Federal Reserve Bulletin, 1984-02

VOLUME 70 • NUMBER 2 • FEBRUARY 1984 FEDERAL RESERVE B U L L E T IN 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 69 MONETAR Y POLIC Y REP OR T TO THE the issue of whether the Truth in Lending CONGRESS Act should continue to prohibit merchants, through use of a surcharge, from charging Conditions in the national economy took a higher prices to credit card purchasers than decided turn for the better in 1983; the to cash purchasers, before the Subcommitoutlook projected for 1984 is further tee on Consumer Affairs of the Senate Comgrowth, significant reduction in unemploymittee on Banking, Housing, and Urban ment, and only modest increases in price Affairs, February 7, 1984. pressures. 105 Chairman Volcker comments on more gen- 87 STAFF STUDIES eral considerations of monetary policy "The Implications for Bank Merger Policy within the context of recent and prospective of Financial Deregulation, Interstate Bank- economic and financial developments, being, and Financial Supermarkets" explores fore the Joint Economic Committee of the evidence regarding the argument that a Congress, February 9, 1984. massive merger movement is required to avert widespread bank failures. 108 ANNOUNCEMENTS Actions by the Board to strengthen the 88 INDUSTRIAL PRODUCTION enforcement of the Community Reinvest- Output rose about 1.1 percent in January. ment Act. Income of Federal Reserve Banks. 90 STATEMENTS TO CONGRESS Adoption of rules to implement several sec- Paul A. Volcker, Chairman, Board of Govtions of the International Lending Superviernors, discusses the basic rules to guide sion Act of 1983. the development of our banking system, particularly in regard to two recent legisla- Revisions to off-line surcharges for wire tive proposals, the Financial Services Com- transfers of funds. petitive Equity Act and the Depository In- Exemptions from Regulation Y. stitutions Holding Company Act Amendments of 1983, before the Senate Amendments to procedures for processing Committee on Banking, Housing, and Ur- applications. ban Affairs, January 16, 1984. Statement by Chairman Volcker on regulation of financial services. 96 Chairman Volcker focuses on some broad considerations that bear on the approach to Amendment to Regulation J. monetary policy, the interaction of mone- Proposal to amend Regulation T; proposal tary policies with other policies, and on to revise fee structure for wire transfers of overall economic prospects, before the funds; draft regulations establishing uni- House Committee on Banking, Finance and form requirements for accounting for fees Urban Affairs, February 7, 1984. on international loans. 102 Nancy H. Teeters, Member, Board of Gov- Publication of supplement to list of OTC ernors, presents the views of the Board on stocks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Revised guidelines for the provision of new mittee, would remain at 6 to 10 percent. It or fit coin and currency. was also understood that the Committee would consult should the aggregates and the Final determination regarding preemption economy turn out to be significantly weaker of certain state laws from Truth in Lending. than expected. Admission of four state banks to membership in the Federal Reserve System. 121 LEGAL DEVELOPMENTS 115 RECORD OF POLICY ACTIONS OF THE Revision of Regulation Y; Amendments to FEDERAL OPEN MARKET COMMITTEE Rules Regarding Delegation of Authority; various bank holding company and bank At its meeting on December 19-20, 1983, merger orders; and pending cases. the Committee decided on a short-run policy that called for maintaining at least the Al FINANCIAL AND BUSINESS STATISTICS existing degree of restraint on reserve positions, subject to the possibility of a slight A3 Domestic Financial Statistics increase in such restraint depending on de- A44 Domestic Nonfinancial Statistics velopments relating to the outlook for eco- A52 International Statistics nomic activity and price pressures and on evidence that monetary growth appeared to A67 GUIDE TO TABULAR PRESENTATION, be exceeding the Committee's expecta- STATISTICAL RELEASES, AND SPECIAL tions. The Committee anticipated that such TABLES a policy would be associated with growth of both M2 and M3 at an annual rate of around A68 BOARD OF GOVERNORS AND STAFF 8 percent for the period from November 1983 to March 1984. The Committee be- A70 FEDERAL OPEN MARKET COMMITTEE lieved that an acceleration in the growth of AND STAFF; ADVISORY COUNCILS Ml to an annual rate of around 6 percent for the four-month period was likely to be All FEDERAL RESERVE BOARD consistent with its objectives for the broad- PUBLICATIONS er aggregates and that expansion in total domestic nonfinancial debt over this period A75 INDEX TO STATISTICAL TABLES would be within the tentative range of 8 to 11 percent established for 1984. It was All FEDERAL RESERVE BANKS, BRANCHES, agreed that the intermeeting range for the AND OFFICES federal funds rate, which provides a mechanism for initiating consultation of the Com- A78 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February 7, foreign trade, that represent risks to orderly 1984, pursuant to the Full Employment and progress. Balanced Growth Act of 1978.1 At present, the prospects for extending the economic gains of the past year into 1984 appear, by and large, to be good. Economic growth THE OUTLOOK FOR THE ECONOMY IN 1984 slowed in the final quarter of 1983, with real GNP Conditions in the national economy took a decid- up 4V percent at an annual rate. A continuation 2 ed turn for the better in 1983. Real gross national of growth in that general range would be consisproduct rose 6 percent over the four quarters of tent with significant progress toward lower unemthe year, close to the experience during the first ployment this year and with sustained expansion years of past cyclical recoveries but well above in a framework of greater price stability in the earlier projections. Although unemployment re- years beyond. mained painfully high, rising production spurred As is typical, the composition of output is gains in employment large enough to cut the likely to change as the cyclical expansion moves unemployment rate by 2Vi percentage points through its second year. Business investment in over the course of the year. At the same time, plant and equipment can be expected to provide most broad measures of prices and wages record- a greater share of the impetus to economic ed further progress toward lower inflation. In growth, reflecting continuing gains in sales, risshort, the performance of the economy in 1983 ing capacity utilization, and improved profitabilisuggested that the immediate objective of permit- ty. Conversely, 1984 probably will see smaller ting sufficient growth in monetary and credit contributions to growth from those sectors that aggregates to foster a solid economic recovery, lent early strength to the recovery. Housing while not encouraging developments that would activity surged early in 1983, largely in reaction rekindle inflationary pressures, was achieved. to the sizable decline in mortgage rates that But success cannot be measured by perform- started in mid-1982; absent an appreciable moveance during any one year, and in some respects •nk' . the first year of recovery—beginning in the context of excess capacity and high unemploy- Objectives for money and credit growth for 19841 ment—provided the most favorable environment Percent , for combining economic growth with progress Tentative Ranges toward price stability. The more stringent and Monetary New ranges ranges for for 1983 aggregate for 1984 1984 set in established meaningful test will come as we seek to maintain July 1983 in July 1983 the momentum of expansion and the progress M2 6 to 9 6V2 to 9>/2 7 to 102 toward stability while the margin of unemployed M3 6 to 9 6 to 9 6'/2 to 9'/2 Ml 4 to 8 4 to 8 5 to 93 resources diminishes. Moreover, developments Domestic in 1983 were marred by certain structural imbal- nonfinancial ances, particularly in the federal budget and in sector debt. 8 to 11 8 to 11 8'/2toll'/2 1. Ranges apply to periods from fourth quarter to tourth quarter, except as specified. 2. Range applies to period from February-March 1983 to fourth 1. The charts for the report are available on request from quarter of 1983. Publications Services, Board of Governors of the Federal 5 3. Range applies to period from second quarter of 1983 to fourth Reserve System, Washington, D.C. 20551. quarter of 1983. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Bulletin • February 1984 ment in mortgage rates from current levels, wage bargaining patterns characteristic of earlier homebuilding can be expected to be more stable years of rapid inflation. this year. Consumption spending, whose up- Furthermore, as time passes, the imbalances swing strongly boosted aggregate demand in associated with the current expansion will pose 1983, is likely to decelerate in the coming year: increasing risks. The second year of an expanfor the first time in several years, spendable sion of economic activity is likely to bring with it income will not be enhanced by a major federal growing business credit demands. At the same tax cut, and any considerable further decline in time, unless decisive action is taken, the federal the saving rate appears improbable. Inventory government deficit will continue to drain off an behavior is always uncertain; however, with the extremely large portion of available net saving in liquidation and initial accumulation phases of the the economy. With no easing of the tensions in cycle complete, inventory investment in 1984 is credit markets, interest-sensitive sectors, such likely to add less to economic growth than it did as housing and long-term business investment, in in 1983. Stocks will probably remain low relative all probability will continue to operate well beto sales, since high financing costs and new low their underlying potential and below the methods of inventory control are a restraining levels consistent with sustained, balanced ecoinfluence. nomic growth and a strong productivity perform- The prospects for continued progress against ance. inflation have been improved by better produc- The large federal government deficit has had tivity performance, more realistic wage bargain- repercussions for the international economy as ing, and a more competitive environment for well. By adding to pressures on domestic credit price decisions. The supply-demand situation in markets, it has helped induce an inflow of capital the oil market suggests that another inflationary from abroad, exerting upward pressure on the shock from that source is unlikely, and indicators dollar, even as our trade and current account of inflation expectations have remained at lower balances have deteriorated. Further deterioralevels thus far in the recovery. These factors all tion in the external balance is expected this year, provide favorable portents for the future, but and that trend and level of imbalance cannot be they will be tested as economic expansion con- sustained indefinitely. Under these circumtinues. The firmer labor and product markets stances, it certainly is questionable whether we that are normally associated with the second can count on the continuing eagerness of foreignyear of an economic recovery could cause some ers to invest in increasing amounts of dollarcyclically sensitive prices to rise; a social securi- denominated assets, and this has significant imty tax increase for employers will boost labor plications for potential developments in credit costs; food prices are likely to be higher than and exchange markets. Even if the recent trends they otherwise might have been because of the effects of last summer's drought on meat prices. Federal Reserve objectives for money and credit in While these latter forces need not in and of 1983 and actual growth themselves mean the underlying trend toward Percent lower rates of inflation has ended, they could, if associated with other factors, tend to increase RRaannggeess Actual growth MMoonneettaarryy ffoorr 11998833 inflation expectations and generate broader pres- aaggggrreeggaattee eessttaabblliisshheedd Revised Old iinn JJuullyy 11998833 data data sures on prices and wages. One of the possibilities is that the competitive forces associated with M2 7 to 10' 8.3 7.8 the appreciation of the dollar and the ample M M 3 l 6»/ 5 2 t t o o 9 9 V 3 22 9 7 . . 7 2 9 5. . 5 2 availability of goods from abroad—which have Domestic been exerting downward pressures on the rate of nonfinancial sector debt. 8'/2TO LLT/2 10.5 10.5 inflation—could recede. More fundamentally, as margins of excess capacity diminish—to the van- 1. Range applies to period from February-March 1983 to fourth quarter of 1983. ishing point in a few industries—and as the 2. Range applies to period from fourth quarter of 1982 to fourth availability of experienced labor declines, there quarter of 1983. may be temptations to revert to the pricing and 3. Range applies to period from second quarter of 1983 to fourth quarter of 1983. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 71 in the trade balance could be sustained, it is not Economic projections for 1984 at all clear that the consequences for American Percent industry would be acceptable. FOMC members and Moreover, the federal deficit and associated other FRB Presidents high U.S. interest rates will continue to aggra- EEccoonnoommiicc iinnddiiccaattoorr AA tt dd rr mm aatt ii ii nn oonn iiss -vate the debt servicing problems of major inter- tendency national debtors. To be sure, the approval of Change, fourth quarter funding for the International Monetary Fund, the to fourth quarter Nominal GNP 8 to \0V2 9 to 10 9.8 support of official creditors, and the widespread Real GNP 3Vi to 5 4 to 43/4 4.5 cooperation of the private banking community GNP deflator 4 to 6 m to 5 5.0 have been constructive. But, while key develop- Average unemployment rate in the fourth ing countries have put in place economic adjust- quarter 7>/4 to 8 Th to 73/4 7.7 ment policies that have resulted in necessary reductions in their imports, such progress has that recent labor force trends and pressures on been achieved at high cost to their domestic capacity in a few industries could lead to a more economies. Thus countries with heavy debt significant pickup in inflation, such a developburdens still confront the task of restoring ment generally is perceived to be only a risk growth of real income as structural adjustments rather than the most likely outcome. proceed. An important contribution to this effort, as well as to our own long-run economic health, is the continued access of these nations to the THE FEDERAL RESERVE S OBJECTIVES FOR financial and goods markets of industrial coun- THE GROWTH OF MONEY AND CREDIT tries. At its meeting of January 30-31, the FOMC modified only slightly the tentative ranges for the The Economic Projections of the FOMC monetary and credit aggregates for 1984 established last July. The ranges for M2 and M3 were While recognizing the risks implicit in the bud- set at 6 to 9 percent, 1 percent and V2 percent getary and international circumstances outlined respectively, below the ranges for 1983. The above, the members of the Federal Open Market tentative Ml growth range of 4 to 8 percent was Committee (together with other Reserve Bank confirmed for the same period. A monitoring presidents) believe the most probable course of range of 8 to 11 percent, as anticipated in July, developments during 1984 is further growth, sig- was established for growth in the outstanding nificant reduction in unemployment, and only debt of domestic nonfinancial sectors. modest—and essentially cyclical—increases in The ranges for 1984 are intended to be consisprice pressures. The central tendency of fore- tent with the basic policy objective of achieving casts shows real GNP growth in a range of 4 to long-lasting economic expansion in a context of 43A percent this year. This growth rate is similar continuing control of inflationary pressures. to the first view expressed by the members last They assume that relationships between monesummer, but, of course, would follow significant- tary and credit growth and economic activity and ly faster growth in 1983 than anticipated. The inflation will be broadly consistent with past unemployment rate is expected to continue to trends and cyclical developments. There is readecline in 1984, and given the progress in reduc- son to expect that the special considerations ing joblessness last year, the expected level of affecting monetary growth rates last year—inunemployment in the fourth quarter of this cluding important institutional changes in the year—generally between IV2 and 73/4 percent—is financial system—will be less significant in 1984. substantially lower than had been anticipated. Specifically, the large-scale shifts of funds asso- FOMC members expect the GNP implicit de- ciated with the introduction of MMDAs (money flator to rise a bit more rapidly this year than in market deposit accounts) and Super NOW (nego- 1983—generally in the range of AV2 to 5 percent. tiable order of withdrawal) accounts appear, for While some members have expressed concern all practical purposes, to be completed. Some of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ;

72 Federal Reserve Bulletin • February 1984 the other influences that had special effects par- compared with historical experience, Ml growth ticularly on the demand for Ml last year—uncer- might appropriately be higher in the range. tainties about the economic and financial outlook In recent quarters, the velocity of Ml has early in the year and the lagged effect of the shown a moderately rising tendency, in contrast sharp decline of interest rates in late 1982—are to sharp declines in 1982 and early 1983. Still, the behind us. No further regulatory or statutory rise in Ml velocity in the first year of the current changes that would significantly affect growth economic recovery was decidedly less than in rates of the monetary aggregates appear immi- earlier post-World War II cyclical expansions. nent. Some proposals—such as payment of inter- Velocity behavior over the past 18 months apest on demand deposits or on required reserve pears to have reflected responses to the declines balances—would have important impacts on the of interest rates in the latter part of 1982; the aggregates and would require reconsideration of subsequent leveling off of rates; changing prethe ranges, especially for Ml, if they were en- cautionary attitudes; and to some degree peracted to be effective in 1984. haps, more lasting changes in motives for holding A further reduction of V2 percent in the growth Ml, as the composition of that aggregate has range for M2 for 1984 from that tentatively set in shifted. last July was influenced by technical consider- Since their introduction on a nationwide basis, ations. Last year's range—though it was based interest-bearing accounts with full checking privon February-March to abstract from the bulk of ileges (NOW accounts) have become an increasdistortions connected with the introduction of ingly important element in Ml. Most of these MMDAs—necessarily had allowed for some re- accounts are subject to a ceiling rate, though a sidual shifting into such accounts as the year growing proportion (Super NOWs) pay market progressed, which in fact took place. In any rates. All of the accounts contain funds placed event, M2 in 1983 was maintained well within its for long-term savings purposes as well as funds target range, and growth in 1984 should not be used primarily for transactions. In light of these influenced by that special factor. structural changes, it is not yet clear how the The Committee anticipates that both M2 and public's demand for Ml might be affected, for M3, which will continue to receive substantial any given level of income, by variations in credit weight in policy implementation, may well fluc- market or other conditions that affected savings tuate in the upper part of their ranges in the preferences, or how it might be affected by current year. The actual growth of M2 and M3 variations in the level of income itself; nor is it will depend in part on the strategies and aggres- clear how quickly or in what ways depository siveness with which depository institutions seek institutions might themselves respond to such deposits in an environment of deregulated depos- variations by altering terms on deposit offerings. it interest rates. While there is evidence of more "normal" and Growth of the broader aggregates will also be predictable patterns reappearing, the Committee influenced by the pattern of net capital inflows felt that more time would be required for assessfrom abroad. For example, nonresident holdings ing the impact of recent structural changes on of Eurodollars are not included in M2 or M3, and public and institutional behavior before full or should banks bid aggressively for funds through primary weight could be placed on Ml as a policy that channel, as seems possible, growth in those guide. Thus the Committee decided in setting a aggregates would tend to be restrained relative to range for Ml that its behavior should be evaluatgrowth in bank credit and nominal GNP. Limited ed in the context of movements in the broader allowance was made for that development in monetary aggregates, which for the time being setting the ranges. would continue to be given substantial weight in As tentatively agreed in July, the range for Ml policy implementation. was reduced by 1 percentage point from the The FOMC also considered whether the prorange set for the last half of 1983. Growth around cedures of System open market operations the midpoint of the range would appear appropri- should be altered in light of the shift to the new ate on the assumption of relatively normal veloc- contemporaneous reserve requirement system ity growth; if velocity growth remains weak (CRR) on February 2, a system that potentially Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 73 would permit somewhat closer short-run control federal deficit will approach the record level of of Ml. It was the Committee's view that adapta- the past year. The federal deficit was nearly 6 tion of open market procedures does not depend percent of GNP in 1983, the high for the poston the technical characteristics of the reserve World War II years, and is likely to be only requirement system in place but rather on broad- slightly lower in 1984, the second year of cyclical er policy judgments about the relative weight to expansion. In the comparable stage of earlier be given to Ml as a target and the desirability of cyclical recoveries, this percentage generally seeking close short-run control of that aggregate. dropped rapidly or was at much lower levels— Taking account of policy judgments about the providing room for additional borrowing to suprole of Ml and other monetary aggregates under port expanding business capital outlays and current circumstances, as well as uncertainties in housing. the period of transition to CRR, the Committee fWhile debt formation by the private sector agreed to make no substantial change in current may proceed at a somewhat more rapid pace this operating procedures at this time.2 year than in 1983, the expected pickup is modest The Committee set a monitoring range of 8 to by the standards of earlier recoveries. That ex- 11 percent for growth in the debt of domestic pectation is partly a reflection of the fact that the nonfinancial sectors during 1984. This range is Vi massive federal presence in the credit markets, percentage point below the corresponding range unlike the pattern in previous expansions, will for 1983, reflecting the moderating trend that, continue to absorb the bulk of the net saving based on historical relationships, would be ex- available to the domestic economy. The federal pected to accompany progress toward price sta- deficit over the past two years absorbed an bility and sustainable growth in production. The unusually large proportion of the saving available range allows for growth of debt in 1984 that might to the domestic economy, and this will continue outpace expansion in nominal GNP, as often into 1984. The availability of domestic saving to occurs in the second year of a cyclical recovery. finance the growing federal deficit and expanding private investment has remained limited, and expansion of total saving in line with financing needs last year was dependent on large increases Implications for Credit Markets in net funds obtained from abroad. Further such increases will again be required this year. And if Developments in credit markets and interest present trends continue, the government will rates, as always, will be subject to a variety of continue to drain off" much more of the nation's influences at home and abroad. The ranges speci- domestic saving than at any time in the preceding fied for the monetary and credit aggregates, three decades, apart from the first year of recovwhich are felt to be broadly consistent with the ery from the 1973-75 recession. expectations of members of the FOMC about the The persistence of large deficits in the face of course of economic activity and prices, will not strengthening private credit demands would tend in and of themselves determine the course of to exert pressures on domestic credit markets, interest rates and the degree of credit market keeping interest rates higher than they otherwise pressures. Whether interest rates fall or rise—or would be. Put another way, large deficits are an remain stable—will depend importantly on the offset to other forces working toward lower strength and composition of demands on the interest rates. These pressures stemming from economy, actual and anticipated price pressures, the federal deficit work to restrain expansion in and credit demands. areas of the economy that are more sensitive to Dominating the outlook for credit flows in the interest rates—such as housing, autos, and longyear ahead is the prospect that—in the absence term business capital spending. They also—to of immediate action by the fiscal authorities—the the extent higher interest rates lead to a strong dollar on exchange markets—retard our export industries. And, finally, high interest rates contribute to strains on the domestic and interna- 2. A statement issued on January 13, 1984, on the policy tional financial system from the lingering heavy implications of CRR appears as appendix A to this report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Bulletin • February 1984 indebtedness incurred during inflationary expan- growth and productivity over the years ahead. sion of earlier years. As time went on, the export sector of the econo- Actions taken to reverse the upward trend in my also should benefit as an aspect of the the structural budgetary deficit clearly would readjustment in our present unbalanced external work to reduce potential credit market pres- position. sures, to help assure a balanced and sustainable economic expansion, and to promote a more orderly readjustment of our balance of payments THE PERFORMANCE OF THE ECONOMY position. The timing and magnitude of the favor- IN 1983 able impact naturally would depend on the scheduling, force, and prospective "carry Output and employment registered sharp gains in through" of any action to reduce the budgetary 1983, lifting the economy out of one of the most deficit as well as on the surrounding economic severe recessions since World War II. These environment. gains brought a considerable reduction in the Ordinarily, the principal effect of a lower bud- unemployment rate, which fell 2Vi percentage get deficit on credit markets and the economy points over the year to 8.2 percent by year-end. would be expected to occur as the programs— The first year of recovery was marked by broadwhether on the spending or tax sides—actually ly based increases in spending by consumers and become effective. Gains could occur earlier, businesses; these advances were stronger than however, in anticipation of reduced federal cred- generally anticipated, given the low confidence it demands. For example, actions taken this year and historically high credit costs that prevailed that would clearly reduce structural federal defi- as the year began. cits beginning in fiscal years 1985 and 1986 could The impressive progress in reducing inflation work in some degree in 1984 to lower interest in 1982 extended into 1983. The consumer price rates, particularly longer-term rates. This would index rose VA percent in 1983, the smallest result from favorable effects on inflation expecta- increase in more than a decade. The continued tions as well as the anticipated relief from the slowing in inflation was aided by favorable price weight of governmental pressure on credit mar- developments in energy markets and by the kets. damping effect on food prices of abundant sup- A decline in the structural federal deficit would plies of livestock products. However, 1983 also in the first instance reduce one source of eco- saw improvements in broader forces affecting nomic stimulus. However, any such effects prices and wages. With important lags, business should be associated with lower interest rates and labor involved in key contract settlements than otherwise, encouraging offsetting increases seemed to be adapting constructively to the less in spending by businesses and households for inflationary environment, and overall wage and capital goods, homes, and consumer durables. compensation increases were considerably The positive effects from small reductions in smaller than those of the previous year. At the the federal deficit would be difficult to isolate in same time, productivity improved, thereby helpour large, active credit markets. However, as ing to limit increases in unit labor costs, and structural deficits are reduced by substantial average real incomes rose. amounts—say $50 billion to $100 billion—the While the performance of the economy in 1983 counterpart rise in private credit may be most marked a strong and encouraging advance tonoticeable initially in mortgage markets at the ward the goal of sustained, noninflationary lower, long-term interest rates that are likely to growth, several areas of concern remained. Alevolve. In addition, businesses would be in a though labor market conditions improved markposition to increase bond and stock offerings as edly, unemployment continued to be unacceptathey take advantage of the more favorable capital bly high—especially for younger job seekers and market atmosphere to improve their liquidity and minorities. In addition, 1983 saw a sharp—and balance sheet positions. Prospects for business worrisome—increase in the federal deficit. For spending for plant and equipment would be im- the fiscal year ending in September, the deficit proved—an important factor in maintaining (not including off-budget programs) climbed to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 75 almost $200 billion. This deficit represented Short-term yields were relatively stable early about 6 percent of GNP; the highest deficit so in 1983, following a marked decline during the measured in the previous three decades had been second half of 1982. In late spring, economic 4 percent in 1976. The borrowing necessary to growth accelerated sharply, and the monetary finance the deficit, in combination with continu- aggregates, looked at as a whole, were continuing huge prospective government credit de- ing to grow at a relatively rapid pace. In those mands, exerted pressures on market interest circumstances, the Federal Reserve began to rates—offsetting the effects of lower inflation and restrain somewhat its provision of reserves to other factors—thereby tending to temper expan- depository institutions, and short-term interest sion of credit-sensitive private sectors of the rates rose moderately during the summer economy. months. For the remainder of the year, most Firms tied closely to world markets also did short-term rates fluctuated in a generally narrow not share proportionately in the U.S. economic range, ending 1983 around 1 percentage point recovery in 1983. Large federal deficits and higher than a year earlier. associated high domestic interest rates helped The decline in long-term interest rates that had induce sizable inflows of foreign capital to the commenced in mid-1982 continued through the United States throughout the year and contribut- early months of 1983. These rates also began ed to a further rise in the exchange value of the moving up in the spring, climbing fairly steadily dollar. The strong dollar, in turn, put pressures through August. Thereafter, long rates fluctuated on industries facing competition from foreign in a range somewhat above that of the first half of imports and, in an environment of sluggish eco- the year. At the end of 1983, long rates generally nomic growth in other countries, made it difficult were 1 to 1 Vi percentage points above their levels for U.S. industries to sell their products abroad. of a year earlier. Exceptions to this pattern were Consequently, imports increased dramatically mortgage rates and yields on municipal bonds, relative to exports in 1983; this shift had a which were down on balance from their levels at significant moderating influence on the growth in the close of 1982. Long-term interest rates redomestic output. mained quite high relative to the current rate of The international debt situation remained a inflation throughout 1983; continuing uncertainmajor concern in 1983. Some countries with ties regarding the speed of the economic expanserious debt problems made considerable pro- sion and its possible implications for future inflagress in formulating and implementing internal tion, as well as concerns about the outlook for adjustment policies, and they continued to re- federal deficits, were factors. ceive a moderate flow of new financing. Nonetheless, historically high interest rates in the United States continued to place heavy burdens Household Sector on the many developing countries with outstanding debt concentrated in dollars. Most households experienced financial and economic gains in 1983. With unemployment down and gains in employment sizable, growth in per- Financial Markets sonal income rebounded smartly during the past year. Further deceleration of inflation, lower Partly reflecting the ready availability of funds interest rates, and the cumulative 25 percent from abroad, financial markets absorbed the reduction in federal tax rates on personal income increase in demand for credit associated with during the past three years all helped raise the both the financing of the record federal deficit purchasing power of household income. In addiand the upturn in the economy in 1983 without tion, household net worth rose substantially in undue stress. In fact, interest rates were lower 1983, primarily reflecting the surge in stock maron average, and less variable, in 1983 than during ket prices that began in 1982 and carried into the preceding few years, although most rates 1983. were somewhat higher at the end of the year than These gains no doubt were instrumental in at the start. boosting consumer confidence, which surveys Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Federal Reserve Bulletin • February 1984 indicated rose sharply in 1983 to its highest level improved) and by continued growth of secondary in a decade. This improved mood encouraged mortgage markets. The gains also reflected the households to finance major purchases by bor- popularity of financing techniques that provided rowing and to devote a larger proportion of homebuyers with initial interest rates lower than current income to consumption rather than sav- those quoted for fixed-rate, conventional loans. ing. As a result, the personal saving rate fell from The record volume of tax-exempt, revenue 5.8 percent of disposable income in 1982 to 4.8 bonds issued by states and localities last year to percent in 1983. finance single-family mortgages provided many The improved economic and financial status of homebuyers with reduced-cost mortgage financhouseholds fostered a substantial upswing in ing. Further, as market rates rose during the consumer spending. Much of the strength came year, homebuyers increasingly switched to adin the automobile sector, as sales recovered from justable-rate mortgages. Many such instruments several years of sluggish performance. Sales of offered an initial rate advantage of 2 percentage domestic models quickened in the first half of the points or more. By year-end, 55 percent of all year, spurred by financing incentives from deal- conventional mortgage loans closed had a variers and lower rates on bank loans. Lower gaso- able-rate feature of some kind. When mortgage line prices and the introduction of new and better rates were at their recent low point in the spring American products also appeared to help. The of 1983, only 30 percent of conventional loans recovery in domestic automobile sales continued closed were adjustable. In addition, such interthrough the second half of the year, despite the est-reducing mechanisms as builder buydowns withdrawal of financing incentives. Sales of im- and seller financing remained important features ported models, still constrained by import re- of housing finance during the year. strictions on Japanese models, edged up a bit in 1983, regaining their pre-quota (1980) level. Consumer spending for other goods and services also Business Sector strengthened, paced by large gains in housingrelated items such as furniture and appliances as Economic and financial conditions in the busiwell as brisk advances in general merchandise ness sector also improved markedly in 1983, as and apparel sales. firms started the process of rebuilding their bal- Demand for housing surged in 1983, as early in ance sheets from the recession. Sales and prothe year long-term mortgage interest rates fell duction rose sharply, bringing increased capacity below 13 percent for the first time since the utilization and productivity. These gains helped summer of 1980. The sharpness of the upturn propel before-tax profits, which had been dereflected the considerable volume of demand pressed in the early 1980s, to an unusually rapid postponed from the preceding few years of high increase for the first year of an economic expancredit costs and uncertain economic conditions. sion. With effective corporate tax rates lower, New housing construction rose considerably in businesses were able to retain a larger proportion response to rising sales during the first three of their profits than in previous recoveries. quarters of the year. The rate of housing starts Much-improved cash flows and lower interest leveled off in the final quarter, influenced by the rates put firms in a much better position to backup in mortgage interest rates during the service their outstanding debt in 1983. Further, second half of the year. However, for the year as the corporate sector improved its overall capital a whole, total private housing starts rose 60 position in 1983 by issuing new stock in vastly percent, the sharpest annual increase in almost improved equity markets. During the first half of 40 years. The construction activity generated by the year firms strengthened their balance sheets the increase in starts was an important factor in by shifting borrowing toward longer maturities. GNP growth, as is typical in the first year of an However, historically high interest rates limited economic recovery. this adjustment, and rising credit costs later in The expansion in housing construction in 1983 the year sharply reduced the volume of long-term was supported by increased lending by thrift debt financing. institutions (where deposit growth was much A marked shift in inventory investment from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 77 liquidation to accumulation took place in 1983, Despite a comparatively good inflation perfurther boosting GNP. Firms had undertaken formance, the competitive position of firms in the massive reductions in stocks during 1982 and United States eroded further in 1983. After deearly 1983. With final demands strengthening, clining more than 15 percent in 1982, the volume inventory reduction slowed markedly in the sec- of U.S. exports remained weak last year. Exond quarter of the year; and after midyear, firms ports to industrial countries, which account for began to rebuild their inventories. With sales and almost two-thirds of the U.S. total, recovered shipments quite strong during the second half of somewhat in response to a moderate pickup in the year, the actual stocks of inventories re- aggregate demand abroad. However, economic mained quite lean, and inventory-sales ratios fell growth in many developing nations was limited to historically low levels. by their debt service problems, and demand by Business spending on plant and equipment did those countries for imports from the United not reach its cyclical trough until the first quarter States remained depressed. In contrast, the vigof 1983, but such expenditures grew rapidly orous expansion in the U.S. economy and the throughout the rest of the year. Overall, business strength of the dollar pushed both the volume fixed investment increased almost 11 Vi percent and the value of imports significantly higher. As in real terms between the fourth quarter of 1982 a result, the U.S. trade deficit increased from an and the fourth quarter of 1983. At year-end, annual rate of about $45 billion in the fourth rising new orders and surveys showing that busi- quarter of 1982 to a rate of about $75 billion in the nesses planned higher investment spending sug- fourth quarter of 1983. The U.S. current account gested that the recovery in investment had registered a corresponding shift, with the deficit developed momentum that would carry it into for the year reaching about $40 billion. Essential- 1984. ly, rapid increases in demand in the United The strength in investment spending was con- States were partly satisfied by increasing imcentrated in the equipment sector early in 1983, ports, limiting gains in U.S. output. especially in motor vehicles, high-technology office equipment, and computing machinery. The recovery in equipment spending became more The Government Sector broadly based as the year progressed, as it spread to traditional heavy equipment. Expendi- Government purchases of goods and services tures for new structures also turned up in the were lower in real terms in 1983 than in 1982. second half of the year, led by investment in However, this decline stemmed largely from a stores and warehouses. Construction of new reduction in crop inventories held by the Comoffice buildings declined sharply during the first modity Credit Corporation (CCC) that was assohalf of 1983 and held at that reduced pace during ciated in part with the Payment-in-Kind (PIK) the second half of the year, as vacancy rates program. Excluding CCC, real federal purchases remained quite high. in 1983 were up 4Vi percent, led by a 5V\ percent increase in defense spending. Purchases by state and local governments picked up a bit, after two International Trade years of weakness induced by the recession and cutbacks in federal support. The rising exchange value of the dollar was a An especially important development in the major influence on U.S. exports and imports in government sector in 1983 was the shifting fiscal 1983. On a weighted-average basis, the dollar positions of governments. The federal deficit rose an additional 10 percent during the course of ballooned to $195 billion in the fiscal year ending the year, bringing the cumulative appreciation in September 1983. This figure was nearly twice since 1980 to 50 percent. The sustained strength as large as the previous year's deficit, which of the dollar has reflected economic policies here itself was of record proportions. In part, the and abroad as well as the attractiveness of dollar increase in the deficit in fiscal year 1983 reflected investments in a time of international political the lagged effects of the recession on receipts and and financial uncertainty. transfer payments, but other factors also were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • February 1984 important. Revenue growth was limited by the settlements" component of union wage increases cumulative effects of three years of sizable tax was reduced to less than 1 percent. At the same reductions, and spending was buoyed by in- time, cost-of-living adjustments slowed, reflectcreases in outlays for defense, social insurance ing the continued moderation in prices. expenditures, and interest payments on national On average, however, wage gains in 1983 debt. exceeded price increases, so that most workers At the state and local level, operating budgets experienced improved purchasing power. Rising (excluding social insurance funds) moved dra- real wages mirrored improvements in labor promatically from deficit into surplus. This shift ductivity. Although a good deal of the gain in resulted largely from the combination of tax output per hour worked was attributable to the increases and cost-cutting efforts adopted during pickup normal during the early stages of an the recession as well as an unanticipated increase economic recovery, there is reason to believe in the tax base as the economy expanded at a that longer-run improvements also were in train. surprisingly rapid pace. Revisions in work rules at many establishments during the recession contributed to efficiency, and in 1983 both business and labor appeared to Labor Markets sustain their efforts to trim costs and improve quality. Reflecting wage and productivity devel- The recovery of production in 1983 was translat- opments, unit labor costs rose only 1XA percent in ed into an impressive improvement in labor 1983. This was the best performance since the markets. Three million workers were added to mid-1960s. nonagricultural payrolls in the 12 months ending in December 1983. The most rapid gains were registered in durable goods manufacturing and in Prices construction, the sectors hit hardest during the recession. Service jobs also contributed impor- The continued moderation in labor costs, a printantly to overall employment growth during the cipal determinant of price movements, helped to year. unwind further the wage-price spiral that fueled Despite the rapid expansion in job opportuni- inflation throughout the 1970s. Household surties, the rise in the labor force was relatively veys during 1983 revealed that, despite some moderate, damped by the long-term slowing in increase in the second half of the year, expectathe growth.oHhe young adult population and by tions about inflation throughout 1983 remained stability in labor force participation rates. As a lower than they had been in some time. Ample result, the first year of the recovery was marked productive capacity and a strong dollar also by an unusual concentration of hiring from the contributed to further progress in reducing the pool of those who reported that they had perma- rate of inflation. nently lost their last job. Because such workers That progress was reflected in most key price typically are out of work for extended periods, measures. Increases in the consumer price index the number of long-term unemployed workers remained in a much reduced range in 1983. The also fell sharply last year. brighter inflation picture in part reflected transi- Nominal wage increases continued to deceler- tory factors. Slack demand and large worldwide ate in 1983. Hourly compensation rose at a rate inventories caused a sharp decline in petroleum of 5 percent over the four quarters of 1983—the prices early in the year, and prices of food at the slowest pace since 1965. The easing of wage consumer level were relatively stable throughout increases reflected slack in labor markets in 1983. However, the agricultural picture turned general as well as adjustments in several major less favorable in the wake of the summer collective bargaining agreements. Nearly 40 per- drought. The resulting depletion of grain stocks, cent of workers who negotiated major union coming on top of the effects of the federal settlements during 1983 accepted wage freezes or government's PIK program designed to reduce outright pay cuts for the first year of their new agricultural production, put upward pressures on contracts. As a result, the size of the "new the prices of many agricultural commodities in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 79 the latter part of the year that can be expected to changes or other causes, it seemed that such affect consumer food prices in 1984. In addition, effects would be smaller and more predictable for severe December weather promised to adversely the broader aggregates than for Ml. affect the supply of fresh fruits and vegetables In the case of M2, an annual target range of 7 early in 1984. to 10 percent was established. The FOMC be- The deceleration of prices in 1983 was not lieved that performance of the aggregate would limited to the food and energy sectors. The most appropriately be measured over a period consumer price index excluding those sectors when it would be less influenced by the initial, rose less than 5 percent—about half the pace of highly aggressive marketing of MMDAs. Thus just three years earlier. Producer prices in gener- the Committee chose the average level of Februal were little changed in 1983, as price increases ary and March as the base for measuring growth, of capital equipment as well as of consumer rather than the fourth quarter, the period that goods slowed markedly. generally had been used in the past. It was anticipated that the range for M2, which was 1 percentage point higher than the range for 1982, THE GROWTH OF MONEY AND CREDIT would allow for some residual shifting of funds to IN 1983 MMDA accounts over the remainder of the year. The range for M3, to be measured as usual In its reports to the Congress in February and from the fourth quarter to the fourth quarter, was July 1983, the Federal Reserve indicated that established at 6Vi to 9Vi percent. This range was monetary policy during that year would be con- the same as that established in the previous year, ducted with the aim of fostering a recovery in but encompassed growth below the actual outeconomic activity and encouraging further pro- come in 1982. In adopting this range, the Comgress toward price stability. Establishing specific mittee assumed that any net shift of funds during objectives for growth in the monetary aggregates the year into the new types of deposit accounts was fraught with difficulties, however. Beginning from market instruments would be largely offset in 1982, the behavior of Ml in relation to eco- by reductions in managed liabilities (such as nomic activity had diverged sharply from histori- large CDs) included in M3. cal trends, raising doubts about the usefulness of In light of difficulties in gauging the relation that aggregate—at least over the near term—as a between transaction balances and economic acpolicy target; the effects of newly introduced tivity, the range for Ml was set in February at 4 Super NOWs and money market deposit ac- to 8 percent, a band 1 percentage point wider counts (MMDAs) on the behavior of Ml also than usual. As noted above, the Committee were subject to considerable uncertainty. In ad- agreed that, in implementing monetary policy, dition, it was evident early in 1983 that M2 was less than customary weight would be assigned to being swelled by massive shifts of funds from Ml; instead, the Committee would rely primarily outside that aggregate into MMDAs, but it was on the broader aggregates, at least until Ml had impossible to predict the precise timing and evidenced more regular and predictable behavvolume of such shifts. ior. Moreover, the Committee emphasized that, Reflecting these special factors and uncertain- in implementing policy, the significance it atties, in early 1983 the Federal Open Market tached to movements in the various monetary Committee departed from past practice in estab- measures necessarily would depend on evidence lishing monetary objectives for 1983. The Com- about the strength of economic recovery, the mittee agreed that the uncertainties regarding Ml outlook for prices and inflationary expectations, continued to warrant the practice, begun in Octo- and emerging conditions in domestic and internaber 1982, of placing principal weight on the tional financial markets. broader monetary aggregates—M2 and M3—in The Committee also set forth for the first time the implementation of monetary policy. Al- its expectations for growth of the total debt of though the demands of the public for those domestic nonfinancial sectors, indicating that a aggregates might be affected by shifts in asset range of 8V2 to IP/2 percent, measured from preferences that were rooted in regulatory December 1982 to December 1983, would be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • February 1984 appropriate. This range was thought to be about range for Ml for the second half of 1983. This in line with expected growth in nominal GNP, range of 5 to 9 percent was based on the average reflecting the historically similar growth trends for the second quarter, rather than that for the of each. It was recognized that, in the early fourth quarter of 1982. The decision to adopt a stages of other postwar recoveries, growth in new base for monitoring Ml growth reflected a GNP had exceeded growth in debt by an appre- judgment that the recent rapid growth of Ml ciable margin; but in the current circumstances— would appropriately be treated as a one-time including the financial condition of the private phenomenon, which was expected to be neither sector as the recession ended and the prospec- reversed nor extended. It appeared, in retrotive huge volume of federal borrowing—expan- spect, that the surge in Ml might largely have sion in the debt aggregate might run in the upper reflected an adjustment by the public of its cash half of the stated range during 1983. balances in response to the pronounced drop in The behavior of Ml in early 1983 continued to the opportunity cost of holding low-yielding dediverge from precedents. (The analysis here—as mand deposits and regular NOW accounts. The elsewhere in this section—is based on recently FOMC emphasized that it still regarded the berevised data for the monetary aggregates, but the havior of Ml as subject to substantial uncertainsame finding holds for the data that were avail- ties, and it reaffirmed its decision to place princiable during 1983.)3 As apparently was the case pal weight on the broader aggregates in the during the second half of the previous year, implementation of monetary policy. precautionary motives stemming from highly un- After midyear, precautionary demands for liqcertain employment and income prospects evi- uid balances apparently began to abate, reflectdently continued to swell demands for liquid ing improved confidence arising from the recovbalances relative to the rate of spending on goods ery; a moderate rise in interest rates, which and services; in addition, the lagged effects of began in late spring, also curbed demands for earlier declines in interest rates contributed to money. Demand deposits peaked in July and increased demands for money. Ml expanded edged down, on balance, during the second half; rapidly through late spring; growth was dominat- the growth of OCDs fell to a fraction of the rapid ed by its highly liquid, interest-earning other first-half pace. Thus Ml entered its newly estabcheckable deposit (OCD) component. Growth in lished monitoring range in late summer and fin- OCDs during the first half of the year accounted ished the year in the middle of that range. for more than half of the expansion in Ml, a During the first quarter of 1983, the velocity of contribution well out of proportion to the impor- Ml continued to decline at nearly the extraorditance of this component. In turn, inflows to nary rate of 1982. These declines exceeded those Super NOW accounts, which had been autho- implied by models of past behavior, even taking rized in early January, exceeded growth in OCDs into account the effects of the large reduction in during the year as a whole. Even so, the intro- the opportunity cost of holding money balances duction of the new deposit accounts appears in brought about by sharp drops in market rates and retrospect to have had little effect on the overall the introduction of ceiling-free Super NOW acgrowth rate of Ml, as inflows from outside Ml counts. As the year progressed, the velocity of into Super NOWs probably were roughly offset Ml began to increase, slowly at first but more by outflows from Ml to MMDAs. rapidly by the last quarter. Even with this accel- In light of the rapid expansion in Ml through eration, growth in Ml velocity in the full year midyear, and referring back to its recognition following the business cycle trough in the fourth that appropriate growth rates for the aggregates quarter of 1982 was well below the experience would depend on judgments about unfolding typical in a recovery. economic and financial developments, the As was evident when the target ranges were FOMC in July established a new monitoring first established early in 1983, the dramatic response to the authorization of MMDAs substan- 3. Appendix B to this report provides detailed information tially boosted M2. Competition for these funds on the recent benchmark and seasonal adjustment revisions was intense: promotional activity was heavy of monetary data for 1983, as well as on the impact of a redefinition of M3 to include term Eurodollars. and, in some regions, introductory interest rates Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 81 Growth of money and credit1 tions on small time deposits with original maturi- Percentage changes ties or notice periods longer than 31 days had little noticeable impact on deposit flows. Domestic Period Ml M2 M3 nonfinancial Reflecting MMDA inflows, M2 growth from sector debt3 the fourth quarter of 1982 through the fourth Base to fourth quarter, quarter of 1983 was 12 percent. However, from 19832 7.2 8.3 9.7 10.5 the February-March period used by the FOMC Fourth quarter to as the base for its target growth range, expansion fourth quarter 1978 8.2 8.0 11.8 13.0 through the fourth quarter was at an SlA percent 1979 7.5 8.1 10.3 12.0 1980 7.4 9.0 9.6 9.5 annual rate, well within its range. 1981 5.1 9.3 12.3 9.6 After declining at a record rate in the first (2.5)* 1982 8.7 9.5 10.5 9.2 quarter, M2 velocity rose during the rest of the 1983 10.0 12.1 9.7 10.5 year; over the year as a whole, velocity fell Quarterly growth rates slightly. As was the case for Ml, the velocity of 1983:1 12.8 20.5 10.8 8.8 2 11.6 10.6 9.3 12.0 M2 failed by a wide margin to keep pace with the 3 9.5 6.9 7.4 9.9 4 4.8 8.5 10.0 9.8 average increase during the first year of a business recovery. However, correction for the vol- 1. Ml, M2, and M3 incorporate effects of benchmark and seasonal adjustment revisions. M3 incorporates a definitional change as well, ume of funds thought to have been attracted to the inclusion of term Eurodollars. See appendix B to this report for MMDAs from outside M2 suggests that velocity detailed information. 2. The base for measuring growth in Ml was the second quarter of movements were in reasonably close correspon- 1983; for M2, February-March 1983; for M3, the fourth quarter of dence with experience. 1982; and for domestic nonfinancial sector debt, December 1982. 3. Growth rates of domestic nonfinancial sector debt are measured M3 growth picked up a bit in the first quarter between last months of periods. from its late 1982 pace, owing to the explosion in 4. Ml figure in parentheses is adjusted for shifts to NOW accounts in 1981. M2. But until the closing months of the year, expansion in this aggregate was restrained by were far above yields on market investments. sharp runoffs in managed liabilities—especially Inflows to MMDAs in January alone totaled $147 large CDs—in response to the rapid buildup early billion, and by March outstandings had reached in the year of MMDA balances and limited loan $321 billion. However, most of the inflow to demand at commercial banks. On the other hand, MMDAs appears to have come from other in- thrift institutions continued to issue large CDs at struments included in M2. Analysis by the a rapid pace in response to robust mortgage Board's staff suggests that as much as four-fifths demands and a cost incentive to pay down adof that inflow may have been transferred from vances from the Federal Home Loan Banks. On savings deposits, small time deposits, and money balance, M3 moved on a track near the upper end market mutual funds. (Over the course of the of its target range during 1983; growth from year, assets of money market mutual funds fourth quarter to fourth quarter was 93/4 percent, dropped 25 percent.) Still, a sizable volume of just outside the target range.4 funds came from outside M2 and had an evident Domestic nonfinancial sector debt increased impact on growth in that aggregate. IOI/2 percent in 1983, a bit above the pace of the In the face of the heavy deposit inflows and previous year. The outstanding debt of the federrelative sluggishness of business loan demand at al government grew almost 20 percent, about commercial banks, institutions dropped their ag- matching the pace of 1982; this expansion acgressive promotion of MMDAs. The aggregate counted for about 40 percent of the increase in all level of MMDAs barely increased after June, domestic nonfinancial debt last year. State andr! reflecting a sharp drop in interest rates offered on laca&spvemment financiagactivity surged to a these accounts. At the same time, the less liquid new record; some of the borrowing reflected small time deposit component of M2 increased efforts on the part of the issuers to market debt quite rapidly over the second half of the year, as before the imposition of anticipated constraints, a result of the steepening yield curve and more attractive rates on such deposits. However, the 4. M3 has been redefined to include term Eurodollars, removal on October 1 of all remaining restricpreviously included only in the aggregate L. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • February 1984 including requirements for bond registration and the economy. Broad measures of stock prices proposed limits on revenue bond issuance. A increased about 20 percent. The balance of bond stepped-up pace of investment in housing and downgradings and upgradings by the principal consumer durables led to a near doubling of rating agencies became much more favorable. borrowing by the household sector. But issuance Spreads between interest rates on private and of nonfinancial business debt slowed to a quite federal government debt obligations narrowed slow pace, as internal cash flows of corporations dramatically during 1983, as did spreads between exceeded capital expenditures for much of the yields on lower- and higher-rated private securiyear, and relatively high stock prices encouraged ties. The strong stock market enabled many large issuance of new equity shares. firms to strengthen their balance sheets and The proportion of credit intermediated by de- many young companies to make initial public pository institutions grew substantially, rising offerings of their shares. from about one-third in 1982 to about one-half in Commercial banks adapted to important 1983. This increase reflected both the impact of changes in their environment in 1983. The new MMDA inflows and a surge in demands for deposit accounts were successful in attracting mortgages. Funds advanced by thrift institu- funds to both banks and thrift institutions. At the tions, in particular, rose sharply from a de- same time, banks experienced relatively soft pressed 1982 pace. Commercial bank credit also demand for business loans—especially in the expanded more rapidly in 1983; purchases of first half of the year—and, hence, invested heavigovernment securities accounted for more than ly in government securities, other market instruone-third of net credit extended by banks. At- ments, and loans to consumers. However, credit tracted by relatively high U.S. interest rates, problems intensified in energy-related busifunds advanced by the foreign sector also in- nesses, and the financial condition of a number creased substantially during 1983. of foreign borrowers remained troubling. A wide- Thus each of the monetary and credit aggre- spread increase, relative to historical experience, gates finished the year close to or within the occurred in loan-loss provisions. A sizable numranges set by the FOMC. (Indeed, for the data ber of banks—mostly small—experienced creditbefore the recent benchmark, seasonal, and defi- quality problems so severe that they were closed nition revisions, all of the money stock measures or merged into other institutions. Nonetheless, were well within their ranges at the end of 1983.) earnings of commercial banks in general appear Achievement of these objectives and the broader to have been well maintained in 1983. goals of the Federal Reserve was brought about The condition of the thrift industry began to by relatively small changes in the reserve posi- improve last year as lower average interest rates tion of the banking system and was accompanied significantly reduced operating losses. As a reby generally stable conditions in financial mar- sult of the MMDA, these institutions have enkets. Interest rates fluctuated far less than in the joyed a substantial increase in core deposits, and previous few years. Moreover, although most their improved profit position has enabled them interest rates rose moderately during the year as to expand large time deposits at reasonable cost.' the economic recovery progressed, on average In contrast to commercial banks, thrift instituinterest rates were substantially lower in 1983 tions saw a heavy demand for loans last year. than in 1982. For example, rates on level-pay- For the first time, in 1983 a large proportion of ment home mortgages averaged nearly 3 percent- mortgages that they made carried adjustable-rate age points below their 1982 levels; business features, thus repairing some of the severe misborrowing costs likewise declined significantly. match in asset and liability durations. Neverthe- Other indicators attested to a greater degree of less, profit positions remain marginal and highly stability and confidence in financial markets and sensitive to changes in interest rates. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 83 APPENDIX A: FEDERAL RESERVE PRESS sition, affected its behavior, and increased uncer- RELEASE OF JANUARY 13, 1984, tainties about its relationship to the economy. REGARDING CONTEMPORANEOUS RESERVE Other, broader aggregates—M2 and M3—en- REQUIREMENTS compass Ml plus other highly liquid assets and forms of saving, such as money market fund accounts and time and savings deposits held at Beginning Thursday, February 2, the new con- banks and thrift institutions. Some of these other temporaneous reserve requirement (CRR) sys- assets also, in one degree or another, serve tem will become effective. In that connection, transaction purposes, though they are not by law questions have been raised about the implica- subject to transaction reserve requirements. In tions of this change for the Federal Reserve's general, the bulk of the assets in the broad open market operating procedures. This issue aggregates are not subject to reserve requirehas been considered by the Federal Open Market ments, although nonpersonal time deposits bear Committee. Taking account of technical transi- a relatively small lagged requirement. tional uncertainties as well as policy judgments about the role of Ml and other monetary aggregates under current circumstances, the Commit- Open Market Operations and CRR tee agreed to make no substantial change in current operating procedures at this time. Adaptations in open market operating procedures to CRR must take account of certain technical and transitional issues as well as the Background policy issue about the weight to be given Ml and other monetary aggregates in operations. The The new CRR system differs from the present more technical and transitional issues involve lagged reserve requirement structure in two prin- how the depository system as a whole adjusts to cipal ways. First, required reserves against the new reserve requirement system—which transaction deposits will have to be held on an may influence demands for excess reserves, attiessentially contemporaneous basis, instead of tudes toward the discount window, and the being lagged by two weeks. Second, the reserve speed of asset and liability adjustments generalholding period has been lengthened from one ly. It can be expected that some time will elapse week to two weeks (with the relevant period for before banks and other depository institutions deposits also lengthened to roughly the same two have fully adjusted their reserve management, as weeks—the two-week deposit period running well as portfolio and liability management, to the from Tuesday to the second Monday, and the new system. Money managers have to become reserve period running from Thursday to the accustomed to operating without certain knowlsecond Wednesday). edge of their required reserves for a full reserve This structural change in the reserve account- averaging period during most of that period. In ing system has tightened the linkage between addition, usual startup problems with new data reserves and the current behavior of transaction systems will probably add to uncertainties at deposits—demand deposits and interest-bearing least for a while. Such data problems would also accounts with full checking privileges (NOW and affect the timing and reliability of figures availsimilar accounts). These deposits, along with able to the Federal Reserve. currency held by the public, comprise Ml, the These technical issues aside, the new reserve measure of money most nearly related to the requirement structure would potentially permit transaction needs of the economy. But because somewhat closer short-term control of Ml in of NOW and similar accounts, which have grown particular. With CRR, if open market operations substantially in volume over the past few years, were geared primarily to Ml, an "automatic" Ml is also affected by saving propensities and tightening or easing of reserve positions that patterns. The Committee has been placing less worked to bring Ml under control would tend to weight than formerly on Ml because of the occur somewhat more promptly than with lagged institutional changes that have altered its compo- reserve accounting. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • February 1984 Whether operating procedures should be short-run movements in Ml alone may not be adapted for this purpose does not depend on the appropriate. technical characteristics of the reserve require- In light of these various considerations, the ment system in place but rather on broader Committee agreed that no substantial change policy judgments about the relative weight to be would be made in open market operating procegiven to Ml as a target and the desirability of dures at this time. These operating procedures seeking close short-run control of that aggregate. will be reviewed after a transitional period in the To the extent less weight continues to be placed context of the role played by the monetary on Ml, and relatively more on broader aggre- aggregates, particularly Ml, in policy implemengates less closely related to reserves, "automat- tation and the potential implicit in CRR for ic" changes in reserve pressures in response to achieving closer short-run control of Ml. APPENDIX B: MONEY STOCK REVISIONS changes to System reporting procedures made in 1983, largely related to reduced reporting under Measures of the money stock have been revised the Garn-St Germain Act of 1982. In addition, to reflect annual seasonal factor and benchmark the currency component was revised to reflect revisions, as well as a definitional change affect- revisions to figures on the amount of coin in ing M3. This appendix discusses these revisions circulation. The net impact of these revisions and presents tables comparing growth rates of was to raise the levels and boost the growth rates the old and new series. of each of the aggregates in 198!* Definitional Change Seasonal Revisions The definition of M3 has been changed to include Seasonal factors have been updated using the term Eurodollars held by U.S. residents in Cana- X-ll ARIMA procedure adopted in 1982. Nonda and the United Kingdom and at foreign transaction M2 has been seasonally adjusted as a branches of U.S. banks elsewhere. A recent whole—instead of being built up from seasonally reporting change provides data on term Eurodol- adjusted savings and small time deposits—in lars at a panel of branches of large U.S. banks on order to reduce distortions caused by portfolio a schedule similar to other M3 elements. The shifts arising from financial change in recent inclusion of term Eurodollars raised the level of years, especially shifts to money market deposit M3 about $90 billion but had a minimal effect on accounts in 1983. A similar procedure has been M3 growth in 1983. used to seasonally adjust the non-M2 portion of M3. Benchmark Revisions Deposits have been benchmarked to recent call reports; further revisions to deposits stem from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 85 B.l. Comparison of revised and old growth rates for Ml Percentage changes at annual rates Differences RReevviisseedd OOlldd DDiiffffeerreennccee PPeerriioodd MMll MMll ((11 -- 22)) Benchmark Seasonals (1) (2) (3) (4) (5) Monthly 1982—October 17.3 14.2 3.1 .5 2.6 November 15.8 13.6 2.2 .8 1.4 December 10.3 10.6 -.3 -.4 .1 1983—January 11.5 9.8 1.7 -2.4 4.1 February 14.8 22.4 -7.6 .2 -7.8 March 13.0 15.9 -2.9 0 -2.9 April 3.6 -2.7 6.3 1.7 4.6 May 21.0 26.3 -5.3 .5 -5.8 June 10.2 10.2 0 1.4 -1.4 July 9.4 8.9 .5 .9 -.4 August 5.8 2.8 3.0 0 3.0 September 3.5 .9 2.6 .6 2.0 October 6.2 1.9 4.3 1.6 2.7 November 3.2 .9 2.3 0 2.3 December 5.3 6.5 -1.2 -1.0 -.2 Quarterly 1982:4 15.4 13.1 2.3 .2 2.1 1983:1 12.8 14.1 -1.3 -.7 -.6 2 11.6 12.2 -.6 .8 -1.4 3 9.5 8.9 .6 .8 -.2 4 4.8 2.1 2.7 .6 2.1 Annual 1983 1982:4 to 1983:4 10.0 9.6 .4 .4 0 Semiannual 1982:4 to 1983:2 12.4 13.3 -.9 0 -.9 1983:2 to 1983:4 7.2 5.5 1.7 .7 1.0 B.2. Comparison of revised and old growth rates for M2 Percentage changes at annual rates Differences RReevviisseedd OOlldd DDiiffffeerreennccee PPeerriioodd MM22 MM22 ((11 -- 22)) Benchmark Seasonals (1) (2) (3) (4) (5) Monthly 1982—October 9.3 7.9 1.4 -.1 1.5 November 10.5 9.5 1.0 .4 .6 December 12.1 8.9 3.2 .5 2.7 1983—January 31.9 30.9 1.0 -.6 1.6 February 21.7 24.4 -2.7 -.9 -1.8 March 7.8 11.2 -3.4 .0 -3.4 April 8.4 2.8 5.6 1.9 3.7 May 11.8 12.4 -.6 .1 -.7 June 8.4 10.4 -2.0 -.1 -1.9 July 5.4 6.8 -1.4 .0 -1.4 August 4.9 6.0 -1.1 .0 -1.1 September 7.1 4.8 2.3 .6 1.7 October 10.8 9.1 1.7 .9 .8 November 8.2 7.2 1.0 .0 1.0 December 8.2 5.5 2.7 .3 2.4 Quarterly 1982:4 10.6 9.3 1.3 .3 1.0 1983:1 20.5 20.3 .2 -.2 .4 2 10.6 10.1 .5 .5 .0 3 6.9 7.8 -.9 .1 -1.0 4 8.5 7.0 1.5 .4 1.1 Annual 1982:4 to 1983:4 12.1 11.7 .4 .3 .1 February-March 1983 to 1983:4 8.3 7.8 .5 .6 -.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • February 1984 B.3. Comparison of revised and old growth rates for M31 Percentage changes at annual rates Differences RReevviisseedd OOlldd DDiiffffeerreennccee PPeerriioodd MM33 MM33 ((11 -- 22)) Benchmark Seasonals (1) (2) (3) (4) (5) Monthly 1982—October 11.7 9.3 2.4 0 2.4 November 7.7 9.3 -1.6 -.8 -.8 December 5.7 3.7 2.0 -.3 2.3 1983—January 14.4 13.0 1.4 -1.2 2.6 February 13.1 13.7 -.6 1.4 -2.0 March 7.2 8.1 -.9 1.2 -2.1 April 8.7 3.3 5.4 2.8 2.6 May 9.6 10.9 -1.3 .5 -1.8 June 10.3 11.0 -.7 .2 -.9 July 5.1 5.5 -.4 -.2 -.2 August 6.1 8.8 -2.7 -.3 -2.4 September 8.8 7.6 1.2 -.5 1.7 October 9.4 8.6 .8 -1.0 1.8 November 14.1 11.9 2.2 2.7 -.5 December 8.8 6.6 2.2 .3 1.9 Quarterly 1982:4 10.0 9.5 ..55 --..33 .8 1983:1 10.8 10.2 .6 -.1 .7 2 9.3 8.1 1.2 1.5 -.3 3 7.4 8.4 -1.0 -.1 -.9 4 10.0 9.0 1.0 .1 .9 Annual 1982:4 to 1983:4 9.7 9.2 .5 .5 0 1. Revised M3 includes term Eurodollars; the inclusion of term Eurodollars boosted M3 growth in 1983 by no more than 0.1 percentage points. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

87 Staff Studies The staffs of the Board of Governors of the indicate concurrence by the Board of Governors, Federal Reserve System and of the Federal by the Federal Reserve Banks, or by the mem- Reserve Banks undertake studies that cover a bers of their staffs. wide range of economic and financial subjects. Single copies of the full text of each of the From time to time the results of studies that are studies or papers summarized in the BULLETIN of general interest to the professions and to are available without charge. The list of Federal others are summarized in the FEDERAL RESERVE Reserve Board publications at the back of each BULLETIN. BULLETIN includes a separate section entitled The analyses and conclusions set forth are "Staff Studies" that lists the studies that are those of the authors and do not necessarily currently available. STUDY SUMMARY THE IMPLICATIONS FOR BANK MERGER POLICY OF FINANCIAL DEREGULATION, INTERSTATE BANKING, AND FINANCIAL SUPERMARKETS Stephen A. Rhoades—Staff, Board of Governors Prepared as a staff study in spring 1983. The increasing similarity of bank and nonbank banks. The now fashionable view that the finanthrift institutions due to deregulation, along with cial supermarket approach is the only way to the emergence of financial supermarkets and the survive is open to serious question, for many prospect of interstate banking, has led some reasons. Indeed, research evidence, experience observers to argue that a massive merger move- in retailing and banking, and the conglomerate ment in banking is required to avert widespread mergers in the industrial sector in the 1960s are bank failures. They believe that only large insti- all grounds for skepticism about the notion of the tutions that adopt the financial supermarket ap- financial supermarket as an "operational imperaproach can survive. This paper has explored a tive." good deal of relevant evidence and found no The conclusion that must be drawn from the support for this view. evidence is that small banks, whether specialized Evidence shows that small banks generally or diversified, seem likely to remain viable instioperate about as efficiently as large banks, that tutions. This conclusion suggests that a massive they can take advantage of new technology, and merger movement in banking cannot be justified that they perform profitably, with reasonable on grounds of averting the failure of many small risk, when they compete in markets with larger institutions. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Industrial Production Released for publication February 15 ings. At 158.1 percent of the 1967 average, industrial output in January 1984 was almost 3 Industrial production increased an estimated 1.1 percent above its last peak reached in July 1981. percent in January following revised increases of In market groupings, production of durable 0.6 and 0.3 percent in December and November consumer goods rose 2.4 percent in January, respectively. The increases for December and reflecting increases in the output of home goods, November had previously been estimated at 0.5 autos, and consumer-use trucks. Autos were and 0.7 percent. Output gains in January were assembled at an annual rate of 8.1 million units, sizable and widespread in most market group- and an 8.3 million rate is currently scheduled for 1967 = 100 170 1978 1980 1982 1984 1978 1980 1982 1984 All series are seasonally adjusted and are plotted on a ratio scale. Auto sales and stocks include imports. Latest figures: January. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

89 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Grouping 1983 1984 1983 1984 JJJaaannn... 111999888333 tttooo JJJaaannn... Dec. Jan. Sept. Oct. Nov. Dec. Jan. 111999888444 Major industry groupings Total industrial production 156.4 158.1 1.3 .8 .3 .6 1.1 15.1 Products, total 157.1 158.8 1.1 .5 .3 .7 1.1 12.7 Final products 154.9 156.6 .9 .4 .5 1.0 1.1 11.8 Consumer goods 158.0 159.6 .6 -.3 -.3 1.0 1.0 11.1 Durable 158.3 162.1 2.1 -.5 -.5 1.5 2.4 23.2 Nondurable 157.8 158.5 .1 -.1 -.3 .7 .4 6.9 Business equipment 165.4 167.3 1.3 1.6 1.7 .8 1.1 14.1 Defense and space 126.0 127.9 1.3 .9 .9 1.6 1.5 9.9 Intermediate products 165.1 167.0 2.0 .7 -.5 -.4 1.2 16.2 Construction supplies 150.5 152.7 1.6 .6 -.3 -.9 1.5 20.2 Materials 155.5 157.0 1.7 1.2 .5 .5 1.0 18.9 Major industry groupings Manufacturing 157.0 159.0 1.5 .7 .2 .3 1.3 16.3 Durable 144.3 146.9 2.0 .8 .5 .6 1.8 19.9 Nondurable 175.5 176.6 1.0 .6 -.2 .1 .6 12.2 Mining 124.5 126.2 .9 1.0 2.2 3.0 1.4 3.5 Utilities 183.2 178.9 .0 -1.6 -.1 3.9 -2.3 9.7 NOTE. Indexes are seasonally adjusted. February. Output of nondurable consumer goods rials, which overall had increased only slightly in increased only 0.4 percent, as the gains observed December. Output of nondurable materials was in most components were partially offset by up 0.4 percent in January; production of energy reduced residential use of electricity, compared materials was about unchanged, as sharp gains in with the exceptionally heavy use in December. coal production were largely offset by decreased Production of business equipment increased 1.1 generation of electricity. percent; gains occurred in most groups and were In industry groupings, manufacturing output especially large in transit equipment. Output of increased 1.3 percent in January, with durables construction supplies advanced 1.5 percent fol- up 1.8 percent and nondurables up 0.6 percent. lowing declines in the final two months of 1983. Mining output, which early in this recovery had Output of materials increased 1.0 percent in lagged somewhat, rose sharply again in January. January. Sharp gains in metals and parts for Utility output was reduced 2.3 percent. consumer goods boosted output of durable mate- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Statements to Congress Statement by Paul A. Volcker, Chairman, Board issues that were before the country then and of Governors of the Federal Reserve System, now. before the Committee on Banking, Housing, and But, as you well know, under the pressure of Urban Affairs, U.S. Senate, Salt Lake City, technological and market change, there is also a Utah, January 16, 1984. pressing need to adapt the legislative framework to today's conditions lest crucial continuing objectives of public policy be eroded or overturned. For a chairman of the Federal Reserve Board, In earlier testimony before you, I have reviewed there is a special pleasure in the opportunity to the dangers of permitting the situation to evolve come to Salt Lake City to participate with the in haphazard and potentially dangerous ways, Senate Banking Committee in a discussion of the influenced not just by natural responses to marbasic rules to guide the development of our ket forces, but often by capricious effects of banking system. The senior senator from this existing and now outmoded provisions of law. state has been leading the effort to achieve The result would be not just unfair competitive constructive and timely responses to the need to distortions but also an unintended unraveling of change our banking laws to meet today's condi- basic tenets of public policy that the legislative tions. In that respect, Mr. Chairman, you follow structure has been designed to promote. in the tradition of another native son, Marriner To summarize our basic approach toward Eccles. As chairman of the Federal Reserve these matters, our point of departure is the basic Board for more than 13 years during the 1930s proposition that banks, and depository instituand 1940s, he spearheaded the effort to rewrite tions generally, continue to perform a unique and banking laws to meet the needs of his time—and critical role in the financial system and the econfor many years thereafter. Your sponsorship, omy—as operators of the payments system, as Senator Garn, of legislation to rededicate our custodians of the bulk of liquid savings, as key office in Washington in his name is an appropri- and impartial suppliers of short-term credit, and ate and welcome recognition of a man to whom as the link between monetary policy and the we owe a great deal. economy. This unique role implies continuing Drawing on his experience as a businessman governmental concerns about the stability and and innovative banker in Utah, Marriner Eccles impartiality of these institutions—concerns that greatly strengthened the Federal Reserve and did are reflected in the federal "safety net" long much to repair the financial system after the provided by the discount window and by deposit ravages of the banking crisis of the early 1930s insurance, by regulatory protection against unand the depression. He instinctively recognized due risk, and by policies to discourage conflicts the crucial importance of a sound banking sys- of interest and undue concentration of banking tem to the proper functioning of our economy, resources. We also believe that these concerns and the necessary role of the federal government must, to a degree, encompass business organizain setting out an appropriate legislative frame- tions of which banks are a part—bank holding work, supported by effective supervision and companies—for the basic reason that a bank or regulation. He was, of course, particularly con- depository institution cannot be wholly separatscious of the responsibilities of the Federal Re- ed from the fortunes of its affiliates and from the serve, as the nation's central bank, in protecting success or failure of their business objectives. the stability of the banking system. He built well, Those fundamental concerns are broadly reand in reviewing the problems we face today, I flected in the proposed legislation before the am struck by many parallels between the basic committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

