Federal Reserve Bulletin, 1986-07

VOLUME 72 • NUMBER 7 • JULY 1986 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 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 Section 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 437 AGRICULTURAL BANKS UNDER STRESS 467 Martha R. Seger, Member, Board of Governors, discusses whether laws to protect This article discusses the recent failures of financial institutions from becoming havens agricultural banks, the deteriorating quality for tax evaders, drug traffickers, and other of farm loans that contributed to such failmoney launderers can be strengthened and ures, and the nature of the process that has whether new laws should be enacted, beproduced financial distress for many farm fore the Subcommittee on Financial Instituborrowers; it also looks at the trends in tions Supervision, Regulation and Insurcomponents of income and expenses of ance of the House Committee on Banking, agricultural banks and the pricing of farm Finance and Urban Affairs, May 14, 1986. loans. 472 Emmett J. Rice, Member, Board of Gover- 449 LIFE INSURANCE COMPANIES IN A nors, reviews the disclosure requirements CHANGING ENVIRONMENT of three bills dealing with credit card applications and solicitations, all three of which The role and activities of life insurance would add an early disclosure requirement companies have changed over the past two to the Truth in Lending Act for open-end decades as high and volatile interest rates, credit card plans, before the Subcommittee combined with rigidities in the regulatory on Financial Institutions and Consumer Afstructure and tax laws affecting life insurfairs of the Senate Committee on Banking, ance companies, have diverted household Housing, and Urban Affairs, May 21, 1986. saving flows from traditional life insurance products. 476 ANNOUNCEMENTS 461 INDUSTRIAL PRODUCTION Meeting of Consumer Advisory Council. Industrial production increased an estimat- New policy on large borrowings from the ed 0.2 percent in April. discount window. Report on financial results of priced service 463 STATEMENTS TO CONGRESS operations. Paul A. Volcker, Chairman, Board of Gov- Proposal to amend the definition of "deposernors, reviews the Financial Institutions it" in Regulation D; comment requested on Emergency Acquisition Amendments of proposed conditions to be imposed on the 1986, legislation that would make some acquisition of thrift institutions by bank important changes to the emergency proviholding companies. sions of the Garn-St Germain Depository Institutions Deregulation Act of 1982, be- Change in Board staff. fore the Subcommittee on Financial Institu- Admission of seven state banks to membertions Supervision, Regulation and Insurship in the Federal Reserve System. ance of the House Committee on Banking, Finance and Urban Affairs, May 7, 1986. 478 RECORD OF POLICY ACTIONS OF THE [Chairman Volcker presented identical tes- FEDERAL OPEN MARKET COMMITTEE timony before the Senate Committee on Banking, Housing, and Urban Affairs, May At its meeting on April 1, 1986, the Commit- 13, 1986.] tee adopted a directive that called for main- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

taining about the existing degree of pressure AI FINANCIAL AND BUSINESS STATISTICS on reserve positions. The members expect- A3 Domestic Financial Statistics ed such an approach to policy implementa- A44 Domestic Nonfinancial Statistics tion to be consistent with growth of both A53 International Statistics M2 and M3 at an annual rate of about 7 percent for the period from March to June. A69 GUIDE TO TABULAR PRESENTATION, Over the same period, they expected Ml to STATISTICAL RELEASES, AND SPECIAL expand at an annual rate of about 7 to 8 TABLES percent, but they recognized that the behavior of Ml remained subject to unusual A70 BOARD OF GOVERNORS AND STAFF uncertainty. The Committee indicated that it might find somewhat lesser or somewhat All FEDERAL OPEN MARKET COMMITTEE greater reserve availability acceptable over AND STAFF, ADVISORY COUNCILS the intermeeting period depending on the growth of the monetary aggregates, the strength of the business expansion, the per- A74 FEDERAL RESERVE BOARD formance of the dollar on foreign exchange PUBLICATIONS markets, progress against inflation, and conditions in domestic and international MI INDEX TO STATISTICAL TABLES credit markets. The Committee agreed that the current intermeeting range of 6 to 10 A79 FEDERAL RESERVE BANKS, BRANCHES, percent for the federal funds rate should be AND OFFICES retained. A80 MAP OF FEDERAL RESERVE SYSTEM 485 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Agricultural Banks under Stress This article was prepared by Emanuel Melichar loans first become delinquent on periodic interof the Board's Division of Research and Statis- est payments and then become uncollectible, at tics. least in part. If such losses are so large that the government agency that chartered the bank—the Financial problems in the farm sector have ad- Office of the Comptroller of the Currency in the versely affected many rural banks, both directly case of national banks and state banking agencies and through their depressing effect on rural eco- in the case of state-chartered banks—determines nomic activity. The greatest impact has been on that it is insolvent, the bank fails. The number of banks with the greatest relative involvement in bank failures is thus a lagging indicator of bankfarm lending. More than 4,800 of the nation's ing problems, but failures have high public visibanks—34 percent of all banks—can be charac- bility and, locally, affect more people directly terized as "agricultural banks," in that the ratio than do loan losses. of farm loans to total loans in their portfolio is The number of agricultural bank failures first above the simple average of such ratios at all became conspicuous during the spring and sumbanks (which was about 16 percent at the end of mer of 1984. In every quarter since, they have 1985). At agricultural banks as a group, farm represented more than half of all failures of loans constitute 35.7 percent of total loans, far commercial banks (chart 1). The agricultural above the average of 3.4 percent in the banking banks that have failed have been relatively small system as a whole. During the 1970s, these banks in size, however, and thus these failures generalprospered along with most of the farm sector. ly have affected only the immediate communi- But as many of their borrowers became financial- ties. The 68 agricultural banks that failed in 1985 ly stressed, their fortunes also faded. had, on average, total assets of $21 million, only As recently as 1982, agricultural banks as a two-thirds the average size of all agricultural group still enjoyed the favorable loan experience—low delinquency rates and losses—and relatively high profits that had characterized the 1. Bank failures previous decade. Thereafter, loan problems be- Number of banks gan to mount, in some cases to magnitudes that posed a threat to the banks. During 1984, failures I Nonagricultural banks | Agricultural banks of agricultural banks became increasingly common, and in 1985 on average more than one bank per week failed. These stresses at agricultural banks resulted mainly from adverse loan experience, rather than from changes in the regulatory or competitive environment. 1983 1984 1985 AGRICULTURAL BANK FAILURES Quarterly data; agricultural banks are insured commercial banks at which the ratio of total farm loans ("loans secured by farm real estate" plus "loans to finance agricultural production and other loans When caused by deterioration in the quality of its to farmers") to total loans is above the unweighted average of such ratios at all banks on the date specified (16.14 percent as of December loans, the failure of an agricultural bank general- 31, 1985). At the end of 1985, there were 4,847 agricultural banks (34 ly represents the culmination of a long period percent of all banks), and they held 58 percent of all farm loans in the banking system. Throughout this article, banking data are for domesduring which increasing amounts of the bank's tic offices of insured commercial banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

438 Federal Reserve Bulletin • July 1986 banks and only one-eighth the average size of all provide better advice, guidance, and support to commercial banks. Only 3 had assets of more these borrowers. than $50 million, while 23 had assets of less than Rural communities that have retained local $10 million. Thus, although agricultural banks banking services after their economic life has accounted for nearly three-fifths of bank failures been disrupted by a bank failure may experience last year, their assets were less than two-fifths of some future recompense. In making good on the the assets at all failed banks. For the same deposits of the bank that failed, the FDIC uses its reason, farm loans constituted only one-fifth of insurance fund to replace the bad loans in the the total loans at all of the banks that failed— bank's portfolio. Thus the local bank or banks about $460 million of the total loans of $2.4 that receive the deposits also receive good assets billion at failed banks. to back those deposits, often including substan- When a bank fails, the Federal Deposit Insur- tial amounts in cash. Such banks are thus placed ance Corporation (FDIC), as the insurer of the in a better position to consider future lending bank's deposits, takes control both of the depos- opportunities as they arise and to use future its and of the loans and other assets in which the earnings to increase their capital and to improve bank has invested its funds. As a general rule, their banking services. In contrast, had the trouthe FDIC knows that a bank is in serious danger bled bank managed to survive, some of the of failing. To minimize the inconvenience and banking resources of the community would have disruption to the customers of the bank, the remained tied up in the old, poorly performing FDIC begins working to arrange for another loans, and some future bank earnings would have bank or a new bank to take over the deposits and been dedicated to covering losses on those loans. the good loans and other assets immediately after the failure occurs. Although such mergers or acquisitions are arranged in most cases, some- CREDIT QUALITY PROBLEMS times no other financial institution is interested in such arrangements and the FDIC is left with Most banks that have failed could earlier have no alternative but to close the bank. In these been found among the banks that reported relacases the disruption can be considerably greater tively large amounts of delinquent loans, such as because depositors are paid off and must find a the group of banks at which nonperforming loans new institution in which to place their funds. In exceed total capital (chart 2). The number of addition, borrowers are required to pay off their such vulnerable banks is much larger than the loans when they mature, and so they must find a number of bank failures. Because there are subnew source of credit. stantial repayments or recoveries on most non- No matter what arrangements are made, the performing loans, only a small proportion of the failure of a bank poses a potentially serious problem for borrowers whose loans are delinquent or who are in a weak financial condition. 2. Vulnerable banks 1 Such borrowers may find it difficult, if not impos- Number of banks sible, to find a new lender. Often, the FDIC faces the unpleasant task of foreclosing on their loans. Even borrowers in relatively good financial condition experience some inconvenience, at the least, as they must document their financial position and history to new and understandably wary lenders. In states where a number of agricultural banks have failed, efforts have been made to help such borrowers to establish new credit lines. Groups such as state extension services, bankers' organizations, and the Farm- 1. Banks with nonperforming loans greater than total capital. See note to chart 3 for definition of nonperforming loans. Data are as of ers Home Administration have been working to end of quarter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Agricultural Banks under Stress 439 3. Delinquency rates on loans at agricultural banks nonaccrual status (in general, loans on which Percent some loss is expected) plus renegotiated loans and other loans past due 90 days or more. In turn, as chart 3 also indicates, most of the growth in nonperforming loans has occurred in its nonaccrual component, which is the most seriously delinquent category. By the end of 1985, 2.8 percent of all loans at agricultural banks were in nonaccrual status, compared with less than 1 percent three years earlier. The quality of loans at agricultural banks has deteriorated most in a 12-state area comprising IlMllIllUHHRHHaHa^^ the western Corn Belt, the Great Plains (exclud- 1983 1984 1985 ing Texas), and the northern Rocky Mountain Data are as of end of quarter. Total delinquent loans are nonperregion. In each of the 12 contiguous states of this forming loans and other loans on which payments are past due 30 days or more. area, which stretches from Missouri, Oklahoma, Nonperforming loans are loans in nonaccrual status, other loans on and Colorado northward to the Canadian border, which payments are past due 90 days or more, and loans that have been restructured or renegotiated to provide a reduction of either the average proportion of loans in nonaccrual interest or principal because of a deterioration in the financial position status at agricultural banks exceeded the national of the borrower. Loans are in nonaccrual status if (1) they are maintained on a cash average of 2.8 percent. Three-fifths of the nabasis because of deterioration in the financial position of the borrow- tion's agricultural banks are located in this area. er, (2) payment in full of interest or principal is not expected, or (3) principal or interest has been in default for a period of 90 days or more These banks have just over half the total loans at unless the obligation is both well secured and in the process of agricultural banks nationally but account for collection. two-thirds of the nonaccrual loans. Their relatively poorer loan experience is a fairly recent development. Only two years earlier, their expevulnerable banks are likely to fail. But as the rience differed little from the national norm. number of banks in a vulnerable position in- Loan charge-offs (net of recoveries) at agriculcreases, the number of failures is likely to follow. tural banks also have risen sharply, parallelling At the end of 1985, the 170 vulnerable agricul- the rise in nonaccrual loans. At all agricultural tural banks accounted for more than half of all banks, net charge-offs in 1985 averaged 2.1 pervulnerable banks and for 3.5 percent of all agri- cent of total loans (computed as a percentage of cultural banks. They were concentrated in five the loans outstanding at the end of the year). states—Iowa, Kansas, Minnesota, Missouri, and Losses were up substantially from 1.2 percent in Nebraska—which together accounted for 100 of 1984 and an average of only 0.2 percent during the banks. the 1970s. At agricultural banks in the 12-state Rising delinquency rates on the loans of agri- area experiencing the most stress, loan losses cultural banks have been the leading indicator of were somewhat higher, averaging 1.5 percent in vulnerability and failures. As chart 3 shows, 1984 and 2.7 percent in 1985. delinquency rates on all loans at agricultural The farm loans of agricultural banks have banks have been trending upward since banks contributed heavily, and disproportionately, to began reporting these data in December 1982. At total loan losses and delinquencies. Nationally, the end of 1985, total delinquencies (nonperform- agricultural banks charged off 3.5 percent of their ing loans plus other loans past due 30 to 89 days) farm production loans during 1985. Even after were 7.3 percent of outstanding loans. While the these large charge-offs, 4.6 percent of farm proshorter-term delinquencies have shown a strong duction loans were in nonaccrual status. Both seasonal pattern that peaks each year in March, rates are nearly three times the corresponding they have increased little over time. Most of the rates for other loans at agricultural banks. Thus, growth in total delinquencies has occurred in though many of the nonfarm borrowers at agrinonperforming loans, which include loans in cultural banks are closely tied to the farm econo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

440 Federal Reserve Bulletin • July 1986 my, the farm loans as such are mainly responsi- they rise sharply each winter and then fall back ble for the current troubles at these banks. during the spring and summer. At all banks nationally, delinquency and Banks charged off an estimated $1.3 billion of charge-off rates on farm production loans actual- farm production loans during 1985, about 3.7 ly have been running slightly above the rates on percent of loans outstanding. These very large such loans at agricultural banks, in part reflecting losses followed the already high charge-offs of very unfavorable farm loan experience at large 1984, estimated to have been $900 million, or 2.2 banks in California, which leads the nation in percent of the outstanding loans. Many of the farm production. At these large banks, farm loans charged off presumably had been in nonacproduction loans account for only about 3 per- crual status, but, as already noted, nonaccrual cent of total loans—about the same as the aver- loans nevertheless continued to rise. And as long age for all banks in both California and the as nonaccrual loans are rising, losses are likely to nation. Diversification is enabling these banks to remain high. weather their severe farm loan losses. Nationally, delinquency rates on farm production loans at banks have been in a pronounced The Genesis of Farm Financial Difficulties uptrend, as chart 4 shows. At the end of 1985, 10.5 percent of such loans were delinquent, How did farm financial problems arise? What compared with 8.0 percent a year earlier. As with proportion of farm debt is in trouble? In addressthe loans at agricultural banks examined in the ing such questions, one encounters several seempreceding section, most of the upward climb in ing paradoxes. total delinquencies has occurred in the most For example, most farms—including most of seriously delinquent nonaccrual component, the farms in financial difficulty—have been genwhich rose to 6.0 percent of outstandings in erating operating profits; that is, their proceeds December 1985, from 4.1 percent a year earlier. from the sale of the commodities produced (plus Other past-due farm production loans have any government payments) have exceeded their shown less upward trend but contribute a current expenses of production and marketing, marked seasonal swing to total delinquencies as and substantial sums have remained as the earnings of labor, management, and capital. In the aggregate, such net farm earnings averaged $43 4. Delinquency rates on farm production loans at billion annually in 1980-85. After imputed reinsured commercial banks turns to the labor and management of farm operators and their families, an estimated $23 Percent billion per year remained as net earnings of farm capital. The existence of operating profits from farming has important implications. One result is that most land now farmed will continue to be farmed—except for marginal land on which unit costs are high because of low yields or special requirements—and thus farm output will not be reduced much by market forces. Also, operating profits have enabled extensive farm lending operations to continue. In 1985, according to estimates based on the Federal Reserve's quarterly national survey of the terms of bank lending to 1983 1984 1985 farmers, banks made 3 million farm production loans totaling $52 billion, with an average maturi- Data are as of end of quarter. Farm production loans are "loans to finance agricultural production and other loans to farmers," excluding ty of about eight months. Banks entered the year loans secured by farm real estate. For definitions of the various with $39 billion of outstanding farm production classes of delinquent loans, see the note to chart 3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Agricultural Banks under Stress 441 loans and ended the year with $35 billion out- Bank stands to lose an appreciable portion of the standing after charge-offs of about $1 billion; funds it lent. implicitly, repayments during 1985 totaled $55 Fortunately, a minority of farmers are in this billion. Most of these loans were used to pur- position. Only about 4 percent of farmland chase operating inputs, and therefore they were changes hands annually; much is sold only at repaid from gross proceeds. Operating profits retirement or death. Therefore, more than half of provided a cushion that helped to ensure repay- all farmland was inherited or purchased at prices ment of these loans and thus facilitated such well below those of the recent boom, and many borrowing. farmers have little or no mortgage debt. In view of the operating profits, how can some But more than a few farmers and lenders who farmers already have been bankrupted and oth- face an outcome like that in the example now ers be experiencing financial stress? In most ask, in effect, why they bought or financed land cases, the answer is simple: the substantial sum at prices so high that earnings even at the time of remaining after operating expenses are met still purchase failed to cover debt service. Many of falls short of covering scheduled interest and them, along with many analysts and observers, principal payments on debt that these farmers have come to believe that such purchases or had incurred to purchase, expand, or improve loans were based on little substance and much their farms. speculation. They now believe that a psychology In just a few years, these farmers found them- of inflationary expectations pushed the value of selves in a financial bind, as the following exam- farmland far beyond its earning power in the ple illustrates. On a midwestern "family" farm 1970s and early 1980s. In this view, prices of land consisting of 500 acres of cropland capable of were bid up without regard for the return from its producing 140 bushels of corn per acre, annual production, with prices soaring merely because operating profits (before interest or land charges) buyers expected them to go still higher. This may exceed $1 per bushel, thus producing more description of the boom fails on all counts: it than $70,000 as annual earnings of capital, labor, misstates the nature of the expectations that and management. If the farmer has little or no provided a rational basis for the prices paid as debt other than seasonal borrowings to cover well as the nature of the speculative risk actually operating expenses, he should not be financially taken. Beneath the mistaken assessment lies a stressed, and many farmers are in that position. failure to appreciate the extent to which asset But if the farmer purchased this land in 1981 at prices respond, inevitably, to seemingly small the going price of $3,000 per acre, for a total of changes in the trend of their earnings. $1.5 million, and financed his purchase with a mortgage, his current financial position may be Land Price Dynamics. If expected earnings precarious. Suppose the farmer made a down- from land are flat, then farmland will be priced at payment of $450,000 from the sale of a smaller a relatively high yield, logically about equal to farm and obtained a 30-year, variable-rate Feder- the interest rate on farm mortgages. Thus if the al Land Bank loan for the remaining 70 percent mortgage rate is 10 percent, land expected to of the purchase price—fairly typical financing. produce constant earnings of $100 per acre (line Today, only five years later, this farmer still E in chart 5) might sell for 10 times earnings, x owes about $1 million. At the current interest represented by P . Its earnings at the time of x rate of 12 percent, the annual interest charge is purchase would cover interest charges, as many $120,000. Operating profits fall nearly $50,000 lenders now say they should have insisted earnshort of covering this charge. The straightfor- ings do on farmland they financed in the 1970s. ward remedy is to sell the farm and repay the But for nearly five decades after 1932, earnings debt, thereby salvaging the downpayment. But it of farmland maintained a strong upward trend is too late for this course, because such land now and, logically, farmland prices kept pace. After sells for perhaps $1,500 per acre, and so the farm more than a generation of steadily rising land is now worth only $750,000. The farmer's net rents and prices, expectations that these trends worth is now -$250,000, and the Federal Land would continue were entrenched among partici- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 Federal Reserve Bulletin • July 1986 5. An example of the response of land prices to a chart—and to sellers as well as buyers—it is change in the trend of expected earnings worth more. Because participants in the land Dollars per acre market include expected earnings growth in their E = Land earnings projected total return, such land is priced at a P = Land price higher multiple of the present earnings (the solid line P rather than the dashed line). The general 2 relationship holds that the land price equals the present earnings divided by the rate of return sought minus the growth rate of earnings. In this example, land price = $100 / (.10 - .04) = $1,667. In tending to set a present price of $1,667, the land market produces the same expected total yield of 10 percent, but only 6 percent is in the form of current earnings and the remaining 4 percent takes the form of capital appreciation. Thus buyers borrowing at 10 percent have an unavoidable shortfall in cash flow in the early years after purchase. But if the earnings grow as expected, their cash flow first becomes adequate, and later bountiful. If lenders would not finance buyers with such prospects, few land E2 purchases would be financed when land earnings EI + are in a pronounced uptrend. As the uptrend in earnings becomes established, land prices respond, and a history of successfully financed • • • • • • • H M VM 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 land purchases accumulates, land buyers and Year their lenders are in reality speculating that the trend in earnings will continue. Purchases of land entail such speculation no matter what the expants in farmland markets. Analysts found the pected earnings trend, but the risk is probably trends attributable to factors such as productivi- greater when the expected growth rates are highty gains and population growth that seemed er. For example, if the projected earnings path E 2 likely to remain at work. Supply and demand does not materialize as time goes by, and it conditions for farm output in the 1970s appeared becomes evident that the path is actually Ei, then to confirm these analyses. the land price will collapse from P 2 to P\. Between the mid-1950s and the late-1970s, Conversely, if expected earnings growth earnings of farm assets, after adjustment for changes from zero, as in E\, to 4 percent, as in inflation, rose at an average annual rate of at E 2 , land prices will respond by rising 67 percent. least 4 percent. Expected earnings growth at this This power of a change in the earnings trend rate is illustrated by line E in chart 5. Land must be appreciated; otherwise, as the huge 2 prices will tend to rise at the same pace, but change in the price of land is in the process of which P line correctly indicates the price level occurring, observers and even many market par- 2 that the land market will produce? Could land ticipants may conclude, wrongly, that land prices with such expected earnings growth be pur- have lost all relationship to the earnings trend. chased for the same price of $1,000 as the land with flat earnings, enabling its earnings to cover The Land Boom. All of these elements were interest on the mortgage as buyers and lenders present in the land boom and collapse since 1970, would wish? Clearly not. As is obvious from the as depicted in stylized form in chart 6 (in which it Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Agricultural Banks under Stress 443 6. Stylized representation of the farm land boom fall toward the new logical level, P , only 10 3 Dollars per acre times the new flat earnings: E = Land earnings P = E /(A0 - 0) = 10 £ - P = Land price 3 3 3 Note that earnings in this depiction did not decline; the change in their trend sufficed to trigger the downward revaluation of farmland. Incidence of Financial Stress among Farmers The massive adjustment of farmland prices to current expectations of, at best, relatively flat future earnings—the principal economic adjustment now under way in agriculture—has meant financial trouble for operators who borrowed for expansion or improvements when land prices were higher and expectations for earnings were brighter. High interest rates during most of the period since 1978 have compounded their problems. What proportions of farmers and of the total farm debt are enmeshed in these difficulties? Estimates made shortly after the onset of difficulties used available balance sheet data and 0 1 2 3 4 5 6 7 8 9 10 11 112 '13 14 15 16 reasoned, in the absence of individual data on Year earnings and interest charges, that farmers with relatively high ratios of debt to assets were probably financially stressed. Typically, such is again assumed that land buyers were looking analyses indicated that about one-third of the for a total return of 10 percent). The period began operators of commercial farms were financially with a continuation of the trend of the preceding troubled, and that they owed more than half the decade, with expected land earnings growing at farm debt.1 Since such estimates were made, an annual rate of 3 percent (Ej) and land thus new surveys have provided more complete inforselling at about 14 times those earnings: mation on the financial condition of farmers, including data on their operating profits as well P, = / (.10 - .03) = 14.3 Ei. as their balance sheet positions. These data In year 3, earnings doubled and their expected indicate that a significant number of heavily growth rate rose to 5 percent (E ). Land prices indebted farmers have been generating enough 2 started rising sharply toward the new logical operating profits to service their debt. Converseprice level P , 20 times the new expected earn- ly, some lightly indebted farmers are neverthe- 2 ings: less in financial difficulty because their operations have been unprofitable. On balance, one P = E /(A0 - .05) = 20 E . 2 2 2 The chart arbitrarily shows land prices taking 1. For such analyses by the author, see "A Financial five years to reach P and then moving along that Perspective on Agriculture," Federal Reserve Bulletin, vol. 2 path for another four years. Then in year 10, 70 (January 1984), pp. 8-10; and "The Incidence of Financial Stress in Agriculture," AEI Occasional Papers (American expected annual earnings growth fell from 5 Enterprise Institute for Public Policy Research, December percent to zero (E ). Soon, land prices began to 1984). 3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin • July 1986 7. Farm assets and debt the process of being "worked through" in many Ratio scale, billions of 1985 dollars ways, among them partial sale of assets, restructuring of maturities, renegotiation or return of land contract purchases, partial write-offs by lenders, foreclosures, and bankruptcies. Many farm credit analysts believe that considerably more than half of the total troubled debt of this boom-bust cycle remains to be "worked through." In the process, total farm debt is likely to decrease significantly (barring the return of low or negative real interest rates) as farm assets tend to pass from heavily indebted to less indebted hands (in some workouts, the same farmer). Chart 7 shows that the reduction is under way •mKI • i I H I I I l i i H M H H H H H H H n H H I M Hi Percent and also provides a comparison with previous cyclical experience. As in the somewhat parallel circumstances of the early 1920s, debt reduction has lagged the decline in land prices, temporarily increasing the farm sector's debt-asset ratio. In that earlier cycle, debt reduction eventually continued well into the period in which farm income • miiiiiaminiiaimiiiifliimmiaimimamiiHia 1920 1940 1960 1980 and land prices had started on a new upward Data exclude CCC loans. The implicit price deflator for personal trend. consumption expenditures was used to adjust the data for changes in the general level of prices. SOURCE. Economic Indicators of the Farm Sector: National Financial Summary, 1984, ECIFS 4-3, Economic Research Service, U.S. Implications for the Banking System Department of Agriculture, January 1986. Data for 1985 were assembled from reports available as of May 1986. analysis of these data estimated that, at the With more of the farm debt at banks likely to beginning of 1985, about one-sixth of the opera- work its way through the delinquency and tors of commercial farms were in vulnerable or charge-off process during coming years, is there stressed financial positions in the sense that a significant threat to the banking system? Such a there appeared to be a current or intermediate- threat seems highly unlikely because farm loans term threat of default on their debt. This group are only a small proportion of total loans in the owed about one-third of the total debt and nearly banking system and because agricultural banks two-fifths of the bank debt reported by farm account for only a small share of total banking operators in the survey.2 resources. The troubled debt from past investments is in Table 1 presents some measures of the importance of current problems in farm loans and at agricultural banks. In each comparison, the po- 2. For details of the estimate made by the author, see tential impact on the banking system appears "Farm Financial Experience and Agricultural Banking Experience," in The Problems of Farm Credit, Hearings before limited in spite of the relatively greater difficulthe Subcommittee on Economic Stabilization of the Commit- ties of the farm loans or agricultural banks. For tee on Banking, Finance and Urban Affairs, U.S. House of example, all of the 4,850 agricultural banks hold Representatives, 99 Cong., 1 sess., October 23, 1985. Other recent analyses that took farm profitability into account only 5.5 percent of the total loans in the banking include Nancy E. Barickman, "Indicators and Characteris- system. Thus, while the proportion of their loans tics of Financially Stressed Iowa Farm Operators: A Multi- in nonperforming status is much above the avervariate Approach" (M.S. thesis, Iowa State University, age, they still account for less than 10 percent of 1985), and a series of reports by Danita Allen in Successful Farming, including "The Successful Farming Index," vol. 83 all nonperforming loans at all the nation's banks. (October 1985), pp. 11-13; and vol. 84 (June 1986), pp. 19-21; Similarly, farm production loans are now only and "Profitable farms have high debt ratios, too," vol. 84 (May 1986), p. 10. 2.5 percent of total bank loans, and that propor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Agricultural Banks under Stress 445 1. Agriculture's share of loans and loan problems in performing loans is below the average of 4.5 the banking system, December 31, 1982-85 percent at all agricultural banks. The same rela- Percent tionship holds for net loan charge-offs in recent Class of loan 1982 1983 1984 1985 years. Furthermore, the banks reporting relatively large charge-offs tend to be among the banks Loans at agricultural banks as a percentage of loans at all banks that still have high levels of nonperforming loans in their portfolio. TTTToooottttaaaallll 6.8 6.8 6.4 5.5 DDDDeeeelllliiiinnnnqqqquuuueeeennnntttt 5.9 6.7 8.1 8.4 A majority of agricultural banks thus have NNNNoooonnnnppppeeeerrrrffffoooorrrrmmmmiiiinnnngggg 5.1 6.3 8.5 9.5 avoided major farm loan problems during the NNNNoooonnnnaaaaccccccccrrrruuuuaaaallll 2.7 4.1 6.9 8.4 same period when others have experienced them Farm production loans as a percentage and more than 100 have failed. Such striking of loans at all banks variation is evident within each farming region TTTToooottttaaaallll 3.5 3.4 3.2 2.5 and state and even within towns that have more DDDDeeeelllliiiinnnnqqqquuuueeeennnntttt 3.2 4.2 5.2 5.7 NNNNoooonnnnppppeeeerrrrffffoooorrrrmmmmiiiinnnngggg 2.7 4.2 6.3 7.5 than one bank. When asked about such varia- NNNNoooonnnnaaaaccccccccrrrruuuuaaaallll 2.4 4.5 7.0 8.4 tion, bankers and analysts are quick to attribute Agricultural banks are defined in the note to chart 1; delinquent it to differences in farm lending and management loans, in the note to chart 3; and farm production loans, in the note to philosophy during the late 1970s and early 1980s. chart 4. Few of the data regularly reported by banks bear on their lending and management philosotion is likely to shrink. Therefore, while the phies, but some relationships in such data may proportion of farm production loans in nonper- be indicative of their attitudes. For example, forming status is three times the average for all bankers who choose to maintain a relatively low loans, the nonperforming farm loans still account loan-deposit ratio, and thus implicitly prefer to for only 7.5 percent of total nonperforming loans keep a relatively large cushion against possible at all banks. Thus the problems of farm loans and adverse credit or liquidity developments, may agricultural banks are indeed severe, but their also be more likely to favor those borrowers who effect on the banking system as a whole is likely exhibit the same attitude in their own farm or to remain limited. business ventures. If so, then agricultural banks with a low loan-deposit ratio should tend to have Variation among Agricultural Banks a lower percentage of problem loans in their portfolios than those with a high loan-deposit Agricultural banks vary greatly in the relative ratio. This relationship is evident, and to a rather magnitude of their loan delinquencies and losses. marked degree, as table 3 suggests. The relation- As table 2 shows, only a few agricultural banks ship holds as well within each size group of have a very high loan delinquency rate, and most agricultural banks. Agricultural banks that mainhave comparatively low rates. At roughly two- tained a relatively conservative outlook seem to thirds of the banks, the relative amount of non- 3. Nonperforming loans as a percentage of total 2. Percentage distribution of agricultural banks loans at agricultural banks, by loan-deposit ratio by proportion of nonperforming loans, and by size class of bank, December 31, 1985 December 31, 1982-85 Loan-deposit ratio of bank (percent) SSiizzee ccllaassss Nonperforming loans as a pe l r o c a e n n s t a a g t e b o a f n k t otal 1982 1983 1984 1985 mm ((aa dd iill ss oo ll ss ii ll ee oo llaa tt nn ss rr ss ss )) ii oo nn ff bbaa AA nn ll kk ll ss L th e a s n s 35 4 9 t o 50 6 4 t o 65 7 9 t o 8 m 0 o r o e r 35 Total 100.0 100.0 100.0 100.0 All banks .... 4.5 2.5 3.9 4.4 5.1 5.7 Under 2.0 58.7 52.8 44.7 36.4 2.0 to 4.9 29.5 31.9 33.4 33.1 Under 10.... 4.4 2.8 3.6 4.8 4.7 4.8 5.0 to 9.9 10.0 12.3 16.4 21.6 10 to 24 4.6 2.0 3.9 4.6 5.7 5.2 10.0 to 14.9 1.4 2.3 3.9 5.6 25 to 49 4.5 2.8 4.0 4.5 5.0 5.6 15.0 to 19.9 .3 .6 1.1 2.1 50 to 99 4.6 3.0 3.9 4.5 5.4 5.2 20.0 and over .1 .2 .5 1.2 100 and over. 4.4 1.2 3.7 3.8 4.2 6.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin • July 1986 have fared well as farm financial troubles devel- rose from 9.2 percent in 1980 to 9.6 percent at the oped, and apparently a majority of the banks end of 1985. followed that course. Table 4 shows trends since 1970 in the way agricultural banks as a group earned and disposed of their income, with all data expressed as FINANCIAL EXPERIENCE a percentage of total assets. The banks coped OF AGRICULTURAL BANKS well with the introduction of money market certificates of deposit in the late 1970s, which led Increases in loan losses and nonperforming loans to a marked increase in their interest expense have adversely affected the net income of agri- when interest rates rose in national money marcultural banks. Other factors have been present, kets and depositors shifted funds into these inhowever, and a careful look at trends in the struments. Their interest income increased even components of income and expenses is needed to more rapidly, helped in 1980 and 1981 by relasort out the various effects. tively high yields on those assets invested in On the whole, agricultural banks were relative- short-term securities. Since 1981, their net interly profitable for many years preceding the cur- est margin has narrowed as interest received has rent difficulties. From 1970 through 1982, their fallen somewhat more than interest paid to deaverage return on equity hovered between 14 and positors. After factoring in noninterest income 16 percent. Within this narrow range, their most and expenses, which are both less important at profitable years were those in which market agricultural banks than at other banks, relative interest rates were high and they thus reaped total net income before provision for loan losses high rates on their short-term investments. has also declined somewhat from its peak in During the 1970s, loan losses were very low 1980. each year—even years of general business reces- But the provision for loan losses has increased sion—and only 1 percent of the banks reported sharply since 1980, reaching 1.2 percent of assets negative earnings in any given year. In 1981, the in 1985, and before-tax income has felt the full proportion of agricultural banks reporting nega- brunt of that increase. Average income taxes fell tive earnings began to rise, reaching 13 percent in almost to zero in 1985 as many agricultural banks 1984 and 18 percent in 1985. The average return received refunds under the provision that perto equity fell from 16 percent in 1980 to 6 percent mits banks to carry losses back as much as 10 in 1985, although one-half of the banks earned 10 years on their federal tax returns. In effect, percent or more in 1985. And, with earnings therefore, the reduction in income taxes has positive on average, the banks were able, absorbed roughly one-third of the increase in through retention of earnings, to boost their loan losses. Thus, although after-tax income has capital at a faster rate than their assets were fallen considerably from its peak in 1980, it has rising. The ratio of total capital to assets thus remained high enough to permit the agricultural 4. Income, expenses, and profits of agricultural banks as a percentage of total assets, 1970-85 Item 1970 1971 1972 1973 1974 1975 1976 1977 Interest income 5.5 5.4 5.1 5.2 6.4 6.3 6.6 6.7 LESS: Interest expense 2.1 2.3 2.3 2.5 3.0 3.1 3.3 3.4 EQUALS: Net interest margin 3.3 3.2 2.8 2.7 3.5 3.2 3.3 3.3 PLUS: Noninterest income .4 .4 .3 .3 .3 .3 .3 .3 LESS: Noninterest expense, excluding loan losses 2.2 2.2 2.1 2.0 2.1 2.2 2.2 2.2 EQUALS: Net income before loan losses 1.5 1.4 1.2 1.5 1.7 1.4 1.4 1.4 LESS: Provision for loan losses .1 .1 .1 .1 .1 .1 .1 .1 EQUALS: Net income before taxes 1.4 1.2 1.1 1.4 1.5 1.3 1.3 1.3 LESS: Income taxes .4 .3 .3 .4 .4 .3 .2 .3 EQUALS: Net income .8 .9 .9 1.0 1.1 1.0 1.1 1.0 LESS: Cash dividends .3 .3 .2 .2 .2 .2 .3 .2 EQUALS: Retained earnings .7 .7 .7 .8 .9 .8 .8 .8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Agricultural Banks under Stress 447 banks to pay dividends to their stockholders at 8. Average effective interest rates on farm the rate in effect since 1981. (On average, even non-real-estate loans made by commercial banks the agricultural banks with operating losses paid Percent dividends in 1985, although at less than half the rate of the banks with operating profits.) By 1985, however, the margin by which dividends were covered was slim, and so the banks added relatively little in retained earnings to their capital. Interest Rate Trends. Rates on farm loans made by banks have dropped substantially since their cyclical peak in 1981, as chart 8 shows. The Quarterly estimates for loans made in the first full week of the chart makes clear, however, that the decline at second month of the quarter. SOURCE. "Survey of terms of bank lending," Statistical Release small banks has lagged that at larger banks, at E.2, Board of Governors of the Federal Reserve System. which changes in farm loan rates—both up and down—have followed more closely changes in their funds in fixed-rate certificates of deposit the prime rate at large banks. with maturities of six months or longer, the Some observers have assumed that small average cost of funds has adjusted only gradually banks have maintained higher rates on farm to changes in national money market rates. loans recently in order to cover some of the higher loan delinquencies and losses they have Farm Loan Trends. In 1985, outstanding farm experienced on these loans. However, as has loans at banks joined in the general decline of been noted, at agricultural banks the difference total farm debt. Underlying trends in farm debt between interest expense and interest income are more clearly evident if the widely fluctuating has not widened during the period since 1980, loans from the Commodity Credit Corporation when loan losses soared. Thus the recent lag in are excluded from the totals, as shown on lines 3, the downward trend of interest rates on farm 9, and 17 of table 5. Overall farm mortgage debt loans at small banks appears attributable mainly (line 9) and production debt (line 17) have exhibto a corresponding lag in the downward move- ited similar patterns, rising rapidly through 1981 ment of interest paid to depositors. Because and then more slowly in 1982 and 1983 before small banks have limited control over their de- beginning a decline in 1984 that accelerated in posit inflows or maturities, they tend, prudently, 1985. Charge-oflfs accounted for a minor portion to base their loan rates on their average (rather of the recent decline; the major part reflected than marginal) cost of funds. And, because their loan repayments. Some were involuntary repaydepositors have maintained a substantial share of ments reflecting foreclosure and the like. On the 4. Continued Item 1978 1979 1980 1981 1982 1983 1984 1985 Interest income 7.0 7.8 9.3 11.0 11.4 10.3 10.6 10.0 LESS: Interest expense 3.6 4.1 5.3 7.1 7.5 6.5 6.9 6.2 EQUALS: Net interest margin 3.5 3.7 4.0 4.0 3.9 3.8 3.7 3.8 PLUS: Noninterest income .4 .4 .4 .5 .5 .5 .5 .5 LESS: Noninterest expense, excluding loan losses 2.3 2.3 2.4 2.5 2.6 2.6 2.6 2.7 EQUALS: Net income before loan losses 1.6 1.8 2.0 1.9 1.8 1.7 1.6 1.7 LESS: Provision for loan losses .2 .2 .2 .3 .4 .6 .8 1.2 EQUALS: Net income before taxes 1.4 1.5 1.7 1.6 1.4 1.1 .8 .6 LESS: Income taxes .3 .3 .4 .4 .3 .2 .1 .0 EQUALS: Net income 1.1 1.2 1.3 1.2 1.1 1.0 .7 .5 LESS: Cash dividends .3 .3 .3 .4 .4 .4 .4 .4 EQUALS: Retained earnings .8 .9 .9 .8 .7 .6 .3 .1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Federal Reserve Bulletin • July 1986 5. Change in farm debt outstanding, 1980-85 Percent MEMO: Amount Type of debt and lender group outstanding, 1980 1981 1*82 1983 1984 1985 December 31, 1985 (billions of dollars) 1 Total debt 10 11 8 -1 -2 -3 205.2 2 Commodity Credit Corporation -2 61 93 -30 -19 99 17.3 3 Total debt excluding CCC 10 9 4 2 -1 -8 187.8 4 Banks 2 2 8 8 3 -6 46.9 5 Farm Credit System 17 16 5 0 -2 -13 59.2 6 Life insurance companies 6 1 -2 -1 -2 -5 11.8 7 Farmers Home Administration 21 19 3 1 6 6 27.3 8 Individuals and others 8 6 2 -1 -7 -11 42.6 9 Real estate debt 12 10 4 2 -1 -6 105.6 10 Banks 1 -4 0 10 9 12 11.4 11 Federal Land Banks 21 21 9 2 1 -9 44.6 12 Life insurance companies 6 1 -2 -1 -2 -5 11.8 13 Farmers Home Administration 8 13 4 4 6 4 10.6 14 Individuals and others 8 5 1 1 -7 -9 27.2 15 Non-real-estate debt 8 11 11 -3 -3 -1 99.6 16 Commodity Credit Corporation -2 61 93 -30 -19 99 17.3 17 Non-real-estate debt, excluding CCC 8 8 4 1 -1 -11 82.2 18 Banks 2 4 10 8 1 -10 35.5 19 Production credit associations 9 7 -3 -6 -7 -22 14.1 20 Federal Intermediate Credit Banks 22 13 -5 -2 3 -39 .5 21 Farmers Home Administration 31 23 2 -1 7 7 16.8 22 Individuals and others 7 6 4 -3 -5 -15 15.4 SOURCE. Data through 1984 are from Economic Indicators of the search Service, U.S. Department of Agriculture. Data for 1985 are Farm Sector: National Financial Summary, 1984, Economic Re- from reports and estimates available in May 1986. other hand, over the past year, some farmers in were restructured using real estate as collateral. good financial position have found that the rates Recently, more of the gain probably has reprethey would get upon renewing their certificates sented refinancing of Federal Land Bank loans; of deposit and money market investments were however, the total increase of $1 billion in farm so much below the rate charged on their farm mortgage loans at commercial banks during 1985 mortgage or other loans that they used these explains at most a small part of the total payfunds to repay their loans. down of $5 billion experienced by Federal Land The volume of farm mortgage loans at com- Banks. Later this year, farm mortgage loans mercial banks has constituted one of the few made by banks will be included in the Federal exceptions to the general downward trend. It still Reserve's quarterly survey of terms of bank represents less than one-fourth of farm loans at lending to farmers, and more information will banks, but has risen by around 10 percent in each thus become available on the purposes and other of the past three years. Initially, the gain may characteristics of this growing component of have consisted largely of production loans that farm debt. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

449 Life Insurance Companies in a Changing Environment This article was prepared by Timothy Curry and products offered to the public have changed Mark Warshawsky of the Board's Division of dramatically. Important regulations governing Research and Statistics. Mr. Curry is now with types of investments and loan rates have been the Federal Savings and Loan Insurance Corpo- eased. Tax rules have been redesigned. Investration. ment managers of insurance company portfolios have sought to lessen their exposure to move- Major changes in the life insurance industry have ments in interest rates by shortening maturities occurred over the past two decades, especially in and by matching more closely the maturities of response to the high and volatile interest rates of assets and liabilities. Liquidity building also has the late 1970s. As the inflation rate climbed from become more important, manifested by in- 4 percent in 1971 to more than 13 percent in 1980, creased holdings of short-term investments and rising interest rates gave households opportuni- the purchases of long-term securities that have ties to earn rates of return much higher than active secondary markets; and life companies those on traditional cash-value life insurance have increased the equity component of their policies, causing household savings to flow away portfolios in order to boost returns. from such products. Life insurance companies have been more Voluntary terminations of ordinary life insur- successful in competing for pension reserves. ance policies in force (otherwise known as lapses The increase in pension reserves at life compaand surrenders) accelerated as interest rates and nies reflects both a generalized movement toinflation climbed, and sales of new policies ward savings in the form of pensions and the slowed. The liquidity of life companies was fur- ability of the industry to compete with other ther strained as policyholders borrowed heavily pension fund managers. against accumulated cash values at contractual Life insurance companies in the United States rates well below market yields. According to traditionally have been important financial intersurveys conducted by the American Council of mediaries. The life insurance and pension re- Life Insurance, policyholder loans absorbed serves they provide are savings instruments that more than 22 percent of funds available for help households accumulate wealth for retireinvestment by the general accounts of life com- ment and bequests. Life companies in turn use panies in the early part of 1980, compared with the premiums paid for these products to invest in only 4 percent in early 1978. Regulations were equities and bonds, thus efficiently helping to slow to adapt to the changing environment, cre- transform a large portion of the financial assets ating a drag on the ability of the industry to offer of households into real capital investment by competitive products for household savings. business and government. Although insurance Moreover, in addition to the liquidity problems, companies have made a successful transition into the effective tax burden of the industry was a new and more competitive economic environgrowing with the inflation-boosted rise in nomi- ment, their smaller share of household savings nal interest rates. has reduced their role in the intermediation pro- The life insurance industry has adapted to the cess. However, despite currently low and stable new conditions through major changes in its rates of inflation and interest, the industry products and investment strategy and more re- is likely to continue using its new strategies cently has been helped by changes in its tax and to compete for its lost share of household regulatory position. The types of life insurance savings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin • July 1986 This article reviews the decline of life insur- 1. Interest and inflation rates ance reserves relative to other types of house- Percent hold assets and the growing importance of pension reserves to life insurance companies. It examines how changes in the economic climate in recent years have influenced investment strategies of these institutions, and it assesses the earnings performance and prospects for the industry. An appendix discusses changes in the federal taxation of life companies. 1955 ' 1965 ' ' ' 1975 ' ' ' ' 1985 1. On 20-year Treasury securities. DECLINE IN LIFE INSURANCE RESERVES 2. Calculated from the consumer price index. Climbing inflation rates and high yields on alternative investments (chart 1) have created greater these trends have been in evidence since the competition for household savings, and the evi- 1950s. Adding the two categories of reserves dence suggests that the life insurance industry together shows that the total share of life compahas lost part of its share of the market for nies in household asset holdings dropped from household savings. Life insurance reserves rep- 9.2 percent in 1965 to 8.5 percent in 1985. resent the cash value of life insurance policies, and pension reserves at life companies derive from individual purchases of annuity policies and Low Returns on Cash-Value Policies payments by employers for group annuities under pension plans administered by life insurers. Several reasons have been cited to explain the As table 1 indicates, life insurance reserves relative decline in life insurance reserves; for the dropped steadily from about 7 percent of the most part the explanation lies in the fact that total financial assets held by households in 1965 traditional life insurance contracts with savings to about 3 percent by 1985. Pension reserves at components have offered policyholders a sublife companies rose from about 2 percent of stantially lower return, after taxes, than alternate assets in 1965 to about 5 percent in 1985. Both investments. This point is illustrated by compar- 1. Distribution of financial assets of households, by type of asset, selected years, 1952-85 Percent except where otherwise noted Securities Pension Reserves TToottaall CCoorr-- Private sponsors LLLiiifffeee ppoorraattee YYYeeeaaarrr DDDeeepppooosssiiitttsss ggoo mm UU vv ee .. ee SS nn rr .. tt nn -- mmuu aa pp nn nn aa dd ii ll cc ii-- ee pp qq CC oo uu oo rr ii aa tt rr ii -- tt ee ee ss OOtthheerr iii rrr nnn eee sss sss uuu eee rrr rrr aaa vvv nnn eee ccc sss eee A l t i e f d e r m e d c i o n b m is y - - Other ss GG pp oo mm oo vv nn ee ee ss nn rr oo tt nn rr -- ss Percent o B f i d ll o io ll n a s r s bboonnddss panies 1952 27.2 13.0 7.1 32.7 2.1 11.6 1.5 1.9 2.9 100 521.2 1955 24.2 9.8 6.9 40.5 1.7 9.8 1.6 2.5 3.0 100 707.7 1960 24.4 7.6 7.8 40.6 1.5 8.8 1.9 3.9 3.5 100 973.2 1965 25.7 5.4 6.4 43.3 1.3 7.3 1.9 5.0 3.7 100 1,466.4 1970 28.3 5.5 7.6 37.8 1.6 6.8 2.1 5.7 4.6 100 1,925.5 1975 36.7 5.4 8.3 25.4 1.8 6.5 2.9 7.3 5.7 100 2,541.1 1980 36.0 5.5 6.3 26.4 1.9 4.8 3.8 9.2 6.1 100 4,497.5 1984 37.8 5.9 6.5 22.6 1.8 3.7 5.0 9.4 7.3 100 6,613.1 1985 35.1 5.9 7.4 24.2 1.7 3.3 5.2 9.7 7.5 100 7,624.1 NOTE: Here and in the following tables, data may not add to totals SOURCE. Flow of funds accounts, Board of Governors of the because of rounding. Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Life Insurance Companies in a Changing Environment 451 ing the after-tax return on a cash-value insurance These sales costs are considerably larger than for policy to the after-tax return on an alternate plan other forms of financial investment. Vendors of that likewise combines saving and insurance— other financial products progressively lowered saving through periodic investments in a mutual the cost of their marketing strategies through the fund buying newly issued corporate bonds and use of new, lower-cost distribution systems, insurance through the purchase of a term life while life companies retained their high-cost, policy. Three reasons explain why a cash-value labor-intensive system. policy produces a lower after-tax return. Third, an after-tax differential in returns ap- First, upon purchasing a cash-value policy, the pears. Interest income earned in a mutual fund is individual receives the average rate of return on taxed under the individual income tax, whereas the insurer's portfolio. When rates in the market interest income on a cash-value life insurance rose markedly, a big gap emerged between cur- investment is tax deferred, and in many cases tax rently prevailing rates and the average return on free, at the individual level. However, on a cashlife insurer portfolios, which contained a large value policy, federal tax is levied on interest share in fixed-rate bonds purchased many years income at the corporate level. Before 1958, fedago. Yields on life insurance investment plans eral income taxes paid by life companies were were further restrained by policy loans that were minimal. The level of taxation increased with the available to policyholders at fixed low rates. passage of the 1959 Life Insurance Company Tax These loans were drawn when market yields and Act, which continued to operate, with modificaalternative borrowing costs rose, forcing life tions, until 1984. Under the 1959 act, life compainsurers to substitute these low-earning loans for nies became subject to tax at the normal corpohigher-yielding market instruments in their port- rate tax rate on a portion of investment income. folios. Thus, when newly issued bonds were The portion depended on the amount by which yielding 12 percent in 1980, life insurers' portfo- the rate of return on the insurer's portfolio lios were earning 8 percent (table 2). exceeded its promised rate of return on life Second, the returns on cash-value policies and insurance policies (see the appendix for details). alternate investments were spread further apart During the 1960s and early 1970s, when interest by differences in marketing costs. Life compa- rates were fairly stable, most investment income nies have traditionally distributed their policies escaped untaxed. Toward the end of the 1970s, through sales agents, who receive a large initial when interest rates increased far above promised sales commission and smaller renewal commis- rates, the portion of investment income subject sions based on premiums paid for the policy. to taxation at the corporate rate increased substantially. The combination of these three factors meant 2. Annual rates of return on invested assets of life that cash-value life insurance was no longer an companies and on corporate bonds, selected attractive investment for individuals. The afteryears, 1950-84 tax differential in returns between investment in Percent life insurance and investment in a mutual bond Invested Corporate fund decreased, and the accumulation of life Year assets of bonds2 life insurers' insurance reserves as a proportion of personal disposable income declined (chart 2). 1950 3.13 2.62 1955 3.51 3.06 As mentioned earlier, policy loan activity in- 1960 4.11 4.41 1965 4.61 4.49 creased as market interest rates rose, and these 1970 5.34 8.04 low-rate loans helped depress returns on insurer 1975 6.44 8.83 portfolios. Moreover, the surge in loans, along 1980 8.06 11.94 1984 9.65 12.71 with the acceleration in policy surrenders, had the additional effect of severely reducing the 1. After investment expenses but before federal income taxes. liquidity of life insurers and their ability to meet Separate accounts are excluded. 2. New issues of Aaa corporate bonds. claims. During periods when market interest SOURCE. For life company assets, American Council of Life Insurrates exceeded the regulatory 5 to 8 percent rate ance; for corporate bonds, Moody's Investors Service. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Federal Reserve Bulletin • July 1986 2. Return differential and accumulation of life The Response of Life Companies insurance reserves and Other Changes In response to the sagging sales and rising surrenders of traditional cash-value policies, life companies developed and marketed new types of cash-value plans. These new products offer rates on the savings portion of the policy that are more closely aligned with current rates on market credit instruments. For example, under one of these new types, the universal life plan, a policyholder pays for insurance coverage and separate- 1. Difference in after-tax returns between cash-value life insurance and direct investment in corporate bonds. ly places money in a savings account. The sav- 2. Ratio of the accumulation of life insurance reserves to disposable ings portion generally carries a rate of interest personal income (four-quarter moving average). SOURCE. Mark Warshawsky, "Life Insurance Savings and the that varies with prevailing rates on short-term After-Tax Life Insurance Rate of Return," Journal of Risk and credit instruments, subject to a minimum rate. Insurance, vol. 52 (December 1985), pp. 585-606. The policyholder can deposit into or withdraw on policy loans, policyholders exploited an arbi- from this account and vary the size of coverage trage opportunity by borrowing against their and the amount and timing of premium paycash values to invest directly in assets earning ments. current market rates. Some policyholders used Variable life is another plan that reflects curthese loans as a cheap form of borrowing to rent market rates. The size and timing of premifinance consumption. The level of policy loan um payments are fixed, and the rate of return activity, as measured by the ratio of net policy varies depending on investment results. A miniloans extended during the quarter to available mum death benefit is guaranteed in the policy, cash value, is highly correlated with the size of and the benefit may be higher if the underlying the arbitrage opportunity, as measured by the investments have appreciated. Policyholders difference between the current market rate on may choose to place their investments in stocks, certificates of deposit and the average contractu- bonds, or money market assets of various types. al rate available on policy loans (chart 3). During According to industry estimates, premiums on the 1979-82 period of escalating interest rates, universal and variable life policies accounted for policy loans outstanding increased more than 50 almost 42 percent of new premiums on life insurpercent (from $35 billion to $53 billion) and ance sales during 1985, up from 3 percent four equaled almost 25 percent of life insurance re- years earlier. In recent years some companies serves at the end of 1982. have also adjusted the premium and dividend schedules on new issues of traditional cash-value 3. Policy loan activity and interest rates policies to reflect yields on newly issued bonds Ratio Percent rather than average portfolio rates of return. Life companies have also found less costly methods of marketing their products. Many now sell their policies through direct-mail offerings, and some sell them through stock brokers or commercial banks—methods thought to be cheaper than maintaining a large sales staff. Outside the corporation, changes in federal tax I I 1 I i I t I t f I I i 1 I ' f : I I 11997700 11997755 11998800 11998855 laws and in state regulations helped life companies compete for savings. The tax changes, made 1. Ratio of policy loans extended (net of repayments) to available in 1982 and 1984, reduced effective marginal tax cash value. 2. The rate on certificates of deposit less the rate on policy loans. rates on investment in life insurance. The SOURCE. For ratio of loans to cash value, flow of funds accounts, changes in state regulations, made in response to Board of Governors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Life Insurance Companies in a Changing Environment 453 the rampant growth of policy loans, allowed new lion, and between 1980 and 1984 they almost policies to be sold with floating loan rates. Most doubled to $342 billion, surpassing the level of life insurance contracts sold after 1982 have this life reserves. As a share of total liabilities, indifeature, and recent loan activity has subsided vidual and group annuity reserves increased with the decline in interest rates. However, the from 22 percent to 47 percent in the 1960-84 existence of the older policies, with fixed loan period. rates, still leaves the industry somewhat vulnera- The growth of the pension business at life ble to large increases in interest rates. insurance companies has been part of an overall trend during the past decades in which employers are weighting their compensation to employ- THE RISE OF ees in the direction of pension coverage. This is PENSION RESERVES reflected in the fact that all types of retirement annuities at life insurance companies and pay- In the past two decades the balance of activity at ments to private pension plans not administered life companies has shifted from life insurance by life insurers have been rising in relation to products to group pension funds and individual disposable personal income. The passage of the annuities. This shift is evidenced on the indus- Employee Retirement Income Security Act of try's balance sheet by the changing nature of 1974 (ERISA) further increased the general level policy reserves, which constitute the major part of investable funds generated by pension plans of life company liabilities. Life insurance re- by tightening the mandatory funding provisions serves have grown relatively slowly, making up a of plans. declining percentage of total life company liabil- Although the level of pension reserves at life ities (table 3). The share of total liabilities back- companies has risen steadily in the last 35 years, ing individual life policies fell by half in the 1960- the position of life companies relative to other 84 period, dropping from 60 percent of total pension managers in competing for pension busiliabilities in 1960 to about 30 percent in 1984. In ness has fluctuated. The share of life insurers in contrast, reserves backing individual and group total private (that is, non-government-sponannuities have grown sharply. During the 1970s, sored) pension reserves declined to a little more reserves in this category increased by $132 bil- than one-quarter in 1965 (table 4). By 1985, 3. Distribution of liabilities of life insurance companies, by type of liability, selected years, 1960-84 Dollars in billions 1960 1970 1980 1984 TTyyppee ooff lliiaabbiilliittyy Dollars Percent Dollars Percent Dollars Percent Dollars Percent Policy reserves Life insurance, total 70.8 59.2, 115.4 55.7 197.9 41.3 225.9 31.2 Individual Ordinary 58.9 49.3 100.1 48.3 175.3 36.3 202.5 28.0 Industrial 10.6 8.9 12.3 5.9 12.6 2.6 12.8 1.7 Group1 1.3 1.1 3.1 1.5 10.0 2.1 10.6 1.5 Annuities, total 26.9 22.4 48.9 23.6 181.4 37.8 341.7 47.0 Group 15.0 12.5 34.0 16.4 140.4 29.2 254.6 35.0 Individual2 11.9 9.9 14.9 7.2 41.0 8.6 87.1 12.0 Health insurance .9 .7 3.5 1.7 11.0 2.3 16.6 2.3 Total policy reserves 98.6 82.4 167.8 81.0 390.3 81.4 584.2 80.5 Other obligations and unassigned surplus3 21.1 17.6 39.5 19.0 88.9 18.6 138.8 19.2 Total liabilities 119.6 100 207.3 100 479.2 100 723.0 100 1. Includes reserves for credit life insurance. such dividends, securities valuation reserves, special surplus funds, 2. Includes reserves for individual annuities and supplementary unassigned surplus, capital and retained earnings of stock companies, contracts with and without life contingencies. and other items. 3. Includes policy dividend accumulations and funds set aside for SOURCE. American Council of Life Insurance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 Federal Reserve Bulletin • July 1986 4. Distribution of reserves of private pension plans, administrative burdens of pension fund manageby plan issuer, selected years, 1950-85 ment, prompted many smaller corporate sponsors to turn over management of the funds to Reserves (billions of dollars) insurance companies. SShhaarree ooff YYeeaarr Plans lliiffee An additional factor in the recent growth of issued Other iinnssuurreerrss by life plans Total ((ppeerrcceenntt)) pension business at life insurance companies is insurers the large number of terminations by corporate 1950 5.6 6.5 12.1 46.3 sponsors of overfunded pension plans. The re- 1955 11.3 18.3 29.6 38.2 cent boom in bond and stock markets has in- 1960 18.9 38.1 57.0 33.2 1965 27.3 73.6 100.9 27.1 creased the value of pension assets beyond the 1970 41.0 110.4 151.4 27.1 actuarial liabilities of many plans. Many plan 1975 72.3 186.6 258.9 27.9 sponsors are choosing to terminate a defined 1980 172.0 412.5 584.5 29.4 1984 331.6 623.3 954.9 34.4 benefit plan and replace it with a defined contri- 1985 394.1 738.5 1132.6 34.8 bution plan in order to recapture surplus assets.1 SOURCE. Flow of funds accounts, Board of Governors. Such sponsors generally purchase annuities from life companies in order to provide the promised benefits to retired annuitants and vested plan however, their share had bounced back to almost participants. Life insurance industry officials re- 35 percent. The shifts reflect changes in the tax, port that a significant portion of their pension regulatory, and institutional environment of the business in recent years has been generated from life insurance companies competing for pension such terminations. For example, during the business. 1984-85 period, corporations canceled approxi- In the 1950s, life companies paid corporate mately 460 plans, with $9.4 billion in assets being taxes on a portion of investment income earned used to purchase annuities from life companies, according to the Pension Benefit Guaranty Coron pension reserves and were burdened with poration. contraints on portfolio investment strategies. Other fund managers were not so encumbered. Another important source of funds for life The Life Insurance Company Tax Act of 1959 insurance companies in recent years has been the eliminated the tax disparity by canceling the tax sale to individuals of single-premium deferred for life companies. The investment constraints annuities.2 These annuities feature the tax debecame looser beginning in the early 1960s, when ferred build-up of funds at current market rates. most states began to permit life companies to In 1982, all issuers sold approximately $9 billion invest pension fund assets in separate accounts in single-premium deferred annuities. The banknot subject to the overall investment limitations ruptcies of two providers that previously had for life insurance assets; in particular, life com- accounted for the bulk of the deferred annuities panies could invest in common stocks up to 100 market caused investors to shy away from these percent of assets held in separate accounts. investments in late 1983; sales have picked up Also, in crediting investment returns to group again as companies with solid reputations have annuities, life companies began in the 1960s to entered the market. use an interest rate related to current yields on new investments rather than the average investment return on the total portfolio. With such changes in tax, regulatory, and institutional fac- 1. A defined benefit plan states the benefits to be received tors, life companies were able to compete with by employees after retirement. The employer's contributions under such a plan are actuarially determined. Under a defined bank-administered and other pension funds more contribution plan, the contribution rate is fixed and benefits effectively in the late 1960s and early 1970s. The to be received by employees after retirement depend to some passage of ERISA in 1974 gave an additional extent upon investment earnings experience. push to life companies seeking pension fund 2. A deferred annuity provides for periodic income payments to begin at some future date for a specified number of business. This legislation, which tightened the years or for life. A single-premium annuity is purchased with responsibilities of fiduciaries and increased the one lump-sum payment at the time the agreement is made. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Life Insurance Companies in a Changing Environment 455 TRENDS IN INVESTMENT STRATEGIES active secondary markets. Second, in term structure—the companies have shortened the maturi- Historically, insurers have attempted to match ty of their long-term assets to lessen the interestthe maturity or duration of their investments to rate risk caused by disintermediation and to the long-term nature of their liabilities. The liabil- enhance asset-liability matching with new insurities represent the anticipated future payment of ance products. Third, in equity—life companies death and retirement benefits. Until the 1970s have placed more emphasis on direct equity these payments were reasonably predictable investments, either through whole ownership or over time. Cash flow, derived from premium joint ventures, in order to boost portfolio yields. income and interest on investments, was always sufficient to meet benefit payments and operating expenses and still provide for increases in com- Greater Liquidity and Shorter Maturities pany surplus and capital. Thus, a portfolio manager operating under the usual condition of a In recent years, life companies have sought positive yield curve would almost always find it greater liquidity by increasing their holdings of optimal to obtain the higher yields attached to short-term credit market instruments such as illiquid long-term securities rather than to sacri- Treasury bills and commercial paper. At yearfice income by investing in relatively liquid end 1980, cash and short-term assets held by life short-term instruments. companies totaled $14 billion, or about 3 percent The watershed period of the late 1970s and of total assets (table 5). By year-end 1985 these early 1980s generated sweeping changes in the assets had jumped to more than $40 billion, portfolio strategies of life companies. These new accounting for about 5 percent of the total. Life investment trends have been concentrated in insurance companies have also enhanced liquidthree areas. First, in liquidity—stung by the ity through the acquisition of readily marketable disintermediation caused by the high level of intermediate and long-term U.S. government and interest rates prevailing in the late 1970s and agency debt instruments; since 1980, holdings of early 1980s, life companies have become more such securities have increased from 3 percent to sensitive to the possible need for liquidity; al- 11 percent of total assets. though long-term assets still dominate their port- Life companies traditionally have been the folios, the companies have strengthened short- most important source of long-term business term holdings and purchased assets that have finance in the United States; in 1985, for exam- 5. Distribution of assets of life insurance companies, by type of asset, selected years, 1970-85 Percent Type of asset 1970 1975 1980 1981 1982 1983 1984 1985 Short-term Cash and other Corporate securities. Long-term Corporate bonds 34 35 35 34 33 32 32 32 Government securities U.S 2 2 3 4 5 7 9 11 State, local, and foreign 3 3 3 3 3 4 4 3 Corporate stock1 8 10 10 9 10 10 9 9 Mortgages 36 31 27 26 24 23 22 21 Real estate 3 3 3 4 4 4 3 4 Policy loans 8 8 9 9 9 8 8 7 Other2 4 5 6 7 7 8 8 8 Total 100 100 100 100 100 100 100 100 MEMO: Total assets (billions of dollars) 207.3 289.3 479.2 525.8 588.2 654.9 722.9 816.2 1. Market value. ment income due and accrued, and oil, mineral, timber, and other 2. Includes due and deferred premiums, interest and other invest- equity investments. SOURCE. American Council of Life Insurance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin • July 1986 pie, they held more than half of all outstanding smaller percentages of their investable cash flow: corporate bonds. Corporate bonds have re- 25 to 30 percent in 1984, down from a historical mained a relatively stable share of life company level of 40 to 50 percent. The primary explanaportfolios since 1970, averaging about one-third. tion for this trend is the increased preference of However, the same forces affecting other aspects life companies for securities with liquid secondof investments by life companies—fear of further ary markets. Another possible explanation is the disintermediation and the changing nature of life reduced supply of traditional, private-placement company products—have also generated signifi- issues, especially among lower-rated industrial cant changes in the nature of their corporate issuers. Many of these firms have found that bond purchases. One trend has been for life public-market investors increasingly accept their companies to purchase corporate securities that securities, as evidenced by the large issuance of have much shorter average maturities. Before so called "high-yield" or "junk bond" securities the late 1970s the maturities of most corporate in the public market in recent years. Also, Rule securities averaged 15 to 20 years or more. In 415 of the Securities and Exchange Commission, recent years, average maturities generally have which permits shelf registration, may have dentbeen less than 12 years. In addition, some corpo- ed the private placement market because it alrate securities now have variable rates; these lows issues to be brought to the public market as securities, even though they have a multiyear quickly as to the private market in most cases. lifespan, have much lower price risk because the adjustment of the coupon rate to market yields The Swing to Equities ensures a price close to par. The participation of life companies in the pri- Mortgage loans for commercial property also vate placement market has also changed. Life have been an important investment outlet for life companies purchase corporate bonds in the pri- companies, reaching 36 percent of their total vate placement market through forward commit- assets in 1970. In the late 1970s life companies ments to issuers, and the 50 largest life compa- began to deemphasize this type of loan, so that nies have been the major outlet for this market. by year-end 1985 it accounted for only about 21 Issuers in the private placement market are pri- percent of total assets. The shift away from marily smaller, less well known nonfinancial mortgage lending in part reflects an increased corporations that require flexible loan terms and preference by life companies to make equity special provisions. Of all the purchasers in the investments in real estate, which have more than market, only the major life companies have the doubled over the past seven years, reaching $29 large, highly specialized investment staffs neces- billion during 1985. The principal allure has been sary to analyze such transactions. The other the fact that the rental income tends to rise with purchasers, including smaller insurance compa- the general level of prices, partly because built-in nies, public and private pension funds, and bond escalator clauses are a common feature of rental funds and mutual savings banks, tend to follow agreements. the large insurance companies to participate in The share of corporate equities in the assets of private placement offerings. Other institutional life companies, which was only about 4 percent investors have been largely precluded from par- in 1960, began to expand rapidly during the 1970s ticipating in private placements by the lack of and reached about 9 percent by year-end 1985. secondary market trading. Much of this increase stemmed from aggressive For life insurance companies, the private competition for pension plans and the previously placement market tended to be the preferred mentioned allowance granted by states for life avenue for acquisitions of corporate bonds. Gen- companies to use common stocks to fund such erally, the main attractions were rates higher plans. than those of public-market bonds, attractive call Life companies have invested an increasing option features, and protective covenant inden- share of resources in other types of equity owntures. In recent years, however, life companies erships, often through joint ventures and limited have been committing to private placements partnerships. Investments such as oil and gas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Life Insurance Companies in a Changing Environment 457 explorations, leveraged buyout pools, and ven- $43 billion, up from less than $4 billion during ture capital projects have become common with 1970. Premiums on individual and group annulife insurers in recent years. The assets in this ities increased from 8 percent to about 21 percent "other" category have grown from about $28 of total gross income during the 1970-84 period. billion to $65 billion, a 130 percent increase, Between 1970 and 1984 the share of total during the past five years. As a share of their income derived from investments rose from 21 total investments, other investments by life com- percent to almost 29 percent. The annual rate of panies increased from about 6 percent to almost income on the portfolio of life companies, which 8 percent over this period. consists mostly of interest income on bonds and Other, "off-balance-sheet" techniques are be- mortgages, dividends on stocks, and rent on real ing used by life insurance companies to build estate, has been steadily rising; it increased liquidity and reduce rate risk exposure. Many nearly one-half percentage point to more than 9Vi companies "liquify" their mortgage portfolios percent in 1984 (see table 2). This primarily via collateralized mortgage securities. Interest reflected the retirement of bond issues with low rate swaps convert fixed-rate loans into floating- coupons and the reinvestment of the proceeds in rate loans. Risks arising from interest rate com- issues with higher yields. mitments in the private placement market are Despite the volatile conditions in financial hedged within reasonable time limits through markets and the liquidity problems of many life financial futures and options. insurers, the industry remained profitable throughout the 1970s and into the 1980s. Life insurance companies earned more than $131/4 LIFE INSURANCE INDUSTRY billion after taxes in 1980, a year of severe INCOME STATEMENT disintermediation in the industry (table 7). This experience contrasts most notably with that of Life insurance companies receive funds from the thrift industry, which suffered large losses two primary sources: premiums paid by policy- during the period of high interest rates. The holders and earnings on investment. For reasons difference between the two industries is primarialready discussed, income from policyholders ly attributable to different growth patterns and has shifted away from life insurance and toward the ability of the life companies to adjust the annuity and health insurance plans. Indeed, the maturity structure of their assets. Also, earnings fastest growing share of total income for life growth in the life insurance industry in recent companies over the past decade has come from years has been due to pension, term life, and individual and corporate retirement products health insurance products, which are relatively such as single-premium deferred annuities, cor- insensitive to changes in market interest rates. porate thrift plans, and guaranteed investment The persistent liability-asset mismatch of the contracts (table 6). During 1984, premium in- thrift industry makes earnings in that industry come from annuity products amounted to about very sensitive to changes in interest rates. 6. Distribution of gross income of life insurance companies, by source of income, selected years, 1950-84 Dollars in billions 1950 1960 1970 1980 1984 Dollars Percent Dollars Percent Dollars Percent Dollars Percent Dollars Percent Life insurance 6.2 54.9 12.0 52.3 21.7 44.2 40.8 31.2 51.3 24.9 Annuities .9 8.0 1.3 5.8 3.7 7.6 22.4 17.1 42.9 20.8 Health insurance 1.0 8.8 4.0 17.4 11.4 23.3 29.4 22.5 40.7 19.7 Investments 2.1 18.6 4.3 18.7 10.1 20.6 33.9 25.9 59.2 28.7 Other 1.1 9.7 1.3 5.8 2.1 4.3 4.3 3.3 12.1 5.9 Total 11.3 100 23.0 100 49.1 100 130.9 100 206.1 100 SOURCE. American Council of Life Insurance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

