Federal Reserve Bulletin, 1985-11

VOLUME 71 • NUMBER 11 • NOVEMBER 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 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 823 ADJUSTABLE-RATE FINANCING IN 866 STATEMENTS TO CONGRESS MORTGAGE AND CONSUMER CREDIT Paul A. Volcker, Chairman, Board of Gov- MARKETS ernors, comments on proposals for reform- This article investigates the forces underly- ing the federal deposit insurance system ing the development of adjustable-rate lend- and reviews some other elements of the ing in mortgage and consumer credit mar- appropriate federal approach toward deposkets and discusses the similarities and itory institutions, before the Senate Comdifferences between typical lending prac- mittee on Banking, Housing, and Urban tices in the two markets. Affairs, September 11, 1985. 874 J. Charles Partee, Member, Board of Gov- 836 PROFITABILITY OF INSURED ernors, presents the Board's views on a COMMERCIAL BANKS IN 1984 recent South Dakota law that authorizes out-of-state bank holding companies to ac- The profitability of insured commercial quire state-chartered banks in South Dakobanks declined again in 1984. ta and to engage through these banks in all facets of the insurance business, the so- 850 TREASURY AND FEDERAL RESERVE called South Dakota loophole, in conflict FOREIGN EXCHANGE OPERATIONS with federal law and regulation, before the During the six months from February Subcommittee on Financial Institutions Suthrough July, the dollar briefly continued its pervision, Regulation and Insurance, of the climb of four and one-half years to reach House Committee on Banking, Finance and record levels for the floating-rate period; Urban Affairs, September 11, 1985. thereafter it declined to close the period 877 William Taylor, Director of the Board's much lower. Division of Banking Supervision and Regulation, discusses the financial condition of 862 STAFF STUDIES the institutions under the supervision of the "The Role of the Prime Rate in the Pricing Federal Reserve, before the Subcommittee of Business Loans by Commercial Banks, on Financial Institutions Supervision, Reg- 1977-84" examines the shift by commercial ulation and Insurance of the House Combanks in the late 1970s away from the prime mittee on Banking, Finance and Urban Afrate—traditionally considered the rate of- fairs, September 11, 1985. fered by banks to their most creditworthy customers—toward measures of the cost of 882 ANNOUNCEMENTS funds as the basis for pricing large business Revisions to Regulation K. loans. Publication of Annual Statistical Digest, 864 INDUSTRIAL PRODUCTION 1984. Output rose an estimated 0.3 percent in Admission of four state banks to member- August. ship in the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

884 LEGAL DEVELOPMENTS A80 BOARD OF GOVERNORS AND STAFF Various bank holding company, bank ser- A82 FEDERAL OPEN MARKET COMMITTEE vice corporation, and bank merger orders; AND STAFF; ADVISORY COUNCILS and pending cases. A84 FEDERAL RESERVE BOARD Ai FINANCIAL AND BUSINESS STATISTICS PUBLICATIONS A3 Domestic Financial Statistics A44 Domestic Nonfinancial Statistics A87 INDEX TO STATISTICAL TABLES A53 International Statistics A89 FEDERAL RESERVE BANKS, BRANCHES, A69 GUIDE TO TABULAR PRESENTATION, AND OFFICES STATISTICAL RELEASES, AND SPECIAL TABLES A90 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adjustable-Rate Financing in Mortgage and Consumer Credit Markets John L. Goodman, Jr., and Charles A. Luckett HOME MORTGAGE CREDIT of the Board's Division of Research and Statistics prepared this article. The emergence of the adjustable-rate mortgage (ARM) as a major form of home financing is one The variability of interest rates in recent years of the most significant developments in the resiand the trend toward deregulation in financial dential mortgage market since the long-term, markets have spawned a number of innovations self-amortizing, fixed-rate loan was introduced in in lending practices. Among the more prominent the 1930s. The share of ARMs in the market has of these changes is the use of adjustable-rate grown from a negligible portion as recently as loans in the home mortgage and consumer credit 1980 to approximately half of all home loans markets, where the fixed-rate, fixed-term con- originated today. The sharply increased flow of tract had long been the dominant credit instru- these loans pushed their share of all home mortment, .-it*'ft; gage debt outstanding to almost one-fifth by mid- Lenders have embraced the adjustable-rate 1985. loan as a means of shifting to borrowers part of With ARMs, the U.S. housing credit market the sharply increased risk to which higher and has been moving in the same direction as the more widely fluctuating interest rates have ex- market for commercial and industrial loans, in posed them. That risk was particularly acute in which the trend over the years has been toward the mortgage market—mortgage loans were typi- variable rates (as discussed by Thomas Brady in cally written with 25- to 30-year maturities, while a new Federal Reserve staff study summarized in for most creditors the cost of obtaining loanable this issue). And though ARMs are a fairly recent funds was tied to liabilities with much shorter arrival on the U.S. home mortgage scene, mortterms. Borrowers, meanwhile, have found that gages with adjustable interest charges have long adjustable-rate loans possess several attractive been the standard in some other industrialized features that can compensate for sharing the risk countries, including Australia, Canada, and the of higher interest costs. These features include United Kingdom. the opportunity to benefit from possibly lower interest rates in the future, without resort to costly refinancing, as well as access to initial Reasons for the Expansion interest rates that are generally lower than pre- of ARM Lending vailing fixed rates. Adjustable-rate loans currently account for The high and volatile interest rates of the late almost half of the home mortgages and perhaps 1970s and early 1980s sparked the development as much as 20 percent of the consumer loans of ARMs. Thrift institutions, the largest single being made. This article describes the forces source of home mortgage credit, were especially underlying the development of adjustable-rate harmed by the unanticipated rise in interest rates lending in mortgage and consumer credit markets during that period. The higher rates raised costs and compares typical lending practices in the two of relatively short-term deposits for those institumarkets. tions more quickly than it increased returns on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

824 Federal Reserve Bulletin • November 1985 their portfolios of long-term, fixed-rate mortgage because practices in loan underwriting have typiassets. cally permitted homebuyers to qualify for a larg- Before 1979, only state-chartered institutions er loan with an ARM than with a fixed-rate in a handful of states were permitted to make mortgage. adjustable-rate home loans; California accounted for most of such lending. But, by 1981, federally ARM Features and Pricing chartered savings and loan associations and savings banks, as well as national banks, were The interest rate on an adjustable-rate home loan allowed to make adjustable-rate home loans. is subject to changes that can result in higher or Unlike the earlier variable-rate loans, which lower monthly mortgage payments. Some other were subject to state regulation, the ARMs au- types of mortgages, notably the graduated-paythorized by the federal enabling laws and regula- ment mortgage, also have a variable monthly tory changes in 1981 carried few restrictions. In payment; however, an ARM differs from the particular, a wide range of index rates and graduated-payment mortgage in that increases or schemes for periodic rate adjustments were per- decreases in future payments are not scheduled mitted. or known in advance. The ARM is thus charac- The easing of regulations was an essential terized by the transfer, from lenders to borrowcondition for ARM lending to grow, but did not ers, of some of the risk of changes in market guarantee that consumers would accept such interest rates. loans. In principle, several kinds of homebuyers Several features govern the interest rates on are apt to find ARMs an attractive alternative to ARMs: fixed-rate mortgages. One group includes con- • The index is the base rate from which the sumers who expect interest charges (and thus ARM rate is calculated. Typically, indexes are their loan payments) to be lower in the future widely available measures not under the control with an ARM than with a fixed-rate loan. To be of any single lender, such as interest rates on sure, ARMs have caught the attention of many Treasury securities or the cost of funds at federconsumers because initial interest rates typically ally insured thrift institutions. have been below rates available on fixed-rate • The adjustment period is the length of time mortgages. But the relevant cost measure for that the interest rate or loan payment on an ARM borrowers is the average interest rate that they is scheduled to remain unchanged; at the end of expect to pay over the entire term of indebted- this interval, the rate is reset and usually the ness—an expectation dependent on changes in monthly loan payment is recalculated accordinginterest rates as well as on the duration of the ly. indebtedness. A borrower likely will require a • The margin is the markup that, when added lower expected average rate on an ARM than on to the index, establishes the scheduled rate, a fixed-rate loan to compensate for the risk of called the "program" rate, at each adjustment rate increases. interval. Others who may find ARMs attractive are • Initial discounts are the interest rate conceshomebuyers who expect to reside in their new sions offered on the first year or more of the loan home for only a short time. A low initial interest that reduce the interest rate below the program rate on an ARM, especially if combined with rate (that is, the index plus margin). Initial dislimits on periodic rate adjustments, can often counts are often offered as marketing aids on guarantee a relatively low average rate for some- ARMs. one planning to move again within, say, three • Caps are limits on the extent to which either years. ARMs may also appeal to those who the interest rate or the monthly payment can be expect their incomes, and therefore their ability changed at the end of each adjustment period or to make mortgage payments, to move closely in over the life of the loan. step with any rise in interest rates. Borrowers The mix of ARM features has varied considerconstrained by the income requirement for a ably since 1981 as creditors have gained experifixed-rate loan also may find the ARM attractive ence and consumer preferences have changed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adjustable-Rate Financing in Mortgage and Consumer Credit Markets 825 1. Commonly used ARM indexes interest rates have become more common. In early 1985, more than 95 percent of ARMs origi- • Percent nated at thrift institutions featured annual or lifetime caps or both. ARM lenders have faced several marketing questions in determining the combination of ARM features and rates that will maximize the profitability of their mortgage lending. Presumably, a lender will set ARM rates and terms to generate the same expected revenue as a fixed- I I i i rate mortgage over the anticipated life of the loan 1981 1983 1985 except for a concession in the ARM rate for lessened interest rate risk. In practice, a given 1. Yields on one-year securities. 2. Average cost of funds at thrift institutions in FHLB District 11 expected yield can be generated from any one of (California, Arizona, and Nevada). several sets of ARM features. For example, the 3. Median cost of funds at FSLIC-insured thrift institutions. potential cost to a lender of setting caps on Industry surveys indicate that immediately after periodic adjustments to the interest rate can be ARMs were authorized nationally, they often offset by reducing the initial discounts, by raising featured either three- or five-year interest rate margins, or both. adjustment periods. By early 1985, however, the The variety of design options consequently has adjustment interval of the typical ARM had been spurred a proliferation of ARM types. By one cut to one year. As the interval has been re- count, more than 400 distinct kinds of ARMs duced, more market-sensitive measures have were being originated early in 1984. More recentbeen chosen as indexes. Formerly among the ly, trade reports indicate some consolidation in most common indexes were the cost of funds at the variety of ARMs, partly because trading in federally insured thrift institutions nationwide or the secondary market requires a more standardin the home loan bank district covering Califor- ized product. The most common type has benia, Arizona, and Nevada (chart 1); now the come an ARM with annual interest rate adjustmore variable one-year U.S. Treasury borrowing ments tied to the yield on one-year Treasury rate is more widely used. securities; the adjustments are capped at 2 per- Two other important changes in the past few centage points annually and at 5 to 7 percentage years relate to the magnitude of the initial rate points over the life of the loan. discounts and the caps on adjustments to the Changes over time in the average initial interinterest rate. During 1983 and early 1984, some est rate on ARM loans have been affected by the lenders were offering large promotional "teaser" evolving mix of ARM features. As shown in discounts—3 to 6 percentage points below the scheduled ARM rate—in the initial period. In the 2. Effective initial interest rate case of new homes, the cost of the discount often on conventional home mortgages closed was paid by the builder, who "bought down" the interest rate and added the cost back into the Percent purchase price of the house. Recently, lenders and insurers have come to realize that large discounts usually render the loans unprofitable; also, lenders perceive the threat of regulation in reaction to consumer complaints of misleading lending practices. As a result, considerably fewer offerings of loans with large discounts seem to have been made during late 1984 and 1985. At the same time and for some of the same reasons, caps on annual and life-of-loan adjustments to Monthly data. SOURCE. Federal Home Loan Bank Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

826 Federal Reserve Bulletin • November 1985 3. Selected interest rate spreads loan originations—including conventional loans as well as federally insured or guaranteed mortgages—has tended to be high during periods of relatively high interest rates and lower at other times. Of secondary importance is the initial rate advantage on ARMs; that is, for any given general level of rates, the ARM share usually has been higher when the initial rate advantage on ARMs has been larger. This pattern is consistent with a choice by consumers of a fixed-rate loan when interest rates are low enough for them to have both the security offered by the fixed-rate and the house they want. But even at low fixed-rates, 1. Rates on new loan commitments at savings and loans; initial some homebuyers can be won over to adjustable rates in the case of ARMs. rates by larger initial rate advantages. chart 2, the spread between ARMs and fixed-rate The consumers who used ARMs to borrow mortgages has varied considerably during the during the first half , of 1982 and those who past four years. At first, when short-term interest borrowed with ARMs in 1984 may have had rates in general were unusually high relative to different reasons. Housing activity was low in longer-term rates, the average adjustable rate 1982 because of the high interest rates, reduced actually exceeded the fixed rate; later the two incomes, and lowered consumer confidence acrates occasionally moved in opposite directions. companying the business recession that contin- Generally, however, they have followed similar ued through the end of the year. Mortgage borpatterns of change. rowers in 1982, many of whom presumably had Much of the first-year rate advantage of ARMs little flexibility in the timing of their changes of in 1984 apparently reflected special initial dis- residence, were faced with an unattractive counts because neither the index values nor the choice: a fixed-rate loan at an unusually high other features of ARMs being written at that time interest rate, or an ARM with an equally high imply the relatively low initial rates. In 1985, by initial rate but at least the possibility of a subsecontrast, the initial interest rate advantage on quent downward adjustment. More than one- ARMs appears to have reflected mainly the fact third chose an ARM despite the lack of any initial that rates on short-term securities in general rate advantage. were low relative to long rates. Throughout the By 1984, total home mortgage lending was first half of 1985, the spread between initial rates more than double the volume of 1982, and the on one-year ARMs and rates on fixed-rate loans ARM share rose further in the first half of the with an expected life of roughly 10 years has year. By that time, interest rates on fixed-rate approximated the spread between Treasury se- loans had declined more than 2 percentage points curities of comparable maturities, as shown in from their 1982 peaks; but the initial rate on onechart 3. 4. ARM share of home loan originations Determinants of ARM Market Share Percent The volume of adjustable-rate mortgages in the marketplace demonstrates that many consumers have found them preferable to fixed-rate mortgages. The market share of ARMs, however, has varied substantially (see chart 4). Two factors that explain statistically much of the change in 1981 1983 1985 share are the general level of mortgage interest rates and the initial rate advantage on ARMs. Quarterly data. SOURCES. Federal Home Loan Bank Board, Federal Housing Other things equal, the ARM share of all home Administration, Veterans Administration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adjustable-Rate Financing in Mortgage and Consumer Credit Markets 827 year ARMs had fallen twice as much, and these 1. Home mortgage originations, by lender type, loans were widely available at first-year rates of 1984' 11 percent or less, compared with 13 percent or Percent of total dollar volume more for fixed-rate mortgages. Consumers were All ARM apt to be attracted to ARMs if they expected the Type of lender home loan originations originations ARM rate not to rise significantly—whether because of their expectations of market develop- Savings and loan associations ... 48 60 Mortgage companies 24 14 ments, caps on their rate adjustments, or inade- Commercial banks 20 13 Savings banks 6 8 quate understanding of the terms of their loans. Other institutional lenders 3 6 Also likely to choose an ARM during this period Total 100 100 were homebuyers with short expected durations of residence or with a desire for a mortgage 1. Data exclude home loans provided by individuals. NOTE. Components do not add to totals because of rounding. larger than the amount for which they could SOURCES. U.S. Department of Housing and Urban Development, qualify with fixed-rate financing. Federal Home Loan Bank Board, Federal Reserve Board. hance the interest rate sensitivity of their assets Impact of ARMs on Financial Institutions because they have held relatively more shortterm or variable-rate loans of other types. A variety of institutions offer home mortgage Mortgage companies have continued to conloans. Thrift institutions (savings and loan assocentrate on fixed-rate lending. One reason is ciations and savings banks) originated more than that, more than other lenders, they specialize in half of the total dollar volume in 1984, a fairly home loans that are insured by the Federal typical year in this respect. Commercial banks Housing Administration (FHA) or guaranteed by and mortgage companies accounted for most of the Veterans Administration (VA). FHA and VA the rest (table 1). By last year, thrift institutions loans accounted for approximately 15 percent of had become specialists in ARM lending. Savings the total dollar volume of home loans originated and loans issued a disproportionately large share in 1984, but such loans made up nearly half of the of all ARMs; their incentive to make ARMs has volume originated by mortgage companies. Not been greater than that for other lenders because until late 1984 did the FHA begin to insure of the wider gap between the average maturity of adjustable-rate mortgages, and the volume of assets and liabilities at savings and loans. The ARMs it has underwritten to date has been largest of these institutions have shown the insignificant. The VA has no guaranty program greatest tendency to make ARMs, and some of for ARMs. these institutions report that they no longer even offer fixed-rate home loans. The Secondary Market for ARMs Although more than half of all conventional home loans made by thrift institutions since late A second reason for the relatively few ARMs 1981 have been ARMs, most of the mortgage originated by mortgage companies is that these holdings of these institutions carry the fixed companies usually sell the mortgages that they rates prevalent in earlier years. Furthermore, originate rather than hold them, and there have some of the ARM holdings are not particularly been relatively few buyers of ARMs. Mortgage rate sensitive compared with deposits and bor- companies have, however, sold some ARMs to rowings at thrift institutions. Sluggish indexes of thrift institutions that want to increase the prothe cost of funds and caps on rate adjustments portion of ARMs in their portfolios. keep returns on a portfolio of ARMs from adjust- The Federal National Mortgage Association ing fully to market rates, even annually. To date, (FNMA) has been the other major purchaser of therefore, the reduction in the exposure of sav- ARMs from mortgage companies and other loan ings and loans to interest rate risk has been originators. FNMA has carried out its functions limited. of enhancing the liquidity and stability of the Commercial banks, too, have increased their mortgage and housing markets largely by buying ARM lending. These institutions have had less mortgage loans from "originators; it finances incentive than their thrift counterparts to en- these purchases by issuing debt. FNMA suffered Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

828 Federal Reserve Bulletin • November 1985 from the runup of interest rates in the late 1970s A final constraint on the growth of ARMand early 1980s because, like the thrift institu- backed mortgage securities has been the inclinations, it had a portfolio of mortgage loans with an tion of many thrift institutions to hold ARM average maturity longer than that of its liabilities. loans in their portfolios in order to narrow the In an attempt to reduce its maturity gap as well maturity gap between their assets and liabilities. as to generate fee income on its purchases, Because thrift institutions have been originating FNMA bought more than $9 billion of ARMs in roughly 60 percent of all ARMs since the begin- 1983-84, roughly 5 percent of all ARMs originat- ning of 1984, their retention of ARMs has signified during that period. cantly limited the potential flow of these instru- Few secondary market outlets for ARMs have ments to the secondary market. emerged other than FNMA and thrift institutions. A market for pass-through securities issued against pools of adjustable-rate mortgages Underwriting and Insuring ARMs has developed only slowly. This is one reason that the Federal Home Loan Mortgage Corpora- The potential with adjustable-rate mortgages for tion (FHLMC), a major issuer of fixed-rate mort- increases in interest rates, and therefore in gage pass-throughs, has not purchased a large monthly payments, raises the chances that some volume of ARMs so far. The lack of ARM- homeowners will be unable to meet the payments backed securities stands in sharp contrast to the on their ARM loans. Thus, while ARMs relieve situation in the fixed-rate mortgage market, lenders of some interest rate risk, they may where "securitization" of mortgages mainly expose lenders to greater credit risk—that is, the through the issuance of pass-throughs by risk that borrowers will default on the loans. FHLMC and FNMA or guarantees by the Although a homeowner's cash-flow difficulties Government National Mortgage Association can lead to delinquency on mortgage payments, (GNMA) has been a prime source of capital for an owner's equity in his or her house is the most mortgage lending. important determinant of default and eventual The slow pace at which ARM-backed mort- foreclosure on a loan. As long as the market gage securities have developed is in part a conse- value of a house exceeds the loan balance, an quence of the diversity of the product. First, the owner has an incentive to sell the property or to variations in ARMs make it difficult to create a borrow additional funds needed to meet the large pool of such loans with similar features, as payments rather than default. The possibility traditionally required to back a marketable se- that ARMs will generate low or even negative curity issue. Second, potential investors in an owner's equity is, therefore, the prime reason for ARM pass-through security can turn to alterna- concern about increased risk of default with tive outlets that have many of the desirable traits these loans. The average loan-to-value ratio on of ARM pass-throughs but none of the uncertain- ARMs has been comparatively high: on conventy regarding the duration of the investment or the tional ARM home loans originated between Janpossibility that caps will limit interest rate in- uary 1984 and July 1985, it was 78 percent; on creases. In this connection, the weak secondary conventional fixed-rate mortgages, it was 74 permarket to date for the FHA-insured ARM in cent. particular is attributable to investor coolness Another source of concern about owner's eqtoward the comparatively restrictive annual cap uity with ARMs is the scheduled or potential of 1 percent on interest rate adjustments on these negative amortization on some of these loans. loans. Because most FHA-insured and VA-guar- Graduated-payment ARMs and ARMs with caps anteed loans are originated for sale in the second- on increases on loan payments but not on the ary market via GNMA-guaranteed pass-through underlying interest rate can cause the loan balsecurities, the lack of investor demand for ance to build up over time, further shrinking the GNMA ARM securities has effectively blocked owner's equity; this can occur if the scheduled origination of FHA-insured ARMs in the primary interest payment goes up more than the maximarket. mum allowable increase in payment. The result- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adjustable-Rate Financing in Mortgage and Consumer Credit Markets 829 ing increase in loan principal may be repaid by ity of default. These measures were taken in higher future monthly payments or by extending response both to market forces and to the threat the life of the loan. These forms of ARMs have of renewed regulation motivated by concerns for accounted for only a small percentage of ARMs consumer protection. originated recently but were more common be- The multitude of ARM forms and their novelty fore this year. have made it difficult for consumers to assess the Because ARMs are still new and because rates advantages and the risks of all the alternative on which the ARM indexes are based have been kinds of loans available to them. Without adefalling during much of the period since 1981, quate information, consumers face greater reliable evidence has yet to emerge about the chances of entering credit agreements with more delinquencies and defaults on these loans. Expe- interest rate risk than they are prepared to bear. rience with fixed-rate mortgages suggests that Since early 1984, a variety of private and public home loans are most likely to go bad in the third actions have been taken to educate mortgage year after origination, and most ARMs are not borrowers about ARMs, including joint publicayet that old. Delinquency and default rates on tion by the Federal Reserve Board and the fixed-rate mortgages have reached postwar highs Federal Home Loan Bank Board of a congresin the past year as the average annual rate of sionally mandated booklet on ARMs, which is increase in property values slowed from 12 per- widely distributed to prospective mortgage borcent in the last half of the 1970s to about 3 rowers. And, in cooperation with lender and percent since 1981. (In some locales, house consumer groups, the Federal Reserve Board prices have even been declining.) By restricting continues to refine the information on rates rethe buildup of equity, slower appreciation in quired by law to be disclosed on certain mortprices may be expected to increase default rates gage contracts. for ARMs as well. Private mortgage insurance companies have a heavy stake in the incidence of default on home Effects of ARMs on Housing Demand loans whether with fixed or adjustable rates. These firms have insured roughly 30 percent of In theory the availability of ARMs might have all home loans originated in recent years and a stimulated aggregate housing demand during the somewhat larger share of adjustable-rate loans. past two years. That is, if the many home mort- Insurance, usually required by lenders for all gage borrowers who chose ARMs viewed them conventional mortgages with initial loan-to-value as a less expensive alternative to fixed-rate firatios greater than 80 percent, typically covers nancing, the perceived savings in credit costs the top 20 to 25 percent of the mortgage amount. might have been reflected in stronger housing Private mortgage insurers have already decided demand than would have existed otherwise, as that their risks of insuring ARMs exceed their well as in the selection of ARMs over fixed-rate risks on traditional fixed-rate business. In mid- mortgages. 1984, these companies raised their premiums on Furthermore, during much of the past three ARMs to a third or more above the premiums for years, an individual or family could qualify for a fixed-rate mortgages and raised the ratio of in- larger mortgage if the loan carried an adjustable come to initial loan payments required of new rate instead of a fixed rate. That was the case ARM borrowers. because qualifications were set with reference to The private mortgage insurance companies are the initial loan payment, which is typically lower not alone in their attempts to limit the potential on an ARM than on the corresponding fixed-rate for default on ARMs. Recently the Federal loan. Home Loan Bank Board, its subsidiary, the Somewhat surprisingly, recent studies indicate Federal Home Loan Mortgage Corporation, and that ARMs have generated little, if any, added the Federal National Mortgage Association have housing demand (see, for example, the study by all taken steps to restrict the origination and Howard Esaki and Judy A. Wachtenheim in the trading of those ARMs with the highest probabil- Winter 1984-85 issue of the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

830 Federal Reserve Bulletin • November 1985 Bank of New York's Quarterly Review). This more than $500 million, which account for 60 research has suggested that the strong expansion percent of all consumer loans, fewer than half of single-family housing construction since the were making adjustable-rate consumer loans by recessionary low of late 1981 has coincided with the end of last year, according to the American the emergence of ARMs but has not resulted Bankers Association, although as many as onefrom it. Other factors—notably lower interest third reportedly planned to offer adjustable rates rates on fixed-rate mortgage loans, the larger at some point (see table 2). Only about onenumber of potential homebuyers, and sustained fourth of the smaller banks made adjustable-rate growth in income and consumer confidence— loans, and fewer than that expressed any intenexplain most of the rise. Although conclusions tion to do so. At other financial institutions that can be only tentative at this early date, the lend to consumers, principally credit unions and anticipated savings with ARMs have apparently thrift institutions, the incidence of adjustablebeen sufficient to persuade consumers to switch rate lending apparently is lower than it is at forms of financing but not to alter substantially banks. their choices of housing. From another perspective, there is little evidence that ARMs have affected the degree to The Limited Appeal of Adjustable-Rate which housing production is sensitive to interest Consumer Loans rates. Because of ARMs, the mode of home financing may now vary with the general level of Multiyear fixed-rate lending in the consumer interest rates, but the volume of mortgage bor- market, like that in the mortgage market, began rowing and housing demand appears to vary to entail greater risks to lenders during the 1970s inversely with interest rates about as much as it as market rates of interest rose to unprecedented has in the past. levels and became more volatile as well. With the maturities of their liabilities typically shorter than those of their consumer loan assets, lenders faced an increasing risk that net yields on their CONSUMER CREDIT consumer loan portfolios would shrink. In addi- The movement toward adjustable-rate lending is tion, the looser regulation of interest rates paid less well documented in the consumer credit on consumer deposits and growing competition market than it is in the mortgage market. Adjust- for funds among bank and nonbank entities inable-rate instruments for consumer loans clearly tensified the risks to profitability associated with were developed later than the mortgage type and fixed-rate consumer lending by depository instihave spread more slowly. As a result, the ratio of tutions. On the other side of the transaction, the adjustable-rate to fixed-rate loans made today is availability of various adjustable-rate plans enmuch smaller for consumer lending than for abled credit seekers of widely differing expectamortgage lending. tions and risk tolerances to select loans tailored Among commercial banks with deposits of to their own specific tastes. 2. Consumer lending programs with adjustable rates at commercial banks, by size of bank Percent of respondents Currently offering Planning to offer adjustable-rate lending adjustable-rate lending SSiizzee ooff bbaannkk ((ddeeppoossiittss iinn mmiilllliioonnss ooff ddoollllaarrss)) 1981 1982 1983 1984 1981 1982 1983 1984 Less than 25 444444......333333 444444......000000 111111333333......888888 222222444444......000000 222222444444......333333 111111777777......888888 333333......111111 111111222222......000000 25-50 444444......555555 444444......000000 111111444444......000000 222222999999......666666 222222888888......000000 444444000000......000000 111111111111......333333 111111555555......222222 50-100 444444......222222 444444......555555 111111444444......111111 222222999999......555555 444444000000......444444 333333444444......333333 111111777777......999999 111111555555......555555 100-500 555555......111111 111111222222......444444 111111777777......333333 333333111111......444444 555555111111......888888 444444666666......999999 333333888888......777777 333333000000......222222 More than 500 111111000000......333333 111111777777......888888 333333444444......777777 444444222222......666666 666666444444......111111 666666333333......222222 444444000000......000000 333333555555......000000 SOURCE. American Bankers Association, Retail Bank Credit Report, 1982, 1983, 1984, and 1985 editions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adjustable-Rate Financing in Mortgage and Consumer Credit Markets 831 Nevertheless, the movement toward adjust- ties allows mortgage originators to lighten their able-rate lending has been much less rapid for exposure to interest rate movements. In conconsumer loans than for home mortgages. Al- trast, development of a market for securities though the same basic stimulants to adjustable- backed by consumer loans is at a very early rate lending have operated in both markets, they stage, limited so far to a few private placements. appear to be generally less critical in consumer Although lenders sometimes sell portions of their lending for both creditors and borrowers. consumer portfolios directly to other institutions, and some major consumer creditors have To Creditors. From the viewpoint of the credit sold "participations" in consumer credit acgrantor, adjustable-rate consumer loans may be counts on an ad hoc basis, regular channels for less appealing than ARMs because the interest secondary market transactions in consumer rate risk is less acute on loans with two- to four- loans are largely lacking—a situation that in itself year maturities—the typical term for the bulk of may reflect the lesser vulnerability of consumer consumer loans—than it is on mortgages with lenders to interest rate risk. terms of twenty-five to thirty years. With the On balance, the forces motivating institutions more rapid turnover of consumer loan portfolios to make adjustable-rate loans appear less comand the ability of lenders to match maturities on pelling in the consumer market than in the mortat least some of their consumer loans with matu- gage market. rities on longer-term certificates of deposit or similar liabilities, net yields on consumer lending To Borrowers. From a credit seeker's point of are simply less vulnerable than on mortgages to view, the lower initial interest rates generally adverse movements in market interest rates. available under adjustable-rate plans afford Also, the cost of making an adjustment, such as smaller benefits on consumer loans than on mortnotifying the borrower of the change, is greater gage loans. This situation reflects the smaller relative to the amount outstanding for a consum- principal amounts typically involved in a coner loan than for a mortgage loan. sumer loan and the smaller proportion of the In addition, the leading suppliers of consumer total payment that interest constitutes because of credit (commercial banks) have been much less the much shorter amortization period. At current exposed to the risks of fixed-rate lending than interest rate levels, for instance, an initial dishave the leading suppliers of mortgage credit count of 1 percentage point on a four-year, (savings and loan associations). Historically, $10,000 new-car loan would reduce the monthly long-term, fixed-rate mortgages have constituted payment $5; a 1 point concession on a thirtythe bulk of credit extended by savings and loans, year, $80,000 home mortgage would lower the whereas consumer loans typically have made up monthly payment $63 (table 3). less than 20 percent of commercial bank loan The potential impact of future rate adjustments portfolios. Moreover, a sizable portion of the on monthly and lifetime payments is likewise assets of commercial banks other than consumer smaller for consumer loans than for mortgages. loans already carry adjustable rates (or were Expectations of future rate movements thus written for very short terms), and the broader seem less crucial to borrowers contemplating an asset powers of banks permit them to channel adjustable-rate consumer loan than to potential funds away from consumer loans as an alterna- users of adjustable-rate mortgage credit. If bortive to establishing variable rates for such loans. rowers expected rates to rise, they would tend to Thus, commercial banks may have felt less in- resist taking on adjustable-rate mortgages withcentive to adopt adjustable-rate financing than out a sizable rate concession or the anticipation did their counterparts in the mortgage market. of near-term liquidation. Accordingly, the much On the other hand, originators of consumer higher proportion of adjustable-rate lending obloans do not enjoy the same access to a well- served in the mortgage market could, to some developed secondary market that mortgage origi- extent, reflect borrower expectations in recent nators do. For instance, the ability to package years that rates will fall; or it could reflect loans for sale through mortgage-backed securi- stronger efforts by mortgage lenders than by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

832 Federal Reserve Bulletin • November 1985 3. Impact of interest rates on monthly payments for on average, about one-fifth of the loans held by typical loans institutions offering such plans actually carried Dollars except as noted an adjustable rate. 48-month newhome mo Item car loan for loan $10,000 $80,000 Pricing of Adjustable-Rate Loans At 14 percent1 Principal 10,000 80,000 The terms that characterize consumer and mort- Total interest 3,117 261,240 Total obligation 13,117 341,240 gage loans differ in several ways. For instance, Monthly payment 273 rate caps of some kind, now almost universally At 13 percent1 applicable to mortgage loans, are apparently a Principal Total interest feature of only a little more than half of the Total obligation Monthly payment adjustable-rate consumer loans originated recently. Difference in monthly payment between loans at 13 and 14 percent The Index and the Initial Rate. According to Expressed in percent - the mid-1985 Trans Data survey, interest rates on Treasury bills are the most common base to 1. Annual percentage rate. which adjustable-rate consumer loans are inconsumer lenders to promote adjustable-rate dexed (table 4). In this they resemble ARMs. But loans through such inducements as annual or the prime rate on business loans—hardly ever lifetime caps on rate movements and limits on used as a reference rate for ARMs—is frequently payment increases. employed in consumer lending. In fact, in con- Another consideration that pertains less criti- sumer surveys sponsored by the Federal Reserve cally to the consumer market than to the mort- in 1983 and 1984, respondents having adjustablegage market is a borrower's ability to qualify for rate loans cited the prime rate far more often a loan. With a mortgage, the impact on the than any other as their index. In some cases an monthly payment of the difference between the prevailing fixed rate and the initially lower ad- 4. Features of adjustable-rate consumer loans at justable rate can be a crucial factor in determincommercial banks and thrift institutions ing whether a prospective homebuyer qualifies for a mortgage of given size. In contrast, because Percent of Feature institutions of the smaller impact of interest rate differentials on the size of monthly payments for consumer Index rate Rate on Treasury bills 39.7 loans, the difference between fixed and adjust- Prime rate 31.0 able rates is less likely to be a pivotal factor in a Own cost of funds 10.3 Federal Reserve discount rate 1.7 borrower's qualification for that type of loan. O • t her ' * • J ' " I 26.7 Adjustment period Monthly 45.8 Quarterly 32.5 Volume of Adjustable-Rate Lending Semiannual 10.0 Annual.... 4.2 flipper 20.0 The proportion of banks making adjustable-rate Adjustment method Maturity change consumer loans, according to a 1984 survey by Payment change the American Bankers Association, ranged from ^Balloon payment 25 percent for smaller banks to a bit more than 40 Interest rate caps Lifetime percent for the largest banks. A recent survey of Annual . None large banks and thrift institutions by the Trans Data Corporation had similar results: 45 percent MEMO: Lifetime floor of respondents offered adjustable-rate consumer SOURCE. Trans Data Corporation, 1985. Percentages do not add to loans in mid-1985. This survey also found that, 100 because some respondents provided more than one answer. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adjustable-Rate Financing in Mortgage and Consumer Credit Markets 833 institution will use a measure of its own cost of percent of the institutions specify caps on rate funds as an index rate. increases over the life of the loan, and about one- Initial rates on adjustable-rate consumer loans third place caps on the increase that can be made appear to range between V2 and V/2 percentage in any one year. (Some among these provide points below the corresponding fixed rate of- both types of caps.) Nearly one-third of the fered, with 1 point perhaps the most common lenders in the Trans Data survey establish a floor differential. for rate declines. Adjustment Period. Nearly half the lenders making adjustable-rate consumer loans specify monthly adjustments. Quarterly adjustments are Economic Impact of Adjustable-Rate also common. Fewer than 5 percent of the insti- Consumer Loans tutions making adjustable-rate consumer loans reprice them annually—the most widely followed The innovation of adjustable-rate consumer lendpractice in the mortgage market. ing could conceivably affect the overall supply of consumer credit and the quality of loan portfolios Adjustment Method. The most common meth- of lending institutions. Aggregate demand for od of accommodating a change in the interest consumer credit could be augmented by the rate on an outstanding consumer loan is to main- availability of a wider choice of loan types. tain a fixed size of payment and extend the maturity of the loan. When interest rates rise, Total Supply of Credit. The spread between this method generates extra loan payments at the the gross yield on a consumer loan portfolio and end of the scheduled term; when interest rates the cost of funds undoubtedly can be made more fall, it reduces the number of scheduled pay- stable if adjustable rates are used, and this prosments. But rarely will such a method result in pect may have expanded the aggregate supply of more than a couple of additional payments; for consumer credit somewhat in recent years. Still, instance, even in the unusually adverse event as noted above, the mismatching of maturities on that the rate on a three-year loan jumped immedi- assets and liabilities is much less severe in conately after it was made from 15 to 20 percent and sumer lending than in mortgage lending, so that remained at that level, only about three and one- the potential boost to the supply of consumer half additional monthly payments would be re- credit from adjustable-rate programs is probably quired. quite limited. Maturities on mortgage loans seldom are ex- The willingness of lenders to extend consumer tended in this manner. Given the high proportion credit has increased since the early 1980s, a trend of interest to principal in the early stages of that seems attributable more reasonably to facrepayment on a mortgage, upward rate adjust- tors other than adjustable rates. The widespread ments of as little as 1 percentage point can create raising or removal of state ceilings on consumer negative amortization when caps on annual in- interest rates was likely an important stimulant creases in mortgage payments are employed, as to supply. In 1979, when the sharp rise in market is often the case. At some point the entire loan is interest rates began, as many as 35 states were rescheduled, usually with the original maturity mandating ceilings of 13 percent or lower on date retained. new-car loans. Commercial banks, the largest suppliers of auto credit, retreated sharply from Rate Caps. Of the financial institutions making the auto loan market during the following three adjustable-rate consumer loans, nearly 40 per- years. More recently, with the various rate ceilcent provide no contractual limit on the extent to ings liberalized, average auto loan rates at banks which interest rates may rise if an increase is have fluctuated between 13 and 17 percent, and warranted by the indexing formula. (In some banks have returned in full force to the auto loan market. cases, however, state laws establish ceiling rates for various types of consumer loans.) About 45 Consumer credit supply, whether through ad- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

834 Federal Reserve Bulletin • November 1985 justable-rate or fixed-rate lending, has also been Credit Demands. Adjustable-rate financing augmented by the removal of barriers to the probably has had a minimal effect on credit participation of savings and loan associations in demand as well. Some econometric studies have consumer credit markets. These institutions identified consumer interest rates as a factor of have been the fastest-growing segment of the statistical significance in explaining observed market since 1982. Savings and loan portfolios levels of consumer credit, but the average effect have expanded at rates of 30 to 45 percent per of a change of 1 percentage point in rates—about year, advancing from an industry total of $16 the amount of the initial rate concession on an billion at the end of 1982 to $36 billion by mid- adjustable loan—generally is estimated to be 1985. While some of this expansion undoubtedly rather small. Presumably, the chance to benefit represents substitution for other sources of cred- from future rate reductions with an adjustableit, it seems likely that the presence of a new and rate loan could make individuals less reluctant to aggressive entrant into the market has added to borrow at high rates; adjustable rates are, howthe overall supply of consumer credit. ever, probably seldom the decisive factor behind a consumer's decision to borrow. Loan Quality. In the shifting of some portion of interest rate risk from lender to borrower OUTLOOK through adjustable-rate lending, the lender may take on increased credit risk: the risk that the Largely in response to the higher levels and borrower may be unable or unwilling to make greater volatility of interest rates in the late 1970s loan payments should the interest rate on the and early 1980s, adjustable-rate credit is appearloan be adjusted upward. ing more often on the menu of financing choices Little information is available on delinquencies available to households. Having become estabor defaults on adjustable-rate consumer loans. lished, adjustable-rate credit arrangements now Collection experience on such loans has not been seem likely to retain a significant position in both tested by a prolonged period of sharply rising home mortgage and consumer financing. There interest rates. However, in view of the relatively always will be some borrowers and lenders small effect that even large rate changes would whose needs and preferences can be met best by have on the size or the number of monthly adjustable-rate financing. At the same time, compayments, a high incidence of delinquencies due petitive pressures will continue to work toward solely to adjustable rates does not seem likely. maintaining the availability of fixed-rate credit At the margin, a few borrowers may be unable to because other borrowers will always be willing to handle an increased loan payment, and slower pay what lenders require to provide the security amortization of a loan collateralized by a depre- of fixed-rate financing. ciating asset may lead a few borrowers with The shares of adjustable- and fixed-rate credit negative equity to stop repaying a loan. But in the marketplace are likely to continue to defaults that hinge on the small changes in pay- change in response to the level and fluctuations ments stemming from interest rate adjustments in short- and long-term interest rates, much as should be rare. the ARM share of home mortgages has varied Rates of delinquency on consumer loans during the past three years. And as lenders dropped during the current economic upswing to acquire more experience and sophistication with their lowest levels in more than 10 years, though adjustable-rate financing, they may modify their they retraced part of their decline in the first half pricing of these loans, even in the absence of any of 1985. However, the overall downtrend in change in market interest rates. Consumers, too, delinquencies seems attributable mainly to the can be expected to become more knowledgeable generally buoyant economic conditions since about adjustable-rate lending and therefore more 1982 and to an unusually low level of consumer fully informed in their choices. A greater number debt entering the recovery period rather than to of informed borrowers will benefit both houseany favorable impact of interest rate adjustments holds and lenders by helping them avoid illin a period of gradually declining rates. advised financing decisions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adjustable-Rate Financing in Mortgage and Consumer Credit Markets 835 So far, adjustable-rate credit appears to have ket deposit accounts and money market mutual had more impact on the composition of house- funds. Any detrimental impact of rising interest hold balance sheets than on aggregate demand rates on the sector as a whole should, therefore, for housing and consumer goods. As pointed out be quite limited, although individual borrowers earlier, the favorable initial price of adjustable- with relatively few financial assets—such as rate credit appears to have had only a small some first-time home buyers using ARMs—may impact on total demand. Rate adjustments as experience difficulty. well have probably had only a small aggregate Plainly, adjustable-rate credit enhances the effect on demand, although the ability of a house- ability of the financial system to accommodate hold sector with substantial adjustable-rate debts large changes in market conditions. And finally, to maintain expenditure levels or to avoid finan- it should be noted that the growing prevalence of cial strains during periods of rising interest rates adjustable-rate financing is producing a broader has yet to be seriously tested. The household constituency of consumers with a direct and sector lends more than it borrows, however, and immediate concern about financial market devela sizable share of the sector's assets are in opments that affect interest rates. • adjustable-rate instruments, such as money mar- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

836 Profitability of Insured Commercial Banks in 1984 Deborah J. Danker and Mary M. McLaughlin of ings began to show signs of improvement as the Board's Division of Research and Statistics some large banks reported higher profits and the prepared this article. Chinhui Juhn and Rachel midyear downturn in market interest rates low- Valcour provided research assistance. ered the cost of liabilities more rapidly than the return on assets for many banks. Nevertheless, The profitability of insured commercial banks the slowdown in economic growth in the second declined again in 1984. Another sharp rise in half of the year and continued financial distress loan-loss provisions cut the industry's return on in certain sectors of the economy left the outlook average net assets to 0.64 percent and the return for asset quality clouded, raising questions about on equity to 10.5 percent, down substantially when any sustained upturn in banking industry from the 1979 highs of 0.80 and 13.9 percent profitability might occur. respectively. Deteriorating asset quality—mani- Despite a decline late in the year, market fested in higher delinquency rates, increased interest rates were approximately 1 percentage provisions for loan losses, and larger net charge- point higher on average in 1984 than the year offs—was an important factor in the worsening before. This rise was reflected in offsetting incondition of many banks. These and other diffi- creases in commercial bank interest income and culties in the banking system were underscored expense, which left the industry's interest marby the failure of 78 insured commercial banks, gin only slightly changed on balance. The small more than in any year since the founding of the increase in the interest margin apparent in table 1 Federal Deposit Insurance Corporation half a did little to outweigh a large expansion in loancentury earlier. loss provisions; but an improvement in the bal- Toward the end of 1984, however, bank earn- ance of other noninterest expenses and noninter- 1. Income and expense as percent of average net assets, all insured commercial banks, 1980-841 Item 1980 1981 1982 1983 1984 Gross interest income 9.87 11.81 11.19 9.50 10.12 Gross interest expense 6.78 8.75 8.02 6.36 6.% Net interest margin 3.09 3.07 3.17 3.15 3.16 Noninterest income .89 .99 1.05 1.12 1.27 Loan-loss provision .25 .26 .40 .47 .56 Other noninterest expense 2.63 2.76 2.91 2.95 3.05 Securities gains (-losses) -.05 -.08 -.06 .00 -.01 Income before taxes 1.05 .96 .84 .84 .81 Taxes2 .26 .20 .14 .18 .19 Extraordinary items .00 .00 .00 .00 .01 Net income .79 .76 .71 .67 .64 Cash dividends declared .29 .30 .31 .33 .32 Net retained earnings .50 .46 .39 .34 .32 MEMO: Net interest margin, taxable equivalent3 3.45 3.44 3.54 3.50 3.53 1. Assets are fully consolidated and net of loan-loss reserves; 3. For each bank with profits before tax greater than zero, income averages are based on amounts outstanding at the beginning and end from state and local obligations was increased by [1/(1 - 01 times the of each year. lesser of profits before tax or interest earned on state and local 2. Includes all taxes estimated to be due on income, extraordinary obligations (t is the marginal federal income tax rate). This adjustment gains, and security gains. approximates the equivalent pretax return on state and local obligations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

837 est income helped bolster bank profits in 1984. 2. Rates paid for fully consolidated liabilities, The rise in noninterest income indicated that all insured commercial banks, 1980-841 banks were moving more and more into fee- Percent producing financial services, both by expanding Item 1980 1981 1982 1983 1984 into new product areas and by continuing the Interest-bearing deposits . 10.66 13.42 12.10 9.32 10.04 trend toward explicit pricing of traditional bank- Large certificates of ing products. Moreover, the more moderate in- deposit2 12.56 16.42 14.13 8.90 10.69 Deposits in foreign crease in noninterest expenses suggested that the offices2 14.03 17.37 14.87 10.32 12.62 Other deposits 8.10 10.07 9.99 9.11 9.02 industry was managing to generate that addition- Gross federal funds pural business in a generally profitable manner. chased and repurchase agreements ... 14.69 17.53 12.84 9.69 11.27 (Detailed income and expense data for all insured Other liabilities for borrowed money3 ... 11.01 13.84 12.81 11.88 13.42 commercial banks are displayed in appendix Total 11.10 13.89 12.21 9.46 10.30 table A.l.) 1. Calculated as described in the "Technical Note," FEDERAL The drop in profitability last year was especial- RESERVE BULLETIN, vol. 65 (September 1979), p. 704. ly sharp at small banks in general and at small 2. Series break after 1983. Reporting instructions classified international banking facilities as domestic offices through the end of 1983 agricultural banks in particular. Aggregate net and as foreign offices thereafter. Income data are not sufficiently income as a share of assets at small banks (those detailed to allow construction of consistent series on the new basis for rates of return, as has been done with balance sheet data in other with consolidated assets of less than $100 miltables in this article. lion) declined 14 basis points, compared with the 3. Including subordinated notes and debentures. industry's overall decline of just 3 basis points. Profits at these banks eroded as their interest fleeted the market's heightened concern about margin narrowed significantly, a development threats to the stability of financial institutions. attributable in part to the large number of agricul- These threats were dramatized by the loan qualitural banks included in the small bank category. ty and funding difficulties of the Continental Deteriorating loan quality contributed to the Illinois Bank, which faced a liquidity crisis durweaker performance by agricultural banks in ing May 1984. In addition to that situation, which maintaining interest margins as more loans were was resolved later in the year with a permanent placed on nonaccrual status. In addition, these assistance plan put together by the regulatory banks charged off 1.4 percent of their loans, authorities, the outlook for international debt almost double the industry average, and their repayments and other aspects of credit quality provisions for loan losses soared 50 percent continued to concern many holders of bank above the 1983 figure. On balance, the return on obligations. net assets at agricultural banks declined a full 30 Despite the large rise in CD rates, the indusbasis points, pulling them out of the ranks of the try's average interest expense on deposits and most profitable banks, a position they previously borrowings increased only about half as much as had occupied. average market rates in 1984, or about 60 basis points. Upward pressure on interest expense was moderated by the substitution of less expensive INTEREST EXPENSE retail-type deposits for more costly money market liabilities; large CDs, federal funds purchased During 1984, the higher average level of market and, especially, the relatively expensive deposits interest rates translated into higher average rates at foreign offices all became smaller components paid on most bank liabilities (see table 2). In fact, of the aggregate balance sheet (see table 3). Also, interest rates on banks' money market liabilities the fixed-rate nature of a portion of deposits— rose more than those on many other types of owing both to the presence of long-term time obligations with, for example, the spread be- deposits and to binding interest rate ceilings on tween rates on large certificates of deposit (CDs) demand deposits, passbook savings, and regular and on U.S. Treasury bills widening 35 to 40 NOW accounts—limited the increase. basis points as compared with 1983 averages. The change in bank liability structure in 1984 The higher relative rates on bank liabilities re- continued the pattern that had become evident in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

838 Federal Reserve Bulletin • November 1985 3. Selected liabilities as a percent of total assets, all insured commercial banks, 1980-841 Domestic offices Fully consolidated offices IItteemm 1980 1981 1982 1983 1984 1980 1981 1982 1983 1984 Deposit liabilities 76.93 76.09 74.95 74.99 75.60 79.56 78.61 77.61 77.68 78.06 In foreign offices 16.05 15.93 15.79 14.71 13.65 In domestic offices 63.50 62.68 61.82 62.97 64.41 Demand deposits 29.11 25.20 21.03 19.68 19.43 24.03 20.76 17.35 16.53 16.55 Other checkable deposits 1.16 2.95 4.16 4.80 5.12 .96 2.43 3.43 4.03 4.36 Large time deposits2 15.50 17.15 17.71 14.46 13.41 12.79 14.13 14.61 12.15 11.42 Other deposits3 31.17 30.79 32.05 36.04 37.64 25.73 25.37 26.43 30.26 32.07 Gross federal funds purchased and repurchase agreements 8.38 9.12 9.67 9.28 8.66 6.94 7.54 7.99 7.81 7.40 Other borrowings 2.27 2.18 2.24 2.47 2.41 2.63 2.62 2.64 2.84 2.80 MEMO Money market liabilities4 26.14 28.45 29.62 26.22 24.48 38.42 40.21 41.04 37.51 35.28 Average assets (billions of dollars) 1,459 1,598 1,733 1,897 2,043 1,767 1,939 2,101 2,259 2,398 1. Percentages are based on aggregate data and thus reflect the 2. Deposits of $100,000 and over. heavier weighting of large banks. Data are based on averages for call 3. Including savings, small time deposits, and MMDAs. dates in December of the preceding year and in June and December of 4. Large time deposits issued by domestic offices, deposits issued the current year. The 1984 data are based on averages for call dates at by foreign offices, subordinated notes and debentures, repurchase the beginning and end of the year only. agreements, gross federal funds purchased, and other borrowings. the preceding year when the upward trend in larger. Specifically, money market liabilities demoney market liabilities was reversed and retail- clined markedly, to the equivalent of 58.4 from type accounts began to become substantially 61.5 percent of total assets at these banks, while more important. The spur for the 1983 changes retail-type accounts increased commensurately, was largely regulatory: the introduction of Super and even demand deposits rose somewhat as a NOWs and money market deposit accounts share of assets. At the small banks, by contrast, around the beginning of that year and the remov- the share of money market liabilities grew; alal of interest rate ceilings on most small time though most categories of retail-type deposits did deposits attracted funds into the retail-type ac- show some increases, these were more than counts. Although regulation of deposits changed offset by the drop of almost 1 percentage point in little during 1984, the pattern of liability shifts demand deposits as a share of assets. Even with seen in the previous year continued, with the this unfavorable change in the structure of their most growth occurring in other checkable depos- liabilities, however, the small banks scored the its and the "other deposits" category of table 3, smallest rise in interest expense, again demonwhich consists of MMDAs, savings, and small strating their still substantial insulation from fluctime deposits. tuations in market rates. Money market liabilities As the middle panel of the chart demonstrates, accounted for just 11.6 percent of total assets at both the levels of and the changes in interest these banks, and despite the increase in 1984, the expense varied according to bank size. The relative unimportance of these liabilities kept group containing the nine largest banks, at which interest expense from moving more promptly money market liabilities account for the bulk of with market rates. Although the interest expense liabilities, had the highest level of interest ex- at medium-sized banks rose more rapidly than pense as well as the largest increase of any that at the small banks, the medium-sized banks group.1 A favorable shift in the composition of continued to show the lowest average interest liabilities at these money center banks kept the expense of any group. This cost containment was rise in overall interest expenses from being even achieved through a combination of a liability mix more favorable than that at larger banks, along with average rates paid lower than those at smaller banks. (Data on liability and asset composition, earnings, and rates paid and earned are 1. The group of banks classified as the money center banks has been changed from previous years' articles to be the nine contained in appendix table A.2, disaggregated largest banks, ranked by total consolidated assets as of by bank size.) December 31, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 839 Components of interest margin types (see tables 4 and 5). Compared with securities, loans also have a shorter average maturity Percent of average assets or repricing interval and thus allow higher mar- GROSS INTEREST INCOME ket rates to show through more quickly in interest income. Moreover, the most rapid growth occurred in consumer and mortgage lending, where rates tend to be higher than on, say, commercial and industrial loans. During the second year of the economic expansion, consumers remained willing to incur debt at the same time that low delinquency rates on that debt helped make banks willing to lend. In addition, a series of large corporate mergers and acquisitions was, at times, a significant factor influencing the growth of bank loans, especially during the first half of the year. As with interest expense, interest income in 1984 rose more rapidly at the larger banks than at the smaller banks. This development stemmed primarily from the shorter effective maturity of the larger banks' assets. To illustrate, the share of loans in total assets was more than 62 percent at the nine money center banks, but was just 52 percent at the small banks. And loans at the money center banks were more concentrated in NET INTEREST MARGIN the relatively short-term commercial and industrial category, so that the average maturity of their loans at year-end was 13 months, compared with 19 months for loans at small banks. The contrast in portfolio composition is even more striking in holdings of securities, the average maturity of which was more than twice that of loans. In particular, the nine largest banks held just under 7 percent of their assets in investmenti i i i i i i i r r i i i i account securities, while for small banks as a 1972 1976 1980 1984 group the comparable figure was more than 30 Size categories are based on year-end consolidated assets of each percent. bank. Gross interest income is adjusted for taxable equivalence. Net 4. Rates of return on fully consolidated portfolios, interest margin is gross interest income adjusted for taxable equivaall insured commercial banks, 1980-841 lence minus gross interest expense. Data are for domestic operations until 1976, when foreign office Percent operations of U.S. banks were consolidated into the totals. Item 1980 1981 1982 1983 1984 Securities, total 7.87 9.28 9.96 9.83 9.95 State and local government . 6.02 6.74 7.20 7.04 7.51 Loans, gross 13.71 16.38 15.20 12.70 13.64 INTEREST INCOME Net of loan-loss provision 13.20 15.83 14.38 11.76 12.53 Taxable equivalent2 Total securities 10.18 11.65 12.43 12.06 12.18 Interest income also rose in 1984, propelled by State and local government . 11.01 11.96 12.81 12.58 13.45 Total securities and gross the higher average level of market interest rates loans 12.87 15.24 14.56 12.55 13.29 and assisted by a shift in the composition of bank portfolios toward loans, which generally yield 1. Calculated as described in the "Technical Note," FEDERAL RESERVE BULLETIN, vol. 65 (September 1979), p. 704. the highest gross rate of return of the major asset 2. See table 1, note 3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

840 Federal Reserve Bulletin • November 1985 5. Selected portfolio items as a percent of total assets, all insured commercial banks, 1980-841 Domestic offices Fully consolidated offices IItteemm 1980 1981 1982 1983 1984 1980 1981 1982 1983 1984 Interest-earning assets 80.40 80.78 82.06 81.91 81.83 83.11 83.83 85.10 85.22 84.94 Loans 55.02 54.27 54.44 53.46 54.51 55.34 55.15 56.06 55.73 56.80 Securities 20.09 20.09 19.58 20.31 20.17 17.06 17.00 16.56 17.47 17.64 U.S. government 10.12 10.45 10.40 11.65 11.63 8.38 8.63 8.59 9.79 9.91 State and local government 9.50 9.20 8.75 8.11 7.94 7.88 7.62 7.25 6.84 6.80 Other bonds and stocks .67 .44 .43 .54 .60 .81 .75 .73 .83 .94 Gross federal funds sold and reverse repurchase agreements 4.43 4.81 5.30 5.13 4.88 3.68 3.99 4.41 4.34 4.18 Interest-bearing deposits .86 1.61 2.75 3.01 2.28 7.03 7.69 8.06 7.69 6.32 MEMO: Average assets (billions of dollars) 1,459 1,598 1,733 1,897 2,043 1,767 1,939 2,101 2,259 2,398 1. Percentages are based on aggregate data and thus reflect the the current year. The 1984 data are based on averages for call dates at heavier weighting of large banks. Data are based on averages for call the beginning and end of the year only. dates in December of the preceding year and in June and December of Despite the relatively low increase in interest banks as a whole remained the highest of the four income at small banks, that group continued to groups, and in fact was almost double that of the post the highest interest earnings of the four size nine money center banks. So while the differclasses (see the top panel of the chart). Their ences among sizes of banks lessened, they rehigh earnings were not, as noted earlier, a func- mained substantial (see the bottom panel of the tion of a particularly favorable portfolio compo- chart). sition, but instead resulted from the high rates of A reversal in rank did occur, however, bereturn that small banks earned on both loans and tween agricultural banks and mortgage-oriented securities—in each case outpacing the industry commercial banks, as a contraction in the interaverage by at least 50 basis points. est margin of the former combined with a small increase in the margin at the latter.3 Despite NET INTEREST MARGIN growing concern over the quality of the collateral backing real estate loans, the reversal in rank In the aggregate, the interest margin of commer- also was apparent in net income figures; aftertax cial banks increased slightly during 1984. All of profits edged higher at banks specializing in the improvement, however, can be attributed to mortgages, to 0.84 percent of net assets, while the widening of 8 basis points in the margin of profits of agricultural banks plunged to 0.71 those banks with consolidated assets of more percent. than $1 billion, excluding the nine money center banks. This group of "other" large banks restrained interest expense, in part by a sizable LOAN LOSSES shift in the structure of liabilities away from money market liabilities and toward retail-type For the third consecutive year, provisions for deposits, while managing to record a significant loan losses overshadowed interest or noninterest increase in income. margins as factors determining the trend in over- By contrast, the interest margin of small banks all profitability of insured commercial banks. deteriorated 10 basis points. Although the poor With business bankruptcy rates in the United performance of agricultural banks, which consti- States still high and the outlook for growth in tute fully one-third of small banks, was an impor- developing countries uncertain, the banking intant cause, a marked narrowing of interest margins was evident among other small banks as well.2 Nevertheless, the interest margin of small agricultural production; this group contained 3,899 banks in 1984. 2. Agricultural banks include commercial banks with at 3. The mortgage group includes commercial banks with at least one-quarter of loans at their domestic offices allocated least one-quarter of their net assets in loans secured by real to farm real estate mortgages and loans made to finance estate; in 1984, this group contained 3,525 banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 841 6. Loan losses and recoveries, all insured commercial banks, 1980-84 Millions of dollars Net charge-offs YYeeaarr aanndd ssiizzee ooff bbaannkk11 LLoosssseess RReeccoovveerriieess LLooaann--lloossss cchhaarrggeedd Percent of pprroovviissiioonn Amount loans2 1983 All banks 10,456 2,056 8,401 .66 10,614 Less than $100 million 2,001 387 1,615 .84 1,895 $100 million to $1 billion 11,,994411 393 11,,554488 .64 11,,992277 $1 billion or more Money center banks 2,059 450 1,609 .45 2,057 Others 4,454 826 3,629 .77 4,736 1984 All banks 12,564 2,038 10,471 .77 13,331 Less than $100 million 2,284 401 1,879 .94 2,344 $100 million to $1 billion 2,059 420 11,,770099 .65 22,,119977 $1 billion or more Money center banks 2,604 445 2,101 .57 2,925 Others 5,623 817 4,783 .91 5,866 1. Size categories are based on year-end fully consolidated assets. 2. Average of beginning- and end-of-year loan balances. dustry increased additions to loan-loss reserves 9 tural banks increased their provisions by a recbasis points, bringing loan-loss provisions to a ord 30 basis points to 0.89 percent of net assets. new high of 0.56 percent of net assets (see table International loans remained a source of asset 1). The rise paralleled that of loans charged off quality problems for commercial banks in 1984. (net of recoveries), which jumped 11 basis points The proportion of foreign-office loan portfolios to 0.77 percent of average loans (see table 6). reported as delinquent was 1.5 percentage points Since loan-loss reserves are counted as primary higher than the 4.1 percent at domestic offices.4 capital for regulatory purposes, improving capi- And as was the case in 1983, at money center tal-to-asset ratios may have been another motive banks the share of commercial and industrial for additions to these reserves. loans to non-U.S. addressees in total net charge- Both the rate of loan charge-offs and provi- offs was, at 29 percent, larger than the share of sions increased at all sizes of banks. Medium- such loans in total loans, 26 percent. Provisions sized banks, however, did significantly better for losses on international loans (booked at either than the others. The portion of their loan portfo- domestic or foreign offices) increased very little lio made up of delinquent and nonaccruing loans, in 1984. At the nearly 200 banks with foreign as well as their charge-off rate, was well below offices, international loan-loss provisions rethe industry average. These banks increased mained at 0.13 percent of average assets, while their provisions and charge-offs just 1 or 2 basis provisions for loan losses attributable to the points at the same time that the nine largest banks' domestic business jumped 11 basis poinis banks raised theirs on the order of 10 to 15 basis to 0.45 percent. points. In the aggregate, the other two groups of banks incurred losses and added to reserves at rates similar to those at the nine money center banks. But the deterioration at the group of other OTHER NONINTEREST EXPENSES AND large banks can be attributed entirely to the NONINTEREST INCOME performance at Continental Illinois, and the deterioration at small banks was due primarily to the The margin between noninterest income and worsening situation at agricultural banks. As expenses as a share of net assets improved noted earlier, banks with at least one-quarter of their loan portfolios concentrated in loans to farmers wrote off more than 1.4 percent of their 4. Delinquent loans include those that are more than 30 loans in 1984. In light of depressed commodity days past due but still accruing, those placed on nonaccrual status, and renegotiated "troubled" debt, as defined for the prices and falling farm asset values, the agricul- Call Report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

842 Federal Reserve Bulletin • November 1985 5 basis points in 1984. This improvement was been due to heavier spending on marketing, evident across the industry except at the large automation, and new product development. banks other than money center banks, where the The growth of noninterest income relative to margin was essentially unchanged. Although net assets rose markedly in 1984 over the pace in both components rose, the ratio of noninterest the past couple of years, both for the banking income to assets grew more sharply and out- system as a whole and for banks in each size paced its growth of recent years, rising 15 basis class. Service charges on deposit accounts were points to 1.27 percent. The growth in noninterest not an important factor in the increase, except at expense relative to assets was only slightly faster small banks, where a modest rise in these than the 1983 pace, increasing 10 basis points to charges was the predominant contributor to the 3.05 percent. The two groups of smaller banks growth in noninterest income. Gains in income improved their noninterest margins by increasing from trading account activity appeared only at income and reducing expenses, while the larger the money center banks where this component banks showed higher levels of both components. contributed one-third of the total rise. By far the The nine money center banks exhibited the most largest factor for the industry as a whole was the striking growth in both income and expenses, growth in other noninterest income. At the large lifting noninterest income, for example, more banks the increase likely was due importantly to than 25 percent. growth and development of off-balance-sheet In 1983 most of the differences among bank products, such as loan participations, interest groups in the changes in noninterest expense rate swaps and caps, and credit enhancement were due to salaries and benefits. In 1984, how- (primarily through the issuance of standby letters ever, wage expenses changed little, rising only of credit). slightly at large banks and decreasing marginally at other banks. Occupancy expense was also PROFITABILITY, DIVIDENDS, AND CAPITAL about the same in the aggregate and among banks of various sizes; only the money center banks Insured commercial banks were less profitable in showed a noticeable advance, up 5 basis points 1984 than at any time in the past 20 years. The relative to net assets. Most of the growth in return on average net assets dipped 3 basis points noninterest expense occurred in the "all other" to 0.64 percent; similarly, the return on equity category, and all of this rise was at banks with fell 72 basis points to 10.52 percent (see table 7). assets of more than $1 billion. Although no direct However, these trends were far from uniform data are available, this increase may well have across sizes of banks. In fact, much of the 7. Profit rates, all insured commercial banks, 1980-84 Percent Type of return and size of bank1 1980 1981 1982 1983 1984 Return on assets2 All banks .79 .76 .71 .67 .64 Less than $100 million 1.18 1.14 1.06 .96 .82 $100 million to $1 billion .91 .91 .83 .84 .88 $1 billion or more Money center banks .56 .53 .53 .53 .52 Others .65 .66 .66 .53 .51 Return on equity3 All banks 13.67 13.11 12.09 11.24 10.52 Less than $100 million 14.19 13.45 12.50 11.18 9.65 $100 million to $1 billion 13.63 12.85 11.75 11.86 12.30 $1 billion or more Money center banks 14.57 13.58 13.22 12.53 11.42 Others 12.63 12.75 11.38 10.12 9.37 1. Size categories are based on year-end fully consolidated assets. 3. Net income as a percent of the average of beginning- and end-of- 2. Net income as a percent of the average of beginning- and end-of- year equity capital, year fully consolidated assets net of loan-loss reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 843 8. Sources of increases in total equity capital, all insured commercial banks, 1980-84 Millions of dollars, except as noted Retained income1 Net increase in equity Percent of increase in equity capital capital from retained income YYeeaarr All banks Large banks All Large All Large banks banks2 banks banks (c c o o l l u u m m n n 1 3 ) - h (c c o o l l u u m m n n 2 4 ) + (1) (2) (3) (4) (5) (6) 1980 8,827 3,844 10,408 4,566 85 84 1981 8,847 4,104 11,162 5,465 79 75 1982 8,283 4,051 9,373 4,578 88 88 1983 7,651 3,621 10,738 5,625 71 64 1984 , 7,647 3,820 14,584 8,967 52 43 1. Net income less cash dividends declared on preferred and 2. Banks with fully consolidated assets of $1 billion or more at yearcommon stock. end. deterioration was concentrated at small banks, income to net assets translated into a drop of 15 which were affected in the aggregate by the poor basis points in retained income and a rise of 1 performance of agricultural banks. The return on basis point in dividends declared. For the indusassets at agricultural banks fell 30 basis points to try as a whole, dividends fell slightly as a ratio to 0.71 percent, and their return on equity dropped net assets, but continued to increase in dollar 3.44 percentage points to 8.03 percent. The mon- terms (table A.l). The only group to cut their ey center banks showed little change in profits cash dividends was the money center banks. relative to assets, but their return on equity fell The industry's primary capital-to-assets ratio more than 1 percentage point as they added to rose in 1984, ending the year at just over 7 capital. In contrast to the national average, medi- percent; banks with $1 billion or more in assets um-sized banks and other large banks (excluding raised their ratio to about 6V4 percent. Large the money center banks and, in this case, Conti- banks made a concerted effort to bring their nental Illinois) showed some improvement in capital-to-assets ratios in line with new regulaprofitability. Banks with foreign offices posted a tory guidelines both by reducing assets (such as small drop in profitability, all of which they selling loan participations and emphasizing other attributed to their international business.5 Profits off-balance-sheet activity) and by issuing stock from international operations fell to 33 percent of (primarily mandatory convertible debt) and total net profits at these banks, down from 37 building up loan-loss reserves. percent in 1983. The industry further increased its capital dur- The decline in overall banking profitability was ing the first half of 1985, lifting the aggregate reflected primarily in lower retained income (see primary capital-to-assets ratio to about 7lA pertable 8). Continuing the downward trend of re- cent. Some of this rise stemmed from expanded cent years, banks retained approximately one- flows of retained income as the industry posted half of their aggregate net income in 1984, com- higher profits; its aftertax return on assets pared with the 63 percent retained in 1980, for reached 0.74 percent, up from 0.64 during the example; The drop in retained earnings last year first half of the preceding year. The improvement was concentrated at the small banks, where a in profitability was very narrowly distributed, decline of 14 basis points in the ratio of aftertax however, as three out of four size groups saw their profitability decline. Only large banks (ex- 5. The usual discussion of insured U.S. commercial banks cluding money center banks) recorded an inwith foreign offices is not included in this article because crease, and much of that owed to Continental reporting changes effective with the 1984 Call Report made Illinois' return to profitability. comparisons with previous years not meaningful. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

844 Federal Reserve Bulletin • November 1985 A.l. Report of income, all insured commercial banks, 1980-84 Millions of dollars, except as noted Item 1980 1981 1982 1983 1984 Operating income, total 190,020 247,568 257,283 239,255 271,376 Interest, total 174,350 228,394 235,242 214,089 241,055 Loans 126,601 162,964 166,672 151,356 174,018 Balances with banks 16,037 23,904 23,866 16,738 16,493 Gross federal funds sold and reverse repurchase agreements 8,726 12,182 11,308 9,198 10,403 Securities (excluding trading accounts) 22,986 29,345 33,396 36,796 40,141 U.S. government 13,394 18,019 21,028 24,204 State and local government 8,167 9,704 10,647 10,618 Other1 1,425 1,622 1,721 1,974 Service charges on deposits 3,162 3,891 4,583 5,399 6,486 Other operating income 12,508 15,283 17,458 19,767 23,835 Operating expense, total 171,474 229,079 239,548 220,259 251,980 Interest, total 119,746 169,074 168,646 143,210 165,860 Deposits 98,115 138,826 141,180 119,840 138,465 Large certificates of deposits 24,746 38,895 37,365 22,523 25,288 Deposits in foreign offices 34,942 46,696 41,754 29,022 35,687 Other deposits 38,427 53,235 62,061 68,295 77,490 Gross federal funds purchased and repurchase agreements 16,718 23,752 20,628 16,438 18,957 Other borrowed money2 4,913 6,496 6,838 6,933 8,438 Salaries, wages, and employee benefits 24,540 27,900 31,244 33,636 36,332 Occupancy expense3 7,318 8,558 9,975 11,100 12,029 Loan-loss provision 4,474 5,079 8,429 10,614 13,331 Other operating expense 14,540 16,872 19,975 21,669 24,291 Securities gains or losses (-) -857 -1,595 -1,282 -30 -138 Income before tax 18,546 18,488 17,735 18,996 19,397 Applicable income taxes 4,644 3,859 2,975 4,076 4,427 Extraordinary items 19 57 64 70 215 Net income 13,921 14,687 14,824 14,989 15,184 Cash dividends declared 5,094 5,840 6,541 7,338 7,536 1. Includes interest income from other bonds, notes and deben- 3. Occupancy expense for bank premises net of any rental income tures, and dividends from stocks. plus furniture and equipment expenses. 2. Includes interest paid on U.S. Treasury tax and loan account balances and on subordinated notes and debentures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 845 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1980-841 A. All banks Item 1980 1981 1982 1983 1984 Balance sheet items as a percent of average consolidated assets Interest-earning assets 83.11 83.83 85.10 85.22 84.94 Loans 55.34 55.15 56.06 55.73 56.80 Commercial and industrial — 20.77 21.54 22.81 22.54 22.50 Real estate 14.57 14.37 14.24 14.13 14.82 Personal 10.61 9.64 9.20 9.17 9.73 Securities 17.06 17.00 16.56 17.47 17.64 U.S. government 8.38 8.63 8.59 9.79 9.91 State and local government ... 7.88 7.62 7.25 6.84 6.80 Other bonds and stock .81 .75 .73 .83 .94 Gross federal funds sold and reverse repurchase agreements 3.68 3.99 4.41 4.34 4.18 Interest-bearing deposits 7.03 7.69 8.06 7.69 6.32 Deposit liabilities 79.56 78.61 77.61 77.68 78.06 In foreign offices 16.05 15.93 15.79 14.71 13.65 In domestic offices 63.50 62.68 61.82 62.97 64.41 Demand deposits 24.03 20.76 17.35 16.53 16.55 Other checkable deposits .96 2.43 3.43 4.03 4.36 Large time deposits 12.79 14.13 14.61 12.15 11.42 Other deposits 25.73 25.37 26.43 30.26 32.07 Gross federal funds purchased and repurchase agreements 6.94 7.54 7.99 7.81 7.04 Other borrowings 2.63 2.62 2.64 2.84 2.80 MEMO: Money market liabilities .. 38.42 40.21 41.04 37.51 35.28 Effective interest rate (percent) Rates earned Securities 7.87 9.28 9.% 9.83 9.95 State and local government 6.02 6.74 7.20 7.04 7.51 Loans, gross 13.71 16.38 15.20 12.70 13.64 Net of loan-loss provision . 13.20 15.83 14.38 11.76 12.53 Taxable equivalent Securities 10.18 11.65 12.43 12.06 12.18 Securities and gross loans . 12.87 15.24 12.81 12.58 13.29 Rates paid Interest-bearing deposits — 10.66 13.42 12.10 9.32 10.04 Large certificates of deposit 12.56 16.42 14.13 8.90 10.69 Deposits in foreign offices . 14.03 17.37 14.87 10.32 12.62 Other deposits 8.10 10.07 9.99 9.11 9.02 All interest-bearing liabilities 11.10 13.89 12.21 9.46 10.30 Income and expenses as a percent of average net consolidated assets Gross interest income 9.87 11.81 11.19 9.50 10.12 Gross interest expense 6.78 8.75 8.02 6.36 6.96 Net interest margin 3.09 3.07 3.17 3.15 3.16 Taxable equivalent 3.45 3.44 3.54 3.50 3.53 Noninterest income .89 .99 1.05 1.12 1.27 Loan-loss provision .25 .26 .40 .47 .56 Other noninterest expense 2.63 2.76 2.91 2.95 3.05 Income before tax 1.05 .96 .84 .84 .81 Taxes .26 .20 .14 .18 .19 Extraordinary items .00 .00 .00 .00 .01 Net income .79 .76 .71 .67 .64 Cash dividends declared .29 .30 .31 .33 .32 Net retained income .50 .46 .39 .34 .32 MEMO Average assets (billions of dollars) 1,767 1,939 2,101 2,259 2,398 Number of banks 14,219 14,207 14,122 14,074 13,953 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

846 Federal Reserve Bulletin • November 1985 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1980-84—Continued1 B. Banks with less than $100 million in assets Item 1980 1981 1982 1983 1984 Balance sheet items as a percent of average consolidated assets Interest-earning assets 90.39 90.76 91.02 90.92 90.64 55.90 53.64 52.47 51.39 52.14 Commercial and industrial 11.86 12.26 12.91 12.88 12.91 20.83 19.60 12.91 17.98 18.88 15.54 13.97 18.37 12.28 12.37 27.83 29.35 29.61 31.00 30.39 U.S. government 15.48 17.38 18.26 20.53 20.85 State and local government 11.87 11.50 10.94 10.01 9.01 Other bonds and stock .49 .46 .41 .46 .54 Gross federal funds sold and reverse repurchase agreements 5.49 5.87 6.35 5.% 5.53 Interest-bearing deposits 1.18 1.90 2.60 2.57 2.58 88.16 87.56 87.17 87.83 88.09 26.68 22.52 19.03 17.01 16.11 Other checkable deposits .85 4.01 6.14 7.55 8.14 Large time deposits 9.43 10.03 10.67 9.80 10.21 51.20 51.00 51.32 53.46 53.62 Gross federal funds purchased and repurchase agreements 1.03 1.41 11..6688 11..2211 11..0011 Other borrowings .61 .52 .48 .41 .35 MEMO: Money market liabilities 11.07 11.96 12.83 11.42 11.58 Effective interest rate (percent} Rates earned 7.88 9.69 10.82 10.58 10.66 State and local government 5.80 6.45 7.24 7.47 7.84 Loans, gross 12.43 14.91 15.34 13.70 14.16 Net of loan-loss provision 11.90 14.29 14.42 12.58 12.83 Taxable equivalent Securities 9.96 11.70 12.95 1122..5533 1122..2244 Securities and gross loans 11.60 13.76 14.47 13.26 13.45 Rates paid Interest-bearing deposits 8.82 11.21 10.% 99..1155 99..5555 Large certificates of deposit % 11.69 15.14 13.74 9.20 10.83 Other deposits 8.37 10.56 10.51 9.15 9.35 All interest-bearing liabilities 8.89 11.31 11.01 9.11 9.55 Income and expenses as a percent of average net consolidated assets Gross interest income 9.68 11.49 11.70 10.57 10.88 Gross interest expense 5.37 7.13 7.33 6.31 6.72 Net interest margin 4.31 4.36 4.37 4.26 4.16 Taxable equivalent 4.85 4.90 4.94 4.80 4.64 .64 .69 .68 .70 .75 .27 .29 .42 .51 .62 Other noninterest expense 3.11 3.23 3.31 3.28 3.27 Income before tax 1.52 1.44 1.31 1.18 1.01 Taxes .34 .31 .24 .23 .20 Extraordinary items .00 .00 .00 .00 .01 1.18 1.14 1.06 .96 .82 Cash dividends declared .32 .35 .39 .38 .39 Net retained income .86 .79 .67 .58 .43 MEMO Average assets (billions of dollars) 333377 352 365 337733 383 12,528 12,352 12,080 11,810 11,558 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 847 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1980-84—Continued1 C. Banks with $100 million to $1 billion in assets Item 1980 1981 1982 1983 1984 Balance sheet items as a percent of average consolidated assets Interest-earning assets 87.35 87.99 89.01 89.37 89.27 Loans 55.34 54.03 53.38 52.70 54.09 Commercial and industrial 15.90 16.34 16.88 16.84 17.55 Real estate 20.54 20.02 19.38 18.89 19.64 Personal 15.43 14.00 13.16 12.86 13.04 Securities 25.25 25.68 25.30 26.51 26.22 U.S. government 12.29 13.15 13.48 15.34 15.49 State and local government ... 12.34 11.88 11.16 10.29 9.78 Other bonds and stock .61 .65 .66 .87 .95 Gross federal funds sold and reverse repurchase agreements 5.35 5.46 5.91 5.59 5.40 Interest-bearing deposits 1.41 2.84 4.42 4.58 3.56 Deposit liabilities 83.92 83.18 82.89 84.34 85.00 In foreign offices .18 .24 .24 .22 .37 In domestic offices 83.74 82.94 82.66 84.12 84.64 Demand deposits 28.75 24.97 21.31 19.51 18.73 Other checkable deposits 1.44 3.62 5.21 6.10 6.45 Large time deposits 14.37 14.98 15.35 12.94 12.84 Other deposits 39.17 39.37 40.79 45.57 46.61 Gross federal funds purchased and repurchase agreements 5.43 6.08 6.47 5.21 4.60 Other borrowings 1.37 1.28 1.15 1.21 .97 MEMO: Money market liabilities .. 21.34 22.58 23.20 19.57 18.77 Effective interest rate (percent) Rates earned Securities 7.65 9.15 9.96 9.89 9.96 U.S. government 9.41 11.55 12.41 11.86 10.34 State and local government 5.84 6.52 7.03 7.03 7.43 Other bonds and stock 9.11 10.15 10.52 11.31 10.34 Loans, gross 12.79 15.23 14.70 12.78 13.60 Net of loan-loss provision . 12.26 14.67 13.81 11.88 12.65 Taxable equivalent Securities 9.97 11.37 12.27 12.08 12.14 Securities and gross loans . 11.90 13.97 13.91 12.55 13.12 Rates paid Interest-bearing deposits — 9.06 11.47 10.67 8.83 9.37 Large certificates of deposit 12.13 16.05 13.91 8.90 10.90 Deposits in foreign offices . 12.99 15.84 14.48 9.23 15.39 Other deposits 8.06 9.99 9.71 8.82 9.01 All interest-bearing liabilities 9.50 11.98 12.85 8.80 9.43 Income and expenses as a percent of average net consolidated assets Gross interest income 9.47 11.25 11.06 9.85 10.35 Gross interest expense 5.62 7.39 7.14 6.00 6.50 Net interest margin 3.85 3.86 3.92 3.85 3.85 Taxable equivalent 4.39 4.38 4.45 4.37 4 1 . . 3 0 8 0 Noninterest income .81 .87 .90 .94 Loan-loss provision .26 .27 .42 .43 .45 Other noninterest expense 3.20 3.34 3.43 3.38 3.33 Income before tax 1.15 1.02 .92 .97 1.06 Taxes .20 .13 .09 .14 .19 Extraordinary items .01 .01 .00 .00 .01 Net income .96 .91 .83 .84 .88 Cash dividends declared .37 .39 .40 .42 .43 Net retained income .59 .52 .43 .42 .45 MEMO Average assets (billions of dollars) 347 382 413 453 487 Number of banks 1,501 1,651 1,813 2,012 2,130 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