91 There are now two major proposals, S. 2181, financial system, to promote competitive equity, the Financial Services Competitive Equity Act, and to establish clearly the competitive rules for which was introduced by the chairman, and the various segments of the financial services S. 2134, the Depository Institutions Holding industry. One significant area of possible dis- Company Act Amendments of 1983, introduced agreement—the appropriate role for so-called by the ranking minority member, Senator Prox- consumer banks—I will comment upon at a later mire. Both of these bills have as a common base point. S. 1069, the administration's proposed Financial Similarly, with respect to the definition of Institutions Deregulation Act (FIDA), which has thrifts, there has been increasingly clear recognibeen endorsed by the Board. These bills differ in tion of the anomalies that arise as thrifts achieve the scope of new powers authorized bank hold- and implement powers much more comparable ing companies and in some other important ar- to commercial banks, but still operate under eas, and I also recognize that inclusion of certain more liberal provisions of law—such as the abprovisions of S. 2181 for discussion purposes sence of restrictions on ownership, the ability to does not necessarily imply endorsement. But I obtain long-term governmental lending, favoralso believe it important to emphasize that these able tax treatment, and the freedom to branch bills have key provisions that are identical or intrastate and interstate—denied commercial similar, suggesting and reflecting an emerging banks. The growing similarity of powers, combroad consensus on the core of constructive bined with differences in regulatory approaches, legislation. Thus, I believe the raw materials for results in competitive inequalities and thus in coherent action are now before you, providing a tensions that undermine legislative intentions. strong base for legislative action in a matter of All of that is reflected in the strong interest of a months. variety of financial or nonfinancial businesses in the acquisition of thrifts in order to benefit from bank-like powers and to participate in the pay- POINTS OF GROWING CONSENSUS ments mechanism, but without the restrictions Analysis and discussion of these proposals sug- applicable to banks or bank holding companies. gest that the framework for legislative action can Looked at from another direction, there is be built on three essential elements: (1) clarify- recognition of the fact that the public policy ing, through new statutory definitions, what is a rationale for the favorable regulatory, tax, and bank, what is a thrift, and the proper scope of credit treatment of thrift institutions is fundapowers for state-chartered banks; (2) streamlin- mentally rooted in their activity as home lenders. ing the procedures of the Bank Holding Compa- Consequently, the essential idea that a thrift ny Act; and (3) expanding the powers of bank should be defined by a test set forth in terms of holding companies. residential lending activity seems to be increas- Other issues, including new rules for interstate ingly accepted, as well as the corollary that such banking and payment of interest on demand institutions should not operate in tandem with deposits and reserves at the Federal Reserve nondepository owners. Again, there are differ- Banks, also need early resolution. As a practical ences on the specifics of the test that need to be matter, these areas may not have achieved the resolved and that I will discuss later. same degree of consensus. We would like to see Recent developments strongly point to the progress in those directions, and we welcome the need for another provision defining the role of efforts of your chairman to advance the discus- depository institutions—provisions that offer a sion. However, we do not believe inability to framework for the discretion of states in authoachieve full agreement in all those areas should rizing new powers for state-chartered banking necessarily delay legislation dealing with the institutions. To the extent that the Congress, in core elements of the bills before you. the national interest, finds it necessary to cir- I do believe that there is a broad agreement cumscribe the activities of depository instituthat new definitions of the terms "banks" and tions and their holding companies, such limita- "thrifts" are urgently necessary to assure an tions could be rendered null and void over time orderly framework for the development of the by unrestrained state action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • February 1984 There are various approaches toward dealing companies, including revenue bond underwritwith this anomaly in the dual banking system, ing, and mutual investment fund powers. All of reconciling a desirable element of flexibility for this has long been supported by the Federal the states to experiment with new kinds of bank- Reserve Board. In addition, both S. 2181 and ing powers while avoiding developments that S. 2134 would further provide for underwriting of undermine the overall policy intent of the Con- mortgage-backed securities. Finally, the latter gress with respect to bank and bank holding bill would promote competitive equity in this company powers. What remains is to decide area by applying the Glass-Steagall Act to nonamong these approaches. Meanwhile, we at the members as well as Federal Reserve member Board, in view of existing law and expressions of banks. congressional intent, have indicated that we Proposals to extend powers of bank holding could not approve the acquisition of state-char- companies to insurance underwriting and brokertered banks by bank holding companies with the age and to real estate brokerage appear, to apparent intent of undertaking, under relevant varying degrees, more controversial. S. 2181 state law, widespread insurance activities be- provides one possible approach toward dealing yond the state in which the bank is chartered. with the concerns about banks acquiring This is one illustration of the urgent need for "healthy" thrifts by limiting such acquisitions congressional direction in setting appropriate across state lines. Various limitations have been guidelines. suggested for the exercise of real estate develop- The streamlining of the procedures for dealing ment powers. While I will touch upon most of with bank holding company applications and these areas more specifically, we hope and anticeliminating the burden on applicants to demon- ipate that further agreement could be reached in strate net public benefits is broadly supported by the weeks ahead on the basis for proceeding. affected institutions and also appears ready I look forward to further opportunities to work for action. In recent amendments to our regula- with the committee as it reconciles various tion governing bank holding company activities, points of view. But I also want to emphasize as the Board has gone as far as it felt it could, strongly as I can that the basic core elements for consistent with present law, to speed up proce- constructive legislation do seem to be falling into dures and lessen regulatory burdens. The ap- place, and the opportunity for action is here. proach encompassed in the bills before you would permit further progress in these directions MAJOR ISSUES THAT NEED RESOLUTION by eliminating the "benefits and burdens" test of present law, limiting bank holding company ex- Title I of S. 2181 draws on the base of the aminations and reports, providing for expedited administration FID A proposals, but with certain notice procedures for approval of new activities, significant changes and additions, including and setting out new and simplified criteria for some consistent with my earlier testimony. determining the permissibility of new activities S. 2134 is also built on the administration proposgenerally. als, but is more limited. The remaining titles of The third area with which any bill must deal is S. 2181 deal with a variety of other banking defining the degree of expanded bank holding issues. These include authorization for regional company powers. Again, I believe a nascent interstate banking compacts; interest on demand consensus has developed for a broader test than deposits and on reserves; preemption of state incorporated in present law. S. 2134 and S. 2181 interest rate ceilings on business, agricultural, approach the matter in a somewhat different and consumer credit; and federal rules on deposit way; both would have the practical result of availability. Finally, the bill also adds provisions permitting and directing the Federal Reserve to on consumer leasing, credit card fraud, expandpermit holding companies to engage in a some- ed powers for credit unions, and an authorization what broader range of services, and the differ- for bankers' banks to invest in export trading ences between the bills should be reconcilable. companies. Both bills follow the administration proposal on So far as holding company powers are conexpansion of securities powers of bank holding cerned, S. 2181 would make five important Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 93 changes from the administration bill: limitations has large speculative elements; it is marked by on tying of banking and insurance products; the cyclical instability, and the risks and large comscope of real estate development; provisions to mitments potentially involved could bias lending avoid excessive concentration of resources; the decisions. As I understand it, however, the main definition of the term "bank;" and the proposed concern of many banks interested in real estate definition of a thrift institution. development is taking more passive equity posi- I believe there is agreement that tying of the tions in projects managed by others, usually in provision of bank credit or other banking ser- connection with lending commitments, or to help vices to the sale of products or services by other facilitate the sale and exchange of property. affiliates of a holding company could impair The administration proposals provided some impartiality in credit decisions and competitive basic and desirable limitations on risk by confinequity. The existing Bank Holding Company ing investment in real estate development subsid- Act, Federal Reserve regulations, and antitrust iaries to 5 percent of holding company capital, laws already contain safeguards and prohibitions and S. 2181 would rule out construction activity against conflicts of interest in this area. S. 2181 as well. We support those provisions, but also would add a number of additional limitations and believe it might be desirable to adopt certain procedural requirements specifically directed to- other limitations on the scope of real estate ward the linkage of insurance and banking prod- development activities. After further consultaucts to reinforce the prohibition on tying. Similar tions with interested groups, we will be prepared questions could arise in the real estate brokerage to suggest more precise legislative language. In area. any event, we believe the Board should have We recognize the concerns that motivate the clear authority to maintain minimum capital and new provisions. At the same time, cumbersome maximum leveraging provisions for real estate detailed requirements could impose burdens not subsidiaries in the interest of the stability of the encountered by other businesses, including re- institutions and the banking system. tail, securities, and insurance firms, that might Another provision of S. 2181 is responsive to provide insurance services in combination with the concerns expressed by some, including the other services and products, including credit, Federal Reserve Board, about the possible posuch as personal loans. We note, for instance, tential for an excessive concentration of rethat the proposed provision would not be applied sources from a combination of banks and insurto thrift holding companies. ance or other nonbanking companies within a These potential competitive differences would holding company. Specifically, the bill provides be ameliorated by extending any tougher anti- that a holding company accounting for more than tying provisions to thrift holding companies and 0.3 percent of domestic deposits could not invest by curtailing the ability of other businesses to more than 25 percent of its capital in any one acquire nonbanks or consumer banks to which class of permissible nonbanking activities. I apthese provisions would not apply. Within that preciate the ingenuity of the proposed approach. framework, I believe fair and reasonable proce- But I am concerned about the arbitrary elements dural safeguards could be maintained. inherent in a double-barreled statistical test, and The provisions of S. 2181 limit the scope of whether it would in fact effectively accomplish real estate development activities, while S. 2134 the stated purpose. would not authorize such activities. We believe Preliminary analysis suggests, for instance, the there is a reasonable middle course. largest bank holding companies could acquire The term "real estate development" is itself controlling interests in the largest insurance coman ambiguous and poorly defined activity, rang- panies. We are studying this matter further to see ing in some concepts to the inclusion of housing if in fact a simpler and more direct test may and commercial construction; speculative pur- adequately achieve your purpose. The complicachase of land; and owning, managing, and main- tion does not, of course, arise in the context of taining office buildings and other commercial S. 2134, which would provide for no expansion properties. Taken as a whole, real estate devel- of insurance powers. opment is an activity that experience has taught One of the ways in which S. 2181 differs from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • February 1984 the administration proposal is in carving out a It has been suggested that these nonbank major exception to the general definition of a banks do not raise these public policy issues bank. The proposal raises technical and drafting because they could not engage in the range of problems, but I would like to focus today on the commercial lending that characterizes the activipolicy issues. S. 2181 would, in effect, legitimize ties of a typical commercial bank. I question the idea of a so-called consumer bank operating whether this is a valid conclusion. Virtually the outside the framework of the Bank Holding same issue was faced by the Congress in 1970 Company Act. In effect, a class of banks concen- when it considered an exemption from bank trating primarily on consumer business would be holding company restrictions for small banks. It established free from the general banking rules concluded then that ties between firms engaged against conflicts of interest, concentration of in commercial and industrial activities and resources, and assumption of undue risk. More- banks, even if those banks were to be engaged over, while the proposal formally attempts to predominantly in consumer lending, raised serilimit interstate acquisition of consumer banks, ous problems because of potential conflicts and the provisions for exempting industrial banks could encourage increasing cartelization of our from the Bank Holding Company Act would economy through the exercise of preferential open an avenue for substantial undermining of lending. the restrictions on interstate banking. Even more immediately, the proposed ar- Thus, under the proposal, a bank holding rangement appears competitively unfair to estabcompany would be able to add interstate deposit- lished banks, undercutting the public policy obtaking and other consumer services to the range jectives sought by the Bank Holding Company of interstate business lending and other activities Act, by giving essential benefits of being a bank already permitted under the rubric of Edge Act to those that are not subject to the rules. Any affiliates, loan production offices, and finance system based on this inequality of treatment will companies. While we favor review and liberal- inevitably come under strain. ization of restrictions on interstate banking, we I would strongly suggest adoption of the definibelieve that question should be approached di- tion of bank contained in S. 1609 and S. 2134. rectly on its own merits, and outside the context The definition contained in these bills seems to of the definition of the term "bank" that has have a wide measure of support as evidenced by such important implications for the policy objec- its inclusion not only in these two bills, but also tives of the Bank Holding Company Act. in legislation proposed by Chairman St Germain, For nonbanking companies—insurance com- the Federal Deposit Insurance Corporation, and panies, investment houses, retailers, and indus- the Federal Reserve as well. trial firms—the practical effect would be to pro- Earlier in my testimony, I mentioned the imvide direct access to the payments system and to portance of an adequate definition of a thrift facilities for offering insured deposits to the institution eligible for the special benefits providgeneral public in conjunction with a range of ed by law for these institutions. S. 2181 suggests credit services. Moreover, those nonbanking a dual test for thrift eligibility for treatment as a companies would appear to be able to engage in unitary savings and loan holding company—60 the equivalent of interstate banking, at least percent of assets in residential mortgages and through industrial banks and probably through mortgage-backed securities or no more than 25 the ability of their nationwide office networks to percent of assets in certain qualifying commeract on behalf of consumer banks owned by these cial loans. The second alternative and indepencompanies. dent test leaves open the possibility that institu- The overall result would be to provide com- tions not engaged very substantially in home mercial and investment firms major benefits of mortgage lending would retain liberal treatment being a bank, while not subjecting them to rules with respect to activities and banking. For examapplicable to banking institutions—that is, limita- ple, 75 percent of commercial banks could be tions on the range of activities and ownership, treated as thrifts because they have less than 25 and protections against conflicts of interest, con- percent of their assets in qualifying commercial centration of resources, and excessive risk. loans. (Only six commercial banks would qualify Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 95 under the first test alone.) If, however, the bill Title X would authorize regional interstate were modified to provide a true dual test—that banking compacts for a five-year period. I previis, both a minimum residential mortgage and a ously expressed my concern about the balkanizamaximum business credit test—I believe the real tion of the banking system implicit in regional intent of this provision would be met. The point compacts along what must inevitably be arbiis that only firms truly committed to residential trary lines. At the same time, some evolutionary mortgages should be provided the existing bene- easing of present state restrictions appears apfits of unitary holding company treatment. A propriate. While I believe there are more efficasingle test of residential mortgage lending, as cious approaches than regional arrangements, provided in S. 2134, should be adequate, provid- we would not oppose congressional authorizaing that the percentage is sufficient and current tion of regional compacts if viewed as a tempofederal limitations on commercial lending powers rary and transitional matter. That, as I underof thrifts are taken into account. stand it, would be the purpose of the provisions Plainly, a problem would be posed by this of S. 2181. approach for many savings banks that tradition- We will be happy to submit detailed comments ally have had many securities in their portfolios on the provisions about bankers' banks, consumbut wish to maintain a basic thrift orientation. er leasing, delayed availability, usury ceilings, Moreover, institutions with mutual ownership and credit card fraud at an early date. that fail the test would have difficulty in taking advantage of the full range of holding company powers available to stock institutions. A large part of the answer could be found in CONCLUSION transitional arrangements extending over years; those arrangements could set out benchmarks for I am convinced that the efforts to improve the measuring progress toward the objective. In ad- legislative framework governing the financial dition, the possibility of nonspecialized mutual system, taking account of the vast changes in the institutions exercising holding-company-type regulatory and technological environment for the powers through subsidiaries could be explored. conduct of banking, are now ready to bear fruit. I also note that S. 2134 would limit tandem The discussion and debate on new powers, new operations of a qualifying savings and loan with definitions, and competitive equity have been its nonbanking owner; that is, the joint offering of reflected in a core area of near consensus, and products and discounting to common customers the remaining issues are ripe for decision. Workwould be discouraged. Those provisions seem to able proposals and the necessary information are me important to maintain the separation of bank- at hand. ing and commerce. The general prohibitions on We still have an opportunity to shape the bank holding companies underwriting corporate direction of the financial system in a manner that securities should be applicable to thrifts as well. recognizes and accommodates market forces but The further question also arises as to the extent also recognizes enduring concerns of public polito which thrifts not eligible for unitary treatment cy. should be afforded access to Federal Home Loan But we do not have unlimited time. Far from Bank Board credit. it. The present arrangements are in disarray, and events, willy-nilly, are forcing change that may or may not be consistent with considered judg- REMAINING POINTS ments about the public interest. We want competition, and the benefits to the I will not at this time burden you with detailed consumer inherent in competition. We also want comments on the remaining nine titles of S. 2181. a safe and sound banking system, stable in itself, So far as two of those are concerned, I indicated and contributing to a larger economic stability. our broad support for payment of interest on If we act—and act promptly—we can further reserves and interest on demand deposits in my both those aims. We want to cooperate with you testimony last September. actively in working toward that end. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1984 Statement by Paul A. Volcker, Chairman, Board historical norms than was characteristic of 1982 of Governors of the Federal Reserve System, and early 1983. Developments as 1983 probefore the Committee on Banking, Finance and gressed pointed in that direction. At year-end, all Urban Affairs, U.S. House of Representatives, the targeted aggregates appeared to be within the February 7, 1984. 1983 ranges; a tendency for velocity to rise—in contrast to historically large declines in 1982 and I am pleased to be meeting with this committee early 1983—was more in line with past cyclical once again to discuss the Federal Reserve's experience.2 Further experience will be necesmonetary policy objectives for the year ahead. sary to confirm the validity of that judgment, and You have before you the official monetary policy the committee recognizes that recent regulatory report that is required under the Humphrey- and institutional changes may be reflected in Hawkins Act. That report, which was released some changes in the underlying trends of veloci- Monday, describes rather fully the current eco- ty, particularly for Ml. nomic situation and sets out our decisions with For that reason, substantial weight will continrespect to monetary policy in detail. (See pages ue to be placed on the broader aggregates for the 69-86 of this BULLETIN.) My prepared remarks time being, and growth in Ml will be evaluated in this morning will focus mainly on some broader the light of the performance of the other aggreconsiderations that seem to me to bear crucially gates. All the aggregates will be interpreted on our approach to monetary policy, on the against the background of developments in the interaction of monetary policy with other poli- economy, current and prospective price prescies, and on our economic prospects. sures, and conditions in domestic credit and international markets. More detail about the new targets and 1983 MONETARY POLICY "TARGETS" FOR 1984 performance is provided in the Humphrey-Haw- AND ECONOMIC PROJECTIONS kins Report itself, and I will be glad to address any questions you have about them. At its meeting last week, the Federal Open In setting the new target ranges, the Commit- Market Committee (FOMC) essentially reaf- tee members generally felt that economic activity firmed the ranges for money and credit growth would continue rising through 1984 and into 1985 tentatively established in July of last year. Those at a more moderate—and potentially more susnew target ranges are set out in table 1, against tainable—pace of 4 to 43A percent. That growth is the background of last year's targets.1 expected to be accompanied by some further The target ranges for M3 and for nonfinancial decline in the unemployment rate to the area of debt were lowered by Vi percent from the 1983 IVi to 73/4 percent. Cyclical factors and special ranges to 6 to 9 and 8 to 11 percent respectively circumstances—including the effects of bad as tentatively set in July. The M2 range was weather—are expected to be reflected in a little reduced 1 percent from the 1983 range to 6 to 9 larger price increase on average, following the percent. That is Vi percent lower than anticipated remarkably good progress of 1982 and 1983. in July, reflecting in part technical considerations Taken together, those projections resemble bearing on the appropriate relationships among those set out by the administration and many the broader aggregates. The Ml range was set at others, and they suggest a generally satisfactory 4 to 8 percent, 1 percent lower than during the economic performance is probable in 1984. But second half of 1983, as had been anticipated. those summary forecasts should not divert our These targeted ranges envisage that the rela- attention from certain serious problems that have tionships between the monetary aggregates and emerged. As I assess the outlook, there are clear the nominal gross national product—that is, "ve- hazards and risks before us. Unless dealt with locity"—will return to patterns much closer to 2. Subsequent benchmark revisions increased growth of 1. The tables and charts to this statement are available on all the monetary aggregates fractionally, bringing M3 slightly request from Publications Services, Board of Governors of above the targeted range during the fourth quarter. The the Federal Reserve System, Washington, D.C. 20551. revised data are reflected in table 2 and in the charts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 97 forcefully and effectively, they will jeopardize plined policies—indeed, we have already gone a the good prospects for 1984 and beyond. long way toward shaping policies and attitudes— toward dealing with the threat. What we have not done in this past year is face THE OPPORTUNITY AND THE RISKS up to other hazards to our prosperity and to our stability—hazards that are new to our actual A year ago, in appearing before you on this experience but which have been long identified. I occasion, I emphasized that, after too many am referring, of course, to our twin deficits: the years of pain and instability, we had an enor- structural deficit in our federal budget and the mous opportunity to sustain growth for years deficit in our external accounts—both at unprecahead in an environment of much greater price edented levels and getting worse. stability. Today, after a year of strong recovery, Both of those deficits carry implications for that sense of the opportunities before us has only the prospects of reducing our still historically been reinforced. high levels of interest rates. The simple fact is that the economy moved So far, the strains have been masked by other ahead faster, and unemployment dropped more factors of strength and by the rapidity of growth sharply, than we or most others thought at all from the depths of recession. But with the pasprobable. At the same time, the inflation rate sage of time and full recovery, the predictable dropped further, to the point that producer prices effects have become more obvious. They pose a were almost unchanged over the year as a whole clear and present danger to the sustainability of and consumer prices rose by less than at any growth and the stability of markets, domestic time over the past decade. The fact that we were and international. We still have time to act—but able to combine strong growth with good price in my judgment, not much time. performance is what is so encouraging. It is the key to lasting success. With job opportunities, real incomes, and prof- SOURCES OF STRENGTH its all rising, so has the sense of optimism among both families and businesses. That widely shared I can summarize briefly why I think the developimpression is confirmed statistically in the re- ments of the past year are, in key respects, so sults of "attitudinal" indexes that attempt to promising—why, potentially, what has been gomeasure confidence, expectations, and buying ing on can be not "just another" cyclical recovplans—they are mostly at the highest, or near the ery, but the start of a long process of growth and highest, levels in many years. renewed stability. I realize that improvement must be measured Looking back, it is now apparent that the trend from where we started. There was a lot of room of productivity growth had practically stopped in to grow, and the early stages of recovery typical- the late 1970s. But productivity began to increase ly see rapid growth and less price pressures. Any again during the recession and rose rapidly dursatisfaction with what has been happening has to ing most of last year. One or two years do not be tempered by the knowledge that there is still a make a new trend, and relatively good productivconsiderable way to go to reach satisfactory ity growth is typical of the early stages of recovlevels of employment and before we can claim to ery. But the evidence—quantitative and qualitahave restored reasonable price stability. In par- tive—suggests something more than cyclical ticular, should inflationary trends and fears again forces are at work in important areas of the take hold, prospects for the lower interest rates economy. Under the pressure of adversity—and and orderly credit markets we need to support with the seemingly "easy pickings" of speculainvestment and productivity growth would be tive and inflationary gains diminishing—manageshattered. ment and labor alike have turned their efforts and I hardly need to remind you that inflation has their imagination toward ways to increase effitended to worsen during periods of cyclical ex- ciency and to curtail overhead. pansion. But that need not be inevitable. Out of That, together with growing markets, accounthard experience, I believe we can shape disci- ed for the speed of the rebound in total profits Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • February 1984 and improvement in profit margins last year from by stronger productivity growth. With real wages long-depressed levels, even as prices for many again rising on average, and with prices more goods and services tended to stabilize. The cash stable, the logic points toward much more modflow of businesses has been further reinforced by erate new wage contracts than became the norm the liberal treatment of depreciation and other in the inflationary 1970s. The competitive prestax changes enacted in recent years, and after- sures associated with the process of deregulation tax economic profits, only a year after recession, in some important industries also have been a are approaching the highest levels of the 1970s factor working to contain costs and prices, and relative to GNP. Strong expansion in some types happily we can begin to see some signs of more of investment during 1983—particularly electron- restrained cost increases in areas, such as mediic equipment where technological change has cal care and education, that have been slow to been so rapid—carries promise for future pro- reflect the disinflationary process. ductivity. To the extent we can build confidence in the We should not claim too much. Profits remain outlook for more stable prices, the process well below rates typical of the prosperous 1960s. could, potentially, feed on itself. Incentives for Recent employment increases, while highly wel- speculation in commodities, and for speculative come in themselves, have been so large relative excesses, would be greatly reduced and possibilito output growth that they raise some questions ties of another burst in oil prices diminished. It about whether rapid productivity growth is being could provide the best possible environment for maintained. Long-lived investment—new plant declines in interest rates over time—nominal and for expansion of capacity—still lags. High inter- real—and interest rates are themselves an eleest rates, the uncertainty bred by years of disap- ment of costs. Lower interest rates could, in pointment, and strong competition from abroad turn, be a powerful factor supporting and encourall have restrained heavy investment. Already, a aging housing and the business investment that few industries are close to, or even at, sustain- we need to maintain economic momentum and to able capacity. But, on balance, the evidence and support productivity growth. the omens are more favorable than for several years. That is certainly true of the longer-term out- THE PROBLEMS look for costs and prices. I am well aware that slack markets and excessive unemployment, the Nonetheless, as I suggested a few minutes ago, appreciating dollar together with the ready avail- the prospects for sustained growth and stability ability of goods from abroad, and the decline in must remain conditional. There is another, and world oil prices all helped account for the rapid- bleaker, reality. We are faced with two deficits— ity of the drop in the general inflation rate and the in our budget and in our international accounts— degree to which cost pressures have subsided. unprecedented in magnitude. Those twin deficits To that extent, progress toward stability has had have multiple causes, but they are not unrelated. a sizable "one time," or cyclical, component. Left untended, each, rather than improving, will But we also now have a clear opportunity to tend to cumulate on itself until finally they will build in that improvement—the best opportunity undercut all that has been achieved with so much in many years. effort and so much pain. As the increase in average wages and salaries, Looking back, the rising budget deficit providwhich accounts for some two-thirds of all costs, ed a large and growing stimulus to purchasing has declined in nominal terms, the real income of power as we emerged from recession. It helped the average worker has increased. That reverses account for the vigor of consumption in the face the pattern as inflation accelerated during much of historically high interest rates. The other side of the 1970s when escalating wages often lagged of the coin is that financing the deficit last year behind more rapidly rising prices. The more amounted to three quarters of our net new dofavorable pattern should be assisted by greater mestic savings. That was tolerable—we obviousstability in energy prices, where the outlook ly have tolerated it—for a limited period of time (barring political turmoil) appears favorable, and when other demands on those savings were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 99 limited. Business inventories actually declined would then be thrown back more fully on domeson balance last year, and housing and business tic sources of savings. If our federal financing investment were recovering from recession lows. needs remain so high, housing and investment Even then, deficits were a factor keeping inter- will be squeezed harder. est rates higher than otherwise, and the implica- I must also point out that, in the same way that tions become much more serious as the economy the interest costs of this year's deficit add to next grows closer to its potential. The hard fact is that year's requirements—and compound over many for many years we have succeeded in saving (net years thereafter—the interest and dividend payof depreciation) only some 7 to 9 percent of our ments related to the net capital inflow build up GNP. Despite the efforts to raise it, the domestic future charges against the current account of the saving rate remains within that range now and balance of payments. Skepticism about our abiliforeseeably. If the budgetary deficit absorbs ty to account accurately and fully for all the amounts equal to 5 percent or more of the GNP flows of funds into or out of the country is as the economy grows—and that is the present justified; it is nonetheless ominous that the reprospect for the "current services" or "base corded net investment position of the United line" budget—not much of our domestic savings States overseas, built up gradually over the enwill be left over for the investment we need. tire postwar period, will in the space of only Over the past year, our needs have been three years—1983, 1984, and 1985—be reversed. increasingly met by savings from abroad in the If the data at all reflect reality, the largest and form of a net capital inflow. That money has richest economy in the world is on the verge of come easily; amid world economic and political becoming a net debtor internationally, and would uncertainty, the United States has been a highly soon become the largest. attractive place to invest. But part of the attrac- Looking at the same development from anothtion for investment in dollars has been relatively er angle, it is the exporter, and those competing high interest rates. In effect, the growing capital directly with imports, that have not shared at all inflow has, directly or indirectly, helped to fi- proportionately in the recovery. Developments nance the internal budget, by the same token in the fourth quarter illustrate the point. There helping to moderate the pressures of the budget has been much comment about the slowing in the deficit on the domestic financial markets. At the rate of GNP growth to a rate of about 4!/2 same time, the flow of funds into our capital and percent. But, judging from the preliminary figmoney markets pushed the dollar higher in the ures, domestic demands were quite well mainexchange markets even in the face of a growing tained, increasing at a rate of almost 7 percent. trade and current account deficit—and the dollar Much of that increased demand flowed abroad, appreciation in turn undercut our worldwide adding to income and production elsewhere. It trading position further. was domestic production, not demand, that grew We simply can't have it both ways—on the one appreciably more slowly. hand, look abroad for increasing help in financ- For a time, as with the budget deficit, that kind ing the credits related to our budget deficit, our of discrepancy is tolerable. Indeed, from one housing, and our investment, and on the other point of view, it has provided a welcome impetus hand, expect to narrow the growing gap in our toward stimulating the growth process in other trade accounts. At the end of the day, the countries of the industrialized world, and the counterpart of a net capital inflow is a net deficit strength of our markets assisted the external on our current account—trade and services— adjustments necessary in the developing world. with other countries. We can also take pride in the fact that others find Most forecasts suggest that we, as a nation, the United States an attractive place to invest; will have to borrow abroad (net) about 2 percent good performance and policies can help sustain or more of our GNP this year to meet projected those flows. domestic needs. That pace does not appear sus- But we simply cannot afford to become addicttainable over a long period. Faced at some point ed to drawing on increasing amounts of foreign with a reduction in the net flow of capital from savings to help finance our internal economy. abroad, the burden of financing the budget deficit Part of our domestic industry—that part depen- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin • February 1984 dent on exports or competing with imports— ciency, less alarm (at least for the short run) over would be sacrificed. The stability of the dollar the outlook for prices, and relative confidence by and our domestic financial markets would be- others in the outlook for the United States. In come hostage to events abroad. If recovery is to this setting, we can assume that, within limits, proceed elsewhere, as we want, other countries more of any given growth in the money supply will increasingly need their own savings. While will finance real activity and less rising prices we do not know when, at some point the process than would have been the case when the inflawould break down. tionary momentum was high. But we also recognize that the battle against inflation has not yet been won—that skepticism THE IMPLICATIONS FOR MONETARY POLICY about our ability, as a nation, to maintain progress toward stability is still evident. That is one In the abstract, the ultimate objective of mone- of the reasons why longer-term interest rates tary policy is simple to state and widely agreed: have lingered so far above current inflation levto provide just enough money to finance sustain- els. After so many false starts in the past, the able growth—and not so much as to feed infla- skepticism is likely to remain until we can demtion. In the concrete, issues abound. onstrate that, in fact, the recent improvement is Some of them are more or less technical—how not simply a temporary matter—that the Federal we define and measure money and its relation- Reserve is not prepared to accommodate a new ship to the nominal GNP. These questions are inflationary surge as the economy grows. The dealt with in our formal report describing our doubts are reinforced by concerns that the presdecisions on the targets. I want here to concen- sures of the huge budget deficit on financial trate on some broader implications of the current markets may, willy-nilly, push us in that direcsituation for the conduct of monetary policy. tion, as has happened in so many countries. There is no instrument of monetary policy The desire to see interest rates lower, or to that, in any direct or immediate sense, can avoid increases, is natural. But attempts to acearmark money only for expansion and not for complish that desirable end by excessive moneinflation, or vice versa. The distribution of any tary growth would soon be counterproductive. given nominal growth of the GNP between real By feeding concerns about inflation, the implicagrowth and inflation is a product of many fac- tions for interest rates would in the end be tors—the flexibility and competitiveness of prod- perverse—and likely sooner rather than later. As uct and labor markets, the exchange rate, and things stand, credit markets are already faced internal or external shocks (such as the oil crises with potential demands far in excess of our of the 1970s). Expectations and attitudes devel- capacity to save domestically; to add renewed oped out of past experience are critically impor- fears of inflation to the outlook would only be to tant. reduce the willingness to commit funds for long In that respect we have not inherited a sense of periods of time and for productive investment. stability. Quite to the contrary, the legacy of the Inflationary policies would also discourage the 1970s was deeply ingrained patterns of behav- continuing flow of funds from abroad, upon ior—in pricing, in wage bargaining, in interest which, for the time being, we are dependent. In rates, and in financial practices generally—built the last analysis, willingness to provide those on the assumption of continuing, and accelerat- funds freely at current or lower interest rates is ing, inflation. Starving an inflation of the money dependent on confidence in our stability and in needed to sustain it is a difficult process in the our economic management. Depreciation of the best of circumstances; it was doubly so when the dollar externally as a result of inflationary policontinuing inflationary momentum was so cies will not, in the end, help our exporters, or strong. those competing with imports, because that de- Now, after a great deal of pain and dislocation, preciation would be accompanied by inflated attitudes have changed—there is a sense of great- domestic costs. er restraint in pricing and wage behavior, a In a real sense, the greatest contribution that greater recognition of the need to improve effi- the Federal Reserve itself can make to our lasting Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 101 prosperity is to foster the expectation—and the international financial markets, and other relereality—that we can sustain the hard-won gains vant considerations. All those factors will, in against inflation and build upon them. turn, be affected by other public and private In my judgment, against a background of more policies. In that context, it is the strength of stable prices, interest rates are indeed too high economic activity, the demand pressures on the for the long-term health of the United States or credit markets, and the willingness of others to the world economy. I have repeatedly expressed invest in the United States that will influence the the view that, as we maintain the progress course of interest rates. against inflation, interest rates should decline— In approaching our own operational decisions, and they should stay lower. the actual and prospective size of the budget Much is at stake. We will need more industrial deficit inevitably complicates the environment capacity, and relatively soon. Even after the within which we work. By feeding consumer sharp declines in interest rates from earlier purchasing power, by heightening skepticism peaks, many thrift institutions and businesses about our ability to control the money supply and remain in marginal profit positions and with contain inflation, by claiming a disproportionate weakened financial structures; lower rates would share of available funds, and by increasing our bring much faster progress in repairing the dam- dependence on foreign capital, monetary policy age. The cooperative efforts of borrowers, must carry more of the burden of maintaining banks, and the governments and central banks of stability, and its flexibility, to some degree, is the industrialized world have managed to contain constrained. the strains on the international financial system, but the pressures are still strongly evident. Both economic growth and lower interest rates are TOWARD A POSITIVE SOLUTION needed as part of more fundamental solutions. But wish and desire are not the same thing as Monetary policy is only one part of an economic reality—we have to deal with the situation as it program. It is an essential part, but success is is. In setting the targets for the various monetary dependent on a coherent whole. and credit aggregates for 1984 as a whole, the I have tried to demonstrate that we have come FOMC had to remain alert to the danger of a long way—that we have much upon which to renewed inflation as well as to the need for build sustained prosperity. growth. It also decided that, operationally, it Many of the portents are favorable. Public would for the time being be appropriate to main- policy has encouraged greater competition, retain essentially the same degree of restraint on moved harmful regulatory restraints, and providthe reserve positions of depository institutions ed greater incentives. There are hopeful signs that has prevailed since last autumn.3 That judg- that productivity is again growing and that a ment reflects the fact that growth in the various healthy concern has arisen about costs and effimeasures of money and credit now appears ciency. Energy prices have stabilized. We have broadly consistent with objectives, that the mo- had a strong recovery, and the progress toward mentum of economic expansion remains strong, price stability has been gratifying. and that inflationary tendencies have been con- Prospects for extending that success rest in tained. That operational judgment will, of part on continuing discipline by business and course, be reviewed constantly in the weeks and labor. We cannot afford to return to the synmonths ahead. drome of the 1970s, with prices and wages chas- Those decisions will reflect continuing ap- ing each other amid fears of inflation and erosion praisals of the rate of growth of money and of productivity and real incomes. The expericredit, interpreted in the light of all the evidence ments in the private sector with profit sharing, about economic activity, prices, domestic and with quality circles, and with other forms of labor-management cooperation—efforts born in adversity—can bear fruit in prosperity. 3. In the very short run, account will be taken of possible If such efforts are to do so—if a sense of increases in the level of excess reserves occasioned by the transition to contemporaneous reserve accounting. discipline is to be maintained—those of us re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • February 1984 sponsible for public policy must be able to dem- markets, but it complicates our trade position. onstrate that inflation will not again get the upper And if and as our trade account improves, the hand—that productivity and restraint will be brunt of financing excessive budget deficits rewarded, not penalized in favor of those seeking would fall back more fully on domestic savings, inflationary or speculative gain. squeezing domestic capital spending harder. The contribution that monetary and other poli- We can, of course, sit back and wait awhile cies make to that environment is critical. As the longer, hoping for the best. expansion proceeds, and as some of the tempo- I certainly have some understanding of the rary factors restraining prices recede, we as a difficulties of achieving a consensus on difficult nation simply cannot afford to permit inflation to budgetary choices when a sense of immediate attain a new momentum. Our monetary policies crisis is lacking—when for the moment things are, and in my judgment must continue to be, seem to be going so well. geared to avoid that danger. But I also know to wait too long would be to But for all that progress and promise, some- take risks with the American economy. thing is out of kilter. It is already late. The stakes are large. Markets Our common sense tells us that enormous and have a mind of their own; they have never waited potentially rising budget deficits, and the high on the convenience of kings or Congressmen—or and rising deficits in our trade accounts, are elections. wrong—they cannot be indefinitely prolonged. The time to take the initiative is now, when we That common sense is confirmed by simple can influence markets constructively—when we observation. Some of our proudest industries— can demonstrate that we are in control of our potentially capable of competing strongly in own financial destiny. Real progress toward reworld markets—are in trouble, tempted to shift ducing the budget deficit is needed to clear away more operations abroad for sheer survival or to the dangers. demand protectionist walls. Interest rates remain I sense a fresh opportunity in the proposals of historically high, threatening housing and invest- the President for a joint effort to attack the ment. deficit—for a sizable "down payment" on what And, in this instance, economic analysis bears is ultimately needed. out, and amplifies, the judgments of common Certainly, that kind of demonstration that we sense and simple observation. Our two deficits are beginning to face up to our budgetary probare related. The budget deficit, by outrunning lem would make it easier for monetary policy to our ability to save, damages prospects for hous- do its necessary work. And, in the larger scene, ing and for investment, and makes us dependent it would be tangible evidence to our own people on foreign capital. That capital from abroad, for that we can do what is necessary to seize the the present, alleviates the pressure on our money bright opportunities before us. • Chairman Volcker presented identical testimony before the Senate Committee on Banking, Housing, and Urban Affairs on February 8, 1984. Statement by Nancy H. Teeters, Member, Board charging higher prices to credit card purchasers of Governors of the Federal Reserve System, than to cash purchasers through the use of a before the Subcommittee on Consumer Affairs, "surcharge." Committee on Banking, Housing, and Urban As you know, the purpose of the Truth in Affairs, U.S. Senate, February 7, 1984. Lending law, which was passed in 1968, is to provide for a uniform disclosure of the cost of I am pleased to appear before you this morning credit to consumers through the identified "fito present the views of the Board of Governors nance charge" and "annual percentage rate." As on the issue of whether the Truth in Lending Act a result, the act originally required that any should continue to prohibit merchants from differential between the price charged in a cash Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 103 transaction and that charged in a credit transac- preempting them to the extent those laws treated tion be treated as a cost of credit and included in discounts as finance charges. the finance charge and annual percentage rate. However, because of some uncertainty as to This requirement, as well as state disclosure the effect of the surcharge prohibition, it was and usury laws, however, was viewed in subse- originally scheduled to expire on February 27, quent years as an obstacle to merchants wishing 1979. Subsequently, the expiration date was adto implement two-tier pricing systems for cash vanced, and the surcharge prohibition will now and credit card customers—that is, establishing expire on February 27, 1984. The chart in attachtwo prices for property or services, a lower price ment A summarizes the provisions of the current for customers paying cash and a higher price for law and indicates the provisions that would apply customers paying with a credit card. Consumer after the expiration date, absent some action by groups argued that the fee imposed on merchants the Congress.3 by credit card companies was being passed on in The principal reason for the temporary nature higher prices to all customers.1 As a result, it was of the surcharge prohibition was to allow the argued that cash customers were being forced to Congress to study the issue more thoroughly. It subsidize credit customers when they were re- wanted to determine whether there is, in fact, a quired to pay the same price for an item. Two- higher cost associated with the use of credit tier pricing systems were thus viewed as poten- cards; whether cash customers do, as a result, tially beneficial to consumers as a means of subsidize credit customers; and whether it is eliminating the subsidy. necessary to allow surcharges as well as dis- The Congress responded to this concern and counts in order to eliminate any subsidization. sought to eliminate this subsidy by removing the When the prohibition was last extended in 1981, Truth in Lending and state law obstacles to the Board was directed to prepare a report on the merchants offering lower prices to cash custom- effects of credit cards so that the Congress would ers. It amended the federal act in 1974 to provide have a basis for making a permanent decision that discounts for cash need not be considered regarding surcharges. The report was to discuss finance charges for purposes of Truth in Lend- the impact of credit cards on the costs that ing. There was, however, a great deal of uncer- merchants incur, on the pricing of goods and tainty following action by the Congress as to services, and on retail sales volume. whether it intended to permit additions to prices The Board submitted its report in July 1983. for credit card customers (surcharges) as well as Appendix B contains a more detailed summary reductions in prices for cash customers (dis- of the results, but these are the main findings: counts). In response, the Congress in 1976 prohibited the imposition of surcharges—that is, •The costs to retailers of credit card transacadding an amount to the regular price of an item tions (including point-of-sale, security-related, when it was sold to credit card customers.2 At and financial costs) are higher than the costs for the same time, the Congress responded to the other types of transactions. The extra cost is concern that state disclosure and usury laws about 2 to 3 percent of the transaction amount. presented an obstacle to discount programs by •There is little evidence that credit card usage increases overall retail sales volume. Since credit cards are so widely accepted, retailers as a whole 1. The charge assessed by a credit card company on a do not recover the added cost of credit card merchant's credit card transactions is often referred to as the transactions through increased sales. "merchant discount." If a merchant accepts a credit card for •The extra cost of credit card transactions (to a $100 purchase, for example, the merchant might be assessed a three percent fee, thus receiving only $97 when the the extent it is not recovered directly from credit transaction is processed by the credit card company. card users) is reflected in retail prices. It appears 2. In amending the act, the Congress defined a "discount" as a reduction in the regular price and a "surcharge" as an addition to the regular price. The "regular price" was not defined, however. In order to allow merchants to determine whether their programs involved discounts or surcharges, the 3. The attachments to this statement are available on Board by regulation defined regular price. This definition was request from Publications Services, Board of Governors of made part of the act in 1981. the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1984 that on average the price of a given item is charge or discount does not exceed 5 percent. To increased by something less than 1 percent. make such programs work, the exemption from •About 25 percent of gasoline stations and 6 the Truth in Lending rules, both state and federpercent of other retailers offer discounts. Ap- al, and from state usury ceilings should be availproximately 40 percent of all retailers surveyed able to both programs. believed that discounts for cash are "a good Our recommendation that both surcharges and idea." discounts be permitted is based on the proposition that the two are fundamentally equivalent, In finding that credit card transactions cost as well as on a number of practical considermost retailers more than cash or check transac- ations. First, while advocates of discounts have tions, and that the additional cost is generally not claimed that discount programs result only in offset by higher sales volume but is reflected in price reductions for cash buyers, without penalthe price level, the report supports the conclu- izing credit card users, economic reality is such sion that cash buyers, at least to some extent, that prices generally will be restructured so that subsidize credit card users when all customers the "new" credit price is above—and the dispay the same price. The report estimates the counted cash price only somewhat below—the typical size of the subsidy to be between Vi "old" single price. The Board's study indicates percent and WA percent of the total price. Thus, that if discount programs are to be economically it appears that the theory underlying the attempt feasible, most are likely to involve some increase by the Congress in 1974 to eliminate the subsidy in the price, from which discounts to cash cusof credit card users by encouraging two-tier tomers are calculated. In fact, two-tier pricing pricing was correct. At the same time, the size of through discounts ordinarily would result in esthe subsidy may be smaller than many people sentially the same level of credit and cash prices had assumed, which may help to explain why as would a surcharge program. relatively few retailers have seen fit to adopt Second, allowing two alternative methods of two-tier pricing. pricing may provide merchants the flexibility In summary, our studies confirm that cash they need to offer more of the two-tier pricing customers subsidize credit customers to some that the Congress is trying to encourage. Alextent. The report also indicates that discount though 40 percent of the retailers surveyed by programs have become popular in at least one the Board considered cash discounts a "good industry, but probably are not as widespread in idea," only 6 percent actually offered them. This the marketplace as a whole as proponents of the low figure may mean that merchants find dislegislation hoped. Finally, a sizable percentage count programs to be too much trouble to adminof the retailers surveyed look with favor on such ister. programs. Another possible explanation is that the simi- Although many options are now available to larity between discounts and surcharges causes the Congress, they fall into three categories. merchants to be confused about what is a permis- Congress could remove the special Truth in sible discount and what is an illegal surcharge— Lending rules for discounts and surcharges, thus as evidenced by many inquiries the Board has requiring them both to be treated as finance received about the distinction. This uncertainty charges; as a practical matter, this would proba- may discourage merchants from risking a violably eliminate the existing programs and ensure tion of federal law. If the lack of two-tier pricing that new ones would not develop. Congress is related to either or both of these factors, then could make the surcharge prohibition perma- there is some hope that permitting both pricing nent, thereby permitting continuation of most schemes might promote the result the Congress discount programs now in place, but without any originally hoped to achieve. good reason to expect more to be offered in the A third consideration concerns the claim made future. Finally, it could allow the surcharge by some opponents of surcharges that allowing prohibition to expire, thereby possibly promot- both types of two-tier pricing will lead to coning some additional two-tier pricing. The Board sumer confusion in a marketplace where some favors this third alternative, provided the sur- merchants offer discounts and others impose Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 105 surcharges. While the possibility of some initial merchants from offering price differentials relatconfusion certainly exists (much like that which ed to the extra cost of credit card transactions. accompanied the introduction of discount pro- The Board's study indicates that the fee imposed grams at service stations), we do not think the by credit card companies on merchants averages problem would be major since merchants would 3.1 percent (with an average of 4.1 percent for still be required to disclose their policies. In small businesses), well within the 5 percent limit. addition, the Board believes that competition In addition, most cash discounts now being ofand the merchants' desire for customer goodwill fered are in the neighborhood of 3 to 5 percent. would lead them to make clear to their customers Therefore, we believe that limiting the differenwhat their pricing practices are. Furthermore, tial to 5 percent would avoid any major distorthere is at least one type of problem with dis- tions of credit costs as a result of the finance count programs that would not exist with sur- charge exclusion without adversely affecting the charges. There have been reports that cash- provision's goal. paying customers have not always received the Second, we believe that the two-tier pricing discounts to which they were entitled; this has provision should be limited to credit cards. The occurred, for example, where customers be- purpose of the original exception, in fact the only lieved that the posted price reflected the dis- focus of the discussions over the years, was to count, when it in fact did not. provide a means to remove from the price In addition to allowing both types of pricing charged to the cash customer the extra cost of systems, we urge the Congress to make two credit card transactions. However, in 1981 the other changes. First, we suggest that the amount Congress changed the language of the act to of the price differential in any two-tier pricing provide special treatment for discounts not only system that is excluded from Truth in Lending in credit card transactions, but in all open-end requirements and state disclosure and usury laws credit transactions. The Board believes that be limited to 5 percent of the cash price of the since open-end credit transactions not involving property or service. Any price differential be- a credit card do not generally result in a "mertween cash customers and credit customers is a chant discount," this may have been an unwarcost of credit and normally would be viewed as a ranted extension of the provision and could finance charge. In this case, however, the Con- further undercut the accuracy of the Truth in gress chose to sacrifice some accuracy in the Lending disclosures and the effectiveness of credit cost disclosures and the protection offered state laws. We therefore recommend that the by state usury laws in order to help eliminate special treatment offered two-tier price differensubsidization of credit card users. Since this tials be limited to credit card transactions. provision involves a trade-off with the goals of I appreciate the opportunity to address the the Truth in Lending Act and state laws, we subcommittee and hope that our testimony will think some limits are appropriate. Furthermore, be of assistance in your efforts to deal with this we think the 5 percent limit would not keep difficult question. • Statement by Paul A. Volcker, Chairman, Board tives for the growth of money and credit. I have of Governors of the Federal Reserve System, also testified before the House and Senate Bankbefore the Joint Economic Committee, February ing Committees in the past two days and have 9, 1984. distributed copies of my formal statement to you. My prepared remarks this morning, therefore, I appreciate the opportunity to appear before this will be brief and confined to more general considcommittee today. As you know, the Federal erations of monetary policy within the context of Reserve submitted its semiannual monetary poli- recent and prospective economic and financial cy report to the Congress earlier this week. That developments. report describes in detail our plans for monetary The basic policy objective of the Federal Repolicy, including the Federal Reserve's objec- serve continues to be to contribute to sustained Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • February 1984 economic expansion in a context of greater price that was far better than anticipated. Real gross stability. In setting the target ranges for the national product rose 6 percent over the four various monetary and credit aggregates, the Fed- quarters of the year, well above earlier projeceral Open Market Committee (FOMC) at its tions, and the unemployment rate was cut 2Vi meeting last week had to be alert both to the need percentage points. At the same time, most broad for economic growth and to the danger of re- measures of prices and wages recorded further newed inflationary pressures. Consistent with progress toward lower inflation. With employthese objectives and the current economic situa- ment expanding, productivity improving, and tion, the FOMC essentially reaffirmed the tenta- inflation moderating, the real income of the avertive ranges for the monetary and credit aggre- age worker rose. gates for 1984 established last July. The ranges As we move into 1984, there are strong reacall for growth rates that are Vi to 1 percentage sons for believing the economic gains of the past point below those set for 1983.1 year can be extended. The latest reports on The ranges for 1984 envisage that relationships employment, income, and production, showing between monetary and credit growth and eco- further gains around the turn of the year, are nomic activity and inflation—the "velocity" of consistent with that view, as are indexes of money—will broadly follow past trends and cy- consumer and business confidence at high levels. clical developments after the unusual behavior of Much more fundamentally, the progress against 1982 and early 1983. Most of the special influ- inflation, the evidence of increased productivity, ences that depressed velocity in late 1982 and the sense of greater discipline and restraint, and early 1983 appear to be behind us, and the a recovery in profits all, in my opinion, go a long evidence over the past half year has become way toward setting the stage for a long period of more (but not entirely) in line with longer-run greater prosperity. experience. This judgment about the fundamen- We all realize a year of strong recovery—hard tal relationship between money and economic on the heels of a severe recession—has left performance will, of course, be reviewed con- unemployment still far too high, with some 9 stantly in the months ahead, and our evaluation million still out of work. To some degree, the will reflect all of the available evidence about rapid progress toward price stabilization has production, employment, prices, and domestic reflected "one time" or cyclical influences. and international financial markets. More time must pass before we can claim suc- Consistent with the monetary ranges estab- cess or take satisfaction that we have restored lished for this year, the members of the FOMC prosperity or assured stability. And, we need to generally felt that the economy would grow at a recognize and deal effectively with some obvious more moderate—and potentially more sustain- hazards and risks that jeopardize the good prosable—pace of 4 to 43A percent during 1984 and pects for 1984 and beyond. into 1985. The gains in output are expected to Those prospects rest in good part on whether generate a further expansion of new job opportu- interest rates, and conditions in credit markets nities, and the unemployment rate is expected to more generally, can support the housing and decline to the area of IV2 to IVA percent by year's investment we need, whether we can restore end. After remarkably good progress in 1982 and better balance in our international accounts, and 1983, price increases are expected to be a little whether, in the meantime, we can count on the larger on average, essentially as a result of inflows of capital from abroad upon which we cyclical factors and special circumstances—in- have become dependent. cluding the effects of bad weather and the large Over time, success in those areas is dependent hike in payroll taxes earlier this year. on the expectation and the reality that we can The prospect of further good economic gains in build on the progress toward price stability. 1984 comes on the heels of a performance in 1983 Monetary policy must contribute to that goal— disciplined growth in the money supply is a 1. The new target ranges are set out in table 1 against the critical ingredient. But there are also factors background of last year's targets. The table is available on outside the control of monetary policy that bear request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. importantly on the question. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 107 As you know, we are faced with two deficits: internal and external deficits because interest the structural deficit in our federal budget and costs compound on themselves. the deficit in our external accounts—both at I believe we now have a rare opportunity to set unprecedented levels and getting worse. Those in train a long period of growth and stability. A twin deficits have multiple causes, but they are decade that began with accelerating inflation and not unrelated. Left unattended, each, rather than prolonged recession can end with renewed confiimproving, will tend to cumulate on itself. Soon- dence and strength. But that happy vision will er or later, the financing of those deficits will not be achieved by resting on our oars—by expose us to financial risks that could undercut sitting back and drifting with the tide. It will all that has been achieved in recent years with so require a continuing sense of discipline by busimuch effort and so much pain. ness and labor, and emphasis on competition and Large budget deficits, currently and prospec- productivity. It will require the demonstration by tively, are a burden on credit markets and absorb those of us responsible for public policy that our historically unprecedented fractions of our do- twin deficits can be brought under control and mestic savings. That is one reason interest rates that inflation will not again get the upper hand. today are far higher than is healthy from the We can and should be gratified by the progress standpoint of balanced growth domestically. that has been made, and by the many positive Those interest rates have been moderated as a signs in the outlook. We have time—time to result of a growing capital flow from abroad, influence markets constructively, time to demonstimulated by a variety of causes; in effect, net strate that we are in control of our own financial capital inflows have been used, directly or indi- and economic destiny. But to wait would be to rectly, to help meet the government's financing multiply the risks, to increase the hazards to full requirements. But those growing capital inflows, recovery, to jeopardize what has been achieved. which have tended to make the dollar appreciate That is why I hope that you in the Congress, relative to other currencies, are also inextricably together with the administration, can find the related to a large and growing deficit in our trade consensus required to begin reducing the budget accounts. In both our financial and our trading deficit, and to restore confidence that, over time, interests, we cannot afford to become addicted to the structural deficit can be closed. Right now, drawing on increasing amounts of foreign savings no other action appears so promising and so to supplement our limited domestic savings sim- important in terms of seizing, and capitalizing ply because the federal government is drawing so upon, the immense opportunities before us. Cerheavily on that savings pool. The longer they tainly, that would make it easier for monetary last, the more difficult it is to cope with these policy to play its own essential role. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Announcements ENFORCEMENT OF COMMUNITY The Council suggested development by the REINVESTMENT ACT Federal Reserve System of improved means for detecting lender practices that illegally discour- The Federal Reserve Board today announced a age loan applications. series of steps, based on recommendations from The Board took the following actions: its Consumer Advisory Council to strengthen enforcement of the Community Reinvestment • In the interest of developing a unified system, Act (CRA).1 invited other financial supervisory agencies to join in a In sending its report to the Council's chair- review of systems used in gathering information on the race, national origin, sex, marital status, and age of man, the Board said: applicants for credit. • Left open for future consideration proposed adop- The Federal Reserve has completed its review of the tion of an automated or computerized system for Consumer Advisory Council's study on the Federal analyzing data derived from applications. Reserve's implementation of the Community Rein- • Decided against the routine use of "testers" in vestment Act and has taken actions to carry out most examining for illegal credit discrimination by state of the Council's 50 or so recommendations. A good member banks.3 However, when there is a strong many of the Council's recommendations suggested suspicion of possible discrimination at an institution, improvements that could be instituted by the Federal the Reserve Bank will report the facts and consult with Reserve staff without official Board consideration, and Board staff to determine if using testers is appropriate. others suggested continuing existing Federal Reserve programs. In both cases the Board's staff has taken The Board staff responded affirmatively to a appropriate action to ensure the implementation of number of Council recommendations in the field Council suggestions. The Board of Governors has noted these staff responses. of bank examination procedures. These include giving special guidance to examiners in how to Several Council suggestions, however, re- conduct examinations of both small rural instituquired Board review and were considered at the tions and large wholesale banks, sharing of infor- Board's January 25, 1984, meeting. mation among examining agencies, broadening Principal actions by the Board (other than the range of organizations examiners interview those previously announced concerning proce- (with increased emphasis on contacts with comdures for processing bank and bank holding munity-based and minority groups), encouraging company applications) are reported below.2 lenders to maintain written loan policies, and development of materials that examiners can use to discuss, with bank management, bank partici- 1. The Consumer Advisory Council, established by the pation in programs affecting small and minority Congress at the request of the Federal Reserve Board, is businesses and local community development. comprised of 30 members, representing a broad range of consumer and creditor interests. It meets several times yearly with the Board to counsel the Board on its responsibilities under the Consumer Credit Protection Act. responses by the Board made public today, but are not The Board announced on January 31 a number of amend- repeated in this release. ments to its procedures for bringing applications involving 2. The Board also considered, but decided not to pursue, banks and bank holding companies to public notice and for Council recommendations regarding revision of the CRA handling protests. These amendments incorporated most of rating system and the CRA statement. the Council's recommendations in these fields that were 3. Testers might approach a lending institution by teleincluded in the Council's review of the Board's implementa- phone, or in person, for the apparent purpose of applying for tion of CRA. The previously announced Board and staff credit, but in fact to determine whether the institution disresponses to the Council's recommendations with respect to criminates against some applicants, such as women or minorthese application procedures are included in the overall ities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

109 The staff also noted that the System's affirma- Income of the Federal Reserve System is tive action program meets recommendations of derived primarily from interest accrued on U.S. the Council regarding a special recruitment effort government securities that the Federal Reserve for hiring Federal Reserve consumer compliance has acquired in the conduct of monetary policy examiners; other System programs meet recom- through open market operations. Income from mendations concerning recruitment, career train- Federal Reserve services amounted to $497 miling, and development in the System. The Re- lion. serve Banks will continue to emphasize Operating expenses of the 12 Reserve Banks consumer compliance examination as an integral and their branches totaled $1,022 billion, includpart of their regulatory activity. The staff also ing $68 million for earnings credits granted to responded affirmatively to a number of other depository institutions. Assessments by the recommendations by the Council regarding con- Board of Governors amounted to $72 million for sumer compliance examiners and examination. Board expenditures and $152 million for the cost Further, staff responses indicated agreement of Federal Reserve currency. Other deductions with Council recommendations concerning the from current net income amounted to $400 milactivities, responsibilities, training, and relation- lion. This was primarily the result of $456 million ship of Community Affairs Officer (CAOs) to of unrealized loss on assets denominated in forexaminers in the area of community develop- eign currencies related to revaluation of the ment, and for giving priority to the community assets at market exchange rates, and a $21 milaffairs functions of the CAOs. It was noted that lion gain on sales of U.S. government obligathe responsibilities of CAOs include the develop- tions. ment, as recommended by the Council, of com- Net income before dividends, additions to munity profiles and other credit-related data surplus, and payments to the Treasury totaled analysis to assist examiners in evaluating the $14,424 billion. Statutory dividends to member performance of banks under CRA. banks were $85 million; additions to Reserve The Council suggested that changes should be Bank surplus were $107 million; and payments to made to define clearly the responsibilities of the Treasury as interest on Federal Reserve CAOs at the Reserve Banks so as to ensure more notes amounted to $14,232 billion. consistent CRA implementation nationwide, that Under the policy established by the Board of the Board should make greater efforts to see to it Governors at the end of 1964, all net income after that CAOs are carrying out their duties, and that the statutory dividend to member banks and the Board should devise a system for measuring additions to surplus to bring it to the level of the effectiveness of CAO activities. paid-in capital is paid to the U.S. Treasury as interest on Federal Reserve notes. The Board accepted the first two of these recommendations, but decided that the third is not compatible, at this time, with the nature of the CAO's role. RULES REGARDING INTERNATIONAL However, future development of such a system was not ruled out. LENDING SUPERVISION ACT The Board is developing, in consultation with the Reserve Banks, a Systemwide statement of Communi- The Federal Reserve Board on February 9, 1984, ty Affairs Officer activities and responsibilities, and announced adoption of rules to implement severbeginning in 1985 will require annual operations real sections of the International Lending Superviviews of this activity. sion Act of 1983. Two of the rules require banking organizations to maintain special reserves and authorize the INCOME OF FEDERAL RESERVE BANKS Board to require submission of quarterly reports on the foreign lending of banking institutions, Preliminary figures indicate that gross income of including publication of material country expothe Federal Reserve Banks amounted to $16.07 sure. These rules will be effective upon publicabillion during 1983. More than $14 billion of this tion. was paid to the U.S. Treasury. In addition, the Board published for comment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1984 proposed rules respecting the accounting for fees on their obligations; and (2) whether there are no associated with international loans. (See "Pro- definite prospects for restoring orderly debt serposed Actions.") vice. The three federal banking regulators—Federal When required, the initial year's ATRR nor- Deposit Insurance Corporation, Federal Reserve mally will be 10 percent of the principal amount Board, and Office of the Comptroller of the of the asset on which reserves must be kept, or Currency—are issuing the rules and proposals more, or less, as determined by the federal jointly, as one facet of a joint program to banking agencies, and, when required for subsestrengthen, under the new law, the supervision quent years, normally will be 15 percent, or and regulation of foreign lending by U.S. banking more, or less, as the agencies determine. The organizations. The Board's rules apply to state rules specify the factors according to which of chartered banks that are members of the Federal these amounts will be determined. Reserve System and to bank holding companies The Board will notify each banking institution and Edge and Agreement corporations engaged it supervises of the amount of any ATRR and if in banking. Nonmember banks and national an ATRR may be reduced. A banking institution banks are covered by the rules of the other may write down an asset in lieu of establishing an agencies. ATRR. If an institution does so, it must replenish At the same time as it published its rules, the its allowance for possible loan losses to the Board announced that it is holding open the extent necessary to provide adequately for estiperiod for comment on questions of whether the mated losses in its loan portfolio. An institution U.S. branches or agencies or commercial lending may at any time reduce an ATRR to the extent of subsidiaries of foreign banks should be subject to any write-down on its books of the value of the these provisions or other provisions of the act. relevant asset. Therefore, the final rules being published do not The Board also adopted a rule setting forth the at this time apply to these entities. framework for requiring country exposure re- The Board adopted its final rules under section ports by banking insitutions (under Section 907 905(a) of the act after consideration of comment of the act). This rule provides that the Board will received on proposals published in December. prescribe jointly with the other federal banking Section 905(a) requires banking institutions to agencies the format, content, and reporting and maintain special reserves, out of current income, filing date of the reports. For this purpose, the against the risks present in certain international agencies have initiated modifications in the curloans or other international assets, when the rent Country Exposure Report form (FFIECfederal banking agencies determine that such 009). reserves are necessary. The principal elements of the rules under this section adopted by the Board are the following: REVISIONS TO OFF-LINE SURCHARGES FOR WIRE TRANSFERS OF FUNDS • A banking institution shall establish an Allocated Transfer Risk Reserve (ATRR) for specified interna- Revisions to the off-line surcharges for the Retional assets (principally loans) when required under serve Bank's wire transfer of funds and net these rules. settlement services have been made, to become • At least annually, the agencies shall jointly deter- effective March 1.1 mine the following: (1) which international assets are The new fee schedule is the following: subject to risks warranting establishment of an ATRR; (2) the size of the ATRR; (3) whether an already established ATRR may be reduced. Wire transfer Net settlement (dollars) of funds (dollars) The rules also set forth the criteria to be used Off-line origination 5.50 Off-line settlement 8.00 Telephone advice 3.00 Telephone advice 3.00 in determining whether an ATRR is required under two headings: (1) whether the quality of 1. Off-line institutions do not have an electronic connection international assets has been impaired by prowith the Federal Reserve and, therefore, must originate their tracted inability of borrowers to make payments transactions and be advised of their settlement by phone. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 111 Pending Board action, the basic transfer fee, surance for its bank subsidiaries. Upon request currently $0.65 will remain in effect for all on- the Board may grant extensions of this two-year and off-line transfers of funds. period for three additional one-year periods. EXEMPTIONS FROM REGULATION Y AMENDMENTS TO PROCEDURES FOR PROCESSING APPLICATIONS The Federal Reserve Board acted upon a number of requests submitted by companies under the The Federal Reserve Board has announced procedures provided in the Board's revised Reg- adoption of amendments to its procedures for ulation Y for exemptions from the regulation. processing applications, including revision of the The Board approved limited exemptions for cer- Board's Statement of Policy on Handling Protain state chartered savings and loan associations tested Applications of bank and bank holding and a six-month extension of time for companies companies. These amendments are intended to that acquired banks before December 10, 1982, provide the public with clearer and easier to use to comply with the regulation. procedures for filing protests and for requesting In today's action, the Board decided, upon the meetings or hearings. basis of requests received from affected institu- The amendments are based in part on recomtions, that it will not consider as bank holding mendations of a Board staff task force, estabcompanies those companies that acquired state lished to review the Board's procedures for chartered savings and loan associations before handling protested applications. The Consumer December 10, 1982, the deposits of which are Advisory Council (CAC) was requested to study privately insured under state law, provided that the Board's implementation of the Community these institutions limit their lending and deposit Reinvestment Act (CRA), and the Board's taking activities to those permissible for federally amendments to its procedures and policy stateinsured thrift institutions under the Home Own- ment incorporate most of the CAC recommendaers' Loan Act. tions on procedures for bringing applications to public notice and for dealing with protests.' The Board also, upon request, will grant a sixmonth period for compliance with the revised The amendments apply to applications for regulation by companies that acquired banks which notice is published on or after January 31, before December 10, 1982, and that will become 1984. bank holding companies as a result of the Regula- The amendments incorporate the following tion Y revisions. recommendations by the Consumer Advisory Under the Bank Holding Company Act, such a Council task force: company must register with the Board as a bank holding company within 180 days of February 6, • Adopt a revised newspaper notice of applications, published in plain English and including a statement 1984, the effective date of the revised regulation. that one of the factors the Board considers in acting on The Board's decision provides that such a comapplications is the performance of banks concerned in pany may request that it not be regarded as a the application in helping to meet local credit needs. bank holding company during this 180-day period • Explore ways in which Reserve Bank weekly bullebefore registration, in order to allow sufficient tins noting applications newly received can be made time for orderly compliance with the act. more informative. • Publish a comprehensive document consolidating At the expiration of the 180-day period, the publications relating to CRA and additional informacompany will be required to either register as a bank holding company or to terminate the status of its subsidiary as a bank. If the company 1. At the same time the Board acted on the Council's advice registers, the company would be regarded as a concerning protested applications, it adopted most of the bank holding company and would be required, Council's further recommendations deriving from its study of within two years from February 6, 1984, to divest Board implementation of the Community Reinvestment Act in the fields of development of Federal Reserve compliance its impermissible nonbanking activities and to personnel, examination procedures, and community affairs seek Federal Deposit Insurance Corporation inofficers. These actions are being announced separately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • February 1984 tion on factors the Board considers in evaluating • Amend the Board's Rules of Procedure, in the applications under CRA. interests of ensuring due consideration of comment on • Formalize procedures for notifying protestants of an application, to clarify that comment must be rethe Board's decision on a protested application and ceived by the Board's Secretary on or before the date take steps to explain the decision. specified as the end of the comment period. The • Make special efforts to provide protestants with an Secretary can give extensions on showing of good explanation of analysis of data relating to a protest. cause. To implement Board action on these recommendations of the Council's task force, Federal STATEMENT ON REGULATION Reserve procedures will be revised as follows. OF FINANCIAL SERVICES • A model "plain English" newspaper notice of an Paul A. Volcker, Chairman of the Federal Reapplication will be used and the Community Affairs serve Board, issued the following statement after Officer of the Reserve Banks will be designated as a today's meeting of the Task Group on Regulation source of further information. Newspaper notices will of Financial Services: include a statement that in acting on applications one of the factors the Board considers is the performance under CRA of banks involved in the application. I am pleased that the Task Group under Vice • An expanded uniform format has been developed President Bush was able to reach a consensus on a and will be used for the weekly bulletin published by wide range of issues. the Reserve Banks detailing applications received dur- The recommendations represent a careful balancing ing the preceding week. This notice will include refer- of various concerns relevant to a system of banking ence to laws or regulations governing the processing of and bank holding company regulation and supervision. applications, identify Reserve Bank personnel (Com- I believe that, as agreed, the proposals adequately munity Affairs Officers) who can provide further infor- reflect the concerns of the Federal Reserve in the mation, and list available publications concerning ongoing process, and the essential linkages with our CRA. other related responsibilities. At the same time, with • The Board will work with the Federal Financial effective cooperation among the Federal and State Institutions Examination Council to update the Coun- agencies, simplification and effectiveness can be encil's publication, "A Citizen's Guide to CRA" and will hanced. publish a summary reflecting current Board positions We also hope that debate on administrative arrangeon CRA factors. ments not divert attention from the need for substan- • The Board will amend its Policy Statement to tive legislation on banking definitions, regulatory formalize notification of protestants of decisions on procedures, and bank holding company powers, as protested applications. reflected in Administration proposals for the Financial • Federal Reserve personnel will be prepared to Institutions Deregulation Act. furnish protestants with an explanation of how data have been analyzed in a variety of protests and provide a sampling of relevant Orders and other material. AMENDMENT TO REGULATION J Additionally, the Board approved the following The Federal Reserve Board today announced an staff recommendations: amendment to its Regulation J (Collection of Checks and Other Items and Wire Transfer of • Amend the Board's Policy Statement on Handling Funds) to permit a Reserve Bank to charge for Protested Applications to specify that Reserve Banks generally will arrange private meetings between an checks that it delivers or makes available to an applicant and protestant following the first exchange institution that is closed regularly on a weekday of correspondence between the parties. when its Reserve Bank is open. It is estimated • Amend the policy statement and the Board's rules that this action will eliminate approximately $110 regarding delegation of authority to delegate to the million daily average in Federal Reserve check Board's General Counsel authority to convene a public meeting or other proceeding and to appoint a float. presiding officer with respect to a protested applica- The amendment becomes effective April 2, tion. 1984. • Amend the policy statement to designate the Com- The Board acted after consideration of community Affairs Officer of the Reserve Banks as the ment received on proposals published in Septemcontact person to answer questions concerning protest procedures and CRA matters in general. ber. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 113 The amendment affects institutions that International Lending Supervision Act of 1983). choose to close on a weekday. Such closings The comment period on these fee accounting may result in Federal Reserve float—the value of rules closes March 9. Final rules are to be checks for which the Federal Reserve has given adopted no later than March 29, 1984. credit to the institution that sent the checks to it for collection (the sending institution) but for which the Federal Reserve has not yet collected SUPPLEMENT TO LIST OF OTC STOCKS from the institution on which the checks are drawn (the paying institution). The Federal Reserve Board today published a The Board gave paying institutions the alterna- supplement to its list of over-the-counter (OTC) tive of being charged for the value of float stocks that are subject to its margin regulations, created in this way rather than being charged for effective February 21, 1984. the value of the checks on that day. The supplement should be used in conjunction The Board decided not to take similar action— with the June 20, 1983, list of OTC margin stocks as earlier proposed—affecting institutions closed and the October 17, 1983, supplement to the list. on a nonstandard holiday (a state or local holiday Changes that have been made in the list, which on which its District Reserve Bank is open for now includes 1,917 OTC stocks, are as follows: business). Instead, Reserve Banks will be per- 216 stocks have been included for the first time; mitted to defer for a day giving credit to sending 13 stocks previously on the list have been reinstitutions, for checks drawn on paying institu- moved for substantially failing to meet the retions closed on nonstandard holidays. The value quirements for continued listing; 30 stocks have of any remaining float arising from nonstandard been removed for reasons such as listing on a holidays will be added to the cost base for the national securities exchange or acquisition of the check collection service. companies by another firm. The Board took these actions pursuant to The Board monitors the market activity of all provisions of the Monetary Control Act of 1980 OTC stocks to determine which stocks meet the requiring the Federal Reserve to eliminate or requirements for inclusion and continued inclucharge for Federal Reserve float. sion on the list of OTC margin stocks and periodically revises the list. PROPOSED ACTIONS CURRENCY GUIDELINES The Federal Reserve Board published, for public comment, a proposal to amend Regulation T The Federal Reserve Board has approved re- (Credit by Brokers and Dealers). The Board vised guidelines for the provision of new or fit requested comment by February 15, 1984. coin and currency by Federal Reserve Banks to The Federal Reserve Board also published, for depository institutions. public comment, a proposed revision to the fee The revised guidelines contain uniform packstructure for the Federal Reserve's wire transfer aging standards for coin and currency for deposof funds service. The proposal includes a reduc- iting and ordering cash. They also clarify the tion of the basic fee for originating or receiving a System's policy with regard to access to Federal wire transfer of funds from $0.65 to $0.60 per Reserve cash services. Under the new guidetransfer. At the same time, the Board proposed a lines, depository institutions, including branches, fixed monthly fee for all depository institutions will have access to cash services so long as that have an electronic connection with the Fed- administrative procedures and packaging requireeral Reserve. Comment is requested by March ments are met. 16, 1984. These standards will ensure that all Federal The Federal Reserve Board also issued for Reserve offices provide a uniform level of central comment draft regulations establishing uniform bank cash services to all depository institutions requirements for accounting for fees on interna- on an equitable basis. These standards will be tional loans (as required by section 906 of the phased in over the next three years to minimize Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • February 1984 their impact on depository institutions and Re- to the position of Director of the Board's Diviserve Banks. sion of Support Services. Mr. Frazier replaces The Board also approved the elimination of Donald E. Anderson, who retired. cash transportation price supports for shipments Mr. Frazier came to the Board as Assistant of coin and currency to Alaska, Hawaii, and Director in the Division of Support Services in Guam. June 1980, following a 25-year career with the U.S. Army, and was promoted to Associate Director in August 1981. He holds a B.S. from PREEMPTION AUTHORITY REGARDING the Hampton Institute and an M.A. in Business CERTAIN STATE LAWS Management from Central Michigan University. The Federal Reserve Board announced final determinations that provisions of New Hampshire SYSTEM MEMBERSHIP: and New Jersey State laws governing the offering ADMISSION OF STATE BANKS of cash discounts in the sale of motor fuel are not inconsistent with the Truth in Lending Act and The following banks were admitted to member- Regulation Z implementing the act and are not ship in the Federal Reserve System during the preempted. The Board's determination is effec- period January 10, 1984, through February 10, tive January 31, 1984. 1984: In this regard, the Board made the more general determination that these laws are subject to Colorado the Board's preemption authority. Aurora Bank of Aurora Iowa Everly Everly State Bank CHANGES IN BOARD STAFF Florida Tampa Regency Bank of Florida The Federal Reserve Board announced the pro- South Dakota motion of Robert E. Frazier on January 31, 1984, Irene Farmers State Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

115 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON DECEMBER 19-20, 1983 percent in November, after increases of 1.4 percent in each of the preceding two months. 1. Domestic Policy Directive Sales increased at most major categories of stores in November, including a substantial rise The information reviewed at this meeting sug- in purchases of discretionary items, as indicated gested that real GNP was growing at a relatively by strong outlays at general merchandise and rapid pace in the current quarter, although the apparel stores. Sales at automotive outlets also rate of expansion appeared to have moderated rose markedly. While sales of new domestic from the third-quarter pace. Strength in personal automobiles, at an annual rate of about 7 million consumption expenditures and in business units in both October and November, were up spending—particularly for inventories and equip- only slightly from the average selling pace in the ment—is apparently contributing to the contin- third quarter, the annual rate of imported car ued expansion in economic activity. Price and sales averaged about 350,000 units higher in wage increases generally have remained moder- those months than in the third quarter. ate, though advances in some indexes have Private housing starts rose about 6V2 percent in been somewhat larger than in the spring and November, to an annual rate of about P/4 million summer. units, and newly issued permits for residential The index of industrial production increased construction increased marginally. For both se- 0.8 percent in November, the same as in Octo- ries, the levels in November were close to the ber. Output of business equipment continued to averages in the third quarter. In October, sales of rise briskly, registering average increases of existing homes fell about 5V2 percent below their nearly IV2 percent in each of the two months. average in the third quarter, while sales of new Output of materials also continued to increase homes rose for the second consecutive month. rapidly, but production of consumer goods and Indicators of business capital spending have construction supplies rose only slightly. The rate moved somewhat erratically in recent months, of capacity utilization in manufacturing in- but generally suggest continued relatively strong creased 0.5 percentage point further in Novem- expansion in that sector. Shipments of nondeber to 79.4 percent, well above its recession low fense capital goods surged in September but fell of 68.8 percent a year earlier. somewhat in October. New orders, however, Nonfarm payroll employment, adjusted for recorded strong gains in September and October, strike activity, advanced about 345,000 further in and the backlog of unfilled orders rose sharply in November; the rise was larger than in October both months. but about the same as the average monthly The producer price index for finished goods increase in the second and third quarters. Em- had changed little on average over the previous ployment gains were widespread, and were par- two months, rising 0.3 percent in October and ticularly marked in manufacturing and service falling 0.2 percent in November. Thus far in 1983 industries. The civilian unemployment rate fell the index had increased at an annual rate of less 0.4 percentage point further to 8.4 percent, near- than V2 percent. The consumer price index rose ly 2VI percentage points below its peak in De- 0.4 percent in October, about the same as in the cember 1982. preceding three months; over the first ten The nominal value of retail sales rose 1.9 months of the year, consumer prices had in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1984 creased at an annual rate of about 4 percent. The Growth in M2 and M3, after slowing substanindex of average hourly earnings was little tially over the summer months, strengthened in changed in November, after rising somewhat October and November. M2 was growing at a faster in September and October than in previous pace close to the annual rate of SV2 percent months. Thus far in 1983 the index had increased specified by the Committee for the Septemberat an annual rate of about 3'/2 percent, compared to-December period; M3 grew at an annual rate with a rise of 6 percent in 1982. of 8V2 percent in October but increased at a faster In foreign exchange markets the trade-weight- pace in November, as banks relied more on ed value of the dollar had risen more than 3 managed liabilities, partly to offset a massive percent since the FOMC meeting in mid-Novem- runoff of U.S. Treasury balances associated with ber, surpassing the peak recorded in August. the temporary delay in raising the federal debt Increasing international tensions apparently con- limit. Ml continued to expand at a sluggish pace tributed to the dollar's strength, as investors in November but increased substantially in early viewed dollar assets as a "safe haven" in the December. Through November, M2 was in the face of concerns about the security of financial lower portion of the Committee's longer-run assets in some other parts of the world. Evidence range for the year 1983, M3 was close to the of continued strong expansion in U.S. economic upper limit of its range, and Ml was near the activity also fueled the dollar's rise. News of a lower end of the Committee's monitoring range record trade deficit for October, at a rate mark- of 5 to 9 percent for the period from the second edly higher than that in the third quarter, slowed quarter of 1983 to the fourth quarter of 1983. the appreciation of the dollar only temporarily. The debt of domestic nonfinancial sectors was The rise in the deficit reflected a sharp increase estimated to have continued expanding at a modin imports, as exports were about unchanged. erate pace in November, and its level remained At its meeting on November 14-15, 1983, the well within the Committee's monitoring range of Committee had decided that in the short run, SV2 percent to 11V2 percent for the year. Growth open market operations should be directed to- in credit at U.S. commercial banks rose to an ward maintaining the existing degree of reserve estimated annual rate of about 14 percent in restraint. The members anticipated that such a November, reflecting an acceleration in growth policy would continue to be associated with of total loans and continued heavy acquisitions growth of M2 and M3 at an annual rate of around of Treasury securities. Real estate and consumer 8 V2 percent for the period from September to lending, while moderating somewhat in Novem- December, consistent with the growth ranges ber, remained strong. Borrowing by businesses established for those aggregates for the year. picked up, as issuance of commercial paper Those ranges were 7 to 10 percent at an annual slowed considerably from the brisk pace of prerate for M2 for the period from February-March vious months and financing in long-term debt of 1983 to the fourth quarter of 1983; and 6V2 to markets remained light. 9V2 percent for M3 for the period from the fourth Total reserves contracted in November, as quarter of 1982 to the fourth quarter of 1983. It required reserves declined in association with a was agreed that over the coming intermeeting drop in demand deposits. Nonborrowed reserves period the need for greater or lesser restraint on fell by more, as the average level of adjustment reserve conditions should be evaluated on the borrowing rose in that month. Demands for basis of evidence about the continuing strength borrowing eased off in the first half of December, of the economic recovery and other factors bear- however. Over the intermeeting interval as a ing on the business and inflation outlook. De- whole, adjustment plus seasonal borrowing pending on such evidence, somewhat greater ranged from about $440 million to $865 million, restraint would be acceptable should the aggre- averaging about $685 million during the four gates expand more rapidly, while lesser restraint statement weeks ending December 14, only might be acceptable in the context of a significant slightly above the average during the previous shortfall in growth of the aggregates from current intermeeting period. expectations. Federal funds continued to trade in a range of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 117 about 9lA to 9XA percent over the period, with might well exceed the staff projection, given the recent trading generally near the Upper end of momentum of the recovery and a stimulative that range. Other short-term interest rates rose fiscal policy. In particular, it was suggested that about VA to 3A percentage point over the inter- the currently high level of confidence among meeting period, while most long-term rates in- businessmen and large cash flows to business creased about XA percentage point. Rates on firms favored relatively rapid expansion in busimunicipal bonds rose somewhat more, as issuers ness fixed investment. Some members also remarketed large volumes of such securities in ferred to the possibility of a buildup in invenadvance of deadlines on some types of issuance tories by firms that had been experiencing strong or in anticipation of legislation in 1984 imposing sales and increasing delays in obtaining new restrictions on the issuance of certain tax-exempt supplies of many products. bonds. Average rates on new commitments for Other members were somewhat less sanguine fixed-rate conventional home mortgage loans about the prospective strength of the ongoing changed little over the period and have fluctuat- expansion. Some emphasized the vulnerability of ed in a narrow range near 13.40 percent since late the economy to a substantial rise in interest October. rates, should one occur, from levels that were The staff projections presented at this meeting already high in real terms. In this connection, continued to indicate that growth of real GNP members referred to the desirability of prompt would slow from the rapid rate of recent quarters action to reduce the federal deficit, whose size, to a more moderate pace in 1984. Consumption both current and prospective, was a major factor expenditures and housing outlays were projected maintaining upward pressure on interest rates. to moderate after growing rapidly in 1983, and High interest rates, apart from their adverse the stimulus to economic growth from inventory impact on interest-sensitive sectors of the doaccumulation was likely to diminish. However, mestic economy such as housing, also would business fixed investment was expected to show tend to exert upward pressure on the value of the continued strength, and the deterioration in net dollar in foreign exchange markets, with further exports of goods and services was expected to unfavorable consequences for U.S. exports, and slow over the course of 1984. A decline in the would add to difficulties inherent in the current unemployment rate was anticipated over the international debt situation. projection period, and upward pressures on Other comments about the economic outlook prices were expected to remain generally moder- included the view of one member that, if very ate. sluggish growth in Ml over the course of recent In the Committee's discussion of the economic months were to continue, it could lead to a situation and outlook, the members commented downturn in economic activity by the second or that further expansion in economic activity re- third quarter of 1984. Another member raised the mained a likely prospect for 1984 but that the rate possibility that sales might prove to be disapof growth would probably slow considerably pointing over the months ahead in relation to the from the pace in recent quarters. At the same apparently exuberant expectations of many busitime, members referred to the many uncertain- ness leaders, and such a development would tend ties that clouded the outlook, and several ex- to restrain spending on both fixed investment pressed concern that inflationary pressures and inventories. One member also commented might worsen during the year. Reports from that the backlog in demand for housing appeared around the country indicated widespread im- to have been used up, and further demand was provement in business conditions and the devel- likely to be weak under foreseeable financial opment of considerable optimism in the business conditions. community, although it was noted that some Partly because of these differences about the industries were still operating well below capac- outlook for economic activity, the members exity. pressed somewhat divergent views with regard In the view of some Committee members, the to prospects for inflation over the year ahead. A expansion in economic activity during 1984 number of members, while acknowledging the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1984 possibility of some rise in the rate of inflation provisionally set at 8 to 11 percent for 1984. At during the second year of a recovery, believed this meeting the Committee began a review of the that any such rise was likely to be moderated by ranges for 1984 in the expectation that at its next sizable margins of unused capacity in many meeting it would complete the review and estabindustries, by continuing strong competition lish ranges for the year within the framework of from foreign suppliers, and by a still relatively the Full Employment and Balanced Growth Act high, if declining, rate of unemployment. Some of 1978 (the Humphrey-Hawkins Act).1 of these members also observed that recent In the Committee's discussion of policy for the statistics on commodity and other prices did not near term, most of the members agreed that the suggest that the rate of inflation was acceler- continued strength of the economic expansion ating. and the spreading optimism, with the attendant Other members were less optimistic about the risk that inflationary sentiment would intensify, prospects for inflation. Several commented on argued against any easing of reserve conditions indications of a strengthening in inflationary ex- and in favor of maintaining at least the existing pectations among participants in financial mar- degree of reserve restraint. Such a policy would kets and among businessmen, many of whom contemplate a slight move toward greater rewere reportedly looking for opportunities to raise straint if economic and monetary developments prices. Underlying wage pressures, which had appeared to warrant such a course. According to been held down by depressed conditions in many an analysis presented at this meeting, the existindustries, were also seen by many members as ing restraint on reserve conditions was likely to likely to increase as profits continued to im- be associated with growth in M2 and M3 during prove. Reference was also made to the adverse the period from November to March at rates that implications for costs and for inflationary pres- were well within the ranges that the Committee sures of a projected decline in productivity had tentatively set previously for 1984. Such a growth. One member expressed the view that policy was also likely to result in a considerable large increases in Ml during the latter part of acceleration in the growth of Ml over the four- 1982 and the first part of 1983 would probably be month period, given the anticipation that dereflected, after an expected lag, in accelerating mands for transaction balances would be more in inflation by the latter part of 1984. It was also line with spending than they had been in recent noted that a significant decline in the foreign months. exchange value of the dollar, if it should occur as While nearly all the members could accept a many observers expected, would contribute to policy of maintaining at least the existing degree domestic inflation. In this connection concern of reserve restraint, some expressed a preference was expressed that, as the foreign exchange for some slight firming immediately in light of value of the dollar rose to a relatively high level, their assessment of the economic situation and the dollar would be exposed increasingly to a concerns about the potential for a reemergence precipitate drop, and if such a drop came when of inflationary pressures. Other members prethe economy was operating closer to full capaci- ferred to make no change in the existing degree ty, it would tend to have a much more substantial of restraint for now, pending a further evaluation inflationary impact than otherwise. of economic developments and monetary At its meeting in July, the Committee had growth. In the view of some of these members, agreed on tentative growth ranges of 6V2 to 9Vi even a slight firming of reserve conditions at this percent for M2 and 6 to 9 percent for M3 during time would incur the risk of a relatively prothe period from the fourth quarter of 1983 to the nounced reaction in financial markets, with damfourth quarter of 1984. The Committee believed aging consequences for housing and other interthat growth of Ml in a range of 4 to 8 percent from the fourth quarter of 1983 to the fourth 1. The Committee also discussed the implications for open quarter of 1984 would be consistent with the market operating procedures of the shift to contemporaneous ranges for the broader aggregates. The associat- reserve requirements effective February 2, 1984. The Committee's views were set forth in an announcement dated ed range for total domestic nonfinancial debt was January 13, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 119 est-sensitive sectors of the economy. Some mer. In November, industrial production and nonfarm members also emphasized that higher domestic payroll employment increased appreciably further and the civilian unemployment rate declined 0.4 percentinterest rates could have a very undesirable age point to 8.4 percent. Retail sales rose substantially impact on the value of the dollar in foreign in November following sizable gains in September and exchange markets and on the international debt October. Housing starts increased in November to a situation. A number of members were also influ- level close to their third-quarter average. Recent data enced by the relatively sluggish growth of Ml indicate continuing expansion in business capital spending. Producer prices were little changed on averover the course of recent months, although such age in October and November, and consumer prices growth appeared to be accelerating in December. continued to increase in October at about the same Some urged that greater weight be placed on Ml pace as in other recent months. The index of average in the formulation and implementation of policy; hourly earnings changed little in November after rising and in the view of one member, reserve condi- somewhat faster in September and October than in previous months; over the first eleven months of the tions should be eased promptly if it became clear year the index has risen more slowly than in 1982. that growth in Ml was remaining sluggish. The foreign exchange value of the dollar has risen At the conclusion of the discussion, most of considerably further since mid-November against a the members indicated their acceptance of a trade-weighted average of major foreign currencies. In short-run policy that called for maintaining at October the U.S. foreign trade deficit was markedly higher than in the third quarter, reflecting a sharp rise least the existing degree of restraint on reserve in imports. positions, subject to the possibility of a slight After slowing substantially over the summer increase in such restraint depending on developmonths, growth in M2 and M3 strengthened in October ments relating to the outlook for economic activi- and November. Ml continued to grow at a sluggish ty and price pressures and on evidence that pace in November but increased substantially in early monetary growth appeared to be exceeding the December. Through November, M2 was at a level in the lower portion of the Committee's range for 1983, Committee's expectations. The members antici- M3 was close to the upper limit of its range, and Ml pated that such a policy would be associated with was near the lower end of the Committee's monitoring growth of both M2 and M3 at an annual rate of range for the second half of the year. Most interest around 8 percent for the period from November rates have risen somewhat since mid-November. 1983 to March 1984. The Committee believed The Federal Open Market Committee seeks to foster monetary and financial conditions that will help to that an acceleration in the growth of Ml to an reduce inflation further, promote growth in output on a annual rate of around 6 percent for the foursustainable basis, and contribute to a sustainable patmonth period was likely to be consistent with its tern of international transactions. At its meeting in objectives for the broader aggregates and that July the Committee reconsidered the growth ranges expansion in total domestic nonfinancial debt for monetary and credit aggregates established earlier for 1983 in furtherance of these objectives and set over this period would be within the tentative tentative ranges for 1984. The Committee recognized range of 8 to 11 percent established for the year that the relationships between such ranges and ulti- 1984. It was agreed that the intermeeting range mate economic goals have become less predictable; for the federal funds rate, which provides a that the impact of new deposit accounts on growth of mechanism for initiating consultation of the monetary aggregates cannot be determined with a high degree of confidence; and that the availability of Committee, would remain at 6 to 10 percent. It interest on large portions of transaction accounts may was also understood that the Committee would be reflected in some changes in the historical trends in consult should the aggregates and the economy velocity. turn out to be significantly weaker than expect- Against this background, the Committee at its July ed. meeting reaffirmed the following growth ranges for the broader aggregates: for the period from February- At the conclusion of the meeting, the Commit- March of 1983 to the fourth quarter of 1983, 7 to 10 tee issued the following domestic policy directive percent at an annual rate for M2; and for the period to the Federal Reserve Bank of New York: from the fourth quarter of 1982 to the fourth quarter of 1983, 6V2 to 9V2 percent for M3. The Committee also The information reviewed at this meeting suggests agreed on tentative growth ranges for the period from that real GNP has grown at a relatively rapid pace in the fourth quarter of 1983 to the fourth quarter of 1984 the current quarter, although the rate of expansion of 6V2 to 9V2 percent for M2 and 6 to 9 percent for M3. appears to have moderated since the spring and sum- The Committee considered that growth of Ml in a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • February 1984 range of 5 to 9 percent from the second quarter of 1983 Mr. Martin dissented from this action because to the fourth quarter of 1983, and in a range of 4 to 8 of his concern that any tightening of reserve percent from the fourth quarter of 1983 to the fourth conditions and the associated increase in interest quarter of 1984, would be consistent with the ranges rates would present a threat to the sustainability for the broader aggregates. The associated range for total domestic nonfinancial debt was reaffirmed at 8V2 of the economic expansion: needed business to IH/2 percent for 1983 and tentatively set at 8 to 11 investment would be more expensive, internapercent for 1984. tional debt servicing more burdensome, and in- In implementing monetary policy, the Committee terest-sensitive housing more vulnerable. agreed that substantial weight would continue to be placed on the behavior of the broader monetary aggregates. The behavior of Ml and total domestic nonfinancial debt will be monitored, with the degree of 2. Authorization for weight placed on Ml over time dependent on evidence Domestic Open Market Operations that velocity characteristics are resuming more predictable patterns. The Committee understood that At its previous meeting the Committee had voted policy implementation would involve continuing appraisal of the relationships between the various mea- to increase from $4 billion to $5 billion the limit sures of money and credit and nominal GNP, including on changes between Committee meetings in Sysevaluation of conditions in domestic credit and foreign tem Account holdings of U.S. government and exchange markets. federal agency securities specified in paragraph The Committee seeks in the short run to maintain at 1(a) of the authorization for domestic open marleast the existing degree of reserve restraint. The ket operations, for the intermeeting period endaction is expected to be associated with growth of M2 and M3 at annual rates of around 8 percent from ing with the close of business on December 20, November to March. The Committee anticipates that 1983. At this meeting the Committee voted to Ml growth at an annual rate of around 6 percent from retain the $5 billion limit for the upcoming inter- November to March will be consistent with its objecmeeting interval beginning on December 21, tives for the broader aggregates, and that expansion in 1983. total domestic nonfinancial debt would continue at around its recent pace. Depending on evidence about the continuing strength of economic recovery and Votes for this action: Messrs. Volcker, Solomon, other factors bearing on the business and inflation Gramley, GufFey, Keehn, Martin, Morris, Partee, outlook, somewhat greater restraint would be accept- Rice, Roberts, Mrs. Teeters, and Mr. Wallich. able should the aggregates expand more rapidly. The Votes against this action: None. Chairman may call for Committee consultation if it appears to the Manager for Domestic Operations that This action was taken on the recommendation pursuit of the monetary objectives and related reserve of the Manager for Domestic Operations. The paths during the period before the next meeting is likely to be associated with a federal funds rate persis- Manager had advised that substantial net sales of tently outside a range of 6 to 10 percent. securities were likely to be required during the weeks ahead in order to absorb reserves that had Votes for this action: Messrs. Volcker, Solomon, been provided recently to meet seasonal needs Gramley, Guffey, Keehn, Morris, Partee, Rice, for currency in circulation. Roberts, Mrs. Teeters, and Mr. Wallich. Vote against this action: Mr. Martin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