458 Federal Reserve Bulletin • July 1986 7. Income statement for the life insurance industry, selected years, 1960-84 Billions of dollars Item 1960 1965 1970 1975 1980 1984 Gross income 23.0 33.2 49.1 78.0 130.9 206.1 Benefit and interest payments 10.9 15.5 24.1 35.7 56.3 87.0 Additions to policy reserves 4.8 7.1 9.3 19.4 35.7 61.8 Commissions 1.6 2.3 3.3 5.3 9.2 15.3 Home and field office expenses 2.3 3.1 4.8 7.4 12.1 18.4 Net income 3.4 5.2 7.6 10.2 17.6 23.6 Taxes Federal income .6 .7 1.2 1.9 2.5 2.6 All other .5 .8 1.2 1.8 2.7 Net income after taxes 2.8 4.0 5.6 7.1 13.3 18.3 Dividends Policyholders 1.9 2.8 3.8 5.1 8.1 11.4 Shareholders .1 .2 .5 .7 1.4 3.2 Increases in surplus and retained earnings .8 1.0 1.3 1.3 3.8 3.7 SOURCE. American Council of Life Insurance. PROSPECTS FOR THE INDUSTRY toward increased pension coverage, while terminations of plans administered by nonlife manag- The near-term outlook for the flow of funds ers and coincident purchases of group annuities through the life insurance industry is still depen- will likely continue as a result of the very recent dent in part on a forecast of the level of interest surges in the bond and stock markets. rates. Policy loans and terminations of older In the longer term, the life insurance industry cash-value life insurance policies will increase if will try to improve its competitive position in the interest rates rise. If, however, interest rates changing market for financial products and serremain stable or fall, the flow of funds to life vices. It will continue to expand the range of companies will grow. Policy loans and termina- insurance products as well as design new chantions may be expected to decline, and sales of nels of distribution. New combinations of insurnew insurance products will continue to be ance and investment, running the gamut of risk strong. Regardless of the future level of interest and return tradeoffs, are likely to emerge. The rates, the pension aspect of the business should number of joint ventures with other financial continue to improve. Pension reserves at life institutions for the distribution of insurance companies will benefit from the secular trend products probably will grow. APPENDIX: FEDERAL TAXATION OF LIFE INSURANCE COMPANIES We describe here the federal income tax as exceeded its promised rate of return on life applied to life insurance companies from 1959 to insurance policies. Under the so-called Menge the present. Passage of the 1959 Life Insurance formula, the taxed percentage of investment Company Tax Act raised taxes for life insurers, earnings would be 10 times the percentage-point subjecting them to the statutory rate for corpora- difference between the portfolio return and the tions but on a "taxable income" basis specially promised rate.3 The promised rate, which is designed for life companies. Income taxes were imposed on a portion of investment earnings, 3. The formula is named for Walter Menge, an actuary who conducted studies on the relationship between interest with the portion dependent on the amount by rates and the level of life insurance reserves necessary to pay which the rate of return on the insurer's portfolio off all expected future claims. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Life Insurance Companies in a Changing Environment 459 regulated by state insurance commissioners, was interest paid and, therefore, deductible without less than 4 percent for most of the period during limit from taxable income. However, mutual which the 1959 act operated. Thus, if a company companies, which are owned by policyholders, earned 6 percent on its portfolio and had a could not deduct from their taxable income divipromised rate of 4 percent, it paid taxes on 20 dends paid to holders of these new policies. By percent of its nonpension portfolio income; given 1982 it was quite clear that the 1959 act had a marginal corporate tax rate of 46 percent, taxes become inequitable and needed to be changed. A of the company would average 9 percent of its stopgap law that corrected the most obvious nonpension portfolio income. The effective tax failures of the 1959 act operated from 1982 until a rate would rise, however, as the rate of return on complete reform package was assembled in 1984. the portfolio increased. The stopgap measure imposed four main During the 1960s and early 1970s when interest changes: (1) The section of the tax code that rates were fairly stable, the Menge formula pro- permitted the election for modified coinsurance duced a tax burden for life companies in line with was repealed. (2) A geometric formula replaced tax burdens on other financial products. Toward the Menge arithmetic formula in the calculation the end of the 1970s, when market interest rates of taxable investment income. (3) Approximately rose far above promised rates, the Menge formu- 80 percent of policyholder dividends were made la produced substantial increases in the effective deductible expenses. (4) Universal life policies tax rate on insurance company earnings. For were required to have minimum amounts of life example, with a 10 percent portfolio yield, 60 insurance coverage to qualify for tax deferrals in percent of the investment income of the compa- order to prevent their being used primarily as ny would be taxed at the corporate tax rate; thus, savings vehicles. savings in the form of life insurance would have a The stopgap measure lowered the efffective lower after-tax yield than direct investment in a tax rate of the industry and restored competitive bond fund for anyone whose personal tax rate balance between stock and mutual companies. It was less than 28 percent (0.46 x 0.60). also clarified the tax status of the universal life By 1979 the marginal tax rate on investment policy, thereby spurring sales of this new prodincome of life insurance reserves had increased uct. dramatically because of the Menge formula. In The Tax Reform Act of 1984 completed the 1980, some companies discovered that modified revision of life insurer taxation, which became coinsurance arrangements could reduce signifi- similar to that for other corporations, with taxcantly their federal tax liabilities under the 1959 able income defined as gross income less deducact.4 Also, the introduction of new insurance tions. Under the 1984 act, however, there are products interacted with provisions of the 1959 two major exceptions to the similarity. One is a act so as to upset the delicate balance in the special life insurance company deduction that industry between stock and mutual companies. was created in the belief that without it, life Stock companies, which are owned by share- insurers would not be competitive with other holders, had a competitive advantage in sales of financial institutions. The special deduction is new universal life insurance products. These generally equal to 20 percent of taxable income. companies could treat interest credited in excess The other exception arises from the fact that all of the promised rate on these new products as dividends to policyholders are deductible. In order to "level the playing field" between stock and mutual companies, the deduction allowed to mutual companies for policyholder dividends is reduced by the "differential earnings amount." 4. Reinsurance is the assumption by an insurer of all or The reduction imposes a tax at the company part of a risk previously carried by another insurer. Modified level on the portion of dividends being paid to coinsurance is a form of reinsurance whereby the original insurer maintains the reserves on the policies and the assets policyholders for ownership of the mutual comheld in relation to the policies, and all or a portion of the pany, while the portion of dividends being paid investment income derived from those assets is paid to the as returned premiums or savings on better-thannew insurer as payment for the reinsurance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin • July 1986 expected experience is tax free at the company changes in the level of nominal interest rates. level. These changes should enable life companies to The tax law changes have reduced the federal compete more effectively for household savings tax burden on life insurance companies and have under volatile as well as stable economic condimade the burden less likely to be influenced by tions. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

461 Industrial Production Released for publication May 15 over the month except for oil and gas well drilling, which continued to decline. At 125.1 Industrial production increased an estimated 0.2 percent of the 1977 average, the total index in percent in April following revised declines of 0.8 April was only 0.8 percent higher than it was a and 0.7 percent in February and March respec- year earlier. tively. The April increase was concentrated in In market groups, output of consumer goods motor vehicles for consumer and business use, increased 0.6 percent in April, after declines in as output rebounded from its March decline. the preceding three months, as auto assemblies Elsewhere, production on balance changed little rose to a seasonally adjusted annual rate of 8.1 Ratio scale, 1977= 100 140 TOTAL INDEX - - x • " ' 120 _ Products •— __ — — — — 100 — / Materials ^ / 1 1 1 1 1 1 80 1 1 1 1 1 1 140 MANUFACTURING MATERIALS Durable — Nondurable - 120 —\ —Cs Nondurable V — 100 Energy Durable \y 1 1 1 1 1 1 _L INTERMEDIATE PRODUCTS Business supplies ,J y / \ Construction supplies J I I 240 240 OIL AND GAS DRILLING FINAL PRODUCTS 200 200 160 Defense and space 160 Business equipment 120 140 100 120 100 Consumer goods 60 1980 1982 1984 1980 1982 1984 1986 All series are seasonally adjusted. Latest figures: April. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin • July 1986 1977 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Group 1986 1985 1986 AAAppprrr... 111999888555 tttooo AAAppprrr... Mar. Apr. Dec. Jan. Feb. Mar. Apr. 111999888666 Major market groups Total industrial production 124.9 125.1 .8 .3 -.8 -.7 .2 .8 Products, total 132.2 132.6 .4 .2 -.9 -.7 .3 1.3 Final products 131.6 132.1 .5 .0 -1.1 -1.0 .4 .6 Consumer goods 122.2 123.0 1.2 -.3 -.5 -.8 .6 2.9 Durable 113.2 115.5 -.3 -2.7 2.0 3.6 Nondurable 125.5 125.8 1.2 -.4 -.6 -.1 .2 2.7 Business equipment.. 140.2 141.1 -.2 1.0 -1.0 -.9 .6 - .7 Defense and space... 178.5 179.5 .0 -.8 -1.4 1.0 .5 5.5 Intermediate products.. 134.3 134.2 .2 1.1 -.3 .2 -.1 3.8 Construction supplies 123.7 123.9 -.2 2.7 -.4 .1 .2 5.6 Materials 114.8 114.9 1.4 .3 -.6 -.6 1 - 1 Major industry groups Manufacturing 128.1 128.7 .5 .6 -.6 -.7 .5 1.7 Durable 127.8 128.8 .5 .4 -.9 -1.1 .7 .4 Nondurable 128.4 128.6 .5 .8 -.3 -.2 .2 3.4 Mining 103.2 102.0 .5 .1 -2.0 -2.1 -1.1 -7.0 Utilities 114.2 114.0 3.8 -1.6 -1.9 1.6 -.1 .4 NOTE. Indexes are seasonally adjusted. million units following a 7.7 million unit rate in higher than that of a year earlier—but has March. Production of durable consumer goods changed little since January. Defense and space other than motor vehicles again changed little, equipment, which had declined around the turn while output of nondurable consumer goods of the year, rose in April for the second succesedged up 0.2 percent. Output of business equip- sive month. Output of materials was again little ment rose 0.6 percent after declines of about 1 changed and, on balance, has been stagnant percent in each of the previous two months. The since mid-1984. increase was spurred by a gain of 6.0 percent in In industry groups, manufacturing output rose transit equipment; besides a rise in output of 0.5 percent in April, with durables growing 0.7 autos for business use, production of trucks and percent and nondurables 0.2 percent. The conaircraft also advanced. Production of manufac- tinuing decline in mining, precipitated largely by turing, power, and commercial equipment was the drop in oil and gas well drilling, was someabout unchanged and has remained sluggish for what less steep this month; in April, mining about IV2 years; output of construction, mining, output decreased 1.1 percent after declines of and farm equipment continued to contract and about 2 percent in each of the previous two was almost 10 percent below the level of a year months. Production at utilities was little earlier. Production of construction supplies re- changed. mained at a high level in April—almost 6 percent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

463 Statements to Congress Statement by Paul A. Volcker, Chairman, Board The existing provisions of the Garn-St Gerof Governors of the Federal Reserve System, main Act provide for emergency interstate acquibefore the Subcommittee on Financial Insitu- sitions of failed banks of $500 million or more. tions Supervision, Regulation and Insurance of Companion provisions for thrift institutions are the Committee on Banking, Finance and Urban decidedly more liberal both with respect to size Affairs, U.S. House of Representatives, May 7, and other criteria. Both provisions have been 1986. decidedly helpful in dealing with points of strain. But the banking structure and economic conditions in states heavily impacted by energy and I appreciate the opportunity to appear before this agricultural problems strongly indicate that these committee today to discuss H.R. 4701, the Fi- authorities need to be strengthened to provide nancial Institutions Emergency Acquisition further assurance that problems—actual and po- Amendments of 1986. That legislation would tential—can be dealt with expeditiously and in a make a number of important, but still limited, manner that will avoid a potentially contagious changes to the emergency provisions of the and debilitating loss of confidence within a state. Garn-St Germain Depository Institutions Dereg- Specifically, we are concerned that in states in ulation Act of 1982. which major banking organizations take the form For your convenience, I have attached to my of multibank holding companies, we have the statement a short, and I hope readable, explana- tools to deal with banks within that holding tion of the bill.1 In this statement, I will focus on company structure as a coherent whole rather the principal issues involved—the urgent need than piece by piece. We also believe that, in for action, and the means of balancing the effec- some situations, we can act more expeditiously, tiveness of the proposed measures with appropri- with less risk to confidence and to other banks ate protection of the interests of individual and with less cost to the FDIC insurance fund, if states. mergers with out-of-state institutions can be ar- The federal banking regulators—the Federal ranged before a bank actually fails or requires Reserve Board, the Federal Deposit Insurance FDIC assistance. Corporation (FDIC), and the Office of the Comp- Specifically, our strong recommendation is troller of the Currency—have reached a common that the emergency acquisition powers be exjudgment that the tools we have now for dealing panded to accomplish the following: (1) allow the with emergency situations involving failed or interstate acquisition of a multibank holding failing banks, including those within sizable bank company, or some or all of the banks within a holding companies, are not fully adequate. That holding company, when a significant portion of judgment was reached in the light of strains and the banking assets of a holding company are pressures involving banks in entire states or impaired; (2) reduce the bank asset size criterion regions of the country that, as a result of the for such interstate acquisitions to $250 million; turmoil in energy and agricultural markets, face and (3) permit acquisition of failing as well as unusually severe economic conditions. failed banks. As members of this committee are aware, a series of developments over this decade have adversely impacted banks and led to an unusual 1. The attachments to this statement are available on number of failures and more generalized strains. request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Disinflation, strong competition, and rapid Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

464 Federal Reserve Bulletin • July 1986 changes in technology and market values have all could raise unwarranted concerns about other, played a part. basically sound banks, and lead to a contagious Taken as a whole, the banking system has and spreading loss of confidence. It is that conresponded constructively and resiliently to these tingency that we want to deal with and toward pressures. There is, indeed, highly encouraging which the proposed legislation is directed. The evidence that the system as a whole is now powers sought are precautionary. Perhaps they gaining strength. Specifically, for most banks, will, in the end, not have to be used. I hope not. capital ratios have improved, earnings have in- But it surely would be imprudent to rely on that creased, and nonperforming assets have been hope. Recent earnings reports and other difficulreduced. ties at a few institutions point to the danger. A Nevertheless, in certain areas of the country, prompt congressional response will, in itself, particularly where the economy is heavily depen- provide a strong message of reassurance. dent on agriculture and energy, these strains The case for this legislation is, I believe, have been particularly great; and they have been widely acknowledged in the states most directly aggravated by the sharp declines in energy, agri- concerned. The debate, as I have observed it, cultural, and land prices. It is mainly in those revolves around specific provisions of the proareas that we face a compelling need to be in a posed legislation that balance the need for effecposition to deal with problem situations in a tive action against the concerns of states, and manner that will protect, rather than undermine, banks within a state, that they be able to prethe strength and stability of the whole, including serve their ability to determine the future of their the vast majority of institutions that are fully state's banking structure. capable of dealing with their own problems so In striking that public policy balance, the Conlong as general confidence is maintained. gress has already concluded that interstate bank- Fortunately, the banks, large and small, that ing acquisitions are appropriate in certain emerhave served now-troubled energy and farming gency situations—those involving failed banks of businesses have typically been in a relatively $500 million or larger. In addition, separate prostrong position. They have generally been char- visions of present law permit out-of-state acquiacterized by historically high capital ratios, good sitions of both failed and failing mutual savings earnings, and ample liquidity. The fact that they banks meeting the minimum asset size requirehave been able to draw on these strengths has ment of $500 million and of savings and loan provided a strong first line of defense in dealing associations without any restrictions as to size. I with the present pressures. Ordinarily, that would also point out that current provisions of should be adequate. law allow the interstate or interindustry acquisi- Supplementing their natural strength, the Fed- tions of thrift institutions "where severe finaneral Reserve is, of course, fully prepared to cial conditions exist which threaten the stability provide assistance as part of the process of of a significant number of insured institutions or making necessary adjustments to pressures of insured institutions possessing significant fithrough its discount window on liquidity and nancial resources." changes in deposit flows. The availability of that Those provisions of existing law were adopted kind of normal and appropriate assistance by the because the Congress recognized the need for central bank, backstopping the resources and constructive preventative action to assure that a resourcefulness of the banking organizations serious particular situation did not spread and get themselves, should in itself enable solvent insti- worse. The same motivation lies behind the tutions to adjust to the situation. present proposal. While the present situation, in However, there is one remaining potential our judgment, requires some further extension of danger to stability of banking in these heavily authority for interstate bank acquisitions, care impacted areas—and therefore to the entire has been taken to limit the scope of that authority economies of some states or regions. and to provide a key role for state bank supervi- The failure of a few important institutions— sors; in fact, the proposal before you dealing unless handled expeditiously and effectively— with commercial banks is substantially narrower Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 465 than the interstate acquisition arrangements for current circumstances be salable within a state. savings and loan associations that are now con- Indeed, in some cases the holding company tained in the Garn-St Germain Act. involved may be among the largest banking institutions in the state. In other instances, the larger institutions in the state, while able to cope effectively with their own problems, may not be in a MAIN PROVISIONS OF THE LEGISLATION position to raise the amount of capital, or to provide the liquidity or management resources Perhaps the most important change in the pro- necessary for a major acquisition. posed legislation would be to permit the federal The third area of change would be to permit supervisory authorities to deal with the units of a the sale of "failing"—defined as a bank in danger multibank holding company as an integrated of closing—as well as "failed" institutions. The whole. This change is a recognition of simple definition of failing is meant to be rigorous—that reality. is, to only include an institution that, while A number of states, including typically those technically still solvent, has no reasonable prosimpacted by adverse energy and agricultural pect for either maintaining the liquidity or raising developments, have a banking structure built the capital necessary to maintain itself as an around multibank holding companies. Normally, independent institution without prolonged federunits in those holding companies operate with a al assistance. large degree of interdependence, under common The purpose is straightforward. Such a "failmanagement. However, the financial condition ing" institution may be more attractive to a of different banking units within the holding potential buyer than one actually in receivership. company may vary substantially. The sale might be arranged without disturbance As things now stand, the law permits us to deal to confidence. There would be no cost, or a with those units of a holding company bank by lesser cost, to the FDIC. bank. Some individual banks within the holding company may reach the size limit of $500 million specified by the Garn-St Germain legislation, but many units may not, even though the holding company is one of the major institutions in the LIMITATIONS ON THE USE OF THE state. In some cases, none of the units meets the EMERGENCY POWERS present size test, even if the holding company is far larger. Yet, the failure of one or two impor- As I indicated earlier, the debate on the proposed tant banking units of a holding company would legislation appears to center much less on quesbe bound to affect the viability of the whole. tions of basic purpose and rationale—which The proposed legislation deals with this situa- seems to be broadly accepted—than on the aption by enabling the sale of some or all the banks propriate specific limitations designed to protect within a holding company, or the holding compa- the rights of states. This matter is one to which ny itself, to an out-of-state institution when at we have devoted considerable attention. We least one-third of the entire assets of the holding believe that an appropriate balance has been company are in failed or failing units, provided struck consistent with the need for operational those troubled units collectively reach an aggre- effectiveness. That need includes the simple fact gate asset size of $250 million. that out-of-state purchasers of failed or very The second proposal is to modify the asset size troubled institutions will simply not be available, limit for an individual bank or for banking units or available only at very heavy cost to the FDIC, within a holding company by reducing it from unless the acquired banks can be operated profit- $500 million to $250 million. That reduction is in ably in highly competitive markets. recognition of the fact that deeply troubled insti- Specifically, the following would apply: tutions of that size, particularly when incorporat- 1. Interstate acquisitions could only be made ed in a larger holding company, may not in of banks (or units in a holding company system) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

466 Federal Reserve Bulletin • July 1986 when their operation as independent going con- is accepted, the new provision for "failing" cerns is no longer feasible. banks appears certainly reasonable as a matter of 2. Only the chartering authority—state or fed- further protecting the FDIC fund and the stabileral as the case may be—could initiate the pro- ity of other banks that could be infected by a cess of interstate acquisition by determining that confidence crisis. Such a provision has already the bank is failed or failing. been adopted for thrift institutions. Strong pref- 3. A minimum size requirement has been main- erence would be provided for an in-state "solutained, although at a lower level. tion," if in fact such a solution exists—in fact, 4. An out-of-state acquirer of a bank or bank that protection would be stronger than if, under holding company would have its subsequent ex- current law, the banks failed and FDIC funds pansion rights limited to the three largest metro- were more directly at risk. politan areas or cities within a state. In all cases of failing institutions, the board of 5. In all cases, consultation with the relevant directors or the stockholders of the institution state bank supervisor would be required as to the itself would have to agree to a proposed merger. possibility of an in-state solution. In the case of a Some have questioned whether that might lead to failing or failed institution when the FDIC pro- a preference for an out-of-state partner willing to vides assistance, bidding priorities of present law pay a higher price. That possibility is one reason favoring an in-state solution are retained, and an why the relevant state supervisor has been proobjection by a state supervisor could be overrid- vided an effective veto power so long as there is, den only by a unanimous vote of the FDIC in fact, a feasible in-state partner ready, willing, board. In the case of a failing institution when no and able to provide the necessary capital and FDIC assistance is provided, no interstate acqui- other support. sition could proceed if the supervisor certifies Other questions have arisen with respect to the that there is a qualified in-state (or, when region- necessity to deal with the units of a multibank al arrangements exist, regional) acquirer unless holding company as a whole. In some instances, the Federal Reserve Board determines that the dismemberment of a holding company may inproposed in-state buyer does not in fact have deed be possible. But that will not always, or adequate financial resources. even typically, be consistent with achieving the 6. Finally, the authorities provided would end purposes of the legislation—speedy and orderly after five years. disposition of severe problems in a manner con- We believe that these safeguards are reason- sistent with the stability of the banking system able and workable, balancing the legitimate con- over an entire state or region. cerns of the states and competing banks with the Specifically, in cases in which the failed or broader interest in effective action to deal with failing units within a holding company are key emergency situations. They build upon concepts units of the system, piece-by-piece disposition and tests in existing law, either for banks or thrift would imply that sister banks are cut adrift, institutions. I am not aware of serious concerns without the operating, accounting, and product that those existing authorities have been abused. delivery systems often centered in lead banks or So far as the "failing bank" test is concerned, the holding company itself. Units that might have the intent is plainly only to deal with institutions been both solvent and liquid within the holding that, in terms of strong liquidity pressures or company structure would find their viability unimpaired capital, would otherwise require large dermined if they had to maintain themselves as and prolonged official assistance if they are able independent units—units that would inevitably to survive at all, with ancillary risks to the FDIC be tinged by their past association with a failed fund. In effect, the only alternative to merger holding company organization. Nor are individwould be to make them wards of the government ual units of a holding company likely to be for an indefinite period. attractive to potential out-of-state acquirers. The associated uncertainties and potential disrup- If such institutions were permitted actually to tions are precisely what the bill is designed to fail, it is widely accepted that they would be avoid. eligible for interstate acquisition. If that premise Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 34 CONCLUSION The bill has been carefully drafted to limit its scope totally to emergency situations for a limit- It is an unhappy fact that economic conditions in ed period, at the same time reconciling conflictsome states have brought strains and strong ing demands of public policy. The Congress in pressures on elements of the banking system in the past has acted with care and effectiveness in those areas. At the same time, there is every providing necessary authority to deal with probreason to believe that those problems can be lem areas in both the banking and thrift induscontained and diffused in a manner that will tries. preserve and support the essential stability of the Failure to act now could only increase the banking system, and thus avoid aggravating al- risks that the ultimate costs would be far greater. ready difficult economic circumstances. We want to forestall a crisis, not to pick up the To assure that result, supervisory and regula- pieces after the damage has been done. tory agencies do need some limited additional I strongly recommend that you take the crucial authorities so that they can act with dispatch and further steps required by the present situation at minimum cost, both in financial terms and in with the clear sense of urgency the situation terms of maintaining confidence. Those authori- demands. • ties would be provided by H.R. 4701. Chairman Volcker presented identical testimony before the Senate Committee on Banking, Housing, and Urban Affairs, May 13, 1986. Statement by Martha R. Seger, Member, Board tral banks and international organizations, to of Governors of the Federal Reserve System, curtail money laundering activities. before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of BANK SECRECY ACT the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, May 14, The Federal Reserve, together with the other 1986. banking agencies, has the responsibility for monitoring financial institutions to determine their compliance with the Bank Secrecy Act. In this I appreciate the opportunity to appear before the regard, the Federal Reserve monitors state memsubcommittee today on behalf of the Federal ber banks and Edge Act corporations, a respon- Reserve Board to discuss whether existing laws sibility delegated to it by the Department of the to protect our nation's financial institutions from Treasury, which has primary responsibility for becoming havens for tax evaders, drug traffick- enforcement of the statute. Enacted in 1970, the ers, and other money launderers can be strength- Bank Secrecy Act, among other things, requires ened and whether new laws should be enacted. financial institutions to report certain currency I shall begin by focusing on the Bank Secrecy transactions in excess of $10,000 to the Treasury Act and on the various legislative proposals to Department. As you know, the reporting and strengthen the act. As requested, I will then recordkeeping requirements of the Bank Secrecy discuss whether certain titles of the Financial Act were designed to frustrate criminal activities Institutions Regulatory and Interest Rate Control that generate large sums of cash, such as drug Act of 1978 (FIRICA) need to be amended to trafficking, by putting the spotlight on large curprovide the banking agencies with more effective rency transactions. means of curbing the use of financial institutions As the subcommittee is aware, in recent years by criminal elements for illegal gains. Finally, I there have been an unfortunate number of inwill offer the Federal Reserve's views on what stances, including some involving large banking might be done, in cooperation with foreign cen- organizations, in which financial institutions ne- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

468 Federal Reserve Bulletin • July 1986 glected to report currency transactions as re- In addition, the Federal Reserve has instructed quired by law. In most cases these violations its examiners to implement in-depth assessment were not due to criminal intent on the part of procedures for Bank Secrecy Act compliance financial institutions, but rather to their failure to during all full-scope examinations. Previously, put in place or enforce controls designed to examiners conducted an in-depth review only ensure that transactions covered by the act when a preliminary assessment of a bank's interwould be properly reported. nal systems revealed some reason to intensify The widespread publicity surrounding these the investigation. The Federal Reserve has also reporting failures heightened the awareness of expanded coverage of the Bank Secrecy Act in financial institutions as to the importance of its training program for bank examiners. complying with the Bank Secrecy Act. Many banks conducted in-house compliance audits to find transactions that should have been reported PROPOSED MONEY LAUNDERING BILLS under the law. Many of those banks that did find them voluntarily admitted their failure to report Despite improved compliance with the Bank the transactions and paid substantial fines. These Secrecy Act, we know that better recordkeeping banks and other institutions have since made alone will not put an end to money laundering in special efforts to tighten their compliance con- this country. Those who are engaged in money trols. As a matter of fact, the volume of Currency laundering are a resourceful lot and have incen- Transaction Report (CTR) filings has increased tives to circumvent even the most carefully craftdramatically. ed rules and regulations. Indeed, the ability to Therefore, in my view, it is time to consider circumvent the law is an essential requirement streamlining and modernizing the reporting pro- for success in drug trafficking and other such cess—especially for large institutions that must activities. The use of "smurfs" to circumvent submit a high volume of CTRs to the Internal the existing law is a case in point. (Smurfs, or Revenue Service. This procedure could include, "runners," are couriers who convert funds defor example, the use of computer-generated rived from illicit activities into multiple transactapes and other technology to minimize the ava- tions, each less than $10,000, to evade the curlanche of paper. An additional benefit of such an rency reporting requirements of the Bank approach might be improved compliance. Secrecy Act.) Federal agencies have also recognized that Yet efforts to curtail money laundering by their enforcement procedures needed to be making it more difficult and risky are clearly in strengthened and, as a result, have made a the public interest and should continue. At presconcerted effort to improve compliance under ent, however, the burden of the Bank Secrecy the Bank Secrecy Act. Specifically, they have Act clearly falls more on depository institutions expended additional time and effort to increase than on those institutions directly involved in the awareness of both financial institutions and money laundering. While the reports required examiners as to the requirements of the Bank under the act have been recently utilized to more Secrecy Act. An interagency working group, effectively target money laundering, they cannot, composed of representatives of federal banking in and of themselves, put an end to laundering and law enforcement agencies, has been activities. In the Board's view, it is more approstrengthening enforcement procedures and im- priate to strengthen enforcement through better proving communication and coordination among utilization of current resources, and to strengthgovernment agencies. Among other things, the en prosecution by making money laundering a group agreed recently to adopt uniform Bank crime, rather than to increase reporting burdens. Secrecy Act examination procedures. The group Because of the link between money laundering meets on a regular basis and will continue to and cash-based criminal activity, the Board supexplore methods to enhance the agencies' abili- ports legislative efforts to limit the use of finanties to carry out their responsibilities under the cial institutions by money launderers. Four of act. the bills before the subcommittee (H.R. 2785, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 469 1367, 1474, and 1945) would make money laun- committee that it is not desirable to shift this dering a federal crime. This action would ap- determination to the Treasury and away from the proach the problem more directly; under present financial institutions that, after all, are in a better law, criminal activities are only indirectly position to know the identity and the transactiontracked by monitoring currency transactions in- al habits of their customers. Such a shift would volving financial institutions. be unduly burdensome to the Treasury and to the Two proposed bills (H.R. 4573 and 3892) are financial institutions that would have to supply aimed at giving enforcement authorities addition- the Treasury with the detailed information needal tools to prevent one common means of evad- ed to make its determinations. Perhaps it would ing the Bank Secrecy Act—namely, structuring be better to retain the current law, which allows transactions involving more than $10,000 into the Treasury, by regulation, to make any such multiple transactions of a lesser amount. The changes that it deems necessary. H.R. 3892 Board supports efforts to limit such "structur- would require the Treasury to review annually all ing." exemptions to currency reporting requirements While we generally support the objectives of granted by a financial institution to its customthe bills before the subcommittee, it is important ers. We suspect that this requirement might also that their provisions be closely evaluated to prove unduly burdensome to the Treasury and to ensure that they pass a reasonable cost-benefits financial institutions. test. It is not possible to review in detail all of the H.R. 1474 would require that all outgoing provisions of these bills at this hearing. Howev- international wire and other electronic transfers er, we do want to stress that in this attempt to be reported on a Currency or Monetary Instrustrengthen our laws, care should be taken to ment Report. While we generally believe that avoid the collection of more information than is wire and other electronic transfers should be necessary. For such an exercise does not signifi- included among the types of transactions regulatcantly contribute to law enforcement efforts, and ed by the Bank Secrecy Act, we agree with the only adds to the costs of banking, which are testimony given by the Treasury before this passed on to the consumer. subcommittee, which stated that this particular With regard to specific bills, H.R. 1474 con- reporting requirement should not be imposed by tains a provision that would require federal su- statute. We question whether the burden impervisory agencies to verify compliance with the posed by the reporting requirement would be Bank Secrecy Act in the course of every exami- offset by the usefulness of the information that nation they perform. We currently check for the reports would generate. Such information is such compliance when making regularly sched- more effectively acquired through the Treasury's uled commercial bank examinations and are im- existing authority to require specific financial plementing numerous steps to strengthen our institutions to provide copies to the Treasury of ability to carry out this function more effectively. all wire transfers taking place within a particular We also perform carefully targeted examinations period of time. when the need arises. In those instances, to H.R. 4280 would require a financial institution make more cost-effective use of our resources, to keep special records relating to any cash we would like to retain the flexibility to deter- transaction in excess of $3,000. It is already mine the parameters and frequency of such vis- within the Treasury's ability to require this type its. For these reasons, we suggest that the provi- of recordkeeping by regulation as needed, prosion not be adopted by the subcommittee. vided it would assist law enforcement efforts in H.R. 1474 would also provide that every ex- ways that would justify the burden imposed on emption to the Bank Secrecy Act's requirements financial institutions. be approved by the Treasury. Under current H.R. 4280 would establish that the amounts regulations, it is the responsibility of the financial that are subject to currency transaction reporting institution to determine whether its customers requirements be at least $10,000. Currently, the are eligible for such exemptions. We agree with Treasury has the authority to vary this amount as the testimony by the Treasury before this sub- necessary to carry out its enforcement responsi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

470 Federal Reserve Bulletin • July 1986 bilities. We believe that it is useful for the Important though these powers are, we should Treasury to maintain its ability to respond to bear in mind that the Federal Reserve Board is changing criminal practices rather than to man- not a criminal law enforcement agency. While date by statute, as this bill would do, a specific our examiners are trained in detecting questionsize of transaction to be covered. able transactions, any suspected criminal activi- H.R. 3892 contains a provision that would ties are referred to appropriate law enforcement include any foreign subsidiary or affiliate of a authorities. Therefore, the referral process is U.S. commercial bank in the definition of finan- critical to successful prosecution under Title I. cial institution for purposes of the Bank Secrecy The Federal Reserve has been working dili- Act. This provision would appear to subject gently to improve the criminal referral process. these entities to reporting requirements, includ- In August 1985, the Federal Reserve distributed ing filing CTRs for cash or currency transactions to the financial institutions that it supervises a of $10,000, regardless of whether they involve uniform criminal referral form. Moreover, the U.S. dollars. The Treasury regulations, as we Federal Reserve recently developed and impleunderstand them, do not extend the reach of the mented procedures to ensure that criminal referpresent reporting requirements beyond our bor- rals involving activities that may affect the safety ders. H.R. 3892 would, for the first time, give and soundness of a bank or bank holding compaextraterritorial effect to the reporting require- ny are submitted directly to the Fraud Section of ments, with the likely result of placing U.S. the Department of Justic for high level attention. banks, in some instances, in conflict with local In addition, procedures have been established to law and raising important areas of friction with ensure that criminal forms submitted to the Fedmany host countries who have been particularly eral Reserve are properly handled. Computer sensitive to the extraterritorial application of systems also have been developed to track and U.S. law. cross-check the referrals against the activities of the Enforcement Section of the Board's Division FIRICA: TITLE I, SUPERVISORY CONTROL of Banking Supervision and Regulation. In this manner, we are better coordinating the actions OVER DEPOSITORY INSTITUTIONS that must be taken under both civil and criminal You asked that we revisit certain FIRICA titles law when illegal activity is suspected. to determine whether they too could be strengthened to keep criminal elements from using finan- TITLE VI, CHANGE IN CONTROL cial institutions for illegal gains. The basic thrust of Title I is to provide the Under the Change in Bank Control Act of 1978, bank regulatory agencies with enhanced tools for bank regulatory agencies have the authority to combating violations of banking laws and unsafe act on notices involving changes in the control of and unsound activities. Title I authorizes, among insured banks and bank holding companies. The other things, the use of civil money penalties for Federal Reserve is responsible, in particular, for violations of various banking laws (including the notices involving state member banks and bank Board's Regulations D and O, Section 23A of the holding companies. Change in Control notices Federal Reserve Act, and the Bank Holding generally must be processed in 60 days. During Company Act) and provides for enforcement this period, the reviewing agency considers authority against individuals, as opposed to insti- among other factors, the financial condition and tutions.1 character of the prospective owner or owners. 1. With regard to the authority of the bank regulatory other Court of Appeal's decisions, and it may severely limit agencies to take enforcement actions directly against individ- the ability of the agencies to seek appropriate relief against uals, I note that the U.S. Court of Appeals for the Seventh individuals in matters, for example, involving unjust enrich- Circuit, in the Larimore v. Comptroller of the Currency case, ment. To clarify the authority of the Federal Reserve as well determined last week that the Comptroller of the Currency as of the other bank regulatory agencies in this area, it may be could not use its cease-and-desist authority to seek monetary useful for the Congress to consider legislation directed at this damages from individuals for violations of law and unsafe or problem. unsound banking practices. This decision was in conflict with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 471 One important objective of this process is to The RFPA, however, does not preclude any weed out individuals with criminal backgrounds, financial institution from notifying a government either by disapproving the Change in Control or, authority that it has information that may be in effect, by allowing them to disqualify them- relevant to a possible violation of any statute or selves by withdrawing their notice. regulation. In August 1985, the Board adopted a Typically, supervisory authorities are familiar uniform interagency criminal referral form for with individuals who are seeking to gain control the use of the financial institutions under its of a financial institution. Change in Control in- jurisdiction. Similar forms subsequently were vestigations in such cases proceed in a timely adopted by the other federal regulatory agencies. fashion. However, there are sometimes cases, The form has been carefully structured to elicit such as those involving foreign individuals or information that we were not getting before, individuals who previously have not been in- perhaps because of perceived RFPA problems. volved in banking, in which the applicant's back- Out of the approximately 400 referrals made by ground is not known. These cases require the these institutions since that time, only three have reviewing agency to draw on information from lacked necessary information because of perlaw enforcement agencies and foreign banking ceived RFPA problems and these instances did agencies. Such information often is not received not involve Bank Secrecy Act violations. We until well into the 60-day review period, making believe that the adoption of these forms by all it necessary to invoke the 30-day extension peri- supervisory agencies will address through adod allowed under the Change in Bank Control ministrative action many of the difficulties expe- Act to make a thorough investigation. We can, rienced by the law enforcement agencies in this however, conceive of situations in which even area. the 30-day extension period would not be sufficient. Thus, we would favor an amendment to INTERNATIONAL COOPERATION the Change in Bank Control Act that would allow the Board to extend the processing period in I would now like to turn to the subject of those rare situations when it is necessary to international cooperation. In general, the Federcollect and evaluate additional information about al Reserve maintains extensive contact with forpotential criminal activity. eign bank supervisory authorities to discuss broad supervisory issues relating to banking, such as capital adequacy and liquidity. The most TITLE XI, RIGHT TO FINANCIAL PRIVACY visible example of such contact is the Basle ACT Committee on Banking Regulations and Supervisory Practices, which consists of representatives The Right to Financial Privacy Act ("RFPA") from the central banks and bank supervisory was intended to protect bank customers' privacy agencies of the major industrial countries. In rights, while enabling federal regulatory and law addition, the Federal Reserve regularly sends a enforcement agencies to carry out their responsi- representative to regional meetings of bank subilities under the law. The RFPA, among other pervisors from the Caribbean, Latin America, things, prohibits access to the financial records and Asia. of a customer of a financial institution by govern- In our view, international steps to assist enment authorities, unless the customer has autho- forcement efforts are best handled through initiarized such disclosure, or the financial records are tives such as those undertaken by the Departobtained pursuant to specified agency or law ment of Justice to institute mutual legal enforcement actions and the customer is given assistance treaties between the United States notice of such disclosure. Disclosure also may and other countries. Such treaties include speciffall within one of the other limited exceptions to ic provisions addressing the use of international banking facilities for criminal activities. The Fedthe notice requirement, such as when the inforeral Reserve stands ready to assist the Justice mation is obtained through the examination pro- Department by making quick referrals of suscess. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

472 Federal Reserve Bulletin • July 1986 pected criminal activity to the appropriate au- Further, both foreign and domestic bank suthorities and by providing advice on international pervisors usually are not empowered to investitransactions. gate criminal activity and, therefore, must refer At the same time, the Federal Reserve will any evidence of illegal conduct to their respeccontinue efforts to heighten the sensitivity of tive law enforcement authorities. Foreign bank banking authorities abroad to the problems of supervisors may also face serious legal obstacles money laundering through the international when disclosure of information on individual banking system. In June 1985, this subject was customers is involved. It is with regard to these raised informally by the Federal Reserve's repre- kinds of obstacles that mutual assistance treaties sentative to the Basle Supervisory Committee. are particularly useful. Another occasion for such discussions will be the forthcoming meeting of the committee, which is to be held in Washington at the end of June. A CONCLUSION portion of the meeting has already been scheduled to include a discussion of current issues In conclusion, I would like to emphasize that the before U.S. banking authorities, and our repre- Federal Reserve Board, in conjunction with othsentative plans to use this occasion to discuss the er federal agencies, has intensified its efforts to possibilities for greater cooperation and commu- address the problem of criminal activity involvnication. ing financial institutions. The Bank Secrecy Act It is important to point out, however, that the is but one of the several areas on which we have ability of bank supervisors to deal with activities focused. Bank fraud, officer and director misconsuch as drug trafficking and money laundering is duct, and insider abuse have also received spelimited. It is, for example, difficult to monitor cial attention. international financial transactions given the We understand the critical importance of pronumber and volume of such transactions each moting improved enforcement and prosecution day. Moreover, even if such monitoring were of bank-related criminal activity, and we look feasible, it would be problematic, at best, to hope forward to working with the subcommittee as it to draw valid conclusions regarding ultimate reviews and weighs the merits of the various origins or destinations of individual transactions. proposals before it. • Statement by Emmett J. Rice, Member, Board of S. 2264 would also require credit card issuers to Governors of the Federal Reserve System, be- report certain cost terms to the Board, and would fore the Subcommittee on Financial Institutions require the Board in turn to make this informaand Consumer Affairs of the Committee on tion available to the public and to report it Banking, Housing, and Urban Affairs, U.S. Sen- annually to the Congress. ate, May 21, 1986. Currently, the law requires early disclosures only when creditors engage in advertising. Solici- I appreciate the opportunity to appear before this tations for credit are thus subject to some Truth subcommittee to discuss the disclosure require- in Lending disclosure requirements, since they ments of three bills dealing with credit card are considered "advertisements" under the statapplications and solicitations: S. 2140, S. 2264, ute and the Board's implementing regulation, and S. 2421. All three bills would add an early Regulation Z. Whenever certain credit terms are disclosure requirement to the Truth in Lending stated in an advertisement, the creditor must Act for open-end credit card plans. S. 2421 is give additional information about the credit plan. narrower than the other bills because it deals For example, if the creditor advertises the plan's only with disclosures in mail solicitations, annual fee, the advertisement must state the though it also addresses the balance computation annual percentage rate as well as any other methods used by certain credit card issuers. finance charges that may be imposed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 473 If none of the specified credit terms is stated in tations much of the disclosure information prothe solicitation, however, the law does not re- posed in the bill, and, presumably, have not quire that cost information about the plan be viewed this information as an impediment to given. Consequently, while the act does at times advertising. Requiring disclosure in all applicarequire that consumers receive cost information tions whether or not the application is part of a with solicitations, the present law does not al- mail solicitation—as the two other bills do— ways require that consumers are given this infor- might have the adverse effect that the Congress mation before they receive a credit card. sought to avoid in 1980. Under the current law consumers must, how- Increased disclosure requirements invariably ever, be given full disclosure of the terms and result in some increased costs to the industry. conditions of the credit card program no later Additional costs resulting from S. 2421 would than the time that they receive the card. There- probably not be substantial, because it focuses fore, consumers do have an opportunity to re- on the narrow area of mail solicitations. In mail view all of the terms and conditions before using solicitations creditors should be able to include the account. In addition, the regulation provides current disclosure information without signifithat a consumer may not be obligated on a credit cant burden, since such solicitations are usually program before receiving complete disclosures; offered for a limited time with stated expiration this would include, for example, the obligation to dates. Broader legislation, as suggested by pay an annual membership fee. S. 2140 and S. 2264, that would require disclo- The proposed bills go beyond the present act sures in all applications for open-end credit by requiring the creditor to include certain Truth cards—not just in mail solicitations—could in Lending disclosures in any application or prove to be operationally difficult for card issuers solicitation for a credit card plan, without regard and could result in costs that exceed consumer to whether the creditor mentions a particular benefits. For example, card issuers would have term. The proposed legislation expands the cur- to reprint credit card applications when the terms rent statutory requirements for advertising in of their credit card plans change. The burden another way as well. The card issuer would be would vary depending on the creditor, however. required to disclose the conditions under which a National banks offering their credit cards nationfinance charge may be imposed, including wide, for example, may be able to have uniform whether or not any time period exists for credit credit terms so that a single solicitation or applito be repaid without incurring a finance charge; cation would apply to all prospective cardin addition, S. 2140 would require disclosure of holders. Retailers, in contrast, are generally subthe balance computation method. ject to individual state laws, which would make The issue of how much disclosure to require in the use of uniform nationwide documents more advertisements has been considered before the difficult. In addition, the burdens associated with Congress—most recently in 1980, when it simpli- additional disclosure requirements would probafied the Truth in Lending Act. At that time, the bly be greater for small institutions. Congress cut back on the disclosures required in The Truth in Lending Act and Regulation Z open-end credit advertisements in the hope that mandate that creditors disclose which balance reducing the disclosure burden would promote computation method they intend to use—and more advertising, thereby increasing competi- provide an explanation of how that method tion. To the extent that the proposed disclosure works. The creditor must provide this informarequirements might discourage open-end credit tion in its initial disclosure statement and must advertisements, this legislation could have the repeat it on each monthly bill. unintended effect of decreasing rather than in- S. 2421 would also require nonretailer card creasing competition. We are inclined to think, issuers, such as banks, to use one particular however, that given the limited scope of the method—the average daily balance method—in increased disclosure in S. 2421 it would not have calculating the finance charge, or an alternative that effect. Our impression is that many card method that results in a lower finance charge. issuers are already including in their mail solici- In general, the Truth in Lending Act does not Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

474 Federal Reserve Bulletin • July 1986 involve the substantive regulation of credit putation may have some appeal, it may affect terms, such as the rate of interest that can be both the operations and yields of some creditors. imposed or the types of charges that are permis- If adoption of this approach results in increased sible. Rather, the focus of that act is on ensuring operational costs or reduced revenue, the issuer that consumers receive the most important credit is likely to pass such costs on to its customers in information before becoming obligated. By ven- some way or other. Thus, regulating the balance turing into the substantive regulation of credit computation method area might result in restrictterms via the Truth in Lending Act, the provi- ed credit availability; the elimination of grace sions of S. 2421 dealing with balance computa- periods; or higher interest rates, annual fees, or tions would be a departure from the current merchant discounts. It is uncertain, therefore, approach. whether the benefit of having a uniform balance Over the years creditors have used various computation method would exceed the associatbalance calculation methods for their open-end ed costs to consumers after such adjustments credit plans, some of which generally produce have taken place. higher monthly finance charges than others. The And we have more fundamental problems with "previous balance" method will often result in this aspect of S. 2421. Traditionally, balance higher finance charges for consumers, for exam- computation methods—like other yield-producple. However, the timing of a customer's pur- ing terms, such as interest rates, the amount of chases and payments can influence which bal- transaction charges, late charges, and so on— ance computation method results in the lowest have been regulated by the states. In fact, over finance charge. In addition, even within a single the years many states have specified the permisbalance computation method, such as the aver- sible balance methods as one aspect of their age daily balance method, there are variations in overall rate regulation. Because the states conhow favorable or unfavorable one creditor's sider all determinants of the cost of credit in method may be to the consumer as compared fashioning their regulations, they probably are in with another creditor's. a better position to regulate the balance compu- Many of the other terms required to be dis- tation method in relationship to other credit closed, such as the annual fee or the annual terms. Moreover, federal legislation of the balpercentage rate, are straightforward and easy for ance computation method could be viewed as the consumers to understand. The way the creditor beginning of federal control of a host of other figures the balance to which it will apply the terms—such as rebate methods and delinquency annual percentage rate, however, is not so easily charges—that have long been controlled by the understandable—even with the disclosures re- states. Rate regulation has been an important quired by the act and the regulation. Conse- state function, and we suggest great caution in quently, while a creditor might satisfy the Truth overturning this tradition, particularly on a in Lending requirement by explaining how it piecemeal basis. calculates the customer's balance, the customer An alternate approach to the problem is to may not be able to fully appreciate how one seek increased consumer awareness of balance creditor's method differs from another—and, computation methods. One way of doing this consequently, how the difference might affect the involves educational efforts on the part of indusamount of the finance charge. try and consumer groups. A pamphlet dealing One approach to this problem is the one taken with how to shop for a credit card, for example, by S. 2421: that is, to prohibit all balance compu- was just released by the American Institute of tation methods except one. The purpose of such Certified Public Accountants in cooperation with an action, presumably, would be to standardize the U.S. Office of Consumer Affairs, and we that feature of credit card programs, so that expect that it will receive wide distribution. As consumers no longer would have to consider this another example, the Federal Reserve prepares particular term when comparing credit card pro- educational materials and conducts presentagrams. tions for teachers and other groups regarding consumer credit, including credit cards. The While the approach of S. 2421 to balance com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 475 Federal Reserve Bank of Minneapolis has devel- In conclusion, the Board believes in full disclooped instructional materials for secondary sure—both because it is the fair way to deal with school teachers, and is currently preparing addi- consumers and because it aids the competitive tional material dealing with credit cards, includ- process. However, given the extensive discloing balance computation methods. These, and sures already required by the Truth in Lending other, educational efforts should help alert con- Act when the consumer receives the credit card, sumers to the fact that differences in credit and the fact that many card issuers already programs do exist and that "shopping around" supply much of the proposed information in their may save them money. solicitations, we are not sure that legislation is S. 2264 would require each credit card issuer needed. I might add that our files do not show to report to the Board on a quarterly basis the any consumer complaints on the matter. On the average annual percentage rate and any annual other hand, we believe that the burden of the or other fee applicable during the preceding disclosure provisions contained in S. 2421 would quarter. While this idea may seem appealing on not be substantial. In contrast, we believe that initial examination, there are a number of ques- the scope of S. 2140 and S. 2264 is too broad, tions about its usefulness and cost that need to be particularly in that the bills require disclosures in considered. The Federal Reserve is currently all applications. analyzing the results of a study conducted at the With regard to S. 2421, we appreciate the request of the Congress to measure the benefits difficulties that some consumers may have in of providing consumers with comparative cost comparing balance computation methods. Howinformation about closed-end credit. While this ever, because these methods have been a matter demonstration project did not address credit of state law for so long, and because they are so cards, its findings should provide a means of intimately tied to other state provisions, we do better evaluating the use that consumers make of not favor this portion of S. 2421. In addition, the published lists of comparative rate data. In view provision in S. 2264 for reporting credit cost of the costs associated with the collection and terms to the Board is potentially costly, and until dissemination of comprehensive information the Board completes its analysis of the demonabout rates and fees from thousands of credit stration project on closed-end credit rates, we card issuers, the Board suggests postponing ac- cannot be sure about the extent of the benefits of tion in this area until the results of the demon- such compilations. • stration project are available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

476 Announcements MEETING OF REPORT ON FINANCIAL RESULTS OF CONSUMER ADVISORY COUNCIL PRICED SERVICE OPERATIONS The Federal Reserve Board announced that its The Federal Reserve Board has reported finan- Consumer Advisory Council met on June 19 and cial results of Federal Reserve priced service 20, in sessions open to the public. The Council's operations for the quarter ending March 31, function is to advise the Board on the exercise of 1986. the Board's responsibilities under the Consumer The Board issues a report on priced services Credit Protection Act and on other matters on annually and a priced service balance sheet and which the Board seeks its advice. income statement quarterly. The financial statements are designed to reflect standard account- NEW POLICY ON LARGE BORROWINGS ing practices, taking into account the nature of FROM THE DISCOUNT WINDOW the Federal Reserve's activities and its unique position in this field. The Federal Reserve Board announced on May 19, 1986, a new policy to deal with exceptionally large borrowings from the discount window that PROPOSED ACTIONS arise from computer breakdowns or other operating problems associated with the payments The Federal Reserve Board issued for public mechanism. comment a proposal to amend the definition of Under the new policy, a rate higher than the the term "deposit" in its Regulation D (Reserve basic discount rate will be applied to loans of Requirements of Depository Institutions). Comunusual size that result from a major operating ment is requested by July 11, 1986. problem at the borrower's facility unless the The Board has also requested public comment problem is clearly beyond the reasonable control on whether conditions it imposed on the acquisiof the institution. tion of thrift institutions by bank holding compa- The rate to be charged will be the highest rate nies should be modified. Comment should be within the structure of discount rates at that received by the Board no later than June 27, time. Although the current basic discount rate is 1986. 6V2 percent, the highest rate posted by the Federal Reserve is now 8V2 percent, which can apply to extended credit borrowings outstanding for more CHANGE IN BOARD STAFF than 150 days. This action will assure that, in extraordinary Naomi Salus, Special Assistant to the Board, circumstances arising from computer break- resigned, effective June 1, 1986. downs or other operating problems, credit extended by the Federal Reserve will be at rates as high as or higher than those prevailing for short- SYSTEM MEMBERSHIP: term accommodation in the open market. ADMISSION OF STATE BANKS The new policy will encourage institutions to maintain or put in place the appropriate mea- The following banks were admitted to membersures and precautions to reduce the chances that ship in the Federal Reserve System during the any major problems might develop. period May 1 through May 31, 1986: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

477 Arizona Texas Sun City Sun City Bank New Boston First Bank & Trust Maryland Utah Bethesda Mellon Bank (MD) Salt Lake City First Security Financial Missouri Virginia St. Robert ... First State Bank of St. Robert Richmond Commonwealth Bank New York Flushing Great Eastern Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON APRIL 1, 1986 to the dramatic declines in oil prices. Limited information available for March, including reported cutbacks in motor vehicle assemblies and Domestic Policy Directive steel production and a further decline in drilling activity, suggested continued sluggishness in The information reviewed at this meeting indicat- production. The index of capacity utilization for ed a mixed pattern of developments. On balance total industry declined 0.6 percent to 80.0 perit appeared that economic activity had picked up cent; over the past year the index generally had from the reduced fourth-quarter pace, although fluctuated in a range of 80 to 81 percent. spending remained sluggish in some key sectors. Although retail sales changed little in January Price developments thus far in 1986 had been and February, they remained about 1.0 percent dominated by sharp declines in oil prices. Energy above the average in the fourth quarter, owing to prices fell substantially over the first two months a spurt in December. The rise relative to the level of the year and food prices also declined some- of the fourth quarter was attributable to gains in what, while prices of most other goods and outlays for durable goods, particularly automoservices rose at a moderate pace. biles and furniture and appliances. Sales of do- Total nonfarm payroll employment, which had mestic automobiles, boosted by additional fiincreased substantially in January, rose further nancing incentive programs, rose to an average in February, but employment in manufacturing annual rate of 8.3 million units over the Januaryfell after four months of gains. The average February period, about W2 million units above monthly rise in employment for the two months the depressed fourth-quarter rate. However, was about 325,000, somewhat higher than the sales slipped during the first 20 days of March to average in the fourth quarter of 1985. Hiring was a rate of 7 million units. exceptionally brisk at retail trade and service Total private housing starts surged in the Januestablishments in both months. In contrast to the ary-February period to an annual rate of more employment gains reported in the payroll survey, than 2 million units, compared with an average of employment as measured by the household sur- about 13A million units for the fourth quarter and vey fell almost 400,000 in February, about offset- for the year 1985. The increase was concentrated ting the increase in January, and the civilian in the single-family sector, though construction unemployment rate rose 0.6 percentage point to of multifamily structures remained at a relatively 7.3 percent. A sharp drop in agricultural employ- brisk pace despite continued high rental vacancy ment, not measured by the payroll survey, ac- rates. Sales of new homes declined somewhat in counted for about half of the decline; job losses February to a level about equal to the fourthin energy-related industries apparently also con- quarter average, while sales of existing homes tributed to the decline. remained at about their January pace and a little The index of industrial production fell an esti- lower than in the fourth quarter. Over the period mated 0.6 percent in February after edging up since the FOMC meeting in February, the averonly slightly in January. Although output of age rate on commitments at savings and loan automotive goods was higher in February, pro- associations for conventional fixed-rate home duction cutbacks were widespread for most oth- mortgage loans had declined nearly 1 percentage er categories of goods. In particular, petroleum point to about 10 percent, the lowest level since drilling activity was curtailed sharply in response 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

479 Business capital spending apparently weak- proach to policy implementation to be consistent ened somewhat in early 1986 after a surge around with growth in M2 and M3 at annual rates of the end of last year. Shipments of nondefense about 6 percent and 7 percent respectively for capital goods from domestic producers rose 5 the period from November to March. Over the percent in February but remained well below the same period they expected Ml to expand at an average in the fourth quarter. New orders for annual rate of around 7 percent, though the nondefense capital goods, after having been es- behavior of Ml was viewed as still subject to sentially flat in the fourth quarter, declined unusual uncertainty. The Committee agreed that sharply in January but turned up in February. somewhat greater or somewhat lesser reserve Outlays for nonresidential structures probably restraint might be acceptable over the intermeetfell in early 1986, as spending on petroleum ing period, depending on the behavior of the drilling activity reportedly plummeted. aggregates, the strength of the business expan- Largely reflecting declines in energy prices, sion, developments in foreign exchange markets, the producer price index for finished goods fell progress against inflation, and conditions in dosubstantially in January and February, dropping mestic and international credit markets. The 0.7 percent and 1.6 percent respectively. Produc- intermeeting range for the federal funds rate was er prices for consumer foods and for crude food retained at 6 to 10 percent. materials also declined appreciably over the two After growing little in January, Ml expanded months. The consumer price index declined 0.4 at an annual rate of about 7V4 percent in February percent in February—its first decline in more and was expected to grow at a rate of about 14 than three years—more than offsetting a rise in percent in March—leaving this aggregate at a January. A sharp drop in prices for gasoline and level somewhat above the upper end of the fuel oil accounted for most of the February Committee's range for the year. On the other decline, but food prices also fell. Prices of other hand, growth of M2 was generally sluggish over goods and services generally rose moderately. the first three months of the year, and expansion The index of average hourly earnings edged up in M3 remained moderate. As a result, M2 was on balance over the first two months of the year. running below its long-run range while M3 was The trade-weighted value of the dollar against near the midpoint of its range for 1986. The major foreign currencies continued to fall expansion in total domestic nonfinancial debt through about mid-March but recently rose appeared to have slowed appreciably over the somewhat; on balance the dollar had declined first quarter, after extraordinarily rapid growth about PA percent over the period since the around the end of last year. February meeting. Disappointment among mar- Open market operations during the intermeetket participants about data released on U.S. ing period were directed at maintaining about the economic activity and concerns about potential prevailing degree of pressure on reserve posiadverse effects of the sharp declines in oil prices tions. Seasonal plus adjustment borrowing from on U.S. banks holding sizable loans to energy- the discount window averaged about $350 million related businesses and to oil-producing develop- during the three full reserve maintenance periods ing countries exerted downward pressure on the after the February FOMC meeting. That level dollar, offset to some extent by views that for- was inflated a bit by technical problems associateign authorities, especially the Japanese, were ed with wire transfers early in the interval; more reluctant to see further appreciation of their recently, borrowing was running in the area of currencies. The merchandise trade deficit in Jan- $225 million to $250 million. uary appeared to have been only slightly smaller Federal funds generally traded in the 73A to 8 than in December; preliminary data for February percent area during the first half of the intermeetsuggested that exports increased and that the ing period. After the announcement by the Fedprice and quantity of oil imports declined. eral Reserve on March 7 of a reduction in the At its meeting on February 11-12, 1986, the discount rate from lxh to 7 percent, the federal Committee had adopted a directive that called funds rate fell to around 73/s percent and generalfor maintaining unchanged conditions of reserve ly fluctuated around that level throughout the availability. The members expected such an ap- remainder of the period. Other short-term inter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin • July 1986 est rates declined about Vi to 7/s percentage point ations from the staff projection were likely to be over the intermeeting interval. Long-term rates in the direction of more rapid growth. dropped more sharply, falling by 1 to nearly l3/4 Other members, while seeing some improvepercentage points, against a background of fur- ment as a likely prospect for the second half of ther weakness in oil prices, mixed economic the year, nonetheless emphasized the uncertainnews, and declines in some aggregate measures ties—both domestic and international—that conof prices. tinued to trouble the business outlook and that During the Committee's discussion of the eco- could portend more restrained expansion than nomic situation and outlook, several members was currently anticipated. Consumer debt burcommented on the contrast between current indi- dens remained large and one member observed cations of some sluggishness in economic activi- that sales of new automobiles currently appeared ty and a number of underlying developments that to be inhibited to some extent by a reduced pointed to stronger expansion later in the year willingness or capacity of some consumers to and perhaps in 1987 as well. The incoming infor- borrow. In the business sector, while investment mation on business activity was mixed, but it spending was likely to benefit considerably from was thought that on balance such information the reduced cost of capital, its overall growth suggested a pickup in economic growth in the might well be restrained by weak demands for first half of this year from the very slow pace in business equipment in important sectors of the the fourth quarter. Several members observed, economy such as agriculture and energy, and by though, that the near-term outlook remained the impact over time of apparent overbuilding, relatively weak, particularly taking account of notably of office structures, in some parts of the substantial cutbacks in oil company investments country. One member also noted that uncertainassociated with declining oil prices. At the same ties relating to tax reform legislation were contime a combination of developments—including tinuing to inhibit business investment spending. reduced interest rates, higher stock prices, lower Members also indicated that the improved condioil prices, and a decline in the dollar on exchange tions in financial markets stemmed to a large markets—was likely to exert an increasingly extent from expectations of future reductions in stimulative impact on the economy as the year federal budget deficits and a failure to implement progressed. The staff projection presented at this such reductions could have highly adverse conmeeting had suggested that the expansion in real sequences for financial markets and the eco- GNP would strengthen by the second half of the nomy. year, after relatively modest growth in the first With respect to exchange market develophalf. ments, the decline in the dollar was viewed as In evaluating the economic outlook, some implying upward pressures on domestic prices members referred to the apparent improvement over time, but also as likely to stimulate business in business confidence over the course of recent activity. While there were few actual indications weeks as the cost of capital declined and interna- to date of directly induced increases in export tional competitiveness improved. It was thought sales, contacts with business suggested that exthat substantial declines in interest rates would port markets were improving. The members conhave a stimulative impact on interest-sensitive tinued to differ in their assessment of when and sectors of the economy; indeed, that impact was to what extent a lower dollar would exert its already being felt in the housing sector. Members favorable effects on overall domestic economic also reported that lower interest rates were lead- activity or begin to show through significantly in ing to a large volume of mortgage debt refinanc- prices. One emphasized that efforts by foreign ings. The latter would reduce monthly servicing firms to retain market shares, especially in the costs and would therefore tend to support con- absence of strong economic growth abroad, sumer spending over time. The rise in stock would tend to reduce the expansionary and price market prices and the decline in oil prices also effects of the dollar's depreciation. were viewed as favorable for consumer spend- Some members commented that the strength ing. Taking account of these various factors, a of the expansion in the U.S. economy over the few members commented that potential devinext few quarters would depend to an important Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 481 extent on the rate of economic growth in key procedures under the Humphrey-Hawkins Act, industrial nations abroad and the resulting in- these ranges would be reviewed at the July crease in their demands for U.S. exports. It was meeting or sooner if warranted by unanticipated noted, however, that stronger expansion in some developments. major foreign countries might well be contingent In the Committee's discussion of policy impleon their pursuit of more stimulative economic mentation for the weeks immediately ahead, all policies, and there was question about the will- of the members favored directing open market ingness of some key countries to undertake such operations at least initially toward maintaining policies at this time. A member also commented essentially unchanged conditions of reserve on the importance of world commodity prices in availability. However, some shadings of opinion maintaining the international purchasing power were expressed. A few preferred to tilt the of many developing countries, in addition to provision of reserves toward slightly easier rethose that exported oil, and the potentially ad- serve conditions or at least to retain flexibility in verse repercussions of lower commodity prices that direction, depending on emerging market on world trade and U.S. export industries. conditions. Others expressed the view that cur- In their comments about the outlook for infla- rent reserve pressures should be well maintion the members gave considerable emphasis to tained, recognizing the possibility that such an the favorable impact of declining oil prices, but it approach to policy implementation might involve was also noted that those prices remained vul- some little tightening of market conditions since nerable to a reversal. In the staffs economic market participants might be anticipating some projections, the rate of increase in prices was easing. More generally, a number of members projected to slow over the near term, largely commented that policy implementation needed because of the favorable, one-time effects of to take account of the already accommodative lower oil prices. Members noted that the current posture of monetary policy and the favorable, downward pressures on prices provided an op- though somewhat uncertain, prospects for stronportunity for the more effective pursuit of poli- ger expansion over the intermediate term, if not cies designed to foster a continuing reduction in in the period immediately ahead. the rate of inflation. It was observed in this The members anticipated that, with little or no connection that while considerable progress had change in reserve conditions, the monetary agbeen made in curbing inflation in key industries gregates would tend to grow at rates that were such as manufacturing and construction, the broadly consistent with the Committee's target services industries appeared to be particularly ranges for the year. Ml might remain on the high resistant to further anti-inflationary progress. side in the weeks ahead, but it was emphasized Partly for that reason but also in light of the that the behavior of Ml remained subject to recent weakness in productivity, the deprecia- considerable uncertainty. According to an analytion of the dollar, federal budget uncertainties, sis prepared for this meeting, Ml growth over the and the possibility of a reversal in oil prices, next three months might be close to that experisome members expressed concern about the enced over the December-to-March period, asunderlying inflationary potential in the economy. suming unchanged conditions of reserve avail- They also cited recent price increases by a major ability, somewhat slower expansion in nominal automobile manufacturer as a worrisome devel- GNP, and no further declines in short-term maropment in terms of its broader implications for ket rates. However, demands for Ml balances inflationary attitudes and future inflation. were likely to be boosted, possibly substantially, At its meeting in February the Committee had if interest rates should decline further during the agreed on policy objectives for monetary growth period ahead. Some members also stressed the for the period from the fourth quarter of 1985 to desirability of focusing on the tendency for the the fourth quarter of 1986 that included ranges of velocity of Ml to remain relatively weak and the 3 to 8 percent for Ml and 6 to 9 percent for both associated possibility that relatively rapid growth M2 and M3. The associated range for total do- in Ml and in reserves might be needed to help mestic nonfinancial debt was set at 8 to 11 sustain the expansion. In general, the members percent. In keeping with the Committee's usual agreed that the behavior of Ml should continue Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Federal Reserve Bulletin • July 1986 to be evaluated in light of its consistency with M2 domestic and international credit markets. The and M3 and also in the context of broader Committee agreed that the current intermeeting economic and financial developments, the poten- range of 6 to 10 percent for the federal funds rate tial for inflationary pressures, and exchange mar- should be retained, although some members sugket conditions. Over the next three months M2 gested that the current range might be lowered as was expected to strengthen from its reduced a technical adjustment that would bring the prepace in the first quarter, while M3 was likely to sent trading level of the federal funds rate closer continue to expand at a moderate rate. to the midpoint of the range. With regard to possible intermeeting adjust- At the conclusion of the meeting the following ments in policy implementation, the members domestic policy directive was issued to the Fedcould foresee potential developments that might eral Reserve Bank of New York: call for either some easing or some tightening, given the uncertainties about prospective eco- The information reviewed at this meeting indicates a mixed pattern of developments with evidence of a nomic and financial developments and the bepickup in economic activity from the reduced fourthhavior of the monetary aggregates. In these quarter pace but with spending sluggish in some key circumstances, most of the members felt that sectors. Total nonfarm payroll employment increased there should be no presumptions about the likely appreciably further in February following a large rise direction of any intermeeting adjustments. How- in January, but employment in manufacturing fell after four months of gains and industrial production deever, some members believed that policy impleclined. The civilian unemployment rate rose sharply to mentation should remain especially alert to de- 7.3 percent. Retail sales were little changed in January velopments that might call for some easing of and February after rising over the previous two reserve conditions, given the risks that the ex- months, while housing starts were well above their pansion might prove to be significantly weaker pace in late 1985. Business capital spending apparently weakened somewhat in early 1986. The merchandise than expected over the period immediately trade deficit for January appears to have been only ahead. It was noted that a further reduction in slightly smaller than in December; preliminary data for the discount rate, should market conditions here February suggest that exports increased and that the and policy developments abroad make such an price and quantity of oil imports declined. Largely action desirable, could have implications for reflecting declines in energy prices, consumer prices edged down on balance over the first two months of monetary policy implementation and, depending 1986 and producer prices fell substantially. on the circumstances, might require a consulta- Growth in Ml picked up considerably over the tion of the Committee prior to the next scheduled course of the first quarter, leaving this aggregate by meeting on May 20. March somewhat above the upper end of its range for the year. On the other hand, growth of M2 was At the conclusion of the Committee's discusgenerally sluggish over the past 3 months and was sion, all of the members indicated their acceptrunning below its long-run range. Expansion of M3 ance of a directive that called for maintaining was moderate during the winter months, with growth about the existing degree of pressure on reserve around the midpoint of its range for 1986. Interest conditions. The members expected such an ap- rates have declined considerably since the February meeting of the Committee. On March 6, the Federal proach to policy implementation to be consistent Reserve Board approved a reduction in the discount with growth of both M2 and M3 at an annual rate rate from IV2 to 7 percent. The trade-weighted value of of about 7 percent for the period from March to the dollar against major foreign currencies continued June. Over the same period, Ml was expected to to decline through mid-March but has risen somewhat expand at an annual rate of about 7 to 8 percent, more recently; on balance the dollar has declined slightly since the February meeting. but the members recognized that the behavior of The Federal Open Market Committee seeks mone- Ml remained subject to unusual uncertainty. The tary and financial conditions that will foster reasonable Committee indicated that it might find somewhat price stability over time, promote growth in output on lesser or somewhat greater reserve availability a sustainable basis, and contribute to an improved acceptable over the intermeeting period depend- pattern of international transactions. In furtherance of ing on the growth of the monetary aggregates, these objectives the Committee agreed at its February meeting to establish the following ranges for monetary the strength of the business expansion, the pergrowth, measured from the fourth quarter of 1985 to formance of the dollar on foreign exchange marthe fourth quarter of 1986. With respect to Ml, the kets, progress against inflation, and conditions in Committee recognized that, based on the experience Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 483 of recent years, the behavior of that aggregate was are likely to be associated with a federal funds rate subject to substantial uncertainties in relationship to persistently outside a range of 6 to 10 percent. economic activity and prices, depending among other things on its responsiveness to changes in interest Votes for this action: Messrs. Volcker, Corrigan, rates. It agreed that an appropriate target range under Angell, Guffey, Horn, Johnson, Melzer, Morris, existing circumstances would be 3 to 8 percent, but it Rice, Ms. Seger, and Mr. Wallich. Votes against intends to evaluate movements in Ml in the light of its this action: None. Absent and not voting: Mr. consistency with the other monetary aggregates, de- Martin. velopments in the economy and financial markets, and potential inflationary pressures. It adopted a range of 6 On April 21, the Committee held a conference to 9 percent for M2 and 6 to 9 percent for M3. The associated range for growth in total domestic nonfi- by telephone after the announcement of a reducnancial debt was set at 8 to 11 percent for the year tion in the discount rate from 7 to 6V2 percent 1986. effective on that date. The members reviewed In the implementation of policy for the immediate recent economic and financial developments, future, the Committee seeks to maintain the existing including the behavior of the monetary aggredegree of pressure on reserve positions. This action is gates and technical factors affecting the proviexpected to be consistent with growth in M2 and M3 over the period from March to June at annual rates of sion of reserves. At the conclusion of the discusabout 7 percent; while the behavior of Ml continues to sion the members agreed that no changes were be subject to unusual uncertainty, growth at an annual needed in the current directive adopted at the rate of about 7 to 8 percent over the period is anticipatmeeting on April 1. It was understood that in ed. Somewhat lesser reserve restraint or somewhat carrying out open market operations within the greater reserve restraint might be acceptable depending on behavior of the aggregates, the strength of the framework of that directive, and recognizing that business expansion, developments in foreign exchange partial data suggested a strengthening in all the markets, progress against inflation, and conditions in monetary aggregates in recent weeks, a degree of domestic and international credit markets. The Chaircaution should be exercised to avoid an impresman may call for Committee consultation if it appears sion that a further change in the discount rate to the Manager for Domestic Operations that reserve conditions during the period before the next meeting was sought over the period immediately ahead. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments AMENDMENT TO RULES REGARDING the Federal Reserve Act (12 U.S.C. 321 et seq., 601- DELEGATION OF AUTHORITY 604a, and 611 et seq.), and section 225.14, 225.23, and 225.41-43 of Regulation Y (12 C.F.R. 225.14, The Board of Governors is amending 12 C.F.R. Part 225.23, and 225.41-43), and sections 211.3(a), 265, its Rules Regarding Delegation of Authority, to 211.4(c), 211.5(c), and 211.34 of Regulation K delegate to the Secretary of the Board the authority to (12 C.F.R. 211.3(a), 211.4(c), 211.5(c), and 211.34), act on certain membership applications requiring the to furnish reports on competitive factors involved in prior approval of the Board. The amendment autho- a bank merger to the Comptroller of the Currency rizes the Secretary to take action on a membership and the Federal Deposit Insurance Corporation and application when a Reserve Bank could take action on to take actions the Reserve Bank could take except the application under delegated authority but a direc- for the fact that the Reserve Bank may not act tor or senior officer of any holding company, bank, or because a director or senior officer of any holding company involved in the transaction is a director of company, bank, or company involved in the transthe Federal Reserve Bank or branch. It is expected action is a director of a Federal Reserve Bank or that this delegation of authority will expedite process- branch. ing of membership applications when such an interlock exists. Effective May 19, 1986, the Board amends AMENDMENT TO RULES REGARDING 12 C.F.R. Part 265 as follows: DELEGATION OF AUTHORITY Part 265—Rules Regarding Delegation of The Board of Governors is amending 12 C.F.R. Part Authority 265, its Rules Regarding Delegation of Authority, to redesignate the current paragraph 265.2(b)(10) as para- 1. The authority citation for 12 C.F.R. Part 265 is graph (b)(ll), and to reinsert paragraph (b)(10) as it revised as follows: read previous to the amendment published on February 14, 1984, when it was inadvertently deleted. Authority: Sec. 11, 38 Stat. 261 and 80 Stat. 1314; Effective May 29, 1986, the Board amends 12 U.S.C. 248. 12 C.F.R. Part 265 as follows: Part 265—Rules Regarding Delegation of 2. Part 265 is amended by revising section 265.2(a)(2) Authority as follows: Section 265.2—Specific Functions Delegated to 1. The authority citation for 12 C.F.R. Part 265 contin- Board Employees and to Federal Reserve ues to read as follows: Banks. Authority. Sec. 11, 38 Stat. 261 and 80 Stat. 1314; 12 U.S.C. 248. (a)(2) Under the provisions of sections 18(c) and 2. Part 265 is amended by redesignating the current 18(c)(4) of the Federal Deposit Insurance Act paragraph 265.2(b)(10) as paragraph 265.2(b)(Il) and (12 U.S.C. 1828(c) and 1828(c)(4)), sections 3(a), by adding a new paragraph 165.2(b)(10) to read as 4(c)(8), and 4(c)(14) of the Bank Holding Company follows: Act (12 U.S.C. 1842(a), 1843(c)(8), and 1843(c)(14)), sections 5(a), 5(b), and 7(d) of the Bank Service Section 265.2—Specific Functions Delegated to Corporation Act (12 U.S.C. 1865(a), 1865(b), and Board Employees and to Federal Reserve 1867(d)), the Change in Bank Control Act Banks. (12 U.S.C. 1817(j», and sections 9, 25, and 25(a) of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