848 Federal Reserve Bulletin • November 1985 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1980-84—Continued1 D. Nine money center banks Item 1980 1981 1982 1983 1984 Balance sheet items as a percent of average consolidated assets Interest-earning assets 77.80 79.40 80.94 80.35 80.12 Loans 55.94 57.91 61.03 61.72 62.64 Commercial and industrial 29.09 30.21 32.34 32.31 31.78 Real estate 7.89 8.62 9.16 9.22 9.82 Personal 4.63 4.50 4.61 4.72 5.28 Securities 6.90 6.48 5.96 6.39 6.68 U.S. government 3.06 2.77 2.37 2.60 2.33 State and local government ... 2.41 2.39 2.37 2.49 2.90 Other bonds and stock 1.43 1.32 1.23 1.30 1.45 Gross federal funds sold and reverse repurchase agreements 1.53 2.11 2.50 2.52 2.51 Interest-bearing deposits 13.44 12.90 11.45 9.72 8.29 Deposit liabilities 76.42 75.37 73.69 72.18 72.08 In foreign offices 40.68 39.86 39.99 37.93 36.79 In domestic offices 35.74 35.51 33.70 34.25 35.30 Demand deposits 17.94 15.06 11.28 11.43 11.83 Other checkable deposits .55 .83 1.06 1.19 1.24 Large time deposits 10.58 12.95 13.75 10.55 8.81 Other deposits 6.68 6.68 7.61 11.08 13.42 Gross federal funds purchased and repurchase agreements 6.85 7.23 7.27 7.86 7.42 Other borrowings 4.52 4.54 4.75 5.12 5.34 MEMO: Money market liabilities .. 62.63 64.58 65.76 61.46 58.36 Effective interest rate (percent) Rates earned Securities 8.58 9.89 9.73 9.56 9.72 U.S. government 9.03 10.97 10.81 11.92 11.58 State and local government 6.75 7.55 7.46 6.33 7.61 Other bonds and stock 10.76 11.99 11.93 11.46 11.10 Loans, gross 14.81 17.41 15.53 12.63 13.80 Net of loan-loss provision . 14.43 17.00 14.% 11.99 12.90 Taxable equivalent Securities 10.70 12.46 12.36 11.86 12.58 Securities and gross loans . 14.35 14.44 15.24 12.56 13.68 Rates paid Interest-bearing deposits 12.79 15.94 13.95 10.23 11.39 Large certificates of deposit 13.67 16.64 14.47 8.96 10.70 Deposits in foreign offices . 13.74 17.12 14.89 10.77 12.90 Other deposits 8.12 9.97 9.66 10.02 8.64 All interest-bearing liabilities 12.80 16.06 12.28 10.56 11.81 Income and expenses as a percent of average net consolidated assets Gross interest income 10.27 12.45 11.40 9.23 10.06 Gross interest expense 8.21 10.49 9.22 6.99 7.84 Net interest margin 2.06 1.96 2.17 2.24 2.22 Taxable equivalent 2.19 2.11 2.32 2.37 2.39 Noninterest income .98 1.14 1.19 1.27 1.59 Loan-loss provision .19 .21 .30 .36 .50 Other noninterest expense 1.88 2.00 2.23 2.33 2.54 Income before tax .94 .84 .76 .84 .78 Taxes .37 .31 .24 .30 .26 Extraordinary items .00 .00 .01 .00 .00 Net income .56 .53 .53 .53 .52 Cash dividends declared .22 .22 .23 .27 .24 Net retained income .37 .31 .30 .26 .29 MEMO Average assets (billions of dollars) 498 538 564 582 594 Number of banks 9 9 9 9 9 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of Insured Commercial Banks 849 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1980-84—Continued1 E. Large banks other than money center banks Item 1980 1981 1982 1983 1984 Balance sheet items as a percent of average consolidated assets Interest-earning assets 80.90 81.36 83.21 83.84 83.41 Loans 54.50 54.35 55.54 55.15 56.40 Commercial and industrial 21.72 22.42 23.70 23.15 23.25 Real estate 13.12 13.02 13.25 13.25 13.81 Personal 9.98 9.02 8.68 8.88 9.74 Securities 14.64 14.00 13.43 14.28 14.91 U.S. government 6.48 6.14 5.91 7.04 7.34 State and local government ... 7.58 7.35 6.97 6.58 6.81 Other bonds and stock .58 .51 .54 .66 .76 Gross federal funds sold and reverse repurchase agreements 3.49 3.68 4.09 4.20 4.05 Interest-bearing deposits 8.28 9.32 10.15 10.21 8.05 Deposit liabilities 74.68 73.89 73.07 73.43 74.11 In foreign offices 13.78 14.01 13.85 13.03 11.47 In domestic offices 60.90 59.89 59.22 60.40 62.64 Demand deposits 24.87 22.02 18.89 18.21 18.61 Other checkable deposits 1.07 2.21 2.92 3.33 3.71 Large time deposits 15.67 16.75 16.75 13.84 12.83 Other deposits 19.29 18.90 20.66 25.02 27.49 Gross federal funds purchased and repurchase agreements 11.33 11.84 12.39 12.05 11.48 Other borrowings 2.94 2.94 2.92 3.23 3.16 MEMO: Money market liabilities .. 43.72 45.53 45.91 42.16 38.94 Effective interest rate (percent) Rates earned Securities 7.82 8.74 9.17 9.16 9.41 U.S. government 9.42 10.64 11.12 11.18 11.13 State and local government 6.20 6.96 7.24 6.95 7.36 Other bonds and stock — 11.84 12.11 12.66 10.84 11.49 Loans, gross — 14.09 16.90 15.13 12.31 13.35 Net of loan-loss provision . 13.48 16.29 14.19 11.19 12.10 Taxable equivalent Securities 10.45 11.60 12.09 11.66 12.06 Securities and gross loans . 13.31 15.79 14.52 11.57 13.08 Rates paid Interest-bearing deposits 11.02 13.92 12.20 9.09 9.84 Large certificates of deposit 12.57 16.88 14.47 8.83 10.54 Deposits in foreign offices . 14.79 17.98 14.84 9.48 12.04 Other deposits 7.79 9.54 9.66 9.08 8.88 All interest-bearing liabilities 11.78 14.55 12.28 9.24 10.14 Income and expenses as a percent of average net consolidated assets Gross interest income 9.88 11.80 10.87 9.03 9.73 Gross interest expense 7.07 8.98 7.94 6.13 6.75 Net interest margin 2.81 2.82 2.92 2.90 2.98 Taxable equivalent 3.17 3.19 3.28 3.22 3.35 1.00 Noninterest income 1.10 1.19 1.29 1.43 Loan-loss provision .29 .29 .46 .56 .63 Other noninterest expense 2.64 2.78 2.95 2.99 3.14 Income before tax .81 .76 .64 .63 .62 Taxes .16 .10 .05 .10 .13 Extraordinary items .00 .00 .00 .00 .01 Net income .65 .66 .60 .53 .51 Cash dividends declared .28 .29 .29 .29 .28 Net retained income .37 .36 .31 .25 .23 MEMO Average assets (billions of dollars) 586 668 759 850 934 Number of banks 181 195 220 243 256 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

850 Treasury and Federal Reserve Foreign Exchange Operations This 47th joint report reflects the Treasury- this stage of the business cycle. At the same Federal Reserve policy of making available addi- time, market attention was focused on concerns tional information on foreign exchange opera- about the imbalances in the structure of the tions from time to time. The Federal Reserve current recovery—imbalances reflected in a Bank of New York acts as agent for both the large U.S. fiscal deficit, unprecedented dispari- Treasury and the Federal Open Market Commit- ties in the current account positions of the largest tee of the Federal Reserve System in the conduct industrialized countries, interest rates at levels of foreign exchange operations. that appeared high relative to current inflation This report was prepared by Sam Y. Cross, rates, and persistent unemployment problems Manager of Foreign Operations for the System abroad. Open Market Account and Executive Vice Presi- With the major money and capital markets of dent in charge of the Foreign Group of the the world increasingly integrated through pro- Federal Reserve Bank of New York. Officers of gressive liberalization of exchange controls and the Foreign Exchange Function, together with other regulations, shifts in sentiment about these Richard F. Alford, Elizabeth A. Goldstein, Thad- uncertainties were associated with sizable movedeus D. Russell, and Elisabeth S. Klebanoff, ments in dollar rates. During the six months from contributed to its preparation. It covers the February through July, the dollar briefly continperiod February 1985 through July 1985. Previ- ued its climb of four and one-half years, advancous reports have been published in the March ing strongly to hit record levels in the floatingand September (October 1982) BULLETINS of rate period. Thereafter it depreciated, at times each year beginning with September 1962 and in quickly, to close the period much lower. the May and November BULLETINS beginning with May 1985. THE DOLLAR S CONTINUED RISE. During the period under review, many observers FEBRUARY TO EARLY MARCH of the foreign exchange markets were uncertain about the sustainability of the global economic The dollar was buoyed early in the period by an expansion, now into its third year. The vigorous improving outlook for the U.S. economy and the upswing in the United States had faltered in the implications for U.S. monetary policy. Data bethird quarter of 1984, and market participants ing published at the time pointed to a significant were anxious for evidence of whether domestic rebound in the fourth quarter that had been demand would remain strong enough to support unanticipated just months before, and economic renewed increases in production and employ- forecasters were beginning to present reassuring ment in 1985. Doubts developed about other projections of moderate growth for 1985. An countries' ability to continue to expand should accelerating expansion of monetary aggregates U.S. growth remain subdued, since exports to was seen as limiting the scope for any further the United States had been the major source of easing of U.S. monetary policy and might even stimulus abroad. Meanwhile, inflation had decel- suggest some tightening. As a result, there was a erated in almost all of the industrial countries, perception in the market that the decline of U.S. but the scope for making further progress in the interest rates, which had brought short-term defight against inflation was seen as more limited at posit rates down more than 3 percentage points Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

851 in about six months and was marked by two cuts intervene than before. But they were uncertain of Vi percentage point each in Federal Reserve about the circumstances in which the central discount rates, was not likely to continue. As this banks would judge intervention to be approprishift in expectations occurred, market rates for ate. long-term as well as short-term instruments At the same time dealers remained impressed backed up somewhat during February and into by the strength of demand for dollars in the early March. exchange market. Enthusiasm spread about the The economic outlook abroad was more degree of interest coming from abroad in the guarded. The performance of many of the Euro- Treasury's February refunding operations. Compean economies had not been sufficient to dispel mercial entities were frequently seen as buyers concerns about their longer-term growth poten- of dollars, presumably to hedge future committial. Industrial production statistics for the first ments in light of the improving outlook for the quarter, while hard to interpret because of tem- dollar. As sentiment toward the dollar became porary disruptions associated either with labor increasingly bullish, the dollar rose through levdisputes or an unusually severe winter, pointed els at which, in earlier months, some central to declines in output in many large countries. banks had intervened and previously provided Also, business opinions and press commentary resistance. The dollar's rise then gained momenappeared to reflect a lack of confidence in most tum, markets became one-sided, and dollar rates countries that domestic demand could revive moved quickly to successive highs against seversufficiently to ensure a continued expansion al European currencies. By February 26, the should U.S. growth be subdued. Fiscal policies dollar had risen nearly 10 percent against major abroad were regarded as being almost universal- European currencies while rising 3 percent ly restrictive, as the authorities sought further against the Japanese yen. At this point the dollar progress in achieving their medium-term goal of was at its highest level of the six-month period reducing fiscal deficits as a proportion of national under review, trading around DM3.48 and $1.03 income. Monetary policies were also generally against the German mark and British pound restrained. respectively. Thus, few market observers thought that for- On three occasions during the first three weeks eign central banks would welcome pressures of February, the U.S. authorities intervened, emanating from either a renewed firming of inter- selling a total of $242.6 million against marks, est rates in the United States or a continuing $48.8 million against yen, and $16.4 million decline in their currencies to tighten monetary against sterling, to counter disorderly market policy any more. Yet the impact on domestic conditions in operations coordinated with foreign prices of the progressive decline of these coun- central banks. Between February 27 and March tries' currencies against the dollar was showing 1, the U.S. authorities sold another $257.4 milthrough, at least in Germany where import prices lion against marks in the New York market in a were rising more quickly. Market participants concerted intervention. These operations therefore became wary of the possibility that the brought the total of U.S intervention sales of authorities there, as well as in other countries, dollars, between the January 21 G-5 meeting and might use intervention in an effort to stop the March 1, to $659 million. currency depreciations. As for the central banks of most other G-10 The full range of these international issues had countries, they intervened much more heavily already been discussed at a G-5 meeting late in between February 27 and March 1 than before, January. Moreover, the May 1983 Williamsburg selling dollars, buying German marks and other agreement to undertake coordinated intervention currencies, or doing both. For all G-10 countries as necessary was reaffirmed at that meeting, and as a group, the total of dollars sold during the five visible foreign exchange market operations had weeks between January 21 and March 1 was subsequently been undertaken by the authorities about $10 billion. This series of operations conof several countries. Market participants per- stituted one of the biggest dollar interventions ceived the central banks to be more willing to during the floating-rate period. The sales of dol- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

852 Federal Reserve Bulletin • November 1985 lars by G-10 countries other than the United from U.S.-produced goods, thereby jeopardizing States was large enough to cause a sizable drop the sustainability of economic expansion here. in their official foreign currency reserves. At the same time, signs of strain in U.S. financial markets became more prominent, rais- THE DECLINE: MID-MARCH ing the risk that financial as well as economic TO THE END OF JULY dislocations would intensify. The failure of three secondary government securities dealers, though Even after the large interventions of late Febru- constituting a very small part of the market, ary to early March, the dollar traded close to its imposed losses for a number of customers, inlate-February highs for about two weeks. But the cluding several local governments and thrift inintervention had resulted in an accumulation of stitutions. The repercussions of these incidents dollar-denominated assets in private hands. Talk revealed weaknesses in private deposit insurance had begun to spread earlier that portfolio manag- systems and led to large deposit outflows from ers were gearing up to provide more currency state-insured thrift institutions, particularly in diversification to customers' portfolios, taking Ohio, before the governor of that state temporaradvantage of assets that appeared undervalued at ily closed the affected institutions. Pictures discurrent exchange rates and capitalizing on the played prominently by the media of queues of possibility of future currency appreciation. Then, depositors unable to withdraw their funds heightaround mid-March, a more pessimistic reassess- ened concern about the authorities' ability to ment of the outlook for the U.S. economy and a deal adequately with problem situations. Since shift of view about interest rates began to weigh difficulties had already been identified in energy, on the currency. real estate, and agricultural portfolios, this weak- By mid-March, a variety of statistics were ness was perceived as having potentially farindicating that economic activity in the United reaching implications. States was proceeding only at a relatively slow Against this background, market participants pace. While final demand remained buoyant, the adjusted their assessments of the outlook for demand for labor and growth of production in the U.S. monetary policy and interest rates. Dealers manufacturing sector were much weaker than were sensitive to the implications of the imbalhad been assumed in most forecasts earlier in the ances in the economy for the industrial sector year. Market participants came to realize the and the prospects for sustained growth. Money, extent that demand was being diverted away as measured by Ml, though remaining well above target, was growing somewhat more slow- 1. Federal Reserve reciprocal currency arrangements ly on a month-to-month basis. Inflation rates Millions of dollars were still low, a renewed weakness in oil prices helped keep inflationary expectations at bay, and Amount of Institution facility signs of congressional action to reduce the fiscal July 31, 1985 deficit lent some relief to the bond market. Austrian National Bank 250 Thus most observers came to expect the Fed- National Bank of Belgium 1,000 Bank of Canada 2,000 eral Reserve to give priority to supporting the National Bank of Denmark 250 economy and providing assistance to the domes- Bank of England 3,000 Bank of France 2,000 tic financial system. Market interest rates of all German Federal Bank 6,000 Bank of Italy 3,000 maturities started to decline in a trend that was to last about three months, while expectations de- Bank of Japan 5,000 Bank of Mexico 700 veloped that the Federal Reserve would an- Netherlands Bank 500 Bank of Norway 250 nounce a series of cuts in its discount rates. By Bank of Sweden 300 mid-June, short-term interest rates had fallen 2 Swiss National Bank 4,000 percentage points or more, with the Federal Bank for International Settlements Swiss francs/dollars 600 Reserve lowering its official rates just once—by Other authorized European currency/dollars 1,250 Yi percentage point, effective May 20. Long-term Total 30,100 rates also declined, but more slowly. As a result Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 853 2. Drawings and repayments by the Argentine Central Bank under special swap arrangements with the U.S. Treasury Millions of dollars, drawings or repayments (-) Outstanding Outstanding Drawings on the U.S. Treasury September 1984:4 1985:1 1985:2 July 31, 31, 1984 1985 500 million 500 -230 0 -270 150 million. 75 143 68 Data are on a value-data basis. of these declines, most U.S. interest rates were dollar investments were still relatively attractive. below levels prevailing at the depth of the 1982 The scope for hedging the currency risk, should recession. the dollar decline, had been demonstrated. And As these developments began to unfold, the profits realized from earlier hedging operations dollar fell substantially in the exchange markets. increased the overall rate of return on dollar Many market participants were concerned for a portfolios sufficiently to protect against even time about the magnitude of any drop in the significant future declines in the dollar. In effect, dollar if foreign investors tried to liquidate dollar the dollar retained its stature as the principal assets accumulated during previous years. In- medium for investment. deed, investors acted to protect the value of their Meanwhile, the currencies that traditionally portfolios, mostly by selling dollars in the for- benefit from a shift of investor preference out of ward market but also by shifting into assets dollars, the German mark and Japanese yen, had denominated in other currencies. Commercial appreciated relatively modestly as the dollar had customers postponed dollar purchases in the declined. The U.S. economy had still outperexpectation of being able to buy later at more formed those of most other industrialized counattractive rates. Bank dealers and speculators on tries, and talk continued of a renewed acceleraorganized exchanges also sought to sell the dollar tion of U.S. growth in the second half of 1985. and to establish short positions. Under these The only currency to challenge the dollar as an circumstances the dollar moved lower. As it fell investment alternative was pound sterling. With through levels at which resistance had previously the outlook for economic growth in the United been expected, the pace of the decline quick- Kingdom brighter than for most other countries ened. From its peak in late February to the and interest rate levels there comparatively high, middle of April, the dollar dropped 20 percent sterling-denominated assets provided an attracagainst sterling, 15 percent against the continen- tive outlet for investors reluctant to accept detal currencies, as well as 6V2 and 4 percent clines in yields elsewhere. Thus by the end of against the Japanese yen and Canadian dollar June, the dollar was trading above its mid-April respectively. lows against all currencies except sterling. Late in April, however, the dollar firmed and Many market observers had supposed that the then traded relatively steadily through the end of authorities abroad would have taken advantage June. Market participants perceived that foreign of the decline in U.S interest rates that occurred investors had not liquidated their dollar holdings during the spring to ease their own monetary in large scale so that fears of an early and policies. But in Germany and Japan the authoriprecipitous fall in the dollar faded. Instead, in- ties appeared reluctant to cut short-term interest flows of new funds were continuing, especially rates until they were more confident about the from Japan at the beginning of that country's exchange market situation. In the other counnew fiscal year in April, as well as from countries tries, the authorities were cautious about letting suffering from serious inflation problems. Also, interest rates at home get too far out of line with persistent strains in the U.S. financial sector those of their closest trading partners. To varywere being well contained. Interest yields on ing degrees, foreign central banks took ad van- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

854 Federal Reserve Bulletin • November 1985 tage of the decline in the dollar instead to rebuild become cautious. Market professionals had altheir foreign currency reserves. The authorities ready begun to set up positions in anticipation in several countries acquired sizable amounts of that the dollar might resume its decline. Thus, both dollars and German marks, currencies that when others came into the market to sell, dollar could be used in future intervention operations to rates moved down through the end of the month, support their own currencies. By the end of June dropping well below the lows of mid-April. Sterthe G-10 countries as a group had largely recov- ling continued to lead the rise of foreign currenered the reserves lost in the early months of the cies against the dollar. After mid-July, however, year. when a realignment within the European Mone- In July the dollar resumed its decline. During tary System (EMS) drew attention to the mark's the spring, the gap had continued between strong potential for revaluation in that arrangement, the growth of U.S. domestic demand and weak ex- German currency also began to strengthen more pansion of domestic production. As a result, the rapidly than before. During the entire Februaryregular flow of economic statistics had presented July period under review, the dollar had fallen on conflicting signals. By early July, however, it balance 20 percent against sterling to $1.4135, 12 again became clear that U.S. economic activity percent against the mark to DM2.7850, by aphad not increased as much as most observers had proximately similar magnitudes relative to most expected. An acceleration of real growth of gross other continental currencies, and 8 percent national product in the second quarter was more against the Japanese yen to ¥236. moderate than anticipated, and anecdotal infor- Meanwhile, during late June and July, progmation for July suggested that the third quarter ress was being made in some of the largest Latin was getting off to no better a start. The mounting American countries to deal with the serious U.S. trade and current account deficits were imbalances in their economies. In Argentina, the increasingly perceived by market participants as government came to an agreement with the Intera drag on the domestic economy. Noting an national Monetary Fund (IMF) on a stabilization increase in protectionist pressures, they consid- program that entailed currency and wage-price ered the possibility that the administration might reform designed to brake the country's rapidly welcome a further decline in the dollar to help accelerating inflation. Upon completion of an restore external balance. At the same time, dis- agreement by the IMF to provide a standby, the appointment developed over the prospects for U.S. Treasury and 11 other monetary authorities meaningful reduction of the fiscal deficit, as acted to facilitate the provision of a bridge fiefforts in the Congress to adopt a compromise nancing facility of $483 million for Argentina, of budget resolution appeared to falter. which the U.S. portion was $150 million. Argen- During the month, interest rate developments tina made two drawings of roughly equal size on tended to move in the dollar's favor. In the this facility, on June 19 and on June 24, for a total United States, interest rates started to firm. of $460 million. The Treasury's portion of these Market participants here came to expect that the drawings was $143 million. Argentina is sched- Federal Reserve would not be more accommoda- uled to repay the drawings in two installments tive until it could assess more fully the implica- after the period. In Mexico, the government tions of the drop in interest rates that had already tightened fiscal policy, liberalized trade policy, occurred and of a renewed acceleration in Ml and made major changes in the structure of its growth. In Europe, interest rates began to ease exchange market. These actions were undertakmore rapidly. The central bank in Germany en in order to align Mexico's cost and price began to provide liquidity at progressively lower structure more closely with world markets and interest rates and, at least for a time, central aid in bringing inflation down to targeted levels. banks in other continental countries moved in a In the period from February through July, the similar direction. Thus, interest differentials ac- Federal Reserve and the Exchange Stabilization tually moved in favor of the dollar during the Fund (ESF) realized no profits or losses from month. exchange transactions. As of July 31, cumulative Nonetheless, sentiment toward the dollar had bookkeeping or valuation losses on outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 855 3. Net profits or losses (-) on U.S. Treasury and ments among the relationships of all European Federal Reserve current foreign exchange currencies as they declined and then rose against operations the dollar. Millions of dollars Early in the period, with the dollar strengthen- U.S. Treasury ing across the board, the continental currencies Period Federal Exchange as a group fell about 10 percent. The Swiss franc Reserve Stabilization Fund dropped to SF2.9405, the lowest level in more than 10 years, and the German mark posted a low February 1-July 31, 1985... 0 0 Valuation profits and losses for the floating-rate period at DM3.4780. The on outstanding assets and liabilities as Dutch guilder, the French and Belgian francs, of July 31, 1985 -871.1 -578.3 and the Italian lira dropped to record lows of NG3.9430, FF10.6300, BF69.90, and LIT2167 Data are on a value-date basis. respectively. Sterling, which had been the target foreign currency balances were $871 million for of especially heavy selling pressure just before the Federal Reserve and $578 million for the the period, declined somewhat more slowly Treasury's Exchange Stabilization Fund. These against the dollar during February. Neverthevaluation losses represent the decrease in the less, by February 26 it had declined nearly 9 dollar value of outstanding currency assets val- percent and also recorded a record low of ued at end-of-period exchange rates, compared $1.0370. with the rates prevailing at the time the foreign Meanwhile, authorities in Germany and the currencies were acquired. United Kingdom were concerned that inflation The Federal Reserve and the ESF invest for- was picking up as a result, at least in part, of the eign currency balances acquired in the market as impact on import prices of the continuing a result of their foreign operations in a variety of strength of the dollar. In the United Kingdom, instruments that yield market-related rates of inflationary expectations were also stimulated by return and that have a high degree of quality and concerns over the priorities of the government's liquidity. Under the authority provided by the economic policy and above-target growth of Monetary Control Act of 1980, the Federal Re- money. But the British authorities had acted to serve had invested $1,009.2 million equivalent of address these concerns before the period by its foreign currency holdings in securities issued permitting an abrupt and sharp increase in shortby foreign governments as of July 31. In addi- term interest rates. In Germany, where the prestion, the Treasury held the equivalent of $1,756.0 sures were far less acute, market rates also million in such securities as of the end of July. tended to firm. But market participants perceived the German authorities to be resisting the EUROPEAN CURRENCIES rise out of concern that significant increases in interest rates were not appropriate to the domes- Coming into the six-month period, progress ap- tic economic situation. These developments had peared to stall in resolving the economic prob- disappointing implications for other countries lems facing European countries. During the that had been maintaining favorable interest rate months of severe winter weather, growth in differentials relative to Germany. The central several countries slowed, unemployment in banks in France, Italy, and Belgium, for examsome continued to drift upward, and a decelera- ple, saw the opportunity for them to lower intertion in inflation petered out. At the same time the est rates in response to earlier improvements in trend toward greater convergence of economic their price performance as quickly slipping away. performances started to dissipate, notwithstand- Following the G-5 meeting in January, most ing the fact that governments in almost all of European central banks participated in the coorthese countries continued to be committed to dinated interventions that took place through common goals for economic policy: reducing early March. All of those participating sold dolgovernment deficits and containing inflation. Un- lars, at times in sizable amounts. Some suppleder these circumstances, there were some adjust- mented their dollar sales with purchases of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

856 Federal Reserve Bulletin • November 1985 marks and a couple of other currencies, either the pound, the Bank of England allowed interest against dollars or their own currencies. rates to ease somewhat. But the authorities were From mid-March, when the dollar began to perceived as acting to slow the decline—an apdecline, to the end of June, sterling was the proach that appeared reasonable as long as the currency that rebounded most strongly to lead economic outlook for the United Kingdom was the rise of European currencies against the dol- more optimistic than for most other countries. lar. The Swiss franc also benefited more than By late June, short-term interest rates were still many others, while the German mark was not above 12 percent and differentials vis-a-vis dollar particularly buoyant. interest rates were even wider than they had This pattern of exchange rate changes sur- been in early February. prised market observers who had anticipated In Germany, also, the Bundesbank did not that, once the dollar started to fall, the mark judge the domestic situation as warranting a would reassert itself as the principal alternative change in the course of monetary policy. The for investment. But as it turned out, the curren- central bank saw the underlying trend of ecocies to benefit most from the dollar's initial nomic activity still pointing upward. Central decline were, for the most part, those with assets bank money stock was growing close to the top yielding relatively high interest rates. Foreign of its target path, buoyed by an acceleration of capital was drawn into sterling, enticed by high domestic credit growth early in the year. The yields on gilts and other fixed-income securities public sector in particular was temporarily havas well as the breadth and liquidity of London's ing an expansionary impact on monetary growth. financial markets. Residents in countries with And by late spring a public debate had emerged high interest rates borrowed abroad where the over accelerating proposed tax cuts. The cost of funds was lower to finance trade and Bundesbank did not wish to suggest that an domestic expenditures. The Swiss franc firmed easing of policy was appropriate by announcing against many other currencies, even though reductions of its official rates. But it was willing Swiss interest rates remained relatively low be- to provide sufficient liquidity to the banking cause the impression spread in the markets that system mainly through repurchase agreements. monetary policy in Switzerland was not likely to These operations reduced banks' use of Lombe eased. In Germany, interest rates were also bard credit and guided day-to-day money rates lower than in most other countries, and econom- cautiously lower. By the end of June, threeic indicators for the first quarter were being month money rates had eased 75 basis points interpreted in the market as disappointing. Ex- from levels at the end of February, less than half pectations developed that the Bundesbank would the decline for comparable rates in the United cut interest rates as soon as exchange market States. conditions permitted and U.S. interest rates de- The relative stability of interest rates in Gerclined. many was a factor limiting the scope for interest Although the upward pressure on European rate declines in other European countries. The interest rates subsided as the dollar declined authorities there had accepted that domestic during the spring, the European monetary au- interest rates would remain considerably higher thorities were slower to lower interest rates than than those in Germany because inflation rates many market observers had expected. were higher and current account positions were In the United Kingdom, the authorities were not as strong. Yet their currencies were being intent on reassuring markets of their commit- buoyed relative to the mark by the inflow of ment to strict financial policies. A cautious bud- interest-sensitive capital. Under the circumget, presented in March, called for both a drop in stances, these central banks also looked to relathe public sector borrowing requirement and tively subtle techniques to ease money market reductions of growth targets for Britain's two rates gradually, so as not to suggest that a change monetary target variables, MO and M3. As inter- in policy was under way. The Bank of France, est rates in the United States declined and capital for example, lowered its money market interveninflows into sterling exerted upward pressure on tion rate, acting cautiously by moving in several Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 857 small steps. In this way, short-term interest rates authorities might welcome a decline in their in France declined somewhat more than in Ger- currency. many. A more substantial change in technique Sentiment toward the lira was briefly buoyed occurred in Belgium where the National Bank in May and June when the government's position decided to adopt a more flexible and market- strengthened with a defeat of a referendum reinrelated practice for fixing the discount rate. stating wage indexation and a smooth transition Henceforth the discount rate was to be linked to to a new presidency. But by July the lira had the rate on three-month Treasury certificates. As resumed its slide toward its lower EMS limit. a result, a decline that had already occurred in This depreciation helped to offset the competimarket rates was acknowledged, and rates tive disadvantage resulting from accumulated continued to ease modestly through the end inflation differentials but removed room for of June. movement of the exchange rate within the wide Against this background, the authorities in band available to the lira in the EMS arrangemany European countries also chose to respond ment. The Italian authorities therefore decided to to the favorable exchange market environment seek a realignment of the lira's central rates. for their currencies by acquiring foreign currency Thus, after the lira dropped to its existing lower reserves. During the second quarter, a number of limit in hectic trading on Friday, July 19, the central banks were active buyers of dollars either authorities closed the foreign exchange markets in the market or from customers. They also in Italy after the fixing. That weekend the EMS purchased substantial amounts of other curren- countries agreed to a realignment that took the cies, especially the German mark, because it is a form of a devaluation of 7.8 percent of the lira's currency frequently used for intervention within bilateral central rates against all other active the EMS and is of increasing importance in the EMS members. As a result, the lira's European reserve holdings of other European countries. As currency unit central rate fell 7.7 percent while a result of these operations, many countries the others rose 0.15 percent. restored the reserves lost during their interven- The July realignment of the EMS served to tion operations in late January through early focus market attention on the risks of further March. France and Italy had among the largest adjustments in the exchange rate relationships increases in reserves. Germany's increase was among European currencies. Market operators the greatest, even though it refrained from inter- began to hedge their borrowings in currencies of vening for much of the period. countries with low interest rates and their invest- Meanwhile, the Italian lira had broken stride ments in currencies of countries with high interwith the other European currencies. During Feb- est rates. The monetary authorities in countries ruary it had risen against the dollar more slowly like France and Belgium found the scope for than the others. As a result, it had moved from letting interest rates ease or for adding to official the top to the bottom of the narrow EMS band reserves more circumscribed than before. At the between early February and mid-March; it then same time the Bundesbank found that the extraded consistently about IV2 percent below the change rate environment, together with a reaffirbottom-most currency in the narrow band during mation of the government's policy of fiscal conthe second quarter. Fiscal policy in Italy had solidation, afforded an opportunity to let shortbeen expansionary, with the government deficit term interest rates decline more quickly. A expected to grow to 17 percent of gross domestic similar development occurred in the Netherproduct in 1985. Moreover, Italy's inflation re- lands. mained high relative to that of other countries, At about the same time in July, sentiment and successive increases in wage settlements toward sterling began to soften as well. The eroded the country's competitiveness all the pound had risen progressively against the mark more. Accordingly, the current account had de- to levels that brought into question Britain's teriorated, with imports of capital goods quick- competitive position vis-a-vis its European tradening. Under these circumstances, market par- ing partners. Moreover, the earlier optimistic ticipants came to anticipate that the Italian assessment of the country's economic prospects Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

858 Federal Reserve Bulletin • November 1985 gave way to a more guarded outlook in the face but the central bank refrained from reducing its of a weakening flow of new orders and a flatten- official lending rates, citing as its main reason the ing of output growth. Market participants came need to support the yen in the exchange markets. therefore to expect the Bank of England to After March the yen did not rise as rapidly as permit a more rapid decline in interest rates, other currencies against the dollar. Attention even if the pound were to weaken as a conse- was often focused on Japan's huge long-term quence. Indeed, during the month, money mar- capital outflows—which had reached $50 billion ket rates in London declined toward the 11 in 1984—as a major potential source of unprepercent level, and favorable interest rate differ- dictable pressure against the yen. At times durentials relative to the dollar narrowed about 1V2 ing the period, the yen's performance in the percentage points. In response, sterling gave up exchange market—as well as credit market desome of its gains vis-a-vis the mark late in the velopments in both Japan and the United month. States—was influenced temporarily by reports Thus, the decline of the dollar in July came to and rumors about possible changes in rules or be reflected in a somewhat more rapid rise in the preferences governing Japanese investment German mark than had occurred previously. abroad. In any case, the yen did not benefit, as Even so, at the end of the six-month period did the European currencies, from a favorable under review, the pound had still risen from the shift of capital flows late in the period under February lows against the dollar more than the review. Long-term capital outflows, as measured other European currencies. It closed the period in Japanese net purchases of foreign bonds, at $1.4350, up 38 percent from lows at the end of actually grew larger to set new records in June February. The mark rose 25 percent during the and July. But since a greater proportion of the same period to DM2.7800, with the Swiss franc outward investment by Japanese residents was and most EMS currencies moving roughly in line thought to be hedged through forward foreign with the mark. The lira rose 18 percent to exchange transactions and short-term dollar bor- LIT 1872. rowings, the resulting pressures against the yen were substantially mitigated. JAPANESE YEN Rising foreign protectionist threats against Japan and demands that the Japanese government The yen generally moved in line with European step up its actions to reduce the trade imbalance currencies against the dollar during the six- also attracted attention in exchange markets at month period, but its fluctuations were narrow- times as a potentially negative background factor er. As the period opened, market sentiment for the yen. Generally, however, such pressures toward the yen was relatively positive. An an- did not have immediate exchange rate influnualized rise of 9 percent in GNP in the fourth ences. Announcements in April and June of new quarter of 1984 and optimistic projections for Japanese government programs to open domescalendar year 1985 compared favorably with the tic markets by reduced tariffs, liberalized investexperience and outlook of other countries. Infla- ment rules, and administrative reforms had little tion remained low, with the effect of the yen's apparent impact on the yen rate at the time. depreciation against the dollar offset by its rise By the end of the period, Japanese foreign against other currencies and by the weakness of currency reserves had risen almost $1.2 billion to world commodity prices, particularly petroleum. $2.38 billion, largely reflecting interest earnings. Japan's current account surplus had grown to a record $35 billion in 1984. Thus the yen did not CANADIAN DOLLAR fall as rapidly against the dollar as the European currencies during February. The Canadian dollar, like other currencies, Japanese fiscal policy continued to be one of weakened considerably against the U.S. dollar gradually reducing the government's fiscal defi- early in the period. The rise in U.S. interest rates cit as a proportion of GNP. The Bank of Japan during January and February fanned renewed maintained its accommodative monetary stance, debate over priorities for monetary and fiscal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 859 policies in Canada. Inflation in Canada had stabi- percentage points over the remainder of the lized at less than 4 percent on a year-on-year period. The Bank of Canada made net dollar basis, but the unemployment rate had recently purchases as its currency rose, which it used to moved up to more than 11 percent. Market repay debt on its commercial bank credit lines participants, noting that Canada's traditional in- and to bolster reserves. Also, a further U.S. terest rate advantage had dwindled to about 1 dollar borrowing in the U.S. market also served percentage point by early February, questioned to boost the level of foreign exchange reserves. the willingness of Canadian authorities to permit By the end of July, foreign exchange reserves increases in interest rates comparable with those had risen $498 million over the period to $2.1 in the United States. Moreover, uncertainty de- billion. veloped as to whether Canada's newly elected government would deal decisively with its plan to reduce the budget deficit and improve the SELECTED LATIN AMERICAN CURRENCIES investment climate. At the same time, unease developed surrounding potential capital outflows During the six months under review, two major related to the acquisition by Canadians of for- Latin American countries, Mexico and Argentieign-owned assets in the petroleum sector. na, introduced new economic packages that in- Against this background, sentiment toward the cluded, among other measures, reforms to their Canadian dollar deteriorated sharply. Specula- respective foreign exchange systems. In the case tive selling and an adverse shift in commercial of Mexico, this package was designed to get its leads and lags put pressure on the exchange rate, stabilization efforts of the past three years back which fell to an all-time low of Can.$1.4070 on track. In the case of Argentina, the task was ($0.7107) early in March, a decline of 6 percent to embark on major reforms to reverse longfrom the end of January. The authorities inter- festering economic imbalances that were being vened heavily to moderate the decline, financing reflected in spiraling inflation rates. their dollar sales by drawing on the government's credit lines with commercial banks and borrowing in the Eurodollar market. Moreover, the Mexico Bank of Canada allowed interest rates to rise more sharply than U.S. rates, and the currency's Mexico had posted a significant improvement in interest rate advantage widened to 2Vi percent- its trade account, which had swung from a deep age points. deficit into surplus in 1983 and 1984. However, These developments helped to convince mar- the surplus had subsequently narrowed. During ket participants that the authorities' approach to the first four months of this year, the weakening the exchange rate had not been changed. In of Mexico's external position was being accentuaddition, the Canadian government announced ated by a fall of nearly 10 percent in total plans for tax increases and expenditure cuts to exports. Oil shipments dropped in the face of reduce the fiscal deficit together with legislation weakening prices elsewhere, the competitiveto remove impediments to foreign investment in ness of non-oil exports declined with a real Canada, thereby reducing uncertainty further. appreciation of the "controlled" exchange rate, Moreover, a strong external performance, signs and the pressures of increasing internal demand of a pickup in the domestic economy, and low deflected production to the home market. Under wage settlements provided a more encouraging these circumstances, Mexico's current account outlook for the currency. surplus for all of 1985 was also expected to Thus, after mid-March the Canadian dollar diminish, notwithstanding the reduction of interrecovered most of the ground it had lost earlier in est payments stemming from declining interest the period to close at Can.$1.3539 ($0.7386), rates. down only 2 percent on balance over the six Meanwhile, Mexico's fiscal deficit through months. Under these circumstances, interest dif- June rose to well above target levels. The budget ferentials eased back to fluctuate around Wi overrun reflected oil revenues that were lower Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

860 Federal Reserve Bulletin • November 1985 than anticipated and increased government trading at 247.3 pesos per dollar the day before, spending resulting partly from inflation that was to the "super-free" market, where the peso was higher than expected and greater internal interest at 312.0 pesos per dollar before the announcepayments. ment of this change. This switch constituted a In response to these pressures, beginning in devaluation of 26 percent for transactions not late May the discounts widened between Mexi- eligible for the "controlled" rate. Then on July co's "controlled" exchange rate for licensed 25, the Mexican government announced additransactions and the two free market rates—the tional economic reforms including the following: internal "free" rate and the "super-free" rate • A devaluation of the "controlled" exchange across the Mexican border. Thus, the improverate of 17 percent, from 232 to 279 pesos per ment in the foreign exchange position of the dollar. Mexican peso, which had occurred in late March • The introduction of a "regulated float" to and in April after announcement of new underreplace the earlier crawling system involving a standings with the IMF on 1985 economic polifixed, daily slide of the peso against the dollar for cies and the signing of the first phase of Mexico's the "controlled" market. multi-year rescheduling, quickly dissipated. By • Elimination of import permits on goods aclate spring the external market was subject to counting for about 37 percent of its imports, recurring rumors of an impending peso devaluathereby making a total of more than 60 percent of tion, an increase in the daily rate by which the Mexican imports subject to tariffs rather than authorities adjusted the crawling "controlled" nontariff barriers, and a further enlargement of rate, and cuts in oil export prices. By mid-July, the "DIMEX" arrangements. the gaps between exchange rates for the peso • A cut in current government expenditures, were increasingly large. Exporters had the incenamounting to 150 billion Mexican pesos during tive to delay or divert revenues required to be 1985, that entailed a 20 percent cut in budgeted converted in the "controlled" market to either expenditures on goods, the elimination of several the domestic "free" market or the external "suhighly visible government positions, and major per-free" market. Also, the volume of trading in cutbacks in expenditures by public enterprises. the internal "free market" diminished substantially. Thus, the widening gap of peso rates was a The purpose of these reforms was twofold. source of growing concern to the authorities. First, they were expected to relieve demand To deal with this situation, the Mexican au- pressures in the economy coming from the public thorities adopted a series of measures, starting in sector. Second, they were intended to improve mid-June. Under Mexico's procedures for licens- competitiveness by adjusting the exchange rate ing imports, exporters were granted certificates and by opening the domestic market to lowerof importation rights (called "DIMEX"), permit- priced imports for raw materials, intermediate ting them to import without license a range of products, and capital goods. raw materials and inputs to make their opera- During the period between the announcement tions more efficient. Effective June 28, Mexican of the abolition of the internal "free" market and banks were allowed to operate in the foreign the rest of the economic reforms, the peso weakexchange market at the "super-free" rate by ened sharply as Mexican residents rushed to buy establishing trading houses designed for this pur- dollars in anticipation of a further devaluation. pose. After the Mexican banks were able to By July 24, the market rate in Mexico and abroad participate in the "super-free" market via their had fallen a further 20 percent to 374 pesos per trading houses, they became major intermediar- dollar, and the discount relative to the "conies in that market. Then, on July 11, the Mexican trolled" rate widened to more than 60 percent. banks, supported by the monetary authorities, But by the end of July, the peso recovered to decided to stop trading at the internal "free" 354.50 pesos per dollar, and the discount from rate. As a result, transactions were switched the "controlled" rate narrowed to about 27 perfrom the "free" market, where the peso was cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 861 Argentina 1 percent per day to adjust for the inflation differentials between Argentina and other coun- In Argentina a newly constituted democratic tries. Following this action, and amid rumors of government had been attempting to grapple with dramatic economic measures, the premium that a debilitating wage-price spiral without jeopar- Argentine residents had to pay for dollars in the dizing promised increases in real incomes. But parallel market widened to 35 percent. the domestic economy was in severe disequilibri- Then on June 14, President Alfonsin anum. The central bank had monetized years of nounced a package of bold economic reforms, oversized fiscal deficits. It found that, with pub- centering on a further, substantial cut in the lic sector wage increases and fiscal policy stimu- fiscal deficit and a pledge to stop monetizing the lating demand, efforts to restrict excessive bank deficit. The deficit, which had fluctuated in the lending through interest rate ceilings and credit range of 10 to 12 percent of GDP since the end of allocation schemes led to a diversion of financing 1983, was to be slashed to only 2.5 percent for to an informal inter-company market. the second half of this year. In support of this Argentine officials had repeatedly spoken of plan, price and wage ceilings were frozen— the need for programs to stabilize the economy actions described as interim steps toward elimover time by tightening monetary and fiscal inating the country's price and wage indexation policies. As recently as December 1984, Argenti- system that was perpetuating Argentina's inflana had announced a 15-month standby arrange- tion problem. ment with the IMF. But from the start the In addition, currency reform was instituted to country was not in compliance with the standby replace the Argentine peso with a new currency, provisions, and the rise in Argentina's inflation the austral, at a rate of 1,000 pesos to 1 austral. rate continued to accelerate. In the process, the Effective June 16, the austral was given a fixed strategy of gradual adjustment had lost credibil- parity of 80 austral cents to the U.S. dollar. ity. By early 1985 the internal chaos wrought by On the basis of these measures the government an economy reeling toward hyperinflation pro- was able to shore up Argentina's external financvoked political demands for a new approach that ing position and reduce cash flow problems. It promised quicker results, even if the approach completed negotiations for reactivating the IMF involved immediate sacrifice. program, which was approved on August 9. It Thus, in March President Alfonsin, with a new also took steps to reduce interest arrears on economic team, began to adopt a series of new public sector debt, using funds from official measures to achieve rapid adjustment and a reserves and drawing upon a multilateral bridge radical restructuring of the economy. First, regu- financing facility backed by the monetary aulated deposit rates were raised to levels compara- thorities of the United States and 11 other particble with the monthly inflation rate. Interest rates ipating countries. The government's actions also were deregulated on some bank liabilities to set the stage for completion of a rescheduling attract funds back into the banking system where agreement and a new lending program with comthe authorities could exert more control on credit mercial banks. creation. Public utilities also raised prices signifi- The announcement of the government's adcantly to increase revenue. justment program was generally well received in On June 11, the government announced a Argentina. In the exchange market, too, the devaluation of 18 percent for the Argentine peso Argentine currency appeared to have gained a in the official market. Previously, the govern- steadier footing by late July. Capital inflows ment had implemented "mini-devaluations" began to materialize, taking the form, at least in rarely exceeding 4 percent, and averaging about part, of a reversal of commercial leads and lags. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

862 Staff Studies The staffs of the Board of Governors of the indicate concurrence by the Board of Governors, Federal Reserve System and of the Federal by the Federal Reserve Banks, or by the mem- Reserve Banks undertake studies that cover a bers of their staffs. wide range of economic and financial subjects. Single copies of the full text of each of the From time to time the results of studies that are studies or papers summarized in the BULLETIN of general interest to the professions and to are available without charge. The list of Federal others are summarized in the FEDERAL RESERVE Reserve Board publications at the back of each BULLETIN. BULLETIN includes a separate section entitled The analyses and conclusions set forth are "Staff Studies" that lists the studies that are those of the authors and do not necessarily currently available. STUDY SUMMARY THE ROLE OF THE PRIME RATE IN THE PRICING OF BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84 Thomas F. Brady—Staff, Board of Governors Prepared as a staff study in the spring of 1985 This study investigates the shift in the pricing of in the market for large business loans of very large business loans that began in the late 1970s. short maturity (and today dominates this mar- The shift has been away from the prime rate— ket), but by the second half of 1982 this practice traditionally considered the rate offered by banks had become commonplace at longer maturities, to their most creditworthy business customers— including one year or more. By that time, about toward market rates measuring the cost of fund- 90 percent of the dollar volume of gross shorting large loans. Typically, large loans with prices term loan extensions and an estimated 70 percent based on funding costs have rates below the or so of outstanding short-term loans at 48 large prime. The study also examines changes in the banks had rates below prime. cost of these loans compared to other business In examining pricing patterns by size of loan, loans and the implications of the pricing shift for the study compares rates on small and mediumthe behavior of the prime rate. sized loans with rates on large loans (those made Using information on business loan pricing in amounts of $1 million or more). Smaller loans from the Board's quarterly Survey of Terms of are priced mainly at rates of prime or above, and Bank Lending (STBL) for the 1977-84 period, large loans generally have market-related rates. the study compares the main characteristics of The spread between the average rates of these loans extended at rates of prime or above with two classes of loans rose on balance over the those of loans made at rates below prime for four 1977-84 period. This increase in the relative cost maturities: three short-term (overnight; one of smaller loans is due to a narrowing of markups month or less, excluding overnight; and more of rates for large loans over their market-related than one month and less than one year) and one base rates and to a widening on balance of the year or more. Below-prime lending first emerged spread of the prime rate over market rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

863 The study models the prime rate and compares gross business loan extensions and average loan estimates of its behavior based on data for recent rates available from the STBL over the 1977-84 years to its behavior in the period preceding period, the study estimates demand functions for substantial volumes of below-prime lending. This eight categories of loans, disaggregated by fixed comparison suggests that the widespread use of and floating rate and by maturity. The econometmarket rates in place of the prime rate to price ric evidence suggests that the price elasticity of large business loans has contributed to the ten- loan demand increases with loan size and that dency for the prime to lag declines in market rate-based substitution occurs between several rates and has increased its sensitivity to per- categories of large loans and between large loans ceived risk. These findings are consistent with and bonds. Little evidence was found, however, the comparatively high level of the prime in for rate-based substitution between business recent years. loans and commercial paper issued by nonfinan- Using the thirty-two quarterly observations of cial firms. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

864 Industrial Production Released for publication September 13 gains in output were largest in durable consumer goods and in defense and space equipment. At Industrial production increased an estimated 0.3 124.8 percent of the 1977 average, the index of percent in August. The level of output was industrial production in August was 1.0 percent revised downward for the three previous higher than that of a year earlier. months, and the index now shows no change in In market groups, production of consumer industrial output in May, an increase of 0.3 goods increased 0.7 percent, reflecting mainly a percent in June, and no change in July. August sharp gain in automotive products. Autos were Ratio scale, 1977 = 100 140 TOTAI INDEX 120 " - 100 Materials 1 1 l l l l MATERIALS Durable Nondurable / Energy INTERMEDIATE PRODUCTS Business supplies \ yJ'\J Durable - 80 Construction supplies 240 140 MOTOR VEHICLES AND PARTS EINAL PRODUCTS 120 _ Left scale ~~ Right scale — 200 100 Defense and space 160 __ _ _ Business equipment 140 / —^ 80 120 100 60 Consumer goods 1 I 1 1 1 1 80 1979 1981 1983 1985 1979 1981 1983 1985 All series are seasonally adjusted. Latest figures: August. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

865 1977 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, GGGrrrooouuuppp 1985 1985 AAAuuuggg... 111999888444 tttooo AAAuuuggg... July Aug. Apr. May June July Aug. 111999888555 Major market groups Total industrial production 124.4 124.8 .1 .0 .3 .0 .3 1.0 Products, total 131.7 132.3 .4 .4 .3 .0 .4 2.6 Final products 131.7 132.4 .4 .3 .1 .0 .5 2.1 Consumer goods 120.4 121.3 -.2 .4 .5 -.2 .7 2.4 Durable 112.1 115.1 -1.8 .3 1.0 -.7 2.7 1.6 Nondurable 123.5 123.5 .3 .5 .4 .0 .0 2.8 Business equipment 140.4 140.7 1.3 -.1 -.9 -.1 .2 1.1 Defense and space 173.5 175.0 .6 .6 .9 .4 .9 8.9 Intermediate products 131.9 132.2 .5 .8 1.2 .1 .2 4.2 Construction supplies 120.1 120.2 .4 .7 1.3 .4 .1 4.2 Materials 114.3 114.5 -.4 -.7 .3 -.1 .1 -1.4 Major industry groups Manufacturing 126.8 127.5 .2 .0 .1 .0 .5 1.3 Durable 127.5 128.4 .2 -.2 -.2 -.2 .7 .6 Nondurable 125.8 126.1 .3 .3 .5 .3 .2 2.4 Mining 109.6 108.9 -.8 .2 .5 -.7 -.6 -3.6 Utilities 113.3 112.9 -.2 .1 .1 -.4 -.3 2.7 NOTE. Indexes are seasonally adjusted. assembled at the same annual rate as in July—8.3 ing declines in the preceding three months. Promillion units—but output of light trucks, in large duction of construction and business supplies part produced for the consumer market, surged increased further. Total materials output was during August. Output of home goods also in- almost unchanged again, with the output of duracreased in August; this rise follows a sharp ble and nondurable materials up, but with prodecline in July, which largely reflected cutbacks duction of energy materials reduced further. in the production of appliances. Output of home In industry groups, manufacturing output ingoods remains more than 3 percent below year- creased 0.5 percent in August, with gains of 0.7 earlier levels. In nondurable consumer goods, percent in durables and 0.2 percent in nonduraproduction was unchanged again. Output of busi- bles. However, mining activity declined 0.6 perness equipment edged upward in August follow- cent, and output at utilities was off 0.3 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

866 Statements to Congress Statement by Paul A. Volcker, Chairman, Board examiners reveal that a sizable number of addiof Governors of the Federal Reserve System, tional institutions have serious problems. Conbefore the Committee on Banking, Housing, and siderations of how to deal with these problems Urban Affairs U.S. Senate, September 11, 1985. and, indeed, how to turn around the recent trends, are thus in order. I appreciate the opportunity to be here today to In part these problems are traceable to the comment on proposals for reforming the federal heightened degree of competition to which instideposit insurance system and to review some tutions are now subject, a development fostered other elements of the appropriate federal ap- in large part by technological and financial innoproach toward depository institutions. vations both at home and abroad. Those innova- In the light of recent and current problems in tions, in turn, have been accompanied by and, in banking and thrift institutions, such a review is good part, forced by greatly relaxed regulation of natural. At the same time, as proposals for interest rates paid on deposits. Some institutions changing deposit insurance and supervisory ar- have importantly expanded asset powers. rangements for depository institutions are re- The economic environment has also changed viewed, we should not lose sight of their success- in a way that has increased the risks in highly es, both in the past and in coping with the present aggressive banking practices. That change was strains. punctuated by a major recession in the early For many years, the number of failed deposi- 1980s, which itself strained the finances of many tory institutions was minuscule relative to the businesses and individuals. But we also had a number of such businesses. Recently, there has vigorous recovery and expansion, and ordinarily been a significant increase in actual, or near, credit quality would be expected to show marked failures, and the financial system as a whole has improvement after the first year or so of recovbeen under greater strain. But the points of ery. That has not happened so far during the particular pressure have been dealt with in a current expansion. manner that has avoided contagious chain reac- In significant part, that is because the nation tions, and the health of other financial institu- has also been going through the more fundamentions and of the economy has not been under- tal process of moving from a condition of accelmined. As intended by the Congress, no small erating and anticipated inflation to one of much depositor of any federally insured institution has more moderate price pressures generally. In fact, lost money because of a bank failure, and losses downward price pressures in some previously to larger depositors and to other creditors of inflated sectors of the economy have been evibanking organizations have been very limited, dent, and real interest rates have been unusually without calling upon support of the general tax- high. Many ventures thought likely to be profitpayer. able by financial institutions and their customers As we review this experience, it is also natural during an inflationary period have turned out not and appropriate that you consider whether im- to be so. The energy, shipping, agricultural, and provements need to be made in the functioning of real estate areas are replete with examples. our deposit insurance and supervisory systems. Moreover, patterns of thinking shaped during We have indeed seen a number of organizations, inflationary times are hard to dispel. Thus, some including some larger ones, fail or be forced into projects undertaken by entrepreneurs and fimerger or reorganization in the past few years. nanced by depository institutions—and some- And, while that number has remained compara- times those roles are combined—still seem to tively small, the reports of our federal and state depend importantly for their success on in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

867 creased prices, particularly with respect to some have been inadvertently encouraged by the fedkinds of real estate development. eral "safety net"—indeed the extent to which The strength of the dollar in international the very success of those arrangements in procurrency markets has also been a factor adding tecting individual depositors and the financial to pressures on the manufacturing, mining, and and economic stability generally has also encouragricultural sectors, even as the economy as a aged some depository organizations to assume whole has grown substantially. A number of inordinate risks for both the institutions and the important foreign borrowers in Latin America insurance system. and elsewhere, who were favored lending outlets One aspect of the dilemma for the authorities during the highly inflationary period, have found is that institutions may, consciously or unconthemselves in an overextended position in the sciously, build into their decisionmaking the current economic climate. view that deposit insurance and the availability I believe that a third major source of our of discount window credit will give added time current problems can be traced to certain and leeway to deal with unforeseen problem changes in banking and public attitudes that situations that may arise, thus making instituemerged gradually as memories of earlier diffi- tions less self-reliant and less concerned about culties faded from consciousness and the post- risk despite the vulnerability of equity owners. war economy and financial markets displayed Depositors and creditors of banking organizaremarkable—indeed virtually unprecedented— tions themselves, because of the safety net, may growth and stability. Banks ended World War II anticipate that the "government," in the last with unusually high liquidity and strong capital analysis, will take actions to protect them against positions. It was natural and healthy that these loss, so that they can be relatively indifferent to funds would be more actively employed over the risk exposure of depository institutions. That time and that the extreme caution bred by de- is obviously the case for insured depositors who, pression would be dissipated. In the absence of by design, rely on the federal insurance backing signs of real difficulty for several decades, a new their deposits rather than on the financial health generation of managers, directors, and regula- of their banking institution for the return of their tors, basing their judgments on postwar experi- money. ence, shifted the focus of bank policies away The other side of the dilemma is that the from concerns with safety and toward greater "safety net" provides an essential public serrisk-taking in a quest for larger profits in a highly vice, not only in protecting small depositors but competitive environment. In time, and further also in avoiding the spread of fear among deposiinduced by the inflationary expectations bred in tors generally, thus undermining the stability of the 1970s, these tendencies were carried beyond the system as a whole. Instilling discipline at the prudent limits in a few institutions. expense of a financial debacle would be a Pyrrhic These risks have been aggravated more recent- victory. ly by the reactions of some managers, particular- Clearly, part of the challenge is to maintain a ly in the thrift industry, to a prolonged period of strong and effective safety net while minimizing extreme earnings pressures in their traditional adverse side effects on excessive risk-taking. lines of business. Implicitly or explicitly, they One important means of maintaining such baldecided, in effect, to "roll the dice" by undertak- ance is that management and owners of failed ing particularly risky activities generating imme- and distressed institutions are not, and should diate profits or the hope for large gains over time. not be, immunized from the consequences of bad From the standpoint of managers or owners, the decisionmaking and excessive risk-taking. chance of failure of the institution was already Stockholders lose when a bank has failed or large, and should sizable losses rather than gains gotten into trouble; management has lost jobs materialize, depositors would, in any event, be and reputations. Moreover, recent events conprotected, in whole or in part, by deposit insur- firm that uninsured depositors and creditors do ance. not feel entirely free of potential risk, and some recent events have alerted managements to the One general question before you is the extent importance of maintaining confidence. to which these changes in attitude and behavior Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

868 Federal Reserve Bulletin • November 1985 There is one aberrant situation that has been of plines inherent in the market process. Ideas strong and understandable concern to the insur- along this line run from more frequent disclosure ing agencies. I touched earlier on the apparent of information about the condition of banking temptation of some thrift institutions, finding and thrift institutions to increasing the frequency themselves with negative earnings and impaired and the certainty of loss that large depositors and capital and concerned about their ability to re- other creditors would suffer in the event of failed store profitability through adherence to normal institutions. The concept is that, by intensifying business practices, to channel funds into risky the consequences of bad decisionmaking, deposfinancial ventures. In some cases, these prac- itory institutions—their managements, directors, tices are directly aided and abetted by the fact shareholders, and depositors and creditors—will that the institution is able to obtain more sizable be more sensitive to risk, promoting safer and funds than would otherwise be possible by issu- sounder practices. ing insured deposits at relatively high rates, quite Obviously, the sensitivity of depository instioften through the auspices of a broker. Such tutions and their customers to the consequences insured deposits have been highly attractive be- of risk-taking is fundamental to prudent banking. cause they have provided interest returns above Any manager blinded to that fact by years of the general market level, and because they are tranquility has been forcibly reminded by recent fully insured and free of risk regardless of the events. But our financial history demonstrates condition and the activities of the issuing institu- unambiguously the dangers of relying on market tion. Given this potential for abuse, we have discipline alone. Before the 1930s, market discisupported the concept of strict limitations on pline did not prevent bank failures or systematicertain insured-deposit brokerage activities. cally discourage excessive risk-taking—until af- In sum, the burden of my remarks is that the ter periodic crises had occurred, at great expense insurance system, the safety net, and the pro- to the economy generally. Indeed, the entire cesses of banking supervision, faced with the rationale for the establishment of the Federal strongest challenge in decades, have functioned Reserve System and for the Federal Deposit with remarkable effectiveness to protect the sta- Insurance Corporation (FDIC) lay in the realizability of the banking system. We must not impair tion that institutions at the core of our payments that effectiveness. At the same time, we want to and financial systems have a unique importance learn all that we can from recent experience to for the stability of the economy generally. encourage a still stronger, self-reliant system, to Recent years have seen considerably more deal with the sources of strain, and to speed a public disclosure of loan concentrations and othreturn to a situation in which active use of the er matters. Normally, the presumption should be safety net is reduced. In that process, we want to in favor of wide disclosure in the interest of full build on the existing strengths of the system, and market information to investors, within limits to encourage the efforts already strongly under imposed by customer or competitive confidentiway among many depository institutions to im- ality. But such disclosure provides limited proprove their own positions. Perhaps it is also tection at best against imprudent lending or other worth emphasizing that this is no time for overre- risks that are usually not apparent in simple action—for encouraging the pendulum of atti- listings of concentrations and that, indeed, often tudes and policies by either managements or are exposed after the fact. officials to swing to the point that reasonable The question remains of striking an appropriinnovation, risk-taking, and growth is stifled by ate balance. Experience suggests strongly that unwarranted fear and uncertainty. creditors and investors find it difficult or impossible in practice to make reliable incremental appraisals of the degree to which institutions are MARKET DISCIPLINE taking excessive risks before the time the consequences of such activities become readily appar- One approach toward maintaining a balance be- ent. To take one example, the Continental Illitween stability and risk-taking would involve nois Bank was an investment favorite, praised reinforcing, or duplicating by other means, disci- for aggressive expansion, virtually until the eve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 869 of the exposure of massive problems in its loan widespread public ownership are already reportfolio. Those problems were initially centered quired to disclose material changes in circumin the energy area. But aggressive energy lend- stances, including the official enforcement orders ing, in the environment of the 1970s and the early bearing on their outlook. There are situations in 1980s, was considered appropriate and desirable which detailed disclosure by a banking agency in the marketplace for many banks, and those itself might serve a useful or a necessary purbanks were generally characterized by high earn- pose, particularly when the management is not ings, stock prices, and growth. Investors and actively and wholeheartedly moving to deal with depositors detected and reacted to the problems its problems. But that is not ordinarily the case. only after it was clear that a highly aggressive Rather, the entire procedure will often become lending posture in the energy area had yielded more, and unnecessarily, adversarial, making it bitter fruit. Then, left untempered, the reactions more difficult for examiners to obtain informawould have been so strong as to undermine a tion or engage in a frank exchange of views, and number of banks' prospects for viability, with tying up limited supervisory and enforcement widespread secondary repercussions. A similar manpower in legal proceedings. pattern of years of complacency, even when the general nature and the size of the lending is well known, could be cited in the growing loan expo- RISK-BASED INSURANCE sures of multinational banks to developing countries. Similarly, the exposure of thousands of One proposal that has been set forth, as a kind of small, agriculturally oriented banks is today substitute for direct market discipline, to achieve viewed very differently than it was only a few greater control over risk-taking by depository years ago. institutions—and also to make the depository In other words, in an inherently uncertain insurance system more equitable—is to shift world, subject to changes in objective circum- from the present flat-rate premium system of stances and fashion, the prescience of market deposit insurance to a risk-based system. In forces is necessarily limited and sentiment quick- concept, institutions taking a significantly riskier ly reversible. Once it becomes reasonably clear position would be required to pay higher premithat an institution has difficulties, sharp swings in ums than conservatively managed organizations. attitude can undercut orderly solutions, posing In principle, the proposal appears logical and risks to other banks and to the financial system in attractive. It seems undeniably fair to require general. those institutions exposing the insurance fund to There is no doubt that market forces ultimately greater risk to pay higher premiums to compenare capable of imposing, and do impose, a severe sate for that risk, an approach long followed by discipline. We want to take advantage of that. private companies in all areas of insurance. But we would also like those disciplines, to the But there is reason to question the practical extent feasible, to work consistently with con- benefits of such an approach. If differential insurstructive solutions to problems, which takes ance premiums are to effectively deter excestime, rather than to exact its lesson at the ex- sive risk-taking, the range between premiums pense of economic stability generally. charged institutions exposed to relatively great In striking that balance, the Federal Reserve risk and those operating more conservatively has not favored proposals that would have the would have to be fairly wide. But such a wide federal agencies themselves, as a general rule, range for premiums implies more precision in disclose detailed cease and desist orders or other gauging the risk exposure of different institutions disciplinary action that they have issued against or different types of lending than may be objecbanking organizations. Such routine disclosure tively possible, or that is widely perceived as may at times exacerbate an already delicate fair. We do not, for instance, want to indiscrimisituation and make more difficult the task of nately place a drag on commercial lending, or federal regulators seeking an orderly and appro- agricultural lending, or energy lending. The size priate resolution of problems that are, in fact, of the insurance premiums might be interpreted "curable." Larger banking organizations with as a kind of credit rating, but it would be too Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

870 Federal Reserve Bulletin • November 1985 crude to bear that burden. And I do not see, in teristics of a bank or a thrift institution may practice, how the premiums could be "fine- appear more equitable in terms of relative contrituned" before problems in fact emerge. butions to the insurance funds. Moreover, there It may be possible, for instance, to get general may be certain types of loan and investment agreement as to the relative riskiness of broad situations that are clearly so risky relative to the categories of balance sheet positions. All would "norm" that a sharply higher insurance premium agree, for example, that private loans are more could be clearly justified. That might be the case, risky than Treasury securities; that a low liquid for example, with real estate development activiasset ratio, particularly if accompanied by heavy ties of the kind that some institutions are actively reliance on purchased money, is more risky than developing, as permitted by some states. But I a high ratio; that a marked imbalance between would have to question, if the risks are so asset and liability maturities is more risky than a evident, whether such activities are appropriate close balance. But once past those relatively for depository institutions at all. broad concepts, consensus becomes much more As I have emphasized to this committee before difficult to achieve. in this connection, I am deeply concerned about There are many less tangible factors—such as the increasing tendency of states to provide the quality of an institution's management, its powers for state-chartered institutions operating internal controls, and its credit standards, what- under the protection of the federal safety net that ever the lending area—that affect the riskiness of may be inconsistent with prudent banking or an operation and should be taken into account. thrift operations. That, indeed, seems to me an The principal differences in the quality and the area in which action is urgently needed. relative riskiness of loan portfolios lies within broad loan categories, as much or more than between them. OTHER REFORMS IN DEPOSIT INSURANCE Bank examiners, of course, make such judgments. But there would be great drawbacks to I should like to comment briefly on several other basing premiums on the already difficult, and proposals for reforming the deposit insurance inherently qualitative, judgments contained in system that have been advanced in recent years. bank examinations. Such judgments are fallible One such proposal is to move the deposit insurand our forecasting ability is limited. To reflect ance limit back down to a significantly lower those judgments routinely in large changes in level. It is reasoned that this will result in a larger insurance premiums, involving both public no- proportion of deposits being subject to loss tice and higher costs, could well diminish pros- should an institution fail, and, by increasing risk pects for effective remedial action. exposure, encourage depositors to be more se- Some have suggested that the problems inher- lective in placing their funds with institutions. ent in ex ante identification of risk could be dealt The precise level for assured insurance protecwith by levying premiums on an ex post basis— tion is, of course, arbitrary, and I have myself that is, to charge higher premiums to institutions resisted the large increases enacted in the past. experiencing losses. But does it really make But we are not dealing with a blank sheet of sense to levy punitive premiums under such paper. Depositors and financial markets generalconditions, placing an added drain on the earn- ly are accustomed to, and presume maintenance ings of an institution with substantial problems, of, the present $100,000 level. and, in effect, announcing that added burden to It seems likely that, if insurance coverage were the world? Rather, would it not often work at reduced somewhat, the main effect would be that cross purposes with the efforts that federal regu- most smaller depositors with amounts to place lators would be making at such times to restore that exceed the cutoff would simply channel the institution to health? them into two or more deposit accounts with I recognize that, even if the possibility of using different institutions. Accordingly, costs to desharply differentiated insurance premiums as an positors and to the banking system would be effective deterrent to excessive risk is limited, raised. If the insurance level were to be sharply some distinctions based upon the general charac- lowered, the proportion of "runable" deposits at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 871 all institutions would increase, thus increasing of uncertainty and reduced liquidity to which the potential instabilities of the system at a time depositors are otherwise exposed. But I do not of strain. envisage such an approach as a satisfactory In concept, looking further into the future, substitute for the so-called purchase and assumpthere may be some merit to increasing, in a tion technique or other forms of assistance when careful and limited way, the effective risk expo- those alternatives are feasible and costs reasonsure of larger depositors, inducing them to make able. a more careful assessment of the conditions of In considering that or other new approaches, organizations in which they are placing funds and careful consideration must be given to the uncerworking in a marginal way to encourage more tainties that are inherent in change at a particuprudent banking practices. But those depositors larly sensitive time. In that spirit, proposals that are not entirely without risk today, and I do not might partially insure larger depositors, but at believe this is the time to inject more uncertainty the same time increase the risk of loss or illiquidinto the system. Any changes in this respect ity of an uninsured fraction, could be debated. should be made, in my judgment, only in more But any change in that respect should be ansettled circumstances, and with long lead times. nounced far in advance and be implemented with I believe that a fair description of the present great care. approach in operating the "safety net" is to Proposals to require institutions to pay the provide full protection for depositors within the same premiums on their deposit liabilities at insurance limits but also to protect all depositors overseas branches and at International Banking when that is practically feasible at reasonable Facilities as they do on all other deposits booked cost through mergers or otherwise, taking ac- in the United States, deserve careful review. count of the costs of alternatives, including the These depositors benefit from the greater stabileffects on the community and on banking stabil- ity of financial conditions that results from the ity more generally. The number of cases in which deposit insurance system as much as do other that protection has not been possible and feasible large depositors. Thus, it seems fair that banking in practice has been very small, for banks large organizations choosing to fund part of their operor small. That approach seems to me to remain ations overseas—and that proportion can be broadly appropriate. It does not commit the "managed"—should be subject to the same in- FDIC or the Federal Savings and Loan Insur- surance costs as those that rely on domestic ance Corporation (FSLIC) to full protection in sources of funds. every circumstance—such as when some combi- At the same time, extending insurance costs to nation of huge potential losses, unknown contin- foreign branch deposits changes the relative cost gent liabilities, and possibilities of fraud could burdens among our depository institutions, afclearly impose excessive costs relative to practi- fects incentives to branch abroad, and raises cal alternatives. In a few cases, a full payout to some competitive questions vis-a-vis banks insured depositors alone has been necessary. abroad. A fuller assessment of the pros and cons As the committee knows, there has been some appears to me in order before proceeding definitesting by the FDIC of a modified payoff tech- tively, and if a decision is made to implement the nique. This technique involves deriving an esti- proposal, it should probably be phased in over a mate of the proportionate amounts of the unin- period of years. sured depositor claims that are likely to be Proposals also have been advanced for mergrecovered from the liquidation of a closed institu- ing the FDIC and the FSLIC insurance funds. In tion's assets and then paying that amount to the principle, this would appear appropriate if, and depositor immediately rather than waiting until as, these depository institutions are required to the liquidation is completed. Any recovery adhere to equivalent regulatory and supervisory above that minimum is to be passed through after standards, and particularly if their powers broadit is realized. That approach, I believe, could be ly coincide. There has been some movement in an improvement over the delayed payoff ap- those directions, but there also remains a long proach that is routine in general bankruptcy way to go. proceedings, since it helps reduce the side effects Whether one would want to proceed more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

872 Federal Reserve Bulletin • November 1985 immediately to merge the funds would appear to put in place on a formal basis in the early 1980s depend on how the advantages are weighed, in and have helped to reverse the earlier downtrend current circumstances, of bringing the larger in capital asset ratios. resources of the FDIC fund to the support of the We now have under active review, as do the savings and loan industry. Against that advan- other federal bank supervisors, proposals for tage there is a legitimate question as to whether supplementing the existing standards. One objecmonies contributed by commercial banks and tive is to take account of the rapid growth in "offmutual savings banks should now be made avail- balance-sheet" risk exposures and declines in able to protect the depositors of savings and loan liquidity, particularly at larger banking organizaassociations. At the least, the importance of tions. To some degree, the simple capital-asset bringing the regulatory and supervisory stan- ratios that are at the center of our current guidedards of the two industries into alignment lines contribute to those developments; institupromptly would be greatly reinforced. But, in tions work to improve those ratios by holding addition, I believe that the Congress, in address- down asset growth partly by limiting liquid asset ing such a proposal, should consider possible holdings and by assuming off-balance-sheet commeans for bolstering the size of the FSLIC fund mitments in lieu of direct lending. or the relative contribution of the savings and We can approach, and are approaching, the loan industry should it decide to authorize such a problem in part through strengthening the crucial merger. process of examination, emphasizing that existing standards are minimums that can, and should, be exceeded depending upon the risk OTHER INITIATIVES profile of an institution. We are also carefully considering several variants of proposals for Apart from the initiatives in the deposit insur- quantifying a risk-related capital measure to supance area that I have just reviewed, I believe that plement the present approach. I anticipate that there are other actions—indeed more important one or more approaches will be set out for public actions—that are being taken and that can be comment before the end of the year. taken to strengthen further our depository sys- In adopting such an approach, we face some of tem and achieve greater assurance that it will the same difficulties that I outlined in connection continue to function safely and efficiently. with risk-based deposit insurance, particularly Federal insurance and other elements of the the difficulty of assigning appropriate weights to federal "safety net" necessarily imply a clear different broad asset categories. But these stanfederal interest in how the protected funds are dards potentially can be applied, and bank peremployed and managed. To some degree, strong formance monitored, in the context of a detailed supervision can minimize the need for, and de- examination process, and the approach has the mands upon, the "safety net." And no insurer further potential advantage of contributing to can afford to be indifferent to the behavior of the international comparability. insured. The chairman of the FDIC has proposed phas- All the federal agencies, individually and in ing in an increase in the minimum capital requirecooperation, have taken steps to strengthen the ment for banks to 9 percent, permitting the supervisory and, where necessary, the regula- increase to be in the form of subordinated debt. tory process. I can speak directly here only of That is another initiative that I find attractive in the Federal Reserve, where a number of steps concept and worthy of study. The idea is that are under way to implement a comprehensive market discipline would be reinforced at the margin without further jeopardizing depositors— program for further strengthening our supervisoindeed, consistent with stronger depositor prory and regulatory activities. tections—by requiring banks to find a larger As you may recall, in conjunction with the market for debt (or equity) that would have no other bank regulatory agencies, we have, over insurance protection. At least as important in my the past few years, tightened significantly our view, the added capital would provide an extra capital standards applicable to banks and bank cushion of protection against the possibility of holding companies. These standards were first Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 873 loss to depositors and to the deposit insurance have been burdened more heavily than in many fund. years, and we have seen some unaccustomed The Federal Reserve also has under active failures and reliance on the "safety net." That review other proposals for modifying the struc- alone justifies a review of steps to ensure that our ture of regulations and guidelines in place to see banking institutions, and their supervisory agenthat banking organizations meet appropriate cies, are following policies and practices consisstandards in conducting their business activities. tent with the earliest possible return to robust Specifically, we are preparing standards to guide health and full self-reliance. a bank holding company with respect to appro- But, in making that review, let us not overlook priate policies toward cutting or eliminating the the many continuing elements of strength in the payment of dividends when, and if, the organiza- banking system that enable it to deal with points tion is experiencing significant problems. We are of pressure. The vast majority of our depository also actively considering, within our present institutions have absorbed and adjusted to a less authority, appropriate limitations on bank hold- favorable financial and economic environment in ing companies undertaking particularly risky ac- a way that retains, and even reinforces, their tivities that may be sanctioned by state law but resiliency. Capital ratios are improving, profitthat appear to extend beyond the intent and ability has generally been maintained, well-run framework of federal legislation. thrift institutions, at present interest rates, have Meanwhile, we have under way a number of the potential for rebuilding capital, and I sense significant steps to enhance our ability to identi- that managements of most institutions have actfy, and seek correction of, problem situations at ed to review lending standards and control sysindividual banking organizations. The frequency tems. It is these factors that support confidence and the intensity of examinations and inspections and prospects for the future. At the same time, of larger banking organizations is being in- the "safety net" has operated with great effeccreased, while at the same time we seek to tiveness; it has done what it is supposed to do increase cooperation and coordination in the and what the American public has expected. It examination of smaller organizations with other will continue to do so. federal agencies and state banking authorities. The issues you are reviewing are as complex Indeed, if states are willing and have the required as they are important. There is a need to proresources, we would plan to increase our reli- ceed—but to proceed with all due caution—so ance on their examinations of smaller banking that any changes will in fact contribute to reinorganizations. forcing solutions to our current difficulties and to Communications with the boards of directors a stronger banking system, not the reverse. I of large organizations with problems are being have indicated that the Federal Reserve has been upgraded in content and official participation. moving to improve its regulatory standards and Where warranted, we will make full use of our to strengthen its supervisory capabilities. As you statutory powers to see that banking organiza- know, the other federal agencies responsible for tions cease activities that are causing them harm supervising depository institutions are taking and adopt policies that will restore their financial steps. health. Our problems have been manageable. They should remain so. We welcome the cooperation of the Congress in that effort, not simply with CONCLUSION respect to the questions under review today, but more importantly and fundamentally in dealing At a time in which the domestic and the world with the underlying sources of the imbalances economies are subject to many imbalances and and distortions in our economy and financial distortions, banking systems here and abroad system. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

874 Federal Reserve Bulletin • November 1985 Statement by J. Charles Partee, Member, Board The Congress has not authorized these activiof Governors of the Federal Reserve System, ties for national banks or for bank holding combefore the Subcommittee on Financial Institu- panies and indeed has specifically banned many tions Supervision, Regulation and Insurance, of of them as unsafe and unsound. For example, the the Committee on Banking, Finance and Urban Glass-Steagall Act prohibits national banks and Affairs, U.S. House of Representatives, Septem- state member banks from engaging in, or being ber 11, 1985. affiliated with a company engaged principally in, dealing or underwriting most types of securities. Title VI of the Garn-St Germain Depository I am pleased to appear before the subcommittee Institutions Deregulation Act of 1982 prohibits today to present the Board's views on the so- bank holding companies from underwriting incalled South Dakota loophole. This loophole, surance. Real estate development activities are which is based on a recent South Dakota law not permissible for national banks and have not authorizing out-of-state bank holding companies been determined by the Federal Reserve to be to acquire state-chartered banks in South Dakota closely related to banking and thus permissible and to engage through these banks in all facets of for bank holding companies. the insurance business, primarily outside the The proliferation of state laws authorizing new state, conflicts with prevailing federal law and nonbanking activities appears to have developed regulation. Indeed, there has been a proliferation in part in response to pressures from banking in recent years of state laws authorizing federally institutions that have turned to state law as a insured banks and thrift institutions to engage in means of engaging in new nonbanking activities a broad range of nonbanking activities not previ- foreclosed to them by federal law. The states ously deemed appropriate for depository institu- enacting these laws in turn are motivated in tions, including securities and real estate invest- many cases by a desire to attract new employment and development activities as well as ment and revenues by offering bank holding insurance sales and underwriting. companies a means of exploiting ambiguities or This trend is of special concern because cer- "loopholes" in federal law. There is no gain in tain of these state laws do not appear to be this offering for the economy as a whole, and motivated in any substantial measure by consid- there could well be heavy costs to bear for the erations relating to improving the banking or federal government and for the users of the thrift structure or by any local need for the financial system. services authorized, but rather by a desire to The legislation in South Dakota stands out as attract new business and tax revenues to the an example of state efforts to expand jobs and states through the liberal use of a bank franchise. revenues at the expense of other considerations. A competitive race among the states to expand The preamble to the South Dakota statute indinonbanking powers would substantially increase cates that its purpose is to secure new employthe level of risk in the banking system. For ment and revenue for the state by enabling outexample, the recently enacted Ohio law allows a of-state bank holding companies to take state bank to invest as much as 50 percent of its advantage of a "unique opportunity" afforded by assets in real estate. An Ohio bank could thus perceived loopholes in the national banking laws. effectively transform itself from a banking insti- South Dakota has, however, insulated its own tution into a real estate investment company of domestic financial and insurance institutions the type and with the potential for the problems against the competitive and other effects of these that have occurred in Maryland recently. The activities by specifically providing that a new same is true for the statutes that permit invest- South Dakota bank acquired by an out-of-state ment in equity securities. Similarly, so-called holding company must conduct its banking and wildcard statutes or leeway provisions authorize insurance activities at a location and in a manner investment of substantial amounts of banking so as not to attract customers from the general assets in any activity not otherwise prohibited, public to the detriment of existing banks or thus allowing state banks to invest in nonbanking insurance companies in the state. South Dakota ventures of every type and description. thus has authorized its banks to engage, in every Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 875 state other than South Dakota, in activities ex- abuse or evasion by bank holding companies of pressly prohibited under federal law and indeed the nonbanking provisions of the act. under many state laws. In adopting this regulation, however, the The Board's main concern with statutes such Board expressly noted that a potential conflict as this is that they are not appropriately balanced could arise between the nonbanking restrictions by considerations relating to the safety and of the act and state law if state law was interpretsoundness of the nation's banking system. We ed to permit nonbanking activities that were recognize, of course, the interest of the states in impermissible for a bank holding company under regulating banking within their borders. The dual the act. In a statement issued with the regulation, banking system has contributed on balance to the the Board specifically noted that it would review flexibility and the resiliency of our banking sys- the provision from time to time to ensure that it tem, and has helped make it more responsive to was not being used to frustrate the act's purthe needs of both business and consumers. Nev- poses. ertheless, serious questions must be raised about Since 1971, holding company banks, relying on an undermining of the carefully established fed- this regulatory provision, have engaged in a eral framework of authorized nonbanking pow- limited variety of nonbanking activities authoers for banks and thrift institutions through the rized by state law, for example, insurance agenactions of individual states, motivated not by cy and travel agency activities. Until the South concerns for safety and soundness but by other Dakota statute, the Board did not feel that there parochial objectives. In view of the expansion of had been significant abuse of this provision. powers in South Dakota and other states and the State-authorized activities generally had been of likelihood that this example could well be emu- a limited nature, had not been authorized on a lated elsewhere, we believe that the Congress large scale, had generally been conducted inshould enact legislation on banking and thrift state without the types of operating limitations in powers that reconciles the states' legitimate need the South Dakota law, and, most importantly, for flexibility with the federal government's con- had not posed significant risks to the banking cern about the problems of excessive risks for system. the banking and thrift system and for the federal The application by Citicorp to acquire a South financial safety net. Dakota state bank for the purpose of engaging in The new state laws, and the South Dakota broad insurance activities pursuant to the South statute in particular, are premised in great part Dakota law, in the Board's view, was inconsison lack of clarity in the Bank Holding Company tent with the regulatory provision adopted by the Act as to its application to the direct activities of Board in 1971. Citicorp's application, and the subsidiary banks of bank holding companies. prospect of numerous similar applications as The act embodies the national policy against the other states enacted new nonbanking powers for commingling of banking and commerce by pre- state banks, carried the potential for widespread cluding bank holding companies from engaging in evasion of the Bank Holding Company Act. or acquiring companies engaged in activities that Accordingly, the Board in January 1984 suspendare not closely related to banking. The Board has ed the processing of the application, as well as long held that the provisions of the act apply to similar applications filed by BankAmerica Coracquisitions by holding company banks of voting poration and First Interstate Bancorp, noting its shares of a nonbanking company. In 1971, with tentative judgment that it could not approve the the expansion of the act to cover one-bank proposals in view of existing law and expressions holding companies, the Board adopted a regula- of congressional intent. After Citicorp had reactitory provision that allows wholly owned operat- vated its application, the Board proceeded to ing subsidiaries of bank holding company banks reach a final decision on the case and denied the to engage in activities that the bank itself may application as a circumvention of the provisions engage in directly pursuant to state law. This in the Bank Holding Company Act that sharply provision was adopted to promote competitive limit the scope of bank holding company inequity between holding company banks and in- surance activities. The Board concluded that dependent banks in the absence of evidence of the overall effect of the South Dakota law Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