121 Legal Developments REVISION OF REGULATION Y Section 225.13 Factors considered in acting on bank applications The Board of Governors has adopted the revision of Section 225.14 Procedures for applications, notices, Regulation Y (12 CFR Part 225). The final regulation and hearings reduces regulatory burden by eliminating various application requirements, particularly in the nonbanking Subpart C—Nonbanking Activities and Acquisitions area, and by accelerating the processing schedules for by Bank Holding Companies all applications. In addition, the final regulation incorporates Board interpretations of significant provisions Section 225.21 Prohibited nonbanking activities and of the Bank Holding Company Act and Change in acquisitions; exempt bank holding Bank Control Act to improve understanding of the companies Board's policies. The regulation has been comprehen- Section 225.22 Exempt nonbanking activities and sively reorganized and rewritten for clarity in order to acquisitions enhance the usefulness of the regulation to the reader. Section 225.23 Procedures for applications, notices, Finally, the Board has amended the regulation to add and hearings five nonbanking activities to the list of those permissi- Section 225.24 Factors considered in acting on nonble for bank holding companies. The procedural provi- banking applications sions of sections 225.14 and 225.23 are effective for all Section 225.25 List of permissible nonbanking applications and notices submitted to the Board on and activities after January 1, 1984. Effective February 5, 1984, the Board revises Regu- Subpart D—Control and Divestiture Proceedings lation Y by removing sections 225.1 through 225.7 and section 225.51, except section 225.4(e), which is redes- Section 225.31 Control proceedings ignated section 225.22(d) as set forth below, and Section 225.32 Divestiture proceedings sections 225.101 through 225.143, which remain in effect; and by adding the following Subparts A through E and the Appendices to Subparts A through E to Subpart E—Change in Bank Control Part 225: Section 225.41 Transactions requiring prior notice Part 225—Bank Holding Companies and Section 225.42 Transactions not requiring prior Change in Bank Control notice Section 225.43 Procedures for filing, processing, Subpart A—General Provisions and acting on notices Section 225.1 Authority, purpose, and scope Section 225.2 Definitions Appendices to Subparts A through E Section 225.3 Administration Section 225.4 Corporate practices Appendix A Capital Adequacy Guidelines Section 225.5 Registration, reports, and inspections Appendix B Policy Statement for Formation of Small Section 225.6 Penalties for violations One-Bank Holding Companies Subpart B—Acquisition of Bank Securities or Assets INTERPRETATIONS Section 225.11 Transactions requiring Board ap- * * * ** proval Section 225.12 Transactions not requiring Board Authority: 12 U.S.C. 1844(b), 3106, 3108, 18170X13), approval 1818(b); and Pub. L. 98-181, Title IX. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1984 Subpart A—General Provisions voting securities of a bank holding company or state member bank of the Federal Reserve System. (6) Appendix A to the regulation contains the Section 225.1—Authority, Purpose, and Scope Board's Capital Adequacy Guidelines for bank holding companies and for state member banks. (7) Appendix B to the regulation contains the (a) Authority. This Part (Regulation Y) is issued by the Board's Policy Statement for Formation of Small Board of Governors of the Federal Reserve System One-Bank Holding Companies. ("Board") under section 5(b) of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1844(b)) ("BHC Act"); sections 8 and 13(a) of the International Banking Act of 1978 (12 U.S.C. 3106 and 3108); Section 225.2—Definitions section 7(j)(13) of the Federal Deposit Insurance Act, as amended by the Change in Bank Control Act of Except as modified in this section or unless the 1978 (12 U.S.C. 18170X13)) ("Bank Control Act"); context otherwise requires, the terms used in this section 8(b) of the Federal Deposit Insurance Act regulation have the same meanings as set forth in the (12 U.S.C. 1818(b)); and the International Lending relevant statutes. Supervision Act of 1983 (Pub. L. 98-181, Title IX). (a)(1) "Bank" means any institution organized under The BHC Act is codified at 12 U.S.C. 1841, et seq. the laws of the United States that: (i) accepts deposits that the depositor has a legal (b) Purpose. The principal purposes of this Part are to right to withdraw on demand and regulate the acquisition of control of banks by compa- (ii) engages in the business of making commercial nies and individuals, to define and regulate the non- loans. For the purposes of this definition: banking activities in which bank holding companies (A) "deposits that the depositor has a legal right and foreign banking organizations with United States to withdraw on demand" (hereinafter "demand operations may engage, and to set forth the procedures deposits") means any deposit with transactionfor securing approval for such transactions and activi- al capability that, as a matter of practice, is ties. payable on demand and that is withdrawable by check, draft, negotiable order of withdrawal, or (c) Scope. other similar instrument; and (1) Subpart A contains general provisions and defini- (B) "commercial loans" means any loan other tions of terms used in this regulation. than a loan to an individual for personal, family, (2) Subpart B governs acquisitions of bank or bank household, or charitable purposes, and includes holding company securities and assets by bank the purchase of retail installment loans or comholding companies or by any company that will mercial paper, certificates of deposit, bankers' become a bank holding company as a result of the acceptances, and similar money market instruacquisition. ments, the extension of broker call loans, the (3) Subpart C defines and regulates the nonbanking sale of federal funds, and the deposit of interestactivities in which bank holding companies and bearing funds. foreign banking organizations may engage directly (2) "Bank" includes any state-chartered bank or or through a subsidiary. In addition, certain non- national banking association that banking activities conducted by foreign banking (i) is owned exclusively (except to the extent organizations and certain foreign activities conduct- directors' qualifying shares are required by law) ed by bank holding companies are governed by the by other depository institutions, or by a bank Board's Regulation K (12 CFR Part 211, Interna- holding company owned exclusively by other tional Banking Operations). depository institutions; and (4) Subpart D specifies situations in which a compa- (ii) is organized to engage exclusively in providing ny is presumed to control voting securities or to services for other depository institutions and their have the power to exercise a controlling influence officers, directors, and employees. over the management or policies of a bank or other (3) "Bank" does not include: company, sets forth the procedures for making a (i) any institution that does not do business in the control determination, and provides rules governing United States except as an incident to its activities the effectiveness of divestitures by bank holding outside the United States; companies. (ii) any institution the accounts of which are (5) Subpart E governs changes in bank control insured by the Federal Savings and Loan Insurresulting from the acquisition by individuals or ance Corporation or any institution chartered by companies (other than bank holding companies) of the Federal Home Loan Bank Board; or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 123 (iii) "Agreement" or "Edge" corporations oper- class of voting securities of the bank or other ating under sections 25 or 25(a) of the Federal company, directly or indirectly or acting through Reserve Act (12 U.S.C. 601-604(a), 611-631). one or more other persons; (ii) control in any manner over the election of a (b)(1) "Bank holding company" means any company majority of the directors, trustees, or general (including a bank) that has direct or indirect control partners (or individuals exercising similar funcof a bank, other than control that results from the tions) of the bank or other company; ownership or control of: (iii) the power to exercise, directly or indirectly, a (i) voting securities held in good faith in a fiducia- controlling influence over the management or ry capacity (other than as provided in paragraphs policies of the bank or other company, as deter- (d)(2)(ii) and (iii) of this section) without sole mined by the Board after notice and opportunity discretionary voting authority, or as otherwise for hearing in accordance with section 225.31 of exempted under section 2(a)(5)(A) of the BHC Subpart D of this regulation; or Act; (iv) conditioning in any manner the transfer of 25 (ii) voting securities acquired and held only for a per cent or more of the outstanding shares of any reasonable period of time in connection with the class of voting securities of a bank or other underwriting of securities, as provided in section company upon the transfer of 25 per cent or more 2(a)(5)(B) of the BHC Act; of the outstanding shares of any class of voting (iii) voting rights to voting securities acquired for securities of another bank or other company. the sole purpose and in the course of participating (2) A bank or other company is deemed to control in a proxy solicitation, as provided in section voting securities or assets owned, controlled, or 2(a)(5)(C) of the BHC Act: held, directly or indirectly: (iv) voting securities acquired in satisfaction of (i) by any subsidiary of the bank or other comdebts previously contracted in good faith, as pany; provided in section 2(a)(5)(D) of the BHC Act, if (ii) in a fiduciary capacity (including by pension the securities are divested within two years of and profit-sharing trusts) for the benefit of the acquisition (or such later period as the Board may shareholders, members, or employees (or individpermit by order); or uals serving in similar capacities) of the bank or (v) voting securities of certain institutions owned other company or of any of its subsidiaries; or by a thrift institution or a trust company, as (iii) in a fiduciary capacity for the benefit of the provided in sections 2(a)(5)(E) and (F) of the BHC bank or other company or any of its subsidiaries. Act. (2) Except for the purposes of section 225.4(b) of this subpart and Subpart E of this regulation or as (e) "Foreign banking organization" and "qualifying otherwise provided in this regulation, the term foreign banking organization" shall have the same "bank holding company" includes a foreign banking meanings as provided in section 211.23 of the Board's organization. For the purposes of Subpart B, the Regulation K (12 CFR 211.23). term "bank holding company" includes a foreign banking organization only if it owns or controls a (f) "Management official" means any officer, director bank in the United States. (including honorary or advisory directors), partner, or trustee of a bank or other company, or any employee of the bank or other company with policy-making (c)(1) "Company" includes any bank, corporation, functions. general or limited partnership, association or similar organization, business trust, or any other trust unless by its terms it must terminate either within 25 (g) "Outstanding shares" means any voting securities, years, or within 21 years and 10 months after the but does not include securities owned by the United death of individuals living on the effective date of States or by a company wholly-owned by the United the trust. States. (2) "Company" does not include any organization, the majority of the voting securities of which are (h) "Person" includes an individual, bank, corporaowned by the United States or any state. tion, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated (d)(1) "Control" of a bank or other company means organization, or any other form of entity. (except for the purposes of Subpart E): (i) ownership, control, or power to vote 25 per (i) "Principal shareholder" means a person that owns cent or more of the outstanding shares of any or controls, directly or indirectly, 25 per cent or more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1984 of any class of voting securities of a bank or other authorized by the Board to exercise various functions company. prescribed in this regulation and in the Board's Rules Regarding Delegation of Authority (12 CFR Part 265) (j) "Subsidiary" means a bank or other company that and the Board's Rules of Procedure (12 CFR Part 262). is controlled by another company, and refers to a direct or indirect subsidiary of a bank holding compa- (b) Appropriate Federal Reserve Bank. In administerny. An indirect subsidiary is a bank or other company ing this regulation, the appropriate Federal Reserve that is controlled by a subsidiary of the bank holding Bank is as follows: company. (1) For a bank holding company (or a company applying to become a bank holding company): the (k) "United States" means the United States and Reserve Bank of the Federal Reserve district in includes any state of the United States, the District of which the company's banking operations are princi- Columbia, any territory of the United States, Puerto pally conducted, as measured by total domestic Rico, Guam, American Samoa, and the Virgin Islands. deposits in its subsidiary banks on the date it became (or will become) a bank holding company; (l)(l) "Voting securities" means shares of common or (2) For a foreign banking organization that has no preferred stock, general or limited partnership subsidiary bank and is not subject to paragraph shares or interests, or similar interests if the shares (b)(1) of this section: the Reserve Bank of the or interest, by statute, charter, or in any manner, Federal Reserve district in which the total assets of entitle the holder: the organization's United States branches, agencies, (i) to vote for or to select directors, trustees, or and commercial lending companies are the largest as partners (or persons exercising similar functions of the later of January 1, 1980, or the date it becomes of the issuing company); or a foreign banking organization; (ii) to vote on or to direct the conduct of the (3) For an individual or company submitting a notice operations or other significant policies of the under Subpart E of this regulation: the Reserve issuing company. Bank of the Federal Reserve district in which the (2) Preferred shares, limited partnership shares or banking operations of the bank holding company or interests, or similar interests are not "voting securi- state member bank to be acquired are principally ties" if: conducted, as measured by total domestic deposits (i) any voting rights associated with the shares or on the date the notice is filed. interest are limited solely to the type customarily provided by statute with regard to matters that would significantly and adversely affect the rights Section 225.4—Corporate Practices or preference of the security or other interest, such as the issuance of additional amounts or (a) Bank holding company policy and operations. classes of senior securities, the modification of (1) A bank holding company shall serve as a source the terms of the security or interest, the dissolu- of financial and managerial strength to its subsidiary tion of the issuing company, or the payment of banks and shall not conduct its operations in an dividends by the issuing company when preferred unsafe or unsound manner. dividends are in arrears; (2) Whenever the Board believes an activity of a (ii) the shares or interest represent an essentially bank holding company or control of a nonbank passive investment or financing device and do not subsidiary (other than a nonbank subsidiary of a otherwise provide the holder with control over the bank) constitutes a serious risk to the financial issuing company; and safety, soundness, or stability of a subsidiary bank (iii) the shares or interest do not entitle the holder, of the bank holding company and is inconsistent by statute, charter, or in any manner, to select or with sound banking principles or the purposes of the to vote for the selection of directors, trustees, or BHC Act or the Financial Institutions Supervisory partners (or persons exercising similar functions) Act of 1966, as amended (12 U.S.C. 1818(b) et seq.), of the issuing company. the Board may require the bank holding company to terminate the activity or to terminate control of the subsidiary, as provided in section 5(e) of the BHC Section 225.3—Administration Act. (a) Delegation of authority. Designated Board mem- (b) Purchase or redemption by a bank holding compabers and officers and the Federal Reserve Banks are ny of its own securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 125 (1) Filing notice. A bank holding company shall give the BHC Act, including the Board's Capital Adethe Board prior written notice before purchasing or quacy Guidelines (Appendix A to Subparts A redeeming its equity securities, if the gross consider- through E) and the Board's Policy Statement for ation for the purchase or redemption, when aggre- Formation of Small One-Bank Holding Companies gated with the net consideration paid by the compa- (Appendix B to Subparts A through E). ny for all such purchases or redemptions during the preceding 12 months, is equal to 10 per cent or more of the company's consolidated net worth. For the (5) Disapproval and hearing. The Board shall notify purposes of this section, "net consideration" is the the bank holding company in writing of the reasons gross consideration paid by the company for all of for a decision to disapprove any proposed purchase its equity securities purchased or redeemed during or redemption. Within 10 calendar days of receipt of the period minus the gross consideration received a notice of disapproval by the Board, the bank for all of its equity securities sold during the period holding company may submit a written request for a other than as part of a new issue. hearing. The Board will order a hearing within 10 calendar days of receipt of that request if it finds that (2) Content of notice. Any notice under this section material facts are in dispute or if it otherwise apshall be filed with the appropriate Reserve Bank and pears appropriate. Any hearing conducted under shall contain the following information: this paragraph shall be held in accordance with the (i) the purpose of the transaction, a description of Board's Rules of Practice for Formal Hearings the securities to be purchased or redeemed, the (12 CFR Part 263). At the conclusion of the hearing, total number of each class outstanding, the gross the Board shall by order approve or disapprove the consideration to be paid, and the terms of any proposed purchase or redemption on the basis of the debt incurred in connection with the transaction; record of the hearing. (ii) a description of all equity securities redeemed within the preceding 12 months, the net consider- (c) Deposit insurance. Every bank that is a bank ation paid, and the terms of any debt incurred in holding company or a subsidiary of a bank holding connection with those transactions; and company shall obtain Federal Deposit Insurance and (iii) a current and pro forma consolidated balance shall remain an "insured bank" as defined in section sheet if the bank holding company has total assets 3(h) of the Federal Deposit Insurance Act (12 U.S.C. of over $150 million, or a current and pro forma 1813(h)). parent company only balance sheet if the bank holding company has total assets of $150 million (d) Tie-in arrangements. A bank holding company and or less. any nonbanking subsidiary conducting an activity authorized under section 225.23 of this regulation may (3) Acting on notice. Within 30 calendar days of not in any manner extend credit, lease or sell property receipt of a notice under this section, the appropri- of any kind, provide any service, or fix or vary the ate Reserve Bank shall either approve the transac- consideration for any of these transactions subject to tion proposed in the notice or refer the notice to the any condition or requirement that, if imposed by a Board for decision. If the notice is referred to the bank, would constitute an unlawful tie-in arrangement Board for decision, the Board shall act on the notice under section 106 of the Bank Holding Company Act within 60 calendar days after the Reserve Bank Amendments of 1970 (12 U.S.C. 1971, 1972(1)). receives the notice. (4) Factors considered in acting on notice. The (e) Acting as transfer agent, municipal securities Board may disapprove a proposed purchase or dealer, or clearing agent. A bank holding company or redemption if it finds that the proposal would consti- any nonbanking subsidiary that is a "bank," as detute an unsafe or unsound practice, or would violate fined in section 3(a)(6) of the Securities Exchange Act any law, regulation, Board order, directive, or any of 1934 (15 U.S.C. 78c(a)(6)), and that is a transfer condition imposed by, or written agreement with, agent of securities, a municipal securities dealer, a the Board. In determining whether a proposal con- clearing agency, or a participant in a clearing agency stitutes an unsafe or unsound practice, the Board (as those terms are defined in section 3(a) of the will consider whether the bank holding company's Securities Exchange Act, (12 U.S.C. 78c(a)), shall be financial condition, after giving effect to the pro- subject to sections 208.8(f)-(j) of the Board's Regulaposed purchase or redemption, meets the financial tion H (12 CFR 208.8(f)-(j)) as if it were a state member standards applied by the Board under section 3 of bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1984 Section 225.5—Registration, Reports, and any order or notice issued thereunder, the Board may Inspections institute a cease and desist proceeding in accordance with the Financial Institutions Supervisory Act of (a) Registration of bank holding companies. Each 1966, as amended (12 U.S.C. 1818(b) et seq.). company shall register within 180 days after becoming a bank holding company by furnishing information in Subpart B—Acquisition of Bank Securities or the manner and form prescribed by the Board. A Assets company that receives the Board's prior approval under Subpart B of this regulation to become a bank Section 225.11—Transactions Requiring Board holding company may complete this registration re- Approval quirement through submission of its first annual report to the Board as required by paragraph (b) of this The following transactions require an application for section. the Board's prior approval under section 3 of the BHC Act unless otherwise exempted under section 225.12 (b) Reports of bank holding companies. Each bank of this subpart: holding company shall furnish, in the manner and form (a) Formation of bank holding company. Any action prescribed by the Board, an annual report of the that causes a bank or other company to become a bank company's operations for the fiscal year in which it holding company. becomes a bank holding company, and for each fiscal year during which it remains a bank holding company. (b) Acquisition of subsidiary bank. Any action that Additional information and reports shall be furnished causes a bank to become a subsidiary of a bank as the Board may require. holding company. (c) Examinations and inspections. The Board may (c) Acquisition of control of bank or bank holding examine or inspect any bank holding company and company securities. The acquisition by a bank holding each of its subsidiaries and prepare a report of their company of direct or indirect ownership or control of operations and activities. With respect to a foreign any voting securities of a bank or bank holding compabanking organization, the Board may also examine any ny, if the acquisition results in the company's control branch or agency of a foreign bank in any state of the of more than 5 per cent of the outstanding shares of United States and may examine or inspect each of the any class of voting securities of the bank or bank organization's subsidiaries in the United States and holding company. An acquisition includes the purprepare reports of their operations and activities. The chase of additional securities through the exercise of Board will rely as far as possible on the reports of preemptive rights, but does not include securities examination made by the primary federal or state received in a stock dividend or stock split that does not supervisor of the subsidiary bank of a bank holding alter the bank holding company's proportional share of company or of the branch or agency of the foreign any class of voting securities. bank. (d) Acquisition of bank assets. The acquisition by a bank holding company or by a subsidiary thereof Section 225.6—Penalties for Violations (other than a bank) of all or substantially all of the assets of a bank. (a) Criminal and civil penalties. Section 8 of the BHC Act provides criminal penalties for willful violation, (e) Merger of bank holding companies. The merger or and civil penalties for violation, by any company or consolidation of bank holding companies, including a individual of the BHC Act or any regulation or order merger through the purchase of assets and assumption issued under it, or for making a false entry in any of liabilities. book, report, or statement of a bank holding company. Civil money penalty assessments for violations of the Section 225.12—Transactions not Requiring BHC Act shall be made in accordance with Subpart B Board Approval of the Board's Rules of Practice for Hearings (12 CFR 263, Subpart B). For any willful violation of the Bank The following transactions do not require the Board's Control Act or any regulation or order issued under it, approval under section 225.11 of this subpart: the Board may assess a civil penalty as provided in (a) Acquisition of securities in fiduciary capacity. The 12 U.S.C. 1817(j)(15). acquisition by a bank or other company (other than a trust that is a company) of control of voting securities (b) Cease and desist proceedings. For any violation of of a bank or bank holding company in good faith in a the BHC Act, the Bank Control Act, this regulation, or fiduciary capacity, unless: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 127 (1) the acquiring bank or other company has sole Section 225.13—Factors Considered in Acting discretionary authority to vote the securities and on Bank Applications retains the authority for more than two years; or (2) the acquisition is for the benefit of the acquiring (a) Prohibited anticompetitive transactions. As specibank or other company, or its shareholders, employ- fied in sections 3(c)(1) and (2) of the BHC Act, the ees, or subsidiaries. Board may not approve any application under this subpart if: (b) Acquisition of securities in satisfaction of debts (1) the transaction would result in a monopoly or previously contracted. The acquisition by a bank or would further any combination or conspiracy to other company of control of voting securities of a bank monopolize, or to attempt to monopolize, the busior bank holding company in the regular course of ness of banking in any part of the United States; or securing or collecting a debt previously contracted in (2) the effect of the transaction may be substantially good faith, if the acquiring bank or other company to lessen competition in any section of the country, divests the securities within two years of acquisition. tend to create a monopoly, or in any other manner The Board or Reserve Bank may grant requests for up be in restraint of trade, unless the Board finds that to three one-year extensions. the transaction's anticompetitive effects are clearly outweighed by its probable effect in meeting the (c) Acquisition of securities by a bank holding compa- convenience and needs of the community. ny with majority control. The acquisition by a bank holding company of additional voting securities of a (b) Other factors. In deciding applications under this bank or bank holding company if more than 50 per cent subpart, the Board also considers the following factors of the outstanding voting securities of the bank or bank with respect to the applicant, its subsidiaries, any holding company is lawfully controlled by the acquir- banks related to the applicant through common ownering bank holding company prior to the acquisition. ship or management, and the bank or banks to be acquired: (1) Financial condition. Their financial condition (d) Transactions subject to Bank Merger Act. The and future prospects, including whether current and merger or consolidation of a subsidiary bank of a bank projected capital positions and levels of indebtedholding company with another bank, or the purchase ness conform to standards and policies established of assets by such a subsidiary bank, or a similar by the Board. transaction involving subsidiary banks of a bank holding company, if the transaction requires the prior (2) Management. The competence and character of approval of a Federal supervisory agency under the the principals of the applicant and banks or bank Bank Merger Act (12 U.S.C. 1828(c)). This exception holding companies concerned; their record of comdoes not include: pliance with laws and regulations; and applicant's (1) the merger of a nonsubsidiary bank and a nonop- record of fulfilling any commitments to, and any erating subsidiary bank formed by a company for conditions imposed by, the Board in connection the purpose of acquiring the nonsubsidiary bank; with prior applications. and (2) any transaction requiring the Board's prior ap- (3) Convenience and needs of the community. The proval under section 225.11(e) of this subpart. The convenience and needs of the communities to be Board may require an application under this subpart served, including the record of performance if it determines that the merger or consolidation under the Community Reinvestment Act of 1977 would have a significant adverse impact on the (12 U.S.C. 2901 et seq.) and regulations issued financial condition of the bank holding company or thereunder, including the Board's Regulation BB otherwise requires approval under section 3 of the (12 CFR Part 228.) BHC Act. (c)(1) Interstate transactions. The Board may not (e) Holding securities in escrow. The holding of any approve any application under this subpart that voting securities of a bank or bank holding company in would permit: an escrow arrangement for the benefit of an applicant (i) the formation of a bank holding company that pending the Board's action on an application for controls more than 5 per cent of the outstanding approval of the proposed acquisition, if title to the shares of any class of voting securities of two or securities and the voting rights remain with the seller more banks located in different states; or and payment for the securities has not been made to (ii) the acquisition by a bank holding company or the seller. by any of its subsidiaries of any voting securities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1984 of, any interest in, or substantially all of the assets days of receipt of the requested information, either of, an additional bank located in a state other than accept the application for processing or return it to the the state in which the operations of the banking applicant if it is still incomplete. Upon accepting an subsidiaries of the bank holding company were application, the Reserve Bank shall immediately send principally conducted (as measured by total de- copies to the Board. posits) on July 1, 1966, or on the date on which the company became a bank holding company, (d) Action on applications. whichever date is later. (2) Exceptions. The prohibitions of this paragraph (1) Action under delegated authority. The Reserve do not apply if: Bank shall approve an application under this section (i) the bank is located in a state that by statute within 30 calendar days after it has accepted the expressly authorizes the acquisition of securities application, unless the Reserve Bank, upon notice of, an interest in, or substantially all of the assets to the applicant, refers the application to the Board of, a bank within the state by an out-of-state bank for decision because action under delegated authorholding company; or ity is not appropriate. Upon written notice to the (ii) the acquisition involves a closed or failing applicant, the Reserve Bank may extend the 30-day bank with assets of at least $500,000,000, and has period for 15 days. If the extension of time is to been authorized under section 13(f) of the Federal request necessary additional information, the 15-day Deposit Insurance Act (12 U.S.C. 1823(f)). period does not commence until after the Reserve Bank receives the requested information. Section 225.14—Procedures for Applications, Notices, and Hearings (2) Board action. The Board shall act on an application under this subpart that is referred to it for (a) Filing application. An application for the Board's decision within 60 calendar days after the Reserve prior approval under this subpart shall be filed with the Bank has accepted the application, unless the Board appropriate Reserve Bank on the designated form and notifies the applicant that the 60-day period is being shall comply with section 262.3 of the Rules of Proce- extended for a specified period and states the readure (12 CFR 262.3), which requires the applicant to sons for the extension. In no event may the extenpublish newspaper notice of the application. sion exceed the 91-day period provided in paragraph (g) of this section. The Board may request additional (b) Notice. information that it believes is necessary for its decision. (1) Notice to primary banking supervisor. Upon receipt of an application under this subpart, the (e) Notice to Attorney General. The Board or Reserve Reserve Bank shall promptly furnish notice and a Bank shall immediately notify the Attorney General of copy of the application to the primary banking approval of any application under this section. supervisor of the bank to be acquired. The primary supervisor shall have 30 calendar days from the date (f) Hearings. As provided in section 3(b) of the BHC of the letter giving notice in which to submit its Act, the Board shall order a hearing if it receives from views and recommendations to the Board. the primary supervisor of the bank to be acquired, within the 30-day period specified in paragraph (b)(1) (2) Federal Register notice. Upon receipt by the of this section, a written recommendation of disap- Reserve Bank of an application under this section, proval of an application. The Board may order a notice of the application shall be promptly sent to formal or informal hearing or other proceeding on the the Federal Register for publication. The Federal application, as provided in section 262.3(i)(2) of the Register notice shall invite comment on the applica- Board's Rules of Procedure (12 CFR 262.3(i)(2)). Any tion for a period of no more than 30 days. request for a hearing (other than from the primary supervisor) shall comply with section 262.3(e) of the (c) Accepting application for processing. Within 10 Rules of Procedure (12 CFR 262.3(e)). business days after the Reserve Bank receives an application under this section, the Reserve Bank shall (g) Approval through failure to act. accept it for processing, request additional information to complete the application, or return the application if (1) Ninety-one day rule. An application under this it is substantially incomplete. If additional information subpart shall be deemed approved if the Board fails is requested, the Reserve Bank shall, within 5 business to act on the application within 91 calendar days Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 129 after the date of submission to the Board of the Subpart C—Nonbanking Activities and complete record on the application. For this pur- Acquisitions by Bank Holding Companies pose, the Board acts when it issues an order stating that the Board has approved or denied the applica- Section 225.21—Prohibited Nonbanking tion, reflecting the votes of the members of the Activities and Acquisitions; Exempt Bank Board, and indicating that a statement of the reasons Holding Companies for the decision will follow promptly. (a) Prohibited nonbanking activities and acquisitions. (2) Complete record. For the purpose of computing Except as provided in section 225.22 of this subpart, a the commencement of the 91-day period, the record bank holding company or a subsidiary may not engage is complete on the latest of: in, or acquire or control, directly or indirectly, voting (i) the date of receipt by the Board of an applica- securities or assets of a company engaged in, any tion that has been accepted by the Reserve Bank; activity other than: (ii) the last day provided in any notice for receipt (1) banking or managing or controlling banks and of comments and hearing requests on the applica- other subsidiaries authorized under the BHC Act; tion; and (iii) the date of receipt by the Board of the last relevant material regarding the application that is (2) an activity that the Board determines to be so needed for the Board's decision, if the material is closely related to banking or managing or controlling received from a source outside of the Federal banks as to be a proper incident thereto, including Reserve System; or any incidental activities that are necessary to carry (iv) the date of completion of any hearing or other on such an activity, if the bank holding company has proceeding. obtained the prior approval of the Board for that activity in accordance with and subject to the re- (h) Exceptions to notice and hearing requirements. quirements of this regulation. (1) Probable bank failure. If the Board finds it must (b) Exempt bank holding companies. The following act immediately on an application in order to pre- bank holding companies are exempt from the provivent the probable failure of a bank or bank holding sions of this subpart: company, the Board may modify or dispense with (1) Family-owned companies. Any company that is the notice and hearing requirements provided in this a "company covered in 1970," as defined in section section. 2(b) of the BHC Act, more than 85 per cent of the voting securities of which was collectively owned on (2) Emergency. If the Board finds that, although June 30, 1968, and continuously thereafter, by memimmediate action on an application is not necessary, bers of the same family (or their spouses) who are an emergency exists requiring expeditious action, lineal descendants of common ancestors. the Board shall provide the primary supervisor ten days to submit its recommendation. The Board may (2) Labor, agricultural, and horticultural organizaact on such an application without a hearing and tions. Any company that was on January 4, 1977, may modify or dispense with the other notice and both a bank holding company and a labor, agriculhearing requirements provided in this section. tural, or horticultural organization exempt from taxation under section 501 of the Internal Revenue Code (26 U.S.C. 501(c)). (i) Waiting period. A transaction approved under this subpart shall not be consummated until thirty days (3) Companies granted hardship exemption. Any after the date of approval of the application, unless the bank holding company that has controlled only one Board has determined under paragraph (h) of this bank since before July 1, 1968, and that has been section that: granted an exemption by the Board under section (1) the application involves a probable bank failure, 4(d) of the BHC Act, subject to any conditions in which case the transaction may be consummated imposed by the Board. immediately upon approval; or (2) an emergency exists requiring expeditious ac- (4) Companies granted exemption on other grounds. tion, in which case the transaction may be consum- Any company that acquired control of a bank before mated on or after the fifth calendar day following December 10, 1982, without the Board's prior apapproval. proval under section 3 of the BHC Act, on the basis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1984 of a narrow interpretation of the term "demand approval, conduct a safe deposit business, or acquire deposit" or "commercial loan" if the Board has voting securities of a company that conducts such a determined that: business. (i) coverage of the company as a bank holding company under this subpart would be unfair or (c) Nonbanking acquisitions not requiring prior Board represent an unreasonable hardship; and approval. The Board's prior approval is not required (ii) exclusion of the company from coverage under under this subpart for the following acquisitions: this regulation is consistent with the purposes of (1) DPC acquisitions. the BHC Act and section 106 of the Bank Holding (i) Voting securities or assets, acquired by fore- Company Act Amendments of 1970 (12 U.S.C. closure or otherwise, in the ordinary course of 1971, 1972(1)). The provisions of section 225.4 of collecting a debt previously contracted ("DPC Subpart A of this regulation are not applicable to a property") in good faith, if the DPC property is company exempt under this paragraph. divested within two years of acquisition. (ii) The Board may, upon request, extend this Section 225.22—Exempt Nonbanking Activities two-year period for up to three additional oneand Acquisitions year periods. The Board may permit additional extensions for up to 5 years (for a total of 10 (a) Servicing activities. A bank holding company may, years), for real estate or other assets that are without the Board's prior approval under this subpart, demonstrated by the bank holding company to furnish services to or perform services for, or establish have value and marketability characteristics simior acquire a company that engages solely in furnishing lar to real estate. services to or performing services for: (iii) Transfers of DPC property within the bank (1) the bank holding company or its subsidiaries in holding company system do not extend any period connection with their activities as authorized by for divestiture of the property. law, including services that are necessary to fulfill commitments entered into by the subsidiaries with (2) Securities or assets required to be divested by third parties, if the bank holding company or servic- subsidiary. Voting securities or assets required to be ing company complies with the Board's published divested by a subsidiary at the request of an examininterpretations and does not act as principal in ing federal or state authority (except by the Board dealing with third parties; and under the BHC Act or this regulation), if the bank (2) the internal operations of the bank holding com- holding company divests the securities or assets pany or its subsidiaries. Services for the internal within two years from the date acquired from the operations of the bank holding company or its subsidiary. subsidiaries include, but are not limited to: (i) accounting, auditing, and appraising; (3) Fiduciary investments. Voting securities or as- (ii) advertising and public relations; sets acquired by a bank or other company (other (iii) data processing and data transmission ser- than a trust that is a company) in good faith in a vices, data bases or facilities; fiduciary capacity, if the voting securities or assets (iv) personnel services; are: (v) courier services; (i) held in the ordinary course of business; and (vi) holding or operating property used wholly or (ii) not acquired for the benefit of the company or substantially by a subsidiary in its operations or its shareholders, employees, or subsidiaries. its future use; (vii) liquidating property acquired from a subsid- (4) Securities eligible for investment by a national iary; bank. Voting securities of the kinds and amounts (viii) liquidating property acquired from any explicitly eligible by federal statute (other than sources either prior to May 9, 1956, or the date on section 4 of the Bank Service Corporation Act, which the company became a bank holding com- 12 U.S.C. 1864) for investment by a national bank, pany, whichever is later; and and voting securities acquired prior to June 30, (ix) selling, purchasing, or underwriting insurance 1971, in reliance on section 4(c)(5) of the BHC Act such as blanket bond insurance, group insurance and interpretations of the Comptroller of the Curfor employees, and property and casualty insur- rency under section 5136 of the Revised Statutes ance. (12 U.S.C. 24(7)). (b) Safe deposit business. A bank holding company or (5) Securities or property representing 5 per cent or nonbank subsidiary may, without the Board's prior less of a company. Voting securities of a company Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 131 or property that, in the aggregate, represent 5 per part, acquire or retain securities on the basis of cent or less of the outstanding shares of any class of section 4(c)(5) the BHC Act in accordance with the voting securities of a company or a 5 per cent regulations of the Comptroller of the Currency. interest or less in the property, subject to the provisions of 12 CFR 225.137. (2) State bank. A state-chartered bank or its subsid- (6) Securities of investment company. Voting securi- iary may, insofar as federal law is concerned and ties of an investment company that is solely engaged without the Board's prior approval under this subin investing in securities and that does not own or part: control more than 5 per cent of the outstanding (i) acquire or retain securities, on the basis of shares of any class of voting securities of any section 4(c)(5) of the BHC Act, of the kinds and company. amounts explicitly eligible by federal statute for investment by a national bank; or (7) Assets acquired in the ordinary course of busi- (ii) acquire or retain all (but, except for directors' ness. Assets of a company acquired in the ordinary qualifying shares, not less than all) of the securicourse of business, subject to the provisions of ties of a company that engages solely in activities 12 CFR 225.132, if the assets relate to activities in in which the parent bank may engage, at locations which the acquiring company has previously re- at which the bank may engage in the activity, and ceived Board approval under this regulation to en- subject to the same limitations as if the bank were gage in the geographic areas to be served. engaging in the activity directly. (8) Asset acquisitions by consumer finance or mort- (e) Activities and securities of new bank holding gage company or industrial bank. Assets of an companies. A company that becomes a bank holding office(s) of a company, all or substantially all of company may, for a period of two years, engage in which relate to making, acquiring, or servicing loans nonbanking activities and control voting securities or for personal, family, or household purposes, if: assets of a nonbank subsidiary, if the bank holding (i) the acquiring company has previously received company engaged in such activities or controlled such Board approval under this regulation to engage in voting securities or assets on the date it became a bank consumer finance, residential mortgage banking, holding company. The Board may grant requests for or industrial banking activities in the geographic up to three one-year extensions of the two-year areas to be served by the acquired office(s); period. (ii) the assets acquired during any twelve-month period do not represent more than 25 per cent of (f) Grandfathered activities and securities. Unless the the assets (on a consolidated basis) of the acquir- Board orders divestiture or termination under section ing consumer finance company, mortgage compa- 4(a)(2) of the BHC Act, a "company covered in 1970," ny or industrial bank, or more than $25 million, as defined in section 2(b) of the BHC Act, may: whichever amount is less; (1) retain voting securities or assets and engage in (iii) the assets acquired do not represent more activities that it has lawfully held or engaged in than 50 per cent of the selling company's consoli- continuously since June 30, 1968; and dated assets that are devoted to the consumer (2) acquire voting securities of any newly-formed finance, residential mortgage banking, or industri- company to engage in such activities. al banking business; (iv) the acquiring company notifies the Reserve (g) Securities or activities exempt under Regulation K. Bank of the acquisition within 30 days after the A bank holding company may acquire voting securities acquisition; and or assets and engage in activities as authorized in (v) the acquiring company, after giving effect to Regulation K (12 CFR Part 211). the transaction, meets the Board's Capital Adequacy Guidelines (Appendix A to Subparts A Section 225.23—Procedures for Applications, through E) and the Board has not previously Notices, and Hearings notified the acquiring company that it may not acquire assets under the exemption in this para- (a) Application or notice required for nonbanking graph. activities. An application or notice for the Board's prior approval under section 225.21(a) of this subpart (d) Acquisition of securities by subsidiary banks. for the following transactions shall be filed by a bank holding company with the appropriate Reserve Bank (1) National bank. A national bank or its subsidiary on the designated form in accordance with the Board's may, without the Board's approval under this sub- Rules of Procedure (12 CFR 262.2): Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1984 (1) Engaging de novo in listed nonbanking activities. approval under this regulation to engage in the A notice is required to commence or to engage de activity in that country ; or novo, either directly or through a subsidiary, in a (iii) the Board or appropriate Reserve Bank has nonbanking activity listed in section 225.25 of this notified the company that a notice under parasubpart. The applicant may commence the activity graph (a)(1) of this section is required. 30 days after receipt by the Reserve Bank of the The Board may require an application under paranotice unless the Reserve Bank within the 30-day graph (a)(2) or (a)(3) of this section instead of a period: notice. (i) returns the notice because it is incomplete or requires an application under paragraph (a)(2) or (2) Activities outside United States. With respect to (3) of this section; activities to be engaged in outside the United States (ii) notifies the company that it may consummate that require approval under this subpart, the procethe transaction at an earlier date; dures of this section apply only to activities to be (iii) extends the 30-day period for an additional 15 engaged in directly by a bank holding company that days; or is not a qualifying foreign banking organization or by (iv) refers the notice to the Board for decision a nonbank subsidiary of a bank holding company because substantive adverse comment is received approved under this subpart. Regulation K (12 CFR or it otherwise appears appropriate. Part 211) governs other international operations of If the 30-day period is extended by the Reserve bank holding companies. Bank to request necessary additional information, the 15-day period does not commence until after the (3) Alteration of nonbanking activity. A notice under Reserve Bank receives the requested information. paragraph (a)(1) of this section is required to alter a The Reserve Bank shall promptly send a copy of nonbanking activity in any material respect from any notice received under this paragraph to the that considered by the Board in acting on the Board. application or notice to engage in the activity. The Board may require an application under paragraph (2) Acquiring a company engaged in listed nonbank- (a)(2) or (3) of this section instead of a notice. ing activities. An application is required to acquire or control voting securities or assets of a company (c) Accepting application for processing. Within 10 engaged in a permissible nonbanking activity listed business days after the Reserve Bank receives an in section 225.25 of this subpart. application under this section, the Reserve Bank shall accept it for processing, request additional information (3) Engaging in or acquiring a company to engage in to complete the application, or return the application unlisted nonbanking activities. An application is to the applicant if it is substantially incomplete. If required to commence or to engage de novo, or to additional information is requested, the Reserve Bank acquire or control voting securities or assets of a shall, within 5 business days of receipt of the requestcompany engaged in, any activity not listed in ed information, either accept the application for prosection 225.25 of this subpart. The application shall cessing or return the application to the applicant if it is contain evidence that the proposed activity is so still incomplete. Upon accepting an application, the closely related to banking or managing or controlling Reserve Bank shall immediately send copies to the banks as to be a proper incident thereto. Board. (b) Notice to expand or alter nonbanking activities. (d) Federal Register notice. (I) De novo expansion. A notice under paragraph (1) Listed activities. Upon receipt by the Reserve (a)(1) of this section is required to open a new office Bank of an application or notice involving an activior to form a subsidiary to engage in, or to relocate an ty listed in section 225.25 of this subpart, notice of existing office engaged in, a nonbanking activity that the application or proposal shall be promptly sent to the Board has previously approved for the bank the Federal Register for publication. The Federal holding company under this regulation, only if: Register notice shall invite comment for a period of (i) the Board's prior approval was limited geo- not more than 30 days. graphically; (ii) the activity is to be conducted in a country (2) Unlisted activities. In the case of an application outside of the United States and the bank holding under this section involving an activity not listed in company has not previously received prior Board section 225.25 of this subpart, the Board shall, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 133 within 10 business days of acceptance by the Re- application in the Federal Register. The newspaserve Bank, send notice of the application to the per notice shall be published in a newspaper of Federal Register for publication, unless the Board general circulation in the areas to be served as a determines that the applicant has not demonstrated result of the acquisition and shall provide an that the activity is so closely related to banking or to opportunity for interested persons to comment on managing or controlling banks as to be a proper the application for a period of at least 10 calendar incident thereto. The Board may extend the 10-day days. If the applicant elects Federal Register period for an additional 30 calendar days upon notice, the notice shall provide an opportunity for notice to the applicant. In the event notice of an interested persons to comment for a period of at application is not published for comment, the Board least 15 calendar days. shall inform the applicant of the reasons for the decision. The Federal Register notice shall invite (2) Criteria for use of expedited procedure. The comment on the proposal for a reasonable period of procedure in this paragraph is available only if: time, generally for 30 days. (i) neither the book value of the assets to be acquired nor the gross consideration to be paid for (e) Action on applications. the securities or assets exceeds $15 million; (ii) the bank holding company has previously (1) Action under delegated authority. The Reserve received Board approval to engage in the activity Bank shall approve an application under paragraph involved in the acquisition; and (a)(2) of this section within 30 calendar days after it (iii) the bank holding company meets the Board's has accepted the application, unless the Reserve Capital Adequacy Guidelines (Appendix A to Bank, upon notice to the applicant, refers the appli- Subparts A through E). cation to the Board for decision because action under delegated authority is not appropriate. Upon (3) Action on application. Within 5 business days written notice to the applicant, the Reserve Bank after the close of the comment period specified in may extend the 30-day period for 15 days. If the the Federal Register notice or within 15 calendar extension of time is to request necessary additional days after receipt by the Reserve Bank of the information, the 15-day period does not commence newspaper notice, the Reserve Bank shall either until the Reserve Bank receives the requested infor- approve the application or refer it to the Board for mation. decision if action under delegated authority is not appropriate. The Board shall act on an application (2) Board action. The Board shall act on an applica- under this paragraph that is referred to it for decition or notice under this section that is referred to it sion in accordance with paragraph (e)(2) of this for decision within 60 calendar days after the Re- section. The Reserve Bank, upon written notice to serve Bank has accepted the application or received the applicant, may extend the time period for apthe notice, unless the Board notifies the applicant proval under this paragraph for a reasonable period that the 60-day period is being extended for a of time not to exceed 30 days. The Reserve Bank or specified period and explains the reasons for the the Board may require an application under paraextension. In no event may the extension exceed the graph (a)(2) of this section. 91-day period specified in paragraph (h) of this section. The Board may request additional informa- (g) Hearing. Any request for a hearing on an application that it believes is necessary for its decision. tion or notice under this section shall comply with the provisions of section 262.3(e) of the Board's Rules of (f) Expedited procedure for small acquisitions. Procedure (12 CFR 262.3(e)). The Board may order a formal or informal hearing or other proceeding on an (1) Filing notice. As an alternative to the application application, as provided in section 262.3(i)(2) of the procedure of paragraph (a)(2) of this section, a bank Rules of Procedure (12 CFR 262.3(i)(2)). The Board holding company may apply to acquire voting secu- shall order a hearing only if there are disputed issues of rities or assets of a company engaged in an activity material fact that cannot be resolved in some other listed in section 225.25 of this subpart by: manner. (i) providing the appropriate Reserve Bank with a description of the transaction; and either (h) Approval through failure to act; 91-day rule. An (ii) submitting a copy of a newspaper notice in the application or notice under this subpart shall be form prescribed by the Board; or deemed approved if the Board fails to act on the (iii) requesting the Board to publish notice of the application or notice within 91 calendar days after the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1984 date of submission to the Board of the complete record (2) Industrial banking. Operating an industrial bank, on the application or notice. The procedures for com- Morris Plan bank, or industrial loan company, as putation of the 91-day rule as set forth in section authorized under state law, so long as the institution 225.14(g) of Subpart B of this regulation apply to is not a bank. applications and notices under this subpart. (3) Trust company functions. Performing functions (i) Emergency thrift institution acquisitions. In the or activities that may be performed by a trust case of an application to acquire a thrift institution, the company (including activities of a fiduciary, agency, Board may modify or dispense with the notice and or custodial nature), in the manner authorized by hearing requirements of this section if the Board finds federal or state law, so long as the institution is not a that an emergency exists that requires the Board to act bank and does not make loans or investments or immediately and the primary Federal regulator of the accept deposits other than: institution concurs. (i) deposits that are generated from trust funds not currently invested and that are properly secured Section 225.24—Factors Considered in Acting to the extent required by law; on Nonbanking Applications (ii) deposits representing funds received for a special use in the capacity of managing agent or In evaluating an application or notice under section custodian for an owner of, or investor in, real 225.23 of this subpart, the Board shall consider wheth- property, securities, or other personal property; er the performance by the applicant of the activity can or for such owner or investor as agent or custodireasonably be expected to produce benefits to the an of funds held for investment or as escrow public (such as greater convenience, increased compe- agent; or for an issuer of, or broker or dealer in tition, and gains in efficiency) that outweigh possible securities, in a capacity such as a paying agent, adverse effects (such as undue concentration of re- dividend disbursing agent, or securities clearing sources, decreased or unfair competition, conflicts of agent; provided such deposits are not employed interest, and unsound banking practices). This consid- by or for the account of the customer in the eration includes an evaluation of the financial and manner of a general purpose checking account or managerial resources of the applicant, including its interest-bearing account; or subsidiaries, and any company to be acquired, and the (iii) making call loans to securities dealers or effect of the proposed transaction on those resources. purchasing money market instruments such as Unless the record demonstrates otherwise, the com- certificates of deposit, commercial paper, governmencement or expansion of a nonbanking activity ment or municipal securities, and bankers accepde novo is presumed to result in benefits to the public tances. (Such authorized loans and investments, through increased competition. however, may not be used as a method of channeling funds to nonbanking affiliates of the trust Section 225.25—List of Permissible company.) Nonbanking Activities (4) Investment or financial advice. Acting as invest- (a) Closely related nonbanking activities. The activi- ment or financial advisor to the extent of: ties listed below are so closely related to banking or (i) serving as the advisory company for a mortmanaging or controlling banks as to be a proper gage or a real estate investment trust; incident thereto and may be engaged in by a bank (ii) serving as investment adviser (as defined in holding company or a subsidiary thereof in accordance section 2(a)(20) of the Investment Company Act with and subject to the requirements of this regulation. of 1940, 15 U.S.C. 80a-2(a)(20)), to an investment company registered under that act, including (b)(1) Making and servicing loans. Making, acquiring, sponsoring, organizing, and managing a closedor servicing loans or other extensions of credit end investment company; (including issuing letters of credit and accepting (iii) providing portfolio investment advice1 to any drafts) for the company's account or for the account other person; of others, such as would be made, for example, by the following types of companies: (i) consumer finance; 1. The term "portfolio investment" is intended to refer generally to the investment offunds in a "security" as defined in section 2(1) of the (ii) credit card; Securities Act of 1933 (15 U.S.C. 77b) or in real property interests, (iii) mortgage; except where the real property is to be used in the trade or business of the person being advised. In furnishing portfolio investment advice, (iv) commercial finance; and bank holding companies and their subsidiaries shall observe the (v) factoring. standards of care and conduct applicable to fiduciaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 135 (iv) furnishing general economic information and investment in the property plus the estimated total advice, general economic statistical forecasting cost of financing the property over the term of the services and industry studies;2 and lease,5 from: (v) providing financial advice to state and local (A) rentals; governments, such as with respect to the issuance (B) estimated tax benefits (investment tax credof their securities. it, net economic gain from tax deferral from accelerated depreciation, and other tax benefits (5) Leasing personal or real property. Leasing per- with a substantially similar effect); sonal or real property or acting as agent, broker, or (C) the estimated residual value of the property adviser in leasing such property if: at the expiration of the initial term of the lease, (i) the lease is to serve as the functional equivalent which in no case shall exceed 20 per cent of the of an extension of credit to the lessee of the acquisition cost of the property to the lessor; property; and (ii) the property to be leased is acquired specifical- (D) in the case of a lease of personal property of ly for the leasing transaction under consideration not more than seven years in duration, such or was acquired specifically for an earlier leasing additional amount, which shall not exceed 60 transaction; per cent of the acquisition cost of the property, (iii) the lease is on a nonoperating basis;3 as may be provided by an unconditional guaran- (iv) at the inception of the initial lease the effect of tee by a lessee, independent third party, or the transaction (and, with respect to governmen- manufacturer, which has been determined by tal entities only, reasonably anticipated future the lessor to have the financial resources to transactions 4) will yield a return that will com- meet such obligation, that will assure the lessor pensate the lessor for not less than the lessor's full of recovery of its investment and cost of financing; (v) the maximum lease term during which the 2. This is to be contrasted with "management consulting," which lessor must recover the lessor's full investment in the Board views as including, but not limited to, the provision of analysis or advice as to a firm's (A) purchasing operations, such as the property, plus the estimated total cost of inventory control, sources of supply, and cost minimization subject to financing the property, shall be 40 years; and constraints; (B) production operations, such as quality control, work measurement, product methods, scheduling shifts, time and motion (vi) at the expiration of the lease (including any studies, and safety standards; (C) marketing operations, such as renewals or extensions with the same lessee), all market testing, advertising programs, market development, packaginterest in the property shall be either liquidated ing, and brand development; (D) planning operations, such as demand and cost projections, plant location, program planning, corporate or released on a nonoperating basis as soon as acquisitions and mergers, and determination of long-term and short- practicable but in no event later than two years term goals; (E) personnel operations, such as recruitment, training, from the expiration of the lease;6 however, in no incentive programs, employee compensation, and management-personnel relations; (F) internal operations, such as taxes, corporate case shall the lessor retain any interest in the organization, budgeting systems, budget control, data processing property beyond 50 years after its acquisition of systems evaluation, and efficiency evaluation; or (G) research operations, such as product development, basic research, and product the property. design and innovation. The Board has determined that "management consulting" is not an activity that is so closely related to banking or (6) Community development. Making equity and managing or controlling banks as to be a proper incident thereto. debt investments in corporations or projects de- 3. For purposes of the leasing of automobiles, the requirement that the lease be on a nonoperating basis means that the bank holding signed primarily to promote community welfare, company may not, directly or indirectly: (A) provide for the servicing, such as the economic rehabilitation and developrepair, or maintenance of the leased vehicle during the lease term; (B) purchase parts and accessories in bulk or for an individual vehicle ment of low-income areas by providing housing, after the lessee has taken delivery of the vehicle; (C) provide for the services, or jobs for residents. loan of an automobile during servicing of the leased vehicle; (D) purchase insurance for the lessee; or (E) provide for the renewal of the vehicle's license merely as a service to the lessee where the lessee could renew the license without authorization from the lessor. 4. The Board understands that some federal, state and local governmental entities may not enter into a lease for a period in excess of one 5. The estimate by the lessor of the total cost of financing the year. Such an impediment does not prohibit a company authorized to property over the term of the lease should reflect, among other conduct leasing activities under this paragraph from entering into a factors: the term of the lease, the modes of financing available to the lease with such governmental entities if the company reasonably lessor, the credit rating of the lessor and/or the lessee, if a factor in the anticipates that the governmental entities will renew the lease annual- financing, and prevailing rates in the money and capital markets. ly until such time as the company is fully compensated for its 6. In the event of a default on a lease agreement prior to the investment in the leased property plus its costs of financing the expiration of the lease term, the lessor shall either release the property. Further, a company authorized to conduct personal proper- property, subject to all the conditions of this paragraph, or liquidate ty leasing activities under this paragraph may also engage in so-called the property as soon as practicable but in no event later than two years "bridge" lease financing of personal property, but not real property, if from the date of default on a lease agreement or such additional time the lease is short-term pending completion of long-term financing, by as the Board may permit under section 225.22(c)(1) of this regulation, the same or another lender. as if the property were DPC property. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1984 (7) Data processing. Providing to others data pro- (10) Courier services. Providing courier services for: cessing and data transmission services, facilities (i) checks, commercial papers, documents, and (including data processing and data transmission written instruments (excluding currency or bearhardware, software, documentation or operating er-type negotiable instruments) that are expersonnel), data bases, or access to such services, changed among banks and financial institutions; facilities, or data bases by any technological means, and if: (ii) audit and accounting media of a banking or (i) the data to be processed or furnished are financial nature and other business records and financial, banking, or economic, and the services documents used in processing such media.8 are provided pursuant to a written agreement so describing and limiting the services; (11) Management consulting to depository institu- (ii) the facilities are designed, marketed, and tions. Providing management consulting advice 9 to operated for the processing and transmission of nonaffiliated bank and nonbank depository institufinancial, banking, or economic data; and tions, including commercial banks, savings and loan (iii) the hardware provided in connection there- associations, mutual savings banks, credit unions, with is offered only in conjunction with software industrial banks, Morris Plan banks, cooperative designed and marketed for the processing and banks, and industrial loan companies, if: transmission of financial, banking, or economic (i) neither the bank holding company nor any of its data, and where the general purpose hardware subsidiaries own or control, directly or indirectly, does not constitute more than 30 per cent of the any equity securities in the client institution; cost of any packaged offering. (ii) no management official, as defined in 12 CFR 212.2(h), of the bank holding company or any of (8) Insurance sales. Except as prohibited in Title VI its subsidiaries serves as a management official of of the Garn-St Germain Depository Institutions Act the client institution, except where such interlockof 1982 (12 U.S.C. 1843(c)(8)), acting as insurance ing relationships are permitted pursuant to an agent or broker in offices at which the holding exemption granted under 12 CFR 212.4(b); company or its subsidiaries are otherwise engaged in (iii) the advice is rendered on an explicit fee basis business (or in an office adjacent thereto) with without regard to correspondent balances mainrespect to the following types of insurance: tained by the client institution at any depository (i) any insurance that institution subsidiary of the bank holding compa- (A) is directly related to an extension of credit ny; and by a bank or bank-related firm of the kind (iv) disclosure is made to each potential client described in this regulation, or institution of (B) is directly related to the provision of other (A) the names of all depository institutions that financial services by a bank or such a bank- are affiliates of the consulting company, and related firm; and (B) the names of all existing client institutions (ii) any insurance sold by a bank holding company located in the same county(ies), Metropolitan or a nonbanking subsidiary in a community that Statistical Area, or Primary Metropolitan Stahas a population not exceeding 5,000 (as shown by tistical Area as the client institution.10 the last preceding decennial census), if the principal place of banking business of the bank holding (12) Money orders, savings bonds, and travelers company is located in a community having a checks. The issuance and sale at retail of money population not exceeding 5,000. 8. See also the Board's interpretation on courier activities (12 CFR (9) Underwriting Credit Life, Accident and Health 225.129), which sets forth conditions for bank holding company entry Insurance. Acting as underwriter for credit life into the activity. insurance and credit accident and health insurance 9. A bank holding company that has received the Board's prior approval to engage in offering management consulting advice to that is directly related to an extension of credit by nonaffiliated commercial banks as of April 20, 1982, may offer such the bank holding company system.7 advice on a de novo basis to nonbank depository institutions pursuant to this paragraph without filing an application under section 225.23 of this subpart. 10. In performing this activity, bank holding companies are not 7. To assure that engaging in the underwriting of credit life and authorized to perform tasks or operations or provide services to client credit accident and health insurance can reasonably be expected to be institutions either on a daily or continuing basis, except as necessary in the public interest, the Board will only approve applications in to instruct the client institution on how to perform such services for which an applicant demonstrates that approval will benefit the con- itself. See also the Board's interpretation of bank management consumer or result in other public benefits. Normally such a showing sulting advice (12 CFR 225.131). This interpretation shall apply to the would be made by a projected reduction in rates or increase in policy performance of management consulting services for commercial benefits due to bank holding company performance of this service. banks and any other type of depository institution. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 137 orders and similar consumer-type payment instru- (17) Foreign exchange advisory and transactional ments having a face value of not more than $1,000; services. Providing, by any means, general informathe sale of U.S. savings bonds; and the issuance and tion and statistical forecasting with respect to forsale of travelers checks. eign exchange markets; advisory services designed to assist customers in monitoring, evaluating and (13) Real estate appraising. Performing appraisals managing their foreign exchange exposures; and of real estate. transactional services with respect to foreign exchange by arranging for "swaps" among customers (14) Arranging commercial real estate equity financ- with complementary foreign exchange exposures ing. Acting as intermediary for the financing of and for the execution of foreign exchange transaccommercial or industrial income-producing real es- tions; provided the activity is conducted through a tate by arranging for the transfer of the title, control separately incorporated subsidiary of the bank holdand risk of such a real estate project to one or more ing company that: investors, if: (i) does not take positions in foreign exchange for (i) the financing arranged exceeds $1 million; its own account; (ii) the bank holding company and its affiliates do (ii) observes the standards of care and conduct not provide financing to the investors to acquire a applicable to fiduciaries with respect to its foreign real estate project for which the bank holding exchange advisory and transactional services; and company arranges equity financing; (iii) does not itself execute foreign exchange trans- (iii) the bank holding company and its affiliates do actions. not have an interest in or participate in managing, developing or syndicating a real estate project for (18) Futures commission merchant. Acting as a which it arranges equity financing, and do not futures commission merchant for nonaffiliated perpromote or sponsor the development or syndica- sons in the execution and clearance on major comtion of such property; and modity exchanges of futures contracts and options (iv) the fee received for arranging equity financing on futures contracts for bullion, foreign exchange, for a real estate project is not based on profits to government securities, certificates of deposit and be derived from the project and is not larger than other money market instruments that a bank may the fee that would be charged by an unaffiliated buy or sell in the cash market for its own account, if intermediary. the activity is conducted through a separately incorporated subsidiary of the bank holding company (15) Securities Brokerage. Providing securities bro- that: kerage services, related securities credit activities (i) does not become a clearing member of any pursuant to the Board's Regulation T (12 CFR Part exchange or clearing association that requires the 220), and incidental activities such as offering custo- parent corporation of the clearing member to also dial services, individual retirement accounts, and become a member of that exchange or clearing cash management services, if the securities broker- association unless a waiver of the requirement is age services are restricted to buying and selling obtained; securities solely as agent for the account of custom- (ii) does not trade for its own account except for ers and do not include securities underwriting or the purpose of hedging a cash position in the dealing or investment advice or research services. related government security, bullion, foreign currency, or money market instrument; (iii) time stamps orders of all customers to the (16) Underwriting and dealing in government obli- nearest minute, executes all orders strictly in gations and money market instruments. Underwrit- chronological sequence to the extent consistent ing and dealing in obligations of the United States, with the customers' specifications, and executes general obligations of states and their political subdi- all orders with reasonable promptness with due visions, and other obligations that state member regard to market conditions; banks of the Federal Reserve System may be autho- (iv) does not extend credit to customers for the rized to underwrite and deal in under 12 U.S.C. 24 purpose of meeting initial or maintenance margins and 335, including bankers' acceptances and certifi- required of customers except for posting margin cates of deposit, under the same limitations as on behalf of customers in advance of prompt would be applicable if the activity were performed reimbursement; and by the bank holding company's subsidiary member (v) has and maintains capitalization fully adequate banks or its subsidiary nonmember banks as if they to meet its own commitments and those of its were member banks. customers, including affiliates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1984 Subpart D—Control and Divestiture hearing or other proceeding, the Board shall issue a Proceedings final order determining whether the company controls voting securities, or has the power to exercise a Section 225.31—Control Proceedings controlling influence over the management or policies, of the bank or other company. If a control (a) Preliminary determination of control. relationship is found, the Board may direct the (1) The Board may issue a preliminary determina- company to terminate the control relationship or to tion of control under the procedures set forth in this file an application for the Board's approval to retain section in any case in which: the control relationship under Subpart B or C of this (i) any of the presumptions of control set forth in regulation. paragraph (d) of this section is present; or (ii) it otherwise appears that a company has the (d) Rebuttable presumptions of control. The following power to exercise a controlling influence over rebuttable presumptions shall be used in any proceedthe management or policies of a bank or other ing under this section: company. (1) Control of voting securities: (2) If the Board makes a preliminary determination (i) Securities convertible into voting securities. A of control under this section, the Board shall send company that owns, controls, or holds securities notice to the controlling company containing a state- that are immediately convertible, at the option of ment of the facts upon which the preliminary deter- the holder or owner, into voting securities of a mination is based. bank or other company, controls the voting securities. (b) Response to preliminary determination of control. (ii) Option or restriction on voting securities. A Within 30 calendar days of issuance by the Board of a company that enters into an agreement or underpreliminary determination of control or such longer standing under which the rights of a holder of period permitted by the Board, the company against voting securities of a bank or other company are whom the determination has been made shall: restricted in any manner controls the securities. (1) submit for the Board's approval a specific plan This presumption does not apply where the agreefor the prompt termination of the control ment or understanding: relationship; (A) is a mutual agreement among shareholders (2) file an application under Subpart B or C of this granting to each other a right of first refusal with regulation to retain the control relationship; or respect to their shares; (3) contest the preliminary determination by filing a (B) is incident to a bona fide loan transaction; response, setting forth the facts and circumstances or in support of its position that no control exists, and, (C) relates to restrictions on transferability and if desired, requesting a hearing or other proceeding. continues only for the time necessary to obtain approval from the appropriate federal supervi- (c) Hearing and final determination. sory authority with respect to acquisition by the (1) The Board shall order a formal hearing or other company of the securities. appropriate proceeding upon the request of a company that contests a preliminary determination that (2) Control over company. the company has the power to exercise a controlling (i) Management agreement. A company that eninfluence over the management or policies of a bank ters into any agreement or understanding with a or other company, if the Board finds that material bank or other company (other than an investment facts are in dispute. The Board may also in its advisory agreement), such as a management condiscretion order a formal hearing or other proceed- tract, under which the first company or any of its ing with respect to a preliminary determination that subsidiaries directs or exercises significant influthe company controls voting securities of the bank ence over the general management or overall or other company under the presumptions in para- operations of the bank or other company controls graph (d)(1) of this section. the bank or other company. (2) At a hearing or other proceeding, any applicable (ii) Shares controlled by company and associated presumptions established by paragraph (d) of this individuals. A company that, together with its section shall be considered in accordance with the management officials or principal shareholders Federal Rules of Evidence and the Board's Rules of (including members of the immediate families of Practice for Formal Hearings (12 CFR Part 263). either as defined in 12 CFR 206.2(k)), owns, (3) After considering the submissions of the compa- controls, or holds with power to vote 25 per cent ny and other evidence, including the record of any or more of the outstanding shares of any class of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 139 voting securities of a bank or other company (ii) the divesting company has any management controls the bank or other company, if the first official in common with the acquiring person. company owns, controls, or holds with power to (2) For the purposes of this section: vote more than 5 per cent of the outstanding (i) "indebtedness" does not include routine busishares of any class of voting securities of the bank ness or personal credit that is unrelated to the or other company. divestiture transaction and that is extended by the (iii) Common management officials. A company divesting company in the ordinary course of its that has one or more management officials in lending business; and common with a bank or other company controls (ii) "divesting company" and "acquiring person" the bank or other company, if the first company include their parent companies, subsidiaries, and, owns, controls or holds with power to vote more if the acquiring person is an individual, companies than 5 per cent of the outstanding shares of any controlled by the individual. class of voting securities of the bank or other company, and no other person controls as much (b) Request for divestiture determination. For any as 5 per cent of the outstanding shares of any class divestiture that is deemed ineffective under paragraph of voting securities of the bank or other company. (a) of this section, the divesting company may request (iv) Shares held as fiduciary. The presumptions in the Board to determine that the divestiture is in fact paragraphs (d)(2)(ii) and (iii) of this section do not effective by submitting a letter that includes: apply if the securities are held by the company in (1) a description of the divestiture transaction and a fiduciary capacity without sole discretionary the existing and prospective relationship between authority to exercise the voting rights. the divesting company and the acquiring person; (2) evidence and argument demonstrating that the (e) Presumptions of non-control. divesting company is not capable of controlling the (1) In any proceeding under this section, there is a acquiring person or the divested assets or securities; presumption that any company that directly or indi- and rectly owns, controls, or has power to vote less than (3) a request for a hearing, if desired. 5 per cent of the outstanding shares of any class of voting securities of a bank or other company does (c) Hearing. The Board shall order a formal hearing or not have control over that bank or other company. other appropriate proceeding upon the request of a (2) In any proceeding under this section, or judicial divesting company under paragraph (b) of this section, proceeding under the BHC Act, other than a pro- if the Board finds that material facts are in dispute. ceeding in which the Board has made a preliminary The Board may also order a formal hearing or other determination that a company has the power to proceeding if, in the Board's judgment, such a proexercise a controlling influence over the manage- ceeding would be appropriate. ment or policies of the bank or other company, a company may not be held to have had control over (d) Standards for making divestiture determination. In the bank or other company at any given time, unless acting on the request of a divesting company under that company, at the time in question, directly or paragraph (b) of this section, the Board shall consider indirectly owned, controlled, or had power to vote 5 the following factors, among others, in determining per cent or more of the outstanding shares of any whether the divesting company is capable of controlclass of voting securities of the bank or other ling the acquiring person or the divested assets or company, or had already been found to have control securities: on the basis of the existence of a controlling influ- (1) Indebtedness of acquiring person to divesting ence relationship. company. (i) the terms of the indebtedness, including the Section 225.32—Divestiture Proceedings amount of the indebtedness in relation to the total purchase price; (a) Ineffective divestitures. (ii) the ability of the acquiring person to repay the (1) The divestiture of assets or voting securities by a indebtedness; and bank holding company (or a company that would be (iii) the manner in which the divesting company a bank holding company but for the divestiture) is would dispose of the divested assets in the event it ineffective, and the divesting company shall be reacquires the assets as a result of default on the presumed to control the acquiring person or the indebtedness. divested assets or securities, if (i) the acquiring person is indebted in any manner (2) Management official interlocks. The extent of to the divesting company; or the involvement of the interlocking management Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1984 official in the operations of the divesting company of any class of voting securities of the institution, and the acquiring person, and the management and if: official's relationship to the assets or securities (A) the institution has registered securities under being divested. section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781); or (e) Final determination. After considering the submis- (B) no other person will own a greater percentage sion of the divesting company and other evidence, of that class of voting securities immediately after including the record of any hearing or other proceed- the transaction. ing, the Board shall issue an order determining whether the company controls or is capable of controlling (c) Rebuttal of presumption of control. Prior notice to the acquiring person or the divested assets or securi- the Board is not required for any acquisition of voting ties. securities under the presumption set forth in paragraph (b)(2) of this section, if the Board finds that the (f) Review of other divestitures. In any divestiture of acquisition will not result in control. The Board will assets or securities by a company that is not covered afford the person seeking to rebut the presumption an under paragraph (a) of this section, the Board may opportunity to present views in writing or, if approprireview the divestiture to assure that the divesting ate, orally before its designated representatives at an company is not capable of controlling the acquiring informal conference. person or the divested assets or securities. (d) Other transactions. Transactions other than those set forth in paragraph (b)(2) resulting in a person's Subpart E—Change in Bank Control control of less than 25 per cent of a class of voting securities of a state member bank or bank holding Section 225.41—Transactions Requiring Prior company do not result in control for purposes of the Notice Bank Control Act. (a) Prior notice requirement. Section 225.42—Transactions not Requiring (1) Any person acting directly or indirectly, or Prior Notice through or in concert with one or more persons, shall give the Board 60 days' written notice, as The following transactions do not require prior notice specified in section 225.43 of this subpart, before to the Board under this subpart: acquiring control of a state member bank or bank (a) Increase of previously authorized acquisitions. The holding company, unless the acquisition is exempt acquisition of additional shares of a class of voting under section 225.42 of this subpart. securities of a state member bank or bank holding (2) For the purposes of this subpart, "acquisition" company by any person who has lawfully acquired and includes a purchase, assignment, transfer, or pledge maintained control of 25 per cent or more of that class of voting securities, or an increase in percentage of voting securities after filing the notice required ownership of a bank or other company resulting under section 225.41(b)(1) of this subpart. from a redemption of voting securities. (b) Acquisitions subject to approval under BHC Act or (b) Acquisitions requiring prior notice. The following Bank Merger Act. Any acquisition of voting securities transactions constitute, or are presumed to constitute, subject to approval under section 3 of the BHC Act the acquisition of control under the Bank Control Act, (section 225.11 of Subpart B), or section 18(c) of the requiring prior notice to the Board: Federal Deposit Insurance Act (Bank Merger Act, (1) the acquisition of any voting securities of a state 12 U.S.C. 1828(c)). member bank or bank holding company if, after the transaction, the acquiring person (or persons acting (c) Transactions exempt under BHC Act. Any acquisiin concert) owns, controls, or holds with power to tion described in sections 2(a)(5) or 3(a)(A) or (B) of vote 25 per cent or more of any class of voting the BHC Act (12 U.S.C. 1841(a)(5), 1842(a)(A) and securities of the institution; or (B)) by a person described in those provisions. (2) the acquisition of any voting securities of a state member bank or bank holding company if, after the (d) Grandfathered control relationships. transaction, the acquiring person (or persons acting (1) The acquisition of additional voting securities of in concert) owns, controls, or holds with power to a state member bank or bank holding company by a vote 10 per cent or more (but less than 25 per cent) person who continuously since March 9, 1979 (or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 141 since that institution commenced business, if later) summary, and a description of any subsequent materiheld power to vote 25 per cent or more of any class al changes, subject to the authority of the Reserve of voting securities of that institution; or Bank or the Board to require additional information. (2) the acquisition of additional voting securities of a state member bank or bank holding company by a (b) Advice to bank supervisory agencies. person who is presumed under section 225.41(b)(2) (1) Upon accepting a notice relating to acquisition of of this subpart to have controlled the institution securities of a state member bank, the Reserve Bank continuously since March 9, 1979, if the aggregate shall send a copy of the notice to the appropriate amount of voting securities held does not exceed 25 state bank supervisor, which shall have 30 calendar per cent of any class of voting securities of the days from the date the notice is sent in which to institution. submit its views and recommendations to the Board. The Reserve Bank shall also send a copy of any (e) Acquisitions in satisfaction of debts previously notice it accepts to the Comptroller of the Currency contracted or through inheritance or gift. Any acquisi- and the Federal Deposit Insurance Corporation. tion of voting securities, which would otherwise re- (2) If the Board finds that it must act immediately in quire a notice under this subpart, in satisfaction of a order to prevent the probable failure of the bank or debt previously contracted in good faith, or through bank holding company involved, the Board may inheritance or a bona fide gift, if the acquiring person dispense with or modify the requirements for notice notifies the appropriate Reserve Bank within 30 calen- to the state supervisor. dar days after the acquisition and provides any relevant information requested by the Reserve Bank. (c) Time period for Board action. (f) Proxy solicitation. The acquisition of the power to (1) Consummation of acquistion. vote securities of a state member bank or bank holding (i) A proposed acquisition may be consummated company through receipt of a revocable proxy in 60 days after submission to the Reserve Bank of a connection with a proxy solicitation for the purpose of complete notice under paragraph (a) of this secconducting business at a regular or special meeting of tion, unless within that period the Board disapthe institution, if the proxy terminates within a reason- proves the proposed acquisition or extends the 60able period after the meeting. day period as provided under paragraph (c)(2) of this section. (g) Stock dividends. The receipt of voting securities of (ii) A proposed acquisition for which notice has a state member bank or bank holding company been filed under paragraph (a) of this section may through a stock dividend or stock split if the propor- be consummated before the expiration of the 60tional interest of the recipient in the institution remains day period if the Board notifies the acquiring substantially the same. person in writing of the Board's intention not to disapprove the acquisition. (h) Acquisition of foreign banking organization. The acquisition of voting securities of a qualifying foreign (2) Extension of time period. banking organization. (This exemption does not ex- (i) The Board may extend the 60-day period in tend to the reports and information required under paragraph (c)(1) of this section for an additional 30 paragraphs 9, 10, and 12 of the Bank Control Act days by notifying the acquiring person. (12 U.S.C. 1817(j)(9), (10), and (12)). (ii) The Board may further extend the period for disapproval or return the notice, if the Board finds Section 225.43—Procedures for Filing, that the acquiring person has not furnished all the Processing, and Acting on Notices information required under paragraph (a) of this section or has submitted material information that (a) Filing notice. A notice required under this subpart is substantially inaccurate. If the Board so exshall be filed with the appropriate Reserve Bank and tends the time period, it shall notify the acquiring shall contain the information required by paragraph 6 person of the information that is incomplete or of the Bank Control Act (12 U.S.C. 1817(j)(6)), or inaccurate. prescribed in the designated Board form. With respect to personal financial statements required by paragraph (d) Investigation of notice. In investigating any notice 5(B) of the Bank Control Act, an individual may accepted under this subpart, the Board or Reserve include a statement of assets and liabilities as of a date Bank may solicit information or views from any perwithin 90 days of filing the notice, a brief income son (including any bank or bank holding company Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1984 involved in the notice, and any appropriate state, -allowance for possible loan and lease losses federal or foreign governmental authority). No person -minority interest in equity accounts of consolidated (other than the acquiring person), whose views are subsidiaries solicited or who presents information, thereby becomes a party to the proceeding or acquires any Secondary Components of Capital standing or right to participate in the Board's consideration of the notice. It is recognized that other financial instruments can, with certain restrictions, be considered as part of (e) Factors considered in acting on notices. In review- capital because they possess some, though not all, of ing a notice filed under this subpart, the Board shall the features of capital. These instruments are: consider the information in the record, the views and -limited-life preferred stock recommendations of the appropriate bank supervisor, -bank subordinated notes and debentures and unseand any other relevant information obtained during cured long-term debt of the parent company and its any investigation of the notice. The Board may disap- nonbank subsidiaries prove an acquisition if it finds adverse effects with respect to any of the factors set forth in paragraph 7 of Restrictions Relating to Secondary Components the Bank Control Act (12 U.S.C. 1817(j)(7)) (i.e., competitive, financial, managerial, banking or incom- The secondary components will be considered as pleteness of information). capital under the conditions listed below: -The issue must have an original weighted average (f) Disapproval and hearing. Within three days after maturity of at least seven years. its decision to issue a notice of intent to disapprove -If the issue has a serial or installment repayment any proposed acquisition, the Board shall notify the program, all scheduled repayments shall be made acquiring person in writing of the reasons for the at least annually, once contractual repayment of action. Within 10 calendar days of receipt of the notice principal begins, and the amount repaid in a given of the Board's intent to disapprove, the acquiring year shall be no less than the amount repaid in the person may submit a written request for a hearing. previous year. Any hearing conducted under this paragraph shall be -For banks only, the aggregate amount of limitedin accordance with the Rules of Practice for Formal life preferred stock and subordinated debt qualify- Hearings (12 CFR Part 263). At the conclusion of the ing as capital may not exceed 50 per cent of the hearing, the Board shall, by order, approve or disap- amount of the bank's primary capital. prove the proposed acquisition on the basis of the -As the secondary components approach maturity, record of the hearing. If the acquiring person does not redemption or payment, the outstanding balance of request a hearing, the notice of intent to disapprove all such instruments—including those with serial becomes final and unappealable. note payments, sinking fund provisions, or an amortization schedule—will be amortized in accordance with the following schedule: APPENDICES TO SUBPARTS A THROUGH E Percent of Issue Appendix A—Capital Adequacy Guidelines Years to Maturity Considered Capital Definition of Capital to be Used in Determining Greater than or equal to 5 100 Less than 5 but greater than or equal to 4 80 Capital Adequacy of National and State Less than 4 but greater than or equal to 3 60 Less than 3 but greater than or equal to 2 40 Member Banks and Bank Holding Companies Less than 2 but greater than or equal to 1 20 Less than 1 0 Primary Components of Capital NOTE: NO adjustment in the book amount of the issue is required or expected by this schedule. Adjustment will be made by a memorandum account. The primary components of capital are: -common stock -perpetual preferred stock -surplus Minimum Capital Guidelines -undivided profits -contingency and other capital reserves The Federal Reserve and the Office of the Comptroller -mandatory convertible instruments (capital instru- of the Currency have developed minimum capital ments with covenants mandating conversion into guidelines to provide a framework for assessing the common or perpetual preferred stock) capital of well-managed national banks, state member Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 143 banks and bank holding companies.1 The guidelines to operate above the minimum primary capital levels. are used in the examination and supervisory process Also, those banking organizations that have a higher and will be reviewed from time to time for possible than average percentage of their assets exposed to adjustment commensurate with changes in the econo- risk, or have a higher than average amount of offmy, financial markets and banking practices. balance sheet risk, may be expected to hold additional Objectives of the minimum capital guidelines are to: primary capital to compensate for this risk. -Introduce greater uniformity, objectivity and con- The agencies also have established capital guidesistency into the supervisory approach for assess- lines for the total capital to total assets ratio. These ing capital adequacy ; guidelines consist of three broad zones: -Provide direction for capital and strategic planning to banks and bank holding companies and for the appraisal of this planning by the agencies; and Multinational Capital Community -Permit some reduction of existing disparities in and Regional capital ratios between banking organizations of Zone 1 Above 6.5% Above 7.0% different size. Zone 2 5.5% to 6.5% 6.0% to 7.0% Zone 3 Below 5.5% Below 6.0% Two principal ratio measurements of capital are used: (1) primary capital to total assets; and, (2) total Generally, the nature and intensity of supervisory capital to total assets. Primary capital consists of action will be determined by the zone in which an common stock, perpetual preferred stock, capital sur- institution falls. While an institution's position in the plus, undivided profits, reserves for contingencies and quantitative capital zones will normally trigger the other capital reserves, mandatory convertible instru- below specified supervisory responses, qualitative ments, the allowance for possible loan and lease analysis will continue to be used in determining minilosses, and any minority interest in the equity ac- mum levels of capital for banking institutions. counts of consolidated subsidiaries. Total capital in- For banking institutions operating in Zone 1, the cludes the primary capital components plus limited-life agencies will: preferred stock and qualifying notes and debentures. -Presume that capital is adequate if the primary The capital guidelines generally will be applied on a capital ratio is acceptable to the regulator and is consolidated basis. However, for those bank holding above the minimum level; companies with consolidated assets under $150 mil- -Intensify analysis and action when unwarranted lion, the capital guidelines will apply only to the bank declines in capital ratios occur. if: (1) the company does not engage directly or indirectly in any nonbanking activity involving significant For banking institutions operating in Zone 2, the leverage; and, (2) no significant debt of the parent agencies will: company is held by the general public. -Presume that the institution may be under-capital- Some bank holding companies are engaged in signif- ized, particularly if the primary and total capital icant nonbanking activities that require capital ratios ratios are at or near the minimum guidelines; higher than those for the bank alone. In these cases, -Engage in extensive contact and discussion with appropriate adjustments will be made in the applica- the management and require the submission of tion of the consolidated capital guidelines. comprehensive capital plans acceptable to the reg- Institutions affected by the guidelines are catego- ulator; rized as either multinational organizations (as desig- -Closely monitor the capital position over time. nated by their respective supervisory agency); regional organizations (all other institutions with assets in The agencies' approach to institutions operating in excess of $1 billion)2; or community organizations Zone 3 will include: (less than $1 billion in total assets). -A very strong presumption that the institution is A minimum level of primary capital to total assets is under-capitalized; established at 5 per cent for multinational and regional -Frequent contact with management and a requireorganizations and 6 per cent for community organiza- ment that the institution submit a comprehensive tions. Generally banking organizations are expected capital plan, including a capital augmentation program that is acceptable to the regulator; -Continuous analysis, monitoring and supervision. 1. Institutions that are under special supervision and those that have been in operation for less than two years are not included in the The guidelines will be applied in a flexible manner program. 2. May include some other institutions located in money centers. with exceptions as appropriate. The assessment of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1984 capital adequacy will continue to be made on a case- have the option of improving the relationship of debt by-case basis considering various qualitative factors to equity by repaying the principal amount of its debt that affect an institution's overall financial condition. or through the retention of earnings, or both. Under Thus, the agencies retain the flexibility to make appro- these procedures, newly organized small one-bank priate adjustments in the application of the guidelines holding companies will be expected to reduce the to individual institutions. relationship of their debt to equity over a reasonable period of time to a level comparable to that maintained by many large and multibank holding companies. In general, this policy is intended to apply only to Appendix B—Policy Statement for Formation of one-bank holding companies that would not have Small One-Bank Holding Companies significant leveraged nonbank activities and whose subsidiary bank would have total assets of approxi- Assessment of Financial Factors mately $150 million or less at the time the application is filed. Small one-bank holding companies formed In acting on applications filed under the Bank Holding before the initial effective date of the Board's policy Company Act, the Board has adopted, and continues concerning formation of small one-bank holding comto follow, the principle that bank holding companies panies and assessment of financial factors (March 28, should serve as a source of strength for their subsid- 1980) may switch to a plan that adheres to the intent of iary banks. When bank holding companies incur debt this policy provided they comply with criteria 2,3, and and rely upon the earnings of their subsidiary banks as 4 set forth below. the means of repaying such debt, a question arises as The criteria are as follows: to the probable effect upon the financial condition of the company and its subsidiary bank or banks. General The Board believes that a high level of debt at the parent holding company level impairs the ability of a In evaluating applications filed pursuant to Section bank holding company to provide financial assistance 3(a)(1) of the Bank Holding Company Act, as amendto its subsidiary bank and in some cases the servicing ed, when the applicant intends to incur debt to finance requirements on such debt may be a significant drain the acquisition of a small bank, the Board will take into on the bank's resources. For these reasons, the Board account a full range of financial and other information, has not favored the use of acquisition debt in the including the recent trend and stability of earnings of formation of bank holding companies. Nevertheless, the bank, the past and prospective growth of the bank, the Board has recognized that the transfer of owner- the quality of the bank's assets, the ability of the ship of small banks often requires the use of acquisi- applicant to meet debt servicing requirements without tion debt. The Board therefore has permitted the placing an undue strain on the bank's resources, and formation of small one-bank holding companies with the record and competency of management of the debt levels higher than would be permitted for larger applicant and the bank. In addition, the Board will or multibank holding companies. Approval of these require applicants to meet the minimum requirements applications has been given on the condition that the set forth below. As a general rule, failure to meet any small one-bank holding companies demonstrate the of these requirements will result in denial of the ability to service the acquisition debt without straining application; however, the Board reserves the right to the capital of their subsidiary bank and, further, that make exceptions if the circumstances warrant. such companies restore their ability to serve as a source of strength for their subsidiary bank within a 1. Minimum Down Payment. The amount of acquisirelatively short period of time. tion debt should not exceed 75 per cent of the In the interest of furthering its policy of facilitating purchase price of the bank to be acquired. When the the transfer of ownership in banks without diluting owner(s) of the holding company incur debt to bank safety and soundness, the Board has reexamined finance the purchase of the bank, such debt will be the analytical framework and financial criteria it ap- considered acquisition debt even though it does not plies when considering the formation of small one- represent an obligation of the bank holding compabank holding companies and has adopted certain revi- ny, unless the owner(s) can demonstrate that such sions in its procedures and standards as described debt can be serviced without reliance on the rebelow. sources of the bank or bank holding company. The revised criteria shift the focus from debt repayment to the relationship between debt and equity at the 2. Maintenance of Adequate Capital. An applicant parent holding company. The holding company will proposing to use acquisition debt must demonstrate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 145 to the satisfaction of the Board that any debt servic- equity ratio is below 30 per cent. However, some ing requirements to which the bank holding compa- dividends may be permitted provided all of the ny may be subject would not cause the subsidiary following conditions are met: a) the applicant has bank's ratio of gross capital to assets to fall below 8 begun making scheduled repayments of principal on per cent during the 12-year period following con- the acquisition debt; b) such scheduled repayments summation of the acquisition. Gross capital is de- of principal are reasonable in amount, will be made fined as the sum of total stockholders' equity, the at least annually, and will allow for the retirement of allowance for possible loan losses, and subordinated the acquisition debt over a period not to exceed 25 capital notes and debentures. years; and c) the applicant can clearly demonstrate at the time the application is filed that such divi- 3. Reduction in Parent Company Leverage. The dends will not jeopardize the ability of the holding applicant must demonstrate to the satisfaction of the company to reduce its debt to equity ratio to 30 per Board that the parent holding company's ratio of cent within 12 years of consummation of the proposdebt to equity will decline to 30 per cent within 12 al or cause the gross capital to assets of the subsidyears after consummation of the acquisition. The iary bank to fall below 8 per cent over the same holding company must also demonstrate that it will period. Also, it is expected that dividends will be be able to safely meet debt servicing and other eliminated if the holding company is not meeting the requirements imposed by its creditors. projections made at the time the application was The term "debt," as used in the ratio of debt to filed regarding the ability of the holding company to equity, means any borrowed funds (exclusive of reduce the debt to equity ratio to 30 per cent within short-term borrowings that arise out of current 12 years of consummation of the proposal. transactions, the proceeds of which are used for current transactions), and any securities issued by, The requirements of this Policy Statement should be or obligations of, the holding company that are the read in the context of the Board's Capital Adequacy functional equivalent of borrowed funds. Guidelines (Appendix A), including the definitions of The term "equity," as used in the ratio of debt to capital and its components. equity, means the total stockholders' equity of the bank holding company adjusted to reflect the periodic amortization of "goodwill" (defined as the excess of cost of any acquired company over the Effective date: This revision of Part 225 becomes sum of the amounts assigned to identifiable assets effective 30 days after publication in the Federal acquired, less liabilities assumed) in accordance Register, except for sections 225.14 and 225.23, which with generally accepted accounting principles. In become effective for all applications and notices subdetermining the total amount of stockholders' equi- mitted to the Board on and after January 1, 1984. ty, the bank holding company should account for its investments in the common stock of subsidiaries by the equity method of accounting. Ordinarily the Board does not view redeemable AMENDMENT TO RULES REGARDING preferred stock as a substitute for common stock in DELEGATION OF AUTHORITY a one-bank holding company formation. Nevertheless, to a limited degree and under certain circum- The Board of Governors is amending its Rules Regardstances the Board will consider redeemable pre- ing Delegation of Authority to delegate to the Director ferred stock as equity in the capital accounts of the of its Division of Consumer and Community Affairs holding company if the following conditions are met: the authority to make determinations under the Equal 1) the preferred stock is redeemable only at the Credit Opportunity Act (Regulation B) and the Home option of the issuer and 2) the debt to equity ratio of Mortgage Disclosure Act (Regulation C) regarding the the holding company would be at or remain below 30 effect of those acts on similar state laws. The Board is per cent following the redemption or retirement of also making editorial revisions and a correction to the any preferred stock. Preferred stock that is convert- delegation rules. ible into common stock of the holding company may Effective January 30, 1984, the Board amends Rules be treated as equity. Regarding Delegation of Authority by revising and redesignating paragraphs (h)(2) and (h)(3) as (h)(3) and 4. Dividend Restrictions. The bank holding compa- (h)(4), respectively; by reinstating paragraph (h)(2) as ny is not expected to pay any corporate dividends it existed prior to February 2, 1983; and by adding on common stock until such time as its debt to paragraphs (h)(5) and (h)(6) to read as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • February 1984 Part 265—Rules Regarding Delegation of (12 U.S.C. § 1842(a)(3)) to acquire 100 percent of the Authority voting shares of State Bank of Green Valley, Green Valley, Wisconsin ("Bank"). Section 265.2—Specific Functions Delegated to Notice of the application, affording opportunity for Board Employees and to Federal Reserve interested persons to submit comments and views, has Banks been given in accordance with section 3(b) of the Act (12 U.S.C. § 1842(b)). The time for filing comments and views has expired, and the Board has considered (h)*** the application and all comments received in light of (2) Pursuant to section 703(b) of the Consumer the factors set forth in section 3(c) of the Act Protection Act (15 U.S.C. 1691b(b», to call meet- (12 U.S.C. § 1842(c)). ings of and consult with the Consumer Advisory Applicant, the ninth largest banking organization in Council established under that section, to approve Wisconsin, controls eight subsidiary banks with aggrethe agenda for such meetings, and to accept any gate deposits of $403.2 million, representing approxiresignation from Consumer Advisory Council mem- mately 1.7 percent of the total deposits in commercial bers. banks in the state.1 Bank, the 239th largest banking (3) Pursuant to sections 111, 171(a) and 186(a) of the organization in Wisconsin, controls $21.9 million in Truth in Lending Act (15 U.S.C. 1610(a), 1666j(a) deposits, representing less than 0.1 percent of the total and 1667e(a)) and the Board's Regulation Z (12 CFR deposits in commercial banks in the state. Upon 226.28) and Regulation M (12 CFR 213.7), to deter- consummation of the proposed transaction, Applicant mine whether a state law is inconsistent with the would become the eighth largest banking organization federal act and regulations. in Wisconsin, and its share of the total deposits in (4) Pursuant to section 919 of the Electronic Fund commercial banks in the state would remain at approx- Transfer Act (15 U.S.C. 1693q) and the Board's imately 1.7 percent. Regulation E (12 CFR 205.12), to determine whether Bank's main office is located in the Shawano banka state law is inconsistent with the federal act and ing market,2 and it operates a branch in the Oconto regulation. banking market.3 Neither of these markets is located (5) Pursuant to section 705(f) of the Equal Credit in an Metropolitan Statistical Area and none of Appli- Opportunity Act (15 U.S.C. 1691d(f)) and the pant's subsidiary banks competes in either of the Board's Regulation B (12 CFR 202.11), to determine relevant banking markets. Additionally, none of Appliwhether a state law is inconsistent with the federal cant's principals is affiliated with any other banking act and regulation. organization that is located in either of the markets. (6) Pursuant to section 306(a) of the Home Mortgage Accordingly, consummation of the proposal would not Disclosure Act (12 U.S.C. 2805(a)) and the Board's have an adverse effect upon existing or probable future Regulation C (12 CFR Part 203), to determine competition or the concentration of banking resources whether a state law is inconsistent with the federal in any relevant area. act and regulation. The financial and managerial resources of Applicant, its subsidiaries and Bank are regarded as generally satisfactory and their future prospects are favor- BANK HOLDING COMPANY, BANK MERGER, AND able. As a part of this transaction, Applicant proposes BANK SERVICES CORPORATION ORDERS ISSUED to provide Bank with trust and investment advisory BY THE BOARD OF GOVERNORS services and a trained agricultural loan officer. In addition, as a result of its affiliation with Applicant, Orders Issued Under Section 3 of Bank Holding Bank will be able to increase its lending limits and Company Act provide its customers with more cost-effective and efficient services through the use of Applicant's data Firstar Corporation, processing services. Accordingly, considerations re- Appleton, Wisconsin lating to the convenience and needs of the community to be served lend weight toward approval of the proposal. Order Approving Acquisition of Bank Firstar Corporation, Appleton, Wisconsin, ("Appli- 1. All banking data are as of December 31, 1982. cant"), a bank holding company within the meaning of 2. The Shawano banking market is approximated by all of Shawano the Bank Holding Company Act of 1956, as amended County and the southern one-half of Menominee County, all in Wisconsin. (12 U.S.C. § 1841 et seq.) ("Act"), has applied for the 3. The Oconto banking market is approximated by Oconto County, Board's approval under section 3(a)(3) of the Act Wisconsin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 147 On the basis of the record, the application is ap- cent of the total deposits in commercial banks in the proved for the reasons summarized above. The trans- state. Upon consummation of this transaction, Appliaction shall not be consummated before the thirtieth cant would remain the fourth largest banking organizacalendar day following the effective date of this Order, tion in the state and would control 7.1 percent of the or later than three months after the effective date of total deposits in commercial banks in the state. The this Order, unless such period is extended for good Board has carefully considered the effects of the cause by the Board or by the Federal Reserve Bank of proposal on the structure of banking in Florida and has Chicago, acting pursuant to delegated authority. concluded that consummation of this transaction By order of the Board of Governors, effective would not significantly increase the concentration of January 19, 1984. banking resources in the state. Applicant's subsidiary banks compete directly with Voting for this action: Governors Wallich, Partee, Teeters, RTBC's subsidiary banks in six banking markets. Rice, and Gramley. Absent and not voting: Chairman Applicant is the third largest of 15 commercial banking Volcker and Governor Martin. organizations in the Jacksonville banking market,2 with $470.3 million in deposits, representing 19.4 per- JAMES MCAFEE, cent of the total deposits in commercial banks in the [SEAL] Associate Secretary of the Board market.3 RTBC is the thirteenth largest banking organization in the Jacksonville banking market, with Florida National Banks of Florida, Inc., deposits of $24.1 million, controlling approximately Jacksonville, Florida 1.0 percent of the total deposits in commercial banks therein.4 Upon consummation of this proposal, Appli- Order Approving Acquisition of Bank Holding cant would remain the third largest commercial bank- Company and its Subsidiary Banks ing organization in the market, controlling approximately 20.4 percent of the total deposits in commercial Florida National Banks of Florida, Inc., Jacksonville, banks in the market. Florida ("Applicant"), a bank holding company within While consummation of the proposal would elimithe meaning of the Bank Holding Company Act of nate some existing competition in the Jacksonville 1956, as amended (12 U.S.C. § 1841 et seq.) ("Act"), banking market, the Board believes that certain fachas applied for the Board's approval under section tors substantially mitigate the anticompetitive effects 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire of the proposal. Upon consummation, Applicant's 100 percent of the voting shares of Royal Trust Bank share of the total deposits in commercial banks in the Corp., St. Petersburg, Florida ("RTBC"), and thereby market would increase by only 1.0 percentage point to indirectly to acquire RTBC's five subsidiary banks: 20.4 percent, the Herfindahl-Hirschman Index Royal Trust Bank, Gulfport; Royal Trust Bank, N.A., ("HHI") would increase by only 38 points to 1767, Miami; Royal Trust Bank of Florida, N.A., St. Peters- and the market would remain moderately concentratburg; Royal Trust Bank of Jacksonville, Jacksonville; ed, as measured by this Index.5 Fourteen commercial and Royal Trust Bank of Palm Beach, N.A., Palm banking alternatives would remain in the market after Beach, all located in Florida ("Banks"). consummation of the transaction. Notice of the application, affording opportunity for interested persons to submit comments and views, has been given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the 2. The Jacksonville banking market is approximated by Duval, Board has considered the application and all com- Orange, Park, and Clay Counties, in Florida. 3. Applicant recently divested one of its bank subsidiaries which ments received in light of the factors set forth in operates in the Jacksonville banking market, Jacksonville National section 3(c) of the Act. Bank, Jacksonville, Florida, pursuant to a commitment made by Applicant to the Board when the Board approved Applicant's merger Applicant, the fourth largest banking organization in with Alliance Corporation, Jacksonville, Florida, on December 10, Florida, controls two banking subsidiaries with total 1981. (Florida National Banks of Florida, Inc., 68 FEDERAL RESERVE deposits of approximately $2.8 billion, representing BULLETIN 49 (1982)). Accordingly, the Board has evaluated the competitive effects of this proposal in light of this divestiture. 5.6 percent of the total deposits in commercial banks 4. Although Applicant anticipates selling RTBC's subsidiary bank in the state.1 RTBC, with deposits of approximately in the Jacksonville banking market, the Board has analyzed the $737.3 million, is the thirteenth largest commercial competitive effects of this proposal as if Applicant were not intending to divest this subsidiary bank of RTBC because this divestiture has banking organization in Florida and controls 1.5 pernot yet occurred. 5. Under the United States Justice Department Merger Guidelines (June 14, 1982), a market in which the post-merger HHI is between 1. All state banking data are as of December 31, 1982; all market 1000 and 1800 is considered moderately concentrated. In such mardata are as of June 30, 1982; both reflect mergers and acquisitions kets, the Department is not likely to challenge a merger that produces through January 3, 1984. an increase in the HHI of less than 100 points, as in this case. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • February 1984 Finally, in its evaluation in previous cases of the Applicant is the fifth largest of twenty banking competitive effects of a proposal, the Board has indi- organizations in the Orlando banking market, with cated that thrift institutions have become, or at least $132.1 million in deposits, representing 4.7 percent of have the potential to become, major competitors of the total deposits in commercial banks in the market.9 commercial banks.6 On this basis, the Board has RTBC is the thirteenth largest banking organization in accorded substantial weight to the influence of thrift the Orlando banking market, with deposits of $18.6 institutions in its evaluation of the competitive effects million, controlling 0.8 percent of the total deposits in of a proposal. In this case, the increase in concentra- commercial banks in the market. Upon consummation tion in the Jacksonville banking market is alleviated by of this transaction, Applicant would remain the fifth the presence of nine thrift institutions in the market, largest commercial banking organization in the relecontrolling $1.2 billion in deposits, which represents vant market and its share of deposits in the market approximately 33 percent of the total deposits in would increase to 5.5 percent. With an HHI of 2018, commercial banks and thrift institutions in the market. the Orlando banking market is considered highly con- The thrift institutions in the market currently offer a centrated, according to the Department of Justice full range of consumer services and transaction ac- Merger Guidelines. Consummation of the transaction counts, and state-chartered thrift institutions in Flori- would increase the HHI in the relevant market by only da have broad commercial lending and other powers. 7 points to 2025, making the transaction one that Further, under provisions of the Garn-St Germain would not be subject to challenge under the Justice Department's Merger Guidelines.10 In addition, Appli- Depository Institutions Act of 1982, the commercial cant would not become one of the four largest banking lending powers of federal thrift institutions have been organizations in the market and 18 banking organizasignificantly expanded. Consequently, the Board has tions would remain in the market upon consummation. determined that consummation of this proposal would In light of these and other facts of record, the Board not have a significantly adverse effect on existing competition in the Jacksonville banking market.7 has determined that the effect of the proposal on competition in the Orlando banking market would not Applicant is the twelfth largest commercial banking be significantly adverse. organization in the Pinellas County banking market, with $114.5 million in deposits, and controls 3.0 per- Applicant and RTBC compete directly in three cent of the total deposits in commercial banks in the additional markets in Florida, the Miami-Fort Laudermarket.8 RTBC is the fifth largest banking organiza- dale banking market, the Eastern Palm Beach County tion in the Pinellas County banking market with depos- banking market, and the Tampa banking market.11 its of $290.6 million, representing 7.7 percent of the Although consummation of this proposal would elimitotal deposits in commercial banks therein. Upon nate some existing competition between Applicant and consummation of this proposal, Applicant would be- RTBC in these markets, the Board does not consider come the second largest banking organization in the these effects to be serious. Upon consummation of the market, holding 10.7 percent of the total deposits in acquisition, Applicant would control less than 5 percommercial banking organizations in the market. cent of the total deposits in commercial banks in each The Pinellas County banking market is unconcen- of these markets. Both the Miami-Fort Lauderdale and trated, with a four-firm concentration ratio of 41.4 the Eastern Palm Beach County markets are unconpercent and an HHI of 669. Upon consummation of centrated, and the Miami-Fort Lauderdale banking this transaction, the market would remain unconcen- market would remain so after consummation of the trated, with the four-firm concentration ratio increas- proposal. The Eastern Palm Beach County banking ing to 44.1 percent and the HHI increasing by 48 points market would become moderately concentrated upon consummation of this transaction, with the HHI into 717 points. Accordingly, the Board has determined creasing by 7 points, bringing the market's HHI to that the effect of the proposal on competition in the Pinellas County banking market would not be significantly adverse. 9. The Orlando banking market is approximated by all of Orange County, Florida, and Seminole County, excluding the towns of 6. Comerica Inc. (Bank of the Commonwealth), 69 FEDERAL Oviedo and Saffron, Florida. RESERVE BULLETIN 797 (1983); General Bancshares Corporation, 69 10. Under the Department of Justice's Merger Guidelines, in a FEDERAL RESERVE BULLETIN 802 (1983); First Tennessee National market where the post-merger HHI is 1800 or more, the Department is Corporation, 69 FEDERAL RESERVE BULLETIN 298 (1983). unlikely to challenge a merger that produces an increase in the HHI of 7. If the deposits of the thrift institutions were taken into account in less than 50 points. computing market shares, Applicant's market share would be 12.7 11. The Miami-Fort Lauderdale banking market is approximated by percent, RTBC's market share would be 0.7 percent, and the HHI Broward and Dade Counties, Florida. The eastern Palm Beach would be 1014. Upon consummation of this proposal, Applicant's County banking market is approximated by all of Palm Beach County, market share would increase to 13.4 percent, and the HHI would Florida, excluding the towns of Belle Glade and Pahokee. The Tampa increase by only 16 points to 1030. banking market is approximated by all of Hillsborough County, 8. The Pinellas County banking market is approximated by Pinellas Florida, and the towns of Land 0' Lakes and Elfers in Pasco County, County, Florida. Florida. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 149 1000 points. The Tampa banking market is moderately weight toward approval of the application and outconcentrated and would remain so after consumma- weigh any anticompetitive effects that may result from tion of this proposal, with the HHI increasing by 3 consummation of this proposal. Accordingly, the points to 1368. However, Applicant would not become Board has determined that consummation of the transone of the four largest banking organizations in any of action would be consistent with the public interest and these markets upon consummation of the proposal, that the application should be approved. and numerous banking organizations would remain in On the basis of the record, this application is apeach of these markets. proved for the reasons summarized above. The trans- On the basis of these and other facts of record, the action shall not be made before the thirtieth calendar Board concludes that the effects of consummation of day following the effective date of this Order, or later the proposal on existing competition in the Miami-Fort than three months after the effective date of this Lauderdale, Eastern Palm Beach County, and Tampa Order, unless such period is extended for good cause banking markets would not be substantially to lessen by the Board or by the Federal Reserve Bank of competition in these markets. Atlanta, acting pursuant to delegated authority. The Board has considered the effects of this propos- By order of the Board of Governors, effective al on probable future competition in the 22 markets in January 25, 1984. which Applicant and RTBC do not compete directly. The Board has also examined the proposal in light of Voting for this action: Chairman Volcker and Governors its proposed guidelines for assessing the competitive Martin, Wallich, Partee, Teeters, Rice, and Gramley. effects of market extension mergers and acquisitions.12 In evaluating the effects of a proposed merger or JAMES MCAFEE, consolidation upon probable future competition, the [SEAL] Associate Secretary of the Board Board considers market concentration, the number of probable future entrants into the market, the size of the bank to be acquired and the attractiveness of the Orders Issued Under Section 4 of Bank Holding market for entry on a de novo or foothold basis absent Company Act approval of the acquisition. In none of these markets would the proposed merger require intensive analysis Citicorp, under the Board's proposed guidelines. After consid- New York, New York eration of these factors in the context of the specific facts of this case, the Board concludes that consum- Order Approving Acquisition of Savings and Loan mation of this proposal would not have any significant Association adverse effects on probable future competition in any relevant market. Citicorp, New York, New York, a bank holding com- The financial and managerial resources of Appli- pany within the meaning of the Bank Holding Compacant, RTBC and their subsidiaries are regarded as ny Act (the "BHC Act"), has applied for the Board's generally satisfactory, and their prospects appear fa- approval under section 4(c)(8) of that Act (12 U.S.C. vorable. The record of this application indicates that § 1843(c)(8)), and section 225.4(b)(2) of the Board's RTBC's existing customers would gain access to Ap- Regulation Y (12 C.F.R. § 225.4(b)(2)), to acquire all of plicant's statewide system of automated teller ma- the voting shares of First Federal Savings and Loan chines upon consummation of this proposal. In addi- Association of Chicago, Chicago, Illinois ("First Fedtion, RTBC's customers would benefit from certain eral"), and indirectly its wholly-owned service corposervices available through Applicant, including cen- rations and their subsidiaries.1 First Federal is a tralized securities portfolio management, the fiduciary federally chartered savings and loan association resultmanagement and portfolio expertise of Applicant's ing from an April 1982 merger of First Federal, First trust services, retail discount brokerage services and Financial Savings and Loan of Downer's Grove, participation in Florida's Interchange Group. Conse- Downer's Grove, Illinois, and Union Federal Savings quently, considerations relating to the convenience and Loan Association of Cook County, Matteson, and needs of the community to be served lend slight Illinois, a supervisory merger that was arranged by the Federal Savings and Loan Insurance Corporation ("FSLIC"). 12. "Policy Statement of the Board of Governors of the Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (March 3, 1982). While the proposed policy statement 1. First Federal is currently operated as a mutual association. In has not been approved by the Board, the Board is using the policy order to effect consummation of the proposal, Applicant will form a guidelines as part of its analysis of the effect of a proposal on probable federal stock savings and loan association that will merge with First future competition. Federal. 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150 Federal Reserve Bulletin • February 1984 As a result of section 333 of the Garn-St Germain ware), Wilmington, Delaware. Citicorp also controls Depository Institutions Act of 1982 (Pub. L. No. 97- numerous nonbanking subsidiaries located throughout 320, 96 Stat. 1469), First Federal, an institution char- the United States, including subsidiaries located in tered by the Federal Home Loan Bank Board ("Bank Illinois that are engaged in first and second mortgage Board") and the accounts of which are insured by the lending activities and mortgage servicing activities. FSLIC, is not a "bank" for purposes of the BHC Act. First Federal, headquartered in Chicago, Illinois, Accordingly, this application is properly filed under operates 62 offices and has assets of $4.0 billion (as of section 4 of the BHC Act to acquire a company October 31, 1983). First Federal is the second largest engaged in a nonbanking activity. savings and loan association in Illinois and the 14th By letter dated December 15, 1983, the Bank Board largest in the United States. It is primarily engaged in requested that the Board act immediately upon the taking savings deposits and making loans to individapplication in view of the emergency nature of the uals secured by mortgages on real property. First situation at First Federal and its deteriorating financial Federal also owns a number of service corporations condition. In light of this request and considering the engaged in real estate development, data processing, situation at First Federal, the Board promptly pub- insurance underwriting and agency activities, warelished notice of the application in the Federal Register, housing GNMA securities, and monitoring properties providing 14 days for interested persons to comment securing First Federal's loan participation interests. on the application. In addition, in order to provide the First Federal also has a one-third interest in a mortfullest opportunity for public comment consistent with gage loan servicing corporation. the need to act expeditiously on the application, the Two distinct product markets are involved in this Board ordered an informal hearing to be held on proposal: deposit taking and mortgage lending. First January 5, 1984, in Washington, D.C., to receive Federal has no offices outside of Illinois engaged in comments and testimony from interested persons on deposit taking or mortgage lending at any location at the application and to allow interested persons to which subsidiaries of Citicorp engage in the same question Citicorp concerning its proposal. In response activities. First Federal's home office and 44 of its to a number of requests from interested parties for branches operate in the Chicago banking market,2 additional time in which to comment and to prepare for controlling less than 4 percent of the total deposits in the hearing, the Board extended the comment period commercial banks and savings and loan associations in for five additional days and rescheduled the hearing the market. First Federal's remaining branches are for January 11, 1984. located in 15 other markets in Illinois. In 12 of these In response to its request for comment on the markets it holds less than 5 percent of the total application, the Board received approximately 60 writ- deposits in commercial banks and savings and loan ten comments opposing the acquisition ("Protes- associations in the market, and in the remaining three tants") and 33 favoring the acquisition. Two general the range is from eight to fifteen percent. In contrast, comments were received that did not take a position Applicant does not accept federally insured deposits from locations in Illinois.3 Thus, in the deposit-taking on the proposal. Two commenters requested the product market there is no significant existing compe- Board to hold a formal hearing on the application. In tition between Citicorp and First Federal. addition, the Board received sworn testimony from 13 persons or organizations who appeared at the hearing, With regard to mortgage lending, First Federal in in addition to Citicorp, as well as statements and other 1982 originated approximately 4.7 percent of the first documents submitted by the participants at the mortgage loans on 1-4 family dwellings made by hearing. commercial banks and savings and loan associations in The Board has carefully considered the issues raised the Chicago SMSA,4 representing 5.4 percent of the by the Protestants in light of the factors set forth in total dollar value of such first mortgages.5 Applicant section 4(c)(8) of the Act. Based upon the record engages in mortgage lending and servicing activities in before the Board in this matter, the Board makes the Illinois through a single office located near Chicago. following findings. Citicorp, with total consolidated assets of $130.5 billion (as of September 30, 1983) is the largest banking 2. The Chicago banking market is approximated by Cook, DuPage, and Lake Counties, Illinois. organization in the United States. Citicorp operates 3. Applicant's Edge Act subsidiaries take deposits in Illinois that four subsidiary banks: Citibank, N.A., New York, are not federally insured, but these subsidiaries operate in a different New York, the second largest commercial bank in product market from First Federal. 4. Mortgage lending data is not readily available for the Chicago New York with $25.7 billion in domestic deposits (as market. The Board finds, however, that the Chicago SMSA, for which of December 31, 1982); Citibank (New York State), such data is available, provides a reasonable approximation of the Chicago market for the purposes of this case. N.A., Buffalo, New York; Citibank (South Dakota), 5. These statistics include an estimated market share held by N.A., Sioux Falls, South Dakota; and Citibank (Dela- mortgage banking companies in each SMSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 151 Applicant began originating residential mortgage loans concentration of resources, decreased or unfair comin 1983, and has only a small share of the first petition, conflicts of interests, or unsound banking mortgage loans on 1-4 family dwellings made by practices." commercial banks and savings and loan associations in In 1977, the Board determined that, as a general the Chicago SMSA. In addition, there are a large matter, the activity of operating a savings and loan is number of competitors engaged in various mortgage not a "proper incident" to banking because the potenlending and servicing activities in the Chicago SMSA, tial adverse effects of generally allowing affiliations of including banks, thrift institutions, credit unions, and banks and thrift institutions were then sufficiently mortgage banking companies. Applicant and First strong to outweigh the benefits that might result in Federal also make commercial construction and sec- individual cases. (D.H. Baldwin & Co., 63 FEDERAL ond mortgage loans. The markets for both of these RESERVE BULLETIN 280 (1977)). Subsequently, in products are unconcentrated, Applicant's and First three cases involving the acquisition of a failing thrift Federal's market shares are small, and there are institution, the Board found that the adverse effects of numerous other competitors and potential competitors bank/thrift affiliations were overcome by the public in the market. benefits of preserving the failing thrift institution.7 In view of Citicorp's limited presence in the relevant In the Garn-St Germain Act, Congress has con- Illinois markets served by First Federal, the number firmed the Board's authority under the BHC Act to and size of financial organizations that operate or that allow the acquisition by a bank holding company of a are potential entrants in these markets, the legal thrift institution under such circumstances and has prohibitions against Citicorp's expansion of its subsid- established the framework within which the Board is iary banks into Illinois, and the fact that First Federal to consider such acquisitions. That statute provides is a failing institution with limited competitive vigor, for a division of responsibilities between the Board the Board concludes that this proposal would not have under the BHC Act and the Bank Board under the any significant adverse effect on existing or potential National Housing Act. Under that Congressionally competition in any relevant market. Indeed, the pro- mandated division of responsibility, the Bank Board is posed acquisition will have a substantial beneficial authorized to arrange for the acquisition or merger of impact on competition by ensuring the continued failing thrift institutions under specified conditions, operation of First Federal as a viable institution and after a consideration of a series of priorities that through access to the financial and managerial re- favor intra-industry and intrastate transactions over sources of Citicorp. inter-industry and interstate transactions. The statute Section 4(c)(8) of the Act authorizes a bank holding also provides that the Bank Board's calculations and company to acquire a company engaged in nonbanking estimations of offers shall be determinative. activities that are determined by the Board to be "so Section 123 of the Garn-St Germain Act specifically closely related to banking or managing or controlling provides that, after appropriate consideration of these banks as to be a proper incident thereto." The Board priorities and compliance with the other requirements has determined previously that the operation of a thrift of the statute, the Bank Board may authorize the institution satisfies the first, or closely related to acquisition of a failing thrift by a bank holding compabanking, standard of section 4(c)(8) of the Act. For the ny. If the Bank Board selects a bank holding company, reasons set out in those earlier Board decisions, the the acquired thrift becomes subject to the branching Board reaffirms that determination in this case.6 restrictions applicable to national banks in the state in Under the second, or "proper incident," standard which the thrift is located. of section 4(c)(8) of the Act, the Board is required to While the Garn-St Germain Act assigns to the Bank consider whether the performance of the activity by a Board the responsibility for selection of the appropribank holding company or a subsidiary of a bank ate solution to a failing thrift institution situation, that holding company "can reasonably be expected to statute also requires the Board's consideration of the produce benefits to the public, such as greater conve- effects of a proposal involving a bank holding company nience, increased competition, or gains in efficiency acquisition under the prudential standards of section that outweigh possible adverse effects, such as undue 4(c)(8) of the BHC Act, which involve an evaluation of the possible adverse effects and anticipated public benefits of the proposal.8 That evaluation does not, 6. E.g., Old Stone Corporation, 69 FEDERAL RESERVE BULLETIN 812 (1983); Citicorp, 68 FEDERAL RESERVE BULLETIN 656 (1982); Interstate Financial Corporation, 68 FEDERAL RESERVE BULLETIN 316 (1982); D.H. Baldwin & Co., 63 FEDERAL RESERVE BULLETIN 280 7. Old Stone Corporation, supra; Citicorp, supra; Interstate Finan- (1977); American Fletcher Corporation, 60 FEDERAL RESERVE BUL- cial Corporation, supra. LETIN 868 (1974). A Board staff study of thrift institutions supports the 8. Section 4(c)(8) of the BHC Act does not require a determination view that operating a thrift institution is closely related to banking. that a given proposal is the most desirable that could be presented. ("Bank Holding Company Acquisitions of Thrift Institutions," Sep- The fact that alternative purchasers may be available is not determinatember 1981.) tive. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin • February 1984 however, include a review of the Bank Board's selec- contained in the Garn-St Germain Act, and instead tion of the appropriate bidder for the failing thrift. relied almost exclusively on the Bank Board's deter- Section 118 of the Garn-St Germain Act also autho- mination that Citicorp had submitted a bid for First rizes the Board to dispense with both the notice and Federal representing the most favorable terms for the hearing requirements of section 4(c)(8) of the BHC Act FSLIC. Protestants also state that the Bank Board was if it finds that an application to acquire a thrift institu- required to consult the State of Illinois in order to tion presents an emergency situation requiring imme- assess the impact of the proposal on Illinois banking diate action, and the primary federal regulator of that structure and failed to do so. Finally, Protestants state institution concurs in this finding. that the FSLIC did not make sufficient efforts to find In a letter dated December 15, 1983, the Bank Board an intra-industry or intrastate purchaser, and that the informed the Board that the Bank Board had selected Board should delay action on this application and Citicorp as the winning bidder for First Federal and encourage the FSLIC to seek such a purchaser. urged the Board to act immediately on the Citicorp As indicated above these are not relevant matters application in view of the severe financial condition of for Board consideration under section 4(c)(8) of the First Federal. The Bank Board stated that such action BHC Act. The decision as to which bid to accept is was necessary to restore public confidence in First committed to the exclusive discretion of the FSLIC Federal, to maintain confidence in the savings and under the Garn-St Germain Act. The Board does, loan industry, and to stabilize the daily increasing however, note the statements by the FSLIC that the potential cost to the FSLIC. procedures it followed in accepting the Citicorp pro- Since its organization in 1982, First Federal's condi- posal complied with the requirements of the Garn-St tion has steadily deteriorated. During the first ten Germain Act for acquisition of failing thrift institumonths of 1983, for example, First Federal lost an tions, and that a broad range of bidders, including average of $4.4 million per month. (This figure is $8.3 savings and loan associations, commercial banks, and million per month if certain "purchase accounting" other financial institutions were invited to bid for First adjustments to income are ignored.) As of October 31, Federal.9 1983, First Federal's net worth had declined to a The Board has reexamined, in the context of this negative $59.8 million, excluding capital assistance application, the general adverse factors cited in the from the FSLIC. Since January, 1983, its net worth Board's 1977 D.H. Baldwin decision, including regulahas declined by $36.7 million. tory conflict, erosion of institutional rivalry, and the Further, deposit outflow at First Federal has been potential for undermining interstate banking prohibisignificant. During the first ten months of 1983, First tions. The Board has also considered the adverse Federal lost $336 million in deposits. In order to factors that might be associated with this particular stabilize First Federal's condition, the FSLIC has application,10 including the potential for unfair compepurchased Income Capital Certificates of First Federal tition, conflicts of interests, financial risks, diversion in the amount of $87 million, and the Federal Home of funds, and participation in impermissible activities. Loan Bank of Chicago has advanced an additional In view of the determination by the Bank Board and $527 million to First Federal. Uncertainty regarding the Board's findings with respect to First Federal's First Federal's future has made it difficult to attract financial condition, and the other considerations deand retain management, and current management does tailed below, the Board has determined that the subnot have the resources to restore First Federal to stantial benefits to the public associated with preservfinancial health. ing First Federal as a competitor are sufficient to In view of these and other facts of record, the outweigh the generalized adverse effects found by the Board, under the authority provided in section 118(a) of the Garn-St Germain Act, has concluded that an emergency situation exists at First Federal that requires the Board to act immediately on this application, and the Bank Board has concurred in this finding. 9. In response to questions raised by others with the Bank Board Accordingly, and as discussed below, the Board here- regarding the cost to the FSLIC of Citicorp's proposal under alternative interest rate calculations, the Bank Board has advised that, under by denies the requests for a formal hearing on this the interest rate assumptions of the Office of Management and Budget, application, the requests to defer Board action on the Citicorp's bid was more favorable to the FSLIC than any other open application, and the requests to allow for a further bid. In its letter of January 19, 1984, the Bank Board stated that "after evaluating all considerations that the Bank Board deems relevant, period for public comment on the application. including cost to the FSLIC, the Citicorp application is by far superior The Board has considered the assertions of Protes- to all other proposals." tants that the Bank Board failed to give appropriate 10. As stated above, the Board has examined the competitive effects associated with this particular application and has concluded weight to the intra-industry and intrastate priorities that there are no substantial adverse effects associated therewith. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 153 Board in the D.H. Baldwin case.11 In reaching this Citicorp may result in a decrease in First Federal's decision, the Board has considered that this is not the lending in low- and moderate-income areas; (3) defirst acquisition of a savings and loan association by creased or unfair competition would result because Citicorp. While the Garn-St Germain Act provides for Citicorp would operate First Federal in tandem with the acquisition by a bank holding company of a savings its banking and other subsidiaries in order to engage in and loan association located in another state under effective interstate banking and would use its substanemergency circumstances, Congress has continued to tial resources to dominate banking in Illinois; (4) require that such proposals meet the proper incident to Citicorp may not have the financial resources to banking standard of section 4(c)(8) of the BHC Act, operate and revitalize First Federal; (5) the transaction mandating an evaluation by the Board of the public would result in an undue concentration of resources; benefits and possible adverse effects in each case. and (6) the consummation of the proposal would have Under this standard, the Board has considered as a significant adverse effect on banking structure in adverse effects the impact of this proposal, in the Illinois. context of the proposed acquisition of New Biscayne In approving Citicorp's prior application to acquire Federal Savings & Loan Association, Miami, Florida Fidelity Federal Savings and Loan Association of San ("New Biscayne"), and the acquisition of Fidelity Francisco, the Board imposed a number of conditions Federal Savings and Loan Association of San Francis- designed to address the potential adverse effects assoco, on the interstate banking prohibition of the BHC ciated with the affiliation of a thrift institution with a Act and the concentration of resources. The Board banking organization. In the instant application, Citinotes that Applicant is the largest banking organiza- corp requests the Board not to impose those condition in the country, and has acquired or proposes to tions on its proposed acquisition of First Federal. The acquire, through a series of transactions, substantial Protestants, however, urge the continuing need for the thrift institutions in three states controlling more than conditions based on considerations of unfair competi- $9 billion in assets. On this basis, Applicant would be tion, interstate banking, and the need to maintain the fourth largest savings and loan organization in the specialized depository institutions. The Board contincountry. ues to believe that there are potential adverse effects After considering all facts of record, the Board has resulting from the affiliation of a thrift institution with concluded that consummation of the First Federal a banking organization and, accordingly, has decided proposal and Applicant's proposal to acquire New to impose in this case the conditions on the operation Biscayne would not have such a serious adverse effect of the acquired thrift found necessary in the Fidelity on the interstate banking prohibition of the Act or case. The Board believes these conditions address in result in such an undue concentration of resources as substantial part the concerns raised by the Protesto outweigh the public benefits associated with pre- tants.12 serving these major thrift competitors. If, however, The Board has also carefully considered Protesany further expansion into the savings and loan indus- tant's assertion that consummation of this proposal try were contemplated by Citicorp through the acquisi- would severely undermine the banking structure in tion of additional savings and loan associations, the Illinois. Illinois is basically a unit banking state, since Board would weigh these factors more heavily. it does not permit branch banking and limits bank In its evaluation of this application, the Board holding company acquisitions to specified geographic considered the contentions of the Protestants that, in regions of the state. In contrast, First Federal has 62 addition to the general effects cited by the Board in offices, located throughout the state. Protestants state Baldwin, the following principal adverse effects may that consummation of this proposal would therefore result from consummation of the Citicorp proposal: (1) allow Citicorp to establish a branch network in Illinois Citicorp does not intend to maintain First Federal as a specialized institution committed to the provision of housing credit; (2) acquisition of First Federal by 12. It has been suggested that the Board should prevent Citicorp from changing First Federal's name in any respect and prohibit any subsequent mergers or acquisitions involving thrift institutions. The prohibitions on tandem operations and transactions with affiliates that the Board is imposing provide for the separation of First Federal from 11. Consummation of this proposal will make Citicorp a multiple Citicorp's other operations. Accordingly, the Board does not believe savings and loan holding company subject to various restrictions on its that Citicorp should be prevented from identifying First Federal as a activities under the National Housing Act, which do not apply to Citicorp subsidiary. With respect to subsequent mergers or acquisiunitary savings and loan holding companies. (12 U.S.C. § 1730a(c)(2)). tions, any such transaction would require Board approval under the However, the Bank Board has used its authority under the emergency BHC Act as a condition of this order and would be limited by the provisions of section 408(m)(l)(A) of the National Housing Act, provisions of section 408(m)(5)(A) of the National Housing Act 12 U.S.C. § 1730a(m)(l)(A), to determine that the multiple holding (12 U.S.C. § 1730a(m)(5)(A)) restricting further branching by First company restrictions shall not apply to Citicorp. Federal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin • February 1984 that no Illinois bank could establish. According to the proposed acquisition of New Biscayne. The Board has Protestants, such a significant alteration in the struc- reviewed relevant data from Citicorp's inspection reture of Illinois banking should not be accomplished ports and the examination reports of its subsidiaries as without more participation by the state, and may well as official reports and filings with the Board, represent illegal branch banking in view of the expand- including data on Citicorp's domestic and foreign loan ed powers of savings and loan associations and Citi- portfolio. The Board also has reviewed the Assistance corp's status as a bank holding company. Agreement among Citicorp, First Federal, and the The Board does not believe that consummation of FSLIC. Based upon this review and taking into acthe proposal would constitute unlawful branch bank- count the factors and commitments listed below, the ing.13 First Federal is, of course, not a bank and the Board concludes that the reasonably expected public conditions imposed by the Board on Citicorp's opera- benefits of the proposal are sufficient to outweigh any tion of First Federal will prevent it from becoming adverse effect relating to the financial resources of effectively a branch of any of Citicorp's subsidiary Citicorp as well as other possible adverse effects of the banks. proposal. With regard to the effect of the acquisition on In reaching this conclusion, the Board placed con- Illinois' banking structure generally, the Board notes siderable emphasis on the following factors. First, the that Congress was aware that several unit banking Assistance Agreement provides substantial protection states might be affected by the emergency thrift provi- to Citicorp in connection with losses that may arise sions of the Garn-St Germain Act, but it gave no from First Federal's existing assets and liabilities. indication that emergency acquisitions in these states Second, Citicorp's capital ratios and earnings have should be prevented or treated differently. Rather, to improved over the past 18 months. Third, in connecaddress the possible disparity between the branching tion with the two proposed savings and loan acquisiauthority of banks and thrifts in such situations, Con- tions before the Board, Citicorp has committed to gress required in section 123 of the Garn-St Germain raise $350 million of additional primary capital by Act that a savings and loan association acquired by a March 31, 1984. This additional capital would, after bank holding company under the emergency provi- adjusting for the temporary build-up in Citicorp's sions may only establish branches to the same extent period-end assets and giving effect to this proposal and that a national bank may establish and operate the proposed acquisition of New Biscayne, place branches in the state in which the savings and loan Citicorp in compliance with the Board's minimum association is located. Moreover, the Board notes that capital adequacy guidelines. Finally, in addition to the any adverse effect upon Illinois' banking structure specific commitment regarding capital, Citicorp has posed by First Federal's branch network exists cur- stated that it will, subject to reasonable economic and rently under state and federal branching laws applica- market conditions, increase its capital ratios materially ble to savings and loan associations in Illinois. above the Board's minimum capital adequacy guide- Finally, the conditions the Board has imposed on lines by December 31, 1984. In its consideration of the First Federal's operation, and in particular the condi- financial aspects of this application, the Board has tion requiring that First Federal be operated as a relied on these capital commitments and Citicorp's saving and loan association as well as the provisions of continuing efforts to improve its capital position. The the Garn-St Germain Act limiting First Federal's fu- Board believes that capital adequacy is especially ture branching capability, should address the concerns important in the analysis of bank holding company expressed regarding any adverse effect on banking expansion proposals, particularly where the organizastructure in Illinois arising out of the ownership of tion has a significant loan exposure, such as loans in First Federal by a bank holding company. foreign countries experiencing liquidity problems. In evaluating this application, the Board has careful- The Board concludes that Citicorp's acquisition of ly considered the financial and managerial resources of First Federal will provide a substantial and compelling Citicorp and the effect on these resources of the public benefit in that Citicorp will provide First Federproposed acquisition of First Federal as well as the al with sufficient new capital funds and managerial assistance to restore First Federal as a viable competitor and to restore public confidence in First Federal. Citicorp has committed to invest sufficient funds in 13. The courts have held that the Bank Board has "complete authority to permit intrastate branching by [federally chartered] First Federal so that its resulting capital would be not S&Ls," notwithstanding state laws that restrict the branching author- less than 6 percent of First Federal's total liabilities, ity of state chartered banks or S&Ls. Independent Bankers Ass'n v. compared to the present regulatory minimum of 3 FHLBB, 557 F. Supp. 23, 26 (D.D.C. 1982). Accord, North Arlington Nat. Bank v. Kearny Federal S&L Ass'n, 187 F. 2d 564 (3d Cir.), cert, percent, and to maintain that 6 percent ratio until denied, 342 U.S. 816 (1951). The Board also notes that Illinois allows December 31,1985. Citicorp also has extensive experistatewide branching by savings and loan associations chartered under the laws of Illinois. ence in both the consumer banking and consumer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 155 finance areas and appears fully capable of revitalizing would provide similar programs and services to the a consumer-oriented depository institution. communities served by First Federal. The Board notes The record establishes that Citicorp has the financial that Citicorp made commitments in the Fidelity appliand managerial resources and the commitment to cation regarding consultations with community groups serving the convenience and needs of the public to concerning the credit needs of the community, comachieve this result. The acquisition will restore an mitments that it is meeting. active and effective competitor and will increase com- In addition, Citicorp has made the following competition in numerous Illinois communities, will ensure mitments to the Board in connection with its considerthe continuation of services by First Federal to its ation of this application: thousands of customers and the public, and will pro- 1. First Federal will maintain at least the same tect the interests of First Federal's depositors, the percentage of its assets invested in Illinois residenpublic, the savings and loan industry generally, and tial mortgages as are invested as of the date of this the FSLIC. order. The Board has also considered as a substantial 2. First Federal will use its commercial lending public benefit the savings to the FSLIC that will result powers under the Home Owners' Loan Act for the from the proposal. By letters dated December 15, benefit of small business in Illinois. 1983, and January 18 and 19,1984, the Bank Board has 3. First Federal will develop community programs advised the Board that it has explored all alternatives specifically tailored to the needs of Illinois commufor solving First Federal's problem and has deter- nities served by First Federal. mined that Citicorp's bid would serve the public interest and minimize the cost to the FSLIC to a These commitments, upon which the Board has substantially greater extent than the terms offered by relied in acting upon this application, should maintain any other bidder. and enhance First Federal's services to its local com- Citicorp's commitment to the introduction of new munities and also address the concerns expressed products and services and the expansion of current regarding diversion of funds from Illinois. services of First Federal also lend weight toward To guard against possible adverse effects of the approval. This expansion of First Federal's services affiliation in this case between a banking organization and operations also may be expected to provide great- and a savings and loan association, including the er convenience to the public. Citicorp's experience potential for unfair competition and diversion of funds, and expertise also should result in gains in efficiency at the Board has imposed the following conditions: First Federal. In assessing the public benefits of this 1. Applicant shall operate First Federal as a savings proposal, the Board has noted the favorable perform- and loan association having as its primary purpose ance of Fidelity Federal Savings and Loan Association the provision of residential housing credit. First of San Francisco after its acquisition by Citicorp in Federal shall limit its activities to those permitted to late 1982. federal savings and loan associations currently un- Finally, Citicorp has a satisfactory record of service der the Home Owners' Loan Act, and shall not to its local communities, and has stated that it intends engage in any activity prohibited to bank holding to use its resources to promote and expand First companies and their subsidiaries under section Federal's service to its communities. In this regard, 4(c)(8) of the Bank Holding Company Act. These the Board notes that the provisions of the Community limitations shall apply to First Federal's service Reinvestment Act are applicable to First Federal as a corporation subsidiaries, which shall have a reasonsavings and loan association.14 able period consistent with the terms of the assist- At the hearing, representatives of Citicorp present- ance agreement among Citicorp, First Federal, and ed sworn testimony regarding the services it provides the FSLIC to complete the divestiture of their real to local communities in New York and, through Citi- estate development projects. Citicorp shall have two corp Savings, in California. Such services include years to divest First Federal's insurance underwritprograms for the rehabilitation and construction of ing subsidiary or to terminate its impermissible low- and moderate-income housing, small business activities. lending, economic development centers, and partici- 2. First Federal shall not establish or operate a pation with community groups to further such pro- remote service unit at any location outside Illinois. grams. Citicorp's representatives testified that it 3. First Federal shall not establish or otherwise acquire branches at locations not permissible for national or state banks located in Illinois. 14. Although the Board does not believe the Community Reinvest- 4. First Federal shall be operated as a separate, ment Act is applicable in the case of section 4 applications, the Board independent, profit-oriented corporate entity and has considered Citicorp's record under that statute in acting upon this application. shall not be operated in tandem with any other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin • February 1984 subsidiary of Applicant. Applicant and First Federal Illinois, or the legality of the proposal under branch shall limit their operations to effect this condition, banking laws; (5) the appropriate priority assigned by and will observe the following conditions: the Bank Board to Citicorp's bid under the Garn-St a. No banking or other subsidiary of Applicant Germain Act; (6) the use First Federal will make of the shall link its deposit-taking activities to accounts additional capital supplied by Citicorp; and (7) the at First Federal in a sweeping arrangement or methods by which Citicorp will promote First Federal similar arrangement. and the effects such promotion may have on voluntary b. Neither Applicant nor any of its subsidiaries tie-ins. shall solicit deposits or loans for First Federal, As indicated above, the Board, pursuant to section nor shall First Federal solicit deposits or loans for 118(a) of the Garn-St Germain Act, has dispensed with any other subsidiary of Applicant. the hearing requirement of section 4(c)(8) of the Act 5. To the extent necessary to ensure independent based upon the emergency situation at First Federal. operation of First Federal and prevent the improper In this regard, the Board believes that the procedures diversion of funds, there shall be no transactions employed by it in this case, including the opportunity between First Federal and Applicant or any of its for written comment and the informal hearing, providsubsidiaries without the prior approval of the Feder- ed an adequate opportunity for public participation in al Reserve Bank of New York. This limitation the Board's consideration of the proposal consistent encompasses the transfer, purchase, sale or loan of with the emergency situation that the Board has found any assets or liabilities, but does not include infu- at First Federal. The Board imposed no limitation on sions of capital from Applicant, the payment of the length or nature of the written comments. In dividends by First Federal to Applicant, or the sale addition, numerous parties participated in the informal of residential real estate loans from First Federal to hearing in Washington, D.C., and all persons that any subsidiary of Applicant.15 wished to testify at these hearings were given an 6. Applicant shall not change First Federal's name opportunity to do so and to submit questions to to include the word "bank" or any other term that Citicorp regarding the application. A number of such might confuse the public regarding First Federal's questions were received and responded to by Citicorp. status as a nonbank, thrift institution. Finally, the requests for hearings, when viewed in 7. First Federal shall not convert its charter to that the context of the factors the Board is required to of a state savings and loan association or other state- consider under the BHC Act, the conditions that the chartered thrift institution or to a national or state Board has imposed on the operation of First Federal commercial bank without the Board's prior by Citicorp, and the severe financial condition of First approval. Federal about which there is no dispute, do not raise The Board concludes that consummation of the issues of disputed fact that would warrant a formal proposal, subject to the commitments and conditions hearing. Based on the foregoing considerations, the set out above, may not reasonably be expected to Board does not believe that a formal hearing is reresult in conflicts of interests, unsound banking prac- quired or appropriate in this case and denies the tices, or other adverse effects. requests of the Protestants for a formal hearing. Several of the Protestants have requested the Board The Illinois Bankers Association ("IBA") has reto hold a formal hearing regarding Citicorp's proposal. quested the Board, in the event it approves the pro- They raise as bases for a hearing the following: (1) posed acquisition, to require Citicorp, pending judicial discovery is necessary so that all material facts associ- review of the FSLIC's selection of Citicorp as the ated with the applications may be provided to Protes- winning bidder, to maintain separately identifiable and tants; (2) the need to cross-examine Citicorp officers segregable accounts for each aspect of First Federal's regarding Citicorp's proposal to merge First Federal operations and not to dispose of any of First Federal's with Citicorp Savings, the first thrift institution ac- assets until the completion of the FSLIC litigation. quired by Citicorp, since this merger could affect the While the Board has determined not to grant this amount of funds available in Illinois for residential specific request, the conditions that the Board has loans; (3) the need to assess the competitive effects of imposed address the concerns expressed by IBA since the proposal in each local market; (4) the need for they require the continued operation of First Federal information regarding management interlocks between as a separate and independent savings and loan associ- First Federal and Citicorp, which could affect the ation, prevent any tandem operations with Citicorp, amount of funds available for residential loans in and limit transactions between Citicorp and First Federal. Moreover, limited divestitures of assets that could result from consummation of Citicorp's proposal 15. The Board does not consider any extension of credit by Citicorp prior to further consideration of the FSLIC decision to First Federal that is necessary to maintain First Federal's liquidity or general financial integrity to be covered by this limitation. on First Federal by the Court of Appeals for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 157 Seventh Circuit will not materially alter First Federal's ny Act (the "BHC Act"), has applied for the Board's operations or adversely affect the ability to carry out approval under section 4(c)(8) of that Act (12 U.S.C. any court orders.16 § 1843(c)(8)), and section 225.4(b)(2) of the Board's Based upon the foregoing and other facts and cir- Regulation Y (12 C.F.R. § 225.4(b)(2)), to acquire all of cumstances reflected in the record, the Board has the voting shares of New Biscayne Federal Savings determined that the reasonably expected public bene- and Loan Association, Miami, Florida ("New Bisfits of the proposed acquisition are sufficient to out- cayne"), and indirectly its wholly-owned service corweigh any possible adverse effects of the proposal, poration.1 New Biscayne is a federally-chartered savincluding any potential adverse effects of the affiliation ings and loan association and is the successor by of a commercial banking organization with a thrift supervisory conversion of Biscayne Federal Savings institution. In reaching this conclusion, the Board has and Loan Association, Miami, Florida, a stock savings relied on the rationale advanced in its Fidelity order and loan association that was declared insolvent by the with regard to the balance of public benefits and Federal Home Loan Bank Board ("Bank Board") on adverse effects. Accordingly, the application is ap- April 6, 1983, and placed under the receivership of the proved subject to the conditions and commitments Federal Savings and Loan Insurance Corporation described in this Order and the record of this applica- ("FSLIC"). tion. As a result of section 333 of the Garn-St Germain The Board's decision is further subject to the condi- Depository Institutions Act of 1982 (Pub.L. No. 97tions set forth in section 225.4(c) of Regulation Y and 320, 96 Stat. 1469), New Biscayne, an institution to the Board's authority to require such modification chartered by the Bank Board and the accounts of or termination of the activities of a holding company or which are insured by the FSLIC, is not a "bank" for any of its subsidiaries as the Board finds necessary to purposes of the BHC Act. Accordingly, this applicaassure compliance with the provisions and purposes of tion is properly filed under section 4 of the BHC Act to the Act and the Board's regulations and orders issued acquire a company engaged in a nonbanking activity. thereunder, or to prevent evasion thereof. The trans- By letter dated December 16, 1983, the Bank Board action shall be made not later than three months after requested that the Board act immediately upon this the effective date of this Order, unless that period is application in view of the emergency nature of the extended for good cause by the Board or by the situation at New Biscayne and its deteriorating finan- Federal Reserve Bank of New York acting pursuant to cial condition. In light of this request and considering authority hereby delegated. the situation at New Biscayne, the Board promptly By order of the Board of Governors, effective published notice of the application in the Federal January 20, 1984. Register, providing 14 days for interested persons to comment on the application. In addition, in order to Voting for this action: Chairman Volcker and Governors provide the fullest opportunity for public comment Martin, Wallich, Partee, and Gramley. Voting against this consistent with the need to act expeditiously on the action: Governors Teeters and Rice. Governor Wallich ab- application, the Board ordered an informal hearing to stained from the insurance portion of this application. be held on January 6, 1984, in Washington, D.C., to receive comments and testimony from interested per- JAMES MCAFEE, sons on the application and to allow interested persons [SEAL] Associate Secretary of the Board to question Citicorp concerning its proposal. In response to a number of requests from interested parties Note: For the Dissenting Statements of Governors for additional time in which to comment and to prepare Rice and Teeters see pages 163-164. for the hearing, the Board extended the comment period for five additional days and rescheduled the hearing for January 9, 1984. Citicorp, New York, New York In response to its request for comment on the application, the Board received approximately 20 written comments opposing the acquisition ("Protes- Order Approving Acquisition of Savings and Loan tants") and 30 favoring the acquisition. Four general Association comments were received that did not take a position on the proposal. In addition, the Board received sworn Citicorp, New York, New York, a bank holding company within the meaning of the Bank Holding Compa- 1. New Biscayne is currently operated as a mutual association. In 16. The Court of Appeals has declined to stay the effectiveness of order to effect consummation of the proposal, Applicant will form a the FSLIC decision. Hartigan v. FHLBB, Nos. 84-1023, 84-1042 and federal stock savings and loan association that will merge with New 84-1053 (7th Cir. January 17, 1984). Biscayne. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin • February 1984 testimony from four persons or organizations who cent of the total volume of first mortgage originations appeared at the hearing, in addition to Citicorp, as well in Florida. Citicorp operates approximately ten offices as statements and other documents submitted by the of its nonbank subsidiaries in seven Florida SMS As; participants at the hearing. The Board did not receive New Biscayne operates in four of these SMS As. In a request for a formal hearing on the application. each of these, the share of mortgages originated by The Board has carefully considered the issues raised Citicorp and New Biscayne is small, and their comby the Protestants in light of the factors set forth in bined shares in the four common SMS As are approxisection 4(c)(8) of the Act. Based upon the record mately 2 percent, 3 percent, 5.8 percent and 11.7 before the Board in this matter, the Board makes the percent.4 In addition, there are a large number of following findings. competitors engaged in various mortgage lending and Citicorp, with total consolidated assets of $130.5 servicing activities in Florida, including banks, thrift billion (as of September 30, 1983) is the largest banking institutions, credit unions and mortgage banking comorganization in the United States. Citicorp operates panies. four subsidiary banks: Citibank, N.A., New York, In view of Citicorp's limited presence in the relevant New York, the second largest commercial bank in Florida markets served by New Biscayne, the number New York with $25.7 billion in domestic deposits, (as and size of financial organizations operating in these of December 31, 1982); Citibank (New York State), Florida markets, the number of potential entrants into N.A., Buffalo, New York; Citibank (South Dakota), these markets, the legal prohibitions against Citicorp's N.A., Sioux Falls, South Dakota; and Citibank (Dela- expansion of its subsidiary banks into Florida, and the ware), Wilmington, Delaware. Citicorp also controls fact that New Biscayne is a failing institution with numerous nonbanking subsidiaries located throughout limited competitive vigor, the Board concludes that the United States, including subsidiaries located in this proposal would not have any significant adverse Florida that are engaged in first and second mortgage effect on existing or potential competition in any lending activities and mortgage servicing activities. relevant market. Indeed, the proposed acquisition will New Biscayne, headquartered in Miami, Florida, have a substantial beneficial impact on competition by operates 35 offices and has assets of $1.9 billion (as of ensuring the continued operation of New Biscayne as October 31, 1983). New Biscayne is the fifth largest a viable institution through access to the financial and savings and loan association in Florida and the 43rd managerial resources of Citicorp. largest in the United States. It is primarily engaged in Section 4(c)(8) of the Act authorizes a bank holding taking savings deposits and making loans to individ- company to acquire a company engaged in nonbanking uals secured by mortgages on real property. New activities that are determined by the Board to be "so Biscayne also owns a service corporation that engages closely related to banking or managing or controlling in real estate development. banks as to be a proper incident thereto." The Board Two distinct product markets are involved in this has determined previously that the operation of a thrift proposal: deposit taking and mortgage lending. New institution satisfies the first, or closely related to Biscayne has no offices outside of Florida engaged banking, standard of section 4(c)(8) of the BHC Act. in deposit taking or mortgage lending at any location For the reasons set out in those earlier Board deciat which subsidiaries of Citicorp engage in the sions, the Board reaffirms that determination in this same activities. New Biscayne operates in five Florida case.5 banking markets, where it controls from 1.1 percent to Under the second or "proper incident" standard of 5.3 percent of the total deposits in commercial banks section 4(c)(8) of the Act, the Board is required to and savings and loan associations in those areas.2 In consider whether the performance of the activity by a contrast, Applicant does not accept federally-insured bank holding company or a subsidiary of a bank deposits from locations in Florida.3 Thus, in the de- holding company "can reasonably be expected to posit-taking product market, there is no significant existing competition between Citicorp and New Biscayne. 4. These statistics include the estimated market share held by mortgage banking companies in each SMSA. Mortgage lending data With regard to mortgage lending, Citicorp and New are not readily available for the relevant markets. The Board finds, Biscayne together account for approximately 3.5 per- however, that these SMSAs provide a reasonable approximation of the relevant markets in this instance. 5. E.g., Old Stone Corporation, 69 FEDERAL RESERVE BULLETIN 812 (1983); Citicorp, 68 FEDERAL RESERVE BULLETIN 656 (1982); 2. These are the Miami-Ft. Lauderdale, east Palm Beach County, Interstate Financial Corporation, 68 FEDERAL RESERVE BULLETIN Martin County, Naples, and Pinellas County banking markets. New 812 (1982); D.H. Baldwin & Co., 63 FEDERAL RESERVE BULLETIN 280 Biscayne's largest share of 5.3 percent is in the Martin County (1977); American Fletcher Corporation, 60 FEDERAL RESERVE BULbanking market. LETIN 868 (1974). A Board staff study of thrift institutions supports the 3. Applicant's Edge Act subsidiaries take deposits that are not view that operating a thrift institution is closely related to banking. federally insured, but these subsidiaries operate in a different product "Bank Holding Company Acquisitions of Thrift Institutions," Sepmarket from New Biscayne. tember 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 159 produce benefits to the public, such as greater conve- benefits of the proposal.7 That evaluation does not, nience, increased competition, or gains in efficiency however, include a review of the Bank Board's selecthat outweigh possible adverse effects, such as undue tion of the appropriate bidder for the failing thrift. concentration of resources, decreased or unfair com- Section 118 of the Garn-St Germain Act allows the petition, conflicts of interests, or unsound banking Board to dispense with both the notice and hearing practices." requirements of section 4(c)(8) of the BHC Act if it In 1977, the Board determined that, as a general finds that an application to acquire a thrift institution matter, the activity of operating a savings and loan is presents an emergency situation requiring immediate not a "proper incident" to banking because the poten- action, and the primary federal regulator of that institial adverse effects of generally allowing affiliations of tution concurs in this finding. banks and thrift institutions were then sufficiently In a letter dated December 16, 1983, the Bank Board strong to outweigh the benefits that might result in advised the Board that the Bank Board had selected individual cases. (D.H. Baldwin & Co., 63 FEDERAL Citicorp as the winning bidder for New Biscayne RESERVE BULLETIN 280 (1977)). Subsequently, in under the emergency provisions of section 123 of the three cases involving the acquisition of a failing thrift Garn-St Germain Act. The Bank Board urged the institution, the Board found that the adverse effects of Board to act immediately on the Citicorp application in bank/thrift affiliations were overcome by the public view of the deteriorating and serious financial condibenefits of preserving the failing thrift institution.6 tion of New Biscayne. The Bank Board stated that In the Garn-St Germain Act, Congress has con- such action was necessary to restore public confidence firmed the Board's authority under the BHC Act to in New Biscayne, to maintain confidence in the savallow the acquisition by a bank holding company of a ings and loan industry generally, and to stabilize the thrift institution under such circumstances and has daily increasing potential cost to the FSLIC. established the framework within which the Board is New Biscayne's predecessor was placed in receiverto consider such acquisitions. That statute provides ship by the Bank Board on April 6, 1983, an action that for a division of responsibilities between the Board has been confirmed by the U.S. Court of Appeals for under the BHC Act and the Bank Board under the the Eleventh Circuit. In April 1983, New Biscayne was National Housing Act. Under that Congressionally insolvent by more than $29 million, and its condition mandated division of responsibility, the Bank Board is has steadily deteriorated since that time. As of Noauthorized to arrange for the acquisition or merger of vember 30, 1983, for example, New Biscayne's net failing thrift institutions under specified conditions, worth had declined to a negative $49 million, if FSLIC and after a consideration of a series of priorities that Income Capital Certificates are excluded from net favor intra-industry and intrastate transactions over worth, and it is experiencing losses of about $2.5 inter-industry and interstate transactions. The statute million per month. In addition, between April 6 and also provides that the Bank Board's calculations and October 31, New Biscayne lost almost $374 million in estimations of offers shall be determinative. deposits, or approximately 20 percent of total depos- Section 123 of the Garn-St Germain Act specifically its. provides that, after appropriate consideration of these In order to stabilize New Biscayne's condition, the priorities and compliance with the other requirements FSLIC has purchased Income Capital Certificates of of the statute, the Bank Board may authorize the New Biscayne in the amount of $38.7 million, and the acquisition of a failing thrift by a bank holding compa- Federal Home Loan Bank of Atlanta has advanced an ny. If the Bank Board selects a bank holding company, additional $449 million to New Biscayne. 146 New the acquired thrift becomes subject to the bank Biscayne employees, including 34 members of its branching restrictions applicable to national banks in management staff, have submitted their resignations, the state in which the thrift is located. and uncertainty regarding New Biscayne's future has While the Garn-St Germain Act assigns to the Bank made it difficult to replace these employees. The Bank Board the responsibility for selection of the appropri- Board has advised the Board that there is no evidence ate solution to a failing thrift institution situation, that that New Biscayne's continued deterioration can be statute also requires the Board's consideration of the averted, or that the rising cost to the FSLIC can be effects of a proposal involving a bank holding company checked, unless New Biscayne is acquired by a puracquisition under the prudential standards of section chaser that is capable of restoring public confidence in 4(c)(8) of the BHC Act, which involve an evaluation of the institution. In view of these and other facts of the possible adverse effects and anticipated public 7. Section 4(c)(8) of the BHC Act does not require a determination that a given proposal is the most desirable that could be presented. 6. Old Stone Corporation, supra; Citicorp, supra; Interstate Finan- The fact that alternative purchasers may be available is not determinacial Corporation, supra. tive. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin • February 1984 record, the Board has concluded that an emergency Board notes that Applicant is the largest banking situation exists at New Biscayne that requires the organization in the country, and has acquired or Board to act immediately on this application, and the proposes to acquire, through a series of transactions, Bank Board has concurred in this finding. According- substantial thrift institutions in three states controlling ly, the Board has, under the authority provided in more than $9 billion in assets. On this basis, Applicant Section 118(a) of the Garn-St Germain Act, dispensed would be the fourth largest savings and loan organizawith the hearing requirement of section 4(c)(8) and any tion in the country. further period for public comment on the application. After considering all the facts of record, the Board The Board has reexamined, in the context of this has concluded that consummation of the New Bisapplication, the general adverse factors cited in the cayne proposal and Applicant's proposal to acquire Board's 1977 D.H. Baldwin decision, including regula- First Federal, would not have such a serious adverse tory conflict, erosion of institutional rivalry, and the effect on the interstate banking prohibition of the Act potential for undermining interstate banking prohibi- or result in such an undue concentration of resources tions. The Board has also considered the adverse as to outweigh the public benefits associated with factors that might be associated with this particular preserving these major thrift competitors. If, however, application,8 including the potential for unfair compe- any further expansion into the savings and loan industition, conflicts of interests, financial risks, diversion try were contemplated by Citicorp through the acquisiof funds, and participation in impermissible activities. tion of additional savings and loan associations, the In view of the determination by the Bank Board and Board would weigh these factors more heavily. the Board's findings with respect to New Biscayne's In its evaluation of this application, the Board financial condition, and the other considerations de- considered the contentions of the Protestants that, in tailed below, the Board has determined that the sub- addition to the general effects cited by the Board in stantial benefits to the public associated with preserv- Baldwin, the following adverse effects may result from ing New Biscayne as a competitor are sufficient to consummation of the Citicorp proposal: (1) Citicorp outweigh the generalized adverse effects found by the does not intend to maintain New Biscayne as a special- Board in the D.H. Baldwin case.9 In reaching this ized institution committed to the provision of housing decision, the Board has considered that this is not the credit; (2) Citicorp would use New Biscayne as a first acquisition of a savings and loan association by vehicle to engage in activities impermissible for bank Citicorp. While the Garn-St Germain Act provides for holding companies; (3) decreased or unfair competithe acquisition by a bank holding company of a savings tion would result because Citicorp would operate New and loan association located in another state under Biscayne in tandem with its banking and other subsidemergency circumstances, Congress has continued to iaries in order to engage in effective interstate banking require that such proposals meet the proper incident to and to use its substantial resources to dominate bankbanking standard of section 4(c)(8) of the BHC Act ing in Florida; (4) Citicorp may not have the financial mandating an evaluation by the Board of the public ability and resources to operate and revitalize New benefit and possible adverse effects in each case. Biscayne; and (5) the transaction would result in an Under this standard, the Board has considered as undue concentration of resources. adverse effects the impact of this proposal, in the In approving Citicorp's prior application to acquire context of the proposed acquisition of First Federal Fidelity Federal Savings and Loan Association of San Savings & Loan Association of Chicago, Chicago, Francisco, the Board imposed a number of conditions Illinois ("First Federal"), and the acquisition of Fidel- designed to address the potential adverse effects assoity Federal Savings and Loan Association of San ciated with the affiliation of a thrift institution with a Francisco, on the interstate banking prohibition of the banking organization. In the instant application, Citi- BHC Act and the concentration of resources. The corp requests the Board not to impose those conditions on its proposed acquisition of New Biscayne. The Protestants, however, urge the continuing need for the conditions based on considerations of unfair 8. As stated above, the Board has examined the competitive effects competition, interstate banking, and the need to mainassociated with this particular application and has concluded that tain specialized depository institutions. The Board there are no substantial adverse effects associated therewith. 9. Consummation of this proposal will make Citicorp a multiple continues to believe that there are potential adverse savings and loan holding company subject to various restrictions on its effects resulting from the affiliation of a thrift instituactivities which do not apply to unitary savings and loan holding tion with a banking organization and, accordingly, has companies. 12 U.S.C. § 1730a(c)(2). However, the Bank Board has used its authority under the emergency provisions of section decided to impose in this case the conditions on the 408(m)(l)(A) of the National Housing Act, 12 U.S.C. operation of the acquired thrift found necessary in the § 1730a(m)(l)(A), to determine that the multiple holding company restrictions shall not apply to Citicorp. Fidelity case. The Board believes these conditions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 161 address in substantial part the concerns raised by the exposure, such as loans in foreign countries experienc- Protestants.10 ing liquidity problems. In evaluating this application, the Board has careful- The Board concludes that Citicorp's acquisition of ly considered the financial and managerial resources of New Biscayne will provide a substantial and compel- Citicorp and the effect on these resources of the ling public benefit in that Citicorp will provide New proposed acquisition of New Biscayne as well as the Biscayne with sufficient new capital funds and manaproposed acquisition of First Federal, Chicago, Illi- gerial assistance to restore New Biscayne as a viable nois. The Board has reviewed relevant data from competitor and to restore public confidence in New Citicorp's inspection reports and the examination re- Biscayne. Citicorp has committed to invest sufficient ports of its subsidiaries as well as official reports and funds in New Biscayne so that its resulting capital filings with the Board, including data on Citicorp's would be not less than 6 percent of New Biscayne's domestic and foreign loan portfolio. Based upon this total liabilities, compared to the present regulatory review and taking into account the factors and com- minimum of 3 percent, and to maintain that 6 percent mitments listed below, the Board concludes that the ratio until December 31, 1985. Citicorp also has extenreasonably expected public benefits of the proposal sive experience in both the consumer banking and are sufficient to outweigh any adverse effect relating to consumer finance areas and appears fully capable of the financial resources of Citicorp as well as other revitalizing a consumer-oriented depository institupossible adverse effects of the proposal. tion. In reaching this conclusion, the Board placed con- The record establishes that Citicorp has the financial siderable emphasis on the following factors. First, and managerial resources and the commitment to Citicorp's capital ratios and earnings have improved serving the convenience and needs of the public to over the past 18 months. Second, in connection with achieve this result. The acquisition will restore an the two proposed savings and loan acquisitions before active and effective competitor and will increase comthe Board, Citicorp has committed to raise $350 mil- petition in numerous Florida markets, will ensure the lion of additional primary capital by March 31, 1984. continuation of services by New Biscayne to its thou- This additional capital would, after adjusting for the sands of customers and the public, and will protect the temporary build-up in Citicorp's period-end assets and interests of New Biscayne's depositors, the public, the giving effect to this proposal and the proposed acquisi- savings and loan industry generally, and the FSLIC. tion of First Federal, place Citicorp in compliance with The Board has also considered as a substantial the Board's minimum capital adequacy guidelines. public benefit the savings to the FSLIC that will result Finally, in addition to the specific commitment regard- from the proposal. The Bank Board has advised the ing capital, Citicorp has stated that it will, subject to Board that it has explored all alternatives for solving reasonable economic and market conditions, increase New Biscayne's problem and has determined that its capital ratios materially above the Board's mini- Citicorp's bid would serve the public interest and mum capital adequacy guidelines by December 31, minimize the cost to the FSLIC to a substantially 1984. In its consideration of the financial aspects of greater extent than the terms offered by any other this application, the Board has relied on these capital bidder. commitments and Citicorp's continuing efforts to im- Citicorp's commitment to the introduction of new prove its capital position. The Board believes that products and services and the expansion of current capital adequacy is especially important in the analysis services of New Biscayne also lends weight toward of bank holding company expansion proposals, particapproval. This expansion of New Biscayne's services ularly where the organization has a significant loan and operations also may be expected to provide greater convenience to the public. Citicorp's experience and expertise also should result in gains in efficiency at New Biscayne. In assessing the public benefits of this proposal, the Board has noted the favorable perform- 10. It has been suggested that the Board should prevent Citicorp from changing New Biscayne's name in any respect and prohibit any ance of Fidelity Federal Savings and Loan Association subsequent mergers or acquisitions involving thrift institutions. The of San Francisco after its acquisition by Citicorp in prohibitions on tandem operations and transactions with affiliates that late 1982. the Board is imposing provide for the separation of New Biscayne from Citicorp's other operations. Accordingly, the Board does not Finally, Citicorp has a good record of service to its believe that Citicorp should be prevented from identifying New local communities, and has stated that it intends to use Biscayne as a Citicorp subsidiary. With respect to subsequent mergers or acquisitions, any such transaction would require Board approval its resources to promote and expand New Biscayne's under the BHC Act as a condition of this order and would be limited service to its communities. In this regard, the Board by the provisions of section 408(m)(5)(A) of the National Housing Act notes that the provisions of the Community Reinvest- (12 U.S.C. § 1730(m)(5)(A)) limiting further branching by New Biscayne. ment Act are applicable to New Biscayne as a savings Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin • February 1984 and loan association.11 At the hearing, representatives the divestiture of its real estate development proof Citicorp presented sworn testimony regarding the jects. services it provides to local communities in New York 2. New Biscayne shall not establish or operate a and, through Citicorp Savings, in California. Such remote service unit at any location outside Florida. services include programs for the rehabilitation and 3. New Biscayne shall not establish or otherwise construction of low- and moderate-income, housing, acquire branches at locations not permissible for small business lending, economic development centers national or state banks located in Florida. and participation with community groups to further 4. New Biscayne shall be operated as a separate, such programs. Citicorp's representatives testified independent, profit-oriented corporate entity and that it would provide similar programs and services to shall not be operated in tandem with any other the communities served by New Biscayne. The Board subsidiary of Applicant. Applicant and New Bisnotes that Citicorp made commitments in the Fidelity cayne shall limit their operations to effect this condiapplication regarding consultations with community tion, and will observe the following conditions: groups concerning the credit needs of the community, a. No banking or other subsidiary of Applicant commitments that it is meeting. shall link its deposit-taking activities to accounts In addition, Citicorp has made the following com- at New Biscayne in a sweeping arrangement or mitments to the Board in connection with its consider- similar arrangement. ation of this application: b. Neither Applicant nor any of its subsidiaries 1. New Biscayne will maintain at least the same shall solicit deposits or loans for New Biscayne, percentage of its assets invested in Florida residen- nor shall New Biscayne solicit deposits or loans tial mortgages as are invested as of the date of this for any other subsidiary of Applicant. Order. 5. To the extent necessary to ensure independent 2. New Biscayne will use its commercial lending operation of New Biscayne and prevent the improppowers under the Home Owners' Loan Act for the er diversion of funds, there shall be no transactions benefit of small business in Florida. between New Biscayne and Applicant or any of its 3. New Biscayne will develop community programs subsidiaries without the prior approval of the Federspecifically tailored to the needs of Florida commu- al Reserve Bank of New York. This limitation nities served by New Biscayne. encompasses the transfer, purchase, sale or loan of any assets or liabilities, but does not include infu- These commitments, upon which the Board has sions of capital from Applicant, the payment of relied in acting upon this application, should maintain dividends by New Biscayne to Applicant, or the sale and enhance New Biscayne's services to its local of residential real estate loans from New Biscayne communities and also address the concerns expressed to any subsidiary of Applicant.12 regarding the diversion of funds from Florida. 6. Applicant shall not change New Biscayne's name To guard against possible adverse effects of the to include the word "bank" or any other term that affiliation in this case between a banking organization might confuse the public regarding New Biscayne's and a savings and loan association, including the status as a nonbank, thrift institution. potential for unfair competition and diversion of funds, 7. New Biscayne shall not convert its charter to that the Board has imposed the following conditions: of a state savings and loan association or other state 1. Applicant shall operate New Biscayne as a sav- chartered thrift institution or to a national or state ings and loan association having as its primary commercial bank without the Board's prior purpose the provision of residential housing credit. approval. New Biscayne shall limit its activities to those permitted to federal savings and loan associations The Board concludes that consummation of the currently under the Home Owners' Loan Act, and proposal, subject to the commitments and conditions shall not engage in any activity prohibited to bank set out above, may not reasonably be expected to holding companies and their subsidiaries under sec- result in conflicts of interests, unsound banking praction 4(c)(8) of the Bank Holding Company Act. tices, or other adverse effects. These limitations shall apply to New Biscayne's Based upon the foregoing and other facts and cirwholly-owned service corporation, which shall have cumstances reflected in the record, the Board has two years from the date of this Order to complete determined that the reasonably expected public benefits of the proposed acquisition are sufficient to out- 11. Although the Board does not believe the Community Reinvestment Act is applicable in the case of section 4 applications, the Board 12. The Board does not consider any extension of credit by Citicorp has considered Citicorp's record under that statute in acting upon this to New Biscayne that is neceassary to maintain New Biscayne's application. liquidity or general financial integrity to be covered by this limitation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 163 weigh any possible adverse effects of the proposal, quently held that these adverse effects may be overincluding any potential adverse effects of the affiliation come in the case of a failing thrift institution because of a commercial banking organization with a thrift of the substantial public benefits associated with preinstitution. In reaching this conclusion, the Board has serving the institution as a competitor. In each such relied on the rationale advanced in its Fidelity Order instance, however, the Board has reaffirmed its findwith regard to the balance of public benefits and ings regarding the adverse effects of such affiliations, adverse effects. Accordingly, the application is ap- which stem principally from the undermining of the proved subject to the conditions and commitments interstate banking prohibitions of the Bank Holding described in this Order, and the record of this applica- Company Act and the erosion of the separation and tion. rivalry between the banking and thrift industries. The Board's decision is further subject to the condi- In this case, the Board has again affirmed the tions set forth in section 225.4(c) of Regulation Y and presence of these adverse effects in the affiliation of a to the Board's authority to require such modification banking organization with a thrift institution. Howevor termination of the activities of a holding company or er, the Board has concluded that any possible adverse any of its subsidiaries as the Board finds necessary to effects in this case are outweighed by the public assure compliance with the provisions and purposes of benefit of restoring each of the ailing thrift institutions the Act and the Board's regulations and orders issued to a viable condition. The Board also considered thereunder, or to prevent evasion thereof. The trans- concerns regarding concentration of resources and the action shall be made not later than three months after undermining of the interstate banking prohibition of the effective date of this Order, unless that period is the Bank Holding Company Act and cautioned that it extended for good cause by the Board or by the would weigh these factors more heavily in any future Federal Reserve Bank of New York acting pursuant to expansion by Citicorp into the savings and loan indusauthority hereby delegated. try through acquisition of additional institutions. By order of the Board of Governors, effective I recognize that the Board imposed a number of January 20, 1984. conditions on its approval of the proposed acquisitions designed to mitigate any potential adverse effects of Voting for this action: Chairman Volcker and Governors the applications, including requirements to assure Martin, Wallich, Partee, and Gramley. Voting against this competitive equality and maintenance of the acquired action: Governors Teeters and Rice. institutions as independent savings and loan associations devoted primarily to home mortgage lending. JAMES MCAFEE, While the conditions imposed by the Board are essen- [SEAL] Associate Secretary of the Board tial in mitigating potential adverse effects of the proposals, in my judgment, the adverse factors present in Dissenting Statement of Governor Rice this case are so significant, even in light of the conditions imposed by the Board, that they are not out- I dissent from the Board's approval today of the weighed by the public benefits associated with revitalacquisitions by Citicorp of First Federal Savings and izing these institutions. It is with respect to this Loan Association of Chicago, Chicago, Illinois, and balancing of adverse effects and public benefits that I New Biscayne Federal Savings and Loan Association, disagree with the majority of the Board. Miami, Florida. Although I joined the Board in its approval of While the Garn-St Germain Depository Institutions Citicorp's acquisition of Fidelity Federal Savings and Act of 1982 authorizes the Board to approve the Loan Association of San Francisco in recognition of acquisition of a failing thrift institution by a bank the substantial public benefits of that case, this proholding company, Congress intended and indeed spec- posal would allow Citicorp to acquire two more major ified that the Board should evaluate any such proposal savings and loan associations in two additional states, under the net public benefits standard of section institutions that have a substantial network of 4(c)(8) of the Bank Holding Company Act. Under that branches throughout these states. In my view, the standard, the Board is required to consider whether adverse effects on the interstate banking prohibition of the performance of the activity can reasonably be the Act and the other factors specified in the Board's expected to result in benefits to the public that out- D.H. Baldwin decision are increasingly pronounced weigh possible adverse effects. where the same bank holding company engages in a In 1977, the Board determined that the operation of series of transactions involving the acquisition of a savings and loan association by a bank holding major thrift institutions across state lines. I share the company entailed such significant potential adverse concerns expressed by many of the commenters that effects as to outweigh the public benefits that might approval of these applications would seriously underresult in any individual case. The Board has subse- mine the Congressionally established structure of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 Federal Reserve Bulletin • February 1984 banking in this country as embodied in the Douglas the express terms of the Garn-St Germain Act, meet Amendment to the Bank Holding Company Act and the net public benefits standard of the Bank Holding the McFadden Act. Company Act. If the proposal by the successful bidder In 1970, Congress amended the Bank Holding Com- does not meet this standard, another solution to repany Act to authorize the Board to allow bank holding store the thrift institution to a viable condition would companies to engage in a broader range of nonbanking have to be arranged by the FHLBB. activities. In authorizing such an expansion, the Con- As the Board's order makes clear, Congress has not gress expressly recognized the potential for the con- authorized the Board to review the FHLBB's seleccentration of economic resources that might result tion of the appropriate bidder. However, at the same through the combination of major banking institutions time, Congress did not authorize the FHLBB to evaluwith nonbanking institutions in "power centers domi- ate, through the selection of the bidder, the effect of nating the American economy."1 The specific inclu- the proposal on the public policies embodied in the sion of the "undue concentration of resources" stan- Bank Holding Company Act. This responsibility is dard in section 4(c)(8) of the Act and the requirement committed exclusively to the Board. that Board approval of any nonbanking activity take In view of the magnitude of the adverse effect of account of this factor reflects Congressional concern these two acquisitions on the fundamental policies of over control of economic resources and, as the courts the Bank Holding Company Act, I cannot concur in have held, demands "a more searching inquiry than the majority's finding that these proposals satisfy the the usual antitrust considerations of ease of entry and net public benefits standard of section 4(c)(8) of the relative market shares."2 Act. As the Board notes, Citicorp is the largest banking I would deny these applications. organization in the United States and will, following these acquisitions, control the fourth largest savings January 20, 1984 and loan organization in the country as well as having a substantial presence in the thrift institution structure of three states. In my judgment, the concentration of Dissenting Statement of Governor Teeters banking and economic resources resulting from these acquisitions raises serious potential for an undue con- For the reasons stated in the dissent of Governor Rice, centration of resources. Because of the size and mar- I dissent from the Board's approval of the applications ket share of the institutions involved in the present of Citicorp, New York, New York, to acquire First applications and the impact of their acquisition by Federal Savings and Loan Association of Chicago, Citicorp on the policies of the Act and on the structure Chicago, Illinois, and New Biscayne Federal Savings and federal regulation of banking in this country, I and Loan Association, Miami, Florida. believe that the adverse effects that the Board recognized and cautioned against in its decisions are present January 20, 1984 to such a significant extent that approval of the applications on the basis of public benefits is not warranted. While I recognize the importance of the public Orders Issued Under Sections 3 and 4 of Bank benefits of preserving the service of these thrift institu- Holding Company Act tions to their local communities, the Act requires the Board to balance this benefit against possible adverse Norstar Bancorp, Inc., effects. In requiring this balancing, Congress recog- Albany, New York nized the importance of the public policy considerations and prudential limitations embodied in the Act Order Approving the Formation and Merger of Bank and that they should not be automatically relaxed to Holding Companies and the Acquisition of preserve a failing thrift institution, but only upon a Companies Engaged in Insurance and Mortgage compelling showing of countervailing public benefits. Banking Activities Accordingly, any bidder selected by the FHLBB as the best solution to a failing thrift situation must, under Norstar Bancorp, Inc., Albany, New York, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied for the 1. H. Rep. No. 91-1744, 91st Cong., 2d Sess. 11 (1970). See also S. Board's approval under section 3 of the Act (12 U.S.C. Rep. No. 91-1084, 91st Cong., 2d Sess. 2-4 (1970). 2. Citicorp v. Board of Governors, 589 F.2d 1182 1190-1191 (2d § 1842) to acquire Security New York State Corpora- Cir. 1979), cert, denied, 442 U.S. 929 (1979). Accord, Alabama Assn. tion, Rochester, New York ("Security") and thereby of Insurance Agents v. Board of Governors, 553 F.2d 224, 251 (5th indirectly acquire Security Trust Company of Roches- Cir. 1976), amended and rehearing denied, 558 F.2d 729 (1977), cert, denied, 435 U.S. 904 (1978). ter, Rochester, New York; First Trust Union Bank, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 165 Wellsville, New York; The Mohawk National Bank, cial banks in the state would increase to approximately Schenectady, New York; First Bank and Trust Com- 2.4 percent, and Applicant would become the eleventh pany of Ithaca, Ithaca, New York; The Bank of largest commercial banking organization in the state. Auburn, Auburn, New York; Genesee Country Bank, In view of Applicant's relatively small share of state- LeRoy, New York; First Bank and Trust Company of wide deposits, it is the Board's view that consumma- Corning, Corning, New York; The State Bank of tion of this acquisition would not have any significant Seneca Falls, Seneca Falls, New York, and Glen Bank adverse effects on the concentration of commercial and Trust Company, Watkins Glen, New York. In banking resources in New York. connection with this application, SNY Holding Corpo- Applicant's subsidiary banks compete directly with ration, Albany, New York, has applied for the Board's Security's subsidiary banks in four banking markets: approval to become a bank holding company by merg- the Albany, Batavia, Rochester, and Syracuse banking er with Security. markets. Applicant also has applied for the Board's approval In the Albany banking market,4 Applicant is the under section 4(c)(8) of the Act (12 U.S.C. market's second largest commercial banking organiza- § 1843(c)(8)) and section 225.4(b)(2) of the Board's tion with IPC deposits of $293.9 million,5 representing Regulation Y (12 C.F.R. § 225.4(b)(2)), to acquire 15.9 percent of IPC deposits in commercial banks in Griffin Life Insurance Company, Phoenix, Arizona, a the market. Security is the market's sixth largest company engaged in the reinsurance of credit-related commercial banking organization with $108.4 million insurance directly related to extensions of credit by in deposits, representing 5.9 percent of IPC deposits in subsidiaries of Security, and Griffley Corporation, commercial banks in the market. After consummation Rochester, New York, a company that will engage in of the proposal, Applicant would control 21.8 percent mortgage banking activities. These activities have of IPC deposits in commercial banks in the market. been determined by the Board to be closely related to The Albany banking market is considered to be banking and permissible for bank holding companies moderately concentrated.6 Although consummation of (12 C.F.R. §§ 225.4(a)(1), (3) and (10)), and this this proposal would eliminate some existing competidetermination has not been affected by the recent tion between Applicant and Security in the Albany amendments to section 4(c)(8) of the Act limiting the market, the presence of 10 thrift institutions mitigates permissible insurance activities of bank holding com- the competitive effects of the transaction. These instipanies.1 tutions hold combined deposits of $3.7 billion, or Notice of the applications, affording opportunity for approximately 68 percent of total deposits in the interested persons to submit comments, has been market. Moreover, the three largest institutions in the given in accordance with sections 3 and 4 of the Act market are thrift institutions. The Board has previous- (48 Federal Register 52126 and 56850 (November 16, ly indicated that thrift institutions have become, or at 1983 and December 23, 1983)). The time for filing least have the potential to become, major competitors comments has expired, and the Board has considered of commercial banks.7 Thrift institutions already exert the applications and all comments received in light of a considerable competitive influence in the market as the factors set forth in section 3(c) of the Act providers of NOW accounts and consumer loans. In (12 U.S.C. § 1842(c)) and the considerations specified addition, thrift institutions are engaged in the business in section 4(c)(8) of the Act. of making commercial loans and providing an alterna- Applicant is the thirteenth largest commercial bank- tive for such services in the Albany market. Based ing organization in New York with six subsidiary upon the number, size and market shares of thrift banks that control aggregate deposits of $3.9 billion,2 institutions in the Albany market, the Board has representing 1.7 percent of total deposits in commercial banks in the state.3 Security is the nineteenth 4. The Albany banking market is approximated by Albany, Schelargest banking organization in the state, with nine nectady, and Rensselaer Counties and the towns of Ballston, Charlbanking subsidiaries that control aggregate deposits of ton, Clifton Park, Galway, Halfmoon, Malta, Mechanicsville, Milton, $1.4 billion, representing 0.7 percent of total deposits Stillwater, and Waterford in Saratoga County. 5. Market deposit data refer only to deposits of individuals, partin commercial banks in the state. Upon consummation nerships and corporations ("IPC deposits"). of the proposed acquisition and all planned divesti- 6. The Herfindahl-Hirshman Index ("HHI") in the market is 1318 tures, Applicant's share of total deposits in commer- and would increase by 146 points to 1464 upon consummation of the proposal. Under the Department of Justice's Merger Guidelines, a market in which the post-merger HHI is between 1000 and 1800 is considered moderately concentrated. In such markets, the Department is likely to challenge a merger that produces an increase in the 1. See Garn-St Germain Depository Institutions Act of 1982, Pub. HHI of more than 100 points. L. No. 97-320 § 601, 96 Stat. 1469, 1536-38 (1982). 7. Comerica, Inc., 69 FEDERAL RESERVE BULLETIN 797 (1983); 2. Unless otherwise indicated, deposit data are as of June 30, 1982. General Bancshares Corporation, 69 FEDERAL RESERVE BULLETIN 3. Applicant also controls Northeast Bankshares Association, Port- 802 (1983); First Tennessee National Corporation, 69 FEDERAL REland, Maine (deposits of $472.1 million as of September 30, 1983). SERVE BULLETIN 298 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin • February 1984 concluded that thrift institutions exert a significant In addition to the five banks that would remain in competitive influence that substantially mitigates the the market after consummation of the proposal, three anticompetitive effects of this proposal.8 thrift institutions, controlling 22.4 percent of the mar- In the Batavia banking market, Applicant is the ket's total deposits, operate in the market. The presfourth largest of six commercial banking organiza- ence of these institutions further mitigates the antitions, with total deposits of $48.8 million, representing competitive effects of the proposal in the Batavia 16.5 percent of the total deposits in commercial banks market.11 Accordingly, the Board finds that consumin the market.9 Security is the market's third largest mation of this proposal would have no significant commercial banking organization, with $58.5 million in adverse competitive effect in the Batavia market. deposits, representing 19.8 percent of the total depos- The Rochester banking market also is highly conits in commercial banks in the market. The market is centrated, with an HHI of 1983 and the four largest highly concentrated, with an HHI of 2055 and the four commercial banking organizations controlling 77.1 largest commercial banking organizations controlling percent of total deposits in commercial banks in the 87.2 percent of deposits in commercial banks in the market.12 Security controls the fourth largest commermarket. A combination of Applicant and Security in cial banking organization in the market with 12.4 the market would result in a single banking organiza- percent of market deposits. Applicant controls less tion controlling 36.7 percent of the total deposits in than one percent of market deposits. After consummacommercial banks in the market. Consummation of the tion, Applicant would assume Security's rank as the proposal would increase the market's four-firm con- fourth largest commercial banking organization in the centration ratio from 87.2 percent to 96.6 percent and market, with a market share of approximately 13.4 increase the HHI by 668 points to 2723. percent. Thirteen commercial banks would continue to In order to minimize the competitive effects of the operate in the market after consummation of the proposal in the Batavia market, Applicant proposes to proposal and the HHI would increase by only 22 divest four branches to two unaffiliated banks that are points. Accordingly, the Board believes that consummation of the proposal would have no significant already represented in the market. These branches adverse effect on existing competition in the Rochester have deposits of $48.2 million, representing 16.3 permarket. cent of market deposits. After the proposed divestiture, Applicant would control approximately 20 per- In the Syracuse banking market, the four largest cent of total deposits in commercial banks in the commercial banking organizations control 79.5 permarket. cent of deposits in commercial banks in the market and Although an acquisition of the size proposed nor- the market HHI is 1709.13 Applicant is the seventh mally would cause concern, the Board believes that largest commercial banking organization in the market the proposed divestitures mitigate the anticompetitive and controls 2.1 percent of total deposits in commereffects of the proposal in the Batavia banking market. cial banks in the market. Security is the fifteenth Applicant effectively would assume Security's market largest commercial banking organization in the market share and market concentration would not increase and controls 0.3 percent of market deposits. Upon significantly. Although Applicant would divest the consummation, Applicant's rank would remain undeposits of its branches to two commercial banking changed and its market share would increase to 2.4 organizations already in the market, the resulting percent. The HHI would increase by only one point to market shares of these institutions would be 16.2 1710 as a result of the proposal. Accordingly, the percent and 13.1 percent. Thus, the proposal would result in a market of more equally sized competitors. Applicant has committed that the proposed divestitures will take place on or before consummation of the proposed merger.10 effects. See Barnett Banks of Florida, Inc., 68 FEDERAL RESERVE BULLETIN 190 (1982); InterFirst Corporation, 68 FEDERAL RESERVE 8. If thrift institutions in the Albany banking market were included BULLETIN 243 (1982). in the calculation of market concentration, the share of total deposits 11. If thrift institutions in the Batavia banking market were includheld by the four largest organizations in the market (three of which are ed in the calculation of market concentration, the share of total thrift institutions) would be 53.3 percent and Applicant's share of deposits held by the four largest organizations in the market would be deposits would decrease to 7.3 percent. The HHI would increase by 70.6 percent. Applicant's share of total market deposits would be 15.7 only 21 points to 1003. and the HHI would increase by 41 points to 1550. 9. The Batavia banking market is defined as Genesee County, 12. The Rochester banking market is defined as Monroe and Wayne excluding the town of Bergen, and the towns of Attica, Bennington, Counties; Livingston County excluding the towns of Nunda, Ossian, Covington, and Middlebury in Wyoming County. and Portage; Orleans County excluding the town of Shelby, and the 10. The Board's policy with regard to competitive divestitures town of Bergen in Genesee County. requires that divestitures intended to cure the anticompetitive effects 13. The Syracuse banking market is defined as Onondaga and resulting from a merger or acquisition occur on or before the date of Oswego Counties, and the towns of Cazenovia, De Ruyter, Fenner, consummation of the merger to avoid the existence of anticompetitive Georgetown, Lenox, Nelson, and Sullivan in Madison County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 167 Board concludes that consummation of this proposal directly related to extensions of credit made by the would not have an adverse effect on existing competi- subsidiaries of Security and Norstar. Applicant also tion in the Syracuse banking market. has applied to acquire Griffley Corporation, Roches- The Board has considered the effects of this propos- ter, New York ("Griffley"), a company that will al on probable future competition in the 27 markets in engage in mortgage banking activities, serving the which Applicant and Security do not compete directly. State of New York. Applicant presently engages in The Board has also examined the proposal in light of mortgage banking activities through its subsidiary, its proposed guidelines for assessing the competitive Norstar Mortgage Services, Inc. Griffley has not been effects of market extension mergers and acquisitions.14 active in mortgage banking activities for a number a In evaluating the effects of a proposed merger or years and thus its acquisition by Norstar will not consolidation upon probable future competition, the eliminate any significant competition in this area. Board considers market concentration, the number of Accordingly, it does not appear that Applicant's probable future entrants into the market, the size of acquisition of Griffin or Griffley would have any the bank to be acquired, and the attractiveness of the significant adverse effect upon existing or potential market for entry on a de novo or foothold basis absent competition. Furthermore, there is no evidence in the approval of the acquisition. All of the markets in record to indicate that approval of this proposal would question have more than six probable future entrants. result in undue concentration of resources, decreased In addition, nine of these markets are small markets, or unfair competition, conflicts of interests, unsound as defined by the guidelines, and of the remaining 18 banking practices or other adverse effects on the markets, 10 are unconcentrated as measured by the public interest. Accordingly, the Board has deterguidelines. In none of these markets would the promined that the balance of the public interest factors it posed merger require intensive analysis under the must consider under section 4(c)(8) of the Act is Board's proposed guidelines. After consideration of favorable and consistent with approval of the applicathese factors in the context of the specific facts of this tion to acquire Griffin and Griffley. case, the Board concludes that consummation of this Based on the foregoing and the facts of record, the proposal would not have any significant adverse ef- Board has determined that the applications under fects on probable future competition in any relevant sections 3 and 4 of the Act should be and hereby are market. approved. This determination is subject to the condi- The financial and managerial resources of Appli- tion that completion of the planned divestitures take cant, and its subsidiaries are regarded as satisfactory, place on or before the date of consummation of the and their future prospects appear favorable. In addi- acquisition. The acquisition of Security shall not be tion, Applicant plans to inject additional capital into consummated before the thirtieth calendar day follow- Security's lead bank. Accordingly, considerations re- ing the effective date of this Order or later than three lating to banking factors are consistent with approval. months after the effective date of this Order, unless Considerations relating to the convenience and needs such period is extended for good cause by the Board or of the communities to be served also are consistent by the Federal Reserve Bank of New York pursuant to with approval of the application. delegated authority. The determinations as to Appli- Applicant also has applied, pursuant to section cant's nonbanking activities are subject to the condi- 4(c)(8) of the Act, to acquire Griffin Life Insurance tions set forth in section 225.4(c) of Regulation Y Company, Phoenix, Arizona ("Griffin"), a wholly- (12 CFR § 225.4(c)) and to the Board's authority to owned subsidiary of Security, which engages in the require such modification or termination of the activireinsurance of credit related insurance made by Secur- ties of a holding company or any of its subsidiaries as ity's subsidiary banks or its other subsidiaries. Al- the Board finds necessary to assure compliance with though Applicant currently engages in the reinsurance the provisions and purposes of the Act and the Board's of credit related insurance, no adverse competitive regulations and orders issued thereunder, or to preeffect would result from this acquisition because the vent evasion thereof. activities of Griffin would be limited to insurance By order of the Board of Governors, effective January 23, 1984. Voting for this action: Chairman Volcker and Governors Martin, Wallich, Partee, Rice, and Gramley. Voting against 14. "Policy Statement of the Board of Governors of the Federal this action: Governor Teeters. Governor Wallich abstained Reserve System for Assessing Competitive Factors Under the Bank from the insurance portions of these applications. Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (March 3, 1982). While the proposed policy statement has not been adopted by the Board, the Board is using the policy guidelines as part of its analysis of the effect of a proposal on probable JAMES MCAFEE, future competition. [SEAL] Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin • February 1984 FEDERAL RESERVE ACT ORDERS ISSUED BY THE Board may also consider whether conduct of the BOARD OF GOVERNORS activity will enable the U. S. banking organization to compete effectively with foreign organizations. In ad- Orders Issued Under Section 25 of Federal dition, the Board takes into account whether the Reserve Act performance of the activity by a United States banking organization overseas is consistent with the prudent Citibank Overseas Investment Corporation, conduct and management of the company's banking Wilmington, Delaware and nonbanking operations, and the effect of the activity on the capital and managerial resources of the Order Approving Additional Activity Abroad U. S. banking organization. The list of permissible activities in Regulation K Citibank Overseas Investment Corporation ("COIC"), includes the underwriting of credit life insurance and Wilmington, Delaware, has applied for the Board's credit accident and health insurance that is related to consent under section 25(a) of the Federal Reserve Act extensions of credit by the investor or its affiliates (12 U.S.C. § 615(c)) and section 211.5(d) of the (12 C.F.R. § 211.5(d)(5)). The general activity of Board's Regulation K (12 C.F.R. § 211.5(d)) to retain underwriting life insurance is not included in the list. the shares of its subsidiary, Citibank Assurance Com- In support of its request for approval of this applicapany Limited ("Assurance"), London, England, after tion, COIC contends that engaging in underwriting life Assurance engages in the general activity of under- insurance in the United Kingdom is financial in nature writing life insurance in the United Kingdom.1 Assur- because life insurance policies are an important savance currently has authority to underwrite in the ings vehicle in the United Kingdom, are often related United Kingdom any life insurance that is related to an to lending activities, and are included in packages of extension of credit made by the Citicorp organization consumer financial services offered by banks and or by unaffiliated lenders.2 other United Kingdom financial institutions. COIC has COIC is a corporation organized under section 25(a) also provided information demonstrating that there are of the Federal Reserve Act (an "Edge Corporation") at least nine instances of affiliations in the United and is wholly-owned by Citibank, N.A., New York, Kingdom between banks, including two major clearing New York. Citibank is a wholly-owned subsidiary of banks, or licensed deposit takers, and life insurance Citicorp, New York, New York, which is the largest underwriters. In addition, underwriters holding apcommercial banking organization in the United States proximately 20 percent of the life insurance funds in with consolidated assets of $130.9 billion as of June 30, the United Kingdom are affiliated with depository 1983. institutions. In light of all the facts of record, including In reviewing proposals by U. S. banking organiza- the participation of U. K. banking organizations in this tions to engage in activities overseas, the Board has activity, the Board concludes that the general activity recognized that in other banking and financial sys- of underwriting life insurance in the United Kingdom tems, local institutions are often permitted to engage in can be considered usual in connection with banking or activities that would not be permissible for United other financial operations in the United Kingdom. States banking organizations under applicable United In assessing the risks to U. S. banking organizations States laws and regulations. In the Edge Act and the from performance of this activity, the Board is of the Bank Holding Company Act, the Board has been view that the application of prudent underwriting granted authority to permit activities abroad that are practices can serve to reduce many of the risks ingenerally not authorized in the United States for bank volved in insurance underwriting. Nevertheless, the holding companies. In the exercise of that authority, experience of U. S. banking organizations with such the Board has adhered to the policy that the foreign activities is limited, and the Board believes that, at activities that it authorizes should be of a banking or least in the initial period, the magnitude of such financial, as opposed to commercial, nature, or that activities should remain within reasonable limits in such activities should be usual in connection with relation to the overall operations of U.S. banking banking or other financial operations abroad. The organizations. In this regard, the Board considered as significant that Assurance is a relatively small company that appears to be adequately capitalized; that Citicorp indicated, and the record reflects, that Assurance would require no additional capital over the next 1. As discussed below, COIC has indicated that the ownership of three years; and that the projected growth of Assur- Assurance will be transferred from COIC to Citicorp within three ance will be moderate. In the future, the Board intends months after Assurance engages in this activity. 2. Letter dated April 22, 1982, to Citibank. to consider whether to place some limitations on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 169 size of a U. S. banking organization's aggregate over- The size of the proposed investment, as well as of seas insurance underwriting activities.3 Assurance itself, the restrictions on affiliate transac- With respect to the investments that may be made tions, the fact that life insurance underwriting is a by Assurance, Regulation K itself restricts to a 20 regulated and supervised activity in the United Kingpercent, noncontrolling interest an investor's share- dom, and the ongoing supervision of Citicorp pursuant holding in any foreign company that engages in activi- to the Bank Holding Company Act, would appear to ties that are not otherwise authorized by Regulation be adequate to ensure that the conduct of this activity K.4 Therefore, any investments made by Assurance in would not result in undue risk to the Citicorp organizathe shares of companies in the course of investing tion. funds generated by its life underwriting business are Based on the foregoing and other considerations subject to this limit, affording through portfolio diver- contained in the record, and in reliance on all of the sification some measure of protection against risks factors specified above, the Board has concluded that associated with the investment activities of life insur- the proposed activity in the circumstances of this case ance underwriters. may be considered usual in connection with the trans- In acting on the application, the Board also relied on action of banking or other financial operations in the the fact that COIC has indicated that the ownership of United Kingdom, and that its performance by a sub- Assurance will be transferred from COIC, a Citibank sidiary of Citicorp would not be inconsistent with the subsidiary, to Citicorp itself. Holding company owner- supervisory purposes of the Bank Holding Company ship would have the effect of automatically applying Act. Accordingly, the application is approved. the quantitative limits and collateral requirements of By order of the Board of Governors, effective section 23A of the Federal Reserve Act (12 U.S.C. January 10, 1984. § 371c) to covered transactions between Citibank and Assurance.5 Voting for this action: Chairman Volcker and Governors Wallich, Partee, Rice, and Gramley. Absent and not voting: Governors Martin and Teeters. 3. In this connection, the Board noted that Congress has under consideration whether and to what extent U.S. banking organizations WILLIAM W. WILES, may be permitted to engage in insurance underwriting in the United [SEAL] Secretary of the Board States. 4. 12 C.F.R. § 211.5(b)(iii). This section also limits the total amount invested in all nonconforming portfolio investments to 100 percent of the investor's capital and surplus. (e)(1)), that until the transfer of Assurance to Citicorp takes place, all 5. The Board has determined, pursuant to its authority under covered transactions between Citibank and Assurance will be subject section 23A of the Federal Reserve Act (12 U.S.C. § 371c(b)(l)(E) and to the provisions of section 23A. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During January 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) Baldwin Bancshares, Inc., First National Bank of Baldwin, January 6, 1984 Baldwin, Wisconsin Baldwin, Wisconsin First Frederick Corporation, First National Bank in Hobart, January 16, 1984 Frederick, Oklahoma Hobart, Oklahoma Mercantile Texas Corporation, Capital Bank-Greens Parkway, N.A. January 26, 1984 Dallas, Texas Houston, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin • February 1984 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 ADM Bancorp, Inc., Arrowhead State Bank of Kansas Kansas City December 29, 1983 Kansas City, Kansas City, Kansas City, Kansas ASB Corporation, American State Bank, Kansas City January 16, 1984 Tulsa, Oklahoma Tulsa, Oklahoma BancHills BanCorp, Inc., Bank of the Hills, Dallas December 30, 1983 Austin, Texas Austin, Texas Benton State Bankshares, Inc., Benton State Bank, St. Louis December 27, 1983 Benton, Arkansas Benton, Arkansas BSP Bancorp, Bank of San Pedro, San Francisco December 30, 1983 San Pedro, California San Pedro, California Centennial Bancshares, Inc., Mission Bancshares, Inc., Kansas City January 6, 1984 Mission, Kansas Mission, Kansas Central Bancorp, Inc., The First National Bank of Dan- Chicago January 5, 1984 Danville, Indiana ville, Danville, Indiana Citizens Financial Group, Inc., Citizens Bank of New Haven, St. Louis January 13, 1984 New Haven, Missouri New Haven, Missouri Citizens Independent Bancorp, Citizens Independent Bank, Atlanta January 17, 1984 Huntsville, Alabama Huntsville, Alabama The Colonial BancGroup, Inc., The Bank of Huntsville, Atlanta December 30, 1983 Montgomery, Alabama Huntsville, Alabama, Citizens National Bank of Opp, Opp, Alabama Commercial Bancshares, Inc., Park Tower National Bank, Dallas January 17, 1984 Houston, Texas Houston, Texas Community Holding Company, Inez Deposit Bank, Cleveland December 30, 1983 Inez, Kentucky Inez, Kentucky Decatur Bancshares, Inc., Decatur County Bank, Chicago January 13, 1984 Greensburg, Indiana Greensburg, Indiana Farmers Bancshares, Inc., Farmers State Bank, Dallas December 23, 1983 Center, Texas Center, Texas Farmers Holding Company, The Farmers State Bank and St. Louis January 20, 1984 Jacksonville, Illinois Trust Company, Jacksonville, Illinois Farmers & Merchants Banc- The Farmers & Merchants Bank, Atlanta December 30, 1983 shares, Inc., Adel, Georgia Adel, Georgia Financial Center Bancorp, The Financial Center Bank, San Francisco January 19, 1984 San Francisco, California N.A., San Francisco, California Financial Group Dawson, Inc., The Dawson Bank, Kansas City January 9, 1984 Dawson, Nebraska Dawson, Nebraska Financial Group Elk Creek, State Bank of Elk Creek, Kansas City January 9, 1984 Inc., Elk Creek, Nebraska Elk Creek, Nebraska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 171 Section 3 Reserve Effective Applicant Bank(s) Bank date Financial Group Humboldt, Home State Bank and Trust Kansas City January 9, 1984 Inc., Company, Humboldt, Nebraska Humboldt, Nebraska First Charlestown Corporation, The First National Bank of Clark St. Louis January 18, 1984 Charlestown, Indiana County, Charlestown, Indiana First Freeport Corporation, Mount Carroll National Bank, Chicago January 16, 1984 Freeport, Illinois Mount Carroll, Illinois Stockton Bancorp, Inc., Stockton, Illinois Warren Bancorp, Inc., Warren, Illinois First Geary Corporation, Geary Bancshares, Inc., Kansas City December 23, 1983 Geary, Oklahoma Geary, Oklahoma The First National Bank of Geary, Geary, Oklahoma First Groesbeck Holding Com- First National Bank, Dallas December 23, 1983 pany, Groesbeck, Texas Groesbeck, Texas First Harvey Bancorporation, First State Bank of Harvey, Minneapolis January 16, 1984 Inc., Harvey, North Dakota Harvey, North Dakota First Illinois Bancorp, Inc., First Galesburg National Bank Chicago January 4, 1984 Galesburg, Illinois and Trust Company, Galesburg, Illinois First Illinois Bancorp, Inc., Monroe National Bank of Colum- St. Louis January 11, 1984 Manchester, Missouri bia, Columbia, Illinois First Michigan Bank Corpora- FMB-First Michigan Bank- Chicago January 5, 1984 tion, Grand Rapids, Zeeland, Michigan Grand Rapids, Michigan First Paragould Bankshares, First National Bank, St. Louis January 16, 1984 Inc., Paragould, Arkansas Paragould, Arkansas First Preston Bancshares of First National Bank of Terra Richmond January 17, 1984 West Virginia, Inc., Alta, Terra Alta, West Virginia Terra Alta, West Virginia First Sharp County Bancshares, First National Bank of Sharp St. Louis December 29, 1983 Inc., County, Ash Flat, Arkansas Ash Flat, Arkansas First Winters Holding The Security State Bank, Dallas December 20, 1983 Company, Wingate, Texas Winters, Texas F & M Bancorporation, Inc., State Bank of Hilbert, Chicago January 10, 1984 Kaukauna, Wisconsin Hilbert, Wisconsin F&M Bank Holding Company, Farmers and Merchants Bank in Minneapolis January 6, 1983 Cooperstown, North Dakota Cooperstown, Cooperstown, North Dakota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 Federal Reserve Bulletin • February 1984 Section 3 Reserve Effective Applicant Bank(s) Bank date General Bancshares Corpora- General Bancshares Corporation St. Louis January 10, 1984 tion, of Illinois, St. Louis, Missouri Belleville, Illinois The Charleston National Bank, Charleston, Illinois Ashmore State Bank, Ashmore, Illinois Gulf National Bancorp, Inc., Gulf National Bank at Lake Atlanta January 16, 1984 Lake Charles, Louisiana Charles, Lake Charles, Louisiana Hazen Bancorporation, Inc., Union State Bank of Hazen, Minneapolis January 6, 1984 Hazen, North Dakota Hazen, North Dakota Henderson Bancorporation, The Sibley County Bank, Minneapolis January 20, 1984 Inc., Henderson, Minnesota Henderson, Minnesota The Heritage Group, Inc., Heritage Bank of Woodridge, Chicago December 30, 1983 Woodridge, Illinois Woodridge, Illinois Hoosier Hills Financial Corpo- The Ripley County Bank, Chicago January 12, 1984 ration, Osgood, Indiana Osgood, Indiana Kerens Financial, Inc., Kerens Bancshares, Inc., Dallas December 30, 1983 Kerens, Texas Kerens, Texas The First State Bank of Kerens, Kerens, Texas Lingle Valley Banc-Shares, Lingle State Bank, Kansas City January 4, 1984 Lingle, Wyoming Lingle, Wyoming Marytown Bancshares, Inc., Farmers & Merchants Bank, Chicago January 12, 1984 New Holstein, Wisconsin Marytown, Wisconsin Merchants Bancorp, Inc., First American Bank of Aurora, Chicago January 3, 1984 Aurora, Illinois Aurora, Illinois Midwest Bancshares, Inc., Heritage Bank of Park Forest Chicago December 28, 1984 Park Forest South, Illinois South, Park Forest South, Illinois Mission-Valley Bancorp, Bank of Pleasanton, San Francisco January 16, 1984 Fremont, California Pleasanton, California Commercial Bank of Fremont, Fremont, California NCB Inc., The National City Bank of Kansas City January 16, 1984 Englewood, Colorado Denver, Denver, Colorado Nodaway Valley Bancshares, Nodaway Valley Bank, Kansas City December 27, 1983 Inc., Maryville, Missouri Maryville, Missouri North Missouri Bancorp, Inc., The Citizens Bank of Edina, St. Louis January 13, 1984 LaBelle, Missouri Edina, Missouri LaBelle Bancshares, Inc., LaBelle, Missouri Northern Highlands Bancorpor- Northern Highlands State Bank, Minneapolis January 12, 1984 ation, Inc., Mercer, Wisconsin Mercer, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 173 Section 3 Reserve Effective AApppplliiccaanntt BBaannkk((ss)) Bank date Northshore Bancshares, Inc., La Marque Bank, Dallas December 28, 1983 Houston, Texas La Marque, Texas NW Services Corporation, Northwest Georgia Bank, Atlanta December 23, 1983 Ringgold, Georgia Ringgold, Georgia Old Stone Corporation, Old Stone Mortgage Corporation, Boston January 3, 1984 Providence, Rhode Island Seattle, Washington Peoples Bank Corporation, Peoples Bank & Trust Company, St. Louis December 29, 1983 Mountain Home, Arkansas Mountain Home, Arkansas Peoples First National Banc- Peoples First National Bank, Atlanta December 29, 1983 shares, Inc., North Miami Beach, Florida North Miami Beach, Florida Poth Bancorporation, Inc., The First National Bank of Poth, Dallas December 30, 1983 Poth, Texas Poth, Texas Potomac Bancorp, Inc., Goodwine State Bank, Chicago January 20, 1984 Springfield, Illinois Potomac, Illinois Rio Grande Bancshares, Inc., First State Bank of Silver City, Dallas January 20, 1984 Las Cruces, New Mexico Silver City, New Mexico Riverdale Bancorporation, Inc., Heritage/Glenwood Bank, Chicago January 18, 1984 Riverdale, Illinois Glen wood, Illinois Robanco Financial Corp., The First National Bank of Chicago December 28, 1983 Rochester, Indiana Rochester, Rochester, Indiana South Central Illinois Bancorp., The First National Bank of St. Louis January 4, 1984 Effingham, Illinois Effingham, Effingham, Illinois Spurgeon Financial Corpora- The Spurgeon State Bank, St. Louis December 30, 1983 tion, Spurgeon, Illinois Spurgeon, Indiana State National Bancorp of The State National Bank of St. Louis January 10, 1984 Frankfort, Inc., Frankfort, Frankfort, Kentucky Frankfort, Kentucky Tallahatchie Holding Company, Tallahatchie County Bank, St. Louis January 13, 1984 Charleston, Mississippi Charleston, Mississippi TC Bankshares, Inc., Citizens Bank and Trust St. Louis December 22, 1983 North Little Rock, Arkansas Company, Flippin, Arkansas Texana Bancshares, Inc., Texana National Bank of Belton, Dallas January 5, 1984 Hamilton, Texas Belton, Texas Twin City Bancshares, Inc., Twin City Bank, St. Louis December 21, 1983 North Little Rock, Arkansas North Little Rock, Arkansas Urban Bancshares, Inc., Missouri Bank and Trust Kansas City December 27, 1983 Kansas City, Missouri Company of Kansas City, Kansas City, Missouri Vermillion Bancshares, Inc., Vermillion State Bank, Minneapolis December 30, 1983 Vermillion, Minnesota Vermillion, Minnesota Zachary Bancshares, Inc., Bank of Zachary, Atlanta January 11, 1984 Zachary, Louisiana Zachary, Louisiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 Federal Reserve Bulletin • February 1984 Section 4 Nonbanking Reserve Effective Applicant company Bank date Bank of Boston Corporation, Quissett Corporation, Boston January 13, 1984 Boston, Massachusetts Cambridge, Massachusetts Grant Bancshares, Inc., Service Insurance Agency, Inc., Kansas City December 30, 1984 Grant, Nebraska Imperial, Nebraska Manufacturers Hanover Wells Fargo Bank, N.A., New York January 9, 1984 Corporation, San Francisco, California New York, New York to engage in corporate trust and agency operations South Carolina National Union Finance Corporation- Richmond December 29, 1984 Corporation, Emporia, Virginia Branch, Columbia, South Carolina Emporia, Virginia Southern Bancorporation, Inc. Master Loan Service of Houston, Richmond January 23, 1984 Greenville, South Carolina Inc., Houston, Texas Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant company Bank date Cornbelt Bancorporation, Corn Belt State Bank, Chicago January 11, 1984 Correctionville, Iowa Correctionville, Iowa general insurance activities Eberly Investment Co., The Stanton National Bank, Kansas City January 9, 1984 Stanton, Nebraska Stanton, Nebraska Stanton National Insurance Agency, Stanton, Nebraska First Hysham Holding The First National Bank In Minneapolis January 6, 1984 Company, Hysham, Hysham, Montana Hysham, Montana general insurance activities Herman First National Agency, The First National Bank of Minneapolis January 18, 1984 Inc., Herman, Herman, Minnesota Herman, Minnesota general insurance agency activities Mid-Nebraska Bancshares, Inc. Wolbach Insurance Agency, Inc., Kansas City December 20, 1983 Ord, Nebraska Wolbach, Nebraska Broken Bow Enterprises, Inc., Broken Bow, Nebraska Titonka Bancshares, Inc., Titonka Savings Bank, Chicago December 27, 1983 Titonka, Iowa Titonka, Iowa Boyken Insurance Agency, Inc., Titonka, Iowa Tipton Bancshares, Inc., Tipton Bancorporation, Inc., Kansas City January 6, 1984 Tipton, Oklahoma Tipton, Oklahoma First Tipton Business Trust, Tipton, Oklahoma Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 175 ORDERS APPROVED UNDER BANK MERGER ACT By the Board of Governors Effective Applicant Bank ^ Central Trust Company, Genesee Country Bank, January 26, 1984 Rochester, New York LeRoy, New York By Federal Reserve Banks ,. , Reserve Effective A AppllCant Bank Bank date Citizens Bank of New Haven, Citizens Interim Bank of New St. Louis January 13, 1984 New Haven, Missouri Haven, New Haven, Missouri PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. Independent Insurance Agents of America, Inc. and Richter v. Board of Governors, et al. filed May 1982, Independent Insurance Agents of Missouri, Inc. v. U.S.D.C. for the Northern District of Illinois. Board of Governors, filed June 1983, U.S.C.A. for Wyoming Bancorporation v. Board of Governors, filed the Eighth Circuit (two cases). May 1982, U.S.C.A. for the Tenth Circuit. The Committee for Monetary Reform, et al., v. Board First Bancorporation v. Board of Governors, filed of Governors, filed June 1983, U.S.D.C. for the April 1982, U.S.C.A. for the Tenth Circuit. District of Columbia. Charles G. Vick v. Paul A. Volcker, et al., filed March Dakota Bankshares, Inc. v. Board of Governors, filed 1982, U.S.D.C. for the District of Columbia. May 1983, U.S.C.A. for the Eighth Circuit. Jolene Gustafson v. Board of Governors, filed March Jet Courier Services, Inc., et al. v. Federal Reserve 1982, U.S.C.A. for the Fifth Circuit. Bank of Atlanta, et al. filed February 1983, Edwin F. Gordon v. Board of Governors, et al., filed U.S.C.A. for the Sixth Circuit. October 1981, U.S.C.A. for the Eleventh Circuit Securities Industry Association v. Board of Gover- (two consolidated cases). nors, et al., filed February 1983, U.S.C.A. for the Allen Wolf son v. Board of Governors, filed September Second Circuit. 1981, U.S.D.C. for the Middle District of Florida. Flagship Banks, Inc. v. Board of Governors, filed Bank Stationers Association, Inc., et al. v. Board of January 1983, U.S.D.C. for the District of Colum- Governors, filed July 1981, U.S.D.C. for the Northbia. ern District of Georgia. Flagship Banks, Inc. v. Board of Governors, filed Public Interest Bounty Hunters v. Board of Gover- October 1982, U.S.D.C. for the District of Colum- nors, et al., filed June 1981, U.S.D.C. for the bia. Northern District of Georgia. Association of Data Processing Service Organiza- First Bank & Trust Company v. Board of Governors, tions, Inc., et al. v. Board of Governors, filed filed February 1981, U.S.D.C. for the Eastern Dis- August 1982, U.S.C.A. for the District of Columbia. trict of Kentucky. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 Federal Reserve Bulletin • February 1984 9 to 5 Organization for Women Office Workers v. A. G. Becker, Inc. v. Board of Governors, et ai, filed Board of Governors, filed December 1980, October 1980, U.S.C.A. for the District of Colum- U.S.D.C. for the District of Massachusetts. bia. Securities Industry Association v. Board of Gover- A. G. Becker, Inc. v. Board of Governors, et al., filed nors, et ai, filed October 1980, U.S.C.A. for the August 1980, U.S.C.A. for the District of Columbia. District of Columbia. Berkovitz, et al. v. Government of Iran, et al., filed June 1980, U.S.D.C. for the Northern District of California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics CONTENTS Domestic Financial Statistics WEEKLY REPORTING COMMERCIAL BANKS A3 Monetary aggregates and interest rates Assets and liabilities A4 Reserves of depository institutions, Reserve A18 All reporting banks Bank credit A19 Banks with assets of $1 billion or more A5 Reserves and borrowings of depository A20 Banks in New York City institutions A21 Balance sheet memoranda A5 Federal funds and repurchase agreements of A22 Branches and agencies of foreign banks large member banks A23 Gross demand deposits of individuals, partnerships, and corporations POLICY INSTRUMENTS FINANCIAL MARKETS A6 Federal Reserve Bank interest rates A7 Reserve requirements of depository institutions A24 Commercial paper and bankers dollar A8 Maximum interest rates payable on time and acceptances outstanding savings deposits at federally insured institutions A24 Prime rate charged by banks on short-term A9 Federal Reserve open market transactions business loans A25 Terms of lending at commercial banks A26 Interest rates in money and capital markets FEDERAL RESERVE BANKS A27 Stock market—Selected statistics A28 Selected financial institutions—Selected assets A10 Condition and Federal Reserve note statements and liabilities All Maturity distribution of loan and security holdings FEDERAL FINANCE MONETARY AND CREDIT AGGREGATES A29 Federal fiscal and financing operations A30 U.S. Budget receipts and outlays A12 Aggregate reserves of depository institutions A31 Federal debt subject to statutory limitation and monetary base A31 Gross public debt of U.S. Treasury—Types and A13 Money stock measures and components ownership A14 Bank debits and deposit turnover A32 U.S. government securities dealers— A15 Loans and securities of all commercial banks Transactions, positions, and financing A3 3 Federal and federally sponsored credit agencies—Debt outstanding COMMERCIAL BANKING INSTITUTIONS A16 Major nondeposit funds A17 Assets and liabilities, last-Wednesday-of-month series Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • February 1984 SECURITIES MARKETS AND International Statistics CORPORATE FINANCE A52 U.S. international transactions—Summary A34 New security issues—State and local A53 U.S. foreign trade governments and corporations A53 U.S. reserve assets A35 Open-end investment companies—Net sales and A53 Foreign official assets held at Federal Reserve asset position Banks A35 Corporate profits and their distribution A54 Foreign branches of U.S. banks—Balance sheet A36 Nonfinancial corporations—Assets and data liabilities A56 Selected U.S. liabilities to foreign official A36 Total nonfarm business expenditures on new institutions plant and equipment A37 Domestic finance companies—Assets and liabilities and business credit REPORTED BY BANKS IN THE UNITED STATES A56 Liabilities to and claims on foreigners REAL ESTATE A57 Liabilities to foreigners A59 Banks' own claims on foreigners A38 Mortgage markets A60 Banks' own and domestic customers' claims on A39 Mortgage debt outstanding foreigners A60 Banks' own claims on unaffiliated foreigners A61 Claims on foreign countries—Combined CONSUMER INSTALLMENT CREDIT domestic offices and foreign branches A40 Total outstanding and net change A41 Terms REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES FLOW OF FUNDS A62 Liabilities to unaffiliated foreigners A63 Claims on unaffiliated foreigners A42 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit markets SECURITIES HOLDINGS AND TRANSACTIONS A64 Foreign transactions in securities Domestic Nonfinancial Statistics A65 Marketable U.S. Treasury bonds and notes— Foreign holdings and transactions A44 Nonfinancial business activity—Selected measures A44 Output, capacity, and capacity utilization INTEREST AND EXCHANGE RATES A45 Labor force, employment, and unemployment A46 Industrial production—Indexes and gross value A65 Discount rates of foreign central banks A48 Housing and construction A66 Foreign short-term interest rates A49 Consumer and producer prices A66 Foreign exchange rates A50 Gross national product and income A51 Personal income and saving A67 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 1983 11998833 Q1 Q2 Q3 Q4 Aug. Sept. Oct. Nov. Dec. Reserves of depository institutions 1 Total 4.1 12.4 4.7 -2.1 -3.4 .7 -3.0 -6.9 5.8 2 Required 3.8 12.6 4.6 -2.6 -1.5 -1.5 -3.2 -7.8 4.9 3 Nonborrowed 3.5 6.2 1.8 4.9 -6.6 4.2 16.7 -9.1 10.3 4 Monetary base2 9.5 11.1 7.6 7.4 6.4 9.1 7.6 6.1 6.4 Concepts of money and liquid assets3 5 Ml 14.1 12.2 8.9 2.1 2.8 .9 1.9 .9' 6.5 6 M2 20.3 10.1 7.8 7.0 6.0 4.8 9.1 7.2' 5.5 7 M3 10.2 8.1 8.4' 9.0 8.6 7.6' 8.6' ll.^ 6.6 8 L 10.8' 9.8' 10.8 n.a. 11.(K 8.4' 6.6' n.a. n.a. Time and savings deposits Commercial banks 9 Total 14.2 3.0 6.1 7.2 5.7 6.0 3.1 13.8 9.7 10 Savings4 -43.4 -14.8 -6.8 -9.5 -11.2 -8.7 -10.5 -7.9 -11.5 11 Small-denomination time5 -48.5 24.1 14.9 20.1 22.4 17.3 23.1 21.7 9.3 12 Large-denomination time6 -53.9 -24.8 -8.5 -4.2 -2.9 -3.8 -21.6 11.2 14.5 13 Thrift institutions7 12.1 16.0 13.7 11.5 13.5 12.5 13.C 9.7' 5.9 14 Total loans and securities at commercial banks8 10.9^ 9.9 8.6 12.5 11.2 4.9 9.9 13.7 12.9 Interest rates (levels, percent per annum) 1983 1983 1984 Q1 Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. SSShhhooorrrttt---ttteeerrrmmm rrraaattteeesss 1 1 1 1 1 1 1 1 1 1 1 1 6 7 6 7 6 7 5 8 5 8 5 8 TTT DDD CCC FFFeee rrr ooo iii eee sss ddd mmm ccc aaa eee ooo sss mmm rrr uuu aaa uuu eee lll rrr nnn yyy rrr ttt fff ccc uuu iii bbb www aaa nnn iii lll iii lll ddd lll nnn sss ppp sss ddd 999 aaa ((( ooo ppp 333 www eee --- rrr mmm bbb ((( ooo ooo 333 nnn rrr --- rrr ttt mmm hhh ooo ,,, www ooo sss nnn iiinnn eee ttt ccc hhh ggg ooo 111 ))) 000 111 nnn 111 ddd 111222 aaa rrryyy mmmaaarrrkkkeeettt)))111111 8 8 8 8 . . . . 1 6 3 5 1 5 4 0 8 8 8 8. . . . 6 5 4 8 2 0 0 0 9 8 9 9 . . . . 1 3 5 4 4 4 0 6 9 9 8 8 . . . . 2 5 4 8 1 0 3 0 9 8 9 9 . . . . 4 2 5 0 5 4 0 0 8 9 8 8 . . . . 9 6 5 4 9 4 0 8 9 9 8 8 . . . . 1 5 3 7 0 0 4 6 9 9 9 8 . . . . 5 0 4 5 3 0 7 0 9 9 8 8 . . . . 2 5 9 5 0 0 0 6 LLLooonnnggg---ttteeerrrmmm rrraaattteeesss BBBooonnndddsss 222 111 000 999 SSS UUU ttt ... aaa SSS ttteee ... ggg aaa ooo nnnddd vvv eee lll rrr ooo nnn ccc mmm aaalll eee nnn ggg ttt ooo 111333 vvv eeerrrnnnmmmeeennnttt111444 1 9 0 . . 4 8 3 7 1 9 0 . . 2 8 3 1 1 9 1 . . 6 7 1 9 1 9 1 . . 7 9 7 0 1 9 1 . . 5 8 8 3 1 9 1 . . 6 7 6 7 1 9 1 . . 7 9 5 2 1 9 2 . . 8 0 9 2 1 9 1 . . 6 8 3 2 222111 AAA---rrraaattteeeddd uuutttiiillliiitttyyy (((rrreeeccceeennntttlllyyy---oooffffffeeerrreeeddd))) 12.70 12.12 12.96 13.14 12.53 12.43 12.64 12.62 12.99 222222 CCCooonnnvvveeennntttiiiooonnnaaalll mmmooorrrtttgggaaagggeeesss 13.26 13.16 13.83 13.47 13.60 13.52 13.48 13.42 13.28 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) travelers 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 money market deposit accounts (MMDAs), savings and small- 15. Compilation of the Federal Reserve. This series is an estimate of the yield denomination time deposits at all depository institutions, overnight repurchase on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of agreements at commercial banks, overnight Eurodollars held by U.S. residents call protection. This table previously showed the rate on newly-issued Aaa utility other than banks at Caribbean branches of member banks, and balances of money bonds, but this series was discontinued in January 1984 owing to the lack of Aaa market mutual funds (general purpose and broker/dealer). issues. M3: M2 plus large-denomination time deposits at all depository institutions 16. Average rates on new commitments for conventional first mortgages on and term RPs at commercial banks and savings and loan associations and balances new homes in primary markets; from Department of Housing and Urban of institution-only money market mutual funds. Development. L: M3 plus other liquid assets such as term Eurodollars held by U.S. residents other than banks, bankers acceptances, commercial paper, Treasury bills and NOTE. Revisions in reserves of depository institutions reflect the transitional other liquid Treasury securities, and U.S. savings bonds. phase-in of reserve requirements as specified in the Monetary Control Act of 4. Savings deposits exclude NOW and ATS accounts at commercial banks 1980. and thrifts and CUSD accounts at credit unions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics • February 1984 1.11 RESERVES OF DEPOSITORY INSTITUTIONS, RESERVE BANK CREDIT Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures FFaaccttoorrss 1983 1984 1983 1984 Nov. Dec. Jan.'' Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25p SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 167,773 171,695' 173,591 169,687 173,426 172,966 174,845 173,499 171,238 170,769 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 148,005 151,679 152.481 150,671 153,770 151,498 153,555 153,696 151,822 151,266 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 147,775 151,517 151.482 150,671 153,770 151,498 151,120 153,162 151,822 150,586 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 230 162 999 0 0 0 2.435 534 0 680 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss 8,762 8,673 8,709 8,646 8,645 8,645 8,920 8,662 8,635 8,691 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,714 8,646 8,630 8,646 8,645 8,645 8,645 8,642 8,635 8,626 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 48 27 79 0 0 0 275 20 0 65 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 54 34 76 0 0 0 413 7 0 10 99999 LLLLLoooooaaaaannnnnsssss 912 745' 726 629 1,054 753 1,291 563 781 505 1111100000 FFFFFllllloooooaaaaattttt 1,592 2,294' 2,843 1,583 1,655 3,592 2,119 1,946 1,298 1,439 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 8,448 8,270 8,756 8,159 8,301 8,479 8,547 8,624 8,703 8,859 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,123 11,123 11,120 11,123 11,123 11,123 11,121 11,121 11,121 11,120 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 12,786 13,786 13,786 13,786 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 165,317 168,284 167,006 167,713 168,295 169,685 170,156 168,979 167,168 165,418 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 481 471 477 473 473 471 462 467 478 481 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 2,905 3,591 4,479 3,266 4,108 3,729 3.436 3,458 3,118 5,252 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 238 220 216 197 237 224 210 216 225 216 1111199999 OOOOOttttthhhhheeeeerrrrr 596 594 489 581 620 528 755 471 465 427 2222200000 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnnttttt............... 1,237 1,477 1,941 1,484 1,501 1,348 1,531 2,422 2,105 1,973 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 5,584 5,598 5,617 5,617 5,682 5,654 5,514 5,566 5,735 5,573 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaaccccccccccooooouuuuunnnnntttttsssss22222 20,943 20,986' 22,889 19,883 22,036 20,854 22,305 21,443 21,467 20,951 End-of-month figures Wednesday figures 1983 1984 1983 1984 Nov. Dec. Jan.'' Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25p SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 168,481 172,460 169,225 171,971 174,928 174,318 179,211 178,565 176,275 174,267 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss''''' 149,439 151,942 150,254 150,055 152,379 152,570 157,519 153,740 153,538 151,914 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 149,439 150,558 150,254 150,055 152,379 152,570 153,147 153,740 153,538 149,699 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 1,384 0 0 0 0 4,372 0 0 2,215 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss 8,647 8,853 8,605 8,645 8,645 8,645 8,974 8,635 8,635 8,825 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,647 8,645 8,605 8,645 8,645 8,645 8,645 8,635 8,635 8,605 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 208 0 0 0 0 329 0 0 220 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 418 0 0 0 0 436 0 0 35 3333311111 LLLLLoooooaaaaannnnnsssss 1,057' 918 418 2.431 1,132 1,311 1,217 2,215 3,362 646 3333322222 FFFFFllllloooooaaaaattttt 898 1,563 846 2,522 4,232 3,055 2,296 5,252 1,880 3,795 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 8,438 8,766 9,102 8,318 8,540 8,737 8,769 8,723 8,860 9,052 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,123 11,121 11,120 11,123 11,123 11,123 11,121 11,121 11,120 11,120 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 166,682 170,005 164,514 168,146 169,033 170,616 170,229 168,291 166,619 164,786 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 475 463 484 473 472 462 462 468 480 484 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 2,896 3,661 7,153 2,839 4,621 3,636 3,104 3,258 3,921 7,331 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 360 191 252 232 287 263 198 226 171 198 4444411111 OOOOOttttthhhhheeeeerrrrr 610 845 410 540 531 597 474 485 431 435 4444422222 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnnttttt.......... 983 1,013 1,047 1,018 1,023 1,018 1,014 1,020 1,034 1,049 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 5,432 5,394 5,625 5.432 5,499 5,496 5,552 5,554 5,446 5,445 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaaccccccccccooooouuuuunnnnntttttsssss22222 20,569 20,413 19,263 22,817 22,989 21,756 27,702 28.787 27,696 24,062 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 1984 Dec. Dec. June July Aug. Sept. Oct. Nov. Dec. Jan.P 1 Reserve balances with Reserve Banks' 26,163 24,804 21,808 22,139 21,965 20,585 21,059 20,943 20,986 22,889 2 Total vault cash (estimated) 19,538 20,392 20,098 20,413 20,035 20,798 20,471 20,558 20.755 22,548 3 Vault cash at institutions with required reserve balances2 13,577 14,292 13,593 13,647 13,656 13,927 13,866 14,014 14,597 14,784 4 Vault cash equal to required reserves at other institutions 2,178 2,757 3,014 3,161 3,039 3,404 3,212 3,187 3,311 4,002 5 Surplus vault cash at other institutions3 3,783 3,343 3,491 3,605 3,340 3,467 3,393 3,357 2,847 3,762 6 Reserve balances + total vault cash4 45,701 45,196 41,906 42,552 42,000 41,383 41,530 41,501 41,741 45,437 7 Reserve balances + total vault cash used to satisfy reserve requirements4 5 41,918 41,853 38,415 38,947 38,660 37,916 38,137 38,144 38,894 41,675 8 Required reserves (estimated) 41,606 41,353 37,935 38,440 38,214 37,418 37,632 37,615 38,333 39,508 9 Excess reserve balances at Reserve Banks4-6 312 500 480 507 446 498 505 529 561 2,167 10 Total borrowings at Reserve Banks 642 697 1,714 1,382 1,573 1,441 837 912 745 726 11 Seasonal borrowings at Reserve Banks 53 33 121 172 198 191 142 119 96 86 12 Extended credit at Reserve Banks 149 187 964 572 490 515 255 6 2 4 Weekly averages of daily figures for week ending 1983 1984 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25p 13 Reserve balances with Reserve Banks' 21,935 21,127 20,605 19,883 22,036 20,854 22,305 21,443 21,467 20,951 14 Total vault cash (estimated) 19,190 21,036 20,929 20,348 20,383 21,292 20,912 21,508 2244,,002277 2233,,113377 15 Vault cash at institutions with required reserve balances2 13,650 14,409 14,355 14,715 14,422 14,879 14,637 14,841 15,253 1155,,663377 16 Vault cash equal to required reserves at other institutions 2,672 3,298 3,216 3,843 2,963 3,270 3,198 3,378 4,364 3,664 17 Surplus vault cash at other institutions3 2,868 3,329 3,358 1,790 2,998 3,143 3,077 3,289 4,410 3,836 18 Reserve balances + total vault cash4 41,125 42,163 41,534 40,231 42,419 42,146 43,217 42,951 45,494 4444,,008888 19 Reserve balances + total vault cash used to satisfy reserve requirements4 5 38,257 38,834 38,176 38,441 39,421 39,003 40,140 39,662 41,084 40,252 20 Required reserves (estimated) 37,958 38,198 37,671 37,954 38,776 38,567 39,182 38,980 40,609 39,672 21 Excess reserve balances at Reserve Banks4 6 299 636 505 487 645 436 958 682 475 580 22 Total borrowings at Reserve Banks 813 877 438 629 1,054 753 1,291 563 781 505 23 Seasonal borrowings at Reserve Banks 123 123 89 89 100 115 73 69 79 96 24 Extended credit at Reserve Banks 4 13 2 1 1 3 5 2 4 6 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.) 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks' Averages of daily figures, in millions of dollars 1983 and 1984 week ending Wednesday By maturity and source Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28' Jan. 4 Jan. 11 Jan. 18 Jan. 25 One day and continuing contract 1 Commercial banks in United States 56,862' 57,272 55,442 57,318 61,404 58,059 52,911 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 24,79(K 25,260-- 24,655 23,800 21,419 19,723 21,574 22,974 24,970 3 Nonbank securities dealers 4,792 5,174 5,479 5,577 5,385 5,720 5,421 5,866 4,790 4 All other 23,464 26,838 26,580 26,514 23.751 25,887 27,179 26,483 28,338 All other maturities 5 Commercial banks in United States 6,917 6,034 6,310' 6,343' 6,464 6,326 5,836 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 10,040 9,889 10,242 9,846' 10,110 9,737 8,927 9,026 8,759 7 Nonbank securities dealers 7,564 6,724 6,740 6,826 6,799 6,400 6,190 6,756 7,398 8 All other 13,546 10,359 10,073r 8,805' 12,862 9,756 8,316 9,786 9,666 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 23,504 25,143 23,381 22,443 22,858 23,316 25,068 24,528 23,566 10 Nonbank securities dealers 4,286 4,514 4,715' 4,634 4,246 4,367 4,862 4,291 4,068 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