486 Federal Reserve Bulletin • July 1986 (b)(10) To revoke acceptance of and return as given in accordance with section 3(b) of the Act. The incomplete a notice filed pursuant to the Change in time for filing comments has expired, and the Board Bank Control Act (12 U.S.C. 1817(j)) or to extend has considered the applications and all comments the time during which action must be taken on a received in light of the factors set forth in section 3(c) notice where the General Counsel determines, with of the Act. the concurrence of the Board's Director of Banking Applicant's only banking subsidiary, The Citizens Supervision and Regulation, that the notice is mate- National Bank of Evansville, Evansville, Indiana, is rially incomplete under the Change in Bank Control the 12th largest commercial banking organization in Act or the Board's regulation promulgated thereun- Indiana, controlling deposits of $498.3 million, repreder or contains material information that is substan- senting 1.4 percent of the total deposits in commercial tially inaccurate. banks in the state.2 Peoples Bank is one of the smaller commercial banking organizations in Kentucky and controls deposits of $93 million, representing less than one percent of the total deposits in commercial banks in the state. Consummation of this proposal would have no effect on the concentration of banking re- ORDERS ISSUED UNDER BANK HOLDING sources in Indiana or Kentucky. In addition, because COMPANY ACT, BANK SERVICE CORPORATION Applicant and Company do not operate in any of the ACT, AND FEDERAL RESERVE ACT same markets, approval would not have any effect on existing competition. The Board also examined the Orders Issued Under Section 3 of the Bank effect of the proposal on probable future competition Holding Company Act in the relevant geographic markets and has concluded that consummation of this proposal would not have CNB Bancshares, Inc. any significant adverse effects on probable future Evansville, Indiana competition in any relevant market. Section 3(d) of the Act (12 U.S.C. § 1842(d)), the CNB Acquisition Company Douglas Amendment, prohibits the Board from ap- Evansville, Indiana proving an application by a bank holding company to acquire control of any bank located outside of the Order Approving Formation and Acquisition of Bank holding company's home state, unless such acqusition Holding Companies is "specifically authorized by the statute laws of the State in which such bank is located, by language to CNB Bancshares, Inc., Evansville, Indiana, a bank that effect and not merely by implication." holding company within the meaning of the Bank Effective July 13, 1984, the statute laws of Kentucky Holding Company Act ("Act") (12 U.S.C. §§ 1841 authorize any bank holding company having its princiet seq.), has applied for the Board's approval under pal place of business in a state contiguous to Kentucky section 3(a)(5) of the Act (12 U.S.C. § 1842(a)(5)) to to acquire control of a Kentucky bank or bank holding acquire Peoples First Bancorp of Madisonville, Inc., company, if the state where that bank holding compa- Madisonville, Kentucky ("Company"), a one-bank ny is located authorizes the acquisition of bank holding holding company, and thereby indirectly acquire Com- companies in the acquiror's home state under condipany's banking subsidiary, Peoples Bank & Trust tions that are "substantially no more restrictive" than Company of Madisonville, Madisonville, Kentucky those imposed by the Kentucky interstate banking ("Peoples Bank"). This transaction would be effected law.3 by merging Company with CNB Acquisition Compa- Effective January 1, 1986, the statute laws of ny, Evansville, Indiana, a shell corporation organized Indiana authorize a bank or bank holding company and wholly owned by Applicant.1 with its principal place of business in the region Notice of the applications, affording interested per- consisting of Ohio, Kentucky, Illinois, and Michigan sons an opportunity to submit comments, has been to apply to acquire an Indiana bank or bank holding 1. CNB Acquisition Company has applied for the Board's approval pursuant to section 3(a)(1) of the Act (12 U.S.C. § 1842(a)(1)) to become a bank holding company by merging with Company and thereby acquiring Peoples Bank. In connection with this transaction, Peoples Bank will be consolidated with a phantom bank subsidiary of Applicant, CNB Interim Bank, N.A., a new shell national bank 2. Banking data are as of June 30, 1985. organized as a subsidiary of CNB Acquisition Company. 3. Ky. Rev. Stat. § 287.900(6) (Supp. 1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 487 company if the Indiana Director of Financial Institu- First Fidelity Bancorporation tions determines that the laws of the acquiror's state Newark, New Jersey would permit the applicant to be acquired by the Indiana bank holding company or bank sought to be Order Approving Acquisition of a Bank acquired.4 The Indiana and Kentucky banking commissioners, in a joint "Reciprocal Agreement Between First Fidelity Bancorporation, Newark, New Jersey, a the State of Indiana and the Commonwealth of Ken- bank holding company within the meaning of the Bank tucky," have concluded that the interstate banking Holding Company Act ("Act"), has applied for the statutes of Indiana and Kentucky are reciprocal and Board's approval under section 3(a)(3) of the Act authorize banking acquisitions between the two states. (12 U.S.C. § 1842(a)(3)) to acquire all of the outstand- Upon independent review, the Board has concluded ing voting shares of The Morris County Savings Bank, that the two statutes are reciprocal and that Kentucky Morristown, New Jersey ("Bank"). Bank is a statehas by statute expressly authorized an Indiana bank chartered stock savings bank, the accounts of which holding company, such as Applicant, to acquire a are insured by the Federal Deposit Insurance Corpora- Kentucky bank holding company, such as Company. tion. Accordingly, the Board concludes that approval of Notice of the application, affording opportunity for Applicant's proposal to acquire indirectly a bank hold- interested persons to submit comments, has been ing company in Kentucky is not barred by the Douglas given in accordance with section 3(b) of the Act (50 Amendment. Federal Register 49,130 (1985)). The time for filing The financial and managerial resources and future comments has expired, and the Board has considered prospects of Applicant, Company and their subsidiar- the application and all comments received in light of ies are considered satisfactory and consistent with the factors set forth in section 3(c) of the Act approval of the application. Considerations related to (12 U.S.C. § 1842(c)). the convenience and needs of the communities to be The Board has previously determined that a state served are also consistent with approval. guaranty savings bank is a "bank" under section 2(c) Based on the foregoing and other facts of record, the of the Act if it accepts demand deposits, engages in the Board has determined that the proposed acquisition is business of making commercial loans, and is not in the public interest and that the applications should covered by the exemption created by the Garn-St be approved. Accordingly, the applications are ap- Germain Depository Institutions Deregulation Act of proved for the reasons stated above. The transactions 1982 for thrift institutions insured by the Federal shall not be consummated before the thirtieth calendar Savings and Loan Insurance Corporation ("FSLIC") day following the effective date of this Order or prior or operating under a charter by the Federal Home to the final approval of the Kentucky Commissioner of Loan Bank Board.1 Bank accepts demand deposits Banking or later than three months after the effective and NOW accounts and engages in the business of date of this Order, unless that period is extended for making commercial loans. Its deposits are not insured good cause by the Board or the Federal Reserve Bank by the FSLIC. Accordingly, the Board has determined of St. Louis, pursuant to delegated authority. that Bank is a "bank" for purposes of the Act. The By order of the Board of Governors, effective application has therefore been considered in light of May 27, 1986. the requirements of section 3 of the Act pertaining to the acquisition of banks. Voting for this action: Chairman Volcker and Governors Applicant is the largest bank holding company in Wallich, Rice, Seger, Angell, and Johnson. New Jersey, controlling five banking subsidiaries, with deposits of $9.8 billion.2 Bank is the 22nd largest JAMES MCAFEE depository institution among commercial banks and [SEAL] Associate Secretary of the Board thrift institutions in New Jersey, with deposits of $859 1. BankVermont Corporation, 70 FEDERAL RESERVE BULLETIN 829 (1984); The Franlrford Corporation, 70 FEDERAL RESERVE BULLE- TIN 654 (1984); The One Bancorp, 70 FEDERAL RESERVE BULLETIN 359 (1984); Amoskeag Bank Shares, Inc., 69 FEDERAL RESERVE BULLETIN 860 (1983); First NH Banks, Inc., 69 FEDERAL RESERVE BULLETIN 874 (1983). 4. Ind. Code § 28-2-15-18 (Supp. 1985). 2. Banking data are as of December 31, 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin • July 1986 million. Upon consummation, Applicant would con- that the application should be, and hereby is, aptrol 8.6 percent of the total deposits in commercial proved. The transaction shall not be consummated banks and thrift institutions in the state,3 and would before the thirtieth calendar day following the effective thus remain the largest bank holding company in the date of the Order or later than three months after the state. Consummation of the proposed transaction effective date of the Order, unless such period is would not have a significant effect upon the concentra- extended for good cause by the Board or by the tion of banking resources in New Jersey. Federal Reserve Bank of New York acting pursuant to Bank is the 68th largest depository institution in the delegated authority. metropolitan New York-New Jersey banking market,4 By order of the Board of Governors, effective controlling 0.30 percent of the total deposits in deposi- May 9, 1986. tory institutions in the market. Four of Applicant's existing banking subsidiaries operate in the New York- Voting for this action: Chairman Volcker and Governors New Jersey market. Applicant is the eighth largest of Wallich, Rice, Seger, Angell, and Johnson. 162 commercial banking organizations and 397 depository institutions in the New York-New Jersey market, JAMES MCAFEE controlling 3.3 percent of the total deposits in commer- [SEAL] Associate Secretary of the Board cial banks and 1.9 percent of the total deposits in depository institutions in the market. Following consummation of this transaction, the Herfindahl-Hirsch- Concurring Statement of Governor Rice mann Index ("HHI") among banking organizations in the market would rise by only four points, to 708.5 I concur with the majority's opinion that this applica- Given Applicant's and Bank's relatively small share of tion should be approved. I note, however, that Bank deposits in the market and the large number of com- engages directly in a limited amount of real estate petitors remaining in the market, the Board concludes investment activities under provisions of New Jersey that consummation of the proposal would not have any law that authorize state savings banks in that state to significant effect on existing or probable future compe- engage directly in real estate investment activities. tition, nor would it significantly increase the concen- Real estate investment activities are not currently tration of banking resources in the market. permissible nonbanking activities for bank holding companies and their subsidiaries under the Bank Hold- The financial and managerial resources of Appliing Company Act and the Board's regulations. In this cant, its subsidiary banks, and Bank are regarded as regard, the Board is currently considering whether, in satisfactory and consistent with approval of this prolight of recent state initiatives authorizing banks to posal, particularly in light of certain commitments directly conduct real estate investment activities, the made by Applicant. Considerations relating to the Board should find these activities to be closely related convenience and needs of the community to be served to banking and, therefore, a permissible activity for are also consistent with approval. bank holding companies. Based on the foregoing and other facts of record, I am concerned that the direct investment by bankincluding the commitments made by Applicant, the ing organizations in real estate permits a bank holding Board has determined that consummation of the procompany to engage indirectly through its subsidiary posed transaction would be in the public interest and bank in activities that the holding company is prohibited from conducting directly, with the adverse consequence of conducting risky activities, such as real estate investment, in the bank. However, the Board's 3. Under New Jersey law, a single depository institution may not control more than a fixed percentage—12 percent during 1986—of current regulations permit a state bank owned by a deposits in depository institutions in the state. holding company to establish a wholly owned operat- 4. Based on the results of a study of the Metropolitan New Yorking subsidiary to conduct activities that the bank may, New Jersey banking market conducted by the Federal Reserve Bank of New York, including data regarding commuting patterns, popula- under relevant state law, conduct directly. Thus, while tion density, and other facts of record, the Board has determined that I am concerned about the risk of the real estate the Metropolitan New York-New Jersey banking market should be redefined to include all of New York City and Long Island, New activities of Bank and the fact that Applicant cannot York; Putnam, Westchester, Rockland and Orange Counties in New currently conduct these activities directly, Applicant's York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, proposal appears to be permissible under the Board's Morris, Ocean, Passaic, Somerset, Sussex, Union and Warren Counties in New Jersey; and portions of Fairfield County in Connecticut. current regulations. Moreover, Applicant has commit- 5. The Department of Justice has indicated that it will not challenge ted to significantly limit the scope of these activities acquisitions after which the HHI is less than 1000 except in extraordiand to exclude real estate investments from calculanary circumstances, and has not objected to the proposed acquisition in this case. tions of the capital of Bank and Applicant, pending Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 489 consideration by the Board of the general issue regard- resources in any relevant market. Thus, competitive ing the real estate investment activities of bank holding factors are consistent with approval of the application. companies. Accordingly, I concur in approval of the Section 3(c) of the BHC Act requires in every case application. that the Board consider the financial resources of the May 9, 1986 applicant organization and the bank or bank holding company to be acquired. As the Board has previously stated, review of the financial resources of foreign Ljubljanska Banka-Associated Bank banking organizations raises a number of complex Ljubljana, Yugoslavia issues that the Board believes require careful consideration and that the Board continues to have under Order Approving the Acquisition of a Bank review.2 In this regard, the Board has initiated consultations with appropriate foreign bank supervisors and Ljubljanska Banka-Associated Bank, Ljubljana, Yu- notes that work is currently in progress among foreign goslavia, has applied for Board approval under section and domestic bank supervisory officials to develop 3 of the Bank Holding Company Act ("BHC Act") more fully the concept of functional equivalency of (12 U.S.C. § 1842) to acquire all of the voting shares of capital ratios for banks of different countries. Pending LBS Bank-New York, New York, New York the outcome of these consultations and deliberations, ("Bank"), a proposed new state-chartered bank, and the Board has determined to consider the issues raised thereby to become a bank holding company subject to by applications by foreign banks to acquire domestic the BHC Act. banks on a case-by-case basis. Notice of the application, affording interested per- In this case, the Board notes that the primary capital sons an opportunity to submit comments, has been ratio of Applicant, after making certain adjustments in given in accordance with section 3(b) of the BHC Act. accord with U.S. regulatory and accounting practices, The time for filing comments has expired and the is below the minimum level established for domestic Board has considered the application and all com- bank holding companies. The Board regards this as a ments received in light of the factors set forth in negative factor. In other similar cases, the Board has section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). considered mitigating factors, including adjustments to Applicant, with total assets of approximately $6.1 the applicant's capital that reflect differences in acbillion as of year-end 1985, is the second largest counting and regulatory practices and that generally banking organization in Yugoslavia, and includes 22 cause applicant's capital to reflect the levels required so-called "basic banks," which are full service com- for domestic bank holding companies. In this case, the mercial banks that operate approximately 360 banking Board puts particular emphasis on the facts that Bank offices throughout Yugoslavia.1 Applicant also has will be established de novo, strongly capitalized, and banking affiliates in Frankfurt, Germany; Vienna, small in relation to Applicant; that Applicant has Austria; London, England; and Paris, France. Appli- established a plan to increase its capital to a level that cant does not operate any banking or nonbanking will equal or exceed the capital guidelines set for U.S. affiliates in the United States, and proposes to estab- bank holding companies, and has already begun implelish Bank de novo. In view of the fact that Bank will be mentation of this capital plan through earnings retena new bank and based upon all the facts of record, the tion and obtaining additional capital contributions Board concludes that the proposed transaction will from its indirect corporate founders; that Applicant is have no adverse effects on existing or probable future in compliance with the capital and other financial competition, and will not increase the concentration of requirements of the appropriate supervisory authorities in Yugoslavia and that Applicant's resources and prospects are viewed as satisfactory by those authorities; and that Applicant is supported by the resources 1. Under Yugoslav law, the 22 basic banks are the founders of of its 22 basic banks and of the 7,000 corporate Applicant and, through an Assembly, select Applicant's management and board of directors. Applicant, however, is responsible for, among founders of those basic banks, all of which are, under other things, maintaining the liquidity of the basic banks, establishing Yugoslav law, jointly and severally liable to the full and coordinating many of the key policies of the basic banks, and extent of their capital for the obligations of Applicant. providing common services to the basic banks. All of the basic banks operate under the name "Ljubljanska Banka" and report on a consolidated basis within Applicant's financial statements. In light of this relationship and all of the other facts of record in this case, the Board considers the 22 basic banks to be subsidiaries of 2. Bank of Montreal, 70 FEDERAL RESERVE BULLETIN 664 (1984); Applicant for purposes of the BHC Act, the International Banking Act Mitsubishi Bank, Ltd., 70 FEDERAL RESERVE BULLETIN 518 (1984). of 1978, the restrictions imposed on interaffiliate lending by section See also Policy Statement on Supervision and Regulation of Foreign- 23A of the Federal Reserve Act (12 U.S.C. § 371(c)), and all other Based Bank Holding Companies, 1 Federal Reserve Regulatory relevant statutes and Board regulations. Service 11 4-835 (1979). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

490 Federal Reserve Bulletin • July 1986 The Board expects that Applicant will maintain Louisiana Bancshares, Inc. Bank as among the more strongly capitalized banking Baton Rouge, Louisiana organizations of comparable size in the United States. In addition, the Board expects that Bank will be Order Approving the Acquisition of a Bank operated at all times in a manner consistent with U.S. banking principles and will conduct all credit transac- Louisiana Bancshares, Inc., Baton Rouge, Louisiana, tions on an arms-length basis. Based on these and all a bank holding company within the meaning of the of the other facts of record, including the commit- Bank Holding Company Act of 1956, as amended ments made by Applicant, the Board concludes that ("Act") (12 U.S.C. §§ 1841 et seq.), has applied for the financial and managerial factors are consistent the Board's approval under section 3(a)(3) of the Act with approval of this application. (12 U.S.C. § 1842(a)(3)) to acquire all of the voting The Board has also determined that considerations shares of St. Tammany National Bank, Mandeville, relating to the convenience and needs of the communi- Louisiana ("Bank"). ty to be served are consistent with approval. Based on Notice of the application, affording an opportunity the foregoing and all the facts of record, including the for interested persons to submit comments, has been commitments made by Applicant, the Board has deter- given in accordance with section 3(b) of the Act. The mined that consummation of the transaction would be time for filing comments has expired, and the Board consistent with the public interest. Accordingly, the has considered the application and all comments re- Board has determined that the application should be ceived in light of the factors set forth in section 3(c) of and hereby is approved. The transaction shall not be the Act (12 U.S.C. § 1842(c)). consummated before the thirtieth calendar day follow- Applicant is the largest commercial banking organiing the effective date of this Order, or later than three zation in Louisiana, controlling deposits of $3.8 bilmonths after the effective date of this Order, unless lion, representing approximately 13 percent of the such period is extended for good cause by the Board or total deposits in commercial banking organizations in by the Federal Reserve Bank of New York pursuant to the state.1 Bank is the 144th largest commercial bankdelegated authority. ing organization in the state, controlling deposits of By order of the Board of Governors, effective $47.9 million, representing 0.16 percent of the total May 30, 1986. deposits in commercial banking organizations in the state. Upon consummation of the proposed acquisition, Applicant would remain the largest commercial Voting for this action: Chairman Volcker and Governors Wallich, Rice, Seger, and Johnson. Voting against this ac- banking organization in the state, and would continue tion: Governor Angell. to control approximately 13 percent of the total deposits in commercial banking organizations in the state. Consummation of this transaction would not have any JAMES MCAFEE [SEAL] Associate Secretary of the Board significant adverse effect upon the concentration of banking resources in the state. Bank operates in the New Orleans banking market,2 Dissenting Statement by Governor Angell where it is the 17th largest of 31 banking organizations, controlling 0.7 percent of total deposits of commercial I dissent from the Board's action in this case. I believe banks in the market.3 Applicant does not compete in that an approximation of the same financial standards, the New Orleans banking market and consummation of this proposal would not eliminate existing competiincluding capital adequacy standards, that are applied tion in any geographic market. Since the New Orleans to domestic bank holding companies should also be banking market is not concentrated and there are applied to foreign banking organizations seeking to numerous probable future entrants into the market, acquire banks in the United States. To do otherwise consummation of this proposal would not have any allows foreign banking organizations a clear competisignificant adverse effect on probable future competitive advantage over domestic banking organizations and is inconsistent with the principles of competitive equality and national treatment embodied in the BHC Act. In order to prevent inconsistent treatment of foreign and domestic banking organizations, a high priority should be given to developing international 1. Banking data are as of December 31, 1984, unless otherwise standards for comparing capital adequacy. indicated. 2. The New Orleans banking market consists of the parishes of Orleans, Jefferson, St. Bernard and St. Tammany. May 30, 1986 3. All market data are as of June 30, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 491 tion in the New Orleans market. Accordingly, the Applicant, the second largest commercial banking Board concludes that factors relating to competition organization in Wisconsin, controls 36 subsidiary are consistent with approval of this application. banks with $3.6 billion total deposits, representing The financial and managerial resources of Appli- 12.1 percent of total deposits in commercial banks in cant, its subsidiary banks and Bank are consistent with the state.1 First Affiliated is the 40th largest commerapproval of the proposal. Considerations relating to cial banking organization in the state and controls the convenience and needs of the communities to be deposits of $121.7 million, representing .4 percent of served are also consistent with approval of the pro- the total deposits in commercial banks in the state. posal. Upon consummation of the proposed transaction, Ap- Based on the foregoing and other facts of record, the plicant will remain the second largest commercial Board has determined that the application should be, banking organization in Wisconsin, with total deposits and hereby is, approved. The transaction shall not be of $3.7 billion, representing 12.5 percent of total consummated before the thirtieth calendar day follow- deposits in commercial banks in the state. Consummaing the effective date of this Order, or later than three tion of the subject proposal would have no significant months after the effective date of this Order, unless effect on the concentration of banking resources in such period is extended for good cause by the Board or Wisconsin. the Federal Reserve Bank of Atlanta, acting pursuant Both Applicant and First Affiliated compete directly to delegated authority. in the Stevens Point banking market.2 Applicant is the By order of the Board of Governors, effective third largest commercial banking organization in the May 28, 1986. market, with total deposits of $26.5 million, representing 7.3 percent of the deposits in commercial banks in Voting for this action: Chairman Volcker and Governors the market. First Affiliated is the largest of 12 commer- Wallich, Rice, Seger, Angell, and Johnson. cial banking organizations in the market, with deposits of $121.7 million, representing 33.9 percent of the JAMES MCAFEE deposits in commercial banks in the market. After [SEAL] Associate Secretary of the Board consummation of the proposal, Applicant's share of the deposits in commercial banks in the market would be 41.2 percent. The market's four-firm concentration Marshall & Ilsley Corporation ratio would increase from 72.4 percent to 78.8 percent Milwaukee, Wisconsin and the Herfindahl-Hirschman Index ("HHI") would increase by 495 points to 2447.3 Order Approving Acquisition of a Bank Holding In order to minimize the competitive effects of the Company proposal in the Stevens Point market, Applicant proposes to divest one of its two subsidiary banks in the Marshall & Ilsley Corporation, Milwaukee, Wiscon- market, M&I Bank of Portage County ("Portage sin, a bank holding company within the meaning of the Bank") to an individual who does not control any Bank Holding Company Act (12 U.S.C. § 1841 et seq. other bank in the market. This divestiture would be ("Act")), has applied for .he Board's approval under section 3 of the Act (12 U.S.C. § 1842) to acquire First Affiliated Bancorporation, Inc., Stevens Point, Wisconsin ("First Affiliated"), and thereby to acquire 1. Deposit data refer to total domestic deposits effective as of the Bank of Park Ridge, Park Ridge, Wisconsin, and December 31, 1984, and include Applicant's recent acquisition of Lancaster State Bank, Lancaster, Wisconsin, consummated on De- The First National Bank of Stevens Point, Stevens cember 31, 1985. Data for Applicant also include its pending acquisi- Point, Wisconsin ("Banks"). In connection with these tions of Farmers & Merchants Bank, Marytown, Wisconsin ($10.3 applications, M&I Stevens Point Corporation, Stevens million in total deposits), and Home State Bank of South Milwaukee, South Milwaukee, Wisconsin ($36.1 million in total deposits). Point, Wisconsin, has applied to become a bank hold- 2. The Stevens Point banking market is approximated by Portage ing company by merger with First Affiliated. County plus Iola and Scandinavia townships in Waupaca County and Notice of the applications, affording interested par- Plainfield township in Waushara County, Wisconsin. 3. Under the revised Department of Justice Merger Guidelines (49 ties an opportunity to submit comments, has been Federal Register 26,823 (June 29, 1984)) ("Guidelines"), a market in given in accordance with section 3(b) of the Act (51 which the post-merger HHI is over 1800 is considered highly concentrated. In such markets, the Department is likely to challenge a merger Federal Register 7125 (February 28, 1986)). The time that produces an increase in the HHI of more than 50 points. The for filing comments has expired, and the Board has Department of Justice has informed the Board that a bank merger or considered the applications and all comments received acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI in light of the factors set forth in section 3(c) of the is at least 1800 and the merger increases the HHI by at least 200 Act. points. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Federal Reserve Bulletin • July 1986 effected prior to or at consummation of this proposal.4 approval. Considerations relating to the convenience Portage Bank, the largest of Applicant's subsidiaries in and needs of the community to be served are also the Stevens Point market, controls deposits of $18.1 consistent with approval. Based on the foregoing and million, which represents 5 percent of the deposits in other facts of record, the Board has determined that commercial banks in the market. After the proposed the proposed acquisition is in the public interest and divestiture, Applicant would control approximately that the applications should be, and hereby are, ap- 36.2 percent of the total deposits in commercial banks proved. in the market. Consummation of the proposed acquisi- On the basis of the record, the applications are tion would increase the HHI in the market by 133 approved for the reasons summarized above. The points to 2085, and increase the four-firm concentra- transaction shall not be consummated before the thirtition ratio by 1.4 percentage points to 73.8 percent. eth calendar day following the effective date of this Although an acquisition of this size would normally Order, or later than three months after the effective cause concern, the Board believes that the anticom- date of this Order, unless such period is extended for petitive effects of the proposal are mitigated by a good cause by the Board or the Federal Reserve Bank number of factors. First, inasmuch as Applicant will of Chicago pursuant to delegated authority. divest the bank to an entity not presently in the By order of the Board of Governors, effective market, the total number of competitors in the market May 27, 1986. will not decrease. In addition, the Board has considered the presence of thrift institutions in its analysis of Voting for this action: Chairman Volcker and Governors this proposal.5 Two thrift institutions compete with Wallich, Rice, Seger, Angell, and Johnson. commercial banks in the Stevens Point market. These thrifts, which account for 31.9 percent of the market's JAMES MCAFEE total deposits, represent the market's largest and [SEAL] Associate Secretary of the Board fourth largest organizations. Thrift institutions already exert a considerable competitive influence in the market as providers of NOW accounts and consumer loans. In addition, the larger of these institutions Mellon Bank Corporation provides commercial and industrial loans in addition to Pittsburgh, Pennsylvania traditional thrift services. Based upon the above considerations, the Board concludes that consummation Mellon Financial Corporation (MD) of the proposal is not likely to substantially lessen Bethesda, Maryland competition in the Stevens Point market.6 The financial and managerial resources of Appli- Order Approving Acquisition of Bank and Formation cant, its subsidiaries and Banks are consistent with of Bank Holding Company Mellon Bank Corporation, Pittsburgh, Pennsylvania ("Applicant"), a bank holding company within the 4. The Board's policy with regard to competitive divestitures meaning of the Bank Holding Company Act (the requires that divestitures intended to cure the anticompetitive effects resulting from a merger or acquisition occur on or before the date of "BHC Act" or "Act"), and Mellon Financial Corpoconsummation of the merger to avoid the existence of anticompetitive ration (MD), Bethesda, Maryland ("Mellon Finaneffects. See Burnett Banks of Florida, Inc., 68 FEDERAL RESERVE cial"), have applied for the Board's approval under BULLETIN 190 (1982); InterFirst Corporation, 68 FEDERAL RESERVE BULLETIN 243 (1982). By letter dated April 29, 1986, the Department section 3 of the Act (12 U.S.C. § 1842) and section of Justice has indicated that it finds no objection to the proposed 225.14(h)(2) of the Board's Regulation Y (12 C.F.R. transaction on competition grounds, so long as the proposed divesti- § 225.14(h)(2)) to acquire all of the voting shares of ture of Portage Bank occurs prior to or concurrent with consummation of the proposal. Mellon Bank (MD), Bethesda, Maryland ("Bank"), a 5. The Board has previously indicated that thrift institutions have de novo state-chartered commercial bank. Applicant become, or have the potential to become, major competitors of commercial banks. National City Corporation, 70 FEDERAL RESERVE will form Bank to acquire certain assets and assume BULLETIN 743 (1984); NCNB Corporation, 70 FEDERAL RESERVE certain liabilities of Community Savings and Loan, BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL Inc., Bethesda, Maryland ("Community"), a closed RESERVE BULLETIN 802 (1983); First Tennessee National Corporasavings and loan association whose deposits were tion, 69 FEDERAL RESERVE BULLETIN 298 (1983). 6. If 50 percent of deposits held by thrift institutions in the Stevens insured by the Maryland Savings-Share Insurance Point banking market are included in the calculation of market Corporation ("MSSIC"). Mellon Financial, a wholly concentration, after consummation of the proposed divestiture, the share of total deposits held by the four largest organizations in the owned subsidiary of Applicant, would become an market would be 69.8 percent. Applicant's market share would intermediate bank holding company by acquiring increase by 1.9 to 29.4 percent and the HHI would increase by 88 Bank. points to 1613 upon consummation of the proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 493 Applicant's establishment and acquisition of Bank In view of these and other facts of record, the Board would be a major step toward resolving the financial believes that there is an emergency requiring expedicrisis involving MSSIC-insured savings and loan asso- tious action on the applications within the meaning of ciations, a crisis that began one year ago.1 During that section 3(b) of the Act and section 225.14(h)(2) of crisis, several such institutions were placed in conser- Regulation Y. The Board has accordingly determined vatorship, and the Governor of Maryland limited with- that it is appropriate to shorten the period in which drawals at the remaining institutions to $1,000 per interested persons may submit comments regarding month. The Maryland General Assembly abolished the the applications. Notice of the applications was MSSIC, merged it into the State of Maryland Deposit promptly published in the Federal Register (51 Feder- Insurance Fund Corporation ("MDIF"), and required al Register 11,838 (1986)) and in a newspaper of all institutions previously insured by the MSSIC to general circulation. The time for filing comments has apply for insurance from the Federal Savings and expired, and the Board has considered the applications Loan Insurance Corporation ("FSLIC"). and all comments received in light of the factors set As of April 21, 1986, 91 of the 101 Maryland savings forth in section 3(c) of the Act. No hearing has been and loan associations formerly insured by the MSSIC requested. were open on a full-service basis: 42 institutions, with Applicant, with total assets of $33.4 billion, has six combined assets of $6.5 billion, had received final subsidiary banks and is the ninth largest banking approval for federal deposit insurance; 4 institutions, organization in the United States.2 Applicant also with combined assets of $21 million, had received engages in a variety of nonbanking activities. conditional approval for such insurance; and 45 insti- The proposed acquisition would have no significant tutions, with combined assets of $267 million, were no adverse effect on the concentration of banking relonger subject to withdrawal restrictions, although sources in Maryland or on competition in the Washingthey lacked final or conditional approval for FSLIC ton, D.C., banking market,3 where Community is insurance. The 10 institutions still subject to withdraw- located. Applicant currently has no subsidiary bank in al restrictions had combined assets of $1.5 billion. the market or anywhere in Maryland. Moreover, Com- Four of those institutions, with combined assets of munity is a relatively small institution, and is no longer $1.3 billion (including Community, with assets of $389 a viable competitor: it is insolvent, its deposits are million), were in receivership or conservatorship. frozen, and there is no prospect that it will reopen. By Because of Community's financial problems, the allowing Bank to compete in place of Community, the Circuit Court for Montgomery County, Maryland, proposed acquisition would tend to increase competiplaced Community in conservatorship on September tion in the market. 5, 1985, and in receivership on April 8, 1986. On May The financial and managerial resources of Applicant 2, 1986, in approving the MDIF's agreements with are consistent with approval of the applications. Appli- Applicant and Bank, the court found that Community cant would recapitalize Bank so that its primary capiwas insolvent. Few withdrawals have been permitted tal will exceed the minimum standards set forth in the since September 5, 1985, and no interest has accrued Board's Capital Adequacy Guidelines, and Applicant on Community's deposits since April 4, 1986. has committed to maintain Bank's capital. In view of The Bank Commissioner of Maryland has advised that commitment, the financial and managerial rethe Board that there is an emergency in Maryland sources and future prospects of Mellon Financial and involving savings and loan associations formerly in- Bank are also consistent with approval. While the sured by the MSSIC; that Community's assets, adjust- Board considers as an adverse factor any significant ed for anticipated losses, are far less than its liabilities; dilution of capital or increase in off-balance-sheet risk and that the proposed acquisition is "an integral part in connection with a proposed acquisition, the Board of the plan forged by the State of Maryland to avoid a believes that any adverse effects of this proposal are complete collapse of the savings and loan industry and mitigated by the MDIF's agreement to contribute insure reasonable access to depositors' funds." Ac- cash, provide certain indemnities, and make certain asset and income guarantees.4 In addition, the Board cordingly, the Commissioner has asked the Board to approve these applications expeditiously under the emergency procedures of the BHC Act. 2. Unless otherwise specified, financial data are as of December 31, 1985. 3. The market is coextensive with the Washington, D.C., RMA, which includes portions of Maryland and Virginia. 1. The Board's Orders in Baltimore Bancorp, 71 FEDERAL RE- 4. In its agreements with the MDIF, Applicant has taken precau- SERVE BULLETIN 901 (1985), and Chase Manhattan Corporation, 71 tions against being exposed to Community's non-deposit liabilities, FEDERAL RESERVE BULLETIN 960 (1985), have recounted the circum- including claims involving Equity Programs Investment Corporation stances of that crisis. and its affiliates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin • July 1986 notes that the proposed acquisition would have a to be served. Accordingly, Bank's membership appliminimal effect on Applicant's capital and leverage. cation is approved.6 The acquisition would give Community's depositors In light of the circumstances set forth above, the full and immediate access to their funds—access that Board has determined that there is an emergency they have lacked for nearly twelve months—and requiring expeditious action on the applications within would enable Bank to serve the convenience and the meaning of section 3(b) of the BHC Act and needs of the relevant communities. The Board accord- section 225.14(h)(2) of Regulation Y. Accordingly, the ingly concludes that convenience and needs factors acquisition may be consummated on or after the fifth lend substantial weight toward approval of the applica- calendar day following the effective date of this Order. tions. The acquisition shall not be consummated later than On the basis of all of the above, particularly the three months after the effective date of this Order compelling benefits of the proposed acquisition to the unless that period is extended for good cause by the depositors of Community and to the public, the Board Federal Reserve Bank of Cleveland, pursuant to deleconcludes that approval of the acquisition would be in gated authority, or by the Board. the public interest. By order of the Board of Governors, effective Under section 3(d) of the BHC Act, a bank holding May 7, 1986. company may not acquire a bank located outside of the holding company's home state unless the acquisi- Voting for this action: Chairman Volcker and Governors tion is "specifically authorized by the statute laws of Wallich, Rice, Seger, Angell, and Johnson. the state in which such bank is located." 12 U.S.C. § 1842(d). The Maryland Financial Institutions Code JAMES MCAFEE authorizes the State Bank Commissioner to allow an [SEAL] Associate Secretary of the Board out-of-state bank holding company (such as Applicant) to acquire a commercial bank (such as Bank) that has been formed to assume a substantial portion of the Simmer Development Company liabilities of a savings and loan association that is in Chillicothe, Missouri receivership (such as Community). See Md. Fin. Inst. Code §§ 1101-06 (as amended by Md. House Bill No. CS Bancshares, Inc. 905, 1986 Md. Laws, ch. 11, effective Apr. 3, 1986). Chillicothe, Missouri The Code specifies that such an acquisition is "authorized for purposes of section 3(d)" of the BHC Act. Id. Order Approving Formation of Bank Holding § 5-1102(b). The Maryland Bank Commissioner has Companies informed the Board that she will soon approve the proposed acquisition. The Board has accordingly con- CS Bancshares, Inc., Chillicothe, Missouri ("CSB"), cluded that the acquisition is permissible under section has applied for the Board's approval under section 3(d). 3(a)(1) of the Bank Holding Company Act ("Act") Based on the foregoing and other facts of record, the (12 U.S.C. § 1842(a)(1)) to become a bank holding applications of Applicant and Mellon Financial are company by acquiring up to 92.8 percent of the voting approved for the reasons set forth above. shares of Chillicothe State Bank, Chillicothe, Missouri Bank has applied under section 9 of the Federal ("Bank"). Simmer Development Company, Chilli- Reserve Act (12 U.S.C. § 321) and section 208.4 of the cothe, Missouri ("SDC"), has also applied for the Board's Regulation H (12 C.F.R. § 208.4) to become a Board's approval under section 3(a)(1) of the Act to member of the Federal Reserve System upon being become a bank holding company by acquiring up to acquired by Applicant. Bank appears to meet all the 50.5 percent of the voting shares of CSB. criteria for admission to membership, including those Notice of the applications, affording opportunity for relating to Bank's management, capital, assets and interested persons to submit comments, has been liabilities,5 earnings prospects, and corporate powers, given in accordance with section 3 of the Act (51 and to the convenience and needs of the communities Federal Register 6037 (1986)). The time for filing 6. In view of the facts of record and at the request of the Maryland Bank Commissioner, the Board has determined that there is an emergency requiring expeditious action on the membership application. Accordingly, the Board hereby waives the notice and other 5. Bank will have no assets that are ineligible for ownership by a procedural requirements for membership set forth in section 262.3(1) state member bank. of the Board's Rules of Procedure. 12 C.F.R. § 262.3(1). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 495 comments has expired, and the Board has considered ty to be served are consistent with approval of the the applications and all comments received in light of transaction. the factors set forth in section 3(c) of the Act, includ- Based on the foregoing and other facts of record, the ing comments by the Missouri Division of Finance. Board has determined that the applications should be, CSB is a nonoperating corporation formed for the and hereby are, approved. The acquisitions shall not purpose of acquiring Bank. SDC is a shell corporation be consummated before the thirtieth calendar day owned by CSB's principal shareholder.1 Bank is one following the effective date of this Order, or later than of the smaller commercial banking organizations in the three months after the effective date of this Order, state of Missouri,2 controlling less than 0.1 percent of unless the latter period is extended for good cause by the total deposits in commercial banking organizations the Board or the Federal Reserve Bank of Kansas in the state. Consummation of this proposal would not City, acting pursuant to delegated authority. result in the concentration of banking resources or in By order of the Board of Governors, effective any significant adverse competitive effects in the state May 5, 1986. of Missouri. Bank competes in the Livingston County banking Voting for this action: Governors Wallich, Rice, Seger, market,3 where it is the second largest of four banking Angell, and Johnson. Absent and not voting: Chairman Volcker. organizations, controlling 28.3 percent of total deposits in commercial banking organizations in the market. JAMES MCAFEE None of the principals of SDC, CSB, or Bank are [SEAL] Associate Secretary of the Board associated with any other financial institutions located within the relevant banking market. Accordingly, consummation of this transaction would not result in the concentration of banking resources or in any signifi- Orders Issued Under Section 4 of the Bank cant adverse competitive effects in any relevant geo- Holding Company Act graphic area. Thus, competitive factors are consistent with approval. Amsterdam-Rotterdam Bank, N.V. The financial and managerial resources and future Amsterdam, The Netherlands prospects of SDC, CSB and Bank are consistent with approval of the transaction.4 Applicant has proposed Order Approving Application to Engage in Trust no new services for Bank upon consummation of the Company and Investment Advisory Activities transaction. There is no evidence in the record, however, that the banking needs of the community to be Amsterdam-Rotterdam Bank, N.V., Amsterdam, The served are not being met. Accordingly, considerations Netherlands, a foreign bank subject to the provisions relating to the convenience and needs of the communiof the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval, pursuant to section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.21(a) of the Board's Regulation Y (12 C.F.R. § 225.21(a)), to indirectly acquire voting 1. SDC currently owns certain nonbanking assets which are impermissible for bank holding companies. SDC has committed that it will shares of The Private Bank & Trust, National Associadivest all of its impermissible nonbanking assets within two years from tion, Miami, Florida ("Trust Company"), a newly the date that it becomes a bank holding company under the Act, consistent with the requirements of section 4(a)(2) of the Act, established limited purpose trust company. Trust 12 U.S.C. § 1843(a)(2). SDC also commits to submit plans for such Company will engage in trust services, investment divestiture for the prior review of the Federal Reserve Bank of Kansas advisory services, and discretionary management of City. 2. All banking data are as of December 31, 1984. financial assets primarily for wealthy individuals living 3. The Livingston County banking market is comprised of Living- outside the United States. These activities have been ston County, Missouri. determined by the Board to be closely related to 4. In evaluating financial and managerial factors in connection with these applications, the Board has considered a protest by four banking and permissible for bank holding companies directors and shareholders of Bank. Protestants allege that the appli- under sections 225.25(b)(3) and (4) of the Board's cations should be denied because the holding companies resulting from approval of these applications would not be able to serve as a Regulation Y (12 C.F.R. §§ 225.25(b)(3) and (4)). source of financial and managerial strength to Bank. In addition, Trust Company will not make commercial loans or Protestants allege that deficiencies in the condition of Bank are due to accept demand deposits, and will not, therefore, be a the managerial deficiencies of the controlling principal of SDC. After careful consideration of the protest and all of the facts of record, bank for purposes of the BHC Act. Applicant will including recent improvements instituted in the management of Bank, acquire shares of Trust Company indirectly through and the comments by the Missouri Division of Finance, the Board has concluded that the protest does not support a finding of adverse Bank Oppenheim Pierson (Schweiz) A. G. ("BOP"), a banking factors. bank chartered in Switzerland. BOP is owned jointly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin • July 1986 by Applicant and Sal Oppenheim, Jr., & Cie ("Oppen- The Board notes that the primary capital ratio of heim & Cie"), a private German bank. BOP will own Applicant, as publicly reported, is below the minimum 16.7 percent of the voting shares of T.P.B. Holdings, capital guidelines established by the Board for U.S. N.V., a Netherlands Antilles holding company that bank holding companies. The Board has also considwill, in turn, own all of the shares of The Private Bank ered all of the information available to the Board & Trust Corporation, Miami, Florida, the immediate regarding the financial condition of Applicant and owner of all of the shares of Trust Company. In made adjustments in accordance with U.S. regulatory addition, BOP will own 50 percent of the voting shares and accounting practices. In light of these facts and the of the sole general partner of T.P.B. Investments Ltd., fact that Trust Company will be established de novo, a limited partnership formed by BOP and a number of will be small in comparison to Applicant, and will individual investors to hold 66.6 percent of the voting engage in permissible nonbanking activities, the Board shares of T.P.B. Holdings, N.V. The remaining shares has determined that the financial resources of Appliof T.P.B. Holdings, N.V., and 50 percent of the shares cant are consistent with approval of this application. of the general partner will be acquired by an individual Applicant's proposed acquisition would establish an investor. additional competitor providing trust services in Flori- Notice of the application, affording interested per- da. There is no evidence in the record that indicates sons an opportunity to submit comments, has been that Applicant's proposal would result in any undue duly published (51 Federal Register 6802 (1986)). The concentration of resources, decreased or unfair comtime for filing comments has expired and the Board petition, conflicts of interest or unsound banking prachas considered the application and all comments re- tices.2 Accordingly, based on all the facts of record ceived in light of the factors set forth in section 4(c) of including the commitments made by Applicant, the the BHC Act. Board has determined that the benefits to the public Applicant, with total assets of approximately $48.7 would outweigh any potential adverse effects. billion,1 is the third largest bank in The Netherlands Based on the foregoing, and all the facts of record, and the 58th largest banking organization worldwide. the Board has determined that the balance of public Applicant engages in a wide range of retail and whole- interest factors it is required to consider under section sale banking activities, as well as securities underwrit- 4(c)(8) of the BHC Act is favorable. Accordingly, the ing and brokerage activities outside the United States. application should be, and hereby is, approved. The In the United States, Applicant operates a branch in Board's determination in this case is subject to all of New York, and representative offices in San Francis- the conditions set forth in Regulation Y, including co, Los Angeles, and Houston. In addition, Applicant sections 225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) owns approximately 20 percent of the voting shares of and 225.23(b)), and to the Board's authority to require European American Bancorp, New York, New York. such modification or termination of the activities of a BOP and Oppenheim & Cie do not have a banking bank holding company or any of its subsidiaries as the presence in the United States. Board finds necessary to assure compliance with, and In acting on this application, the Board must consid- prevent evasions of, the provisions and purposes of er the standards enumerated in section 4(c)(8) of the the BHC Act and the Board's regulations and orders issued thereunder. BHC Act. As noted above, the proposed activities of Trust Company have been previously determined to The transaction shall not be consummated later than be closely related to banking within the meaning of the three months after the date of this Order, unless such BHC Act. The Board is also required under section 4(c)(8) of the BHC Act to determine whether the performance of the proposed activities by an applicant "can reasonably be expected to produce benefits to 2. In prior decisions, the Board has indicated concern that conductthe public, such as greater convenience, increased ing nonbanking activities through a joint venture may "lead to a competition, or gains in efficiency that outweigh possi- matrix of relationships between co-venturers that could break down the legally mandated separation of banking and commerce." Amsterble adverse effects, such as undue concentration of dam-Rotterdam Bank, N.V., 70 FEDERAL RESERVE BULLETIN 835 resources, decreased or unfair competition, conflicts (1984); see also The Maybaco Company and Equitable Bancorporaof interests, or unsound banking practices." tion, 69 FEDERAL RESERVE BULLETIN 375 (1983); and Deutsche Bank AG, 67 FEDERAL RESERVE BULLETIN 449 (1981). In this case, the joint (12 U.S.C. § 1843(c)(8)). ownership by Applicant and Oppenheim & Cie of BOP represents a longstanding relationship between two foreign banking organizations to conduct banking and financial activities primarily outside the United States, and does not raise the same concerns previously expressed by the Board. In addition, the fact that BOP has established a limited partnership with a number of private individual investors for the purpose of establishing Trust Company would not appear in this 1. As of December 31, 1985. case to result in any adverse effects. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 497 period is extended for good cause by the Board or by Quotron engages in the following nonbanking activithe Federal Reserve Bank of New York, pursuant to ties: delegated authority. (1) Financial Information Service. This service con- By order of the Board of Governors, effective sists of providing on-line transaction and quotation May 23, 1986. data regarding stocks, bonds, options, mutual funds, commodities, and a variety of other financial data. Voting for this action: Governors Wallich, Rice, Angell, (2) Financial Data Base Service. This service conand Johnson. Absent and not voting: Chairman Volcker and sists of providing Quotron's customers with access Governor Seger. to a library of financial and economic data bases, prepared by third party data base services, that provide, among other things, financial information JAMES MCAFEE [SEAL] Associate Secretary of the Board extracted from reports filed with the SEC, business and economic news, economic analysis, commentary and forecasts, and advisory services. Citicorp (3) Financial Office Service. This service includes New York, New York word processing, electronic mail, automated client bookkeeping, a spreadsheet service, and business Order Approving Acquisition of Quotron Systems, graphics. Inc. (4) Hardware. This service consists of the design, assembly and provision (generally through lease) of Citicorp, New York, New York, a bank holding com- the computer hardware that is used to conduct pany within the meaning of the Bank Holding Compa- activities 1, 2 and 3. ny Act of 1956 ("Act"), has applied for the Board's approval, pursuant to section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the Quotron is also involved in a joint venture with the Board's Regulation Y (12 C.F.R. § 225.23(a)) to ac- Associated Press and Dow Jones & Company, which quire all of the voting shares of Quotron Systems, Inc., markets Quotron's services outside of North America. Los Angeles, California ("Quotron"), a company that Quotron has also entered into an agreement with engages in a variety of data processing and data American Telephone & Telegraph ("AT&T"), that transmission activities for customers such as securities provides for the joint marketing of Quotron's services, and commodities exchanges, brokerage firms, com- along with certain computer hardware and software mercial banks, savings and loan associations, insur- developed by AT&T. ance companies, and investment managers. Activities 1 and 2 involve the processing and trans- Notice of the application, affording interested per- mission of banking, financial and economic data and sons an opportunity to submit comments, has been the provision of hardware in connection therewith. duly published (51 Federal Register 11,501 (1986)). Such activities have been determined by the Board to The time for filing comments has expired, and the be closely related to banking and permissible for bank Board has considered the application and all com- holding companies in section 225.22(b)(7) of Regulaments received in light of the factors set forth in tion Y (12 C.F.R. § 225.25 (b)(7)), which permits bank section 4(c)(8) of the Act. holding companies to provide to others data process- Citicorp, with total consolidated assets of $181.9 ing and data transmission services, facilities, data billion, is the largest banking organization in the bases, or access to such services, facilities, or data nation.1 It presently operates eight banking subsidiar- bases by any technological means, if: ies. Its lead bank, Citibank, N.A., New York, New (i) the data to be processed or furnished are York, accounts for approximately 79 percent of its financial, banking, or economic, and the services consolidated assets and is a full-service commercial are provided pursuant to a written agreement so bank. Citicorp's other banking subsidiaries are located describing and limiting the services; in South Dakota, Maryland, Nevada, Delaware, (ii) the facilities are designed, marketed, and Maine, Utah, and New York State. Citicorp also operated for the processing and transmission of engages, directly and through subsidiaries, in a variety financial, banking, or economic data; and of nonbanking activities, including data processing and (iii) the hardware provided in connection theredata transmission services. with is offered only in conjunction with software designed and marketed for the processing and transmission of financial, banking, or economic 1. Banking data are as of March 31, 1986. data, and where the general purpose hardware Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin • July 1986 does not constitute more than 30 percent of the electronic mail and word processing systems. Quotron cost of any packaged offering. markets these financial office services with its financial information and financial data base services. The The financial office service and the design and assem- office services may be used on the same terminals that bly of data processing hardware have not been consid- provide financial information and data bases. ered previously by the Board. The broker portfolio system, spreadsheet, business Section 4(c)(8) of the Bank Holding Company Act graphics, and automated client bookkeeping system provides that a bank holding company may, with components of the financial office service are designed Board approval, engage in any activity "which the for, and appear limited to, manipulating banking, Board after due notice and opportunity for hearing has financial or economic data, specifically data provided determined (by order or regulation) to be so closely through Quotron's financial information and data base related to banking or managing or controlling banks as services, as well as certain customer information. to be a proper incident thereto." Moreover, Citicorp has committed that the FOS ser- The Board has relied on guidelines established by vices will be offered pursuant to a written contract that the federal courts to determine whether an activity is describes and limits the service to the transmission closely related to banking under section 4(c)(8).2 Un- and processing of banking, financial or economic data. der these guidelines, an activity may be found to be Based on the facts of record, including Citicorp's closely related to banking if it is demonstrated: commitment, the Board concludes that the services (1) that banks generally have, in fact, provided the listed above permit the processing and transmission of proposed services; banking, financial and economic data and are therefore (2) that banks generally provide services that are permissible for bank holding companies under Regulaoperationally or functionally so similar to the pro- tion Y. posed services as to equip them particularly well to The word processing and electronic mail compoprovide the proposed services; or nents of the office service, as currently offered by (3) that banks generally provide services that are so Quotron, are not limited to the processing of banking, integrally related to the proposed service as to financial or economic data. Unlike the spreadsheet require their provision in a specialized form. and other services discussed above, which are designed to process financial data, the word processing The Board also may consider other factors in deter- and electronic mail services are capable of being used mining whether an activity is closely related to bank- for nonfinancial applications. ing and has stated that it will consider evidence of any Applicant asserts that the office service (including reasonable connection to banking in making its analy- word processing and electronic mail) is offered by sis.3 In addition, section 225.21(a)(2) of Regulation Y Quotron solely to allow customers to manipulate bankpermits a bank holding company to engage in inciden- ing, financial or economic data provided by Quotron. tal activities that are necessary to carry on activities Applicant contends that since the office service may that the Board has determined are closely related to only be purchased by customers who have already banking. purchased Quotron's financial information and data base services, the office service is associated only with Financial Office Service the delivery of banking, financial, or economic data, and is permissible under section 225.25(b)(7) of Regu- Quotron provides, in connection with the financial lation Y. information and data base services, financial office To the extent that the word processing and electronservices ("FOS") that include: a broker portfolio ic mail services are limited to data provided by Quosystem; an automated client bookkeeping system that tron, the services are permissible because they are analyzes and maintains the value of clients' financial limited to banking, financial or economic data—the assets based on current market prices; a spreadsheet only data provided by Quotron. However, Quotron service, which permits financial calculations, forecast- provides its customers with the capacity to have ing and analysis; business graphics, which allow cus- access, through the Quotron computer, to information tomers to plot and analyze financial information; and stored in its customers' data bases. Because of the nature of Quotron's customers and the financial orientation of the Quotron system and software, it is likely that the customer data to be accessed will be account information or similar financial data. In addition, the 2. National Courier Association v. Board of Governors, 516 F.2d services will be provided pursuant to a contract that 1229 (D.C. Cir. 1975). limits their use to banking, financial or economic data. 3. 49 Federal Register 806 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 499 Moreover, the financial office service, including may not be used for general data processing purposes, word processing and electronic mail, will not be pro- and is limited to the specific applications designed and vided to a customer unless the customer subscribes to maintained by Quotron for the processing and transthe information and data base service. Because of this mission of banking, financial and economic data.6 requirement and the design and pricing of the word As noted above, however, Quotron also provides its processing and electronic mail services, a customer is customers with the ability to gain access to informanot likely to subscribe to the Quotron service merely tion and data processing programs on the customers' to obtain the word processing capability. own mainframe computers, through Quotron hard- In order to insure that the word processing and ware. The Board believes that the possibility of extenelectronic mail services will be limited to processing sive use of this capability for nonfinancial data prothe financial, banking, or economic data, the Board is cessing applications is unlikely. However, in view of requiring, as a condition to its approval of this applica- this capability and in order to assure that Quotron's tion, that these services be limited to processing only hardware activities represent only a minor part of those data provided by Quotron or contained in the Quotron's business, the Board is conditioning its apcustomers' own data bases and that such data be proval on the requirement that the cost of the hardlimited to banking, financial or economic data. The ware provided to Quotron's customers may not consti- Board believes that, subject to this condition, the word tute more than 30 percent of the cost of any packaged processing and electronic mail services are permissible offering.7 for bank holding companies under section 225.25(b)(7) Design and Assembly of Hardware. Quotron also of Regulation Y. designs and assembles the hardware that is used in connection with software to provide the Quotron Hardware services. The Board has not previously considered whether the assembly of hardware designed for the Provision of Hardware. In addition to providing processing or transmission of banking, financial and financial information, data base, and office services, economic data is closely related to banking or permis- Quotron provides the hardware that is used in connec- sible as an incidental activity.8 tion with these services. Such hardware includes the Applicant has not asserted, and the record does not desktop terminals used by brokers and the keyboards support a finding, that the assembly of computer that enable brokers and other operators to use Quo- hardware is closely related to banking. Applicant tron's services. The desktop terminals are linked to argues that Quotron's assembly of its hardware is minicomputers, leased from Quotron, and located on incidental to its provision of data processing services customers' premises. Quotron's terminals and key- because such assembly is necessary for Quotron to boards are designed to receive and manipulate bank- assure the availability, reliability and quality of coming, financial, and economic data and may also be ponents used by Quotron, and that stock quotation capable of nonfinancial applications. companies like Quotron can assure such product char- Regulation Y permits a bank holding company to acteristics only by the design and assembly of the provide hardware in conjunction with the provision of hardware that provides quotation information. In supsoftware used for the processing or transmission of port of the argument, Applicant asserts that competibanking, financial or economic data.4 If the hardware tors of Quotron also design and assemble the hardware provided is considered to be special-purpose hard- that provides the Quotron service. ware, its provision is considered closely related to banking.5 If the hardware is general-purpose hardware, its provision is considered incidental to a closely related activity and the cost of the hardware must be limited to 30 percent of any packaged offering. 6. Quotron maintains control over the uses of the hardware through The hardware provided by Quotron is primarily its control of all the software that is loaded into its hardware. Any special-purpose hardware. The hardware generally changes requested by a customer to the roster of software programs used by the customer must be processed by Quotron at a central Quotron facility. 7. The Board also notes that the facts of record show that the hardware constitutes less than 30 percent of the cost of any packaged offering, thus satisfying the condition imposed in this order. 8. In Citicorp ("Citishare"), the Board was not required to consider the permissibility of manufacturing either general or special- 4. C.F.R. § 225.24(b)(7)(iii). purpose hardware; in fact, the Board's order specifically noted that 5. Special-purpose hardware is designed to provide a specific data "Citicorp has not applied for approval to manufacture hardware or processing or transmission service, and is not likely to be used, to any software and this activity is not intended to be encompassed by this significant extent, for nonfinancial purposes. order." 68 FEDERAL RESERVE BULLETIN at 509, n.17 (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

500 Federal Reserve Bulletin • July 1986 In National Courier, the court stated that an activity whether the proposal can "reasonably be expected to would be considered to be permissible as an activity produce benefits to the public, such as greater convethat is incidental to a closely related activity if the nience, increased competition, or gains in efficiency, former activity is "necessary" to the provision of the that outweigh possible adverse effects, such as undue latter service. 516 F.2d 1229, 1240-41. concentration of resources, decreased or unfair com- The record contains examples of competitors of petition, conflicts of interests, or unsound banking Quotron that purchase finished hardware manufac- practices." 12 U.S.C. § 1443(c)(8). tured by outside vendors to provide their companies' Two subsidiaries of Applicant currently engage in services. In addition, the Board notes that numerous some of the same lines of business as Quotron, and manufacturers and assemblers of mainframe and end- thus some existing competition would be eliminated by user terminal components exist, some of which cur- this proposal.10 However, the market for the services rently supply components to Quotron. provided by Quotron is nationwide, is characterized In view of the fact that finished hardware of the type by a large number of competitors, and has few barriers provided by Quotron is available and, in fact, is to entry. In addition, neither Applicant nor Quotron marketed by companies providing services similar to holds a significant share of the relevant market. Acthose provided by Quotron, the Board concludes that cordingly, the Board concludes that although some Applicant has not demonstrated that it could only existing competition would be eliminated upon conensure the availability and reliability of Quotron com- summation of this proposal, the amount of competition ponents through their continued design and assembly that would be eliminated is not significant. of components. Accordingly, the Board finds that the There is no evidence in the record to indicate that continuation of Quotron's design and assembly activi- consummation of the proposal would result in undue ties cannot be considered "necessary" to Quotron's concentration of resources, conflicts of interest, unprovision of its permissible data processing services, sound banking practices or other adverse effects on and thus cannot be considered incidental to Quotron's the public interest. In this connection, the Board notes provision of permissible services. that Quotron's system does not allow Quotron to have Accordingly, as a condition to its approval of this access to customer confidential or nonpublic informaapplication, the Board is requiring Applicant to divest tion. Quotron's hardware assembly activities within two Quotron participates in several joint ventures with years of its acquisition of Quotron. However, at any other nonbanking organizations to provide for the time during the two-year period, Applicant may sub- processing of banking, financial and economic data mit arguments to the Board that, based on its experi- and data bases containing such data. The joint venence operating Quotron, Applicant should be permit- tures include Quotron Systems International, a wholly ted to continue the assembly of hardware. owned subsidiary of Quotron, which owns a 50 per- Other data base services. Quotron's library of third- cent interest in a joint venture with subsidiaries of the party data bases provided to customers includes a Associated Press ("AP") and Dow Jones & Company, program by which customers can receive airline and Inc. ("Dow Jones"), for the purpose of marketing hotel information and make airline and hotel reserva- Quotron's services, including the AP-Dow Jones tions. The receipt of such information and the ability newswires, overseas. The activities of this joint vento make airline and hotel reservations are not related ture are identical to Quotron's existing activities that to the provision of banking, financial, and economic the Board has previously and by this order determined data and are similar to travel agency services, which to be permissible for bank holding companies. the Board has determined are not closely related to Quotron also has an agreement with AT&T to banking.9 Thus, the Board is requiring, as a condition develop, market and operate the financial information to approval of this application, that Applicant elimi- products of both parties. The agreement does not nate the travel reservation service from the roster of third-party data base programs provided by Quotron. The Balance of Public Benefits Over Possible Adverse Effects. In determining whether an activity is a 10. The two subsidiaries are: Citishare Corporation, which proproper incident to banking, the Board must consider vides several financial, banking, or economic data base services, including end-of-day prices of securities, a daily summary and historical data for foreign exchange rates, advice on portfolio positions in foreign currencies, money market instruments and gold, and other international, national and local financial and economic information; and Global Electronic Markets Company, a general partnership between a subsidiary of Citibank, N.A., and a subsidiary of McGraw Hill, which provides quotes and other financial information concern- 9. 62 FEDERAL RESERVE BULLETIN 148 (1976). ing petroleum products and petrochemicals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 501 provide for any equity investment by either party or for Quotron's stock. In this regard, the Board has for any profit-sharing by the parties, except to the taken into account Applicant's demonstrated ability to extent that each party receives profits proportional to raise substantial amounts of primary capital during the the contribution of resources that it has agreed to past year. The Board expects that Applicant will use provide. The Board notes that the agreement would its capacity to raise capital in order to maintain its allow customers of AT&T's UNIX personal computer tangible capital ratios at pre-acquisition levels. Acto have access to Quotron's data bases. Applicant has cordingly, the Board concludes that Applicant's financommitted that the data processing services to be cial and managerial resources are consistent with provided by the joint venture will be provided pursu- approval. ant to a written agreement which describes and limits Based on a consideration of all the relevant facts, the data to be furnished or processed to banking, the Board has determined that the balance of the financial, and economic data. public interest factors that it is required to consider Quotron also participates in an agency arrangement under section 4(c)(8) is favorable. Accordingly, the with Societe de Documentations et Analyses Finan- application is hereby approved, subject to the condicieres SA ("DAFSA"), a French financial information tions specified above, including the condition that and economic research firm, to market Quotron's Applicant divest Quotron's assembly activities within services in the Benelux countries. DAFSA also pro- two years of its acquisition of Quotron. vides banking, financial and economic data bases to This determination is also subject to all of the Quotron, which Quotron provides to third parties. As conditions set forth in Regulation Y, including sections is the case with Quotron's agreement with AT&T, 225.4(d) and 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and Quotron's arrangement with DAFSA involves no equi- 225.23(b)(3)), and to the Board's authority to require ty investment by either party, and no profit-sharing such modification or termination of the activities of a agreement between the parties. bank holding company or any of its subsidiaries as the In view of the structure and limited purposes of Board finds necessary to assure compliance with the these arrangements as discussed above, the Board provisions and purposes of the Act and the Board's believes that Applicant's acquisition of interests in regulations and orders issued thereunder, or to prethese joint ventures would not have any effect on vent evasion thereof. competition or present an impermissible "matrix of The transaction shall be made not later than three relationships" between Applicant and its nonbanking months after the effective date of this Order, unless coventurers.11 such period is extended for good cause by the Board or Consummation of this proposal may be expected to by the Federal Reserve Bank of New York pursuant to result in public benefits, including increased competi- delegated authority. tion and improved services. Applicant would be able By order of the Board of Governors, effective to provide Quotron with additional capital and with May 19, 1986. additional and enhanced data bases. Voting for this action: Chairman Volcker and Governors The Board has stated that it expects banking organi- Rice, Angell, and Johnson. Abstaining from this action: zations contemplating expansion proposals to ensure Governor Wallich. Absent and not voting: Governor Seger. that pro forma capital ratios exceed the minimum capital levels without significant reliance on intangi- WILLIAM W. WILES bles, particuarly goodwill.12 This proposal would re- [SEAL] Secretary of the Board sult in a significant increase in Citicorp's intangible assets. The Board notes that Applicant's pro forma primary capital ratio on a tangible basis is just above the levels specified in the Board's Capital Adequacy Texas American Bancshares, Inc. Guidelines, assuming a $19 per share purchase price Fort Worth, Texas Order Approving an Application to Purchase and Sell Precious Metals and Coins for the Account of Customers 11. The Board has previously indicated its concerns regarding the Texas American Bancshares, Inc., Fort Worth, Texas, potential for undue concentration of resources that could result from the combination in a joint venture of banking and nonbanking institu- a bank holding company within the meaning of the tions. See, e.g., Amsterdam-Rotterdam Bank, N.V., 70 FEDERAL Bank Holding Company Act, 12 U.S.C. § 1841 etseq. RESERVE BULLETIN 835 (1984); Deutsche Bank AG, 67 FEDERAL ("BHC Act"), has applied pursuant to section 4(c)(8) RESERVE BULLETIN 449 (1981). of the BHC Act and section 225.23(a) of the Board's 12. 50 Federal Register 16,057, 16,066-67 (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

502 Federal Reserve Bulletin • July 1986 Regulation Y, 12 C.F.R. § 225.23(a), to engage proposed activities by Applicant "can reasonably be de novo through its wholly owned subsidiary, TABro- expected to produce benefits to the public . . . that kerage, Inc., Fort Worth, Texas ("TAB"), in the outweigh possible adverse effects . . . ." (12 U.S.C. purchase and sale of gold and silver bullion and coins § 1843(c)(8)). Consummation of Applicant's proposal for the account of its customers. will result in increased convenience to customers. In Notice of the application, affording interested per- addition, the Board expects that the entry of Applicant sons an opportunity to submit comments on the rela- into the market for these services will increase the tion of the proposed activity to banking and on the level of competition among providers of these servbalance of the public interest factors regarding the ices. Accordingly, the Board concludes that the perapplication, has been duly published (51 Federal Reg- formance of the proposed activities by Applicant can ister 7638 (1986)). The time for filing comments has reasonably be expected to produce benefits to the expired, and the Board has considered the application public. and all comments received in light of the public The Board has also considered the potential for interest factors set forth in section 4(c)(8) of the BHC adverse effects that may be associated with this pro- Act. posal. There is no evidence in the record that consum- TAB proposes to engage in the purchase and sale of mation of the proposed transactions would result in silver and gold bullion and coins for the account of any adverse effects such as decreased competition, customers. TAB will not engage in the purchase and undue concentration of resources, unfair competition, sale of platinum and palladium,1 nor will it deal in gold conflicts of interest, or unsound banking practices. or silver for its own account. In addition, TAB does Applicant's proposal to buy and sell gold and silver not propose to extend credit, and does not propose to bullion and coins is a fee-generating, nonleveraged offer investment advice to customers in connection activity that the Board believes would not have an with the proposed services. adverse effect on Applicant's financial resources. Ac- Applicant is a multibank holding company with 35 cordingly, the financial and managerial resources of subsidiary banks, controlling total deposits of approxi- Applicant and its subsidiaries overall are consistent mately $5.11 billion.2 Applicant is the seventh largest with approval of the application. commercial banking organization in Texas, controlling Based upon a consideration of all the facts of record, 3.4 percent of the total deposits in commercial banks the Board concludes that the balance of the public in the state. TAB has been approved as a discount interest factors that the Board is required to consider broker to engage in securities brokerage activities under section 4(c)(8) is favorable. Accordingly, the permissible for bank holding companies under section application is hereby approved. 225.25(b)(15) of the Board's Regulation Y, 12 C.F.R. This determination is subject to all of the conditions § 225.25(b)(15). set forth in the Board's Regulation Y, including those The proposed activities of TAB are essentially iden- in sections 225.4(d) and 225.23(b) (12 C.F.R. tical to activities previously approved by the Board.3 §§ 225.4(d) and 225.23(b)), and to the Board's author- In addition, banks have traditionally engaged in the ity to require such modification or termination of the purchase and sale of gold and silver bullion.4 Thus, the activities of a bank holding company or any of its Board concludes that Applicant's proposal to engage subsidiaries as the Board finds necessary to assure in the purchase and sale of bullion and coins for the compliance with the provisions and purposes of the account of customers is closely related to banking. BHC Act and the Board's regulations and orders In order to approve this application, the Board is issued thereunder, or to prevent evasion thereof. also required to determine that the performance of the The activity shall be commenced not later than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Dallas pursuant to delegated authority. By order of the Board of Governors, effective 1. In Standard and Chartered Banking Group Ltd., 38 Federal May 22, 1986. Register 27,552 (1973), the Board found that the activities of dealing in platinum and palladium were not authorized for national banks, and were not closely related to banking. Voting for this action: Governors Wallich, Rice, Angell, 2. Data are as of June 30, 1985. and Johnson. Absent and not voting: Chairman Volcker and 3. First Interstate Bancorp, 71 FEDERAL RESERVE BULLETIN 467 Governor Seger. (1985). See also The Hongkong and Shanghai Banking Corp., 72 FEDERAL RESERVE BULLETIN 345 (1986); Standard and Chartered Banking Group Ltd., 38 Federal Register 27,552 (1973). 4. See, e.g., 12 U.S.C. § 24(7) (national banks are explicitly WILLIAM W. WILES permitted to buy and sell coins and bullion). [SEAL] Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 503 Orders Issued Under Sections 3 and 4 of the banking organization in Indiana, controlling 1.4 per- Bank Holding Company Act cent of the total deposits in commercial banks in the state. NBD Bancorp, Inc. Under section 3(d) of the Act, a bank holding Detroit, Michigan company may not acquire a bank located outside of the holding company's home state unless the acquisi- NBD Indiana, Inc. tion is "specifically authorized by the statute laws of Detroit, Michigan the state in which such bank is located, by language to that effect and not merely by implication."312 U.S.C. Order Approving Acquisition of a Bank Holding § 1842(d). The statute laws of Indiana authorize a Company and Its Nonbanking Subsidiaries Michigan bank holding company to acquire an Indiana bank or bank holding company if Michigan law "per- NBD Bancorp, Inc., Detroit, Michigan ("Applicant"), mit[s] Indiana bank holding companies to acquire a bank holding company within the meaning of the banks and bank holding companies in that state," and Bank Holding Company Act ("Act"), and NBD Indi- would also permit the Michigan bank holding company ana, Inc., Detroit, Michigan ("NBD Indiana"), have "to be acquired by the Indiana bank holding company applied for the Board's approval under section 3 of the . . . sought to be acquired." Ind. Code § 28—2—15— Act (12 U.S.C. § 1842) to acquire Midwest Commerce 18(e) (effective Jan. 1, 1986). Michigan law, in turn, Corporation, Elkhart, Indiana ("Midwest"), and authorizes an Indiana bank holding company to acthereby to acquire indirectly Midwest Commerce quire a Michigan bank holding company, with the Banking Corporation, Elkhart, Indiana ("Bank"), a permission of the Commissioner of the Michigan Fistate-chartered commercial bank.1 nancial Institutions Bureau, if the Commissioner finds that Indiana law authorizes a Michigan bank holding Applicant and NBD Indiana have also applied for company to acquire a bank in Indiana "under condithe Board's approval under section 4(c)(8) of the Act tions that are not unduly restrictive." Mich. Comp. (12 U.S.C. § 1843(c)(8)) to acquire the following non- Laws § 487.430b(2)(a) (effective Jan. 1, 1986). banking subsidiaries of Midwest: Midwest Commerce Leasing Corp., Elkhart, Indiana, which engages in The Indiana Department of Financial Institutions personal property leasing; Midwest Commerce Data approved the proposed acquisition on May 8, 1986, Corp., Elkhart, Indiana, which provides data process- and the Michigan Commissioner approved it on April ing services; and Midwest Commerce Insurance 25, 1986. Based on a review of the record, the Board Corp., Elkhart, Indiana, which acts as agent and concludes that the Michigan and Indiana statutes are broker with respect to credit-related insurance. The reciprocal, and that the Indiana statute expressly Board has determined these activities to be closely authorizes a Michigan bank holding company, such as related to banking and permissible for bank holding Applicant, to acquire an Indiana bank holding compacompanies. 12 C.F.R. § 225.25(b)(5), (7), (8). ny, such as Midwest. Thus, the proposed acquisition is Notice of the applications, affording interested per- permissible under section 3(d) of the Act. sons an opportunity to submit comments, has been Bank operates in the Elkhart-Niles-South Bend given in accordance with sections 3 and 4 of the Act. banking market,4 where Bank is the third largest of 19 51 Federal Register 7853 (1986). The time for filing commercial banking organizations and controls 15.3 comments has expired, and the Board has considered percent of the total deposits in commercial banks in the applications and all comments received in light of the market. Applicant currently has no subsidiary the factors set forth in section 3(c) and the consider- bank in the market or anywhere in Indiana. Accordingations specified in section 4(c)(8) of the Act. ly, the Board concludes that the proposed acquisition NBD, with total domestic deposits of $8.8 billion,2 is would have no adverse effect on existing competition the largest commercial banking organization in Michi- in the relevant market or on the concentration of gan, controlling 16.5 percent of the total deposits in commercial banks in the state. Midwest, with deposits of $495 million, is the twelfth largest commercial 3. A bank holding company's home state is the state in which its banking operations were principally conducted on June 1, 1966, or on the date on which the company became a bank holding company, whichever is later. 4. The Elkhart-Niles-South Bend banking market consists of Elk- 1. NBD Indiana has also applied under section 3(a)(1) of the Act to hart County, Indiana, St. Joseph County, Indiana (excluding Olive become a bank holding company. NBD Indiana is of no significance and Warren Townships), Cass County, Michigan, and the townships except as a means to facilitate the proposed acquisition. of Berrien, Bertrand, Buchanan, Niles, and Oronoko in Berrien 2. All data are as of December 31, 1984, unless otherwise specified. County, Michigan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

