Federal Reserve Bulletin, 1985-07

VOLUME 71 • NUMBER 7 • JULY 1985 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield • S. David Frost • Griffith L. Garwood • James L. Kichline • Edwin M. Truman Naomi P. Salus, Coordinator t 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 Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 487 A REVISION OF THE INDEX OF 517 Paul A. Volcker, Chairman, Board of Gov- INDUSTRIAL PRODUCTION ernors, reviews the banking bill, S. 2851, and says that the basic framework for the This article describes the first general reviconduct of depository institution business sion of the Federal Reserve's monthly inthat would have been established by S. 2851 dex of industrial production since 1976 and is sorely missed and is urgently needed, reviews developments in the industrial secbefore the Senate Committee on Banking, tor during the past decade in light of the Housing, and Urban Affairs, May 8, 1985. revised data. 520 E. Gerald Corrigan, President, Federal Re- 502 INDUSTRIAL PRODUCTION serve Bank of New York, offers his views concerning recent problems in the U.S. Output declined an estimated 0.2 percent in government securities market and says that April. the market as a whole continues to function effectively although the cumulative weight 504 STATEMENTS TO CONGRESS of recent disturbances raises some impor- Marvin Duncan, Vice President, Federal tant questions about the structure and func- Reserve Bank of Kansas City, discusses tioning of the markets, before the Subcomagricultural legislation being considered by mittee on Securities of the Senate the Congress and says that appropriate na- Committee on Banking, Housing, and Urtional policy choices must be made if agri- ban Affairs, May 9, 1985. cultural markets in the long term are to 524 President Corrigan discusses the impact of brighten materially, before the Senate Comrecent developments in the government semittee on Agriculture, Nutrition, and Forcurities market and says that these events estry, May 1, 1985. have not materially affected the functioning 508 Preston Martin, Vice Chairman, Board of of the market as a whole, the conduct of Governors, discusses the trend toward monetary policy, or Treasury financing acgreater internationalization of capital mar- tivities, before the Subcommittee on Comkets, the further growth of "securitized" merce, Consumer, and Monetary Affairs of credit, and the continued development of the House Committee on Government Opfutures and options markets based on finan- erations, May 15, 1985. cial instruments, before the Subcommittee 528 William Taylor, Director of the Board's on Telecommunications, Consumer Protec- Division of Banking Supervision and Regution, and Finance of the House Committee lation, reviews the Federal Reserve's suon Energy and Finance, May 2, 1985. pervisory oversight of certain transactions 514 Vice Chairman Martin examines the impact between banks and government securities of recent merger and buyout activity on dealers that involve the transfer of, or a domestic credit flows and the safety and security interest in, U.S. government secusoundness of financial markets, before the rities, before the Subcommittee on Com- Subcommittee on Domestic Monetary Poli- merce, Consumer, and Monetary Affairs of cy of the House Committee on Banking, the House Committee on Government Op- Finance and Urban Affairs, May 3, 1985. erations, May 15, 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

533 ANNOUNCEMENTS intermeeting range for the federal funds rate, which provides a mechanism for initi- Change in the discount rate. ating consultation of the Committee when Meeting of Consumer Advisory Council. its boundaries are persistently exceeded, would be left unchanged at 6 to 10 percent. Policy statement on large-dollar wire transfer systems. 543 LEGAL DEVELOPMENTS Policy on securities lending. Amendment to Rules Regarding Equal Op- Proposed actions. portunity; various bank holding company, bank service corporation, and bank merger Admission of four state banks to memberorders; and pending cases. ship in the Federal Reserve System. Ai FINANCIAL AND BUSINESS STATISTICS 536 RECORD OF POLICY ACTIONS OF THE A3 Domestic Financial Statistics FEDERAL OPEN MARKET COMMITTEE A44 Domestic Nonfinancial Statistics At its meeting on March 26, 1985, the A53 International Statistics Committee adopted a directive that called for no change in reserve conditions. The A69 GUIDE TO TABULAR PRESENTATION, members anticipated that that action would STATISTICAL RELEASES, AND SPECIAL be consistent with growth of Ml, M2, and TABLES M3 at annual rates of around 6, 7, and 8 percent respectively for the period from A70 BOARD OF GOVERNORS AND STAFF March to June. The members agreed that somewhat lesser restraint might be accept- A72 FEDERAL OPEN MARKET COMMITTEE able in the context of substantially slower AND STAFF, ADVISORY COUNCILS growth in the monetary aggregates, while somewhat greater restraint might be accept- A74 FEDERAL RESERVE BOARD able if monetary growth were substantially PUBLICATIONS faster. In either event, the need for greater or lesser restraint would also be appraised All INDEX TO STATISTICAL TABLES against the background of developments relating to the strength of the business ex- A79 FEDERAL RESERVE BANKS, BRANCHES, pansion, progress against inflation, and AND OFFICES conditions in domestic credit and foreign exchange markets. It was agreed that the A80 MAP OF FEDERAL RESERVE SYSTEM ( Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production Joan D. Hosley and James E. Kennedy of the data more comprehensive than those available Board's Division of Research and Statistics pre- monthly—for instance, data in the Bureau of pared this article. Laurence P. Greenberg and Mines Yearbook—also are used in the revisions. Kathleen Van Twyver provided research assist- The latest revision moves the base year for the ance. index from 1967 to 1977, a year in which the economy was reasonably well balanced and expanding. New value-added weights were as- The Federal Reserve Board has completed a signed to each series for 1977. general revision of its index of industrial produc- The industrial production index uses different tion, the first since 1976 and the sixth since the value-added weights for different years in an 1920s. This article describes the revision and attempt to represent accurately the evolution of reviews developments in the industrial sector relative prices. In the revised index, 1967 during the past decade in light of the revised weights have been used for the 1967-72 period, data. 1972 weights for 1972-77, and 1977 weights from The index of industrial production is of special 1977 to the present. The individual series and the interest for several reasons. First, it measures a weighted aggregates for each of these periods large portion of the output of the national econo- have been linked to form a continuous index my on a monthly basis. Second, that portion, expressed as a percentage of output in 1977. together with construction, accounts for the bulk Before this revision, value-added weights from of the variation in output over the course of the 1967 were used in the current monthly industrial business cycle. Third, the index—with its sub- production index. stantial industrial detail—is helpful in illuminat- Besides updating weights, the revision offers ing structural developments in the economy. an opportunity to change the way in which The index of industrial production is con- industries are classified, to add series, and to structed with data from a variety of sources. improve series when possible. In the present Current monthly estimates of production in some revision, the number of basic series has been industries are based on measures of physical increased from 235 to 252 to improve coverage output. For industries in which direct measure- for several industries and to allow more meaningment is not possible, output is inferred from ful groupings. The classification system now production-worker hours and the use of electric matches the 1977 Standard Industrial Classificapower. Periodic revisions benchmark the indi- tion (SIC). In several cases new industry classifividual industrial production series to more com- cations and new data sources have permitted a prehensive data sources. One of the major separation of production components that previsources for benchmark revisions is the Census of ously had to be lumped together even though Manufactures, which is undertaken every five they serve different functions. For instance, adyears. In the current general revision, revised ditional data were used to separate automobiles indexes of production were obtained from the sold to households from those sold to business Census of Manufactures for 1972 and 1977 and and government. In the market groups of the from Annual Surveys of Manufactures through previously published index, trucks had already 1981. These indexes are used to adjust the annual been separated in this way. levels of most of the Federal Reserve's 252 basic The revised industrial production index will be series on industrial production. Other annual presented in detail in a manual now in prepara- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin • July 1985 tion. The manual will describe the basic con- 2. Growth in industrial production in six countries, cepts, classifications, monthly series, bench- selected periods marking procedure, aggregation and weighting Average annual increase in percent technique, and method of seasonal adjustment, Country 1967-84 1967-77 1977-84 as well as the uses, limitations, and history of the 1 United States 3.0 3.1 2.9 index. Federal Republic of Germany 2.6 3.8 .8 irance 2.8 4.2 .8 Italy 2.6 3.8 .9 5.9 6.6 4.8 United Kingdom 1.3 2.1 .3 MAJOR DEVELOPMENTS SOURCE. International Financial Statistics. The revised index of total industrial production shows an average annual growth rate between 1967 and 1984 that is marginally higher than that industrial production in recent years, the producshown in the previously published index: 3.0 tivity of labor in the manufacturing sector continpercent compared with 2.9 percent. To put these ued to improve. In this setting, job opportunities trends in context, during the preceding two dec- in the manufacturing sector were diminished; ades (1947-67) industrial production had ad- employment in this sector reached a peak of 21 vanced at an average annual rate of 4.8 percent million in 1979, and by 1984 was 7 percent lower. (table 1). In the period from 1967 to 1984, among the six major industrial countries listed in table 2, only Timing of Peaks and Troughs in Japan did the overall growth rate exceed that of U.S. industry. In all six countries listed, As chart 1 shows, the revised index of total growth slowed after 1977 compared with the industrial production displays much the same previous decade. The deceleration in industrial cyclical variation as did the previously published growth in the five foreign countries was, howev- index. Only for 1973-74 does the current revision er, more pronounced than it was in the United result in a noticeable difference in the timing of States, where the rate dropped from an annual a peak or trough in industrial activity. Both inaverage of 3.1 percent in the years 1967-77 to 2.9 dexes reveal a rapid fall in output in the closing percent in the years 1977-84. months of 1974 and a bottoming out in March Despite the moderate rate of growth in U.S. 1975. But the revised index reveals a peak in output in the autumn of 1973 and then a fall of almost 2 percent by the third quarter of 1974, while the previously published index fluctuated 1. Growth rate in industrial production, by major group, selected periods in a narrow range between November 1973 and Average annual increase in percent, except as noted September 1974. The revised figures conform more closely to the cyclical timing reported by propor- the National Bureau of Economic Research, Group 1947-67 1967-77 1977-84 which put the peak in November 1973. (percent) In the most recent cycle, July 1981 remains the Total industrial high point, after which total output fell more than production 11 percent over the following 15 months. Ac- Major market groups jJ-.t Products cording to the revised index, production at the Consumer goods... cyclical low was virtually flat during the last Business equipment three months of 1982, at a level scarcely above Construction supplies the 1977 average, while the previously published Materials index pointed to a distinct trough, in November Major industry groups 1982. Both indexes show the strong rebound in (vmm 4.7 3.2 overall industrial output during 1983 and the first Durables 5.0 2.6 Nondurables 4.5 3.9 half of 1984, as well as the leveling out since the ilities , 8.4 4.4 11.5 summer of 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production 489 1. Revised and earlier industrial production indexes 2. Total industrial production and high-technology industries Ratio 1977=100 Ratio scale, 1977=100 120 Monthly data, seasonally adjusted. Monthly data, seasonally adjusted. The high-technology category includes office and computing ma- Sectoral Developments chines, electronic communications, electronic components, medical instruments, and copiers and related equipment. The combined 1977 weight of these high-technology industries in total industrial produc- The U.S. economy in recent years has benefited tion is 6.1 percent. from rapid growth of some new industries, while many of its older industries have matured and slowed in their rate of growth. Some of the sions were evident in slower-growing or declinfastest-growing industries have been those that ing industries such as metal mining, primary embody sophisticated technology in both their metals, fabricated metals, leather and leather production processes and their final products. products, and gas utilities (table 3). Chart 2 plots production for a group of such Among the durable goods industries, the revi- "high technology" industries—office and com- sion underscores the weakness in manufacturing puting machines, copiers and related equipment, of equipment for agriculture, construction and electronic communications, electronic compo- mining, and railroads; in commercial shipbuildnents, and medical instruments—against total ing; and in primary metals. For this set of indusindustrial production. Because these industries tries, output peaked in 1979 and has since have grown at a much faster rate than total declined about 40 percent (chart 3). The contriindustrial production since 1977, their combined bution of these industries to total industrial proproportion in the overall index has increased duction has shrunk from 8.0 percent in 1977 to from 6.1 percent in 1977 to 12.9 percent by the 4.7 percent at the end of 1984. end of 1984. These and other fast-growing industries have on balance accounted for most of the growth in total industrial production since the 3. Total industrial production and low-performing late 1970s. durable goods industries A major revision in the industrial production index generally results in an upward adjustment to the output of "growth industries." One reason is that available current monthly data are likely to fail to capture the full contribution of firms and products that enter the market in the years between major revisions. The real extent of this contribution becomes known only in the light of more comprehensive data. The latest revision confirms this tendency: the average annual rate 1978 1980 1982 1984 of growth in high-technology industries as measured by the revised index was 14 percent during Monthly data, seasonally adjusted. Low-performing durables include farm equipment, construction and the 1977-84 period, compared with 9 percent in mining equipment, railroad equipment, commercial shipbuilding, and the earlier index. In contrast, downward revi- primary metals. The 1977 weight of low-performing durables in total industrial production is 8.0 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

490 Federal Reserve Bulletin • July 1985 The rate of growth in the output of many for domestic refining of crude oil has diminished nondurable manufacturing industries also has because domestic production of crude oil has slowed in the past decade despite strength in changed little since the development of the Alassuch areas as paper, printing and publishing, and ka North Slope field in the late 1970s and berubber and plastics products. Besides the leather cause the volume of imported crude oil has and products industry, which has been in actual fallen. Moreover, imports of refined petroleum decline since the late 1960s, the most pro- products have increased as refining capacity nounced loss has occurred in refining of petro- abroad has expanded. leum products, which dropped after each of the Among other nondurable goods industries, 'major rounds of price increases for crude oil and output of textile mill products and apparel has has recovered only partially since 1982. At the stagnated in recent years as imports have satisend of 1984, output of petroleum refineries was fied the increases in domestic demand. Growth about one-fifth below the 1978-79 high. The need in the chemical industry—the largest industry 3. Comparison of rates of growth in industrial production Growth rate calculated with Average annual rate of growth, revised index minus growth rate revised index (percent) Series calculated with earlier index 1967-84 1967—77 1977-84 1967-84 1967-77 1977-84 Total 3.0 3.1 2.9 .1 -.2 .5 Major market groups Products, total 3.2 3.0 3.5 .2 -.3 .9 Consumer goods 3.1 3.6 2.4 .2 -.2 .9 Business and defense equipment. 3.0 1.8 4.9 0 -.3 .7 Business 4.1 3.9 4.4 .6 -.1 1.5 Defense and space .4 -3.8 6.7 -1.4 -1.8 -.9 Intermediate products 3.3 3.4 3.2 0 -.4 .7 Construction supplies 2.3 2.6 1.9 -.5 -.9 .1 Materials 2.7 3.3 2.0 -.1 0 -.2 Durable 3.0 3.0 2.9 .1 -.1 .4 Nondurable 3.4 4.7 1.5 -.3 .2 -.9 Energy 1.4 1.9 .6 -.2 -.2 -.3 Major industry groups Mining 1.3 1.1 1.5 -.1 -.6 .6 Metal mining -1.5 0 -3.7 -1.0 -.5 -1.7 Coal 2.7 2.0 3.5 .1 0 -.1 Oil and gas extraction 1.1 .9 1.3 -.1 -.8 .9 Stone and earth minerals 2.0 1.8 2.2 -.2 -.4 .1 Manufacturing 3.2 3.2 3.1 .2 -.1 .6 Durables 2.9 2.6 3.2 .3 -.1 .7 Lumber and products 1.9 2.3 1.3 -.5 -.4 -.5 Furniture and fixtures 3.7 3.1 4.6 -.2 -.7 .6 Clay, glass, stone products 2.5 3.1 1.7 -.3 -.7 .4 Primary metals -.6 .9 -2.7 -.3 -.2 -.5 Fabricated metal products 1.3 1.9 .4 -.6 -.8 -.3 Nonelectrical machinery 4.3 3.8 5.1 .7 .1 1.7 Electrical machineiy 6.0 4.5 8.1 1.3 .7 2.2 Transportation equipment 1.8 1.9 1.8 -.1 -.1 .1 Instruments 5.9 6.9 4.6 2.6 2.3 3.0 Miscellaneous manufactures.. 1.8 3.2 -.3 -.6 -.9 -.3 Nondurables 3.5 3.9 2.9 0 -.3 .4 Food and products 3.1 2.9 3.5 .2 -.4 1.2 Tobacco .6 .9 .1 -.2 -.3 -.2 Textile mill products 2.3 3.5 .5 .4 .5 .1 Apparel products 1.4 2.1 .4 -.2 -.9 .8 Paper and products 3.4 3.3 3.5 .1 .1 0 Printing and publishing 3.7 2.4 5.8 .5 -.1 1.6 Chemicals and products 5.0 6.6 2.8 0 .2 -.2 Petroleum products 1.2 3.5 -1.9 -.1 -.1 0 Rubber and plastics products. 6.6 7.5 5.3 -.7 -1.3 .1 Leather and products -3.1 -2.7 -3.7 -.1 .3 -.8 Utilities 3.2 4.4 1.5 -.4 -.2 -.6 Electric 4.4 5.9 2.2 .1 0 0 Gas .4 1.0 -.4 -1.2 -.2 -2.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production 491 included in nondurable manufacturing—has tive prices. Even imports of materials that are slowed appreciably, despite continued strength relatively costly to transport, such as gypsum in plastics materials and in drugs and other board, have increased in recent years. In addiconsumer chemical products. Weakness was tion, imports of capital equipment and finished concentrated among agricultural chemicals; their consumer goods have gained ground while exoutput was lower in late 1984 than it had been ports of such goods have leveled off. five years earlier. Weakness since the 1970s in many of the industries mentioned above was due to a number STATISTICAL CHANGES of factors. In particular, the two rounds of energy price increases in the 1970s were detrimental to As noted earlier, the changes in this revision of the growth of real income in the United States industrial production, as in previous revisions, and thus restrained the demand for industrial arise from a variety of sources. Individual series goods. Later, the recessions of 1980 and 1981-82 have been affected most by the benchmarking curtailed aggregate demand again. Although the procedure, in which most series are brought into influence of these factors has receded, the conformity with Census production indexes or strength of the dollar in recent years has caused with other data that are more comprehensive U.S. exports to stagnate and imports of manufac- than those from which the monthly indexes are tured goods and materials to surge. Foreign constructed. In some cases, series were revised supplies of goods such as chemicals, textiles, very little; in others, revisions were substantial. metals, and some other major industrial materi- In general, aggregates showed less revision than als have become increasingly available at attrac- their component parts because of offsetting 4. Additions to basic series in the industrial production index New series SIC Market classification Reason for addition1 Gold and silver ores 104 Durable materials, n.e.c. New data source Ferroalloy ores 106 Durable materials, n.e.c. New data source Miscellaneous metal ores 105, 8, 9 Durable materials, n.e.c. Disaggregation Chemicals and fertilizer materials .. 147 Chemical materials New data source Poultry 2012 Consumer staples Disaggregation Corn oil 20462 Consumer staples New data source Corn syrup and starch 20462 Nondurable materials, n.e.c. New data source Pet foods 2047 Consumer staples Disaggregation Roasted coffee 2095 Consumer staples Disaggregation Narrow fabrics 224 Textile materials Disaggregation Flooring. 2426 Construction supplies New data source Inorganic pigments 2816 Chemical materials Disaggregation; SIC change Replacement tires, business 3012 Business supplies Disaggregation Original equipment business tires .. 3012 Equipment parts Disaggregation Clay sewer pipe 3259 Construction supplies New data source Clay tile 3253, 5 Construction supplies New data source Miscellaneous nonferrous metals... 3332, 3, 9 Durable materials, n.e.c. New data source Ordnance 3482 Defense and space equipment Disaggregation; SIC change Computer parts 3572 Equipment parts Disaggregation Electronic communications Nondefense 36622 Commercial equipment Disaggregation Parts 36622 Equipment parts Disaggregation Automobiles, consumer 3712 Automotive products Disaggregation Automobiles, business 3712 Transit equipment Disaggregation Military aircraft equipment, n.e.c... 3724, 82 Defense and space equipment SIC change Aircraft parts 3724, 82 Equipment parts SIC change Guided missiles and space vehicles. 3761 Defense and space equipment SIC change Missile and space vehicle parts 3764, 9 Equipment parts SIC change Travel trailers and campers 3792 Automotive products Disaggregation Tanks 3795 Defense and space equipment Disaggregation Transportation equipment, n.e.c 3799 Automotive products Disaggregation Watches and eyeglasses 385, 7 Home goods SIC change Copiers and related equipment 386 Commercial equipment Disaggregation 1. Modifications of existing series arising from changes in source, 2. Only a portion of this SIC industry is included in the associated scope, or aggregation are not shown. market classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Federal Reserve Bulletin • July 1985 changes in the individual series. In addition to make up for the elimination of monthly Census level corrections made as a result of the bench- surveys of this industry, production indexes for marking procedure, changes have been made to it are now based on data on production-worker individual series with the incorporation of data hours from the monthly establishment survey from new sources. Further changes result from conducted by the Bureau of Labor Statistics. the alignment of industrial production series with New industry classifications called for revithe 1977 Standard Industrial Classification; the sions to many individual series in both the dura- 1967 version was used in the last major revision. ble and nondurable manufacturing industries. Finally, some series were added as new sources For instance, ordnance and accessories (formerof data became available (table 4). ly SIC 19) was split between two existing durable manufacturing industries in the 1972 version of the SIC. The portion of this industry covering Special Problems small arms and ammunition was placed in the fabricated metal products industry (SIC 34), Several individual industries pose special mea- while guided missiles and tanks—included in surement problems—for example, office and defense equipment in the market classification of computing machines (SIC 357). This industry the index—were placed in the transportation includes computers, accounting and calculating equipment industry (SIC 37). Three separate machines, and typewriters. The adjustment to industrial production series were developed for new benchmark data and to more comprehensive these components: one for small arms and aminterim data has yielded an upward revision in munition, one for guided missiles, and one for the average annual rate of growth of this industry tanks. All three are estimated on a monthly basis from 12 percent to 22 percent for the 1977-84 from data on production-worker hours. period. Technological advances in computing Among the nondurable manufacturing indusequipment have spurred tremendous leaps in the tries, changes to series necessitated by modificaability to store, retrieve, and manipulate data. At tions in the Standard Industrial Classification the same time, both the size and the price of were especially extensive in the chemicals and computer components have fallen. Equipment of products industry. This industry now covers essentially the same size and price as a piece eighteen series (one more than previously), of several years older often offers a marked im- which four are new in coverage, source, or provement in capability; this increase in "quali- composition. ty" (broadly defined) implies a reduction in the price per operation of a magnitude that is difficult to assess. For the 1977-84 period, estimates of Improvement of Market Classifications price reduction in computers after adjustment for quality change range widely, from 10 percent to The industrial production index is organized both more than 80 percent. For the purpose of forming by industry groups defined by the SIC codes and the annual production indexes for the industry, a by market groups developed by the Federal conservative estimate of a decline in prices of Reserve. During the most recent revision, severabout 20 percent from 1977 to 1984 was used to al series have been developed to augment the deflate dollar-value data for the office and com- market classification. All automobiles, for examputing machines industry. During this same peri- ple, were formerly classified as consumer goods, od, the producer price index for manufacturing when in fact a sizable portion was acquired by capital goods increased about 63 percent, thus government or businesses for their own use or to implying a difference of more than 80 percentage lease or rent. The revision has split the auto points in the movements of the prices of office production series to create a new series on and computing machines and those for capital business autos, based on fleet acquisition data, goods generally. which was made a part of the series on business Revisions in the apparel series typify the need equipment. The classification of autos by two for adaptation to the loss of a data source. To sizes was discontinued because the progressive Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production 493 reduction in the size of autos since the 1970s some as shelters for workers and construction made the distinction between sizes less useful supervisors. In the market grouping of the index, than it had been. More meaningful market groups manufactured homes, along with oil and gas well became possible in tire production; the portion of drilling, fall in a new category called "rigs and tires sold for new trucks was placed in equipment prefabs." This category is included as a separate parts rather than in intermediate products. component of total equipment, along with busi- A newly created market group comprises mo- ness and defense and space equipment. bile homes and oil and gas well drilling. Mobile homes are difficult to classify because they are usually transported to permanent locations after Effect of New Weights construction and are therefore not truly mobile. They are made from many different materials and Levels and movements of the revised market and serve a variety of uses, some as residences and industry aggregates are influenced not only by 5. Proportions of value added in industrial production, by major market group and industry1 1967 1972 1977 1984 Series (percent) (percent) (percent) (percent) Major market groups Total 100.00 100.00 100.00 100.00 Products, total 61.30 61.91 57.72 60.23 Consumer goods 27.65 27.90 25.52 24.77 Total equipment2 20.23 19.77 19.25 22.21 Business 13.27 14.08 14.34 15.88 Defense and space 6.96 4.80 3.67 4.75 Intermediate products 13.42 14.24 12.94 13.27 Construction supplies 6.51 6.80 5.96 5.57 Materials 38.70 38.09 42.28 39.78 Durable 20.29 19.81 20.50 20.59 Nondurable 10.10 9.80 10.10 9.22 Energy 8.31 8.48 11.69 9.98 Major industry groups Total 100.00 100.00 100.00 100.00 Mining 6.36 6.59 9.83 8.95 Metals .51 .58 .50 .31 Coal .69 .91 1.60 1.68 Oil and gas extraction 4.40 4.44 7.07 6.33 Stone and earth minerals .75 .66 .66 .63 Manufacturing 87.95 87.33 84.22 85.67 Durables 51.98 51.08 49.10 50.31 LLuummbbeerr aanndd pprroodduuccttss 1.64 2.50 2.30 2.06 FFuurrnniittuurree aanndd ffiixxttuurreess 1.37 1.48 1.27 1.42 Clay, glass, stone products 2.74 3.05 2.72 2.50 Primary metals 6.57 5.63 5.33 3.61 Fabricated metal products 5.93 6.51 6.46 5.45 Nonelectrical machinery 9.15 9.09 9.54 11.12 Electrical machinery 8.05 7.40 7.15 10.12 Transportation equipment 9.27 9.63 9.13 8.51 Instruments 2.11 2.56 2.66 2.99 Miscellaneous manufactures 1.51 1.64 1.46 1.18 Nondurables 35.97 36.26 35.11 35.31 Food and products 8.75 8.62 7.96 8.30 Tobacco .67 .64 .62 .51 Textile mill products 2.68 2.84 2.29 1.95 Apparel products 3.31 3.27 2.79 2.36 Paper and products 3.21 3.16 3.15 3.29 Printing and publishing 4.72 4.89 4.54 5.51 Chemicals and products 7.74 7.85 8.05 8.04 Petroleum products 1.79 1.47 2.40 1.72 Rubber and plastics products 2.24 2.82 2.80 3.29 Leather and products .86 .71 .53 .33 Utilities 5.69 6.08 5.% 5.42 Electric 3.88 4.13 4.17 4.00 1.81 1.96 1.78 1.42 1. Components may not add to aggregate totals because of rounding 2. The new category, "rigs and prefabs," referred to above is not and the omission of some series. shown separately because of its small proportion in the total index. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin • July 1985 revisions to basic series but also by the applica- portion of this industry in the total index intion of new weights. The industrial production creased from 1.4 percent in 1977 to 4.6 percent in weights, based on value-added data from the 1984. In contrast, the average annual rate of Census, are used in combining individual series growth of the oil and gas extraction industry or subgroups into various totals. A comparison from 1977 to 1984 was 1.3 percent, less than that of proportions for major industries—the relative for the total index, and its proportion fell from importance of the groups for that year—can be 7.1 percent in 1977 to 6.3 percent in 1984. seen in table 5. Preliminary 1984 contributions to the total index, calculated on the basis of the 1977 value-added weights and 1984 production Results of the Revision levels, are also shown. The 1984 proportions may be indicative of the way weights will change For the 1967-84 period as a whole, the revision in the future. However, the differences between caused the measure of growth in total industrial the 1977 weights and the 1984 proportions reflect production to move slightly upward. During the movements in output between those years but first part of this period (1967-77), the revised not changes in relative prices. In many instances, index displays slightly less growth in most major output movements reflect estimated changes in the market categories than did the earlier index quality of goods, which often have a significant (table 3). Revisions in the 1977-84 period, howeffect on the shares of industries undergoing rapid ever, were generally upward. Sizable changes in innovation. When new value-added weights for the indexes for business equipment resulted 1982 and 1987 are introduced, however, the shares largely from upward revisions to computers, of fast-growing industries in the total index are instruments, and electronic equipment. In the likely to shrink because prices in such industries consumer goods market group, the upward revitend to increase less than the average. sion for the 1977-84 period was due partly to Two examples stand out. While the output of upward revisions in the home goods and food computers has surged since the last major revi- products series. Defense and space equipment, sion, rapid innovation has allowed declines in on the other hand, was revised sharply downprice and increases in demand. As a conse- ward mainly because of a reclassification of quence, the total value added for the office and nondefense portions of the electronic communicomputing machines industry (SIC 357) through cations industry (SIC 366) out of defense equipthe mid-1970s has increased only moderately ment and into business equipment and equiprelative to that for total industry, and the value- ment materials. In addition, newly available data added weight increased from a 1967 figure of 1.1 occasioned a downward shift in the military percent to a 1977 figure of 1.4 percent. By aircraft series. contrast, with oil prices much higher in 1977 than The growth since 1977 of some of the major in 1967, prices of energy-related goods climbed market aggregates is shown in chart 4. Boosted sharply. Thus the 1977 valued-added weight for the oil and gas extraction industry (SIC 13) is 7.1 4. Market aggregates in the industrial production index percent, up from the 1967 figure of 4.4 percent; for coal, a competitive product, the weight is 1.6 percent, up from its 1967 value of 0.7 percent. In the monthly index, the current proportion of an individual industry in the total index should increase only when production in that industry picks up more than production in the remainder of the index. For instance, from 1977 to 1984 the office and computing machines industry grew at an average annual rate of 22 percent, compared with average annual growth of 2.9 percent in 1978 1980 1982 1984 total industrial production; accordingly, the pro- Monthly data, seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production 495 5. Industrial production indexes of mining and utilities chinery (including computers), electrical machinery, and instruments all show substantially more Ratio scale, 1977=100 growth in the revised index than previously indicated. Growth in the industrial production index for mining was revised downward for the 1967-77 period because the rates of growth of metal mining, oil and gas extraction, and stone and earth minerals were all revised downward. In the 1977-84 period, the revised index for mining shows faster growth than did the previously 1970 1975 1980 1984 published index because of an upward revision to Monthly data, seasonally adjusted. growth in the oil and gas extraction industry. The utility component of the index was revised by strong demand for computing equipment, downward in both the periods. Very slight upgrowth of business equipment production has ward revisions in electric utilities were more than exceeded that for consumer goods. In addition, offset by sizable downward revisions in the gas the output of defense and space equipment has utility series. These results reinforce the downbeen growing vigorously since 1979. ward shift in the trend rate of growth in utilities Viewing production by industrial groups, the that occurred after the surge in energy prices in growth in the manufacturing sector, which ac- the mid-1970s. From an average of about 7 counted for about 84 percent of total industrial percent per year before 1973, the trend rate of production in 1977, was revised downward only increase in utility output subsequently receded to slightly for the 1967-77 period. The downward about 2 percent per year (chart 5). revision in the rubber and plastics products and apparel industries was the most significant among those in the nondurable goods industries. Shift in the Relationship between Products Smaller downward revisions were made in the and Materials food, tobacco, printing, and petroleum industries; and upward revisions were significant in For about three decades after the Second World textile mill products and in chemicals (table 3). War, products and materials in the aggregate had Revisions for the durable manufacturing indus- similar trend rates of growth, though materials tries in the 1967-77 period were nearly offsetting, output varied more than products output (chart and thus the durables index reflects growth at 6). In recent years, the trends have diverged, and nearly the same rate as shown previously. This by the end of 1984, the level of materials output overall stability conceals substantial revisions in some industries. Growth in furniture and fix- 6. Industrial production indexes of tures, in clay, glass, and stone, in fabricated products and materials metals, and in miscellaneous manufactures was revised appreciably downward; growth in instru- , Ratio scale, 1977=100 M ments and electrical machinery was substantially Products greater than previously indicated. / 120 During the 1977-84 period, annual growth in 100 the nondurable manufacturing industries was 0.4 percentage point greater than shown in the earlier index, with the largest upward revisions in the food products and printing and publishing industries. Growth in the durable manufacturing industries was revised upward by 0.7 percentage point during this same period. Nonelectrical ma- Monthly data, seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin • July 1985 was about 12 percent below that of products. 6. Seasonal factors used to adjust data on Several factors may account for the recent automobile production, 1967-84 change in this relationship. Domestic producers of raw materials have faced stiff competition Quarter YYeeaarr from foreign producers. Moreover, domestic in- First Second Third Fourth dustries import many parts for their products, 1967 105.9 115.2 70.6 107.9 such as semiconductors, auto engines, and spe- 1968 106.9 113.0 66.1 113.8 1969 108.5 112.6 71.8 107.2 cialty steel; these parts are classified as materi- 1970 109.2 112.9 73.4 103.4 als. In addition, in some production processes, 1971 109.6 111.2 78.0 100.8 1972 101.7 112.3 84.3 101.6 materials usage has been reduced outright. In the 1973 101.9 113.1 83.8 101.2 1974 102.3 112.7 83.8 101.0 case of motor vehicle production, for example, 1975 102.5 113.2 84.9 99.1 both materials substitution and reductions in the 1976 102.9 113.5 82.8 100.6 size of vehicles have contributed to a lowering in 1977 105.2 113.7 81.1 100.1 1978 106.3 112.1 80.1 101.4 demand for steel in each vehicle produced. Fur- 1979 105.3 112.1 82.1 100.7 1980 104.0 112.8 82.0 101.6 ther, in the 1980-84 period, users of materials 1981 102.4 112.3 82.8 102.7 had both the incentive—the high interest cost of 1982 102.5 111.2 83.7 102.8 1983 103.0 110.7 84.6 102.0 carrying stock—and the means—computerized 1984 104.2 106.4 87.5 102.3 inventory control—to hold stocks of materials to the minimum necessary for a given level of adjustment, known as intervention analysis, is production. Finally, as mentioned earlier, the used to exclude data for such periods from the value-added weights for many energy-related in- calculation of seasonal factors.1 dustries increased markedly from 1967 to 1977. The seasonal patterns displayed in the individ- These industries, the products of which are ual industrial production series vary widely. mostly included in the materials group, have Some industries exhibit seasonal fluctuations of grown relatively little in recent years, and have 40 percent or more within the calendar year. The therefore contributed to the divergence in growth closedown of automobile assembly plants to perbetween products and materials. mit retooling for new models poses a special challenge. The closedowns usually occur annually, although not necessarily at exactly the same SEASONAL ADJUSTMENT time each year. The approach used in constructing the industrial production index is to shift the The separation of seasonal movements from cy- seasonal factor to coincide with the closedown clical and irregular fluctuations and from trend is chosen by the industry (similar to the shift of the of crucial importance in the compilation of the Easter seasonal factor for department store sales industrial production index and greatly affects as the date of Easter shifts). The shifting of the reliability of the monthly estimates. Adjust- seasonal factors between the second and the ments for seasonality are attempts to remove third quarters can be seen in table 6. For invariations in output that are due to regularly stance, in 1984 the seasonal factor for the second recurring events such as the seasons, holidays, quarter is lower than that for 1983, whereas the and vacations. The ratio-to-moving-average third-quarter seasonal factor is higher. The seatechnique, which was introduced before the Sec- sonal factors were changed because most closeond World War, is used to accomplish seasonal downs for model changeover occurred in the adjustment. Studies have indicated, however, third quarter in 1983, but in 1984 some were that this technique tends to attribute more to shifted to the second quarter. seasonal fluctuation than is appropriate in certain instances. In particular, the standard method erroneously includes some of the effects of 1. A formal theoretical statement of this technique appears lengthy strikes and sharp cyclical movements in in G.E.P. Box and G.C. Tiao, "Intervention Analysis with Applications to Economic and Environmental Problems," the calculation of the seasonal factors. To reme- Journal of the American Statistical Association, vol. 70 dy this problem, a supplementary method of (March 1975), pp. 70-79. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production 497 CONCLUSION Whether growth in the industrial sector will return to more robust rates depends on a number The revised industrial production index shows of factors. From a short-term perspective, the essentially the same historical movements as the strong dollar and the associated extraordinary previously published index. In particular, the U.S. trade deficits have inhibited growth in the deceleration of growth in the industrial sector industrial sector. Sometimes overshadowed by during the past 10 to 15 years is confirmed in the these developments is the longer-term challenge revised index, and the cyclical patterns in the to U.S. manufacturing in both domestic and revised index are much the same as those in the world markets posed by the rise of competitive earlier one. In general, growth rates for vibrant industries in Europe and Asia. To meet this new industries have been revised upward, challenge, U.S. firms will need to become more whereas growth in some long-established indus- efficient and to develop and market products in tries has been revised downward. On balance, industries in which the United States holds a however, revisions were on the upside. comparative advantage over other countries. • The appendix tables follow. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin • July 1985 A.l Revised indexes of industrial production, seasonally adjusted, 1977 = 100 Month Quarter Year Annual average Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total index 1977 96.5 97.2 98.0 99.0 99.6 100.4 100.7 101.0 101.4 101.8 102.1 102.1 97.3 99.7 101.0 102.0 100.0 1978 101.6 101.6 103.0 105.5 105.8 106.9 107.5 107.7 108.3 109.2 109.9 110.8 102.1 106.1 107.9 110.0 106.5 1979 110.3 110.9 111.2 109.9 110.9 110.9 110.5 110.2 110.4 111.0 111.0 111.0 110.8 110.6 110.4 111.0 110.7 1980 111.3 111.4 111.4 109.1 106.2 105.0 104.8 106.3 107.7 108.5 110.7 111.0 111.4 106.8 106.3 110.1 108.6 1981 111.0 111.2 111.6 110.6 111.2 112.0 113.4 112.8 111.5 110.4 109.0 107.4 111.2 111.3 112.5 108.9 111.0 1982 105.4 107.0 105.8 104.5 103.6 103.0 102.5 102.0 101.3 100.5 100.6 100.5 106.1 103.7 102.0 100.6 103.1 1983 102.5 103.3 104.2 105.6 106.9 107.8 109.8 111.6 113.7 114.4 114.8 115.5 103.3 106.8 111.7 114.9 109.2 1984 118.4 119.3 120.1 120.7 121.3 122.3 123.2 123.5 123.3 122.7 123.4 123.3 119.3 121.5 123.4 123.1 121.8 Products, total 1977 97.0 97.4 97.7 98.8 99.3 100.1 100.6 101.3 101.5 101.6 101.8 103.0 97.3 99.4 101.1 102.1 100.0 1978 102.1 102.7 104.5 105.9 106.0 107.5 107.7 108.0 108.7 109.1 109.8 110.6 103.1 106.5 108.1 109.8 106.9 1979 110.7 111.1 111.4 109.8 111.3 111.1 110.6 110.2 110.9 111.5 111.4 111.5 111.1 110.7 110.6 111.5 111.0 1980 111.5 112.4 112.4 110.4 108.5 108.1 108.8 110.4 111.5 112.1 113.1 113.0 112.1 109.0 110.3 112.7 111.0 1981 113.1 113.2 113.6 113.5 114.4 114.4 115.2 114.5 113.3 112.7 111.7 110.9 113.3 114.1 114.3 111.8 113.4 1982 109.0 110.6 109.9 108.7 108.3 107.8 107.6 106.9 106.4 105.7 106.1 106.2 109.8 108.3 106.9 106.0 107.8 1983 107.5 108.0 108.8 110.4 111.6 112.8 114.4 116.5 118.4 118.9 119.1 120.0 108.1 111.6 116.4 119.3 113.9 1984 122.8 123.7 124.5 125.4 126.2 127.5 128.6 129.0 128.8 129.0 129.9 129.8 123.7 126.4 128.8 129.5 127.1 Final products 1977 97.3 97.8 97.8 98.9 99.2 99.9 100.6 101.2 101.4 101.4 101.7 102.8 97.7 99.3 101.1 101.9 100.0 1978 101.6 102.5 104.4 106.0 106.1 107.5 107.8 108.3 108.9 109.2 109.9 110.5 102.8 106.5 108.3 109.9 106.9 1979 110.8 111.0 111.5 109.4 111.4 111.1 110.6 110.2 111.1 111.5 111.5 111.4 111.1 110.6 110.6 111.5 111.0 1980 111.8 112.9 112.9 111.9 110.1 109.6 110.7 111.7 112.8 113.5 114.5 114.1 112.5 110.5 111.7 114.0 112.2 1981 114.2 114.7 115.1 115.2 116.0 116.2 116.9 116.3 115.3 115.1 114.0 113.2 114.7 115.8 116.2 114.1 115.2 1982 111.0 112.5 112.0 110.8 110.2 109.6 109.3 108.3 107.7 107.0 107.4 107.9 111.8 110.2 108.4 107.4 109.5 1983 108.6 109.0 109.7 111.3 112.5 113.6 115.1 117.3 119.2 119.3 119.7 120.8 109.1 112.5 117.2 120.0 114.7 1984 123.4 124.2 125.0 126.1 126.8 128.2 129.2 129.7 129.8 129.9 130.7 130.6 124.2 127.1 129.5 130.4 127.8 Consumer goods 1977 98.0 98.5 98.4 99.0 99.1 99.7 100.3 101.3 100.6 101.3 101.7 102.4 98.3 99.3 100.7 101.8 100.0 1978 100.1 101.6 102.9 104.2 104.1 105.4 105.4 105.3 105.5 105.4 105.4 106.1 101.6 104.6 105.4 105.7 104.3 1979 105.4 105.0 105.5 103.1 105.0 104.3 103.2 102.6 102.8 102.9 103.1 103.2 105.3 104.1 102.9 103.1 103.9 1980 103.2 103.6 104.1 102.5 100.2 99.9 101.0 102.1 103.5 103.8 104.3 104.1 103.6 100.9 102.2 104.1 102.7 1981 104.4 104.3 104.7 104.4 105.4 104.7 105.1 104.9 103.3 103.3 102.7 101.6 104.5 104.8 104.4 102.5 104.1 1982 100.7 101.9 101.7 101.2 101.3 101.8 101.7 102.0 101.0 100.9 101.3 101.1 101.4 101.4 101.5 101.1 101.4 1983 103.0 103.7 104.5 106.2 107.8 108.8 110.3 112.2 113.4 113.6 113.6 114.4 103.7 107.6 112.0 113.9 109.3 1984 116.2 116.9 117.3 118.3 117.7 118.5 119.1 118.4 118.3 118.5 119.6 119.7 116.8 118.2 118.6 119.3 118.2 Durable consumer goods 1977 95.5 95.5 97.2 97.6 98.4 100.5 101.8 102.6 102.5 103.0 102.0 103.8 96.1 98.9 102.3 103.0 100.0 1978 96.7 99.9 102.4 105.3 103.6 105.3 106.2 105.6 104.6 105.1 105.2 105.7 99.6 104.7 105.5 105.3 103.7 1979 104.9 104.7 104.5 96.5 102.3 102.3 100.7 95.7 97.1 96.2 95.6 96.0 104.7 100.4 97.8 95.9 99.9 1980 91.9 93.0 93.2 87.6 82.6 81.3 82.0 84.3 88.0 90.8 93.8 92.3 92.7 83.8 84.8 92.3 88.4 1981 91.3 91.5 91.3 91.4 93.2 92.6 92.4 91.2 88.0 87.8 84.4 79.8 91.4 92.4 90.6 84.0 89.7 1982 78.4 81.4 82.0 83.5 84.0 85.9 86.2 86.2 83.0 81.0 81.2 81.4 80.6 84.5 85.1 81.2 82.9 1983 86.3 89.4 91.6 93.2 95.6 97.5 99.7 102.6 104.3 106.5 106.7 109.7 89.1 95.5 102.2 107.6 98.5 1984 113.0 113.0 112.8 113.0 111.8 111.7 113.8 113.3 111.5 111.4 113.3 113.1 112.9 112.2 112.9 112.6 112.6 Nondurable consumer goods 1977 99.0 99.6 98.9 99.4 99.4 99.4 99.7 100.7 99.8 100.6 101.5 101.8 99.2 99.4 100.1 101.3 100.0 1978 101.4 102.2 103.1 103.7 104.3 105.4 105.1 105.1 105.9 105.5 105.5 106.3 102.3 104.5 105.4 105.8 104.5 1979 105.6 105.1 105.8 105.5 106.1 105.0 104.2 105.1 104.9 105.5 106.0 105.9 105.5 105.5 104.7 105.8 105.4 1980 107.5 107.6 108.2 108.1 106.9 107.0 108.1 108.8 109.3 108.7 108.3 108.4 107.8 107.4 108.8 108.5 108.1 1981 109.2 109.0 109.6 109.1 109.7 109.0 109.6 109.8 108.8 108.9 109.4 109.6 109.3 109.3 109.4 109.3 109.3 1 1 9 9 8 8 3 2 1 1 0 0 9 8 . . 2 9 1 1 0 0 9 9 . . 5 0 1 1 0 0 9 9 . . 2 0 110171..80 1 1 1 0 2 7 . . 3 8 1 10 1 7 2 . . 8 9 1 1 0 1 7 4 . . 5 3 1 1 1 0 5 7 . . 7 9 1 1 1 0 6 7 . . 7 7 1 10 1 8 6 . . 3 2 1 1 1 0 6 8 . . 1 7 1 1 1 0 6 8 . . 1 4 1 1 0 0 9 9 . . 1 1 1 1 1 0 2 7 . . 1 8 1 10 1 7 5 . . 7 6 1 1 0 1 8 6. . 1 5 1 1 1 0 3 8 . . 3 3 1984 117.3 118.3 118.9 120.3 119.9 120.9 120.9 120.2 120.7 121.0 121.8 122.1 118.2 120.4 120.6 121.6 120.2 Business equipment 1977 96.2 96.6 96.5 98.3 98.4 99.5 100.8 100.7 102.5 102.7 103.2 104.4 96.4 98.7 101.3 103.5 100.0 1978 104.4 105.1 107.4 109.8 109.8 111.8 112.6 114.3 115.5 116.8 119.0 119.5 105.6 110.5 114.1 118.4 112.2 1979 122.1 123.6 124.5 122.7 125.2 125.4 125.2 124.4 126.4 126.3 125.5 124.6 123.4 124.5 125.3 125.5 124.7 1980 125.2 127.1 126.0 125.3 123.0 121.8 123.2 123.9 124.5 126.0 127.8 127.4 126.1 123.4 123.9 127.1 125.1 1981 127.0 128.0 127.9 128.3 128.9 130.3 131.1 128.7 127.9 126.3 123.8 122.8 127.6 129.1 129.2 124.3 127.6 1982 118.3 119.8 118.8 116.8 115.0 113.3 113.2 110.1 110.3 108.6 108.9 109.9 119.0 115.0 111.2 109.1 113.6 1983 109.2 109.4 110.0 111.5 112.4 113.4 114.6 117.7 120.8 120.7 121.7 123.0 109.5 112.5 117.7 121.8 115.4 1984 127.1 128.5 130.4 131.2 133.3 135.5 137.0 139.1 139.2 139.1 139.8 138.4 128.7 133.3 138.4 139.1 134.9 Defense and space equipment 1977. 98.8 99.5 98.8 101.6 102.1 102.6 102.6 102.3 103.1 95.9 95.0 98.1 99.0 102.1 102.7 96.3 100.0 1978. 98.4 95.4 100.4 100.9 101.0 101.9 102.1 102.5 103.3 102.5 102.5 103.6 98.1 101.2 102.6 102.9 101.2 1979. 103.9 104.5 103.6 102.6 103.1 103.0 103.8 105.0 106.3 109.3 110.5 111.2 104.0 102.9 105.0 110.3 105.6 1980. 112.1 113.6 113.6 115.3 115.6 116.2 114.4 115.6 116.3 116.7 117.5 117.9 113.1 115.7 115.4 117.3 115.4 1981. 117.5 116.9 117.1 116.1 116.6 117.1 118.6 120.5 121.8 123.7 125.0 126.9 117.1 116.6 120.3 125.2 119.8 1982. 124.3 128.5 129.5 131.6 133.5 133.9 134.3 134.2 135.2 136.4 137.4 136.9 127.4 133.0 134.6 136.9 133.0 1983. 137.8 139.2 140.4 141.6 142.7 143.6 144.9 145.0 146.3 145.4 145.2 145.5 139.1 142.6 145.4 145.4 143.1 1984. 148.8 151.3 151.9 155.6 156.0 157.2 158.5 160.7 163.4 163.5 163.3 165.3 150.6 156.3 160.8 164.1 157.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production 499 A.l Continued Month Quarter Annual Year average Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Intermediate products 1977 95.8 96.0 97.2 98.4 99.6 100.7 100.7 101.6 101.4 102.4 102.2 103.6 96.3 99.6 101.2 102.8 100.0 1 1 9 97 7 8 9 1 1 1 0 0 3 . . 2 8 1 10 1 3 1 . . 7 2 110141..60 1 1 1 0 0 5 . . 7 6 1 1 1 0 0 5 . . 8 9 1 1 1 0 0 7 . . 7 4 1 1 1 0 0 7 . . 5 4 1 1 1 0 0 7 . . 2 0 1 1 1 08 0 . . 1 3 1 1 1 0 1 8 . . 2 9 1 1 1 0 1 9 . . 2 2 1 1 1 1 1 0 . . 7 9 1 1 1 0 0 4 . . 8 0 1 1 1 0 0 6 . . 7 3 1 10 1 7 0 . . 5 3 1 10 1 9 1 . . 7 3 1 1 1 0 0 6 . . 8 9 1980 110.6 110.5 110.7 105.1 102.9 102.8 102.5 106.0 107.3 107.2 108.5 109.0 110.6 103.6 105.3 108.2 106.9 1981 109.3 108.3 108.7 107.9 109.0 108.5 109.4 108.5 106.3 104.8 104.1 102.8 108.8 108.5 108.1 103.9 107.3 1982 102.0 104.0 102.5 101.4 101.6 101.1 101.2 101.7 101.7 101.1 101.2 100.6 102.8 101.4 101.5 101.0 101.7 1983 103.6 104.3 105.6 107.3 108.4 110.0 112.2 113.7 115.9 117.3 117.2 117.6 104.5 108.6 113.9 117.4 111.2 1984 120.9 121.9 122.8 123.0 124.2 125.4 127.0 126.9 125.6 126.2 127.2 127.3 121.9 124.2 126.5 126.9 124.9 Construction supplies 1977 94.4 94.6 96.5 98.1 99.7 100.6 101.1 102.0 102.1 102.7 102.5 104.9 95.2 99.5 101.7 103.4 100.0 1978 104.2 103.9 104.1 105.4 105.6 107.1 106.9 107.0 108.2 108.6 109.6 111.8 104.1 106.0 107.4 110.0 106.9 1979 110.7 110.1 109.7 107.7 107.9 107.9 108.4 107.5 108.2 108.5 108.5 109.4 110.2 107.9 108.0 108.8 108.7 1980 108.1 108.2 106.8 98.1 94.6 93.8 92.8 98.6 100.6 100.7 102.8 103.3 107.7 95.5 97.3 102.3 100.6 1981 104.7 103.0 103.2 101.7 101.5 99.7 99.1 99.5 96.3 94.0 91.7 89.3 103.6 101.0 98.3 91.7 98.6 1982 88.5 91.2 88.7 87.3 88.1 88.2 88.1 89.4 88.5 87.1 87.9 86.3 89.5 87.9 88.7 87.1 88.3 1983 92.7 93.5 94.5 96.1 97.7 99.3 102.2 103.6 105.4 107.1 107.2 106.7 93.6 97.7 103.7 107.0 100.6 1984 111.2 112.4 113.9 113.7 113.1 114.3 114.3 115.3 114.7 114.6 115.7 114.7 112.5 113.7 114.8 115.0 114.0 Materials 1977 95.9 97.0 98.5 99.4 100.1 100.7 100.9 100.5 101.4 102.1 102.4 110111..01 97.1 100.1 100.9 101.8 100.0 1 1 1 9 9 9 7 7 8 8 9 0 11 10 01 0 91 . .. 9 60 1 1 1 1 1 0 0 0 0 . . . 6 2 0 1 11 1 01 0 11 . .. 0 00 1 1 1 1 0 0 0 7 4 . . . 1 3 9 1 1 1 0 0 1 3 5 0 . . . 1 5 4 1 1 10 1 0 6 0 0 . . . 1 8 7 1 1 9 0 1 9 7 0 . . . 2 2 4 1 1 1 1 0 0 0 7 0 . . . 1 3 6 1 1 1 0 0 0 2 9 7 . . . 5 7 7 1 1 1 1 0 0 0 9 3 . . . 4 2 6 1 1 11 1 0 0 0 7 . . . 1 3 3 1 11 0 0 8 . . 3 4 1 1 1 1 0 1 0 0 0 . . . 4 6 4 1 1 10 0 1 5 3 0 . . . 5 7 4 1 1 1 0 0 1 0 7 0 . . . 8 1 4 1 1 1 1 0 1 0 6 0 . . . 3 4 2 1 1 1 1 0 0 0 5 5 . . . 3 3 9 1981 108.0 108.4 108.8 106.6 106.9 108.5 110.8 110.4 109.0 107.3 105.2 102.7 108.4 107.4 110.1 105.1 107.7 1982 100.4 102.0 100.3 98.7 97.1 96.4 95.7 95.5 94.4 93.5 93.2 92.6 100.9 97.4 95.2 93.1 96.7 1983 95.8 96.8 98.0 99.2 100.5 101.0 103.5 105.0 107.3 108.4 108.9 109.4 96.9 100.2 105.3 108.9 102.8 1984 112.4 113.3 114.1 114.4 114.7 115.2 115.8 116.1 115.9 114.2 114.6 114.6 113.3 114.8 116.0 114.5 114.6 Manufacturing 1977 96.0 97.0 97.7 98.8 99.6 100.2 100.6 101.6 101.5 101.8 102.1 103.0 96.9 99.6 101.2 102.3 100.0 1 1 9 9 7 7 8 9 110121..41 1 1 1 0 1 2 . . 7 3 1 1 1 0 2 3 . . 1 4 1 10 1 5 0 . . 8 3 1 1 1 0 2 6 . . 1 1 1 10 1 7 2 . . 3 0 1 1 1 0 1 8 . . 8 0 1 1 1 0 1 8 . . 2 6 1 1 1 0 1 9 . . 2 3 1 1 1 0 1 9 . . 7 8 111101..61 1 11 1 1 1 . . 7 2 1 1 1 0 1 2. . 7 6 1 1 1 0 1 6 . . 5 4 1 1 1 0 1 8 . . 4 6 1 11 1 0 1 . . 7 3 1 10 1 7 1 . . 1 5 1 19 9 8 8 1 0 1 11 1 1 0 . . 4 6 1 11 1 1 0 . . 5 7 111111..11 1 10 1 8 1 . . 6 2 1 1 1 0 1 5 . . 7 6 1 1 1 0 1 4 . . 7 0 1 10 1 4 2 . . 1 9 1 10 1 5 2 . . 8 3 1 10 1 7 0 . . 5 8 1 1 0 0 9 8 . . 4 4 1 1 0 1 7 0 . . 6 2 1 1 0 1 5 0 . . 8 4 1 1 1 1 0 1 . . 8 3 1 1 0 1 6 1 . . 1 6 1 1 1 0 2 5. . 8 0 1 10 0 9 7 . . 7 6 1 1 1 0 0 8 . . 5 2 1982 103.4 105.1 104.3 103.0 102.5 102.2 102.2 101.8 101.2 100.1 100.1 100.0 104.3 102.6 101.8 100.1 102.2 1983 102.4 103.5 104.9 106.3 107.9 109.0 111.2 113.1 115.2 115.9 116.2 116.8 103.6 107.7 113.2 116.3 110.2 1984 119.6 121.0 122.0 122.8 123.2 124.1 125.4 125.9 125.6 125.5 126.0 125.8 120.9 123.4 125.6 125.8 123.9 Durable manufacturing 1977 95.3 96.1 97.1 98.5 99.4 100.3 101.0 101.8 102.1 102.3 102.2 103.9 96.2 99.4 101.7 102.8 100.0 1978 102.4 102.3 103.7 106.4 106.7 107.9 109.2 110.1 110.9 111.9 113.0 114.4 102.8 107.0 110.0 113.1 108.2 1 1 9 9 7 8 9 0 1 1 1 1 2 4 . . 7 0 1 1 1 1 3 4 . . 3 8 1 1 1 1 3 5 . . 1 2 1 1 1 0 2 9 . . 1 9 1 11 0 4 6 . . 5 2 1 11 0 4 4 . . 8 2 1 1 0 1 3 4 . . 9 2 1 11 0 3 5 . . 1 9 1 11 0 3 7 . . 5 4 1 11 0 3 9 . . 7 2 1 1 1 1 2 3 . . 0 0 1 11 1 3 1 . . 3 8 1 11 1 4 3 . . 7 0 1 1 0 1 6 3 . . 8 8 1 1 1 0 3 5. . 7 6 111131..30 1 1 0 1 9 3 . . 1 9 1981 111.4 111.3 112.0 111.8 112.5 112.4 113.7 113.5 111.3 109.9 107.5 105.6 111.6 112.3 112.8 107.7 111.1 1982. 101.9 103.8 103.0 101.7 100.9 100.5 100.5 99.3 98.1 96.3 96.2 96.5 102.9 101.0 99.3 96.3 99.9 1983. 98.7 100.1 101.8 103.3 104.7 105.9 108.6 110.9 113.1 114.4 114.9 116.3 100.2 104.6 110.9 115.2 107.7 1984. 119.6 121.0 122.2 123.3 123.8 124.7 126.4 127.7 127.2 127.0 127.5 127.4 120.9 123.9 127.1 127.3 124.8 Nondurable manufacturing 1977 97.1 98.1 98.6 99.4 100.0 100.2 100.1 101.2 100.6 101.0 101.9 101.8 97.9 99.9 100.7 101.5 100.0 1978 102.4 102.4 102.8 104.9 105.3 106.4 106.3 106.4 106.9 107.0 107.3 107.9 102.5 105.5 106.5 107.4 105.5 1979 107.1 107.2 107.9 107.9 108.8 108.2 108.6 108.7 108.0 108.9 108.6 108.4 107.4 108.3 108.4 108.7 108.2 1980 109.6 109.2 108.4 107.0 104.9 103.8 104.3 105.6 107.6 107.3 107.7 108.4 109.1 105.2 105.9 107.8 107.0 1981 109.4 109.8 109.9 110.3 110.7 110.7 111.8 110.8 110.0 108.6 107.9 106.3 109.7 110.6 110.8 107.6 109.7 1982 105.5 107.0 106.3 105.0 104.8 104.7 104.7 105.5 105.7 105.5 105.7 105.0 106.3 104.9 105.3 105.4 105.5 1983 107.5 108.2 109.4 110.6 112.4 113.4 114.9 116.2 118.0 117.9 117.9 117.5 108.4 112.1 116.3 117.7 113.7 1984 119.5 121.0 121.6 121.9 122.3 123.2 123.9 123.2 123.1 123.3 123.8 123.4 120.7 122.4 123.4 123.5 122.5 Mining 1977 95.7 99.1 100.6 100.8 100.8 101.6 101.7 98.1 102.1 102.1 102.6 94.1 98.5 101.1 100.6 99.6 100.0 1978 92.5 93.6 97.9 106.2 106.2 107.0 108.6 106.0 104.9 106.9 107.3 105.9 94.7 106.5 106.5 106.7 103.6 1979 103.1 104.0 104.0 105.8 105.3 106.1 105.1 107.3 108.1 108.6 109.8 109.1 103.7 105.7 106.8 109.2 106.4 1980 113.0 112.3 113.4 112.2 113.3 113.0 111.2 110.0 111.3 110.0 113.9 115.2 112.9 U1121-..81 110.9 113.1 112.4 1981 115.0 117.2 117.9 107.8 109.3 116.1 122.2 122.7 121.9 121.3 120.1 119.1 116.7 122.2 120.2 117.5 1982 119.7 119.7 116.9 114.5 112.1 108.7 106.5 105.0 102.6 102.5 101.8 101.4 118.8 111.8 104.7 101.9 109.3 1983 103.8 100.6 99.7 100.4 100.3 100.7 101.7 103.2 105.3 106.2 107.0 105.4 101.4 100.4 103.4 106.2 102.9 1984 110.9 109.4 109.6 109.8 111.7 113.5 114.8 113.0 113.6 107.2 108.8 108.9 109.9 111.7 113.8 108.3 110.9 Utilities 1977 102.2 98.8 97.3 97.6 98.9 99.5 101.4 100.5 101.0 101.2 100.3 101.2 99.4 98.7 101.0 100.9 100.0 1978 102.8 103.9 103.6 101.3 102.0 102.3 102.0 103.0 104.2 104.0 103.3 104.4 103.4 101.9 103.1 103.9 103.1 1979 106.3 109.1 107.6 107.9 106.3 104.3 103.7 104.0 104.6 105.1 106.5 105.9 107.7 106.2 104.1 105.8 105.9 1980 104.8 106.3 109.8 107.1 105.1 105.6 107.4 109.1 108.9 106.7 108.7 108.4 106.9 105.9 108.5 107.9 107.3 1981 107.1 106.2 106.8 105.3 107.6 109.3 109.5 106.7 106.5 107.4 106.9 106.6 106.7 107.4 107.6 107.0 107.1 1982 109.7 109.0 107.8 107.1 104.8 103.8 103.7 103.4 102.2 102.0 102.8 101.2 108.8 105.2 103.1 102.0 104.8 1983 100.6 101.6 101.4 103.5 103.3 103.0 105.5 107.6 109.0 107.4 106.8 112.2 101.2 103.2 107.4 108.8 105.2 1984 112.7 109.4 111.6 111.4 111.6 111.4 109.8 110.0 109.7 109.4 112.1 111.6 111.2 111.4 109.8 111.1 110.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

500 Federal Reserve Bulletin • July 1985 A.2 Revised indexes of industrial production, not seasonally adjusted, 1977 = 100 1977 .... 93.5 97.2 98.3 98.8 99.8 103.1 98.5 101.4 101.6 100.0 1 19 9 7 7 8 9 . .. . . . . . 1 9 0 8 6 . . 4 8 110111..70 1 1 0 1 3 1 . . 1 7 1 1 0 0 9 5 . . 5 7 1 1 1 0 0 5 . . 8 7 1 1 1 0 3 9 . . 8 7 1 10 0 5 8 . . 1 2 1 1 0 1 8 0 . . 3 9 1 1 1 0 0 9 . . 7 6 1 1 1 0 0 6. . 5 7 1980.... 107.9 111.5 111.9 108.4 105.7 107.3 102.9 107.2 109.7 108.6 1981 .... 107.7 111.3 112.0 109.8 110.7 114.3 111.6 113.5 108.6 111.0 1982 .... 102.6 107.1 106.0 103.5 102.8 105.1 101.1 103.1 100.2 103.1 1983.... 100.2 102.9 104.1 104.6 106.1 110.0 108.3 113.1 114.5 109.2 1984 .... 115.1 119.1 120.1 119.6 120.4 124.8 121.6 124.8 •1 22.7 .. 12•1. 8 98.0 103.3 104.9 101.0 97.0 96.4 99.6 103.0 101.0 100.0 102.4 108.7 109.3 104.7 100.9 99.7 104.9 107.7 105.0 104.311 103.6 107.5 107.1 102.3 98.3 103.5 104.1 105.4 102.6 103.9 98.3 102.6 107.7 103.4 99.0 101.5 100.4 105.5 103.4 102.7 103.5 107.4 107.4 101.6 96.7 102.3 104.3 107.8 101.9 104.1 99.4 104.7 104.9 100.4 96.0 99.3 100.9 105.0 100.4 101.4 105.9 111.9 118.6 112.5 108.2 101.3 107.1 115.6 113.1 109.3 115.6 121.8 123.8 118.6 113.1 114.3 117.7 122.3 118.5 118.2 Durable consumer goods 1977 91.1 97.2 101.2 101.1 101.1 105.9 93.1 95.7 110.3 102.6 95.5 96.5 102.7 98.0 102.8 100.0 1978 92.3 102.2 105.8 109.8 105.8 109.6 95.5 98.2 108.1 M 113.2 106.0 97.9 100.1 108.4 100.6 105.7 103.7 1979 100.0 106.9 108.8 99.4 105.2 106.9 91.3 89.4 101.5 103.8 96.6 89.1 105.2 103.8 94.0 96.5 99.9 1980 87.5 94.1 96.0 89.2 83.8 84.2 75.0 80.9 92.1 97.9 94.9 85.2 92.5 85.7 82.7 92.7 88.4 1981 86.9 92.2 93.9 93.4 95.3 96.5 84.7 88.3 91.3 M 94.9 85.1 74.0 91.0 95.1 88.1 84.7 89.7 1982 75.0 82.0 84.1 85.2 85.9 89.5 78.9 83.7 85.6 87.7 82.2 74.8 80.4 86.9 82.8 81.6 82.9 1983 82.5 90.2 93.7 95.0 97.9 101.7 90.9 98.7 108.2 115.9 107.3 99.9 88.8 98.2 99.3 107.7 98.5 1984 109.3 113.8 115.3 115.8 113.8 115.5 103.9 110.3 115.2 S 121.5 114.1 102.8 112.8 115.0 109.8 112.8 112.6 Nondurable goods 1977. 95.3 97.9 96.2 96.2 96.9 102.3 101.1 106.7 106.4 102.9 100.4 97.6 96.5 98.5 104.8 100.3 100.0 1978. 97.6 100.7 100.2 101.1 101.1 108.3 106.6 111.4 112J 107.8 104.2 102.0 99.5 103.5 110.3 104.7 104.5 1979, 101.7 103.8 103.1 102.0 103.0 107.8 105.6 111.5 111.6 108.3 104.5 101.8 102.9 104.3 109.6 104.9 105.4 1980, 103.3 106.1 105.5 104.3 103.8 109.6 110.0 115.7 116.6 111.5 106.7 104.1 105.0 105.9 114.1 107.4 108.1 1981 105.2 107.4 106.8 105.0 106.4 111.2 112.3 116.6 116.0 111.9 107.7 105.1 106.5 107.5 115.0 108.2 109.3 1982, 105.0 107.8 106.0 103.7 104.5 110.4 109.9 114.9 115.1 111.4 107.2 103.8 106.3 106.2 113.3 107.5 108.3 1983, 105.3 106.6 106.0 106.9 108.8 115.7 117.0 123.2 124.9 119.6 114.4 111.2 106.0 110.5 121.7 115.1 113.3 1984 113.3 115.9 115.4 115.5 116.2 124.1 124.3 127.4 128.9 124.5 120.2 116.8 114.8 118.6 126.9 120.5 120.2 Business equipment 1977.... 93.4 96.7 97.2 97.5 98.2 102.4 99.1 99.0 106.0 i 104.6 103.3 102.7 95.8 99.4 101.4 103.5 100.0 1978.... 101.3 105.4 108.0 109.5 109.4 114.9 110.8 113.1 118.8 119.1 118.9 117.4 104.9 111.2 114.2 118.4 112.2 1979.... 118.4 123.7 125.7 121.5 124.8 129.0 123.5 123.6 129.8 128.8 125.1 122.4 122.6 125.1 125.6 125.4 124.7 1980.... 121.2 127.2 127.1 123.8 122.2 125.4 121.9 123.6 128.1 128.4 127.2 125.1 125.2 123.8 124.5 126.9 125.1 1981.... 122.9 127.7 128.8 126.5 128.1 134.0 130.2 112191..31 131.3 128.9 123.0 120.5 126.5 129.5 130.3 124.1 127.6 1982.... 114.5 119.5 119.3 114.8 113.8 116.4 113.0 114.0 110.9 108.2 107.8 117.7 115.0 112.7 109.0 113.6 1983.... 106.1 108.0 110.2 109.5 111.2 116.6 114.6 119.1 124.9 123.1 120.9 120.6 108.1 112.4 119.5 121.5 115.4 1984.... 122.9 127.9 130.6 128.5 131.7 139.2 137.0 142.0 143.0 141.7 138.7 135.6 127.1 133.1 140.7 138.7 134.9 Defense and space equipment — . 1977.... 99.5 99.8 99.6 100.8 102.4 103.5 101.1 101.2 102.3 95.2 95.2 99.3 99.6 102.2 101.5 96.6 100.0 1978.... 99.1 96.0 101.4 100.2 100.9 102.4 100.8 101.1 102.2 101.8 102.9 105.3 98.9 101.2 101.4 103.4 101.2 1979.... 104.7 105.5 104.8 102.0 102.8 103.0 102.5 103.4 105.1 108.6 111.2 113.6 105.0 102.6 103.7 111.1 105.6 1980.... 113.1 114.7 114.8 114.6 115.0 116.0 113.1 113.7 115.0 115.9 118.3 120.6 114.2 115.2 113.9 118.3 115.4 1981 .... 118.7 118.0 118.2 115.5 115.9 116.7 117.2 118.6 120.6 122.7 125.7 129.8 118.3 116.0 118.8 126.1 119.8 1982.... 125.7 129.6 130.5 131.1 132.8 133.6 132.9 132.4 134.2 135.2 138.0 140.0 128.6 132.5 133.2 137.8 133.0 1983 .... 139.7 139.5 141.1 141.2 142.2 143.4 143.3 143.3 145.5 143.9 145.5 148.5 140.1 142.3 144.0 146.0 143.1 1984.... 150.3 152.1 152.6 155.4 155.7 BH157r.1 •• 156-. 8 15~8.5 163*.0 -I1 61.6 163.3 168.4 151.7 156.0 159.41 164.4 157.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A Revision of the Index of Industrial Production 501 A.2 Continued —a sag Month Quarter Annual YYeeaarr average Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1 2 3 4 Intermediate products 90.3 93.2 95.0 97.8 99.6 104.0 101.2 105.0 106.4 105.4 102.4 99.7 92.8 100.5 104.2 102.5 100.0 1978.. 97.9 101.1 102.3 105.2 105.6 110.4 107.8 110.6 113.4 112.2 109.5 106.9 100.4 107.1 110.6 109.5 106.9 1979.. 104.1 108.4 108.9 109.8 110.2 113.6 110.7 114.1 115.9 114.7 111.5 107.7 107.1 111.2 113.6 111.3 110.8 1980.. 104.5 107.6 108.8 104.1 102.1 105.2 102.6 110.0 113.1 110.7 108.8 105.2 107.0 103.8 108.6 108.2 106.9 1981.. 103.3 105.6 106.5 106.8 107.9 111.0 109.7 112.9 112.3 108.4 104.3 99.0 105.1 108.5 111.6 103.9 107.3 1982.. 96.5 101.4 100.3 100.1 100.5 103.3 101.7 106.1 107.6 104.6 101.4 96.8 99.4 101.3 105.1 101.0 101.7 1983.. 97.8 101.5 103.2 105.9 107.1 112.4 112.9 118.7 122.7 121.6 117.3 113.2 100.8 108.5 118.1 117.4 111.2 1984.. 114.3 118.3 120.0 121.6 122.8 128.1 128.0 132.2 132.9 130.3 127.9 122.4 117.5 124.2 131.1 126.8 124.9 Construction supplies 1977.... 87.7 91.0 95.0 99.0 101.5 105.0 100.8 104.2 105.9 106.0 103.1 100.7 91.3 101.8 103.6 103.3 100.0 1978.... 97.0 100.0 102.0 106.8 107.3 111.6 106.6 109.1 112.3 112.2 110.4 107.5 99.7 108.6 109.3 110.0 106.9 1979.... 103.3 105.9 108.0 108.5 109.4 112.3 108.0 109.5 112.4 112.3 109.3 105.4 105.7 110.1 110.0 109.0 108.7 1980.... 100.9 104.0 105.1 98.7 95.8 97.5 92.5 100.5 104.5 104.4 103.6 99.7 103.3 97.3 99.2 102.5 100.6 1981 .... 97.6 99.0 101.5 102.3 102.7 103.6 98.9 101.6 100.1 97.5 92.3 86.1 99.4 102.9 100.2 92.0 98.6 1982.... 82.4 87.6 87.3 87.9 89.2 91.5 88.1 91.4 92.0 90.4 88.5 83.2 85.8 89.6 90.5 87.4 88.3 1983.... 86.1 89.7 93.1 96.8 98.9 103.2 102.2 106.0 109.6 111.1 107.8 102.9 89.6 99.6 105.9 107.3 100.6 1984.... 103.2 107.8 112.2 114.5 114.4 118.7 114.3 118.0 119.2 118.9 116.3 110.5 107.7 115.9 117.2 115.2 114.0 Materials 1977 .... 93.9 98.3 100.1 100.3 101.3 103.0 97.0 99.8 101.9 103.1 102.5 98.8 97.4 101.5 99.6 101.5 100.0 1 19 9 7 7 8 9 . .. . . . . . 1 9 0 8 7 . . 7 2 1 1 1 0 1 1 . . 8 2 1 1 1 0 2 2 . . 9 4 110161..10 1 10 1 6 1 . . 5 4 1 1 1 0 3 8 . . 4 5 1 1 0 0 6 3 . . 5 2 1 10 0 6 9 . . 6 4 1 1 1 0 0 8 . . 4 4 1 1 1 1 1 0 . . 5 4 1 11 1 0 0 . . 1 3 1 10 0 8 7 . . 7 8 1 10 1 0 0 . . 8 6 1 10 1 7 1 . . 1 9 1 1 0 0 6 8. . 8 0 1 1 0 0 9 9 . . 9 7 1 1 1 0 0 5 . . 3 9 1980.... 108.8 111.6 111.9 108.0 103.7 102.7 95.8 100.3 103.2 104.6 107.2 105.7 110.8 104.8 99.8 105.9 105.3 1981 .... 105.9 110.0 110.8 107.3 107.5 110.7 107.2 110.0 109.8 108.3 1W.9 100.1 108.9 108.5 109.0 104.4 107.7 1982.... 98.8 103.7 102.1 99.1 97.3 98.1 92.6 95.5 95.2 94.5 93.1 90.4 101.6 98.2 94.4 92.6 96.7 1983.... 94.9 98.1 99.5 99.6 100.6 102.6 100.2 105.2 108.3 109.6 108.5 106.5 97.5 100.9 104.6 108.2 102.8 1984.... 110.3 115.1 116.1 114.9 115.0 117.2 112.2 116.4 116.9 115.4 114.1 111.6 113.8 115.7 115.2 113.7 114.6 Manufacturing 1977.... 92.3 96.3 98.2 99.0 100.2 103.5 98.2 101.7 104.5 104.4 102.2 99.4 95.6 100.9 101.5 102.0 100.0 1978.... 98.4 101.8 103.8 106.3 106.4 110.6 105.2 108.8 112.4 112.7 110.7 108.0 101.3 107.8 108.8 110.5 107.1 1 1 9 9 8 7 0 9 . . . . . . . . 1 1 0 0 7 6 . . 2 9 111111..20 1 1 1 1 1 2 . . 7 9 1 1 0 1 8 0 . . 4 4 1 1 0 1 5 2 . . 4 3 1 11 0 5 6 . . 3 8 1 10 0 9 1 . . 1 8 1 1 0 1 6 1 . . 8 6 1 11 1 4 0 . . 5 8 1 11 1 4 1 . . 7 3 1 1 1 1 0 1 . . 2 3 1 10 0 7 6 . . 8 9 1 11 1 0 0 . . 3 0 1 11 0 2 6 . . 7 9 1 1 0 1 6 1 . . 5 7 1 1 0 1 9 1 . . 5 3 1 11 0 1 8 . . 5 2 1981.... 106.4 110.2 111.6 110.8 111.8 114.6 110.7 113.4 114.2 112.3 107.5 102.5 109.4 112.4 112.8 107.4 110.5 1982.... 99.5 104.7 104.5 102.4 102.3 104.9 100.4 103.2 104.7 103.1 100.1 96.7 102.9 103.2 102.8 100.0 102.2 1983.... 98.9 102.5 105.0 105.6 107.7 111.9 109.3 114.6 119.2 119.3 115.9 112.6 102.1 108.4 114.4 115.9 110.2 1984.... 115.1 120.3 122.1 121.9 123.0 127.4 123.5 128.0 129.7 129.1 125.6 121.3 119.2 124.1 127.1 125.3 123.9 Durable manufacturing 1977.... 92.2 96.2 98.4 99.3 100.6 103.7 98.2 99.7 104.2 104.6 102.2 100.7 95.6 101.2 100.7 102.5 100.0 1 19 9 7 7 8 9 . .. . . . . . 1 9 1 9 0 . . 0 3 1 1 1 0 5 2 . . 1 5 1 1 1 0 7 5 . . 0 0 1 10 1 7 2 . . 7 8 1 1 0 1 7 5 . . 6 4 1 1 1 1 8 1 . . 4 2 110151..80 1 1 1 0 1 8 . . 2 0 1 1 1 1 5 3 . . 9 0 1 11 1 4 6 . . 5 3 1 1 1 13 3 . . 1 0 1 1 1 1 0 1 . . 4 2 1 1 1 0 4 2 . . 1 2 1 1 0 1 8 5. . 5 8 1 1 1 0 2 8 . . 7 9 1 1 1 1 3 2 . . 3 9 1 1 1 0 3 8 . . 9 2 1 1 9 9 8 8 1 0 . .. . . . . . 1 1 0 09 7 . . 1 9 1 1 1 1 1 3 . . 5 5 1 1 1 1 3 4 . . 4 6 1 11 1 0 2 . . 1 0 1 10 1 6 3 . . 5 2 1 1 1 0 5 7 . . 6 0 110111..30 1 1 1 0 2 5 . . 6 0 1 10 1 9 3 . . 7 5 1 1 1 1 2 1 . . 2 6 1 1 0 1 7 2 . . 3 0 1 1 0 0 2 8 . . 9 9 1 1 1 1 0 2 . . 9 4 1 1 0 1 7 3 . . 9 6 1 1 1 0 2 5 . . 4 3 1 1 0 1 7 0 . . 5 8 110191..11 1982 .... 98.9 104.1 104.0 101.6 101.2 103.1 98.2 98.8 100.2 98.4 96.2 94.0 102.3 102.0 99.1 96.2 99.9 1983 .... 96.3 99.8 102.7 103.3 105.1 108.7 106.2 110.3 115.7 117.0 114.6 112.8 99.6 105.7 110.7 114.8 107.7 1984.... 116.1 121.2 123.4 123.2 124.1 127.9 123.5 127.9 129.9 129.8 127.0 123.5 120.2 125.1 127.1 126.8 124.8 Nondurable manufacturing 92.6 96.5 97.8 98.6 99.6 103.3 98.2 104.5 105.0 104.0 102.2 97.7 95.6 100.5 102.6 101.3 100.0 1978.. 97.5 100.8 101.9 104.4 104.8 109.5 104.3 109.8 111.5 110.2 107.6 103.7 100.1 106.2 108.5 107.2 105.5 1979.. 102.1 105.7 107.3 107.1 108.1 111.1 106.6 112.2 112.6 112.4 108.9 104.2 105.1 108.8 110.5 108.5 108.2 1980.. 104.5 107.6 107.7 106.0 104.0 106.5 102.6 109.4 112.5 111.0 107.8 104.2 106.6 105.5 108.2 107.7 107.0 1981 .. 104.3 108.3 109.2 109.0 109.8 113.4 110.4 114.6 115.2 112.5 107.8 101.9 107.3 110.7 113.4 107.4 109.7 1982.. 100.5 105.5 105.3 103.6 103.9 107.4 103.5 109.5 111.0 109.6 105.7 100.5 103.8 105.0 108.0 105.3 105.5 1983.. 102.6 106.2 108.2 109.0 111.4 116.3 113.6 120.7 123.9 122.4 117.7 112.3 105.7 112.2 119.4 117.5 113.7 1984.. 113.7 119.0 120.1 120.1 121.2 126.4 123.2 127.9 129.3 127.9 123.3 117.9 117.6 122.6 126.8 123.0 122.5 Mining &~&JjBSM 1977 .... 94.0 99.2 101.2 101.3 101.5 102.5 97.7 97.8 102.8 103.8 103.8 94.4 98.1 101.8 99.4 100.7 100.0 1978.... 91.3 93.7 98.4 106.7 106.7 107.8 104.2 105.8 105.4 108.7 108.6 106.0 94.5 107.1 105.1 107.8 103.6 1979.... 101.6 104.2 104.9 106.1 105.4 106.7 100.9 107.2 108.4 110.4 111.3 109.5 103.6 106.1 105.5 110.4 106.4 1980.... 111.5 112.8 114.5 112.3 113.0 113.1 106.8 110.0 111.4 111.7 115.6 116.0 112.9 112.8 109.4 114.5 112.4 1981.... 113.9 118.2 118.9 107.4 108.6 115.6 117.2 122.8 121.9 123.4 121.9 120.3 117.0 110.6 120.6 121.8 117.5 1982.... 119.1 121.2 118.0 113.9 110.9 107.6 102.3 105.2 102.7 104.4 103.5 102.8 119.4 110.8 103.4 103.6 109.3 1983.... 106.0 102.0 99.5 98.8 98.6 98.8 98.1 103.5 105.5 108.4 108.8 106.8 102.5 98.7 102.4 108.0 102.9 1984.... 110.3 111.0 110.4 108.7 110.1 112.1 110.5 113.5 113.9 109.2 110.7 110.4 110.6 110.3 112.6 110.1 110.9 Utilities 1977.... 110.0 107.0 94.7 92.5 91.5 98.3 104.8 105.0 102.2 95.8 96.1 102.2 103.9 94.1 104.0 98.0 100.0 1978.... 110.6 113.1 101.9 96.3 94.3 100.9 105.1 107.2 105.6 98.1 98.8 105.4 108.5 97.1 106.0 100.8 103.1 1 1 9 9 7 8 9 0 . . . . . . . . 1 1 1 1 4 2 . . 5 3 1 1 1 1 9 4 . . 1 8 1 1 0 0 5 9 . . 9 0 1 1 0 0 2 1 . . 4 6 9 9 7 6 . . 7 3 1 1 0 0 2 4 . . 8 2 110161..40 1 1 0 1 8 4 . . 5 8 1 11 0 0 5 . . 5 9 1 9 0 9 0 . . 0 4 1 1 0 0 4 2 . . 0 0 1 1 0 0 8 6 . . 7 4 1 1 1 1 2 3 . . 1 2 1 1 0 0 0 1 . . 7 0 1 1 1 0 2 6 . . 1 9 1 1 0 0 4 2. . 5 4 1 1 0 0 7 5 . . 3 9 1981.... 115.6 115.2 104.8 99.7 98.5 108.0 113.8 112.4 107.4 100.7 102.2 106.8 111.9 102.1 111.2 103.2 107.1 1 19 9 8 8 2 3 . . . . . . . . 1 1 1 0 8 8 . . 7 2 1 11 0 8 9 . . 2 7 1 9 0 9 5 . . 3 8 1 9 0 8 1 . . 3 4 9 95 4 . . 8 6 1 1 0 0 1 2. . 7 2 1 1 1 0 0 7 . . 2 6 1 10 1 9 5 . . 5 4 1 10 1 3 1 . . 4 1 1 9 0 5 0 . . 5 5 1 9 0 7 1. . 7 9 1 1 1 0 2 1 . . 2 2 1 1 0 1 5 4 . . 7 2 1 9 0 8 0 . . 0 0 1 1 1 0 2 6 . . 2 8 1 9 0 8 4. . 8 2 1 1 0 0 5 4 . . 2 8 1984.... 123.5 116.4 109.3 105.8 102.2 110.6 114.3 115.7 111.3 102.3 107.8 111.4 116.4 106.2 113.8 107.1 110.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

502 Industrial Production Released for publication May 15 165.4 percent of the 1967 average, the index was 2.0 percent above a year earlier. Industrial production declined an estimated 0.2 In market groupings, production of consumer percent in April following an increase of 0.3 goods declined 0.4 percent in April. Durable percent in March and a gain of 0.1 percent in consumer goods fell 1 percent, as automotive February; the latter was revised upward from the products declined 1.2 percent and output of estimate published earlier. The small decline in home goods decreased an estimated 0.8 percent. April continues a pattern of little change in the Automobiles were assembled at an annual rate of level of industrial output since mid-1984. At 8.1 million units in April following a rate of 8.3 1967=100 1969-70=100 180 n AUTOS - MANUFACTURING Stocks — /v_ ' "y-, Nondurable 170 SSSaaallleeesss ///——— \\\JJJ 150 - AA /V 130 \\\JJJ DDDooommmeeessstttiiiccc aaasssssseeemmmbbbllliiieeesss ——— 1 1 111 111 ''' 111 110 1979 1981 1983 1985 1979 1981 1983 1985 All series are seasonally adjusted and are plotted on a ratio scale. Auto sales and stocks include imports. Latest figures: April. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

503 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Grouping 1985 1984 1985 AAAppprrr... 111999888444 tttooo AAAppprrr... Mar. Apr. Dec. Jan. Feb. Mar. Apr. 111999888555 Major market groupings Total industrial production 165.8 165.4 .0 .2 .1 .3 -.2 2.0 Products, total 168.5 168.2 .2 -.1 .0 .3 -.2 3.5 Final products 166.9 166.6 .3 .0 -.2 .3 -.2 4.0 Consumer goods 162.5 161.9 -.2 -.1 -.1 .3 -.4 .3 Durable 164.5 162.9 -.3 -.3 1.2 1.3 -1.0 .4 Nondurable 161.7 161.5 -.2 .1 -.6 -.1 -.1 .2 Business equipment.. 188.1 187.5 .6 -.2 -.4 -.2 -.3 8.1 Defense and space... 147.8 148.8 1.8 .8 .1 1.3 .7 11.7 Intermediate products.. 174.1 173.9 .1 -.3 .6 .2 -.1 1.7 Construction supplies 157.9 158.0 .4 -.4 .4 .2 .1 -1.0 Materials 161.8 161.1 -.4 .4 .5 .3 -.4 -.2 Major industry groupings Manufacturing. 167.1 166.7 .0 -.1 .4 -.2 2.0 Durable 159.0 158.4 .0 .3 .6 -.4 3.8 Nondurable . 178.9 178.8 .0 -.4 .0 -.1 -.2 Mining 126.1 124.2 1.0 -.6 1.0 -1.5 .7 Utilities 187.7 188.2 -.1 2.5 -.3 .3 3.0 NOTE. Indexes are seasonally adjusted. million units in March. Nondurable consumer In industry groupings, manufacturing output goods edged down 0.1 percent. In April, produc- declined 0.2 percent in April, as durables fell 0.4 tion of business equipment declined 0.3 percent, percent and nondurables 0.1 percent. In April, the fourth consecutive decrease since January. the level of durable manufacturing output was Output of defense and space equipment contin- about 4 percent above a year earlier while nonduued to be strong, gaining 0.7 percent in April. rable manufacturing was little changed. Mining Production of construction supplies was little production in April fell 1.5 percent while utilities changed in April. Production of materials fell 0.4 output, on balance, was not changed over the percent and was at about the same level as a year past two months following its sharp increase of earlier. 2.5 percent in February. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

504 Statements to Congress Statement by Marvin Duncan, Vice President, the past few decades. The promise of research in Federal Reserve Bank of Kansas City, Kansas biotechnology is that productivity will continue City, Missouri, before the Committee on Agricul- to grow, perhaps more rapidly than in the past. ture, Nutrition, and Forestry, U.S. Senate, May Currently, about two-thirds of U.S. farmers' 1, 1985. acres of cropland are needed to produce food and fiber for domestic consumption. The combina- I am pleased for the opportunity to discuss tion of slower growth of population in the United agricultural legislation being considered by the States and strong growth of productivity in U.S. Congress. The views and opinions expressed agriculture point toward a time by the end of the herein are solely my own and do not necessarily century when only half of the current American represent those of the Federal Reserve Bank of cropland will be required for domestic use. In Kansas City or of the Federal Reserve System. short, without growing export markets, U.S. farmers can expect sharp increases in excess capacity that will create escalating financial bur- THE POLICY ENVIRONMENT dens for them and for the taxpayers that provide income transfers to farmers and pay higher food U.S. agriculture has reached a crossroads. It costs than might be available elsewhere. faces a more competitive world marketplace, Potentially higher food costs point to the secwith slower growth in demand for food and fiber ond problem. If, as seems likely, continuing than had been expected. To succeed in this pressures for higher and higher farm commodity environment, U.S. agriculture must price its prices occurred in a regulated agriculture, U.S. products competitively and compete aggressive- prices would outstrip world prices—possibly by ly for markets. Thus, in some respects, the growing margins. On balance, a highly regulated needed change in direction for U.S. agricultural agriculture would seriously damage U.S. agriculpolicy is quite clear. ture's export market. That eventuality is widely In other respects, the appropriate change in recognized even by supporters of such a policy. policy is far from clear, for the vision of the Even more sobering, however, is the strong future has been clouded by farm financial stress. likelihood of growing competition from abroad in The rapidly deteriorating financial position of the U.S. domestic market for food and fiber. The heavily leveraged farmers has raised troubling United States would then face an increasing need questions about their survival. Should not the to protect its domestic markets against imported Congress reshape agricultural policy in a quite food and fiber products. Already some foreign different direction—back toward high price guar- producers match—and perhaps surpass—the efantees and rigid production controls in an effort ficiency of U.S. farm production. And, U.S. to save those financially troubled farmers? Pro- imports of food and fiber products are currently ponents of that viewpoint seem willing to forgo on the increase. broader world market opportunities in exchange Some agricultural spokesmen call for regulafor that public utility approach to agriculture. tion of production and high support prices as a Despite the appeal to some in the farm sector means of saving the most financially troubled of a highly regulated and subsidized domestic U.S. farmers. The probable loss of 90,000 to agriculture, at least two difficult problems would 100,000 farmers with debt-to-asset ratios of more arise. First, American agriculture is a dynamic, than 70 percent is decried. However, these farmchanging industry. It has enjoyed marked pro- ers are rapidly losing equity in their businesses. ductivity growth of about 1.75 percent a year for Between 40 and 50 percent of them are already Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