876 Federal Reserve Bulletin • November 1985 on the proposed nationwide insurance activities ulation Act to bank subsidiaries of bank holding of the state bank to be acquired by Citicorp companies. would be that the bank would act as an insurance H.R. 1513 goes some distance toward dealing company in direct contravention of the act's with the dangers posed by the broad, staterestrictions. authorized activities for banking and thrift orga- While the Board believes that it has authority nizations. The bill is based on the premise that a under the act to regulate the activities of non- state should not be able to insulate itself from the banking subsidiaries of bank holding companies, competitive and other effects of wide-ranging the additional question of whether the nonbank- and potentially damaging nonbanking activities ing restrictions of the act apply to activities that it authorizes for institutions it charters but engaged in directly by a subsidiary bank has been that operate predominantly in other states. raised in a number of contexts, including peti- In view of the proliferation of state laws authotions to the Board and litigation. The Board has rizing extensive securities, insurance, equity inunder consideration this question, as well as vestment, and real estate activities, however, whether to revise its existing regulatory provi- and the increased risks that these activities pose sion for operating subsidiaries of holding compa- for the federal safety net and the nation's bankny banks. ing system, the Board strongly believes that the In recognition of the serious risks posed by the limitations contained in H.R. 1513 should be expansion of nonbanking powers of state banks expanded to cover activities even when conductand thrift institutions, both the Federal Deposit ed within the authorizing state if it is determined Insurance Corporation (FDIC) and the Federal that they threaten safety and soundness. As I Home Loan Bank Board (FHLBB) have under- have stressed, it is not desirable, even within taken regulatory initiatives that would set limits their own borders, for states to expose the bankon the scope of nonbanking powers authorized ing system to the increased risks of nonbanking by state law. The FDIC has proposed to establish activities that the Congress has determined are operating and investment limitations on certain unsafe and unsound for federal institutions and nonbanking activities of FDIC-insured banks. bank holding companies. The FHLBB has promulgated regulations that It does seem desirable, however, to allow the would establish a review procedure by the Fed- states to retain flexibility to experiment with new eral Home Loan Banks on a case-by-case basis initiatives in local banking and thrift services by for direct investment by thrift institutions in authorizing nonbanking activities within state certain nonbanking activities over a threshold borders if such activities are not determined to amount. be unsafe or unsound. For example, many state Notwithstanding these actions, we would con- banks have operated insurance agencies and cur in the view that legislation is needed to travel bureaus pursuant to state law for many provide a uniform national policy with respect to years. These activities do not pose threats to the the proper scope of state-authorized nonbanking stability of the banking system because the risks activities consistent with a safe and sound finan- associated with such activities are rather minicial structure. H.R. 1513 addresses the problem mal. Indeed, the Congress has allowed savings of South Dakota type statutes by limiting the and loan holding companies to own and operate ability of state banks to engage in activities not insurance agencies for many years, and federal permissible for national banks or bank holding savings and loan associations also are permitted companies outside the authorizing state. Similar- to operate insurance agencies through service ly, savings and loan associations and savings corporations. National banks similarly have been banks would be prohibited from engaging outside authorized to operate insurance agencies in small the authorizing state in activities not permissible localities. for federal thrift institutions or multiple savings We thus would favor retaining flexibility to and loan holding companies. In addition, the bill allow the states to continue to authorize such applies the prohibitions on bank holding compaactivities. A provision such as in section 2 of ny insurance activities enacted in Title VI of the H.R. 1513 that would apply all of the Title VI Garn-St Germain Depository Institutions Dereginsurance prohibitions to subsidiary banks of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 877 bank holding companies is undesirable because it vices industry, and we would prefer to see a would limit the procompetitive aspect of insur- legislative solution along the lines of H.R. 1513 ance sales activities by banks. The Board has that still allows flexibility in this area, but with previously testified in favor of an appropriate authority to limit risks that cause concerns for expansion of bank holding company powers to safety and soundness. • accommodate the evolution of the financial ser- Statement by William Taylor, Director, Division adjusted for classified assets and standby letters of Banking Supervision and Regulation, Board of credit. of Governors of the Federal Reserve System, From 1980 to 1984, the ratio of equity and before the Subcommittee on Financial Institu- loan-loss reserves to total assets has risen from tions Supervision, Regulation and Insurance, of 5.37 percent to 6.15 percent for all state member the Committee on Banking, Finance and Urban banks, and from 5.30 percent to 6.33 percent for Affairs, U.S. House of Representatives, Septem- all bank holding companies with assets of more ber 11, 1985. than $100 million. These increases are largely attributable to higher levels of capital at institu- I appreciate the opportunity to appear before this tions with assets of more than $1 billion. Capital subcommittee to discuss the financial condition ratios at smaller state member banks have reof the institutions under the supervision of the mained about level during the 1980s, while bank Federal Reserve. As indicated by the data pro- holding companies with less than $1 billion in vided in the text of this testimony, there are a assets have shown moderately improved ratios. number of financial institutions that continue to Besides the calculation of capital ratios, the experience a variety of difficulties. Problems in evaluation of capital adequacy must also take the farm, energy, international, and shipping into consideration the quality of assets and the sectors are evident, and the number of bank level of off-balance-sheet risk. While classified failures and problem banks remains high by assets have risen significantly at state member historical standards. On the positive side there banks since 1980, capital ratios adjusted for has been an improvement in capital ratios (espe- classified assets still show increases for all size cially of larger banks), and the majority of the classes of state member banks and bank holding banks are profitable and have good asset quality companies. If standby letters of credit were to be and sound operations. The subcommittee may added to total assets in computing capital ratios, wish to refer to related data previously provided the results would still show an increasing trend. on state member banks and bank holding compa- Multinational banking institutions have also nies in response to Chairman St Germain's letter exhibited improvement in the ratio of equity and of August 1, 1985. I would now like to address loan-loss reserves to total assets in recent years. the specific questions raised in your letter of Capital ratios for these banks have risen since September 3. 1980, and are at their highest levels since the early 1970s, even though the capital ratios of these large banks are generally below the levels of smaller institutions. Improvement is also evi- QUESTION 1—CAPITAL dent in capital ratios adjusted for classified assets and for standby letters of credit. One is less After declining steadily during the 1970s, bank sanguine about the improvement in large bank capital ratios have increased in recent years. capital ratios when capital is measured against Improvement is apparent throughout the range of loans or risk assets. institutions, as state member banks and bank One major reason for increased levels of bank holding companies have shown higher capital and bank holding company capital has been the ratios during each of the past four years. This adoption of capital adequacy guidelines in Deupward trend is also evident when capital is cember 1981. These guidelines established mini- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

878 Federal Reserve Bulletin • November 1985 mum capital levels and have continued to provide The typical pattern has been for net chargestate member banks and bank holding companies offs to increase sharply during a recession, to with targets or objectives to be reached over time. continue to increase in the year after a recession, Recent amendments to the guidelines, in conjunc- then to decline as economic conditions improve. tion with the capital maintenance regulations of the The present period has not conformed to this Office of the Controller of the Currency (OCC) and general pattern. Credit quality, as measured by the Federal Deposit Insurance Corporation the charge-off ratio, has not improved during the (FDIC), raised the minimum guidelines for large present economic recovery. banking organizations and established uniform Part of the explanation for this phenomenon minimum capital levels for all federally supervised has to do with the particular conditions of the banking organizations. past few years that have adversely affected credit Bank and bank holding company capital are quality for the nation's businesses. These condinot deemed to be adequate simply because an tions include back-to-back recessions and the organization meets the minimum capital require- transition to a period of lower inflation and ments. Banking organizations whose operations inflationary expectations. involve degrees of risk that are higher than In addition, part of the explanation concerns normal are expected to hold additional capital. problems endemic to particular sectors: agricul- Areas that merit particular attention in analyzing tural, international, energy, and real estate. The risk profiles are the loan and investment portfo- obvious problems in the agricultural and energy lios, the level of liquid assets in relation to total sectors, the difficulties that developing countries assets, the volume and nature of all off-balance- have had repaying debt, and the overbuilding in sheet risk (particularly standby letters of credit), certain sectors of the real estate business have all the level and specific character of intangible contributed to a worsening of credit quality probassets, and the extent and the nature of all lems in recent years. In contrast, credits in the nonbanking activities. Institutions that are agricultural, energy, and international sectors deemed to have inadequate levels of capital are were relatively unaffected by the 1973-74 recesrequired to submit an acceptable plan for achiev- sion (although there were some international ing compliance and may be subject to appropri- credit problems in industrialized countries). In ate supervisory and regulatory actions. the late 1970s and the early 1980s these credits Are capital levels adequate? From a supervi- were not considered to be major problem areas. sor's viewpoint it is hard to imagine that a bank Although the real estate industry suffered setcould be too well capitalized, and it is even more backs in the mid-1970s, by the end of the decade difficult to determine what amount of capital is (helped by the rapid inflation of the period) it too adequate to cover the ever changing risk profiles. was faring relatively well. And so the best answer seems to be that capital Since 1982, credit quality has deteriorated levels are stronger than they have been but are more at the largest and at the smallest banks than not at such a level that would cause us to at those of moderate size. Data for all insured moderate our encouragement to the banks for commercial banks since 1982 indicate that the continued improvement. greatest increase in the ratio of net charge-offs to equity and loan-loss reserves has been for banks with more than $1 billion in assets and for those with less than $300 million in assets. For banks QUESTION 2—ASSET QUALITY with more than $1 billion in assets, net chargeoffs to equity and reserves have increased from Asset quality is generally sensitive to national 7.93 percent in 1982 to 10.25 percent in 1984; and international economic conditions. As the banks with less than $300 million have also shown a significant increase during this period, financial strength of certain borrowers deteriowith the ratio increasing from 5.58 percent to rates during periods of recession, their ability to 7.04 percent. For state member banks, the ratio satisfy their loan obligations is impaired. After a of classified assets to total assets also has inlag, banks are forced to write off an increasing creased sharply since 1982 for banks in these two percentage of loans due to nonpayment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 879 size groups, whereas for banks with assets of in 1984 can be considered only fair. At 0.62 $300 million to $1 billion, this ratio has actually percent, the 1984 ROA figure is consistent with declined. the range achieved throughout the 1980s, above Off-balance-sheet activity is growing rapidly the range achieved throughout the second half of and the risks associated with these activities the 1970s (during which period the ROA never need to be closely monitored. For the 25 largest exceeded 0.58 percent), but below the levels bank holding companies, which are responsible recorded during the first half of the 1970s. (In for the preponderance of these off-balance-sheet 1970 and 1971, the ROA for state member banks items, standby letters of credit have approxi- was 0.73 percent and 0.71 percent respectively.) mately tripled since the beginning of the decade. The ROE for state member banks in 1984, at During 1984, the nation's 100 top issuers in- 11.58 percent, equalled the 1983 mark and recreased their standby letters of credit 25 percent. mained well within the fairly narrow band of Other off-balance-sheet instruments, such as fi- 10.04 percent (1976) to 12.87 percent (1980) that nancial futures, forwards and options, interest was registered from 1970 to 1984. rate swaps, and the like have also increased. In 1984, state member banks within the smaller Much of the off-balance-sheet activity is a size classes once again outperformed the larger response to heightened demands for more so- banks with assets of $1 billion and more in terms phisticated financial services generated by such of the ROA: 0.77 percent for banks smaller than factors as improved technology, the increasing $300 million; 0.88 percent for banks between integration of international financial markets, $300 million and $1 billion; and 0.59 percent for and more volatile interest rates. Pressures for banks with more than $1 billion. In a reversal of stronger capital ratios have to some degree con- past years, banks in the middle size class outtributed to the growth of off-balance-sheet busi- stripped those in the smallest one, presumably ness. By creating contingent rather than direct due to the performance of agricultural loans that obligations, banks generate fee income but avoid are concentrated in the smallest bank size class. increasing their reported assets. When measured The ROE, like the ROA, was generally true to relative to assets, leverage is reduced and profit- form in 1984. The largest banks, due to their ability increased. greater use of leverage, compensated somewhat Although off-balance-sheet activities are not for lower ROAs. At 11.96 percent, the ROE for now quantitatively included in the capital guide- the banks with $1 billion and more surpassed the lines of the Federal Reserve Board, its policy 9.43 percent mark for the banks with less than statement on capital adequacy states that these $300 million, but fell short of the 12.36 percent items will be considered in assessing a bank's mark for the banks with $300 million to $1 billion. capital adequacy. The Federal Reserve is cur- In short, 1984 was not a premier year for bank rently studying methods whereby certain items earnings, nor have the past several years been (for example, standby letters of credit) would be particularly robust. specifically included in the calculation of bank capital ratios. QUESTION 4—BANK LIQUIDITY QUESTION 3—EARNINGS While several indicators of bank liquidity exist, this concept is often difficult to measure, and the In 1984, state member banks earned a return of structure of liabilities, as well as of assets, must 0.62 percent on year-end assets (ROA) and a be considered. Recent reporting changes provide 11.58 percent return on year-end equity (ROE). more information about the frequency with During the same period, all bank holding compa- which banks can reprice their assets and liabilnies (BHCs) with assets of more than $100 mil- ities; that data base is useful for evaluating the lion earned returns of 0.55 percent and 9.95 exposure of banks to interest rate movements. percent respectively. These figures, however, do not address directly In terms of the period since 1970, the ROAs the extent to which banks have matched the and the ROEs achieved by state member banks maturities of their assets and liabilities or the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

880 Federal Reserve Bulletin • November 1985 ability of the banks to raise additional funds under the Bank Holding Company Rating Syswhen needed. tem. These 251 companies had total assets of As clearly demonstrated in recent years, the $153 billion. liquidity of any financial institution rests heavily The number of problem banks and bank holdon depositor confidence. Funds can quickly flow ing companies under Board supervision is larger out of an institution if confidence wanes. Per- than we would normally expect at this stage of ceived liquidity provided by large amounts of the economic cycle. As discussed in the response "short-term" loans may also be misleading if, as to Question 2, the distinguishing feature for the with some customers, the loans must constantly current business cycle is that the energy and the be renewed. And, of course, it remains true that agricultural sectors of the economy have not banks that depend heavily on the professional improved as much as the overall economy and financial markets for funding remain more vul- many private-sector loans to developing counnerable to liquidity problems than banks with a tries continue to be problematical. Domestic broader base of consumer and business deposits. agriculture, in particular, has been deteriorating These data show that purchased funds (large since 1980. Problems in agriculture are inevitably CDs, foreign office deposits, and the like) as a transmitted to farm banks, which previously had percentage of total assets of state member banks strong records of profitability. increased each year from 1976 through 1982 and Of the 64 state member banks rated composite have declined in 1983 and 1984. Large banks 4 or 5, 19 are farm banks. All but one of these were, of course, much more dependent on these farm banks have become problem institutions funds than smaller banks. since 1983. It is also noted that 40 of the 145 Data on the volume of brokered deposits have banks with composite 3 ratings are farm banks. been collected only since 1983 and are not signifi- Thus, nearly 30 percent of the financial institucant, in the aggregate, for state member banks. tions subject to special supervisory attention are At year-end 1984, these deposits funded only banks with farm loan concentrations. The in- 0.34 percent of the assets of all state member crease in the number of problem banks in recent banks and a much smaller share for banks with years can be related to a variety of factors assets of less than $1 billion. Moreover, the use including the effects of two recessions, a shift in of these deposits has declined since year-end inflationary expectations, increased competition 1983, when state members funded 0.43 percent of brought on at least in part by interest rate deregutheir assets with brokered deposits. lation, poor business judgment, and, in some While these deposits are significant for a few cases, misuse of the public trust, such as fraud, state member banks, the amounts involved in insider abuse, and self dealing. these cases are relatively small. Only 12 state Although the increase in the number of probmember banks held more that $20 million in lem banks has caused us to seek ways to brokered deposits at year-end 1984, and virtually strengthen our ability to uncover difficulties at an all of them were major banking institutions. earlier stage, thereby increasing the chances of Several of the relatively heavy users of brokered successful recovery, we would like to think that deposits were Delaware subsidiaries of major the rigor of our supervision has been consistent New York City banks, which are prevented by throughout the period. While it seems essential law from dealing with local customers. that we make every effort to improve our supervision of banks, we must be careful not to overreact. Ours is a business of wise selection among unhappy choices, something that must be QUESTION 5—PROBLEM INSTITUTIONS done with great care. As of June 30, 1985, there were 64 state member As to actions being taken in response to the banks with composite ratings of 4 or 5 under the trend in the number of problem institutions, the Uniform Interagency Rating System. These 64 Federal Reserve System has undertaken a combanks had total assets of $3.9 billion. prehensive review of the supervision of state As of June 30, 1985, there were 251 bank member banks and bank holding companies. holding companies with composite 4 or 5 ratings Teams comprised of Reserve Bank and Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 881 staff are reviewing the supervisory methodology QUESTION 6—HISTORY AND PERSPECTIVE and the analytic techniques and have made pro- ON EMERGENCY ACTIONS posals designed to enhance our effectiveness. A number of these initiatives have been adopted or The Bank Holding Company Act and the Bank are under active review. The principal compo- Merger Act contain a number of special provinents of this effort are as follows: sions to authorize expedited action on mergers • Instituting measures to strengthen the sur- and acquisitions in situations involving troubled veillance function to identify more promptly banks. These statutes allow the Federal Reserve emerging supervisory problems. to shorten or suspend the comment period and to • Improving the communication of examination eliminate the publication requirement of the Fedfindings, including the format of the written eral Register for applications designed to prevent report of examination and the oral presentations the probable failure of a bank or a bank holding to boards of directors. company. Thus, the Board, at the request of the • Strengthening of prudential standards to help financial institution's chartering authority, can prevent problems (leveraging, liquidity, dividend permit the acquisition of a troubled institution policy). either immediately or on the fifth calendar day • Stressing the continuing importance of main- after the expiration of the comment period, detaining adequate capital and of holding appropri- pending upon the severity of the financial instituate loan-loss reserves. tion's problems. • Increasing the frequency and the scope of the So far this year, the System has approved 12 on-site examinations. bank holding company applications involving • Upgrading coordination and cooperation with troubled banks. Also, there have been in 1985 other banking supervisory agencies, both state three emergency actions processed under the and federal, to improve efficiency and resource Change in Bank Control Act to prevent the utilization. probable failure of bank holding companies. This • Sharpening the analytic approach to deal with number compares with 16 expedited actions in issues such as bank holding company funding 1984 and 14 such actions in 1983. At this stage of and liquidity, risk and leverage considerations in the cycle we would normally expect the number nonbank activities, and the like. of such actions to decline. However, continued • Increasing staff and enhancing training. difficulties in certain sectors of bank lending must be factored into any judgment about the number of such actions that might be necessary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

882 Announcements REGULATION K: REVISIONS lation had permitted Edge corporations to invest the lesser of $2 million or 5 percent of their The Federal Reserve Board published on Sep- capital and surplus without prior notice to or tember 30, 1985, revisions to its Regulation K approval by the Federal Reserve. The Board (International Banking Operations) that will per- increased the dollar investment amount to $15 mit Edge corporations to enlarge the scope of million. their activities. The revisions became effective A certain amount of leeway was granted by the October 24, 1985, with one exception. The provi- Board in the permissible activities of subsidiarsions that pertain to investment procedures are ies. In order to provide some flexibility to U.S. effective immediately. banking organizations in acquiring controlling The International Banking Act requires the interests in existing companies engaged in imper- Board to review and to revise Regulation K missible activities, the Board has liberalized its every five years to ensure that the purposes of standards to allow such companies to derive up the Edge Act are being served in light of prevail- to 5 percent of assets and revenues from impering economic conditions and banking practices. missible activities. Edge corporations are chartered to engage in Also, the Board took action on some technical international or foreign banking or other interna- provisions of the regulation regarding U.S. nontional or foreign operations. banking activities of foreign banks. These The major revisions to the regulation pertain to changes are outlined in the Board's document. the following: activities of Edge corporations in the United States, changes in control of Edge PUBLICATION OF corporations, and investment procedures. Cer- ANNUAL STATISTICAL DIGEST, 1984 tain other technical and clarifying revisions have been made to Regulation K as well. The Board The Annual Statistical Digest, 1984, is now has deferred making any changes in the capital available. This one-year Digest is designed as a requirements for banking Edge corporations. compact source of economic, and especially fi- The revised regulation will allow Edge corpo- nancial, data. The Digest provides a single rations to provide full banking services to a source of historical continuations of the statistics limited class of companies, such as foreign air- carried regularly in the FEDERAL RESERVE BULlines and shipping companies, that are restricted LETIN. The Digest also offers a continuation of by their charters or licenses to international series that formerly appeared regularly in the business. The Board may consider whether pro- BULLETIN, as well as certain special, irregular cedures can be developed to identify other com- tables that the BULLETIN also once carried. panies engaged in international business that This issue of the Digest covers only 1984 could qualify for full banking services from Edge unless data were revised for earlier years. It corporations. serves to maintain the historical series first pub- In terms of changes in control of Edge corpo- lished in Banking and Monetary Statistics, 1941rations, the Board adopted changes to Regula- 1970, and the Digest for 1970-79 and yearly issues tion K that would require any party purchasing thereafter. A Concordance of Statistics will be 25 percent or more of the voting shares of an included with all orders. The Concordance pro- Edge corporation to give the Board 60 days' vides a guide to tables that cover the same notice before acquisition. material in the current and the previous year's The Board also revised the investment proce- Digest, the ten-year Digest for 1970-79, and the dures applicable to Edge corporations. The regu- BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

883 Copies of the Digest are available from Publi- Alabama cations Services, Mail Stop 138, Board of Gover- Grand Bay Mobile County Bank nors of the Federal Reserve System, Washing- Colorado ton, D.C. 20551. The price is $12.50 per copy. Denver American Bank of Commerce Texas Houston Interstate Bank North Virginia SYSTEM MEMBERSHIP. Virginia Beach .. Princess Anne Commercial ADMISSION OF STATE BANKS Bank The following banks were admitted to membership in the Federal Reserve System during the period September 1 through October 1, 1985: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

884 Legal Developments REVISIONS OF REGULATION K Subpart B—Foreign Banking Organizations The Board of Governors of the Federal Reserve Sys- Section 211.21—Authority, purpose and scope tem has reviewed and revised its regulations governing Section 211.22—Interstate banking operations of forthe operations of Edge corporations. The revisions eign banking organizations concern certain U.S. activities of Edge corporations, Section 211.23—Nonbanking activities of foreign lending limits and investment and change in control banking organizations procedures applicable to Edge corporations. Some proposals dealing with foreign banking organizations Subpart C—Export Trading Companies operating in the United States have also been adopted. Effective October 24, 1985, as set forth below, the Section 211.31—Authority, purpose, and scope Board hereby amends 12 C.F.R. Part 211, except in Section 211.32—Definitions the case of the provisions in section 211.5(c), which Section 211.33—Investments and extensions of credit are effective immediately: Section 211.34—Procedures for filing and processing notices Part 211—Regulation K; International Banking Subpart D—International Lending Supervision Operations Section 211.41—Authority, purpose, and scope 1. The authority citation for Part 211 continues to read Section 211.42—Definitions as follows: Section 211.43—Allocated transfer risk reserve Section 211.44—Reporting and disclosure of interna- Authority: Federal Reserve Act (12 U.S.C. 211 tional assets et seq.y, Bank Holding Company Act of 1956, as Section 211.45—Accounting for fees on international amended (12 U.S.C. 1841 et seq.); the International loans Banking Act of 1978 (Pub. L. 95-369; 92 Stat. 607; 12 U.S.C. 3101 et seq.); the Bank Export Services Act (Title II, Pub. L. 97-290, 96 Stat. 1235); and the INTERPRET A TIONS International Lending Supervision Act (Title IX, Pub. L. 98-181, 97 Stat. 1153). Section 211.601—Status of certain offices for purposes of the International Banking Act re- 2. 12 C.F.R. Part 211 is revised to read as follows: strictions on interstate banking operations Part 211—International Banking Operations Section 211.602—Investments by United States banking organizations in foreign compa- Subpart A—International Operations of United nies that transact business in the States Banking Organizations United States Section 211.1—Authority, purpose, and scope Subpart A—International Operations of United Section 211.2—Definitions States Banking Organizations Section 211.3—Foreign branches of U.S. banking organizations Section 211.1—Authority, Purpose, and Scope Section 211.4—Edge and Agreement corporations Section 211.5—Investments and activities abroad (a) Authority. This subpart is issued by the Board of Section 211.6—Lending limits and capital require- Governors of the Federal Reserve System ("Board") ments under the authority of the Federal Reserve Act Section 211.7—Supervision and reporting ("FRA") (12 U.S.C. 221 et seq.); the Bank Holding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

885 Company Act of 1956 ("BHC Act") (12 U.S.C. 1841 (d) An Edge corporation is "engaged in banking" if it et seq.); and the International Banking Act of 1978 is ordinarily engaged in the business of accepting ("IBA") (92 Stat. 607; 12 U.S.C. 3101 et seq.). Re- deposits in the United States from nonaffiliated perquirements for the collection of information contained sons. in this regulation have been approved by the Office of Management and Budget under the provisions of 44 (e) "Engaged in business" or "engaged in activities" U.S.C. 3501, et seq. and have been assigned OMB in the United States means maintaining and operating Nos. 7100-0107; 7100-0109; 7100-0110; 7100-0069; an office (other than a representative office) or subsid- 7100-0086, and 7100-0073. iary in the United States. (b) Purpose. This subpart sets out rules governing the (f) "Foreign" or "foreign country" refers to one or international and foreign activities of U.S. banking more foreign nations, and includes the overseas terriorganizations, including procedures for establishing tories, dependencies, and insular possessions of those foreign branches and Edge corporations to engage in nations and of the United States, and the Commoninternational banking and for investments in foreign wealth of Puerto Rico. organizations. (g) "Foreign bank" means an organization that: is (c) Scope. This subpart applies to corporations orga- organized under the laws of a foreign country; engages nized under section 25(a) of the FRA (12U.S.C.611- in the business of banking; is recognized as a bank by 631), "Edge corporations"; to corporations having an the bank supervisory or monetary authority of the agreement or undertaking with the Board under sec- country of its organization or principal banking operation 25 of the FRA (12 U.S.C. 601-604a), "Agreement tions; receives deposits to a substantial extent in the corporations"; to member banks with respect to their regular course of its business; and has the power to foreign branches and investments in foreign banks accept demand deposits. under section 25 of the FRA (12 U.S.C. 601-604a);' and to bank holding companies with respect to the (h) "Foreign branch" means an office of an organizaexemption from the nonbanking prohibitions of the tion (other than a representative office) that is located BHC Act afforded by section 4(c)(13) of the BHC Act outside the country under the laws of which the (12 U.S.C. 1843(c)(13». organization is established, at which a banking or financing business is conducted. Section 211.2—Definitions (i) "Investment" means the ownership or control of shares (including partnership interests and other inter- Unless otherwise specified, for the purposes of this ests evidencing ownership), binding commitments to subpart: acquire shares, contributions to the capital and surplus (a) An "affiliate" of an organization means; of an organization, and the holding of an organiza- (1) any entity of which the organization is a direct or tion's subordinated debt when shares of the organizaindirect subsidiary ; or tion are also held by the investor or the investor's (2) any direct or indirect subsidiary of the organiza- affiliate. tion or such entity. (j) "Investor" means an Edge corporation, Agreement (b) "Capital and surplus" means paid-in and unim- corporation, bank holding company, or member bank. paired capital and surplus, and includes undivided profits but does not include the proceeds of capital (k) "Joint venture" means an organization that has 20 notes or debentures. per cent or more of its voting shares held directly or indirectly by the investor or by an affiliate of the (c) "Directly or indirectly" when used in reference to investor, but which is not a subsidiary of the investor. activities or investments of an organization means activities or investments of the organization or of any (1) "Organization" means a corporation, government, subsidiary of the organization. partnership, association, or any other entity. (m) "Person" means an individual or an organization. 1. Section 25 of the FRA, which refers to national banking associa- (n) "Portfolio investment" means an investment in an tions, also applies to state member banks of the Federal Reserve System by virtue of section 9 of the FRA (12 U.S.C. 321). organization other than a subsidiary or joint venture. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

886 Federal Reserve Bulletin • November 1985 (o) "Representative office" means an office that en- ness of banking in the country where it transacts gages solely in representational and administrative business: functions such as solicitation of new business for or (1) Guarantees. Guarantee debts, or otherwise agree liaison between the organization's head office and to make payments on the occurrence of readily customers in the United States, and does not have ascertainable events,3 if the guarantee or agreement authority to make business decisions for the account specifies a maximum monetary liability; but except of the organization represented. to the extent that the member bank is fully secured, it may not have liabilities outstanding for any person (p) "Subsidiary" means an organization more than 50 on account of such guarantees or agreements which per cent of the voting shares of which is held directly when aggregated with other unsecured obligations or indirectly by the investor, or which is otherwise of the same person exceed the limit contained in controlled or capable of being controlled by the inves- paragraph (a)(1) of section 5200 of the Revised tor or an affiliate of the investor. Statutes (12 U.S.C. 84) for loans and extensions of credit; Section 211.3—Foreign Branches of U.S. (2) Investments. Invest in: Banking Organizations (i) the securities of the central bank, clearing houses, governmental entities, and government- (a) Establishment of foreign branches. sponsored development banks of the country in (1) Right to establish branches. Foreign branches which the foreign branch is located; may be established by any member bank having (ii) other debt securities eligible to meet local capital and surplus of $1,000,000 or more, an Edge reserve or similar requirements; and corporation, an Agreement corporation, or a subsid- (iii) shares of professional societies, schools, and iary held pursuant to this Subpart. Unless otherwise the like necessary to the business of the branch; provided in this section, the establishment of a however, the total investments of the bank's foreign branch requires the specific prior approval branches in that country under this paragraph of the Board. (exclusive of securities held as required by the law (2) Branching within a foreign country. Unless the of that country or as authorized under section organization has been notified otherwise, no prior 5136 of the Revised Statutes (12 U.S.C. 24, Sev- Board approval is required for an organization to enth)) may not exceed one per cent of the total establish additional branches in any foreign country deposits of the bank's branches in that country on where it operates one or more branches.2 the preceding year-end call report date (or on the (3) Branching into additional foreign countries. Af- date of acquisition of the branch in the case of a ter giving the Board 45 days' prior written notice, an branch that has not so reported); organization that operates branches in two or more (3) Government obligations. Underwrite, distribute, foreign countries may establish a branch in an buy, and sell obligations of: additional foreign country, unless notified otherwise (i) the national government of the country in by the Board.2 which the branch is located; (4) Expiration of branching authority. Authority to (ii) an agency or instrumentality of the national establish branches through prior approval or prior government; and notice shall expire one year from the earliest date on (iii) a municipality or other local or regional which the authority could have been exercised, governmental entity of the country; however, no unless the Board extends the period. member bank may hold, or be under commitment (5) Reporting. Any organization that opens, closes, with respect to, such obligations for its own or relocates a branch shall report such change in a account in an aggregate amount exceeding 10 per manner prescribed by the Board. cent of its capital and surplus; (4) Credit extensions to bank's officers. Extend (b) Further powers of foreign branches of member credit to an officer of the bank residing in the banks. In addition to its general banking powers, and country in which the foreign branch is located to to the extent consistent with its charter, a foreign finance the acquisition or construction of living branch of a member bank may engage in the following quarters to be used as the officer's residence abroad, activities so far as usual in connection with the busi- provided the credit extension is reported promptly to the branch's home office and any extension of 2. For the purpose of this paragraph, a subsidiary other than a bank or an Edge or Agreement corporation is considered to be operating a 3. "Readily ascertainable events" include, but are not limited to, branch in a foreign country if it has an affiliate that operates an office events such as nonpayment of taxes, rentals, customs duties, or costs (other than a representative office) in that country. of transport and loss or nonconformance of shipping documents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 887 credit exceeding $100,000 (or the equivalent in local (i) the financial condition and history of the applicurrency) is reported also to the bank's board of cant; directors; (ii) the general character of its management; (5) Real estate loans. Take liens or other encum- (iii) the convenience and needs of the community brances on foreign real estate in connection with its to be served with respect to international banking extensions of credit, whether or not of first priority and financing services; and and whether or not the real estate has been im- (iv) the effects of the proposal on competition. proved. (5) Authority to commence business. After the (6) Insurance. Act as insurance agent or broker; Board issues a permit, the Edge corporation may (7) Employee benefits program. Pay to an employee elect officers and otherwise complete its organizaof the branch, as part of an employee benefits tion, invest in obligations of the United States program, a greater rate of interest than that paid to Government, and maintain deposits with depository other depositors of the branch; institutions, but it may not exercise any other pow- (8) Repurchase agreements. Engage in repurchase ers until at least 25 per cent of the authorized capital agreements involving securities and commodities stock specified in the articles of association has been that are the functional equivalents of extensions of paid in cash, and each shareholder has paid in cash credit; at least 25 per cent of that shareholder's stock (9) Investment in subsidiaries. With the Board's subscription. Unexercised authority to commence prior approval, establish or invest in a wholly- business as an Edge corporation shall expire one owned subsidiary to engage solely in activities in year after issuance of the permit, unless the Board which the member bank is permitted to engage or in extends the period. activities that are incidental to the activities of the (6) Amendments to articles of association. No foreign branch, where required by local law or amendment to the articles of association shall beregulation; and come effective until approved by the Board. (10) Other activities. With the Board's prior approval, engage in other activities that the Board determines are usual in connection with the transaction of (b) Nature and ownership of shares. the business of banking in the places where the (1) Shares. Shares of stock in an Edge corporation member bank's branches transact business. may not include no-par value shares and shall be issued and transferred only on its books and in (c) Reserves of foreign branches of member banks. compliance with section 25(a) of the FRA and this Reserves shall be maintained against foreign branch subpart. The share certificates of an Edge corporadeposits when required by Part 204 of this chapter tion shall: (Regulation D). (i) name and describe each class of shares indicating its character and any unusual attributes such Section 211.4—Edge and Agreement as preferred status or lack of voting rights; and corporations (ii) conspicuously set forth the substance of: (A) limitations upon the rights of ownership and (a) Organization. transfer of shares imposed by section 25(a) of (1) Permit. A proposed Edge corporation shall be- the FRA; and come a body corporate when the Board issues a (B) rules that the Edge corporation prescribes permit approving its proposed name, articles of in its by-laws to ensure compliance with this association, and organization certificate. paragraph. Any change in status of a sharehold- (2) Name. The name shall include "international," er that causes a violation of section 25(a) of the "foreign," "overseas," or some similar word, but FRA shall be reported to the Board as soon as may not resemble the name of another organization possible, and the Edge corporation shall take to an extent that might mislead or deceive the such action as the Board may direct. public. (2) Ownership of Edge corporations by foreign insti- (3) Federal Register notice. The Board will publish tutions. in the Federal Register notice of any proposal to (i) Prior Board approval. One or more foreign or organize an Edge corporation and will give interest- foreign-controlled domestic institutions referred ed persons an opportunity to express their views on to in paragraph 13 of section 25(a) of the FRA the proposal. (12 U.S.C. 619) may apply for the Board's prior (4) Factors considered by the Board. The factors approval to acquire directly or indirectly a majorconsidered by the Board in acting on a proposal to ity of the shares of the capital stock of an Edge organize an Edge corporation include: corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

888 Federal Reserve Bulletin • November 1985 (ii) Conditions and requirements. Such an institu- tions that it finds necessary to assure the safe and tion shall: sound operation of the Edge corporation, to as- (A) provide the Board information related to its sure the international character of its operation, financial condition and activities and such other and to prevent adverse effects such as decreased information as may be required by the Board; or unfair competition, conflicts of interest, or (B) ensure that any transaction by an Edge undue concentration of resources. corporation with an affiliate4 is on substantially the same terms, including interest rates and (c) Domestic branches. An Edge corporation may collateral, as those prevailing at the same time establish branches in the United States 45 days after for comparable transactions by the Edge corpo- the Edge corporation has given notice to its Reserve ration with nonaffiliated persons, and does not Bank, unless the Edge corporation is notified to the involve more than the normal risk of repayment contrary within that time. The notice to the Reserve or present other unfavorable features; Bank shall include a copy of the notice of the proposal (C) ensure that the Edge corporation will not published in a newspaper of general circulation in the provide funding on a continual or substantial communities to be served by the branch and may basis to any affiliate or office of the foreign appear no earlier than 90 calendar days prior to institution through transactions that would be submission of notice of the proposal to the Reserve inconsistent with the international and foreign Bank. The newspaper notice must provide an opportubusiness purposes for which Edge corporations nity for the public to give written comment on the are organized; proposal to the appropriate Federal Reserve Bank for (D) in the case of a foreign institution not at least 30 days after the date of publication. The subject to section 4 of the BHC Act: factors considered in acting upon a proposal to estab- (i) comply with any conditions that the Board may lish a branch are enumerated in paragraph (a)(4) of this impose that are necessary to prevent undue con- section. Authority to open a branch under prior notice centration of resources, decreased or unfair com- shall expire one year from the earliest date on which petition, conflicts of interest, or unsound banking that authority could have been exercised, unless the practices in the United States; and Board extends the period. (ii) give the Board 45 days' prior written notice, in a form to be prescribed by the Board, before (d) Reserve requirements and interest rate limitations. engaging in any nonbanking activity in the United The deposits of an Edge or Agreement corporation are States, or making any initial or additional invest- subject to Parts 204 and 217 of this chapter (Regulaments in another organization, that would require tions D and Q) in the same manner and to the same prior Board approval or notice by an organization extent as if the Edge or Agreement corporation were a subject to section 4 of the BHC Act; in connection member bank. with such notice, the Board may impose conditions necessary to prevent adverse effects that (e) Permissible activities in the United States. An may result from such activity or investment; and Edge corporation may engage directly or indirectly in (E) invest in Edge corporations no more than 10 activities in the United States that are permitted by the per cent of the institution's capital and surplus. sixth paragraph of section 25(a) of the FRA and are (3) Change in control. incidental to international or foreign business, and in (i) Prior notice. Any person shall give the Board such other activities as the Board determines are 60 days' prior written notice, in a form to be incidental to international or foreign business. The prescribed by the Board, before acquiring, direct- following activities will ordinarily be considered incily or indirectly, 25 per cent or more of the voting dental to an Edge corporation's international or forshares, or otherwise acquiring control, of an Edge eign business: corporation; the Board may extend the 60-day (1) Deposit activities. period for an additional 30 days by notifying the (i) Deposits from foreign governments and foreign acquiring party. persons. An Edge corporation may receive in the (ii) Board review. In reviewing a notice filed under United States transaction accounts, savings, and this paragraph, the Board shall consider the fac- time deposits (including issuing negotiable certifitors set forth in paragraph (a)(4) of this section cates of deposits) from foreign governments and and may disapprove a notice or impose any condi- their agencies and instrumentalities; offices or establishments located, and individuals residing, outside the United States. 4. For purposes of this paragraph, "affiliate" means any organiza- (ii) Deposits from other persons. An Edge corpotion that would be an "affiliate" under section 23A of the FRA (12 U.S.C. 371c) if the Edge corporation were a member bank. ration may receive from any other person in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 889 United States transaction accounts, savings, and that the Edge corporation is obligated to repurtime deposits (including issuing negotiable certifi- chase; cates of deposit) if such deposits: (iii) Issue long-term subordinated debt that does (A) are to be transmitted abroad; not qualify as a "deposit" under Part 204 of this (B) consist of funds to be used for payment of chapter (Regulation D). obligations to the Edge corporation or collateral (4) Credit activities. An Edge corporation may: securing such obligations; (i) Finance the following: (C) consist of the proceeds of collections (A) contracts, projects, or activities performed abroad that are to be used to pay for exported substantially abroad; or imported goods or for other costs of export- (B) the importation into or exportation from the ing or importing or that are to be periodically United States of goods, whether direct or transferred to the depositor's account at anoth- through brokers or other intermediaries; er financial institution; (C) the domestic shipment of temporary storage (D) consist of the proceeds of extensions of of goods being imported or exported (or accucredit by the Edge corporation; mulated for export); and (E) represent compensation to the Edge corpo- (D) the assembly or repackaging of goods imration for extensions of credit or services to the ported or to be exported; customer; (ii) Finance the costs of production of goods and (F) are received from Edge or Agreement cor- services for which export orders have been reporations, foreign banks and other depository ceived or which are identifiable as being directly institutions (as described in Part 204 of this for export; chapter (Regulation D)); (iii) Assume or acquire participations in exten- (G) are received from an organization that by its sions of credit, or acquire obligations arising from charter, license or enabling law is limited to transactions the Edge corporation could have business that is of an international character, financed; including Foreign Sales Corporations (iv) Guarantee debts, or otherwise agree to make (26 U.S.C. 921); transportation organizations payments on the occurrence of readily ascertainengaged exclusively in the international trans- able events,5 if the guarantee or agreement speciportation of passengers or in the movement of fies the maximum monetary liability thereunder goods, wares, commodities or merchandise in and is related to a type of transaction described in international or foreign commerce; and export paragraphs (e)(4)(i) and (ii) of this section; and trading companies that are exclusively engaged (v) Provide credit and other banking services for in activities related to international trade. domestic and foreign purposes to organizations of (2) Liquid funds. Funds of an Edge or Agreement the type described in section 211.4(e)(l)(ii)(G) of corporation not currently employed in its interna- this part. tional or foreign business, if held or invested in the (5) Payments and collections. An Edge corporation United States, shall be in the form of cash, deposits may receive checks, bills, drafts, acceptances, with depository institutions, as described in Part 204 notes, bonds, coupons, and other instruments for of this chapter (Regulation D), and other Edge and collection abroad, and collect such instruments in Agreement corporations, and money market instru- the United States for a customer abroad; and may ments (including repurchase, agreements with re- transmit and receive wire transfers of funds and spect to such instruments) such as bankers' accep- securities for depositors. tances, obligations of or fully guaranteed by federal, (6) Foreign exchange. An Edge corporation may state, and local governments and their instrumental- engage in foreign exchange activities. ities, federal funds sold, and commercial paper. (7) Fiduciary and investment advisory activities. An (3) Borrowings. An Edge corporation may: Edge corporation may: (i) Borrow from offices of other Edge and Agree- (i) Hold securities in safekeeping for, or buy and ment corporations, foreign banks, and depository sell securities upon the order and for the account institutions (as described in Part 204 of this chap- and risk of, a person, provided such services for ter, Regulation D) or issue obligations to the United States or any of its agencies or instrumentalities; (ii) Incur indebtedness from a transfer of direct obligations of, or obligations that are fully guaran- 5. "Readily ascertainable events" include, but are not limited to, teed as to principal and interest by, the United events such as nonpayment of taxes, rentals, customs duties, or cost States or any agency or instrumentality thereof of transport and loss or nonconformance of shipping documents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

890 Federal Reserve Bulletin • November 1985 U.S. persons shall be with respect to foreign Section 211.5—Investments and Activities securities only; Abroad (ii) Act as paying agent for securities issued by foreign governments or other entities organized (a) General policy. Activities abroad, whether conunder foreign law; ducted directly or indirectly, shall be confined to those (iii) Act as trustee, registrar, conversion agent, or of a banking or financial nature and those that are paying agent with respect to any class of securi- necessary to carry on such activities. In doing so, ties issued to finance foreign activities and distrib- investors shall at all times act in accordance with high uted solely outside the United States; standards of banking or financial prudence, having due (iv) Make private placements of participations in regard for diversification of risks, suitable liquidity, its investments and extensions of credit; however, and adequacy of capital. Subject to these considerexcept to the extent permissible for member ations and the other provisions of this section, it is the banks under section 5136 of the Revised Statutes Board's policy to allow activities abroad to be orga- (12 U.S.C. 24, Seventh), no Edge corporation nized and operated as best meets corporate policies. may otherwise engage in the business of underwriting, distributing, or buying or selling securi- (b) Investment requirements. ties in the United States; (1) Eligible investments. (v) Act as investment or financial adviser by (i) An investor may directly or indirectly: providing portfolio investment advice and portfo- (A) invest in a subsidiary that engages solely in lio management with respect to securities, other activities listed in paragraph (d) of this section financial instruments, real property interests and or in such other activities as the Board has other investment assets,6 and by providing advice determined in the circumstances of a particular on mergers and acquisitions, provided such ser- case are permissible except that, in the case of vices for U.S. persons shall be with respect to an acquisition of a going concern, existing acforeign assets only; and tivities that are not otherwise permissible for a (vi) Provide general economic information and subsidiary may account for not more than five advice, general economic statistical forecasting per cent of either the consolidated assets or services and industry studies, provided such ser- revenues of the acquired organization; vices for U.S. persons shall be with respect to (B) invest in a joint venture provided that, foreign economies and industries only. unless otherwise permitted by the Board, not (8) Banking services for employees. Provide banking more than 10 per cent of the joint venture's services, including deposit services, to the officers consolidated assets or revenues shall be attriband employees of the Edge corportion and its affili- utable to activities not listed in paragraph (d) of ates; however, extensions of credit to such persons this section; and shall be subject to the restrictions of Part 215 of this (C) make portfolio investments (including secuchapter (Regulation O) as if the Edge corporation rities held in trading or dealing accounts) in an were a member bank. organization if the total direct and indirect (9) Other activities. With the Board's prior approv- portfolio investments in organizations engaged al, engage in other activities in the United States in activities that are not permissible for joint that the Board determines are incidental to the ventures does not at any time exceed 100 per international or foreign business of Edge corpora- cent of the investor's capital and surplus.7 tions. (ii) A member bank's direct investments under section 25 of the FRA shall be limited to foreign (f) Agreement corporations. With the prior approval of banks and to foreign organizations formed for the the Board, a member bank or bank holding company sole purpose of either holding shares of a foreign may invest in a federally- or state-chartered corpora- bank or performing nominee, fiduciary, or other tion that has entered into an agreement or undertaking banking services incidental to the activities of a with the Board that it will not exercise any power that foreign branch or foreign bank affiliate of the is impermissible for an Edge corporation under this member bank. subpart. (2) Investment limit. In computing the amount that may be invested in any organization under this 6. For purposes of this section, management of an investment portfolio does not include operational management of real property, or 7. For this purpose, a direct subsidiary of a member bank is deemed industrial or commercial assets. to be an investor. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 891 section, there shall be included any unpaid amount holding company, or Edge corporation engaged for which the investor is liable and any investments in banking, or 25 per cent of the investor's by affiliates. capital and surplus in the case of an Edge (3) Divestiture. An investor shall dispose of an corporation not engaged in banking; investment promptly (unless the Board authorizes (ii) any additional investment in an organization in retention) if: any calendar year so long as: (i) the organization invested in: (A) the total amount invested in that calendar (A) engages in the general business of buying or year does not exceed 10 per cent of the invesselling goods, wares, merchandise, or commod- tor's capital and surplus; and ities in the United States; (B) the total amount invested under section (B) engages directly or indirectly in other busi- 211.5 (including investments made pursuant to ness in the United States that is not permitted to specific consent or prior notice) in that calendar an Edge corporation in the United States except year does not exceed cash dividends reinvested that an investor may hold up to five per cent of under paragraph (c)(l)(iii) of this section plus 10 the shares of a foreign company that engages per cent of the investor's direct and indirect directly or indirectly in business in the United historical cost9 in the organization, which in- States that is not permitted to an Edge corpora- vestment authority, to the extent unexercised, tion; or may be carried forward and accumulated for up (C) engages in impermissible activities to an to five consecutive years; extent not permitted under paragraph (b)(1) of (iii) any additional investment in an organization this section; or in an amount equal to cash dividends received (ii) after notice and opportunity for hearing, the from that organization during the preceding 12 investor is advised by the Board that its invest- calendar months; or ment is inappropriate under the FRA, the BHC (iv) any investment that is acquired from an Act, or this subpart. affiliate at net asset value. (2) Prior notice. An investment that does not qualify (c) Investment procedures.8 Direct and indirect invest- under the general consent procedure may be made ments shall be made in accordance with the general after the investor has given 45 days' prior written consent, prior notice, or specific consent procedures notice to the Board if the total amount to be invested contained in this paragraph. The Board may at any does not exceed 10 per cent of the investor's capital time, upon notice, suspend the general consent and and surplus. The Board may waive the 45-day prior notice procedures with respect to any investor or period if it finds immediate action is required by the with respect to the acquisition of shares of organiza- circumstances presented. The notice period shall tions engaged in particular kinds of activities. An commence at the time the notice is accepted. The investor shall apply for and receive the prior specific Board may suspend the period or act on the investconsent of the Board for its initial investment in its ment under the Board's specific consent procefirst subsidiary or joint venture unless an affiliate has dures. made such an investment. Authority to make invest- (3) Specific consent. Any investment that does not ments under prior notice or specific consent shall qualify for either the general consent or the prior expire one year from the earliest date on which the notice procedure shall not be consummated without authority could have been exercised, unless the Board the specific consent of the Board. extends the period. (1) General consent. Subject to the other limitations (d) Permissible activities. The Board has determined of this section, the Board grants its general consent that the following activities are usual in connection for the following: with the transaction of banking or other financial (i) any investment in a joint venture or subsidiary, operations abroad: and any portfolio investment, if the total amount invested (in one transaction or in a series of transactions) does not exceed the lesser of: 9. The "historical cost" of an investment consists of the actual amounts paid for shares or otherwise contributed to the capital (A) $15 million; or accounts, as measured in dollars at the exchange rate in effect at the (B) 5 per cent of the investor's capital and time each investment was made. It does not include subordinated debt surplus in the case of a member bank, bank or unpaid commitments to invest even though these may be considered investments for other purposes of this part. For investments acquired indirectly as a result of acquiring a subsidiary, the historical 8. When necessary, the general consent and prior notice provisions cost to the investor is measured as of the date of acquisition of the of this section constitute the Board's approval under the eighth subsidiary at the net asset value of the equity interest in the case of paragraph of section 25(a) of the FRA for investments in excess of the subsidiaries and joint ventures, and in the case of portfolio investlimitations therein based on capital and surplus. ments, at the book carrying value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

892 Federal Reserve Bulletin • November 1985 (1) commercial and other banking activities; banking or other financial operations abroad and are (2) financing, including commercial financing, con- consistent with the FRA or the BHC Act. sumer financing, mortgage banking, and factoring; (3) leasing real or personal property, or acting as (e) Debts previously contracted. Shares or other ownagent, broker, or advisor in leasing real or personal ership interests acquired to prevent a loss upon a debt property, if the lease serves as the functional equiv- previously contracted in good faith shall not be subject alent of an extension of credit to the lessee of the to the limitations or procedures of this section; howevproperty; er, they shall be disposed of promptly but in no event (4) acting as fiduciary; later than two years after their acquisition, unless the (5) underwriting credit life insurance and credit Board authorizes retention for a longer period. accident and health insurance; (6) performing services for other direct or indirect Section 211.6—Lending Limits and Capital operations of a United States banking organization, Requirements including representative functions, sale of long-term debt, name saving, holding assets acquired to pre- (a) Acceptances of Edge corporations. vent loss on a debt previously contracted in good (1) Limitations. An Edge corporation shall be and faith, and other activities that are permissible do- remain fully secured for: mestically for a bank holding company under sec- (i) all acceptances outstanding in excess of 200 per tions 4(a)(2)(A) and 4(c)(1)(C) of the BHC Act; cent of its capital and surplus; (7) holding the premises of a branch of an Edge (ii) all acceptances outstanding for any one person corporation or member bank or the premises of a in excess of 10 per cent of its capital and surplus. direct or indirect subsidiary, or holding or leasing These limitations apply only to acceptances of the the residence of an officer or employee of a branch types described in paragraph 7 of section 13 of the or subsidiary; FRA (12 U.S.C. 372). (8) providing investment, financial, or economic (2) Exceptions. These limitations do not apply if the advisory services; excess represents the international shipment of (9) general insurance agency and brokerage; goods and the Edge corporation (10) data processing; (i) is fully covered by primary obligations to (11) managing a mutual fund if the fund's shares are reimburse it that are guaranteed by banks or not sold or distributed in the United States or to bankers, or United States residents and the fund does not exer- (ii) is covered by participation agreements from cise managerial control over the firms in which it other banks, as such agreements are described in invests; section 250.165 of this chapter. (12) performing management consulting services provided that such services when rendered with (b) Loans and extensions of credit to one person. respect to the United States market shall be restrict- (1) Limitations. Except as the Board may otherwise ed to the initial entry; specify: (13) underwriting, distributing, and dealing in debt (i) the total loans and extensions of credit outand equity securities outside the United States, standing to any person by an Edge corporation provided that no underwriting commitment by a engaged in banking and its direct or indirect subsidiary of an investor for shares of an issuer may subsidiaries may not exceed 15 per cent of the exceed $2 million or represent 20 per cent of the Edge corporation's capital and surplus;10 and capital and surplus or voting shares of an issuer (ii) the total loans and extensions of credit to any unless the underwriter is covered by binding com- person by a foreign bank or Edge corporation mitments from subunderwriters or other purchasers; subsidiary of a member bank, and by majority- (14) operating a travel agency provided that the owned subsidiaries of a foreign bank or Edge travel agency is operated in connection with finan- corporation, when combined with the total loans cial services offered abroad by the investor or and extensions of credit to the same person by the others; member bank and its majority-owned subsidiar- (15) engaging in activities that the Board has deter- ies, may not exceed the member bank's limitation mined by regulation in 12 C.F.R. 225.25(b) are on loans and extensions of credit to one person. closely related to banking under section 4(c)(8) of the BHC Act; and (16) with the Board's specific approval, engaging in 10. For purposes of this subsection, "subsidiary" includes subsidother activities that the Board determines are usual iaries controlled by the Edge corporation but does not include in connection with the transaction of the business of companies otherwise controlled by affiliates of the Edge corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 893 (2) "Loans and extensions of credit" means all ly include default to that entity. The total loans direct or indirect advances of funds to a person11 and extensions of credit under this subparamade on the basis of any obligation of that person to graph to any person shall at no time exceed 100 repay the funds. These shall include acceptances per cent of the capital and surplus of the Edge outstanding not of the types described in paragraph corporation. 7 of section 13 of the FRA (12 U.S.C. 372); any liability of the lender to advance funds to or on (c) Capitalization. An Edge corporation shall at all behalf of a person pursuant to a guarantee, standby times be capitalized in an amount that is adequate in letter of credit, or similar agreements; investments relation to the scope and character of its activities. In in the securities of another organization except the case of an Edge corporation engaged in banking, where the organization is a subsidiary, and any its capital and surplus shall be not less than 7 per cent underwriting commitments to an issuer of securities of risk assets. For this purpose, subordinated capital where no binding commitments have been secured notes or debentures, in an amount not to exceed 50 per from subunderwriters or other purchasers. cent of non-debt capital, may be included for deter- (3) Exceptions. The limitations of paragraph (b)(1) of mining capital adequacy in the same manner as for a this section do not apply to: member bank; risk assets shall be deemed to be all (i) deposits with banks and federal funds sold; assets on a consolidated basis other than cash, (ii) bills or drafts drawn in good faith against amounts due from banking institutions in the United actual goods and on which two or more unrelated States, United States Government securities, and Fedparties are liable; eral funds sold. (iii) any bankers' acceptance of the kind described in paragraph 7 of section 13 of the FRA that is issued and outstanding; Section 211.7—Supervision and Reporting (iv) obligations to the extent secured by cash collateral or by bonds, notes, certificates of in- (a) Supervision. debtedness, or Treasury bills of the United States; (1) Foreign branches and subsidiaries. Organiza- (v) loans and extensions of credit that are covered tions conducting international banking operations by bona fide participation agreements; or under this Subpart shall supervise and administer (vi) obligations to the extent supported by the full their foreign branches and subsidiaries in such a faith and credit of the following: manner as to ensure that their operations conform to (A) the United States or any of its departments, high standards of banking and financial prudence. agencies, establishments, or wholly-owned cor- Effective systems of records, controls, and reports porations (including obligations to the extent shall be maintained to keep management informed insured against foreign political and credit risks of their activities and condition. Such systems by the Export-Import Bank of the United States should provide, in particular, information on risk or the Foreign Credit Insurance Association), assets, liquidity management, and operations of the International Bank for Reconstruction and controls and conformance to management policies. Development, the International Finance Corpo- Reports on risk assets should be sufficient to permit ration, the International Development Associa- an appraisal of credit quality and assessment of tion, the Inter-American Development Bank, exposure to loss, and for this purpose provide full the African Development Bank, or the Asian information on the condition of material borrowers. Development Bank; Reports on the operations of controls should include (B) any organization if at least 25 per cent of internal and external audits of the branch or subsidsuch an obligation or of the total credit is also iary. supported by the full faith and credit of, or (2) Joint ventures. Investors shall maintain sufficient participated in by, any institution designated in information with respect to joint ventures to keep paragraph (b)(3)(v)(A) of this section in such informed of their activities and condition. Such manner that default to the lender will necessari- information shall include audits and other reports on financial performance, risk exposure, management policies, and operations of controls. Complete infor- 11. In the case of a foreign government, these include loans and mation shall be maintained on all transactions with extensions of credit to the foreign government's departments or the joint venture by the investor and its affiliates. agencies deriving their current funds principally from general tax revenues. In the case of a partnership or firm, these include loans and (3) Availability of reports to examiners. The reports extensions of credit to its members and, in the case of a corporation, and information specified in paragraphs (a)(1) and these include loans and extensions of credit to the corporation's (2) of this section shall be made available to examinaffiliates where the affiliate incurs the liability for the benefit of the corporation. ers of the appropriate bank supervisory agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

894 Federal Reserve Bulletin • November 1985 (b) Examinations. Examiners appointed by the Board the exemptions afforded by this section only if, disreshall examine each Edge corporation once a year. An garding its United States banking, more than half of its Edge corporation shall make available to examiners worldwide business is banking; and more than half of sufficient information to assess its condition and oper- its banking business is outside the United States.1 In ations and the condition and activities of any organiza- order to qualify, a foreign banking organization shall: tion whose shares it holds. (1) meet at least two of the following requirements: (i) banking assets held outside the United States (c) Reports. exceed total worldwide nonbanking assets; (1) Reports of condition. Each Edge corporation (ii) revenues derived from the business of banking shall make reports of condition to the Board at such outside the United States exceed total revenues times and in such form as the Board may prescribe. derived from its worldwide nonbanking business; The Board may require that statements of condition or or other reports be published or made available for (iii) net income derived from the business of public inspection. banking outside the United States exceeds total (2) Foreign operations. Edge and Agreement corpo- net income derived from its worldwide nonbankrations, member banks, and bank holding compa- ing business; and nies shall file such reports on their foreign opera- (2) meet at least two of the following requirements: tions as the Board may require. (i) banking assets held outside the United States (3) Acquisition or disposition of shares. A member exceed banking assets held in the United States; bank, Edge or Agreement corporation or a bank (ii) revenues derived from the business of banking holding company shall report in a manner prescribed outside the United States exceed revenues deby the Board any acquisition or disposition of rived from the business of banking in the United shares. States; or (iii) net income derived from the business of (d) Filing and processing procedures. banking outside the United States exceeds net (1) Unless otherwise directed by the Board, applica- income derived from the business of banking in tions, notifications, and reports required by this part the United States. shall be filed with the Federal Reserve Bank of the district in which the parent bank or bank holding company is located or, if none, the Federal Reserve (c) * * * Bank of the district in which the applying or reporting institution is located. Instructions and forms for (d) * * * such applications, notifications and reports are available from the Federal Reserve Banks. (e) * * * (2) The Board shall act on an application or notification under this Subpart within 60 calendar days after (f) Permissible activities and investments. A foreign the Reserve Bank has accepted the application or banking organization that qualifies under paragraph (b) notification unless the Board notifies the investor of this section may : that the 60-day period is being extended and states the reasons for the extension. (5) Own or control voting shares of a foreign compa- 3. Subpart B of 12 C.F.R. Part 211 is amended by ny that is engaged directly or indirectly in business revising sections 211.23(b) and 211.23(f) to read as in the United States other than that which is incidenfollows: tal to its international or foreign business, subject to the following limitations: Subpart B—Foreign Banking Organizations (i) more than 50 per cent of the foreign company's consolidated assets shall be located, and consolidated revenues derived from, outside the United States; Section 211.23—Nonbanking Activities of Foreign Banking Organizations 1. None of the assets, revenues, or net income, whether held or (a) * * * derived directly or indirectly, of a subsidiary bank, branch, agency, commercial lending company, or other company engaged in the (b) Qualifying foreign banking organizations. Unless business of banking in the United States (including any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin specifically made eligible for the exemptions by the Islands) shall be considered held or derived from the business of Board, a foreign banking organization shall qualify for banking "outside the United States." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 895 (ii) the foreign company shall not directly under- ORDERS ISSUED UNDER BANK HOLDING write, sell, or distribute, nor own or control more COMPANY ACT, BANK MERGER ACT, BANK than 5 per cent of the voting shares of a company SERVICE CORPORATION ACT, AND FEDERAL that underwrites, sells, or distributes securities in RESERVE ACT the United States except to the extent permitted bank holding companies; Orders Issued Under Section 3 of Bank Holding (iii) if the foreign company is a subsidiary of the Company Act foreign banking organization, the foreign company must be, or control, an operating company and Central Wisconsin Bankshares, Inc. its direct or indirect activities in the United States Wausau, Wisconsin shall be subject to the following limitations: Order Approving the Acquisition of a Bank Central Wisconsin Bankshares, Inc., Wausau, Wis- AMENDMENTS TO RULES REGARDING consin, a bank holding company within the meaning of DELEGATION OF AUTHORITY the Bank Holding Company Act ("Act"), has applied for the Board's approval under section 3(a)(3) of the The Board of Governors is amending 12 C.F.R. Part Act (12 U.S.C. § 1842(a)(3)) to acquire at least 80 265, its Rules Regarding Delegation of Authority, to percent of the outstanding voting shares of Central delegate to the Federal Reserve Banks authority to act National Bank of Wausau, Wausau, Wisconsin on applications by U.S. banking organizations to es- ("Bank"). tablish Edge corporations. It is anticipated that this Notice of the application, affording an opportunity delegation of authority will aid in the expeditious for interested persons to submit comments, has been processing of applications to establish Edge corporagiven in accordance with section 3(b) of the Act. The tions. time for filing comments has expired, and the Board Effective September 27, 1985, the Board hereby has considered the application and all comments reamends 12 C.F.R. 265 as follows: ceived, including comments from Peoples State Bank, Wausau, Wisconsin ("Protestant"), in light of the 1. The authority citation for Part 265 continues to read factors set forth in section 3(c) of the Act (12 U.S.C. as follows: § 1842(c)). Applicant, the eighth largest commercial banking Authority: Sec. 11, 38 Stat. 261; 12 U.S.C. 248. organization in Wisconsin, controls nine subsidiary banks with total deposits of $481.6 million, represent- 2. § 265.2(f) is amended by adding paragraph (47) to ing 1.6 percent of the total deposits in commercial read as follows: banks in Wisconsin.1 Bank, which is one of the smaller Section 265.2—Specific Functions Delegated to banking organizations in Wisconsin, controls deposits Board Employees and to Federal Reserve of $16.4 million, which represents approximately 0.1 Banks percent of the total deposits in commercial banks in the state. Upon consummation of this proposal, Appli- * * cant would control 1.7 percent of the total deposits in (47) Under section 25(a) of the Federal Reserve Act commercial banks in the state and Applicant's rank and Subpart A of the Board's Regulation K, to among commercial banking organizations would be approve applications by a United States banking unchanged. Consummation of this proposal would not organization to establish an Edge corporation if all have any significant effect on the concentration of the following criteria are met: banking resources in Wisconsin. This application represents the third attempt by (i) The U.S. banking organization meets capital Applicant to acquire Bank. The Board denied Appliadequacy guidelines and is otherwise in satisfaccant's application to acquire Bank in 19662 and again tory condition; in 1976.3 The Board's earlier denials were based on the (ii) The proposed Edge corporation will be a competitive effects of the acquisition of Bank by wholly-owned subsidiary of a single banking organization; and (iii) No other significant policy issue is raised on which the Board has not previously expressed its 1. Banking data are as of December 31, 1984. view. 2. Central Wisconsin Bankshares, Inc., 52 FEDERAL RESERVE BULLETIN 29 (1966). 3. Central Wisconsin Bankshares, Inc., 62 FEDERAL RESERVE Digitized for FRASER BULLETIN 538 (1976). http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

896 Federal Reserve Bulletin • November 1985 Applicant in the Wausau area, where Applicant al- posits of $16.4 million, representing 2.5 percent of the ready controlled two banks. Applicant has asserted total deposits in commercial banks therein. Upon that the competitive circumstances have changed in consummation of the transaction, Applicant would the relevant banking market such that consummation control 35.2 percent of the total deposits in commerof the proposal would not have substantially anticom- cial banks in the relevant banking market. petitive effects in any relevant banking market. The four largest commercial banks in the Wausau The Board has considered the record of this case banking market control 59.1 percent of the total deposand has determined that the effect of the proposed its in commercial banks in the market, which would acquisition is not likely substantially to lessen compe- increase to 61.6 upon consummation of the proposal. tition in any relevant banking market. This conclusion The Herfindahl-Hirchsman Index (HHI) of the market is based on the following facts and circumstances. is 1479 and would increase by 164 points to 1643 upon consummation of the proposal.5 Thus, the market is Relevant Market not highly concentrated and would not become highly concentrated upon consummation of the transaction. In its consideration of Applicant's proposal to acquire Although the proposed acquisition would eliminate Bank in 1976, the Board determined that the relevant some existing competition between Applicant and market consisted of the Wausau Ranally Metro Area Bank in the Wausau banking market, the Board has ("RMA"), which included those portions of Marathon considered the fact that Bank was formed de novo by County near the cities of Wausau, Schofield and Applicant's principals in 1965. The record also shows Rothschild, but did not include any portion of Lincoln that shareholders of Applicant control 77 percent of County. Upon examination of all current relevant the voting stock of Bank. In the Board's view, this economic information, however, the Board believes ownership structure limits the amount of competition that the relevant market within which to evaluate the that exists between Applicant and Bank. Moreover, pending application is larger than the Wausau RMA. the Board believes that the competitive effects of the In the nine years since the Board's previous denial, transaction are mitigated by a number of other facts of the Wausau area has undergone significant changes, record including the following. and the area served by Applicant's subsidiary banks in First, the record shows that thrift institutions are the Wausau area and Bank has expanded. The record significant competitors of commercial banks in the indicates that a significant number of the residents in Wausau banking market.6 Four thrift institutions comthe southern portion of Lincoln County commute into pete in the Wausau banking market, two of which are Marathon County. This commuting pattern is assisted the second and third largest financial institutions in the by the existence of a four-lane limited access highway market. These institutions hold deposits of $213.6 between the city of Wausau and the city of Merrill, million, representing 25.9 percent of the total deposits which is in the center of Lincoln County. The record in the market. All of the thrift institutions offer transalso shows that there is significantly less commuting action accounts, including NOW and Super NOW from north of Merrill into the southern portion of accounts and money market accounts, in addition to Lincoln County and Marathon County. Based on these their traditional time and savings deposit services. The and other facts of record, the Board has determined thrift institutions also offer commercial real estate that the relevant market within which to evaluate the loans, other commercial loans and commercial checkcompetitive effects of this proposal consists of Mara- ing accounts. In view of these facts, the Board bethon County (less the townships of Holton, Hull, lieves that thrift institutions should be accorded signif- Brighton, Spencer, McMillan and Day) and the southern half of Lincoln County. 5. Under the revised Department of Justice Merger Guidelines (49 Competitive Factors Federal Register 26,823 (1984)), a market in which the post-merger HHI is between 1000 and 1800 is considered moderately concentrated, and the Department is likely to challenge a merger that increases the Applicant is the largest of 15 commercial banking HHI by more than 100 points, unless other facts of record indicate that the merger is not likely substantially to lessen competition. The organizations in the Wausau banking market, control- Department has informed the Board that a bank merger or acquisition ling two banks with deposits of $217 million, repre- generally will not be challenged (in the absence of other factors indicating anticompetitive effect) unless the post-merger HHI is at senting 32.7 percent of the total deposits in commerleast 1800 and the merger increases the HHI by at least 200 points. cial banks in the market.4 Bank, which was formed in The Department has not indicated any objection to this proposal. 1965 by principals of Applicant, is the 13th largest 6. The Board has previously determined that thrift institutions have become, or at least have the potential to become, major competitors of banking organization in the relevant market with decommercial banks. NCNB Corporation, 70 FEDERAL RESERVE BUL- LETIN 225 (1984); Sun Banks, Inc., 69 FEDERAL RESERVE BULLETIN 934 (1983); Merchants Bancorp, Inc., 69 FEDERAL RESERVE BULLE- TIN 865 (1983); First Tennessee National Corporation, 69 FEDERAL 4. Market data are as of December 31, 1984. RESERVE BULLETIN 298 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 897 icant weight when evaluating the competitive effects of regulatory delays in the processing of applications this proposal.7 In further mitigation of the anticompeti- under the Act, the Board's Rules require that a hearing tive effects of this proposal, the Board has considered request include a statement of why a written presentathe relatively small size of Bank, and the fact that 13 tion would not suffice in lieu of a hearing, identifying commercial banking organizations would remain in the specifically any questions of fact that are in dispute market upon consummation of the proposal. and summarizing the evidence that would be presented Finally, the Board notes that in its previous denials at a hearing. 12 C.F.R. § 262.3(e). of Applicant's acquisition of Bank, the Board empha- Protestant's submissions do not identify any quessized Applicant's dominant position in what was then tions of fact in dispute or summarize or indicate the a highly concentrated market. In 1976, Applicant evidence that they would present at a hearing. Rather, controlled 53 percent of the total deposits in commer- Protestant's hearing request is based solely on the cial banks in the market, and the three-firm concentra- Board's previous denials of Applicant's applications to tion ratio in the market was 77 percent. Approval of acquire Bank and has not been augmented with any the acquisition at that time would have increased the facts or other evidence. The Board has reviewed the three-firm concentration ratio to 79 percent and solidi- submissions of Protestant and Applicant, and other fied Applicant's dominance of the market. As noted, material in the record, and, based on this review, the the record shows that the share of the commercial Board does not believe that a hearing is warranted or bank deposits in the Wausau RMA held by Applicant appropriate. Accordingly, the Board hereby denies has declined steadily since 1964.8 In addition, as Protestant's request for a hearing. discussed above, the relevant market has expanded Protestant asserts that the competitive issues conand is no longer considered highly concentrated. Thus, cerning this application "are almost identical to the it does not appear that approval of the application issues presented at the times of the previous applicawould have the effect of solidifying Applicant in a tions," and asserts that approval of the application dominant position in a highly concentrated market. would have a chilling effect on the development of In view of the facts discussed above, with particular bank competition in the relevant market. However, as reference to the changes in the definition of the market discussed above, the Board has evaluated the signifiand the competition afforded by thrift institutions, the cant changes that have occurred in the competitive Board has determined that consummation of this pro- environment of the relevant market and has concluded posal is not likely to have a significant adverse effect that the competitive effects of the proposal would not on existing competition in any relevant market. warrant denial of the application. Protestant has of- The Board has considered the comments of Protes- fered no facts or other evidence that would alter this tant in opposition to the proposed transaction. Protes- conclusion. Thus, the Board has determined that Prottant asserts that consummation of the transaction estant's objections are without merit. would have substantial adverse effects on existing The financial and managerial resources of Applicant competition in the Wausau banking market. Protestant and Bank are satisfactory and their prospects appear also requests that the Board hold a hearing on the favorable. Considerations relating to the convenience application. and needs of the community to be served also are With regard to Protestant's request for a hearing, consistent with approval. section 3(b) of the Act does not require the Board to Based on the foregoing and other facts of record, the hold a hearing concerning an application unless the Board has determined that the application should be, appropriate banking authority makes a timely written and hereby is, approved for the reasons set forth recommendation of denial of the application. In this above. The transaction shall not be consummated case, no such recommendation of denial has been before the thirtieth calendar day following the effective received from the Comptroller of the Currency and date of this Order, or later than three months after the thus no hearing is required. Under the Board's Rules effective date of this Order, unless such period is of Procedure, however, the Board may order a hearing extended for good cause by the Board or the Federal in its discretion. In order to determine whether a Reserve Bank of Chicago, acting pursuant to delegated hearing would be appropriate and to avoid undue authority. By order of the Board of Governors, effective September 16, 1985. 7. If 50 percent of the deposits held by thrift institutions were included in the calculation of market concentration, the pre-acquisition four-firm concentration ratio would be 50.7 percent and the HHI Voting for this action: Chairman Volcker and Governors would be 1154. Applicant's and Bank's market shares would be 27.9 Martin, Wallich, Partee, Rice, and Seger. and 2.1 percent, respectively. Upon consummation, the four-firm concentration ratio would be 52.8 percent and the HHI would increase 117 points to 1269. WILLIAM W. WILES 8. Applicant controlled 65.1 percent of the deposits in the Wausau [SEAL] Secretary of the Board RMA in 1964, 53.0 percent in 1974, and 45.3 percent in 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

898 Federal Reserve Bulletin • November 1985 First Security Corporation of Kentucky mercial banks in the market. Company is the ninth Lexington, Kentucky largest commercial banking organization in the market and controls 3.1 percent of the total deposits in com- Order Approving Acquisition of a Bank Holding mercial banks in the market. Upon acquisition of Company Company, Applicant would remain the largest banking organization in the Lexington market, and would First Security Corporation of Kentucky, Lexington, control 30.4 percent of the deposits in commercial Kentucky, a bank holding company within the mean- banks in the market. The share of deposits held by the ing of the Bank Holding Company Act of 1956, as four largest commercial banking organizations in the amended (12 U.S.C. §§ 1841 et seq.) ("Act"), has Lexington banking market is 56 percent and would applied for the Board's approval under section 3(a)(3) increase to 59.1 percent upon consummation of the of the Act (12 U.S.C. § 1842(a)(3)) to acquire all of the proposed transaction. The market's Herfindahlvoting shares of the successor by merger to Clark Hirschman Index ("HHI") is 1181 and would increase County Bancorporation, Inc., Winchester, Kentucky by 169 points to 1350.4 ("Company"), a bank holding company within the Although the proposed acquisition would eliminate meaning of the Act, and thereby indirectly to acquire existing competition between Applicant and Compa- Clark County Bank, Inc., Winchester, Kentucky ny, the Board notes that the market would not become ("Bank").1 highly concentrated as a result of this transaction and Notice of the applications, affording an opportunity that 20 commercial banking organizations would refor interested persons to submit comments, has been main in the market as alternative providers of banking given in accordance with section 3(b) of the Act services. In addition, the facts of record indicate that (12 U.S.C. § 1842(b)). The time for filing comments the concentration of banking resources in the Lexinghas expired and the Board has considered the applica- ton market and Applicant's share of the market's tions and all comments received in light of the factors commercial bank deposits have declined significantly set forth in section 3(c) of the Act (12 U.S.C. since 1980.5 § 1842(c)). The effect of this transaction on competition in the Applicant is the fourth largest banking organization Lexington market is further mitigated by the competiin Kentucky, controlling one bank with deposits of tion offered by thrift institutions.6 The ten thrift insti- $603.1 million, representing 3.2 percent of the total tutions in the market hold deposits of $406.5 million, deposits in commercial banks in the state.2 Company, representing 15.9 percent of the total deposits in the the 56th largest banking organization in the state, market. Almost all of these institutions provide NOW controls deposits of $68.6 million, representing 0.3 accounts and make consumer loans, and four of the percent of the total deposits in commercial banks in institutions are actively engaged in commercial lend- Kentucky. Upon consummation of the proposed ac- ing. In view of these facts, the Board considers the quisition, Applicant would control total deposits of presence of thrift institutions as a factor in assessing $671.7 million, representing 3.6 percent of the total the competitive effects of the proposed transaction, deposits in commercial banks in Kentucky, and would and has determined that consummation of the proremain the state's fourth largest commercial banking posed transaction is not likely to have a significant organization. The proposed transaction would have no significant effect on the concentration of banking resources in Kentucky. Applicant's subsidiary bank competes with Bank in 4. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (1984)), a market in which the post-merger the Lexington banking market.3 Applicant is the larg- HHI is between 1000 and 1800 is considered moderately concentrated, est banking organization in the Lexington market, and the Department is likely to challenge a merger that increases the controlling 27.3 percent of the total deposits in com- HHI by more than 100 points, unless other facts of record indicate that the merger is not likely substantially to lessen competition. The Department has informed the Board, however, that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating an anticompetitive effect) unless the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. 1. Applicant has also applied under section 3(a)(1) of the Act The Department has not indicated any objection to this proposal. (12 U.S.C. § 1842(a)(1)) for approval to merge its wholly-owned 5. The HHI decreased from 1400 to 1181 and Applicant's share of subsidiary, New Clark County Bancorporation, Inc. ("New Clark"), deposits fell from 31.7 percent to 27.3 percent between June 30, 1980, with Company, thereby causing New Clark to become a bank holding and March 31, 1985. company. New Clark is of no significance except as a means to 6. The Board has previously determined that thrift institutions have facilitate the acquisition of Bank. become, or at least have the potential to become, major competitors of 2. Banking data are as of March 31, 1985. State deposit rankings are banks. NCNB Corporation, 70 FEDERAL RESERVE BULLETIN 225 based on deposit data as of December 31, 1984. (1984); Sun Banks, Inc., 69 FEDERAL RESERVE BULLETIN 934 (1983); 3. The Lexington banking market comprises Fayette, Scott, Wood- First Tennessee National Corporation, 69 FEDERAL RESERVE BULLEford, Jessamine, Bourbon, and Clark Counties, all in Kentucky. TIN 298 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 899 adverse effect on existing competition in the Lexing- for the purpose of becoming a bank holding company ton market.7 by acquiring Bank, which holds aggregate deposits of The financial and managerial resources and future $31.3 million.1 Upon acquisition of Bank, Applicant prospects of Applicant, its subsidiary bank, and Bank would control one of the smaller commercial banking are consistent with approval of the applications. Con- organizations in Nebraska with approximately 0.2 siderations relating to the convenience and needs of percent of the total deposits in commercial banks in the communities to be served also are consistent with the state. approval. Bank is the third largest of five commercial banking Based on the foregoing and other facts of record, the organizations in the Adams County banking market2 Board has determined that consummation of the pro- and holds approximately 9.7 percent of the total deposed acquisition would be in the public interest and posits in commercial banks therein. Neither Applicant that the applications should be approved. According- nor any of its principals is associated with any other ly, the applications are approved for the reasons banking organization in the market. Consummation of summarized above. The transaction shall not be con- this transaction would not result in any adverse effects summated before the thirtieth calendar day following upon competition or increase the concentration of the effective date of this Order, or later than three banking resources in any relevant area. months after the effective date of this Order, unless The financial and managerial resources and future such period is extended for good cause by the Board or prospects of Applicant and Bank are regarded as by the Federal Reserve Bank of Cleveland, acting consistent with approval, especially in light of commitpursuant to delegated authority. ments made by Applicant's principals in connection By order of the Board of Governors, effective with this application. Considerations relating to the September 30, 1985. convenience and needs of the community to be served are also consistent with approval of the application. Voting for this action: Chairman Volcker and Governors Based on the foregoing and other facts of record, the Wallich, Partee, Rice, and Seger. Absent and not voting: Board has determined that consummation of the trans- Governor Martin. action would be in the public interest and that the JAMES MCAFEE application should be approved. On the basis of the [SEAL] Associate Secretary of the Board record, the application is approved for the reasons summarized above. The transaction shall not be con- Hastings Bancorp, Inc. summated before the thirtieth calendar day following Omaha, Nebraska the effective date of this Order, or later than three months following the effective date of this Order, Order Approving Formation of a Bank Holding unless such period is extended for good cause by the Company Board or by the Federal Reserve Bank of Kansas City, acting pursuant to delegated authority. Hastings Bancorp, Inc., Omaha, Nebraska, has ap- By order of the Board of Governors, effective plied for the Board's approval pursuant to section September 23, 1985. 3(a)(1) of the Bank Holding Company Act (12 U.S.C. § 1842(a)(1)) ("Act") to become a bank holding com- Voting for this action: Vice Chairman Martin and Goverpany by acquiring 96.7 percent of the voting shares of nors Wallich, Partee, Rice, and Seger. Absent and not voting: Chairman Volcker. Hastings State Bank, Hastings, Nebraska ("Bank"). Notice of the application, affording interested per- JAMES MCAFEE sons an opportunity to submit comments, has been [SEAL] Associate Secretary of the Board given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the Board has considered the application and all comments re- Moore Financial Group Incorporated ceived in light of the factors set forth in section 3(c) of Boise, Idaho the Act. Applicant, a non-operating corporation with no sub- Order Approving the Acquisition of a Bank sidiaries, was organized under the laws of Nebraska Moore Financial Group Incorporated, Boise, Idaho, a bank holding company within the meaning of the Bank 7. If 50 percent of the deposits held by thrift institutions were included in the calculation of market concentration, Applicant's postacquisition share of the market's deposits would be 27.9 percent. Upon consummation of the proposed acquisition, the four-firm con- 1. All banking data are as of December 31, 1984. centration ratio would increase from 51.3 to 54.2 percent and the HHI 2. The Adams County banking market is approximated by Adams would increase by 143 points to 1149. County, Nebraska. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