504 Federal Reserve Bulletin • July 1986 banking resources in Indiana. Moreover, in light of the the thirtieth calendar day following the effective date numerous other potential out-of-state entrants into the of this Order or later than three months after the market, the acquisition would have no significant effective date of this Order, unless that period is adverse effect on probable future competition in the extended for good cause by the Board, or by the market. Federal Reserve Bank of Chicago pursuant to delegat- The financial and managerial resources and future ed authority. The determination regarding the acquisiprospects of Applicant, Midwest, and their subsidiar- tion of Midwest's nonbanking subsidiaries is subject to ies are satisfactory and consistent with approval of the the conditions set forth in the Board's Regulation Y, applications. Considerations relating to the conve- including those in sections 225.4(d) and 225.23(b) nience and needs of the communities to be served are (12 C.F.R. §§ 225.4(d), 225.23(b)), and to the Board's also consistent with approval. authority to require such modification or termination There is no evidence of record indicating that the of the activities of a bank holding company or any of acquisition of Midwest's nonbanking subsidiaries its subsidiaries as the Board finds necessary to assure would result in undue concentration of resources, compliance with, and prevent evasions of, the providecreased or unfair competition, conflicts of interests, sions and purposes of the Act and the Board's regulations issued thereunder. unsound banking practices, or other adverse effects. Accordingly, the Board has concluded that the balance By order of the Board of Governors, effective of the public interest factors it is required to consider May 28, 1986. under section 4(c)(8) is favorable and consistent with approval. Voting for this action: Chairman Volcker and Governors Based on the foregoing and other facts of record, the Wallich, Rice, Angell, and Johnson. Governor Wallich abstained from the insurance portion of this action. Abstaining Board has determined that the proposed acquisition from this action: Governor Seger. would be in the public interest, and that the applications should be approved. Accordingly, the applications are approved for the reasons set forth above. The JAMES MCAFEE banking acquisition shall not be consummated before [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 Reserve Effective Applicant Bank(s) Bank date ABC Holding Company, Farmers and Merchants Bank of Atlanta May 12, 1986 Moultrie, Georgia Thomas County, Coolidge, Georgia Associated Banc-Corp., Randall Bank, Chicago April 24, 1986 Green Bay, Wisconsin Madison, Wisconsin Brownstown CSB Bancorp, The Citizens State Bank, St. Louis April 30, 1986 Brownstown, Indiana Brownstown, Indiana Central Banc System, Inc., American Heritage Bank of St. Louis April 30, 1986 Granite City, Illinois Granite City, Granite City, Illinois The Central Bancorporation, Citizens National Bank, Cleveland May 6, 1986 Inc., Fort Wright, Kentucky Cincinnati, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 505 Section 3—Continued . i / x Reserve Effective Applicant Bank(s) ^ ^ Chase Manhattan National Chase Bank of Ohio, New York May 13, 1986 Holding Corporation, Mentor, Ohio Newark, Delaware Citizens Bancshares of The Citizens State Bank of Kansas City May 7, 1986 Waterville, Inc., Waterville, Waterville, Kansas Waterville, Kansas Citizens Investments, Inc., Capital State Bank, Philadelphia May 15, 1986 Vineland, New Jersey Trenton, New Jersey CNB Bancshares, Inc., The Posey County National St. Louis April 30, 1986 Evansville, Indiana Bank, Mount Vernon, Indiana Community Group, Inc., Fentress County Bank, Atlanta May 1, 1986 Jasper, Tennessee Jamestown, Tennessee East Side Bancorporation, East Side Bank and Trust Chicago April 22, 1986 Chicago, Illinois Company, Chicago, Illinois Enterprise Bancshares, Inc., First National Bank of Del City, Kansas City May 13, 1986 Del City, Oklahoma Del City, Oklahoma Farmers Capital Bank Farmers Bancshares of St. Louis April 30, 1986 Corporation, Georgetown, Inc., Frankfort, Kentucky Georgetown, Kentucky Fidelity Holding Company, Fidelity Bank, N.A., Dallas May 13, 1986 San Antonio, Texas San Antonio, Texas First Busey Corporation, Champaign County Bank and Chicago April 11, 1986 Urbana, Illinois Trust Company, Urbana, Illinois First Commercial Bancshares, First National Bank of Atlanta May 12, 1986 Inc., St. Bernard Parish, Metairie, Louisiana Arabi, Louisiana Commercial Bank and Trust Company, Metaire, Louisiana 1st Community Bancorp, Inc., Sparta State Bank, Chicago April 22, 1986 Sparta, Michigan Sparta, Michigan First Interstate Corporation of Outagamie Bank Shares, Inc., Chicago April 25, 1986 Wisconsin, Appleton, Wisconsin Sheboygan, Wisconsin Outagamie Bancorp, Inc., Sheboygan, Wisconsin First Kansas Bancshares, Inc., The First National Bank of Kansas City April 30, 1986 Hutchinson, Kansas Hutchinson, Hutchinson, Kansas First La Grange Bancshares, The First National Bank of Dallas May 16, 1986 Inc., La Grange, La Grange, Texas La Grange, Texas First Sandoval Bancorp, Inc., The First National gank of St. Louis May 9, 1986 Sandoval, Illinois Sandoval, Sandoval, Illinois First Union Corporation of First Union National Bank, Richmond May 19, 1986 North Carolina, Charlotte, North Carolina Charlotte, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin • July 1986 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date First Wachovia Corporation, First Atlanta Bank National Richmond May 9, 1986 Winston-Salem, Association, North Carolina New Castle, Delaware First Atlanta Corporation, Atlanta, Georgia Franklin Bancorp, Inc., Franklin National Bank of Minneapolis May 9, 1986 Minneapolis, Minnesota Minneapolis, Minneapolis, Minnesota Fulton Financial Corporation, Albion Bancorp, Inc., Philadelphia April 22, 1986 Lancaster, Pennsylvania Pen Argyl, Pennsylvania Houston State Holding, Inc., Houston State Bank, Minneapolis May 7, 1986 Houston, Minnesota Houston, Minnesota Huntington Bancshares, Incor- Huntington Bancshares Indiana, Cleveland May 9, 1986 porated, Inc., Columbus, Ohio Columbus, Ohio Huntington Bancshares Indiana, Central Bancorp, Inc., Cleveland May 9, 1986 Inc., Plainfield, Indiana Columbus, Ohio Independence Bancorp, Inc., Freedom Valley Bancshares, Philadelphia April 28, 1986 Perkasie, Pennsylvania Ltd., West Chester, Pennsylvania International Bancorp of Miami, The International Bank of Atlanta April 29, 1986 Inc., Miami, N.A., Miami, Florida Miami, Florida Gran valor Holdings, S. A., Panama City, Panama International Bancorp of Miami, N. V., Curacao, Netherlands Antilles King Financial Corporation, The Central Bank of St. Louis May 12, 1986 Louisville, Kentucky North Pleasureville, Pleasureville, Kentucky Lincoln Financial Corporation, Akron Financial, Inc., Chicago May 8, 1986 Fort Wayne, Indiana Akron, Indiana M & F Bancshares, Inc., Doss Financial Bancshares, Inc., Dallas May 12, 1986 Weatherford, Texas Weatherford, Texas Madison Bancshares, Inc., Bank of Madison, Kansas City May 23, 1986 Madison, Nebraska Madison, Nebraska Magna Group, Inc., First Banc Group, Inc., St. Louis May 22, 1986 Belleville, Illinois Centralia, Illinois MarBanc Financial Corporation, State Bank of Markle, Chicago May 7, 1986 Markle, Indiana Markle, Indiana Marshall & Ilsley Corporation, The Home State Bank of Chicago April 23, 1986 Milwaukee, Wisconsin South Milwaukee, South Milwaukee, Wisconsin Mega Bancshares, Inc., Mega Bank of St. Charles St. Louis April 22, 1986 St. Ann, Missouri County, St. Charles County, Missouri Mid-Wisconsin Financial State Bank of Medford, Minneapolis May 16, 1986 Services, Inc., Medford, Wisconsin Medford, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 507 Section 3—Continued Reserve Effective AApppplliiccaanntt BBaannkk((ss)) Bank date Montecito Bancorp, The Bank of Montecito, San Francisco May 8, 1986 Santa Barbara, California Santa Barbara, California Mount Sterling National Hold- The Mount Sterling National Cleveland April 24, 1986 ing Corporation, Bank, Mount Sterling, Kentucky Mount Sterling, Kentucky NBT Bancorp Inc., The National Bank and Trust New York April 23, 1986 Norwich, New York Company of Norwich, Norwich, New York North Houston Bancshares, North Houston Bank, Dallas May 16, 1986 Inc., Houston, Texas Houston, Texas Old National Bancorp, People's Bank & Trust Company, St. Louis May 9, 1986 Evansville, Indiana Mount Vernon, Indiana Ossian Financial Services, Inc., Ossian State Bank, Chicago May 27, 1986 Ossian, Indiana Ossian, Indiana Penn Central Bancorp, Inc., The First National Bank of Philadelphia May 5, 1986 Huntingdon, Pennsylvania Saxton, Saxton, Pennsylvania Peoples Financial Services Peoples National Bank of Susque- Philadelphia May 12, 1986 Corp., hanna County, Hallstead, Pennsylvania Hallstead, Pennsylvania Pioneer Bancshares, Inc. of Horatio State Bank, St. Louis May 15, 1986 Horatio, Horatio, Arkansas Horatio, Arkansas Progressive Bancshares, Inc., The Anderson National Bank of Cleveland May 13, 1986 Lexington, Kentucky Lawrenceburg, Lawrenceburg, Kentucky Readlyn Bancshares, Inc., The Readlyn Savings Bank, Chicago May 8, 1986 Readlyn, Iowa Readlyn, Iowa Saban S.A., Republic New York Corporation, New York April 23, 1986 Panama City, Republic of New York, New York Panama Saver's Bancorp, Inc., United Savings Bank, Boston April 25, 1986 Littleton, New Hampshire Manchester, New Hampshire Security Bancshares, Inc., Farmers and Merchants Bank, St. Louis May 23, 1986 Des Arc, Arkansas Des Arc, Arkansas Security Dallas Bancshares, Security Bank, Dallas April 22, 1986 Inc., Dallas, Texas Dallas, Texas Shawmut Corporation, Home Bank and Trust Company, Boston May 13, 1986 Boston, Massachusetts Meriden, Connecticut Shell Lake Bancorp, Inc., Shell Lake State Bank, Minneapolis April 22, 1986 Shell Lake, Wisconsin Shell Lake, Wisconsin Tanglewood Bancshares, Inc., Tanglewood Bank, N.A., Dallas April 28, 1986 Houston, Texas Houston, Texas Tennessee National Bancshares, Bank of Cannon County, Atlanta April 30, 1986 Inc., Woodbury, Tennessee Maryville, Tennessee Citizens State Bank of McMinnville, McMinnville, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Federal Reserve Bulletin • July 1986 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Tri-County Financial Group, First State Bank, Chicago April 29, 1986 Inc., Mendota, Illinois Mendota, Illinois Trinity Bancorp, Inc., Trinity National Bank, Dallas May 9, 1986 Benbrook, Texas Benbrook, Texas United Bank Corporation of First National Bank of New York April 30, 1986 New York, Downsville Downsville, New York Downsvile, New York Whitley-Williamsburg Financial Farmers National Bank of Cleveland May 5, 1986 Corporation, Williamsburg, Williamsburg, Kentucky Williamsburg, Kentucky Section 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Banks of Iowa, Inc., Banks of Iowa Credit Chicago May 5, 1986 Des Moines, Iowa Corporation, Des Moines, Iowa CITIZENS BANKING COR- ML, Inc., Chicago May 8, 1986 PORATION, Detroit, Michigan Flint, Michigan Comerica Incorporated, Detroit, Michigan First of America Bank Corporation, Kalamazoo, Michigan Manufacturers National Corporation, Detroit, Michigan Michigan National Corporation, Bloomfield Hills, Michigan Union Bancorp Inc., Grand Rapids, Michigan Citizens Financial Group, Inc., Gulf States Mortgage Co., Inc., Boston May 22, 1986 Providence, Rhode Island Atlanta, Georgia Cullen/Frost Bankers, Inc., Cullen/Frost Discount Brokers, Dallas May 1, 1986 San Antonio, Texas Inc., San Antonio, Texas Hamptons Bancshares Inc., Island Computer Corporation of New York May 5, 1986 East Hampton, New York New York, Inc., The First of Long Island Bohemia, New York Corporation, Glen Head, New York Suffolk Bancorp, Riverhead, New York Mahaska Investment Company, data processing services Chicago May 1, 1986 Oskaloosa, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 509 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Security Pacific Corporation, Bankline, Inc., San Francisco April 23, 1986 Los Angeles, California Phoenix, Arizona Security Pacific Corporation, acquire certain assets of Brokers San Francisco May 22, 1986 Los Angeles, California Data Management Services, Inc., New York, New York Ventura County National Strathearn Cattle Company, San Francisco May 8, 1986 Bancorp, Simi Valley, California Oxnard, California Venco Mortgage Corporation, Oxnard, California Venco Commercial Finance Corporation, Oxnard, California Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date First National Cincinnati Peoples National Bancorp of Cleveland April 30, 1986 Corporation, America, Cincinnati, Ohio Lawrenceburg, Indiana Met Financial Corporation, Metropolitan National Bank, San Francisco May 6, 1986 Oakland, California Oakland, California, mortgage brokerage activities ORDERS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date First Community Bank, Inc., First Community Bank—Castle Richmond May 23, 1986 Princeton, West Virginia Rock, Pineville, West Virginia Georgia Railroad Bank & Trust Bank of Waynesboro, Atlanta April 22, 1986 Company, Waynesboro, Georgia Augusta, Georgia Manufacturers Hanover Trust purchase certain assets and New York May 9, 1986 Company, assume certain liabilities of six New York, New York branches of Dollar Dry Dock Savings Bank, White Plains, New York Norstar Bank of Upstate NY, purchase certain assets and New York April 25, 1986 Albany, New York assume certain liabilities of a branch of Chemical Bank, New York, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin • July 1986 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. CBC, Inc. v. Board of Governors, No. 86-1001 (10th Independent Community Bankers Associaton of South Cir., filed Jan. 2, 1986). Dakota v. Board of Governors, No. 84-1496 (D.C. Howe v. United States, et al, No. 85-4504-C (D. Cir., filed Aug. 7, 1985). Mass., filed Dec. 6, 1985). Florida Bankers Association, et al. v. Board of Gover- Myers, et al. v. Federal Reserve Board, No. 85-1427 nors, No. 85-193 (U.S., filed Aug. 5, 1985). (D. Idaho, filed Nov. 18, 1985). Urwyler, et al. v. Internal Revenue Service, et al., No. Souser, et al. v. Volcker, et al., No. 85-C-2370, et al. CV-F-85-402 REC (E.D. Cal., filed July 18, 1985). (D. Colo., filed Nov. 1, 1985). Johnson v. Federal Reserve System, et al., No. S85- Podolak v. Volcker, No. C85-0456, et al. (D. Wyo., 0958(R) and S85-1269(N) (S.D. Miss., filed July 16, filed Oct. 28, 1985). 1985). Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa, Wight, et al. v. Internal Revenue Service, et al., No. filed Oct. 22, 1985). CIV S-85-0012 MLS (E.D. Cal., filed July 12, 1985). Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D. Cook v. Spillman, et al., No. CIV S-85-0953 EJG Minn., filed Oct. 21, 1985). (E.D. Cal., filed July 10, 1985). Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D. Florida Bankers Association v. Board of Governors, Neb., filed Oct. 16, 1985). No. 84-3883 and No. 84-3884 (11th Cir., filed Feb. Jensen v. Wilkinson, et al., No. 85-4436-S, et al. (D. 15, 1985). Kan., filed Oct. 10, 1985). Florida Department of Banking v. Board of Gover- Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D., nors, No. 84-3831 (11th Cir., filed Feb. 15, 1985), filed Oct. 8, 1985). and No. 84-3832 (11th Cir., filed Feb. 15, 1985). First National Bank of Blue Island Employee Stock Lewis v. Volcker, et al., No. C-l-85-0099 (S.D. Ohio, Ownership Plan v. Board of Governors, No. 85- filed Jan. 14, 1985). 2615 (7th Cir., filed Sept. 23, 1985). Brown v. United States Congress, et al., No. 84-2887- First National Bancshares II v. Board of Governors, 6(IG) (S.D. Cal., filed Dec. 7, 1984). No. 85-3702 (6th Cir., filed Sept. 4, 1985). Melcher v. Federal Open Market Committee, No. 84- McHuin v. Volcker, et al., No. 85-2170 WARB (W.D. 1335 (D.D.C., filed Apr. 30, 1984). Okl., filed Aug. 29, 1985). Securities Industry Association v. Board of Governors, No. 80-2614 (D.C. Cir., filed Oct. 24., 1980), and No. 80-2730 (D.C. Cir., filed Oct. 24, 1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics A19 All reporting banks A20 Banks in New York City A21 Branches and agencies of foreign banks MONEY STOCK AND BANK CREDIT A22 Gross demand deposits—individuals, partnerships, and corporations A3 Reserves, money stock, liquid assets, and debt measures A4 Reserves of depository institutions, Reserve FINANCIAL MARKETS Bank credit A5 Reserves and borrowings—Depository A23 Commercial paper and bankers dollar institutions acceptances outstanding A5 Federal funds and repurchase agreements— A23 Prime rate charged by banks on short-term Large member banks business loans A24 Interest rates—money and capital markets A25 Stock market—Selected statistics POLICY INSTRUMENTS A26 Selected financial institutions—Selected assets and liabilities A6 Federal Reserve Bank interest rates A7 Reserve requirements of depository institutions A8 Maximum interest rates payable on time and FEDERAL FINANCE savings deposits at federally insured institutions A9 Federal Reserve open market transactions A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation FEDERAL RESERVE BANKS A30 Gross public debt of U.S. Treasury—Types and ownership A10 Condition and Federal Reserve note statements A31 U.S. government securities dealers— All Maturity distribution of loan and security Transactions holdings A32 U.S. government securities dealers—Positions and financing 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 A35 Corporate profits and their distribution 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