505 technically insolvent. Dramatically lower inter- dollar in international exchange markets. Moreest rates and sharply higher commodity prices, in over, high real U.S. interest rates hold interest combination with rising land values, would likely rates higher worldwide than would otherwise be be required to save them. Given the magnitude of true and also slow world economic growth. The the financial peril they face, it seems unlikely unusually expansive U.S. fiscal policy in the that agricultural programs generous enough to midst of an economic expansion has added to the save them can—or should—be enacted. burden of the nation's monetary authority in Those that would turn back by legislation the developing and implementing macroeconomic downward adjustment in commodity prices and policy. The result of high federal budget deficits asset values in U.S. agriculture misunderstand has been a large U.S. trade deficit and an uneven the role of the inflation of the 1970s in creating economic expansion, with some sectors performexcessive agricultural investment and commod- ing very well while more capital-intensive and ity price escalation. They also ignore the inevita- export-dependent sectors, such as agriculture, bility of price and asset value adjustments to a lag behind. more competitive world marketplace and a more U.S. tax policy has encouraged investment in price-stable economic environment. Policy, capacity for agricultural production earlier and to however, can and should help moderate that a greater extent than market fundamentals would adjustment process and avoid sharp undershoot- have justified. Farmers' use of tax incentives, ing of both commodity and asset prices below such as cash accounting, investment tax credit, those prices supported by economic fundamen- and immediate expensing of certain development tals. costs, has distorted both agricultural product and The case seems clear from an economic per- asset markets. But the tax sheltering of nonfarm spective. U.S. agriculture will prosper in direct income by investment in agriculture has been a relationship to its success in capturing its share much greater problem. Its effect can be seen of growing world markets for food and fiber. particularly in production of livestock and cer- Static world markets, coupled with growing pro- tain specialty crops, when in some instances the ductivity in the sector, would mean continued impact of off-farm investment outweighs farmer painful downsizing of American agriculture. Ag- investment decisions in determining supply and ribusinesses, on both the input and output side of price. In the past decade, the conversion of farmers, are also dependent on growing export fragile range and grasslands—usually subsidized markets. With the agricultural sector, in its by government farm programs—to irrigated and broadest definition, accounting for about 20 per- dryland cropland has been evident also. cent of the nation's gross national product and At a more macroeconomic level, many econoemploying 20 percent of its labor force, an agri- mists believe federal tax relief for business has cultural policy that promotes market growth is helped make this country a prime investment also important to national economic perform- opportunity for foreigners. If true, that relief has ance. added further to the strength of the U.S. dollar in international exchange markets. Indeed, some economists are now asking whether lower taxes NATIONAL POLICY on business investment in other industrial countries might help to ease the value of the dollar. Before agricultural policy and program options Finally, as the United States becomes more are discussed, some comments on the role of dependent on international trade to support its national policy are important. That is true since it economic growth, a particularly complex probis probably not possible to offset the impact of lem takes on added importance. From time to adverse national policies fully by sector-specific time, the national security and foreign policy agricultural policy. A number of issues come to objectives of the United States conflict with its mind. trade objectives. The Russian grain embargo of The very large federal budget deficits of recent the late 1970s, the Russian gas pipeline embargo years add significantly to the inflation-adjusted of the early 1980s, the allocation of Public Law cost of carrying debt and to the value of the U.S. 480 food assistance, and continuing discussion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin • July 1985 over U.S. cargo preference legislation are all 130,000 to 140,000 farmers, with debt-to-asset cases in point. How those conflicts are resolved ratios of between 40 and 70 percent, are having when they arise will become more and more some problems, but most of them can be saved important to U.S. trading sectors vying for world with debt and asset restructuring, provided their markets in an increasingly competitive environ- asset values do not plunge far below about half ment. the value of the market high in 1980-81. For those farmers that can be saved, the Farmers Home Administration (FmHA) debt adjustment AGRICULTURAL POLICY program can provide timely and valuable help. Extending FmHA assistance to restructuring As the Congress and the nation's agricultural real estate debt, in addition to non-real-estate leaders have studied agricultural policy options, debt, is an important part of that adjustment some views have converged. First, there has assistance. Programs that facilitate the transfer been growing appreciation that national policies of land from weaker to stronger hands and that outside agriculture are unusually important to prevent undue amounts of farmland on the marthe sector's improved well-being. That means ket that depress land values far below their farm legislation cannot solve all of agriculture's economic worth would provide needed stabilizaproblems. Second, in a more competitive world tion to rural America. Farmers, lenders, and marketplace, market-clearing prices for farm rural communities would all benefit. The FmHA commodities are not only critically important debt adjustment program could, I believe, fulfill signals to foreign producers and buyers but also a role in that process. If precipitous land-price an indication to U.S. producers of the challenge declines were to continue well into the future, it ahead. Finally, new agricultural legislation must might be useful to consider facilitating formation spend public resources more effectively. Agricul- of an entity—maybe with partial federal capitaltural legislation will be expected to make a ization—to acquire troubled farm real estate and contribution to a reduction in the federal budget hold it for a few years. deficit. In a longer time frame, it seems reasonable to The real issue in the agricultural policy debate shift FmHA lending increasingly to loan guaranis not if, but rather when and how, policy will tees rather than direct lending. Such guarantees become more market oriented. The current farm should be of limited duration, perhaps with the financial stress, coupled with the likelihood that guaranteed proportion to decline over the guareconomic recovery in the farm sector may be antee period. Tighter focusing of FmHA credit two to four years away, poses the need for an guarantees to beginning farmers for farm ownerimaginative multiyear adjustment assistance pro- ship and operating expenses and to limited availgram for farmers. Lacking such assistance, farm- ability for other family farmers on a lender-ofers will not accept the concept of market pricing. last-resort basis would help avoid mistakes of the But, that concept is critical both to a new direc- past and return the agency's lending activities to tion for agricultural policy and to the longer-term the purposes originally intended. When crop well-being of U.S. farmers. insurance is available, FmHA disaster loans are In evaluating alternative legislative proposals probably not necessary. When disaster loans are before the Congress, I will concentrate my re- made, they should be in the form of loan guaranmarks on agricultural credit, loan rates and target tees and for limited periods. Interest rates on prices, acreage reduction, and exports. guaranteed loans might start out no lower than Agricultural producers that carry heavy debt— the cost of loan funds to the government and rise in the current environment, debt-to-asset ratios during the term of the loan guarantee to commerof more than 40 percent—are having varying cial rates. degrees of trouble in servicing their obligations. Many people think rural development lending About 90,000 to 100,000 commercial family farm- by the FmHA should be phased out, and they ers are so indebted with debt-to-asset ratios of may be correct. It appears that FmHA's authormore than 70 percent that it is unlikely they can ity became too broad during the 1960s and 1970s survive beyond a couple of years. Another for the agency to manage well with its limited Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 507 resources. Yet the pace of change in rural Ameri- one to three years to induce participation in ca is quickening, and the adjustments for many programs by commercial farmers who account rural residents will be traumatic. At some point, for most of the U.S. crop production. After that greater public sector support for retraining and period, payment limitations could be reduced to rural development activities may be useful. For no more than median family income—both to example, retraining and relocation benefits for limit federal budget exposure and for equity displaced farmers could ease their adjustment considerations. But moving too quickly in sharpinto a new vocation. ly reducing target price payments would likely Commodity Credit Corporation (CCC) loans result in a stalemate on the legislative package represent another source of credit to farmers. and jeopardize the critically important concept of When collateral is turned over to the CCC in full market pricing for U.S. commodities in internasettlement of a nonrecourse loan, CCC loans tional trade. have the potential for substantial public subsidy. It seems wise to retain legislative authority for To reduce this subsidy, a cap could be placed on acreage limitations, set asides, and paid diverthe amount of nonrecourse loans available to a sion. These options could be exercised at the farmer in a given crop year, and interest could be discretion of the Secretary of Agriculture, but charged a farmer on defaulted loans. If farm with some limitations on the amount of commodsubsidies must be reduced, many crop farmers ity price improvement to be achieved in a given would prefer the proposed annual limit of year. U.S. capacity for agricultural production is $200,000 on nonrecourse loans with only re- currently substantially larger than that which can course loans available above that limit, rather be marketed domestically or in export markets than a very low cap on government payments. without sharp reductions in market prices, at Such a nonrecourse loan cap serves to direct least until growth of export demand improves. loan benefits to family farmers. A multiyear program of land retirement, aimed Proposals to set CCC loan rates for wheat, first at fragile lands, seems prudent given the feed grains, cotton, rice, and soybeans at a prospective supply-demand balance of U.S. proportion of the moving average of recent crops for the next few years. About 25 million years' market prices are fundamental in shifting acres could probably be removed on a bid basis. to a more market-oriented farm policy. That To do so would somewhat reduce production change in CCC loan rates should be made capacity, enhance soil conservation goals, and promptly. The language of either the administra- cushion somewhat the downward adjustment in tion or the Helms bill would accomplish that farm real estate values. shift. CCC loans at 75 to 85 percent of market The antisodbuster language in both the adminprices would send clear market signals to U.S. istration and in the Helms bills responds to a producers and avoid building large stocks of popular theme among farmers. It also makes crops locked from the market by unrealistically sense to conservationists and economists. While high prices. The policy shift would also send a it may not be appropriate for government to message to offshore producers that the United prevent landowners from converting fragile lands Sates intends to compete aggressively in world to intensive cultivation when economic fundamarkets. mentals justify more production capacity, it An immediate adjustment in CCC loan rates seems clear that government subsidization of should be made, but would likely result in lower crop production has spurred land conversion, receipts for crop producers until world demand been costly to taxpayers and farmers, and damgrowth picks up tempo. Thus, some combination aged soil resources. Thus, withdrawal of governof target price payments and acreage diversion ment subsidies for a number of years after conpayments—income transfer payments to farm- version seems a good approach. Linking ers—to offset much of the lost cash receipts may government crop subsidies to the use of approbe required to satisfy farm groups, especially priate conservation measures is also overdue. early in the adjustment period. That also implies, Export development, along with market pric- I believe, that the current limitation of $50,000 on ing, are the essential agricultural policy initiagovernment payments be maintained for another tives required to turn around the fortunes of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Federal Reserve Bulletin • July 1985 financially troubled agricultural sector. Proposed term profitability of U.S. agriculture. Without legislative changes recognize a legitimate role for such a program it is quite unlikely that world government credit and credit guarantees in meet- market growth during the rest of this century will ing competition from other producers in the be rapid enough to provide acceptable growth in world. Intermediate credit is appropriately sin- agricultural export opportunities and in farm gled out for increased emphasis. Efforts to re- income. In a world of static demand growth—or duce large CCC stocks also seem useful. Policy- even if growth were slow—U.S. domestic promakers should proceed cautiously, however, in tectionist pressures would be difficult, if not the area of competitive subsidization of exports. impossible, to contain. Conversely, such a devel- Bilateral and multilateral negotiations seem pref- opment effort could add broadly to demand erable, when possible. growth for U.S. products while at the same time Policies outside agriculture, as previously not- making a very positive contribution to political ed, are major factors in U.S. export competitive- stability and living standards around the world. ness. Changes in those policies, coupled with market pricing for U.S. agricultural exports, and improved world economic growth will spur ex- SUMMARY port demand. The future growth markets for U.S. agriculture will be found increasingly In summary, agricultural policy is at a crossamong low- and middle-income countries that roads. Agriculture's interests will be served by have high population growth and high income moving forward with market-oriented agricultural elasticity of demand for food and fiber. Con- legislation. But the fragile financial circumversely, Japan and Western Europe represent stances of many farmers and agribusinesses call relatively mature markets in which growth in for more generous and longer-term government demand will likely slow. assistance to ease the transition than had earlier It is heartening to read proposed legislation been thought necessary. Appropriate national directed at using U.S. surplus commodities and policy choices also must be made if agricultural Public Law 480 fundings to enhance economic markets in the long term are to brighten materialgrowth in target countries. That is a good start. ly. Finally, the best growth markets for U.S. In the past, the United States has had impressive agricultural products will be in what are now the success in turning such concessional markets low- and the middle-income countries of the into commerical markets. But the task is large. A world. A carefully conceived, strategic policy of major long-range strategic development assis- development assistance for these countries could tance effort to spur economic growth—and as a return substantial dividends in economic growth result, demand for food and fiber—in low- and for U.S. farmers and agribusinesses. • middle-income countries is essential to the long- Statement by Preston Martin, Vice Chairman, markets, the further growth of "securitized" cred- Board of Governors of the Federal Reserve Sys- it, and the continued development of futures and tem, before the Subcommittee on Telecommuni- options markets based on financial instruments. cations, Consumer Protection, and Finance of Capital has been flowing across international the Committee on Energy and Commerce, U.S. borders for centuries. The economic develop- House of Representatives, May 2, 1985. ment of the United States from the colonial period through the nineteenth century, for exam- I appreciate the opportunity to appear before this ple, was financed in good part by capital providcommittee to discuss the economic and bank ed by Great Britain and other European nations. regulatory implications of three major develop- And throughout most of the twentieth century— ments in financial markets during the 1980s. As indeed, generally until the current decade—the requested, I will focus, in turn, on the trend United States has been a major source of net toward greater internationalization of capital capital for many other countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 509 However, during the past 20 years financial a more moderate pace. Before the development markets in major countries have become increas- of this market, international security issues took ingly more international in character and increas- the form of bonds issued by nonresidents in ingly more integrated. Initially this process oc- national markets and were subject to the regulacured primarily in the more traditional types of tions that applied in that market. By the midbanking activities. Until the mid-1960s U.S. and 1960s, however, the "offshore" Eurobond marforeign banks conducted the great bulk of their ket had begun a period of concerted growth, as international banking transactions from offices in offerings by U.S. and European corporations and their home countries. At that time, under the sovereign borrowers became more or less continimpetus provided by the U.S. program to control uous, supplementing the funds raised and loaned capital outflows, banking transactions in dollars in the Eurobanking markets. outside the United States expanded rapidly. U.S. Although the Eurobond market, whose market banks developed foreign branch networks to makers are located in a number of financial accept deposits from and extend credits to for- centers, is not subject to national regulations, its eign customers. Initially, the growth of this busi- investors, issuers, and underwriters are freness occurred principally in offices in Europe— quently subject to regulation by their national hence, the name Eurodollar market. But soon authorities. Examples of such U.S. regulations such international banking activity developed in include the restriction that Eurobond offerings a wide range of other financial centers, such as that are not registered with the Securities and Singapore and Hong Kong, and also in newly Exchange Commission at issuance cannot be established offshore banking centers in the Ca- sold in the United States until after they have ribbean and elsewhere. And the number of par- been seasoned for a 90-day period. Furthermore, ticipants grew to include major banks from all U.S. tax regulations discourage the sale of Eurocountries. bonds to U.S. investors, particularly through The volume of deposits placed in offshore U.S. banking organizations. offices increased greatly in those days because Other governments also regulate access to the they were not subject to the interest rate con- Eurobond market. Nevertheless, the trend in straints or the reserve requirements that applied recent years has clearly been to open up national to deposits in national markets. In addition, securities markets and thus to allow greater growth in the 1970s was particularly stimulated integration of these markets with other national by the emergence of oil-producing countries as and international markets. Recent examples inmajor creditors, who preferred that their assets clude the removal by Germany and Japan of be intermediated. Over the same time, the rapid important restrictions on the use of their currendevelopment of communications technology cies in certain international financial transachelped to enlarge the competitive environment tions. for international financial services to a world- The securities issued in the Eurobond market wide basis. In this environment, banks began to have continued to be those of European governshave margins between rates paid on deposits ments, the most creditworthy of U.S. and foreign and rates charged on loans, to develop new types corporations, and international organizations of banking instruments, and (later, when banking such as the World Bank. One reason why U.S. supervisors began to require banks to improve corporate borrowers have continued to be attheir capital positions) to seek income from pro- tracted to this market is that in recent years they viding services outside the traditional banking have been able to issue dollar-denominated securole of intermediation. rities at cheaper rates than in the United States. Banks have expanded their provision of finan- In part, this is possible because securities are cial services internationally by playing an impor- offered in bearer form, giving a guarantee of tant role in the establishment and development of anonymity to the investor. Most investors in this the Eurobond market and by helping to link that market have been, and continue to be, foreign market with domestic securities markets. The financial institutions and foreign residents. Eurobond market developed in parallel with the Thus, the Eurobond market in its maturity is Eurobanking market, although, until recently, at an effective alternative to national debt markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin • July 1985 As such, it provides an important means by shore to finance their direct investments and which capital can flow between countries inter- operations overseas, U.S. banks asked for aunationally, helping to promote its efficient alloca- thority to underwrite and deal in securities tion on a worldwide basis. During the 1980s, for abroad through merchant banking subsidiaries. example, the market has served as an important In this context, the Board gave that permission source of net capital inflow into the United to a number of subsidiaries, at first mainly in States, a development that is a counterpart of the London but subsequently in other banking cenlarge trade deficit this country has been running ters. Although the primary interest at that time over this period. was in underwriting and dealing in debt securi- In the wake of the surge of U.S. corporate ties, authorizations were extended to equity seissues, a few U.S. commercial banking firms curities and other securities containing equity have become important lead arrangers and un- elements. Subsequently, in the 1979 revision of derwriters in international (and foreign) securi- its regulations regarding international banking, ties markets. U.S. banks have been able to the Board placed underwriting, distributing, and participate in the development and operations of dealing in debt and equity securities outside the international capital markets through foreign United States on the list of permissible activities. subsidiaries by reason of the broad statutory There are no specific regulatory limitations on authority contained in the Edge Act (section the underwriting of debt securities overseas. 25(a) of the Federal Reserve Act). A principal However, the underwriting commitment by the purpose of that act, which was enacted in 1919, Edge corporation or its subsidiary to an issuer of was to facilitate the international and foreign debt securities is considered a liability of that banking and financial operations of U.S. banks entity and, as such, would be considered an and to promote, thereby, the foreign trade and extension of credit to the issuer. Accordingly, commerce of the United States. Through the these commitments would be aggregated with creation of subsidiary corporations endowed other extensions of the parent bank to that issuer with greater banking and financing powers than for the purposes of the bank's lending limit. those possessed by domestic banks, it was in- The underwriting of equity securities abroad tended by the Congress that U.S. banks should by a banking organization is more limited. No be able to compete more effectively with foreign equity underwriting commitment by an Edge banking institutions in U.S. trade financing and corporation subsidiary may exceed $2 million, or in international and foreign banking. represent 20 percent or more of the capital and It was recognized by the Congress that if Edge surplus or voting stock of an issuer, unless the corporations were bound by domestic banking underwriter is covered by binding commitments rules in their operations abroad, they could be from subunderwriters or other purchasers. placed at a severe competitive disadvantage with More generally, the Board's regulation admonforeign banks, and the foreign trade and com- ishes U.S. banking organizations that their unmerce of the United States would not be promot- derwriting and other activities abroad are to be ed. Accordingly, the Congress gave to each Edge carried out at all times with high standards of corporation the right "... generally to exercise banking or financial prudence, having due regard such powers. . . as may be usual, in the determi- for diversification of risks, suitable liquidity, and nation of the Board, in connection with the adequacy of capital. The Board monitors these transaction of the business of banking or other activities through regular reporting requirements financial operations in the countries. . . in which and the examination process. it shall transact business. ..." The Board has U.S. commercial banks, as well as U.S. indetermined, through its regulations and orders in vestment banks, have only become important individual cases which activities abroad are ap- underwriters in the Eurobond market in the propriate for U.S. banking organizations in the 1980s. In significant part this prominence is light of the purposes of the Edge Act and related attributable to the development of various innostatutes. vative financial arrangements, most importantly In the mid-1960s, as U.S. companies sought currency and interest rate swaps. In its simple ways to raise medium- and long-term funds off- form, an interest rate swap, for example, in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 511 volves two parties, one with a fixed interest throughs have been largely responsible for widpayment debt, the other with a floating-rate debt. ening and deepening, has helped insulate the These parties agree to swap their interest pay- housing industry, to some extent, when deposit ment obligation. One or both parties enter these flows to thrift institutions have been weak. By agreements to obtain a preferred interest pay- making it easier to invest in mortgages without ment stream or to lower borrowing costs. Be- having the resources or the expertise needed to cause of the rapid growth of financial swaps and originate and service such loans, the pool of other innovative financial arrangements and the lenders and investors has been greatly increased. major involvement of international banks in their Mortgage interest rates have been more uniform employment, the Federal Reserve is cooperating geographically and have moved more in line with with other central banks in assembling informa- market rates. tion on these arrangements and in analyzing their The ability to sell loans has clear benefits for market implications and policy significance. banks. It makes the asset side of their balance A second broad area of financial market devel- sheets more liquid; it allows banks to manage opments in which banks are increasingly in- their assets. They can spread individual-borrowvolved is the securitizing of loans. This is a er risks better and control the proportions of process that packages relatively illiquid two- different borrower and maturity categories. The party borrowing agreements and transforms securitizing of loans broadens the range of inthem into negotiable securities. Experience with vestment opportunities for many investors, ofsuch securities comes almost entirely from the fering yet another alternative for increasing the mortgage markets. The Congress provided the liquidity of a portfolio and diversifying risk. This essential impetus to the securitizing of credit procedure helps some borrowers compete on when it created the Government National Mort- more even terms for funds. The extent to which gage Association in 1968 to guarantee privately additional funds acquired by households to purissued securities backed by pools of mortgages. chase houses or autos crowd out business bor- These instruments were called pass-throughs, rowing is still a matter for continued research. because interest and principal payments on the There are, however, some increased risks acmortgages were passed through to the security companying the packaging and sale of loans. In holders. The Federal Home Loan Mortgage Cor- some private loan packages, the origination is poration was started two years later and extend- separated from the actual lending for funds, with ed the acceptable limits of loan pools to include third parties insuring the loans, still others doing conventional as well as federally insured mort- the loan packaging, and even different firms gages. Since then, the Federal National Mort- holding the loans in escrow or as trustee. This gage Association and a wide range of private procedure, as the recent experience of California firms have also issued pass-throughs. The out- banks suggests, may tend to encourage sloppy standing volume of residential mortgage pass- procedures and inadequate loan evaluation as through securities has grown exponentially. At each party relies on others to investigate the present, securities guaranteed by the three agen- loans thoroughly. Furthermore, ultimate purcies total $290 billion; counting mortgage-backed chasers of the securities, who sometimes bear securities with a private guarantee, the total is the most risk, may lack the expertise and the more than $300 billion. More than one-fifth of all information to make proper investigations. existing home mortgages have now been placed As regulators, we also have some concern in pass-through pools, representing about 5 per- about how banks account fof loan sale transaccent of all credit market debt. tions. Although outright sales to nonaffiliated By and large, the experience with these securi- parties without residual guarantees cause no ties has been quite good. The original intent of problem, loan pools are often sold with some federal government participation was to augment recourse to the originating bank in case of dethe flow of capital to the housing industry to faults. For example, the bank may commit to make mortgage credit cheaper and more consis- replace all loan losses up to 10 percent of the tently available over the course of the cycle. The loans sold. With the exception of certain mortsecondary mortgage market, which pass- gage pool transactions, the Federal Reserve's Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

512 Federal Reserve Bulletin • July 1985 position and that of other bank regulators has The Congress, in the Futures Trading Act of been that loans sold with recourse to the origina- 1982, directed the Commodity Futures Trading tor or its affiliate should be classified as collater- Commission (CFTC), the Securities and Exalized borrowings, not as asset sales. Otherwise, change Commission (SEC), and the Federal such loan sales could be too easily used to keep Reserve Board, with the assistance of the U.S. risk off balance sheets and thus distort capital Treasury to conduct a study of futures and ratios. Federal Reserve examiners have detailed options markets. Since that study was submitted instructions to take all off-balance-sheet risks to the Congress in December of last year, I will into account when evaluating the capital adequa- confine my remarks to a brief summary of its cy of an institution. conclusions. Thereafter, I will address in greater Rapid growth and dynamic innovation have detail the regulatory framework the Federal been characteristics of financial futures and op- Reserve and other banking agencies have in tions markets since their inception in the early place to assure that banks participate in these 1970s. The first such contracts that began trading markets in a safe and sound manner. on organized exchanges—futures based on for- The main conclusions of the joint agency study eign currencies and options based on individual are the following: stocks—met with immediate success, and they have grown substantially in trading volume. With 1. The new financial futures and options marthis initial experience, the futures and options kets serve a useful economic purpose, primarily exchanges were encouraged to introduce other in providing a means by which risks inherent in such instruments. Over the latter half of the economic activity can be shifted from firms and 1970s and the early 1980s, a number of interest individuals less willing to beat them to those rate futures and options contracts, based on U.S. more willing to do so. Treasury and federal agency securities and on 2. These new markets appear to have no private debt instruments, were introduced. Trad- significant negative implications for the formaing in many, although not all, of these markets tion of capital. rose sharply from the outset, and it has contin- 3. Financial futures and options contracts difued to flourish. Finally, in the early 1980s, the fer in important characteristics, but have many exchanges introduced futures and options con- common elements, and hence, there is a need for tracts based on various stock indexes. Again, close harmonization of federal regulation of these these markets attracted wide interest, as reflect- markets. ed by spectacular growth in several of them and 4. Trading in functionally similar instruments broad participation by a wide range of financial under the jurisdiction of the SEC or the CFTC service organizations and individuals. does not appear to have resulted in significant Like their counterparts in traditional commod- harm to public customers of these derivative or ities futures markets and in the over-the-counter related cash markets. markets for foreign currencies and individual 5. With respect to the various issues examined stock options, those participating in the new in the study, no additional legislation appears to exchange traded futures and options markets do be needed at this time to establish an appropriate so to achieve one of two basic purposes. Some regulatory framework. seek gains by guessing right on the way that At year-end 1984, only 268 of the nation's stock prices, interest rates, or exchange rates are 14,500 insured commercial banks reported any likely to move. Besides these speculators who futures or forward positions outstanding; 93 add liquidity to the market and efficiency to the banks reported options positions outstanding. pricing process, a wide range of other partici- Banks with assets in excess of $5 billion accountpants are in the market to hedge risks that they ed for roughly 90 percent of domestic bank are exposed to in the course of their ordinary volume in futures and options contracts. Deposibusiness affairs—that is, to shift their risk expo- tory institutions have been able to use derivative sure to speculators in the market. It is this risk instruments in hedging and arbitrage activities transfer process that provides the fundamental related to holding securities in bond trading economic justification for these markets. accounts with both activities contributing to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 513 liquidity of the U.S. government securities mar- and bank holding company use of these instrukets. In addition, banks have utilized these deriv- ments. It is our intent to balance prudential ative instruments in managing various segments concerns against the industry's need for flexibiliof their asset-liability positions. ty and innovation. However, in the final analy- The involvement of banks in these derivative sis, the policy guidelines require that bank manmarkets is subject to guidelines first adopted by agement be able to describe and document in all the regulatory agencies in 1979. The basic detail how the bank's derivative contract activiobjective in these actions was to ensure that the ties contribute to the bank's attaining its objecinstitutions choosing to use these instruments tives of reduction of interest rate risk. only do so in a way that will reduce their An additional complication associated with exposure to interest rate or foreign exchange derivative products is the fact that trading straterisk. Before engaging in such activities, manage- gies linking cash positions and derivative instrument is directed to obtain specific authorization ments can be quite complex—especially in the from the institution's board of directors. Also, fast-moving bond trading environment of dealer management is required to develop appropriate banks in which inventory can turn over in a internal controls, including position limits and matter of hours or minutes. Rather than analyze management reports and to establish procedures the use of derivative products in detail, for for market value accounting with respect to open example, attempting to distinguish bona fide contract positions. State-chartered institutions arbitrage from riskier forms of arbitrage, System also first must verify that applicable state law per- examiners have been instructed to consider demits them to take positions in these instruments. rivative products as part of the overall evaluation The essential trading strategy directed by the of trading activities in the relatively few dealer guidelines is that institutions should establish banks we supervise. This pragmatic approach positions that hedge their overall exposure to relies on the fact that all cash and derivative interest rate risk. This concept, while straightfor- positions in a bond trading area are subject to ward in intent, is difficult to follow in practice. market value accounting, and hence, vital disci- Hedging as engaged in traditionally in, for exam- pline is imposed to prevent excessive risk-taking. ple, commodity futures markets has been a rath- The Board also adopted, in 1980, a general er clear-cut process. For example, a hedger policy regarding the appropriate use of financial simply took a "short" position in the futures futures, forward and options contracts by bank market to offset a "long" inventory position he holding companies and their nonbank subsidiarhad in the cash market. Since future and cash ies. This policy, basically the same as that appliprices tend to be highly correlated, any loss cable to banks, limits the position that can be suffered in the long cash position from a decline taken in these derivative products to those that in market price would be offset by the profit reduce exposure to risk and requires the estabobtained from the short futures position. This lishment, by written policy, of appropriate intersimple concept of pairing a short (or long) posi- nal controls and audit programs to ensure adhertion in futures against a long (or short) cash ence to this limitation. The Federal Reserve has position does not necessarily assure that a hedge also permitted 13 bank holding companies to is established when it comes to financial institu- establish subsidiaries to conduct business as a tions, however. Due to the complexity of bank futures commission merchant (FCM)—that is, as balance sheets, the agencies have held that to a broker of futures or options on futures condetermine whether a futures or options position tracts. In addition, permission has been given to increases or reduces risk exposure, it is neces- one state member bank to establish a subsidiary sary to consider the interest rate exposure of the to function as an FCM (the Comptroller of the entire balance sheet position. Currency has also given similar permission to a It is important to note that the theory and the number of national banks). Consistent with the means for measuring bank interest rate risk con- Federal Reserve's general policy, these units of tinue to be debated and refined. The Board has the holding company are prohibited from taking a adopted an extensive examination manual to aid position in the market for their own account examiners in assessing and in evaluating bank except for hedging a cash position. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

514 Federal Reserve Bulletin • July 1985 Statement by Preston Martin, Vice Chairman, $15 billion of the 1984 volume represented lever- Board of Governors of the Federal Reserve Sys- aged buyout transactions, which typically rely on tem, before the Subcommittee on Domestic debt financing for as much as 80 to 90 percent of Monetary Policy of the Committee on Banking, the purchase price, often using the assets of the Finance and Urban Affairs, U.S. House of Rep- company as collateral for the loans. Bank credit resentatives, May 3, 1985. that was used to finance large mergers or defensive actions to avoid takeovers totaled an esti- I am pleased to appear before this subcommittee mated $35 billion last year. About two-thirds of to discuss recent merger and buyout activity and these loans were from U.S. banks, but foreign the impact of this activity on domestic credit bank participation also was sizable. In the first flows and the safety and the soundness of finan- quarter of 1985, large merger-related bank loans cial markets. have totaled about $7 billion, with most of these The dollar volume of completed merger trans- loans supplied by U.S. banks. actions totaled more than $120 billion last year, Such credit is small relative to total credit more than double the experience of any previous outstanding at banks. Moreover, many mergeryear (attachment l).1 A substantial portion of this related bank loans are paid down fairly quickly volume—more than $50 billion—was attributable with funds raised by sales of assets, or with to very large combinations, each involving more proceeds from the sale of commercial paper or than $1 billion. So far this year we have contin- long-term securities. Thus, for example, approxiued to witness a substantial volume of acquisi- mately two-thirds of the large-merger bank loans tions and proposed combinations. Although it is extended in 1984 have been repaid. Nonetheless, unlikely that all of the proposed mergers will the heavy reliance on debt, from whatever reach fruition, the current volume is certainly source, to effect the substantial number of merglarge enough to warrant continued monitoring of ers, takeovers, and leveraged buyouts raises market impacts. questions about the potential impact that the As I have noted in recent testimony before transactions may have on aggregate credit flows other congressional committees, I believe that and on the exposure, owing to heavy leveraging, there is a legitimate place in our economy for of the firms involved. mergers and takeovers. They can be important The Board is aware of the influence of merger mechanisms for redeploying corporate assets to activity on aggregate credit flows, and takes it their most profitable—and socially beneficial— into consideration when evaluating the behavior uses, and for bringing about better management. of the money and debt aggregates. Growth in the Thus, we must be careful about attempting to domestic nonfinancial debt aggregate, which we impose the judgment of government authorities monitor in the course of our monetary policy about which private transactions will be econom- deliberations, is estimated to have been boosted ically productive and which will not. Nonethe- about 1 to IV2 percentage points in 1984 as a less, government is obliged to do what it can to result of merger-related credit extensions. But ensure that certain kinds of risk-taking not jeop- mergers and buyouts appear to have had a much ardize the stability of our financial system. From more limited impact on the three monetary agthe perspective of the Federal Reserve, our gregates for which we establish target ranges. concerns have focused on the effect that merger The narrow money aggregate, Ml, may be inand takeover activity is likely to have on aggre- creased temporarily as a result of a large merger, gate credit flows and on the risk exposure of but proceeds from merger sales generally are financial institutions and markets. reinvested in other assets, and the effect of Ml Many of these merger transactions have been tends to be small over periods of time relevant financed, at least initially, with debt. More than for monetary policy considerations. The broader aggregates, M2 and M3, may be boosted somewhat more than Ml, as some proceeds from stock sales flow into time deposits, money mar- 1. The attachments to this statement are available on ket mutual funds, and other assets included in request from Publications Services, Board of Governors of these aggregates. But relative to the size of M2 the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 515 and M3, this effect also would be relatively by historical standards, especially during a busiminor. Given our ability to evaluate the size and ness expansion. the timing of large transactions, we can antici- Another source of equity growth has come pate possible distortions to the aggregates in a from the appreciation of existing corporate asparticular period and thus avoid inadvertently sets. Reflecting the improvement in corporate reacting to these factors rather than to more profits in this expansion and a more favorable fundamental determinants of credit demand in environment for future earnings, the market's our policy deliberations. As a result, I do not evaluation of corporate assets has risen. Morebelieve that mergers present an operational prob- over, even though a large portion of recent stock lem for us that could cause appreciable unintend- retirements has been financed with debt, aggreed variations in reserve market pressures. gate debt-to-equity ratios for nonfinancial busi- Assessing the implications of merger activity is ness as a whole—based on market values of quite complex, however, and even though we do equity—have remained well below the peaks not believe that debt-financed merger activity reached in the 1970s. Nonetheless, while these has had a significant effect on aggregate credit aggregate measures have not changed dramatiflows, we are concerned about the potential risk cally, it is clear that some firms are retiring huge exposure that may result as firms retire existing amounts of their equity and are taking on appreequity with funds raised through increased use of ciable amounts of debt to finance merger-related debt. activity. Last year, nonfinancial corporations retired The Federal Reserve, in its roles as supervisor more than $85 billion of equity through mergers, of banks and bank holding companies and as takeovers, and share repurchases. Equity retire- lender of last resort, has the responsibility in ments were bolstered also by firms that elected conjunction with other regulatory agencies for to repurchase their own shares rather than to maintaining the safety and the soundness of undertake new investment or to acquire other financial institutions and markets. To date, we firms. Some share repurchases clearly were have seen no evidence indicating that the credit prompted as defensive measures taken to lessen extended to finance mergers and leveraged the possibility of outsiders buying significant buyouts has resulted in significant problems for amounts of stocks; other repurchases were made the surviving firms or the financial institutions because corporations find them to be a more that have extended credit to them. Of course, our profitable way to invest funds. When a company economy has been undergoing an expansion that believes that the value of its assets is higher than has provided a favorable economic and financial the market's valuation of its stock, such buy- environment for growth, and thus the companies backs may appear to be more attractive than created by recent mergers, as yet, have not been alternative investments. tested by adverse economic conditions. Current- The unprecedented level of stock retirements ly, there are indications that economic growth associated with mergers, takeovers, and share may be slowing. Should the earnings prospects repurchases has given rise to concerns about the of these firms deteriorate unexpectedly or interpotential erosion of the equity base of American est rates rise sharply, some firms may be strained business. There have been offsets, however, to to service heavy debt burdens. In this event, the this erosion. Aided by the new depreciation institutions that provided the credit could in turn rules, after-tax earnings of nonfinancial corpora- be exposed to possible losses. tions have rebounded strongly in the current Leveraged buyouts may be of particular conexpansion. With dividend growth remaining re- cern because these purchases typically are exestrained, retained earnings have been a relatively cuted with particularly heavy reliance on debt substantial source of new corporate equity in financing. Because buyout loans often involve recent quarters. A less important source of equi- floating-rate debt, the purchasing companies will ty is new stock issues. Retained earnings of all be especially vulnerable if interest rates rise nonfinancial firms offset the net retirement of substantially and cash flows are not adequate to stock, and net additions to equity in the aggre- service the heavy debt burdens. gate remained positive last year though quite low The Federal Reserve has actively urged banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

516 Federal Reserve Bulletin • July 1985 to evaluate carefully all loans, but particularly involved and to the likelihood of being granted a those loans used to finance buyouts and other speculative grade. It is important that less welltypes of takeover transactions, and to apply known companies be able to raise funds in secuprudent standards in making credit decisions. rities markets and also that investors seek a We regularly include specific instruction with thorough understanding of the investment merits respect to the review of bank lending activity and and risks associated with lower-grade securities. loans associated with leveraged buyouts in our Federally chartered banks may make loans to training courses for bank examiners. In June finance mergers; they are prohibited from acquir- 1984, we offered additional training for dealing ing below-investment-grade bonds in their inwith leveraged buyouts for senior bank examin- vestment portfolios. However, some state-charers. At about the same time, we issued specific tered institutions currently may not be subject to guidelines for examiners at each of the 12 District such restrictions. Indeed, some state-chartered Federal Reserve Banks to follow in evaluating thrift institutions have purchased these securiloans for financing leveraged buyouts and for ties. Given the sensitivity of financial markets to assessing the total exposure of a bank to such the fortunes of individual institutions, we continlending. ue to encourage supervisors at both state and A recent review of the results of bank exami- federal levels to evaluate carefully developments nations indicated that only a small number of in this area and to take adequate steps to prevent state member banks appeared to actively lend for undue exposure of individual institutions to unpurposes of effecting leveraged buyouts to the expected events. extent that they might be exposed to adverse The Federal Reserve Board does not believe changes in market conditions. No banks have that arbitrary controls on the use of credit can be experienced serious problems to date as a result desirable or effective. Attempts to regulate flows of such lending. While these survey results sug- of credit for particular purposes run the risk of gest that there is little reason for alarm at this creating unintended distortions in credit flows time, we will continue to evaluate this activity and impeding the efficient allocation of capital. and to adjust our policies as needed. We encour- Since mergers can be important mechanisms for age all lenders to apply prudent lending stan- redeploying corporate assets to more profitable dards, particularly purchasers of low-rated or uses, promoting better management, economies unrated bonds, which appear to have become of scale or scope, or reinforcing market incenpopular vehicles for financing takeover attempts. tives, we must be careful about imposing the Most of the purchasers of these so-called "junk judgment of government authorities concerning bonds" that are used to finance merger activity which private transactions will be desirable from reportedly are large, sophisticated investors who a social and economic standpoint. When governshould be aware of the risks involved in holding ment controls on the use of credit are in exissuch instruments. The higher rates paid on these tence for any length of time, they become inbonds suggest that they are perceived to involve creasingly inequitable as market participants find greater risks, but the question of whether the risk ways to circumvent them. And such controls are premiums will prove to be adequate to compen- usually extremely difficult to enforce; since credsate investors for the exposure that they under- it is fungible, most financing can be achieved take remains unanswered inasmuch as the mar- through alternative channels, such as borrowing ket has not been tested by significant negative through unregulated intermediaries, from foreign events. lenders, or the like. I do not wish to imply that lower-quality bonds In this regard, I also would like to comment on are undesirable financial instruments. These se- the role of margin regulations as they may affect curities provide an important source of financing merger financing. Margin regulations apply to for many small, unknown companies. A new firm lenders making loans for the purpose of purchasmay have good growth potential, but because it ing securities when those loans are collateralized is untested as yet, its debt issues likely will be with securities. Thus, investors that wish to rated below investment grade; some new compa- purchase stocks on credit may, under current nies opt not to obtain a rating owing to the cost margin requirements, borrow 50 percent of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 517 purchase price, and pledge the acquired stocks when possible. Unfortunately, there are areas in as collateral. The recent tendency for stock which the application of margin regulations is prices of target companies to rise when a take- cloudy; in particular, questions have arisen conover or merger is anticipated suggests that some cerning credit extended to purchase securities investors may be purchasing shares of these that may be "indirectly" secured by stock. companies in anticipation of realizing gains as These cases require a regulatory review to deterthe merger transactions are negotiated. Although mine whether or not the extension of credit we have no data on such individual stock trades, would be subject to margin requirements. As you it may be that some involve margin credit exten- may be aware, Federal Reserve staff currently sions. The 50 percent margin requirement, we are reviewing a petition to this effect by Unocal. believe, is more than adequate to ensure the Up to this time, the Board has not believed that integrity of the marketplace in the event of efforts to curb takeover activity by expanding the unexpected price movements in these and other scope of margin regulations to cover selected stocks. types of transactions has been a desirable option. Margin credit likely has played a quite limited Such a course runs all the risks of distorting role in the actual financing of mergers and take- capital flows and impeding the efficient allocaovers. The margin regulations do not apply to tion of resources like other selective credit conunsecured loans or to loans secured by assets trols. other than securities. Well-capitalized compa- I would like to reiterate that I do not wish to nies may borrow to purchase shares in another imply that we should be complacent about the company by pledging other types of assets as implications of lending to effect mergers and collateral or by using unsecured loans, in which buyouts. The Federal Reserve will continue to case the lenders would not be subject to margin monitor this activity and its effects on financial requirements. Given the current high margin markets and to review our examination stanrequirements, there is a strong incentive for dards in light of developments in this area. • firms to use other means of financing acquisitions Statement by Paul A. Volcker, Chairman, Board In previous statements before this committee, of Governors of the Federal Reserve System, I have stressed the unique and complex role before the Committee on Banking, Housing, and played by depository institutions in our financial Urban Affairs, U.S. Senate, May 8, 1985. system and our economy. For the convenience of the committee, I have attached to this state- I am pleased to appear before this committee ment a copy of my statement before this committoday to review the banking bill, S. 2851, that tee on March 27, 1984, which sets out in detail was adopted by the Senate last year in Septem- the conceptual framework from which we at the ber and to assess the continuing need for this Board approach the present legislative effort to legislation. On several occasions in the past I revise the banking structure in the light of have advised this committee of the need to move changed market conditions, (attachment l)1 with a sense of urgency to reform the existing The legislation adopted by the Senate last year statutory framework governing "banking" orga- took some basic steps necessary to adapt the nizations, prompted by my concern that there financial system to changed circumstances. It are real dangers in permitting the financial sys- provided for the following: (1) a new definition of tem to evolve, as it is now, in a haphazard and a banks and thrift institutions; (2) a streamlining of potentially dangerous way. Nothing has hap- the procedural provisions of the bank and thrift pened in the seven months since September 1984 holding company acts; (3) a broadening, within that would cause me to change this assessment. an appropriate regulatory framework, of the Quite the contrary, the basic framework for the conduct of depository institution business that 1. The attachments to this statement are available on would have been established by S. 2851 is sorely request from Publications Services, Board of Governors of missed and is still urgently needed. the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin • July 1985 powers of depository institution holding compa- and to create new employment opportunities nies; (4) a better delineation of the scope of state rather than a reflection of a coherent philosophy authority in the area of banking organization toward banking. These essentially competitive powers; and (5) a start on developing rules efforts will offset one another in the end, but at governing interstate expansion of depository in- the cost of establishing banking practices that stitutions. could well be inconsistent with the requirements The broad consensus on these and other provi- of a safe and sound banking system. For insions was reflected in the overwhelming support stance, legislation was adopted last year in Caliby the Senate for S. 2851. fornia and in New York to authorize real estate The need for new legislation to clarify and development activities and in Ohio to authorize reinforce certain continuing goals of public poli- investment in corporate equities as well as real cy toward banking has only intensified in the past estate development, posing real risks for the year. There has been further proliferation of banks that engage in these activities. Of equal nonbank banks; new state initiatives to greatly concern is the legislation in some states that has expand the powers of state-chartered banks and given carte blanche to state-chartered thrift instithrift institutions; and new applications by banks tutions, allowing them to virtually make any type and bank holding companies to engage in insur- of investment almost without restriction. ance, securities, and other activities that must be Faced with these laws, and their likely prolifdecided with or without congressional guidance. eration, the three federal regulators with respon- Since July 1, 1983, the grandfather date in sibilities in these areas—the Board, the Federal S. 2851, 22 applications for nonbank banks by Home Loan Bank Board, and the Federal Deposcommercial companies, including major securi- it Insurance Corporation—have adopted, or have ties, insurance, and retail firms, have received under consideration, regulations to establish a approval. Since September 1984, 276 applica- framework for the conduct of state-chartered tions by bank holding companies for nonbank depository institution activities. The three debanks located in 40 different states have also pository institution regulators have in effect been approved. While a U.S. District Court in reached the conclusion that if they are unre- Florida has enjoined the Comptroller from issu- strained these activities can seriously endanger ing any new final charters, and the Federal depository institutions themselves and the finan- Reserve has returned pending applications be- cial system in which they are such an important cause of this injunction, there is a continuing and part. Administrative authority to act in this delian important need for legislative action on the cate area of state-federal relations needs a clear definition of bank. mandate of congressional support. I need only stress that in the appeal process, The unsatisfactory state of existing law is the decisions of the lower court could be re- manifest also in recent applications by bank versed, with a resultant flood of new nonbank holding companies to engage directly or through banks immediately being put into place. In any subsidiaries in a considerable range of insurance event, the Court's ruling does not apply directly and securities activities, taking advantage of to nonbank banks authorized under state law or perceived new interpretations of federal law or to existing national banks that could be convert- new state laws. Holding company applications ed to nonbank banks. I fully expect that commer- are now before the Board to engage in nationcial firms prepared to take advantage of loop- wide insurance brokerage and underwriting holes will turn in this direction as a means of through state banks and to participate in underevading the separation of banking and commerce writing and distribution of commercial paper, that is now required. revenue bonds, and mortgage-backed obligations. These applications raise serious questions The accelerating trend in the states toward of policy in areas that have been of important authorization of new nonbanking powers for congressional concern. We are required, neverbanks and thrift institutions is another point of theless, by law to act on them. It would be far serious concern. These laws appear to be part of preferable to act in these areas on the basis of a a kind of bidding process to attract and retain fresh statutory mandate, rather than attempt to depository institutions, to enhance revenues, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 519 apply existing rules to circumstances that were should not be used to market the products of a unforeseen 10, 20, and 50 years ago. nonthrift or bank parent and vice versa. All these developments have created a continuing large volume of complex litigation—and more can be expected. Almost every important CLARIFICATION OF STATE BANKING banking policy is now the subject of judicial POWERS review, and the courts, or we the regulators, are faced with the unhappy dilemma of attempting to Second, the provisions on limiting state powers apply old laws adopted in very different circum- to authorize new banking activities should be stances to new facts and new arrangements that extended and clarified. The bill now prevents the Congress did not envision when the laws states from authorizing new powers for banks were originally adopted. In these circumstances, that are not permitted under section 4 of the inconsistent rulings should be no surprise. The Bank Holding Company Act unless these activibanking system is simply too important to leave ties are confined to the authorizing state. On the to haphazard development. basis of recent developments it seems clear that The legislation adopted by the Senate last year this limitation should be extended to include would have made a major contribution toward activities authorized by states that are inconsisestablishing a new and a more stable framework tent with safe and sound banking. The Congress in which depository institutions and other finan- has extensively reviewed the powers that should cial firms can operate, while protecting the basic be permitted to banks and their holding compafoundations of a safe and sound financial system. nies and has carefully balanced considerations However, I believe changes are needed in at involving both fair competition and risk. We least three important areas to strengthen the believe that it is both unwise and dangerous to Senate bill to assure that these objectives are the stability of the system to permit the expanfully met. sion of powers that raise serious safety and soundness considerations, particularly when the primary motivation for the adoption of these STRENGTHENING THE THRIFT TEST powers is parochial considerations of jobs and revenues. First, the so-called thrift test should be strengthened substantially. Conceptually, S. 2851 seems to accept the importance of assuring that thrift institutions extensively engaged in commercial TRANSITION TO INTERSTATE BANKING activities, like commercial banks, be subject to national policy requiring a separation of banking Third, legislation adopted this year should also and commerce. However, the thrift test set out go beyond approving regional arrangements, as seems to me too weak, and would permit provided for in title IX of S. 2851, and address "nonthrift thrifts" the bank-like powers to devel- the rules for interstate expansion. The present op, undercutting the prohibition on nonbank situation of loophole exploitation and discriminabanks. tory regional arrangements is inherently unsatis- To achieve the necessary strengthening, the factory. Title IX only goes so far as to legitimize thrift test should, at a minimum, require that at regional arrangements for a period of five years. least 65 percent of a thrift institution's own These arrangements are satisfactory only as a assets be devoted to home lending. It should transition to a less discriminatory system of exclude a pass-through of loans originated and interstate banking. New arrangements for intersold to other investors, an activity freely engaged state banking should also include provisions to in by a wide variety of institutions that have no assure fair competition and should avoid undue special protection under federal law as well as by concentration of resources, elements that would many commercial banks. If liquid assets are to well be lost to the extent that interstate expanqualify, they should do so only in amounts sion was confined for an indefinite period to required by law. In addition, a thrift institution regional arrangements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Federal Reserve Bulletin • July 1985 DEFINITION OF BANK tions that take transaction accounts (not just demand deposits narrowly defined) and make Finally, I would like to emphasize one area in commercial loans and that are not covered by the which I believe a change should not be made. I Savings and Loan Holding Company Act should understand that proposals have been made by be covered by the Bank Holding Company Act. others to undermine the definition of bank con- For just these same reasons, I would urge that tained in S. 2851 by permitting nondepository the provisions of S. 2851, which allow bank institutions—industrial firms, retail firms, securi- holding companies to own nonfederally insured ties and insurance firms—to enter the banking banks, be deleted from the bill. business without being subject to the Bank Hold- I would also urge that the nonbank bank ing Company Act, provided that they have no grandfather provisions of S. 2851 be modified to more than a limited portion of their assets in assure that grandfather status is not abused by commercial loans. This concept, now beguilingly expansion of commercial lending or by geographcalled the consumer or family bank, would clear- ic expansion. ly undercut the basic public policies sought by Last year the Senate took a significant step closing the nonbank bank loophole. forward toward adopting the urgently needed Moreover, I believe that there is an important new framework of public policies for the conduct defect in the bill's definition of "bank." S. 2851 of the banking and thrift businesses. Recent now exempts from the definition of bank institu- events have demonstrated the continuing need tions that take demand deposits and are not for final congressional action and I believe have federally insured, so long as they hold no more created the atmosphere in which this action can than 10 percent of their assets in commercial be taken. I believe S. 2851 needs to be strengthloans. I have urged, and recent experience seems ened in the areas I have indicated and strongly to me to confirm my concerns, that all institu- urge your early action. • Statement by E. Gerald Corrigan, President, lem situations in the market; and the fourth Federal Reserve Bank of New York, before the contains some thoughts regarding the future op- Subcommittee on Securities of the Committee on eration of the market. Banking, Housing, and Urban Affairs, U.S. Senate, May 9, 1985. THE STRUCTURE OF THE GOVERNMENT I appreciate this opportunity to appear before SECURITIES MARKET this subcommittee to offer my views and to respond to your questions concerning recent The fact that the market for U.S. government problems in the U.S. government securities mar- securities is the largest, most efficient, and most ket. While the circumstances and frequency of important securities market in the country and these problems—some involving specific allega- the world is well documented and need not be tions of fraudulent activities that I consider to be developed for this subcommittee. The market outrageous—are clearly disturbing, the market consists of several broad categories of particias a whole continues to function effectively. Yet, pants, starting, of course, with the U.S. governthe cumulative weight of recent disturbances ment itself as the issuer of the securities through raises some important questions about the struc- its fiscal agents—the 12 Federal Reserve Banks. ture and the functioning of the market. My In addition, and as detailed in the following prepared statement consists of four sections: the section, the Federal Reserve Bank of New first outlines the structure of the government York—acting on behalf of the Federal Open securities market; the second reviews the role of Market Committee—uses the day-to-day purthe Federal Reserve Bank of New York as it chases and sales of government securities as the relates to the market; the third seeks to identify primary instrument for the conduct of monetary some common elements or traits in recent prob- policy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 521 Private participants in the government securi- affiliates. There also are many other major marties market start with the so-called primary deal- ket participants such as pension funds and large ers in U.S. government securities. Firms are nonfinancial corporations that, by some definidesignated as primary dealers by the Federal tions, could qualify as government securities Reserve Bank of New York based on a number dealers. Thus, the number of firms active in the of criteria. These criteria are detailed in the government securities market is large and would appendix to this statement.1 Ten years ago there be still larger if the population were defined to were 25 primary dealers. This number has grown include the firms—and their affiliates—that speto the present level of 36—15 of which are banks cialize in dealing in government-backed or agenor bank subsidiaries, 11 are broker-dealers sub- cy securities. Indeed, because the "agency" ject to regulation by the Securities and Exchange security market includes a wide range of instru- Commission (SEC), and 10 are otherwise "un- ments and issuers—some of which are backed by regulated" at the federal level. The primary the full faith and credit of the U.S. government dealers are the core group of market makers for and some of which are not—additional questions government debt in that they maintain two-way and issues may arise in this area. markets for government securities and participate directly and actively in auctions of new government debt. They serve as the essential THE ROLE OF THE FEDERAL RESERVE BANK bridge between the Treasury and the vast domes- OF NEW YORK tic and international network of institutions and individuals who are the ultimate holders of gov- The Federal Reserve Bank of New York's direct ernment debt. interest in the operation of the government secu- Besides the primary dealers, there are a large rities market grows out of the fact that day-tonumber of bank and nonbank "secondary" deal- day purchases and sales of government securities ers in government securities. While the exact are the primary vehicle used by the Federal number of secondary dealers is not known—in Reserve in seeking to influence the growth of part because there is no consensus definition of a money and credit. During 1984, for example, the dealer and in part because a number of these aggregate value of such transactions conducted dealers are not registered with a federal agency— by the Federal Reserve with the primary dealers published and other sources would suggest that was $209 billion. The Federal Reserve also acts there may be as many as 400 to 500 firms. We on behalf of approximately 150 foreign central believe that the majority of these secondary banks and other foreign official institutions in the dealers are "regulated" in the sense that their market. Transactions conducted by the Federal government securities dealer operations proba- Reserve on behalf of these institutions in 1984 bly take place within an otherwise regulated amounted to $211 billion. All Federal Reserve banking organization or within a broker-dealer transactions in government securities—whether registered with the SEC. However, even with for its own account or for the account of foreign some of these "regulated" firms, the govern- official institutions—are conducted only with the ment securities activities may, in fact, take place primary dealers. in an affiliate or subsidiary that is not subject to The origins of the Federal Reserve Bank of federal regulation. In addition, perhaps 100 or New York's role in providing a form of surveilmore government securities dealers are wholly lance over the primary dealers were, in part, a unregulated—at least at the federal level. straightforward business proposition. Given the These estimates of the number of secondary enormous volume of public funds associated dealers are based largely on published and other with the Federal Reserve's transactions in the reports of firms that label themselves dealers. marketplace, it was quite natural that in conduct- They, in turn, may have multiple subsidiaries or ing these transactions the New York Federal Reserve would be guided by one of the oldest precepts in trading—"know your counterparty." 1. The attachments to this statement are available on Of course, our interest in the workings of the request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. market goes beyond our strict business relation- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Federal Reserve Bulletin • July 1985 ships with the primary dealers. Indeed, our con- circumstances in which efforts to move in on a cern stems from the fact that the government situation could create difficulty where none had securities market is the market that we use for existed, or could make a large problem out of a monetary policy implementation and which the small one. Some danger of this type probably Treasury uses for financing the federal govern- exists with any regulatory function, but it may be ment. Over time, and in recognition of the larger especially acute in the case of the government public interest considerations associated with the securities market, given the intricate interdepenoperation of the government market, the New dence of that market with so many other parts of York Federal Reserve's role in the market the financial structure. Since there can never be evolved into an informal watchdog function that a fail-safe system of surveillance or even of loosely incorporated some elements of tradition- regulation, I believe that recognition of these al regulatory functions. problems must be central to our thinking as we This evolution of the Federal Reserve's inter- seek ways to guard against abuses while at the est in the government securities market took same time seek to preserve the strength and place, however, in a framework in which the dynamism of the market. Federal Reserve had and continues to have no express statutory authority. At the same time, RECENT PROBLEM SITUATIONS the sheer growth of the debt, as well as advances in communications and technology, have made it In considering the appropriate public policy repossible for hundreds of new firms to enter the sponse to the recent problem situations involving government securities business and operate na- government securities dealers, it is useful to seek tionwide from virtually any location in the to identify some common characteristics associcountry. ated with various episodes—recognizing, of To summarize, the Federal Reserve's initial course, that each situation has had its own interest in the safe functioning of the government distinct traits. Indeed, because of the unique securities market was one that grew out of the traits of each case, it is risky to attempt generaltime-honored tradition of knowing those with ization since each generalization will have its whom you do business. Over time, that interest exceptions. Yet, with this qualification firmly in gradually assumed some of the trappings of a mind, a close inspection of recent problem situamore generalized but essentially voluntary sys- tions does suggest several areas of commonality. tem of oversight aimed at the primary dealers. Among these areas are the following. That system of general surveillance over the primary dealers has, in my judgment, served the Misleading Financial Statements. In a number Treasury, the Federal Reserve, and the public of episodes, the firm in question has issued well for a long period of time. apparently false or misleading financial state- More recently, and reflecting in part changes ments, some of which were "audited" and some in market structure, the Federal Reserve stepped of which were not. More specifically, it would up its efforts to learn more about the activities of appear that some individual cases entail allegasome of the larger secondary dealers in govern- tions of outright fraud of a nature that can only ment securities. This effort, also entirely volun- be described as outrageous. tary in nature, entailed a very limited form of voluntary monthly reporting and efforts aimed at Multiple Affiliated Companies. In several inestablishing voluntary capital adequacy standards. stances, problems in one company were masked The current arrangements, especially as ex- by relationships, and at times complex transactended to the secondary dealers, may not be tions, with affiliated companies. Indeed, in some adequate for the future. For example, by having instances it would appear that some investors an informal monitoring role, we may create an may not have fully understood which entity was appearance of providing much greater protection the counterparty to transactions. from abuse than is justified. Moreover, given our present role, we have to be careful in dealing The Use of Working Capital Generated by with suspected problems—indeed there may be Matched-Book Operations. In the jargon of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 523 trade, a matched book is the holding by a dealer fundamental sense, some of these customers of an equal and offsetting—or "matched"— may have been easy targets because they—out of amount of reverse repurchase agreements and pressures to generate interest income—were all repurchase agreements (RPs). Matched-book op- too willing to be seduced by the prospect of a erations are central to the workings of the market "special deal." Unfortunately, for a struggling because they provide a convenient vehicle for thrift institution or a cash-pressed municipality, dealers to serve as efficient intermediaries be- these temptations can be great, especially when tween those seeking to invest in government the transaction in question involves a "risk free" securities and those seeking to use holdings of Treasury security. The point, of course, is that government securities to gain liquidity. In the- the security may be risk-free while the transacory, a matched-book operation—even one of tion can be quite risky. considerable size—should be a very low-risk As mentioned earlier, these factors are not activity to the dealer and to its customers. In common to all problem situations that we have practice, however, theory may not always apply. seen in the government securities market nor do For example, if the amount of the book is they exhaust the possible list of causes or proba- "matched," but not the maturities, the overall ble causes of the difficulties that have occurred. position can include somewhat greater risk. For example, they do not include the accrued Moreover, and more importantly for these pur- interest problem that was a key factor in one poses, a matched book, by its very nature, can case, nor do they include any possible connecproduce working capital for the dealer through tions among individuals associated with one or the excess margin that can be produced during more of the problem dealers, nor the possible the term of certain RP transactions. In a number role that "money brokers" may have played in of the problem situations it appears that the one or more cases. What they do suggest, howdealers in question used working capital generat- ever, is that the problems we have seen are ed by matched-book operations to engage in multifaceted and entail factors ranging from intrading for their own account and in the process vestor attitudes and motivations on the one hand incurred losses or attempted to use such working to gross misrepresentation and alleged wholesale capital to make up losses. fraud on the other, none of which is necessarily easy to eliminate by regulation. Improper Control Arrangements. In a number of instances, customers of problem dealers incurred losses because the customers failed both LOOKING TO THE FUTURE to know their counterparty and to secure control of the securities underlying the RP transaction Recent events have brought into even sharper with the problem dealer. The failure to know the focus the question of whether part or all of the counterparty—its financial status and its man- government securities market should be subject agement—or to secure control of the securities— to some form of formal regulation backed up by whether caused by carelessness or misrepresen- explicit statutory authority. Indeed, several bills tation or both—not only ultimately resulted in have been introduced in the Senate or the House the loss to the customer but also had the effect of to that end. Moreover, many market participants providing funds to the problem dealer, thereby and the Public Securities Association are now on permitting the dealer to continue operations in a record as favoring some form of regulation. All way that may have disguised its true financial of this is understandable since the cumulative condition. effect of the recent string of failures of government securities dealers has been, to put it mildly, The Drive for Earnings. In looking at the list of unsettling. harmed customers of problem dealers it is easy Yet, as we seek a higher level of assurance that to conclude that some, if not many, incurred the problems of the past will not be repeated, we losses because they were naive about the nature must proceed with caution. In the case of the of the transactions. In a proximate sense, the government securities market, the costs of poorconclusion may be warranted. But, in a more ly conceived or poorly executed regulation could Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Federal Reserve Bulletin • July 1985 be enormous. For example, if regulation unnec- community ; (2) an expanded public education essarily affected the liquidity and the efficiency program targeted at certain classes of investors of the market in an adverse way to the extent of in RP-type transactions; (3) stepped-up bank raising the average yield on Treasury securities supervisory efforts regarding the involvement in outstanding only 10 basis points, the cost to the RP-type transactions by depository institutions; Treasury and ultimately to the taxpayer would and (4) the expansion of the scope and intensity mount to a staggering $1.7 billion per year at of our on-site inspection program for primary current levels of Treasury debt. On the other dealers. In this regard, I had also hoped that hand it is, of course, possible that uncertainties there might be some operational enhancements and instabilities growing out of further problems to the book-entry system for government securicould have an even greater impact on the market. ties that might prove useful in improving controls Reflecting these considerations the Federal surrounding RP-type transactions. However, Reserve, the Treasury, and the SEC are working based on our preliminary analysis, it is clear that diligently to arrive at a position on whether any such major enhancements will not come legislation is needed and, if so, what form such quickly or cheaply, if at all. legislation should take. The interagency position In closing, allow me to stress four points. is expected to be communicated to the Congress First, I share the deep concerns expressed in the no later than mid-June. Those interagency delib- Congress and elsewhere about the recent proberations are, in the first instance, aimed at fur- lems in the government securities markets. Secther fact-finding and, in the second, at a review ond, despite these problems, the market as a of various alternative approaches to regulation of whole continues to function effectively in fair the government securities market. A key date in weather or foul. Third, the issues involved in the that process will be May 20, the deadline for the question of whether the government securities submission of responses to the SEC's request for market should be regulated, and if so the appropublic comment on the oversight of the govern- priate form of such regulation, are exceedingly ment securities market. complex. Finally, if it appears that regulation is. In tandem with the interagency review, we at required, we are challenged to do it in a way that the Federal Reserve Bank of New York are introduces minimal inefficiencies and costs into a moving ahead on several fronts including the market that is so vital to our overall financial and following: (1) the implementation of the system economic well-being. We look forward to workof voluntary capital guidelines that are aimed ing closely with the Congress in seeking solulargely at the "unregulated" secondary dealer tions to these difficult issues. • Statement by E. Gerald Corrigan, President, ing, they have not had any materially adverse Federal Reserve Bank of New York, before the effects on the functioning of the market as a Subcommittee on Commerce, Consumer, and whole, the conduct of monetary policy, or Trea- Monetary Affairs of the Committee on Govern- sury financing activities. However, we have ment Operations, U.S. House of Representa- seen, and are seeing, a fair amount of repositiontives, May 15, 1985. ing in the market as market participants reevaluate their positions and their relationships in the I appreciate the opportunity to appear before this wake of these problems. subcommittee to offer my views and to respond The Federal Reserve Bank of New York's to your questions concerning recent problems in direct interest in the operation of the government the U.S. government securities market. Within securities market grows out of the fact that daythe past few months six government securities to-day purchases and sales of government securifirms have failed and in the process have inflicted ties are the primary vehicle used by the Federal losses on a number of market participants includ- Reserve in seeking to influence the growth of ing banks, thrift institutions, and municipalities. money and credit. During 1984, for example, the While these events are, to put it mildly, disturb- aggregate value of such transactions conducted Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 525 by the Federal Reserve with the primary dealers gradually took on some of the trappings of a was $209 billion. The Federal Reserve also acts more generalized, but essentially voluntary, syson behalf of approximately 150 foreign central tem of oversight aimed at the primary dealers. banks and other foreign official institutions in the That system of general surveillance over the market. Transactions conducted by the Federal primary dealers has, in my judgment, served the Reserve on behalf of these institutions amounted Treasury, the Federal Reserve, and the public to $211 billion in 1984. All Federal Reserve well for a long period of time. transactions in government securities—whether More recently, and reflecting in part changes for its own account or for the account of foreign in market structure, the Federal Reserve has official institutions—are conducted only with the stepped up its efforts to learn more about the primary dealers. activities of some of the larger secondary dealers The origins of the Federal Reserve Bank of in government securities. This effort—also en- New York's role in providing a form of surveil- tirely voluntary in nature—has entailed a very lance over the primary dealers were, in part, a limited form of voluntary monthly reporting and straightforward business proposition. Given the efforts aimed at establishing voluntary capital enormous volume of public funds associated adequacy standards. with the Federal Reserve's transactions in the At the time of its demise, E.S.M. Government marketplace, it was quite natural that in conduct- Securities, Inc. (ESM) was one of the approxiing these transactions the New York Federal mately 30 firms filing monthly reports with the Reserve would be guided by one of the oldest Federal Reserve Bank of New York and would precepts in trading—"know your counterparty." have been one of the "unregulated" firms to Of course, our interest in the workings of the which the capital guidelines are targeted. Bevill, market goes beyond our strict business relation- Bresler and Schulman, Inc. (BBS), a brokerships with the primary dealers. Indeed, our con- dealer registered with the Securities and Excern stems from the fact that the government change Commission (SEC), was also a monthly securities market is the market that we use for reporting dealer. However, the reports for BBS monetary policy implementation and which the did not reflect the activities of two or more Treasury uses for financing the federal govern- related firms when the losses that ultimately gave ment. Over time, and in recognition of the larger rise to the demise of BBS occurred. While inforpublic interest considerations associated with the mation supplied by ESM was false and informaoperation of the government market, the New tion supplied by BBS may have been false or York Federal Reserve's role in the market has misleading, the information as reported for the evolved into an informal watchdog function that entities that it covered suggested that both firms loosely incorporated some elements of tradition- would have met the capital standards. al regulatory functions. The current arrangements, especially as ex- This evolution of the Federal Reserve's inter- tended to the secondary dealers, may not be est in the government securities market took adequate for the future. For example, by having place, however, in a framework in which the an informal monitoring role, we may create an Federal Reserve had and continues to have, no appearance of providing much greater protection express statutory authority. At the same time, from abuse than is justified. Moreover, given our the sheer growth of the debt as well as advances present role, we have to be careful in dealing in communications and technology have made it with suspected problems—indeed there may be possible for hundreds of new firms to enter the circumstances in which efforts to move in on a government securities business and to operate situation could create difficulty where none had nationwide from virtually any location in the existed, or could make a large problem out of a country. small one. Some danger of this type probably To summarize, the Federal Reserve's initial exists with any regulatory function, but it may be interest in the safe functioning of the government especially acute in the case of the government securities market was one that grew out of the securities market, given the intricate interdepentime-honored tradition of knowing those with dence of that market with so many other parts of whom you do business. Over time, that interest the financial structure. Since there can never be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

526 Federal Reserve Bulletin • July 1985 a fail-safe system of surveillance or even of government securities to gain liquidity. In theregulation, I believe that recognition of these ory, a matched-book operation—even one of problems must be central to our thinking as we considerable size—should be a very low-risk seek ways to guard against abuses while at the activity to the dealer and to its customers. In same time seek to preserve the strength and practice, however, theory may not always apply. dynamism of the market. For example, if the amount of the book is "matched," but not the maturities, the overall RECENT PROBLEM SITUATIONS position can include somewhat greater risk. Moreover, and more importantly for these pur- In considering the appropriate public policy re- poses, a matched book, by its very nature, can sponse to the recent problem situations involving produce working capital for the dealer through government securities dealers, it is useful to seek the excess margin that can be produced during to identify some common characteristics associ- the term of certain RP transactions. In a number ated with various episodes—recognizing, of of the problem situations it appears that the course, that each situation has had its own dealers in question used working capital generatdistinct traits. Indeed, because of the unique ed by matched-book operations to engage in traits of each case, it is risky to attempt general- trading for their own account and in the process ization since each generalization will have its incurred losses or attempted to use such working exceptions. Yet, with this qualification firmly in capital to make up losses. mind, a close inspection of recent problem situations does suggest several areas of commonality. Improper Control Arrangements. In a number Among these areas are the following. of instances, customers of problem dealers incurred losses because the customers failed both Misleading Financial Statements. In a number to know their counterparty and to secure control of episodes, the firm in question has issued of the securities underlying the RP transaction apparently false or misleading financial state- with the problem dealer. The failure to know the ments, some of which were "audited" and some counterparty—its financial status and its manof which were not. More specifically, it would agement—or to secure control of the securities— appear that some individual cases entail allega- whether caused by carelessness or misrepresentions of outright fraud of a nature that can only tation or both—not only ultimately resulted in be described as outrageous. the loss to the customer but also had the effect of providing funds to the problem dealer, thereby Multiple Affiliated Companies. In several in- permitting the dealer to continue operations in a stances, problems in one company were masked way that may have disguised its true financial by relationships, and at times complex transac- condition. tions, with affiliated companies. Indeed, in some instances it would appear that some investors The Drive for Earnings. In looking at the list of may not have fully understood which entity was harmed customers of problem dealers it is easy the counterparty to transactions. to conclude that some, if not many, incurred losses because they were naive about the nature The Use of Working Capital Generated by of the transactions. In a proximate sense, the Matched-Book Operations. In the jargon of the conclusion may be warranted. But, in a more trade, a matched book is the holding by a dealer fundamental sense, some of these customers of an equal and offsetting—or "matched"— may have been easy targets because they—out of amount of reverse repurchase agreements and pressures to generate interest income—were all repurchase agreements (RPs). Matched-book op- too willing to be seduced by the prospect of a erations are central to the workings of the market "special deal." Unfortunately, for a struggling because they provide a convenient vehicle for thrift institution or a cash-pressed municipality, dealers to serve as efficient intermediaries be- these temptations can be great, especially when tween those seeking to invest in government the transaction in question involves a "risk free" securities and those seeking to use holdings of Treasury security. The point, of course, is that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 527 the security may be risk-free while the transac- its RP transactions that would include approprition can be quite risky. ate provision for securing control of collateral. It As mentioned earlier, these factors are not may be particularly appropriate for smaller insticommon to all problem situations that we have tutions to insist that such an agreement provide seen in the government securities market nor do that collateral be held by a third party or by the they exhaust the possible list of causes or proba- institution itself. ble causes of the difficulties that have occurred. Given appropriate attention to margin and to For example, they do not include the accrued securing control of collateral, transactions in interest problem that was a key factor in one government securities—no matter what their case, nor do they include any possible connec- specific nature—are low-risk and safe and sound. tions among individuals associated with one or But, like any transaction, they require adequate more of the problem dealers, nor the possible controls and they presume that the institution in role that "money brokers" may have played in question is knowledgeable about the manageone or more cases. What they do suggest, how- ment and the financial condition of each of its ever, is that the problems we have seen are counterparties to such transactions. The case for multifaceted and entail factors ranging from in- that essential discipline is no less compelling vestor attitudes and motivations on the one hand because the instrument in question happens to be to gross misrepresentation and alleged wholesale a U.S. government security. fraud on the other, none of which is necessarily Aside from these specific issues, the recent easy to eliminate by regulation. problems in the government securities markets In considering the harm that was inflicted on have forcefully raised the question of whether depository institutions by the failure of the gov- the market should be subject to some formal ernment securities dealers, two sets of circum- regulatory apparatus backed up by explicit statustances stand out. First, there have been a few tory authority. As the subcommittee knows, the instances in which depository institutions pro- Federal Reserve, the Treasury, and the SEC are vided clearly excessive margins to dealers and in working diligently to arrive at a position on the process became large, unsecured creditors. whether legislation is needed and, if so, what While the circumstances surrounding these par- form such legislation should take. The interagenticular cases appear to be extraordinary, a case cy position is expected to be communicated to can be made that margin that is associated with the Congress no later than mid-June. Those RP-type transactions—indeed all forms of unse- interagency deliberations are, in the first incured credit exposure arising from RP-type stance, aimed at further fact-finding and, in the transactions—should be made subject to lending second, at a review of various alternative aplimits. proaches to regulation of the government securi- The second, and more generalized, phenome- ties market. A key date in that process will be non that stands out has been the failure of May 20, the deadline for the submission of depository institutions to secure control of the responses to the SEC's request for public comcollateral associated with RP-type transactions. ment on the oversight of the government securi- Remedies to this problem do not come easily ties market. because market practices vary appreciably, de- In tandem with the interagency review, we at pending on the specific parties to a particular the Federal Reserve Bank of New York are transaction and on the type of transaction itself. moving ahead on several fronts including the Reflecting these considerations, as well as the following: (1) the implementation of the system presumption of prudence on the part of deposi- of voluntary capital guidelines that are aimed tory institutions, the federal bank regulatory largely at the "unregulated" secondary dealer agencies have relied on guidelines rather than on community; (2) an expanded public education formal regulations insofar as these types of trans- program targeted at certain classes of investors actions are concerned. In general, that approach in RP-type transactions; (3) stepped-up bank still seems apt to me although a case can be made supervisory efforts regarding the involvement in that all federally insured depository institutions RP-type transactions by depository institutions; should have a written agreement governing all of and (4) the expansion of the scope and intensity Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

528 Federal Reserve Bulletin • July 1985 of our on-site inspection program for primary market should be regulated, and if so the approdealers. priate form of such regulation, are exceedingly In closing, allow me to stress four points. complex. Finally, if it appears that regulation is First, I share the deep concerns expressed in the required, we are challenged to do it in a way that Congress and elsewhere about the recent prob- introduces minimal inefficiencies and costs into a lems in the government securities markets. Sec- market that is so vital to our overall financial and ond, despite these problems, the market as a economic well-being. We look forward to workwhole continues to function effectively in fair ing closely with the Congress in seeking soluweather or foul. Third, the issues involved in the tions to these difficult issues. • question of whether the government securities Statement by William Taylor, Director, Division tions. Excerpts from Federal Reserve documents of Banking Supervision and Regulation, Board and manuals containing the System's detailed of Governors of the Federal Reserve System, guidelines for evaluating the activities of interest before the Subcommittee on Commerce, Con- to the committee have been provided to your sumer, and Monetary Affairs of the Committee committee's staff; and, for your convenience, the on Government Operations, U.S. House of Rep- most relevant portions of this information have resentatives, May 15, 1985. also been attached to my statement.1 Other information requested in your letter to Chairman I appreciate the opportunity to appear before this Volcker dated April 29, 1985, has also been committee to discuss the Federal Reserve's su- forwarded to your staff, or is contained in the pervisory oversight of certain transactions be- appendixes to this statement. tween banks and government securities dealers At the outset, it may be helpful to clarify the that involve the transfer of, or a security interest Federal Reserve's supervisory responsibilities in, U.S. government securities. Commercial and activities with respect to commercial bankbanking organizations are active participants in ing organizations. The Federal Reserve has priour government securities market—both as in- mary responsibility at the federal level for supervestors and as traders and dealers. Therefore, vising and for examining state-chartered banks the integrity, the efficiency, and the smooth that are members of the Federal Reserve System functioning of the government securities market and for examining all bank holding companies. are important factors bearing on the safety and The System is charged by the Congress to ensure the stability of our banking and financial system. that these institutions are operated in a safe and The fact that the full faith and credit of the U.S. sound manner and to determine their compliance government stands behind each Treasury securi- with U.S. banking laws and regulations. The ty means, of course, that direct investments in Federal Reserve, together with the other banking such securities are free of credit risk. However, agencies, discharges its safety and soundness recent events underscore the fact that loans and and compliance responsibilities largely through other transactions collateralized by or based the conduct of on-site supervisory examinations. upon government securities can entail risks, es- While national banks are by law members of the pecially if the parties involved do not follow Federal Reserve System, these institutions are prudent practices in evaluating the financial con- examined by the Office of the Comptroller of the dition of the counterparty, in avoiding undue Currency. In carrying out its oversight responsiconcentration of exposure, in monitoring collat- bilities for bank holding companies and their eral values, and, most importantly, in requiring subsidiary banks, the Federal Reserve, as directtight control over underlying collateral. ed by the Congress in the Bank Holding Company Act, relies upon examinations of national My remarks will address prudent banking practices regarding transactions collateralized by securities, as well as the Federal Reserve's 1. The attachments to this statement are available on guidelines and procedures for examining and request from Publications Services, Board of Governors of supervising bank involvement in such transac- the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 529 banks conducted by the Office of the Comptrol- U.S. government or federal agency securities, ler of the Currency and examinations of state are purchased by a bank under an agreement to nonmember banks conducted by the Federal resell (an asset) or sold by a bank under an Deposit Insurance Corporation. For these rea- agreement to repurchase (a liability). The pursons, my remarks will address the bank supervi- chase of securities under agreement to resell is sory activities of the Federal Reserve and the equivalent, for supervisory purposes, to a shortinvolvement of state member banks in repur- term loan or an investment secured by the underchase transactions and in related securities activ- lying collateral. Banks engage in such money ities. market transactions in the process of managing The on-site examination of a banking organiza- their own investment portfolios or in connection tion conducted by the Federal Reserve generally with their dealer activities. Often, the counterinvolves the following: (1) an appraisal of the party to this type of transaction is a security soundness of the institution's loans and invest- dealer who is seeking funds to finance his securiments; (2) an evaluation of internal operations, ties portfolio. The sale of securities under agreepolicies, and management; (3) an analysis of key ment to repurchase, on the other hand, constifinancial factors such as capital, earnings, and tutes, for supervisory purposes, a form of shortliquidity; (4) a review for compliance with bank- term secured borrowing that can be used as an ing laws and regulations; (5) an evaluation of the alternate source of funds to finance the bank's oversight provided by the bank's board of direc- securities holdings or other money market intors; and (6) an overall determination of the vestments. Normally, in a repurchase transacinstitution's solvency. As this brief summary tion, the party receiving funds sells (that is, suggests, examiners endeavor to evaluate both provides as collateral) securities with a market the financial condition of the banking organiza- value that marginally exceeds the amount of cash tion at the time of the examination, as well as the received. This transaction provides a measure of organization's internal systems for monitoring protection against price variation for the lender and controlling, on an ongoing basis, the type of funds. Control of the securities underlying and the level of risk to which it may become repurchase transactions is, therefore, critical to exposed in the course of its operations. Conse- protect the party that has supplied cash in the quently, examination procedures are designed to event that the counterparty is not able to repay encourage banking organizations to recognize all the cash under the terms of the repurchase forms of potential risk and to establish effective agreement. credit review and approval procedures. Prudent There are potential risks to banking organizabanking practice also requires the adoption of tions on "both sides" of a repurchase transacpolicies that preclude undue concentrations of tion. The purchase of securities under agreement exposure to any one or related borrowers, the to resell in many respects entails risks analogous establishment of procedures to monitor the value to those risks associated with any loan or extenand assure the availability of collateral, and the sion of credit. Generally, in these transactions, implementation of reliable reporting systems and banks advance cash to the counterparty in return controls aimed at safeguarding assets and at for securities, subject to an agreement that the ensuring adherence to internal policies and pro- counterparty will repurchase the securities from cedures. Besides evaluating a bank's loan and the bank for cash at a specified date. In such investment portfolios and the policies and proce- transactions, the bank is subject to a number of dures for managing these portfolios, examiners potential risks. First, the bank faces credit risk in also review the operations of those banks that the event that the counterparty's financial condiare dealing in securities or that are engaged in tion deteriorates and the counterparty is unable securities-clearing activities. to repurchase the securities. If this development Much attention has been drawn in recent should occur, the bank must look to the underlyweeks to the involvement of depository institu- ing collateral to protect its position. A second tions in repurchase transactions and reverse re- risk, therefore, relates to the market value of the purchase transactions. In these transactions, underlying security. If the market value declines money market instruments or securities, usually significantly, the bank could be exposed to loss Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin • July 1985 in an amount approximately equal to the differ- reporting and control mechanisms have been ence between the book value of the repurchase established to assure compliance with the politransaction and the value of the collateral. A final cies, and that an adequate degree of supervision risk derives from the possibility that the bank has is provided by senior management and by the not obtained control over the underlying securi- board of directors. ties. If a party has not taken physical possession While an on-site examination is not an audit of the underlying collateral or has not taken steps and examiners cannot and do not review every to ensure that the securities purchased are deliv- bank transaction, Federal Reserve examination ered to a third-party agent for the lender, it may procedures do provide audit guidelines for test find that its entire investment is exposed to loss if checking, under appropriate circumstances, a control of the collateral cannot be reestablished bank's securities safekeeping practices. For exbecause of fraud or mismanagement of the coun- ample, if internal operating policies and proceterparty. dures are found to be inadequate, examiners may Prudent banking practices and the Federal verify physical possession of securities or, if Reserve's examination procedures address each securities are not held by the bank, compare the of the potential risks outlined above. In review- bank's records to safekeeping receipts provided ing the bank's investment portfolio as well as its by the independent, third-party trustee. In generdealer activities, the Federal Reserve urges al, however, the main emphasis is on determinbanks to develop written policies that require ing the adequacy of a bank's internal policies and adequate credit review of counterparties in re- procedures for administering its collateral posipurchase transactions; that encourage risk diver- tion and its adherence to these policies and sification by establishing limits on certain types procedures. of transactions and exposures to individual or Besides investing funds through the purchase related counterparties; and that encourage the of securities under agreement to resell, banks proper monitoring and control of the underlying may also, as I have noted previously, raise funds collateral. Banks are expected to perform full by engaging in the sale of securities under agreeand complete financial analyses of counterpar- ment to repurchase. Through this type of transties, and Federal Reserve examination guidelines action, banks can obtain the use of relatively state that funds generally should not be advanced low-cost, short-term funds to finance their holduntil specified types of collateral are delivered ings of securities or other money market instruinto the bank's custody or to an independent ments. In return for the funds received, banks safekeeping agent. In considering the adequacy provide collateral, generally in the form of secuof collateral arrangements, some flexibility must rities, to the counterparty who in this instance is, be maintained that takes into account the in effect, the lender of funds to the bank. strength and creditworthiness of the counter- Despite the fact that this transaction is the party, the type of instrument involved in the functional equivalent, for supervisory purposes, transaction, and the terms of the transaction. of a short-term borrowing, a bank may neverthe- Generally, as a matter of sound practice, confir- less be exposed to some credit risk. The seller of mation of the transfer of the securities to an the securities (that is, the borrower of cash) independent safekeeping agent should be re- normally provides, for collateral purposes, secuceived from the agent or the clearing bank, rather rities with a market value that exceeds the than from the counterparty to the transaction. amount of cash received. This margin provides Moreover, counterparties should be required to protection to the party that is advancing cash. maintain sufficient collateral over the life of the Banks or other institutions that sell securities transaction, and agreements with counterparties under agreement to repurchase could, therefore, should permit the bank to make margin calls and be exposed to the risk of loss to the extent that to improve its collateral position if the market the value of the underlying securities that they value of collateral begins to erode. Federal Re- have provided to the seller exceeds the amount serve examiners attempt to determine that banks of their repurchase obligation and the seller is have appropriate policies and procedures in unable to return the securities as agreed. The place to address these concerns, that internal excess margin in this instance is equivalent in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 531 terms of risk to an unsecured loan by the party ee would constitute a minimum step toward putting up the collateral (that is, the borrower of adequately securing the lender's position. cash) to the party providing the funds (that is, the Besides investment and dealer activities inparty taking possession of the collateral). In light volving government securities, some banks enof these concerns, the Federal Reserve sent a gage in government securities clearance activiletter to all state member banks in 1982, that, ties. These activities involve some of the same among other things, underscored the potential risks outlined above and, therefore, are reviewed risks associated with the sale of securities under by Federal Reserve examiners during on-site agreement to repurchase and urged banks to examinations. Examiners evaluate the bank's analyze carefully the financial condition of those policies and procedures for administering this institutions and brokers with whom they engage activity and test check the systems and controls in repurchase transactions. to ensure compliance with the policies and pro- Besides credit risks, repurchase transactions, cedures. In general, banks are expected to have because they constitute short-term investments written policies that require reconciliation of the or sources of funds, also entail potential liquid- bank's securities position with the Federal Reity and funding risks. For this reason, Federal serve Bank and the close scrutiny by senior Reserve examiners encourage banks to evaluate officials of the failure of any party to deliver the interest rate exposure at various maturity securities to the bank as planned. Since clearlevels resulting from the use of short-term funds, ance activities involve the lending against securito formulate funding policies that take into ac- ties as collateral, clearing banks are also expectcount the institutions' entire asset-liability mix, ed to screen new accounts for the purpose of and to control the excessive mismatches or credit evaluation and to assure the receipt and "gaps" between the maturities of assets and the review on an ongoing basis of current finanliabilities. cial statements. Prudent banking practice re- Within recent weeks, the Federal Reserve, quires that lending limits be established for each together with the other federal depository institu- customer and that a daily review of collateral be tion regulatory agencies and under the auspices conducted to assure the maintenance of proper of the Examination Council, adopted a formal margins and the acquisition of additional margin, supervisory policy pertaining to the lending of if necessary, to protect the bank in the event of a securities. While this policy was principally di- customer default. rected to the lending of securities from the finan- Based upon the information that is available to cial institution's own account or the lending by us at present, only four state member banks had financial institutions of their customers' securi- open positions with the recently failed governties held in custody, such lending is to some ment securities dealers referred to in your letter extent analogous to repurchase transactions, and of April 29, 1985. Two of these institutions had the policy reiterates prudential concerns and sufficient collateral to cover their exposure, and, guidelines that are also applicable in some re- therefore, did not experience any losses as a spects to repurchase agreements. These guide- result of these transactions. The two other instilines will be used in the examination of all banks tutions experienced some losses—in one case and holding companies that are engaged in secu- amounting to less than one-tenth of 1 percent of rities lending. In general, the guidelines require capital; in the other case amounting to less than 5 formal credit analyses and approvals of prospec- percent of capital. tive borrowers; full collateralization and daily While Federal Reserve enforcement actions mark-to-market collateral valuation procedures; often address weaknesses in, or the absence of, establishment of credit concentration limits; adequate loan or investment policies, none of the proper recordkeeping procedures; and appropri- formal enforcement actions that have been unate collateral management practices. The guide- dertaken by the Federal Reserve since 1980 have lines state that securities should not be loaned been based upon an institution's U.S. governunless collateral has been received simultaneous- ment securities dealer activities; although one ly with the loan and that delivery of collateral to action was directed toward municipal securities the lender or to an independent third-party trust- dealer activities. Three supervisory actions tak- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin • July 1985 en since 1980 addressed directly or indirectly the positions, as well as the importance of effective securities clearance activities of institutions su- internal and external audits designed to detect pervised by the Federal Reserve. In general, operational deficiencies, weak controls, and dethese actions have addressed systems and con- partures from sound banking practices. trols for recordkeeping and internal accounting, Ultimately, no system of supervision can prethe development of expanded internal audit pro- vent fraud or deceptive practices on the part of grams, the preparation of internal operating and market participants, nor can the supervisory procedures manuals, violations of certain bank- process, by its very nature, fully prevent unwise ing laws and regulations, and capital adequacy. management decisions or conscious decisions to While I believe that our examination and su- assume excessive risks. Nonetheless, the events pervisory procedures are generally satisfactory, of the past several months serve to emphasize it is, of course, impossible to guarantee that the importance of sound operational controls and financial institutions will not experience losses as policies designed to monitor and control risktaka result of their participation in repurchase trans- ing by financial institutions. In light of these actions or securities lending and trading activi- events, the Federal Reserve intends to review its ties. Examinations are only conducted periodi- supervisory policies and procedures with respect cally, and examiners cannot evaluate each to repurchase transactions and dealer and clearindividual securities transaction. Consequently, ing activities. We believe that it is the responsithis underscores the importance to financial in- bility of both the supervisors and the managers of stitutions of having in place effective internal financial institutions to ensure that proper syspolicies and operating controls for monitoring tems are in place to control exposure and to and controlling risk and protecting collateral minimize the risk of loss. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

533 Announcements CHANGE IN THE DISCOUNT RATE The council's function is to advise the Board on the exercise of the Board's responsibilities The Federal Reserve Board approved a reduc- under the Consumer Credit Protection Act and tion in the discount rate from 8 percent to IVi on other matters on which the Board seeks its percent, effective May 20, 1985. The discount advice. rate is the interest rate that is charged depository institutions when they borrow from their District Federal Reserve Banks. POLICY ON LARGE-DOLLAR The action was taken against the background WIRE TRANSFER SYSTEMS of relatively unchanged output for some time in the industrial sector of the economy stemming The Federal Reserve Board has issued a stateheavily from rising imports and a strong dollar. ment of its policy to control and reduce the risks Price pressures, while clearly a continuing con- to depository institutions participating in largecern in some areas, appear to remain relatively dollar wire transfer systems. The policy will well contained in goods-producing sectors of the become effective March 27, 1986. economy, and sensitive commodity prices are The policy calls on private networks and degenerally at the lowest levels in about two years. pository institutions to reduce their own credit Growth of the monetary aggregates has slowed risks. It also depends, in part, on the role of the appreciably, although Ml has remained some- Federal Reserve and other financial institution what above the path implied by the annual target. regulators in examining, monitoring, and coun- In this setting, a reduction in the discount rate seling institutions. consistent with the declining trend in market Large-dollar networks are an integral part of interest rates over recent weeks appears appro- the payment and clearing mechanism. Current priate. data indicate that total daylight overdrafts aver- In making the change, the Board voted on age $110 billion to $120 billion per day. A dayrequests submitted by the Federal Reserve light overdraft occurs when an institution has Banks of Boston, New York, Richmond, Atlan- sent funds over Fedwire (the Federal Reserve ta, Chicago, Minneapolis, Kansas City, and Dal- wire transfer system) in excess of the balance in las. its reserve or clearing account, or it has sent (Subsequently the Board approved similar ac- more funds over a private wire network than it tions by the directors of the Federal Reserve has received. Banks of Cleveland, St. Louis, and San Francis- Because a failure of a participant to settle its co, effective May 21, and of Philadelphia, effec- net position on a private large-dollar network tive May 24.) could cause substantial disruption in financial markets, one of the Board's major objectives in establishing its policy is to reduce the possibility of a settlement failure. This objective would be MEETING OF CONSUMER ADVISORY accomplished primarily through a reduction in the volume of overdrafts and through encourag- COUNCIL ing institutions to exercise better control over The Federal Reserve Board announced that its exposures that remain. Consumer Advisory Council met on June 20 and In establishing its policy, the Board made it 21 in sessions open to the public. clear that it is not condoning the use of this Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Federal Reserve Bulletin • July 1985 practice by depository institutions. While some comments on automated clearinghouse issues degree of intra-day credit may be necessary to and net settlement issues was later extended to keep the payment mechanism operating smooth- September 30.] ly, the Board expects to see, over time, a reduc- The Board also requested comment by June tion in both the total volume of daylight over- 17, 1985, on a proposed data collection for ex drafts and the number of institutions with a post monitoring of automated clearinghouse pattern of substantial reliance on such credit. transactions. After reviewing the initial impact of the new policy, the Board may adopt additional guidelines to reduce further the volume and incidence of daylight overdrafts and other use of intra-day POLICY ON SECURITIES LENDING credit. The Board encourages each depository institu- The Federal Reserve Board has announced the tion that incurs daylight overdrafts on Fedwire or adoption of a supervisory policy on securities participates in private large-dollar wire networks lending. The Federal Financial Institutions Exvoluntarily to adopt by December 31, 1985, a amination Council had recommended that each cross-system sender net debit cap (a sender net of the federal financial regulatory agencies adopt debit cap that applies across all wire transfer the policy statement. systems) following the guidelines that the Board The policy statement is intended to provide has established.1 prudential standards of safety and soundness for The Board's policy also states that no large- financial institutions that may engage in securidollar payment network will be eligible for Fed- ties lending activities. The statement covers the eral Reserve net settlement services unless it securities lending of a bank or trust company for satisfies the following conditions: (1) requires its own account, as well as the lending of customeach participant to establish a maximum net ers' securities held in custody or trust accounts. amount it is willing to receive from any sender Matters addressed include the need for full colla- (bilateral net credit limit); (2) establishes a maxi- teralization and daily mark-to-market procemum ceiling on the amount of intra-day credit a dures, formal approvals and credit analyses in sender may incur (sender net debit cap) that is selecting borrowers, written agreements with reasonably designed to reduce the risks to partic- borrowers and lending customers, and adoption ipants in that network; (3) develops and imple- of written internal safeguards and review procements a system that will reject or hold any dures. Guidelines for recordkeeping and regulapayment that would exceed either bilateral net tory reporting are also provided. credit limits or the network's sender net debit cap; and (4) agrees to provide transaction data to its Reserve Bank on request. In addition to its policy action, the Board also PROPOSED ACTIONS requested comment by August 15, 1985, regarding the following: (1) the treatment of Fedwire The Federal Reserve Board has issued for public overdrafts resulting from transfer of book-entry comment proposed amendments to its Regulasecurities; (2) automated clearinghouse issues; tion Z (Truth in Lending) to require lenders to and (3) net settlement issues. [The deadline for provide more information about adjustable-rate mortgages (ARMs). Comment is requested by July 12, 1985. 1. The cross-system cap selected should have two compo- The Board has also requested public comment nents: a ceiling on the net debit position that an institution on an application by Citicorp to engage through a could incur on any single day, and a limit that the institution could incur on average over a two-week period. For example, wholly owned subsidiary in underwriting and if an institution rated itself as "average" under the Board's dealing in, to a limited extent, municipal revenue guidelines, it would not allow its net debit position to exceed bonds (including certain industrial development 1.5 times its capital on any single day or 1.0 times its capital on average over a two-week period. bonds), mortgage-related securities, and con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 535 sumer-receivable-related securities. The Board California requested comment by July 22, 1985. Concord Concord Commercial Bank Florida Miami Lakes Enterprise Bank of Florida SYSTEM MEMBERSHIP: Georgia ADMISSION OF STATE BANKS Atlanta Metro Savings Bank Virginia The following banks were admitted to member- Abdington Highland Union Bank ship in the Federal Reserve System during the period May 1 through May 31, 1985: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MARCH 26, 1985 than previously had been estimated. The recent sluggishness in production apparently reflected 1. Domestic Policy Directive the continuing substitution of imports for domestically produced goods and ongoing corrections The information reviewed at this meeting sug- of inventory imbalances in some industries. gested that real GNP, which had grown at an The U.S. merchandise trade deficit increased annual rate of about AVA percent in the fourth sharply in January, as non-oil imports rose by 16 quarter, was expanding at a slower pace in the percent from the reduced fourth-quarter rate. current quarter. Growth in domestic spending The trade balance had deteriorated markedly last appeared to be relatively strong in early 1985, but year and was the principal contributor to a an increased share of the demand for goods current account deficit in the balance of payapparently was being met by imports rather than ments of $102 billion in 1984, as compared with domestic production. Broad measures of prices $42 billion in the previous year. and wages generally were continuing to rise at Total private housing starts declined in Februrates close to those recorded in 1984. ary after a sharp rise in January. Nevertheless, Total retail sales rose considerably over the the average for the two months, at an annual rate first two months of 1985; outlays in February of nearly PA million units, was somewhat higher were more than 2 percent above the average in than the rate in the fourth quarter. Issuance of the fourth quarter. Sales of new domestic auto- residential building permits during the Januarymobiles were at an annual rate of 8V2 million February period was also above the fourth-quarunits in January and February, about 1 million ter pace. Sales of new homes picked up slightly units higher than the average in the fourth quar- in January, according to preliminary data, but ter of 1984. Auto sales during the first 20 days of sales of existing homes edged down in February March remained strong, at a rate a little below after posting four consecutive monthly gains. the January-February pace. Information on business capital spending sug- Nonfarm payroll employment rose 120,000 in gested less rapid expansion in early 1985. Ship- February after average increases of about ments by domestic producers of nondefense cap- 300,000 in the preceding four months. Retail ital goods dropped sharply in January and trade and service establishments reported further recovered only a little in February; imports of strong job gains in February, but employment in business equipment, however, were especially the manufacturing sector fell 75,000. The average strong in January. Spending on nonresidential length of the workweek in manufacturing also construction continued at a relatively brisk pace declined, partly because of adverse weather dur- in both months. New orders for nondefense ing the survey week. The civilian unemployment capital goods fluctuated widely in January and rate was 7.3 percent, little changed from its level February, but on balance were little changed at year-end, and within the range of 7.2 to 7.5 from the average level in the second half of 1984. percent that has generally prevailed since mid- With respect to broader indicators of future 1984. business spending plans, recent surveys of anticipated plant and equipment expenditures pointed Industrial production declined 0.5 percent in to continued, though moderating, gains in 1985. February, and data for the three preceding months were revised to show smaller increases Overall investment in business inventories has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