A6 Domestic Financial Statistics • February 1984 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit' SShhoorrtt--tteerrmm aaddjjuussttmmeenntt ccrreeddiitt FFFeeedddeeerrraaalll RRReeessseeerrrvvveee aanndd sseeaassoonnaall ccrreeddiitt First 60 days Next 90 days BBBaaannnkkk of borrowing of borrowing After 150 days EEffffeeccttiivvee ddaattee ffoorr ccuurrrreenntt rraatteess Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 1/31/84 date rate 1/31/84 rate 1/31/84 rate 1/31/84 rate Boston 8'/z 12/14/82 9 8'/2 9 9 Vi 10 10 '/> 11 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 D Sa a n l la F s rancisco... 8'/! 1 1 2 2 / / 1 1 4 4 / / 8 8 2 2 9 8 9 9l/2 10 lO'/i 11 1 1 2 2 / / 1 1 4 4 / / 8 8 2 2 Range of rates in recent years2 Range (or F.R. Range(or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. Ba of n k Effective date A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. 7Vi V/2 In effect Dec. 31, 1973 1978— July 3 7-71/4 7'/4 1981— May 5 13-14 14 1974— Apr. 25 7'/V8 10 71/4 7'/4 14 14 Dec. 3 1 9 0 6 73 8 7 / 3 4 / - 4 8 7 7 3 3 / / 4 4 A O Se u c p t g . t . . 2 2 1 1 2 6 8- 7 8 3 1 /4 /2 7 8 V 3 /2 /4 N D o ec v . . 4 7 6 13 1 1 - 3 2 1 4 1 1 1 3 3 2 1975— Jan. 2 1 6 4 0 i 7I V /4 7 - 1 t 7 / r V 4 - 4 lV i, 7 7 7 3 1 '/ / / 4 4 4 Nov. 2 1 0 3 91/! 9 9 8 ' 1 / V / 2 2 i 1982— J A u u ly g . 2 7 0 3 ? 1 1 1 1 1 - ' 1 1 / I 1 ' - / ' > 1 /2 2 I 1 1 1 1 V 1/ / 2 2 Feb. 5 7 63/ 6 4 3 - / 7 4 i /4 6 6 3 3 / / 4 4 1979—J A u u ly g . 2 1 0 7 10 1 - 0 1 0'/i 1 1 0 0 ' /2 1 3 6 W 1 / 1 2 1 10 1 1 /2 Mar. 10 6'/4-63/4 6'/4 20 10'/> 10'/2 77 10-W/2 10 14 6'/4 6'/4 Sept. 19 10'/>-l 1 11 30 10 10 May 16 6-61/4 6 21 11 11 Oct. 17 9'/2-10 91/2 23 6 6 Oct. 8 11-12 12 n 9'/2 9V2 1976— Jan. 19 5 5 ^ 1 - A 6 5 5 Vl/z i 10 12 12 Nov. 7 7 7 6 9-9 9 '/ 2 9 9 23 1980— Feb. 15 12-13 13 Dec. 14 81/2-9 9 Nov. 2 2 2 6 5'/ 5 4 1 -5 /4 '/2 5 5 ! ! / / 4 4 May 2 1 9 9 12 1 - 3 1 3 1 1 3 3 1 1 5 7 81 8 /2 1 — /2 9 m 8'/ > 30 12 12 1977— Aug. 30 5'/4-53/4 51/4 June 13 11-12 11 Sept. 3 2 1 5'/ 5 4 3 -5 /4 3/4 5 53 3 / / 4 4 July 2 1 8 6 10 1 - 1 1 1 1 1 1 0 Oct. 26 6 6 29 10 10 1978— Jan. 2 9 0 6 6 - 6 V '/ i > 6 6 [ '/ A 2 S N D e e o p c v t . . . 2 1 6 5 7 12 1 1 - 1 2 1 3 1 1 1 1 2 3 May 1 1 1 2 6 7 W -7 7 7 13 13 In effect Jan. 31, 1984 S>/2 81/2 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 1981, and 1982. 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