78 Federal Reserve Bulletin • July 1986 A36 Nonfinancial corporations—Assets and A54 U.S. reserve assets liabilities A54 Foreign official assets held at Federal Reserve A36 Total nonfarm business expenditures on new Banks plant and equipment A55 Foreign branches of U.S. banks—Balance sheet A37 Domestic finance companies—Assets and data liabilities and business credit A57 Selected U.S. liabilities to foreign official institutions REAL ESTATE REPORTED BY BANKS IN THE UNITED STATES A38 Mortgage markets A39 Mortgage debt outstanding A57 Liabilities to and claims on foreigners A58 Liabilities to foreigners A60 Banks' own claims on foreigners CONSUMER INSTALLMENT CREDIT A61 Banks' own and domestic customers' claims on foreigners A40 Total outstanding and net change A61 Banks' own claims on unaffiliated foreigners A41 Terms A62 Claims on foreign countries—Combined domestic offices and foreign branches FLOW OF FUNDS REPORTED BY NONBANKING BUSINESS A42 Funds raised in U.S. credit markets ENTERPRISES IN THE UNITED STATES A43 Direct and indirect sources of funds to credit markets A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS SELECTED MEASURES A65 Foreign transactions in securities A66 Marketable U.S. Treasury bonds and notes— A44 Nonfinancial business activity—Selected Foreign transactions measures A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization INTEREST AND EXCHANGE RATES A47 Industrial production—Indexes and gross value A49 Housing and construction A67 Discount rates of foreign central banks A50 Consumer and producer prices A67 Foreign short-term interest rates A51 Gross national product and income A68 Foreign exchange rates A52 Personal income and saving A69 Guide to Tabular Presentation, International Statistics Statistical Releases, and Special Tables SUMMARY STATISTICS A53 U.S. international transactions—Summary A54 U.S. foreign trade 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 1985 1986' 1985r 1986 Q2 Q3 Q4' Ql Dec. Jan/ Feb/ Mar/ Apr. Reserves of depository institutions2 1 Total 17.0 15.7 12.5 13.1 20.5 7.1 12.8 12.8 10.5 2 Required 17.3 16.4 11.5 12.3 17.4 5.8 13.4 18.4 13.2 3 Nonborrowed 19.1 17.5 10.4 19.1 33.1 22.1 10.0 16.3 7.2 4 Monetary base3 8.2 9.6 8.2 8.6 8.2 9.3 7.6 8.0 6.0 Concepts of money, liquid assets, and debt4 5 Ml 10.5 14.5 10.7 7.7 12.6 1.1 7.5 13.9 14.5 6 M2 6.3 9.5 6.0 4.3 7.0 1.6 3.6 6.8 13.7 7 M3 5.5 7.7 6.4 7.4 7.3 8.9 6.1 6.8 10.6 8 L 6.2 7.9 9.3 8.1 12.0 7.2 6.1 3.6 n.a. 9 Debt 12.1 12.9 14.3 16.1 21.9 18.2 10.0 9.0 n.a. Nontransaction components 10 In M25 5.0 8.0 4.6 3.2 5.3 1.7 2.4 4.4 13.5 11 In M3 only6 2.6 .2 8.0 19.8 8.2 38.8 15.9 6.9 -1.4 Time and savings deposits Commercial banks 12 Savings7 -1.0 7.6 3.6 1.6 -2.9 1.9 2.9 6.7 8.6 13 Small-denomination time8 2.1 -3.3 -1.6 5.3 6.0 7.8 4.7 2.8 -3.4 14 Large-denomination time9,10 6.9 -3.6 14.1 18.5 10.4 45.6 7.5 -18.5 -1.3 Thrift institutions 15 Savings7 3.8 12.9 7.5 3.4 .7 1.3 4.7 8.7 24.5 16 Small-denomination time 1.0 -2.8 -2.9 6.6 6.1 8.0 8.2 6.7 3.8 17 Large-denomination time9 5.5 -1.0 5.2 10.0 8.5 6.9 11.4 27.8 11.7 Debt components4 18 Federal 12.6 14.6 15.1 17.9 29.1 17.0 10.4 5.0 n.a. 19 Nonfederal 12.0 12.4 14.0 15.5 19.7 18.6 9.9 10.2 n.a. 20 Total loans and securities at commercial banks" 9.7 9.6 8.8 12.7 16.6 15.3 4.1 9.5 1.7 1. Unless otherwise noted, rates of change are calculated from average commercial banks, money market funds (general purpose and broker/dealer), amounts outstanding in preceding month or quarter. foreign governments and commercial banks, and the U.S. government. Also 2. Figures incorporate adjustments for discontinuities associated with the subtracted is a consolidation adjustment that represents the estimated amount of implementation of the Monetary Control Act and other regulatory changes to demand deposits and vault cash held by thrift institutions to service their time and reserve requirements. To adjust for discontinuities due to changes in reserve 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 based on monthly averages. 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, Money Market Deposit Accounts or more, excluding those booked at international banking facilities. (MMDAs), savings and small-denomination time deposits (time deposits—includ- 10. Large-denomination time deposits at commercial banks less those held by ing retail RPs—in amounts of less than $100,000), and balances in both taxable and money market mutual funds, depository institutions, and foreign banks and tax-exempt general purpose and broker/dealer money market mutual funds. officii institutions. Excludes individual retirement accounts (IRA) and Keogh balances at depository 11. Changes calculated from figures shown in table 1.23. institutions and money market funds. Also excludes all balances held by U.S. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic NonfinancialS tatistics • July 1986 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending FFFaaaccctttooorrrsss 1986 1986 Feb. Mar. Apr. Mar. 19 Mar. 26 Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 199,811 199,955 203,014 199,346 198,876 201,735 201,426 202,326 204,287 204,676 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 174,309 174,710 177,563 173,891 173,841 176,049 176,160 177,365 178,753 178,351 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 174,088 174,492 176,389 173,891 173,466 176,049 176,160 176,281 177,055 176,103 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 221 218 1,174 0 375 0 0 1,084 1,698 2,248 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 8,248 8,246 8,384 8,187 8,335 8,187 8,187 8,309 8,410 8,685 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,204 8,187 8,187 8,187 8,187 8,187 8,187 8,187 8,187 8,187 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 44 59 197 0 148 0 0 122 223 498 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 872 755 919 758 780 795 952 729 992 1,057 1111100000 FFFFFllllloooooaaaaattttt 1,056 773 432 619 231 1,060 684 123 316 520 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 15,326 15,471 15,716 15,890 15,690 15,643 15,443 15,799 15,816 16,063 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 11,090 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt.................... 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 17,13c 17,183' 17,229 17,184' 17,198' 17,208 17,217 17,226 17,235 17,244 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 191,238' 192,441' 194,372 192,801' 192,469' 193,235 194,353 194,850 194,400 194,058 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 577' 609 607 605 614 619 635 629 577 582 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 7,282 3,399 3,870 3,044 3,610 2,926 3,365 3,393 2,221 6,769 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 221 260 247 264 266 244 231 211 284 246 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss .................... 1,951 1,863 1,818 1,718 1,757 2,063 1,760 1,868 1,947 1,736 2222200000 OOOOOttttthhhhheeeeerrrrr 445 487 448 690 427 454 469 467 415 414 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 6,326 6,391 6,254 6,184 6,278 6,174 6,092 6,252 6,345 6,388 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 24,709 27,497 28,435 27,033 26,462 29,035 27,545 27,690 31,140 27,534 End-of-month figures Wednesday figures 1986 1986 Feb. Mar. Apr. Mar. 19 Mar. 26 Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 200,473 201,820 210,494 198,690 202,789 201,379 201,627 205,160 212,037 210,494 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 176,536 176,620 181,834 173,965 176,712 176,143 174,918 179,593 183,601 181,834 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 176,536 176,620 174,312 173,965 174,088 176,143 174,918 176,238 176,660 174,312 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 0 0 7,522 0 2,624 0 0 3,355 6,941 7,522 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 8,187 8,187 9,620 8,187 9,222 8,187 8,187 8,487 9,180 9,620 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,187 8,187 8,187 8,187 8,187 8,187 8,187 8,187 8,187 8,187 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 0 0 1,433 0 1,035 0 0 300 993 1,433 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 661 818 954 702 895 683 2,519 699 1.233 954 33333 33333 22222 33333 OOOOO FFFFFlllll ttttt ooooo hhhhh aaaaa eeeee ttttt rrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 15 -2 ,3 1 0 2 1 15,6 5 3 6 5 0 17,2 8 3 5 5 1 15, 4 43 0 4 2 16 -1 ,1 4 0 6 6 15, 7 6 5 1 6 0 15,5 4 6 4 2 1 15, 4 89 8 2 9 1 1 6 , , 3 6 5 6 4 9 17,2 8 3 5 5 1 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,090 11,090 11,089 11,090 11,090 11,090 11,090 11,090 11,090 11,089 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt ............... 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 17,154' 17,207' 17,252 17,196' 17,207' 17,216 17,225 17,234 17,243 17,252 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 191,033' 193,209' 194,503 192,736' 192,718' 193,887 194,834 194,871 194,163 194,503 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 604 617 638 613 617 627 638 578 573 638 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 5,026 3,280 11,550 1,440 2,394 2,817 2,900 3,484 0 11,550 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 277 274 326 248 187 249 251 235 317 326 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss .................... 1,525 1,542 1,590 1,536 1,537 1,542 1,536 1,542 1,541 1,590 4444422222 OOOOOttttthhhhheeeeerrrrr 436 511 441 528 377 492 445 472 369 441 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 6,735 6,162 6,680 5,976 6,144 5,8% 6,093 6,043 6.234 6,680 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 27,799 29,240 27,826 28,617 31,830 28,893 27,963 30,977 41,891 27,826 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 1983 1984 1985 1985 1986 Dec. Dec. Dec. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 Reserve balances with Reserve Banks1 21,138 21,738 27,620 24,972 25,431 26,385 27,620 26,373 24,700 27,114 2 Total vault cash2 20,755 22,316 22,956 22,465 22,724 22,457 22,956 24,245 24,962 22,688 3 Vault cash used to satisfy reserve requirements3 . 17,908 18,958 20,522 19,475 20,038 19,997 20,522 21,687 21,952 20,160 4 Surplus vault cash4 2,847 3,358 2,434 2,990 2,686 2,460 2,434 2,559 3,010 2,528 5 Total reserves5 38,894 40,696 48,142 44,447 44,469 46,382 48,142 48,060 46,652 47,274 6 Required reserves 38,333 39,843 47,085 43,782 44,716 45,454 47,085 46,949 45,555 46,378 7 Excess reserve balances at Reserve Banks6 561 853 1,058 666 753 928 1,058 1,111 1,097 896 8 Total borrowings at Reserve Banks 774 3,186 1,318 1,289 1,187 1,741 1,318 770 884 761 9 Seasonal borrowings at Reserve Banks 96 113 56 203 172 107 56 36 56 68 10 Extended credit at Reserve Banks7 2 2,604 499 656 629 530 499 497 492 518 Biweekly averages of daily figures for weeks ending 1985 and 1986 Jan. 1 Jan. 15 Jan. 29 Feb. 12 Feb. 26 Mar. 12 Mar. 26 Apr. 9 Apr. 23 May 7 11 Reserve balances with Reserve Banks1 27,928 28,282 24,710 23,924 24,989 27,102 26,704 28,292 29,387 28,674 12 Total vault cash2 23,612 23,591 24,684 26,078 24,348 22,577 22,986 22,121 22,369 22,100 13 Vault cash used to satisfy reserve requirements3 . 21,022 21,288 21,961 22,891 21,424 20,016 20,409 19,809 20,191 19,818 14 Surplus vault cash4 2,590 2,304 2,723 3,187 2,924 2,561 2,577 2,312 2,178 2,282 15 Total reserves5 48,950 49,570 46,671 46,815 46,413 47,118 47,113 48,101 49,578 48,491 16 Required reserves 47,644 48,294 45,753 45,629 45,406 46,142 46,187 47,479 48,203 47,611 17 Excess reserve balances at Reserve Banks6 1,307 1,276 918 1,187 1,008 976 926 622 876 881 18 Total borrowings at Reserve Banks 1,338 614 903 662 1,100 704 769 874 861 981 19 Seasonal borrowings at Reserve Banks 51 28 42 44 66 65 69 76 64 89 20 Extended credit at Reserve Banks7 472 471 529 480 506 475 535 576 671 637 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 Banks' Averages of daily figures, in millions of dollars 1986 week ending Monday BByy mmaattuurriittyy aanndd ssoouurrccee Mar. 24 Mar. 31 Apr. 7 Apr. 14 Apr. 21 Apr. 28 May 5 May 12 May 19 One day and continuing contract 1 Commercial banks in United States 67,991 66,593 77,453r 75,488 74,009 67,911 68,557 69,020 69,536 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 39,070 38,368 39,712 40,106 37,981 36,133 36,603 38,851 36,495 3 Nonbank securities dealers 9,022 9,113 10,027 10,498 10,633 10,161 9,921 9,684 9,938 4 All other 27,653 23,446 26,583 25,542 25,239 25,852 25,433 25,321 26,337 All other maturities 5 Commercial banks in United States 10,509 12,443 9,663r 9,301 9,472 9,598 10,167 9,464 99,,339944 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 7,747 8,080 7,287 7,592r 7,702 7,359 7,915 6,853 6,632 7 Nonbank securities dealers 10,604 10,828 9,912 10,504' 10,199 11,550 10,670 10,127 10,180 8 All other 10,625 14,646 9,434 10,013 10,781 11,175 10,824 10,427 10,523 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 26,605 25,894 33,684 31,752 30,450 29,310 28,673 24,906 26,736 10 Nonbank securities dealers 10,689 9,592 11,245 9,056 10,313 9,863 9,202 8,634 8,934 I. Banks with assets of Si 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 • July 1986 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit2 SShhoorrtt--tteerrmm aaddjjuussttmmeenntt ccrreeddiitt FFFeeedddeeerrraaalll RRReeessseeerrrvvveee aanndd sseeaassoonnaall ccrreeddiitt'' First 60 days Next 90 days BBBaaannnkkk of borrowing of borrowing After 150 days EEffffeeccttiivvee ddaattee ffoorr ccuurrrreenntt rraatteess Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 5/28/86 date rate 5/28/86 rate 5/28/86 rate 5/28/86 rate Boston 6'/2 4/21/86 7 6>/2 7 71/2 81/2 9 4/21/86 New York 4/21/86 4/21/86 Philadelphia 4/23/86 4/23/86 Cleveland 4/21/86 4/21/86 Richmond 4/21/86 4/21/86 Atlanta 4/22/86 4/22/86 Chicago 4/21/86 4/21/86 St. Louis 4/22/86 4/22/86 Minneapolis 4/21/86 4/21/86 Kansas City .... 4/21/86 4/21/86 Dallas 4/21/86 4/21/86 San Francisco... 6'/2 4/21/86 7 6'/2 7 71/2 8'/2 9 4/21/86 Range of rates in recent years3 Range (or F.R. Range (or F.R. Range (or F.R. level)— Bank level)— Bank level)— Bank Effective date All F.R. of Effective date All F.R. of Effective date All F.R. of Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1973 IVi 7'/2 July 10 7'/4 71/4 1981— Dec. 4 12 12 1974— Apr. 25 71/2-8 8 Aug. 21 73/t 73/4 3 0 Sept. 22 8 8 11998822—— JJuullyy 20 111/2-12 111/2 Dec. 9 73/4-8 7% Oct. 16 8-8'/2 P/i 23 ll'/i 111/2 16 7V4 73/4 20 8'/2 8V2 AAuugg.. 2 11-111/2 11 Nov. 1 8'/2-9'/2 91/2 3 11 11 1975— Jan. 6 71/4-73/4 73/4 3 9'/2 9>/2 16 10'/2 l0'/2 10 71/4-73/4 7'/4 27 10-W/2 10 24 71/4 71/4 July 20 10 10 30 10 10 Feb. 5 63/4-71/4 63/4 Aug. 17 10-10'/^ 101/! Oct. 12 9'/2-10 9</2 7 63/4 63/4 20 10</2 10'/2 13 9'/2 91/2 Mar. 10 6'/4-63/4 6'/4 Sept. 19 10V2-11 11 Nov. 22 9-91/2 9 14 61/4 61/4 21 11 11 26 9 9 May 16 6-6V4 6 Oct. 8 11-12 12 Dec. 14 81/2-9 9 23 6 6 10 12 12 15 8'/2-9 81/2 17 8'/2 81/2 1976— Jan. 19 51/2-6 5'/2 Feb. 15 12-13 13 23 51/2 51/2 19 13 13 11998844—— AApprr.. 9 81/2-9 9 Nov. 22 51/4-5'/2 5'/4 May 29 12-13 13 13 9 9 26 51/4 51/4 30 12 12 Nov. 21 81/2-9 81/2 June 13 11-12 11 26 8'/2 81/2 1977— Aug. 30 51/4-53/4 51/4 16 11 11 Dec. 24 8 8 31 51/4-53/4 53/4 July 28 10-11 10 Sept. 2 53/4 53/4 29 10 10 11998855—— MMaayy 20 71/2-8 7>/2 Oct. 26 6 6 Sept. 26 11 11 24 71/2 71/2 Nov. 17 12 12 1978— Jan. 9 6-6V2 61/2 Dec. 5 12-13 13 1986— Mar. 7 7-71/2 7 20 61/2 61/2 13 13 10 7 7 May 11 6V2-7 7 5 13-14 14 AApprr.. 21 61/2-7 6'/2 12 7 7 23 61/2 6'/2 July 3 7-71/4 71/4 May 8 14 14 Nov. 2 13-14 13 In effect May 28, 1986 6'/2 6>/2 6 13 13 1. After May 19, 1986, the highest rate within the structure of discount rates rate under this structure is applied may be shortened. See section 201.3(b)(2) of may be charged on adjustment credit loans of unusual size that result from a major Regulation A. operating problem at the borrower's facility. 3. Rates for short-term adjustment credit. For description and earlier data see A temporary simplified seasonal program was established on Mar. 8, 1985, and the following publications of the Board of Governors: Banking and Monetary the interest rate was a fixed rate '/2 percent above the rate on adjustment credit. Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980, The program was re-established on Feb. 18, 1986; the rate may be either the same 1981, and 1982. as that for adjustment credit or a fixed rate '/2 percent higher. 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 period. The surcharge was eliminated on Nov. 17, 1981. 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 TTyypp dd ee ee pp oo oo ff ss ii dd tt eepp iinn oo tt ss ee ii rr tt vv ,, aa aa ll nndd Monetary Control Act TTyy dd pp ee ee pp oo oo ff ss ii dd tt ee ii pp nn oo ttee ssii rr tt vv ,, aall aa 55 nn dd Monetary Control Act6 Percent Effective date Percent Effective date Net demand2 Net transaction accounts18 7 12/30/76 SO—$31.7 million 3 12/31/85 9l/2 12/30/76 1122 1122//3311//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 16l/4 12/30/76 By original maturity Less than IV2 years 3 10/6/83 Time and savings1'3 1 Vi years or more 0 10/6/83 SSaavviinnggss 3 3/16/67 Eurocurrency liabilities Time4 All types 3 11/13/80 $0 million-$5 million, by maturity 30-179 days 3 3/16/67 180 days to 4 years 21/2 1/8/76 4 years or more 1 10/30/75 Over $5 million, by maturity 30-179 days 6 12/12/74 180 days to 4 years 2Vi 1/8/76 4 years or more 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual 5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97- Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report 320) provides that $2 million of reservable liabilities (transaction accounts, for 1976, table 13. Under provisions of the Monetary Control Act, depository nonpersonal time deposits, and Eurocurrency liabilities) of each depository institutions include commercial banks, mutual savings banks, savings and loan institution be subject to a zero percent reserve requirement. The Board is to adjust associations, credit unions, agencies and branches offoreign banks, and Edge Act the amount of reservable liabilities subject to this zero percent reserve requirecorporations. ment each year for the next succeeding calendar year by 80 percent of the 2. Requirement schedules are graduated, and each deposit interval applies to percentage increase in the total reservable liabilities of all depository institutions, that part of the deposits of each bank. Demand deposits subject to reserve measured on an annual basis as of June 30. No corresponding adjustment is to be requirements were gross demand deposits minus cash items in process of made in the event of a decrease. Effective Dec. 9, 1982, the amount of the collection and demand balances due from domestic banks. exemption was established at $2.1 million. Effective with the reserve maintenance The Federal Reserve Act as amended through 1978 specified different ranges of period beginning Jan. 1, 1985, the amount of the exemption is $2.4 million. requirements for reserve city banks and for other banks. Reserve cities were Effective with the reserve computation period beginning Dec. 31, 1985, the designated under a criterion adopted effective Nov. 9, 1972, by which a bank amount of the exemption is $2.6 million. In determining the reserve requirements having net demand deposits of more than $400 million was considered to have the of a depository institution, the exemption shall apply in the following order: (1) character of business of a reserve city bank. The presence of the head office of nonpersonal money market deposit accounts (MMDAs) authorized under 12 CFR such a bank constituted designation of that place as a reserve city. Cities in which section 1204.122; (2) net NOW accounts (NOW accounts less allowable deducthere were Federal Reserve Banks or branches were also reserve cities. Any tions); (3) net other transaction accounts; and (4) nonpersonal time deposits or banks having net demand deposits of $400 million or less were considered to have Eurocurrency liabilities starting with those with the highest reserve ratio. With the character of business of banks outside of reserve cities and were permitted to respect to NOW accounts and other transaction accounts, the exemption applies maintain reserves at ratios set for banks not in reserve cities. only to such accounts that would be subject to a 3 percent reserve requirement. Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances 6. For nonmember banks and thrift institutions that were not members of the due from domestic banks to their foreign branches and on deposits that foreign Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent 1987. For banks that were members on or after July 1, 1979, but withdrew on or respectively. The Regulation D reserve requirement of borrowings from unrelated before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends banks abroad was also reduced to zero from 4 percent. on Oct. 24, 1985. For existing member banks the phase-in period of about three Effective with the reserve computation period beginning Nov. 16, 1978, years was completed on Feb. 2, 1984. All new institutions will have a two-year domestic deposits of Edge corporations were subject to the same reserve phase-in beginning with the date that they open for business, except for those requirements as deposits of member banks. institutions that have total reservable liabilities of $50 million or more. 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as 7. Transaction accounts include all deposits on which the account holder is Christmas and vacation club accounts were subject to the same requirements as permitted to make withdrawals by negotiable or transferable instruments, paysavings deposits. ment orders of withdrawal, and telephone and preauthorized transfers (in excess The average reserve requirement on savings and other time deposits before of three per month) for the purpose of making payments to third persons or others. implementation of the Monetary Control Act had to be at least 3 percent, the However, MMDAs and similar accounts offered by institutions not subject to the minimum specified by law. rules of the Depository Institutions Deregulation Committee (DIDC) that permit 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent no more than six preauthorized, automatic, or other transfers per month of which was imposed on large time deposits of $100,000 or more, obligations of affiliates, no more than three can be checks—are not transaction accounts (such accounts and ineligible acceptances. This supplementary requirement was eliminated with are savings deposits subject to time deposit reserve requirements.) the maintenance period beginning July 24, 1980. 8. The Monetary Control Act of 1980 requires that the amount of transaction Effective with the reserve maintenance period beginning Oct. 25, 1979, a accounts against which the 3 percent reserve requirement applies be modified marginal reserve requirement of 8 percent was added to managed liabilities in annually by 80 percent of the percentage increase in transaction accounts held by excess of a base amount. This marginal requirement was increased to 10 percent all depository institutions determined as of June 30 each year. Effective Dec. 31, beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and 1981, the amount was increased accordingly from $25 million to $26 million; was eliminated beginning July 24, 1980. Managed liabilities are defined as large effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million; time deposits, Eurodollar borrowings, repurchase agreements against U.S. effective Jan. 1, 1985, to $29.8 million; and effective Dec. 31, 1985, to $31.7 government and federal agency securities, federal funds borrowings from non- million. member institutions, and certain other obligations. In general, the base for the 9. In general, nonpersonal time deposits are time deposits, including savings marginal reserve requirement was originally the greater of (a) $100 million or (b) deposits, that are not transaction accounts and in which a beneficial interest is the average amount of the managed liabilities held by a member bank, Edge held by a depositor that is not a natural person. Also included are certain corporation, or family of U.S. branches and agencies of a foreign bank for the two transferable time deposits held by natural persons, and certain obligations issued reserve computation periods ending Sept. 26, 1979. For the computation period to depository institution offices located outside the United States. For details, see beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease section 204.2 of Regulation D. in an institution's U.S. office gross loans to foreigners and gross balances due from foreign offices of other institutions between the base period (Sept. 13-26, NOTE. Required reserves must be held in the form of deposits with Federal 1979) and the week ending Mar. 12, 1980, whichever was greater. For the Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a computation period beginning May 29, 1980, the base was increased by 7Vi Federal Reserve Bank indirectly on a pass-through basis with certain approved percent above the base used to calculate the marginal reserve in the statement institutions. week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was reduced to the extent that foreign loans and balances declined. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • July 1986 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions' Percent per annum Savings and loan associations and Commercial banks mutual savings banks (thrift institutions)1 In effect May 31, 1986 In effect May 31, 1986 TTTyyypppeee ooofff dddeeepppooosssiiittt Percent Effective date Percent Effective date 2 3 1 N M Sa e o v g n i o e n t y g i a s m ble a rk o e r t d e d r e o p f o s w it i t a h c d c r o a u w n a t l accounts ( ( ( 2 3 4 ) ) ) 12 4 / 1 1 / / 1 4 1 / / / 8 8 8 6 2 6 ( ( ( 4 2 3 ) ) ) 12 4 / 1 1 / / 1 4 1 / / / 8 8 8 6 2 6 4 7 T im 31 e da a y c s c ounts (5) 1/1/86 (5) 9/1/86 1100//11//8833 1100//11//8833 1. Effective Oct. 1, 1983, restrictions on the maximum rates of interest payable 4. Effective Dec. 14, 1982, depository institutions are authorized to offer a new by commercial banks and thrift institutions on various categories of deposits were account with a required initial balance of $2,500 and an average maintenance removed. For information regarding previous interest rate ceilings on all catego- balance of $2,500 not subject to interest rate restrictions. Effective Jan. 1, 1985, ries of accounts see earlier issues of the FEDERAL RESERVE BULLETIN, the the minimum denomination and average balance maintenance requirements was Federal Home Loan Bank Board Journal, and the Annual Report of the Federal lowered to $1,000. Effective Jan. 1, 1986, the minimum denomination and average Deposit Insurance Corporation. balance maintenance requirements were removed. No minimum maturity period 2. Effective Apr. 1, 1986, the interest rate ceiling on savings deposits was is required for this account, but depository institutions must reserve the right to removed. Before Apr. 1, 1986, savings deposits were subject to an interest rate require seven days, notice before withdrawals. Depository institutions may not ceiling of 5'/2 percent. guarantee a rate of interest for this account for a period longer than one month or 3. Before Jan. 1, 1986, NOW accounts with minimum denomination require- condition the payment of a rate on a requirement that the funds remain on deposit ments of less than $1,000 were subject to an interest rate ceiling of 5!/» percent. for longer than one month. NOW accounts with minimum required denominations of $1,000 or more and 5. Before Jan. 1, 1986, deposits of less than $1,000 were subject to an interest IRA/Keough (HR10) Plan accounts were not subject to interest rate ceilings. rate ceiling of 5V4 percent. Deposits of less than $1,000 issued to governmental Effective Jan. 1, 1986, the minimum denomination requirement was removed. units were subject to an interest rate ceiling of 8 percent. Effective Jan. 1, 1986, the minimum denomination requirement was removed. 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 1986 TTyyppee ooff ttrraannssaaccttiioonn 11998833 11998844 11998855 Sept. Oct. Nov. Dec. Jan. Feb. Mar. U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 18,888 20,036 22,214 1,171 0 1,180 4,515 228866 0 339966 ? Gross sales 3,420 8,557 4,118 0 265 0 0 225 2,277 0 Exchange 0 0 0 350 0 -350 0 0 0 0 4 Redemptions 2,400 7,700 3,500 0 0 0 0 0 1,000 0 Others within 1 year 5 Gross purchases 484 1,126 1,349 0 0 0 143 0 00 00 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shift 18,887 16,354 19,763 1,028 529 2,363 943 725 4,776 1,152 8 Exchange -16,553 -20,840 -17,717 -1,807 -942 -615 -1,529 -596 -2,148 -1,458 9 Redemptions 87 0 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 1,896 1,638 2,185 0 00 0 868 00 00 00 11 Gross sales 0 0 0 0 0 0 0 0 0 0 1? Maturity shift -15,533 -13,709 -17,459 -1,028 -520 -1,731 -943 -703 -4,776 -1,152 13 Exchange 11,641 16,039 13,853 1,457 942 650 1,529 596 1,548 1,458 5 to 10 years 14 Gross purchases 890 536 458 0 0 0 345 00 00 00 IS Gross sales 0 300 100 0 0 0 0 0 0 0 16 Maturity shift -2,450 -2,371 -1,857 0 -10 -600 0 -22 0 0 17 Exchange 2,950 2,750 2,184 0 0 184 0 0 350 0 Over 10 years 18 Gross purchases 383 441 293 0 00 0 119977 00 00 00 19 Gross sales 0 0 0 0 0 0 0 0 0 0 70 Maturity shift -904 -275 -447 0 0 -32 0 0 0 0 21 Exchange 1,962 2,052 1,679 0 0 131 0 0 250 0 All maturities ?? Gross purchases 22,540 23,776 26,499 1,171 0 1,180 6,068 228866 00 339966 ?3 Gross sales 3,420 8,857 4,218 0 265 0 0 225 2,277 0 24 Redemptions 2,487 7,700 3,500 0 0 0 0 0 1,000 0 Matched transactions ?5 578,591 808,986 866,175 73,925 100,929 85,486 76,399 63,109 90,459 88,917 26 Gross purchases 576,908 810,432 865,968 72,347 100,197 84,769 78,962 61,156 94,368 88,604 Repurchase agreements 77 Gross purchases 105,971 127,933 134,253 14,029 00 33,,668844 2233,,333388 2244,,225577 00 66,,774488 28 Gross sales 108,291 127,690 132,351 14,029 0 3,684 19,809 24,699 3,087 6,748 29 Net change in U.S. government securities 12,631 8,908 20,477 -408 -997 463 12,159 -2,335 -2,456 83 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 00 00 00 00 00 00 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 292 256 162 0 0 0 0 0 -40 0 Repurchase agreements 33 Gross purchases 8,833 11,509 22,183 33,,552222 00 11,,445544 77,,664400 55,,338844 00 11,,882211 34 Gross sales 9,213 11,328 20,877 3,522 0 1,454 5,947 6,454 623 1,821 35 Net change in federal agency obligations -672 -76 1,144 0 0 0 1,693 -1,070 -663 0 BANKERS ACCEPTANCES 36 Repurchase agreements, net -1,062 -418 0 0 0 0 0 0 0 0 37 Total net change in System Open Market Account 10,897 8,414 21,621 -408 --999977 463 13,853 --33,,440055 --33,,111199 8833 NOTE. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • July 1986 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1986 1986 Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 Feb. Mar. Apr. Consolidated condition statement ASSETS 1 Gold certificate account 11,090 11,090 11,090 11,090 11,089 11,090 11,090 11,089 2 Special drawing rights certificate account 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 3 Coin 553 571 544 538 530 589 570 530 Loans 4 To depository institutions 683 2,519 699 1,233 954 661 818 954 5 Other 0 0 0 0 0 0 0 0 Acceptances—Bought outright 6 Held under repurchase agreements 0 00 00 00 00 00 00 00 Federal agency obligations 7 Bought outright 8,187 8,187 8,187 8,187 88,,118877 88,,118877 8,187 88,,118877 8 Held under repurchase agreements 0 0 300 993 1,433 0 0 1,433 U.S. government securities Bought outright 9 Bills 83,770 82,545 83,865 84,287 81,939 84,163 84,247 81,939 10 Notes 67,397 67,397 67,397 67,397 67,397 67,397 67,397 67,397 11 Bonds 24,976 24,976 24,976 24,976 24,976 24,976 24,976 24,976 12 Total bought outright1 176,143 174,918 176,238 176,660 174,312 176,536 176,620 174,312 13 Held under repurchase agreements 0 0 3,355 6,941 7,522 0 0 7,522 14 Total U.S. government securities 176,143 174,918 179,593 183,601 181,834 176,536 176,620 181,834 15 Total loans and securities 185,013 185,624 188,779 194,014 192,408 185,384 185,625 192,408 16 Items in process of collection 7,561 7,373 9,113 8,242 7,798 6,295 5,495 7,798 17 Bank premises 618 617 621 621 623 616 618 623 Other assets 18 Denominated in foreign currencies2 7,674 7,678 7,681 7,696 8,260 7,829 7,673 8,260 19 All other3 7,318 7,267 7,590 8,352 8,352 6,856 7,344 8,352 20 Total assets 224,545 224,938 230,136 235,271 233,778 223,377 223,133 233,778 LIABILITIES 21 Federal Reserve notes 177,851 178,818 178,759 178,031 178,418 175,072 177,189 178,418 Deposits 22 To depository institutions 30,435 29,499 32,519 43,432 29,416 29,324 30,782 29,416 23 U.S. Treasury—General account 2,817 2,900 3,484 0 11,550 5,026 3,280 11,550 24 Foreign—Official accounts 249 251 235 317 326 277 274 326 25 Other 492 445 472 369 441 436 511 441 26 Total deposits 33,993 33,095 36,710 44,118 41,733 35,063 34,847 41,733 27 Deferred credit items 6,805 6,932 8,624 6,888 6,947 6,507 4,935 6,947 28 Other liabilities and accrued dividends4 2,139 2,136 2,080 2,268 2,217 2,273 2,184 2,217 29 Total liabilities 220,788 220,981 226,173 231,305 229,315 218,915 219,155 229,315 CAPITAL ACCOUNTS 30 Capital paid in 1,821 1,824 1,827 1,825 1,828 1,800 1,821 1,828 31 Surplus 1,781 1,781 1,781 1,781 1,781 1,781 1,781 1,781 32 Other capital accounts 155 352 355 360 854 881 376 854 33 Total liabilities and capital accounts 224,545 224,938 230,136 235,271 233,778 223,377 223,133 233,778 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 139,998 142,214 139,813 141,280 146,001 131,599 136,262 146,001 Federal Reserve note statement 35 Federal Reserve notes outstanding 211,304 211,515 211,921 212,299 211,992 210,237 211,323 211,992 36 LESS: Held by bank 33,453 32,697 33,162 34,268 33,574 35,165 34,134 33,574 37 Federal Reserve notes, net 177,851 178,818 178,759 178,031 178,418 175,072 177,189 178,418 Collateral held against notes net: 38 Gold certificate account 11,090 11,090 11,090 11,090 11,089 11,090 11,090 11,089 39 Special drawing rights certificate account 4,718 4,718 4,718 4,718 4,718 4,718 4,718 4,718 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. government and agency securities 162,043 163,010 162,951 162,223 162,611 159,264 161,381 162,611 42 Total collateral 177,851 178,818 178,759 178,031 178,418 175,072 177,189 178,418 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. NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For 2. Assets shown in this line are revalued monthly at market exchange rates. address, see inside front cover. 3. Includes special investment account at Chicago of Treasury bills maturing within 90 days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 1986 1986 Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 Feb. 28 Mar. 31 Apr. 30 1 Loans—Total 683 2,519 699 1,233 954 661 818 954 ? Within 15 days 663 2,499 698 1,229 936 647 806 936 3 16 days to 90 days 20 20 1 4 18 14 12 18 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. government securities—Total 176,143 174,918 179,593 183,601 181,834 176,536 176,620 181,834 10 Within 15 days1 9,010 5,740 11,413 12,530 13,456 4,893 4,190 13,456 11 16 days to 90 days 41,352 42,134 43,019 43,642 39,760 45,663 45,337 39,760 1? 91 days to 1 year 56,038 57,301 55,418 57,686 58,193 56,543 57,350 58,193 n Over 1 year to 5 years 32,621 32,621 32,626 32,626 33,308 32,315 32,621 33,308 14 Over 5 years to 10 years 15,113 15,113 15,108 15,108 15,108 15,113 15,113 15,108 15 Over 10 years 22,009 22,009 22,009 22,009 22,009 22,009 22,009 22,009 16 Federal agency obligations—Total 8,187 8,187 8,187 9,180 9,620 8,187 8,187 9,620 17 Within 15 days1 38 83 280 1,228 2,049 331 246 2,049 18 16 days to 90 days 760 715 502 581 159 704 617 159 19 91 days to 1 year 1,909 1,914 1,927 1,880 1,795 1,744 1,844 1,795 20 Over 1 year to 5 years 3,793 3,788 3,778 3,837 3,902 3,821 3,793 3,902 21 Over 5 years to 10 years 1,263 1,263 1,276 1,230 1,291 1,178 1,263 1,291 22 Over 10 years 424 424 424 424 424 409 424 424 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 NonfinancialS tatistics • July 1986 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1985' 1986' 11998822 11998833 11998844 11998855 IItteemm DDeecc.. DDeecc.. DDeecc.. DDeecc// Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS'' 11 TToottaall rreesseerrvveess22 34.28 36.14 39.08 45.61 43.88 44.24 44.85 45.61 45.88 46.37 46.86 47.27 22 NNoonnbboorrrroowweedd rreesseerrvveess 33.65 35.36 35.90 44.29 42.59 43.06 43.11 44.29 45.11 45.49 46.10 46.38 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt33 33.83 35.37 38.50 44.79 43.25 43.69 43.64 44.79 45.61 45.98 46.62 47.01 44 RReeqquuiirreedd rreesseerrvveess 33.78 35.58 38.23 44.55 43.22 43.49 43.92 44.55 44.77 45.27 45.97 46.47 55 MMoonneettaarryy bbaassee44 170.04 185.39 198.80 216.72 212.29 213.57 215.25 216.72 218.40 219.79 221.26 222.36 Not seasonally adjusted 6 Total reserves2 35.01 36.86 40.13 46.84 43.68 44.21 45.08 46.84 47.11 45.68 46.34 47.93 7 Nonborrowed reserves 34.37 36.09 36.94 45.52 42,39 43.02 43.34 45.52 46.34 44.80 45.58 47.04 8 Nonborrowed reserves plus extended credit3 34.56 36.09 39.55 46.02 43.04 43.65 43.87 46.02 46.84 45.29 46.10 47.67 9 Required reserves 34.51 36.30 39.28 45.78 43.01 43.45 44.15 45.78 46.00 44.59 45.44 47.13 10 Monetary base4 173.07 188.66 201.94 220.36 212.16 213.36 216.04 220.36 218.74 216.78 218.98 222.14 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 41.85 38.89 40.70 48.14 44.45 45.47 46.38 48.14 48.06 46.65 47.27 48.88 12 Nonborrowed reserves 41.22 38.12 37.51 46.82 43.16 44.28 44.64 46.82 47.29 45.77 46.51 47.99 13 Nonborrowed reserves plus extended credit3 41.41 38.12 40.09 47.41 43.83 44.90 45.07 47.41 47.79 46.22 47.17 48.21 14 Required reserves 41.35 38.33 39.84 47.08 43.78 44.72 45.45 47.08 46.95 45.55 46.38 48.08 15 Monetary base4 180.42 192.26 202.51 223.53 214.50 216.19 218.96 223.53 221.59 219.57 221.70 224.88 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 1986 1982 1983 1984 1985 DDeecc.. DDeecc.. DDeecc.. DDeecc.. JJaann.. FFeebb..'' MMaarr..'' AApprr.. Seasonally adjusted 1 Ml 479.9 527.1 558.5 626.6 627.2 631.1 638.4 646.1 ? M2 1,952.6 2,186.0 2,373.8 2,565.7' 2,569.1' 2,576.9 2,591.4 2,620.8 M3 2,443.5 2,697.3 2,986.5 3,200.3' 3,224.1' 3,240.6 3,259.0 3,287.7 4 L 2,850.1 3,163.5 3,532.3 3,837.0' 3,860.C 3,879.5 3,891.0 n.a. 5 Debt 4,661.1 5,191.9 5,951.8 6,801.0' 6,904.3' 6,961.9 7,013.9 n.a. Ml components 6 Currency2 134.3 148.3 158.5 170.6 171.9 172.9 173.9 117744..55 7 Travelers checks3 4.3 4.9 5.2 5.9 5.9 5.9 6.1 6.1 8 Demand deposits4 237.9 242.7 248.4 271.5 268.9 269.2 273.2 275.6 9 Other checkable deposits5 103.4 131.3 146.3 178.6 180.5 183.1 185.2 189.9 Nontransactions components in In M26 1,472.7 1,658.9 1,815.4 1,939.1' 1,941.9' 1,945.8 1,953.0 1,974.7 n In M3 only7 490.9 511.3 612.7 634.5' 655.0' 663.7 667.6 666.9 Savings deposits9 i? Commercial Banks 163.7 133.4 122.3 124.5' 124.7 125.0 125.7 126.6 13 Thrift institutions 194.2 173.2 167.3 179.1 179.3 180.0 181.3 185.0 Small denomination time deposits9 14 Commercial Banks 380.4 351.1 387.2 384.1 386.6' 388.1 389.0 387.9 15 Thrift institutions 472.4 434.1 500.3 496.2 499.5' 502.9 505.7 507.1 Money market mutual funds 16 General purpose and broker/dealer 185.2 138.2 167.5 176.5 177.7 181.0 186.2 191.8 17 Institution-only 51.1 43.2 62.7 64.6 67.3 67.7 70.2 74.1 Large denomination time deposits10 18 Commercial Banks11 262.1 228.7 263.7 279.1 289.7 291.5 287.0 286.9 19 Thrift institutions 65.8 101.1 150.2 157.3 158.2 159.7 163.4 165.0 Debt components 70 Federal debt 979.2 1,173.0 1,367.3 1,586.0 1,608.5 1,622.5 1,629.3 n.a. 21 Non-federal debt 3,681.8 4,019.0 4,584.6 5,215.0' 5,295.8' 5,339.4 5,384.6 n.a. Not seasonally adjusted ?? Ml 490.9 538.8 570.5 639.9' 633.5 619.2 630.5 652.9 ?3 M2 1,958.6 2,192.8 2,380.8 2,573.9' 2,577.9' 2,570.2 2,593.4 2,630.4 74 M3 2,453.3 2,707.9 2,997.9 3,213.0' 3,231.8 3,232.6 3,259.3 3,294.2 75 L 2,856.4 3,170.1 3,537.5 3,843.2' 3,865.2' 3,871.9 3,895.2 n.a. 26 Debt 4,655.7 5,186.5 5,946.2 6,793.9' 6,896.7' 6,940.2 6,985.3 n.a. Ml components 77 Currency2 136.5 150.5 160.9 173.1 170.5 170.6 172.3 173.7 ?8 Travelers checks3 4.1 4.6 4.9 5.5 5.5 5.6 5.8 5.8 79 Demand deposits4 246.2 251.3 257.3 281.3 275.1 262.0 267.1 278.6 30 Other checkable deposits5 104.1 132.4 147.5 180.1 182.4 181.0 185.3 194.8 Nontransactions components 31 M26 1,467.7 1,654.0 1,810.3 1,933.9' 1,944.3' 1,951.0 1,962.9 1,977.5 32 M3 only7 494.7 515.1 617.0 639.1' 653.9' 662.4 665.9 663.7 Money market deposit accounts 33 Commercial banks 26.3 230.5 267.2 332.4 336.7 337.0 340.3 344.8 34 Thrift institutions 16.9 148.7 149.7 179.6 179.0 179.4 180.2 180.5 Savings deposits8 35 Commercial Banks 162.1 132.2 121.4 123.5 123.9 123.6 124.9 127.2 36 Thrift institutions 193.1 172.3 166.5 178.3 178.8 179.1 181.6 186.0 Small denomination time deposits9 37 Commercial Banks 380.1 351.1 387.6 384.8 386.5 387.0 387.2 384.4 38 Thrift institutions 471.7 434.2 501.2 497.6' 502.6' 504.7 504.6 504.3 Money market mutual funds 39 General purpose and broker/dealer 185.2 138.2 167.5 176.5 177.7 181.0 186.2 191.8 40 Institution-only 51.1 43.2 62.7 64.6 67.3 67.7 70.2 74.1 Large denomination time deposits10 41 Commercial Banks" 265.2 230.8 265.5 280.9 288.5 290.3 287.6 283.4 42 Thrift institutions 65.8 101.4 150.6 157.8 159.0 160.7 163.2 164.0 Debt components 43 Federal debt 976.4 1,170.2 1,364.7 1,583.7 1,606.7 1,621.0 1,633.2 n.a. 44 Non-federal debt 3,679.3 4,016.3 4,581.5 5,210.2' 5,290.0' 5,319.2 5,352.0 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • July 1986 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 based on monthly averages. 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 1986 1V83 Oct. Nov. Dec. Jan. Feb. Mar. DEBITS TO Seasonally adjusted Demand deposits2 1 All insured banks 109,642.3 128,440.8 154,556.0 162,205.4 163,038.1 189,203.0 169,894.2 179,139.6 182,841.8 2 Major New York City banks 47,769.4 57,392.7 70,445.1 76,706.3 77,069.6 89,415.1 79,324.3 85,298.6 89,350.3 3 Other banks 61,873.1 71,048.1 84,110.9 85,499.2 85,968.5 99,787.9 90,569.9 93,841.0 93,491.5 4 ATS-NOW accounts3 1,405.5 1,588.7 1,920.8 2,212.7 2,227.8 2,452.5 2,027.5 2,193.5 2,266.0 5 Savings deposits4 741.4 633.1 539.0 562.0 533.4 418.6 362.4 364.6 356.7 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 379.7 434.4 496.5 513.2 508.1 581.9 531.8 560.8 566.0 7 Major New York City banks 1,528.0 1,843.0 2,168.9 2,422.2 2,368.5 2,567.0 2,306.3 2,473.8 2,517.7 8 Other banks 240.9 268.6 301.8 300.6 298.1 343.7 317.7 329.3 325.1 9 ATS-NOW accounts3 15.6 15.8 16.7 18.4 18.2 19.8 16.1 17.2 17.7 10 Savings deposits4 5.4 5.0 4.5 4.6 4.3 3.4 2.9 3.0 2.9 DEBITS TO Not seasonally adjusted Demand deposits2 11 All insured banks 109,517.6 128,059.1 154,108.4 167,639.3 157,070.9 192,060.0 180,495.6 161,655.6 179,715.2 12 Major New York City banks 47,707.4 57,282.4 70,400.9 78,010.5 73,982.4 92,551.5 84,880.9 77,376.9 87,757.0 13 Other banks 64,310.2 70,776.9 83,707.8 89,628.8 83,088.6 99,508.5 95,614.7 84,278.6 91,958.3 14 ATS-NOW accounts3 1,397.0 1,579.5 1,903.4 2,157.7 2,007.8 2,354.4 2,406.1 2,065.3 2,349.0 15 MMDA5 567.4 848.8 1,179.0 1,293.0 1,221.5 1,493.2 1,543.8 1,334.9 1,600.4 16 Savings deposits4 742.0 632.9 538.7 579.9 496.3 405.3 392.4 331.1 362.3 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 379.9 433.5 497.4 532.1 489.3 574.9 554.2 520.0 569.5 18 Major New York City banks 1,510.0 1,838.6 2,191.1 2,507.4 2,332.4 2,594.1 2,393.7 2,314.0 2,494.1 19 Other banks 240.5 267.9 301.6 315.7 287.2 333.4 329.4 303.8 328.0 20 ATS-NOW accounts3 15.5 15.7 16.6 18.1 16.4 18.8 18.9 16.4 18.3 21 MMDA5 2.8 3.5 3.8 4.0 3.7 4.5 4.6 4.0 4.7 22 Savings deposits4 5.4 5.0 4.5 4.8 4.0 3.3 3.2 2.7 3.0 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 NonfinancialS tatistics • July 1986 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1985 1986 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total loans and securities2 1,788.5 1,802.7 1,819.0 1,828.8 1,841.3 1,844.4 1,869.6 1,895.5 1,919.6 1,926.2 1,941.5 1,944.2 2 U.S. government securities 266.3 267.1 271.6 271.4 273.1 270.0 275.0 270.7 264.6 270.8 268.0 264.7 3 Other securities 142.2 144.5 145.4 148.2 151.3 154.8 160.7 174.5 189.6 184.9 180.5 179.2 4 Total loans and leases2 1,380.0 1,391.0 1.402.1 1,409.2 1,416.9 1,419.7 1,433.9 1,450.3 1,465.4 1,470.5 1,493.0 1,500.2 5 Commercial and industrial 484.3 484.3 484.1 485.7 487.2 487.0 490.6 493.9 494.2 495.3 502.1 504.4 6 Bankers acceptances held3.. 4.9 4.7 5.1 5.0 4.7 4.7 4.9 5.2 5.3 4.8 5.0 5.1 / Other commercial and 479.3 479.6 479.0 480.7 482.5 482.3 485.7 488.6 489.0 490.5 497.1 499.3 industrial 469.2 470.1 469.6 471.1 473.3 473.7 477.3 479.8 479.1 480.8 448877..33 448899..00 8 U.S. addressees4 9 Non-U.S. addressees4.... 10.1 9.5 9.4 9.6 9.2 8.6 8.4 8.8 9.8' 9.7 9.8 10.3 10 Real estate 394.8 398.7 403.7 407.1 409.9 414.5 419.2 423.2 426.1 430.5 435.6 440.6 11 Individual 269.9 272.7 276.3 278.5 280.3 281.3 283.8 286.5 289.4 292.3 294.8 296.4 12 Security 37.5 40.0 40.3 36.7 38.2 37.9 37.8 38.7 43.1 41.8 48.3 46.4 13 Nonbank financial institutions 31.4 31.1 31.4 32.1 32.3 32.0 32.8 34.1 33.7 32.2 32.2 32.5 14 Agricultural 39.4 39.4 39.6 39.6 40.1 40.3 40.5 40.8 40.9 41.0 41.0 40.7 15 State and political subdivisions 47.5 47.5 47.9 48.8 48.8 49.3 50.0 52.4' 58.3 58.1 58.0 57.6 16 Foreign banks 10.7 10.4 10.4' 10.3' 10.0 9.8' 9.5' 9.6 9.6 9.8 9.9' 9.7 17 Foreign official institutions ... 6.9 6.7 6.6 6.4 6.6 6.8 6.9 7.0 7.0 7.0 6.8 6.9 18 Lease financing receivables... 16.7 17.0 17.3 17.5 17.6 17.7 17.9 18.2 18.7 18.9 19.0 19.2 19 All other loans 41.0' 43.3 44.5' 46.5 45.9' 43.1' 45. C 46.1 44.4 43.5 45.4' 45.8 Not seasonally adjusted 20 Total loans and securities2 1,784.6 1,803.6 1,812.5 1,822.1 1,839.8 1,846.1 1,870.8 1,908.5 1,929.0 1,924.2 1,937.2 1,943.9 21 U.S. government securities 268.4 270.8 271.4 269.8 270.7 266.9 270.6 267.2 264.5 271.8 270.1 270.3 2 2 2 3 O To th ta e l r l s o e a c n u s r i a t n ie d s leases2 1,3 1 7 4 3 2 . . 4 8 1,3 1 8 4 8 4 . . 6 2 1,3 1 9 4 7 4 . . 2 0 1,4 1 0 4 4 7. . 7 6 1,4 1 1 5 8 0 . . 4 7 1,4 1 2 5 4 4. . 2 9 1,4 1 3 6 9 0 . . 4 8 1,4 1 6 7 4 6. . 5 8 1,4 1 7 9 3 0 . . 7 8 1,4 1 6 8 7 5 . . 2 2 1,4 1 8 8 6 0 . . 4 7 1,4 1 9 7 4 8. . 7 9 2 2 4 5 Co B m a m nk er e c rs i al a c a c n e d p t i a n n d c u es s tr h i e a l l d . 3 . . . . . 482 4 . . 8 9 482 4 . . 8 8 483 5 . . 2 0 483 4 . . 5 9 487 4 . . 2 6 48 4 8 . . 6 0 49 4 1 . . 8 0 497 55.. . 55 3 49 55 6 .. . 44 4 49 44 4 .. . 77 9 50 55 1 .. . 00 8 50 55 4 .. . 11 6 26 Other commercial and 2277 U. i S n . d a u d st d r r ia e l s sees4 4 4 6 7 8 7 . . 3 9 4 4 6 7 8 7 . . 6 9 4 4 6 7 8 8 . . 7 2 4 4 6 7 9 8 . . 0 6 4 4 7 8 3 2 . . 1 6 4 4 7 8 4 3 . . 3 4 4 47 8 7 6 . . 1 2 4 48 9 1 1 . . 8 8 4 4 8 9 1 1 . . 0 1 ' 4 4 9 8 0 1 . . 1 1 4 48 9 7 6 . . 7 8 4 4 9 9 0 9 . . 1 5 28 Non-U.S. addressees4.... 9.6 9.3 9.5 9.6 9.4 9.1 9.1 10.0 9.9' 9.0' 9.1 9.4 29 Real estate 393.8 398.1 403.1 407.3 411.2 415.9 420.3 423.8 426.8 430.0 434.3 439.1 30 Individual 267.7 270.7 274.5 278.3 281.5 283.4 285.8 290.0 292.2 292.0 292.3 293.9 31 Security 36.0 39.9 38.3 35.8 36.7 37.7 39.7 4433..44 4444..55 4400..66 4477..44 4466..33 32 Nonbank financial institutions 31.2 31.1 31.5 32.3 32.4 32.0 32.7 34.2 33.7 31.9 32.1 32.6 3333 Agricultural 39.3 39.9 40.4 40.5 40.9 40.9 40.6 4400..44 4400..33 4400..11 4400..11 4400..00 34 State and political subdivisions 47.5 47.5 47.9 48.8 48.8 49.3 50.0 52.4' 58.3 58.1 58.0 57.6 3355 Foreign banks 10.4 10.1 10.3 10.0 10.1 10.0 9.9 10.1 9.8 9.8 9.7 9.5 36 Foreign official institutions . . . 6.9 6.7 6.6 6.4 6.6 6.8 6.9 7.0 7.0 7.0 6.8 6.9 37 Lease financing receivables... 16.7 16.9 17.2 17.4 17.5 17.6 17.7 18.1 18.9 19.1 19.2 19.3 38 All other loans 41.1 44.9 44.2 44.4 45.5 43.4 44.7 48.0 45.7' 43.6 44.7 45.2 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 BANKS1 Monthly averages, billions of dollars 1985 1986 SSoouurrccee May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Total nondeposit funds 1 Seasonally adjusted2 109.2 110.9 106.3 109.8 111.6 115.2 118.4 123.8 127.1' 112277..55 113366..66 112288..77 2 Not seasonally adjusted 113.7 112.2 105.4 111.4 112.4 116.2 121.9 125.9 129.5 132.5 141.5 132.0 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 137.7 143.5 143.4 139.8 140.5 141.0 145.9 150.4 147.6 114488..55 115566..11 115555..11 4 Not seasonally adjusted 142.1 144.8 142.4 141.5 141.4 142.0 149.4 152.4 150.1 153.5 161.0 158.4 5 Net balances due to foreign-related institutions, not seasonally adjusted -28.4 -32.6 -37.1 -30.0 -29.0 -25.8 -27.6 -26.6 --2200..55'''' --2211..00 --1199..55 --2266..44 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -29.5 -32.5 -38.3 -32.8 -30.7 -28.7 -30.3 -31.6 -28.0 --2255..88 --2266..55 --3300..22 7 Gross due from balances 74.5 76.4 79.2 75.8 74.7 74.2 74.1 76.1 74.4 69.5 71.7' 75.3 8 Gross due to balances 44.9 44.0 40.8 43.0 44.0 45.4 43.8 44.5 46.5' 43.7 45.2 45.1 9 Foreign-related institutions' net positions with directly related institutions, not seasonally ii..<<yy adjusted5 1.1 -.2 1.3 2.8 1.7 2.9 2.7 5.1 7.4 44..88'' 33..77 10 Gross due from balances 51.7 53.0 54.6 55.1 56.0 55.4 56.1 56.8 57.7 60.0 60.7 62.6 11 Gross due to balances 52.9 52.8 55.9 57.9 57.8 58.3 58.8 61.9 65.1 64.8' 67.7 66.3 Security RP borrowings 12 Seasonally adjusted® 81.4 83.5 83.7 83.3 85.3 84.7 84.8 88.0 86.1 8877..77 87.6 8877..11 13 Not seasonally adjusted 83.4 82.3 80.4 82.6 83.7 83.4 85.9 87.7 86.1 90.3 90.1 88.0 U.S. Treasury demand balances7 14 Seasonally adjusted 20.3 16.9 20.5 16.1 14.9 4.7 13.5 17.5 19.0 21.1 1155..77 1177..44 15 Not seasonally adjusted 20.9 14.9 23.1 13.4 16.8 5.4 7.9 14.6 24.0 24.2 15.7 17.7 Time deposits, $100,000 or more8 16 Seasonally adjusted 330.4 328.9 324.2 327.2 330.8 333.9 335.9 337.6 349.4 335511..88 334477..77 334466..88 17 Not seasonally adjusted 329.6 327.2 323.2 327.7 332.7 336.3 337.5 339.4 348.3 350.7' 348.2 343.3 1. Commercial banks are those in the 50 states and the District of Columbia 3. Other borrowings are borrowings on any instrument, such as a promissory with national or state charters plus agencies and branches of foreign banks, New note or due bill, given for the purpose of borrowing money for the banking York investment companies majority owned by foreign banks, and Edge Act business. This includes borrowings from Federal Reserve Banks and from foreign corporations owned by domestically chartered and foreign banks. banks, term federal funds, overdrawn due from bank balances, loan RPs, and Data for lines 1-4 and 12-17 have been revised in light of benchmarking and participations in pooled loans. revised seasonal adjustment. 4. Averages of daily figures for member and nonmember banks. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from 5. Averages of daily data. nonbanks and not seasonally adjusted net Eurodollars. Includes averages of 6. Based on daily average data reported by 122 large banks. Wednesday data for domestically chartered banks and averages of current and 7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at previous month-end data for foreign-related institutions. commercial banks. Averages of daily data. 8. Averages of Wednesday figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic NonfinancialS tatistics • July 1986 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars 1985 1986 AAccccoouunntt June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. ALL COMMERCIAL BANKING INSTITUTIONS1 1 Loans and securities 1,927.3 1,948.5 1,952.1 1,969.9 1,979.1 2,027.7 2,059.3 2,057.9 2,071.6 2,084.6 2,106.0 2 Investment securities 392.1 392.3 393.7 397.0 396.3 404.6 413.6 427.2 427.3 422.1 423.6 3 U.S. government securities 255.3 256.1 254.2 254.4 249.3 251.8 249.9 249.0 252.1 250.9 252.4 4 Other 136.8 136.2 139.6 142.6 147.0 152.8 163.6 178.3 175.1 171.2 171.2 Trading account assets 23.1 22.3 24.2 26.4 25.0 32.0 31.1 30.1 33.9 30.1 27.9 6 Total loans 1,512.1 1,534.0 1,534.1 1,546.5 1,557.8 1,591.2 1,614.6 1,600.6 1,610.4 1,632.3 1,654.5 7 Interbank loans 123.1 133.0 128.6 129.1 131.7 147.0 149.6 136.5 139.2 141.1 151.4 8 Loans excluding interbank 1,388.9 1,401.0 1,405.5 1,417.5 1,426.1 1,444.1 1,465.0 1,464.1 1,471.2 1,491.3 1,503.1 9 Commercial and industrial 484.3 485.9 484.6 489.2 488.8 493.1 495.9 496.9 502.1 509.2 510.7 10 Real estate 400.0 405.6 409.3 412.8 418.3 421.8 425.0 428.6 431.6 436.1 442.1 11 Individual 272.1 276.1 280.0 282.1 285.1 286.8 291.1 292.7 292.3 292.6 295.7 12 All other 232.6 233.4 231.5 233.4 233.9 242.5 253.0 245.8 245.1 253.4 254.6 13 Total cash assets 190.4 198.0 188.4 188.2 190.1 207.7 211.6 188.1 194.6 199.4 211.1 14 Reserves with Federal Reserve Banks 21.6 21.0 24.5 24.9 19.6 20.5 27.6 22.0 26.3 29.2 25.6 15 Cash in vault 22.2 22.0 22.7 22.1 22.6 21.4 22.2 23.0 22.6 21.8 22.3 16 Cash items in process of collection ... 68.4 70.5 62.5 61.4 67.9 81.9 79.3 63.9 66.7 68.6 80.4 17 Demand balances at U.S. depository institutions 31.3 33.5 30.6 30.8 31.6 35.8 36.1 31.4 31.9 31.4 34.8 18 Other cash assets 46.8 51.0 48.2 49.1 48.4 48.1 46.5 47.8 47.1 48.4 48.0 19 Other assets 189.4 194.5 180.8 185.8 178.1 185.0 189.4 178.0 177.1 185.4 196.8 20 Total assets/total liabilities and capital ... 2,307.1 2,341.1 2,321.3 2,344.0 2,347.3 2,420.5 2,460.3 2,424.0 2,443.3 2,469.3 2,513.9 21 Deposits 1,659.8 1,685.0 1,676.9 1,683.0 1,705.6 1,743.9 1,763.6 1,729.5 1,736.9 1,754.2 1,789.4 22 Transaction deposits 474.0 492.3 475.4 474.9 491.4 521.9 536.4 488.2 491.3 502.1 540.3 23 Savings deposits 425.6 434.3 436.4 438.3 443.8 448.4 450.0 451.9 455.1 459.8 465.5 24 Time deposits 760.1 758.4 765.0 769.8 770.4 773.6 777.1 789.4 790.4 792.2 783.5 25 Borrowings 315.8 321.6 308.9 323.2 309.0 350.8 361.5 359.7 370.2 369.2 387.4 26 Other liabilities 179.7 181.1 182.0 183.6 177.9 170.6 178.5 177.9 178.7 187.5 177.6 27 Residual (assets less liabilities) 151.8 153.4 153.4 154.1 154.8 155.1 156.7 156.9 157.6 158.5 159.5 MEMO 28 U.S. government securities (including trading account) 271.0 270.0 268.3 271.5 265.1 271.7 265.7 266.9 275.4 270.9 270.6 29 Other securities (including trading account) 144.3 144.6 149.7 151.9 156.2 164.9 178.9 190.4 185.8 181.3 180.8 DOMESTICALLY CHARTERED COMMERCIAL BANKS2 30 Loans and securities 1,829.2 1,847.9 1,850.8 1,863.6 1,872.3 1,917.7 1,944.2 1,943.6 1,953.8 1,961.9 1,982.8 31 Investment securities 385.1 385.1 386.5 389.1 388.1 396.6 405.9 417.3 416.9 412.4 412.2 32 U.S. government securities 251.4 252.4 250.4 250.5 245.0 248.0 246.0 244.9 247.6 246.5 246.7 33 Other 133.8 132.7 136.0 138.6 143.1 148.7 159.9 172.4 169.3 165.8 165.5 34 Trading account assets 23.1 22.3 24.2 26.4 25.0 32.0 31.1 30.1 33.9 30.1 27.9 35 Total loans 1,420.9 1,440.5 1,440.1 1,448.1 1,459.2 1,489.1 1,507.2 1,496.3 1,502.9 1,519.5 1,542.8 36 Interbank loans 100.6 110.0 104.7 103.8 106.8 121.1 121.2 113.0 112.6 116.5 126.2 37 Loans excluding interbank 1,320.3 1,330.5 1,335.5 1,344.2 1,352.4 1,368.0 1,386.0 1,383.3 1,390.3 1,402.9 1,416.6 38 Commercial and industrial 436.0 437.6 435.7 437.9 437.4 440.0 442.0 439.7 443.4 445.5 449.3 39 Real estate 394.4 399.9 403.7 407.0 412.7 416.3 419.4 423.1 426.1 430.5 436.3 40 Individual 271.8 275.9 279.8 281.8 284.8 286.5 290.9 292.5 292.0 292.3 295.5 41 All other 218.1 217.2 216.3 217.5 217.5 225.2 233.7 228.0 228.8 234.5 235.5 42 Total cash assets 179.2 185.3 176.4 176.1 178.0 195.8 199.3 173.2 181.2 185.3 196.7 43 Reserves with Federal Reserve Banks 20.9 20.4 23.8 24.4 18.6 19.5 26.1 21.2 25.8 28.7 24.7 44 Cash in vault 22.2 22.0 22.6 22.0 22.6 21.4 22.2 23.0 22.6 21.7 22.2 45 Cash items in process of collection ... 68.2 70.3 62.2 61.1 67.7 81.6 79.0 63.5 66.3 68.1 80.0 46 Demand balances at U.S. depository institutions 29.8 32.2 29.0 29.4 30.2 34.0 34.4 29.6 30.3 29.8 33.1 47 Other cash assets 38.1 40.4 38.8 39.2 38.9 39.2 37.7 35.9 36.2 36.9 36.6 48 Other assets 137.7 144.9 132.6 133.3 132.0 137.1 141.2 130.0 126.4 135.5 141.1 49 Total assets/total liabilities and capital ... 2,146.2 2,178.1 2,159.8 2,173.0 2,182.3 2,250.6 2,284.8 2,246.8 2,261.3 2,282.7 2,320.5 50 Deposits 1,617.2 1,642.3 1,631.9 1,636.6 1,659.5 1,697.5 1,716.7 1,681.2 1,689.9 1,705.8 1,741.0 51 Transaction deposits 467.7 486.0 468.9 468.3 484.9 515.2 529.3 481.3 484.3 494.8 533.0 52 Savings deposits 424.3 432.9 435.1 436.9 442.4 446.9 448.5 450.4 453.5 458.2 463.8 53 Time deposits 725.2 723.3 727.9 731.4 732.2 735.4 738.9 749.5 752.1 752.7 744.2 54 Borrowings 253.8 258.4 249.6 259.0 248.0 280.5 290.0 292.2 299.2 299.7 304.5 55 Other liabilities 126.1 126.8 127.4 125.9 122.7 120.2 124.0 119.1 117.2 121.4 118.2 56 Residual (assets less liabilities) 149.1 150.7 150.8 151.5 152.2 152.5 154.0 154.3 154.9 155.8 156.8 1. Commercial banking institutions include insured domestically chartered NOTE. Figures are partly estimated. They include all bank-premises subsidiarcommercial banks, branches and agencies of foreign banks, Edge Act and ies and other significant majority-owned domestic subsidiaries. Loan and securi- Agreement corporations, and New York State foreign investment corporations. ties data for domestically chartered commercial banks are estimates for the last 2. Insured domestically chartered commercial banks include all member banks Wednesday of the month based on a sample of weekly reporting banks and and insured nonmember banks. quarter-end condition report data. Data for other banking institutions are estimates made for the last Wednesday of the month based on a weekly reporting 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 1986 AAccccoouunntt Mar. 5 Mar. 12 Mar. 19' Mar. 26' Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 1 Cash and balances due from depository institutions 100,133 99,573 96,650 97,031 102,206 90,940 104,818 109,111 101,622 2 Total loans, leases and securities, net 935,662' 932,783' 925,806 922,278 928,144 931,187 936,016 938,517 943,552 3 U.S. Treasury and government agency 92,193 91,492 89,854 90,179 91,343 95,459 94,860 91,684 92,526 4 Trading account 21,782 20,819 20,324 19,986 21,576 23,792 22,559 19,661 21,495 5 Investment account, by maturity 70,411 70,673 69,530 70,193 69,767 71,666 72,301 72,023 71,031 6 One year or less 18,533 18,871 19,371 18,930 19,732 20,072 19,735 19,292 19,227 7 Over one through five years 34,613 34,593 33,522 34,566 33,396 33,891 34,337 33,921 33,249 8 Over five years 17,264 17,208 16,636 16,697 16,639 17,702 18,230 18,809 18,554 9 Other securities 70,485 69,527 68,814 68,781 67,630 67,226 68,512 68,587 69,268 10 Trading account 5,547 5,017 4,825 4,821 4,534 4,252 5,414 5,238 5,206 11 Investment account 64,939 64,510 63,988 63,960 63,096 62,974 63,098 63,349 64,062 1? States and political subdivisions, by maturity 58,695 58,208 57,712 57,485 56,465 56,245 56,148 56,349 56,912 13 One year or less 10,840 10,493 10,303 10,388 9,793 9,702 9,635 9,592 9,759 14 Over one year 47,854 47,716 47,408 47,097 46,672 46,543 46,513 46,757 47,154 15 Other bonds, corporate stocks, and securities 6,244 6,302 6,277 6,475 6,631 6,730 6,950 7,000 7,149 16 Other trading account assets 4,696 5,124 5,529 5,246 5,260 4,886 4,902 4,510 4,821 17 Federal funds sold1 70,522 69,885' 59,723 60,679 62,291 66,791 64,049 71,815 70,343 18 To commercial banks 40,082 40,867' 32,360 34,442 38,077 43,366 39,242 43,868 44,000 19 To nonbank brokers and dealers in securities 19,923 19,574 19,138 18,617 17,306 15,284 16,655 18,847 17,379 7 ? 0 1 Ot T h o e r o l t o h a e n r s s and leases, gross2 11X0,151,70 11 71 '9 6 , , 4 1 4 0 3 3 ' 721 8 , , 2 2 6 2 1 4 71 7 6 , , 6 6 2 3 0 9 72 6 0 , , 9 9 0 0 9 7 71 8 6 , , 1 2 4 4 1 0 72 8 3 , , 1 3 5 8 2 0 72 9 1 , , 1 64 0 7 0 72 8 6 , ,5 9 0 6 2 4 ?? Other loans, gross2 701,242' 700,211' 705,378 700,744 705,011 700,356 707,484 705,745 710,608 73 Commercial and industrial2 259,750' 258,721' 260,386 258,580 261,191 258,575 261,495 258,778 260,964 74 Bankers acceptances and commercial paper 2,162 2,223 2,328 2,231 2,296 2,235 2,259 2,166 2,155 ?5 All other 257,588' 256,498' 258,058 256,349 258,895 256,340 259,237 256,611 258,809 76 U.S. addressees 253,023 251,941 253,546 251,812 254,415 251,950 254,530 252,105 254,261 27 Non-U.S. addressees 4,565' 4,557' 4,512 4,537 4,479 4,390 4,706 4,506 4,548 ?8 Real estate loans2 183,536 184,188 185,203 185,265 185,680 185,884 186,774 187,028 187,513 79 To individuals for personal expenditures 132,878' 132,856' 132,817 132,723 132,726 132,816 133,492 133,876 134,305 30 To depository and financial institutions 43,314' 42,512' 42,651 42,365 42,406 42,225 43,054 44,104 43,641 31 Commercial banks in the United States 13,539 13,079' 13,252 13,172 12,748 12,762 12,950 14,796 13,893 3? Banks in foreign countries 5,730' 5,143' 5,096 5,141 5,106 4,838 4,915 5,543 5,420 33 Nonbank depository and other financial institutions 24,045 24,289 24,303 24,052 24,552 24,625 25,189 23,764 24,328 34 For purchasing and carrying securities 19,695 21,252 22,210 20,704 20,071 20,253 21,152 20,435 21,964 35 To finance agricultural production 6,308 6,255 6,264 6,236 6,202 6,186 6,207 6,217 6,226 36 To states and political subdivisions 36,807 36,751 36,754 36,640 36,416 36,364 36,469 36,581 36,416 37 To foreign governments and official institutions 3,249' 3,160' 3,145 3,287 3,246 3,138 3,095 3,293 3,292 38 All other 15,704' 14,517' 15,949 14,944 17,073 14,914 15,745 15,434 16,286 39 Lease financing receivables 15,835 15,892 15,883 15,895 15,896 15,884 15,895 15,902 15,894 40 LESS: Unearned income 4,948 4,985 4,983 4,976 4,918 4,898 4,926 4,924 4,960 41 Loan and lease reserve2 14,364 14,365 14,391 14,270 14,368 14,517 14,760 14,802 14,947 4? Other loans and leases, net2 697,765' 696,754' 701,886 697,392 701,621 696,825 703,693 701,921 706,594 43 All other assets 126,894 122,385 127,153 127,056 130,332 132,844 133,072 130,386 131,848 44 Total assets 1,162,689' 1,154,740' 1,149,609 1,146,365 1,160,683 1,154,972 1,173,906 1,178,014 1,177,022 45 Demand deposits 211,800' 202,584' 205,084 200,630 218,000 206,395 222,191 213,028 222,160 46 Individuals, partnerships, and corporations 157,112' 157,315' 156,123 152,903 168,203 158,847 167,9% 158,423 167,022 47 States and political subdivisions 4,846 4,137 4,829 5,012 5,099 4,618 5,988 5,017 6,072 48 U.S. government 4,856 2,834 4,162 2,520 1,666 1,674 4,029 3,743 4,754 49 Depository institutions in United States 24,904' 21,925' 23,032 23,009 25,003 22,705 25,329 22,787 24,601 50 Banks in foreign countries 6,495' 5,946' 5,500 5,827 6,158 5,557 6,225 6,832 6,450 51 Foreign governments and official institutions 779 868' 776 897 939 891 930 985 878 57 Certified and officers' checks 12,808 9,559' 10,661 10,461 10,932 12,104 11,694 15,241 12,382 S3 Transaction balances other than demand deposits 44,767' 43,754' 43,599 43,330 45,925 46,483 48,150 45,807 44,323 54 Nontransaction balances 493,337' 493,907' 493,030 493,407 493,910 493,925 490,885 490,617 490,165 55 Individuals, partnerships and corporations 454,028' 454,734' 454,118 454,472 455,638 455,657 453,052 452,318 451,865 56 States and political subdivisions 26,142 26,190 25,879 25,845 25,429 25,614 25,308 25,823 25,786 57 U.S. government 766 550 596 637 692 700 691 689 683 58 Depository institutions in the United States 10,687' 10,827' 10,818 10,836 10,483 10,323 10,221 10,182 10,260 59 Foreign governments, official institutions and banks 1,714 1,606 1,619 1,616 1,669 1,630 1,612 1,606 1,571 60 Liabilities for borrowed money 249,321' 250,293' 242,870 241,764 236,144 242,454 247,063 258,854 252,670 61 Borrowings from Federal Reserve Banks 120 1,182 145 173 110 2,019 245 547 305 67 Treasury tax-and-loan notes 8,553 6,122 11,844 9,405 2,308 6,366 11,134 15,731 17,532 63 All other liabilities for borrowed money3 240,648' 242,988' 230,881 232,186 233,727 234,070 235,684 242,576 234,833 64 Other liabilities and subordinated note and debentures 82,968' 83,324' 84,351 86,579 85,547 84,339 84,727 88,703 85,844 65 Total liabilities 1,082,193' 1,073,862' 1,068,934 1,065,710 1,079,528 1,073,597 1,093,016 1,097,010 1,095,162 66 Residual (total assets minus total liabilities)4 80,496 80,878 80,675 80,655 81,155 81,375 80,890 81,004 81,861 MEMO 67 Total loans and leases (gross) and investments adjusted5 901,353' 898,185' 899,568 893,910 896,605 894,474 903,511 899,579 905,566 68 Total loans and leases (gross) adjusted2 5 733,978' 732,042' 735,372 729,704 732,373 726,903 735,237 734,798 738,952 69 Time deposits in amounts of $100,000 or more 163,172' 162,666' 161,850 161,925 159,428 159,116 156,948 156,783 156,074 70 Loans sold outright to affiliates—total6 1,754' 1,816' 1,910 1,910 1,647 1,743 1,803 1,637 1,713 71 Commercial and industrial 1,033' 1,092' 1,186 1,206 942 1,044 1,102 973 1,049 7? Other 721 724 724 704 705 699 700 664 664 73 Nontransaction savings deposits (including MMDAs) 196,695 197,694' 197,783 198,102 200,782 201,518 200,257 200,150 200,633 1. Includes securities purchased under agreements to resell. 4. This is not a measure of equity capital for use in capital adequacy analysis or 2. Levels of major loan items were affected by the Sept. 26, 1984, transaction for other analytic uses. between Continental Illinois National Bank and the Federal Deposit Insurance 5. Exclusive of loans and federal funds transactions with domestic commercial Corporation. For details see the H.4.2 statistical release dated Oct. 5, 1984. banks. 3. Includes federal funds purchased and securities sold under agreements to 6. Loans sold are those sold outright to a bank's own foreign branches, repurchase; for information on these liabilities at banks with assets of $1 billion or nonconsolidated nonbank affiliates of the bank, the bank's holding company (if more on Dec. 31, 1977, see table 1.13. not a bank), and nonconsolidated nonbank subsidiaries of the holding company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • July 1986 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures except as noted 1986 AAccccoouunntt Mar. 5 Mar. 12 Mar. 19 Mar. 26 Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 1 Cash and balances due from depository institutions 26,055 27,675 25,493 27,075 25,650 22,834 25,555 31,870 26,606 2 Total loans, leases and securities, net1 201,402' 203,712 199,994 198,136 197,961 198,032 200,446 203,880 204,206 Securities 3 4 5 Investment account, by maturity 10,988 10,682 9,747 10,171 10,288 10,587 11,192 11,145 10,673 6 One year or less 1,299 1,215 1,492 1,596 1,597 1,574 1,442 1,522 1,375 7 Over one through five years 5,712 5,635 4,643 5,570 5,608 5,732 6,322 6,017 6,087 8 Over five years 3,976 3,832 3,612 3,004 3,083 33,,228800 33,,442288 33,,660066 33,,221100 9 10 11 Investment account 15,624 15,626 15,515 15,567 15,228 15,i83 15,276 15,319 15,462 12 States and political subdivisions, by maturity 13,495 13,490 13,399 13,382 13,141 13,110 13,106 13,144 13,262 13 One year or less 1,842 1,847 1,818 1,915 1,684 1,666 1,656 1,655 1,706 14 Over one year 11,653 11,643 11,581 11,467 11,456 11,443 11,449 11,489 11,557 15 Other bonds, corporate stocks and securities 2,129 2,136 2,116 2,186 2,087 2,074 2,170 2,174 22,,220000 1166 Loans and leases 17 Federal funds sold3 30,107 33,921 28,733 29,414 27,532 29,172 28,173 32,777 31,808 IS To commercial banks 11,670 16,347 11,886 13,755 13,319 15,660 14,180 17,499 16,289 19 To nonbank brokers and dealers in securities 11,172 10,889 10,807 9,642 9,343 7,479 8,433 9,539 8,800 20 To others 7,265 6,684 6,040 6,018 4,869 6,033 5,560 5,740 6,719 21 Other loans and leases, gross 150,315' 149,182 151,728 148,642 150,434 148,666 151,388 150,235 151,907 22 Other loans, gross 147,236' 146,099 148,644 145,551 147,345 145,633 148,348 147,189 148,870 23 Commercial and industrial 58,951 58,298 58,396 57,635 58,975 58,019 59,041 57,514 5577,,998888 24 Bankers acceptances and commercial paper 546 541 547 495 462 516 483 492 448888 25 All other 58,406 57,757 57,849 57,140 58,513 57,503 58,558 57,022 57,500 26 U.S. addressees 57,833 57,180 57,271 56,551 57,986 56,982 57,780 56,261 56,738 27 Non-U.S. addressees 573 578 578 588 527 522 779 762 762 28 Real estate loans 30,421 30,630 31,014 30,924 31,003 30,964 31,288 31,433 31,286 29 To individuals for personal expenditures 17,863' 17,837' 17,849 17,872 17,737 17,731 17,800 17,855 17,926 30 To depository and financial institutions 13,932' 13,099 13,322 13,380 13,489 13,390 14,038 14,575 14,849 31 Commercial banks in the United States 4,745 4,439 4,586 4,487 4,524 4,639 4,981 5,487 5,880 32 Banks in foreign countries 2,773' 2,174 2,308 2,232 2,318 2,080 1,955 2,576 2,293 33 Nonbank depository and other financial institutions 6,414 6,487 6,428 6,661 6,647 6,670 7,102 6,512 6,676 34 For purchasing and carrying securities 11,122 11,898 12,794 11,163 10,580 11,180 11,214 10,575 11,664 35 To finance agricultural production 344 322 324 321 317 316 312 323 319 36 To states and political subdivisions 9,411 9,369 9,347 9,244 9,196 9,187 9,279 9,391 9,259 37 To foreign governments and official institutions 870 761 749 866 818 764 716 922 856 38 All other 4,321' 3,883' 4,849 4,144 5,229 4,082 4,661 4,600 4,722 39 Lease financing receivables 3,079 3,083 3,084 3,091 3,089 3,033 3,040 3,046 3,037 40 LESS: Unearned income 1,424 1,432 1,434 1,433 1,407 1,377 1,384 1,389 1,433 41 Loan and lease reserve 4,208 4,267 4,296 4,224 4,113 4,198 4,200 4,208 4,211 42 Other loans and leases, net 144,683' 143,483 145,998 142,984 144,913 143,091 145,804 144,638 146,263 43 All other assets4 75,147 69,053 72,561 69,544 72,181 76,800 75,831 72,658 73,456 44 Total assets 302,604' 300,441 298,048 294,754 295,792 297,667 301,832 308,408 304,268 Deposits 45 Demand deposits 57,277' 53,916 55,640 54,077 56,788 54,879 58,778 59,765 58,584 46 Individuals, partnerships, and corporations 36,220 37,511 37,881 36,317 40,174 36,718 39,995 37,713 39,120 47 States and political subdivisions 606 483 691 698 667 564 1,081 581 688 48 U.S. government 961 545 839 513 183 221 656 684 715 49 Depository institutions in the United States 6,542 5,282 5,797 5,762 5,286 5,229 5,878 5,517 6,167 50 Banks in foreign countries 5,198' 4,661 4,263 4,467 4,772 4,347 4,886 5,587 5,127 51 Foreign governments and official institutions 628 723 627 783 790 724 766 831 684 52 Certified and officers' checks 7,120 4,711 5,540 5,536 4,915 7,077 55,,551166 88,,885522 66,,008822 53 Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers) 4,950' 4,603' 4,612 4,622 4,946 5,078 5,330 4,992 4,785 54 Nontransaction balances 92,349 91,788 92,166 91,649 91,869 91,406 91,093 90,444 91,395 55 Individuals, partnerships and corporations 82,983 82,496 83,130 82,662 82,929 82,520 82,220 81,431 82,129 56 States and political subdivisions 5,954 5,937 5,794 5,645 5,598 5,853 5,782 5,870 5,876 57 U.S. government 45 41 40 43 48 49 46 49 48 58 Depository institutions in the United States 2,459 2,478 2,364 2,445 2,385 2,114 2,187 2,222 2,496 59 Foreign governments, official institutions and banks 907 836 839 855 907 870 859 873 846 60 Liabilities for borrowed money 89,794 92,141 85,371 83,257 81,677 85,539 85,411 90,032 87,809 61 800 1,475 62 Treasury tax-and-loan notes 2,274 1,413 3,208 2,535 287 1,536 3,074 4,414 4,894 63 All other liabilities for borrowed money5 87,521 89,927 82,164 80,722 81,390 82,528 82,337 85,618 82,914 64 Other liabilities and subordinated note and debentures 32,504' 32,129' 34,581 35,489 34,521 34,700 35,286 37,146 35,378 65 Total liabilities 276,874' 274,578 272,370 269,095 269,801 271,602 275,898 282,379 277,950 66 Residual (total assets minus total liabilities)6 25,730 25,863 25,678 25,659 25,991 26,065 25,934 26,028 26,318 MEMO 67 Total loans and leases (gross) and investments adjusted17 190,619' 188,625 189,252 185,551 185,638 183,309 186,869 186,491 187,681 68 Total loans and leases (gross) adjusted7 164,007' 162,317 163,989 159,813 160,122 157,539 160,401 160,027 161,546 69 Time deposits in amounts of $100,000 or more 36,778 35,645 35,948 35,567 35,043 34,657 34,834 34,402 34,880 1. Excludes trading account securities. 6. Not a measure of equity capital for use in capital adequacy analysis or for 2. Not available due to confidentiality. other analytic uses. 3. Includes securities purchased under agreements to resell. 7. Exclusive of loans and federal funds transactions with domestic commercial 4. Includes trading account securities. banks. 5. Includes federal funds purchased and securities sold under agreements to NOTE. These data also appear in the Board's H.4.2 (504) release. For address, repurchase. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS WITH ASSETS OF $750 MILLION OR MORE ON JUNE 30, 1980 Assets and Liabilities • Millions of dollars, Wednesday figures 1986 AAccccoouunntt11 Mar. 5 Mar. 12 Mar. 19 Mar. 26 Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 1 Cash and due from depository institutions . 8,939 8,894 8,435 9,204 9,417 8,730 9,589 9,389 9,452 2 Total loans and securities 63,728 64,800 66,163 68,377 67,583 66,693 67,529 68,517 69,478 3 U.S. Treasury and govt, agency securities 3,789 3,906 3,883 3,784 3,888 4,245 4,492 4,345 4,946 4 Other securities 4,391 4,078 4,080 4,014 3,999 3,983 4,152 4,322 4,310 5 Federal funds sold2 2,989 3,485 3,823 4,312 3,786 3,726 3,116 4,380 4,318 6 To commercial banks in the United States 2,225 2,788 2,919 3,394 3,105 2,985 2,189 3,359 3,314 7 To others 764 696 904 918 681 741 927 1,021 1,004 8 Other loans, gross 52,559 53,331 54,377 56,266 55,908 54,740 55,769 55,469 55,904 9 Commercial and industrial 31,478 31,649 32,188 33,411 32,629 32,342 32,617 32,224 32,188 10 Bankers acceptances and commercial paper 2,186 2,042 2,230 2,372 2,348 2,216 2,243 2,219 22,,337711 11 All other 29,292 29,606 29,957 31,038 30,281 30,126 30,374 30,005 29,816 12 U.S. addressees 26,947 27,313 27,867 28,888 28,146 27,942 28,159 27,764 27,551 13 Non-U.S. addressees 2,345 2,293 2,090 2,150 2,135 2,184 2,215 2,241 2,265 14 To financial institutions 14,282 14,726 14,902 15,262 15,540 15,184 15,845 16,067 15,863 15 Commercial banks in the United States . 11,316 11,650 11,773 12,288 12,707 12,525 12,793 13,235 12,929 16 Banks in foreign countries 1,124 1,091 1,069 1,012 973 968 1,055 984 953 17 Nonbank financial institutions 1,842 1,985 2,060 1,962 1,860 1,692 1,996 1,848 1,981 18 To foreign govts, and official institutions.. 598 607 606 654 608 608 622 611 641 19 For purchasing and carrying securities .. 2,562 2,708 3,084 3,397 3,611 2,951 3,092 2,889 3,428 20 All other 3,638 3,641 3,597 3,542 3,520 3,654 3,593 3,678 3,784 21 Other assets (claims on nonrelated parties).. 22,594 22,901 22,758 22,783 21,812 22,273 21,905 22,107 22,024 22 Net due from related institutions 14,048 13,625 12,317 11,206 11,982 14,735 12,407 13,694 14,744 23 Total assets 109,309 110,220 109,674 111,570 110,794 112,431 111,430 113,708 115,698 24 Deposits or credit balances due to other than directly related institutions 31,144 30,835 31,792 32,462 31,901 32,113 32,338 31,799 3322,,882211 25 Transaction accounts and credit balances3 2,975 2,419 2,777 2,841 2,723 2,549 2,730 2,653 2,961 26 Individuals, partnerships, and corporations 1,478 1,495 1,558 1,520 1,555 1,397 11,,555522 1,550 1,667 27 Other 1,496 923 1,219 1,321 1,168 1,152 1,178 1,102 1,294 28 Nontransaction accounts4 28,169 28,417 29,014 29,620 29,178 29,564 29,608 29,146 29,860 29 Individuals, partnerships, and corporations 22,458 22,878 23,661 24,019 23,718 24,110 24,109 23,831 24,626 30 Other 5,711 5,539 5,353 5,601 5,460 5,454 5,499 5,315 5,234 31 Borrowings from other than directly related institutions 44,366 44,065 40,906 39,320 43,829 4466,,559966 4433,,774477 4455,,771177 4466,,888888 32 Federal funds purchased5 22,187 21,920 18,439 16,772 20,959 24,021 22,243 23,410 25,378 33 From commercial banks in the United States 17,332 17,060 13,191 12,314 16,055 18,892 15,886 16,856 18,439 34 From others 4,855 4,860 5,248 4,457 4,904 5,129 6,356 6,554 6,939 35 Other liabilities for borrowed money 22,179 22,145 22,467 22,548 22,871 22,575 21,505 22,306 21,510 36 To commercial banks in the United States 20,170 20,510 20,679 20,744 21,009 20,991 19,628 20,585 19,648 37 To others 2,009 1,636 1,788 1,803 1,862 1,584 1,876 1,722 1,863 38 Other liabilities to nonrelated parties 24,252 24,755 24,900 24,476 23,481 24,252 23,510 23,464 23,694 39 Net due to related institutions 9,548 10,564 12,076 15,312 11,582 9,468 11,835 12,728 12,294 40 Total liabilities 109,309 110,220 109,674 111,570 110,794 112,431 111,430 113,708 115,698 MEMO 41 Total loans (gross) and securities adjusted6 50,187 50,362 51,471 52,696 51,771 51,183 52,547 51,923 53,235 42 Total loans (gross) adjusted6 42,006 42,378 43,508 44,897 43,883 42,956 43,903 43,255 43,979 A Levels of many asset and liability items were revised beginning Oct. 31, in transaction accounts. Before Jan. 1, 1986, they were included in savings 1984. For details, see the H.4.2 (504) statistical release dated Nov. 23, 1984. (nontransaction) accounts. 1. Effective Jan. 1, 1986, The reporting panel includes 65 U.S. branches and 2. Includes securities purchased under agreements to resell. agencies of foreign banks instead of the 50 banks previously reporting. Data 3. Includes credit balances, demand deposits, and other checkable deposits. shown for weeks before Jan. 1, 1986 are estimated to represent the new 65-bank 4. Includes savings deposits, money market deposit accounts, and time panel. Minor definitional changes were made in a few items effective with Jan. 1 deposits. data due to a change in treatment of credit balances and other checkable deposits. 5. Includes securities sold under agreements to repurchase. Credit balances formerly were reported as a separate item and are now included in 6. Exclusive of loans to and federal funds sold to commercial banks in the the transaction account breakdowns. Other checkable deposits are now included United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic NonfinancialS tatistics • July 1986 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1 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.. Sept. Dec. Mar.3 June Sept. Dec. 1 All holders—Individuals, partnerships, and corporations 315.5 288.9 291.8 293.5 288.8 302.7 286.6 298.6 299.6 321.6 2 Financial business 29.8 28.0 35.4 32.8 30.4 31.7 28.1 28.9 28.9 32.9 3 Nonfinancial business 162.8 154.8 150.5 161.1 158.9 166.3 158.3 164.7 168.1 178.4 4 Consumer 102.4 86.6 85.9 78.5 79.9 81.5 77.9 81.8 80.7 84.8 5 Foreign 3.3 2.9 3.0 3.3 3.3 3.6 3.5 3.7 3.5 3.5 6 Other 17.2 16.7 17.0 17.8 16.3 19.7 18.8 19.5 18.5 22.1 Weekly reporting banks 1984 1985 11998800 11998811 11998822 11998833 DDeecc.. DDeecc.. DDeecc.. DDeecc..22 Sept. Dec. Mar.3 June Sept. Dec. 7 All holders—Individuals, partnerships, and corporations 147.4 137.5 144.2 146.2 145.3 157.1 147.8 151.4 153.7 168.8 8 Financial business 21.8 21.0 26.7 24.2 23.7 25.3 22.6 22.9 23.3 26.6 9 Nonfinancial business 78.3 75.2 74.3 79.8 79.2 87.1 82.8 84.0 85.9 94.4 10 Consumer 35.6 30.4 31.9 29.7 29.8 30.5 29.1 29.9 30.6 32.4 11 Foreign 3.1 2.8 2.9 3.1 3.2 3.4 3.3 3.5 3.3 3.1 12 Other 8.6 8.0 8.4 9.3 9.3 10.9 10.0 11.0 10.6 12.3 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 1986 IInnssttrruummeenntt DD 1199 ee 88 cc 11 .. DD 1199 ee 88 cc 22 .. DD 11 ee 99 cc 88 .. 33 11 DD 1199 ee 88 cc 44 .. DD 1199 ee 88 cc 55 .. Oct. Nov. Dec. Jan. Feb. Mar. Commercial paper (seasonally adjusted unless noted otherwise) 11 AAllll iissssuueerrss 165,829 166,436 187,658 237,586 300,899 282,155 287,981 300,899 302,160 297,862 301,110 FFiinnaanncciiaall ccoommppaanniieess33 DDeeaalleerr--ppllaacceedd ppaappeerr44 22 TToottaall 30,333 34,605 44,455 56,485 78,443 70,395 72,145 78,443 79,048 78,136 84,071 33 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 6,045 2,516 2,441 2,035 1,602 2,077 1,969 1,602 1,410 1,475 1,348 DDiirreeccttllyy ppllaacceedd ppaappeerr55 44 TToottaall 81,660 84,393 97,042 110,543 135,504 131,504 131,667 135,504 134,584 134,443 135,510 55 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd)) 26,914 32,034 35,566 42,105 44,778 42,570 41,490 44,778 37,418 36,948 37,013 66 NNoonnffiinnaanncciiaall ccoommppaanniieess66 53,836 47,437 46,161 70,558 86,952 80,256 84,169 86,952 88,528 85,283 81,529 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 69,226 79,543 78,309 77,121 68,180 69,272 67,890 68,180 68,205 67,188 66,906 Holder 8 Accepting banks 10,857 10,910 9,355 10,255 11,233 9,719 11,027 11,233 11,084 12,352 13,052 9 Own bills 9,743 9,471 8,125 9,065 9,507 8,041 8,903 9,507 9,346 10,127 10,713 10 Bills bought 1,115 1,439 1,230 1,191 1,726 1,679 2,123 1,726 1,738 2,225 2,340 Federal Reserve Banks 11 Own account 195 1,480 418 0 0 0 0 0 0 0 0 12 Foreign correspondents 1,442 949 729 671 937 850 874 937 898 874 877 13 Others 56,731 66,204 67,807' 66,195r 56,004' 58,703' 55,989' 56,004' 56,271' 53,983' 52,944' Basis 14 Imports into United States 14,765 17,683 15,649 16,975 15,225 16,503 15,845 15,225 14,820 14,806 13,596 15 Exports from United States 15,400 16,328 16,880 15,859 13,189 13,116 13,030 13,189 12,951 13,115 13,406 16 All other 39,060 45,531 45,781 44,287r 39,764' 39,653' 39,015' 39,764' 40,543' 39,267' 39,877' 1. Effective Dec. 1, 1982, there was a break in the commercial paper series. The 4. Includes all financial company paper sold by dealers in the open market. key changes in the content of the data involved additions to the reporting panel, 5. As reported by financial companies that place their paper directly with the exclusion of broker or dealer placed borrowings under any master note investors. agreements from the reported data, and the reclassification of a large portion of 6. Includes public utilities and firms engaged primarily in such activities as bank-related paper from dealer-placed to directly placed. communications, construction, manufacturing, mining, wholesale and retail trade, 2. Correction of a previous misclassification of paper by a reporter has created transportation, and services. a break in the series beginning December 1983. The correction adds some paper to 7. Beginning October 1984, the number of respondents in the bankers acceptnonfinancial and to dealer-placed financial paper. ance survey were reduced from 340 to 160 institutions—those with $50 million or 3. Institutions engaged primarily in activities such as, but not limited to, more in total acceptances. The new reporting group accounts for over 95 percent commercial, savings, and mortgage banking; sales, personal, and mortgage of total acceptances activity. financing; factoring, finance leasing, and other business lending; insurance underwriting; and other investment activities. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective Date Average rate 11.50 1985--Jan. 15. 10.50 1984—Jan. 11.00 1985—Mar 12.00 May 20. 10.00 Feb. 11.00 Apr 12.50 June 18. 9.50 Mar. 11.21 May 13.00 Apr. 11.93 June 12.75 1986--Mar. 7.. 9.00 May 12.39 July 12.50 Apr. 21 . 8.50 June 12.60 Aug 12.00 July 13.00 Sept 11.75 Aug. 13.00 Oct 11.25 Sept 12.97 Nov 10.75 Oct. 12.58 Dec Nov. 11.77 Dec. 11.06 1986—Jan Feb 1985—Jan. 10.61 Mar Feb. 10.50 Apr NOTE. These data also appear in the Board's H.15 (519) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • July 1986 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. 1986 1986, week ending IInnssttrruummeenntt 11998833 11998844 11998855 Jan/ Feb. Mar. Apr. Mar. 28 Apr. 4 Apr. 11 Apr. 18 Apr. 25 MONEY MARKET RATES 1 Federal funds1-2 9.09 10.22 8.10 8.14 7.86 7.48 6.99 7.25 7.39 7.05 6.97 6.92 2 Discount window borrowing1'2 3 8.50 8.80 7.69 7.50 7.50 7.10 6.83 7.00 7.00 7.00 7.00 6.79 Commercial paper4-5 3 1-month 8.87 10.05 7.94 7.78 7.70 7.30 6.75 7.25 7.22 6.83 6.57 6.57 4 3-month 8.88 10.10 7.95 7.71 7.63 7.20 6.60 7.13 7.02 6.66 6.41 6.44 5 6-month 8.89 10.16 8.01 7.62 7.54 7.08 6.47 7.00 6.82 6.53 6.30 6.34 Finance paper, directly placed4-5 6 1-month 8.80 9.97 7.91 7.75 7.68 7.24 6.69 7.19 7.18 6.76 6.44 6.53 7 3-month 8.70 9.73 7.77 7.52 7.47 7.15 6.49 7.03 6.99 6.64 6.34 6.25 8 6-month 8.69 9.65 7.75 7.47 7.40 7.10 6.44 6.96 6.88 6.61 6.32 6.20 Bankers acceptances5-6 9 3-month 8.90 10.14 7.92 7.62 7.54 7.09 6.48 7.01 6.80 6.46 6.30 6.44 10 6-month 8.91 10.19 7.96 7.55 7.41 6.94 6.36 6.83 6.61 6.36 6.21 6.35 Certificates of deposit, secondary market7 11 1-month 8.96 10.17 7.97 7.83 7.69 7.33 6.74 7.30 7.14 6.76 6.58 6.62 12 3-month 9.07 10.37 8.05 7.82 7.69 7.24 6.60 7.16 7.02 6.62 6.44 6.47 13 6-month 9.27 10.68 8.25 7.83 7.70 7.23 6.57 7.15 6.94 6.57 6.41 6.47 14 Eurodollar deposits, 3-month8 9.56 10.73 8.28 8.02 7.89 7.42 6.80 7.43 7.23 7.01 6.71 6.56 U.S. Treasury bills5 Secondary market9 b 3-month 8.61 9.52 7.48 7.07 7.06 6.56 6.06 6.39 6.31 6.07 5.84 6.03 16 6-month 8.73 9.76 7.65 7.16 7.11 6.57 6.08 6.42 6.30 6.08 5.87 6.06 17 1-year 8.80 9.92 7.81 7.21 7.11 6.59 6.06 6.46 6.27 6.03 5.85 6.08 Auction average10 18 3-month 8.52r 9.57r 7.47 7.04 7.03 6.59 6.06 6.36 6.35 6.19 5.84 5.86 19 6-month 8.76' 9.80 7.64 7.13 7.08 6.60 6.07 6.43 6.32 6.17 5.93 5.87 20 1-year 8.86r 9.91 7.83 7.31 7.19 6.61 5.94 n.a. n.a. 5.94 n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 9.57 10.89 8.43 7.73 7.61 7.03 6.44 6.89 6.67 6.41 6.21 6.46 22 2-year 10.21 11.65 9.27 8.14 7.97 7.21 6.70 7.10 6.90 6.67 6.47 6.70 23 3-year 10.45 11.89 9.64 8.41 8.10 7.30 6.86 7.19 7.03 6.82 6.59 6.94 24 5-year 10.80 12.24 10.13 8.68 8.34 7.46 7.05 7.36 7.22 7.04 6.80 7.10 25 7-year 11.02 12.40 10.51 9.03 8.58 7.67 7.16 7.52 7.27 7.15 6.92 7.24 26 10-year 11.10 12.44 10.62 9.19 8.70 7.78 7.30 7.63 7.39 7.31 7.10 7.35 27 20-year 11.34 12.48 10.97 9.59 9.08 8.09 7.50 7.93 7.54 7.50 7.33 7.57 28 30-year 11.18 12.39 10.79 9.40 8.93 7.96 7.39 7.81 7.47 7.39 7.22 7.42 Composite13 29 Over 10 years (long-term) 10.84 11.99 10.75 9.51 9.07 8.13 7.59 7.98 7.62 7.58 7.39 7.66 State and local notes and bonds Moody's series14 30 Aaa 8.80 9.61 8.60 7.74 7.26 6.73 6.81 6.80 6.65 6.80 6.90 6.90 31 Baa 10.17 10.38 9.58 8.79 8.30 7.58 7.45 7.60 7.40 7.40 7.50 7.50 32 Bond Buyer series15 9.51 10.10 9.11 8.08 7.44 7.08 7.20 7.21 7.15 7.25 7.16 7.22 Corporate bonds Seasoned issues16 33 All industries 12.78 13.49 12.05 10.75 10.40 9.79 9.51 9.71 9.54 9.52 9.42 9.51 .34 Aaa 12.04 12.71 11.37 10.05 9.67 9.00 8.79 8.94 8.74 8.75 8.66 8.90 35 Aa 12.42 13.31 11.82 10.46 10.13 9.49 9.21 9.43 9.24 9.23 9.12 9.23 36 A 13.10 13.74 12.28 11.04 10.67 10.15 9.83 10.04 9.89 9.87 9.76 9.80 37 Baa 13.55 14.19 12.72 11.44 11.11 10.50 10.19 10.42 10.28 10.24 10.13 10.13 38 A-rated, recently-offered utility bonds17 12.73 13.81 12.06 10.74 10.20 9.41 9.26 9.29 9.21 9.19 9.15 9.47 MEMO: Dividend/price ratio19 39 Preferred stocks 11.02 11.59 10.49 9.85 9.62 9.13 8.97 9.21 9.12 9.01 8.90 8.80 40 Common stocks 4.40 4.64 4.25 3.90 3.72 3.50 3.43 3.43 3.46 3.49 3.37 3.38 1. Weekly and monthly figures are averages of all calendar days, where the places. Thus, average issuing rates in bill auctions will be reported using two rate for a weekend or holiday is taken to be the rate prevailing on the preceding rather than three decimal places. business day. The daily rate is the average of the rates on a given day weighted by 11. Yields are based on closing bid prices quoted by at least five dealers. the volume of transactions at these rates. 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields 2. Weekly figures are averages for statement week ending Wednesday. are read from a yield curve at fixed maturities. Based on only recently issued, 3. Rate for the Federal Reserve Bank of New York. actively traded securities. 4. Unweighted average of offering rates quoted by at least five dealers (in the 13. Averages (to maturity or call) for all outstanding bonds neither due nor case of commercial paper), or finance companies (in the case of finance paper). callable in less than 10 years, including one very low yielding "flower" bond. Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. General obligations based on Thursday figures; Moody's Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 150- 15. General obligations only, with 20 years to maturity, issued by 20 state and 179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 5. Yields are quoted on a bank-discount basis, rather than an investment yield 16. Daily figures from Moody's Investors Service. Based on yields to maturity basis (which would give a higher figure). on selected long-term bonds. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Compilation of the Federal Reserve. This series is an estimate of the yield (which may be, but need not be, the average of the rates quoted by the dealers). on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 7. Unweighted average of offered rates quoted by at least five dealers early in call protection. Weekly data are based on Friday quotations. the day. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 8. Calendar week average. For indication purposes only. sample of ten issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H.15 (519) and G.13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1985 1986 IInnddiiccaattoorr 11998833 11998844 11998855 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 92.63 92.46 108.09 109.09 106.62 107.57 113.93 119.33 120.16 126.43 133.97 137.25 2 Industrial 107.45 108.01 123.79 124.92 122.35 123.65 130.53 136.77 137.13 144.03 152.75 157.35 3 Transportation 89.36 85.63 104.11 109.92 104.96 103.72 108.61 113.52 115.72 124.18 128.66 125.92 4 Utility 47.00 46.44 56.75 56.99 55.93 55.84 59.07 61.69 62.46 65.18 68.06 69.35 5 Finance 95.34 89.28 114.21 114.68 110.21 112.36 122.83 128.86 132.36 142.13 153.94 154.83 6 Standard & Poor's Corporation (1941-43 = 10)' ... 160.41 160.50 186.84 188.31 184.06 186.18 197.45 207.26 208.19 219.37 232.33 237.97 7 American Stock Exchange2 (Aug. 31, 1973 = 50) 216.48 207.96 229.10 232.65 226.27 225.00 236.53 243.28 245.27 246.09 264.91 270.59 Volume of trading (thousands of shares) 8 New York Stock Exchange 85,418 91,084 109,191 87,468 97,910 110,569 122,263 133,446 130,872 152,590 160,755 146,330 9 American Stock Exchange 8,215 6,107 8,355 7,275 7,057 7,648 9,183 11,890 11,105 14,057 15,902 13,503 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 23,000 22,470 28,390 25,780 25,330 26,350 26,400 28,390 26,810 27,450 29,090 30,760 Free credit balances at brokers4 11 Margin-account5 1,755 2,715 1,810 1,745 1,715 2,080 2,715 2,645 2,545' 2,715' 3,065 12 Cash-account 8,430 10,215 12,840 9,440 10,080 9,630 10,340 12,840 11,695 12,355 13,920 14,340 Margin-account debt at brokers (percentage distribution, end of period) 13 Totol 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)6 14 Under 40 22.0 18.0 34.0 35.0 40.0 37.0 35.0 34.0 32.0 28.0 29.0 29.0 15 40-49 22.0 18.0 20.0 21.0 22.0 22.0 20.0 20.0 21.