537 remained moderate thus far in 1985 though re- restraint on reserve positions would be acceptcent inventory developments have varied consid- able in the event of substantially slower growth erably across industries. In the manufacturing in the monetary aggregates. Such adjustments in sector stocks fell in January for the third month the degree of pressure on reserves would be in a row, largely in response to earlier weakness considered in the context of developments in the in orders and sales. On the other hand, retail U.S. economy and conditions in foreign extrade inventories rose substantially, primarily change markets. The intermeeting range for the reflecting increased stocks at automobile dealers federal funds rate was set at 6 to 10 percent. to alleviate short supplies of some popular mod- Growth in Ml accelerated to an annual rate of els. about 14 percent in February from 9 percent in The producer price index for finished goods, January, but partial data available for March which was unchanged in January, edged down indicated a considerable slowing. Growth in M2 0.1 percent in February. Petroleum prices fell and M3 moderated somewhat in February and sharply in both months, and food prices also averaged about 12 percent and 9 percent respecdeclined as reductions for meats and most live- tively over the January-February period. As stock offset weather-related increases for fresh with Ml, growth in the broader aggregates apfruits and vegetables. The consumer price index peared to be slowing considerably in March. rose 0.3 percent in February, about the same as Expansion in total domestic nonfinancial debt its monthly average over the past year; substan- remained relatively rapid over the first two tial declines in prices of energy-related items months of the year, though somewhat below the tempered the increases in prices of food and pace of previous months. other commodities. Over the first two months of The average level of adjustment plus seasonal the year, the average hourly earnings index was borrowing by depository institutions at the disrising at a rate close to that recorded in 1984. count window rose somewhat over the inter- Since the Committee's meeting in mid-Febru- meeting interval, averaging around $600 million ary, the trade-weighted value of the dollar in in the two complete maintenance periods after foreign exchange markets had fluctuated widely the February meeting and $428 million in the first under often volatile market conditions. During half of the current statement period. The higher the early part of the intermeeting period, the level of borrowing for the most part reflected dollar rose by about 5 percent. At that time, unexpectedly large demands for excess reserves, especially during the last few days of February but for a time was also influenced to an extent by and the beginning of March, monetary authori- more cautious provision of reserves through ties sold dollars on a large scale. More recently, open market operations, given the strength of the the dollar dropped sharply on exchange markets, monetary aggregates, especially Ml. more than offsetting the earlier rise. The reversal Federal funds traded mainly between 83/s and was attributed in part to indications of slower 83/ percent during the intermeeting interval, av- 4 growth in U.S. economic activity than many in eraging a little above 8V2 percent, about the same the market had anticipated and to concerns as in the first half of February. Other short-term abroad about the implications of problems with rates rose about lA to Vi percentage point while non-federally insured thrift institutions in Ohio. long-term yields generally increased by V2 per- At its meeting on February 12-13, 1985, the centage point or more. Several measures of Committee had adopted a directive that called interest rates on new commitments for home for maintaining the degree of reserve pressures mortgage loans also showed increases of about Vi that had characterized the weeks preceding the percentage point from their levels in mid-Februmeeting. The members agreed that modest in- ary. creases in reserve restraint would be sought if The staff projections presented at this meeting growth in Ml appeared to be exceeding an annu- continued to suggest that real GNP would grow al rate of about 8 percent and growth in M2 and at a moderate pace in 1985. Business fixed in- M3 was running above 10 to 11 percent during vestment, though slowing from the exceptionally the period from December to March. Lesser rapid rates of increase in the past two years, was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Federal Reserve Bulletin • July 1985 likely to expand further in 1985. Consumer trade deficit appeared to be damping incentives spending was expected to remain relatively brisk to invest domestically in a wide range of manuduring the year, supported by gains in real dis- facturing industries. More generally, the point posable income and in employment. Growth of was made that, to a considerable extent, foreign real output, however, was expected to fall short trade developments were tending to offset the of the rise in aggregate demand. The unemploy- stimulus provided by an expansive fiscal policy ment rate was projected to edge down over the and the still considerable upward momentum of period and the rate of increase in prices was private final demands. expected to remain close to, or slightly below, The prospective performance of business fixed that experienced in 1984. investment was cited as a key element in the During the Committee's review of current eco- outlook for economic activity. While the memnomic and financial conditions and the outlook bers generally anticipated further expansion in for economic activity, most of the members investment spending, developments over the agreed that continuing expansion at a moderate course of recent months together with the results pace remained a reasonable expectation for 1985. of surveys of business intentions suggested a However, considerable concern was expressed pronounced deceleration from the unusually rapabout the sensitive conditions in domestic finan- id growth experienced during the first two years cial and foreign exchange markets, especially of the current expansion. Moreover, the demand against the background of the distortions and for domestically produced business equipment uncertainties stemming from massive and per- was being inhibited to an unusual extent by the sisting deficits in the federal budget and the level of the dollar internationally and the competrecord and still widening gap in the nation's itiveness of foreign substitutes. In addition, the balance of trade. The members referred to the exceptional demand for technically advanced, quite different trends in various sectors of the computer-related, equipment might not be suseconomy; in general, the service industries were tained at the earlier rate of increase, according to doing well while industries related to agriculture, reports from various contacts around the counmining, energy, and a number of manufacturing try. Commercial construction, including office activities were experiencing a variety of prob- structures, was still showing considerable lems and were subject to varying degrees of strength, but some members questioned the susfinancial strain. With a number of lending institu- tainability of such investment over time in the tions, especially those associated with relatively face of relatively high vacancy rates and other depressed industries and with housing finance, factors. While lower interest rates since last also experiencing financial pressures, the overall summer were a supporting factor in housing, economy was vulnerable to adverse develop- reference was also made to the possible vulneraments. In this difficult set of circumstances sev- bility of multifamily housing construction, given eral members commented that the risks of any the apparent overbuilding in some parts of the deviation in the economy from their current country. Construction of single-family housing expectations were in the direction of slower appeared to be rising, but this sector was not growth; a few members referred to the possibility thought likely to be the source of substantial of little or no expansion later in the year. further economic stimulus in the view of at least A good deal of concern was expressed during some members. One member expressed a relathe meeting about the adverse effects on domes- tively pessimistic view about the outlook for tic economic activity stemming particularly from housing, partly because many mortgage lenders the rising tide of imports but also from difficulties and private insurers were imposing stricter credit in export markets. With a large amount of do- standards after experiencing losses, and incenmestic demand continuing to be met through tives for investment in housing clearly had imports rather than domestic production, adjust- dimmed in many parts of the country. ments were beginning to be made in production A number of members observed that consumer and distribution facilities that would not easily be expenditures would probably remain a source of reversed later. It was also noted that the growing strength in the economic expansion, although Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 539 some commented that consumer sentiment— Ml and M2 appeared to be decelerating appreciawhile still favorable—may have been negatively bly in March and a staff analysis suggested that affected by the news about the problems of some current reserve conditions might be associated financial institutions. Members also took note of with considerably slower growth in the second the rapid growth of consumer debt and its poten- quarter than over the first three months of the tially adverse implications for future retail sales. year, a number of members expressed concern It was observed that automobile sales had re- that such growth might remain more rapid than mained strong, but the prospects for added eco- was desirable. A rate of growth in coming nomic thrust from this sector appeared limited, months higher than seemed reasonably consistin part because any further expansion in the ent with the growth targets for the year might demand for automobiles might well be met large- raise questions about the Committee's commitly through imports. ment to an anti-inflationary policy, with adverse With regard to the outlook for inflation, it was effects on inflationary expectations and possibly noted that prices of services were still tending to also on financial markets. Conversely, if monerise with some momentum, while prices of most tary growth over the next few months were held goods were basically flat. Given the members' within the Committee's ranges for the year, it expectations for economic activity and assuming was observed that the Committee would have no major changes in the value of the dollar or more flexibility later in fostering monetary developments abroad, the members saw little growth consistent with continuing economic exbasis for expecting significant deviations from pansion and progress toward containing inflarecent price trends. tion. In any event, the members generally felt At its meeting in February the Committee had that under prevailing circumstances monetary agreed on policy objectives that called for mone- growth might appropriately remain relatively tary growth ranges for the period from the fourth high within the ranges for the year, a prospect quarter of 1984 to the fourth quarter of 1985 of 4 that the Committee also had contemplated at the to 7 percent for Ml, 6 to 9 percent for M2, and 6 previous meeting. to 9Vi percent for M3. The associated range for The members gave considerable attention to total domestic nonfinancial debt was set at 9 to the question of possible intermeeting adjust- 12 percent for 1985. In keeping with the Commit- ments in the degree of reserve restraint. In tee's usual procedures under the Humphrey- keeping with past practice, the members agreed Hawkins Act, these ranges would be reviewed at that such adjustments should not be made autothe July meeting or sooner if warranted by unan- matically in response to the behavior of the ticipated economic and financial developments. monetary aggregates alone, but needed to take In the Committee's discussion of policy imple- account of emerging evidence on the business mentation for the intermeeting period, the mem- situation, domestic credit conditions, and the bers did not differ greatly in their views regarding foreign exchange value of the dollar. Nonethethe appropriate operational approach, and all less, there was some difference of views among indicated that they could support an approach the members with regard to their willingness to directed, at least initially, toward maintaining tolerate relatively rapid growth in the monetary about the current degree of restraint on reserve aggregates, should it occur, over the period positions. The members recognized that current ahead. While no member contemplated the need uncertainties about the economic outlook and for a substantial move toward greater reserve the sensitive conditions in domestic credit and restraint, some commented that a small but timeforeign exchange markets weighed against a sig- ly move might well avert the necessity for a more nificant increase in the degree of reserve re- vigorous, and potentially more disruptive, adstraint. At the same time, several placed consid- justment later. On the other hand, a number of erable emphasis on the desirability of fostering members felt that the current economic uncerslower monetary expansion over the period tainties and related volatility that appeared to ahead to help assure growth within the Commit- pervade domestic credit and foreign exchange tee's target ranges for the year. While growth in markets would argue for more tolerance toward Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin • July 1985 growth in the aggregates, particularly to the hourly earnings appear to be continuing to rise at rates extent that such growth might signify an increase close to those recorded in 1984. Since the Committee's meeting in mid-February, the in demands for liquidity. foreign exchange value of the dollar has fluctuated At the conclusion of the Committee's discuswidely in often volatile market conditions. Most resion, a majority of the members favored and all cently, the trade-weighted value of the dollar against could accept a directive that called for no change major foreign currencies has dropped sharply, more in reserve conditions, though a few members than offsetting its rise earlier in the intermeeting interval. Monetary authorities sold dollars on a large scale indicated some preference for a directive that during the period, especially in late February and early specified a slight increase in the degree of re- March. The merchandise trade deficit increased sharpserve restraint. The members anticipated that the ly in January from relatively low December and approach to policy implementation adopted by fourth-quarter rates. The current account deficit for the Committee would be consistent with growth the full year 1984 was more than double that recorded in 1983. of Ml, M2, and M3 at annual rates of around 6,7, Growth in Ml accelerated in February, following and 8 percent respectively for the period from relatively rapid expansion in other recent months, but March to June. The members agreed that some- information available through mid-March indicates a what lesser restraint might be acceptable in the considerable slowing. Growth in the broader aggrecontext of substantially slower growth in the gates moderated in February and appears to be slowing further in March. In January and February expanmonetary aggregates, while somewhat greater sion in total domestic nonfinancial debt remained restraint might be acceptable if monetary growth relatively rapid, though somewhat below the pace of were substantially faster. In either event, the previous months. Most interest rates have risen someneed for greater or lesser restraint would also be what since the February meeting of the Committee. appraised against the background of develop- The Federal Open Market Committee seeks to fosments relating to the strength of the business ter monetary and financial conditions that will help to reduce inflation further, promote growth in output on a expansion, progress against inflation, and condisustainable basis, and contribute to an improved pattions in domestic credit and foreign exchange tern of international transactions. In furtherance of markets. It was agreed that the intermeeting these objectives the Committee agreed at its meeting range for the federal funds rate, which provides a in February to establish ranges for monetary growth of mechanism for initiating consultation of the 4 to 7 percent for Ml, 6 to 9 percent for M2, and 6 to 9V2 percent for M3 for the period from the fourth Committee when its boundaries are persistently quarter of 1984 to the fourth quarter of 1985. The exceeded, would be left unchanged at 6 to 10 associated range for total domestic nonfinancial debt percent. was set at 9 to 12 percent for the year 1985. The At the conclusion of the meeting, the following Committee agreed that growth in the monetary aggregates in the upper part of their ranges for 1985 may be domestic policy directive was issued to the Fedappropriate, depending on developments with respect eral Reserve Bank of New York: to velocity and provided that inflationary pressures remain subdued. The Committee understood that policy implementa- The information reviewed at this meeting suggests tion would require continuing appraisal of the relationthat real GNP is currently expanding at a slower pace ships not only among the various measures of money than in the fourth quarter, with an increased share of and credit but also between those aggregates and domestic spending apparently being met out of im- nominal GNP, including evaluation of conditions in ports. Total retail sales rose considerably for January domestic credit and foreign exchange markets. and February combined and housing starts, though In the implementation of policy for the immediate declining in February, were above their fourth-quarter future, taking account of the progress against inflation, pace. However, information on business capital uncertainties in the business outlook, and the exspending suggests less rapid expansion in early 1985. change value of the dollar, the Committee seeks to Business inventory investment continues at a moder- maintain the existing degree of pressure on reserve ate rate. Industrial production declined on balance in positions. This action is expected to be consistent with January and February and, with employment falling in growth in Ml, M2, and M3 at annual rates of around 6, the manufacturing sector, total nonfarm payroll em- 7, and 8 percent respectively during the period from ployment increased at a somewhat reduced pace. The March to June. Somewhat lesser reserve restraint civilian unemployment rate, at 7.3 percent in Febru- might be acceptable in the event of substantially ary, was little changed from its level at year-end. slower growth of the monetary aggregates while some- Broad measures of prices and the index of average what greater restraint might be acceptable in the event Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 541 of substantially higher growth. In either case such a the authorization for domestic open market operchange would be considered in the context of apprais- ations to raise from $4 billion to $6 billion the als of the strength of the business expansion, progress limit on intermeeting changes in System account against inflation, and conditions in domestic credit and holdings of U.S. government and federal agency foreign exchange markets. The Chairman may call for securities. The Manager noted that the Commit- Committee consultation if it appears to the Manager for Domestic Operations that pursuit of the monetary tee had found it necessary to authorize tempoobjectives and related reserve paths during the period rary increases in the limit with greater frequency, before the next meeting is likely to be associated with primarily because of the increased size of the net a federal funds rate persistently outside a range of 6 to variation, especially from seasonal influences, in 10 percent. market factors such as the Treasury balance that affect reserves. In 1984 such temporary increases Votes for this action: Messrs. Volcker, Corrigan, Balles, Black, Forrestal, Gramley, Keehn, Martin, had been authorized on six occasions, more than Partee, Rice, Ms. Seger, and Mr. Wallich. Votes in any other recent year. A permanent increase against this action: None. in the limit to $6 billion would reduce the number of occasions requiring special Committee action, 2. Review of Continuing Authorizations while still calling needs for particularly large changes to the Committee's attention. The Com- The Committee followed its customary practice mittee concurred in the Manager's view that of reviewing all of its continuing authorizations such an increase would be appropriate. and directives at this first regular meeting of the Accordingly, effective immediately, paragraph Federal Open Market Committee following the 1(a) of the authorization for domestic open marelection of new members from the Federal Re- ket operations was amended to read as follows: serve Banks to serve for the year beginning 1. The Federal Open Market Committee authorizes March 1, 1985. The Committee reaffirmed the and directs the Federal Reserve Bank of New York, to authorization for foreign currency operations, the extent necessary to carry out the most recent the foreign currency directive, and the procedur- domestic policy directive adopted at a meeting of the Committee: al instructions with respect to foreign currency (a) To buy or sell U.S. Government securities, operations in the forms in which they were including securities of the Federal Financing Bank, currently outstanding.1 and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency Votes for these actions: Messrs. Volcker, Corrigan, of the United States in the open market, from or to Balles, Black, Forrestal, Gramley, Keehn, Martin, securities dealers and foreign and international ac- Partee, Rice, Ms. Seger, and Mr. Wallich. Votes counts maintained at the Federal Reserve Bank of against these actions: None. New York, on a cash, regular, or deferred delivery basis, for the System Open Market Account at market prices, and, for such Account, to exchange maturing 3. Authorization for U.S. Government and Federal agency securities with the Treasury or the individual agencies or to allow Domestic Open Market Operations them to mature without replacement; provided that the aggregate amount of U.S. Government and Federal On the recommendation of the Manager for agency securities held in such Account (including Domestic Operations, System Open Market Ac- forward commitments) at the close of business on the count, the Committee amended paragraph 1(a) of day of a meeting of the Committee at which action is taken with respect to a domestic policy directive shall not be increased or decreased by more than $6.0 1. Prior to this meeting, on March 6, 1985, certain other billion during the period commencing with the opening routine authorizations of the Committee, including various of business on the day following such meeting and resolutions, rules, and procedures, and the agreement with ending with the close of business on the day of the next the U.S. Treasury to warehouse foreign currencies, were such meeting; distributed to the Committee members and Reserve Bank Presidents for their review. It was agreed that these authorizations would continue to stand as previously adopted and Votes for this action: Messrs. Volcker, Corrigan, would not be placed on the agenda for consideration at this Balles, Black, Forrestal, Gramley, Keehn, Martin, meeting unless any member so requested, and no such Partee, Rice, Ms. Seger, and Mr. Wallich. Votes requests were received. against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Federal Reserve Bulletin • July 1985 Subsequently, on April 15, 1985, the Manager billion for the intermeeting period ending May advised that projections indicated very large 21, 1985. needs for reserves during the current intermeeting period, mainly because of sharply increasing Votes for this action: Messrs. Volcker, Balles, Treasury balances in April. Accordingly, effec- Black, Forrestal, Gramley, Keehn, Martin, Ms. Seger and Mr. Timlen. Votes against this action: tive April 16, 1985, the Committee approved the None. (Absent and not voting: Messrs. Corrigan, recommendation of the Manager that the limit in Partee, Rice, and Wallich. Mr. Timlen voted as paragraph 1(a) be raised from $6 billion to $9 alternate for Mr. Corrigan.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

543 Legal Developments REVISION OF RULES REGARDING EQUAL Section 268.303—Right to Representation OPPORTUNITY Section 268.304—Presentation of the Complaint Section 268.305—Rejection or Cancellation of the The Board of Governors of the Federal Reserve Sys- Complaint tem has revised and expanded its Equal Opportunity Section 268.306—Investigation Regulation principally for the following purposes: Section 268.307—Adjustment of Complaint and Offer 1. To designate clear responsibility for equal opportu- of Hearing nity functions in light of changes in the Board's Section 268.308—Hearing on the Complaint organizational structure; Section 268.309—Relationship to Other Agency Ap- 2. to prohibit discrimination against handicapped per- pellate Procedure sons in programs and activities conducted by the Section 268.310—Avoidance of Delay Board; and Section 268.311—Decision on the Complaint 3. to provide for review by the Equal Employment Section 268.312—Complaint File Opportunity Commission ("EEOC") of Board deci- Section 268.313—Joint Processing and Consolidation sions on individual and class complaints of discrimina- of Complaints tion in employment. Section 268.314—Freedom from Reprisal or Interfer- Effective June 1, 1985, the Board revises 12 C.F.R ence Part 268, Rules Regarding Equal Opportunity as set Section 268.315—Remedial Actions forth below: Section 268.316—Right to File A Civil Action Section 268.317—Notice of Right Part 268—Rules Regarding Equal Opportunity Section 268.318—Effect on Administrative Procedure Index Subpart D—Class Complaints of Discrimination Part 268—Rules Regarding Equal Opportunity Section 268.401—Definitions Subpart A—General Provisions Section 268.402—Precomplaint Processing Section 268.403—Filing and Presentation of A Class Section 268.101—Authority, Purpose, and Scope Complaint Section 268.102—Board Program Section 268.404—Acceptance, Rejection or Cancella- Section 268.103—Definitions tion Section 268.405—Notification and Opting Out Subpart B—Administration Section 268.406—Avoidance of Delay Section 268.407—Freedom From Restraint, Interfer- Section 268.201—Equal Employment Designations ence, Correction, and Reprisal Section 268.202—The Administrative Governor Section 268.408—Obtaining Evidence Concerning the Section 268.203—The Staff Director For Management Complaint Section 268.204—The EEO Programs Officer Section 268.409—Opportunities For Resolution of the Section 268.205—Federal Women's Program Manager Complaint Section 268.206—Hispanic Program Coordinator Section 268.410—Hearing Section 268.207—Handicapped Program Coordinator Section 268.411—Report of Findings and Recommendations Subpart C—Complaints of Discrimination on Section 268.412—Board Decision Grounds of Race, Color, Religion, Sex, National Section 268.413—Notification to Class Members of Origin, Age, or Physical or Mental Handicap Decision Section 268.414—Corrective Action Section 268.301—Precomplaint Processing Section 268.415—Right to File A Civil Action for Section 268.302—Filing of Complaint Judicial Review Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin • July 1985 Section 268.416—Notice of Right Subpart I—Equal Pay Section 268.417—Effect on Administrative Processing Section 268.901—General Prohibition of Discrimination Subpart E—Nondiscrimination on Account of Age Section 268.902—Record Keeping Section 268.903—Procedure Section 268.501—Policy Statement Section 268.904—Right to File Civil Action for Judi- Section 268.502—Processing of Complaints cial Review Section 268.503—Coverage Section 268.504—Exceptions Authority: Sections 10(4) and 11(1) of the Federal Section 268.505—Right to File Civil Action for Judi- Reserve Act (partially codified in 12 U.S.C. §§ 244 and cial Review 248(1)) Section 268.506—Effect on Administrative Procedure Part 268—Equal Opportunity Subpart F—Prohibition Against Discrimination in Subpart A—General Provisions Employment Because of a Physical or Mental Handicap Section 268.101—Authority, Purpose, and Scope Section 268.601—Definitions Section 268.602—General Policy (a) Authority. This regulation (Code of Federal Regula- Section 268.603—Reasonable Accommodation tions, Title 12, Part 268) is issued by the Board of Section 268.604—Employment Criteria Governors of the Federal Reserve System ("Board") Section 268.605—Preemployment Inquiries under the authority of sections 10(4) and 11(1) of the Section 268.606—Physical Access to Buildings Federal Reserve Act (partially codified in 12 U.S.C. §§ Section 268.607—Processing Complaints 244 and 248(1)). (b) Purpose and scope. This regulation sets forth the Board's policy, program, and procedures for providing Subpart G—Prohibition Against Discrimination in equal opportunity to Board employees and applicants Board Programs and Activities because of a Physical for employment without regard to race, color, religion, or Mental Handicap sex, national origin, age, or physical or mental handicap. It also sets forth the Board's policy, program, and Section 268.701- Purpose and Application procedures for prohibiting discrimination on the basis Section 268.702- Definitions of physical or mental handicap in programs and activi- Section 268.703- •Self Evaluation ties conducted by the Board. Section 268.704- •Notice Section 268.705- •Prohibition Against Discrimination Section 268.102—Board Program Section 268.706- •Employment Section 268.707- -Program Accessibility: Discrimina- The Board has established, maintains, and carries out tion Prohibited a continuing affirmative program designed to promote Section 268.708— Program Accessibility: Existing Fa- equal opportunity in every aspect of the Board's ic ilities personnel policies and practices in the employment, Section 268.709—:P rogram Accessibility: New Con- development, advancement, and treatment of employstruction and Alterations ees and applicants for employment. Under the terms Section 268.710- Communications of its program, the Board: Section 268.711- Compliance Procedures (a) Provides sufficient resources to administer its equal opportunity program in a positive and effective man- Subpart H—Review by the Equal Employment ner and assure that the principal and operating officials Opportunity Commission responsible for carrying out the equal opportunity program meet established qualifications requirements; Section 268.801—Entitlement (b) seeks to eradicate every form of prejudice or Section 268.802—Filing of the Request for Review discrimination based upon race, color, religion, sex, Section 268.803—Time Limits national origin, age, or physical or mental handicap, Section 268.804—Procedures from the Board's personnel policies and practices and Section 268.805—Review & Consideration working conditions; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 545 (c) provides the maximum feasible opportunity to utilization of skills of incumbents are concentrated in employees to enhance their skills through on-the-job jobs with lower skill requirements; and training, work study programs, and other training (n) prepares annually equal opportunity plans of action programs so that they may perform at their highest which include, but are not limited to: potential and advance in accordance with their abili- (1) Provision for the establishment of training and ties; education programs designed to provide maximum (d) communicates the Board's equal opportunity poli- opportunity for employees to advance so as to cy and program and its employment needs to all perform at their highest potential; sources of job candidates without regard to race, (2) describes the qualifications, in terms of training color, religion, sex, national origin, age, or physical or and experience relating to equal opportunity, of the mental handicap, and solicits their recruitment assist- principal and operating officials concerned with adance on a continuing basis; ministration of the Board's equal opportunity pro- (e) participates at the community level with other gram; and employers, schools, universities, and other public and (3) describes the allocation of personnel and reprivate groups in cooperative action to improve em- sources proposed by the Board to carry out its equal ployment opportunities; opportunity program. (f) reviews, evaluates, and controls managerial and supervisory performance in such a manner as to insure Section 268.103—Definitions a continuing affirmative application and vigorous enforcement of the policy of equal opportunity, and (a) "Age" is an inclusive term which means the age of provides orientation, training, and advice to managers at least forty years. and supervisors to assure their understanding and (b) "Complainant" means any party who files a claim, implementation of the equal opportunity policy and complaint, or request for counseling under this Reguprogram; lation. (g) provides recognition to employees, supervisors, (c) "Complaint of discrimination" means any claim or managers, and units demonstrating superior accom- complaint filed under this regulation or the Board's plishment in equal opportunity; grievance procedure alleging discrimination in em- (h) informs its employees and applicants for employ- ployment because of race, color, national origin, reliment of the Board's affirmative equal opportunity gion, sex, age, or physical or mental handicap. policy and program and enlists their cooperation; (d) "Grievance procedures" means the Board's Ad- (i) provides counseling for employees and applicants justing Work-related Problems Policy. for employment who believe they have been discriminated against because of race, color, religion, sex, national origin, age, or physical or mental handicap, Subpart B—Administration and for resolving informally the matters raised by them; Section 268.201—Equal Employment Designations (j) provides for the prompt, fair, and impartial consideration and disposition of complaints involving issues of discrimination on grounds of race, color, religion, (a) The Board designates an EEO Programs Officer, an sex, national origin, age, or physical or mental handi- EEO Officer, a Federal Women's Program Manager, a cap; Hispanic Program Coordinator, a Handicapped Pro- (k) has established a system for periodically evaluating gram Coordinator, and such EEO Counselors and the effectiveness of the Board's overall equal opportu- other persons as may be necessary to assist the Board nity effort; in carrying out the functions described in this Regulation. (1) makes reasonable accommodations to the religious needs of employees and applicants for employment, including the needs of those who observe the Sabbath Section 268.202—The Administrative Governor on other than Sunday, when those accommodations can be made (by substitution of another qualified (a) The Administrative Governor is a member of the employee, by a grant of leave, a change of a tour of Board of Governors. He or she is designated by the duty, or other means) without undue hardship on the Chairman of the Board of Governors, charged with business of the Board; overseeing the internal affairs of the Board and em- (m) utilizes to the fullest extent the present skills of powered to make decisions and determinations on employees by all means, including the redesigning of behalf of the Board of Governors when authority to do jobs where feasible so that tasks not requiring the full so is delegated to him or her. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

546 Federal Reserve Bulletin • July 1985 (b) The Administrative Governor is hereby delegated determination as he or she considers desirable, includthe authority to make determinations adjudicating ing any recommendation for such disciplinary action complaints of discrimination pursuant to sections as is warranted by the circumstances when an employ- 268.311, 268.412, and 268.71 l(k) of this Regulation. ee is found to have engaged in a discriminatory prac- The Administrative Governor is further delegated the tice. authority to order such corrective measures, including (c) The Staff Director For Management may make such remedial actions as may be required by sections changes in programs and procedures designed to elimi- 268.315, 268.412(c), 268.414(a), and 268.711(k) of this nate discriminatory practices and improve the Board's Regulation, as he or she may consider necessary, program for equal opportunity. including such disciplinary action as is warranted by the circumstances when an employee has been found Section 268.204—The EEO Programs Officer to have engaged in a discriminatory practice. (c) The Administrative Governor may delegate to any The EEO Programs Officer shall perform the following officer or employee of the Board any of his or her functions: duties or functions under this Regulation. (a) Advise the Board, the Administrative Governor, (d) The Administrative Governor may refer to the and the Staff Director For Management with respect to Board of Governors for determination or decision any the preparation of plans, goals, objectives, procecomplaint of discrimination that the Administrative dures, regulations, reports, and other matters pertain- Governor would otherwise decide pursuant to sections ing to the Board's program established under section 268.311, 268.412, and 268.711(k) of this Regulation, 268.102, and administer the Board's equal opportunity and may make any recommendations for any changes program; in programs and procedures designed to eliminate (b) evaluate from time to time the sufficiency of the discriminatory practices or to improve the Board's Board's program for equal opportunity and report programs under this Regulation, and may make any thereon to the Board, the Administrative Governor, recommendations for remedial or disciplinary action and the Staff Director For Management, with recomwith respect to managerial or supervisory employees mendations as to any improvement or correction needwho have failed in their responsibilities, or employees ed, and may make recommendations regarding remewho have been found to have engaged in discrimina- dial or disciplinary action with respect to managerial tory practices, or with regard to any other matter or supervisory employees who have failed in their which the Administrative Governor believes merits responsibilities; the attention of the Board of Governors. (c) recommend changes in programs and procedures designed to eliminate discriminatory practices and Section 268.203—The Staff Director For improve the Board's program for equal opportunity; Management (d) provide for counseling by an EEO Counselor, of any aggrieved employee or applicant for employment (a) When so authorized by the Administrative Gover- who believes that he or she has been discriminated nor, the Staff Director For Management shall make against because of race, color, religion, sex, national any determinations on complaints of discrimination origin, age, or physical or mental handicap, and for that would otherwise be made by the Administrative attempting to resolve on an informal basis the matter Governor under sections 268.311 and 268.412. The raised by the employee or applicant before a complaint Staff Director For Management shall issue letters of of discrimination may be filed under sections 268.302 findings under section 268.711(g). The Staff Director and 268.403 of this Regulation; For Management shall order such corrective mea- (e) publicize to Board employees and applicants for sures, including such remedial actions as may be employment and post permanently on official bulletin required by sections 268.315, 268.412(c), 268.414(a), boards: and 268.711(h) as he or she may consider necessary, (1) The names and office addresses and the EEO and including the recommendation for such discipli- responsibilities of the Staff Director For Managenary action as is warranted by the circumstances when ment, the EEO Programs Officer, the Federal Woman employee is found to have engaged in a discrimina- en's Program Manager, the EEO Officer, the History practice. panic Program Coordinator, and the Handicapped (b) The Staff Director For Management shall review Program Coordinator; the record on any complaint under this Regulation (2) the names and office addresses of EEO Counselbefore a determination is made by the Board of ors, the segments of the Board for which they are Governors or the Administrative Governor on the responsible, the availability of EEO Counselors to complaint and make such recommendations as to the counsel an employee or applicant for employment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 547 who believes that he or she has been discriminated with respect to, the employment and advancement of against because of race, color, religion, sex, national Hispanics. origin, age, or physical or mental handicap; and the requirement that an employee or applicant for em- Section 268.207—Handicapped Program ployment must consult the EEO Counselor as pro- Coordinator vided by sections 268.301 and 268.402; and (3) time limits for contacting EEO Counselors; The Handicapped Program Coordinator shall perform (f) provide to each employee annually (and the Divi- the following functions: Advise the Board of Goversion of Personnel shall provide to each applicant for nors, the Administrative Governor, the Staff Director employment) a copy of a notice summarizing the For Management, and the EEO Programs Officer on general purposes of this Regulation and specifying matters affecting, and administer the Board's program where copies of this Regulation can be obtained. The with respect to, the employment and advancement of EEO Programs Officer shall ensure that copies of this handicapped persons. Regulation are posted in permanent locations in all Board facilities. The EEO Programs Officer shall, on Subpart C—Complaints of Discrimination on the request of any employee or applicant for employ- Grounds of Race, Color, Religion, Sex, ment provide that employee or applicant with a copy National Origin, Age, or Physical or Mental of this Regulation; Handicap (g) appoint any investigative officers or complaints examiners as necessary to administer this Regulation. Section 268.301—Precomplaint Processing The EEO Programs Officer is authorized to request the loan of any investigative officers or complaints exam- (a) An aggrieved person who believes he or she has iners from any other agency as necessary to administer been discriminated against on the basis of race, color, this Regulation. The EEO Programs Officer, with the religion, sex, national original, age, or physical or concurrence of the Staff Director For Management, mental handicap, shall consult with an EEO Counselor may authorize appropriate reimbursement to such to try and resolve the matter. The EEO Counselor agencies for the services of such investigative officers shall make whatever inquiry he or she believes is and complaints examiners; necessary into the matter and seek a solution to the (h) provide for the receipt and investigation of individ- matter on an informal basis. The EEO Counselor shall ual complaints of discrimination, subject to sections advise the aggrieved person of the complaint proce- 268.301 through 268.312; and dure under this subpart, counsel him or her concerning (i) provide for the acceptance and processing and/or the issues in the matter, keep a record of the counselrejection of class action complaints in accordance with ing activities so as to brief the EEO Officer on those Subpart D of this Regulation. activities, and when advised that a formal complaint of discrimination has been filed by an aggrieved person, Section 268.205—Federal Women's Program shall submit a written report to the EEO Officer with a Manager copy to the aggrieved person summarizing the EEO Counselor's actions and advice to the aggrieved per- The Federal Women's Program Manager shall perform son concerning the issues in the matter. The EEO the following functions: Advise the Board of Gover- Counselor shall, insofar as is practicable, conduct the nors, the Administrative Governor, the Staff Director final interview of the aggrieved person not later than For Management, and the EEO Programs Officer on 21 calendar days after the date on which the matter matters affecting, and administer the Board's program was called to the EEO Counselor's attention by the with respect to, the employment and advancement of aggrieved person. If, within 21 calendar days, the women. matter has not been resolved to the satisfaction of the aggrieved person, that person shall be immediately informed in writing, at the time of the final interview, Section 268.206—Hispanic Program of his or her right to file a complaint of discrimination Coordinator and of his or her right to representation, including legal counsel. The notice shall inform the aggrieved person The Hispanic Program Coordinator shall perform the of his or her right to file a discrimination complaint at following functions: Advise the Board of Governors, any time up to 15 calendar days after receipt of the said the Administrative Governor, the Staff Director For notice, identify to the aggrieved person the officials Management, and the EEO Programs Officer on mat- with whom such complaint may be filed, and advise ters affecting, and administer the Board's program the aggrieved person that he or she must inform the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin • July 1985 Board immediately if he or she retains counsel or any ceived by the Administrative Governor, the Staff other representative in connection with the complaint. Director For Management, the EEO Programs Offi- (b) The EEO Counselor shall not attempt in any way to cer, the Federal Women's Program Manager, the restrain the aggrieved person from filing a complaint. Hispanic Program Coordinator, or the Handicapped (c) The EEO Counselor shall not reveal the identity of Program Coordinator shall be transmitted to the any aggrieved person who consults with the EEO EEO Officer for acknowledgment of receipt in ac- Counselor, except when authorized to do so by the cordance with section 268.302(c)(1). aggrieved person, or until the Board has accepted a (c) Acknowledgment of Receipt of Complaint. complaint of discrimination from the aggrieved per- (1) The EEO Officer shall acknowledge receipt of son. the complaint to the complainant, or his or her (d) The EEO Counselor shall have the full cooperation authorized representative, in writing. of all employees in the performance of his or her duties (2) The EEO Officer shall advise the complainant, or under this section. his or her authorized representative, of all adminis- (e) The EEO Counselor shall be free from restraint, trative rights of the complainant and of complaininterference, coercion, discrimination or reprisal, in ant's right to file a civil action as set forth in section connection with the performance of his or her duties 268.316, including the time limits imposed on the under this section. exercise of those rights. (d) Extensions of Time. Section 268.302—Filing of Complaint (1) The EEO Programs Officer shall extend the time limits set forth in this section: (a) Time Limits. (i) On written request of the complainant, or his or (1) The Board shall accept a complaint for process- her authorized representative, when the coming under this subpart only if: plainant shows that he or she was not notified of (i) The complainant brought to the attention of an the time limits and was not otherwise aware of EEO Counselor the matter causing him or her to them, or that he or she was prevented by circumbelieve he or she had been discriminated against stances beyond his or her control from submitting within 30 calendar days of the date of the matter the matter within the time limits; or or, if a personnel action, within 30 calendar days (ii) For other reasons considered sufficient by the of its effective date; and EEO Programs Officer. (ii) The complainant, or his or her authorized (2) Written requests for extension of time under this representative, submitted his or her written com- section shall be filed with the EEO Programs Offiplaint to an appropriate official within 15 calendar cer. days of the date of his or her final interview with the EEO Counselor. Section 268.303—Right to Representation (2) A complaint shall be deemed to have been filed on the date it was received, if delivered to an At any stage in the presentation of a complaint under appropriate official, or on the date postmarked if this subpart, including the counseling stage under addressed to an appropriate official designated to section 268.301, the complainant shall have the right to receive complaints under subparagraph (b)(3) of this be accompanied, represented, and advised by a represection. sentative, including legal counsel, of his or her choice. (b) Filing Requirements. Complainant shall be advised of this right in writing by (1) A complaint of discrimination must be submitted the EEO Counselor or other appropriate person rein writing by the complainant, or his or her autho- sponsible for matters under this regulation at the rized representative, and must be signed by the commencement of processing of any matter subject to complainant. this Regulation. (2) A complaint of discrimination may be submitted in person or by mail. If a complainant, or his or her Section 268.304—Presentation of the Complaint authorized representative, submits the complaint by mail, use of registered mail is advised. (a) If the complainant is an employee of the Board, he (3) The complaint shall be submitted to either the or she shall have a reasonable amount of official time Administrative Governor, the Staff Director For to present his or her complaint, if he or she is Management, the EEO Programs Officer, the EEO otherwise in an active duty status. Officer, the Federal Women's Program Manager, (b) If the complainant is an employee of the Board and the Hispanic Program Coordinator, or the Handi- the complainant designates another employee of the capped Program Coordinator. All complaints re- Board as his or her representative, the representative Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 549 shall have a reasonable amount of official time, if he or occurred, and any policies and practices related to the she is otherwise in an active duty status, to present the work situation which may constitute or appear to complaint. constitute discrimination, even though they have not been expressly cited by the complainant. Information Section 268.305—Rejection or Cancellation of needed for an appraisal of the utilization of members the Complaint of the complainant's group as compared to the utilization of persons outside the complainant's group shall (a) The EEO Programs Officer shall reject a complaint be recorded in statistical form in the investigative file, which was not timely filed under section 268.302(a), but specific information as to a person's membership unless the time for filing has been extended pursuant or nonmembership in the complainant's group needed to section 268.302(d), and shall reject those allegations to facilitate an adjustment of the complaint or to make in a complaint which are not within the purview of this an informed decision on the complaint shall, if availregulation or which set forth identical matters as able, be recorded by name in the investigative file. (As contained in a previous complaint filed by the same used in this subpart, the term "investigative file" shall complainant which is pending at the Board or has been mean the various documents and information acquired decided by the Board. The EEO Programs Officer may during the investigation under this section—including cancel a complaint for failure of the complainant to affidavits of the complainant, of the alleged discrimiprosecute the complaint. Such action cancelling a nating official, and of witnesses, and copies of or complaint may be taken only after the EEO Programs extracts from records, policy statements, or regula- Officer has provided the complainant, or his or her tions of the Board—organized to show their relevance authorized representative, a written request, including to the complaint or the general environment out of notice of proposed cancellation, that the complainant which the complaint arose.) If necessary, the investiprovide certain information or otherwise proceed with gative officer may obtain information regarding the the complaint, and the complainant has failed to membership or nonmembership of a person in the satisfy this request within 15 calendar days of his or complainant's group by asking each person concerned her receipt of the request. to provide the information voluntarily; he or she shall not require or coerce an employee to provide this (b) The EEO Programs Officer shall transmit any information. decision to reject or cancel by letter to the complainant, or his or her authorized representative. The (b) The investigative officer shall be authorized: decision letter shall inform the complainant of his or (1) To investigate all aspects of complaints of disher right to have the decision of the EEO Programs crimination; Officer submitted to the Equal Employment Opportu- (2) to request all employees of the Board to coopernity Commission for review as described in subpart H ate with him or her in the conduct of the investigaand of his or her right to file a civil action as described tion; and in section 218.316 of this subpart, and of the time limits (3) to require that statements of witnesses be under applicable thereto. oath or affirmation without a pledge of confidence. Section 268.306—Investigation Section 268.307—Adjustment of Complaint and Offer of Hearing (a) The EEO Officer shall advise the EEO Programs Officer of the receipt of a complaint. The EEO Pro- (a) The Board shall provide an opportunity for adjustgrams Officer shall provide for the prompt investiga- ment of the complaint on an informal basis after the tion of the complaint. The EEO Programs Officer shall complainant has reviewed the investigative file. For appoint an investigative officer to investigate the com- this purpose, the EEO Officer shall furnish complainplaint. The investigative officer, if an employee of the ant, or his or her authorized representative, with a Board, shall occupy a position which is not, directly or copy of the investigative file promptly after receiving it indirectly, under the jurisdiction of the Director of the from the investigative officer, and shall provide an Division or Office of the Board in which the complaint opportunity for the complainant, or his or her authoarose. The investigation shall include a thorough re- rized representative, to discuss the investigative file view of the circumstances under which the alleged with appropriate officials. discrimination occurred, the treatment of members of (b) If an adjustment of the complaint is arrived at and the complainant's group identified by his or her com- approved, the terms of the adjustment shall be reduced plaint as compared with the treatment of other em- to writing and made a part of the complaint file, with a ployees or applicants for employment in the Board copy of the terms of the adjustment provided to the Division or Office in which the alleged discrimination complainant. An informal adjustment of a complaint Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin • July 1985 may include an award of back pay, attorney's fees and/ another agency, except in a case where the Board or costs, if appropriate, or other appropriate relief. might be prevented by reason of law from divulging Where the parties agree on an adjustment of the information concerning the matter complained of to a complaint, but cannot agree on whether attorney's person who has not received a required security fees and/or costs should be awarded or on the amount clearance. In that event, the EEO Programs Officer, in of attorney's fees and/or costs to be awarded, the issue consultation with the Equal Employment Opportunity of the award of attorney's fees and/or costs or the Commission, shall select an impartial employee of the amount which should be awarded may be severed and Board to serve as a complaints examiner. In selecting shall be the subject of a final decision pursuant to a complaints examiner, the Board shall request the section 268.311. The decision of whether to award Equal Employment Opportunity Commission to supattorney's fees and/or costs or of the amount to be ply the name of a complaints examiner who has been awarded may be submitted for review by the Equal certified by the Commission as qualified to conduct a Employment Opportunity Commission, pursuant to hearing under this section. subpart H of this Regulation. (b) Arrangements for hearing. The EEO Officer shall (c) If the Board does not carry out, or rescinds any transmit to the complaints examiner the complaint file action specified by the terms of the adjustment for any containing all the documents described in section reason not attributable to the actions or conduct of the 268.312 that have been acquired up to that point in the complainant, the EEO Officer shall, upon the com- processing of the complaint and including the original plainant's written request, reinstate the complaint for copy of the investigative file (which shall be considfurther processing at the point that processing ceased ered by the complaints examiner in making his or her because of the adjustment. recommended decision on the complaint). The com- (d) If an adjustment of the complaint is not arrived at, plaints examiner shall review the entire complaint file the complainant shall be notified in writing by the EEO to determine whether further investigation is needed Officer: before scheduling the hearing. When the complaints (1) Of the proposed disposition of the complaint; examiner determines that further investigation is need- (2) of the complainant's right to a hearing and ed, he or she shall remand the complaint to the decision by the Board of Governors or the Adminis- Board's EEO Officer for further investigation or artrative Governor under section 268.311, or the Staff range for the appearance of witnesses necessary to Director For Management if he or she is delegated supply the needed additional information at the hearthe authority under section 268.202(c), if the com- ing. The requirements of section 268.306 shall apply to plainant notifies the EEO Officer in writing within 15 any further investigation of the complaint. The comcalendar days of receipt of the notice that he or she plaints examiner shall schedule the hearing at a convedesires a hearing; and nient time and place. (3) of the complainant's right to a decision by the (c) Conduct of hearing. Board of Governors or the Administrative Governor (1) Attendance at the hearing shall be limited to under section 368.311, or the Staff Director For persons determined by the complaints examiner to Management if he or she is delegated the authority have direct connection with the complaint. under section 268.202(c), without a hearing. (2) The complaints examiner shall conduct the hear- (e) If the complainant fails to notify the EEO Officer of ing so as to bring out pertinent facts, including the his or her wishes within 15 calendar days of receipt of production of pertinent documents. Rules of evithe notice set forth in section 268.307(d), the EEO dence shall not be applied strictly, but the com- Officer shall transmit the complaint file to the Board of plaints examiner shall exclude irrelevant or unduly Governors or the Administrative Governor, or to the repetitious evidence. Information having a bearing Staff Director For Management if he or she has been on the complaint or employment policy or practices authorized to act for the Administrative Governor relevant to the complaint shall be received in evipursuant to section 268.202(c), for decision under dence. The complaints examiner, the complainant, section 268.311. his or her authorized representative, and representatives of the Board at the hearing shall be given the Section 268.308—Hearing on the Complaint opportunity to cross-examine witnesses who appear and testify. Testimony shall be under oath or affir- A hearing, held pursuant to an election by the com- mation. plainant as provided in section 268.307(d)(2), shall be (d) Powers of Complaints Examiner. In addition to the conducted in the following manner: other powers vested in the complaints examiner by the (a) Complaints Examiner. The hearing shall be held by Board in this Regulation, the complaints examiner a complaints examiner, who must be an employee of shall be authorized to: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 551 (1) Administer oaths or affirmations; complaints examiner shall transmit to the EEO Pro- (2) regulate the course of the hearing; grams Officer: (3) rule on offers of proof; (1) the complaint file (including the record of the (4) limit the number of witnesses whose testimony hearing); would be unduly repetitious; and (2) the findings and analysis of the complaints exam- (5) exclude any person from the hearing for contu- iner with regard to the matter that gave rise to the macious conduct or misbehavior that obstructs the complaint and the general environment out of which hearing. the complaint arose; (e) Witnesses at hearing. The complaints examiner (3) the recommended decision of the complaints shall request the Board or any agency that is subject to examiner on the merits of the complaint, including the authority of an Equal Employment Opportunity recommended remedial action, where appropriate, Commission complaints examiner to make available as with regard to the matter that gave rise to the a witness at the hearing any employee(s) requested by complaint and the general environment out of which the complainant when the complaints examiner deter- the complaint arose. mines that the testimony of such employee(s) is neces- The complaints examiner shall notify the complainsary. He or she may also request the appearance of ant of the date on which this was done. In addition, the any other person whose testimony he or she deter- complaints examiner shall transmit, by separate letter mines is necessary to furnish information pertinent to to the EEO Programs Officer, any findings and recomthe complaint under consideration. The complaints mendations he or she considers appropriate with reexaminer shall give the complainant his or her reasons spect to conditions at the Board which do not bear for the denial of a request for the appearance of directly on the matter which gave rise to the complaint employees or other persons as witnesses and shall or which bear on the general environment out of which insert those reasons in the record of the hearing. The the complaint arose. Board or any agency that is subject to the authority of an Equal Employment Opportunity Commission com- Section 268.309—Relationship to Other Agency plaints examiner may make its employees available as Appellate Procedure witnesses at a hearing on a complaint when requested to do so by the complaints examiner and it is not When an employee or applicant for employment administratively impracticable to comply with the re- makes a written allegation of discrimination on quest for a witness. When it is administratively im- grounds of race, color, religion, sex, national origin, practicable to comply with the request for a witness, age, or physical or mental handicap, in connection the Board or other agency shall provide an explanation with an action that would otherwise be processed to the complaints examiner. If the complaints examin- under a grievance procedure or other system of the er determines that the explanation is inadequate, he or Board, the allegation of discrimination shall be procshe shall so advise the Board or other agency and essed under this Regulation. request it to make the employee available as a witness Section 268.310—Avoidance of Delay at the hearing. If the complaints examiner determines that the explanation is adequate, he or she shall insert it in the record of the hearing, provide a copy of the (a) The complaint shall be resolved promptly. To this explanation to the complainant, and make arrange- end, both the complainant and the Board shall proceed ments to secure testimony from the employee through with the complaint as specified in this Regulation a written interrogatory. Employees of the Board shall without undue delay so that the complaint is resolved be on duty status during the time they are made within 180 calendar days after it was filed, including available as witnesses. time spent in the processing of the complaint by the (f) Record of hearing. The hearing shall be recorded complaints examiner under section 268.308. When the and transcribed verbatim. All documents submitted to, complaint has not been resolved within such time, the and accepted by, the complaints examiner at the complainant may petition the Staff Director For Manhearing shall be made part of the record of the hearing. agement for a review of the reasons for the delay. If the Board submits a document that is accepted, the (b) The EEO Programs Officer may cancel a complaint Board shall promptly furnish a copy to the complain- if the complainant fails to prosecute the complaint ant. If the complainant submits a document that is without undue delay. Such action may be taken only accepted, he or she shall promptly make the document after the EEO Programs Officer has provided the available to the Board's representative for reproduc- complainant, or his or her authorized representative, tion. with a written request, including notice of the pro- (g) Findings, analysis, and recommendations. The posed cancellation, that the complainant provide cer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin • July 1985 tain information or otherwise proceed with the com- complaints examiner under section 268.308(g) of this plaint, and the complainant has failed to satisfy this subpart and a copy of the hearing record. The request within 15 calendar days of receipt by the decision shall adopt, reject, or modify the recomcomplainant, or his or her authorized representative, mended decision of the complaints examiner under of this request. However, instead of cancelling for section 268.308(g). If the decision is to reject or failure to prosecute, the complaint may be adjudicated modify the recommended decision, the decision if sufficient information for that purpose is available, letter shall set forth the specific reasons in detail for (c) When the complaints examiner has submitted a rejection or modification. recommended decision finding discrimination and a (3) When there has been no hearing under section final decision has not been issued by the Board of 268.308 and no adjustment under section 268.307, Governors or the Administrative Governor under sec- the decision letter shall set forth the findings, analytion 268.311, or by the Staff Director For Management sis, and decision of the Board of Governors or the if he or she is delegated the authority to act for the Administrative Governor under paragraph (a) of this Administrative Governor pursuant to section section, or of the Staff Director For Management if 268.202(c), within 180 calendar days after the date the he or she has been delegated the authority to make complaint was filed, the complaints examiner's recom- the decision under section 268.202(c). mended decision shall become a final decision binding (c) The decision shall require any remedial action on the Board 30 calendar days after its submission to authorized by law and determined to be necessary or the EEO Programs Officer. In such event, the comdesirable to resolve the issue of discrimination and to plainant shall be notified of the decision and furnished promote the policy of equal opportunity, whether or a copy of the findings, analysis, recommended decinot there is a finding of discrimination. When discrimision of the complaints examiner under section nation is found, the decision maker shall: 268.308(g), and a copy of the hearing record and shall (1) Advise the complainant, or his or her authorized be advised that at the complaint's request the decision representative, that any request for attorney's fees may be reviewed by the Equal Employment Opportuand/or costs must be documented and submitted nity Commission pursuant to subpart H of this Part, of within 20 calendar days of receipt; his or her right to file a civil action as described in (2) require remedial action to be taken in accordance section 268.316 of this regulation, and of the time with section 268.315; limits applicable thereto. (3) review the matter giving rise to the complaint to determine whether disciplinary action against any Section 268.311—Decision on the Complaint alleged discriminatory officials is appropriate; and (4) record the basis for his or her decision to take, or (a) The EEO Programs Officer shall notify the Board not to take, disciplinary action, but this decision of Governors when the complaint is ripe for decision shall not be recorded in the complaint file. under this section. At the request of any member of (d) When the final decision provides for an award of the Board of Governors made within 7 calendar days attorney's fees and/or costs, the amount of those of such notice, the Board of Governors shall make the awards shall be determined under section 268.315(c). decision on the complaint. If no such request is made, In the unusual situation in which the Board determines the Administrative Governor, or the Staff Director For not to award attorney's fees and/or costs to a prevail- Management if he or she is delegated the authority to ing complainant, the decision shall set forth the specifdo so under section 268.202(c), shall make the decision ic reasons for denying the award. on the complaint. The decision on the complaint shall (e) The decision letter shall inform the complainant be made based on information in the complaint file and that at his or her request the decision may be reviewed shall be made in a fair, impartial, and objective man- by the Equal Employment Opportunity Commission ner. under subpart H, of his or her right to file a civil action (b)(1) The decision on the complaint shall be in writ- in accordance with section 268.316 of this subpart, and ing, shall reflect the date of issuance, and shall be of the time limits applicable thereto. transmitted to the complainant, or his or her authorized representative, either by certified mail, return Section 268.312—Complaint File receipt requested, or by any other method which establishes the date of receipt by the complainant, (a) The EEO Officer shall maintain a complaint file or his or her authorized representative. containing all documents pertinent to the complaint, (2) When there has been a hearing on the complaint, except as provided in section 268.311(c)(4). the decision letter shall transmit a copy of the (1) The complaint file shall include copies of: findings, analysis, and recommended decision of the (i) The notice of the EEO Counselor to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 553 complainant, or his or her authorized repre- Section 268.314—Freedom from Reprisal or sentative, pursuant to section 268.301(a); Interference (ii) the written report of the EEO Counselor under section 268.301(a) to the EEO Officer on whatever (a) Freedom from reprisal. Complainants, their authoprecomplaint counseling efforts were made with rized representatives, and witnesses shall be free from regard to the complainant's case; restraint, interference, coercion, discrimination, or (iii) the complaint; reprisal at any stage in the presentation and processing (iv) the investigative file; of a complaint, including the counseling stage under (v) if the complaint is withdrawn by the complain- section 268.301, or any time thereafter. ant, a written statement of the complainant, or his (b) Review of allegations of reprisal. A complainant, or her authorized representative, to that effect; his or her authorized representative, or a witness who (vi) if adjustment of the complaint is arrived at alleges restraint, interference, coercion, discriminaunder section 268.307, the written record of the tion, or reprisal for having filed a complaint or for terms of the adjustment; having participated in the processing of a complaint (vii) if no adjustment of the complaint is arrived at under this subpart, may, if an employee or applicant under section 268.307, a copy of the letter under for employment, have the allegation reviewed as an section 268.307(d) notifying the complainant, or individual complaint of discrimination subject to the his or her authorized representative, of the pro- provisions of this subpart. posed disposition of the complaint and of com- (c) Consolidation of complaints. When a complainant plainant's right to a hearing; alleges that he or she has been subjected to restraint, (viii) if the decision is made under section interference, coercion, discrimination, or reprisal in 268.307(e), a copy of the letter to the complainant connection with the filing of a prior complaint of transmitting that decision; discrimination and that prior complaint from which the (ix) if a hearing was held, the record of the allegation derives is in process at the Board at the time hearing, together with the complaints examiner's the allegation is made, the complainant may request findings, analysis, and recommended decision on the EEO Programs Officer to consolidate the allegathe merits of the complaint; tion with the prior complaint. If the prior complaint is (x) the recommendations of the Staff Director For at the hearing stage of the complaint process under Management or the EEO Programs Officer, if any, section 268.308, the complainant may request the to the Board of Governors, the Administrative complaints examiner to consolidate the allegation with Governor, or the Staff Director For Management; the complaint at the hearing. The EEO Programs and Officer or the complaints examiner may grant the (xi) if the decision is made under section 268.311, request, provided, that the request is made within 30 a copy of the letter transmitting the decision. calendar days of occurrence of the act which forms the (b) The complaint file shall contain no document that basis of the allegation, or within 30 calendar days of its has not been made available to the complainant, or his effective date, if a personnel action. The EEO Proor her authorized representative, including a physician grams Officer or the complaints examiner may also designated in writing by the complainant. deny the request, at his or her discretion, and require that the allegation be processed in accordance with section 268.314(b). Section 268.313—Joint Processing and Consolidation of Complaints Section 268.315—Remedial Actions (a) Two or more complaints of discrimination filed by (a) Remedial Action Involving an Applicant. employees or applicants for employment with the (1) When it is determined that an applicant for Board consisting of substantially similar allegations of employment has been discriminated against, the discrimination may, with the written permission of the Board shall offer the applicant employment of the complainants, be consolidated by the EEO Programs type and grade denied him or her, unless the record Officer. contains clear and convincing evidence that the (b) Two or more individual complaints of discrimina- applicant would not have been hired even absent tion from the same employee or applicant for employ- discrimination. The offer shall be made in writing. ment may, at the discretion of the EEO Programs The applicant shall have 15 calendar days from Officer, be joined for processing after notifying the receipt of the offer within which to accept or decline complainant that the complaints will be processed the offer. Failure to notify the Board of his or her jointly. decision within the 15-day period will be considered Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin • July 1985 a declination of the offer, unless the applicant can section, unless the record contains clear and conshow that circumstances beyond his or her control vincing evidence that the employee would not have prevented the applicant from responding within the been promoted or employed at a higher grade, even time limit. If the offer is accepted, appointment shall absent discrimination. The back pay liability may be retroactive to the date the applicant should have not accrue from a date earlier than two years prior to been hired, subject to the limitation in paragraph the date the discrimination complaint was filed, but, (a)(3) of this section. Back pay, computed in the in any event shall not exceed the date the employee manner set forth in paragraph (d) of this section, would have been promoted. If a finding of discrimishall be awarded from the beginning of the retroac- nation was not based on a complaint, the back pay tive period, subject to the same limitation, until the liability may not accrue from a date earlier than two date the individual actually enters on duty. The years prior to the date the finding of discrimination applicant shall be deemed to have performed ser- was recorded, but, in any event, shall not exceed the vices for the Board during this period of retroactivi- date he or she would have been promoted; ty for all purposes except for meeting service re- (2) consideration for promotion to a position for quirements for completion of a probationary or trial which the employee is qualified before considerperiod that is required. If the offer is declined, the ation is given to other candidates, if the record applicant shall be awarded a sum equal to the back contains clear and convincing evidence that, alpay he or she would have received, computed in the though discrimination existed at the time selection manner set forth in paragraph (d) of this section, for promotion was made, the employee would not from the date he or she would have been appointed have been promoted even absent discrimination. If until the date the offer was made subject to para- the employee is not selected, the Board shall record graph (a)(3) of this section. The applicant shall be the reasons for nonselection. This priority considerinformed in the offer of his or her right to this award ation shall take precedence over all other Board in the event he declines the offer. employment priorities; (2) When it is determined that discrimination existed (3) cancellation of an unwarranted personnel action at the time the applicant was considered for employ- and restoration of the employee; ment but that there is clear and convincing evidence (4) expunction from the Board's records of any that the applicant would not have been hired even reference to or any record of an unwarranted disciabsent the discrimination, the Board shall consider plinary action; the applicant for any existing vacancy of the type (5) full opportunity to participate in the employee and grade for which he or she was considered benefit denied him or her (e.g., training, preferential initially and for which he or she is qualified before work assignments, overtime scheduling). consideration is given to other candidates. If the (c) Attorney's Fees or Costs. applicant is not selected, the Board shall record the (1) Awards of Attorney's Fees or Costs. The Board reasons for nonselection. If no vacancy exists, the may award the complainant reasonable attorney's Board shall give the applicant priority consideration fees and/or costs incurred in the processing of for the next vacancy for which he or she is qualified. complaints of discrimination or retaliation under this This priority shall take precedence over all other subpart. In a decision made under sections 268.307, Board employment priorities. 268.310, 268.311, 268.314, or under subpart D of this (3) A period of retroactivity or a period for which regulation, or in connection with any review by the back pay is awarded under this paragraph may not Equal Employment Opportunity Commission pursuextend from a date earlier than two years prior to the ant to subpart H, the Board may award reasonable date on which the complaint was initially filed. If a attorney's fees or costs incurred in the processing of finding of discrimination .was not based on a com- the matter. plaint, the period of retroactivity or period for which (i) A finding of discrimination shall raise a preback pay is awarded under this paragraph may not sumption of entitlement to an award of attorney's extend earlier than two years prior to the date the fees. finding of discrimination was recorded. (ii) Attorney's fees may be allowed only for the (b) Remedial Action Involving an Employee. When it services of members of the Bar and law clerks, is determined that a Board employee has been dis- paralegals, or law students under supervision of criminated against, the Board shall take remedial members of the Bar, except that no award is actions which may include, but need not be limited to, allowable for the services of any employee of the one or more of the following: Federal Government. (1) Retroactive promotion, with back pay computed (iii) Attorney's fees shall be paid only for services in the manner set forth in paragraph (d) of this performed after the filing of the complaint under Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 555 section 268.302 and after the complainant has (B) fees and disbursements for printing and notified the Board that he or she is represented by witnesses except to the extent already paid for an attorney, except that fees are allowable for a by the Board; reasonable period of time prior to the notification (C) fees for exemplification and copies of paof representation for any services performed in pers necessarily obtained for use in the case reaching a determination to represent the com- except to the extent already paid for by the plainant. Written submissions to the Board which Board; and are signed by the attorney shall be deemed to (D) any other costs determined to be reasonable constitute notice of representation. by the Board of Governors or the Administra- (2) Amount of Award. When it is determined to tive Governor under section 268.311, or the award attorney's fees and/or costs, the complain- Staff Director For Management if he or she is ant's attorney shall submit a verified statement of authorized to make the decision under section costs and attorney's fees, as appropriate, to the 268.202(c). Witness fees shall be awarded in Board within 20 calendar days of receipt of the accordance with the provisions of 28 U.S.C. decision. A statement of attorney's fees shall be § 1821. However, no award may be made for a accompanied by an affidavit executed by the attor- Board or Federal government employee who is ney of record itemizing the attorney's charges for in a duty status when made available as a legal services, and both the verified statement and witness. the accompanying affidavit shall be made a part of (d) Computation of Back Pay. the complaint file. The amount of attorney's fees (1) The Board will compute for the period covered and/or costs to be awarded the complainant shall be by the corrective action the pay, allowances, and determined by agreement between the complainant, differentials the complainant would have received if the complainant's representative, and a repre- discrimination had not occurred. sentative of the Board. Such agreement shall imme- (2) No complainant shall be granted more pay, diately be reduced to writing. If the complainant, the allowances, or differentials under this paragraph complainant's representative, and the Board's rep- than he or she would have received if discrimination resentative cannot reach an agreement on the had not occurred. amount of attorney's fees and costs within 20 calen- (3) Except as provided in paragraph (d)(4) of this dar days of receipt of the verified statement and section, in computing back pay under this paraaccompanying affidavit, the amount of attorney's graph, the Board shall not include: fees and/or costs to be awarded shall be decided (i) Any period during which the complainant was under section 268.311 within 30 calendar days of not ready, willing, and able to perform his or her receipt of the statement and affidavit. Such decision duties because of an incapacitating illness or shall include the specific reasons for determining the injury; or amount of the award. (ii) any period during which the complainant was (i) The amount of the attorney's fees and costs unavailable for the performance of his or her awarded shall be determined in accordance with duties for reasons other than those related to, or the following standards: the time and labor re- caused by, the discriminatory actions against the quired; the novelty and difficulty of the questions complainant. presented by the complaint; the skill requisite to (4) In computing the amount of back pay under this perform the legal services properly; the preclu- paragraph, the Board shall grant, upon written resion of other employment by the attorney due to quest of a complainant, any sick or annual leave acceptance of the case; the customary fee; wheth- available to the complainant for a period of incapacier the fee is fixed or contingent; time limitations tation if the complainant can establish that the imposed by the client or the circumstances; the period of the incapacitation was the result of illness amount involved and the results obtained; the or injury. experience, reputation, and ability of the attor- (5) In computing the amount of back pay under this ney; the undesirability of the case; the nature and paragraph, the Board shall deduct: length of the professional relationship between (i) Any amounts earned by a complainant from the complainant and the attorney; and awards in other employment during the period covered by similar cases. the corrective action. The Board will include as (ii) The costs which may be awarded include: other employment only employment engaged in (A) Fees of the reporter for all or any of the by the complainant to take the place of employstenographic transcript necessarily obtained for ment from which the complainant had been sepause in the case unless provided by the Board; rated from or did not receive because of discrimi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Federal Reserve Bulletin • July 1985 nation against the complainant; and the 6 year time limit to file civil action specified in (ii) any erroneous payments received from the section 268.505 in the case of discrimination because Board or other Federal government agencies as a of age and in section 268.904 in the case of denial of result of the discriminatory actions against com- equal pay, in any final action on a complaint under this plainant, which, in the case of erroneous pay- subpart. ments received from the Board's or other Federal government retirement systems, shall be returned Section 268.318—Effect on Administrative to the appropriate system. Procedure Section 268.316—Right to File a Civil Action The filing of a civil action does not terminate Board processing of a complaint or Equal Employment Op- (a) Except as provided in paragraph (c) of this section, portunity Commission review of any Board action a complainant is authorized to file a civil action against under this subpart. the Board in an appropriate United States District Court: Subpart D—Class Complaints of Discrimination (1) Within 30 calendar days of receipt of notice of final action on the complaint under sections Section 268.401—Definitions 268.305(b), 268.307(b), 268.310(b) and (c), and 268.311; (a) A "class" is a group of Board employees or (2) after 180 calendar days from a date of filing a applicants for employment, on whose behalf it is complaint with the Board if there has been no alleged that they have been, are being, or may be decision; adversely affected, by a Board personnel management (3) within 30 calendar days following receipt of policy or practice which the Board has authority to notice of the final findings of the Equal Employment rescind or modify, and which discriminates against the Opportunity Commission on a request to review the group on the basis of their common race, color, final action by the Board pursuant to subpart H of religion, sex, national origin, age, or mental or physithis Regulation; or cal handicap. (4) after 180 calendar days from the date of filing of a (b) A "class complaint" is a written complaint of request for review of a final decision of the Board by discrimination filed on behalf of a class by the agent of the Equal Employment Opportunity Commission if the class alleging that: there has been no findings by the Equal Employ- (1) The class is so numerous that a consolidated ment Opportunity Commission pursuant to subpart complaint of the members of the class is impractical ; H of this Regulation. (2) there are questions of fact common to the class; (b) For the purposes of this part, the decision of the (3) the claims of the agent of the class are typical of Board shall be final only when the Board makes a the claims of the class; and determination on all of the issues in the complaint, (4) the agent of the class, or his or her authorized including whether or not to award attorney's fees and/ representative, if any, will fairly and adequately or costs. If a determination to award attorney's fees protect the interests of the class. and/or costs is made, the decision is not final until the (c) An "agent of the class" is a class member who acts procedures are followed for determining the amount of for the class during the processing of the class comthe award as set forth in section 268.315(c) of this plaint. subpart. (c) A complainant who filed a complaint of discrimina- Section 268.402—Precomplaint Processing tion because of age or because of denial of equal pay shall file civil actions within the time limits set forth in (a) An employee or applicant for employment who section 268.505 of subpart E of this Regulation for wishes to be an agent and who believes he or she has complaints of age discrimination and in section been discriminated against shall consult with an EEO 268.904 of subpart I of this Regulation for complaints Counselor within 90 calendar days of the matter giving of denial of equal pay. rise to the allegation of individual discrimination or within 90 calendar days of its effective date if a Section 268.317—Notice of Right personnel action. (b) The EEO Counselor shall: The Board shall notify a complainant in writing of his (1) Advise the aggrieved person of the discriminaor her right to file a civil action, and of the 30-day time tion complaint procedures, of his or her right to limit to file civil suit specified in section 268.316, or of representation, including legal counsel, throughout Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 557 the precomplaint and complaint process, and of the (1) A description of the Board personnel manageright to anonymity only during the precomplaint ment policy or practice giving rise to the complaint; process; and (2) make whatever inquiry he or she believes is (2) a description of the resultant personnel action or necessary; matter adversely affecting the agent. (3) make an attempt at informal resolution through (c) The complaint must be filed not later than 15 discussion with appropriate officials; calendar days after the agent's receipt of the notice of (4) counsel the aggrieved person concerning the final interview with an EEO Counselor pursuant to issues involved; section 268.402(c). (5) inform the EEO Officer and other appropriate (d) The complaint must be filed with either the Adminofficials when he or she believes corrective action is istrative Governor, the Staff Director For Managenecessary; ment, the EEO Programs Officer, the EEO Officer, the (6) keep a record of all counseling activities; and Federal Women's Program Manager, the Hispanic (7) summarize actions and advice in writing both to Program Coordinator, or the Handicapped Program the EEO Officer and the aggrieved person concern- Coordinator. ing the issues arising from the personnel manage- (e) A complaint shall be deemed filed on the date it is ment policy or practice in question. postmarked, or, in the absence of a postmark, on the (c) The EEO Counselor shall conduct a final interview date it is received by an official with whom complaints and terminate counseling with the aggrieved person may be filed. not later than 30 calendar days after the date on which (f) At all stages, including counseling, in the preparathe allegation of discrimination was called to the tion and presentation of a complaint or claim, and attention of the EEO Counselor. During the final review by the Equal Employment Opportunity Cominterview, the EEO Counselor shall inform the ag- mission of a Board decision on a complaint or claim grieved person in writing that counseling is terminat- under subpart H, the agent or claimant shall have the ed, that he or she has the right to file a class complaint right to be accompanied, represented, and advised by of discrimination with appropriate officials of the a representative of his or her own choosing, including Board, of the time limits for filing a class complaint, of legal counsel, provided the choice of a representative his or her right to representation, including legal does not involve a conflict of interest or conflict of counsel, and of his or her duty to assure that the Board position. The representative shall be designated in is immediately informed if legal representation is ob- writing and the designation made a part of the class tained. complaint file. (d) The EEO Counselor shall not attempt in any way to (g) If the agent is a Board employee in an active duty restrain the aggrieved person from filing a complaint or status, he or she shall have a reasonable amount of to encourage the person to file a complaint. official time to prepare and present the complaint. (e) The EEO Counselor shall not reveal the identity of Board employees, including attorneys, who are reprean aggrieved person during the period of consultation, senting employees of the Board in discrimination except when authorized to do so in writing by the complaint cases must be permitted to use a reasonable aggrieved person. amount of official time to carry out that responsibility (f) All Board employees and officers shall fully cooper- whenever it is consistent with the faithful performance ate with EEO Counselors in the performance of their of their duties. duties under this section. EEO Counselors shall have routine access to personnel records of the Board Section 268.404—Acceptance, Rejection or without unwarranted invasion of privacy. Cancellation (g) Corrective action taken as a result of counseling shall be consistent with law and the Board's regula- (a) Within 10 calendar days of the Board's receipt of a tions, rules, and instructions. complaint, the EEO Officer shall forward the complaint, along with a copy of the EEO Counselor's Section 268.403—Filing and Presentation of a report and any other information pertaining to timeli- Class Complaint ness or other relevant circumstances related to the complaint, to the Equal Employment Opportunity (a) The complaint must be submitted in writing by the Commission with a request for designation of a comagent, or his or her authorized representative, and be plaints examiner qualified to conduct the proceeding. signed by the agent. (b) The complaints examiner may recommend that the (b) The complaint shall set forth specifically and in Board reject the complaint, or a portion thereof, for detail: any of the following reasons: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

558 Federal Reserve Bulletin • July 1985 (1) The complaint was not timely filed; complaint, and the agent has failed to satisfy this (2) the complaint consists of an allegation identical request within 15 calendar days of his or her receipt of to an allegation contained in a previous complaint the request. filed on behalf of the same class which is pending (h) An agent, or his or her authorized representative, before the Board or which has been resolved or must be informed by the complaints examiner in a decided by the Board; request under (c) or (d) of this section that his or her (3) the complaint is not within the purview of this complaint may be rejected if the information is not subpart; provided. (4) the agent failed to consult an EEO Counselor in a (i) The complaints examiner's recommendation to the timely manner; Board on whether to accept, reject, or cancel a com- (5) the complaint lacks specificity and detail; plaint shall be transmitted in writing to the Board and (6) the complaint was not submitted in writing or the agent, or his or her authorized representative. The was not signed by the agent; or complaints examiner's recommendation to accept, re- (7) the complaint does not meet all of the prerequi- ject, or cancel shall become the Board's decision sites set forth in section 268.401(b) of this subpart. unless the EEO Programs Officer rejects or modifies (c) If an allegation is not included in the EEO Counsel- the decision within 10 calendar days of its receipt. The or's report, the complaints examiner shall afford the EEO Programs Officer shall notify the agent, or his or agent 15 calendar days to explain whether the matter her authorized representative, and the complaints exwas discussed with an EEO Counselor and if not, why aminer of his or her decision to accept, reject, or he or she did not discuss the allegation with an EEO cancel a complaint. The notice of a decision to reject Counselor. If the explanation is not satisfactory, the or cancel the class complaint shall inform the agent of complaints examiner may recommend that the Board his or her right to proceed with an individual complaint reject the allegation. If the explanation is satisfactory, of discrimination under subpart C, that he or she may the complaints examiner may refer the allegation to request that the Board's decision on the complaint be the Board for further counseling of the agent. reviewed by the Equal Employment Opportunity (d) If an allegation lacks specificity and detail, the Commission pursuant to subpart H, and of his or her complaints examiner shall afford the agent 15 calendar right to file a civil action pursuant to section 268.415, days to provide specific and detailed information. The and of the time limits applicable thereto. complaints examiner may recommend that the Board reject the complaint if the agent fails to provide such Section 268.405—Notification and Opting Out information within the specified time period. If the information provided contains new allegations outside (a) After acceptance of a class complaint, the Board, the scope of the complaint, the complaints examiner within 15 calendar days, shall use reasonable means, must advise the agent how to proceed on an individual such as delivery, mailing, distribution, or posting, to or class basis concerning these allegations. notify all class members of the existence of the class (e) The complaints examiner may recommend that the complaint. Board extend the time limits for filing a complaint and (b) A notice shall contain: for consulting with an EEO Counselor when the agent, (1) The name of the Board or organizational segor his or her authorized representative, shows that he ments) thereof involved, its location, and the date or she was not notified of the prescribed time limits of acceptance of the complaint; and was not otherwise aware of them or that he or she (2) a description of the issues accepted as part of the was prevented by circumstances beyond his or her class complaint; control from acting within the time limits. (3) an explanation that class members may remove (f) When appropriate, the complaints examiner may themselves from the class by notifying the EEO recommend to the Board that a class be divided into Programs Officer within 30 calendar days after issusubclasses and that each subclass be treated as a class, ance of the notice; and and the provisions of this section then shall be con- (4) an explanation of the binding nature of the final strued and applied accordingly. decision on or resolution of the complaint. (g) The complaints examiner may recommend that the Board cancel a complaint after it has been accepted Section 268.406—Avoidance of Delay because of failure of the agent to prosecute the complaint. This action may be taken only after the com- The complaint shall be processed promptly after it has plaints examiner has provided the agent, or his or her been accepted. To this end, the parties shall proceed authorized representative, a written request, including with the complaint without undue delay so that the notice of proposed cancellation, that the agent provide complaint is processed within 180 calendar days after certain information or otherwise proceed with the it was filed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 559 Section 268.407—Freedom from Restraint, on a request to develop evidence. When the com- Interference, Correction, and Reprisal plaints examiner renders his or her report of findings and recommendations on the merits of the com- (a) Agents, claimants, their authorized representa- plaint, a party's failure to comply with the comtives, witnesses, the Staff Director For Management, plaints examiner's ruling on an evidentiary request the EEO Programs Officer, the EEO Officer, EEO may be taken into account. Investigators, EEO Counselors, and other Board offi- (3) During the time period for development of evicials having responsibility for the processing of dis- dence, the complaints examiner may, at his or her crimination complaints shall be free from restraint, discretion, direct that an investigation of facts releinterference, coercion, and reprisal at all stages in the vant to the complaint, or any portion thereof, be presentation and processing of a complaint, including conducted by an investigator trained and/or certified the counseling stage under section 268.402 or any time by the Equal Employment Opportunity Commisthereafter. sion. (b) A person identified in paragraph (a) of this section, (4) Both parties shall furnish the complaints examinif a Board employee or applicant for employment, may er all materials that they wish the complaints examfile a complaint of restraint, interference, coercion, or iner to examine and such other material as the reprisal in connection with the presentation and proc- complaints examiner may request. essing of a complaint of discrimination. The complaint shall be filed and processed in accordance with the Section 268.409—Opportunities for Resolution provisions of subpart C of this Regulation. of the Complaint Section 268.408—Obtaining Evidence (a) The complaints examiner shall furnish the agent, or Concerning the Complaint his or her authorized representative, and the Board representative with a copy of all materials obtained (a) General. concerning the complaint and provide an opportunity (1) Upon the acceptance of a complaint, the EEO for the agent, or his or her authorized representative, Programs Officer shall designate a Board repre- to discuss these materials with the Board representative. The Board representative shall not be an sentative and attempt resolution of the complaint. alleged discriminating official or any individual des- (b) At any time after acceptance of a complaint, the ignated under subpart B of this Regulation. complaint may be resolved by agreement of the Board (2) In representing the Board, the Board repre- and the agent to terms offered by either party. sentative shall consult with officials, if any, named (c) If resolution of the complaint is arrived at, the or identified as responsible for the alleged discrimi- terms of the resolution shall be reduced to writing, and nation, and other officials or employees of the Board signed by the agent and the Staff Director For Manageas necessary. In such consultations, the Board rep- ment. A resolution may include a finding on the issue resentative shall be subject to the provisions of the of discrimination, and award of attorney's fees and/or Board's regulations, rules, and instructions con- costs, and must include any corrective action agreed cerning privacy and access to individual personnel upon. Corrective action in the resolution must be records and reports. consistent with law and the Board's regulations, rules, (b) Development of evidence. and instructions. A copy of the resolution shall be (1) The complaints examiner shall notify the agent, provided to the agent. or his or her authorized representative, and the (d) Notice of the resolution shall be given to all class Board representative that a period of not more than members in the same manner as notification of the 60 calendar days will be allowed for both parties to acceptance of the class complaint and shall state the prepare their cases. This time period may be extend- terms of corrective action, if any, to be granted by the ed by the complaints examiner upon the request of Board. A resolution shall bind all members of the either party. Both parties are entitled to reasonable class. development of evidence on matters relevant to the (e) If the Board does not carry out, or rescinds, any issues raised in the complaint. Evidence may be action specified by the terms of the resolution for any developed through interrogatories, depositions, and reason not attributable to acts or conduct of the agent, requests for production of documents. It shall be his or her authorized representative, or class memgrounds for objection to producing evidence that the bers, the Board upon the agent's written request shall information sought by either party is irrelevant, reinstate the complaint for further processing from the overburdensome, repetitious, or privileged. point processing ceased under the terms of the resolu- (2) In the event that mutual cooperation fails, either tion. Failure of the Board to reinstate the complaint party may request the complaints examiner to rule may be reviewed by the Equal Employment Opportu- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin • July 1985 nity Commission pursuant to subpart H of this Regula- (3) The decision of the Board of Governors, the tion. Administrative Governor, or the Staff Director For Management if he or she is delegated the authority to make the decision under section 268.202(c), shall Section 268.410—Hearing be in writing and shall be transmitted to the agent, or his or her authorized representative, along with a On the expiration of the period allowed for preparation copy of the record of the hearing and a copy of the of the case, the complaints examiner shall set a date findings and recommendations of the complaints for a hearing. The hearing shall be conducted in examiner. accordance with section 268.308 of subpart C of this (4) When the decision of the Board of Governors, Regulation. the Administrative Governor, or the Staff Director For Management if he or she is delegated the authority to make the decision under section Section 268.411—Report of Findings and 268.202(c), is to reject or modify the findings and Recommendations recommendations of the complaints examiner, the decision shall contain the specific reasons in detail (a) The complaints examiner shall transmit to the EEO for the action. Programs Officer: (b) If the Board of Governors, the Administrative (1) The record of the hearing; Governor, or the Staff Director For Management if he (2) the complaints examiner's findings and analysis or she is authorized to make the decision under section with regard to the complaint; and 268.202(c), has not issued a decision within 30 calen- (3) the complaints examiner's report of findings and dar days of receipt by the Board of the complaints recommended decision on the complaint, including examiner's report of findings and recommendations, corrective action pertaining to systemic relief for the those findings and recommendations shall become the class and any individual corrective action, where final Board decision. The Board shall transmit the final appropriate, with regard to the personnel action or Board decision and the record of the hearing to the matter which gave rise to the complaint. agent, or his or her authorized representative, within 5 (b) The complaints examiner shall notify the agent, or calendar days of the expiration of the 30-day period. his or her authorized representative, of the date on (c) The decision of the Board of Governors, the which the report of findings and recommendations was Administrative Governor, or the Staff Director For forwarded to the EEO Programs Officer. Management if he or she is authorized to make the decision under section 268.202(c) of subpart C of this Regulation, shall require any remedial action autho- Section 268.412—Board Decision rized by law and determined to be necessary or desirable to resolve the issue of discrimination and to (a)(1) The EEO Programs Officer shall notify the promote the policy of equal opportunity, whether or Board of Governors when the complaint is ripe for not there is a finding of discrimination. When discrimidecision under this section. At the request of any nation is found, the Board shall: member of the Board of Governors made within 7 (1) Advise the agent, or his or her authorized calendar days of such notice, the Board of Gover- representative, that any request for attorney's fees nors shall make the decision on the complaint. If no and/or costs must be documented and submitted such request is made, the Administrative Governor, within 20 calendar days of receipt of the decision; or the Staff Director For Management if he or she is (2) review the matter giving rise to the complaint to delegated the authority to do so under section determine whether disciplinary action against al- 268.202(c), shall make the decision on the com- leged discriminatory officials is appropriate; and plaint. (3) record the basis for its decision to take or not to (2) Within 30 calendar days of receipt of the report take disciplinary action, but this decision shall not of findings and recommendations issued under sec- be recorded in the complaint file. tion 268.411 of this subpart, the Board of Gover- (d) When the final decision provides for the award of nors, the Administrative Governor, or the Staff attorney's fees and/or costs, the amount of these Director For Management if he or she is authorized awards shall be determined under section 268.315(c) of to make the decision under section 268.202(c), shall subpart C of this Regulation. When it is determined issue a decision to accept, reject, or modify the not to award attorney's fees and/or costs, the decision findings and recommendations of the complaints shall set forth the specific reasons for denying the examiner. award. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 561 (e) The decision shall inform the agent, or his or her the class or upon the relief to which the claimant is authorized representative, that on request of the agent entitled, the EEO Programs Officer shall refer the the decision under this section may be reviewed by the claim, with recommendations concerning it, to the Equal Employment Opportunity Commission pursu- complaints examiner. ant to subpart H of this Regulation, of his or her right (e) The complaints examiner shall notify the claimant to file a civil action in accordance with section 268.415 of his or her right to a hearing on the claim and shall of this subpart, and of the time limits applicable allow the parties to the claim an opportunity to submit thereto. evidence and representations concerning the claim. If (f) A final decision on a class complaint shall be a hearing is requested, it shall be conducted in accordbinding on all members of the class and the Board. ance with section 268.308 of subpart C of this Regulation. If no hearing is requested, the complaints examiner, in his or her discretion, may hold a hearing to Section 268.413—Notification to Class obtain necessary evidence concerning the claim. Members of Decision (f) The complaints examiner shall issue a report of findings and recommendations on the claim which Class members shall be notified by the Board, through shall be treated the same as a report of findings and the same media employed to give notice of the exis- recommendations under sections 268.411 and 268.412. tence of the class complaint, of the Board decision and (g) If the complaints examiner determines that the corrective action, if any. The notice, where appropri- claimant is not a member of the class or that the claim ate, shall include information concerning the rights of was not timely filed, the complaints examiner shall class members to seek individual relief, and of the recommend rejection of the claim and give notice of procedures to be followed. Notice shall be given by his or her action to the Board, the claimant and the the Board within 10 calendar days of the transmittal of claimant's authorized representative. Such notice its decision to the agent. shall include advice that the claimant may request review of the claim by the Equal Employment Opportunity Commission pursuant to subpart H and of Section 268.414—Corrective Action claimant's right to file a civil action in accordance with the provisions of section 268.415. (a) When discrimination is found, the Board shall eliminate or modify the personnel policy or practice out of which the complaint arose, and provide individ- Section 268.415—Right to File a Civil Action ual corrective action, including an award of attorney's for Judicial Review fees and/or costs to the agent, in accordance with section 268.315 of subpart C of this Regulation. Cor- (a) Except as provided in paragraph (c) of this section, rective action in all cases must be consistent with law an agent who has filed a complaint or a claimant who and Board regulations, rules, and instructions. has filed a claim for relief based on race, color, (b) When discrimination is found and a class member religion, sex, national origin, or physical or mental believes that but for that discrimination, he or she handicap, is authorized to file a civil action against the would have received employment or an employment Board in an appropriate United States District Court: benefit, the class member may file a written claim with (1) Within 30 calendar days of his or her receipt of the EEO Programs Officer within 30 calendar days of notice of final action taken by the Board; notification by the Board of its decision. (2) after 180 calendar days from the date he or she (c) The claim must include a specific, detailed showing filed a complaint or claim with the Board if there has that the claimant is a class member who was affected been no final decision on the complaint or claim. by a personnel action or matter resulting from the (3) within 30 calendar days following receipt of discriminatory policy or practice within not more than notice of the final findings of the Equal Employment 135 calendar days preceding the filing of the class Opportunity Commission on a request to review the complaint. final decision of the Board pursuant to subpart H of (d) The EEO Programs Officer shall attempt to resolve this Regulation; or the claim for relief within 60 calendar days after the (4) after 180 calendar days from the date of filing of a date the claim was postmarked, or in the absence of a request for review of a final decision of the Board by postmark, within 60 calendar days after the date it was the Equal Employment Opportunity Commission if received by the EEO Programs Officer, with whom there has been no finding by the Equal Employment claims may be filed. If the EEO Programs Officer and Opportunity Commission pursuant to subpart H of claimant do not agree that the claimant is a member of this Regulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin • July 1985 (b) For the purposes of this Part, the decision of the comply with this policy. Board shall be final only when the Board makes a (b) The Board shall not discriminate against any emdetermination on all issues in the complaint, including ployee or applicant for employment because such whether or not to award attorney's fees and/or costs. employee or applicant has opposed any practice for- If a determination to award attorney's fees and/or bidden under this subpart or because such employee costs is made, the decision will not be final until the or applicant has made a charge, testified, assisted, or procedure is followed for determining the amount of participated in any manner in any investigation, prothe award as set forth in section 268.315(c) of sub- ceeding, or litigation under this subpart. part C. (c) The Board shall not print or publish, or cause to be (c) An agent who filed a class complaint of discrimina- printed or published, any notice or advertisement tion because of age shall file a civil suit within the time relating to employment by the Board indicating any limits set forth in section 268.505 of subpart E of this preference, limitation, specification, or discriminaregulation. An agent who filed a class complaint of tion, based on age, except as permitted by section denial of equal pay shall file a civil suit within the time 268.504. limits set forth in section 268.904 of subpart I of this Regulation. Section 268.502—Processing of Complaints Section 268.416—Notice of Right All individual and class complaints of discrimination on the basis of age shall be filed and processed When the agent alleges that the Board discriminated pursuant to subparts C and D, respectively, except against a class on the basis of race, color, religion, sex, that civil actions shall be filed pursuant to section national origin, age, or physical or mental handicap, or 268.505 of this subpart and except that section a claimant files for relief, the Board shall notify the 268.315(c) providing for award of attorney's fees and/ agent or claimant in writing of his or her right to file a or costs shall not apply to complaints of discrimination civil action following any final action on a complaint or under this subpart. A complaint may also be filed by claim under this subpart. an organization for a complainant with his or her consent. Section 268.417—Effect on Administrative Processing Section 268.503—Coverage The filing of a civil action by an agent or claimant does A person filing a complaint of discrimination on the not terminate Board processing of a complaint or claim basis of age must have been at least 40 years of age at or Equal Employment Opportunity Commission re- the time the alleged discrimination occurred. view of any Board action under this subpart. Section 268.504—Exceptions Subpart E—Nondiscrimination on Account of The Board may adopt such reasonable exemptions to Age the provisions of this subpart as have been established by the Equal Employment Opportunity Commission Section 268.501—Policy Statement pursuant to 29 C.F.R. § 1613.501(c). (a) The Board shall not: Section 268.505—Right to File Civil Action for (1) Fail or refuse to hire or discharge any individual Judicial Review or otherwise discriminate against any individual with respect to his or her compensation, terms, A complainant, agent, or claimant, under this subpart conditions, or privileges or employment, because of is authorized to file a civil action against the Board in such individual's age, except as permitted by sec- an appropriate United States District Court within six tion 268.504; years of the matter causing the complainant, agent, or (2) limit, segregate, or classify Board employees or claimant to believe he or she has been discriminated applicants for employment in any way which would against because of age. deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his Section 268.506—Effect on Administrative or her status as an employee or applicant because of Procedure such individual's age, except as permitted by section 268.504; or The filing of a civil action by an employee does not (3) reduce the wage rate of any employee in order to terminate Board processing of a complaint under this Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 563 subpart or Equal Employment Opportunity Commis- essential functions of the position in question without sion review of any such complaint pursuant to sub- endangering the health and safety of the handicapped part H. person or others, and who, depending upon the type of appointing authority being used: (1) Meets the experience and/or education require- Subpart F—Prohibition Against Discrimination ments (which may include passing a written test) of in Employment Because of a Physical or the position in question; or Mental Handicap (2) meets the criteria for appointment under one of the special appointing authorities for handicapped persons. Section 268.601—Definitions (g) "Facility" is defined for the purposes of this subpart to mean all or any portion of buildings, struc- (a) "Handicapped person" is defined for the purposes tures, equipment, roads, walks, parking lots, rolling of this subpart as one who has: stock or other conveyances, or other real or personal (1) A physical or mental impairment which substan- property. tially limits one or more of such person's major life activities; (2) has a record of such an impairment; or Section 268.602—General Policy (3) is regarded as having such an impairment. (b) "Physical or mental impairment" means: The Board gives full consideration to hiring, place- (1) any physiological disorder or condition, cosmetic ment, and advancement of qualified physically or disfigurement, or anatomical loss affecting one or mentally handicapped persons. The Board shall be a more of the following body systems: Neurological; model employer of handicapped individuals. The musculoskeletal; special sense organs; respiratory, Board shall not discriminate against qualified physicalincluding speech organs; cardiovascular; reproduc- ly or mentally handicapped persons. tive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or (2) any mental or psychological disorder, such as Section 268.603—Reasonable Accommodation mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabil- (a) The Board shall make reasonable accommodation ities. to the known physical or mental limitations of a (c) "Major life activities" means functions, such as qualified handicapped employee or applicant for emcaring for one's self, performing manual tasks, walk- ployment unless it can demonstrate that the accommoing, seeing, hearing, speaking, breathing, learning, and dation would impose an undue hardship on the operaworking. tion of its programs. (d) "Has a record of such an impairment" means has a (b) Reasonable accommodation may include, but shall history of, or has been classified (or misclassified) as not be limited to: having a mental or physical impairment that substan- (1) Making facilities readily accessible to and usable tially limits one or more major life activities. by handicapped persons; (e) "Is regarded as having such an impairment" (2) job restructuring, part-time or modified work means: schedules, acquisition or modification of equipment (1) Has a physical or mental impairment that does or devices, appropriate adjustment or modification not substantially limit major life activities but is of examinations, the provision of readers and intertreated by an employer as constituting such a limita- preters, and other similar actions; and tion; (3) reassignment to another job position, if practica- (2) has a physical or mental impairment that sub- ble. stantially limits major life activities only as a result (c) In determining pursuant to paragraph (a) of this of the attitude of an employer toward such impair- section whether an accommodation would impose an ment; or undue hardship on the operations of the Board, factors (3) has none of the impairments defined in paragraph to be considered include: (b) of this section but is treated by an employer as (1) The overall size of the Board's program with having such an impairment. respect to the number of employees, number and (f) "Qualified handicapped person" is defined for the type of facilities, and size of budget; purposes of this subpart to mean, with respect to (2) the type of Board operation including the compoemployment, a handicapped person who, with or sition and structure of the Board's work force; and without reasonable accommodation, can perform the (3) the nature and the cost of the accommodation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