Policy Instruments Al 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Member bank requirements Depository institution requirements before implementation of the after implementation of the TTyyppee ooff ddeeppoossiitt,, aanndd Monetary Control Act TTyyppee ooff ddeeppoossiitt,, aanndd Monetary Control Act6 ddeeppoossiitt iinntteerrvvaall ddeeppoossiitt iinntteerrvvaall55 Percent Effective date Percent Effective date Net demand2 Net transaction accounts18 7 12/30/76 $0-$28.9 million 3 12/29/83 9>/2 12/30/76 Over $28.9 million 1122 1122//2299//8833 $10 million-$100 million 113/4 12/30/76 $100 million-$400 million 12}A 12/30/76 Nonpersonal time deposits9 Over $400 million 16'/4 12/30/76 By original maturity Less than 1 Vi years 3 10/6/83 Time and savings2'3 11 VVii yyeeaarrss oorr mmoorree 0 10/6/83 Savings 3 3/16/67 Eurocurrency liabilities Time4 All types 3 11/13/80 $0 million-$5 million, by maturity 30-179 days 3 3/16/67 180 days to 4 years 2L/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 5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97- Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report 320) provides that $2 million of reservable liabilities (transaction accounts, for 1976, table 13. Under provisions of the Monetary Control Act, depository nonpersonal time deposits, and Eurocurrency liabilities) of each depository institutions include commercial banks, mutual savings banks, savings and loan institution be subject to a zero percent reserve requirement. The Board is to adjust associations, credit unions, agencies and branches offoreign banks, and Edge Act the amount of reservable liabilities subject to this zero percent reserve requirecorporations. ment each year for the next succeeding calendar year by 80 percent of the 2. Requirement schedules are graduated, and each deposit interval applies to percentage increase in the total reservable liabilities of all depository institutions, that part of the deposits of each bank. Demand deposits subject to reserve measured on an annual basis as of June 30. No corresponding adjustment is to be requirements were gross demand deposits minus cash items in process of made in the event of a decrease. Effective Dec. 9, 1982, the amount of the collection and demand balances due from domestic banks. exemption was established at $2.1 million. Effective with the reserve maintenance The Federal Reserve Act as amended through 1978 specified different ranges of period beginning Jan. 12, 1984, the amount of the exemption is $2.2 million. In requirements for reserve city banks and for other banks. Reserve cities were determining the reserve requirements of a depository institution, the exemption designated under a criterion adopted effective Nov. 9, 1972, by which a bank shall apply in the following order: (1) nonpersonal money market deposit accounts having net demand deposits of more than $400 million was considered to have the (MMDAs) authorized under 12 CFR section 1204.122; (2) net NOW accounts character of business of a reserve city bank. The presence of the head office of (NOW accounts less allowable deductions); (3) net other transaction accounts; such a bank constituted designation of that place as a reserve city. Cities in which and (4) nonpersonal time deposits or Eurocurrency liabilities starting with those there were Federal Reserve Banks or branches were also reserve cities. Any with the highest reserve ratio. With respect to NOW accounts and other banks having net demand deposits of $400 million or less were considered to have transaction accounts, the exemption applies only to such accounts that would be the character of business of banks outside of reserve cities and were permitted to subject to a 3 percent reserve requirement. maintain reserves at ratios set for banks not in reserve cities. 6. For nonmember banks and thrift institutions that were not members of the Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, due from domestic banks to their foreign branches and on deposits that foreign 1987. For banks that were members on or after July 1, 1979, but withdrew on or branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends respectively. The Regulation D reserve requirement of borrowings from unrelated on Oct. 24, 1985. For existing member banks the phase-in period is about three banks abroad was also reduced to zero from 4 percent. years, depending on whether their new reserve requirements are greater or less Effective with the reserve computation period beginning Nov. 16, 1978, than the old requirements. All new institutions will have a two-year phase-in domestic deposits of Edge corporations were subject to the same reserve beginning with the date that they open for business, except for those institutions requirements as deposits of member banks. that have total reservable liabilities of $50 million or more. 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as 7. Transaction accounts include all deposits on which the account holder is Christmas and vacation club accounts were subject to the same requirements as permitted to make withdrawals by negotiable or transferable instruments, paysavings deposits. ment orders of withdrawal, and telephone and preauthorized transfers (in excess The average reserve requirement on savings and other time deposits before of three per month) for the purpose of making payments to third persons or others. implementation of the Monetary Control Act had to be at least 3 percent, the However, MMDAs and similar accounts offered by institutions not subject to the minimum specified by law. rules of the Depository Institutions Deregulation Committee (DIDC) that permit 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent no more than six preauthorized, automatic, or other transfers per month of which was imposed on large time deposits of $100,000 or more, obligations of affiliates, no more than three can be checks—are not transaction accounts (such accounts and ineligible acceptances. This supplementary requirement was eliminated with are savings deposits subject to time deposit reserve requirements.) the maintenance period beginning July 24, 1980. 8. The Monetary Control Act of 1980 requires that the amount of transaction Effective with the reserve maintenance period beginning Oct. 25, 1979, a accounts against which the 3 percent reserve requirement applies be modified marginal reserve requirement of 8 percent was added to managed liabilities in annually by 80 percent of the percentage increase in transaction accounts held by excess of a base amount. This marginal requirement was increased to 10 percent all depository institutions determined as of June 30 each year. Effective Dec. 31, beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and 1981, the amount was increased accordingly from $25 million to $26 million; and was eliminated beginning July 24, 1980. Managed liabilities are defined as large effective Dec. 30, 1982, to $26.3 million; and effective Dec. 29, 1983, to $28.9 time deposits, Eurodollar borrowings, repurchase agreements against U.S. 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 a 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. Nonmembers may maintain reserve balances with a 1979) and the week ending Mar. 12, 1980, whichever was greater. For the Federal Reserve Bank indirectly on a pass-through basis with certain approved computation period beginning May 29, 1980, the base was increased by IV2 institutions. percent above the base used to calculate the marginal reserve in the statement week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was reduced to the extent that foreign loans and balances declined. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Financial Statistics • February 1984 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions' Percent per annum Commercial banks mut S ua a l v i s n a g v s i n a g n s d b l a o n an k s a ( s t s h o r c if i t a t i i n o s n t s i tu a t n i d o ns)1 In effect Jan. 31, 1984 In effect Jan. 31, 1984 Type of deposit Effective date Percent Effective date 5l/2 1 Savings 55 '/'>A 1/1/84 7/1/79 2 Negotiable order of withdrawal accounts 12/31/80 5'/4 12/31/80 3 Negotiable order of withdrawal accounts of $2,500 or more2 1/5/83 1/5/83 4 Money market deposit account2 12/14/82 12/14/82 Time accounts by maturity 5 7-31 days of less than $2,5004 5'/i 1/1/84 5l/l 9/1/82 6 7-31 days of $2,500 or more2 1/5/83 1/5/83 7 More than 31 days 10/1/83 10/1/83 1. Effective Oct. 1, 1983, restrictions on the maximum rates of interest payable balance of $2,500 not subject to interest rate restrictions. No minimum maturity by commercial banks and thrift institutions on various categories of deposits were period is required for this account, but depository institutions must reserve the removed. For information regarding previous interest rate ceilings on all catego- right to require seven days notice before withdrawals. When the average balance ries of accounts see earlier issues of the FEDERAL RESERVE BULLETIN, the is less than $2,500, the account is subject to the maximum ceiling rate of interest Federal Home Loan Bank Board Journal, and the Annual Report of the Federal for NOW accounts; compliance with the average balance requirement may be Deposit Insurance Corporation before November 1983. determined over a period of one month. Depository institutions may not guarantee 2. Effective Dec. 1, 1983, IRA/Keogh (HR10) Plan accounts are not subject to a rate of interest for this account for a period longer than one month or condition minimum deposit requirements. the payment of a rate on a requirement that the funds remain on deposit for longer 3. Effective Dec. 14, 1982, depository institutions are authorized to offer a new than one month. account with a required initial balance of $2,500 and an average maintenance 4. Deposits of less than $2,500 issued to governmental units continue to be subject to an interest rate ceiling of 8 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1983 TTyyppee ooff ttrraannssaaccttiioonn 11998800 11998811 11998822 June July Aug. Sept. Oct. Nov. Dec. U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 7,668 13,899 17,067 1,721 666 1,768 33,,118844 330099 11,,443355 33,,669955 7 Gross sales 7,331 6,746 8,369 0 0 289 214 0 0 0 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 3,389 1,816 3,000 0 0 0 500 0 700 0 Others within 1 year Gross purchases 912 317 312 0 156 0 00 00 115555 00 6 Gross sales 0 23 0 0 0 0 0 0 0 0 7 Maturity shift 12,427 13,794 17,295 1,398 1,162 2,212 902 529 2,828 915 8 Exchange -18,251 -12,869 -14,164 -916 0 -5,344 -753 -636 -2,930 0 9 Redemptions 0 0 0 87 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 2,138 1,702 1,797 0 481 0 0 0 820 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 1? Maturity shift -8,909 -10,299 -14,524 -1,398 -1,121 -2,212 -902 -256 -1,684 -915 13 Exchange 13,412 10,117 11,804 916 0 3,130 753 636 1,796 0 5 to 10 years 14 Gross purchases 703 393 388 0 215 00 00 00 334499 00 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shift -3,092 -3,495 -2,172 0 -41 516 0 -273 -250 0 17 Exchange 2,970 1,500 2,128 0 0 1,300 0 0 700 0 Over 10 years 18 Gross purchases 811 379 307 0 124 0 00 00 115511 00 19 Gross sales 0 0 0 0 0 0 0 0 0 0 70 Maturity shift -426 0 -601 0 0 -516 0 0 -894 0 21 Exchange 1,869 1,253 234 0 0 914 0 0 434 0 All maturities 77 Gross purchases 12,232 16,690 19,870 1,721 1,642 1,768 3,184 309 22,,990099 33,,669955 73 Gross sales 7,331 6,769 8,369 0 0 289 214 0 0 0 24 Redemptions 3,389 1,816 3,000 87 0 0 500 0 700 0 Matched transactions 75 674,000 589,312 543,804 50,086 40,934 45,989 48,193 53,751 5566,,885588 58,979 26 Gross purchases 675,496 589,647 543,173 47,783 43,037 44,480 47,667 53,367 57,991 56,404 Repurchase agreements 77 Gross purchases 113,902 79,920 130,774 7,891 7,816 2,263 37,211 19,247 33,,225577 3,644 28 Gross sales 113,040 78,733 130,286 6,730 8,978 0 30,223 28,499 3,257 2,260 29 Net change in U.S. government securities 3,869 9,626 8,358 493 2,583 2,234 8,933 -9,326 3,342 2,504 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 668 449944 00 00 00 00 00 00 00 00 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 145 108 189 17 10 138 5 6 84 2 Repurchase agreements 33 Gross purchases 28,895 1133,,332200 1188,,995577 667788 555588 118899 22,,887711 11,,996600 449977 663344 34 Gross sales 28,863 13,576 18,638 463 773 0 2,510 2,510 497 426 35 Net change in federal agency obligations 555 130 130 198 -225 51 356 -557 -84 206 BANKERS ACCEPTANCES 36 Repurchase agreements, net 73 -582 1,285 203 -203 209 913 -1,122 0 418 37 Total net change in System Open Market Account 4,497 9,175 9,773 893 2,155 2,493 10,203 -11,005 33,,225588 3,128 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

A10 Domestic Financial Statistics • February 1984 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month Account 1983 1984 1983 1984 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Nov. Dec. Jan. Consolidated condition statement ASSETS 1 Gold certificate account 11,123 11,121 11,121 11,120 11,120 11,123 11,121 11,120 2 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 3 Coin 409 401 418 451 478 428 415 498 Loans 4 To depository institutions 1,311 1,217 2,215 3,362 646 1,059 918 418 5 Other 0 0 0 0 0 0 0 0 Acceptances Bought outright 6 Held under repurchase agreements 0 436 00 0 3355 0 441188 0 Federal agency obligations 7 Bought outright 8,645 8,645 88,,663355 8,635 88,,660055 8,647 88,,664455 88,,660055 8 Held under repurchase agreements 0 329 0 0 220 0 208 0 U.S. government securities Bought outright 9 Bills 67.822 68,399 68,992 68,790 64,951 64,691 65,810 65,806 10 Notes 63,934 63,934 63,934 63,934 63,934 63,934 63,934 63,634 11 Bonds 20,814 20,814 20,814 20,814 20,814 20,814 20,814 20,814 12 Total bought outright1 152,570 153,147 153,740 153,538 149,699 149,439 150,558 150,254 13 Held under repurchase agreements 0 4,372 0 0 2,215 0 1,384 0 14 Total U.S. government securities 152,570 157,519 153,740 153,538 151,914 149,439 151,942 150,254 15 Total loans and securities 162,526 168,146 164,590 165,535 161,420 159,145 162,131 159,277 16 Cash items in process of collection 11,877 12,901 12,553 9,840 11,293 8,947 9,708 10,383 17 Bank premises 551 549 548 548 549 551 547 548 Other assets 18 Denominated in foreign currencies2 3.735 3,688 3,764 3,766 3,768 3,867 3,688 3,700 19 All other3 4,451 4,532 4,411 4,546 4,735 4,020 4,531 4,854 20 Total assets 199,290 205,956 202,023 200,424 197,981 192,699 196,759 194,998 LIABILITIES 21 Federal Reserve notes 157,702 157,307 155,392 153,765 151,963 153,800 157,097 151,711 Deposits 22 To depository institutions 22,813 28,763 29,856 28,763 25,146 21,581 21,446 20,361 23 U.S. Treasury—General account 3,636 3,104 3,258 3,921 7,331 2,896 3,661 7,153 24 Foreign—Official accounts 263 198 226 171 198 360 191 252 25 Other 558 427 436 398 400 581 825 359 26 Total deposits 27,270 32,492 33,776 33,253 33,075 25,418 26,123 28,125 27 Deferred availability cash items 8,822 10,605 7,301 7,960 7,498 8,049 8,145 9,537 28 Other liabilities and accrued dividends4 2,266 2,515 2,291 2,231 2,210 2,369 2,464 2,188 29 Total liabilities 196,060 202,919 198,760 197,209 194,746 189,636 193,829 191,561 CAPITAL ACCOUNTS 30 Capital paid in 1.465 1,465 1,465 1,465 1,467 1,458 1,465 1,468 31 Surplus 1,359 1,465 1,465 1,465 1,465 1,359 1,465 1,465 32 Other capital accounts 406 107 333 285 303 246 0 504 33 Total liabilities and capital accounts 199,290 205,956 202,023 200,424 197,981 192,699 196,759 194,998 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 112,846 114,186 112,389 112,119 111,733 111,906 114,619 112,311 Federal Reserve note statement 35 Federal Reserve notes outstanding 179,111 178,583 178,723 179,525 180,561 178,700 178,875 180,570 36 LESS: Held by bank5 2-1,497 21,276 23,331 25,760 28,598 24,900 21,778 28,859 37 Federal Reserve notes, net 157,614 157,307 155,392 153,765 151,963 153,800 157,097 151,711 Collateral held against notes net: 38 Gold certificate account 11,123 11,121 11,121 11,120 11,120 11,123 11,121 11,120 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 141,873 141,568 139,653 138,027 136,225 138,059 141,358 135,973 42 Total collateral 157,614 157,307 155,392 153,765 151,963 153,800 157,097 151,711 1. Includes securities loaned—fully guaranteed by U.S. government securities 4. Includes exchange-translation account reflecting the monthly revaluation at pledged with Federal Reserve Banks—and excludes (if any) securities sold and market exchange rates of foreign-exchange commitments. scheduled to be bought back under matched sale-purchase transactions. 5. Beginning September 1980, Federal Reserve notes held by the Reserve Bank 2. Assets shown in this line are revalued monthly at market exchange rates. are exempt from the collateral requirement. 3. Includes special investment account at Chicago of Treasury bills maturing within 90 days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Reserve Banks; Banking Aggregates All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1983 1984 1983 1984 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Nov. 30 Dec. 30 Jan. 31 1 Loans—Total 1,31 lr 1,217 2,215 3,362 646 1,059 918 418 2 Within 15 days 1,196 1,182 2,161 3,345 622 1,018 881 387 3 16 days to 90 days 114 35 54 17 24 41 37 31 4 91 days to 1 year 1 0 0 0 0 0 0 0 5 Acceptances—Total 0 436 0 0 35 0 418 0 6 Within 15 days 0 436 0 0 35 0 418 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. government securities—Total 152,570 157,519 153,740 153,538 151,914 149,439 151,942 150,254 10 Within 15 days' 7,216 9,599 6,354 6,289 6,723 7,873 2,700 6,295 11 16 days to 90 days 35,659 37,449 37,230 37,318 37,089 32,493 38,247 35,451 12 91 days to 1 year 44,175 44,896 44,581 44,356 42,527 43,553 45,475 43,246 n Over 1 year to 5 years 34,021 34,076 34,076 34,162 34,162 34,021 34,021 34,149 14 Over 5 years to 10 years 13,485 13,485 13,485 13,399 13,399 13,485 13,485 13,099 15 Over 10 years 18,014 18,014 18,014 18,014 18,014 18,014 18,014 18,014 16 Federal agency obligations—Total 8,645 8,974 8,635 8,635 8,825 8,647 8,853 8,605 17 Within 15 days' 178 379 145 240 315 120 386 212 18 16 days to 90 days 598 749 641 546 683 671 598 685 19 91 days to 1 year 1,937 1,914 1,927 1,927 1,815 1,799 1,937 1,696 20 Over 1 year to 5 years 4,196 4,196 4,186 4,186 4,290 4,331 4,196 4,290 21 Over 5 years to 10 years 1,333 1,333 1,333 1,333 1,319 1,323 1,333 1,319 22 Over 10 years 403 403 403 403 403 403 403 403 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

A12 Domestic Financial Statistics • February 1984 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1983 IItteemm D 19 e 8 c 0 . D 19 e 8 c 1 . D 19 e 8 c 2 . D 19 e 8 c 3 . May June July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS1 1 Total reserves2 32.46 33.75 36.23 37.59 37.13 37.61 37.80 37.69 37.72 37.62 37.41 37.59 2 Nonborrowed reserves 30.77 33.11 35.60 36.82 36.18 35.98 36.35 36.15 36.28 36.78 36.50 36.82 3 Required reserves 31.94 33.43 35.73 37.03 36.68 37.13 37.29 37.25 37.22 37.12 36.88 37.03 4 Monetary base3 151.1 158.8 171.1 186.5 178.8 180.3 181.1 182.1 183.4 184.6' 185.5 186.5 Not seasonally adjusted 5 Total reserves2 33.4 34.61 36.96 38.37 36.64 36.79 37.34 37.06 37.39 37.68 37.69' 38.37 6 Nonborrowed reserves 31.72 33.98 36.33 37.60 35.69 35.15 35.89 35.52 35.95 37.84 36.79 37.50 7 Required reserves 32.89 34.29 36.46 37.81 36.19 36.31 36.83 36.62 36.89 37.18 37.17 37.81 8 Monetary base3 154.4 161.9 174.4 190.0 177.8 179.6 181.7 181.8 182.9 184.4 186.7 190.0 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS4 9 Total reserves2 40.66 41.92 41.85 38.89 38.28 38.42 38.95 38.66 37.92 38.14 38.14 38.89 10 Nonborrowed reserves 38.97 41.29 41.22 38.12 37.33 36.78 37.50 37.12 36.48 37.29 37.24 38.12 11 Required reserves 40.15 41.60 41.35 38.33 37.83 37.93 38.44 38.21 37.42 37.63 37.62 38.33 12 Monetary base3 162.5 169.7 179.3 190.6 179.8 181.6 183.7 183.8 183.5 184.9 187.2' 190.6 1. Reserve aggregates include required reserves of member banks and Edge of $210 million; Jan. 14, 1982, a reduction of $60 million; Feb. 11, 1982 an increase Act corporations and other depository institutions. Discontinuities associated of $170 million; Mar. 4, 1982, an estimated reduction of $2.0 billion; May 13, 1982, with the implementation of the Monetary Control Act. the inclusion of Edge Act an estimated increase of $150 million; Aug. 12, 1982 an estimated increase of $140 corporation reserves, and other changes in Regulation D have been removed. million; and Sept. 2, 1982, an estimated reduction of $1.2 billion; Oct. 28, 1982 an 2. Reserve balances with Federal Reserve Banks plus vault cash at institutions estimated reduction of $100 million; Dec. 23, 1982 an estimated reduction of $800 with required reserve balances plus vault cash equal to required reserves at other million; Mar. 3, 1983 an estimated reduction of $1.9 billion; and Sept. 1, 1983, an institutions. estimated reduction of $1.2 billion beginning with the week ended Dec. 23, 1981, 3. Consists of reserve balances and service-related balances and adjustments at reserve aggregates have been reduced by shifts of reservable liabilities to IBFs. Federal Reserve Banks in the current week plus vault cash held two weeks earlier On the basis of reports of liabilities transferred to IBFs by U.S. commercial banks used to satisfy reserve requirements at all depository institutions plus currency and U.S. agencies and branches of foreign banks, it is estimated that required outside the U.S. Treasury, Federal Reserve Banks, the vaults of depository reserves were lowered on average by $60 million to $90 million in December 1981 institutions, and surplus vault cash at depository institutions. and $180 million to $230 million in January 1982, mostly reflecting a reduction in 4. Reserves of depository institutions series reflect actual reserve requirement reservable Eurocurrency transactions. Also, beginning with the week ending percentages with no adjustments to eliminate the effect of changes in Regulation D Apr. 20, 1983, required reserves were reduced an estimated $80 million as a result including changes associated with the implementation of the Monetary Control of the elimination of reserve requirements on nonpersonal time deposits with Act. Includes required reserves of member banks and Edge Act corporations and maturities of 21/2 years or more to less than 3'/2 years. beginning Nov. 13, 1980, other depository institutions. Under the transitional phase-in program of the Monetary Control Act of 1980, the net changes in NOTE. Latest monthly, and weekly figures are available from the Board's required reserves of depository institutions have been as follows: Effective H.3(502) statistical release. Back data and estimates of the impact on required Nov. 13, 1980, a reduction of $2.9 billion; Feb. 12, 1981, an increase of $245 reserves and changes in reserve requirements are available from the Banking million; Mar. 12, 1981, an increase of $75 million; May 14, 1981, an increase of Section, Division of Research and Statistics, Board of Governors of the Federal $245 million; Sept. 3, 1981, a reduction of $1.1 billion; Nov. 12, 1981, an increase Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Aggregates A13 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1983 1980 1981 1982 1983 Dec. Dec. Dec. Dec. Sept. Oct. Nov. Dec. Seasonally adjusted MEASURES' 1 Ml 414.1 440.6 478.2 521.1 517.1 517.9 518.3' 521.1 2 M2 1,630.3 1,794.9 1,959.5 2,184.6 2,145.4 2,161.6' 2,174.6' 2,184.6 3 M3 1,936.7 2,167.9 2,377.6 2,602.9 2,544.9' 2,563.2' 2,588.7' 2,602.9 4 L2 2,343.6 2,622.0 2,896.7r n.a. 3,137.9' 3,155.2' n.a. n.a. SELECTED COMPONENTS 5 Currency 116.2 123.2 132.8 146.0 143.0 144.2 145.3 146.0 6 Travelers checks3 4.1 4.5 4.2 4.8 4.7 4.8 4.8 4.8 7 Demand deposits 266.8 236.4 239.8 243.1 243.4 242.9 241.6 243.1 8 Other checkable deposits4 26.9 76.6 101.3 127.1 126.0 126.0 126.5 127.1 9 Savings deposits5 400.7 344.4 359.3 312.3 320.6 318.8 316.4 312.3 10 Small-denomination time deposits6 731.7 828.6 859.1 792.1 757.7 771.0 784.4' 792.1 11 Large-denomination time deposits7 258.9 302.6 333.8 329.0 317.7 319.9 324.8' 329.0 Not seasonally adjusted MEASURES' 12 Ml 424.7 452.1 491.0 535.3 514.1 519.5 523.8 535.3 13 M2 1,635.0 1,799.6 1,964.5 2,191.4 2,137.2 2,160.6' 2,174.4' 2,191.4 14 M3 1,944.9 2,175.9 2,385.3 2,611.4 2,535.7' 2,561.7' 2,588.3' 2,611.4 15 L2 2,350.8 2,629.7 2,904.7 n.a. 3,121.3' 3,150.3' n.a. n.a. SELECTED COMPONENTS 16 Currency 118.3 125.4 135.2 148.7 142.6 143.9 146.1 148.7 17 Travelers checks3 3.9 4.3 4.0 4.6 5.0 4.8 4.6 4.6 18 Demand deposits 275.2 244.0 247.7 251.4 242.1 244.4 244.7 251.4 19 Other checkable deposits4 27.2 78.4 104.0 130.7 124.5 126.4 128.4 130.7 20 Overnight RPs and Eurodollars8 28.4 36.1 44.3 56.1 53.0 56.5 55.2 56.1 21 Savings deposits5 398.3 342.1 356.7 310.1 318.2 318.0 313.8 310.1 22 Money market deposit accounts n.a. n.a. 43.2 372.4 366.9 367.4 369.1 372.4 23 Small-denomination time deposits6 728.3 824.1 853.9 786.7 754.8 769.2' 781.3' 786.7 Money market mutual funds 24 General purpose and broker/dealer 61.4 150.9 182.2 138.0 137.6 137.8 138.7 138.0 25 Institution only 14.9 36.0 47.6 40.2 39.1 39.9 40.6 40.2 26 Large-denomination time deposits7 262.4 305.9 336.5 330.8 316.7 319.4' 324.6' 330.8 1. Composition of the money stock measures is as follows: 3. Outstanding amount of U.S. dollar-denominated travelers 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) travelers 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

A14 Domestic Nonfinancial Statistics • February 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. 1983 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998811'' 11998822'' 11998833'' July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted DEBITS TO Demand deposits2 1 All insured banks 80,858.7 90,914.4 109,642.5 107,884.4 111,538.1 110,700.7 118,407.2 114,466.6 127,335.8 2 Major New York City banks 33,891.9 37,932.9 47,769.4 46,978.0 48,373.3 46,903.7 52,639.9 49,715.8 53,446.6 3 Other banks 46,966.9 52,981.6 61,873.1 60,906.4 63,164.9 63,796.9 65,767.3 64,750.8 73,889.2 4 ATS-NOW accounts3 743.4 1,036.2 1,405.5 1,390.1 1,679.5 1,495.9 1,392.8 1,447.4 1,626.1 5 Savings deposits4 672.7 721.4 741.4 659.4 706.3 712.7 643.7 674.9 730.0 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 285.8 324.2 380.5 371.5 385.7 384.7 409.6 398.3 440.4 7 Major New York City banks 1,105.1 1,287.6 1,528.0 1,432.2 1,526.7 1,508.8 1,703.8 1,645.6 1,733.1 8 Other banks 186.2 211.1 240.9 236.5 245.3 248.6 254.7 251.8 286.1 9 ATS-NOW accounts3 14.0 14.5 15.6 15.0 17.9 15.9 14.9 15.5 17.3 10 Savings deposits4 4.1 4.5 5.4 4.8 5.2 5.3 4.9 5.1 5.5 Not seasonally adjusted DEBITS TO Demand deposits2 11 All insured banks 81,197.9 91,031.9 109,517.7 105,057.8 115,776.6 111,741.3 114,191.9 110,963.9 135,256.1 12 Major New York City banks 34,032.0 38,001.0 47,707.4 45,601.0 49,788.2 48,276.1 49,910.9 47.508.1 58,049.3 13 Other banks 47,165.9 53,030.9 61,810.3 59,456.8 65,988.3 63,465.2 64,280.9 63,455.8 77,206.8 14 ATS-NOW accounts3 737.6 1,027.1 1,397.8 1,325.3 1,468.9 1,388.3 1,373.2 1,327.2 1,589.0 15 MMDA5 0 0 573.5 603.3 655.5 641.4 700.3 639.1 819.0 16 Savings deposits4 672.9 720.0 742.0 661.6 694.3 688.9 672.9 635.3 714.4 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 286.1 325.0 379.9 357.6 406.7 387.2 391.1 381.7 453.0 18 Major New York City banks 1,114.2 1,295.7 1,526.6 1,383.5 1,621.6 1,574.5 1,595.5 1,553.4 1,813.9 19 Other banks 186.2 211.5 240.5 227.9 259.8 246.1 246.6 244.0 289.6 20 ATS-NOW accounts3 14.0 14.3 15.5 14.5 16.0 15.0 14.6 14.0 16.4 21 MMDA5 0 0 2.8 2.8 3.0 2.9 3.2 2.8 3.6 22 Savings deposits4 4.1 4.5 5.4 4.8 5.1 5.2 5.1 4.8 5.5 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 SMSAs 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 A15 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1981 1982 1983 1981 1982 1983 CCaatteeggoorryy Dec.2 Dec. Sept. Oct. Nov. Dec. Dec.2 Dec. Sept. Oct. Nov. Dec. Seasonally adjusted Not seasonally adjusted 1 Total loans and securities3 1,316.3 1,412.1 1,520.3 1,532.9' 1,548.9' 1,566.8 1,326.1 1,422.5 1,521.6 1,538.2 1,555.8 1,578.1 2 U.S. Treasury securities 111.0 130.9 176.9 182.3 186.2 188.1 111.4 131.5 176.3 180.8 185.0 188.9 3 Other securities 231.4 239.1 247.1 246.5' 247.1' 247.0 232.8 240.6 247.1 246.9 247.4 248.5 4 Total loans and leases3 973.9 1,042.0 1,096.3 1,104.1' 1,115.7' 1,131.7 981.8 1,050.4 1,098.2 1,110.4 11,,112233..44 11,,114400..77 5 Commercial and industrial loans 358.0 392.4 402.6 404.7 407.8 413.1 360.1 394.7 402.2 405.4 409.6 415.5 6 Real estate loans 285.7 303.2 326.2 329.2 332.1 335.2 286.8 304.1 326.9 330.5 333.4 336.2 7 Loans to individuals 185.1 191.8 207.7 212.0' 215.4 219.5 186.4 193.1 209.1 213.6 216.7 221.0 8 Security loans 21.9 24.7 23.7 25.2 26.2 27.2 22.7 25.5 23.4 25.0 26.7 28.1 9 Loans to nonbank financial institutions 30.2 31.1 30.8 30.4 29.8 28.8 31.2 32.1 30.9 30.6 30.2 29.7 10 Agricultural loans 33.0 36.1 38.9' 39.1' 39.3 39.6 33.0 36.1 38.2 38.3 39.6 39.6 11 Lease financing receivables 12.7 13.1 12.9 13.0 13.0 13.1 12.7 13.1 12.9 13.0 13.0 13.1 12 All other loans 47.2 49.5r 53.5' 50^ 52.1 55.1 49.2 51.5' 53.4' 52.6' 54.1 57.5 MEMO 13 Total loans and securities plus loans sold3 4 1,319.1 1,415.0 1,522.8 1,535.5' 1,551.4' 1,569.2 1,328.9 1,425.4 1,524.2 1,540.5' LSSS^ 1,580.5 14 Total loans plus loans sold3 4 .... 976.7 1,045.0 1,098.9 1,106.7 1,118.2' 1,134.1 984.7 1,053.3 1,100.8 1.112.9^ 1,126.0' 1,143.1 15 Total loans sold to affiliates3 4.... 2.8 2.9 2.6 2.6 2.5 2.4 2.8 2.9 2.6 2.6 2.5 2.4 16 Commercial and industrial loans plus loans sold4 360.2 394.6 404.6 406.7 409.7 414.9 362.3 396.9 404.2 407.4 411.6 417.3 17 Commercial and industrial loans sold4 2.2 2.3 2.0 2.0 1.9 1.8 2.2 2.3 2.0 2.0 1.9 1.8 18 Acceptances held 8.9 8.5 8.3 8.9 8.6 8.2 9.8 9.5 8.3 8.8 8.9 9.0 19 Other commercial and industrial loans 349.1 383.8 394.3 395.8 399.2 404.9 350.3 385.2 393.9 396.6 400.8' 406.5 20 To U.S. addressees5 334.9 373.5 381.8 383.2' 386.9 394.7 334.3 372.7 381.6 383.9 388.0 393.9 21 To non-U.S. addressees 14.2 10.3 12.5 12.7 12.3 10.2 16.1 12.4 12.3 12.8 12.7 12.5 22 Loans to foreign banks 19.0 13.5 14.3 14.7 14.5 12.2 20.0 14.5 14.7 15.0 14.8 13.1 1. Includes domestically chartered banks; U.S. branches and agencies of 4. Loans sold are those sold outright to a bank's own foreign branches, foreign banks, New York investment companies majority owned by foreign nonconsolidated nonbank affiliates of the bank, the bank's holding company (if banks, and Edge Act corporations owned by domestically chartered and foreign not a bank), and nonconsolidated nonbank subsidiaries of the holding company. banks. 5. United States includes the 50 states and the District of Columbia. 2. Beginning December 1981, shifts of foreign loans and securities from U.S. ranking offices to international banking facilities (IBFs) reduced the levels of NOTE. Data are prorated averages of Wednesday estimates for domestically several items. Seasonally adjusted data that include adjustments for the amounts chartered banks, based on weekly reports of a sample of domestically chartered si ifted from domestic offices to IBFs are available in the Board's G.7 (407) banks and quarterly reports of all domestically chartered banks. For foreignsti tistical release (available from Publications Services, Board of Governors of related institutions, data are averages of month-end estimates based on weekly the Federal Reserve System, Washington, D.C. 20551). reports from large agencies and branches and quarterly reports from all agencies, 3. Excludes loans to commercial banks in the United States. branches, investment companies, and Edge Act corporations engaged in banking. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • February 1983 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1981 1982 1983 source Dec. Dec. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total nondeposit funds 1 Seasonally adjusted2 96.3 83.0 76.7 76.0 80.3 90.9 88.3 76.3 81.6 83.2 80.2 97.2 99.3 2 Not seasonally adjusted 98.1 84.6 77.7 76.8 79.0 90.5 90.0 78.5 85.9 86.0 82.7 99.5 101.3 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 111.8 128.0 135.3 135.4 139.9 145.9 140.7 132.7 130.9 132.2 133.5 141.6 139.8 4 Not seasonally adjusted 113.5 129.6 136.3 136.2 138.5 145.5 142.4 134.8 135.2 135.0 136.0 143.9 141.8 5 Net balances due to foreign-related institutions, not seasonally adjusted -18.1 -47.9 -61.5 -62.3 -62.4 -57.7 -55.1 -58.9 -51.8 -51.4 -55.8 -46.9 -42.9 6 Loans sold to affiliates, not seasonally adjusted4 2.8 2.9 3.0 3.0 3.0 2.8 2.7 2.7 2.6 2.6 2.6 2.5 2.4 MEMO 7 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted5 -22.4 -39.5 -50.4 -52.7 -52.6 -48.6 -49.1 -50.8 -45.2 -46.2 -48.5 -42.9 -39.9 8 Gross due from balances 54.9 72.2 78.9 79.7 80.3 76.3 75.8 77.4 73.6 74.7 76.6 76.4 75.3 9 Gross due to balances 32.4 32.6 28.4 26.8 27.6 27.6 26.6 26.5 28.3 28.3 28.1 33.5 3355..44 10 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted6 4.3 -8.2 -11.0 -9.4 -9.7 -9.0 -5.9 -7.9 -6.5 -5.1 -7.3 -4.0 -3.0 11 Gross due from balances 48.1 54.9 55.5 56.1 55.9 55.8 53.9 55.2 53.5 53.5 55.2 53.1 53.5 12 Gross due to balances 52.4 46.6 44.4 46.6 46.1 46.7 47.9 47.2 47.0 48.3 47.8 49.1 5500..55 Security RP borrowings 13 Seasonally adjusted' 59.0 71.0 74.3 74.7 79.3 84.6 81.4 75.6 74.2 76.0 78.1 83.9 83.9 14 Not seasonally adjusted 59.2 71.1 73.7 73.9 76.3 82.6 81.5 76.1 76.9 77.2 79.0 84.6 8833..88 U.S. Treasury demand balances8 15 Seasonally adjusted 12.2 11.9 8.8 12.5 13.5 11.3 13.0 24.0 20.6 16.5 21.7 11.3 11.6 16 Not seasonally adjusted 11.1 10.8 10.2 13.2 14.2 12.5 13.2 21.8 16.4 18.0 24.7 8.5 1100..66 Time deposits, $100,000 or more9 17 Seasonally adjusted 325.4 349.6 307.2 300.0 296.6 287.2 287.0 284.9 284.2 283.2 278.2 280.8 284.1 18 Not seasonally adjusted 330.4 353.9 310.5 300.7 293.0 285.0 283.5 281.3 283.9 283.9 279.5 282.0 287.1 1. Commercial banks are those in the 50 states and the District of Columbia banks, term federal funds, overdrawn due from bank balances, loan RPs, and with national or state charters plus agencies and branches of foreign banks, New participations in pooled loans. Includes averages of daily figures for member York investment companies majority owned by foreign banks, and Edge Act banks and averages of current and previous month-end data for foreign-related corporations owned by domestically chartered and foreign banks. institutions. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from 4. Loans initially booked by the bank and later sold to affiliates that are still nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates. held by affiliates. Averages of Wednesday data. Includes averages of Wednesday data for domestically chartered banks and 5. Averages of daily figures for member and nonmember banks. averages of current and previous month-end data for foreign-related institutions. 6. Averages of daily data. 3. Other borrowings are borrowings on any instrument, such as a promissory 7. Based on daily average data reported by 122 large banks. note or due bill, given for the purpose of borrowing money for the banking 8. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at business. This includes borrowings from Federal Reserve Banks and from foreign commercial banks. Averages of daily data. 9. Averages of Wednesday figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Banking Institutions A17 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1982 1983 Dec. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. DOMESTICALLY CHARTERED COMMERCIAL BANKS1 1 Loans and securities, excluding interbank 1,370.3 1,392.2 1,403.8 1,411.9 1,435.1 1,437.4 1,457.0 1,466.1 1,483.0 1,502.3 1,525.2' 2 Loans, excluding interbank 1,000.7 1,001.7 1,005.1 1,007.5 1,025.6 1,029.1 1,043.4 1,049.7 1,060.3 1,075.5 1,095.1' 3 Commercial and industrial 356.7 358.0 357.9 356.7 360.1 361.1 363.0 364.0 367.0 372.8 380.8 4 Other 644.0 643.7 647.2 650.8 665.6 668.0 680.4 685.7 693.3 702.7 714.4' 5 U.S. Treasury securities 129.0 150.6 155.5 160.9 166.0 165.1 167.5 171.2 176.8 180.4 181.4 6 Other securities 240.5 239.9 243.3 243.5 243.5 243.3 246.1 245.2 245.9 246.4 248.7 7 Cash assets, total 184.4 168.9 170.1 164.5 176.9 168.7 176.9 160.0 164.0 179.0 190.5 8 Currency and coin 23.0 19.9 20.4 20.3 21.3 20.7 21.0 20.8 20.5 22.3 23.3' 9 Reserves with Federal Reserve Banks 25.4 20.5 23.9 22.4 18.8 20.6 22.5 15.4 19.7 17.6 18.6 10 Balances with depository institutions . 67.6 67.1 66.1 65.6 69.7 67.1 69.0 66.7 67.1 70.9 75.6 11 Cash items in process of collection ... 68.4 61.5 59.6 56.3 67.1 60.3 64.4 56.9 56.6 69.0 73.0 12 Other assets2 265.3 257.9 252.4 248.3 253.2 254.5 257.2 252.3 253.0 261.9 253.8' 13 Total assets/total liabilities and capital ... 1,820.0 1,818.9 1,826.3 1,824.8 1,865.2 1,860.6 1,891.0 1,878.4 1,900.0 1,943.9 1,969.5' 14 Deposits 1,361.8 1,374.2 1,368.0 1,370.8 1,402.7 1,396.5 1,420.1 1,408.1 1,419.5 1,459.2 1,482.6' 15 Demand 363.9 333.4 329.2 324.5 344.4 334.2 344.7 328.1 331.3 358.1 371.0 16 Savings 296.4 419.2 426.9 440.2 445.3 447.5 449.0 448.8 451.5 458.3 460.7 17 Time 701.5 621.6 611.9 606.1 613.1 614.8 626.4 631.2 636.8 642.8 650.8 18 Borrowings 215.1 211.3 224.0 214.1 221.2 217.5 217.2 217.8 226.8 219.7 216.3 19 Other liabilities 109.2 103.5 102.3 104.7 104.3 105.5 107.6 107.1 106.5 112.6 117.9 20 Residual (assets less liabilities) 133.8 130.0 132.0 135.1 137.0 141.0 146.1 145.4 147.2 152.4 152.8 MEMO 21 U.S. Treasury note balances included in borrowing 10.7 9.6 17.8 2.7 19.3 19.3 14.8 20.8 22.5 2.8 8.8 22 Number of banks 14,787 14,819 14,823 14,817 14,826 14,785 14,795 14,804 14,800 14,799 14,796 ALL COMMERCIAL BANKING INSTITUTIONS3 23 Loans and securities, excluding interbank 1,429.7 1,451.3 1,460.8 1,467.6 1,491.5 1,494.1 1,515.4 1,525.4 1,541.8 1,563.2 1,586.8' 24 Loans, excluding interbank 1,054.8 1,054.5 1,055.7 1,056.4 1,075.2 1,078.8 1,094.9 1,102.5 1,112.2 1,129.2 1,149.3' 25 Commercial and industrial 395.3 395.9 393.5 391.7 395.3 397.7 400.6 402.7 405.3 412.0 420.1 26 Other 659.5 658.6 662.2 664.7 679.9 681.2 694.3 699.8 706.8 717.2 729.2' 27 U.S. Treasury securities 132.8 155.3 160.2 166.1 171.3 170.3 172.7 176.1 182.0 185.9 186.9 28 Other securities 242.1 241.5 244.9 245.2 245.1 245.0 247.8 246.9 247.7 248.1 250.6' 29 Cash assets, total 200.7 185.5 186.3 180.3 193.5 185.2 193.3 174.7 178.4 195.0 205.0 30 Currency and coin 23.0 19.9 20.4 20.3 21.3 20.7 21.1 20.9 20.5 22.3 23.4 31 Reserves with Federal Reserve Banks 26.8 22.0 25.4 23.8 20.0 21.9 24.0 16.6 20.8 19.1 19.7 32 Balances with depository institutions . 81.4 81.0 79.8 78.9 84.0 81.2 82.8 79.3 79.5 83.6 SS.C 33 Cash items in process of collection ... 69.4 62.6 60.7 57.3 68.2 61.4 65.4 58.0 57.6 70.0 74.(K 34 Other assets2 341.7 325.4 317.8 309.5 318.1 318.7 324.6 320.9 318.8 329.7 321.3' 35 Total assets/total liabilities and capital ... 1,972.1 1,962.2 1,964.9 1,957.4 2,003.2 1,998.0 2,033.3 2,021.0 2,039.1 2,088.0 2,113.1' 36 Deposits 1,409.7 1,419.5 1,411.0 1,413.1 1,443.8 1,438.1 1,461.4 1,448.9 1,459.0 1,499.4 1,524.8' 37 Demand 376.2 345.7 341.1 336.4 356.4 346.4 356.6 340.0 343.2 369.9 383.2 38 Savings 296.7 419.7 427.3 440.7 445.7 448.0 449.5 449.3 452.0 458.8 461.3' 39 Time 736.7 654.1 642.6 636.0 641.6 643.8 655.3 659.5 663.8 670.6 680.4' 40 Borrowings 278.3 269.9 281.3 269.5 278.2 277.9 280.5 282.6 289.6 282.5 275.1 41 Other liabilities 148.4 141.1 138.6 137.9 142.3 139.1 143.4 142.3 141.5 151.9 158.6' 42 Residual (assets less liabilities) 135.7 131.9 133.9 137.0 138.9 142.9 148.0 147.3 149.1 154.2 154.7 MEMO 43 U.S. Treasury note balances included in borrowing 10.7 9.6 17.8 2.7 19.3 19.3 14.8 20.8 22.5 2.8 8.8 44 Number of banks 15,329 15,376 15,390 15,385 15,396 15,359 15,370 15,382 15,383 15,382 15,380 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

A18 Domestic Nonfinancial Statistics • February 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 Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 1 Cash items in process of collection 49,878 49,636 53,639 49,096' 53,442 47,811 52,076 53,484 57,643 2 Demand deposits due from banks in the United States.. 7,144 7,372 8,013 6,403 8.071 7,914 7,626 8,258 9,170 3 All other cash and due from depository institutions .... 33,431 29,220 31,786 34,728 32.089 32,122 35,366 34,678 35,642 4 Total loans and securities 689,197' 689,244' 688,605' 685,393' 693,383' 694,972 694,913 695,166 697,514 Securities 5 U.S. Treasury securities 56,304 57,065 58,501 57,373 58,500 60,023 59,209 58,181 56,665 6 Trading account 9,114 9,383 9,701 8,178 9.045 9,855 8,603 8,342 7,686 7 Investment account, by maturity 47,190 47,682 48,800 49,194 49,455 50,168 50,606 49,839 48,979 8 One year or less 14,730 15,139 15,274 15,442 15,469 15,952 15,677 15,398 14,941 9 Over one through five years 29,246 29,318 30,734 30,932 31.244 31,353 31,824 31,248 30,838 10 Over five years 3,213 3,225 2,792 2,820 2.743 2,862 3,105 3,192 3,200 11 Other securities 84,140 83,673 83,614 84,536 83.946 84,723 84,333 85,150 85,735 12 Trading account 6,346 5,799 5,719 6,227 5.675 6,491 5,782 6,164 5,912 13 Investment account 77,794 77,874 77,894 78,309 78,271 78,231 78,551 78,986 79,823 14 U.S. government agencies 15,982 15,885 15,881 16,021 15,905 15,893 16,150 16,205 16,152 15 States and political subdivisions, by maturity 58,146 58,356 58,348 58,618 58,676 58,641 58,702 59,105 60,010 16 One year or less 7,833 7,942 7,863 7,992 7.984 8,133 7,996 7,964 7,953 17 Over one year 50,312 50,415 50,485 50,626 50,692 50,507 50,706 51,140 52,057 18 Other bonds, corporate stocks and securities 3,667 3,633 3,665 3,670 3,690 3,697 3,699 3,676 3,661 Loans 19 Federal funds sold1 45,751 44,083 42,523 40,574 44,815 43,761 44,777 39,568 40,220 20 To commercial banks 33,202 32,288 30,276 27,998 33.587 30,628 31,122 26,686 27,565 21 To nonbank brokers and dealers in securities 9,394 8,391 9,181 9,406 8,369 9,612 10,065 9,202 9,210 22 To others 3,156 3,404 3,067 3,170 2,860 3,522 3,590 3,680 3,446 23 Other loans, gross 516,660' 518,144' 517,700' 516,651' 519.866' 520,265 520,386 526,046 528,688 24 Commercial and industrial 216,767' 218,604' 216,684' 216,292' 217.410' 218,307 218,202 219,747 221,684 25 Bankers acceptances and commercial paper 4,858' 5,329' 4,358' 3,904' 4,862' 4,842 4,684 4,343 4,619 26 All other 211,909 213,274 212,326 212,387 212.548 213,465 213,518 215,404 217,064 27 U.S. addressees 204,653 205,928 205,055 205,124 205.251 206,194 206,447 208,201 209,822 28 Non-U.S. addressees 7,256 7,346 7,271 7,263 7.298 7,270 7,070 7,203 7,242 29 Real estate 139,441 139,261 139,634 139,686 139.903 139,911 140,288 140,303 140,001 30 To individuals for personal expenditures 81,642 81,756 81,980 82,425 82.898 83,448 84,171 85,083 8855,,997766 To financial institutions 31 Commercial banks in the United States 7,891' 8,202' 7,997' 8,131' 7.879' 7,814 7,647 9,110 9,095 32 Banks in foreign countries 8,606' 8,604' 8,587' 8,087' 8,411' 8,208 7,335 7,700 7,884 33 Sales finance, personal finance companies, etc 9,655 9,322 9,297 9,178 9,224 9,299 9,322 9,139 9,358 34 Other financial institutions 15,581 15,888 15,438 15,023 15,246 15,505 15,653 15,365 16,124 35 To nonbank brokers and dealers in securities 9,840 9,213 10,387 10,590 11.232 10,685 10,544 11,550 10,494 36 To others for purchasing and carrying securities2 .... 3,332 3,378 3,186 3,195 3.180 3,200 3,204 3,229 3,290 37 To finance agricultural production 7,284 7,221 7,208 7,161 7.153 7,068 7,157 7,207 7,152 38 All other 16,620 16,696 17,300 16,883 17,329 16,817 16,862 17,613 17,629 39 LESS: Unearned income 4,979 5,018 4,997 4,979 4.973 4,973 4,976 4,965 4,970 40 Loan loss reserve 8,680 8,703 8,737 8,763 8,771 8,827 8,816 8,813 8,826 41 Other loans, net 503,001' 504,423' 503,967' 502,909' 506,122' 506,465 506,594 512,268 514,893 42 Lease financing receivables 10,987 10,992 10,989 11,015 11,044 11,063 11,058 11,104 11,136 43 All other assets 143,736' 146,917' 142,369' 140,841' 142,090' 144,500 142,929 144,029 140,567 44 Total assets 934,374 933,382 935,401 927,476' 940,119 938,383 943,969 946,720 951,672 Deposits 45 Demand deposits 178,266 178,264 182,702 117722,,664488'' 185,419 177,669 182,850 184,936 193,574 46 Mutual savings banks 707 713 734 563 677 623 674 587 633 47 Individuals, partnerships, and corporations 136,457 136,286 138,397 133,377' 141,338 136,614 141,563 141,620 147,568 48 States and political subdivisions 5,522 4,340 4,844 4,691' 5.120 4,796 4,863 5,266 5,754 49 U.S. government 1,154 1,496 2,314 2,026 1.938 1,820 2,237 1,188 2,059 50 Commercial banks in the United States 19,740 18,601 20,147 18,289 20,124 19,234 18,785 20,005 21,620 51 Banks in foreign countries 6,316 5,978 6,921 6,000 6.498 6,058 5,995 5,929 6,461 52 Foreign governments and official institutions 711 751 899 936 1,276 821 760 954 897 53 Certified and officers' checks 7,659 10,100 8,448 6,766' 8.448 7,702 7,973 9,386 8,582 54 Time and savings deposits 422,723 424,026 423,360 425,988 426.856 427,672 427,187 428,095 429,545 55 Savings 173,711' 174,186' 174,195' 173,928' 174,763' 176,017 175,169 174,814 174,788 56 Individuals and nonprofit organizations 153,120' 153,311' 153,138' 152,788' 153,398' 154,440 153,673 153,483 153,254 57 Partnerships and corporations operated for profit .. 19,344' 19,671' 19,780' 19,926' 20,109' 20,265 20,222 20,048 20,242 58 Domestic governmental units 1,200 1,164 1,232 1,171 1,216 1,255 1,222 1,202 1,208 59 All other 45 40 45' 43' 40 57 52 80 84 60 Time 249,012' 249,840' 249,166' 252,06c 252,093' 251,655 252,018 253,281 254,757 61 Individuals, partnerships, and corporations 222,53C 223,430' 222,521' 225,013' 225,114' 224,902 224,907 225,765 227,183 62 States and political subdivisions 16,572 16,609 16,648 16,955 16,617 16,368 16,530 16,752 16,624 63 U.S. government 224 211 218 214 214 232 217 215 209 64 Commercial banks in the United States 6,558 6,460 6,598 6,728 7.059 77,,111199 77,,330055 77,,337700 77,,666611 65 Foreign governments, official institutions, and banks 3,128 3,129 3,180 3,150 3,089 33,,003344 33,,005599 33,,118800 33,,008800 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 379 3,725 910 605 515 149 1,938 420 706 67 Treasury tax-and-loan notes 15,032 2,743 1,662 1,340 1,482 2,650 2,219 9,382 6,087 68 All other liabilities for borrowed money3 168,664 171,901 172,658 170,290 171,267 173,748 169,103 163,414 162,051 69 Other liabilities and subordinated notes and debentures . 87,326 90,595 92,032 94,716 92,177 93,798 98,066 98,360 97,320 70 Total liabilities 872,390 871,253 873,325 865,587' 877,717 875,686 881,363 884,606 889,283 71 Residual (total assets minus total liabilities)4 61,984 62,129 62,076 61,888 62,402 62,696 62,606 62,114 62,389 1. Includes securities purchased under agreements to resell. 4. This is not a measure of equity capital for use in capital adequacy analysis or 2. Other than financial institutions and brokers and dealers. for 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 NOTE: January data, which normally would appear in this issue of the more on Dec. 31, 1977, see table 1.13. BULLETIN, will be published on a revised basis in the March issue. Weekly data on the new basis are being published currently in the Board's H.4.2 statistical release. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A19 1.27 LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1 Billlion or More on December 31, 1977, Assets and Liabilities Millions of dollars, Wednesday figures 1983 AAccccoouunntt Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 1 Cash items in process of collection 46,875 46,935 50,398 45,894' 50,369 45,117 49,034 50,347 54,359 ? Demand deposits due from banks in the United States.. 6,585 6,755 7,381 5,821 7,393 7,236 6,846 7,447 8,307 3 All other cash and due from depository institutions 30,516 26,405 28,915 31,783 29,203 29,381 32,321 31,567 32,476 4 Total loans and securities 638,763' 638,837' 638,598' 635,667' 643,166' 644,015 644,065 643,972 645,913 Securities U.S. Treasury securities 51,254 51,944 53,424 52,232 53,353 54,785 53,931 52,889 51,330 6 Trading account 9,020 9,288 9,576 8,095 8.953 9,743 8,490 8,240 7,560 7 Investment account, by maturity 42,234 42,656 43,848 44,136 44.400 45,041 45,442 44,649 43,770 8 One year or less 13,025 13,376 13,601 13,674 13.759 14,204 13,940 13,677 13,220 9 Over one through five years 26,266 26,324 27,724 27,911 28.166 28,243 28,634 28,016 27,593 10 Over five years 2,943 2,955 2,522 2,550 2.475 2,594 2,867 2,956 2,957 11 Other securities 76,264 75,820 75,766 76,677 76,110 76,889 76,453 77,284 77,699 1? Trading account 6,167 5,651 5,537 6,077 5,558 6,334 5,604 6,025 5,752 H Investment account 70,097 70,169 70,229 70,600 70,552 70,555 70,849 71,259 71,947 14 U.S. government agencies 14,291 14,192 14,223 14,350 14,246 14,242 14,493 14,556 14,516 15 States and political subdivisions, by maturity 52,501 52,705 52,702 52,945 52.976 52,969 53,005 53,374 54,126 16 One year or less 7,164 7,306 7,228 7,360 7,345 7,500 7,357 7,325 7,300 17 Over one year 45,336 45,399 45,474 45,585 45,631 45,469 45,648 46,049 46,826 18 Other bonds, corporate stocks and securities 3,305 3,272 3,304 3,305 3,329 3,343 3,351 3,329 3,305 Loans 19 Federal funds sold1 40,363 38,874 37,751 36,315 40,237 38,422 39,944 3344,,882244 3355,,669911 70 To commercial banks 28,536 27,808 26,132 24,271 29.452 25,888 27,011 22,800 23,938 ?1 To nonbank brokers and dealers in securities 8,727 7,684 8,584 8,917 7,978 9,046 9,380 8,382 8,346 7? To others 3,101 3,381 3,035 3,128 2,807 3,487 3,554 3,642 3,408 ?3 Other loans, gross. 483,520' 484,890' 484,356' 483,150' 486,177' 486,717 486,526 491,745 493,974 74 Commercial and industrial 204,614' 206,381' 204,486' 203,962' 205.076' 206,102 205,913 207,221 208,970 ?5 Bankers acceptances and commercial paper 4,654' 5,134' 4,166' 3,695' 4.667' 4,652 4,473 4,129 4,386 ?6 All other 199,959 201,247 200,321 200,268 200.410 201,449 201,440 203,092 204,583 77 U.S. addressees 192,817 194,024 193,163 193,120 193.256 194,317 194,517 196,041 197,452 78 Non-U.S. addressees 7,142 7,224 7,157 7,148 7.153 7,132 6,923 7,052 7,131 79 Real estate 130,566' 130,411 130,724 130,737 130,930 130,931 131,269 131,269 130,927 30 To individuals for personal expenditures 72,344 72,416 72,614 72,999 73.402 73,892 74,526 75,362 76,070 To financial institutions 31 Commercial banks in the United States 7,404' 7,719' 7,540' 7,628' 7.407' 7,354 7,128 88,,552266 8,515 37 Banks in foreign countries 8,466' 8,480' 8,473' 7,976' 8,291' 8,095 7,217 7,575 7,784 33 Sales finance, personal finance companies, etc 9,438 9,113 9,093 8,962 9,006 9,081 9,102 8,929 9,140 34 Other financial institutions 14,928 15,230 14,798 14,401 14.587 14,861 15,010 14,728 15,482 35 To nonbank brokers and dealers in securities 9,768 9,122 10,287 10,506 11.151 10,592 10,450 11,441 10,385 36 To others for purchasing and carrying securities2 .... 3,073 3,115 2,922 2,926 2,909 2,933 2,937 2,962 3,019 37 To finance agricultural production 7,082 7.022 7,012 6,967 6.958 6,872 6,961 7,014 6,955 38 All other 15,836 15,880 16,407 16,085 16.460 16,004 16,012 16,718 16,727 39 LESS: Unearned income 4,394 4,431 4,410 4,389 4.390 4,390 4,391 4,379 4,381 40 Loan loss reserve 8,243 8,259 8,289 8,318 8.320 8,407 8,399 8,390 8,400 41 Other loans, net 470,883' 472,199' 471,657' 470,443 473.466' 473,920 473,736 478,976 481,193 47 Lease financing receivables 10,554 10,558 10,554 10,580 10,606 10,626 10,620 10,663 10,690 43 All other assets 139,606' 142,651' 138,045' 136,490' 137.699' 140,116 138,463 139,520 135,943 44 Total assets 872,900 872,141 873,892 866,236' 878,437 876,492 881,350 883,515 887,688 Deposits 45 Demand deposits 165,521 165,888 169,740 159,885' 172,163 164,870 169,474 117711,,332222 117799,,663322 46 Mutual savings banks 675 674 702 534 649 595 648 561 602 47 Individuals, partnerships, and corporations 126,481 126,414 128,262 123,235' 130,841 126,370 130,941 130,952 136,702 48 States and political subdivisions 4,935 3,820 4,258 4,137' 4,522 4,293 4,289 4,448 5,024 49 U.S. government 1,009 1,380 2,088 1,857 1,757 1,673 1,973 1,044 1,886 50 Commercial banks in the United States 18,078 17,076 18,475 16,722 18,481 17,676 17,196 18,367 19,868 51 Banks in foreign countries 6,269 5,918 6,880 5,952 6,453 6,002 5,949 5,881 6,408 52 Foreign governments and official institutions 710 750 898 935 1,275 809 760 954 845 53 Certified and officers' checks 7,362 9,856 8,178 6,512' 8,184 7,452 7,719 9,114 8,296 54 Time and savings deposits 391,342 392,352 391,644 394,295 395,347 396,187 395,635 396,405 397,529 55 Savings 160,38c 160,740' 160,680' 160,538' 161,334'' 162,455 161,667 161,310 161,209 56 Individuals and nonprofit organizations 141,516' 141,620' 141,416' 141,202' 141,793' 142,731 142,006 141,800 141,577 57 Partnerships and corporations operated for profit .. 17,733' 18,026' 18,099' 18,232' 18,406' 18,554 18,526 18,363 18,504 58 Domestic governmental units 1,071 1,039 1,106 1,046 1,080 1,098 1,069 1,066 1,070 59 All other 60 54 59' 58' 55 71 67 80 57 60 Time 230,962' 231,612' 230,964' 233,758' 234,013' 233,732 233,968 235,095 236,320 61 Individuals, partnerships, and corporations 206,447' 207,214' 206,332' 208,763' 209,042' 208,937 208,836 209,567 210,765 67 States and political subdivisions 14,845 14,839 14,885 15,161 14,866 14,680 14,857 15,110 14,988 63 U.S. government 202 190 198 194 195 212 198 196 190 64 Commercial banks in the United States 6,341 6,241 6,368 6,490 6,822 6,869 7,017 7,042 7,2% 65 Foreign governments, official institutions, and banks 3,128 3,129 3,180 3,150 3,089 3,034 3,059 33,,118800 3,080 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 379 3,686 813 580 480 114499 1,938 330022 622 67 Treasury tax-and-loan notes 14,220 2,580 1,494 1,232 1,389' 2,490 2,072 8,849 5,740 68 All other liabilities for borrowed money3 158,270 161,055 162,261 159,852 160,742 162,603 158,010 152,641 150,918 69 Other liabilities and subordinated notes and debentures . 85,198 88,453 89,830 92,480 89,932 91,547 95,655 95,875 94,832 70 Total liabilities 814,929 814,014 815,781 808,325' 820,053 817,846 822,784 825,393 829,273 71 Residual (total assets minus total liabilities)4 57,970 58,127 58,111 57,911 58,384 58,646 58,566 58,122 58,415 1. Includes securities purchased under agreements to resell. 4. This is not a measure of equity capital for use in capital adequacy analysis or 2. Other than financial institutions and brokers and dealers. for other analytic uses. 3. Includes federal funds purchased and securities sold under agreement to repurchase; for information on these liabilities at banks with assets of $1 billion or more on Dec. 31, 1977, see table 1.13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • February 1983 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1983 AAccccoouunntt Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 1 Cash items in process of collection 14,002 19,123 15,874 13,488 16,566 14,245 16,933 16,935 17,190 2 Demand deposits due from banks in the United States.. 978 1,302 1,383 814 1,335 1,408 1,290 1,265 1,233 3 All other cash and due from depository institutions .... 6,069 3,579 5,099 5,434 5,264 5,805 6,822 5,596 5,007 4 Total loans and securities1 148,231 146,850 147,867 147,994 150,616 148,742 150,019 149,697 151,043 Securities 5 U.S. Treasury securities2 6 Trading account2 7 Investment account, by maturity 9,440 9,845 10,366 10,530 10,461 10,041 9,904 9,506 9,069 8 One year or less 2,455 2,899 3,083 3,123 2,972 2,667 2,430 2,421 2,416 9 Over one through five years 6,078 6,039 6,847 6,972 7,053 6,854 6,778 6,318 5,894 10 Over five years 907 907 435 435 436 520 695 766 759 11 Other securities2 12 Trading account2 13 Investment account 14,919 15,063 14,998 15,152 15,145 15,254 15,316 15,634 16,211 14 U.S. government agencies 1,476 1,476 1,408 1,401 1,396 1,389 1,389 1,387 1,384 15 States and political subdivisions, by maturity 12,712 12,855 12,864 13,010 13,007 13,131 13,191 13,505 14,086 16 One year or less 1,895 2,004 1,974 2,019 1,940 2,011 2,029 1,985 2,047 17 Over one year 10,817 10,851 10,890 10,990 11,067 11,120 11,162 11,520 12,039 18 Other bonds, corporate stocks and securities 731 732 726 741 742 734 736 741 741 Loans 19 Federal funds sold3 11,907 10,571 10,183 11,390 13,136 11,678 13,195 10,580 11,891 20 To commercial banks 5,361 4,615 3,968 4,912 7,629 5,229 6,458 4,057 5,644 21 To nonbank brokers and dealers in securities 4,821 4,042 4,362 4,603 3,951 4,375 4,618 4,166 4,077 22 To others 1,724 1,914 1,853 1,876 1,557 2,074 2,119 2,357 2,169 23 Other loans, gross 116,052 115,461 116,415 115,038 116,010 115,928 115,787 118,135 118,023 24 Commercial and industrial 57,958 58,687 58,314 57,500 57,644 58,252 58,113 57,968 58,793 25 Bankers' acceptances and commercial paper 1,727 1,815 1,452 1,151 1,563 1,478 1,417 1,171 1,307 26 All other 56,232 56,871 56,862 56,349 56,081 56,774 56,696 56,797 57,486 27 U.S. addressees 54,422 55,081 55,090 54,554 54,288 54,973 54,883 54,939 55,622 28 Non-U.S. addressees 1,810 1,791 1,772 1,795 1,793 1,801 1,812 1,858 1,864 29 Real estate 20,646 20,580 20,622 20,630 20,580 20,496 20,522 20,613 20,412 30 To individuals for personal expenditures 12,693 12,717 12,718 12,791 12,829 1122,,993377 1133,,004400 1133,,116688 1133,,228866 To financial institutions 31 Commercial banks in the United States 1,605 1,618 1,659 1,607 1,589 1,597 1,573 2,180 2,122 32 Banks in foreign countries 2,984 2,753 2,901 2,564 2,831 2,732 2,438 2,765 2,932 33 Sales finance, personal finance companies, etc 3,992 3,673 3,678 3,529 3,625 3,749 3,718 3,772 3,797 34 Other financial institutions 4,230 4,356 4,091 3,979 4,112 4,086 4,220 4,295 4,454 35 To nonbank brokers and dealers in securities 6,089 5,115 6,405 6,669 7,058 6,387 6,412 7,476 6,113 36 To others for purchasing and carrying securities4 .... 668 681 648 624 590 607 628 662 665 37 To finance agricultural production 691 698 701 661 661 615 637 652 611 38 All other 4,495 4,584 4,678 4,481 4,491 4,470 4,486 4,583 4,838 39 LESS: Unearned income 1,459 1,460 1,454 1,456 1,457 1,458 1,460 1,464 1,474 40 Loan loss reserve 2,627 2,629 2,642 2,661 2,679 2,702 2,722 2,693 2,678 41 Other loans, net 111,966 111,372 112,320 110,922 111,874 111,768 111,604 113,978 113,872 42 Lease financing receivables 2,027 2,029 2,046 2,047 2,048 2,035 2,038 2,077 2,067 43 All other assets5 64,354 65,971 63,505 62,775 62,678 64,108 62,396 61,279 60,530 44 Total assets 235,661 238,855 235,775 232,553 238,507 236,343 239,498 236,850 237,071 Deposits 45 Demand deposits 45,951 51,064 47,842 44,301 50,404 46,674 49,388 49,528 51,529 46 Mutual savings banks 312 341 358 232 281 263 352 265 278 47 Individuals, partnerships, and corporations 31,986 33,197 31,796 30,532 34,014 31,860 34,109 33,372 35,433 48 States and political subdivisions 734 592 626 606 556 612 598 626 608 49 U.S. government 169 549 573 410 375 372 523 272 571 50 Commercial banks in the United States 4,048 4,978 4,162 4,355 5,103 4,480 4,719 4,567 4,518 51 Banks in foreign countries 5,043 4,678 5,628 4,626 5,135 4,800 4,647 4,579 5,201 52 Foreign governments and official institutions 522 571 686 725 1,055 632 574 770 661 53 Certified and officers' checks 3,137 6,157 4,013 2,814 3,886 3,655 3,866 5,078 4,258 54 Time and savings deposits 73,938 73,844 73,805 74,919 75,133 74,994 74,944 75,071 75,251 55 Savings 27,456' 27,634' 27,780' 27,844' 27,973' 28,115 28,050 28,237 28,234 56 Individuals and nonprofit organizations 24,434' 24,498' 24,622' 24,678' 24,828' 24,909 24,870 24,982 25,048 57 Partnerships and corporations operated for profit .. 2,797' 2,892' 2,906' 2,938' 2,932' 2,963 2,957 3,019 2,945 58 Domestic governmental units 186 205 210 188 175 188 173 171 172 59 All other 39 38 42' 40' 38 55 50 66 68 60 Time 46,482' 46,21c 46,025' 47,075' 47.16C 46,878 46,893 46,833 47,017 61 Individuals, partnerships, and corporations 40,880' 40,689' 40,261' 41,257' 41,257' 41,120 41,018 40,798 41,018 62 States and political subdivisions 2,030 2,047 2,101 2,101 2,037 1,968 2,009 2,115 2,101 63 U.S. government 15 15 19 18 18 18 15 15 14 64 Commercial banks in the United States 2,278 2,209 2,362 2,439 22,,662266 22,,559966 22,,668899 22,,662200 22,,772244 65 Foreign governments, official institutions, and banks 1,278 1,251 1,281 1,260 11,,222211 11,,117755 11,,116611 11,,228855 11,,115599 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 300 2,040 350 400 300 1,790 305 67 Treasury tax-and-loan notes 3,674 603 359 336 447 608 636 2,723 1,705 68 All other liabilities for borrowed money6 55,783 54,475 56,099 55,027 56,899 57,466 54,699 51,806 51,443 69 Other liabilities and subordinated notes and debentures . 36,087 36,737 37,218 37,579 35,215 36,301 37,786 37,816 36,597 70 Total liabilities 215,732 218,764 215,674 212,562 218,398 216,043 219,243 216,944 216,830 71 Residual (total assets minus total liabilities)7 19,929 20,092 20,102 19,991 20,109 20,300 20,255 19,906 20,242 1. Excludes trading account securities. 6. Includes federal funds purchased and securities sold under agreements to 2. Not available due to confidentiality. repurchase. 3. Includes securities purchased under agreements to resell. 7. Not a measure of equity capital for use in capital adequacy analysis or for 4. Other than financial institutions and brokers and dealers. other analytic uses. 5. Includes trading account securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1983 AAccccoouunntt Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 BANKS WITH ASSETS OF $750 MILLION OR MORE 1 Total loans (gross) and securities adjusted1 661,762' 662,475' 664,066' 663,005' 665,662' 670,330 669,936 673,148 674,649 2 Total loans (gross) adjusted1 521,318' 521,737' 521,951' 521,0%' 523,216' 525,584 526,394 529,818 532,249 3 Demand deposits adjusted2 107,494 108,532 106,603 103,238' 109,914 108,804 109,752 110,258 112,252 4 Time deposits in accounts of $100,000 or more 140,573' 140,759' 140,107' 142,777' 142,516' 142,021 142,346 143,376 144,841 5 Negotiable CDs 88,424 88,322 87,427 89,542 89,424 88,931 89,378 89,922 91,712 6 Other time deposits 52,150' 52,437' 52,680' 53,235' 53,092' 53,089 52,969 53,454 53,128 7 Loans sold outright to affiliates3 2,594 2,536 2,559 2,490 2.385 2,432 2,401 2,386 2,364 8 Commercial and industrial 2,001 1,945 1,963 1,904 1,839 1,850 1,831 1,837 1,810 9 Other 592 591 596 586 546 583 570 549 555 BANKS WITH ASSETS OF $1 BILLION OR MORE 10 Total loans (gross) and securities adjusted1 615,461' 615,999' 617,625' 616,476' 619,018' 623,570 622,716 625,416 626,241 11 Total loans (gross) adjusted1 487,943' 488,235' 488,435' 487,567' 489,554' 491,896 492,332 495,243 497,212 12 Demand deposits adjusted2 99,558 100,497 98,778 95,411' 101,555 100,404 101,272 101,564 103,518 13 Time deposits in accounts of $100,000 or more 131,729' 131,815' 131,178' 133,737' 133,724' 133,332 133,538 134,471 135,797 14 Negotiable CDs 83,424 83,279 82,416 84,523 84,634 84,202 84,473 84,896 86,544 15 Other time deposits 48,305' 48,536' 48,762' 49,214' 49,089' 49,130 49,065 49,575 49,252 16 Loans sold outright to affiliates3 2,544 2,486 2,510 2,434 2,331 2,369 2,338 2,323 2,302 17 Commercial and industrial 1,966 1,909 1,928 1,869 1.806 1,807 1,788 1,795 1,767 18 Other 578 578 582 565 525 562 549 529 534 BANKS IN NEW YORK CITY 19 Total loans (gross) and securities adjusted1'4 145,350 144,707 146,336 145,592 145,534 146,076 146,170 147,617 147,429 20 Total loans (gross) adjusted1 120,992 119,799 120,971 119,910 119,928 120,780 120,951 122,478 122,148 21 Demand deposits adjusted2 27,732 26,414 27,233 26,047 28.360 27,577 27,214 27,754 29,249 22 Time deposits in accounts of $100,000 or more 30,978 30,574 30,573 31,608 31,546 31,157 31,297 31,083 31,357 23 Negotiable CDs 18,528 18,143 18,015 19,118 18,990 18,709 18,873 18,522 19,001 24 Other time deposits 12,450 12,431 12,558 12,490 12,556 12,448 12,424 12,561 12,356 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