(K 19.0 19.0 20.0 16 50-59 16.0 16.0 19.0 18.0 16.0 17.0 19.0 19.0 19.(K 21.0 22.0' 20.0 17 60-69 9.0 9.0 11.0 11.0 9.0 10.0 11.0 11.0 11.0 13.0 13.0 13.0 18 70-79 6.0 5.0 8.0 8.0 6.0 7.0 7.0 8.0 8.0 9.0 s.O' 9.0 19 80 or more 6.0 6.0 8.0 7.0 7.0 7.0 8.0 8.0 9.0 10.0 9.0 9.0 Special miscellaneous-account balances at brokers (end of period) 20 Total balances (millions of dollars)7 58,329 75,840 99,310 90,930 91,400 92,250 95,240 99,310 99,290 104,228 103,450 105,790 Distribution by equity status (percent) 21 Net credit status 63.0 59.0 58.0 59.0 59.0 58.0 57.0 58.0 59.0 60.0 61.0 59.0 Debt status, equity of 22 60 percent or more 28.0 29.0 31.0 30.0 31.0 31.0 32.0 31.0 33.0 32.0 31.0 8.0 23 Less than 60 percent 9.0 11.0 11.0 11.0 10.0 11.0 11.0 11.0 8.0 8.0 8.0 33.0 Margin requirements (percent of market value and effective date)8 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 24 Margin stocks 70 80 65 55 65 50 25 Convertible bonds 50 60 50 50 50 50 26 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 5. New series beginning June 1984. companies. With this change the index includes 400 industrial stocks (formerly 6. Each customer's equity in his collateral (market value of collateral less net 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 debit balance) is expressed as a percentage of current collateral values. financial. 7. Balances that may be used by customers as the margin deposit required for 2. Beginning July 5, 1983, the American Stock Exchange rebased its index additional purchases. Balances may arise as transfers based on loan values of effectively cutting previous readings in half. other collateral in the customer's margin account or deposits of cash (usually sales 3. Beginning July 1983, under the revised Regulation T, margin credit at proceeds) occur. broker-dealers includes credit extended against stocks, convertible bonds, stocks 8. Regulations G, T, and U of the Federal Reserve Board of Governors, acquired through exercise of subscription rights, corporate bonds, and govern- prescribed in accordance with the Securities Exchange Act of 1934, limit the ment securities. Separate reporting of data for margin stocks, convertible bonds, amount of credit to purchase and carry margin stocks that may be extended on and subscription issues was discontinued in April 1984, and margin credit at securities as collateral by prescribing a maximum loan value, which is a specified broker-dealers became the total that is distributed by equity class and shown on percentage of the market value of the collateral at the time the credit is extended. lines 17-22. Margin requirements are the difference between the market value (100 percent) 4. Free credit balances are in accounts with no unfulfilled commitments to the and the maximum loan value. The term "margin stocks" is defined in the brokers and are subject to withdrawal by customers on demand. corresponding regulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • July 1986 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1985 1986 May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. FSLIC insured institutions 1 Assets 819,168 978,514 1,003,225 1,012,312 1,022,410 1,034,979 1,042,065' 1,049,234' 1,061,329' 1,069,491' 1,069,829' 1,078,919' 1,089,726 2 Mortgages 521,308 599,021 617,574 623,275 627,311' 633,107' 638,112' 644,615' 647,882' 650,200' 651,782' 652,536' 653,713 3 Mortgage-backed securities.... 90,902 108,219 106,433 102,892 105,869 108,417' 113,333' 111,405' 110,405' 110,267' 111,852' 113,531' 115,018 4 Cash and investment securities1 . 109,923 135,640 129,918 132,109 133,001 135,050' 131,582' 130,759' 139,590' 143,560' 139,789' 144,763' 149,766 5 Other 74,086 91,516 98,034 100,595 101,281 101,688' 101,467' 102,660' 103,023' 103,141' 103,947' 104,612' 106,758 6 Liabilities and net worth 819,168 978,514 1,003,225 1,012,312 1,022,410 1,034,979 1,042,065' 1,049,234' 1,061,329' 1,069,491' 1,069,829' 1,078,919' 1,089,726 7 Savings capital 671,059 784,724 809,083 817,551 822,105 826,841 831,274 833,193 837,463' 843,957' 847,540' 852,296' 862,192 8 Borrowed money 98,511 137,123 129,082 130,269 134,019 139,507 144,982' 147,355 152,769' 156,696' 150,851' 151,981' 154,786 9 FHLBB 57,253 71,719 74,159 75,897 77,756 80,129 81,486' 82,569 82,718 84,398' 82,633' 82,473' 82,412 10 Other 41,258 65,404 54,923 54,372 56,263 59,378 63,496' 64,786 70,051' 72,298' 68,218' 69,508' 72,374 11 Other 16,619 18,746 24,215 22,055 23,252 25,199 21,865' 24,271' 26,035 21,971' 24,193' 26,584' 23,814 12 Net worth2 32,980 37,921 40,845 42,436 43,034 43,432 43,945' 44,415' 45,063 46,867' 47,245' 48 ,05' 48,934 13 MEMO: Mortgage loan commitments outstanding3 56,785 65,836 69,683 69,585 68,805 66,120 65,743 65,049' 65,455' 62,091' 60,788' 63,136' 64,214 Savings banks4 14 Assets 193,535 203,898 212,509 212,163 213,824 215,298 215,560 215,893 216,793 216,693 216,673 218,119 Loans 15 Mortgage 97,356 102,895 105,869 105,891 106,441 107,322 108,842 109,171 109,494 110,371 108,973 109,702 16 Other 19,129 24,954 28,530 29,211 30,339 30,195 29,672 29,967 31,217 30,875 31,752 32,501 Securities 17 U.S. government 15,360 14,643 14,895 14,074 13,960 13,868 13,686 13,734 13,434 13,113 12,568 12,474 18 Mortgage-backed securities ... 18,205 19,215 19,527 19,160 19,779 20,101 20,368 20,012 19,828 19,482 21,372 21,525 19 State and local government... 2,177 2,077 2,094 2,093 2,086 2,105 2,107 2,163 2,148 2,323 2,298 2,297 20 Corporate and other7 25,375 23,747 24,344 24,047 23,738 23,735 23,534 23,039 22,816 21,212 20,828 20,707 n a. 21 Cash 6,263 4,954 5,004 4,935 4,544 4,821 4,916 4,893 4,771 6,219 5,645 5,646 22 Other assets 9,670 11,413 12,246 12,770 12,937 13,151 12,345 12,914 13,085 13,098 13,237' 13,267 23 Liabilities 193,535 203,898 212,509 212,163 213,824 215,298 215,560 215,893 216,793 216,693 216,673 218,119 24 Deposits 172,665 180,616 185,802 186,091 186,824 187,207 187,722 187,239 187,552 185,930 186,321 186,777 25 Regular8 170,135 177,418 182,113 182,218 182,881 183,222 183,560 183,2% 183,716 181,921' 182,399 182,890 26 Ordinary savings 38,554 33,739 33,457 33,526 33,495 33,398 33,252 33,303 33,638 33,021 32,365 32,693 27 Time 95,129 104,732 104,843 104,756 104,737 104,448 104,668 104,024 104,116 103,269 104,436 104,588 28 Other 2,530 3,198 3,674 3,873 3,943 3,985 4,162 3,943 3,836 4,049 3,922 3,887 29 Other liabilities 10,154 12,504 15,546 14,348 15,137 15,971 15,546 15,996 16,309 17,375 17,086 17,793 30 General reserve accounts 10,368 10,510 10,913 11,238 11,453 11,704 11,882 12,299 12,567 12,821 12,925 13,211 Life insurance companies8 31 Assets 654,948 722,979 757,523 765,891 772,452 778,293 783,828 791,483 802,024 816,203 824,850 Securities 32 Government 50,752 63,899 67,880 68,636 68,983 69,975 71,095 72,334 73,451 77,230 77,966 33 United States6 28,636 42,204 45,593 46,260 46,514 47,343 48,181 49,300 50,321 53,559 53,979 34 State and local 9,986 8,713 8,998 9,044 8,980 9,201 9,293 9,475 9,615 10,086 10,373 35 Foreign7 12,130 12,982 13,289 13,332 13,489 13,431 13,621 13,559 13,515 13,585 13,614 36 Business 322,854 359,333 384,342 388,448 393,386 397,202 399,474 403,832 410,141 414,424 420,835 n a. n a. 37 Bonds 257,986 295,998 314,021 317,029 321,752 325,647 329,133 331,675 335,129 337,205 343,003 38 Stocks 64,868 63,335 70,321 71,419 71,634 71,555 70,341 72,157 75,012 77,219 77,832 39 Mortgages 150,999 156,699 160,47(1 161,485 162,690 163,027 163,929 165,687 167,306 170,460 171,275 40 Real estate 22,234 25,767 27,215 27,831 28,240 28,450 28,476 28,637 28,844 28,662 28,709 41 Policy loans 54,063 54,505 54,384 54,320 54,300 54,238 54,225 54,142 54,121 54,200 54,187 42 Other assets 54,046 63,776 63,232 65,171 64,853 65,401 66,629 57,313 68,161 71,227 69,179 Credit unions9 43 Total assets/liabilities and capital . 81,961 93,036 104,992 106,783 107,991 111,150 113,016 114,783 117,029 118,010 118,933 122,623 126,653 44 Federal 54,482 63,205 71,342 72,021 72,932 74,869 75,567 76,415 77,829 77,861 78,619 80,024 82,275 45 State 27,479 29,831 33,650 34,762 35,059 36,281 37,449 38,368 39,200 40,149 40,314 42,599 44,378 46 Loans outstanding 50,083 62,561 65,298 66,817 67,662 69,171 70,765 71,811 72,404 73,513 73,513 74,207 75,300 47 Federal 32,930 42,337 44,042 44,707 44,963 46,036 46,702 47,065 47,538 47,933 48,055 48,059 48,633 48 State 17,153 20,224 21,256 22,110 22,699 23,135 24,063 24,746 24,866 25,580 25,458 26,148 26,667 49 Savings 74,739 84,348 95,278 96,702 98,026 99,834 101,318 103,677 105,384 105,963 107,238 110,541 114,579 50 Federal (shares) 49,889 57,539 66,68( 66,243 67,070 68,087 68,592 70,063 71,117 70,926 72,166 73,227 75,698 51 State (shares and deposits) . 24,850 26,809 28,598 30,459 30,956 31,747 32,726 33,614 34,267 35,037 35,072 37,314 38,881 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All NOTES TO TABLE 1.37 1. Holdings of stock of the Federal Home Loan Banks are in "other assets." NOTE. FSLIC-insured institutions: Estimates by the FHLBB for all associa- 2. Includes net undistributed income accrued by most associations. tions in the United States. Data are based on monthly reports of federally insured 3. As of July 1985, data include loans in process. associations. Even when revised, data for current and preceding year are subject 4. The National Council reports data on member mutual savings banks and on to further revision. savings banks that have converted to stock institutions, and to federal savings Savings banks: Estimates of National Council of Savings Institutions for all banks. savings banks in the United States. 5. Excludes checking, club, and school accounts. Life insurance companies: Estimates of the American Council of Life Insurance 6. Direct and guaranteed obligations. Excludes federal agency issues not for all life insurance companies in the United States. Annual figures are annualguaranteed, which are shown in the table under "Business" securities. statement asset values, with bonds carried on an amortized basis and stocks at 7. Issues of foreign governments and their subdivisions and bonds of the year-end market value. Adjustments for interest due and accrued and for International Bank for Reconstruction and Development. differences between market and book values are not made on each item separately 8. Data for December 1984 through April 1985 have been revised. but are included, in total, in "other assets." 9. As of June 1982, data include federally chartered or federally insured, state- Credit unions: Estimates by the National Credit Union Administration for a chartered credit unions serving natural persons. Before that date, data were group of federal and federally insured state credit unions serving natural persons. estimates of all credit unions. 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 NonfinancialS tatistics • July 1986 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1985 1986 111999888333 111999888444 111999888555 Nov. Dec. Jan. Feb. Mar. Apr. U.S. budget1 1 Receipts, total 600,562 666,457 733,996 51,163 68,193 76,710 53,370 49,557 91,438 2 On-budget n.a. n.a. n.a. 37,611 . 52,884 57,465 38,417 32,203 69,130 3 Off-budget n.a. n.a. n.a. 13,552 15,309 19,245 14,953 17,355 22,308 4 Outlays, total 808,273 851,796 945,927 84,548 82,849 83,201 77,950 79,700 81,510 5 On-budget n.a. n.a. n.a. 69,391 71,579 68,146 61,963 63,660 67,276 6 Off-budget n.a. n.a. n.a. 15,157 11,270 15,055 15,987 16,040 14,234 7 Surplus, or deficit (-), total -207,711 -185,339 -211,931 -33,386 -14,656 -6,492 -24,580 -30,142 9,928 8 On-budget n.a. n.a. n.a. -31,781 -18,695 -10,682 -23,546 -31,457 1,854 9 Off-budget n.a. n.a. n.a. -1,605 4,039 4,190 -1,034 1,315 8,074 Source of financing (total) 10 Borrowing from the public 212,424 170,817 197,269 45,863 33,261 12,660 1166,,001100 88,,444411 1144,,221133 11 Cash and monetary assets (decrease, or increase (-))2 -9,889 5,636 10,673 -8,671 -21,020 -9,503 12,969 14,093 -22,542 12 Other3 5,176 8,885 3,989 -3,806 2,415 3,334 -4,400 7,608 -1,599 MEMO 13 Treasury operating balance (level, end of period) 37,057 22,345 17,060 10,051 30,935 40,215 26,326 12,246 34,417 14 Federal Reserve Banks 16,557 3,791 4,174 2,294 9,351 16,228 5,026 3,280 11,550 15 Tax and loan accounts 20,500 18,553 12,886 7,757 21,584 23,987 21,300 8,966 22,867 1. In accordance with the Balanced Budget and Emergency Deficit Control Act 3. Includes accrued interest payable to the public; allocations of special of 1985, all former off-budget entries are now presented on-budget. The Federal drawing rights; deposit funds; miscellaneous liability (including checks outstand- Financing Bank (FFB) activities are now shown as separate accounts under the ing) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S. agencies that use the FFB to finance their programs. The act has also moved two currency valuation adjustment; net gain/loss for IMF valuation adjustment; and social security trust funds (Federal old-age survivors insurance and Federal profit on the sale of gold. disability insurance trust funds) off-budget. 2. Includes U.S. Treasury operating cash accounts; SDRs; reserve position on SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. the U.S. quota in the IMF; loans to International Monetary Fund; and other cash Government," and the "Daily Treasury Statement." 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 1984 1984 1985 HI H2 Feb. Apr. RECEIPTS 1 All sources 666,457 733,996 341,808 341,392 380,618 364,790 53,370 49,557 91,438 2 Individual income taxes, net 295,960 330,918 144,691 157,229 166,783 169,987 25,370 12,572 45,120 4 6 3 5 P W R N r e o i e f t n s h u i w h d n i e e d t l s n h d t h ia e l l d Election Campaign Fund . 2 8 6 7 4 1 9, , , 3 7 3 5 7 4 3 0 0 6 5 2 9 6 9 5 7 8, , , 9 7 6 4 4 8 3 1 3 5 5 1 6 5 4 7 1 0 , , , 4 4 6 5 6 5 2 8 3 7 9 14 1 7 5 9 , , , 3 2 4 8 1 0 7 0 3 5 1 7 5 4 8 6 9 , , , 6 1 2 8 5 8 2 4 5 8 9 1 2 5 8 2 5 , , , 2 0 7 9 2 3 5 5 8 6 27 3 1 , , , 2 1 2 9 8 5 5 1 3 2 2 1 5 3 6 , , , 1 4 0 4 8 6 1 2 0 8 2 4 1 1 2 9 , , , 9 5 3 0 5 5 1 5 5 0 0 7 8 Co G R rp r e o o fu r ss a n t d r i s o e n c e i i n p c ts o me taxes 7 1 4 7 , , 1 2 7 8 9 6 7 1 7 6 , , 4 0 1 8 3 2 4 1 0 0 , , 3 0 2 4 8 5 3 6 5 , , 8 1 4 9 7 0 42 8 , , 1 3 9 7 3 0 3 7 6 , , 7 5 5 2 1 8 1 1 , , 9 3 4 2 1 1 1 2 0 , ,7 6 1 0 4 1 1 2 1 , , 4 1 7 9 6 2 9 Socia n l et i nsurance taxes and contributions 241,902 268,805 131,372 118,690 128,017 22,046 22,785 31,756 10 Employment taxes and contributions1 212,180 238,288 114,102 105,624 116,276 19,207 22,229 28,391 11 Self-employment taxes and contributions2 8,709 10,468 7,667 1,086 9,482 985 641 643 6,510 12 Unemployment insurance 25,138 25,758 14,942 10,706 16,213 9,281 2,467 190 2,999 13 Other net receipts3 4,580 4,759 2,329 2,360 2,350 2,458 372 366 366 14 Excise taxes 37,361 35,865 18,304 18,961 17,259 18,470 2,265 2,531 2,512 15 Customs deposits 11,370 12,079 5,576 6,329 5,807 6,354 948 1,036 1,087 16 Estate and gift taxes 6,010 6,422 3,102 3,029 3,204 3,323 487 533 680 17 Miscellaneous receipts4 16,965 18,576 8,481 8,812 9,144 9,861 1,635 1,989 1,568 OUTLAYS 18 All types 851,781 946,323 420,700 446,943 463,842 488,739 78,290 79,700 81,510 19 National defense 227,413 252,748 114,639 118,286 124,186 134,675 21,268 24,002 22,842 2 2 2 2 2 1 2 3 0 4 G N I E A n n e a g t n e t e r u r e r i g r n c r a y a u a l l l t t i r u s o e c r n s e i a o e l u n c r a c e f , e f s a s i p r a s a n d c e, e n a v n i d r o t n e m ch e n nt o logy. 1 1 1 8 7 2 5 3 , , , , . 0 3 5 8 6 8 1 9 1 7 6 7 3 3 6 2 1 1 8 5 5 3 6 , , , , , 6 6 5 3 1 8 2 6 5 7 5 7 5 7 6 5 5 3 7 1 , , , , , 4 9 4 1 0 8 6 2 2 8 1 3 6 9 0 4 7 8 8 1 , , , , , 4 3 5 5 4 7 7 2 5 2 3 0 4 0 3 1 4 6 5 1 , , , , 8 2 6 6 7 9 7 3 8 0 2 5 0 0 5 1 4 3 7 8 5 , , , , , 7 3 5 3 4 2 0 5 6 1 7 5 3 7 2 2 - , 2 1 8 8 1 0 0 4 3 7 8 3 0 8 9 1 1 , , 9 5 8 6 2 6 3 4 7 0 7 8 9 6 7 3 1 , , 4 1 7 7 3 8 3 6 5 3 9 0 1 8 2 25 Commerce and housing credit 6,917 4,229 2,572 2,663 -260 644 -725 -319 604 26 Transportation 23,669 25,838 10,616 13,673 11,440 15,360 1,723 1,963 2,271 27 Community and regional development .. 7,673 7,680 3,154 4,836 3,408 3,901 519 615 638 28 Education, training, employment, social services 27,579 29,342 13,445 14,149 14,481 2,727 2,377 29 Health 30,417 33,542 15,551 15,692 16,945 17,237 2,885 2,385 3,205 30 Social security and medicare 235,764 254,446 119,420 119,613 128,351 129,037 21,641 22,009 22,234 31 Income security 112,668 128,200 58,684 61,558 65,246 59,457 10,683 10,409 11,113 32 Veterans benefits and services 25.614 26,352 12,849 13,317 11,956 14,527 2,327 1,080 2,340 33 Administration of justice 5,660 6,277 2,807 2,992 3,016 3,212 567 511 546 34 General government 5,053 5,228 2,462 2,552 2,857 3,634 375 1,165 -48 35 General-purpose fiscal assistance 6,768 6,353 2,943 3,458 2,659 3,391 172 61 885 36 Net interest* 111,058 129,436 54,748 61,293 65,143 67,448 12,958 10,668 10,359 37 Undistributed offsetting receipts6 -31,957 -32,759 -16,270 -17,061 -14,436 -17,953 -2,583 -2,464 -4,387 1. Old-age, disability, and hospital insurance, and railroad retirement accounts. 5. Net interest function includes interest received by trust funds. 2. Old-age, disability, and hospital insurance. 6. Consists of rents and royalties on the outer continental shelf and U.S. 3. Federal employee retirement contributions and civil service retirement and government contributions for employee retirement. disability fund. 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. receipts. Government," and the Budget of the U.S. Government, Fiscal Year 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic NonfinancialS tatistics • July 1986 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1983 1984 1985 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 1,415.3 1,468.3 1,517.2 1,576.7 1,667.4 1,715.1 1,779.0 1,827.5 1,950.3 2 Public debt securities 1,410.7 1,463.7 1,512.7 1,572.3 1,663.0 1,710.7 1,774.6 1,823.1 1,945.9 3 Held by public 1,174.4 1,223.9 1,255.1 1,309.2 1,373.4 1,415.2 1,460.5 1,506.6 1,597.1 4 Held by agencies 236.3 239.8 257.6 263.1 289.6 295.5 314.2 316.5 348.9 5 Agency securities 4.6 4.6 4.5 4.5 4.5 4.4 4.4 4.4 4.4 6 Held by public 3.5 3.5 3.4 3.4 3.4 3.3 3.3 3.3 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 1,411.4 1,464.5 1,513.4 1,573.0 1,663.7 1,711.4 1,775.3 1,823.8 1,932.4 9 Public debt securities 1,410.1 1,463.1 1,512.1 1,571.7 1,662.4 1,710.1 1,774.0 1,822.5 1,931.1 10 Other debt1 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 11 MEMO: Statutory debt limit 1,490.0 1,490.0 1,520.0 1,573.0 1,823.8 1,823.8 1,823.8 1,823.8 2,078.7 1. Includes guaranteed debt of government agencies, specified participation NOTE. Data from Treasury Bulletin and Daily Treasury Statement (U.S. certificates, notes to international lending organizations, and District of Columbia Treasury Department), stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1985 TTyyppee aanndd hhoollddeerr 11998811 11998822 11998833 11998844 QL Q2 Q3 Q4 1 Total gross public debt 1,028.7 1,197.1 1,410.7 1,663.0 1,710.7 1,774.6 1,823.1 1,945.9 By type 2 Interest-bearing debt 1,027.3 1,195.5 1,400.9 1,660.6 1,695.2 1,759.8 1,821.0 1,943.4 3 Marketable 720.3 881.5 1,050.9 1,247.4 1,271.7 1,310.7 1,360.2 1,437.7 4 Bills 245.0 311.8 343.8 374.4 379.5 381.9 384.2 399.9 5 Notes 375.3 465.0 573.4 705.1 713.8 740.9 776.4 812.5 6 Bonds 99.9 104.6 133.7 167.9 178.4 187.9 199.5 211.1 7 Nonmarketable1 307.0 314.0 350.0 413.2 423.6 449.1 460.8 505.7 8 State and local government series 23.0 25.7 36.7 44.4 47.7 53.9 62.8 87.5 9 Foreign issues2 19.0 14.7 10.4 9.1 9.1 8.3 6.6 7.5 10 Government 14.9 13.0 10.4 9.1 9.1 8.3 6.6 7.5 11 Public 4.1 1.7 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 68.1 68.0 70.7 73.1 74.1 75.4 77.0 78.1 13 Government account series3 196.7 205.4 231.9 286.2 292.2 311.0 313.9 332.2 14 Non-interest-bearing debt 1.4 1.6 9.8 2.3 15.5 14.8 2.1 2.5 By holder4 15 U.S. government agencies and trust funds 203.3 209.4 236.3 289.6 295.5 314.2 316.5 348.9 16 Federal Reserve Banks 131.0 139.3 151.9 160.9 161.0 169.1 169.7 181.3 17 Private investors 694.5 848.4 1,022.6 1,212.5 1,254.1 1,292.0 1,338.2 1,431.3 18 Commercial banks 111.4 131.4 188.8 183.4 195.0 196.3 196.9 192.2 19 Money market funds 21.5 42.6 22.8 25.9 26.7 24.8 22.7 25.1 20 Insurance companies 29.0 39.1 56.7 76.4 80.4 85.0 88.6 93.2 21 Other companies 17.9 24.5 39.7 50.1 50.8 50.7 54.9 62.0 22 State and local governments 104.3 127.8 155.1 179.4 189.7 198.9 n.a. n.a. Individuals 23 Savings bonds 68.1 68.3 71.5 74.5 75.4 76.7 78.2 79.8 74 Other securities 42.7 48.2 61.9 69.3 69.7 72.0 73.2 74.9 25 Foreign and international5 136.6 149.5 166.3 192.9 186.4 200.7 209.8 214.6 26 Other miscellaneous investors6 163.0 217.0 259.8 360.6 380.0 386.9 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 1986 1986 week ending Wednesday IItteemm 11998833 11998844 11998855 Jan. Feb/ Mar/ Mar. 26r Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 Immediate delivery2 1 U.S. government securities 42,135 52,778 75,331 102,451 103,908 99,904 92,888 118,852 106,170 98,444 95,282 92,116 By maturity 7. Bills 22,393 26,035 32,900 34,741 36,253 36,352 32,605 39,736 40,409 38,016 33,704 29,858 3 Other within 1 year 708 1,305 1,811 1,850 1,994 1,786 1,882 1,894 1,565 1,395 1,690 2,528 4 1-5 years 8,758 11,733 18,361 25,664 24,224 22,639 25,603 25,568 23,615 20,824 21,568 24,845 5 5-10 years 5,279 7,606 12,703 20,892 23,598 21,618 19,060 29,847 21,763 21,033 20,972 21,023 6 Over 10 years 4,997 6,099 9,556 19,304 17,839 17,510 13,738 21,807 18,817 17,176 17,348 13,862 By type of customer V U.S. government securities dealers 2,257 2,919 3,336 2,903 3,013 4,037 2,166 5,921 3,207 3,959 3,335 5,422 8 U.S. government securities brokers 21,045 25,580 36,222 51,382 52,436 52,355 46,695 58,258 57,475 50,967 50,129 47,543 9 All others3 18,833 24,278 35,773 48,167 48,459 43,512 44,027 54,673 45,488 43,519 41,818 39,152 10 Federal agency securities 5,576 7,846 11,640 15,239 17,420 14,970 17,245 16,645 15,141 18,755 14,289 11,509 11 Certificates of deposit 4,333 4,947 4,016 3,739 4,483 4,864 3,526 4,810 6,263 4,656 4,267 4,320 12 Bankers acceptances 2,642 3,243 3,242 3,290 3,753 3,839 3,468 3,934 5,531 3,795 2,980 2,911 13 Commercial paper 8,036 10,018 12,717 16,357 16,705 16,058 15,029 18,522 15,080 15,842 15,923 16,586 Futures transactions4 14 Treasury bills 6,655 6,947 5,561 5,445 3,624 4,397 2,249 3,750 5,509 3,117 4,057 5,078 15 Treasury coupons 2,501 4,503 6,069 9,140 9,056 8,375 6,092 8,995 8,208 7,925 8,413 8,257 16 Federal agency securities 265 262 240 2 7 6 3 19 8 14 0 9 Forward transactions5 17 U.S. government securities 1,493 1,364 1,283 2,592 1,743 1,287 1,739 1,075 1,564 1,089 1,447 1,260 18 Federal agency securities 1,646 2,843 3,857 6,655 7,172 8,148 5,494 7,061 6,874 10,763 8,090 6,910 1. Transactions are market purchases and sales of securities as reported to the securities, nondealer departments of commercial banks, foreign banking agencies, Federal Reserve Bank of New York by the U.S. government securities dealers on and the Federal Reserve System. its published list of primary dealers. 4. Futures contracts are standardized agreements arranged on an organized Averages for transactions are based on the number of trading days in the period. exchange in which parties commit to purchase or sell securities for delivery at a The figures exclude allotments of, and exchanges for, new U.S. government future date. securities, redemptions of called or matured securities, purchases or sales of 5. Forward transactions are agreements arranged in the over-the-counter securities under repurchase agreement, reverse repurchase (resale), or similar market in which securities are purchased (sold) for delivery after 5 business days contracts. from the date of the transaction for government securities (Treasury bills, notes, 2. Data for immediate transactions do not include forward transactions. and bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • July 1986 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1986 1986 week ending Wednesday IItteemm 11998833 11998844 11998855 Feb. Mar.' Apr. Apr. 2 Apr. 9 Apr. 16 Apr. 23 Apr. 30 Positions Net immediate2 1 U.S. government securities 14,082 5,429 7,391 11,708r 10,799 18,320 16,724 22,049 21,597 14,665 14,247 2 Bills 10,800 5,500 10,075 16,085 12,123 17,010 12,985 19,081 19,808 16,004 13,301 3 Other within 1 year 921 63 1,050 2,801 2,961 5,834 4,402 5,765 5,805 5,946 5,814 4 1-5 years 1,912 2,159 5,154 8,793 9,590 9,352 13,050 10,061 8,547 7,433 10,448 5 5-10 years -78 -1,119 -6,202 -11,158' -10,339 -10,195 -9,722 -9,161 -9,583 -11,459 -10,654 6 Over 10 years 528 -1,174 -2,686 -4,814' -3,536 -3,681 -3,992 -3,696 -2,981 -3,260 -4,663 7 Federal agency securities 7,313 15,294 22,860 33,049' 37,208 36,165 35,935 35,759 36,675 37,171 35,042 8 Certificates of deposit 5,838 7,369 9,192 9,436 10,609 10,717 11,018 11,262 10,361 10,622 10,472 9 Bankers acceptances 3,332 3,874 4,586 5,608 5,770 5,537 6,746 6,488 5,593 4,670 4,867 10 Commercial paper 3,159 3,788 5,570 6,832 8,678 8,148 9,478 7,928 7,407 7,788 9,146 Futures positions 11 Treasury bills -4,125 -4,525 -7,322 -18,504 -27,541 -26,431 -27,113 -27,933 -27,399 -26,760 -23,431 12 Treasury coupons -1,033 1,794 4,465 5,003 5,279 2,590 4,724 3,292 2,556 2,055 1,790 13 Federal agency securities 171 233 -722 -313 -247 -82 -41 -71 -69 -104 -104 Forward positions 14 U.S. government securities -1,936 -1,643 -911 -928 -2,981 -1,888 -2,223 -2,266 -1,988 -1,200 -1,923 15 Federal agency securities -3,561 -9,205 -9,420 -10,039 -12,157 -11,500 -12,112 -11,808 -13,099 -11,037 -9,713 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 29,099 44,078 68,035 86,481 91,649 90,823 84,990 85,104 91,014 95,235 94,272 17 Term agreements 52,493 68,357 80,509 101,330 104,905 109,742 100,639 104,465 106,814 115,660 115,669 Repurchase agreements5 18 Overnight and continuing 57,946 75,717 101,410 131,711 138,072 141,918 137,117 134,876 146,579 146,521 141,617 19 Term agreements 44,410 57,047 77,748 86,748 94,667 103,705 93,221 97,433 99,571 110,878 111,130 1. Data for dealer positions and sources of financing are obtained from reports ties involved are not available for trading purposes. Immediate positions include submitted to the Federal Reserve Bank of New York by the U.S. government reverses to maturity, which are securities that were sold after having been securities dealers on its published list of primary dealers. obtained under reverse repurchase agreements that mature on the same day as the Data for positions are averages of daily figures, in terms of par value, based on securities. Data for immediate positions do not include forward positions. the number of trading days in the period. Positions are net amounts and are shown 3. Figures cover financing involving U.S. government and federal agency on a commitment basis. Data for financing are in terms of actual amounts securities, negotiable CDs, bankers acceptances, and commercial paper. borrowed or lent and are based on Wednesday figures. 4. Includes all reverse repurchase agreements, including those that have been 2. Immediate positions are net amounts (in terms of par values) of securities arranged to make delivery on short sales and those for which the securities owned by nonbank dealer firms and dealer departments of commercial banks on a obtained have been used as collateral on borrowings, that is, matched agreements. commitment, that is, trade-date basis, including any such securities that have 5. Includes both repurchase agreements undertaken to finance positions and been sold under agreements to repurchase (RPs). The maturities of some "matched book" repurchase agreements. repurchase agreements are sufficiently long, however, to suggest that the securi- 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 1986 AAggeennccyy 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. 1 Federal and federally sponsored agencies 237,787 240,068 271,220 292,584 293,930 293,905 290,596' 290,302' n.a. 2 Federal agencies 33,055 33,940 35,145 35,990 36,121 36,390 36,400 36,376 35,927 3 Defense Department1 354 243 142 79 75 71 66 63 59 4 Export-Import Bank2 3 14,218 14,853 15,882 15,417 15,417 15,678 15,677 15,677 15,257 5 Federal Housing Administration4 288 194 133 116 115 115 113 109 108 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 1,940 1,940 1,940 1,940 1,940 1,940 8 Tennessee Valley Authority 14,365 14,970 15,435 16,199 16,335 16,347 16,365 16,348 16,324 9 United States Railway Association6 194 111 51 74 74 74 74 74 74 10 Federally sponsored agencies7 204,732 206,128 236,075 256,594 257,809 257,515 254,196' 253,926' n.a. 11 Federal Home Loan Banks 55,967 48,930 65,085 73,260 73,840 74,447 73,201 72,793' 74,778 12 Federal Home Loan Mortgage Corporation 4,524 6,793 10,270 13,239 11,016 11,926 13,044 13,695 n.a. 13 Federal National Mortgage Association8 70,052 74,594 83,720 92,578 94,576 93,896 92,658 93,179 92,414 14 Farm Credit Banks 73,004 72,816 71,193 69,274 69,933 68,851 66,600 64,955 65,275 15 Student Loan Marketing Association 2,293 3,402 5,745 8,243 8,444 8,395 8,693' 9,304' 9,513 MEMO 16 Federal Financing Bank debt 126,424 135,791 145,217 153,565 154,226 153,373 153,709 153,418 153,455 Lending to federal and federally sponsored 17 Export-Import Bank3 14,177 14,789 15,852 15,409 15,409 15,670 15,670 15,670 15,250 18 Postal Service6 1,221 1,154 1,087 1,690 1,690 1,690 1,690 1,690 1,690 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 14,474 14,610 14,622 14,690 14,673 14,649 21 United States Railway Association6 194 111 51 74 74 74 74 74 74 Other Lending10 22 Farmers Home Administration 53,261 55,266 58,971 63,969 64,189 64,234 64,354 63,774 63,464 23 Rural Electrification Administration 17,157 19,766 20,693 21,792 21,826 20,654 20,678 20,739 20,959 24 Other 22,774 26,460 29,853 31,157 31,428 31,429 31,553 31,798 32,369 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. Some data are estimated. 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 • July 1986 1.45 NEW SECURITY ISSUES State and Local Governments Millions of dollars 1985 1986 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998833 11998844 11998855 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 All issues, new and refunding1 86,421 106,641 214,189 12,268 15,239 13,345 20,780 32,144 57,430 1,755' 3,255 Type of issue 2 General obligation 21,566 26,485 52,622 5,257 3,160 3,953 5,852 6,695 8,754 751 1,021 3 U.S. government loans2 96 16 14 0 0 0 0 0 0 0 0 4 Revenue 64,855 80,156 161,567 7,011 12,079 9,392 14,928 25,449 48,676 821 2,234 5 U.S. government loans2 253 17 27 6 2 0 6 7 0 0 0 Type of issuer 6 State 7,140 9,129 13,004 786 800 1,501 1,337 1,648 2,146 296 255 7 Special district and statutory authority 51,297 63,550 134,363 6,893 9,484 7,580 12,374 21,563 39,147 579' 1,715 8 Municipalities, counties, townships, school districts 27,984 33,962 66,822 4,589 4,955 4,264 6,371 21,563 16,137 697 1,285 9 Issues for new capital, total 72,441 94,050 156,050 7,660 10,709 9,878 13,984 21,362 46,788 1,350 1,887 Use of proceeds 10 Education 8,099 7,553 16,658 797 1,194 1,317 1,518 1,954 3,901 370 422 11 Transportation 4,387 7,552 12,070 651 252 471 1,264 3,734 3,480 246 347 12 Utilities and conservation 13,588 17,844 26,852 720 1,987 1,358 2,924 3,266 7,070 315 212 13 Social welfare 26,910 29,928 63,181 3,155 4,283 3,989 4,305 8,672 22,589 6 110 14 Industrial aid 7,821 15,415 12,892 553 1,524 735 1,507 2,029 3,583 0 190 15 Other purposes 11,637 15,758 24,398 1,784 1,469 2,009 2,466 1,707 6,165 413 606 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 1985 1986 Type of issue or issuer, or use 11998833 11998844 11998855 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. p 1 All issues1 120,299' 132,531 201,751 14,861 11,304 11,595 13,568 19,429 17,479 24,001' 29,967 2 Bonds2 68,718' 109,903 166,236 11,465 8,833 9,271 10,913 14,440 14,079 19,539' 25,022 Type of offering 3 Public 47,594' 73,579 120,039 11,465 8,833 9,271 10,913 14,440 14,079 19,539' 25,022 4 Private placement 21,126 36,326 46,195 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 5 Manufacturing 17,001' 24,607 52,278 2,352 2,079 1,953 4,072 2,704 4,694 3,950 8,825 6 Commercial and miscellaneous 7,540 13,726 15,215 921 186 898 933 735 624 1,216 784 7 Transportation 3,833 4,694 5,743 459 177 348 125 187 633 373 340 8 Public utility 9,125 10,679 12,957 857 1,042 863 1,114 1,090 820 2,540 2,133 9 Communication 3,642 2,997 10,456 1,295 367 690 100 2,318 0 1,200 1,907 10 Real estate and financial 27,577 53,199 69,587 5,581 4,982 4,519 4,569 7,407 7,308 10,230 11,033 11 Stocks3 51,579 22,628 35,515 3,396 2,471 2,324 2,655 4,989 3,400 4,462' 4,945 Type 12 Preferred 7,213 4,118 6,505 754 653 406 782 908 570 975 1,035 13 Common 44,366 18,510 29,010 2,642 1,818 1,918 1,873 4,081 2,830 3,487' 3,910 Industry group 14 Manufacturing 14,135 4,054 5,700 235 820 279 746 1,045 827 1,269' 723 15 Commercial and miscellaneous 13,112 6,277 9,149 1,293 507 403 596 1,220 683 434 643 16 Transportation 2,729 589 1,544 127 107 113 21 200 78 302 308 17 Public utility 5,001 1,624 1,966 73 47 408 12 201 176 153 357 18 Communication 1,822 419 978 18 7 41 5 146 231 282 0 19 Real estate and financial 14,780 9,665 16,178 1,650 983 1,080 1,275 2,177 1,405 2,022' 2,914 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 1985 1986 IItteemm 11998844 11998855 Aug. Sept. Oct. Nov. Dec. Jan. Feb.' Mar. INVESTMENT COMPANIES1 1 Sales of own shares2 107,480 222,671' 18,049 16,936 22,099 20,585 23,560 32,466 27,489 33,100 2 Redemptions of own shares3 77,032 132,440 10,837 9,963 10,653 11,138 18,337 15,836 11,860 14,440 3 Net sales 30,448 90,321R 7,212 6,973 11,446 9,447 5,223 16,630 15,629 18,660 4 Assets4 137,126 251,695 201,608 203,210 218,720 237,410 251,536 265,487 292,002 315,183 5 Cash position5 12,181 20,607 17,959 18,700 21,987 21,894 20,590 22,425 23,716 27,707 6 Other 124,945 231,088 183,649 184,510 196,733 215,516 230,946 243,062 268,286 287,476 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. 1984 1985 1986 AAccccoouunntt 11998833 11998844 11998855 Q2 Q3 Q4 QL Q2 Q3 Q4 QL 1 Corporate profits with inventory valuation and capital consumption adjustment 213.8 273.3 295.5 277.8 271.2 276.2 281.7 288.1 309.1 303.1 314.2 2 Profits before tax 205.0 237.6 225.3 247.4 227.7 228.0 220.0 218.7 228.6 233.8 218.0 3 Profits tax liability 75.2 93.6 85.0 100.6 87.4 87.4 83.4 82.3 87.4 87.1 78.5 4 Profits after tax 129.8 144.0 140.2 146.7 140.3 140.6 136.6 136.4 141.1 146.7 139.5 5 Dividends 70.8 78.1 83.5 77.5 78.9 80.7 82.0 83.1 83.9 85.0 87.6 6 Undistributed profits 59.0 65.9 56.7 69.2 61.3 60.0 54.6 53.3 57.3 61.7 52.0 7 Inventory valuation -9.9 -5.4 -.6 -5.6 -1.3 -1.6 .7 2.2 4.7 -10.1 17.3 8 Capital consumption adjustment 18.8 41.0 70.9 36.0 44.8 49.8 61.1 67.2 75.9 79.4 78.9 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • July 1986 1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities Billions of dollars, except for ratio 1984 1985' AAccccoouunntt 11997799 11998800 11998811 11998822 11998833 Q4 Ql Q2 Q3 Q4 1 Current assets 1,214.8 1,328.3 1,419.6 1,437.1 1,575.9 1,703.0 1,718.4 1,729.8 1,756.7 1,778.5 2 Cash 118.0 127.0 135.6 147.8 171.8 173.6 166.7 168.0 174.6 188.0 3 U.S. government securities 16.7 18.7 17.7 23.0 31.0 36.2 35.0 34.8 31.9 32.3 4 Notes and accounts receivable 459.0 507.5 532.5 517.4 583.0 633.1 649.5 652.4 658.6 671.2 5 Inventories 505.1 543.0 584.0 579.0 603.4 656.9 666.1 666.6 674.7 663.9 6 Other 116.0 132.1 149.7 169.8 186.7 203.2 201.0 208.0 217.0 223.2 7 Current liabilities 807.3 890.6 971.3 986.0 1,059.6 1,163.6 1,173.2 1,179.4 1,209.1 1,232.7 8 Notes and accounts payable 460.8 514.4 547.1 550.7 595.7 647.8 636.4 649.8 668.1 683.1 9 Other 346.5 376.2 424.1 435.3 463.9 515.8 536.8 529.7 541.0 549.7 10 Net working capital 407.5 437.8 448.3 451.1 516.3 539.5 545.2 550.3 547.6 545.7 11 MEMO: Current ratio1 1.505 1.492 1.462 1.458 1.487 1.464 1.465 1.467 1.453 1.443 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 1986 IInndduussttrryy 11998844 11998855 1199886611 Q3 Q4 QL Q2 Q3 Q4 QL1 Q21 1 Total nonfarm business 354.44 386.41 395.13 361.48 368.29 371.16 387.83 388.90 397.74 390.66 400.68 Manufacturing 2 Durable goods industries 66.24 73.14 70.99 68.26 71.43 69.87 73.96 72.85 75.87 71.11 72.71 3 Nondurable goods industries 72.58 80.01 80.86 74.18 75.53 75.78 80.36 81.19 82.70 79.17 81.04 Nonmanufacturing 4 Mining 16.86 15.88 13.89 16.82 17.00 15.66 16.51 15.94 15.40 14.11 14.30 Transportation 5 Railroad 6.79 7.06 6.90 7.31 6.44 6.02 7.48 8.13 6.61 6.35 7.41 6 Air 3.56 4.78 6.14 3.72 3.65 4.20 3.66 5.20 6.06 6.70 5.67 7 Other 6.17 6.13 5.98 6.47 6.18 6.01 6.37 5.77 6.39 5.84 5.86 Public utilities 8 Electric 37.03 36.12 35.45 36.63 35.40 36.65 36.04 35.34 36.45 35.53 34.81 9 Gas and other 10.44 12.62 13.05 11.28 11.52 11.81 12.43 12.80 13.44 13.10 13.99 10 Commercial and other2 134.75 150.67 161.88 136.80 141.13 145.16 151.02 151.69 154.81 158.74 164.88 ATrade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1984 1985 1986 AAccccoouunntt 11998811 11998822 11998833 Q3 Q4 Ql Q2 Q3 Q4 Ql ASSETS Accounts receivable, gross 1 Consumer 72.4 78.1 87.4 95.6 96.7 99.1 106.0 116.4 120.8 125.5 2 Business 100.3 101.4 113.4 124.5 135.2 142.1 144.6 141.4 152.8 159.7 3 Real estate 17.9 20.2 22.5 25.2 26.3 27.2 28.4 29.0 30.4 31.5 4 Total 190.5 199.7 223.4 245.3 258.3 268.5 279.0 286.5 304.0 316.7 Less: 5 Reserves for unearned income 30.0 31.9 33.0 36.0 36.5 36.6 38.6 41.0 40.9 41.3 6 Reserves for losses 3.2 3.5 4.0 4.3 4.4 4.9 4.8 4.9 5.0 5.1 7 Accounts receivable, net 157.3 164.3 186.4 205.0 217.3 227.0 235.6 240.6 258.1 270.3 8 All other 27.1 30.7 34.0 36.4 35.4 35.9 39.5 46.3 46.8 50.6 9 Total assets 184.4 195.0 220.4 241.3 252.7 262.9 275.2 286.9 304.9 321.0 LIABILITIES 10 Bank loans 16.1 18.3 18.7 19.7 21.3 19.8 18.5 18.2 21.0 20.4 11 Commercial paper 57.2 51.1 59.7 66.8 72.5 79.1 82.6 93.6 96.9 102.0 Debt 12 Other short-term 11.3 12.7 13.9 16.1 16.2 16.8 16.6 16.6 17.2 18.5 13 Long-term 56.0 64.4 68.1 73.8 77.2 78.3 85.7 86.4 93.0 100.0 14 All other liabilities 18.5 21.2 30.1 32.6 33.1 35.4 36.9 36.6 39.6 41.4 15 Capital, surplus, and undivided profits 25.3 27.4 29.8 32.3 32.3 33.5 34.8 35.7 37.1 38.8 16 Total liabilities and capital 184.4 195.0 220.4 241.3 252.7 262.9 275.2 286.9 304.9 321.0 NOTE. Components may not add to totals due to rounding. These data also appear in the Board's G.20 (422) release. For address, see 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 1986 1986 1986 MMMaaarrr... 333111,,, 111999888666''' Jan. Feb. Mar. Jan. Feb. Mar. Jan. Feb. Mar. 1 Total 159,681 2,704 1,303 2,668 28,862 28,644 27,526 26,158 27,341 24,858 Retail financing of installment sales 2 Automotive (commercial vehicles) 14,839 242 360 126 1,128 1,256 1,044 886 896 918 3 Business, industrial, and farm equipment 20,213 -5 -237 27 686 692 805 691 929 778 Wholesale financing 4 Automotive 26,558 285 1,029 2,097 10,681 10,732 10,900 10,396 9,703 8,803 5 Equipment 4,582 153 -15 63 689 540 526 536 555 463 6 All other 7,652 305 38 168 1,779 1,563 1,631 1,474 1,525 1,463 Leasing 7 Automotive 15,967 272 178 46 949 787 814 677 609 768 8 Equipment 40,329 700 46 -194 1,932 1,573 1,309 1,232 1,527 1,503 9 Loans on commercial accounts receivable and factored commercial accounts receivable 17,258 668 -28 322 9,560 10,094 9,209 8,892 10,122 8,887 10 All other business credit 12,283 84 -68 13 1,458 1,407 1,288 1,374 1,475 1,275 1. Not seasonally adjusted. NOTE. These data also appear in the Board's G.20 (422) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • July 1986 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1985 1986 IItteemm 11998833 11998844 11998855 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes 1 Purchase price (thousands of dollars) 92.8 96.8 104.1 104.1 107.5 111.5 108.4 115.1 108.1' 112.7 2 Amount of loan (thousands of dollars) 69.5 73.7 77.4 77.1 78.5 80.3 77.6 84.3 79.6r 83.3 3 Loan/price ratio (percent) 77.1 78.7 77.1 76.0 75.5 75.0 74.4 75.6 75. A' 76.1 4 Maturity (years) 26.7 27.8 26.9 26.7 26.4 26.7 25.4 26.8 26.9r 26.0 5 Fees and charges (percent of loan amount)2 2.40 2.64 2.53 2.49 2.57 2.59 2.55 2.64 2.6 (K 2.33 6 Contract rate (percent per annum) 12.20 11.87 11.12 10.64 10.55 10.47 10.40 10.21 10.04r 9.87 Yield (percent per annum) 7 FHLBB series' 12.66 12.37 11.58 11.09 11.01 10.94 10.89 10.68 10.50r 10.28 8 HUD series4 13.43 13.80 12.28 11.86 11.56 11.03 10.82 10.49 10.60 n.a. SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 13.11 13.81 12.24 11.87 11.28 10.70 10.78 10.59 9.77 n.a. 10 GNMA securities6 12.25 13.13 11.61 11.16 10.81 10.39 10.25 9.79 9.44 9.17 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) II Total 74,847 83,339 94,574 97,228 97,807 98,282 98,671 98,820 98,795 98,746 12 FHA/VA-insured 37,393 35,148 34,244 33,885 33,828 33,684 33,583 33,466 33,368 33,246 13 Conventional 37,454 48,191 60,331 63,343 63,979 64,598 65,088 65,354 65,427 65,500 Mortgage transactions (during period) 14 Purchases 17,554 16,721 21,510 1,767 1,624 1,663 1,188 1,159 1,410 1,631 15 Sales 3,528 978 1,301 200 100 319 0 n.a. n.a. n.a. Mortgage commitments1 16 Contracted (during period) 18,607 21,007 20,155 1,733 1,199 1,858 1,315 2,578 1,917 3,774 17 Outstanding (end of period) 5,461 6,384 3,402 3,840 3,330 3,402 3,211 4,480 4,851 6,942 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 18 Total 5,9% 9,283 12,399 13,025 13,194 14,022 14,412 14,584 n.a. n.a. 19 FHA/VA 974 910 841 823 816 825 800 792 n.a. n.a. 20 Conventional 5,022 8,373 11,558 12,202 12,378 13,197 13,612 14,584 n.a. n.a. Mortgage transactions (during period) 21 Purchases 23,089 21,886 44,012 3,215 3,680 6,0% 3,709 4,605 n.a. n.a. 22 19,686 18,506 38,905 3,076 3,449 5,202 3,107R 4,286 n.a. n.a. Mortgage commitments9 23 Contracted (during period) 32,852 32,603 48,989 3,995 4,854 5,651 5,305 6,044 n.a. n.a. 24 Outstanding (end of period) 16,964 13,318 16,613 n.a. n.a. 16,613 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. Based on transactions on first day of subsequent month. Large securities swap programs, while the corresponding data for FNMA exclude swap monthly movements in average yields may reflect market adjustments to changes activity. in maximum permissable contract rates. 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 1985 1986 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998833 11998844 11998855'' Q1 Q2 Q3 Q4' Q1 1 1,811,540 2,024,483' 2,256,778 2,071,279' 2,128,471' 2,190,661' 2,256,778 2,303,242 7 1,189,811 1,319,667' 1,471,012 1,347,511' 1,384,248' 1,427,675' 1,471,012 1,497,430 3 158,718 179,074' 204,311 184,886' 190,004' 195,488' 204,311 208,356 4 350,389 414,040' 474,755 427,242' 443,40C 458,735' 474,755 491,823 5 112,622 111,702' 106,700 111,640' 110,819' 108,763' 106,700 105,633 6 Selected financial institutions 1,130,781 1,269,500' 1,390,328 1,291,540' 1,323,474' 1,356,114' 1,390,328 1,407,881 7 330,521 376,792' 426,103 385,867' 398,561' 413,059' 426,103 436,707 8 1- to 4-family 182,514 197,225' 214,817 199,617' 204,439' 210,203' 214,817 218,354 9 18,410 20,387' 23,442 20,808' 21,748' 22,426' 23,442 24,018 10 120,210 148,936' 176,359 155,061' 161,678' 169,302' 176,359 182,500 11 Farm 9,387 10,244' 11,485 10,381' 10,696' 11,128' 11,485 11,835 1? 131,940 154,441 177,278 161,032 165,705 174,427 177,278 188,177 13 1- to 4-family 93,649 107,302 121,889 111,592 114,375 119,952 121,889 131,043 14 17,247 19,817 23,331 20,668 21,357 22,604 23,331 24,144 15 Commercial 21,016 27,291 31,976 28,741 29,942 31,757 31,976 32,906 16 Farm 28 31 82 31 31 114 82 84 17 Savings and loan associations 494,789 555,277 586,085 559,263 569,291 575,684' 586,085 576,998 18 387,924 421,489 434,359 421,024 425,021 427,081' 434,359 420,096 19 44,333 55,750 66,775 57,660 60,231 62,608' 66,775 67,368 70 62,403 77,605 84,342 80,070 83,447 85,358' 84,342 89,004 21 Farm 129 433 609 509 592 637' 609 530 77 Life insurance companies 150,999 156,699 170,460 158,162 161,485 163,929 170,460 174,460 73 15,319 14,120 12,279 13,840 13,562 13,382 12,279 12,129 74 19,107 18,938 19,731 18,964 18,983 18,972 19,731 19,931 ?5 103,831 111,175 126,621 113,187 116,812 119,543 126,621 130,671 26 12,742 12,466 11,829 12,171 12,128 12,032 11,829 11,729 27 Finance companies2 22,532 26,291 30,402 27,216 28,432 29,015 30,402 31,539 28 Federal and related agencies 148,328 158,993 166,978 163,531 165,912 166,248 166,978 167,526 79 Government National Mortgage Association 3,395 2,301 1,473 1,964 1,825 1,640 1,473 1,563 30 1- to 4-family 630 585 539 576 564 552 539 527 31 Multifamily 2,765 1,716 934 1,388 1,261 1,088 934 1,036 3? Farmers Home Administration 2,141 1,276 733 1,062 790 577 733 704 33 1- to 4-family 1,159 213 183 156 223 185 183 217 34 Multifamily 173 119 113 82 136 139 113 33 35 409 497 159 421 163 72 159 217 36 Farm 400 447 278 403 268 181 278 237 37 Federal Housing and Veterans 4,894 4,816 4,920 4,878 4,888 4,918 4,920 4,957 Administration 1,893 2,048 2,254 2,181 2,199 2,251 2,254 2,301 38 1- to 4-family 3,001 2,768 2,666 2,697 2,689 2,667 2,666 2,656 39 MMuullttiiffaammiillyy 78,256 87,940 98,282 91,975 94,777 96,769 9988,,228822 9988,,779955 40 Federal National Mortgage Association 73,045 82,175 91,966 86,129 88,788 90,590 91,966 92,315 41 1- to 4-family 5,211 5,765 6,316 5,846 5,989 6,179 6,316 6,480 4? MMuullttiiffaammiillyy 52,010 52,261 47,548 52,104 51,056 49,255 4477,,554488 4466,,448855 43 Federal Land Banks 3,081 3,074 2,798 3,064 3,006 2,895 2,798 2,735 44 1- to 4-family 48,929 49,187 44,750 49,040 48,050 46,360 44,750 43,750 45 Farm 7,632 10,399 14,022 11,548 12,576 13,089 14,022 15,022 46 Federal Home Loan Mortgage Corporation 7,559 9,654 11,881 10,642 11,288 11,457 11,881 12,481 47 1- to 4-family 73 745 2,141 906 1,288 1,632 2,141 2,541 48 MMuullttiiffaammiillyy 285,073 332,057 415,042 347,793 365,748 388,948 415,042 438,816 49 Mortgage pools or trusts3 159,850 179,981 212,145 185,954 192,925 201,026 212,145 220,348 50 Government National Mortgage Association 155,950 175,589 207,198 181,419 188,228 196,198 207,198 215,280 51 1- to 4-family 3,900 4,392 4,947 4,535 4,697 4,828 4,947 5,068 57 MMuullttiiffaammiillyy 57,895 70,822 100,387 76,759 83,327 91,915 110000,,338877 110088..445522 53 Federal Home Loan Mortgage Corporation 57,273 70,253 99,515 75,781 82,369 90,997 99,515 107,610 54 1- to 4-family 622 569 872 978 958 918 872 842 55 MMuullttiiffaammiillyy 25,121 36,215 54,987 39,370 42,755 48,769 54,987 62.310 56 Federal National Mortgage Association 25,121 35,965 54,036 38,772 41,985 47,857 54,036 61,117 57 1- to 4-family n.a. 250 951 598 770 912 951 1,193 58 MMuullttiiffaammiillyy 42,207 45,039 47,523 45,710 46,741 47,238 4477,,552233 4477,,770066 59 Farmers Home Administration 20,404 21,813 22,186 21,928 21,962 22,090 22,186 22,082 60 1- to 4-family 5,090 5,841 6,675 6,041 6,377 6,415 6,675 6,943 61 Multifamily 7,351 7,559 8,190 7,681 8,014 8,192 8,190 8,150 62 Commercial 9,362 9,826 10,472 10,060 10,388 10,541 10,472 10,531 63 Farm 247,358 263,933' 284,430 268,415' 273,337' 279,351' 284,430 289,019 64 141,758 151,871' 164,710 153,574' 157,807' 162,970' 164,710 167,604 65 38,786 42,017' 45,417 43,715' 43,520' 44,10c 45,417 46,103 66 35,169 40,977' 47,108 42,081' 43,344' 44,511' 47,108 48,375 67 Commercial 31,645 29,068 27,195 29,045' 28,666' 27.77C 27,195 26,937 68 1. Includes loans held by nondeposit trust companies but not bank trust 4. Other holders include mortgage companies, real estate investment trusts, departments. state and local credit agencies, state and local retirement funds, noninsured 2. Assumed to be entirely 1- to 4-family loans. pension funds, credit unions, and other U.S. agencies. 3. Outstanding principal balances of mortgage pools backing securities insured NOTE. Based on data from various institutional and governmental sources, with or guaranteed by the agency indicated. some quarters estimated in part by the Federal Reserve. Multifamily debt refers to loans on structures of five or more units. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • July 1986 1.55 CONSUMER INSTALLMENT CREDIT14 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1985 1986 11998844 11998855 July Aug. Sept. Oct. Nov. Dec. Jan. Feb/ Mar. Amounts outstanding (end of period) 1 Total 453,580 535,098 500,039 506,090 516,420 522,978 528,621 535,098 542,753 547,761 551,474 By major holder 2 Commercial banks 209,158 240,796 229,088 230,644 233,545 235,364 238,620 240,7% 243,256 244,670 245,386 i Finance companies2 96,126 120,095 107,498 109,457 114,927 117,565 118,356 120,095 123,717 126,001 127,422 4 Credit unions 66,544 75,127 71,446 71,938 72,433 73,474 74,117 75,127 75,810 76,431 77,012 5 Retailers3 37,061 39,187 38,423 38,751 38,723 38,890 39,039 39,187 39,416 39,496 39,844 6 Savings institutions 40,330 55,555 49,474 51,115 52,656 53,509 54,307 55,555 56,290 57,048 57,835 7 Gasoline companies 4,361 4,337 4,110 4,185 4,136 4,176 4,182 4,337 4,264 4,114 3,975 By major type of credit 8 Automobile 173,122 206,482 191,201 192,923 198,656 201,994 203,766 206,482 210,661 213,342 214,431 y Commercial banks 83,900 92,764 90,350 90,234 90,784 91,402 92,127 92,764 93,489 93,828 93,376 1 10 1 F C i r n e a d n it c e u n c i o o m ns p anies 5 28 4 , , 6 6 1 6 4 3 7 3 3 0 , , 3 5 9 7 1 7 6 2 2 9 , , 5 7 8 1 6 6 6 2 4 9 , , 0 7 7 7 1 5 6 2 9 9 , , 2 5 0 5 1 6 7 29 1 , , 9 4 0 1 4 5 7 3 1 0 , , 9 1 9 6 6 6 3 7 0 3 , , 5 3 7 9 7 1 7 3 6 0 , ,8 4 5 1 5 0 7 3 8 1 , , 3 10 1 7 0 3 7 1 9 , , 3 4 4 1 4 6 12 Savings institutions 5,945 9,750 8,549 8,843 9,115 9,273 9,477 9,750 9,907 10,097 10,295 13 Revolving 98,514 118,296 110,904 112,373 113,850 115,218 117,050 118,2% 119,682 120,723 122,190 14 Commercial banks 58,145 73,893 68,172 69,079 70,453 71,507 73,076 73,893 74,991 75,953 77,053 15 Retailers 33,064 34,560 34,065 34,330 34,264 34,382 34,486 34,560 34,770 34,843 35,188 16 Gasoline companies 4,361 4,337 4,110 4,185 4,136 4,176 4,182 4,337 4,264 4,114 3,975 17 Savings institutions 2,944 5,506 4,557 4,779 4,997 5,153 5,306 5,506 5,657 5,813 5,974 18 Mobile home 24,184 25,461 25,015 25,173 25,341 25,320 25,315 25,461 25,371 25,482 25,714 19 Commercial banks 9,623 9,578 9,576 9,608 9,662 9,596 9,584 9,578 9,457 9,475 9,447 20 Finance companies 9,161 9,116 9,141 9,114 9,092 9,089 9,057 9,116 9,125 9,161 9,327 21 Savings institutions 5,400 6,767 6,298 6,451 6,587 6,635 6,674 6,767 6,789 6,846 6,940 22 Other 157,760 184,859 172,919 175,621 178,573 180,446 182,490 184,859 187,039 188,211 189,139 23 Commercial banks 57,490 64,561 60,990 61,723 62,646 62,859 63,833 64,561 65,319 65,414 65,511 24 Finance companies 32,302 37,588 35,771 36,272 36,634 37,061 37,303 37,588 38,182 38,530 38,678 25 Credit unions 37,930 44,550 41,730 42,163 42,877 43,570 43,951 44,550 44,955 45,323 45,668 26 Retailers 3,997 4,627 4,358 4,421 4,459 4,508 4,553 4,627 4,646 4,653 4,656 27 Savings institutions 26,041 33,533 30,070 31,042 31,957 32,448 32,850 33,533 33,937 34,291 34,626 Net change (during period) 28 Total 77,341 81,518 6,786 6,051 10,330 6,558 5,643 6,477 7,655 5,008 3,713 By major holder 29 Commercial banks 39,819 31,638 2,263 1,556 2,901 1,819 3,256 2,176 2,460 1,414 716 30 Finance companies2 9,961 23,969 1,392 1,959 5,470 2,638 791 1,739 3,622 2,284 1,421 31 Credit unions 13,456 8,583 757 492 495 1,041 643 1,010 683 621 581 32 Retailers3 2,900 2,126 96 328 -28 167 149 148 229 80 348 33 Savings institutions 11,038 15,225 2,239 1,641 1,541 853 798 1,248 735 758 787 34 Gasoline companies 167 -24 38 75 -49 40 6 155 -73 -150 -139 By major type of credit 35 Automobile 27,214 33,360 1,742 1,722 5,733 3,338 1,772 2,716 4,179 2,681 1,089 36 Commercial banks 16,352 8,864 551 -116 550 618 725 637 725 339 -452 37 Credit unions 3,223 1,963 173 59 -219 348 262 411 278 252 237 38 Finance companies 4,576 18,728 626 1,485 5,130 2,214 581 1,395 3,019 1,900 1,106 39 Savings institutions 3,063 3,805 392 294 272 158 204 273 157 190 198 40 Revolving 20,145 19,782 1,644 1,469 1,477 1,368 1,832 1,246 1,386 1,041 1,467 41 Commercial banks 15,949 15,748 1,281 907 1,374 1,054 1,569 817 1,098 %2 1,100 42 Retailers 2,512 1,496 52 265 -66 118 104 74 210 73 345 43 Gasoline companies 167 -24 38 75 -49 40 6 155 -73 -150 -139 44 Savings institutions 1,517 2,562 273 222 218 156 153 200 151 156 161 45 Mobile home 1,990 1,277 247 158 168 -21 -5 146 -90 111 232 46 Commercial banks -199 -45 -20 32 54 -66 -12 -6 -121 18 -28 47 Finance companies 544 -45 34 -27 -22 -3 -32 59 9 36 166 48 Savings institutions 1,645 1,367 233 153 136 48 39 93 22 57 94 49 Other 27,992 27,099 3,153 2,702 2,952 1,873 2,044 2,369 2,180 1,172 928 50 Commercial banks 7,717 7,071 451 733 923 213 974 728 758 95 97 51 Finance companies 4,841 5,286 732 501 362 427 242 285 594 348 148 52 Credit unions 10,233 6,620 584 433 714 693 381 599 405 368 345 53 Retailers 388 630 44 63 38 49 45 74 19 7 3 54 Savings institutions 4,813 7,492 1,342 972 915 491 402 683 404 354 335 1. The Board's series cover most short- and intermediate-term credit extended 2. More detail for finance companies is available in the G.20 statistical release, to individuals that is scheduled to be repaid (or has the option of repayment) in 3. Excludes 30-day charge credit held by travel and entertainment companies, two or more installments. 4. All data have been revised. 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 1986 IItteemm 11998833 11998844 11998855 Sept. Oct. Nov. Dec. Jan. Feb. Mar. INTEREST RATES Commercial banks1 1 48-month new car2 13.92 13.71 n.a. n.a. n.a. 12.39 n.a. n.a. 12.29 n.a. 2 24-month personal 16.50 16.47 n.a. n.a. n.a. 15.61 n.a. n.a. 15.52 n.a. 3 120-month mobile home2 16.08 15.58 n.a. n.a. n.a. 14.66 n.a. n.a. 14.57 n.a. 4 Credit card 18.78 18.77 n.a. n.a. n.a. 18.57 n.a. n.a. 18.48 n.a. Auto finance companies 5 New car 12.58 14.62 n.a. 8.84 9.97 11.71 12.52 9.99 9.70 10.51 6 Used car 18.74 17.85 n.a. 17.31 17.21 17.28 17.22 16.60 16.74 16.63 OTHER TERMS3 Maturity (months) 7 New car 45.9 48.3 n.a. 51.2 51.5 52.0 52.1 51.2 51.3 51.0 8 Used car 37.9 39.7 n.a. 41.4 41.4 41.5 41.4 42.8 42.5 42.4 Loan-to-value ratio 9 New car 86 88 n.a. 92 93 92 92 92 92 90 10 Used car 92 92 n.a. 95 95 95 95 95 95 95 Amount financed (dollars) 11 New car 8,787 9,333 n.a. 10,449 10,498 10,205 9,925 10,064 10,074 10,306 12 Used car 5,033 5,691 n.a. 6,097 6,091 6,167 6,255 6,165 6,194 6,207 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 NonfinancialS tatistics • July 1986 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1983 1984 1985 11998800 11998811 11998822 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .... 341.8 372.7 395.3 542.9 765.9 883.8 506.0 579.7 713.4 818.4 735.8 11,,003322..00 By sector and instrument 2 U.S. government 79.2 87.4 161.3 186.6 198.8 223.6 221.9 151.2 172.2 225.4 184.0 263.2 J Treasury securities 79.8 87.8 162.1 186.7 199.0 223.7 222.0 151.4 172.4 225.5 184.1 263.3 4 Agency issues and mortgages -.6 -.5 -.9 -.1 -.2 -.1 -.1 -.1 -.2 -.1 -.1 -.1 5 Private domestic nonfinancial sectors 262.6 285.3 234.1 356.3 567.1 660.2 284.1 428.5 541.2 593.1 551.8 768.7 6 Debt capital instruments 188.1 154.5 152.6 253.7 325.3 474.3 227.3 280.1 287.7 362.8 367.4 581.2 1 Tax-exempt obligations 30.3 23.4 48.6 57.3 65.8 173.4 57.3 57.4 38.9 92.6 88.4 258.4 8 Corporate bonds 26.7 21.8 18.7 16.0 47.1 67.9 21.4 10.6 31.9 62.3 68.0 67.8 9 Mortgages 131.2 109.3 85.4 180.3 212.4 233.0 148.6 212.1 216.9 207.9 211.1 255.0 10 Home mortgages 94.2 72.2 50.5 116.9 130.7 152.8 98.7 135.2 135.6 125.7 133.8 171.7 11 Multifamily residential 7.6 4.8 5.4 11.9 20.7 25.7 6.1 17.6 23.6 17.7 22.5 28.9 12 Commercial 19.2 22.2 25.2 48.9 62.0 59.0 42.2 55.7 58.5 65.6 57.0 61.1 13 Farm 10.2 10.0 4.2 2.6 -1.0 -4.5 1.6 3.6 -.8 -1.2 -2.3 -6.7 14 Other debt instruments 74.5 130.8 81.4 102.6 241.9 185.9 56.8 148.4 253.5 230.2 184.3 187.5 15 Consumer credit 4.7 22.6 17.7 56.7 94.8 103.6 38.0 75.4 98.0 91.6 113.0 94.2 16 Bank loans n.e.c 37.0 54.7 54.2 26.8 79.5 30.7 13.7 39.8 89.9 69.0 24.0 37.4 1/ Open market paper 5.7 19.2 -4.7 -1.6 24.2 12.9 -10.0 6.9 33.5 15.0 13.3 12.4 18 Other 27.1 34.4 14.2 20.7 43.3 38.8 15.1 26.3 32.1 54.6 34.0 43.5 19 By borrowing sector 262.6 285.3 234.1 356.3 567.1 660.2 284.1 428.5 541.2 593.1 551.8 768.7 20 State and local governments 17.2 6.8 25.9 37.6 45.0 128.5 36.0 39.2 21.4 68.6 71.5 185.6 21 Households 118.9 119.7 87.9 187.4 239.2 297.7 152.3 222.6 236.0 242.3 261.8 333.5 22 Farm 15.2 16.6 6.8 4.1 -.1 -6.8 .8 7.4 -.7 .5 -7.6 -6.1 23 Nonfarm noncorporate 31.2 38.6 41.3 70.8 90.8 84.0 56.1 85.5 96.9 84.7 80.8 87.1 24 Corporate 80.1 103.6 72.1 56.4 192.3 156.9 39.0 73.8 187.7 196.9 145.2 168.6 25 Foreign net borrowing in United States 27.2 27.2 15.7 18.9 2.8 -.4 15.4 22.4 23.0 -17.4 -2.4 1.5 2b Bonds .8 5.4 6.7 3.8 4.1 4.9 4.6 2.9 1.1 7.0 5.2 4.7 27 Bank loans n.e.c 11.5 3.7 -6.2 4.9 -7.8 -6.9 11.4 -1.6 -4.5 -11.1 -5.6 -8.1 28 Open market paper 10.1 13.9 10.7 6.0 2.5 -1.0 -4.6 16.5 20.9 -16.0 -4.6 2.5 29 U.S. government loans 4.7 4.2 4.5 4.3 4.0 2.5 3.9 4.6 5.5 2.6 2.6 2.4 30 Total domestic plus foreign 369.0 399.9 411.0 561.7 768.7 883.4 521.3 602.1 736.4 801.0 733.4 1,033.5 Financial sectors 31 Total net borrowing by financial sectors 57.6 89.0 80.2 89.2 138.2 187.5 69.1 109.3 126.5 149.9 167.0 208.1 By instrument 32 U.S. government related 44.8 47.4 64.9 67.8 74.9 99.4 66.2 69.4 69.6 80.1 92.7 106.1 33 Sponsored credit agency securities 24.4 30.5 14.9 1.4 30.4 20.6 -4.1 6.9 29.9 30.9 26.0 15.1 34 Mortgage pool securities 19.2 15.0 49.5 66.4 44.4 78.8 70.3 62.5 3399..77 4499..22 6666..77 9911..00 t.5 Loans from U.S. government 1.2 1.9 .4 36 Private financial sectors 12.8 41.6 15.3 21.4 63.3 88.1 2.9 40.0 56.9 69.7 74.3 101.9 37 Corporate bonds 1.8 3.5 13.7 12.6 25.9 28.6 10.3 14.9 20.7 31.1 3333..22 24.0 38 Mortgages * * .1 « .4 -.2 * * .4 .4 --..11 -.2 39 Bank loans n.e.c -.9 .9 1.9 -.2 1.0 4.2 -3.3 3.0 -.5 2.4 1.1 7.2 40 Open market paper 4.8 20.9 -1.1 16.0 20.4 41.3 7.9 24.1 20.4 20.4 28.4 54.3 41 Loans from Federal Home Loan Banks 7.1 16.2 .8 -7.0 15.7 14.2 -12.1 -2.0 15.9 15.5 1111..77 1166..77 By sector 42 Sponsored credit agencies 25.6 32.4 15.3 1.4 30.4 20.6 -4.1 6.9 29.9 30.9 26.0 15.1 43 Mortgage pools 19.2 15.0 49.5 66.4 44.4 78.8 70.3 62.5 39.7 49.2 66.7 91.0 44 Private financial sectors 12.8 41.6 15.3 21.4 63.3 88.1 2.9 40.0 56.9 69.7 74.3 101.9 45 Commercial banks .5 .4 1.2 .5 4.4 3.8 .8 .2 4.8 3.9 5.2 2.4 46 Bank affiliates 6.9 8.3 5.9 12.6 16.9 9.2 10.1 15.1 26.0 7.8 9.2 9.2 47 Savings and loan associations 7.4 15.5 2.5 -2.1 22.7 21.7 -9.3 5.2 19.7 25.6 11.1 32.3 48 Finance companies -1.1 18.2 6.3 11.3 19.3 54.4 2.1 20.5 6.3 32.4 49.8 59.1 49 REITs -.5 -.2 * -.2 .8 -.1 -.1 -.3 .8 .8 -.2 All sectors 50 Total net borrowing 426.6 488.9 491.2 651.0 906.9 1070.9 590.4 711.5 863.0 950.9 900.3 1,241.6 51 U.S. government securities 122.9 133.0 225.9 254.4 273.8 323.1 288.2 220.7 241.9 305.6 276.8 369.4 52 State and local obligations 30.3 23.4 48.6 57.3 65.8 173.4 57.3 57.4 38.9 92.6 88.4 258.4 53 Corporate and foreign bonds 29.3 30.7 39.0 32.4 77.1 101.4 36.3 28.4 53.8 100.5 106.3 96.5 54 Mortgages 131.1 109.2 85.4 180.3 212.7 232.8 148.6 212.0 217.2 208.2 210.8 254.7 55 Consumer credit 4.7 22.6 17.7 56.7 94.8 103.6 38.0 75.4 98.0 91.6 113.0 94.2 56 Bank loans n.e.c 47.7 59.2 49.9 31.5 72.7 28.0 21.8 41.2 84.9 60.4 19.5 36.4 57 Open market paper 20.6 54.0 4.9 20.4 47.1 53.2 -6.7 47.5 74.8 19.3 37.2 69.3 58 Other loans 40.1 56.7 19.9 17.9 i 63.0 55.5 6.9 29.0 53.4 72.7 48.4 62.6 External corporate equity funds raised in United States 59 Total new share issues 21.2 -3.3 33.6 66.3 -33.6 28.2 81.9 50.7 -41.2 -25.9 25.1 31.2 60 Mutual funds 4.5 6.0 16.8 31.5 37.1 99.6 35.3 27.7 39.0 35.3 92.0 107.1 61 All other 16.8 -9.3 16.8 34.8 -70.7 -71.4 46.6 23.0 -80.2 -61.2 -66.9 -75.9 62 Nonfinancial corporations 12.9 -11.5 11.4 28.3 -77.0 -81.6 38.2 18.4 -84.5 -69.4 -75.7 -87.5 63 Financial corporations 1.8 1.9 4.0 2.5 5.2 4.6 2.6 2.4 5.0 5.3 4.6 4.7 64 Foreign shares purchased in United States 2.1 .3 1.5 4.0 1.1 5.6 5.7 2.2 -.7 2.9 4.2 6.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates. 1983 1984 1985 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998800 11998811 11998822 11998833 11998844 11998855 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 341.8 372.7 395.3 542.9 765.9 883.8 506.0 579.7 713.4 818.4 735.8 1,032.0 Bv public agencies and foreign 7 Total net advances 97.1 97.7 114.1 117.4 144.6 220.9 120.5 114.4 124.2 116655..11 195.9 245.8 3 U.S. government securities 15.8 17.1 22.7 27.6 36.0 46.8 41.0 14.1 30.5 41.4 47.0 46.5 4 Residential mortgages 31.7 23.5 61.0 76.1 56.5 92.6 80.2 72.1 52.8 60.1 86.0 99.3 5 FHLB advances to savings and loans 7.1 16.2 .8 -7.0 15.7 14.2 -12.1 -2.0 15.9 15.5 11.7 16.7 6 Other loans and securities 42.5 40.9 29.5 20.8 36.6 67.3 11.4 30.2 25.0 48.1 51.2 83.3 Total advanced, by sector 7 U.S. government 23.7 24.0 15.9 9.7 17.1 22.5 9.1 10.3 7.8 26.4 19.7 25.3 8 Sponsored credit agencies 45.6 48.2 65.5 69.8 73.3 103.9 68.6 71.0 73.6 73.0 97.7 110.1 9 Monetary authorities 4.5 9.2 9.8 10.9 8.4 21.6 15.7 6.1 12.1 4.7 26.6 16.6 10 Foreign 23.3 16.2 22.8 27.1 45.9 72.8 27.2 27.0 30.7 61.0 51.9 93.8 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 44.8 47.4 64.9 67.8 74.9 99.4 6666..22 69.4 69.6 8800..11 92.7 106.1 12 Foreign 27.2 27.2 15.7 18.9 2.8 -.4 15.4 22.4 23.0 -17.4 -2.4 1.5 Private domestic funds advanced 13 Total net advances 316.7 349.6 361.8 512.1 699.0 762.0 467.1 557.1 681.8 716.1 630.2 893.8 14 U.S. government securities 107.1 115.9 203.1 226.9 237.8 276.4 247.2 206.6 211.4 264.2 229.8 322.9 15 State and local obligations 30.3 23.4 48.6 57.3 65.8 173.4 57.3 57.4 38.9 92.6 88.4 258.4 16 Corporate and foreign bonds 19.3 18.8 14.8 14.9 34.8 31.4 21.4 8.5 25.3 44.3 41.9 21.0 17 Residential mortgages 70.0 53.5 -5.3 52.6 94.8 85.8 24.6 80.6 106.3 83.3 70.3 101.3 18 Other mortgages and loans 97.1 154.2 101.4 153.0 281.5 209.2 104.6 202.0 315.8 247.1 211.5 206.9 19 LESS: Federal Home Loan Bank advances 7.1 16.2 .8 -7.0 15.7 14.2 -12.1 -2.0 15.9 15.5 11.7 16.7 Private financial intermediation 70 Credit market funds advanced by private financial institutions 283.8 321.7 288.4 384.6 555.6 531.5 332.0 437.2 552.5 558.7 456.8 606.4 71 Commercial banking 100.6 102.3 107.2 136.1 181.7 170.8 121.0 151.3 195.2 168.1 147.2 194.4 77 Savings institutions 54.5 27.8 30.1 139.8 146.3 104.5 131.3 148.3 167.9 124.7 61.7 147.4 73 Insurance and pension funds 94.5 97.6 107.4 94.2 119.0 118.1 83.0 105.3 112.0 126.0 101.6 134.5 24 Other finance 34.2 94.0 43.7 14.5 108.6 138.1 -3.3 32.3 77.4 139.9 146.3 130.0 75 Sources of funds 283.8 321.7 288.4 384.6 555.2 531.5 332.0 437.2 552.5 558.7 456.8 606.4 76 Private domestic deposits and RPs 169.6 211.9 196.2 209.3 298.8 201.5 203.8 214.8 292.2 305.5 185.2 217.5 27 Credit market borrowing 12.8 41.6 15.3 21.4 63.3 88.1 2.9 40.0 56.9 69.7 74.3 101.9 78 Other sources 101.3 68.2 77.0 153.9 193.5 241.9 125.3 182.4 203.4 183.5 197.3 287.0 79 Foreign funds -21.7 -8.7 -26.7 22.1 19.0 17.3 -14.2 58.5 27.2 10.9 10.7 24.0 30 Treasury balances -2.6 -1.1 6.1 -5.3 4.0 9.8 9.9 -20.6 1.2 6.8 20.3 -.7 31 Insurance and pension reserves 83.7 90.7 103.2 95.1 110.3 110.2 83.5 106.8 119.5 101.2 100.6 119.7 32 Other, net 41.8 -12.7 -5.6 41.9 60.1 104.5 46.1 37.7 55.5 64.6 65.6 144.0 Private domestic nonfinancial investors 33 Direct lending in credit markets 45.8 69.5 88.7 148.9 206.7 318.6 137.9 159.9 186.3 227.1 247.7 389.4 34 U.S. government securities 24.6 29.3 32.1 88.3 125.8 155.3 96.9 79.7 126.3 125.3 121.6 188.9 35 State and local obligations 7.0 11.1 29.2 43.5 43.2 99.4 47.2 39.9 25.3 61.2 47.2 151.6 36 Corporate and foreign bonds -11.0 -3.9 8.1 -5.5 15.3 6.9 -10.8 -.3 7.5 23.0 39.7 -25.8 37 Open market paper -3.1 2.7 -.6 6.5 -1.4 30.9 -6.6 19.7 3.2 -6.1 8.3 53.5 38 Other 28.4 30.3 19.9 16.1 23.8 26.0 11.3 20.8 24.0 23.7 30.9 21.1 39 Deposits and currency 181.1 221.9 203.3 228.4 303.4 211.8 225.6 231.3 303.6 303.2 199.5 223.7 40 Currency 10.3 9.5 9.7 14.3 8.6 12.4 14.8 13.8 15.9 1.3 18.4 6.5 41 Checkable deposits 5.4 18.1 17.6 26.7 24.1 45.2 53.0 -.4 30.4 17.7 17.9 72.2 47 Small time and savings accounts 82.9 47.0 138.1 218.3 149.8 134.3 278.9 157.7 130.7 169.0 161.4 107.2 43 Money market fund shares 29.2 107.5 24.7 -44.1 47.2 -2.2 -84.0 -4.2 30.2 64.2 4.2 -8.6 44 Large time deposits 45.6 36.8 11.9 -5.9 83.6 14.1 -55.1 43.4 97.6 69.6 * 28.1 45 Security RPs 6.5 2.5 3.8 14.3 -5.8 10.1 11.0 17.5 3.3 -15.0 1.7 18.5 46 Deposits in foreign countries 1.1 .5 -2.5 4.8 -4.0 -2.2 7.0 2.7 -4.5 -3.6 -4.1 -.3 47 Total of credit market instruments, deposits and currency 226.9 291.4 292.0 377.3 510.1 530.3 363.5 391.2 489.9 530.3 447.2 613.0 48 Public holdings as percent of total 26.3 24.4 27.8 20.9 18.8 25.0 23.1 19.0 16.9 20.6 26.7 23.8 49 Private financial intermediation (in percent) 89.6 92.0 79.7 75.1 79.5 69.8 71.1 78.5 81.0 78.0 72.5 67.8 50 Total foreign funds 1.6 7.6 -3.9 49.2 64.9 90.2 13.0 85.5 57.9 71.9 62.6 117.7 MEMO: Corporate equities not included above 51 Total net issues 21.2 -3.3 33.6 66.3 -33.6 28.2 81.9 50.7 -41.2 -25.9 25.1 31.2 57 Mutual fund shares 4.5 6.0 16.8 31.5 37.1 99.6 35.3 27.7 39.0 35.3 92.0 107.1 53 Other equities 16.8 -9.3 16.8 34.8 -70.7 -71.4 46.6 23.0 -80.2 -61.2 -66.9 -75.9 54 Acquisitions by financial institutions 24.9 20.9 36.9 56.7 10.3 47.4 76.4 36.9 2.1 18.5 60.7 34.1 55 Other net purchases -3.6 -24.3 -3.3 9.6 -43.9 -19.2 5.5 13.7 -43.4 -44.5 -35.6 -2.9 NOTES BY LINE NUMBER. 31. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.57. 32. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 33. Line 13 less line 20 plus line 27. 6. Includes farm and commercial mortgages. 34-38. Lines 14-18 less amounts acquired by private finance plus amounts 11. Credit market funds raised by federally sponsored credit agencies, and net borrowed by private finance. Line 38 includes mortgages. issues of federally related mortgage pool securities. 40. Mainly an offset to line 9. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. sum of lines 28 and 47 less lines 40 and 46. 48. Line 2/line 1. 18. Includes farm and commercial mortgages. 49. Line 20/line 13. 26. Line 39 less lines 40 and 46. 50. Sum of lines 10 and 29. 27. Excludes equity issues and investment company shares. Includes line 19. 51. 53. Includes issues by financial institutions. 29. Foreign deposits at commercial banks, bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts branches, and liabilities of foreign banking agencies to foreign affiliates, less outstanding may be obtained from Flow of Funds Section, Division of Research claims on foreign affiliates and deposits by banking in foreign banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, 30. Demand deposits and note balances at commercial banks. D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • July 1986 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures' 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1985 1986 MMeeaassuurree 11998833 11998844 11998855 Aug. Sept. Oct. Nov. Dec. Jan. Feb.' Mar.' Apr. 1 Industrial production 109.2 121.8 124.5 125.2 125.1 124.4 125.4 126.4 126.7' 125.7 124.9 125.1 Market groupings 2 Products, total 113.9 127.1 131.7 133.0 133.1 131.8 133.5 134.1 134.4' 133.2 132.2 132.6 3 Final, total 114.7 127.8 132.0 133.3 133.3 131.9 133.7 134.4 134.4' 132.9 131.6 132.1 4 Consumer goods 109.3 118.2 120.7 121.5 121.8 120.8 122.7 124.2 123.9' 123.2 122.2 123.0 5 Equipment 121.7 140.5 147.1 149.0 148.6 146.6 148.3 147.9 148.4' 145.8 144.2 144.2 6 Intermediate 111.2 124.9 130.6 132.0 132.3 131.5 132.7 132.9 134.4 134.0 134.3 134.2 7 Materials 102.8 114.6 114.7 114.5 114.2 114.2 114.3 115.9 116.2' 115.5 114.8 114.9 Industry groupings 8 Manufacturing 110.2 123.9 127.1 128.2 127.7 127.2 128.4 129.1 129.8' 129.0 128.1 128.7 Capacity utilization (percent)2 9 Manufacturing 74.0 80.8 80.3 80.7 80.1 79.6 80.2 80.4 80.8' 80.0 79.3 79.3 10 Industrial materials industries 75.3 82.3 80.2 79.9 79.5 79.3 79.2 80.1 80.2' 79.7 79.1 79.0 11 Construction contracts (1977 = 100)3 138.0 150.0 161.0 164.0 167.0 168.0 162.0 162.0 146.0 162.0 149.0 176.0 12 Nonagricultural employment, total4 137.1 143.6 148.5 148.9 149.3 149.8 150.1 150.6 151.2 151.4 151.7 152.0 13 Goods-producing, total 100.1 106.1 107.5 107.3 107.1 107.5 107.6 107.9 108.5 108.3 108.0 108.0 14 Manufacturing, total 94.8 99.8 99.9 99.6 99.1 99.4 99.7 99.9 100.0 100.0 99.7 99.6 15 Manufacturing, production-worker ... 87.6 93.0 92.4 91.9 91.5 91.8 92.0 92.4 92.4 92.4 92.1 92.0 16 Service-producing 157.3 164.1 170.9 171.7 172.4 173.0 173.5 174.0 174.6 175.1 175.7 176.2 17 Personal income, total 440.1 482.8 511.0 511.3 513.6 516.8' 519.3 525.1 525.4 527.8 528.7 534.8 18 Wages and salary disbursements 390.7 427.8 457.1 459.2 461.9 464.3 467.1 471.5 472.6 474.3 476.5 477.5 19 Manufacturing 295.9 326.8 340.7 340.7 341.3 344.9 344.8 348.4 347.7 346.2 347.3 346.5 20 Disposable personal income5 175.8 193.6 203.1 202.8 203.5 204.9 205.9 208.2 209.0 210.0 210.6 213.3 21 Retail sales (1977 = 100)6 162.0 179.0 190.6 194.2 198.4 190.6 191.6 194.0 194.8 194.5 192.8 193.8 Prices7 22 Consumer 298.4 311.1 322.2 323.5 324.5 325.5 326.6 327.4 328.4 327.5 326.0 325.3 23 Producer finished goods 285.2 291.1 293.7 293.5 290.0 294.7 296.4' 297.2 296.2 292.3 288.1 286.9 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 were Seasonally adjusted data for changes in the price indexes may be obtained from 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 1986 CCaatteeggoorryy 11998833 11998844 11998855 Sept. Oct. Nov. Dec. Jan. Feb. Mar.' Apr. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 176,414 178,602 180,440 180,831 181,011 181,186 181,349 181,898 182,055 182,223 182,387 2 Labor force (including Armed Forces)1 113,749 115,763 117,695 118,049 118,355 118,376 118,466 119,014 119,322 119,445 119,473 3 Civilian labor force 111,550 113,544 115,461 115,790 116,114 116,130 116,229 116,786 111177,,008888 117,207 111177,,223344 Employment 4 Nonagricultural industries2 97,450 101,685 103,971 104,502 104,755 104,899 105,055 105,655 105,465 105,503 105,670 5 Agriculture 3,383 3,321 3,179 3,017 3,058 3,070 3,151 3,299 3,096 3,285 3,222 Unemployment 6 Number 10,717 8,539 8,312 8,271 8,301 8,161 8,023 7,831 8,527 8,419 8,342 7 Rate (percent of civilian labor force) ... 9.6 7.5 7.2 7.1 7.1 7.0 6.9 6.7 7.3 7.2 7.1 8 Not in labor force 62,665 62,839 62,745 62,782 62,656 62,810 62,883 62,884 62,733 62,778 62,914 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 90,196 94,461 97,698 98,217 98,559 98,801 99,086 99,496 99,656' 99,834 100,040 10 Manufacturing 18,434 19,412 19,426 19,279 19,338 19,381 19,433 19,447 19,439' 19,389 19,362 11 Mining 952 974 969 962 960 954 952 947 929' 902 866 12 Contract construction 3,948 4,345 4,661 4,721 4,753 4,754 4,770 4,906 4,883' 4,870 4,954 13 Transportation and public utilities 4,954 5,171 5,300 5,317 5,327 5,342 5,350 5,357 5,344' 5,348 5,345 14 Trade 20,881 22,134 23,195 23,344 23,440 23,473 23,550 23,697 23,790' 23,883 23,939 15 Finance 5,468 5,682 5,924 5,987 6,011 6,048 6,068 6,098 6,131' 6,159 6,206 16 Service 19,694 20,761 21,929 22,155 22,244 22,365 22,450 22,540 22,592' 22,744 22,827 17 Government 15,869 15,984 16,295 16,452 16,486 16,484 16,513 16,504 16,548' 16,539 16,541 1. Persons 16 years of age and over. Monthly figures, which are based on exclude proprietors, self-employed persons, domestic servants, unpaid family sample data, relate to the calendar week that contains the 12th day; annual data workers, and members of the Armed Forces. Data are adjusted to the March 1984 are averages of monthly figures. By definition, seasonality does not exist in benchmark and only seasonally adjusted data are available at this time. Based on population figures. Based on data from Employment and Earnings (U.S. Depart- data from Employment and Earnings (U.S. Department of Labor). ment of Labor). 4. In addition to the revisions noted here, data for January through June 1985 2. Includes self-employed, unpaid family, and domestic service workers. have been revised as follows: Jan., 21,382; Feb., 21,480; Mar., 21,644; Apr., 3. Data include all full- and part-time employees who worked during, or 21,723; May, 21,813; and June, 21,856. These data were reported incorrectly in received pay for, the pay period that includes the 12th day of the month, and the BULLETIN for November 1985 through March 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • July 1986 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1985 1986 1985 1986 1985 1986 Q2 Q3 Q4 Ql' Q2 Q3 Q4 Ql Q2 Q3 Q4 QK Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 124.2 124.8 125.4 125.8 154.0 155.1 156.2 157.2 80.7 80.5 80.3 80.0 2 Mining 110.0 108.5 107.6 105.3 133.6 133.9 134.1 134.3 82.3 81.0 80.2 78.4 3 Utilities 113.6 111.4 113.7 113.7 134.5 135.4 136.3 136.9 84.4 82.3 83.4 83.1 4 Manufacturing 126.6 127.6 128.2 129.0 157.7 158.9 160.2 161.3 80.3 80.3 80.0 79.9 5 Primary processing ... 108.1 109.5 110.4 111.8 132.0 132.4 132.8 133.2 81.9 82.7 83.1 83.9 6 Advanced processing 137.9 138.6 139.0 139.2 173.2 174.9 176.7 178.3 79.6 79.2 78.7 78.1 7 Materials 114.5 114.2 114.8 115.5 142.5 143.4 144.3 145.0 80.4 79.6 79.5 79.7 8 Durable goods 121.4 120.7 121.4 121.8 157.4 158.9 160.5 161.6 77.1 76.0 75.6 75.4 9 Metal materials .... 80.2 79.4 82.4 80.9 117.3 117.3 117.3 116.7 68.4 67.7 70.3 69.3 10 Nondurable goods.... 111.2 113.7 113.8 115.9 137.8 138.2 138.7 139.1 80.7 82.2 82.0 83.4 11 Textile, paper, and chemical.. 111.0 114.1 114.0 116.4 137.0 137.4 137.8 138.1 81.0 83.0 82.7 84.3 12 Paper 121.8 123.8 124.5 128.4 136.2 136.3 136.5 136.8 89.4 90.8 91.2 93.9 13 Chemical 112.6 114.6 114.2 116.0 142.0 142.6 143.1 143.5 79.3 80.4 79.8 80.9 14 Energy materials 105.2 103.2 104.2 104.1 120.3 120.6 120.9 121.2 87.5 85.5 86.1 85.9 Previous cycle1 Latest cycle2 1985 1985 1986 High Low High Low Apr. Aug. Sept. Oct. Nov. Dec. Jan/ Feb/ Mar/ Apr. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 80.9 80.7 80.5 79.8 80.3 80.7 80.8 80.0 79.3 79.3 16 Mining 92.8 87.8 95.2 76.9 82.1 80.9 81.0 80.9 79.7 80.0 80.0 78.5 76.8 75.9 17 Utilities 95.6 82.9 88.5 78.0 86.7 81.5 83.4 82.7 82.3 85.3 83.8 82.1 83.3 83.1 18 Manufacturing 87.7 69.9 86.5 68.0 80.4 80.7 80.1 79.6 80.2 80.4 80.7 80.0 79.2 79.4 19 Primary processing . .. 91.9 68.3 89.1 65.1 81.5 82.9 82.8 83.1 83.0 83.3 84.8 84.0 83.3 83.4 20 Advanced processing . 86.0 71.1 85.1 69.5 79.8 79.6 79.0 78.0 79.0 79.0 78.8 78.2 77.4 77.7 21 Materials 92.0 70.5 89.1 68.4 81.5 79.9 79.5 79.3 79.2 80.1 80.2 79.7 79.1 79.0 22 Durable goods 91.8 64.4 89.8 60.9 79.1 76.6 75.4 75.2 75.8 75.8 76.4 75.4 74.5 74.5 23 Metal materials 99.2 67.1 93.6 45.7 68.2 69.4 67.3 69.4 70.8 70.7 71.3 69.3 67.2 67.4 24 Nondurable goods .... 91.1 66.7 88.1 70.6 81.1 82.1 82.9 81.9 81.5 82.7 83.5 83.6 82.9 83.0 25 Textile, paper, and chemical 92.8 64.8 89.4 68.6 82.0 82.8 83.7 82.4 82.1 83.5 84.3 84.5 84.1 84.1 26 Paper 98.4 70.6 97.3 79.9 92.6 90.1 90.7 88.8 90.1 94.7 94.8 93.7 93.1 n.a. 27 Chemical 92.5 64.4 87.9 63.3 80.2 79.8 81.2 80.5 78.8 80.1 81.1 80.9 80.6 n.a. 28 Energy materials 94.6 86.9 94.0 82.2 87.4 85.1 85.6 86.2 84.7 87.4 85.9 85.7 86.1 85.8 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 1985 1986 pro- 11998855 GGrroouuppiinngg por- avg. tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Mar .p Apr.f Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 124.5 124.1 124.1 124.3 124.1 125.2 125.1 124.4 125.4 126.4 126.7 125.7 124.9 125.1 ? Products 57.72 131.7 130.8 131.4 131.6 131.6 133.0 133.1 131.8 133.5 134.1 134.4 133.2 132.2 132.6 Final products 44.77 132.0 131.3 131.7 131.6 131.8 133.3 133.3 131.9 133.7 134.4 134.4 132.9 131.6 132.1 4 Consumer goods 25.52 120.7 119.5 120.0 120.4 120.1 121.5 121.8 120.8 122.7 124.2 123.9 123.2 122.2 123.0 5 Equipment 19.25 147.1 146.9 147.1 146.6 147.3 149.0 148.6 146.6 148.3 147.9 148.4 145.8 144.2 144.2 6 Intermediate products 12.94 130.6 129.3 130.3 131.4 130.7 132.0 132.3 131.5 132.7 132.9 134.4 134.0 134.3 134.2 7 Materials 42.28 114.7 115.0 114.2 114.3 113.8 114.5 114.2 114.2 114.3 115.9 116.2 115.5 114.8 114.9 Consumer goods 8 Durable consumer goods 6.89 112.9 111.5 111.8 112.0 111.3 114.0 112.9 111.4 111155..55 116.8 116.6 116.3 111133..22 111155..55 9 Automotive products 2.98 115.1 113.1 113.6 113.4 115.0 120.0 117.8 112.9 116.8 116.6 117.0 118.3 112.1 117.3 1100 Autos and trucks 1.79 112.0 109.0 109.6 109.4 113.7 120.2 116.6 108.7 113.7 112.0 116.2 118.8 107.6 115.8 1111 Autos, consumer 1.16 98.9 100.5 98.1 97.0 101.1 101.3 98.8 92.3 94.9 99.9 103.6 107.0 95.1 101.0 1? Trucks, consumer .63 136.3 124.7 130.9 132.3 137.2 155.4 149.7 139.1 148.6 134.5 139.5 140.6 130.6 N Auto parts and allied goods 1.19 119.7 119.4 119.6 119.4 116.8 119.6 119.5 119.3 121.4 123.4 118.2 117.7 118.9 119.5 14 Home goods 3.91 111.3 110.2 110.4 110.9 108.4 109.5 109.3 110.2 114.5 116.9 116.4 114.8 114.0 114.1 15 Appliances, A/C and TV 1.24 129.5 126.9 129.3 131.5 121.6 124.5 123.7 126.3 139.4 145.4 138.8 136.5 134.5 135.3 16 1.19 130.3 127.1 128.7 131.7 123.2 125.5 125.6 128.6 141.9 148.4 141.5 139.1 136.9 17 Carpeting and furniture .96 119.4 118.1 116.9 119.6 122.2 119.5 120.2 120.1 122.9 118.9 122.3 121.9 119.8 18 1 71 93.6 93.7 93.1 91.2 91.2 93.0 92.7 92.9 91.9 95.2 96.9 95.1 95.9 19 Nondurable consumer goods 18.63 123.6 122.5 123.1 123.5 123.4 124.2 125.1 124.3 125.4 127.0 126.5 125.7 125.5 125.8 70 Consumer staples 15.29 129.4 128.5 129.0 129.6 129.3 130.3 131.0 130.1 131.0 133.0 132.2 131.8 131.6 71 Consumer foods and tobacco 7.80 129.7 129.4 128.9 130.5 130.1 130.8 131.5 129.5 130.7 132.4 131.3 131.9 131.3 131.9 •>•> 7.49 129.1 127.6 129.1 128.7 128.5 129.7 130.5 130.6 131.2 133.6 133.1 131.7 131.9 ?3 Consumer chemical products .... 2.75 147.5 145.1 147.3 145.4 145.4 149.1 151.4 149.4 152.4 152.9 153.8 155.6 153.2 132.2 "M 1 88 143.7 142.0 143.7 144.6 144.9 143.9 144.7 145.5 145.7 148.0 144.4 141.7 143.2 2 86 101.9 101.5 102.1 110022..22 101.5 101.8 101.0 102.9 101.4 105.6 105.8 102.1 104.2 ">6 1.44 8888..55 90.0 90.2 8888..88 89.2 91.1 85.8 90.2 90.1 92.3 93.9 91.4 91.8 27 11..4422 111133..22 111144..44 111155..99 111144..00 112.7 116.5 111155..88 112.9 119.2 117.8 113.0 Equipment ?8 Business and defense equipment 18.01 147.8 147.7 147.9 147.4 147.9 149.7 149.4 147.5 149.7 149.4 150.3 148.6 148.0 148.9 79 Business equipment 14.34 141.3 142.0 141.9 140.7 141.3 143.0 142.2 139.6 141.7 141.4 142.9 141.5 140.2 141.1 30 Construction, mining, and farm .... 2.08 67.7 68.4 67.4 67.7 68.6 67.2 67.0 65.9 68.2 68.3 67.7 65.3 63.4 31 Manufacturing 3.27 112.8 112.4 113.1 111.9 113.5 115.1 114.8 111.7 112.8 112.8 113.1 114.1 114.9 115.0 3? 1.27 83.6 81.8 82.8 84.1 85.6 84.5 85.1 85.5 84.7 87.1 84.5 83.4 82.7 82.4 33 5.22 219.3 221.8 222.8 219.6 219.5 222.8 219.4 213.9 217.7 217.9 219.2 217.5 217.9 218.1 34 2.49 106.1 106.0 102.9 103.4 103.3 106.0 108.3 109.7 111.2 107.7 114.6 111.4 104.0 110.2 35 Defense and space equipment 3.67 173.6 170.1 171.2 173.4 173.9 175.5 177.5 178.7 180.7 180.7 179.3 176.7 178.5 179.5 Intermediate products 36 Construction supplies 5.95 119.0 117.4 118.1 119.2 119.4 112211..55 121.3 120.0 112200..99 120.7 112244..00 112233..55 112233..77 112233..99 37 Business supplies 6.99 140.5 139.4 140.7 141.7 140.3 140.9 141.7 141.2 142.7 143.3 143.2 143.0 143.3 38 5.67 144.4 143.4 144.4 146.1 144.4 145.1 145.4 144.8 146.7 146.8 147.2 146.6 147.1 39 11..3311 112233..77 112222..44 112244..66 112222..77 112222..77 112222..55 112255..77 112255..77 112255..33 112288..11 125.9 127.5 112266..99 Materials 40 Durable goods materials 20.50 121.8 122.8 120.7 120.8 120.2 121.8 120.2 120.4 121.7 122.1 123.2 121.8 120.5 120.6 41 Durable consumer parts 4.92 100.7 101.8 100.1 98.7 98.3 100.0 99.0 100.2 101.6 101.5 103.9 102.7 100.5 100.2 47 Equipment parts 5.94 159.0 161.1 157.8 157.3 157.0 158.7 156.5 154.0 155.0 155.1 154.8 154.2 153.8 154.2 43 Durable materials n.e.c 9.64 109.7 110.0 108.2 109.6 108.6 110.2 108.7 109.9 111.4 112.3 113.7 111.5 110.1 110.3 44 Basic metal materials 4.64 84.8 86.6 82.0 85.0 82.5 85.1 82.8 85.8 87.6 88.5 87.5 84.6 82.3 45 Nondurable goods materials 10.09 112.2 110.4 111.3 111.8 112.8 113.5 114.7 113.4 113.0 114.9 116.1 116.3 115.4 115.6 46 Textile, paper, and chemical 7.53 112.4 110.5 110.9 111.7 113.5 113.8 115.1 113.5 113.2 115.2 116.4 116.8 116.2 116.3 4477 1 52 97.7 94.1 95.0 97.3 100.2 104.4 104.1 101.2 104.4 102.1 103.2 107.3 106.1 4488 Pulp and paper materials 1.55 123.7 121.3 120.9 123.3 125.0 122.8 123.7 121.1 123.0 129.3 129.5 128.2 127.6 49 Chemical materials 4.46 113.6 112.3 112.9 112.6 114.0 113.8 115.9 115.0 112.8 114.8 116.3 116.1 115.7 50 Miscellaneous nondurable materials .. 2.57 111.3 110.1 112.5 112.0 110.8 U2.7 113.5 113.3 112.5 113.9 115.3 114.9 113.2 51 Energy materials 11.69 104.3 105.3 105.3 105.1 103.5 102.7 103.4 104.2 102.5 105.8 104.1 103.9 104.5 104.2 7.57 107.8 107.9 107.8 109.0 107.4 106.4 106.8 108.2 106.7 109.0 106.8 107.6 107.9 5533 4.12 9977..99 110000..66 110000..66 98.1 96.2 95.9 97.0 96.8 94.7 100.1 99.1 97.0 98.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • July 1986 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1985 SIC pro- 1985 Grouping code por- avg. tion Apr. May June July Aug. Sept. Oct. Nov. Dec Jan/ Feb. Mar.P Apr Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 110.6 111.1 111.3 111.6 109.4 109.1 110.3 109.9 108.9 110.8 110.2 108.0 107.3 106.5 2 Mining 9.83 109.0 109.6 109.8 110.6 108.7 108.3 108.4 108.4 106.9 107.4 107.4 105.3 103.2 102.0 3 Utilities 5.96 113.2 113.6 113.7 113.4 110.7 110.3 113.2 112.4 112.2 116.5 114.6 112.4 114.2 114.0 4 Manufacturing 84.21 127.1 126.6 126.6 126.7 126.9 128.2 127.7 127.2 128.4 129.1 129.8 129.0 128.1 128.7 5 Nondurable 35.11 125.6 124.3 124.7 125.5 125.6 126.6 126.9 126.4 127.3 128.0 129.1 128.7 128.4 128.6 6 Durable 49.10 128.2 128.2 127.9 127.6 127.9 129.4 128.3 127.7 129.2 129.9 130.4 129.3 127.8 128.8 Mining I Metal 10 .50 75.1 81.2 78.3 77.5 60.9 73.1 71.4 74.2 78.3 74.3 75.5 76.7 80.7 8 Coal 11.12 1.60 127.5 128.5 128.7 134.0 128.0 127.7 126.3 130.1 125.5 128.0 130.6 124.9 123.5 9 Oil and gas extraction 13 7.07 106.3 106.5 106.9 106.9 106.9 105.5 106.0 104.8 103.5 104.4 103.6 101.5 98.7 97.2 10 Stone and earth minerals 14 .66 118.8 118.5 118.7 117.9 116.6 117.7 119.3 120.4 119.0 114.0 117.1 121.2 118.5 Nondurable manufactures II Foods 20 7.96 131.0 130.8 131.4 131.8 132.2 132.6 132.5 130.7 131.4 132.6 133.2 133.6 133.3 12 Tobacco products 21 .62 98.4 95.7 98.9 96.0 97.7 97.8 105.3 104.5 103.5 99.3 97.9 13 Textile mill products 22 2.29 102.5 99.0 100.0 103.3 104.1 106.3 106.7 104.9 108.0 106.3 107.4 110.4 109.1 14 Apparel products 23 2.79 101.8 100.2 100.3 99.2 100.6 100.4 101.8 102.6 103.9 105.0 105.8 103.6 103.7 15 Paper and products 26 3.15 127.4 125.1 124.1 127.1 129.0 127.5 128.6 127.3 128.2 132.3 133.1 132.1 131.6 16 Printing and publishing 27 4.54 155.3 154.2 155.4 156.7 154.3 156.3 156.2 157.0 159.0 158.4 158.9 157.1 156.6 158.6 17 Chemicals and products 28 8.05 127.1 125.8 126.7 126.4 126.4 128.2 129.0 127.9 128.0 128.5 130.5 130.8 131.2 18 Petroleum products 29 2.40 86.7 87.3 87.4 87.1 88.3 88.2 85.9 87.7 87.3 88.7 92.6 88.4 88.6 89.5 19 Rubber and plastic products. .. 30 2.80 147.0 144.9 144.3 145.5 145.6 148.0 148.6 148.7 150.5 150.0 150.5 150.6 150.2 20 Leather and products 31 .53 70.9 69.9 71.0 71.5 72.2 72.7 72.3 71.4 72.1 69.9 67.5 67.0 65.8 Durable manufactures 21 Lumber and products 24 2.30 110.9 112.2 113.5 113.0 114.8 115.9 116.5 115.6 116.5 119.9 118.2 22 Furniture and fixtures 25 1.27 142.0 141.0 142.0 141.9 145.3 144.3 143.2 141.9 144.1 142.1 143.9 145.4 145.3 23 Clay, glass, stone products.... 32 2.72 114.8 114.5 116.3 116.1 115.1 116.2 116.2 115.6 115.2 118.2 120.2 118.2 118.0 24 Primary metals 33 5.33 80.6 81.4 76.4 78.3 79.0 82.0 80.3 83.1 83.6 81.7 84.9 81.9 78.3 78.8 25 Iron and steel 331.2 3.49 70.7 71.9 65.4 67.6 68.7 71.6 69.7 74.4 75.3 72.0 75.5 71.2 66.7 26 Fabricated metal products .... 34 6.46 107.8 109.1 108.3 107.4 107.3 107.8 107.5 108.4 107.9 108.8 109.3 109.4 109.0 109.5 27 Nonelectrical machinery 35 9.54 146.6 148.9 149.1 145.6 147.5 149.2 146.5 143.0 145.6 146.0 146.2 145.3 144.1 144.3 28 Electrical machinery 36 7.15 169.3 168.9 169.3 169.5 165.7 166.1 165.1 165.1 168.9 171.9 167.9 165.5 165.4 165.5 29 Transportation equipment 37 9.13 123.2 120.7 120.9 121.8 123.7 126.8 126.2 124.5 126.5 126.8 128.9 128.1 123.9 127.1 30 Motor vehicles and parts.... 371 5.25 112.8 110.9 110.5 110.5 112.8 116.8 115.3 111.7 114.5 115.4 117.8 117.8 110.1 115.1 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 137.5 134.1 134.9 137.1 138.5 140.4 141.1 141.9 142.9 142.3 144.0 142.1 142.7 143.5 32 Instruments 38 2.66 139.9 138.5 139.9 140.7 141.1 141.8 139.4 139.8 140.7 140.6 141.1 141.8 142.5 143.4 33 Miscellaneous manufactures... 39 1.46 96.4 98.3 98.3 96.8 95.9 97.2 96.4 95.9 94.5 96.3 99.0 98.1 97.5 Utilities 34 Electric 44..1177 111199..55 111199..11 111199..55 111199..44 111177..55 111166..77 112200..66 111199..33 111188..77 112244..44 111199..99 111188..55 112200..66 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 333555 517.5 773.4 773.3 774.4 773.5 769.0 778.7 777.9 772.2 782.8 783.3 792.9 787.0 788.5 784.3 333666 405.7 614.8 616.2 616.2 614.0 610.1 618.6 617.8 613.0 622.4 622.1 629.2 624.5 615.5 621.5 333777 272.7 364.8 364.7 365.1 364.0 361.7 366.2 365.6 363.8 370.5 373.6 375.0 374.0 370.2 373.7 333888 133.0 250.1 248.0 250.8 251.0 250.3 252.4 252.2 249.3 251.9 248.5 254.1 250.5 245.2 247.7 333999 111.9 115588..66 155.6 158.3 159.7 160.4 160.1 160.1 159.2 160.4 161.2 163.7 162.6 163.1 162.8 A A major revision of the industrial production index and the capacity (July 1985), pp. 487-501. The revised indexes for January through June 1985 were utilization rates was released in July 1985. See "A Revision of the Index of 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. 1985 1986 IItteemm 11998833 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec. Jan/ Feb/ Mar. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,605 1,682 l,733r 1,717' 1,709' 1,782' 1,846' 1,703' 1,668' 1,839' 1,861 1,808 1,834 7 1-family 902 922 957' 958' 961' 99C 956' 984' 932' 963' 1,060 1,033 1,043 3 2-or-more-family 703 759 777' 759' 748' 792' 89C 719' 736' 876' 801 775 791 4 Started 1,703 1,749 1,742 1,693 1,673 1,737 1,653 1,784 1,654 1,882 2,034 2,001 1,930 5 1-family 1,067 1,084 1,072 1,036 1,068 1,071 1,006 1,118 1,006 1,098 1,335 1,202 1,207 6 2-or-more-family 635 665 669 657 605 666 647 666 648 784 699 799 723 7 Under construction, end of period1 1,003 1,051 1,063 1,073 1,071 1,079 1,065 1,089 1,087 1,088 1,094 1,111 1,101 8 1-family 524 556 539 574 577 582 568 578 570 561 571 582 574 9 2-or-more-family 479 494 524 499 494 499 496 512 517 528 522 529 527 10 Completed 1,390 1,652 1,703 1,758 1,722 1,720 1,778 1,541 1,721 1,762 1,778 1,721 1,822 11 1-family 924 1,025 1,072 1,078 1,042 1,032 1,100 1,072 1,095 1,141 1,075 1,036 1,159 12 2-or-more-family 466 627 631 680 680 688 678 469 626 621 703 685 663 13 Mobile homes shipped 296 296 284 272 285 286 283 291 287 285 280 266 240 Merchant builder activity in 1-family units 14 Number sold 622 639 688 710 745 708 681 637 722 729' 736 709 903 15 Number for sale, end of period1 304 358 35(K 354 351 348 350 353 353 349' 353 356 339 Price (thousands of dollars)2 Median 16 Units sold 75.5 80.0 84.3 86.3 82.1 83.3 84.6 85.4 87.2 87.9' 86.3 89.4 88.3 17 Units sold 89.9 97.5 101.0' 99.6 99.4 99.2 102.6 102.7 104.1 106.1' 103.5 106.6 110.4 EXISTING UNITS (1-family) 18 Number sold 2,719 2,868 3,217 3,070 3,170 3,430 3,480 3,530 3,450 3,520 3,300 3,270 3,200 Price of units sold (thousands of dollars)1 19 Median 69.8 72.3 75.4 76.5 76.7 77.2 75.9 75.2 74.9 75.5 77.1 77.4 79.8 20 Average 82.5 85.9 90.6 91.9 92.7 93.2 91.4 91.2 90.3 91.8 93.0 93.1 96.8 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 268,730 312,989 342,363 343,837 344,206 343,246 346,084 344,502 343,847 351,669 355,063 358,881 354,593 77 Private 218,016 257,802 280,023 278,939 279,521 279,371 282,505 282,115 281,284 286,914 286,701 290,195 286,493 73 Residential 121,309 145,058 148,250 147,158 148,699 146,858 148,915 150,873 149,670 150,690 151,716 155,103 154,297 24 Nonresidential, total 96,707 112,744 131,773 131,781 130,822 132,513 133,590 131,242 131,614 136,224 134,985 135,092 132,196 Buildings 75 Industrial 12,863 13,746 15,767 15,170 15,384 15,118 15,567 15,630 16,271 17,357 15,748 16,252 14,440 76 Commercial 35,787 48,102 60,050 58,290 57,956 59,910 61,227 60,740 61,101 64,496 64,340 63,389 62,792 71 Other 11,660 12,298 12,406 12,786 12,578 12,957 12,769 12,250 12,495 12,048 12,448 12,793 13,207 28 Public utilities and other 36,397 38,598 43,550 45,535 44,904 44,528 44,027 42,622 41,747 42,323 42,449 42,658 41,757 79 Public 50,715 55,186 62,342 64,897 64,686 63,875 63,580 62,387 62,563 64,755 68,361 68,686 68,100 30 Military 2,544 2,839 3,152 3,426 3,364 2,966 3,008 3,086 3,040 3,452 3,765 4,145 3,396 31 Highway 14,143 16,295 19,951 21,093 19,589 20,224 19,585 19,193 19,826 20,827 22,020 21,910 21,991 37 Conservation and development 4,822 4,656 4,959 5,410 5,075 4,824 5,254 4,892 5,176 4,978 5,620 4,425 4,619 33 Other 29,206 31,396 34,280 34,968 36,658 35,861 35,733 35,216 34,521 35,498 36,956 38,206 38,094 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (a) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of comparable with data in prior periods because of changes by the Bureau of the existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from originating agency. Permit authoriza- Construction Reports (C-30-76-5), issued by the Bureau in July 1976. tions are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • July 1986 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted C m h o an n g th e s f e ro a m rli e 1 r 2 Change ( a f t r o a m nn 3 u a m l o ra n t t e h ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm AAAppprrr... 1985 1986 1985 1986 111999888666 11998855 11998866 (((111999666777 AApprr.. AApprr.. === 111000000)))''' June Sept. Dec/ Mar/ Dec. Jan. Feb. Mar. Apr. CONSUMER PRICES2 1 AH items 3.7 1.6 3.3 2.4 S.3 -1.9 .4 .3 -.4 -.4 -.3 325.3 2 Food 2.4 2.1 .6 2.1 5.9 -1.4 .6 .2 -.7 .1 .3 316.1 3 Energy items .7 -14.8 6.9 -3.2 3.3 -34.2 .4 .1 -3.8 -6.5 -5.8 361.8 4 All items less food and energy 4.5 4.2 3.5 3.4 5.4 4.1 .3 .4 .2 .4 .4 324.8 5 Commodities 3.3 .8 -.9 1.1 3.6 .3 .2 .3 -.1 -.1 -.1 262.1 6 Services 5.3 6.2 6.2 4.8 6.5 6.5 .4 .5 .4 .6 .7 393.8 PRODUCER PRICES 7 Finished goods .7 -2.1 2.2 -2.4 9.2 -12.4 .6 -.7 -1.6 -1.1 -.6 286.9 8 Consumer foods -.8 .1 -5.7 -2.9 16.0 -7.4 L.C -1.6 .3 .1 272.4 9 Consumer energy -4.8 -28.5 24.7 -11.3 20.7 -67.6 2.3' -3.5C -9.4 -13.4 -8.4 511.3 10 Other consumer goods 2.4 2.4 1.9 .0 4.4 2.9 .2 .0 -.1 .8 .2 257.1 11 Capital equipment 1.8 1.9 1.5 -.9 5.6 .7 .1 .1 .3 .3 305.6 12 Intermediate materials3 .2 -3.9 .6 -1.3 2.9 -11.9 .4' -.5 -1.4 -1.3 -1.0 312.9 13 Excluding energy .6 -.5 .8 -.7 .0 -1.2 .1' -.1' -.2 .0 -.3 304.0 Crude materials 14 Foods -11.0 -8.3 -16.7 -20.6 47.0 -25.2 -.5 -2.6 -3.6 -1.0 -3.1 220.1 15 Energy -4.3 -23.8 4.4 -5.9 -4.0 -50.1 -.2' -8.2 -8.9 -7.7 570.7 16 Other -6.9 -3.2 -7.8 -4.4 1.5 -3.7 -.1' -.4' -3.0 2.6 1.2 249.1 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. 1985 1986 AAccccoouunntt 11998833 11998844 11998855 QL Q2 Q3 Q4 QL' GROSS NATIONAL PRODUCT 1 Total 3,401.6 3,774.7 3,988.5 3,917.5 3,960.6 4,016.9 4,059.3 4,121.3 By source 2 Personal consumption expenditures 2,229.3 2,423.0 2,582.3 2,525.0 2,563.3 2,606.1 2,634.8 2,669.1 3 Durable goods 289.6 331.1 361.5 351.5 356.5 376.0 362.0 364.1 4 Nondurable goods 817.0 872.4 912.2 895.7 910.2 914.5 928.3 936.0 5 Services 1,122.7 1,219.6 1,308.6 1,277.8 1,296.6 1,315.6 1,344.6 1,369.0 6 Gross private domestic investment 501.9 674.0 669.3 657.6 672.8 666.1 680.7 715.4 7 Fixed investment 508.3 607.0 661.8 639.1 657.3 665.9 685.0 678.0 8 Nonresidential 356.3 427.9 476.2 459.6 474.2 478.5 492.5 480.3 9 Structures 126.1 147.6 170.2 166.1 169.7 170.4 174.5 171.1 10 Producers' durable equipment 230.2 280.2 306.0 293.5 304.5 308.1 318.0 309.2 11 Residential structures 152.0 179.1 185.6 179.4 183.1 187.4 192.5 197.8 1? Change in business inventories -6.4 67.1 7.5 18.5 15.5 .2 -4.3 37.4 13 Nonfarm .8 58.0 11.8 14.2 10.8 3.1 19.0 39.1 14 Net exports of goods and services -5.3 -59.2 -78.5 -42.3 -70.3 -87.8 -113.4 -99.8 H Exports 354.1 384.6 369.9 379.6 369.2 363.2 367.8 377.4 16 Imports 359.4 443.8 448.4 421.9 439.5 451.0 481.2 477.2 17 Government purchases of goods and services 675.7 736.8 815.4 777.2 794.8 832.5 857.2 836.6 18 Federal 284.8 312.9 355.4 334.4 337.8 364.8 384.7 357.8 19 State and local 390.9 423.9 460.0 442.8 457.1 467.7 472.5 478.8 B\ major type of product 70 Final sales, total 3,408.0 3,707.6 3,981.1 3,899.0 3,945.0 4,016.7 4,063.6 44,,008833..99 71 Goods 1,394.7 1,585.9 1,639.3 1,628.3 1,636.1 1,650.7 1,642.2 1,671.7 7? Durable 572.3 679.5 709.2 706.2 705.9 714.8 710.0 712.8 73 Nondurable 822.4 906.3 930.1 922.1 930.2 935.9 932.2 958.9 74 Services 1,678.0 1,806.6 1,930.5 1,887.6 1,908.2 1,939.9 1,986.4 2,016.0 25 Structures 328.9 382.2 418.6 401.5 416.3 426.2 430.6 433.6 26 Change in business inventories -6.4 67.1 7.5 18.5 15.5 .2 -4.3 37.4 27 Durable goods -.8 37.0 6.4 16.9 1.8 -6.4 13.4 26.8 28 Nondurable goods -5.5 30.1 1.0 1.6 13.7 6.6 -17.7 10.6 29 MEMO: Total GNP in 1982 dollars 3,277.7 3,492.0 3,570.0 3,547.8 3,557.4 3,584.1 3,590.8 3,623.5 NATIONAL INCOME 30 Total 2,718.3 3,039.3 3,211.3 3,155.3 3,192.2 3,228.0 3,269.9 3,315.6 31 Compensation of employees 2,025.9 2,221.3 2,372.5 2,320.4 2,356.9 2,385.2 2,427.5 2,462.8 32 Wages and salaries 1,675.4 1,835.2 1,960.3 1,917.7 1,947.6 1,970.1 2,005.8 2,035.1 33 Government and government enterprises 324.2 346.1 370.8 362.6 367.4 372.6 379.7 384.9 34 Other 1,351.6 1,488.9 1,589.7 1,555.1 1,580.2 1,597.5 1,626.1 1,650.2 35 Supplement to wages and salaries 350.5 386.2 412.2 402.7 409.4 415.1 421.7 427.7 36 Employer contributions for social insurance 171.0 192.8 205.8 201.8 204.6 206.7 210.2 213.4 37 Other labor income 179.5 193.4 206.4 200.9 204.8 208.4 211.5 214.3 38 Proprietors' income1 192.3 233.7 242.2 239.4 240.9 237.5 250.9 251.3 39 Business and professional1 178.0 201.6 221.0 212.9 218.1 225.3 227.6 235.7 40 Farm1 14.3 32.1 21.2 26.5 22.8 12.2 23.3 15.6 41 Rental income of persons2 12.8 10.8 13.8 11.0 13.8 14.5 15.9 18.9 42 Corporate profits1 213.8 273.3 295.5 281.7 288.1 309.1 303.1 314.2 43 Profits before tax3 205.0 237.6 225.3 220.0 218.7 228.6 233.8 218.0 44 Inventory valuation adjustment -10.0 -5.4 -.6 .7 2.2 4.7 -10.1 17.3 45 Capital consumption adjustment 18.8 41.0 70.9 61.1 67.2 75.9 79.4 78.9 46 Net interest 273.6 300.2 287.4 302.9 292.4 281.8 272.6 268.5 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • July 1986 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1983 1984 QI Q2 Q3 Q4 PERSONAL INCOME AND SAVING 1 Total personal income 2,836.4 3,111.9 3,293.5 3,240.9 3,280.1 3,298.5 3,354.3 2 Wage and salary disbursements 1,675.8 1,834.9 1,960.5 1,917.6 1.948.6 1.970.1 2.005.8 3 Commodity-producing industries 523.0 577.9 607.3 600.1 604.7 607.6 616.9 4 Manufacturing 397.4 438.9 457.6 453.5 454.9 457.2 464.7 5 Distributive industries 404.2 441.6 468.8 459.8 467.4 471.2 476.8 6 Service industries 424.4 469.4 513.6 495.2 508.1 518.7 532.4 7 Government and government enterprises 324.2 346.1 370.8 362.5 368.4 372.6 379.7 8 Other labor income 179.5 193.4 206.4 200.9 204.8 208.4 211.5 9 Proprietors' income1 192.3 233.7 242.2 239.4 240.9 237.5 250.9 10 Business and professional1 178.0 201.6 221.0 212.9 218.1 225.3 227.6 1 1 1 2 Re F n a ta r l m i 1 n come of persons2 1 1 4 2 . . 3 8 3 1 2 0 . . 1 8 2 1 1 3 . . 2 8 2 1 6 1 . . 5 0 2 1 2 3 . . 8 8 1 1 2 4 . . 2 5 2 1 3 5 . . 3 9 13 Dividends 68.0 74.6 78.9 77.9 78.7 79.1 79.8 14 Personal interest income 385.7 442.2 456.3 462.8 460.5 450.6 451.4 15 Transfer payments 442.2 454.7 484.5 477.6 481.0 488.1 491.2 16 Old-age survivors, disability, and health insurance benefits. 221.7 235.7 249.2 250.7 256.5 257. 253.4 17 LESS: Personal contributions for social insurance 119.8 132.4 146.3 148.3 149.7 152.0 149.1 18 EQUALS: Personal income 2,836.4 3,111.9 3,240.9 3,280.1 3.298.5 3,354.3 3,293.5 19 LESS: Personal tax and nontax payments 411.1 441.8 501.7 462.4 498.2 508.5 492.7 20 EQUALS: Disposable personal income 2,425.4 2,670.2 2,739.2 2.817.7 2.800.2 2.845.9 2,800.8 21 LESS: Personal outlays 2,292.2 2,497.7 2,608.4 2,650.6 2.697.6 2,730.6 2,671.8 22 EQUALS: Personal saving 133.2 172.5 130.9 167.2 102.6 115.2 129.0 MEMO Per capita (1982 dollars) 23 Gross national product 13,959.5 14,727.9 14,918.5 14,875.4 14,884.5 14,958.6 14,948.7 24 Personal consumption expenditures 9,139.2 9,447.0 9,665.7 9,595.8 9,638.0 9,722.8 9,701.6 25 Disposable personal income 9,942.0 10,412.0 10,483.0 10,411.0 10,595.0 10,447.0 10,479.0 26 Saving rate (percent) 5.5 6.5 4.6 4.8 5.9 3.7 4.0 GROSS SAVING 27 Gross saving. 469.8 584.5 553.4 578.3 571.7 537.3 526.1 28 Gross private saving 600.6 693.0 694.3 677.7 723.6 681.8 694.2 29 Personal saving 133.2 172.5 129.0 130.9 167.2 102.6 115.2 3 3 0 1 C U o n r d p is o t r r a i t b e u t i e n d v e c n o t r o p ry o ra v t a e l u p a r t o io fi n t s1 a djustment. -1 6 0 7 . . 0 9 1 - 0 5 1 .4 .6 12 - 6 .6 . 9 116. . 3 7 12 2 2 . . 2 6 13 4 7 . . 7 8 - 1 1 3 0 1 . . 1 0 Capital consumption allowances 32 Corporate 245.0 256.6 269.2 264.3 266.8 270.9 274.8 33 Noncorporate 154.6 162.3 169.2 166.3 167.0 170.5 173.2 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts -130.8 -108.5 -141.0 -99.4 -151.9 -144.5 -168.0 36 Federal -179.4 -172.9 -200.0 -162.6 -209.1 -201.3 -226.9 37 State and local 48.6 64.4 59.0 63.2 57.3 56.9 58.8 38 Capital grants received by the United States, net .0 .0 .0 .0 .0 .0 .0 39 Gross investment 469.2 583.0 554.0 580.8 567.0 539.9 528.2 40 Gross private domestic 501.9 674.0 669.3 657.6 672.8 666.1 680.7 41 Net foreign -32.7 -91.0 -115.3 -76.8 -105.8 -126.2 -152.5 42 Statistical discrepancy. -1.5 2.5 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1984 1985 IItteemm ccrreeddiittss oorr ddeebbiittss 11998833 11998844 11998855PP Q4 Q1 Q2 Q3 Q4P i 1 Balance on current account -45,994 -107,358 -117,664 - -- 3 22 1 88 , ,, 8 99 0 88 5 22 - --22 2 33 4 ,, , 44 1 99 8 11 3 - --22 2 77 7 ,, , 99 6 88 2 00 6 - --33 2 33 9 ,, , 11 3 00 0 11 0 - -- 3 33 6 33 , ,, 5 00 5 99 9 33 3 Merchandise trade balance2 -67,216 -114,107 -124,289 -30,885 -23,365 -28,487 -32,955 -39,482 4 Merchandise exports 201,712 219,916 213,990 56,242 55,198 53,530 52,276 52,986 Merchandise imports -268,928 -334,023 -338,279 -87,127 -78,563 -82,017 -85,231 -92,468 6 Military transactions, net -163 -1,765 -2,046 -575 -212 -586 -429 -818 7 Investment income, net3 25,401 19,109 24,683 4,003 2,530 5,378 8,651 8,124 8 Other service transactions, net 4,837 819 -1,229 -253 36 -503 -571 -194 9 Remittances, pensions, and other transfers -2,566 -2,891 -3,538 -782 -934 -843 -866 -896 10 U.S. government grants (excluding military) -6,287 -8,522 -11,246 -3,313 -2,238 -2,585 -3,130 -3,293 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,006 -5,516 -2,628 -734 -850 -853 --339922 --553322 12 Change in U.S. official reserve assets (increase, -) -1,196 -3,130 -3,858 -1,109 -233 -356 -121 -3,147 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -66 -979 -897 -194 -264 -180 -264 -189 15 Reserve position in International Monetary Fund -4,434 -995 908 -143 281 72 388 168 16 Foreign currencies 3,304 -1,156 -3,869 -772 -250 -248 -245 -3,126 17 Change in U.S. private assets abroad (increase, -)3 -48,842 -11,800 -31,698 -13,003 621 -1,342 -12,235 -18,742 18 Bank-reported claims -29,928 -8,504 -5,926 -4,933 135 4,095 -1,521 -8,635 19 Nonbank-reported claims -6,513 6,266 n.a. 970 1,201 1,863 -1,873 n.a. 20 U.S. purchase of foreign securities, net -7,007 -5,059 -7,871 -3,663 -2,494 -2,214 -1,708 -1,456 21 U.S. direct investments abroad, net3 -5,394 -4,503 -19,092 -5,377 1,779 -5,086 -7,133 -8,651 7,2 Change in foreign official assets in the United States (increase, +) 5,795 3,424 -1,908 7,119 -11,204 8,465 2,435 -1,604 23 U.S. Treasury securities 6,972 4,690 -610 5,814 -7,219 8,722 -90 -2,023 24 Other U.S. government obligations -476 167 -329 -67 -307 136 24 -182 25 Other U.S. government liabilities4 552 453 148 -197 -462 575 -95 130 76 Other U.S. liabilities reported by U.S. banks 545 663 372 2,052 -3,099 -134 2,974 631 27 Other foreign official assets5 -1,798 -2,549 -1,489 -483 -117 -834 -378 -160 28 Change in foreign private assets in the United States (increase, +)3 78,527 93,895 125,017 26,191 24,915 17,849 32,113 5500,,114400 29 U.S. bank-reported liabilities 49,341 31,674 40,610 4,481 13,345 195 6,527 20,543 30 U.S. nonbank-reported liabilities -118 4,284 n.a. -1,863 -2,655 -1,324 509 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 8,721 22,440 20,910 9,501 2,633 5,106 7,452 5,719 32 Foreign purchases of other U.S. securities, net 8,636 12,983 50,712 9,380 9,510 7,135 11,674 22,393 33 Foreign direct investments in the United States, net3 11,947 22,514 16,255 4,692 2,082 6,737 5,951 1,485 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 16,717 30,486 32,739 13,341 10,934 3,863 7,500 10,444 36 44,,330055 --442255 --559977 --33,,665500 44,,667744 37 Statistical discrepancy in recorded data before seasonal adjustment 16,717 30,486 32,739 9,036 11,359 4,460 11,150 5,770 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -1,196 -3,130 -3,858 -1,109 -233 -356 -121 -3,147 39 Foreign official assets in the United States (increase, +) 5,243 2,971 -2,056 7,316 -10,742 7,890 2,530 -1,734 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) -8,283 -4,143 -6,750 812 -2,021 -1,808 -1,961 -960 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 194 190 58 61 1100 1122 1155 2222 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 officii agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing; military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • July 1986 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are not seasonally adjusted. 1985 1986 IItteemm 11998833 11998844 11998855 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 200,486 217,865 213,146 17,034 17,618 17,721 16,994 17,006 17,735 18,913 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 258,048 325,726 345,276 31,349 28,429 30,010 30,728 32,005 28,895 31,972 3 Trade balance -57,562 107,861 -132,129 -14,315 -10,811 -12,290 -13,734 -14,999 -11,160 -13,059 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 1986 TTyyppee 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Total 33,958 33,747 34,934 41,657 42,852 43,191 43,673 45,505 44,919 46,491 2 Gold stock, including Exchange Stabilization Fund' 11,148 11,121 11,096 11,090 11,090 11,090 11,090 11,090 11,090 11,089 3 Special drawing rights2 3 5,250 5,025 5,641 6,926 7,253 7,293 7,441 7,960 7,839 8,098 4 Reserve position in International Monetary Fund2 7,348 11,312 11,541 11,843 11,955 11,952 11,824 12,172 12,025 12,242 5 Foreign currencies4 10,212 6,289 6,656 11,798 12,554 12,856 13,318 14,283 13,965 15,062 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 1986 AAsssseettss 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Deposits 328 190 253 267 340 480 256 276 273 325 Assets held in custody 2 U.S. Treasury securities' 112,544 117,670 118,267 118,000 117,814 121,004 121,995 124,905 127,611 132,017 3 Earmarked gold2 14,716 14,414 14,265 14,242 14,240 14,245 14,193 14,172 14,167 14,160 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 1986 AAsssseett aaccccoouunntt 11998822 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar.P All foreign countries 1 Total, all currencies 469,712 477,090 453,656 456,676 454,492 455,935 458,076 447,529' 448,213 457,755 ? Claims on United States 91,805 115,542 113,393 119,526 121,806 115,587 119,716 116,786' 113,706 118,435 61,666 82,026 78,109 85,463 87,255 82,327 87,201 84,410 80,942 85,155 4 Other banks in United States2 13,664 13,258 12,808 12,096 13,076 11,757' 11,727 12,894 5 21,620 20,805 21,743 21,164 19,439 20,619 21,037 20,386 6 Claims on foreigners 358,493 342,689 320,162 314,997 310,480 317,498 315,763 308,673' 310,637 314,964 7 Other branches of parent bank 91,168 96,004 95,184 87,673 86,912 89,580 91,399 88,393 88,467 91,680 8 133,752 117,668 100,397 102,334 98,578 102,907 103,014 100,449' 99,798 101,059 9 24,131 24,517 23,343 23,389 23,478 23,613 23,395 23,35C 23,602 23,653 10 Nonbank foreigners 109,442 107,785 101,238 101,601 101,512 101,398 97,955 96,481' 98,770 98,572 11 Other assets 19,414 18,859 20,101 22,153 22,206 22,850 22,597 22,07c 23,870 24,356 12 Total payable in U.S. dollars 361,982 371,508 350,636 335,302 331,610 329,622 336,288 321,703' 315,275 322,424 n Claims on United States 90,085 113,436 111,426 116,630 118,630 112,419 116,648 113,726' 110,349 114,792 1 1 5 4 Other banks in United States2 61,010 80,909 7 1 7 3 , , 2 5 2 0 9 0 8 1 4 2 , , 2 6 5 9 2 7 8 1 6 2 , , 1 2 0 5 1 8 8 1 1 1 , , 1 4 6 6 2 3 8 1 5 2 , , 9 4 7 7 1 3 8 1 3 1 , , 2 1 6 0 4 2 ' 7 1 9 1 , , 6 0 0 7 7 0 8 1 3 2 , , 8 2 3 0 3 1 16 20,697 19,681 20,271 19,794 18,204 19,360 19,672 18,758 17 Claims on foreigners 259,871 247,406 228,600 208,868 203,009 207,258 209,924 198,817' 195,088 198,255 18 Other branches of parent bank 73,537 78,431 78,746 69,241 68,576 70,548 72,689 68,748 67,625 71,282 19 106,447 93,332 76,940 71,013 67,344 69,646 71,738 65,779' 63,714 63,199 70 Public borrowers 18,413 17,890 17,626 17,386 17,432 17,277 17,169 16,958 17,127 17,148 21 Nonbank foreigners 61,474 60,977 55,288 51,228 49,657 49,787 48,328 47,332 46,622 46,626 22 Other assets 12,026 10,666 10,610 9,804 9,971 9,945 9,716 9,160' 9,838 9,377 United Kingdom 23 Total, all currencies 161,067 158,732 144,385 150,276 149,607 152,456 148,599 150,835 148,788 150,414 74 27,354 34,433 27,731 32,620 33,816 33,774 33,150 36.308 33,458 33,980 75 23,017 29,111 21,918 25,829 26,956 26,718 26,970 26,837 27,281 27,881 76 Other banks in United States2 -> 1,429 1,334 1,269 1,289 1,106 1,173 1,133 1,119 77 4,384 5,457 5,591 5,767 5,074 5,298 5,044 4,980 78 Claims on foreigners 127,734 119,280 111,828 112,529 110,325 112,865 110,224 109,301 109,826 110,833 79 Other branches of parent bank 37,000 36,565 37,953 32,418 32,110 30,600 31,576 30,394 30,218 30,807 30 50,767 43,352 37,443 40,504 37,858 40,482 39,250 39,257 39,393 38,824 31 Public borrowers 6,240 5,898 5,334 5,112 5,482 5,735 5,644 5,949 6,065 5,793 32 Nonbank foreigners 33,727 33,465 31,098 34,495 34,875 36,048 33,754 33,161 34,150 35,409 33 Other assets 5,979 5,019 4,882 5,127 5,466 5,817 5,225 5,226 5,504 5,601 34 Total payable in U.S. dollars 123,740 126,012 112,809 108,731 108,024 108,699 108,626 108,566 105,272 104,719 35 Claims on United States 26,761 33,756 26,868 31,505 32,569 32,553 32,085 35,292 32,360 32,644 36 Parent bank 22,756 28,756 21,495 25,358 26,495 26,210 26,568 29,470 26,874 27,393 3 3 8 7 N Ot o h n e b r a b n a k n s k 2 s in United States2 5.1XX) 4 1 , , 0 3 1 6 0 3 4 1 , , 9 2 0 4 0 7 4 1 , , 8 1 8 9 0 4 5 1 , , 1 2 3 0 8 5 4 1 , , 5 0 1 0 2 5 4 1 , , 7 0 3 8 3 9 4 1 , , 4 0 3 4 9 7 4 1 , , 2 0 3 1 4 7 39 Claims on foreigners 92,228 88,917 82,945 74,301 72,323 72,842 73,482 70,356 69,621 69,145 40 Other branches of parent bank 31,648 31.838 33,607 26,596 26,719 24,989 26,011 25,083 24,474 24,944 41 36,717 32,188 26,805 25,458 23,888 25,667 26,139 24,013 23,598 22,032 47 Public borrowers 4,329 4,194 4,030 3,633 3,966 3,982 3,999 4,252 4,367 4,223 43 Nonbank foreigners 19,534 20.697 18,503 18,614 17,750 18,204 17,333 17,008 17,182 17,946 44 Other assets 4,751 3.339 2,996 2,925 3,132 3,304 3,059 2,918 3,291 2,930 Bahamas and Caymans 45 Total, all currencies 145,156 152,083 146,811 135,519 135,262 133,645 142,055 130,413 128,851 135,210 46 Claims on United States 59,403 75.309 77,296 72,744 73,572 69,923 74,874 68,576 68,304 71,672 47 34,653 48,720 49,449 47,299 47,918 45,811 50,553 44,586 43,866 46,813 48 Other banks in United States2 Q 11,544 11,138 10,812 10,082 11,223 9,867 9,815 10,776 49 16,303 14,307 14,842 14,030 13,098 14,123 14,623 14,083 50 Claims on foreigners 81,450 72,868 65,598 59,466 58,467 60,503 63,894 58,510 56,958 59,833 51 Other branches of parent bank 18,720 20,626 17,661 15,428 15,856 17,050 19,042 16,468 15,872 19,686 5? 42,699 36,842 30,246 27,087 25,861 26,768 28,182 25,476 25,268 24,697 53 Public borrowers 6,413 6,093 6,089 6,598 6,417 6,440 6,458 6,320 6,186 6,197 54 Nonbank foreigners 13,618 12,592 11,602 10,353 10,333 10,245 10,212 10,246 9,632 9,253 55 Other assets 4,303 3,906 3,917 3,309 3,223 3,219 3,287 3,327 3,589 3,705 56 Total payable in U.S. dollars 139,605 145,641 141,562 130,135 129,787 127,997 136,794 124,981 122,980 129,187 1. Beginning with June 1984 data, reported claims held by foreign branches 2. Data for assets vis-a-vis other banks in the United States and vis-a-vis have been reduced by an increase in the reporting threshold for "shell" branches nonbanks are combined for dates before June 1984. from $50 million to $150 million equivalent in total assets, the threshold now applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • July 1986 3.14 Continued 1985 1986 Sept. Oct. Nov. Dec. Jan. Feb. Mar.P All foreign countries 57 Total, all currencies 469,712 477,090 453,656 456,676 454,492 455,935 458,076 447,529' 448,213 457,755 58 Negotiable CDs3 n.a. n.a. 37,725 39,676 38,044 36,607 34,607 34,597 33,458 36,066 59 To United States 179,015 188,070 147,583 143,556 140,142 143,169 155,273 142,207' 138,153 139,941 60 Parent bank 75,621 81,261 78,739 78,631 75,479 81,171 83,649 76,805' 73,445 74,553 61 Other banks in United States 33,405 29,453 18,409 17,017 15,602 15,49V 16,894 14,724 13,988 15,432 62 NonbanKs 69,989 77,356 50,435 47,908 49,061 46,542' 54,730 50,678 50,720 49,956 63 To foreigners 270,853 269,685 247,907 250,345 252,253 252,171' 246,006 249,598' 254,277 259,939 64 Other branches of parent bank 90,191 90,615 93,909 87,854 88,539 88,438 89,529 86,351 86,336 91,084 65 Banks 96,860 92,889 78,203 82,421 82,470 81,871 76,878 84,158' 83,850 84,746 66 Official institutions 19,614 18,896 20,281 21,020 21,322 21,658 19,523 19,935' 21,854 20,648 67 Nonbank foreigners 64,188 68,845 55,514 59,050 59,922 60,204' 60,076 59,154' 62,237 63,461 68 Other liabilities 19,844 19,335 20,441 23,099 24,053 23,954 22,190 21,127' 22,325 21,809 69 Total payable in U.S. dollars 379,270 388,291 367,145 350,394 346,883 345,810 353,470 337,194' 330,813 338,805 70 Negotiable CDs3 n.a. n.a. 35,227 35,695 33,995 32,838 31 063 31,182 30,202 32,418 71 To United States 175,528 184,305 143,571 136,917 134,266 137,070' 149,896 136,809 132,063 133,760 72 Parent bank 73,295 79,035 76,254 74,778 71,996 77,892 80,623 73,897 70,109 71,231 73 Other banks in United States 33,040 28,936 17,935 16,092 15,128 14,926' 16,264 14,011 13,292 14,641 74 Nonbanks 69,193 76,334 49,382 46,047 47,142 44,252' 53,009 48,901 48,662 47,888 75 To foreigners 192,510 194,139 178.260 167,785 168,378 165,359' 163,361 160,112 159,691 164,656 76 Other branches of parent bank 72,921 73,522 77,770 69,606 70,007 69,261 70,943 67,174 66,033 70,793 77 Banks 57,463 57,022 45,123 41,180 41,559 39,682 37,323 38,469 36,716 37,472 78 Official institutions 15,055 13,855 15,773 16,224 16,010 15,905 14,354 14,796 15,819 14,703 79 Nonbank foreigners 47,071 51,260 39,594 40,775 40,802 40,511' 40,741 39,673 41,123 41,688 80 Other liabilities 11,232 9,847 10,087 9,997 10,244 10,543 9,150 9,091' 8,857 7,971 United Kingdom 81 Total, all currencies 161,067 158,732 144,385 150,276 149,607 152,456 148,599 150,835 148,788 150,414 82 Negotiable CDs3 n.a. n.a. 34,413 35,819 33,913 32,708 31,260 30,788 29,419 32,217 83 To United States 53,954 55,799 25,250 25,547 24,958 27,933 29,422 29,901 26,705 22,945 84 Parent bank 13,091 14,021 14,651 14,592 13,893 18,167 19,330 19,845 16,783 13,706 85 Other banks in United States 12,205 11,328 3,125 3,526 2,602 2,453 2,974 2,264 1,965 2,511 86 Nonbanks 28,658 30,450 7,474 7,429 8,463 7,313 7,118 7,792 7,957 6,728 87 To foreigners 99,567 95,847 77,424 79,671 80,646 81,446 78,525 80,724 82,666 85,493 88 Other branches of parent bank 18,361 19,038 21,631 20,233 20,175 21,932 23,389 21,858 21,954 24,194 89 Banks 44,020 41,624 30,436 32,041 33,102 32,200 28,581 32,326 32,088 33,280 90 Official institutions 11,504 10,151 10,154 10,824 10,812 10,519 9,676 10,093 10,956 9,750 91 Nonbank foreigners 25,682 25,034 15,203 16,573 16,557 16,795 16,879 16,447 17,668 18,269 92 Other liabilities 7,546 7,086 7,298 9,239 10,090 10,369 9,392 9,422 9,998 9,759 93 Total payable in U.S. dollars 130,261 131,167 117,497 112,816 111,263 112,681 112,697 112,073 108,402 107,911 94 Negotiable CDs3 n.a. n.a. 33,070 33,380 31,574 30,570 29,337 28,845 27,655 30,042 95 To United States 53,029 54,691 24,105 23,329 22,854 25,581 27,756 28,150 24,967 21,070 96 Parent bank 12,814 13,839 14,339 13,995 13,350 17,651 18,956 19,461 16,513 13,387 97 Other banks in United States 12,026 11,044 2,980 3,309 2,479 2,295 2,826 2,090 1,835 2,314 98 Nonbanks 28,189 29,808 6,786 6,025 7,025 5,635 5,974 6,599 6,619 5,369 99 To foreigners 73,477 73,279 56,923 52,245 52,469 52,091 51,980 50,762 51,686 52,711 100 Other branches of parent bank 14,300 15,403 18,294 15,999 15,480 16,687 18,493 16,614 16,829 18,683 101 Banks 28,810 29,320 18,356 15,787 17,053 15,840 14,344 14,872 14,457 14,725 102 Official institutions 9,668 8,279 8,871 9,055 8,877 8,357 7,661 8,242 8,747 7,839 103 Nonbank foreigners 20,699 20,277 11,402 11,404 11,059 11,207 11,482 11,034 11,653 11,464 104 Other liabilities 3,755 3,197 3,399 3,862 4,366 4,439 3,624 4,316 4,094 4,088 Bahamas and Caymans 105 Total, all currencies 145,156 152,083 146,811 135,519 135,262 133,645 142,055 130,413 128,851 135,210 106 Negotiable CDs3 n.a. n.a. 615 686 745 747 610 1,076 1,237 1,132 107 To United States 104,425 111,299 102,955 94,375 92,978 92,508 103,548 91,943 91,705 97,310 108 Parent bank 47,081 50,980 47,162 44,647 43,083 43,509 44,546 38,850 39,380 43,535 109 Other banks in United States 18,466 16,057 13,938 12,092 11,946 11,874 12,778 11,185 10,854 11,604 110 Nonbanks 38,878 44,262 41,855 37,636 37,949 37,125 46,224 41,908 41,471 42.171 111 To foreigners 38,274 38,445 40,320 37,668 38,787 37,307 35,053 35,271 33,773 34,444 112 Other branches of parent bank 15,796 14,936 16,782 16,023 17,201 15,593 14,075 14,755 13,072 13,881 113 Banks 10,166 11,876 12,405 11,420 11,120 10,954 10,669 11,108 10,842 10,346 114 Official institutions 1,967 1,919 2,054 1,763 1,872 2,278 1,776 1,505 1,737 1,743 115 Nonbank foreigners 10,345 11,274 9,079 8,462 8,594 8,482 8,533 7,903 8,122 8,474 116 Other liabilities 2,457 2,339 2,921 2,790 2,752 3,083 2,844 2,123 2,136 2,324 117 Total payable in U.S. dollars 141,908 148,278 143,582 131,226 130,992 129,575 138,322 126,536 124,572 131,004 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 1986 IItteemm 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar.'' 1 Total1 177,950 180,552 180,328 178,331 179,971 178,743 180,773 180,205 181,154 By type 2 Liabilities reported by banks in the United States2 25,534 26,089 25,889 27,014 29,276 26,611 28,233 26,326 25,486 3 U.S. Treasury bills and certificates3 54,341 59,976 56,493 54,398 54,331 53,252 53,294 54,420 55,933 U.S. Treasury bonds and notes 4 Marketable 68,514 69,019 76,181 74,972 74,735 77,447 77,809 78,428 78,822 5 Nonmarketable4 7,250 5,800 3,550 3,550 3,550 3,550 3,550 3,150 2,750 6 U.S. securities other than U.S. Treasury securities5 22,311 19,668 18,215 18,397 18,079 17,883 17,887 17,881 18,163 By area 7 Western Europe1 67,645 69,776 74,514 74,257 76,832 74,290 74,355 72,696 72,428 8 Canada 2,438 1,528 1,561 1,586 1,507 1,314 1,118 1,762 1,445 9 Latin America and Caribbean 6,248 8,561 10,539 10,100 10,871 11,121 11,506 10,228 10,414 10 Asia 92,572 93,954 88,326 87,288 85,876 86,995 89,088 90,268 91,516 11 Africa 958 1,264 1,397 1,410 1,629 1,824 1,897 1,786 1,846 12 Other countries6 8,089 5,469 3,991 3,690 3,256 3,199 2,809 3,465 3,505 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 1985 IItteemm 11998822 11998833 11998844 Mar. June Sept.' Dec.'' 1 Banks' own liabilities 4,844 5,219 8,586 7,992 10,238 12,901 15,168 2 Banks' own claims 7,707 7,231 11,984 12,618' 14,179 15,233 16,088 3 Deposits 4,251 2,731 4,998 5,941 7,308' 8,540 8,329 4 Other claims 3,456 4,501 6,986 6,677' 6,871' 6,693 7,759 5 Claims of banks' domestic customers1 676 1,059 569 440 243 328 832 1. Assets owned by customers of the reporting bank located in the United NOTE. Data on claims exclude foreign currencies held by U.S. monetary States that represent claims on foreigners held by reporting banks for the accounts authorities, of their domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • July 1986 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1985 1986 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998822 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar.P 1 All foreigners 307,056 369,607 407,306 420,758' 417,541' 421,341' 434,671 430,836' 436,422 440,076 2 Banks' own liabilities 227,089 279,087 306,898 323,339' 321,857R 324,049' 340,373 335,036' 340,060 344,046 3 Demand deposits 15,889 17,470 19,571 20,926 18,450 20,940' 21,107 19,648' 19,659 20,195 4 Time deposits' 68,797 90,632 110,413 115,186R 114,438 114,314' 116,716 114,241' 116,623 116,364 Other2 23,184 25,874 26,268 29,789' 28,932 29,856 29,468 30,805' 31,479 32,233 6 Own foreign offices3 119,219 145,111 150,646 157,438' 160,037' 158,939' 173,082 170,342' 172,298 175,255 7 Banks' custody liabilities4 79,967 90,520 100,408 97,419 95,684 97,292 94,298 95,800' 96,362 96,030 8 U.S. Treasury bills and certificates5 55,628 68,669 76,368 73,398 72,163 7733,,118899 6688,,778855 6699,,880011 7722,,663311 7722,,771144 9 Other negotiable and readily transferable instruments6 20,636 17,467 18,747 17,160 16,755 16,979 17,964 17,946' 15,547 15,327 10 Other 3,702 4,385 5,293 6,861 6,766 7,124 7,549 8,054 8,184 7,989 11 Nonmonetary international and regional organizations7 4,922 5,957 4,454 7,467 6,766 7,803 5,566 7,487 9,997 5,228 12 Banks' own liabilities 1,909 4,632 2,014 3,275 1,842 1,535 2.366 2,714 4,456 1,409 13 Demand deposits 106 297 254 243 143 252 85 96 184 102 14 Time deposits' 1,664 3,584 1,267 2,261 1,299 1,051 2,067 2,369 4,022 397 15 Other2 139 750 493 771 399 233 214 250 250 910 16 Banks' custody liabilities4 3,013 1,325 2,440 4,192 4,924 6,268 3,200 4,773 5,540 3,820 17 U.S. Treasury bills and certificates 1,621 463 916 2,759 33,,663366 55,,006699 11,,773366 3,216 4,219 22,,331111 18 Other negotiable and readily transferable instruments6 1,392 862 1,524 1,433 1,287 1,195 1,464 11,,555566 1,322 1,508 19 Other 0 0 0 0 1 5 0 11 0 0 20 Official institutions8 71,647 79,876 86,065 82,382 81,412 83,608 79,862 81,527' 80,746 81,419 21 Banks' own liabilities 16,640 19,427 19,039 20,262 21,178 23,323 20,825 22,590' 21,926 21,733 22 Demand deposits 1,899 1,837 1,823 2,151 1,707 2,018 2,077 1,638 1,602 1,917 23 Time deposits' 5,528 7,318 9,374 8,954 10,277 10,523 10,935 10,680' 10,189 10,396 24 Other2 9,212 10,272 7,842 9,157 9,195 10,783 7,813 10,272 10,136 9,419 25 Banks' custody liabilities4 55,008 60,448 67,026 62,120 60,234 60,284 59,037 58,937 58,820 59,686 26 U.S. Treasury bills and certificates5 46,658 54,341 59,976 5566,,449933 5544,,339988 5544,,333311 5533,,225522 5533,,229944 5544,,442200 5555,,993333 27 Other negotiable and readily transferable instruments6 8,321 6,082 6,966 5,492 5,767 5,848 5,711 5,526 4,052 3,585 28 Other 28 25 84 135 69 105 75 117 348 168 29 Banks9 185,881 226,887 248,893 257,69c 256,379' 255,021' 274,991 266,460' 269,777 278,586 30 Banks' own liabilities 169,449 205,347 225,368 235,063' 234,428' 233,188' 252,290 243,740' 247,116 255,604 31 Unaffiliated foreign banks 50,230 60,236 74,722 77,625 74,391 74,249' 79,208 73,397' 74,818 80,350 32 Demand deposits 8,675 8,759 10,556 10,468 9,045 10,043 10,271 9,792 9,659 9,692 33 Time deposits' 28,386 37,439 47,095 48,744R 47,833 46,809' 48,962 44,662' 45,617 50,115 34 Other2 13,169 14,038 17,071 18,413' 17,514 17,397 19,975 18,943' 19,543 20,542 35 Own foreign offices3 119,219 145,111 150,646 157,438' 160,037' 158,939' 173,082 170,342' 172,298 175,255 36 Banks' custody liabilities4 16,432 21,540 23,525 22,627 21,951 21,832 22,701 22,720' 22,661 22,982 37 U.S. Treasury bills and certificates 5,809 10,178 11,448 9,952 99,,889977 99,,442299 99,,555544 99,,222233 99,,550011 99,,886699 38 Other negotiable and readily transferable instruments6 7,857 7,485 7,236 6,462 5,906 5,853 6,153 6,006' 5,876 5,752 39 Other 2,766 3,877 4,841 6,213 6,148 6,551 6,994 7,491 7,283 7,361 40 Other foreigners 44,606 56,887 67,894 73,219 72,984 74,909' 74,251 75,362' 75,902 74,842 41 Banks' own liabilities 39,092 49,680 60,477 64,740 64,409 66,002' 64,892 65,992' 66,561 65,301 42 Demand deposits 5,209 6,577 6,938 8,064 7,555 8,627' 8,673 8,122 8,214 8,484 4 4 4 3 O Ti t m he e r2 d eposits 33,2 6 1 6 9 4 42,2 8 9 1 0 3 52,6 8 7 6 8 1 55 1 , , 2 4 2 4 7 9 55 1 , , 0 8 2 2 9 5 55 1 , , 9 4 3 4 2 4 54 1 , , 7 4 5 6 2 7 56 1 , , 5 3 3 40 0 ' 56 1 , , 7 5 9 5 6 0 55 1 , , 4 36 5 1 6 45 Banks' custody liabilities4 5,514 7,207 7,417 8,479 8,575 8,907 9,359 9,370 9,341 9,542 46 U.S. Treasury bills and certificates 1,540 3,686 4,029 4,193 44,,223322 44,,336600 44,,224433 44,,006688'' 44,,449911 44,,660011 47 Other negotiable and readily transferable instruments6 3,065 3,038 3,021 3,774 3,795 4,084 4,636 4,858 4,297 4,482 48 Other 908 483 367 513 548 463 480 444 553 459 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 14,307 10,346 10,476 9,228 9,088 9,152 9,845 9,628' 7,386 6,603 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 1986 AArreeaa aanndd ccoouunnttrryy 11998822 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar./' 1 Total 307,056 369,607 407,306 420,758' 417,541' 421,341' 434,671 430,836' 436,422 440,076 2 Foreign countries 302,134 363,649 402,852 413,291' 410,775' 413,538' 429,105 423,349' 426,425 434,848 3 Europe 117,756 138,072 153,145 157,222' 158,857' 163,433' 163,438 161,234' 157,052 157,231 4 Austria 519 585 615 767 613 655 693 692 769 1,665 5 Belgium-Luxembourg 2,517 2,709 4,114 5,725 5,262 5,556 5,214 5,189' 4,732 4,265 6 Denmark 509 466 438 778 558 624 513 536 533 536 7 Finland 748 531 418 350 594 497 491 373 506 354 8 France 8,171 9,441 12,701 15,741 15,984 15,863 15.540 15,595' 15,148 15,905 9 Germany 5,351 3,599 3,358 5,224 4,366 7,265 4,835 5,622 5,309 5,690 10 Greece 537 520 699 593 536 574 664 612 551 535 11 Italy 5,626 8,462 10,762 9,088 9,717 9,069 9,642 7,739 7,235 7,215 1? Netherlands 3,362 4,290 4,731 4,568 4,295 4,359 4,212 4,069 4,027 4,332 13 Norway 1,567 1,673 1,548 1,043 1,132 1,008 848 781 552 469 14 Portugal 388 373 597 641 647 619 652 706' 685 705 15 Spain 1,405 1,603 2,082 2,140 2,094 2,122 2,113 1,899 1,794 1,771 16 Sweden 1,390 1,799 1,676 1,668 1,760 1,482 1,344 1,622 1,693 1,565 17 Switzerland 29,066 32,246 31,740 29,290 28,495 28.992 28,742 26,119 25,606 26,736 18 Turkey 296 467 584 516 417 288 429 504 404 383 19 United Kingdom 48,172 60,683 68,671 70,497' 73,877' 74,595' 76,571 80,563' 80,106 78,559 70 Yugoslavia 499 562 602 647 626 675 673 595 600 535 7.1 Other Western Europe1 7,006 7,403 7,192 7,432 7,403 8,619 9,635 7,643 6,311 5,360 7? U.S.S.R 50 65 79 37 51 36 105 43 64 63 23 Other Eastern Europe2 576 596 537 477 429 533 523 332' 427 588 24 Canada 12,232 16,026 16,059 17,358 16,288 16,428' 17,426 18,037 21,466 22,496 ?5 Latin America and Caribbean 114,163 140,088 153,381 157,480 156,319' 155,202' 167,745 161,389' 161,044 164,228 76 Argentina 3,578 4,038 4,394 5,634 5,872 5,899 6,029 5,786 5,551 5,155 77 Bahamas 44,744 55,818 56,897 53,694 54,518 53,394' 57,621 53,809' 54,630 55,268 78 Bermuda 1,572 2,266 2,370 2,124 2,238 2,415 2,765 2,596 2,147 2,324 79 Brazil 2,014 3,168 5,275 5,894 5,861 5,614 5,369 6,049 5,759 6,071 30 British West Indies 26,381 34,545 36,773 38,931 37,163 35,858' 42,645 40,469 41,127 43,942 31 Chile 1,626 1,842 2,001 1,907 1,940 2,867 2,042 2,019 1,997 2,083 37 Colombia 2,594 1,689 2,514 2,599 2,562 2,920 3,102 3,336 3,140 3,079 33 Cuba 9 8 10 13 64 7 11 16 6 7 34 Ecuador 455 1,047 1,092 1,251 1,029 1,253' 1,238 1,211 1,172 1,207 35 Guatemala 670 788 896 1,005 957 1,087 1,071 1,146 1,132 1,127 36 Jamaica 126 109 183 144 122 150 122 244 126 144 37 Mexico 8,377 10,392 12,303 13,809 13,610 13,948 14,045 13,702 13,433 12,980 38 Netherlands Antilles 3,597 3,879 4,220 4,973 4,666 4,612' 4,875 4,696 4,560 4,570 39 Panama 4,805 5,924 6,951 7,168 7,343' 6,502' 7,492 7,416 7,161 7,216 40 Peru 1,147 1,166 1,266 1,159 1,093 1,124 1,166 1,124 1,100 1,176 41 Uruguay 759 1,244 1,394 1,576 1,498 1,534 1,549 1,730 1,727 1,567 47 Venezuela 8,417 8,632 10,545 11,121 11,404 11,345 11,919 11,467 11,741 11,670 43 Other Latin America and Caribbean 3,291 3,535 4,297 4,479 4,381 4,673' 4,683 4,571 4,534 4,641 44 48,716 58,570 71,187 73,292 71,643 71,047 72,266 74,841' 78,767 82,647 China 45 Mainland 203 249 1,153 1,937 1,809 1,380 1,594 1,003 1,624 1,410 46 Taiwan 2,761 4,051 4,990 6,280 6,455 7,427 7,799 9,092' 9,661 10,840 47 Hong Kong 4,465 6,657 6,581 7,924 7,964 8,170 8,062 8,215 8,194 8,643 48 India 433 464 507 644 473 562 711 606 630 926 49 Indonesia 857 997 1,033 1,363 1,570 1,381 1,466 1,524 1,738 2,107 50 Israel 606 1,722 1,268 1,189 2,118 1,595 1,595 1,459' 1,358 1,451 51 Japan 16,078 18,079 21,640 23,597 22,059 21,689 23,077 25,047 26,397 28,273 5? Korea 1,692 1,648 1,730 1,657 1,751 1,685 1,665 1,503 1,602 1,551 53 Philippines 770 1,234 1,383 1,607 1,325 1,189 1,140 942' 1,086 978 54 Thailand 629 747 1,257 1,029 1,014 1,066 1,358 1,199 1,141 1,103 55 Middle-East oil-exporting countries3 13,433 12,976 16,804 15,352 15,252 14,941 14,523 15,174' 16,308 15,384 56 Other Asia 6,789 9,748 12,841 10,713 9,852 9,961 9,276 9,076' 9,028 9,980 57 Africa 3,124 2,827 3,396 3,635 3,723 3,989 4,883 4,643 4,359 4,260 58 Egypt 432 671 647 923 885 780 1,363 1,080 987 870 59 Morocco 81 84 118 157 140 145 163 98 92 91 60 South Africa 292 449 328 370 404 462 388 567 421 465 61 Zaire 23 87 153 115 136 140 163 73 92 95 6? Oil-exporting countries4 1,280 620 1,189 1,049 1,076 1,407 1,494 1,644 1,614 1,601 63 Other Africa 1,016 917 961 1,021 1,082 1,056 1,312 1,182 1,152 1,137 64 Other countries 6,143 8,067 5,684 4,303 3,945 3,440 3,347 3,205 3,739 3,986 65 Australia 5,904 7,857 5,300 3,762 3,451 2,906 2,779 2,707 3,024 3,236 66 All other 239 210 384 541 494 534 568 498 714 750 67 Nonmonetary international and regional organizations 4,922 5,957 4,454 7,467 6,766 7,803 5,566 7,487 9,997 5,228 68 International 4,049 5,273 3,747 6,542 5,779' 6,952 4,551 6,109 8,801 4,139 69 Latin American regional 517 419 587 796 646 580 894 909 863 916 70 Other regional5 357 265 120 129 341' 271 121 470 333 173 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 • July 1986 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 1986 AArreeaa aanndd ccoouunnttrryy 11998822 11998833 11998844 Sept.' Oct. Nov. Dec. Jan. Feb. Mar.P 1 Total 355,705 391,312 400,162' 390,612 381,103' 384,515' 403,209 386,367' 389,768 394,695 2 Foreign countries 355,636 391,148 399,363' 390,230 380,334' 383,903' 402,178 385,075' 388,959 394,212 3 Europe 85,584 91,927 99,014' 106,091 102,194' 106,915' 108,360 104,277' 100,225 100,352 4 Austria 229 401 433 763 673 614 598 485 542 494 5 Belgium-Luxembourg 5,138 5,639 4,794 6,147 5,882 6,801 5,741 5,831 5,276 5,428 6 Denmark 554 1.275 648 615 636 558 706 864 940 845 7 Finland 990 1,044 898 905 789 909 823 843 741 1,194 8 France 7,251 8,766 9,157 11,029 10,190 9,785 9,134 9,058' 7,990 8,596 y Germany 1,876 1,284 1,306 999 1,036 1,355 1,257 1,211' 1,306 1,374 10 Greece 452 476 817 1,004 966 854 991 933 884 798 n Italy 7,560 9,018 9,119 7,394 7,597 7,765 8,833 7,482' 6,948 7,297 12 Netherlands 1,425 1,267 1,356 1,297 1,110 1,389 1,258 1,248 1,249 1,394 13 Norway 572 690 675 858 788 755 697 692 652 613 14 Portugal 950 1,114 1,243 1,189 1,141 1,123 1,058 1,040' 936 897 13 Spain 3,744 3,573 2,884 2,401 2,310 2,199 1,908 1,801' 1,897 1,866 16 Sweden 3,038 3,358 2,230 2,474 2,643 2,546 2,203 2,174 2,278 2,422 17 Switzerland 1,639 1,863 2,123 3,091 2,604 3,162 3,161 2,836 2,361 2,940 18 Turkey 560 812 1,130 1,269 1,355 1,269 1,200 1,512 1,519 1,587 19 United Kingdom 45,781 47,364 56,185' 60,641 58,106' 61,655' 64,594 62,356' 60,574 57,953 20 Yugoslavia 1,430 1,718 1,886 1,880 1,867 1,879 1,964 1,901 1,953 1,899 21 Other Western Europe1 368 477 596 685 1,206 1,082 998 716' 734 1,166 22 U.S.S.R 263 192 142 199 165 128 130 169 287 424 23 Other Eastern Europe2 1,762 1,598 1,389 1,252 1,131 1,086 1,107 1,126' 1,159 1,164 24 Canada 13,678 16,341 16,109' 16,965 15,941 16,209 16,466 17,279' 18,281 17,945 25 Latin America and Caribbean 187,969 205,491 207,862 194,050 190,779' 191,663 202,401 188,975' 190,645 196,770 26 Argentina 10,974 11,749 11,050 11,433 11,236 11,486 11,462 11,463 11,594 11,455 27 Bahamas 56,649 59,633 58,009 53,424 51,256' 49,015 57,756 49,712' 49,614 55,776 28 Bermuda 603 566 592 480 1,017 498 499 542 380 460 29 Brazil 23,271 24,667 26,315 25,416 25,397 25,376 25,283 25,209 25,159 25,381 30 British West Indies 29,101 35,527 38,205 35,096 34,258 37,063 38,640 34,345' 36,447 36,820 31 Chile 5,513 6,072 6,839 6,192 6,145 6,198 6,603 6,525 6,487 6,557 32 Colombia 3,211 3,745 3,499 3,183 3,210 3,222 3,259 3,185 3,044 22,,990044 33 Cuba 3 0 0 0 4 0 0 0 0 11 34 Ecuador 2,062 2,307 2,420 2,423 2,411 2,419 2,390 2,439 2,369 2,399 35 Guatemala3 124 129 158 168 168 197 194 174 167 168 36 Jamaica3 181 215 252 228 222 222 224 228 213 213 37 Mexico 29,552 34,802 34,885 31,833 31,720 32,424 32,255 31,826 32,102 31,582 38 Netherlands Antilles 839 1,154 1,350 1,170 1,387 1,071 1,340 1,022 1.043 927 39 Panama 10,210 7,848 7,707 7,108 6,526 6,519 6,650 6,532 5.881 6,193 40 Peru 2,357 2,536 2,384 2,069 2,016 1,990 1,947 1,874 1,891 1,806 41 Uruguay 686 977 1,088 989 947 954 960 966 956 961 42 Venezuela 10,643 11,287 11,017 10,863 10,838 10,876 10,871 10,947 11,302 11,195 43 Other Latin America and Caribbean 1,991 2,277 2,091 1,977 2,022 2,135 2,067 1,984' 1,995 1,973 44 Asia 60,952 67,837 66,316 64,398 62,847 60.578' 66,166 6655,,889988'' 7711,,115511 70,714 China 45 Mainland 214 292 710 1,148 997 748 639 750 820 902 46 Taiwan 2,288 1,908 1,849 1,476 1,329 1,258 1,535 1,300' 1,286 1,400 47 Hong Kong 6,787 8,489 7,293 7,718 6,917 6,472 6,796 6,923 7,607 8,208 48 India 222 330 425 461 388 439 450 332 284 481 49 Indonesia 348 805 724 695 653 608 698 692 793 710 50 Israel 2,029 1,832 2,088 1,875 1,901 1,958 1,991 1,834 1,697 1,616 51 Japan 28,379 30,354 29,066 27,002 28,558 26,768' 31,209 32,232' 36,475 36,711 52 Korea 9,387 9,943 9,285 9,192 9,096 8,908 9,241 8,839' 9,098 9,240 53 Philippines 2,625 2,107 2,555 2,412 2,239 2,285 2,224 2,206 2,236 2,336 54 Thailand 643 1,219 1,125 787 756 788 840 793 766 810 55 Middle East oil-exporting countries4 3,087 4,954 5,044 4,845 4,576 4,239 4,298 3,975 3,869 3,577 56 Other Asia 4,943 5,603 6,152 6,785 5,436 6,106 6,245 6,021 6,218 4,722 57 Africa 5,346 6,654 6,615 5,641 5,463 5,394' 5,407 5,416 5,459 5,128 58 Egypt 322 747 728 634 668 685 721 677 690 653 5y Morocco 353 440 583 592 610 584 575 591 612 646 60 South Africa 2,012 2,634 2,795 2,062 1,968 1,848 1,942 1,965 1,948 1,796 61 Zaire 57 33 18 22 21 21 20 18 19 17 62 Oil-exporting countries5 801 1,073 842 828 674 677 630 582 568 488 63 Other 1,802 1,727 1,649 1,503 1,521 1,579' 1,520 1,584 1,621 1,528 64 Other countries 2,107 2,898 3,447 3,087 3,111 3,144 3,379 3,230 3,199 3,305 65 Australia 1,713 2,256 2,769 2,304 2,293 2,341 2,401 2,409 2,367 2,480 66 All other 394 642 678 783 818 803 978 821 832 825 67 Nonmonetary international and regional organizations6 68 164 800 382 768 612 1,030 1,292 809 483 1. Includes the Bank for International Settlements. Beginning April 1978, also 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and includes Eastern European countries not listed in line 23. United Arab Emirates (Trucial States). 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German 5. Comprises Algeria, Gabon, Libya, and Nigeria. Democratic Republic, Hungary, Poland, and Romania. 6. Excludes the Bank for International Settlements, which is included in 3. Included in "Other Latin America and Caribbean" through March 1978. "Other Western Europe." 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 1986 TTyyppee ooff ccllaaiimm 11998822 11998833 11998844 Sept.' Oct. Nov. Dec. Jan.' Feb. Mar.P 1 Total 333333399999996666666,,,,,,,000000011111115555555 444444422222226666666,,,,,,,222222211111115555555 444444433333333333333,,,,,,,000000077777778888888''''''' 444444422222224444444,,,,,,,000000088888881111111 444444433333332222222,,,,,,,000000099999990000000 339944,,669955 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 333333355555555555555,,,,,,,777777700000005555555 333333399999991111111,,,,,,,333333311111112222222 444444400000000000000,,,,,,,111111166666662222222''''''' 333333399999990000000,,,,,,,666666611111112222222 381,103' 384,515' 444444400000003333333,,,,,,,222222200000009999999 386,367 389,768 339944,,669955 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 44444445555555,,,,,,,444444422222222222222 55555557777777,,,,,,,555555566666669999999 66666662222222,,,,,,,222222233333337777777 66666660000000,,,,,,,333333388888882222222 60,132 59,920 66666660000000.......333333333333331111111 60,469 60,655 6600,,334422 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 111111122222227777777,,,,,,,222222299999993333333 111111144444446666666,,,,,,,333333399999993333333 111111155555556666666,,,,,,,222222211111116666666 111111155555559999999,,,,,,,555555522222220000000 156,011 158,752 111111177777776666666,,,,,,,555555533333335555555 163,983 168,955 117733,,999977 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222221111111,,,,,,,333333377777777777777 111111122222223333333,,,,,,,888888833333337777777 111111122222224444444,,,,,,,999999933333332222222''''''' 111111111111118888888,,,,,,,000000044444447777777 113,664' 115,189' 111111111111116666666,,,,,,,222222244444444444444 111,957 110,507 111100,,554433 66 DDeeppoossiittss 44444444444444,,,,,,,222222222222223333333 44444447777777,,,,,,,111111122222226666666 44444449999999,,,,,,,222222222222226666666''''''' 44444449999999,,,,,,,888888800000006666666 47,345' 47,610' 44444447777777,,,,,,,444444411111116666666 45,694 44,181 4444,,887799 77 OOtthheerr 77777777777777,,,,,,,111111155555553333333 77777776666666,,,,,,,777777711111111111111 77777775555555,,,,,,,777777700000006666666 66666668888888,,,,,,,222222244444442222222 66,319' 67,578 66666668888888,,,,,,,888888822222229999999 66,263 66,326 6655,,666633 88 AAllll ootthheerr ffoorreeiiggnneerrss 66666661111111,,,,,,,666666611111114444444 66666663333333,,,,,,,555555511111114444444 55555556666666,,,,,,,777777777777777777777 55555552222222,,,,,,,666666666666663333333 51,296 50,654 55555550000000,,,,,,,000000099999998888888 49,958 49,651 4499,,881144 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 44444440000000,,,,,,,333333311111110000000 33333334444444,,,,,,,999999900000003333333 33333332222222,,,,,,,999999911111116666666 33333333333333,,,,,,,444444466666668888888 22222228888888,,,,,,,888888888888881111111 2222222,,,,,,,444444499999991111111 2222222,,,,,,,999999966666669999999 3333333,,,,,,,333333388888880000000 3333333,,,,,,,333333311111114444444 3333333,,,,,,,333333333333335555555 11 Negotiable and readily transferable 33333330000000,,,,,,,777777766666663333333 22222226666666,,,,,,,000000066666664444444 22222223333333,,,,,,,888888800000005555555 22222224444444,,,,,,,888888822222227777777 11111119999999.......333333333333332222222 12 Outstanding collections and other 7777777,,,,,,,000000055555556666666 5555555,,,,,,,888888877777770000000 5555555,,,,,,,777777733333332222222 5555555,,,,,,,333333322222227777777 6666666,,,,,,,222222211111114444444 13 MEMO: Customer liability on 33333338888888,,,,,,,111111155555553333333 33333337777777,,,,,,,777777711111115555555 33333337777777,,,,,,,111111100000003333333 33333330000000,,,,,,,111111199999995555555 22222228888888,,,,,,,111111188888880000000 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 .... 42,499 46,337 40,714 38,205 37,632 37,856 37,307 38,318 n.a. 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 1985 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998822 11998833 11998844 Mar. June Sept. Dec. 1 Total 228,150 243,715 243,952 241,379' 232,485' 232,360' 227,238 By borrower 2 Maturity of 1 year or less1 173,917 176,158 167,858 167,004' 159,383' 162,262' 160,162 3 Foreign public borrowers 21,256 24,039 23,912 23,688 23,764' 26,466 26,312 4 All other foreigners 152,661 152,120 143,947 143,316' 135,619' 135,797' 133,850 5 Maturity of over 1 year1 54,233 67,557 76,094 74,374 73,102 70,098' 67,076 6 Foreign public borrowers 23,137 32,521 38,695 38,187' 37,554' 36,257 34,510 7 All other foreigners 31,095 35,036 37,399 36,188' 35,549' 33,841' 32,566 By area Maturity of 1 year or less1 8 Europe 50,500 56,117 58,498 61,596' 56,369' 58,403' 56,425 9 Canada 7,642 6,211 6,028 7,588' 6,100' 6,386 10 Latin America and Caribbean 73,291 73,660 62,791 60,447' 63,517' 62,973' 63,040 11 37,578 34,403 33,504 30,903 27,569 29,049 27,779 12 Africa 3,680 4,199 4,442 4,109 4,003 3,954 3,753 13 All other2 1,226 1,569 2,593 2,360 11,,776644 1,782 22,,777799 Maturity of over 1 year1 14 Europe 11,636 13,576 9,605 8,545 8,739 8,078 7,643 15 Canada 1,931 1,857 1,882 2,181 2,116 1,932 1,804 16 Latin America and Caribbean 35,247 43,888 56,144 55,411 53,507 52,049 50,662 17 3,185 4,850 5,323 5,221 5,123 5,217' 4,502 18 Africa 1,494 2,286 2,033 1,963 1,996 1,665 1,538 19 All other2 740 1,101 1,107 1,053 1,622 1,157 926 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 • July 1986 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks' Billions of dollars, end of period 1984 1985 AArreeaa oorr ccoouunnttrryy 11998811 11998822 11998833 Mar. June7 Sept. Dec. Mar. June Sept. Dec.P 1 Total 415.2 438.7 437.3 435.1 432.4 411.9 409.2 411.3 402.5 403.9 403.5 2 G-10 countries and Switzerland 175.5 179.7 168.0 166.0 157.9 148.2 148.0 152.8 146.9 153.1 155.7 3 Belgium-Luxembourg 13.3 13.1 12.4 11.0 10.9 9.8 8.8 9.4 9.0 9.6 9.2 4 France 15.3 17.1 16.3 15.9 14.2 14.3 14.1 14.6 13.6 14.9 12.6 5 Germany 12.9 12.7 11.3 11.7 10.9 10.0 9.0 8.9 9.6 9.9 11.0 6 Italy 9.6 10.3 11.4 11.2 11.5 9.7 10.1 10.0 8.5 8.4 9.7 V Netherlands 4.0 3.6 3.5 3.4 3.0 3.4 3.9 3.8 3.7 3.4 3.9 8 Sweden 3.7 5.0 5.1 5.2 4.3 3.5 3.2 3.1 2.8 3.1 2.7 9 Switzerland 5.5 5.0 4.3 4.3 4.2 3.9 3.9 4.2 4.0 4.1 4.4 10 United Kingdom 70.1 72.1 65.4 65.1 60.6 57.5 60.0 65.1 65.7 68.0 66.9 11 Canada 10.9 10.4 8.3 8.6 8.9 8.1 7.9 9.0 8.0 7.5 8.0 12 Japan 30.2 30.2 29.9 29.7 29.3 27.9 27.2 24.8 22.0 24.3 27.3 13 Other developed countries 28.4 33.7 36.1 35.7 37.2 36.4 33.9 33.0 32.5 32.3 30.5 14 Austria 1.9 1.9 1.9 2.0 1.9 1.8 1.6 1.6 1.6 1.7 1.5 15 Denmark 2.3 2.4 3.4 3.4 3.1 2.9 2.2 2.1 1.9 2.1 2.4 16 Finland 1.7 2.2 2.4 2.1 2.3 1.9 1.9 1.8 1.8 1.8 1.6 17 Greece 2.8 3.0 2.8 3.0 3.3 3.2 2.9 2.9 2.9 2.8 2.6 18 Norway 3.1 3.3 3.3 3.2 3.2 3.2 3.0 2.9 2.9 3.4 2.9 19 Portugal 1.1 1.5 1.5 1.4 1.7 1.6 1.4 1.4 1.3 1.4 1.3 20 Spain 6.6 7.5 7.1 7.1 7.3 6.9 6.5 6.4 5.9 6.2 5.8 21 Turkey 1.4 1.4 1.7 1.9 2.0 2.0 1.9 1.9 2.0 2.1 1.9 22 Other Western Europe 2.1 2.3 1.8 1.8 1.9 1.7 1.7 1.7 1.8 1.7 2.0 23 South Africa 2.8 3.7 4.7 4.8 4.7 5.0 4.5 4.2 3.9 3.3 3.2 24 Australia 2.5 4.4 5.5 5.2 5.8 6.3 6.2 6.2 6.4 5.8 5.2 25 OPEC countries2 24.8 27.4 28.9 28.6 27.0 25.2 25.8 25.4 23.8 24.1 21.8 26 Ecuador 2.2 2.2 2.2 2.1 2.1 2.1 2.2 2.2 2.3 2.3 2.2 27 Venezuela 9.9 10.5 9.9 9.7 9.5 9.2 9.3 9.3 9.3 9.2 8.9 28 Indonesia 2.6 3.2 3.8 4.0 4.3 4.0 3.9 3.8 3.6 3.6 3.4 29 Middle East countries 7.5 8.7 10.0 9.8 8.4 7.4 8.2 7.8 6.6 6.7 5.7 30 African countries 2.5 2.8 3.0 3.0 2.7 2.5 2.3 2.3 2.2 2.3 1.6 31 Non-OPEC developing countries 96.3 107.1 111.6 112.2 113.5 112.7 112.9 111.8 111.0 111.2 106.8 Latin America 32 Argentina 9.4 8.9 9.5 9.5 9.2 9.1 8.7 8.6 8.6 9.3 8.9 33 Brazil 19.1 22.9 23.1 25.1 25.4 26.3 26.3 26.4 26.6 26.1 25.6 34 Chile 5.8 6.3 6.4 6.5 6.7 7.1 7.0 7.0 6.9 6.9 6.9 35 Colombia 2.6 3.1 3.2 3.1 3.0 2.9 2.9 2.8 2.7 2.6 2.7 36 Mexico 21.6 24.5 26.1 25.6 26.2 26.2 26.0 25.7 25.6 25.2 25.3 37 Peru 2.0 2.6 2.4 2.3 2.3 2.2 2.2 2.2 2.1 2.0 1.8 38 Other Latin America 4.1 4.0 4.2 4.4 4.1 3.9 3.9 3.7 3.6 3.5 3.4 Asia China 39 Mainland .2 .2 .3 .3 .6 .5 .7 .7 .3 1.1 .5 40 Taiwan 5.1 5.3 5.3 4.9 5.4 5.3 5.3 5.4 5.5 5.2 4.5 41 India .3 .6 1.0 1.0 1.0 1.1 1.0 1.0 1.0 1.2 1.4 42 2.1 2.3 1.9 1.6 1.9 1.7 1.8 1.7 2.3 1.5 1.6 43 Korea (South) 9.4 10.9 11.3 11.1 11.3 10.5 10.9 10.6 10.3 10.7 9.7 44 Malaysia 1.7 2.1 2.9 2.8 2.9 3.1 3.0 2.9 3.0 2.9 2.5 45 Philippines 6.0 6.3 6.2 6.7 6.3 5.9 6.0 6.1 6.0 6.1 5.8 46 Thailand 1.5 1.6 2.2 2.1 1.9 1.8 1.8 1.7 1.6 1.6 1.4 47 Other Asia 1.0 1.1 1.0 .9 1.1 1.0 1.2 1.1 1.0 1.1 1.1 Africa 48 Egypt 1.1 1.2 1.5 1.4 1.4 1.2 1.2 1.1 1.0 1.0 1.0 49 Morocco .7 .7 .8 .8 .8 .8 .8 .8 .8 .9 .9 50 .2 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 51 Other Africa3 2.3 2.4 2.3 2.2 1.9 1.9 2.1 2.2 2.0 2.0 1.9 52 Eastern Europe 7.8 6.2 5.3 4.9 4.9 4.5 4.4 4.3 4.3 4.6 4.1 53 U.S.S.R .6 .3 .2 .2 .2 .2 .1 .2 .3 .2 .1 54 Yugoslavia 2.5 2.2 2.4 2.3 2.3 2.3 2.3 2.2 2.2 2.5 2.2 55 Other 4.7 3.7 2.8 2.5 2.4 2.1 2.0 1.9 1.8 1.9 1.8 56 Offshore banking centers 63.7 66.8 70.5 71.4 74.6 67.4 67.0 66.9 66.8 61.4 67.4 57 Bahamas 19.0 19.0 21.8 24.6 27.5 23.8 21.5 21.9 22.0 16.9 21.6 58 Bermuda .7 .9 .9 .7 .7 1.0 .9 .7 .9 .8 .7 59 Cayman Islands and other British West Indies 12.4 12.9 12.2 12.0 12.2 11.1 11.7 12.4 12.4 12.5 13.4 60 Netherlands Antilles 3.2 3.3 4.2 3.3 3.3 3.1 3.4 3.3 3.2 2.3 2.3 61 Panama4 7.7 7.6 6.0 6.3 6.6 5.7 6.8 5.7 5.5 6.2 6.2 62 Lebanon .2 .1 .1 .1 .1 .1 .1 .1 .1 .0 .1 63 Hong Kong 11.8 13.9 15.0 14.4 13.9 13.1 12.8 12.9 13.1 13.2 13.3 64 Singapore 8.7 9.2 10.3 10.0 10.3 9.5 9.8 10.0 9.7 9.4 9.8 65 Others5 .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 18.8 17.9 17.0 16.3 17.4 17.4 17.3 17.1 17.3 17.6 17.1 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 1984 1985 Type, and area or country 998811 11998822 11998833 Dec. Mar. June Sept/ Dec." 1 Total 28,618 27,512 25,346 29,357 26,243 24,591 25,184 27,018 2 Payable in dollars 24,909 24,280 22,233 26,389 23,466 21,945 22,364 23,811 3 Payable in foreign currencies 3,709 3,232 3,113 2,968 2,777 2,646 2,820 3,208 By type 4 Financial liabilities 12,157 11,066 10,572 14,509 11,722 11,489 11,743 12,856 5 Payable in dollars 9,499 8,858 8,700 12,553 9,873 9,533 9,780 10,835 6 Payable in foreign currencies 2,658 2,208 1,872 1,955 1,849 1,956 1,963 2,021 7 Commercial liabilities 16,461 16,446 14,774 14,849 14,521 13,103 13,441 14,162 8 Trade payables 10,818 9,438 7,765 7,005 7,052 5,854 5,694 6,685 9 Advance receipts and other liabilities. 5,643 7,008 7,009 7,843 7,469 7,249 7,747 7,477 10 Payable in dollars 15,409 15,423 13,533 13,836 13,593 12,413 12,584 12,976 11 Payable in foreign currencies 1,052 1,023 1,241 1,013 928 690 857 1,186 By area or country Financial liabilities 12 Europe 6,825 6,501 5,742 6,728 6,138 5,934 6,534 7,146 13 Belgium-Luxembourg 471 505 302 471 298 351 367 329 14 France 709 783 843 995 896 865 849 857 15 Germany 491 467 502 489 506 474 493 419 16 Netherlands 748 711 621 590 619 604 624 745 17 Switzerland 715 792 486 569 541 566 593 676 18 United Kingdom 3,565 3,102 2,839 3,297 3,039 2,825 3,318 3,822 19 Canada 963 746 764 863 840 850 826 760 20 Latin America and Caribbean 3,356 2,751 2,596 5,086 3,147 3,106 2,619 3,152 21 Bahamas 1,279 904 751 1,926 1,341 1,107 1,145 1,120 22 Bermuda 7 14 13 13 25 10 4 4 23 Brazil 22 28 32 35 29 27 23 29 24 British West Indies 1,241 1,027 1,041 2,103 1,521 1,734 1,234 1,814 25 Mexico 102 121 213 367 25 32 28 15 26 Venezuela 98 114 124 137 3 3 3 3 27 Asia 976 1,039 1,424 1,777 1,555 1,555 1,728 1,765 28 Japan 792 715 991 1,209 1,033 965 1,098 1,148 29 Middle East oil-exporting countries2 75 169 170 155 124 147 82 82 30 Africa 14 17 19 14 12 14 14 12 0 0 0 0 0 0 0 0 31 Oil-exporting countries3 24 12 27 41 31 30 22 21 32 All other4 Commercial liabilities 3,770 3,831 3,245 4,001 3,519 3,485 3,897 4,011 33 Europe 71 52 62 48 37 53 56 62 34 Belgium-Luxembourg 573 598 437 438 401 425 431 453 35 France 545 468 427 622 590 431 601 607 36 Germany 220 346 268 245 272 284 386 364 37 Netherlands 424 367 241 257 233 353 289 379 38 Switzerland 880 1,027 732 1,095 752 740 858 976 39 United Kingdom 40 Canada 897 1,495 1,841 1,975 1,727 1,494 1,383 1,449 41 Latin America and Caribbean 1,044 1,570 1,473 1,871 1,717 1,244 1,262 1,088 42 Bahamas 2 16 1 7 11 12 2 12 43 Bermuda 67 117 67 114 112 77 105 77 44 Brazil 67 60 44 124 101 90 120 58 45 British West Indies 2 32 6 32 21 1 15 44 46 Mexico 340 436 585 586 654 492 415 430 47 Venezuela 276 642 432 636 395 309 311 212 48 Asia 9,384 8,144 6,741 5,285 5,721 5,259 5,353 6,046 49 Japan 1,094 1,226 1,247 1,256 1,241 1,232 1,567 1,799 50 Middle East oil-exporting countries2' 7,008 5,503 4,178 2,372 2,786 2,396 2,109 2,829 51 Africa 703 753 553 588 765 633 572 587 52 Oil-exporting countries3 344 277 167 233 294 265 235 238 53 All other4 664 651 921 1,128 1,070 988 975 982 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • July 1986 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 Dec. Mar. June Sept. Dec.'' 1 Total 36,185 28,725 34,911 29,839 28,672 26,968 28,487r 28,071 2 Payable in dollars 32,582 26,085 31,815 27,242 26,100 24,339 25,621' 25,769 3 Payable in foreign currencies 3,603 2,640 3,0% 2,597 2,571 2,629 2,866 2,302 By type 4 Financial claims 21,142 17,684 23,780 19,192 18,375 16,512 19,024 18,031 5 Deposits 15,081 13,058 18,496 14,559 14,368 12,657 15,135 14,805 6 Payable in dollars 14,456 12,628 17,993 14,140 13,871 12,101 14,432 14,190 7 Payable in foreign currencies 625 430 503 420 497 556 704 615 8 Other financial claims 6,061 4,626 5,284 4,633 4,007 3,856 3,889 3,227 9 Payable in dollars 3,599 2,979 3,328 3,190 2,442 2,375 2,351 2,192 10 Payable in foreign currencies 2,462 1,647 1,956 1,442 1,565 1,480 1,538 1,035 11 Commercial claims 15,043 11,041 11,131 10,646 10,297 10,456 9,463' 10,040 12 Trade receivables 14,007 9,994 9,721 9,177 8,784 9,089 7,988' 8,750 13 Advance payments and other claims 1,036 1,047 1,410 1,470 1,513 1,367 1,475' 1,290 14 Payable in dollars 14,527 10,478 10,494 9,912 9,787 9,863 8,839' 9,387 15 Payable in foreign currencies 516 563 637 735 510 592 624 652 By area or country Financial claims 16 Europe 4,5% 4,873 6,488 5,754 5,774 5,445 6,452' 6,306 17 Belgium-Luxembourg 43 15 37 15 29 15 12 10 18 France 285 134 150 126 92 51 132 184 19 Germany 224 178 163 224 196 175 158 223 20 Netherlands 50 97 71 66 81 46 127 61 21 Switzerland 117 107 38 66 46 16 53 74 22 United Kingdom 3,546 4,064 5,817 4,856 5,042 4,867 5,725 5,492 23 Canada 6,755 4,377 5,989 3,979 3,934 3,747 4,022 3,256 24 Latin America and Caribbean 8,812 7,546 10,234 8,170 7,612 6,475 7,450 7,650 25 Bahamas 3,650 3,279 4,771 3,282 3,018 2,153 2,290 2,638 26 Bermuda 18 32 102 6 4 6 5 6 27 Brazil 30 62 53 100 98 % 92 78 28 British West Indies 3,971 3,255 4,206 4,021 3,924 3,657 4,504 4,440 29 Mexico 313 274 293 215 201 206 201 180 30 Venezuela 148 139 134 125 101 100 73 48 31 Asia 758 698 764 %1 856 639 %9 696 32 Japan 366 153 297 353 509 281 725 475 33 Middle East oil-exporting countries2 37 15 4 13 6 6 6 4 34 Africa 173 158 147 210 101 111 104 103 35 Oil-exporting countries3 46 48 55 85 32 25 31 29 36 All other4 48 31 159 117 97 95 26 21 Commercial claims 37 Europe 5,405 3,826 3,670 3,801 3,360 3,689 3,235' 3,533 38 Belgium-Luxembourg 234 151 135 165 149 212 158 175 39 France 776 474 459 440 375 408 36C 426 40 Germany 561 357 349 374 358 375 336' 346 41 Netherlands 299 350 334 335 340 301 286 284 42 Switzerland 431 360 317 271 253 376 208 284 43 United Kingdom 985 811 809 1,063 885 950 779' 898 44 Canada %7 633 829 1,021 1,248 1,065 1,10c 1,023 45 Latin America and Caribbean 3,479 2,526 2,695 22,,005522 1,973 2,124 1,717' 1,808 46 Bahamas 12 21 8 88 9 11 18 13 47 Bermuda 223 261 190 115 164 65 62' 93 48 Brazil 668 258 493 214 210 193 211' 206 49 British West Indies 12 12 7 7 6 29 7 6 50 Mexico 1,022 775 884 583 493 616 4 W 510 51 Venezuela 424 351 272 206 192 224 149' 157 52 Asia 3,959 3,050 3,063 3,073 2,985 2,721 22,,771122'' 2,982 53 Japan 1,245 1,047 1,114 1,191 1,154 %8 888844 1,016 54 Middle East oil-exporting countries2 905 751 737 668 666 593 541' 638 55 Africa 772 588 588 470 510 522 434' 437 56 Oil-exporting countries3 152 140 139 134 141 139 131 130 57 All other4 461 417 286 229 221 336 264' 257 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 1986 1985 1986 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998844 11998855'' Jan.- Sept. Oct. Nov. Dec. Jan. Feb. Mar.P Mar. U.S. corporate securities STOCKS 1 Foreign purchases 59,834 81,819 32,816 4,802 7,244' 8,409 11,172' 8,729' 10,585 13,502 2 Foreign sales 62,814 76,851 26,455 4,690 6,560 7,137 9,010' 6,987 8,828 10,640 3 Net purchases, or sales (—) -2,980 4,968 6,361 112 684' 1,273 2,161' 1,743' 1,756 2,862 4 Foreign countries -3,109 4,884 6,306 163 656' 1,362 1,996 1,755' 1,737 2,815 5 Europe -3,077 2,068 4,770 170 554 948 1,339 1,173' 1,393 2,204 6 France -405 -438 -156 -120 -82 -85 -105 -63 -68 -26 7 Germany -50 730 598 29 235 270 283 134 234 229 8 Netherlands -357 -122 396 25 33 47 125 109 121 166 9 Switzerland -1,542 -75 1,406 -87 125 107 280 288' 420 698 in United Kingdom -677 1,674 2,269 293 210 579 700 615' 634 1,021 II Canada 1,691 355 139 34 -31 -70 93 121 -59 77 i? Latin America and Caribbean 495 1,718 344 -35 89' 243 305 -68' 213 198 13 Middle East1 -1,992 238 316 54 8 -174 227 208 -19 127 14 Other Asia -378 313 544 -26 -16 384 -25 268' 154 122 15 Africa -22 24 115 0 -4 -1 12 25 30 59 16 Other countries 175 168 78 -34 55 32 44 26 24 28 17 Nonmonetary international and regional organizations 129 84 55 -51 28 -89 165 -12 2200 4477 BONDS2 18 Foreign purchases 39,296 87,176 27,912 7,482 7,401 12,466 9,755 6,065' 9,284 12,564 19 Foreign sales 26,199 43,068 15,102 3,634' 2,786 4,284 4,558 2,939 4,936 7,227 20 Net purchases, or sales (—) 13,096 44,109 12,811 3,848' 4,614 8,182 5,197 3,126' 4,348 5,337 21 Foreign countries 12,799 44,203 12,464 4,174' 4,768 7,824 5,555 3,229' 4,199 5,036 7? Europe 11,697 40,042 9,844 3,947' 3,662 6,835 5,176 2,840' 3,121 3,883 ?3 France 207 210 -24 42 8 -15 0 27 -33 -17 24 Germany 1,724 2,001 -90 159 308 897 408 -2 45 -132 75 Netherlands 100 222 113 -4 0 158 13 85 3 25 76 Switzerland 643 3,987 1,306 154 249 804 1,013 235 511 560 77 United Kingdom 8,429 32,757 8,460 3,517' 3,036 4,903 3,696 2,471' 2,616 3,374 78 Canada -62 189 -226 -31 42 110 19 2 -31 -198 79 Latin America and Caribbean 376 498 246 -64 81 124 68 18 27 200 30 Middle East1 -1,030 -2,643 -159 -187 11 -215 -435 -174 0 15 31 Other Asia 1,817 6,068 2,749 508 966 975 703 541 1,064 1,144 37 Africa 1 11 2 0 1 0 4 1 1 0 33 Other countries 0 38 9 1 6 -5 19 2 17 -10 34 Nonmonetary international and regional organizations 297 -95 347 -326 -154 358 --335588 -103 114499 301 Foreign securities 35 Stocks, net purchases, or sales (-) -1,101 -3,895 -2,088 -217' -49' -303' -413 123 -772 -1,440 36 Foreign purchases 14,816 21,006 9,061 1,563' 2,168' 2,159' 2,740 2,509' 2,933 3,618 37 Foreign sales 15,917 24,902 11,149 1,780' 2,217' 2,462' 3,153 2,386' 3,705 5,058 38 Bonds, net purchases, or sales (-) -3,930 -4,018 -4,036 -417' -756' 272' -138 -67 -966 -3,003 39 Foreign purchases 56,017 81,153 32,652 6,833' 8,538 9,000' 8,370 9,796 10,418 12,438 40 Foreign sales 59,948 85,171 36,688 7,250' 9,294' 8,728' 8,507 9,862 11,385 15,441 41 Net purchases, or sales (—), of stocks and bonds .... -5,031 -7,913 -6,124 -635' -805' -31' -551 57 -1,738 -4,443 42 Foreign countries -4,642 -8,977 -6,029 —870' -793' -254' -886 -31 -1,879 -4,119 43 Europe -8,655 -9,926 -6,137 -762' -635' -1,046' -424 -379 -1,918 -3,840 44 Canada 542 -1,686 -1,029 2 -27 112' -394 -219 -319 -491 45 Latin America and Caribbean 2,460 1,850 638 191 48 32 85 220 297 121 46 1,356 667 1,086 -318' -179' 814' -352 395 563 127 47 Africa -108 75 21 -2 -5 37' 42 7 10 4 48 Other countries -238 43 -608 19 6 -204 156 -56 -512 -40 49 Nonmonetary international and regional organizations -389 1,063 -96 235 -13 223 335 88 140 -324 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, ties sold abroad by U.S. corporations organized to finance direct investments Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). abroad. 2. Includes state and local government securities, and securities of U.S. government agencies and corporations. Also includes issues of new debt securi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • July 1986 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1986 1985 1986 Country or area 11998844 11998855 Jan.- Mar. Sept. Oct. Nov. Dec. Jan. Feb. Mar.f Transactions, net purchases or sales (-) during period1 1 Estimated total2 21,501 29,786' 8,499 6,547' -647' 2,500"- 6,460' -1,359 292 9,566 2 Foreign countries2 16,496 29,303' 5,295 4,002' -116' 2,276' 3,066' -884 3,823 2,355 3 Europe2 11,014 3,918' 3,739 96C -699' -995' 180 114 1,818 1,808 4 Belgium-Luxembourg 287 476 -165 49 10 29 -44 33 -2 -196 5 Germany2 2,929 1,917 913 294 17 -101 302 132 459 322 6 Netherlands 449 269 -174 127 -126 155 -82 26 -261 61 7 Sweden 40 976 -22 -33 -41 -42 -41 -200 193 -14 8 Switzerland2 656 760 205 25 116 -151 -116 68 115 22 9 United Kingdom 5,188 -2,186' 2,801 285 -733' -584' 50 -60 1.388 1,474 10 Other Western Europe 1,466 1,706 180 214 58 -301 111 116 -75 138 11 Eastern Europe 0 0 0 0 0 0 0 0 0 0 12 Canada 1,586 -190 170 106 138 -394 -71 -461 -131 762 13 Latin America and Caribbean 1,418 4,312 918 562 125 735 90 107 584 227 14 Venezuela 14 238 10 2 91 72 -41 -53 -63 127 15 Other Latin America and Caribbean 536 2,343 704 556 110 367 265 86 448 171 16 Netherlands Antilles 869 1,731 204 4 -76 296 -133 74 200 -70 17 2,431 20,839' 221 2,237' 248' 2,979' 2,833' -584 1,251 -446 18 Japan 6,289 18,859 880 1,884 1,630 3,039 902 -861 1,601 140 19 -67 112 -38 0 9 1 9 -8 -12 -18 20 All other 114 311 284 137 63 -51 25 -52 314 22 21 Nonmonetary international and regional organizations 5,009 483' 3,206 2,545 -530 224' 3,393 -474 -3,532 7.212 22 International 4,612 -394 2,997 1,883 -430 -15 3,001 -194 -3,766 6,957 23 Latin American regional 0 18 88 -1 0 8 7 14 51 23 MEMO 24 Foreign countries2 16,496 29,303' 5,295 4,002' -116' 2,276' 3,066' -884 3,823 2,355 25 Official institutions 505 8,427' 1,375 1,064 -1,209 -236' 2,712' 362 619 394 26 Other foreign2 15,992 20,876' 3,919 2,938' 1,093' 2,512' 355 -1,246 3,204 1,961 Oil-exporting countries 27 Middle East3 -6,270 -1,576' -686 -826' -814' -413' 740 222 -301 -607 28 Africa4 -101 7 1 0 4 0 2 1 0 -2 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria. notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on Apr. 30, 1986 Rate on Apr. 30, 1986 Rate on Apr. 30, 1986 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria.. 4.0 Aug. 1985 France1 7.50 Apr. 1986 Norway 8.0 June 1983 Belgium . 8.75 Apr. 1986 Germany, Fed. Rep. of ... 3.5 Mar. 1986 Switzerland 4.0 Mar. 1983 Brazil... 49.0 Mar. 1981 Italy 14.0 Mar. 1986 United Kingdom2. Canada.. 9.23 Apr. 1986 Japan 3.5 Apr. 1986 Venezuela 8.0 Oct. 1985 Denmark 7.0 Oct. 1983 Netherlands 4.5 Mar. 1986 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 1986 CCoouunnttrryy,, oorr ttyyppee 11998833 11998844 11998855 Oct. Nov. Dec. Jan. Feb. Mar. Apr. 9.57 10.75 8.27 8.08 8.02 7.99 8.02 7.89 7.42 6.80 10.06 9.91 12.16 11.49 11.50 11.66 12.78 12.60 11.70 10.43 9.48 11.29 9.64 8.73 8.85 9.25 10.23 11.81 10.94 9.57 5.73 5.96 5.40 4.77 4.82 4.80 4.65 4.47 4.49 4.48 4.11 4.35 4.92 4.53 4.07 4.13 4.08 3.85 3.84 4.04 5.58 6.08 6.29 5.89 5.90 5.79 5.71 5.74 5.44 5.23 12.44 11.66 9.91 9.29 8.95 8.92 8.95 8.81 8.28 7.66 8 Italy 18.95 17.08 14.86 14.16 14.29 14.71 14.88 15.91 16.05 13.62 10.51 11.41 9.60 8.97 8.66 9.14 9.75 9.75 9.75 8.51 66..4499 66..3322 6.47 6.47 7.29 7.36 6.54 6.04 5.47 4.85 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • July 1986 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1985 1986 CCoouunnttrryy//ccuurrrreennccyy 11998833 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. 1 Australia/dollar1 90.14 87.937 70.026 67.74 68.11 70.00 69.93 70.79 72.28 2 Austria/schilling 17.968 20.005 20.676 18.236 17.658 17.151 16.389 15.976 15.965 3 Belgium/franc 51.121 57.749 59.336 52.474 51.251 49.843 47.748 46.603 46.394 4 Brazil/cruzeiro 573.27 1841.50 6205.10 8913.95 9915.71 11345.26 13020.00 13.843 13.84 5 Canada/dollar 1.2325 1.2953 1.3658 1.3765 1.3954 1.4070 1.4043 1.4009 1.3879 6 China, P R./yuan 1.9809 2.3308 2.9434 3.2086 3.2095 3.2095 3.2152 3.2202 3.2143 7 Denmark/krone 9.1483 10.354 10.598 9.3918 9.1221 8.9468 8.6048 8.4096 8.3928 8 Finland/markka 5.5636 6.0007 6.1971 5.5709 5.4824 5.4131 5.2465 5.1517 5.1235 9 France/franc 7.6203 8.7355 8.9799 7.9095 7.6849 7.4821 7.1575 6.9964 7.2060 10 Germany/deutsche mark 2.5539 2.8454 2.9419 2.5954 2.5122 2.4384 2.3317 2.2752 2.2732 11 Greece/drachma 87.895 112.73 138.40 153.037 150.186 148.69 143.48 141.43 142.50 12 Hong Kong/dollar 7.2569 7.8188 7.7911 7.8042 7.8064 7.8081 7.8042 7.8125 7.7957 13 India/rupee 10.1040 11.348 12.332 12.1010 12.1524 12.243 12.370 12.289 12.393 14 Ireland/pound1 124.81 108.64 106.62 119.19 122.48 124.75 129.79 132.87 133.71 15 Italy/lira 1519.30 1756.10 1908.90 1753.72 1713.50 1663.14 1588.21 1548.43 1559.45 16 Japan/yen 237.55 237.45 238.47 204.07 202.79 199.89 184.85 178.69 175.09 1/ Malaysia/ringgit 2.3204 2.3448 2.4806 2.4341 2.4291 2.4489 2.4704 2.5367 2.5981 18 Netherlands/guilder 2.8543 3.2083 3.3184 2.9230 2.8293 2.7489 2.6343 2.5678 2.5629 19 New Zealand/dollar1 66.790 57.837 49.752 57.230 52.633 51.657 53.177 52.820 56.127 20 Norway/krone 7.3012 8.1596 8.5933 7.8076 7.6524 7.5541 7.2789 7.1711 7.1603 21 Portugal/escudo 111.610 147.70 172.07 162.963 160.798 157.99 152.63 149.40 150.79 22 Singapore/dollar 2.1136 2.1325 2.2008 2.1084 2.1213 2.1289 2.1401 2.1600 2.1880 23 South Africa/rand1 89.85 69.534 45.57 37.57 37.05 42.40 47.94 49.04 48.77 24 South Korea/won 776.04 807.91 861.89 893.35 893.13 892.75 888.57 886.66 887.95 25 Spain/peseta 143.500 160.78 169.98 159.658 156.052 152.91 147.31 143.06 144.11 2 26 1 S ri Lanka/rupee 23.510 25.428 27.187 27.449 27.420 26.342 27.596 27.623 27.791 Sweden/krona 7.6717 8.2706 8.6031 7.8127 7.6817 7.5938 7.3997 7.2610 7.2433 28 Switzerland/franc 2.1006 2.3500 2.4551 2.1306 2.1042 2.0660 1.9547 1.9150 1.9016 29 Taiwan/dollar n.a. 39.633 39.889 39.981 39.906 39.405 39.239 39.027 38.689 30 Thailand/baht 22.991 23.582 27.193 26.315 26.715 26.676 26.492 26.418 26.429 31 United Kingdom/pound1 151.59 133.66 129.74 143.96 144.47 142.44 142.97 146.74 149.85 MEMO 32 United States/dollar2 125.34 138.19 143.01 128.08 125.80 123.65 118.77 116.05 115.67 1. Value in U.S. cents. 3. Currency reform. 2. Index of weighted-average exchange value of U ,S. dollar against currencies NOTE. Averages of certified noon buying rates in New York for cable transfers. of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76 Data in this table also appear in the Board's G.5 (405) release. For address, see global trade of each of the 10 countries. Series revised as of August 1978. For inside front cover. description and back data, see "Index of the Weighted-Average Exchange Value of the U.S. Dollar: Revision" on p. 700 of the August 1978 BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1986 All 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, December 31, 1984 August 1985 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1985 November 1985 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1985 January 1986 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1985 May 1986 A74 Terms of lending at commercial banks, May 1985 August 1985 A70 Terms of lending at commercial banks, August 1985 November 1985 A70 Terms of lending at commercial banks, November 1985 March 1986 A70 Terms of lending at commercial banks, February 1986 May 1986 A70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH EMMETT J. RICE 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 BOB S. MOORE, Special Assistant to the Board STANLEY J. SIGEL, Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board LEGAL DIVISION MICHAEL BRADFIELD, General Counsel DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., Deputy General Counsel RICHARD M. ASHTON, Associate General Counsel JAMES L. KICHLINE, Director OLIVER IRELAND, Associate General Counsel EDWARD C. ETTIN, Deputy Director RICKI R. TIGERT, Assistant General Counsel MICHAEL J. PRELL, Deputy Director MARYELLEN A. BROWN, Assistant to the General Counsel JARED J. ENZLER, Associate Director DAVID E. LINDSEY, Associate Director OFFICE OF THE SECRETARY ELEANOR J. STOCKWELL, Associate Director THOMAS D. SIMPSON, Deputy Associate Director WILLIAM W. WILES, Secretary LAWRENCE SLIFMAN, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary MARTHA BETHEA, Assistant Director JAMES MCAFEE, Associate Secretary SUSAN J. LEPPER, Assistant Director RICHARD D. PORTER, Assistant Director DIVISION OF CONSUMER PETER A. TINSLEY, Assistant Director AND COMMUNITY AFFAIRS LEVON H. GARABEDIAN, Assistant Director (Administration) GRIFFITH L. GARWOOD, Director JERAULD C. KLUCKMAN, Associate Director GLENN E. LONEY, Assistant Director DIVISION OF INTERNATIONAL FINANCE DOLORES S. SMITH, Assistant Director EDWIN M. TRUMAN, Director DIVISION OF BANKING LARRY J. PROMISEL, Senior Associate Director SUPERVISION AND REGULATION CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director WILLIAM TAYLOR, Director ROBERT F. GEMMILL, Staff Adviser WELFORD S. FARMER, Deputy Director' PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director FREDERICK R. DAHL, Associate Director DON E. KLINE, Associate Director RALPH W. SMITH, JR., Assistant Director FREDERICK M. STRUBLE, Associate Director WILLIAM A. RYBACK, Deputy Associate Director STEPHEN C. SCHEMERING, Deputy Associate Director RICHARD SPILLENKOTHEN, Deputy Associate Director HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director ANTHONY CORNYN, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer 1. On loan from the Federal Reserve Bank of Richmond. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff MARTHA R. SEGER MANUEL H. JOHNSON WAYNE D. ANGELL 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 CHARLES L. HAMPTON, Senior Technical Adviser PORTIA W. THOMPSON, Equal Employment Opportunity DIVISION OF FEDERAL RESERVE Programs Officer BANK OPERATIONS CLYDE H. FARNSWORTH, JR., Director DIVISION OF PERSONNEL ELLIOTT C. MCENTEE, Associate Director DAVID L. ROBINSON, Associate Director DAVID L. SHANNON, Director C. WILLIAM SCHLEICHER, JR., Associate Director JOHN R. WEIS, Assistant Director CHARLES W. BENNETT, Assistant Director CHARLES W. WOOD, Assistant Director ANNE M. DEBEER, Assistant Director JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director OFFICE OF THE CONTROLLER WILLIAM E. PASCOE III, Assistant Director JOHN H. PARRISH, Assistant Director GEORGE E. LIVINGSTON, Controller FLORENCE M. YOUNG, Adviser BRENT L. BOWEN, Assistant Controller DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director WALTER W. KREIMANN, Associate Director GEORGE M. LOPEZ, Assistant Director OFFICE OF THE EXECUTIVE DIRECTOR FOR INFORMATION RESOURCES MANAGEMENT ALLEN E. BEUTEL, Executive Director STEPHEN R. MALPHRUS, Assistant Director DIVISION OF HARDWARE AND SOFTWARE SYSTEMS BRUCE M. BEARDSLEY, Director THOMAS C. JUDD, Assistant Director ELIZABETH B. RIGGS, Assistant Director ROBERT J. ZEMEL, Assistant Director DIVISION OF APPLICATIONS DEVELOPMENT AND STATISTICAL SERVICES WILLIAM R. JONES, Director DAY W. RADEBAUGH, Assistant Director WILLIAM C. SCHNEIDER, JR., Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • July 1986 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL MANUEL H. JOHNSON EMMETT J. RICE ROGER GUFFEY THOMAS C. MELZER MARTHA R. SEGER KAREN N. HORN FRANK E. MORRIS HENRY C. WALLICH STEPHEN H. AXILROD, Staff Director and Secretary JOHN M. DAVIS, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary RICHARD G. DAVIS, Associate Economist NANCY M. STEELE, Deputy Assistant Secretary THOMAS E. DAVIS, Associate Economist MICHAEL BRADFIELD, General Counsel DONALD L. KOHN, Associate Economist JAMES H. OLTMAN, Deputy General Counsel DAVID E. LINDSEY, Associate Economist JAMES L. KICHLINE, Economist ALICIA H. MUNNELL, Associate Economist EDWIN M. TRUMAN, Economist (International) MICHAEL J. PRELL, Associate Economist ANATOL B. BALBACH, Associate Economist CHARLES J. SIEGMAN, 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 ROBERT L. NEWELL, FIRST DISTRICT, President WILLIAM H. BOWEN, EIGHTH DISTRICT, Vice President ROBERT L. NEWELL, First District HAL C. KUEHL, Seventh District JOHN F. MCGILLICUDDY, Second District WILLIAM H. BOWEN, Eighth District GEORGE A. BUTLER, Third District DEWALT H. ANKENY, JR., Ninth District JULIEN L. MCCALL, Fourth District F. PHILLIPS GILTNER, Tenth District JOHN G. MEDLIN, JR., Fifth District NAT S. ROGERS, Eleventh District BENNETT A. BROWN, Sixth District G. ROBERT TRUEX, JR., Twelfth District HERBERT V. PROCHNOW, SECRETARY WILLIAM J. KORSVIK, ASSOCIATE SECRETARY Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 and Advisory Councils CONSUMER ADVISORY COUNCIL MARGARET M. MURPHY, Columbia, Maryland, Chairman LAWRENCE S. OKINAGA, Honolulu, Hawaii, Vice Chairman RACHEL G. BRATT, Medford, Massachusetts FREDERICK H. MILLER, Norman, Oklahoma JONATHAN BROWN, Washington, D.C. ROBERT F. MURPHY, Detroit, Michigan MICHAEL S. CASSIDY, New York, New York HELEN NELSON, Mill Valley, California THERESA FAITH CUMMINGS, Springfield, Illinois SANDRA PARKER, Richmond, Virginia NEIL J. FOGARTY, Jersey City, New Jersey JOSEPH L. PERKOWSKI, Centerville, Minnesota STEVEN M. GEARY, Jefferson City, Missouri BRENDA SCHNEIDER, Detroit, Michigan KENNETH HALL, Jackson, Mississippi JANE SHULL, Phildelphia, Pennsylvania STEVEN W. HAMM, Columbia, South Carolina TED L. SPURLOCK, New York, New York ROBERT J. HOBBS, Boston, Massachusetts MEL STILLER, Boston, Massachusetts ROBERT W. JOHNSON, West Lafayette, Indiana CHRISTOPHER J. SUMNER, Salt Lake City, Utah JOHN M. KOLESAR, Cleveland, Ohio EDWARD J. WILLIAMS, Chicago, Illinois EDWARD N. LANGE, Seattle, Washington MERVIN WINSTON, Minneapolis, Minnesota FRED S. MCCHESNEY, Atlanta, Georgia MICHAEL ZOROYA, St. Louis, Missouri THRIFT INSTITUTIONS ADVISORY COUNCIL RICHARD H. DEIHL, Los Angeles, California, President MICHAEL R. WISE, Denver, Colorado, Vice President ELLIOTT G. CARR, Orleans, Massachusetts JAMIE J. JACKSON, Houston, Texas M. TODD COOKE, Philadelphia, Pennsylvania FRANCES LESNIESKI, East Lansing, Michigan JOHN C. DICUS, Topeka, Kansas DONALD F. MCCORMICK, Livingston, New Jersey HAROLD W. GREENWOOD, JR., Minneapolis, Minnesota HERSCHEL ROSENTHAL, Miami, Florida JOHN A. HARDIN, Rock Hill, South Carolina GARY L. SIRMON, Walla Walla, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, THE BANK HOLDING COMPANY MOVEMENT TO 1978: A Mail Stop 138, Board of Governors of the Federal Reserve COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to System, Washington, D.C. 20551. When a charge is indicat- one address, $2.25 each. ed, remittance should accompany request and be made INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; payable to the order of the Board of Governors of the Federal 10 or more to one address, $1.25 each. Reserve System. Remittance from foreign residents should PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. be drawn on a U.S. bank. Stamps and coupons are not $13.50 each. accepted. SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES: REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each. TIONS. 1984. 120 pp. FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updat- ANNUAL REPORT. ed at least monthly. (Requests must be prepaid.) ANNUAL REPORT: BUDGET REVIEW, 1985-86. Consumer and Community Affairs Handbook. $60.00 per FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or year. $2.00 each in the United States, its possessions, Canada, Monetary Policy and Reserve Requirements Handbook. and Mexico; 10 or more of same issue to one address, $60.00 per year. $18.00 per year or $1.75 each. Elsewhere, $24.00 per Securities Credit Transactions Handbook. $60.00 per year. year or $2.50 each. Federal Reserve Regulatory Service. 3 vols. (Contains all BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint three Handbooks plus substantial additional material.) of Part I only) 1976. 682 pp. $5.00. $175.00 per year. BANKING AND MONETARY STATISTICS. 1941-1970. 1976. Rates for subscribers outside the United States are as 1,168 pp. $15.00. follows and include additional air mail costs: ANNUAL STATISTICAL DIGEST Federal Reserve Regulatory Service, $225.00 per year. 1974-78. 1980. 305 pp. $10.00 per copy. Each Handbook, $75.00 per year. 1981. 1982. 239 pp. $ 6.50 per copy. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A 1982. 1983. 266 pp. $ 7.50 per copy. MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. 1983. 1984. 264 pp. $11.50 per copy. WELCOME TO THE FEDERAL RESERVE. 1984. 1985. 254 pp. $12.50 per copy. PROCESSING AN APPLICATION THROUGH THE FEDERAL RE- FEDERAL RESERVE CHART BOOK. Issued four times a year in SERVE SYSTEM. August 1985. 30 pp. February, May, August, and November. Subscription THE MONETARY AUTHORITY OF THE FEDERAL RESERVE, includes one issue of Historical Chart Book. $7.00 per May 1984. (High School Level.) year or $2.00 each in the United States, its possessions, WRITING IN STYLE AT THE FEDERAL RESERVE. August 1984. Canada, and Mexico. Elsewhere, $10.00 per year or 93 pp. $2.50 each. $3.00 each. REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT XIII AMERI- HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- CAN-GERMAN BIENNIAL CONFERENCE, March 1985. tion to the Federal Reserve Chart Book includes one REMARKS BY CHAIRMAN PAUL A. VOLCKER, TO THE EMPIRE issue. $1.25 each in the United States, its possessions, CLUB OF CANADA AND THE CANADIAN CLUB OF TO- Canada, and Mexico; 10 or more to one address, $1.00 RONTO, October 28, 1985. each. Elsewhere, $1.50 each. SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in the United States, its possessions, Canada, and Mexico; 10 or more of same issue to one address, $13.50 per year CONSUMER EDUCATION PAMPHLETS or $.35 each. Elsewhere, $20.00 per year or $.50 each. Short pamphlets suitable for classroom use. Multiple copies THE FEDERAL RESERVE ACT, as amended through August 31, available without charge. 1985. with an appendix containing provisions of certain other statutes affecting the Federal Reserve System. 576 pp. $7.00. Alice in Debitland REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- Consumer Handbook on Adjustable Rate Mortgages ERAL RESERVE SYSTEM. Consumer Handbook to Credit Protection Laws ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— The Equal Credit Opportunity Act and Business Credit Regulation Z) Vol. I (Regular Transactions). 1969. 100 Fair Credit Billing pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each Federal Reserve Glossary volume $2.25; 10 or more of same volume to one Guide to Federal Reserve Regulations address, $2.00 each. How to File A Consumer Credit Complaint FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY If You Borrow To Buy Stock UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one If You Use A Credit Card address, $1.50 each. Instructional Materials of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 Series on the Structure of the Federal Reserve System BLES: A REVIEW OF THE LITERATURE, by Victoria S. The Board of Governors of the Federal Reserve System Farrell with Dean A. DeRosa and T. Ashby McCown. The Federal Open Market Committee January 1984. Out of print. Federal Reserve Bank Board of Directors 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- Federal Reserve Banks DEUTSCHE MARK INTERVENTION, by Laurence R. Organization and Advisory Committees Jacobson. October 1983. 8 pp. U.S. Currency 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BE- What Truth in Lending Means to You TWEEN EXCHANGE RATES AND INTERVENTION: A REVIEW OF THE TECHNIQUES AND LITERATURE, by Kenneth Rogoff. October 1983. 15 pp. 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTER- VENTION, AND INTEREST RATES: AN EMPIRICAL IN- PAMPHLETS FOR FINANCIAL INSTITUTIONS VESTIGATION, by Bonnie E. Loopesko. November Short pamphlets on regulatory compliance, primarily suit- 1983. Out of print. able for banks, bank holding companies and creditors. 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET INTERVENTION: A REVIEW OF THE LITERATURE, by Ralph W. Tryon. October 1983. 14 pp. The Board of Directors' Opportunities in Community Rein- 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET vestment INTERVENTION: APPLICATIONS TO CANADA, GERMA- The Board of Directors' Role in Consumer Law Compliance NY, AND JAPAN, by Deborah J. Danker, Richard A. Combined Construction/Permanent Loan Disclosure and Haas, Dale W. Henderson, Steven A. Symansky, and Regulation Z Ralph W. Tryon. April 1985. 27 pp. Community Development Corporations and the Federal Re- 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECONOserve MY, by Darrell Cohen and Peter B. Clark. January Construction Loan Disclosures and Regulation Z 1984. 16 pp. Out of print. Finance Charges Under Regulation Z 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF How to Determine the Credit Needs of Your Community FINANCIAL DEREGULATION, INTERSTATE BANKING, Regulation Z: The Right of Rescission AND FINANCIAL SUPERMARKETS, by Stephen A. The Right to Financial Privacy Act Rhoades. February 1984. Out of print. Signature Rules in Community Property States: Regulation B 138. ANTITRUST LAWS, JUSTICE DEPARTMENT GUIDE- Signature Rules: Regulation B LINES, AND THE LIMITS OF CONCENTRATION IN LO- Timing Requirements for Adverse Action Notices: Regula- CAL BANKING MARKETS, by James Burke. June 1984. tion B 14 pp. What An Adverse Action Notice Must Contain: Regulation B 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN Understanding Prepaid Finance Charges: Regulation Z THE UNITED STATES, by Thomas D. Simpson and Patrick M. Parkinson. August 1984. 20 pp. 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF THE LITERATURE, by John D. Wolken. November STAFF STUDIES.- Summaries Only Printed in the 1984. 38 pp. Bulletin 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAY- Studies and papers on economic and financial subjects that MENT COSTS, by William Dudley. November 1984. are of general interest. Requests to obtain single copies of 15 pp. the full text or to be added to the mailing list for the series 142. MERGERS AND ACQUISITIONS BY COMMERCIAL may be sent to Publications Services. BANKS, 1960-83, by Stephen A. Rhoades. December 1984. 30 pp. 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF Staff Studies 115-125 are out of print. THE ELECTRONIC FUND TRANSFER ACT: RECENT SURVEY EVIDENCE, by Frederick J. Schroeder. April 1985. 23 pp. 114. MULTIBANK HOLDING COMPANIES: RECENT EVI- 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- DENCE ON COMPETITION AND PERFORMANCE IN SUMER CREDIT REGULATIONS: THE TRUTH IN LEND- BANKING MARKETS, by Timothy J. Curry and John T. ING AND EQUAL CREDIT OPPORTUNITY LAWS, by Rose. Jan. 1982. 9 pp. Gregory E. Elliehausen and Robert D. Kurtz. May 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- 1985. 10 pp. KET INTERVENTION, by Donald B. Adams and Dale 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME W. Henderson. August 1983. 5 pp. AND THEIR IMPACT ON CONSUMERS, by Glenn B. 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- Canner and Robert D. Kurtz. August 1985. 31 pp. VENTION: JANUARY-MARCH 1975, by Margaret L. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF Greene. August 1984. 16 pp. BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- by Thomas F. Brady. November 1985. 25 pp. VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) garet L. Greene. October 1984. 40 pp. INDEXES OF THE MONETARY AGGREGATES, by Helen 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- T. Farr and Deborah Johnson. December 1985. 42 pp. VENTION: OCTOBER I98O-OCTOBER 1981, by Margaret 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF L. Greene. August 1984. 36 pp. THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA- 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON IN- TION RESULTS, by Flint Brayton and Peter B. Clark. TERNATIONAL TRADE AND OTHER ECONOMIC VARIA- December 1985. 17 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS A Financial Perspective on Agriculture. 1/84. IN BANKING BEFORE AND AFTER ACQUISITION, by Survey of Consumer Finances, 1983. 9/84. Stephen A. Rhodes. April 1986. 32 pp. Bank Lending to Developing Countries. 10/84. 150. STATISTICAL COST ACCOUNTING MODELS IN BANK- Survey of Consumer Finances, 1983: A Second Report. ING: A REEXAMINATION AND AN APPLICATION, by 12/84. John T. Rose and John D. Wolken. May 1986. 13 pp. Union Settlements and Aggregate Wage Behavior in the 1980s. 12/84. The Thrift Industry in Transition. 3/85. A Revision of the Index of Industrial Production. 7/85. REPRINTS OF BULLETIN ARTICLES Financial Innovation and Deregulation in Foreign Industrial Most of the articles reprinted do not exceed 12 pages. Countries. 10/85. Recent Developments in the Bankers Acceptance Market. 1/86. The Commercial Paper Market since the Mid-Seventies. 6/82. The Use of Cash and Transaction Accounts by American Foreign Experience with Targets for Money Growth. 10/83. Families. 2/86. Intervention in Foreign Exchange Markets: A Summary of Financial Characteristics of High-Income Families. 3/86 Ten Staff Studies. 11/83. U. S. International Transactions in 1985. 5/86. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Index to Statistical Tables References are to pages A3-A68 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 7 Financial institutions, 26 Reserves and related items, 3, 4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Nonfinancial corporations, 36 Banks, by classes, 3, 18—20, 21 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 40, 41 Turnover, 15 Production, 47, 48 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) Dividends, corporate, 35 BANKERS acceptances, 9, 23, 24 Bankers balances, 18-20 (See also Foreigners) EMPLOYMENT, 45 Bonds (See also U.S. government securities) Eurodollars, 24 New issues, 34 Rates, 24 FARM mortgage loans, 39 Branch banks, 21, 55 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business activity, nonfinancial, 44 Federal credit agencies, 33 Business expenditures on new plant and equipment, 36 Federal finance Business loans (See Commercial and industrial loans) Debt subject to statutory limitation, and types and ownership of gross debt, 30 Receipts and outlays, 28, 29 CAPACITY utilization, 46 Treasury financing of surplus, or deficit, 28 Capital accounts Treasury operating balance, 28 Banks, by classes, 18 Federal Financing Bank, 28, 33 Federal Reserve Banks, 10 Federal funds, 5, 17, 19, 20, 21, 24, 28 Central banks, discount rates, 67 Federal Home Loan Banks, 33 Certificates of deposit, 24 Federal Home Loan Mortgage Corporation, 33, 38, 39 Commercial and industrial loans Federal Housing Administration, 33, 38, 39 Commercial banks, 16, 19 Federal Land Banks, 39 Weekly reporting banks, 19-21 Federal National Mortgage Association, 33, 38, 39 Commercial banks Federal Reserve Banks Assets and liabilities, 18-20 Condition statement, 10 Commercial and industrial loans, 16, 18, 19, 20, 21 Discount rates (See Interest rates) Consumer loans held, by type, and terms, 40, 41 U.S. government securities held, 4, 10, 11, 30 Loans sold outright, 19 Federal Reserve credit, 4, 5, 10, 11 Nondeposit funds, 17 Federal Reserve notes, 10 Real estate mortgages helo, by holder and property, 39 Federal Savings and Loan Insurance Corporation insured Time and savings deposits, 3 institutions, 26 Commercial paper, 23, 24, 37 Federally sponsored credit agencies, 33 Condition statements (See Assets and liabilities) Finance companies Construction, 44, 49 Assets and liabilities, 37 Consumer installment credit, 40, 41 Business credit, 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 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

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

A79 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Joseph A. Baute Frank E. Morris George N. Hatsopoulos Robert W. Eisenmenger NEW YORK* 10045 John Brademas E. Gerald Corrigan Clifton R. Wharton, Jr. Thomas M. Timlen Buffalo 14240 Mary Ann Lambertsen 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 James E. Haas 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 30303 John H. Weitnauer, Jr. Robert P. Forrestal Bradley Currey, Jr. Jack Guynn Delmar Harrison Birmingham 35283 A. G. Trammell Fred R. Hen- Jacksonville 32231 E. William Nash, Jr. James D. Hawkins Miami 33152 Sue McCourt Cobb Patrick K. Barron Nashville 37203 Patsy R. Williams Jeffrey J. Wells New Orleans 70161 Sharon A. Perlis Henry H. Bourgaux CHICAGO* 60690 Robert J. Day Silas Keehn Marcus Alexis Daniel M. Doyle Detroit 48231 Robert E. Brewer 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 William C. Ballard, Jr. James E. Conrad Memphis 38101 G. Rives Neblett Paul I. Black, Jr. MINNEAPOLIS 55480 John B. Davis, Jr. Gary H. Stern Michael W. Wright Thomas E. Gainor Helena 59601 Marcia S. Anderson 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 S. 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 James L. Stull El Paso 79999 Peyton Yates Joel L. Koonce, Jr. Houston 77252 Walter M. Mischer, Jr. J.Z. Rowe San Antonio 78295 Ruben M. Garcia Thomas H. Robertson SAN FRANCISCO 94120 Alan C. Furth Robert T. Parry Fred W. Andrew Richard T. Griffith Los Angeles 90051 Richard C. Seaver Robert M. McGill Portland 97208 Paul E. Bragdon Angelo S. Carella Salt Lake City 84125 Don M. Wheeler E. Ronald Liggett Seattle 98124 John W. Ellis Gerald R. Kelly *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories April 1984 jHRHHMHHMi BMW liijM ALASKA — M— " © / A * <> A sp •AN LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

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