564 Federal Reserve Bulletin • July 1985 Section 268.604—Employment Criteria and any employee requesting such information, shall state clearly that the information requested is (a) The Board shall not make use of any employment intended for use solely in conjunction with affirmatest or other selection criterion that screens out or tive action; and tends to screen out qualified handicapped persons or (2) any such written questionnaire or employee any class of handicapped persons unless: requesting such information shall state clearly that (1) The test score or other selection criterion, as the information is being requested on a voluntary used by the Board, is job-related for the position in basis, that refusal to provide it will not subject the question; and employee or applicant for employment to any ad- (2) there are not available alternative job-related verse treatment, and that it will be used only in tests or criteria that do not screen out or tend to accordance with this subpart, screen out as many handicapped persons. (d) Information obtained in accordance with this sec- (b) The Board shall select and administer tests con- tion as to the medical condition or history of the cerning employment so as to insure that, when admin- employee or applicant for employment shall be kept istered to an employee or applicant for employment confidential except that: who has a handicap that impairs sensory, manual, or (1) Managers, selecting officials, and others inspeaking skills, the test results accurately reflect the volved in the selection process or responsible for employee's or applicant's ability to perform the posi- affirmative action may be informed that the employtion or type of position in question, rather than reflect- ee or applicant for employment is a handicapped ing the employee's or applicant's impaired sensory, individual eligible for affirmative action; manual, or speaking skills (except where those skills (2) supervisors and managers may be informed are the factors that the test purports to measure). regarding necessary accommodations; (3) first aid and safety personnel may be informed, Section 268.605—Preemployment Inquiries where appropriate, if the condition might require emergency treatment; (a) Except as provided in paragraphs (b) and (c) of this (4) government officials investigating compliance section, the Board shall not conduct any preemploy- with laws, regulations, and instructions relevant to ment medical examination and shall not make preem- equal opportunity and affirmative action for handiployment inquiry of an applicant for employment as to capped individuals shall be provided information whether the applicant is a handicapped person or as to upon request; and the nature or severity of a handicap. The Board may, (5) statistics generated from information obtained however, make preemployment inquiry into an appli- may be used to manage, evaluate, and report on cant's ability to meet the medical qualification require- equal opportunity and affirmative action programs. ments, with or without reasonable accommodation, of the position in question (i.e., the minimum abilities Section 268.606—Physical Access to Buildings necessary for safe and efficient performance of the duties of the position in question). The Board shall not discriminate against qualified (b) Nothing in this section shall prohibit the Board handicapped employees or applicants for employment from conditioning an offer of employment on the due to the inaccessibility of its facilities. results of a medical examination conducted coincident to the employee's entrance on duty, provided, that: Section 268.607—Processing Complaints (1) All entering employees are subjected to such an examination regardless of handicap or when the All individual complaints of discrimination on the preemployment medical questionnaire used for posi- basis of handicap shall be processed under subpart C. tions which do not routinely require medical exami- All class complaints of discrimination on the basis of nation indicates a condition for which further exami- handicap shall be processed under subpart D. nation is required because of the job-related nature of the condition; and Subpart G—Prohibition Against Discrimination (2) the results of such an examination are used only in Board Programs and Activities because of a in accordance with the requirements of this subpart. Physical or Mental Handicap (c) To enable and evaluate affirmative action to hire, place, or advance handicapped individuals, the Board Section 268.701—Purpose and Application may invite employees and applicants for employment to indicate whether and to what extent they are (a) Purpose. The purpose of this subpart is to prohibit handicapped, provided that: discrimination on the basis of handicap in programs or (1) Any written questionnaire used for this purpose, activities conducted by the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 565 (b) Application. This subpart applies to all programs more of the following body systems: Neurological; and activities conducted by the Board. Such programs musculoskeletal; special sense organs; respiratory, and activities include: including speech organs; cardiovascular; reproduc- (1) Holding open meetings of the Board or other tive; digestive; genito-urinary; hemic and lymphatic; meetings or public hearings at the Board's office in skin; and endocrine; or Washington, D.C.; (2) any mental or psychological disorder, such as (2) responding to inquiries, filing complaints, or mental retardation, organic brain syndrome, emoapplying for employment at the Board's office; tional or mental illness, and specific learning disabil- (3) making available the Board's library facilities; ities. and The term "physical or mental impairment" in- (4) any other lawful interaction with the Board or its cludes, but is not limited to, such diseases and condistaff in any official matter with people who are not tions as orthopedic, visual, speech, and hearing imemployees of the Board. pairments, cerebral palsy, epilepsy, muscular This subpart does not apply to Federal Reserve dystrophy, multiple sclerosis, cancer, heart disease, banks or to financial institutions or other companies diabetes, mental retardation, emotional illness, and supervised or regulated by the Board. drug addiction and alcoholism. (f) "Major life activities" means functions such as Section 268.702—Definitions caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and (a) "Auxiliary aids" means services or devices that working. enable persons with impaired sensory, manual, or (g) "Has a record of such an impairment" means has a speaking skills to have an equal opportunity to partici- history of, or has been misclassified as having, a pate in, and enjoy the benefits of, programs or activi- mental or physical impairment that substantially limits ties conducted by the Board. For example, auxiliary one or more major life activities. aids useful for persons with impaired vision include (h) "Is regarded as having an impairment" means: readers, Brailled materials, audio recordings, telecom- (1) Has a physical or mental impairment that does munication devices and other similar services and not substantially limit major life activities but is devices. Auxiliary aids useful for persons with im- treated by the Board as constituting such a limitapaired hearing include telephone handset amplifiers, tion; telephones compatible with hearing aids, telecommu- (2) has a physical or mental impairment that subnication devices for deaf persons (TDD's), interpret- stantially limits major life activities only as a result ers, note takers, written materials, and other similar of the attitudes of others toward such impairment; services and devices. or (b) "Complete complaint" means a written statement (3) has none of the impairments defined in subparathat contains the complainant's name and address and graph (1) of this definition but is treated by the describes the Board's alleged discriminatory actions in Board as having such an impairment. sufficient detail to inform the Board of the nature and (i) "Qualified handicapped person" means: date of the alleged violation. It shall be signed by the (1) With respect to a Board program or activity complainant or by someone authorized to do so on his under which a person is required to perform services or her behalf. Complaints filed on behalf of classes or or to achieve a level of accomplishment, a handithird parties shall describe or identify (by name, if capped person who meets the essential eligibility possible) the alleged victims of discrimination. requirements and who can achieve the purpose of (c) "Facility" means all or any portion of buildings, the program or activity without modifications in the structures, equipment, roads, walks, parking lots, program or activity that the Board can determine on rolling stock or other conveyances, or other real or the basis of a written record would result in a personal property. fundamental alteration in its nature; or (d) "Handicapped person" means any person who (2) with respect to any other program or activity, a has: handicapped person who meets the essential eligibil- (1) A physical or mental impairment which substan- ity requirements for participation in, or receipt of tially limits one or more of such person's major life benefits from, that program or activity. activities; (2) has a record of such an impairment; or Section 268.703—Self Evaluation (3) is regarded as having such an impairment. (e) "Physical or mental impairment" means: (a) The Board shall, within one year of the effective (1) Any physiological disorder or condition, cosmet- date of this section, evaluate its current policies and ic disfigurement, or anatomical loss affecting one or practices, and the effects thereof, that do not or may Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin • July 1985 not meet the requirements of this subpart, and, to the (iv) provide different or separate aid, benefits, or extent modifications of any such policies and practices services to handicapped persons or to any class of is required, the Board shall proceed to make the handicapped persons than is provided to others necessary modifications. unless such action is necessary to provide quali- (b) The Board shall provide an opportunity to interest- fied handicapped persons with aid, benefits, or ed persons, including handicapped persons or organi- services that are as effective as those provided to zations representing handicapped persons, to partici- others; pate in the self-evaluation process by submitting (v) deny a qualified handicapped person the opcomments (both oral and written). portunity to participate as a member of planning (c) The Board shall, for three years from the effective or advisory boards; or date of this section, maintain on file and make avail- (vi) otherwise limit a qualified handicapped perable for public inspection: son in the enjoyment of any right, privilege, (1) A description of areas examined and any prob- advantage, or opportunity enjoyed by others relems identified; and ceiving the aid, benefit, or service. (2) The Board may not deny a qualified handicapped person the opportunity to participate in programs or (2) a description of any modifications made. activities that are not separate or different, despite the existence of permissibly separate or different programs or activities. Section 268.704—Notice (3) The Board may not, directly or through contrac- The Board shall make available to employees, appli- tual or other arrangements, utilize criteria or methcants for employment, participants, beneficiaries, and ods of administration, the purpose or effect of which other interested persons such information regarding would: the provisions of this subpart and its applicability to (i) Subject qualified handicapped persons to disthe programs and activities conducted by the Board, crimination on the basis of handicap; or and make such information available to them in such (ii) defeat or substantially impair accomplishment manner as the Board finds necessary to appraise such of the objectives of a program or activity with persons of the protections against discrimination as- respect to handicapped persons. sured them by this subpart. (4) The Board may not, in determining the site or location of a facility, make selections the purpose or Section 268.705—Prohibition Against effect of which would: Discrimination (i) Exclude handicapped persons from, deny them the benefits of, or otherwise subject them to (a) No qualified handicapped person shall, on the basis discrimination under any program or activity of handicap, be excluded from participation in, be conducted by the Board; or denied the benefits of, or otherwise be subjected to (ii) defeat or substantially impair the accomplishdiscrimination in any program or activity conducted ment of the objectives or a program or activity by the Board. with respect to handicapped persons. (b)(1) The Board, in providing any aid, benefit, or (5) The Board, in the selection of procurement service, may not, directly or through contractual, contractors, may not use criteria that subject qualilicensing, or other arrangements, on the basis of fied handicapped persons to discrimination on the handicap: basis of handicap. (i) Deny a qualified handicapped person the op- (6) The Board may not administer a licensing or portunity to participate in or benefit from the aid, certification program in a manner that subjects benefit, or service; qualified handicapped persons to discrimination on (ii) afford a qualified handicapped person an op- the basis of handicap, nor may the Board establish portunity to participate in or benefit from the aid, requirements for the programs and activities of benefit, or service that is not equal to that afford- licensees or certified entities that subject qualified ed others; handicapped persons to discrimination on the basis (iii) provide a qualified handicapped person with of handicap. However, the programs and activities an aid, benefit, or service that is not as effective in of entities that are licensed or certified by the Board affording equal opportunity to obtain the same are not, themselves, covered by this subpart. result, to gain the same benefit, or to reach the (c) The exclusion of nonhandicapped persons from the same level of achievement as that provided to benefits of a program limited by Federal statute or others; Board Order to handicapped persons or the exclusion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 567 of a specific class of handicapped persons from a Board resources available for use in the funding and program limited by Federal statute or Board Order to a operation of the conducted program or activity, and different class of handicapped persons is not prohibit- must be accompanied by a written statement of the ed by this subpart. reasons for reaching that conclusion. If an action (d) The Board shall administer programs activities in would result in such an alteration or such burdens, the most integrated setting appropriate to the needs of the Board shall take any other action that would not qualified handicapped persons. result in such an alteration or such burdens but would nevertheless ensure that handicapped persons receive the benefits and services of the pro- Section 268.706—Employment gram or activity. (b) Methods. The Board may comply with the require- No qualified handicapped person shall, on the basis of ments of this section through such means as redesign handicap, be subjected to discrimination in employ- of equipment, reassignment of services to accessible ment under any program or activity conducted by the buildings, assignment of aides to handicapped per- Board. The definitions, requirements and procedures sons, home visits, delivery of service at alternate of subpart F of this regulation shall apply to discrimi- accessible sites, alteration of existing facilities and nation in employment under this subpart. construction of new facilities, use of accessible rolling stock, or any other methods that result in making its programs or activities readily accessible to and usable Section 268.707—Program Accessibility: by handicapped persons. The Board is not required to Discrimination Prohibited make structural changes in existing facilities where other methods are effective in achieving compliance Except as otherwise provided in section 268.708, no with this section. In choosing among available methqualified handicapped person shall, because the ods for meeting the requirements of this section, the Board's facilities are inaccessible to or unusable by Board gives priority to those methods that offer prohandicapped persons, be denied the benefits of, be grams and activities to qualified handicapped persons excluded from participation in, or otherwise be sub- in the most integrated setting appropriate. jected to discrimination under any program or activity (c) Time period for compliance. The Board shall conducted by the Board. comply with any obligations established under this section with which it is not presently complying within sixty days of the effective date of this section except Section 268.708—Program Accessibility: that where structural changes in facilities are under- Existing Facilities taken, such changes shall be made within three years of the effective date of this section, but in any event, as (a) General. The Board shall operate each program or expeditiously as possible. activity so that the program or activity, when viewed (d) Transition plan. In the event that structural in its entirety, is readily accessible to and usable by changes to facilities will be undertaken to achieve handicapped persons. This paragraph does not: program accessibility, the Board shall develop, within (1) Necessarily require the Board to make each of its six months of the effective date of this section, a existing facilities accessible to and usable by handi- transition plan setting forth the steps necessary to capped persons; or complete such changes. The Board shall provide an (2) require the Board to take any action that it can opportunity to interested persons, including handidetermine, based on a written record, would result capped persons or organizations representing handiin a fundamental alteration in the nature of a pro- capped persons, to participate in the development of gram or activity or in undue financial and adminis- the transition by submitting comments (both oral and trative burdens. In those circumstances where the written). A copy of the transition plan shall be made Board believes that the proposed action would fun- available for public inspection. The plan shall, at a damentally alter the program or activity or would minimum: result in undue financial and administrative burdens, (1) Identify physical obstacles in the Board's facilithe Board shall establish a written record showing ties that limit the accessibility of its programs or that compliance with paragraph (a) of this section activities to handicapped persons; would result in such alterations or burdens. The (2) describe in detail the modifications that will decision that compliance would result in such alter- make the facilities accessible; ations or burdens shall be made by the Board of (3) specify the schedule for taking the steps neces- Governors or their designee after considering all sary to achieve compliance with this section and, if Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin • July 1985 the time period of the transition plan is longer than tive burdens, the Board shall establish a written record one year, identify steps that will be taken during showing compliance with this section would result in each year of the transition period; and such alterations or burdens. The determination that (4) indicate the official responsible for implementa- compliance would result in such alterations or burdens tion of the plan. shall be made by the Board of Governors or their designee after considering all Board resources available for use in the funding and operation of the Section 268.709—Program Accessibility: New conducted program or activity, and must be accompa- Construction and Alterations nied by a written statement of the reasons for reaching that conclusion. If an action required to comply with Each building or part of a building that is constructed this section would result in such an alteration or such or altered by, on behalf of, or for the use of the Board, burdens, the Board shall take any other action that shall be designed, constructed, or altered so as to be would not result in such an alteration or such burdens readily accessible to and usable by handicapped per- but would nevertheless ensure that, to the maximum sons. extent possible, handicapped persons receive the benefits and services of the program or activity. Section 268.710—Communications Section 268.711—Compliance Procedures (a) The Board shall take appropriate steps to ensure effective communication with applicants, participants, (a) Applicability. Not withstanding any other provision personnel of other Federal entities, and members of of this Regulation, this section, except as provided in the public. paragraph (b) of this section, rather than subparts C (1) The Board shall furnish appropriate auxiliary and D of this Regulation shall apply to all allegations of aids where necessary to afford a handicapped per- discrimination on the basis of handicap in programs or son an equal opportunity to participate in, and enjoy activities conducted by the Board. the benefits of, a program or activity conducted by (b) Employment Complaints. The Board shall process the Board. complaints alleging discrimination in employment on (i) In determining what type of auxiliary aid is the basis of handicap in accordance with section necessary, the Board shall give primary consider- 268.607. ation to the requests of the handicapped person. (c) Responsible Official. The EEO Programs Officer (ii) The Board need not provide individually pre- shall be responsible for coordinating implementation scribed devices, readers for personal use or study, of this section. or other devices of a personal nature. (d) Filing the Complaint (2) Where the Board communicates with employees (1) Who may file. Any person who believes that he and others by telephone, telecommunications de- or she has been subjected to discrimination prohibitvices for deaf persons (TDD's) or equally effective ed by this subpart may, personally or by his or her telecommunication systems shall be used. authorized representative, file a complaint of dis- (b) The Board shall ensure that interested persons, crimination with the EEO Programs Officer. including persons with impaired vision or hearing, can (2) Confidentiality. The EEO Programs Officer shall obtain information as to the existence and location of not reveal the identity of any person submitting a accessible services, activities, and facilities. complaint, except when authorized to do so in (c) The Board shall provide signs at a primary entrance writing by the complainant, and except to the extent to any inaccessible facility, directing users to a loca- necessary to carry out the purposes of this subpart, tion at which they can obtain information about acces- including the conduct of any investigation, hearing, sible facilities. The international symbol for accessibil- or proceeding under this subpart. ity shall be used at each primary entrance of an (3) When to File. Complaints shall be filed within accessible facility. 180 days of the alleged act of discrimination. The (d) This section does not require the Board to take any EEO Programs Officer may extend this time limit for action that would result in a fundamental alteration in good cause shown. For the purpose of determining the nature of a program or activity or in undue when a complaint is timely filed under this subparafinancial and administrative burdens. In those circum- graph, a complaint mailed to the Board shall be stances where the Board believes that the proposed deemed filed on the date it is postmarked. Any other action would fundamentally alter the program or activ- complaint shall be deemed filed on the date it is ity or would result in undue financial and administra- received by the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 569 (4) How to File. Complaints may be delivered or the agreement shall be reduced to writing and made mailed to the Administrative Governor, the Staff a part of the complaint file, with a copy of the Director For Management, the EEO Programs Offi- agreement provided to the complainant. The written cer, or the EEO Officer, the Federal Women's agreement may include a finding on the issue of Program Manager, the Hispanic Program Coordina- discrimination and shall describe any corrective tor, or the Handicapped Program Coordinator. action to which the complainant has agreed. Complaints should be sent to the EEO Programs (g) Letter of findings. If an informal resolution of the Officer, Board of Governors of the Federal Reserve complaint is not reached, the EEO Programs Officer System, 20th and Constitution Avenue, N.W., shall transmit the complaint file to the Staff Director Washington, D.C. 20551. If any Board official other For Management. The Staff Director For Management than the EEO Programs Officer receives a com- shall, within 180 days of the receipt of the complete plaint, he or she shall forward the complaint to the complaint by the EEO Programs Officer, notify the EEO Programs Officer. complainant of the results of the investigation in a (e) Acceptance of Complaint. letter sent by certified mail, return receipt requested, (1) The EEO Programs Officer shall accept a com- containing: plete complaint that is filed in accordance with (1) Findings of fact and conclusions of law; paragraph (d) of this section and over which the (2) a description of a remedy for each violation Board has jurisdiction. The EEO Programs Officer found; shall notify the complainant of receipt and accept- (3) a notice of right of the complainant to appeal the ance of the complaint. Letter of Findings to the Board of Governors or the (2) If the EEO Programs Officer receives a com- Administrative Governor for a decision under paraplaint that is not complete, he or she shall notify the graph (k) of this section; and complainant, within 30 calendar days of receipt of (4) a notice of right of the complainant to request a the incomplete complaint, that additional informa- hearing. tion is needed. If the complainant fails to complete (h) Filing an Appeal. the complaint within 30 days of receipt of this (1) Notice of appeal, with or without a request for notice, the EEO Programs Officer shall dismiss the hearing, shall be filed by the complainant with the complaint without prejudice. EEO Programs Officer within 30 days of receipt (3) If the EEO Programs Officer receives a com- from the Staff Director For Management of the plaint over which the Board does not have jurisdic- Letter of Findings required by paragraph (g) of this tion, the EEO Programs Officer shall notify the section. complainant and shall make reasonable efforts to (2) If the complainant does not request a hearing, the refer the complaint to the appropriate government EEO Programs Officer shall transmit the notice of entity. appeal and investigative record to the Board of (f) Investigation/Conciliation. Governors or the Administrative Governor, which- (1) Within 180 calendar days of the receipt of a ever is the decision maker under paragraph (k) of complete complaint, the EEO Programs Officer this section. shall complete the investigation of the complaint, (3) If the complainant does not file a notice of appeal attempt informal resolution of the complaint, and if within the time prescribed in paragraph (h)(1) of this no informal resolution is achieved, the EEO Pro- section, the EEO Programs Officer shall certify that grams Officer shall forward the investigative report the Letter of Findings is the final Board decision on to the Staff Director For Management. the complaint at the expiration of that time. (2) The EEO Programs Officer may request Board (i) Acceptance of Appeal. The EEO Programs Officer employees to cooperate in the investigation and shall accept and process any timely appeal. A comattempted resolution of complaints. Employees who plainant may appeal to the Administrative Governor are requested by the EEO Programs Officer to from a decision by the EEO Programs Officer that an participate in any investigation under this section appeal is untimely. This appeal shall be filed within 15 shall do so as part of their official duties and during days of receipt of the decision from the EEO Programs the course of regular duty hours. Officer. (3) The EEO Programs Officer shall furnish the (j) Hearing. complainant with a copy of the investigative report (1) Upon a timely request for a hearing, the EEO promptly after receiving it from the investigator and Programs Officer shall request that the Board of provide the complainant with an opportunity for Governors appoint an administrative law judge to informal resolution of the complaint. conduct the hearing. The administrative law judge (4) If a complaint is resolved informally, the terms of shall issue a notice to all parties specifying the date, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin • July 1985 time, and place of the scheduled hearing. The hear- ceive witness fees. ing shall be commenced no earlier than 15 calendar (ii) Employees of other Federal agencies called to days after the notice is issued and no later than 60 testify at a hearing, at the request of the adminiscalendar days after the request for a hearing is filed, trative law judge and with the approval of the unless all parties agree to a different date. employing agency, shall be on official duty status (2) The hearing, decision, and any administrative during any absence from normal duties caused by review thereof shall be conducted in conformity their testimony, and shall not receive witness with 5 U.S.C. §§ 554-557 (sections 5-8 of the Ad- fees. ministrative Procedures Act). The administrative (iii) The fees and expenses of other persons called law judge shall have the duty to conduct a fair to testify at a hearing shall be paid by the party hearing, to take all necessary actions to avoid delay, requesting their appearance. and to maintain order. He or she shall have all (iv) The administrative law judge may require the powers necessary to these ends, including (but not Board to pay travel expenses necessary for the limited to) the power to: complainant to attend the hearing. (i) Arrange and change the dates, times, and (v) The Board shall pay the required expenses and places of hearings and prehearing conferences and changes for the administrative law judge and court to issue notices thereof; reporter. (ii) hold conferences to settle, simplify, or deter- (vi) All other expenses shall be paid by the parties mine the issues in a hearing, or to consider other incurring them. matters that may aid in the expeditious disposition (5) The administrative law judge shall submit in of the hearing; writing recommended findings of fact, conclusions (iii) require parties to state their positions in of law, and remedies to all parties and the EEO writing with respect to the various issues in the Programs Officer within 30 calendar days, after the hearing and to exchange such statements with all receipt of the hearing transcripts, or within 30 other parties; calendar days after the conclusion of the hearing if (iv) examine witnesses and direct witnesses to no transcripts are made. This time limit may be testify; extended with the permission of the EEO Programs (v) receive, rule on, exclude, or limit evidence; Officer. (vi) rule on procedural items pending before him (6) Within 15 calendar days after receipt of the or her, and recommended decision of the administrative law (vii) take any action permitted to the administra- judge, any party may file exceptions to the recomtive law judge as authorized by this subpart or by mended decision with the EEO Programs Officer. the provisions of the Administrative Procedure Thereafter, each party will have ten calendar days to Act (5 U.S.C. §§ 554-557). file reply exceptions with the EEO Programs Offi- (3) Technical rules of evidence shall not apply to cer. hearings conducted pursuant to this paragraph, but (k) Decision. rules or principles designed to assure production of (1) The EEO Programs Officer shall notify the Board credible evidence and to subject testimony to cross- of Governors when the complaint is ripe for decision examination shall be applied by the administrative under this paragraph. At the request of any member law judge wherever reasonably necessary. The ad- of the Board of Governors made within 7 calendar ministrative law judge may exclude irrelevant, im- days of such notice, the Board of Governors shall material, or unduly repetitious evidence. All docu- make the decision on the complaint. If no such ments and other evidence offered or taken for the request is made, the Administrative Governor shall record shall be open to examination by the parties, make the decision on the complaint. The decision and opportunity shall be given to refute facts and shall be made based on information in the investigaarguments advanced on either side of the issues. A tive record and, if a hearing is held, on the hearing transcript shall be made of the oral evidence except record. The decision shall be made within 60 calento the extent the substance thereof is stipulated for dar days of the receipt by the EEO Programs Officer the record. All decisions shall be based upon the of the notice of appeal and investigative record hearing record. pursuant to paragraph (h)(2) of this section or 60 (4) The costs and expenses for the conduct of a calendar days following the end of the period for hearing shall be allocated as follows: filing reply exceptions set forth in paragraph (j)(7) of (i) Employees of the Board shall, upon the request this section, whichever is applicable. If the decision of the administrative law judge, be made available maker under this paragraph determines that addito participate in the hearing and shall be on official tional information is needed from any party, the duty status for this purpose. They shall not re- decision maker shall request the information and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 571 provide the other party or parties an opportunity to Review and Appeals, Equal Employment Opportunity respond to that information. The decision maker Commission, 2401 E Street, N.W., Washington, D.C. shall have 60 calendar days from receipt of the 20506, and with the Board's EEO Programs Officer. additional information to render the decision on the appeal. The decision maker shall transmit the deci- Section 268.803—Time Limits sion by letter to all parties. The decision shall set forth the findings, any remedial actions required, (a) Except as provided in paragraph (b) of this section, and the reasons for the decision. If the decision is a complainant, agent, or claimant may file a request based on a hearing record, the decision maker shall for review at any time up to 20 calendar days after consider the recommended decision of the adminisreceipt of the Board's notice of final decision on the trative law judge and render a final decision based complaint or claim, except that the deadline shall be 15 on the entire record. The decision maker may also calendar days in connection with any class complaint remand the hearing record to the administrative law or claim. A request for review shall be deemed filed on judge for a fuller development of the record. the date it is postmarked, or in the absence of a (2) The Board shall take any action required under postmark, on the date it is received by the Equal the terms of the decision promptly. The decision Employment Opportunity Commission. Any statemaker Governor may require periodic compliance ment or brief in support of the request for review must reports specifying: be submitted to the Equal Employment Opportunity (i) The manner in which compliance with the Commission and to the Board within 30 calendar days provisions of the decision has been achieved; of filing the request for review. For the purposes of (ii) the reasons any action required by the final this part, the decision of the Board shall be final only Board decision has not been taken; and when the Board makes a determination on all of the (iii) the steps being taken to ensure full compli- issues in the complaint or claim, including whether or ance. not to award attorney's fees and/or costs. If a decision (3) The decision maker may retain responsibility for to award attorney's fees and/or costs is made, the resolving disputes that arise between parties over decision shall not be final until the procedure is interpretation of the final Board decision, or for followed for determining the amount of such award as specific adjudicatory decisions arising out of imple- set forth in section 268.315(c) of subpart C. mentation. (b) The time limits within which a request for review must be filed will not be extended unless, based upon a written statement by the complainant, agent, or claim- Subpart H—Review by the Equal Employment ant showing that he or she was not notified of the Opportunity Commission prescribed time limit and was not otherwise aware of it or that circumstances beyond his or her control pre- Section 268.801—Entitlement vented the filing of a request for review within the prescribed time limits, the Equal Employment Oppor- (a) A complainant, agent, or claimant may request the tunity Commission determines that the time limit Equal Employment Opportunity Commission to reshould be extended. view any final decision of the Board under sections 268.305(b), 268.307(b), 268.310, 268.311, 268.404, 268.409(e), 268.412, and 268.414. Section 268.804—Procedures (b) A complainant, agent, or claimant may not request review by the Equal Opportunity Commission under (a) The Office of Review and Appeals of the Equal paragraph (a) of this section when the issue of dis- Employment Opportunity Commission shall review crimination giving rise to the complaint is being con- the complaint or claim file and all relevant written sidered, or has been considered, in connection with representations made to the Commission. The Office any other request for review by the Equal Employ- may return a complaint to the Board with a request for ment Opportunity Commission filed by the same com- further investigation or a hearing if it considers such plainant, agent, or claimant. action necessary. There is no right to a hearing before the Office of Review and Appeals. The Office of a Section 268.802—Filing of the Request for Review and Appeals shall issue a written finding Review setting forth its reasons for its findings and shall transmit such findings for consideration by the Board. The complainant, agent, or claimant shall file his or The Office of Review and Appeals shall also issue her request for review in writing, either personally or copies of its findings to the complainant, agent or by mail, simultaneously with the Director, Office or claimant. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin • July 1985 Section 268.805—Review & Consideration (b) a merit system; (c) a system which measures earnings by quantity or (a) The Commissioners may, in their discretion, re- quality of production; or open and reconsider any findings of the Office of (d) a differential based on any factor other than sex or Review and Appeals when the Board or the complain- otherwise not prohibited by this regulation. ant, agent, or claimant requesting reopening or reconsideration submits written argument or evidence Section 268.902—Record Keeping which tend to establish that: (1) New and material evidence is available that was (a) The Board shall preserve any records which are not readily available when the previous finding was made in the regular course of business which relate to issued; the payment of wages, wage rates, job evaluations, job (2) the previous finding involves an erroneous inter- descriptions, merits systems, seniority systems, depretation of law or regulation or misapplication of scriptions of practices, or other matters which deestablished policy; or scribed or explain the basis for payment of any wage (3) the previous finding is of a precedential nature differential to employees of the opposite sex, and involving a new or unreviewed policy consideration which may be pertinent to determination of whether that may have effects beyond the actual case at such differential is based on a factor other than sex. hand, or is otherwise of such an exceptional nature (b) Such records are to be kept for at least six years. as to merit the personal attention of the Commissioners. Section 268.903—Procedure (b) If the Commissioners, in their discretion, reopen and reconsider any previous findings of the Office of (a) Wages withheld in violation of this subpart have the Review and Appeals, the Commissioners shall trans- status of unpaid minimum wage or unpaid overtime mit their findings for consideration by the Board. The compensation. Commissioners shall also issue copies of their findings (b) Any employee who believes he or she has received to the complainant, agent or claimant. unequal pay due to discrimination based on sex may seek recovery of withheld wages by filing a complaint of discrimination under subpart C of this regulation, if Subpart I—Equal Pay a complaint of individual discrimination, or subpart D of this regulation, if a class action, except that civil Section 268.901—General Prohibition of actions shall be filed pursuant to section 268.904 of this Discrimination subpart. The Board shall not discriminate among employees on Section 268.904—Right to File Civil Action for the basis of sex by paying wages to employees at a rate Judicial Review less than the rate at which it pays wages to employees of the opposite sex for equal work on jobs the perform- A complainant, agent, or claimant, under this subpart ance of which requires equal skill, effort, and responsi- is authorized to file a civil action against the Board in bility, and which are performed under similar working an appropriate United States District Court within six conditions, except where such payment is made pursu- years of matter causing the complainant, agent, or ant to: claimant to believe he or she has been denied equal (a) A seniority system; pay. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 573 ORDERS ISSUED UNDER BANK HOLDING Applicant would control 32.5 percent of the deposits of COMPANY ACT, BANK MERGER ACT, BANK commercial banks in the market. SERVICE CORPORATION ACT, AND FEDERAL The Green Bay market is considered to be moder- RESERVE ACT ately concentrated, with the four largest commercial banking organizations controlling 70.7 percent of the Orders Issued Under Section 3 of Bank Holding total deposits of commercial banks in the market. The Company Act Herfindahl-Hirschman Index ("HHI") is 1536. Upon consummation of the proposal, the four-firm ratio Associated Banc-Corp would increase to 77.0 percent and the HHI would Green Bay, Wisconsin increase 330 points to 1866.3 While this acquisition would eliminate some existing Order Approving Acquisition of a Bank competition, the Board believes that the anticompetitive effects of this proposal are mitigated by the Associated Banc-Corp, Green Bay, Wisconsin, a bank presence of thrift institutions in the market.4 Seven holding company within the meaning of the Bank savings and loan associations compete in the market, Holding Company Act of 1956, as amended (12 U.S.C. and control total deposits of $401 million, representing § 1841 et seq.) ("Act"), has applied for the Board's approximately 26.5 percent of the total deposits of approval pursuant to section 3(a)(3) of the Act commercial banks and thrifts in the market. These (12 U.S.C. § 1842 (a)(3)) to acquire all of the voting thrifts offer NOW accounts and consumer loans. Four shares of State Bank of De Pere, De Pere, Wisconsin of the seven thrifts also make commercial loans. Based ("Bank"). on these facts and other evidence of record, the Board Notice of the application, affording an opportunity has concluded that the competition offered by thrift for interested persons to submit comments, has been institutions in the Green Bay market mitigates the anticompetitive effects of this proposal. In addition, a given in accordance with section 3(b) of the Act. The total of ten other commercial banks would remain in time for filing comments has expired, and the Board the market after consummation. Thus, the Board has has considered the application and all comments redetermined that consummation of this proposal would ceived in light of the factors set forth in section 3(c) of not have a significant adverse effect on existing comthe Act (12 U.S.C. § 1842(c)). petition in the market.5 Applicant, the fifth largest banking organization in Wisconsin, controls seven subsidiary banks with total The financial and managerial resources and future deposits of $761.2 million, representing approximately prospects of Applicant and Bank are generally satis- 2.8 percent of the total deposits of commercial banks factory and consistent with approval of this applicain the state.1 Bank is the 74th largest commercial tion. Although Bank will not significantly alter the banking organization in the state, with total deposits of services it provides after consummation of the propos- $70.6 million, representing approximately 0.26 percent al, considerations relating to the convenience and of the total deposits of commercial banks in the state. needs of the communities to be served are consistent Upon acquisition of Bank, Applicant would remain with approval. Based on these and other facts of Wisconsin's fifth largest banking organization and record, it is the Board's judgment that consummation would control approximately 3.1 percent of the total of the proposed transaction would be in the public deposits of commercial banks in the state. Consumma- interest and that the application should be approved. tion of this proposal would not result in a significant increase in the concentration of banking resources in 3. Under the Department of Justice's revised Merger Guidelines Wisconsin. (49 Federal Register 26,823 (1984)), a market with a post-merger HHI Applicant and Bank both operate in the Green Bay above 1800 is considered highly concentrated. Where the resulting banking market.2 Applicant's subsidiary is the largest increase in the HHI is more than 100 points, the Department is likely to challenge a merger unless other facts indicate that the merger is not of the market's 12 commercial banks, holding deposits likely to substantially lessen competition. The Department has voiced of $291.5 million, which represent 26.2 percent of total no objection to this proposal. deposits of commercial banks in the market. Bank is 4. The Board has previously determined that thrift institutions have become, or at least have the potential to become, major competitors of the fifth largest commercial banking organization in banks. NCNB Corporation, 70 FEDERAL RESERVE BULLETIN 225 the market, with 6.3 percent of deposits of commercial (1984); Sun Banks Inc., 69 FEDERAL RESERVE BULLETIN 934 (1983); banks there. Upon consummation of this transaction, Merchants Bancorp, Inc., 69 FEDERAL RESERVE BULLETIN 865 (1983); Monmouth Financial Services, Inc., 69 FEDERAL RESERVE BULLETIN 867 (1983). 5. If 50 percent of the deposits held by thrift institutions were 1. All banking data are as of June 30, 1984. included in the calculation of market concentration, Applicant's post- 2. The Green Bay market is approximated by Brown County, merger market share would be 27.6 percent, and the post-acquisition Wisconsin. HHI would increase by 240 points, from 1174 to 1414. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin • July 1985 On the basis of the record, the application is ap- Applicant, a nonoperating corporation, was orgaproved for the reasons summarized above. The trans- nized for the purpose of becoming a bank holding action shall not be consummated before the thirtieth company by acquiring Bank. Bank was established in calendar day following the effective date of this Order 1917 and conducts a full-service commercial banking or later than three months after the effective date of business through 37 offices in Puerto Rico and 12 this Order unless such period is extended for good offices in New York City.1 Bank has been a member of cause by the Board, or by the Federal Reserve Bank of the Federal Reserve System since 1982. Upon acquisi- Chicago pursuant to delegated authority. tion of Bank, which has total assets of $1.9 billion and By order of the Board of Governors, effective total deposits of $1.65 billion,2 Applicant would con- May 21, 1985. trol the second largest commercial bank in Puerto Rico. Interim Bank is being formed as a nonoperating Voting for this action: Chairman Volcker and Governors bank merely to facilitate the acquisition by Applicant Martin, Wallich, Partee, Rice, Gramley, and Seger. of Bank's outstanding common shares under Puerto Rican law.3 Consummation of the proposed transac- JAMES MCAFEE tion would not result in any adverse effects upon [SEAL] Associate Secretary of the Board competition or increase the concentration of banking resources in any relevant area. Accordingly, competitive considerations are consistent with approval. BanPonce Corporation The financial and managerial resources of Applicant Hato Rey, Puerto Rico and Bank are satisfactory and their future prospects appear favorable. Accordingly, the Board concludes Order Approving Formation of a Bank Holding that banking factors are consistent with approval of Company, Merger with an Interim Bank, and the applications. Membership of Interim Bank in the Federal Reserve Although consummation of this proposal would re- System sult in no immediate changes in the banking services offered by Bank, considerations relating to the conve- BanPonce Corporation, Hato Rey, Puerto Rico, has nience and needs of the community to be served are applied for the Board's approval under section 3(a)(1) consistent with approval of this proposal. Accordingof the Bank Holding Company Act ("BHC Act") ly, the Board has determined that consummation of (12 U.S.C. § 1842(a)(1)) to become a bank holding the proposed transaction would be in the public company through the acquisition of all of the outstand- interest. ing voting shares of Banco de Ponce, Ponce, Puerto Based on the foregoing and other facts of record, the Rico ("Bank"). Applicant has also applied for the Board has determined that the applications under the Board's approval under the Bank Merger Act BHC Act and the Bank Merger Act should be and (12 U.S.C. § 1828(c)) to merge Bank with Ponce Inter- hereby are approved. The Board has also determined im Bank, Ponce, Puerto Rico ("Interim Bank"), which that the application by Interim Bank for membership was formed for the sole purpose of effecting Appli- in the Federal Reserve System should be and hereby is cant's acquisition of Bank. Interim Bank has applied under section 19(h) of the Federal Reserve Act for membership in the Federal Reserve System. The resulting bank will operate under the charter and title of 1. Because Puerto Rico is not deemed a "state" for purposes of the Bank. McFadden Act, Bank is permitted to branch outside of Puerto Rico. Bank is deemed a domestic bank for purposes of the BHC Act, Notice of the applications, affording an opportunity however, and its assets, revenues and income derived from its for interested persons to submit comments, has been operations in Puerto Rico are considered domestic assets, revenues given in accordance with section 3(b) of the BHC Act. and income for purposes of section 221.23(b) of Regulation K. (12 U.S.C. § 221.23(b)). As required by the Bank Merger Act, reports of the 2. Banking data are as of December 31, 1984. competitive effects of the merger were requested from 3. The statute laws of Puerto Rico provide for the merger of banks the United States Attorney General, the Comptroller but do not provide for the formation of a bank holding company through the exchange of holding company shares for a bank's shares of the Currency and the Federal Deposit Insurance or obligations. The Board has jurisdiction to act on mergers of insured Corporation. The time for filing comments has ex- banks under section 18(c) of the Federal Deposit Insurance Act when pired, and the Board has considered the applications the resulting bank is to be a member bank. While Interim Bank will not accept deposits and will thus not be an "insured bank," the Board has and all comments received in light of the factors set previously exercised jurisdication over mergers of this type involving forth in section 3(c) of the BHC Act (12 U.S.C. interim banks formed solely to effect bank acquisitions by bank § 1842(c)) and the Bank Merger Act (12 U.S.C. holding companies. One Valley Bancorp, 70 FEDERAL RESERVE BULLETIN 48 (1984); Comerica Incorporated, 69 FEDERAL RESERVE § 1828(c)(5)). BULLETIN 797 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 575 approved. The transactions shall not be made before teenth largest banking organization in West Virginia, the thirtieth calendar day following the effective date controlling total deposits of $127.1 million, which of this Order or later than three months after the would represent 1.1 percent of the total deposits in effective date of this Order unless such period is commercial banks in the state. The acquisition would extended for good cause by the Board or by the have no significant effect on the concentration of Federal Reserve Bank of New York pursuant to banking resources in West Virginia. delegated authority. Seneca Bank operates in the Greenbrier County By order of the Board of Governors, effective banking market,2 where it is the second largest of May 6, 1985. seven banking organizations in the market. As Applicant does not operate in the Greenbrier County bank- Voting for this action: Chairman Volcker and Governors ing market, the proposed acquisition would have no Wallich, Partee, Rice, and Gramley. Absent and not voting: significant adverse effect on existing competition. The Governors Martin and Seger. Board has considered the effects of this proposal upon probable future competition in the market in light of its WILLIAM W. WILES proposed market extension guidelines.3 The Greenbri- [SEAL] Secretary of the Board er County banking market is not highly concentrated, nor would Applicant be considered a probable future entrant into the market apart from the proposed acqui- City Holding Company sition. Accordingly, the Board has concluded that the Charleston, West Virginia acquisition would have no significant adverse effect on potential competition in the market. Order Approving Acquisition of Shares of a Bank Applicant has options to purchase 19.96 percent of Holding Company Seneca's single class of voting stock, and it intends to purchase an additional 10.04 percent of such stock on City Holding Company, Charleston, West Virginia, a the over-the-counter market or through privately nebank holding company within the meaning of the Bank gotiated transactions. Holding Company Act, 12 U.S.C. § 1841 et seq. Seneca objects to the proposed acquisition on the ("Act"), has applied for the Board's approval under following grounds: section 3(a)(3) of the Act, 12 U.S.C. 1841(a)(3), to (1) that Applicant, through its options for Seneca's acquire up to 30 percent of the voting shares of Seneca shares, acquired control of more than 5 percent of Bancshares, Inc., Fairlea, West Virginia ("Seneca"), those shares without the Board's prior approval in also a bank holding company. violation of section 3(a)(3) of the Act and section Notice of the application, affording interested per- 225.11(c) of the Board's Regulation Y, 12 C.F.R. sons an opportunity to submit comments, has been § 225.11(c); given in accordance with section 3(b) of the Act, (2) that Applicant would not be a source of financial 12 U.S.C. § 1841(b). The time for filing comments has and managerial strength to Seneca Bank, and that expired, and the Board has considered the application the acquisition would impair the future prospects of and all comments received in light of the factors set Seneca, Seneca Bank, and Applicant; and forth in section 3(c) of the Act, 12 U.S.C. § 1841(c). (3) that the acquisition would adversely affect the Applicant and Seneca each control one bank. Appli- convenience and needs of the community served by cant controls City National Bank of Charleston, Seneca Bank. Charleston, West Virginia, the thirty-sixth largest banking organization in West Virginia, with deposits Control of the Shares Under Option of $82.4 million, representing 0.7 percent of all deposits in commercial banks in the state.1 Seneca controls Section 3(a)(3) of the Act and section 225.11(c) of Seneca National Bank, Fairlea, West Virginia ("Sene- Regulation Y prohibit a bank holding company from ca Bank"), the seventy-second largest banking organi- acquiring more than 5 percent of the outstanding zation in the state, with deposits of $44.7 million, representing 0.4 percent of all deposits in commercial banks in the state. For purposes of the Act, the proposed acquisition would make Applicant the nine- 2. The Greenbrier County banking market is coextensive with Greenbrier County. 3. 47 Federal Register 9017 (1982). Although the proposed policy statement setting forth these guidelines has not been adopted by the Board, the Board is using the guidelines in its analysis of the effects of 1. All banking data are as of September 30, 1984. a proposal on probable future competition. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Federal Reserve Bulletin • July 1985 voting shares of another bank holding company with- mission to acquire the shares under option.4 The out the Board's prior approval. Under section Board concludes that the options were permissible 225.3 l(d)(ii) of Regulation Y, "[a] company that enters under section 225.3l(d)(ii)(C) of Regulation Y and into an agreement or understanding under which the raised no presumption of control.5 rights of a holder of voting securities ... are restricted Accordingly, the Board finds that Applicant has not in any manner" is presumed to control the securities. acquired control of more than 5 percent of Seneca's 12 C.F.R. § 225.3l(d)(ii). This presumption does not outstanding shares, and thus has not violated section apply, however, if the agreement or understanding 3(a)(3) of the Act or section 225.11(c) of Regulation Y. "relates to restrictions on transferability and continues only for the time necessary to obtain approval from the appropriate federal supervisory authority Financial and Managerial Considerations and with respect to acquisition by the company of the Future Prospects securities." Id. § 225.3l(d)(ii)(C). Seneca asserts that Applicant's options to purchase Seneca asserts that financial and managerial factors shares of Seneca violate section 3(a)(3) of the Act and and the future prospects of Applicant and Seneca section 225.11(c) of Regulation Y by impermissibly weigh against approval of this application. Specificalrestricting the rights of the holders of those shares (the ly, Seneca argues that Applicant will not acquire "optionors"), and thus give rise to a presumption that effective control and thus could neither forestall a Applicant controls the optionors' shares. Seneca cites costly tender offer battle that would impair the future the provisions of the option agreements regarding prospects of both companies, nor serve as a source of stock dividends and dissenting shareholders' rights as financial and managerial strength.6 well as the duration of the original options as evidence In support of its position, Seneca cites NBC Co., 60 that Applicant has impermissibly restricted the rights FEDERAL RESERVE BULLETIN 782 (1974), in which the of the holders of the shares. Board denied an application to acquire shares of a The agreements do not give Applicant an uncondi- bank because, under the circumstances of that case, tional right to stock dividends; they simply provide the acquisition "would only perpetuate or aggravate that the stock received as a dividend "shall immediate- dissension in Bank's management," without permitly be subject to the terms and conditions of this ting the applicant to obtain control of the bank. Id. at Agreement." Applicant has no right to any stock 784. The facts of NBC differ from those presented here dividends unless it actually exercises the option. To in several key respects. NBC sought to acquire less the extent that the agreements prevent an optionor than 25 percent of the outstanding shares of a bank, from encumbering or disposing of stock received as a that is, less than a controlling interest under section dividend, they merely restrict the transferability of 2(a)(2)(A) of the Act, 12 U.S.C. § 1841(a)(2)(A). Morethat stock. Such a restriction is permissible, however, over, the presence of a hostile shareholder controlling under section 225.31(d)(ii)(C) of Regulation Y, so long over 50 percent of the bank's shares ensured that NBC as it continues only for the time necessary to obtain could not have gained actual control of the bank. regulatory approval. Here, by contrast, Applicant has applied to acquire The limits on the exercise of dissenting sharehold- control of Seneca and would become its largest shareers' rights are likewise consistent with section 225.3l(d)(ii)(C). Shareholders who exercise such rights in effect transfer their shares to the issuing corporation. See W. Va. Code § 31-1-122; H. Henn & 4. After learning of Seneca's objections to the proposed acquisi- J. Alexander, Laws of Corporations and Other Busition, Applicant shortened the option period so that it now expires on ness Enterprises § 349, at 998 (1983). Thus, in the the earlier of July 12, 1985, or the date of regulatory approval. Board's view, the limits on those rights are permissible 5. Even apart from the presumption created by section 225.31(d)(ii), Seneca contends that Applicant actually controls the restrictions on transferability, which raise no preshares under option. In support of this contention, Seneca cites the sumption of control. vote of holders of a "significant number" of the shares under option against anti-takeover measures proposed by the management of Nor does the original option period of one year Seneca. In view of the optionors' interest in completing the sale of commencing January 1985, for options covering 6.33 their shares, the mere vote against anti-takeover measures is not a percent of Seneca's outstanding shares, raise a pre- basis for finding that Applicant controls the optionors' shares. 6. Seneca alleges that its own future prospects will be impaired sumption of control. The Board believes that under the through (1) disruption of Seneca's plans for growth and expansion, (2) circumstances of this case, an option period of one the loss of customers, and (3) preemption of a more favorable offer. year does not exceed the time reasonably necessary to Seneca also alleges that Applicant's future prospects will be impaired by Seneca's low dividend policy which will mean a poor return on a obtain regulatory approval, particularly in view of substantial investment. The Board has carefully considered these Applicant's prompt application to the Board for per- claims and finds that they are not supported by the record. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 577 holder.7 Seneca's position would preclude the Board By order of the Board of Governors, effective from approving any proposal to acquire less than an May 13, 1985. absolute majority of the shares of a bank if the management of the bank opposes the acquisition. The Voting for this action: Vice Chairman Martin and Gover- Act recognizes, however, that control is possible nors Rice, Gramley, and Seger. Absent and not voting: Chairman Volcker and Governors Wallich and Partee. without ownership of an absolute majority of voting shares. After careful consideration of Seneca's comments, JAMES MCAFEE the Board is unable to conclude that consummation of [SEAL] Associate Secretary of the Board this proposal would impair the future prospects of either Applicant or Seneca. The financial condition and managerial resources of Applicant, Seneca, and Equimark Purchasing Partners their subsidiary banks are consistent with approval of Philadelphia, Pennsylvania the application. Considerations related to the convenience and needs of the community to be served are Order Approving Formation of a Bank Holding also consistent with approval of the application.8 Company Request For Hearing Equimark Purchasing Partners, Philadelphia, Pennsylvania, has applied for the Board's approval under Seneca has also requested the Board to order a formal section 3(a)(1) of the Bank Holding Company Act hearing focusing on whether Applicant has control of ("Act") (12 U.S.C. § 1842(a)(1)) to become a bank the shares under option. While section 3(b) of the Act holding company by acquiring at least 64 percent of requires no formal hearing in this instance, the Board the voting shares of Equimark Corporation, Pittswould have discretion to order a formal or informal burgh, Pennsylvania ("Equimark"), and thereby indihearing. The Board has reviewed the record of this rectly to acquire its wholly owned subsidiary bank, application, and has determined that there are no Equibank, Latrobe, Pennsylvania ("Bank"). material factual differences in the record that might Notice of the application, affording opportunity for warrant a hearing. Rather, Seneca's arguments con- interested persons to submit comments, has been cern the interpretation or significance of documents or given in accordance with section 3(b) of the Act. The undisputed facts of record. As all parties have had time for filing comments has expired and the Board ample opportunity to present their arguments in writ- has considered the application and all comments reing and to respond to one another's submissions, the ceived in light of the factors set forth in section 3(c) of Board has determined that a hearing would serve no the Act (12 U.S.C. § 1842(c)). useful purpose. Accordingly, Seneca's request for a Applicant is a nonoperating de novo company with formal hearing is hereby denied. no subsidiaries, formed for the purpose of acquiring Based on the foregoing and other facts of record, the Equimark. Equimark is the seventh largest commer- Board has determined that the application should be cial banking organization in Pennsylvania, with total and hereby is approved. The acquisition shall not be deposits of $2.4 billion, representing approximately consummated before the thirtieth calendar day follow- 2.9 percent of total deposits in commercial banking ing the effective date of this Order, or later than three organizations in the state.1 Principals of Applicant are months after the effective date of this Order, unless also principals of Equimark and of Bank. that period is extended for good cause by the Federal Bank operates in the Pittsburgh banking market,2 Reserve Bank of Richmond, acting pursuant to dele- where it is the third largest banking organization, gated authority, or by the Board. controlling 13.2 percent of total deposits in commercial banking organizations in the market.3 One principal of Applicant holds a 7.5 percent limited partnership interest in the Trustees' Private Bank ("Trustees' 7. For these same reasons Seneca errs in characterizing the acquisition as a mere "stake-out" to preclude another company from acquiring Seneca on more favorable terms. 8. Seneca asserts that the proposed acquisition would adversely 1. Deposit data are as of September 30, 1984. affect the convenience and needs of the community served by Seneca 2. The Pittsburgh banking market is defined as Allegheny County Bank because Applicant has no experience in providing banking and portions of Butler, Armstrong, Westmoreland, Washington, and services in a rural area such as Greenbrier County. The Board does Beaver counties, Pennsylvania. not believe the record supports this allegation. 3. Unless otherwise noted, banking data are as of June 30, 1983. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

578 Federal Reserve Bulletin • July 1985 Bank"), a private bank in the Pittsburgh banking By order of the Board of Governors, effective market. As of June 30, 1983, Trustees' Bank's sole May 16, 1985. office held total deposits of $1.2 million, or 0.01 percent of total market deposits. The principal does Voting for this action: Vice Chairman Martin and Governot exercise control over the private bank. No other nors Partee, Gramley, and Seger. Absent and not voting: Chairman Volcker and Governors Wallich and Rice. principal of Applicant is affiliated with any other depository organization in the Pittsburgh market. On the basis of these facts, the Board concludes that JAMES MCAFEE consummation of this proposal would not result in any [SEAL] Associate Secretary of the Board adverse effects upon existing or potential competition or any increase in the concentration of banking resources in any relevant area. F.N.B. Corporation The proposed transaction is one of a series of Hermitage, Pennsylvania transactions designed to increase Bank's equity capital. Under the proposed transactions, Equimark would Order Approving Acquisition of Bank redeem $25 million of its Series B Preferred Stock, currently owned by Chase Manhattan Corporation, F.N.B. Corporation, Hermitage, Pennsylvania, a bank New York, New York ("CMC"), and convert $25 holding company within the meaning of the Bank million of Bank's Series A Preferred Stock, currently Holding Company Act (12 U.S.C. § 1841, et seq.) owned by CMC, to Adjustable Rate Perpetual Pre- ("Act"), has applied for the Board's approval under ferred Stock.4 In addition, Equimark proposes to section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)), to retire an option granted to CMC to purchase all of the acquire all of the voting shares of Reeves Bank, capital stock of Bank. Beaver Falls, Pennsylvania ("Bank"). In view of Applicant's proposal to increase the Notice of the application, affording opportunity for capital of Equimark and Bank, the financial and mana- interested persons to submit comments, has been gerial resources and future prospects of Applicant, its given in accordance with section 3(b) of the Act, principals and partners, Equimark, and Bank are con- 12 U.S.C. § 1841(b). The time for filing comments has sistent with approval of this application. Applicant has expired, and the Board has considered the application proposed no new services for Equimark or Bank upon and all comments received in light of the factors set acquisition. However, there is no evidence that the forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). banking needs of the community to be served are not Applicant is the 31st largest commercial banking being met, and Applicant's proposal to increase the organization in Pennsylvania, with two bank subsidiarfinancial strength of Equimark and Bank would be of ies holding $374.8 million in deposits.1 Bank operates benefit to the community. Accordingly, considerations in the Beaver Falls banking market,2 where it is the 8th relating to the convenience and needs of the communi- largest of 11 commercial banking institutions, with ties to be served are consistent with approval. $26.5 million, representing 5 percent of the total de- Based on the foregoing and other facts of record, the posits in commercial banks in the market. None of Board has determined that approval of the application Applicant's banking subsidiaries operates in the Beawould be consistent with the public interest and that ver Falls market. One of Applicant's nonbanking the application should be, and hereby is, approved. subsidiaries, Consumer Discount Company, originates The transaction shall not be consummated before the consumer loans in the Beaver County market. Howevthirtieth calendar day following the effective date of er, the overlapping share of the consumer finance this Order or later than three months after the effective market controlled by Applicant and Bank is insignifidate of this Order, unless such period is extended for cant in comparison with total market volume. good cause by the Board or the Federal Reserve Bank Based on all the facts on record, the Board conof Cleveland, acting pursuant to delegated authority. cludes that consummation of the proposed transaction would have no significant adverse effect on either existing or potential competition in any relevant market. 4. By letter dated June 21, 1982, the Board permitted CMC to purchase Equibank's Series A and Equimark's Series B Preferred Stock. The Board determined that it would not institute a control 1. Banking organization deposits are as of September 30, 1984, and proceeding against CMC, or any person to whom CMC might transfer market deposits are as of June 30, 1983. its option, on the basis that the transaction gave CMC or its transferee 2. The Beaver Falls banking market consists of the townships of control of Equimark or Bank within the meaning of the Act. The Perry, Wayne, Big Beaver, and Little Beaver, all in southern Lawproposed transaction appears to satisfy the provisions of the Board's rence County, and all of Beaver County except the townships of determination of June 21, 1982. Hanover, Independence, Hopewell, Harmony, and Economy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 579 In evaluating this application, the Board also has this Order, unless such period is extended for good considered the financial and managerial resources of cause by the Board or the Federal Reserve Bank of Applicant and the effect on these resources of the Cleveland, acting pursuant to delegated authority. proposed acquisition of Bank. The Board has stated By order of the Board of Governors, effective and continues to believe that capital adequacy is an May 28, 1985. especially important factor in the analysis of bank holding company proposals.3 Voting for this action: Vice Chairman Martin and Gover- In this case, Applicant's existing primary and total nors Wallich, Gramley, and Seger. Absent and not voting: Chairman Volcker and Governors Partee and Rice. capital ratios are above the minimum levels specified in the Board's Capital Adequacy Guidelines.4 Under these guidelines, the Board has stated that in review- JAMES MCAFEE ing acquisition proposals, the Board will take into [SEAL] Associate Secretary of the Board consideration the primary capital ratio and the primary ratio after deducting intangibles. On the basis of tangible assets alone, the Applicant's primary capital Saver's Bancorp, Inc. ratio does not meet the minimum levels specified in the Littleton, New Hampshire guidelines. The guidelines also provide, however, for the Board to take into account the nature and amount Order Denying the Acquisition of a Bank of intangible assets on a case-by-case basis. In assessing Applicant's capital adequacy, the Saver's Bancorp, Inc., Littleton, New Hampshire, a Board has considered that inclusion of a small percent- bank holding company within the meaning of the Bank age of intangibles, consisting of core deposit intangi- Holding Company Act of 1956, as amended (12 U.S.C. bles rather than goodwill, would permit Applicant to § 1841 et seq.) ("Act"), has applied for the Board's meet the minimum primary capital guidelines. Further- approval under section 3(a)(3) of the Act (12 U.S.C. more, the Board has approved applications where, as § 1842(a)(3)) to acquire all of the voting shares of here, the Board is able to determine through projected North Country Bank, Berlin, New Hampshire earnings that the applicant would achieve an accept- ("Bank"). able primary capital ratio exclusive of intangibles Notice of this application, affording an opportunity within a short period of time.5 Projections indicate that for interested persons to submit comments, has been a satisfactory primary capital ratio exclusive of intan- given in accordance with section 3(b) of the Act. The gibles will be achieved by Applicant in approximately time for filing comments has expired, and the Board six months. Moreover, Applicant has committed to a has considered the application and all comments redefinite plan to improve its capital position in the event ceived, including those of the Boston Regional Office its projections are not met within six months of of the FDIC and the New Hampshire Department of consummation of this proposal. Banking in support of the application, and those of the Based on these facts, and in view of Applicant's and Antitrust Division of the U.S. Department of Justice in Bank's satisfactory financial and managerial resources opposition to the application, in light of the factors set and future prospects, the Board believes that banking forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). factors are consistent with approval. Considerations Applicant, the seventh largest commercial banking relating to the convenience and needs of the communi- organization in New Hampshire, controls one bank ties to be served are also consistent with approval of with total deposits of $275.8 million, representing 4.8 this application. Accordingly, the Board finds the percent of the total deposits in commercial banks in proposed acquisition would be in the public interest. the state.1 Bank, the 37th largest commercial banking On the basis of the record, the application is ap- organization in the state, controls total deposits of proved for the reasons summarized above. The trans- $25.4 million, representing 0.4 percent of the total action shall not be consummated before the thirtieth deposits in commercial banks in the state. Upon calendar day following the effective date of this Order, consummation of this proposal, Applicant would reor later than three months after the effective date of main the seventh largest commercial banking organization in New Hampshire and would control 5.2 percent of the total deposits in commercial banks in the state. In the Board's view, consummation of this 3. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 (1984). 4. Capital Adequacy Guidelines, 50 Federal Register 16,057 (1985). 5. Midlantic Banks, Inc. 71 FEDERAL RESERVE BULLETIN 458 (1985); Security Richland Bancorporation, 70 FEDERAL RESERVE 1. State banking data are as of December 31, 1984, while market BULLETIN 655 (1984). and deposit data are as of June 30, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

580 Federal Reserve Bulletin • July 1985 proposal would not have a significant effect upon the discussed below, Bank's financial performance has concentration of banking resources in New Hamp- improved steadily to the point where Bank currently shire. serves as a significant source of competition in the Applicant's subsidiary bank competes directly with market. The Board believes that under these circum- Bank in the Berlin, New Hampshire, banking market.2 stances the elimination of Bank as one of the few Applicant is the smallest of three commercial banking sources of commercial banking services in the market organizations in the Berlin banking market, with $16.7 is likely to result in a substantial lessening of competimillion in deposits, representing 14.7 percent of the tion in the Berlin banking market. total deposits in commercial banks in the market. The Board believes in this instance that the anticom- Bank is the second largest commercial banking organi- petitive effects of the transaction are not significantly zation in the Berlin banking market and controls 22.3 mitigated by the presence of thrift institutions in the percent of the total deposits in commercial banks in Berlin banking market.4 There is one thrift institution the market. The Berlin banking market contains three in the market that holds 33.9 percent of the total commercial banking organizations controlling 100 per- deposits in the market.5 This thrift institution engages cent of the deposits in commercial banks in the market in little, if any, commercial lending. Moreover, even if and has a Herfindahl-Hirschman Index ("HHI") of the thrift institution is included in the market as a full 4680. competitor of commercial banks, which is not warrant- Upon consummation of this proposal, Applicant ed by its activities in the market, the post-merger HHI would control 37 percent of the total deposits in would increase by 287 points to 3481. On this basis, commercial banks in the market, only two commercial the Board would continue to regard the competitive banking organizations would remain in the market, effects of this acquisition as substantially adverse. and the HHI would increase by 658 points to 5338. Where, as here, consummation of the proposed This increase would make this transaction one that transaction is likely substantially to lessen competiwould be subject to challenge under the Department of tion, section 3(c) of the Act requires the Board to deny Justice Merger Guidelines, and the Antitrust Division the application unless the substantial adverse effects of the Department has indicated in a letter to the Board are clearly outweighed in the public interest by the its view that the effect of this transaction on existing probable effect of the transaction in meeting the concompetition would be significantly adverse.3 venience and needs of the community to be served. The Board is seriously concerned about the effect The record indicates that the Berlin banking market is this proposal would have on the concentration of a small, isolated market whose population has debanking resources in the Berlin banking market. The clined in recent years compared to the state of New Berlin market is already highly concentrated with a Hampshire as a whole, which has had an increase in limited number of competitors, and consummation of population. Bank suffered loan losses as a result of the this proposal would further reduce that number. As departure of a major employer in the market at the end of 1978, and its capital ratios declined in 1982, requiring Bank to reduce its expenses. As a result, Bank decreased its banking hours and curtailed or limited 2. The Berlin, New Hampshire, banking market is approximated by expansion of certain of the banking services it offered the City of Berlin and the towns of Dummer, Gorham, Milan, Randolph, and Shelburne in Coos County, New Hampshire. Appli- to its customers. cant has contended that the relevant geographic market within which While the Board has given serious consideration to to evaluate the competitive effects of this acquisition should be these factors, the Board does not believe that these expanded to include the Conway area in Carroll County, New Hampshire, which is south of the Berlin banking market as presently defined. The evidence in the record indicates that the Berlin banking market is geographically isolated from Conway by rugged mountainous terrain; that adverse weather conditions can prevail during the 4. In a number of earlier cases, the Board has, in its evaluation of winter; that the markets are connected only by a two-lane road over the competitive effects of a bank merger or acquisition, concluded that this rugged terrain; that Berlin and Conway, the major towns in the thrift institutions have become, or at least have the potential to two markets, are 40 miles apart; that there is little commuting between become, major competitors of commercial banks in the provision of the two markets; and that the deposit overlap between the two both commercial and consumer banking services The Chase Manhatbanking markets is insubstantial. Based on these facts and other tan Corporation, 70 FEDERAL RESERVE BULLETIN 529 (1984); NCNB evidence in the record, the Board concludes that the relevant geo- Bancorporation, 70 FEDERAL RESERVE BULLETIN 225 (1984); General graphic market within which to evaluate the competitive effects of this Bancshares Corporation, 69 FEDERAL RESERVE BULLETIN 802 (1983); proposal consists of the Berlin banking market, as described above. First Tennessee National Corporation, 69 FEDERAL RESERVE BULLE- 3. Under the Department of Justice Merger Guidelines, a market in TIN 298 (1983). which the post-merger HHI is above 1800 is considered highly 5. There are two credit unions in the market, but these institutions concentrated. In such markets, the Department has indicated that do not compete over the full range of services of commercial banks to where a merger produces an increase of 100 points or more and an be considered competitors of commercial banks. Specifically, the HHI substantially exceeding 1800, as in this case, only in extraordi- credit unions do not make commercial loans and one of the credit nary cases will factors establish that the merger is not likely substan- unions offers no transaction account services. The other credit union tially to lessen competition. only recently began oflFering transaction accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 581 factors are sufficient to mitigate, to any significant The Bartlett Bank and Trust Company, Bartlett, Illidegree, the substantial anticompetitive effects of this nois ("Bank"). proposal. Although Bank's share of deposits has de- Notice of the application, affording an opportunity creased somewhat in recent years, such a result is to for interested persons to submit comments, has been be expected when a financial institution takes steps to given in accordance with section 3(b) of the Act improve its capital position by temporarily reducing (12 U.S.C. § 1842(b)). The time for filing comments expenses and curtailing expansion. In this regard, the has expired, and the Board has considered the applica- Board notes that Bank's situation has improved mark- tion and all comments received, including those of edly since 1982, demonstrating Bank's ability indepen- Bank and of Acorn Bankshares, Inc., Bloomingdale, dently to work itself out of its difficulties. On this Illinois ("Acorn'*), in light of the factors set forth in basis, the Board believes that Bank's future prospects section 3(c) of the Act (12 U.S.C. § 1842(c)). are favorable and that Bank has shown that it will Applicant is the 47th largest commercial banking remain an effective, albeit smaller, competitor in the organization in Illinois, controlling seven banks with Berlin banking market without affiliation with Appli- aggregate deposits of $243.4 million, representing 0.22 cant. Accordingly, financial and managerial factors do percent of total deposits in commercial banks in the not outweigh the anticompetitive effects of this pro- state.1 Bank is the 604th largest banking organization posal. in Illinois, with total deposits of $34.6 million, repre- Although Applicant's proposal includes a number of senting 0.03 percent of total deposits in commercial improvements and expansions in the services and banks in the state. Upon consummation of the prooperations of Bank, it is the Board's view that these posed acquisition, Applicant would become the 41st benefits, while lending some weight toward approval largest commercial banking organization in Illinois and of the application, are not sufficient to meet the would control 0.25 percent of total deposits in comstatutory standard required to outweigh the substan- mercial banks in the state. The proposed acquisition tially adverse competitive effects of this proposal. would have no significant effect on the concentration Accordingly, the Board concludes that the substantial of banking resources in Illinois. anticompetitive effects of this transaction are not Both Applicant and Bank compete in the Chicago outweighed by the convenience and needs of the banking market.2 Applicant is the 40th largest comcommunity to be served. mercial banking organization in the banking market, Based on the foregoing and other considerations controlling 0.30 percent of total deposits in commerreflected in the record, the Board's judgment is that cial banks. Bank is the 277th largest commercial the proposed acquisition is not in the public interest banking organization in the Chicago market, and conand the application should be, and hereby is, denied. trols 0.04 percent of total deposits in commercial By order of the Board of Governors, effective banks. Upon acquisition of Bank, Applicant would May 29, 1985. become the 36th largest commercial banking organization, controlling 0.34 percent of total deposits in Voting for this action: Vice Chairman Martin and Gover- commercial banks in the market. nors Partee and Gramley. Voting against this action: Gover- The Chicago banking market is not highly concennors Wallich and Seger. Absent and not voting: Chairman trated, and there are numerous competitors in the Volcker and Governor Rice. market substantially larger than the combination of Applicant and Bank. In view of the small relative size JAMES MCAFEE of the banking organizations involved in this proposal, [SEAL] Associate Secretary of the Board the Board finds that consummation of the proposed transaction would not have a significant effect on existing competition in the market. Accordingly, con- Suburban Bancorp, Inc. siderations relating to competitive factors under the Palatine, Illinois Act are consistent with approval of this application. The financial and managerial resources and future Order Approving Acquisition of Shares of a Bank prospects of Applicant and Bank are considered generally satisfactory. Accordingly, the Board concludes Suburban Bancorp, Inc., Palatine, Illinois, a bank that banking factors are consistent with approval of holding company within the meaning of the Bank the application. Holding Company Act (12 U.S.C. §§ 1841 et seq.) ("Act"), has applied for the Board's approval under 1. Banking data are as of December 31, 1983. section 3(a)(3) of the Act (12 U.S.C. § 1842(3)) to 2. The Chicago banking market is approximated by Cook, DuPage, acquire more than 50 percent of the voting shares of and Lake Counties, all in Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

582 Federal Reserve Bulletin • July 1985 In reaching this conclusion, the Board has consid- (2) Applicant phrased its adjustments to the purered comments concerning this application from both chase price in a highly technical manner such that Bank and Acorn Bankshares, Inc.3 Bank and Acorn reasonable investors are not likely to realize that the (collectively, "Protestants") have protested this appli- contingent adjustments can have a substantial effect cation on the following grounds: on the price investors will receive for their shares if (1) that managerial factors are substantially adverse tendered pursuant to Applicant's tender offer; because of Applicant's alleged violation of federal (3) Applicant stated, both in writing and through securities laws and the "control" provisions of the oral communications with Bank's shareholders, that Board's Regulation Y in its attempt to acquire Bank; its offer was higher than the Acorn offer when (2) that Applicant would be able to acquire only a Applicant knew that the price adjustments conminority of Bank's shares, resulting in a hostile tained in its offer could lead to a price for tendered minority block that would have a serious negative shares that was lower than Acorn's offer; and effect on Bank's operations; and (4) Applicant represented that its tender offer was (3) that Applicant's acquisition of Bank would have on a "first come, first served" basis, limited to 80 significant adverse effects on competition in rele- percent of the shares, and urged Bank's shareholdvant markets. For reasons discussed below, the ers to hurry to tender their shares when, in fact, Board has determined that Protestants' claims do Applicant never intended to accept less than all not warrant denial of the application. shares tendered and when Applicant knew that the number of shares tendered would not exceed 80 Securities Laws Allegations percent. Protestants also allege that Applicant violated Rule Protestants' primary allegations under the federal se- 14e-3(d), promulgated under section 14 of the 1934 curities laws are that Applicant made numerous mis- Act, because, during the pendency of Applicant's representations or omitted to state material facts in its tender offers, it received material non-public informatender offer for shares of Bank and thus violated both tion from insiders of Bank who had tendered their sections 14(e) and 10(b) of the Securities Exchange shares to Applicant. Act of 1934 ("1934 Act"), 12 U.S.C. §§ 78n(e) and Finally, Protestants allege two technical violations 78j(b). Protestants argue that the alleged violations of the securities laws in Applicant's original and reflect so adversely on Applicant's management as to amended tender offers: require denial of this application. Among Protestants' (1) that Applicant violated section 14(e) of the 1934 specific allegations are that: Act in leaving its amended tender offer open for only (1) In its tender offer, Applicant consistently mis- 14 days, rather than for the minimum of 20 business represented the price offered by it as an amount days required by section 14(e), thereby forcing certain when the price offered was subject to contin- Bank's shareholders to make a hasty and less than gent adjustments that were likely to result in a fully informed decision to accept or reject Applisignificant reduction.4 cant's offer; and (2) that Applicant violated Rule 10b-13, promulgated pursuant to section 10(b) of the 1934 Act, by accepting an option from one of Bank's sharehold- 3. Acorn made a friendly tender offer for the shares of Bank, but ers on December 20, 1984, after it had made its received tenders of only a minority of such shares. Applicant received tender offer on December 19. tenders of 53.3 percent of Bank's shares in response to its offer. 4. The two adjustments in Applicant's tender offer that Protestants The Board does not believe that the standards of allege should have been more fully disclosed are: section 3(c) of the Act for review of bank holding (1) that if Bank issues a stock dividend or otherwise issues new company expansion proposals require the Board to shares of stock, the per-share purchase price would be adjusted so that Applicant's maximum total payment would remain the same as it adjudicate the type of securities law issues raised by would have been without the new shares; and Protestants. This is particularly true in this case where (2) that the purchase price would be reduced to reflect any payment the issues raised by Protestants are currently being made by Bank to Acorn to indemnify Acorn for expenses incurred in its acquisition attempt. Protestants state that adjustment (1) was in litigated in a case brought by Acorn and Bank in response to an option granted Acorn by Bank on January 7, 1985, to federal district court.5 The Board notes that the only acquire 11,453 authorized but unissued shares, and adjustment (2) answered a "bust-out" clause in the January 7 option agreement that remedy requested by Protestants in the litigation is indemnified Acorn for its expenses if a bidder other than Acorn injunctive relief; if the court were to rule against received tenders for over 50 percent of Bank's shares. Both the option agreement and the indemnification clause have been ruled unlawful by the Illinois Commissioner of Banks (Letter from John E. Treston, First Deputy Commissioner of Banks and Trust Companies of the 5. Acorn Bankshares, Inc. v. Suburban Bancorp, Inc., No. 85 State of Illinois, to the Board of Directors, Bartlett Bank & Trust C 0329 (N.D. 111. filed Jan. 14, 1985). In addition, Applicant has filed Company, February 7, 1985). suit against Acorn Bank attacking Acorn's tender offer. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 583 Applicant, the court would simply enjoin Applicant and are otherwise consistent with Regulation Y. Applifrom accepting the shares offered to it. The effect of cant filed its application with reasonable promptness, such a ruling would be to force Applicant to issue a on February 15, 1985. Therefore, even though the revised tender offer that would remedy any prior option agreements contain no explicit requirement that omissions or misstatements. In the Board's view, the Applicant secure the Board's approval prior to exercourt is fully able to offer Protestants any relief to cising the options, the rebuttable presumption of conwhich they may be entitled. trol in section 225.31(d)(1) does not apply to these The Board has, however, considered Protestants' options. allegations in the context of its evaluation of the Protestants further allege that the payment by Applifinancial and managerial factors in this case.6 The cant of the legal fees incurred by seven shareholders of Board's review of the record does not indicate that the Bank in a stockholder's derivative action against Bank alleged securities law violations by Applicant, even if to invalidate Bank's stock dividend of January 2, 1985, established, reflect any fraudulent intent by Applicant indicates that Applicant in fact controls the shares or otherwise reflect so adversely on Applicant's mana- owned by those individuals (11 percent of Bank's gerial resources so as to warrant denial of the applica- shares). Although Applicant's payment of legal fees tion. (Protestants make no allegations of common law does provide some support for Protestants' assertion, fraud or of criminal conduct.) Applicant's decision to pay these legal fees could just as easily be explained by noting that Applicant's Allegations of "Control" Violations interests are parallel to those of the shareholders. Moreover, no formal tie exists between these seven Protestants allege that Applicant's December, 1984, shareholders and Applicant except for the shareholdacquisition of options for approximately 40 percent of ers' tender of their shares to Applicant; without further evidence of control of these shares by Applicant, Bank's shares violates the "control" provisions of Protestants' allegation does not support a finding that Regulation Y (12 C.F.R. § 225.31(d)(1)) because the the stock owned by these shareholders should be option agreements do not condition the ability of attributed to Applicant. Applicant to exercise the option upon the Board's approval and appear to allow for immediate exercise of the option by Applicant. Although a bank holding company may not acquire Possible Minority Position in Bank options for more than 5 percent of a bank's shares that are immediately convertible into voting securities, Bank contends that, if this application were approved, section 225.3l(d)(l)(ii)(C) of Regulation Y exempts Applicant would be able to acquire only a minority of from the rebuttable presumption of control in section Bank's shares, and that the existence of such a hostile 225.31(d) those option agreements for the acquisition minority block would have a serious negative impact of shares that continue only for the time necessary to on Bank's operations and future prospects. Bank obtain approval from the Board. The Board generally bases its argument that Applicant would not be able to considers option agreements of a duration of one year acquire a majority of shares on the existence of the or less to be consistent with the terms of this exemp- January 7 option granted Acorn to acquire 11,453 tion. If an option agreement terminates by its terms authorized but unissued shares of Bank. within one year and meets the other requirements of After consideration of the record in this case, the section 225.31(d), the Board does not insist upon the Board has determined that Bank's claim does not conditioning of options upon Board approval, as long require denial of the application. First, Applicant has as the holder of the option promptly files an applica- committed in writing that it will not consummate its tion to acquire the bank in question. Bank holding proposed acquisition of Bank's shares if it cannot companies are advised, however, that the Board be- obtain a majority thereof. Second, as noted above, the lieves the conditioning of options upon the Board's Illinois Commissioner of Banks has ruled that the approval of an application under the Act to be appro- January 7 option agreement is invalid and that the priate in these circumstances. shares contained in the option agreement with Acorn The option agreements entered into by Applicant in shall not be sold or issued by Bank.7 If the Commis- December, 1984, expire by their terms within a year 7. Bank and Acorn have contested this ruling and, as part of their 6. See Benson Bancshares, Inc., 63 FEDERAL RESERVE BULLETIN action against Applicant in federal district court, have sought a 1009 (1977). declaratory judgment that the option agreement is valid. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

584 Federal Reserve Bulletin • July 1985 sioner's position is sustained, Acorn will be unable to By order of the Board of Governors, effective exercise its option or to acquire a majority of Bank's May 16, 1985. shares. Voting for this action: Vice Chairman Martin and Governors Partee, Gramley, and Seger. Absent and not voting: Chairman Volcker and Governors Wallich and Rice. Competitive Factors JAMES MCAFEE Protestants allege that Applicant's proposal would [SEAL] Associate Secretary of the Board have adverse effects on competition in relevant markets. First, Bank argues that Applicant has a "historically low percentage of loans to deposits" and that this Orders Issued Under Sections 3 and 4 of Bank allegedly low loan-to-deposit ratio implies that Appli- Holding Company Act cant's acquisition may reduce competition in the local area by the "direct reduction of available funds for Citizens Financial Corporation lending in the community." While Applicant's ratio of Highland Park, Illinois loans to deposits is under the average for its peer group, the relevant market for consideration of com- Order Approving Acquisition of Banks and a petitive factors in this case is the Chicago banking Commercial Finance Company market, rather than the bank's local service area. The effect of this proposal on competition in the Chicago Citizens Financial Corporation ("Citizens"), Highland banking market, in which hundreds of banks compete Park, Illinois, has applied under section 3(a)(1) of the in commercial and consumer lending, would be insig- Bank Holding Company Act of 1956 ("Act"), nificant. Moreover, the Board has considered this 12 U.S.C. § 1842(a)(1), to become a bank holding application in the context of Applicant's overall lend- company by acquiring control of the following bank ing record and is unable to conclude that consumma- holding companies and banks (collectively, "Banks") tion of the proposed acquisition would result in any in Illinois: First Highland Corporation and its subsidsignificant lessening of Bank's service to the commu- iary, The First National Bank of Highland Park, both nity. of Highland Park; Elk Grove Investment Corporation Second, Acorn alleges that Applicant is already and its subsidiary, Bank of Elk Grove, both of Elk "among the largest" banking organizations in the Grove Village; Financial Investments Corporation and suburban corridor northwest of Chicago and that ap- its subsidiary, Hyde Park Bank and Trust Company, proval of this proposal would allow Applicant to both of Chicago; Woodfield Investments Corporation strengthen its grip on this market area, thus decreasing and its subsidiary, Woodfield Bank, both of Schaumcompetition. Like the previous claim, this allegation is burg; and North State Investment Corporation and its without merit, because the competitive effects of this subsidiary, Marina Bank, both of Chicago; and Citiproposal in the relevant market would be de minimis. zens Bank and Trust Company, Park Ridge. The On the basis of all the facts of record, the Board acquisition by Citizens of the five bank holding compadoes not believe that Protestants' comments present nies will be effected by means of an exchange of sufficient evidence to support denial of this application shares, and represents a reorganization of existing on the basis of adverse managerial, financial, or com- ownership interests. The acquisition of Citizens Bank petitive factors. Considerations relating to the conve- and Trust will be effected by means of a cash purnience and needs of the community to be served also chase. are consistent with approval. Citizens also has applied under section 4(c)(8) of the Based on the foregoing and other facts of record, the Act, 12 U.S.C. § 1843(c)(8), and section 225.23(a)(2) Board has determined that the proposed acquisition is of the Board's Regulation Y, 12 C.F.R. § 225.23(a)(2), in the public interest and that the application should be to acquire Interfinancial Corporation ("Interfinanapproved. Accordingly, the application is approved cial"), Chicago, Illinois. Interfinancial is engaged in for the reasons summarized above. The transaction the activity of operating as a commercial finance shall not be consummated before the thirtieth calendar company. The Board has determined that this activity day following the effective date of this Order, or later is closely related to banking and permissible for bank than three months after the effective date of this holding companies. 12 C.F.R. § 225.25(b)(l)(iv). Order, unless such period is extended for good cause Notice of the applications, affording opportunity for by the Board or by the Federal Reserve Bank of interested persons to submit comments, has been Chicago, pursuant to delegated authority. given in accordance with sections 3 and 4 of the Act, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 585 50 Federal Register 8192 (1985). The time for filing a significant level of intangible assets arising from a comments has expired, and the Board has considered proposed expansion.5 the applications and all comments received in light of In this case, the Board notes that Citizens' primary the factors set forth in section 3(c) of the Act, and total capital ratios are above the minimum levels 12 U.S.C. § 1842(c), and the considerations specified specified for bank holding companies under the in section 4(c)(8) of the Act. Board's Capital Adequacy Guidelines.6 Under these Citizens, a nonoperating Illinois corporation, was guidelines, the Board has stated that, in reviewing organized for the purpose of becoming a bank holding acquisition proposals, the Board will take into considcompany by acquiring Banks. Upon consummation of eration both the stated primary capital ratio and the the proposal, Applicant would become the sixth larg- primary capital ratio after deducting intangibles. In est commercial banking organization in Illinois, con- acting on applications under the guidelines, the Board trolling total deposits of $1.2 billion, which represents also will take into account the nature and amount of 1.2 percent of the deposits in commercial banks in the intangible assets and will, as appropriate, adjust capistate.1 Consummation of this proposal will not have an tal ratios to include certain intangible assets on a caseadverse effect upon the concentration of banking re- by-case basis. sources in Illinois. In its assessment of Citizens' capital adequacy, the Banks are all located in the Chicago market,2 and Board has considered the fact that the proposed acquieach controls less than 1 percent of the deposits in sition would increase the amount of goodwill as a commercial banks in the market.3 Upon consumma- percentage of Citizens' primary capital. However, tion of the proposal, Applicant would become the sixth Citizens would meet the minimum capital required largest commercial banking organization in the Chica- under the Board's guidelines without undue reliance go market, and would control 1.8 percent of the on goodwill. Moreover, Citizens' projections indicate deposits in commercial banks in the market. The that its tangible primary capital ratio will exceed the Herfindahl-Hirschman Index ("HHI") would in- minimum level specified for bank holding companies crease by 2.6 points to 804.6.4 On the basis of these in the revised guidelines by the end of 1985. The and the other facts of record, the Board concludes that financial and managerial resources and future prosconsummation of the proposal would not have a pects of Applicant and Banks are regarded as generally significant adverse effect upon existing competition in satisfactory, particularly in light of commitments made the Chicago market. in connection with this application. Although Citizens will incur debt as a result of this transaction, it appears In evaluating this application, the Board has considthat Citizens will be capable of serving as a source of ered the financial and managerial resources of Citizens strength to its subsidiaries. Based upon these facts, the and the effect on these resources of this proposal. The Board believes that banking factors are consistent with Board has indicated and continues to believe that approval. Considerations relating to the convenience capital adequacy is an especially important factor in and needs of the communities to be served also are the analysis of bank holding company proposals, parconsistent with approval. ticularly in transactions where a significant acquisition is involved, and that it will consider the implications of Applicant also has applied under section 4(c)(8) of the Act to acquire Interfinancial.7 Interfinancial is a commercial finance company, which initiates and services asset-based loans and arranges participation loans. 1. Unless otherwise indicated, all deposit data are as of June 30, This proposal is essentially a reorganization of the 1984. ownership of Interfinancial. Consummation of this 2. The Chicago market is approximated by all of Cook, DuPage, and Lake Counties, all in Illinois. 3. Applicant's principals have controlled the five one-bank holding companies for a number of years. In accordance with its policy, the Board has reviewed the competitive effects of the transactions by which these banks came under common control. See, e.g., Mahaska Investment Company, 63 FEDERAL RESERVE BULLETIN 579 (1977); 5. Security Banks of Montana, 71 FEDERAL RESERVE BULLETIN Mid-Nebraska Bancshares, Inc. v. Board of Governors, 627 F.2d 266 246 (1985); National City Corporation, 70 FEDERAL RESERVE BULLE- (D.C. Cir. 1980). Based upon the small market shares of these banks at TIN 743 (1984); Eagle Bancorporation, 70 FEDERAL RESERVE BULLEthe times they came under common control, the Board concludes that TIN 728 (1984). these transactions did not have a significant adverse effect on competi- 6. Capital Adequacy Guidelines (50 Federal Register 16,057 tion. (1985)). 4. Under the revised Justice Department Merger Guidelines 7. Interfinancial is owned as a joint venture. First Highland Corpo- (June 14, 1984), a market in which the post-merger HHI is below 1000 ration, Elk Grove Investment Corporation, North State Investment is considered to be unconcentrated. In such a market, the Justice Corporation, and Financial Investments Corporation own 80 percent Department is unlikely to challenge a merger producing an increase in of Interfinancial. Applicant will own 80 percent of Interfinancial as a the HHI of less than 100 points. result of its acquisition of these bank holding companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

586 Federal Reserve Bulletin • July 1985 proposal will have no effect on competition or the National"), and thereby indirectly acquire City Naconcentration of resources in any relevant market. tional Bank of Baton Rouge, Baton Rouge, Louisiana; The record does not contain any evidence that con- and to acquire directly The First National Bank of summation of the proposal would result in any other Lake Charles, Lake Charles, Louisiana ("Lake adverse factors, such as conflicts of interest or un- Charles Bank"), and Rapides Bank & Trust Company, sound banking practices. Accordingly, the Board has Alexandria, Louisiana ("Rapides Bank") (together, determined that the balance of public interest factors it known as "Companies and Banks"). must consider under section 4(c)(8) of the Act is First Commerce Corporation has also applied for favorable and consistent with approval of the applica- the Board's approval under section 4(c)(8) of the Act tion by Citizens to acquire Interfinancial. (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Based upon the foregoing and the facts of record, Board's Regulation Y (12 C.F.R. § 225.23), to acquire the Board has determined that the applications under MSDI Company, Lafayette, Louisiana, a subsidiary of sections 3 and 4 of the Act should be, and hereby are, First Lafayette, which currently engages in data proapproved. The proposal shall not be consummated cessing activities. before the thirtieth calendar day following the effective Applicant is the third largest commercial banking date of this Order nor later than three months after the organization in Louisiana and controls total domestic effective date of this Order, unless such period is deposits of $1.4 billion, representing 5.1 percent of the extended for good cause by the Board or by the total deposits in commercial banks in the state.1 First Federal Reserve Bank of Chicago pursuant to delegat- Lafayette, the 16th largest commercial banking organied authority. The determination as to Applicant's zation in the state, controls one bank with total nonbanking activity is subject to the conditions set domestic deposits of $363.1 million, representing 1.3 forth in sections 225.4(d) and 225.23(b)(3) of Regula- percent of the total deposits in commercial banks in tion Y, 12 C.F.R. §§ 225.4(d) and 225.23(b)(3), and the the state. City National, the 14th largest commercial Board's authority to require such modification or banking organization in the state, controls one bank termination of the activities of a holding company or with total domestic deposits of $399.8 million, repreany of its subsidiaries as the Board finds necessary to senting 1.4 percent of the total deposits in commercial assure compliance with the provisions and purposes of banks in the state. Rapides Bank is the 21st largest the Act and the Board's regulations and orders issued commercial banking organization in the state with thereunder, or to prevent evasion thereof. deposits of $314.7 million, representing 1.1 percent of By order of the Board of Governors, effective the total deposits in commercial banks in the state. May 20, 1985. Lake Charles Bank is the 35th largest commercial bank in the state, with deposits of $141.6 million, Voting for this action: Chairman Volcker and Governors representing 0.5 percent of the total deposits in com- Martin, Wallich, Partee, Rice, Gramley, and Seger. mercial banks therein. Upon consummation of the proposed transactions, Applicant would become the JAMES MCAFEE largest commercial banking organization in Louisiana, [SEAL] Associate Secretary of the Board controlling $2.6 billion in deposits, representing 9.5 percent of the total deposits in commercial banks in the state. The proposed transaction would have no First Commerce Corporation significant effect on the concentration of banking re- New Orleans, Louisiana sources in Louisiana. Because Applicant and the banks to be acquired do Order Approving the Merger of Bank Holding not operate in any of the same markets, consummation Companies, the Acquisition of Banks and a of this proposal would not have a significant adverse Company Engaged in Data Processing Activities effect upon existing competition in any relevant market.2 The Board has also examined the effect of the First Commerce Corporation, New Orleans, Louisiana, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied 1. Banking data are as of June 30, 1984. for the Board's approval under section 3 of the Act 2. Applicant operates in the New Orleans banking market, which is approximated by the New Orleans MSA. Lake Charles Bank operates (12 U.S.C. § 1842) to merge with First Lafayette Banin the Lake Charles banking market, which is defined as the Lake corp, Inc., Lafayette, Louisiana ("First Lafayette"), Charles SMSA. City National operates in the Baton Rouge market, and thereby indirectly to acquire The First National which is defined as the Baton Rouge SMSA. First Lafayette operates in the Lafayette banking market, which is approximated by the Bank of Lafayette, Lafayette, Louisiana, and City Lafayette SMSA. Rapides Bank operates in the Alexandria banking National Bancshares, Baton Rouge, Louisiana ("City market, which is approximated by the Alexandria SMSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 587 proposed acquisition upon probable future competi- sections 3 and 4 of the Act should be and are hereby tion in the relevant geographic markets in light of the approved. The merger of bank holding companies and Board's proposed market extension Guidelines.3 After the acquisition of Banks shall not be consummated consideration of these factors in light of the specific before the thirtieth calendar day following the effective facts of this case, the Board has concluded that date of this Order, and neither the banking acquisition consummation of this proposal would not have any nor the nonbanking acquisition shall occur later than significant adverse effects on probable future competi- three months after the effective date of this Order, tion in any relevant market. The New Orleans, Baton unless such period is extended for good cause by the Rouge, and Lake Charles markets are not considered Board or by the Federal Reserve Bank of Atlanta, highly concentrated under the Board's guidelines, and acting pursuant to delegated authority. The determinathere are numerous potential entrants into the Alexan- tion with respect to Applicant's acquisition of Compadria and Lafayette banking markets. ny is subject to all of the conditions set forth in The financial and managerial resources of Appli- Regulation Y, including sections 225.4(d) and cant, Companies and Banks are regarded as satisfac- 225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), and to tory and consistent with approval. There is no evi- the Board's authority to require such modification or dence in the record indicating that the banking needs termination of activities of a holding company or any of the communities to be served are not being met. of its subsidiaries as the Board finds necessary to Applicant is a member of Gulfnet, a regional system of assure compliance with the provisions and purposes of automatic teller machines and Companies and Banks the Act and the Board's regulations and orders issued will also become members of this system. Consider- thereunder, or to prevent evasion thereof. ations relating to the convenience and needs of the By order of the Board of Governors, effective community to be served also are consistent with May 20, 1985. approval. Applicant has also applied, pursuant to section Voting for this action: Chairman Volcker and Governors 4(c)(8) of the Act, to acquire MSDI Company, Lafay- Martin, Wallich, Partee, Rice, Gramley, and Seger. ette, Louisiana ("Company"). Company currently is a subsidiary of First Lafayette and engages in data JAMES MCAFEE processing activities to the extent permissible for bank [SEAL] Associate Secretary of the Board holding companies under section 225.25(b)(7) of Regulation Y (12 C.F.R. § 225.25(b)(7)). Applicant currently offers data processing services through its bank subsidiary. In view of the presence of numerous other Key Banks, Inc. suppliers of these services in the region, and the small Albany, New York market shares involved, the Board concludes that no significant existing competition would be eliminated Key Bancorp of the Pacific Inc. by the proposal. Anchorage, Alaska There is no evidence in the record to indicate that approval of this proposal would result in undue con- Order Approving Acquisition of Banks, Formation of centration of resources, decreased or unfair competi- a Bank Holding Company, and the Performance of tion, conflicts of interests, unsound banking practices Certain Nonbanking Activities or other adverse effects on the public interest. Accordingly, the Board has determined that the balance of the Key Banks, Inc. ("Key Banks"), Albany, New York, public interest factors it must consider under section a bank holding company within the meaning of the 4(c)(8) of the Act is consistent with approval of the Bank Holding Company Act of 1956 ("Act"), application to acquire Company. 12 U.S.C. § 1841 et seq., has applied under section Based on the foregoing and other facts of record, the 3(a)(3) of the Act, 12 U.S.C. § 1842(a)(3), to acquire Board has determined that the applications under Alaska Pacific Bancorporation ("Alaska Pacific"), Anchorage, Alaska, a bank holding company within the meaning of the Act, and thereby to acquire indirectly its subsidiary banks: Alaska Pacific Bank 3. "Policy Statement of the Board of Governors of the Federal ("Alaska Bank"), Anchorage, Alaska, and the First Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act," 47 Federal National Bank of Fairbanks ("Fairbanks Bank"), Register 9017 (1982). While the proposed policy statement has not Fairbanks, Alaska. Key Banks will effect this acquisibeen adopted by the Board, the Board is using the policy Guidelines as tion through its wholly owned subsidiary, Key Banpart of its analysis of the effect of a proposal on probable future competition. corp of the Pacific, Inc. ("Key Pacific"), Anchorage, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

588 Federal Reserve Bulletin • July 1985 Alaska.1 In a related application, Key Pacific has its proposed guidelines for assessing the competitive applied for the Board's approval under section 3(a)(1) effects of market extension mergers and acquisitions.4 of the Act, 12 U.S.C. § 1842(a)(1), to become a bank Alaska Pacific operates in the Anchorage and Fairholding company by acquiring Alaska Pacific and its banks markets.5 In view of the lack of concentration in subsidiary banks. the Anchorage market and the number of potential Key Banks and Key Pacific also have applied under entrants in the Fairbanks market, the Board concludes section 4(c)(8) of the Act, 12 U.S.C. § 1843(c)(8), and that consummation of this proposal would not have section 225.23(a)(2) of Regulation Y, 12 C.F.R. any significant adverse effects upon probable future § 225.23(a)(2), to acquire indirectly Alaska Pacific competition in any relevant market. Mortgage Company ("Alaska Mortgage"), Anchor- Section 3(d) of the Act prohibits a bank holding age, Alaska; All Coast Financial, Inc. ("All Coast company from acquiring a bank outside of the bank Financial"), San Diego, California; All Coast Ser- holding company's home state unless the statute laws vices, Inc. ("All Coast Services"), San Diego, Califor- of the state where the target bank is located specificalnia; and Pentek Leasing, Inc. ("Pentek"), San Jose, ly authorize such an acquisition.6 Section 06.05.235(e) California. The Board has previously determined that of the Alaska Statutes allows out-of-state bank holding the activities engaged in by these companies are companies to acquire banks located in Alaska unless closely related to banking and permissible for bank the bank to be acquired is a recently formed bank.7 holding companies. 12 C.F.R. §§ 225.25(b)(1) and (5). Since Alaska Bank and Fairbanks Bank are not recent- Notice of the applications, affording opportunity for ly formed banks within the meaning of Alaska law,8 interested persons to submit comments, has been the proposal would not violate the Douglas Amendgiven in accordance with sections 3 and 4 of the Act, ment to the Act. In this regard, the Director of 50 Federal Register 10,857 (1985). The time for filing Alaska's Department of Commerce and Economic comments has expired, and the Board has considered Development commented that the proposal would not the applications and all comments received in light of conflict with any Alaska law or regulation. the factors set forth in section 3(c) of the Act, The financial and managerial resources and future 12 U.S.C. § 1842(c), and the considerations specified prospects of Key Banks, Key Pacific, Alaska Pacific in section 4(c)(8) of the Act.2 and their subsidiaries are satisfactory and consistent Key Banks is the fourteenth largest banking organi- with approval of these applications. Considerations zation in the state of New York, and controls ten related to the convenience and needs of the communisubsidiary banks and six nonbanking subsidiaries that ties to be served also are consistent with approval. are engaged in investment advisory, leasing, data Consummation of this proposal will allow Alaska processing and credit reinsurance activities. It con- Pacific to offer a variety of services not currently trols total deposits of $3.4 billion, which represents 1.9 offered, including automobile leasing, discount brokerpercent of the deposits in commercial banks in New age services, electronic banking services, and credit York.3 Alaska Pacific is the fifth largest banking life and accident and health insurance. organization in Alaska. It controls total deposits of $326 million, which represents 9.8 percent of the deposits in commercial banks in Alaska. Alaska Bank and Fairbanks Bank do not compete in any banking market with any subsidiary bank of Key Banks. Ac- 4. "Proposed Policy Statement of the Board of Governors of the cordingly, consummation of this proposal will not Federal Reserve System for Assessing Competitive Factors Under the result in any adverse effects upon existing competition Bank Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (1982). Although the proposed policy statement has not in any relevant market. been approved by the Board, the Board is using the policy guidelines The Board also has considered the effect of this as part of its analysis of the effect of a proposal on probable future proposal upon probable future competition in light of competition. 5. The Anchorage market is defined to include the Anchorage Metropolitan Area. The Fairbanks market is defined to include the Fairbanks Metropolitan Area. 6. 12 U.S.C. § 1842(d). The home state of the acquiring holding company is defined for Douglas Amendment purposes as the state in which the operations of the bank holding company's banking subsid- 1. Key Pacific is a nonoperating company that would become a iaries were principally conducted on the later of July 1, 1966, or the bank holding company upon consummation of this proposal. date on which the company became a bank holding company. Id. 2. Comments were submitted by the Comptroller of the Currency 1. See Alaska Stat. § 06.05.235(e) (1984). The Board has found that and the Director of the Department of Commerce and Economic for purposes of section 3(d) of the Act, the statute laws of Alaska Development of the State of Alaska. The Comptroller expressed no specifically authorize an out-of-state bank holding company to acquire opposition to the applications. a bank in Alaska. Rainier Bancorporation, 69 FEDERAL RESERVE 3. Unless otherwise indicated, all deposit data are as of June 30, BULLETIN 295 (1983). 1984. 8. See Alaska Stat. § 06.05.235(g). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 589 Key Banks and Key Pacific also have applied under section 3 and 4 of the Act should be, and hereby are, section 4(c)(8) of the Act to acquire Alaska Mortgage, approved. The proposal shall not be consummated All Coast Financial, All Coast Services and Pentek.9 before the thirtieth calendar day following the effective Alaska Mortgage originates, sells and services residen- date of this Order or later than three months after the tial mortgage loans in Alaska. All Coast Financial effective date of this Order, unless such period is originates and services commercial mortgage loans in extended for good cause by the Board or by the California. All Coast Services is a wholly owned Federal Reserve Bank of New York, pursuant to subsidiary of All Coast Financial, and engages only in delegated authority. The determination as to Applitrustee services required for trust deeds originated by cants' nonbanking activities is subject to the condi- All Coast Financial. Pentek engages in full-payout tions set forth in sections 225.4(d) and 225.23(b)(3) of leasing of personal property in Alaska, Washington, Regulation Y, 12 C.F.R. §§ 225.4(d) and 225.23(b)(3), Oregon and California. The Board has previously and the Board's authority to require such modification determined that these activities are closely related to or termination of the activities of a holding company or banking and permissible for bank holding companies. any of its subsidiaries as the Board finds necessary to 12 C.F.R. §§ 225.25(b)(1) and (5). assure compliance with the provisions and purposes of Consummation of this proposal will not result in any the Act and the Board's regulations and orders issued adverse effects, such as decreased competition. With thereunder, or to prevent evasion thereof. respect to existing competition, the nonbanking sub- By order of the Board of Governors, effective sidiaries of Key Banks do not operate in the same May 15, 1985. markets as any of Alaska Pacific's nonbanking subsidiaries. Thus, consummation of this proposal would not Voting for this action: Vice Chairman Martin and Govereliminate existing competition in any relevant market. nors Partee, Gramley, and Seger. Absent and not voting: Chairman Volcker and Governors Wallich and Rice. With respect to potential competition, Alaska Pacific has a very small presence in each of the relevant nonbanking product markets. Accordingly, consum- WILLIAM W. WILES mation of the proposal will not have a significant [SEAL] Secretary of the Board adverse effect on potential competition in any relevant market. There is no evidence in the record that consummation of the proposal would result in any other United Community Corporation adverse effects, such as unsound banking practices, Shawnee, Oklahoma unfair competition, conflicts of interest, or an undue concentration of resources. Order Approving the Formation of a Bank Holding With respect to public benefits, consummation of Company and the Provision of Management the proposal may result in increased competition since Consulting Services to Nonaffiliated Depository Alaska Pacific's nonbanking subsidiaries will have Institutions access to the greater financial resources of Key Banks. Accordingly, the Board has determined that the bal- United Community Corporation, Shawnee, Oklahoance of public interest factors it must consider under ma, has applied for the Board's approval under section section 4(c)(8) of the Act is favorable and consistent 3(a)(1) of the Bank Holding Company Act ("Act") with approval of the applications by Key Banks and (12 U.S.C. § 1842(a)(1)) to become a bank holding Key Pacific to acquire the nonbanking subsidiaries of company by acquiring all of the voting shares of seven Alaska Pacific. bank holding companies, thereby indirectly acquiring Based upon the foregoing and the facts of record, their subsidiary banks and bank holding companies. the Board has determined that the applications under Applicant proposes to acquire: Federal National Bancshares, Inc., Shawnee, Oklahoma, and its subsidiaries, The Federal National Bank and Trust Company of Shawnee, Shawnee, Oklahoma, and Security State 9. Alaska Pacific has two other nonbanking subsidiaries: Alaska Bank, Comanche, Oklahoma; First Stillwater Banc- Pacific Trust Company ("Alaska Trust"), Anchorage, Alaska; and shares, Inc., and First Union Corporation, both of Alaska Pacific Investment Company ("Alaska Investment"). Alaska Trust is a subsidiary of Alaska Bank, and is held indirectly by Alaska Stillwater, Oklahoma, and their subsidiary, The First Pacific under section 225.22(d)(2) of the Board's Regulation Y, National Bank and Trust Company of Stillwater, Still- 12 C.F.R. § 225.22(d)(2). Alaska Trust engages in trust activities in water, Oklahoma; First Guthrie Bancshares, Inc., which Alaska Bank may engage, and at locations at which Alaska Bank may engage in such activities. Alaska Investment is a small Guthrie, Oklahoma, and its subsidiary banks, The business investment corporation that Alaska Pacific holds directly First National Bank, Guthrie, Oklahoma, Liberty under section 4(c)(5) of the Act, 12 U.S.C. § 1843(c)(5), and section 225.22(c)(4) of the Board's Regulation Y, 12 C.F.R. § 225.22(c)(4). State Bancshares, Inc., and The Liberty State Bank, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