A22 Domestic Nonfinancial Statistics • February 1983 1.30 LARGE WEEKLY REPORTING BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1983 AAccccoouunntt Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 1 Cash and due from depository institutions. 5,998 6,066 6,230 6,552 6,605 6,180 6,370 7,213 6,068 2 Total loans and securities 42,029 43,487 43,173 43,878 43,668 43,048 44,947 45,090 45,609 3 U.S. Treasury securities 4,711 4,664 4,755 4,675 4,594 4,648 4,628 4,604 4,614 4 Other securities 972 957 958 951 966 966 1,049 1,066 1,066 5 Federal funds sold1 2,496 4,291 3,669 3,874 3,457 2,865 3,841 3,971 4,476 6 To commercial banks in United States .. 2,383 4,159 3,552 3,626 3,282 2,707 3,519 3,722 4,195 7 To others 113 132 117 248 175 158 322 249 281 8 Other loans, gross 33,849 33,573 33,791 34,377 34,651 34,539 35,428 35,449 35,454 9 Commercial and industrial 18,536 18,742 18,960 18,913 19,313 19,191 19,661 1199,,661111 1199,,446633 10 Bankers acceptances and commercial paper 2,855 2,839 2,899 3,064 3,069 3,121 3,294 3,254 3,256 11 All other 15,681 15,903 16,061 15,848 16,244 16,070 16,367 16,357 16,207 12 U.S. addressees 13,792 14,047 14,216 13,926 14,417 14,243 14,533 14,546 14,377 13 Non-U.S. addressees 1,889 1,857 1,846 1,923 1,827 1,828 1,834 1,811 1,830 14 To financial institutions 11,053 10,672 10,607 11,232 10,596 10,707 11,010 11,412 11,075 15 Commercial banks in United States... 8,628 8,474 8,473 8,974 8,255 8,394 8,662 9,199 8,820 16 Banks in foreign countries 1,800 1,620 1,542 1,600 1,660 1,642 1,648 1,572 1,584 17 Nonbank financial institutions 626 578 591 657 681 671 700 642 671 18 For purchasing and carrying securities .. 683 590 626 480 948 964 1,132 822 1,106 19 All other 3,577 3,569 3,597 3,753 33,,779933 33,,667777 33,,662266 33,,660033 33,,881100 20 Other assets (claims on nonrelated parties) 11,905 11,926 12,130 12,359 12,642 12,738 12,673 12,967 12,421 21 Net due from related institutions 12,552 12,558 12,042 12,449 11,769 12,654 11,542 9,769 9,944 22 Total assets 72,484 74,037 73,576 75,238 74,684 74,621 75,532 75,038 74,043 23 Deposits or credit balances2 19,380 19,422 19,257 20,387 20,662 20,625 21,537 22,498 22,485 24 Credit balances 202 154 157 151 143 145 125 165 174 25 Demand deposits 1,775 1,799 1,768 1,874 1,792 1,673 11,,993399 22,,114422 11,,993300 26 Individuals, partnerships, and corporations 873 853 786 855 882 820 860 851 914 27 Other 901 946 982 1,019 910 853 1,079 1,292 1,016 28 Total time and savings 17,404 17,468 17,331 18,362 1188,,772288 1188,,880088 1199,,447733 2200,,119911 2200,,338811 29 Individuals, partnerships, and corporations 14,776 14,786 14,584 15,655 15,999 15,935 16,461 17,046 17,217 30 Other 2,627 2,682 2,747 2,707 2,729 2,873 3,012 3,145 3,163 31 Borrowings3 34,666 34,638 34,265 34,025 33,365 33,755 33,382 31,115 30,862 32 Federal funds purchased4 11,102 10,685 11,190 10,063 10,157 10,880 1100,,445533 77,,991199 77,,888877 33 From commercial banks in United States 9,152 8,474 9,065 8,035 8,530 8,974 8,421 5,798 5,826 34 From others 1,951 2,211 2,126 2,028 1,628 1,906 2,032 2,121 2,061 35 Other liabilities for borrowed money.... 23,564 23,953 23,074 23,962 23,208 22,875 22,929 23,196 22,976 36 To commercial banks in United States 19,647 20,275 19,466 19,913 19,390 19,007 19,165 19,475 19,353 37 To others 3,917 3,678 3,608 4,049 3,817 3,868 3,764 3,721 3,622 38 Other liabilities to nonrelated parties 12,799 12,685 13,016 13,404 13,377 13,626 13,550 14,544 13,351 39 Net due to related institutions 5,639 7,292 7,039 7,422 7,280 6,615 7,063 6,881 7,345 40 Total liabilities 72,484 74,037 73,576 75,238 74,684 74,621 75,532 75,038 74,043 MEMO 41 Total loans (gross) and securities adjusted5 31,018 30,854 31,147 31,277 32,130 31,947 32,766 32,169 32,595 42 Total loans (gross) adjusted5 25,334 25,232 25,434 25,651 26,570 26,303 27,088 26,499 26,915 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 A23 1.31 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 1982 1983 11997788 1199779922 11998800 11998811 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June 1 All holders—Individuals, partnerships, and corporations 294.6 302.2 315.5 288.9 268.9 271.5 276.7 295.4 283.5 289.5 2 Financial business 27.8 27.1 29.8 28.0 27.8 28.6 31.9 35.5 34.0 35.1 3 Nonfinancial business 152.7 157.7 162.8' 154.8 138.7 141.4 142.9 151.7 144.4 147.7 4 Consumer 97.4 99.2 102.4 86.6 84.6 83.7 83.3 88.1 85.5 86.9 5 Foreign 2.7 3.1 3.3 2.9 3.1 2.9 2.9 3.0 3.2 3.0 6 Other 14.1 15.1 17.2 16.7 14.6 15.0 15.7 17.1 16.4 16.8 Weekly reporting banks 1982 1983 11997788 1199779944 11998800 11998811 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June 7 All holders—Individuals, partnerships, and corporations 147.0 139.3 147.4 137.5 126.8 127.9 132.1 144.0 140.7 141.9 8 Financial business 19.8 20.1 21.8 21.0 20.2 20.2 23.4 26.7 25.2 26.3 9 Nonfinancial business 79.0 74.1 78.3 75.2 67.1 67.7 68.7 74.2 72.7 73.1 10 Consumer 38.2 34.3 35.6 30.4 29.2 29.7 29.6 31.9 31.2 30.4 11 Foreign 2.5 3.0 3.1 2.8 2.9 2.8 2.7 2.9 3.0 2.9 12 Other 7.5 7.8 8.6 8.0 7.3 7.5 7.7 8.4 8.6 9.3 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 demand deposit ownership 170 large commercial banks, each of which had total assets in domestic offices survey sample was reduced to 232 banks from 349 banks, 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

A24 Domestic Nonfinancial Statistics • February 1983 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1983 IInnssttrruummeenntt DD 1199 ee 77 cc 88 .. 11 DD 99 ee 77 cc 99 .. 11 DD 1199 ee 88 cc 00 .. DD 1199 ee 88 cc 11 .. DD 11 ee 99 cc 8822 ..22 July Aug. Sept. Oct. Nov. Dec. Commercial paper (seasonally adjusted unless noted otherwise) 11 AAllll iissssuueerrss 83,438 112,803 124,374 165,455 166,208 172,199 174,669 176,775 175,924 180,206 185,407 FFiinnaanncciiaall ccoommppaanniieess33 DDeeaalleerr--ppllaacceedd ppaappeerr44 22 TToottaall 12,181 17,359 19,599 29,904 34,067 39,027 40,749 39,963 37,323 40,890 40,994 33 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 3,521 2,784 3,561 6,045 2,516 2,367 2,353 2,303 2,195 2,341 2,441 DDiirreeccttllyy ppllaacceedd ppaappeerr55 44 TToottaall 51,647 64,757 67,854 81,715 84,183 89,585 90,628 91,600 92,819 93,820 96,692 55 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 12,314 17,598 22,382 26,914 32,034 33,613 35,085 34,856 34,622 35,001 35,566 66 NNoonnffiinnaanncciiaall ccoommppaanniieess66 19,610 30,687 36,921 53,836 47,958 43,587 43,292 45,212 44,977 45,496 47,721 Bankers dollar acceptances (not seasonally adjusted) 7 Total 33,700 45,321 54,744 69,226 79,543 72,710 73,977 73,569 72,902 77,919 78,309 Holder 8 Accepting banks 8,579 9,865 10,564 10,857 10,910 9,008 8,498 9,205 9,501 10,894 9,355 9 Own bills 7,653 8,327 8,963 9,743 9,471 8,231 7,466 7,986 8,212 9,558 8,125 10 Bills bought 927 1,538 1,601 1,115 1,439 777 1,033 1,219 1,289 1,337 1,230 Federal Reserve Banks 11 Own account 587 704 776 195 1,480 0 209 0 0 0 0 12 Foreign correspondents 664 1,382 1,791 1,442 949 670 717 622 483 573 729 13 Others 24,456 33,370 41,614 56,731 66,204 63,032 65,961 64,942 62,917 67,026 68,955 Basis 14 Imports into United States 8,574 10,270 11,776 14,765 17,683 15,122 14,487 14,653 14,829 14,906 15,649 15 Exports from United States 7,586 9,640 12,712 15,400 16,328 16,286 16,476 16,215 16,036 17,209 16,880 16 All other 17,541 25,411 30,257 39,060 45,531 41,301 43,514 43,201 65,015 45,805 45,781 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 Dec. 1, 1982, there was a break in the commercial paper series. The 4. Includes all financial company paper sold by dealers in the open market. key changes in the content of the data involved additions to the reporting panel, 5. As reported by financial companies that place their paper directly with the exclusion of broker or dealer placed borrowings under any master note investors. agreements from the reported data, and the reclassification of a large portion of 6. Includes public utilities and firms engaged primarily in such activities as 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 Rate Month Average Month rate 1981—Nov. 24 16.00 1982—Aug. 23 13.50 1982—Jan 15.75 1983—Jan Dec. 1 15.75 Oct. 7 13.00 Feb 16.56 Feb 14 12.00 16.50 Mar Nov. 22 11.50 Apr 16.50 Apr 16.50 May 1982—Feb. 18 17.00 16.50 June 23 16.50 July 16.26 July July 20 16.00 Aug 14.39 Aug 29 15.50 Sept 13.50 Sept Aug. 2 15.00 1983—Jan. 11 11.00 Oct 12.52 Oct 16 14.50 Feb. 28 10.50 11.85 Nov 18 14.00 Aug. 8 11.00 Dec 11.50 Dec Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Business Lending A25 1.34 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 7-11, 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) 26,906,178 679,407 460,408 554,091 2,042,372 726,993 22,442,908 2 Number of loans 130,514 91,718 13,836 8,922 11,597 1,077 3,364 3 Weighted-average maturity (months) 1.3 3.6 3.7 4.0 4.9 3.1 ..88 4 With fixed rates .7 3.2 3.6 3.9 3.8 1.5 ..44 5 With floating rates 2.5 4.5 3.8 4.1 5.6 4.8 1.7 6 Weighted-average interest rate (percent per annum) .. 10.95 13.91 13.78 13.23 12.34 11.82 10.59 7 Interquartile range1 10.27-11.18 12.68-14.85 12.55-14.56 12.36-13.80 11.46-12.96 11.32-12.55 10.24-10.75 8 With fixed rates 10.80 14.26 13.79 13.70 12.63 11.24 10.54 9 With floating rates 11.20 13.28 13.78 12.93 12.21 12.14 10.68 Percentage of amount of loans 10 With floating rate 36.7 3355..77 6600..00 6611..33 6699..22 6644..88 3311..88 11 Made under commitment 68.4 31.3 30.5 37.2 43.8 65.2 73.4 12 With no stated maturity 12.5 15.7 27.1 26.7 22.7 38.5 10.0 13 With one-day maturity 17.4 2.1 .0 .2 .5 3.3 20.7 1-99 LONG-TERM COMMERCIAL AND INDUSTRIAL LOANS 14 Amount of loans (thousands of dollars) 2,834,473 367,008 426,052 168,157 1,873,256 15 Number of loans 19,150 16,303 1,851 246 750 16 Weighted-average maturity (months) 50.8 39.0 40.7 48.7 55.5 17 With fixed rates 50.7 42.0 45.9 55.0 57.1 18 With floating rates 50.8 36.3 36.6 47.6 55.2 19 Weighted-average interest rate (percent per annum) .. 12.94 14.03 17.89 12.03 11.68 20 Interquartile range1 11.38-12.68 12.68-14.65 12.40-28.42 11.46-12.68 10.92-12.40 21 With fixed rates 15.19 14.95 24.52 11.51 10.68 22 With floating rates 12.13 13.21 12.60 12.12 11.93 Percentage of amount of loans 23 With floating rate 73.6 52.9 5555..66 8855..88 80.6 24 Made under commitment 59.1 42.7 45.3 66.6 64.8 1-24 25-49 50-99 500 and over CONSTRUCTION AND LAND DEVELOPMENT LOANS 25 Amount of loans (thousands of dollars) 990,925 150,071 110,531 83,576 178,568 468,178 26 Number of loans 23,236 17,606 3,315 1,303 806 206 27 Weighted-average maturity (months) 8.5 6.9 7.1 9.6 13.2 7.4 28 With fixed rates 9.0 8.5 7.7 8.2 13.5 9.3 29 With floating rates 8.2 5.4 6.3 12.3 13.2 6.6 30 Weighted-average interest rate (percent per annum) .. 13.25 14.16 14.58 14.19 13.02 12.57 31 Interquartile range1 12.13-13.88 13.43-14.93 13.42-15.56 13.31-14.89 12.40-13.30 12.12-13.24 32 With fixed rates 13.56 13.98 14.94 14.73 12.90 12.43 33 With floating rates 13.09 14.32 14.16 13.32 13.04 12.63 Percentage of amount of loans 34 With floating rate 65.1 5522..77 46.5 3388..00 8855..77 7700..55 35 Secured by real estate 92.4 85.3 98.0 95.8 95.9 91.4 36 Made under commitment 64.4 75.1 59.7 32.6 74.7 63.9 37 With no stated maturity 4.0 2.7 2.9 6.8 6.4 3.2 38 With one-day maturity .0 .0 .0 .0 .0 .0 Type of construction 39 1- to 4-family 33.9 4477..55 67.3 76.1 2288..55 16.1 40 Multifamily 15.9 3.5 4.5 9.9 22.4 21.1 41 Nonresidential 50.3 49.0 28.3 14.0 49.1 62.8 AAllll ssiizzeess 1-9 10-24 25-49 50-99 100-249 225500 aanndd oovveerr LLOOAANNSS TTOO FFAARRMMEERRSS 42 Amount of loans (thousands of dollars) 1,467,055 137,726 177,981 171,295 193,955 250,340 535,758 43 Number of loans 58,634 36,687 11,551 5,309 2,774 1,738 845 44 Weighted-average maturity (months) 6.8 6.4 7.6 6.6 7.5 11.9 4.1 45 Weighted-average interest rate (percent per annum) .. 13.64 14.30 14.25 13.92 13.94 13.82 12.98 46 Interquartile range1 12.68-14.50 13.88-14.74 13.42-14.71 13.19-14.49 13.42-14.51 13.80-14.45 11.59-14.23 By purpose of loan 47 Feeder livestock 14.00 1144..2222 1133..9999 1144..2200 1144..1122 13.45 1133..9922 48 Other livestock 13.87 14.30 15.13 14.14 13.83 (*) 13.37 49 Other current operating expenses 13.37 14.26 14.11 14.06 13.78 13.72 11.54 50 Farm machinery and equipment 13.91 14.50 14.09 13.51 (*) (*) (*) 51 Other 12.93 14.32 14.08 13.32 13.78 13.13 12.54 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

A26 Domestic Nonfinancial Statistics • February 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 1984 week 1984, week ending ending IInnssttrruummeenntt 11998811 11998822 11998833 Oct. Nov. Dec. Jan. Dec. 30 Jan. 6 Jan. 13 Jan. 20 Jan. 27 MONEY MARKET RATES 1 Federal funds'-2 16.38 12.26 9.09 9.48 9.34 9.47 9.56 8.96 10.06 99..5533 99..5544 99..5533 Commercial paper3-4 2 1-month 15.69 11.83 8.87 9.03 9.10 9.56 9.23 9.66 9.36 9.22 9.18 9.20 3 3-month 15.32 11.89 8.88 8.99 9.10 9.53 9.20 9.55 9.32 9.20 9.15 9.19 4 6-month 14.76 11.89 8.89 8.98 9.09 9.50 9.18 9.47 9.28 9.20 9.12 99..1177 Finance paper, directly placed3-4 5 1-month 15.30 11.64 8.80 8.99 9.06 9.51 9.20 9.49 9.33 9.17 9.17 9.20 6 3-month 14.08 11.23 8.70 8.82 8.87 9.16 9.08 9.20 9.19 9.09 9.02 9.03 7 6-month 13.73 11.20 8.69 8.79 8.84 9.11 9.02 9.15 9.15 9.07 8.95 88..9966 Bankers acceptances4-5 8 3-month 15.32 11.89 8.90 9.01 9.16 9.52 9.23 9.46 9.31 9.24 9.19 9.23 9 6-month 14.66 11.83 8.91 8.97 9.13 9.45 9.19 9.31 9.25 9.21 9.13 99..1199 Certificates of deposit, secondary market6 10 1-month 15.91 12.04 8.96 9.11 9.22 9.67 9.33 9.77 9.51 9.35 9.25 9.29 11 3-month 15.91 12.27 9.07 9.18 9.36 9.69 9.42 9.67 9.57 9.44 9.35 9.40 12 6-month 15.77 12.57 9.27 9.31 9.51 9.85 9.56 9.72 9.70 9.63 9.45 9.53 13 Eurodollar deposits, 3-month7 16.79 13.12 9.56 9.54 9.79 10.08 9.78 9.92 9.88 99..8855 9.70 99..7755 U.S. Treasury bills4 Secondary market8 14 3-month 14.03 10.61 8.61 8.64 8.76 9.00 8.90 8.96 8.95 8.88 8.88 8.93 15 6-month 13.80 11.07 8.73 8.83 8.93 9.17 9.02 9.14 9.12 9.03 8.95 9.00 16 1-year 13.14 11.07 8.80 8.98 9.08 9.24 9.07 9.22 9.19 9.09 9.02 99..0044 Auction average9 17 3-month 14.029 10.686 8.63 8.71 8.71 8.96 8.93 8.94 9.04 8.92 8.82 8.92 18 6-month 13.776 11.084 8.75 8.90 8.89 9.14 9.06 9.14 9.19 9.10 8.92 9.01 19 1133..115599 1111..009999 88..8866 99..1133 99..0033 99..1166 99..0044 99..2233 99..0044 CAPITAL MARKET RATES U.S. Treasury notes and bonds10 Constant maturities" 20 1-year 14.78 12.27 9.57 9.81 9.94 10.11 9.90 10.09 10.02 9.91 9.86 9.87 21 2-year 14.56 12.80 10.21 10.57 10.66 10.84 10.64 10.85 10.77 10.66 10.56 10.63 V 2-Vi-year12 10 95 10 80 10 75 23 3-year 14.44 12.92 10.45 10.87 10.96 IT .13 io.93 11.10 11.04 10.98 io.86 10.89 24 5-year 14.24 13.01 10.80 11.28 11.41 11.54 11.37 11.54 11.50 11.42 11.29 11.31 25 7-year 14.06 13.06 11.02 11.47 11.61 11.78 11.58 11.74 11.71 11.63 11.50 11.52 26 10-year 13.91 13.00 11.10 11.54 11.69 11.83 11.68 11.79 11.79 11.71 11.59 11.63 27 20-year 13.72 12.92 11.34 11.77 11.92 12.02 11.82 11.97 11.97 11.86 11.74 11.76 28 30-year 13.44 12.76 11.18 11.58 11.75 11.88 11.75 11.84 11.86 11.79 11.67 11.71 Composite13 29 Over 10 years (long-term) 12.87 12.23 10.84 11.21 11.32 11.44 11.29 11.41 11.42 11.32 11.21 11.23 State and local notes and bonds Moody's series14 30 Aaa 10.43 10.88 8.80 8.93 9.01 9.34 9.00 9.25 9.20 9.00 8.90 8.90 31 Baa 11.76 12.48 10.17 10.04 10.01 10.29 10.10 10.30 10.20 10.10 10.10 10.00 32 Bond Buyer series15 11.33 11.66 9.51 9.66 9.75 9.89 9.63 9.76 9.66 9.67 9.60 9.59 Corporate bonds Seasoned issues16 33 All industries 15.06 14.94 12.78 12.79 12.93 13.07 12.92 13.09 13.08 13.00 12.85 12.83 34 Aaa 14.17 13.79 12.04 12.25 12.41 12.57 12.20 12.56 12.53 12.43 12.01 11.98 35 Aa 14.75 14.41 12.42 12.49 12.61 12.76 12.71 12.76 12.78 12.71 12.69 12.70 36 A 15.29 15.43 13.10 12.97 13.09 13.21 13.13 13.25 13.24 13.16 13.09 13.07 37 Baa 16.04 16.11 13.55 13.46 13.61 13.75 13.65 13.79 13.75 13.71 13.61 1133..5577 38 A-rated, recently-offered utility bond17 1166..6633 1155..4499 1122..7733 1122..8899 1133..1144 1133..2299 1122..9999'' 1133..1166'' 1122..9955'' 1122..8888'' 1122..8855'' MEMO: Dividend/price ratio18 39 Preferred stocks 12.36 12.53 11.2 P 10.97 11.12 11.49 11.35 11.66 11.55 11.47 11.26 11.10 40 Common stocks 5.20 5.81 4.40 4.25 4.31 4.32 4.27 4.29 4.27 4.24 4.25 4.33 1. Weekly and monthly figures are averages of all calendar days, where the 11. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields rate for a weekend or holiday is taken to be the rate prevailing on the preceding are read from a yield curve at fixed maturities. Based on only recently issued, business day. The daily rate is the average of the rates on a given day weighted by actively traded securities. the volume of transactions at these rates. 12. Each biweekly figure is the average of five business days ending on the 2. Weekly figures are statement week averages—that is, averages for the Monday following the date indicated. Until Mar. 31, 1983, the biweekly rate week ending Wednesday. determined the maximum interest rate payable in the following two-week period 3. Unweighted average of offering rates quoted by at least five dealers (in the on 2-'/!-year small saver certificates. (See table 1.16.) case of commercial paper), or finance companies (in the case of finance paper). 13. Averages of yields (to maturity or call) for all outstanding bonds neither due Before November 1979, maturities for data shown are 30-59 days, 90-119 days, nor callable in less than 10 years, including several very low yielding "flower" and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 150- bonds. 179 days for finance paper. 14. General obligations only, based on figures for Thursday, from Moody's 4. Yields are quoted on a bank-discount basis, rather than an investment yield Investors Service. basis (which would give a higher figure). 15. General obligations only, with 20 years to maturity, issued by 20 state and 5. Dealer closing offered rates for top-rated banks. Most representative rate local governmental units of mixed quality. Based on figures for Thursday. (which may be, but need not be, the average of the rates quoted by the dealers). 16. Daily figures from Moody's Investors Service. Based on yields to maturity 6. Unweighted average of offered rates quoted by at least five dealers early in on selected long-term bonds. the day. 17. Compilation of the Federal Reserve. This series is an estimate of the yield 7. Calendar week average. For indication purposes only. on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 8. Unweighted average of closing bid rates quoted by at least five dealers. call protection. Weekly data are based on Friday quotations. The Federal Reserve 9. Rates are recorded in the week in which bills are issued. Beginning with the previously published interest rate series on both newly-issued and recently- Treasury bill auction held on Apr. 18, 1983, bidders were required to state the offered Aaa utility bonds, but discontinued these series in January 1984 owing to percentage yield (on a bank discount basis) that they would accept to two decimal the lack of Aaa issues. 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 often issues: four public utilities, four industrials, one financial, and one 10. 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets All 1.36 STOCK MARKET Selected Statistics 1983 1984 IInnddiiccaattoorr 11998811 11998822 11998833 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 74.02 68.93 92.63 94.61 96.43 96.74 93.96 96.70 96.78 95.36 94.92 96.16 2 Industrial 85.44 78.18 107.45 109.43 112.52 113.21 109.50 112.76 112.87 110.77 110.60 112.16 3 Transportation 72.61 60.41 89.36 89.07 92.22 92.91 88.06 94.56 95.41 97.68 98.79 97.98 4 Utility 38.90 39.75 47.00 47.62 46.76 46.61 46.94 48.16 48.73 48.50 47.00 47.43 5 Finance 73.52 71.99 95.34 102.45 101.22 99.60 95.76 97.00 94.79 94.48 94.25 95.79 6 Standard & Poor's Corporation (1941-43 = 10)1 ... 128.05 119.71 160.41 164.10 166.39 166.96 162.42 167.16 167.65 165.23 164.36 166.39 7 American Stock Exchange2 (Aug. 31, 1973 = 100) 171.79 141.31 216.48 223.97 237.51 244.03 230.10 234.36 223.76 218.42 221.31 224.83 Volume of trading (thousands of shares) 8 New York Stock Exchange 46,967 64,617 85,418 93,016 89,729 79,508 74,191 82,866 85,445 86,405 88,041 105,518 9 American Stock Exchange 5,346 5,283 8,215 12,260 10,874 8,199 6,329 6,629 7,751 6,160 6,939 7,167 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers-dealers3 14,411 13,325 23,000 16,713 18,292 19,218 19,437 20,124 21,030 22,075 23,000 11 Margin stock4 14,150 12,980 22,720 16,370 17,930 18,870 19,090 19,760 20,690 21,790 22,720 12 Convertible bonds 259 344 279 342 361 347 346 363 339 285 279 13 Subscription issues 2 1 1 1 1 1 1 1 1 1 1 n a. Free credit balances at brokers5 14 Margin-account 3,515 5,735 6,620 6,090 6,150 6,275 6,350 6,550 6,630 7,599 6,620 15 Cash-account 7,150 8,390 8,430 8,310 8,590 8,145 8,035 7,930 7,695 6,512 8,430 Margin-account debt at brokers (percentage distribution, end of period) 16 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in percent)6 17 Under 40 37.0 21.0 41.0 14.0 13.0 21.0 23.0 24.0 35.0 48.0 41.0 18 40-49 24.0 24.0 22.0 19.0 21.0 28.0 28.0 27.0 24.0 22.0 22.0 19 50-59 17.0 24.0 16.0 30.0 29.0 21.0 20.0 21.0 17.0 17.0 16.0 n a. 70 60-69 10.0 14.0 9.0 16.0 16.0 14.0 13.0 12.0 10.0 10.0 9.0 1 21 70-79 6.0 9.0 6.0 II.0 12.0 9.0 9.0 9.0 7.0 7.0 6.0 1 22 80 or more 6.0 8.0 6.0 9.0 9.0 7.0 7.0 7.0 7.0 6.0 6.0 T Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)7 25,870 35,598 58,329 45,465 47,100 50,580 50,267 51,211 54,029 57,490 58,329 4 I Distribution by equity status (percent) 24 Net credit status 58.0 62.0 63.0 62.0 62.0 62.0 62.0 64.0 63.0 63.0 63.0 n.a. Debt status, equity of 11 25 60 percent or more 31.0 29.0 28.0 32.0 33.0 31.0 31.0 29.0 28.0 29.0 28.0 t 26 Less than 60 percent 11.0 9.0 9.0 6.0 5.0 6.0 7.0 7.0 9.0 8.0 9.0 Margin requirements (percent of market value and effective date)8 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 6. 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 7. 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. Beginning July 5, 1983, the American Stock Exchange rebased its index other collateral in the customer's margin account or deposits of cash (usually sales effectively cutting previous readings in half. proceeds) occur. 3. Margin credit includes all credit extended to purchase or carry stocks or 8. Regulations G, T, and U of the Federal Reserve Board of Governors, related equity instruments and secured at least in part by stock. Credit extended is prescribed in accordance with the Securities Exchange Act of 1934, limit the end-of-month data for member firms of the New York Stock Exhange. amount of credit to purchase and carry margin stocks that may be extended on Besides assigning a current loan value to margin stock generally, Regulations T securities as collateral by prescribing a maximum loan value, which is a specified and U permit special loan values for convertible bonds and stock acquired through percentage of the market value of the collateral at the time the credit is extended. exercise of subscription rights. Margin requirements are the difference between the market value (100 percent) 4. A distribution of this total by equity class is shown on lines 17-22. and the maximum loan value. The term "margin stocks" is defined in the 5. Free credit balances are in accounts with no unfulfilled commitments to the corresponding regulation. brokers and are subject to withdrawal by customers on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • February 1983 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1983 AAccccoouunntt 11998811 11998822 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.? Savings and loan associations 664,167 706,045 722,352 723,616 728,487 728,156 731,275 739,575 745,040 746,514 754,932 761,307 769,316 2 Mortgages 518,547 482,234 481,090 475,688 476,248 472,124 473,134 477,919 481,691 480,813 483,854 488,182 492,857 3 Cash and investment securities1 63,123 84,767 94,080 96,649 99,226 103,468 101,284 101,754 98,996 99,419 100,714 100,539 102,326 4 Other 82,497 139,044 147,182 151,279 153,013 152,564 156,857 159,902 164,353 166,282 170,364 172,582 174,133 5 Liabilities and net worth 664,167 706,045 722,352 723,616 728,487 728,156 731,275 739,575 745,040 746,514 754,932 761,307 769,316 525,061 566,189 591,913 597,112 601,171 599,673 603,178 608,683 613,087 615,691 620,233 622,645 632,285 7 Borrowed money 88,782 97,979 86,544 84,884 83,640 82,722 84,328 84,682 84,345 85,926 87,315 89,148 91,100 8 FHLBB 62,794 63,861 58,841 56,859 55,933 54,392 54,234 53,579 52,303 52,179 52,678 51,735 52,448 9 Other 25,988 34,118 27,703 28,025 27,707 28,330 30,094 31,103 32,042 33,747 34,637 37,413 38,652 10 Loans in process2 6,385 9,934 11,039 12,245 13,462 14,528 15,972 17,063 17,931 18,773 19,168 19,684 21,152 11 Other 15,544 15,720 17,524 14,767 16,210 18,323 15,548 17,931 19,078 15,978 17,934 19,680 15,173 12 Net worth3 28,395 26,157 26,371 26,853 27,466 27,438 28,221 28,279 28,530 28,919 29,450 29,834 30,758 13 MEMO: Mortgage loan commitments outstanding4 15,225 18,054 22,051 24,885 27,920 30,089 30,630 31,667 32,342 3322,,441100 32,723 3344,,669977 3322,,665599 Mutual savings banks5 14 Assets 175,728 174,197 176,378 178,814 178,826 180,071 181,975 182,822 183,612 186,041 188,021 189,146 Loans 15 Mortgage 99,997 94,091 93,607 93,823 93,311 93,587 94,000 93,998 93,941 94,831 95,181 95,600 16 Other 14,753 16,957 18,211 17,837 18,353 17,893 17,438 18,134 17,929 17,830 18,860 19,674 Securities 17 U.S. government6 9,810 9,743 11,081 12,187 12,364 13,110 13,572 13,931 14,484 14,794 14,774 15,090 18 State and local government 2,288 2,470 2,440 2,403 2,311 2,260 2,257 2,248 2,247 2,244 2,189 2,194 19 Corporate and other7 37,791 36,161 36,905 37,827 38,342 39,142 40,206 40,667 41,045 41,889 41,907 42,625 20 Cash 5,442 6,919 6,104 6,548 6,039 5,960 6,224 5,322 5,168 5,560 4,940 4,990 21 Other assets 5,649 7,855 8,031 8,189 8,107 8,118 8,276 8,522 8,799 8,893 9,051 8,973 22 Liabilities 175,728 174,197 176,378 178,814 178,826 180,071 181,975 182,822 183,612 186,041 188,021 189,146 23 Deposits 155,110 155,196 159,162 161,489 161,262 162,287 163,990 164,848 165,087 165,887 166,260 169,334 24 Regular8 153,003 152,777 156,915 159,088 158,760 159,840 161,573 162,271 162,600 162,998 163,782 166,984 25 Ordinary savings 49,425 46,862 41,165 41,183 40,379 40,467 40,451 39,983 39,360 39,768 38,129 38,448 26 Time 103,578 96,369 87,377 86,272 84,593 83,506 84,705 85,445 86,446 85,603 90,639 93,051 27 Other 2,108 2,419 2,247 2,401 2,502 2,447 2,417 2,577 2,487 2,889 2,478 2,350 28 Other liabilities 10,632 8,336 7,542 7,395 7,631 3,114 7,754 7,5% 7,884 9,475 8,988 9,192 29 General reserve accounts 9,235 9,197 9,342 9,352 9,377 9,575 9,684 9,932 9,879 12,245 10,314 30 MEMO: Mortgage loan commitments outstanding9 1,293 1,285 1,295 1,639 1,882 1,860 1,884 1,969 2,046 2,023 2,210 2,418 Life insurance companies 31 Assets 525,803 588,163 595,959 602,770 609,298 620,572 628,224 633,569 638,826 644,295 647,149 652,904 Securities 32 Government .... 25,209 36,499 36,946 38,449 39,210 42,523 43,348 44,751 45,700 46,109 47,767 47,170 33 United States10 8,167 16,529 17,877 19,213 19,746 20,706 21,141 22,228 22,817 23,134 24,380 24,232 34 State and local 7,151 8,664 8,333 8,368 8,524 10,053 10,355 10,504 10,695 10,739 10,791 10,686 35 Foreign" 9,891 11,306 10,736 10,868 10,940 11,764 11,852 12,019 12,188 12,236 12,596 12,252 36 Business 255,769 287,126 293,427 296,233 300,558 309,254 313,510 316,934 318,584 321,568 320,964 325,787 n a. 37 Bonds 208,099 231,406 235,376 236,430 238,689 245,833 248,248 252,397 253,977 256,131 256,332 260,432 38 Stocks 47,670 55,720 58,051 59,803 61,869 63,421 65,262 64,537 64,607 65,437 64,632 65,355 39 Mortgages 137,747 141,989 142,683 143,031 143,011 143,758 144,725 145,086 146,400 147,356 148,256 148,947 40 Real estate 40,094 20,264 21,014 21,175 21,352 21,344 21,629 21,690 21,749 21,903 22,141 22,278 41 Policy loans 48,706 52,961 53,383 53,560 53,715 53,804 53,914 53,972 54,063 54,165 54,255 54,362 42 Other assets 35,815 48,571 43,355 50,322 51,452 48,889 51,098 51,136 52,330 53,194 53,765 54,360 Credit unions12 43 Total assets/liabilities and capital 60,611 69,572 71,412 73,876 74,896 76,851 78,467 79,084 79,595 80,678 81,033 81,845 82,854 44 Federal 39,181 45,483 46,673 48,350 48,986 50,275 51,430 51,844 52,224 53,033 53,222 53,710 54,372 45 State 21,430 24,089 24,739 22,526 25,910 26,576 27,037 27,240 27,371 27,645 27,811 28,135 28,482 46 Loans outstanding 42,333 43,223 42,823 43,067 43,530 44,055 45,001 45,616 46,880 47,744 48,345 49,102 49,923 47 Federal 27,096 27,941 27,644 27,823 28,133 28,512 29,175 29,577 30,384 30,912 31,287 31,789 32,304 48 State 15,237 15,282 15,179 15,244 15,397 15,543 15,826 16,039 16,496 16,832 17,058 17,313 17,619 49 Savings 54,152 62,977 64,780 67,494 68,663 70,221 71,712 72,438 72,550 73,697 74,187 74,685 75,435 50 Federal (shares) 35,250 41,341 42,533 44,336 45,165 46,192 47,145 47,713 47,874 48,709 49,044 49,400 49,839 51 State (shares and deposits) 18,902 21,636 22,247 23,158 23,498 24,029 24,567 24,725 24,676 24,988 25,143 25,285 25,596 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.37 Continued 1983 AAccccoouunntt 11998811 11998822 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec." FSLIC-insured federal savings banks 52 Assets 6,859 9,401 18,635 22,713 33,667 39,660 41,763 46,191 57,496 59,422 61,717 53 Mortgages 3,353 5,115 11,556 14,345 21,248 25,236 26,494 28,086 34,814 35,637 37,166 54 Cash and investment securities' 2,453 3,683 4,310 5,901 6,675 6,890 7,514 9,245 9,587 9,653 55 Other 1,833 3,396 4,058 6,518 7,749 8,379 10,591 13,437 14,198 14,898 56 Liabilities and net worth 6,859 9,401 18,635 22,713 33,667 39,660 41,763 46,191 57,496 59,422 61,717 57 Savings and capital 5,877 8,050 15,377 18,598 27,419 32,446 34,108 37,284 47,058 48,544 50,384 58 Borrowed money 717 2,160 2,719 4,146 4,831 5,008 5,445 6,598 6,775 6,981 59 FHLBB 396 1,550 1,979 2,755 3,094 3,131 3,572 4,192 4,323 4,381 60 Other 321 610 740 1,391 1,737 1,877 1,873 2,406 2,452 2,600 61 Other 203 305 453 759 755 919 1,142 1,089 1,293 1,428 62 Net worth3 431 793 943 1,343 1,628 1,728 2,320 2,751 2,810 2,924 MEMO 63 Loans in process2 98 121 265 335 650 791 828 934 1,120 1,181 1,222 64 Mortgage loan committments outstanding4 431 592 722 1,113 1,438 1,743 1,774 2,130 2,064 2,230 1. Holdings of stock of the Federal Home Loan Banks are in "other assets." 11. Issues of foreign governments and their subdivisions and bonds of the 2. Beginning in 1982, loans in process are classified as contra-assets and are International Bank for Reconstruction and Development. not included in total liabilities and net worth. Total assets are net of loans in 12. As of June 1982, data include only federal or federally insured state credit process. unions serving natural persons. 3. Includes net undistributed income accrued by most associations. 4. Excludes figures for loans in process, which are shown as a liability. NOTE. Savings and loan associations: Estimates by the FHLBB for all 5. The National Council reports data on member mutual savings banks and on associations in the United States. Data are based on monthly reports of federally savings banks that have converted to stock institutions, and to federal savings insured associations and annual reports of other associations. Even when revised, banks. data for current and preceding year are subject to further revision. 6. Beginning April 1979, includes obligations of U.S. government agencies. Mutual savings banks: Estimates of National Council of Savings Institutions for Before that date, this item was included in "Corporate and other." all savings banks in the United States. 7. Includes securities of foreign governments and international organizations Life insurance companies: Estimates of the American Council of Life Insurance and, before April 1979, nonguaranteed issues of U.S. government agencies. for all life insurance companies in the United States. Annual figures are annual- 8. Excludes checking, club, and school accounts. statement asset values, with bonds carried on an amortized basis and stocks at 9. Commitments outstanding (including loans in process) of banks in New year-end market value. Adjustments for interest due and accrued and for York State as reported to the Savings Banks Association of the State of New differences between market and book values are not made on each item separately York. but are included, in total, in "other assets." 10. 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 federally insured state credit unions serving natural persons. Figures are preliminary and revised annually to incorporate recent data. 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFiissccaall FFiissccaall FFiissccaall Type of account or operation yyeeaarr yyeeaarr yyeeaarr 1982 1983 1983 11998811 11998822 11998833 HI H2 HI Oct. Nov. Dec. U.S. budget 1 Receipts1 599,272 617,766 600,562 322,478 286,338 306,331 45,156 46,200 58,041 2 Outlays1 657,204 728,375 795,917 348,678 390,846 396,477 70,225 67,792 74,702 3 Surplus, or deficit (-) -57,932 -110,609 -195,355 -26,200 -104,508 -90,146 -25,069 -21,592 -16,661 4 Trust funds 6,817 5,456 23,056 -17,690 -6,576 22,680 -1,471 -3,408 3,921 5 Federal funds2-3 -64,749 -116,065 -218,410 -43,889 -97,934 -112,822 -23,598 -18,183 -20,579 Off-budget entities (surplus, or deficit (-)) 6 Federal Financing Bank outlays -20,769 -14,142 -10,404 -7,942 -4,923 -5,418 1,347 -526 -312 7 Other3 4 -236 -3,190 -1,953 227 -2,267 -528 100 -152 400 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -78,936 -127,940 -207,711 -33,914 -111,699 -96,094 -23,623 -22,270 -16,572 Source or financing 9 Borrowing from the public 79,329 134,993 212,425 41,728 119,609 102,538 11,732 8,946 15,501 10 Cash and monetary assets (decrease, or increase (-))4 -1,878 -11,911 -9,889 -408 -9,057 -9,664 9,525 21,277 -6,092 11 Other5 1,485 4,858 5,176 -7,405 1,146 3,222 2,367 -7,953 7,164 MEMO 12 Treasury operating balance (level, end of period) 18,670 29,164 37,057 10,999 19,773 100,243 27,100 5,213 11,817 13 Federal Reserve Banks 3,520 10,975 16,557 4,099 5,033 19,442 4,841 2,896 3,661 14 Tax and loan accounts 15,150 18,189 20,500 6,900 14,740 72,037 22,259 2,316 8,157 1. Effective Feb. 8, 1982, supplemental medical insurance premiums and 5. Includes accrued interest payable to the public; allocations of special voluntary hospital insurance premiums, previously included in other insurance drawing rights; deposit funds; miscellaneous liability (including checks outstandreceipts, have been reclassified as offsetting receipts in the health function. ing) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S. 2. 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. 3. Other off-budget includes Postal Service Fund; Rural Electrification and Telephone Revolving Fund; Rural Telephone Bank; and petroleum acquisition SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Digitized for FRandA StraEnsRpo rtation and strategic petroleum reserve effective November 1981. Government." Treasury Bulletin, and the Budget of the United States Governhttp://fraser.stlou4. isInfecldud.oesr gU/ .S. Treasury operating cash accounts; SDRs; gold tranche ment, Fiscal Year 1985. drawing rights; loans to International Monetary Fund; and other cash and Federal Resermvoen eBtaaryn kas oseft sS. t. Louis

A30 Domestic Nonfinancial Statistics • February 1983 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1982 1983 1983 111999888111 111999888222 111999888333 HI H2 HI Oct. Nov. Dec. RECEIPTS 1 All sources1 599,272 617,766 600,563 322,478 286,338 306,331 48,102 46,200 58,041 2 Individual income taxes, net 285,917 297,744 288,938 150,565 145,676 144,550 23,227 22,700 25,577 3 Withheld 256,332 267,513 266,010 133,575 131,567 135,531 21,720 22,550 24,482 4 Presidential Election Campaign Fund ... 41 39 36 34 5 30 0 0 0 5 Nonwithheld 76,844 84,691 83,586 66,174 20,040 63,014 2,022 1,011 1,948 6 Refunds 47,299 54,498 60,692 49,217 5,938 54,024 515 861 854 Corporation income taxes 7 Gross receipts 73,733 65,991 61,780 37,836 25,661 33,522 2,824 1,827 11,558 8 Refunds 12,596 16,784 24,758 8,028 11,467 13,809 2,356 1,360 636 9 Social insurance taxes and contributions, net 182,720 201,498 209,001 108,079 94,278 110,521 15,707 16,780 1166,,112200 10 Payroll employment taxes and contributions2 156,932 172,744 179,010 88,795 85,063 90,912 14,266 14,151 1155,,443355 11 Self-employment taxes and contributions3 6,041 7,941 6,756 7,357 177 6,427 0 103 0 12 Unemployment insurance 15,763 16,600 18,799 9,809 6,857 11,146 1,100 2,166 289 13 Other net receipts14 3,984 4,212 4,436 2,119 2,181 2,196 341 360 396 14 Excise taxes 40,839 36,311 35,300 17,525 16,556 16,904 3,142 3,259 3,011 15 Customs deposits 8,083 8,854 8,655 4,310 4,299 4,010 766 904 855 16 Estate and gift taxes 6,787 7,991 6,053 4,208 3,445 2,883 488 453 484 17 Miscellaneous receipts5 13,790 16,161 15,594 7,984 7,891 7,751 1,357 1,637 1,072 OUTLAYS 18 All types1 657,204 728,424 795,917 348,683 390,847 396,477 70,225 67,792 74,702 19 National defense 159,765 187,418 210,461 93,154 100,419 105,072 17,416 17,947 19,576 20 International affairs 11,130 9,982 8,927 5,183 4,406 4,705 1,083 318 2,647 21 General science, space, and technology ... 6,359 7,070 7,777 3,370 3,903 3,486 880 777 480 22 Energy 10,277 4,674 4,035 2,946 2,059 2,073 253 342 534 23 Natural resources and environment 13,525 12,934 12,676 5,636 6,940 5,892 1,251 974 1,221 24 Agriculture 5,572 14,875 22,173 7,087 13,260 10,154 1,718 766 1,452 25 Commerce and housing credit 3,946 3,865 4,721 1,408 2,244 2,164 1,848 -288 565 26 Transportation 23,381 20,560 21,231 9,915 10,686 9,918 3,051 2,118 2,030 27 Community and regional development .... 9,394 7,165 7,302 3,055 4,186 3,124 1,015 686 752 28 Education, training, employment, social services 31,402 26,300 25,726 12,607 12,187 12,801 2,165 2,205 2,214 29 Health1 65,982 74,017 81,157 37,219 39,073 41,206 7,928 7,064 7,149 30 Income security 225,101 248,343 280,244 112,782 133,779 143,001 20,922 22,810 24,040 31 Veterans benefits and services 22,988 23,955 24,845 10,865 13,241 11,334 1,940 2,051 3,336 32 Administration of justice 4,696 4,671 5,014 2,334 2,373 2,522 442 396 448 33 General government 4,614 4,726 4,991 2,400 2,322 2,434 143 535 364 34 General-purpose fiscal assistance 6,856 6,393 6,287 3,325 3,152 3,124 1,644 337 64 35 Net interest6 68,726 84,697 89,774' 41,883 44,948 42,358' 7,536' 9,464 8,712 36 Undistributed offsetting receipts7 -16,509 -13,270 -21,424' -6,490 -8,333 -8,885' 1,010' -710 -889 1. Effective Feb. 8, 1982, supplemental medical insurance premiums and 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous voluntary hospital insurance premiums, previously included in other insurance receipts. receipts, have been reclassified as offsetting receipts in the health function. 6. Net interest function includes interest received by trust funds. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. 7. Consists of rents and royalties on the outer continental shelf and U.S. 3. Old-age, disability, and hospital insurance. government contributions for employee retirement. 4. Federal employee retirement contributions and civil service retirement and disability fund. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Government" and the Budget of the U.S. Government. Fiscal Year 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1981 1982 1983 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 1,034.7 1,066.4 1,084.7 1,147.0 1,201.9 1,249.3 1,324.3 1,381.9 n.a. 2 Public debt securities 1,028.7 1,061.3 1,079.6 1,142.0 1,197.1 1,244.5 1,319.6 1,377.2 1,410.7 3 Held by public 825.5 858.9 867.9 925.6 987.7 1,043.3 1,090.3 1,138.2 4 Held by agencies 203.2 202.4 211.7 216.4 209.4 201.2 229.3 239.0 5 Agency securities 6.0 5.1 5.0 5.0 4.8 4.8 4.7 4.7 6 Held by public 4.6 3.9 3.9 3.7 3.7 3.7 3.6 3.6 n a. 7 Held by agencies 1.4 1.2 1.2 1.2 1.2 1.1 1.1 1.1 T 8 Debt subject to statutory limit 1,029.7 1,062.2 1,080.5 1,142.9 1,197.9 1,245.3 1,320.4 1,378.0 1,411.4 9 Public debt securities 1,028.1 1,060.7 1,079.0 1,141.4 1,196.5 1,243.9 1,319.0 1,376.6 1,410.1 10 Other debt1 1.6 1.5 1.5 1.5 1.4 1.4 1.4 1.3 1.3 11 MEMO: Statutory debt limit 1,079.8 1,079.8 1,143.1 1,143.1 1,290.2 1,290.2 1,389.0 1,389.0 1,490.0 1. Includes guaranteed debt of government agencies, specified participation NOTE. Data from Treasury Bulletin (U.S. Treasury Department), certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1983 1984 Type and holder 1979 1980 1981 Sept. Oct. Nov. Dec. 1 Total gross public debt 1,028.7 1,197.1 1,377.2 1,384.6 1,389.2 1,410.7 By type 2 Interest-bearing debt 844.0 928.9 1,027.3 ,195.5 ,375.8 ,383.3 1,387.9 ,400.9 3 Marketable 530.7 623.2 720.3 881.5 ,024.0 ,035.3 1,044.3 ,050.9 4 Bills 172.6 216.1 245.0 311.8 340.7 339.0 335.3 343.8 5 Notes 283.4 321.6 375.3 465.0 557.5 566.2 575.3 573.4 6 Bonds 74.7 85.4 99.9 104.6 125.7 129.2 133.8 633.7 7 Nonmarketable1 313.2 305.7 307.0 314.0 351.8 347.9 343.5 350.0 8 Convertible bonds2 2.2 9 State and local government series 24.6 23.8 23.0 25.7 35.1 35.3 35.7 36.1 10 Foreign issues3 28.8 24.0 19.0 14.7 11.5 11.5 10.5 10.4 11 Government 23.6 17.6 14.9 13.0 11.5 11.5 10.5 10.4 12 Public 5.3 6.4 4.1 1.7 .0 .0 .0 0 13 Savings bonds and notes 79.9 72.5 68.1 68.0 70.3 70.6 70.9 70.7 14 Government account series4 177.5 185.1 196.7 205.4 234.7 230.3 226.2 231.9 15 Non-interest-bearing debt 1.2 1.3 1.4 1.6 1.5 1.3 1.3 9.8 By holder5 16 U.S. government agencies and trust funds 187.1 192.5 203.3 209.4 239.0 17 Federal Reserve Banks 117.5 121.3 131.0 139.3 155.4 18 Private investors 540.5 616.4 694.5 848.4 982.7 19 Commercial banks 96.4 116.0 109.4 131.4 176.3 20 Mutual savings banks 4.7 5.4 ,5.2 n.a. 21 Insurance companies 16.7 20.1 19.1 38.7 22 Other companies 22.9 25.7 37.8 n.a. 23 State and local governments 69.9 78.8 85.6 113.4 Individuals 24 Savings bonds 79.9 72.5 68.0 68.3 70.6 25 Other securities 36.2 56.7 75.6 48.2 57.9 26 Foreign and international6 124.4 127.7 141.4 149.4 160.8 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 1 '/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

A32 Domestic Nonfinancial Statistics • February 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 Oct/ Nov. Dec. Oct. 26' Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Immediate delivery1 1 U.S. government securities 18,331 24,728 32,271 46,071 48,749 42,471 44,657 42,823 49,391 58,643 44,221 45,481 By maturity 2 Bills 11,413 14,768 18,398 24,194 24,880 23,658 21,481 24,960 25,397 26,068 22,883 23,500 3 Other within 1 year 421 621 810 757 1,014 930 715 949 888 1,141 821 1,086 4 1-5 years 3,330 4,360 6,272 10,170 10,419 7,909 12,082 7,747 11,458 12,392 11,142 8,388 5 5-10 years 1,464 2,451 3,557 5,832 6,446 5,129 5,842 5,021 5,317 9,766 4,223 8,033 6 Over 10 years 1,704 2,528 3,234 5,119 5,991 4,845 4,537 4,146 6,331 9,276 5,152 4,476 By type of customer 7 U.S. government securities dealers 1,484 1,640 1,769 2,470 2,532 2,423 2,637 2,607 3,037 2,940 2,145 22,,111111 8 U.S. government securities brokers 7,610 11,750 15,659 23,394 23,022 19,117 21,409 21,039 24,305 27,245 20,266 21,181 9 All others2 9,237 11,337 15,344 20,207 23,195 20,931 20,611 19,178 22,049 28,459 21,809 22,190 10 Federal agency securities 3,258 3,306 4,142 6,853 6,743 5,959 6,585 5,840 7,673 8,379 6,703 4,345 11 Certificates of deposit 2,472 4,477 5,001 4,206 4,334 4,405 4,123 4,115 3,913 4,448 4,763 4,360 12 Bankers acceptances 1,807 2,502 2,659 2,737 2,361 2,084 2,566 2,758 3,037 2,665 2,494 13 Commercial paper 6,128 7,595 8,626 8,307 7,963 8,391 8,337 8,391 8,671 88,,556655 77,,445544 Futures transactions3 14 Treasury bills 3,523 5,031 7,976 7,189 6,451 6,165 5,8% 8,556 8,220 7,843 4,406 15 Treasury coupons n.a. 1,330 1,490 3,175 3,443 2,487 3,228 2,481 2,932 3,762 4,497 2,782 16 Federal agency securities 234 259 208 293 194 211 169 389 235 305 217 Forward transactions4 17 U.S. government securities 365 835 1,101 1,520 1,171 2,069 724 1,450 2,233 1,814 860 18 Federal agency securities 1,370 982 1,7% 1,953 1,906 1,509 1,427 2,380 2,988 1,760 1,044 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 Oct. Nov. Dec. Oct. 5 Oct. 12 Oct. 19 Oct. 26 Nov. 2 Positions Net immediate1 1 U.S. government securities 4,306 9,033 9,328 4,997' 1,672 -2,369 9,178' 4,306 3,321 5,851 3,654 2 Bills 4,103 6,485 4,837 2,144' 1,598 -1,437 2,847' 671 2,830 2,657 2,493 3 Other within 1 year -1,062 -1,526 -199 -464' -142 47 -397 -307 -642 -511 -472 4 1-5 years 434 1,488 2,932 3,021 1,559 678 5,024 3,051 1,003 3,770 2,826 5 5-10 years 166 292 -341 132 -1,205 -745 1,151 650 357 -220 -1,353 6 Over 10 years 665 2,294 2,001 164 -138 -912 552 241 -227 155 160 7 Federal agency securities 797 2,277 3,712 10,152 9,364 11,518 9,216 9,961 11,052 10,201 9,864 1 9 8 0 C C B e o a r n m t k i m f e i r e c s r a c t a e i c a s l c o e p f p a t d p a e e n p r c o e s s i t k 3 | , 1 15 2 3 1 , , , 4 6 7 3 5 4 5 8 6 3 2 5, , , 5 8 3 3 3 1 1 2 7 4 6 3 , , , 0 3 8 6 8 0 2 5 3 ' 4 7 3 , , , 5 5 2 5 2 0 4 8 7 4 7 3 , , , 2 8 4 2 2 3 2 8 8 6 3 3 , , , 3 9 4 0 0 2 8 3 3 ' 3 3 6 , , , 9 6 5 4 4 8 5 7 6 4 6 33 , , ,, 3 6 1144 1 1 99 0 0 33 4 6 ,, , , 11 4 9 33 1 8 11 5 0 33 4 7 ,, , , 11 3 4 33 4 9 44 4 4 Futures positions 11 Treasury bills 1 -8,934 -2,508 -8,339' -5,626 -2,916 -10,936' -8,801 -7,567 -8,044 -6,787 12 Treasury coupons n.a. -2,733 -2,361 -71 (K -153 1,016 -1,612 -808 -524 -542 -23 13 Federal agency securities 1 522 -224 308 569 386 144 207 309 387 444488 Forward positions 1 1 5 4 F U e . d S e . r g al o v a e g r e n n m cy e n s t e s c e u c r u it r i i e t s i es T 1 - - 4 6 5 0 1 3 -1 - , 7 1 8 9 8 0 - - 6 1 , , 2 7 1 5 9 6 - -3 5 , , 2 % 4 8 6 - - 7 2 , ,9 7 7 0 1 3 - -1 5 , , 4 3 5 7 2 3 - -1 6 , , 6 3 1 9 3 8 - -1 7 , , 4 0 2 5 2 7 - -1 6 , , 9 0 5 9 1 9 - -2 5 , , 5 3 9 0 2 0 Financing2 Reverse repurchase agreements3 16 Overnight and continuing 14,568 26,754 33,623 34,944 36,710 31,848 35,141 33,832 33,665 33,652 17 Term agreements T 32,048 48,247 53,194 62,966 65,578 51,443 52,473 5533,,225500 5555,,661100 5599,,669933 Repurchase agreements4 n.a. 18 Overnight and continuing 1 35,919 49,695 63,269 60,%2 65,095 61,406 64,385 65,385 61,899 63,148 19 Term agreements T 29,449 43,410 47,319 55,306 53,560 47,263 45,856 46,396 49,760 51,264 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1983 AAggeennccyy 11998800 11998811 11998822 June July Aug. Sept. Oct. Nov. 1 Federal and federally sponsored agencies 188,665 221,946 237,085 235,041 236,037 236,931 236,610 239,121 240,177 2 Federal agencies 28,606 31,806 33,055 33,353 33,436 33,420 33,744 33,735 33,813 3 Defense Department1 610 484 354 298 284 274 264 258 253 4 Export-Import Bank2-3 11,250 13,339 14,218 14,563 14,563 14,564 14,740 14,740 14,740 5 Federal Housing Administration4 477 413 288 228 220 213 206 203 197 6 Government National Mortgage Association participation certificates5 2,817 2,715 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service6 1,770 1,538 1,471 1,404 1,404 1,404 1,404 1,404 1,404 8 Tennessee Valley Authority 11,190 13,115 14,365 14,570 14,675 14,675 14,840 14,840 14,945 9 United States Railway Association6 492 202 194 125 125 125 125 125 109 10 Federally sponsored agencies7 160,059 190,140 204,030 201,688 202,601 203,511 202,866 205,386 206,364 11 Federal Home Loan Banks 37,268 54,131 55,967 48,871 49,065 49,081 49,283 49,956 49,285 12 Federal Home Loan Mortgage Corporation 4,686 5,480 4,524 6,500 6,146 5,875 6,134 6,950 7,024 13 Federal National Mortgage Association 55,182 58,749 70,052 71,303 71,612 72,163 71,258 71,965 73,531 14 Farm Credit Banks 62,923 71,359 71,896 72,652 73,306 73,744 73,046 73,465 73,474 15 Student Loan Marketing Association (8) 421 1,591 2,362 2,472 2,648 3,145 3,050 3,050 MEMO 16 Federal Financing Bank debt 87,460 110,698 126,424 131,987 133,367 134,505 136,081 134,799 135,361 Lending to federal and federally sponsored 17 Export-Import Bank3 10,654 12,741 14,177 14,493 14,493 14,493 14,676 14,676 14,676 18 Postal Service6 1,520 1,288 1,221 1,154 1,154 1,154 1,154 1,154 1,154 19 Student Loan Marketing Association 2,720 5,400 5,000 5,000 5,000 5,000 5,000 5,000 5,000 20 Tennessee Valley Authority 9,465 11,390 12,640 12,845 12,950 12,950 13,115 13,175 13,220 21 United States Railway Association6 492 202 194 125 125 125 125 125 109 Other Lending10 22 Farmers Home Administration 39,431 48,821 53,261 54,946 55,776 56,386 55,691 55,916 55,916 23 Rural Electrification Administration 9,1% 13,516 17,157 18,378 18,497 18,638 18,936 19,093 19,216 24 Other 11,262 12,740 22,774 25,046 25,372 25,759 27,384 25,660 26,070 1. Consists of mortgages assumed by the Defense Department between 1957 7. Includes outstanding noncontingent liabilities; Notes, bonds, and debenand 1963 under family housing and homeowners assistance programs. tures. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 8. Before late 1981, the Association obtained financing through the Federal 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. Financing Bank. 4. Consists of debentures issued in payment of Federal Housing Administration 9. The FFB, which began operations in 1974, is authorized to purchase or sell insurance claims. Once issued, these securities may be sold privately on the obligations issued, sold, or guaranteed by other federal agencies. Since FFB securities market. incurs debt solely for the purpose of lending to other agencies, its debt is not 5. Certificates of participation issued before fiscal 1969 by the Government included in the main portion of the table in order to avoid double counting. National Mortgage Association acting as trustee for the Farmers Home Adminis- 10. Includes FFB purchases of agency assets and guaranteed loans; the latter tration; Department of Health, Education, and Welfare; Department of Housing contain loans guaranteed by numerous agencies with the guarantees of any and Urban Development; Small Business Administration; and the Veterans particular agency being generally small. The Farmers Home Administration item Administration. consists exclusively of agency assets, while the Rural Electrification Administra- 6. Off-budget. tion entry contains both agency assets and guaranteed loans. 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, that is, 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

A34 Domestic Nonfinancial Statistics • February 1983 1.45 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1983 Type of issue or issuer, or use 11998800 11998811 11998822 Apr/ May' June' July' Aug.' Sept.' Oct.' Nov. 1 All issues, new and refunding1 48,367 47,732 78,950 11,024 9,583 7,546 4,359 6,174 6,094 6,502 5,645 Type of issue 2 General obligation 14,100 12,394 21,088 3,461 3,571 1,550 859 1,606 1,248 1,901 1,662 3 U.S. government loans2 38 34 225 2 6 7 7 9 14 15 15 4 Revenue 34,267 35,338 57,862 7,563 6,012 5,9% 3,500 4,568 4,846 4,601 3,983 5 U.S. government loans2 57 55 461 9 14 16 26 29 35 39 39 Type of issuer 6 State 5,304 5,288 8,406 1,745 830 277 484 673 452 856 405 7 Special district and statutory authority 26,972 27,499 45,000 5,812 4,478 4,253 3,009 3,351 4,151 4,334 3,228 8 Municipalities, counties, townships, school districts 16,090 14,945 25,544 3,467 4,275 3,016 866 2,150 1,491 1,312 2,012 9 Issues for new capital, total 46,736 46,530 74,613 9,076 6,989 6,040 3,873 4,595 5,464 5,069 5,1% Use of proceeds 10 Education 4,572 4,547 6,444 681 828 881 535 714 526 442 501 11 Transportation 2,621 3,447 6,256 560 419 233 274 261 194 250 327 12 Utilities and conservation 8,149 10,037 14,254 2,592 1,513 938 268 279 1,236 593 1,085 13 Social welfare 19,958 12,729 26,605 3,158 2,069 2,119 1,920 2,135 2,321 2,551 2,004 14 Industrial aid 3,974 7,651 8,256 485 708 666 383 248 468 288 472 15 Other purposes 7,462 8,119 12,797 1,600 1,452 1,203 493 958 719 945 807 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 1983 Type of issue or issuer, 11998800 11998811 11998822 or use Mar. Apr. May June July Aug. Sept. Oct.' 1 All issues1'2 73,694 70,441 84,198 11,728 10,468 11,489 8,165 6,474 5,941 6,568 6,592 2 Bonds 53,206 45,092 53,636 5,317 6,015 7,017 2,244 2,550 2,547 2,865 3,055 Type of offering 3 Public 41,587 38,103 43,838 5,317 6,015 7,017 2,244 2,550 2,547 2,865 3,055 4 Private placement 11,619 6,989 9,798 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 5 Manufacturing 15,409 12,325 13,123 %2 1,449 2,158 706 60 200 282 367 6 Commercial and miscellaneous. 6,693 5,229 5,681 511 1,109 1,055 425 228 458 353 114 7 Transportation 3,329 2.052 1,474 0 175 150 115 148 0 0 0 8 Public utility 9,557 8,963 12,155 950 755 1,115 363 322 355 590 510 9 Communication 6,683 4,280 2,265 650 725 505 250 1,100 0 100 50 10 Real estate and financial 11,534 12,243 18,938 2,244 1,802 2,034 385 692 1,534 1,540 2,014 11 Stocks3 20,489 25,349 30,562 6,411 4,453 4,472 5,921 3,924 3,394 3,703 3,842 Type 12 Preferred 3,631 1,797 5,113 893 440 492 665 290 247 644 300 13 Common 16,858 23,552 25,449 5,518 4,013 3,980 5,256 3,634 3,147 3,059 3,542 Industry group 14 Manufacturing 4,839 5,074 5,649 1,654 1,424 1,545 2,449 1,015 1,309 %2 744 15 Commercial and miscellaneous. 5,245 7,557 7,770 1,225 1,494 922 1,358 1,415 743 997 868 16 Transportation 549 779 709 91 113 221 109 337 145 165 305 17 Public utility 6,230 5,577 7,517 674 639 264 550 72 263 200 588 18 Communication 567 1,778 2,227 1,133 37 8 138 20 236 0 36 19 Real estate and financial 3,059 4,584 6,690 1,634 746 1,512 1,317 1,065 698 1,379 1,301 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 A35 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1983 IItteemm 11998822 11998833 May June July Aug. Sept. Oct. Nov. Dec. INVESTMENT COMPANIES' 1 Sales of own shares2 45,675 84,813 7,577 8,107 6,944 6,032 5,915 6,532 6,341 6,866 2 Redemptions of own shares3 30,078 57,119 4,486 5,416 4,500 4,885 4,412 4,264 3,920 5,945 3 Net sales 15,597 27,694 3,091 2,691 2,444 1,147 1,503 2,268 2,421 921 4 Assets4 76,841 113,404 101,423 106,449 104,279 104,494 109,455 107,314 113,052 113,404 5 Cash position3 6,040 8,353 8,771 9,110 8,815 8,045 8,868 8,256 9,395 8,353 6 Other 70,801 105,051 92,652 97,339 95,464 93,449 100,587 99,058 103,657 105,051 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 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 1 Corporate profits with inventory valuation and capital consumption adjustment 175.4 192.3 164.8 192.0 162.0 166.8 168.5 161.9 181.8 218.2 248.4 2 Profits before tax 234.6 227.0 174.2 217.2 173.2 178.8 177.3 167.5 169.7 203.3 229.1 3 Profits tax liability 84.8 82.8 59.1 75.6 60.3 61.4 60.8 54.0 61.5 76.0 84.9 4 Profits after tax 149.8 144.1 115.1 141.7 112.9 117.4 116.5 113.5 108.2 127.2 144.1 5 Dividends 58.6 64.7 68.7 67.3 67.7 67.8 68.8 70.4 71.4 72.0 73.7 6 Undistributed profits 91.2 79.4 46.4 74.4 45.2 49.5 47.7 43.1 36.7 55.2 70.4 7 Inventory valuation -42.9 -23.6 -8.3 -15.7 -5.5 -8.5 -9.0 -10.3 -1.7 -10.6 -18.3 8 Capital consumption adjustment -16.3 -11.0 -1.1 -9.5 -5.6 -3.5 .1 4.7 13.9 25.6 37.6 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • February 1983 1.49 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1982 1983 AAccccoouunntt 11997777 11997788 11997799 11998800 11998811 Q3 Q4 Q1 Q2 Q3 1 Current assets 912.7 1,043.7 1,214.8 1,327.0 1,419.3 1,441.8 1,425.4 1,436.5 1,464.2 1,522.4 2 Cash 97.2 105.5 118.0 126.9 131.8 126.9 144.0 139.7 145.7 148.4 3 U.S. government securities 18.2 17.2 16.7 18.7 17.4 18.9 22.4 25.8 27.5 26.3 4 Notes and accounts receivable 330.3 388.0 459.0 506.8 530.3 534.2 511.0 517.9 534.3 562.7 5 Inventories 376.9 431.8 505.1 542.8 585.1 596.5 575.2 573.2 570.5 591.1 6 Other 90.1 101.1 116.0 131.8 154.6 165.3 172.6 179.9 186.2 193.8 7 Current liabilities 557.1 669.5 807.3 889.3 976.3 1,007.6 977.8 986.3 997.7 1,038.6 8 Notes and accounts payable 317.6 383.0 460.8 513.6 558.8 562.7 552.8 543.2 551.6 578.8 9 Other 239.6 286.5 346.5 375.7 417.5 444.9 425.0 443.1 446.1 459.9 10 Net working capital 355.5 374.3 407.5 437.8 442.9 434.2 447.6 450.2 466.5 483.7 11 MEMO: Current ratio1 1.638 1.559 1.505 1.492 1.454 1.431 1.458 1.456 1.468 1.466 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 1984 IInndduussttrryy11 11998822 11998833 11998844'' Q3 Q4 Ql Q2 Q3 Q41 Ql1 Q2> 1 Total nonfarm business 316.43 303.20 333.32 315.79 303.18 293.03 293.46 304.70 321.60 323.07 325.42 Manufacturing 2 Durable goods industries 56.44 51.45 59.87 57.14 50.51 50.74 48.48 53.06 53.52 57.18 58.09 3 Nondurable goods industries 63.23 59.74 66.11 62.32 59.72 59.12 60.31 58.06 61.45 61.81 62.86 Nonmanufacturing 4 Mining 15.45 12.00 13.48 14.63 13.41 12.03 10.91 11.93 13.14 12.25 13.68 Transportation 5 Railroad 4.38 3.93 4.50 3.94 4.35 3.35 3.64 4.07 4.68 4.38 4.68 6 Air 3.93 3.78 2.59 4.11 4.76 4.09 4.10 3.57 3.34 2.44 2.70 7 Other 3.64 3.54 3.86 3.24 3.22 3.60 3.14 3.36 4.07 3.96 4.03 Public utilities 8 Electric 33.40 35.29 35.36 34.98 35.15 33.97 34.86 35.84 36.50 32.80 32.76 9 Gas and other 8.55 7.33 8.81 8.40 7.85 7.64 6.62 6.38 8.67 9.02 9.54 10 Trade and services 86.95 88.02 96.35 87.31 84.36 82.38 85.85 91.06 92.79 96.98 95.03 11 Communication and other2 40.46 38.11 42.38 39.73 39.84 36.11 35.54 37.38 43.42 42.25 42.03 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 A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1982 1983 AAccccoouunntt 11997777 11997788 11997799 11998800 11998811 Q3 Q4 Ql Q2 Q3 ASSETS Accounts receivable, gross 1 Consumer 44.0 52.6 65.7 73.6 85.5 88.3 89.5 89.9 91.3 92.3 2 Business 55.2 63.3 70.3 72.3 80.6 82.2 81.0 82.2 84.9 86.8 3 Total 99.2 116.0 136.0 145.9 166.1 170.5 170.4 172.1 176.2 179.0 4 LESS: Reserves for unearned income and losses 12.7 15.6 20.0 23.3 28.9 30.4 30.5 29.7 30.4 30.1 5 Accounts receivable, net 86.5 100.4 116.0 122.6 137.2 140.1 139.8 142.4 145.8 148.9 6 Cash and bank deposits 2.6 3.5 1 7 Securities .9 1.3 \ 24.9' 27.5 34.2 39.1 39.7 42.8 44.3 45.0 8 All other 14.3 17.3 J 9 Total assets 104.3 122.4 140.9 150.1 171.4 179.2 179.5 185.2 190.2 193.9 LIABILITIES 10 Bank loans 5.9 6.5 8.5 13.2 15.4 16.8 18.6 16.6 16.3 17.0 11 Commercial paper 29.6 34.5 43.3 43.4 51.2 46.7 45.8 45.2 49.0 49.7 Debt 12 Short-term, n.e.c 6.2 8.1 8.2 7.5 9.6 9.9 8.7 9.8 9.6 8.7 13 Long-term, n.e.c 36.0 43.6 46.7 52.4 54.8 60.9 63.5 64.7 64.5 66.2 14 Other 11.5 12.6 14.2 14.3 17.8 20.5 18.7 22.8 24.0 24.4 15 Capital, surplus, and undivided profits 15.1 17.2 19.9 19.4 22.8 24.5 24.2 26.0 26.7 27.9 16 Total liabilities and capital 104.3 122.4 140.9 150.1 171.4 179.2 179.5 185.2 190.2 193.9 1. Beginning Q1 1979, asset items on lines 6, 7, and 8 are combined. NOTE. Components may not add to totals due to rounding. 1.52 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 NNNooovvv... 333000,,, 111999888333''' Sept. Oct. Nov. Sept. Oct. Nov. Sept. Oct. Nov. 1 Total 91,487 2,909 986 1,793 27,209 25,841 29,988 24,300 24,855 28,195 2 Retail automotive (commercial vehicles) 20,519 1,443 680 1,320 2,620 1,925 2,592 1,177 1,245 1,272 3 Wholesale automotive 13,654 397 310 662 7,461 7,124 8,516 7,064 6,814 7,854 4 Retail paper on business, industrial, and farm equipment 28,282 256 -406 -198 1,149 1,049 1,504 893 1,455 11,,770022 5 Loans on commercial accounts receivable and factored commercial accounts receivable 9,912 255 149 17 13,782 13,822 15,344 13,527 13,673 15,327 6 All other business credit 19,120 558 253 -8 2,197 1,921 2,032 1,639 1,668 2,040 1. Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • February 1983 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1983 IItteemm 11998811 11998822 11998833 June July Aug. Sept. Oct. Nov. Dec. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 90.4 94.6 92.6 93.0 97.3 94.4 100.7 95.8 98.0 93.1 2 Amount of loan (thousands of dollars) 65.3 69.8 69.4 69.2 72.3 67.3 76.5 72.5 76.7 71.9 3 Loan/price ratio (percent) 74.8 76.6 77.0 76.9 76.5 73.3 78.5 78.4 80.5 78.8 4 Maturity (years) 27.7 27.6 26.7 27.3 28.1 25.7 27.2 26.9 26.5 27.3 5 Fees and charges (percent of loan amount)2 2.67 2.95 2.40 2.43 2.54 1.96 2.45 2.33 2.54 2.62 6 Contract rate (percent per annum) 14.16 14.47 12.20 11.90 12.02 12.01 12.08 11.80 11.82 11.95 Yield (percent per annum) 7 FHLBB series5 14.74 15.12 12.66 12.36 12.50 12.38 12.54 12.25 12.34 12.45 8 HUD series4 16.52 15.79 13.43 13.37 14.00 13.90 13.60 13.52 13.48 13.41 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 16.31 15.31 13.11 12.96 14.23 13.78 13.55 13.23 13.23 13.25 10 GNMA securities6 15.29 14.68 12.26 12.09 12.54 13.01 12.73 12.42 12.51 12.49 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 58,675 66,031 74,847 74,669 74,630 75,057 75,174 75,665 76,714 78,256 12 FHA/VA-insured 39,341 39,718 37,393 37,376 37,092 36,894 36,670 36,455 36,349 36,211 13 Conventional 19,334 26,312 37,454 37,293 37,583 38,163 38,505 39,210 40,365 42,045 Mortgage transactions (during period) 14 Purchases 6,112 15,116 17,554 1,333 1,358 1,213 1,203 1,244 1,348 2,204 15 2 2 3,528 83 786 121' 464 257 0 250 Mortgage commitments1 16 Contracted (during period) 9,331 22,105 18,607 2,506 1,198 1,282 2,739 1,882 997 1,471 17 Outstanding (end of period) 3,717 7,606 5,461 5,887 5,099 5,165 6,684 7,182 6,493 5,461 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 IK Total 5,245 5,153 6,235 6,182 6,149 6,857 6,963 7,093 19 FHA/VA 2,236 1,921 982 971 964 961 947 940 20 Conventional 3,010 3,224 5,253 5,211 5,185 5,896 6,016 6,153 Mortgage transactions (during period) 21 Purchases 3,789 23,671 n a. 1,494 1,523 1,621 2,263 2,886 1,287 n a. 22 Sales 3,531 24,164 1,244 1,491 1,588 1,556 2,750 1,143 Mortgage commitments9 23 Contracted (during period) 6,974 28,187 2,358 4,671 6,367 3,283 2,598 2,093 24 Outstanding (end of period) 3,518 7,549 7,719 10,794 15,519 16,512 16,198 16,994 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associmajor institutional lender groups; compiled by the Federal Home Loan Bank ation guaranteed, mortgage-backed, fully modified pass-through securities, as- Board in cooperation with the Federal Deposit Insurance Corporation. suming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying 2. Includes all fees, commissions, discounts, and "points" paid (by the the prevailing ceiling rate. Monthly figures are unweighted averages of Monday borrower or the seller) to obtain a loan. quotations for the month. 3. Average effective interest rates on loans closed, assuming prepayment at the 7. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's Administration-insured first mortgages for immediate delivery in the private mortgage commitments and mortgage transactions include activity under mortsecondary market. Any gaps in data are due to periods of adjustment to changes in gage/securities swap programs, while the corresponding data for FNMA exclude maximum permissible contract rates. swap activity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate Debt A39 1.54 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1982 1983 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998811 11998822 11998833 Q4 Q1 Q2 Q3 Q4 1 All holders 1,583,264 1,653,633 1,820,445 1,653,633 1,678,899 1,721,507 1,773,389 1,820,445 2 1- to 4-family 1,065,294 1,104,634 1,211,809 1,104,634 1,120,241 1,145,735 1,181,076 1,211,809 3 Multifamily 136,354 140,431 151,397 140,431 141,376 144,606 146,943 151,397 4 Commercial 279,889 301,862 347,821 301,862 310,379 323,172 336,397 347,821 5 101,727 106,706 109,418 106,706 106,903 107,994 108,973 109,418 6 Major financial institutions 1,040,827 1,022,161 1,106,119 1,022,161 1,026,071 1,047,143 1,077,877 1,106,119 7 Commercial banks' 284,536 300,203 329,745 300,203 301,974 310,048 320,063 329,745 8 1- to 4-family 170,013 173,157 182,679 173,157 171,552 173,937 177,955 182,679 9 Multifamily 15,132 16,421 17,971 16,421 16,216 16,867 17,443 17,971 10 Commercial 91,026 102,219 119,862 102,219 105,721 110,346 115,575 119,862 11 Farm 8,365 8,406 9,233 8,406 8,485 8,898 9,090 9,233 12 Mutual savings banks 99,997 97,805 133,325 97,805 105,378 119,236 129,645 133,325 13 1- to 4-family 68,187 66,777 95,249 66,777 73,240 84,349 92,467 95,249 14 Multifamily 15,960 15,305 17,964 15,305 15,587 16,667 17,588 17,964 15 Commercial 15,810 15,694 20,083 15,694 16,522 18,192 19,562 20,083 16 Farm 40 29 29 29 29 28 28 29 17 Savings and loan associations 518,547 482,234 492,857 482,234 475,688 473,134 480,813 492,857 18 1- to 4-family 433,142 392,201 389,357 392,201 383,642 376,851 380,563 389,357 19 Multifamily 37,699 38,868 42,386 38,868 39,149 39,838 41,206 42,386 20 Commercial 47,706 51,165 61,114 51,165 52,897 56,445 59,044 61,114 21 Life insurance companies 137,747 141,919 150,192 141,919 143,031 144,725 147,356 150,192 22 1- to 4-family 17,201 16,743 15,503 16,743 16,388 15,860 15,534 15,503 23 Multifamily 19,283 18,847 19,201 18,847 18,825 18,778 18,857 19,201 24 Commercial 88,163 93,501 102,738 93,501 95,158 97,416 100,209 102,738 25 Farm 13,100 12,828 12,750 12,828 12,660 12,671 12,756 12,750 26 Federal and related agencies 126,094 138,185 144,980 138,185 140,028 142,094 142,224 144,980 27 Government National Mortgage Association 4,765 4,227 3,825 4,227 3,753 3,643 3,475 3,825 28 1- to 4-family 693 676 703 676 665 651 639 703 29 Multifamily 4,072 3,551 3,122 3,551 3,088 2,992 2,836 3,122 30 Farmers Home Administration 2,235 1,786 600 1,786 2,077 1,605 600 600 31 1- to 4-family 914 783 211 783 707 381 211 211 32 Multifamily 473 218 32 218 380 555 32 32 33 Commercial 506 377 113 377 337 248 113 113 34 Farm 342 408 244 408 653 421 244 244 35 Federal Housing and Veterans Administration 5,999 5,228 4,700 5,228 5,138 5,084 5,050 4,700 36 1- to 4-family 2,289 1,980 1,771 1,980 1,867 1,911 2,061 1,771 37 Multifamily 3,710 3,248 2,929 3,248 3,271 3,173 2,989 2,929 38 Federal National Mortgage Association 61,412 71,814 77,488 71,814 73,666 74,669 75,174 77,488 39 1- to 4-family 55,986 66,500 71,831 66,500 68,370 69,396 69,938 71,831 40 Multifamily 5,426 5,314 5,657 5,314 5,296 5,273 5,236 5,657 41 Federal Land Banks 46,446 50,350 51,154 50,350 50,544 50,858 51,069 51,154 42 1- to 4-family 2,788 3,068 3,007 3,068 3,059 3,030 3,008 3,007 43 Farm 43,658 47,282 48,147 47,282 47,485 47,828 48,061 48,147 44 Federal Home Loan Mortgage Corporation 5,237 4,780 7,213 4,780 4,850 6,235 6,856 7,213 45 1- to 4-family 5,181 4,733 7,162 4,733 4,795 6,119 6,799 7,162 46 Multifamily 56 47 51 47 55 116 57 51 47 Mortgage pools or trusts2 163,000 216,654 285.666 216,654 234,596 252,665 272,611 285,666 48 Government National Mortgage Association 105,790 118,940 159,237 118,940 127,939 139,276 151,597 159,237 49 1- to 4-family 103,007 115,831 155,188 115,831 124,482 135,628 147,761 155,188 50 Multifamily 2,783 3,109 4,049 3,109 3,457 3,648 3,836 4,049 51 Federal Home Loan Mortgage Corporation 19,853 42,964 58,586 42,964 48,008 50,934 54,152 58,586 5? 1- to 4-family 19,501 42,560 57,945 42,560 47,575 50,446 53,539 57,945 53 Multifamily 352 404 641 404 433 488 613 641 54 Federal National Mortgage Association3 717 14,450 24,800 14,450 18,157 20,933 23,819 24,800 55 1- to 4-family 717 14,450 24,800 14,450 18,157 20,933 23,819 24,800 56 Farmers Home Administration 36,640 40,300 43,043 40,300 40,492 41,522 43,043 43,043 57 1- to 4-family 18,378 20,005 21,083 20,005 20,263 20,728 21,083 21,083 58 Multifamily 3,426 4,344 5,042 4,344 4,344 4,343 5,042 5,042 59 Commercial 6,161 7,011 7,542 7,011 7,115 7,303 7,542 7,542 60 Farm 8,675 8,940 9,376 8,940 8,770 9,148 9,376 9,376 61 Individual and others4 253,343 276,633 283,680 276,633 278,204 279,605 280,677 283,680 6? 1- to 4-family5 167,297 185,170 185,320 185,170 185,479 185,515 185,699 185,320 63 Multifamily 27,982 30,755 32,352 30,755 31,275 31,868 31,208 32,352 64 Commercial 30,517 31,895 36,369 31,895 32,629 33,222 34,352 36,369 65 Farm 27,547 28,813 29,639 28,813 28,821 29,000 29,418 29,639 1. Includes loans held by nondeposit trust companies but not bank trust 5. Includes a new estimate of residential mortgage credit provided by individdepartments. uals. 2. Outstanding principal balances of mortgages backing securities insured or NOTE. Based on data from various institutional and governmental sources, with guaranteed by the agency indicated. some quarters estimated in part by the Federal Reserve in conjunction with the 3. Outstanding balances on FNMA's issues of securities backed by pools of Federal Home Loan Bank Board and the Department of Commerce. Separation of conventional mortgages held in trust. The program was implemented by FNMA in nonfarm mortgage debt by type of property, if not reported directly, and October 1981. interpolations and extrapolations when required, are estimated mainly by the 4. Other holders include mortgage companies, real estate investment trusts, Federal Reserve. Multifamily debt refers to loans on structures of five or more state and local credit agencies, state and local retirement funds, noninsured units. pension funds, credit unions, and U.S. agencies for which amounts are small or for which separate data are not readily available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • February 1983 1.55 CONSUMER INSTALLMENT CREDIT' Total Outstanding, and Net ChangeA Millions of dollars 1983 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998800 11998811 11998822 May June July Aug. Sept. Oct. Nov. Dec. Amounts outstanding (end of period) 1 Total 313,472 331,697 344,798 347,189 353,012 358,020 363,662 367,604 371,561 376,390 387,927 By major holder 2 Commercial banks 147,013 147,622 152,069 153,471 156,603 159,666 163,313 165,971 168,352 170,823 177,252 3 Finance companies .... 76,756 89,818 94,322 95,364 96,349 97,319 97,708 97,274 97,370 97,522 97,688 4 Credit unions 44,041 45,954 47,253 47,838 48,652 49,139 50,121 51,123 51,767 52,578 53,471 5 Retailers2 28,448 29,551 30,202 27,541 27,804 27,900 28,067 28,319 28,713 29,668 33,183 6 Savings and loans 9,911 11,598 13,891 15,842 16,207 16,369 16,615 17,130 17,624 18,080 18,568 7 Gasoline companies ... 4,468 4,403 4,063 3,943 4,159 4,356 4,457 4,338 4,243 4,157 4,131 8 Mutual savings banks.. 2,835 2,751 2,998 3,190 3,238 3,271 3,381 3,449 3,492 3,562 3,634 By major type of credit 9 Automobile 116,838 125,331 130,227 133,640 136,183 138,689 141,677 142,477 143,621 144,663 146,078 1 1 0 1 Co I m nd m i e re r c c t i a p l ap b e a r n ks... 6 3 1 5 , , 5 2 3 3 6 3 3 58 4 , , 0 3 8 7 1 5 3 58 5 , , 8 1 5 7 1 8 60,38 ( 4 3 ) 61,8 ( 70 3 ) 63,4 ( 25 3 ) 66,06 ( 5 3 ) 67,41 ( 3 3 ) 68,82 ( 8 3 ) 70,03 ( 4 3 ) 71,77 ( 8 3 ) 12 Direct loans 26,303 23,706 23,673 (3) (3) (3) (3) (3) (3) (3) (3) 13 Credit unions 21,060 21,975 22,596 22,880 23,269 23,502 23,972 24,451 24,759 25,147 25,574 14 Finance companies .. 34,242 45,275 48,780 50,376 51,044 51,762 51,640 50,613 50,034 49,482 48,726 15 Revolving 58,352 62,819 67,184 63,459 64,899 65,856 66,913 67,904 68,921 70,742 77,467 16 Commercial banks... 29,765 32,880 36,688 35,536 36,515 37,173 37,973 38,848 39,576 40,573 43,965 17 Retailers 24,119 25,536 26,433 23,980 24,225 24,327 24,483 24,718 25,102 26,012 29,371 18 Gasoline companies . 4,468 4,403 4,063 3,943 4,159 4,356 4,457 4,338 4,243 4,157 4,131 19 Mobile home 17,322 18,373 18,988 19,448 19,647 19,750 19,882 20,087 20,256 20,366 20,471 20 Commercial banks... 10,371 10,187 9,684 9,581 9,651 9,717 9,741 9,766 9,767 9,761 9,732 21 Finance companies .. 3,745 4,494 4,965 4,976 4,995 4,982 5,012 5,038 5,062 5,043 5,033 22 Savings and loans ... 2,737 3,203 3,836 4,384 4,485 4,530 4,598 4,741 4,878 5,004 5,139 23 Credit unions 469 489 503 507 516 521 531 542 549 558 567 24 Other 120,960 125,174 128,399 130,642 132,283 133,725 135,190 137,136 138,763 140,619 143,911 25 Commercial banks... 45,341 46,474 46,846 47,970 48,567 49,351 49,534 49,944 50,181 50,455 51,777 26 Finance companies .. 38,769 40,049 40,577 40,012 40,310 40,575 41,056 41,623 42,274 42,997 43,929 27 Credit unions 22,512 23,490 24,154 24,451 24,867 25,116 25,618 26,130 26,459 26,873 27,330 28 Retailers 4,329 4,015 3,769 3,561 3,579 3,573 3,584 3,601 3,611 3,656 3,812 29 Savings and loans ... 7,174 8,395 10,055 11,458 11,722 11,839 12,017 12,389 12,746 13,076 13,429 30 Mutual savings banks 2,835 2,751 2,998 3,190 3,238 3,271 3,381 3,449 3,492 3,562 3,634 Net change (during period)4 31 Total 1,448 18,217 2,418 2,696 4,406 4,840 3,388 2,375 4,885 4,671 6,614 By major holder 32 Commercial banks -7,163 607 1,111 1,540 2,422 2,766 2,317 1,829 2,629 2,749 4,688 33 Finance companies .... 8,438 13,062 1,024 362 470 909 239 -721 620 205 -24 34 Credit unions -2,475 1,913 197 288 573 662 510 646 942 912 731 35 Retailers2 329 1,103 -91 169 368 272 5 245 150 251 659 36 Savings and loans 1,485 1,682 201 374 456 188 147 507 376 438 513 37 Gasoline companies ... 739 -65 -51 -51 77 5 65 -167 131 58 -31 38 Mutual savings banks .. 95 -85 27 14 40 38 105 36 37 58 78 By major type of credit 39 Automobile 477 8,495 1,491 1,313 1,973 2,421 2,521 285 1,772 1,238 2,019 4 4 4 0 1 2 Co D I m n i d m re i e r c e r t c c t l i o a p l a a n b p s e a r n ks... - - - 5 3 2 , , , 1 8 7 0 3 2 4 0 6 - - 3 2 - , , 8 4 5 5 5 9 8 5 7 4 5 2 2 9 9 7 8 1,0 ( ( 66 3 3 ) ) 1,2 ( ( 84 3 3 ) ) 1,4 ( ( 82 3 3 ) ) 2,35 ( ( 9 3 3 ) ) 1,2 ( ( 43 3 3 ) ) 1,4 ( ( 9 ? 9 3 ) ) 1,3 ( ( 02 3 3 ) ) 2,13 ( ( 1 3 3 ) ) 43 Credit unions -1,184 914 89 137 275 328 232 309 451 436 349 44 Finance companies .. 7,491 11,033 875 110 414 611 -70 -1,267 -178 -500 -461 45 Revolving 1,415 4,467 501 514 1,210 821 313 479 1,145 1,300 1,723 46 Commercial banks... -97 3,115 650 373 806 556 217 404 856 999 1,148 47 Retailers 773 1,417 -98 192 327 260 31 242 158 243 606 48 Gasoline companies . 739 -65 -51 -51 77 5 65 -167 131 58 -31 49 Mobile home 483 1,049 -37 17 151 141 70 150 102 107 136 50 Commercial banks... -276 -186 -74 -86 28 68 -14 8 -10 0 18 51 Finance companies .. 355 749 -15 1 -6 7 15 1 -16 -14 -25 52 Savings and loans ... 430 466 49 98 123 59 64 134 118 111 135 53 Credit unions -25 20 3 4 6 7 5 7 10 10 8 54 Other -927 4,206 463 852 1,072 1,457 484 1,461 1,866 2,026 2,736 55 Commercial banks... -960 1,133 8 187 304 660 -245 174 284 448 1,391 56 Finance companies .. 592 1,280 164 251 62 291 294 545 814 719 462 57 Credit unions -1,266 975 105 147 292 327 273 330 481 466 374 58 Retailers -444 -314 7 -23 41 12 -26 3 -8 8 53 59 Savings and loans ... 1,056 1,217 152 276 333 129 83 373 258 327 378 60 Mutual savings banks 95 -85 27 14 40 38 105 36 37 58 78 • These data have been revised from December 1980 through February 1983. 4. For 1982 and earlier, net change equals extensions, seasonally adjusted less 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, and scheduled to be repaid (or with the option of repayment) in two or more NOTE: Total consumer noninstallment credit outstanding—credit scheduled to installments. be repaid in a lump sum, including single-payment loans, charge accounts, and 2. Includes auto dealers and excludes 30-day charge credit held by travel and service credit—amounted to, not seasonally adjusted, $80.7 billion at the end of entertainment companies. 1981, $85.9 billion at the end of 1982, and $96.9 billion at the end of 1983. 3. Not reported after December 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Debt A41 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT Percent unless noted otherwise 1983 IItteemm 11998800 11998811 11998822 June July Aug. Sept. Oct. Nov. Dec. INTEREST RATES Commercial banks' 1 14.30 16.54 16.83 13.50 13.46 ? 15.47 18.09 18.65 16.28 16.39 3 14.99 17.45 18.05 15.58 15.47 4 1177..3311 1177..7788 1188..5511 1188..7755 1188..7755 Auto finance companies 5 New car 14.82 16.17 16.15 11.57 11.84 12.77 13.62 13.54 13.50 13.92 6 Used car 19.10 20.00 20.75 18.58 18.28 18.25 18.21 18.15 18.16 18.06 OTHER TERMS3 Maturity (months) 7 New car 45.0 45.4 46.0 45.6 45.7 45.9 46.2 46.2 46.3 46.3 8 Used car 34.8 35.8 34.0 38.0 38.0 38.0 38.0 38.0 38.0 37.9 Loan-to-value ratio 9 New car 87.6 86.1 85.3 87 87 87 87 86 86 87 10 Used car 94.2 91.8 90.3 92 93 93 93 93 93 92 Amount financed (dollars) 11 New car 6,322 7,339 8,178 8,512 8,642 8,724 8,792 8,982 9,118 9,167 12 Used car 3,810 4,343 4,746 5,039 5,052 5,103 5,144 5,213 5,316 5,401 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