900 Federal Reserve Bulletin • November 1985 Holding Company Act of 1956, as amended ("Act"), and is expressly authorized by the statute laws of has applied for the Board's approval under section Utah. 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire Bank operates in the Salt Lake City Metropolitan 100 percent of the voting shares of Continental Bank banking market.6 It is the seventh largest of 28 comand Trust Company, Salt Lake City, Utah ("Bank").1 mercial banking organizations in the market, control- Notice of the application, affording an opportunity ling $200 million in deposits, representing 5.6 percent for interested persons to submit comments, has been of total deposits in commercial banks in the market. given in accordance with section 3(b) of the Act. The Applicant owns an industrial loan company, Moore time for filing comments has expired, and the Board Financial of Utah, which has deposits of approximatehas considered the application and all comments re- ly $62 million in the market. Applicant is also repreceived in light of the factors set forth in section 3(c) of sented in the market by two nonbanking subsidiaries, the Act (12 U.S.C. § 1842(c)). Moore Financial Services ("MFS") and Moore Trust Applicant has banking subsidiaries in Idaho and Company ("MTC"), which provide commercial loan Oregon with consolidated assets of $2.9 billion and and trust services, respectively. The market shares of total domestic deposits of $2.5 billion.2 Upon acquisi- MFS and MTC are de minimis. Accordingly, the tion of Bank, Applicant would control the seventh Board concludes that consummation of the proposed largest banking organization in Utah with 2.8 percent acquisition would not result in any adverse effects of the total deposits in commercial banks in the state.3 upon competition or increase the concentration of Section 3(d) of the Act prohibits the Board from resources in any relevant area. approving an application by a bank holding company The financial and managerial resources of Applicant to acquire any bank located outside of the state in and Bank are considered satisfactory and their proswhich operations of the bank holding company's sub- pects appear favorable. The Board has also detersidiaries are principally conducted, unless the acquisi- mined that considerations relating to the convenience tion is "specifically authorized by the statute laws of and needs of the community to be served are consisthe State in which such bank is located, by language to tent with approval of the application. Affiliation with that effect and not merely by implication." (12 U.S.C. Applicant would enable Bank to expand the scope and § 1842(d)). array of its services. Accordingly, it is the Board's Utah law expressly allows reciprocal acquisitions judgment that the proposed transactions would be in between Utah depository institutions and depository the public interest and that the applications should be institutions whose operations are principally conduct- approved. ed in 11 other states, provided that the terms and Based on the foregoing and other facts of record, the conditions imposed by the other states are substantial- Board has determined that the applications should be ly comparable to those imposed by the Utah statute.4 and hereby are approved for the reasons set forth Applicant's banking subsidiaries conduct their busi- above. The transactions shall not be consummated ness principally in Idaho, one of the 11 states express- before the thirtieth calendar day following the effective ly set forth in the Utah statute. It appears that under date of this Order, or later than three months after the the Idaho statute a Utah banking organization may effective date of this Order, unless such period is acquire an Idaho banking organization under substan- extended by the Board or by the Federal Reserve tially comparable terms and conditions as those im- Bank of San Francisco, acting pursuant to delegated posed by the Utah statute.5 By Order dated June 12, authority. 1985, the Commissioner of the Utah Department of By order of the Board of Governors, effective Financial Institutions determined that the Idaho law September 27, 1985. satisfies the substantial comparability requirement of the Utah law. Accordingly, the Board has determined Voting for this action: Chairman Volcker and Governors that the proposed acquisition conforms with Utah law Wallich, Partee, Rice, and Seger. Absent and not voting: Governor Martin. JAMES MCAFEE [SEAL] Associate Secretary of the Board 1. Applicantt hhaass aallssoo aapppplliieedd ffoorr aapppprroovvaall ttoo mmeerrggee iittss wwhhoollllyy-owned subsidiiaarryy,, CCoonnttiinneennttaall IInntteerriimm BBaannkk,, wwiitthh aanndd iinnttoo BBaannkk., Continental Initteerriimm BBaannkk iiss bbeeiinngg oorrggaanniizzeedd ssoolleellyy aass aa mmeeaannss ttoo facilitate the accqquuiissiittiioonn ooff vvoottiinngg sshhaarreess ooff BBaannkk bbyy AApppplliiccaanntt,. 2. Banking ddaattaa aarree aass ooff MMaarrcchh 3311,, 11998855.. 3. Banking ddaattaa aarree aass ooff SSeepptteemmbbeerr 3300,, 11998844.. 6. The Salt Lake City Metropolitan banking market is approximat- 4. Utah Codiee AAnnnn.. §§§§ 77--11--110022,, eett sseeqq.. ed by the Salt Lake City, Utah Metropolitan area. Market data are as 5. Idaho Coddee,, §§ 2266--22660011,, eett sseeqq.. of June 30, 1983. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 901 Orders Issued Under Section 4 of the Bank tion concurs in this finding. (12 U.S.C. § 1843(c)(8); Holding Company Act 12 C.F.R. §.225.23(i)). Municipal is a thrift institution as that term is defined in section 2(i) of the BHC Act, Baltimore Bancorp and Municipal does not have a federal regulator. Baltimore, Maryland By letter dated September 24, 1985, the Director of the Maryland Deposit Insurance Fund Corporation Order Approving Acquisition of a Stock Savings and requested that the Board act expeditiously on this Loan Association application in light of the recent events in Maryland and the financial condition of Municipal. In this re- Baltimore Bancorp, Baltimore, Maryland, a bank gard, the Board notes that MSSIC-insured institutions holding company within the meaning of the Bank have experienced severe problems at least since mid- Holding Company Act (the "BHC Act"), has applied May of this year. On May 9, 1985, the Attorney for the Board's approval under section 4(c)(8) of the General of Maryland announced that, because of BHC Act (12 U.S.C. § 1843(c)(8)), and section "management problems" at Old Court Savings and 225.23(a)(3) of the Board's Regulation Y (12 C.F.R. Loan of Baltimore, one of the largest savings and loan § 225.23(a)(3)), to acquire all of the voting shares of associations privately insured by the Maryland Sav- Charles Street Savings and Loan Association, Inc. (in ings-Share Insurance Corporation, a new managing organization) ("Charles Street"), a Maryland char- officer was being installed and an investigation was tered stock savings and loan association. being instituted. This announcement and the publicity Charles Street would be the successor by merger to that followed created a severe liquidity crisis at several Municipal Savings and Loan Association, Inc. ("Mu- MSSIC-insured institutions, and within four days after nicipal"), Baltimore, Maryland, a state chartered mu- the announcement conservators had been appointed to tual savings and loan association formerly privately manage the affairs of two MSSIC-insured institutions insured by the Maryland Savings-Share Insurance and the Governor of Maryland had imposed withdraw- Corporation ("MSSIC").1 Baltimore Bancorp would al limitations of $1,000 per month on the remaining 100 thereby engage in the activity of operating a savings MSSIC-insured institutions, including Municipal. and loan association within Maryland. By virtue of this On May 17, 1985, the Maryland General Assembly, proposal, Applicant also would acquire Municipal's meeting in emergency session, passed legislation real estate development subsidiary, Towson Service which, among other things, abolished MSSIC and Corporation, Towson, Maryland. Although the Board merged it into the state-funded Maryland Deposit has not added the operation of a thrift institution to the Insurance Fund Corporation ("MDIFC") and relist of activities specified in section 225.25(b) of Regu- quired all institutions previously insured by MSSIC to lation Y as generally permissible for bank holding apply for insurance from the Federal Savings and companies, the Board has determined in several indi- Loan Insurance Corporation ("FSLIC"). Institutions vidual cases that the operation of a thrift institution is with assets over $40,000,000 were required to apply closely related to banking.2 for FSLIC insurance before June 1, 1985, in order As a result of amendments to the BHC Act con- to retain insurance coverage from MDIFC and tained in the Garn-St Germain Depository Institutions were required to receive FSLIC insurance before Act of 1982, section 4(c)(8) of the BHC Act provides December 31, 1985. that the Board may dispense with the notice and As of September 23, 1985, 79 of the 101 Maryland hearing requirements of section 4(c)(8) with regard to S&Ls formerly insured by MSSIC were open on a full the acquisition of a thrift institution if the Board finds service basis. Twenty-four of these S&Ls, with comthat an emergency exists that requires immediate bined assets of $4.6 billion, have received final approvaction and the primary federal regulator of the institu- al for FSLIC insurance. Sixteen S&Ls, with assets of $514 million, have received conditional FSLIC approval. The remaining 18 institutions, with combined assets 1. Charles Street has been organized solely to facilitate the acquisi- of $3 billion, remain subject to the Governor's execution of Municipal, which heretofore had been a mutual association. tive order limiting withdrawals and are not open for Upon consummation of the proposed acquisition and the fulfillment of certain regulatory requirements, Charles Street will resume opera- full service. Municipal, with assets of $95 million as of tions under its original name of Municipal Savings and Loan Associa- July 31, 1985, currently operates under these withtion, Inc., and operate as a state-chartered federally insured stock savings and loan association. drawal limitations and is not open on a full service 2. See e.g., D.H. Baldwin & Co., 63 FEDERAL RESERVE BULLETIN basis. Despite these individual account withdrawal 280 (1977); Interstate Financial Corp., 68 FEDERAL RESERVE BULLE- limitations, Municipal continues to experience sub- TIN 316 (1982); Citicorp, 68 FEDERAL RESERVE BULLETIN 656 (1982); stantial deposit outflows. In the event it would be Old Stone Corporation; 69 FEDERAL RESERVE BULLETIN 812 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

902 Federal Reserve Bulletin • November 1985 required to write off its capital deposit in MSSIC, business of making commercial loans. (12 U.S.C. Municipal would possess a negative net worth of at § 1841(c)). least $1.6 million based upon the results of an exami- Municipal is, and will continue to be after the nation conducted by the Federal Home Loan Bank proposed acquisition, a "thrift institution" as that Board ("FHLBB"). Municipal has applied for FSLIC term is defined in section 2(i) of the BHC Act. insurance and has been informed that it must raise (12 U.S.C. § 1841(i)). Prior to obtaining FSLIC insuradditional regulatory net worth equal to 5 percent of its ance, Municipal will not make commercial loans, and deposit liabilities in order to qualify for FSLIC insur- subsequent to obtaining such insurance, will exercise ance. Conditional approval for FSLIC insurance will only those powers permitted to federally chartered not be granted until Municipal demonstrates that it has savings and loan associations. Thus, the acquisition of a commitment to provide the necessary capital. If Municipal qualifies as a nonbanking acquisition, and Municipal does not receive federal insurance by De- after Municipal has obtained FSLIC insurance, it may cember 31, 1985, it will be forced to liquidate by the be retained by Applicant as a nonbanking institution terms of Maryland General Assembly's recent legisla- under the provisions of the Garn-St Germain Act, tion. Applicant, with total consolidated assets of ap- which provide that any institution that is insured by proximately $1.8 billion as of June 30, 1985, has FSLIC is exempt from the definition of bank in the committed to provide the necessary capital in order to BHC Act. allow Municipal to qualify for FSLIC insurance and Applicant, with deposits of $1.3 billion as of avoid Municipal's liquidation. December 31, 1984, is the seventh largest banking Consummation of Applicant's proposal will remove organization in Maryland, representing 6.3 percent of the threat of financial loss to the MDIFC with respect aggregate bank deposits in the state. Both Applicant to this institution, and will ensure the viability of and Company (with total deposits of $95.0 million as of Municipal and its continued service to the conve- December 31, 1984)3 operate in the Baltimore Ranally nience and needs of its community. Moreover, the Metro Area ("Baltimore RMA").4 Applicant is the Director of the MDIFC has indicated that Applicant's fourth largest depository institution among banks and acquisition of Municipal is part of an overall effort to thrift institutions in the Baltimore RMA with total restore full public confidence in the former MSSIC deposits of $1.1 billion, representing 6.7 percent of thrift institutions. deposits in the market. Municipal ranks thirty-first In view of these and other facts of record, the Board among the 162 depository institutions in the market, believes that an emergency exists that requires expedi- with total deposits of $92.0 million representing aptious action: to prevent Municipal's liquidation; to proximately 0.5 percent of market deposits in banks assure its restoration to permanent full service opera- and thrift institutions. In the Board's view, consumtion as soon as possible; and to contribute to the mation of this proposal would not substantially lessen process of achieving a resolution to the problems faced competition in the market.5 Indeed, the proposed by former MSSIC institutions generally. Accordingly, acquisition would have a substantial beneficial effect the Board has determined that it is appropriate in this on competition by ensuring the continued operation of instance to shorten the period for interested persons to Municipal as an effective competitor. submit comments regarding this application. In this Section 4(c)(8) of the BHC Act (12 U.S.C regard, the Board promptly caused to be published § 1843(c)(8)) authorizes a bank holding company to notice of the application in the Federal Register and in acquire a nonbank company where the activities of the a newspaper of general circulation in Baltimore City nonbank company are determined by the Board to be and County, Maryland (the principal places of busi- "so closely related to banking or managing or controlness of Applicant and Municipal), and announced its ling banks as to be a proper incident thereto." The Act acceptance of the application in a press statement provides that the Board may make such determinareleased by the Board in Washington, D.C. These tions by order or by regulation. As earlier stated, the notices provided interested persons until September 26, 1985, to comment on the application. Upon a review of the comments received and in light of the 3. Deposit outflows precipitated by Municipal's financial difficulties reduced total deposits to an estimated $90.4 million as of May 31, circumstances outlined above, the Board has deter- 1985. mined to dispense with a hearing in this case. 4. The Baltimore RMA is defined as the City of Baltimore, Baltimore County, the northern tip of Anne Arundel County, the northern As noted above, this application has been filed part of Howard County, most of Carroll County, and the southwest under section 4(c)(8) of the BHC Act as a nonbanking part of Harford County, all in Maryland. Market data are as of activity. The BHC Act defines a "bank" as an institu- June 30, 1984. 5. If thrifts were accorded full weight in the competitive analysis, tion that accepts deposits that the depositor has a legal acquisition of Municipal by Applicant would raise the market's right to withdraw on demand and that is engaged in the Herfindahl-Hirschman Index only 7 points to 510. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 903 Board has determined previously that the operation of In view of the unique circumstances that led to the a thrift institution is closely related to banking, and suspension of and subsequent restrictions on withreaffirms that determination in this Order. drawals at Municipal and other privately insured insti- With respect to the "proper incident" requirement, tutions by the Governor of Maryland, the emergency section 4(c)(8) of the BHC Act requires the Board to legislation recently enacted by the Maryland General consider whether the performance of the activity by an Assembly in an attempt to remedy the problems faced affiliate of a holding company "can reasonably be by these institutions and their depositors, the need for expected to produce benefits to the public, such as a prompt solution in this case, and the other considergreater convenience, increased competition, or gains ations detailed below, the Board has determined that in efficiency that outweigh possible adverse effects, there are substantial benefits to the public associated such as undue concentration of resources, decreased with preserving Municipal as a thrift competitor suffior unfair competition, conflicts of interests, or un- cient to outweigh the generalized adverse effects found sound banking practices." by the Board in the D.H. Baldwin case. In 1977, the Board considered the general question The Board considers Applicant's acquisition of Muwhether savings and loan association ("S&L") activi- nicipal to be a substantial and compelling public beneties are a proper incident to banking. At that time, the fit in that Applicant will provide Municipal with suffi- Board determined that, as a general matter, S&L cient new capital funds to enable Municipal to activities are not a proper incident to banking because continue its operations and to remain a viable competithe potential adverse effects of generally allowing tor. The record establishes that Applicant has the affiliations of banks and S&Ls were then sufficiently financial and managerial resources and commitment to strong to outweigh any public benefits that might serving the convenience and needs of the public to result in individual cases. (D.H. Baldwin & Co., 63 achieve this result. The acquisition will preserve a FEDERAL RESERVE BULLETIN 280 (1977)). competitor in the market served by Municipal, thus Because of the considerations elaborated in D.H. ensuring the continuation of services by Municipal to Baldwin, the Board has not been prepared to permit its customers and protecting the interests of Municibank holding companies to acquire thrift institutions pal's depositors. on a general basis. However, the Board has consis- The affiliation of Applicant and Municipal is not tently regarded the BHC Act as authorizing the Board likely to result in unfair competition. To guard against to permit such an acquisition, and the Board has possible adverse effects of affiliation in this case approved several such proposals involving failing between a banking organization and a savings and loan thrift institutions on the basis that any adverse effects association, including the potential for unfair competiof bank/thrift affiliations would be overcome by the tion and diversion of funds, the Board has determined public benefits of preserving the failing thrift institu- to condition its approval as follows: tions.6 In addition, Congress has recognized the need 1. Applicant will operate Municipal as a savings and to allow bank holding companies to acquire failing loan association having as its primary purpose the federally insured thrift institutions in the Garn-St provision of residential housing credit. Municipal Germain Act. will limit its activities to those currently permitted to The Board has reexamined, in the context of this federal savings and loan associations under the application, the general adverse factors cited in the Home Owners' Loan Act, but shall not engage in Board's 1977 D.H. Baldwin decision, including regula- any activity prohibited to bank holding companies tory conflict, erosion of institutional rivalry, and the and their subsidiaries under section 4(c)(8) of the potential for undermining interstate banking prohibi- Bank Holding Company Act. As discussed below, tions. The Board has also considered the adverse these limitations will apply to Municipal's whollyfactors that might be associated with this particular owned service corporation. application,7 including the potential for unfair compe- 2. Municipal will not establish or operate a remote tition, conflicts of interests, financial risks, diversion service unit at any location outside Maryland. of funds, and participation in impermissible activities. 3. Municipal will not establish or operate branches at locations not permissible for national or state banks located in Maryland.8 6. See e.g., F.N.B. Corporation, 71 FEDERAL RESERVE BULLETIN 340 (1985); The Chase Manhattan Corporation, 71 FEDERAL RESERVE BULLETIN 462 (1985); Interstate Financial Corp., supra; and Citicorp, supra. 7. As stated above, the Board has examined the competitive effects 8. The Federal Reserve Bank of Richmond is hereby delegated associated with this particular application and has concluded that authority to act on applications by Applicant to open additional offices there are no significant adverse effects associated with the proposed of Municipal under section 225.23(b)(1) of Regulation Y. (12 C.F.R. acquisition. § 225.23(b)(1)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

904 Federal Reserve Bulletin • November 1985 4. Municipal will be operated as a separate, indepen- ling public benefits provided thereby, the Board has dent, profit-oriented corporate entity and shall not determined to grant Applicant's request to retain Serbe operated in tandem with any other subsidiary of vice Corporation's interest in certain real estate devel- Applicant. Applicant and Municipal will limit their opment joint ventures for a two-year period.10 This operations to effect this condition, and will observe will allow for an orderly divestiture of these assets the following conditions: without further loss to financially troubled Municipal a. No banking or other subsidiary of Applicant and also will avoid possible adverse consequences to will link its deposit-taking activities to accounts at the MDIFC, the recently formed state insurance fund Municipal in a sweeping arrangement or similar which currently insures Municipal's deposits. arrangement. The Board concludes that consummation of the b. Neither Applicant nor any of its subsidiaries proposal, subject to the conditions set out above, may will solicit deposits or loans for Municipal nor reasonably be expected not to result in conflicts of shall Municipal solicit deposits or loans for any interests, unsound banking practices, undue concenother subsidiary of Applicant. tration of resources, or other adverse effects. 5. Applicant will not change Municipal's name in Based upon the foregoing and other facts and cirany manner that might confuse the public regarding cumstances reflected in the record, the Board has Municipal's status as a nonbank thrift institution. determined that the acquisition of Municipal by Appli- 6. Municipal will not convert its charter to that of a cant would result in substantial and compelling public national or state commercial bank without the benefits that are sufficient to outweigh any adverse Board's prior approval. effects that may reasonably be expected to result from 7. To the extent necessary to insure independent this proposal, including any potential adverse effects operation of Municipal and prevent the improper of the affiliation of a commercial banking organization diversion of funds, there shall be no transactions with a thrift institution. Accordingly, the application is between Municipal and Applicant or any of its approved subject to the conditions described in this subsidiaries without the prior approval of the Feder- Order, and the record of the application. al Reserve Bank of Richmond. This limitation en- The Board's decision is further subject to the condicompasses the transfer, purchase, sale or loan of tions set forth in Regulation Y, including sections any assets or liabilities, but does not include infu- 225.4(d) and 225.23(b), and to the Board's authority to sions of capital from Applicant, the payment of require such modification or termination of the actividividends by Municipal to Applicant, or the sale of ties of a holding company or any of its subsidiaries as residential real estate loans from Municipal to any the Board finds necessary to assure compliance with, subsidiary of Applicant. or to prevent evasion of, the provisions and purposes 8. Baltimore Bancorp will cooperate with Municipal of the Act and the Board's regulations and orders in applying for and obtaining FSLIC insurance. issued thereunder. The transaction shall be made not later than three months after the effective date of this By virtue of this proposal, Applicant also will ac- Order, unless that period is extended for good cause quire Municipal's sole subsidiary, Towson Service by the Board or by the Federal Reserve Bank of Corporation ("Service Corporation"), Towson, Mary- Richmond pursuant to authority hereby delegated. land. Service Corporation engages in impermissible By order of the Board of Governors, effective real estate development activities through equity inter- September 30, 1985. ests in 10 joint ventures.9 In any application by a bank holding company to acquire a nonbanking organiza- Voting for this action: Chairman Volcker and Governors tion, the nonbanking organization ordinarily would be Martin, Wallich, Partee, Rice, and Seger. required to divest any impermissible assets, or to cease to engage in any impermissible activities, prior JAMES MCAFEE to consummation of the acquisition. In view of the [SEAL] Associate Secretary of the Board emergency nature of this acquisition and the compel- 9. In this regard, the Board has received a written comment on this application from counsel for several of Service Corporation's joint venture partners. The Board has carefully reviewed the comment and has determined that it does not relate to, or appear to warrant denial 10. This is consistent with the provisions of section 4 of the BHC under, any of the factors specified in section 4 of the Bank Holding Act relating to the time for compliance by bank holding companies Company Act. with the nonbanking provisions of that act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 905 The Chase Manhattan Corporation not exceeding $1,000. The Board has previously ap- New York, New York proved applications to engage in the issuance of payment instruments with a maximum face value of Chase Manhattan National Corporation $10,000. In its Orders, the Board found that an in- New York, New York crease in the denomination of such instruments would not affect the fundamental nature of the payment Order Approving the Issuance of and Sale of instruments, and the Board concluded that the issu- Payment Instruments; the Sale of U.S. Savings ance and sale of the proposed instruments is closely Bonds; and the Issuance and Sale of Traveler's related to banking.3 Checks In order to approve this application, the Board must also find that the performance of the proposed activity The Chase Manhattan Corporation and Chase Manhat- by a nonbank affiliate of Chase Manhattan "can reatan National Corporation, both of New York, New sonably be expected to produce benefits to the public, York (together, known as "Chase Manhattan"), bank such as greater convenience, increased competition, holding companies within the meaning of the Bank or gains in efficiency, that outweigh possible adverse Holding Company Act ("Act"), have applied for the effects, such as undue concentration of resources, Board's approval under section 4(c)(8) of the Act decreased or unfair competition, conflicts of interests, (12 U.S.C. § 1843(c)(8)) and sections 225.23 and or unsound banking practices." 225.25(b)(12) of the Board's Regulation Y (12 C.F.R. Consumer-type payment instruments, such as tradi- §§ 225.23 and 225.25(b)(12)) to engage de novo directly tional money orders, are marketed nationally on the or through a subsidiary, in the issuance and sale of wholesale level by a few large organizations and variably denominated payment instruments with a locally on the retail level by a wide variety of financial maximum face value of $10,000; the issuance and sale and nonfinancial institutions. On the national scale, of traveler's checks, and the sale of U.S. savings the market is concentrated, being dominated by only a bonds. The instruments will be sold by both affiliated few large organizations.4 Entry into this business on a and unaffiliated institutions throughout the United national scale involves overcoming significant barriers States. because a potential entrant must possess the capability Notice of the applications, affording interested per- for managing the extensive sales and servicing operasons an opportunity to submit comments on the bal- tion necessary for handling a low unit-price, highance of public interest factors regarding the applica- volume product. Such capabilities frequently are assotions, has been published (50 Federal Register 31,427 ciated with banking organizations of significant size, (1985)). The time for filing comments has expired, and such as Chase Manhattan. Chase Manhattan's entry the Board has considered the applications and all into this market would result in increased competition comments received in light of the public interest in this industry and may be expected ultimately to factors set forth in section 4(c)(8) of the Act. result in increased prospects for some deconcentration Chase Manhattan controls total consolidated assets of the industry in the future. Accordingly, the Board of $86.4 billion, and is the second largest bank holding views Chase Manhattan's proposal as procompetitive company in the state of New York, based on total and in the public interest insofar as it relates to the domestic deposits.1 Chase Manhattan operates four issuance of instruments that are intended primarily for commercial banks and also engages in a variety of use by consumers. nonbanking activities, including mortgage banking and In its past consideration of the issuance of variably futures commission merchant activities. denominated payment instruments, the Board has Chase Manhattan proposes to engage de novo in the been concerned that the issuance of such instruments issuance and sale of variably denominated payment with a face value of over $1,000 would result in an instruments with a face value of up to $10,000. These adverse effect on the reserve base. Because reserve instruments will include money orders and will be requirements serve as an essential tool of monetary issued on a nationwide basis. Regulation Y includes on policy, the Board is concerned that this proposal may the list of permissible nonbanking activities2 the issuance and sale of money orders and other similar consumer-type payment instruments with a face value 3. BankAmerica Corporation, 70 FEDERAL RESERVE BULLETIN 364 (1984); See also, RepublicBank Corporation, 71 FEDERAL RESERVE BULLETIN 724 (1985); Citicorp, 71 FEDERAL RESERVE BULLETIN 58 (1985). 4. Money orders are primarily used to transmit money by members of the consumer public who do not or cannot maintain checking 1. Asset datum is as of March 31, 1985, and deposit datum is as of accounts. Traditionally, money orders have a maximum face value December 31, 1984. printed on the instrument, which is generally at or lower than the limit 2. 12 C.F.R. § 225.25(b)(12). set by Regulation Y. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

906 Federal Reserve Bulletin • November 1985 result in adverse effects due to the erosion of the this Order, unless such period is extended for good reservable deposits of the banking system. cause by the Board or by the Federal Reserve Bank of In its BankAmerica Order, the Board decided that New York, acting pursuant to delegated authority. BankAmerica and any other bank holding company By order of the Board of Governors, effective that receives approval to engage in this activity would September 4, 1985. be required to file with the Board weekly reports of daily data on this activity for use in conjunction with Voting for this action: Chairman Volcker and Governors measuring and interpreting the money stock and for Martin, Wallich, Partee, and Seger. Absent and not voting: assessing the effects of the proposal on the reserve Governor Rice. base. The Board also determined to monitor closely the effects of such proposals by bank holding compa- JAMES MCAFEE nies on the Board's conduct of monetary policy. If it [SEAL] Associate Secretary of the Board later appears that the result of such proposals is a significant reduction in the reserve base or other adverse effect on the conduct of monetary policy, the IntraWest Financial Corporation Board may impose reserve requirements on such Denver, Colorado transactions, pursuant to section 19 of the Federal Reserve Act (12 U.S.C. § 461(a)) and the Board's Order Approving Acquisition of Shares of IntraWest Regulation D (12 C.F.R. Part 204). Insurance Company The record shows that the sale of these largerdenominated money orders by Chase Manhattan IntraWest Financial Corporation, Denver, Colorado, a would increase competition in this field and enhance bank holding company within the meaning of the Bank the convenience of the purchaser. The Board finds Holding Company Act ("Act"), has applied for the that these instruments, which will be issued by a large Board's approval pursuant to section 4(c)(8) of the Act financial organization and will enjoy ready acceptabil- (12 U.S.C. § 1843(c)(8)) and section 225.23(a)(1) of the ity, will provide benefits to the public. Board's Regulation Y (12 C.F.R. § 225.23(a)(1)), to Chase Manhattan also proposes to engage in the sale acquire 75.1 percent of the voting shares of IntraWest and issuance of traveler's checks and the sale of U.S. Insurance Company ("Company"), Northglenn, Colosavings bonds. The activities are permissible for bank rado, a de novo joint venture. The remaining 24.9 holding companies under the Board's Regulation Y, percent of Company's voting shares would be ac- 12 C.F.R. § 225.25(b)(12). Chase Manhattan's entry quired by American Bankers Life Assurance Compainto these activities will provide greater convenience ny ("American Bankers"), Miami, Florida. Company and, in the case of traveler's checks, provide an proposes to engage in the activity of underwriting, as additional source of competition in a field in which a reinsurer, credit life and credit accident and health limited number of independent organizations are ac- insurance written in connection with extensions of tive. Moreover, there is no evidence in the record that credit by Applicant and its lending subsidiaries. Comconsummation of this proposal would result in adverse pany's activities initially will be conducted at the effects, such as unsound banking practices, unfair Colorado offices of Applicant and its subsidiaries. competition, conflicts of interests, or an undue con- Notice of the application, affording interested percentration of resources. sons an opportunity to submit comments, has been Based upon the foregoing and other considerations duly published (50 Federal Register 26,269 (1985)). reflected in the record, the Board has determined that The time for filing comments has expired, and the the balance of the public interest factors it is required Board has considered the application and all comto consider under section 4(c)(8) is favorable. This ments received in light of the public interest factors set determination is subject to all of the conditions set forth in section 4(c)(8) of the Act. forth in Regulation Y, including sections 225.4(d) and Applicant, through Company, proposes to engage in 225.23(b), and to the Board's authority to require such insurance underwriting activities to the extent those modification or termination of the activities of a hold- activities are generally permissible for bank holding ing company or any of its subsidiaries as the Board companies in the Board's Regulation Y, 12 C.F.R. finds necessary to assure compliance with the provi- § 225.25(b)(9). Section 225.25(b)(9) of Regulation Y sions and purposes of the Act and the Board's regula- authorizes bank holding companies to underwrite tions and orders issued thereunder, or to prevent credit life insurance and credit accident and health evasion thereof. insurance that is directly related to extensions of credit The activity approved hereby shall be commenced by the bank holding company system. The regulation not later than three months after the effective date of requires that an applicant must offer premium rate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 907 reductions or equivalent public benefits in order to to be commenced de novo, no existing competition engage in this activity. (12 C.F.R. § 225.25(b)(9) n.7.) would be eliminated as a result of this proposal. Applicant has committed to offer the required rate Competitive considerations, therefore, are consistent reductions. with approval of the application. Applicant, with consolidated assets of $1.1 billion as Furthermore, the Board is satisfied that approval of of June 30, 1985, controls 15 banking subsidiaries this application does not inherently present the opporthroughout Colorado. Applicant also controls 3 non- tunity or potential for conflicts of interest or other bank subsidiaries engaged in leasing, mortgage lending anticompetitive practices. In this regard, Applicant and credit-related insurance agency activities. Ameri- has committed to abide by the anti-tying and disclocan Bankers, a direct insurance writer, offers credit sure provisions of the Bank Holding Company Act life and disability policies in 49 states through 6,000 Amendments of 1970, the Truth in Lending Act, and agents, most of which are financial institutions. the Board's Regulation Z, in its provision of insurance Under the proposed joint venture arrangement, services in connection with extensions of credit.2 American Bankers will have a management/servicing The Board also notes that the proposed activities are agreement with Company, as is common among bank limited in scope and that there are no other joint holding company credit reinsurance subsidiaries and ventures between Applicant and American Bankers. direct insurance writers. American Bankers will pro- Additionally, the subject of this joint venture reprevide Company with necessary actuarial expertise, sents a relatively minor portion of the business of each specialized assistance in filings with state insurance joint venturer. Consequently, the Board has no reason regulators and tax preparation, in return for a service to believe that Applicant or its subsidiaries would fee and dividends proportional to its investment. favor American Bankers in the provision of credit or Because this proposal involves the use of a joint other services. venture between a bank holding company and a non- Consummation of the proposal may be expected to banking company, the Board has analyzed the propos- result in public benefits inasmuch as an additional al with respect to its effects on existing and potential source of credit insurance will be available to Applicompetition between Applicant and American Bank- cant's customers. Moreover, Applicant has committed ers in the relevant market for the underwriting of to maintain its premium rates below any state prima credit life and credit accident and health insurance.1 facie rates for such insurance in conformance with the The de novo joint venture proposed by Applicant and Board's regulation. American Bankers is designed to take advantage of The financial and managerial resources of Applirecently enacted tax laws that may accord favorable cant, American Bankers, and Company are considered tax treatment to such insurance co-ventures, and not generally satisfactory, and there is no evidence in the to incur any competitive advantage or preclude com- record to indicate that consummation of the proposal petition. Applicant will redeem its co-venturer's share would result in undue concentration of resources, interest in Company should that tax advantage not unsound banking practices, or other adverse effects on materialize. Moreover, given the structure of the in- the public interest. dustry, in which credit insurance is almost invariably Based on the foregoing and other facts of record, the provided directly by the lender to its customers, it is Board concludes that the balance of the public interest unlikely that American Bankers would compete indefactors it must consider under section 4(c)(8) of the pendently to offer credit insurance to Applicant's Act favors approval of the application. Accordingly, customers. Accordingly, the Board concludes that the Board has determined that the application should consummation of the proposed joint venture would not be and hereby is approved. This determination is have any significant adverse effects on probable future subject to all the conditions set forth in Regulation Y, competition in any relevant market. As the activity is including those in sections 225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds 1. The Board has previously indicated its concerns regarding the necessary to assure compliance with the provisions potential for undue concentration of resources that could result from the combination in a joint venture of banking and nonbanking institu- and purposes of the Act and the Board's regulations tions. The Board also is concerned that joint ventures not lead to a matrix of relationships that could undermine the legally mandated separation of banking and commerce. See, e.g., Amsterdam-Rotterdam Bank, N.V., 70 FEDERAL RESERVE BULLETIN 835 (1984); Deutsche Bank AG, 67 FEDERAL RESERVE BULLETIN 449 (1981); and Maryland National Corporation, 65 FEDERAL RESERVE BULLETIN 2. These provisions are found at (12 U.S.C. § 1971 et seq.,) 271 (1979). (15 U.S.C. § 1601 et seq.,) and 12 C.F.R. Part 226, respectively. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

908 Federal Reserve Bulletin • November 1985 and orders issued thereunder, or to prevent evasion Board or by the Federal Reserve Bank of Kansas City, thereof.3 acting pursuant to delegated authority. The transaction shall be consummated not later than By order of the Board of Governors, effective three months after the effective date of this Order, September 27, 1985. unless such period is extended for good cause by the Voting for this action: Chairman Volcker and Governors Partee, Rice, and Seger. Abstaining from this action: Gover- 3. In that regard, the Board has sought public comment regarding nor Wallich. Absent and not voting: Governor Martin. the proposed elimination of the rate reduction requirement from this activity. 48 Federal Register 53,125 (1983). Any final action taken by JAMES MCAFEE the Board with respect to this rule would be applicable to Applicant and Company. [SEAL] Associate Secretary of the Board ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT 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 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date American Bancorp of Edmond, American Bank and Trust, Kansas City September 18, 1985 Inc., Edmond, Oklahoma Edmond, Oklahoma Cameron Bancshares, Inc., The First National Bank of Cleveland September 11, 1985 Cameron, West Virginia Cameron, Cameron, West Virginia Centra Financial Inc., Central Bank, Chicago September 13, 1985 West Allis, Wisconsin West Allis, Wisconsin Central Fidelity Banks, Inc., Central Fidelity Bank, N.A., Richmond September 4, 1985 Richmond, Virginia Richmond, Virginia Century Bancshares, Inc., Century National Bank, Richmond August 30, 1985 Washington, D.C. Washington, D.C. Citizens Fidelity Corporation, Central Kentucky Bancorp, Inc., St. Louis September 16, 1985 Louisville, Kentucky Elizabethtown, Kentucky Citizens Trust Bancorp, Inc., Citizens Trust, Chicago September 5, 1985 Ann Arbor, Michigan Ann Arbor, Michigan City Holding Company, The Bank of Cross Lanes, Richmond September 20, 1985 Charleston, West Virginia Cross Lanes, West Virginia Claiborne Holding Company, Claiborne County Bank, Atlanta August 28, 1985 Inc., Tazewell, Tennessee Tazewell, Tennessee Commercial Bancshares, Inc., Lenape State Bank, New York September 4, 1985 Jersey City, New Jersey West Deptford, New Jersey Crosby Bancshares, Inc., Crosby State Bank, Dallas August 21, 1985 Crosby, Texas Crosby, Texas DN Bankshares Inc., Dartmouth National Corporation, Boston September 20, 1985 Nashua, New Hampshire Hanover, New Hampshire Indian Head Banks Inc., Nashua, New Hampshire Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 909 Section 3—Continued Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Elkhorn Bankshares Corpora- State Bank of Elkhorn, Chicago September 19, 1985 tion, Elkhorn, Wisconsin Elkhorn, Wisconsin F & M Banchsares, Inc., Farmers & Merchants Bank, St. Louis September 19, 1985 Trezevant, Tennessee Trezevant, Tennessee F & M Merger Corporation, Winnebago County Bank, Chicago September 17, 1985 Kaukauna, Wisconsin Omro, Wisconsin First Atlanta Bancshares, Inc., The First National Bank of Dallas September 3, 1985 Atlanta, Texas Atlanta, Atlanta, Texas First Bancorp, First Bank and Trust Company, Chicago September 6, 1985 Indianapolis, Indiana Speedway, Indiana 1st Columbia Corp., Rio-Fall River Union Bank, Chicago September 11, 1985 Columbus, Wisconsin Fall River, Wisconsin First Dalhart Bancshares, Inc., First National Bank in Dalhart, Dallas September 4, 1985 Dalhart, Texas Dalhart, Texas First Indiana Bancshares, Inc., First National Bank of Clark St. Louis August 29, 1985 Charlestown, Indiana County, Charlestown, Indiana The First National Bank of Scottsburg, Scottsburg, Indiana First Leesport Bancorp, Inc., The First National Bank of Philadelphia September 17, 1985 Leesport, Pennsylvania Leesport, Leesport, Pennsylvania First Polk Bankshares, Inc., First National Bank of Polk Atlanta August 28, 1985 Cedartown, Georgia County, Cedartown, Georgia First Sarasota Bancorporation, City Commercial Bank, Atlanta September 6, 1985 Tampa, Florida Sarasota, Florida Freedom Valley Bancshares, Freedom Valley Bank, Philadelphia September 13, 1985 Ltd., West Chester, Pennsylvania West Chester, Pennsylvania General Bancshares Corpora- The Hillsboro National Bank, St. Louis September 9, 1985 tion, Hillsboro, Illinois St. Louis, Missouri Hi-Bancorp., Inc., New Century Bank, Chicago September 17, 1985 Highwood, Illinois Mundelein, Illinois Hillsboro Financial Corporation, The First National Bank of Kansas City September 20, 1985 Wichita, Kansas Hillsboro, Hillsboro, Kansas IB Bancshares, Inc., Independence Bank, Dallas September 6, 1985 Piano, Texas Piano, Texas The Indiana National Corpora- Lafayette National Corporation, Chicago September 17, 1985 tion, Lafayette, Indiana Indianapolis, Indiana J. Carl H. Bancorporation, Farmers Trust & Savings Bank, Chicago September 4, 1985 Earling, Iowa Earling, Iowa Lena Bancorp, Inc., Lena State Bank, Chicago September 23, 1985 Lena, Illinois Lena, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

910 Federal Reserve Bulletin • November 1985 Section 3—Continued Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Liberty Bay Financial Corpora- North Sound Bank, San Francisco September 20, 1985 tion, Poulsbo, Washington Poulsbo, Washington Lowndes Bancshares, Inc., Commercial Banking Company, Atlanta August 28, 1985 Hahira, Georgia Hahira, Georgia Mid-South Bancorp, Inc., Adairville Banking Company, St. Louis August 28, 1985 Franklin, Kentucky Adairville, Kentucky MNet Corp, MBank USA, Dallas September 9, 1985 Dallas, Texas Wilmington, Delaware The Nashville Adel Banking Company, Atlanta September 6, 1985 Holding Company, Adel, Georgia Nashville, Georgia National Banc of Commerce The First National Bank of Belle, Richmond September 13, 1985 Company, Belle, West Virginia Charleston, West Virginia The National Bancorp of Ken- The National Bank of Cynthiana, Cleveland September 18, 1985 tucky, Inc., Cynthiana, Kentucky Lexington, Kentucky The First National Bank of Falmouth, Falmouth, Kentucky New East Bancshares, Inc., First National Bank of Jasper, Dallas August 30, 1985 Livingston, Texas Jasper, Texas East Texas Bancshares, Inc., Livingston, Texas Peoples First Corporation, First Liberty Bank of Calvert St. Louis September 11, 1985 Paducah, Kentucky City, Calvert City, Kentucky Pioneer Bank Shares, Inc., Pioneer National Bank of Duluth, Minneapolis August 29, 1985 Duluth, Minnesota Duluth, Minnesota Pilot Point Bancorp, Inc., Pilot Point Bancshares Corpora- Dallas September 3, 1985 Pilot Point, Texas tion, Pilot Point, Texas Republic National Bancorp, Republic National Bank, San Francisco September 6, 1985 Inc., Phoenix, Arizona Phoenix, Arizona Rhea County Financial Corpora- First Bank of Rhea County, Atlanta September 18, 1985 tion, Spring City, Tennessee Spring City, Tennessee Richmond Bank Holding Co., State Bank of Richmond, Minneapolis September 13, 1985 Richmond, Minnesota Richmond, Minnesota Rock Financial Corporation, North Plainfield State Bank, New York September 13, 1985 North Plainfield, New Jersey North Plainfield, New Jersey Scott Bancshares, Inc., State Bank of Niantic, Chicago September 23, 1985 Bethany, Illinois Niantic, Illinois SJNB Financial Corp., Tri-Valley Bancorp, San Francisco September 19, 1985 San Jose, California Dublin, California Southwest Financial Corpora- Orland Park Plaza Bank, Chicago September 18, 1985 tion, Orland Park, Illinois Evergreen Park, Illinois St. Charles Bancshares, Inc., First National Bank of Blooming Minneapolis September 18, 1985 St. Charles, Minnesota Prairie, Digitized for FRASER Blooming Prairie, Minnesota http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 911 Section 3—Continued Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date The Stockmen's Bancorp, The Stockmen's Bank, San Francisco September 12, 1985 Kingman, Arizona Kingman, Arizona Town & Country Financial, The Bank of Dundee, St. Louis September 20, 1985 Inc., Dundee, Kentucky Dundee, Kentucky United Bancshares, Inc., The Union Bank Company, Cleveland September 4, 1985 Columbus Grove, Ohio Columbus Grove, Ohio University State Bank Corpora- University State Bank, Atlanta September 6, 1985 tion, Tampa, Florida Tampa, Florida USBANCORP, Inc., McKeesport National Corpora- Philadelphia September 4, 1985 Johnstown, Pennsylvania tion, McKeesport, Pennsylvania Watford City Bancshares, Inc., First International Bank of Minneapolis September 6, 1985 Watford, North Dakota Watford City, Watford City, North Dakota West Bancorp, Inc., Bank of Westmont, Chicago September 6, 1985 Westmont, Illinois Westmont, Illinois Section 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Chase County Bankshares, Inc. sale of general insurance Kansas City September 3, 1985 Strong City, Kansas Commerce Bancshares, Inc., Commerce Brokerage Services, Kansas City September 13, 1985 Kansas City, Missouri Inc., Kansas City, Missouri MCorp, First Chicago Data Corporation, Dallas August 30, 1985 Dallas, Texas Chicago, Illinois MCorp Financial, Inc., Wilmington, Delaware MCorp, General Electric Information Dallas August 30, 1985 Dallas, Texas Services Company, MCorp Financial, Inc., Rockville, Maryland Wilmington, Delaware Section 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Cidadel Bankshares, Inc., Montgomery County Financial Kansas City August 30, 1985 Wichita, Kansas Corp., Augusta Bank and Trust Independence, Kansas Company, credit-related insurance activities Augusta, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

912 Federal Reserve Bulletin • November 1985 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. Independent Community Bankers Associaton of South Dimension Financial Corporation v. Board of Gover- Dakota v. Board of Governors, No. 84-1496 nors, No. 84-1274 (U.S., filed Feb. 6, 1985). (D.D.C., filed Aug. 7, 1985). Lewis v. Volcker, et al., No. C-l-85-0099 (S.D. Ohio, Florida Bankers Association, et al. v. Board of Gover- filed Jan. 14, 1985). nors, No. 85-193 (U.S., filed Aug. 5, 1985). Brown v. United States Congress, et al., No. 84-2887- Populist Party of Iowa v. Federal Reserve Board, No. 6(IG) (S.D. Cal., filed Dec. 7, 1984). 85-626-B (S.D. Iowa, filed Aug. 2, 1985). Seattle Bancorporation, et al. v. Board of Governors, John R. Urwyler, et al. v. Internal Revenue Service, No 84-7535 (9th Cir., filed Aug. 15, 1984). et al., No. CV-F-85-402 REC (E.D. Cal., filed July Melcher v. Federal Open Market Committee, No. 84- 18, 1985). 1335 (D.D.C., filed, Apr. 30, 1984). Broad Street National Bank of Trenton v. Board of State of Ohio v. Board of Governors, No. 84-1270 Governors, No. 85-3387 (3d Cir., filed July 17, (10th Cir., filed Jan. 30, 1984). 1985). Colorado Industrial Bankers Association v. Board of Wight, et al. v. Internal Revenue Service, et al., No. Governors, No. 84-1122 (10th Cir., filed Jan. 27, CIV S-85-0012 MLS (E.D. Cal., filed July 12,1985). 1984). Cook v. Spillman, et al., No. CIV S-85-0953 EJG First Bancorporation v. Board of Governors, No. 84- (E.D. Cal. filed July 10, 1985). 1011 (10th Cir., filed Jan. 5, 1984). Calhoun, et al. v. Board of Governors, No. 85-1750 Oklahoma Bankers Association v. Federal Reserve (D.D.C., filed May 30, 1985). Board, No. 83-2591 (10th Cir., filed Dec. 13, 1983). Florida Bankers Association v. Board of Governors, The Committee For Monetary Reform, et al. v. Board No. 84-3883 and No. 84-3884 (11th Cir., filed Feb. of Governors, No. 84-5067 (D.D.C., filed June 16, 15, 1985). 1983). Florida Department of Banking v. Board of Gover- Securities Industry Association v. Board of Governors, No. 84-3831 (11th Cir., filed Feb. 15, 1985), nors, No. 80-2614 (D.C. Cir., filed Oct. 24. 1980), and No. 84-3832 (11th Cir., filed Feb. 15, 1985). and No. 80-2730 (D.C. Cir., filed Oct. 24, 1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics 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 A3 3 Federal and federally sponsored credit MONETARY AND CREDIT AGGREGATES agencies—Debt outstanding A12 Aggregate reserves of depository institutions and monetary base SECURITIES MARKETS AND A13 Money stock, liquid assets, and debt measures CORPORATE FINANCE A15 Bank debits and deposit turnover A16 Loans and securities—All commercial banks A34 New security issues—State and local governments and corporations A35 Open-end investment companies—Net sales and COMMERCIAL BANKING INSTITUTIONS asset position 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 • November 1985 A35 Corporate profits and their distribution A54 Foreign official assets held at Federal Reserve A36 Nonfinancial corporations—Assets and Banks liabilities A55 Foreign branches of U.S. banks—Balance sheet A36 Total nonfarm business expenditures on new data plant and equipment A57 Selected U.S. liabilities to foreign official A37 Domestic finance companies—Assets and institutions liabilities and business credit REPORTED BY BANKS IN THE UNITED STATES REAL ESTATE A57 Liabilities to and claims on foreigners A38 Mortgage markets A58 Liabilities to foreigners A39 Mortgage debt outstanding A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on foreigners CONSUMER INSTALLMENT CREDIT A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined A40 Total outstanding and net change domestic offices and foreign branches A41 Terms REPORTED BY NONBANKING BUSINESS FLOW OF FUNDS ENTERPRISES IN THE UNITED STATES A42 Funds raised in U.S. credit markets A63 Liabilities to unaffiliated foreigners A43 Direct and indirect sources of funds to credit A64 Claims on unaffiliated foreigners markets SECURITIES HOLDINGS AND TRANSACTIONS Domestic Nonfinancial Statistics A65 Foreign transactions in securities A66 Marketable U.S. Treasury bonds and notes— SELECTED MEASURES Foreign transactions A44 Nonfinancial business activity—Selected measures INTEREST AND EXCHANGE RATES A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization A67 Discount rates of foreign central banks A47 Industrial production—Indexes and gross value A67 Foreign short-term interest rates A49 Housing and construction A68 Foreign exchange rates A50 Consumer and producer prices A51 Gross national product and income A52 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables International Statistics SPECIAL TABLES SUMMARY STATISTICS A70 Terms of lending at commercial banks, A53 U.S. international transactions—Summary August 1985 A54 U.S. foreign trade A76 Assets and liabilities of foreign banks, A54 U.S. reserve assets March 31, 1985 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 (annual rates of change, seasonally adjusted in percent)1 IItteemm 1984 1985 1985 Q3 Q4 Q1 Q2 Apr. May June July Aug. Reserves of depository institutions2 1 Total 6.9 3.8 17.4 12.2 7.1 18.1 24.8 12.2 16.7 2 Required 6.7 3.0 16.9 12.3 8.1 16.4 22.3 13.9 17.6 3 Nonborrowed -44.7 36.3 57.3 14.1 15.7 18.3 29.5 15.4 18.1 4 Monetary base3 7.1 4.7 8.2 7.5 3.6 10.6 13.5 6.8 13.8 Concepts of money, liquid assets, and debt4 5 Ml 4.5 3.2 10.6 10.2 5.9 14.0 19.8 9.3 20.5 6 M2 6.8 9.1 12.0 5.3 -1.0 8.6 13.8' 8.5' 11.2 7 M3 9.5 11.0 10.7 5.2 .3 7.6' 10.5' 4.2 8.6 8 L 11.6 9.6 10.0 n.a. 1.0 6.0 n.a. n.a. n.a. 9 Debt 13.4' 13.9' 13.5' 11.7' 11.9' 12.3' 11.8' 11.9' n.a. Nontransaction components 10 In M23 7.6 10.9 12.5 3.7 -3.0 6.9 11.9 8.2 8.2 11 In M3 only6 20.5 18.7 5.5 4.8' 5.0 4.0' -1.9' -12.6' -1.3 Time and savings deposits Commercial banks 12 Savings7 -5.6 -10.4 -8.7 -1.7 -7.0 8.0 14.9 12.8 9.7 13 Small-denomination time8 13.4 6.9 -1.8 6.5 15.0 7.4 2.2 -7.1 -13.3 14 Large-denomination time9-10 19.3 12.2 2.6 8.3 16.0 -4.0 -19.4 -7.6 9.0 Thrift institutions 15 Savings7 -6.5 -6.6 2.2 3.1 -.7 4.3 9.2 18.3 22.9 16 Small-denomination time 17.1 15.2 1.7 3.9 4.8 10.4' 3.3' -7.9' -13.9 17 Large-denomination time9 37.8 29.8 21.0 2.6 1.6 13.2 2.3 -16.9 -3.9 Debt components4 18 Federal 15.5' 16.0' 15.3' 12.6' 12.1' 15.8' 13.9' 16.0 n.a. 19 Nonfederal 12.8' 13.3' 13.0' 11.5' 11.9' 11.2 11.1 10.7 n.a. 20 Total loans and securities at commercial banks" 9.1 9.2' 9.9 9.6 4.7 13.3 9.3 10.1' 6.9 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 Nonfinancial Statistics • November 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 Factors 1985 1985 June July Aug. July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 188,651 191,521 190,759 193,595 190,640 189,176 190,535 191,539 190,147 189,887 2 U.S. government securities1 166,584 168,803 168,440 170,858 168,347 166,630 167,740 168,361 168,551 168,429 3 Bought outright 166,451 168,183 165,378 169,555 168,347 166,630 167,740 168,361 168,551 168,154 4 Held under repurchase agreements 133 620 62 1,303 0 0 0 0 0 275 5 Federal agency obligations 8,325 8,448 8,249 8,546 8,303 8,296 8,257 8,244 8,227 8,278 6 Bought outright 8,321 8,302 8,238 8,303 8,303 8,296 8,257 8,244 8,227 8,227 7 Held under repurchase agreements 4 146 11 243 0 0 0 0 0 51 8 Acceptances 0 0 0 0 0 0 0 0 0 0 9 Loans 1,227 1,180 1,109 1,171 884 950 835 1,144 1,079 1,096 10 Float 600 703 488 662 658 620 589 572 659 148 11 Other Federal Reserve assets 11,915 12,387 12,473 12,357 12,448 12,679 13,114 13,219 11,631 11,935 12 Gold stock 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 13 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 14 Treasury currency outstanding 16,749 16,794 16,843 16,791 16,801 16,811 16,819 16,833 16,847 16,861 ABSORBING RESERVE FUNDS 15 Currency in circulation 185,414 187,579 187,860 188,057 187,037 186,560 187,683 188,337 187,902 187,245 16 Treasury cash holdings 596 577 552 577 574 574 556 553 550 550 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 2,874 3,918 2,925 3,219 3,582 3,725 2,798 3,032 3,182 2,436 18 Foreign 229 228 204 203 240 204 200 209 202 198 19 Service-related balances and adjustments 1,657 1,660 1,661 1,641 1,845 1,723 1,617 1,607 1,650 1,654 20 Other 470 367 485 513 353 298 510 413 661 394 21 Other Federal Reserve liabilities and capital 6,301 6,243 6,238 6,297 6,214 6,211 6,429 6,216 6,165 6,150 22 Reserve balances with Federal Reserve Banks2 23,568 23,451 23,386 25,588 23,303 22,399 23,270 23,712 22,389 23,829 End-of-month figures Wednesday figures 1985 1985 June July Aug. July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 191,442 190,923 192,693 194,850 189,160 190,923 190,800 194,358 190,009 191,952 24 U.S. government securities1 169,110 167,095 170,109 169,595 166,394 167,095 167,580 169,474 167,837 169,862 25 Bought outright 169,110 167,095 170,109 169,595 166,394 167,095 167,580 169,474 167,837 167,934 26 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 1,928 27 Federal agency obligations 8,303 8,257 8,227 8,303 8,303 8,257 8,257 8,227 8,227 8,581 28 Bought outright 8,303 8,257 8,227 8,303 8,303 8,257 8,257 8,227 8,227 8,227 29 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 354 30 Acceptances 0 0 0 0 0 0 0 0 0 0 31 Loans 1,338 1,567 2,068 4,128 915 1,567 861 2,397 1,441 1,098 32 Float 262 -571 -152 395 1,018 -571 892 282 517 172 33 Other Federal Reserve assets 12,429 14,575 12,441 12,429 12,530 14,575 13,210 13,978 11,987 12,239 34 Gold stock 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 35 Special drawing rights certificate account ... 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 36 Treasury currency outstanding 16,770 16,817 16,873 16,800 16,810 16,820 16,831 16,845 16,859 16,873 ABSORBING RESERVE FUNDS 37 Currency in circulation 185,886 187,040 188,553 187,626 186,687 187,042 188,231 188,331 187,601 187,635 38 Treasury cash holdings 588 577 548 574 574 577 551 550 550 548 Deposits, other than reserve balances with Federal Reserve Banks 39 Treasury 3,288 2,656 3,656 3,150 2,882 2,656 3,847 2,754 4,172 2,561 40 Foreign 310 274 223 189 217 274 259 215 198 188 41 Service-related balances and adjustments .... 1,348 1,395 1,435 1,361 1,395 1,395 1,407 1,407 1,421 1,421 42 Other 321 323 389 531 294 323 418 346 413 423 43 Other Federal Reserve liabilities and capital 6,291 6,325 6,240 6,065 6,031 6,325 6,007 6,024 5,987 5,994 44 Reserve balances with Federal Reserve Banks2 25,888 24,858 24,230 27,861 23,597 24,858 22,619 27,284 22,235 25,763 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 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1982 1983 1984 1985 Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June' July 1 Reserve balances with Reserve Banks' 24,939 21,138 21,738 21,577 20,416 22,065 23,217 22,385 23,367 23,503 2 Total vault cash2 20,392 20,755 22,316 23,044 23,927 21,863 21,567 21,898 22,180 22,530 3 Vault cash used to satisfy reserve requirements3 . 17,049 17,908 18,958 19,547 19,857 18,429 18,435 18,666 18,985 19,300 4 Surplus vault cash4 3,343 2,847 3,358 3,497 4,070 3,434 3,132 3,231 3,196 3,230 5 Total reserves5 41,853 38,894 40,696 41,125 40,273 40,494 41,652 41,051 42,352 42,803 6 Required reserves 41,353 38,333 39,843 40,380 39,370 39,728 40,914 40,247 41,447 41,948 7 Excess reserve balances at Reserve Banks6 500 561 853 745 903 766 738 804 905 855 8 Total borrowings at Reserve Banks 697 774 3,186 1,395 1,289 1,593 1,323 1,334 1,205 1,107 9 Seasonal borrowings at Reserve Banks 33 96 113 62 71 88 135 165 151 167 10 Extended credit at Reserve Banks7 187 2 2,604 1,050 803 1,059 868 534 665 507 Biweekly averages of daily figuresf or weeks ending 1985 Apr. 24 May 8 May 22 June 5 June 19 July 3' July 17 July 31 Aug. 14 Aug. 28p 11 Reserve balances with Reserve Banks1 23,520 22,751 22,032 22,610 23,861 23,084 24,256 22,840 23,468 23,127 12 Total vault cash2 21,880 21,327 22,357 21,692 21,688 23,029 22,019 22,935 22,829 23,052 13 Vault cash used to satisfy reserve requirements3. 18,764 18,181' 19,068 18,472'' 18,724 19,550 19,043 19,505 19,550 19,686 14 Surplus vault cash4 3,116 3,145 3,289 3,220 2,964 3,480 2,977 3,431 3,280 3,366 15 Total reserves5 42,284 40,933 41,100 41,082 42,585 42,633 43,298 42,344 43,018 42,813 16 Required reserves 41,400 40,234 40,248 40,260 41,861 41,461 42,608 41,392 42,280 41,842 17 Excess reserve balances at Reserve Banks6 884 699 852 823 724 1,172 690 953 738 971 18 Total borrowings at Reserve Banks 1,158 953 1,434 1,518 1,123 1,167 1,284 917 990 1,088 19 Seasonal borrowings at Reserve Banks 131 169 160 171 142' 153 152 185 224 225 20 Extended credit at Reserve Banks7 766 396 369 914 612' 620 483 506 509 610 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 July 22 July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 One day and continuing contract 1 Commercial banks in United States 61,686 57,442 64,462 63,640' 63,841 58,282 58,562 68,597 65,553 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 31,360 28,774 28,305 29,230' 29,258 28,111 28,068 26,700 27,636 3 Nonbank securities dealers 9,753 8,963 9,332 8,766 10,776 10,228 8,754 10,060 9,738 4 All other 25,188 26,228 26,057' 26,034' 25,572 25,649 26,307 25,236 25,193 All other maturities 5 Commercial banks in United States 8,900 8,943 8,851 9,010 8,693 9,308 9,759 9,402 9,751 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 7,600 7,489 7,644 7,527 7,544 7,693 7,701 7,822 7,735 7 Nonbank securities dealers 8,288 8,682 9,037 9,470 9,602 9,290 10,563 9,801 10,172 8 All other 7,281 7,094 6,690' 7,086' 7,368 7,574 8,325 8,079 7,901 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 30,133 26,750 30,197 28,062' 29,686 27,009 29,438 31,030 30,163 10 Nonbank securities dealers 7,504 7,513' 7,756' 7,056' 7,357 7,578 6,728 8,126 8,286 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 Nonfinancial Statistics • November 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 9/25/85 date rate 9/25/85 rate 9/25/85 rate 9/25/85 rate Boston IVi 5/20/85 71/2 8VI 9 9'/2 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... 7V2 5 5/ / 2 2 1 0 / / 8 8 5 5 m 8 Vz 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 date A le l v l e F l) . — R. Ba o n f k Effective date A le ll v e F l . s R - . Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. IVI V* In effect Dec. 31, 1973 71/2 July 3 7-7 71/4 1981— May 8 14 14 1974— Apr. 3 2 0 5 7 8 '/ i-8 8 8 Aug. 2 1 1 0 7V1/A4 7 7 1 3 / / 4 4 Nov. 2 6 13 1 - 3 1 4 1 1 3 3 1975—J D a e n c . . 1 1 9 6 6 0 7 V 7 L/ V 3 / 4 / t 4 -7 A - -8 ' V / 4 A 7 7 7 7 W» 3 3 3 / / / / 4 4 4 4 i O S N e o c p t v . t . . 2 2 1 3 2 0 1 6 8 8 !49 - 8 8 - 8 9 VV V> 2 / i >i 8% 9 9 % ' / l 2 / V V 2 l i 1982— J D A u u e l c g y . . 2 2 4 3 2 0 l \ l \ - V l 1 l 2 ' i / t - ! \ 2 1 H 1 U 2 1 V l/2 2 Feb. 2 5 4 63/ 7 4 1 - / 7 4 ' /4 63/4 Julv 20 10 10 1 3 6 1 1 0 1l / i l 1 O 1 ' /i Mar. 1 7 0 6'/ 6 4 3 -6 /4 3 /4 6 6' 3 / / 4 4 Aug. 2 1 0 7 IOW-IO/V22 \m 3 2 0 7 10- 1 1 0 0 1/! 1 1 0 0 May 2 1 1 3 4 6 6- 6 6 6 1 1 /4 /4 6 6 6 ' /4 S O e c p t. t . 2 1 8 1 9 lO 1 1 1 ' 1 / - i 1 -l 2 1 1 1 1 2 1 1 O N c o t v . . 2 1 1 2 2 3 9 9 V9i - —V 9 1 1 02 / 2 99 9 L V/2 2 10 12 12 26 9 9 1976— N Ja o n v . . 2 2 1 2 3 9 5 5 ' V 5A' 2 /2 - - 6 5 '/2 5 5 5> '/ /l 4 2/ l Feb. 1 1 9 5 12 1 - 3 1 3 1 1 3 3 Dec. 1 1 1 4 7 5 8 8 8' ' / / 2 2 >- - 9 9 /2 8 8 9 ' V A 2 26 5'/4 5V4 May 29 12-13 13 1977— Aug. 3 3 1 0 5 5 ' ' / / 4 4 - - 5 5 3 3 / / 4 4 5 53 ' /4 A June 3 1 1 0 3 6 11 1 1 - 2 1 1 2 1 1 1 2 1 1 1984— N Ap o r v . . 2 1 1 9 3 8 8' ' /2 /9 - 2 9 -9 9 9 8' /> Sept. 2 53/4 53/4 July 28 10-11 10 26 8'/> 8>/» Oct. 26 6 6 29 10 10 Dec. 24 8 8 Sept. 26 11 11 m-8 1978— Jan. 20 9 6- 6 6 '/ ' 2 /2 6 6 V '/> i D N e o c v . . 1 5 7 12 1 - 2 1 3 1 1 3 2 1985— May 2 2 4 0 IVI 7V<//>i May 1 1 2 1 6V 7 2 —7 7 7 5 13 1 - 3 1 4 1 1 3 4 In effect Sept. 25, 1985 m m 1. A temporary simplified seasonal program was established on Mar. 8, 1985, Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980, and the interest rate was set at 8V2 percent at that time. On May 20 this rate was 1981, and 1982. lowered to 8 percent. In 1980 and 1981, the Federal Reserve applied a surcharge to short-term 2. Applicable to advances when exceptional circumstances or practices involve adjustment credit borrowings by institutions with deposits of $500 million or more only a particular depository institution and to advances when an institution is that had borrowed in successive weeks or in more than 4 weeks in a calendar under sustained liquidity pressures. As an alternative, for loans outstanding for quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes 1980. There was no surcharge until Nov. 17, 1980, when a 2 percent surcharge was into account rates on market sources of funds, but in no case will the rate charged adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and be less than the basic rate plus one percentage point. Where credit provided to a to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective particular depository institution is anticipated to be outstanding for an unusually Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for prolonged period and in relatively large amounts, the time period in which each applying the surcharge was changed from a calendar quarter to a moving 13-week rate under this structure is applied may be shortened. See section 201.3(b)(2) of period. The surcharge was eliminated on Nov. 17, 1981. Regulation A. 3. Rates for short-term adjustment credit. For description and earlier data see the following publications of the Board of Governors: Banking and Monetary 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 TTyyppee ooff ddeeppoossiitt,, aanndd Monetary Control Act TTyyppee ooff ddeeppoossiitt,, aanndd Monetary Control Act6 ddeeppoossiitt iinntteerrvvaall ddeeppoossiitt iinntteerrvvaall55 Percent Effective date Percent Effective date Net demand2 Net transaction accounts7 8 7 12/30/76 $0-$29.8 million 3 1/1/85 9 Vi 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 16'/4 12/30/76 By original maturity Less than l'/i years 3 10/6/83 Time and savings2-3 1 '/2 years or more 0 10/6/83 SSaavviinnggss 3 3/16/67 Eurocurrency liabilities Time4 3 11/13/80 $0 million-$5 million, by maturity 30-179 days 3 3/16/67 180 days to 4 years 2j/2 1/8/76 4 years or more 1 10/30/75 Over $5 million, by maturity 30-179 days 6 12/12/74 180 days to 4 years 2>/4 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 IVi 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 • November 1985 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions1 Percent per annum Savings and loan associations and Commercial banks mutual savings banks (thrift institutions)1 In effect Sept. 30, 1985 In effect Sept. 30, 1985 Type of deposit Percent Effective date Percent Effective date 1 Savings 5Vi 1/1/84 5'/2 7/1/79 2 Negotiable order of withdrawal accounts 51/4 12/31/80 5'/4 12/31/80 3 Negotiable order of withdrawal accounts of $1,000 or more2 1/5/83 1/5/83 4 Money market deposit account2 <3) 12/14/82 (3) 12/14/82 Time accounts 5 7-31 days of less than $1,0004 5'/2 1/1/84 51/2 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 1985 TTyyppee ooff ttrraannssaaccttiioonn 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May June July U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,067 18,888 20,036 0 2,976 916 6,026 227744 22,,009999 00 2 Gross sales 8,369 3,420 8,557 2,668 214 554 0 417 0 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 3,000 2,400 7,700 1,600 400 500 0 800 0 200 Others within 1 year 5 Gross purchases 312 484 1,126 0 0 961 245 0 00 00 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shift 17,295 18,887 16,354 596 1,987 1,299 1,129 2,443 1,312 1,238 8 Exchange -14,164 -16,553 -20,840 -625 -2,739 0 -1,463 -2,945 0 -1,778 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 0 465 884466 00 00 00 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -14,524 -15,533 -13,709 -596 -1,902 -1,299 -1,114 -2,101 -1,312 -1,153 13 Exchange 11,804 11,641 16,039 625 1,645 0 1,463 1,940 0 1,778 5 to 10 years 14 Gross purchases 388 890 536 0 0 0 110088 00 00 00 15 Gross sales 0 0 300 100 0 0 0 0 0 0 16 Maturity shift -2,172 -2,450 -2,371 0 -54 0 -16 42 0 -85 17 Exchange 2,128 2,950 2,750 0 600 0 0 600 0 0 Over 10 years 18 Gross purchases 307 383 441 0 0 0 0 00 00 00 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -601 -904 -275 0 -30 0 0 -384 0 0 21 Exchange 234 1,962 2,052 0 493 0 0 405 0 0 All maturities 22 Gross purchases 19,870 22,540 23,476 0 2,976 2,343 7,321 274 22,,009999 0 23 Gross sales 8,369 3,420 7,553 2,768 214 554 0 417 0 0 24 Redemptions 3,000 2,487 7,700 1,600 400 500 0 800 0 200 Matched transactions 543,804 578,591 808,986 66,668 57,076 54,718 65,845 78,870 81,016 6600,,998800 26 Gross purchases 543,173 576,908 810,432 66,367 57,283 57,288 64,001 77,597 83,782 59,165 Repurchase agreements 27 Gross purchases 130,774 105,971 139,441 20,225 19,584 4,922 11,540 2211,,771166 22,,880011 1100,,448866 28 Gross sales 130,286 108,291 139,019 21,852 17,077 7,429 4,088 29,168 2,801 10,486 29 Net change in U.S. government securities 8,358 12,631 8,908 -6,295 5,077 1,351 12,931 -9,668 4,865 -2,015 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 00 00 00 00 00 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 189 292 256 0 17 0 0 8 60 46 Repurchase agreements 33 Gross purchases 18,957 8,833 1,205 1,463 2,428 444455 998833 11,,333366 112200 22,,443399 34 Gross sales 18,638 9,213 817 1,851 2,048 825 452 1,867 120 2,439 35 Net change in federal agency obligations 130 -672 132 388 363 -380 531 -540 -60 -46 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 -6,683 5,440 971 13,462 -10,208 4,805 -2,061 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 • November 1985 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month AAccccoouunntt 1985 1985 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 June July Aug. Consolidated condition statement ASSETS 1 Gold certificate account 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 2 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 3 Coin 486 486 488 491 487 474 486 484 Loans 4 To depository institutions 1,567 861 2,397 1,441 1,098 1,338 1,567 2,068 5 Other 0 0 0 0 0 0 0 0 Acceptances—Bought outright 6 Held under repurchase agreements 0 0 00 00 00 00 00 00 Federal agency obligations 7 Bought outright 8,257 8,257 8,227 8,227 8,227 88,,330033 8,257 8,227 8 Held under repurchase agreements 0 0 0 0 354 0 0 0 U.S. government securities Bought outright 9 Bills 76,286 76,759 78,653 77,016 77,113 78,301 76,286 79,288 10 Notes 67,066 67,072 67,072 66,422 66,422 67,066 67,066 66,422 11 Bonds 23,743 23,749 23,749 24,399 24,399 23,743 23,743 24,399 12 Total bought outright1 167,095 167,580 169,474 167,837 167,934 169,110 167,095 170,109 13 Held under repurchase agreements 0 0 0 0 1,928 0 0 0 14 Total U.S. government securities 167,095 167,580 169,474 167,837 169,862 169,110 167,095 170,109 15 Total loans and securities 176,919 176,698 180,098 177,505 179,541 178,751 176,919 180,404 16 Cash items in process of collection 7,394 6,838 6,234 6,342 5,835 6,277 7,394 5,445 17 Bank premises 588 589 589 589 590 585 588 590 Other assets 18 Denominated in foreign currencies2 4,493 4,496 4,499 4,502 4,508 4,149 4,493 4,591 19 All other3 9,494 8,125 8,890 6,896 7,141 7,695 9,494 7,260 20 Total assets 215,082 212,940 216,506 212,033 213,810 213,639 215,082 214,482 LIABILITIES 21 Federal Reserve notes 171,286 172,437 172,524 171,782 171,797 170,178 171,286 172,712 Deposits 22 To depository institutions 26,253 24,026 28,691 23,656 27,184 27,236 26,253 25,665 23 U.S. Treasury—General account 2,656 3,847 2,754 4,172 2,561 3,288 2,656 3,656 24 Foreign—Official accounts 274 259 215 198 188 310 274 223 25 Other 323 418 346 413 423 321 323 389 26 Total deposits 29,506 28,550 32,006 28,439 30,356 31,155 29,506 29,933 27 Deferred availability cash items 7,965 5,946 5,952 5,825 5,663 6,015 7,965 5,597 28 Other liabilities and accrued dividends4 2,212 2,224 2,217 2,182 2,182 2,315 2,212 2,232 29 Total liabilities 210,969 209,157 212,699 208,228 209,998 209,663 210,969 210,474 CAPITAL ACCOUNTS 30 Capital paid in 1,741 1,741 1,744 1,748 1,748 1,721 1,741 1,748 31 Surplus 1,626 1,626 1,626 1,626 1,626 1,626 1,626 1,626 32 Other capital accounts 746 416 437 431 438 629 746 634 33 Total liabilities and capital accounts 215,082 212,940 216,506 212,033 213,810 213,639 215,082 214,482 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 125,643 124,984 124,437 124,800 124,059 112211,,227766 125,643 124,404 Federal Reserve note statement 35 Federal Reserve notes outstanding 201,968 202,913 203,802 204,277 204,535 200,234 201,968 204,511 36 LESS: Held by bank 30,682 30,476 31,278 32,495 32,738 30,056 30,682 31,799 37 Federal Reserve notes, net 171,286 172,437 172,524 171,782 171,797 170,178 171,286 172,712 Collateral held against notes net: 38 Gold certificate account 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 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 155,578 156,729 156,816 156,074 156,089 154,470 155,578 157,004 42 Total collateral 171,286 172,437 172,524 171,782 171,797 170,178 171,286 172,712 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 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 June 28 July 31 Aug. 30 1,567 861 2,397 1,441 1,098 1,338 1,567 2,153 2 Within 15 days 1,494 740 2,272 1,401 1,079 937 1,494 2,074 4 3 9 1 1 6 d d a a y y s s t t o o 9 1 0 y e d a a r y s 7 0 3 11 2 9 12 3 2 4 0 0 1 0 9 40 0 1 7 0 3 7 0 9 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 167,095 167,580 169,474 167,837 169,862 169,110 167,095 170,109 10 Within 15 days1 9,291 10,678 10,533 8,690 10,845 7,604 9,291 6,209 11 16 days to 90 days 35,609 37,667 37,750 35,025 34,680 39,719 35,609 35,438 12 91 days to 1 year 49,831 46,860 48,816 52,558 52,773 48,651 49,831 56,898 1 1 3 4 O O v v e e r r 5 1 y y e e a a r r s t t o o 5 1 0 y e y a e r a s r s 2 3 1 0 6 5 , , , 8 3 1 1 5 9 3 5 6 2 3 1 0 6 5 , , , 8 3 2 1 6 0 3 1 1 2 3 1 0 6 5 , , , 3 8 2 6 0 1 1 1 3 2 3 1 1 5 4 , , , 4 2 8 3 6 6 5 3 6 2 3 1 1 5 4 , , , 4 2 8 3 6 6 5 3 6 3 2 1 0 7 5 , , ,2 8 0 8 1 4 1 3 2 2 3 1 0 6 5 , , , 8 3 1 5 1 9 5 3 6 2 3 1 1 5 4 , , , 4 2 8 3 6 6 5 3 6 16 Federal agency obligations—Total 8,257 8,257 8,227 8,227 8,581 8,303 8,257 8,227 17 Within 15 days1 120 30 97 210 566 159 120 213 2 2 1 1 0 1 9 8 O 9 O 1 1 6 v v e e d d r r a a y y 5 1 s s y y t t e o e o a a r 9 r 1 s 0 t t y o d o e a a 5 1 y r y 0 s e y a e r a s r s 4 1 1 , , , 0 7 6 2 3 8 8 3 4 9 0 3 5 0 9 4 1 1 , , , 0 7 7 2 3 8 8 1 4 9 0 9 9 0 9 3 1 1 , , , 9 6 8 2 3 9 7 2 4 9 0 9 2 0 9 3 1 1 , , , 9 8 5 2 3 9 7 0 4 9 0 9 9 0 9 4 1 1 , , , 0 8 2 4 3 7 1 5 7 9 0 3 7 6 9 4 1 1 , , , 0 6 8 2 3 2 7 1 3 9 3 7 3 2 9 4 1 1 , , , 0 6 7 2 3 8 8 3 4 9 0 3 5 0 9 4 1 1 , , , 0 8 4 2 3 7 1 7 5 9 0 3 5 7 9 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 • November 1985 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1985 - 1981 1982 1983 1984 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Aug. Seasonally adjusted ADJUSTED FOR 1 Total reserves2 32.10 34.28 36.14 39.08 39.64 40.43 40.47 40.71 41.32 42.18 42.61 43.20 2 Nonborrowed reserves 31.46 33.65 35.36 35.90 38.24 39.14 38.88 39.39 39.99 40.97 41.50 42.13 3 Nonborrowed reserves plus extended credit3 31.61 33.83 35.37 38.50 39.29 39.95 39.94 40.26 40.52 41.64 42.01 42.70 4 Required reserves 31.78 33.78 35.58 38.23 38.89 39.53 39.71 39.97 40.52 41.27 41.75 42.36 5 Monetary base4 158.10 170.14 185.49 199.03 200.21 202.05 202.95 203.56 205.35 207.66 208.83 211.23 Not seasonally adjusted 6 Total reserves2 32.82 35.01 36.86 40.13 40.70 39.88 40.07 41.25 40.64 41.96 42.41 42.60 7 Nonborrowed reserves 32.18 34.37 36.09 36.94 39.31 38.59 38.47 39.93 39.31 40.75 41.30 41.53 8 Nonborrowed reserves plus extended credit3 32.33 34.56 36.09 39.55 40.36 39.39 39.53 40.80 39.84 41.42 41.81 42.10 9 Required reserves 32.50 34.51 36.30 39.28 39.96 38.97 39.30 40.52 39.84 41.05 41.55 41.77 10 Monetary base4 160.94 173.17 188.76 202.02 200.93 199.54 200.86 203.42 204.54 207.99 210.26 211.31 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 41.92 41.85 38.89 40.70 41.12 40.27 40.49 41.65 41.05 42.35 42.80 42.97 12 Nonborrowed reserves 41.29 41.22 38.12 37.51 39.73 38.98 38.90 40.33 39.72 41.15 41.70 41.90 13 Nonborrowed reserves plus extended credit3 41.44 41.41 38.12 40.09 40.88 39.83 40.03 40.77 40.45 41.88 42.23 42.50 14 Required reserves 41.61 41.35 38.33 39.84 40.38 39.37 39.73 40.91 40.25 41.45 41.95 42.13 15 Monetary base4 170.47 180.52 192.36 202.59 201.35 199.94 201.29 203.81 204.94 208.39 210.65 211.68 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.. MMaayy JJuunnee JJuullyy AAuugg.. Seasonally adjusted 1 Ml 441.8 480.8 528.0 558.5 581.6 591.2 595.8 606.0 7 M2 1,794.4 1,954.9 2,188.8 2,371.7 2,444.6 2,472.7' 2,490.2' 2,513.4 M3 2,235.8 2,446.8 2,701.8 2,995.0 3,075.7 3,102.7' 3,136.0 4 L 2,596.5 2,854.7 3,168.8 3,539.4 3,642.3 n.a. * n.a. 5 4,255.6' 4,649.7' 5,177.3' 5,926.9' 6,226.5' 6,287.5' 6,349.9' n.a. Ml components 6 Currency2 124.0 134.3 148.4 158.7 163.1 164.5 165.4 167.1 7 Travelers checks3 4.4 4.3 4.9 5.2 5.5 5.7 5.9 5.9 8 Demand deposits4 235.2 238.6 243.5 248.6 255.8 260.7 260.9 264.1 9 Other checkable deposits5 78.2 103.5 131.3 146.0 157.3 160.3 163.6 168.8 Nontransactions components 10 In M26 1,352.6 1,474.0 1,660.8 1,813.3 1,863.0 1,881.5' 1,894.4' 1,907.4 11 In M3 only7 441.4 492.0 512.9 623.3 631.0' 630.0' 623.4' 622.7 Savings deposits9 1? Commercial Banks 158.6 163.5 133.4 122.6 120.4 121.9 123.2 124.2 13 Thrift institutions 185.8 194.4 173.6 166.0 168.9' 170.2 172.8 176.1 Small denomination time deposits9 14 Commerical Banks 347.8 379.8 350.7 387.0 390.0' 390.7 388.4 384.1 15 Thrift institutions 475.8 471.7 433.8 498.6 502.1' 503.5 500.2' 494.4 Money market mutual funds 16 General purpose and broker/dealer 150.6 185.2 138.2 167.5 172.2 175.4 175.8' 176.7 17 Institution-only 38.0 51.1 43.2 62.7 63.5 67.1 64.8 62.9 Large denomination time deposits10 18 Commercial Banks11 247.5 262.0 228.9 264.4 272.1' 267.7 266.0 268.0 19 Thrift institutions 54.6 66.2 101.9 151.8 156.1' 156.4 154.2 153.7 Debt components 70 Federal debt 825.9 979.3 1,173.0' 1,367.3' 1,442.8' 1,459.5' 1,479.0 n.a. 21 Non-federal debt 3,429.7r 3,670.4' 4,004.3' 4,559.7' 4,783.7' 4,828.0' 4,870.9 n.a. Not seasonally adjusted 77 452.2 491.8 539.7 570.4 576.2 592.3 599.1 601.6 73 M2 1,798.7 1,959.6 2,194.0 2,376.7 2,440.7' 2,476.4' 2,496.2' 2,506.6 74 M3 2,243.4 2,454.4 2,709.2 3,002.1 3,073.6' 3,105.4' 3,115.8' 3,130.9 75 L 2,604.7 2,859.5 3,172.7 3,540.9 3,637.2 n.a. n.a. n.a. 26 4,251.0' 4,644.0' 5,171.er 5,920.8' 6,198.7' 6,262.6' 6,326.6 n.a. Ml components 77 Currency2 126.2 136.5 150.5 160.9 163.2 165.2 166.8 167.7 78 Travelers checks3 4.1 4.0 4.6 4.9 5.4 6.0 6.6 6.6 79 Demand deposits4 243.4 247.2 252.2 257.4 251.4 259.8 262.2 260.9 30 Other checkable deposits5 78.5 104.1 132.4 147.2 156.2 161.3 163.5 166.3 Nontransactions components 31 M26 1,346.5 1,467.8 1,654.2 1,806.3 1,864.5 1,884.1 1,897.1' 1,905.1 32 M3 only7 444.7 494.8 515.2 625.4 632.9 629.0' 619.6' 624.2 Money market deposit accounts 33 Commercial banks n.a. 26.3 230.5 267.1 298.3' 307.3 313.0 317.7 34 Thrift institutions .0 16.9 148.7 147.9 165.6 167.8 171.0 174.0 Savings deposits8 35 Commercial Banks 157.5 162.1 113322..22 112211..44 112211..77 112233..22 112244..44 112244..00 36 Thrift institutions 184.7 193.2 172.5 164.9 170.1 172.6 175.1 175.5 Small denomination time deposits9 37 Commercial Banks 347.7 380.1 351.1 387.6 385.2 386.4 386.4 385.4 38 Thrift institutions 475.5 471.7 434.2 499.4 495.5 496.8 497.6' 494.1 Money market mutual funds 39 General purpose and broker/dealer 150.6 185.2 138.2 167.5 172.2 175.4 175.8' 176.7 40 Institution-only 38.0 51.1 43.2 62.7 63.5 67.1 64.8 62.9 Large denomination time deposits10 41 Commercial Banks11 251.7 265.2 230.8 265.9 270.0 267.3 265.1 269.8 42 Thrift institutions 54.4 65.9 101.4 151.1 156.1 156.0 154.3 155.1 Debt components 43 Federal debt 823.0 976.4 1,170.2 1,364.7 1,443.8 1,457.9 1,475.8 n.a. 44 Non-federal debt 3,428.0'' 3,667.6' 4,001.4' 4,556.1' 4,754.9' 4,804.8' 4,850.9 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • November 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 official 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. 1985 Feb. Mar. Apr. May June July DEBITS TO Seasonally adjusted Demand deposits2 1 All insured banks 90,914.4 109,642.3 128,440.8 143,281.5 139,608.3 156,513.2 149,252.8 146,714.9 157,128.3 2 Major New York City banks 37,932.9 47,769.4 57,392.7 63,157.0 62,523.7 70,621.4 66,394.3 66,615.5 69,952.8 3 Other banks 52,981.5 61,873.1 71,048.1 80,124.5 77,084.6 85,891.8 82,858.4 80,099.4 87,175.5 4 ATS-NOW accounts3 1,036.2 1,405.5 1,588.7 1,618.6 1,567.0 1,689.3 1,771.1 1,614.3 1,870.1 5 Savings deposits4 720.3 741.4 633.1 499.8 539.2 589.0 636.4 544.4 584.3 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 324.2 379.7 434.4 471.4 456.3 515.4 484.6 471.4 506.4 7 Major New York City banks 1,287.6 1,528.0 1,843.0 1,902.2 1,967.0 2,183.9 2,079.6 2,104.9 2,131.4 8 Other banks 211.1 240.9 268.6 295.9 281.1 316.5 300.2 286.5 314.2 9 ATS-NOW accounts3 14.5 15.6 15.8 15.0 14.4 15.4 16.1 14.4 16.4 10 Savings deposits4 4.5 5.4 5.0 4.2 4.6 5.0 5.4 4.6 4.9 DEBITS TO Not seasonally adjusted Demand deposits2 11 All insured banks 91,031.8 109,517.6 128,059.1 129,297.2 143,154.3 151,536.1 151,342.3 148,651.5 157,898.2 12 Major New York City banks 38,001.0 47,707.4 57,282.4 57,337.4 64,188.9 67,422.3 67,249.3 67,999.4 70,496.1 13 Other banks 53,030.9 64,310.2 70,776.9 71,959.8 78,965.4 84,113.8 84,093.0 80,652.1 87.402.1 14 ATS-NOW accounts3 11,,002277..11 1,397.0 1,579.5 1,524.4 1,624.7 1,946.1 1,775.5 1,744.0 1,807.5 15 MMDA5 567.4 848.8 980.9 1,032.5 1,221.4 1,146.7 1,077.9 1,183.3 16 Savings deposits4 720.0 742.0 632.9 455.5 552.9 644.4 621.1 549.7 586.0 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 325.0 379.9 433.5 437.2 480.9 498.1 505.5 480.6 509.5 18 Major New York City banks 1,295.7 1,510.0 1,838.6 1,780.6 1,990.7 2,138.6 2,205.8 2,125.9 2,185.9 19 Other banks 211.5 240.5 267.9 273.0 297.5 308.4 312.7 290.8 314.8 20 ATS-NOW accounts3 14.4 15.5 15.7 14.3 14.9 17.2 16.2 15.5 15.9 21 MMDA5 2.8 3.5 3.4 3.5 4.2 3.9 3.5 3.5 22 Savings deposits4 4.5 5.4 5.0 3.9 4.7 5.4 5.2 4.6 4.8 1. Annual averages of monthly figures. NOTE. Historical data for demand deposits are available back to 1970 estimated 2. Represents accounts of individuals, partnerships, and corporations and of in part from the debits series for 233 SMSAs that were available through June states and political subdivisions. 1977. Historical data for ATS-NOW and savings deposits are available back to 3. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- July 1977. Back data are available on request from the Banking Section, Division counts authorized for automatic transfer to demand deposits (ATS). ATS data of Research and Statistics, Board of Governors of the Federal Reserve System, availability starts with December 1978. Washington, D.C. 20551. 4. Excludes ATS and NOW accounts, MMDA and special club accounts, such 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 • November 1985 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1984 1985 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Seasonally adjusted 1 Total loans and securities2 1,674.8 1,682.8 1,701.0 1,714.8 1,724.0 1,742.3 1,758.9 1,765.8 1,785.3 1,799.1 LSM^ 1,824.6 2 U.S. government securities 258.0 257.0 259.4 260.2 260.1 265.8 266.9 261.1 265.9 266.6 271.0 270.9 3 Other securities 141.9 141.5 141.1 139.9 142.4 140.8 138.7 140.1 142.1 144.5 145.5 148.2 4 Total loans and leases2 1,274.9 1,284.3 1,300.6 1,314.7 1,321.5 1,335.6 1,353.3 1,364.6 1,377.3 1,388.0 1,397.8' 1,405.5 5 Commercial and industrial 460.0 463.0 467.1 468.1 468.4 473.4 480.4 480.9 483.3 483.6 484.2 485.8 6 Bankers acceptances held3.. 5.4 5.6 6.0 5.2 5.0 6.1 6.4 5.4 4.9 4.7 5.1 5.0 7 Other commercial and industrial 454.6 457.3 461.1 462.9 463.4 467.2 474.1 475.5 478.4 478.9 479.1 480.8 8 U.S. addressees4 443.5 446.7 450.7 453.3 453.7' 457.0' 463.7' 465.2' 468.7 469.7' 469.9 471.3 9 Non-U.S. addressees4.... 11.1 10.6 10.3 9.6 9.7 10.2 10.3 10.3 9.6 9.1 9.2 9.5 10 Real estate 364.7 367.7 371.8 375.6 377.9 382.1 385.8 389.9 393.8 397.4 401.4 405.3 11 Individual 241.3 243.5 246.7 251.0 254.6 257.7 261.9 265.5 268.7 271.5 274.9' 277.4 12 Security 28.8 30.3 30.2 31.5 31.9 31.6 32.8 35.1 37.5 40.0 40.3 36.7 13 Nonbank financial institutions 31.2 31.1 31.2 31.4 31.2 30.9 30.6 31.2 31.5 31.2 31.6 32.3 14 Agricultural 40.8 40.6 40.4 40.3 39.9 39.6 39.5 39.4 39.4' 39.4 39.6 39.6 15 State and political subdivisions 41.7 41.4 42.3 44.2 46.9 46.6 46.8 47.1 47.5 47.4 47.7 48.7 16 Foreign banks 11.7 11.7 11.9 11.5 11.4 11.4' 11.1' 10.8 10.5' 10.3 10.4 10.1 17 Foreign official institutions ... 8.9 8.5 8.4 8.3 7.9 7.9 7.7 7.8 7.8 7.6 7.2 6.4 18 Lease financing receivables... 15.0 15.1 15.3 15.5 15.6 15.8 16.1 16.4 16.7 16.9 17.3 17.5 19 All other loans 30.8 31.5 35.3 37.2 35.8' 38.6 40.3 40.5' 40.5 42.6 43.2 45.7 Not seasonally adjusted 20 Total loans and securities2 1,673.2 1,684.0 1,701.9 1,725.8 1,732.0 1,740.4 1,755.0 1,766.0 1,781.4 1,800.0 1,807.9' 1,818.0 21 U.S. government securities 255.7 254.1 255.2 256.9 260.1 266.8 269.0 266.6 268.0 270.3 270.8 269.3 1 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 7 4 6 1 . . 2 3 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 1 3 4 2 1 . . 6 0 1,3 1 4 3 7 8 . . 1 9 1.3 1 5 3 9 9 . . 7 8 1,3 1 7 4 0 2 . . 7 7 1,3 1 8 4 5 4 . . 5 1 1,3 1 9 44 2 . . 1 9 ' 1,4 1 0 4 0 7 . . 9 7 2 2 4 5 Co B m a m nk e e r r ci s a a l c a c n e d p ta in n d ce u s s t h r e ia ld l. 3 . . . . . 459 5 . . 9 3 46 5 3 . . 5 8 467 5 . . 3 9 47 5 1 . . 7 2 470 5. . 1 3 47 6 2 . . 0 9 48 66 0 .. . 33 0 48 55 1 .. . 55 2 48 44 1 .. . 99 9 48 44 2. .. 1 88 48 55 3. .. 3 00 48 44 3 .. . 99 6 26 Other commercial and 22 2 77 8 N U o . i S n n . d - U u a s d . t S d r . i r a e a l s d se d e r s e 4 ssees4.... 4 4 5 4 1 4 3 1 . . . 3 6 3 4 44 5 1 7 8 1 . . . 2 3 1 4 45 6 1 0 1 1 . . . 5 4 0 4 4 6 5 1 5 5 0 . . . 5 0 5 4 4 5 6 9 5 5 . . . 8 4 2 4 4 5 6 9 7 6 . . . 7 2 9 4 4 7 6 9 3 3 . . . 7 8 9 4 4 7 6 9 5 6 . . . 7 6 1 ' ' 4 46 7 9 7 7 . . . 2 8 0 4 46 7 8 8 7 . . . 9 3 2 4 4 7 6 9 8 9 . . . 3 3 0 4 4 6 7 9 9 8 . . . 5 2 7 29 Real estate 365.8 368.9 372.8 376.2 378.6 381.7 384.7 388.6 392.8 396.9 400.8 405.5 30 Individual 242.3 245.3 248.4 254.0 257.0 257.4 259.7 263.2 266.5 269.6 273.2' 277.2 31 Security 27.7 30.2 31.7 35.2 33.0 30.8 32.2 3355..00 3366..00 3399..99 3388..33 3355..88 32 Nonbank financial institutions 31.3 31.0 31.1 31.5 31.3 30.7 30.6 31.3 31.3 31.2 31.7 32.4 3333 Agricultural 41.6 41.2 40.5 40.0 39.3 38.8 38.6 38.8 3399..33'' 3399..99 4400..44 4400..55 34 State and political subdivisions 41.7 41.4 42.3 44.2 46.9 46.6 46.8 47.1 47.5 47.4 47.7 48.7 3355 Foreign banks 11.9 12.0 12.2 12.2 11.7 11.4 10.9' 10.4' 10.3 9.9' 10.2 9.9 36 Foreign official institutions .. . 8.9 8.5 8.4 8.3 7.9 7.9 7.7 7.8 7.8 7.6 7.2 6.4 3/ Lease financing receivables ... 14.9 15.0 15.1 15.5 15.8 16.0 16.3 16.4 16.7 16.9 17.2 17.3 38 All other loans 30.1 31.7 35.5 39.2 37.0' 38.4' 39.4 39.9 40.7' 44.2' 43.1' 43.6 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 A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS' Monthly averages, billions of dollars 1984 1985 SSoouurrccee Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Total nondeposit funds 1 Seasonally adjusted2 106.5 107.9 112.0 108.5 102.5' 113.9' 116.9' 105.2' 112.(V 112.5' 110088..55'' 111122..88 2 Not seasonally adjusted 107.0 109.6 117.5 111.1 104.8' 117.4' 119.4' 108.3' 117.2' 114.8' 107.3' 114.6 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 141.6 141.4 145.0 140.5 138.8 146.8 147.2 138.8 142.0 146.7 114466..99 114444..11 4 Not seasonally adjusted 142.1 143.1 150.5 143.1 141.1 150.2 149.7 141.9 147.2 149.0 145.8 146.0 5 Net balances due to foreign-related institutions, not seasonally adjusted -35.1 -33.5 -33.1 -32.0 -36.3' -32.8' -30.3' -33.fr -30.0' -34.2' --3388..55'' -31.3 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -35.2 -34.2 -32.7 -31.4 -34.8' -31.6' -29.5' -32.4' -29.fr -32.5 --3388..44 --3322..99 7 Gross due from balances 71.5 69.8 68.3 69.0 71.4 70.5 71.4 74.9' 74.6 76.6 79.3' 76.0 8 Gross due to balances 36.3 35.6 35.6 37.6 36.fr 41.9' 42.5' 45.(K 44.1' 40.9 43.1 9 Foreign-related institutions' net positions with directly related a in d s j t u it s u te t d io 5 n s, not seasonally .1 .7 -.4 -.6 -1.5' -1.2 -.8 -1.1' --..55'' -l.fr <<yy 11..66 10 Gross due from balances 51.7 50.8 50.7 52.0 53.1' 54.1' 53.4 51.8 52.4 53.8' 54.9 55.3 11 Gross due to balances 51.8 51.5 50.4 51.4 51.fr 52.8' 52.7' 50.7 52 .C 52.1' 54.9' 56.9 Security RP borrowings 12 Seasonally adjusted® 81.4 82.0 84.0 81.1 82.3 90.1 92.0 85.4 8855..55 8866..55 8877..11 8877..44 13 Not seasonally adjusted 79.4 81.2 87.0 81.1 82.2 91.1 92.0 86.0 88.3 86.3 83.4 86.8 U.S. Treasury demand balances7 14 Seasonally adjusted 16.0 8.0 17.3 16.1 14.7 13.0 11.8 14.6 2222..66 17.4 2244..99 1166..77 15 Not seasonally adjusted 17.5 11.0 10.4 12.5 18.5 15.8 12.8 15.4' 20.9 14.9 23.1 13.4 Time deposits, $100,000 or more8 16 Seasonally adjusted 315.4 321.4 323.0 325.8 324.8 325.4 329.9 332.6 333311..22 332266..88 332233..22 332255..00 17 Not seasonally adjusted 316.8 322.2 322.9 327.3 325.6 324.9 330.3 330.1 329.1' 326.4 322.3 326.8 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 Domestic Nonfinancial Statistics • November 1985 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars 1984 1985 AAccccoouunntt Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. ALL COMMERCIAL BANKING INSTITUTIONS1 1 Loans and securities 1,822.7 1,822.7 1,864.0 1,853.8 1,873.4 1,880.5 1,895.9 1,905.1 1,923.5 1,942.2 1,946.4 2 Investment securities 375.2 374.4 377.5 381.0 382.0 383.3 383.4 389.8 391.6 391.9 393.3 3 U.S. government securities 241.2 240.4 242.5 244.9 248.0 250.9 250.0 254.0 254.9 255.8 253.7 4 Other 134.0 133.9 134.9 136.1 134.1 132.5 133.4 135.8 136.7 136.1 139.5 5 Trading account assets 22.5 21.9 22.9 24.2 27.6 23.7 23.5 23.5 23.1 22.2 24.3 6 Total loans 1,424.9 1,426.4 1,463.7 1,448.7 1,463.7 1,473.5 1,489.0 1,491.8 1,508.7 1,528.1 1,528.9 7 Interbank loans 126.1 122.6 126.9 125.2 128.6 125.9 130.7 123.8 122.8 132.7 128.3 8 Loans excluding interbank 1,298.8 1,303.8 1,336.8 1,323.4 1,335.1 1,347.6 1,358.3 1,368.0 1,385.9 1,395.4 1,400.6 9 Commercial and industrial 467.7 468.7 476.8 469.8 476.5 482.7 481.5 482.8 483.6 486.1 484.8 10 Real estate 369.8 374.4 377.7 380.2 382.5 386.0 389.8 394.9 398.8 403.3 407.5 11 Individual 247.1 249.6 255.5 257.4 258.1 260.4 264.2 267.3 270.9 274.8 278.8 12 All other 214.2 211.1 226.8 216.1 218.0 218.4 222.8 223.0 232.6 231.2 229.6 13 Total cash assets 188.0 188.4 201.9 187.8 189.2 183.4 187.3 202.0 190.1 197.2 188.4 14 Reserves with Federal Reserve Banks 18.1 20.4 20.5 20.9 19.6 19.8 22.9 20.7 21.6 21.0 24.5 15 Cash in vault 21.4 23.9 23.3 21.9 21.8 21.3 21.3 23.3 22.2 22.0 22.6 16 Cash items in process of collection ... 70.2 66.5 75.9 66.9 68.8 63.9 64.1 76.5 68.4 71.3 62.4 17 Demand balances at U.S. depository institutions 32.0 30.9 34.5 30.9 32.2 31.6 30.1 35.1 31.2 32.5 30.6 18 Other cash assets 46.3 46.7 47.7 47.3 46.7 46.8 48.9 46.5 46.7 50.5 48.3 19 Other assets 201.6 190.1 196.8 191.7 195.4 188.5 188.7 183.4 189.4 195.2 179.1 20 Total assets/total liabilities and capital ... 2,212.2 2,201.2 2,262.6 2,233.3 2,257.9 2,252.4 2,272.0 2,290.5 2,303.0 2,334.7 2,313.9 21 Deposits 1,578.9 1,578.2 1,631.2 1,604.3 1,617.8 1,625.6 1,636.4 1,659.2 1,657.1 1,682.2 1,673.7 22 Transaction deposits 462.7 453.1 491.1 456.8 459.2 457.6 465.3 479.9 473.6 492.6 475.2 23 Savings deposits 371.1 378.1 386.3 400.0 406.8 409.8 409.4 418.0 424.8 433.2 435.3 24 Time deposits 745.0 747.0 753.8 747.5 751.8 758.2 761.7 761.3 758.7 756.4 763.1 25 Borrowings 314.3 298.8 304.1 306.5 308.8 300.6 309.8 304.9 315.4 319.4 306.1 26 Other liabilities 174. V 179.4 181.1 173.7 182.2 176.9 175.3 175.6 179.3 181.0 181.4 27 Residual (assets less liabilities) 144^ 144.8 146.2 148.8 149.2 149.2 150.5 150.8 151.3 152.1 152.7 MEMO 28 U.S. government securities (including trading account) 256.3 255.2 256.9 261.9 269.5 268.4 266.4 268.9 270.6 269.7 267.9 29 Other securities (including trading account) 141.5 141.1 143.4 143.2 140.2 138.7 140.6 144.3 144.2 144.5 149.7 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 1,728.5 1,726.7 1,765.4 1,759.6 1,774.6 1,781.9 1,796.4 1,809.2 1,825.3 1,843.0 1,846.5 31 Investment securities 367.9 367.5 370.5 373.7 374.7 376.6 376.7 383.3 384.6 384.7 386.0 32 U.S. government securities 236.1 235.8 237.9 240.2 243.2 246.6 246.0 250.3 250.9 252.0 250.0 33 Other 131.8 131.6 132.6 133.5 131.5 130.0 130.6 133.0 133.7 132.7 136.0 34 Trading account assets 22.5 21.9 22.9 24.2 27.6 23.7 23.5 23.5 23.1 22.2 24.3 35 Total loans 1,338.0 1,337.3 1,372.1 1,361.7 1,372.3 1,381.6 1,396.2 1,402.5 1,417.6 1,436.1 1,436.2 36 Interbank loans 103.3 96.1 102.8 100.6 100.9 99.9 103.1 100.4 100.3 109.7 104.3 37 Loans excluding interbank 1,234.7 1,241.2 1,269.3 1,261.2 1,271.4 1,281.6 1,293.1 1,302.1 1,317.3 1,326.4 1,331.9 38 Commercial and industrial 423.0 424.7 430.2 425.7 431.5 435.5 436.0 435.9 435.3 437.4 435.6 39 Real estate 365.5 369.1 372.1 375.1 377.3 380.9 384.5 389.4 393.3 397.7 401.9 40 Individual 246.9 249.4 255.3 257.2 257.9 260.2 263.9 267.1 270.6 274.5 278.6 41 All other 199.3 198.0 211.7 203.1 204.8 205.0 208.7 209.6 218.1 216.7 215.9 42 Total cash assets 176.6 176.8 190.3 175.7 177.8 172.5 175.7 191.0 179.0 185.0 176.3 43 Reserves with Federal Reserve Banks 17.1 19.7 19.2 20.2 18.7 19.2 22.3 19.6 20.9 20.4 23.7 44 Cash in vault 21.4 23.9 23.3 21.9 21.8 21.3 21.3 23.2 22.2 22.0 22.6 45 Cash items in process of collection ... 69.9 66.3 75.6 66.7 68.5 63.7 63.9 76.2 68.1 71.0 62.1 46 Demand balances at U.S. depository institutions 30.7 29.4 32.9 29.5 30.9 30.3 28.7 33.7 29.7 31.2 28.9 47 Other cash assets 37.5 37.5 39.3 37.5 37.9 38.0 39.5 38.2 38.0 40.3 39.0 48 Other assets 147.9 139.7 142.1 137.6 139.0 137.2 137.6 131.6 137.8 143.7 129.5 49 Total assets/total liabilities and capital ... 2,053.1 2,043.2 2,097.8 2,072.9 2,091.4 2,091.7 2,109.7 2,131.8 2,142.1 2,171.7 2,152.4 50 Deposits 1,539.1 1,538.0 1,587.8 1,561.8 1,573.7 1,580.5 1,591.7 1,616.0 1,614.5 1,639.5 1,628.7 51 Transaction deposits 456.2 446.8 484.5 450.6 452.9 451.4 458.9 473.5 467.3 486.3 468.7 52 Savings deposits 370.1 377.1 385.2 398.9 405.6 408.6 408.3 416.8 423.5 431.8 434.0 53 Time deposits 712.8 714.1 718.1 712.3 715.2 720.5 724.5 725.8 723.7 721.4 726.0 54 Borrowings 251.3 240.9 243.1 246.5 247.0 239.9 247.9 245.6 253.3 256.0 246.9 55 Other liabilities 120.5 122.3 123.5 118.4 124.2 124.7 122.3 122.0 125.7 126.7 126.8 56 Residual (assets less liabilities) 142.1 142.0 143.4 146.1 146.5 146.6 147.8 148.1 148.6 149.4 150.0 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 1985 July l(y July 17 July 24 July 31' Aug. 7 Aug. 14 Aug. 21 Aug. 28 1 Cash and balances due from depository institutions 87,460 96,340 88,197' 93,245 86,716 90,905 85,991 89,297 2 Total loans, leases and securities, net 851,903 853,801' 840,464' 855,998 847,179 850,212 853,676 852,253 3 U.S. Treasury and government agency 88,953 85,614 85,448 86,100 84,733 86,486 86,590 84,751 4 Trading account 16,319 13,538 13,624 13,856 13,503 15,237 15,558 14,125 5 Investment account, by maturity 72,634 72,075 71,824 72,244 71,230 71,249 71,032 70,626 6 One year or less 21,453 21,537 21,292 21,724 21,867 21,743 21,302 21,180 7 Over one through five years 36,210 36,031 35,925 36,006 34,973 35,826 36,232 35,998 8 Over five years 14,972 14,507 14,606 14,514 14,390 13,680 13,497 13,447 9 Other securities 48,569 49,581' 49,930' 49,809 50,689 51,956 52,345 53,083 1 1 1 1 1 1 1 2 5 6 0 1 3 4 Ot T I h n e r O S v a r e d t t a t O s O h i r n t t e a m e v n g r d s e e e i r a b n n a y c o n g o t e c n n d a o a a d e r u c c p s n c c o y , o o o t e r l c u u i a t o n l n i r e r c t t s p a s o l a r s s a s u e t b e ts d s i t v o is c i k o s n , s , a n b d y s m ec a u tu ri r t i i t e y s 4 3 3 4 4 4 5 9 4 5 , , , , , , , 8 3 1 1 2 1 3 7 7 9 4 4 2 7 7 9 2 4 9 8 0 4 3 3 4 4 4 9 4 5 3 , , , , , , , 9 7 6 1 8 7 7 0 2 2 1 4 3 4 5 3 8 6 8 6 5 ' ' 4 3 3 4 5 9 4 4 5 3 , , , , , , , 9 7 8 1 9 0 4 4 6 1 5 0 2 7 1 8 8 0 0 9 4 ' ' 4 3 3 4 5 9 4 3 4 5 , , , , , , , 8 0 5 8 9 7 1 5 2 9 6 7 2 8 5 0 0 9 9 0 9 4 4 3 0 5 5 3 5 5 5 , , , , , , , 2 1 3 1 7 3 0 5 2 4 1 7 7 7 7 6 3 9 0 6 0 4 4 3 6 5 0 5 5 5 3 , , , , , , , 3 5 2 2 8 9 1 3 6 6 3 3 2 7 6 5 7 3 2 0 6 4 4 3 1 6 6 5 3 5 5 , , , , , , , 0 0 5 3 4 5 3 0 3 1 3 6 3 3 1 7 3 2 4 4 0 4 4 3 1 6 5 6 5 5 3 , , , , , , , 3 3 8 7 3 7 5 7 8 3 3 0 3 4 2 0 0 1 3 5 2 17 Federal funds sold1 53,154 57,17c 50,935 59.315 52,509 53,935 53,960 54,633 18 To commercial banks 35,986 39,042' 33,426 41,576 34,803 36,062 33,892 35,828 19 To nonbank brokers and dealers in securities 11,862 12,676 12,266 12,375 11,913 11,965 12,842 11,820 20 To others 5,306 5,452 5,243 5,363 5,792 5,908 7,226 6,985 21 Other loans and leases, gross2 673,910 675,494' 668,512' 675,159 673,540 671,983 675,401 674,210 22 Other loans, gross2 659,912 661,486' 654,493' 661,117 659,461 657,843 661,253 660,000 23 Commercial and industrial2 253,070 252,799' 251,887' 253,599 252,954 251,880 251,203 251,591 24 Bankers acceptances and commercial paper 2,553 2,400 2,411 2,410 2,615 2,541 2,427 2,241 25 All other 250,516 250,399' 249,476' 251,189 250,339 249,339 248,776 249,350 2 2 6 7 N U o .S n . - U ad .S d . r e a s d se d e r s e ssees 24 4 5 , , 9 5 8 3 7 0 24 4 5 , , 9 4 6 37 2 ' 244 5, , 0 4 4 32 3 ' 246 5 , , 1 0 6 2 3 6 245 4 , , 3 98 5 7 2 244 5 , , 3 0 2 1 5 4 24 4 3, , 8 9 1 6 1 5 244 4 , , 4 9 2 2 5 4 28 Real estate loans2 169,188 169,829' 169,953' 170,632 171,012 171,796 172,233 172,449 29 To individuals for personal expenditures 122,523 122,369 122,089 122,492 122,727 122,773 123,200 123,757 30 To depository and financiali nstitutions 40,582 40,302 40,063 40,758 40,960 40,597 40,965 40,830 31 Commercial banks in the United States 10,449 10,343 10,832 10,776 11,123 10,870 10,886 11,119 32 Banks in foreign countries 5,454 5,441 5,383 5,683 5,314 5,048 5,216 4,917 33 Nonbank depository and other financial institutions 24,679 24,517 23,848 24,300 24,523 24,679 24,863 24,794 34 For purchasing and carrying securities 19,709 19,918 15,595' 18,593 16,729 15,858 18,168 16,052 35 To finance agricultural production 7,355 7,318 7,327 7,335 7,323 7,316 7,278 7,234 36 To states and political subdivisions 29,999 30,190' 30,356' 30,449 30,451 30,845 30,994 30,987 37 To foreign governments and official institutions 3,412 3,522 3,576 3,410 3,304 3,142 3,117 3,298 38 All other 14,074 15,239' 13,646' 13,848 14,002 13,635 14,095 13,801 39 Lease financing receivables 13,999 14,008' 14,019' 14,042 14,079 14,140 14,148 14,211 40 LESS: Unearned income 5,204 5,207 5,234 5,226 5,207 5,219 5,216 5,215 4 4 4 1 2 3 O Al t l h e o r th L l e o o r a a n a n s s s a a e n n t d s d l l e e a a s s e e s r , e n se e r t2 v e2 6 1 5 3 1 6 4 2 , , , 0 7 6 8 0 22 3 4 6 1 5 3 1 7 2 2 , , , 6 1 5 9 1 9 1 0 6 ' ' ' 6 1 5 3 12 0 2 , , , 6 5 6 7 0 0 8 1 c ' ' 6 1 5 3 1 7 6 2 , , , 2 4 7 0 5 2 8 5 4 6 1 5 3 1 5 3 2 , , , 4 2 8 7 8 60 3 3 6 1 5 3 1 3 1 2 , , , 8 5 9 6 5 0 0 7 5 6 1 5 2 1 7 6 2 , , , 2 3 9 4 1 3 6 7 9 6 1 5 2 1 6 5 2 , , , 0 3 9 5 3 4 1 1 4 44 Total assets 1,074,067 1,082,251' 1,061,163' 1,085,689 1,067,179 1,072,675 1,065,985 1,066,880 45 Demand deposits 191,717 194,702 186,895' 197,501 190,429 188,507 186,597 186,937 46 Individuals, partnerships, and corporations 146,559 149,450' 141,839' 150,051 143,882 146,237 142,477 142,797 47 States and political subdivisions 5,063 5,188 5,104 5,867 5,348 4,784 5,365 4,697 48 U.S. government 1,628 1,157' 2,727' 1,600 2,309 2,353 1,114 1,830 49 Depository institutions in United States 22,376 23,418 21,885 24,015 22,840 20,943 23,042 22,826 50 Banks in foreign countries 5,912 6,059 5,446 5,992 5,598 5,047 5,316 4,880 5 5 1 2 C Fo er r t e i i f g ie n d g a o n v d er o n f m fic e e n r t s s ' a c n h d e c o k f s fi cial institutions 9,2 9 7 0 4 5 8,5 8 9 4 0 2 9,0 8 8 08 6 9,1 8 5 16 9 9,6 7 6 9 0 1 8,2 9 0 3 7 7 8,5 7 3 46 6 9,0 8 1 9 5 1 53 Transaction balances other than demand deposits 38,904 38,493 37,836 38,585 39,669 38,976 38,567 38,361 54 Nontransaction balances 470,710 470,802 471,540 472,175 473,029 473,639 474,684 474,261 5 6 6 6 5 5 5 6 6 5 5 0 1 2 6 8 9 3 4 7 Li T a O S D A I F B U n b t r o o l e t . a d l e i h r S p r l t a i e i e r o . e o v t s i o r i t s g i s u e g h d w i n r l s o t a e u i o i y a v n r n a f g r b e o d g l o y t r l s i r a i s v l n , a p i x i e t b m b f n p o - i r r e o a i s l a n o e l i s r n t i r t n m m i t r i d t t i c a o t n u e - e a n w l s e F t n o l d i r e o e a t f s s s d o d n h n s u , r e u s i b p r m o b n b a d i s f o o n o o f l i r i t v n a r c e d R t r n i e i h s s i a o y d n e i e w l o s a n e c i e t U n r o e s d v s n d r t e p i i m t t o n e u B r o o d t a a n t i o e t n S e i n k o y t a s a n 3 s n t s a e d n s d d e b b e a n n t k ur s e .. s 4 2 1 3 2 0 9 9 1 5 3 7 9 2 0 3 3 , , , , , , , , 1 1 4 3 3 2 4 6 3 6 6 2 3 9 9 6 3 6 9 7 6 5 6 4 2 6 8 3 2 4 2 1 3 2 9 1 9 1 5 2 9 3 3 2 0 5 2 , , , , , , , , , 2 3 3 3 4 5 0 4 0 3 7 4 4 1 7 7 8 6 7 7 1 2 4 4 0 5 0 2 7 1 ' ' ' ' ' 4 1 1 3 2 9 9 8 1 5 3 0 9 2 8 5 2 , , , , , , , , 3 9 8 4 3 5 5 9 3 8 3 6 7 0 5 3 8 9 5 5 1 9 6 2 1 1 8 0 0 ' ' ' ' ' ' ' 4 2 1 3 2 0 9 8 1 6 3 9 2 5 6 7 6 , , , , , . , , 5 1 3 7 1 3 8 4 9 3 2 6 0 7 0 1 4 3 1 1 1 5 6 0 2 6 7 6 2 9 4 1 1 3 2 9 9 8 7 6 4 3 9 2 3 6 , , , , , , , , 5 4 5 3 6 1 5 8 3 1 2 4 1 9 3 6 2 2 9 8 8 1 4 1 2 0 3 9 9 0 4 1 1 3 9 2 9 9 7 2 4 5 9 5 9 2 1 , , , , , , , , , 4 2 7 2 3 6 7 6 3 4 1 3 2 1 5 4 2 5 9 1 6 7 7 0 6 4 7 6 0 9 4 1 1 3 2 9 9 8 8 4 9 2 7 5 4 6 , , , , , , , , 1 2 0 4 4 5 4 7 4 7 1 5 3 2 2 1 5 8 6 0 8 8 5 9 8 2 0 8 5 5 4 1 1 3 2 9 9 8 7 4 9 2 7 5 5 8 , , , , , , , , 5 4 5 2 1 6 6 2 4 2 5 6 1 4 4 3 7 5 8 2 9 1 0 4 4 2 4 9 8 9 6 6 6 5 R To es ta id l u l a ia l b ( i t l o it t i a es l assets minus total liabilities)4 99 7 8 5 , ,2 7 7 94 3 1,00 7 7 5 , , 0 2 3 1 9 2 ' ' 98 7 5 5 , , 6 4 7 9 3 C ' 1,00 7 9 6 , ,0 67 1 9 0 99 7 1 6 , ,0 1 1 68 1 99 7 6 6 , ,1 5 5 23 2 98 7 9 6 , , 8 1 2 5 6 9 99 7 0 6 , , 8 0 6 1 6 4 67 M To E t M al O l oans and leases (gross) and investments adjusted5 823,296 822,218' 814,040' 821,587 819,320 821,404 827,053 823,466 68 Total loans and leases (gross) adjusted2-5 680,630 683,279' 675,189' 682,122 680,123 678,987 684,584 681,897 69 Time deposits in amounts of $100,000 or more 152,813 152,991' 153,998 153,491 154,623 155,440 156,066 156,302 70 Loans sold outright to affiliates—total6 2,209 2,240 2,139 2,066 2,072 2,035 2,010 1,991 71 Commercial and industrial 1,404 1,423 1,327 1,271 1,272 1,260 1,227 1,239 72 Other 805 817 812 795 800 774 783 752 73 Nontransaction savings deposits (including MMDAs)... 185,464 185,504 185,653 186,768 186,670 186,555 187,056 186,459 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 • November 1985 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1985 AAccccoouunntt July 10 July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Sept. 4 1 Cash and balances due from depository institutions 18,626 24,892 22,281 21,265 20,712 22,446 19,531 22,180 24,685 2 Total loans, leases and securities, net1 179,492R 180,847' 175,534' 184,063' 175,489 177,619 180,810 178,464 184,167 Securities 3 4 5 Investment account, by maturity 10,154 10,856 10,730 10,718 9,689 9,667 10,002 9,869 9,791 6 One year or less 1,373 1,799 1,731 2,013 1,844 1,844 1,770 1,781 1,669 7 Over one through five years 7,079 7,395 7,367 7,070 6,203 6,051 6,457 6,425 6,330 K Over five years 1,702 11,,666622 11,,663322 11,,663366 11,,664422 11,,777722 11,,777766 11,,666622 11,,779922 9 10 11 Investment account 10,046 10,141 10,261 10,144 10,216 10,422 10,481 10,482 10,544 12 States and political subdivisions, by maturity 8,914 8,986 9,087 9,115 9,177 9,231 9,268 9,270 9,273 13 One year or less 1,234 1,234 1,303 1,306 1,339 1,357 1,390 1,398 1,429 14 Over one year 7,680 7,753 7,785 7,809 7,837 7,874 7,878 7,872 7,844 15 Other bonds, corporate stocks and securities 1,132 1,155 1,174 11,,002299 1,040 11,,119900 11,,221133 11,,221122 11,,227711 1166 Loans and leases 17 Federal funds sold3 22,746 23,611 21,570 26,658 21,119 23,714 23,736 23,238 25,070 18 To commercial banks 11,861 12,299 10,974 15,990 10,223 12,192 10,150 11,046 11,979 19 To nonbank brokers and dealers in securities 7,095 7,277 6,690 6,991 6,762 7,085 7,978 6,760 7,788 20 To others 3,790 4,035 3,907 3,676 4,134 4,437 5,608 5,432 5,303 21 Other loans and leases, gross 141,642' 141,334' 138,089' 141,659' 139,649 139,054 141,837 140,126 144,040 22 Other loans, gross 138,966' 138,652' 135,411' 138,979' 136,964 136,336 139,132 137,389 141,305 23 Commercial and industrial 60,330 59,704 59,638 60,381 60,208 59,870 59,770 59,703 60,751 24 Bankers acceptances and commercial paper 856 739 870 906 980 797 754 688 750 25 All other 59,473 58,964 58,769 59,475 59,227 59,074 59,017 59,015 60,000 26 U.S. addressees 58,809 58,286 58,086 58,811 58,556 58,354 58,310 58,325 5599,,331133 27 Non-U.S. addressees 664 678 683 664 671 720 707 690 668888 28 Real estate loans 26,690' 26,952' 26,862' 27,307' 27,306 27,473 27,636 27,685 27,688 29 To individuals for personal expenditures 17,099 17,133 17,174 17,252 17,254 17,347 17,342 17,433 17,527 30 To depository and financial institutions 11,460 11,292 11,571 11,745 11,501 11,326 11,785 11,998 12,700 31 Commercial banks in the United States 2,229 1,997 2,478 2,392 2,196 2,098 2,239 2,716 2,475 32 Banks in foreign countries 2,010 2,118 1,987 2,241 2,004 1,734 2,042 1,784 2,695 33 Nonbank depository and other financial institutions 7,220 7,177 7,106 7,112 7,300 7,495 7,504 7,497 7,529 34 For purchasing and carrying securities 10,505 10,352 7,351' 9,582 7,838 7,475 9,797 7,571 8,581 35 To finance agricultural production 370 365 362 352 367 352 342 340 315 36 To states and political subdivisions 7,801 7,956 8,022 7,991 8,014 8,395 8,421 8,286 8,274 37 To foreign governments and official institutions 746 849 922 737 767 626 648 829 865 38 All other 3,965 4,048 3,510 3,630 3,709 3,471 3,390 3,543 4,604 39 Lease financing receivables 2,675 2,682 2,678 2,680 2,685 2,718 2,706 2,737 2,735 40 LESS: Unearned income 1,453 1,453 1,462 1,448 1,450 1,450 1,452 1,454 1,428 41 Loan and lease reserve 3,644 3,642 3,655 3,668 3,734 3,788 3,794 3,796 3,850 42 Other loans and leases, net 136,545' 136,239' 132,972' 136,543' 134,465 133,816 136,591 134,875 138,762 43 All other assets4 71,479' 67,732' 67,954' 69,507' 67,849 68,095 65,150 64,155 70,716 44 Total assets 269,598' 273,471' 265,770' 274,834' 264,050 268,160 265,492 264,800 279,568 Deposits 45 Demand deposits 47,229 49,396 47,037' 48,945' 47,338 45,094 45,831 45,848 53,375 46 Individuals, partnerships, and corporations 31,375 33,542' 31,020' 33,181' 30,833 31,552 30,295 30,528 35,561 47 States and political subdivisions 988 1,027 912 872 892 868 1,017 809 782 48 U.S. government 264 127' 47 C 195' 453 424 112 368 193 49 Depository institutions in the United States 4,842 5,446 5,212 5,761 5,379 4,280 5,989 5,702 6,248 50 Banks in foreign countries 4,660 4,793 4,210 4,658 4,243 3,795 4,168 3,701 5,395 51 Foreign governments and official institutions 696 679 636 641 603 770 562 711 687 52 Certified and officers' checks 4,402 3,781 4,577 3,637 4,934 33,,440044 3,687 44,,002277 4,510 53 Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers) 4,196 4,043 3,997 4,115 4,194 4,127 4,067 4,046 4,259 54 Nontransaction balances 85,664 85,907 86,015 86,057 85,896 85,562 85,461 84,925 85,632 55 Individuals, partnerships and corporations 78,099 78,317 78,194 78,147 78,144 77,709 77,719 77,252 77,874 56 States and political subdivisions 4,289 4,456 4,586 4,607 4,548 4,592 4,556 4,489 4,568 57 U.S. government 60 47 51 50 49 54 51 49 39 58 Depository institutions in the United States 2,208 2,067 2,125 2,177 2,136 2,170 2,098 2,122 2,164 59 Foreign governments, official institutions and banks 1,008 1,019 1,059 1,075 1,019 1,037 1,038 1,013 987 60 Liabilities for borrowed money 68,638' 69,531' 64,752' 67,282' 61,594 66,563 62,845 63,330 67,734 61 1,650 1,290 425 62 Treasury tax-and-loan notes 3,259 3,590 3,484 3,633 1,490 1,379 1,694 1,995 1,366 63 All other liabilities for borrowed money5 65,380' 64,291' 61,268' 63,649' 60,104 63,894 60,726 61,335 66,368 64 Other liabilities and subordinated note and debentures 39,822 40,578 39,918 44,221' 40,756 42,492 42,960 42,399 44,210 65 Total liabilities 245,549' 249,454' 241,719' 250,620' 239,777 243,840 241,164 240,548 255,210 66 Residual (total assets minus total liabilities)6 24,048 24,017 24,051 24,215' 24,272 24,320 24,328 24,252 24,358 MEMO 67 Total loans and leases (gross) and investments adjusted1'7 170,498' 171,646' 167,199' 170,796' 168,254 168,567 173,667 169,953 174,990 68 Total loans and leases (gross) adjusted7 150,298' 150,649' 146,208' 149,934' 148,349 148,478 153,184 149,602 154,655 69 Time deposits in amounts of $100,000 or more 32,327 32,547' 32,776 32,458 32,726 32,534 32,525 32,220 32,615 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 A Millions of dollars, Wednesday figures 1985 AAccccoouunntt July 10 July 17 July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Sept. 4 1 Cash and due from depository institutions. 7,143 6,806 6,618 6,996' 7,004 6,874 6,828 6,886 6,617 2 Total loans and securities 46,616 47,244 45,485' 46,676 45,074 46,888 46,633 46,964 47,607 3 U.S. Treasury and govt, agency securities 3,417 3,262 3,354 3,270 3,092 3,055 3,063 3,208 3,242 4 Other securities 2,032 2,069 2,035 2,049 2,066 2,033 2,058 2,090 2,156 5 Federal funds sold1 4,033 5,086 4,027 4,276 3,621 4,754 3,399 4,102 4,046 6 To commercial banks in the United States 3,653 4,649 3,569 3,803 3,258 4,402 3,163 3,652 3,695 7 To others 381 437 458 472 363 352 237 450 351 8 Other loans, gross 37,135 36,827 36,069' 37,082 36,294 37,045 38,113 37,564 38,163 9 Commercial and industrial 22,115' 22,289 21,960 22,231' 21,991 22,311 23,030 22,399 22,900 10 Bankers acceptances and commercial paper 1,939 1,902 1,886 1,890 1,772 1,676 11,,776644 11,,558877 11,,777700 11 All other 20,176' 20,386 20,074 20,341' 20,219 20,635 21,266 20,812 21,130 12 U.S. addressees 18,751 19,002 18,669 18,945' 18,807 19,246 19,854 19,298 19,707 13 Non-U.S. addressees 1,425' 1,384 1,405 1,397 1,412 1,389 1,412 1,514 1,423 14 To financial institutions 10,660 10,488 10,002 10,238 10,027 10,354 10,984 11,018 10,655 15 Commercial banks in the United States . 8,434 8,078 7,714 7,754 7,600 7,946 8,582 8,671 8,151 16 Banks in foreign countries 1,110 1,154 1,081 1,103 1,032 1,104 1,037 1,032 1,074 17 Nonbank financial institutions 1,116 1,256 1,207 1,381 1,395 1,304 1,365 1,316 1,430 18 To foreign govts, and official institutions .. 518' 516 517 514 516 512 506 515 514 19 For purchasing and carrying securities .. 1,543 1,255 1,228' 1,672 1,354 1,447 1,168 1,217 1,602 20 All other 2,298 2,278 2,362 2,426' 2,406 2,420 2,426 2,415 2,492 21 Other assets (claims on nonrelated parties).. 18,383 18,238 18,294' 18,330' 18,483 18,735 18,600 18,758 18,689 22 Net due from related institutions 10,003 9,957 8,058' 9,766' 9,243 8,852 8,648 8,188 8,777 23 Total assets 82,146 82,245 78,456' 81,768' 79,804 81,350 80,709 80,796 81,691 24 Deposits or credit balances due to other than directly related institutions.... 22,676 22,722 23,048' 23,492' 23,685 2233,,888899 2244,,556666 2255,,223388 2255,,000033 25 Credit balances 148 186 173 142 208 137 136 280 143 26 Demand deposits 1,664 1,676 1,774' 1,652 1,759 1,762 1,643 1,755 1,745 27 Individuals, partnerships, and corporations 892 916 886' 933 998 943 995577 996655 994488 28 Other 772 760 888' 720 761 818 686 790 797 29 Time and savings deposits 20,865 20,860 21,10(K 21,698' 21,718 21,990 22,788 23,203 23,115 30 Individuals, partnerships, and corporations 16,414 16,519 16,773' 16,931 17,059 17,248 18,420 1188,,661155 1188,,558877 31 Other 4,451 4,340 4,327' 4,767' 4,659 4,742 4,367 4,588 4,528 32 Borrowings from other than directly related institutions 31,457 32,065 27,786 30,309 29,572 28,930 2288,,776633 2288,,220066 3300,,448888 33 Federal funds purchased2 13,712 14,853 10,568 12,651 11,426 11,000 11,060 11,200 13,799 34 From commercial banks in the United States 10,861 12,199 8,105 10,044 8,787 8,605 8,373 88,,225533 1100,,885599 35 From others 2,851 2,654 2,462 2,607 2,639 2,395 2,687 2,946 2,940 36 Other liabilities for borrowed money.. . . 17,745 17,212 17,218 17,658 18,145 17,931 17,703 17,006 16,689 37 To commercial banks in the United States 15,722 15,898 15,948 16,410 16,813 16,287 16,131 15,736 1155,,551166 38 To others 2,023 1,314 1,270 1,248 1,332 1,644 1,572 1,270 1,173 39 Other liabilities to nonrelated parties 20,285 20,138 20,099' 20,432 20,903 20,789 20,643 21,078 20,827 40 Net due to related institutions 7,727 7,321 7,523' 7,535 5,645 7,741 6,736 6,274 5,373 41 Total liabilities 82,146 82,245 78,456' 81,768' 79,804 81,350 80,709 80,796 81,691 MEMO 42 Total loans (gross) and securities adjusted3 34,529 34,517 34,202' 35,119 34,216 34,540 34,888 34,641 3355,,776611 43 Total loans (gross) adjusted3 29,081 29,186 28,813' 29,800 29,057 29,451 29,767 29,343 30,364 • 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. Includes 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 • November 1985 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances, not seasonally adjusted Commercial banks TTyyppee ooff hhoollddeerr 1984 1985 11998800 11998811 11998822 11998833 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar.3 June? 1 All holders—Individuals, partnerships, and corporations 315.5 288.9 291.8 293.5 279.3 286.3 288.8 302.7 288.1 300.9 2 Financial business 29.8 28.0 35.4 32.8 31.7 30.8 30.4 31.7 28.1 29.4 3 Nonfinancial business 162.8 154.8 150.5 161.1 150.3 156.7 158.9 166.3 159.7 165.4 4 Consumer 102.4 86.6 85.9 78.5 78.1 78.7 79.9 81.5 77.3 81.9 5 Foreign 3.3 2.9 3.0 3.3 3.3 3.5 3.3 3.6 3.5 3.6 6 Other 17.2 16.7 17.0 17.8 15.9 16.7 16.3 19.7 19.6 20.6 Weekly reporting banks 1984 1985 11998800 11998811 11998822 11998833 DDeecc.. DDeecc.. DDeecc.. DDeecc..22 Mar. June Sept. Dec. Mar.3 June? 7 All holders—Individuals, partnerships, and corporations 147.4 137.5 144.2 146.2 139.2 145.3 145.3 157.1 147.8 151.9 8 Financial business 21.8 21.0 26.7 24.2 23.5 23.6 23.7 25.3 22.6 23.3 9 Nonfinancial business 78.3 75.2 74.3 79.8 76.4 79.7 79.2 87.1 82.8 83.9 10 Consumer 35.6 30.4 31.9 29.7 28.4 29.9 29.8 30.5 29.1 30.1 11 Foreign 3.1 2.8 2.9 3.1 3.2 3.2 3.2 3.4 3.3 3.5 12 Other 8.6 8.0 8.4 9.3 7.7 8.9 9.3 10.9 10.0 11.1 1. Figures include cash items in process of collection. Estimates of gross 3. Beginning March 1985, financial business deposits and, by implication, total deposits are based on reports supplied by a sample of commercial banks. Types of gross demand deposits have been redefined to exclude demand deposits due to depositors in each category are described in the June 1971 BULLETIN, p. 466. thrift institutions. Historical data have not been revised. The estimated volume of 2. In January 1984 the weekly reporting panel was revised; it now includes 168 such deposits for December 1984 is $5.0 billion at all insured commercial banks banks. Beginning with March 1984, estimates are constructed on the basis of 92 and $3.0 billion at weekly reporting banks. sample banks and are not comparable with earlier data. Estimates in billions of dollars for December 1983 based on the newly weekly reporting panel are: financial business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; 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 1985 IInnssttrruummeenntt DD 1199 ee 88 cc 00 .. DD 1199 ee 88 cc 11 .. DD 11 ee 99 cc 88 .. 22 11 DD 1199 ee 88 cc 33 .. DD 11 ee 9988 cc.. 44 22 Feb. Mar. Apr. May June July Commercial paper (seasonally adjusted unless noted otherwise) 11 AAllll iissssuueerrss 124,374 165,829 166,436 188,312 239,117 247,095 250,575 255,236 258,943 254,627 262,769 FFiinnaanncciiaall ccoommppaanniieess33 DDeeaalleerr--ppllaacceedd ppaappeerr44 22 TToottaall 19,599 30,333 34,605 44,622 56,917 60,186 60,895 63,405 61,282 61,602 67,419 33 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 3,561 6,045 2,516 2,441 2,035 2,265 2,304 2,180 2,295 2,051 2,083 DDiirreeccttllyy ppllaacceedd ppaappeerr55 44 TToottaall 67,854 81,660 84,393 96,918 110,474 114,824 118,029 117,841 119,975 118,432 118,722 55 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 22,382 26,914 32,034 35,566 42,105 42,759 43,334 42,405 43,126 43,454 41,228 66 NNoonnffiinnaanncciiaall ccoommppaanniieess66 36,921 53,836 47,437 46,772 71,726 72,085 71,651 73,990 77,686 74,593 76,628 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 54,744 69,226 79,543 78,309 75,470 76,109 73,726 72,825 69,689 68,375 68,497 Holder 8 Accepting banks 10,564 10,857 10,910 9,355 10,255 10,623 10,473 9,666 9,265 9,470 9,299 9 Own bills 8,963 9,743 9,471 8,125 9,065 9,726 9,166 8,263 7,578 7,869 8,012 10 Bills bought 1,601 1,115 1,439 1,230 1,191 897 1,340 1,403 1,687 1,601 1,287 Federal Reserve Banks 11 Own account 776 195 1,480 418 0 0 0 0 0 0 0 12 Foreign correspondents 1,791 1,442 949 729 671 761 737 728 575 511 652 13 Others 41,614 56,731 66,204 68,225 67,595 67,279 65,865 65,965 63,797 62,106 58,238 Basis 14 Imports into United States 11,776 14,765 17,683 15,649 16,975 17,115 16,124 16,417 16,670 16,286 16,444 15 Exports from United States 12,712 15,400 16,328 16,880 15,859 15,881 15,179 14,875 14,214 13,340 12,969 16 All other 30,257 39,060 45,531 45,781 42,635 43,113 42,423 41,533 38,804 38,748 39,184 1. Effective Dec. 1,1982, there was a break in the commercial paper series. The financing; factoring, finance leasing, and other business lending; insurance key changes in the content of the data involved additions to the reporting panel, underwriting; and other investment activities. the exclusion of broker or dealer placed borrowings under any master note 4. Includes all financial company paper sold by dealers in the open market. agreements from the reported data, and the reclassification of a large portion of 5. As reported by financial companies that place their paper directly with bank-related paper from dealer-placed to directly placed. investors. 2. Correction of a previous misclassification of paper by a reporter has created 6. Includes public utilities and firms engaged primarily in such activities as a break in the series beginning December 1983. The correction adds some paper to communications, construction, manufacturing, mining, wholesale and retail trade, nonfinancial and to dealer-placed financial paper. transportation, and services. 3. Institutions engaged primarily in activities such as, but not limited to, 7. Beginning October 1984, the number of respondents in the bankers acceptcommercial, savings, and mortgage banking; sales, personal, and mortgage ance survey will be reduced from 340 to 160 institutions—those with $50 million or more in total acceptances. The new reporting group accounts for over 95 percent of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Rate Effective Date Rate Month Average rate 11.00 1984—Oct. 17 12.50 1983—Jan 11.16 1984—May 10.50 29 12.00 Feb 10.98 June 11.00 Nov. 9 11.75 10.50 July 28 11.25 10.50 Aug. 11.50 Dec. 20 10.75 May 10.50 Sept. 12.00 June 10.50 Oct. 12.50 1985—Jan. 15 10.50 July 10.50 Nov. 13.00 May 20 10.00 Aug 10.89 Dec. 12.75 June 18 9.50 Sept 11.00 Oct 11.00 1985—Jan. . Nov 11.00 Feb. Dec 11.00 Mar. Apr. 1984—Jan.. 11.00 May. Feb. 11.00 June. Mar. 11.21 July Apr. 11.93 Aug. 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 • November 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 IInnssttrruummeenntt 11998822 11998833 11998844 May June July Aug. Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 MONEY MARKET RATES 1 Federal funds1'2 12.26 9.09 10.22 7.97 7.53 7.88 7.90 7.64 7.92 7.88 8.06 7.78 2 Discount window borrowing1'2 3 11.02 8.50 8.80 7.50' 7.50 7.50 7.50 7.50 7.50 7.50 7.50 7.50 Commercial paper4'5 3 1-month 11.83 8.87 10.05 7.80 7.34 7.58 7.73 7.75 7.75 7.74 7.67 7.71 4 3-month 11.89 8.88 10.10 7.83 7.35 7.56 7.72 7.77 7.76 7.72 7.67 7.68 5 6-month 11.89 8.89 10.16 7.88 7.38 7.57 7.74 7.86 7.82 7.72 7.68 7.68 Finance paper, directly placed4 5 6 1-month 11.64 8.80 9.97 7.74 7.31 7.53 7.70 7.69 7.76 7.66 7.63 7.70 7 3-month 11.23 8.70 9.73 7.71 7.19 7.40 7.56 7.61 7.67 7.54 7.50 7.47 8 6-month 11.20 8.69 9.65 7.69 7.16 7.34 7.55 7.60 7.65 7.53 7.50 7.47 Bankers acceptances5 6 9 3-month 11.89 8.90 10.14 7.77 7.32 7.53 7.68 7.72 7.70 7.68 7.64 7.66 10 6-month 11.83 8.91 10.19 7.81 7.34 7.54 7.69 7.83 7.75 7.66 7.62 7.65 Certificates of deposit, secondary market7 11 1-month 12.04 8.96 10.17 7.83 7.38 7.58 7.77 7.75 7.75 7.80 7.75 7.75 12 3-month 12.27 9.07 10.37 7.92' 7.44 7.64 7.81 7.83 7.83 7.82 7.78 7.79 13 6-month 12.57 9.27 10.68 8.08 7.58 7.80- 7.97 8.07 8.07 7.97 7.89 7.92 14 Eurodollar deposits, 3-month8 13.12 9.56 10.73 8.13 7.60 7.89 8.03 8.15 8.13 8.01 7.95 7.99 U.S. Treasury bills' Secondary market9 15 3-month 10.61 8.61 9.52 7.48 6.95 7.08 7.14 7.28 7.21 7.13 7.07 7.07 16 6-month 11.07 8.73 9.76 7.65 7.09 7.2 C 7.32 7.44 7.44 7.34 7.22 7.22 17 1-year 11.07 8.80 9.92 7.85 7.27 7.31 7.48 7.57 7.58 7.49 7.39 7.42 Auction average10 18 3-month 10.69' 8.63' 9.58' 7.56 7.01 7.05 7.18 7.23 7.30 7.14 7.14 7.07 19 6-month 11.08' 8.75' 9.8(K 7.75 7.16 7.16 7.35 7.40 7.52 7.36 7.28 7.21 20 1-year 11.10 8.86' 9.91 7.94 7.18 7.09 7.60 n.a. 7.60 n.a. n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 12.27 9.57 10.89 8.46 7.80 7.86 8.05 8.14 8.15 8.07 7.95 7.97 22 2-year 12.80 10.21 11.65 9.39 8.69 8.77 8.94 9.05 9.06 8.95 8.85 8.86 73 9.20 9 20 9 20 24 3-year 12.92 10.45 11.89 9.75 9.05 9.18 9.31 9.51 9.46 9.28 9.18 9.22 25 5-year 13.01 10.80 12.24 10.34 9.60 9.70 9.81 10.01 9.98 9.84 9.67 9.66 26 7-year 13.06 11.02 12.40 10.72 10.08 10.16' 10.20 10.45 10.38 10.24 10.04 10.05 27 10-year 13.00 11.10 12.44 10.85 10.16 10.31 10.33 10.61 10.53 10.37 10.16 10.17 28 20-year 12.92 11.34 12.48 11.19 10.57 10.68 10.73 10.93 10.86 10.79 10.61 10.59 29 30-year 12.76 11.18 12.39 11.05 10.45' 10.50 10.56 10.73 10.69 10.63 10.45 10.42 Composite14 30 Over 10 years (long-term) 12.23 10.84 11.99 10.96 10.36 10.51 10.60 10.78 10.73 10.65 10.48 10.46 State and local notes and bonds Moody's series15 31 Aaa 10.86 8.80 9.61 8.52 8.24 8.34 8.49 8.40 8.40 8.50 8.65 8.50 32 Baa 12.46 10.17 10.38 9.54 9.03 9.18 9.50 9.40 9.40 9.50 9.60 9.60 33 Bond Buyer series16 11.66 9.51 10.10 9.01 8.69 8.81 9.08 9.01 9.02 9.12 9.18 9.09 Corporate bonds Seasoned issues17 34 All industries 14.94 12.78 13.49 12.47 11.70 11.69 11.76 11.86 11.88 11.79 11.68 11.63 35 Aaa 13.79 12.04 12.71 11.72 10.94 10.97 11.05 11.21 11.20 11.08 10.95 10.90 36 Aa 14.41 12.42 13.31 12.30 11.46 11.42 11.47 11.56 11.61 11.51 11.40 11.33 37 A 15.43 13.10 13.74 12.70 11.98 11.92 12.00 12.09 12.11 12.04 11.92 11.89 38 Baa 16.11 13.55 14.19 13.15 12.40 12.43 12.50 12.58 12.59 12.54 12.44 12.40 39 A-rated, recently-offered utility bonds18 15.49 12.73 13.81 12.25 11.62 11.60 11.77 11.83 11.78 11.82 11.70 11.73 MEMO: Dividend/price ratio19 40 Preferred stocks 12.53 11.02 11.59 10.60 10.05 9.92 10.15 9.93 10.04 10.13 10.17 10.25 41 Common stocks 5.81 4.40 4.64 4.31 4.21 4.14 4.23 4.17 4.24 4.25 4.21 4.22 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-Vi-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 one very low yielding "flower" bond. 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 Dec. Jan. Feb. Mar. Apr. May June July Aug. 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 94.85 99.11 104.73 103.92 104.66 107.00 109.52 111.64 109.09 2 Industrial 78.18 107.45 108.01 109.05 113.99 120.71 119.64 119.93 121.88 124.11 126.94 124.92 3 Transportation 60.41 89.36 85.63 88.00 94.88 101.76 98.30 96.47 99.66 105.79 111.67r 109.92 4 Utility 39.75 47.00 46.44 50.58 51.95 53.44 53.91 55.51 57.32 59.61 59.68 56.99 5 Finance 71.99 95.34 89.28 95.29 101.34 109.58 107.59 109.39 115.31 118.44 119.85 114.68 6 Standard & Poor's Corporation (1941-43 = 10)1 ... 119.71 160.41 160.50 164.48 171.61 180.88 179.42 180.62 184.90r 188.89 192.54r 188.31 7 American Stock Exchange2 (Aug. 31, 1973 = 100) 282.62r 216.48 207.96 202.28 211.82 228.40 225.62 229.46 228.75 227.48 235.21 232.65 Volume of trading (thousands of shares) 8 New York Stock Exchange 64,617 85,418 91,084 89,032 121,545 115,489 102,591 94,387 106,827 105,849 111,952 87,468 9 American Stock Exchange 5,283 8,215 6,107 7,254 9,130 10,010 8,677 7,801 7,171 7,128 7,284 7,275 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 13,325 23,000 22,470 22,470 22,090 22,970 23,230 23,900 24,300 25,260 11 Margin stock 12,980 22,720 4 4 4 4 4 4 4 12 Convertible bonds 344 279 n.a. 13 Subscription issues 1 1 Free credit balances at brokers4 14 Margin-account 5,735 6,620 7,015 7,015 6,770 6,680 6,780 6,910 6,865 7,300 15 Cash-account 8,390 8,430 10,215 10,215 9,725 9,840 10,155 9,230 9,230 10,115 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 46.0 35.0 36.0 38.0 39.0 36.0 37.0 34.0 3355..00 18 40-49 24.0 22.0 18.0 18.0 19.0 20.0 20.0 19.0 19.0 19.0 20.0 21.0 19 50-59 24.0 16.0 16.0 16.0 20.0 18.0 18.0 18.0 19.0 19.0 19.0 18.0 20 60-69 14.0 9.0 9.0 9.0 11.0 11.0 10.0 10.0 11.0 10.0 11.0 11.0 21 70-79 9.0 6.0 5.0 5.0 7.0 8.0 7.0 7.0 7.0 7.0 8.0 8.0 22 80 or more 8.0 6.0 6.0 6.0 8.0 8.0 7.0 7.0 8.0 8.0 8.0 7.0 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 35,598 58,329 75,840 75,840 79,600 81,830 81,930 82,990 87,120 86,910 89,240 90,930 Distribution by equity status (percent) 24 Net credit status 62.0 63.0 59.0 59.0 59.0 59.0 60.0 60.0 60.0 59.0 59.0 59.0 Debt status, equity of 25 60 percent or more 29.0 28.0 29.0 29.0 30.0 31.0 30.0 30.0 30.0 31.0 32.0 30.0 26 Less than 60 percent 9.0 9.0 11.0 11.0 10.0 10.0 10.0 10.0 10.0 10.0 9.0 11.0 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 April 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 • November 1985 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1984 1985 AAccccoouunntt 11998822 11998833 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Savings and loan associations 707,646 773,417 877,642 881,627 887,696 902,449 898,537 898,086 904,827 906,995 911,696 917,013 923,681 22 MMoorrttggaaggeess 483,614 494,789 550,129 552,516 556,229 555,277 558,276 556,184 559,263 563,376 566,396 569,291 666,728 33 CCaasshh aanndd iinnvveessttmmeenntt sseeccuurriittiieess11 ........ 85,438 104,274 112,350 112,023 114,879 125,358 119,673 119,724 119,713 114,641 116,432 118,163 119,423 4 Other 138,594 174,354 215,163 217,088 216,588 221,814 220,588 222,178 225,851 228,978 228,868 229,559 137,530 5 Liabilities and net worth 707,646 773,417 877,642 881,627 887,696 902,449 898,537 898,086 904,827 906,995 911,696 917,013 923,681 6 Savings capital 567,961 634,455 704,558 708,846 714,780 724,301 730,709 726,308 732,406 731,914 737,704 742,034 743,878 7 Borrowed money 97,850 92,127 121,329 119,305 117,775 126,169 114,806 116,879 119,461 118,655 115,391 117,000 119,618 8 FHLBB 63,861 52,626 63,627 63,412 63,383 64,207 63,152 63,452 63,187 63,941 65,239 66,861 68,312 9 Other 33,989 39,501 57,702 55,893 54,392 61,962 51,654 53,427 56,274 54,714 50,152 50,139 51,306 10 Loans in process2 9,934 21,117 27,141 26,754 26,683 26,959 26,546 26,636 27,004 27,406 27,404 27,945' n.a. 11 Other 15,602 15,968 18,050 19,894 21,302 17,215 18,358 19,857 17,471 20,539 21,671 19,708 21,359 12 Net worth3 26,233 30,867 33,705 33,582 33,839 34,764 34,664 35,042 35,489 35,887 36,930 38,271 38,824 13 MEMO: Mortgage loan commitments outstanding4 18,054 32,996 40,089 38,530 37,856 34,841 33,305 34,217 35,889 36,269 36,953 35,734' n.a. Mutual savings banks5 14 Assets 174,197 193,535 201,445 203,274 204,499 203,898 204,859 206,175 210,568 210,469 212,509 212,163 Loans 15 Mortgage 94,091 97,356 101,621 102,704 102,953 102,895 103,393 103,654 104,340 105,102 105,869 105,891 16 Other 16,957 19,129 24,535 24,486 24,884 24,954 25,747 26,456 27,798 28,000 28,530 29,211 Securities 17 U.S. government6 9,743 15,360 14,965 15,295 15,034 14,643 14,628 14,917 15,098 14,504 14,895 14,074 18 State and local government 2,470 2,177 2,052 2,080 2,077 2,077 2,067 2,069 2,092 2,097 2,094 2,093 19 Corporate and other7 36,161 43,580 42,605 43,003 43,361 42,962 43,351 43,063 43,888 43,889 43,871 43,189 20 Cash 6,919 6,263 4,795 4,605 4,795 4,954 4,140 4,423 4,864 4,679 5,004 4,935 21 Other assets 7,855 9,670 10,872 11,101 11,395 11,413 11,533 11,593 12,488 12,288 12,246 12,770 22 Liabilities 174,197 193,535 201,445 203,274 204,499 203,898 204,859 206,175 210,568 210,469 212,509 212,163 23 Deposits 155,196 172,665 177,345 178,624 180,073 180,616 181,062 181,849 185,197 184,478 185,802 186,091 24 Regular8 152,777 170,135 174,296 175,727 177,130 177,418 177,954 178,791 181,742 180,804 182,113 182,218 25 Ordinary savings 46,862 38,554 34,564 34,221 34,009 33,739 33,413 33,413 33,715 33,211 33,457 33,526 26 Time 96,369 95,129 102,934 104,151 104,849 104,732 104,098 103,536 105,204 104,527 104,843 104,756 27 Other 2,419 2,530 3,049 2,897 2,943 3,198 3,108 3,058 3,455 3,689 3,674 3,873 28 Other liabilities 8,336 10,154 12,979 13,853 13,453 12,504 12,931 13,387 14,393 14,959 15,546 14,348 29 General reserve accounts 9,235 10,368 10,488 10,459 10,535 10,510 10,619 10,670 10,720 10,803 10,913 11,238 30 MEMO: Mortgage loan commitments outstanding9 1,285 2,387 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Life insurance companies 31 Assets 588,163 654,948 699,996 705,827 712,271 720,807 730,120 734,920 741,442 747,683 756,552 Securities 32 Government 36,499 50,752 57,552 59,825 62,678 64,683 65,367 67,111 66,641 67,265 68,673 33 United States10 16,529 28,636 35,586 37,594 40,288 41,970 42,183 43,929 43,317 43,840 45,069 34 State and local. 8,664 9,986 9,221 9,344 9,385 9,757 9,895 9,956 9,770 9,772 9,870 35 Foreign11 11,306 12,130 12,745 12,887 13,005 12,956 13,289 13,226 13,554 13,653 13,734 36 Business 287,126 322,854 350,512 352,059 354,815 354,902 364,617 367,411 370,582 374,904 379,763 n.a. n a. 37 Bonds 231,406 257,986 285,543 287,607 291,021 290,731 297,666 298,381 302,072 305,945 308,393 38 Stocks 55,720 64,868 64,969 64,452 63,794 64,171 66,951 69,030 68,510 68,959 71,370 39 Mortgages 141,989 150,999 155,802 156,064 156,691 157,283 157,583 158,052 158,956 160,250 161,354 40 Real estate 20,264 22,234 24,685 24,947 25,467 25,985 26,343 26,567 26,911 27,202 27,652 41 Policy loans 52,961 54,063 54,551 54,574 54,571 54,610 54,442 54,523 54,466 54,472 54,417 42 Other assets 48,571 54,046 56,894 58,358 58,049 63,344 61,768 61,256 63,886 63,590 64,693 Credit unions12 43 Total assets/liabilities and capital .. 69,585 81,961 91,651 91,619 92,521 93,036 94,646 96,183 98,646 101,268 104,992 44 Federal 45,493 54,482 62,107 61,935 62,690 63,205 64,505 65,989 67,799 68,903 71,342 45 State 24,092 27,479 29,544 29,684 29,831 29,831 30,141 30,194 30,847 32,365 33,650 46 Loans outstanding 43,232 50,083 59,874 60,483 62,170 62,561 62,662 62,393 62,936 64,341 65,298 47 Federal 27,948 32,930 40,310 40,727 41,762 42,337 42,220 42,283 42,804 43,414 44,042 48 State 15,284 17,153 19,564 19,756 20,408 20,224 20,442 20,110 20,132 20,927 21,256 49 Savings 62,990 74,739 83,172 83,129 84,000 84,348 86,047 86,048 88,560 91,275 95,278 50 Federal (shares) 41,352 49,889 56,734 56,655 57,302 57,539 58,820 59,914 61,758 62,867 66,680 51 State (shares and deposits) 21,638 24,850 26,438 26,474 26,698 26,809 27,227 26,134 26,802 28,408 28,598 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.37 Continued 1984 1985 AAccccoouunntt 11998822 11998833 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July FSLIC-insured federal savings banks 52 Assets 6,859 64,969 82,174 87,743 94,536 98,559 98,747 106,657 109,720 110,511 113,739 114,610 53 Mortgages 3,353 38,698 48,841 51,554 55,861 57,429 57,667 60,938 62,608 63,519 64,822 65,862 54 Cash and investment securities' 10,436 12,867 13,615 14,826 16,001 15,378 17,511 18,237 17,923 18,886 18,655 55 Other 15,835 20,466 22,574 23,849 25,129 25,702 28,208 28,875 29,069 30,031 30,093 56 Liabilities and net worth 6,859 64,969 82,174 87,743 94,536 98,559 98,747 106,657 109,720 110,511 113,739 114,610 57 Savings and capital 5,877 53,227 65,079 70,080 76,167 79,572 80,091 85,632 88,001 88,205 90,414 92,089 58 Borrowed money 7,477 11,828 11,935 11,937 12,798 12,372 14,079 14,860 15,187 15,220 14,576 59 FHLBB 4,640 6,600 6,867 7,041 7,515 7,361 8,023 8,491 8,849 8,925 9,039 60 Other 2,837 5,228 5,068 4,896 5,283 5,011 6,056 6,369 6,338 6,295 5,537 61 Other 1,157 1,610 1,896 2,259 1,903 1,982 2,356 2,174 2,400 3,032 2,740 62 Net worth3 3,108 3,657 3,832 4,173 4,286 4,302 4,590 4,685 4,719 5,073 5,205 MEMO 63 Loans in process2 1,264 1,505 1,457 1,689 1,738 1,685 1,747 1,919 2,010 2,068 2,072 64 Mortgage loan commitments outstanding4 2,151 2,970 2,925 3,298 3,234 3,510 3,646 3,752 3,937 4,229 4,682 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 • November 1985 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFiissccaall Fiscal Fiscal Type of account or operation yyeeaarr year year 1983 1984 1985 11998822 1983 1984 HI H2 HI June July August U.S. budget 1 Receipts1 617,766 600,562 666,457 306,331 306,584 341,808 72,151 57,970 55,776 2 Outlays1 728,375 795,917 841,800 396,477 406,849 420,700 71,506 78,012 83,621 3 Surplus, or deficit (-) -110,609 -195,355 -175,343 -90,146 -100,265 -78,892 645 -20,042 -27,845 4 Trust funds 5,456 23,056 30,565 22,680 7,745 18,080 10,268 -392 287 5 Federal funds2 3 -116,065 -218,410 -205,908 -112,822 -108,005 -96,971 -9,623 -19,650 -28,132 Off-budget entities (surplus, or deficit (-)) 6 Federal Financing Bank outlays -14,142 -10,404 -7,277 -5,418 -3,199 -2,813 -1,573 -1,308 26 7 Other3-4 -3,190 -1,953 -2,719 -528 -1,206 -838 -441 -183 221 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 -1,369 -21,532 -27,597 Source of financing 9 Borrowing from the public 134,993 212,425 170,817 102,538 84,020 80,592 11,857 23,921 16,157 10 Cash and monetary assets (decrease, or increase (-))4 -11,911 -9,889 5,636 -9,664 -16,294 -3,127 -12,697 -466 12,013 11 Other5 4,858 5,176 8,885 3,222 4,358 7,418 2,209 -1,923 -573 MEMO 12 Treasury operating balance (level, end of period) 29,164 37,057 22,345 27,997 11,817 13,567 24,013 24,146 11,841 13 Federal Reserve Banks 10,975 16,557 3,791 19,442 3,661 4,397 3,288 2,656 3,656 14 Tax and loan accounts 18,189 20,500 18,553 8,764 8,157 9,170 20,725 21,489 8,185 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 Fiscal Fiscal Source or type year year 1983 1984 1985 1983 1984 HI H2 HI H2 July Aug. RECEIPTS 1 AU sources 600,563 666,457 306,331 305,122 341,808 341,392 72,151 57,970 55,776 2 Individual income taxes, net 288,938 295,955 144,551 147,663 144,691 157,229 34,764 26,252 25,770 4 5 3 W P N r o i e t n s h w i h d i e e t l n h d t h ia el l d E lection Campaign Fund . 26 8 6 3, , 5 0 8 1 3 0 5 6 27 8 9 1 , , 3 3 4 4 3 5 6 5 1 6 3 3 5 , , 0 5 1 3 3 4 1 0 1 2 3 0 3 , , 7 7 0 6 3 8 6 1 6 4 1 0 , , 4 6 6 5 2 3 7 9 14 1 5 9 , ,4 2 0 1 3 0 5 2 1 3 3 , , 4 5 4 7 8 9 3 26 1 , , 8 1 9 3 8 3 3 24 2 , , 9 28 1 5 4 2 6 Refunds 60,692 64,770 54,024 6,815 57,458 7,387 2,266 1,783 1,431 Corporation income taxes 7 Gross receipts 61,780 74,179 33,522 31,064 40,328 35,190 11,373 3,052 2,397 8 Refunds 24,758 17,286 13,809 8,921 10,045 6,847 585 1,161 1,319 9 Social insurance taxes and contributions, net 208,994 241,902 110,520 131,372 118,690 21,049 22,853 22,943 10 Payroll employment taxes and contributions1 179,010 203,476 90,912 88,388 106,436 104,540 18,924 21,474 18,617 11 Self- c e o m n p tr l i o b y u m ti e o n n t s 2 t axes and 6,756 8,709 6,427 398 7,667 1,086 1,258 -406 0 12 Unemployment insurance 18,799 25,138 10,984 8,714 14,942 10,706 501 1,276 3,928 13 Other net receipts3 4,436 4,580 2,197 2,290 2,329 2,360 367 441 398 14 Excise taxes 35,300 37,361 16,904 19,586 18,304 18,961 2,733 3,409 2,544 15 Customs deposits 8,655 11,370 4,010 5,079 5,576 6,329 997 1,125 1,151 16 Estate and gift taxes 6,053 6,010 2,883 3,050 3,102 3,029 428 614 560 17 Miscellaneous receipts4 15,594 16,965 7,751 7,811 8,481 8,812 1,391 1,826 1,730 OUTLAYS 18 All types 795,917 841,800 396,477 406,849 420,700 446,943 71,506 78,012 83,621 19 National defense 210,461 227,405 105,072 108,967 114,639 118,286 20,815 22,140 23,209 2 2 2 2 2 0 1 2 3 4 I G E A N n n a g e t n e t e r u r r i e c r g n r u a y a a l l l t t i u r o s r e n c e s i a o e l n u a c r f c e f e , a s i s r p a s a n c d e , e n a v n i d r o t n e m ch e n n o t logy . 2 1 4 8 7 2 2 , , , , , 0 9 7 1 6 2 3 7 7 7 7 5 7 3 6 1 1 1 8 2 2 3 2 , , , , , 2 4 6 3 2 7 7 1 6 1 1 7 3 4 5 1 4 3 2 5 0 , , , , , 7 0 8 4 1 0 7 9 8 5 5 3 2 6 4 6 4 6 5 1 , , , , , 1 9 2 2 5 1 3 7 1 3 7 3 8 6 3 5 5 7 3 1 , , , , , 4 4 9 1 0 8 6 2 2 8 1 3 6 9 0 8 4 7 8 1 , , , , , 5 4 3 5 4 5 7 7 2 2 0 3 0 4 3 - 1 8 , 9 0 6 8 7 7 7 5 2 4 4 2 3 6 1 1 , , 3 4 6 2 1 9 1 8 5 6 2 1 7 2 2 1 1 1 , , , 7 5 6 3 5 4 5 4 9 1 2 4 7 6 0 25 Commerce and housing credit 4,721 5,198 2,164 2,648 2,572 2,663 266 -189 -295 26 Transportation 21,231 24,705 9,918 13,323 10,616 13,673 2,130 2,563 2,617 27 Community and regional development .. 7,302 7,803 3,124 4,327 3,154 4,836 652 476 730 28 Education, training, employment, social services 25,726 26,616 12,801 13,246 13,445 13,737 1,949 2,185 2,745 29 Health 28,655 30,435 41,206 27,271 15,551 15,692 2,735 2,944 2,917 30 Social security and medicare 223,311 235,764 n.a. n.a. 119,420 119,613 23,074 21,890 21,306 31 Income security 122,156 96,714 143,001 92,643 50,450 57,411 7,809 10,855 10,201 32 Veterans benefits and services 24,845 25,640 11,334 13,621 12,849 13,317 907 2,324 3,409 33 Administration of justice 5,014 5,616 2,522 2,628 2,807 2,992 443 658 519 34 General government 4,991 4,836 2,434 2,479 2,462 2,552 643 215 479 35 General-purpose fiscal assistance 6,287 6,577 3,124 3,290 2,943 3,458 -131 1,222 92 36 Net interest6 86,963 111,007 42,358 47,674 54,748 61,293 9,972 10,312 12,324 37 Undistributed offsetting receipts7 -33,976 -15,454 -8,887 -7,262 -8,036 -12,914 -2,410 -3,485 -2,481 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 Financial Statistics • November 1985 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1983 1984 1985 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 1,249.3 1,324.3 1,381.9 1,415.3 1,468.3 1,517.2 1,576.7 1,667.4 1,715.1 2 Public debt securities 1,244.5 1,319.6 1,377.2 1,410.7 1,463.7 1,512.7 1,572.3 1,663.0 1,710.7 3 Held by public 1,043.3 1,090.3 1,138.2 1,174.4 1,223.9 1,255.1 1,309.2 1,373.4 1,415.2 4 Held by agencies 201.2 229.3 239.0 236.3 239.8 257.6 263.1 289.6 295.5 5 Agency securities 4.8 4.7 4.7 4.6 4.6 4.5 4.5 4.5 4.4 6 Held by public 3.7 3.6 3.6 3.5 3.5 3.4 3.4 3.4 3.3 7 Held by agencies 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 8 Debt subject to statutory limit 1,245.3 1,320.4 1,378.0 1,411.4 1,464.5 1,513.4 1,573.0 1,663.7 1,711.4 9 Public debt securities 1,243.9 1,319.0 1,376.6 1,410.1 1,463.1 1,512.1 1,571.7 1,662.4 1,710.1 10 Other debt1 1.4 1.4 1.3 1.3 1.3 1.3 1.3 1.3 1.3 11 MEMO: Statutory debt limit 1,290.2 1,389.0 1,389.0 1,490.0 1,490.0 1,520.0 1,573.0 1,823.8 1,823.8 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 Q3 Q4 Q1 Q2 1 Total gross public debt 930.2 1,028.7 1,197.1 1,410.7 1,572.3 1,663.0 1,710.7 1,774.6 By type 2 Interest-bearing debt 928.9 1,027.3 1,195.5 1,400.9 1,559.6 1,660.6 1,695.2 1,759.8 3 Marketable 623.2 720.3 881.5 1,050.9 1,176.6 1,247.4 1,271.7 1,310.7 4 Bills 216.1 245.0 311.8 343.8 356.8 374.4 379.5 381.9 5 Notes 321.6 375.3 465.0 573.4 661.7 705.1 713.8 740.9 6 Bonds 85.4 99.9 104.6 133.7 158.1 167.9 178.4 187.9 7 Nonmarketable1 305.7 307.0 314.0 350.0 383.0 413.2 423.6 449.1 8 State and local government series 23.8 23.0 25.7 36.7 41.4 44.4 47.7 53.9 9 Foreign issues2 24.0 19.0 14.7 10.4 8.8 9.1 9.1 8.3 10 Government 17.6 14.9 13.0 10.4 8.8 9.1 9.1 8.3 11 Public 6.4 4.1 1.7 .0 .0 .0 .0 .0 12 Savings bonds and notes 72.5 68.1 68.0 70.7 73.1 73.3 74.4 75.7 13 Government account series3 185.1 196.7 205.4 231.9 259.5 286.2 292.2 31 1.0 14 Non-interest-bearing debt 1.3 1.4 1.6 9.8 12.7 2.3 15.5 14.8 By holder4 15 U.S. government agencies and trust funds 192.5 203.3 209.4 236.3 263.1 289.6 295.5 16 Federal Reserve Banks 121.3 131.0 139.3 151.9 155.0 160.9 161.0 17 Private investors 616.4 694.5 848.4 1,022.6 1,154.1 1,212.5 1,254.1 18 Commercial banks 112.1 111.4 131.4 188.8 183.0 183.4 195.0 19 Money market funds 3.5 21.5 42.6 22.8 13.6 25.9 26.6 20 Insurance companies 24.0 29.0 39.1 56.7 73.2 82.3 84.0 21 Other companies 19.3 17.9 24.5 39.7 47.7 51.1 51.9 n.a. 22 State and local governments 87.9 104.3 127.8 155.1 n.a. n.a. n.a. Individuals 23 Savings bonds 72.5 68.1 68.3 71.5 73.7 74.5 75.4 74 Other securities 44.6 42.7 48.2 61.9 68.7 69.3 69.9 25 Foreign and international5 129.7 136.6 149.5 166.3 175.5 192.8 186.3 26 Other miscellaneous investors6 122.8 163.0 217.0 259.8 n.a. 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 11998822 11998833 11998844 June July Aug. July 24 July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Immediate delivery1 1 U.S. government securities 32,260 42,135 52,786 86,993r 65,844' 70,843 65,336' 64,585 71,267 77,463 72,543 62,462 By maturity 2 Bills 18,392 22,393 26,040 34,571 29,390 29,989 29,067 28,656 31,947 30,521 30,998 26,417 3 Other within 1 year 810 708 1,305 1,664 1,556 1,636 1,324 1,676 1,928 1,473 1,581 1,634 4 1-5 years 6,271 8,758 11,734 23,489' 15,962' 17,390 16,373' 17,618 18,415 16,419 20,052 16,739 5 5-10 years 3,555 5,279 7,607 15,601 10,810 11,270 10,373 8,987 9,771 13,454 9,875 9,283 6 Over 10 years 3,232 4,997 6,100 11,667 8,126 10,557 8,197 7,648 9,207 15,597 10,037 8,389 By type of customer / U.S. government securities dealers 1,770 2,257 2,920 2,947 2,478 2,912 1,799 3,383 2,564 3,711 1,999 2,923 8 U.S. government securities brokers 15,794 21,045 25,584 42,796 33,392 34,593 34,915 32,157 36,022 38,425 36,733 28,555 9 All others2 14,697 18,832 24,282 41,251' 29,973' 33,339 28,623' 29,045 32,682 35,328 33,812 30,983 10 Federal agency securities 4,140 5,576 7,846 12,893 10,794 10,950 9,710 8,749 8,468 11,591 14,290 10,030 11 Certificates of deposit 5,000 4,333 4,947 4,669 3,889 3,245 4,009 3,272 3,352 3,558 3,350 2,867 12 Bankers acceptances 2,502 2,642 3,244 4,007 3,245 2,980 3,143 3,038 3,005 3,064 3,298 2,583 13 Commercial paper 7,595 8,036 10,018 12,711 13,379 1133,,002266 1122,,331133 12,403 12,826 12,827 13,980 12,509 Futures transactions3 14 Treasury bills 5,055 6,655 6,947 6,420 4,044' 3,922 5,051 3,476 3,019 4,796 4,603 2,802 15 Treasury coupons 1,487 2,501 4,503 7,632 4,954' 5,589 5,280 5,462 5,597 6,280 5,386 5,266 16 Federal agency securities 261 265 262 223 155 346 134 337 176 334 262 502 Forward transactions4 17 U.S. government securities 835 1,493 1,364 1,319 1,151 1,268 1,450 1,583 1,364 1,665 1,235 1,174 18 Federal agency securities 978 1,646 2,843 3,740 3,492 3,581 2,959 2,685 3,371 4,171 4,425 2,777 1. Data for immediate transactions does not 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 • November 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 June July Aug. July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Positions Net immediate1 1 U.S. government securities 13,663 10,701 5,538 1,940' 295' 1,433 -2,246 -4,599 4,627 640 3,971 2 Bills 7,297 8,020 5,500 4,638' 2,973' 5,327 2,042 2,521 8,312 5,357 5,280 3 Other within 1 year 972 394 63 844' 1,293 1,376 1,652 1,310 1,394 1,337 1,356 4 1-5 years 3,256 1,778 2,159 5,698 6,513' 4,442 6,669 5,253 6,548 1,651 4,277 5 5-10 years -318 -78 -1,119 -7,173' -7,230' -6,199 -8,150 -8,169 -7,555 -4,685 -5,084 6 Over 10 years 2,026 528 -1,174 -2,393r -3,412' -3,670 -4,576 -5,654 -4,221 -3,167 -2,034 7 Federal agency securities 4,145 7,232 15,294 22,746 23,461 23,108 22,083 22,784 23,756 22,988 22,944 8 Certificates of deposit 5,532 5,839 7,369 9,492 8,996 8,205 8,636 8,236 8,079 8,269 8,212 9 Bankers acceptances 2,832 3,332 3,874 4,544 4,607 4,206 3,679 4,525 4,573 3,984 3,753 10 Commercial paper 3,317 3,159 3,788 5,232 4,786 4,905 4,041 5,272 4,972 5,093 4,417 Futures positions 11 Treasury bills -2,507 -4,125 -4,525 -4,925 -4,799 -6,699 -4,751 -5,856 -6,158 -6,779 -7,700 12 Treasury coupons -2,303 -1,032 1,794 4,235' 4,452 5,169 5,520 5,347 5,929 5,250 4,638 13 Federal agency securities -224 171 233 -472' -1,161 -530 -1,199 --11,,116699 -540 -130 -282 Forward positions 14 U.S. government securities -788 -1,936 -1,643 223' -1,086 -693 -2,076 -945 -298 -1,221 -453 15 Federal agency securities -1,432 -3,561 -9,205 -9,144 -8,941 -10,793 -9,153 -9,431 -11,294 -11,843 -10,638 Financing2 Reverse repurchase agreements3 16 Overnight and continuing 26,754 29,099 44,078 66,347 221,104 69,377 73,201 67,514 71,755 71,916 66,067 17 Term agreements 48,247 52,493 68,357 75,308 74,930 78,394 77,445 79,663 76,708 78,163 8800,,774444 Repurchase agreements4 18 Overnight and continuing 49,695 57,946 75,717 146,450 100,429 103,403 105,731 96,920 104,777 105,841 105,336 19 Term agreements 43,410 44,410 57,047 66,486 151,085 67,346 60,274 68,577 65,709 67,851 67,878 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. Before 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. Data for on a commitment basis. Data for financing are based on Wednesday figures, in immediate positions does not 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 1985 AAggeennccyy 11998822 11998833 11998844 Feb. Mar. Apr. May June July 1 Federal and federally sponsored agencies 237,085 239,716 271,564 271,479 275,093 275,209 278,697 283,953' 284,732 2 Federal agencies 33,055 33,940 35,145 35,360 35,140 35,182 34,915' 35,644' 35,352 3 Defense Department1 354 243 142 122 116 107 102 97 93 4 Export-Import Bank2 3 14,218 14,853 15,882 15,881 15,709 15,707 15,706 15,744 15,744 5 Federal Housing Administration4 288 194 133 129 127 123 122 119 118 6 Government National Mortgage Association participation certificates5 2,165 2,165 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service6 1,471 1,404 1,337 1,337 1,337 1,337 97(K 970 970 8 Tennessee Valley Authority 14,365 14,970 15,435 15,675 15,635 15,776 15,776 16,475' 16,188 9 United States Railway Association6 194 111 51 51 51 74 74 74 74 10 Federally sponsored agencies7 204,030 205,776 236,419 236,120 239,953 240,027 243,782 248,309 249,380 11 Federal Home Loan Banks 55,967 48,930 65,085 64,706 65,700 65,257 67,765 69,898 70,244 12 Federal Home Loan Mortgage Corporation 4,524 6,793 10,270 11,237 11,882 12,004 12,167 12,723 13,197 13 Federal National Mortgage Association8 70,052 74,594 83,720 84,701 86,297 86,913 88,170 89,518 90,208 14 Farm Credit Banks 71,896 72,409 71,255 70,012 70,161 69,882 69,321 69,570 69,122 15 Student Loan Marketing Association 1,591 3,050 5,369 5,464 5,913 5,971 6,359 6,600 6,609 MEMO 16 Federal Financing Bank debt 126,424 135,791 145,217 146,611 147,507 148,718 149,597 151,971' 152,958 Lending to federal and federally sponsored 17 Export-Import Bank3 14,177 14,789 15,852 15,852 15,690 15,690 15,690 15,729 15,729 18 Postal Service6 1,221 1,154 1,087 1,087 1,087 1,087 720 720 720 19 Student Loan Marketing Association 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 20 Tennessee Valley Authority 12,640 13,245 13,710 13,950 13,910 14,051 14,154 14,750' 14,463 21 United States Railway Association6 194 111 51 51 51 74 74 74 74 Other Lending10 22 Farmers Home Administration 53,261 55,266 58,971 59,041 59,756 60,641 61,461 6622,,660066 63,546 23 Rural Electrification Administration 17,157 19,766 20,693 20,804 20,730 20,894 21,003 21,183 21,364 24 Other 22,774 26,460 29,853 30,826 31,283 31,281 31,495 31,909' 32,062 1. Consists of mortgages assumed by the Defense Department between 1957 7. Includes outstanding noncontingent liabilities: Notes, bonds, and debenand 1963 under family housing and homeowners assistance programs. tures. 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. 8. Before late 1981, the Association obtained financing through the Federal 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. Financing Bank. 4. Consists of debentures issued in payment of Federal Housing Administration 9. The FFB, which began operations in 1974, is authorized to purchase or sell insurance claims. Once issued, these securities may be sold privately on the obligations issued, sold, or guaranteed by other federal agencies. Since FFB securities market. incurs debt solely for the purpose of lending to other agencies, its debt is not 5. Certificates of participation issued before fiscal 1969 by the Government included in the main portion of the table in order to avoid double counting. National Mortgage Association acting as trustee for the Farmers Home Adminis- 10. Includes FFB purchases of agency assets and guaranteed loans; the latter tration; Department of Health, Education, and Welfare; Department of Housing contain loans guaranteed by numerous agencies with the guarantees of any and Urban Development; Small Business Administration; and the Veterans particular agency being generally small. The Farmers Home Administration item Administration. consists exclusively of agency assets, while the Rural Electrification Administra- 6. Off-budget. tion entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • November 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 Nov. Dec. Jan. Feb. Mar. Apr. Mayr June 1 All issues, new and refunding1 79,138 86,421 106,641 13,548 17,713 6,607 8,510 9,873 12,095 14,097 11,313 Type of issue 3 2 Ge U ne .S ra . l g o o b ve li r g n a m tio e n n t loans2 21,0 2 9 2 4 5 21,56 % 6 26,48 1 5 6 2,611 3 2,185 2 1,887 7 3,527 0 2,998 5 3,265 0 4,535 2 2,581 0 4 Revenue 58,044 64,855 80,156 10,937 15,528 4,720 4,983 6,875 8,830 9,562 8,732 5 U.S. government loans2 461 253 17 1 0 3 0 0 2 0 1 Type of issuer 6 State 8,438 7,140 9,129 405 725 369 1,559 252 958 1,298 350 7 Special district and statutory authority 45,060 51,297 63,550 7,265 11,894 4,045 4,493 5,754 7,279 8,126 7,380 8 Municipalities, counties, townships, school districts 25,640 27,984 33,962 5,878 5,094 2,193 2,458 3,867 3,858 4,673 3,583 9 Issues for new capital, total 74,804 72,441 94,050 12,352 16,354 5,206 5,890 8,253 9,075 9,279 7,886 Use of proceeds 10 Education 6,482 8,099 7,553 999 671 757 950 1,018 1,121 1,169 933 11 Transportation 6,256 4,387 7,552 2,151 1,339 347 472 173 319 631 276 12 Utilities and conservation 14,259 13,588 17,844 534 4,133 1,359 1,008 1,491 2,347 1,478 1,883 13 Social welfare 26,635 26,910 29,928 3,701 3,598 1,670 1,848 3,155 3,105 3,454 2,903 14 Industrial aid 8,349 7,821 15,415 3,866 5,572 389 353 584 293 782 540 15 Other purposes 12,822 11,637 15,758 1,101 1,041 684 1,259 1,832 1,890 1,765 1,351 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 Dec. Jan. Feb. Mar. Apr. May June July 1 All issues1 84,638 120,074 132,311 6,940 7,294 6,743 14,005 11,790 12,896 19,391 11,775* 2 Bonds2 54,076 68,495 109,683 5,918 5,739 4,027 11,641 8,850 9,738 15,651 8,628 Type of offering 3 Public 44,278 47,369 73,357 5,918 5,739 4,027 11,641 8,850 9,738 15,651 8,628 4 Private placement 9,798 21,126 36,326 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 5 Manufacturing 12,822 16,851 24,607 1,741 1,326 1,476 5,660 922 1,500 8,044 2,688 6 Commercial and miscellaneous 5,442 7,540 13,726 555 144 469 974 1,317 639 865 1,642 7 Transportation 1,491 3,833 4,694 110 297 30 130 334 357 512 76 8 Public utility 12,327 9,125 10,679 575 309 80 500 860 1,136 585 423 9 Communication 2,390 3,642 2,997 169 375 353 300 0 150 125 110 10 Real estate and financial 19,604 27,502 52,980 2,768 3,288 1,619 4,077 5,418 5,956 5,520 3,689 11 Stocks3 30,562 51,579 22,628 1,022 1,555 2,716 2,364 2,940 3,158 3,740 3,147 Type 12 Preferred 5,113 7,213 4,118 91 170 218 311 312 634 726 63 IP 13 Common 25,449 44,366 18,510 931 1,385 2,498 2,053 2,628 2,524 3,014 2,516P Industry group 14 Manufacturing 5,649 14,135 4,054 137 172 229 224 283 504 558 601P 15 Commercial and miscellaneous 7,770 13,112 6,277 112 234 760 472 1,019 624 1,453 562P 16 Transportation 709 2,729 589 71 0 153 32 522 33 236 Of 17 Public utility 7,517 5,001 1,624 66 225 283 197 157 185 91 87 P 18 Communication 2,227 1,822 419 26 271 101 15 5 119 151 99P 19 Real estate and financial 6,690 14,780 9,665 610 653 1,190 1,424 954 1,693 1,251 1.798P 1. Figures, which represent gross proceeds of issues maturing in more than one 2. Monthly data 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 11998844rr Dec. Jan. Feb. Mar. Apr. May Juner July INVESTMENT COMPANIES' 1 Sales of own shares2 84,345 107,484 10,006 19,152 14,786 14,582 18,049 16,408 18,191 20,285 2 Redemptions of own shares3 57,100 77,027 8,948 9,183 8,005 9,412 13,500 10,069 9,836 11,502 3 Net sales 27,245 30,457 1,058 9,969 6,781 5,170 4,549 6,339 8,355 8,783 4 Assets4 113,599 137,126 137,126 151,534 154,707 157,065 164,087 178,275 186,284 195,707 5 Cash position5 8,343 11,978 11,978 13,114 14,567 13,082 15,444 15,017 15,565 17,079 6 Other 105,256 125,148 125,148 138,420 140,140 143,983 148,643 163,258 170,719 178,628 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 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r 1 Corporate profits with inventory valuation and capital consumption adjustment 159.1 225.2 285.7 245.0 260.0 277.4 291.1 282.8 291.6 292.3 298.5 2 Profits before tax 165.5 203.2 235.7 227.4 225.5 243.3 246.0 224.8 228.7 222.3 221.0 3 Profits tax liability 60.7 75.8 89.8 84.7 84.5 92.7 95.8 83.1 87.7 85.3 83.6 4 Profits after tax 104.8 127.4 145.9 142.6 141.1 150.6 150.2 141.7 141.0 137.0 137.4 5 Dividends 69.2 72.9 80.5 73.3 75.4 77.7 79.9 81.3 83.1 84.5 85.6 6 Undistributed profits 35.6 54.5 65.3 69.3 65.6 72.9 70.2 60.3 58.0 52.5 51.8 7 Inventory valuation -9.5 -11.2 -5.6 -19.3 -9.2 -13.5 -7.3 -.2 -1.6 .9 2.5 8 Capital consumption adjustment 3.1 33.2 55.7 36.9 43.6 47.6 52.3 58.3 64.5 69.1 75.0 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 • November 1985 1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities Billions of dollars, except for ratio 1984 1985 AAccccoouunntt 11997799 11998800 11998811 11998822 11998833 Q1 Q2 Q3 Q4 QL 1 Current assets 1,214.8 1,327.0 1,418.4 1,432.7 1,557.3 1,599.6 1,630.1 1,666.1 1,682.0 1,694.2 2 Cash 118.0 126.9 135.5 147.0 165.8 159.0 154.7 150.0 160.9 153.8 3 U.S. government securities 16.7 18.7 17.6 22.8 30.6 35.0 36.9 33.2 36.6 35.3 4 Notes and accounts receivable 459.0 506.8 532.0 519.2 577.8 599.7 615.4 630.6 622.3 634.8 5 Inventories 505.1 542.8 583.7 578.6 599.3 619.6 629.8 656.9 655.6 664.6 6 Other 116.0 131.8 149.5 165.2 183.7 186.3 193.4 195.4 206.6 205.7 7 Current liabilities 807.3 889.3 970.0 976.8 1,043.0 1,077.0 1,111.9 1,142.2 1,150.7 1,159.1 8 Notes and accounts payable 460.8 513.6 546.3 543.0 577.8 584.0 605.1 623.9 627.4 614.7 9 Other 346.5 375.7 423.7 433.8 465.3 493.0 506.9 518.2 523.3 544.4 10 Net working capital 407.5 437.8 448.4 455.9 514.3 522.6 518.1 523.9 531.3 535.1 11 MEMO; Current ratio1 1.505 1.492 1.462 1.467 1.493 1.485 1.466 1.459 1.462 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. 1984' 1985 IInndduussttrryy 11998833 11998844'' 1199885511'' QL Q2 Q3 Q4 QL Q2' Q3" Q41 1 Total nonfarm business 304.78 354.44 383.98 337.95 349.97 361.48 368.29 371.16 387.83 389.54 387.40 Manufacturing 2 Durable goods industries 53.08 66.24 73.58 61.23 64.03 68.26 71.43 69.87 73.96 75.81 74.68 3 Nondurable goods industries 63.12 72.58 79.86 68.68 71.93 74.18 75.53 75.78 80.36 82.02 81.30 Nonmanufacturing 4 Mining 15.19 16.86 16.08 17.24 16.38 16.82 17.00 15.66 16.51 16.32 15.80 Transportation 5 Railroad 4.88 6.79 7.24 6.06 7.34 7.31 6.44 6.02 7.48 8.06 7.43 6 Air 4.36 3.56 4.28 3.35 3.53 3.72 3.65 4.20 3.66 4.86 4.39 7 Other 4.72 6.17 6.05 5.87 6.14 6.47 6.18 6.01 6.37 6.09 5.74 Public utilities 8 Electric 37.27 37.03 35.53 38.27 37.79 36.63 35.40 36.65 36.04 35.29 34.13 9 Gas and other 7.70 10.44 12.56 8.81 10.16 11.28 11.52 11.81 12.43 13.11 12.87 10 Commercial and other2 114.45 134.75 148.81 128.42 132.67 136.80 141.13 145.71' 151.02 148.00 151.05 •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 A Billions of dollars, end of period 1983 1984 1985 AAccccoouunntt 11998800 11998811 11998822 Q4 Ql Q2 Q3 Q4 Ql Q2 ASSETS Accounts receivable, gross 1 Consumer 63.2 72.4 78.1 87.4 87.4 90.5 95.6 96.7 99.1 106.0 7 Business 90.3 100.3 101.4 113.4 120.5 124.4 124.5 135.2 142.1 144.6 3 Real estate 13.8 17.9 20.2 22.5 22.2 23.0 25.2 26.3 27.2 28.4 4 Total 167.3 190.5 199.7 223.4 230.1 238.0 245.3 258.3 268.5 279.0 Less: Reserves for unearned income 23.6 30.0 31.9 33.0 32.8 33.9 36.0 36.5 36.6 38.6 6 Reserves for losses 2.8 3.2 3.5 4.0 4.1 4.4 4.3 4.4 4.9 4.8 7 Accounts receivable, net 140.9 157.3 164.3 186.4 193.2 199.6 205.0 217.3 227.0 235.6 8 All other 23.1 27.1 30.7 34.0 35.7 35.8 36.4 35.4 35.9 39.5 9 Total assets 164.0 184.4 195.0 220.4 228.9 235.4 241.3 252.7 262.9 275.2 LIABILITIES 10 Bank loans 14.3 16.1 18.3 18.7 16.2 18.3 19.7 21.3 19.8 18.5 11 Commercial paper 47.7 57.2 51.1 59.7 64.8 68.5 66.8 72.5 79.1 82.6 Debt 12 Other short-term 10.4 11.3 12.7 13.9 14.1 15.5 16.1 16.2 16.8 16.6 n Long-term 52.4 56.0 64.4 68.1 70.3 69.7 73.8 77.2 78.3 85.7 14 All other liabilities 15.9 18.5 21.2 30.1 32.4 32.1 32.6 33.1 35.4 36.9 15 Capital, surplus, and undivided profits 23.3 25.3 27.4 29.8 31.1 31.4 32.3 32.3 33.5 34.8 16 Total liabilities and capital 164.0 184.4 195.0 220.4 228.9 235.4 241.3 252.7 262.9 275.2 A Finance company asset and liability data have been revised from June 1980 NOTE. Components may not add to totals due to rounding, forward. Revised quarterly data will appear in the Board's forthcoming Annual These data also appear in the Board's G.20 (422) release. For address, see Statistical Digest. 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 JJJuuulllyyy 333111,,, 111999888555""" May June July May June July May June July 1 Total 143,942 692 508 580 26,710 25,455 25,791 26,018 24,947 25,211 Retail financing of installment sales 2 Automotive (commercial vehicles) 12,895 354 146 366 1,135 948 1,170 781 802 804 3 Business, industrial, and farm equipment 20,520 4 71 -38 1,238 1,347 1,240 1,234 1,276 1,278 Wholesale financing 4 Automotive 19,577 -462 422 -997 9,493 9,053 8,497 9,955 8,631 9,494 5 Equipment 4,583 34 -160 83 588 439 638 554 599 555 6 All other 6,790 -249 126 30 1,569 1,517 1,576 1,818 1,391 1,606 Leasing 7 Automotive 15,228 363 295 251 1,034 882299 1,090 671 534 839 8 Equipment 37,477 141 -174 584 992 1,345 1,223 851 1,519 639 9 Loans on commercial accounts receivable and factored commercial accounts receivable 15,591 243 -268 207 9,396 8,917 9,201 9,153 9,185 8,994 10 All other business credit 11,281 264 50 154 1,265 1,060 1,156 1,001 1,010 1,002 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 • November 1985 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1985 Feb. Mar. Apr. May June July Aug. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 94.6 92.8 96.8 101.8 91.3 101.4 106.4 102.4 119.2r 104.4 2 Amount of loan (thousands of dollars) 69.8 69.5 73.7 76.5 69.9 76.9 78.4 79.7 89.4' 74.4 3 Loan/price ratio (percent) 76.6 77.1 78.7 77.6 79.8 78.9 76.1 79.9 77.5' 74.6 4 Maturity (years) 27.6 26.7 27.8 28.1 27.2 27.4 26.8 27.7 27.5 24.5 5 Fees and charges (percent of loan amount)2 2.95 2.40 2.64 2.58 2.65 2.65 2.49 2.40 2.24' 2.46 6 Contract rate (percent per annum) 14.47 12.20 11.87 11.74 11.42 11.55 11.55 11.31 10.94' 10.78 Yield (percent per annum) 7 FHLBB series5 15.12 12.66 12.37 12.21 11.92 12.05 12.01 11.75 11.34' 11.24 8 HUD series4 15.79 13.43 13.80 13.06 13.26 13.01 12.49 12.06 12.09 12.06 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 15.30 13.11 13.81 13.27 13.43 12.97 12.28 11.89 12.12 n.a. 10 GNMA securities6 14.68 12.25 13.13 12.23 12.68 12.31 11.93 11.54 11.48 11.24 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 66,031 74,847 83,339 90,369 91,975 92,765 93,610 94,777 95,634 96,324 12 FHA/VA-insured 39,718 37,393 35,148 34,553 34,585 34,516 34,428 34,307 34,276 34,177 13 Conventional 26,312 37,454 48,191 55,816 57,391 58,250 59,182 60,470 61,359 62,147 Mortgage transactions (during period) 14 Purchases 15,116 17,554 16,721 1,559 2,256 1,515 1,703 1,904 1,918 1,921 15 Sales 2 3,528 978 0 100 0 0 0 251 230 Mortgage commitments7 16 Contracted (during period) 22,105 18,607 21,007 1,895 1,636 1,921 2,074 1,593 1,583 1,797 17 Outstanding (end of period) 7,606 5,461 6,384 5,665 5,019 5,361 5,589 5,062 4,517' 4,245 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 18 Total 5,131 5,996 9,283 11,118 11,549 11,615 11,879 12,576 12,844 n.a. 19 FHA/VA 1,027 974 910 859 854 850 843 838 842 n.a. 20 Conventional 4,102 5,022 8,373 10,259 10,694 10,765 11,036 11,738 12,002 n.a. Mortgage transactions (during period) 21 Purchases 23,673 23,089 21,886 3,247 3,232 2,201 3,591 4,106 4,626 n.a. 22 Sales 24,170 19,686 18,506 2,428 2,751 1,973 3,189 3,292 4,200 n.a. Mortgage commitments9 23 Contracted (during period) 28,179 32,852 32,603 3,622 3,453 4,141 3,701 5,172 3,259 n.a. 24 Outstanding (end of period) 7,549 16,964 13,318 30,135 30,436 n.a. n.a. n.a. n.a. n.a. 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 Q2 Q3 Q4 Ql Q2 1 All holders 1,631,283' 1,811,445' 2,025,383' 1,919,082' 1,975,197' 2,025,383' 2,072,673' 2,127,879 ? 1- to 4-family 1,074,67c 1,192,840' 1,331,582' 1,263,236' 1,298,583' 1,331,582' 1,363,648' 1,402,596 3 Multifamily 145,767' 156,738' 171,418' 165,088' 167,439' 171,418' 175,047' 179,369 4 Commercial 300,799 349,195 407,533 376,617 394,144 407,533 419,809 431,891 5 110,047' 112,672' 114,85c 114,141' 115,031' 114,85C 114,169' 114,023 Major financial institutions 1,021,327 1,108,249 1,241,682 1,177,662 1,215,160 1,241,682 1,263,656 1,292,487 7 Commercial banks1 301,272 330,521 374,681 352,258 363,156 374,681 383,444 395,755 8 1- to 4-family 173,804 182,514 196,070 190,185 193,090 196,070 198,912 203,299 9 Multifamily 16,480 18,410 21,432 20,501 20,083 21,432 21,974 22,716 10 Commercial 102,553 120,210 146,650 131,533 139,742 146,650 152,242 159,094 11 Farm 8,435 9,387 10,529 10,039 10,241 10,529 10,316 10,646 1? Mutual savings banks 94,452 131,940 154,441 143,387 146,073 154,441 161,992 165,684 n 1- to 4-family 64,488 93,649 109,890 102,122 103,824 109,890 114,735 118,190 14 Multifamily 14,780 17,247 19,385 18,227 18,580 19,385 20,081 20,575 ii Commercial 15,156 21,016 25,136 23,009 23,639 25,136 27,146 26,888 16 Farm 28 28 30 29 30 30 30 31 17 Savings and loan associations 483,614 494,789 555,277 528,172 550,129 555,277 559,263 569,292 18 1- to 4-family 393,323 390,883 431,450 414,087 429,101 431,450 433,429 441,201 19 Multifamily 38,979 42,552 48,309 45,951 47,861 48,309 48,936 49,813 20 Commercial 51,312 61,354 75,518 68,134 73,167 75,518 76,898 78,278 21 Life insurance companies 141,989 150,999 157,283 153,845 155,802 157,283 158,957 161,756 77 1- to 4-family 16,751 15,319 14,180 14,437 14,204 14,180 13,918 14,009 73 Multifamily 18,856 19,107 19,017 19,028 18,828 19,017 19,071 19,328 74 Commercial 93,547 103,831 111,642 107,796 110,149 111,642 113,823 116,493 25 Farm 12,835 12,742 12,444 12,584 12,621 12,444 12,145 11,926 26 Federal and related agencies 138,741 148,328 158,993 153,897 154,768 158,993 163,547 166,504 27 Government National Mortgage Association 4,227 3,395 2,301 2,715 2,389 2,301 1,964 1,825 28 1- to 4-family 676 630 585 605 594 585 576 564 29 Multifamily 3,551 2,765 1,716 2,110 1,795 1,716 1,388 1,261 30 Farmers Home Administration 1,786 2,141 1,276 1,344 738 1,276 1,062 790 31 1- to 4-family 783 1,159 213 281 206 213 156 223 32 Multifamily 218 173 119 463 126 119 82 136 33 Commercial 377 409 497 81 113 497 421 163 34 Farm 408 400 447 519 293 447 403 268 35 Federal Housing and Veterans Administration 5,228 4,894 4,816 4,753 4,749 4,816 4,878 4,882 36 1- to 4-family 1,980 1,893 2,048 1,894 1,982 2,048 2,181 2,205 37 Multifamily 3,248 3,001 2,768 2,859 2,767 2,768 2,697 2,677 38 Federal National Mortgage Association 71,814 78,256 87,940 83,243 84,850 87,940 91,975 94,777 39 1- to 4-family 66,500 73,045 82,175 77,633 79,175 82,175 86,129 88,788 40 Multifamily 5,314 5,211 5,765 5,610 5,675 5,765 5,846 5,989 41 Federal Land Banks 50,953 52,010 52,261 52,364 52,595 52,261 52,120 51,654 4? 1- to 4-family 3,130 3,081 3,074 3,061 3,068 3,074 3,080 3,053 43 Farm 47,823 48,929 49,187 49,303 49,527 49,187 49,040 48,601 44 Federal Home Loan Mortgage Corporation 4,733 7,632 10,399 9,478 9,447 10,399 11,548 12,576 45 1- to 4-family 4,686 7,559 9,654 8,931 8,841 9,654 10,642 11,288 46 Multifamily 47 73 745 547 606 745 906 1,288 47 Mortgage pools or trusts2 216,654 285,073 332,057 305,051 317,548 332,057 347,793 365,748 48 Government National Mortgage Association 118,940 159,850 179,981 170,893 175,770 179,981 185,954 192,925 49 1- to 4-family 116,038 155,950 175,589 166,723 171,481 175,589 181,419 188,228 50 Multifamily 2,902 3,900 4,392 4,170 4,289 4,392 4,535 4,697 51 Federal Home Loan Mortgage Corporation 42,964 57,895 70,822 61,267 63,964 70,822 76,759 83,327 52 1- to 4-family 42,560 57,273 70,253 60,636 63,352 70,253 75,781 82,369 53 Multifamily 404 622 569 631 612 569 978 958 54 Federal National Mortgage Association3 14,450 25,121 36,215 29,256 32,888 36,215 39,370 42,755 55 1- to 4-family 14,450 25,121 35,965 29,256 32,730 35,965 38,772 41,985 56 Multifamily n.a. n.a. 250 n.a. 158 250 598 770 57 Farmers Home Administration 40,300 42,207 45,039 43,635 44,926 45,039 45,710 46,741 58 1- to 4-family 20,005 20,404 21,813 21,331 21,595 21,813 21,928 21,962 59 Multifamily 4,344 5,090 5,841 5,081 5,618 5,841 6,041 6,377 60 Commercial 7,011 7,351 7,559 7,764 7,844 7,559 7,681 8,014 61 Farm 8,940 9,362 9,826 9,459 9,869 9,826 10,060 10,388 67 Individual and others4 254,561' 269,795' 292,651' 282,472' 287,721' 292,651' 297,677' 303,140 63 1- to 4-family5 155,496' 164,36C 178,623' 172,054' 175,340' 178,623' 181,99C 185,232 64 Multifamily 36,644' 38,587' 41,11C 39,91C 40,441' 41,11C 41,914' 42,784 65 Commercial 30,843 35,024 40,531 38,300 39,490 40,531 41,598 42,961 66 Farm 31,578' 31,824' 32,387' 32,208' 32.45C 32,387' 32,175' 32,163 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 • November 1985 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change Millions of dollars 1984 1985 Nov. Dec. Jan. Feb. Mar. Apr. May June July Amounts outstanding (end of period) 1 Total 383,701 460,500 447,783 460,500 461,530 463,628 471,567 479,935 488,666 495,813' 503,834 By major holder 2 Commercial banks 171,978 212,391 206,635 212,391 213,951 215,778 219,970 223,850 226,973 229,676' 232,913 3 Finance companies 87,429 96,747 95,753 96,747 96,732 97,360 99,133 101,324 104,130 105,971 107,985 4 Credit unions 53,471 67,858 66,528 67,858 68,538 68,939 70,432 71,418 72,381 73,468 74,614 5 Retailers2 37,470 40,913 37,124 40,913 38,978 37,483 37,082 37,091 37,472 37,548 37,399 6 Savings and loans 23,108 29,945 29,358 29,945 30,520 31,405 32,349 33,514 34,754 35,901 37,301 7 Gasoline companies 4,131 4,315 4,217 4,315 4,329 4,012 3,820 3,834 3,918 4,075 4,316 8 Mutual savings banks 6,114 8,331 8,168 8,331 8,482 8,651 8,781 8,904 9,038 9,174 9,306 By major type of credit 9 Automobile 143,114 172,589 170,731 172,589 173,769 175,491 179,661 183,558 187,795 191,315' 194,678 10 Commercial banks 67,557 85,501 84,326 85,501 86,223 87,333 89,257 90,915 92,403 94,099' 95,763 11 Credit unions 25,574 32,456 31,820 32,456 32,781 32,973 33,687 34,159 34.620 35,139 35,687 12 Finance companies 49,983 54,632 54,585 54,632 54,765 55,185 56,717 58,484 60,772 62,077 63,228 13 Revolving 81,977 101,555 93,944 101,555 100,565 99,316 100,434 101,887 103,492 104,333' 105,539 14 Commercial banks 44,184 60,549 56,641 60,549 61,445 61,978 63,684 65,127 66,311 66,956' 68,093 15 Retailers 33,662 36,691 33,086 36,691 34,791 33,326 32,930 32,926 33,263 33,302 33,130 16 Gasoline companies 4,131 4,315 4,217 4,315 4,329 4,012 3,820 3,834 3,918 4,075 4,316 17 Mobile home 23,862 24,556 24,439 24,556 24,281 24,379 24,456 24,675 24,925 25,205' 25,545 18 Commercial banks 9,842 9,610 9,613 9,610 9,498 9,456 9,425 9,432 9,445 9,480' 9,493 19 Finance companies 9,547 9,243 9,235 9,243 9,053 9,044 8,981 8,992 9,016 9,061 9,146 20 Savings and loans 3,906 4,985 4,887 4,985 5,005 5,150 5,305 5,496 5,699 5,887 6,117 21 Credit unions 567 718 704 718 725 729 745 755 765 777 789 22 Other 134,748 161,800 158,669 161,800 162,915 164,442 167,016 169,815 172,454 174,960' 178,072 23 Commercial banks 50,395 56,731 56,055 56,731 56,785 57,011 57,604 58,376 58,814 59,141' 59,564 24 Finance companies 27,899 32,872 31,933 32,872 32,914 33,131 33,435 33,848 34,342 34,833 35,611 25 Credit unions 27,330 34,684 34,004 34,684 35,032 35,237 36,000 36,504 36,996 37,552 38,138 26 Retailers 3,808 4,222 4,038 4,222 4,187 4,157 4,152 4,165 4,209 4,246 4,269 27 Savings and loans 19,202 24,960 24,471 24,960 25,515 26,255 27,044 28,018 29,055 30,014 31,184 28 Mutual savings banks 6,114 8,331 8,168 8,331 8,482 8,651 8,781 8,904 9,038 9,174 9,306 Net change (during period) 29 Total 48,742 76,799 6,080 6,819 7,223 9,041 8,342 8,270 9,042 5,227' 6,247 By major holder 30 Commercial banks 19,488 40,413 2,483 3,028 3,799 5,071 4,847 3,853 4,108 1,690' 1,824 31 Finance companies 18,572 18,636 778 1,196 901 1,203 2,048 1,885 2,373 1,218 1,629 32 Credit unions 6,218 14,387 1,731 1,336 1,290 1,423 797 1,215 673 797 1,149 33 Retailers2 5,075 3,443 278 389 251 269 91 168 341 -31 112 34 Savings and loans 7,285 6,837 546 576 922 997 715 1,063 1,327 1,417 1,338 35 Gasoline companies 68 184 86 117 -91 -102 -142 -45 59 -51 21 36 Mutual savings banks 1,322 2.217 178 177 151 180 -14 131 161 187 174 By major type of credit 37 Automobile 16,856 29,475 2,549 2,687 2,887 3,198 3,391 3,488 3,792 2,686' 2,365 38 Commercial banks 8,002 17,944 1,019 1,275 1,616 1,790 1,767 1,546 1,589 1,488' 1,025 39 Credit unions 2,978 6,882 828 640 598 696 381 580 325 380 550 40 Finance companies 11,752 9,298 702 772 673 712 1,243 1,362 1,878 818 790 41 Revolving 12,353 19,578 1,614 1,445 1,957 2,527 2,631 2,126 2,429 -73' 856 42 Commercial banks 7,518 16,365 1,289 1,001 1,809 2,429 2,698 2,003 2,095 42' 733 43 Retailers 4,767 3,029 239 327 239 200 75 168 275 -64 102 44 Gasoline companies 68 184 86 117 -91 -102 -142 -45 59 -51 21 45 Mobile home 1,452 694 -91 117 -159 282 -11 218 186 196' 324 46 Commercial banks 237 -232 -1 29 -89 41 -50 19 -21 -31' -22 47 Finance companies 776 -608 -192 -13 -144 33 -63 13 -19 1 74 48 Savings and loans 763 1,079 84 88 60 192 92 175 219 217 261 49 Credit unions 64 151 18 13 14 16 10 11 7 9 11 50 Other 18,081 27,052 2,008 2,570 2,538 3,034 2,331 2,438 2,635 2,418' 22,,770022 51 Commercial banks 3,731 6,336 176 723 463 811 432 285 445 191' 8888 52 Finance companies 6,044 9,946 268 437 372 458 868 510 514 399 765 53 Credit unions 3,176 7,354 885 683 678 711 406 624 341 408 588 54 Retailers 308 414 39 62 12 69 16 0 66 33 10 55 Savings and loans 6,522 5,758 462 488 862 805 623 888 1,108 1,200 1,077 56 Mutual savings banks 1,322 2,217 178 177 151 180 -14 131 161 187 174 1. The Board's series cover most short- and intermediate-term credit extended NOTE. Total consumer noninstallment credit outstanding—credit scheduled to to individuals through regular business channels, usually to finance the purchase be repaid in a lump sum, including single-payment loans, charge accounts, and of consumer goods and services or to refinance debts incurred for such purposes, service credit—amounted to, not seasonally adjusted, $85.9 billion at the end of and scheduled to be repaid (or with the option of repayment) in two or more 1982, $96.9 billion at the end of 1983, and $116.6 billion at the end of 1984. installments. These data also appear in the Board's G.19 (421) release. For address, see 2. Includes auto dealers and excludes 30-day charge credit held by travel and inside front cover. entertainment companies. 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 1985 IItteemm 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May June July INTEREST RATES Commercial banks1 1 48-month new car2 16.82 13.92 13.71 n.a. 13.37 n.a. n.a. 13.16 n.a. n.a. 2 24-month personal 18.64 16.50 16.47 n.a. 16.21 n.a. n.a. 16.09 n.a. n.a. 3 120-month mobile home2 18.05 16.08 15.58 n.a. 15.42 n.a. n.a. 15.03 n.a. n.a. 4 Credit card 18.51 18.78 18.77 n.a. 18.85 n.a. n.a. 18.74 n.a. n.a. Auto finance companies J New car 16.15 12.58 14.62 15.11 13.78 12.65 11.92 11.87 12.06 12.46 6 Used car 20.75 18.74 17.85 17.88 17.91 17.78 17.78 17.84 17.77 17.49 OTHER TERMS3 Maturity (months) / New car 45.9 45.9 48.3 50.7 51.4 52.2 51.5 50.9 51.3 51.7 8 Used car 37.0 37.9 39.7 41.3 41.1 41.3 41.3 41.4 41.3 41.5 Loan-to-value ratio 9 New car 85 86 88 90 90 91 91 91 91 91 10 Used car 90 92 92 93 93 93 93 94 94 95 Amount financed (dollars) 11 New car 8,178 8,787 9,333 9,654 9,196 9,232 9,305 9,775 9,965 10,355 12 Used car 4,746 5,033 5,691 5,951 5,968 5,976 6,043 6,117 6,116 6,146 1. Data for midmonth of quarter only. 3. At auto finance companies. 2. Before 1983 the maturity for new car loans was 36 months, and for mobile NOTE. These data also appear in the Board's G.19 (421) release. For address, home loans was 84 months. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Financial Statistics • November 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' 1985 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11997799'' 11998800'' 11998811'' 11998822'' 11998833'' 11998844'' H2 HI H2 HI H2 HI Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .... 388.7 340.0 371.6 398.3 538.9 755.6 442.1 508.8 569.0 704.0 807.3 708.4 By sector and instrument 2 U.S. government 37.4 79.2 87.4 161.3 186.6 198.8 218.4 222.0 151.1 172.7 224.9 182.3 3 Treasury securities 38.8 79.8 87.8 162.1 186.7 199.0 218.8 222.1 151.2 172.9 225.0 182.4 4 Agency issues and mortgages -1.4 -.6 -.5 -.9 -.1 -.2 -.4 -.1 -.1 -.2 -.1 -.1 5 Private domestic nonfinancial sectors 351.3 260.8 284.2 237.0 352.3 556.8 223.7 286.7 417.9 531.3 582.4 526.1 6 Debt capital instruments 213.9 186.3 153.7 153.5 249.1 322.1 167.1 225.4 272.7 281.8 362.4 344.1 7 Tax-exempt obligations 30.3 30.3 23.4 48.6 57.3 65.8 54.6 57.3 57.3 38.9 92.6 80.5 8 Corporate bonds 17.3 26.7 21.8 18.7 16.0 42.3 25.3 21.4 10.6 24.4 60.2 61.4 9 Mortgages 166.2 129.4 108.5 86.2 175.7 214.1 87.1 146.7 204.7 218.5 209.6 202.2 10 Home mortgages 121.7 93.8 71.6 50.4 115.6 139.2 50.1 96.2 135.1 144.8 133.5 140.8 11 Multifamily residential 8.3 7.1 4.8 5.3 9.4 14.0 5.8 6.3 12.6 16.0 12.0 13.9 12 Commercial 24.4 19.2 22.2 25.2 47.6 58.8 27.3 42.3 53.0 55.6 62.0 49.0 13 Farm 11.8 9.3 9.9 5.3 3.0 2.1 3.9 1.9 4.1 2.0 2.1 -1.5 14 Other debt instruments 137.5 74.5 130.5 83.6 103.3 234.8 56.6 61.3 145.2 249.5 220.0 182.0 15 Consumer credit 45.4 4.7 22.7 20.1 59.8 96.5 21.7 44.1 75.5 102.1 90.9 122.3 16 Bank loans n.e.c 51.2 37.0 54.7 54.1 26.7 79.4 41.9 13.7 39.8 90.2 68.7 16.6 17 Open market paper 11.1 5.7 19.2 -4.7 -1.6 23.7 -19.3 -10.0 6.9 33.5 13.8 15.6 18 Other 29.7 27.1 33.9 14.0 18.3 35.2 12.4 13.6 23.1 23.7 46.7 27.6 19 By borrowing sector 351.3 260.8 284.2 237.0 352.3 556.8 223.7 286.7 417.9 531.3 582.4 526.1 20 State and local governments 17.6 17.2 6.8 25.9 37.6 45.0 29.3 36.1 39.2 21.4 68.6 66.6 21 Households 181.0 117.9 119.2 90.4 190.4 249.5 93.5 156.0 224.8 248.2 250.7 273.1 22 Farm 21.4 14.3 16.4 7.9 4.5 2.9 5.9 1.1 7.8 2.1 3.8 -10.5 23 Nonfarm noncorporate 35.3 31.0 38.4 40.9 65.2 77.8 42.1 55.5 75.0 83.0 72.5 69.6 24 Corporate 96.0 80.4 103.4 71.9 54.6 181.7 52.9 38.0 71.1 176.6 186.8 127.3 25 Foreign net borrowing in United States 20.2 27.2 27.2 15.7 18.9 1.7 21.2 15.3 22.5 22.9 -19.5 -14.2 26 Bonds 3.9 .8 5.4 6.7 3.8 4.1 11.0 4.6 2.9 1.1 7.0 4.8 27 Bank loans n.e.c 2.3 11.5 3.7 -6.2 4.9 -7.8 -4.7 11.3 -1.5 -4.6 -11.0 -11.7 28 Open market paper 11.2 10.1 13.9 10.7 6.0 1.4 9.0 -4.6 16.5 20.9 -18.1 -8.8 29 U.S. government loans 2.9 4.7 4.2 4.5 4.3 4.0 6.0 3.9 4.6 5.5 2.6 1.5 30 Total domestic plus foreign 408.9 367.2 398.8 414.0 557.8 757.4 463.3 524.0 591.5 726.9 787.8 694.3 Financial sectors 31 Total net borrowing byf inancials ectors 82.4 57.6 89.0 76.2 85.2 130.3 57.5 66.7 103.7 119.2 141.3 177.9 By instrument 32 U.S. government related 47.9 44.8 47.4 64.9 67.8 74.9 69.7 66.2 69.4 69.6 80.1 105.0 33 Sponsored credit agency securities 24.3 24.4 30.5 14.9 1.4 30.4 7.5 -4.1 6.9 29.9 31.0 26.1 34 Mortgage pool securities 23.1 19.2 15.0 49.5 66.4 44.4 62.2 70.3 62.5 39.7 49.2 78.9 3S .6 1.2 1.9 .4 36 Private financial sectors 34.5 12.8 41.6 11.3 17.4 55.4 -12.2 .5 34.4 49.6 61.2 72.8 37 Corporate bonds 7.8 1.8 3.5 9.7 8.6 18.5 11.2 6.4 10.7 12.2 24.7 31.9 38 Mortgages * * * .1 * -.1 .1 * * -.1 -.1 * 39 Bank loans n.e.c -.5 -.9 .9 1.9 -.2 1.0 .6 -2.5 2.2 .3 1.6 * 40 Open market paper 18.0 4.8 20.9 -1.1 16.0 20.4 -14.6 8.7 23.4 21.3 19.5 29.3 41 Loans from Federal Home Loan Banks 9.2 7.1 16.2 .8 -7,0 15.7 -9.5 -12.1 -2.0 15.9 15.5 11.6 By sector 42 Sponsored credit agencies 24.8 25.6 32.4 15.3 1.4 30.4 7.5 -4.1 6.9 29.9 31.0 26.1 43 Mortgage pools 23.1 19.2 15.0 49.5 66.4 44.4 62.2 70.3 62.5 39.7 49.2 78.9 44 Private financial sectors 34.5 12.8 41.6 11.3 17.4 55.4 -12.2 .5 34.4 49.6 61.2 72.8 45 Commercial banks 1.6 .5 .4 1.2 .5 4.4 1.7 .8 .2 4.8 3.9 8.2 46 Bank affiliates 6.5 6.9 8.3 1.9 8.6 10.9 -5.8 6.1 11.1 20.0 1.8 8.2 47 Savings and loan associations 12.6 7.4 15.5 2.5 -2.1 22.7 -9.3 -9.3 5.2 19.7 25.6 5.6 48 Finance companies 15.3 -1.1 18.2 6.3 11.3 18.1 1.9 3.9 18.8 5.6 30.6 51.6 49 REITs -.1 -.5 -.2 * .3 .2 * -.3 -.2 .3 .1 .1 All sectors 50 Total net borrowing 491.3 424.9 487.8 490.2 643.0 887.6 520.8 590.7 695.2 846.1 929.2 872.1 51 U.S. government securities 84.8 122.9 133.0 225.9 254.4 273.8 288.3 288.4 220.5 242.4 305.1 287.4 52 State and local obligations 30.3 30.3 23.4 48.6 57.3 65.8 54.6 57.3 57.3 38.9 92.6 80.5 53 Corporate and foreign bonds 29.0 29.3 30.7 35.0 28.4 64.8 47.5 32.5 24.3 37.7 92.0 98.1 54 Mortgages 166.1 129.3 108.4 86.2 175.6 213.9 87.1 146.6 204.7 218.3 209.4 202.1 55 Consumer credit 45.4 4.7 22.7 20.1 59.8 96.5 21.7 44.1 75.5 102.1 90.9 122.3 56 Bank loans n.e.c 52.9 47.7 59.2 49.9 31.4 72.6 37.8 22.5 40.4 85.9 59.3 4.9 57 Open market paper....: 40.3 20.6 54.0 4.9 20.4 45.4 -25.0 -5.9 46.8 75.7 15.2 36.1 58 Other loans 42.4 40.1 56.2 19.7 15.5 54.9 8.9 5.3 25.7 45.1 64.8 40.8 External corporate equity funds raised in United States 59 Total new share issues -4.3 21.9 -3.0 35.3 67.8 -33.1 47.2 83.4 52.1 -40.8 -25.5 25.4 60 Mutual funds .1 5.2 6.3 18.4 32.8 37.7 24.3 36.8 28.9 39.6 35.7 94.9 61 All other -4.3 16.8 -9.3 16.9 35.0 -70.8 22.9 46.7 23.2 -80.4 -61.2 -69.5 62 Nonfinancial corporations -7.8 12.9 -11.5 11.4 28.3 -77.0 15.8 38.2 18.4 -84.5 -69.4 -78.7 63 Financial corporations 2.7 1.8 1.9 4.0 2.7 5.1 4.1 2.7 2.6 4.8 5.3 5.4 64 Foreign shares purchased in United States .8 2.1 .3 1.5 4.0 1.1 3.0 5.7 2.2 -.7 2.9 3.8 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' 1984r 1985r TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997799rr 11998800'' 11998811RR 11998822rr 11998833rr 11998844rr H2 HI H2 HI H2 HI 1 Total funds advanced in credit markets to domestic nonfinancial sectors 388.7 340.0 371.6 398.3 538.9 755.6 442.1 508.8 569.0 704.0 880077..33 770088..44 By public agencies and foreign 2 Total net advances 75.2 97.1 97.7 114.1 117.5 142.2 112277..11 112200..22 111144..77 112233..22 116611..22 119933..66 3 U.S. government securities -6.3 15.8 17.1 22.7 27.6 36.0 35.7 40.7 14.4 29.5 42.5 52.8 4 Residential mortgages 35.8 31.7 23.5 61.0 76.1 56.5 74.5 80.2 72.1 52.8 60.1 86.5 5 FHLB advances to savings and loans 9.2 7.1 16.2 .8 -7.0 15.7 -9.5 -12.1 -2.0 15.9 15.5 11.6 6 Other loans and securities 36.5 42.5 40.9 29.5 20.8 34.1 26.5 11.5 30.2 25.1 43.2 42.7 Total advanced, by sector 7 U.S. government 19.0 23.7 24.0 15.9 9.7 17.2 17.1 9.1 10.3 7.9 2266..55 55..22 8 Sponsored credit agencies 53.1 45.6 48.2 65.5 69.8 73.3 69.1 68.6 71.0 73.6 73.0 111.2 9 Monetary authorities 7.7 4.5 9.2 9.8 10.9 8.4 15.7 15.6 6.2 11.9 4.9 27.9 10 Foreign -4.5 23.3 16.2 22.8 27.1 43.4 25.3 27.0 27.2 29.9 56.9 49.2 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 74.9 69.7 6666..22 6699..44 6699..66 8800..11 110055..00 12 Foreign 20.2 27.2 27.2 15.7 18.9 1.7 21.2 15.3 22.5 22.9 --1199..55 -14.2 Private domestic funds advanced 13 Total net advances 381.6 314.9 348.5 364.8 508.1 690.0 405.9 470.0 546.1 673.3 706.8 660055..77 14 U.S. government securities 91.0 107.1 115.9 203.1 226.9 237.8 252.6 247.6 206.1 213.0 262.7 234.7 15 State and local obligations 30.3 30.3 23.4 48.6 57.3 65.8 54.6 57.3 57.3 38.9 92.6 80.5 16 Corporate and foreign bonds 18.5 19.3 18.8 14.8 14.9 29.9 29.6 21.4 8.5 17.7 42.2 33.2 17 Residential mortgages 94.2 69.1 52.9 -5.5 48.9 96.6 -18.7 22.2 75.5 107.9 85.3 6688..11 18 Other mortgages and loans 156.7 96.3 153.8 104.6 153.0 275.6 78.2 109.4 196.7 311.7 239.5 220000..99 19 LESS: Federal Home Loan Bank advances 9.2 7.1 16.2 .8 -7.0 15.7 -9.5 -12.1 -2.0 15.9 15.5 11.6 Private financial intermediation 20 Credit market funds advanced by private financial institutions 316.4 281.3 317.2 287.6 382.7 553.2 300.7 334.6 430.7 548.1 558.3 446655..00 21 Commercial banking 123.1 100.6 102.3 107.2 136.1 181.9 114.5 121.6 150.6 196.0 167.9 140.3 22 Savings institutions 56.5 54.5 27.4 31.4 140.5 143.0 37.6 132.7 148.4 161.5 124.6 78.0 23 Insurance and pension funds 85.6 94.5 97.6 107.4 94.2 123.1 103.8 83.0 105.3 111.8 134.4 101.6 24 Other finance 51.2 31.7 89.9 41.5 11.9 105.1 44.8 -2.7 26.5 78.8 131.4 145.2 25 Sources of funds 316.4 281.3 317.2 287.6 382.7 553.2 300.7 334.6 430.7 548.1 558.3 465.0 26 Private domestic deposits and RPs 137.4 169.6 211.9 174.4 205.2 287.7 201.7 194.1 216.3 277.1 298.2 186.2 27 Credit market borrowing 34.5 12.8 41.6 11.3 17.4 55.4 -12.2 .5 34.4 49.6 61.2 72.8 28 Other sources 144.5 98.8 63.7 101.8 160.0 210.1 111.2 140.0 180.0 221.3 198.9 206.0 29 Foreign funds 27.6 -21.7 -8.7 -26.7 22.1 19.0 -25.1 -14.2 58.5 27.2 10.9 26.3 30 Treasury balances .4 -2.6 -1.1 6.1 -5.3 4.0 14.1 10.1 -20.8 1.7 6.4 20.1 31 Insurance and pension reserves 72.9 83.7 90.7 103.2 95.1 111.7 95.3 83.5 106.8 118.0 105.5 93.3 32 Other, net 43.6 39.4 -17.2 19.3 48.1 75.4 26.9 60.6 35.6 74.6 76.2 66.2 Private domestic nonfinancial investors 33 Direct lending in credit markets 99.7 46.5 72.9 88.5 142.8 192.2 93.0 135.9 149.8 174.8 220099..66 221133..55 34 U.S. government securities 52.5 24.6 29.3 32.1 88.3 122.8 28.9 97.5 79.1 128.3 117.3 123.5 35 State and local obligations 9.9 7.0 11.1 29.2 43.5 42.2 29.7 47.2 39.8 24.3 60.1 41.9 36 Corporate and foreign bonds -1.4 -11.0 -3.9 3.9 -9.2 * 13.8 -14.5 -4.0 -8.4 8.5 13.1 37 Open market paper 8.6 -3.1 2.7 -.6 6.5 -1.0 -4.7 -6.0 19.1 4.4 -6.5 11.6 38 Other 30.1 29.1 33.7 24.0 13.7 28.2 25.4 11.8 15.6 26.2 30.3 23.4 39 Deposits and currency 146.8 181.1 221.9 181.6 224.4 292.2 211.5 215.9 232.8 288.5 296.0 203.8 40 Currency 8.0 10.3 9.5 9.7 14.3 8.6 12.7 14.8 13.8 15.9 1.4 18.8 41 Checkable deposits 18.3 5.2 18.0 15.4 23.0 21.4 29.3 49.1 -3.0 25.0 17.7 17.1 42 Small time and savings accounts 59.3 82.9 47.0 138.1 219.5 149.2 193.1 278.9 160.1 129.9 168.6 162.5 43 Money market fund shares 34.4 29.2 107.5 24.7 -44.1 47.2 10.0 -84.0 -4.2 30.2 64.2 4.2 44 Large time deposits 18.8 45.8 36.9 -7.7 -7.5 75.7 -37.3 -61.0 45.9 88.8 62.7 -2.3 45 Security RPs 6.6 6.5 2.5 3.8 14.3 -5.8 6.6 11.0 17.5 3.3 -15.0 4.7 46 Deposits in foreign countries 1.5 1.1 .5 -2.5 4.8 -4.0 -2.9 7.0 2.7 -4.5 -3.6 -1.2 47 Total of credit market instruments, deposits and currency 246.5 227.6 294.7 270.1 367.2 484.5 304.5 351.8 382.6 463.3 505.6 417.3 48 Public holdings as percent of total 18.4 26.4 24.5 27.6 21.1 18.8 27.4 22.9 19.4 17.0 20.5 27.9 49 Private financial intermediation (in percent) 82.9 89.3 91.0 78.8 75.3 80.2 74.1 71.2 78.9 81.4 79.0 76.8 50 Total foreign funds 23.1 1.6 7.6 -3.9 49.2 62.4 .1 12.8 85.7 57.0 67.8 75.5 MEMO: Corporate equities not included above 51 Total net issues -4.3 21.9 -3.0 35.3 67.8 -33.1 47.2 83.4 52.1 -40.8 --2255..55 2255..44 52 Mutual fund shares .1 5.2 6.3 18.4 32.8 37.7 24.3 36.8 28.9 39.6 35.7 94.9 53 Other equities -4.3 16.8 -9.3 16.9 35.0 -70.8 22.9 46.7 23.2 -80.4 -61.2 -69.5 54 Acquisitions by financial institutions 12.9 24.9 20.9 37.1 56.4 11.1 63.9 76.2 36.5 2.6 19.6 56.9 55 Other net purchases -17.1 -3.0 -23.9 -1.8 11.4 -44.3 -16.7 7.2 15.6 -43.4 -45.1 -31.5 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 • November 1985 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1984 1985 MMeeaassuurree 11998822 11998833 11998844 Dec. Jan. Feb. Mar. Apr. May' June' July' Aug. 1 Industrial production 103.1 109.2 121.8 123.3 123.6 123.7 124.0 124.1 124.1 124.4 124.4 124.0 Market groupings 2 Products, total 107.8 113.9 127.1 129.8 129.6 129.8 130.3 130.8 131.4 131.7 131.7 132.3 3 Final, total 109.5 114.7 127.8 130.6 130.4 130.4 130.8 131.3 131.7 131.7 131.7 132.4 4 Consumer goods 101.4 109.3 118.2 119.7 118.8 119.1 119.8 119.5 120.0 120.7 120.4 121.3 5 Equipment 120.2 121.7 140.5 144.9 145.7 145.3 145.4 146.9 147.1 146.4 146.6 147.1 6 Intermediate 101.7 111.2 124.9 127.3 126.8 127.7 128.6 129.3 130.3 131.8 131.9 132.2 7 Materials 96.7 102.8 114.6 114.6 115.4 115.4 115.5 115.0 114.2 114.5 114.3 114.5 Industry groupings 8 Manufacturing 102.2 110.2 123.9 125.8 125.9 125.8 126.3 126.6 126.6 126.7 126.8 127.5 Capacity utilization (percent)2 9 Manufacturing 70.3 74.0 80.8 80.9 80.7 80.4 80.5 80.5 80.3 80.2 80.0 80.2 10 Industrial materials industries 71.7 75.3 82.3 81.3 81.7 81.5 81.4 80.9 80.1 80.2 79.9 79.8 11 Construction contracts (1977 = 100)3 111.0 137.0 149.0 150.0 150.0 145.0 162.0 161.0 162.0 142.0 164.0 163.0 12 Nonagricultural employment, total4 136.1 137.1 143.6 146.0 146.5 146.8 147.3 147.6 148.0 148.1 148.5 148.9 13 Goods-producing, total 102.2 100.1 106.1 107.5 107.7 107.5 107.5 107.6 107.5 107.3 107.2 107.4 14 Manufacturing, total 96.6 94.8 99.8 100.8 100.8 100.6 100.4 100.1 99.9 99.7 99.5 99.7 15 Manufacturing, production-worker ... 89.1 87.9 94.0 93.7 93.6 93.3 93.0 92.6 92.3 92.0 91.9 92.1 16 Service-producing 154.7 157.3 164.1 167.2 167.8 168.3 169.1 169.5 170.3 170.5 171.2 171.7 17 Personal income, total 410.3 435.6 478.1 493.9 496.7 499.4 501.0 505.5R 502.2 504.1 506.3 507.8 18 Wages and salary disbursements 367.4 388.6 422.5 436.7 438.5 440.5 443.7 445.7 446.8 449.8 450.4 453.0 19 Manufacturing 285.5 294.7 323.6 333.2 334.4 332.9 334.8 333.5 333.9 334.7 334.5 337.1 20 Disposable personal income5 398.0 427.1 470.3 484.5 487.6 484.7 481.3 496.3' 504.5 492.1 494.4 495.3 21 Retail sales (1977 = 100)6 148.1 162.0 179.0 183.4 184.2 186.1 185.7 191.5 190.7 188.8 189.1 192.7 Prices7 22 Consumer 289.1 298.4 311.1 315.5 316.1 317.4 318.8 320.1 321.3 322.3 322.8 323.5 23 Producer finished goods 280.7 285.2 291.2 292.0 292.1 292.6 292. 1' 293.1 294.2 293.9 294.8 293.5 1. A major revision of the industrial production index and the capacity 5. Based on data in Survey of Current Business (U.S. Department of Comutilization rates was released in July 1985. See "A Revision of the Index of merce). Industrial Production" and accompanying tables that contain revised indexes 6. Based on Bureau of Census data published in Survey of Current Business. (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 7. Data without seasonal adjustment, as published in Monthly Labor Review. (July 1985), pp. 487-501. The revised indexes for January through June 1985 will Seasonally adjusted data for changes in the price indexes may be obtained from be shown in the September BULLETIN. the Bureau of Labor Statistics, U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Com- NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6, merce, and other sources. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 3. Index of dollar value of total construction contracts, including residential, of Current Business. nonresidential and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the last two months are preliminary and Company, F. W. Dodge Division. estimated, respectively. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. 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. 1985 CCaatteeggoorryy 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May' June July Aug. HOUSEHOLD SURVEY DATA 1 Noninstitutional population' 174,450 176,414 178,602 179,600 179,742 179,891 180,024 180,171 180,322 180,492 180,657 2 Labor force (including Armed Forces)1 112,383 113,749 115,763 117,091 117,310 117,738 117,596 117,600 117,009 117,543 117,551 3 Civilian labor force 110,204 111,550 113,544 114,875 115,084 115,514 115,371 115,373 114,783 115,314 115,299 4 Nonagricultural industries2 96,125 97,450 101,685 103,071 103,345 103,757 103,517 103,648 103,232 103,737 104,080 5 Agriculture 3,401 3,383 3,321 3,320 3,340 3,362 3,428 3,312 3,138 3,126 3,092 Unemployment 6 Number 10,678 10,717 8,539 8,484 8,399 8,396 8,426 8,413 8,413 8,451 8,127 7 Rate (percent of civilian labor force) ... 9.7 9.6 7.5 7.4 7.3 7.3 7.3 7.3 7.3 7.3 7.0 8 Not in labor force 62,067 62,665 62,839 62,509 62,432 62,153 62,428 62,571 63,313 62,949 63,106 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 89,566 90,196 94,461 96,419 96,591 96,910 97,120 97,421 97,473r 97,722' 98,010 10 Manufacturing 18,781 18,434 19,412 19,604 19,561 19,526 19,467 19,426 19,398' 19,355' 19,392 II Mining 1,128 952 974 974 976 977 982 982 974 970 961 12 Contract construction 3,905 3,948 4,345 4,534 4,525 4,553 4,641 4,658 4,638' 4,653' 4,678 13 Transportation and public utilities 5,082 4,954 5,171 5,259 5,272 5,269 5,278 5,301 5,295 5,306' 5,290 14 Trade 20,457 20,881 22,134 22,776 22,857 22,963 23,013 23,140 23,193' 23,24(K 23,315 15 Finance 5,341 5,468 5,682 5,790 5,809 5,835 5,858 5,888 5,906' 5,934' 5,972 16 Service 19,036 19,694 20,761 5,263' 5,269' 5,274' 5,278' 5,270' 5,276' 5,284' 5,314 17 Government 15,837 15,870 15,987 16,100 16,111 16,143 16,158 16,213 16,213' 16,349' 16,338 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 1984 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 • November 1985 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1984 1985 1984 1985 1984 1985 Q3 Q4 Ql Q2' Q3 Q4 Ql Q2 Q3 Q4 Ql Q2' Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 123.4 123.1 123.8 124.2 150.6 151.7 152.8 154.0 81.9 81.2 81.0 80.7 2 Mining 113.8 108.3 110.1 109.9 132.9 133.1 133.4 133.6 85.6 81.3 82.6 82.3 3 Utilities 109.8 111.1 114.2 113.7 132.6 133.0 133.7 134.5 82.8 83.5 85.5 84.4 4 Manufacturing 125.6 125.8 126.0 126.7 153.9 155.2 156.5 157.7 81.6 81.0 80.5 80.3 5 Primary processing ... 107.6 107.0 107.5 108.0 131.2 131.4 131.6 132.0 82.0 81.5 81.6 81.8 6 Advanced processing 136.3 137.0 137.1 137.9 167.6 169.6 171.4 173.2 81.3 80.8 80.0 79.8 7 Materials 116.0 114.5 115.4 114.5 139.8 140.7 141.6 142.5 83.0 81.4 81.5 80.4 8 Durable goods 124.0 123.7 123.6 121.5 153.1 154.4 155.9 157.4 81.0 80.1 79.3 77.2 9 Metal materials .... 82.0 80.4 80.6 80.3 118.8 117.8 117.3 117.3 69.0 68.2 68.7 68.5 10 Nondurable goods 111.6 110.9 110.9 111.1 136.3 136.8 137.3 137.8 81.9 81.0 80.7 80.6 11 Textile, paper, and chemical.. 112.2 110.7 111.6 110.9 135.7 136.2 136.7 137.0 82.7 81.3 81.7 81.0 12 Paper 127.7 126.2 126.3 121.5 133.7 135.3 136.1 136.2 95.5 93.3 92.8 89.2 13 Chemical 110.2 110.9 113.2 112.5 140.8 141.1 141.5 142.0 78.3 78.6 80.0 79.2 14 Energy materials 105.7 101.3 105.0 105.3 119.3 119.7 120.0 120.3 88.6 84.6 87.5 87.5 Previous cycle1 Latest cycle2 1984 1984 1985 High Low High Low Aug. Dec. Jan. Feb. Mar. Apr. May' June' July' Aug. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 82.0 81.1 81.1 80.9 81.0 80.8 80.6 80.6 80.4 80.5 16 Mining 92.8 87.8 95.2 76.9 85.0 81.7 82.9 82.1 82.8 82.1 82.2 82.6 81.9 81.3 17 Utilities 95.6 82.9 88.5 78.0 83.0 83.8 84.7 86.7 85.0 84.6 84.5 84.4 83.9 83.4 18 Manufacturing 87.7 69.9 86.5 68.0 81.8 80.9 80.7 80.4 80.5 80.5 80.3 80.2 80.0 80.2 19 Primary processing ... 91.9 68.3 89.1 65.1 82.3 80.9 81.6 81.5 81.8 82.1 81.5 81.9 82.2 82.5 20 Advanced processing . 86.0 71.1 85.1 69.5 81.4 80.8 80.2 79.8 79.8 79.7 79.8 79.4 78.9 79.2 21 Materials 92.0 70.5 89.1 68.4 83.1 81.3 81.7 81.5 81.4 80.9 80.1 80.2 79.9 79.8 22 Durable goods 91.8 64.4 89.8 60.9 81.3 79.7 79.9 79.1 78.9 78.3 76.6 76.7 76.5 76.5 23 Metal materials 99.2 67.1 93.6 45.7 69.3 68.0 68.1 68.2 69.8 69.9 66.2 69.3 68.1 69.5 24 Nondurable goods .... 91.1 66.7 88.1 70.6 81.9 80.8 80.9 81.1 80.2 80.2 80.8 80.9 81.5 81.7 25 Textile, paper, and chemical 92.8 64.8 89.4 68.6 82.9 80.7 81.7 82.0 81.4 80.7 80.9 81.2 82.0 82.3 26 Paper 98.4 70.6 97.3 79.9 95.0 93.7 93.7 92.6 92.1 89.1 88.8 89.7 90.6 n.a. 27 Chemical 92.5 64.4 87.9 63.3 78.2 78.3 80.1 80.2 79.5 79.2 79.5 79.1 79.6 n.a. 28 Energy materials 94.6 86.9 94.0 82.2 88.4 85.5 86.6 87.4 88.4 87.6 87.5 87.3 86.2 85.6 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 A Monthly data are seasonally adjusted 1977 11998844 1985 Grouping p p r o o r - - a 11 v 9988 g 44 . tion Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June' July? Aug/ Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 121.8 123.5 123.3 122.7 123.4 123.3 123.6 123.7 124.0 124.1 124.1 124.4 124.4 124.8 2 Products 57.72 127.1 129.0 128.8 129.0 129.9 129.8 129.6 129.8 130.3 130.8 131.4 131.7 131.7 132.3 3 Final products 44.77 127.8 129.7 129.8 129.9 130.7 130.6 130.4 130.4 130.8 131.3 131.7 131.7 131.7 132.4 4 Consumer goods 25.52 118.2 118.4 118.3 118.5 119.6 119.7 118.8 119.1 119.8 119.5 120.0 120.7 120.4 121.3 5 Equipment 19.25 140.5 144.5 145.0 145.0 145.5 144.9 145.7 145.3 145.4 146.9 147.1 146.4 146.6 147.1 6 Intermediate products 12.94 124.9 126.9 125.6 126.2 127.2 127.3 126.8 127.7 128.6 129.3 130.3 131.8 131.9 132.2 7 Materials 42.28 114.6 116.1 115.9 114.2 114.6 114.6 115.4 115.4 115.5 115.0 114.2 114.5 114.3 114.5 Consumer goods 8 Durable consumer goods 6.89 112.6 113.3 111.5 111.4 113.3 113.1 112.8 112.8 113.5 111.5 111.8 112.9 112.1 115.1 9 Automotive products 2.98 109.8 111.6 107.4 104.2 110.2 111.6 114.2 115.4 115.1 113.1 113.6 113.8 116.7 121.0 10 Autos and trucks 1.79 103.0 106.0 98.7 95.0 103.1 104.7 112.5 111.7 110.5 109.0 109.6 109.4 113.7 120.9 11 Autos, consumer 1.16 93.2 92.7 85.1 84.0 89.7 95.6 102.5 100.7 101.3 100.5 98.1 97.0 101.1 101.3 12 Trucks, consumer .63 121.2 130.8 124.1 115.4 127.8 121.5 131.1 132.0 127.5 124.7 130.9 132.3 137.2 13 Auto parts and allied goods 1.19 120.1 120.0 120.6 118.1 121.1 122.1 116.8 121.1 122.0 119.4 119.6 120.4 121.1 121.3 14 Home goods 3.91 114.8 114.6 114.7 116.9 115.8 114.3 111.6 110.9 112.2 110.2 110.4 112.2 108.6 110.6 15 Appliances, A/C and TV 1.24 136.2 138.7 138.0 140.5 137.4 137.2 126.1 127.1 131.8 126.9 129.3 134.8 121.5 127.3 16 Appliances and TV 1.19 137.5 140.6 140.1 142.2 138.4 138.2 126.6 127.2 131.8 127.1 128.7 135.2 123.1 17 Carpeting and furniture .96 117.6 117.5 118.8 118.1 118.1 114.1 112.7 117.9 117.7 118.1 116.9 119.6 121.4 18 Miscellaneous home goods 1.71 97.8 95.7 95.6 99.3 99.0 97.9 100.6 95.1 95.0 93.7 93.1 91.7 92.1 19 Nondurable consumer goods 18.63 120.2 120.2 120.7 121.0 121.8 122.1 121.1 121.4 122.1 122.5 123.1 123.5 123.5 123.5 20 Consumer staples 15.29 125.0 125.4 126.3 126.7 127.4 127.7 126.6 126.9 127.9 128.5 129.0 129.7 129.4 129.8 21 Consumer foods and tobacco 7.80 126.2 126.6 127.7 128.2 127.6 129.1 127.1 127.8 128.0 129.4 128.9 130.6 129.9 22 Nonfood staples 7.49 123.9 124.3 125.0 125.4 127.5 126.5 126.0 126.0 127.7 127.6 129.1 128.7 128.9 129.6 23 Consumer chemical products .. 2.75 137.4 138.3 140.4 141.3 143.3 142.7 142.9 143.2 145.1 145.1 147.3 145.4 145.2 24 Consumer paper products 1.88 138.4 141.2 140.7 140.0 141.5 141.8 141.2 138.1 141.7 142.0 143.7 144.7 145.5 25 Consumer energy 2.86 101.4 99.8 100.0 100.5 103.0 100.7 99.9 101.5 101.9 101.5 102.1 102.2 102.5 26 Consumer fuel 1.44 89.3 88.5 88.1 88.8 89.9 87.7 85.1 84.9 87.0 90.0 90.2 88.8 89.7 27 Residential utilities 1.42 113.7 111.2 112.1 112.4 116.3 113.9 115.0 118.4 117.1 113.2 114.4 115.9 Equipment 28 Business and defense equipment 18.01 139.6 143.5 144.1 144.1 144.6 143.9 145.5 145.6 146.1 147.7 147.9 147.2 147.2 147.7 29 Business equipment 14.34 134.9 139.1 139.2 139.1 139.8 138.4 140.4 140.0 140.2 142.0 141.9 140.6 140.4 140.7 30 Construction, mining, and farm .. 2.08 66.6 68.1 67.9 69.5 68.2 68.5 68.8 68.3 67.1 68.4 67.4 67.7 68.5 31 Manufacturing 3.27 109.4 113.4 113.3 112.7 112.4 111.5 111.6 112.3 112.0 112.4 113.1 111.9 112.3 112.9 32 Power 1.27 79.2 80.3 82.4 83.7 83.8 84.5 82.5 81.8 79.6 81.8 82.8 83.3 83.7 84.1 33 Commercial 5.22 209.2 216.5 216.9 216.4 217.1 214.5 217.4 217.0 218.9 221.8 222.8 219.6 218.9 219.3 34 Transit 2.49 98.6 100.6 99.3 98.5 102.9 100.9 106.7 104.9 104.5 106.0 102.9 103.1 102.2 102.8 35 Defense and space equipment 3.67 157.9 160.7 163.4 163.5 163.3 165.3 165.3 167.3 169.0 170.1 171.2 172.8 173.5 175.0 Intermediate products 36 Construction supplies 5.95 114.0 115.3 114.7 114.6 115.7 114.7 116.2 115.7 116.9 117.4 118.1 119.7 120.1 120.2 37 Business supplies 6.99 134.2 136.9 134.9 136.1 137.1 138.0 135.9 137.9 138.6 139.4 140.7 142.2 142.0 38 General business supplies 5.67 137.9 141.3 138.7 140.1 140.9 141.4 140.2 141.1 141.9 143.4 144.4 145.8 145.8 39 Commercial energy products 1.31 118.0 117.4 118.2 118.8 120.4 122.9 117.1 124.1 124.5 122.4 124.6 126.4 Materials 40 Durable goods materials 20.50 122.3 124.4 124.0 123.7 123.9 123.4 124.2 123.3 123.3 122.8 120.7 121.2 121.2 121.6 41 Durable consumer parts 4.92 98.0 99.0 98.8 98.9 99.1 99.8 102.6 102.2 102.1 101.8 100.1 99.1 99.5 99.7 42 Equipment parts 5.94 164.5 170.1 169.9 168.6 169.1 168.8 166.7 164.2 163.3 161.1 157.8 157.5 157.6 157.9 43 Durable materials n.e.c 9.64 108.6 109.2 108.5 108.7 108.7 107.4 109.1 109.0 109.6 110.0 108.2 110.1 109.8 110.4 44 Basic metal materials 4.64 86.4 85.6 85.0 84.8 85.2 84.0 83.5 84.1 85.1 86.6 82.0 85.4 84.9 45 Nondurable goods materials 10.09 111.2 111.6 111.4 111.2 110.7 110.7 110.9 111.4 110.3 110.4 111.3 111.6 112.6 113.0 46 Textile, paper, and chemical materials 7.53 111.6 112.5 112.3 111.5 110.5 110.1 111.5 112.1 111.3 110.5 110.9 111.4 112.6 113.1 47 Textile materials 1.52 101.5 104.5 99.2 98.5 93.7 91.2 90.3 93.5 93.0 94.1 95.0 97.3 99.4 48 Pulp and paper materials 1.55 126.5 127.0 127.7 126.2 125.1 127.2 127.5 126.0 125.4 121.3 120.9 122.2 123.5 49 Chemical materials 4.46 109.9 110.1 111.5 110.8 111.1 110.6 113.3 113.5 112.7 112.3 112.9 112.5 113.3 50 Miscellaneous nondurable materials 2.57 109.8 109.0 108.4 109.9 111.1 112.1 109.2 109.4 107.2 110.1 112.5 112.3 112.4 51 Energy materials 11.69 104.0 105.5 105.5 99.9 101.5 102.4 103.9 104.9 106.2 105.3 105.3 105.2 103.9 103.2 52 Primary energy 7.57 107.5 109.3 110.0 101.4 104.1 106.0 107.0 107.6 110.2 107.9 107.8 108.8 106.6 53 Converted fuel materials 4.12 97.6 98.5 97.2 97.1 96.8 96.0 98.2 100.0 99.0 100.6 100.6 98.5 98.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • November 1985 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1985 Grouping c S o I d C e p p o ro r- - a 1 v 98 g 4 . tion Aug. Sept. Oct. Nov. Dec Jan. Feb. Mar. Apr. Mayr June' Julyp Aug Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 110.9 111.9 112.1 108.0 110.1 109.9 111.4 111.9 111.8 111.1 111.3 111.7 2 Mining 9.83 110.9 113.0 113.6 107.2 108.8 108.9 110.5 109.5 110.5 109.6 109.8 110.4 3 Utilities 5.% 110.9 110.0 109.7 109.4 112.1 111.6 113.0 115.8 113.9 113.6 113.7 113.8 4 Manufacturing 84.21 123.9 125.9 125.6 125.5 126.0 125.8 125.9 125.8 126.3 126.6 126.6 126.7 5 Nondurable 35.11 122.5 123.2 123.1 123.3 123.8 123.4 123.2 123.8 123.9 124.3 124.7 125.4 6 Durable 49.10 124.8 127.7 127.2 127.0 127.5 127.4 127.8 127.2 128.0 128.2 127.9 127.7 Mining 7 Metal 10 .50 77.0 72.2 73.6 75.3 75.5 69.3 70.5 74.5 83.6 81.2 78.3 77.2 9 8 O Co il a a l nd gas extraction 11.1 1 2 3 7 1 . . 0 6 7 0 1 10 2 9 7 . . 1 6 1 11 3 0 6 . . 2 4 1 10 4 9 4 . . 2 2 1 1 0 1 2 0 . . 0 1 1 1 0 13 9 . . 1 8 1 1 1 0 6 9 . . 2 8 1 11 1 0 8 . . 7 5 1 10 2 8 1 . . 2 5 1 1 0 3 6 1 . . 8 9 1 1 2 0 8 6 . . 5 5 1 1 2 0 8 6 . . 7 9 1 1 0 3 6 4 . . 7 0 10 Stone and earth minerals 14 .66 116.1 118.4 117.6 114.2 115.3 113.2 118.5 119.8 118.7 118.5 118.7 117.9 Nondurable manufactures 11 Foods 7.96 127.1 127.7 128.2 129.1 128.7 129.0 128.2 129.4 128.5 130.8 131.4 131.8 12 Tobacco products .62 100.7 97.3 99.6 103.1 102.7 107.4 97.2 103.8 103.4 98.4 95.7 100.5 13 Textile mill products 2.29 103.7 103.5 100.9 100.3 97.1 94.7 93.6 98.5 99.4 99.0 100.0 103.3 14 Apparel products 2.79 102.8 101.3 100.1 100.5 101.1 102.5 102.6 103.1 101.3 100.2 100.3 99.2 15 Paper and products 3.15 127.3 128.2 128.9 127.6 127.7 128.8 128.3 126.4 126.9 125.1 124.1 127.1 16 Printing and publishing 4.54 147.9 151.5 148.8 149.5 153.5 151.2 150.4 150.3 152.6 154.2 155.4 156.3 17 Chemicals and products 8.05 121.7 122.0 124.2 123.5 124.3 123.4 125.7 125.8 126.5 125.8 126.7 126.4 18 Petroleum products 2.40 87.4 87.5 85.7 85.4 86.2 84.7 84.1 84.0 84.7 87.3 87.4 87.0 19 Rubber and plastic products 2.80 143.2 144.5 144.1 146.0 146.6 146.6 145.9 145.7 144.1 144.9 144.3 144.6 20 Leather and products .53 76.7 74.2 73.4 70.9 71.5 71.4 69.1 69.2 69.4 69.9 71.0 70.5 Durable manufactures 21 Lumber and products 24 2.30 109.1 109.4 110.4 110.2 109.5 109.4 109.2 109.1 109.5 110.9 112.2 114.0 22 Furniture and fixtures 25 1.27 136.7 140.0 140.9 139.9 139.8 138.0 136.5 139.0 139.2 141.0 142.0 141.9 23 Clay, glass, stone products.... 32 2.72 112.3 113.7 112.6 113.3 113.6 111.8 112.7 110.5 111.4 114.5 116.3 115.8 24 Primary metals 33 5.33 82.4 84.0 82.9 81.3 80.9 78.4 81.7 80.2 81.8 81.4 76.4 78.3 25 Iron and steel 331.2 3.49 73.5 74.6 73.6 71.0 71.1 68.9 71.0 68.5 73.2 71.9 65.4 67.6 26 Fabricated metal products 34 6.46 102.8 104.1 104.8 104.8 105.4 105.9 106.4 107.6 108.6 109.1 108.3 107.4 27 Nonelectrical machinery 35 9.54 142.0 147.8 146.5 146.6 145.8 144.6 145.0 144.9 146.5 148.9 149.1 145.9 28 Electrical machinery 36 7.15 172.4 176.2 176.8 178.4 178.9 180.2 176.0 173.2 173.1 168.9 169.3 169.9 29 Transportation equipment 37 9.13 113.6 116.2 114.3 113.4 116.0 117.8 120.4 120.5 120.8 120.7 120.9 121.7 30 Motor vehicles and parts.... 371 5.25 105.6 108.3 104.6 103.1 107.5 109.5 113.0 112.5 111.3 110.9 110.5 110.5 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 124.4 126.9 127.5 127.3 127.5 129.0 130.5 131.4 133.7 134.1 134.9 136.9 32 Instruments 38 2.66 136.9 139.8 140.2 138.6 138.6 138.9 138.7 138.7 139.0 138.5 139.9 140.7 33 Miscellaneous manufactures... 39 1.46 98.0 97.8 95.9 98.6 98.6 97.2 99.0 96.4 96.0 98.3 98.3 97.8 Utilities 34 Electric 116.8 116.2 116.8 118.7 121.9 119.5 119.1 119.5 119.4 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 35 Products, total 596.0 745.6 752.4 749.2 753.7 759.2 756.5 761.3 764.2 769.5 773.3 774.4 774.9 770.1 36 Final 472.7 593.7 598.0 596.8 600.4 605.2 601.8 606.5 608.7 613.3 616.2 616.2 614.8 610.0 37 Consumer goods . 309.2 356.5 354.1 352.5 355.5 359.0 360.0 358.8 360.9 364.6 364.7 365.1 364.9 362.7 38 Equipment 163.5 237.6 244.3 244.8 245.4 246.7 242.3 247.6 247.8 248.7 251.4 251.1 249.8 247.4 39 Intermediate 123.3 151.8 154.3 152.3 153.2 154.0 154.6 154.9 155.5 156.3 157.1 158.2 160.2 160.1 • A major revision of the industrial production index and the capacity (July 1985), pp. 487-501. The revised indexes for January through June 1985 will utilization rates was released in July 1985. See "A Revision of the Index of be shown in the September BULLETIN. Industrial Production" and accompanying tables that contain revised indexes NOTE. These data also appear in the Board's G.12.3 (414) release. For address, (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June' July Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,000 1,605 1,682 1,477 1,616 1,599 1,635 1,624 1,741 1,704 1,778 1,712 1,694 2 1-family 546 902 922 827 846 843 903 927 993 948 933 961 967 3 2-or-more-family 454 703 759 650 770 756 732 697 748 756 845 751 727 4 Started 1,062 1,703 1,749 1,564 1,600 1,630 1,849 1,647 1,889 1,933 1,681 1,701 1,647 5 1-family 663 1,067 1,084 979 1,043 1,112 1,060 1,135 1,168 1,155 1,039 1,031 1.062 6 2-or-more-family 400 635 665 585 557 518 789 512 721 778 642 670 585 7 Under construction, end of period1 720 1,003 1,051 1,081 1,077 1,073 1,071 1,066 1,063 1,088 1,089 1,078 1,079 8 1-family 400 524 556 571 574 579 572 580 578 583 582 575 582 9 2-or-more-family 320 479 494 510 503 495 499 485 485 505 507 503 497 10 Completed 1,005 1,390 1,652 1,614 1,587 1,635 1,719 1,794 1,685 1,641 1,627 1,768 1,686 11 1-family 631 924 1,025 972 1,001 985 1,107 1,082 1,043 1,074 1,020 1,098 1,010 12 2-or-more-family 374 466 627 642 586 650 612 712 642 567 607 670 676 13 Mobile homes shipped 240 296 295 302 291 282 273 276 283 287 287 270 286 Merchant builder activity in 1-family units 14 Number sold 413 622 639 652 596 604 634 676 699 649' 682 708 747 15 Number for sale, end of period1 255 304 358 346 349 356 356 360 357 356' 356 354 353 PPrriiccee ((tthhoouussaannddss ooff ddoollllaarrss))22 MMeeddiiaann 1166 UUnniittss ssoolldd 69.3 75.5 80.0 80.1 82.5 78.3 82.5 82.0 84.2 85.6' 80.1 85.7 81.7 AAvveerraaggee 1177 UUnniittss ssoolldd 83.8 89.9 97.5 95.7 101.4 96.3 98.3 96.2 100.9 104.7' 98.1 99.0 99.5 EXISTING UNITS (1-family) 18 Number sold 1,991 2,719 2,868 2,740 2,830 2,870 3,000 2,880 3,030 3,040 3,040 3,060 3,140 Price of units sold (thousands of dollars)2 19 Median 67.7 69.8 72.3 71.9 71.9 72.1 73.8 73.5 74.2 74.5 75.0 76.2 77.4 20 Average 80.4 82.5 85.9 86.2 85.1 85.9 87.7 87.2 88.6 89.7 90.1 91.5 93.5 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 236,935 268,730 312,989 318,179 313,076 310,062 341,038 334,254 333,723 341,861r 339,943 343,837 340,243 22 Private 186,091 218,016 257,802 261,963 257,469 254,547 283,688 276,452 274,575 281,988' 276,420 278,939 275,561 23 Residential 80,609 121,309 145,058 144,043 137,880 134,296 155,260 146,042 146,195 146,539' 142,254 147,158 144,542 24 Nonresidential, total 105,482 96,707 112,744 117,920 119,589 120,251 128,428 130,410 128,380 135,449' 134,166 131,781 131,019 Buildings 25 Industrial 17,346 12,863 13,746 14,333 14,645 14,440 15,195 15,815 14,585 17,283 16,443 15,170 15,413 76 Commercial 37,281 35,787 48,102 52,092 52,541 54,528 58,524 58,922 59,382 61,219' 60,064 58,290 58,097 27 Other 10,507 11,660 12,298 11,916 11,771 12,150 11,889 12,054 11,245 12,663' 12,929 12,786 12,625 28 Public utilities and other 40,348 36,397 38,598 39,579 40,632 39,133 42,820 43,619 43,168 44,284' 44,730 45,535 44,884 29 Public 50,843 50,715 55,186 56,215 55,608 55,514 57,350 57,802 59,148 59,873' 63,523 64,897 64,682 30 Military 2,205 2,544 2,839 2,902 3,107 2,952 2,969 3,036 3,078 3,166' 3,349 3,426 3,197 31 Highway 13,293 14,143 16,295 16,210 16,939 16,888 17,759 18,416 19,176 19,920 22,314 21,093 19,685 32 Conservation and development 5,029 4,822 4,656 4,748 5,127 4,654 4,645 4,674 4,727 4,393' 5,051 5,410 5,135 33 Other 30,316 29,206 31,396 32,355 30,435 31,020 31,977 31,676 32,167 32,394' 32,809 34,968 36,665 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (a) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of comparable with data in prior periods because of changes by the Bureau of the existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from originating agency. Permit authoriza- Construction Reports (C-30-76-5), issued by the Bureau in July 1976. tions are those reported to the Census Bureau from 16,000jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • November 1985 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted C m h o a n n t g h e s f e r a o r m lie 1 r 2 Change (a f t r o a m nn u 3 a m l r o a n t t e h ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm AAAuuuggg... 1984 1985 1985 111999888555 11998844 11998855 (((111999666777 AAuugg.. AAuugg.. === 111000000)))''' Sept. Dec. Mar. June Apr. May June July Aug. CONSUMER PRICES2 1 All items 4.2 3.4 4.5 3.0 4.1 3.3 .4 .2 .2 .2 .2 323.5 2 Food 4.3 1.6 3.9 3.7 2.6 -.9 -.2 -.1 .1 .1 .0 309.7 3 Energy items -.6 1.5 .1 -.7 -.8 9.6 1.8 .3 .2 -.3 -.6 433.8 4 All items less food and energy 5.1 4.1 5.3 3.5 5.5 3.4 .3 .3 .3 .3 .3 315.3 5 Commodities 4.1 1.8 3.8 .9 6.6 -1.4 .0 -.2 -.2 -.2 .1 258.8 6 Services 5.7 5.6 6.2 5.0 5.0 6.4 .4 .7 .5 .5 .5 378.6 PRODUCER PRICES 7 Finished goods 1.8 .8 .0 1.1 .5 1.5 .4 .2 -.2 .3 -.3 293.5 8 Consumer foods 5.1 -1.6 4.5 3.3 -3.0 -8.2 -.9 -1.1 -.1 1.3 -.7 269.5 9 Consumer energy -7.1 -2.9 -19.7 5.6 -21.3 25.9 6.1' 3.2' -3.3 -1.4 -1.6 719.5 10 Other consumer goods 2.3 2.5 2.5 -.2 6.5 1.3 -.1' .2 .2 .4 .0 252.6 11 Capital equipment 2.4 2.1 2.3 -1.1 6.2 1.9 .E .0 .4 .0 .2 300.9 12 Intermediate materials3 2.4 -.6 -1.1 1.2 -2.5 1.1 .3 .4' -.4 -.3 -.1 324.4 13 Excluding energy 3.0 .1 .9 1.5 -1.0 1.2 .2 .2 -.1 -.1 305.2 Crude materials 14 Foods .0 -13.7 -1.7 10.6 -24.9 -19.9 -3.<Y -2.2' -.3 -1.1 -3.8 221.4 15 Energy 1.2 -6.6 .4 -7.6 -13.1 2.9 .4' -1.5 -.3 -.9 742.4 16 Other 1.0 -5.6 -15.3 -10.7 -13.3 3.4 2.0' -1.4' .2 .7 -1.2 245.8 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers 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 Q2 Q3 Q4 Ql Q2r GROSS NATIONAL PRODUCT 1 3,069.3 3,304.8 3,662.8 3,644.7 3,694.6 3,758.7 3,810.6 3,853.1 By source 2 Personal consumption expenditures 1,984.9 2,155.9 2,341.8 2,332.7 2,361.4 2,396.5 2,446.5 22,,449933..00 3 Durable goods 245.1 279.8 318.8 320.7 317.2 326.3 334.8 339.2 4 Nondurable goods 757.5 801.7 856.9 858.3 861.4 866.5 877.3 891.9 5 Services 982.2 1,074.4 1,166.1 1,153.7 1,182.8 1,203.8 1,234.4 1,261.9 6 Gross private domestic investment 414.9 471.6 637.8 627.0 662.8 637.8 646.8 643.2 7 Fixed investment 441.0 485.1 579.6 576.4 591.0 601.1 606.1 625.3 8 Nonresidential 349.6 352.9 425.7 420.8 435.7 447.7 450.9 467.3 9 Structures 142.1 129.7 150.4 150.0 151.4 157.9 162.9 168.3 10 Producers' durable equipment 207.5 223.2 275.3 270.7 284.2 289.7 288.0 299.0 11 Residential structures 91.4 132.2 153.9 155.6 155.3 153.5 155.2 158.0 12 Nonfarm 86.6 127.6 148.8 150.5 150.1 148.3 150.0 152.4 13 Change in business inventories -26.1 -13.5 58.2 50.6 71.8 36.6 40.7 17.9 14 Nonfarm -24.0 -3.1 49.6 47.0 63.7 27.2 34.1 11.4 15 Net exports of goods and services 19.0 -8.3 -64.2 -58.7 -90.6 -56.0 -74.5 -94.0 16 Exports 348.4 336.2 364.3 362.4 368.6 367.2 360.7 347.7 17 Imports 329.4 344.4 428.5 421.1 459.3 423.2 435.2 441.6 18 Government purchases of goods and services 650.5 685.5 747.4 743.7 761.0 780.5 791.9 810.9 19 Federal 258.9 269.7 295.4 296.4 302.0 315.7 319.9 324.2 20 State and local 391.5 415.8 452.0 447.4 458.9 464.8 472.0 486.7 By major type of product 71 Final sales, total 3,095.4 3,318.3 3,604.6 33,,559944..11 33,,662222..88 33,,772222..11 33,,777700..00 33,,883355..22 ?? 1,276.7 1,355.7 1,542.9 1,544.8 1,549.1 1,579.8 1,583.8 1,579.6 73 Durable 499.9 555.3 655.6 647.9 654.7 687.7 677.1 669.6 74 776.9 800.4 887.3 896.9 894.4 892.1 906.7 910.0 75 Services 1,510.8 1,639.3 1,763.3 1,742.6 1,783.3 1,813.7 1,857.2 1,888.8 26 Structures 281.7 309.8 356.5 357.2 362.1 365.2 369.6 384.8 27 Change in business inventories -26.1 -13.5 58.2 50.6 71.8 36.6 40.7 17.9 28 Durable goods -18.0 -2.1 30.4 18.2 41.7 26.7 29.0 3.7 29 Nondurable goods -8.1 -11.3 27.8 32.4 30.1 9.9 11.7 14.2 30 MEMO: Total GNP in 1972 dollars 1,480.0 1,534.7 1,639.3 1,638.8 1,645.2 1,662.4 1,663.5 1,671.3 NATIONAL INCOME 31 2,446.8 2,646.7 2,959.9 2,944.8 2,984.9 3,036.3 3,076.5 3,106.5 32 Compensation of employees 1,864.2 1,984.9 2,173.2 2,159.2 2,191.9 2,228.1 2,272.7 2,305.9 33 Wages and salaries 1,568.7 1,658.8 1,804.1 1,793.3 1,819.1 1,848.2 1,882.8 1,909.5 34 Government and government enterprises 306.6 328.2 349.8 347.5 352.0 357.2 365.5 370.7 35 Other 1,262.2 1,331.1 1,454.2 1,445.8 1,467.1 1,490.9 1,517.3 1,538.9 36 Supplement to wages and salaries 295.5 326.2 369.0 365.9 372.8 380.0 389.8 396.3 37 Employer contributions for social insurance 140.0 153.1 173.5 172.4 174.7 177.5 183.6 186.1 38 Other labor income 155.5 173.1 195.5 193.5 198.1 202.5 206.3 210.2 19 Proprietors' income1 111.1 121.7 154.4 149.8 153.7 159.1 159.8 160.7 40 Business and professional1 89.2 107.9 126.2 126.3 126.4 129.7 134.0 137.3 41 Farm1 21.8 13.8 28.2 23.4 27.3 29.4 25.7 23.4 42 Rental income of persons2 51.5 58.3 62.5 62.0 63.0 64.1 64.8 66.7 43 Corporate profits1 159.1 225.2 285.7 291.1 282.8 291.6 292.3 298.5 44 Profits before tax3 165.5 203.2 235.7 246.0 224.8 228.7 222.3 221.0 45 Inventory valuation adjustment -9.5 -11.2 -5.7 -7.3 -.2 -1.6 .9 2.5 46 Capital consumption adjustment 3.1 33.2 55.7 52.3 58.3 64.5 69.1 75.0 47 Net interest 260.9 256.6 284.1 282.8 293.5 293.4 287.0 274.7 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 • November 1985 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1984 1985 1983 1984 Q2 Q3 Q4 Ql PERSONAL INCOME AND SAVING 1 Total personal income 2.584.6 2,744.2 3,012.1 2,984.6 3,047.3 3,096.2 3,143.8 2 Wage and salary disbursements 1.568.7 1,659.2 1.804.0 1,793.1 1,819.5 1,847.6 1.882.7 3 Commodity-producing industries 509.3 519.3 569.3 567.0 573.3 580.9 590.9 4 Manufacturing 382.9 395.2 433.9 432.2 436.4 442.4 447.9 5 Distributive industries 378.6 398.6 432.0 429.5 436.4 443.1 449.0 6 Service industries 374.3 413.1 452.9 449.3 457.3 466.9 477.4 7 Government and government enterprises 306.6 328.2 349.8 347.3 352.4 356.7 365.4 8 Other labor income 155.5 173.1 195.5 193.5 198.1 202.5 206.3 9 Proprietors' income' 111.1 121.7 154.4 149.8 153.7 159.1 159.8 10 Business and professional1 89.2 107.9 126.2 126.3 126.4 129.7 134.0 11 Farm1 21.8 13.8 28.2 23.4 27.3 29.4 25.7 12 Rental income of persons2 51.5 58.3 62.5 62.0 63.0 64.1 64.8 13 Dividends 66.5 70.3 77.7 77.2 78.5 80.2 81.4 14 Personal interest income 366.6 376.3 433.7 425.6 449.3 456.1 456.0 15 Transfer payments 376.1 405.0 416.7 415.2 418.6 421.8 439.2 16 Old-age survivors, disability, and health insurance benefits. 204.5 221.6 237.3 235.2 238.2 243.5 249.6 17 LESS: Personal contributions for social insurance 111.4 119.6 132.5 131.8 133.4 135.2 146.4 18 EQUALS: Personal income 2,584.6 2,744.2 3.012.1 2,984.6 3.047.3 3,0%.2 3.143.8 19 LESS: Personal tax and nontax payments 404.1 404.2 435.3 430.3 440.9 451.7 489.0 20 EQUALS: Disposable personal income 2,180.5 2,340.1 2,576.8 2,554.3 2.606.4 2,644.5 2,654.8 21 LESS: Personal outlays 2,044.5 2,222.0 2,420.7 2,409.5 2,442.3 2,481.5 2,536.2 22 EQUALS: Personal saving 136.0 118.1 156.1 144.8 164.1 163.0 118.6 MEMO Per capita (1972 dollars) 23 Gross national product 6,369.7 6,543.4 6,926.1 6.933.2 6,943.2 6,998.3 6,989.0 24 Personal consumption expenditures 4,145.9 4,302.8 4,488.7 4.502.3 4,498.4 4,527.1 4,575.7 2 2 5 6 Sa D vi i n sp g o r s a a t b e l e (p p er e c rs e o n n t) a l income 4,55 6 5 . . 2 0 4,670 5 . . 0 0 4,939 6 . . 0 1 4,930 5. . 7 0 4,96 6 5 . . 3 0 4,99 6 6 . . 2 0 4,965 4. . 5 0 GROSS SAVING 27 Gross saving 408.8 437.2 551.8 551.0 556.4 556.0 550.7 28 Gross private saving 524.0 571.7 674.8 660.2 689.4 698.2 662.1 29 Personal saving 136.0 118.1 156.1 144.8 164.1 163.0 118.6 30 Undistributed corporate profits' 29.2 76.5 115.4 115.3 118.4 120.8 122.5 31 Corporate inventory valuation adjustment -9.5 -11.2 -5.7 -7.3 -.2 -1.6 .9 Capital consumption allowances 32 Corporate 221.8 231.2 246.2 244.1 248.1 252.8 257.4 33 Noncorporate 137.1 145.9 157.0 156.0 158.8 161.5 163.7 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 -109.2 -133.0 -142.2 -111.4 36 Federal -148.2 -178.6 -175.8 -163.7 -180.6 -197.8 -165.1 37 State and local 32.9 44.1 52.9 54.5 47.6 55.6 53.7 38 Capital grants received by the United States, net .0 .0 .0 .0 .0 .0 .0 39 Gross investment 408.3 437.7 544.4 542.0 543.4 546.1 542.6 40 Gross private domestic 414.9 471.6 637.8 627.0 662.8 637.8 646.8 41 Net foreign -6.6 -33.9 -93.4 -85.0 -119.4 -91.6 -104.2 42 Statistical discrepancy -7.4 -9.0 -13.0 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 1983 Q2 Q3 Q4 Ql Q2P 1 Balance on current account -8,051 -101,532 -24,493 -32,500 -25,477 -30,325 -31,811 2 Not seasonally adjusted.. -24,654 -35,724 -22,759 -29,416 -32,066 3 Merchandise trade balance2 ... -36,444 -62,012 -108,281 -25,649 -32,507 -24,557 -29,532 -33,001 4 Merchandise exports 211,198 200,745 220,316 54,677 55,530 56,355 55,707 53,245 5 Merchandise imports -247,642 -262,757 -328,597 -80,326 -88,037 -80,912 -85,239 -86,246 6 Military transactions, net -318 -163 -1,765 -593 -250 -575 -212 -566 7 Investment income, net3 29,493 25,401 19,109 3,618 3,256 4,003 2,537 5,582 8 Other service transactions, net. 7,353 4,837 819 363 -123 -253 54 -474 9 Remittances, pensions, and other transfers -2,633 -2,566 -2,891 -710 -669 -782 -934 -841 10 U.S. government grants (excluding military) -5,501 -6,287 -8,522 -1,522 -2,207 -3,313 -2,238 -2,511 11 Change in U.S. government assets, other than official reserve assets, net (increase, —) -6,131 -5,006 -5,516 -1,369 -734 -850 -849 1 1 2 3 Ch G an ol g d e in U.S. official reserve assets (increase, -) -4,965 0 -1,196 0 -3,130 0 -565 0 -799 0 -1,109 0 -233 0 -356 0 1 1 4 5 S R p e e s c e i r a v l e d p r o a s w it in io g n r i i n g h I t n s t e (S rn D a R ti s o ) n al Monetary Fund - - 2 1, , 3 5 7 5 1 2 -4,4 -6 3 6 4 - - 9 9 9 7 5 9 - - 3 2 2 8 1 8 - - 3 2 3 7 1 1 - - 1 1 4 9 3 4 -2 2 6 8 4 1 -18 7 0 2 16 Foreign currencies -1,041 3,304 -1,156 44 -197 -772 -250 -248 17 Change in U.S. private assets abroad (increase, -)3. -108,121 -48,842 -11,800 -17,070 20,532 -13,003 718 -1,657 18 Bank-reported claims -111,070 -29,928 -8,504 -20,186 17,725 -4,933 135 4,350 19 Nonbank-reported claims 6,626 -6,513 6,266 1,908 2,099 970 1,201 n.a. 20 U.S. purchase of foreign securities, net -8,102 -7,007 -5,059 -756 -1,313 -3,663 -2,494 -1,862 21 U.S. direct investments abroad, net3 4,425 -5,394 -4,503 1,964 2,021 -5,377 1,876 -4,145 22 Change in foreign official assets in the United States (increase, +) 3,672 5,795 3,424 -224 -686 7,119 -11,204 8,154 23 U.S. Treasury securities 5,779 6,972 4,690 -274 -575 5,814 -7,219 8,521 24 Other U.S. government obligations -694 -476 167 146 85 -67 -307 136 25 Other U.S. government liabilities4 684 552 453 555 -139 -197 -462 503 26 Other U.S. liabilities reported by U.S. banks -1,747 545 663 328 430 2,052 -3,099 -185 27 Other foreign official assets5. -350 -1,798 -2,549 -979 -487 -483 -117 -821 28 Change in foreign private assets in the United States (increase, +)3 90,775 78,527 93,895 41,816 3,825 26,191 24,915 17,636 29 U.S. bank-reported liabilities 65,922 49,341 31,674 20,970 -5,125 4,481 13,345 326 30 U.S. nonbank-reported liabilities -2,383 -118 4,284 4,566 -2,939 -1,863 -2,655 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 7,052 8,721 22,440 6,485 5,058 9,501 2,633 5,291 32 Foreign purchases of other U.S. securities, net 6,392 8,636 12,983 506 1,603 9,380 9,510 7,117 33 Foreign direct investments in the United States, net3 13,792 11,947 22,514 9,289 5,228 4,692 2,082 4,902 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 32,821 11,513 24,660 1,889 10,997 7,013 16,979 8,883 36 Owing to seasonal adjustments -606 -3,170 4,200 -305 -578 37 Statistical discrepancy in recorded data before seasonal adjustment 32,821 11,513 24,660 2,495 14,167 2,813 17,284 9,461 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -4,965 -1,196 -3,131 -566 -799 -1,119 -233 -356 39 Foreign official assets in the United States (increase, +) 2,988 5,243 2,971 -779 -547 7,316 -10,742 7,651 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 7,291 -8,283 -4,143 -2,097 -453 812 -2,021 -1,862 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 585 194 190 44 45 61 10 15 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 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 • November 1985 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1985 IItteemm 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May June July 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 212,193 200,486 19,142 19,401 17,853 18,446 17,779 17,414 17,438 17,411 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 243,952 258,048 25,933 28,297 27,985 28,129 28,295 28,685 29,425 26,630 3 Trade balance -31,759 -57,562 -6,791 -8,8% -10,131 -9,683 -10,516 -11,271 -11,987 -9,219 NOTE. The data through 1981 in this table are reported by the Bureau of Census the export side, the largest adjustments are: (1) the addition of exports to Canada data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of not covered in Census statistics, and (2) the exclusion of military sales (which are export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in combined with other military transactions and reported separately in the "service the Census basis trade data; this adjustment has been made for all data shown in account" in table 3.10, line 6). On the import side, additions are made for gold, the table. Beginning with 1982 data, the value of imports are on a customs ship purchases, imports of electricity from Canada, and other transactions; valuation basis. military payments are excluded and shown separately as indicated above. The Census basis data differ from merchandise trade data shown in table 3.10, SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" U.S. International Transactions Summary, for reasons of coverage and timing. On (Department of Commerce, Bureau of the Census). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1985 TTyyppee 11998822 11998833 11998844 Feb. Mar. Apr. May June July Aug. 1 Total 33,958 33,747 34,934 34,272 35,493 35,493 35,782 36,088 37,071 37,154 2 Gold stock, including Exchange Stabilization Fund' 11,148 11,121 11,096 11,093 11,093 11,091 11,091 11,091 11,090 11,090 3 Special drawing rights2-3 5,250 5,025 5,641 5,781 5,973 5,971 6,163 6,196 6,510 6,692 4 Reserve position in International Monetary Fund2 7,348 11,312 11,541 11,097 11,386 11,382 11,370 11,394 11,513 11,490 5 Foreign currencies4 10,212 6,289 6,656 6,301 7,041 7,049 7,158 7,408 7,958 7,894 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 1985 AAsssseettss 11998822 11998833 11998844 Feb. Mar. Apr. May June July Aug. 1 Deposits 328 190 253 331 253 348 204 310 274 223 Assets held in custody 2 U.S. Treasury securities1 112,544 117,670 118,267 115,179 113,532 115,184 116,989 121,755 124,400 123,321 3 Earmarked gold2 14,716 14,414 14,265 14,260 14,264 14,264 14,265 14,262 14,251 14,251 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 1985 AAsssseett aaccccoouunntt 11998822 11998844 Jan. Feb. Mar. Apr. May June July All foreign countries 1 Total, all currencies 469,712 477,090 452,205 444,953 452,796 462,009 460,344 458,121' 456,859 462,707 ? Claims on United States 91,805 115,542 113,435 115,501 119,034 119,925' 121,809' 121,137' 121,270 119,387 Parent bank 61,666 82,026 78,151 79,318 84,084 86,795' 86,893' 85,606' 85,261 84,039 4 Other banks in United States2 1 m , .1 13,664 13,686 13,737 13,092 14,199 14,101 14,461 14,739 5 21,620 22,497 21,213 20,038 20,717' 21,430' 21,548 20,609 6 Claims on foreigners 358,493 342,689 318,710 309,119 314,174 321,686' 318,487' 316,319' 314,874 321,542 7 Other branches of parent bank 91,168 96,004 94,717 87,351 89,184 92,990 90,896' 90,421' 89,428 90,763 8 Banks 133,752 117,668 100,328 99,871 104,373 105,258 104,303 102,249 101,441 104,817 9 Public borrowers 24,131 24,517 22,872 22,408 22,186 22,456 22,812 22,753 22,709 22,724 10 Nonbank foreigners 109,442 107,785 100,793 99,489 98,431 100,982' 100,476 100,896' 101,2% 103,238 11 Other assets 19,414 18,859 20,060 20,333 19,588 20,398 20,048 20,665' 20,715 21,778 12 Total payable in U.S. dollars 361,982 371,508 349,342 343,461 351,7% 354,570 351,280 349,442' 348,875 344,949 n Claims on United States 90,085 113,436 111,468 113,250 116,730 117,56c 119,219' 118,687' 118,717 116,416 14 Parent bank 61,010 80,909 77,271 78,392 83,074 85,713' 85,760' 84,635' 84,273 82,889 15 Other banks in United States2 13,500 13,493 13,464 12,790 13,844 13,708 14,023 14,115 16 Nonbanks2 20,697 21,365 20,192 19,057 19,615' 20,344' 20,421 19,412 17 Claims on foreigners 259,871 247,406 227,303 219,768 224,714 226,968' 222,26C 220,846' 220,388 218,749 18 Other branches of parent bank 73,537 78,431 78,279 72,326 74,248 77,229 74,652' 74,664' 74,190 74,063 19 Banks 106,447 93,332 76,872 75,756 79,217 78,755 76,874 75,642 75,280 75,320 20 Public borrowers 18,413 17,890 17,160 16,994 16,754 17,001 16,976 16,999 16,923 16,667 21 Nonbank foreigners 61,474 60,977 54,992 54,692 54,495 53,983' 53,758 53,541' 53,995 52,699 22 Other assets 12,026 10,666 10,571 10,443 10,352 10,042 9,801 9,909 9,770 9,784 United Kingdom 23 Total, ail currencies 161,067 158,732 144,385 146,130 149,534 150,705 148,711 148,285 149,599 151,455 24 Claims on United States 27,354 34,433 27,731 28,783 31,910 29,675 29,930' 30,327' 31,321 31,142 75 Parent bank 23,017 29,111 21,918 22,2% 25,313 23,250 23,236' 23,567' 23,932 24,370 26 Other banks in United States2 1 1,429 1,540 1,561 1,511 1,649 1,613 1,691 1,525 77 Nonbanks2 4,384 4,947 5,036 4,914 5,045 5,147 5,698 5,247 28 Claims on foreigners 127,734 119,280 111,772 112,284 112,937 115,889 112,817' 113,201 114,827 29 Other branches of parent bank 37,000 36,565 37,897 36,367 35,381 35,857 34,036' 33,948' 34,188 33,539 30 Banks 50,767 43,352 37,443 39,063 40,%1 40,812 41,253 39,910 39,856 40,546 31 Public borrowers 6,240 5,898 5,334 5,345 5,306 5,186 4,959 4,921 4,966 5,056 32 Nonbank foreigners 33,727 33,465 31,098 31,509 31,289 34,034 33,441 34,038 34,191 35,686 33 Other assets 5,979 5,019 4,882 5,063 4,687 5,141 5,092 5,141 5,077 5,486 34 Total payable in U.S. dollars 123,740 126,012 112,809 112,953 116,232 114,122 111,497 111,303 112,684 110,451 35 Claims on United States 26,761 33,756 26,924 27,807 30,945 28,839 29,003' 29,405' 30,372 30,089 36 Parent bank 22,756 28,756 21,551 21,960 24,911 22,910 22,905' 23,272' 23,625 23,997 37 Other banks in United States2 -i 1,363 1,4% 1,498 1,466 1,576 1,491 1,608 1,415 38 Nonbanks2 4,010 4,351 4,536 4,463 4,522 4,642 5,139 4,677 39 Claims on foreigners 92,228 88,917 82,889 82,161 82,268 82,437 79,505' 79,016' 79,466 77,446 40 Other branches of parent bank 31,648 31,838 33,551 31,899 31,099 31,331 29,056' 29,230' 29,364 28,623 41 Banks 36,717 32,188 26,805 27,465 28,523 27,982 27,808 27,188 27,325 26,349 42 Public borrowers 4,329 4,194 4,030 4,021 3,964 3,804 3,533 3,527 3,619 3,538 43 Nonbank foreigners 19,534 20,697 18,503 18,776 18,682 19,320 19,108 19,071 19,158 18,936 44 Other assets 4,751 3,339 2,9% 2,985 3,019 2,846 2,989 2,882 2,846 2,916 Bahamas and Caymans 45 Total, all currencies 145,156 152,083 146,811 141,834 144,665 147,041 145,0% 144,033 143,549 140,785 46 Claims on United States 59,403 75,309 77,296 76,856 76,446 78,886 79,150 78,849 78,049 75,275 47 Parent bank 34,653 48,720 49,449 48,892 50,043 53,925 52,996' 51,886' 51,171 48,669 48 Other banks in United States2 1 u ,.„ 11,544 11,326 11,305 10,761 11,647 11,723 11,999 12,381 49 Nonbanks2 16,303 16,638 15,098 14,200 14,507' 15,24c 14,879 14,225 50 Claims on foreigners 81,450 72,868 65,598 61,204 64,408 64,339 62,164 61,604 61,959 62,209 51 Other branches of parent bank 18,720 20,626 17,661 14,382 16,235 15,685 14,716 15,271 15,645 15,669 5? Banks 42,699 36,842 30,246 29,230 30,927 31,481 29,887 28,942 28,501 29,240 53 Public borrowers 6,413 6,093 6,089 6,162 6,081 6,349 6,683 6,604 6,642 6,505 54 Nonbank foreigners 13,618 12,592 11,602 11,430 11,165 10,824 10,878 10,787 11,171 10,795 55 Other assets 4,303 3,906 3,917 3,774 3,811 3,816 3,782 3,580 3,541 3,301 56 Total payable in U.S. dollars 139,605 145,641 141,562 137,090 139,543 141,534 139,926 138,724 138,581 135,472 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 • November 1985 3.14 Continued 1985 lyoz Jan. Feb. Mar. Apr. May June July? All foreign countries 57 Total, all currencies 469,712 477,090 452,205 444,953 452,796 462,009 460,344 458,121' 456,859 462,707 58 Negotiable CDs3 n.a. n.a. 37,725 38,804 41,798 40,889 38,940 37,188 37,952 37,683 59 To United States 179,015 188,070 146,955 143,663 140,896 145,892 145,011' 145,158' 147,007 145,959 60 Parent bank 75,621 81,261 78,111 75,213 72,320 75,952 75,88c 77,976' 79,434 80,221 61 Other banks in United States 33,405 29,453 18,409 18,125 17,832' 18,022' 18,841 18,782 19,430 17,032 62 Nonbanks 69,989 77,356 50,435 50,325 50,744' 51,918' 50,290 48,40C 48,143 48,706 63 To foreigners 270,853 269,685 247,122 241,538 249,619 253,642 254,840' 253,701' 250,748 255,987 64 Other branches of parent bank 90,191 90,615 93,206 87,722 89,872 93,978 91,792' 91,208' 90,354 92,275 65 Banks 96,860 92,889 78,203 79,291 84,013 82,670 83,607 81,537 80,496 82,802 66 Official institutions 19,614 18,896 20,281 19,484 19,356 20,831 21,854 21,827' 21,703 20,937 67 Nonbank foreigners 64,188 68,845 55,432 55,041 56,378 56,163 57,587 59,129' 58,195 59,973 68 Other liabilities 19,844 19,335 20,403 20,948 20,483 21,586 21,553 22,074' 21,152 23,078 69 Total payable in U.S. dollars 379,270 388,291 365,859 357,853 366,054 369,049 365,378 363,423' 364,685 360,245 70 Negotiable CDs3 n.a. n.a. 35,227 36,295 39,544 38,197 35,958 34,216 34,638 33,716 71 To United States 175,528 184,305 142,943 139,811 137,154 141,555 140,350' 140,508' 142,084 140,715 72 Parent bank 73,295 79,035 75,626 72,892 70,084 73,529 73,281' 75,352' 76,628 77,108 73 Other banks in United States 33,040 28,936 17,935 17,587 17,303' 17,473' 18,270 18,209 18,869 16,446 74 Nonbanks 69,193 76,334 49,382 49,332 49,767' 50,553' 48,799' 46,947' 46,587 47,161 75 To foreigners 192,510 194,139 177,638 171,479 178,745 179,066 178,846' 178,856' 178,651 176,494 76 Other branches of parent bank 72,921 73,522 77,222 72,648 74,926 78,441 76,083' 75,476' 75,298 75,809 77 Banks 57,463 57,022 45,131 44,948 48,734 44,871 45,167 44,413 44,694 43,716 78 Official institutions 15,055 13,855 15,773 14,861 14,653 16,049 17,178 17,407' 17,278 15,935 79 Nonbank foreigners 47,071 51,260 39,512 39,022 40,432 39,705 40,418 41,560 41,381 41,034 80 Other liabilities 11,232 9,847 10,051 10,268 10,611 10,231 10,224 9,843' 9,312 9,320 United Kingdom 81 Total, all currencies 161,067 158,732 144,385 146,130 149,534 150,705 148,711 148,285 149,599 151,455 82 Negotiable CDs3 n.a. n.a. 34,413 35,455 38,281 37,350 35,326 33,661 34,437 34,094 83 To United States 53,954 55,799 25,250 27,757 23,439 23,982 23,984' 24,816' 25,477 24,172 84 Parent bank 13,091 14,021 14,651 16,714 13,763 14,509 14,033' 14,283' 14,912 13,439 85 Other banks in United States 12,205 11,328 3,125 3,569 2,948 2,918 2,665 2,735 3,571 2,853 86 Nonbanks 28,658 30,450 7,474 7,474 6,728 6,555 7,286 7,798' 6,994 7,880 87 To foreigners 99,567 95,847 77,424 75,039 80,450 80,722 80,913' 81,033' 81,009 83,480 88 Other branches of parent bank 18,361 19,038 21,631 20,199 22,146 23,699 21,887' 21,784' 22,565 23,647 89 Banks 44,020 41,624 30,436 31,216 33,789 32,003 32,259 31,573 30,852 32,389 90 Official institutions 11.504 10,151 10,154 9,084 9,374 10,305 11,590 11,2W 11,240 10,180 91 Nonbank foreigners 25,682 25,034 15,203 14,540 15,141 14,715 15,177 16,416' 16,352 17,264 92 Other liabilities 7,546 7,086 7,298 7,879 7,364 8,651 8,488 8,775 8,676 9,709 93 Total payable in U.S. dollars 130,261 131,167 117,497 117,198 120,623 117,984 116,128 115,740 117,331 114,123 94 Negotiable CDs3 n.a. n.a. 33,070 34,084 37,033 35,719 33,763 32,140 32,722 31,743 95 To United States 53,029 54,691 24,105 26,587 22,386 22,481 22,281' 23,213' 23,728 22,259 % Parent bank 12,814 13,839 14,339 16,349 13,506 14,129 13,569' 13,874' 14,474 12,782 97 Other banks in United States 12,026 11,044 2,980 3,420 2,804 2,748 2,500 2,550 3,387 2,687 98 Nonbanks 28,189 29,808 6,786 6,818 6,076 5,604 6,212 6,789' 5,867 6,790 99 To foreigners 73,477 73,279 56,923 52,954 57,654 56,327 56,473' 56,880' 57,507 56,783 100 Other branches of parent bank 14,300 15,403 18,294 16,940 18,772 20,127 18,451' 18,375' 19,053 19,640 101 Banks 28.810 29,320 18,356 17,889 20,022 17,191 17,497 17,417 17,175 17,249 102 Official institutions 9,668 8,279 8,871 7,748 7,854 8,734 9,989 9,687' 9,648 8,430 103 Nonbank foreigners 20,699 20,277 11,402 10,377 11,006 10,275 10,536 11,401 11,631 11,464 104 Other liabilities 3,755 3,197 3,399 3,573 3,550 3,457 3,611 3,507 3,374 3,338 Bahamas and Caymans 105 Total, all currencies 145,156 152,083 146,811 141,834 144,665 147,041 145,096 144,033 143,549 140,785 106 Negotiable CDs3 n.a. n.a. 615 734 953 779 634 436 344 320 107 To United States 104,425 111,299 102,955 98,466 99,200 103,037 100,480 99,370 99,847 98,684 108 Parent bank 47,081 50,980 47,162 43,783 43,358 45,373 43,740 45,557 45,731 47,144 109 Other banks in United States 18,466 16,057 13,938 13,320 13,590 13,959 15,112 14,545 14,748 12,979 110 Nonbanks 38,878 44,262 41,855 41,363 42,252 43,705 41,628' 39,268 39,368 38,561 111 To foreigners 38,274 38,445 40,320 39,785 41,529 40,367 41,102 41,437 40,621 39,081 112 Other branches of parent bank 15,796 14,936 16,782 16,014 17,111 16,744 17,179 17,759 16,615 16,645 113 Banks 10,166 11,876 12,405 12,274 12,976 12,562 13,469 12,879 13,600 12,329 114 Official institutions 1,967 1,919 2,054 2,020 1,992 1,884 1,598 2,194 1,866 1,941 115 Nonbank foreigners 10,345 11,274 9,079 9,477 9,450 9,177 8,856 8,605 8,540 8,166 116 Other liabilities 2,457 2,339 2,921 2,849 2,983 2,858 2,880 2,790 2,737 2,700 117 Total payable in U.S. dollars 141,908 148,278 143,590 138,200 140,973 143,223 140,945 139,909 139,648 136,820 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 1985 IItteemm 11998833 11998844 Jan. Feb. Mar. Apr. Mayr June? July 1 Total1 177,950 180,556 176,853 173,356 169,815 170,565 173,637 177,673 180,306 By type 2 Liabilities reported by banks in the United States2 25,534 26,089 23,310 23,420 22,991 22,721 23,103 22,845 21,960 3 U.S. Treasury bills and certificates3 54,341 59,976 56,662 5522,,447744 5544,,668855 57,226 56,691 58,589 6600,,772277 U.S. Treasury bonds and notes 4 Marketable 68,514 69,029 71,557 72,879 67,601 67,004 70,470 73,182 74,693 5 Nonmarketable4 7,250 5,800 5,800 5,300 5,300 4,900 4,500 4,500 4,500 6 U.S. securities other than U.S. Treasury securities5 22,311 19,662 19,524 19,283 19,238 18,714 18,873 18,557 18,426 By area 1 Western Europe1 67,645 69,789 68,295 67,387 63,746 65,660 67,870 70,248 72,943 8 Canada 2,438 1,528 1,491 1,136 1,715 1,403 1,558 1,571 2,010 9 Latin America and Caribbean 6,248 8,554 7,450 7,278 7,518 7,528 8,072 8,467 8,833 10 Asia 92,572 93,951 93,044 91,029 90,721 89,968 90,217 91,445 90,868 11 Africa 958 1,264 1,120 1,397 1,200 1,403 1,262 1,299 1,259 12 Other countries6 8,089 5,470 5,453 5,129 4,915 4,603 4,658 4,643 4,393 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 1985 IItteemm 11998811 11998822 11998833 Sept. Dec. Mar. June 1 Banks'own liabilities 3,523 4,844 5,219 6,227 7,542 8,012 10,150 2 Banks' own claims 4,980 7,707 7,231 9,290 11.307 12,639 14,012 3 Deposits 3,398 4,251 2,731 3,641 4,537 6,148 7,437 4 Other claims 1,582 3,456 4,501 5,649 6,770 6,491 6,575 5 Claims of banks' domestic customers' 971 676 1,059 281 569 440 243 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 • November 1985 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1985 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May June July? 1 All foreigners 307,056 369,607 406,457 399,255 405,239 413,225 410,655 411,144' 412,772 414,868 2 Banks' own liabilities 227,089 279,087 306,510 301,627 311,688 317,097 312,697 315,455' 316,873 317,112 3 Demand deposits 15,889 17,470 19,571 17,975 19,369 18,131 18,295 17,705' 19,425 17,954 4 Time deposits' 68,797 90,632 110,292 114,169 117,097 119,228 117,787 120,682' 116,213 114,075 5 Other2 23,184 25,874 26,099 23,507 24,991 25,127 24,338 25,614' 25,746 26,221 6 Own foreign offices3 119,219 145,111 150,547 145,977 150,211 154,611 152,277 151,453' 155,488 158,862 7 Banks' custody liabilities4 79,967 90,520 99,947 97,628 93,572 96,128 97,958 95,690 95,899 97,756 8 U.S. Treasury bills and certificates5 55,628 68,669 75,838 73,635 69,189 71,552 73,078 71,597 73,061 75,396 9 Other negotiable and readily transferable instruments6 20,636 17,467 18,670 18,192 18,068 18,099 18,337 17,690 16,207 16,084 10 Other 3,702 4,385 5,439 5,802 6,315 6,477 6,543 6,403 6,632 6,276 11 Nonmonetary international and regional organizations7 4,922 5,957 4,083 6,929 5,812 5,905 6,112 6,694 5,709 4,854 12 Banks' own liabilities 1,909 4,632 1,644 3,571 2,092 2,333 3,083 4,389 3,928 3,078 13 Demand deposits 106 297 254 417 341 191 167 264 164 134 14 Time deposits' 1,664 3,584 1,102 2,682 936 1,488 2,276 3,747 3,023 2,391 15 Other2 139 750 288 472 815 654 640 377 740 553 16 Banks' custody liabilities4 3,013 1,325 2,440 3,358 3,719 3,572 3,029 2,305 1,782 1,777 17 U.S. Treasury bills and certificates 1,621 463 916 1,921 2,258 2,082 1,434 775 642 767 18 Other negotiable and readily transferable instruments6 1,392 862 1,524 1,429 1,461 1,490 1,593 1,531 1,140 1,010 19 Other 0 0 0 8 1 0 2 0 0 0 20 Official institutions8 71,647 79,876 86,065 79,972 75,894 77,675 79,947 79,794' 81,434 82,687 21 Banks' own liabilities 16,640 19,427 19,039 16,970 17,249 16,777 16.581 17,602' 17,725 17,161 22 Demand deposits 1,899 1,837 1,823 1,780 1,881 1,923 1,975 1,630 1,891 1,551 23 Time deposits' 5,528 7,318 9,374 8,363 8,673 8,469 9,126 8,678' 9,000 8,9% 24 Other2 9,212 10,272 7,842 6,826 6,694 6,385 5,481 7,294' 6,833 6,614 25 Banks' custody liabilities4 55,008 60,448 67,026 63,002 58,645 60,898 63,366 62,192 63,710 65,526 26 U.S. Treasury bills and certificates5 46,658 54,341 59,976 56,662 52,474 54,685 57,226 56,691 58,589 60,727 27 Other negotiable and readily transferable instruments6 8,321 6,082 6,966 6,287 6,086 6,109 6,007 5,451 5,042 4,705 28 Other 28 25 84 53 85 105 133 50 78 94 29 Banks9 185,881 226,887 248,190 241,805 250,059 257,565 252,858 251,720' 254,073 256,681 30 Banks' own liabilities 169,449 205,347 225,341 219,231 227,722 235,132 230,426 229,794' 232,247 235,030 31 Unaffiliated foreign banks 50,230 60,236 74,794 73,254 77,512 80,521 78,149 78,341 76,759 76,168 32 Demand deposits 8,675 8,759 10,556 9,030 9,656 9,154 9,266 8,714' 9,847 8,952 33 Time deposits' 28,386 37,439 47,120 48,622 50,993 54,222 51,610 52,653' 49,949 49,630 34 Other2 13,169 14,038 17,118 15,602 16,862 17,144 17,273 16,973 16,962 17,586 35 Own foreign offices3 119,219 145,111 150,547 145,977 150,211 154,611 152,277 151,453' 155,488 158,862 36 Banks' custody liabilities4 16,432 21,540 22,848 22,575 22,336 22,433 22,432 21,926 21,827 21,651 37 U.S. Treasury bills and certificates 5,809 10,178 10,927 10,933 10,493 10,602 10,446 10,216 9,745 9,934 38 Other negotiable and readily transferable instruments6 7,857 7,485 7,156 6,527 6,254 6,206 6,235 6,104 6,231 6,330 39 Other 2,766 3,877 4,766 5,114 5,589 5,625 5,751 5,606 5,851 5,387 40 Other foreigners 44,606 56,887 68,119 70,549 73,475 72,079 71,738 72,936' 71,555 70,645 41 Banks' own liabilities 39,092 49,680 60,486 61,855 64,604 62,855 62,608 63,670' 62,973 61,842 42 Demand deposits 5,209 6,577 6,938 6,747 7,491 6,863 6,888 7,098 7,522 7,317 43 Time deposits 33,219 42,290 52,697 54,502 56,494 55,049 54,775 55,603' 54,241 53,058 44 Other2 664 813 851 606 619 943 945 969 1,211 1,468 45 Banks' custody liabilities4 5,514 7,207 7,633 8,693 8,871 9,224 9,131 9,266 8,581 8,803 46 U.S. Treasury bills and certificates 1,540 3,686 4,020 4,118 3,964 4,182 3,973 3,915 4,085 3,968 47 Other negotiable and readily transferable instruments6 3,065 3,038 3,024 3,948 4,267 4,294 4,501 4,604 3,793 4,040 48 Other 908 483 590 628 640 748 657 746 704 795 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 14,307 10,346 10,476 9,287 9,169 9,412 9,145 9,081 8,679 8,565 1. Excludes negotiable time certificates of deposit, which are included in 5. Includes nonmarketable certificates of indebtedness and Treasury bills "Other negotiable and readily transferable instruments." issued to official institutions of foreign countries. 2. Includes borrowing under repurchase agreements. 6. Principally bankers acceptances, commercial paper, and negotiable time 3. U.S. banks: includes amounts due to own foreign branches and foreign certificates of deposit. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 7. Principally the International Bank for Reconstruction and Development, and regulatory agencies. Agencies, branches, and majority-owned subsidiaries of the Inter-American and Asian Development Banks. foreign banks: principally amounts due to head office or parent foreign bank, and 8. Foreign central banks and foreign central governments, and the Bank for foreign branches, agencies or wholly owned subsidiaries of head office or parent International Settlements. foreign bank. 9. Excludes central banks, which are included in "Official institutions." 4. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17 Continued 1985 AArreeaa aanndd ccoouunnttrryy 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May June July? 1 Total 307,056 369,607 406,457 399,255 405,239 413,225 410,655 411,144' 412,772 414,868 2 Foreign countries 302,134 363,649 402,374 392,326 399,428 407,320 404,544 404,451' 407,063 410,013 3 Europe 117,756 138,072 152,553 149,304 152,221 151,660 149,108 151,219' 153,782 154,806 4 Austria 519 585 615 734 625 670 537 627 563 561 5 Belgium-Luxembourg 2,517 2,709 4,114 4,000 4,638 4,797 4,795 4,619 4,989 5,684 6 Denmark 509 466 438 452 530 452 557 494 727 747 7 Finland 748 531 418 425 735 804 476 604 325 395 8 8,171 9,441 12,701 11,908 12,430 12,782 13,627 14,178' 13,849 15,228 9 Germany 5,351 3,599 3,358 3,586 3,258 2,923 3,539 3,727 4,003 4,394 10 Greece 537 520 699 615 583 730 649 585' 605 589 II Italy 5,626 8,462 10,757 9,477 9,108 8,412 7,895 8,467' 9,276 9,624 1? Netherlands 3,362 4,290 4,799 4,663 4,622 4,934 4,448 4,685' 4,376 4,691 13 Norway 1,567 1,673 1,548 1,712 1,635 1,889 2,138 1,994' 1,397 1,182 14 Portugal 388 373 597 570 614 715 698 665 635 658 11 1,405 1,603 2,082 2,016 1,887 2,079 2,000 2,030 2,015 2,114 16 Sweden 1,390 1,799 1,676 2,133 1,486 1,667 1,901 1,689 2,277 2,557 17 Switzerland 29,066 32,246 31,054 31,437 31,580 30,421 30,059 29,706' 29,547 28,401 18 Turkey 296 467 584 495 501 527 506 384 631 653 19 United Kingdom 48,172 60,683 68,711 68,039 70,269 70,289 68,239 69,779' 70,952 70,242 70 Yugoslavia 499 562 602 545 602 671 648 585 729 626 71 Other Western Europe1 7,006 7,403 7,184 5,855 6,628 6,286 5,790 5,877r 6,241 5,980 77 U.S.S.R 50 65 79 66 60 94 125 67 31 72 23 Other Eastern Europe2 576 596 537 575 431 517 480 458 614 408 24 Canada 12,232 16,026 16,048 16,331 18,263 17,228 17,006 16,214 15,874 16,284 71 Latin America and Caribbean 114,163 140,088 153,577 151,374 154,828 157,708 156,803 157,071 158,316 158,915 76 Argentina 3,578 4,038 4,424 4,523 4,354 4,551 4,664 4,912 5,088 5,325 77 44,744 55,818 56,897 55,580 56,928 59,600 59,069 58,195 57,406 55,662 78 Bermuda 1,572 2,266 2,370 2,706 3,410 2,799 3,159 3,192 2,496 2,381 79 Brazil 2,014 3,168 5,332 4,920 6,143 4,656 4,743 5,376 5,187 5,727 30 British West Indies 26,381 34,545 36,747 35,265 35,171 36,593 35,765 35,489 38,967 40,654 31 Chile 1,626 1,842 2,001 1,948 1,916 1,897 1,909 1,922 1,870 1,910 37 Colombia 2,594 1,689 2,514 2,356 2,453 2,540 2,401 2,452 2,526 2,421 33 Cuba 9 8 10 26 8 6 6 7 6 10 34 Ecuador 455 1,047 1,092 912 981 1,024 1,022 987 1,004 1,046 31 Guatemala 670 788 896 920 915 950 955 979 963 972 36 Jamaica 126 109 183 157 182 163 154 146 123 194 37 Mexico 8,377 10,392 12,506 13,254 13,000 13,240 13,202 13,658 13,532 13,406 38 Netherlands Antilles 3,597 3,879 4,153 4,346 4,662 4,576 4,383 4,439 4,200 4,056 39 Panama 4,805 5,924 6,951 6,884 7,177 7,488 7,584 7,570 7,427 7,427 40 Peru 1,147 1,166 1,266 1,151 1,064 1,132 1,077 1,162 1,168 1,113 41 Uruguay 759 1,244 1,394 1,485 1,413 1,443 1,461 1,492 1,415 1,459 47 Venezuela 8,417 8,632 10,545 10,667 10,740 10,649 10,791 10,696 10,471 10,853 43 Other Latin America and Caribbean 3,291 3,535 4,297 4,275 4,311 4,401 4,458 4,396 4,465 4,301 44 48,716 58,570 71.115 66,522 64,981 72,095 73,233 71,509' 70,316 71,752 China 4^ Mainland 203 249 1,153 1,075 1,068 980 912 698 886 993399 46 Taiwan 2,761 4,051 4,975 5,098 5,187 5,306 5,242 5,381 5,545 5,849 47 Hong Kong 4,465 6,657 6,594 6,558 6,648 6,937 7,091 7,360 7,989 7,900 48 India 433 464 507 559 725 738 554 546 569 555 49 Indonesia 857 997 1,033 1,136 914 1,052 1,104 1,031 1,118 1,463 SO 606 1,722 1,268 1,003 994 941 873 988' 1,053 1,010 11 Japan 16,078 18,079 21,586 21,662 22,551 24,540 22,683 22,688' 21,104 23,058 5? Korea 1,692 1,648 1,724 1,560 1,584 1,526 1,595 1,598 1,705 1,403 13 Philippines 770 1,234 1,383 1,327 1,113 1,102 1,223 1,305 1,443 1,334 14 Thailand 629 747 1,257 1,161 1,050 1,384 1,141 1,167 1,063 984 11 Middle-East oil-exporting countries3 13,433 12,976 16,804 15,965 15,202 16,391 16,373 16,316 15,051 15,412 56 Other Asia 6,789 9,748 12,831 9,417 7,945 11,200 14,441 12,430 12,790 11,845 57 3,124 2,827 3,396 3,170 3,561 3,476 3,517 3,429 3,920 3,381 18 Egypt 432 671 647 541 637 715 747 618 745 882 19 Morocco 81 84 118 115 116 167 155 189 161 9988 60 South Africa 292 449 328 376 371 244 339 273 332 118811 61 23 87 153 76 79 100 128 124 170 87 6? Oil-exporting countries4 1,280 620 1,189 1,186 1,450 1,346 1,177 1,114 1,497 1,099 63 Other Africa 1,016 917 961 876 910 903 969 1,112 1,015 1,034 64 Other countries 6,143 8,067 5,684 5,624 5,574 5,152 4,877 5,009 4,854 4,875 61 Australia 5,904 7,857 5,300 5,248 5,017 4,743 4,456 4,608 4,462 4,364 66 All other 239 210 384 377 557 409 422 401 392 511 67 Nonmonetary international and regional organizations 4,922 5,957 4,083 6,929 5,812 5,905 6,112 6,694 55,,770099 44,,885544 68 International 4,049 5,273 3,376 6,165 4,935 5,132 5,247 5,636 4,698 3,802 69 Latin American regional 517 419 587 600 580 632 706 834 808 782 70 Other regional5 357 265 120 165 296 141 159 224 203 270 1. Includes the Bank for International Settlements. Beginning April 1978, also 4. Comprises Algeria, Gabon, Libya, and Nigeria. includes Eastern European countries not listed in line 23. 5. Asian, African, Middle Eastern, and European regional organizations, 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German except the Bank for International Settlements, which is included in "Other Democratic Republic, Hungary, Poland, and Romania. Western Europe." 3. 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

A60 International Statistics • November 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 1985 AArreeaa aanndd ccoouunnttrryy 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May June July? 1 Total 355,705 391,312 398,558 387,050 393,212 396,898 390,022 390,992' 395,596 390,506 2 Foreign countries 355,636 391,148 397,884 386,126 392,912 396,658 389,942 390,178' 394,926 390,232 3 Europe 85,584 91,927 97,917 96,068 98,019 101,759 99,427 99,997 100,790 100,374 4 Austria 229 401 433 339 367 484 519 552 536 815 5 Belgium-Luxembourg 5,138 5,639 4,794 4,683 5,097 5,233 5,161 5,264 5,217 5,739 6 Denmark 554 1,275 648 589 589 638 601 560 474 503 7 Finland 990 1,044 898 817 907 826 804 700 896 875 8 France 7,251 8,766 9,117 8,642 9,627 10,042 10,273 10,462 9,969 10,006 9 Germany 1,876 1,284 1,313 1,001 945 1,072 1,008 1,015' 1,218 1,107 10 Greece 452 476 817 896 840 848 907 921 1,002 947 11 Italy 7,560 9,018 9,079 8,040 8,481 8,711 8,256 7,798 7,518 7,600 12 Netherlands 1,425 1,267 1,351 1,480 1,490 1,348 1,401 1,040 1,339 1,142 13 Norway 572 690 675 651 808 621 748 753 750 709 14 Portugal 950 1,114 1,243 1,212 1,286 1,186 1,151 1,158 1,156 1,151 15 Spain 3,744 3,573 2,884 2,858 3,135 2,978 2,890 2,587 2,699 2,388 16 Sweden 3,038 3,358 2,220 2,497 2,586 2,342 2,338 2,177 2,072 2,714 17 Switzerland 1,639 1,863 2,123 2,308 2,110 1,921 1,843 1,631 2,231 2,635 18 Turkey 560 812 1,130 1,232 1,155 1,172 1,147 1,162 1,208 1,313 19 United Kingdom 45,781 47,364 55,184 54,843 54,648 58,381 56,199 57,812 58,218 56,411 20 Yugoslavia 1,430 1,718 1,886 1,862 1,783 1,793 1,892 1,940 1,958 1,972 21 Other Western Europe1 368 477 596 671 679 642 640 760 776 689 22 U.S.S.R 263 192 142 118 178 203 245 312 297 275 23 Other Eastern Europe2 1,762 1,598 1,382 1,329 1,308 1,317 1,404 1,393' 1,255 1,383 24 Canada 13,678 16,341 16,057 16,363 19,082 18,766 18,349 17,891 17,856 16,695 25 Latin America and Caribbean 187,969 205,491 207,561 199,474 200,736 202,808 199,034 201,104' 203,642 200,794 26 Argentina 10,974 11,749 11,043 11,453 11,280 11,162 11,163 11,346 11,422 11,457 27 Bahamas 56,649 59,633 57,904 54,405 54,548 57,608 55,526 56,763' 59,104 55,648 28 Bermuda 603 566 592 601 448 464 633 506 581 405 29 Brazil 23,271 24,667 26,315 25,886 26,146 26,124 26,207 26,434 26,567 26,583 30 British West Indies 29,101 35,527 38,077 35,368 36,806 36,299 35,503 36,050' 36,344 37,277 31 Chile 5,513 6,072 6,839 6,746 6,713 6,775 6,676 6,634 6,675 6,663 32 Colombia 3,211 3,745 3,499 3,369 3,406 3,313 3,246 3,270 3,207 3,230 33 Cuba 3 0 0 0 1 0 0 0 0 0 34 Ecuador 2,062 2,307 2,420 2,477 2,489 2,470 2,467 2,487 2,495 2,450 3.5 Guatemala3 124 129 158 154 157 154 154 149 145 152 36 Jamaica3 181 215 252 242 253 233 223 237 227 234 37 Mexico 29,552 34,802 34,824 34,066 33,660 33,410 32,554 32,748' 32,412 32,214 38 Netherlands Antilles 839 1,154 1,350 1,273 1,393 1,254 1,319 1,386 1,249 1,110 39 Panama 10,210 7,848 7,707 6,864 7,071 7,083 7,039 6,751 6,856 7,005 40 Peru 2,357 2,536 2,384 2,414 2,337 2,345 2,353 2,310 2,290 2,238 41 Uruguay 686 977 1,088 1,053 1,021 1,019 1,014 1,013 1,013 1,007 42 Venezuela 10,643 11,287 11,017 10,968 10,929 10,956 10,804 10,947 10,996 10,991 43 Other Latin America and Caribbean 1,991 2,277 2,091 2,135 2,077 2,139 2,154 2,072 2,061 2,129 44 6600,,995522 67,837 6666,,227788 64,387 65,351 63,595 63,430 61,788' 63,374 63,334 China 45 Mainland 214 292 710 507 741 650 572 543' 360 635 46 Taiwan 2,288 1,908 1,849 1,745 1,827 1,954 1,937 1,641' 1,716 1,540 47 Hong Kong 6,787 8,489 7,283 6,801 7,351 6,639 6,897 7,290 7,225 7,497 48 India 222 330 425 299 354 284 307 270 310 375 49 Indonesia 348 805 734 710 780 780 704 701 682 627 50 Israel 2,029 1,832 2,088 1,993 2,041 1,941 2,004 2,038 2,599 2,056 51 Japan 28,379 30,354 29,059 28,495 29,092 28,008 26,594 25,407' 26,522 26,406 52 Korea 9,387 9,943 9,285 8,799 8,813 9,298 9,434 9,127' 9,115 9,712 53 Philippines 2,625 2,107 2,550 2,499 2,560 2,435 2,360 2,384 2,452 2,454 54 Thailand 643 1,219 1,125 1,123 1,076 1,005 939 852 862 750 55 Middle East oil-exporting countries4 3,087 4,954 5,044 5,004 4,856 4,708 5,509 5,546 5,120 5,315 56 Other Asia 4,943 5,603 6,126 6,411 5,860 5,895 6,171 5,989 6,411 5,967 57 Africa 5,346 6,654 6,615 6,536 6,376 6,221 6,299 6,203 6,071 5,978 58 Egypt 322 747 728 668 584 674 629 612 626 606 59 Morocco 353 440 583 552 582 584 595 577 592 596 60 South Africa 2,012 2,634 2,795 2,791 2,666 2,420 2,508 2,497 2,519 2,421 61 Zaire 57 33 18 41 29 24 24 24 24 24 62 Oil-exporting countries5 801 1,073 842 812 791 819 893 871 740 743 63 Other 1,802 1,727 1,649 1,672 1,724 1,700 1,651 1,621 1,570 1,589 64 Other countries 2,107 2,898 3,456 3,297 3,348 3,510 3,403 3,194' 3,192 3,057 65 Australia 1,713 2,256 2,778 2,593 2,635 2,824 2,755 2,536' 2,506 2,320 66 All other 394 642 678 704 713 686 648 658 686 737 67 Nonmonetary international and regional organizations6 68 164 674 925 300 240 80 815 670 227755 1. Includes the Bank for International Settlements. Beginning April 1978, also 5. Comprises Algeria, Gabon, Libya, and Nigeria. includes Eastern European countries not listed in line 23. 6. Excludes the Bank for International Settlements, which is included in 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German "Other Western Europe." Democratic Republic, Hungary, Poland, and Romania. NOTE. Data for period before April 1978 include claims of banks' domestic 3. Included in "Other Latin America and Caribbean" through March 1978. customers on foreigners. 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saud iArabia, and United Arab Emirates (Trucial States). 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 1985 TTyyppee ooff ccllaaiimm 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May' June July 1 Total 333333399999996666666,,,,,,,000000011111115555555 444444422222226666666,,,,,,,222222211111115555555 444444433333331111111,,,,,,,444444477777774444444 444444433333330000000,,,,,,,555555544444444444444 444444422222225555555,,,,,,,000000011111118888888 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 333333355555555555555,,,,,,,777777700000005555555 333333399999991111111,,,,,,,333333311111112222222 333333399999998888888,,,,,,,555555555555558888888 387,050 393,212 333333399999996666666,,,,,,,888888899999998888888 390,022 390,992 333333399999995555555,,,,,,,555555599999996666666 390,506 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 44444445555555,,,,,,,444444422222222222222 55555557777777,,,,,,,555555566666669999999 66666661111111,,,,,,,444444477777773333333 61,411 61,828 66666661111111,,,,,,,666666677777776666666 60,972 61,673 66666661111111,,,,,,,111111133333336666666 61,147 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 111111122222227777777,,,,,,,222222299999993333333 111111144444446666666,,,,,,,333333399999993333333 111111155555556666666,,,,,,,222222200000002222222 153,651 154,524 111111155555557777777,,,,,,,999999933333333333333 155,144 156,989 111111166666662222222,,,,,,,444444455555556666666 158,007 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222221111111,,,,,,,333333377777777777777 111111122222223333333,,,,,,,888888833333337777777 111111122222223333333,,,,,,,777777799999991111111 117,525 121,372 111111122222222222222,,,,,,,111111144444445555555 119.369 119,108 111111111111118888888,,,,,,,222222200000004444444 117,642 66 DDeeppoossiittss 44444444444444,,,,,,,222222222222223333333 44444447777777,,,,,,,111111122222226666666 44444448888888,,,,,,,111111166666668888888 45,745 47,685 44444449999999,,,,,,,666666677777772222222 47,664 48,096 44444447777777,,,,,,,888888899999998888888 48,931 77 OOtthheerr 77777777777777,,,,,,,111111155555553333333 77777776666666,,,,,,,777777711111111111111 77777775555555,,,,,,,666666622222224444444 71,780 73,687 77777772222222,,,,,,,444444477777773333333 71,706 71,012 77777770000000,,,,,,,333333300000006666666 68.710 88 AAllll ootthheerr ffoorreeiiggnneerrss 66666661111111,,,,,,,666666611111114444444 66666663333333,,,,,,,555555511111114444444 55555557777777,,,,,,,000000099999992222222 54,463 55,487 55555555555555,,,,,,,111111144444443333333 54,536 53,222 55555553333333,,,,,,,888888800000000000000 53.711 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 44444440000000,,,,,,,333333311111110000000 33333334444444,,,,,,,999999900000003333333 33333332222222,,,,,,,999999911111116666666 33333333333333,,,,,,,666666644444446666666 22222229999999,,,,,,,444444422222222222222 2222222,,,,,,,444444499999991111111 2222222,,,,,,,999999966666669999999 3333333,,,,,,,333333388888880000000 3333333,,,,,,,888888877777771111111 2222222,,,,,,,888888877777770000000 11 Negotiable and readily transferable 33333330000000,,,,,,,777777766666663333333 22222226666666,,,,,,,000000066666664444444 22222223333333,,,,,,,888888800000005555555 22222224444444,,,,,,,555555577777776666666 22222221111111,,,,,,,000000066666664444444 12 Outstanding collections and other 7777777,,,,,,,000000055555556666666 5555555,,,,,,,888888877777770000000 5555555,,,,,,,777777733333332222222 5555555,,,,,,,111111199999998888888 5555555,,,,,,,444444488888888888888 13 MEMO: Customer liability on 33333338888888.......111111155555553333333 33333337777777,,,,,,,777777711111115555555 33333336666666,,,,,,,666666666666667777777 33333335555555,,,,,,,222222200000004444444 33333331111111,,,,,,,666666699999994444444 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 .... 42.499 46,217 40,096 43,136' 40,261' 39,703' 39,375' 37,393 36,012 n.a. 1. U.S. banks: includes amounts due from own foreign branches and foreign 3. Principally negotiable time certificates of deposit and bankers acceptances. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 4. Includes demand and time deposits and negotiable and nonnegotiable regulatory agencies. Agencies, branches, and majority-owned subsidiaries of certificates of deposit denominated in U.S. dollars issued by banks abroad. For foreign banks: principally amounts due from head office or parent foreign bank, description of changes in data reported by nonbanks, see July 1979 BULLETIN, and foreign branches, agencies, or wholly owned subsidiaries of head office or p. 550. parent foreign bank. NOTE. Beginning April 1978, data for banks' own claims are given on a monthly 2. Assets owned by customers of the reporting bank located in the United basis, but the data for claims of banks' own domestic customers are available on a States that represent claims on foreigners held by reporting banks for the account quarterly basis only. of their domestic customers. 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 1985 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998811AA 11998822 11998833 Sept. Dec. Mar. JuneP 1 Total 154,590 228,150 243,715 240,590 243,170 239,222 230,714 By borrower 2 Maturity of 1 year or less1 116,394 173,917 176,158 162,802 165,321 164,883 158,090 3 Foreign public borrowers 15,142 21,256 24,039 21,086 22,141 23,496 23,864 4 All other foreigners 101,252 152,661 152,120 141,716 143,180 141,387 134,227 5 Maturity of over 1 year1 38,197 54,233 67,557 77,788 77,849 74,339 72,623 6 Foreign public borrowers 15,589 23,137 32,521 38,571 39,672 38,088 37,133 7 All other foreigners 22,608 31,095 35,036 39,217 38,177 36,251 35,490 By area Maturity of 1 year or less1 8 Europe 28,130 50,500 56,117 56,741 58,173 60,269 55,448 9 Canada 4,662 7,642 6,211 5,841 5,978 7,481 6,098 10 Latin America and Caribbean 48,717 73,291 73,660 61,449 60,825 60,071 63,370 11 Asia 31,485 37,578 34,403 32,268 33,435 30,651 27,426 12 Africa 2,457 3,680 4,199 4,798 4,442 4,109 3,976 13 All other2 943 1,226 1,569 1,705 22,,446688 2,301 11,,777722 Maturity of over 1 year1 14 Europe 8,100 11,636 13,576 11,249 9,590 8.545 8,588 15 Canada 1,808 1,931 1,857 1,801 1,890 2,181 2,116 16 Latin America and Caribbean 25,209 35,247 43,888 56,625 57,834 55,372 53,141 17 Asia 1,907 3,185 4.850 5,106 5,386 5,235 5,196 18 Africa 900 1,494 2,286 1,857 2,033 1,963 2,002 19 All other2 272 740 1,101 1,150 1,116 1,043 1,581 1. Remaining time to maturity. 2. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • November 1985 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 1983 1984 1985 AArreeaa oorr ccoouunnttrryy 11998811 11998822 June Sept. Dec. Mar. June7 Sept. Dec. Mar. June'' 1 Total 415.2 438.7 439.9 431.0 437.3 435.1 430.6 410.1 407.7 409.3' 400.6 2 G-10 countries and Switzerland 175.5 179.7 177.1 168.8 168.0 166.0 157.7 148.0 147.6 152.4' 146.7 3 Belgium-Luxembourg 13.3 13.1 13.3 12.6 12.4 11.0 10.9 9.8 8.8 9.4 9.0 4 France 15.3 17.1 17.1 16.2 16.3 15.9 14.2 14.3 14.1 14.6' 13.6 5 Germany 12.9 12.7 12.6 11.6 11.3 11.7 10.9 10.0 9.0 8.9 9.6 6 Italy 9.6 10.3 10.5 9.9 11.4 11.2 11.5 9.7 10.1 10.0 8.9 7 Netherlands 4.0 3.6 4.0 3.6 3.5 3.4 3.0 3.4 3.9 3.7 3.7 8 Sweden 3.7 5.0 4.7 4.9 5.1 5.2 4.3 3.5 3.2 3.1 2.9 9 Switzerland 5.5 5.0 4.8 4.2 4.3 4.3 4.2 3.9 3.9 4.2 4.0 10 United Kingdom 70.1 72.1 70.8 67.8 65.4 65.1 60.5 57.4 59.8 64.8' 65.2 11 Canada 10.9 10.4 10.8 8.9 8.3 8.6 8.9 8.1 7.8 9.0 8.0 12 Japan 30.2 30.2 28.5 29.0 29.9 29.7 29.3 27.9 27.2 24.7' 21.9 13 Other developed countries 28.4 33.7 34.5 34.3 36.1 35.7 37.1 36.3 33.8 33.0 32.4 14 Austria 1.9 1.9 2.1 1.9 1.9 2.0 1.9 1.8 1.6 1.6 1.6 15 Denmark 2.3 2.4 3.4 3.3 3.4 3.4 3.1 2.9 2.2 2.1 1.9 16 Finland 1.7 2.2 2.1 1.8 2.4 2.1 2.3 1.9 1.9 1.8 1.8 17 Greece 2.8 3.0 2.9 2.9 2.8 3.0 3.3 3.2 2.9 2.9 2.9 18 Norway 3.1 3.3 3.4 3.2 3.3 3.2 3.2 3.2 3.0 2.9 2.9 19 Portugal 1.1 1.5 1.4 1.4 1.5 1.4 1.7 1.6 1.4 1.4 1.3 20 6.6 7.5 7.2 7.1 7.1 7.1 7.3 6.9 6.5 6.5' 5.9 21 Turkey 1.4 1.4 1.4 1.5 1.7 1.9 2.0 2.0 1.9 1.9 2.0 22 Other Western Europe 2.1 2.3 2.0 2.1 1.8 1.8 1.9 1.7 1.7 1.7 1.8 23 South Africa 2.8 3.7 3.9 4.7 4.7 4.8 4.7 5.0 4.5 4.2 3.9 24 Australia 2.5 4.4 4.5 4.4 5.5 5.2 5.7 6.2 6.1 6.2 6.3 25 OPEC countries2 .24.8 27.4 28.3 27.2 28.9 28.6 26.7 25.0 25.6 25.2' 23.6 26 Ecuador 2.2 2.2 2.2 2.1 2.2 2.1 2.1 2.1 2.2 2.2 2.3 27 Venezuela 9.9 10.5 10.4 9.8 9.9 9.7 9.5 9.2 9.3 9.3' 9.3 28 Indonesia 2.6 3.2 3.2 3.4 3.8 4.0 4.0 3.8 3.7 3.6 3.4 29 Middle East countries 7.5 8.7 9.5 9.1 10.0 9.8 8.4 7.4 8.2 7.8 6.5 30 African countries 2.5 2.8 3.0 2.8 3.0 3.0 2.7 2.5 2.3 2.3' 2.1 31 Non-OPEC developing countries 96.3 107.1 108.8 109.8 111.6 112.2 112.8 111.9 112.2 111.3 110.4 Latin America 32 Argentina 9.4 8.9 9.4 9.5 9.5 9.5 9.2 9.1 8.7 8.6 8.6 33 Brazil 19.1 22.9 22.7 23.1 23.1 25.1 25.4 26.3 26.3 26.4 26.6 34 Chile 5.8 6.3 5.8 6.3 6.4 6.5 6.7 7.1 7.0 7.0 6.9 35 Colombia 2.6 3.1 3.2 3.2 3.2 3.1 3.0 2.9 2.9 2.8 2.7 36 Mexico 21.6 24.5 25.3 25.9 26.1 25.6 26.0 26.1 25.8 25.7 25.6 37 2.0 2.6 2.6 2.4 2.4 2.3 2.3 2.2 2.2 2.2 2.1 38 Other Latin America 4.1 4.0 4.3 4.2 4.2 4.4 4.1 3.9 3.9 3.7' 3.6 Asia China 39 Mainland .2 .2 .2 .2 .3 .3 .6 .5 .7 .7 .3 40 Taiwan 5.1 5.3 5.1 5.2 5.3 4.9 5.3 5.2 5.1 5.3 5.5 41 .3 .6 .7 .8 1.0 1.0 1.0 1.1 1.0 1.0 1.0 42 2.1 2.3 2.3 1.7 1.9 1.6 1.9 1.7 1.8 1.7 2.3 43 Korea (South) 9.4 10.9 10.9 10.9 11.3 11.1 11.2 10.3 10.8' 10.5 10.1 44 Malaysia 1.7 2.1 2.6 2.8 2.9 2.8 2.7 3.0 2.8 2.8 2.8 45 Philippines 6.0 6.3 6.4 6.2 6.2 6.7 6.3 5.9 6.0 6.1 5.9 46 Thailand 1.5 1.6 1.8 1.8 2.2 2.1 1.9 1.8 1.8 1.7 1.5 47 Other Asia 1.0 1.1 1.2 1.0 1.0 .9 1.1 .9' 1.1 1.1 .9 Africa 48 Egypt 1.1 1.2 1.3 1.4 1.5 1.4 1.4 1.2 1.2 1.1 1.0 49 Morocco .7 .7 .8 .8 .8 .8 .8 .8 .8 .8 .8 50 Zaire .2 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 51 Other Africa3 2.3 2.4 2.2 2.4 2.3 2.2 1.9 1.9 2.1 2.2' 2.0 52 Eastern Europe 7.8 6.2 5.8 5.3 5.3 4.9 4.9 4.5 4.4 4.3' 4.3 53 U.S.S.R .6 .3 .4 .2 .2 .2 .2 .2 .1 .2' .3 54 Yugoslavia 2.5 2.2 2.3 2.3 2.4 2.3 2.3 2.3 2.3 2.2 2.2 55 Other 4.7 3.7 3.0 2.8 2.8 2.5 2.4 2.1 2.0 1.9 1.8 56 Offshore banking centers 63.7 66.8 69.3 68.7 70.5 71.4 74.1 66.9 66.8 66.2' 65.9 57 Bahamas 19.0 19.0 20.7 21.6 21.8 24.6 27.5 23.7 21.5 21.6' 21.5 58 Bermuda .7 .9 .8 .8 .9 .7 .7 1.0 .9 .7 .9 59 Cayman Islands and other British West Indies 12.4 12.9 12.7 10.5 12.2 12.0 12.2 11.1 11.7 12.3' 12.4 60 Netherlands Antilles 3.2 3.3 2.6 4.1 4.2 3.3 3.3 3.1 3.4 3.3 3.2 61 Panama4 7.7 7.6 6.6 5.7 6.0 6.3 6.6 5.7 6.8 5.7 5.5 62 Lebanon .2 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.8 13.9 14.5 15.2 15.0 14.4 13.5 12.7 12.5 12.4 12.6 64 Singapore 8.7 9.2 11.2 10.5 10.3 10.0 10.2 9.5 9.8 10.0 9.6 65 Others5 .1 .0 .0 .1 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 18.8 17.9 16.2 16.9 17.0 16.3 17.3 17.3 17.3 16.9 17.5 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 all 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 States1 Millions of dollars, end of period Type, and area or country 1981 1982 1983 Mar. June Sept. 1 Total 28,618 27,512 25,215 29,551 34,248 30,738 28,808 2 Payable in dollars 24,909 24,280 22,195 26,314 31,050 27,934 25,935 3 Payable in foreign currencies 3,709 3,232 3,020 3,237 3,198 2,804 2,873 By type 4 Financial liabilities 12,157 11,066 10,441 14,247 18,574 15,879 13,951 5 Payable in dollars 9,499 8,858 8,662 12,229 16,532 14,082 12,084 6 Payable in foreign currencies 2,658 2,208 1,779 2,018 2,043 1,797 1,868 7 Commercial liabilities 16,461 16,446 14,774 15,304 15,674 14,859 14,857 8 Trade payables 10,818 9,438 7,765 7,893 7,897 6,900 6,990 9 Advance receipts and other liabilities... 5,643 7,008 7,009 7,411 7,776 7,959 7,867 10 Payable in dollars 15,409 15,423 13,533 14,085 14,518 13,852 13,851 11 Payable in foreign currencies 1,052 1,023 1,241 1,219 1,155 1,007 1,006 By area or country Financial liabilities 12 Europe 6,825 6,501 5,710 7,158 7,335 6,679 6,798 13 Belgium-Luxembourg 471 505 302 428 359 428 471 14 France 709 783 843 956 900 910 995 15 Germany 491 467 502 524 571 521 489 16 Netherlands 748 711 589 537 595 595 578 17 Switzerland 715 792 486 641 563 514 569 18 United Kingdom 3,565 3,102 2,839 3,841 4,097 3,463 3,389 19 Canada 963 746 764 795 735 825 863 20 Latin America and Caribbean 3,356 2,751 2,607 4,912 9,017 6,780 4,576 21 Bahamas 1,279 904 751 1,419 3,642 2,606 1,423 22 Bermuda 7 14 13 51 13 11 13 23 Brazil 22 28 32 37 25 33 35 24 British West Indies 1,241 1,027 1,018 2,635 4,546 3,250 2,103 25 Mexico 102 121 213 243 237 260 367 26 Venezuela 114 124 121 124 130 137 27 Asia 976 1,039 1,332 1,355 1,462 1,566 1,682 28 Japan 792 715 898 947 1,013 1,085 1,121 29 Middle East oil-exporting countries2.. 75 169 170 170 180 144 147 30 Africa 1 0 4 1 0 7 1 0 9 1 0 9 1 0 6 16 1 1 0 4 31 Oil-exporting countries3 32 All other4 Commercial liabilities 3,770 3,831 3,245 3,567 3,409 3,961 3,987 33 Europe 71 52 62 40 45 34 48 34 Belgium-Luxembourg 573 598 437 488 525 430 438 35 France 545 468 427 417 501 558 619 36 Germany 220 346 268 259 265 239 245 37 Netherlands 424 367 241 477 246 405 257 38 Switzerland 880 1,027 732 847 794 1,133 1,082 39 United Kingdom 40 Canada 897 1,495 1,841 1,776 1,840 1,906 1,975 4 4 1 2 La B ti a n h a A m m a e s r ica and Caribbean 1,044 2 1,57 1 0 6 1,473 1 1,80 1 7 4 1,70 1 5 7 1,758 1 1,871 7 43 Bermuda 67 117 67 158 124 110 114 44 Brazil 67 60 44 68 31 68 124 45 British West Indies 2 32 6 33 5 8 32 46 Mexico 340 436 585 682 568 641 586 47 Venezuela 276 642 432 560 630 628 636 48 Asia 9,384 8,144 6,741 6,620 6,989 5,569 5,307 49 Japan 1,094 1,226 1,247 1,291 1,235 1,429 1,256 50 Middle East oil-exporting countries2-5. 7,008 5,503 4,178 3,735 4,190 2,364 2,372 51 Africa 703 753 553 539 684 597 588 52 Oil-exporting countries3 344 277 167 243 217 251 233 53 All other4 664 651 995 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 • November 1985 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1984 1985 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998811 11998822 11998833 Mar. June Sept. Dec. Mar.P 1 Total 36,185 28,725 34,951 33,767 31,977 30,545 29,531 28,221 2 Payable in dollars 32,582 26,085 31,856 30,919 28,9% 27,754 26,934 25,679 3 Payable in foreign currencies 3,603 2,640 3,0% 2,848 2,982 2,792 2,597 2,542 By type 4 Financial claims 21,142 17,684 23,821 22,904 21,529 20,157 18,940 17,935 5 Deposits 15,081 13,058 18,375 17,657 16,410 15,376 14,307 13,941 6 Payable in dollars 14,456 12,628 17,872 17,225 15,888 14,936 13,887 13,462 7 Payable in foreign currencies 625 430 503 432 522 439 420 479 8 Other financial claims 6,061 4,626 5,445 5,247 5,120 4,781 4,633 3,994 9 Payable in dollars 3,599 2,979 3,489 3,502 3,359 3,088 3,190 2,430 10 Payable in foreign currencies 2,462 1,647 1,956 1,745 1,761 1,693 1,442 1,565 11 Commercial claims 15,043 11,041 11,131 10,864 10,448 10,389 10,591 10,286 12 Trade receivables 14,007 9,994 9,721 9,540 9,105 8,885 9,110 8,762 13 Advance payments and other claims 1,036 1,047 1,410 1,323 1,343 1,503 1,481 1,524 14 Payable in dollars 14,527 10,478 10,494 10,193 9,749 9,729 9,856 9,787 15 Payable in foreign currencies 516 563 637 671 699 659 735 499 By area or country Financial claims 16 Europe 4,596 4,873 6,448 6,351 6,434 5,679 5,604 5,614 17 Belgium-Luxembourg 43 15 37 30 37 15 15 29 18 France 285 134 150 171 151 146 114 86 19 Germany 224 178 159 144 161 187 224 276 20 Netherlands 50 97 71 32 158 62 66 72 21 Switzerland 117 107 38 115 61 64 66 46 22 United Kingdom 3,546 4,064 5,781 5,651 5,613 4,973 4,721 4,901 23 Canada 6,755 4,377 6,166 5,684 5,290 4,480 4,006 3,945 24 Latin America and Caribbean 8,812 7,546 10,150 9,871 8,562 8,825 8,045 7,322 25 Bahamas 3,650 3,279 4,745 3,953 3,255 3,382 3,270 2,956 26 Bermuda 18 32 102 3 11 5 6 36 27 Brazil 30 62 53 87 83 84 100 98 28 British West Indies 3,971 3,255 4,163 4,925 4,394' 4,488 3,905 3,641 29 Mexico 313 274 291 279 230 232 215 201 30 Venezuela 148 139 134 130 124 128 125 102 31 758 698 764 757 977 900 %1 856 32 Japan 366 153 297 313 321 371 353 509 33 Middle East oil-exporting countries2 37 15 4 7 8 7 13 6 34 Africa 173 158 147 144 158 160 210 101 35 Oil-exporting countries3 46 48 55 42 35 37 85 32 36 All other4 48 31 145 % 109 113 114 97 Commercial claims 37 Europe 5,405 3,826 3,670 3,610 3,555 3,570 3,812 3,369 38 Belgium-Luxembourg 234 151 135 173 142 128 138 149 39 France 776 474 459 413 408 411 440 375 40 Germany 561 357 349 365 447 370 374 359 41 Netherlands 299 350 334 310 306 303 340 345 42 Switzerland 431 360 317 336 250 289 271 253 43 United Kingdom 985 811 809 787 812 891 1,063 872 44 Canada 967 633 829 1,061 933 1,026 1,021 1,248 45 Latin America and Caribbean 3,479 2,526 2,695 2,419 2,042 1,976 11,,997733 1,913 46 Bahamas 12 21 8 8 4 14 88 9 47 Bermuda 223 261 190 216 89 88 115 164 48 Brazil 668 258 493 357 310 219 214 210 49 British West Indies 12 12 7 7 8 10 7 6 50 Mexico 1,022 775 884 745 577 595 583 493 51 Venezuela 424 351 272 268 241 245 206 193 52 3,959 3,050 3,063 2,997 3,085 2,884 3,086 3,012 53 Japan 1,245 1,047 1,114 1,186 1,178 1,080 1,191 1,154 54 Middle East oil-exporting countries2 905 751 737 701 710 703 688 693 55 Africa 772 588 588 497 536 595 470 522 56 Oil-exporting countries3 152 140 139 132 128 135 134 177 57 All other4 461 417 286 280 297 338 229 221 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 1985 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998833 11998844 Jan.- July Jan. Feb. Mar. Apr. May June July U.S. corporate securities STOCKS 1 Foreign purchases 69,770 60,473' 43,680 5,026 7,125 6,303 5,106 6,476 6,462 7,181 2 Foreign sales 64,360 63,388 43,686 5,726 7,180 6,748 5,071 6,371 6,068 6,522 3 Net purchases, or sales (-) 5,410 -2,915' -5 -700 -56 -445 36 106 394 659 4 Foreign countries 5,312 -3,030' -39 -717 -51 -402 28 149 396 559 5 Europe 3,979 -2,975' -1,380 -558 -215 -582 -161 -269 70 336 6 France -97 -405 -9 -19 -41 -13 24 17 26 -3 7 Germany 1,045 -50 -165 -134 -109 -113 23 38 5 126 8 Netherlands -109 -315 -357 -44 -108 -129 16 -48 -86 42 9 Switzerland 1,325 -1,490 -455 -159 -133 -122 -48 -81 49 38 10 United Kingdom 1,799 -647' -496 -178 129 -195 -191 -214 48 104 11 Canada 1,151 1,673 260 47 168 -2 33 9 -62 66 12 Latin America and Caribbean 529 493 1,003 98 158 80 169 247 132 119 13 Middle East1 -808 -1,998 64 -52 -101 116 -96 44 100 53 14 Other Asia 395 -372 -61 -264 -99 -41 91 101 174 -23 15 Africa 42 -23 7 -7 -2 -13 -1 -8 13 25 16 Other countries 24 171 69 19 40 39 -6 25 -31 -16 17 Nonmonetary international and regional organizations 98 115 33 17 -5 -43 8 -44 -1 100 BONDS2 18 Foreign purchases 24,000 39,331' 44,682 5,937 8,219 5,484 4,501 6,747 5,284 8,510 19 Foreign sales 23,097 26,071 24,282 3,106 3,649 2,598 3,068 3,689' 3,910 4,261 20 Net purchases, or sales (-) 903 13,260' 20,400 2,831 4,570 2,886 1,432 3,058' 1,374 4,249 21 Foreign countries 888 I2,96Y 19,753 2,835 4,489 2,936 1,408 3,246' 1,241 3,598 22 Europe 909 11,793' 18,530 2,635 4,143 2,952 1,634 2,762 1,195 3,210 23 France -89 207 10 55 -17 -10 18 0 -35 -2 24 Germany 344 1,731 164 67 -153 -112 174 -6 13 182 25 Netherlands 51 93 30 9 44 8 -9 -11 -9 -2 26 Switzerland 583 644 1,529 12 315 483 65 71 93 491 27 United Kingdom 434 8,520 16,126 2,441 4,018 2,550 1,294 2,398 1,035 2,390 28 Canada 123 -71 87 59 -11 -5 0 43 4 -4 29 Latin America and Caribbean 100 390 373 90 50 69 -82 178 28 40 30 Middle East1 -1,161 -1,011 -1,724 -123 -84 -127 -507 -112 -505 -265 31 Other Asia 865 1,862 2,447 140 337 89 381 372 518 610 32 Africa 0 1 5 0 0 0 0 1 0 3 33 Other countries 52 (X 35 35 54 -41 -19 2' 1 3 34 Nonmonetary international and regional organizations 15 297 647 -4 81 -50 25 -188 133 651 Foreign securities 35 Stocks, net purchases, or sales (-) -3,765 -1,057' -2,586 -782 -663' -457 -101 129' -155 -556 36 Foreign purchases 13,281 14,591 10,609 1,222 1,607' 1,379 1,437 1,753' 1,631 1,580 37 Foreign sales 17,046 15,648' 13,194 2,004 2,271' 1,836 1,538 1,623 1,786 2,136 38 Bonds, net purchases, or sales (-) -3,239 -4,052' -3,062 175 202' -950 -670 -1,035 -263 -521 39 Foreign purchases 36,333 57,312' 43,370 5,424 5,299' 5,673 5,674 7,469 6,689 7,142 40 Foreign sales 39,572 61,364' 46,432 5,249 5,097' 6,623 6,345 8,504 6,952 7,662 41 Net purchases, or sales (-), of stocks and bonds .... -7,004 -5,648 -607 -461' -1,407 -772 -906' -418 -1,076 42 Foreign countries -6,559 -4,720' -6,140 -736 -761' -1,217 -680 -1,070' -369 -1,306 43 Europe -5,492 -8,632' -6,594 -719 -96' -1,208 -798 -1,980' -674 -1,120 44 Canada -1,328 413 -1,431 75 -422 -68 23 99 -157 -785 45 Latin America and Caribbean 1,120 2,472 1,323 193 -49' 7 136 812 75 150 46 Asia -855 1,345 418 -392 -250' 99 -13 202' 355 418 47 Africa 141 -107 -6 -4 -3 -26 -5 2 13 18 48 Other countries -144 -210 149 111 58' -21 -23 -8' 19 13 49 Nonmonetary international and regional organizations -445 -389 492 129 300 -190 -91 164 -49 229 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 • November 1985 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1985 1985 11998833 11998844 Country or area Jan.- Jan. Feb. Mar. Apr. May June July July Transactions, net purchases or sales (-) during period1 1 Estimated total2 3,693 21,438^ 17,822 2,294 2,308 -4,401 -4,324 2,981' 5,758 4,558 2 Foreign countries2 3,162 16,433' 18,582 3,779 2,153 -4,756 2,249 4,249' 5,758 5,150 3 Europe2 6,226 11,070 3,196 532 -81 -1,435 1,818 544 1,025 793 4 Belgium-Luxembourg -431 289 341 104 18 0 80 101 17 21 5 Germany2 2,450 2,958 361 -120 -129 -1,538 299 851 415 584 6 Netherlands 375 454 -183 -71 11 -201 -7 -73 10 148 7 Sweden 170 46 11,,119922 150 -10 1 30 157 775 89 8 Switzerland2 -421 635 880088 -35 358 313 183 -133 143 -21 9 United Kingdom 1,966 5,223 -1,320 419 -342 293 188 -1,021 -96 -761 10 Other Western Europe 2,118 1,466' 1,9% 86 12 -303 1,045 663 -239 732 11 Eastern Europe 0 0 0 0 0 0 0 0 0 0 12 Canada 699 1,526 149 -110 -242 38 334 114' 6 8 13 Latin America and Caribbean -212 1,413 2,197 149 735 -82 466 581 206 143 14 Venezuela -124 14 77 5 -11 2 10 -9 80 0 15 Other Latin America and Caribbean 60 528 877 -2 71 65 177 462 124 -20 16 Netherlands Antilles -149 871 1,242 146 674 -149 278 127 3 163 17 Asia -3,535 2,377 12,944 3,093 1,726 -3,289 -331 2,943 4,516 4,285 18 Japan 2,315 6,062 10,503 578 559 177 1,717 1,054 2,666 3,752 19 Africa 3 -67 95 2 1 1 13 57 10 10 20 All other -17 114 1 113 14 11 -51 9' -6 -89 21 Nonmonetary international and regional organizations 535 5,006' -759 -1,485 155 355 2,075 -1,267' 0 -592 22 International 218 4,612 -422 -1,675 504 338 1,792 -1,057 -105 -219 23 Latin American regional 0 0 3 0 1 0 -3 5 0 0 MEMO 24 Foreign countries2 3,162 16,433' 18,582 3,779 2,153 -4,756 2,249 4,249' 5,758 5,150 25 Official institutions 779 515' 5,664 2,528 1,322 -5,278 -598 3,466 2,713 1,511 26 Other foreign2 2,382 15,918' 12,914 1,251 830 521 2,846 782' 3,045 3,639 Oil-exporting countries 27 Middle East3 -5,419 -6,277 911 27 -372 554 -827 108 1,422 -1 28 Africa" -1 -101 0 0 0 0 0 0 0 0 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 Aug. 31, 1985 Rate on Aug. 31, 1985 Rate on Aug. 31, 1985 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria.. 4.5 June 1984 France1 9.63 July 1985 Norway 8.0 June 1983 Belgium. 10.0 Aug. 1985 Germany, Fed. Rep. of 4.5 June 1984 Switzerland 4.0 Mar. 1983 Brazil... 49.0 Mar. 1981 Italy 15.5 Jan. 1985 United Kingdom2. Canada.. 9.20 Aug. 1985 Japan 5.0 Oct. 1983 Venezuela May 1983' Denmark 7.0 Oct. 1983 Netherlands 5.0 Aug. 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 1985 CCoouunnttrryy,, oorr ttyyppee 11998822 11998833 11998844 Feb. Mar. Apr. May June July Aug. 1 Eurodollars 12.24 9.57 10.75 9.05 9.32 8.74 8.13 7.60 7.89 8.02 2 United Kingdom 12.21 10.06 9.91 13.69 13.52 12.70 12.61 12.38 12.01 11.42 3 Canada 14.38 9.48 11.29 10.63 11.42 10.15 9.77 9.58 9.33 9.16 4 Germany 8.81 5.73 5.96 6.13 6.36 5.99 5.87 5.66 5.31 4.75 5 Switzerland 5.04 4.11 4.35 5.66 5.77 5.35 5.15 5.14 5.07 4.64 6 Netherlands 8.26 5.58 6.08 6.90 7.14 6.82 6.90 6.58 6.29 5.80 7 France 14.61 12.44 11.66 10.60 10.71 10.49 10.15 10.18 9.97 9.79 8 Italy 19.99 18.95 17.08 15.79 15.82 15.15 14.91 15.00 14.37 14.36 9 Belgium 14.10 10.51 11.41 10.75 10.75 10.09 9.35 8.96 8.95 9.50 10 Japan 6.84 6.49 6.32 6.29 6.30 6.26 6.26 6.30 6.29 6.30 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 • November 1985 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1985 CCoouunnttrryy//ccuurrrreennccyy 11998822 11998833 11998844 Mar. Apr. May June July Aug. 1 Australia/dollar1 101.65 90.14 87.937 69.70 65.84 67.68 66.51 69.95 70.70 2 Austria/schilling 17.060 17.968 20.005 23.247 21.717 21.868 21.532 20.446 19.632 3 Belgium/franc 45.780 51.121 57.749 66.308 62.283 62.572 61.719 58.626 56.543 4 Brazil/cruzeiro 179.22 573.27 1841.50 4158.19 4511.58 5239.00 5786.00 6236.19 6714.00 5 Canada/dollar 1.2344 1.2325 1.2953 1.3840 1.3658 1.3756 1.3676 1.3526 1.3575 6 China, P.R./yuan 1.8978 1.9809 2.3308 2.8533 2.8480 2.8556 2.8693 2.8809 2.9093 7 Denmark/krone 8.3443 9.1483 10.354 11.797 11.114 11.2244 10.9962 10.456 10.1459 8 Finland/markka 4.8086 5.5636 6.0007 6.8464 6.4652 6.4641 6.3660 6.0798 5.9464 9 France/franc 6.5793 7.6203 8.7355 10.078 9.4427 9.4829 9.3414 8.8513 8.5323 10 Germany/deutsche mark 2.428 2.5539 2.8454 3.2982 3.0946 3.1093 3.0636 2.9083 2.7937 11 Greece/drachma 66.872 87.895 112.73 140.62 134.86 137.239 136.00 131.75 131.75 12 Hong Kong/dollar 6.0697 7.2569 7.8188 7.8009 7.7902 7.7766 7.7698 7.7527 7.7906 13 India/rupee 9.4846 10.1040 11.348 12.861 12.400 12.5004 12.441 12.031 11.898 14 Ireland/pound1 142.05 124.81 108.64 94.58 101.17 100.71 102.19 107.79 111.43 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 2078.50 1975.89 1984.45 1953.92 1900.33 1873.51 17 Japan/yen 249.06 237.55 237.45 257.92 251.84 251.73 248.84 241.14 237.46 18 Malaysia/ringgit 2.3395 2.3204 2.3448 2.5734 2.4922 2.4759 2.4685 2.4696 2.4644 19 Mexico/peso 72.990 155.01 192.31 246.15 246.57 254.8182 294.22 346.70 339.78 20 Netherlands/guilder 2.6719 2.8543 3.2083 3.7290 3.4981 3.5097 3.4535 3.2732 3.1429 21 New Zealand/dollar1 75.101 66.790 57.837 45.276 45.520 45.197 45.949 49.826 53.564 22 Norway/krone 6.4567 7.3012 8.1596 9.4608 8.9314 8.9442 8.8255 8.4338 8.2487 23 Philippines/peso 8.5324 11.0940 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 24 Portugal/escudo 80.101 111.610 147.70 183.98 174.56 177.545 176.15 169.77 167.34 25 Singapore/dollar 2.1406 2.1136 2.1325 2.2582 2.2199 2.2228 2.2291 2.2109 2.2191 26 South Africa/rand1 92.297 89.85 69.534 50.33 51.50 50.18 50.54 51.07 43.07 27 South Korea/won 731.93 776.04 807.91 850.71 861.21 792.56 875.00 876.46 885.09 28 Spain/peseta 110.09 143.500 160.78 183.13 172.85 175.397 173.42 167.97 164.49 29 Sri Lanka/rupee 20.756 23.510 25.428 26.836 27.113 27.404 27.433 27.327 27.377 30 Sweden/krona 6.2838 7.6717 8.2706 9.4135 8.9946 8.9895 8.8565 8.4703 8.3106 31 Switzerland/franc 2.0327 2.1006 2.3500 2.8033 2.5948 2.6150 2.5721 2.4060 2.2962 32 Taiwan/dollar n.a. n.a. 39.633 39.542 39.728 39.906 39.857 40.136 40.501 33 Thailand/baht 23.014 22.991 23.582 28.097 27.466 27.554 27.433 27.053 26.889 34 United Kingdom/pound1 174.80 151.59 133.66 112.53 123.77 124.83 128.08 138.07 138.40 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 116.57 125.34 138.19 158.14 149.56 149.92 147.71 140.94 137.55 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

69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1985 A83 SPECIAL TABLES Published Irregulary, 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, June 30, 1984 April 1985 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1984 April 1985 A74 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1984 August 1985 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1985 November 1985 A76 Terms of lending at commercial banks, February 1985 June 1985 A70 Terms of lending at commercial banks, May 1985 August 1985 A70 Terms of lending at commercial banks, August 1985 November 1985 A70 Special tables begin on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • November 1985 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 5-9, 19851 A. Commercial and Industrial Loans Weighted Loan rate (percent) Amount AAvveerraaggee average Loans Particiof loans size mmaattuurriittyy22 made under pation Characteristics (thousands (thousands Weighted Inter- commitment loans of dollars) of dollars) average SSttaannddaarrdd quartile (percent) (percent) Days effective3 range5 ALL BANKS 1 Overnight6 14,399,667 8,840 * 8.57 .43 8.33-8.73 52.9 2.0 2 One month and under 7,026,181 499 15 9.00 .18 8.48-9.22 69.5 12.8 3 Fixed rate 3,985,397 380 16 9.03 .27 8.49-9.20 71.4 9.1 4 Floating rate 3,040,784 845 13 8.97 .11 8.45-9.41 67.0 17.7 5 Over one month and under a year 8,841,052 65 151 10.31 .39 8.88-11.07 66.3 8.6 6 Fixed rate 5,028,949 50 129 10.38 .54 8.72-11.74 56.4 4.7 7 Floating rate 3,812,104 109 179 10.23 .24 9.45-11.02 79.4 13.7 8 Demand7 4,752,297 195 * 9.88 .13 8.57-10.79 68.5 8.1 9 Fixed rate 1,296,414 470 * 8.83 .41 8.21-8.84 62.1 10.5 10 Floating rate 3,455,883 160 * 10.28 .11 9.84-11.02 70.9 7.2 11 Total short term 35,019,198 199 48 9.27 .26 8.38-9.84 61.8 6.7 12 Fixed rate (thousands of dollars) . 24,041,683 208 32 9.03 .39 8.33-9.06 57.1 3.2 13 1-24 603,704 6 101 13.30 .32 12.13-14.30 27.3 .0 14 25-49 363,031 35 104 13.80 .63 12.19-14.85 30.5 .1 15 50-99 334,031 68 116 13.05 .25 11.74-14.49 35.8 9.1 16 100-499 622,174 187 226 12.15 .64 10.38-13.25 41.9 1.4 17 500-999 256,557 648 47 9.66 .12 8.99-9.96 75.5 7.7 18 1000 and over 21,862,185 7,878 22 8.68 .07 8.33-8.90 58.9 3.2 19 Floating rate (thousands of dollars). 10,977,515 182 96 9.80 .12 8.70-10.75 72.0 14.3 20 1-24 306,732 9 154 11.77 .12 10.95-12.56 65.8 1.2 21 25-49 298,767 32 146 11.49 .06 10.92-12.13 65.0 2.3 22 50-99 436,192 66 143 11.17 .07 10.47-11.82 62.6 3.3 23 100-499 1,437,152 192 145 10.75 .07 9.92-11.30 69.9 5.7 24 500-999 775,152 654 145 10.45 .10 9.92-11.02 76.2 4.5 25 1000 and over 7,723,521 4,266 80 9.33 .17 8.49-9.93 73.0 18.5 Months 26 Total long term 5,450,796 123 52 10.44 .26 9.14-11.36 78.2 6.0 27 Fixed rate (thousands of dollars) 1,855,446 60 51 10.49 .44 8.92-11.76 70.9 3.8 28 1-99 418,156 14 43 13.51 .75 12.13-14.93 17.0 .2 29 100-499 59,084 222 90 11.78 .16 10.79-12.68 32.5 7.9 30 500-999 39,511 707 80 10.47 1.00 9.25-11.57 70.8 3.2 31 1000 and over 1,338,695 7,676 51 9.49 .57 8.75-9.92 89.5 4.8 32 Floating rate (thousands of dollars) 3,595,350 265 52 10.42 .23 9.29-11.36 81.9 7.2 33 1-99 254,576 25 46 12.15 .25 11.02-13.24 38.9 2.8 34 100-499 605,333 225 39 11.41 .12 11.02-12.00 69.5 4.3 35 500-999 202,479 669 43 10.56 .21 9.92-11.19 76.2 12.3 36 1000 and over 2,532,963 5,702 57 9.99 .23 8.99-10.98 89.7 7.9 Loan rate (percent) DDaayyss PPrriimmee rraattee99 Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 13,953,262 10,307 * 8.52 8.17 9.54 52.5 2.1 38 One month and under 6,120,031 2,850 14 8.73 8.38 9.54 70.8 14.1 39 Over one month and under a year 4,425,942 472 142 9.01 8.71 9.69 74.3 8.8 40 Demand7 1,822,347 2,248 * 8.52 8.24 9.52 59.9 11.5 41 Total short term 26,321,582 1,923 30 8.65 8.32 9.56 60.9 6.7 42 Fixed rate 21,286,429 1,919 23 8.65 8.31 9.57 58.7 3.3 43 Floating rate 5,035,153 1,939 61 8.66 8.33 9.54 70.3 20.9 Months 44 Total long term 2,068,250 288 52 8.94 8.70 9.57 92.6 6.3 45 Fixed rate .... 996,038 146 46 8.97 8.83 9.58 91.2 6.1 46 Floating rate .. 1,072,219 2,790 58 8.92 8.58 9.55 93.8 6.6 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 4.23 Continued A. Continued Weighted Loan rate (percent) Average LLooaannss PPaarrttiiccii-of loans size mmaattuurriittyy22 made under pation CChhaarraacctteerriissttiiccss (thousands (thousands Inter- commitment loans of dollars) of dollars) average SSttaannddaarrdd quartile (percent) (percent) Days effective3 range5 48 LARGE BANKS 1 Overnight6 11,771,007 11,295 * 8.55 .01 8.33-8.73 53.7 2.3 7 One month and under 5,406,134 2,328 13 8.84 .03 8.46-9.14 73.1 12.8 Fixed rate 2,824,539 3,082 15 8.88 .00 8.51-9.16 76.4 8.8 4 Floating rate 2,581,595 1,836 11 8.80 .06 8.38-9.13 69.4 17.3 5 Over one month and under a year ... 4,900,340 531 140 9.47 .03 8.70-9.92 78.1 1111..88 6 Fixed rate 2,983,284 1,615 116 9.11 .04 8.43-9.72 71.2 55..44 7 Floating rate 1,917,056 260 178 10.03 .06 9.38-10.79 88.9 21.8 8 Demand7 2,157,601 396 * 9.69 .06 8.46-10.47 71.0 12.3 9 Fixed rate 588,789 792 * 8.76 .02 8.21-8.84 69.6 22.7 10 Floating rate 1,568,812 333 * 10.04 .03 9.25-10.75 71.6 8.4 11 Total short term 24,235,082 1,343 35 8.90 .04 8.33-9.20 64.5 7.5 12 "Fixed rate (thousands of dollars) 17,680,476 3,918 24 8.70 .04 8.33-8.93 60.4 3.2 N 1-24 11,967 9 95 12.42 .25 10.92-13.52 58.2 .0 14 25-49" 11,145 33 84 11.64 .29 10.52-12.68 63.1 .0 15 50-99 ..:.-.., 15,611 68 78 11.08 .01 10.52-12.13 74.8 1.0 16 100-499 106,341 215 56 10.53 .16 9.73-11.35 86.4 4.2 17 500-999 102,732 628 44 9.59 .07 9.01-9.96 78.6 6.7 18 1000 and over 17,432,679 9,145 23 8.68 .04 8.33-8.91 60.2 3.2 19 Floating rate (thousands of dollars) 6,554,606 484 74 9.44 .01 8.49-9.96 75.5 19.0 ?N 1-24 55,548 11 150 11.66 .01 11.02-12.19 79.1 2.2 71 25-49 67,709 34 143 11.38 .01 10.75-12.13 76.4 3.2 77 50-99 129,904 64 135 11.13 .01 10.48-11.57 74.7 3.8 73 100-499 541,008 195 140 10.69 .01 9.92-11.03 79.6 5.5 74 500-999 311,067 662 147 10.37 .03 9.92-11.02 85.8 1.7 25 1000 and over 5,449,371 5,141 64 9.18 .01 8.46-9.84 74.4 22.1 Months 26 Total long term 3,314,021 1,115 53 9.84 .04 8.93-10.81 93.0 6.4 71 Fixed rate (thousands of dollars) .... 1,221,654 1,903 49 9.49 .07 8.71-9.81 93.3 5.8 78 1-99 8,181 21 54 12.49 .69 10.64-13.31 45.1 11.7 79 100-499 17,014 224 49 10.65 .04 9.84-11.33 81.2 27.4 30 500-999 26,170 669 61 9.64 .01 9.01-10.44 79.5 4.9 31 1000 and over 1,170,289 8,501 49 9.45 .10 8.70-9.69 94.1 5.4 32 Floating rate (thousands of dollars) 2,092,367 898 55 10.05 .10 8.99-11.02 92.8 6.8 33 1-99 43,432 33 36 11.37 .03 10.75-12.13 74.2 6.7 34 100-499 124,021 219 42 10.94 .04 10.24-11.57 80.6 7.8 35 500-999 116,933 669 42 10.50 .04 9.84-11.17 85.0 11.9 36 1000 and over 1,807,981 6,621 57 9.93 .13 8.94-10.98 94.6 6.4 Loan rate (percent) DDaayyss PPrriimmee rraattee®® Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 11,554,902 11,646 * 8.52 8.18 9.50 54.1 2.4 38 One month and under 4,914,681 5,192 13 8.69 8.34 9.50 72.2 13.7 39 Over one month and under a year ... 3,309,910 5,057 135 8.92 8.64 9.50 75.9 9.3 40 Demand7 964,771 3,324 * 8.52 8.24 9.50 59.7 20.0 41 Total short term 20,744,264 7,194 27 8.63 8.29 9.50 62.1 7.0 4? Fixed rate 16,867,946 8,097 23 8.62 8.29 9.50 60.2 3.0 43 Floating rate 3,876,318 4,845 46 8.65 8.31 9.50 70.8 24.2 Months 44 Total long term 1,707,880 5,890 49 8.94 8.71 9.50 97.7 5.7 45 Fixed rate 855,434 5,801 43 8.93 8.83 9.50 99.2 7.1 46 Floating rate 852,446 5,982 55 8.94 8.59 9.50 96.2 4.4 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • November 1985 4.23 TERMS OF LENDING AT COMMERCIAL BANKS SURVEY of Loans Made, August 5-9, 19851—Continued A. Commercial and Industrial Loans—Continued Weighted Loan rate (percent) AAmmoouunntt AAvveerraaggee average Loans PPaarrttiiccii-- Characteristics ( o t o h f f o d u l o o s l a a la n n r d s s ) s ( o th f o d s u o iz s l a l e a n r d s) s mmaattuurriittyy22 W av e e ig r h ag te e d SSttaannddaarrdd q I u n a t r e t r il - e c m o ( m a p d e m r e c i u t e m n nd t e ) n e r t (p p l e o a r a t c i n e o n s n t ) Days effective3 range5 OTHER BANKS 1 Overnight6 2,628,661 4,480 * 8.63 .42 8.33-8.66 49.5 .7 2 One month and under 1,620,047 138 19 9.54 .17 8.52-9.93 57.5 12.8 3 Fixed rate 1,160,858 121 18 9.39 .27 8.46-9.64 59.1 10.0 4 Floating rate 459,189 209 21 9.91 .10 8.86-10.75 53.6 19.6 5 Over one month and under a year 3,940,713 31 163 11.36 .39 9.84-13.10 51.6 4.5 6 Fixed rate 2,045,665 21 148 12.22 .53 9.96-13.65 34.8 3.6 7 Floating rate 1,895,048 69 181 10.44 .23 9.84-11.43 69.8 5.5 8 Demand7 2,594,696 138 * 10.04 .12 8.73-11.02 66.4 4.6 9 Fixed rate 707,626 351 * 8.88 .41 8.30-8.79 55.8 .4 10 Floating rate 1,887,070 112 * 10.47 .11 9.92-11.02 70.4 6.2 11 Total short term 10,784,116 68 83 10.10 .26 8.46-11.07 55.6 4.8 12 Fixed rate (thousands of dollars) 6,361,207 57 58 9.95 .38 8.39-11.07 47.7 3.1 13 1-24 591,737 6 102 13.32 .21 12.13-14.37 26.7 .0 14 25-49 351,886 35 104 13.87 .56 12.19-14.85 29.4 .1 15 50-99 318,421 68 117 13.15 .25 12.19-14.49 33.8 9.5 16 100-499 515,833 182 251 12.48 .62 10.56-13.25 32.8 .9 17 500-999 153,825 662 49 9.71 .10 8.87-9.96 73.4 8.3 18 1000 and over 4,429,506 5,099 17 8.67 .05 8.83-8.82 53.8 3.4 19 Floating rate (thousands of dollars) 4,422,909 95 139 10.32 .12 9.73-11.07 66.8 7.3 20 1-24 251,184 9 154 11.80 .12 10.93-12.66 62.9 1.0 21 25-49 231,058 32 146 11.53 .06 10.92-12.13 61.7 2.0 22 50-99 306,288 66 146 11.18 .07 10.47-11.91 57.5 3.1 23 100-499 896,144 190 148 10.79 .07 9.92-11.47 64.1 5.8 24 500-999 464,085 648 143 10.51 .10 9.92-11.02 69.8 6.4 25 1000 and over 2,274,150 3,030 131 9.70 .17 8.58-10.47 69.5 9.8 Months 26 Total long term 2,136,775 52 50 11.37 .26 9.92-12.19 55.2 5.4 27 Fixed rate (thousands of dollars) 633,792 21 54 12.43 .44 10.12-13.80 27.8 .0 28 1-99 409,975 14 43 13.53 .29 12.13-14.93 16.5 .0 29 100-499 42,070 221 107 12.24 .15 12.19-12.96 12.9 .0 30 500-999 13,341 795 119 12.10 1.00 9.96-13.99 53.6 .0 31 1000 and over 168,406 4,585 64 9.83 .56 8.84-9.96 57.2 .0 32 Floating rate (thousands of dollars) 1,502,983 134 48 10.92 .21 9.92-12.00 66.8 7.7 33 1-99 211,143 24 49 12.31 .25 11.07-13.24 31.6 2.0 34 100-499 481,312 226 38 11.53 .11 11.02-12.00 66.6 3.4 35 500-999 85,546 669 45 10.64 .21 9.93-11.19 64.2 12.9 36 1000 and over 724,982 4,235 56 10.15 .18 9.84-10.92 77.4 11.7 Loan rate (percent) DDaayyss PPrriimmee rraattee99 Effective3 Nominal8 LOANS MADE BELOW PRIME10 37 Overnight6 2,398,360 6,633 t 8.48 8.14 9.74 44.9 .7 38 One month and under 1,205,350 1,004 18 8.90 8.54 9.70 65.0 15.8 39 Over one month and under a year 1,116,032 128 163 9.28 8.94 10.24 69.5 7.4 40 Demand7 857,576 1,648 * 8.51 8.24 9.53 60.1 1.8 41 Total short term 5,577,318 516 44 8.74 8.40 9.80 56.5 5.5 42 Fixed rate 4,418,483 490 26 8.74 8.40 9.83 53.3 4.4 43 Floating rate 1,158,835 645 116 8.71 8.40 9.69 68.9 9.7 Months 44 Total long term 360,377 52 67 8.97 8.65 9.88 68.2 9.2 45 Fixed rate .... 140,604 21 63 9.19 8.83 10.09 42.4 .0 46 Floating rate .. 219,773 909 69 8.83 8.53 9.75 84.7 15.0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 4.23 Continued B. Construction and Land Development Loans Loan rate (percent) AAmmoouunntt AAvveerraaggee WWeeiigghhtteedd LLooaannss PPaarrttiiccii-- CChhaarraacctteerriissttiiccss ooff llooaannss ssiizzee aavveerraaggee mmaaddee uunnddeerr ppaattiioonn (( oo tt ff hh oo dd uu oo ss llll aa aa nn rr dd ss)) ss (( oo tt ff hh oo dd uu oo ss llll aa aa nn rr dd ss)) ss (( mm mm aa oo tt nn uu tt rr hh iitt ss yy ))22 W e a ff v e e e i c g r t h a i g t v e e e d 3 St e a r n r d o a r4 r d q r I u a n a n t r e g t r e i - l 5 e ccoo (( mm ppee mm rrcc iitt ee mm nntt ee )) nn tt ((pp ll ee oo rr aa cc nn eenn ss tt)) ALL BANKS 1 Total 2,282,636 146 17 11.37 .15 9.92-12.96 83.9 7.3 2 Fixed rate (thousands of dollars) 1,124,143 110 6 11.00 .33 9.92-11.31 89.5 10.6 1-24 47,676 11 14 13.56 .27 13.24-14.45 32.3 .3 4 25-49 86,780 29 18 12.68 .71 11.57-14.37 93.4 20.1 50-99 158,474 74 10 13.25 .52 11.31-14.93 70.6 .5 6 100-499 127,821 169 6 11.29 .13 11.31-11.31 %.3 1.2 7 500 and over 703,393 7,551 4 10.06 .41 9.92-9.99 95.9 14.2 8 Floating rate (thousands of dollars) .. 1,158,493 214 27 11.72 .25 11.02-12.% 78.4 4.1 9 1-24 24,000 10 7 11.71 .09 11.30-12.13 82.6 2.3 10 25-49 27,536 34 13 11.48 .12 11.02-12.01 79.6 7.1 11 50-99 33,937 69 11 11.55 .14 11.02-12.13 66.3 6.8 17 100-499 123,502 195 13 11.33 .18 10.92-11.57 78.8 7.0 13 500 and over 949,518 926 29 11.79 .24 11.02-12.96 78.7 3.6 By type of construction 14 Single family 799,176 97 27 12.83 .25 12.96-12.96 8877..00 ..77 15 Multifamily 133,424 115 10 12.11 .30 11.01-12.68 87.5 5.4 16 Nonresidential 1,350,035 216 11 10.43 .18 9.92-11.31 81.6 11.4 48 LARGE BANKS 1 Total 889,451 1,062 8 10.15 .18 9.92-10.47 93.0 11.7 2 Fixed rate (thousands of dollars) .... 657,841 3,795 4 9.79 .16 9.92-9.99 %.7 15.0 3 1-24 901 11 5 12.91 .21 12.40-13.80 68.0 6.7 4 25-49 * * * * * * * * 5 50-99 * * * * * * * 6 100-499 * * * * * 7 500 and over 653,702 10,946 4 9.77 .15 9.92-9.99 %.8 14.9 8 Floating rate (thousands of dollars) .. 231,610 349 18 11.20 .03 11.02-11.57 82.4 2.4 9 1-24 2,028 11 7 11.52 .11 11.02-11.59 93.0 .0 10 25-49 4,161 37 10 11.43 .10 11.02-11.57 94.6 3.6 11 50-99 5,668 69 13 11.41 .08 11.02-11.57 84.0 9.8 12 100-499 39,146 218 13 11.33 .05 11.02-11.57 92.9 6.9 13 500 and over 180,607 1,757 20 11.15 .01 11.02-11.57 79.7 1.2 By type of construction 14 Single family 71,934 180 11 11.41 .04 11.02-11.57 87.4 2.5 15 Multifamily 33,894 376 19 10.84 .20 11.02-11.02 95.6 17.3 16 Nonresidential 783,622 2,249 7 10.01 .16 9.92-10.20 93.4 12.3 OTHER BANKS 1 Total 1,393,185 94 22 12.14 .14 11.31-12.96 78.0 4.5 2 Fixed rate (thousands of dollars) 466,302 47 10 12.72 .38 11.31-14.37 79.3 4.4 3 1-24 46,775 11 15 13.57 .28 13.24-14.45 31.6 .2 4 25-49 86,205 29 18 12.67 .76 11.57-14.37 93.6 20.3 5 50-99 157,994 74 10 13.26 .55 11.31-14.93 70.6 .5 6 100-499 125,638 169 6 11.30 .11 11.31-11.31 96.3 .0 7 500 and over * * * * * * * 8 Floating rate (thousands of dollars) .. 926,883 195 29 11.85 .28 11.02-12.% 77.4 4.5 9 1-24 21,973 10 7 11.73 .08 11.30-12.13 81.7 2.5 10 25-49 23,375 34 14 11.49 .12 10.95-12.02 76.9 7.7 11 50-99 28,268 69 10 11.58 .16 11.02-12.13 62.8 6.2 17 100-499 84,356 185 13 11.33 .21 10.92-12.01 72.2 7.1 13 500 and over 768,911 833 32 11.93 .31 11.02-12.% 78.4 4.1 By type of construction 14 Single family 727,241 93 28 12.97 .27 12.96-12.% 86.9 .5 15 Multifamily 99,530 93 7 12.54 .33 11.01-15.02 84.7 1.4 16 Nonresidential 566,413 96 17 11.01 .19 9.92-11.57 65.4 10.1 For notes see end of table. *Fewer than 10 sample loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • November 1985 4.23 TERMS OF LENDING AT COMMERCIAL BANKS SURVEY of Loans Made, August 5-9, 1985'—Continued C. Loans to Farmers11 Size class of loans (thousands) Characteristics All sizes $1-9 $10-24 $25-49 $50-99 $100-249 ALL BANKS 1 Amount of loans (thousands of dollars)... 772,865 130,361 105,392 89,350 86,369 150,882 2 Number of loans 49,814 37,315 7,100 2,712 1,284 1,107 3 Weighted average maturity (months)2 7.7 6.4 7.7 8.5 6.9 5.8 4 Weighted average interest rate (percent)3. 12.31 13.18 12.% 12.73 12.46 12.82 5 Standard error4 .35 .17 .18 .41 .22 .71 6 Interquartile range5 11.02-13.42 12,32-13.88 12.31-13.65 11.89-13.42 12.00-13.26 12.10-13.42 By purpose of loan 7 Feeder livestock 11.70 13.16 13.17 12.25 11.78 10.66 8 Other livestock 12.41 12.93 13.28 * * 13.00 9 Other current operating expenses 12.53 13.23 12.95 12.31 12.43 13.20 10 Farm machinery and equipment 13.34 13.40 12.97 13.43 * * 11 Other 11.46 12.84 12.41 12.57 12.09 10.65 Percentage of amount of loans 12 With floating rates 41.2 26.3 34.5 40.0 47.1 27.2 13 Made under commitment 41.9 27.7 25.6 31.2 40.1 26.6 By purpose of loan 14 Feeder livestock 10.6 11.3 9.1 6.2 17.7 10.8 15 Other livestock 11.7 5.6 16.1 * * 22.5 16 Other current operating expenses 50.2 64.6 58.0 45.0 40.9 60.8 17 Farm machinery and equipment 9.2 8.9 4.6 33.4 * * 18 Other 18.1 9.5 11.6 12.1 12.1 3.5 48 LARGE BANKS11 1 Amount of loans (thousands of dollars).. 209,930 6,918 9,695 10,242 10,359 33,919 2 Number of loans 3,327 1,840 643 312 159 231 3 Weighted average maturity (months)2 ... 7.3 5.9 7.9 8.4 7.2 6.0 4 Weighted average interest rate (percent)3 10.63 11.86 11.56 11.38 11.18 10.95 5 Standard error4 .30 .10 .13 .18 .17 .22 6 Interquartile range5 9.77-11.46 11.02-12.40 10.92-12.13 10.65-12.01 10.51-11.76 10.15-11.73 By purpose of loan 7 Feeder livestock 10.80 11.57 11.21 11.51 * 10.89 8 Other livestock 10.71 11.66 11.56 * * * 9 Other current operating expenses 10.66 11.89 11.60 11.34 11.13 11.22 10 Farm machinery and equipment 11.13 12.24 * * * * 11 Other 10.44 11.98 11.68 11.17 11.32 10.65 Percentage of amount of loans 12 With floating rates 66.8 75.9 85.9 90.8 93.7 91.4 13 Made under commitment 81.1 84.5 79.5 87.3 87.3 88.7 By purpose of loan 14 Feeder livestock 17.3 13.7 10.9 17.6 * 29.0 15 Other livestock 14.3 5.5 8.7 * * * 16 Other current operating expenses 37.0 61.5 58.2 58.6 43.8 46.5 17 Farm machinery and equipment 1.2 2.4 * * * * 18 Other 30.2 17.0 17.8 15.9 22.9 15.5 OTHER BANKS11 1 Amount of loans (thousands of dollars).. 562,935 123,443 95,698 79,107 76,010 116,963 2 Number of loans 46,487 35,475 6,457 2,400 1,124 876 3 Weighted average maturity (months)2 ... 7.9 6.4 7.7 8.5 6.9 5.8 4 Weighted average interest rate (percent)3 12.93 13.26 13.10 12.91 12.64 13.36 5 Standard error4 .17 .13 .13 .36 .14 .67 6 Interquartile range5 12.36-13.51 12.45-13.93 12.59-13.65 12.13-13.50 12.36-13.26 13.15-13.52 By purpose of loan I Feeder livestock 12.41 13.27 * » 11.83 * 8 Other livestock 13.25 13.00 13.37 * * * 9 Other current operating expenses 13.00 13.30 13.09 12.48 12.62 13.61 10 Farm machinery and equipment 13.42 13.42 13.12 * * * II Other 12.31 12.93 12.52 12.82 * Percentage of amount of loans 12 With floating rates 31.6 23.5 29.3 33.5 40.8 * 13 Made under commitment 27.3 24.5 20.2 23.9 33.7 * By purpose of loan 14 Feeder livestock 8.1 11.2 * * 17.4 * 15 Other livestock 10.8 5.6 16.9 * * * 16 Other current operating expenses 55.2 64.8 58.0 43.2 40.5 64.9 17 Farm machinery and equipment 12.2 9.3 4.7 * * * 18 Other 13.6 9.1 11.0 11.6 * * For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 NOTES TO TABLE 4.23 1. The survey of terms of bank lending to business collects data on gross loan 4. The chances are about two out of three that the average rate shown would extensions made during the first full business week in the mid-month of each differ by less than this amount from the average rate that would be found by a quarter by a sample of 340 commercial banks of all sizes. The sample data are complete survey of lending at all banks. blown up to estimate the lending terms at all insured commercial banks during that 5. The interquartile range shows the interest rate range that encompasses the week. TTie estimated terms of bank lending are not intended for use in collecting middle 50 percent of the total dollar amount of loans made. the terms of loans extended over the entire quarter or residing in the portfolios of 6. Overnight loans are loans that mature on the following business day. those banks. Construction and land development loans include both unsecured 7. Demand loans have no stated date of maturity. loans and loans secured by real estate. Thus, some of the construction and land 8. The approximate annual interest rate on each loan—without regard to development loans would be reported on the statement of condition as real estate compounding—is calculated from survey data on the stated rate and other terms loans and the remainder as business loans. The survey of terms of bank lending to of the loan; then in computing the average of these approximate nominal rates, farmers covers about 250 banks selected to represent all sizes of banks. Mortgage each loan is weighted by its dollar amount. loans, purchased loans, foreign loans, and loans of less than $1,000 are excluded 9. The prime rate reported by each bank is weighted by the volume of loans from the survey. extended and then averaged. As of December 31, 1984, average domestic assets of 48 large banks were $14.7 10. This survey provides data on gross loan extensions made during one week billion and assets of the smallest of these banks were $2.7 billion. For all insured of each quarter. The proportion of these loan extensions that is made at rates banks total domestic assets averaged $149 million. below prime may vary substantially from the proportion of such loans outstanding 2. The weighted average maturity is calculated only for loans with a stated date in bank loan portfolios. of maturity (that is, loans payable on demand are excluded). In computing the 11. Among banks reporting loans to farmers, most "large banks" had over $500 average, each loan is weighted by its dollar amount. million in total assets, and most "other banks" had total assets below $500 3. The approximate compounded annual interest rate on each loan is calculated million. from survey data on the stated rate and other terms of the loan; then, in computing the average of these approximate effective rates, each loan is weighted by its dollar amount. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • November 1985 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19851 Millions of dollars All states2 New York Other states2 CCaallii-- IItteemm ffoorrnniiaa,, IIlllliinnooiiss,, Total Branches3 Agencies Branches3 Agencies ttoottaall44 bbrraanncchheess Branches Agencies 1 Total assets5 283,052 226,778 56,275 202,930 5,713 46,218 13,583 6,265 8,342 2 Cash and due from depository institutions 66,748 60,913 5,835 57,042 255 6,034 2,714 272 431 3 Currency and coin (U.S. and foreign) 22 19 3 15 1 2 2 1 2 4 Balances with Federal Reserve Banks 1,147 1,090 57 970 28 38 52 51 8 5 Balances with other central banks 32 29 3 28 3 0 1 0 0 6 Demand balances with commercial banks in United States 1,011 880 131 807 44 65 31 21 43 7 All other balances with depository institutions in United States and with banks in foreign countries 64,295 58,670 5,625 55,002 178 5,918 2,625 197 374 8 Time and savings balances with commercial banks in United States 33,709 30,169 3,540 28,292 154 3,310 1,598 123 233 9 Balances with other depository institutions in United States 126 101 25 101 0 4 0 0 21 10 Balances with banks in foreign countries 30,460 28,400 2,060 26,610 24 2,604 1,027 74 120 11 Foreign branches of U.S. banks 2,314 2,280 35 2,239 5 21 41 0 9 12 Other banks in foreign countries 28,145 26,120 2,025 24,371 19 2,583 986 74 111 13 Cash items in process of collection 241 225 16 219 1 12 3 2 5 14 Total securities, loans, and lease financing receivables .... 155,800 120,237 35,563 104,135 4,430 27,637 10,032 3,441 6,125 15 Total securities, book value 12,402 10,925 1,477 10,315 151 1,298 423 43 173 16 U.S. Treasury 4,731 4,488 242 4,273 112 59 163 25 100 17 Obligations of other U.S. government agencies and corporations 568 548 21 553322 2 1155 00 1133 6 18 Obligations of states and political subdivisions in United States 73 62 12 50 0 1 12 0 11 19 Other bonds, notes, debentures, and corporate stock .. 7,030 5,827 1,202 5,460 37 1,223 249 5 55 20 Federal funds sold and securities purchased under agreements to resell 7,796 6,636 1,159 6,426 658 449 130 48 84 By holder 21 Commercial banks in United States 6,270 5,469 801 5,267 360 398 122 48 74 22 Others 1,526 1,167 359 1,159 298 51 8 0 10 By type 23 One-day maturity or continuing contract 7,655 6,496 1,159 6,286 658 448 130 48 84 24 Securities purchased under agreements to resell.... 49 30 19 30 18 0 0 0 1 25 Other 7,606 6,466 1,140 6,256 640 448 130 48 83 26 Other securities purchased under agreements to resell 141 140 1 140 0 1 0 0 00 27 Total loans, gross 143,542 109,412 34,130 93,910 4,289 26,375 9,614 3,400 5,955 78 LESS: Unearned income on loans 145 100 44 89 10 35 5 2 2 29 EQUALS: Loans, net 143,397 109,312 34,086 93,820 4,279 26,339 9,608 3,398 5,953 Total loans, gross, by category 30 Real estate loans 5,005 2,797 22,,220088 11,,881122 8 11,,334400 440055 227777 11,,116633 31 Loans to financial institutions 54,397 41,555 12,842 37,238 953 11,564 3,265 519 858 3? Commercial banks in United States 27,513 19,941 7,572 18,034 390 7,412 1,253 246 178 33 U.S. branches and agencies of other foreign banks .. 23,548 16,336 7,212 14,566 373 7,094 1,170 202 144 34 Other commercial banks 3,965 3,605 360 3,468 17 318 83 44 34 35 Banks in foreign countries 23,886 19,043 4,843 17,352 542 3,734 1,336 273 649 36 Foreign branches of U.S. banks 841 657 184 497 13 180 149 1 1 37 Other 23,045 18,386 4,659 16,855 529 3,554 1,187 272 648 38 Other financial institutions 2,998 2,571 426 1,851 22 418 676 1 31 39 Loans for purchasing or carrying securities 1,537 1,451 86 1,375 1 158 0 3 0 40 Commercial and industrial loans 66,085 51,069 15,017 41,896 2,063 11,234 5,395 2,387 3,111 41 U.S. addressees (domicile) 42,300 32,244 10,056 24,492 217 8,476 4,840 1,709 2,566 42 Non-U.S. addressees (domicile) 23,785 18,825 4,961 17,404 1,846 2,758 554 679 544 43 Loans to individuals for household, family, and other personal expenditures 362 244 119 205 91 27 9 21 9 44 All other loans 16,156 12,297 3,859 11,383 1,174 2,052 540 192 815 45 Loans to foreign governments and official institutions 15,269 11,547 3,722 10,765 1,161 1,941 479 115522 777722 46 Other 887 750 137 618 13 111 61 41 43 47 Lease financing receivables 0 0 0 0 0 0 0 0 0 48 All other assets 52,709 38,991 13,718 35,327 371 12,098 706 2,504 1,702 49 Customers' liability on acceptances outstanding.... 19,153 14,624 4,529 14,150 36 4,485 207 197 79 50 U.S. addressees (domicile) 11,968 7,939 4,030 7,629 6 4,074 196 42 21 51 Non-U.S. addressees (domicile) 7,185 6,686 499 6,520 30 412 11 154 57 57 Net due from related banking institutions6 26,153 18,296 7,858 15,694 177 6,561 132 2,184 1,406 53 Other 7,402 6,072 1,331 5,484 158 1,052 367 123 218 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies All 4.30 Continued Millions of dollars All states2 New York Other states2 IItteemm Total Branches3 Agencies Branches3 Agencies ff tt oo CC oo rr tt aa nn aa ll ii ii ll aa -- 44 ,, bb II rr llll aa ii nn nn cc oo hh iiss ee ,, ss Branches Agencies 54 Total liabilities5 283,052 226,778 56,275 202,930 5,713 46,218 13,583 6,265 8,342 55 Total deposits and credit balances 160,877 138,972 21,905 127,680 1,957 18.914 5,226 3,631 3.469 56 Individuals, partnerships, and corporations 46,541 42,687 3,853 36,433 94 1,663 2.162 3,134 3.054 57 U.S. addressees (domicile) 26,245 26,185 60 20,996 12 383 1.797 3.038 20 58 Non-U.S. addressees (domicile) 20,295 16,502 3,793 15,437 83 1.280 365 97 3,034 59 U.S. government, states, and political subdivisions in United States 72 72 0 2277 00 9 11 2266 00 60 All other 114,265 96,213 18,052 91,221 1,863 17,242 3,054 471 414 61 Foreign governments and official institutions .... 7,632 7,176 456 7,044 262 111 40 20 154 62 Commercial banks in United States 46,709 36,009 10,700 33,698 938 10,290 1,454 241 88 61 U.S. branches and agencies of other foreign banks 37,719 28,945 8,775 27,010 556644 88,,771144 11,,225522 114400 4400 64 Other commercial banks in United States 8,990 7,064 1,925 6,688 374 1,576 202 102 4488 65 Banks in foreign countries 59,512 52,658 6,855 50,135 652 6,818 1,547 205 115544 66 Foreign branches of U.S. banks 7,059 5,779 1,280 5,285 235 1,184 292 51 13 67 Other banks in foreign countries 52,453 46,879 5,574 44,850 417 5,634 1,256 155 142 68 Certified and officers' checks, travelers checks, and letters of credit sold for cash 412 371 41 343 1111 2244 1133 4 1177 69 Demand deposits 3,400 3,162 238 2,889 1111 87 126 91 196 70 Individuals, partnerships, and corporations 1,915 1,770 145 1,557 00 58 106 65 129 71 U.S. addressees (domicile) 1,199 1,198 1 1,010 0 26 102 59 11 72 Non-U.S. addressees (domicile) 716 572 144 547 0 32 4 6 112288 73 U.S. government, states, and political subdivisions in United States 7 7 0 77 00 00 00 00 00 74 All other 1,478 1,385 93 1,325 11 29 19 26 67 75 Foreign governments and official institutions .... 304 301 3 279 0 1 2 20 2 76 Commercial banks in United States 97 85 11 82 0 1 1 2 11 77 U.S. branches and agencies of other foreign banks 33 33 1 3322 00 00 00 00 11 78 Other commercial banks in United States 63 53 10 49 0 1 1 1100 79 Banks in foreign countries 665 628 38 621 0 3 4 0 37 80 Certified and officers' checks, travelers checks. and letters of credit sold for cash 412 371 41 343 1111 2244 1133 4 1177 81 Time deposits 156,123 134,741 21,382 123.940 1,838 18,714 5,016 3,458 3,158 82 Individuals, partnerships, and corporations 43,418 39,929 3,488 34,104 44 1,493 1.972 2,988 2,817 83 U.S. addressees (domicile) 24,372 24,371 1 19,556 0 299 1,614 2,902 11 84 Non-U.S. addressees (domicile) 19,046 15,559 3,487 14,548 44 1,194 357 86 22,,881166 85 U.S. government, states, and political subdivisions in United States 65 65 0 20 00 9 1100 2255 00 86 All other 112,641 94,747 17,894 89,815 1,794 17,212 3,034 445 341 87 Foreign governments and official institutions .... 7,286 6,863 422 6,753 238 109 38 11 147 88 Commercial banks in United States 46,596 35,919 10,678 33,612 927 10,288 1,453 223399 77 89 U.S. branches and agencies of other foreign banks 37,685 28,912 8,774 26,977 564 8,714 11,,225522 114400 3399 90 Other commercial banks in United States 8,911 7,007 1,904 6,635 363 1,575 201 100 38 91 Banks in foreign countries 58,759 51,965 6,794 49.450 629 6,815 1,543 205 117 92 Savings deposits 995 878 117 662 0 83 8844 81 85 93 Individuals, partnerships, and corporations 995 878 117 662 0 83 8844 81 85 94 U.S. addressees (domicile) 541 541 0 355 0 30 80 76 0 95 Non-U.S. addressees (domicile) 454 337 117 307 0 53 4 5 85 % U.S. government, states, and political subdivisions in United States 0 0 0 0 00 00 00 00 00 97 All other 0 0 0 0 0 0 0 0 0 98 Credit balances 360 191 168 190 109 30 0 1 30 99 Individuals, partnerships, and corporations 213 110 103 109 51 30 0 1 24 100 U.S. addressees (domicile) 134 75 58 74 12 29 0 11 19 101 Non-U.S. addressees (domicile) 80 35 45 35 39 1 0 00 5 102 U.S. government, states, and political subdivisions in United States 0 0 0 0 00 00 00 00 00 103 All other 146 81 65 81 58 1 0 0 6 104 Foreign governments and official institutions .... 42 12 31 12 25 11 0 0 6 105 Commercial banks in United States 16 5 11 5 11 00 0 0 0 106 U.S. branches and agencies of other foreign banks 1 1 0 1 00 00 00 00 00 107 Other commercial banks in United States 15 4 11 4 11 0 0 0 0 108 Banks in foreign countries 88 65 23 65 23 0 0 0 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • November 1985 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1985•—Continued Millions of dollars All states2 New York Other states2 IItteemm ffoo CC rr aa nn ll ii ii aa -- ,, IIlllliinnooiiss,, Total Branches3 Agencies Branches3 Agencies ttoottaall44 bbrraanncchheess Branches Agencies 109 Federal funds purchased and securities sold under agreements to repurchase 22.956 18,075 4,881 17,087 624 44,,332288 553333 118866 119988 By holder 110 Commercial banks in United States 18,692 14,373 4,319 13,471 242 4,174 465 118866 115544 Hi Others 4,265 3,703 562 3,616 382 154 68 0 44 By type 112 One-day maturity or continuing contract 21,834 17,038 4,796 16,127 541 4,316 467 186 198 in Securities sold under agreements to repurchase .. 2.514 2,413 101 2.401 64 38 0 88 114 Other 19,320 14,626 4,695 13.726 477 4,277 464 186 119900 115 Other securities sold under agreements to repurchase 1.122 1,037 85 960 8833 1133 6666 00 00 116 Other liabilities for borrowed money 38.070 23,336 14,734 21.135 1,684 12,706 1,260 448844 799 117 Owed to banks 36,150 21,564 14,586 19.530 1,631 12,613 1,100 447788 799 118 U.S. addressees (domicile) 35.081 20,690 14,392 18,716 1,616 12,607 1,075 444 624 119 Non-U.S. addressees (domicile) 1.069 874 195 815 15 6 25 34 175 120 Owed to others 1,920 1,772 148 1,605 54 94 161 6 0 121 U.S. addressees (domicile) 1,739 1,648 91 1,481 7 84 161 6 0 122 Non-U.S. addressees (domicile) 181 124 57 124 47 10 0 0 0 173 All other liabilities 61,149 46,394 14,755 37,028 1,448 10,269 6,563 1,964 3,877 124 Acceptances executed and outstanding 21,571 16,705 4,866 16,216 16 4,841 219 199 81 125 Net due to related banking institutions6 33,813 24,634 9.178 16,196 1,321 4,860 6,073 1,654 3,709 126 Other 5.765 5,055 711 4,617 111 569 271 111 87 127 T M i E m M e O deposits of $100,000 or more 116,162 97,040 19,121 86,602 74 18.447 4,946 33,,228822 22,,881111 128 Certificates of deposit (CDs) in denominations of $100,000 or more 35.708 33.716 1.992 28,328 1 1,232 11,,882299 22,,990066 11,,441122 129 Other 80,454 63,324 17,129 58,274 73 17,215 3,117 376 1,399 130 Savings deposits authorized for automatic transfer and NOW accounts 88 53 35 34 0 1144 7 8 2266 131 Money market time certificates of $10,000 and less than $100,000 with original maturities of 26 weeks 0 0 0 0 0 0 00 00 00 132 Time certificates of deposit in denominations of $100,000 or more with remaining maturity of more than 12 months 11,713 11,677 36 9,834 0 119933 446622 11,,119955 2288 133 Acceptances refinanced with a U.S.-chartered bank .. 3,333 2,408 925 2,024 114 933 0 261 11 134 Statutory or regulatory asset pledge requirement 49.739 48,322 1,417 45,351 1,337 150 2,846 20 3355 135 Statutory or regulatory asset maintenance requirement 18.709 18,493 215 6,060 0 444488 9,093 2,896 211 136 Commercial letters of credit 9,040 6,188 2,852 5,620 133 22,,663344 166 245 241 137 Standby letters of credit, total 33,989 29,010 4,979 24,934 86 4,183 2,730 715 1,342 138 U.S. addressees (domicile) 30.500 26,037 4,464 22,193 18 3,823 2,560 685 1,221 139 Non-U.S. addressees (domicile) 3,489 2,973 516 2,740 68 360 170 30 121 140 Standby letters of credit conveyed to others through participations (included in total standby letters of credit) 4.802 4,590 211 44,,000099 00 226699 338844 4422 9977 141 Holdings of commercial paper included in total gross loans 569 362 207 328 33 221133 1100 33 1122 142 Holdings of acceptances included in total commercial and industrial loans 4,736 3.616 1,120 3,470 5522 11,,009955 9933 1177 1100 143 Immediately available funds with a maturity greater than one day (included in other liabilities for borrowed money) 28,058 17,569 10,489 15,696 1,373 9,400 11,,112200 337711 98 144 Gross due from related banking institutions6 100,949 82,005 18,944 74,113 894 16,314 3,511 3,563 2,554 145 U.S. addressees (domicile) 25,732 18,951 6,781 14,355 117 5,807 1,354 2,900 1,199 146 Branches and agencies in the United States 24,915 18,355 6,560 13,780 95 5,608 1,336 2,897 1,199 147 In the same state as reporter 2,130 1,471 658 1.418 48 595 0 2 67 148 In other states 22,785 16,884 5.902 12,362 48 5,013 1,336 2,896 1,132 149 U.S. banking subsidiaries7 818 596 221 576 22 199 18 2 11 150 Non-U.S. addressees (domicile) 75,217 63,054 12.163 59,757 777 10,507 2,157 664 11,,335555 151 Head office and non-U.S. branches and agencies. 73,232 61,449 11.783 58.190 759 10,298 2,122 663 1.199 152 Non-U.S. banking companies and offices 1,984 1,605 380 1,567 18 209 35 0 156 153 Gross due to related banking institutions6 108.608 88,344 20,264 74,615 2,038 14,613 9,452 3,033 4,858 154 U.S. addressees (domicile) 25,066 17,880 7,186 10,222 34 3,789 4,811 2,320 3,891 155 Branches and agencies in the United States 24,545 17,497 7,048 9,932 34 3,706 4,728 2,311 3,834 1 1 5 5 6 7 I I n n t o h th e e s r a m sta e t e st s a te as reporter 2 2 2 , , 0 5 4 0 5 0 1 1 6 , , 4 0 2 6 8 9 6,4 6 3 17 1 8 1 , , 5 3 5 7 9 3 2 1 2 2 3,0 6 9 0 9 8 4,72 0 8 2,309 2 3,78 5 3 1 1 1 5 5 8 9 No U n . - S U . .S ba . n a k d in d g re s s u se b e s s i d ( i d a o r m ies ic 7 ile) 83,5 5 4 2 2 1 70,4 3 6 8 4 4 13,0 1 7 3 8 8 64,3 2 9 9 3 0 2,00 0 4 10,82 8 4 2 4,64 8 1 3 71 9 3 96 5 7 7 160 Head office and non-U.S. branches and agencies. 81,189 68,386 12,803 62,382 1,915 10.668 4,626 713 888866 161 Non-U.S. banking companies and offices 2,353 2,078 275 2,011 89 157 15 0 8811 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A79 4.30 Continued Millions of dollars All states2 New York Other states2 IItteemm Total Branches3 Agencies Branches3 Agencies ff tt oo CC oo rr aa tt nn aa ll ii ii ll aa -- 44 ,, bb II rr ll aa llii nn nn cc oo hh iiss ee ,, ss Branches Agencies Average for 30 calendar days (or calendar month) ending with report date 162 Total assets 284,148 226,989 57,160 203,179 5,715 47,090 13,569 6,365 8,231 163 Cash and due from depository institutions 64,446 58,364 6,082 54,579 278 6,164 2,755 255 414 164 Federal funds sold and securities purchased under agreements to resell 8,728 7,591 1,138 7,214 612 545 255 43 59 165 Total loans 139,987 106,586 33,402 91,464 4,108 26,012 9,389 3,405 5,609 166 Loans to banks in foreign countries 23,179 18,373 4,806 16,791 570 3,679 1,237 265 637 167 Total deposits and credit balances 155,982 134,266 21,715 123,146 1,720 18,872 5,363 3,581 3,300 168 Time CDs in denominations of $100,000 or more 35,009 33,007 2,001 27,399 0 1,277 1,903 3,045 1,384 169 Federal funds purchased and securities sold under agreements to repurchase 20,816 16,187 4,630 15,120 598 4,101 571 258 168 170 Other liabilities for borrowed money 39,750 24,503 15,247 22,200 1,718 13,177 1,323 458 874 171 Number of reports filed8 465 295 170 189 26 120 45 32 53 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, footnote 6). On the former monthly branch and agency report, available through "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign the G.ll statistical release, gross balances were included in total assets and total Banks." This form was first used for reporting data as of June 30, 1980. From liabilities. Therefore, total asset and total liability figures in this table are not November 1972 through May 1980, U.S. branches and agencies of foreign banks comparable to those in the G.ll tables. had filed a monthly FR 886a report. Aggregate data from that report were 6. "Related banking institutions" includes the foreign head office and other available through the Federal Reserve statistical release G.ll, last issued on U.S. and foreign branches and agencies of the bank, the bank's parent holding July 10, 1980. Data in this table and in the G.ll tables are not strictly comparable company, and majority-owned banking subsidiaries of the bank and of its parent because of differences in reporting panels and in definitions of balance sheet holding company (including subsidiaries owned both directly and indirectly). items. Gross amounts due from and due to related banking institutions are shown as 2. Includes the District of Columbia. memo items. 3. Includes all offices that have the power to accept deposits from U.S. 7. "U.S. banking subsidiaries" refers to U.S. banking subsidiaries majorityresidents, including any such offices that are considered agencies under state law. owned by the foreign bank and by related foreign banks and includes U.S. offices 4. Agencies account for almost all of the assets and liabilities reported in of U.S.-chartered commercial banks, of Edge Act and Agreement corporations, California. and of New York State (Article XII) investment companies. 5. Total assets and total liabilities include net balances, if any, due from or due 8. In some cases two or more offices of a foreign bank within the same to related banking institutions in the United States and in foreign countries (see metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 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 BOB STAHLY MOORE, Special Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION JAMES L. KICHLINE, Director MICHAEL BRADFIELD, General Counsel EDWARD C. ETTIN, Deputy Director J. VIRGIL MATTINGLY, JR., Deputy General Counsel MICHAEL J. PRELL, Deputy Director RICHARD M. ASHTON, Associate General Counsel JOSEPH S. ZEISEL, Deputy Director OLIVER IRELAND, Associate General Counsel JARED J. ENZLER, Associate Director RICKI TIGERT, Assistant General Counsel DAVID E. LINDSEY, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel ELEANOR J. STOCKWELL, Associate Director THOMAS D. SIMPSON, Deputy Associate Director LAWRENCE SLIFMAN, Deputy Associate Director OFFICE OF THE SECRETARY HELMUT F. WENDEL, Deputy Associate Director MARTHA BETHEA, Assistant Director WILLIAM W. WILES, Secretary ROBERT M. FISHER, Assistant Director BARBARA R. LOWREY, Associate Secretary DAVID B. HUMPHREY, Assistant Director JAMES MCAFEE, Associate Secretary SUSAN J. LEPPER, Assistant Director RICHARD D. PORTER, Assistant Director PETER A. TINSLEY, Assistant Director DIVISION OF CONSUMER LEVON H. GARABEDIAN, Assistant Director (Administration) AND COMMUNITY AFFAIRS GRIFFITH L. GARWOOD, Director JERAULD C. KLUCKMAN, Associate Director DIVISION OF INTERNATIONAL FINANCE GLENN E. LONEY, Assistant Director DOLORES S. SMITH, Assistant Director EDWIN M. TRUMAN, Director LARRY J. PROMISEL, Senior Associate Director CHARLES J. SIEGMAN, Senior Associate Director DIVISION OF BANKING DAVID H. HOWARD, Deputy Associate Director SUPERVISION AND REGULATION ROBERT F. GEMMILL, Staff Adviser PETER HOOPER HI, Assistant Director KAREN H. JOHNSON, Assistant Director WILLIAM TAYLOR, Director THOMAS E. CIMENO, JR., Deputy Director1 RALPH W. SMITH, JR., Assistant Director FREDERICK R. DAHL, Associate 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

81 and Official Staff EMMETT J. RICE MARTHA R. SEGER 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 Officer DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF PERSONNEL CLYDE H. FARNSWORTH, JR., Director DAVID L. SHANNON, Director ELLIOTT C. MCENTEE, Associate Director JOHN R. WEIS, Assistant Director DAVID L. ROBINSON, Associate Director CHARLES W. WOOD, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director WALTER ALTHAUSEN, Assistant Director CHARLES W. BENNETT, Assistant Director OFFICE OF THE CONTROLLER ANNE M. DEBEER, Assistant Director JACK DENNIS, JR., Assistant Director GEORGE E. LIVINGSTON, Controller EARL G. HAMILTON, Assistant Director BRENT L. BOWEN, Assistant Controller WILLIAM E. PASCOE III, Assistant Director2 FLORENCE M. YOUNG, Adviser DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director WALTER W. KREIMANN, Associate Director GEORGE M. LOPEZ, Assistant Director OFFICE OF COMPUTING AND INFORMATION SERVICES ALLEN E. BEUTEL, Executive Director DIVISION OF COMPUTING SERVICES BRUCE M. BEARDSLEY, Director THOMAS C. JUDD, Assistant Director ELIZABETH B. RIGGS, Assistant Director ROBERT J. ZEMEL, Assistant Director DIVISION OF INFORMATION SERVICES WILLIAM R. JONES, Director STEPHEN R. MALPHRUS, Assistant Director WILLIAM C. SCHNEIDER, JR., Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • November 1985 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman E. GERALD CORRIGAN, Vice Chairman JOHN J. BALLES SILAS KEEHN EMMETT J. RICE ROBERT P. BLACK PRESTON MARTIN MARTHA R. SEGER ROBERT P. FORRESTAL J. CHARLES PARTEE 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 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 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 LLOYD P. JOHNSON, 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

83 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

84 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 AN APPLICATION THROUGH THE FEDERAL REother statutes affecting the Federal Reserve System. 576 SERVE SYSTEM. August 1985. 30 pp. 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

85 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. Out of print. 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. Out of print. 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. Out of print. 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- 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME VENTION: SEPTEMBER I977-DECEMBER 1979, by Mar- AND THEIR IMPACT ON CONSUMERS, by Glenn B. garet L. Greene. October 1984. 40 pp. Canner and Robert D. Kurtz. August 1985. 31 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

86 REPRINTS OF BULLETIN ARTICLES A Financial Perspective on Agriculture. 1/84. Most of the articles reprinted do not exceed 12 pages. Survey of Consumer Finances, 1983. 9/84. Bank Lending to Developing Countries. 10/84. Survey of Consumer Finances, 1983: A Second Report. The Commercial Paper Market since the Mid-Seventies. 6/82. 12/84. Applying the Theory of Probable Future Competition. 9/82. Union Settlements and Aggregate Wage Behavior in the International Banking Facilities. 10/82. 1980s. 12/84. Foreign Experience with Targets for Money Growth. 10/83. The Thrift Industry in Transition. 3/85. Intervention in Foreign Exchange Markets: A Summary of U.S. International Transactions in 1984. 5/85. Ten Staff Studies. 11/83. A Revision of the Index of Industrial Production. 7/85. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

87 Index to Statistical Tables References are to pages A3-A79 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20, 74 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, 76-79 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 Reserve Banks and at foreign central banks and foreign countries (See Interest rates) BANKERS acceptances, 9, 23, 24 Discounts and advances by Reserve Banks (See Loans) Bankers balances, 18-20 (See also Foreigners) Dividends, corporate, 35 Bonds (See also U.S. government securities) New issues, 34 EMPLOYMENT, 45 Rates, 24 Eurodollars, 24 Branch banks, 21, 55, 76-79 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, 70-72,76 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, 18, 19, 20, 21, Federal Land Banks, 39 70-72, 76 Federal National Mortgage Association, 33, 38, 39 Consumer loans held, by type, and terms, 40, 41 Federal Reserve Banks Loans sold outright, 19 Condition statement, 10 Nondeposit funds, 17 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 39 U.S. government securities held, 4, 10, 11, 30 Terms of lending, 70-75 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, 73 Assets and liabilities, 37 Consumer installment credit, 40, 41 Business credit, 37 Consumer prices, 44, 50 Loans, 40, 41 Consumption expenditures, 51, 52 Paper, 23, 24 Corporations Financial institutions Nonfinancial, assets and liabilities, 36 Loans to, 19, 20, 21 Profits and their distribution, 35 Selected assets and liabilities, 26 Security issues, 34, 65 Float, 4 Cost of living (See Consumer prices) Flow of funds, 42, 43 Credit unions, 26, 40 (See also Thrift institutions) Foreign banks, assets and liabilities of U.S. branches and Currency and coin, 18 agencies, 21, 76-79 Currency in circulation, 4, 13 Foreign currency operations, 10 Customer credit, stock market, 25 Foreign deposits in U.S. banks, 4, 10, 19, 20 Foreign exchange rates, 68 DEBITS to deposit accounts, 15 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits 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

88 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 HOUSING, new and existing units, 49 Reserve requirements, 7 Reserves INCOME, personal and national, 44, 51, 52 Commercial banks, 18 Industrial production, 44, 47 Depository institutions, 3, 4, 5, 12 Installment loans, 40, 41 Federal Reserve Banks, 10 Insurance companies, 26, 30, 39 U.S. reserve assets, 54 Interest rates Residential mortgage loans, 38 Bonds, 24 Retail credit and retail sales, 40, 41, 44 Commercial banks, 70-75 Consumer installment credit, 41 SAVING Federal Reserve Banks, 6 Flow of funds, 42, 43 Foreign central banks and foreign countries, 67 National income accounts, 51 Money and capital markets, 24 Savings and loan associations, 8, 26, 39, 40, 42 (See also Mortgages, 38 Thrift institutions) Prime rate, 23 Savings deposits (See Time and savings deposits) Time and savings deposits, 8 Securities (See specific types) International capital transactions of United States, 53-67 Federal and federally sponsored credit agencies, 33 International organizations, 57, 58, 60, 63, 64 Foreign transactions, 65 Inventories, 51 New issues, 34 Investment companies, issues and assets, 35 Prices, 25 Investments (See also specific types) Special drawing rights, 4, 10, 53, 54 Banks, by classes, 18, 19, 20, 21, 26 State and local governments Commercial banks, 3, 16, 18-20, 39 Deposits, 19, 20 Federal Reserve Banks, 10, 11 Holdings of U.S. government securities, 30 Financial institutions, 26, 39 New security issues, 34 Ownership of securities issued by, 19, 20, 26 LABOR force, 45 Rates on securities, 24 Life insurance companies (See Insurance companies) Stock market, selected statistics, 25 Loans (See also specific types) Stocks (See also Securities) Banks, by classes, 18-20 New issues, 34 Commercial banks, 3, 16, 18-20, 70-75, 76 Prices, 25 Federal Reserve Banks, 4, 5, 6, 10, 11 Financial institutions, 26, 39 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 38, 39 TAX receipts, federal, 29 MANUFACTURING Thrift institutions, 3 (See also Credit unions, Mutual Capacity utilization, 46 savings banks, and Savings and loan associations) Production, 46, 48 Time and savings deposits, 3, 8, 13, 17, 18, 19, 20, 21 Margin requirements, 25 Trade, foreign, 54 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 4 Federal funds and repurchase agreements, 5 Treasury deposits, 4, 10, 28 Reserve requirements, 7 Treasury operating balance, 28 Mining production, 48 UNEMPLOYMENT, 45 Mobile homes shipped, 49 U.S. government balances Monetary and credit aggregates, 3,12 Commercial bank holdings, 18, 19, 20 Money and capital market rates, 24 Treasury deposits at Reserve Banks, 4, 10, 28 Money stock measures and components, 3, 13 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 18-20, 21, 30 Mutual funds, 35 Dealer transactions, positions, and financing, 32 Mutual savings banks, 8, 26, 39, 40 (See also Thrift Federal Reserve Bank holdings, 4, 10, 11, 30 institutions) 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 Rates, 24 OPEN market transactions, 9 U.S. international transactions, 53-67 Utilities, production, 48 PERSONAL income, 52 Prices VETERANS Administration, 38, 39 Consumer and producer, 44, 50 Stock market, 25 Prime rate, 23 WEEKLY reporting banks, 19-21 Producer prices, 44, 50 Wholesale (producer) prices, 44, 50 Production, 44, 47 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

89 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. Herr 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

90 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories April 1914 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