590 Federal Reserve Bulletin • July 1985 both of Tahlequah, Oklahoma; Konawa Bancorpora- of the commercial banks involved in this proposal tion, Inc., Konawa, Oklahoma, and its subsidiary operate in banking markets in which Applicant's prinbank, Oklahoma State Bank, Konawa, Oklahoma; cipal controls other banks. The markets where these First Seminole Bancorporation, Inc., Seminole, Okla- banks operate are the Tulsa, Pottawatomie, and Ponhoma, and its subsidiary bank, First National Bank, totoc banking markets.2 In analyzing the competitive Seminole, Oklahoma; Sand Springs Bancshares, Inc., effects of a proposal such as this one, involving Sand Springs, Oklahoma, and its subsidiary bank First banking organizations located in the same market and Bank and Trust Company, Sand Springs, Oklahoma; under common control, the Board considers the comand ABC Bancshares, Inc., McAlester, Oklahoma, petitive effects of the transactions whereby common and its subsidiaries American Bank of Commerce, control of the institutions was established.3 McAlester, Oklahoma, Wilburton State Bancshares, In the Tulsa banking market, banks owned by Inc., and Wilburton State Bank, both of Wilburton, Applicant's principal control less than 1 percent of the Oklahoma. market's commercial bank deposits. In the Pottawato- Applicant also has applied for the Board's ap- mie market, one of the two banks controlled by proval under section 4(c)(8) of the Act (12 U.S.C. Applicant's principal was started de novo by Appli- § 1843(c)(8)) to provide management consulting ser- cant's principal. In the Pontotoc banking market, vices for nonaffiliated depository institutions. This Applicant's principal controls Oklahoma State Bank activity has previously been determined by the Board and two other banks that control, in the aggregate, to be closely related to banking and permissible for approximately 16.0 percent of the market's commerbank holding companies (12 C.F.R. § 225.25(b)(ll)). cial bank deposits. The two affiliated banks held small Notice of the applications, affording opportunity for market shares (7.6 percent and 4.6 percent) at the time interested persons to submit comments, has been of affiliation and one of the banks was in danger of given in accordance with sections 3 and 4 of the Act failing when it was acquired by Applicant's principal. (50 Federal Register 7647 (1985)). The time for filing Upon review of the facts concerning the transactions comments has expired, and the Board has considered as a result of which these institutions came under the applications and all comments received in light of common control, the Board concludes that the affilithe factors set forth in section 3(c) of the Act ations did not substantially lessen competition in any (12 U.S.C. § 1842(c)) and the considerations specified relevant banking market. in section 4(c)(8) of the Act. Based upon the facts of record, the Board has Applicant is a nonoperating corporation, formed for determined that consummation of this proposal would the purpose of becoming a bank holding company by have no significant adverse effects on competition in acquiring seven bank holding companies currently any relevant banking market. affiliated through common ownership and their subsid- Where the principal of an applicant controls other iary bank holding companies and banks. Thus, this banking organizations, the Board considers the finanproposal represents a restructuring of existing owner- cial and managerial resources and future prospects of ship interests. all of the institutions comprising the chain. According- Each of the banks to be acquired controls less than 1 ly, the banks involved in this proposal and the affiliatpercent of total deposits in commercial banks in the ed banking organizations have been reviewed in light state.1 Upon consummation of this proposal, Appli- of the Board's Capital Adequacy Guidelines4 which cant would become the 4th largest commercial banking are generally applicable to bank holding companies organization in Oklahoma, controlling total deposits of and chain banking organizations with total assets of $490.2 million, representing approximately 1.9 percent over $150 million.5 Based upon the record, the finanof the total deposits in commercial banks in the state. cial and managerial resources of Applicant and the Consummation of this proposal would have no significant adverse effects on the concentration of banking resources in Oklahoma. All of the organizations involved in this proposal compete in separate banking markets. Applicant's 2. The Tulsa banking market is approximated by the Tulsa RMA. principal, however, controls a number of other com- The Pottawatomie banking market is approximated by Pottawatomie mercial banking organizations in Oklahoma, and three County, Oklahoma. The Pontotoc banking market is approximated by Pontotoc County plus portions of Seminole and Garvin Counties. 3. See Mid-Nebraska Bancshares, Inc. v. Board of Governors, 627 F.2d 26 (D.C. Cir. 1980). 4. 50 Federal Register 16,057 (1985); to be codified at 12 C.F.R. Parts 208, 225, 263. 5. The combined banking assets of the chain equal $1.1 billion as of 1. Deposit data are as of December 30, 1983. June 30, 1983. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 591 banks are considered to be generally satisfactory.6 Based on the foregoing and the facts of record, the Applicant does not plan to provide any new services as Board has determined that the applications under a result of this proposal. There is no evidence in the sections 3(a)(1) and 4(c)(8) of the Act are consistent record, however, that the needs of the communities to with the public interest, and should be and hereby are be served are not being met. Accordingly, consider- approved. The banking acquisitions shall not be conations relating to the convenience and needs of the summated before the thirtieth calendar day following communities to be served are consistent with ap- the effective date of this Order, and neither the bankproval. ing acquisitions nor the nonbanking activity shall be Applicant also has applied under section 4(c)(8) of consummated later than three months after the effecthe Act to engage directly in providing management tive date of this Order, unless such period is extended consulting services for nonaffiliated depository institu- for good cause by the Board or by the Federal Reserve tions pursuant to Regulation Y. 12 C.F.R. Bank of Kansas City, pursuant to delegated authority. § 225.25(b)(ll). Applicant will engage in this activity The determinations as to Applicant's nonbanking acde novo and thus will provide additional competition in tivities are subject to the conditions set forth in this area. There is no evidence in the record that sections 225.4(d) and 225.23(b)(3) of Regulation Y approval of this proposal would result in any undue (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)) and the concentration of resources, decreased or unfair com- Board's authority to require such modifications or petition, conflicts of interests, unsound banking prac- termination of the activities of a holding company or tices, or other adverse effects on the public interest. any of its subsidiaries as the Board finds necessary to Accordingly, the Board has determined that the bal- assure compliance with the provisions and purposes of ance of public interest factors it must consider under the Act and the Board's regulations and orders issued section 4(c)(8) of the Act is consistent with approval of thereunder, or to prevent evasion thereof. this proposal. By order of the Board of Governors, effective May 13, 1985. Voting for this action: Vice Chairman Martin and Governors Rice, Gramley, and Seger. Absent and not voting: Chairman Volcker and Governors Wallich and Partee. 6. As part of this proposal MCorp, Dallas, Texas (formerly Mercantile Texas Corporation), will purchase $10.0 million of Applicant's nonvoting preferred stock. Applicant has committed that it will not JAMES MCAFEE consummate this proposal until the Board has reviewed the terms of MCorp's proposed investment. [SEAL] Associate Secretary of the Board Legal Developments continued on next page Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 Federal Reserve Bulletin • July 1985 ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During April 1985 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 (effective date) First Interstate Corporation of Alaska, First Interstate Bank of Alaska, May 23, 1985 Anchorage, Alaska Anchorage, Alaska 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 ABC Holding Company, Quitman Bancshares, Inc., Atlanta May 8, 1985 Moultrie, Georgia Quitman, Georgia Adams Bankcorp, Inc., Adams County Bank, Kansas City May 29, 1985 Northglenn, Colorado Northglenn, Colorado City wide Bank of Thornton, Thornton, Colorado Allied Bancshares, Inc., Allied Bank Arlington, Dallas May 15, 1985 Houston, Texas Arlington, Texas American Bank Holding Corpo- American National Bank-Up- Dallas May 9, 1985 ration, town, Corpus Christi, Texas Corpus Christi, Texas AmeriWest Bancor, Inc., Paradise Valley, San Francisco May 10, 1985 Phoenix, Arizona Phoenix, Arizona Angola State Bancorp, Angola State Bank, Chicago May 17, 1985 Angola, Indiana Angola, Indiana Atlantic Bancorporation, Glendale National Bank of New Philadelphia May 21, 1985 Voorhees, New Jersey Jersey, Voorhees, New Jersey Bank South Corporation, Bank South Macon, Inc., Atlanta May 24, 1985 Atlanta, Georgia Macon, Georgia First Citizens Bank, Forsyth, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 593 Section 3—Continued . „ . , . Reserve Effective Applicant Bank(s) Bank date Benson Investment Company, Kelly Field Bancshaes Corpora- Dallas May 10, 1985 San Antonio, Texas tion, San Antonio, Texas Kelly Field National Bank, Leon Valley, Texas Exchange National Bank, San Antonio, Texas BNH Bancshares, Inc., The Bank of New Haven, Boston May 6, 1985 New Haven, Connecticut New Haven, Connecticut Canandaigua National Corpora- The Canandaigua National Bank New York April 26, 1985 tion, and Trust Company, Canandaigua, New York Canandiagua, New York Capital Peoples Bancshares, United Peoples Bank, Dallas April 18, 1985 Inc., Lampasas, Texas Killeen, Texas The Peoples National Bank of Lampasas, Lampasas, Texas Cattail Bancshares, Inc., Atwater State Bank, Minneapolis April 18, 1985 Atwater, Minnesota Atwater, Minnesota State Bank of Kimball, Kimball, Minnesota CB&T Bancshares, Inc., Cohutta Bancshares, Inc., Atlanta May 24, 1985 Columbus, Georgia Chats worth, Georgia CB&T Bancshares, Inc., First United Bancshares, Inc., Atlanta May 14, 1985 Columbus, Georgia Montezuma, Georgia First United Bank, Montezuma, Georgia CB&T Capital Corporation, Citizens Bank & Trust Company, St. Louis May 13, 1985 Louisville, Mississippi Louisville, Mississippi Centennial Bancshares, Inc., Pioneer National Bank, San Francisco May 22, 1985 Yakima, Washington Yakima, Washington C.F.C. Bancorp, Inc., First National Bank of Crystal Minneapolis May 10, 1985 Crystal Falls, Michigan Falls, Crystal Falls, Michigan Chapman Bancshares, Inc., Valley Insurance Company, Inc., Kansas City April 24, 1985 Chapman, Kansas Junction City, Kansas Citizens Bancshares, Inc., The Citizens Bank of Weston, Richmond April 26, 1985 Weston, West Virginia Weston, West Virginia Citizens Financial Services, Citizens Union Bank, Atlanta May 17, 1985 Inc., Greensboro, Georgia Greenboro, Georgia Chemical New York Corpora- Chemical National Bank, New York May 3, 1985 tion, Jericho, New York New York, New York CNB Corporation, The Conway National Bank, Richmond May 6, 1985 Conway, South Carolina Conway, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

594 Federal Reserve Bulletin • July 1985 Section 3—Continued _ , , . Reserve Effective Applicant Bank(s) Bank date Community Bancorp, Inc., The Citizens Bank of Owensville, St. Louis May 16, 1985 Manchester, Missouri Owensville, Missouri Community Bancshares, Inc., Grants State Bank, Kansas City May 17, 1985 Grants, New Mexico Grants, New Mexico Community Bankers, Inc., Granbury Bancshares, Inc., Dallas May 30, 1985 Granbury, Texas Granbury, Texas Grandview Bancshares, Inc., Grandview, Texas First State Bank of Cleburne, Cleburne, Texas Granbury State Bank, Grandbury, Texas First State Bank, Grandview, Texas Community State Banking Cor- Community State Bank of Starke, Atlanta May 14, 1985 poration, Starke, Florida Starke, Florida C&P Bank Corporation of Pen- Gulfside National Bank, Atlanta April 30, 1985 sacola, Gulf Breeze, Florida Pensacola, Florida Crosby Bancshares, Inc., Crosby State Bank, Dallas May 3, 1985 Crosby, Texas Crosby, Texas Cross Plains Bankshares, Inc., Citizens State Bank, Dallas May 2, 1985 Cross Plains, Texas Cross Plains, Texas Cynthiana Bancorporation, The Cynthiana State Bank, St. Louis May 6, 1985 Cynthiana, Indiana Cynthiana, Indiana Dentel Bancorporation, Victor State Bank, Chicago April 25, 1985 Victor, Iowa Victor, Iowa DeSoto Bancshares, Inc., The Bank of DeSoto, St. Louis May 6, 1985 DeSoto, Illinois DeSoto, Illinois Farmers Capital Bank Corpora- The Lawrenceburg National St. Louis May 1, 1985 tion, Bank, Frankfort, Kentucky Lawrenceburg, Kentucky FCN Banc Corp., The Franklin County National Chicago May 17, 1985 Brookville, Indiana Bank of Brookville, Brookville, Indiana First American Bank Corpora- Old Orchard Bank & Trust Com- Chicago May 24, 1985 tion, pany, Elk Grove Village, Illinois Skokie, Illinois First Atlanta Corporation, Bankshares of Georgia, Inc., Atlanta May 24, 1985 Atlanta, Georgia Montezuma, Georgia First Bancshares of Natchi- First Bank of Natchitoches and Dallas April 18, 1985 toches, Inc., Trust Company, Natchitoches, Louisiana Natchitoches, Louisiana FirstBank Corp., Bank of Alma, Chicago May 20, 1985 Alma, Michigan Alma, Michigan First Bank Shares of the South The First National Bank of Alma, Atlanta May 8, 1985 East, Inc., Alma, Georgia Alma, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 595 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date First Independent Investment First Independent Bank, San Francisco May 13, 1985 Group, Inc., Vancouver, Washington Vancouver, Washington First Lehigh Corporation, Albion Bancorp, Inc., Philadelphia May 2, 1985 Walnutport, Pennsylvania Pen Argyl, Pennsylvania First National Bancorp in First National Bank in Fort Lee, New York April 16, 1985 Fort Lee, Fort Lee, New Jersey Fort Lee, New Jersey First National Bancshares of First National Bank of Paulding Atlanta May 2, 1985 Paulding County, Ltd., County, Dallas, Georgia Dallas, Georgia First National Cincinnati Corpo- The Ohio State Bank, Cleveland April 18, 1985 ration, Columbus, Ohio Cincinnati, Ohio First Norton Corporation, First Security Bank and Trust Kansas City April 17, 1985 Norton, Kansas Company, Norton, Kansas First of America Bank Corpora- Community National Bank of Chicago May 17, 1985 tion, Pontiac, Kalamazoo, Michigan Pontiac, Michigan First New England Bankshares First Bristol County National Boston May 6, 1985 Corp., Bank, Taunton, Massachusetts Taunton, Massachusetts First Richardson BancShares, First National Bank of Richard- Dallas May 24, 1985 Inc., son, Richardson, Texas Richardson, Texas First Shawnee Bancshares, Inc., First National Bank in Shawnee, Kansas City May 17, 1985 Shawnee, Kansas Shawnee, Kansas First Valley Corporation, Hanover Bank of Pennsylvania, Philadelphia May 14, 1985 Bethlehem, Pennsylvania Wilkes-Bare, Pennsylvania First Virginia Banks, Inc., The Citizens Bank, Inc., Richmond May 15, 1985 Falls Church, Virginia South Hill, Virginia Fourth Financial Corporation, Charter Banks, N.A., Kansas City May 8, 1985 Wichita, Kansas Wichita, Kansas GCB Bancorp, Inc., Gibson County Bank, St. Louis May 21, 1985 Princeton, Indiana Princeton, Indiana GNB Bancorp, Inc., New Century Bank, Chicago May 28, 1985 Mundelein, Illinois Mundelein, Illinois Great Falls Bancorp, Great Falls Bank, New York May 6, 1985 Totowa, New Jersey Totowa, New Jersey Greene County Bancshares, Greene County Bank, Atlanta April 16, 1985 Inc., Greeneville, Tennessee Greeneville, Tennessee Hartsville Bancshares, Inc., The Bank of Hartsville, Richmond April 12, 1985 Hartsville, South Carolina Hartsville, South Carolina Independent Community Banc- The Citizens State Bank, Chicago May 14, 1985 shares, Inc., Kiel, Wisconsin Kiel, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 Federal Reserve Bulletin • July 1985 Section 3—Continued Reserve Effective Applicant Bankw (s)s Bank date IntraWest Financial Corpora- IntraWest Bank of Arapahoe, Kansas City May 1, 1985 tion, N.A., Denver, Colorado Arapahoe County, Colorado Keeco, Inc., Round Lake Bankcorp, Inc., Chicago May 3, 1985 Chicago, Illinois Round Lake, Illinois Kentucky Southern Bancorp, Citizens Bank and Trust Com- St. Louis April 12, 1985 Inc., pany, Bowling Green, Kentucky Glasgow, Kentucky Liberty Bancshares, Inc., Janada Bancshares, Inc., Minneapolis May 30, 1985 St. Paul, Minnesota St. Paul, Minnesota Liberty State Bank, St. Paul, Minnesota Luray Bankshares, The Peoples State Bank of Luray, Kansas City April 26, 1985 Luray, Kansas Luray, Kansas Metroplex Bancshares, Inc., Gleneagles National Bank, Dallas May 9, 1985 Dallas, Texas Piano, Texas Mid-Missouri Bancshares, Inc., Polk County Bank, St. Louis April 10, 1985 Nevada, Missouri Bolivar, Missouri North Adams Bancshares, Inc., North Adams State Bank of St. Louis May 14, 1985 Ursa, Illinois Ursa, Ursa, Illinois Parker County Bancshares, Weatherford Bancshares, Inc., Dallas April 17, 1985 Inc., Weatherford, Texas Weatherford, Texas The First National Bank of Weatherford, Weatherford, Texas Penn Central Bancorp, Inc., Hollidaysburg Trust Company, Philadelphia April 16, 1985 Huntingdon, Pennsylvania Hollidaysburg, Pennsylvania Peoples Bancorp of Washington, The Peoples National Bank and St. Louis April 30, 1985 Washington, Indiana Trust Company, Washington, Indiana Peoples Bank Corporation of Powell County Bancorp, Inc., Cleveland May 14, 1985 Berea, Stanton, Kentucky Berea, Kentucky First National Carlisle Corp., Carlisle, Kentucky Peoples Commerce Corporation, Peoples Bank and Trust Compa- St. Louis May 15, 1985 North Carrollton, Mississippi ny, North Carrollton, Mississippi Peoples Financial Corp. Inc. Peoples Bank of Ford City, Penn- Cleveland April 26, 1985 Ford City, Pennsylvania sylvania, Ford City, Pennsylvania New Bethlehem Bank, New Bethlehem, Pennsylvania Pierson Bancorporation, Inc., Farmers Savings Bank, Chicago May 3, 1985 Pierson, Iowa Pierson, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 597 Section 3—Continued t, w \ Reserve Effective Applicant Bank(s) Bank date Pullman Bancshares, Inc., Heritage/Pullman Bank and Trust Chicago May 14, 1985 Chicago, Illinois Company, Chicago, Illinois Round Lake Bancorp, Inc., First State Bank of Round Lake, Chicago May 3, 1985 Round Lake, Illinois Round Lake, Illinois Second National Corporation, Citizens Banking Company, Chicago May 6, 1985 Richmond, Illinois Lynn, Indiana Shamrock Bancshares, Inc., Mountain View Bancorporation, Kansas City May 24, 1985 Coalgate, Oklahoma Inc., Mountain View, Oklahoma The First National Bank of Mountain View, Mountain View, Oklahoma Sidell Bancorp, Inc., Sidell State Bank, Chicago May 14, 1985 Sidell, Illinois Sidell, Illinois Southeast Minnesota Banc- Altura State Bank, Minneapolis May 16, 1985 shares, Inc., Altura, Minnesota Altura, Minnesota State National Bancorp, Inc., Farmers Liberty Bank of Au- Cleveland April 25, 1985 Maysville, Kentucky gusta, Augusta, Kentucky Summerville/Trion Bancshares, First National Bank of Chattooga Atlanta April 16, 1985 Inc., County, Trion, Georgia Trion, Georgia The Colonial BancGroup, Inc., First Tuscumbia Corporation, Atlanta April 26, 1985 Montgomery, Alabama Tuscumbia, Alabama First National Bank in Tuscumbia, Tuscumbia, Alabama Bank of Lexington, Lexington, Alabama The National Holding Company, The Citizens Bank, Atlanta May 8, 1985 Nashville, Georgia Nashville, Georgia The South First National Corpo- First State Financial Corporation, Atlanta May 24, 1985 ration, Gulfport, Mississippi Ocean Springs, Mississippi Trivoli Bancorp, Inc., Trivoli State Bank, Chicago April 29, 1985 Trivoli, Illinois Trivoli, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 Federal Reserve Bulletin • July 1985 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date United Bancorp of Kentucky, Richmond Bank and Trust Com- Cleveland May 23, 1985 Inc., pany, Lexington, Kentucky Richmond, Kentucky United Community Bancorp, First National Bank of Bunker St. Louis May 21, 1985 Inc., Hill, Greenfield, Illinois Bunker Hill, Illinois First Bunker Hill Bancshares, Inc., Chatham Community Bank, Chatham, Illinois Vernon Bank Corporation, The National Bank of Vernon, New York May 17, 1985 Vernon, New York Vernon, New York Winona National Holding Com- Winona National and Savings Minneapolis May 7, 1985 pany, Bank, Winona, Minnesota Winona, Minnesota Section 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Alliance Bancorp, Poynter Insurance Agency, Inc., Chicago April 17, 1985 Danville, Indiana Danville, Indiana California Commercial Banc- retain commercial lending ac- San Francisco April 25, 1985 shares, tivities/engage de novo in mort- Santa Ana, California gage banking activities Commercial Bancshares, Inc., NA Home Investors Mortgage New York May 24, 1985 Jersey City, New Jersey Corporation, Hackensack, New Jersey Denmark Bancshares, Inc., McDonald Insurance Agency, Chicago May 10, 1985 Denmark, Wisconsin Denmark, Wisconsin First Bank System, Inc., John C. Boe Company, Inc., Minneapolis May 17, 1985 Minneapolis, Minnesota Grand Forks, North Dakota First Bank System, Inc., Professional Insurance People, Minneapolis May 17, 1985 Minneapolis, Minnesota Inc., Butte, Montana First Bank System, Inc., Transcontinental Brokers, Inc., Minneapolis May 16, 1985 Minneapolis, Minnesota Minneapolis, Minnesota FSB Bancorporation, Peoples Insurance Company, Atlanta May 6, 1985 Decatur, Alabama Birmingham, Alabama Key Banks, Inc., Howe and Rusling, Inc., New York April 16, 1985 Albany, New York Rochester, New York Manufacturers Hanover Corpo- C.I.T. Corporation, New York May 24, 1985 ration, Rainier Equipment Finance, Inc., New York, New York Ranier National Bank, Seattle, Washington Norwest Corporation, O.K., Inc., Minneapolis May 21, 1985 Minneapolis, Minnesota Kearney, Nebraska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 599 Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Knob Noster, Inc., Knob Noster Bancshares, Inc., Kansas City May 13, 1985 Knob Noster, Missouri Knob Noster, Missouri The Bank of Knob Noster, Knob Noster, Missouri and the sale of general insurance Valley Bancshares, Inc., Mapleton Trust & Savings Bank, Chicago May 8, 1985 Maple ton, Iowa Mapleton, Iowa DANCO, Inc., Mapleton, Iowa Farmers Savings Bank, Danbury, Iowa Western Kansas Investment Selden Investment Inc., Kansas City April 25, 1985 Corporation, Inc., Selden, Kansas Winona, Kansas Selden State Bank, Selden, Kansas ORDERS UNDER BANK MERGER ACT By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date New Belknap Bank, Belknap Bank & Trust, Boston April 26, 1985 Belmont, New Hampshire Belmont, New Hampshire 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. Florida Bankers Association v. Board of Governors, David Bolger Revocable Trust v. Board of Governors, No. 84-3883 and No. 84-3884 (11th Cir., filed Feb. No. 84-4141 (2d Cir., filed Aug. 31, 1984). 15, 1985). Citicorp v. Board of Governors, No. 84-4121 (2d Cir., Florida Department of Banking v. Board of Gover- filed Aug. 27, 1984). nors, No. 84-3831 (11th Cir., filed Feb. 15, 1985). Seattle Bancorporation, et al. v. Board of Governors, Florida Department of Banking v. Board of Gover- No 84-7535 (9th Cir., filed Aug. 15, 1984). nors, No. 84-3832 (11th Cir., filed Feb. 15, 1985). Bank of New York Co., Inc. v. Board of Governors, Dimension Financial Corporation v. Board of Gover- No. 84-4091 (2d Cir., filed June 14, 1984). nors, No. 84-1274 (U.S., filed Feb. 6, 1985). Citicorp v. Board of Governors, No. 84-4081 (2d Cir., Citicorp v. Board of Governors, No. 85-4009 (2d Cir., filed May 22, 1984). filed Jan. 15, 1985). Lamb v. Pioneer First Federal Savings and Loan Citicorp v. Board of Governors, No. 84-4173 (2d Cir., Association, No. C84-702 (D. Wash., filed May 8, filed Dec. 31, 1984). 1984). Citicorp v. Board of Governors, No. 84-754 (U.S., Melcher v. Federal Open Market Committee, No. 84filed Oct. 12, 1984). 1335 (D.D.C., filed, Apr. 30, 1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

600 Federal Reserve Bulletin • July 1985 Florida Bankers Association, et al. v. Board of Gover- Financial Institutions Assurance Corp. v. Board of nors, No. 84-3269 and No. 84-3270 (11th Cir., filed Governors, No. 84-1101 (4th Cir., filed Jan. 27, Apr. 20, 1984). 1984). Northeast Bancorp, Inc. v. Board of Governors, No. First Bancorporation v. Board of Governors, No. 84- 84-363 (U.S., filed Mar. 27, 1984). 1011 (10th Cir., filed Jan. 5, 1984). De Young v. Owens, et al., No. SC 9782-20-6 (D., N. Oklahoma Bankers Association v. Federal Reserve Dist., Iowa, filed Mar. 8, 1984). Board, No. 83-2591 (10th Cir., filed Dec. 13, 1983). Huston v. Board of Governors, No. 84-1361 (8th Cir., The Committee for Monetary Reform, et al. v. Board filed Mar. 20, 1984); and No. 84-1084 (8th Cir. filed of Governors, No. 84-5067 (D.C. Cir., filed June 16, Jan. 17, 1984). 1983). State of Ohio, v. Board of Governors, No. 84-1270 Securities Industry Association v. Board of Gover- (10th Cir., filed Jan. 30, 1984). nors, No. 80-2614 (D.C. Cir., filed Oct. 24. 1980); Ohio Deposit Guarantee Fund v. Board of Governors, and No. 80-2730 (D.C. Cir., filed Oct. 24, 1980). No. 84-1257 (10th Cir., filed Jan. 28, 1984). A. G. Becker, Inc. v. Board of Governors, No. 80- Colorado Industrial Bankers Association v. Board of 2614 (D.C. Cir., filed Oct. 14, 1980); and No. 80- Governors, No. 84-1122 (10th Cir., filed Jan. 27, 2730 (D.C. Cir., filed Oct. 14, 1980). 1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

2 Federal Reserve Bulletin • July 1985 SECURITIES MARKETS AND International Statistics CORPORATE FINANCE A34 New security issues—State and local SUMMARY STATISTICS governments and corporations A35 Open-end investment companies—Net sales and A53 U.S. international transactions—Summary asset position A54 U.S. foreign trade A35 Corporate profits and their distribution A54 U.S. reserve assets A36 Nonfinancial corporations—Assets and A54 Foreign official assets held at Federal Reserve liabilities Banks A36 Total nonfarm business expenditures on new A55 Foreign branches of U.S. banks—Balance sheet plant and equipment data A37 Domestic finance companies—Assets and A57 Selected U.S. liabilities to foreign official liabilities and business credit institutions REAL ESTATE REPORTED BY BANKS IN THE UNITED STATES A38 Mortgage markets A57 Liabilities to and claims on foreigners A39 Mortgage debt outstanding A58 Liabilities to foreigners A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on CONSUMER INSTALLMENT CREDIT foreigners A61 Banks' own claims on unaffiliated foreigners A40 Total outstanding and net change A62 Claims on foreign countries—Combined A41 Terms domestic offices and foreign branches FLOW OF FUNDS REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES A42 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit A63 Liabilities to unaffiliated foreigners markets A64 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS A65 Foreign transactions in securities SELECTED MEASURES A66 Marketable U.S. Treasury bonds and notes— Foreign transactions A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment INTEREST AND EXCHANGE RATES A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A67 Discount rates of foreign central banks A49 Housing and construction A67 Foreign short-term interest rates A50 Consumer and producer prices A68 Foreign exchange rates A51 Gross national product and income A52 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Monetary and credit aggregates (annua] rates of change, seasonally adjusted in percent)1 IItteemm 1984 1985 1984 1985 Q2 Q3 Q4 Ql' Dec. Jan. Feb.' Mar.' Apr. Reserves of depository institutions2 1 Total 8.6 6.8 -.7 21.2 18.8 31.1 19.8 5.9 10.4 2 Required 10.3 6.6 -1.5 20.7 14.0 35.2 15.2 10.3 11.4 3 Nonborrowed -10.8 -44.6 30.7 62.0 72.6 94.4 23.8 -3.2 19.2 4 Monetary base3 7.0 7.2 3.9 8.7 8.0 8.0 12.2 5.4 4.0 Concepts of money, liquid assets, and debt4 i Ml 6.5 4.5 3.2 10.6 10.2 9.0 14.3 5.7 6.1 6 M2 7.1 6.8 9.1' 12.0 13.<y 13.7 11.0 3.8 -.8 7 M3 10.5 9.5 11.0 10.7 14.2' 10.2 8.3 5.6 .7 8 L 12.2 12.2 9.4 9.0 12.0 8.1 8.0 6.5 n.a. 9 Debt 13.2 12.5 12.5 13.3 14.3 13.0 12.2 11.7 n.a. Nontransaction components 10 In M25 7.2 7.6 lO^ 12.5 13.9^ 15.2' 10.0 3.2 -2.8 11 In M3 only6 24.9 20.2' 18.7' 5.7 18.6 -3.3' -1.9 12.6 6.1 Time and savings deposits Commercial banks 12 Savings7 -6.7 -5.6 -10.4 -8.7 -11.6 -9.8 -2.0 -10.9 -7.0 13 Small-denomination time8 13.1 13.4 6.9 -1.8 7.8 -7.1 -8.4 2.5 15.0 14 Large-denomination time9'10 21.8 19.3 12.2 2.6 3.6 -9.5 9.6 23.1 14.7 Thrift institutions 15 Savings7 -.7 -6.5 -6.6 2.2 -6.5 6.5' 7.9 2.9 -.7 16 Small-denomination time 13.4 17.1' 15.2' 1.7 11.2 -3.4' -3.9 .5 5.3 17 Large-denomination time9 48.1 37.8' 29.8' 21.0 38.3' 22.1' 2.3 -5.4 .8 Debt components4 18 Federal 13.1 14.7 15.6 16.1 17.7 16.2 14.4 10.5 n.a. 19 Nonfederal 13.2 11.8 11.5 12.4 13.3 12.1' 11.6 12.1 n.a. 20 Total loans and securities at commercial banks" 11.0 9.1 9.2' 9.9 9.7' 6.4 12.7 11.4 4.7 1. Unless otherwise noted, rates of change are calculated from average funds. Also excludes all balances held by U.S. commercial banks, money market amounts outstanding in preceding month or quarter. funds (general purpose and broker/dealer), foreign governments and commercial 2. Figures incorporate adjustments for discontinuities associated with the banks, and the U.S. government. Also subtracted is a consolidation adjustment implementation of the Monetary Control Act and other regulatory changes to that represents the estimated amount of demand deposits and vault cash held by reserve requirements. To adjust for discontinuities due to changes in reserve thrift institutions to service their time and savings deposits. requirements on reservable nondeposit liabilities, the sum of such required M3: M2 plus large-denomination time deposits and term RP liabilities (in reserves is subtracted from the actual series. Similarly, in adjusting for discontin- amounts of $100,000 or more) issued by commercial banks and thrift institutions, uities in the monetary base, required clearing balances and adjustments to term Eurodollars held by U.S. residents at foreign branches of U.S. banks compensate for float also are subtracted from the actual series. worldwide and at all banking offices in the United Kingdom and Canada, and 3. The monetary base not adjusted for discontinuities consists of total balances in both taxable and tax-exempt, institution-only money market mutual reserves plus required clearing balances and adjustments to compensate for float funds. Excludes amounts held by depository institutions, the U.S. government, at Federal Reserve Banks plus the currency component of the money stock less money market funds, and foreign banks and official institutions. Also subtracted is the amount of vault cash holdings of thrift institutions that is included in the a consolidation adjustment that represents the estimated amount of overnight RPs currency component of the money stock plus, for institutions not having required and Eurodollars held by institution-only money market mutual funds. reserve balances, the excess of current vault cash over the amount applied to L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term satisfy current reserve requirements. After the introduction of contemporaneous Treasury securities, commercial paper and bankers acceptances, net of money reserve requirements (CRR), currency and vault cash figures are measured over market mutual fund holdings of these assets. the weekly computation period ending Monday. Debt: Debt of domestic nonfinancial sectors consists of outstanding credit Before CRR, all components of the monetary base other than excess reserves market debt of the U.S. government, state and local governments, and private are seasonally adjusted as a whole, rather than by component, and excess nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conreserves are added on a not seasonally adjusted basis. After CRR, the seasonally sumer credit (including bank loans), other bank loans, commercial paper, bankers adjusted series consists of seasonally adjusted total reserves, which include acceptances, and other debt instruments. The source of data on domestic excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt currency component of the money stock plus the remaining items seasonally data are on an end-of-month basis. Growth rates for debt reflect adjustments for adjusted as a whole. discontinuities over time in the levels of debt presented in other tables. 4. Composition of the money stock measures and debt is as follows: 5. Sum of overnight RPs and Eurodollars, money market fund balances Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults (general purpose and broker/dealer), MMDAs, and savings and small time of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits deposits less the estimated amount of demand deposits and vault cash held by at all commercial banks other than those due to domestic banks, the U.S. thrift institutions to service their time and savings deposit liabilities. government, and foreign banks and official institutions less cash items in the 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, process of collection and Federal Reserve float; and (4) other checkable deposits money market fund balances (institution-only), less a consolidation adjustment (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer that represents the estimated amount of overnight RPs and Eurodollars held by service (ATS) accounts at depository institutions, credit union share draft institution-only money market mutual funds. accounts, and demand deposits at thrift institutions. The currency and demand 7. Excludes MMDAs. deposit components exclude the estimated amount of vault cash and demand 8. Small-denomination time deposits—including retail RPs—are those issued deposits respectively held by thrift institutions to service their OCD liabilities. in amounts of less than $100,000. All IRA and Keogh accounts at commercial M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) banks and thrifts are subtracted from small time deposits. issued by all commercial banks and overnight Eurodollars issued to U.S. residents 9. Large-denomination time deposits are those issued in amounts of $100,000 by foreign branches of U.S. banks worldwide, MMDAs, savings and small- or more, excluding those booked at international banking facilities. denomination time deposits (time deposits—including retail RPs—in amounts of 10. Large-denomination time deposits at commercial banks less those held by less than $100,000), and balances in both taxable and tax-exempt general purpose money market mutual funds, depository institutions, and foreign banks and and broker/dealer money market mutual funds. Excludes individual retirement official institutions. accounts (IRA) and Keogh balances at depository institutions and money market 11. Changes calculated from figures shown in table 1.23. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics • July 1985 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending FFFaaaccctttooorrrsss 1985 1985 Feb. Mar. Apr. Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 180,077 182,130 187,124 181,497 182,192 181,141 183,594 184,621 186,787 186,177 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 157,221 159,896 164,467 159,115 159,983 159,736 160,520 161,541 164,225 163,900 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 155,848 159,737 163,690 159,115 159,614 159,736 160,186 161,541 164,225 163,900 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 1,373 159 777 0 369 0 334 0 0 0 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 8,565 8,386 8,454 8,372 8,415 8,372 8,393 8,372 8,372 8,372 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,378 8,372 8,372 8,372 8,372 8,372 8,372 8,372 8,372 8,372 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 187 14 82 0 43 0 21 0 0 0 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 1,278 1,646 1,316 2,038 1,681 897 1,687 1,863 1,198 1,118 1111100000 FFFFFllllloooooaaaaattttt 1,248 540 503 506 318 240 541 813 542 608 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 11,765 11,662 12,384 11,466 11,794 11,896 12,453 12,032 12,450 12,179 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,094 11,093 11,093 11,093 11,093 11,093 11,093 11,093 11,093 11,092 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 16,501 16,565 16,635 16,550 16,568 16,586 16,604 16,618 16,632 16,646 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 178,273 179,085 180,972 179,430 179,306 178,860 179,570 181,334 181,698 180,816 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 550 549 575 549 552 554 558 569 570 580 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 4,344 3,804 6,711 4,061 3,818 4,280 2,981 4,189 3,720 6,016 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 223 229 218 207 254 205 251 191 231 204 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss .................... 1,71? 1,647' 1,556 1,993 1,577 1,538 1,649 1,568 1,587 1,543 2222200000 OOOOOttttthhhhheeeeerrrrr 533 628 427 440 1,205 473 398 364 653 371 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 6,061 6,099 6,424 5,907 6,101 6,262 6,572 6,514 6,186 6,407 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 20,589-- 22,367r 22,587 21,171 21,658 21,266 23,930 22,221 24,484 22,596 End-of-month figures Wednesday figures 1985 1985 Feb. Mar. Apr. Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 181,786 184,711 197,652 186,424 180,792 180,313 180,969 186,866 187,676 189,571 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 159,632 160,983 173,913 160,156 158,869 159,169 158,841 162,407 164,439 166,717 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 157,124 160,983 166,460 160,156 158,869 159,169 158,841 162,407 164,439 166,717 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 2,508 0 7,453 0 0 0 0 0 0 0 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 8,752 8,372 8,903 8,372 8,372 8,372 8,372 8,372 8,372 8,372 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,372 8,372 8,372 8,372 8,372 8,372 8,372 8,372 8,372 8,372 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 380 0 531 0 0 0 0 0 0 0 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 2,329 2,582 1,525 5,840 1,465 385 824 3,467 1,270 1,480 3333322222 FFFFFllllloooooaaaaattttt -56 298 254 359 219 274 789 277 98 416 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 11,129 12,476 13,057 11,697 11,867 12,113 12,143 12,343 13,497 12,586 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,093 11,093 11,091 11,093 11,093 11,093 11,093 11,093 11,093 11,091 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 16,531r 16,602 16,658 16,565 16,583 16,602 16,616 16,630 16,644 16,658 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 178,416 179,210 180,842 179,566 179,189 179,015 180,498 181,841 181,488 180,545 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 557 554 586 552 554 554 569 569 579 586 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 3,308 3,063 19,305 3,698 3,623 4,204 2,683 2,177 4,284 8,868 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 332 253 348 232 211 216 192 227 205 180 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss .................... 1,226 1,359 1,302 1,226 1,224 1,224 1,359 1,359 1,326 1,326 4444422222 OOOOOttttthhhhheeeeerrrrr 461 347 324 411 721 439 402 321 824 315 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 5,863 6,600 6,652 5,934 5,894 6,101 6,352 6,081 6,071 6,229 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 23,866 25,638 20,660 27,082 21,671 20,873 21,241 26,632 25,254 23,889 1. Includes securities loaned—fully guaranteed by U.S government securities 2. Excludes required clearing balances and adjustments to compensate for pledged with Federal Reserve Banks—and excludes (if any) securities sold and float. 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

Money Stock and Bank Credit A5 1.12 RESERVES AND BORROWINGS Depository Institutions Millions of dollars Monthly averages8 RRReeessseeerrrvvveee ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1982 1983 1984 1984 1985 Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss11111 24,939 21,138 21,738 20,099 20,843 21,738 21,577 20,416'' 22,065 23,218 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh22222 20,392 20,755 22,316 21,875 21,827 22,316 23,044 23,927 21,863 21,567 33333 VVVVVaaaaauuuuulllllttttt cccccaaaaassssshhhhh uuuuussssseeeeeddddd tttttooooo sssssaaaaatttttiiiiisssssfffffyyyyy rrrrreeeeessssseeeeerrrrrvvvvveeeee rrrrreeeeeqqqqquuuuuiiiiirrrrreeeeemmmmmeeeeennnnntttttsssss33333 ..... 17,049 17,908 18,958 18,413 18,392 18,958 19,547 19,857 18,429 18,436 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 3,343 2,847 3,358 3,462 3,434 3,358 3,497 4,070 3,434 3,131 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss55555 41,853 38,894 40,696 38,512 39,235 40,6% 41,125 40,273 40,494 41,654 66666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 41,353 38,333 39,843 37,892 38,542 39,843 40,380 39,370 39,728 40,915 77777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss66666 500 561 853 620 693 853 745 903 766 739 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 697 774 3,186 6,017 4,617 3,186 1,395 1,289 1,593 1,323 99999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 33 96 113 299 212 113 62 71 88 135 1111100000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss77777 187 2 2,604 5,057 3,837 2,604 1,050 803 1,059 868 Biweekly averages of daily figures for weeks ending 1985 Jan. 2 Jan. 16 Jan. 30 Feb. 13 Feb. 27 Mar. 13 Mar. 27 Apr. 1C Apr. 24 May 8^ 1111111111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss11111 22,171 22,819 20,375 19,924 20,734 22,407 21,458 23,073 23,519 22,761 1111122222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh22222 22,129 22.819 20,379 24,893 23,203 21,518 22,353 21,274 21,880 21,327 1111133333 VVVVVaaaaauuuuulllllttttt cccccaaaaassssshhhhh uuuuussssseeeeeddddd tttttooooo sssssaaaaatttttiiiiisssssfffffyyyyy rrrrreeeeessssseeeeerrrrrvvvvveeeee rrrrreeeeeqqqqquuuuuiiiiirrrrreeeeemmmmmeeeeennnnntttttsssss33333 ..... 19,701 22,089 23,828 20,624 19,270 18,093 18,828 18,126 18,765 18,185 1111144444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 19,703 19,002 19,995 4,269 3,933 3,425 3,525 3,148 3,115 3,142 1111155555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss55555 41,832 41.820 40,374 40,548 40,003 40,500 40,286 41,199 42,284 40,945 1111166666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 40,625 41,187 39,590 39,537 39,198 39,719 39,477 40,642 41,399 40,243 1111177777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss66666 1,207 634 785 1,012 806 782 810 557 885 703 1111188888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 2,691 1,631 976 1,369 1,174 1,865 1,289 1,775 1,158 953 1111199999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 81 58 63 60 81 69 98 121 131 169 2222200000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss77777 2,038 1,371 593 988 603 1,224 839 1,295 766 396 1. Excludes required clearing balances and adjustments to compensate for computation period by institutions having required reserve balances at Federal float. Reserve Banks plus the amount of vault cash equal to required reserves during the 2. Dates refer to the maintenance periods in which the vault cash can be used to maintenance period at institutions having no required reserve balances. satisfy reserve requirements. Under contemporaneous reserve requirements, 6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy maintenance periods end 30 days after the lagged computation periods in which reserve requirements less required reserves. the balances are held. 7. Extended credit consists of borrowing at the discount window under the 3. Equal to all vault cash held during the lagged computation period by terms and conditions established for the extended credit program to help institutions having required reserve balances at Federal Reserve Banks plus the depository institutions deal with sustained liquidity pressures. Because there is amount of vault cash equal to required reserves during the maintenance period at not the same need to repay such borrowing promptly as there is with traditional institutions having no required reserve balances. short-term adjustment credit, the money market impact of extended credit is 4. Total vault cash at institutions having no required reserve balances less the similar to that of nonborrowed reserves. amount of vault cash equal to their required reserves during the maintenance 8. Before February 1984, data are prorated monthly averages of weekly period. averages; beginning February 1984, data are prorated monthly averages of 5. Total reserves not adjusted for discontinuities consist of reserve balances biweekly averages. with Federal Reserve Banks, which exclude required clearing balances and NOTE. These data also appear in the Board's H.3 (502) release. For address, see adjustments to compensate for float, plus vault cash used to satisfy reserve inside front cover. requirements. Such vault cash consists of all vault cash held during the lagged 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks1 Averages of daily figures, in millions of dollars 1985 week ending Monday BByy mmaattuurriittyy aanndd ssoouurrccee Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15' Apr. 22 Apr. 29 May 6 May 13 One day and continuing contract 1 Commercial banks in United States 59,617 55,739 56,025 65,950 63,357 62,838 54,786 61,576 59,551 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 26,391 25,724 24,661 24,529 25,116 24,127 23,921 25,587 27,101 3 Nonbank securities dealers 9,082 8,195 8,652 6,940 7,835 7,372 7,310 6,944 6,769 4 All other 29,390 29,512 28,436 22,905 25,254 26,606 26,982 25,363 26,485 All other maturities 5 Commercial banks in United States 9,354 9,495 9,299 10,036 9,694 9,744 10,079 10,544 10,074 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 8,401 8,597 8,357 8,777' 8,215 7,805 8,307 8,739 8,201 7 Nonbank securities dealers 8,366 8,010 8,641 8,389' 8,063 8,376 9,475 9,946 9,766 8 All other 8,946 9,167 8,887 13,879 11,250 8,543 8,885 7,765 8,098 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 26,775' 26,885 27,747 31,380 29,887 30,838 27,132 29,253 26,710 10 Nonbank securities dealers 6,505 6,521 6,902 6,281 6,137 6,799 6,581 6,894 6,480 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 • July 1985 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit2 SShhoorrtt--tteerrmm aaddjjuussttmmeenntt ccrreeddiitt FFFeeedddeeerrraaalll RRReeessseeerrrvvveee aanndd sseeaassoonnaall ccrreeddiitt11 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 5/28/85 date rate 5/28/85 rate 5/28/85 rate 5/28/85 rate Boston V/2 5/20/85 m 8Vi 9 m 10 5/20/85 New York 5/20/85 5/20/85 Philadelphia 5/24/85 5/24/85 Cleveland 5/21/85 5/21/85 Richmond 5/20/85 5/20/85 Atlanta 5/20/85 5/20/85 Chicago 5/20/85 5/20/85 St. Louis 5/21/85 5/21/85 Minneapolis 5/20/85 5/20/85 Kansas City .... 5/20/85 5/20/85 D Sa a n ll a F s rancisco... m 5 5/ / 2 2 1 0 / / 8 8 5 5 m %Vi 9 9 Vi 10 5 5 / / 2 2 1 0 / / 8 8 5 5 Range of rates in recent years3 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. Ba o n f k Effective A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1973 m m 1978— July 3 7-7!/4 7V4 11998811—— MMaayy 5 13-14 14 1974— Apr. 25 7Vi-8 8 10 71/4 7V4 8 14 14 Dec. 3 9 0 73 8 / 4-8 m8 m A Se u p g t . . 2 2 1 2 7 8 3 /4 7 8 % Nov. 2 6 13 1 - 3 1 4 1 1 3 3 16 73/4 Oct. 16 8—8'/^ Dec. 4 12 12 20 8Vi 8'/! 1975— Jan. 1 6 0 7 7 V 1/4 4- - 7 7 3 3 / / 4 4 7m 3/4 Nov. 1 3 8V 9 i - V 9 i V i 9 9 V V i i 11998822—— JJuullyy 2 2 0 3 llV llV ii 1 2 l l l i V vi i 24 7'/4 7'/4 AAuugg.. 2 11—11 Vi 11 Feb. 5 63/4-7'/4 63/4 1979—July 20 10 10 3 11 11 7 63/4 63/4 Aug. 17 10W 16 10 Vi 10 Vi Mar. 10 6'/4-63/4 6V4 20 lOVi lOVi 27 lO-lOVi 10 14 6V4 6'/4 Sept. 19 1 11 30 10 10 May 16 6-61/4 6 21 11 11 Oct. 12 9Vi-10 9Vi 23 6 6 Oct. 8 11-12 12 13 91/2 9>/2 SVi 10 12 12 Nov. 22 9-9V2 9 1976— Jan. 19 5'/2-6 5V2 26 9 9 Nov. 2 2 2 3 5'/ 5 4 V - i 5'/2 5V4 1980—Feb. 1 1 5 9 12 1 - 3 1 3 1 1 3 3 Dec. 1 1 4 5 8 8 > V / i 2 - - 9 9 9 m 26 51/4 5'/4 May 29 12-13 13 17 8 Vi 8 Vi 30 12 12 1977— Aug. 30 5'/4-53/4 Jl/4 June 13 11-12 11 11998844—— AApprr.. 9 m~9 9 31 5'/4-53/4 53/4 16 11 11 13 9 9 Sept. 2 53/4 55/4 July 28 10-11 10 Nov. 21 8^-9 iVi Oct. 26 6 6 29 10 10 26 8>/2 8Vi Sept. 26 11 11 Dec. 24 8 8 1978— Jan. 9 6-6 VV2i 6 Vi Nov. 17 12 12 MMaayy 20 7Vi-8 7Vi 20 6 61 V i Dec. 5 12-13 13 28 m 7Vi May 11 6'/2-7 1 8 13 13 12 7 In effect May 28, 1985 m 7l/2 1. A temporary simplified seasonal program was established on Mar. 8, 1985, the following publications of the Board of Governors: Banking and Monetary and the interest rate was set at 8'/2 percent at that time. On May 20 this rate was Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980, lowered to 8 percent. 1981, and 1982. 2. 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. As an alternative, for loans outstanding for that had borrowed in successive weeks or in more than 4 weeks in a calendar more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, into account rates on market sources of funds, but in no case will the rate charged 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was be less than the basic rate plus one percentage point. Where credit provided to a adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and particular depository institution is anticipated to be outstanding for an unusually to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective prolonged period and in relatively large amounts, the time period in which each Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for rate under this structure is applied may be shortened. See section 201.3(b)(2) of applying the surcharge was changed from a calendar quarter to a moving 13-week Regulation A. period. The surcharge was eliminated on Nov. 17, 1981. 3. Rates for short-term adjustment credit. For description and earlier data see Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Member bank requirements Depository institution requirements before implementation of the after implementation of the TTyy dd pp ee ee pp oo oo ff ss ii dd tt ee ii pp nn oo ttee ss rr iitt vv ,, aa aa ll nndd Monetary Control Act TTyy dd pp ee ee pp oo oo ff ss ii dd tt ee ii pp nn oo ttee ss rr iitt vv ,, aa ll aa 55 nn dd Monetary Control Act6 Percent Effective date Percent Effective date Net demand2 Net transaction accounts7,8 7 12/30/76 $0-$29.8 million 3 1/1/85 W2 12/30/76 Over $29.8 million 1122 11//11//8855 $10 million-$100 million 113/4 12/30/76 $100 million-$400 million 123/4 12/30/76 Nonpersonal time deposits9 Over $400 million 161/4 12/30/76 By original maturity Less than l'/i years 3 10/6/83 Time and savings2-* 1 '/2 years or more 0 10/6/83 Savings 3 3/16/67 Eurocurrency liabilities Time4 AAllll ttyyppeess 3 11/13/80 $0 million-$5 million, by maturity 30-179 days 3 3/16/67 180 days to 4 years 2Vi 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 2</> 1/8/76 4 years or more 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report reduced to the extent that foreign loans and balances declined. for 1976, table 13. Under provisions of the Monetary Control Act, depository 5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97institutions include commercial banks, mutual savings banks, savings and loan 320) provides that $2 million of reservable liabilities (transaction accounts, associations, credit unions, agencies and branches offoreign banks, and Edge Act nonpersonal time deposits, and Eurocurrency liabilities) of each depository corporations. institution be subject to a zero percent reserve requirement. The Board is to adjust 2. Requirement schedules are graduated, and each deposit interval applies to the amount of reservable liabilities subject to this zero percent reserve requirethat part of the deposits of each bank. Demand deposits subject to reserve ment each year for the next succeeding calendar year by 80 percent of the requirements were gross demand deposits minus cash items in process of percentage increase in the total reservable liabilities of all depository institutions, collection and demand balances due from domestic banks. measured on an annual basis as of June 30. No corresponding adjustment is to be The Federal Reserve Act as amended through 1978 specified different ranges of made in the event of a decrease. Effective Dec. 9, 1982, the amount of the requirements for reserve city banks and for other banks. Reserve cities were exemption was established at $2.1 million. Effective with the reserve maintenance designated under a criterion adopted effective Nov. 9, 1972, by which a bank period beginning Jan. 1, 1985, the amount of the exemption is $2.4 million. In having net demand deposits of more than $400 million was considered to have the determining the reserve requirements of a depository institution, the exemption character of business of a reserve city bank. The presence of the head office of shall apply in the following order: (1) nonpersonal money market deposit accounts such a bank constituted designation of that place as a reserve city. Cities in which (MMDAs) authorized under 12 CFR section 1204.122; (2) net NOW accounts there were Federal Reserve Banks or branches were also reserve cities. Any (NOW accounts less allowable deductions); (3) net other transaction accounts; banks having net demand deposits of $400 million or less were considered to have and (4) nonpersonal time deposits or Eurocurrency liabilities starting with those the character of business of banks outside of reserve cities and were permitted to with the highest reserve ratio. With respect to NOW accounts and other maintain reserves at ratios set for banks not in reserve cities. transaction accounts, the exemption applies only to such accounts that would be Effective Aug. 24,1978, the Regulation M reserve requirements on net balances subject to a 3 percent reserve requirement. due from domestic banks to their foreign branches and on deposits that foreign 6. For nonmember banks and thrift institutions that were not members of the branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, respectively. The Regulation D reserve requirement of borrowings from unrelated 1987. For banks that were members on or after July 1, 1979, but withdrew on or banks abroad was also reduced to zero from 4 percent. before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends Effective with the reserve computation period beginning Nov. 16, 1978, on Oct. 24, 1985. For existing member banks the phase-in period of about three domestic deposits of Edge corporations were subject to the same reserve years was completed on Feb. 2, 1984. All new institutions will have a two-year requirements as deposits of member banks. phase-in beginning with the date that they open for business, except for those 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as institutions that have total reservable liabilities of $50 million or more. Christmas and vacation club accounts were subject to the same requirements as 7. Transaction accounts include all deposits on which the account holder is savings deposits. permitted to make withdrawals by negotiable or transferable instruments, pay- The average reserve requirement on savings and other time deposits before ment orders of withdrawal, and telephone and preauthorized transfers (in excess implementation of the Monetary Control Act had to be at least 3 percent, the of three per month) for the purpose of making payments to third persons or others. minimum specified by law. However, MMDAs and similar accounts offered by institutions not subject to the 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent rules of the Depository Institutions Deregulation Committee (DIDC) that permit was imposed on large time deposits of $100,000 or more, obligations of affiliates, no more than six preauthorized, automatic, or other transfers per month of which and ineligible acceptances. This supplementary requirement was eliminated with no more than three can be checks—are not transaction accounts (such accounts the maintenance period beginning July 24, 1980. are savings deposits subject to time deposit reserve requirements.) Effective with the reserve maintenance period beginning Oct. 25, 1979, a 8. The Monetary Control Act of 1980 requires that the amount of transaction marginal reserve requirement of 8 percent was added to managed liabilities in accounts against which the 3 percent reserve requirement applies be modified excess of a base amount. This marginal requirement was increased to 10 percent annually by 80 percent of the percentage increase in transaction accounts held by beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and all depository institutions determined as of June 30 each year. Effective Dec. 31, was eliminated beginning July 24, 1980. Managed liabilities are defined as large 1981, the amount was increased accordingly from $25 million to $26 million; time deposits, Eurodollar borrowings, repurchase agreements against U.S. effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million; government and federal agency securities, federal funds borrowings from non- and effective Jan. 1, 1985, to $29.8 million. member institutions, and certain other obligations. In general, the base for the 9. In general, nonpersonal time deposits are time deposits, including savings marginal reserve requirement was originally the greater of (a) $100 million or (b) deposits, that are not transaction accounts and in which a beneficial interest is the average amount of the managed liabilities held by a member bank, Edge held by a depositor that is not a natural person. Also included are certain corporation, or family of U.S. branches and agencies of a foreign bank for the two transferable time deposits held by natural persons, and certain obligations issued reserve computation periods ending Sept. 26, 1979. For the computation period to depository institution offices located outside the United States. For details, see beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease section 204.2 of Regulation D. in an institution's U.S. office gross loans to foreigners and gross balances due from foreign offices of other institutions between the base period (Sept. 13-26, NOTE. Required reserves must be held in the form of deposits with Federal 1979) and the week ending Mar. 12, 1980, whichever was greater. For the Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a computation period beginning May 29, 1980, the base was increased by 7Vi Federal Reserve Bank indirectly on a pass-through basis with certain approved percent above the base used to calculate the marginal reserve in the statement institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • July 1985 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions' Percent per annum Commercial banks mut S u a a v l 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 it u a t n io d n s)1 In effect May 31, 1985 In effect May 31, 1985 Type of deposit Percent Effective date Effective date 2 1 N Sa e v g i o n t g ia s ble order of withdrawal accounts 5 5 l V /2 * 12/ 1 3 / 1 1 / / 8 8 0 4 5 5'/ l 4 /2 12 7 /3 /1 1 / / 7 8 9 0 3 Negotiable order of withdrawal accounts of $1,000 or more2 1/5/83 1/5/83 4 Money market deposit account2 12/14/82 (3) 12/14/82 5 7 T - i 3 m 1 e d a a c y c s o o u f n t l s e ss than Sl.OOO4 5Vi 1/1/84 5'/2 9/1/82 6 7-31 days of $1,000 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 the minimum denomination and average maintenance balance requirements was by commercial banks and thrift institutions on various categories of deposits were lowered to $1,000. No minimum maturity period is required for this account, but removed. For information regarding previous interest rate ceilings on all catego- depository institutions must reserve the right to require seven days, notice before ries of accounts see earlier issues of the FEDERAL RESERVE BULLETIN, the withdrawals. When the average balance is less than $1,000, the account is subject Federal Home Loan Bank Board Journal, and the Annual Report of the Federal to the maximum ceiling rate of interest for NOW accounts; compliance with the Deposit Insurance Corporation. average balance requirement may be determined over a period of one month. 2. Effective Dec. 1, 1983, IRA/Keogh (HR10) Plan accounts are not subject to Depository institutions may not guarantee a rate of interest for this account for a minimum deposit requirements. Effective Jan. 1, 1985, the minimum denomina- period longer than one month or condition the payment of a rate on a requirement tion requirement was lowered from $2,500 to $1,000. that the funds remain on deposit for longer than one month. 3. Effective Dec. 14, 1982, depository institutions are authorized to offer a new 4. Effective Jan. 1, 1985, the minimum denomination requirement was lowered account with a required initial balance of $2,500 and an average maintenance from $2,500 to $1,000. Deposits of less than $1,000 issued to governmental units balance of $2,500 not subject to interest rate restrictions. Effective Jan. 1, 1985, 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 1984 1985 TTyyppee ooff ttrraannssaaccttiioonn 11998822 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar. U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,067 18,888 20,036 3,249 507 4,463 3,410 0 2,976 916 2 Gross sales 8,369 3,420 8,557 71 1,300 0 0 2,668 214 554 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 3,000 2,400 7,700 0 2,200 0 0 1,600 400 500 Others within 1 year 5 Gross purchases 312 484 1,126 600 0 146 182 0 0 961 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shift 17,295 18,887 16,354 872 896 1,348 771 596 1,987 1,299 8 Exchange -14,164 -16,553 -20,840 0 -1,497 -3,363 -966 -625 -2,739 0 9 Redemptions 0 87 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 1,797 1,896 1,638 0 0 830 0 0 0 465 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -14,524 -15,533 -13,709 -872 -896 594 -771 -596 -1,902 1,299 13 Exchange 11,804 11,641 16,039 0 1,497 1,763 966 625 1,645 0 5 to 10 years 14 Gross purchases 388 890 536 0 0 335 0 0 0 0 15 Gross sales 0 0 300 0 0 0 0 100 0 0 16 Maturity shift -2,172 -2,450 -2,371 0 0 -1,893 0 0 -54 0 17 Exchange 2,128 2,950 2,750 0 0 850 0 0 600 0 Over 10 years 18 Gross purchases 307 383 441 0 0 164 0 0 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -601 -904 -275 0 0 -49 0 0 -30 0 21 Exchange 234 1,962 2,052 0 0 750 0 0 493 0 All maturities 22 Gross purchases 19,870 22,540 23,476 3,849 507 5,938 3,591 0 2,976 2,343 23 Gross sales 8,369 3,420 7,553 71 1,300 0 0 2,768 214 554 24 Redemptions 3,000 2,487 7,700 0 2,200 0 0 1,600 400 500 Matched transactions 25 Gross sales 543,804 578,591 808,986 52,893 89,689 51,904 63,674 66,668 57,076 54,718 26 Gross purchases 543,173 576,908 810,432 55,776 85,884 55,516 61,537 66,367 57,283 57,288 Repurchase agreements 27 Gross purchases 130,774 105,971 139,441 26,040 0 12,063 3,888 20,225 19,584 4,922 28 Gross sales 130,286 108,291 139,019 30,867 0 12,063 2,261 21,852 17,077 7,429 29 Net change in U.S. government securities 8,358 12,631 8,908 1,835 -6,798 9,549 3,080 -6,295 5,077 1,351 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 189 292 256 1 14 90 0 0 17 * Repurchase agreements 33 Gross purchases 18,957 8,833 1,205 3,743 0 698 506 1,463 2,428 445 34 Gross sales 18,638 9,213 817 4,112 0 698 119 1,851 2,048 825 35 Net change in federal agency obligations 130 -672 132 -370 -14 -90 388 388 363 -380 BANKERS ACCEPTANCES 36 Repurchase agreements, net 1,285 -1,062 -418 0 0 0 0 0 0 0 37 Total net change in System Open Market Account 9,773 10,897 6,116 1,465 -6,811 9,459 3,468 -6,683 5,440 971 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 Nonfinancial Statistics • July 1985 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month AAccccoouunntt 1985 1985 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 Feb. Mar. Apr. Consolidated condition statement ASSETS 1 Gold certificate account 11,093 11,093 11,093 11,093 11,091 11,093 11,093 11,091 2 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 3 548 558 551 547 542 551 566 597 Loans 4 To depository institutions 385 824 3,467 1,270 1,480 2,329 2,582 1,525 5 Other 0 0 0 0 0 0 0 0 Acceptances—Bought outright 6 Held under repurchase agreements 0 0 0 0 00 0 00 00 Federal agency obligations 7 Bought outright 8,372 8,372 8,372 8,372 8,372 8,372 88,,337722 88,,337722 8 Held under repurchase agreements 0 0 0 0 0 380 0 531 U.S. government securities Bought outright 9 Bills 69,655 69,327 72,893 73,630 75,908 69,036 7711,,446699 7755,,665511 10 Notes 66,070 66,070 66,070 67,269 67,269 64,644 66,070 67,269 11 Bonds 23,444 23,444 23,444 23,540 23,540 23,444 23,444 23,540 12 Total bought outright1 159,169 158,841 162,407 164,439 166,717 157,124 160,983 166,460 13 Held under repurchase agreements 0 0 0 0 0 2,508 0 7,453 14 Total U.S. government securities 159,169 158,841 162,407 164,439 166,717 159,632 160,983 173,913 15 Total loans and securities 167,926 168,037 174,246 174,081 176,569 170,713 171,937 184,341 16 Cash items in process of collection 6,429 7,741 6,644 8,083 7,679 6,241 6,127 9,730 17 Bank premises 576 574 575 576 576 571 572 577 Other assets 18 Denominated in foreign currencies2 3,643 3,973 3,976 3,979 3,982 3,498 3,971 4,007 19 All other3 7,894 7,596 7,792 8,942 8,028 7,060 7,933 8,473 20 Total assets 202,727 204,190 209,495 211,919 213,085 204,345 206,817 223,434 LIABILITIES 21 Federal Reserve notes 163,515 165,009 166,331 165,970 165,015 162,992 163,728 165,367 Deposits 22. To depository institutions 22,097 22,600 27,991 26,580 25,215 25,092 26,997 21,962 23 U.S. Treasury—General account 4,204 2,683 2,177 4,284 8,868 3,308 3,063 19,305 24 Foreign—Official accounts 216 192 227 205 180 332 253 348 25 Other 439 402 321 824 315 461 347 324 26 Total deposits 26,956 25,877 30,716 31,893 34,578 29,193 30,660 41,939 27 Deferred availability cash items 6,155 6,952 6,367 7,985 7,263 6,297 5,829 9,476 28 Other liabilities and accrued dividends4 2,412 2,378 2,384 2,378 2,520 2,463 2,445 2,614 29 Total liabilities 199,038 200,216 205,798 208,226 209,376 200,945 202,662 219,396 CAPITAL ACCOUNTS 30 Capital paid in 1,685 1,687 1,685 1,687 1,687 1,669 1,687 1,702 31 1,624 1,624 1,626 1,626 1,626 1,626 1,624 1,626 32 Other capital accounts 380 663 386 380 396 105 844 710 33 Total liabilities and capital accounts 202,727 204,190 209,495 211,919 213,085 204,345 206,817 223,434 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 115,079 118,798 115,271 116,287 116,686 116,519 114,890 116,712 Federal Reserve note statement 35 Federal Reserve notes outstanding 196,165 196,118 195,990 196,059 196,630 194,635 196,021 196,490 36 LESS: Held by bank 32,650 31,109 29,659 30,089 31,615 31,643 32,293 31,123 37 Federal Reserve notes, net 163,515 165,009 166,331 165,970 165,015 162,992 163,728 165,367 Collateral held against notes net: 38 Gold certificate account 11,093 11,093 11,093 11,093 11,091 11,093 11,093 11,091 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 147,804 149,298 150,620 150,259 149,306 147,281 148,017 149,658 42 Total collateral 163,515 165,009 166,331 165,970 165,015 162,992 163,728 165,367 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. 2. Assets shown in this line are revalued monthly at market exchange rates. NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For 3. Includes special investment account at Chicago of Treasury bills maturing address, see inside front cover. within 90 days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1985 1985 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 Feb. 28 Mar. 29 Apr. 30 1 Loans—Total 385 822 3,467 1,270 1,480 2,329 2,582 1,525 2 Within 15 days 365 755 3,414 1,247 1,458 2,320 2,558 1,438 3 16 days to 90 days 20 67 53 23 22 9 24 87 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. government securities—Total 159,169 158,841 162,407 164,439 166,717 159,632 160,983 173,913 10 Within 15 days1 5,393 5,107 6,199 4,622 4,438 5,276 4,565 12,305 11 16 days to 90 days 34,744 34,748 36,216 39,205 39,293 33,214 37,280 38,406 12 91 days to 1 year 46,481 46,619 47,625 47,196 49,570 49,056 46,587 50,568 13 Over 1 year to 5 years 37,309 37,125 37,125 37,986 37,986 36,844 37,309 37,204 14 Over 5 years to 10 years 14,546 14,546 14,546 14,638 14,638 14,546 14,546 14,638 15 Over 10 years 20,696 20,696 20,696 20,792 20,792 20,696 20,696 20,792 16 Federal agency obligations—Total 8,372 8,372 8,372 8,372 8,372 8,752 8,372 8,903 17 Within 15 days1 142 20 149 223 148 615 142 613 18 16 days to 90 days 461 581 432 398 465 514 461 533 19 91 days to 1 year 1,942 1,965 2,003 1,963 1,941 1,738 1,942 1,991 20 Over 1 year to 5 years 4,164 4,143 4,105 4,105 4,135 4,222 4,164 4,083 21 Over 5 years to 10 years 1,264 1,264 1,284 1,284 1,284 1,264 1,264 1,284 22 Over 10 years 399 399 399 399 399 399 399 399 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 Nonfinancial Statistics • July 1985 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures _ 1984 1985 1981 1982 1983 1984 Dec. Dec. Dec. Dec. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted ADJUSTED FOR 1 Total reserves2 32.10 34.28 36.14 38.71 38.14 37.76 38.11 38.71 39.71 40.37 40.57' 40.92 2 Nonborrowed reserves 31.46 33.65 35.36 35.52 30.90 31.74 33.50 35.52 38.32 39.08 38.97 39.60 3 Nonborrowed reserves plus extended credit3 31.61 33.83 35.37 38.13 37.36 36.80 37.33 38.13 39.37 39.88 40.03 40.46 4 Required reserves 31.78 33.78 35.58 37.86 37.52 37.14 37.42 37.86 38.97 39.46 39.80 40.18 5 Monetary base4 158.10 170.14 185.49 198.74 196.25 196.18 197.43 198.74 200.07 202.10 203.01' 203.69 Not seasonally adjusted 6 Total reserves2 32.82 35.01 36.86 40.13 37.88 37.95 38.69 40.13 40.70 39.88 40.07' 41.26 7 Nonborrowed reserves 32.18 34.37 36.09 36.94 30.64 31.94 34.07 36.94 39.31 38.59 38.47 39.93 8 Nonborrowed reserves plus extended credit3 32.33 34.56 36.09 39.55 37.10 36.99 37.91 39.55 40.36 39.39 39.53 40.80 9 Required reserves 32.50 34.51 36.30 39.28 37.25 37.33 37.99 39.28 39.96 38.97 39.30 40.52 10 Monetary base4 160.94 173.17 188.76 202.02 196.07 196.13 198.22 202.02 200.93 199.54 200.86' 203.42 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 41.92 41.85 38.89 40.70 38.04 38.51 39.23 40.70 41.12 40.27 40.49 41.65 12 Nonborrowed reserves 41.29 41.22 38.12 37.51 30.80 32.50 34.62 37.51 39.73 38.98 38.90' 40.33 13 Nonborrowed reserves plus extended credit3 41.44 41.41 38.12 40.09 37.29 37.37 38.54 40.09 40.88 39.83 40.03 40.77 14 Required reserves 41.61 41.35 38.33 39.84 37.41 37.89 38.54 39.84 40.38 39.37 39.73 40.91 15 Monetary base4 170.47 180.52 192.36 202.59 196.23 196.69 198.77 202.59 201.35 199.94 201.29' 203.82 1. Figures incorporate adjustments for discontinuities associated with the of vault cash holdings of thrift institutions that is included in the currency implementation of the Monetary Control Act and other regulatory changes to component of the money stock plus, for institutions not having required reserve reserve requirements. To adjust for discontinuities due to changes in reserve balances, the excess of current vault cash over the amount applied to satisfy requirements on reservable nondeposit liabilities, the sum of such required current reserve requirements. After the introduction of contemporaneous reserve reserves is subtracted from the actual series. Similarly, in adjusting for discontin- requirements (CRR), currency and vault cash figures are measured over the uities in the monetary base, required clearing balances and adjustments to weekly computation period ending Monday. compensate for float also are subtracted from the actual series. Before CRR, all components of the monetary base other than excess reserves 2. Total reserves not adjusted for discontinuities consist of reserve balances are seasonally adjusted as a whole, rather than by component, and excess with Federal Reserve Banks, which exclude required clearing balances and reserves are added on a not seasonally adjusted basis. After CRR, the seasonally adjustments to compensate for float, plus vault cash used to satisfy reserve adjusted series consists of seasonally adjusted total reserves, which include requirements. Such vault cash consists of all vault cash held during the lagged excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted computation period by institutions having required reserve balances at Federal currency component of the money stock and the remaining items seasonally Reserve Banks plus the amount of vault cash equal to required reserves during the adjusted as a whole. maintenance period at institutions having no required reserve balances. 5. Reflects actual reserve requirements, including those on nondeposit liabil- 3. Extended credit consists of borrowing at the discount window under the ities, with no adjustments to eliminate the effects of discontinuities associated terms and conditions established for the extended credit program to help with implementation of the Monetary Control Act or other regulatory changes to depository institutions deal with sustained liquidity pressures. Because there is reserve requirements. not the same need to repay such borrowing promptly as there is with traditional NOTE. Latest monthly and biweekly figures are available from the Board'S short-term adjustment credit, the money market impact of extended credit is H.3(502) statistical release. Historical data and estimates of the impact on similar to that of nonborrowed reserves. required reserves of changes in reserve requirements are available from the 4. The monetary base not adjusted for discontinuities consists of total reserves Banking Section, Division of Research and Statistics, Board of Governors of the plus required clearing balances and adjustments to compensate for float at Federal Federal Reserve System, Washington, D.C. 20551. Reserve Banks and the currency component of the money stock less the amount Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Billions of dollars, averages of daily figures 1985 1981 1982 1983 1984 DDeecc.. DDeecc.. DDeecc.. DDeecc.. JJaann..'' FFeebb..'' MMaarr..'' AApprr.. Seasonally adjusted 1 Ml 441.9 480.5 525.4 558.5 562.7 569.4 572.1 575.0 2 M2 1,796.6 1,965.3 2,196.3 2,371.8' 2,398.9 2,420.9 2,428.6 2,427.0 3 M3 2,236.7 2,460.3 2,710.4 2,995.1 3,020.6 3,041.6 3,055.7 3,057.5 4 L 2,598.4 2,868.7 3,178.7 3,544. 1' 3,568.1 3,591.9 3,611.4 n.a. 5 Debt2 4,323.8 4,710.1 5,224.6 5,936.6 6,001.0 6,062.1 6,121.5 n.a. Ml components 6 Currency2 124.0 134.1 148.0 158.7 159.4 160.5 161.3 161.7 7 Travelers checks3 4.3 4.3 4.9 5.2 5.3 5.3 5.4 5.5 8 Demand deposits4 236.2 239.7 243.7 248.6 249.1 251.7 251.9 252.5 9 Other checkable deposits5 77.4 102.4 128.9 146.0 149.0 151.8 153.6 155.3 Nontransactions components 10 In M26 1,354.6 1,484.8 1,670.9 1,813.3' 1,836.2 1,851.5 1,856.4 1,852.0 11 In M3 only7 440.2 495.0 514.1 623.4' 621.7 620.7 627.2 630.5 Savings deposits9 12 Commercial Banks 159.7 164.9 134.6 122.6 121.6 121.4 120.3 119.5 13 Thrift institutions 186.1 197.2 178.2 166.0 166.9 168.0 168.4 168.3 Small denomination time deposits9 14 Commerical Banks 349.6 382.2 353.1 387.0 384.7 382.0 382.8 387.6 15 Thrift institutions 477.7 474.7 440.0 498.6' 497.2 495.6 495.8 498.0 Money market mutual funds 16 General purpose and broker/dealer 150.6 185.2 138.2 167.7' 171.9 175.0 177.4 176.1 17 Institution-only 36.2 48.4 43.2 62.7 65.0 62.2 59.5 59.6 Large denomination time deposits10 18 Commercial Banks11 247.3 261.8 225.1 264.4 262.3 264.4 269.5 272.9 19 Thrift institutions 54.3 66.1 100.4 151.8' 154.6 154.9 154.2 154.4 Debt components 20 Federal debt 830.1 991.4 1,173.1 1,367.1 1,385.5 1,402.2 1,414.4 n.a. 21 Non-federal debt 3,493.7 3,718.7 4,051.6 4,569.6 4,615.5 4,660.0 4,707.1 n.a. Not seasonally adjusted 22 Ml 452.3 491.9 537.9 570.4 568.3 558.6 564.9 581.7 23 M2 1,798.7 1,967.4 2,198.1 2,376.7' 2,404.2 2,414.4 2,428.8 2,438.9 24 M3 2,242.7 2,466.6 2,716.5 3,002.3 3,024.4 3,034.9 3,057.4 3,069.4 25 L 2,605.6 2,876.5 3,189.4 3,545.4' 3,573.6 3,590.5 3,618.4 n.a. 26 Debt2 4,323.8 4,710.1 5,218.5 5,930.2 5,992.5 6,038.2 6,090.8 n.a. Ml components 27 Currency2 126.1 136.4 150.5 160.9 158.3 158.6 159.8 161.2 28 Travelers checks3 4.1 4.1 4.6 4.9 4.9 5.0 5.1 5.2 29 Demand deposits4 243.6 247.3 251.6 257.4 254.9 244.9 246.3 255.1 30 Other checkable deposits5 78.5 104.1 131.3 147.2 150.1 150.1 153.6 160.1 Nontransactions components 31 M26 1,346.3 1,475.5 1,660.2 1,806.3' 1,835.9 1,855.8 1,863.9 1,857.2 32 M3 only7 444.1 499.2 518.4 625.5' 620.2 620.5 628.6 630.5 Money market deposit accounts 33 Commercial banks n.a. 26.3 230.0 267.1 280.4 289.3 294.0 295.9 34 Thrift institutions n.a. 16.6 145.9 147.9 153.2 159.0 163.9 164.4 Savings deposits8 35 Commercial Banks 157.5 162.1 132.0 121.4 121.1 120.4 120.6 120.9 36 Thrift institutions 184.7 195.5 176.5 164.9 165.8 166.5 168.2 169.3 Small denomination time deposits9 37 Commercial Banks 347.7 380.1 351.0 387.6 386.3 384.1 383.7 383.9 38 Thrift institutions 475.6 472.4 437.6 499.4' 502.0 499.5 496.2 495.8 Money market mutual funds 39 General purpose and broker/dealer 150.6 185.2 138.2 167.5' 171.9 175.0 177.4 176.1 40 Institution-only 36.2 48.4 43.2 62.7 65.0 62.2 59.5 59.6 Large denomination time deposits10 41 Commercial Banks11 252.1 266.2 228.5 265.9 263.1 263.9 269.8 270.3 42 Thrift institutions 54.3 66.2 100.7 151.1' 154.1 154.9 153.3 153.4 Debt components 43 Federal debt 830.1 991.4 1,170.2 1,364.7 1,383.1 1,397.4 1,412.0 n.a. 44 Non-federal debt 3,943.7 3,718.7 4,048.3 4,565.5 4,609.4 4,640.8 4,678.8 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • July 1985 NOTES TO TABLE 1.21 1. Composition of the money stock measures and debt is as follows: 2. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults commercial banks. Excludes the estimated amount of vault cash held by thrift of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits institutions to service their OCD liabilities. at all commercial banks other than those due to domestic banks, the U.S. 3. Outstanding amount of U.S. dollar-denominated travelers checks of nongovernment, and foreign banks and official institutions less cash items in the bank issuers. Travelers checks issued by depository institutions are included in process of collection and Federal Reserve float; and (4) other checkable deposits demand deposits. (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer 4. Demand deposits at commercial banks and foreign-related institutions other service (ATS) accounts at depository institutions, credit union share draft than those due to domestic banks, the U.S. government, and foreign banks and accounts, and demand deposits at thrift institutions. The currency and demand official institutions less cash items in the process of collection and Federal deposit components exclude the estimated amount of vault cash and demand Reserve float. Excludes the estimated amount of demand deposits held at deposits respectively held by thrift institutions to service their OCD liabilities. commercial banks by thrift institutions to service their OCD liabilities. M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) 5. Consists of NOW and ATS balances at all depository institutions, credit issued by all commercial banks and overnight Eurodollars issued to U.S. residents union share draft balances, and demand deposits at thrift institutions. Other by foreign branches of U.S. banks worldwide, MMDAs, savings and small- checkable deposits seasonally adjusted equals the difference between the seasondenomination time deposits (time deposits—including retail RPs—in amounts of ally adjusted sum of demand deposits plus OCD and seasonally adjusted demand less than $100,000), and balances in both taxable and tax-exempt general purpose deposits. Included are all ceiling free "Super NOWs," authorized by the and broker/dealer money market mutual funds. Excludes individual retirement Depository Institutions Deregulation committee to be offered beginning Jan. 5, accounts (IRA) and Keogh balances at depository institutions and money market 1983. funds. Also excludes all balances held by U.S. commercial banks, money market 6. Sum of overnight RPs and overnight Eurodollars, money market fund funds (general purpose and broker/dealer), foreign governments and commercial balances (general purpose and broker/dealer), MMDAs, and savings and small banks, and the U.S. government. Also subtracted is a consolidation adjustment time deposits, less the consolidation adjustment that represents the estimated that represents the estimated amount of demand deposits and vault cash held by amount of demand deposits and vault cash held by thrift institutions to service thrift institutions to service their time and savings deposits. their time and savings deposits liabilities. M3: M2 plus large-denomination time deposits and term RP liabilities (in 7. Sum of large time deposits, term RPs and term Eurodollars of U.S. amounts of $100,000 or more) issued by commercial banks and thrift institutions, residents, money market fund balances (institution-only), less a consolidation term Eurodollars held by U.S. residents at foreign branches of U.S. banks adjustment that represents the estimated amount of overnight RPs and Eurodolworldwide and at all banking offices in the United Kingdom and Canada, and lars held by institution-only money market funds. balances in both taxable and tax-exempt, institution-only money market mutual 8. Savings deposits exclude MMDAs. funds. Excludes amounts held by depository institutions, the U.S. government, 9. Small-denomination time deposits—including retail RPs— are those issued money market funds, and foreign banks and official institutions. Also subtracted is in amounts of less than $100,000. All individual retirement accounts (IRA) and a consolidation adjustment that represents the estimated amount of overnight RPs Keogh accounts at commercial banks and thrifts are subtracted from small time and Eurodollars held by institution-only money market mutual funds. deposits. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term 10. Large-denomination time deposits are those issued in amounts of $100,000 Treasury securities, commercial paper and bankers acceptances, net of money or more, excluding those booked at international banking facilities. market mutual fund holdings of these assets. 11. Large-denomination time deposits at commercial banks less those held by Debt: Debt of domestic nonfinancial sectors consists of outstanding credit money market mutual funds, depository institutions, and foreign banks and market debt of the U.S. government, state and local governments, and private officisd institutions. nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- NOTE: Latest monthly and weekly figures are available from the Board's H.6 sumer credit (including bank loans), other bank loans, commercial paper, bankers (508) release. Historical data are available from the Banking Section, Division of acceptances, and other debt instruments. The source of data on domestic Research and Statistics, Board of Governors of the Federal Reserve System, nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt Washington, D.C. 20551. data are on an end-of-month basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 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. 1984 1985 Oct. Nov. Dec. Jan. Feb. Mar. Seasonally adjusted DEBITS TO Demand deposits2 1 All insured banks 80,858.7 90,914.4 109,642.3 142,907.3 134,016.3 137,512.0 140,678.6 143,281.5 139,608.3 2 Major New York City banks 34,108.1 37,932.9 47,769.4 67,488.7 60,992.8 62,341.0 64,474.7 63,157.0 62,523.7 3 Other banks 46,966.5 52,981.5 61,873.1 75,418.5 73,023.5 75,171.0 76,203.9 80,124.5 77,084.6 4 ATS-NOW accounts3 761.0 1,036.2 1,405.5 1,698.6 1,678.5 1,677.5 1,552.0 1,618.6 1,567.0 5 Savings deposits4 679.6 720.3 741.4 597.2 579.1 486.0 501.3 499.8 539.2 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 285.8 324.2 379.7 486.8 448.2 453.4 468.6 471.4 456.3 7 Major New York City banks 1,116.7 1,287.6 1,528.0 2,199.6 1,917.5 1,903.0 2,008.6 1,902.2 1,967.0 8 Other banks 185.9 211.1 240.9 286.9 273.3 277.8 284.2 295.9 281.1 9 ATS-NOW accounts3 14.4 14.5 15.6 16.9 16.5 16.3 14.6 15.0 14.4 10 Savings deposits4 4.1 4.5 5.4 4.9 4.7 4.0 4.2 4.2 4.6 DEBITS TO Not seasonally adjusted Demand deposits2 11 All insured banks 81,197.9 91,031.8 109,517.6 141,249.5 131,791.6 140,166.0 148,880.1 129,297.2 143,154.3 12 Major New York City banks 34,032.0 38,001.0 47,707.4 64,790.2 61,148.7 64,498.9 68,203.1 57,337.4 64,188.9 13 Other banks 47,165.9 53,030.9 64,310.2 76,459.2 70,643.0 75,667.1 80,677.0 71,959.8 78,965.4 14 ATS-NOW accounts3 737.6 1,027.1 1,397.0 1,665.7 1,524.8 1,625.4 1,838.9 1,524.4 1,624.7 15 MMDA5 567.4 901.1 819.7 899.7 1,103.9 980.9 1,032.5 16 Savings deposits4 672.9 720.0 742.0 616.2 538.7 470.6 544.7 455.5 552.9 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 286.4 325.0 379.9 479.9 438.8 447.1 486.0 437.2 480.9 18 Major New York City banks 1,114.2 1,295.7 1,510.0 2,120.7 1,944.6 1,910.8 2,025.9 1,780.6 1,990.7 19 Other banks 186.2 211.5 240.5 289.9 262.7 270.5 295.9 273.0 297.5 20 ATS-NOW accounts3 14.0 14.4 15.5 16.6 14.9 15.4 17.1 14.3 14.9 ~>\ MMDA5 2.8 3.7 3.2 3.4 4.0 3.4 3.5 22 Savings deposits4 4.1 4.5 5.4 5.1 4.4 3.9 4.6 3.9 4.7 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 Federjd Reserve System, availability starts with December 1978. Washington, D.C. 20551. 4. Excludes ATS and NOW accounts, MMDA and special club accounts, such These data also appear on the Board's G.6 (406) release. For address, see inside as Christmas and vacation clubs. front cover. 5. Money market deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • July 1985 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1984 1985 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total loans and securities2 1,629.8 1,636.6 1,652.6 1,662.1 1,674.8' 1,682.8 1,701.1 1,714.8 1,724.0 1,742.3' 1,758.y 1,765.7 2 U.S. government securities 257.3 253.7 256.4 257.1 258.0 257.0 259.4 260.2 260.1 265.8' 266.9' 261.1 3 Other securities 140.5 139.7 139.5 140.8 141.9 141.5 141.1 139.9 142.4' 140.8' 138.7' 140.1 4 Total loans and leases2 1,232.0 1,243.2 1,256.7 1,264.2 1,274.9' 1,284.3 1,300.6 1,314.7 1,321.5' 1,335.6^ 1,353.3' 1,364.5 5 Commercial and industrial 448.0 452.2 455.0 458.1 460.0 463.0 467.1 468.1 468.4' 473.4' 480.4 480.9 6 Bankers acceptances held3.. 5.8 5.8 6.5 6.1 5.7 5.9 6.2 5.4 5.1 6.3 66..55 55..55 7 Other commercial and industrial 442.2 446.3 448.5 451.9 454.3 457.1 460.8 462.7 463.3' 467.1' 473.9 475.4 8 U.S. addressees4 430.2 434.7 436.8 440.3 443.2 446.5 450.5 453.1 453.6' 457.0' 463.6 465.1 9 Non-U.S. addressees4 12.0 11.7 11.6 11.6 11.1 10.6 10.3 9.6 9.7 10.2 10.3 10.3 10 Real estate 350.7 354.7 358.3 361.2 364.7' 367.7 371.8 375.6 377.9 382.1' 385.8' 389.9 11 Individual 229.0 233.0 236.3 238.5 241.3 243.5 246.7 251.0 254.6 257.7 261.9' 265.5 12 Security 30.1 28.6 28.0 26.1 28.8 30.3 30.2 31.5 31.9 31.6 3322..88 3355..11 13 Nonbank financial institutions 31.4 31.4 31.4 30.9 31.3 31.2 31.2 31.4 31.3 30.9 30.7 31.2 14 Agricultural 40.3 40.4 40.6 40.5 40.7 40.6 40.5 40.3 40.2 40.2 4400..33 4400..11 15 State and political subdivisions 37.6 38.9 40.3 41.1 41.6 41.2 42.1 44.0 46^ 46.6 46.8 47.1 lb Foreign banks 12.3 12.3 12.2 12.0 11.5 11.4 11.7 11.4 11.3 11.4 11.1 10.7 17 Foreign official institutions ... 8.9 8.8 9.3 9.4 8.9 8.5 8.4 8.3 7.8 7.9 7.7 7.8 18 Lease financing receivables... 14.1 14.3 14.5 14.8 15.0 15.1 15.3 15.5 15.6 15.8 16.1 16.4 19 All other loans 29.6 28.8 30.9 31.7 31.1' 31.9 35.7 37.5 35.4' 38.<y 39.6' 39.9 Not seasonally adjusted 20 Total loans and securities2 1,626.6 1,637.6 1,646.7 1,656.1 1,673.2' 1,684.0 1,701.9 1,725.8 1,732.0 1,740.4' IJSS.V 1,765.9 21 U.S. government securities 259.4 257.2 256.2 255.5 255.7' 254.1 255.3 256.9 260.1' 266.8' 269.C 266.6 2 2 2 3 T O o th ta e l r l s o e a c n u s r i a t n ie d s leases2 1,2 1 2 4 6 1 . . 1 1 1,2 1 4 3 1 9 . . 0 4 1,2 1 5 3 2 8 . . 4 2 1,2 1 6 4 0 0 . . 2 4 1,2 1 7 4 6 1. . 3 2 ' 1,2 1 8 4 9 0 . . 0 9 1,3 1 0 4 5 1 . . 5 2 1,3 1 2 4 7 1 . . 4 5 1,3 1 2 4 8 3 . . 7 3 ' ' 1,3 14 3 1 2 . . < 6 y ' 1,3 1 4 3 7 8 . . 1 9 ' ' 1,3 1 5 3 9 9 . . 7 7 2 2 4 5 Co B m a m nk e e r r c s ia a l c a c n e d p t i a n n d c u es s t h ri e a ld l. 3 . . . . . 446 5 . . 8 7 45 6 0 . . 0 9 45 6 4 . . 4 3 456 5 . . 1 9 45 55 9 .. . 66 9 463 55 . .. 8 88 46 66 7 .. . 11 3 47 55 1 .. . 88 2 47 55 0 .. . 22 3 ' 47 66 2 ..11 ^ 48 66 0 .. . 44 0 48 55 1 .. . 66 2 2b Other commercial and industrial 441.0 444.8 447.9 450.1 454.3 458.0 461.2 465.3 465.C 466.8' 473.5' 475.5 2277 U.S. addressees4 429.5 433.5 436.2 438.5 443.0 447.0 450.2 454.8 455.3' 457.1' 463.8 466.0 28 Non-U.S. addressees4 11.6 11.3 11.7 11.6 11.3 11.1 11.0 10.6 9.8 9.7 9.8 9.5 29 Real estate 349.8 354.1 357.7 361.4 365.8' 368.9 372.8 376.2 378.6' 381.7' 384.7' 388.6 30 Individual 227.2 231.3 234.7 238.3 242.3' 245.3 248.4 254.0 257.C 257.4 259.7' 263.2 31 Security 28.9 28.5 26.6 25.4 27.7 30.2 31.7 3355..22 3333..00 3300..88 3322..22 3355..00 32 Nonbank financial institutions 31.2 31.4 31.4 31.0 31.4 31.1 31.1 31.5 31.3' 30.7 30.7 31.3 3333 Agricultural 40.2 40.9 41.3 41.4 41.5 41.2 40.6 4400..00 3399..66 3399..44 3399..33 3399..44 34 State and political subdivisions 37.6 38.9 40.3 41.1 41.6 41.2 42.1 44.0 46.9' 46.6 46.8 47.1 3355 Foreign banks 12.0 11.8 12.0 11.7 11.7 11.8 12.0 12.0 11.6 11.4 10.9 10.3 3b Foreign official institutions ... 8.9 8.8 9.3 9.4 8.9 8.5 8.4 8.3 7.8 7.9 7.7 7.8 3/ Lease financing receivables... 14.1 14.3 14.4 14.7 14.9 15.0 15.1 15.5 15.8 16.0 16.3' 16.4 38 All other loans 29.6 30.1 30.3 29.8 30.5 32.1 35.8 39.5 36.7' 37.8' 38.8' 39.3 1. Data are prorated averages of Wednesday estimates for domestically char- 2. Excludes loans to commercial banks in the United States. tered insured banks, based on weekly sample reports and quarterly universe 3. Includes nonfinancial commercial paper held. reports. For foreign-related institutions, data are averages of month-end estimates 4. United States includes the 50 states and the District of Columbia. based on weekly reports from large U.S. agencies and branches and quarterly NOTE. These data also appear in the Board's G.7 (407) release. For address, see reports from all U.S. agencies and branches, New York investment companies inside front cover. majority owned by foreign banks, and Edge Act corporations owned by domestically chartered and foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions All 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS' Monthly averages, billions of dollars 1984 1985 SSoouurrccee May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Total nondeposit funds 1 Seasonally adjusted2 109.1 99.4 100.3 103.5 106.5 107.9 112.0 108.6 102.2 113.7 116.6 110055..00 2 Not seasonally adjusted 113.8 101.8 99.9 105.7 107.0 109.6 117.5 111.1 104.6 117.1 119.0 108.1 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 137.4 133.2 134.5 139.3 141.6 141.4 145.0 140.5 138.7 146.7 114477..22 113388..77 4 Not seasonally adjusted 142.1 135.7 134.0 141.5 142.1 143.1 150.5 143.1 141.1 150.2 149.6 141.9 5 Net balances due to foreign-related institutions, not seasonally adjusted -28.2 -33.9 -34.2 -35.8 -35.1 -33.5 -33.1 -32.0 -36.5 -33.1 --3300..66 --3333..88 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -29.8 -32.9 -33.1 -35.0 -35.2 -34.2 -32.7 -31.4 -34.9 -31.8 --2299..88 --3322..66 7 Gross due from balances 73.5 73.8 71.2 72.8 71.5 69.8 68.3 69.0 71.4 70.6 71.5 75.0 8 Gross due to balances 43.6 40.9 38.1 37.7 36.3 35.6 35.6 37.6 36.5 38.8 41.7 42.4 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted5 1.6 -0.9 -1.0 -0.7 0.1 0.7 -0.4 -0.6 -1.6 -1.3 -0.8 --11..22 10 Gross due from balances 49.7 50.7 51.9 51.6 51.7 50.8 50.7 52.0 52.9 54.0 53.3 51.7 11 Gross due to balances 51.2 49.7 50.8 50.8 51.8 51.5 50.4 51.4 51.3 52.7 52.5 50.5 Security RP borrowings 12 Seasonally adjusted® 79.6 76.1 77.5 79.9 81.4 82.0 84.0 81.1 82.3 90.1 9922..00 8855..44 13 Not seasonally adjusted 81.9 76.0 74.6 79.6 79.4 81.2 87.0 81.1 82.2 91.1 92.0 86.0 U.S. Treasury demand balances7 14 Seasonally adjusted 13.4 14.1 12.8 13.1 16.0 8.0 17.3 16.1 14.7 13.0 1111..88'' 1144..66 15 Not seasonally adjusted 12.8 12.4 11.9 10.3 17.5 11.0 10.4 12.5 18.5 15.8 12.8 15.3 Time deposits, $100,000 or more8 16 Seasonally adjusted 302.2 309.9 314.8 314.2 315.4 321.4 323.0 325.8 324.8 325.4' 329.9' 333322..66 17 Not seasonally adjusted 300.2 309.0 313.7 315.6 316.8 322.2 322.9 327.3 325.6 324.9 330.3' 330.1 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. York investment companies majority owned by foreign banks, and Edge Act 4. Averages of daily figures for member and nonmember banks. corporations owned by domestically chartered and foreign banks. 5. Averages of daily data. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from 6. Based on daily average data reported by 122 large banks. nonbanks and not seasonally adjusted net Eurodollars. Includes averages of 7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at Wednesday data for domestically chartered banks and averages of current and commercial banks. Averages of daily data. previous month-end data for foreign-related institutions. 8. Averages of Wednesday figures. 3. Other borrowings are borrowings on any instrument, such as a promissory NOTE. These data also appear in the Board's G. 10 (411) release. For address see note or due bill, given for the purpose of borrowing money for the banking inside front cover. business. This includes borrowings from Federal Reserve Banks and from foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 DomesticN onfinancial Statistics • July 1985 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars 1983 1984 1985 AAccccoouunntt Dec. July Aug. Sept/ Oct. Nov. Dec. Jan. Feb. Mar/ Apr. ALL COMMERCIAL BANKING INSTITUTIONS1 1 Loans and securities 1,680.62 1,765.3 1,784.5 1,798.3 1,822.7 1,822.7 1,864.0 1,854.6 1,874.4 1,879.1 1,895.9 2 Investment securities n.a. 378.2 376.2 377.2 375.2 374.4 377.5 380.9 382.0 383.5 383.4 3 U.S. government securities n.a. 246.5 243.5 243.4 241.2 240.4 242.5 245.0 248.0 250.9 250.0 4 Other n.a. 131.7 132.7 133.8 134.0 133.9 134.9 136.0 134.0 132.6 133.4 5 Trading account assets n.a. 15.7 20.0 20.9 22.5 21.9 22.9 24.2 27.6 23.7 23.5 6 Total loans 1.249.32 1,371.4 1,388.4 1,400.2 1,424.9 1,426.4 1,463.7 1,449.5 1,464.8 1,471.9 1,489.0 7 Interbank loans 111.42 118.6 127.1 123.3 126.1 122.6 126.9 125.2 128.6 124.3 130.7 8 Loans excluding interbank 1,137.92 1,252.8 1,261.2 1,276.9 1,298.8 1,303.8 1,336.8 1,324.3 1,336.2 1,347.6 1,358.3 9 Commercial and industrial 419.4 454.4 455.2 459.8 467.7 468.7 476.8 470.0 476.8 482.7 481.5 10 Real estate 332.4 356.8 361.8 366.6 369.8 374.4 377.7 380.7 382.6 386.1 389.8 11 Individual 217.6 235.2 240.0 243.3 247.1 249.6 255.5 257.4 258.1 260.4 264.2 12 All other 168.52 206.5 204.2 207.3 214.2 211.1 226.8 216.1 218.7 218.3 222.8 13 Total cash assets 219.6 179.1 177.3 181.0 188.0 188.4 201.9 187.8 189.2 183.7 187.3 14 Reserves with Federal Reserve Banks 23.5 19.4 17.4 18.0 18.1 20.4 20.5 20.9 19.6 20.0 22.9 15 Cash in vault 23.4 21.6 22.2 21.6 21.4 23.9 23.3 21,9 21.8 21.3 21.3 lb Cash items in process of collection ... 73.2 60.2 60.7 63.2 70.2 66.5 75.9 66.9 6688..88 6633..99 6644..11 17 Demand balances at U.S. depository institutions 29.3 29.5 30.8 32.0 30.9 34.5 30.8 32.2 31.6 30.1 18 Other cash assets J 995 48.6 47.5 47.4 46.3 46.7 47.7 47.3 46.7 46.9 48.9 19 Other assets 193.6 191.3 190.6 196.8 201.6 190.1 196.8 191.9 195.2 192.5 188.7 20 Total assets/total liabilities and capital ... 2,093.8 2,135.6 2,152.4 2,176.1 2,212.2 2,201.2 2,262.6 2,234.2 2,258.8 2,255.3 2,272.0 21 Deposits 1,508.9 1,535.5 1,539.0 1,549.9 1,578.9 1,578.2 1,631.2 1,604.5 1,617.9 1,625.1 1,636.4 22 Transaction deposits 374.62 441.4 440.0 442.3 462.7 453.1 491.1 456.9 459.3 457.6 465.3 23 Savings deposits 457.22 368.5 365.1 364.9 371.1 378.1 386.3 400.0 406.8 409.8 409.4 24 Time deposits 677.1 725.6 734.0 742.7 745.0 747.0 753.8 747.5 751.8 757.7 761.7 25 Borrowings 273.22 292.0 301.5 307.1 314.3 298.8 304.1 306.7 309.0 300.2 309.8 2 2 7 b R O e th si e d r u l a i l a b (a il s it s i e e t s s less liabilities) 1 16 4 4 7 . . 4 3 2 2 1 16 4 7 0 . . 9 2 1 1 4 6 2 9 . . 1 7 1 1 4 7 6 2 . . 2 9 1 17 4 5 4 . . 1 0 1 1 4 7 4 9 . . 8 4 1 18 4 1 6 . . 1 2 1 17 4 4 8 . . 2 9 1 1 4 8 9 2 . . 3 6 1 18 4 0 9 . . 7 4 1 1 7 5 5 0 . . 3 5 MEMO 28 U.S. government securities (including trading account) 225544..II22 255.6 255.1 255.5 256.3 255.2 256.9 262.0 226699..55 226688..44 226666..44 29 Other securities (including trading account) 117777..2222 138.3 141.0 142.7 141.5 141.1 143.4 143.1 140.1 138.8 140.6 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 1,591.32 1,676.7 1,688.4 1,707.4 1,728.5 1,726.7 1,765.4 1,759.6 1,774.6 1,781.9 1,796.4 31 Investment securities n.a. 371.2 369.1 369.8 367.9 367.5 370.5 373.7 374.7 376.6 376.7 32 U.S. government securities n.a. 241.4 238.5 238.4 236.1 235.8 237.9 240.2 243.2 246.6 246.0 33 Other n.a. 129.8 130.7 131.5 131.8 131.6 132.6 133.5 131.5 130.0 130.6 34 Trading account assets n.a. 15.7 20.0 20.9 22.5 21.9 22.9 24.2 27.6 23.7 23.5 35 Total loans 1,167.42 1,289.8 1,299.4 1,316.6 1,338.0 1,337.3 1,372.1 1,361.7 1,372.3 1,381.6 1,396.2 3b Interbank loans 87.02 95.2 97.6 99.9 103.3 96.1 102.8 100.6 100.9 99.9 103.1 37 Loans excluding interbank 1.080.42 1,194.6 1,201.8 1,216.7 1,234.7 1,241.2 1,269.3 1,261.2 1,271.4 1,281.6 1,293.1 38 Commercial and industrial 381.32 414.0 414.5 418.7 423.0 424.7 430.2 425.7 431.5 435.5 436.0 39 Real estate 327.2 353.1 358.0 362.3 365.5 369.1 372.1 375.1 377.3 380.9 384.5 40 Individual 217.4 235.1 239.8 243.1 246.9 249.4 255.3 257.2 257.9 260.2 263.9 41 All other 154.62 192.4 189.6 192.5 199.3 198.0 211.7 203.1 204.8 205.0 208.7 42 Total cash assets 207.0 166.7 165.9 169.0 176.6 176.8 190.3 175.7 177.8 172.5 175.7 43 Reserves with Federal Reserve Banks 19.9 18.0 16.7 17.4 17.1 19.7 19.2 20.2 18.7 19.2 22.3 44 Cash in vault 23.4 21.6 22.2 21.6 21.4 23.9 23.3 21.9 21.8 21.3 21.3 45 Cash items in process of collection ... 73.0 60.1 60.5 63.0 69.9 66.3 75.7 66.7 6688..55 6633..77 6633..99 46 Demand balances at U.S. depository institutions 27.9 28.2 29.4 30.7 29.4 32.9 29.5 30.9 30.3 28.7 47 Other cash assets 39.2 38.3 37.7 37.5 37.5 39.3 37.5 37.9 38.0 39.5 48 Other assets 150.4 138.9 140.6 141.2 147.9 139.7 142.1 137.6 139.0 137.2 137.6 49 Total assets/total liabilities and capital ... 1,948.7 1,982.3 1,995.0 2,017.6 2,053.1 2,043.2 2,097.8 2,072.9 2,091.4 2,091.7 2,109.7 50 Deposits 1,468.1 1,495.4 1,500.3 1,510.9 1,539.1 1,538.0 1,587.8 1,561.8 1,573.7 1,580.5 1,591.7 51 Transaction deposits 368.52 434.8 433.7 435.9 456.2 446.8 484.5 450.6 452.9 451.4 458.9 52 Savings deposits 456.62 367.5 364.2 363.9 370.1 377.1 385.2 398.9 405.6 408.6 408.3 53 Time deposits 643.0 693.1 702.4 711.1 712.8 714.1 718.1 712.3 715.2 720.5 724.5 54 Borrowings 214.I2 228.0 236.0 243.5 251.3 240.9 243.1 246.5 247.0 239.9 247.9 55 Other liabilities 122.32 121.5 119.3 119.7 120.5 122.3 123.5 118.4 124.2 124.7 122.3 5b Residual (assets less liabilities) 144.I2 137.4 139.3 143.4 142.1 142.0 143.4 146.1 146.5 146.6 147.8 1. Commercial banking institutions include insured domestically chartered NOTE. Figures are partly estimated. They include all bank-premises subsidiarcommercial banks, branches and agencies of foreign banks, Edge Act and ies and other significant majority-owned domestic subsidiaries. Loan and securi- Agreement corporations, and New York State foreign investment corporations. ties data for domestically chartered commercial banks are estimates for the last 2. Data are not comparable with those of later dates. See the Announcements Wednesday of the month based on a sample of weekly reporting banks and section of the March 1985 BULLETIN for a description of the differences. quarter-end condition report data. Data for other banking institutions are esti- 3. Insured domestically chartered commercial banks include all member banks mates made for the last Wednesday of the month based on a weekly reporting and insured nonmember banks. sample of foreign-related institutions and quarter-end condition reports. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1.4 Billion or More on December 31, 1982, Assets and Liabilities Millions of dollars, Wednesday figures Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 May 1 May 8 1 Cash and balances due from depository institutions 94,050 91,00c 87,182' 92,427' 92,705' 97,789 89,499 105,047 90,317 2 Total loans, leases and securities, net 829,742 827,169' 829,288' 836,335' 832,76c 837,989 834,758 846,151 838,794 3 U.S. Treasury and government agency 90,327 86,954 86,950 87,428 86,111 86,882 85,471 84,150 85,607 4 Trading account 20,417 17,652 17,512 17,316 16,040 17,360 16,344 14,750 15,533 5 Investment account, by maturity 69,910 69,302 69,438 70,112 70,071 69,522 69,127 69,401 70,073 6 One year or less 21,687 21,043 21,211 21,576 21,579 21,132 20,753 20,860 20,902 7 Over one through five years 35,002 35,224 35,213 35,254 34,884 34,772 34,074 34,520 35,246 8 Over five years 13,220 13,035 13,013 13,282 13,608 13,618 14,300 14,020 13,925 9 Other securities 46,710 46,742 47,143 45,845 45,814 48,792 48,785 48,909 48,431 10 Trading account 3,248 3,610 3,802 2,614 2,534 5,131 4,862 5,112 4,263 11 Investment account 43,463 43,132 43,341 43,231 43,280 43,661 43,922 43,798 44,167 12 States and political subdivisions, by maturity 38,886 38,577 38,737 38,471 38,518 38,865 38,959 38,903 39,111 13 One year or less 4,922 4,559 4,542 4,543 4,527 4,728 4,723 4,851 4,8% 14 Over one year 33,964 34,018 34,195 33,928 33,991 34,137 34,236 34,052 34,214 15 Other bonds, corporate stocks, and securities 4,577 4,556 4,604 4,761 4,762 4,7% 4,%3 4,894 5,057 16 Other trading account assets 3,047 2,490 2,427 3,018 2,980 2,905 2,309 3,101 3,061 17 Federal funds sold1 51,504 48,994 51,804 54,904 56,572 52,697 53,292 57,708 51,816 18 To commercial banks 35,205 33,478 36,335 38,245 40,639 35,762 36,430 40,271 35,225 19 To nonbank brokers and dealers in securities 11,514 10,368 10,281 11,080 11,091 12,055 10.775 12,056 10,754 20 To others 4,785 5,148 5,187 5,579 4,842 4,879 6,086 5,381 5,837 21 Other loans and leases, gross2 654,985 658,794' 657,582' 661,818' 658,018' 663,493 661,703 669,171 666,842 22 Other loans, gross2 641,780 645,589' 644,386' 648,570' 644,752' 650,230 648,260 655,683 653,322 23 Commercial and industrial2 254,941' 255,877' 255,670 256,344' 254,377' 254,784 253,810 254,891 255,807 24 Bankers acceptances and commercial paper 4,138 3,758 3,795 3,724' 3,503' 3,042 2,645 2,724 2,389 25 All other 250,803' 252,12C 251,875 252,620 250,875' 251,742 251,166 252,167 253,418 26 U.S. addressees 245,086' 246,352' 246,263 247,078 245,240' 246,232 245,684 246,770 248,018 27 Non-U.S. addressees 5,717 5,768 5,612 5,542 5,634 5,510 5,481 5,397 5,400 28 Real estate loans2 164,360 164,306 164,536 164,469 164,872 165,203 165,662 166,255 166,332 29 To individuals for personal expenditures 115,693 115,946' 116,272' 116,542' 116,769' 117,653 118,302 118,878 119,023 30 To depository and financial institutions 39,254 39,492 38,550 39,646' 39,189' 39,407 39,672 41,446 40,663 31 Commercial banks in the United States 9,774 9,883 9,855 lo.ory 9,739' 10,182 10,840 11,841 11,394 32 Banks in foreign countries 5,846 5,888 5,381 5,528' 5,488' 5,256 5,109 5,265 5,508 33 Nonbank depository and other financial institutions 23,634 23,722 23,314 24,040' 23, %2 23,968 23,723 24,340 23,760 34 For purchasing and carrying securities 13,857 15,684 14,952 16,496 15,352 18,438 16,663 18,737 17,502 35 To finance agricultural production 6,985' 7,056' 7,076 7,018 7,036 7,086 7,119 7,111 7,130 36 To states and political subdivisions 29,563 29,725 29,766 29,631 29,779 29,750 29,880 29,949 29,988 37 To foreign governments and official institutions 3,640 3,646 3,839 3,876 3,890 3,875 3,859 3,760 3,646 38 All other 13,487 13,856 13,725 14,549 13,485' 14,034 13,293 14,655 13,230 39 Lease financing receivables 13,205 13,204 13,196 13,249 13,267 13,262 13,442 13,488 13,521 40 LESS: Unearned income 5,274 5,264 5,293 5,223 5,238 5,241 5,257 5,218 5,208 41 Loan and lease reserve2 11,556 11,540' 11,325 11,457 11,497 11,537 11,544 11,671 11,755 42 Other loans and leases, net2 638,154 641,989' 640,964' 645,139' 641,284' 646,714 644,902 652,282 649,880 43 All other assets 128,705 129,475' 128,863' 133,980' 131,698' 131,248 129,025 130,326 127,541 44 Total assets 1,052,497 1,047,644' l,045,33y 1,062,742' 1,057,16* 1,067,026 1,053,282 1,081,524 1,056,652 45 Demand deposits 181,664 185,050' 182,371' 194,813' 187,907' 193,048 182,742 204,544 182,638 46 Individuals, partnerships, and corporations 141,993 140,179' 139,194' 145,352' 144,190' 147,564 139,035 154,030 138,811 47 States and political subdivisions 4,408 5,169 4,719 4,693 5,074 5,659 5,256 6,184 4,714 48 U.S. government 1,156 4,040 2,581 4,512 2,471 1,874 3,555 1,491 2,595 49 Depository institutions in United States 20,259 21,428' 21,511 23,456 20,695' 23,570 20,877 25,346 21,549 50 Banks in foreign countries 4,989 5,429 5,302 6,050 5,496' 5,122 4,921 5,719 5,901 51 Foreign governments and official institutions 690 776 810 850 981 902 937 1,175 889 52 Certified and officers' checks 8,169 8,029 8,254 9,900 9,000 8,357 8,159 10,598 8,179 53 Transaction balances other than demand deposits 36,597 36,409 36,111 38,852 39,100 40,518 37,681 36,878 37,070 54 Nontransaction balances 462,460 463,404 464,684 465,610 465,372 464,520 464,676 463,948 465,132 55 Individuals, partnerships and corporations 426,942 427,898 428,769' 430,603' 429,999' 428,788 428,262 427,916 428,655 56 States and political subdivisions 23,170 23,452 23,68C 22,952' 23,279' 23,501 24,235 23,977 24,432 57 U.S. government 355 349 347 342 350 316 333 342 386 58 Depository institutions in the United States 9,242 8,991 9,169' 9,073 9,226 9,327 9,321 9,205 9,212 59 Foreign governments, official institutions and banks.. 2,750 2,714 2,720 2,640 2,517 2,588 2,525 2,508 2,448 60 Liabilities for borrowed money 199,639 193,034 119911,,996600 193,630' 194,180' 200,800 198,541 203,437 204,307 61 Borrowings from Federal Reserve Banks 5,521 1,043 500 3,175 925 977 700 70 62 Treasury tax-and-loan notes 2,164 8,675 7,106 4,597 92 13,583 15,439 15,935 15,948 63 All other liabilities for borrowed money3 191,954 183,316 184,854 188,532' 190,913' 186,291 182,125 186,801 188,289 64 Other liabilities and subordinated note and debentures 98,458 96,391 96,870' 96,005' %,513' 94,270 95,781 98,550 93,200 65 Total liabilities 978,817 974,288' 971,996' 988,910' 983,072' 993,156 979,422 1,007,357 982,348 66 Residual (total assets minus total liabilities)4 73,679 73,357 73,337 73,832 74,092 73,870 73,860 74,167 74,304 MEMO 67 Total loans and leases (gross) and investments adjusted5 801,594 800,613' 799,716' 804,690' 799,117' 808,823 804,289 810,928 809,138 68 Total loans and leases (gross) adjusted2-5 661,510 664,427' 663,196' 668,399' 664,212' 670,245 667,724 674,767 672,040 69 Time deposits in amounts of $100,000 or more 156,691' 156,978 157,742 156,7% 156,047 155,639 156,658 155,419 155,930 70 Loans sold outright to affiliates—total6 2,855' 2,905' 2,836' 2,863' 2,862' 2,834 2,800 2,805 2,768 71 Commercial and industrial 1,926' 1,982' 1,935' 1,97(K 1,%7' 1,933 1,902 1,922 1,875 72 Other 929 923 900 893 894 901 898 882 894 73 Nontransaction savings deposits (including MMDAs)... 176,492 176,916 177,132 178,585 178,6% 177,3% 176,467 176,773 177,473 1. Includes securities purchased under agreements to resell. 5. Exclusive of loans and federal funds transactions with domestic commercial 2. Levels of major loan items were affected by the Sept. 26, 1984 transaction banks. between Continental Illinois National Bank and the Federal Deposit Insurance 6. Loans sold are those sold outright to a bank's own foreign branches, Corporation. For details see the H.4.2 statistical release dated Oct. 5, 1984. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 3. Includes federal funds purchased and securities sold under agreements to not a bank), and nonconsolidated nonbank subsidiaries of the holding company. repurchase; for information on these liabilities at banks with assets of $1 billion or NOTE. These data also appear in the Board's H.4.2 (504) release. For address, more on Dec. 31, 1977, see table 1.13. see inside front cover. 4. This is not a measure of equity capital for use in capital adequacy analysis or for other analytic uses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • July 1985 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures Account Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 May 1 May 8 1 Cash and balances due from depository institutions . 24,355 22,556 20,303 21,876 22,600 22,779 20,337 27,343 23,523 2 Total loans, leases and securities, net1 . 176,578 175,223 174,424 176,765 175,284 175,425 174,972 183,291 178,733 Securities 3 U.S. Treasury and government agency2 4 Trading account2 5 Investment account, by maturity 13,335 13,411 13,365 13,404 13,335 12,557 12,210 12,020 12,295 6 One year or less 2,257 2,276 2,255 2,293 2,321 1,847 1,803 1,683 1,664 7 Over one through five years 9,447 9,527 9,494 9,365 9,280 8,895 8,652 8,546 8,840 8 Over five years 1,631 1,609 1,615 1,747 1,734 1,815 1,754 1,790 1,791 9 Other securities2 10 Trading account2 11 Investment account 9,254 9,137 9,194 9,iii 9,231 9,489 9,530 9,560 9,674 12 States and political subdivisions, by maturity . 8,360 8,269 8,349 8,291 8,354 8,598 8,612 8,603 8,643 13 One year or less 995 909 933 908 910 1,082 1,092 1,227 1,227 14 Over one year 7,365 7,360 7,416 7,383 7,444 7,516 7,520 7,376 7,416 15 Other bonds, corporate stocks and securities 894 868 845 880 877 890 918 957 1,031 16 Other trading account assets2 Loans and leases 17 Federal funds sold3 22,388 19,894 20,082 20,452 21,640 19,090 20,593 24,788 21,200 18 To commercial banks . 13,590 11,735 11,936 11,175 13,469 9,548 11,092 14,804 11,461 19 To nonbank brokers and dealers in securities . 5,812 4,822 4,760 5,558 5,330 6,533 5,316 6,759 5,744 20 To others 2,986 3,338 3,386 3,719 2,841 3,008 4,185 3,225 3,9% 21 Other loans and leases, gross 136,541 137,709 136,667 138,536 135,944 139,156 137,506 141,783 140,471 22 Other loans, gross 134,274 135,435 134,404 136,279 133,671 136,878 135,044 139,320 138,005 23 Commercial and industrial 61,824 62,146 61,840 61,988 61,210 61,926 61,240 62,063 62,552 24 Bankers acceptances and commercial paper 902 773 825 800 798 700 614 665 656 25 All other . 60,922 61,373 61,016 61,188 60,412 61,226 60,626 61,398 61,897 26 U.S. addressees . 60,265 60,712 60,359 60,533 59,729 60,556 59,978 60,752 61,227 27 Non-U.S. addressees 656 660 657 654 683 670 648 646 670 28 Real estate loans . 25,328 25,359 25,486 25,268 25,359 25,392 25,623 25,697 25,800 29 To individuals for personal expenditures 16,125 16,185 16,251 16,320 16,357 16,481 16,577 16,682 16,789 30 To depository and financial institutions 11,390 11,467 10,932 11,711 11,129 11,215 11,101 12,329 11,920 31 Commercial banks in the United States 1,973 1,976 1,975 2,425 1,920 2,153 2,255 2,774 2,432 32 Banks in foreign countries 1,989 2,026 1,782 1,990 2,035 1,884 1,633 1,919 2,212 33 Nonbank depository and other financial institutions . 7,427 7,464 7,174 7,2% 7,174 7,179 7,213 7,636 7,276 34 For purchasing and carrying securities 7,054 7,682 7,219 8,307 7,064 9,276 7,956 9,766 8,680 35 To finance agricultural production 438 472 486 466 487 478 444 435 435 36 To states and political subdivisions 7,910 7,886 7,915 7,842 7,874 7,868 7,894 7,938 7,943 37 To foreign governments and official institutions. 793 799 788 840 900 918 925 839 788 38 All other 3,413 3,439 3,487 3,536 3,289 3,324 3,284 3,569 3,097 39 Lease financing receivables 2,267 2,274 2,264 2,257 2,273 2,278 2,462 2,463 2,466 40 LESS: Unearned income 1,490 1,488 1,505 1,457 1,470 1,466 1,470 1,441 1,446 41 Loan and lease reserve 3,450 3,440 3,379 3,341 3,3% 3,400 3,3% 3,418 3,462 42 Other loans and leases, net 131,601 132,781 131,783 133,738 131,078 134,289 132,640 136,924 135,564 43 All other assets4 67,786 67,642 68,061 68,778 66,9% 70,312 67,797 66,731 64,716 44 Total assets 268,720 265,421 262,788 267,420 264,880 268,516 263,106 277,366 266,972 Deposits 45 Demand deposits 44,348 47,193 44,275 47,910 46,144 46,230 45,098 54,385 44,757 46 Individuals, partnerships, and corporations 31,420 32,189 30,741 31,732 31,702 32,036 30,916 37,065 29,828 47 States and political subdivisions 687 799 615 665 657 704 876 926 778 48 U.S. government 166 841 548 853 428 270 611 177 537 49 Depository institutions in the United States 4,028 4,896 4,683 5,058 4,127 5,209 4,520 5,871 4,508 50 Banks in foreign countries 3,675 4,146 3,984 4,665 4,226 3,802 3,662 4,323 4,557 51 Foreign governments and official institutions 510 526 610 674 811 721 756 1,003 717 52 Certified and officers' checks 3,862 3,795 3,093 4,262 4,192 3,487 3,756 5,020 3,832 53 Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers)... 3,830 3,823 3,794 4,133 4,233 4,486 4,124 3,958 3,919 54 Nontransaction balances 84,581 84,715 84,555 84,935 84,642 84,820 84,%3 85,608 85,688 55 Individuals, partnerships and corporations 76,478 76,760 76,552 77,235 77,038 76,%3 76,977 77,568 77,508 56 States and political subdivisions 4,037 4,044 4,011 3,887 3,860 4,149 4,197 4,208 4,440 57 U.S. government 69 65 65 62 61 60 67 66 66 58 Depository institutions in the United States 2,537 2,386 2,466 2,354 2,360 2,324 2,418 2,469 2,454 59 Foreign governments, official institutions and banks .. 1,460 1,460 1,461 1,397 1,324 1,324 1,304 1,298 1,220 60 Liabilities for borrowed money 68,962 64,374 65,248 65,241 64,412 67,946 6633,,112211 6666,,442211 6688,,776600 61 Borrowings from Federal Reserve Banks 2,776 950 62 Treasury tax-and-loan notes 524 2,446 1,765 1,072 9 3,876 4,129 4,306 4,144 63 All other liabilities for borrowed money5 65,662 61,928 63,483 64,169 63,453 64,069 58,992 62,115 64,615 64 Other liabilities and subordinated note and debentures ., 43,442 41,946 41,621 41,669 41,864 41,535 42,331 43,468 40,308 65 Total liabilities 245,164 242,052 239,494 243,888 241,296 245,017 239,637 253,840 243,432 66 Residual (total assets minus total liabilities)6 23,556 23,369 23,294 23,532 23,584 23,499 23,469 23,526 23,539 MEMO 67 Total loans and leases (gross) and investments adjusted1'7.. 165,955 166,440 165,396 167,963 164,761 168,590 166,491 170,573 169,747 68 Total loans and leases (gross) adjusted7 143,366 143,892 142,838 145,388 142,195 146,544 144,752 148,993 147,778 69 Time deposits in amounts of $100,000 or more 33,436 33,395 33,173 33,083 32,582 32,981 33,441 33,546 33,842 1. Excludes trading account securities. 6. Not a measure of equity capital for use in capital adequacy analysis or for 2. Not available due to confidentiality. other analytic uses. 3. Includes securities purchased under agreements to resell. 7. Exclusive of loans and federal funds transactions with domestic commercial 4. Includes trading account securities. banks. 5. Includes federal funds purchased and securities sold under agreements to NOTE. These data also appear in the Board's H.4.2 (504) release. For address, repurchase. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS WITH ASSETS OF $750 MILLION OR MORE ON JUNE 30, 1980 Assets and Liabilities • Millions of dollars, Wednesday figures 1985 AAccccoouunntt Mar. 13 Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 May 1 May 8 1 Cash and due from depository institutions. 6,484 6,346 6,152 6,2% 6,751 6,466 6,621 6,717 6,921 2 Total loans and securities 44,208 45,032 46,013 44,734' 44,820- 43,667 46,339 45,826 44,862 3 U.S. Treasury and govt, agency securities 3,445 3,581 3,630 3,466 3,461 3,620 3,431 3,379 3,439 4 Other securities 1,471 1,460 1,442 1,542 1,575 1,626 1,629 1,674 1,642 5 Federal funds sold1 4,564 4,035 4,582 3,172 4,002 3,431 5,262 4,911 4,246 6 To commercial banks in the United States 4,118 3,661 4,186 2,673 3,611 3,113 4,916 4,473 3,837 7 To others 446 374 396 500 390 318 346 438 409 8 Other loans, gross 34,727 35,956 36,359 36,554' 35,782' 34,990 36,016 35,862 35,535 9 Commercial and industrial 20,004 21,272 21,405 21,415' 21,328' 20,566 20,620 20,899 20,639 10 Bankers acceptances and commercial paper 1,843 1,871 1,798 1,%7' 1,927' 2,031 1,962 1,8% 1,776 11 All other 18,161 19,401 19,607 19,448' 19,400 18,535 18,657 19,003 18,863 12 U.S. addressees 16,925 18,163 18,383 18,195' 18,195 17,406 17,539 17,902 17,743 13 Non-U.S. addressees 1,236 1,238 1,224 1,253 1,205 1,129 1,119 1,102 1,119 14 To financial institutions 11,013 11,081 11,344 11,416 10,604 10,587 11,334 10.916 10,832 15 Commercial banks in the United States. 8,855 8,893 8,929 9,055 8,374 8,441 8,906 8,545 8,497 16 Banks in foreign countries 1,262 1,256 1,258 1,332 1,166 1,132 1,191 1,098 1,080 17 Nonbank financial institutions 896 932 1,156 1,029 1,063 1,014 1,237 1,273 1,255 18 To foreign govts, and official institutions.. 653 654 651 660 685 694 686 678 680 19 For purchasing and carrying securities .. 8% 870 939 1,047 1,084 1,039 1,243 1,323 1,275 20 All other 2,161 2,077 2,020 2,016' 2,082 2,104 2,134 2,045 2,108 21 Other assets (claims on nonrelated parties).. 19,061 18,864 18,282 17,940 17,%9' 18,009 18,418 18,572 18,778 22 Net due from related institutions 9,871 10,904 9,786 11,689 10,664 10,490 9,952 10,292 10,360 23 Total assets 79,623 81,146 80,233 80,659' 80,205' 78,632 81,329 81,408 80,920 24 Deposits or credit balances due to other than directly related institutions 25,019 24,934 25,479 25,326 24,978' 25,076 25,180 25,100 24,122 25 Credit balances 130 128 152 253 135 177 188 139 135 26 Demand deposits 1,640 1,601 1,630 1,692 1,528' 1,632 1,629 1,812 1,574 27 Individuals, partnerships, and corporations 822 809 844 871 836 888 872 982 825 28 Other 817 792 786 821 692' 743 757 830 749 29 Time and savings deposits 23,249 23,205 23,697 23,380 23,315' 23,267 23,363 23,149 22,412 30 Individuals, partnerships, and corporations 18,949 18,965 19,396 18,981 18,783' 18,648 18,764 18,370 17,775 31 Other 4,300 4,240 4,301 4,399 4,532 4,619 4,599 4,778 4,636 32 Borrowings from other than directly related institutions 27,122 28,257 28,450 30,304 29,532 28,641 29,207 29,706 2299,,887744 33 Federal funds purchased2 9,851 11,421 11,212 13,262 12,547 11,481 11,704 12,474 12,484 34 From commercial banks in the United States 7,516 8,913 8,397 10,948 10,237 9,218 9,659 9,966 10,166 35 From others 2,335 2,508 2,815 2,314 2,310 2,263 2,045 2,507 2,318 36 Other liabilities for borrowed money.... 17,270 16,836 17,238 17,042 16,985 17,159 17,502 17,232 17,390 37 To commercial banks in the United States 15,920 15,604 15,953 15,889 15,823 15,934 16,256 16,006 16,080 38 To others 1,351 1,232 1,285 1,153 1,162 1,225 1,246 1,226 1,309 39 Other liabilities to nonrelated parties 20,813 20,508 20,606 19,833 19,689 19,786 20,277 20,514 20,749 40 Net due to related institutions 6,669 7,447 5,698 5,197' 6,006' 5,130 6,665 6,088 6,175 41 Total liabilities 79,623 81,146 80,233 80,659' 80,205' 78,632 81,329 81,408 80,920 MEMO 42 Total loans (gross) and securities adjusted3 31,234 32,478 32,897 33,(X^ 32,835' 32,112 32,517 32,807 32,527 43 Total loans (gross) adjusted3 26,318 27,437 27,826 27,998' 27,798' 26,867 27,456 27,755 27,446 A Levels of many asset and liability items were revised beginning Oct. 31, 3. Exclusive of loans to and federal funds sold to commercial banks in the 1984. For details, see the H.4.2 (504) statistical release dated Nov. 23, 1984. United States. 1. Includes securities purchased under agreements to resell. NOTE. These data also appear in the Board's H.4.2 (504) release. For address, 2. Inciudes securities sold under agreements to repurchase. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • July 1985 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 1983 1984 1199779922 11998800 11998811 11998822 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Sept. Dec. Mar. June Sept. Dec. 1 All holders—Individuals, partnerships, and corporations 302.3 315.5 288.9 291.8 280.3 293.5 279.3 285.8 284.7 304.5 2 Financial business 27.1 29.8 28.0 35.4 32.1 32.8 31.7 31.7 31.3 33.0 3 Nonfinancial business 157.7 162.8 154.8 150.5 150.2 161.1 150.3 154.9 154.8 166.3 4 Consumer 99.2 102.4 86.6 85.9 77.9 78.5 78.1 78.3 78.4 81.7 5 Foreign 3.1 3.3 2.9 3.0 2.9 3.3 3.3 3.4 3.3 3.6 6 Other 15.1 17.2 16.7 17.0 17.1 17.8 15.9 17.4 16.8 19.9 Weekly reporting banks 1983 1984 1199779933 11998800 11998811 11998822 DDeecc.. DDeecc.. DDeecc.. DDcccc.. Sept. Dec.4 Mar. June Sept. Dec. 7 All holders—Individuals, partnerships, and corporations 139.3 147.4 137.5 144.2 136.3 146.2 139.2 145.3 145.3 157.1 8 Financial business 20.1 21.8 21.0 26.7 23.6 24.2 23.5 23.6 23.7 25.3 9 Nonfinancial business 74.1 78.3 75.2 74.3 72.9 79.8 76.4 79.7 79.2 87.1 10 Consumer 34.3 35.6 30.4 31.9 28.1 29.7 28.4 29.9 29.8 30.5 11 Foreign 3.0 3.1 2.8 2.9 2.8 3.1 3.2 3.2 3.2 3.4 12 Other 7.8 8.6 8.0 8.4 8.9 9.3 7.7 8.9 9.3 10.9 1. Figures include cash items in process of collection. Estimates of gross exceeding $750 million as of Dec. 31, 1977. Beginning in March 1979, demand deposits are based on reports supplied by a sample of commercial banks. Types of deposit ownership estimates for these large banks are constructed quarterly on the depositors in each category are described in the June 1971 BULLETIN, p. 466. basis of 97 sample banks and are not comparable with earlier data. The following 1. Beginning with the March 1979 survey, the demand deposit ownership estimates in billions of dollars for December 1978 have been constructed for the survey sample was reduced to 232 banks from 349 banks, and the estimation new large-bank panel; financial business, 18.2; nonfinancial business, 67.2; procedure was modified slightly. To aid in comparing estimates based on the old consumer, 32.8; foreign, 2.5; other, 6.8. and new reporting sample, the following estimates in billions of dollars for 4. In January 1984 the weekly reporting panel was revised; it now includes 168 December 1978 have been constructed using the new smaller sample; financial banks. Beginning with March 1984, estimates are constructed on the basis of 92 business, 27.0; nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and sample banks and are not comparable with earlier data. Estimates in billions of other, 15.1. dollars for December 1983 based on the newly weekly reporting panel are: 3. After the end of 1978 the large weekly reporting bank panel was changed to financial business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; 170 large commercial banks, each of which had total assets in domestic offices other, 9.5. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1984' 1985 IInnssttrruummeenntt 1 D 9 e 7 c 9 . ' D 19 e 8 c 0 . D 19 e 8 c 1 . D 1 e 9 c 8 . 2 2 D 19 e 8 c 3 . Oct. Nov. Dec. Jan. Feb. Mar. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 112,803 124,374 165,829 166,436 188,312 228,194 235,363 239,117 245,322 247,095 250,575 Financial companies4 Dealer-placed paper5 2 Total 1177,,335599 1199,,559999 3300,,333333 3344,,660055 44,622 54,527 5555,,117766 5566,,991177 5599,,771133 6600,,118866 6600,,889955 3 Bank-related (not seasonally adjusted) 22,,778844 33,,556611 66,,004455 2,516 2,441 2,060 11,,999966 22,,003355 2,137 22,,226655 22,,330044 Directly placed paper6 4 Total 64,757 67,854 81,660 84,393 96,918 105,379 109,419 110,474 113,101 114,824 118,029 5 Bank-related (not seasonally adjusted) 17,598 22,382 26,914 32,034 35,566 38,112 40,185 42,105 43,046 42,759 43,334 6 Nonfinancial companies7 30,687 36,921 53,836 47,437 46,772 68,288 70,768 71,726 72,508 72,085 71,651 Bankers dollar acceptances (not seasonally adjusted)8 7 Total 45,321 54,744 69,226 79,543 78,309 77,928 75,741 75,179 75,470 72,273 76,109 Holder 8 Accepting banks 9,865 10,564 10,857 10,910 9,355 10,534 10,397 10,255 10,060 10,623' 10,473 9 Own bills 8,327 8,963 9,743 9,471 8,125 8,960 9,113 9,065 8,839 9,726' 9,166 10 Bills bought 1,538 1,601 1,115 1,439 1,230 1,574 1,284 1,191 1,220 897 1,340 Federal Reserve Banks 11 Own account 704 776 195 1,480 418 0 0 0 0 0 0 12 Foreign correspondents 1,382 1,791 1,442 949 729 658 615 671 679 761 737 13 Others 33,370 41,614 56,731 66,204 68,225 64,549 64,167 64,543 61,603 64,779 65,865 Basis 14 Imports into United States 10,270 11,776 14,765 17,683 15,649 16,256 16,433 16,975 16,733 17,115 16,124 15 Exports from United States 9,640 12,712 15,400 16,328 16,880 16,312 15,849 15,859 15,445 15,881 15,179 16 All other 25,411 30,257 39,060 45,531 45,781 43,172 42,897 42,635 40,095 43,113 42,428 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 5. 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, 6. 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 7. 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. Correction of a previous misclassification of paper by a reporter has created transportation, and services. a break in the series beginning December 1983. The correction adds some paper to 8. Beginning October 1984, the number of respondents in the bankers acceptnonfinancial and to dealer-placed financial paper. ance survey will be reduced from 340 to 160 institutions—those with $50 million or 4. Institutions engaged primarily in activities such as, but not limited to, more in total acceptances. The new reporting group accounts for over 95 percent commercial, savings, and mortgage banking; sales, personal, and mortgage of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective Date Month Average Month rate 11.00 1984—Sept.27.. 12.75 1983—Jan.. 11.16 1984—Apr 1101..0500 Oct. 17.. 12.50 Feb. 10.98 May 29.. 12.00 Mar. 10.50 June Nov. 9.. 11.75 Apr. 10.50 July 11.50 28.. 11.25 May. 10.50 Aug 12.00 Dec. 20.. 10.75 June 10.50 Sept 12.50 July. 10.50 Oct 13.00 1985—Jan. 15, 10.50 Aug. 1101..0890 Nov Sept. 11.00 Dec Oct.. 11.00 D N e o c v . . 11.00 1985—J F a e n b 11.00 Mar 1984—Jan.. 11.00 Apr Feb. May Mar. 11.21 NOTE. These data also appear in the Board's H.15 (519) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • July 1985 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. 1985 1985, week ending 1982 1983 Jan. Feb. Apr. Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 MONEY MARKET RATES 2 1 D Fe is d c e o r u a n l t f u w n i d n s d 1' o 2 w borrowing1'2-3 1 1 1 2 . . 0 2 2 6 9 8 . . 0 5 9 0 1 8 0 . . 8 2 0 3 8 8. .3 00 5 8 8. .5 00 0 8 8. .5 0 8 0 8 8 . . 3 0 8 0 8 8 . .0 68 0 8 8 . . 4 0 5 0 Commercial paper4-5 3 1-month 11.83 10.05 7.99 8.46 8.74 8.67 8.64 8.53 4 3-month 11.89 10.10 8.03 8.54 8.90 8.75 8.69 8.58 5 6-month 11.89 8.89 10.16 8.15 8.69 9.23 9.02 8.82 8.67 Finance paper, directly placed4-5 6 1-month 11.64 8.80 9.97 7.95 8.42 8.70 8.61 8.54 8.52 7 3-month 11.23 8.70 9.73 7.81 8.25 8.67 8.60 8.52 8.51 8 6-month 11.20 8.69 9.65 7.82 8.20 8.65 8.67 8.61 8.55 Bankers acceptances5-6 9 3-month 11.89 8.90 10.14 8.01 8.55 8.68 8.66 8.52 10 6-month 11.83 8.91 10.19 8.11 8.69 9.20 8.91 8.76 8.58 Certificates of deposit, secondary market7 11 1-month 12.04 8.96 10.17 8.05 8.50 8.73 8.64 8.65 8.56 12 3-month 12.27 9.07 10.37 8.14 8.69 9.02 8.82 8.80 8.69 13 6-month 12.57 9.27 10.68 8.45 9.04 9.60 9.31 9.15 9.00 14 Eurodollar deposits, 3-month8 13.12 9.56 10.73 8.37 9.05 9.32 9.14 9.01 8.89 U.S. Treasury bills5 Secondary market9 15 3-month 10.61 8.61 9.52 7.76 8.27 8.52 7.95 8.29 8.17 16 6-month 11.07 8.73 9.76 8.00 8.39 8.90 8.23 8.71 8.58 8.41 17 1-year 11.07 8.80 9.92 8.33 8.56 9.06 8.44 8.90 8.79 8.60 Auction average10 18 3-month 10.686 8.63 9.58 7.76 8.22 8.57 8.00 8.41 8.18 8.14 19 6-month 11.084 8.75 9.80 8.03 8.34 8.92 8.31 8.86 8.55 8.56 20 1-year 11.099 9.91 8.39 8.46 9.24 8.44 CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 12.27 9.57 10.89 9.02 9.29 9.86 9.14 9.68 9.54 9.32 22 2-year 12.80 10.21 11.65 9.93 10.17 10.71 10.09 10.59 10.49 10.29 23 2-k-year13 10.95 2 2 4 5 3 5 - y y e e a a r r 1 13 2 . . 0 9 1 2 ' 1 1 0 0 . .4 8 5 0 1 1 1 2 . . 8 2 9 4 1 1 0 0 . . 4 9 3 3 1 1 0 1 . . 5 1 5 3 1 1 1 1 . . 0 5 5 2 1101..0491 1 1 0 1 . . 9 4 3 3 1 1 0 1 . . 8 3 4 3 1 1 0 1 . . 6 1 6 9 26 7-year 13.06 11.02 12.40 11.27 11.44 11.82 11.34 11.73 11.64 11.49 27 10-year 13.00 11.10 12.44 11.38 11.51 11.86 11.44 11.77 11.71 11.57 28 20-year 12.92 11.34 12.48 11.58 11.70 12.06 11.69 11.97 11.92 11.79 29 30-year 12.76 11.18 12.39 11.45 11.47 11.81 11.47 11.73 11.70 11.55 Composite14 30 Over 10 years (long-term) 12.23 10.84 11.99 11.15 11.35 11.78 11.42 11.70 11.65 11.51 State and local notes and bonds Moody's series15 31 Aaa 10.88 8.80 9.61 9.08 8.98 9.18 8.95 9.15 9.15 9.00 32 Baa 12.48 10.17 10.38 10.16 10.05 10.18 9.95 10.10 10.10 10.00 33 Bond Buyer series16 11.66 9.51 10.10 9.51 9.65 9.77 9.42 9.75 9.63 9.39 Corporate bonds Seasoned issues17 34 All industries 14.94 12.78 13.49 12.64 12.66 13.13 12.89 13.13 13.08 12.98 35 Aaa 13.79 12.04 12.71 12.08 12.13 12.56 12.23 12.50 12.44 12.34 36 Aa 14.41 12.42 13.31 12.43 12.49 12.91 12.69 12.93 12.90 12.75 37 A 1156..1431 13.10 13.74 12.80 12.80 13.36 13.14 13.41 13.37 13.22 38 Baa 13.55 14.19 13.26 13.23 13.69 13.51 13.68 13.61 13.61 39 A-rated, recently-offered utility bonds18 15.49 12.73 13.81 12.78 12.76 13.17 12.75 13.06 12.98 12.71 MEMO: Dividend/price ratio19 40 Preferred stocks 12.53 11.02 11.59 11.13 10.88 10.97 10.75 10.95 10.84 10.79 41 Common stocks 5.81 4.40 4.64 4.51 4.30 4.37 4.37 4.38 4.41 4.40 1. Weekly and monthly figures are averages of all calendar days, where the 11. Yields are based on closing bid prices quoted by at least five dealers. rate for a weekend or holiday is taken to be the rate prevailing on the preceding 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields business day. The daily rate is the average of the rates on a given day weighted by are read from a yield curve at fixed maturities. Based on only recently issued, the volume of transactions at these rates. actively traded securities. 2. Weekly figures are averages for statement week ending Wednesday. 13. Each biweekly figure is the average of five business days ending on the 3. Rate for the Federal Reserve Bank of New York. Monday following the date indicated. Until Mar. 31, 1983, the biweekly rate 4. Unweighted average of offering rates quoted by at least five dealers (in the determined the maximum interest rate payable in the following two-week period case of commercial paper), or finance companies (in the case of finance paper). on 2-!/2-year small saver certificates. (See table 1.16.) Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. Averages (to maturity or call) for all outstanding bonds neither due nor and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 150— callable in less than 10 years, including several very low yielding "flower" bonds. 179 days for finance paper. 15. General obligations based on Thursday figures; Moody's Investors Service. 5. Yields are quoted on a bank-discount basis, rather than an investment yield 16. General obligations only, with 20 years to maturity, issued by 20 state and basis (which would give a higher figure). local governmental units of mixed quality. Based on figures for Thursday. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Daily figures from Moody's Investors Service. Based on yields to maturity (which may be, but need not be, the average of the rates quoted by the dealers). on selected long-term bonds. 7. Unweighted average of offered rates quoted by at least five dealers early in 18. Compilation of the Federal Reserve. This series is an estimate of the yield the day. on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 8. Calendar week average. For indication purposes only. call protection. Weekly data are based on Friday quotations. 9. Unweighted average of closing bid rates quoted by at least five dealers. 19. Standard and Poor's corporate series. Preferred stock ratio based on a 10. Rates are recorded in the week in which bills are issued. Beginning with the sample of ten issues: four public utilities, four industrials, one financial, and one Treasury bill auction held on Apr. 18, 1983, bidders were required to state the transportation. Common stock ratios on the 500 stocks in the price index. percentage yield (on a bank discount basis) that they would accept to two decimal NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. places. Thus, average issuing rates in bill auctions will be reported using two For address, see inside front cover. rather than three decimal places. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1984 1985 IInnddiiccaattoorr 11998822 11998833 11998844 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 68.93 92.63 92.46 94.49 95.68 95.09 95.85 94.85 99.11 104.73 103.92 104.66 2 Industrial 78.18 107.45 108.01 111.20 112.18 110.44 110.91 109.05 113.99 120.71 119.64 119.93 3 Transportation 60.41 89.36 85.63 86.86 86.88 86.82 87.37 88.00 94.88 101.76 98.30 96.47 4 Utility 39.75 47.00 46.44 46.69 47.47 49.02 49.93 50.58 51.95 53.44 53.91 55.51 5 Finance 71.99 95.34 89.28 87.92 91.59 92.94 95.28 95.29 101.34 109.58 107.59 109.39 6 Standard & Poor's Corporation (1941-43 = 10)1 ... 119.71 160.41 160.50 164.42 166.11 164.82 166.27 164.48 171.61 180.88 179.42 180.62 7 American Stock Exchange2 (Aug. 31, 1973 = 100) 141.31 216.48 207.96 207.90 214.50 210.39 209.47 202.28 211.82 228.40 225.62 229.46 Volume of trading (thousands of shares) 8 New York Stock Exchange 64,617 85,418 91,084 109,892 93,108 91,676 83,692 89,032 121,545 115,489 102,591 94,387 9 American Stock Exchange 5,283 8,215 6,107 7,477 5,967 5,587 6,008 7,254 9,130 10,010 8,677 7,801 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 13,325 23,000 22,470 22,810 22,800 22,330 22,350 22,470 22,090 22,970 11 Margin stock 12,980 22,720 \ t t t t i 1 12 Convertible bonds 3441 2791 13 Subscription issues Free credit balances at brokers4 14 Margin-account 5,735 6,620 7,015 6,855 6,690 6,580 6,699 7,015 6,770 6,680 15 Cash-account 8,390 8,430 10,215 8,185 8,315 8,650 8,420 10,215 9,725 9,840 Margin-account debt at brokers (percentage distribution, end of period) 16 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in percent)5 17 Under 40 21.0 41.0 46.0 40.0 42.0 44.0 47.0 46.0 35.0 36.0 38.0 39.0 18 40-49 24.0 22.0 18.0 22.0 22.0 21.0 19.0 18.0 19.0 20.0 20.0 19.0 19 50-59 24.0 16.0 16.0 16.0 15.0 14.0 13.0 16.0 2101..00 1181..00 18.0 18.0 20 60-69 14.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 10.0 10.0 21 70-79 9.0 6.0 5.0 6.0 6.0 6.0 6.0 5.0 7.0 8.0 7.0 7.0 22 80 or more 8.0 6.0 6.0 7.0 6.0 6.0 6.0 6.0 8.0 8.0 7.0 7.0 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 35,598 58,329 75,840 71,840 72,350 71,914 73,904 75,840 79,600 81,830 83,729 82,990 Distribution by equity status (percent) 24 Net credit status 62.0 63.0 59.0 58.0 58.0 59.0 59.0 59.0 59.0 59.0 60.0 60.0 Debt status, equity of 2 2 6 5 6 L 0 e s p s e r th ce a n n t 6 o 0 r p m er o c r e e n t 2 9 9 . . 0 0 2 9 8 . . 0 0 2 1 9 1 . . 0 0 3111..00 3111..00 3101..00 2 1 9 2 . . 0 0 2 1 9 1 . . 0 0 3 1 0 0 . . 0 0 3 1 1 0 . . 0 0 3 1 0 0 . . 0 0 3 1 0 0 . . 0 0 Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 27 Margin stocks 70 80 65 55 65 50 28 Convertible bonds 50 60 50 50 50 50 29 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 5. Each customer's equity in his collateral (market value of collateral less net companies. With this change the index includes 400 industrial stocks (formerly debit balance) is expressed as a percentage of current collateral values. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 6. Balances that may be used by customers as the margin deposit required for financial. additional purchases. Balances may arise as transfers based on loan values of 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. Beginning July 1983, under the revised Regulation T, margin credit at 7. Regulations G, T, and U of the Federal Reserve Board of Governors, broker-dealers includes credit extended against stocks, convertible bonds, stocks prescribed in accordance with the Securities Exchange Act of 1934, limit the acquired through exercise of subscription rights, corporate bonds, and govern- amount of credit to purchase and carry margin stocks that may be extended on ment securities. Separate reporting of data for margin stocks, convertible bonds, securities as collateral by prescribing a maximum loan value, which is a specified and subscription issues was discontinued in Apnl 1984, and margin credit at percentage of the market value of the collateral at the time the credit is extended. broker-dealers became the total that is distributed by equity class and shown on Margin requirements are the difference between the market value (100 percent) lines 17-22. and the maximum loan value. The term "margin stocks" is defined in the 4. 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

A26 Domestic Nonfinancial Statistics • July 1985 t.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1984 1985 AAccccoouunntt 11998822 11998833 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Savings and loan associations 707,646 773,417 825,557 840,682 850,780 860,088 877,642 881,627 887,696 902,449 898,537 898,086 904,827 2 Mortgages 483,614 494,789 519,628 528,172 535,814 540,644 550,129 552,516 556,229 555,277 558,276 556,184 559,263 3 Cash and investment securities1 .... 85,438 104,274 110,033 109,752 108,456 108,820 112,350 112,023 114,879 125,358 119,673 119,724 119,713 4 Other 138,594 174,354 195,8% 202,758 206,510 210,624 215,163 217,088 216,588 221,814 220,588 222,178 225,851 5 Liabilities and net worth 707,646 773,417 825,557 840,682 850,780 860,088 877,642 881,627 887,696 902,449 898,537 898,086 904,827 6 Savings capital 567,961 634,455 670,666 681,947 687,817 691,704 704,558 708,846 714,780 724,301 730,709 726,308 732,406 7 Borrowed money 97,850 92,127 103,119 108,417 110,238 114,747 121,329 119,305 117,775 126,169 114,806 116,879 119,461 8 FHLBB 63,861 52,626 53,485 56,558 57,115 60,178 63,627 63,412 63,383 64,207 63,152 63,452 63,187 9 Other 33,989 39,501 49,634 51,859 53,123 54,569 57,702 55,893 54,392 61,%2 51,654 53,427 56,274 10 Loans in process2 9,934 21,117 24,761 25,726 26,122 26,773 27,141 26,754 26,683 26,959 26,546 26,636 27,004 11 Other 15,602 15,968 19,832 17,586 19,970 20,599 18,050 19,894 21,302 17,215 18,358 19,857 17,471 12 Net worth3 26,233 30,867 31,940 32,732 32,755 33,038 33,705 33,582 33,839 34,764 34,664 35,042 35,489 13 MEMO: Mortgage loan commitments outstanding* 18,054 32,9% 45,274 44,878 43,878 41,182 40,089 38,530 37,856 34,841 33,305 34,217 35,889 Mutual savings banks5 14 Assets 174,197 193,535 200,087 198,864 199,128 200,722 201,445 203,274 204,499 203,898 204,859' 206,175 Loans 15 Mortgage 94,091 97,356 99,881 99,433 100,091 101,211 101,621 102,704 102,953 102,895 103,393' 103,654 16 Other 16,957 19,129 22,907 23,198 23,213 24,068 24,535 24,486 24,884 24,954 25,747 26,456 Securities 17 U.S. government6 9,743 15,360 16,404 15,448 15,457 15,019 14,965 15,295 15,034 14,643 14,628' 14,917 18 State and local government 2,470 2,177 2,024 2,037 2,037 2,055 2,052 2,080 2,077 2,077 2,067' 2,069 19 Corporate and other7 36,161 43,580 43,200 42,479 42,682 42,632 42,605 43,003 43,361 42,%2 43,351' 43,063 20 Cash 6,919 6,263 5,031 5,452 4,8% 4,981 4,795 4,605 4,795 4,954 4,14c 4,423 21 Other assets 7,855 9,670 10,640 10,817 10,752 10,756 10,872 11,101 11,395 11,413 11,533' 11,593 22 Liabilities 174,197 193,535 200,087 198,864 199,128 200,722 201,445 203,274 204,499 203,898 204,859' 206,175 n. I. 23 Deposits 155,1% 172,665 176,253 174,972 174,823 176,085 177,345 178,624 180,073 180,616 181,062' 181,849 24 Regular8 152,777 170,135 173,310 171,858 171,740 172,990 174,2% 175,727 177,130 177,418 177,954' 178,791 25 Ordinary savings 46,862 38,554 37,147 36,322 35,511 34,787 34,564 34,221 34,009 33,739 33,413' 33,413 26 Time %,369 95,129 97,236 97,168 98,410 101,270 102,934 104,151 104,849 104,732 104,098' 103,536 27 Other 2,419 2,530 2,943 3,114 3,083 3,095 3,049 2,897 2,943 3,198 3,108' 3,058 28 Other liabilities 8,336 10,154 12,861 12,999 13,269 13,604 12,979 13,853 13,453 12,504 12,931' 13,387 29 General reserve accounts 9,235 10,368 10,554 10,404 10,495 10,498 10,488 10,459 10,535 10,510 10,6^ 10,670 30 MEMO: Mortgage loan commitments outstanding9 1,285 2,387 n.a. 00 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Life insurance companies 31 Assets 588,163 654,948 673,518 679,449 684,573 694,082 699,996 705,827 712,271 720,807 730,120 734,920 Securities 32 Government 36,499 50,752 53,422 53,970 54,688 56,263 57,552 59,825 62,678 64,683 65,367 67,111 33 United States10 16,529 28,636 31,706 32,066 32,654 33,886 35,586 37,594 40,288 41,970 42,183 43,929 34 State and local. 8,664 9,986 9,239 9,213 9,236 9,357 9,221 9,344 9,385 9,757 9,895 9,956 35 Foreign" 11,306 12,130 12,477 12,691 12,798 13,020 12,745 12,887 13,005 12,956 13,289 13,226 36 Business 287,126 322,854 334,151 338,508 341,802 348,614 350,512 352,059 354,815 354,902 364,617 367,411 n.a. 37 Bonds 231,406 257,986 273,212 276,902 281,113 283,673 285,543 287,607 291,021 290,731 297,666 298,381 38 Stocks 55,720 64,868 60,939 61,606 60,689 64,941 64,%9 64,452 63,794 64,171 66,951 69,030 39 Mortgages 141,989 150,999 152,968 153,845 154,299 155,438 155,802 156,064 156,691 157,283 157,583 158,052 40 Real estate 20,264 22,234 23,517 23,792 24,019 24,117 24,685 24,947 25,467 25,985 26,343 26,567 41 Policy loans 52,961 54,063 54,399 54,430 54,441 54,517 54,551 54,574 54,571 54,610 54,442 54,523 42 Other assets 48,571 54,046 55,061 54,904 55,324 55,133 56,894 58,358 58,049 63,344 61,768 61,256 Credit unions12 43 Total assets/liabilities and capital 69,585 81,961 88,350 90,276 90,145 90,503 91,651 91,619 92,521 93,036 94,646 %,183 98,646 44 Federal 45,493 54,482 59,636 61,316 61,163 61,500 62,107 61,935 62,690 63,205 64,505 65,989 67,799 45 State 24,092 27,479 28,714 28,960 28,982 29,003 29,544 29,684 29,831 29,831 30,141 30,194 30,847 46 Loans outstanding 43,232 50,083 54,437 55,915 57,286 58,802 59,874 60,483 62,170 62,561 62,662 62,393 62,936 47 Federal 27,948 32,930 36,274 37,547 38,490 39,578 40,310 40,727 41,762 42,337 42,220 42,283 42,804 48 State 15,284 17,153 18,163 18,368 18,7% 19,224 19,564 19,756 20,408 20,224 20,442 20,110 20,132 49 Savings 62,990 74,739 80,702 82,578 82,402 82,135 83,172 83,129 84,000 84,348 86,047 86,048 88,560 50 Federal (shares) 41,352 49,889 54,632 56,261 56,278 56,205 56,734 56,655 57,302 57,539 58,820 59,914 61,758 51 State (shares and deposits).. 21,638 24,850 26,070 26,317 26,124 25,930 26,438 26,474 26,698 26,809 27,227 26,134 26,802 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37 Continued 1984 1985 AAccccoouunntt 11998822 11998833 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. FSLIC-insured federal savings banks 52 Assets 6,859 64,969 78,952 81,310 83,989 87,209 82,174 87,743 94,536 98,559 98,747 106,657 109,720 53 Mortgages 3,353 38,698 46,791 48,084 49,996 52,039 48,841 51,554 55,861 57,429 57,667 60,938 62,608 54 Cash and investment securities' .. 10,436 12,814 13,071 13,184 13,331 12,867 13,615 14,826 16,001 15,378 17,511 18,237 55 Other 15,835 19,347 20,155 20,809 21,839 20,466 22,574 23,849 25,129 25,702 28,208 28,875 56 Liabilities and net worth , 6,859 64,969 78,952 81,310 83,989 87,209 82,174 87,743 94,536 98,559 98,747 106,657 109,720 57 Savings and capital 5,877 53,227 63,026 64,364 66,227 68,443 65,079 70,080 76,167 79,572 80,091 85,632 88,001 58 Borrowed money .. ... 3 7,477 10,475 11,489 12,060 12,863 11,828 11,935 11,937 12,798 12,372 14,079 14,860 59 FHLBB 4,640 5,900 6,538 6,897 7,654 6,600 6,867 7,041 7,515 7,361 8,023 8,491 60 Other 2,837 4,575 4,951 5,163 5,209 5,228 5,068 4,896 5,283 5,011 6,056 6,369 61 Other 1,157 1,747 1,646 1,807 1,912 1,610 1,896 2,259 1,903 1,982 2,356 2,174 62 Net worth3 3,108 3,704 3,811 3,895 3,991 3,657 3,832 4,173 4,286 4,302 4,590 4,685 MEMO 63 Loans in process2 1,264 1,787 1,839 1,901 1,895 1,505 1,457 1,689 1,738 1,685 1,747 1,919 64 Mortgage loan commitments outstanding4 2,151 3,763 3,583 3,988 3,860 2,970 2,925 3,298 3,234 3,510 3,646 3,752 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 perons. 3. Includes net undistributed income accrued by most associations. NOTE. Savings and loan associations: Estimates by the FHLBB for all 4. Excludes figures for loans in process. associations in the United States. Data are based on monthly reports of federally 5. The National Council reports data on member mutual savings banks and on insured associations and annual reports of other associations. Even when revised, savings banks that have converted to stock institutions, and to federal savings data for current and preceding year are subject to further revision. banks. Mutual savings banks: Estimates of National Council of Savings Institutions for 6. Beginning April 1979, includes obligations of U.S. government agencies. all savings banks in the United States. Before that date, this item was included in "Corporate and other." Life insurance companies: Estimates of the American Council of Life Insurance 7. Includes securities of foreign governments and international organizations for all life insurance companies in the United States. Annual figures are annualand, before April 1979, nonguaranteed issues of U.S. government agencies. statement asset values, with bonds carried on an amortized basis and stocks at 8. Excludes checking, club, and school accounts. year-end market value. Adjustments for interest due and accrued and for 9. Commitments outstanding (including loans in process) of banks in New differences between market and book values are not made on each item separately York State as reported to the Savings Banks Association of the State of New but are included, in total, in "other assets." York. Credit unions: Estimates by the National Credit Union Administration for a 10. Direct and guaranteed obligations. Excludes federal agency issues not group of federal and federally insured state credit unions serving natural persons. guaranteed, which are shown in the table under "Business" securities. Figures are preliminary and revised annually to incorporate recent data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • July 1985 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal Fiscal Fiscal Type of account or operation year year year 1983 1984 1985 1982 1983 1984 HI H2 HI Feb. Mar. Apr. U.S. budget 1 Receipts1 617,766 600,562 666,457 306,331 306,584 341,808 54,021 49,606 94,593 2 Outlays1 728,375 795,917 841,800 3%,477 406,849 420,700 74,851 78,067 82,228 3 Surplus, or deficit (-) -110,609 -195,355 -175,343 -90,146 -100,265 -78,892 -20,830 -28,461 12,365 4 Trust funds 5,456 23,056 30,565 22,680 7,745 18,080 2,313 -1,682 5.182 5 Federal funds2'3 -116,065 -218,410 -205,908 -112,822 -108,005 —96,971 -23,140 -26,780 7.183 Off-budget entities (surplus, or deficit (-)) 6 Federal Financing Bank outlays -14,142 -10,404 -7,277 -5,418 -3,199 -2,813 -427' -1,134' -1,108 7 Other3'4 -3,190 -1,953 -2,719 -528 -1,206 -838 -202' 91' 128 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -127,940 -207,711 -185,339 -96,094 -104,670 -84,884 -21,056' -29,504' 11,386 Source of financing 9 Borrowing from the public 134,993 212,425 170,817 102,538 84,020 80,592 15,994 13,159 17,036 10 Cash and monetary assets (decrease, or increase (-))4 -11,911 -9,889 5,636 -9,664 -16,294 -3,127 9,094 3,212' -27,927 11 Other5 4,858 5,176 8,885 3,222 4,358 7,418 -4,033' 13,133' -495 MEMO 12 Treasury operating balance (level, end of period) 29,164 37,057 22,345 27,997 11,817 13,567 17,160 13,868 40,022 13 Federal Reserve Banks 10,975 16,557 3,791 19,442 3,661 4,397 3,308 3,063 19,305 14 Tax and loan accounts 18,189 20,500 18,553 8,764 8,157 9,170 13,852 10,805 20,717 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. and transportation and strategic petroleum reserve effective November 1981. Government" Treasury Bulletin, and the Budget of the U.S. Government, Fiscal 4. Includes U.S. Treasury operating cash accounts; SDRs; gold tranche Year 1985. drawing rights; loans to International Monetary Fund; and other cash and monetary assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr 1982 1983 1984 1985 111999888333 111999888444 H2 HI H2 HI Feb. Mar. Apr. RECEIPTS 1 All sources 600,563 666,457 286,337 306,331 305,122 341,808 54,021 49,606 94,593 2 Individual income taxes, net 288,938 295,955 145,676 144,551 147,663 144,691 23,769 15,254 51,602 3 Withheld 266,010 279,345 131,567 135,531 133,768 140,657 23,127 23,952 26,343 4 Presidential Election Campaign Fund ... 36 35 5 30 6 29 1 88 9 5 Nonwithheld 83,586 81,346 20,041 63,014 20,703 61,463 1,683 33,,113366 43,235 6 Refunds 60,692 64,771 5,938 54,024 6,815 57,458 1,041 11,842 17,986 Corporation income taxes 7 Gross receipts 61,780 74,179 25,660 33,522 31,064 4400,,332288 22,,667733 1100,,330044 1111,,226655 8 Refunds 24,758 17,286 11,467 13,809 8,921 10,045 919 1,888 2,409 9 Social insurance taxes and contributions, net 209,001 241,902 94,277 110,520 100,832 131,372 23,080 20,551 2288,,003322 10 Payroll employment taxes and contributions1 179,010 203,476 85,064 90,912 88,388 106,436 19,433 1199,,004455 1188,,882222 11 Self-employment taxes and contributions2 6,756 8,709 177 6,427 398 7,667 664 661100 55,,775577 12 Unemployment insurance 18,799 25,138 6,856 10,984 8,714 14,942 2,615 515 3,062 13 Other net receipts3 4,436 4,580 2,180 2,197 2,290 2,329 362 380 391 14 Excise taxes 35,300 37,361 16,555 16,904 19,586 18,304 2,585 2,739 2,700 15 Customs deposits 8,655 11,370 4,299 4,010 5,079 5,576 842 998 939 16 Estate and gift taxes 6,053 6,010 3,444 2,883 3,050 3,102 504 430 671 17 Miscellaneous receipts4 15,594 16,965 7,890 7,751 7,811 8,481 1,488 1,218 1,793 OUTLAYS 18 All types 795,917 841,800 390,847 396,477 406,849 420,700 74,851 78,067 82,228 19 National defense 210,461 227,405 100,419 105,072 108,967 114,639 19,785 21,782 20,239 20 International affairs 8,927 13,313 4,406 4,705 6,117 5,426 884 1,416 946 21 General science, space, and technology ... 7,777 8,271 3,903 3,486 4,216 3,981 715 740 743 22 Energy 4,035 2,464 2,058 2,073 1,533 1,080 215 207 355 23 Natural resources and environment 12,676 12,677 6,941 5,892 6,933 5,463 786 929 1,006 24 Agriculture 22,173 12,215 13,259 10,154 5,278 7,129 2,054 1,732 2,822 25 Commerce and housing credit 4,721 5,198 2,244 2,164 2,648 2,572 -805 75 1,128 26 Transportation 21,231 24,705 10,686 9,918 13,323 10,616 1,505 1,583 2,045 27 Community and regional development 7,302 7,803 4,187 3,124 4,327 3,154 438 538 683 28 Education, training, employment, social services 25,726 26,616 12,186 1122,,880011 1133,,224466 1133,,444455 22,,662288 22,,223333 22,,334444 29 Health 28,655] 30,435 39,072 41,206 42,150 15,748 2,778 2,685 2,909 30 Social security and medicare 223,311> 235,764 133,779 143,001 20,583 21,031 21,355 31 Income security 106,211J 96,714 135,579 65,212 10,220 11,530 13,347 32 Veterans benefits and services 24,845 25,640 13,240 11,334 13,621 12,849 2,218 2,296 2,293 33 Administration of justice 5,014 5,616 2,373 2,522 2,628 2,807 453 471 572 34 General government 4,991 4,836 2,323 2,434 2,479 2,462 699 343 80 35 General-purpose fiscal assistance 6,287 6,577 3,153 3,124 3,290 2,943 116 75 1,258 36 Net interest6 89,774 111,007 44,948 42,358 47,674 53,729 11,820 10,517 10,858 37 Undistributed offsetting receipts7 -21,424 -15,454 -8,332 -8,887 -7,262 -7,333 -2,238 -2,118 -2,754 1. Old-age, disability, and hospital insurance, and railroad retirement accounts. function. Before February 1984, these outlays were included in the income 2. Old-age, disability, and hospital insurance. security and health functions. 3. Federal employee retirement contributions and civil service retirement and 6. Net interest function includes interest received by trust funds. disability fund. 7. Consists of rents and royalties on the outer continental shelf and U.S. 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous government contributions for employee retirement. receipts. 5. In accordance with the Social Security Amendments Act of 1983, the SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Treasury now provides social security and medicare outlays as a separate 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

A30 Domestic Nonfinancial Statistics • July 1985 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1982 1983 1984 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 1,201.9 1,249.3 1,324.3 1,381.9 1,415.3 1,468.3 1,517.2 1,576.7 1,667.4 2 Public debt securities 1,197.1 1,244.5 1,319.6 1,377.2 1,410.7 1,463.7 1,512.7 1,572.3 1,663.0 3 Held by public 987.7 1,043.3 1,090.3 1,138.2 1,174.4 1,223.9 1,255.1 1,309.2 1,373.4 4 Held by agencies 209.4 201.2 229.3 239.0 236.3 239.8 257.6 264.1 289.6 5 Agency securities 4.8 4.8 4.7 4.7 4.6 4.6 4.5 4.5 4.5 6 Held by public 3.7 3.7 3.6 3.6 3.5 3.5 3.4 3.4 3.4 7 Held by agencies 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 8 Debt subject to statutory limit 1,197.9 1,245.3 1,320.4 1,378.0 1,411.4 1,464.5 1,513.4 1,573.0 1,663.7 9 Public debt securities 1,196.5 1,243.9 1,319.0 1,376.6 1,410.1 1,463.1 1,512.1 1,571.7 1,662.4 10 Other debt1 1.4 1.4 1.4 1.3 1.3 1.3 1.3 1.3 1.3 11 MEMO: Statutory debt limit 1,290.2 1,290.2 1,389.0 1,389.0 1,490.0 1,490.0 1,520.0 1,573.0 1,823.8 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 1984 1985 TTyyppee aanndd hhoollddeerr 11998800 11998811 11998822 11998833 Q2 Q3 04 Q1 1 Total gross public debt 930.2 1,028.7 1,197.1 1,410.7 1,512.7 1,572.3 1,663.0 1,710.7 By type 7 Interest-bearing debt 928.9 1,027.3 1,195.5 1,400.9 1,501.1 1,559.6 1,660.6 1,695.2 3 Marketable 623.2 720.3 881.5 1,050.9 1,126.6 1,176.6 1,247.4 1,271.7 4 216.1 245.0 311.8 343.8 343.3 356.8 374.4 379.5 5 Notes 321.6 375.3 465.0 573.4 632.1 661.7 705.1 713 .8 6 Bonds 85.4 99.9 104.6 133.7 151.2 158.1 167.9 178.4 7 Nonmarketable1 305.7 307.0 314.0 350.0 374.5 383.0 413.2 423.6 8 State and local government series 23.8 23.0 25.7 36.7 39.9 41.4 44.4 47.7 9 Foreign issues2 24.0 19.0 14.7 10.4 8.8 8.8 9.1 9.1 10 Government 17.6 14.9 13.0 10.4 8.8 8.8 9.1 9.1 11 Public 6.4 4.1 1.7 .0 .0 .0 .0 n.a. 12 Savings bonds and notes 72.5 68.1 68.0 70.7 72.3 73.1 73.3 74.4 13 Government account series3 185.1 196.7 205.4 231.9 253.2 259.5 286.2 292.2 14 Non-interest-bearing debt 1.3 1.4 1.6 9.8 11.6 12.7 2.3 15.5 By holder* 15 U.S. government agencies and trust funds 192.5 203.3 209.4 236.3 257.6 263.1 289.6 16 Federal Reserve Banks 121.3 131.0 139.3 151.9 152.9 155.0 160.9 17 Private investors 616.4 694.5 848.4 1,022.6 1,102.2 1,154.1 1,212.5 18 Commercial banks 112.1 111.4 131.4 188.8 182.3 183.0 185.5 19 Money market funds 3.5 21.5 42.6 22.8 14.9 13.6 26.0 20 Insurance companies 24.0 29.0 39.1 56.7 61.6 58.6 73.9 21 Other companies 19.3 17.9 24.5 39.7 45.3 47.7 50.2 22 State and local governments 87.9 104.3 127.8 155.1 165.0 n.a. n.a. n a. Individuals 23 Savings bonds 72.5 68.1 68.3 71.5 72.9 73.7 74.5 74 Other securities 44.6 42.7 48.2 61.9 69.3 73.8 70.8 25 Foreign and international5 129.7 136.6 149.5 166.3 171.5 175.5 193.1 26 Other miscellaneous investors6 122.8 163.0 217.0 259.8 319.4 n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Consists of investments of foreign and international accounts. Excludes nontion Administration; depository bonds, retirement plan bonds, and individual interest-bearing notes issued to the International Monetary Fund. retirement bonds. 6. Includes savings and loan associations, nonprofit institutions, credit unions, 2. Nonmarketable dollar-denominated and foreign currency-denominated se- mutual savings banks, corporate pension trust funds, dealers and brokers, certain ries held by foreigners. U.S. government deposit accounts, and U.S. government-sponsored agencies. 3. Held almost entirely by U.S. government agencies and trust funds. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Data for Federal Reserve Banks and U.S. government agencies and trust Statement of the Public Debt of the United States; data by holder. Treasury funds are actual holdings; data for other groups are Treasury estimates. Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1985 1985 week ending Wednesday IItteemm 11998822CC 11998833 11998844 Feb.' Mar.' Apr. Mar. 20 Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 Immediate delivery1 1 U.S. government securities 32,260 42,135 52,786 71,763 73,353 72,165 66,193' 77,754' 80,195 73,956 83,940 75,757 By maturity 2 Bills 18,392 22,393 26,040 33,453 38,110 35,723 38,931' 37,638' 38,560 40,151 40,331 37,709 3 Other within 1 year 810 708 1,305 1,650 1,727 1,960 1,671 1,766 1,757 1,795 2,083 1,736 4 1-5 years 6,271 8,758 11,734 17,542 16,150 16,963 12,063' 22,241' 17,765 13,832 20,686 18,359 5 5-10 years 3,555 5,279 7,607 10,476 10,485 10,842 7,625 10,049' 12,729 11,182 13,2% 10,%5 6 Over 10 years 3,232 4,997 6,100 8,643 6,882 6,678 5,903 6,060 9,384 6,9% 7,543 6,988 By type of customer 7 U.S. government securities dealers 1,770 2,257 2,920 4,326 3,979 3,868 3,202 4,104 5,128 4,381 4,929 2,592 8 U.S. government securities brokers 15,794 21,045 25,584 33,853 36,408 34,583 33,564 36,480 38,449 35,811 38,966 37,141 9 All others2 14,697 18,832 24,282 33,584 32,966 33,714 29,427' 37,171' 36,618 33,763 40,046 36,023 10 Federal agency securities 4,976 5,576 7,846' 9,477 8,754 10,125 10,138' 8,185 8,570 10,218 14,383 10,003 11 Certificates of deposit 5,000 4,333 4,947 4,607 3,727 4,327 3,458 3,649 3,973 3,989 4,914 5,200 12 Bankers acceptances 2,502 2,642 3,244 3,240 2,925 3,473 2,411' 2,790 2,835 3,628 3,912 3,994 13 Commercial paper 22,,559955 88,,003366 10,018 99,,995588 10,205 11,944 10,525 10,429 11,469 1111,,225511 1122,,333333 1122,,224488 Futures transactions3 14 Treasury bills 5,055 6,655 6,947 7,113 8,066 6,642 10,710 6,018 6,888 6,261 6,725 7,733 15 Treasury coupons 1,487 2,501 4,503 6,150 5,104 5,480 4,776 3,751' 5,158 5,362 5,879 6,277 16 Federal agency securities 261 265 262 128 112 120 109 119 170 150 41 154 Forward transactions4 17 U.S. government securities 835 1,493' 1,364' 1,554 1,329 1,020 1,502 2,048' 757 1,360 790 1,673 18 Federal agency securities 978 1,646' 2,843' 3,298 2,145 2,602 2,609 1,768 2,440 2,424 3,794 2,330 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • July 1985 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing Averages of daily figures, in millions of dollars 1985 1985 week ending Wednesday IItteemm 11998822 11998833 11998844 Feb. Mar. Apr. Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 Positions NNNNeeeetttt iiiimmmmmmmmeeeeddddiiiiaaaatttteeee1111 1111 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss 13,663 10,701 5,538 13,624' 11,201' 8,553 io, st^ 10,915 7,030 9,848 8,330 2222 BBBBiiiillllllllssss 7,297 8,020 5,500 12,456' 13,979 11,559 14,342 11,723 10,255 13,109 12,198 3333 OOOOtttthhhheeeerrrr wwwwiiiitttthhhhiiiinnnn 1111 yyyyeeeeaaaarrrr 972 394 63 851 1,316 1,203 625 858 705 1,019 1,649 4444 1111----5555 yyyyeeeeaaaarrrrssss 3,256 1,778 2,159 3,078 449 2,237 2,011 2,453 721 1,955 2,301 5555 5555----11110000 yyyyeeeeaaaarrrrssss -318 -78 -1,119 -2,900' -2,546' -4,468 -3,223' -2,077 -2,990 -4,418 -5,710 6666 OOOOvvvveeeerrrr 11110000 yyyyeeeeaaaarrrrssss 2,026 528 -1,174 5C -2,240 -2,303 -3,256 -2,364 -1,984 -2,139 -2,431 7777 FFFFeeeeddddeeeerrrraaaallll aaaaggggeeeennnnccccyyyy sssseeeeccccuuuurrrriiiittttiiiieeeessss 4,145 7,232 15,294 19,612' 19,337' 18,048 18,456 16,693 17,372 18,862 18,671 8888 CCCCeeeerrrrttttiiiiffffiiiiccccaaaatttteeeessss ooooffff ddddeeeeppppoooossssiiiitttt 5,532 5,839 7,369 9,491' 8,005 8,652 7,883 8,487 8,334 8,364 8,907 9999 BBBBaaaannnnkkkkeeeerrrrssss aaaacccccccceeeeppppttttaaaannnncccceeeessss 2,832 3,332 3,874 4,728 3,563' 3,949 3,249 3,9% 3,821 3,825 3,948 11110000 CCCCoooommmmmmmmeeeerrrrcccciiiiaaaallll ppppaaaappppeeeerrrr 3,317 3,159 3,788 5,226 4,646 4,965 4,586 4,334 4,195 4,348 5,825 FFFFuuuuttttuuuurrrreeeessss ppppoooossssiiiittttiiiioooonnnnssss 11111111 TTTTrrrreeeeaaaassssuuuurrrryyyy bbbbiiiillllllllssss -2,507 -4,125 -4,525 -2,556' 1,213' -2,877 -2,676' -3,572 -3,701 -3,023 -3,215 11112222 TTTTrrrreeeeaaaassssuuuurrrryyyy ccccoooouuuuppppoooonnnnssss -2,303 -1,032 1,794 3,135' 5,573' 6,333 6,729 6,038 6,258 6,936 6,627 11113333 FFFFeeeeddddeeeerrrraaaallll aaaaggggeeeennnnccccyyyy sssseeeeccccuuuurrrriiiittttiiiieeeessss -224 171 233 -9 -101 38 -168 -108 -33 48 78 FFFFoooorrrrwwwwaaaarrrrdddd ppppoooossssiiiittttiiiioooonnnnssss 11114444 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss -788 -1,936 -1,643 -1,745 -1,320 -814 -1,428 -2,160 -810 -660 -717 11115555 FFFFeeeeddddeeeerrrraaaallll aaaaggggeeeennnnccccyyyy sssseeeeccccuuuurrrriiiittttiiiieeeessss -1,432 -3,561 -9,205 -8,155' -8,250 -7,881 -7,686 -7,897 -8,506 -7,958 -7,489 Financing2 RRRReeeevvvveeeerrrrsssseeee rrrreeeeppppuuuurrrrcccchhhhaaaasssseeee aaaaggggrrrreeeeeeeemmmmeeeennnnttttssss3333 11116666 OOOOvvvveeeerrrrnnnniiiigggghhhhtttt aaaannnndddd ccccoooonnnnttttiiiinnnnuuuuiiiinnnngggg 26,754 29,099 44,078 59,989 60,818 * 59,0% 61,351 61,341 62,917 59,814 11117777 TTTTeeeerrrrmmmm aaaaggggrrrreeeeeeeemmmmeeeennnnttttssss 48,247 52,493 68,357 71,570 75,298 78,752 77,184 76,353 76,958 78,588 RRRReeeeppppuuuurrrrcccchhhhaaaasssseeee aaaaggggrrrreeeeeeeemmmmeeeennnnttttssss4444 11118888 OOOOvvvveeeerrrrnnnniiiigggghhhhtttt aaaannnndddd ccccoooonnnnttttiiiinnnnuuuuiiiinnnngggg 49,695 57,946 75,717 96,535 96,019 n.a. 91,832 96,123 93,090 92,528 93,057 11119999 TTTTeeeerrrrmmmm aaaaggggrrrreeeeeeeemmmmeeeennnnttttssss 43,410 44,410 57,047 62,327 62,890 65,514 62,991 63,129 63,501 69,561 1 1. Immediate positions are net amounts (in terms of par values) of securities 2. Figures cover financing involving U.S. government and federal agency owned by nonbank dealer firms and dealer departments of commercial banks on a securities, negotiable CDs, bankers acceptances, and commercial paper. commitment, that is, trade-date basis, including any such securities that have 3. Includes all reverse repurchase agreements, including those that have been been sold under agreements to repurchase (RPs). The maturities of some arranged to make delivery on short sales and those for which the securities repurchase agreements are sufficiently long, however, to suggest that the securi- obtained have been used as collateral on borrowings, that is, matched agreements. ties involved are not available for trading purposes. Prior to 1984, securities 4. Includes both repurchase agreements undertaken to finance positions and owned, and hence dealer positions, do not include all securities acquired under "matched book" repurchase agreements. reverse RPs. After January 1984, immediate positions include reverses to maturi- NOTE. Data for positions are averages of daily figures, in terms of par value, ty, which are securities that were sold after having been obtained under reverse based on the number of trading days in the period. Positions are shown net and are repurchase agreements that mature on the same day as the securities. Before on a commitment basis. Data for financing are based on Wednesday figures, in 1981, data for immediate positions include forward positions. terms of actual money borrowed or lent. 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 Agency 1982 1983 Sept. Oct. Dec. 1 Federal and federally sponsored agencies 221,946 237,085 239,716 267,399 268,964 270,314 271,564 270,965 271,479 2 Federal agencies 31,806 33,055 33,940 34,754 35,012 35,078 35,145 35,235 35,360 3 Defense Department1 484 354 243 153 149 146 142 133 122 4 Export-Import Bank2 3 13,339 14,218 14,853 15,733 15,721 15,721 15,882 15,882 15,881 5 Federal Housing Administration4 413 288 194 140 139 138 133 132 129 6 Government National Mortgage Association participation certificates5 2,715 2,165 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service6 1,538 1,471 1,404 1,337 1,337 1,337 1,337 1,337 1,337 8 Tennessee Valley Authority 13,115 14,365 14,970 15,160 15,450 15,520 15,435 15,535 15,675 9 United States Railway Association6 202 194 111 51 51 51 51 51 51 10 Federally sponsored agencies7 190,140 204,030 205,776 232,645 233,952' 235,236 236,419 235,730 236,119" 11 Federal Home Loan Banks 54,131 55,967 48,930 65,616 66,126 66,230 65,085 64,705 64,706 12 Federal Home Loan Mortgage Corporation. 5,480 4,524 6,793 8,950 9,634 10,299 10,270 10,195 11,237 13 Federal National Mortgage Association8 ... 58,749 70,052 74,594 80,123 80,357 81,119 83,720 84,612 84,701 14 Farm Credit Banks 71,359 71,8% 72,409 73,131 72,859 72,267 71,255 70,642 70,012 15 Student Loan Marketing Association 421 1,591 3,050 4,824 5,143 5,321 5,369 5,576 5,463 MEMO 16 Federal Financing Bank debt9 110,698 126,424 135,791 144,836 144,978 145,174 145,217 146,034 146,611 Lending to federal and federally sponsored agencies 17 Export-Import Bank3 12,741 14,177 14,789 15,690 15,690 15,690 15,852 15,852 15,852 18 Postal Service6 1,288 1,221 1,154 1,087 1,087 1,087 1,087 1,087 1,087 19 Student Loan Marketing Association 5,400 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 20 Tennessee Valley Authority 11,390 12,640 13,245 13,435 13,725 13,795 13,710 13,810 13,950 21 United States Railway Association6 202 194 111 51 51 51 51 51 51 Other Lending10 22 Farmers Home Administration 48,821 53,261 55,266 59,511 59,021 58,801 58,971 59,066 59,041 23 Rural Electrification Administration 13,516 17,157 19,766 20,587 20,694 20,889 20,693 20,653 20,804 24 Other 12,740 22,774 26,460 29,475 29,710 29,861 29,853 30,515 30,826 1. Consists of mortgages assumed by the Defense Department between 1957 7. Includes outstanding noncontingent liabilities: Notes, bonds, and debenand 1%3 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 1%9 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • July 1985 1.45 NEW SECURITY ISSUES State and Local Governments Millions of dollars 1984 1985 Type of i o s r s u u e s e o r issuer, 11998822 11998833 11998844'' July Aug. Sept. Oct/ Nov/ Dec/ Jan/ Feb. 1 All issues, new and refunding1 79,138 86,421 106,641 7,537 11,726 7,967 12,558 13,548 17,713 6,275 7,856 Type of issue 2 General obligation 21,094 21,566 266,485 1,919 1,781 1,433 3,770 2,611 2,185 1,804 3,424 3 U.S. government loans2 225 96 16 1 1 4 1 3 2 7 0 4 Revenue 58,044 64,855 80,156 5,618 9,945 6,534 8,788 10,937 15,528 4,471 4,432 5 U.S. government loans2 461 253 17 1 1 1 3 1 0 3 0 Type of issuer 6 State 8,438 7,140 9,129 465 2,157 5% 1,110 405 725 367 1,542 7 Special district and statutory authority 45,060 51,297 63,550 5,121 7,321 5,202 7,087 7,265 11,894 3,847 4,172 8 Municipalities, counties, townships, school districts 25,640 27,984 33,962 1,951 2,248 2,169 4,361 5,878 5,093 2,061 2,142 9 Issues for new capital, total 74,804 72,441 94,050 6,592 10,749 7,454 11,105 12,352 16,354 4,904 5,342 Use of proceeds 10 Education 6,482 8,099 7,553 466 627 333 755 999 671 661 896 11 Transportation 6,256 4,387 7,552 118 423 590 1,018 2,151 1,339 341 472 12 Utilities and conservation 14,259 13,588 17,844 385 1,015 2,013 2,784 534 4,133 1,315 902 13 Social welfare 26,635 26,910 29,928 3,728 4,823 3,018 3,500 3,701 3,598 1,567 1,685 14 Industrial aid 8,349 7,821 15,415 884 1,055 679 1,522 3,866 5,572 376 167 15 Other purposes 12,822 11,637 15,758 1,011 2,806 821 1,526 1,101 1,041 644 1,220 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 Corporations Millions of dollars 1984 1985 Type of i o s r s u u e s e o r issuer, 11998822 11998833 11998844 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 All issues1'2 84,638 98,948 95,986 10,917 7,758 12,350 11,931 6,940 7,294 6,74y 14,005 2 Bonds 54,076 47,369 73,357 8,863 6,225 10,403 9,524 5,918 5,739 4,027' 11,641 Type of offering 3 Public 44,278 47,369 73,357 8,863 6,225 10,403 9,524 5,918 5,739 4,027' 11,641 4 Private placement 9,798 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 5 Manufacturing 12,822 7,842 14,438 2,484 1,614 2,989 1,447 1,741 1,326 1,476 5,660 6 Commercial and miscellaneous 5,442 5,186 8,745 776 576 988 1,198 555 144 469 974 7 Transportation 1,491 1,039 1,272 183 200 161 19 110 297 30 130 8 Public utility 12,327 7,241 6,754 765 758 1,150 555 575 309 80 500 9 Communication 2,390 3,159 2,407 0 0 240 1,557 169 375 353 300 10 Real estate and financial 19,604 22,900 39,741 4,654 3,076 4,875 4,749 2,768 3,288 1,619' 4,077 11 Stocks3 30,562 51,579 22,628 2,054 1,533 1,947 2,407 1,022 1,555 2,716 2,364 Type 12 Preferred 5,113 7,213 4,118 334 155 555 655 91 170 218 311 13 Common 25,449 44,366 18,510 1,720 1,378 1,392 1,752 931 1,385 2,498 2,053 Industry group 14 Manufacturing 5,649 14,135 4,054 258 212 712 227 137 172 229 224 15 Commercial and miscellaneous 7,770 13,112 6,277 558 378 489 1,025 112 234 760 472 16 Transportation 709 2,729 589 0 87 16 66 71 0 153 32 17 Public utility 7,517 5,001 1,624 44 92 146 150 66 225 283 197 18 Communication 2,227 1,822 419 123 9 69 3 26 271 101 15 19 Real estate and financial 6,690 14,780 9,665 1,071 755 515 936 610 653 1,190 1,424 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, SOURCE. Securities and Exchange Commission and the Board of Governors of employee stock plans, investment companies other than closed-end, intracorpo- the Federal Reserve System. rate transactions, and sales to foreigners. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A35 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1984 1985 IItteemm 11998833 11998844'' Aug. Sept. Oct. Nov. Dec. Jan. Feb/ Mar. INVESTMENT COMPANIES1 1 Sales of own shares2 84,345 107,485 8,956 8,156 9,517 9,458 10,006 19,152 14,786 14,512 2 Redemptions of own shares3 57,100 77,033 6,497 6,185 6,766 6,343 8,948 9,183 8,005 9,412 3 Net sales 27,245 30,452 2,459 1,971 2,751 3,115 1,058 9,969 6,781 5,100 4 Assets4 113,599 137,126 128,209 129,657 131,539 132,709 137,126 151,534 154,707 156,988 5 Cash position5 8,343 11,978 12,698 13,221 11,417 11,518 11,978 13,114 14,567 13,098 6 Other 105,256 125,148 115,511 116,436 120,122 121,191 125,148 138,420 140,140 143,890 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. 1983 1984 1985 AAccccoouunntt 11998822 11998833 11998844 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1 Corporate profits with inventory valuation and capital consumption adjustment 159.1 225.2 285.7 216.7 245.0 260.0 277.4 291.1 282.8 291.6 294.0 2 Profits before tax 165.5 203.2 235.7 198.2 227.4 225.5 243.3 246.0 224.8 228.7 224.2 3 Profits tax liability 60.7 75.8 89.8 74.8 84.7 84.5 92.7 95.8 83.1 87.7 84.2 4 Profits after tax 104.8 127.4 145.9 123.4 142.6 141.1 150.6 150.2 141.7 141.0 140.0 5 Dividends 69.2 72.9 80.5 71.7 73.3 75.4 77.7 79.9 81.3 83.1 84.5 6 Undistributed profits 35.6 54.5 65.3 51.7 69.3 65.6 72.9 70.2 60.3 58.0 55.5 7 Inventory valuation -9.5 -11.2 -5.6 -12.1 -19.3 -9.2 -13.5 -7.3 -.2 -1.6 .5 8 Capital consumption adjustment 3.1 33.2 55.7 30.6 36.9 43.6 47.6 52.3 58.3 64.5 69.3 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 • July 1985 1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities Billions of dollars, except for ratio 1983 1984 AAccccoouunntt 11997788 11997799 11998800 11998811 11998822 Q4 Ql Q2 Q3 Q4 1 Current assets 1,043.7 1,214.8 1,327.0 1,418.4 1,432.7 1,557.3 1,600.6 1,630.6 1,667.2 1,680.9 2 Cash 105.5 118.0 126.9 135.5 147.0 165.8 159.3 155.0 150.6 161.6 3 U.S. government securities 17.2 16.7 18.7 17.6 22.8 30.6 35.1 36.7 32.3 36.4 4 Notes and accounts receivable 388.0 459.0 506.8 532.0 519.2 577.8 596.9 612.4 628.1 617.7 5 Inventories 431.8 505.1 542.8 583.7 578.6 599.3 623.1 633.3 662.2 659.0 6 Other 101.1 116.0 131.8 149.5 165.2 183.7 186.3 193.2 194.0 206.3 7 Current liabilities 669.5 807.3 889.3 970.0 976.8 1,043.0 1,079.0 1,111.9 1,143.3 1,149.6 8 Notes and accounts payable 383.0 460.8 513.6 546.3 543.0 577.9 584.1 604.6 624.8 627.7 9 Other 286.5 346.5 375.7 423.7 433.8 465.2 495.0 507.3 518.5 521.9 10 Net working capital 374.3 407.5 437.8 448.4 455.9 514.3 521.6 518.6 523.9 531.4 11 MEMO: Current ratio1 1.559 1.505 1.492 1.462 1.467 1.493 1.483 1.466 1.458 1.462 1. Ratio of total current assets to total current liabilities. Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. NOTE. For a description of this series, see "Working Capital of Nonfinancial 20551. Corporations" in the July 1978 BULLETIN, pp. 533-37. SOURCE. Federal Trade Commission and Bureau of the Census. 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 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment • Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1983 1984 1985 IInndduussttrryy11 11998833 11998844 1199885511 Q3 Q4 Ql Q2 Q3 Q4 Ql' Q21 1 Total nonfarm business 304.78 353.74 384.40 309.25 325.45 337.48 348.34 361.12 367.21 380.05 388.86 Manufacturing 2 Durable goods industries 53.08 65.95 75.01 54.15 57.56 61.26 63.12 68.31 71.13 74.01 7766..8844 3 Nondurable goods industries 63.12 72.43 78.62 62.59 66.19 68.71 72.21 73.72 75.07 77.00 80.16 Nonmanufacturing 4 Mining 15.19 16.88 16.49 15.66 16.27 17.61 16.01 16.96 16.93 1166..9933 1166..2211 Transportation 5 Railroad 4.88 6.77 7.35 5.31 6.04 55..7766 7.46 7.47 6.40 66..2211 77..2200 6 Air 4.36 3.55 3.86 4.20 3.75 3.23 3.52 3.73 3.73 3.64 3.90 7 Other 4.72 6.17 6.33 4.69 5.48 5.96 6.06 6.50 6.16 6.11 6.21 Public utilities 8 Electric 37.27 37.09 36.13 37.64 37.79 38.36 37.82 36.82 35.37 36.73 36.14 9 Gas and other 7.70 10.30 12.27 7.13 8.07 8.77 10.07 11.07 11.31 11.97 12.45 10 Commercial and other2 114.45 134.39 148.35 117.88 124.30 127.83 132.07 136.55 141.10 148.17 149.10 •Trade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1983 1984 AAccccoouunntt 11997788 11997799 11998800 11998811 11998822 Q3 Q4 QL Q2 Q3 ASSETS Accounts receivable, gross 1 Consumer 52.6 65.7 73.6 85.5 89.5 92.3 92.8 96.9 99.6 103.4 2 Business 63.3 70.3 72.3 80.6 81.0 86.8 95.2 101.1 104.2 103.2 3 Total 116.0 136.0 145.9 166.1 170.4 179.0 188.0 198.0 203.8 206.6 4 LESS: Reserves for unearned income and losses 15.6 20.0 23.3 28.9 30.5 30.1 30.6 31.9 33.4 34.7 5 Accounts receivable, net 100.4 116.0 122.6 137.2 139.8 148.9 157.4 166.1 170.4 171.9 6 Cash and bank deposits 3.5 1 7 Securities 1.3 /\ 24.9' 27.5 34.2 39.7 45.0 45.3 47.1 48.1 49.1 8 All other 17.3 9 Total assets 122.4 140.9 150.1 171.4 179.5 193.9 202.7 213.2 218.5 220.9 LIABILITIES 10 Bank loans 6.5 8.5 13.2 15.4 18.6 17.0 19.1 14.7 15.3 16.0 11 Commercial paper 34.5 43.3 43.4 51.2 45.8 49.7 53.6 58.4 62.0 60.1 Debt 12 Short-term, n.e.c 8.1 8.2 7.5 9.6 8.7 8.7 11.3 12.2 15.0 15.1 13 Long-term, n.e.c 43.6 46.7 52.4 54.8 63.5 66.2 65.4 68.7 67.6 71.2 14 Other 12.6 14.2 14.3 17.8 18.7 24.4 27.1 29.8 29.0 29.2 15 Capital, surplus, and undivided profits 17.2 19.9 19.4 22.8 24.2 27.9 26.2 29.4 29.6 29.2 16 Total liabilities and capital 122.4 140.9 150.1 171.4 179.5 193.9 202.7 213.2 218.5 220.9 1. Beginning Q1 1979, asset items on lines 6, 7, and 8 are combined. These data also appear in the Board's G.20 (422) release. For address, see NOTE. Components may not add to totals due to rounding. inside front cover. 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 1985 1985 1985 MMMaaarrr... 333111,,, 111999888555''' Jan. Feb. Mar. Jan. Feb. Mar. Jan. Feb. Mar. 1 Total 141,439 4,368 869 873 28,010 26,444 26,283 23,642 25,575 25,410 Retail financing of installment sales 2 Automotive (commercial vehicles) 11,502 -25 43 298 720 797 1,060 745 754 762 3 Business, industrial, and farm equipment 20,293 -218 -25 84 1,254 1,272 1,427 1,472 1,297 1,343 Wholesale financing 4 Automotive 20,580 1,0% 709 476 10,165 9,394 10,201 9,069 8,685 9,725 5 Equipment 4,972 157 -15 105 711 485 540 554 500 435 6 All other 6,750 147 106 86 1,824 1,690 1,652 1,677 1,584 1,566 Leasing 7 Automotive 13,792 623 305 271 1,121 966 872 498 661 601 8 Equipment 36,396 928 39 -252 1,767 916 1,222 839 877 1,474 9 Loans on commercial accounts receivable and factored commercial accounts receivable 15,873 1,659 -687 -419 9,475 9,650 8,262 7,816 10,337 8,681 10 All other business credit 11,281 1 394 224 973 1,274 1,047 972 880 823 1. Not seasonally adjusted. NOTE. These data also appear in the Board's G.20 (422) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • July 1985 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1984 1985 IItteemm 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 94.6 92.8 96.8 98.4 99.5 102.6 94.8 101.8 91.3' 98.6 2 Amount of loan (thousands of dollars) 69.8 69.5 73.7 74.0 75.2 76.9 71.4 76.5 69.9^ 75.1 3 Loan/price ratio (percent) 76.6 77.1 78.7 78.2 77.9 77.9 77.9 77.6 79.8' 79.1 4 Maturity (years) 27.6 26.7 27.8 27.6 27.5 28.0 27.7 28.1 27.2' 27.4 5 Fees and charges (percent of loan amount)2 2.95 2.40 2.64 2.58 2.54 2.65 2.65 2.58 2.65' 2.63 6 Contract rate (percent per annum) 14.47 12.20 11.87 12.27 12.27 12.05 11.77 11.74 11.42' 11.56 Yield (percent per annum) 7 FHLBB series5 15.12 12.66 12.37 12.77 12.75 12.55 12.27 12.21 11.92' 12.05 8 HUD series4 15.79 13.43 13.80 13.59 13.20 13.05 12.88 13.06 13.26 13.01 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5. 15.30 13.11 13.81 13.43 12.90 12.99 13.01 13.27 13.43 12.97 10 GNMA securities6 14.68 12.25 13.13 13.09 12.71 12.54 12.26 12.23 12.68 12.31 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 66,031 74,847 83,339 85,539 86,416 87,940 89,353 90,369 91,975 92,765 12 FHA/V A-insured 39,718 37,393 35,148 34,791 34,752 34,711 34,602 34,553 34,585 34,516 13 Conventional 26,312 37,454 48,191 50,749 51,664 53,229 54,751 55,816 57,391 58,250 Mortgage transactions (during period) 14 Purchases 15,116 17,554 16,721 1,087 1,297 1,962 1,943 1,559 2,256 1,515 15 Sales 2 3,528 978 0 0 0 0 0 100 0 Mortgage commitments7 16 Contracted (during period) 22,105 18,607 21,007 1,638 2,150 2,758 1,230 1,895 1,636 1,921 17 Outstanding (end of period) 7,606 5,461 6,384 6,656 5,916 6,384 5,678 5,665 5,019 5,361 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 18 Total 5,131 5,9% 9,283 9,726 99,,990000 10,399 10,362 11,118 11,549 19 FHA/VA 1,027 974 910 891 888866 881 876 859 854 20 Conventional 4,102 5,022 8,373 8,835 9,014 9,518 9,485 10,259 10,694 Mortgage transactions (during period) 21 Purchases 23,673 23,089 21,886 2,864 2,241 4,137 2,197 3,247 3,232 n.a. 22 Sales 24,170 19,686 18,506 2,573 1,961 3,635 2,162 2,428 2,751 Mortgage commitments9 23 Contracted (during period) 28,179 32,852 32,603 2,663 4,158 4,174 4,264 3,622 3,453 24 Outstanding (end of period) 7,549 16,964 26,990 25,676 27,550 26,990 29,654 30,135 30,436 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associamajor institutional lender groups; compiled by the Federal Home Loan Bank tion guaranteed, mortgage-backed, fully modified pass-through securities, assum- Board in cooperation with the Federal Deposit Insurance Corporation. ing prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the 2. Includes all fees, commissions, discounts, and "points" paid (by the prevailing ceiling rate. Monthly figures are averages of Friday figures from the borrower or the seller) to obtain a loan. Wall Street Journal. 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 mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Any gaps in data are due to periods of adjustment to changes in securities swap programs, while the corresponding data for FNMA exclude swap maximum permissible contract rates. activity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A39 1.54 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1984 1985 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998822 11998833 11998844 Q1 Q2 Q3 Q4 Ql 1 All holders 1,658,450 1,829,761' 2,033,701' 1,873,345' 1,932,749' 1,984,75c 2,033,701' 2,076,898 7 1- to 4-family 1,110,315 1,220,359' 1,350,203' 1,250,361' 1,287,016' 1,318,664' 1,350,203' 1,381,134 3 Multifamily 140,063 150,271' 164,439' 153,486' 158,18c 160,523' 164,439' 168,131 4 Commercial 301,362 349,757' 408,194' 359,880' 377.06C 394,494' 408,194' 416,370 5 106,710 109,374' 110,865' 109,618' 110,493' 111,069' 110,865' 111,263 6 Major financial institutions 1,024,680 1,112,363' 1,247,573' 1,137,787' 1,181,792' 1,219,436' 1,247,573' 1,267,245 7 Commercial banks' 301,272 330,521' 374,689' 339,653' 352,258' 363,043' 374,689' 383,187 8 1- to 4-family 173,804 182,514' 196,112' 185,213' 190,185' 193,138' 1%,112' 200,024 9 Multifamily 16,480 18,410' 21,395' 19,836' 20,501' 20.04C 21,395' 22,033 10 Commercial 102,553 120,210' 146,653' 124,890' 131,533' 139,663' 146,653' 150,401 11 Farm 8,435 9,387' 10,529' 9,714' 10,039' 10,202' 10,529' 10,729 12 Mutual savings banks 97,805 136,054 160,324' 143,180 147,517 150,462 160,324' 166,612 13 1- to 4-family 66,777 96,569 114,076' 101,868 105,063 106,944 114,076' 118,723 14 Multifamily 15,305 17,785 20,123' 18,441 18,752 19,138 20,123' 20,767 15 Commercial 15,694 21,671 26,094' 22,841 23,672 24,349 26,094' 27,091 16 Farm 29 29 31 30 30 31 31 31 17 Savings and loan associations 483,614 494,789 555,277 503,509 528,172 550,129 555,277 559,263 18 1- to 4-family 393,323 390,883 431,450 397,017 414,087 429,101 431,450 433,429 19 Multifamily 38,979 42,552 48,309 43,553 45,951 47,861 48,309 48,936 20 Commercial 51,312 61,354 75,518 62,939 68,134 73,167 75,518 76,898 71 Life insurance companies 141,989 150,999 157,283 151,445 153,845 155,802 157,283 158,183 V 1- to 4-family 16,751 15,319 14,180 14,917 14,437 14,204 14,180 14,153 73 Multifamily 18,856 19,107 19,017 19,083 19,028 18,828 19,017 19,114 74 Commercial 93,547 103,831 111,642 104,890 107,7% 110,149 111,642 112,641 25 Farm 12,835 12,742 12,444 12,555 12,584 12,621 12,444 12,275 26 Federal and related agencies 138,138 147,370 157,377' 150,784 152,669 153,355 157,377' 162,416 27 Government National Mortgage Association 4,227 3,395 2,301 2,900 2,715 2,389 2,301 1,964 78 1- to 4-family 676 630 585 618 605 594 585 576 29 Multifamily 3,551 2,765 1,716 2,282 2,110 1,795 1,716 1,388 30 Fanners Home Administration 1,786 2,141 1,276' 2,094 1,344 738 1,276' 1,062 31 1- to 4-family 783 1,159 213' 1,005 281 206 213' 156 37 Multifamily 218 173 119' 303 463 126 119^ 82 33 Commercial 377 409 497' 319 81 113 497' 421 34 Farm 408 400 447' 467 519 293 447' 403 35 Federal Housing and Veterans Administration 5,228 4,894 4,782 4,832 4,753 4,749 4,782 4,938 36 1- to 4-family 1,980 1,893 2,007 1,956 1,894 1,982 2,007 2,113 37 Multifamily 3,248 3,001 2,775 2,876 2,859 2,767 2,775 2,825 38 Federal National Mortgage Association 71,814 78,256 87,940 80,975 83,243 84,850 87,940 91,975 39 1- to 4-family 66,500 73,045 82,175 75,770 77,633 79,175 82,175 86,129 40 Multifamily 5,314 5,211 5,765 5,205 5,610 5,675 5,765 5,846 41 Federal Land Banks 50,350 51,052 50,679 51,004 51,136 51,182 50,679 50,929 47 1- to 4-family 3,068 3,000 2,948 2,982 2,958 2,954 2,948 2,998 43 Farm 47,282 48,052 47,731 48,022 48,178 48,228 47,731 47,931 44 Federal Home Loan Mortgage Corporation 4,733 7,632 10,399 8,979 9,478 9,447 10,399 11,548 45 1- to 4-family 4,686 7,559 9,654 8,847 8,931 8,841 9,654 10,642 46 Multifamily 47 73 745 132 547 606 745 906 47 Mortgage pools or trusts2 216,654 285,073 332,057 296,481 305,051 317,548 332,057' 347,793 48 Government National Mortgage Association 118,940 159,850 179,981 166,261 170,893 175,770 179,981 185,954 49 1- to 4-family 115,831 155,801 175,084 161,943 166,415 171,095 175,084 180,878 50 Multifamily 3,109 4,049 4,897 4,318 4,478 4,675 4,897 5,076 51 Federal Home Loan Mortgage Corporation 42,964 57,895 70,822 59,376 61,267 63,964 70,822 76,759 5? 42,560 57,273 70,253 58,776 60,636 63,352 70,253 75,781 53 Multifamily 404 622 569 600 631 612 569 978 54 Federal National Mortgage Association3 14,450 25,121 36,215 28,354 29,256 32,888 36,215 39,370 55 1- to 4-family 14,450 25,121 35,965 28,354 29,256 32,730 35,%5 38,772 56 Multifamily n.a. n.a. 250 n.a. n.a. 158 250 598 57 Farmers Home Administration 40,300 42,207 45,00c 42,490 43,635 44,926 45,039' 45,710 58 1- to 4-family 20,005 20,404 21,813' 20,573 21,331 21,595 21,813' 21,928 59 Multifamily 4,344 5,090 5,841' 5,081 5,081 5,618 5,841' 6,041 60 Commercial 7,011 7,351 7,559' 7,456 7,764 7,844 7,559' 7,681 61 Farm 8,940 9,362 9,826' 9,380 9,459 9,869 9,826' 10,060 67 Individual and others4 278,978 284,955 296,694' 288,293 293,237 294,411' 2%,694' 299,444 63 1- to 4-family5 189,121 189,189 193,688' 190,522 193,304 192,753' 193,688' 194,832 64 Multifamily 30,208 31,433 32,918' 31,776 32,169 32,624' 32,918' 33,541 65 Commercial 30,868 34,931 40,231' 36,545 38,080 39,209' 40,231' 41,237 66 Farm 28,781 29,402 29,857' 29,450 29,684 29,825' 29,857' 29,834 1. Includes loans held by nondeposit trust companies but not bank trust 5. Includes estimate of residential mortgage credit provided by individuals. departments. NOTE. Based on data from various institutional and governmental sources, with 2. Outstanding principal balances of mortgages backing securities insured or some quarters estimated in part by the Federal Reserve in conjunction with the guaranteed by the agency indicated. Federal Home Loan Bank Board and the Department of Commerce. Separation of 3. Outstanding balances on FNMA's issues of securities backed by pools of nonfarm mortgage debt by type of property, if not reported directly, and conventional mortgages held in trust. Implemented by FNMA in 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 • July 1985 1.55 CONSUMER INSTALLMENT CREDIT' Total Outstanding, and Net ChangeA Millions of dollars 1984 1985 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998833 11998844 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Amounts outstanding (end of period) 1 Total 383,701 460,500 422,008 430,795 437,469 441,358 447,783 460,500 461,530 463,628' 471,567 By major holder 2 Commercial banks 171,978 212,391 195,265 199,654 202,452 204,582 206,635 212,391 213,951 215,778 219,970 3 Finance companies .... 87,429 96,747 92,534 94,070 95.594 95,113 95,753 96,747 96,732 97,360 99,133 4 Credit unions 53,471 67,858 61,151 62,679 63,808 64,716 66,528 67,858 68,538 68,939' 70,432 5 Retailers2 37,470 40,913 35,058 35,359 35.595 35,908 37,124 40,913 38,978 37,483 37,082 6 Savings and loans 23,108 29,945 26,057 26,922 27,880 28,781 29,358 29,945 30,520 31,405 32,349 7 Gasoline companies ... 4,131 4,315 4,472 4,452 4,328 4,290 4,217 4,315 4,329 4,012 3,820 8 Mutual savings banks.. 6,114 8,331 7,471 7,659 7,812 7,968 8,168 8,331 8,482 8,651 8,781 By major type of credit 9 Automobile 143,114 172,589 161,834 165,177 167,231 168,923 170,731 172,589 173,769 175,491' 179,661 10 Commercial banks... 67,557 85,501 80,103 81,786 82,706 83,620 84,326 85,501 86,223 87,333 89,257 11 Credit unions 25,574 32,456 29,248 29,979 30,519 30,953 31,820 32,456 32,781 32,973' 33,687 12 Finance companies .. 49,983 54,632 52,483 53,412 54,006 54,350 54,585 54,632 54,765 55,185 56,717 13 Revolving 81,977 101,555 86,003 88,202 90,231 91,505 93,944 101,555 100,565 99,316 100,434 14 Commercial banks... 44,184 60,549 50,358 52,313 54,258 55,276 56,641 60,549 61,445 61,978 63,684 15 Retailers 33,662 36,691 31,173 31,437 31,645 31,939 33,086 36,691 34,791 33,326 32,930 16 Gasoline companies . 4,131 4,315 4,472 4,452 4,328 4,290 4,217 4,315 4,329 4,012 3,820 17 Mobile home 23,862 24,556 24,639 24,947 25,198 24,573 24,439 24,556 24,281 24,379' 24,456 18 Commercial banks... 9,842 9,610 9,681 9,711 9,761 9,627 9,613 9,610 9,498 9,456 9,425 19 Finance companies .. 9,547 9,243 9,883 9,992 10,065 9,470 9,235 9,243 9,053 9,044 8,981 20 Savings and loans ... 3,906 4,985 4,428 4,581 4,697 4,791 4,887 4,985 5,005 5,150 5,305 21 Credit unions 567 718 647 663 675 685 704 718 725 729' 745 22 Other 134,748 161,800 149,532 152,469 154,809 156,357 158,669 161,800 162,915 164,442' 167,016 23 Commercial banks... 50,395 56,731 55,123 55,844 55,727 56,059 56,055 56,731 56,785 57,011 57,604 24 Finance companies .. 27,899 32,872 30,168 30,666 31,523 31,293 31,933 32,872 32,914 33,131 33,435 25 Credit unions 27,330 34,684 31,256 32,037 32,614 33,078 34,004 34,684 35,032 35,237' 36,000 26 Retailers 3,808 4,222 3,885 3,922 3,950 3,969 4,038 4,222 4,187 4,157 4,152 27 Savings and loans ... 19,202 24,960 21,629 22,341 23,183 23,990 24,471 24,960 25,515 26,255 27,044 28 Mutual savings banks 6,114 8,331 7,471 7,659 7,812 7,968 8,168 8,331 8,482 8,651 8,781 Net change (during period) 29 Total 48,742 76,799 6,481 6,022 4,982 5,631 6,080 6,819 7,223 9,041' 8,342 By major holder 30 Commercial banks 19,488 40,413 3,192 2,631 1,384 2,756 2,483 3,028 3,799 5,071 4,847 31 Finance companies 18,572 18,636 1,138 1,381 1,571 398 778 1,196 901 1,203 2,048 32 Credit unions 6,218 14,387 1,360 927 871 1,224 1,731 1,336 1,290 1,423' 797 33 Retailers2 5,075 3,443 36 197 225 128 278 389 251 269 91 34 Savings and loans 7,285 6,837 586 804 770 864 546 576 922 997 715 35 Gasoline companies . . . 68 184 -23 -63 -38 98 86 117 -91 -102 -142 36 Mutual savings banks .. 1,322 2,217 192 145 199 163 178 177 151 180 -14 By major type of credit 37 Automobile 16,856 29,475 3,087 2,482 1,513 2,504 2,549 2,687 2,887 3,198' 3,391 38 Commercial banks... 8,002 17,944 1,852 1,150 434 1,057 1,019 1,275 1,616 1,790 1,767 39 Credit unions 2,978 6,882 650 444 416 587 828 640 598 696' 381 40 Finance companies .. 11,752 9,298 585 888 663 860 702 772 673 712 1,243 41 Revolving 12,353 19,578 772 1,263 1,484 1,488 1,614 1,445 1,957 2,527 2,631 42 Commercial banks... 7,518 16,365 764 1,159 1,323 1,279 1,289 1,001 1,809 2,429 2,698 43 Retailers 4,767 3,029 31 167 199 111 239 327 239 200 75 44 Gasoline companies . 68 184 -23 -63 -38 98 86 117 -91 -102 -142 45 Mobile home 1,452 694 334 217 127 -392 -91 117 -159 282' -11 46 Commercial banks... 237 -232 31 4 4 -91 -1 29 -89 41 -50 47 Finance companies .. 776 -608 137 63 19 -381 -192 -13 -144 33 -63 48 Savings and loans ... 763 1,079 152 140 95 67 84 88 60 192 92 49 Credit unions 64 151 14 10 9 13 18 13 14 W 10 50 Other 18,081 27,052 2,288 2,060 1,858 2,031 2,008 2,570 2,538 3,034' 2,331 51 Commercial banks... 3,731 6,336 545 318 -377 511 176 723 463 811 443322 52 Finance companies .. 6,044 9,946 416 430 889 -81 268 437 372 458 886688 53 Credit unions 3,176 7,354 696 473 446 624 885 683 678 711' 406 54 Retailers 308 414 5 30 26 17 39 62 12 69 16 55 Savings and loans ... 6,522 5,758 434 664 675 797 462 488 862 805 623 56 Mutual savings banks 1,322 2,217 192 145 199 163 178 177 151 180 -14 • These data have not been revised this month due to revisions that were not 3. For 1982 and earlier, net change equals extensions, seasonally adjusted less available at time of publication. liquidations, seasonally adjusted. Beginning 1983, net change equals outstandings, 1. The Board's series cover most short- and intermediate-term credit extended seasonally adjusted less outstandings of the previous period, seasonally adjusted. to individuals through regular business channels, usually to finance the purchase NOTE. Total consumer noninstallment credit outstanding—credit scheduled to of consumer goods and services or to refinance debts incurred for such purposes, be repaid in a lump sum, including single-payment loans, charge accounts, and and scheduled to be repaid (or with the option of repayment) in two or more service credit—amounted to, not seasonally adjusted, $80.7 billion at the end of installments. 1981, $85.9 billion at the end of 1982, and $96.9 billion at the end of 1983. 2. Includes auto dealers and excludes 30-day charge credit held by travel and These data also appear in the Board's G.19 (421) release. For address, see entertainment companies. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Installment Credit A41 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT Percent unless noted otherwise 1984 1985 IItteemm 11998822 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar. INTEREST RATES Commercial banks1 1 48-month new car2 16.82 13.92 13.71 n.a. n.a. 13.91 n.a. n.a. 13.37 n.a. 2 24-month personal 18.64 16.50 16.47 n.a. n.a. 16.63 n.a. n.a. 16.21 n.a. 3 120-month mobile home2 18.05 16.08 15.58 n.a. n.a. 15.60 n.a. n.a. 15.42 n.a. 4 Credit card 18.51 18.78 18.77 n.a. n.a. 18.82 n.a. n.a. 18.85 n.a. Auto finance companies 5 New car 16.15 12.58 14.62 15.16 15.18 15.24 15.24 15.11 13.78 12.65 6 Used car 20.75 18.74 17.85 18.10 18.19 18.30 18.34 17.88 17.91 17.78 OTHER TERMS3 Maturity (months) 7 New car 45.9 45.9 48.3 49.5 49.7 50.0 50.2 50.7 51.4 52.2 8 Used car 37.0 37.9 39.7 39.9 39.9 39.9 39.8 41.3 41.1 41.3 Loan-to-value ratio 9 New car 85 86 88 89 88 89 89 90 90 91 10 Used car 90 92 92 93 93 93 93 93 93 93 Amount financed (dollars) 11 New car 8,178 8,787 9,333 9,402 9,449 9,577 9,707 9,654 9,1% 9,232 12 Used car 4,746 5,033 5,691 5,792 5,826 5,900 5,975 5,951 5,968 5,976 1. Data for midmonth of quarter only. NOTE. These data also appear in the Board's G.19 (421) release. For address, 2. Before 1983 the maturity for new car loans was 36 months, and for mobile see inside front cover, home loans was 84 months. 3. At auto finance companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • July 1985 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1982 1983 1984 11997799 11998811 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 386.0 344.6 380.4 404.1 526.4 715.3 358.1 450.1 448.9 563.8 669977..99 773322..66 By sector and instrument 2 U.S. government 37.4 79.2 87.4 161.3 186.6 198.8 104.1 218.4 222.0 151.1 177.4 220.2 i Treasury securities 38.8 79.8 87.8 162.1 186.7 199.0 105.5 218.8 222.1 151.2 177.6 220.3 4 Agency issues and mortgages -1.4 -.6 -.5 -.9 -.1 -.2 -1.4 -.4 -.1 -.1 -.2 -.1 5 Private domestic nonfinancial sectors 348.6 265.4 293.1 242.8 339.8 516.5 254.0 231.7 266.9 412.7 520.5 512.4 6 Debt capital instruments 211.2 192.0 159.1 158.9 239.3 288.4 140.7 177.2 214.4 264.2 280.4 296.4 7 Tax-exempt obligations 30.3 30.3 22.7 53.8 56.3 54.6 43.9 63.7 62.8 49.7 37.9 71.3 8 Corporate bonds 17.3 26.7 21.8 18.7 15.7 32.2 12.0 25.3 23.0 8.4 24.1 40.3 y Mortgages 163.6 135.1 114.6 86.5 167.3 201.5 84.8 88.2 128.6 206.0 218.3 184.8 10 Home mortgages 120.0 96.7 76.0 52.5 108.7 128.9 53.6 51.3 83.8 133.6 140.9 116.9 u Multifamily residential 7.8 8.8 4.3 5.5 8.4 13.8 5.1 5.8 2.8 13.9 17.1 10.4 12 Commercial 23.9 20.2 24.6 23.6 47.3 57.3 19.7 27.5 40.3 54.3 5588..55 56.1 13 Farm 11.8 9.3 9.7 5.0 2.9 1.6 6.5 3.5 1.6 4.1 11..88 1.3 14 Other debt instruments 137.5 73.4 134.0 83.9 100.5 228.1 113.2 54.6 52.5 148.5 240.2 216.1 15 Consumer credit 45.4 6.3 26.7 21.0 51.3 100.6 20.6 21.4 35.9 66.6 103.0 98.2 16 Bank loans n.e.c 51.2 36.7 54.7 55.5 27.3 71.5 69.0 42.0 13.3 41.2 83.2 59.7 17 Open market paper 11.1 5.7 19.2 -4.1 -1.2 23.8 10.0 -18.2 -10.6 8.3 31.5 16.0 18 Other 29.7 24.8 33.4 11.5 23.1 32.3 13.6 9.4 13.9 32.3 22.4 42.1 19 By borrowing sector 348.6 265.4 293.1 242.8 339.8 516.5 254.0 231.7 266.9 412.7 520.5 512.4 20 State and local governments 17.6 17.2 6.2 31.3 36.7 33.0 24.1 38.5 41.9 31.6 18.9 47.0 21 Households 179.3 122.1 127.5 94.5 175.4 241.6 94.7 94.3 134.8 216.0 236.6 246.6 22 Farm 21.4 14.4 16.3 7.6 4.3 2.2 9.6 5.6 .8 7.9 .6 3.8 23 Nonfarm noncorporate 34.4 33.7 40.2 39.5 63.9 76.3 36.6 42.3 50.1 77.6 86.1 66.5 24 Corporate 96.0 78.1 102.9 70.0 59.5 163.5 89.0 51.0 39.3 79.6 178.3 148.6 25 Foreign net borrowing in United States 20.2 27.2 27.2 15.7 18.9 1.7 10.2 21.2 15.3 22.5 19.2 -15.7 26 Bonds 3.9 .8 5.4 6.7 3.8 2.7 2.4 11.0 4.6 2.9 1.1 4.4 21 Bank loans n.e.c 2.3 11.5 3.7 -6.2 4.9 -6.2 -7.6 -4.7 11.3 -1.5 -6.0 -6.3 28 Open market paper 11.2 10.1 13.9 10.7 6.0 .4 12.5 9.0 -4.6 16.5 18.9 -18.1 29 U.S. government loans 2.9 4.7 4.2 4.5 4.3 4.8 3.0 6.0 3.9 4.6 5.3 4.4 30 Total domestic plus foreign 406.2 371.8 407.6 419.8 545.3 717.0 368.3 471.4 504.2 586.3 717.1 717.0 Financial sectors 31 Total net borrowing by financial sectors 82.4 62.9 84.1 69.0 90.7 126.5 84.2 53.8 74.0 107.3 121.0 131.9 By instrument 32 U.S. government related 47.9 44.8 47.4 64.9 67.8 74.2 60.0 69.7 66.2 69.4 69.1 79.2 33 Sponsored credit agency securities 24.3 24.4 30.5 14.9 1.4 30.0 22.4 7.5 -4.1 6.9 30.8 29.2 J4 Mortgage pool securities 23.1 19.2 15.0 49.5 66.4 44.2 36.8 62.2 70.3 62.5 3388..33 5500..00 is Loans from U.S. government .6 1.2 1.9 .4 .8 36 Private financial sectors 34.5 18.1 36.7 4.1 22.9 52.3 24.2 -16.0 7.8 38.0 51.9 52.7 37 Corporate bonds 7.8 7.1 -.8 2.5 17.1 14.5 -2.5 7.6 15.2 18.9 14.9 14.1 38 Mortgages -.1 -.5 .1 * * .1 .1 * * 39 Bank loans n.e.c -.5 -.9 .9 1.9 -.2 .9 3.2 .6 -2.5 2.2 .1 1.7 40 Open market paper 18.0 4.8 20.9 -1.2 13.0 21.2 12.3 -14.7 7.2 18.8 21.2 21.1 41 Loans from Federal Home Loan Banks 9.2 7.1 16.2 .8 -7.0 15.7 11.1 -9.5 -12.1 -2.0 1155..77 1155..77 By sector 42 Sponsored credit agencies 24.8 25.6 32.4 15.3 1.4 30.0 23.2 7.5 -4.1 6.9 30.8 29.2 43 Mortgage pools 23.1 19.2 15.0 49.5 66.4 44.2 36.8 62.2 70.3 62.5 38.3 50.0 44 Private financial sectors 34.5 18.1 36.7 4.1 22.9 52.3 24.2 -16.0 7.8 38.0 51.9 52.7 45 Commercial banks 1.6 .5 .4 1.2 .5 2.7 .7 1.7 .8 .2 4.8 .6 46 Bank affiliates 6.5 6.9 8.3 1.9 8.6 10.8 9.7 -5.8 6.1 11.1 20.0 1.5 47 Savings and loan associations 12.6 7.4 15.5 2.5 -2.7 20.1 14.3 -9.3 -10.0 4.5 18.2 21.9 48 Finance companies 16.5 5.8 12.8 -.9 17.0 19.5 * -1.9 11.4 22.7 99..66 2299..44 49 REITs -1.3 -2.2 .2 .1 .2 .1 .1 .1 .2 .2 ..11 ..11 All sectors 50 Total net borrowing 488.7 434.7 491.8 488.8 635.9 843.5 452.5 525.1 578.2 693.6 838.1 848.9 51 U.S. government securities 84.8 122.9 133.0 225.9 254.4 273.1 163.5 288.3 288.4 220.5 246.7 299.5 52 State and local obligations 30.3 30.3 22.7 53.8 56.3 54.6 43.9 63.7 62.8 49.7 37.9 71.3 53 Corporate and foreign bonds 29.0 34.6 26.4 27.8 36.5 49.4 11.8 43.8 42.8 30.3 40.1 58.8 54 Mortgages 163.5 134.9 113.9 86.5 167.2 201.5 84.8 88.2 128.5 206.0 218.2 184.7 55 Consumer credit 45.4 6.3 26.7 21.0 51.3 100.6 20.6 21.4 35.9 66.6 103.0 98.2 56 Bank loans n.e.c 52.9 47.3 59.3 51.2 32.0 66.2 64.6 37.9 22.1 41.9 77.3 55.1 57 Open market paper 40.3 20.6 54.0 5.4 17.8 45.3 34.8 -23.9 -8.0 43.6 71.5 19.0 58 Other loans 42.4 37.8 55.8 17.2 20.3 52.8 28.5 5.9 5.7 35.0 43.4 62.2 External corporate equity funds raised in United States 59 Total new share issues -3.8 22.2 -4.1 35.3 67.8 -29.8 23.3 47.2 83.5 52.0 -43.3 -16.4 60 Mutual funds .1 5.2 6.3 18.4 32.8 38.1 12.5 24.3 36.8 28.9 39.0 37.2 61 All other -3.9 17.1 -10.4 16.9 34.9 -67.9 10.9 22.9 46.8 23.1 -82.3 -53.6 62 Nonfinancial corporations -7.8 12.9 -11.5 11.4 28.3 -72.1 7.0 15.8 38.2 18.4 -84.5 -59.6 63 Financial corporations 3.2 2.1 .8 4.0 2.7 3.0 3.9 4.1 2.8 2.5 2.9 3.2 64 Foreign shares purchased in United States .8 2.1 .3 1.5 4.0 1.1 -.1 3.0 5.7 2.2 -.7 2.9 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. 1982 1983 1984 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997799 11998800 11998811 11998822 11998833 11998844 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 386.0 344.6 380.4 404.1 526.4 715.3 358.1 450.1 488.9 563.8 697.9 732 !.6 By public agencies and foreign ? Total net advances 75.2 97.0 97.7 109.1 117.1 142.6 100.8 117.3 111199..77 111144..66 112233..77 161 .5 3 U.S. government securities -6.3 15.7 17.2 18.0 27.6 35.8 9.7 26.2 40.5 14.6 33.4 381i ..l2 4 Residential mortgages 35.8 31.7 23.5 61.0 76.1 56.5 47.6 74.4 8800..11 72.0 52.0 61 5 FHLB advances to savings and loans 9.2 7.1 16.2 .8 -7.0 15.7 11.1 -9.5 --1122..11 -2.0 15.7 15i. 7 6 Other loans and securities 36.5 42.4 40.9 29.3 20.5 34.6 32.4 26.2 11.1 29.9 22.6 46i .6 Total advanced, by sector 7 U.S. government 19.0 23.7 24.1 16.0 9.7 16.7 14.8 17.1 9.1 10.3 6.1 27' .2 8 Sponsored credit agencies 53.0 45.6 48.2 65.3 69.5 71.8 61.8 68.7 68.2 70.7 73.0 701 .6 9 Monetary authorities 7.7 4.5 9.2 9.8 10.9 8.4 3.8 15.7 15.6 6.2 17.1 — .3 10 Foreign -4.6 23.2 16.3 18.1 27.1 45.7 20.4 15.8 26.8 27.4 27.5 64k O Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 47.9 44.8 47.4 64.9 67.8 74.2 60.0 69.7 6666..22 6699..44 6699..11 /91 .2 12 Foreign 20.2 27.2 27.2 15.7 18.9 1.7 10.2 21.2 15.3 22.5 19.2 -15 i.7 Private domestic funds advanced N Total net advances 379.0 319.6 357.3 375.6 495.9 648.6 327.5 423.8 450.8 541.1 662.5 6341 .7 14 U.S. government securities 91.1 107.2 115.8 207.9 226.9 237.3 153.7 262.0 247.8 205.9 213.2 261 .3 15 State and local obligations 30.3 30.3 22.7 53.8 56.3 54.6 43.9 63.7 62.8 49.7 37.9 /I .3 16 Corporate and foreign bonds 18.5 19.3 18.8 14.8 14.6 17.4 -.1 29.6 22.9 6.3 18.0 16i. 9 17 Residential mortgages 91.9 73.7 56.7 -3.2 40.9 86.1 11.0 -17.4 6.4 75.5 105.9 66. .2 18 Other mortgages and loans 156.3 96.2 159.5 103.2 150.2 268.9 130.2 76.3 98.7 201.7 303.2 2341 .7 19 LESS: Federal Home Loan Bank advances 9.2 7.1 16.2 .8 -7.0 15.7 11.1 -9.5 -12.1 -2.0 15.7 15i. 7 Private financial intermediation 70 Credit market funds advanced by private financial institutions 313.9 281.5 323.4 285.6 376.7 541.9 274.4 296.7 323.2 430.1 522.2 561 .6 71 Commercial banking 123.1 100.6 102.3 107.2 136.1 176.1 99.9 114.5 121.6 150.6 192.8 159( .4 7? Savings institutions 56.5 54.5 27.8 31.3 136.8 147.7 25.2 37.4 128.9 144.6 157.0 138!) ..48 23 Insurance and pension funds 85.9 94.3 97.4 108.8 98.8 113.2 111.4 106.3 89.5 108.1 95.6 130l .l 24 Other finance 48.5 32.1 96.0 38.3 5.0 104.9 37.9 38.6 -16.8 26.8 76.7 133 75 Sources of funds 313.9 281.5 323.4 285.6 376.7 541.9 274.4 296.7 323.2 430.1 522.2 5611 .6 76 Private domestic deposits and RPs 137.4 169.6 211.9 174.7 203.5 283.9 147.6 201.9 192.7 214.2 277.0 290)! ..77 27 Credit market borrowing 34.5 18.1 36.7 4.1 22.9 52.3 24.2 -16.0 7.8 38.0 51.9 52 78 Other sources 142.0 93.9 74.8 106.7 150.4 205.8 102.6 110.8 122.8 177.9 193.2 218( .3 29 Foreign funds 27.6 -21.7 -8.7 -26.7 22.1 20.8 -28.3 -25.1 -14.2 58.5 15.7 25i> .9.8 30 Treasury balances .4 -2.6 -1.1 6.1 -5.3 3.8 -2.0 14.1 10.1 -20.8 .9 6 31 Insurance and pension reserves 72.8 83.9 90.4 104.6 99.2 108.2 111.4 97.8 90.0 108.4 107.6 1081 .9 32 Other, net 41.2 34.2 -5.9 22.8 34.4 72.9 21.5 24.1 36.8 31.9 69.0 lb, .8 Private domestic nonfinancial investors 33 Direct lending in credit markets 99.6 56.1 70.6 94.2 142.1 159.0 77.3 111.0 113355..33 114488..99 119922..33 125i .7 34 U.S. government securities 52.5 24.6 29.3 37.4 88.7 114.0 35.3 39.5 95.9 81.4 139.4 881 .6 35 State and local obligations 9.9 7.0 10.5 34.4 42.5 31.8 30.1 38.7 52.7 32.3 21.5 421> ..1 1 36 Corporate and foreign bonds -1.4 -5.7 -8.1 -5.2 2.0 -6.2 -17.7 7.3 -1.7 5.7 7.8 -20 37 Open market paper 8.6 -3.1 2.7 -.1 3.9 1.0 3.5 -3.7 -8.1 15.9 3.0 -1 ...02 38 Other 30.0 33.3 36.3 27.8 5.0 18.4 26.2 29.3 -3.4 13.5 20.7 16 39 Deposits and currency 146.8 181.1 221.9 181.9 222.6 294.6 152.1 211.7 214.5 230.7 290.2 299 1 .0 40 Currency 8.0 10.3 9.5 9.7 14.3 14.2 6.7 12.7 14.8 13.8 17.7 101 .7 41 Checkable deposits 18.3 5.2 18.0 15.7 21.7 16.4 1.9 29.5 48.0 -4.7 36.6 -3 1.9 4 4 ? 3 S M m o a n l e l y t i m m a e r a k n e d t f s u a n v d in s g h s a a re c s c ounts 5 3 9 4 . . 3 4 8 2 2 9 . . 9 2 1 4 0 7 7 . . 0 5 1 2 3 4 8 . . 7 2 - 2 4 1 4 9 . . 1 1 1 4 4 7 8 . . 2 0 8 3 3 9 . . 2 4 19 1 3 0 . . 1 0 - 2 8 7 4 8 . . 0 6 1 - 5 4 9 . . 2 7 1 3 2 0 4 . . 2 9 1 6 /1 4 L .22 44 Large time deposits 18.8 45.8 36.9 -7.7 -7.5 69.8 21.9 -37.3 -61.0 45.9 80.0 591 .7 4 4 6 5 D Se e c p u o r s i i t t y s R in P f s o reign countries 6 1 . . 6 5 6 1 . . 5 1 2. . 5 5 -2 3 . . 5 8 1 4 4 . . 8 3 -3 2 . . 4 4 -2 1 . . 2 1 -2 6 . . 9 6 1 7 1 . . 0 0 1 2 7 . . 7 5 -4 5 . . 5 3 -2 - !..53 47 Total of credit market instruments, deposits and currency 246.5 237.2 292.5 276.1 364.7 453.6 229.4 322.7 349.8 379.6 482.5 424 1.8 48 Public holdings as percent of total 18.5 26.1 24.0 26.0 21.5 19.9 27.4 24.9 23.7 19.5 17.2 22 ! .5 49 Private financial intermediation (in percent) 82.8 88.1 90.5 76.0 76.0 83.5 83.8 70.0 71.7 79.5 78.8 881 .5 50 Total foreign funds 23.0 1.5 7.6 -8.6 49.2 66.5 -7.9 -9.3 12.6 85.9 43.1 89> .9 MEMO: Corporate equities not included above 5 5 1 ? To M ta u l t n u e a t l i f s u su n e d s shares -3.8 .1 22 5 . . 2 2 -4 6 .1 .3 3 1 5 8 . . 3 4 66 3 77 2 .. . 88 8 -2 3 9 8 . . 8 1 22 1 33 2 .. . 33 5 4 2 7 4 . . 2 3 88 3 33 6 .. . 55 8 5 2 2 8 . . 0 9 -4 3 3 9 .3 .0 -1 3 6 7 I'. .42 53 Other equities -3.9 17.1 -10.4 16.9 34.9 -67.9 10.9 22.9 46.8 23.1 -82.3 -53 1.6 5 5 5 4 A O c th q e u r i s n it e i t o n p s u r b c y h a fi s n e a s ncial institutions -1 1 6 2 . . 7 9 - 2 2 4 . . 7 9 -2 2 4 0 . . 2 1 - 3 3 9 . . 9 2 5 1 7 0 . . 5 2 -4 1 9 9 . . 2 4 1 12 1 . . 3 0 -2 6 0 7 . . 1 3 7 7 5 . . 6 9 3 1 9 2 . . 2 8 -50 7 . . 8 6 -4 3 7 1 '. .36 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. NOTE. Full statements for sectors and transaction types in flows and in amounts 29. Foreign deposits at commercial banks, bank borrowings from foreign outstanding may be obtained from Flow of Funds Section, Division of Research branches, and liabilities of foreign banking agencies to foreign affiliates. and Statistics, Board of Governors of the Federal Reserve System, Washington, 30. Demand deposits at commercial banks. D.C. 20551. 31. Excludes net investment of these reserves in corporate equities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • July 1985 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1984 1985 MMeeaassuurree 11998822 11998833 11998844 Aug. Sept. Oct. Nov. Dec. Jan/ Feb/ Mar/ Apr. 1 Industrial production 138.6 147.6 166.3 166.0 165.0 164.4 164.8 164.8 165.1 165.3 165.8 165.4 Market groupings 2 Products, total 141.8 149.2 164.7 167.2 166.4 166.9 167.7 168.1 168.0 168.0 168.5 168.2 3 Final, total 141.5 147.1 162.7 165.1 164.6 165.2 166.2 166.7 166.7 166.4 166.9 166.6 4 Consumer goods 142.6 151.7 161.7 162.5 161.6 161.6 162.6 162.2 162.1 162.0 162.5 161.9 5 Equipment 139.8 140.8 164.1 168.7 168.9 170.1 171.2 172.8 173.0 172.5 173.1 173.1 6 Intermediate 143.3 156.6 172.3 175.1 173.0 173.4 173.1 173.2 172.7 173.7 174.1 173.9 7 Materials 133.7 145.2 161.2 164.0 162.8 160.4 160.4 159.8 160.5 161.3 161.8 161.1 Industry groupings 8 Manufacturing 137.6 148.2 164.8 167.6 166.6 166.2 166.6 166.6 166.6 166.5 167.1 166.7 Capacity utilization (percent)1 9 Manufacturing 71.1 75.2 81.6 82.8 82.2 81.7 81.6 81.4 81.2 80.9 81.0 80.5 10 Industrial materials industries 70.1 75.2 82.0 83.3 82.4 81.0 80.9 80.4 80.5 80.8 80.8 80.2 11 Construction contracts (1977 = 100)2 111.0 137.0 149.0 148.0 146.0 145.0 151.0 150.0 153.0 145.0 162.0 161.0 12 Nonagricultural employment, total3 136.1 137.0 143.1 143.6 144.1 144.6 145.1 145.4 146.0 146.1 146.7 147.0 13 Goods-producing, total 102.2 100.4 106.8 107.7 107.3 107.6 107.8 108.4 108.7 108.3 108.7 108.8 14 Manufacturing, total 96.6 95.1 100.7 101.4 100.9 101.2 101.4 101.8 101.9 101.5 101.4 101.2 15 Manufacturing, production-worker ... 89.1 87.9 94.0 94.8 94.0 94.3 94.4 94.8 94.8 94.3 94.1 94.0 16 Service-producing 154.7 157.1 163.0 163.4 164.2 164.9 165.6 165.7 166.4 166.9 167.5 167.9 17 Personal income, total 410.3 435.6 478.1 483.5 487.0 488.8 491.7 493.9 496.4 498.3 501.0 503.8 18 Wages and salary disbursements 367.4 388.6 422.5 425.5 428.4 428.8 432.6 436.7 438.5 440.5 443.9 446.6 19 Manufacturing 285.5 294.7 323.6 326.2 325.7 326.7 330.0 333.2 334.4 332.9 334.6 334.1 20 Disposable personal income4 398.0 427.1 470.3 475.5 479.1 480.6 482.9 484.5 487.2 483.6 481.9 495.9 21 Retail sales5 326.0 373.0 412.0 410.4 414.1 416.4 421.3 422.3 424.0 428.3 425.1 428.8 Prices6 22 Consumer 289.1 298.4 311.1 313.0 314.5 315.3 315.3 315.5 316.1 317.4 318.8 320.1 23 Producer finished goods 280.7 285.2 291.2 291.3 289.5 291.5 292.3 292.(K 292.7 292.5 292.4 293.1 1. Ratios of indexes of production to indexes of capacity. Based on data from 5. Based on Bureau of Census data published in Survey of Current Business. Federal Reserve, McGraw-Hill Economics Department, Department of Com- 6. Data without seasonal adjustment, as published in Monthly Labor Review. merce, and other sources. Seasonally adjusted data for changes in the price indexes may be obtained from 2. Index of dollar value of total construction contracts, including residential, the Bureau of Labor Statistics, U.S. Department of Labor. nonresidential and heavy engineering, from McGraw-Hill Information Systems Company, F. W. Dodge Division. NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6, 3. Based on data in Employment and Earnings (U.S. Department of Labor). and indexes for series mentioned in notes 3 and 7 may also be found in the Survey Series covers employees only, excluding personnel in the Armed Forces. of Current Business. 4. Based on data in Survey of Current Business (U.S. Department of Com- Figures for industrial production for the last two months are preliminary and merce). estimated, respectively. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1984 1985 CCaatteeggoorryy 11998822 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb/ Mar/ Apr. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 174,450 176,414 178,602 179,005 179,181 179,353 179,524 179,600 179,742 179,891 180,024 2 Labor force (including Armed Forces)1 112,383 113,749 115,763 116,006 116,241 116,292 116,682 117,091 117,310 117,738 117,5% 3 Civilian labor force 110,204 111,550 113,544 113,764 114,016 114,074 114,464 114,875 115,084 115,514 115,371 4 Nonagricultural industries2 96,125 97,450 101,685 102,075 102,480 102,598 102,888 103,071 103,345 103,757 103,517 5 Agriculture 3,401 3,383 3,321 3,319 3,169 3,334 3,385 3,320 3,340 3,362 3,428 Unemployment 6 Number 10,678 10,717 8,539 8,370 8,367 8,142 8,191 8,484 8,399 8,3% 8,426 7 Rate (percent of civilian labor force) ... 9.7 9.6 7.5 7.4 7.3 7.1 7.2 7.4 7.3 7.3 7.3 8 Not in labor force 62,067 62,665 62,839 62,999 62,940 63,061 62,842 62,509 62,432 62,153 62,428 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 89,566 90,138 94,166 94,807 95,157 95,497 95,681 96,045 96,161 %,514 96,731 10 Manufacturing 18,781 18,497 19,589 19,616 19,686 19,718 19,801 19,808 19,742 19,720 19,676 11 Mining 1,128 957 999 1,020 1,012 1,009 1,000 1,000 1,001 1,000 1,009 12 Contract construction 3,905 3,940 4,315 4,374 4,382 4,3% 4,457 4,530 4,492 4,606 4,676 13 Transportation and public utilities 5,082 4,958 5,169 5,213 5,225 5,226 5,249 5,266 5,281 5,255 5,272 14 Trade 20,457 20,804 21,790 21,930 22,080 22,267 22,267 22,372 22,426 22,527 22,574 1") Finance 5,341 5,467 5,665 5,684 5,705 5,725 5,749 5,764 5,7% 5,825 5,858 16 Service 19,036 19,665 20,666 20,861 20,964 21,030 21,095 21,231 21,335 21,478 21,570 17 Government 15,837 15,851 15,973 16,109 16,103 16,126 16,063 16,074 16,088 16,103 16,096 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 • July 1985 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1984 1985 1984 1985 1984 1985 Q2 Q3 04 QK Q2 Q3 Q4 Q1 Q2 Q3 Q4 Qlr Output (1967 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Total industry 163.1 165.6 164.7 165.4 199.7 201.1 202.4 204.0 81.7 82.4 81.3 81.1 2 Mining 125.1 129.0 124.3 125.5 165.9 166.1 166.3 166.5 75.4 77.7 74.7 75.4 3 Utilities 183.1 181.1 183.0 186.5 215.3 216.8 218.3 219.8 85.0 83.5 83.8 84.8 4 Manufacturing 164.4 167.2 166.5 166.7 201.0 202.5 204.0 205.7 81.8 82.5 81.6 81.0 5 Primary processing ... 162.5 162.2 159.8 160.8 197.2 198.0 198.7 199.7 82.4 81.9 80.4 80.5 6 Advanced processing . 165.2 169.7 169.6 170.3 203.0 204.9 206.8 208.9 81.4 82.8 82.0 81.5 7 Materials 162.1 163.4 160.2 161.2 195.9 197.2 198.4 199.7 82.7 82.9 80.7 80.7 8 Durable goods 162.0 164.6 162.1 161.8 198.3 199.5 200.8 202.4 81.7 82.5 80.7 79.9 9 Metal materials 100.3 97.2 91.0 92.0 138.5 137.9 137.3 136.8 72.4 70.5 66.3 67.2 10 Nondurable goods.... 186.6 185.7 181.5 181.1 223.4 225.2 226.9 228.4 83.5 82.5 80.0 79.3 11 Textile, paper, and chemical.. 195.9 194.9 189.6 189.2 236.2 238.2 240.3 242.0 82.9 81.8 79.0 78.2 12 Paper 168.5 171.0 168.3 167.1 169.5 170.5 171.5 172.5 99.4 100.3 98.1 96.8 13 Chemical 240.4 238.4 233.5 234.0 305.2 308.0 310.9 313.5 78.8 77.4 75.1 74.7 14 Energy materials 132.4 133.1 129.4 135.1 156.4 157.0 157.6 158.4 84.6 84.8 82.1 85.3 Previous cycle1 Latest cycle2 1984 1984 1985 High Low High Low Apr. Aug. Sept. Oct. Nov. Dec. Jan/ Feb/ Mar/ Apr. Capacity utilization rate (percent) 15 Total industry 88.4 71.1 87.3 69.6 81.3 82.5 81.9 81.4 81.4 81.2 81.1 81.0 81.1 80.6 16 Mining 91.8 86.0 88.5 69.6 74.3 77.3 77.4 74.3 75.1 74.8 75.4 74.? 75.7 74.5 17 Utilities 94.9 82.0 86.7 79.0 85.0 83.3 83.2 82.9 84.6 83.9 83.7 85.6 85.2 85.2 18 Manufacturing 87.9 69.0 87.5 68.8 81.5 82.8 82.0 81.7 81.6 81.4 81.2 80.9 81.0 80.5 19 Primary processing ... 93.7 68.2 91.4 66.2 82.2 82.1 81.5 81.2 80.6 79.5 80.1 80.7 80.7 80.4 20 Advanced processing . 85.5 69.4 85.9 70.0 81.0 83.1 82.4 81.8 82.0 82.2 82.0 81.3 81.2 80.7 21 Materials 92.6 69.3 88.9 66.6 82.5 83.2 82.4 81.0 80.9 80.4 80.5 80.8 80.8 80.2 22 Durable goods 91.4 63.5 88.4 59.8 81.5 82.9 82.2 81.3 80.8 80.0 80.0 79.9 79.8 79.0 23 Metal materials 97.8 68.0 95.4 46.2 73.0 70.8 69.8 67.6 66.7 64.5 65.2 67.7 68.8 68.4 24 Nondurable goods 94.4 67.4 91.7 70.7 83.2 82.9 81.5 80.5 80.2 79.4 79.2 79.2 79.5 79.3 25 Textile, paper, and chemical 95.1 65.4 92.3 68.6 82.7 82.4 80.5 79.7 79.1 78.0 78.0 78.2 78.4 78.2 26 Paper 99.4 72.4 97.9 86.3 98.5 99.7 99.7 98.7 97.2 98.5 98.2 96.4 95.9 n.a. 27 Chemical 95.5 64.2 91.3 64.0 78.9 78.1 76.1 75.7 75.7 73.9 74.3 74.7 75.0 n.a. 28 Energy materials 94.5 84.4 88.9 78.5 84.5 84.7 84.3 81.0 82.1 83.2 84.2 85.7 86.0 85.3 1. Monthly high 1973; monthly low 1975. NOTE. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly highs 1978 through 1980; monthly lows 1982. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted 1967 pro- 1984 Grouping por- avg. tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan/ Feb. Mar.P Apr, Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 163.3 162.1 162.8 164.4 165.9 166.0 165.0 164.4 164.8 164.8 165.1 165.3 2 Products 60.71 164.7 162.5 163.3 165.3 167.4 167.2 166.4 166.9 167.7 168.1 168.0 168.0 3 Final products 47.82 162.7 160.2 161.1 163.1 165.2 165.1 164.6 165.2 166.2 166.7 166.7 166.4 4 Consumer goods 27.68 161.6 161.4 161.7 163.0 163.8 162.5 161.6 161.6 162.6 162.2 162.1 162.0 5 Equipment 20.14 164.1 158.5 160.3 163.3 167.0 168.7 168.9 170.1 171.2 172.8 173.0 172.5 6 Intermediate products 12.89 172.3 171.0 171.6 173.5 175.8 175.1 173.0 173.4 173.1 173.2 172.7 173.7 7 Materials 39.29 161.2 161.5 162.0 162.9 163.5 164.0 162.8 160.4 160.4 159.8 160.5 161.3 Consumer goods 8 Durable consumer goods 7.89 162.0 162.2 161.4 163.6 163.7 162.6 159.6 158.7 161.5 161.0 160.5 162.4 9 Automotive products 2.83 181.3 180.9 179.8 184.3 185.0 181.8 173.0 171.9 184.1 186.0 192.0 189.8 10 Autos and utility vehicles 2.03 158.1 158.4 155.9 158.7 161.1 159.2 145.6 145.0 161.5 164.7 174.3 169.8 11 Autos 1.90 135.3 134.5 132.9 136.2 138.7 134.3 121.1 123.6 138.9 142.5 151.5 144.9 12 Auto parts and allied goods .80 240.3 238.0 240.6 249.3 245.8 239.1 242.7 240.2 241.2 239.9 236.8 240.6 13 Home goods 5.06 151.1 151.7 151.1 152.0 151.8 151.9 152.0 151.4 148.9 147.0 142.9 147.0 14 Appliances, A/C, and TV 1.40 134.3 136.1 134.0 134.9 133.4 132.3 136.4 133.5 130.5 133.0 121.9 126.2 15 Appliances and TV 1.33 137.5 138.8 136.7 138.0 136.9 135.9 140.2 136.8 133.2 136.0 124.2 128.2 16 Carpeting and furniture 1.07 179.2 181.0 179.6 179.4 179.5 180.8 179.3 178.1 177.5 173.2 168.9 175.5 17 Miscellaneous home goods 2.59 148.6 148.0 148.6 150.0 150.3 150.6 149.2 150.0 147.0 143.8 143.6 146.5 18 Nondurable consumer goods 19.79 161.5 161.1 161.8 162.7 163.9 162.4 162.4 162.7 163.0 162.7 162.8 161.8 19 Clothing 4.29 20 Consumer staples 15.50 171.5 170.2 171.6 173.2 174.5 172.7 173.1 173.8 173.9 173.2 173.2 172.5 21 Consumer foods and tobacco 8.33 160.6 160.4 161.0 161.9 162.9 161.8 162.1 162.4 161.2 162.1 162.2 160.8 22 Nonfood staples 7.17 184.2 181.6 183.9 186.3 188.0 185.4 185.9 187.0 188.6 186.1 186.0 186.2 23 Consumer chemical products 2.63 240.7 233.4 235.9 241.5 247.1 244.3 247.3 247.5 245.7 246.4 247.6 245.7 24 Consumer paper products 1.92 145.7 144.0 145.6 147.9 151.5 148.7 146.7 146.9 148.5 146.7 147.7 145.2 25 Consumer energy products 2.62 155.6 157.1 159.8 159.0 155.3 153.3 153.0 155.6 160.7 154.4 152.1 156.4 26 Residential utilities 1.45 177.9 177.4 181.1 182.4 178.6 175.0 174.1 177.4 186.5 178.6 177.9 186.9 Equipment 27 Business 12.63 181.0 173.5 176.5 181.1 185.5 187.6 186.4 187.3 188.4 189.6 189.2 188.4 28 Industrial 6.77 140.6 135.9 138.5 140.4 143.1 143.3 143.5 145.3 145.6 147.0 144.6 142.8 29 Building and mining 1.44 187.6 173.6 182.9 185.8 190.0 191.6 190.7 194.6 197.2 199.8 195.0 186.9 30 Manufacturing 3.85 127.4 126.2 127.4 128.6 130.1 129.7 129.8 131.0 129.9 130.9 129.3 128.8 31 Power 1.47 128.8 124.1 124.1 126.7 131.0 131.2 133.0 134.5 135.8 137.3 135.2 136.2 32 Commercial transit, farm 5.86 227.6 217.0 220.5 228.1 234.5 238.9 235.9 235.8 237.9 238.8 240.7 241.1 33 Commercial 3.26 325.1 309.6 315.5 326.3 333.4 339.2 336.5 338.5 342.1 343.5 348.4 349.8 34 Transit 1.93 115.4 108.9 109.7 115.1 120.4 124.5 121.4 117.8 118.2 119.6 118.5 118.5 35 Farm .67 76.4 78.0 77.1 76.1 81.8 80.3 76.4 76.1 76.2 72.2 69.2 65.0 36 Defense and space 7.51 135.6 133.2 133.1 133.5 135.9 136.8 139.5 141.1 142.2 144.7 145.8 145.9 Intermediate products 37 Construction supplies 6.42 158.9 159.6 159.5 160.9 161.9 160.9 158.2 158.6 156.9 157.5 156.9 157.6 38 Business supplies 6.47 185.7 182.3 183.5 186.1 189.5 189.1 187.6 188.0 189.2 188.8 188.4 189.6 39 Commercial energy products 1.14 193.5 190.0 190.8 195.3 194.9 193.3 194.5 194.8 199.8 196.1 195.7 197.5 Materials 40 Durable goods materials 20.35 161.6 161.3 161.6 163.0 164.2 165.3 164.3 162.9 162.3 161.0 161.6 161.8 41 Durable consumer parts 4.58 134.4 133.2 132.6 134.7 135.1 136.6 136.2 136.3 134.8 136.9 138.4 139.8 42 Equipment parts 5.44 212.5 210.9 210.6 214.0 218.8 220.1 219.6 216.1 216.4 215.0 212.2 208.0 43 Durable materials n.e.c 10.34 146.9 147.7 148.6 148.7 148.3 149.2 147.7 146.7 146.0 143.3 145.2 147.2 44 Basic metal materials 5.57 100.9 105.7 104.5 104.1 103.4 102.0 99.8 97.8 95.7 91.7 93.5 97.1 45 Nondurable goods materials 10.47 184.3 185.7 187.4 186.7 186.5 186.7 184.0 182.1 181.9 180.4 180.6 180.8 46 Textile, paper, and chemical materials 7.62 193.3 195.0 196.8 195.8 195.9 196.3 192.4 190.7 190.2 187.8 188.3 189.2 47 Textile materials 1.85 117.1 118.9 121.9 119.6 118.8 120.1 115.6 112.0 109.3 108.8 107.2 108.5 48 Paper materials 1.62 168.2 166.7 169.2 169.5 172.8 170.0 170.3 168.9 166.7 169.2 169.1 166.3 49 Chemical materials 4.15 237.2 240.0 241.1 240.2 239.3 240.6 235.3 234.5 235.5 230.5 232.1 234.2 50 Containers, nondurable 1.70 175.5 175.7 176.6 176.7 176.6 175.3 175.8 174.3 176.5 177.2 175.5 170.1 51 Nondurable materials n.e.c 1.14 137.3 138.6 140.5 140.5 138.8 139.6 140.8 136.0 134.7 135.7 136.2 140.9 52 Energy materials 8.48 131.5 132.1 131.9 133.2 133.7 133.0 132.7 127.6 129.4 131.3 133.3 135.8 53 Primary energy 4.65 119.5 119.5 119o8 120.1 122.7 121.8 121.6 113.1 115.3 117.9 120.5 123.3 54 Converted fuel materials 3.82 146.3 147.3 146.5 149.0 147.1 146.8 146.1 145.2 146.7 147.6 148.8 151.0 Supplementary groups 55 Home goods and clothing 9.35 139.4 141.0 139.8 139.6 139.7 139.6 138.9 138.3 137.2 136.7 134.8 136.0 56 Energy, total 12.23 142.5 142.8 143.3 144.5 144.0 143.0 142.8 139.8 142.7 142.3 143.1 146.0 57 Products 3.76 167.1 167.1 169.2 170.0 167.3 165.4 165.5 167.5 172.6 167.0 165.4 168.9 58 Materials 8.48 131.5 132.1 131.9 133.2 133.7 133.0 132.7 127.6 129.4 131.3 133.3 135.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • July 1985 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1967 1984 1985 Grouping c S o I d C e p p r o o r - - a 1 v 98 g 4 . tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan/ Feb. Mar.P Apr.c Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities 12.05 152.0 151.3 152.1 154.1 154.4 153.0 153.3 150.5 153.1 152.4 153.0 154.7 155.2 154.4 2 Mining 6.36 125.7 123.3 125.0 127.0 129.9 128.3 128.7 123.6 124.8 124.4 125.6 124.8 126.1 124.2 3 Utilities 5.69 181.5 182.7 182.3 184.3 181.8 180.6 180.9 180.6 184.7 183.7 183.6 188.2 187.7 188.2 4 Electric 3.88 205.4 207.7 206.8 209.6 205.9 204.0 204.4 203.8 209.1 205.3 206.7 213.6 212.4 213.1 5 Manufacturing 87.95 164.8 163.4 164.2 165.7 167.3 167.6 166.6 166.2 166.6 166.5 166.6 166.5 167.1 166.7 6 Nondurable 35.97 179.4 179.1 179.9 181.3 181.8 181.7 180.3 179.4 179.6 179.5 179.6 178.9 178.9 178.8 7 Durable 51.98 154.6 152.6 153.3 154.9 157.2 157.8 157.1 157.1 157.6 157.6 157.6 158.0 159.0 158.4 Mining 8 Metal 10 .51 91.7 98.5 98.0 96.8 96.4 83.4 84.5 91.2 87.5 76.3 82.7 87.3 84.7 9 Coal 11.12 .69 155.8 151.4 153.9 161.5 176.5 171.7 173.7 127.8 134.4 142.1 144.5 154.8 168.0 160.8 10 Oil and gas extraction 13 4.40 121.7 118.8 120.4 121.6 122.8 122.5 122.4 122.6 123.8 123.6 124.0 120.5 120.6 118.5 11 Stone and earth minerals 14 .75 145.0 140.4 144.0 147.9 151.9 153.5 154.6 147.8 147.5 146.0 146.7 147.8 148.0 Nondurable manufactures 12 Foods 20 8.75 163.2 163.1 164.2 165.1 164.9 164.7 164.3 164.0 162.9 164.1 164.9 163.2 13 Tobacco products 21 .67 115.2 113.3 112.8 118.3 115.1 113.8 113.1 119.5 117.4 120.5 115.7 115.0 14 Textile mill products 22 2.68 138.6 140.0 140.5 140.7 139.8 140.3 135.4 133.3 132.0 132.0 131.5 131.5 131.2 15 Apparel products 23 3.31 16 Paper and products 26 3.21 174.4 172.4 174.1 174.6 176.7 176.7 177.5 173.5 173.0 173.7 174.3 176.4 175.5 174.5 17 Printing and publishing 27 4.72 169.7 166.3 167.5 169.0 172.6 173.1 170.5 172.3 174.0 174.1 174.5 173.7 174.4 175.1 18 Chemicals and products 28 7.74 228.1 228.3 227.9 231.0 232.0 231.6 230.8 228.0 230.2 228.1 227.8 227.5 226.9 19 Petroleum products 29 1.79 124.4 126.8 127.9 127.5 124.7 124.3 122.6 122.9 124.0 120.3 116.1 117.7 121.0 124.2 20 Rubber and plastic products 30 2.24 331.7 328.0 334.1 341.0 341.4 341.5 338.4 338.6 332.2 331.3 334.5 334.1 335.7 21 Leather and products 31 .86 59.9 63.5 61.4 60.0 60.6 59.1 57.9 55.0 55.9 56.6 54.1 54.1 55.0 Durable manufactures 22 Ordnance, private and government 19.91 3.64 103.5 101.4 100.8 101.7 102.7 105.5 107.1 107.7 108.6 108.3 107.5 107.9 108.0 108.5 23 Lumber and products 24 1.64 148.7 151.2 146.3 148.5 146.0 148.8 149.2 152.6 152.2 150.4 150.4 148.5 149.5 24 Furniture and fixtures 25 1.37 190.2 186.6 190.5 191.9 192.6 195.3 194.3 194.7 192.1 190.6 187.0 190.8 189.3 25 Clay, glass, stone products 32 2.74 159.7 160.0 160.6 159.7 160.9 160.0 158.0 160.1 159.0 158.9 159.4 160.4 161.0 26 Primary metals 33 6.57 95.1 99.3 98.2 97.9 94.5 94.4 94.1 92.7 91.5 87.8 89.7 91.8 94.5 93.2 27 Iron and steel 331.2 4.21 79.8 84.0 83.5 83.5 76.5 77.7 77.5 74.6 73.9 72.1 72.2 74.3 79.3 28 Fabricated metal products 34 5.93 137.5 135.5 136.5 138.7 140.6 140.0 139.5 140.7 139.0 140.2 139.4 141.7 142.7 143.0 29 Nonelectrical machinery 35 9.15 181.5 174.9 178.8 182.0 186.9 189.1 187.9 187.7 188.9 188.3 189.2 188.4 188.6 188.4 30 Electrical machinery 36 8.05 217.4 214.6 214.5 216.0 221.5 221.5 222.8 222.3 222.5 224.5 220.3 219.8 221.3 218.8 31 Transportation equipment 37 9.27 137.6 134.5 135.0 137.2 140.6 141.0 137.6 137.2 141.3 143.3 145.8 144.7 145.6 145.4 32 Motor vehicles and parts 371 4.50 165.7 161.9 163.0 165.3 169.0 169.6 162.4 161.7 170.8 171.8 176.3 172.3 172.5 171.7 33 Aerospace and miscellaneous transportation equipment.. 372-9 4.77 111.2 108.8 108.6 110.8 113.8 113.9 114.2 114.1 113.6 116.4 117.2 118.6 120.2 120.6 34 Instruments 38 2.11 174.2 171.0 171.8 174.5 176.7 177.4 178.5 176.5 177.5 180.3 179.3 179.0 180.8 181.1 35 Miscellaneous manufactures 39 1.51 148.9 152.1 151.5 150.8 152.4 149.2 147.0 148.3 143.5 137.7 141.0 144.1 144.7 143.2 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total 507.4 670.1 661.1 665.9 671.5 682.4 678.2 673.6 674.7 679.1 680.5 681.0 682.3 684.8 683.4 37 Final 390.9 516.9 509.0 514.0 518.1 525.9 522.3 519.7 521.3 525.8 527.0 527.8 527.4 529.3 529.2 38 Consumer goods 277.5 348.2 347.8 349.5 350.9 353.2 347.4 345.4 346.7 350.1 349.4 350.7 350.6 352.1 351.4 39 Equipment 113.4 168.7 161.2 164.4 167.2 172.8 174.9 174.4 174.5 175.7 177.6 177.1 176.8 177.2 177.8 40 Intermediate 116.6 153.2 152.2 151.9 153.4 156.5 155.9 153.8 153.5 153.3 153.5 153.3 154.9 155.5 154.2 NOTE. These data also appear in the Board's G.12.3 (414) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1984 1985 IItteemm 11998822 11998833 11998844 June July Aug. Sept. Oct. Nov. Dec. Jan.' Feb.' Mar. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,000 1,605 1,682 1,805' 1,591' 1,542' 1,517' 1,477' I,6l6r 1,635 1,624 1,741 7 1-family 546 902 922 939' 864' 853' 866' 827' 846' 843' 903 927 993 3 2-or-more-family 454 703 759 866' 727' 689' 651' 65(K 770' 756' 732 697 748 4 Started 1,062 1,703 1,749 1,837 1,730 1,590 1,669 1,564 1,600 1,630 1,849 1,647 1,883 1-family 663 1,067 1,084 1,077 9% 962 1,009 979 1,043 1,112 1,060 1,135 1,171 6 2-or-more-family 400 635 665 760 734 628 660 585 557 518 789 512 712 7 Under construction, end of period1 720 1,003 1,051 1,098 1,100 1,091 1,088 1,081 1,077 1,073 1,072 1,031 1,068 8 1-family 400 524 556 587 582 574 568 571 574 579 572 559 581 9 2-or-more-family 320 479 494 511 518 517 520 510 503 495 500 471 487 10 Completed 1,005 1,390 1,652 1,718 1,699 1,681 1,657 1,614 1,587 1,635 1,717 1,754 1,679 11 1-family 631 924 1,025 1,045 1,062 1,035 1,040 972 1,001 985 1,120 1,041 1,009 12 2-or-more-family 374 466 627 673 637 646 617 642 586 650 597 713 670 13 Mobile homes shipped 240 296 295 298 301 302 282 302 291 282 273 276 283 Merchant builder activity in 1-family units 14 Number sold 413 622 639 636 615 557 670 652 596 604 622 641 698 15 Number for sale, end of period1 255 304 358 338 340 343 343 346 349 356 356 362 358 Price (thousands of dollars)2 Median 16 Units sold 69.3 75.5 80.0 80.5 80.7 82.0 81.3 80.1 82.5 78.3 82.9 83.4 83.0 17 Units sold 83.8 89.9 97.5 98.8 97.1 96.9 101.3 95.7 101.4 96.3 98.8 98.5 100.2 EXISTING UNITS (1-family) 18 Number sold 1,991 2,719 2,868 2,920 2,790 2,770 2,730 2,740 2,830 2,870 3,000 2,880 3,030 Price of units sold (thousands of dollars)2 19 Median 67.7 69.8 72.3 73.4 74.2 7733..55 7711..99 7711..99 7711..99 7722..11 73.8 7733..55 7744..22 20 Average 80.4 82.5 85.9 87.2 87.9 87.6 85.4 86.2 85.1 85.9 87.7 87.2 88.6 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 230,068 262,167 309,740 315,279 314,223 318,031 318,685 312,849 308,111 307,579 316,356 323,775 324,162 7? Private 179,090 211,369 253,924 257,789 258,245 261,165 260,871 256,121 251,607 251,283 258,579 265,707 265,556 73 Residential 74,808 111,727 133,519 136,418 137,818 138,926 137,106 131,143 125,906 122,727 128,449 133,133 134,807 24 Nonresidential, total 104,282 99,642 120,405 121,371 120,427 122,239 123,765 124,978 125,701 128,556 130,130 132,574 130,749 Buildings 75 Industrial 17,346 12,863 14,426 14,065 13,784 14,613 14,917 14,867 15,287 15,353 15,075 15,687 15,430 76 Commercial 37,281 35,787 49,273 48,947 48,436 49,496 50,861 53,509 54,579 56,661 58,456 59,123 59,580 77 Other 10,507 11,660 12,725 13,327 12,744 12,059 12,079 12,111 11,975 12,396 11,847 12,012 11,428 28 Public utilities and other 39,148 39,332 43,981 45,032 45,463 46,071 45,908 44,491 43,860 44,146 44,752 45,752 44,311 79 Public 50,977 50,798 55,818 57,490 55,979 56,866 57,814 56,729 56,504 56,296 57,777 58,067 58,606 30 Military 2,205 2,544 2,837 2,703 2,345 2,851 3,508 2,890 3,082 2,974 3,254 3,309 3,184 31 Highway 13,428 14,225 16,881 16,824 17,136 17,322 17,209 16,794 17,458 17,588 18,133 18,323 19,378 37, Conservation and development 5,029 4,822 4,586 4,492 4,520 4,520 4,890 4,591 5,073 4,555 4,592 4,645 4,705 33 Other 30,315 29,207 31,514 33,471 31,978 32,173 32,207 32,454 30,891 31,179 31,798 31,790 31,339 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

A50 Domestic Nonfinancial Statistics • July 1985 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (at annual rate) IIInnndddeeexxx llleeevvveeelll IIIttteeemmm AAAppprrr... 1984 1985 1984 1985 111999888555 11998844 11998855 (((111999666777 AApprr.. AApprr.. === 111000000)))111 June Sept. Dec/ Mar/ Dec/ Jan. Feb. Mar. Apr. CONSUMER PRICES2 1 All items 4.5 3.7 3.2 4.5 3.0 4.1 .3 .2 .3 .5 .4 320.1 2 Food 3.6 2.4 -.5 3.9 3.7 2.6 .4 .2 .5 .0 -.2 309.6 3 Energy items 2.8 .7 .3 .1 -.7 -.8 -.2 -.8 -1.4 1.9 1.8 424.4 4 All items less food and energy 5.0 4.5 4.8 5.3 3.5 5.5 .3 .4 .6 .4 .3 311.8 5 Commodities 4.8 3.3 3.9 3.8 .9 6.6 .2 .5 .8 .3 .0 260.0 6 Services 5.2 5.3 5.2 6.2 5.0 5.0 .4 .4 .4 .4 .4 370.7 PRODUCER PRICES 7 Finished goods 2.9 .7 -.4 .0 1.1 1.0 .0 .V -.1 .2 .3 293.1 8 Consumer foods 4.3 -.7 -7.5 4.5 3.3 -2.4 .4 -,3R -.1 -.2 -1.0 272.4 9 Consumer energy .3 -5.0 5.0 -19.7 5.6 -21.0 -.6 -2.4 -2.5 -.9 5.8 713.9 10 Other consumer goods 2.7 2.4 .8 2.5 -.2 6.6 .1 .8' .2 .6 -.2 251.0 11 Capital equipment 2.9 1.9 2.2 2.3 -1.1 6.5 -.3 .1' .5 .4 .0 300.0 12 Intermediate materials3 3.6 .2 2.7 -1.1 1.2 -2.5 .0 .0 -.5 -.1 .3 325.6 13 Excluding energy 3.7 .6 2.0 .9 1.5 -1.0 .1 .0 -.2 -.1 .0 305.7 Crude materials 14 Foods 5.0 -10.8 -19.2 -1.7 10.6 -24.1 .2 -2.1' -2.0 -2.8 -3.0 240.5 15 Energy -1.3 -4.4 4.0 .4 -7.6 -12.7 -.7 -L.Y -.4 -1.0 .1 748.3 16 Other 13.0 -6.9 14.3 -15.3 -10.7 -13.4 -.6 -1.4 -4.3 2.3 2.1 257.4 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

Selected Measures A51 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1984 1985 AAccccoouunntt 11998822 11998833 11998844 Q1 Q2 Q3 Q4 Ql' GROSS NATIONAL PRODUCT 1 3,069.3 3,304.8 3,662.8 3,553.3 3,644.7 3,694.6 3,758.7 3,817.1 By source 2 Personal consumption expenditures 1,984.9 2,155.9 2,341.8 2,276.5 2,332.7 2,361.4 22,,339966..55 22,,444466..11 3 Durable goods 245.1 279.8 318.8 310.9 320.7 317.2 326.3 334.5 4 Nondurable goods 757.5 801.7 856.9 841.3 858.3 861.4 866.5 877.0 5 Services 982.2 1,074.4 1,166.1 1,124.4 1,153.7 1,182.8 1,203.8 1,234.6 6 Gross private domestic investment 414.9 471.6 637.8 623.8 627.0 662.8 637.8 651.2 7 Fixed investment 441.0 485.1 579.6 550.0 576.4 591.0 601.1 610.6 8 Nonresidential 349.6 352.9 425.7 398.8 420.8 435.7 447.7 455.3 9 Structures 142.1 129.7 150.4 142.2 150.0 151.4 157.9 165.3 10 Producers' durable equipment 207.5 223.2 275.3 256.7 270.7 284.2 289.7 290.1 11 Residential structures 91.4 132.2 153.9 151.2 155.6 155.3 153.5 155.3 12 Nonfarm 86.6 127.6 148.8 146.4 150.5 150.1 148.3 150.1 13 Change in business inventories -26.1 -13.5 58.2 73.8 50.6 71.8 36.6 40.6 14 Nonfarm -24.0 -3.1 49.6 60.6 47.0 63.7 27.2 33.5 15 Net exports of goods and services 19.0 -8.3 -64.2 -51.5 -58.7 -90.6 -56.0 -69.1 16 348.4 336.2 364.3 358.9 362.4 368.6 367.2 363.5 17 Imports 329.4 344.4 428.5 410.4 421.1 459.3 423.2 432.6 18 Government purchases of goods and services 650.5 685.5 747.4 704.4 743.7 761.0 780.5 789.0 19 Federal 258.9 269.7 295.4 267.6 296.4 302.0 315.7 316.8 20 State and local 391.5 415.8 452.0 436.8 447.4 458.9 464.8 472.2 By major type of product 71 3,095.4 3,318.3 3,604.6 33,,447799..55 33,,559944..11 33,,662222..88 33,,772222..11 33,,777766..66 77 Goods 1,276.7 1,355.7 1,542.9 1,498.0 1,544.8 1,549.1 1,579.8 1,585.3 73 Durable 499.9 555.3 655.6 632.3 647.9 654.7 687.7 676.8 74 Nondurable 776.9 800.4 887.3 865.7 896.9 894.4 892.1 908.5 75 Services 1,510.8 1,639.3 1,763.3 1,713.7 1,742.6 1,783.3 1,813.7 1,859.6 26 Structures 281.7 309.8 356.5 341.6 357.2 362.1 365.2 372.3 71 Change in business inventories -26.1 -13.5 58.2 73.8 50.6 71.8 36.6 40.6 78 -18.0 -2.1 30.4 34.9 18.2 41.7 26.7 27.6 29 Nondurable goods -8.1 -11.3 27.8 38.9 32.4 30.1 9.9 12.9 30 MEMO: Total GNP in 1972 dollars 1,480.0 1,534.7 1,639.3 1,610.9 1,638.8 1,645.2 1,662.4 1,665.4 NATIONAL INCOME 31 2,446.8 2,646.7 2,959.9 2,873.5 2,944.8 2,984.9 3,036.3 3,075.4 32 Compensation of employees 1,864.2 1,984.9 2,173.2 2,113.4 2,159.2 2,191.9 2,228.1 2,272.9 33 Wages and salaries 1,568.7 1,658.8 1,804.1 1,755.9 1,793.3 1,819.1 1,848.2 1,883.1 34 Government and government enterprises 306.6 328.2 349.8 342.9 347.5 352.0 357.2 365.5 35 Other 1,262.2 1,331.1 1,454.2 1,413.0 1,445.8 1,467.1 1,490.9 1,517.6 36 Supplement to wages and salaries 295.5 326.2 369.0 357.4 365.9 372.8 380.0 389.9 37 Employer contributions for social insurance 140.0 153.1 173.5 169.4 172.4 174.7 177.5 183.6 38 Other labor income 155.5 173.1 195.5 188.1 193.5 198.1 202.5 206.3 39 Proprietors' income1 111.1 121.7 154.4 154.9 149.8 153.7 159.1 154.1 40 Business and professional1 89.2 107.9 126.2 122.5 126.3 126.4 129.7 134.3 41 Farm1 21.8 13.8 28.2 32.5 23.4 27.3 29.4 19.8 42 Rental income of persons2 51.5 58.3 62.5 61.0 62.0 63.0 64.1 64.8 43 Corporate profits1 159.1 225.2 285.7 277.4 291.1 282.8 291.6 294.0 44 Profits before tax3 165.5 203.2 235.7 243.3 246.0 224.8 228.7 224.2 45 Inventory valuation adjustment -9.5 -11.2 -5.7 -13.5 -7.3 -.2 -1.6 .5 46 Capital consumption adjustment 3.1 33.2 55.7 47.6 52.3 58.3 64.5 69.3 47 Net interest 260.9 256.6 284.1 266.8 282.8 293.5 293.4 289.5 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

A52 Domestic Nonfinancial Statistics • July 1985 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1984 1985 Account 1982 1983 1984 Q1 Q2 Q3 Q4 PERSONAL INCOME AND SAVING 1 Total personal income 2.584.6 2,744.2 3,012.1 2,920.5 2,984.6 3,047.3 3,096.2 2 Wage and salary disbursements 1.568.7 1,659.2 1.804.0 1,755.7 1,793.1 1,819.5 1,847.6 3 Commodity-producing industries 509.3 519.3 569.3 555.9 567.0 573.3 580.9 4 Manufacturing 382.9 395.2 433.9 424.6 432.2 436.4 442.4 5 Distributive industries 378.6 398.6 432.0 419.2 429.5 436.4 443.1 6 Service industries 374.3 413.1 452.9 437.9 449.3 457.3 466.9 7 Government and government enterprises. 306.6 328.2 349.8 342.8 347.3 352.4 356.7 8 Other labor income 115151.5. 1 173.1 195.5 188.1 193.5 198.1 202.5 9 Proprietors' income1 121.7 154.4 154.9 149.8 153.7 159.1 10 Business and professional1 89.2 107.9 126.2 122.5 126.3 126.4 129.7 11 Farm1 21.8 13.8 28.2 32.5 23.4 27.3 29.4 12 Rental income of persons2 51.5 58.3 62.5 61.0 62.0 63.0 64.1 13 Dividends 66.5 70.3 77.7 75.0 77.2 78.5 80.2 14 Personal interest income 366.6 376.3 433.7 403.9 425.6 449.3 456.1 15 Transfer payments 376.1 405.0 416.7 411.3 415.2 418.6 421.8 16 Old-age survivors, disability, and health insurance benefits... 204.5 221.6 237.3 232.1 235.2 238.2 243.5 17 LESS: Personal contributions for social insurance 111.4 119.6 132.5 129.6 131.8 133.4 135.2 18 EQUALS: Personal income 2,584.6 2,744.2 3.012.1 2.920.5 2,984.6 3.047.3 3,096.2 19 LESS: Personal tax and nontax payments 404.1 404.2 435.3 418.3 430.3 440.9 451.7 20 EQUALS: Disposable personal income 2,180.5 2,340.1 2,576.8 2,502.2 2,554.3 2.606.4 2,644.5 21 LESS: Personal outlays 2,044.5 2,222.0 2,420.7 2.349.6 2,409.5 2,442.3 2,481.5 22 EQUALS: Personal saving 136.0 118.1 156.1 152.5 144.8 164.1 163.0 MEMO Per capita (1972 dollars) 23 Gross national product 6,369.7 6,543.4 6,926.1 6.829.4 6.933.2 6,943.2 6,998.3 24 Personal consumption expenditures 4,145.9 4,302.8 4,488.7 4.426.5 4.502.3 4,498.4 4,527.1 2 2 5 6 Sa D vi i n s g p o r s a a t b e le (p p er e c r e so n n t) a l income 4,55 6 5. . 0 2 4,670 5 . . 0 0 4,9369..01 4,8665..01 4,930 5. . 7 0 4,965 6 . . 0 3 4,99 6 6 . .0 2 GROSS SAVING 27 Gross saving 408.8 437.2 551.8 543.9 551.0 556.4 556.0 28 Gross private saving 524.0 571.7 674.8 651.3 660.2 689.4 698.2 29 Personal saving 136.0 118.1 156.1 152.5 144.8 164.1 163.0 30 Undistributed corporate profits1 29.2 76.5 115.4 107.0 115.3 118.4 120.8 31 Corporate inventory valuation adjustment -9.5 -11.2 -5.7 -13.5 -7.3 -.2 -1.6 Capital consumption allowances 32 Corporate 221.8 231.2 246.2 239.9 244.1 248.1 252.8 33 Noncorporate 137.1 145.9 157.0 151.8 156.0 158.8 161.5 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts -115.3 -134.5 -122.9 -107.4 -109.2 -133.0 -142.2 36 Federal -148.2 -178.6 -175.8 -161.3 -163.7 -180.6 -197.8 37 State and local 32.9 44.1 52.9 53.9 54.5 47.6 55.6 38 Capital grants received by the United States, net .0 .0 .0 .0 .0 .0 39 Gross investment 408.3 437.7 546.1 542.0 543.4 546.1 40 Gross private domestic 414.9 471.6 637.8 623.8 627.0 662.8 637.8 41 Net foreign -6.6 -33.9 -93.4 -77.7 -85.0 -119.4 -91.6 42 Statistical discrepancy. -7.4 2.2 -9.0 -9.9 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 Item credits or debits 1984P Q4 Q1 Q2 Q3 Q4P 1 Balance on current account -101,647 -17,213 -19,669 -24,704 -33,599 -23,679 2 Not seasonally adjusted -15,964 -18,616 -24,380 -36,190 -22,461 3 Merchandise trade balance2 -36,469 -61,055 -107,435 -19,407 -25,813 -25,802 -32,941 -22,879 4 Merchandise exports 211,198 200,257 220,343 51,829 53,920 54,548 55,616 56,259 5 Merchandise imports -247,667 -261,312 -327,778 -71,236 -79,733 -80,350 -88,557 -79,138 6 Military transactions, net 195 515 -1,635 -273 -370 -404 -320 -542 7 Investment income, net3 27,802 23,508 18,115 5,119 7,744 3,455 2,876 4,039 8 Other service transactions, net 7,331 4,121 506 434 917 204 -352 -263 9 Remittances, pensions, and other transfers -2,635 -2,590 -2,946 -688' -717 -726 -693 -811 10 U.S. government grants (excluding military) -5,423 -6,060 -8,253 -2,398 -1,430 -1,431 -2,169 -3,223 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -6,143 -5,013 -5,460 -1,429 -2,037 -1,235 -1,440 -748 12 Change in U.S. official reserve assets (increase, -) -4,9650 -1,1960 -3,1300 -9530 -6570 -5650 -7990 -1,1090 13 Gold 14 Special drawing rights (SDRs) -1,371 -66 -979 545 -226 -288 -271 -194 15 Reserve position in International Monetary Fund -2,552 -4,434 -995 -1,996 -200 -321 -331 -143 16 Foreign currencies -1,041 3,304 -1,156 498 -231 44 -197 -772 17 Change in U.S. private assets abroad (increase, -)3 -107,790 -43,281 -12,574 -12,461 742 -17,200 19,245 -15,362 18 Bank-reported claims -111,070 -25,391 -7,337 -8,239 1,955 -20,612 16,871 -5,551 19 Nonbank-reported claims 6,626 -5,333 5,566 -1,671 1,659 2,120 1,787 n.a. 20 U.S. purchase of foreign securities, net -8,102 -7,676 -4,761 -983 637 -820 -1,322 -3,257 21 U.S. direct investments abroad, net3 4,756 -4,881 -6,043 -1,568 -3,509 2,112 1,909 -6,554 22 Change in foreign official assets in the United States (increase, +) 3,318 5,339 2,998 6,555 -2,784 -345 -830 6,956 23 U.S. Treasury securities 5,728 6,989 4,644 2,603 -288 -310 -577 5,819 24 Other U.S. government obligations -694 -487 12 417 -8 147 85 -212 25 Other U.S. government liabilities4 382 199 333 161 242 448 -153 -205 26 Other U.S. liabilities reported by U.S. banks -1,747 433 676 3,498 -2,131 349 302 2,156 27 Other foreign official assets5 -351 -1,795 -2,667 -124 -599 -979 -487 -602 28 Change in foreign private assets in the United States (increase, +)3 91,863 76,383 89,800 27,249 18,444 40,750 3,662 26,945 29 U.S. bank-reported liabilities 65,922 49,059 27,571 22,325 8,775 20,789 -5,410 3,417 30 U.S. nonbank-reported liabilities -2,383 -1,318 5,529 -228 4,404 4,055 -2,930 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 7,062 8,731 22,487 1,673 1,358 6,477 5,121 9,531 32 Foreign purchases of other U.S. securities, net 6,396 8,612 13,036 1,134 1,516 587 1,609 9,325 33 Foreign direct investments in the United States, net3 14,865 11,299 21,177 2,345 2,391 8,842 5,272 4,672 0 0 0 0 0 0 0 0 34 Allocation of SDRs 35 Discrepancy 32,916 9,331 30,015 -1,748 5,961 3,299 13,761 6,997 36 Owing to seasonal adjustments 2,657 -195 -140 -2,410 2,748 37 Statistical discrepancy in recorded data before seasonal adjustment 32,916 30,015 4,249 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -4,965 -1,196 -3,131 -953 -657 -566 -799 -1,110 39 Foreign official assets in the United States (increase, +) — 2,936 5,140 2,665 6,394 -3,026 -793 -677 7,161 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 7,291 -8,639 -4,198 -1,640 -2,447 -2,170 -494 913 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 593 205 187 84 41 44 45 58 1. Seasonal factors are no longer calculated for lines 6, 10, 12-16, 18-20, 22-34, 4. Primarily associated with military sales contracts and other transactions and 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing; military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • July 1985 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1984 1985 IItteemm 11998811 11998822 11998833 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 233,677 212,193 200,486 18,210 18,411 18,395 19,142 19,401 17,853 18,446 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 261,305 243,952 258,048 28,409 26,783 27,331 25,933 28,297 27,985 28,129 3 Trade balance -27,628 -31,759 -57,562 -10,199 -8,372 -8,936 -6,791 -8,896 -10,131 -9,683 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. SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" The Census basis data differ from merchandise trade data shown in table 3.10, (Department of Commerce, Bureau of the Census). U.S. International Transactions Summary, for reasons of coverage and timing. On 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 1984 1985 TTyyppee 11998811 11998822 11998833 Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Total 30,075 33,958 33,747 34,570 34,727 34,934 34,380 34,272 35,493 35,493 2 Gold stock, including Exchange Stabilization Fund1 11,151 11,148 11,121 11,096 11,096 11,0% 11,095 11,093 11,093 11,091 3 Special drawing rights2'3 4,095 5,250 5,025 5,539 5,693 5,641 5,693 5,781 5,973 5,971 4 Reserve position in International Monetary Fund2 5,055 7,348 11,312 11,618 11,675 11,541 11,322 11,097' 11,386 11,382 5 Foreign currencies4 9,774 10,212 6,289 6,317 6,263 6,656 6,270 6,301 7,041 7,049 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 1981,5 currencies have been used. The U.S. SDR holdings and reserve position in the IMF also are valued on this basis beginning July 1974. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1984 1985 AAsssseettss 11998811 11998822 11998833 Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Deposits 505 328 190 - 270 392 253 244 331 253 348 Assets held in custody 2 U.S. Treasury securities1 104,680 112,544 117,670 115,542 117,433 118,267 117,330 115,179 113,532 115,184 3 Earmarked gold2 14,804 14,716 14,414 14,260 14,265 14,265 14,261 14,260 14,264 14,264 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

Summary Statistics A55 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1984 1985 AAsssseett aaccccoouunntt 11998811 11998822 11998833 Sept. Oct. Nov. Dec. Jan.' Feb. Mar.P All foreign countries 1 Total, all currencies 462,847 469,712 477,090 453,711 448,499 452,914 452,205 445,041 452,873 462,098 ? Claims on United States 63,743 91,805 115,542 113,789 109,292 112,815 113,435 115,501 119,003 117,960 Parent bank 43,267 61,666 82,026 79,664 75,736 77,958 78,151 79,318 84,053 84,891 4 Other banks in United States2 1 in AT* 13,125 12,591 13,554 13,915 13,918 13,971 13,046 5 Nonbanks2 21,000 20,965 21,303 21,369 22,265 20,979 20,023 6 Claims on foreigners 378,954 358,493 342,689 319,375 319,075 319,431 318,710 309,193 314,271 323,726 7 Other branches of parent bank 87,821 91,168 96,004 92,646 90,821 91,313 94,738 87,416 89,303 95,002 8 Banks 150,763 133,752 117,668 101,567 102,258 103,050 100,307 99,806 104,278 105,210 9 Public borrowers 28,197 24,131 24,517 22,568 23,053 22,907 22,872 22,430 22,208 22,448 10 Nonbank foreigners 112,173 109,442 107,785 102,594 102,943 102,161 100,793 99,541 98,482 101,066 11 Other assets 20,150 19,414 18,859 20,547 20,132 20,668 20,060 20,347 19,599 20,412 12 Total payable in U.S. dollars 350,735 361,982 371,508 346,543 340,675 345,511' 349,342' 343,461 351,786 354,579 n Claims on United States 62,142 90,085 113,436 111,291 106,651 110,442 111,468 113,250 116,699 115,595 14 Parent bank 42,721 61,010 80,909 78,476 74,366 76,763 77,271 78,392 83,043 83,809 15 Other banks in United States2 1 in 12,769 12,338 13,356 13,745 13,719 13,692 12,744 16 Nonbanks2 20,046 19,947 20,323 20,452 21,139 19,964 19,042 17 Claims on foreigners 276,937 259,871 247,406 224,603 223,376 224,251 227,303 219,768 224,738 228,942 18 Other branches of parent bank 69,398 73,537 78,431 75,509 73,472 74,600 78,300 72,391 74,367 79,241 19 Banks 122,110 106,447 93,332 76,566 76,915 77,0% 76,851 75,691 79,122 78,707 70 Public borrowers 22,877 18,413 17,890 16,946 17,337 17,374 17,160 16,983 16,743 16,966 21 Nonbank foreigners 62,552 61,474 60,977 55,582 55,652 55,181 54,992 54,703 54,506 54,028 22 Other assets 11,656 12,026 10,666 10,649 10,648 10,818' 10,571' 10,443 10,349 10,042 United Kingdom 23 Total, all currencies 157,229 161,067 158,732 147,696 147,562 149,377 144,385 146,130 149,534 150,705 74 Claims on United States 11,823 27,354 34,433 29,333 28,952 29,502 27,731 28,783 31,910 29,675 75 Parent bank 7,885 23,017 29,111 23,772 23,283 23,773 21,918 22,2% 25,313 23,250 76 Other banks in United States2 1,327 1,214 1,484 1,429 1,540 1,561 1,511 77 Nonbanks2 4,234 4,455 4,245 4,384 4,947 5,036 4,914 7.8 Claims on foreigners 138,888 127,734 119,280 113,299 113,524 114,264 111,772 112,284 112,937 115,889 7,9 Other branches of parent bank 41,367 37,000 36,565 37,499 37,638 37,395 37,897 36,367 35,381 35,857 30 Banks 56,315 50,767 43,352 39,133 38,696 39,262 37,443 39,063 40,%1 40,812 31 Public borrowers 7,490 6,240 5,898 5,330 5,441 5,424 5,334 5,345 5,306 5,186 32 Nonbank foreigners 33,716 33,727 33,465 31,337 31,749 32,183 31,098 31,509 31,289 34,034 33 Other assets 6,518 5,979 5,019 5,064 5,086 5,611 4,882 5,063 4,687 5,141 34 Total payable in U.S. dollars 115,188 123,740 126,012 114,358 113,437 114,895 112,809 112,953 116,232 114,122 35 Claims on United States 11,246 26,761 33,756 28,282 27,917 28,610 26,924 27,807 30,945 28,839 36 Parent bank 7,721 22,756 28,,756 23,323 22,825 23,378 21,551 21,960 24,911 22,910 3 3 8 7 N O o th n e b r a b n a k n s k 2 s in United States2 1 5,U (¥ O ¥ O 1 3 1 , , 7 1 6 9 4 5 3 1 , , 9 1 7 1 9 3 3 1 , , 7 4 9 3 5 7 4 1 , , 0 3 1 6 0 3 4 1 , , 3 4 5 % 1 4 1 , , 5 4 3 9 6 8 4 1 , , 4 4 6 6 3 6 39 Claims on foreigners 1 99,850 92,228 88,917 83,082 82,456 82,971 82,889 82,161 82,268 82,437 40 Other branches of parent bank 35,439 31,648 31,838 32,704 32,461 32,669 33,551 31,899 31,099 31,331 41 Banks 40,703 36,717 32,188 27,986 27,093 27,290 26,805 27,465 28,523 27,982 47 Public borrowers 5,595 4,329 4,194 3,879 4,063 4,094 4,030 4,021 3,964 3,804 43 Nonbank foreigners 18,113 19,534 20,697 18,513 18,839 18,918 18,503 18,776 18,682 19,320 44 Other assets 4,092 4,751 3,339 2,994 3,064 3,314 2,9% 2,985 3,019 2,846 Bahamas and Caymans 45 Total, all currencies 149,108 145,156 152,083 144,207 138,981 141,610 146,811 141,834 144,665 147,041 46 Claims on United States 46,546 59,403 75,309 76,642 71,911 75,655 77,296 76,856 76,457 78,836 47 Parent bank 31,643 34,653 48,720 49,707 45,641 48,202 49,449 48,892 50,044 53,936 48 Other banks in United States2 1 11,072 10,716 11,284 11,795 11,558 11,539 10,715 49 Nonbanks2 15,863 15,554 16,169 16,052 16,406 14,864 14,185 50 Claims on foreigners 98,057 81,450 72,868 63,545 63,031 62,024 65,598 61,204 64,408 64,389 51 Other branches of parent bank 12,951 18,720 20,626 15,639 15,117 13,837 17,682 14,447 16,330 15,780 57 Banks 55,151 42,699 36,842 30,075 30,263 30,529 30,225 29,165 30,832 31,433 53 Public borrowers 10,010 6,413 6,093 6,119 6,057 6,075 6,089 6,151 6,070 6,305 54 Nonbank foreigners 19,945 13,618 12,592 11,712 11,594 11,583 11,602 11,441 11,176 10,871 55 Other assets 4,505 4,303 3,906 4,020 4,039 3,931 3,917 3,774 3,810 3,816 56 Total payable in U.S. dollars 143,743 139,605 145,641 138,307 133,002 136,211 141,562 137,090 139,543 141,543 1. Beginning with June 1984 data, reported claims held by foreign branches 2. Data for assets vis-a-vis other banks in the United States and vis-a-vis have been reduced by an increase in the reporting threshold for "shell" branches nonbanks are combined for dates before June 1984. from $50 million to $150 million equivalent in total assets, the threshold now applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • July 1985 3.14 Continued 1984 1985 LLiiaabbiilliittyy aaccccoouunntt Sept. Oct. Nov. Dec. Jan.' Feb. Mar.P All foreign countries 57 Total, all currencies 462,847 469,712 477,090 453,711 448,499 452,914 452,205 445,041 452,873 462,098 58 Negotiable CDs3 n.a. n.a. n.a. 39,866 38,520 37,915 37,725 38,804 41,798 40,889 59 To United States 137,767 179,015 188,070 146,632 139,567 138,498 146,955 143,680 140,903 145,3% 60 Parent bank 56,344 75,621 81,261 74,655 74,757 70,346 78,111 75,230 72,326 75,403 61 Other banks in United States 19,197 33,405 29,453 20,120 18,937 18,601 18,394 18,112 17,820 18,068 62 Nonbanks 62,226 69,989 77,356 51,857 45,873 49,551 50,450 50,338 50,757 51,925 63 To foreigners 305,630 270,853 269,685 245,746 248,164 253,925 246,894 241,359 249,151 253,888 64 Other branches of parent bank 86,396 90,191 90,615 90,426 89,492 90,681 93,206 87,722 89,872 94,564 65 Banks 124,906 96,860 92,889 77,471 82,235 86,822 78,203 79,291 84,013 82,601 66 Official institutions 25,997 19,614 18,896 21,566 19,501 20,883 20,281 19,484 19,356 20,831 67 Nonbank foreigners 68,331 64,188 68,845 56,283 56,936 55,539 55,204 54,862 55,910 55,892 68 Other liabilities 19,450 19,844 19,335 21,467 22,248 22,576 20,631 21,198 21,021 21,925 69 Total payable in U.S. dollars 364,447 379,270 388,291 363,876 356,601 361,875 365,859 357,853 366,043 369,049 70 Negotiable CDs3 n.a. n.a. n.a. 37,629 36,102 35,608 35,227 36,295 39,544 38,197 71 To United States 134,700 175,528 184,305 142,111 135,2% 134,303 142,943 139,811 137,142 141,031 72 Parent bank 54,492 73,295 79,035 71,883 72,246 67,821 75,626 72,892 70,072 72,%2 73 Other banks in United States 18,883 33,040 28,936 19,457 18,283 18,052 17,920 17,574 17,290 17,509 74 Nonbanks 61,325 69,193 76,334 50,771 44,767 48,430 49,397 49,345 49,780 50,560 75 To foreigners 217,602 192,510 194,139 173,610 174,107 180,841 177,638 171,479 178,745 179,590 76 Other branches of parent bank 69,299 72,921 73,522 73,412 72,204 74,552 77,222 72,648 74,926 79,027 77 Banks 79,594 57,463 57,022 42,772 46,227 50,509 45,131 44,948 48,734 44,812 78 Official institutions 20,288 15,055 13,855 16,850 14,850 16,068 15,773 14,861 14,653 16,049 79 Nonbank foreigners 48,421 47,071 51,260 40,576 40,826 39,712 39,512 39,022 40,432 39,702 80 Other liabilities 12,145 11,232 9,847 10,526 11,0% 11,123 10,051 10,268 10,612 10,231 United Kingdom 81 Total, all currencies 157,229 161,067 158,732 147,696 147,562 149,377 144,385 146,130 149,534 150,705 82 Negotiable CDs3 n.a. n.a. n.a. 36,600 34,948 34,269 34,413 35,455 38,281 37,350 83 To United States 38,022 53,954 55,799 27,280 26,558 25,338 25,250 27,757 23,439 23,992 84 Parent bank 5,444 13,091 14,021 16,130 16,598 15,116 14,651 16,714 13,763 14,509 85 Other banks in United States 7,502 12,205 11,328 3,451 3,388 3,002 3,110 3,556 2,936 2,913 86 Nonbanks 25,076 28,658 30,450 7,699 6,572 7,220 7,489 7,487 6,740 6,570 87 To foreigners 112,255 99,567 95,847 75,901 77,985 81,217 77,424 75,039 80,188 80,712 88 Other branches of parent bank 16,545 18,361 19,038 21,536 21,023 20,846 21,631 20,199 22,146 23,699 89 Banks 51,336 44,020 41,624 28,996 32,436 34,739 30,436 31,216 33,789 31,993 90 Official institutions 16,517 11,504 10,151 10,625 9,650 10,505 10,154 9,084 9,374 10,305 91 Nonbank foreigners 27,857 25,682 25,034 14,744 14,876 15,127 15,203 14,540 14,879 14,715 92 Other liabilities 6,952 7,546 7,086 7,915 8,071 8,553 7,298 7,879 7,626 8,651 93 Total payable in U.S. dollars 120,277 130,261 131,167 119,337 118,103 119,287 117,497 117,198 120,623 117,984 94-Negotiable CDs3 n.a. n.a. n.a. 35,398 33,703 33,168 33,070 34,084 37,033 35,719 95 To United States 37,332 53,029 54,691 25,763 25,178 24,024 24,105 26,587 22,386 22,481 % Parent bank 5,350 12,814 13,839 15,679 16,209 14,748' 14,339 16,349 13,506 14,129 97 Other banks in United States 7,249 12,026 11,044 3,131 3,144 2,786' 2,%5 3,407 2,792 2,733 98 Nonbanks 24,733 28,189 29,808 6,953 5,825 6,490 6,801 6,831 6,088 5,619 99 To foreigners 79,034 73,477 73,279 54,590 55,482 58,163 56,923 52,954 57,654 56,327 100 Other branches of parent bank 12,048 14,300 15,403 18,175 17,600 17,562 18,294 16,940 18,772 20,127 101 Banks 32,298 28,810 29,320 16,015 18,309 20,262 18,356 17,889 20,022 17,191 102 Official institutions 13,612 9,668 8,279 9,375 8,306 9,072 8,871 7,748 7,854 8,734 103 Nonbank foreigners 21,076 20,699 20,277 11,025 11,267 11,267 11,402 10,377 11,006 10,275 104 Other liabilities 3,911 3,755 3,197 3,586 3,740 3,932 3,399 3,563 3,550 3,457 Bahamas and Caymans 105 Total, all currencies 149,108 145,156 152,083 144,207 138,981 141,610 146,811 141,834 144,665 147,041 106 Negotiable CDs3 n.a. n.a. n.a. 788 878 898 615 734 953 779 107 To United States 85,759 104,425 111,299 100,311 95,249 95,975 102,955 98,466 99,199 103,099 108 Parent bank 39,451 47,081 50,980 41,693 42,851 40,517 47,161 43,783 43,356 45,444 109 Other banks in United States 10,474 18,466 16,057 15,459 14,167 14,187 13,938 13,320 13,591 13,959 110 Nonbanks 35,834 38,878 44,262 43,159 38,231 41,271 41,855 41,363 42,252 43,696 111 To foreigners 60,012 38,274 38,445 40,213 39,872 41,764 40,320' 39,785 41,529 40,305 112 Other branches of parent bank 20,641 15,796 14,936 15,283 14,823 16,455 16,782 16,014 17,111 16,744 113 Banks 23,202 10,166 11,876 11,978 13,068 13,993 12,405 12,274 12,976 12,503 114 Official institutions 3,498 1,967 1,919 3,028 2,211 2,376 2,054 2,020 1,992 1,884 115 Nonbank foreigners 12,671 10,345 11,274 9,924 9,770 8,940 9,079 9,477 9,450 9,174 116 Other liabilities 3,337 2,457 2,339 2,895 2,982 2,973 2,921 2,849 2,984 2,858 117 Total payable in U.S. dollars 145,284 141,908 148,278 140,531 135,326 137,874 143,590 138,200 140,972 143,223 3. Before June 1984, liabilities on negotiable CDs were included in liabilities to the United States or liabilities to foreigners, according to the address of the initial purchaser. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A57 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1984 1985 IItteemm 11998822 11998833 Sept/ Oct/ Nov/ Dec/ Jan. Feb. Mar.P 1 Total1 172,718 177,950 173,583 176,258 178,468 180,640 176,828 173,334 169,703 By type 2 Liabilities reported by banks in the United States2 24,989 25,534 24,146 26,934 25,986 26,197 23,310 23,420 22,910 3 U.S. Treasury bills and certificates3 46,658 54,341 54,627 55,780 59,570 59,976 56,662 52,474 54,685 U.S. Treasury bonds and notes 4 Marketable 67,733 68,514 68,530 67,678 67,076 68,995 71,522 72,846 67,560 5 Nonmarketable4 8,750 7,250 5,800 5,800 5,800 5,800 5,800 5,300 5,300 6 U.S. securities other than U.S. Treasury securities5 24,588 22,311 20,480 20,066 20,036 19,672 19,534 19,294 19,248 By area 7 Western Europe1 61,298 67,645 67,706 68,2% 70,510 69,756 68,260 67,354 63,650 8 Canada 2,070 2,438 1,069 1,321 1,466 1,528 1,491 1,136 1,715 9 Latin America and Caribbean 6,057 6,248 7,067 8,141 8,904 8,645 7,450 7,278 7,501 10 Asia 96,034 92,572 90,852 91,916 90,115 93,951 93,044 91,030 90,711 11 Africa 1,350 958 896 981 1,423 1,290 1,120 1,397 1,200 12 Other countries6 5,909 8,089 5,993 5,603 6,050 5,470 5,463 5,139 4,926 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. NOTE. Based on Treasury Department data and on data reported to the 3. Includes nonmarketable certificates of indebtedness (including those pay- Treasury Department by banks (including Federal Reserve Banks) and securities able in foreign currencies through 1974) and Treasury bills issued to official dealers in the United States. institutions of foreign countries. 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 1984 IItteemm 11998811 11998822 11998833 Mar. June' Sept/ Dec. 1 Banks' own liabilities 3,523 4,844 5,219 5,817 6,459 6,227 7,501 2 Banks' own claims 4,980 7,707 7,231 9,034 9,687 9,334 10,801 3 Deposits 3,398 4,251 2,731 4,024 4,284 3,685 3,964 4 Other claims 1,582 3,456 4,501 5,010 5,404 5,649 6,837 5 Claims of banks' domestic customers1 971 676 1,059 361 227 281 569 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

A58 International Statistics • July 1985 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1984 1985 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998811AA 11998822 11998833 Sept. Oct. Nov.' Dec. Jan.' Feb. Mar.P 1 All foreigners 243,889 307,056 369,607 398,894' 388,894' 399,681 406,381 398,987 405,432 413,064 2 Banks' own liabilities 163,817 227,089 279,087 300,028' 290,184' 297,857 306,758 301,398 311,838 316,936 3 Demand deposits 19,631 15,889 17,470 17,209' 16,490 18,351 19,542 17,975 19,369 18,174 4 Time deposits1 29,039 68,797 90,632 111,922' 109,608' 112,218 110,235 114,145 116,956 119,434 3 Other2 17,647 23,184 25,874 22,170' 24,441' 23,684 26,332 23,542 25,511 24,770 6 Own foreign offices3 97,500 119,219 145,111 148,727' 139,645' 143,604 150,650 145,736 150,001 154,558 7 Banks' custody liabilities4 80,072 79,967 90,520 98,866 98,710' 101,824 100,074 97,588 93,595 96,128 8 U.S. Treasury bills and certificates5 55,315 55,628 68,669 7733,,116600 73,295 7766,,553311 7755,,883388 7733,,663355 6699,,118899 7711,,555522 9 Other negotiable and readily transferable instruments6 18,788 20,636 17,467 20,833 20,281 19,703 18,775 18,141 18,029 18,099 10 Other 5,970 3,702 4,385 4,873 5,135' 5,590 5,460 5,812 6,377 6,477 11 Nonmonetary international and regional organizations7 2,721 4,922 5,957 6,279 4,801 5,852 4,083 6,929 5,812 5,900 12 Banks' own liabilities 638 1,909 4,632 3,305 2,053 2,779 1,644 3,571 2,092 2,328 13 Demand deposits 262 106 297 209 144 354 263 417 341 191 14 Time deposits1 58 1,664 3,584 2,526 1,513 2,114 11,,009933 2,682 936 1,483 15 Other2 318 139 750 570 396 311 228888 472 815 654 16 Banks' custody liabilities4 2,083 3,013 1,325 2,975 2,748 3,073 2,440 3,358 3,719 3,572 17 U.S. Treasury bills and certificates 541 1,621 463 11,,883344 11,,445555 11,,444488 916 11,,992211 22,,225588 22,,008822 18 Other negotiable and readily transferable instruments6 1,542 1,392 862 1,140 1,292 1,604 1,524 11,,442299 11,,446611 1,490 19 Other 0 0 0 0 0 21 0 88 11 0 20 Official institutions8 79,126 71,647 79,876 78,77V 82,714' 85,556 86,173 79,972 75,894 77,594 21 Banks' own liabilities 17,109 16,640 19,427 16,382' 19,247 18,790 19,065 16,970 17,249 16,696 22 Demand deposits 2,564 1,899 1,837 1,969 1,725 2,133 1,823 1,780 1,881 1,923 23 Time deposits' 4,230 5,528 7,318 7,866' 8,677' 9,457 9,391 8,371 8,687 8,471 24 Other2 10,315 9,212 10,272 6,547' 8,846' 7,201 7,852 6,818 6,681 6,301 25 Banks' custody liabilities4 62,018 55,008 60,448 62,391 63,467' 66,766 67,108 63,002 58,645 60,898 26 U.S. Treasury bills and certificates5 52,389 46,658 54,341 54,627 55,780 5599,,557700 5599,,997766 5566,,666622 5522,,447744 5544,,668855 27 Other negotiable and readily transferable instruments6 9,581 8,321 6,082 7,746 7,626 7,010 7,038 6,277 6,086 6,109 28 Other 47 28 25 18 61' 186 94 63 85 105 29 Banks9 136,008 185,881 226,887 246,251' 233,555' 239,806 248,360 241,515 250,399 257,439 30 Banks' own liabilities 124,312 169,449 205,347 221,359' 209,431' 214,240 225,512 218,980 228,040 235,006 31 Unaffiliated foreign banks 26,812 50,230 60,236 72,632' 69,786' 72,635 74,862 73,244 78,038 80,448 32 Demand deposits 11,614 8,675 8,759 8,464' 8,389 9,430 10,526 9,030 9,656 9,152 33 Time deposits1 8,720 28,386 37,439 49,780' 46,770 47,717 47,059 48,612 50,986 54,280 34 Other2 6,477 13,169 14,038 14,388' 14,627 15,488 17,278 15,602 17,396 17,016 33 Own foreign offices3 97,500 119,219 145,111 148,727' 139,645' 143,604 150,650 145,736 150,001 154,558 36 Banks' custody liabilities4 11,696 16,432 21,540 24,892 24,124 23,566 22,848 22,535 22,360 22,433 37 U.S. Treasury bills and certificates 1,685 5,809 10,178 12,234 1111,,882288 1111,,440099 1100,,992277 1100,,993333 1100,,449933 1100,,660022 38 Other negotiable and readily transferable instruments6 4,400 7,857 7,485 8,421 7,802 7,360 7,156 6,487 6,215 6,206 39 Other 5,611 2,766 3,877 4,236 4,494 4,797 4,766 5,114 5,651 5,625 40 Other foreigners 26,035 44,606 56,887 67,591' 67,824 68,467 68,215 70,571 73,328 72,131 41 Banks' own liabilities 21,759 39,092 49,680 58,983' 59,453 60,048 60,537 61,877 64,457 62,907 42 Demand deposits 5,191 5,209 6,577 6,567 6,232 6,433 6,930 6,747 7,491 6,909 43 Time deposits 16,030 33,219 42,290 51,750' 52,648 52,930 52,693 54,481 56,347 55,199 44 Other2 537 664 813 665 573 685 914 650 619 799 45 Banks' custody liabilities4 4,276 5,514 7,207 8,609 8,372 8,419 7,678 8,693 8,871 9,224 46 U.S. Treasury bills and certificates 699 1,540 3,686 4,465 4,232 44,,110033 44,,002200 44,,111188 33,,996644 44,,118822 47 Other negotiable and readily transferable instruments6 3,265 3,065 3,038 3,525 3,560 3,730 3,058 3,948 4,267 4,294 48 Other 312 908 483 619 580 586 601 628 640 748 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,747 14,307 10,346 11,048 10,714 10,437 10,476 9,287 9,168 9,412 A Liabilities and claims of banks in the United States were increased, 4. Financial claims on residents of the United States, other than long-term beginning in December 1981, by the shift from foreign branches to international securities, held by or through reporting banks. banking facilities in the United States of liabilities to, and claims on, foreign 5. Includes nonmarketable certificates of indebtedness and Treasury bills residents. issued to official institutions of foreign countries. 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 foreign bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17 Continued 1984 1985 AArreeaa aanndd ccoouunnttrryy 11998811AA 11998822 11998833 Sept. Oct. Nov. Dec. Jan. Feb. Mar.? 1 Total 243,889 307,056 369,607 398,894' 388,894' 399,681' 406,831 398,987' 405,432 413,064 2 Foreign countries 241,168 302,134 363,649 392,615' 384,094' 393,829' 402,748 392,057' 399,621 407,164 3 Europe 91,275 117,756 138,072 147,282' 146,308' 150,659' 152,395 149,264' 152,319 151,967 4 Austria 596 519 585 693 744 627 615 734 625 670 5 Belgium-Luxembourg 4,117 2,517 2,709 4,278 4,093 3,613 4,114 4,000' 4,638 4,890 6 Denmark 333 509 466 341 337 434 438 452 545 452 7 Finland 296 748 531 638 407 487 418 425 789 804 8 France 8,486 8,171 9,441 11,554' 11,641 11,935 12,701 11,908 12,430 12,768 9 Germany 7,645 5,351 3,599 3,036 3,331 3,425' 3,353 3,586' 3,258 2,920 10 Greece 463 537 520 567 609 602 699 615 583 730 11 Italy 7,267 5,626 8,462 8,266 8,976 11,056 10,757 9,477' 9,148 8,297 17 Netherlands 2,823 3,362 4,290 5,239 4,421 5,077 4,799 4,663 4,622 4,929 13 Norway 1,457 1,567 1,673 1,912 1,895 1,693 1,548 1,712' 1,647 1,889 14 Portugal 354 388 373 434 540 552 597 570 614 715 15 Spain 916 1,405 1,603 1,984 1,905 1,873 2,082 2,016 1,887 2,072 16 Sweden 1,545 1,390 1,799 2,008 1,945 1,839 1,676 2,133 1,551 1,667 17 Switzerland 18,716 29,066 32,246 33,015' 32,461 31,494 31,054 31,397 31,542 30,441 18 Turkey 518 296 467 320 557 457 584 495 501 518 19 United Kingdom 28,286 48,172 60,683 65,456' 65,280' 67,964' 68,553 68,039' 70,219 70,720 20 Yugoslavia 375 499 562 514 579 565 602 545 602 671 21 Other Western Europe1 6,541 7,006 7,403 6,247 6,062 6,429' 7,184 5,855 6,628 6,203 22 U.S.S.R 49 50 65 41 50 54 79 66 60 94 23 Other Eastern Europe2 493 576 596 738 476 481 542 575' 431 518 24 Canada 10,250 12,232 16,026 17,536 16,767 16,549 16,048 16,233 18,163 17,297 7,5 Latin America and Caribbean 85,223 114,163 140,088 152,267' 145,799' 149,794' 153,985 151,229' 154,716 157,523 26 Argentina 2,445 3,578 4,038 4,375' 4,484 4,558' 4,424 4,523 4,361 4,528 77 Bahamas 34,856 44,744 55,818 58,441' 52,838' 55,470' 56,955 55,398' 56,783 59,471 78 Bermuda 765 1,572 2,266 3,158' 3,043 3,222 2,370 2,706' 3,453 2,907 79 Brazil 1,568 2,014 3,168 4,462' 4,729' 4,997' 5,332 4,92C 6,143 4,595 30 British West Indies 17,794 26,381 34,545 35,996' 34,485' 34,385' 36,949 35,269' 35,157 36,536 31 Chile 664 1,626 1,842 1,874 2,052 2,063' 2,001 1,948' 1,916 1,891 32 Colombia 2,993 2,594 1,689 1,957 2,022 2,057 2,514 2,356 2,453 2,529 33 Cuba 9 9 8 8 8 8 10 26 8 7 34 Ecuador 434 455 1,047 931 924 1,029 1,092 912 981 1,024 35 Guatemala 479 670 788 810 855 884 896 920 915 950 36 Jamaica 87 126 109 180 122 110 183 157 182 163 37 Mexico 7,235 8,377 10,392 12,869 12,488' 13,422 12,695 13,298' 13,015 13,246 38 Netherlands Antilles 3,182 3,597 3,879 4,179 4,187 4,180 4,153 4,346 4,662 4,579 39 Panama 4,857 4,805 5,924 6,811 6,585' 6,847 6,928 6,873' 7,156 7,482 40 Peru 694 1,147 1,166 1,343 1,297' l,2W 1,247 1,151' 1,063 1,132 41 Uruguay 367 759 1,244 1,418 1,361 1,309 1,394 1,485 1,413 1,443 47 Venezuela 4,245 8,417 8,632 9,615 10,367 10,013 10,545 10,667 10,742 10,641 43 Other Latin America and Caribbean 2,548 3,291 3,535 3,839 3,952 4,03c 4,297 4,275 4,311 4,401 44 49,822 48,716 58,570 66,457' 66,033' 66,952' 71,139 66,536' 65,260 71,740 China 45 Mainland 158 203 249 803' 804' 844 1,153 1,075' 1,068 980 46 Taiwan 2,082 2,761 4,051 5,042' 5,098' 5,142' 4,975 5,098 5,231 5,312 47 Hong Kong 3,950 4,465 6,657 7,037' 6,236 6,535 7,240 6,558' 6,648 6,927 48 India 385 433 464 644 616 606 507 554 725 740 49 Indonesia 640 857 997 939 1,344' 893' 1,033 1,136 914 1,052 50 Israel 592 606 1,722 750 2,017 1,023 1,268 1,003 995 941 51 Japan 20,750 16,078 18,079 21,310 19,644 20,750 20,929 21,662 22,724 24,177 57 Korea 2,013 1,692 1,648 1,572 1,552 1,609 1,691 1,560' 1,623 1,525 53 Philippines 874 770 1,234 1,020 1,097 1,252 1,396 1,327' 1,124 1,102 54 Thailand 534 629 747 741 980 1,458 1,257 1,161 1,062 1,383 55 Middle-East oil-exporting countries3 12,992 13,433 12,976 13,754 13,890 13,399' 16,804 15,965' 15,202 16,398 56 Other Asia 4,853 6,789 9,748 12,844 12,755' 13,442' 12,886 9,437' 7,945 11,203 57 Africa 3,180 3,124 2,827 3,018 3,343' 3,599' 3,506 3,17C 3,573 3,476 58 Egypt 360 432 671 629 763 739 757 541' 649 715 59 Morocco 32 81 84 136 115 117 118 115 121 167 60 South Africa 420 292 449 318 459 460 328 376 371 244 61 Zaire 26 23 87 148 141 163 153 76 79 100 62 Oil-exporting countries4 1,395 1,280 620 821 1,012' 1,141' 1,189 1,186' 1,450 1,346 63 Other Africa 946 1,016 917 966 852 978 961 876' 904 903 64 Other countries 1,419 6,143 8,067 6,055 5,844 6,277 5,674 5,624' 5,589 5,161 65 Australia 1,223 5,904 7,857 5,687 5,464 5,598 5,290 5,248' 5,024 4,747 66 All other 196 239 210 368 379 679 384 377' 565 414 67 Nonmonetary international and regional organizations 2,721 4,922 5,957 6,279 4,801 5,852' 4,083 6,929 5,812 5,900 68 International 1,661 4,049 5,273 5,411 4,086 5,055 3,376 6,165 4,935 5,127 69 Latin American regional 710 517 419 488 518 593 587 600 580 632 70 Other regional5 350 357 265 381 1% 204' 120 165 296 141 • 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. 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • July 1985 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 1984 1985 AArreeaa aanndd ccoouunnttrryy 11998811AA 11998822 11998833 Sept. Oct. Nov. Dec. Jan. Feb. Mar.P 1 Total 251,589 355,705 391,312 393,92* 383,489' 384,634' 398,722 386,911' 392,589 394,581 2 Foreign countries 251,533 355,636 391,148 393,85Y 382,807' 384,072' 398,048 385,986' 392,289 394,361 3 Europe 49,262 85,584 91,927 98,168'' 95,415' 97,930' 97,%2 %,044' 97,994 101,0% 4 Austria 121 229 401 572 521 532 433 339 367 469 5 Belgium-Luxembourg 2,849 5,138 5,639 6,286 5,363 4,988 4,794 4,683 5,097 5,225 6 Denmark 187 554 1,275 1,057 544 520 648 589 589 633 7 Finland 546 990 1,044 882 887 1,098 898 817 907 829 8 France 4,127 7,251 8,766 9,084r 8,812' 9,299 9,085 8,617 9,601 9,820 9 Germany 940 1,876 1,284 1,220 1,097 1,261 1,305 1,001' 944 1,064 10 Greece 333 452 476 1,086 929 819 817 896 840 847 11 Italy 5,240 7,560 9,018 7,803 7,820 8,854 9,079 8,040 8,481 8,423 12 Netherlands 682 1,425 1,267 1,470 1,190 1,229 1,351 1,480 11,,449900 1,342 13 Norway 384 572 690 649 676 602 675 651 880088 625 14 Portugal 529 950 1,114 1,387 1,346 1,262 1,243 1,212' 1,286 1,156 15 Spain 2,095 3,744 3,573 3,355 3,189 3,017 2,884 2,858' 3,134 2,970 16 Sweden 1,205 3,038 3,358 2,5% 2,362 2,313 2,220 2,497 2,586 2,335 17 Switzerland 2,213 1,639 1,863 1,741 2,067 2,275 2,201 2,308 2,106 1,917 18 Turkey 424 560 812 1,132 1,121' 1,097 1,130 1,232 1,155 1,220 19 United Kingdom 23,849 45,781 47,364 53,681' 53,348' 54,637' 55,184 54,843' 54,618 58,006 20 Yugoslavia 1,225 1,430 1,718 1,888 1,868 1,866 1,886 1,862 1,783 1,793 21 Other Western Europe1 211 368 477 660 660 625 5% 671' 683 646 22 U.S.S.R 377 263 192 176 159 169 142 118 208 400 23 Other Eastern Europe2 1,725 1,762 1,598 1,442 1,454 1,467 1,391 1,329' 1,310 1,375 24 Canada 9,193 13,678 16,341 16,549' 16,634 15,778 16,057 16,343 19,080 16,854 25 Latin America and Caribbean 138,347 187,969 205,491 203,026' 198,372 199,058 207,577 199,378' 200,139 203,403 26 Argentina 7,527 10,974 11,749 11,108 11,014 10,983 11,043 11,453 11,200 11,347 27 Bahamas 43,542 56,649 59,633 55,216 52,006 54,084 58,027 54,369' 54,931 57,355 28 Bermuda 346 603 566 508 551 635 592 596' 428 456 29 Brazil 16,926 23,271 24,667 26,140 26,146 26,275 26,307 25,886 26,146 26,076 30 British West Indies 21,981 29,101 35,527 36,007' 34,871' 33,727' 38,105 35,358' 36,806 37,119 31 Chile 3,690 5,513 6,072 6,836 6,795 6,703 6,839 6,746 6,713 6,790 32 Colombia 2,018 3,211 3,745 3,438 3,343 3,406 3,499 3,369 33,,440066 3,315 33 Cuba 3 3 0 0 0 0 0 0 11 0 34 Ecuador 1,531 2,062 2,307 2,365 2,452 2,431 2,420 2,477 2,489 2,455 35 Guatemala3 124 124 129 120 141 148 158 154 157 154 36 Jamaica3 62 181 215 225 234 222 252 242' 253 233 37 Mexico 22,439 29,552 34,802 35,602 35,364 35,288 34,697 34,021' 33,654 33,366 38 Netherlands Antilles 1,076 839 1,154 1,2% 1,337 1,337 1,350 1,273 1,393 1,284 39 Panama 6,794 10,210 7,848 7,639 7,540 7,360 7,707 6,864 6,200 7,082 40 Peru 1,218 2,357 2,536 2,397 2,416 2,358 2,384 2,414 2,337 2,321 41 Uruguay 157 686 977 934 %2 990 1,088 1,053 1,021 1,016 42 Venezuela 7,069 10,643 11,287 10,982 11,029 10,994 11,017 10,%8 10,929 10,903 43 Other Latin America and Caribbean 1,844 1,991 2,277 2,211' 2,170' 2,118' 2,091 2,135 2,074 2,131 44 Asia 49,851 60,952 67,837 66,006 62,356 6611,,339988 6666,,338800 6644,,338877'' 6655,,335544 6633,,337766 China 45 Mainland 107 214 292 563 409 543 710 507 741 660 46 Taiwan 2,461 2,288 1,908 1,651 1,588 1,679 1,849 1,745 1,827 1,940 47 Hong Kong 4,132 6,787 8,489 7,139 7,155 6,945 7,368 6,801 7,351 6,639 48 India 123 222 330 354 302 381 425 299 354 284 49 Indonesia 352 348 805 886 821 797 734 710 780 790 50 Israel 1,567 2,029 1,832 1,802 1,890 1,938 2,088 1,993 2,041 1,622 51 Japan 26,797 28,379 30,354 30,601 26,862 26,421 29,059 28,495 29,110 28,092 52 Korea 7,340 9,387 9,943 9,586 9,253 8,8% 9,285 8,799' 8,7% 9,2% 53 Philippines 1,819 2,625 2,107 2,578 2,510 2,487 2,550 2,499 2,560 2,435 54 Thailand 565 643 1,219 1,113 1,072 1,112 1,125 1,123 1,076 1,004 55 Middle East oil-exporting countries4 1,581 3,087 4,954 4,506 4,650 4,687 5,054 5,004 4,856 4,722 56 Other Asia 3,009 4,943 5,603 5,227 5,844 5,512 6,133 6,411' 5,860 5,893 57 Africa 3,503 5,346 6,654 6,830 6,862 6,719 6,615 6,536 6,375 6,198 58 Egypt 238 322 747 650 674 693 728 668 584 674 59 Morocco 284 353 440 545 582 536 583 552 582 582 60 South Africa 1,011 2,012 2,634 3,152 3,140 2,960 2,795 2,791 2,666 2,400 61 Zaire 112 57 33 18 18 19 18 41 29 24 62 Oil-exporting countries5 657 801 1,073 944 938 911 842 812 791 874 63 Other 1,201 1,802 1,727 1,522 1,510 1,600 1,649 1,672 1,724 1,645 64 Other countries 1,376 2,107 2,898 3,274 3,169 3,189 3,456 3,297 3,348 3,435 65 Australia 1,203 1,713 2,256 2,673 2,508 2,487 2,778 2,593 2,635 2,757 66 All other 172 394 642 601 661 702 678 704 713 678 67 Nonmonetary international and regional organizations6 56 68 164 71 681 562 674 925 300 220 • Liabilities and claims of banks in the United States were increased, 3. Included in "Other Latin America and Caribbean" through March 1978. beginning in December 1981, by the shift from foreign branches to international 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and banking facilities in the United States of liabilities to, and claims on, foreign United Arab Emirates (Trucial States). residents. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 1. Includes the Bank for International Settlements. Beginning April 1978, also 6. Excludes the Bank for International Settlements, which is included in includes Eastern European countries not listed in line 23. "Other Western Europe." 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German NOTE. Data for period before April 1978 include claims of banks' domestic Democratic Republic, Hungary, Poland, and Romania. customers on foreigners. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 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 1984 1985 TTyyppee ooff ccllaaiimm 11998811AA 11998822 11998833 Sept/ Oct/ Nov/ Dec. Jan. Feb. Mar.? 1 Total 222222288888887777777,,,,,,,555555555555557777777 333333399999996666666,,,,,,,000000011111115555555 444444422222226666666,,,,,,,222222211111115555555 444444422222228888888,,,,,,,444444466666661111111 444444433333331111111,,,,,,,666666633333339999999 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 222222255555551111111,,,,,,,555555588888889999999 333333355555555555555,,,,,,,777777700000005555555 333333399999991111111,,,,,,,333333311111112222222 333333399999993333333,,,,,,,999999922222224444444 383,489 384,634 333333399999998888888,,,,,,,777777722222222222222 386,911 392,589 394,581 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 33333331111111,,,,,,,222222266666660000000 44444445555555,,,,,,,444444422222222222222 55555557777777,,,,,,,555555566666669999999 55555559999999,,,,,,,666666611111117777777 61,367 61,443 66666661111111,,,,,,,333333377777771111111 61,364 61,712 61,374 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 99999996666666,,,,,,,666666655555553333333 111111122222227777777,,,,,,,222222299999993333333 111111144444446666666,,,,,,,333333399999993333333 111111155555552222222,,,,,,,000000055555555555555 143,631 144,809 111111155555556666666,,,,,,,444444499999997777777 153,586 154,004 156,476 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 77777774444444,,,,,,,777777700000004444444 111111122222221111111,,,,,,,333333377777777777777 111111122222223333333,,,,,,,888888833333337777777 111111122222222222222,,,,,,,444444477777777777777 120,879 120,890 111111122222223333333,,,,,,,777777777777775555555 116,903 121,486 121,371 66 DDeeppoossiittss 22222223333333,,,,,,,333333388888881111111 44444444444444,,,,,,,222222222222223333333 44444447777777,,,,,,,111111122222226666666 44444447777777,,,,,,,333333366666667777777 46,787 45,788 44444448888888,,,,,,,111111111111112222222 45,070 47,688 49,841 77 OOtthheerr 55555551111111,,,,,,,333333322222222222222 77777777777777,,,,,,,111111155555553333333 77777776666666,,,,,,,777777711111111111111 77777775555555,,,,,,,111111111111110000000 74,092 75,102 77777775555555,,,,,,,666666666666663333333 71,832 73,798 71,529 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444448888888,,,,,,,999999977777772222222 66666661111111,,,,,,,666666611111114444444 66666663333333,,,,,,,555555511111114444444 55555559999999,,,,,,,777777777777775555555 57,612 57,492 55555557777777,,,,,,,000000088888880000000 55,058 55,387 55,360 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 33333335555555,,,,,,,999999966666668888888 44444440000000,,,,,,,333333311111110000000 33333334444444,,,,,,,999999900000003333333 33333334444444,,,,,,,555555533333337777777 33333332222222,,,,,,,999999911111116666666 1111111,,,,,,,333333377777778888888 2222222,,,,,,,444444499999991111111 2222222,,,,,,,999999966666669999999 4444444,,,,,,,555555577777775555555 3333333,,,,,,,333333388888880000000 11 Negotiable and readily transferable 22222226666666,,,,,,,333333355555552222222 33333330000000,,,,,,,777777766666663333333 22222226666666,,,,,,,000000066666664444444 22222223333333,,,,,,,999999900000007777777 22222223333333,,,,,,,888888800000005555555 12 Outstanding collections and other 8888888,,,,,,,222222233333338888888 7777777,,,,,,,000000055555556666666 5555555,,,,,,,888888877777770000000 6666666,,,,,,,000000055555555555555 5555555,,,,,,,777777733333332222222 13 MEMO: Customer liability on 22222229999999,,,,,,,999999955555552222222 33333338888888,,,,,,,111111155555553333333 33333337777777,,,,,,,777777711111115555555 33333338888888,,,,,,,555555533333336666666 33333336666666,,,,,,,555555577777775555555 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 40,369 42,499 45,856 44,201 43,007 44,152 40,129' 41,921' 39,955 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 1984 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998811AA 11998822 11998833 Mar.' June' Sept. Dec. 1 Total 154,590 228,150 243,715 238,829 249,904 240,595' 243,049 By borrower 2 Maturity of 1 year or less1 116,394 173,917 176,158 163,582 172,474 162,863' 165,200 3 Foreign public borrowers 15,142 21,256 24,039 20,436 21,066 21,059 22,076 4 All other foreigners 101,252 152,661 152,120 143,146 151,407 141,804' 143,124 5 Maturity of over 1 year1 38,197 54,233 67,557 75,247 77,430 77,731' 77,849 6 Foreign public borrowers 15,589 23,137 32,521 36,320 37,747 38,410 39,620 7 All other foreigners 22,608 31,095 35,036 38,927 39,683 39,321' 38,229 By area Maturity of 1 year or less1 8 Europe 28,130 50,500 56,117 54,393 59,924 56,773' 58,170 9 Canada 4,662 7,642 6,211 6,509 6,959 5,841' 5,978 10 Latin America and Caribbean 48,717 73,291 73,660 65,673 65,136 61,479 60,692 11 31,485 37,578 34,403 31,206 34,012 32,252 33,450 12 Africa 2,457 3,680 4,199 4,472 4,790 4,798 4,442 13 All other2 943 1,226 1,569 1,330 1,652 1,720 2,468 Maturity of over 1 year1 14 Europe 8,100 11,636 13,576 13,324 12,778 l l^ 9,590 15 Canada 1,808 1,931 1,857 2,038 2,203 1,801 1,890 16 Latin America and Caribbean 25,209 35,247 43,888 51,238 54,249 56,568' 57,834 17 Asia 1,907 3,185 4,850 5,150 5,098 5,106 5,386 18 Africa 900 1,494 2,286 2,291 1,865 1,857 2,033 19 All other2 272 740 1,101 1,206 1,237 1,150 1,116 • Liabilities and claims of banks in the United States were increased, 1. Remaining time to maturity, beginning in December 1981, by the shift from foreign branches to international 2. Includes nonmonetary international and regional organizations, banking facilities in the United States of liabilities to, and claims on, foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • July 1985 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks' Billions of dollars, end of period 1982 1983 1984 AArreeaa oorr ccoouunnttrryy 11998800 11998811 Dec. Mar. June Sept. Dec. Mar. June7 Sept. Dec.P 1 Total 352.0 415.2 438.7 443.7 439.9 431.0 437.3 434.2 429.2 409.7 407.6 2 G-10 countries and Switzerland 162.1 175.5 179.7 182.5 177.1 168.8 168.0 166.1 157.8 148.1 147.5 3 Belgium-Luxembourg 13.0 13.3 13.1 13.8 13.3 12.6 12.4 11.0 10.8 9.8 8.8 4 France 14.1 15.3 17.1 17.1 17.1 16.2 16.3 15.9 14.3 14.3 14.0 5 Germany 12.1 12.9 12.7 13.4 12.6 11.6 11.3 11.7 11.0 10.0 9.0 6 Italy 8.2 9.6 10.3 10.2 10.5 9.9 11.4 11.2 11.5 9.7 10.1 7 Netherlands 4.4 4.0 3.6 4.3 4.0 3.6 3.5 3.4 3.0 3.4 3.9 8 Sweden 2.9 3.7 5.0 4.3 4.7 4.9 5.1 5.2 4.3 3.5 3.2 9 Switzerland 5.0 5.5 5.0 4.5 4.8 4.2 4.3 4.3 4.2 3.9 4.0 10 United Kingdom 67.4 70.1 72.1 73.4 70.8 67.8 65.4 65.1 60.2 57.4 59.7 11 Canada 8.4 10.9 10.4 12.5 10.8 8.9 8.3 8.6 8.9 8.1 7.8 12 Japan 26.5 30.2 30.2 29.0 28.5 29.0 29.9 29.8 29.5 27.9 27.1 13 Other developed countries 21.6 28.4 33.7 34.0 34.5 34.3 36.1 35.7 37.1 36.3 33.8 14 Austria 1.9 1.9 1.9 2.1 2.1 1.9 1.9 2.0 2.0 1.8 1.7 15 Denmark 2.3 2.3 2.4 3.3 3.4 3.3 3.4 3.4 3.1 2.9 2.2 16 Finland 1.4 1.7 2.2 2.1 2.1 1.8 2.4 2.1 2.3 1.9 1.9 17 Greece 2.8 2.8 3.0 2.9 2.9 2.9 2.8 3.0 3.3 3.2 2.9 18 Norway 2.6 3.1 3.3 3.3 3.4 3.2 3.3 3.2 3.2 3.2 3.0 19 Portugal .6 1.1 1.5 1.4 1.4 1.4 1.5 1.4 1.7 1.6 1.4 20 4.4 6.6 7.5 7.0 7.2 7.1 7.1 7.1 7.3 6.9 6.5 21 Turkey 1.5 1.4 1.4 1.5 1.4 1.5 1.7 1.9 2.0 2.0 1.9 22 Other Western Europe 1.7 2.1 2.3 2.3 2.0 2.1 1.8 1.8 1.9 1.7 1.7 23 South Africa 1.1 2.8 3.7 3.6 3.9 4.7 4.7 4.8 4.7 5.0 4.5 24 Australia 1.3 2.5 4.4 4.6 4.5 4.4 5.5 5.2 5.7 6.2 6.1 25 OPEC countries2 22.7 24.8 27.4 28.5 28.3 27.2 28.9 28.6 26.7 25.0 25.6 26 Ecuador 2.1 2.2 2.2 2.2 2.2 2.1 2.2 2.1 2.1 2.1 2.2 27 Venezuela 9.1 9.9 10.5 10.4 10.4 9.8 9.9 9.7 9.5 9.2 9.3 28 Indonesia 1.8 2.6 3.2 3.5 3.2 3.4 3.8 4.0 4.0 3.8 3.7 29 Middle East countries 6.9 7.5 8.7 9.3 9.5 9.1 10.0 9.8 8.4 7.4 8.2 30 African countries 2.8 2.5 2.8 3.0 3.0 2.8 3.0 3.0 2.7 2.5 2.3 31 Non-OPEC developing countries 77.4 96.3 107.1 108.1 108.8 109.8 111.6 112.1 112.7 111.9 112.3 Latin America 32 Argentina 7.9 9.4 8.9 9.0 9.4 9.5 9.5 9.5 9.2 9.1 8.7 33 Brazil 16.2 19.1 22.9 23.2 22.7 23.1 23.1 25.1 25.4 26.3 26.3 34 Chile 3.7 5.8 6.3 6.0 5.8 6.3 6.4 6.5 6.7 7.1 7.0 35 Colombia 2.6 2.6 3.1 2.9 3.2 3.2 3.2 3.1 3.0 2.9 2.9 36 Mexico 15.9 21.6 24.5 25.1 25.3 25.9 26.1 25.6 26.0 26.1 25.8 37 1.8 2.0 2.6 2.4 2.6 2.4 2.4 2.3 2.3 2.2 2.2 38 Other Latin America 3.9 4.1 4.0 4.2 4.3 4.2 4.2 4.4 4.0 3.9 3.9 Asia China 39 Mainland .2 .2 .2 .2 .2 .2 .3 .3 .6 .5 .7 40 Taiwan 4.2 5.1 5.3 5.1 5.1 5.2 5.3 4.9 5.3 5.2 5.1 41 .3 .3 .6 .7 .7 .8 1.0 1.0 1.0 1.1 1.0 42 1.5 2.1 2.3 2.0 2.3 1.7 1.9 1.6 1.9 1.7 1.8 43 Korea (South) 7.1 9.4 10.9 10.9 10.9 10.9 11.3 11.1 11.2 10.3 10.7 44 Malaysia 1.1 1.7 2.1 2.5 2.6 2.8 2.9 2.8 2.7 3.0 2.8 45 Philippines 5.1 6.0 6.3 6.6 6.4 6.2 6.2 6.7 6.3 5.9 6.0 46 Thailand 1.6 1.5 1.6 1.6 1.8 1.8 2.2 2.1 11..99 1.8 1.8 47 Other Asia .6 1.0 1.1 1.4 1.2 1.0 1.0 .9 11..11 1.0 1.1 Africa 48 Egypt .8 1.1 1.2 1.1 1.3 1.4 1.5 1.4 1.4 11..22 11..22 49 Morocco .7 .7 .7 .8 .8 .8 .8 .8 .8 ..88 ..88 50 .2 .2 .1 .1 .1 .1 .1 .1 .1 .1 .1 51 Other Africa3 2.1 2.3 2.4 2.3 2.2 2.4 2.3 2.2 1.9 1.9 2.1 52 Eastern Europe 7.4 7.8 6.2 5.7 5.8 5.3 5.3 4.9 4.9 4.5 44..55 53 U.S.S.R .4 .6 .3 .3 .4 .2 .2 .2 .2 .2 ..11 54 Yugoslavia 2.3 2.5 2.2 2.2 2.3 2.3 2.4 2.3 2.3 2.3 2.3 55 Other 4.6 4.7 3.7 3.2 3.0 2.8 2.8 2.5 2.4 2.1 2.1 56 Offshore banking centers 47.0 63.7 66.8 68.0 69.3 68.7 70.5 70.5 73.0 66.5 66.8 57 Bahamas 13.7 19.0 19.0 18.6 20.7 21.6 21.8 24.6 27.3 23.7 21.6 58 Bermuda .6 .7 .9 1.0 .8 .8 .9 .7 .7 1.0 .9 59 Cayman Islands and other British West Indies 10.6 12.4 12.9 12.6 12.7 10.5 12.2 11.2 11.3 10.7 11.7 60 Netherlands Antilles 2.1 3.2 3.3 3.1 2.6 4.1 4.2 3.3 3.3 3.1 3.4 61 Panama4 5.4 7.7 7.6 7.1 6.6 5.7 6.0 6.3 66..66 5.7 66..88 62 Lebanon .2 .2 .1 .1 .1 .1 .1 .1 ..11 .1 ..11 63 Hong Kong 8.1 11.8 13.9 15.1 14.5 15.2 15.0 14.4 13.5 12.7 12.5 64 Singapore 5.9 8.7 9.2 10.4 11.2 10.5 10.3 10.0 10.2 9.5 9.8 65 Others5 .3 .1 .0 .0 .0 .1 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 14.0 18.8 17.9 16.9 16.2 16.9 17.0 16.3 17.3 17.3 17.2 1. The banking offices covered by these data are the U.S. offices and foreign Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. as Bahrain and Oman (not formally members of OPEC). Offices not covered include (1) U.S. agencies and branches of foreign banks, and 3. Excludes Liberia. (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are 4. Includes Canal Zone beginning December 1979. adjusted to exclude the claims on foreign branches held by a U.S. office or another 5. Foreign branch claims only. foreign branch of the same banking institution. The data in this table combine 6. Includes New Zealand, Liberia, and international and regional organizaforeign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims tions. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 7. Beginning with June 1984 data, reported claims held by foreign branches foreign banks and those constituting claims on own foreign branches). have been reduced by an increase in the reporting threshold for "shell" branches 2. Besides the Organization of Petroleum Exporting Countries shown individ- from $50 million to $150 million equivalent in total assets, the threshold now ually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq, applicable to ail reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1983 1984 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998800 11998811 11998822 Dec. Mar. June Sept. Dec.P 1 Total 29,434 28,618 27,512 25,197 29,481 34,013 30,738'' 28,788 2 Payable in dollars 25,689 24,909 24,280 22,176 26,243 30,815 27,934' 25,915 3 Payable in foreign currencies 3,745 3,709 3,232 3,020 3,237 3,198 2,804' 2,873 By type 4 Financial liabilities 11,330 12,157 11,066 10,423 14,177 18,339 15,879 13,932 5 Payable in dollars 8,528 9,499 8,858 8,644 12,159 16,297 14,082 12,064 6 Payable in foreign currencies 2,802 2,658 2,208 1,779 2,018 2,043 1,797 1,868 7 Commercial liabilities 18,104 16,461 16,446 14,774 15,304 15,674 14,859' 14,857 8 Trade payables 12,201 10,818 9,438 7,765 7,893 7,897 6,900' 6,990 9 Advance receipts and other liabilities 5,903 5,643 7,008 7,009 7,411 7,776 7,959' 7,867 10 Payable in dollars 17,161 15,409 15,423 13,533 14,085 14,518 13,852' 13,851 11 Payable in foreign currencies 943 1,052 1,023 1,241 1,219 1,155 1,007' 1,006 By area or country Financial liabilities 12 Europe 6,481 6,825 6,501 5,691 7,087 7,230 6,679 6,798 13 Belgium-Luxembourg 479 471 505 302 428 359 428 471 14 France 327 709 783 843 956 900 910 995 15 Germany 582 491 467 492 514 561 521 489 16 Netherlands 681 748 711 581 527 583 595 578 17 Switzerland 354 715 792 486 641 563 514 569 18 United Kingdom 3,923 3,565 3,102 2,839 3,790 4,013 3,463 3,389 19 Canada 964 963 746 764 795 735 825 863 20 Latin America and Caribbean 3,136 3,356 2,751 2,607 4,912 8,888 6,780 4,556 21 Bahamas 964 1,279 904 751 1,419 3,603 2,606 1,423 77 Bermuda 1 7 14 13 51 13 11 13 7,3 Brazil 23 22 28 32 37 25 33 35 24 British West Indies 1,452 1,241 1,027 1,018 2,635 4,457 3,250 2,059 2.5 Mexico 99 102 121 213 243 237 260 369 26 Venezuela 81 98 114 124 121 124 130 137 71 Asia 723 976 1,039 1,332 1,355 1,462 1,566 1,682 28 Japan 644 792 715 898 947 1,013 1,085 1,121 29 Middle East oil-exporting countries2 38 75 169 170 170 180 144 147 30 Africa 11 14 17 19 19 16 16 14 31 Oil-exporting countries3 1 0 0 0 0 0 1 0 32 All other4 15 24 12 10 9 9 14 19 Commercial liabilities 33 Europe 4,402 3,770 3,831 3,245 3,567 3,409 3,961' 3,987 34 Belgium-Luxembourg 90 71 52 62 40 45 34 48 35 France 582 573 598 437 488 525 430 438 36 Germany 679 545 468 427 417 501 558' 619 37 Netherlands 219 220 346 268 259 265 239' 245 38 Switzerland 499 424 367 241 477 246 405' 257 39 United Kingdom 1,209 880 1,027 732 847 794 1,133 1,082 40 Canada 888 897 1,495 1,841 1,776 1,840 1,906' 1,975 41 Latin America and Caribbean 1,300 1,044 1,570 1,473 1,807 1,705 1,758 1,871 47, Bahamas 8 2 16 1 14 17 1 7 43 Bermuda 75 67 117 67 158 124 110 114 44 Brazil 111 67 60 44 68 31 68 124 45 British West Indies 35 2 32 6 33 5 8 32 46 Mexico 367 340 436 585 682 568 641 586 47 Venezuela 319 276 642 432 560 630 628 636 48 Asia 10,242 9,384 8,144 6,741 6,620 6,989 5,569' 5,307 49 Japan 802 1,094 1,226 1,247 1,291 1,235 1,429' 1,256 50 Middle East oil-exporting countries2'5 8,098 7,008 5,503 4,178 3,735 4,190 2,364' 2,372 51 Africa 817 703 753 553 539 684 597' 588 52 Oil-exporting countries3 517 344 277 167 243 217 251 233 53 All other4 456 664 651 921 995 1,046 1,068' 1,128 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

A64 International Statistics • July 1985 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1983 1984 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998800 11998811 11998822 Dec. Mar. June Sept. Dec.P 1 Total 34,482 36,185 28,725 34,932 33,645 31,740 30,18y 28,673 2 Payable in dollars 31,528 32,582 26,085 31,842 30,755 28,770 27,391'' 26,068 3 Payable in foreign currencies 2,955 3,603 2,640 3,090 2,890 2,970 2,792 2,605 By type 4 Financial claims 19,763 21,142 17,684 23,801 22,781 21,292 19,794 18,108 3 Deposits 14,166 15,081 13,058 18,356 17,486 16,124 15,014 13,475 6 Payable in dollars 13,381 14,456 12,628 17,859 17,057 15,614 14,574 13,056 7 Payable in foreign currencies 785 625 430 497 429 510 439 420 8 Other financial claims 5,597 6,061 4,626 5,445 5,296 5,168 4,781 4,632 9 Payable in dollars 3,914 3,599 2,979 3,489 3,506 3,407 3,088 3,182 10 Payable in foreign currencies 1,683 2,462 1,647 1,956 1,790 1,761 1,693 1,450 11 Commercial claims 14,720 15,043 11,041 11,131 10,864 10,448 10,389' 10,565 12 Trade receivables 13,960 14,007 9,994 9,721 9,540 9,105 8,885' 9,084 13 Advance payments and other claims 759 1,036 1,047 1,410 1,323 1,343 1,503' 1,481 14 Payable in dollars 14,233 14,527 10,478 10,494 10,193 9,749 9,729' 9,830 13 Payable in foreign currencies 487 516 563 637 671 699 659 735 By area or country Financial claims 16 Europe 6,069 4,596 4,873 6,434 6,252 6,364 5,569 5,365 17 Belgium-Luxembourg 145 43 15 37 30 37 15 15 18 France 298 285 134 150 171 151 146 114 19 Germany 230 224 178 159 148 161 187 220 20 Netherlands 51 50 97 71 57 158 62 66 21 Switzerland 54 117 107 38 90 61 64 66 22 United Kingdom 4,987 3,546 4,064 5,767 5,548 5,543 4,863 4,486 23 Canada 5,036 6,755 4,377 6,166 5,665 5,180 4,419 3,964 24 Latin America and Caribbean 7,811 8,812 7,546 10,144 9,823 8,469 8,633 7,512 23 Bahamas 3,477 3,650 3,279 4,745 3,927 3,213 3,255 2,951 26 Bermuda 135 18 32 96 3 5 5 6 27 Brazil 96 30 62 53 87 83 84 100 28 British West Indies 2,755 3,971 3,255 4,163 4,903 4,348 4,423 3,703 29 Mexico 208 313 274 291 279 230 232 215 30 Venezuela 137 148 139 134 130 124 128 125 31 Asia 607 758 698 764 753 963 900 944 32 Japan 189 366 153 297 309 307 371 353 33 Middle East oil-exporting countries2 20 37 15 4 7 8 7 37 34 Africa 208 173 158 147 144 158 160 210 33 Oil-exporting countries3 26 46 48 55 42 35 37 85 36 All other4 32 48 31 145 145 158 113 114 Commercial claims 37 Europe 5,544 5,405 3,826 3,670 3,610 3,555 3,570' 3,805 38 Belgium-Luxembourg 233 234 151 135 173 142 128 138 39 France 1,129 776 474 459 413 408 411' 439 40 Germany 599 561 357 348 363 443 370' 374 41 Netherlands 318 299 350 334 310 306 303 340 42 Switzerland 354 431 360 317 336 250 289 271 43 United Kingdom 929 985 811 809 787 812 891' 1,061 44 Canada 914 967 633 829 1,061 933 1,026' 1,020 45 Latin America and Caribbean 3,766 3,479 2,526 2,695 2,419 2,042 1,976' 11,,997722 46 Bahamas 21 12 21 8 8 4 14 88 47 Bermuda 108 223 261 190 216 89 88 115 48 Brazil 861 668 258 493 357 310 219 214 49 British West Indies 34 12 12 7 7 8 10 7 50 Mexico 1,102 1,022 775 884 745 577 595' 583 51 Venezuela 410 424 351 272 268 241 245' 206 52 Asia 3,522 3,959 3,050 3,063 2,997 3,085 2,884' 3,070 53 Japan 1,052 1,245 1,047 1,114 1,186 1,178 1,08c 1,180 54 Middle East oil-exporting countries2 825 905 751 737 701 710 703' 687 55 Africa 653 772 588 588 497 536 595' 470 56 Oil-exporting countries3 153 152 140 139 132 128 135 134 57 All other4 321 461 417 286 280 297 338 228 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

Securities Holdings and Transactions A65 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1985 1984 1985 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998833 11998844 Jan.- Sept. Oct. Nov. Dec. Jan. Feb. Mar.P Mar. U.S. corporate securities STOCKS 1 Foreign purchases 69,770 60,462 18,412 4,052 4,657 4,838 4,487 5,005 7,102 6,305 2 Foreign sales 64,360 63,388' 19,549 4,892 5,398 4,746' 5,049 5,701 7,127 6,721 3 Net purchases, or sales (-) 5,410 —2,926' -1,137 -840 -741 92' -562 -696 -26 -416 4 Foreign countries 5,312 -3,041' -1,107 -909 -752 81' -461 -713 -21 -374 5 Europe 3,979 -2,986' -1,344 -690 -529 -90' -359 -558 -212 -574 6 France -97 -405 -73 -67 -37 -46 -54 -19 -41 -13 7 Germany 1,045 -50 -357 -63 -10 11 -105 -134 -109 -113 8 Netherlands -109 -315 -279 -66 -47 -15 -29 -44 -107 -128 9 Switzerland 1,325 -1,490 -414 -335 -130 -34 -249 -159 -133 -122 10 United Kingdom 1,799 -658' -235 -131 -251 17' 91 -178 131 -188 11 Canada 1,151 1,673 213 149 150 47 134 46 169 -2 12 Latin America and Caribbean 529 493 389 9 -89 30 67 103 185 101 13 Middle East1 -808 -1,998 -37 -207 -270 -12 -1% -52 -101 116 14 Other Asia 395 -372 -404 -160 -92 74 -91 -264 -99 -41 15 Africa 42 -23 -23 -6 -8 -8 -6 -7 -2 -13 16 Other countries 24 171 98 -3 87 39 -11 19 40 39 17 Nonmonetary international and regional organizations 98 115 -30 69 11 11 -101 17 -5 -43 BONDS2 18 Foreign purchases 24,000 39,341' 19,618 3,356 6,994 4,902' 6,403 5,937 8,218 5,462 19 Foreign sales 23,097 26,071' 9,353 2,035 3,060 2,556 2,900 3,106 3,649 2,598 20 Net purchases, or sales (-) 903 13,269' 10,265 1,321 3,934 2,346' 3,503 2,831 4,570 2,864 21 Foreign countries 888 12,972' 10,239 1,278 3,954 2,13y 3,527 2,835 4,489 2,914 22 Europe 909 11,792' 9,708 1,004 3,956 1,954' 3,338 2,635 4,142 2,930 23 France -89 207 29 8 143 -11 24 55 -17 -10 24 Germany 344 1,731 -199 19 606 139 184 67 -153 -112 25 Netherlands 51 93 61 2 22 -1 15 9 44 8 26 Switzerland 583 644 810 9 253 159 276 12 315 483 27 United Kingdom 434 8,520' 8,988 922 2,860 1,603' 2,776 2,441 4,018 2,528 28 Canada 123 -71 44 3 -3 13 14 59 -11 -5 29 Latin America and Caribbean 100 390 208 64 42 44 78 90 50 69 30 Middle East1 -1,161 -1,011 -335 -19 -232 -45 -179 -123 -84 -127 31 Other Asia 865 11,,886622 566 223 192 169 276 140 337 89 32 Africa 0 11 0 1 0 -2 1 0 0 0 33 Other countries 52 IC 48 3 0 2 0 35 54 -41 34 Nonmonetary international and regional organizations 15 297 26 43 -20 213 -24 -4 81 -50 Foreign securities 35 Stocks, net purchases, or sales (-) -3,765 -1,077' -1,870 -340 -318 -177 -221 -781' -652 -437 36 Foreign purchases 13,281 14,591' 4,042 921 1,333 1,147 1,169 1,149' 1,562 1,330 37 Foreign sales 17,046 15,668' 5,911 1,261 1,651 1,324 1,390 1,93c 2,215 1,767 38 Bonds, net purchases, or sales (-) -3,239 -3,931' -577 -482' -1,195' -578' -1,159 168 198 -943 39 Foreign purchases 36,333 57,338' 16,342 4,122 4,527 6,601 5,134 5,396' 5,294 5,652 40 Foreign sales 39,572 61.27C 16,919 4,604 5,722' 7,179' 6,293 5,228' 5,0% 6,594 41 Net purchases, or sales (-), of stocks and bonds -7,004 -5,008' -2,446 -822' -1,513' -755' -1,379 —613' -454 -1,379 42 Foreign countries -6,559 -4,619' -2,685 -886' -1,477' -908' -671 -742' -754 -1,189 43 Europe -5,492 -8,532 -2,024 -963' -1,582' -707 -1,086 -732' -91 -1,200 44 Canada -1,328 413 -414 -198 -68 -23 254 75 -422 -68 45 Latin America and Caribbean 1,120 2,472' 162 28 217 207 104 194' -47 15 46 Asia -855 1,345 -549 169 -30 88 -115 -394' -255 100 47 Africa 141 -107 -33 -14 -19 -16 3 -4 -3 -26 48 Other countries -144 —21C 172 92 6 -457' 169 120 64 -11 49 Nonmonetary international and regional organizations -445 -389 239 64 -36 153 -709 129 300 -190 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, ties sold abroad by U.S. corporations organized to finance direct investments Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). abroad. 2. Includes state and local government securities, and securities of U.S. government agencies and corporations. Also includes issues of new debt securi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • July 1985 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1985 1984 1985 CCoouunnttrryy oorr aarreeaa 11998833 11998844rr M Ja a n r . . - Sept. Oct. Nov. Dec. Jan. Feb. Mar.P Transactions, net purchases or sales (-) during period1 11 EEssttiimmaatteedd ttoottaall22 33,,669933 2211,,441122 223388 --33,,779999 22,,993311 22,,119977 77,,550088 22,,331122 22,,331199 --44,,339933 22 FFoorreeiiggnn ccoouunnttrriieess22 33,,116622 1166,,443322 11,,221122 --11,,773366 11,,009922 22,,229933 55,,006666 33,,779977 22,,116633 --44,,774488 33 EEuurrooppee22 66,,222266 1111,,007700 --998844 --771188 779955 777766 11,,330000 553322 --8811 --11,,443355 44 BBeellggiiuumm--LLuuxxeemmbboouurrgg --443311 228899 112222 2200 2277 4411 4466 110044 1188 00 55 GGeerrmmaannyy22 22,,445500 22,,995588 --11,,778877 --774477 --3399 3366 333366 --112200 --112299 --11,,553388 66 NNeetthheerrllaannddss 337755 445544 --226611 --66 445588 --77 1166 --7711 1111 --220011 77 SSwweeddeenn 117700 4466 114411 7777 --11 11 --8888 115500 --1100 11 88 SSwwiittzzeerrllaanndd22 --442211 663355 663366 9999 --117722 --228888 2266 --3355 335588 331133 99 UUnniitteedd KKiinnggddoomm 11,,996666 55,,222233 337700 --331133 774422 224444 771166 441199 --334422 229933 1100 OOtthheerr WWeesstteerrnn EEuurrooppee 22,,111188 11,,446655 --220055 115533 --221199 774488 224488 8866 1122 --330033 1111 EEaasstteerrnn EEuurrooppee 00 00 00 00 00 00 00 00 00 00 1122 CCaannaaddaa 669999 11,,552266 --227777 228888 223377 119933 224499 --9922 --223311 4477 1133 LLaattiinn AAmmeerriiccaa aanndd CCaarriibbbbeeaann --221122 11,,441133 880022 116655 332200 996655 338800 114499 773355 --8822 1144 VVeenneezzuueellaa --112244 1144 --44 33 11 77 --1100 55 --1111 22 1155 OOtthheerr LLaattiinn AAmmeerriiccaa aanndd CCaarriibbbbeeaann 6600 552288 113344 9922 6611 5577 221133 --22 7711 6655 1166 NNeetthheerrllaannddss AAnnttiilllleess --114499 887711 667722 6699 225588 990022 117777 114466 667744 --114499 --33,,553355 22,,337777 11,,553300 --11,,447755 --330022 336699 33,,221188 33,,009933 11,,772266 --33,,228899 18 Japan 22,,331155 66,,006622 11,,331155 --1188 885511 11,,228877 11,,558855 557788 555599 117777 19 Africa 33 --6677 33 2277 --11 --55 22 22 11 11 20 All other --1177 111144 113388 --2233 4433 --55 --8833 111133 1144 1111 21 Nonmonetary international and regional organizations 553355 44,,998822 --997766 --22,,006633 11,,883399 --9966 22,,444422 --11,,448855 115544 335555 22 International 221188 44,,661122 --883333 --22,,114499 11,,665511 --118888 22,,336611 --11,,667755 550044 333388 23 Latin American regional 00 00 11 00 00 00 00 00 11 00 MEMO 24 Foreign countries2 33,,116622 1166,,443322 11,,221122 --11,,773366 11,,009922 22,,229933 55,,006666 33,,779977 22,,116633 --44,,774488 25 Official institutions 777799 448811 --11,,443366 --11,,996688 --885522 --660022 11,,991199 22,,552277 11,,332244 --55,,228866 26 Other foreign2 22,,338822 1155,,995511 22,,664488 223322 11,,994444 22,,889955 33,,114477 11,,227700 884400 553388 Oil-exporting countries 27 Middle East3 --55,,441199 --66,,227777 220099 --114444 --998833 --11,,228844 --220000 2277 --337722 555544 28 Africa4 --11 --110011 00 00 00 00 00 00 00 00 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria, notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on Apr. 30, 1985 Rate on Apr. 30, 1985 Rate on Apr. 30, 1985 Country Country Country Per- Month Per- Month Percent effective cent effective cent Austria.. 4.5 June 1984 France1 10.25 Apr. 1985 Norway 8.0 Belgium. 11.0 Feb. 1984 Germany, Fed. Rep. of 4.5 June 1984 Switzerland 4.0 Brazil... 49.0 Mar. 1981 Italy 15.5 Jan. 1985 United Kingdom2. Canada.. 10.02 Apr. 1985 Japan 5.0 Oct. 1983 Venezuela 11.0 Denmark 7.0 Oct. 1983 Netherlands 5.5 Feb. 1985 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 NOTE. Rates shown are mainly those at which the central bank either discounts central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1984 1985 CCoouunnttrryy,, oorr ttyyppee 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Eurodollars 12.24 9.57 10.75 10.77 9.50 8.90 8.37 9.05 9.32 8.74 2 United Kingdom 12.21 10.06 9.91 10.60 9.87 9.74 11.63 13.69 13.52 12.70 3 Canada 14.38 9.48 11.29 11.99 11.09 10.41 9.70 10.63 11.42 10.15 4 Germany 8.81 5.73 5.96 6.06 5.92 5.81 5.84 6.13 6.36 5.99 5 Switzerland 5.04 4.11 4.35 5.23 5.03 4.96 5.13 5.66 5.77 5.35 6 Netherlands 8.26 5.58 6.08 6.16 5.87 5.77 5.87 6.90 7.14 6.82 7 France 14.61 12.44 11.66 10.75 10.54 10.66 10.43 10.60 10.71 10.49 8 Italy 19.99 18.95 17.08 17.13 17.13 16.86 15.82 15.79 15.82 15.15 9 Belgium 14.10 10.51 11.41 11.00 10.81 10.75 10.75 10.75 10.75 10.09 10 Japan 6.84 6.49 6.32 6.31 6.32 6.33 6.27 6.29 6.30 6.26 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • July 1985 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1984 1985 CCoouunnttrryy//ccuurrrreennccyy 11998822 11998833 11998844 Nov. Dec. Jan. Feb. Mar. Apr. 1 Australia/dollar1 101.65 90.14 87.937 85.88 84.00 81.51 73.74 69.70 65.84 2 Austria/schilling 17.060 17.968 20.005 21.075 21.802 22.267 23.190 23.247 21.717 i Belgium/franc 45.780 51.121 57.749 60.475 62.380 63.455 66.310 66.308 62.283 4 Brazil/cruzeiro 179.22 573.27 1841.50 2734.16 3008.55 3346.67 3768.17 4158.19 4511.58 5 Canada/dollar 1.2344 1.2325 1.2953 1.3168 1.3201 1.3240 1.3547 1.3840 1.3658 6 China, P.R./yuan 1.8978 1.9809 2.3308 2.6785 2.7953 2.8160 2.8347 2.8533 2.8480 7 Denmark/krone 8.3443 9.1483 10.354 10.824 11.126 11.330 11.807 11.797 11.114 8 Finland/markka 4.8086 5.5636 6.0007 6.2653 6.4563 6.6368 6.8616 6.8464 6.4652 9 France/franc 6.5793 7.6203 8.7355 9.1981 9.5083 9.7036 10.093 10.078 9.4427 10 Germany/deutsche mark 2.428 2.5539 2.8454 2.9985 3.1044 3.1706 3.3025 3.2982 3.0946 11 Greece/drachma 66.872 87.895 112.73 123.63 127.26 129.38 134.73 140.62 134.86 12 Hong Kong/dollar 6.0697 7.2569 7.8188 7.8235 7.8287 7.8110 7.8017 7.8009 7.7902 13 India/rupee 9.4846 10.1040 11.348 12.078 12.293 12.612 12.922 12.861 12.400 14 Ireland/pound1 142.05 124.81 108.64 103.41 100.37 98.23 94.23 94.58 101.17 15 Israel/shekel 24.407 55.865 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Italy/lira 1354.00 1519.30 1756.10 1863.05 1912.52 1948.76 2042.00 2078.50 1975.89 17 Japan/yen 249.06 237.55 237.45 243.63 247.96 254.18 260.48 257.92 251.84 18 Malaysia/ringgit 2.3395 2.3204 2.3448 2.4300 2.4164 2.4804 2.5513 2.5734 2.4922 19 Mexico/peso 72.990 155.01 192.31 210.79 219.56 227.56 236.06 246.15 246.57 20 Netherlands/guilder 2.6719 2.8543 3.2083 3.3817 3.5035 3.5819 3.7387 3.7290 3.4981 21 New Zealand/dollar1 75.101 66.790 57.837 49.278 48.260 47.040 45.223 45.276 45.520 22 Norway/krone 6.4567 7.3012 8.1596 8.7175 8.9805 9.1765 9.4695 9.4608 8.9314 23 Philippines/peso 8.5324 11.0940 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 24 Portugal/escudo 80.101 111.610 147.70 163.10 167.31 172.56 183.24 183.98 174.56 25 Singapore/dollar 2.1406 2.1136 2.1325 2.1554 2.1732 2.2011 2.2557 2.2582 2.2199 26 South Africa/rand1 92.297 89.85 69.534 55.47 52.66 46.34 50.57 50.33 51.50 27 South Korea/won 731.93 776.04 807.91 818.89 825.73 832.16 839.16 850.71 861.21 28 Spain/peseta 110.09 143.500 160.78 168.10 171.98 175.13 182.35 183.13 172.85 29 Sri Lanka/rupee 20.756 23.510 25.428 26.075 26.213 26.392 26.605 26.836 27.113 30 Sweden/krona 6.2838 7.6717 8.2706 8.5957 8.8614 9.0716 9.3364 9.4135 8.9946 31 Switzerland/franc 2.0327 2.1006 2.3500 2.4700 2.5602 2.6590 2.8045 2.8033 2.5948 32 Taiwan/dollar n.a. n.a. 39.633 39.419 39.509 39.209 39.228 39.542 39.728 33 Thailand/baht 23.014 22.991 23.582 26.736 27.091 27.330 27.961 28.097 27.466 34 United Kingdom/pound1 174.80 151.59 133.66 123.92 118.61 112.71 109.31 112.53 123.77 35 Venezuela/bolivar 4.2981 10.6840 n.a. n.a. n.a. n.a. n.a. n.a. n.a. MEMO 36 United States/dollar2 116.57 125.34 138.19 144.92 149.24 152.83 158.43 158.14 149.56 1. Value in U.S. cents. NOTE. Averages of certified noon buying rates in New York for cable transfers. 2. Index of weighted-average exchange value of U.S. dollar against currencies Data in this table also appear in the Board's G.5 (405) release. For address, see of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76 inside front cover. global trade of each of the 10 countries. Series revised as of August 1978. For description and back data, see "Index of the Weighted-Average Exchange Value of the U.S. Dollar: Revision" on p. 700 of the August 1978 BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1985 A83 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference 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 commercial banks, September 30, 1983 March 1984 A68 Assets and liabilities of commercial banks, December 31, 1983 June 1984 A66 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1983 June 1984 A72 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1984 November 1984 A4 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1984 April 1985 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1984 April 1985 A74 Terms of lending at commercial banks, November 1984 June 1985 A70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH PRESTON MARTIN, Vice Chairman J. CHARLES PARTEE OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY AND FINANCIAL POLICY JOSEPH R. COYNE, Assistant to the Board DONALD J. WINN, Assistant to the Board STEPHEN H. AXILROD, Staff Director STEVEN M. ROBERTS, Assistant to the Chairman DONALD L. KOHN, Deputy Staff Director ANTHONY F. COLE, Special Assistant to the Board STANLEY J. SIGEL, Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS MICHAEL BRADFIELD, General Counsel JAMES L. KICHLINE, Director J. VIRGIL MATTINGLY, JR., Deputy General Counsel EDWARD C. ETTIN, Deputy Director RICHARD M. ASHTON, Associate General Counsel MICHAEL J. PRELL, Deputy Director OLIVER IRELAND, Associate General Counsel JOSEPH S. ZEISEL, Deputy Director RICKI TIGERT, Assistant General Counsel JARED J. ENZLER, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel DAVID E. LINDSEY, Associate Director ELEANOR J. STOCKWELL, Associate Director THOMAS D. SIMPSON, Deputy Associate Director OFFICE OF THE SECRETARY LAWRENCE SLIFMAN, Deputy Associate Director HELMUT F. WENDEL, Deputy Associate Director WILLIAM W. WILES, Secretary MARTHA BETHEA, Assistant Director BARBARA R. LOWREY, Associate Secretary ROBERT M. FISHER, Assistant Director JAMES MCAFEE, Associate Secretary DAVID B. HUMPHREY, Assistant Director SUSAN J. LEPPER, Assistant Director RICHARD D. PORTER, Assistant Director DIVISION OF CONSUMER PETER A. TINSLEY, Assistant Director AND COMMUNITY AFFAIRS LEVON H. GARABEDIAN, Assistant Director (Administration) GRIFFITH L. GARWOOD, Director JERAULD C. KLUCKMAN, Associate Director GLENN E. LONEY, Assistant Director DIVISION OF INTERNATIONAL FINANCE DOLORES S. SMITH, Assistant Director EDWIN M. TRUMAN, Director LARRY J. PROMISEL, Senior Associate Director DIVISION OF BANKING CHARLES J. SIEGMAN, Senior Associate Director SUPERVISION AND REGULATION DALE W. HENDERSON, Associate Director ROBERT F. GEMMILL, Staff Adviser WILLIAM TAYLOR, Director PETER HOOPER III, Assistant Director THOMAS E. CIMENO, JR., Deputy Director' DAVID H. HOWARD, Assistant Director FREDERICK R. DAHL, Associate Director RALPH W. SMITH, JR., Assistant Director DON E. KLINE, Associate Director FREDERICK M. STRUBLE, Associate Director HERBERT A. BIERN, Assistant Director ANTHONY CORNYN, Assistant Director ROBERT S. PLOTKIN, Assistant Director STEPHEN C. SCHEMERING, Assistant Director RICHARD SPILLENKOTHEN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer 1. On loan from the Federal Reserve Bank of Boston. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff EMMETT J. RICE MARTHA R. SEGER LYLE E. GRAMLEY 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 CHARLES L. HAMPTON, Senior Technical Adviser Opportunity Programs, Federal Reserve System PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF COMPUTING SERVICES CLYDE H. FARNSWORTH, JR., Director BRUCE M. BEARDSLEY, Director ELLIOTT C. MCENTEE, Associate Director THOMAS C. JUDD, Assistant Director DAVID L. ROBINSON, Associate Director ELIZABETH B. RIGGS, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director ROBERT J. ZEMEL, Assistant Director WALTER ALTHAUSEN, Assistant Director CHARLES W. BENNETT, Assistant Director ANNE M. DEBEER, Assistant Director DIVISION OF INFORMATION SERVICES JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director WILLIAM R. JONES, Director WILLIAM E. PASCOE III, Assistant Director 2 STEPHEN R. MALPHRUS, Assistant Director FLORENCE M. YOUNG, Adviser RICHARD J. MANASSERI, Assistant Director WILLIAM C. SCHNEIDER, JR., Assistant Director DIVISION OF PERSONNEL 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 GEORGE M. LOPEZ, Assistant Director 2. On loan from the Federal Reserve Bank of Richmond (Baltimore Branch). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Federal Reserve Bulletin • July 1985 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman E. GERALD CORRIGAN, Vice Chairman JOHN J. BALLES LYLE E. GRAMLEY J. CHARLES PARTEE ROBERT P. BLACK SILAS KEEHN EMMETT J. RICE ROBERT P. FORRESTAL PRESTON MARTIN MARTHA R. SEGER HENRY C. WALLICH STEPHEN H. AXILROD, Staff Director and Secretary J. ALFRED BROADDUS, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary RICHARD G. DAVIS, Associate Economist NANCY M. STEELE, Deputy Assistant Secretary DONALD L. KOHN, Associate Economist MICHAEL BRADFIELD, General Counsel DAVID E. LINDSEY, 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 JOSEPH R. BISIGNANO, Associate Economist SHEILA L. TSCHINKEL, 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 LEWIS T. PRESTON, President PHILIP F. SEARLE, Vice President WILLIAM H. BOWEN, E. PETER GILLETTE, AND N. BERNE HART, Directors ROBERT L. NEWELL, First District HAL C. KUEHL, Seventh District LEWIS T. PRESTON, Second District WILLIAM H. BOWEN, Eighth District GEORGE A. BUTLER, Third District E. PETER GILLETTE, JR., Ninth District JULIEN L. MCCALL, Fourth District N. BERNE HART, Tenth District JOHN G. MEDLIN, JR., Fifth District NAT S. ROGERS, Eleventh District PHILIP F. SEARLE, Sixth District G. ROBERT TRUEX, JR., Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 and Advisory Councils CONSUMER ADVISORY COUNCIL TIMOTHY D. MARRINAN, Minneapolis, Minnesota, Chairman THOMAS L. CLARK, JR., New York, New York, Vice Chairman RACHEL G. BRATT, Medford, Massachusetts LAWRENCE S. OKINAGA, Honolulu, Hawaii JONATHAN BROWN, Washington, D.C. JOSEPH L. PERKOWSKI, Centerville, Minnesota JEAN A. CROCKETT, Philadelphia, Pennsylvania ELVA QUIJANO, San Antonio, Texas THERESA FAITH CUMMINGS, Springfield, Illinois BRENDA L. SCHNEIDER, Detroit, Michigan STEVEN M. GEARY, Jefferson City, Missouri PAULA A. SLIMAK, Cleveland, Ohio RICHARD M. HALLIBURTON, Kansas City, Missouri GLENDA G. SLOANE, Washington, D.C. CHARLES C. HOLT, Austin, Texas HENRY J. SOMMER, Philadelphia, Pennsylvania EDWARD N. LANGE, Seattle, Washington TED L. SPURLOCK, New York, New York KENNETH V. LARKIN, Berkeley, California MEL STILLER, Boston, Massachusetts FRED S. MCCHESNEY, Atlanta, Georgia CHRISTOPHER J. SUMNER, Salt Lake City, Utah FREDERICK H. MILLER, Norman, Oklahoma WINNIE F. TAYLOR, Gainesville, Florida MARGARET M. MURPHY, Columbia, Maryland MICHAEL M. VAN BUSKIRK, Columbus, Ohio ROBERT F. MURPHY, Detroit, Michigan MERVIN WINSTON, Minneapolis, Minnesota HELEN NELSON, Mill Valley, California MICHAEL ZOROYA, St. Louis, Missouri THRIFT INSTITUTIONS ADVISORY COUNCIL THOMAS R. BOMAR, Miami, Florida, President RICHARD H. DEIHL, LOS Angeles, California, Vice President ELLIOTT G. CARR, Harwich Port, Massachusetts JOHN A. HARDIN, Rock Hill, South Carolina M. TODD COOKE, Philadelphia, Pennsylvania FRANCES LESNIESKI, East Lansing, Michigan J. MICHAEL CORNWALL, Dallas, Texas JOHN T. MORGAN, New York, New York HAROLD W. GREENWOOD, JR., Minneapolis, Minnesota SARAH R. WALLACE, Newark, Ohio MICHAEL R. WISE, Denver, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, THE ECONOMETRICS OF PRICE DETERMINATION CONFER- Mail Stop 138, Board of Governors of the Federal Reserve ENCE, October 30-31, 1970, Washington, D.C. 1972. 397 System, Washington, D.C. 20551. When a charge is indicat- pp. Cloth ed. $5.00 each; 10 or more to one address, ed, remittance should accompany request and be made $4.50 each. Paper ed. $4.00 each; 10 or more to one payable to the order of the Board of Governors of the Federal address, $3.60 each. Reserve System. Remittance from foreign residents should ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— be drawn on a U.S. bank. Stamps and coupons are not Regulation Z) Vol. I (Regular Transactions). 1969. 100 accepted. pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- address, $2.00 each. TIONS. 1984. 120 pp. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY ANNUAL REPORT. UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or address, $1.50 each. $2.00 each in the United States, its possessions, Canada, THE BANK HOLDING COMPANY MOVEMENT TO 1978: A and Mexico; 10 or more of same issue to one address, COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to $18.00 per year or $1.75 each. Elsewhere, $24.00 per one address, $2.25 each. year or $2.50 each. FLOW OF FUNDS ACCOUNTS. 1949-1978. 1979. 171 pp. $1.75 BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint each; 10 or more to one address, $1.50 each. of Part I only) 1976. 682 pp. $5.00. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; BANKING AND MONETARY STATISTICS. 1941-1970. 1976. 10 or more to one address, $1.25 each. 1,168 pp. $15.00. PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. ANNUAL STATISTICAL DIGEST $13.50 each. 1974-78. 1980. 305 pp. $10.00 per copy. NEW MONETARY CONTROL PROCEDURES: FEDERAL RE- 1980. 1981. 241 pp. $10.00 per copy. SERVE STAFF STUDY. 1981. 1981. 1982. 239 pp. $ 6.50 per copy. SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES: 1982. 1983. 266 pp. $ 7.50 per copy. REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL 1983. 1984. 264 pp. $11.50 per copy. ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each. FEDERAL RESERVE CHART BOOK. Issued four times a year in FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updat- February, May, August, and November. Subscription ed at least monthly. (Requests must be prepaid.) includes one issue of Historical Chart Book. $7.00 per Consumer and Community Affairs Handbook. $60.00 per year or $2.00 each in the United States, its possessions, year. Canada, and Mexico. Elsewhere, $10.00 per year or Monetary Policy and Reserve Requirements Handbook. $3.00 each. $60.00 per year. HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- Securities Credit Transactions Handbook. $60.00 per year. tion to the Federal Reserve Chart Book includes one Federal Reserve Regulatory Service. 3 vols. (Contains all issue. $1.25 each in the United States, its possessions, three Handbooks plus substantial additional material.) Canada, and Mexico; 10 or more to one address, $1.00 $175.00 per year. each. Elsewhere, $1.50 each. Rates for subscribers outside the United States are as SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- follows and include additional air mail costs: RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in Federal Reserve Regulatory Service, $225.00 per year. the United States, its possessions, Canada, and Mexico; Each Handbook, $75.00 per year. 10 or more of same issue to one address, $13.50 per year THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A or $.35 each. Elsewhere, $20.00 per year or $.50 each. MULTICOUNTRY MODEL, May 1984.590 pp. $14.50 each. THE FEDERAL RESERVE ACT, as amended through August 30, WELCOME TO THE FEDERAL RESERVE. 1984. with an appendix containing provisions of certain PROCESSING BANK HOLDING COMPANY AND MERGER APPLIother statutes affecting the Federal Reserve System. 576 CATIONS. pp. $7.00. THE MONETARY AUTHORITY OF THE FEDERAL RESERVE, REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- May 1984. (High School Level.) ERAL RESERVE SYSTEM. WRITING IN STYLE AT THE FEDERAL RESERVE. August 1984. REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHA- 93 pp. $2.50 each. NISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. 173 pp. Each REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT XIII AMERIvolume, $3.00; 10 or more to one address, $2.50 each. CAN-GERMAN BIENNIAL CONFERENCE, MARCH 1985 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 CONSUMER EDUCATION PAMPHLETS 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON IN- Short pamphlets suitable for classroom use. Multiple copies TERNATIONAL TRADE AND OTHER ECONOMIC VARIAavailable without charge. BLES: A REVIEW OF THE LITERATURE, by Victoria S. Farrell with Dean A. DeRosa and T. Ashby McCown. January 1984. 21 pp. Alice in Debitland 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- Consumer Handbook on Adjustable Rate Mortgages DEUTSCHE MARK INTERVENTION, by Laurence R. Consumer Handbook to Credit Protection Laws Jacobson. October 1983. 8 pp. The Equal Credit Opportunity Act and . . . Age 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BE- The Equal Credit Opportunity Act and . . . Credit Rights in TWEEN EXCHANGE RATES AND INTERVENTION: A Housing REVIEW OF THE TECHNIQUES AND LITERATURE, by The Equal Credit Opportunity Act and . . . Doctors, Law- Kenneth Rogoff. October 1983. 15 pp. yers, Small Retailers, and Others Who May Provide Inci- 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERdental Credit VENTION, AND INTEREST RATES: AN EMPIRICAL IN- The Equal Credit Opportunity Act and . . . Women VESTIGATION, by Bonnie E. Loopesko. November Fair Credit Billing 1983. 20 pp. Federal Reserve Glossary 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET Guide to Federal Reserve Regulations INTERVENTION: A REVIEW OF THE LITERATURE, by How to File A Consumer Credit Complaint Ralph W. Tryon. October 1983. 14 pp. If You Borrow To Buy Stock 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET If You Use A Credit Card INTERVENTION: APPLICATIONS TO CANADA, GERMA- Instructional Materials of the Federal Reserve System NY, AND JAPAN, by Deborah J. Danker, Richard A. Series on the Structure of the Federal Reserve System Haas, Dale W. Henderson, Steven A. Symansky, and The Board of Governors of the Federal Reserve System Ralph W. Tryon. April 1985. 27 pp. The Federal Open Market Committee 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECONO- Federal Reserve Bank Board of Directors MY, by Darrell Cohen and Peter B. Clark. January Federal Reserve Banks 1984. 16 pp. Monetary Control Act of 1980 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF Organization and Advisory Committees FINANCIAL DEREGULATION, INTERSTATE BANKING, Truth in Leasing AND FINANCIAL SUPERMARKETS, by Stephen A. U.S. Currency Rhoades. February 1984. 8 pp. What Truth in Lending Means to You 138. ANTITRUST LAWS, JUSTICE DEPARTMENT GUIDE- LINES, AND THE LIMITS OF CONCENTRATION IN LO- CAL BANKING MARKETS, by James Burke. June 1984. 14 pp. STAFF STUDIES.- Summaries Only Printed in the 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN Bulletin THE UNITED STATES, by Thomas D. Simpson and Studies and papers on economic and financial subjects that Patrick M. Parkinson. August 1984. 20 pp. are of general interest. Requests to obtain single copies of 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF the full text or to be added to the mailing list for the series THE LITERATURE, by John D. Wolken. November may be sent to Publications Services. 1984. 38 pp. 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAY- MENT COSTS, by William Dudley. November 1984. 15 Staff Studies 115-125 are out of print. pp. 142. MERGERS AND ACQUISITIONS BY COMMERCIAL BANKS, 1960-83, by Stephen A. Rhoades. December 114. MULTIBANK HOLDING COMPANIES: RECENT EVI- 1984. 30 pp. DENCE ON COMPETITION AND PERFORMANCE IN 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF BANKING MARKETS, by Timothy J. Curry and John T. THE ELECTRONIC FUND TRANSFER ACT: RECENT Rose. Jan. 1982. 9 pp. SURVEY EVIDENCE, by Frederick J. Schroeder. April 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- 1985. 23 pp. KET INTERVENTION, by Donald B. Adams and Dale 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- W. Henderson. August 1983. 5 pp. SUMER CREDIT REGULATIONS: THE TRUTH IN LEND- 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- ING AND EQUAL CREDIT OPPORTUNITY LAWS, by VENTION: JANUARY-MARCH 1975, by Margaret L. Gregory E. Elliehausen and Robert D. Kurtz. May Greene. August 1984. 16 pp. 1985. 10 pp. 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- VENTION: SEPTEMBER 1977-DECEMBER 1979, by Margaret L. Greene. October 1984. 40 pp. 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- VENTION: OCTOBER 1980-OcTOBER 1981, by Margaret L. Greene. August 1984. 36 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 REPRINTS OF BULLETIN ARTICLES A Financial Perspective on Agriculture. 1/84. Most of the articles reprinted do not exceed 12 pages. U.S. International Transactions in 1983. 4/84. Survey of Consumer Finances, 1983. 9/84. Bank Lending to Developing Countries. 10/84. The Commercial Paper Market since the Mid-Seventies. 6/82. Survey of Consumer Finances, 1983: A Second Report. Applying the Theory of Probable Future Competition. 9/82. 12/84. International Banking Facilities. 10/82. Union Settlements and Aggregate Wage Behavior in the Foreign Experience with Targets for Money Growth. 10/83. 1980s. 12/84. Intervention in Foreign Exchange Markets: A Summary of The Thrift Industry in Transition. 3/85. Ten Staff Studies. 11/83. U.S. International Transactions in 1984. 5/85. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Index to Statistical Tables References are to pages A3-68 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 7 Financial institutions, 26 Reserves and related items, 3, 4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Nonfinancial corporations, 36 Banks, by classes, 3, 18-20, 21 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 40, 41 Turnover, 15 Production, 47, 48 Discount rates at Federal Reserve Banks and at foreign central banks and foreign countries (See Interest BANKERS acceptances, 9, 23, 24 rates) Bankers balances, 18-20 (See also Foreigners) Discounts and advances by Reserve Banks (See Loans) Bonds (See also U.S. government securities) Dividends, corporate, 35 New issues, 34 Rates, 24 EMPLOYMENT, 45 Branch banks, 21, 55 Eurodollars, 24 Business activity, nonfinancial, 44 Business expenditures on new plant and equipment, 36 FARM mortgage loans, 39 Business loans (See Commercial and industrial loans) Federal agency obligations, 4, 9, 10, 11, 31, 32 Federal credit agencies, 33 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation, and types and Banks, by classes, 18 ownership of gross debt, 30 Federal Reserve Banks, 10 Receipts and outlays, 28, 29 Central banks, discount rates, 67 Treasury financing of surplus, or deficit, 28 Certificates of deposit, 24 Treasury operating balance, 28 Commercial and industrial loans Federal Financing Bank, 28, 33 Commercial banks, 16, 19 Federal funds, 5, 17, 19, 20, 21, 24, 28 Weekly reporting banks, 19-21 Federal Home Loan Banks, 33 Commercial banks Federal Home Loan Mortgage Corporation, 33, 38, 39 Assets and liabilities, 18-20 Federal Housing Administration, 33, 38, 39 Commercial and industrial loans, 16, 19, 21 Federal Land Banks, 38 Consumer loans held, by type, and terms, 40, 41 Federal National Mortgage Association, 33, 38, 39 Loans sold outright, 19 Federal Reserve Banks Nondeposit funds, 17 Condition statement, 10 Number, by classes, 18 Discount rates (See Interest rates) Real estate mortgages held, by holder and U.S. government securities held, 4, 10, 11, 30 property, 39 Federal Reserve credit, 4, 5, 10, 11 Time and savings deposits, 3 Federal Reserve notes, 10 Commercial paper, 23, 24, 37 Federally sponsored credit agencies, 33 Condition statements (See Assets and liabilities) Finance companies Construction, 44, 49 Assets and liabilities, 37 Consumer installment credit, 40, 41 Business credit, 36 Consumer prices, 44, 50 Loans, 19, 40, 41 Consumption expenditures, 51, 52 Paper, 23, 24 Corporations Financial institutions Profits and their distribution, 35 Loans to, 19, 20, 21 Security issues, 34, 65 Selected assets and liabilities, 26 Cost of living (See Consumer prices) Float, 4 Credit unions, 26, 40 (See also Thrift institutions) Flow of funds, 42, 43 Currency and coin, 18 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 21 Customer credit, stock market, 25 Foreign currency operations, 10 Foreign deposits in U.S. banks, 4, 10, 19, 20 DEBITS to deposit accounts, 15 Foreign exchange rates, 68 Debt (See specific types of debt or securities) Foreign trade, 54 Demand deposits Foreigners Adjusted, commercial banks, 15 Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 18-21 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 GOLD REAL estate loans Certificate account, 10 Banks, by classes, 16, 19, 20, 39 Stock, 4, 54 Financial institutions, 26 Government National Mortgage Association, 33, 38, 39 Terms, yields, and activity, 38 Gross national product, 51 Type of holder and property mortgaged, 39 Repurchase agreements, 5, 17, 19, 20, 21 Reserve requirements, 7 HOUSING, new and existing units, 49 Reserves Commercial banks, 18 Depository institutions, 3, 4, 5, 12 INCOME, personal and national, 44, 51, 52 Federal Reserve Banks, 10 Industrial production, 44, 47 U.S. reserve assets, 54 Installment loans, 40, 41 Residential mortgage loans, 38 Insurance companies, 26, 30, 39 Retail credit and retail sales, 40, 41, 44 Interest rates Bonds, 24 SAVING Consumer installment credit, 41 Flow of funds, 42, 43 Federal Reserve Banks, 6 National income accounts, 51 Foreign central banks and foreign countries, 67 Savings and loan associations, 8, 26, 39, 40, 42 (See also Money and capital markets, 24 Thrift institutions) Mortgages, 38 Savings deposits (See Time and savings deposits) Prime rate, commercial banks, 23 Securities (See specific types) Time and savings deposits, 8 Federal and federally sponsored credit agencies, 33 International capital transactions of United States, 53-67 Foreign transactions, 65 International organizations, 57, 58, 60, 63 , 64 New issues, 34 Inventories, 51 Prices, 25 Investment companies, issues and assets, 35 Special drawing rights, 4, 10, 53, 54 Investments (See also specific types) State and local governments Banks, by classes, 18, 19, 20, 21, 26 Deposits, 19, 20 Commercial banks, 3, 16, 18-20, 39 Holdings of U.S. government securities, 30 Federal Reserve Banks, 10, 11 New security issues, 34 Financial institutions, 26, 39 Ownership of securities issued by, 19, 20, 26 Rates on securities, 24 LABOR force, 45 Stock market, 25 Life insurance companies (See Insurance companies) Stocks (See also Securities) Loans (See also specific types) New issues, 34 Banks, by classes, 18-20 Prices, 25 Commercial banks, 3, 16, 18-20 Federal Reserve Banks, 4, 5, 6, 10, 11 Student Loan Marketing Association, 33 Financial institutions, 26, 39 Insured or guaranteed by United States, 38, 39 TAX receipts, federal, 29 Thrift institutions, 3 (See also Credit unions, Mutual MANUFACTURING savings banks, and Savings and loan associations) Capacity utilization, 46 Time and savings deposits, 3, 8, 13, 17, 18, 19, 20, 21 (See Production, 46, 48 also Transaction and Nontransaction balances) Margin requirements, 25 Trade, foreign, 54 Member banks (See also Depository institutions) Transaction balances, 13, 19, 20 Federal funds and repurchase agreements, 5 Treasury cash, Treasury currency, 4 Reserve requirements, 7 Treasury deposits, 4, 10, 28 Mining production, 48 Treasury operating balance, 28 Mobile homes shipped, 49 UNEMPLOYMENT, 45 Monetary and credit aggregates, 3, 12 U.S. government balances Money and capital market rates, 24 Commercial bank holdings, 18, 19, 20 Money stock measures and components, 3, 13 Treasury deposits at Reserve Banks, 4, 10, 28 Mortgages (See Real estate loans) U.S. government securities Mutual funds, 35 Bank holdings, 17, 18-20, 21, 30 Mutual savings banks, 8, 26, 39, 40 (See also Thrift Dealer transactions, positions, and financing, 32 institutions) Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, 30, 66 NATIONAL defense outlays, 29 Open market transactions, 9 National income, 51 Outstanding, by type and holder, 26, 30 Nontransaction balances, 3, 13, 19, 20 Rates, 24 U.S. international transactions, 53-67 OPEN market transactions, 9 Utilities, production, 48 PERSONAL income, 52 VETERANS Administration, 38, 39 Prices Consumer and producer, 44, 50 WEEKLY reporting banks, 19-21 Stock market, 25 Wholesale (producer) prices, 44, 50 Prime rate, commercial banks, 23 Producer prices, 44, 50 Production, 44, 47 YIELDS (See Interest rates) Profits, corporate, 35 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 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 Joseph A. Baute Frank E. Morris Thomas I. Atkins Robert W. Eisenmenger NEW YORK* 10045 John Brademas E. Gerald Corrigan Clifton R. Wharton, Jr. 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 Robert E. Boni Charles A. Cerino Pittsburgh 15230 Milton G. Hulme, Jr. Harold J. Swart RICHMOND* 23219 Leroy T. Canoles, Jr. Robert P. Black Robert A. Georgine Jimmie R. Monhollon Baltimore 21203 Robert L. Tate Robert D. McTeer, Jr. Charlotte 28230 Wallace J. Jorgenson 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 Mclnnis Fred R. Hen- Jacksonville 32231 E. William Nash, Jr. James D. Hawkins Miami 33152 Eugene E. Cohen Patrick K. Barron Nashville 37203 Condon S. Bush Jeffrey J. Wells New Orleans 70161 Leslie B. Lampton Henry H. Bourgaux CHICAGO* 60690 Stanton R. Cook Silas Keehn Robert J. Day Daniel M. Doyle Detroit 48231 Russell G. Mawby Roby L. Sloan ST. LOUIS 63166 W.L. Hadley Griffin Thomas C. Melzer Mary P. Holt Joseph P. Garbarini Little Rock 72203 Sheffield Nelson John F. Breen Louisville 40232 Henry F. Frigon James E. Conrad Memphis 38101 Donald B. Weis Paul I. Black, Jr. MINNEAPOLIS 55480 John B. Davis, Jr. Gary H. Stern Michael W. Wright Thomas E. Gainor Helena 59601 Gene J. Etchart Robert F. McNellis KANSAS CITY 64198 Irvine O. Hockaday, Jr. Roger Guffey Robert G. Lueder Henry R. Czerwinski Denver 80217 James E. Nielson Wayne W. Martin Oklahoma City 73125 Patience Latting William G. Evans Omaha 68102 Kenneth L. Morrison Robert D. Hamilton DALLAS 75222 Robert D. Rogers Robert H. Boykin Bobby R. Inman William H. Wallace El Paso 79999 John R. Sibley Joel L. Koonce, Jr. Houston 77252 Robert T. Sakowitz J.Z. Rowe San Antonio 78295 Robert F. McDermott Thomas H. Robertson SAN FRANCISCO 94120 Alan C. Furth John J. Balles Fred W. Andrew Richard T. Griffith Los Angeles 90051 Richard C. Seaver Robert M. McGill Portland 97208 Paul E. Bragdon Angelo S. Carella Salt Lake City 84125 Don M. Wheeler E. Ronald Liggett 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

A80 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories m s g o g n Ki mm H B8 HAWAII P B oW i> 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 1 |U fl! ! a O n pp d o . r . t . u nity Act J Equal Credit j; Ik Opportunity Mcromf mCredit Rights || lit Housing What i Thithln Lending Means To You 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 staff 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