A42 Domestic Nonfinancial Statistics • February 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 1983 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11997777 11997788 11997799 11998800 11998811 11998822 H2 HI H2 HI H2 HI Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .... 319.4 369.8 386.0 343.2 377.2 395.3 371.3 392.4 362.0 356.8 434.8 495.2 By sector and instrument 2 U.S. government 56.8 53.7 37.4 79.2 87.4 161.3 92.5 87.8 86.9 106.9 215.5 230.2 3 Treasury securities 57.6 55.1 38.8 79.8 87.8 162.1 93.1 88.3 87.3 108.3 215.9 230.2 4 Agency issues and mortgages -.9 -1.4 -1.4 -.6 -.5 -.9 -.6 -.5 -.4 -1.4 -.4 -.1 5 Private domestic nonfinancial sectors 262.6 316.2 348.6 264.0 289.8 234.1 278.7 304.6 275.1 249.9 219.3 265.0 6 Debt capital instruments 171.1 199.7 211.2 192.0 158.4 152.4 189.9 179.3 137.5 139.7 166.1 223.7 7 Tax-exempt obligations 21.9 28.4 30.3 30.3 21.9 50.5 31.9 21.1 22.6 41.7 59.4 60.9 8 Corporate bonds 22.9 21.1 17.3 26.7 22.1 18.8 20.7 26.1 18.0 10.8 26.9 20.9 9 Mortgages 126.3 150.2 163.6 135.1 114.5 83.0 137.3 132.0 96.9 87.3 79.9 142.0 10 Home mortgages 94.0 112.2 120.0 96.7 75.9 56.6 99.2 92.6 59.2 55.8 58.6 106.7 11 Multifamily residential 7.1 9.2 7.8 8.8 4.3 1.3 9.6 4.9 3.7 4.2 -1.7 7.8 12 Commercial 18.1 21.7 23.9 20.2 24.6 20.0 20.9 25.2 23.9 21.4 18.6 27.2 13 Farm 7.1 7.2 11.8 9.3 9.7 5.2 7.6 9.3 10.1 5.9 4.4 .2 14 Other debt instruments 91.6 116.5 137.5 72.0 131.5 81.6 88.8 125.3 137.6 110.1 53.2 41.3 15 Consumer credit 40.2 48.8 45.4 4.9 24.1 18.3 13.0 28.9 19.3 19.3 17.4 38.8 16 Bank loans n.e.c 27.1 37.4 51.2 36.7 54.7 54.4 59.7 45.5 63.9 70.1 38.8 3.8 17 Open market paper 2.9 5.2 11.1 5.7 19.2 -3.3 -9.2 12.0 26.3 6.5 -13.0 -16.3 18 Other 21.3 25.1 29.7 24.8 33.4 12.2 25.3 38.9 28.0 14.3 10.2 15.0 19 By borrowing sector 262.6 316.2 348.6 264.0 289.8 234.1 278.7 304.6 275.1 249.9 219.3 265.0 20 State and local governments 15.4 19.1 20.5 20.3 9.7 36.3 21.7 9.1 10.2 29.3 43.3 51.3 21 Households 137.3 169.4 176.4 117.5 120.6 86.3 121.3 139.8 101.3 87.6 86.1 139.8 22 Farm 12.3 14.6 21.4 14.4 16.3 9.0 12.8 20.1 12.5 9.0 9.1 -1.1 23 Nonfarm noncorporate 28.0 32.4 34.4 33.7 39.6 29.8 40.6 39.8 39.5 34.6 24.9 40.0 24 Corporate 69.7 80.6 96.0 78.1 103.7 72.7 82.3 95.8 111.5 89.3 56.0 34.9 25 Foreign net borrowing in United States 13.5 33.8 20.2 27.2 27.2 15.7 26.7 31.9 22.5 12.8 18.6 18.7 26 Bonds 5.1 4.2 3.9 .8 5.4 6.6 -.4 3.3 7.6 2.4 10.8 4.4 27 Bank loans n.e.c 3.1 19.1 2.3 11.5 3.7 -6.2 18.5 3.1 4.2 -5.1 -7.2 14.9 28 Open market paper 2.4 6.6 11.2 10.1 13.9 10.7 4.5 20.6 7.1 12.5 9.0 -4.6 29 U.S. government loans 3.0 3.9 2.9 4.7 4.2 4.5 4.0 4.9 3.5 3.0 6.0 4.0 30 Total domestic plus foreign 332.9 403.6 406.2 370.4 404.4 411.0 397.9 424.4 384.5 369.6 453.4 513.9 Financial sectors 31 Total net borrowing by financial sectors 45.8 74.6 82.5 63.3 85.4 69.3 64.0 87.4 83.4 89.8 48.7 70.8 By instrument 32 U.S. government related 22.0 37.1 47.9 44.8 47.4 64.9 40.4 45.2 49.6 61.3 68.4 67.9 33 Sponsored credit agency securities 7.0 23.1 24.3 24.4 30.5 14.9 20.8 28.9 32.1 23.6 6.3 -2.5 34 Mortgage pool securities 16.1 13.6 23.1 19.2 15.0 49.5 18.6 14.9 15.1 37.0 62.1 70.4 3S -1.1 .4 .6 1.2 1.9 .4 1.1 1.4 2.4 .8 36 Private financial sectors 23.8 37.5 34.6 18.5 38.0 4.4 23.6 42.2 33.8 28.5 -19.7 2.9 37 Corporate bonds 10.1 7.5 7.8 7.1 -.8 2.3 3.1 -.3 -1.4 -1.2 5.8 12.2 38 Mortgages * .1 * -.1 -.5 .1 -.2 -.8 -.2 .1 .1 .1 39 Bank loans n.e.c -.3 2.8 -.4 -.4 2.2 3.2 -.4 3.2 1.1 5.2 1.2 -5.1 40 Open market paper 9.6 14.6 18.0 4.8 20.9 -2.0 10.8 23.5 18.4 14.0 -18.0 8.6 41 Loans from Federal Home Loan Banks 4.3 12.5 9.2 7.1 16.2 .8 10.3 16.7 15.8 10.4 -8.8 -12.9 By sector 42 Sponsored credit agencies 5.9 23.5 24.8 25.6 32.4 15.3 21.8 30.3 34.5 24.4 6.3 -2.5 43 Mortgage pools 16.1 13.6 23.1 19.2 15.0 49.5 18.6 14.9 15.1 37.0 62.1 70.4 44 Private financial sectors 23.8 37.5 34.6 18.5 38.0 4.4 23.6 42.2 33.8 28.5 -19.7 2.9 45 Commercial banks 1.1 1.3 1.6 .5 .4 1.2 .3 .2 .5 .7 1.7 .8 46 Bank affiliates 2.0 7.2 6.5 6.9 8.3 1.9 8.0 6.9 9.7 9.7 -5.8 6.1 47 Savings and loan associations 6.9 13.5 12.6 7.4 15.5 -3.0 12.3 16.8 14.1 9.1 -15.2 -10.8 48 Finance companies 16.9 18.1 16.6 6.3 14.1 4.9 5.8 18.5 9.7 9.5 .2 7.5 49 REITs -2.5 -1.4 -1.3 -2.2 .2 .1 -2.5 .2 .2 .1 .1 .1 All sectors 50 Total net borrowing 378.7 478.2 488.7 433.7 489.8 480.3 462.0 511.8 467.9 459.4 502.1 584.7 51 U.S. government securities 79.9 90.5 84.8 122.9 133.0 225.9 132.0 131.8 134.3 167.6 284.0 298.2 52 State and local obligations 21.9 28.4 30.3 30.3 21.9 50.5 31.9 21.1 22.6 41.7 59.4 60.9 53 Corporate and foreign bonds 38.0 32.8 29.0 34.6 26.7 27.7 23.5 29.1 24.2 12.0 43.5 37.5 54 Mortgages 126.2 150.2 163.5 134.9 113.9 83.0 137.0 131.1 96.6 87.3 79.8 142.0 55 Consumer credit 40.2 48.8 45.4 4.9 24.1 18.3 13.0 28.9 19.3 19.3 17.4 38.8 56 Bank loans n.e.c 29.9 59.3 53.0 47.8 60.6 51.4 77.8 51.8 69.3 70.2 32.8 13.6 57 Open market paper 15.0 26.4 40.3 20.6 54.0 5.4 6.1 56.1 51.9 33.0 -22.1 -12.3 58 Other loans 27.5 41.9 42.4 37.8 55.8 17.9 40.7 61.8 49.7 28.4 7.4 6.1 External corporate equity funds raised in United States 59 Total new share issues 6.5 1.9 -3.8 22.2 -3.7 35.4 28.0 10.2 -17.7 23.7 47.0 87.1 60 Mutual funds .9 -.1 .1 5.2 6.8 18.6 4.6 8.1 5.6 13.2 24.0 38.8 61 All other 5.6 1.9 -3.9 17.1 -10.6 16.8 23.3 2.1 -23.2 10.6 23.0 48.3 62 Nonfinancial corporations 2.7 -.1 -7.8 12.9 -11.5 11.4 18.8 .9 -23.8 7.0 15.8 38.2 63 Financial corporations 2.5 2.5 3.2 2.1 .9 4.1 2.3 .5 1.2 3.8 4.4 4.4 64 Foreign shares purchased in United States .4 -.5 .8 2.1 * 1.3 2.2 .7 -.7 -.2 2.9 5.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 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 1983 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997777 11997788 11997799 11998800 11998811 11998822 H2 HI H2 HI H2 HI 1 Total funds advanced in credit markets to domestic nonfinancial sectors 319.4 369.8 386.0 343.2 377.2 395.3 371.3 392.4 362.0 335566..88 443344..88 449955..22 By public agencies and foreign ? Total net advances 79.3 102.3 75.2 97.0 97.4 109.3 77.2 113.8 81.0 107.9 110.8 127.5 3 U.S. government securities 34.9 36.1 -6.3 15.7 17.2 17.9 -.8 31.2 3.1 17.7 18.2 52.9 4 Residential mortgages 20.0 25.7 35.8 31.7 23.4 61.1 28.2 21.9 25.0 48.1 74.0 80.7 5 FHLB advances to savings and loans 4.3 12.5 9.2 7.1 16.2 .8 10.3 16.7 15.8 10.4 -8.8 -12.9 6 Other loans and securities 20.2 28.0 36.5 42.4 40.6 29.5 39.4 44.1 37.1 31.7 27.4 6.8 Total advanced, by sector 7 U.S. government 10.0 17.1 19.0 23.7 24.1 16.7 22.2 27.9 20.3 1144..22 1199..11 8.2 8 Sponsored credit agencies 22.5 40.3 53.0 45.6 48.2 65.3 44.0 47.2 49.2 62.5 6688..11 69.2 9 Monetary authorities 7.1 7.0 7.7 4.5 9.2 9.8 -10.3 2.4 16.0 .1 1199..55 12.7 10 Foreign 39.6 38.0 -4.6 23.2 16.0 17.6 21.3 36.4 -4.4 31.1 4.1 37.5 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 22.0 37.1 47.9 44.8 4477..44 6644..99 4400..44 4455..22 4499..66 6611..33 6688..44 6677..99 12 Foreign .'. 13.5 33.8 20.2 27.2 27.2 15.7 26.7 31.9 22.5 12.8 18.6 18.7 Private domestic funds advanced 13 275.6 338.4 379.0 318.2 354.4 366.6 361.2 355.7 335533..11 332233..00 441111..00 445544..33 14 U.S. government securities 45.1 54.3 91.1 107.2 115.9 207.9 132.7 100.6 131.1 149.9 265.8 245.3 IS State and local obligations 21.9 28.4 30.3 30.3 21.9 50.5 31.9 21.1 22.6 41.7 59.4 60.9 16 Corporate and foreign bonds 24.1 23.4 18.5 19.3 19.4 15.4 11.8 20.9 17.9 -1.7 32.4 23.4 17 Residential mortgages 81.0 95.6 91.9 73.7 56.7 -3.3 80.5 75.5 37.9 11.7 -17.2 33.7 18 Other mortgages and loans 107.8 149.3 156.3 94.8 156.9 96.8 114.5 154.3 159.5 131.7 62.0 78.1 19 LESS: Federal Home Loan Bank advances 4.3 12.5 9.2 7.1 16.2 .8 10.3 16.7 15.8 10.4 -8.8 -12.9 Private financial intermediation ?() Credit market funds advanced by private financial institutions 258.8 302.3 294.7 262.3 305.2 271.2 282.8 317.3 293.1 272.8 268.9 351.1 71 Commercial banking 87.8 129.0 123.1 101.1 103.6 108.5 146.5 99.6 107.6 109.7 107.1 127.4 7? Savings institutions 78.5 72.8 56.7 54.9 27.2 30.6 72.9 41.5 12.8 29.5 31.0 128.5 73 Insurance and pension funds 69.0 75.0 66.4 74.4 79.3 94.2 65.6 75.3 83.4 95.4 93.0 107.4 24 Other finance 23.6 25.5 48.5 32.0 95.2 37.9 -2.2 101.0 89.4 38.1 37.8 -12.2 ?5 258.8 302.3 294.7 262.3 305.2 271.2 282.8 317.3 293.1 272.8 268.9 351.1 ?6 Private domestic deposits and RPs 139.0 141.0 142.0 168.6 211.7 173.4 174.2 213.8 209.6 163.4 182.7 210.2 27 Credit market borrowing 23.8 37.5 34.6 18.5 38.0 4.4 23.6 42.2 33.8 28.5 -19.7 2.9 ?8 Other sources 96.1 123.8 118.1 75.2 55.5 93.5 85.0 61.3 49.8 80.8 105.9 138.0 79 Foreign funds 1.4 6.5 27.6 -21.7 -8.7 -27.7 -15.3 -8.7 -8.7 -30.1 -25.4 -17.5 30 Treasury balances 4.3 6.8 .4 -2.6 -1.1 6.1 1.0 6.5 -8.7 -2.1 14.1 7.4 31 Insurance and pension reserves 51.4 62.2 49.1 65.4 73.2 85.9 61.3 62.7 83.8 85.4 86.4 89.3 32 Other, net 39.0 48.4 41.0 34.0 -7.9 29.2 38.0 .8 -16.7 27.6 30.7 58.8 Private domestic nonfinancial investors 33 Direct lending in credit markets 40.6 73.6 118.9 74.4 87.2 99.7 102.0 80.6 93.8 7788..77 112222..44 110066..11 34 U.S. government securities 24.6 36.3 61.4 38.3 47.4 58.1 58.6 37.2 57.6 43.1 72.7 75.0 35 State and local obligations -.8 3.6 9.9 7.0 9.6 30.9 9.2 9.5 9.7 28.4 33.4 47.1 36 Corporate and foreign bonds -3.2 -1.8 5.7 .6 -8.9 -9.4 -.2 -5.5 -12.4 -26.3 7.4 -12.7 37 Open market paper 9.6 15.6 12.1 -4.3 3.7 -2.0 1.4 -3.3 10.7 6.7 -10.7 -10.2 38 Other 10.4 19.9 29.8 32.9 35.4 22.1 32.9 42.7 28.2 26.8 19.6 6.9 39 Deposits and currency 148.6 152.2 151.4 180.0 221.7 179.4 185.5 222.6 220.7 166.2 192.1 231.9 40 8.3 9.3 7.9 10.3 9.5 8.4 9.7 8.0 11.0 4.5 12.3 14.2 41 Checkable deposits 17.2 16.2 18.7 5.0 18.1 13.0 9.9 29.8 6.5 6.7 19.1 55.6 4? Small time and savings accounts 93.6 65.9 59.2 83.1 47.2 137.0 90.2 30.7 63.6 95.1 178.6 295.0 43 Money market fund shares .2 6.9 34.4 29.2 107.5 24.7 -3.4 104.1 110.8 39.4 10.0 -84.0 44 Large time deposits 25.7 44.4 23.0 44.7 36.4 -5.2 69.8 41.6 31.2 21.2 -31.6 -67.5 45 Security RPs 2.2 7.5 6.6 6.5 2.5 3.8 7.8 7.7 -2.6 1.1 6.6 11.0 46 Deposits in foreign countries 1.3 2.0 1.5 1.1 .5 -2.4 1.7 .8 .2 -1.8 -2.9 7.4 47 Total of credit market instruments, deposits and currency 189.1 225.8 270.3 254.4 308.9 279.1 287.5 303.3 314.5 244.9 314.5 337.9 48 Public holdings as percent of total 23.8 25.3 18.5 26.2 24.1 26.6 19.4 26.8 21.1 29.2 24.4 24.8 49 Private financial intermediation (in percent) 93.9 89.3 77.7 82.4 86.1 74.0 78.3 89.2 83.0 84.4 65.4 77.3 50 Total foreign funds 41.0 44.6 23.0 1.5 7.3 -10.2 6.0 27.8 -13.1 1.0 -21.3 20.0 MEMO: Corporate equities not included above 51 Total net issues 6.5 1.9 -3.8 22.2 -3.7 35.4 28.0 10.2 -17.7 23.7 47.0 87.1 5? Mutual fund shares .9 -.1 .1 5.2 6.8 18.6 4.6 8.1 5.6 13.2 24.0 38.8 53 Other equities 5.6 1.9 -3.9 17.1 -10.6 16.8 23.3 2.1 -23.2 10.6 23.0 48.3 54 Acquisitions by financial institutions 7.4 4.5 9.7 16.8 22.1 27.9 22.3 25.3 18.9 19.3 36.4 62.4 55 Other net purchases -.9 -2.7 -13.5 5.4 -25.9 7.5 5.7 -15.1 -36.6 4.4 10.6 24.7 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

A44 Domestic Nonfinancial Statistics • February 1983 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1983 1984 MMeeaassuurree 11998811 11998822 11998833 May June July Aug. Sept. Oct.' Nov.' Dec. Jan. 1 Industrial production1 151.0 138.6 147.6 144.4 146.4 149.7 151.8 153.8 155.0 155.5 156.4 158.1 Market groupings 2 Products, total 150.6 141.8 149.2 146.2 148.1 150.9 153.2 154.9 155.6 156.0 157.1 158.8 3 Final, total 149.5 141.5 147.1 144.5 146.4 149.0 150.7 152.1 152.7 153.4 154.9 156.6 4 Consumer goods 147.9 142.6 151.8 150.4 152.4 154.8 156.3 157.3 156.9 156.5 158.0 159.6 5 Equipment 151.5 139.8 140.7 136.5 138.2 141.0 143.1 144.9 147.0 149.1 150.7 152.6 6 Intermediate 154.4 143.3 156.6 152.2 154.5 158.1 162.2 165.4 166.5 165.7 165.1 167.0 7 Materials 151.6 133.7 145.3 141.7 143.7 147.8 149.7 152.2 154.0 154.7 155.5 157.0 Industry groupings 8 Manufacturing 150.4 137.6 148.3 145.1 147.4 150.6 152.8 155.1 156.2 156.5 157.0 159.0 Capacity utilization (percent)12 9 Manufacturing 79.4 71.1 75.3 73.8 74.9 76.4 77.3 78.4 78.9 78.9 79.0 79.9 10 Industrial materials industries 80.7 70.1 75.2 73.5 74.4 76.5 77.4 78.6 79.5 79.8 80.0 80.8 11 Construction contracts (1977 = 100)3 111.0 111.0 138.0 148.0 151.0 137.0 146.0 143.0 139.0 145.0 134.0 n.a. 12 Nonagricultural employment, total4 138.5 136.2 136.8 135.9 136.5 137.0 136.4 138.1 138.4 138.8 139.2 139.6 13 Goods-producing, total 109.4 102.6 101.5 100.2 100.9 101.8 102.2 102.7 103.7 104.3 104.7 105.6 14 Manufacturing, total 103.7 96.9 96.0 95.1 95.6 96.3 96.6 97.0 98.0 98.6 99.1 99.6 15 Manufacturing, production-worker ... 98.0 89.4 88.7 87.6 88.2 89.2 89.5 89.9 91.2 91.9 92.4 93.2 16 Service-producing 154.4 154.7 156.1 155.5 156.1 156.3 155.1 157.5 157.5 157.8 158.1 158.3 17 Personal income, total 386.5 409.3 453.3 431.6 433.7 436.1 437.5 441.5 446.5 449.7 453.5 n.a. 18 Wages and salary disbursements 349.7 367.2 389.8 386.9 389.0 391.9 393.6 396.2 400.6 401.6 403.9 n.a. 19 Manufacturing 287.3 286.2 300.4 296.4 299.2 302.6 304.6 308.2 310.2 312.7 313.6 n.a. 20 Disposable personal income5 373.7 397.3 426.3 420.5 422.0 429.0 430.1 434.1 438.9 442.2 446.0 n.a. 21 Retail sales" 330.6 326.0 376.1 378.9 380.3 373.7 379.1' 385.3 389.8 390.3 399.0 Prices7 22 Consumer 272.4 289.1 298.4 297.1 298.1 299.3 300.3 301.8 302.6 303.1 303.5 23 Producer finished goods 269.8 280.7 285.2 284.2' 285.0 285.7 286.1' 285.1 287.9 286.8 287.1 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 7. 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 1983 1983 1983 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Output (1967 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Total industry 138.5 144.5 151.8 155.6 194.6 195.5 196.4 197.3 71.2 73.9 77.3 78.9 2 Mining 116.7 112.3 116.1 121.2 165.2 165.3 165.4 165.5 70.6 67.9 70.2 7733..33 3 Utilities 163.6 169.6 178.2 178.7 208.5 209.8 211.1 212.4 78.5 80.8 84.4 8844..11 4 Manufacturing 138.4 145.2 152.8 156.6 195.7 196.6 197.5 198.4 70.7 73.8 77.4 78.9 5 Primary processing 137.0 145.2 152.8 156.9 194.3 194.8 195.3 195.8 70.5 74.6 78.3 80.1 6 Advanced processing 139.7 145.1 152.8 156.0 196.5 197.6 198.6 199.7 71.1 73.5 76.9 78.1 7 Materials 134.8 141.7 149.9 192.3 192.9 193.4 194.0 70.1 73.5 77.5 79.8 8 Durable goods 125.2 134.7 144.2 1502 195.2 195.6 196.0 196.5 64.2 68.9 73.6 76.5 9 Metal materials 78.6 84.9 89.3 93.9 140.2 139.9 139.8 139.6 56.1 60.7 63.9 67.3 10 Nondurable goods 163.7 171.7 179.1 185.3 217.8 218.8 219.6 220.6 75.2 78.5 81.5' 84.0 11 Textile, paper, and chemical 169.3 179.6 188.0 195.5 229.4 230.7 231.6 232.7 73.8 77.9 81.2 84.0 12 Paper 149.9 153.4 162.8 168.5 165.3 166.1 166.9 167.7 90.7 92.3 97.5 100.5 13 Chemical 204.7 219.4 227.8 238.9 294.8 296.6 298.3 300.1 69.4 74.0 76.4 79.6 14 Energy materials 122.2 121.5 127.4 127.7 153.9 154.3 154.7 155.3 79.5 78.7 82.3 82.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A45 2.11 Continued Previous cycle1 Latest cycle2 1983 1983 1984 High Low High Low Jan. May. June July Aug. Sept. Oct/ Nov/ Dec/ Jan. Capacity utilization rate (percent) 15 Total industry 88.4 71.1 87.3 76.5 70.7 73.9 74.8 76.3 77.3 78.2 78.7 78.8 79.2 79.9 16 Mining 91.8 86.0 88.5 84.0 73.8 68.2 68.1 69.5 70.2 70.8 71.5 73.1 75.2 76.2 17 Utilities 94.9 82.0 86.7 83.8 78.4 80.9 80.8 83.5 85.0 84.8 83.3 83.0 86.0 83.9 18 Manufacturing 87.9 69.0 87.5 75.5 70.0 73.8 74.9 76.4 77.3 78.4 78.9 78.9 79.0 79.9 19 Primary processing 93.7 68.2 91.4 72.6 68.6 74.6 75.7 77.1 78.1 79.7 80.4 80.1 79.8 80.8 20 Advanced processing .... 85.5 69.4 85.9 77.0 70.9 73.4 74.4 76.0 76.9 77.8 77.9 78.1 78.5 79.4 21 Materials 92.6 69.3 88.9 74.2 68.7 73.5 74.4 76.5 77.4 78.6 79.5 79.8 80.0 80.8 22 Durable goods 91.4 63.5 88.4 68.4 62.3 68.9 70.0 72.1 73.6 75.2 76.1 76.6 76.8 78.0 23 Metal materials 97.8 68.0 95.4 59.4 53.3 61.0 61.2 62.3 64.0 65.5 68.0 67.0 66.8 68.5 24 Nondurable goods 94.4 67.4 91.7 77.5 73.4 78.7 79.6 80.7 81.1 82.9 84.1 84.1 83.7 83.9 25 Textile, paper, and chemical 95.1 65.4 92.3 75.5 71.4 78.1 79.2 80.4 80.5 82.6 84.1 84.1 83.7 83.8 26 Paper 99.4 72.4 97.9 89.8 90.9 92.9 93.1 96.7 96.9 99.0 99.4 101.6 100.6 100.4 27 Chemical 95.5 64.2 91.3 70.7 66.4 74.0 75.3 75.9 75.5 77.8 79.7 79.5 79.5 79.5 28 Energy materials 94.5 84.4 88.7 84.4 80.1 78.5 78.8 82.6 82.8 81.6 81.4 81.7 83.6 83.5 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. 1983 1984 CCaatteeggoorryy 11998800 11998811 11998822 June July Aug. Sept. Oct. Nov/ Dec/ Jan. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 169,847 172,272 174,451 176,320 176,498 176,648 176,811 176,990 177,151 177,325 177,733 2 Labor force (including Armed Forces)1 109,042 110,812 112,384 114,127 114,017 114,325 114,438 114,077 114,235 114,340 114,415 3 Civilian labor force 106,940 108,670 110,204 111,905 111,825 112,117 112,229 111,866 112,035 112,136 112,215 Employment 4 Nonagricultural industries2 95,938 97,030 96,125 97,264 97,726 98,035 98,568 98,730 99,349 99,585 99,918 5 Agriculture 3,364 3,368 3,401 3,479 3,499 3,449 3,308 3,240 3,257 3,356 3,271 Unemployment 6 Number 7,637 8,273 10,678 11,162 10,600 10,633 10,353 9,896 9,429 9,195 9,026 7 Rate (percent of civilian labor force) ... 7.1 7.6 9.7 10.0 9.5 9.5 9.3 8.8 8.4 8.2 8.0 8 Not in labor force 60,805 61,460 62,067 62,220 62,481 62,323 62,373 62,913 62,916 62,985 63,318 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 90,406 91,156 89,596 89,844 90,152 89,748 90,851 91,084' 91,355 91,583 91,870 10 Manufacturing 20,285 20,170 18,853 18,582 18,733 18,793 18,871 19,064 19,172 19,275 19,375 11 Mining 1,027 1,132 1,122 1,003 1,017 1,023 1,026 1,044 1,045 1,046 1,043 12 Contract construction 4,346 4,176 3,912 3,933 3,974 4,014 4,038 4,060 4,094 4,091 4,194 13 Transportation and public utilities 5,146 5,157 5,057 4,992 4,984 4,341 5,031 5,019 5,019 5,005 5,031 14 20,310 20,551 20,547 20,494 20,529 20,580 20,612 20,666 20,718 20,773 20,837 15 Finance 5,160 5,301 5,350 5,451 5,465 5,488 5,499 5,503 5,515 5,524 5,540 16 Service 17,890 20,547 20,401 19,668 19,770 19,835 19,913 19,956 20,016 20,101 20,143 17 Government 16,241 16,024 15,784 15,721 15,680 15,674 15,861 15,775 15,776 15,768 15,707 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

A46 Domestic Nonfinancial Statistics • February 1983 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted 1983 Grouping por- avg. tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.P Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 147.6 137.4 138.1 140.0 142.6 144.4 146.4 149.7 151.8 153.8 155.0 155.5 156.4 2 Products 60.71 149.2 140.9 140.3 141.6 144.5 146.2 148.1 150.9 153.2 154.9 155.6 156.0 157.1 3 Final products 47.82 147.1 140.1 138.9 139.9 142.8 144.5 146.4 149.0 150.7 152.1 152.7 153.4 154.9 4 Consumer goods 27.68 151.8 143.6 143.4 144.3 147.7 150.4 152.4 154.8 156.3 157.4 156.9 156.5 158.0 5 Equipment 20.14 140.7 135.3 132.7 133.8 136.2 136.5 138.2 141.0 143.1 144.9 147.0 149.1 150.7 6 Intermediate products 12.89 156.6 143.7 145.3 147.8 150.8 152.2 154.5 158.1 162.2 165.3 166.5 165.7 165.1 1 Materials 39.29 145.3 132.0 134.9 137.6 139.7 141.7 143.7 147.8 149.7 152.3 154.0 154.7 155.5 Consumer goods 8 Durable consumer goods 7.89 147.5 131.6 134.4 136.3 140.5 145.5 149.2 152.9 154.2 157.4 156.7 155.9 158.3 9 Automotive products 2.83 158.2 136.2 144.3 142.6 144.9 152.2 160.0 167.0 168.1 172.9 171.3 171.4 177.7 10 Autos and utility vehicles 2.03 134.0 107.0 120.8 116.4 117.8 124.9 135.4 145.4 147.0 153.1 149.2 149.2 157.8 11 Autos 1.90 117.4 97.1 107.3 99.9 102.7 107.4 118.3 129.8 132.0 135.0 129.6 129.4 137.4 12 Auto parts and allied goods .80 219.4 210.2 203.9 209.3 213.6 221.5 222.6 221.9 221.8 223.1 227.4 222.7 228.5 13 Home goods 5.06 141.5 129.1 128.8 132.8 138.1 141.8 143.2 144.9 146.4 148.7 148.4 147.2 147.4 14 Appliances, A/C, and TV 1.40 116.3 109.5 105.8 105.0 106.1 112.8 114.4 116.2 121.2 125.2 129.2 126.3 125.4 15 Appliances and TV 1.33 120.1 112.9 108.8 108.5 109.7 116.1 118.4 119.7 125.0 129.7 133.3 130.5 129.3 16 Carpeting and furniture 1.07 178.0 149.0 156.7 168.3 180.5 181.9 185.6 187.3 187.5 186.3 185.5 182.7 183.2 17 Miscellaneous home goods 2.59 140.0 131.4 129.7 133.3 137.9 140.9 141.3 143.0 143.2 145.9 143.6 143.9 144.6 18 Nondurable consumer goods 19.79 153.5 148.3 147.0 147.5 150.5 152.3 153.6 155.6 157.1 157.5 157.1 156.7 157.8 19 Clothing 4.29 20 Consumer staples 15.50 163.8 158.6 157.4 158.'l 161.1 162.8 164.3 166.1 168.0 168.0 167.2 166.2 167.2 ?1 8.33 150.9 149.5 148.4 150.9 153.2 155.9 156 6 156 3 154 9 156 0 155 1 22 Nonfood staples 7.17 175.7 167.6 166.5 169.4 172.9 174.0 174.1 177.2 181.6 183.2 180.3 179.0 181.0 23 Consumer chemical products .... 2.63 231.4 222.6 220.9 225.6 225.5 227.8 229.0 233.8 239.7 241.5 238.7 233.9 234.1 24 Consumer paper products 1.92 133.2 127.1 127.9 128.1 129.2 128.6 130.1 132.6 137.4 138.2 137.6 137.8 141.8 25 Consumer energy products 2.62 150.9 142.2 140.2 143.3 152.2 153.4 151.2 153.2 155.7 157.7 153.0 154.1 156.6 2266 11..4455 116644..11 116622..99 116666..11 117755..55 117744..33 117700..55 117733..22 117799..99 118822..88 117744..55 117755..88 Equipment 27 Business 12.63 153.1 146.6 142.7 143.7 146.9 147.7 150.2 153.3 156.6 158.8 161.3 164.1 165.4 28 Industrial 6.77 120.4 118.4 113.7 113.1 113.5 114.5 116.3 119.9 124.3 125.6 126.6 128.5 130.8 29 Building and mining 1.44 159.3 173.8 153.6 145.3 141.8 146.2 148.7 154.4 159.2 160.8 166.9 175.8 185.1 30 Manufacturing 3.85 107.0 97.6 97.9 99.7 101.7 102.5 105.0 108.9 113.3 115.0 114.6 114.3 115.1 31 Power 1.47 117.1 118.3 116.0 116.2 116.6 115.0 114.1 114.6 119.0 118.8 118.5 119.4 118.7 32 Commercial transit, farm 5.86 191.0 179.2 176.1 179.2 185.4 186.1 189.5 191.9 194.0 196.7 201.3 205.1 205.4 33 Commercial 3.26 272.7 254.9 251.2 255.7 264.3 265.0 270.9 276.0 277.4 281.2 288.1 292.5 292.1 34 Transit 1.93 95.0 90.8 88.2 90.1 92.0 92.6 93.2 92.0 95.9 97.6 100.0 103.2 104.3 35 Farm .67 69.6 66.0 63.4 63.4 70.2 71.3 70.4 70.8 70.8 71.0 70.9 73.5 74.8 36 Defense and space 7.51 119.9 116.4 116.1 117.0 118.2 117.6 U8.0 120.4 120.2 121.8 122.9 124.0 126.0 Intermediate products U Construction supplies 6.42 142.4 127.0 129.7 133.1 136.4 138.4 142.1 145.8 149.0 151.1 152.3 151.9 150.5 38 Business supplies 6.47 170.7 160.3 160.9 162.3 165.2 166.0 166.8 170.4 175.3 179.3 180.6 179.4 179.6 39 Commercial energy products 1.14 184.8 180.6 178.6 180.3 183.3 183.1 181.4 185.2 186.9 190.2 187.0 187.6 192.0 Materials 40 Durable goods materials 20.35 138.6 121.5 125.3 128.7 132.4 134.7 137.0 141.1 144.2 147.2 149.4 150.5 150.8 41 Durable consumer parts 4.58 113.5 96.2 101.6 104.0 106.5 108.5 109.5 115.6 119.9 123.1 124.9 125.1 126.4 42 Equipment parts 5.44 176.4 157.5 158.8 162.5 167.2 170.6 175.8 180.8 183.6 186.0 188.3 192.8 193.5 43 Durable materials n.e.c 10.34 129.9 113.8 118.2 121.9 125.4 127.5 128.7 131.5 134.2 137.4 139.8 139.5 139.2 44 Basic metal materials 5.57 90.3 78.1 82.4 86.0 87.8 89.3 89.6 90.8 93.1 94.5 98.0 97.4 96.5 45 Nondurable goods materials 10.47 175.0 159.7 164.0 167.5 168.7 172.1 174.3 177.0 178.0 183.4 185.3 185.5 185.0 46 Textile, paper, and chemical materials 7.62 183.2 163.7 170.0 174.3 175.9 180.2 182.8 186.1 186.4 192.0 195.4 195.7 195.3 47 Textile materials 1.85 116.1 104.7 106.4 110.6 110.6 114.6 116.0 119.0 121.5 123.1 124.0 121.9 119.9 48 Paper materials 1.62 158.6 150.1 150.1 149.5 150.8 154.4 155.0 161.1 161.8 165.4 166.3 170.3 169.0 49 Chemical materials 4.15 222.7 195.4 206.2 212.5 214.9 219.6 223.6 225.9 225.1 233.1 238.7 238.7 239.2 50 Containers, nondurable 1.70 168.1 162.1 159.6 163.8 163.2 164.3 166.1 166.5 170.6 179.1 175.9 176.5 176.0 51 Nondurable materials n.e.c 1.14 130.5 129.6 130.5 127.7 129.1 129.7 129.9 131.3 133.0 132.6 131.9 130.8 130.0 52 Energy materials 8.48 124.8 123.0 121.8 121.9 121.6 121.1 121.8 127.7 128.0 126.4 126.3 126.9 130.0 53 Primary energy 4.65 114.6 116.5 115.4 114.4 113.9 113.8 112.6 115.4 113.9 112.8 114.1 115.1 115.8 54 Converted fuel materials 3.82 137.1 130.8 129.6 131.1 131.0 129.9 132.9 142.7 145.2 142.8 141.2 141.2 147.4 Supplementary groups 55 Home goods and clothing 9.35 129.9 120.8 119.9 122.0 126.3 129.2 130.2 132.3 133.3 135.2 135.5 135.9 136.7 56 Energy, total 12.23 135.9 132.4 131.0 131.9 133.9 133.8 133.6 138.5 139.4 139.0 137.7 138.3 141.5 57 Products 3.76 161.2 153.8 151.9 154.5 161.7 162.4 160.4 162.9 165.2 167.5 163.3 164.2 167.3 58 Materials 8.48 124.8 123.0 121.8 121.9 121.6 121.1 121.8 127.7 128.0 126.4 126.3 126.9 130.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A47 2.13 Continued 1967 1983 1984 Grouping c S o I d C e por- a 1 v 9 g 8 . 3 tion Jan. Feb/ Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.P Jan/ Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities 12.05 143.0 141.3 137.5 137.7 138.9 139.7 139.6 143.8 146.0 146.5 145.8 147.1 152.2 151.1 2 Mining 6.36 116.6 121.9 115.6 112.6 111.6 112.8 112.6 115.0 116.1 117.1 118.3 120.9 124.5 126.2 3 Utilities 5.69 172.4 163.1 162.0 165.8 169.3 169.7 169.8 176.0 179.3 179.3 176.5 176.3 183.2 178.9 4 Electric 3.88 196.2 184.4 183.0 188.2 192.7 192.9 192.0 200.9 205.4 204.5 200.7 200.2 209.9 203.6 5 Manufacturing 87.95 148.3 136.7 138.2 140.4 143.1 145.1 147.4 150.6 152.8 155.1 156.2 156.5 157.0 159.0 6 Nondurable 35.97 168.3 157.4 159.0 160.7 163.3 165.4 167.8 170.6 172.9 174.6 175.6 173.3 175.5 176.6 7 Durable 51.98 134.5 122.5 123.9 126.3 129.1 131.0 133.2 136.8 138.8 141.6 142.8 143.5 144.3 146.9 Mining 8 Metal 10 .51 81.4 81.7 75.1 75.2 79.8 84.4 82.9 82.5 80.9 78.7 81.0 85.9 87.3 9 Coal 11.12 .69 136.3 144.8 136.5 127.3 125.3 125.6 124.6 139.9 141.2 140.5 142.7 144.8 145.2 151.8 10 Oil and gas extraction 13 4.40 116.6 124.6 117.0 114.4 112.2 112.5 112.6 113.9 114.7 116.3 117.3 119.4 124.0 124.6 11 Stone and earth minerals 14 .75 122.8 112.8 115.7 114.0 117.7 122.5 121.7 121.2 125.0 126.5 127.4 132.2 134.2 Nondurable manufactures 12 Foods 20 8.75 154.4 153.0 152.0 153.7 155.6 157.7 159.9 159.3 158.2 157.6 157.5 13 Tobacco products 21 .67 104.7 108.5 113.4 114.8 112.9 120.0 112.9 117.1 112.7 109.1 109.5 14 Textile mill products 22 2.68 140.8 125.8 130.7 131.9 136.6 139.6 141.8 146.7 147.4 148.7 148.7 145.9 144.4 15 Apparel products 23 3.31 16 Paper and products 26 3.21 164.3 158.8 155.6 156.3 157.0 161.5 163.0 165.1 168.6 170.4 171.5 172.4 171.9 172.7 17 Printing and publishing 27 4.72 152.7 141.3 144.0 145.9 145.7 145.2 147.4 152.0 157.8 161.7 162.7 162.0 163.7 165.4 18 Chemicals and products 28 7.74 215.8 197.6 202.3 205.7 208.5 211.0 214.7 218.3 220.3 224.1 228.4 227.3 228.0 19 Petroleum products 29 1.79 120.8 113.5 111.7 114.8 120.6 123.8 123.0 124.3 123.2 125.1 123.6 125.4 120.2 121.0 20 Rubber and plastic products 30 2.24 291.5 256.2 264.0 272.0 283.0 288.0 293.8 296.1 306.9 310.9 310.8 309.1 308.2 21 Leather and products 31 .86 61.6 59.5 61.7 59.4 58.7 59.6 60.1 62.3 64.4 64.2 64.0 63.2 63.0 Durable manufactures 22 Ordnance, private and government 19.91 3.64 95.4 93.5 93.3 91.9 93.2 92.6 93.3 95.2 96.8 98.0 98.8 99.3 100.0 100.5 23 Lumber and products 24 1.64 137.1 130.0 130.2 128.7 132.1 135.8 137.4 141.3 141.6 142.3 141.7 140.6 142.5 24 Furniture and fixtures 25 1.37 170.4 150.0 154.0 161.0 167.7 169.6 173.1 175.2 179.0 180.7 181.0 177.0 177.0 25 Clay, glass, stone products 32 2.74 143.2 128.0 131.8 135.6 138.3 139.2 141.7 145.8 147.9 151.7 151.9 152.7 152.1 26 Primary metals 33 6.57 85.5 73.1 77.9 81.2 83.1 84.9 84.8 85.5 87.5 90.6 95.3 92.3 91.0 93.9 27 Iron and steel 331.2 4.21 71.6 59.0 64.3 66.9 68.5 69.5 69.7 71.8 75.1 78.2 84.3 79.2 75.5 28 Fabricated metal products 34 5.93 120.1 107.6 110.3 113.9 115.3 115.5 118.5 122.7 126.0 127.4 126.9 128.5 128.0 129.8 29 Nonelectrical machinery 35 9.15 150.4 138.0 136.2 138.6 143.1 146.1 149.5 154.2 157.3 158.3 159.2 161.6 162.0 164.4 30 Electrical machinery 36 8.05 185.6 169.5 168.9 173.8 177.2 180.1 182.4 188.3 189.2 195.8 198.4 199.9 201.7 206.4 31 Transportation equipment 37 9.27 117.7 106.3 109.6 110.1 111.4 113.8 116.6 119.7 121.1 124.7 125.5 127.3 130.3 133.4 32 Motor vehicles and parts 371 4.50 137.0 113.9 123.0 123.2 125.5 130.4 136.2 142.3 144.3 150.9 150.9 152.9 158.3 162.6 33 Aerospace and miscellaneous transportation equipment... 372-9 4.77 99.6 99.1 97.0 97.7 98.1 98.1 98.1 98.5 99.2 100.0 101.6 103.1 104.0 106.0 34 Instruments 38 2.11 158.5 154.5 153.4 154.0 155.1 156.0 156.1 159.3 161.6 163.6 163.0 162.8 162.4 164.6 35 Miscellaneous manufactures 39 1.51 146.3 131.3 133.9 136.9 145.0 149.0 151.0 153.7 153.1 151.7 149.1 148.9 150.3 151.0 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total 507.4 612.7 578.1 578.4 584.1 592.6 601.8 610.5 620.5 626.6 637.0 637.8 640.3 645.0 653.7 37 Final 390.9 472.8 448.3 447.3 451.3 457.7 465.6 471.8 478.2 481.8 489.9 490.7 492.6 498.0 504.6 38 Consumer goods. 277.5 328.8 310.9 312.0 313.8 318.8 325.6 330.4 333.7 336.7 341.6 340.2 339.4 342.5 345.8 39 Equipment 113.4 144.0 137.4 135.3 137.5 138.9 140.0 141.4 144.5 145.1 148.4 150.5 153.2 155.5 158.7 40 Intermediate 116.6 140.0 129.8 131.1 132.8 134.9 136.2 138.7 142.3 144.8 147.1 147.1 147.7 147.0 149.1 1. 1972 dollar value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • February 1984 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1983 IItteemm 11998811 11998822 11998833 Mar. Apr. May June July Aug. Sept. Oct.' Nov.' Dec. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 986 1,001 1,594 1,467 1,536 1,635 1,761 1,782 1,652 1,506 11,,663300 1,642 1,605 2 1-family 564 546 882 859 841 940 1,013 920 874 837 888800 911 914 3 2-or-more-family 421 454 712 608 695 695 748 862 778 669 750 731 619 4 Started 1,084 1,062 1,703 1,605 1,506 1,807 1,736 1,804 1,904 1,664 1,654 1,755 1,667 5 1-family 705 663 1,067 1,008 1,001 1,183 1,127 1,032 1,135 1,031 1,002 1,097 972 6 2-or-more-family 379 400 636 597 505 624 609 772 769 633 652 658 695 7 Under construction, end of period1 682 720 n.a. 828 859 900 933 963 977 988' 991 1,011 1 8 1-family 382 400 n.a. 472 489 518 532 537 542 542' 537 543 T 9 2-or-more-family 301 320 n.a. 356 370 382 400 425 435 446' 453 469 10 Completed 1,266 1,006 n.a. 1,147 1,164 1,353 1,386 1,432 1,729 1,476' 1,588 1,430 n.a. 11 1-family 818 631 n.a. 788 803 851 959 1,000 1,050 966' 1,041 991 1 12 2-or-more-family 447 374 n.a. 359 361 502 427 432 679 SIO' 547 439 \ 13 Mobile homes shipped 241 239 n.a. 276 291 298 308 299 305 302 291 309 Merchant builder activity in l-familv units 14 Number sold 436 413 624 611 635 665 658 594' 544 589' 624 629 808 15 Number for sale, end of period1 278 255 308 262 266 273 284 289' 296 298' 301 310 302 Price (thousands of dollars)2 Median 16 Units sold 68.8 69.3 75.4 72.5 74.7 74.5 75.8 75.2 76.8 81.C 75.2 75.8 75.9 Average 17 Units sold 83.1 83.8 89.7 86.2 87.6 88.8 90.9 89.2 91.3 97.8' 88.6 91.1 91.1 EXISTING UNITS (1-family) 18 Number sold 2,418 1,991 2,717 2,710 2,730 2,900 2,940 2,790 2,710 2,720 2,610 2,600 2,820 Price of units sold (thousands of dollars)2 19 Median 66.1 67.7 69.9 68.9 68.8 69.2 71.4 71.8 71.5 69.9 69.8 70.4 70.3 20 Average 78.0 80.4 82.5 81.1 81.3 81.7 84.7 84.2 84.7 82.8 83.0 83.4 83.2 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 239,418 232,048 264,854 241,908 247,360 254,763 264,321 274,205 281,997 285,384 271,650 275,487 274,956 22 Private 186,069 180,979 214,527 194,865 199,462 206,029 214,729 222,759 228,529 232,561 222,968 225,389 224,890 23 Residential 86,567 74,809 112,786 96,127 101,961 107,494 113,524 122,297 127,136 129,142 121,688 119,246 118,181 24 Nonresidential, total 99,502 106,170 101,741 98,738 97,501 98,535 101,205 100,462 101,393 103,419 101,280 106,143 106,709 Buildings 25 Industrial 17,031 17,346 13,136 14,263 13,223 13,047 13,136 12,227 14,227 13,166 10,532 12,280 12,842 26 Commercial 34,243 37,281 36,204 35,469 33,619 33,291 35,898 35,871 36,277 36,901 36,118 38,081 38,175 27 Other 9,543 10,507 11,734 11,598 10,770 11,237 10,974 11,250 12,038 12,564 12,279 12,001 12,476 28 Public utilities and other 38,685 41,036 40,667 37,408 39,889 40,960 41,197 41,114 38,851 40,788 42,351 43,781 43,216 29 Public 53,346 51,068 50,326 47,043 47,897 48,734 49,592 51,446 53,469 52,823 48,682 50,098 50,006 30 Military 1,966 2,205 2,470 2,541 2,784 2,255 1,894 2,655 2,258 2,705 2,515 2,619 2,687 31 Highway 13,599 13,521 14,208 11,866 12,900 13,044 12,925 14,091 15,906 15,896 14,644 14,360 15,336 32 Conservation and development 5,300 5,029 4,826 4,894 5,023 4,548 4,853 5,608 5,210 5,048 4,258 3,905 4,911 33 Other 32,481 30,313 28,822 27,742 27,190 28,887 29,920 29,092 30,095 29,174 27,265 29,214 27,132 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 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Prices A49 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted C m h o a n n t g h e s f e ro a m rl ie 1 r 2 Change ( a f t r o a m nn 3 u a m l o r n at t e h ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm DDDeeeccc... 1983 1983 111999888333 11998822 11998833 (((111999666777 DDeecc.. DDeecc.. === 111000000)))''' Mar. June Sept. Dec. Aug. Sept. Oct. Nov. Dec. CONSUMER PRICES2 1 All items 3.9 3.8 .4 5.4 5.3 4.0 .4 .5 .4 .3 .3 303.5 ? Food 3.1 2.6 2.8 1.7 1.7 4.2 .2 .3 .5 .1 .4 293.9 3 Energy items 1.3 -.5 -25.1 21.0 7.1 -1.0 .7 .7 -.4 .0 .1 418.0 4 All items less food and energy 4.5 4.9 4.4 3.9 6.2 4.9 .5 .5 .5 .4 .3 293.6 5 Commodities 5.8 5.0 5.7 2.9 7.1 4.5 .5 .6 .6 .3 .2 249.0 6 Services 3.4 4.8 3.7 4.6 5.3 5.3 .4 .4 .5 .5 .3 345.5 PRODUCER PRICES 7 Finished goods 3.7 .6 -4.7 3.0 2.5 1.5 .4 .2 .3 -.2 .2 287.1 9 8 C C o o n n s s u u m m e e r r f e o n o e d rg s y - 2 .1 .1 -9 2 . . 0 2 -35 4 . . 5 1 11. . 4 0 3 1 . . 7 5 -8 3 . . 2 4 . y.4 y r . .7 4 r - 1 .1 .1 - - 1 1 . . 0 0 -1. . 0 7 7 2 6 6 9 4 . . 4 0 10 Other consumer goods 5.3 1.8 -2.0 3.1 2.9 3.2 .(X .0 .5 .3 242.4 11 Capital equipment 3.9 2.0 2.0 1.7 2.5 1.8 .3 .0 .2 290.5 1? Intermediate materials3 .3 1.5 -4.7 3.2 5.3 2.3 ,,32 r r .6' .4 .2 .0 320.3 13 Excluding energy .6 2.8 .8 2.9 4.0 3.3 .3 .2 .3 .3 298.0 Crude materials 14 Foods 1.5 8.1 18.1 .8 5.9 7.9 3.9r .2 .2 .0 1.7 256.2 15 Energy 2.6 -4.6 -9.2 -5.1 -1.5 -2.3 -.1 .3 -1.0 .2 .2 783.6 16 Other -7.6 15.8 -16.2 61.9 20.2 8.5 l.K l.CK -.3 1.7 .7 263.3 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

A50 Domestic Nonfinancial Statistics • February 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 11998811 11998822 11998833 Q4 Ql Q2 Q3 Q4 GROSS NATIONAL PRODUCT 1 Total 2,954.1 3,073.0 3,309.5 3,109.6 3,171.5 3,272.0 3,362.2 3,432.0 By source 2 Personal consumption expenditures 1,857.2 1,991.9 2,158.6 2,046.9 2,073.0 2,147.0 2,181.1 2,233.1 i Durable goods 236.1 244.5 278.6 252.1 258.5 277.7 282.8 295.2 4 Nondurable goods 733.9 761.0 804.3 773.0 777.1 799.6 814.8 825.9 5 Services 887.1 986.4 1,075.7 1,021.8 1,037.4 1,069.7 1,083.5 1,112.0 6 Gross private domestic investment 474.9 414.5 471.3 377.4 404.1 450.1 501.1 529.8 7 Fixed investment 456.5 439.1 478.2 433.8 443.5 464.6 492.5 512.1 8 Nonresidential 352.2 348.3 347.7 337.0 332.1 336.3 351.0 371.2 9 Structures 133.4 141.9 131.4 138.6 132.9 127.4 130.9 134.5 10 Producers' durable equipment 218.8 206.4 216.3 198.4 199.3 208.8 220.2 236.8 11 Residential structures 104.3 90.8 130.5 96.8 111.3 128.4 141.5 140.8 12 Nonfarm 99.8 86.0 125.5 91.2 106.7 123.3 136.3 135.6 13 Change in business inventories 18.4 -24.5 -6.9 -56.4 -39.4 -14.5 8.5 17.7 14 Nonfarm 10.9 -23.1 -1.2 -53.7 -39.0 -10.3 18.4 26.0 15 Net exports of goods and services 26.3 17.4 -10.6 5.6 17.0 -8.5 -18.3 -32.6 16 Exports 368.8 347.6 335.8 321.6 326.9 327.1 341.1 348.1 1 / Imports 342.5 330.2 346.4 316.1 309.9 335.6 359.4 380.7 18 Government purchases of goods and services 595.7 649.2 690.2 679.7 677.4 683.4 698.3 701.7 19 Federal 229.2 258.7 275.2 279.2 273.5 273.7 278.1 275.6 20 State and local 366.5 390.5 415.0 400.5 404.0 409.7 420.2 426.1 By major type of product 21 Final sales, total 2,935.6 3,097.5 3,316.4 3,165.9 3,210.9 3,286.6 3,353.7 3,414.3 22 Goods 1,291.8 1,280.8 1,361.9 1,264.8 1,292.2 1,346.8 1,388.9 1,419.8 23 Durable 528.0 500.8 544.8 474.0 482.7 536.8 568.9 590.8 24 Nondurable 763.9 780.1 817.1 790.8 809.5 810.0 820.0 829.0 25 Services 1,374.2 1,511.2 1,637.8 1,560.5 1,588.4 1,623.4 1,651.0 1,688.5 26 Structures 288.0 281.0 309.7 284.3 290.9 301.9 322.3 323.6 27 Change in business inventories 18.4 -24.5 -6.9 -56.4 -39.4 -14.5 8.5 17.7 28 Durable goods 3.6 -15.5 -4.2 -45.0 -38.2 -8.9 13.1 17.4 29 Nondurable goods 14.8 -9.1 -2.8 -11.4 -1.2 -5.7 -4.5 .3 30 MEMO: Total GNP in 1972 dollars 1,513.8 1,485.4 1,534.8 1,480.7 1,490.1 1,525.1 1,553.4 1,570.5 NATIONAL INCOME 31 Total 2,373.0 2,450.4 2,646.9 2,474.0 2,528.5 2,612.8 2,686.9 n.a. 32 Compensation of employees 1,769.2 1,865.7 1,990.1 1,889.0 1,923.7 1,968.7 2,011.8 2,056.0 ii Wages and salaries 1,493.2 1,568.1 1,664.0 1,586.0 1,610.6 1,647.1 1,681.5 1,716.6 34 Government and government enterprises 284.4 306.0 326.1 314.5 319.2 323.3 328.4 3,311.8 35 Other 1,208.8 1,262.1 1,338.3 1,271.5 1,291.5 1,323.8 1,353.1 1,384.9 36 Supplement to wages and salaries 276.0 297.6 326.1 302.9 313.1 321.6 330.3 339.3 37 Employer contributions for social insurance 132.5 140.9 152.7 142.5 148.8 151.5 153.9 156.6 38 Other labor income 143.5 156.6 173.4 160.4 164.3 170.1 176.4 182.7 39 Proprietors' income1 120.2 109.0 128.6 116.2 120.6 127.2 126.7 139.7 40 Business and professional1 89.7 87.4 107.6 90.2 98.4 106.2 111.2 114.4 41 Farm1 30.5 21.5 21.0 26.0 22.2 21.0 15.5 25.3 42 Rental income of persons2 41.4 49.9 54.8 52.3 54.1 54.8 53.9 56.2 43 Corporate profits' 192.3 164.8 226.3 161.9 181.8 218.2 248.4 44 Profits before tax3 227.0 174.2 205.3 167.5 169.7 203.3 229.1 45 Inventory valuation adjustment -23.6 -8.4 -9.8 -10.3 -1.7 -10.6 -18.3 -8.5 46 Capital consumption adjustment -11.0 -1.1 30.8 4.7 13.9 25.6 37.6 46.3 47 Net interest 249.9 261.1 247.2 254.7 248.3 243.8 246.1 250.4 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 A51 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1982 1983 AAccccoouunntt 11998811 11998822 11998833 Q4 Ql Q2 Q3 Q4 PERSONAL INCOME AND SAVING 1 Total personal income 2,435.0 2,578.6 2,741.9 2,632.0 2,657.7 2,713.6 2,761.9 2,834.2 ? Wage and salary disbursements 1,493.2 1,568.1 1,664.4 1,586.0 1,610.7 1,648.4 1,681.9 1,716.7 Commodity-producing industries 509.5 509.2 529.6 499.5 508.6 522.2 537.8 549.8 4 Manufacturing 385.3 383.8 402.7 377.4 385.4 397.4 409.2 418.6 Distributive industries 361.6 378.8 397.2 383.5 386.4 394.3 398.9 409.2 6 Service industries 337.7 374.1 411.5 388.5 396.4 407.3 416.4 425.9 7 Government and government enterprises 284.4 306.0 326.1 314.5 319.2 324.6 328.8 331.8 8 Other labor income 143.5 156.6 173.4 160.4 164.3 170.1 176.4 182.7 9 Proprietors' income1 120.2 109.0 128.6 116.2 120.6 127.2 126.7 139.7 in Business and professional1 89.7 87.4 107.6 90.2 98.4 106.2 111.2 114.4 11 30.5 21.5 21.0 26.0 22.2 21.0 15.5 25.3 1? Rental income of persons2 41.4 49.9 54.8 52.3 54.1 54.8 53.9 56.2 n 62.8 66.4 70.5 67.9 68.8 69.3 70.9 72.9 14 Personal interest income 341.3 366.2 366.3 363.1 357.2 357.1 369.9 381.0 n Transfer payments 337.2 374.6 403.5 399.0 398.5 405.3 402.6 407.5 16 Old-age survivors, disability, and health insurance benefits.... 182.0 204.5 222.8 216.5 217.4 221.1 223.8 229.0 17 LESS: Personal contributions for social insurance 104.6 112.0 119.5 112.9 116.5 118.6 120.5 122.5 18 EQUALS: Personal income 2,435.0 2,578.6 2,741.9 2,632.0 2,657.7 2,713.6 2,761.9 2,834.2 19 LESS: Personal tax and nontax payments 387.4 402.1 406.3 404.1 401.8 412.6 400.1 410.6 20 EQUALS: Disposable personal income 2,047.6 2,176.5 2,335.6 2,227.8 2,255.9 2,301.0 2,361.7 2,423.6 21 LESS: Personal outlays 1,912.4 2,051.1 2,222.5 2,107.0 2,134.2 2,209.5 2,245.9 2,300.1 22 EQUALS: Personal saving 135.3 125.4 113.1 120.8 121.7 91.5 115.8 123.5 MEMO: Per capita (1972 dollars) Gross national product 6,584.1 6,399.3 6,550.6 6,355.2 66,,338811..55 6,518.5 6,621.5 6,680.0 24 Personal consumption expenditures 4,161.5 4,179.8 4,316.7 4,204.5 4,225.7 4,318.8 4,330.8 4,389.8 25 Disposable personal income 4,587.0 4,567.0 4,671.0 4,576.0 4,599.0 4,629.0 4,690.0 4,764.0 26 Saving rate (percent) 6.6 5.8 4.8 5.4 5.4 4.0 4.9 5.1 GROSS SAVING 27 Gross saving 483.8 405.8 436.0 351.3 398.5 420.6 455.4 n.a. 28 Gross private saving 509.6 521.6 567.8 526.6 541.5 535.0 587.2 n.a. 29 Personal saving 135.3 125.4 113.1 120.8 121.7 91.5 115.8 123.5 30 Undistributed corporate profits1 44.8 37.0 77.4 37.5 48.9 70.1 89.7 n.a. 31 Corporate inventory valuation adjustment -23.6 -8.4 -9.8 -10.3 -1.7 -10.6 -18.3 -8.5 Capital consumption allowances 3? Corporate 202.9 222.0 231.6 227.7 222288..33 222299..88 223333..11 223355..11 33 Noncorporate 126.6 137.2 145.8 140.5 142.6 143.5 148.6 148.5 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts -26.9 -115.8 -131.8 -175.3 -142.9 -114.4 -131.8 n.a. 36 -62.2 -147.1 -182.9 -208.2 -183.3 -166.1 -187.3 n.a. 37 State and local 35.3 31.3 51.0 32.9 40.4 51.7 55.5 n.a. 38 Capital grants received by the United States, net 1.1 .0 .0 .0 .0 .0 .0 .0 39 Gross investment 478.9 406.2 436.1 355.5 397.4 417.1 457.9 472.0 40 Gross private domestic 474.9 414.5 471.3 377.4 404.1 450.1 501.1 529.8 41 4.0 -8.3 -35.2 -21.9 -6.7 -33.0 -43.2 -57.8 42 Statistical discrepancy -4.9 .5 .1 4.2 -1.2 -3.5 2.5 2.5 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics • February 1984 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 Q3 Q4 Ql Q2 Q3P 1 Balance on current account 421 4,592 -11,211 -6,596 -6,621 -3,587 -9,655 -11,976 -8,143 -5,546 -3,395 -8,898 -13,996 3 Merchandise trade balance2 -25,544 -28,067 -36,389 -13,078 -11,354 -8,810 -14,661 -18,169 4 Merchandise exports 224,237 237,019 211,217 52,241 48,344 49,506 48,913 50,585 5 Merchandise imports -249,781 -265,086 -247,606 -65,319 -59,698 -58,316 -63,574 -68,754 6 Military transactions, net -2,286 -1,355 179 54 -26 516 117 -21 7 Investment income, net3 29,570 33,484 27,304 6,821 6,008 5,089 5,700 6,928 8 Other service transactions, net 5,738 7,462 5,729 1,349 1,182 1,179 1,012 1,347 9 Remittances, pensions, and other transfers -2,347 -2,382 -2,621 -656 -661 -608 -636 -656 10 U.S. government grants (excluding military) -4,709 -4,549 -5,413 -1,086 -1,770 -953 -1,187 -1,405 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,140 -5,078 -5,732 -2,502 -934 -1,053 -1,162 -1,188 12 Change in U.S. official reserve assets (increase, -) -8,155 -5,175 -4,965 -794 -1,949 -787 16 529 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -16 -1,823 -1,371 -434 -297 -98 -303 -209 15 Reserve position in International Monetary Fund -1,667 -2,491 -2,552 -459 -732 -2,139 -212 -88 16 Foreign currencies -6,472 -861 -1,041 99 -920 1.450 531 826 17 Change in U.S. private assets abroad (increase, -)3 -72,757 -100,348 -107,348 -22,803 -16,670 -19,859 488 -5,770 18 Bank-reported claims -46,838 -83,851 -109,346 -20,631 -17,511 -15,935 5,166 -498 19 Nonbank-reported claims -3,174 -1,181 6,976 998 2,337 -2,374 -440 n.a. 20 U.S. purchase of foreign securities, net -3,524 -5,636 -7,986 -3,331 -3,527 -1,808 -3,222 -1,122 21 U.S. direct investments abroad, net3 -19,221 -9,680 3,008 161 2,031 258 -1,016 -4,150 22 Change in foreign official assets in the United States (increase, +) 15,566 5,430 3,172 2,642 1,661 49 1,973 -3,235 23 U.S. Treasury securities 9,708 4,983 5,759 4,834 4,346 3,008 1,955 -692 24 Other U.S. government obligations 2,187 1,289 -670 -71 -556 -371 -170 -363 25 Other U.S. government liabilities4 685 -28 504 -160 130 -270 403 148 26 Other U.S. liabilities reported by U.S. banks -159 -3,479 -2,054 -1,911 -1,717 -1,939 611 -1,870 27 Other foreign official assets5 3,145 2,665 -367 -50 -542 -379 -826 -458 28 Change in foreign private assets in the United States (increase, +)3 39,356 75,248 84,693 14,971 9,856 16,404 8,984 21,722 29 U.S. bank-reported liabilities 10,743 42,154 64,263 10,977 2,823 10,588 919 16,344 30 U.S. nonbank-reported liabilities 6,845 942 -3,104 -425 20 -2,136 134 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 2,645 2,982 7,004 1,364 2,257 2,912 3,072 1,103 32 Foreign purchases of other U.S. securities, net 5,457 7,171 6,141 420 1,975 2,986 2,628 1,867 33 Foreign direct investments in the United States, net3 13,666 21,998 10,390 2,635 2,781 2,054 2,231 2,408 34 Allocation of SDRs 1,152 1,093 0 0 0 0 0 0 35 Discrepancy 29,556 24,238 41,390 15,082 14,657 8,833 -644 -82 -1,190 1,042 -212 792 -1,355 37 Statistical discrepancy in recorded data before seasonal adjustment 29,556 24,238 41,390 16,272 13,615 9.045 -1,436 1,273 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -8,155 -5,175 -4,965 -794 -1,950 -787 16 529 39 Foreign official assets in the United States (increase, +) 14,881 5,458 2,668 2,802 1,531 319 1,570 -3,383 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 12,769 13,581 7,420 368 -1,162 -1,397 -3,433 -2,151 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 756 680 644 267 158 42 30 49 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 A53 3.11 U. S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1983 IItteemm 11998800 11998811 11998822 June July Aug. Sept. Oct. Nov. Dec. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 220,626 233,677 212,193 17,008 16,629 16,630 17,387 16,951 16,848 17,180 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 244,871 261,305 243,952 21,024 21,950 22,782 22,175 24,763 23,179 22,448 3 Trade balance -24,245 -27,628 -31,759 -4,016 -5,321 -6,152 -4,788 -7,812 -6,331 -5,268 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 1983 1984 TTyyppee 11998800 11998811 11998822 July Aug. Sept. Oct. Nov. Dec. Jan. 1 Total 2266,,775566 3300,,007755 3333,,995588 3333,,337733 3322,,662244 3333,,006666 3333,,227733 3333,,665555 3333,,774477 3333,,888877 2 Gold stock, including Exchange Stabilization Fund1 1111,,116600 1111,,115511 1111,,114488 1111,,113311 1111,,112288 1111,,112288 1111,,112266 1111,,112233 1111,,112211 1111,,112200 3 Special drawing rights2-3 2,610 4,095 5,250 5,496 5,543 5,628 5,641 5,735 5,025 5,050 4 Reserve position in International Monetary Fund2 2,852 5,055 7,348 9,475 9,296 9,399 9,554 9,883 11,312 11,422 5 Foreign currencies4-5 10,134 9,774 10,212 7,271 6,657 6,911 6,952 6,914 6,289 5,050 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 1983 1984 AAsssseettss 11998800 11998811 11998822 July Aug. Sept. Oct. Nov. Dec. Jan. 1 Deposits 411 505 328 369 248 297 339 360 190 251 Assets held in custody 2 U.S. Treasury securities' 102,417 104,680 112,544 118,105 113,476 113,498 116,327 116,398 117,670 117,076 3 Earmarked gold2 14,965 14,804 14,716 14,727 14,693 14,621 14,550 14,475 14,414 14,347 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

A54 International Statistics • February 1984 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1983 AAsssseett aaccccoouunntt 11998800 11998811 11998822 May June July Aug. Sept.' Oct. Nov.? All foreign countries 1 Total, all currencies 401,135 462,847 469,432 452,379' 465,866' 455,850' 452,596' 460,261 458,894 463,468 2 Claims on United States 28,460 63,743 91,768 , 92,034' 97,904' 96,963' 99,484' 101,356 102,497 109,512 3 Parent bank 20,202 43,267 61,629 \ 62,722' 65,920' 67,731' 67,137' 65,561 66,942 72,609 4 Other 8,258 20,476 30,139 * 29,312 31,984 29,232 32,347 35,795 35,555 36,903 5 Claims on foreigners 354,960 378,954 358,258 342,298 349,819 340,994 335,036' 340,413 337,849 335,710 6 Other branches of parent bank 77,019 87,821 91,143 86,436 88,352 84,869 84,562' 89,279 87,533 89,469 7 Banks 146,448 150,763 133,640 124,055 130,285 123,539 119,298' 120,202 117,641 114,494 8 Public borrowers 28,033 28,197 24,090 25,547 25,370 25,876 25,147' 24,982 24,979 24,324 9 Nonbank foreigners 103,460 112,173 109,385 106.260 105,812 106,710 106,029' 105,950 107,696 107,423 10 Other assets 17,715 20,150 19,406 18.047 18,143 17,893 18,076' 18,492 18,548 18,246 11 Total payable in U.S. dollars 291,798 350,735 361,712 343,977' 357,499' 350,507' 348,330' 354,595 351,510 358,205 12 Claims on United States 27,191 62,142 90,048 89,678' 95,627' 94,549' 96,995' 98,510 99,938 107,015 13 Parent bank 19,896 42,721 60,973 61,923' 64,591' 66,303' 65,711' 63,716 65,413 71,086 14 Other 7,295 19,421 29,075 27,755 31,036 28,246 31,284 34,794 34,525 35,929 15 Claims on foreigners 255,391 276.937 259,646 243,896 251,259 245,188 241,063' 245,541 241,248 240,768 16 Other branches of parent bank 58,541 69,398 73,512 67.787 69,496 67,160 66,599' 71,248 69,314 71,452 17 Banks 117,342 122,110 106,338 96,071 102,862 97,197 93,816' 95,138 92,059 90,142 18 Public borrowers 23,491 22,877 18,374 19,001 18,681 19,108 18,804' 18,455 18,531 17,752 19 Nonbank foreigners 56,017 62,552 61,422 61.037 60,220 61,723 61,844' 60,700 61,344 61,422 20 Other assets 9,216 11,656 12,018 10,403 10,613 10,770 10,272' 10,544 10,324 10,422 United Kingdom 21 Total, all currencies 144,717 157,229 161,067 151,821 155,631 153,209 154,865 156,048 156,803 155,964 22 Claims on United States 7,509 11,823 27,354 24,847 26,279 26,012 29,722 28,947 30,853 32,352 23 Parent bank 5,275 7,885 23,017 20,456 21,384 20,849 22,169 20,816 22,794 23,959 24 Other 2,234 3,938 4,337 4,391 4,895 5,163 7,553 8,131 8,059 8,393 25 Claims on foreigners 131,142 138,888 127,734 121,187 123,835 121,757 119,672 121,518 120,660 118,468 26 Other branches of parent bank 34,760 41,367 37,000 33,361 35,787 35,632 35,555 36,382 36,556 35,642 27 Banks 58,741 56,315 50,767 47,623 48,328 46,643 44,303 45,451 43,888 42,683 28 Public borrowers 6,688 7,490 6,240 6,599 6,570 6,440 6,342 6,274 6,280 6,397 29 Nonbank foreigners 30,953 33,716 33,727 33,604 33,150 33,042 33,472 33,411 33,936 33,746 30 Other assets 6,066 6,518 5,979 5,787 5,517 5,440 5,471 5,583 5,290 5,144 31 Total payable in U.S. dollars 99,699 115,188 123,740 112,585 118,023 116,526 119,377 121,238 121,817 121,744 32 Claims on United States 7,116 11,246 26,761 24,044 25,536 25,180 28,905 27,837 30,095 31,671 33 Parent bank 5,229 7,721 22,756 20,092 21,017 20,434 21,720 20,036 22,371 23,624 34 Other 1,887 3,525 4,005 3,952 4,519 4,746 7,185 7,801 7,724 8,047 35 Claims on foreigners 89,723 99,850 92,228 84,779 88,587 87,450 86,868 89,530 88,253 86,614 36 Other branches of parent bank 28,268 35,439 31,648 27,579 30,025 30,122 30,053 31,409 31,414 30,371 37 Banks 42,073 40,703 36,717 32,801 34,417 33,159 31,718 33,237 31,796 31,158 38 Public borrowers 4,911 5,595 4,329 4,497 4,547 4,420 4,410 4,329 4,346 4,377 39 Nonbank foreigners 14,471 18,113 19,534 19,902 19,598 19,749 20,687 20,555 20,697 20,708 40 Other assets 2,860 4,092 4,751 3,762 3,900 3,896 3,604 3,871 3,469 3,459 Bahamas and Caymans 41 Total, all currencies 123,837 149,108 145,156 141,147' 146,886' 142,432' 139,699' 143,148 141,311 147,258 42 Claims on United States 17,751 46,546 59,403 62,672' 66,565' 66,032' 63,923' 66,547 66,253 71,363 43 Parent bank 12,631 31,643 34,653 39,157' 40,591' 42,946' 40,308' 40,152 40,105 44,414 44 Other 5,120 14,903 24,750 23,515 25,974 23,086 23,615 26,395 26,148 26,949 45 Claims on foreigners 101,926 98,057 81,450 74,817 76,719 72,683 72,021 72,826 71,268 71,995 46 Other branches of parent bank 13,342 12,951 18,720 18,537 16,658 15,565 15,344 16,764 15,807 17,994 47 Banks 54,861 55,151 42,699 37,589 41,707 37,384 37,360 36,634 35,974 35,352 48 Public borrowers 12,577 10,010 6,413 6,170 5,935 6,538 6,404 6,461 6,527 5,890 49 Nonbank foreigners 21,146 19,945 13,618 12.521 12,419 13,196 12,913 12,967 12,960 12,759 50 Other assets 4,160 4,505 4,303 3,658 3,602 3,717 3,755 3,775 3,790 3,900 51 Total payable in U.S. dollars 117,654 143,743 139,605 135,318' 140,796' 136,301' 133,233' 136,851 134,690 140,842 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A55 3.14 Continued 1983 May June July Aug. Sept. Oct. Nov.? All foreign countries 52 Total, all currencies 401,135 462,847 469,432 452,379r 465,866' 455,850' 452,596' 460,261' 458,894 463,468 53 To United States 91,079 137,767 178,918 183,977' 191,579' 187,713' 183,864' 182,675' 185,599 184,237 54 Parent bank 39,286 56,344 75,561 80,970' 84,576' 81,752' 77,556' 78,038' 85,057 79,591 55 Other banks in United States 14,473 19,197 33,368 31,815 33,672 31,490 29,880 30,982' 27,075 26,237 56 Nonbanks 37,275 62,226 69,989 71,192 73,331 74,471 76,428 73,655 73,467 78,409 57 To foreigners 295,411 305,630 270,678 250,813 256,102 249,823 250,563' 259,438' 254,634 260,301 58 Other branches of parent bank 75,773 86,396 90,148 84,903 86,546 83,911 82,871' 88,029' 85,566 88,311 59 Banks 132,116 124,906 96,739 84,637 87,153 84,649 85,433' 86,565' 84,533 88,258 60 Official institutions 32,473 25,997 19,614 17,199 18,621 18,287 17,830' 20,513 19,403 18,177 61 Nonbank foreigners 55,049 68,331 64,177 64,074 63,782 62,976 64,429 64,331' 65,132 65,555 62 Other liabilities 14,690 19,450 19,836 17,589 18,185 18,314 18,169' 18,148' 18,661 18,930 63 Total payable in U.S. dollars 303,281 364,447 379,003 363,480' 376,149' 368,650' 365,583 373,060' 369,935 374,426 64 To United States 88,157 134,700 175,431 180,201' 188,081' 184,215' 180,173' 178,900' 181,692 180,261 65 Parent bank 37,528 54,492 73,235 78,704' 82,379' 79,496' 75,244' 75,753' 82,660 77,126 66 Other banks in United States 14,203 18,883 33,003 31,222 33,242 31,116 29,334 30,415' 26,548 25,763 67 Nonbanks 36,426 61,325 69,193 70,275 72,460 73,603 75,595 72,732 72,484 77,372 68 To foreigners 206,883 217,602 192,348 174,176 178,877 174,836' 175,616' 184,343' 178,895 184,223 69 Other branches of parent bank 58,172 69,299 72,878 66,664 68,356 67,228 65,679' 70,623' 68,064 70,976 70 Banks 87,497 79,594 57,355 47,424 49,916 48,062 49,522' 50,877' 48,264 52,107 71 Official institutions 24,697 20,288 15,055 12,641 13,912 13,517 13,029' 15,400 14,630 13,453 72 Nonbank foreigners 36,517 48,421 47,060 47,447 46,693 46,029' 47,386' 47,443' 47,937 47,687 73 Other liabilities 8,241 12,145 11,224 9,103 9,191 9,599 9,794' 9,817 9,348 9,942 United Kingdom 74 Total, all currencies 144,717 157,229 161,067 151,821 155,631 153,209 154,865 156,048 156,803 155,964 75 To United States 21,785 38,022 53,954 53,603 56,952 56,959 58,347 56,924 60,903 57,095 76 Parent bank 4,225 5,444 13,091 13,907 14,461 15,011 16,145 16,852 21,385 17,312 77 Other banks in United States 5,716 7,502 12,205 12,773 13,503 12,993 12,462 12,174 10,751 10,176 78 Nonbanks 11,844 25,076 28,658 26,923 28,988 28,955 29,740 27,898 28,767 29,607 79 To foreigners 117,438 112,255 99,567 91,071 91,545 89,198 89,458 92,122 88,727 91,714 80 Other branches of parent bank 15,384 16,545 18,361 20,235 18,376 17,544 17,595 19,365 18,288 18,841 81 Banks 56,262 51,336 44,020 37,594 38,238 37,192 37,571 37,122 35,847 39,088 82 Official institutions 21,412 16,517 11,504 9,413 10,848 10,146 9,588 11,448 10,611 9,871 83 Nonbank foreigners 24,380 27,857 25,682 23,829 24,083 24,316 24,704 24,187 23,981 23,914 84 Other liabilities 5,494 6,952 7,546 7,147 7,134 7,052 7,060 7,002 7,173 7,155 85 Total payable in U.S. dollars 103,440 120,277 130,261 120,324 124,760 123,265 125,656 127,868 128,600 127,234 86 To United States 21,080 37,332 53,029 52,473 56,092 56,081 57,359 55,931 59,824 55,907 87 Parent bank 4,078 5,350 12,814 13,696 14,308 14,812 15,829 16,673 21,145 17,094 88 Other banks in United States 5,626 7,249 12,026 12,439 13,313 12,833 12,223 11,886 10,523 9,880 89 Nonbanks 11,376 24,733 28,189 26,338 28,471 28,436 29,307 27,372 28,156 28,933 90 To foreigners 79,636 79,034 73,477 64,621 65,428 63,818 64,801 68,252 65,347 68,011 91 Other branches of parent bank 10,474 12,048 14,300 15,636 14,117 13,386 13,421 15,166 14,542 15,044 92 Banks 35,388 32,298 28,810 22,960 23,895 23,453 24,447 24,478 23,136 26,343 93 Official institutions 17,024 13,612 9,668 7,306 8,786 8,065 7,630 9,381 8,742 8,029 94 Nonbank foreigners 16,750 21,076 20,699 18,719 18,630 18,914 19,303 19,227 18,927 18,595 95 Other liabilities 2,724 3,911 3,755 3,230 3,240 3,366 3,496 3,685 3,429 3,316 Bahamas and Caymans 96 Total, all currencies 123,837 149,108 145,156 141,147' 146,886' 142,432' 139,699' 143,148' 141,311 147,258 97 To United States 59,666 85,759 104,425 108,973' 111,725' 108,623' 104,470' 104,666' 104,198 106,668 98 Parent bank 28,181 39,451 47,081 51,271' 53,720' 50,777' 46.491' 45,493' 48,264 46,693 99 Other banks in United States 7,379 10,474 18,466 16,143 16,921 15,495 14,560 16,191 14,303 14,090 100 Nonbanks 24,106 35,834 38,878 41,559 41,084 42,351 43,419 42,982 41,631 45,885 101 To foreigners 61,218 60,012 38,274 29,998 33,088 31,560 32,875 36,163 34,734 38,130 102 Other branches of parent bank 17,040 20,641 15,796 10,073 11,822 12,262 12,778' 14,683 14,196 17,040 103 Banks 29,895 23,202 10,166 7,618 9,024 8,012 8,737 9,521 9,059 9,653 104 Official institutions 4,361 3,498 1,967 1,734 1,796 2,101 2,170' 2,237 1,976 1,624 105 Nonbank foreigners 9,922 12,671 10,345 10,573 10,446 9,185 9,190 9,722 9,503 9,813 106 Other liabilities 2,953 3,337 2,457 2,176 2,073 2,249 2,354 2,319 2,379 2,460 107 Total payable in U.S. dollars 119,657 145,284 141,908 138,051' 143,596' 139,246' 136,227' 139,854' 137,513 143,604 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • February 1984 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1983 IItteemm 11998811 11998822'''' June' July' Aug/ Sept/ Oct/ Nov. Dec." 1 Total1 169,735 172,718 174,338 175,576 172,799 171,550 173,272 173,921 178,533 By type 2 Liabilities reported by banks in the United States2 26,737 24,989 23,339 21,372 22,239 21,914 22,057 22,816 25,642 3 U.S. Treasury bills and certificates3 52,389 46,658 49,118 53,484 50,965 50,374 51,618 52,558 54,341 U.S. Treasury bonds and notes 4 Marketable 53,186 67,733 71,093 70,180 69,295 69,300 69,769 69,001 68,997 5 Nonmarketable4 11,791 8,750 7,950 7,950 7,950 7,950 7,950 7,250 7,250 6 U.S. securities other than U.S. Treasury securities5 25,632 24,588 22,838 22,590 22,350 22,012 21,878 22,296 22,303 By area 1 Western Europe1 65,699 61,298 63,699 66,365 64,427 63,845 64,835 65,594 67,569 8 Canada 2,403 2,070 2,826 2,879 2,755 2,712 2,816 2,670 2,443 9 Latin America and Caribbean 6,953 6,057 6,513 5,421 5,676 5,501 5,629 6,468 6,485 10 Asia 91,607 96,034 94,729 94,384 93,183 92,876 92,415 91,567 92,961 11 Africa 1,829 1,350 1,075 1,138 1,173 1,196 1,023 798 987 12 Other countries6 1,244 5,909 5,496 5,389 5,585 5,420 6,554 6,824 8,088 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 Dec. Mar. June' Sept. 1 Banks' own liabilities 1,918 3,748 3,523 4,844 5,075 5,867 5,943 2 Banks' own claims 2,419 4,206 4,980 7,707 8,097 7,851 7,919 3 Deposits 994 2,507 3,398 4,251 3,725 3,911 3,063 4 Other claims 1,425 1,699 1,582 3,456 4,372 3,940 4,856 5 Claims of banks' domestic customers1 580 962 971 676 637 684 717 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 A57 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1983 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998800 11998811AA 11998822 June' July' Aug.' Sept. Oct.' Nov. Dec.P 1 All foreigners 205,297 243,889 307,056' 321,592 327,300 334,931 337,910 337,766 351,488 371,406 2 Banks' own liabilities 124,791 163,817 227,089' 237,478 239,444 248,250 251,421 248,888 262,332 280,996 3 Demand deposits 23,462 19,631 15,889' 17,177 15,595 15,672 16,375 17,094 17,198 17,494 4 Time deposits' 15,076 29,039 68,035' 75,437 74,721 77,888 81,091 80,468 84,335 90,010 5 Other2 17,583 17,647 23,946' 24,110 21,932 23,905 24,956 22,565 23,117 26,108 6 Own foreign offices3 68,670 97,500 119,219' 120,755 127,195 130,785 129,000 128,760 137,682 147,384 7 Banks' custody liabilities4 80,506 80,072 79,967 84,114 87,856 86,682 86,488 88,878 89,156 90,410 8 U.S. Treasury bills and certificates5 57,595 55,315 55,628 61,338 65,237 63,939 64,062 65,735 66,746 68,669 9 Other negotiable and readily transferable instruments6 20,079 18,788 20,636 18,613 17,986 17,977 17,292 17,182 17,721 17,490 10 Other 2,832 5,970 3,702 4,163 4,634 4,765 5,135 5,961 4,690 4,251 11 Nonmonetary international and regional organizations7 2,344 2,721 4,922 5,456 5,678 5,555 5,308 4,619 6,321 6,147 12 Banks' own liabilities 444 638 1,909 3,048 4,030 3,433 3,024 3,294 4,897 4,822 13 Demand deposits 146 262 106 165 307 325 252 452 437 297 14 Time deposits' 85 58 1,664 2,483 3,010 2,507 2,168 2,487 4,079 4,075 15 Other2 212 318 139 400 713 601 605 355 381 449 16 Banks' custody liabilities4 1,900 2,083 3,013 2,408 1,648 2,121 2,284 1,325 1,424 1,325 17 U.S. Treasury bills and certificates 254 541 1,621 1,538 678 1,294 1,442 441 484 463 18 Other negotiable and readily transferable instruments6 1,646 1,542 1,392 870 970 828 842 884 939 862 19 Other 0 0 0 0 0 0 0 0 0 0 20 Official institutions8 86,624 79,126 71,647 72,458 74,856 73,205 72,289 73,675 75,374 79,983 21 Banks' own liabilities 17,826 17,109 16,640 16,441 15,204 16,014 16,147 16,532 16,673 19,535 22 Demand deposits 3,771 2,564 1,899' 2,060 1,774 1,685 1,930 1,818 2,023 1,837 23 Time deposits' 3,612 4,230 5,528 6,061 6,196 5,990 6,185 6,657 6,709 7,519 24 Other2 10,443 10,315 9,212' 8,320 7,234 8,340 8,033 8,057 7,940 10,179 25 Banks' custody liabilities4 68,798 62,018 55,008 56,017 59,652 57,191 56,142 57,144 58,701 60,448 26 U.S. Treasury bills and certificates5 56,243 52,389 46,658 49,118 53,484 50,965 50,374 51,618 52,558 54,341 27 Other negotiable and readily transferable instruments6 12,501 9,581 8,321 6,881 6,139 6,186 5,735 5,489 6,115 6,082 28 Other 54 47 28 17 29 39 32 36 28 25 29 Banks9 96,415 136,008 185,881' 192,487 195,302 203,153 205,879 203,637 214,164 228,500 30 Banks' own liabilities 90,456 124,312 169,449' 173,026 175,174 182,700 184,811 181,696 192,725 206,973 31 Unaffiliated foreign banks 21,786 26,812 50,230' 52,270 47,978 51,914 55,811 52,936 55,043 59,590 32 Demand deposits 14,188 11,614 8,675 9,134 8,074 8,302 8,618 9,102 8,770 8,740 33 Time deposits' 1,703 8,720 28,386' 28,279 26,558 29,300 31,468 30,329 32,265 36,232 34 Other2 5,895 6,477 13,169' 14,857 13,346 14,312 15,725 13,505 14,008 14,617 35 Own foreign offices3 68,670 97,500 119,219' 120,755 127,195 130,785 129,000 128,760 137,682 147,384 36 Banks' custody liabilities4 5,959 11,696 16,432 19,461 20,128 20,454 21,069 21,941 21,438 21,527 37 U.S. Treasury bills and certificates 623 1,685 5,809 8,402 8,608 9,028 9,440 10,036 9,967 10,178 38 Other negotiable and readily transferable instruments6 2,748 4,400 7,857 7,771 7,821 7,581 7,553 7,542 7,251 7,473 39 Other 2,588 5,611 2,766 3,289 3,699 3,845 4,075 4,363 4,221 3,876 40 Other foreigners 19,914 26,035 44,606 51,191 51,464 53,018 54,433 55,834 55,630 56,776 41 Banks' own liabilities 16,065 21,759 39,092 44,963 45,037 46,103 47,439 47,366 48,037 49,667 42. Demand deposits 5,356 5,191 5,209 5,817 5,439 5,360 5,575 5,723 5,968 6,619 43 Time deposits 9,676 16,030 32,457 38,614 38,958 40,091 41,270 40,995 41,282 42,184 44 Other2 1,033 537 1,426 533 640 652 594 648 787 863 45 Banks' custody liabilities4 3,849 4,276 5,514 6,228 6,428 6,916 6,995 8,468 7,593 7,109 46 U.S. Treasury bills and certificates 474 699 1,540 2,279 2,466 2,652 2,805 3,640 3,737 3,686 47 Other negotiable and readily transferable instruments6 3,185 3,265 3,065 3,091 3,055 3,383 3,162 3,267 3,415 3,073 48 Other 190 312 908 857 906 881 1,028 1,562 441 350 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,745 10,747 14,307 11,470 10,941 10,720 10,336 9,995 10,385 10,369 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

A58 International Statistics • February 1984 3.17 Continued 1983 AArreeaa aanndd ccoouunnttrryy 11998800 11998811AA 11998822 June July Aug. Sept. Oct. Nov. Dec.'' 1 Total 205,297 243,889 307,056' 321,592' 327,300' 334,931' 337,910 337,766' 351,488 371,406 2 Foreign countries 202,953 241,168 302,134' 316,136' 321,622' 329,377' 332,601 333,147' 345,168 365,259 3 Europe 90,897 91,275 117,756' 118,681' 118,881' 123,607' 125,850 126,694' 130,099 137,060 4 Austria 523 596 519 640 610 556 659 570 641 585 5 Belgium-Luxembourg 4,019 4,117 2,517 2,852' 2,960' 3,116 2,795 2,853 2,465 2,709 6 Denmark 497 333 509 616 612 573 593 544 538 478 7 Finland 455 296 748 447 292 459 373 372 375 526 8 France 12,125 8,486 8,171 6,774' 8,850' 8,488 8,827 8,638' 8,083 9,436 9 Germany 9,973 7,645 5,351 3.433' 3,710' 3,537 3,438 4,307 4,337 3,587 10 Greece 670 463 537 567 588 636 604 595 544 519 11 Italy 7,572 7,267 5,626 6,634 7,790 7,277 6,931 7,703 7,819 8,492 12 Netherlands 2,441 2,823 3,362 3,247' 3,415' 3,633 3,892 3,735' 3,701 4,290 13 Norway 1,344 1,457 1,567 1.719 900 1,044 1,457 1,072 1,531 1,599 14 Portugal 374 354 388 350 338 315 302 297 306 384 1.S Spain 1,500 916 1,405 1.615 1,694 1,585 1,678 1,592 1,534 1,601 16 Sweden 1,737 1,545 1,390 1,493 1,407 1,204 1,337 1,489' 1,652 1,799 17 Switzerland 16,689 18,716 29,066 29,950' 29,972' 29,877' 29,938 30,725 30,482 31,782 18 Turkey 242 518 296 198 224 315 333 277 319 466 19 United Kingdom 22,680 28,286 48,172 50,461' 48,080' 53,768' 55,602 54,746 58,016 60,288 20 Yugoslavia 681 375 499 504 427 462 506 464 552 427 21 Other Western Europe1 6,939 6,541 7,006 6,656' 6,514 6,347' 6,038 6,102' 6,660 7,433 22 U.S.S.R 68 49 50 71 45 31 23 37 27 65 23 Other Eastern Europe2 370 493 576' 451' 453 384 525 576 518 594 24 Canada 10,031 10,250 12,232 16,369' 16,838' 17,918' 16,470 16,325 16,349 16,016 25 Latin America and Caribbean 53,170 85,223 114,163' 120,842' 124,449' 126,631' 127,077 127,237' 135,038 142,906 26 Argentina 2,132 2,445 3,578 4,751' 5,017 4,249 4,148 4,018 4,377 4,016 27 Bahamas 16,381 34,856 44,744' 49,558' 54,506 51,992' 49,859 51,180' 53,551 56,076 28 Bermuda 670 765 1,572 2.040' 2,363' 2,849' 2,833 2,632 2,582 2,357 29 Brazil 1,216 1,568 2,014 2.675 2,704' 3,046' 3,406 3,818 4,179 3,395 30 British West Indies 12,766 17,794 26,381' 24.795' 24,337' 26,967' 28,442 27,410 31,666 36,510 31 Chile 460 664 1,626 1,355 1,385 1,472 1,613 1,697 1,783 1,896 32 Colombia 3,077 2,993 2.594 1,719 1,618 1,674 1,611 1,617 1,645 11,,669977 33 Cuba 6 9 9 13 11 12 10 10 10 88 34 Ecuador 371 434 455 581 532 601 670 825 1,003 1,047 35 Guatemala 367 479 670 705 697 718 758 750 766 788 36 Jamaica 97 87 126 130 108 106 109 105 234 139 37 Mexico 4,547 7,235 8,377 9,034' 9,142 9,445 9,697 9,449' 9,459 10,162 38 Netherlands Antilles 413 3,182 3,597 3,514 3,434 3,486 3,581 3,858' 3,941 3,861 39 Panama 4,718 4,857 4,805 5,702' 5,608 5,934 6,079 5,902 5,914 6,098 40 Peru 403 694 1,147 1.148 1,055 1,129 1,203 1,049 1,120 1,163 41 Uruguay 254 367 759 957' 960' 1,033 1,116 1,202 1,159 1,221 42 Venezuela 3,170 4,245 8,417 8,631 7,715 8,587 8,382 8,202 8,023 8,589 43 Other Latin America and Caribbean 2,123 2,548 3,291 3,533' 3,257 3,331 3,561 3,513 3,626 3,883 44 42.420 49,822 48,716 51,994' 53,068' 52,649' 5544,,558833 5533,,337700 54,120 5588,,440033 China 45 Mainland 49 158 203 208 192 176 190 216 184 249 46 Taiwan 1,662 2,082 2,761 3,744 3,913 4,086 3,852 3,992 4,063 3,993 47 Hong Kong 2,548 3,950 4,465 5,609' 5,581' 5,614' 6,582 6,507 6,970 6,613 48 India 416 385 433 669 606 528 712 830 725 464 49 Indonesia 730 640 857 554 1,245 839 622 871 661 997 50 Israel 883 592 606 839' 676' 823' 848 812 808 1,886 51 Japan 16,281 20,750 16,078 17,006 17,655 16,922 17,418 17,103 17,137 17,936 52 Korea 1,528 2,013 1,692 1,326 1,552 1,553 1,478 1,353 1,591 1,670 53 Philippines 919 874 770 818 770 933 1,181 747 1,012 1,239 54 Thailand 464 534 629 702' 537 531 581 522 569 715 55 Middle-East oil-exporting countries3 14,453 12,992 13,433 11,833' 11,875' 11,764 12,661 12,410 12,492 12,965 56 Other Asia 2,487 4,853 6,789 8,685 8,467 8,877 8,458 8.007 7,907 9,676 57 Africa 5,187 3,180 3,124 2,693 2,916 2,853 3,132 2,845 2,694 2,826 58 Egypt 485 360 432 467 554 465 488 576 589 642 59 Morocco 33 32 81 54 57 48 84 73 96 84 60 South Africa 288 420 292 355 403 452 520 394 389 449 61 Zaire 57 26 23 59 55 29 34 43 32 87 62 Oil-exporting countries4 3,540 1,395 1,280 743 928 934 963 736 679 620 63 Other Africa 783 946 1,016 1,014 919 926 1,042 1,023 909 944 64 Other countries 1,247 1,419 6,143 5,557' 5,469 5,719 5,490 6,675 6,868 8,047 65 Australia 950 1,223 5,904 5,404 5,250 5,512 5,284 6,461 6,666 7,850 66 All other 297 196 239 154' 219 208 206 214 202 197 67 Nonmonetary international and regional organizations 2,344 2,721 4,922 5,456 5,678 5,555 5,308 4,619 6,321 6,147 68 International 1,157 1,661 4,049 4,750' 4,987 4,861 4,674 3,944 5,556 5,463 69 Latin American regional 890 710 517 443 454 441 445 437 415 419 70 Other regional5 296 350 357 263' 237 252 189 238 350 265 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. • 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 A59 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 1983 AArreeaa aanndd ccoouunnttrryy 11998800 11998811AA 11998822 June' July Aug. Sept. Oct. Nov. Dec.'' 1 Total 172,592 251,589' 355,705' 373,887 367,281' 372,387' 375,536 372,790' 376,937 384,394 2 Foreign countries 172,514 251,533' 355,636' 373,444 366,945' 372,068' 374,939 372,730' 376,867 384,230 3 Europe 32,108 49,262 85,584' 86,827 84,882' 87,996' 90,522 88,718' 89,570 89,525 4 Austria 236 121 229 342 383 338 351 334 395 397 5 Belgium-Luxembourg 1,621 2,849 5,138 5,803 5,471' 5,898' 5,650 5,503 5,548 5,460 6 Denmark 127 187 554 1,098 1,096' 1,124 1,131 1,103 1,272 1,213 7 Finland 460 546 990 870 724' 637 697 789 822 989 8 France 2,958 4,127 7,251 7,942 7,953' 8,589 7,869 7,390 7,885 8,564 9 Germany 948 940 1,876 1,404 1,112 1,168' 1,428 1,095 1,256 1,234 10 Greece 256 333 452 574 458 375 408 369 412 476 11 Italy 3,364 5,240 7,560 7,335 7,406' 7,412' 7,038 7,686 8,432 9,175 12 Netherlands 575 682 1,425 1,165 967 1,048 1,189 1,071' 1,390 1,231 13 Norway 227 384 572 652 598 634 550 575 590 684 14 Portugal 331 529 950 849 844 848 861 893 891 932 15 Spain 993 2,095 3,744 3,207 3,345' 3,373 3,389 3,128 3,634 3,527 16 Sweden 783 1,205 3,038 2,859 2,910 2,836 3,081 3,059 3,252 3,232 17 Switzerland 1,446 2,213 1,639 1,603 1,727 1,630 1,765 1,579 2,112 1,834 18 Turkey 145 424 560 570 629 594 616 660 693 798 19 United Kingdom 14,917 23,849 45,781' 46,689 45,664' 47,863' 50,780 49,841' 47,198 45,774 20 Yugoslavia 853 1,225 1,430 1,464 1,381 1,351 1,369 1,468 1,582 1,692 21 Other Western Europe1 179 211 368 334 358' 406 529 394 428 462 22 U.S.S.R 281 377 263 373 288 232 215 206 176 245 23 Other Eastern Europe2 1,410 1,725 1,762 1,692 1,566 1,640' 1,606 1,575 1,601 1,604 24 Canada 4,810 9,193 13,678 16,694 16,517' 17,501 16,525 15,885 16,390 16,223 25 Latin America and Caribbean 92,992 138,347' 187,969' 199,102 195,289' 195,281' 194,391 195,109' 200,423 204,687 26 Argentina 5,689 7,527 10,974 11,243 11,112 11,334 11,444 11,618 11,899 11,823 27 Bahamas 29,419 43,542' 56,649' 61,820 58,836' 54,687' 55,009 56,220' 58,919 59,885 28 Bermuda 218 346 603 447 342' 390 578 489' 559 568 29 Brazil 10,496 16,926 23,271 23,359 23,742' 24,231' 24,282 24,202' 24,573 24,442 30 British West Indies 15,663 21,981' 29,101 32,738 30,432' 32,266' 30,877 30,796 32,139 35,180 31 Chile 1,951 3,690 5,513 5,161 5,188 5,404' 5,792 5,740 5,860 6,060 32 Colombia 1,752 2,018 3,211 3,601 3,656 3,592 3,665 3,648 3,734 3,826 33 Cuba 3 3 3 0 0 0 0 3 0 0 34 Ecuador 1,190 1,531 2,062 2,038 2,018 2,014 2,020 2,154 2,262 2,336 35 Guatemala3 137 124 124 90 96 100 112 115 122 133 36 Jamaica3 36 62 181 207 209 204 214 203 210 209 37 Mexico 12,595 22,439 29,552 32,426 32,962' 33,689 33,740 33,521' 33,728 34,514 38 Netherlands Antilles 821 1,076 839 522 943 838 897 988' 1,164 1,064 39 Panama 4,974 6,794 10,210 8,840 9,177' 10,093' 9,189 8,835 8,336 7,570 40 Peru 890 1,218 2,357 2,627 2,506 2,421 2,470 2,434 2,469 2,537 41 Uruguay 137 157 686 820 833 820 857 883 903 964 42 Venezuela 5,438 7,069 10,643 11,036 11,121 11,045 11,037 10,881 11,088 11,193 43 Other Latin America and Caribbean 1,583 1,844 1,991 2,129 2,115' 2,152' 2,209 2,379' 2,457 2,383 44 Asia 39,078 49,851 60,952' 62,812 62,069' 62,585' 64,751 63,772' 61,154 64,485 China 45 Mainland 195 107 214 166 124 179 227 295 249 292 46 Taiwan 2,469 2,461 2,288 1,760 1,715 1,644 1,829 1,618 1,572 1,720 47 Hong Kong 2,247 4,132 6,787' 7,917 8,096' 8,022 8,704 8,287' 8,782 7,925 48 India 142 123 222 230 245 275 259 324 305 302 49 Indonesia 245 352 348 544 595 635 688 697 711 501 50 Israel 1,172 1,567 2,029 2,181 1,657 1,648' 1,726 1,780 1,817 1,780 51 Japan 21,361 26,797 28,379' 27,611 27,876' 27,438' 28,563 28,239' 25,773 29,062 5? Korea 5,697 7,340 9,387 9,129 9,639 9,696 9,634 9,314 9,624 9,516 53 Philippines 989 1,819 2,625 2,820 2,630' 2,540' 2,777 2,369 2,427 2,056 54 Thailand 876 565 643 788 689 735 806 831 867 974 55 Middle East oil-exporting countries4 1,432 1,581 3,087 4,461 4,003 4,654 4,142 4,630' 4,236 4,979 56 Other Asia 2,252 3,009 4,943 5,207 4,800' 5,119' 5,395 5,388' 4,791 5,379 57 Africa 2,377 3,503 5,346 5,665 5,940' 6,527 6,482 6,889 6,808 6,676 58 Egypt 151 238 322 450 486 529 596 623 670 683 59 Morocco 223 284 353 463 484 444 444 462 461 446 60 South Africa 370 1,011 2,012 2,231 2,407 2,630 2,719 2,582 2,892 2,650 61 Zaire 94 112 57 46 45 40 38 38 37 33 62 Oil-exporting countries5 805 657 801 830 850 1,052 964 1,481 1,039 1,101 63 Other 734 1,201 1,802 1,645 1,668' 1,832 1,722 1,703 1,709 1,764 64 Other countries 1,150 1,376 2,107 2,343 2,248 2,178' 2,267 2,357 2,522 2,633 65 Australia 859 1,203 1,713 1,724 1,635 1,637' 1,675 1,692 1,899 2,078 66 All other 290 172 394 620 613 542 593 664 624 555 67 Nonmonetary international and regional organizations6 78 56 68 443 336' 319' 598 60 70 164 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 before 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

A60 International Statistics • February 1984 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 1983 TTyyppee ooff ccllaaiimm 11998800 11998811 AA'' 11998822'' June' July' Aug.' Sept. Oct.' Nov. Dec.P 1 Total 111111199999998888888,,,,,,,666666699999998888888 222222288888887777777,,,,,,,555555555555557777777 333333399999996666666,,,,,,,000000011111115555555 444444400000009999999,,,,,,,555555599999992222222 444444411111111111111,,,,,,,666666633333339999999 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 111111177777772222222,,,,,,,555555599999992222222 222222255555551111111,,,,,,,555555588888889999999 333333355555555555555,,,,,,,777777700000005555555 333333377777773333333,,,,,,,888888888888887777777 367,281 372,387 333333377777775555555,,,,,,,555555533333336666666 372,790 376,937 384,394 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 22222220000000,,,,,,,888888888888882222222 33333331111111,,,,,,,222222266666660000000 44444445555555,,,,,,,444444422222222222222 44444449999999,,,,,,,999999966666664444444 50,337 52,009 55555553333333,,,,,,,666666699999999999999 54,770 56,007 57,617 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 66666665555555,,,,,,,000000088888884444444 99999996666666,,,,,,,666666655555553333333 111111122222227777777,,,,,,,222222299999993333333 111111144444440000000,,,,,,,222222233333333333333 135,840 137,166 111111133333337777777,,,,,,,333333388888882222222 141,971 139,759 143,880 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 55555550000000,,,,,,,111111166666668888888 77777774444444,,,,,,,777777700000004444444 111111122222221111111,,,,,,,333333377777777777777 111111122222221111111,,,,,,,000000099999991111111 117,955 120,732 111111122222221111111,,,,,,,999999900000000000000 114,390 118,180 120,895 66 DDeeppoossiittss 8888888,,,,,,,222222255555554444444 22222223333333,,,,,,,333333388888881111111 44444444444444,,,,,,,222222222222223333333 44444447777777,,,,,,,111111166666667777777 46,368 47,345 44444448888888,,,,,,,111111177777779999999 44,613 44,533 46,465 77 OOtthheerr 44444441111111,,,,,,,999999911111114444444 55555551111111,,,,,,,333333322222222222222 77777777777777,,,,,,,111111155555553333333 77777773333333.......999999922222224444444 71,588 73,386 77777773333333,,,,,,,777777722222221111111 69,777 73,647 74,431 88 AAllll ootthheerr ffoorreeiiggnneerrss 33333336666666,,,,,,,444444455555559999999 44444448888888,,,,,,,999999977777772222222 66666661111111,,,,,,,666666611111114444444 66666662222222,,,,,,,555555599999999999999 63,148 62,480 66666662222222,,,,,,,555555555555556666666 61,658 62,991 62,001 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 22222226666666,,,,,,,111111100000006666666 33333335555555,,,,,,,999999966666668888888 44444440000000,,,,,,,333333311111110000000 33333335555555,,,,,,,777777700000005555555 33333336666666,,,,,,,111111100000002222222 888888888888885555555 1111111,,,,,,,333333377777778888888 2222222,,,,,,,444444499999991111111 2222222,,,,,,,666666633333331111111 2222222,,,,,,,666666655555554444444 11 Negotiable and readily transferable 11111115555555,,,,,,,555555577777774444444 22222226666666,,,,,,,333333355555552222222 33333330000000,,,,,,,777777766666663333333 22222226666666,,,,,,,999999933333337777777 22222227777777,,,,,,,555555555555550000000 12 Outstanding collections and other 9999999,,,,,,,666666644444448888888 8888888,,,,,,,222222233333338888888 7777777,,,,,,,000000055555556666666 6666666,,,,,,,111111133333337777777 5555555,,,,,,,888888899999998888888 13 MEMO: Customer liability on 22222222222222,,,,,,,777777711111114444444 22222229999999,,,,,,,999999955555552222222 33333338888888,,,,,,,111111155555553333333 33333334444444,,,,,,,999999900000001111111 33333334444444,,,,,,,555555588888885555555 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 ... 24,468 40,306R 41,702 41,162 41,443 41,899 41,652 44,189 46,520' 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 11998800 11998811AA Sept.' Dec.' Mar.' June' Sept. 1 106,748 154,590' 215,389 228,150 230,112 232,126 233,676 By borrower 2 Maturity of 1 year or less1 82,555 116,394' 163,653 173,917 174,152 174,570 174,629 3 Foreign public borrowers 9,974 15,142 20,118 21,256 21,768 23,030 25,519 4 All other foreigners 72,581 101,252' 143,534 152,661 151,384 151,541 149,111 5 Maturity of over 1 year1 24,193 38,197 51,737 54,233 55,960 57,556 59,046 6 Foreign public borrowers 10,152 15,589 22,026 23,137 24,859 26,206 27,077 7 All other foreigners 14,041 22,608 29,710 31,095 31,100 31,349 31,970 By area Maturity of 1 year or less1 8 Europe 18,715 28,130 45,936 50,500 54,109 52,039 52,665 9 Canada 2,723 4,662 7,067 7,642 6,861 7,055 6,443 10 Latin America and Caribbean 32,034 48,717' 72,431 73,291 75,122 74,768 76,031 11 26,686 31,485 33,434 37,578 32,753 35,327 33,442 12 Africa 1,757 2,457 3,621 3,680 3,872 3,854 4,657 13 All other2 640 943 1,163 1,226 1,435 1,527 1,391 Maturity of over 1 year1 14 Europe 55,,111188 8,100 10,564 11,636 11,986 12,238 11,613 15 Canada 1,448 1,808 2,003 1,931 1,924 1,861 1,756 16 Latin America and Caribbean 15,075 25,209 34,114 35,247 35,842 36,671 38,254 17 1,865 1,907 3,092 3,185 3,573 4,053 4,581 18 Africa 507 900 1,328 1,494 1,485 1,667 1,734 19 All other2 179 272 635 740 1,150 1,066 1,108 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 A61 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 1981 1982 1983 AArreeaa oorr ccoouunnttrryy 11997799 11998800 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1 Total 303.9 352.0 400.0 415.2 419.6 435.1 437.9 438.5 440.1 435.2 421.0 2 G-10 countries and Switzerland 138.4 162.1 172.3 175.5 174.5 176.2 175.3 179.5 181.8 175.8 164.9 3 Belgium-Luxembourg 11.1 13.0 14.1 13.3 13.2 14.1 13.6 13.1 13.7 13.3 12.4 4 France 11.7 14.1 16.0 15.3 16.0 16.5 15.8 17.1 17.1 17.1 16.0 5 Germany 12.2 12.1 12.7 12.9 12.5 12.7 12.2 12.7 13.4 12.5 11.5 6 Italy 6.4 8.2 8.6 9.6 9.0 9.0 9.7 10.3 10.2 10.5 9.7 7 Netherlands 4.8 4.4 3.7 4.0 4.0 4.1 3.8 3.6 4.3 4.1 3.6 8 Sweden 2.4 2.9 3.5 3.7 4.1 4.0 4.7 5.0 4.3 4.7 4.8 9 Switzerland 4.7 5.0 5.1 5.5 5.3 5.1 5.1 5.0 4.6 4.7 4.2 10 United Kingdom 56.4 67.4 68.8 70.1 70.3 69.3 70.2 72.0 72.7 69.7 65.1 11 Canada 6.3 8.4 11.8 10.9 11.6 11.4 11.0 10.4 12.4 10.7 8.8 12 Japan 22.4 26.5 28.1 30.2 28.5 29.9 29.3 30.1 29.1 28.5 28.8 13 Other developed countries 19.9 21.6 26.4 28.4 30.7 32.1 32.7 33.7 33.9 34.3 33.9 14 Austria 2.0 1.9 2.2 1.9 2.1 2.1 2.0 1.9 2.1 2.1 1.9 15 Denmark 2.2 2.3 2.5 2.3 2.5 2.6 2.5 2.4 3.3 3.3 3.3 16 Finland 1.2 1.4 1.4 1.7 1.6 1.6 1.8 2.2 2.1 2.1 1.8 17 Greece 2.4 2.8 2.9 2.8 2.9 2.7 2.6 3.0 2.9 2.8 2.9 18 Norway 2.3 2.6 3.0 3.1 3.2 3.2 3.4 3.3 3.3 3.4 3.2 19 Portugal .7 .6 1.0 1.1 1.2 1.5 1.6 1.5 1.4 1.4 1.3 20 Spain 3.5 4.4 5.8 6.6 7.2 7.3 7.7 7.5 7.0 7.2 7.1 21 Turkey 1.4 1.5 1.5 1.4 1.6 1.5 1.5 1.4 1.5 1.4 1.5 22 Other Western Europe 1.4 1.7 1.9 2.1 2.1 2.2 2.1 2.3 2.2 2.1 2.1 23 South Africa 1.3 1.1 2.5 2.8 3.3 3.5 3.6 3.7 3.6 3.9 4.6 24 Australia 1.3 1.3 1.9 2.5 3.0 4.0 4.0 4.4 4.6 4.5 4.3 25 OPEC countries2 22.9 22.7 23.5 24.8 25.4 26.4 27.3 27.4 28.5 28.0 27.0 26 Ecuador 1.7 2.1 2.1 2.2 2.3 2.4 2.3 2.2 2.2 2.2 2.1 27 Venezuela 8.7 9.1 9.2 9.9 10.0 10.1 10.4 10.5 10.4 10.2 9.6 28 Indonesia 1.9 1.8 2.5 2.6 2.7 2.8 2.9 3.2 3.5 3.2 3.4 29 Middle East countries 8.0 6.9 7.1 7.5 8.2 8.7 9.0 8.7 9.3 9.5 9.0 30 African countries 2.6 2.8 2.6 2.5 2.2 2.5 2.7 2.8 3.0 3.0 2.8 31 Non-OPEC developing countries 63.0 77.4 90.3 96.3 97.5 103.6 104.0 107.0 107.5 108.1 107.6 Latin America 32 Argentina 5.0 7.9 9.3 9.4 10.0 9.6 9.2 8.9 9.0 9.4 9.4 33 Brazil 15.2 16.2 17.7 19.1 19.7 21.4 22.4 22.9 23.1 22.5 22.6 34 Chile 2.5 3.7 5.5 5.8 6.0 6.4 6.2 6.3 6.0 5.8 6.1 35 Colombia 2.2 2.6 2.5 2.6 2.3 2.6 2.8 3.1 2.9 3.2 3.2 36 Mexico 12.0 15.9 20.0 21.6 22.9 25.2 25.0 24.5 25.0 25.0 25.5 37 Peru 1.5 1.8 1.8 2.0 1.9 2.5 2.6 2.6 2.4 2.6 2.3 38 Other Latin America 3.7 3.9 4.2 4.1 4.1 4.0 4.3 4.0 4.2 4.3 4.2 Asia China 39 Mainland .1 .2 .2 .2 .2 .3 .2 .2 .2 .2 .2 40 Taiwan 3.4 4.2 5.1 5.1 5.1 5.0 4.9 5.2 5.1 5.1 5.1 41 India .2 .3 .3 .3 .5 .5 .5 .6 .4 .5 .5 42 Israel 1.3 1.5 1.5 2.1 1.7 2.2 1.9 2.3 2.0 2.3 1.7 43 Korea (South) 5.4 7.1 8.6 9.4 8.6 8.9 9.3 10.8 10.8 10.8 10.5 44 Malaysia 1.0 1.1 1.4 1.7 1.7 1.9 1.8 2.1 2.5 2.6 2.8 45 Philippines 4.2 5.1 5.7 6.0 5.9 6.3 6.0 6.3 6.6 6.4 6.1 46 Thailand 1.5 1.6 1.4 1.5 1.4 1.3 1.3 1.6 1.6 1.8 1.7 47 Other Asia .5 .6 .8 1.0 1.2 1.1 1.3 1.1 1.4 1.2 1.0 Africa 48 Egypt .6 .8 1.0 1.1 1.3 1.3 1.3 1.2 1.1 1.2 1.4 49 Morocco .6 .7 .7 .7 .7 .7 .8 .7 .8 .8 .8 50 Zaire .2 .2 .2 .2 .2 .2 .1 .1 .1 .1 .1 51 Other Africa3 1.7 2.1 2.2 2.3 2.3 2.3 2.2 2.4 2.3 2.2 2.4 52 Eastern Europe 7.3 7.4 7.7 7.8 7.2 6.7 6.3 6.2 5.8 5.8 5.3 53 U.S.S.R .7 .4 .4 .6 .4 .4 .3 .3 .3 .4 .2 54 Yugoslavia 1.8 2.3 2.5 2.5 2.5 2.4 2.2 2.2 2.2 2.3 2.2 55 Other 4.8 4.6 4.7 4.7 4.3 3.9 3.8 3.7 3.3 3.1 2.9 56 Offshore banking centers 40.4 47.0 61.8 63.7 65.7 72.0 72.0 66.9 66.2 67.4 65.6 57 Bahamas 13.7 13.7 21.4 19.0 20.2 24.1 21.4 19.2 17.7 19.9 19.2 58 Bermuda .8 .6 .8 .7 .7 .7 .8 .9 1.0 .8 .9 59 Cayman Islands and other British West Indies 9.4 10.6 12.1 12.4 12.1 12.3 13.6 12.9 11.9 11.9 10.1 60 Netherlands Antilles 1.2 2.1 2.2 3.2 3.2 3.0 3.3 3.3 3.1 2.6 4.2 61 Panama4 4.3 5.4 6.8 7.7 7.2 7.4 8.1 7.6 7.1 6.5 5.6 62 Lebanon .2 .2 .2 .2 .2 .2 .1 .1 .1 .1 .1 63 Hong Kong 6.0 8.1 10.3 11.8 12.9 14.3 14.9 13.8 15.0 14.5 15.0 64 Singapore 4.5 5.9 8.0 8.7 9.3 9.9 9.8 9.1 10.3 11.0 10.4 65 Others5 .4 .3 .1 .1 .1 .1 .0 .0 .0 .0 .1 66 Miscellaneous and unallocated6 11.7 14.0 18.2 18.8 18.5 18.4 20.3 17.9 16.4 15.7 16.9 1. The banking offices covered by these data are the U.S. offices and foreign 2. Besides the Organization of Petroleum Exporting Countries shown individbranches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. ually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq, Offices not covered include (1) U.S. agencies and branches of foreign banks, and Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are 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

A62 International Statistics • February 1984 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1982 1983 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997799 11998800 11998811 Sept. Dec. Mar. June Sept.'' 1 Total 17,433 29,434 28,618 25,149 25,142 22,925 22,381 24,177 2 Payable in dollars 14,323 25,689 24,909 22,051 22,042 20,032 19,489 21,355 3 Payable in foreign currencies 3,110 3,745 3,709 3,099 3,099 2,893 2,892 2,822 By type 4 Financial liabilities 7,523 11,330 12,157 10,855 10,499 10,478 10,760 10,361 5 Payable in dollars 5,223 8,528 9,499 8,565 8,424 8,533 8,730 8,435 6 Payable in foreign currencies 2,300 2,802 2,658 2,291 2,075 1,945 2,031 1,926 7 Commercial liabilities 9,910 18,104 16,461 14,294 14,642 12,447 11,621 13,815 8 Trade payables 4,591 12,201 10,818 8,084 7,687 5,620 5,981 7,056, 9 Advance receipts and other liabilities 5,320 5,903 5,643 6,209 6,955 6,827 5,640 6,760 10 Payable in dollars 9,100 17,161 15,409 13,486 13,618 11,499 10,759 12,919 11 Payable in foreign currencies 811 943 1,052 808 1,024 948 862 896 By area or country Financial liabilities 12 Europe 4,665 6,481 6,825 6,389 6,172 6,090 6,126 5,676 13 Belgium-Luxembourg 338 479 471 494 502 407 436 379 14 France 175 327 709 672 635 685 697 688 15 Germany 497 582 491 446 470 487 460 447 16 Netherlands 829 681 748 759 702 687 728 730 17 Switzerland 170 354 715 670 673 623 595 470 18 United Kingdom 2,477 3,923 3,565 3,212 3,061 3,071 3,060 2,829 19 Canada 532 964 963 753 735 723 854 783 20 Latin America and Caribbean 1,514 3,136 3,356 2,969 2,707 2,690 2,435 2,546 21 Bahamas 404 964 1,279 938 890 817 695 738 22 Bermuda 81 1 7 9 14 18 10 13 23 Brazil 18 23 22 28 28 39 34 32 24 British West Indies 516 1,452 1,241 981 1,002 1,001 932 899 25 Mexico 121 99 102 85 121 149 151 184 26 Venezuela 72 81 98 104 114 121 124 117 27 Asia 804 723 976 714 857 943 1,319 1,322 28 Japan 726 644 792 479 633 699 943 957 29 Middle East oil-exporting countries2 31 38 75 67 69 68 205 201 30 Africa 4 11 14 17 17 20 17 19 31 Oil-exporting countries3 1 1 0 0 0 0 0 0 32 All other4 4 15 24 13 12 13 9 15 Commercial liabilities 33 Europe 3,709 4,402 3,770 3,957 3,639 3,430 3,349 3,384 34 Belgium-Luxembourg 137 90 71 50 52 45 41 47 35 France : 467 582 573 762 595 576 615 506 36 Germany 545 679 545 436 459 440 431 461 37 Netherlands 227 219 220 277 346 351 342 243 38 Switzerland 316 499 424 358 363 354 357 448 39 United Kingdom 1,080 1,209 880 1,001 851 679 623 786 40 Canada 924 888 897 1,197 1,496 1,454 1,465 1,407 41 Latin America and Caribbean 1,325 1,300 1,044 1,235 991 1,050 999 11,,006677 42 Bahamas 69 8 2 6 16 4 1 11 43 Bermuda 32 75 67 48 89 117 76 76 44 Brazil 203 111 67 128 60 51 49 48 45 British West Indies 21 35 2 3 32 4 22 14 46 Mexico 257 367 340 499 379 355 391 429 47 Venezuela 301 319 276 269 148 183 219 217 48 Asia 2,991 10,242 9,384 6,641 7,160 5,437 4,799 6,852 49 Japan 583 802 1,094 1,192 1,226 1,235 1,236 1,294 50 Middle East oil-exporting countries2 5 1,014 8,098 7,008 4,178 4,531 2,803 2,294 4,072 51 Africa 728 817 703 669 704 497 492 506 52 Oil-exporting countries3 384 517 344 248 277 158 167 204 53 All other4 233 456 664 595 651 578 518 600 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 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1982 Type, and area or country Sept. 1 Total 34,482 36,185 30,232 27,988 30,726 31,757' 2 Payable in dollars 28,096 31,528 32,582 27,571 25,360 27,984 29,114' 3 Payable in foreign currencies 3,203 2,955 3,603 2,661 2,628 2,741 2,643' By type 4 Financial claims 18,398 19,763 21,142 18,356 17,033 19,743 21,148 5 Deposits 12,858 14,166 15,081 13,241 12,497 15,092 16,324 6 Payable in dollars 11,936 13,381 14,456 12,828 12,071 14,614 15,897 7 Payable in foreign currencies 923 785 625 413 426 478 426 8 Other financial claims 5,540 5,597 6,061 5,115 4,536 4,651 4,824 9 Payable in dollars 3,714 3,914 3,599 3,419 2,895 3,006 3,226 10 Payable in foreign currencies 1,826 1,683 2,462 1,696 1,641 1,645 1,598 11 Commercial claims 12,901 14,720 15,043 11,877 10,954 10,983 10,609' 12 Trade receivables 12,185 13,960 14,007 10,770 9,945 9,780 9,241' 13 Advance payments and other claims.. 716 759 1,036 1,106 1,010 1,203 1,367' 14 Payable in dollars 12,447 14,233 14,527 11,324 10,394 10,364 9,991' 15 Payable in foreign currencies 454 487 516 552 561 619 618' By area or country Financial claims 16 Europe 6,179 6,069 4,596 4,967 4,772 6,066 7,207 17 Belgium-Luxembourg 32 145 43 16 10 58 12 18 France 177 298 285 326 134 90 137 19 Germany 409 230 224 215 178 127 216 20 Netherlands 53 51 50 119 97 140 136 21 Switzerland 73 54 117 60 107 99 34 22 United Kingdom 5,099 4,987 3,546 3,859 3,981 5,301 6,437 23 Canada 5,003 5,036 6,755 4,386 4,287 4,612 4,870 24 Latin America and Caribbean 6,312 7,811 8,812 7,948 7,087 8,173 7,997 25 Bahamas 2,773 3,477 3,650 3,435 3,160 3.756 3,244 26 Bermuda 30 135 18 16 8 10 72 27 Brazil 163 96 30 76 62 50 48 28 British West Indies 2,011 2,755 3,971 3,411 2,929 3,080 3,317 29 Mexico 157 208 313 268 274 352 348 30 Venezuela 143 137 148 133 139 156 152 31 Asia 601 607 758 846 698 712 771 32 Japan 199 189 366 268 153 233 288 33 Middle East oil-exporting countries2 16 20 37 30 15 18 14 34 Africa 258 208 173 165 158 153 154 35 Oil-exporting countries3 49 26 46 50 45 36 All other4 Commercial claims 4,922 5,544 5,405 4,231 3,758 3,592 3,410' 37 Europe 202 233 234 178 150 140 144 38 Belgium-Luxembourg 727 1,129 776 646 473 489 499' 39 France 593 599 561 427 356 419 364' 40 Germany 298 318 299 268 347 309 242 41 Netherlands 272 354 431 291 339 227 303 42 Switzerland 901 929 985 1,035 793 754 739' 43 United Kingdom 44 Canada 859 914 967 666 635 674 716' 45 Latin America and Caribbean 2,879 3,766 3,479 2,772 2,514 2,690 2,722' 46 Bahamas 21 21 12 19 21 30 30 47 Bermuda 197 108 223 154 259 172 108 48 Brazil 645 861 668 481 258 401 512' 49 British West Indies 16 34 12 7 12 21 21 50 Mexico 708 1,102 1,022 869 767 886 956' 51 Venezuela 343 410 424 373 351 288 273 52 Asia 3,451 3,522 3,959 3,098 3,045 3,126 2,871' 53 Japan 1,177 1,052 1,245 973 1,047 1,115 949' 54 Middle East oil-exporting countries2 765 825 905 111 748 701 70C 55 Africa 551 653 772 661 559 528' 56 Oil-exporting countries3 130 153 152 148 140 131 130 57 All other4 240 415 342 361' 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

A64 International Statistics • February 1984 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1983 1983 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998811 11998822'' Jan.- Dec. June July Aug. Sept. Oct. Nov. Dec.P U.S. corporate securities STOCKS 1 Foreign purchases 40,686 41,881 69,883 6,864 5,758 5,181 5,516 5,530' 4,847 6,014 2 Foreign sales 34,856 37,981 64,460 6,467' 5,203' 5,168' 5,116 5,392 4,783 5,736 3 Net purchases, or sales (—) 5,830 3,901 5,423 397' 555' 13' 400 138' 65 279 4 Foreign countries 5,803 3,816 5,324 422' 546' 14' 392 134' 64 286 5 Europe 3,662 2,530 3,983 188' 437' 71' 261 -99 -58 -274 6 France 900 -143 -100 14 33 -77 -10 -36 -66 -64 7 Germany -22 333 1,054 -31 135 54 48 55 53 -52 8 Netherlands 42 -63 -110 -57 7 -13 -49 -15 24 13 9 Switzerland 288 -579 1,315 186 187 56 123 -18 -97 -206 10 United Kingdom 2,235 3,117 1,810 95 49 79 171 -136 21 53 11 Canada 783 222 1,150 98 1 75 154 124 0 185 12 Latin America and Caribbean -30 317 530 28 35 -98 106 -41' 17 238 13 Middle East1 1,140 366 -808 36 -59 -88 -178 49 44 13 14 Other Asia 287 247 403 68 146 75 51 103 6633 123 15 Africa 7 2 42 1 0 7 4 -1 11 2 16 Other countries -46 131 24 2 -12 -28 -6 -1 -3 1 17 Nonmonetary international and regional organizations 27 85 98 -25 9 -1 8 4 0 -7 BONDS2 18 Foreign purchases 17,304 21,639 23,961 1,546 1,438 2,141 1,888 2,537 2,039 1,657 19 Foreign sales 12,272 20,188 23,075 1,741 1,463 1,995 1,960 2,492' 1,304 1,493 20 Net purchases, or sales (-) 5,033 1,451 886 -195 -25 146 -72 45' 735 164 21 Foreign countries 4,972 1,479 871 -197 -49 44 -77 142' 715 156 22 Europe 1,351 2,082 887 -122 -74 115 14 303 458 -93 23 France 11 305 -90 -7 -5 -6 0 2 -31 -5 24 Germany 848 2,110 286 -12 -8 25 41 66 53 -10 25 Netherlands 70 33 51 -4 5 -3 1 11 5 3 26 Switzerland 108 157 632 28 -8 -1 -19 7 15 78 27 United Kingdom 196 -589 429 120 -33 112 32 136 390 -126 28 Canada -12 24 123 -10 53 -3 -10 22 46 -22 29 Latin America and Caribbean 132 159 100 19 13 -21 4 24 -6 20 30 Middle East1 3,465 -752 -1,133 -168 -119 -121 -105 -249' 116 43 31 Other Asia 44 -22 842 47 78 74 19 45 101 208 32 Africa -1 -19 0 2 0 0 2 0 0 0 33 Other countries -7 7 52 35 0 0 -2 -4 0 0 34 Nonmonetary international and regional organizations 61 -28 15 2 24 102 6 -97 20 7 Foreign securities 35 Stocks, net purchases, or sales (-) -247 -1,341 -3,835 -647 -487 -214 -106 -14 -16 -177 3b Foreign purchases 9,339 7,163 13,121 1,346 972 1,032 1,297 1,140 907 1,123 3/ Foreign sales 9,586 8,504 16,956 1,993 1,458 1,246 1,403 1,154 923 1,300 38 Bonds, net purchases, or sales (-) -5,460 -6,631 -3,336 127 -219 -463 -54 -172 170 -345 39 Foreign purchases 17,553 27,167 35,622 3,220 2,534 2,708 3,714 3,902 3,110 3,071 40 Foreign sales 23,013 33,798 38,957 3,092 2,754 3,171 3,768 4,075 2,940 3,416 41 Net purchases, or sales (-), of stocks and bonds .... -5,707 -7,972 -7,170 -520 -706 -677 -160 -186 154 -522 42 Foreign countries -4,694 -6,806 -6,872 -546 -715 -684 -146 -235 49 -561 43 Europe -728 -2,584 -5,623 -583 -682 -301 124 -338 -417 -440 44 Canada -3,697 -2,363 -1,584 5 55 -97 -355 6 36 -64 45 Latin America and Caribbean 69 336 1,120 -80 47 62 23 5 135 17 46 . -367 -1,822 -898 -182 -145 23 105 90 160 -67 47 Africa -55 -9 141 13 11 14 16 11 1 0 48 Other countries 84 -364 -28 280 0 -385 -59 -10 113355 -7 49 Nonmonetary international and regional organizations -1,012 -1,165 -298 26 9 7 -14 49 105 39 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 A65 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1983 1983 Country or area 1981 1982 J D a e n c . . - June July Aug. Sept. Oct. Nov. Dec.'' Holdings (end of period)1 1 Estimated total2 70,249 85,22(K 91,114' 88,833' 87,483' 88,661' 90,988' 89,642 89,322 2 Foreign countries2 64,565 80,637' 84,931' 83,615' 82.79C 82,763' 84,358' 83.826 84,227 3 Europe2 24,012 29,284 33,638 33,082' 32,996 33,370 34,415 35,058 35,489 4 Belgium-Luxembourg 543 447 -68 99 95 58 18 2 16 5 Germany2 11,861 14,841 16,877 16,315' 16,119 16,156' 16,570 17,092 17,290 6 Netherlands 1,991 2,754 3,251 3,262 3,234 3,034 2,987 3,048 3,129 7 Sweden 643 677 665 684 644 666 714 758 842 8 Switzerland2 846 1,540 877 855 965 1,087 1,177 1,064 1,118 9 United Kingdom 6,709 6,549 8,233 8,235 8,270 8,289 8.629 8,626 8,524 10 Other Western Europe 1,419 2,476 3,803 3,631 3,669 4,081 4,321 4,467 4,569 11 Eastern Europe 0 0 0 0 0 0 0 0 0 12 Canada 514 602 983' 1,058' 1,088' 1,063' 1,265' 1,225 1,301 13 Latin America and Caribbean 736 1,076 1,041 800 774 695 914 864 14 Venezuela 286 188 72 62 62 65 66 64 64 15 Other Latin America and Caribbean 319 656 773 636 622 631 540 674 716 16 Netherlands Antilles 131 232 196 188 116 78 89 176 83 17 Asia 38,671 49,543' 49,137' 48,437' 47,733' 47,430' 47,849' 46,507 46,455 18 Japan 10,780 11,578 12,592 12,763 13,007 13,210 13,446 13.600 13,910 19 Africa 631 77 79 79 79 79 79 79 79 20 All other 2 55 53 74 94 48 56 43 40 21 Nonmonetary international and regional organizations 5,684 4,583 6,183 5,218' 4,693 5,898 6.630 5,816 5,095 22 International 5,638 4,186 5,372 4,500 4,086 5,421 6,094 5,030 4,404 23 Latin American regional 6 6 6 6 6 6 0 6 Transactions (net purchases, or sales (-) during period) 24 Total2 12,699 14,972' 4,101 1,558' -2,281 -1,350 1,178 2,327' -1,339 -326 25 Foreign countries2 11,604 16,072' 3,590 537' -1,315' -826 -26 1,595' -532 401 26 Official institutions 11,730 14,550' 1,252 408' -914 -885 5 468' -768 -3 27 Other foreign2 -126 1,518 2,343 129' -400 59 -31 1,126 236 406 28 Nonmonetary international and regional organizations 1,095 -1,097' 506 1,020' -966 -523 1,205 731' -808 -729 MEMO: Oil-exporting countries 29 Middle East3 11,156 7,575' -5,397 -277 -172 -1,764 -305 -373' -968 -60 30 Africa4 -289 -552 -1 0 0 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 Jan. 31, 1984 Rate on Jan. 31, 1984 Rate on Jan. 31, 1984 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria.. 3.75 Mar. 1983 France1 12.0 Dec. 1983 Norway 8.0 June 1979 Belgium . 10.0 Nov. 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.. 9.98 Jan. 1984 Japan 5.0 Oct. 1983 Venezuela May 1983 Denmark 7.0 Oct. 1983 Netherlands 5.0 Sept. 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. NOTE. 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

A66 International Statistics • February 1984 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1983 1984 CCoouunnttrryy,, oorr ttyyppee 11998811 11998822 11998833 July Aug. Sept. Oct. Nov. Dec. Jan. 1 Eurodollars 16.79 12.24 9.57 10.00 10.27 9.82 9.54 9.79 10.08 9.78 2 United Kingdom 13.86 12.21 10.06 9.84 9.83 9.63 9.34 9.26 9.34 9.40 3 Canada 18.84 14.38 9.48 9.42 9.49 9.35 9.31 9.40 9.83 9.84 4 Germany 12.05 8.81 5.73 5.54 5.66 5.83 6.13 6.26 6.43 6.07 5 Switzerland 9.15 5.04 4.11 4.77 4.61 4.40 4.07 4.11 4.29 3.65 6 Netherlands 11.52 8.26 5.58 5.58 6.03 6.15 6.07 6.17 6.20 6.01 7 France 15.28 14.61 12.44 12.33 12.33 12.42 12.42 12.31 12.16 12.22 8 Italy 19.98 19.99 18.95 17.50 17.50 17.42 17.51 17.71 17.75 17.75 9 Belgium 15.28 14.10 10.51 9.08 9.25 9.25 9.44 9.89 10.50 10.68 10 Japan 7.58 6.84 6.49 6.47 6.52 6.68 6.52 6.35 6.45 6.35 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 (984 CCoouunnttrryy//ccuurrrreennccyy 11998811 11998822 11998833 Aug. Sept. Oct. Nov. Dec. Jan. 1 Argentina/peso n.a. 20985.00 8.59 8.94 11.22 11.65 11.65 16.73 24.38 7. Australia/dollar1 114.95 101.65 90.14 87.93 88.77 91.37 91.59 90.04 90.60 3 Austria/schilling 15.948 17.060 17.968 18.799 18.754 18.305 18.900 19.383 19.815 4 Belgium/franc 37.194 45.780 51.121 53.609 53.841 53.034 54.538 55.939 57.354 5 Brazil/cruzeiro 92.374 179.22 573.27 643.34 701.38 784.35 870.21 943.43 1022.81 6 Canada'dollar 1.1990 1.2344 1.2325 1.2338 1.2326 1.2320 1.2367 1.2469 1.2484 7 Chile/peso n.a. 51.118 79.350 80.011 81.767 83.710 85.600 86.557 88.355 8 China, P.R./yuan 1.7031 1.8978 1.9809 1.9843 1.9867 1.9664 1.9940 1.9920 2.0490 9 Colombia/peso n.a. 64.071 78.563 80.707 82.494 84.196 85.938 87.173 89.703 10 Denmark/krone 7.1350 8.3443 9.1483 9.6308 9.5926 9.4172 9.6791 9.9530 10.1793 11 Finland/markka 4.3128 4.8086 5.5636 5.7063 5.7057 5.6390 5.7468 5.8515 5.9385 12 France/franc 5.4396 6.5793 7.6203 8.0442 8.0598 7.9526 8.1646 8.3839 8.5948 13 Germany/deutsche mark 2.2631 2.428 2.5539 2.6736 2.6679 2.6032 2.6846 2.7500 2.8110 14 Greece/drachma n.a. 66.872 87.895 89.217 92.837 92.968 96.229 98.815 102.601 15 Hong Kong/dollar 5.5678 6.0697 7.2569 7.4416 8.0079 8.0947 7.8120 7.8044 7.7968 16 India/rupee 8.6807 9.4846 10.1040 10.187 10.200 10.229 10.378 10.4895 10.7152 17 Indonesia/rupiah n.a. 660.43 911.31 984.09 986.24 984.12 988.84 994.62 996.43 18 Ireland/pound1 161.32 142.05 124.81 117.99 117.41 119.15 115.85 112.91 110.20 19 Israel/shekel n.a. 24.407 55.865 55.949 60.059 77.808 89.344 100.599 116.728 20 Italy/lira 1138.60 1354.00 1519.30 1589.74 1602.62 1582.81 1625.79 1666.88 1706.63 21 Japan/yen 220.63 249.06 237.55 244.46 242.35 232.89 235.03 234.46 233.80 22 Malaysia/ringgit 2.3048 2.3395 2.3204 2.3523 2.3506 2.3451 2.3450 2.3407 2.3411 23 Mexico/peso 24.547 72.990 155.01 151.59 152.20 157.18 162.36 164.84 166.33 24 Netherlands/guilder 2.4998 2.6719 2.8543 2.9912 2.9844 2.9206 3.0078 3.0856 3.1602 25 New Zealand/dollar1 86.848 75.101 66.790 65.100 65.316 66.162 65.854 65.120 64.860 76 Norway/krone 5.7430 6.4567 7.3012 7.4641 7.4271 7.3244 7.4696 7.7237 7.8763 27 Peru/sol n.a. 694.59 1610.20 1853.18 1995.33 2074.82 2131.13 2213.73 2320.20 ?8 Philippines/peso 7.8113 8.5324 11.0940 11.050 11.050 13.750 14.050 14.050 14.050 29 Portugal/escudo 61.739 80.101 111.610 123.03 124.41 124.41 127.82 131.91 136.29 30 Singapore/dollar 2.1053 2.1406 2.1136 2.1416 2.1417 2.1350 2.1334 2.1317 2.1309 31 South Africa/rand1 114.77 92.297 89.85 89.55 89.86 88.82 84.23 82.15 79.54 37, South Korea/won n.a. 731.93 776.04 787.19 790.83 791.37 796.32 799.23 800.33 33 Spain/peseta 92.396 110.09 143.500 151.302 152.022 151.30 154.66 158.01 159.832 34 Sri Lanka/rupee 18.967 20.756 23.510 24.257 24.397 24.410 24.572 24.767 25.181 35 Sweden/'krona 5.0659 6.2838 7.6717 7.8585 7.8773 7.7844 7.9201 8.0608 8.1782 36 Switzerland/franc 1.9674 2.0327 2.1006 2.1632 2.1623 2.1122 2.1701 2.1983 2.2380 37 Taiwan/Dollar n.a. n.a. n.a. n.a. n.a. 39.420 38.780 39.613 40.202 38 Thailand/baht 21.731 23.014 22.991 22.990 22.990 22.990 22.990 22.992 23.006 39 United Kingdom/pound1 202.43 174.80 151.59 150.26 149.86 149.69 147.66 143.38 140.76 40 Venezuela/bolivar 4.2781 4.2981 10.6840 15.600 13.833 13.088 12.782 12.834 13.021 MEMO United States/dollar2 102.94 116.57 125.34 129.77 129.74 127.50 130.26 132.84 135.07 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

A67 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 when SMSAs Standard metropolitan statistical areas the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1983 A84 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference 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 commercial banks, March 31, 1983 August 1983 A70 Assets and liabilities of commercial banks, June 30, 1983 December 1983 A68 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 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1983 August 1983 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1983 December 1983 A74 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 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 STEVEN M. ROBERTS, Assistant to the Chairman DONALD L. KOHN, Deputy Staff Director FRANK O'BRIEN, JR., Deputy Assistant to the Board STANLEY J. SIGEL, Assistant to the Board ANTHONY F. COLE, Special Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM R. JONES, Special Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION JAMES L. KICHLINE, Director EDWARD C. ETTIN, Deputy Director MICHAEL BRADFIELD, General Counsel MICHAEL J. PRELL, Deputy Director J. VIRGIL MATTINGLY, JR., Associate General Counsel JOSEPH S. ZEISEL, Deputy Director GILBERT T. SCHWARTZ, Associate General Counsel JARED J. ENZLER, 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 RALPH W. SMITH, JR., Assistant Director JOHN E. RYAN, 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

A69 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., Adviser, Equal Employment STEPHEN R. MALPHRUS, Assistant Staff Director Opportunity Programs for Office Automation and Technology DIVISION OF FEDERAL RESERVE DIVISION OF DATA PROCESSING BANK OPERATIONS CHARLES L. HAMPTON, Director CLYDE H. FARNSWORTH, JR., Director BRUCE M. BEARDSLEY, Deputy Director ELLIOTT C. MCENTEE, Associate Director GLENN L. CUMMINS, Assistant Director DAVID L. ROBINSON, Associate Director NEAL H. HILLERMAN, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director RICHARD J. MANASSERI, Assistant Director WALTER ALTHAUSEN, Assistant Director WILLIAM C. SCHNEIDER, JR., Assistant Director CHARLES W. BENNETT, Assistant Director ROBERT J. ZEMEL, Assistant Director ANNE M. DEBEER, Assistant Director JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director DIVISION OF PERSONNEL * JOHN F. SOBALA, Assistant Director DAVID L. SHANNON, 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 ROBERT E. FRAZIER, Director WALTER W. KREIMANN, Associate Director *On loan from the Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Bulletin • February 1984 Federal Open Market Committee 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 JOHN G. MCCOY, President JOSEPH J. PINOLA, Vice President VINCENT C. BURKE, JR., N. BERNE HART, AND LEWIS T. PRESTON, Directors ROBERT L. NEWELL, First District ROGER E. ANDERSON, Seventh District LEWIS T. PRESTON, Second District WILLIAM H. BOWEN, Eighth District RAYMOND J. DEMPSEY, Third District E. PETER GILLETTE, JR., Ninth District JOHN G. MCCOY, Fourth District N. BERNE HART, Tenth District VINCENT C. BURKE, JR., Fifth District VACANCY, Eleventh District PHILIP F. SEARLE, Sixth District JOSEPH J. PINOLA, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Advisory Councils CONSUMER ADVISORY COUNCIL WILLARD P. OGBURN, Boston, Massachusetts, Chairman TIMOTHY D. MARRINAN, Minneapolis, Minnesota, Vice Chairman RACHEL G. BRATT, Medford, Massachusetts FREDERICK H. MILLER, Norman, Oklahoma JAMES G. BOYLE, Austin, Texas MARGARET M. MURPHY, Columbia, Maryland GERALD R. CHRISTENSEN, Salt Lake City, Utah ROBERT F. MURPHY, Detroit, Michigan THOMAS L. CLARK, JR., New York, New York LAWRENCE S. OKINAGA, Honolulu, Hawaii JEAN A. CROCKETT, Philadelphia, Pennsylvania ELVA QUIJANO, San Antonio, Texas MEREDITH FERNSTROM, New York, New York JANET J. RATHE, Portland, Oregon ALLEN J. FISHBEIN, Washington, D.C. JANET SCACCIOTTI, Providence, Rhode Island E.C.A. FORSBERG, SR., Atlanta, Georgia GLENDA G. SLOANE, Washington, D.C. STEVEN M. GEARY, Jefferson City, Missouri HENRY J. SOMMER, Philadelphia,Pennsylvania RICHARD F. HALLIBURTON, Kansas City, Missouri WINNIE F. TAYLOR, Gainesville, Florida LOUISE MCCARREN HERRING, Cincinnati, Ohio MICHAEL M. VAN BUSKIRK, Columbus, Ohio CHARLES C. HOLT, Austin, Texas CLINTON WARNE, Cleveland, Ohio HARRY N. JACKSON, Minneapolis, Minnesota FREDERICK T. WEIMER, Chicago, Illinois KENNETH V. LARKIN, San Francisco, California MERVIN WINSTON, Minneapolis, Minnesota THRIFT INSTITUTIONS ADVISORY COUNCIL THOMAS R. BOMAR, Miami, Florida, President RICHARD H. DEIHL, Los Angeles, California, Vice President JAMES A. ALIBER, Detroit, Michigan NORMAN M. JONES, Fargo, North Dakota GENE R. ARTEMENKO, Chicago, Illinois ROBERT R. MASTERTON, Portland, Maine J. MICHAEL CORNWALL, Dallas, Texas JOHN T. MORGAN, New York, New York JOHN R. EPPINGER, Villanova, Pennsylvania FRED A. PARKER, Monroe, North Carolina SARAH R. WALLACE, Newark, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, REPORT OF THE JOINT TREASURY-FEDERAL RESERVE STUDY Mail Stop 138, Board of Governors of the Federal Reserve OF THE U.S. GOVERNMENT SECURITIES MARKET. 1969. System, Washington, D.C. 20551. When a charge is indicat- 48 pp. $.25 each; 10 or more to one address, $.20 each. ed, remittance should accompany request and be made JOINT TREASURY-FEDERAL RESERVE STUDY OF THE GOVpayable to the order of the Board of Governors of the Federal ERNMENT SECURITIES MARKET; STAFF STUDIES—PART Reserve System. Remittance from foreign residents should 1, 1970. 86 pp. $.50 each; 10 or more to one address, $.40 be drawn on a U.S. bank. Stamps and coupons are not each. PART 2, 1971. Out of print. PART 3, 1973. 131 pp. accepted. $1.00; 10 or more to one address, $.85 each. OPEN MARKET POLICIES AND OPERATING PROCEDURES— STAFF STUDIES. 1971. 218 pp. $2.00 each; 10 or more to THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- one address, $1.75 each. TIONS. 1974. 125 pp. REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHA- ANNUAL REPORT. NISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. 173 pp. Vol. 3. FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or 1972. 220 pp. Each volume, $3.00; 10 or more to one $2.00 each in the United States, its possessions, Canada, address, $2.50 each. and Mexico; 10 or more of same issue to one address, THE ECONOMETRICS OF PRICE DETERMINATION CONFER- $18.00 per year or $1.75 each. Elsewhere, $24.00 per ENCE, October 30-31, 1970, Washington, D.C. 1972. 397 year or $2.50 each. pp. Cloth ed. $5.00 each; 10 or more to one address, BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint $4.50 each. Paper ed. $4.00 each; 10 or more to one of Part I only) 1976. 682 pp. $5.00. address, $3.60 each. BANKING AND MONETARY STATISTICS. 1941-1970. 1976. FEDERAL RESERVE STAFF STUDY: WAYS TO MODERATE 1,168 pp. $15.00. FLUCTUATIONS IN HOUSING CONSTRUCTION. 1972. 487 ANNUAL STATISTICAL DIGEST pp. $4.00 each; 10 or more to one address, $3.60 each. 1971-75. 1976. 339 pp. $ 5.00 per copy. LENDING FUNCTIONS OF THE FEDERAL RESERVE BANKS. 1972-76. 1977. 377 pp. $10.00 per copy. 1973. 271 pp. $3.50 each; 10 or more to one address, 1973-77. 1978. 361 pp. $12.00 per copy. $3.00 each. 1974-78. 1980. 305 pp. $10.00 per copy. IMPROVING THE MONETARY AGGREGATES: REPORT OF THE 1970-79. 1981. 587 pp. $20.00 per copy. ADVISORY COMMITTEE ON MONETARY STATISTICS. 1980. 1981. 241 pp. $10.00 per copy. 1976. 43 pp. $1.00 each; 10 or more to one address, $.85 1981. 1982. 239 pp. $ 6.50 per copy. each. 1982. 1983. 266 pp. $ 7.50 per copy. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— FEDERAL RESERVE CHART BOOK. Issued four times a year in Regulation Z) Vol. I (Regular Transactions). 1969. 100 February, May, August, and November. Subscription pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each includes one issue of Historical Chart Book. $7.00 per volume $1.00; 10 or more of same volume to one year or $2.00 each in the United States, its possessions, address, $.85 each. Canada, and Mexico. Elsewhere, $10.00 per year or FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY $3.00 each. UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- address, $1.50 each. tion to the Federal Reserve Chart Book includes one THE BANK HOLDING COMPANY MOVEMENT TO 1978: A issue. $1.25 each in the United States, its possessions, COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to Canada, and Mexico; 10 or more to one address, $1.00 one address, $2.25 each. each. Elsewhere, $1.50 each. IMPROVING THE MONETARY AGGREGATES: STAFF PAPERS. 1978. 170 pp. $4.00 each; 10 or more to one address, SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in $3.75 each. the United States, its possessions, Canada, and Mexico; 1977 CONSUMER CREDIT SURVEY. 1978. 119 pp. $2.00 each. 10 or more of same issue to one address, $13.50 per year FLOW OF FUNDS ACCOUNTS. 1949-1978. 1979. 171 pp. $1.75 or $.35 each. Elsewhere, $20.00 per year or $.50 each. each; 10 or more to one address, $1.50 each. THE FEDERAL RESERVE ACT, as amended through April 20, INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; 1983. with an appendix containing provisions of certain 10 or more to one address, $1.25 each. other statutes affecting the Federal Reserve System. 576 PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. pp. $7.00. $13.50 each. REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- NEW MONETARY CONTROL PROCEDURES: FEDERAL RE- ERAL RESERVE SYSTEM. SERVE STAFF STUDY, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES: Truth in Leasing REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL U.S. Currency ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each. What Truth in Lending Means to You FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updated at least monthly. (Requests must be prepaid.) Consumer and Community Affairs Handbook. $60.00 per year. STAFF STUDIES.- Summaries Only Printed in the Bulletin Monetary Policy and Reserve Requirements Handbook. $60.00 per year. Studies and papers on economic and financial subjects that Securities Credit Transactions Handbook. $60.00 per year. are of general interest. Requests to obtain single copies of Federal Reserve Regulatory Service. 3 vols. (Contains all the full text or to be added to the mailing list for the series three Handbooks plus substantial additional material.) may be sent to Publications Services. $175.00 per year. Rates for subscribers outside the United States are as 113. BELOW THE BOTTOM LINE: THE USE OF CONTINGENfollows and include additional air mail costs: CIES AND COMMITMENTS BY COMMERCIAL BANKS, by Federal Reserve Regulatory Service, $225.00 per year. Benjamin Wolkowitz and others. Jan. 1982. 186 pp. Each Handbook, $75.00 per year. 114. MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE WELCOME TO THE FEDERAL RESERVE. December 1982. ON COMPETITION AND PERFORMANCE IN BANKING MARKETS, by Timothy J. Curry and John T. Rose. Jan. PROCESSING BANK HOLDING COMPANY AND MERGER APPLI- 1982. 9 pp. CATIONS SUSTAINABLE RECOVERY: SETTING THE STAGE. November 115. COSTS, SCALE ECONOMIES, COMPETITION, AND PROD- 1982. UCT MIX IN THE U.S. PAYMENTS MECHANISM, by David B. Humphrey. Apr. 1982. 18 pp. REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT ANNUAL HUMAN RELATIONS AWARD DINNER, December 1982. 116. DIVISIA MONETARY AGGREGATES: COMPILATION, REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT DEDICATION DATA, AND HISTORICAL BEHAVIOR, by William A. Barnett and Paul A. Spindt. May 1982. 82 pp. CEREMONIES: FEDERAL RESERVE BANK OF SAN FRAN- CISCO. March 1983. 117. THE COMMUNITY REINVESTMENT ACT AND CREDIT ALLOCATION, by Glenn Canner. June 1982. 8 pp. RESTORING STABILITY. REMARKS BY CHAIRMAN PAUL A. VOLCKER. April 1983. 118. INTEREST RATES AND TERMS ON CONSTRUCTION CREDIT CARDS IN THE U.S. ECONOMY: THEIR IMPACT ON LOANS AT COMMERCIAL BANKS, by David F. Seiders. July 1982. 14 pp. COSTS, PRICES, AND RETAIL SALES. July 1983. 114 pp. 119. STRUCTURE-PERFORMANCE STUDIES IN BANKING: AN UPDATED SUMMARY AND EVALUATION, by Stephen A. Rhoades. Aug. 1982. 15 pp. 120. FOREIGN SUBSIDIARIES OF U.S. BANKING ORGANIZA- TIONS, by James V. Houpt and Michael G. Martinson. Oct. 1982. 18 pp. CONSUMER EDUCATION PAMPHLETS 121. REDLINING: RESEARCH AND FEDERAL LEGISLATIVE Short pamphlets suitable for classroom use. Multiple copies RESPONSE, by Glenn B. Canner. Oct. 1982. 20 pp. available without charge. 122. BANK CAPITAL TRENDS AND FINANCING, by Samuel H. Talley. Feb. 1983. 19 pp. Out of print. Alice in Debitland 123. FINANCIAL TRANSACTIONS WITHIN BANK HOLDING Consumer Handbook to Credit Protection Laws COMPANIES, by John T. Rose and Samuel H. Talley. The Equal Credit Opportunity Act and . . . Age May 1983. 11 pp. The Equal Credit Opportunity Act and . . . Credit Rights in 124. INTERNATIONAL BANKING FACILITIES AND THE EURO- Housing DOLLAR MARKET, by Henry S. Terrell and Rodney H. The Equal Credit Opportunity Act and . . . Doctors, Law- Mills. August 1983. 14 pp. yers, Small Retailers, and Others Who May Provide Inci- 125. SEASONAL ADJUSTMENT OF THE WEEKLY MONETARY dental Credit AGGREGATES: A MODEL-BASED APPROACH, by David The Equal Credit Opportunity Act and . . . Women A. Pierce, Michael R. Grupe, and William P. Cleveland. Fair Credit Billing August 1983. 23 pp. Federal Reserve Glossary 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- Guide to Federal Reserve Regulations KET INTERVENTION, by Donald B. Adams and Dale W. How to File A Consumer Credit Complaint Henderson. August 1983. 5 pp. If You Borrow To Buy Stock * 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- If You Use A Credit Card VENTION: JANUARY-MARCH 1975, by Margaret L. Instructional Materials of the Federal Reserve System Greene. Series on the Structure of the Federal Reserve System *128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- The Board of Governors of the Federal Reserve System VENTION: SEPTEMBER 1977-OCTOBER 1981, by Marga- The Federal Open Market Committee ret L. Greene. Federal Reserve Bank Board of Directors *129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- Federal Reserve Banks VENTION: OCTOBER 1980-OCTOBER 1981, by Margaret Organization and Advisory Committees L. Greene. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTER- REPRINTS OF BULLETIN ARTICLES NATIONAL TRADE AND OTHER ECONOMIC VARIABLES: Most of the articles reprinted do not exceed 12 pages. A REVIEW OF THE LITERATURE, by Victoria S. Farrell with Dean A. DeRosa and T. Ashby McCown. January Survey of Finance Companies. 1980. 5/81. 1984. 21 pp. Bank Lending in Developing Countries. 9/81. 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- The Commercial Paper Market since the Mid-Seventies. 6/82. DEUTSCHE MARK INTERVENTION, by Laurence R. Ja- Applying the Theory of Probable Future Competition. 9/82. cobson. October 1983. 8 pp. International Banking Facilities. 10/82. 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN U.S. International Transactions in 1982. 4/83. EXCHANGE RATES AND INTERVENTION: A REVIEW OF New Federal Reserve Measures of Capacity and Capacity THE TECHNIQUES AND LITERATURE, by Kenneth Ro- Utilization. 7/83. goff. October 1983. 15 pp. Foreign Experience with Targets for Money Growth. 10/83. 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVEN- Intervention in Foreign Exchange Markets: A Summary of TION, AND INTEREST RATES: AN EMPIRICAL INVESTI- Ten Staff Studies. 11/83. GATION, by Bonnie E. Loopesko. November 1983. 20 A Financial Perspective on Agriculture. 1/84. pp. 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET INTERVENTION: A REVIEW OF THE LITERATURE, by Ralph W. Tryon. October 1983. 14 pp. * 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET INTERVENTION: APPLICATIONS TO CANADA, GERMANY, AND JAPAN, by Deborah J. Danker, Richard A. Haas, Dale W. Henderson, Steven A. Symansky, and Ralph W. Tryon. 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECONO- MY, by Darrell Cohen and Peter B. Clark. January 1984. 16 pp. *The availability of these studies will be announced in a forthcoming BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 Index to Statistical Tables References are to pages A3 through A66 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers, 9, 24, 26 Demand deposits—Continued Agricultural loans, commercial banks, 18, 19, 20, 25 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 23 Banks, by classes, 17-20 Turnover, 14 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 7 Foreign banks, U.S. branches and agencies, 22 Reserves and related items, 3, 4, 5, 12 Nonfinancial corporations, 36 Deposits (See also specific types) Savings institutions, 28 Banks, by classes, 3, 17-21, 28 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 40, 41 Turnover, 14 Production, 46, 47 Discount rates at Reserve Banks and at foreign central banks (See Interest rates) BANKERS acceptances, 9, 24, 26 Discounts and advances by Reserve Banks (See Loans) Bankers balances, 17-20 (See also Foreigners) Dividends, corporate, 35 Bonds (See also U.S. government securities) New issues, 34 Rates, 3 EMPLOYMENT, 44, 45 Branch banks, 14, 21, 54 Eurodollars, 26 Business activity, nonfinancial, 44 Business expenditures on new plant and equipment, 36 Business loans (See Commercial and industrial loans) FARM mortgage loans, 39 Federal agency obligations, 4, 9, 10, 11, 32 CAPACITY utilization, 44 Federal credit agencies, 33 Capital accounts Federal finance Banks, by classes, 17 Debt subject to statutory limitation and types and Federal Reserve Banks, 10 ownership of gross debt, 31 Central banks, discount rates, 65 Receipts and outlays, 29, 30 Certificates of deposit, 21, 26 Treasury financing of surplus, or deficit, 29 Commercial and industrial loans Treasury operating balance, 29 Commercial banks, 15, 21, 25 Federal Financing Bank, 29, 33 Weekly reporting banks, 18-22 Federal funds, 3, 5, 16, 18, 19, 20, 22, 26, 29 Commercial banks Federal Home Loan Banks, 33 Assets and liabilities, 17-20 Federal Home Loan Mortgage Corporation, 33, 38, 39 Business loans, 25 Federal Housing Administration, 33, 38, 39 Commercial and industrial loans, 15, 21, 22, 25 Federal Land Banks, 39 Consumer loans held, by type, and terms, 40, 41 Federal National Mortgage Association, 33, 38, 39 Loans sold outright, 20 Federal Reserve Banks Nondeposit fund, 16 Condition statement, 10 Number, by classes, 17 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 39 U.S. government securities held, 4, 10, 11, 31 Time and savings deposits, 3 Federal Reserve credit, 4, 5, 10, 11 Commercial paper, 3, 24, 26, 37 Federal Reserve notes, 10 Condition statements (See Assets and liabilites) Federally sponsored credit agencies, 33 Construction, 44, 48 Finance companies Consumer installment credit, 40, 41 Assets and liabilities, 37 Consumer prices, 44, 49 Business credit, 37 Consumption expenditures, 50, 51 Loans, 18, 19, 40, 41 Corporations Paper, 24, 26 Profits and their distribution, 35 Financial institutions Security issues, 34, 64 Loans to, 18, 19, 20, 22 Cost of living (See Consumer prices) Selected assets and liabilities, 28 Credit unions, 28, 40 Float, 4 (See also Thrift institutions) Flow of funds, 42, 43 Currency and coin, 17 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 22 Customer credit, stock market, 27 Foreign currency operations, 10 Foreign deposits in U.S. banks, 4, 10, 18, 19, 20 DEBITS to deposit accounts, 14 Foreign exchange rates, 66 Debt (See specific types of debt or securities) Foreign trade, 53 Demand deposits Foreigners Adjusted, commercial banks, 14 Claims on, 54, 56, 59, 60, 61, 63 Banks, by classes, 17-21 Liabilities to, 20, 53, 54-58, 62, 64, 65 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 GOLD REAL estate loans Certificate account, 10 Banks, by classes, 15, 18-20, 39 Stock, 4, 53 Rates, terms, yields, and activity, 3, 38 Government National Mortgage Association, 33, 38, 39 Savings institutions, 28 Gross national product, 50, 51 Type of holder and property mortgaged, 39 Repurchase agreements and federal HOUSING, new and existing units, 48 funds, 5, 18-20 Reserve requirements, 7 INCOME, personal and national, 44, 50, 51 Reserves Industrial production, 44, 46 Commercial banks, 17 Installment loans, 40, 41 Depository institutions, 3, 4, 5, 12 Insurance companies, 28, 31, 39 Federal Reserve Banks, 10 Interbank loans and deposits, 17 U.S. reserve assets, 53 Interest rates Residential mortgage loans, 38 Bonds, 3 Retail credit and retail sales, 40, 41, 44 Business loans of banks, 25 Federal Reserve Banks, 3, 6 SAVING Foreign central banks and foreign countries, 65, 66 Flow of funds, 42, 43 Money and capital markets, 3, 26 National income accounts, 51 Mortgages, 3, 38 Savings and loan associations, 8, 28, 39, 40, 42 (See also Prime rate, commercial banks, 24 Thrift institutions) Time and savings deposits, 8 Savings deposits (See Time and savings deposits) International capital transactions of United States, 52-65 Securities (See specific types) International organizations, 56, 57-59, 62-65 Federal and federally sponsored credit agencies, 33 Inventories, 50 Foreign transactions, 64 Investment companies, issues and assets, 35 New issues, 34 Investments (See also specific types) Prices, 27 Banks, by classes, 17-20, 28 Special drawing rights, 4, 10, 52, 53 Commercial banks, 3, 15, 17-20, 21, 39 State and local governments Federal Reserve Banks, 10, 11 Deposits, 18-20 Savings institutions, 28, 39 Holdings of U.S. government securities, 31 New security issues, 34 LABOR force, 45 Ownership of securities issued by, 18, 19, 20, 28 Life insurance companies (See Insurance companies) Rates on securities, 3 Loans (See also specific types) Stock market, 27 Banks, by classes, 17-20 Stocks (See also Securities) Commercial banks, 3, 15, 17-20, 21, 25 New issues, 34 Federal Reserve Banks, 4, 5, 6, 10, 11 Prices, 27 Insured or guaranteed by United States, 38, 39 Savings institutions, 28, 39 Student Loan Marketing Association, 33 MANUFACTURING TAX receipts, federal, 30 Capacity utilization, 44 Thrift institutions, 3 (See also Credit unions, Mutual Production, 44, 47 savings banks, and Savings and loan associations) Margin requirements, 27 Time and savings deposits, 3, 8, 13, 16, 17-21 Member banks (See also Depository institutions) Trade, foreign, 53 Federal funds and repurchase agreements, 5 Treasury currency, Treasury cash, 4 Reserve requirements, 7 Treasury deposits, 4, 10, 29 Mining production, 47 Treasury operating balance, 29 Mobile homes shipped, 48 UNEMPLOYMENT, 45 Monetary and credit aggregates, 3,12 U.S. government balances Money and capital market rates (See Interest rates) Commercial bank holdings, 17, 18, 19, 20 Money stock measures and components, 3, 13 Treasury deposits at Reserve Banks, 4, 10, 29 Mortgages (See Real estate loans) U.S. government securities Mutual funds (See Investment companies) Bank holdings, 16, 17-20, 22, 31 Mutual savings banks, 8, 18-20, 28, 31, 39, 40 (See also Dealer transactions, positions, and financing, 32 Thrift institutions) Federal Reserve Bank holdings, 4, 10, 11, 31 Foreign and international holdings and transactions, 10, NATIONAL defense outlays, 30 31, 65 National income, 50 Open market transactions, 9 Outstanding, by type and holder, 28, 31 OPEN market transactions, 9 Rates, 3, 26 U.S. international transactions, 52-65 PERSONAL income, 51 Utilities, production, 47 Prices Consumer and producer, 44, 49 VETERANS Administration, 38, 39 Stock market, 27 Prime rate, commercial banks, 24 WEEKLY reporting banks, 18-22 Producer prices, 44, 49 Wholesale (producer) prices, 44, 49 Production, 44, 46 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All 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 Edward G. Boehne Nevius M. Curtis Richard L. Smoot CLEVELAND* 44101 William H. Knoell Karen N. Horn E. Mandell de Windt William H. Hendricks Cincinnati 45201 Vacant Robert E. Showalter Pittsburgh 15230 Milton G. Hulme, Jr. Harold J. Swart RICHMOND* 23219 William S. Lee, III Robert P. Black Leroy T. Canoles, Jr. Jimmie R. Monhollon Baltimore 21203 Robert L. Tate Robert D. McTeer, Jr. Charlotte 28230 Henry Ponder Albert D. Tinkelenberg Culpeper Communications John G. Stoides and Records Center 22701 ATLANTA 30301 John H. Weitnauer, Jr. Robert P. Forrestal Bradley Currey, Jr. Jack Guynn Birmingham 35283 Martha A. Mclnnis Fred R. Herr Jacksonville 32231 Jerome P. Keuper Charles D. East Miami 33152 Sue McCourt Cobb Patrick K. Barron Nashville 37203 C. Warren Neel Jeffrey J. Wells New Orleans 70161 Sharon A. Perlis James D. Hawkins CHICAGO* 60690 Stanton R. Cook Silas Keehn Edward F. Brabec Daniel M. Doyle Detroit 48231 Russell G. Mawby William C. Conrad ST. LOUIS 63166 W.L. Hadley Griffin Theodore H. Roberts Mary P. Holt Joseph P. Garbarini Little Rock 72203 Sheffield Nelson John F. Breen Louisville 40232 Sister Eileen M. Egan James E. Conrad Memphis 38101 Patricia W. Shaw Randall C. Sumner MINNEAPOLIS 55480 William G. Phillips E. Gerald Corrigan John B. Davis, Jr. Thomas E. Gainor Helena 59601 Ernest B. Corrick Robert F. McNellis KANSAS CITY 64198 Doris M. Drury Roger Guffey Irvine O. Hockaday, Jr. Henry R. Czerwinski Denver 80217 James E. Nielson Wayne W. Martin Oklahoma City 73125 Patience Latting William G. Evans Omaha 68102 Robert G. Lueder Robert D. Hamilton DALLAS 75222 Robert D. Rogers Robert H. Boy kin John V. James William H. Wallace El Paso 79999 Mary Carmen Saucedo Joel L. Koonce, Jr. Houston 77252 Paul N. Howell J.Z. Rowe San Antonio 78295 Lawrence L. Crum Thomas H. Robertson SAN FRANCISCO 94120 Caroline L. Ahmanson John J. Balles Alan C. Furth Richard T. Griffith Los Angeles 90051 Bruce M. Schwaegler Richard C. Dunn Portland 97208 Paul E. Bradgon 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

A78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories V^atUe ''""/ana Helena i J \ Bost®11 Minneapolis / @l j-^a/t Lake (> \anh'°ncisr 'SCO Denv• e(rII Kansas Ciry^ W c i ^M i i"'*R,Hfk BirminHha™Aflanta* III I'as'o Miami 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

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT sumer credit protections. This 44-page booklet ex- PUBLICATIONS plains how to use the credit laws to shop for credit, apply for it, keep up credit ratings, and complain about an unfair deal. The Federal Reserve Board publishes a series of Protections offered by the Electronic Fund Transfer pamphlets covering individual credit laws and topics, Act are explained in Alice in Debitland. This booklet as pictured below. The series includes such subjects as offers tips for those using the new "paperless" syshow the Equal Credit Opportunity Act protects wom- tems for transferring money. en against discrimination in their credit dealings, how Copies of consumer publications are available free to use a credit card, and how to use Truth in Lending of charge from Publications Services, Mail Stop 138, information to compare credit costs. Board of Governors of the Federal Reserve System, The Board also publishes the Consumer Handbook Washington, D.C. 20551. Multiple copies for classto Credit Protection Laws, a complete guide to con- room use are also available free of charge. The Equal Credit LBCMG Opportunity Act LE4SING and .. . LE4SMG \The |1 Equal Credit LBCMG II Opportunity Act and TRUTH IN LE4SING ; Credit Rights In Housing What IL Ituthln Lending Means ToYou The Equal Credit Opportunity Act I ...andI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE REGULATORY SERVICE The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with exten- To promote public understanding of its regulatory sions of credit for the purchase of securities, together functions, the Board publishes the Federal Reserve with all related statutes, Board interpretations, rul- Regulatory Service, a three-volume looseleaf service ings, and staff opinions. Also included is the Board's containing all Board regulations and related statutes, list of OTC margin stocks. interpretations, policy statements, rulings, and stalf The Consumer and Community Affairs Handbook opinions. For those with a more specialized interest in contains Regulations B, C, E, M, Z, AA, and BB and the Board's regulations, parts of this service are associated materials. published separately as handbooks pertaining to mon- For domestic subscribers, the annual rate is $175 for etary policy, securities credit, and consumer affairs. the Federal Reserve Regulatory Service and $60 for These publications are designed to help those who each handbook. For subscribers outside the United must frequently refer to the Board's regulatory materi- States, the price including additional air mail costs is als. They are updated at least monthly, and each $225 for the Service and $75 for each Handbook. All contains conversion tables, citation indexes, and a subscription requests must be accompanied by a check subject index. or money order payable to Board of Governors of the The Monetary Policy and Reserve Requirements Federal Reserve System. Orders should be addressed Handbook contains Regulations A, D, and Q plus to Publications Services, Mail Stop 138, Federal Rerelated materials. For convenient reference, it also serve Board, 20th Street and Constitution Avenue, contains the rules of the Depository Institutions N.W., Washington, D.C. 20551. Deregulation Committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis