Federal Reserve Bulletin, 1986-09

VOLUME 72 • NUMBER 9 • SEPTEMBER 1986 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • 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 603 MONETAR Y POLICY REPORT Publication of new pamphlet, "A Guide to TO THE CONGRESS Business Credit and the Equal Credit Opportunity Act." Sharp contrasts among sectors and regions of the economy characterized economic de- Data from Call Report to be available from velopments during the first half of 1986; on NTIS. balance, real gross national product re- Issuance of revised list of OTC stocks submained on a rather sluggish growth path. ject to margin regulations. Extension of comment period on amend- 618 PROFITABILITY OF U.S.-CHARTERED ments to Regulation D; comment requested INSURED COMMERCIAL BANKS IN 1985 on proposal to allow the head offices of the After a five-year decline, the aggregate Federal Reserve Banks of Minneapolis and profitability of insured commercial banks Kansas City to continue a tiered-pricing turned up somewhat in 1985; notwithstand- structure for check collection services. ing the improvement in the overall profit Admission of six state banks to membership picture, however, a record 118 insured in the Federal Reserve System. commercial banks failed last year. 633 INDUSTRIAL PRODUCTION 646 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE Industrial production decreased an estimated 0.5 percent in June after having declined At its meeting on May 20, 1986, the Com- 0.4 percent in May. mittee adopted a directive that called for no change in the existing degree of pressure on reserve positions. The members expected 635 STATEMENT TO CONGRESS such an action to be associated with a Paul A. Volcker, Chairman, Board of Gov- deceleration in monetary growth over the ernors, reports on the conduct of monetary balance of the second quarter. Because policy in the larger context of the perform- such growth had been rapid thus far in the ance of the U.S. and the world economy, quarter, the members anticipated faster before the Senate Committee on Banking, growth of the monetary aggregates, espe- Housing, and Urban Affairs, July 23, 1986. cially Ml, than was expected at the time of [Chairman Volcker presented identical tes- the April 1 meeting. The members recogtimony before the House Committee on nized that the behavior of Ml remained Banking, Finance and Urban Affairs on July subject to unusual uncertainty, but they 29, 1986.] agreed that its growth might be in the area of 12 to 14 percent for the period from March to June, assuming some decline over 643 ANNOUNCEMENTS the balance of the quarter. For the same Change in the discount rate. period, M2 and M3 were now expected to expand at annual rates of around 8 to 10 Change in reporting of yields on certain percent. The members agreed that if the Treasury securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

anticipated slowing in monetary growth did 653 LEGAL DEVELOPMENTS not occur, somewhat greater reserve pres- Various bank holding company, bank sersure would be acceptable in the context of a vice corporation, and bank merger orders; pickup in the expansion of economic activiand pending cases. ty with account being taken of conditions in domestic and international financial mar- AI FINANCIAL AND BUSINESS STATISTICS kets and the behavior of the dollar on foreign exchange markets. On the other A3 Domestic Financial Statistics hand, somewhat lesser reserve restraint A44 Domestic Nonfinancial Statistics might be acceptable in the event of pro- A53 International Statistics nounced sluggishness in the performance of the economy in association with a marked A69 GUIDE TO TABULAR PRESENTATION, slowing in monetary growth. STATISTICAL RELEASES, AND SPECIAL The Committee agreed that the current TABLES intermeeting range for the federal funds rate should be reduced by 1 percentage point to A74 BOARD OF GOVERNORS AND STAFF 5 to 9 percent. The reduction was intended as a purely technical adjustment in the A76 FEDERAL OPEN MARKET COMMITTEE context of an unchanged degree of reserve AND STAFF; ADVISORY COUNCILS availability and its purpose was to provide a more symmetrical range around the lower A78 FEDERAL RESERVE BOARD federal funds rate that had prevailed for PUBLICATIONS some time. The members regard the federal funds range as a mechanism for initiating A8I INDEX TO STATISTICAL TABLES Committee consultation when its boundaries are persistently exceeded. A83 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A84 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on July 18, What monetary policy has been able to do, 1986, pursuant to the Full Employment and during a period of greater overall price stability Balanced Growth Act of 1978.1 and adequate capacity relative to the demands actually placed upon it, is to accommodate demands for money and credit, helping to facilitate MONETAR Y POLICY AND THE further declines in interest rates. Monetary poli- ECONOMIC OUTLOOK FOR 1986 AND 1987 cy by itself cannot eliminate or deal with the sectoral imbalances that are still troubling the Sharp contrasts among sectors and regions of the economy. A reduction of the large deficit in the economy characterized economic developments nation's external accounts is of critical imporduring the first half of 1986. Reflecting in sub- tance over time, and this reduction will be diffistantial part continuing strong competitive pres- cult to achieve in an orderly way without faster sures from abroad and large spending cutbacks in growth in key foreign economies. Agreement on the oil industry in response to sharply declining tax reform also would remove a major source of prices, industrial and investment activity were uncertainty that probably has inhibited growth in restrained. In contrast, activity continued to the first half of the year; over time, substantial expand rather strongly in housing, the financial progress toward eliminating federal budget defisector, and the broad service area of the econo- cits is essential to achieving better balance in the my. On balance, real gross national product U.S. and world economies. Overall, prospects remained on a rather sluggish growth path. for the economy appear to be favorable, but Although there are substantial uncertainties much will depend on the evolution of policy, about the degree and timing of a pickup in both in this country and abroad. economic activity, a number of positive economic and financial developments have occurred that should provide the basis for somewhat faster Economic and Financial Background economic growth and some reduction in unemployment over the year ahead. Interest rates The first half of this year saw a continuation of have moved lower, and, reflecting the decline of the reduced pace of economic growth that has the dollar on foreign exchange markets, U.S. prevailed since the middle of 1984. Although the industry is in a stronger competitive position service industries have been strong, manufacinternationally. Also, inflation has remained sub- turing activity has been relatively sluggish in the dued, reflecting not only declines in the prices of face of strong foreign competition, and some energy and other basic commodities but also sectors, such as energy and agriculture, are continued restraint on wages in many sectors. under strong pressure. The economy has gener- Much of the uncertainty about a pickup in ated a substantial number of new jobs this year, growth turns on the strength of economic per- but the labor force also has grown rapidly and the formance in other industrialized countries, and unemployment rate has remained around 7 perthere is also some concern over the transitional cent. effects of tax reform legislation. Perhaps the most significant economic event in the first half of 1986 was the plunge in world crude oil prices. Despite the potential longer- 1. The charts to the report are available on request from term benefits from this development, the initial Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. impact on the U.S. economy was negative as, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

604 Federal Reserve Bulletin • September 1986 with less of an incentive to search for new quarter 1985 level, well in excess both of its sources of supply, oil exploration activity was target range of 3 to 8 percent and of the growth in cut back sharply. However, falling crude oil the economy. Over the first half of the year, the prices have been translated quickly into lower velocity of the aggregate appears to have derates of inflation for a time, and in addition, they clined at a faster rate than the postwar record have damped expectations about future price decline in 1985. The interaction of lower interest increases. Consumer confidence has been high, rates with the changed composition of Ml since and with purchasing power boosted by the de- deposit deregulation explains a good portion of cline in energy prices, consumer spending has this rapid decline of velocity. The public apparbeen strong. By damping inflation expectations, ently has been shifting a considerable amount of the drop in world oil prices also spurred a rally in its savings into the negotiable order of withdrawcredit markets, further extending the decline in al (NOW) account component of the aggregate in interest rates that began in mid-1984. response to relatively large declines in rates on Against the background of relatively slow eco- competitive outlets for liquid funds. Growth in nomic growth and little overall price pressure, demand deposits also has been quite strong, monetary policy basically has accommodated likely related to the effect of lower interest rates strong demands for reserves to back deposits on the balances that businesses must hold to thus far in 1986, while responding to and facilitat- compensate for banking services, as well as to a ing the drop in market interest rates with three surge in financial market activity. Even after half-point cuts in the discount rate. At the same taking account of these factors, however, the time, with the dollar under downward pressure in strength of Ml appeared extraordinary in the foreign exchange markets during most of the first half. period and the economies of other key industrial The broader aggregates grew more moderatecountries somewhat weak early in the year, ly, ending the first half near the middle of their international economic and financial develop- respective target growth ranges of 6 to 9 percent. ments remained an important consideration in Nevertheless, the strong demand for liquid asthe conduct of monetary policy. Similar official sets, generated by the relatively large declines in changes in interest rates in several major foreign long-term rates, was evident not only in soaring countries, where growth also has been slower Ml balances but also in the composition of the than expected, took place around the time of the broader aggregates. For example, the more liqfirst two discount rate reductions by the Federal uid components of M2 grew rapidly, while its Reserve this spring. The coordinated cuts helped time-deposit component increased only marginavoid the potential for disturbing exchange mar- ally. Over the same period, the debt of domestic ket conditions. nonfinancial sectors is estimated to have re- Reductions in other short-term rates were gen- mained somewhat above its monitoring range, erally in line with the total decline of 1 Vi percent- growing well in excess of GNP. age points in the discount rate since the end of The substantial decline in long-term interest last year. Yields on long-term credit market rates since the middle of last year has helped instruments fell as much as 2VA percentage buoy interest-sensitive sectors of the economy. points, encouraged not only by the revision of Activity in the housing market was quite strong inflation expectations that seemed to be keyed to in the first half of 1986, supported by the lowest falling energy prices but also by the sluggish level of mortgage rates in more than seven years. performance of the economy and, early in the The reduction in interest rates also was a factor year, by the restraining effect of the Gramm- in the strength of consumer spending, both by Rudman-Hollings legislation on expected federal reducing the overall cost of credit and by raising budget deficits. the value of the household sector's security holdings. These and earlier declines in market rates had a particularly strong effect on the narrow mone- Although the foreign exchange value of the tary aggregate. By June, Ml had grown at an dollar has fallen a third from its 1985 peak, the annual rate of \2VA percent from its fourth- depreciation apparently has not yet produced a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 605 substantial increase in the volume of exports or a significantly altered by the changed composition reduction in the volume of imports. Adjustments of the aggregate in recent years, as well as by the of trading patterns to exchange rate movements prospects for greater price stability. The precise take place over a number of years, and it is not implications of these developments for the future surprising that a dramatic improvement in our are not yet clear, given the limited experience to large merchandise trade deficit has yet to occur. date. In these circumstances, the Committee However, progress has been somewhat slower decided that growth of Ml in excess of the than might have been expected, partly because previously established range of 3 to 8 percent for of the slow growth in other major industrialized 1986 would be acceptable and growth in that countries. The continuing appreciation of the aggregate over the balance of the year would dollar against the currencies of many developing continue to be evaluated in light of the behavior nations also has been a factor. of the other monetary aggregates. Developments The influence of strong foreign competition in all the aggregates will be judged against the remains pervasive. Agricultural products are in background of developments in the economy and ample supply worldwide, reducing the export financial markets and potential price pressures. opportunities of our producers. In manufac- With respect to 1987, the Committee exturing, many industries continue to face weak pressed the preliminary view that the current foreign orders, while an increasing portion of range for Ml—3 to 8 percent—should provide for domestic demand has been met from abroad in adequate money growth to support continued spite of price increases on some competing for- economic expansion, assuming that a greater eign products. With little observed pickup in stability reemerges in the link between Ml and demand, many firms have scaled back their income in a more stable economic, price, and expenditure plans, and capital spending remains interest rate environment than has existed in weak as a result. recent years. However, in the context of the experience of the past several years and keeping in mind the exceptional uncertainties in predict- Ranges for Money and Debt Growth ing the behavior of Ml, the Committee at the end in 1986 and 1987 of this year will review with particular care the appropriate range and weight to be placed on Ml The FOMC reaffirmed the 1986 ranges of 6 to 9 in 1987. percent that had been established in February for As shown in the accompanying table, the M2 and M3; as noted above, the broader mone- FOMC did not change the 1986 "monitoring" tary aggregates ended the first half of the year range for the credit market debt of domestic near the middle of those target ranges. For 1987, nonfinancial sectors and tentatively retained the the Committee tentatively decided that, consis- same range for next year. It was anticipated that tent with its intention to achieve money growth the debt aggregate might exceed the monitoring at a rate consistent with maintaining reasonable range of 8 to 11 percent for 1986 as a whole, price stability and sustainable economic expansion, the target growth ranges for both M2 and M3 would be lowered Vi percentage point, to 5V2 Ranges of growth for monetary and debt aggregates to 8'/ percent, measured from the fourth quarter 2 Percent change, fourth quarter to fourth quarter of 1986 to the fourth quarter of 1987. Those ranges were felt to be consistent with a pickup in Tentative Aggregate 1986 for 1987 economic growth. The rapid rise in Ml over the first half of the Ml [3 to 8]' [3 to 8P year underscored the degree of uncertainty sur- M M 3 2 6 6 t t o o 9 9 5 51 '/ / 2 2 t t o o 8 8 1 » /: /2 Debt 8 to 11 8 to 11 rounding the behavior of the aggregate and, in particular, about its behavior relative to GNP. 1. While no new range was specified for 1986, growth in excess of The nature of the relationship among Ml, in- the established range would be acceptable. 2. Indicative of likely range if more stable velocity behavior shows come, and interest rates appears to have been signs of reemerging. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

606 Federal Reserve Bulletin • September 1986 given its rapid growth around the beginning of Economic projections for 1986 and 19871 the year, but as in the past, the Committee felt Percent that raising the target would create an inappro- FOMC Members and priate benchmark for evaluating longer-term other FRB Presidents Change in GNP trends in debt growth. or unemployment Central Range tendency 1986 Economic Projections Change, fourth quarter to fourth quarter The Committee believes that the monetary ob- Nominal GNP 33/i to 6'A 43A to 53A Real GNP 2V* to 3Vi 2Vi to 3 jectives it has set are supportive of a strengthen- Implicit deflator for GNP \Vi to3'/4 2'A to 2V* ing of economic activity in the second half of the Average level in the fourth quarter year. However, the uncertainties associated with Civilian unemployment rate 6.9 to 7.2 the economic outlook appear to be quite large, 1987 and continued vigilance and flexibility in the Change, fourth quarter to conduct of policy clearly are needed. As summa- Ifffourth quarter Nominal GNP 5 to 8V4 6 to 7Vi rized in the table on economic projections, the Real GNP 2 to 4'A 3 to 3'/2 central-tendency forecast of Committee mem- Implicit deflator for GNP m to 4V4 3 to 4 bers and nonvoting Reserve Bank Presidents is Average level in the fourth quarter for growth of 2VI to 3 percent in real GNP this Civilian unemployment rate 6 Vi to 7 Aro 6 un3d A year. Such an increase in output would be expected to generate appreciable further gains in 1. The administration has yet to publish its mid-session budget review document, but spokesmen have indicated that there will be employment, but the unemployment rate might revisions to earlier forecasts. As a consequence, the customary not drop below 7 percent before year-end. With comparison of FOMC forecasts and administration economic goals has not been included in this report. the decline in energy prices more than offsetting effects from the depreciation of the dollar and with pressure from domestic labor and product cive to balanced growth and to an improved markets restrained, the inflation rate for the year pattern of international transactions. is generally projected at between 2V4 and 2V* A number of factors point toward a reaccelerapercent, as measured by the implicit deflator for tion in growth, although the exact degree and GNP. timing remain uncertain. Despite their initial In 1987, which would be the fifth year of the effects on investment, lower energy prices current expansion, real GNP is projected by should help support economic activity, primarily most participants to increase 3 to 3Vi percent, by bolstering real consumer income. The lower and unemployment is expected to decline moder- level of interest rates also is expected to give ately. A significant portion of the increase in some impetus to consumption while, at the same production next year is expected to come from time, maintaining the strength in the housing the external sector, with the lower value of the market. Business spending on new plant and dollar expected to restrain the growth of imports equipment is projected to pick up somewhat over and to stimulate exports. However, with energy time, but the degree of improvement will depend prices leveling off, exchange-rate-related in- in part on the character of tax reform legislation. creases in import prices are expected to cause an A critical element in the expected improveacceleration in inflation to a range of 3 to 4 ment in economic performance is progress topercent next year. ward reducing the size of the merchandise trade The forecasts of the Committee members and deficit. As previously noted, with import prices nonvoting Reserve Bank Presidents assume that rising as a result of the depreciation of the dollar, the Congress will seek to achieve the Gramm- the growth in imports is expected to slow, and Rudman-Hollings deficit reduction targets. Prog- the increased price competitiveness of U.S. ress in reducing the federal deficit is seen as goods should bolster export growth. However, a crucial in maintaining financial conditions condu- substantial improvement in our trade perfor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 607 mance will require satisfactory growth of de- the volume of oil imports will rise, the sharper mand in other countries. Moreover, such an decline in price is an aid in reducing the large improvement will require open access to foreign deficit in our trade account. markets, which underscores the critical impor- A potentially more significant longer-term intance of avoiding protectionist measures here fluence on our balance of trade is the lower value and abroad. of the dollar. The prices of foreign goods are rising in dollar terms and should begin to shift expenditures from imports to domestic products. THE PERFORMANCE OF THE ECONOMY At the same time, U.S. goods are more competi- DURING THE FIRST HALF OF 1986 tive on world markets, although we have yet to experience a sustained improvement in exports. The economy continued to expand in the first The rather moderate improvement in export volhalf of 1986, but apparently no more rapidly than ume to date reflects, in part, the effects of the in 1985. The overall increase in output during the dollar's earlier rise and the slow pace of economfirst six months of the year generated slightly ic activity abroad. Growth in the major industrimore than 1 million new jobs, and the civilian alized nations was particularly weak in the first unemployment rate held near 7 percent. At the quarter of 1986, although there appears to have same time, the dramatic decline in world crude been some rebound in the second quarter. Meanoil prices caused a substantial slowing in infla- while, the drop in oil revenues reduced import tion. demand in some developing countries, most im- The combination of the lingering effects of the portantly Mexico. high foreign exchange value of the dollar during Another factor affecting the economy this year 1984 and 1985, the slow growth abroad, and the has been the changing fiscal-policy environment. initial impact of lower crude oil prices played a It now appears that the deficit in the current key role in inhibiting any acceleration in overall fiscal year may exceed earlier plans, but the economic activity. Industrial output declined no- Congress has moved to implement the spirit of ticeably over the first half, with activity reflect- the deficit targets contained in the Gramm-Ruding the continuing intense competition from for- man-Hollings legislation in acting on its fiscal eign producers in the manufacturing sector and 1987 budget. The prospect of lower federal budalso the sharp cutbacks in energy-related invest- get deficits in the years ahead, coupled with the ment. U.S. agriculture confronts growing world drop in oil prices, encouraged sizable reductions supplies of many farm products, and many farm- in long-term interest rates at the beginning of ers continue to be squeezed by a heavy debt- 1986, which have begun to stimulate the interestservicing burden and falling land values. The sensitive sectors of the economy. The most drop in oil prices has caused substantial adjust- notable result has been in the housing sector in ment problems in the short run. Oil drilling has which lower mortgage rates have led to substanbeen reduced drastically, and a number of high- tial gains in building activity. Investment in new cost wells have been capped. More than 100,000 plant and equipment has not shown a similarly jobs have been lost in the oil industry since the positive response to lower interest rates, howevbeginning of the year. er; apart from the negative effects of the oil At the same time, however, some of the bene- drilling decline, business spending has been fits from the drop in oil prices did begin to damped by the existence of a sizable overhang of emerge in the first half. The lower price of crude office and factory space and by continuing unceroil was reflected fairly quickly in the prices of tainties about sales trends and tax reform. finished energy products, which caused consum- With the decline in energy prices, further er prices to register their largest three-month progress has been made in reducing the inflation decline since the beginning of 1949. This lower rate. Continued moderation in wage increases price level has given a substantial boost to the and abundant supplies of agricultural commodpurchasing power of consumers and has helped ities and industrial raw materials also were imto support higher levels of spending. Although portant factors in restraining price increases in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

608 Federal Reserve Bulletin • September 1986 the first half of 1986. These favorable develop- and local governments at the end of last year. ments worked to offset the inflationary tenden- However, as these tax-exempt funds were decies associated with the depreciation of the dollar pleted, activity in the multifamily market began and the continued rapid rise in the prices of to taper off in the spring. In addition, concerns services. about the treatment of income properties under tax reform may have begun to restrain the construction of multifamily dwellings. The Household Sector Indicators of the financial position of the household sector were mixed in the first half of Consumer expenditures were quite strong in the the year. Although the growth in consumer credit first half of 1986, supported in part by rapid slowed from its rapid pace in 1985, the ratio of income growth. Real disposable income in- consumer installment debt to disposable income creased at about 5V2 percent at an annual rate, edged up to a new high. The rallies in the stock boosted by high levels of farm subsidy payments and bond markets strengthened the asset side of and the energy-related slowdown in inflation. In the household sector balance sheet, and many addition, survey information indicates that con- homeowners took the opportunity presented by sumer confidence remains high, and many the decline in interest rates to ease their debthouseholds consider it to be a good time to servicing burdens by refinancing mortgage loans. purchase big-ticket items such as a car or a new However, increased strains also were evident, as home. Under these circumstances, consumers personal bankruptcies rose to record levels and have been willing to spend the bulk of their mortgage delinquency rates remained historicalincome gains, and the personal saving rate has ly high. remained at a historically low level. The increase in consumer spending was widespread. Purchases of nondurable goods, such as The Business Sector apparel, were particularly strong in the first quarter, while outlays for services also grew The financial position of the business sector briskly. The demand for new automobiles also improved a bit in the aggregate during the early remained quite high after the large sales increase part of 1986, albeit with considerable diversity in 1985. New cars sold at an annual rate of 11 across industries. Economic profits in the corpomillion units in the first six months of this year, rate sector rose at an $11 billion annual rate in with important support coming from a series of the first quarter, and the share of after-tax ecobelow-market finance incentive programs for nomic profits in GNP remained at the highest many domestic models. Foreign automobiles level since the late-1960s. Financial conditions in continued to sell at a fast pace even though agriculture and manufacturing remained weak, sticker prices generally have increased more however. Agriculture continued to be hurt by than 10 percent in response to the exchange rate excess supply conditions worldwide, and farm changes. loan delinquencies rose to a postwar high. In Activity in the housing sector also has been manufacturing, intense price competition from strong this year. Stimulated by the decline in foreign sources squeezed profit margins, and mortgage rates, sales of new single-family homes with little growth in demand, capacity utilization hit a record high in March and remained general- moved lower. ly strong throughout the second quarter. Produc- Business spending on plant and equipment was tion responded to this increase in demand, and weak in the first half of the year. This poor during the first half, single-family units were performance partly reflected a "payback" after begun at a rate of VA million units, the highest very strong capital spending in the fourth quarter since 1979. Despite elevated rental vacancy of 1985. Firms apparently accelerated their rates, construction apparently was maintained in spending at the end of last year to take advantage the multifamily sector by the large volume of of investment incentives that were targeted for mortgage revenue bonds issued by many state scaling back or elimination under proposed tax Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 609 reform legislation; expenditures then dropped off $212 billion of fiscal 1985. Revenue growth has in the first quarter of 1986. In addition to these slackened in association with the slower pace of tax-anticipation effects, the demand for comput- nominal income growth. Expansion of corporate ers and other high-technology equipment re- tax receipts has slowed significantly, while exmained subdued, after increasing rapidly in the cise tax revenues also are down as lower oil first two years of the recovery. Spending on prices virtually have eliminated the receipts from nonresidential structures was down substantial- the "windfall profits" tax. ly, partly as a result of the cutback in oil and gas Federal purchases of goods and services flucwell drilling, which was large enough to reduce tuated widely in the first half of 1986. They real GNP growth V2 percentage point in the first dropped substantially in the first quarter, in part quarter and perhaps more in the second quarter. reflecting a slowing in the purchases of farm However, a correction also began in the con- products by the Commodity Credit Corporation struction of office buildings in response to past (CCC), after a record increase in the fourth overbuilding and high vacancy rates. quarter of 1985. Excluding CCC purchases, real Much of the change in business inventories in federal outlays were down slightly, as a result of the first half of this year was associated with lower defense spending. fluctuations in automobile dealers' stocks. Do- Purchases of goods and services by state and mestic car production outpaced sales in the first local governments in real terms increased at an quarter, and this resulted in a substantial buildup annual rate of 2.8 percent in the first quarter of of auto inventories. Assembly schedules were 1986, about the same pace as in 1985. After a scaled back in the spring, which helped dealers large increase in the first quarter, construction reduce their excess inventories, although stocks spending remained strong in the spring, while remained high. Outside the auto area, inventory employment rose further. However, a number of investment remained moderate overall, but the states, particularly those dependent on agriculpattern differed markedly between manufac- ture and the oil industry, continued to experience turing and trade. Manufacturers continued to a substantial deterioration in their financial contrim their stocks, preferring to keep inventories dition. A significant portion of tax revenues in lean until there was firm evidence of a resur- many oil-producing states are tied directly to the gence in demand. In contrast, inventory invest- value of oil output, and the drop in oil prices has ment picked up at trade establishments, even induced a concomitant decline in receipts. In though merchants continued to hold a historical- addition, the secondary effects on energy-related ly high level of stocks relative to sales. businesses are tending to reduce revenues fur- With the declines in capital spending and the ther. To restore fiscal balance, many states have slow pace of inventory investment, internal announced expenditure cuts or tax increases. funds in the aggregate were adequate to meet almost all of the basic financing needs of nonfinancial corporations. However, the drop in long- The External Sector term interest rates to the lowest levels since 1978 prompted businesses to issue massive amounts Continuing the decline that began early last year, of bonds; the proceeds were used not only to the dollar depreciated further against the currenfinance new investment but also to retire out- cies of foreign industrial countries during the first standing bonds and stocks and to pay down half of 1986. On balance, the trade-weighted short-term debt. value of the dollar has fallen more than 30 percent from its February 1985 peak, about onethird of which has occurred this year. Associated The Government Sector with the depreciation was a narrowing in inflation-adjusted interest rate differentials between Despite congressional action to slow the growth the United States and the other major industrialof spending, the size of the federal budget deficit ized countries, as interest rates declined both in fiscal 1986 may match or exceed the record here and abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

610 Federal Reserve Bulletin • September 1986 Although a substantial correction has occurred ports was up somewhat in the first quarter, with in the dollar's value, at least against the curren- a decline of 3 V2 percent in exports of agricultural cies of the major industrialized countries, the products offset by increased U.S. nonagriculturnation's current account deficit was unchanged al exports. in the first quarter from the high rate of $135 billion in the fourth quarter of 1985. This lack of improvement was the result of large increases in Labor Markets nonpetroleum imports while exports grew more slowly. The failure to date of the dollar's decline Nonfarm payroll employment expanded in the to slow import growth reflects, in part, the first half at an average pace of roughly 175,000 relatively slow pass-through of the depreciation per month on a strike-adjusted basis, down from into import prices. Because profit margins of 230,000 in 1985. Continuing the trend of the past foreign exporters expanded during the period of few years, gains at trade and service establishdollar appreciation, they are able, for a time, to ments were quite strong and accounted for most absorb the reduced receipts without raising of the overall employment increase. Hiring also prices; slack markets at home also have held was brisk at construction sites through much of down price increases. In addition, the dollar has the period, buoyed by the strength in homebuildcontinued to rise against the currencies of many ing. However, manufacturing payrolls contractdeveloping countries, which account for about ed somewhat, with weakness in the motor vehione-quarter of U.S. nonpetroleum imports. cle, metals, and machinery industries. However, nonpetroleum import prices now are The civilian unemployment rate averaged increasing, led by large increases for automo- somewhat higher over the first half of the year biles, other consumer items, and capital equip- than at the end of 1985. The continued expansion ment. of job opportunities about matched the rise in the The decline in the dollar also improved the number of individuals entering or reentering the price competitiveness of U.S. goods in foreign workforce, and labor force participation reached markets. However, exports have been slow to a new high by midyear. However, the weakness pick up, in important part because of the sluggish in the industrial sector was reflected in a rise in pace of foreign economic activity. Real gross the number of workers separated from their last national product declined in both Japan and West job. Germany in the first quarter, but economic In view of the continued slack in labor markets growth appears to have been somewhat stronger as well as lower price inflation, wage growth in the spring. remained moderate. The employment cost index, Economic growth also has been sluggish a broad measure of overall compensation trends, among many of our major trading partners in the rose 33/4 percent in the 12 months ending in developing world. Like other oil-producing March, down from 4Vi percent over the year countries, Mexico is adjusting its spending to ended in March 1985. Most of the slowing was lower oil revenues, and this adjustment has re- the result of smaller increases in the cost of duced the demand for U.S. products. Falling employee benefit programs, reflecting in part world commodity prices also have aggravated efforts to contain medical insurance expenses, the financial difficulties of other developing na- while wages and salaries rose at about the rate of tions, including members of the Organization of 4 percent experienced in 1985. Continued moder- Petroleum Exporting Countries. ation in union wage gains also was evident in the Reflecting these influences, the volume of collective bargaining agreements reached in the U.S. merchandise imports rose IV2 percent in the first half of 1986. first quarter of 1986, as nonpetroleum imports After declining at the end of 1985, labor procontinued to grow rapidly while oil imports de- ductivity in the nonfarm business sector reclined. The largest increases were in machinery, bounded in the first quarter of 1986. However, with smaller advances registered for some con- the gain largely reflected erratic movements in sumer goods. The volume of merchandise ex- hours worked by self-employed workers, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 611 productivity has been essentially flat over the made in reducing the inflation rate during the past year after rising substantially early in the first half of the year. Retail food prices rose at an recovery. Productivity in manufacturing has in- annual pace of only 1 percent through May, held creased somewhat faster during this expansion, down by falling meat prices. A small decline in as intense import competition has forced many the prices of consumer goods was responsible for producers to modernize their factories and the slowdown in the consumer price index (CPI), streamline work rules. As a result of the first- excluding food and energy, to an annual rate of quarter bounce back in productivity, unit labor increase of V/i percent from its AVi percent rise costs in the nonfarm business sector fell during during 1985. In contrast, the prices of nonenergy that period, but they were still up about 3 percent services continued to increase at an annual rate from a year earlier. of 6 percent, boosted by rising housing costs and by higher premiums for most types of in- Price Developments surance. Falling energy prices were largely responsible for MONETAR Y POLICY AND FINANCIAL a significant slowing in measures of aggregate MARKETS IN THE FIRST HALF OF 1986 inflation during the first half of 1986. A broad measure of prices—the fixed-weighted price in- The Federal Open Market Committee at its meetdex for GNP—increased at a 2VI percent annual ing in February of this year established target rate in the first quarter, down from a rise of VA growth ranges, measured from the fourth quarter percent in 1985. Consumer prices actually de- of 1985 to the fourth quarter of 1986, of 3 to 8 clined over the February-to-April period, but percent for Ml and 6 to 9 percent for both M2 they still were up Wi percent over the 12-month and M3. The associated monitoring range for period ended in May. The drop in prices was growth of the debt of domestic nonfinancial greater at the wholesale level, where weakness in sectors was set at 8 to 11 percent. As compared the industrial sector added to the downward with the ranges for 1985, the M2 target was pressure from energy prices. unchanged, the upper limit for M3 was reduced The speed and magnitude of the decline in Vi percentage point, and the debt range was world crude oil prices this winter were dramatic. lowered 1 full percentage point; the Ml target Over the January-to-April period, crude oil remained the same as that set last July for the prices fell more than $15 per barrel to their second half of 1985. It was expected that growth lowest level since 1978. Prices of refined petro- of money and credit within these ranges would leum products responded quickly to the drop in be adequate to encourage sustainable economic crude oil prices, and retail gasoline prices fell 25 expansion consistent with progress over time percent, or about 28 cents a gallon, over the toward reasonable price stability and an im- January-to-May period. Charges for electricity proved pattern of international transactions. and natural gas, which compete with fuel oil as a In retaining the comparatively wide target power source, responded more slowly to the range for Ml, the FOMC recognized continuing lower crude oil prices but by the end of May had uncertainties about the behavior of that aggrefallen about 1 percent. gate. Moreover, the Committee agreed that, in The prices of industrial raw materials contin- view of these uncertainties and the unexpectedly ued to decline in the first half. Prices were rapid growth of Ml relative to GNP in recent depressed by abundant world supplies of many years, the behavior of the narrow money stock primary commodities; debt-servicing obligations would be evaluated in light of growth in the led many developing countries to maintain or broader monetary aggregates, developments in expand their output. Sluggish industrial activity the economy and financial markets, and the in the United States and other large economies potential for inflationary pressures. contributed to the softness of commodity mar- In the event, rapid Ml growth reemerged early kets. this spring, and by June the aggregate, was far Outside the energy area, further progress was above its range. M2 and M3, however, ended the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

612 Federal Reserve Bulletin • September 1986 first half near the middle of their 1986 target of 1985 that above-target Ml growth would be ranges. This disparate pattern of money growth, acceptable. as well as the modest expansion in economic In light of the uncertainties surrounding the output, ebbing inflation, and continuing down- behavior of Ml, in February of this year the ward pressure on the dollar in foreign exchange FOMC set a 1986 target range for the aggregate markets, provided the setting for policy during that, while not providing for a drop in velocity as the first six months of this year. In general, large as the 6 percent decline posted in 1985, was monetary policy was accommodative. As an wide enough to allow for appreciable variation in operational matter, the degree of pressure on velocity relative to historical trends. Neverthereserve positions of depository institutions re- less, the Committee recognized that the relationmained limited, and the discount rate was low- ship of Ml to income had become increasingly ered twice in the first half of the year, Vz percent- difficult to predict, owing importantly to the age point each time, in the context of sizable changing composition of Ml. An important share declines in market interest rates and similar of the aggregate now consists of interest-bearing actions by some other industrial countries. In deposits, which are potentially an attractive reearly July, the discount rate was cut another x/i pository for savings as well as transaction balpoint, to 6 percent. ances, introducing an additional source of sensitivity to changes in interest rates and other Money, Credit, and Monetary Policy economic variables. In these circumstances, the Committee emphasized that policy implementa- In 1985, Ml grew at a rate substantially above its tion would involve a continuing appraisal of target growth range in the first half, and it trends in all of the money and credit measures, as continued to do so over the remainder of the well as of indicators of economic activity and year, even after the range had been rebased and prices, and conditions in credit and foreign exwidened in July. Instead of the return to more change markets. Within this framework for polinormal behavior that the FOMC had looked for, cy and against a background of incoming data Ml velocity—the ratio of nominal GNP to Ml indicating moderation of inflationary pressures balances—fell even more rapidly in the second and a relatively slow pace of economic expanhalf of the year than it had in the first. Taking the sion—including weakness in some important prevailing economic and financial conditions into goods-producing sectors—the Federal Reserve account, the Committee decided in the latter part basically accommodated the demands for re- Growth of money and credit Percentage changes at annual rates 1. Ml figure in parentheses is adjusted for shifts to NOW accounts e Estimated, in 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 613 serves associated with strong Ml growth over On April 18, the Federal Reserve announced the first half of 1986. another reduction in the discount rate, to 6V2 Early in the year, reserves were provided percent. This change served primarily to catch slightly more freely, continuing the trend toward up with and validate declines that already had easier reserve conditions that had developed late taken place in market rates. Exchange rates and last year. In the initial months of 1986, growth of international interest rate considerations again Ml dropped off sharply from its rapid 1985 pace, played a role, and our discount rate cut coincided and growth of M2 also slowed substantially, to a with a rate cut by the Bank of Japan. rate below its annual target range. There were By this time, market interest rates in the signs of some sluggishness in economic activity, United States had fallen 1 to 2 percentage points and steep declines in oil prices, which were since December, to their lowest levels in eight or improving the outlook for inflation, contributed nine years. Both short- and long-term rates then importantly to a rally in long-term credit markets turned higher for a time, as some indications of that picked up momentum in mid-February. At stronger economic growth seemed to be developthe same time, short-term interest rates edged a ing and prospects for a further easing of monelittle lower, but the federal funds rate remained tary policy receded. Supporting the market's significantly above the Federal Reserve's dis- changed outlook were an acceleration in the count rate. monetary aggregates, strength in some incoming In this context, a cut in the discount rate would economic indicators, and the dollar's slide on complement the thrust of open-market opera- foreign exchange markets, which continued tions and would accommodate the market ten- through mid-May. The dollar subsequently redency toward lower interest rates. However, an covered a bit, but most of the increase both in the important consideration in the timing and extent exchange rate and in U.S. market interest rates of any rate cut was the risk posed by an exces- was reversed before the first half ended, as sive reaction in the foreign exchange markets, indications of an expected strengthening of ecowhen the dollar remained under downward pres- nomic activity failed to materialize. With market sure during much of the period. Ultimately, on interest rates falling, price pressures remaining March 7, the Federal Reserve cut the interest subdued, and the economies of the United States rate charged for discount window borrowings Vi and other industrial countries growing relatively percentage point to 7 percent, and the central slowly, the Federal Reserve again reduced the banks of Japan, Germany, and several other discount rate V2 percentage point, to 6 percent, industrial nations took similar actions around effective July 11. that time. On balance since the end of 1985, the dollar Short-term rates in U.S. markets fell through- has declined more than 10 percent, and shortout March and much of April. Interest rates in term rates, about IV2 percentage points. Longlong-term markets continued to benefit from the term Treasury yields fell as much as 2lA percentfavorable effect of slumping oil prices on infla- age points, but yields on other long-term tion expectations, as well as improvements in the securities fell less; corporate and tax-exempt federal budget outlook, with the Gramm-Rud- bond yields dropped about 1 point, and fixed-rate man-Hollings legislation beginning to bite and mortgages fell just V2 percentage point. The official projections of the deficit being revised smaller declines in these other markets were due sharply downward. To an extent, declining rates in part to the massive issuance of these obligaalso reflected the optimism present in the mar- tions (including a large volume of refinancings) kets that, with economic growth remaining mod- elicited by the drop in rates over recent quarters, erate, there was potential for a further easing of to investor desires for call protection, and in the monetary policy. Ml accelerated markedly— case of tax-exempt securities, to concerns about moving above its target range in March—appar- tax reform. ently in response to lower interest rates, but M2 Lower market interest rates have been an and M3 growth were rather restrained, with M2 important factor in the rapid growth of Ml this remaining below the lower end of its range year. The strong response of Ml to the decline in throughout the first quarter. rates has reflected in part the cumulative effect of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

614 Federal Reserve Bulletin • September 1986 the deposit deregulation of recent years. In the rate of 123/4 percent through June and exceeded first half of 1986, the final two installments of its target by a large margin, both M2 and M3 deregulation—the removal of minimum balance grew moderately in the first half of the year and requirements on money market deposit accounts in June were near the middle of their respective and Super NOWs on January 1 and the lifting of ranges. Some of the more liquid components of the ceiling on passbook savings rates on April the broader monetary aggregates, however, in- 1—appear to have had little immediate effect on creased very rapidly, as part of the larger shift in the growth of Ml or the other aggregates because investor portfolios toward short-term assets. relatively few institutions actually changed their This shift had much less effect on M2 or M3 than deposit pricing practices. But the advent and on Ml, because the reallocation of funds took expansion of interest-bearing checking accounts place largely within these broader aggregates. In over the years have attracted more savings-type addition to transaction deposits, money market balances and have increased the responsiveness deposit accounts, money market mutual funds, of Ml to interest rate changes. Since rates on the and ordinary savings deposits all expanded interest-bearing Ml accounts have adjusted slug- strongly during the first half of the year, while gishly to changes in market rates, relatively wide small time deposits grew only slightly. swings in the incentives to hold these deposits Investors looked not only to the shorter-term have resulted. components of the monetary aggregates, but also Growth in NOW accounts surged in the first to stock and bond mutual funds (not included in half of 1986, reaching an annual rate of around 25 the aggregates), which posted very attractive percent in the second quarter, as it responded to returns as a result of ongoing market rallies. the lower overall level of market interest rates Flows into such funds probably depressed M2 and the narrower spread between long- and growth somewhat in the first half of this year, as short-term rates. The latter development seemed they had in 1985. Even so, lower market interest to spur shifts of funds from time deposits into rates and strong demands for short-term assets shorter-term accounts, including NOW ac- lifted M2 in excess of income, leading to an counts. Demand deposit growth also strength- appreciable further decline in M2 velocity over ened as interest rates declined. In part, lower the first two quarters of 1986. While M2 showed rates prompted increases in the compensating a fair amount of volatility in the first half, growth balances that businesses needed to hold in the of M3 was comparatively steady from month to form of demand deposits to pay for bank ser- month, as banks varied their issuance of manvices. In addition, deposit levels may have been aged liabilities to compensate for fluctuations in boosted to an extent by a sizable increase in core deposit inflows. financial transactions in the first half of the year, The debt of domestic nonfinancial sectors is especially soaring mortgage prepayments and estimated to have expanded at a more moderate originations, which was stimulated by lower rate over the first six months of 1986 than it had rates. in some time, although still well in excess of the The velocity of Ml fell only moderately in the growth in income.2 Bond issuance had surged in first quarter, but as money growth picked up and December in advance of the possible effective nominal GNP apparently failed to accelerate, date of some provisions of tax-reform legislation, velocity dropped at an extraordinary pace in the lifting the first-quarter level of the debt aggresecond quarter, resulting in a first-half rate of gate. Hence, when measured from its fourthdecline in Ml velocity that probably was some- quarter-average base, the growth of domestic what faster than the average over 1985. Although nonfinancial sector debt has remained above its the rapid Ml growth and falling velocity monitoring range, coming in at an annual rate of stemmed in large measure from interest rate 123/4 percent through June. Measured from its declines, the size of the Ml increase was distinct- level at the end of December, however, debt ly larger than what would have been expected based on historical relationships among money, income, and interest rates. 2. The appendix reviews some aspects of the recent behav- In contrast to Ml, which grew at an annual ior of the debt aggregate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 615 grew at an annual rate of 10% percent through purchases. While the stock market rally helped the end of June. spur a substantial rise in gross equity issuance, To an extent, the lower rate of debt growth net stock issuance remained decidedly negative since the end of December represented a reac- because of the mergers and restructurings. Most tion to the inflated borrowing just before the end notable so far this year, however, was the of last year, when special factors applying to strength of long-term debt issuance by busiparticular sectors combined to boost debt issu- nesses in response to steeply falling long-term ance tremendously, far in excess of normal credit rates; gross issuance of corporate bonds, espeneeds. For example, the pronounced slowdown cially strong in March and April, ran far in excess of federal borrowing in the first quarter reflected of previous records. Nonfinancial firms inthe drawdown of substantial cash balances built creased their short-term debt only slightly, howup by the government before year-end. Indeed, ever, and this was reflected in a decline in their federal borrowing picked up again in the second commercial paper outstanding, as well as in slow quarter, and, for the year as a whole, the huge business loan growth at banks. federal deficit is likely to make a strong contribu- The stresses evident in many parts of the tion to aggregate debt growth, as it has for the economy left their mark on the books of banks past several years. and other financial institutions. Asset quality Following the surge in their borrowing late last deteriorated as a consequence of the sharp drop year, state and local governments showed a in oil prices and associated dislocations in the sharp drop in debt growth. This earlier borrow- energy sector, overbuilding in commercial real ing and continued uncertainty about tax reform estate, and the continuing distress in agriculture. restrained tax-exempt debt growth in early 1986. Banks with relatively large amounts of farm Beginning in March, however, public-purpose loans outstanding, as well as other agricultural and refunding issues increased again as rates lenders, have been particularly hard hit recently; declined further and views changed about the loan losses at these institutions have soared and likely form and effective date of restrictions their profitability has continued to slide. While proposed in tax-reform legislation. banks in regions with economies heavily depen- Borrowing by the household sector also eased dent on energy production were among the most somewhat from the heavy pace of recent years. strongly capitalized and profitable earlier, their After a surprising slowdown early in the year, financial position has eroded under pressure of net residential mortgage borrowing apparently surrounding economic difficulties. Bank failures expanded rapidly in the second quarter. Over the in the first half of this year continued to run at entire period, lower mortgage rates spurred a about the rapid pace of 1985, with agricultural substantial pickup in total mortgage originations, banks again accounting for a disproportionate but the high volume of refinancings reportedly share. strained the ability of lenders to process real Overall bank earnings began to improve in estate transactions. Consumer credit growth 1985, and the industry has added significantly to rates this year have been substantially below its capital and loss reserves, although the explothose of last year, though still outpacing the sion in off-balance-sheet commitments and the growth of income. An increasing number of clouded outlook surrounding the repayment of consumers seem to be experiencing difficulty in many bank loans may have made it more difficult making timely payments on outstanding credit; to assess the level of risk in the banking industry. delinquencies on consumer loans other than At savings and loan associations, overall profitcredit cards have risen moderately, but those on ability appears to be improving as interest rates bank credit cards have surged in the past two have declined and mortgage origination activity years, and personal bankruptcy rates have has surged. However, a substantial number of soared. these institutions continue to have severe prob- The smallest degree of deceleration occurred lems owing primarily to losses on weak assets, in the debt of the nonfinancial business sector, prompting proposals to add to the financial rewhich continued to be boosted by the wave of sources of the Federal Savings and Loan Insurcorporate mergers, acquisitions, and share re- ance Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

616 Federal Reserve Bulletin • September 1986 Concerns over loans to certain developing ress has been made in implementing appropriate countries came to the forefront again this year as macroeconomic policies and policies of internal Mexico began to grapple with the additional structural reform. Financial support for such economic and financial problems brought on in policies both from multilateral lending institularge part by dramatically lower oil prices. Banks tions and private creditors has been provided or have remained cautious lenders in the face of is being negotiated along the lines proposed by ongoing concerns about the economic and finan- Secretary of the Treasury Baker in Seoul last cial prospects of these countries. However, de- fall. • spite the weakness of global demand, some prog- APPENDIX: SOME ASPECTS OF THE to extend loans to private borrowers—obliga- BEHAVIOR OF DOMESTIC NONFINANCIAL tions that appear elsewhere in the debt aggre- SECTOR DEBT gate. While nonfinancial sectors engage to some After moving in rather close alignment for about degree in these intermediary functions on a regua quarter of a century, debt growth in recent lar basis, a marked increase in such activity can years has far outpaced expansion of nominal act to boost measured growth in the debt aggre- GNP. The ratio of debt outstanding to GNP gate. This was the case last year, when the began climbing late in 1981 and subsequently proceeds of a large volume of debt issued by soared well above the range that had prevailed state and local governments with the intention of since the early 1950s, a development that extend- retiring outstanding obligations at a later time ed through the first half of 1986. were placed largely in special nonmarketable The debt aggregate is derived from the Federal securities of the federal government. In addition, Reserve's Flow of Funds accounts. It contains debt growth has been lifted in recent years by a the credit market debt of domestic nonfinancial wave of corporate mergers, acquisitions, and sectors—households, nonfinancial businesses, share repurchases that has resulted in a massive state and local governments, and the federal retirement of equity, financed with credit. government—whose spending accounts for the To assess the degree to which this double vast bulk of income and production. It excludes counting and corporate substitution of debt for debt of the financial sector because funds raised equity have acted to boost debt growth, the by financial intermediaries are already counted behavior of an adjusted debt measure and of an in the debt aggregate at the point they are chan- equity-augmented measure was examined. The neled to nonfinancial sectors. To include finan- adjusted debt measure excludes readily identificial sector debt would lead to double counting. able double counting—in particular, that associ- Nonfinancial sectors also behave to a degree ated with the aforementioned state and local and as financial intermediaries, raising funds in credit federal government borrowing as well as with markets and using the proceeds, at least for a credit extended by nonfinancial businesses to the while, to acquire credit market claims on other household sector. The resulting measure of nonfinancial units. In such cases, "double count- adjusted debt is noticeably smaller in relation to ing" may be said to exist, because the initial GNP, but it has behaved quite similarly to the regular debt measure, rising sharply relative to borrowing appears as debt of a domestic nonfi- GNP in recent years to well above the range nancial unit, and the financial asset acquired has prevailing since the 1950s. as its counterpart, either directly or indirectly, debt of another nonfinancial unit. For example, a The adjusted debt measure can be augmented substantial portion of the funds raised by state by the accumulated net issuance of equity so that and local governments in 1985 was used to it encompasses funds raised in all markets. Alacquire claims on the federal government or though increasing less rapidly than debt or mortgage claims on households. The federal gov- adjusted debt—for example, it rose \2V2 percent ernment also issues debt and uses the proceeds in 1985 on an end-of-period basis, as compared Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 617 with 14!/2 percent for adjusted debt and 15 per- consumer debt and has been accompanied by a cent for debt—the augmented measure also has spectacular buildup of financial assets and a low risen rapidly in recent years in relation to GNP, personal saving rate. In other words, the houseindicating that borrowing to retire equity ex- hold sector has been "grossing up" its balance plains only a small portion of the increase in the sheet in recent years by heavy financial asset debt-GNP ratio. From a longer perspective, this accumulation and borrowing. Financial deregulameasure has remained within its historical range, tion and competition for household assets likely and its recent rise returns it, in relation to GNP, have contributed to this process by expanding to the levels prevailing in the 1950s and early access to market-related yields on deposits and 1960s. other financial assets, while growing competition The evidence thus suggests that unusual be- among lenders for market share and the trend havior of the debt aggregate relative to GNP in toward securitization have added to sources of recent years is related more to changes in under- credit and put downward pressure on household lying behavior than to the special factors just borrowing costs. The corresponding narrowing discussed. The unusual rise in debt relative to of the spread between borrowing and deposit GNP in recent years has been in both the federal rates adds to the willingness of households to and nonfederal components of the aggregate. borrow rather than draw down liquid assets Growth in federal debt strengthened in the early when spending rises relative to income. Demo- 1980s and soared in 1982 with the widening of the graphic factors also appear to have contributed budget deficit. After 1982, growth of federal debt to household debt growth as the baby boom slowed a bit in percentage terms while continuing generation has moved further into the age brackto increase in dollar amounts and relative to et in which spending on housing and durables GNP. Rising federal budget deficits have been and borrowing tend to be high. In addition, associated with rising current account deficits households have benefited from the runup in and a growing gap between domestic purchases stock market prices in recent years, and this and output as net exports have contracted sharp- boost to their net worth may have encouraged ly. From one perspective, the growing federal more borrowing. Even so, household debt deficit can be viewed as being financed by an growth has outstripped increases in net worth. inflow of funds from abroad—the counterpart to For nonfinancial corporations, most of the our current account deficit—which has enabled advance in indebtedness relative to output in the federal government to increase its borrowing recent years stems from the substitution of debt without curbing private spending and credit use for equity, previously discussed. The unevento the extent that would be necessary in the ness of the current economic expansion also absence of those external funds.3 However, the appears to have boosted corporate borrowing erosion of our international competitive position, because some industries—especially those dewhich is reflected in the current account deficit, pendent on export markets and those competing certainly has greatly affected individual induswith imports—have experienced protracted tries. weakness, even though overall cash flows have Debt of each of the nonfederal sectors—house- been strong; thus, working capital and investholds, nonfinancial businesses, and state and ment needs have been less closely matched with local governments—also has increased relative cash flows among firms than is typical, contributto economic activity, even after removing the ing to more rechanneling of funds through credit types of double counting mentioned above. In markets and more corporate borrowing. Finally, the case of households, the exceptional growth state and local government borrowing was espeof debt has been evident in both mortgage and cially heavy in 1985, even after removing the double-counting factors already mentioned, as lower interest rates and the anticipation of tax 3. Not shown in the charts to the appendix is the relation between debt measures and domestic spending (GNP less net reform also fueled a surge in tax-exempt bond exports). In recent years, debt growth has been somewhat issuance for purposes other than advance refundmore in line with growth in domestic purchases than output, ing and mortgage acquisitions. but this ratio, too, has risen sharply. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

618 Profitability of U.S.-Chartered Insured Commercial Banks in 1985 Deborah J. Danker and Mary M. McLaughlin of withstanding the improvement in the overall the Board's Division of Research and Statistics profit picture, however, a record 118 insured prepared this article. Rachel Valcour provided commercial banks failed last year. research assistance. Whether 1985 represents an isolated interruption in the general downtrend of bank profitabil- After a five-year decline, the aggregate profit- ity in the 1980s or marks a longer-run turning ability of insured commercial banks turned point remains to be seen. On the one hand, either somewhat higher in 1985. The industry's return of two special factors—neither of which is suson assets rose to 0.70 percent and its return on tainable at its current pace over the long run— equity to 11.33 percent, but both were still well could be credited solely with the improvement in below their 1979 peaks. Lower market interest profits last year. First, the banking industry rates contributed to a widening of net interest realized capital gains of $1.5 billion on securities margins last year and enabled banks to realize in 1985, a sizable swing from the small net capital gains on securities from their investment portfo- loss posted the previous year. And second, a lios, thereby more than offsetting the effects of a single bank reported a huge year-to-year change, continued deterioration in asset quality that was as Continental Illinois returned to profitability apparent in increased loan-loss provisions. As after experiencing a loss of nearly $1 billion in shown in table 1, interest margins have been 1984. Moreover, loan losses continued to rise, generally well maintained in recent years; how- and the sharp drop in oil prices and associated ever, loan-loss provisions have soared, reflecting dislocations in the energy sector, as well as stresses in a number of key sectors of the domes- continuing weakness in agriculture and overtic economy and in developing countries. Not- building in commercial real estate, all point to 1. Income and expense as a percent of average net assets, all insured commercial banks, 1981-85' Item 1981 1982 1983 1984 1985 Gross interest income 11.93 11.36 9.63 10.23 9.39 Gross interest expense 8.77 8.07 6.38 6.97 6.03 Net interest margin 3.17 3.28 3.25 3.26 3.36 Noninterest income .90 .96 1.03 1.19 1.31 Loss provision .26 .40 .47 .57 .66 Other noninterest expense 2.77 2.93 2.96 3.05 3.17 Securities gains (losses) -.08 -.06 .00 -.01 .06 Income before tax .96 .85 .85 .83 .90 Taxes2 .20 .14 .18 .19 .21 Extraordinary items .00 .00 .00 .01 .01 Net income .76 .71 .67 .64 .70 Cash dividends declared .30 .31 .33 .32 .33 Net retained earnings .46 .40 .34 .33 .37 MEMO: Net interest margin, taxable equivalent3 3.53 3.66 3.60 3.73 3.88 1. Assets are fully consolidated and net of loss reserves. Data are 3. For each bank with profits before tax greater than zero, income based on averages for call dates in December of the preceding year from state and local obligations was increased by [?/(1 - 0] times the and in June and December of the current year. In 1984 data are based lesser of profits before tax or interest earned on state and local on averages for call dates at the beginning and end of the year only. obligations (t is the marginal federal income tax rate). This adjustment 2. Includes all taxes estimated to be due on income, extraordinary approximates the equivalent pretax return on state and local obligagains, and security gains. tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

619 lingering—and possibly worsening—problems 2. Rates paid for fully consolidated liabilities, with asset quality for many banks. all insured commercial banks, 1981-851 On the other hand, a rosier picture of net Percent income would have emerged last year but for Item 1981 1982 1983 1984 1985 banks' efforts to increase their loss reserves. Interest-bearing deposits 13.42 12.10 9.32 9.92 8.55 This prudent step was complemented by an Large certificates of deposit 16.42 14.13 8.90 10.67 8.86 increase in retained earnings, as the industry Deposits in foreign offices2 . 17.37 14.87 10.32 12.62 10.24 Other deposits 10.07 9.99 9.11 8.84 7.95 added to capital with both internal and external Gross federal funds purchased and funds. The ability of the banking system to build repurchase agreements .. 17.53 12.84 9.69 11.23 8.52 reserves and capital and to improve profitability Other liabilities for borrowed money3 13.84 12.81 11.88 13.38 10.76 suggests considerable resiliency as the industry Total 13.89 12.21 9.46 10.19 8.65 continues to adjust to disinflation, the deregulation of deposit rates, and the underlying econom- 1. Calculated as described in the "Technical Note," FEDERAL ic difficulties and imbalances that have impaired RESERVE BULLETIN, vol. 65 (September 1979), p. 704. 2. Series break after 1983. Reporting instructions classified internathe quality of many bank assets. tional banking facilities as domestic offices until the end of 1983 and as foreign offices thereafter. Income data are not sufficiently detailed to allow construction of a consistent series on the new basis for rates of return as has been done for balance sheet data in other tables in this article. INTEREST EXPENSE 3. Including subordinated notes and debentures. With market rates in 1985 about 2 percentage times has led to strong deposit inflows when points below their year-earlier levels, commer- market rates have fallen. cial bank interest expense fell to the lowest point In 1985, retail-type deposits again funded more since the late 1970s. The drop in interest expense of commercial bank assets, with increases both resulted not only from the general decline in in interest-bearing checkable accounts and in rates, but also from the ongoing change in the other retail deposits, which include savings, composition of bank liabilities that over the past small time deposits, and MMDAs. For the first several years has lessened the importance of time in at least 10 years, these interest-bearing money market liabilities in funding bank assets. retail-type deposits significantly exceeded the Deregulated retail-type deposits have been re- money market liabilities of banks, accounting for placing more expensive wholesale money. In 37.5 percent of consolidated assets while money 1985, this trend away from money market liabil- market liabilities totaled 34.9 percent. The deities was most apparent at the larger banks. cline in the importance of wholesale liabilities Combined with the sharper decline in rates paid last year occurred despite a special factor that on wholesale liabilities, which continue to ac- worked to boost certain borrowings. Specificount for a much higher share of liabilities than at cally, partly in response to regulators' urgings, smaller banks, this sizable shift into lower-cost commercial banks have been adding to capital, retail-type deposits led the larger banks to post and various types of subordinated notes (includdeclines in interest expense that were on average ed in table 3 as "other borrowings" and "money half again as large as those recorded at banks market liabilities") are considered either primary with less than $1 billion in assets. or secondary capital for regulatory purposes. Last year's declines in market rates were Consequently, concerns about capital adequacy reflected to varying degrees in the interest rates may have motivated a portion of the increase in paid on bank liabilities, as shown in table 2. The other borrowings, while yield considerations and sharpest decreases were evident in the wholesale slowing asset growth restrained issuance of other liability categories, such as federal funds pur- types of money market liabilities, including large chased and deposits in foreign offices. By con- time deposits and deposits booked in foreign trast, the rate on "other deposits," which in offices. table 2 include all interest-bearing retail-type The decline in interest expense was most prodeposits, fell less than 1 percentage point. The nounced at the larger banks, which derive a sluggish adjustment of rates on these deposits, higher proportion of their funding from wholeand especially on the more liquid accounts, at sale sources with market-related rates of return. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

620 Federal Reserve Bulletin • September 1986 3. Selected liabilities as a percent of total assets, all insured commercial banks, 1981-851 Domestic offices Fully consolidated offices IItteemm 1981 1982 1983 1984 1985 1981 1982 1983 1984 1985 Deposit liabilities 76.09 74.95 74.99 75.32 75.35 78.61 77.61 77.68 77.93 77.46 In foreign offices 15.93 15.79 14.71 12.94 12.47 In domestic offices 62.68 61.82 62.97 64.99 64.99 Demand deposits 25.20 21.03 19.68 19.09 18.63 20.76 17.35 16.53 16.47 16.07 Other checkable deposits 2.95 4.16 4.80 5.03 5.32 2.43 3.43 4.03 4.34 4.59 Large time deposits2 17.15 17.71 14.46 14.17 13.19 14.12 14.61 12.15 12.22 11.38 Other deposits3 30.79 32.05 36.04 37.03 38.20 25.37 26.44 30.26 31.95 32.95 Gross federal funds purchased and repurchase agreements 9.12 9.67 9.28 8.68 8.79 7.54 7.99 7.81 7.51 7.64 Other borrowings 2.18 2.24 2.47 2.47 3.05 2.62 2.64 2.84 2.87 3.37 MEMO Money market liabilities4 28.44 29.62 26.21 25.31 25.04 40.21 41.03 37.51 35.55 34.86 Average assets (billions of dollars) .... 1,598 1,733 1,897 2,086 2,072 1,940 2,101 2,259 2,418 2,577 1. Data are based on averages for call dates in December of the 3. Including savings, small time deposits, and MMDAs. preceding year and in June and December of the current year. In 1984 4. Large time deposits issued by domestic offices, deposits issued data are based on averages for call dates at the beginning and end of by foreign offices, repurchase agreements, gross federal funds purthe year only. chased, and other borrowings. 2. Deposits of $100,000 and over. The nine largest banks in the country saw the other large banks start out with a lower cost average rate paid on their interest-bearing liabil- structure of liabilities than did the money center ities drop nearly 2 percentage points last year. banks, they also experienced a more sizable This figure was larger than that for any other improvement in 1985 in their liability composigroup of banks, despite the fact that the nine tion, as the share of retail-type deposits rose 2.5 money center banks tended to post the smallest percentage points, to account for more than onedecline in rates on any given category of liability; third of consolidated assets. for example, the largest banks dropped their The small and medium-sized banks did not do average rate on retail-type deposits just 43 basis as well in reducing their interest expense and points last year—less than half the average de- ended up with expenses somewhat above those cline elsewhere. This paradox is explained in the at large banks other than money center banks. composition of their liabilities: the largest banks The small banks, although starting with a favorfinanced 57.7 percent of their consolidated assets able structure of liabilities, saw that position with money market liabilities, on which rates deteriorate somewhat last year. Unlike the rest adjust quite promptly to declines in market rates, of the banking industry, they increased the share while the rest of the industry financed a little of their assets funded by money market liabilmore than a quarter of its assets this way. ities, stepping up their issuance of large time Moreover, the trend toward lower interest ex- deposits. In addition, they continued to face a pense at the nine money center banks was rein- significant runoff of demand deposits. Although forced by a favorable shift in the structure of small banks gained some interest-bearing retail their liabilities away from the wholesale money deposits, the increase was less than half the that provides the bulk of their financing and average at other banks, and small banks contintoward lower-cost retail-type deposits. Never- ued to have to pay a higher average rate on these theless, the average interest expense at these deposits than did other banks. (Data on balance very large banks remained the highest in the sheet composition, earnings, and rates paid and industry, owing to the continued importance of earned are displayed in appendix table A.2, wholesale liabilities on their balance sheets and disaggregated by bank size.) the relatively high rates they apparently paid for those liabilities. The group of large banks other than money INTEREST INCOME center banks also reduced their interest expense by a substantial amount last year, to the lowest The lower market rates in 1985 also affected among the size categories. Not only did these commercial bank interest income, which in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of U.S.-Chartered Insured Commercial Banks in 1985 621 4. Rates of return on fully consolidated portfolios, the current economic expansion, lower interest all insured commercial banks, 1981-85' rates encouraged stepped-up real estate borrow- Percent ing last year, but reduced C&I loan growth. Business borrowing was diverted to the long- Item 1981 1982 1983 1984 1985 term markets, where corporations took advan- Securities, total 9.28 9.96 9.83 9.95 9.39 tage of rates that had fallen to the lowest level State and local government .. 6.74 7.20 7.04 7.50 6.87 since the start of the 1980s. The largest banks Loans, gross 16.32 15.17 12.69 13.65 12.42 Net of loss experienced a substantial drop in the proportion provision 15.59 14.17 11.59 12.54 11.16 Taxable equivalent2 of C&I loans in their portfolios. Not only are Total securities ... 11.65 12.43 12.06 12.18 11.66 their customers most likely to include those State and local government .. 11.96 12.81 12.58 13.44 12.41 businesses that would have ready access to bond Total securities and gross loans ... 15.07 14.39 12.41 13.31 12.24 markets, but these top banks also continued to record significant sales of C&I loan participa- 1. Calculated as described in the "Technical Note," FEDERAL tions. In contrast, small and medium-sized RESERVE BULLETIN, vol. 65 (September 1979), p. 704. 2. See table 1, note 3. banks, which hold relatively low proportions of business loans in their portfolios, experienced some increases in these shares last year. aggregate dropped 84 basis points to 9.39 percent Overall, securities increased slightly as a share of total net assets. As in the case of interest of consolidated bank assets in 1985. As shown in expense, shifts in balance sheet composition table 5, this small net change masked a decrease influenced the pass-through of lower interest in the importance of U.S. government securities rates to profit-and-loss statements. The decline that about offset strength in state and local in interest income was moderated, and thus net obligations. The upturn in the share of these taxincome was bolstered, by a shift in bank portfo- exempt securities was the first in nearly 15 years, lios in the aggregate away from relatively low- spurred in part by reactions to congressional tax yielding assets, such as U.S. government securi- reform proposals that specified January 1, 1986, ties and interbank deposits, and toward loans as the effective date for eliminating the tax and tax-exempt securities, which were quite at- deductibility of carrying costs on such securities. tractive on a taxable-equivalent basis last year State and local issuers raised a massive volume (see table 4). of funds last year, in response both to the tax Loans rose to more than 58 percent of consoli- reform proposals and to the lower level of interdated bank assets last year, as increases in est rates. This bloated supply helped keep taxconsumer and real estate loans more than made exempt yields high relative to other interest up for sluggish farm and commercial and indus- rates, contributing to the attractiveness of state trial (C&I) loans. While consumer loans contin- and local bonds late last year. Only small banks ued to increase at about the rapid rate typical of devoted a reduced share of their assets to these 5. Selected portfolio items as a percent of total assets, all insured commercial banks, 1981-85' Domestic offices Fully consolidated offices IItteemm 1981 1982 1983 1984 1985 1981 1982 1983 1984 1985 Interest-earning assets 81.56 82.83 82.63 83.00 82.95 84.59 85.87 85.96 85.74 85.82 Loans 55.05 55.21 54.18 56.11 56.28 55.91 56.82 56.46 57.67 58.16 Securities 20.09 19.58 20.31 19.84 19.87 17.00 16.56 17.47 17.58 17.71 U.S. government 10.45 10.40 11.65 11.46 10.92 8.63 8.59 9.79 9.89 9.43 State and local government 9.20 8.75 8.11 7.80 8.29 7.62 7.25 6.84 6.76 7.19 Other bonds and stocks .44 .43 .54 .59 .66 .75 .73 .83 .93 1.09 Gross federal funds sold and reverse repurchase agreements 4.81 5.30 5.13 4.81 5.22 3.99 4.41 4.34 4.17 4.51 Interest-bearing deposits 1.61 2.75 3.01 2.25 1.57 7.69 8.06 7.69 6.33 5.44 MEMO: Average assets (billions of dollars) 1,598 1,733 1,897 2,086 2,072 1,940 2,101 2,259 2,418 2,577 1. Data are based on averages for call dates in December of the 1984 data are based on averages for call dates at the beginning and end preceding year and in June and December of the current year. In of the year only. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

622 Federal Reserve Bulletin • September 1986 obligations, probably because deteriorating prof- 1. Components of net income as a percent of its left them with less need for tax shelters. A average net assets decline in tax-exempt securities as a share of Percent assets was most noticeable at small agricultural NET INTEREST MARGIN and energy banks, whose earnings have been 3.5 under particular pressure.1 As with interest expense, the decline in interest income last year was sharpest at the larger banks. The interest income of smaller banks tends to be less variable because they have assets with longer average maturities; they hold, for example, a far higher proportion of securities than do the largest banks. Last year, additional NET NONINTEREST MARGIN1 downward pressure on interest income at the -1.5 nine money center banks arose from a substantial decline in loans as a share of their assets; these higher-yielding loans were replaced in part by sales of federal funds and reverse repurchase -2.0 agreements. i i i i i i i i i i I i i i l LOSS PROVISIONS .75 NET INTEREST MARGIN In the aggregate, insured commercial banks increased their net interest margin 10 basis points in 1985, to 3.36 percent of total net assets (see chart 1). The nine largest banks, which form the group with the lowest interest margin, were the 1. Excluding loss provisions. only size class of bank to post a decline on average in that margin. This decline, however, support income at these banks, while a shift was more apparent than real because the drop away from money market liabilities helped conwas caused by a reallocation of assets toward trol their expenses; both of these shifts were tax-exempt securities, which generally carry larger (as a share of assets) than at any other lower rates than do taxable assets; adjusting for size class. this influence, the interest margin of money This group of large banks, however, did not center banks increased 9 basis points. On this show the same kind of dominance in securities taxable-equivalent basis, the only category of gains. While these banks registered a rise in their banks to experience a narrowing of its interest taxable-equivalent interest margin that was doumargin in 1985 was the group of smaller banks ble that for the rest of the industry, their increase that do a relatively large amount of energy lend- in capital gains was equal to the industry avering. At the other extreme, the large banks, age. In the aggregate, commercial banks took excluding the top nine, posted an increase of 23 advantage of lower interest rates to sell securities basis points in their taxable-equivalent interest from their investment portfolios last year, realizmargin. A sizable shift toward tax-exempt secu- ing capital gains, expressed as a percentage of rities and consumer and real estate loans helped their consolidated net assets, of 6 basis points— contrasting with a small loss on such transactions 1. Agricultural banks are defined as those at which the in 1984. (This increase in securities gains was ratio of total farm loans to total loans is above the unweighted equal to the rise in overall commercial bank net average of such ratios at all banks. Energy banks include income last year.) Capital gains were widegenerally those with energy loans and leases in excess of 25 percent of primary capital. spread, varying little from size group to size Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of U.S.-Chartered Insured Commercial Banks in 1985 623 group, with slightly larger gains at banks suffer- cent last year. Since loan-loss reserves are ing more pressure on earnings. counted as primary capital for regulatory purposes, incentives to improve capital-to-asset ratios may have been a minor consideration moti- LOAN LOSSES vating additions to these reserves. For the industry as a whole, the charge-offs taken last The upturn of profitability in 1985 occurred de- year lowered somewhat the proportion of loans spite the continuing rise in loan-loss provisions. on nonaccrual status, to 2.2 percent by the end of The industry as a whole increased additions to the year. The proportion of loans that were loss reserves 10 basis points to 0.66 percent of delinquent, whether still accruing interest or not, average net assets—nearly triple the level at the also declined during 1985. beginning of the decade (see chart 1). These The steep upturn in loan-loss provisions in the provisions represent current revenues that com- 1980s was spread across all size classes of banks. mercial banks have diverted from profits to raise Unlike the period from 1973 to 1975, in which or replenish their reserves for loan and lease loan-loss increases were sharper at larger banks, losses. The loan-loss reserve, in turn, is a bal- small banks posted as large a rise in loan-loss ance sheet item that must be maintained at a provisions after the latest recession as did money level adequate to absorb anticipated losses, and center banks (chart 3). Last year, as shown in it may not be allowed to dip below zero when bad table 6, loan-loss provisions at small banks and at loans are charged off against it. Recent experi- the largest banks rose most quickly. The deterioence with loan-loss provisions has shown them ration of asset quality at small banks was particuto be closely related to same-period charge-offs larly marked at banks with heavier concentraof loans. And charge-offs, which generally had tions of lending to farmers and energy-related been related to the cyclical position of the econo- businesses. Loan-loss provisions as a share of my, have risen without interruption so far in the net assets at those banks rose especially steeply, 1980s, despite the fact that 1985 was the third to more than double the national average. Small year of an economic expansion. agricultural banks charged off in excess of 2 These two measures of portfolio quality are percent of their loans and small energy banks, displayed in chart 2, expressed as a proportion of IVi percent. Moreover, these charge-offs are total loans. Charge-offs of bad loans, net of likely to be followed by more, for—unlike the recoveries, rose to 0.86 percent of average loans. rest of the industry—both groups showed large The higher level and faster growth of loss provi- increases in the proportion of their loans placed sions relative to charge-offs imply that bank on nonaccrual status. reserves against losses have been bolstered. In- Banks with assets between $100 million and $1 deed, a memo item in appendix table A.2 shows billion exhibited fewer problems. Their loan-loss loss reserves growing from 0.55 percent of aver- provisions and net charge-offs grew more than age consolidated net assets in 1981 to 0.79 per- the industry average, but the levels of both ratios 2. Net loan losses and provisions as a percent of average loans 3. Loss provisions as a percent of average net assets Percent Percent Less than SI00 million Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

624 Federal Reserve Bulletin • September 1986 6. Loan losses and recoveries, all insured commercial banks, 1984-85 Millions of dollars, except as noted Net charge-offs YYeeaarr aanndd ssiizzee ooff bbaannkk11 LLoosssseess RReeccoovveerriieess LLoossss cchhaarrggeedd Percent of pprroovviissiioonn Amount loans2 1985 All banks 15,521 2,694 12,826 .86 16,967 Less than $100 million 3,273 454 2,819 1.38 3,320 $100 million to $1 billion 2,841 461 2,380 .83 33,,009999 $1 billion or more Money center banks 3,864 557 3,307 .86 4,605 Others 5,543 1,223 4,320 .69 5,943 1984 All banks 12,912 2,141 10,771 .77 13,690 Less than $100 million 2,304 399 1,905 .95 2,401 $100 million to $1 billion 2,160 423 1,737 .65 2,236 $1 billion or more Money center banks 2,604 452 2,152 .57 2,930 Others 5,844 867 4,977 .90 6,122 1. Size categories are based on fully consolidated assets at year- preceding year and in June and December of the current year. In 1984 end. data are based on averages for call dates at the beginning and end of 2. Data are based on averages for call dates in December of the the year only. remained slightly below the averages for all 0.9 percent. Although the delinquency rate rebanks. The proportion of loans at these medium- ported by the money center banks declined from sized banks that were delinquent rose somewhat, 1984, it remained slightly above the industry but remained below that for any other category average, and the share of loans that were classiof banks. fied as nonaccruing increased. Data for the large banks other than money center banks improved, although the results were dominated by the turnaround at Continen- OTHER NONINTEREST EXPENSES tal Illinois. At these banks, provisions for loan AND NONINTEREST INCOME losses declined 8 basis points to 0.56 percent of net assets, and charge-offs declined to 0.69 per- The margin between noninterest income and cent of loans. Excluding Continental Illinois expenses at commercial banks was little changed from the calculations results in both of these last year, in keeping with its trendless behavior ratios remaining about unchanged last year rela- in recent years (see chart 1). Noninterest income tive to the preceding year—which still is better rose 13 basis points relative to assets to 1.31 than for the remainder of the banking industry. percent of net assets, while noninterest expenses The large banks other than money center banks (excluding loan-loss provisions) rose 12 basis also recorded a significant improvement in the points to 3.17 percent of net assets. ratio of delinquent loans to total loans. The drop Unlike the rest of the industry, the money in the ratio at this group accounted for most of center banks improved their net performance on the improvement industrywide last year. noninterest items 15 basis points. They posted a As mentioned earlier, money center banks very large increase in noninterest income, which sharply increased their provisions for loan came about equally from gains on trading aclosses, to 0.74 percent of net assets, and also count securities and from the undifferentiated increased their charge-offs at a faster rate than "other noninterest income." Noninterest exdid other banks. These top nine banks indicated penses also grew relatively rapidly at these largthat half of their loss provisions were attributable est banks, but were more than offset by the to international operations. Indeed, last year, income gains. Other banks experienced smaller C&I loans to non-U.S. addressees were charged increases in both noninterest income and exoff at a higher rate, 1.3 percent of such loans, penses, but for each size class of bank, the than were loans to U.S.-domiciled businesses, growth of expenses outpaced income, leading to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of U.S.-Chartered Insured Commercial Banks in 1985 625 a deterioration in the noninterest margin at these for the industry—could be credited to the return other banks. For both income and expenses, the to profitability of Continental Illinois in 1985. rises were evident primarily in the "all other" Chart 4 shows the movement in return on categories. Although detailed information is not assets of each size group since 1970. At money directly available, "all other" noninterest in- center banks the return on assets slipped 7 basis come likely was lifted by fees and service points last year, and these nine banks showed the charges (other than those on deposit accounts), largest decline in return on equity, more than 1.8 as banks continued to unbundle financial ser- percentage points, as they added significantly to vices and increasingly charged explicitly for such capital. Medium-sized banks showed a small services. Large banks apparently derived income decline in both ratios. But the problems of enerfrom such off-balance-sheet activities as loan gy and farm lenders were clear in the results for participations, interest rate swaps, and issuance small banks. The return on assets at small agriof standby letters of credit. "All other" noninter- cultural banks dropped 17 basis points to 0.57 est expenses probably were boosted by the costs percent, and their return on equity fell almost 2 of marketing, data processing, and new product percentage points to 6.26 percent. Small energy development. banks fared worse; as a group, these 334 banks posted a net loss last year, with their return on equity having sunk 4.4 percentage points since PROFITABILITY, DIVIDENDS, AND CAPITAL the previous year, to a negative 1.26 percent. The 260 U.S.-chartered commercial banks with Insured commercial banks reversed a five-year foreign offices, which generally are large banks, trend and showed an improvement in aggregate showed a gain of 0.16 percent in return on assets. profits last year. The return on average net assets This improvement occurred despite a decline in rose 6 basis points to 0.70 percent; similarly, the their net income from international operations, return on equity rose 73 basis points to 11.33 which fell to 18 percent of their total profits, percent. In both cases the gains were more than down from 30 percent in 1984, as increased accounted for by the group of large banks other provisions for loan losses attributable to internathan money center banks, which posted an in- tional operations were not offset by better percrease of 24 basis points in its return on assets formance in other aspects of that business. last year (see table 7). About half the improve- The overall proportion of income distributed ment at this group—and all of the improvement as dividends changed little in 1985: it remained at 7. Profit rates, all insured commercial banks, 1981-85 Percent Type of return and size of bank1 1981 1982 1983 1984 1985 Return on assets2 All banks .76 .71 .67 .64 .70 Less than $100 million 1.14 1.07 .96 .81 .70 $100 million to $1 billion .91 .84 .84 .88 .84 $1 billion or more Money center banks .53 .53 .54 .52 .45 Others .66 .60 .54 .53 .77 Return on equity3 All banks 13.09 12.10 11.24 10.60 11.33 Less than $100 million 13.39 12.45 11.12 9.49 8.20 $100 million to $1 billion 12.78 11.74 11.86 12.40 11.71 $1 billion or more Money center banks 13.57 13.27 12.57 11.42 9.61 Others 12.80 11.42 10.15 9.66 13.69 1. Size categories are based on fully consolidated assets at year- 3. Net income as a percent of average equity capital. Data are end. based on averages for call dates in December of the preceding year 2. Net income as a percent of fully consolidated net assets. Data are and in June and December of the current year. In 1984 data are based based on averages for call dates in December of the preceding year on averages for call dates at the beginning and end of the year only. and in June and December of the current year. In 1984 data are based on averages for call dates at the beginning and end of the year only. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

626 Federal Reserve Bulletin • September 1986 4. Return on assets dividends in excess of income—or despite net losses. For the industry as a whole, however, Percent retained income funded a larger share of the increase in equity capital (see table 8), reversing Less than $100 million the decline registered for the two previous years. The primary capital-to-asset ratio of commercial banks rose again in 1985, to almost IVi percent by the end of the year. Large banks raised their ratio Vi percentage point to about 63/4 Nine money center percent; money center banks accomplished this ;i 4 : I I 'I I I :t i t :"' I I II t primarily by issuing mandatory convertible debt 1970 1975 1980 1985 and adding to their loan-loss reserves, while other large banks bolstered shareholder equity. about half. And despite the disparity in profits Medium-sized banks increased their ratio mainly among size classes, the path traced by dividends through equity capital, and the more limited was about the same, rising slightly for each increase at small banks came equally from greatgroup. The only exception was agricultural er shareholder equity and loan-loss reserves. banks, which decreased dividends 3 basis points The improvement in profitability for the indusrelative to assets; even the small energy banks, try as a whole did not appear to continue into the despite their poor performance, kept up their early part of 1986. The average return on assets dividends. Large banks other than money center was 3 basis points lower in the first quarter of banks retained virtually all of the increase in this year than during the corresponding period in their profits last year, adding almost two-thirds 1985. The net interest margin showed no change, of their aftertax net income to retained earnings, as both interest income and expense declined 70 while other banks retained only about 45 percent basis points as a share of net assets. The margin of net income. Small agricultural banks retained between noninterest income and expenses imless than one-third of their profits; and energy proved somewhat, and banks realized larger banks with assets of less than $1 billion paid gains on securities. However, these two factors dividends out of equity on average. About one- were outweighed by the continued escalation of third of these energy banks refrained from dis- provisions for losses, up 11 basis points relative tributing dividends, but almost a quarter paid out to assets over the year-earlier period. • 8. Sources of increases in total equity capital, all insured commercial banks, 1981-85 Millions of dollars, except as noted Item 1981 1982 1983 1984 1985 Retained income1 All banks 8,848 8,284 7,653 7,823 9,452 Large banks2 4,104 4,051 3,621 4,090 6,368 Net increase in equity capital All banks 11,163 9,374 10,739 14,956 14,724 Large banks 5,465 4,578 5,626 9,415 9,403 Percent of increase in equity capital from retained income3 All banks 79 88 71 52 64 Large banks 75 88 64 43 68 1. Net income less cash dividends declared on preferred and 2. Banks with fully consolidated assets of $1 billion or more at yearcommon stock. end. 3. Retained income divided by the net increase in equity capital. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of U.S.-Chartered Insured Commercial Banks in 1985 627 A.l. Report of income, all insured commercial banks, 1981-85 Millions of dollars Item 1981 1982 1983 1984 1985 Operating income, total 247,577 257,293 239,264 274,273 273,529 Interest, total 230,148 237,193 216,059 245,640 240,006 Loans 164,715 168,619 153,323 181,873 179,783 Balances with banks 23,905 23,867 16,739 16,557 13,602 Gross federal funds sold and reverse repurchase agreements 12,183 11,309 9,198 10,464 9,355 Securities (excluding trading accounts) 29,345 33,398 36,799 36,746 37,266 U.S. government 18,019 21,028 24,205 n.a. n.a. State and local government 9,704 10,648 10,620 n.a. n.a. Other1 1,622 1,721 1,974 n.a. n.a. Service charges on deposits 3,892 4,584 5,399 6,512 7,281 Other operating income2 13,538 15,517 17,806 22,121 26,242 Operating expense, total 227,490 238,274 220,236 254,273 252,118 Interest, total 169,078 168,651 143,215 167,335 154,128 Deposits 138,830 141,185 119,843 139,331 128,867 Large certificates of deposit 38,896 37,366 22,523 25,761 22,476 Deposits in foreign offices 46,696 41,754 29,021 35,781 30,013 Other deposits 53,238 62,065 68,299 77,789 76,377 Gross federal funds purchased and repurchase agreements 23,752 20,628 16,438 19,323 16,236 Other borrowed money3 6,496 6,838 6,934 8,682 9,025 Salaries, wages, and employee benefits 27,901 31,244 33,637 36,463 39,346 Occupancy expense4 8,558 9,975 11,101 12,092 13,410 Loss provision 5,080 8,429 10,621 13,690 16,967 Other operating expense 16,873 19,975 21,662 24,694 28,266 Securities gains or losses (-) -1,595 -1,282 -30 -142 1,505 Income before tax 18,491 17,737 18,998 19,858 22,915 Taxes 3,859 2,976 4,076 4,665 5,372 Extraordinary items 57 64 70 217 318 Net income 14,689 14,826 14,992 15,409 17,862 Cash dividends declared 5,841 6,542 7,338 7,585 8,410 1. Includes interest income from other bonds, notes and deben- 4. Occupancy expense for bank premises net of any rental income tures, and dividends from stocks. plus furniture and equipment expenses, 2. Includes income from assets held in trading accounts. n.a. Not available. 3. Includes interest paid on U.S. Treasury tax and loan account balances and on subordinated notes and debentures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

628 Federal Reserve Bulletin • September 1986 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-851 A. All banks Item 1981 1982 1983 1984 1985 Balance sheet items as a percent of average consolidated assets Interest-earning assets 84.59 85.87 85.96 85.74 85.82 Loans 55.91 56.82 56.46 57.67 58.16 Commercial and industrial 21.54 22.81 22.54 22.52 22.09 Real estate 14.37 14.24 14.13 14.77 15.66 Consumer 9.64 9.20 9.17 9.97 10.67 Securities 17.00 16.56 17.47 17.58 17.71 U.S. government 8.63 8.59 9.79 9.89 9.43 State and local government .... 7.62 7.25 6.84 6.76 7.19 Other bonds and stocks .75 .73 .83 .93 1.09 Gross federal funds sold and reverse repurchase agreements 3.99 4.41 4.34 4.17 4.51 Interest-bearing deposits 7.69 8.06 7.69 6.33 5.44 Deposit liabilities 78.61 77.61 77.68 77.93 77.46 In foreign offices 15.93 15.79 14.71 12.94 12.47 In domestic offices 62.68 61.82 62.97 64.99 64.99 Demand deposits 20.76 17.35 16.53 16.47 16.07 Other checkable deposits 2.43 3.43 4.03 4.34 4.59 Large time deposits 14.12 14.61 12.15 12.22 11.38 Other deposits 25.37 26.44 30.26 31.95 32.95 Gross federal funds purchased and repurchase agreements .. 7.54 7.99 7.81 7.51 7.64 Other borrowings 2.62 2.64 2.84 2.87 3.37 MEMO: Money market liabilities .... 40.21 41.03 37.51 35.55 34.86 Loss reserves .55 .59 .63 .70 .79 Effective interest rate (percent) Rates earned Securities 9.28 9.96 9.83 9.95 9.39 State and local government 6.74 7.20 7.04 7.50 6.87 Loans, gross 16.32 15.17 12.69 13.65 12.42 Net of loss provision 15.59 14.17 11.59 12.54 11.16 Taxable equivalent Securities 11.65 12.43 12.06 12.18 11.66 Securities and gross loans . 15.07 14.39 12.41 13.31 12.24 Rates paid Interest-bearing deposits 13.42 12.10 9.32 9.92 8.55 Large certificates of deposit 16.42 14.13 8.90 10.67 8.86 Deposits in foreign offices . 17.37 14.87 10.32 12.62 10.24 Other deposits 10.07 9.99 9.11 8.84 7.95 All interest-bearing liabilities . 13.89 12.21 9.46 10.19 8.65 Income and expenses as a percent of average net consolidated assets Gross interest income 11.93 11.36 9.63 10.23 9.39 Gross interest expense 8.77 8.07 6.38 6.97 6.03 Net interest margin 3.17 3.28 3.25 3.26 3.36 Taxable equivalent 3.53 3.66 3.60 3.73 3.88 Noninterest income .90 .96 1.03 1.19 1.31 Loss provision .26 .40 .47 .57 .66 Other noninterest expense 2.77 2.93 2.96 3.05 3.17 Securities gains or losses (-) -.08 -.06 .00 -.01 .06 Income before tax .96 .85 .85 .83 .90 Taxes .20 .14 .18 .19 .21 Extraordinary items .00 .00 .00 .01 .01 Net income .76 .71 .67 .64 .70 Cash dividends declared .30 .31 .33 .32 .33 Net retained income .46 .40 .34 .33 .37 MEMO Average assets (billions of dollars) 1,940 2,101 2,259 2,418 2,577 Number of banks 14,208 14,123 14,075 13,961 13,916 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of U.S.-Chartered Insured Commercial Banks in 1985 629 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-85—Continued1 B. Banks with less than $100 million in assets Item 1981 1982 1983 1984 1985 Balance sheet items as a percent of average consolidated assets Interest-earning assets 90.84 91.10 91.02 90.77 90.92 Loans 53.72 52.55 51.49 52.26 53.00 Commercial and industrial 12.26 12.91 12.88 12.90 13.47 Real estate 19.60 18.37 17.98 18.88 19.84 Consumer 13.97 12.91 12.28 12.36 12.46 Securities 29.35 29.61 31.00 30.39 29.21 U.S. government 17.38 18.25 20.52 20.85 19.97 State and local government 11.50 10.94 10.01 9.01 8.64 Other bonds and stocks .46 .41 .46 .54 .60 Gross federal funds sold and reverse repurchase agreements 5.87 6.35 5.96 5.53 5.94 Interest-bearing deposits 1.90 2.60 2.57 2.59 2.76 Deposit liabilities 87.56 87.17 87.83 88.18 88.26 Demand deposits 22.52 19.04 17.01 16.11 14.88 Other checkable deposits 4.01 6.14 7.55 8.14 8.55 Large time deposits 10.03 10.67 9.80 10.22 10.92 Other deposits 51.00 51.32 53.46 53.71 53.90 Gross federal funds purchased and repurchase agreements 1.41 1.68 1.21 11..0011 ..8855 Other borrowings .52 .48 .41 .35 .36 MEMO: Money market liabilities 11.96 12.83 11.42 11.59 12.13 Loss reserves .51 .51 .52 .58 .67 Effective interest rate (percent) Rates earned Securities 9.69 10.82 10.58 10.66 10.29 State and local government 6.45 7.24 7.47 7.84 7.74 Loans, gross 14.91 15.34 13.70 14.16 13.36 Net of loss provision 14.27 14.39 12.55 12.80 11.53 Taxable equivalent Securities 11.70 12.95 12.53 1122..2233 1111..8833 Securities and gross loans 13.75 14.46 13.24 13.44 12.81 Rates paid Interest-bearing deposits 11.21 10.% 9.15 99..5544 88..4400 Large certificates of deposit 15.14 13.74 9.20 10.84 9.15 Other deposits 10.56 10.51 9.15 9.34 8.27 All interest-bearing liabilities 11.31 11.01 9.11 9.54 8.39 Income and expenses as a percent of average net consolidated assets Gross interest income 11.55 11.75 10.60 10.89 10.31 Gross interest expense 7.15 7.35 6.32 6.72 6.04 Net interest margin 4.39 4.40 4.28 4.17 4.27 Taxable equivalent 4.93 4.96 4.82 4.66 4.74 Noninterest income .68 .67 .69 .74 .77 Loss provision .29 .42 .51 .63 .86 Other noninterest expense 3.24 3.31 3.29 3.28 3.37 Securities gains or losses (-) -.10 -.02 .01 -.01 .08 Income before tax 1.45 1.31 1.18 .99 .88 Taxes .31 .24 .23 .19 .19 Extraordinary items .00 .00 .00 .01 .01 Net income 1.14 1.07 .96 .81 .70 Cash dividends declared .35 .39 .38 .39 .41 Net retained income .79 .67 .58 .41 .29 MEMO Average assets (billions of dollars) 352 365 373 338833 387 Number of banks 12,353 12,081 11,811 11,554 11,358 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

630 Federal Reserve Bulletin • September 1986 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-85—Continued1 C. Banks with $100 million to $1 billion in assets Item 1981 1982 1983 1984 1985 Balance sheet items as a percent of average consolidated assets Interest-earning assets 88.37 89.34 89.65 89.56 89.88 Loans 54.40 53.71 52.98 54.41 56.03 Commercial and industrial 16.34 16.88 16.84 17.50 17.88 Real estate 20.02 19.38 18.89 19.61 20.99 Consumer 14.00 13.16 12.86 13.14 13.47 Securities 25.68 25.30 26.51 26.17 25.58 U.S. government 13.15 13.48 15.34 15.46 14.60 State and local government 11.88 11.16 10.29 9.76 10.00 Other bonds and stocks .65 .66 .87 .95 .98 Gross federal funds sold and reverse repurchase agreements. 5.46 5.91 5.59 5.41 5.46 Interest-bearing deposits 2.84 4.42 4.58 3.58 2.81 Deposit liabilities 83.18 82.89 84.34 85.13 85.49 In foreign offices .24 .24 .22 .27 .29 In domestic offices 82.94 82.66 84.12 84.87 85.21 Demand deposits 24.97 21.31 19.51 18.71 17.64 Other checkable deposits 3.62 5.21 6.10 6.44 6.82 Large time deposits 14.98 15.35 12.94 12.96 13.15 Other deposits 39.37 40.79 45.57 46.76 47.61 Gross federal funds purchased and repurchase agreements 6.08 6.47 5.21 4.59 4.13 Other borrowings 1.28 1.15 1.21 1.04 1.07 MEMO: Money market liabilities 22.58 23.20 19.57 18.86 18.64 Loss reserves .58 .59 .61 .65 .71 Effective interest rate (percent) Rates earned Securities 9.15 9.96 9.89 9.97 9.51 U.S. government 11.55 12.41 11.86 10.35 10.29 State and local government. 6.52 7.03 7.03 7.43 7.11 Other bonds and stocks .... 10.15 10.52 11.31 10.39 9.14 Loans, gross 15.23 14.70 12.78 13.60 12.60 Net of loss provision 14.56 13.71 11.81 12.65 11.39 Taxable equivalent Securities 11.37 12.27 12.08 12.15 11.77 Securities and gross loans .. 13.90 13.84 12.50 13.13 12.34 Rates paid Interest-bearing deposits 11.47 10.67 8.83 9.33 8.16 Large certificates of deposit 16.05 13.91 8.90 10.88 8.78 Deposits in foreign offices .. 15.84 14.48 9.23 15.77 8.11 Other deposits 9.99 9.71 8.82 8.95 8.02 All interest-bearing liabilities.. 11.98 10.89 8.80 9.39 8.14 Income and expenses as a percent of average net consolidated assets Gross interest income 11.37 11.18 9.92 10.39 9.76 Gross interest expense 7.44 7.19 6.02 6.50 5.76 Net interest margin 3.94 4.00 3.90 3.89 4.00 Taxable equivalent 4.46 4.53 4.42 4.42 4.55 Noninterest income .83 .86 .90 .97 .97 Loss provision .27 .42 .43 .46 .61 Other noninterest expense 3.37 3.45 3.39 3.33 3.40 Securities gains or losses (-) -.10 -.07 -.01 -.01 .06 Income before tax 1.03 .92 .98 1.06 1.02 Taxes .13 .09 .14 .19 .20 Extraordinary items .01 .00 .00 .01 .01 Net income .91 .84 .84 .88 .84 Cash dividends declared .39 .40 .42 .43 .45 Net retained income .52 .44 .42 .44 .39 MEMO Average assets (billions of dollars) 382 413 454 488 511 Number of banks 1,651 1,813 2,012 2,135 2,259 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profitability of U.S.-Chartered Insured Commercial Banks in 1985 631 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-85- Continued1 D. Nine money center banks Item 1981 1982 1983 1984 1985 Balance sheet items as a percent of average consolidated assets Interest-earning assets 80.63 82.19 81.56 81.14 80.32 Loans 59.14 62.27 62.93 63.66 61.85 Commercial and industrial 30.21 32.34 32.31 31.78 29.35 Real estate 8.62 9.16 9.22 9.82 10.49 Consumer 4.50 4.61 4.72 5.28 5.78 Securities 6.48 5.96 6.39 6.68 7.20 U.S. government 2.77 2.37 2.60 2.33 2.22 State and local government 2.39 2.37 2.49 2.90 3.14 Other bonds and stocks 1.32 1.23 1.30 1.45 1.84 Gross federal funds sold and reverse repurchase agreements. 2.11 2.50 2.52 2.51 3.55 Interest-bearing deposits 12.90 11.45 9.72 8.29 7.72 Deposit liabilities 75.37 73.69 72.18 72.08 70.91 In foreign offices 39.86 39.99 37.93 35.21 35.42 In domestic offices 35.51 33.70 34.25 36.88 35.49 Demand deposits 15.06 11.28 11.43 11.83 12.01 Other checkable deposits .83 1.06 1.19 1.24 1.31 Large time deposits 12.95 13.75 10.55 10.62 8.27 Other deposits 6.68 7.61 11.08 13.20 13.90 Gross federal funds purchased and repurchase agreements 7.23 7.27 7.86 7.42 7.59 Other borrowings 4.54 4.75 5.12 5.34 6.46 MEMO: Money market liabilities 64.58 65.76 61.46 58.58 57.74 Loss reserves .49 .54 .59 .69 .84 Effective interest rate (percent) Rates earned Securities 9.89 9.73 9.56 9.72 9.17 U.S. government 10.97 10.81 11.92 11.58 11.51 State and local government. 7.55 7.46 6.33 7.61 6.41 Other bonds and stocks 11.99 11.93 11.46 11.10 11.38 Loans, gross 17.32 15.47 12.64 13.85 12.38 Net of loss provision 16.62 14.63 11.75 12.97 11.06 Taxable equivalent Securities 12.46 12.36 11.86 12.58 11.57 Securities and gross loans .. 16.56 14.94 12.32 13.73 12.29 Rates paid Interest-bearing deposits 15.94 13.95 10.23 11.06 9.41 Large certificates of deposit 16.64 14.47 8.96 10.70 8.97 Deposits in foreign offices .. 17.12 14.89 10.77 12.90 10.55 Other deposits 9.97 10.15 10.02 7.83 7.40 All interest-bearing liabilities.. 16.06 13.84 10.56 11.53 9.76 Income and expenses as a percent of average net consolidated assets Gross interest income 12.55 11.63 9.40 10.22 9.10 Gross interest expense 10.45 9.29 7.00 7.84 6.74 Net interest margin 2.10 2.34 2.40 2.38 2.36 Taxable equivalent 2.25 2.49 2.53 2.83 2.93 Noninterest income .98 1.05 1.12 1.42 1.75 Loss provision .21 .30 .36 .50 .74 Other noninterest expense 1.99 2.25 2.34 2.54 2.71 Securities gains or losses (-) -.05 -.06 .01 .02 .06 Income before tax .83 .77 .84 .78 .71 Taxes .30 .24 .30 .26 .26 Extraordinary items .00 .01 .00 .00 .00 Net income .53 .53 .54 .52 .45 Cash dividends declared .22 .23 .27 .24 .25 Net retained income .31 .30 .26 .29 .21 MEMO Average assets (billions of dollars) 538 564 582 594 623 Number of banks 9 9 9 9 9 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

632 Federal Reserve Bulletin • September 1986 A.2. Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-85- Continued1 E. Large banks other than money center banks Item 1981 1982 1983 1984 1985 Balance sheet items as a percent of average consolidated assets Interest-earning assets 82.33 84.19 84.77 84.62 85.24 Loans 55.33 56.52 56.07 57.78 58.90 Commercial and industrial 22.42 23.70 23.15 23.19 22.98 Real estate 13.02 13.25 13.25 13.74 14.61 Consumer 9.02 8.68 8.88 10.31 11.54 Securities 14.00 13.43 14.28 14.81 15.90 U.S. government 6.14 5.91 7.04 7.35 7.32 State and local government 7.35 6.97 6.58 6.71 7.70 Other bonds and stocks .51 .54 .66 .75 .88 Gross federal funds sold and reverse repurchase agreements 3.68 4.09 4.20 4.01 4.10 Interest-bearing deposits 9.32 10.15 10.21 8.02 6.35 Deposit liabilities 73.89 73.07 73.43 73.77 73.50 In foreign offices 14.01 13.85 13.03 10.77 9.39 In domestic offices 59.89 59.22 60.40 62.99 64.11 Demand deposits 22.02 18.89 18.21 18.37 18.13 Other checkable deposits 2.21 2.92 3.33 3.68 4.00 Large time deposits 16.75 16.75 13.84 13.65 12.53 Other deposits 18.90 20.66 25.02 27.29 29.44 Gross federal funds purchased and repurchase agreements ... 11.84 12.39 12.05 11.68 11.84 Other borrowings 2.94 2.92 3.23 3.29 3.77 MEMO: Money market liabilities 45.53 45.91 42.16 39.39 37.53 Loss reserves .60 .65 .70 .78 .85 Effective interest rate (percent) Rates earned Securities 8.74 9.17 9.16 9.42 8.78 U.S. government 10.64 11.12 11.18 11.13 11.17 State and local government. 6.96 7.24 6.95 7.36 6.50 Other bonds and stocks 12.11 12.66 10.84 11.46 11.03 Lo N an et s , o g f r l o o s s s s provision 1 1 6 5 . .9 8 8 0 1 1 5 3 . . 0 9 8 2 1 1 2 0 . . 2 9 9 9 1 1 2 3 . .3 1 7 1 1 1 2 1 . .0 06 0 Taxable equivalent Securities 11.60 12.09 11.66 12.06 11.51 Securities and gross loans .. 15.55 14.31 12.00 13.10 11.94 Rates paid Interest-bearing deposits 13.92 12.20 9.09 9.73 8.34 Large certificates of deposit 16.88 14.17 8.83 10.52 8.78 Deposits in foreign offices .. 17.98 14.84 9.48 12.04 9.62 Other deposits 9.54 9.66 9.08 8.71 7.85 All interest-bearing liabilities.. 14.55 12.28 9.24 10.04 8.34 Income and expenses as a percent of average net consolidated assets Gross interest income 11.95 11.06 9.19 9.89 9.04 Gross interest expense 9.02 8.00 6.17 6.76 5.73 Net interest margin 2.94 3.06 3.02 3.13 3.31 Taxable equivalent 3.31 3.42 3.35 3.56 3.80 Noninterest income 1.00 1.09 1.19 1.34 1.42 Loss provision .29 .46 .56 .64 .56 Other noninterest expense 2.79 2.97 3.01 3.14 3.26 Securities gains or losses (-) -.10 -.07 -.01 -.02 .05 Income before tax .76 .65 .63 .67 .95 Taxes .10 .05 .10 .16 .20 Extraordinary items .00 .00 .00 .01 .02 Net income .66 .60 .54 .53 .77 Cash dividends declared .30 .29 .29 .27 .29 Net retained income .37 .31 .25 .25 .49 MEMO Average assets (billions of dollars) 668 759 850 953 1,057 Number of banks 195 220 243 263 290 1. See notes to tables in the text. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

633 Industrial Production Released for publication July 15 among a wide variety of products and materials, with only autos and transit equipment showing Industrial production decreased an estimated 0.5 any significant gain. Industrial output in the percent in June after having declined 0.4 percent second quarter dropped about 3 percent at an in May and having increased 0.6 percent in annual rate from the preceding quarter. At 124.1 April. About one-half of the June decrease was percent of the 1977 average, the total index was related to strikes affecting the output of business slightly below that of a year earlier. equipment, construction supplies, and durable In market groups, output of durable consumer materials; the remainder reflected declines goods edged up in June after having declined 2.4 Ratio scale, 1977 = 100 TOTAL INDEX - 140 - - ^ , ~ — 112200 _ Products / — —•— ^ / —< - 100 Y — Materials 1 1 1 1 1 1 80 1 1 140 MWllAClI RI\(i MATERIALS Durable — Nondurable^--/' — 120 ^ Nondurable . O 100 Energy Durable \y 1 1 1 1 1 1 80 i i i 1 1 1 160 _ CONSUMER GOODS 140 INTERMEDIATE PRODUCTS Nnndnrahle 120 Business supplies J s 100 / V V - v/ 80 Construction supplies I I L J I I 240 FINAL PRODUCTS 200 Defense and space 160 Business equipment 140 120 100 Consumer goods 1980 1982 1984 1980 1982 1984 1986 All series are seasonally adjusted. Latest figures: June. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

634 Federal Reserve Bulletin • September 1986 1977 = 100 Percentage change from preceding month PPeerrcceennttaaggee cchhaannggee,, Group 1986 1986 JJuunnee 11998855 May June Feb. Mar. Apr. May June 1986 Major market groups Total industrial production 124.7 124.1 -.9 -.9 .6 -.4 -.5 -.2 Products, total 132.6 131.8 -1.0 -.7 .8 -.4 -.6 .2 Final products 131.9 131.2 -1.2 -1.0 .9 -.5 -.6 -.3 Consumer goods 123.9 123.7 -.6 -.5 1.6 -.4 -.1 2.8 Durable 113.4 113.5 -.3 -2.9 2.8 -2.4 .1 1.4 Nondurable 127.8 127.5 -.7 .3 1.2 .2 -.2 3.3 Business equipment.. 139.6 138.0 -1.3 -1.4 .8 -.4 -1.1 -1.9 Defense and space... 179.5 179.7 -1.4 1.0 .1 .4 .1 3.6 Intermediate products.. 134.9 134.0 -.2 .0 .7 .0 -.7 2.0 Construction supplies 124.3 123.0 -.4 .0 .5 .1 -1.0 3.2 Materials 113.9 113.4 -.7 -1.3 .4 -.5 -.4 -.8 Major industry groups Manufacturing. 128.6 127.9 -.8 -.7 .7 -.2 -.5 1.0 Durable 127.8 126.7 -1.0 -1.0 .7 -.6 -.8 -.7 Nondurable . 129.7 129.6 -.5 -.1 .8 .3 .0 3.3 Mining 100.4 98.9 -2.0 -2.5 -.5 -1.7 -1.5 -10.6 Utilities 111.6 112.0 -1.9 -.2 .6 -1.1 .3 -1.3 NOTE. Indexes are seasonally adjusted. percent in May, Autos were assembled at an 1.0 percent, owing in part to a strike in the annual rate of 8.0 million units in June, up from a lumber industry. In June, output of materials fell rate of 7.6 million in May. Output of nondurable about Vi percent, with durable and energy mateconsumer goods was virtually unchanged again rials reduced further. Output of metals, in particuand has, on average, changed little since last lar, was weak—exacerbated by a strike-related December. Production of home goods weakened reduction in aluminum production. Output of further and in June was about 5 percent below nondurable goods materials was unchanged, but the December high; appliance output has fallen remained about 4 percent higher than it was a especially sharply. Production of business equip- year earlier. ment declined about 1 percent in June, with In industry groups, manufacturing output in reductions in all major categories except transit June declined 0.5 percent, as durables fell 0.8 equipment. Within the business equipment percent and nondurables were unchanged. Outgroup, the largest drop last month was for output put at mines decreased 1.5 percent in June folof commercial equipment, which reflected a lowing a similar decline the preceding month. Oil strike-related decline in communication equip- and gas well drilling, which has accounted for ment. Output of defense and space equipment most of the loss in mining output in 1986, deedged up in June after a gain of 0.4 percent in clined further in June, but less rapidly than in May. preceding months. Utilities output rose 0.3 per- Production of construction supplies declined cent following a decrease of 1.1 percent in May. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

635 Statement to Congress Statement by Paul A. Volcker, Chairman, Board lower prices of oil, by far the most important of Governors of the Federal Reserve System, commodity. With industrial prices steady, the before the Committee on Banking, Housing, and average level of wholesale prices has been de- Urban Affairs, U.S. Senate, July 23, 1986. clining here, and even faster in key countries abroad whose currencies have been sharply ap- I appreciate the opportunity to report once again preciating relative to the dollar. Interest rates on the conduct of monetary policy. I would first here and abroad have also declined appreciably, like to place that matter in the larger context of reflecting both the sense of progress against the performance of the U.S. and the world inflation and the fact that growth has been proeconomy. ceeding well within capacity restraints. As you know, there have been marked con- The large decline in U.S. interest rates and the trasts in the economic performance of different sharply higher stock market over the past year sectors and regions of this country. Consumption suggest that the cost of capital has declined. The has been strongly maintained, and there have fall in oil prices has helped bolster the real been large increases in employment in the broad income of consumers. Meanwhile, the substanservice sector. Housing is being built at a high tial depreciation of the dollar has placed our rate. But industrial activity and business invest- industry in a decidedly better competitive posiment, which had leveled off last year, have tion vis-a-vis other industrial countries. As many declined over the last six months, and the agri- have suggested, these underlying forces should cultural and energy industries are under strong help sustain an economic expansion that has pressure. As a consequence, activity in some already lasted longer than most. areas of the country has advanced rather strong- But I would be remiss in failing to emphasize ly, while severe adjustments are taking place in much less satisfactory aspects of the U.S. and the energy and agricultural belts. world economic situation. There can be no evad- The net result is that the overall economic ing the fact that some fundamental economic growth rate in the United States moderated to adjustments must be made within our economy about 3 percent through 1985 and early 1986, and in the months and years ahead. apparently slackened further in the second quar- The clear challenge is to find the ways and ter of this year. Moreover, growth in other major means to work through those adjustments in a industrialized countries remained slower than in context of sustained growth while also consolithe United States during 1985 and the early part dating and retaining the progress toward price of this year. stability. The conduct of U.S. monetary policy is Throughout this period, sizable increases in obviously relevant to that process. But that employment have continued in this country; the single policy instrument cannot itself provide the unemployment rate has remained generally at a answer. Complementary approaches in the fislittle more than 7 percent; and, relative to the cal, trade, and other policies of this country, and size of the working age population, more people in the approaches of other countries, will be are employed than ever before recorded. In required as well. The hard fact is that, while the Europe, unemployment has also remained rela- need for complementary actions to achieve the tively steady, but at much higher levels. necessary adjustments in the United States and After more than three years of economic ex- world economy seems to be more widely recogpansion, the process of disinflation has contin- nized, progress in coordinating action toward ued, reinforced for the time being by sharply those aims has been limited. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

636 Federal Reserve Bulletin • September 1986 DISEQUILIBRIUM IN THE savings generated elsewhere in the world—sav- INDUSTRIAL WORLD ings that have been so freely available in part only because internal growth in Europe and Some obvious imbalances have developed in the Japan has been relatively slow. economies of the industrialized world. That de- Today the imbalances and strains are clearly velopment is evident most of all in the enormous showing. The forward momentum of our econodeficit in our external trade and current accounts my has been sustained almost entirely by conand in the counterpart surpluses of a few other sumer spending and housing construction, both countries. Unless dealt with effectively and con- of which have been accompanied by unsustainastructively, growing market and political pres- bly heavy borrowing. Savings meanwhile have sures will, sooner or later, inevitably have much remained at a relatively low level, even by past more disturbing consequences. U.S. standards. For more than a year, industrial The problem first clearly emerged some time production in the United States has not grown ago. The powerful thrust of the strong U.S. appreciably, and there has been some decline in economic expansion in 1983 and 1984 had spilled 1986. The pace of business investment has slackout abroad in the form of sharply rising imports, ened. aided and abetted by the exceptional strength of Some of the relative weakness in industrial the dollar internationally. There were, for a output and investment over the past six months while, benefits on all sides. At a time of slack can be attributed to temporary factors and to demand at home, exports to us helped Europe developments peculiar to the United States. For and Japan to restore and maintain their growth. instance, some investment orders were speeded The United States also absorbed a disproportion- up late last year in anticipation of tax reform, and ate share of the necessary external adjustment the debate on the nature of that reform has efforts by the heavily indebted countries of Latin apparently led to some deferral of ordering this America. Those countries have sharply curtailed year. The boom in spending for computers has their imports since 1982, and they have become subsided, and commercial construction, in remore competitive in markets for manufactured sponse to large and growing vacancies of office goods. space, is predictably declining. Probably much At the same time, the United States began to more important in recent months have been very be the recipient of a growing flow of capital from sharp cutbacks in domestic oil exploration and abroad. That inflow, which pushed the dollar so investment, driving energy-producing states into high in the exchange markets until early 1985, recessionlike conditions and affecting production had the practical effect of relieving potential of steel and equipment elsewhere as well. pressures on our internal financial markets even But a large part of the difficulty stems from the in the face of the massive and growing federal continuing imbalances in the world economy. On deficit. Consequently, private investment and the average, growth rates in major European construction could expand. At the same time, the economies and Japan were about 3A percent less competitive pressure from imports encouraged than the reduced growth path of the United strong cost-cutting and productivity efforts in the States during 1985 and the first quarter of 1986. industrial sector. That has been one powerful However, the more disturbing contrast lies in the factor accounting for the near stability of prices source of that growth. of manufactured goods over the past year or In the United States, the rate of growth in more. domestic demand, while slowing in the third year We cannot, however, build a lasting founda- of expansion, continued to average about 33A tion for sustained growth and stability on mas- percent through that period. Domestic demand sive international disequilibrium—huge and ris- growth in the industrialized countries of Europe ing trade deficits in the United States and and Japan was significantly less—about 2Vi percounterpart surpluses abroad. Nor can we count cent. In the early part of this year, when their on satisfying indefinitely so many of our own exports slackened, those countries did not grow needs for capital by drawing so heavily on the at all. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to Congress 637 The plain implication is that our overall GNP a matter of relative importance, much more growth rate was reduced by continuing deteriora- fundamental imbalances in the world economy tion in our trade and current account balances. than unfair trading practices are responsible for With our current account deficit reaching a re- the present pattern of trade deficits and surpluscord annual rate of $135 billion in the first quarter es. Those underlying imbalances can only be of this year, industrial production and invest- dealt with by complementary economic policies, ment were restrained. Meanwhile, foreign sur- not by protectionism. pluses continued to build through much of the Quite clearly it is in no one's interest—neither period, and as their exports have slowed, inter- the United States nor other countries—that we nal demand has not yet, in most of those coun- seek better balance in our external accounts by tries, picked up the slack. deliberately restraining further our own growth Prospects for investment and for manufac- rate. But it is also true that as things now stand, turing activity in the United States are heavily stronger domestically generated growth in the dependent on an improved trade outlook. The United States will not reduce the international sharp decline in the dollar since its peak in early imbalances. Taken alone, it would aggravate our 1985 should help set the stage for such an im- trade deficit further, posing an even more diffiprovement. There is evidence that U.S. produc- cult adjustment problem later. ers find themselves in a stronger competitive As I suggested, the recent changes in the position. However, the deterioration in actual exchange rate can help us to escape that dilemtrade in manufactured goods has slowed little. ma—they should work to improve our trade The decline in the dollar is both relatively position and to reduce the surpluses of others. In recent and from a very high level so that the fact, faced with a combination of appreciating absence of a stronger response in trade so far is currencies and slower growth in overseas marnot entirely surprising. What is of concern is that kets, exporters in both Japan and some Europethe domestic markets of our major industrial an countries are experiencing reduced profits competitors have remained so sluggish, raising a and more sluggish orders from abroad. However, question as to the buoyancy of the markets for in the absence of offsetting internal sources of our exports and of their own growth prospects. expansion, those same pressures could dampen You are well aware that the present imbalance their own prospects for growth. among industrial countries is reflected in strong That possibility is one of several reasons why protectionist pressures in the United States. Yet, we should not rely on exchange rate changes as the President has so strongly emphasized, to alone to produce the needed international adjustabandon our tradition of relatively open markets ments in the world economy. Over a number of would surely be to invite an unravelling of the years, we in the United States will certainly need international trading order. We would then have to shift more of our resources into exports and less trade and more inflation. With that develop- into recovering domestic markets in which imment, prospects for sustained growth both here port penetration has been so high. That shift, and abroad would clearly be placed in jeopardy. very broadly, implies relatively more growth in I know of the complaints about "unfair" trad- manufacturing; relatively less growth in services, ing practices of other countries. We need to deal in government spending, or in other sectors; and with them energetically. But I also know the more savings and less borrowing. For some of clear lesson of experience is that a protectionist the rest of the world, the opposite shift will need retreat by the United States, the world's leading to be at work—less reliance on exports and more economic power, would invite recrimination and on domestic sources of growth. escalation. Certainly, the most effective and Much still needs to be done to ease the way for promising avenue for dealing with the trade those adjustments. For one thing, we in the complaints on all sides will be in the planned United States are not prepared for a really large round of multilateral trade negotiations rather improvement in our trade balance. Our financial than in a tit-for-tat process of mutual retaliation. markets remain dependent on the large capital Moreover, I believe it is demonstrable that, as inflows from abroad that are a necessary coun- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

638 Federal Reserve Bulletin • September 1986 terpart of our trade and current account deficits. made. Collectively, the heavily indebted coun- Moreover, taken by itself, depreciation of our tries of Latin America and elsewhere have made currency in an effort to redress the trade deficit an enormous effort to adjust their external acposes a risk of renewed inflation. counts; in fact in 1984 and 1985 they were in Only as our huge federal deficit is cut can we rough current account balance, in contrast to an comfortably contemplate less borrowing abroad aggregate deficit of about $50 billion in 1982. and provide assurance against renewed inflation. To be sure, that effort for a time was accompa- Put another way, in a growing economy, reduc- nied by sharply lower imports, recession, and tions in the federal deficit will be necessary to lower standards of living as these countries release the real and financial resources necessary brought their spending more in line with their to improve our trading position in a way consis- internal resources. But it is also true that many of tent with rising investment. those countries are again growing, in some cases In a few foreign countries, such as Germany, with vigor, as is the case with the largest single some signs of stronger internal growth have debtor, Brazil. Helped by the reduction in world appeared in recent months. But such signs are far interest rates, external interest burdens have from uniform among key countries abroad, and been reduced appreciably in some countries relamost projections of their growth for this year tive to exports or other measures of capacity to have been lowered, not raised, as exports have pay. A number of Latin American countries have slowed. also made striking progress in dealing with in- With rising currencies and falling oil prices, grained inflation for the first time in many years, some of those countries after years of effort have in the process gaining political support. There now successfully achieved virtual stability in has been considerable, if uneven, progress toconsumer prices. Moreover, their wholesale ward liberalizing their economic structures in prices have declined sharply and are appreciably ways that should encourage more growth and lower than they were a year ago. productivity over time. All of us—and certainly this central banker— In the midst of this progress, the sharp decline can appreciate the importance of maintaining a in oil prices over the past six months has had an broad framework of stability and appropriate enormous adverse impact on the oil-exporting financial disciplines to sustain that progress. heavily indebted countries—Venezuela, Nigeria, What is at issue for some countries is their ability Ecuador, and Mexico. At current oil prices, for to achieve and maintain vigorous internal growth instance, Mexico would lose about a third of its at a time of high unemployment and ample 1985 exports, perhaps as much as 15 percent of resources as external stimulus fades away, as it its government revenues, and the equivalent of must if international equilibrium is to be re- some 5 percent of its GNP. Inevitably, that stored. The appreciation of their currencies and situation poses a new and a severe challenge for the strong deflationary influences of low oil and Mexico—a challenge that will require strong new other commodity prices would appear to offer a efforts to make the necessary economic adjustprime opportunity for reconciling those goals of ments and to improve the structure of their domestic growth and stability. economy. There is no large cushion of external reserves to buffer the shock. Consequently, a large amount of financial resources will have to be marshalled from abroad to help ease the THE INTERNATIONAL DEBT PROBLEM transition, to maintain continuity in debt service, and to provide a solid base for renewed growth. Four years after the international debt problem broke into our collective consciousness in 1982, That combination of adjustment, structural when Mexico abruptly lost access to internation- change, and appropriate financing is, indeed, the al credit markets, that threat to our mutual essence of the approach announced by the Mexiprosperity remains. The renewed difficulties of can government earlier this week. In cooperation the oil-producing countries today should not, with the IMF and the World Bank, Mexico is however, obscure the progress that has been undertaking a wide range of efforts to deal with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to Congress 639 both its short- and its longer-range economic structural reform by the indebted countries with problems. To my mind, their efforts, in the midst reasonably assured financing by international of crisis to move toward a more open, competi- institutions and private banks—is now being tive economy, are particularly encouraging. tested. It is being tested in difficult circum- They have joined the General Agreement on stances not foreseen at the time—the sharp break Tariffs and Trade (GATT), import restrictions in oil prices. But the basic community of interare being rationalized and liberalized, a good ests among borrowers and lenders—and the many state-owned enterprises are being made world at large—in a coherent, cooperative apavailable for sale (or, if too inefficient, shut proach is as strong as ever. down), subsidies are being reduced and eliminat- The debtor countries themselves have an enored, and procedures for approving foreign invest- mous stake in maintaining their creditworthiness ment are being eased. If carried through effec- and in seeking solutions in the framework of tively, those measures promise to work toward open, competitive markets. We all have a strong fundamental improvement in the efficiency, com- interest in international financial order—even petitiveness, and creditworthiness of the Mexi- more when there are other points of strain in the can economy, thereby enhancing prospects for banking system. And, of course, relationships longer-term growth. beyond the purely economic are at stake, for the Today, that country is in recession. But the United States most of all. program clearly contemplates economic recov- The challenge is large, but with cooperation, ery in 1987 and 1988. Certainly, sizable amounts also manageable. Indeed, the same oil price of financing from abroad will be required to decline that has undermined the budgetary and support that effort. About half of that financing trading position of Mexico and other large oil can be committed by the IMF, the World Bank, exporters has relieved the pressure on those who and the Inter-American Development Bank. But are importing oil. Interest rates have declined. A Mexico is calling upon commercial banks, with number of borrowing countries will require sigso much already at stake, to play a large role as nificantly less, rather than more, financing than well. the financing that was contemplated a year ago. In assessing that situation, I would note that Given the enormous progress that was made in the Mexican exposure of commercial banks ap- adjusting external positions, most of the borrowpears not to have increased for some 18 months. ers can look toward more balanced expansion in Indeed, there has been little net new lending to their imports and exports as they grow—among Latin America as a whole over the past year. other things, providing renewed opportunities Taking the entire period since mid-1982, the for American exporters. exposure of American banks to the heavily in- But I must also emphasize one essential ingredebted countries of Latin America relative to dient for success beyond the capacity of the their capital has declined appreciably. That ratio indebted countries to manage. Only a stable, fell from about 120 percent of the capital of growing world economy, with markets open to lending banks to less than 75 percent at the end the developing world, can provide an environof last year, a decline of 38 percent. No doubt, ment that is conducive to economic expansion, there has been a further reduction by now. more normal interest rates, and orderly debt Those exposures, in relative terms, are actual- service by the borrowers. That ingredient is ly considerably less than they were in 1977, when plainly the responsibility of the industrialized the data were first collected. For some time, the world alone. It is one of the reasons why we must pace of lending has, in fact, been well below that collectively deal with the obvious imbalances contemplated by Secretary Baker when he set among us. out a framework for a growth-oriented approach toward the international debt problem at the IMF MONETARY POLICY IN 1986 meetings last autumn. That initiative—essentially contemplating a These larger issues were the background against combination of strong adjustment efforts and which the Federal Reserve has conducted mone- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

640 Federal Reserve Bulletin • September 1986 tary policy in 1986 and reviewed its objectives Similarly, there are some indications of a for growth in money and credit this year and greater willingness of businesses to hold demand next. The results of the review by the Federal deposits at a time of lower interest rates, partly Open Market Committee (FOMC) of target because, with interest rates down, a larger balranges for money and credit for 1986 and tenta- ance is necessary to compensate banks for a tive ranges for 1987 were discussed in the Hum- given amount of services. To some extent, an phrey-Hawkins report that was published and environment of more stable prices may also be sent to the Committee at the end of last week. encouraging larger money holdings. That report also sets out projections for real None of that was predictable with any preciactivity and prices by FOMC members and Re- sion, and the rate of growth in Ml, which ran at serve Bank presidents. almost 13 percent over the first half of the year, As indicated in the report, the posture of was far above the FOMC's target range. Action monetary policy remained broadly accommoda- to restrain that growth within the target range— tive over the past six months. The discount rate which would have required reducing the provihas been reduced in three steps this year IV2 sion of reserves and a significant increase in percent, in part responding to and in part facili- pressures on bank reserve positions—was not tating declines in short-term interest rates of deemed desirable in the light of other important similar magnitude. Long-term interest rates also considerations. moved lower, extending the sharper drops in the One of those considerations was that growth in second half of last year. The general structure of the broader measures of money—M2 and M3— interest rates is now as low as at any time since remained well within their respective target 1977. ranges of 6 to 9 percent, ending the second The reductions in interest rates in 1985 and quarter close to their midpoints. That fact and 1986 have clearly helped support the more inter- other evidence suggested that much of the est-sensitive sectors of the economy, reflected in growth of Ml reflected a shifting of the composipart in the highest level of housing starts since tion of liquid assets rather than excessive, and the late 1970s. The declines have also helped potentially highly inflationary, money creation. ease the debt servicing costs of businesses, farm- That judgment was, of course, reinforced by the ers, developing countries, and the U.S. govern- moderate rate of growth for the economy over ment itself. all, the absence of indications of a strong accel- On the other side of the ledger, as interest eration as the year progressed, evidence of greatrates have declined, the rate of growth in debt er stability in prices of manufactured goods, and has remained at disturbingly high levels, al- declining commodity prices. though there are at least faint signs of a slacken- In looking ahead, the Committee decided to ing in the rate of debt creation after a burst retain the existing ranges of 6 to 9 percent for M2 around the turn of the year. The declines in and M3 this year. The range of 3 to 8 percent that interest rates also clearly helped induce the gen- was set for Ml early in the year was not recalieral public to increase its holdings of its most brated because of the uncertainties as to the liquid assets, including demand deposits and behavior of that aggregate at present. Certainly negotiable order of withdrawal (NOW) accounts the inflationary potential of excessive money included in the narrow measure of the money growth remains a matter of concern. But in supply, Ml. That reaction was undoubtedly am- current circumstances, the Committee decided plified by the fact that interest is paid on NOW that the significance of changes in Ml could only accounts, which are now the favored form in be judged in the context of movements in the which transaction balances are held by individ- broader aggregates, and against the background uals. With interest rate spreads currently quite of movements in interest rates and the economy narrow between NOW accounts and other liquid generally. Taking account of those factors, assets, those accounts no doubt have served growth in excess of the target established at the increasingly as a repository for liquid savings as start of the year will be acceptable. well as for money held for transaction purposes. In circumstances of greater economic, price, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to Congress 641 and interest rate stability, more predictable rela- Those underlying forces are reflected in the tionships between Ml and the economy may projection of FOMC members and Reserve Bank reemerge over time, although the trend of Ml presidents that the overall inflation rate is likely velocity—the ratio between GNP and Ml—will to be somewhat higher next year. That prospect likely be different than it was earlier in the underscores the need for vigilance in the conduct postwar period. However, a firm conclusion of monetary policy. We want to assure mainteconcerning the nature and stability of future nance of the remarkable progress toward stabilvelocity characteristics may take years of experi- ity as the economy grows more strongly and as a ence in the new institutional and economic set- large amount of resources are shifted back to ting. For the time being, in looking to next year, manufacturing industries as our trade balance the Committee set out a highly tentative range of improves. Without such assurance, there would Ml growth of 3 to 8 percent on the assumption be no firm basis for expecting the level of interest that velocity changes will be within the range of rates to remain for long at lower levels or to most postwar experience. However, that judg- decline further. ment—and indeed the weight to be given any Ml In looking toward growth in the range of 3 to range for 1987—will be carefully reviewed at the V/2 percent next year, considerable emphasis start of next year. was placed by Committee members on the poten- The tentative 1987 ranges for M2 and M3 were tial contribution to that growth of a stronger lowered Vi percentage point to 5Vz to 8V2 percent. trade balance. As I emphasized earlier, that shift, That modest reduction, consistent with the long- if it is to take place in the context of sustained term objective of achieving a rate of monetary and stronger world growth, will require approprigrowth compatible with price stability, is judged ately complementary policies here and abroad. to be entirely compatible with a somewhat great- Significant progress toward dealing with our own er rate of economic growth next year, provided budget deficit seems to me a key ingredient in that growth is not accompanied by a marked that overall policy "mix." increase in inflationary pressures. The timing of another important domestic poli- The actual price statistics for some months cy instrument—discount rate cuts—has been inhave, of course, reflected the precipitous drop in fluenced by international financial and exchange the price of oil, and consumer prices have rate considerations. A substantial realignment of dropped slightly this year. But equally clearly, the excessively strong dollar exchange rate has the price of oil will not continue falling so fast, been a necessary and constructive part of achievand at some point could well rise again. More ing the necessary adjustment in external trade. predictably, the large depreciation of the dollar But there are clear dangers in placing excessive will bring in its wake an increase in import prices weight on that approach. of manufactured goods. That impact has been History demonstrates all too clearly that a kind moderated so far by the narrowing of the earlier of self-reinforcing cascading depreciation of a wide profit margins of many of those exporting to nation's currency, undermining confidence and us and by the availability of imports from devel- carrying values below equilibrium levels, is not oping countries, few of which have had any in that nation's interest or that of its trading appreciable appreciation of their currencies vis- partners. Among other things, such a movement a-vis the dollar. of the dollar now could transmit strong inflation- The rate of increase in costs of housing and of ary pressures to the United States and inhibit the many services, which accounts for a large pro- free flow of capital from abroad at reasonable portion of the economy, has decelerated little if interest rates. Moreover, other countries would at all in recent years. With demand strong, find it more difficult to sustain their forward measured productivity gains limited, and com- momentum. pensation increases in service occupations con- In the light of all these considerations, the tinuing to average 4V2 percent or more, those discount rate reductions in March and April were areas continue to lend a chronic inflationary bias timed to coincide with similar changes by one or to the general price level. more other key countries, minimizing any impact Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

642 Federal Reserve Bulletin • September 1986 on the exchange markets and consistent with the The difficulties of some financial institutions desirability of some reduction in interest rates in are one specific example of economic problems the industrialized world generally. that cannot be effectively dealt with by monetary policy alone. Indeed a strength of monetary SOME LESSONS OF RECENT EXPERIENCE policy is that it can respond flexibly to changing circumstances. But it is equally true that a single, Experience over the first half of 1986 under- broad-brush policy instrument cannot, at one scored the difficulty—I would say the impossibil- and the same time, be called upon to stimulate ity—of conducting monetary policy in current the economy, protect the dollar, restrain excescircumstances according to one or two simple, sive debt creation, and shift resources away from preset criteria. For instance, the rapid growth of consumption and back into investment, manudebt and Ml clearly bear watching because of the facturing, and exports—as desirable and imporpotential for aggravating the vulnerability of the tant as all those goals may be. financial structure to adversity and because of Events of recent years have also heavily unthe inflationary potential. However, the weight derscored how cumbersome fiscal policy can be, of the evidence strongly suggests that Ml alone and the difficulties of achieving political consenduring this period of economic and institutional sus on such matters as tax reform and the transition is not today a reliable measure of appropriate legislative framework for financial future price pressures (or indeed a good short- institutions. On an international scale, achieving term "leading indicator" of business activity). consensus on appropriate action can be still more The more restrained performance of the broader difficult. aggregates, as well as the performance of the We have nonetheless come a long way toward economy and prices themselves, point in a differ- restoring growth and stability in this decade. But ent direction. my sense is that all that progress is in growing At the same time pressures on the oil industry, jeopardy unless we act—we in the United States, agriculture, and parts of manufacturing and the we in the industrialized world, and we in the more general disinflationary process are reflect- world as a whole—in mutually supportive ways. ed in strains on some depository institutions. The main directions of that effort seem to me Those strains emphasize the importance of deal- clear enough. The Gramm-Rudman-Hollings ing with factors more directly under the control legislation is an expression of the sense of urgenof lenders themselves: excessive leveraging of cy surrounding our budgetary effort in the United borrowers and loose credit standards. A broad States. The rest of the industrial world needs to array of approaches by the supervisory and achieve and maintain a momentum of "homeregulatory authorities has been necessary to deal grown" expansion. With strong national and with the particular points of pressure in a manner international leadership—and with the cooperconsistent with the stability of the entire fabric of ation of private and public lenders—a construcfinancial institutions and markets. tive resolution of the economic crisis in Mexico The present situation certainly makes even can point the way to a wider resolution of the more pointed the need to provide a stronger debt problem in a context of growth. sense of legislative direction about the evolution Hard as it may be to carry through on those of the financial system over time. There are also efforts, that resolution is what needs to be done if urgent specific pieces of legislation before you to the imbalances in the economy are to be effecpermit the Federal Deposit Insurance Corpora- tively addressed. Then we will have a really solid tion and the Federal Reserve to facilitate inter- base for sustaining the momentum of growth and state acquisitions of failed or failing banks and to the progress toward stability in the years ahead. supplement the resources of the Federal Savings Certainly, the Federal Reserve will play its part and Loan Insurance Corporation. in that effort. • Chairman Volcker presented identical testimony before the House Committee on Banking, Finance and Urban Affairs, July 29, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

643 Announcements CHANGE IN THE DISCOUNT RATE Calculation of the 2Vi year constant maturity was initiated at the beginning of 1980 when a new The Federal Reserve Board announced a reduc- time deposit for small savers was authorized with tion in the discount rate from 6V2 percent to 6 a maximum yield tied to the 2Vi year Treasury percent, effective on Friday, July 11, 1986. yield. All interest rate ceilings on deposits have The action, conforming in part to recent de- subsequently been eliminated. clines in a number of market interest rates, was This special announcement was made so that taken within the framework of the generally depository institutions with time deposit conaccommodative stance of monetary policy that tracts that rely on this rate and any lenders who has prevailed for some time. offer loans or parties who have existing contracts More specifically, the action appeared appro- with variable or adjustable rates tied to this yield priate in the context of a pattern of relatively could make alternative arrangements. slow growth, comfortably within capacity constraints, in the United States and in the industrialized world generally. That pattern has been NEW PUBLICATION accompanied by relatively low prices of a number of important commodities and greater stabil- The Federal Reserve Board has announced the ity in prices of goods generally. Measures of the publication of a new pamphlet, A Guide to broader monetary aggregates—M2 and M3—are Business Credit and the Equal Credit Opportuninear the midpoints of the target ranges set at the ty Act. start of the year. The pamphlet was written to facilitate and In making the change, the Board voted on improve access to credit for business owners, requests submitted by the Boards of Directors of particularly first-time borrowers. It describes the the 12 Federal Reserve Banks. The discount rate credit application process from the lender's peris the interest rate that is charged depository spective and provides guidance on the preparainstitutions when they borrow from their District tion of effective loan proposals. It also discusses Federal Reserve Banks. protections provided by the Equal Credit Opportunity Act (which bars discrimination based on sex, race, national origin, marital status, and CHANGE IN REPORTING OF YIELDS other factors), including the right of a business ON U.S. TREASURY SECURITIES applicant to be informed of the lender's reasons for a credit denial. The Federal Reserve Board announced The pamphlet was prepared in consultation that, beginning with the July FEDERAL RESERVE with the following industry groups: the National BULLETIN, it no longer included in its statistical Association of Bank Women, the American tables the average constant maturity yield on Bankers Association, the Consumer Bankers As- U.S. Treasury notes and bonds with 2Vi years sociation, the Independent Bankers Association remaining to maturity. of America, the National Bankers Association, This figure is obtained from the Treasury De- and the U.S. Small Business Administration. In partment. Since there is no marketable Treasury addition, the National Association of Women security with an initial maturity of 2Vi years, the Business Owners brought to this project the Treasury has decided to discontinue calculating viewpoint of business owners as credit applicants. this yield. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

644 Federal Reserve Bulletin • September 1986 The pamphlet will be distributed to the small- as follows: 188 stocks have been included for the business community through the Federal Re- first time, 160 under national market system serve Banks and the groups that joined in its (NMS) designation; 45 stocks previously on the development. Copies are also available on re- list have been removed for substantially failing to quest from Publications Services, Board of Gov- meet the requirements for continued listing; and ernors of the Federal Reserve System, Washing- 40 stocks have been removed for reasons such as ton, D.C. 20551. listing on a national securities exchange or involvement in an acquisition. The list includes all over-the-counter securities DATA FROM CALL REPORTS designated by the Board pursuant to its estab- TO BE AVAILABLE FROM NTIS lished criteria as well as all securities qualified for trading in the national market system. This Beginning October 1, 1986, the National Techni- list includes all securities qualified for trading in cal Information Service (NTIS), an agency of the tier 1 of the NMS through August 12 and those in Department of Commerce, will assume responsi- tier 2 through July 15, 1986. Additional OTC bility for public sale and distribution of individual securities may be designated as NMS securities bank printouts of the Reports of Condition and in the interim between the Board's quarterly Income. The Board and Federal Reserve Banks publications and will be immediately marginable. will no longer handle such requests. Requests for The next publication of the Board's list is schedindividual reports received by the Board and uled for November 1986. Reserve Banks after September 30, 1986, and In addition to NMS-designated securities, the those for printouts from the June 30, 1986, Call Board will continue to monitor the market activiwill be returned. ty of other OTC stocks to determine which NTIS will be able to produce printouts for all stocks meet the requirements for inclusion and publicly available Call and Income Reports di- continued inclusion on the list. rectly from Federal Reserve Board data. Thus, the quality of the data and level of revision will be the same as those currently available from the PROPOSED ACTIONS Federal Reserve System. Requests should be addressed to the following: The Federal Reserve Board has extended the comment period to August 11 on amendments it Sales Office proposed to Regulation D—Reserve Require- National Technical Information Service ments of Depository Institutions. U.S. Department of Commerce The Board also issued for public comment a 5285 Port Royal Road proposal to allow the head offices of the Federal Springfield, Virginia 22161 Reserve Banks of Minneapolis and Kansas City (703) 487-4650 to continue a tiered-pricing structure for check collection services. The proposal also outlines the conditions under which other Reserve Bank REVISED LIST OF OTC STOCKS SUBJECT TO offices could establish tiered pricing for check MARGIN REGULATIONS collection services. Comment is requested by September 19. The Federal Reserve Board has published a revised list of over-the-counter (OTC) stocks that are subject to its margin regulations, effec- SYSTEM MEMBERSHIP: ADMISSION tive August 12, 1986. OF STATE BANKS This List of Marginable OTC Stocks supersedes the revised list that was effective on May The following banks were admitted to member- 13, 1986. Changes that have been made in the ship in the Federal Reserve System during the list, which now includes 2,750 OTC stocks, are period July 1 through July 31, 1986: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 645 Colorado Kentucky Castle Rock.... Castle Rock Industrial Bank Union Central Trust Company Florida North Carolina Bradenton Bank of Bradenton Charlotte Barclays Bank Miami Interstate Bank of Commerce of North Carolina Texas Austin Lakeland State Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

646 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 20, 1986 these developments offset a further plunge in oil and gas well drilling. The index of capacity 1. Domestic Policy Directive utilization for total industry dropped 0.7 percent further in March to 79.3 percent, its lowest level The information reviewed at this meeting indicat- since December 1983, and apparently changed ed a mixed pattern of economic developments. little in April. On balance, growth in real GNP, estimated by Total retail sales rose Vi percent in April, the Commerce Department to have picked up in primarily reflecting a substantial increase in the first quarter to an annual rate of 3.7 percent, spending for automotive products and continued appeared to be expanding at a relatively modest gains in outlays for general merchandise. Sales of pace in the current quarter. Thus far in 1986, domestic automobiles, sparked by a new series broad measures of prices, heavily influenced by of sales and financing incentives, strengthened to sharp reductions in petroleum prices, had shown an annual rate of 8.0 million units from their declines in energy and food prices and moderate sluggish pace of 6.9 million units in March. Sales increases in prices of most other goods and rose even further in early May to a rate of 8.8 services. million units. Total nonfarm payroll employment rose Total private housing starts increased about 4 200,000 further in April, after increasing about percent in April from a relatively high level. 3A million in the first quarter, but employment During the first four months of 1986, starts trends continued to be unbalanced across indus- averaged nearly 2 million units at an annual rate, tries. Employment in finance and service indus- well above levels of about VA million units in tries remained strong, and hiring at construction each of the previous three years. Issuance of sites picked up substantially after changing little residential building permits also rose somewhat in the first quarter. In manufacturing, however, in April, with the increase concentrated in the job losses were recorded for the third consecu- single-family sector. Permits for multifamily tive month, and the length of the average factory structures fell, apparently in response to high workweek slipped from the high levels registered rental vacancy rates, particularly in the South, at the end of last year. Employment in the oil and and perhaps to heightened uncertainties about gas industry plummeted during the first four the prospects for changes in tax legislation relatmonths of the year, as firms curtailed drilling ing to certain types of real estate investment. activity in response to lower oil prices. The Weakness in the energy sector has contributed civilian unemployment rate edged down to 7.1 to a slowing in business capital spending in percent in April, close to the level that had recent months. Outlays for nonresidential strucprevailed throughout 1985. tures fell sharply as spending on petroleum drill- The index of industrial production rose an ing activity plummeted. Expenditures for capital estimated 0.2 percent in April after steep de- equipment dropped substantially, about reversclines in the preceding two months. The increase ing the rise in the previous quarter that was was attributable mainly to a rebound in motor attributed to purchases of equipment in advance vehicle assemblies, but there were also some of potentially adverse tax law changes. New gains in steel output and in production of equip- orders for nondefense capital goods, which had ment for business and for defense and space; been flat in the fourth quarter, remained lacklus- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

647 ter through March. Recent surveys of capital uncertainty. The Committee agreed that somespending plans point to no more than modest what lesser or somewhat greater reserve regrowth in outlays for the year as a whole. straint might be acceptable over the intermeeting Largely reflecting declines in energy prices, period depending on the behavior of the aggrethe producer price index fell 0.6 percent in April, gates, the strength of the business expansion, its fourth consecutive monthly decline, and over developments in foreign exchange markets, prothe first four months of the year the index was gress against inflation, and conditions in domesdown about 11 percent at an annual rate. The tic and international credit markets. The interconsumer price index had fallen 0.4 percent in meeting range for the federal funds rate was March for the second month in a row, and had retained at 6 to 10 percent. declined at an annual rate of about 2 percent over Ml grew at an annual rate of 14!/2 percent in the first three months of the year. Though move- April, close to its rapid pace in March, and data ments in these indexes were dominated by the available thus far for early May indicated further sharp drop in prices of petroleum products, strong expansion. Ml has expanded more rapidly declines in food prices at both the producer and than the Committee expected at the time of its consumer levels also helped to hold down infla- April 1 meeting, and for the year to date has tion in the first quarter. On the other hand, prices grown at a rate well above the 8 percent upper of goods other than food and energy items gener- limit of the Committee's range for 1986. M2 and ally have been rising in recent months at about M3 expanded in April at annual rates of about the same pace that prevailed last year, while 133/4 percent and IOV2 percent respectively, also prices of services have been increasing a little outpacing the growth paths previously expected faster than in 1985. for the second quarter. However, given its earli- The trade-weighted value of the dollar against er weakness, M2 moved only into the lower part major foreign currencies rose somewhat in the of its long-run range in April, while M3 rose to a week before this meeting but on balance it had level slightly above the midpoint of its range for declined about 43A percent further over the peri- 1986. Expansion of total domestic nonfinancial od since the Committee's meeting on April 1; the debt, which had slowed appreciably over the first largest decline was against the Japanese yen. quarter, appeared to be continuing at a relatively There was little net change over the period in the moderate pace. differential between U.S. and a weighted average Open market operations during the intermeetof foreign interest rates. Throughout the period, ing period were directed at maintaining about the but especially around the time of the Tokyo prevailing degree of pressure on reserve posi- Summit in early May, statements of U.S. and tions. During the three full reserve maintenance foreign officials appeared to influence trading periods after the April 1 meeting, seasonal plus behavior. The U.S. merchandise trade deficit adjustment borrowing from the discount window appeared to have decreased somewhat in the first averaged about $275 million. Borrowing was quarter, as both the volume and average price of exceptionally light in the days immediately preoil imports fell and nonagricultural exports ceding the announcement on April 18 of a reducpicked up. tion in the discount rate from 7 to 6V2 percent, At its meeting on April 1, 1986, the Committee but has averaged a little more than $300 million had adopted a directive that called for maintain- since then. ing about the existing degree of pressure on Federal funds generally traded in the 63/4 to 7 reserve positions. The members expected such percent area over most of the intermeeting perian approach to policy implementation to be od, down about Vi percentage point from the rate consistent with growth of both M2 and M3 at an prevailing around the time of the previous meetannual rate of about 7 percent for the period from ing. Most other short-term rates also declined on March to June. Over the same period, Ml was balance, though by less than the federal funds expected to expand at an annual rate of about 7 and discount rates, while long-term rates moved to 8 percent, but the members recognized that somewhat higher. After declining early in the the behavior of Ml remained subject to unusual intermeeting period, interest rates subsequently Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

648 Federal Reserve Bulletin • September 1986 rose against the background of an upturn in oil tive strengthening in economic activity, memprices, strong money supply growth, further de- bers referred among other developments to the preciation of the dollar, and emerging views apparent improvement in business confidence in among market participants that the scope for many parts of the country. Housing activity was further easing in monetary policy was reduced. described as strong in most areas, and some The staff projections presented at this meeting members cited evidence of a pickup in sales of suggested that expansion in real GNP, though consumer durables related to housing. And alrelatively modest in the current quarter, would though activity in manufacturing industries tendlikely strengthen over the second half of 1986 and ed to remain sluggish, the service induswould be at a moderate pace in 1987. The rate of tries generally were experiencing considerable unemployment was expected to decline margin- growth, including notably the financial services ally over the projection horizon. The general and tourism. While the staff forecast had indicatlevel of prices, as measured by the GNP implicit ed continuing growth of consumer spending and deflator, was projected to rise relatively slowly modest expansion in business fixed investment in the near term, but to pick up later as the and inventories, one member referred to the favorable effects of declining oil prices dissipated possibility that expansion in these key sectors and upward pressures on prices from the dollar's might gather momentum as uncertainties about depreciation tended to intensify. the actual strength of business were resolved In the Committee's discussion of the economic favorably, contributing to a greater acceleration situation and outlook, members commented that in real economic growth. Another member comstronger economic expansion in line with the mented that the buildup of liquidity was seen by staff forecast was a reasonable expectation for many observers as a positive factor for the the second half of the year, but several members expansion, especially in the context of what was also stressed the risks of a different outcome. It viewed as an accommodative monetary policy. was generally noted that there was no firm While broad measures of liquidity had not shown evidence to date of a pickup from the currently particular strength in recent quarters, holdings of sluggish rate of expansion in overall economic cash balances had been expanding rapidly and activity and that weaknesses remained in key were available to support a considerable pickup sectors of the economy such as energy and in spending at some point in the future. agriculture. However, a number of fundamental On the other hand, several members indicated factors pointed to faster growth later, though that the possibility of the expansion remaining there was considerable uncertainty about both weak could not be ruled out. In this regard, a the timing and the magnitude of the prospective number of members indicated that they viewed strengthening. These factors included substan- business fixed investment as a major uncertainty tially reduced interest rates, higher prices in in the overall economic outlook, noting that equity markets, lower oil prices, and the favor- current indicators of future investment remained able effects of the dollar's depreciation on the weak and that there was considerable reluctance international competitiveness of U.S. products. to undertake some investment activities pending At the same time, some members observed that the passage of tax reform legislation. Moreover, inflationary pressures could increase over the the apparent overbuilding of commercial and next several quarters, particularly if domestic other facilities in some parts of the country and demands for goods and services proved to be weak investment demand in depressed sectors of quite strong at a time when the lagged price the economy would tend to inhibit investment effects of the dollar's depreciation were being spending over the quarters ahead. Members also felt. It was noted in this connection that progress referred to shortfalls in revenues of state and toward reducing federal budget deficits was ur- local governments in depressed areas of the gently needed to improve prospects for balanced country as a negative factor. Finally, one memeconomic growth and help protect against re- ber referred to the possibility of an inventory newed inflation. correction should the currently positive business With regard to specific indications of prospec- mood begin to deteriorate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 649 A number of members expressed the view that for the period from the fourth quarter of 1985 to the performance of the economy during the sec- the fourth quarter of 1986 that included ranges of ond half of the year would hinge to a consider- 3 to 8 percent for Ml and 6 to 9 percent for both able extent on foreign developments. Some felt M2 and M3. The associated range for total dothat the main downside risks in the nearer-term mestic nonfinancial debt was set at 8 to 11 business outlook were on the foreign trade side. percent. In keeping with the Committee's usual To an important degree, rising demands for U.S. procedures under the Humphrey-Hawkins Act, exports would depend on faster growth in key these ranges would be reviewed at the July foreign industrial nations, and it was observed meeting when provisional ranges would also be that such growth had been disappointing and a established for 1987. pickup might not occur in the absence of more The Committee's policy discussion focused to stimulative economic policies in at least some of a considerable extent on the members' evaluathose countries. And while a depreciated dollar tion of the recent behavior of the monetary could be expected to have a favorable impact on aggregates, particularly Ml. With varying de- U.S. foreign trade over time, that impact might grees of emphasis, members questioned the reliwell be delayed and muted in an environment of ability of Ml developments as a guide for the slow growth abroad and of highly competitive conduct of monetary policy under prevailing markets for internationally traded goods. Further circumstances. It was noted in this connection growth in protectionism in the United States that the rapid growth in Ml and the associated might likewise have a strongly inhibiting effect weakness in its velocity appeared to reflect to a on U.S. export markets as foreign nations retali- considerable but nonetheless uncertain extent ated. the earlier declines that had occurred in market A number of members raised questions about interest rates in the context of subsiding inflathe outlook for inflation. It was pointed out that tionary expectations and softness in final dethe recently favorable behavior of overall prices mands. From this viewpoint, the relatively rapid was the result of price declines in the energy and growth in the demand for money balances needfood sectors. Those declines would soon be in ed to be accommodated in order to assure a the past, and upward pressures on overall prices satisfactory performance of the economy. On the would reemerge, stimulated in part by the lagged other hand, rapid monetary growth also might inflationary effects of the dollar's depreciation. imply an excessive buildup in liquidity, with Indeed, prices of nonfuel imports were already inflationary implications for the future. In that indicated to have turned up. Even if oil prices context, several members emphasized the need were to stabilize near current levels, their favor- to gauge the performance of Ml in light of able impact on overall prices would tend to wane whether behavior of other, broader, monetary over the quarters ahead, and the possibility of a aggregates provided confirming evidence of a reversal in oil prices could not be dismissed. rapid growth in liquid assets. Agricultural prices also could not be expected to Members noted that expansion of the broader continue trending downward, and indeed some aggregates, despite the more rapid growth in firming had occurred recently. On the more recent weeks, was well within the Committee's favorable side, members referred to the intense ranges for 1986, and indeed near the lower end of competition in many markets and to restrained the range in the case of M2. The more moderate wage settlements in a number of industries. growth of the broader aggregates this year, along Basic cost pressures appeared to be well con- with relatively moderate growth of L, an even tained so far in manufacturing industries al- more encompassing measure of the public's liqthough price and wage pressures in the service uid asset holdings, raised questions as to whether industries remained disturbing. In one view any the growth of Ml really represented a potentially intensification of inflationary pressures might excessive buildup in liquidity or was more of a well be delayed until well into 1987. shift in the composition of liquid holdings in At its meeting in February the Committee had response to relative movements in interest rates. agreed on policy objectives for monetary growth However, continuing growth in M2 and M3 at the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

650 Federal Reserve Bulletin • September 1986 relatively rapid rates experienced recently could able conditions for a pickup in business activity be a matter of increasing concern. One member had to be weighed against the currently sluggish expressed a somewhat differing assessment of growth in overall business activity and the consethe behavior of the broader aggregates this year quent uncertainties surrounding the economic in that the contingent liabilities of banks, most of outlook. One member felt, however, that the which back instruments that are not included in rapid growth in Ml and the potential for in- M2 and M3, also seemed to have grown rapidly. creased inflationary pressures later in the year Moreover, growth of M2 and M3 appeared to and in 1987 argued for some firming. have been held back by investor portfolio shifts With regard to possible adjustments during the into bonds and equities, including mutual funds, intermeeting period, a majority of the members and the unwinding of such shifts could result in felt that policy implementation should be alert to faster growth later. In this view, therefore, less the potential need for some firming of reserve comfort could be taken from the relatively re- conditions, especially if business indicators gave strained growth of the broader aggregates for the a clear signal of a pickup in the rate of economic year to date. expansion and monetary growth did not slow in According to an analysis prepared for this line with expectations. Generally, these memmeeting, the maintenance of the current degree bers did not want to rule out the possibility of of pressure on reserve positions could be expect- some easing in the weeks immediately ahead, but ed to be associated with slower monetary growth they foresaw the potential desirability of such a over the balance of the quarter. Even so, be- course only in the context of appreciably more cause of the substantial expansion in April and sluggish economic performance than was now early May, growth for the quarter as a whole expected. In this connection, one member emwould be considerably faster than was expected phasized that continuing declines in the velocity at the time of the previous meeting, notably in of money in combination with a sluggish ecothe case of Ml. According to this analysis, the nomic performance might warrant some easing unusual surge in demand deposits was likely to of reserve conditions. Other members believed subside over the course of coming weeks, while that there should be no presumptions about the some moderation could also be expected in the likely direction of any intermeeting adjustments, growth of NOW accounts as both depositors and given the prevailing uncertainties about the perdepository institutions completed their adjust- formance of the economy, possible developments to the lower market interest rates that had ments in domestic and international financial emerged. Members indicated broad agreement markets, and the behavior of the monetary aggrewith this analysis, but they questioned the timing gates. Some members also expressed the view and extent of the slower growth. In light of the that the Committee should be tolerant of a shortuncertainties that were involved, some proposed fall of Ml growth below current expectations in omitting numerical references in the directive to light of the rapid expansion of Ml recently and the Committee's expectations for monetary for the year to date. It was noted that account growth in the second quarter. However, despite needed to be taken of the behavior of the dollar the greater than usual uncertainties, a majority of on foreign exchange markets in any intermeeting the members preferred to retain the customary adjustments. procedure of specifying numerical growth expec- At the conclusion of the Committee's discustations in the directive. sion, all but one member indicated their accept- In the Committee's discussion of policy imple- ance of a directive that called for no change in mentation for the period immediately ahead, the existing degree of pressure on reserve posimost of the members indicated that they were in tions. The members expected such an action to favor of continuing to direct open market opera- be associated with a deceleration in monetary tions at least initially toward maintaining the growth over the balance of the second quarter. existing degree of reserve availability. In support Because such growth had been rapid thus far in of this view, members commented that the rapid the quarter, the members anticipated faster growth of the monetary aggregates and the favor- growth of the monetary aggregates, especially Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 651 Ml, than was expected at the time of the April 1 reflecting declines in energy prices, consumer prices meeting. The members recognized that the be- have declined somewhat since late 1985 and producer prices have fallen substantially. havior of Ml remained subject to unusual uncer- In April Ml continued to grow at a rapid pace, tainty, but they agreed that its growth might be in leaving this aggregate above the upper end of its range the area of 12 to 14 percent for the period from for the year. Growth of the broader aggregates, espe- March to June, assuming some decline over the cially of M2, strengthened considerably in April, balance of the quarter. For the same period, M2 bringing M2 into the lower part of its long-run range and M3 slightly above the midpoint of its range for and M3 were now expected to expand at annual 1986. Most short-term interest rates have declined on rates of around 8 to 10 percent. The members balance since the April 1 meeting of the Committee, agreed that if the anticipated slowing in monetary while long-term rates are somewhat higher. On April growth did not occur, somewhat greater reserve 18, the Federal Reserve Board approved a reduction in pressure would be acceptable in the context of a the discount rate from 7 to 6V2 percent. The tradeweighted value of the dollar against major foreign pickup in the expansion of economic activity, currencies has risen somewhat recently but on balance with account being taken of conditions in domesthe dollar has declined further since the April meeting, tic and international financial markets and the particularly against the Japanese yen. behavior of the dollar on foreign exchange mar- The Federal Open Market Committee seeks monekets. On the other hand, somewhat lesser re- tary and financial conditions that will foster reasonable price stability over time, promote growth in output on serve restraint might be acceptable in the event a sustainable basis, and contribute to an improved of pronounced sluggishness in the performance pattern of international transactions. In furtherance of of the economy in association with a marked these objectives the Committee agreed at its February slowing in monetary growth. meeting to establish the following ranges for monetary growth, measured from the fourth quarter of 1985 to The Committee agreed that the current interthe fourth quarter of 1986. With respect to Ml, the meeting range for the federal funds rate should Committee recognized that, based on the experience be reduced by 1 percentage point to 5 to 9 of recent years, the behavior of that aggregate was percent. The reduction was intended as a purely subject to substantial uncertainties in relationship to technical adjustment in the context of an un- economic activity and prices, depending among other things on its responsiveness to changes in interest changed degree of reserve availability and its rates. It agreed that an appropriate target range under purpose was to provide a more symmetrical existing circumstances would be 3 to 8 percent, but it range around the lower federal funds rate that intends to evaluate movements in Ml in the light of its had prevailed for some time. The members re- consistency with the other monetary aggregates, degard the federal funds range as a mechanism for velopments in the economy and financial markets, and potential inflationary pressures. It adopted a range of 6 initiating Committee consultation when its to 9 percent for M2 and 6 to 9 percent for M3. The boundaries are persistently exceeded. associated range for growth in total domestic nonfi- At the conclusion of the meeting the following nancial debt was set at 8 to 11 percent for the year domestic policy directive was issued to the Fed- 1986. eral Reserve Bank of New York: In the implementation of policy for the immediate future, the Committee seeks to maintain the existing The information reviewed at this meeting indicates a degree of pressure on reserve positions. This action is mixed pattern of developments but suggests on bal- expected to be consistent with a deceleration in money ance that economic activity is expanding at a relatively growth over the balance of the quarter. However, in modest pace in the current quarter. Total nonfarm view of the rapid money growth thus far in the quarter payroll employment increased moderately further in and the apparent weakness in velocity, the Committee April following a considerable rise in the first quarter, anticipates faster growth for the monetary aggregates, but employment in manufacturing fell for the third particularly Ml, than expected at the last meeting. M2 consecutive month. The civilian unemployment rate and M3 are expected to expand over the period from edged down to 7.1 percent. Industrial production and March to June at annual rates of about 8 to 10 percent. total retail sales turned up in April following earlier While the behavior of Ml continues to be subject to declines, while housing starts rose somewhat further unusual uncertainty, growth at an annual rate of about from a relatively high level. Weakness in the energy 12 to 14 percent over the period is now anticipated. If sector has contributed to a slowing of business capital the anticipated slowing in monetary growth does not spending. The merchandise trade deficit appears to develop, somewhat greater reserve restraint would be have decreased somewhat in the first quarter, as the acceptable in the context of a pickup in growth of the volume and average price of oil imports fell. Largely economy, taking account of conditions in domestic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

652 Federal Reserve Bulletin • September 1986 and international financial markets and the behavior of the limit between Committee meetings on the dollar in foreign exchange markets. Somewhat changes in System Account holdings of U.S. lesser reserve restraint might be acceptable in the government and federal agency securities specicontext of a marked slowing in money growth and fied in paragraph 1(a) of the authorization for pronounced sluggishness in economic performance. The Chairman may call for Committee consultation if domestic open market operations. The increase it appears to the Manager for Domestic Operations was effective immediately for the intermeeting that reserve conditions during the period before the period ending with the close of business on next meeting are likely to be associated with a federal July 9, 1986. funds rate persistently outside a range of 5 to 9 percent. Votes for this action: Messrs. Volcker, Corrigan, Angell, Guffey, Mrs. Horn, Messrs. Johnson, Mor- Votes for this action: Messrs. Volcker, Corrigan, ris, Rice, and Boykin. Votes against this action: Angell, Guffey, Mrs. Horn, Messrs. Johnson, None. Absent and not voting: Mr. Melzer, Ms. Melzer, Morris, Rice, and Ms. Seger. Vote against Seger and Mr. Wallich. (Mr. Boykin voted as this action: Mr. Wallich. Absent and not voting: alternate for Mr. Melzer.) None. This action was taken on the recommendation Mr. Wallich dissented because he preferred to of the Manager for Domestic Operations. The direct open market operations toward somewhat Manager had advised that through June 17, outgreater restraint. He was concerned about the right purchases of securities thus far in the implications of rapid monetary expansion for intermeeting interval had reduced the leeway inflation and wanted to take action promptly to under the usual $6 billion limit to about %2VA help assure slower monetary growth. billion. It was anticipated that substantial additional purchases of securities in excess of that 2. Authorization for Domestic Open Market leeway would be necessary over the remainder Operations of the intermeeting period. Currency in circulation was expanding rapidly, as expected, while On June 18, 1986, the Committee approved a required reserves were growing considerably temporary increase of $3 billion, to $9 billion, in faster than had been anticipated earlier. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

653 Legal Developments AMENDMENT TO REGULATION K of the Bank Holding Company Act of 1956, as amended ("Act") (12 U.S.C. § 1842(a)(1)), to become a The Board of Governors is amending 12 C.F.R. Part bank holding company by acquiring Independent 211, its Regulation K, relating to the types of foreign Bankers' Bank of Illinois, Springfield, Illinois investments that require the specific consent of the ("Bank"), a de novo bankers' bank. Board. Currently an application to the Board is re- Notice of the application, affording opportunity for quired where the investor banking organization pro- interested persons to submit comments, has been poses to invest more than 10 percent of its capital and given in accordance with section 3(b) of the Act. The surplus in a foreign organization. The amendment time for filing comments has expired, and the Board removes this requirement and permits the investor to has considered the application and all comments remake the investment after prior notice to the Board 45 ceived in light of the factors set forth in section 3(c) of days in advance of the date the proposed investment the Act (12 U.S.C. § 1842(c)). would be made. Applicant, a nonoperating Illinois corporation, was Effective July 8, 1986, the Board amends 12 C.F.R. organized for the purpose of becoming a bank holding Part 211 as follows: company by acquiring Bank, a de novo "bankers' bank" chartered under Illinois law, which will perform Part 211—International Banking Operations correspondent services for independent community banks.1 Bank will only engage in providing banking 1. The authority citation for Part 211 continues to read and banking-related services to other banks. as follows: Section 2 of the Act (12 U.S.C. § 1841(c)), as amended by the Garn-St Germain Depository Institu- Authority: 12 U.S.C. 211 et seq.; 12 U.S.C. 1841 tions Act of 1982, includes bankers' banks in the et seq.-, Pub. L. 95-369, 92 Stat. 607, 12 U.S.C. 3101 definition of "bank," enabling these institutions to et seq.-, Title II, Pub. L. 97-290, 96 Stat. 1235; Title form holding companies. Bank does not do business IX, Pub. L. 98-181, 97 Stat. 1153. with the general public. Instead, Bank intends to provide cash letter remittances and clearings, wire 2. Part 211.5(c)(2) is amended by deleting at the end of transfers, sales and purchases of federal funds, money the first sentence the phrase "if the total amount to be market and securities information, sales and purchases invested does not exceed 10 percent of the investor's of overline commercial and agricultural loans, bank capital and surplus." stock loans, and assistance in origination of large complex credits through the use of consultants. Bank will furnish management services which include credit analysis, documentation and controls, collection and ORDERS ISSUED UNDER BANK HOLDING workout planning, strategic planning, cross selling and COMPANY ACT, BANK MERGER ACT, BANK officer call programs, funds availability analysis, data SERVICE CORPORATION ACT, AND FEDERAL processing analysis, audit procedures and productivity RESERVE ACT measuring. Bank only competes with other banks that offer correspondent banking services in Illinois. The Orders Issued Under Section 3 of the Bank Board has determined that consummation of this pro- Holding Company Act posal will have no significant effect on competition, either existing or potential, and will not affect the Bankers' Bancorp of Illinois concentration of banking resources in Illinois. Springfield, Illinois The financial and managerial resources of Applicant and Bank are considered consistent with approval, in Order Approving Formation of a Bank Holding Company Bankers' Bancorp of Illinois, Springfield, Illinois, has 1. Applicant and Bank are owned by 67 community banks, each applied for the Board's approval under section 3(a)(1) holding 5 percent or less of Applicant's outstanding shares. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

654 Federal Reserve Bulletin • September 1986 view of the nature of the activities of a bankers' bank, and the assumption of liabilities of the closed bank and and the prospects of each appear favorable. Factors solicited offers for the acquisition of such assets and relating to the convenience and needs of the communi- liabilities from qualified purchasers. After following ty to be served also are consistent with approval of this the applicable procedures set forth in the Garn-St proposal. Germain Act, the FDIC on July 14, 1986, accepted Bank also has applied for approval under section 9 Applicant's bid for the assets and liabilities of FNB. of the Federal Reserve Act, 12 U.S.C. § 321 et seq. On the same day, the FDIC advised that Applicant had and section 208.4 of Regulation H, 12 C.F.R. § 208.4, been selected as the winning bidder, and recommendto become a member of the Federal Reserve System. ed immediate action on this application to prevent the Bank appears to meet all of the criteria for admission liquidation of FNB. to membership, including capital requirements and In view of this situation and the need for immediate considerations related to management character and action to prevent the failure of the institution and to quality. Accordingly, Bank's membership application protect the interest of FNB's depositors, it has been is approved. determined, pursuant to section 3(b) of the BHC Act Based on the foregoing and other facts of record, the (12 U.S.C. § 1842(b)), section 225.14(h) of Regulation Board has determined that these applications should Y (12 C.F.R. § 225.14(h)), and section 262.3(1) of the be and hereby are approved. This transaction shall not Rules of Procedure of the Board of Governors of the be consummated before the thirtieth calendar day Federal Reserve System (12 C.F.R. § 262.3(1)), to following the effective date of this Order or later than dispense with the notice provisions of the BHC Act. three months after the effective date of this Order, Under section 3(d) of the BHC Act (12 U.S.C. unless such period is extended for good cause by the § 1842(d)), the Douglas Amendment, a bank holding Board or the Federal Reserve Bank of Chicago, acting company generally may not be allowed to acquire pursuant to delegated authority. control of any bank located outside of the holding By order of the Board of Governors, effective company's principal state of banking operations.1 Sec- July 21, 1986. tion 118(c) of the Garn-St Germain Act, however, exempts from this prohibition applications filed as a Voting for this action: Chairman Volcker and Governors result of a transaction authorized under section 116 of Wallich, Rice, Seger, Angell and Johnson. the Garn-St Germain Act. Section 116 permits the FDIC to authorize the interstate acquisition of a failed JAMES MCAFEE bank with assets of $500 million or more upon compli- [SEAL] Associate Secretary of the Board ance with the procedures specified in the statute. FNB had assets of $1.75 billion as of its most recent report of condition, dated March 31, 1986, and, as noted First Interstate Corporation above, the FDIC has determined to accept Applicant's Los Angeles, California bid. In view of these and other facts of record, the Secretary concludes that approval of Applicant's proposal to acquire a bank in Oklahoma is not barred by Order Approving Acquisition of a Bank the Douglas Amendment. First Interstate Corporation, Los Angeles, California, FNB operates in the Oklahoma City banking mara bank holding company within the meaning of the ket. Applicant's subsidiary banks do not operate in Bank Holding Company Act (the "BHC Act") Oklahoma. Accordingly, consummation of the pro- (12 U.S.C. § 1841 et seq.), has applied for approval posed acquisition would have no effect on competition under section 3(a)(3) of the BHC Act (12 U.S.C. in any relevant market. § 1842(a)(3)) to acquire First Interstate Bank of Okla- In evaluating this application, the Secretary of the homa City, N.A., Oklahoma City, Oklahoma Board has carefully considered the financial and mana- ("Bank"), a newly chartered bank that will purchase gerial resources of Applicant and the effect on these certain assets and assume certain liabilities of The resources of the proposed acquisition. The Secretary First National Bank and Trust Company of Oklahoma concludes that banking factors are consistent with City, Oklahoma City, Oklahoma ("FNB"). On July 14, 1986, FNB was declared insolvent and the Federal Deposit Insurance Corporation ("FDIC") was appointed receiver. Pursuant to section 116 of the 1. A bank holding company's principal state of banking operations Garn-St Germain Depository Institutions Act of 1982 is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or (the "Garn-St Germain Act") (12 U.S.C. § 1823(f)), the date on which the company became a bank holding company, the FDIC determined to arrange for the sale of assets whichever is later. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 655 approval. Considerations relating to the convenience bank holding company by acquiring Bank, which holds and needs of the communities to be served are also total deposits of $60 million.1 Upon acquisition of consistent with approval of the application. Bank, Harco would control the 86th largest commer- Having considered the record of this application in cial bank in Kentucky, holding approximately 0.3 light of the factors contained in section 3 of the BHC percent of the total deposits in commercial banks in Act, the Secretary has determined that the proposed the state. Cole is a nonoperating organization formed transaction is in the public interest and that the appli- to hold 35.5 percent of the voting shares of either cation should be approved on a basis that would not Harco or Bank. Cole would be a bank holding compapreclude immediate consummation of the proposed ny, therefore, through its direct or indirect control of acquisition. On the basis of the above considerations, Bank. the application is hereby approved. Bank is the second largest of the three commercial The transaction may be consummated immediately banks located in the Harlan County banking market but in no event later than three months after the and controls approximately 39.3 percent of the total effective date of this Order unless such period is deposits in commercial banks in the market.2 Princiextended for good cause by the Board or by the pals of Harco, who currently control 71.4 percent of Federal Reserve Bank of San Francisco acting pursu- Bank, also control 73.8 percent of Guaranty Deposit ant to delegated authority. Bank, Cumberland, Kentucky ("Guaranty"), which is By order of the Secretary of the Board acting located approximately 22 miles from Bank and in the pursuant to delegated authority for the Board of Gov- Harlan County banking market. Guaranty, with $28 ernors, effective July 14, 1986. million in deposits, is the third largest bank in the market and holds 18.9 percent of the market's commercial bank deposits. Principals of Bank have con- WILLIAM W. WILES [SEAL] Secretary of the Board trolled Guaranty since August 1961. In analyzing the competitive effects of a proposal to form a bank holding company where individuals con- Harco Bankshares, Inc. trolling more than one bank in the relevant banking Harlan, Kentucky market seek to transfer control of one of the banks to a bank holding company, the Board considers the competitive effects of the transaction whereby common Cole Holding Company, Inc. ownership was established.3 In this case, the Board Harlan, Kentucky has considered the competitive effect at the time the principals of Harco first obtained control of Guaranty Order Approving Formation of Bank Holding in August 1961. At that time, the communities of Companies Harlan, which is located in central Harlan County, and Cumberland, which is located in northeast Harlan Harco Bankshares, Inc., Harlan, Kentucky County, were not considered to be in the same banking ("Harco"), has applied for the Board's approval under market. In 1961, the Harlan County banking market section 3(a)(1) of the Bank Holding Company ("Act") consisted of all of Harlan County except the extreme (12 U.S.C. § 1842(a)(1)) to become a bank holding northern border and the northeastern corner, including company by acquiring all of the voting shares of the Cumberland and two other towns, Benham and successor by merger to The Harlan National Bank, Lynch, which were located in a separate Tri-City Harlan, Kentucky ("Bank"). By separate applicabanking market. tions, Cole Holding Company, Inc., Harlan, Kentucky ("Cole"), has applied for Board approval under sec- The record indicates that the terrain in Harlan tion 3(a)(1) of the Act to become a bank holding County is mountainous, serving to isolate the Tri-City company by acquiring 35.5 percent of the voting stock area from the remainder of the county. In 1961, Harlan of either Harco or Bank. and Cumberland each had their own retail, medical Notice of the applications, affording an opportunity for interested persons to submit comments and views, has been given in accordance with section 3(b) of the Act. The time for filing comments has expired, and the Board has considered the applications and all com- 1. All banking data are as of September 30, 1985, unless otherwise ments received in light of the factors set forth in noted. section 3(c) of the Act (12 U.S.C. § 1842(c)). 2. The Harlan County banking market is defined as Harlan County, Kentucky. Harco, a nonoperating corporation with no subsid- 3. See Mid-Nebraska Bancshares, Inc. v. Board of Governors of iaries. was organized for the purpose of becoming a the Federal Reserve System, 627 F.2d 266 (D.C. Cir. 1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

656 Federal Reserve Bulletin • September 1986 and educational facilities. In addition, the mining Board's approval under section 3(a)(5) of the Act industry, which dominated the county's economy, (12 U.S.C. § 1842(a)(5)) to merge with Southwest limited the need for commuting between the Tri-City Bancshares, Inc., Lafayette, Louisiana ("Southarea and the rest of the county by providing their west"), and thereby indirectly to acquire Southwest employees with low-cost housing close to mining National Bank of Lafayette ("Southwest Bank").1 operations in Benham and Lynch. The average driving Notice of the applications, affording an opportunity time between Harlan and Cumberland in 1961 was for interested persons to submit comments, has been substantial, and only after significant highway im- given in accordance with section 3(b) of the BHC Act. provements in the late 1970s did travel between the The time for filing comments has expired, and the communities increase. The commuting pattern was Board has considered the applications and all comfurther altered by housing changes, including the ments received in light of the factors set forth in phase-out of housing provided by coal companies, and section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). by a recent expansion of Harlan's retail facilities. Applicant is the third largest commercial banking These developments prompted the redefinition of the organization in the state, holding deposits of $2.7 market in 1985 to place Cumberland and Harlan in the billion, representing 8.9 percent of total deposits in same market. The affiliation of the two banks in 1961 commercial banks in the state.2 Southwest is the 102nd thus had no adverse impact on competition, since largest commercial banking organization in Louisiana, Bank and Guaranty operated in separate markets. controlling one bank subsidiary, holding deposits of Accordingly, after consideration of the record, the $62.5 million, representing 0.2 percent of total deposits Board concludes that competitive considerations are in commercial banks in the state. Upon consummation consistent with approval of these applications. of this proposal, Applicant would remain the third The financial and managerial resources of Applicant largest banking organization in Louisiana and would and Bank are consistent with approval. Considerations control approximately the same percent of deposits in of convenience and needs of the community to be commercial banks in the state. Consummation of this served are also consistent with approval. transaction would not have a significant adverse effect Based on the foregoing and other facts of record, the on the concentration of banking resources in the state. Board has determined that consummation of the pro- Bank operates in the Lafayette banking market, posed transactions would be in the public interest and where it controls 4 percent of total deposits in comthat the applications should be approved. The transac- mercial banks and is the sixth largest of eight banks.3 tions shall not be consummated before the thirtieth Applicant's subsidiary banks operate in the New Orcalendar day following the effective date of this Order leans and Alexandria banking markets.4 Since Applior later than three months after the effective date of cant's and Southwest's subsidiary banks do not operthis Order, unless such period is extended for good ate in the same markets, consummation of the cause by the Board or by the Federal Reserve Bank of proposal would not eliminate any existing competi- Cleveland acting pursuant to delegated authority. tion. The Board has also examined the effect of the By order of the Board of Governors, effective proposed merger on probable future competition in the July 2, 1986. relevant markets. On the basis of the number of potential entrants into the relevant markets and the Voting for this action: Chairman Volcker and Governors fact that certain of the markets are not highly concen- Wallich, Rice, Seger, Angell, and Johnson. trated, the Board has concluded that consummation of this proposal would not have any significant adverse effects on probable future competition in any relevant JAMES MCAFEE [SEAL] Associate Secretary of the Board market. Hibernia Corporation 1. Applicant has also applied under section 3(a)(3) of the BHC Act New Orleans, Louisiana to acquire and to exercise options to acquire 25 percent of the shares of Southwest Bank. Applicant states that it would exercise these options only in the event that consummation of the merger transaction Order Approving Merger of Bank Holding appeared unlikely. Companies 2. All banking data are as of June 30, 1985, adjusted to reflect consummation of an acquisition approved by the Board on November 5, 1985. Hibernia Corporation, New Orleans, Louisiana, a 3. Market data are as of December 30, 1984. bank holding company within the meaning of the Bank 4. The New Orleans banking market consists of the parishes of Holding Company Act of 1956, as amended ("BHC Orleans, Jefferson, St. Bernard, and St. Tammany; and the Alexandria banking market consists of the parishes of Rapids and Grant. The Act") (12 U.S.C. § 1841 et seq.), has applied for the Lafayette banking market consists of Lafayette Parish. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 657 The financial and managerial resources and future cant and the Protestants, the private meetings proved prospects of Applicant, Southwest, and their subsid- fruitless and in order to complete the record on this iary banks are considered satisfactory and consistent application, the Board, on April 10, 1986, directed that with approval. a public meeting be held. In considering the convenience and needs of the At the public meeting held in New Orleans on communities to be served, the Board has also taken May 3, 1986, both Applicant and Protestants made into account the records of Applicant's bank subsidiar- detailed written submissions and offered testimony. In ies under the Community Reinvestment Act ("CRA") addition, Applicant advised the Board that it would (12 U.S.C. § 2901 et seq.), particularly Applicant's undertake additional programs and measures in conlead bank, Hibernia National Bank of New Orleans nection with Applicant's service to the convenience ("Bank"). The CRA requires the Board to assess the and needs of the community, including low- and records of those subsidiaries in meeting the credit moderate-income segments. Subsequent to the meetneeds of their entire communities, including low- and ing and in response to concerns expressed at the moderate-income neighborhoods, consistent with their meeting, Applicant has clarified and expanded the safe and sound operation, and to take those records scope of the measures it will undertake to serve the into account in its evaluation of bank holding company convenience and needs of the community. applications. Applicant will designate, at the holding company With regard to Applicant's CRA record, the Board level, a CRA officer with the title of vice president has considered extensive comments from the Louisi- whose responsibility will be to evaluate comments ana Association of Community Organizations for Re- from interested parties and to assure that Applicant form Now ("ACORN") and Local 100, Service Em- meets its CRA obligations. This official will be primariployees International Union, AFL-CIO (collectively ly responsible for assessing the credit needs of the "Protestants"). Protestants allege that Applicant has community, including low- and moderate-income resifailed to assess or meet the needs of low- and moder- dents. As part of this process, the CRA officer will ate-income and minority residents within the New meet with representatives of community groups in Orleans community served by the Bank. Protestants New Orleans, including ACORN, as well as any other argue that Applicant and Bank fail to provide a variety group that has information helpful to Applicant in of needed services in New Orleans, including mort- assessing the credit needs of the community. Appligage and small business loans (particularly FHA, VA, cant will also instruct its loan officers on a regular and SB A guaranteed loans), low-cost, economy basis, in writing, on the policies and practices it checking accounts, and check-cashing services for develops to meet the needs of low- and moderate- U.S. government checks. Moreover, Protestants al- income residents of New Orleans. lege Bank has discriminated on the basis of race in Applicant will establish, initially for a two-year extending credit. period, a mortgage lending program directed primarily In accordance with the Board's practice and proce- at low- and moderate-income residents in New Ordures for handling protested applications,5 the Board leans. During this two-year period, Applicant will reviewed the CRA record of Applicant, the allegations make every reasonable effort to make available a made by Protestants, and Applicant's response, and it minimum of $2 million of VA and FHA first mortgage arranged private meetings between Applicant and loans to low- and moderate-income borrowers. Appli- Protestants, in November 1985 and February 1986, to cant will assess the program's overall success after clarify the issues and provide a forum for the resolu- two years. At that time, Applicant will decide whether tion of differences. Applicant took the position that it to continue the mortgage lending program, expand it, was already meeting the convenience and needs of the or discontinue it, based on the success of the program. New Orleans community and that there was no need to In addition, Applicant will make SBA loans in New discuss concerns expressed by Protestants. Applicant Orleans. Applicant previously provided and will conrejected the proposals made by Protestants, and of- tinue to provide non-SBA small business loans in New fered only to advertise its services in low-income and Orleans. Moreover, Applicant has committed to cash, minority areas and to cash government checks for at no charge, U.S. government checks presented by its customers who agreed to deposit one-half the amount customers with valid Louisiana identification. Appliof the check for at least a one-day clearing period. cant will revise its CRA statement to reflect accurately Thus, in the absence of any dialog between the Appli- the loan programs available to all its customers. Applicant will advertise on a regular basis all of its relevant loan and deposit programs, including its FHA, VA, and SBA loans and its low-cost economy 5. See 12 C.F.R. § 262.25(c). checking account, in newspapers and other media Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

658 Federal Reserve Bulletin • September 1986 designed to reach low- and moderate-income and See also, NBD Bancorp, Inc., 68 FEDERAL RESERVE minority persons. BULLETIN 306, 308 (1982); F&MBankshares, Inc., 66 Applicant also relies strongly on its commitment to a FEDERAL RESERVE BULLETIN 508, 509 (1980); and widely dispersed, evenhanded, consumer lending pro- Michigan National Corporation, 66 FEDERAL REgram. Bank has consumer loans outstanding in 147 of SERVE BULLETIN 247, 249 (1980). the 149 low- and moderate-income census tracts in the Finally, Protestants allege that Applicant engages in city of New Orleans,6 and Bank approves and declines a pattern or practice of racial discrimination in grantapproximately the same percentage of consumer loan ing credit in New Orleans. The Board has carefully applications in those low- and moderate-income cen- considered the record on this issue, analyzing the sus tracts that have predominately a minority popula- information submitted at the public meeting and reletion (minority composition in excess of 80 percent of vant loan documentation. Based upon this review, the total population) as in all such low- and moderate- Board cannot find that individuals were denied credit income census tracts. This program is to be continued on the basis of their race or the character of the area in the future. where they reside. Finally, Applicant will promptly develop a detailed Accordingly, based upon all of the evidence, includplan to reassess the credit needs of the low- and ing the programs and measures that Applicant has moderate-income communities in New Orleans undertaken to serve the convenience and needs of the through meetings with community groups, including community, including low- and moderate-income seg- ACORN. Thereafter, Applicant will submit this plan ments of that community, as well as Bank's record of to the Federal Reserve Bank of Atlanta for approval as consumer lending,8 and the additional monitoring of soon as possible, but in no event later than 90 days Applicant's programs by the Reserve Bank, the Board following the date of this Order. Applicant will furnish concludes that convenience and needs considerations written reports, as required by the Reserve Bank, are consistent with approval of these applications. detailing its progress in implementing its programs to Based on the foregoing and other facts of record, the assess and service the convenience and needs of the Board has determined that the applications should be, community. and hereby are, approved.9 This transaction shall not Despite the commitments now advanced by Appli- be consummated before the thirtieth calendar day cant, Protestants continue to oppose the applications, following the effective date of this Order, or later than in principal part because Protestants believe Appli- three months after the eflFective date of this Order, cant's pilot mortgage lending program should include unless such period is extended for good cause by the conventional mortgage loans at below market rates with the waiver of a number of requirements, such as the assessment of points and fees. While the Board may in some circumstances give appropriate weight to 8. Bank's consumer lending record must be considered in conjunction with its limited mortgage lending record because the Board has commitments for future actions to improve service to found that focusing solely on mortgage lending "does not give a the community,7 the Board does not believe the CRA meaningful picture of a bank's overall service to the community." Marine Midland Banks, Inc., 61 FEDERAL RESERVE BULLETIN 890, or the BHC Act requires the Board to establish the 892 (1975). See also American Security & Trust, 62 FEDERAL RESERVE terms and conditions on which lending activities must BULLETIN 258 (1976); Manchester Financial Corporation, 63 FEDERbe conducted to meet community needs. The Board AL RESERVE BULLETIN 849-850 (1977). 9. The Board has also considered the petition of Protestants to has previously stated that it "finds nothing in the BHC consider this matter at an open meeting, or, in the alternative, to Act that requires or authorizes the Board to dictate a maintain a complete transcript of the discussion of this application at bank's product mix (which credit or deposit services a the closed meeting and to provide one week's advance notice of the closed meeting. The Government in the Sunshine Act, 5 U.S.C. § bank should emphasize) or to dictate what proportion 552b, provides specific exemptions from its general requirement of or amount of an institution's funds must, or even open meetings where, as here, the discussion of a particular item is should be allocated to any particular credit need, likely to result in the disclosure to the public of financial institution examination data and ratings or confidential financial information of borrower or neighborhood, or on what specific terms the applicant. In addition, the Sunshine Act does not require a credit should be extended." Commerce Bancshares, transcript of any portion of an agency meeting that is closed because discussion of a particular item is likely to involve disclosure of Inc., 64 FEDERAL RESERVE BULLETIN 576, 579 (1978). examination data. 12 U.S.C. 552b(f)(l). Finally, the Sunshine Act provides an exception to the one-week notice requirement of agency meetings in the case of an agency that properly closes a majority of its meetings under the financial institu- 6. For purposes of this discussion, a low-income census tract has a tions examination and certain other exemptions. The Board is such an median family income of less than 80 percent of the median family agency and has adopted a regulation to that effect. Therefore, the income in the metropolitan area and moderate-income census tract Board is required to provide notice of a meeting at the earliest has a median family income between 80 percent and 125 percent of the practicable time, a requirement the Board met in this case by actual median family income of the metropolitan area. notice to Protestants two days before the meeting at which this 7. See Board statement of January 3, 1980, Federal Reserve application was considered. Regulatory Service, § 6-1312. For these reasons, the Board has denied Protestants' petition. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 659 Board or by the Federal Reserve Bank of Atlanta, State of Delaware amended its banking law to permit acting pursuant to delegated authority. an out-of-state bank holding company to acquire not By order of the Board of Governors, effective more than two de novo banks that will be "operated in July 17, 1986. a manner and at a location that is not likely to attract customers from the general public in [Delaware] to the Voting for this action: Chairman Volcker and Governors substantial detriment of existing banking institutions in Wallich, Rice, Seger, Angell, and Johnson. this state."2 The proposed acquisition under the Delaware law is WILLIAM W. WILES subject to approval by the State Bank Commissioner. [SEAL] Secretary of the Board On January 27, 1986, the State Bank Commissioner of Delaware preliminarily approved Applicant's formation and acquisition of Bank. Based on the foregoing, InterFirst Corporation the Board has determined, as required by section 3(d) Dallas, Texas of the Act, that the proposed acquisition conforms to Delaware law and is specifically authorized by the Order Approving Acquisition of a Bank statute laws of Delaware. Although Bank is located in the Wilmington banking InterFirst Corporation, Dallas, Texas, a bank holding market,3 under the limitations imposed by Delaware company within the meaning of the Bank Holding law on Bank's operations, Bank is not likely to be- Company Act ("Act"), has applied for the Board's come a significant competitor in that banking market. approval under section 3(a)(3) of the Act (12 U.S.C. § The Board notes that this proposal represents a reor- 1842(a)(3)) to acquire all of the voting shares of Inter- ganization of Applicant's existing credit card opera- First Bank Delaware, New Castle, Delaware tions and that Bank will engage primarily in consumer ("Bank"), a proposed new bank chartered under lending through its credit card operations. Bank will Delaware law that will engage in credit card operations provide consumer credit card services in Texas and and accept time deposits. Oklahoma and intends in the near future to offer such Notice of the application, affording an opportunity credit card services in New Mexico, Arizona, Colorafor interested persons to submit comments, has been do, Kansas, Missouri, Arkansas, and Louisiana. The duly published. The time for filing comments has Board concludes that the proposal will not have adexpired, and the Board has considered the application verse effects on competition or the concentration of and all comments received in light of the factors set banking resources in any relevant area, and that the forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). overall competitive effects of the proposal are consistent with approval of the application. Applicant is the second largest banking organization in Texas, operating 68 subsidiary banks with total In evaluating this application, the Board has considdeposits of $14.2 billion. Bank is a newly chartered ered the financial and managerial resources and future state bank that will be located in Delaware.1 Upon prospects of Applicant and the effect of this proposal consummation of this proposal, Applicant would on these resources. In its evaluation of the financial transfer the credit card operations of Applicant's lead aspects of this proposal, the Board has given particular bank, InterFirst Bank Dallas, to Bank. Because consideration to the fact that this is an internal reorga- Bank's activities are limited by state law, the proposed nization designed to improve operational efficiencies. transaction would have no significant effect on the This proposal is de minimis and will not have a concentration of banking resources in Delaware. material effect on Applicant. Although Bank has no Under section 3(d) of the Act, the Douglas Amend- financial or operating history, its financial and manament, 12 U.S.C. § 1842(d), the Board is prohibited gerial resources and future prospects are favorable. from approving any application by a bank holding In its evaluation of InterFirst's managerial recompany to acquire any bank located outside the state sources, the Board has considered certain violations in which the operations of the bank holding company's by InterFirst's subsidiary banks of the Currency and banking subsidiaries are principally conducted unless the acquisition is "specifically authorized by the statute laws of the state in which such bank is located, by 2. Del. Code. Ann. tit. 5 § 803 (Supp. 1984). The law provides, language to that effect and not merely by implication." however, that each such bank may be operated to attract and retain On February 19, 1981, and on August 13, 1984, the customers with whom that bank, the out-of-state holding company, or the holding company's banking and nonbanking subsidiaries have or have had business relations. 3. The Wilmington banking market is approximated by Cecil County in Maryland, Salem County in New Jersey, and New Castle County 1. Banking data are as of December 31, 1985. in Delaware. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

660 Federal Reserve Bulletin • September 1986 Foreign Transactions Reporting Act4 ("CFTRA") and no net gains in jobs or revenues because of the the regulations thereunder. The Board notes that In- proliferation. terFirst brought these matters to the attention of the Based on the foregoing and other facts of record, the appropriate supervisory authorities after the violations Board has determined that approval of the application were discovered through an internal audit and has would be consistent with the public interest and that cooperated with law enforcement agencies. the application should be and hereby is approved. The In addition, InterFirst and its subsidiaries have transaction shall not be consummated before the thirtiimplemented a comprehensive remedial program to eth calendar day following the effective date of this correct these violations and to prevent violations from Order, or later than three months after the effective occurring in the future. Applicant has advised the date of this Order, and Bank shall be opened for Board that it has filed corrective currency transaction business not later than six months after the effective reports; implemented procedures requiring senior offi- date of this Order. The latter two periods may be cers to monitor compliance with the CFTRA reporting extended for good cause by the Board or by the requirements; and established an automated software Federal Reserve Bank of Dallas, acting pursuant to program at teller windows to help ensure that report- delegated authority. able currency transactions are automatically identified By order of the Board of Governors, effective for proper reporting. Applicant also has instituted an July 21, 1986. intensive internal training program for bank personnel regarding compliance with the CFTRA. Voting for this action: Chairman Volcker and Governors The sufficiency of the compliance procedures adopt- Wallich, Rice, Seger, Angell, and Johnson. ed to address this matter and the efficacy in correcting the deficiencies have been reviewed by the primary JAMES MCAFEE supervisors of the banks involved. The Board also has [SEAL] Associate Secretary of the Board consulted with appropriate enforcement agencies with respect to this matter, and has considered InterFirst's past record of compliance with the law. For the Orders Issued Under Section 4 of the Bank foregoing reasons, and based upon a review of all of Holding Company Act the facts of record, including the nature of this proposal, the Board finds that the financial and managerial First Bank System, Inc. resources and future prospects of Applicant are con- Minneapolis, Minnesota sistent with approval. Upon consummation of this proposal, Applicant Order Approving Application to Engage in the plans to offer Bank's customers new products and Activity of Making and Servicing Loans services not currently available to them, such as a premium service credit card and credit card registra- First Bank System, Inc., Minneapolis, Minnesota, a tion. The Board concludes that factors relating to the bank holding company within the meaning of the Bank convenience and needs of the community to be served Holding Company Act ("Act") (12 U.S.C. § 1841 are consistent with approval of the application. et seq.), has applied for the Board's approval under Even though this application is being approved, the section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) to Board expresses its concern about the proliferation of engage de novo through its subsidiary, FBS Credit statutes of this type which permit the entry of out-of- Services, Inc. ("Company"), Minneapolis, Minnesostate bank holding companies in order to shift jobs and ta, in acquiring low-quality assets in connection with revenues from other states, while limiting the in-state the sale of some of Applicant's subsidiary banks. activities of out-of-state owned banks so as to avoid Notice of the application, affording interested percompetition with in-state banking organizations.5 sons an opportunity to submit comments, has been These statutes do not appear to be based on appropri- duly published (51 Federal Register 17,408 (1986)). ate public policy considerations for assuring a stable The time for filing comments has expired, and the and sound banking system locally and nationwide, and Board has considered the application and all comthe end result of their adoption by other states can ments received in light of the public interest factors set only be a serious impairment of banking standards and forth in section 4(c)(8) of the Act. Applicant, with total consolidated assets of $25.7 billion,1 has two lead banks, First National Bank of 4. 31 U.S.C. § 5311, et seq.; 31 C.F.R. § 103. 1. All banking data are as of December 31, 1985, unless otherwise 5. See, Citicorp, 71 FEDERAL RESERVE BULLETIN 101 (1985). specified. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 661 Minneapolis ("First Minneapolis"), Minneapolis, (3) a review by Applicant's Legal and Compliance Minnesota, and First National Bank of Saint Paul Department of current CFTRA Regulations; a revi- ("First St. Paul"), St. Paul, Minnesota. sion of procedures to ensure compliance, including Applicant proposes to engage de novo in the admin- reporting, recordkeeping, and retention requireistration, management, collection, and liquidation of ments; and procedural guidelines to assure complilow-quality assets transferred from some of its af- ance; filiated banks that it intends to divest. These activities (4) the development by each bank of specific proceare permissible for bank holding companies under dures to ensure compliance with CFTRA in view of section 225.25(b)(1) of Regulation Y (12 U.S.C. Applicant's revised compliance procedures; and § 1843(b)(3)).2 (5) the designation of a compliance officer at each In every case involving an acquisition by a bank bank who will be responsible for reviewing the holding company under section 4 of the Act, the Board CFTRA requirements with all personnel involved in considers the effect of the acquisition on the financial transactions where violations may occur, and ongocondition and resources of the applicant. In this con- ing training of affected personnel in conjunction with nection, the Board has taken into consideration that periodic reviews of the CFTRA requirements. the subsidiary would be capitalized at a level commensurate with the quality of the specific low-quality The sufficiency of the compliance procedures to assets. Further, the Board also considered that fund- address this matter and their efficacy in correcting the ing would be provided by sophisticated investors and deficiencies have been reviewed by Office of the would be on terms which do not expose the subsidiary Comptroller of the Currency examiners. The Board to liquidity or interest rate risks. After reviewing all has also consulted with appropriate enforcement agenthe facts of record relating to the overall financial cies and has considered Applicant's past record of condition of Applicant, the Board has determined that compliance with the law. For the foregoing reasons the financial factors relating to this application are and based upon a review of all the facts of record, the consistent with approval, particularly in light of cer- Board concludes that the managerial resources of tain commitments made by Applicant in connection Applicant are consistent with approval. with this proposal. Before approving an application under section 4 of In its evaluation of Applicant's managerial re- the Act that the Board has determined is closely sources, the Board has considered certain violations related to banking, the Board must consider whether by Applicant of the Currency and Foreign Transac- Applicant's performance of the proposed activities tions Reporting Act ("CFTRA"), and the regulations "can reasonably be expected to produce benefits to thereunder.3 The Board notes that Applicant brought the public, such as greater convenience, increased the CFTRA matters to the attention of the appropriate competition, or gains in efficiency that outweigh possisupervisory authorities after the violations were dis- ble adverse effects, such as undue concentration of covered through its internal audit and has cooperated resources, decreased or unfair competition, conflicts with various regulatory agencies. of interest, or unsound banking practices." 12 U.S.C. Applicant has advised the Board that it has taken § 1843(c)(8). numerous steps to prevent recurrence of violations of Consummation of Applicant's proposal will have no CFTRA, including the following: adverse effect on competition, as this proposal is (1) a revision of internal audit procedures to ensure viewed as an internal reorganization. Based upon the effective auditing for compliance with the CFTRA, facts of record, the Board concludes that performance including a review of employees' understanding of of the proposed activities by Applicant can reasonably the regulations through training; testing of samples be expected to provide benefits to the public. of transactions to determine if appropriate reports Based upon the foregoing and all the facts of record, have been made when required; and a review of the the Board has determined that the balance of public exempted customer list; interest factors it is required to consider under section (2) a review of all exempt lists and identification of 4(c)(8) is favorable. Accordingly, the application is prior transactions which must be reported; hereby approved. This determination is subject to all of the conditions set forth in Regulation Y, including sections 225.4(d) and 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), and to the Board's authority to require modification or termination of the 2. Company also proposes to manage and liquidate certain lowquality assets on behalf of banks retained by Applicant. This activity activities of the holding company or any of its subsidis permissible without the prior approval of the Board under section iaries as the Board finds necessary to assure compli- 4(c)(1)(C) of the Act and under section 225.22(a) of Regulation Y. 3. 31 U.S.C. § 5311 et seq.-, 31 C.F.R. § 103. ance with the provisions and purposes of the Act and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

662 Federal Reserve Bulletin • September 1986 the Board's regulations and orders issued thereunder, representing 3 percent of aggregate state deposits. or to prevent evasion thereof. FirstBank also engages in a number of nonbanking This transaction shall not be consummated later activities. than three months after the effective date of this Regulation Y includes on the list of permissible Order, unless such period is extended for good cause nonbanking activities the issuance and sale of money by the Board, or by the Federal Reserve Bank of orders and other similar consumer-type payment in- Minneapolis, pursuant to delegated authority. struments with a face value not exceeding $1,000.3 The By order of the Board of Governors, effective Board previously has approved by order applications July 29, 1986. to engage in the issuance of payment instruments with a maximum face value of $10,000.4 In its orders, the Voting for this action: Chairman Volcker and Governors Board found that an increase in the denomination of Wallich, Rice, Seger, Angell, and Johnson. such instruments would not affect the fundamental nature of the payment instruments, and the Board concluded that the issuance and sale of the proposed JAMES MCAFEE [SEAL] Associate Secretary of the Board instruments in increased denominations was closely related to banking. In addition, the Board has previously approved by order the direct sale and issuance of official checks with no maximum face value, subject to FirstBank Holding Company of Colorado certain conditions.5 Lake wood, Colorado In order to approve this application, the Board must also find that the performance of the proposed activity Order Approving the Issuance and Sale of Variably by FirstBank "can reasonably be expected to produce Denominated Payment Instruments benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that FirstBank Holding Company of Colorado ("Appli- outweigh possible adverse effects, such as undue cant" or "FirstBank"), Lakewood, Colorado, a bank concentration of resources, decreased or unfair comholding company within the meaning of the Bank petition, conflicts of interests, or unsound banking Holding Company Act ("Act"), has applied for the practices." 12 U.S.C. § 1843(c)(8). Board's approval under section 4(c)(8) of the Act Consumer-type payment instruments, such as tradi- (12 U.S.C. § 1843(c)(8)) and section 225.23(a)(3) of the tional money orders, are marketed nationally on the Board's Regulation Y (12 C.F.R. § 225.23(a)(3)), to wholesale level by a few large organizations and engage de novo in the issuance and sale of payment locally on the retail level by a wide variety of financial instruments, as follows: (1) domestic money orders, and nonfinancial institutions.6 On the national scale, up to a maximum face value of $10,000; and (2) official the market is highly concentrated, being dominated by checks, with no limitation on the maximum face a few large organizations. Entry into this business on a amount, but subject to certain conditions. These in- national or regional scale in a substantial manner struments would be sold throughout Colorado through involves overcoming significant barriers because a branches of Applicant's subsidiary banks and one potential entrant must possess the capability for mannonbank subsidiary. aging the extensive sales and servicing operation nec- Notice of the application, affording interested per- essary for handling a low unit-price, high volume sons an opportunity to submit comments, has been product. Such capabilities frequently are associated published (51 Federal Register 15,835 (1986)). The with banking organizations with both a moderate size time for filing comments has expired, and the Board and a significant branch or subsidiary bank system, has considered the application and all comments received in light of the public interest factors set forth in section 4(c)(8) of the Act. 3. 12 C.F.R. § 225.25(b)(12). 4. BankAmerica Corporation, 70 FEDERAL RESERVE BULLETIN 364 FirstBank controls total consolidated assets of (1984); see also The Chase Manhattan Corporation, 71 FEDERAL $763.9 million1 and is the seventh largest banking RESERVE BULLETIN 905 (1985); and Citicorp, 71 FEDERAL RESERVE organization in the state. FirstBank controls 26 subsid- BULLETIN 58 (1985). 5. Wells Fargo & Company, 72 FEDERAL RESERVE BULLETIN 148 iary banks, with $639.4 million in total deposits,2 (1986). 6. Money orders are primarily used to transmit money by consumers who do not maintain checking accounts. Traditionally, money orders have a maximum face value printed on the instrument, which is generally at or lower than the limit set by Regulation Y. Official 1. All banking data are as of March 31, 1986, unless otherwise checks can be used as a substitute for a variety of payment instrunoted. ments, such as cashier's checks, and could be used by businesses as 2. Deposit data are as of December 31, 1985. part of their cash management strategy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 663 such as FirstBank. FirstBank's entry into this market denomination of official checks available for sale by would result in increased competition in an industry FirstBank from $1,000 to $10,000 (as previously apthat currently is concentrated. Accordingly, the Board proved by order for other bank holding companies), views FirstBank's proposal as procompetitive and in but at the same time will permit FirstBank to increase the public interest. the efficiency and reduce the overall cost of its pay- Applicant proposes to issue and sell domestic mon- ment instrument activities. Having reviewed the proey orders with a maximum face value of $10,000, and posal, the Board has determined that the commitments official checks with no limitation on the maximum face and procedures outlined therein sufficiently mitigate amount. In its BankAmerica and Wells Fargo orders,7 the Board's concerns regarding potential adverse efthe Board noted its concern that the issuance of such fects on the reserve base to allow Applicant to cominstruments with a face value over $1,000 could result mence the activity as proposed. The Board's approval in an adverse effect on the reserve base because such for Applicant to engage in this activity, of course, is instruments are not subject to transaction account subject to the continued evaluation of its potential reserve requirements. Because reserve requirements adverse effects on monetary policy. If the Board serve as an essential tool of monetary policy, the discerns such effects in the future, the Board would Board has expressed concern that proposals like that require appropriate modification of the activity and/or of Applicant might result in adverse effects on mone- imposition of additional reserve requirements. tary policy. The record shows that the sale of these large- In order to assess the effects of such proposals on denominated money orders by FirstBank would inthe reserve base, the Board has determined that it crease competition in this field and enhance the conveshould closely monitor the effects of such proposals on nience of purchasers. The Board finds that these its conduct of monetary policy. To that end, the Board instruments, which will be issued by a substantial has approved proposals to issue domestic money financial organization and will enjoy ready acceptabilorders with a face value of up to $10,000, but also has ity, will provide benefits to the public. Moreover, required the filing with the Board of weekly reports of there is no evidence in the record that consummation daily data on this activity. If it appears that the activity of this proposal would result in adverse effects, such causes a significant reduction in the reserve base or as unsound banking practices, unfair competition, other adverse effect on the conduct of monetary conflicts of interests, or undue concentration of repolicy, the Board has stated that it might impose sources. reserve requirements on such transactions, pursuant Based upon the foregoing and all the facts reflected to section 19 of the Federal Reserve Act (12 U.S.C. in the record, the Board has determined that the § 461(a)) and the Board's Regulation D (12 C.F.R. Part balance of the public interest factors it is required to 204). consider under section 4(c)(8) is favorable. This deter- To address the monetary policy concerns expressed mination is subject to all of the conditions set forth in in the Board's prior orders, FirstBank has committed Regulation Y, including sections 225.4(d) and that it will deposit to a demand deposit account at its 225.23(b), and to the Board's authority to require such subsidiary in Lake wood, FirstBank of Villa Italia, modification or termination of the activities of a holdsubject to the reserve requirements of that bank, all ing company or any of its subsidiaries as the Board the proceeds of any official check having a face value finds necessary to assure compliance with the proviin excess of $10,000. The proceeds of each item will sions and purposes of the Act and the Board's regularemain in the demand account until the respective tions and orders issued thereunder, or to prevent payment instrument is paid in full. FirstBank has also evasion thereof. committed to submit weekly reports of daily data The activity shall be commenced no later than three showing separately the aggregate value of all outstand- months after the effective date of this Order, unless ing instruments (including money orders and official such period is extended for good cause by the Board or checks) with a face value of up to $10,000, and the by the Federal Reserve Bank of Kansas City, acting aggregate value of all official checks with a face value pursuant to delegated authority. exceeding $10,000. By order of the Board of Governors, effective Applicant contends that implementation of the fore- July 17, 1986. going commitments and procedures will maintain reserves at the same level as would be the case if the Voting for this action: Chairman Volcker and Governors Board were to approve an application to increase the Wallich, Rice, Seger, Angell, and Johnson. JAMES MCAFEE 7. See notes 4 & 5, supra. [SEAL] Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

664 Federal Reserve Bulletin • September 1986 Independent Bankers Financial Corporation The Board has on previous occasions expressed Dallas, Texas concerns about joint ventures, particularly those between bank holding companies and securities firms. Order Approving Rentention of Interest in Joint The Board is concerned that joint ventures not lead to Venture with Mills & Allen International PLC a matrix of relationships between co-venturers that could break down the legally mandated separation of Independent Bankers Financial Corporation, Dallas, banking and commerce, create the possibility of con- Texas, a bank holding company by virtue of its control flicts of interests and concentration of resources the of Texas Independent Bank, Dallas, Texas, has ap- Act was designed to prevent, or impair or give the plied for the Board's approval to retain its interest in appearance of impairing the ability of the banking GIMB ("Company"), New York, New York, a joint organization to function effectively as an independent venture partnership with Mills & Allen International and impartial provider of credit.3 In addition, joint PLC, London, England. ventures must be carefully analyzed for any possible The application to retain the joint venture is re- adverse effects on competition and on the financial quired under the commitments made by Applicant and condition of the banking organization involved in the Mills & Allen to notify the Board, and apply to retain proposal. The Board believes that these concerns are the joint venture, in the event of changes in the exacerbated where, as here, the joint venture involves securities activities of Mills & Allen. The Board ap- a relationship between a bank holding company and a proved the joint venture on June 26, 1985.1 Subse- securities firm that is more than a passive investor, because such arrangements create the potential for the quently, Mills & Allen acquired Gintelco, New York, mingling of permissible and impermissible securities New York, a broker of corporate debt securities that activities. engages to a limited extent in dealing in such securities. In its analysis of previous joint ventures, the Board Company engages in the activity of acting as a has carefully evaluated the activities of the nonbankmunicipal securities "brokers' broker," as defined by ing partner in order to assure that an impermissible Rule 15c3-l implementing section 15(c)(3) of the Secu- matrix of relationships with the securities company rities Exchange Act of 1934. Applicant holds a 49 was unlikely to develop. The Board has also relied on percent interest in Company through its securities representations and commitments of the companies brokerage subsidiary, Independent Brokerage of involved to address possible adverse effects that may America. The remaining 51 percent interest in Compa- arise from the formation of the joint venture. ny is held by Mills & Allen through its wholly owned Company engages exclusively and Mills & Allen subsidiary GGB Holding, Inc., New York, New York. engages predominately in brokerage activities that are Applicant, with total deposits of $97.4 million,2 is a permissible for a state member bank under section 16 one-bank holding company with a bankers' bank as a of the Glass-Steagall Act (12 U.S.C. § 24 Seventh).4 subsidiary. The shareholders of Applicant are 360 However, Mills & Allen also engages through Gintelco banks in Texas. Mills & Allen is a publicly held in a limited amount of dealing in corporate debt issues corporation based in the United Kingdom that engages for its own account.5 Were this activity conducted by a in insurance, advertising and securities activities member bank or its affiliate, a question would be throughout the world. presented as to whether the activity was consistent In evaluating an application to retain a nonbanking with the restrictions in the Glass-Steagall Act on activity, the Board applies the same standards it would apply to an application to commence such activities initially. Section 4(c)(8) of the Bank Holding Company Act ("Act") requires the Board to consider whether Applicant's performance of the proposed activities can 3. E.g., Independent Bankers Financial Corporation, 71 FEDERAL "reasonably be expected to produce benefits to the RESERVE BULLETIN 651, 653 (1985); Amsterdam-Rotterdam Bank, public, such as greater convenience, increased compe- TV. V., 70 FEDERAL RESERVE BULLETIN 835, 836 (1984); The Maybaco Company and Equitable Bancorporation, 69 FEDERAL RESERVE BULtition, or gains in efficiency, that outweigh possible LETIN 375 (1983); Deutsche Bank AG, 67 FEDERAL RESERVE BULLEadverse effects, such as undue concentration of re- TIN 449 (1981). 4. Securities Industry Ass'n v. Board of Governors!Schwab, 468 sources, decreased or unfair competition, conflicts of U.S. (1984). interests, or unsound banking practices." 12 U.S.C. § 5. Mills & Allen acquired Gintelco on the day following the Board's 1843(c)(8). approval of the joint venture. The circumstances surrounding the acquisition of Gintelco suggest that Mills & Allen may have misled the Board concerning its plans to expand its securities activities in the 1. Independent Bankers Financial Corporation, 71 FEDERAL RE- United States by failing to disclose information that it had been SERVE BULLETIN 651 (1985). advised was material to the Board's consideration of the application to 2. Banking data are as of September 30, 1984. form the joint venture. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 665 securities activities of member banks and their affili- Under these representations, any change in Mills & ates.6 Although the Glass-Steagall Act would not Allen's securities activities to include any activity that prohibit the continuation of the joint venture,7 Mills & would be impermissible for a state member bank in the Allen's expansion of its securities activities presents United States will result in automatic termination of the possibility of mingling permissible securities activi- the joint venture and revocation of the Board's apties with securities activities that are impermissible for proval for the joint venture, and the Board hereby so a member bank under the Glass-Steagall Act. conditions its approval of the retention of the joint In the Board's view, the possible adverse effects of venture. Applicant's continued association with Mills & Allen In addition, the Board is of the view that potential are substantially reduced by certain additional repre- for commingling the business of Applicant and Compasentations provided by the parties in connection with ny with that of Gintelco is reduced by the committhis application to retain Company. Mills & Allen has ments previously offered by Mills & Allen and the represented that Gintelco's market-making activity Applicant concerning separation of offices and personwill not exceed existing levels, representing a total of nel, non-referral of customers, the use of the business approximately $3.5 million at any one time or $250,000 name GIMB only (on the basis that the name is not in any one issue.8 This representation limits the deal- readily identifiable with Mills & Allen or any of its ing activity of Gintelco so that dealing will not be more subsidiaries), and other commitments.9 The Board's than a minor and ancillary part of Gintelco's business approval is conditioned upon the joint venturers' adso long as Mills & Allen retains its interest in the joint herence to those commitments and the additional venture. representations provided in connection with this appli- In addition, to avoid the problems which arose from cation to retain Company. Mills & Allen's acquisition of Gintelco and required With respect to the other factors the Board is this application to retain the joint venture, Applicant required to consider, the Board finds no evidence in and Mills & Allen have represented as follows: the record indicating that Applicant's brokerage activi- 1) Mills & Allen does not engage in, nor intend to ties have resulted in, or would result in, any undue acquire any other company engaged in, any activity concentration of resources, decreased or unfair comin the United States that would be impermissible for petition, conflicts of interests, unsound banking praca state member bank under section 16 of the Glass- tices or other adverse effects. Steagall Act (12 U.S.C. § 24 Seventh) nor will it Based upon the foregoing and all the facts of record, engage in, or acquire a company engaged in, any the Board has determined that the balance of public such activity in the United States. interest factors it is required to consider under section 2) If at any time Mills & Allen is either unable or 4(c)(8) is favorable. Accordingly, the application is unwilling to observe the foregoing representations hereby approved. This determination is subject to the due to a change in economic or commercial circum- conditions set forth in sections 225.4(d) and stances, or for any other reason, Mills & Allen and 225.23(b)(3) of the Board's Regulation Y, 12 C.F.R. §§ Independent Bankers agree that: Mills & Allen will 225.4(d) and 225.23(b)(3). The approval is also subject at such time immediately notify the Board; the to the Board's authority to require modification or approval of the Board for Independent Bankers to termination of the activities of the holding company or continue to participate in GIMB with Mills & Allen any of its subsidiaries as the Board finds necessary to shall be revoked automatically without any further assure compliance with the provisions and purposes of action by the Board; and Independent Bankers will the Act and the Board's regulations and orders issued terminate its business relationship with Mills & thereunder, or to prevent evasion thereof. Allen with respect to GIMB immediately. By order of the Board of Governors, effective July 24, 1986. Voting for this action: Governors Wallich, Rice, Seger, and Johnson. Absent and not voting: Chairman Volcker and Governor Angell. JAMES MCAFEE 6. 12 U.S.C. §§ 24 (Seventh), 78, 377 and 378. [SEAL] Associate Secretary of the Board 7. Mills & Allen and Gintelco are not member banks and do not meet the definition of an "affiliate" of Independent Bankers' member bank subsidiary under section 2(b) of the Glass-Steagall Act. 12 U.S.C. § 221(b). 8. These amounts represent approximately 6 percent of Gintelco's 9. See Independent Bankers Financial Corporation, 71 FEDERAL revenues and 3.6 percent of its total assets. RESERVE BULLETIN 653-654 (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

666 Federal Reserve Bulletin • September 1986 Rainier Bancorporation Germain Depository Institutions Act of 1982 ("Garn- Seattle, Washington St Germain Act"). 12 U.S.C. § 1730a(m). By letter dated July 14, 1986, the Bank Board urged Order Approving Acquisition of a Federal Savings the Board to act on this application immediately in Bank view of Lincoln's weak and deteriorating financial condition and in view of adverse economic conditions Rainier Bancorporation, Seattle, Washington, a bank in Oregon. The Bank Board found that Lincoln had a holding company within the meaning of the Bank negative regulatory net worth of $16.9 million as of Holding Company Act ("BHC Act" or "Act"), has May 31, 1986; has had large and accelerating monthly applied under section 4(c)(8) of the BHC Act, losses, and a declining deposit base; has had difficulty 12 U.S.C. § 1843(c)(8), and section 225.23(a)(3) of the retaining its staff; and would continue to suffer large Board's Regulation Y, 12 C.F.R. § 225.23(a)(3), to losses unless acquired by a stronger institution, such acquire all of the voting shares of Rainier Bank Ore- as Rainier. According to the Bank Board, the progon, a Federal Savings Bank, Portland, Oregon posed acquisition would restore public confidence in ("Rainier Savings"). Rainier Savings is a newly estab- Lincoln, help to maintain confidence in the savings lished federal savings bank formed to assume the and loan industry generally, and limit the daily increasliabilities and acquire substantially all of the assets of ing potential cost to the FSLIC. Lincoln Savings and Loan Association, Portland, Ore- On July 14, 1986, after considering those and other gon ("Lincoln"), a state savings and loan association, facts of record, the Board concluded that there is an whose deposits are insured by the Federal Savings and emergency at Lincoln that requires the Board to act on Loan Insurance Corporation ("FSLIC"). this application immediately, and the Bank Board Rainier Savings would operate as a federal savings concurred in that finding. That same day, acting bank in Oregon. It would not be a "bank" within the pursuant to section 118 of the Garn-St Germain Act, meaning of the BHC Act because its accounts would the Board accordingly dispensed with the hearing be insured by the FSLIC. 12 U.S.C. § 1841(c). Al- requirement of section 4(c)(8) and shortened to seven though the Board has not added the operation of a days the period for filing comments.2 Notice of the federal savings bank to the list of activities generally application was promptly published in the Federal permissible for bank holding companies, 12 C.F.R. Register, 51 Federal Register 25,746 (1986), and in § 225.25(b), the Board has previously determined by newspapers of general circulation in Portland and order that the operation of a federal savings bank or Seattle. The time for filing comments has expired, and other thrift institution is closely related to banking.1 the Board has considered the application and all By acquiring Rainier Savings, Applicant would indi- comments received in light of the factors set forth in rectly acquire Retirement Benefit Services, Inc., Port- section 4(c)(8). land, Oregon ("RBS"), a wholly owned subsidiary of Section 4(c)(8) of the BHC Act authorizes a bank Lincoln which provides discount brokerage services holding company to engage in nonbanking activities and engages in certain other activities. The Board has and to acquire shares of a nonbanking company that previously determined discount brokerage to be close- engages in activities that the Board determines to be ly related to banking and permissible for bank holding "so closely related to banking or managing or controlcompanies. 12 C.F.R. § 225.25(b)(15). ling banks as to be a proper incident thereto." The Act The Federal Home Loan Bank Board ("Bank authorizes the Board to make such determinations by Board"), with the concurrence of the Oregon Supervi- order or by regulation. The Board has previously sor of Savings and Loans, has appointed the FSLIC as determined that operating a thrift institution is closely Lincoln's receiver, effective July 14, pursuant to related to banking,3 and it reaffirms that determination 12 U.S.C. § 1729(c)(1)(B). The Bank Board has autho- in this Order. rized the FSLIC to transfer Lincoln's assets and With respect to the "proper incident" requirement, liabilities to Rainier Savings pursuant to 12 U.S.C. section 4(c)(8) requires the Board to consider whether § 1729(a)-(b). In addition, the Bank Board has selected the performance of the activity by an affiliate of a bank Applicant as the winning bidder for Lincoln under the holding company "can reasonably be expected to emergency provisions of section 123 of the Garn-St 2. The Board has dispensed with the notice and hearing requirements of section 4(c)(8) in similar circumstances. First Pacific Invest- 1. E.g., First Pacific Investments Limited, 72 FEDERAL RESERVE ments Limited, 72 FEDERAL RESERVE BULLETIN 342 (1986); F.N.B. BULLETIN 342 (1986); F.N.B. Corporation, 71 FEDERAL RESERVE Corporation, 71 FEDERAL RESERVE BULLETIN 340 (1985). BULLETIN 340 (1985); Old Stone Corporation, 69 FEDERAL RESERVE Although section 118 of the Garn-St Germain Act expired on July BULLETIN 812 (1983); Citicorp, 68 FEDERAL RESERVE BULLETIN 656 15, 1986, the Board's action remains effective. (1982). 3. See note 1 supra. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 667 produce benefits to the public, such as greater conve- Based upon its review of the record, the Board has nience, increased competition, or gains in efficiency determined that the proposed acquisition would yield that outweigh possible adverse effects, such as undue substantial and compelling public benefits that would concentration of resources, decreased or unfair com- be sufficient to outweigh the generalized adverse efpetition, conflicts of interests, or unsound banking fects identified in D.H. Baldwin. The acquisition practices." would preserve Lincoln as a competitor, restore public In 1977, the Board considered the general question confidence in Lincoln, help to maintain confidence in whether savings and loan association ("S&L") activi- the savings and loan industry generally, and limit the ties are a proper incident to banking. The Board potential cost to the FSLIC. Applicant would provide concluded that, as a general matter, S&L activities are Lincoln with significant new capital, sufficient to ennot a proper incident to banking because the potential able it to achieve a primary capital ratio in compliance adverse effects of generally allowing affiliations of with the Board's Capital Adequacy Guidelines. banks and S&Ls were then sufficiently strong to The record establishes that Applicant has the finanoutweigh any public benefits that might result in cial and managerial resources to achieve that result. In individual cases. D.H. Baldwin & Co., 63 FEDERAL evaluating the proposed acquisition, the Board has RESERVE BULLETIN 280 (1977). placed considerable weight on the assistance to be Because of the considerations elaborated in D.H. provided by the FSLIC pursuant to its assistance Baldwin, the Board has not been willing to permit agreement with Applicant, and has relied on Applibank holding companies to acquire thrift institutions cant's commitment regarding the capitalization of on a general basis. The Board has, however, consis- Rainier Savings. tently regarded the BHC Act as authorizing the Board The proposed acquisition would not substantially to permit such an acquisition, and the Board has lessen in any relevant market or otherwise decrease approved several such proposals involving failing competition. On the contrary, the acquisition would thrift institutions because any adverse effects of bank/ have a substantial beneficial effect on competition by thrift affiliations would be overcome by the public preserving Lincoln as an effective competitor. Applibenefits of preserving the failing thrift institutions.4 cant, with deposits of $4.8 billion, is the second largest The Board approved acquisitions of failing thrift banking organization in the State of Washington, with institutions by bank holding companies both before 21.2 percent of all deposits in commercial banks in the and after the enactment of the Garn-St Germain Act. state.5 Lincoln, with deposits of $251 million, is the That Act recognized the Board's authority under sec- twelfth largest depository institution in Oregon, with tion 4(c)(8) of the BHC Act to approve such acquisi- 1.2 percent of all deposits in depository institutions in tions by authorizing the Board in such cases to dis- the state. pense with the notice and hearing requirements of Applicant and Lincoln compete in the Portland, section 4(c)(8) under appropriate emergency circum- Oregon, banking market.6 Applicant is the nineteenth stances. Although the Garn-St Germain Act expired largest of 43 depository institutions in the market, with on July 15, 1986, the Board's underlying authority to 0.6 percent of all deposits in depository institutions in permit a bank holding company to acquire a failing the market. Lincoln is the tenth largest depository thrift under the net public benefits test of section institution in the market, with 1.2 percent of all 4(c)(8) remains unaffected. deposits in depository institutions in the market. In The Board has reexamined, in the context of this view of the small market shares involved, the weak application, the general adverse factors cited in the condition of Lincoln, and the large number of banks 1977 D.H. Baldwin decision, including regulatory con- and thrift institutions that would remain in the market, flicts, erosion of institutional rivalry, and the potential the acquisition would have no substantial adverse for undermining the prohibitions against interstate effect on existing competition in the market. banking. The Board has also considered the adverse As numerous other institutions provide brokerage factors that might be associated with this particular services, the acquisition would have no substantial application, including any potential for decreased or unfair competition, undue concentration of resources, conflicts of interests, financial risks, diversion of 5. All data are as of June 30, 1985. funds, and participation in impermissible activities. 6. The Portland, Oregon, banking market is coextensive with the Portland, Oregon, RMA: it includes Longview, Washington, where Applicant has a branch. Lincoln's only branch outside of the Portland market is in Tillamook, Oregon, which is in the Tillamook County banking market. 4. See, e.g., F.N.B. Corporation, supra; The Chase Manhattan Applicant does not operate in that market. The Board has determined Corporation, 71 FEDERAL RESERVE BULLETIN 462 (1985); Interstate that the proposed acquisition would have no substantial adverse effect Financial Corp 1, 68 FEDERAL RESERVE BULLETIN 316 (1982). on potential competition in that market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

668 Federal Reserve Bulletin • September 1986 adverse effect on existing or potential competition in 7. To the extent necessary to ensure independent the market for those services. operation of Rainier Savings and prevent the im- To guard against possible adverse effects of affili- proper diversion of funds, there shall be no transacation between a banking organization and a savings tions between Rainier Savings and Applicant or any bank, including the potential for unfair competition of its subsidiaries without the prior approval of the and diversion of funds, the Board has conditioned its Federal Reserve Bank of San Francisco. This limitaapproval as follows: tion encompasses the transfer, purchase, sale, or 1. Applicant shall operate Rainier Savings as a loan of any assets or liabilities, but does not include federal savings bank having as its primary purpose infusions of capital from Applicant, the payment of the provision of residential housing credit. Rainier dividends by Rainier Savings to Applicant, or the Savings shall limit its activities to those currently sale of residential real estate loans from Rainier permitted to thrift institutions under the Home Own- Savings to any subsidiary of Applicant. ers' Loan Act, but shall not engage in any activity prohibited to bank holding companies and their When a bank holding company applies to acquire a subsidiaries under section 4(c)(8) of the BHC Act. nonbanking organization, the nonbanking organization As discussed below, these limitations shall apply to would ordinarily be required to divest any impermissi- RBS. ble assets, or to cease to engage in any impermissible 2. Rainier Savings shall not establish or operate a activities, before the acquisition is consummated. As remote service unit at any location outside Oregon. this is an emergency acquisition and provides substan- 3. Rainier Savings shall not establish or operate tial public benefits, the Board has granted Applicant's branches at locations not permissible for national or request for additional time in which to divest nonconstate banks located in Oregon. forming assets of Lincoln or RBS. Any such assets of 4. Rainier Savings shall be operated as a separate, Lincoln shall be divested within one year after conindependent, profit-oriented corporate entity and summation; any such assets of RBS shall be divested shall not be operated in tandem with any other within six months after consummation. The additional subsidiary of Applicant. Applicant and Rainier Sav- time will allow for an orderly divestiture of any such ings shall limit their operations so as to comply with assets. Any activities of Lincoln or RBS that are not this condition, and shall observe the following con- permissible for bank holding companies shall cease ditions: once the acquisition is consummated. a. No banking or other subsidiary of Applicant The Board concludes that, under the conditions set shall link its deposit-taking activities to accounts forth above, the proposed acquisition may reasonably at Rainier Savings in a sweeping arrangement or be expected not to result in conflicts of interests, similar arrangement. unsound banking practices, decreased or unfair comb. Neither Applicant nor any of its subsidiaries petition, undue concentration of resources, or other shall solicit deposits or loans for Rainier Savings adverse effects. nor shall Rainier Savings solicit deposits or loans Based upon the foregoing and other facts of record, for any other subsidiary of Applicant. the Board has determined that the proposed acquisi- 5. Applicant shall not change the name of Rainier tion would result in substantial and compelling public Savings such that the public might be confused benefits that would be sufficient to outweigh any about the status of Rainier Savings as a nonbank adverse effects that may reasonably be expected to thrift institution. result from this proposal, including any potential ad- 6. Rainier Savings shall not convert its charter to verse effects of the affiliation of a commercial banking that of a national or state commercial bank without organization with a thrift institution. Accordingly, the the Board's prior approval.7 application is approved subject to the conditions set forth above and in the record. The Board's decision in this case is subject to the 7. Applicant has filed an application to acquire a bank in Oregon conditions set forth in Regulation Y, including sections pursuant to the state's interstate banking statute, which became 225.4(d) and 225.23(b), 12 C.F.R. §§ 225.25.4(d), operative July 1, 1986. Or. Rev. Stat. § 715.065. If that application is 225.23(b), and to the Board's authority to require such approved and the acquisition is consummated, Applicant intends thereafter to merge Rainier Savings with the newly acquired bank. modification or termination of the activities of a bank Applicant has requested the Board's approval under condition 6 above holding company or any of its subsidiaries as the for that transaction. Subject to Applicant's obtaining all necessary Board finds necessary to assure compliance with, or to regulatory approvals for the transaction, the Board hereby grants Applicant the approval required by condition 6, since, upon obtaining prevent evasion of, the provisions and purposes of the those approvals, Applicant would have acquired the bank and be Act and the Board's regulations and orders issued authorized to operate the bank in Oregon under express provisions of thereunder. This transaction shall not be consummat- Oregon law and consistent with section 3(d) of the BHC Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 669 ed later than three months after the effective date of populated; Big Lake, Texas, with a population of this Order, unless that period is extended for good 3,500, is the only town in the banking market. cause by the Federal Reserve Bank of San Francisco, Credit bureau services to be offered by Applicant pursuant to authority hereby delegated, or by the include the gathering and reporting of credit informa- Board. tion. Company will offer membership to any business By order of the Board of Governors, effective that extends credit to customers on a regular basis. July 23, 1986. For a monthly fee of $15, members will receive monthly recorded information compiled by Company Voting for this action: Governors Wallich, Rice, Seger, and concerning title, deed, property transfer, security in- Johnson. Absent and not voting: Chairman Volcker and terest and other filings from the Reagan County clerk's Governor Angell. office. In addition, Company will perform credit checks on members' customers for a fee which will JAMES MCAFEE depend upon the costs to Company in obtaining the [SEAL] Associate Secretary of the Board credit information. Company will obtain access to nationwide credit information through its membership in one of the five national credit bureau services. Reagan Bancshares, Inc. Company also will provide information on customers Big Lake, Texas in its area to other credit bureaus and nationwide reporting services for a fee. Collection agency services Order Approving Acquisition of a Company Engaged to be offered include the collection of past due trade in Credit Bureau and Collection Agency Activities accounts and bad checks. On June 25, 1986, the Board approved adding credit Reagan Bancshares, Inc., Big Lake, Texas, a bank bureau and collection agency activities to the list of holding company within the meaning of the Bank permissible nonbanking activities in the Board's Regu- Holding Company Act, 12 U.S.C. § 1841 et seq. lation Y. ("Act"), has applied for the Board's approval under In order to approve this application under section section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and 4(c)(8) of the Act, the Board must determine that the section 225.23(a)(3) of the Board's Regulation Y proposed activities are "so closely related to banking (12 C.F.R. § 225.23(a)(3)), to acquire Credit Bureau of . . . as to be a proper incident thereto. ..." Big Lake, Inc. ("Company"), Big Lake, Texas, and 12 U.S.C. § 1843(c)(8). engage in credit bureau and collection agency activi- With regard to whether the proposed activities are ties. closely related to banking, the traditional tests for Notice of the application, affording interested per- determining whether a nonbanking activity is closely sons an opportunity to submit comments, has been related to banking, and, therefore, permissible for duly published, 51 Federal Register 2433 (1986). The bank holding companies, are set forth in National time for filing comments has expired, and the Board Courier Association v. Board of Governors of the has considered the application and all comments re- Federal Reserve System.2 The National Courier tests ceived in light of the public interest factors set forth in are: section 4(c)(8) of the Act. (1) Banks generally have in fact provided the pro- Applicant is one of the smaller commercial banking posed services. organizations in the state of Texas, controlling depos- (2) Banks generally provide services that are operaits of $33.2 million, representing less than 0.1 percent tionally and functionally so similar to the proposed of total deposits in commercial banking organizations services as to equip them particularly well to proin the state.1 Applicant controls one banking subsid- vide the proposed service. iary, Reagan State Bank, Big Lake, Texas ("Bank"). (3) Banks generally provide services that are so Company is presently owned by principals of Appli- integrally related to the proposed services as to cant; this proposal is merely a restructuring of owner- require their provision in a specialized form. ship. Both Bank and Company operate in the Reagan County banking market, which consists of Reagan County, Texas. Bank is the only banking organization and Company is the only credit bureau or collection agency in the market. Reagan County is sparsely 2. 516 F.2d 1229 (D.C. Cir. 1975); accord, Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, U.S. 1. Banking data are as of June 30, 1985. , 104 S. Ct. 3003, 3008 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

670 Federal Reserve Bulletin • September 1986 Regarding the operation of a credit bureau, banks (2) Company shall not provide preferential treatfrequently report information to credit bureaus and are ment to a customer of any affiliated bank. the source of much of the credit information held by credit bureaus. In addition, banks must, in the normal These commitments closely track the conditions that course of their lending activities, obtain a great deal of the Board has determined to impose upon these activicredit information about individuals and companies. ties when they are added to the list of permissible Banks also use information prepared by such organiza- activities in Regulation Y. tions when they receive a loan request from a custom- In addition, there is no evidence in the record, and er. Finally, the Board notes that the Comptroller of the specifically no comments in opposition to this applica- Currency has issued an interpretive ruling, 12 C.F.R. tion, to indicate that Applicant's engaging in the 5.34 (48 Federal Register 48454 (Oct. 19, 1983)), which proposed activity would result in undue concentration specifies that the operation of a credit bureau is a of resources, decreased or unfair competition, unpermissible activity for an operating subsidiary of a sound banking practices, or other adverse effects. national bank. Thus, banks either perform the func- Applicant has assured the Board that there will be no tions of, or in some instances, perform functions tying arrangements involving services offered by Comwhich are operationally or functionally similar to the pany or services offered by Company and Bank. The basic elements of a credit bureau. Board has, by regulation, applied to bank holding Concerning the operation of a collection agency, companies section 106 of the Act (12 U.S.C. § 1972), banks, in the normal course of business, engage in which prohibits the tying of services by banks, "in debt collection for loans they originate and for loans order to provide specific statutory assurance that the that they service for others. Banks are regarded as use of the economic power of a bank will not lead to a debt collectors under the Fair Debt Collection Prac- lessening of competition or other unfair practices."3 tices Act, 15 U.S.C. 1692, when they collect debts Section 225.4(d) of the Board's Regulation Y from other unrelated entities. (12 C.F.R. 225.4(d)), specifically prohibits a "bank Based upon the above considerations, the Board holding company and any nonbanking subsidiary" concludes that Applicant's proposal to engage in credit from extending credit or providing any service from bureau and debt collection activities is closely related fixing or varying the consideration for such services to banking. "subject to any condition or requirement that, if Before approving a bank holding company's appli- imposed by a bank, would constitute an unlawful tie-in cation to engage in an activity that the Board deter- arrangement under section 106 of the Bank Holding mines is closely related to banking, the Board also Company Act . . . ." must find that consummation of the proposal can Finally, Applicant has assured the Board that it will reasonably be expected to produce benefits to the conduct Company's collection bureau functions in public that outweigh possible adverse effects. accordance with the requirements of the Fair Credit 12 U.S.C. § 1843(c)(8). With respect to Applicant's Reporting Act, 15 U.S.C. § 1681, which requires that proposal to engage in credit bureau and debt collection such activities be conducted in a manner which is fair activities, it appears that the balance of public benefits and equitable to the consumer, with regard to the considerations is favorable. confidentiality, accuracy, relevancy, and proper utili- Potential conflicts of interests could arise from bank zation of credit information. Similarly, Applicant holding company ownership of a credit bureau and states it will conduct its debt collection activities collection agency: for instance, in the provision of consistent with the requirements of the Fair Debt credit information by Company to financial institu- Collection Practices Act, 15 U.S.C. § 1692, which tions that compete with Applicant's subsidiary seeks to eliminate abusive debt collection practices bank(s), or in the use of Company to collect a claim and promote protection of consumers against debt from a debtor who is also indebted to Applicant's collection abuses. subsidiary bank(s), which also seek collection. In Although there are hundreds of local and regional order to reduce the likelihood of conflicts of interests, independently operated credit bureaus, the national the Board has sought and Applicant has made the credit reporting industry consists of only five firms and following commitments in connection with this appli- thus is highly concentrated. While the national market cation: for credit bureau information may be concentrated, (1) Applicant's subsidiary bank(s) will not provide this proposal does not involve the acquisition of one of Company with the names of customers of competing collection agencies in instances where the affiliated bank is a depository for a trust account maintained 3. S. Rep. 91-1084, 91st Cong. 2nd Sess. (1970), reprinted in 1970 by competing collection agencies; and U.S. Code Cong. & Ad. News 5519, 5535. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 671 the five top-tier credit bureaus. Rather, Company is Security Pacific Corporation small and serves a rural, sparsely populated market. Los Angeles, California Company furnishes information primarily about local residents to local businesses. Company will furnish Order Approving Application to Engage in some information to national credit bureaus or obtain Underwriting and Reinsuring Home Mortgage information from national credit bureaus, but antici- Redemption Insurance pates that the overwhelming majority of its credit information requests will be either local in origin or Security Pacific Corporation, Los Angeles, California, will be credit checks on local residents from outside of a bank holding company within the meaning of the the trade area. Based upon these and other facts of Bank Holding Company Act (12 U.S.C. §§ 1841 record, the Board concludes that the credit bureau and et seq.) ("BHC Act" or "Act"), has applied for the debt collection activities of Company are closely relat- Board's approval under section 4(c)(8) of the BHC Act ed to banking and the possible adverse effects of this (12 U.S.C. § 1843(c)(8)) to engage indirectly through acquisition are outweighed by greater convenience to its wholly owned subsidiaries, Chartered Protective the public. Life Insurance Company, San Diego, California; Gen- With regard to competitive factors, although Bank eral Fidelity Life Insurance Company, San Diego, provides some services similar to those offered by California; and Central Plains Insurance Company, Company, Applicant's proposed acquisition of Com- San Diego, California, in the underwriting and reinsurpany would eliminate little existing competition. Ac- ing of home mortgage redemption insurance, that is, cordingly, the Board finds that competitive factors are insurance that assures repayment of loans secured by consistent with approval. first mortgages on residential real estate made by With regard to financial factors, the Board notes Applicant or its subsidiaries in the event of the death that neither Applicant nor Company will incur any or disability of the mortgagor. debt in connection with this proposal. The Board Notice of the application, affording an opportunity concludes that financial and managerial considerations for interested persons to submit comments, has been are also consistent with approval of this proposal. duly published (51 Federal Register 18,379 (1986)). Based upon the foregoing and all the facts of record, The time for filing comments has expired, and the the Board has determined that the balance of public Board has considered the application and all cominterest factors it is required to consider under section ments received in light of the public interest factors set 4(c)(8) is favorable. Accordingly, the application is forth in section 4(c)(8) of the Act. hereby approved. Applicant, with total consolidated assets of $53.5 This determination is also subject to all of the billion, is the second largest banking organization in conditions set forth in the Board's Regulation Y, California.1 It presently operates two banking subsidincluding those in sections 225.4(d) and 225.23(b), and iaries, Security Pacific National Bank, Los Angeles, to the Board's authority to require modification or California, and Security Pacific State Bank, Irvine, termination of the activities of a bank holding compa- California. Applicant also engages, directly and ny or any of its subsidiaries as the Board finds through subsidiaries, in a variety of nonbanking activinecessary to assure compliance with the provisions ties. Applicant's three insurance subsidiaries are adand purposes of the Act and the Board's regulations mitted in 46 states to underwrite credit life insurance. and orders issued thereunder, or to prevent evasion They had a combined total of approximately $1.6 thereof. billion of credit life insurance in force as of Decem- The transaction shall be made not later than three ber 31, 1985. months after the effective date of this Order, unless Applicant proposes to engage on a nationwide basis such period is extended for good cause by the Board or in the underwriting and reinsuring of home mortgage by the Federal Reserve Bank of Dallas pursuant to redemption insurance in connection with extensions of delegated authority. credit made or purchased by Applicant and its affili- By order of the Board of Governors, effective ates, where such extensions of credit are secured by July 1, 1986. first mortgages on residential real estate. The proposed insurance would assure repayment of an out- Voting for this action: Chairman Volcker and Governors standing residential mortgage loan in the event of the Wallich, Seger, Angell, and Johnson. Absent and not voting: death or disability of the mortgagor. The face amount Governor Rice. of the proposed insurance would never exceed the JAMES MCAFEE [SEAL] Associate Secretary of the Board 1. Banking data are as of December 31, 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

672 Federal Reserve Bulletin • September 1986 outstanding balance of the mortgage loan and the redemption insurance policies is likely to result in net insurance would terminate upon repayment of the public benefits.3 loan. Applicant would underwrite the proposed insur- There is no evidence in the record to indicate that ance primarily as group insurance without strict age- Applicant's engaging in the proposed activity would based premiums, and would offer the proposed insur- result in undue concentration of resources, decreased ance at the time the loan is made. or unfair competition, unsound banking practices, or The Board has recently determined that the activi- other adverse effects. The Board has, by regulation, ties of underwriting and reinsuring home mortgage applied to bank holding companies section 106 of the redemption insurance are permissible for bank holding BHC Act (12 U.S.C. § 1972), which prohibits the tying companies under the Garn-St Germain Depository of services by banks, "in order to provide specific Institutions Act of 1982 ("Garn-St Germain Act"), statutory assurance that the use of the economic and that such activities are closely related to banking.2 power of a bank will not lead to a lessening of Citicorp, 72 FEDERAL RESERVE BULLETIN 339 (1986). competition or other unfair competitive practices."4 Applicant's proposal to underwrite and reinsure home Section 225.4(d) of the Board's Regulation Y mortgage redemption insurance is essentially identical (12 C.F.R. § 225.4(d)) specifically prohibits a "bank to the proposal previously approved by the Board in holding company and any nonbanking subsidiary" Citicorp. Thus, the Board concludes that Applicant's from extending credit or providing any service or from proposal to engage in the underwriting and reinsurance fixing or varying the consideration for such services of home mortgage redemption insurance is permissible "subject to any condition or requirement that, if under the Garn-St Germain Act and is closely related imposed by a bank, would constitute an unlawful tie-in to banking. arrangement under section 106 of the Bank Holding In order to approve this application, the Board is Company Act. ..." also required to determine that consummation of the Where insurance, such as home mortgage redempproposal can reasonably be expected to produce bene- tion insurance, is closely related to the lending transfits to the public that outweigh possible adverse effects action, it is important that Applicant provide safe- (12 U.S.C. § 1843(c)(8)). With respect to Applicant's guards to prevent the tying of such insurance to an proposal to underwrite home mortgage redemption extension of credit or to any other service offered by insurance, it appears that the balance of public bene- Applicant or its subsidiaries. In this regard, Applicant fits considerations is favorable. has specifically agreed to provide safeguards identical Applicant's de novo entry into the underwriting of to those approved by the Board in Citicorp, to assure home mortgage redemption insurance will result in an that it would not tie the provision of home mortgage additional competitor in the home mortgage redemp- redemption insurance to any other product or service tion insurance underwriting market. Applicant's entry of Applicant. Applicant has agreed to inform borrowinto the business is also likely to result in the availabil- ers in writing that home mortgage redemption insurity of a greater variety of product features related to ance is not required and that, if desired, it may be home mortgage redemption insurance. For example, purchased from other sources.5 Borrowers will also be Applicant has proposed to offer customers the ability notified in writing of the right to rescind the insurance to pay home mortgage redemption insurance premi- contract at any time after the loan commitment is ums as part of customers' periodic mortgage pay- made and prior to closing. In addition, Applicant has ments. proposed to offer an extended rescission feature, un- Applicant proposes to charge rates for home mort- der which a customer may rescind, without any obligagage redemption insurance policies that are generally tion to pay a premium, coverage by a home mortgage lower than rates charged by many companies compet- redemption insurance policy during the first thirty ing in the underwriting of such insurance. Thus, Appli- days that the policy is in effect. Finally, premiums that cant's proposal is likely to result in some additional rate competition. The availability of these lower rates and the feature described above in home mortgage 3. In Citicorp, the Board found that because states had not generally promulgated prima facie ceilings for home mortgage redemption insurance, and since other types of life insurance would serve as substitutes for home mortgage redemption insurance, such insurance did not appear to present the concerns that had prompted the Board to require bank holding companies to offer credit life insurance at rates below the established state ceilings for such insurance (12 C.F.R. 2. The Board has recently adopted an amendment to its Regulation 225.25(b)(9) n. 7). Y to add the underwriting and reinsurance of home mortgage redemp- 4. S. Rep. 91-1084, 91 Cong. 2nd Sess. (1970), reprinted in 1970 tion insurance to the list of permissible nonbanking activities for bank U.S. Code Cong. & Ad. News 5519, 5535. holding companies. The amended regulation will be effective thirty 5. These requirements are contained, in part, in the Board's days after publication in the Federal Register. Regulation Z (12 C.F.R. 226.4(d)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 673 Applicant charges for home mortgage redemption in- regulations and orders issued thereunder, or to presurance will be payable on a monthly basis, thus vent evasion thereof. permitting the borrower to rescind the insurance at the The transaction shall be made not later than three end of any month for which a premium has been paid months after the effective date of this Order, unless and eliminating premium financing by Applicant as an such period is extended for good cause by the Board or incentive to sell the insurance. As it did in Citicorp, by the Federal Reserve Bank of San Francisco pursuthe Board has made these commitments a condition of ant to delegated authority. its approval of this application. By order of the Board of Governors, effective For the reasons set forth in Citicorp, the Board finds July 24, 1986. that the risks presented to bank holding companies from underwriting home mortgage redemption insur- Voting for this action: Governors Rice, Seger, and Johnance are manageable. In addition, the Board notes that son. Abstaining for this action: Governor Wallich. Absent and not voting: Chairman Volcker and Governor Angell. bank holding companies, such as Applicant, have acquired experience through the underwriting of credit life insurance in operating an actuarially sound insur- WILLIAM W. WILES ance program. [SEAL] Secretary of the Board With respect to managerial resources, the Board has considered certain violations by Applicant of the Currency and Foreign Transactions Reporting Act Orders Issued Under Sections 3 and 4 of the ("CFTRA") and the regulations thereunder.6 In this Bank Holding Company Act regard, the Board notes that Applicant brought these matters to the attention of the appropriate supervisory WM Bancorp authorities after the violations were discovered Cumberland, Maryland through an internal audit. Applicant has cooperated fully with law enforcement agencies. In addition, Order Approving Consolidation of Bank Holding Applicant and its subsidiaries have implemented a Companies and Acquisition of a Company Engaged comprehensive remedial program to correct these vio- in Finance and Insurance Activities lations and to prevent violations from occurring in the future. Applicant has advised the Board that it has WM Bancorp, Cumberland, Maryland, has applied for established a compliance unit to ensure the central the Board's approval under section 3(a)(5) of the Bank review of transactions considered exempt from report- Holding Company Act (12 U.S.C. § 1842(a)(5)) ing under CFTRA; developed a comprehensive audit ("Act") for the consolidation of LTC Bancorp, Cumprogram to ensure compliance with CFTRA and with berland, Maryland ("LTC"), and GNB Bankshares, internal bank policy and procedures; and filed correc- Inc., Oakland, Maryland ("GNB"), both registered tive currency transaction reports. The Board also has bank holding companies under the Act. Applicant consulted with appropriate enforcement agencies with would be the successor corporation and would thereby respect to this matter, and has considered Applicant's become a bank holding company. past record of compliance with the law. Applicant has also applied for the Board's approval Based upon a consideration of all of the relevant under section 4(c)(8) of the Act (12 U.S.C. facts, the Board has determined that the balance of the § 1843(c)(8)) to acquire Community Finance, Inc., public interest factors that it is required to consider Cumberland, Maryland ("Community"), an existing under section 4(c)(8) is favorable. Accordingly, the subsidiary of LTC, that engages in consumer and application is hereby approved. commercial finance activities and acts as agent for the This determination is also subject to all of the sale of life, accident, and health insurance directly conditions set forth in Regulation Y, including sections related to extensions of credit made by LTC subsidiar- 225.4(d) and 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and ies. The Board has determined that these activities are 225.23(b)(3)), and to the Board's authority to require closely related to banking and permissible for bank such modification or termination of the activities of a holding companies (12 C.F.R. §§ 225.25(b)(1) and bank holding company or any of its subsidiaries as the (8)(i)). Board finds necessary to assure compliance with the Notice of the applications, affording an opportunity provisions and purposes of the Act and the Board's for interested persons to submit comments, has been given in accordance with section 3(b) of the Act (51 Federal Register 20,349 (1986)). The time for filing comments has expired, and the Board has considered 6. 31 U.S.C. § 311 et seq.- 31 C.F.R. § 103. the applications and all comments received in light of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 Federal Reserve Bulletin • September 1986 the factors set forth in section 3(c) of the Act its analysis of this proposal.5 Two thrift institutions (12 U.S.C. § 1842(c)) and the considerations specified compete with commercial banks in the Cumberland in section 4(c)(8) of the Act. banking market and control approximately 29 percent LTC, the twenty-second largest commercial bank- of the total deposits in the market. These thrift instituing organization in the state, controls Liberty Bank of tions exert a considerable competitive influence in the Maryland ("Liberty"), with total deposits of $113.4 market as providers of NOW accounts and consumer million representing 0.5 percent of the total deposits in loans. Based upon the above considerations, the commercial banks in the state.1 GNB, the twenty-sixth Board concludes that consummation of the proposal is largest commercial banking organization in Maryland, not likely to substantially lessen competition in the controls one bank, Garrett National Bank ("Garrett"), Cumberland banking market.6 with total deposits of $93.4 million, representing 0.4 The financial and managerial resources of Applipercent of the total deposits in commercial banks in cant, LTC, GNB, and their respective subsidiaries are the state. Upon consolidation, Applicant would be- consistent with approval. Considerations relating to come the fifteenth largest banking organization in the the convenience and needs of the community to be state, with total deposits of $206.8 million, represent- served are also consistent with approval. ing 0.8 percent of total deposits in the state. Applicant has also applied, pursuant to section Liberty and Garrett compete directly in the Cumber- 4(c)(8) of the Act, to acquire Community, the nonland banking market.2 Liberty is the third largest banking subsidiary of LTC, and thereby engage in the commercial banking organization in the market and provision of direct cash consumer loans and sales controls 15.4 percent of the total deposits in commer- finance activities and act as an agent for the sale of life, cial banks in the market.3 Garrett is the fourth largest accident, and health insurance directly related to the commercial banking organization in the market and extension of credit by Applicant. Community was controls 12.5 percent of total deposits in commercial established in 1985 as a subsidiary of LTC, and may be banks in the market. Upon consummation of the viewed as a de minimis participant in the market for proposal, Applicant's share of the deposits in the direct cash loans. In addition, because Community market would be 27.9 percent. The Cumberland mar- only sells insurance related to extensions of credit in ket is considered to be highly concentrated, with the connection with its loan activities, consummation of four largest banks controlling 79.1 percent of the this proposal would not result in the elimination of any deposits in commercial banks in the market. The competition. Accordingly, Applicant's proposal would Herfindahl-Hirschman Index ("HHI") for the market not have any significant adverse effect on competition is 1829 and would increase by 384 points to 2213 upon in the Cumberland banking market. Furthermore, consummation of the proposal.4 there is no evidence in the record to indicate that Although consummation of the proposal would elim- approval of this proposal would result in undue coninate some existing competition between Garrett and centration of resources, decreased or unfair competi- Liberty in the Cumberland banking market, numerous tion, conflicts of interest, unsound banking practices, other commercial banking organizations would re- or other adverse effects on the public interest. Accordmain. In addition, the Board has considered the pres- ingly, the Board has determined that the balance of the ence and competition afforded by thrift institutions in public interest factors it must consider under section 4(c)(8) of the Act is consistent with approval of the application. Based on the foregoing and other facts of record, the Board has determined that the applications under 1. All deposit data are as of December 31, 1985, unless otherwise specified. 2. The Cumberland banking market is approximated by the Cum- 5. The Board has previously indicated that thrift institutions have berland, Maryland Ranally Metropolitan Area ("RMA"); the remain- become, or have the potential to become, major competitors of der of Allegany County, Maryland; Garrett County, Maryland; and commercial banks. National City Corporation, 70 FEDERAL RESERVE Mineral County, West Virginia. BULLETIN 743 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE 3. Market data are as of June 30, 1985. BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL 4. Under the revised Department of Justice Merger Guidelines (49 RESERVE BULLETIN 802 (1983); First Tennessee National Corpora- Federal Register 26,823 (June 29, 1984)), a market in which the post- tion, 69 FEDERAL RESERVE BULLETIN 298 (1983). merger HHI is above 1800 is considered highly concentrated. In such 6. If 50 percent of deposits held by thrift institutions in the markets, the Department is likely to challenge a merger that increases Cumberland banking market were included in the calculation of the HHI by more than 50 points. The Department has informed the market concentration, the share of total deposits held by the four Board that a bank merger or acquisition generally will not be chal- largest organizations in the market would be 71.2 percent. Liberty lenged (in the absence of other factors indicating anticompetitive would control 12.8 percent of the market's deposits and Garrett would effects) unless the post-merger HHI is at least 1800 and the merger control 10.4 percent of the market's deposits. The HHI would increases the HHI by at least 200 points. increase by 265 points to 1778. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 675 sections 3 and 4 of the Act should be and hereby are termination of the activities of a holding company or approved. The consolidation shall not be consummat- any of its subsidiaries as the Board finds necessary to ed before the thirtieth calendar day following the assure compliance with the provisions and purposes of effective date of this Order, and neither the consolida- the Act and the Board's regulations and orders issued tion nor the acquisition of the nonbanking subsidiary thereunder, or to prevent evasion thereof. shall be made later than three months after the effec- By order of the Board of Governors, effective tive date of this Order, unless such period is extended July 31, 1986. for good cause by the Board or the Federal Reserve Bank of Richmond, pursuant to delegated authority. Voting for this action: Governors Wallich, Rice, Seger, The determination as to Applicant's acquisition of the Angell, and Johnson. Absent and not voting: Chairman Volcker. Governor Wallich abstained from the insurance nonbank subsidiary is subject to the conditions set portion of this action. forth in Regulation Y, including sections 225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), and to JAMES MCAFEE the Board's authority to require such modification or [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 American Fletcher Corporation, Carmel Bank and Trust Chicago July 2, 1986 Indianapolis, Indiana Company, Carmel, Indiana American Fletcher Corporation, Citizens Northern Company, Chicago July 14, 1986 Indianapolis, Indiana Inc., Elkhart, Indiana AmeriTrust Corporation, American State Bank, Cleveland July 25, 1986 Cleveland, Ohio Ligonier, Indiana Arthur State Bancshares, Inc., Arthur State Bank, Richmond July 2, 1986 Union, South Carolina Union, South Carolina Atrium Capital Corporation, Landmark Bank of Palm Beach Atlanta July 9, 1986 Boca Raton, Florida County, Boca Raton, Florida Banc One Corporation, First Crawfordsville Financial Cleveland July 14, 1986 Columbus, Ohio Corporation, Crawfordsville, Indiana Barclays PLC, Barclays Bank of North Carolina, New York July 18, 1986 London, England Greenville, North Carolina Barclays Bank PLC, London, England Barclays USA Inc., Wilmington, Delaware Barclays U.S. Holdings Inc., New York, New York BarclaysAmericanCorporation, Charlotte, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 Federal Reserve Bulletin • September 1986 Section 3—Continued „ . . . Reserve Effective Applicant Bank(s) ^ B&nk Bellwood Bancorporation, Inc., First National Bank of Wheaton, Chicago July 3, 1986 Bell wood, Illinois Wheaton, Illinois Benson Financial Corporation, Commercial National Bank, Dallas July 25, 1986 San Antonio, Texas San Antonio, Texas Bonifay Holding Company, The Bank of Bonifay, Atlanta June 27, 1986 Inc., Bonifay, Florida Bonifay, Florida BT Financial Corporation, Fayette Bank and Trust Philadelphia July 17, 1986 Johnstown, Pennsylvania Company, Uniontown, Pennsylvania Capital Reserves Group, Inc., Unitedbank-College Station, Dallas July 3, 1986 College Station, Texas N.A., College Station, Texas CB&T Financial Corp., The Oak Mound Bank, Richmond July 7, 1986 Fairmont, West Virginia Clarksburg, West Virginia Chesnee State Bancshares, Inc. Chesnee State Bank, Richmond July 2, 1986 Chesnee, South Carolina Chesnee, South Carolina The Citizens and Southern Citizens and Southern Florida Atlanta July 15, 1986 Corporation, Corporation, Atlanta, Georgia Fort Lauderdale, Florida Landmark Bank of Seminole County, Casselberry, Florida Clin-Ark Bankshares, Inc., First National Bank, St. Louis July 9, 1986 Clinton, Arkansas Clinton, Arkansas CNB Holding Company, Commercial National Bank, Atlanta July 1, 1986 Daytona Beach, Florida Daytona Beach, Florida Commonwealth Bancshares Heritage Financial Services Philadelphia July 11, 1986 Corporation, Corporation, Williamsport, Pennsylvania Lewistown, Pennsylvania Crown Park Bancshares, Inc., Western National Bank, Dallas July 3, 1986 Lubbock, Texas Lubbock, Texas Dakota Bankshares, Inc., Bankers Financial Corporation, Minneapolis July 14, 1986 Fargo, North Dakota Drake, North Dakota F & M Financial Services Rural Financial Services, Inc., Chicago July 14, 1986 Corporation, Dousman, Wisconsin Menomonee Falls, Wisconsin Farmers & Merchants First Mississippi National Atlanta July 23, 1986 Corporation, Corporation, Forest, Mississippi Hattiesburg, Mississippi First American Bank Northern Illinois Bancorp, Inc., Chicago July 7, 1986 Corporation, Joliet, Illinois Elk Grove Village, Illinois First Brundidge Bancshares, The First National Bank of Atlanta June 30, 1986 Inc., Brundidge, Brundidge, Alabama Brundidge, Alabama First Canon Bancorp, Inc., The First National Bank of Kansas City July 2, 1986 Canon City, Colorado Canon City, Canon City, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 677 Section 3—Continued _ , , . Reserve Effective Applicant Bank(s) B&nk d&te First Colonial Bankshares Avenue Bank and Trust Company Chicago June 20, 1986 Corporation, of Oak Park, Chicago, Illinois Oak Park, Illinois Avenue Bank Northwest, Niles, Illinois Avenue Bank of Elk Grove, Elk Grove Village, Illinois The Northlake Bank, Northlake, Illinois First Indiana Bancorp, First National Bank & Trust Cleveland July 25, 1986 Elkhart, Indiana Company, Sturgis, Michigan First Pennsylvania Corporation, First Pennsylvania Bank (Del.), Philadelphia July 25, 1986 Philadelphia, Pennsylvania Wilmington, Delaware First St. Charles Bancshares, The First National Bank of St. Atlanta July 17, 1986 Inc., Charles Parish, Boutte, Louisiana Boutte, Louisiana FIRST SUBURBAN First Suburban National Bank, Chicago July 10, 1986 BANCORP CORPORATION, May wood, Illinois May wood, Illinois First TexCorp, Inc., First Texas Bank-Irving, N.A., Dallas July 18, 1986 Dallas, Texas Irving, Texas First Wisconsin Corporation, City Bankshares, Inc., Chicago July 18, 1986 Milwaukee, Wisconsin Portage, Wisconsin Friendship Bancshares, Inc., Bank of Friendship, St. Louis July 1, 1986 Friendship, Tennessee Friendship, Tennessee Gateway Bancshares, Inc., Gateway National Bank, Dallas July 21, 1986 Dallas, Texas Dallas, Texas Granite State Bankshares, Inc., Keene Savings Bank, Boston July 3, 1986 Keene, New Hampshire Keene, New Hampshire Hartford National Corporation, First Bancorporation, Boston July 25, 1986 Hartford, Connecticut Vineyard Haven, Massachusetts Hibernia Corporation, South Louisiana Financial Atlanta July 21, 1986 New Orleans, Louisiana Corporation, Houma, Louisiana Hooker National Bancshares, The First National Bank of Kansas City July 8, 1986 Inc., Hooker, Hooker, Oklahoma Hooker, Oklahoma Independent Community Independent Bank, N.A., Dallas July 21, 1986 Financial Corporation, Dallas, Texas Dallas, Texas Coppell Financial Corporation, Dallas, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

678 Federal Reserve Bulletin • September 1986 Section 3—Continued . . Reserve Effective Applicant Bank (ts) ^ BanR Katahdin Bankshares Corp., Katahdin Trust Company, Boston June 30, 1986 Patten, Maine Patten, Maine Kosman, Inc., Scottsbluff National Corporation, Kansas City July 7, 1986 Scottsbluff, Nebraska Scottsbluff, Nebraska Western National Bank, Scottsbluff, Nebraska Leeds Bancgroup, Inc., The Fort Deposit Bank, Atlanta July 15, 1986 Birmingham, Alabama Fort Deposit, Alabama Liberty BanCorporation, Liberty National Bank of Atlanta July 8, 1986 Longwood, Florida Orlando, Orlando, Florida Liberty County Bancshares, First State Bank, Dallas June 26, 1986 Inc., Liberty, Texas Houston, Texas M & M Holding Company, Farmers and Merchants Bank, St. Louis July 23, 1986 Marianna, Arkansas Marianna, Arkansas National City Bancshares, Inc., Chandler State Bank, St. Louis July 16, 1986 Evansville, Indiana Chandler, Indiana NBC Bancshares, Inc., National Bank of Commerce, Dallas June 30, 1986 Pampa, Texas Pampa, Texas Neffs Bancorp, Inc., The Neffs National Bank, Philadelphia July 3, 1986 Neflfs, Pennsylvania Neffs, Pennsylvania Newell Bancshares, Inc., First State Bank, Dallas July 24, 1986 Wells, Texas Wells, Texas Old National Bancorp, The Rockville National Bank, St. Louis July 18, 1986 Evansville, Indiana Rockville, Indiana Ozark Bankshares, Inc., Bankstock Two, Inc., St. Louis July 11, 1986 Ozark, Arkansas Dardanelle, Arkansas Newco Corporation, Jasper, Arkansas Parker Bank Holding The Parker Banking Company, Chicago July 3, 1986 Corporation, Parker City, Indiana Muncie, Indiana Peoples Exchange Bancshares, People Exchange Bank of Atlanta July 21, 1986 Inc., Monroe County, Beatrice, Alabama Beatrice, Alabama Republic Bancorp, Inc., Bellaire State Bank, Chicago July 23, 1986 Flint, Michigan Bellaire, Michigan St. Joseph Bancorporation, Inc. First National Bank of Angola, Chicago July 1, 1986 South Bend, Indiana Angola, Indiana St. Joseph Bancorp, Inc., The State Bank of St. Joseph, Chicago July 21, 1986 Saint Joseph, Illinois Saint Joseph, Illinois SBT Bancshares, Inc., Selmer Bank and Trust Company, St. Louis July 22, 1986 Selmer, Tennessee Selmer, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 679 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Security National Corporation, Security National Bank of Kansas City July 22, 1986 Omaha, Nebraska Omaha, Omaha, Nebraska Signet Banking Corporation, Security National Corporation, Richmond July 25, 1986 Richmond, Virginia Washington, D.C. Stone City Bancshares, Inc., First National Bank of Paoli, St. Louis July 11, 1986 Bedford, Indiana Paoli, Indiana Treasure Bancorp., Inc., Reserve Enterprises, Inc., Minneapolis July 14, 1986 Plenty wood, Montana Plenty wood, Montana The Tysan Corporation, Miltona State Bank, Minneapolis July 3, 1986 Minneapolis, Minnesota Miltona, Minnesota United Banks of Colorado, Inc., American National Bank of Kansas City July 22, 1986 Denver, Colorado Aurora, Aurora, Colorado United Vermont The Green Mountain Bank, Boston July 3, 1986 Bancorporation, Winhall Township, Vermont Rutland, Vermont Villa Park Trust & Savings Edville Bankcorp, Inc., Chicago July 17, 1986 Bank Employees' Stock Villa Park, Illinois Ownership Plan, Villa Park, Illinois Villa Rica Bancorp, Inc., Bank of Villa Rica, Atlanta July 21, 1986 Villa Rica, Georgia Villa Rica, Georgia WFNB Bankshares, Inc., Williamsburg First National Richmond July 8, 1986 Kingstree, South Carolina Bank, Kingstree, South Carolina Woodruff State Bancshares, Woodruff State Bank, Richmond July 2, 1986 Inc., Woodruff, South Carolina Woodruff, South Carolina Section 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date The Bank of New York, purchase certain assets and as- New York July 2, 1986 New York, New York sume certain liabilities of three branches of The Home Savings Bank, Hicksville, Port Washington, and Massapequa, New York Delaware National Bankshares The Insurance Place, Inc., Philadelphia July 8, 1986 Corp., Bethany Beach, Delaware Georgetown, Delaware Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 Federal Reserve Bulletin • September 1986 Section 4—Continued Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Johnston County Bancshares, Johnston County Insurance Kansas City July 18, 1986 Inc., Agency, Inc., Tishomingo, Oklahoma Tishomingo, Oklahoma Metro Bancorp, Inc., Mesa Mortgage Company, San Francisco July 10, 1986 Phoenix, Arizona Phoenix, Arizona Norwest Corporation, three offices of Household Minneapolis June 27, 1986 Minneapolis, Minnesota Finance Corporation II and Household Retail Services, Inc., in Alaska The Sanwa Bank, Limited, Division LE of Continental San Francisco July 2, 1986 Osaka, Japan Illinois National Bank and Trust Company, Chicago, Illinois Standard Chartered PLC, Mocatta Metals Corporation, San Francisco July 3, 1986 London, England New York, New York Sections 3 and 4 Reserve Effective Applicant Bank(s) Bank date Iowa State Bank Holding Iowa State Bank, Chicago June 30, 1986 Company, Des Moines, Iowa Des Moines, Iowa Bankers Leasing Company, Des Moines, Iowa ORDERS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date Ohio Citizens Bank, The Citizens National Bank, Cleveland July 8, 1986 Toledo, Ohio Bryan, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 681 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. Optical Coating Laboratory, Inc. v. United States, McHuin v. Volcker, et al, No. 85-2170 WARB (W.D. No. 288-86C (U.S. Claims Ct., filed May 6, 1986). Okl., filed Aug. 29, 1985). Adkins v. Board of Governors, No. 86-3853 (4th Cir., Independent Community Bankers Associaton of South filed May 14, 1986). Dakota v. Board of Governors, No. 84-1496 (D.C. Securities Industry Association v. Board of Cir., filed Aug. 7, 1985). Governors, No. 86-1412 (D.C. Cir., filed July 14, Florida Bankers Association, et al. v. Board of Gover- 1986). nors, No. 85-193 (U.S., filed Aug. 5, 1985). Jenkins v. Board of Governors, No. 86-1419 (D.C. Urwyler, et al. v. Internal Revenue Service, et al., No. Cir., filed July 18, 1986). CV-F-85-402 REC (E.D. Cal., filed July 18, 1985). CBC, Inc v. Board of Governors, No. 86-1001 (10th Johnson v. Federal Reserve System, et al., No. S85- Cir., filed Jan. 2, 1986). 0958(R) and S85-1269(N) (S.D. Miss., filed July 16, Howe v. United States, et al, No. 85-4504-C (D. 1985). Mass., filed Dec. 6, 1985). Wight, et al. v. Internal Revenue Service, et al., No. Myers, et al. v. Federal Reserve Board, No. 85-1427 CIV S-85-0012 MLS (E.D. Cal., filed July 12, 1985). (D. Idaho, filed Nov. 18, 1985). Cook v. Spillman, et al., No. CIV S-85-0953 EJG Souser, et al. v. Volcker, et al., No. 85-C-2370, et al. (E.D. Cal., filed July 10, 1985). (D. Colo., filed Nov. 1, 1985). Florida Bankers Association v. Board of Governors, Podolak v. Volcker, No. C85-0456, et al. (D. Wyo., No. 84-3883 and No. 84-3884 (11th Cir., filed Feb. filed Oct. 28, 1985). 15, 1985). Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa, Florida Department of Banking v. Board of Goverfiled Oct. 22, 1985). nors, No. 84-3831 (11th Cir., filed Feb. 15, 1985), Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D. and No. 84-3832 (11th Cir., filed Feb. 15, 1985). Minn., filed Oct. 21, 1985). Lewis v. Volcker, et al., No. C-l-85-0099 (S.D. Ohio, Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D. filed Jan. 14, 1985). Neb., filed Oct. 16, 1985). Brown v. United States Congress, et al., No. 84-2887- Jensen v. Wilkinson, et al., No. 85-4436-S, et al. (D. 6 (IG) (S.D. Cal., filed Dec. 7, 1984). Kan., filed Oct. 10, 1985). Melcher v. Federal Open Market Committee, No. 84- Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D., 1335 (D.D.C., filed Apr. 30, 1984). filed Oct. 8, 1985). Securities Industry Association v. Board of Gover- First National Bank of Blue Island Employee Stock nors, No. 80-2614 (D.C. Cir., filed Oct. 24., 1980), Ownership Plan v. Board of Governors, No. 85- and No. 80-2730 (D.C. Cir., filed Oct. 24, 1980). 2615 (7th Cir., filed Sept. 23, 1985). First National Bancshares II v. Board of Governors, No. 85-3702 (6th Cir., filed Sept. 4, 1985). 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 FOLIC Y INS TR UMENTS A26 Selected financial institutions—Selected assets and liabilities A6 Federal Reserve Bank interest rates A7 Reserve requirements of depository institutions A8 Maximum interest rates payable on time and FEDERAL FINANCE savings deposits at federally insured institutions A9 Federal Reserve open market transactions A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation FEDERAL RESERVE BANKS A30 Gross public debt of U.S. Treasury—Types and ownership A10 Condition and Federal Reserve note statements A31 U.S. government securities dealers— All Maturity distribution of loan and security Transactions holdings A32 U.S. government securities dealers—Positions and financing A33 Federal and federally sponsored credit MONETARY AND CREDIT AGGREGATES agencies—Debt outstanding A12 Aggregate reserves of depository institutions and monetary base SECURITIES MARKETS AND CORPORATE FINANCE A13 Money stock, liquid assets, and debt measures A15 Bank debits and deposit turnover A34 New security issues—State and local A16 Loans and securities—All commercial banks governments and corporations A35 Open-end investment companies—Net sales and asset position COMMERCIAL BANKING INSTITUTIONS 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

2 Federal Reserve Bulletin • September 1986 A36 Nonfinancial corporations—Assets and A54 Foreign official assets held at Federal Reserve liabilities Banks A36 Total nonfarm business expenditures on new A55 Foreign branches of U.S. banks—Balance sheet plant and equipment data A37 Domestic finance companies—Assets and A57 Selected U.S. liabilities to foreign official liabilities and business credit institutions REAL ESTATE REPORTED BY BANKS IN THE UNITED STATES A38 Mortgage markets A57 Liabilities to and claims on foreigners A39 Mortgage debt outstanding A58 Liabilities to foreigners A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on CONSUMER INSTALLMENT CREDIT foreigners A61 Banks' own claims on unaffiliated foreigners A40 Total outstanding and net change A62 Claims on foreign countries—Combined A41 Terms domestic offices and foreign branches FLOW OF FUNDS REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES A42 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit A63 Liabilities to unaffiliated foreigners markets A64 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS A65 Foreign transactions in securities SELECTED MEASURES A66 Marketable U.S. Treasury bonds and notes— Foreign transactions A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment INTEREST AND EXCHANGE RATES A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A67 Discount rates of foreign central banks A49 Housing and construction A67 Foreign short-term interest rates A50 Consumer and producer prices A68 Foreign exchange rates A51 Gross national product and income A52 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special International Statistics Tables SUMMARY STATISTICS SPECIAL TABLE A53 U.S. international transactions—Summary A70 Assets and liabilities of foreign banks, A54 U.S. foreign trade December 31, 1985 A54 U.S. reserve assets 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 1986 Q3 Q4 Ql Q2 Feb. Mar. Apr. May' June Reserves of depository institutions2 1 Total 15.7 12.5 13.1 17.8 12.8 12.8 10.5 33.0 21.9 2 Required 16.4 11.5 12.3 19.7 13.4 18.4 13.2 32.7 19.5 3 Nonborrowed 17.5 10.4 19.1 17.7 10.0 16.3 7.3 34.1 24.1 4 Monetary base3 9.6 8.2 8.6 8.8 7.6 8.0 5.9 13.7 9.3 Concepts of money, liquid assets, and debt4 5 Ml 14.5 10.7 7.7 15.8 7.3 14.1 14.5 23.2 14.6 6 M2 9.5 6.0 4.3 10.3 3.5 6.8 13.7' 12.0 9.2 7 M3 7.6' 6.5r 7.4' 7.8 6.2' 7.7' 10.6' 5.3 6.4 8 L 7.8' 9.4' 8.1 n.a. 5.7' 4.1' 7.0 9.8 n.a. 9 Debt 12.9 14.6 16.1 9.6 8.7' 8.3 9.8' 10.2 n.a. Nontransaction components 10 In M25 8.0 4.6 3.2 8.5 2.3 4.4 13.5 8.3 7.5 11 In M3 only6 -.y 8.3' 20.3' -1.5 16.7' 11.0' -1.6' -21.0 -5.1 Time and savings deposits Commercial banks 12 Savings7 7.6 3.2 1.9 11.8 2.9 5.8' 9.6' 21.8 18.6 13 Small-denomination time8 -3.3 -1.6 5.3 -3.2 4.7 2.8 -3.4 -9.6 -10.0 14 Large-denomination time910 -3.6 14.1 18.5 -8.7 7.5 -18.1' -.4' -23.4 -2.6 Thrift institutions 15 Savings7 12.9 7.5 3.1 21.3 4.0 8.7 24.5 31.2 29.7 16 Small-denomination time -2.8 -2.9 6.6 2.9 8.4 6.7 5.9' -4.3 -5.0 17 Large-denomination time9 -1.0 5.2 10.0 11.0 11.4 27.8 11.7 -1.5 -2.2 Debt components4 18 Federal 14.6 15.2 17.5 9.5 9.8 5.3 7.8 12.7 n.a. 19 Nonfederal 12.4 14.4 15.7 9.6 8.4' 9.3' 10.4' 9.4 n.a. 20 Total loans and securities at commercial banks" 9.6 9.4' 12.7 4.1 3.4' 5.6 2.0 5.9 3.9 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 oflicial 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. official 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 Nonfinancial Statistics • September 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 Apr. May June May 14 May 21 May 28 June 4 June 11 June 18 June 25 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 203,014 205,800 207,619 205,101 204,581 204,387 206,484 206,389 209,481 207,270 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss''''' 177,563 180,195 182,611 178,663 179,929 179,449 181,977 181,811 183,442 182,145 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 176,389 179,287 182,086 178,663 178,865 179,449 181,977 181,811 181,194 182,145 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 1,174 908 525 0 1,064 0 0 0 2,248 0 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 8,384 8,366 8,309 8,166 8,430 8,137 8,137 8,137 8,876 8,137 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,187 8,155 8,137 8,166 8.137 8,137 8,137 8,137 8,137 8,137 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 197 211 172 0 293 0 0 0 739 0 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 919 858 780 806 848 890 852 703 734 784 1111100000 FFFFFllllloooooaaaaattttt 432 638 586 813 421 924 458 761 1,109 771 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 15,716 15,743 15,334 16,654 14,954 14,988 15,060 14,978 15,320 15,433 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,090 11,086 11,085 11,085 11,085 11,085 11,085 11,085 11,085 11,084 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt.................... 4,718 4,776 4,818 4,732 4,818 4,818 4,818 4,818 4,818 4,818 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 17.229 17,273 17.314 17,265 17,276 17,287 17,297 17,305 17,313 17,322 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 194,372 196,431 198,603 196,350 196,414 197,175 198,034 198,627 198,855 198,410 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 607 637 636 639 638 636 636 636 636 636 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 3,870 4,679 2.824 4,591 3,972 3,580 2,687 2,475 3,075 3,428 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 247 212 229 206 221 218 240 216 209 241 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss .................... 1,818 1,841 1,882 1,747 1,815 1,891 1,860 1,779 1,960 1,931 2222200000 OOOOOttttthhhhheeeeerrrrr 448 482 477 455 531 395 449 420 533 508 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 6,254 6,384 6.289 6,262 6,332 6,269 6,144 6,091 6,456 6,382 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 28,435 28,269 29,895 27,933 27,838 27,413 29,635 29,352 30,972 28,957 End-of-month figures Wednesday figures 1986 1986 Apr. May June May 14 May 21 May 28 June 4 June 11 June 18 June 25 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 210,494 206,437 209,021 205,636 209,592 209,431 208,453 205,705 210,579 207,102 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 181,834 181,992 183,849 178,869 183,054 181,499 182,690 181,150 184,450 181,893 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 174,312 181,992 183,849 178,869 178,296 181,499 182,690 181,150 183,555 181,893 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 7,522 0 0 0 4,758 0 0 0 895 0 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 9,620 8,137 8,137 8,137 9,506 8,137 8,137 8,137 8,917 8,137 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 8,187 8,137 8,137 8,137 8,137 8,137 8,137 8,137 8,137 8,137 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 1,433 0 0 0 1,369 0 0 0 780 0 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 954 850 952 812 1,233 812 1,059 750 872 797 3333322222 FFFFFllllloooooaaaaattttt 851 132 283 1,046 276 3,744 935 429 632 363 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 17,235 15,326 15,800 16,772 15,523 15,239 15,632 15,239 15,708 15,912 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk 11,089 11,085 11,084 11,085 11,085 11,085 11,085 11,085 11,084 11,084 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt ............... 4,718 4,818 4,818 4,818 4,818 4,818 4,818 4,818 4,818 4,818 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 17,252 17,296 17,329 17,274 17,285 17,296 17,304 17,312 17,321 17,329 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 194,503 197,807 199,244 196,557 196,680 198,020 198,346 198,878 198,733 198,493 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 638 636 636 638 636 636 636 636 636 636 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 11,550 3.083 3,143 2,604 4,186 4,098 1,352 2,9% 4,622 2,846 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 326 254 354 237 205 279 212 208 181 240 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,590 1.596 1,593 1,609 1,609 1,580 1,582 1,580 1,591 1,579 4444422222 OOOOOttttthhhhheeeeerrrrr 441 417 450 561 401 497 425 445 463 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd 517 cccccaaaaapppppiiiiitttttaaaaalllll 6,680 6.110 6,484 6,057 6,235 6,134 5,892 6,174 6,184 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll 6,271 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 27,826 29,733 30,347 30,550 32,828 31,386 33,215 28,003 29,879 31,262 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. Nov. Dec. Jan. Feb. Mar. Apr. May 1 Reserve balances with Reserve Banks' 21,138 21,738 27,620 26,385 27,620 26,373 24,700 27,114 28,892 28,279 2 Total vault cash2 20,755 22,316 22,956 22,457 22,956 24,245 24,962 22,688 22,231 22,474 3 Vault cash used to satisfy reserve requirements3 . 17,908 18,958 20,522 19,997 20,522 21,687 21,952 20,160 19,990 20,140 4 Surplus vault cash4 2,847 3,358 2,434 2,460 2,434 2,559 3,010 2,528 2,241 2,334 Total reserves5 38,894 40,696 48,142 46,382 48,142 48,060 46,652 47,274 48,882 48,419 6 Required reserves 38,333 39,843 47,085 45,454 47,085 46,949 45,555 46,378 48,081 47,581 7 Excess reserve balances at Reserve Banks6 561 853 1,058 928 1,058 1,111 1,097 896 801 838 8 Total borrowings at Reserve Banks 774 3,186 1,318 1,741 1,318 770 884 761 893 876 9 Seasonal borrowings at Reserve Banks 96 113 56 107 56 36 56 68 73 94 10 Extended credit at Reserve Banks7 2 2,604 499 530 499 497 492 518 634 584 Biweekly averages of daily figures for weeks ending 1986 Feb. 26 Mar. 12 Mar. 26 Apr. 9 Apr. 23 May 7 May 21 June 4r June 18 July 2 11 Reserve balances with Reserve Banks' 25,021 27,102 26,704 28,292 29,385 28,676 27,875 28,568 30,156 29,089 12 Total vault cash2 24,348 22,577 22,986 22,121 22,369 22,100 22,700 22,422 22,250 23,580 13 Vault cash used to satisfy reserve requirements3 . 21,424 20,016 20,409 19,809 20,190 19,824 20,366 20,045 20,106 20,956 14 Surplus vault cash4 2,924 2,561 2,577 2,312 2,179 2,276 2,334 2,377 2,144 2,624 15 Total reserves5 46,445 47,118 47,113 48,101 49,575 48,500 48,241 48,613 50,262 50,045 16 Required reserves 45,408 46,142 46,187 47,479 48,703 47,612 47,554 47,600 49,627 48,754 17 Excess reserve balances at Reserve Banks6 1,038 976 926 622 873 888 688 1,014 636 1,292 18 Total borrowings at Reserve Banks 1,100 704 769 874 861 981 827 871 719 879 19 Seasonal borrowings at Reserve Banks 66 65 69 76 64 89 92 101 102 119 20 Extended credit at Reserve Banks7 506 475 535 576 671 637 571 566 526 525 1. Excludes required clearing balances and adjustments to compensate for computation period by institutions having required reserve balances at Federal float. Reserve Banks plus the amount of vault cash equal to required reserves during the 2. Dates refer to the maintenance periods in which the vault cash can be used to maintenance period at institutions having no required reserve balances. satisfy reserve requirements. Under contemporaneous reserve requirements, 6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy maintenance periods end 30 days after the lagged computation periods in which reserve requirements less required reserves. the balances are held. 7. Extended credit consists of borrowing at the discount window under the 3. Equal to all vault cash held during the lagged computation period by terms and conditions established for the extended credit program to help institutions having required reserve balances at Federal Reserve Banks plus the depository institutions deal with sustained liquidity pressures. Because there is amount of vault cash equal to required reserves during the maintenance period at not the same need to repay such borrowing promptly as there is with traditional institutions having no required reserve balances. short-term adjustment credit, the money market impact of extended credit is 4. Total vault cash at institutions having no required reserve balances less the similar to that of nonborrowed reserves. amount of vault cash equal to their required reserves during the maintenance 8. Before February 1984, data are prorated monthly averages of weekly period. averages; beginning February 1984, data are prorated monthly averages of 5. Total reserves not adjusted for discontinuities consist of reserve balances biweekly averages. with Federal Reserve Banks, which exclude required clearing balances and NOTE. These data also appear in the Board's H.3 (502) release. For address, see adjustments to compensate for float, plus vault cash used to satisfy reserve inside front cover. requirements. Such vault cash consists of all vault cash held during the lagged 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks1 Averages of daily figures, in millions of dollars 1986 week ending Monday BByy mmaattuurriittyy aanndd ssoouurrccee May 19 May 26 June 2r June 9 June 16' June 23 June 30 July 7 July 14 One day and continuing contract 1 Commercial banks in United States 69,536 67,481 68,191 75,063 72,971 69,752 67,656 79,240 76,556 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 36,494 37,095 37,738 38,033 38,556 35,998 34,418 37,560 41,305 3 Nonbank securities dealers 9,938 11,296 13,301 8,136 8,424 9,087 8,606 8,871 10,607 4 All other 26,337 25,333 26,068 24,724 24,881 24,494 26,253 26,244 27,606 All other maturities 5 Commercial banks in United States 9,394 9,361 9,243 9,258' 9,817 9,769 9,551 8,708 8,477 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 6,632 7,706 7,198 6,800 6,714 6,538 6,852 6,466 6,420 7 Nonbank securities dealers 10,180 10,079 9,572 9,207 9,493 9,077 8,813 8,099 8,046 8 All other 10,523 10,531 9,692 9,077 9,651 10,489 10,536 9,706 9,886 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 26,736 24,605 27,383 27,391 27,076 26,363 26,351 34,230 30,912 10 Nonbank securities dealers 8,946 10,149 9,328 9,015 8,784 8,949 8,061 9,098 9,392 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • September 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 ccrreeddiitt11 First 60 days Next 90 days BBBaaannnkkk of borrowing of borrowing After 150 days EEffffeeccttiivvee ddaattee ffoorr ccuurrrreenntt rraatteess Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 7/11/86 date rate 7/11/86 rate 7/11/86 rate 7/11/86 rate Boston 6 7/11/86 6'/2 6 6'/2 7 71/2 8'/2 7/11/86 New York 7/11/86 7/11/86 Philadelphia 7/11/86 7/11/86 Cleveland 7/11/86 7/11/86 Richmond 7/11/86 7/11/86 Atlanta 7/11/86 7/11/86 Chicago 7/11/86 7/11/86 St. Louis 7/11/86 7/11/86 Minneapolis 7/11/86 7/11/86 Kansas City .... 7/11/86 7/11/86 Dallas 7/11/86 7/11/86 San Francisco... 6 7/11/86 6'/2 6 6'/2 7 7!/2 81/2 7/11/86 Range of rates in recent years3 Range (or F.R. Range(or F.R. Range(or F.R. Effective date A le ll v e F l) . — R. Ba of n k Effective date A le ll v e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. Ba of n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1973 71/2 71/2 1978- Aug. 21 7V4 7'/4 1981— Dec. 4 12 12 1974— Apr. 25 71/2-8 8 Sept. 22 3 0 Oct. 16 8-81/2 8 Vi 11998822—— JJuullyy 20 111/2-12 111/2 Dec. 9 7-V4-8 73/4 20 81/2 fr/2 23 11'/2 111/2 16 73/4 73/4 Nov. 1 8'/2-9 Vi 9!/> AAuugg.. 2 ll-ll'/2 11 3 9Vl 9xh 3 11 11 1975— Jan. 6 71/4-73/4 73/4 16 101/2 101/2 10 71/4-73/4 71/4 July 20 10 10 27 10-101/2 10 24 71/4 71/4 Aug. 17 10-10'/2 101/2 30 10 10 Feb. 5 63/4-7l/4 63/4 20 10'/2 10'/2 Oct. 12 91/2-10 91/2 7 63/4 63/4 Sept. 19 10'/2-ll 11 13 9Vi 91/2 Mar. 10 6'/4-63/4 61/4 21 11 11 Nov. 22 9-91/2 9 14 61/4 61/4 Oct. 8 11-12 12 26 9 9 May 16 6-61/4 6 10 12 12 Dec. 14 81/2-9 9 23 6 6 15 81/2-9 8'/2 Feb. 15 12-13 13 17 81/2 81/2 1976— Jan. 19 5'/2-6 51/2 19 13 13 23 5'/2 5Vi May 29 12-13 13 11998844—— AApprr.. 9 816-9 9 Nov. 22 5'/4-5'/2 5'/4 30 12 12 13 9 9 26 51/4 51/4 June 13 11-12 11 Nov. 21 8'/2-9 8'/2 16 11 11 26 8'/2 81/2 1977— Aug. 30 51/4-53/4 51/4 July 28 10-11 10 Dec. 24 8 8 31 51/4-53/4 53/4 29 10 10 Sept. 2 53/4 53/4 Sept. 26 11 11 11998855—— MMaayy 20 71/2-8 7'/2 Oct. 26 6 6 Nov. 17 12 12 24 71/2 IVi Dec. 5 12-13 13 1978— Jan. 9 6-6I/2 61/2 8 13 13 1986— Mar. 7 7-71/2 1 20 6'/2 61/2 10 7 7 May 11 61/2-7 7 May 5 13-14 14 AApprr.. 21 61/2-7 61/2 12 7 7 14 14 23 61/2 61/2 July 3 7-71/4 71/4 Nov. 2 13-14 13 July 11 6 6 July 10 71/4 71/4 6 13 13 In effect July 28, 1986 6 6 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 Vi 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 Vz 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 loaps 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 Al 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' 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 tt ss ee ii rr tt vv ,, aa aa ll55 nn dd Monetary Control Act6 Percent Effective date Percent Effective date Net demand2 Net transaction accounts7 8 7 12/30/76 $0—$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 16'/t 12/30/76 By original maturity Less than l'/i years 3 10/6/83 Time and savings2^ 1 xh 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 2Vi 1/8/76 4 years or more 1 10/30/75 Over $5 million, by maturity 30-179 days 6 12/12/74 180 days to 4 years 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 that permit no more than six preauthorized, automatic, or other transfers per 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent month of which no more than three can be checks—are not transaction accounts was imposed on large time deposits of $100,000 or more, obligations of affiliates, (such accounts are savings deposits subject to time deposit reserve requirements.) and ineligible acceptances. This supplementary requirement was eliminated with 8. The Monetary Control Act of 1980 requires that the amount of transaction the maintenance period beginning July 24, 1980. accounts against which the 3 percent reserve requirement applies be modified Effective with the reserve maintenance period beginning Oct. 25, 1979, a annually by 80 percent of the percentage increase in transaction accounts held by marginal reserve requirement of 8 percent was added to managed liabilities in all depository institutions determined as of June 30 each year. Effective Dec. 31, excess of a base amount. This marginal requirement was increased to 10 percent 1981, the amount was increased accordingly from $25 million to $26 million; beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million; was eliminated beginning July 24, 1980. Managed liabilities are defined as large effective Jan. 1, 1985, to $29.8 million; and effective Dec. 31, 1985, to $31.7 time deposits, Eurodollar borrowings, repurchase agreements against U.S. million. government and federal agency securities, federal funds borrowings from non- 9. In general, nonpersonal time deposits are time deposits, including savings member institutions, and certain other obligations. In general, the base for the deposits, that are not transaction accounts and in which a beneficial interest is marginal reserve requirement was originally the greater of (a) $100 million or (b) held by a depositor that is not a natural person. Also included are certain the average amount of the managed liabilities held by a member bank, Edge transferable time deposits held by natural persons, and certain obligations issued corporation, or family of U.S. branches and agencies of a foreign bank for the two to depository institution offices located outside the United States. For details, see reserve computation periods ending Sept. 26, 1979. For the computation period section 204.2 of Regulation D. beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease in an institution's U.S. office gross loans to foreigners and gross balances due NOTE. Required reserves must be held in the form of deposits with Federal from foreign offices of other institutions between the base period (Sept. 13-26, Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a 1979) and the week ending Mar. 12, 1980, whichever was greater. For the Federal Reserve Bank indirectly on a pass-through basis with certain approved computation period beginning May 29, 1980, the base was increased by 7Vi institutions. percent above the base used to calculate the marginal reserve in the statement week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was reduced to the extent that foreign loans and balances declined. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • September 1986 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions' Percent per annum Commercial banks mut S u a al v i s n a g v s i n a g n s d b l a o n an k s a ( s t s h o r c if i t a t i i n o s n t s i tu a t n io d ns)1 In effect July 31, 1986 In effect July 31, 1986 TTTyyypppeee ooofff dddeeepppooosssiiittt Percent Effective date Percent Effective date 2 3 1 N M Sa e o v g n i o n e t y g i a s b m le 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 aw un a t l accounts ( ( ( 3 4 2 > ) ) 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. ceiling of 5Vi percent. 5. Before Jan. 1, 1986, deposits of less than $1,000 were subject to an interest 3. Before Jan. 1, 1986, NOW accounts with minimum denomination require- rate ceiling of 5Vi percent. Deposits of less than $1,000 issued to governmental ments of less than $1,000 were subject to an interest rate ceiling of 5'/4 percent. units were subject to an interest rate ceiling of 8 percent. Effective Jan. 1, 1986, NOW accounts with minimum required denominations of $1,000 or more and the minimum denomination requirement was removed. IRA/Keough (HR10) Plan accounts were not subject to interest rate ceilings. 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 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 18,888 20,036 22,214 1,180 4,515 286 0 396 2,988 33,,119966 2 Gross sales 3,420 8,557 4,118 0 0 225 2,277 0 0 0 3 Exchange 0 0 0 -350 0 0 0 0 0 0 4 Redemptions 2,400 7,700 3,500 0 0 0 1,000 0 0 0 Others within 1 year 5 Gross purchases 484 1,126 1,349 0 143 0 0 0 0 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shift 18,887 16,354 19,763 2,363 943 725 4,776 1,152 447 1,847 8 Exchange -16,553 -20,840 -17,717 -615 -1,529 -596 -2,148 -1,458 -1,129 -1,819 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 0 868 0 00 00 00 00 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -15,533 -13,709 -17,459 -1,731 -943 -703 -4,776 -1,152 -447 -1,532 13 Exchange 11,641 16,039 13,853 650 1,529 596 1,548 1,458 1,134 1,019 5 to 10 years 14 Gross purchases 890 536 458 0 345 0 0 0 0 0 15 Gross sales 0 300 100 0 0 0 0 0 0 0 16 Maturity shift -2,450 -2,371 -1,857 -600 0 -22 0 0 -5 -315 17 Exchange 2,950 2,750 2,184 184 0 0 350 0 0 500 Over 10 years 18 Gross purchases 383 441 293 0 197 0 0 0 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -904 -275 -447 -32 0 0 0 0 0 0 21 Exchange 1,962 2,052 1,679 131 0 0 250 0 0 300 All maturities 22 Gross purchases 22,540 23,776 26,499 1,180 6,068 286 0 396 2,988 3,196 23 Gross sales 3,420 8,857 4,218 0 0 225 2,277 0 0 0 24 Redemptions 2,487 7,700 3,500 0 0 0 1,000 0 0 0 Matched transactions 25 Gross sales 578,591 808,986 866,175 85,486 76,399 63,109 90,459 88,917 109,253 62,663 26 Gross purchases 576,908 810,432 865,968 84,769 78,962 61,156 94,368 88,604 103,957 67,147 Repurchase agreements 27 Gross purchases 105,971 127,933 134,253 3,684 23,338 24,257 0 6,748 2211,,115566 1122,,339955 28 Gross sales 108,291 127,690 132,351 3,684 19,809 24,699 3,087 6,748 13,634 19,917 29 Net change in U.S. government securities 12,631 8,908 20,477 463 12,159 -2,335 -2,456 83 5,214 158 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 00 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 292 256 162 0 0 0 40 0 0 50 Repurchase agreements 33 Gross purchases 8,833 11,509 22,183 1,454 7,640 5,384 00 11,,882211 33,,336699 33,,113355 34 Gross sales 9,213 11,328 20,877 1,454 5,947 6,454 623 1,821 1,955 4,567 35 Net change in federal agency obligations -672 -76 1,144 0 1,693 -1,070 -663 0 1,432 -1,482 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 21,621 463 13,853 -3,405 -3,119 83 6,647 -1,324 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 • September 1986 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1986 1986 May 28 June 4 June 11 June 18 June 25 Apr. May June Consolidated condition statement ASSETS 1 Gold certificate account 11,085 11,085 11,085 11,084 11,084 11,089 11,085 11,084 2 Special drawing rights certificate account 4,818 4,818 4,818 4,818 4,818 4,718 4,818 4,818 3 491 482 495 487 492 530 487 488 Loans 4 To depository institutions 812 1,059 750 872 797 954 850 952 5 Other 0 0 0 0 0 0 0 0 Acceptances—Bought outright 6 Held under repurchase agreements 0 00 0 00 00 00 00 00 Federal agency obligations 7 Bought outright 8,137 8,137 8,137 8,137 88,,113377 8,187 8,137 88,,113377 8 Held under repurchase agreements 0 0 0 780 0 1,433 0 0 U.S. government securities Bought outright 9 Bills 89,126 90,317 88,777 9911,,118822 8899,,552200 81,939 89,619 91,476 10 Notes 67,097 67,097 67,097 67,097 67,097 67,397 67,097 67,097 11 Bonds 25,276 25,276 25,276 25,276 25,276 24,976 25,276 25,276 12 Total bought outright1 181,499 182,690 181,150 183,555 181,893 174,312 181,992 183,849 13 Held under repurchase agreements 0 0 0 895 0 7,522 0 0 14 Total U.S. government securities 181,499 182,690 181,150 184,450 181,893 181,834 181,992 183,849 15 Total loans and securities 190,448 191,886 190,037 194,239 190,827 192,408 190,979 192,938 16 Items in process of collection 11,852 7,706 6,453 7,648 6,078 7,798 5,836 4,959 17 Bank premises 629 632 632 634 634 623 629 634 Other assets 18 Denominated in foreign currencies2 8,290 8,003 8,007 8,016 8,029 8,260 8,002 8,200 19 All other3 6,320 6,997 6,600 7,058 7,249 8,352 6,695 6,966 20 Total assets 233,933 231,609 228,127 233,984 229,211 233,778 228,531 230,087 LIABILITIES 21 Federal Reserve notes 181,851 182,160 182,697 182,536 182,293 178,418 181,634 183,040 Deposits 22 To depository institutions 32,966 34,797 29,583 3322,,884411 31,470 29,416 31,329 31,940 23 U.S. Treasury—General account 4,098 1,352 2,9% 4,622 2,846 11,550 3,083 3,143 24 Foreign—Official accounts 279 212 208 181 240 326 254 354 25 Other 497 425 445 517 463 441 417 450 26 Total deposits 37,840 36,786 33,232 38,161 35,019 41,733 35,083 35,887 27 Deferred credit items 8,108 6,771 6,024 7,016 5,715 6,947 5,704 4,676 28 Other liabilities and accrued dividends4 2,160 2,178 2,248 2,316 2,236 2,217 2,249 2,190 29 Total liabilities 229,959 227,895 224,201 230,029 225,263 229,315 224,670 225,793 CAPITAL ACCOUNTS 30 Capital paid in 1,834 1,806 1,807 1,806 1,807 1,828 1,839 1,807 31 Surplus 1,781 1,770 1,780 1,781 1,781 1,781 1,778 1,781 32 Other capital accounts 359 138 339 368 360 854 244 706 33 Total liabilities and capital accounts 233,933 231,609 228,127 233,984 229,211 233,778 228,531 230,087 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 147,068 147,642 146,990 148,407 145,959 146,001 147,103 146,909 Federal Reserve note statement 35 Federal Reserve notes outstanding 213,981 214,419 214,779 215,486 215,943 211,992 213,923 215,965 36 LESS: Held by bank 32,130 32,259 32,082 32,950 33,650 33,574 32,289 32,925 37 Federal Reserve notes, net 181,851 182,160 182,697 182,536 182,293 178,418 181,634 183,040 Collateral held against notes net: 38 Gold certificate account 11,085 11,085 11,085 11,084 11,084 11,089 11,085 11,084 39 Special drawing rights certificate account 4,818 4,818 4,818 4,818 4,818 4,718 4,818 4,818 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. government and agency securities 165,948 166,257 166,794 166,634 166,391 162,611 165,731 167,138 42 Total collateral 181,851 182,160 182,697 182,536 182,293 178,418 181,634 183,040 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 May 28 June 4 June 11 June 18 June 25 Apr. 30 May 30 June 30 1 Loans—Total 812 1,059 750 872 797 954 850 952 2 Within 15 days 805 1,030 718 867 787 936 823 922 3 16 days to 90 days 7 29 32 5 10 18 27 30 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 181,499 182,690 181,150 184,450 181,893 181,834 181,992 183,849 10 Within 15 days' 12,275 10,264 7,839 10,255 9,129 13,456 6,711 6,428 II 16 days to 90 days 43,197 45,039 47,654 46,334 44,753 39,760 47,713 48,118 17 91 days to 1 year 55,039 56,345 54,615 56,819 56,969 58,193 56,580 58,100 n Over 1 year to 5 years 33,385 33,439 33,439 33,439 33,439 33,308 33,385 33,600 14 Over 5 years to 10 years 15,294 15,294 15,294 15,294 15,294 15,108 15,294 15,294 15 Over 10 years 22,309 22,309 22,309 22,309 22,309 22,009 22,309 22,309 16 Federal agency obligations—Total 8,137 8,137 8,137 8,917 8,137 9,620 8,137 8,137 17 Within 15 days' 221 40 0 922 164 1,591 221 164 18 16 days to 90 days 504 707 707 613 591 617 504 601 19 91 days to 1 year 1,800 1,823 1.896 1,848 1,866 1,795 1,800 1,856 70 Over 1 year to 5 years 3,871 3,826 3,783 3,783 3,765 3,902 3,871 3,765 21 Over 5 years to 10 years 1,317 1,317 1.327 1,327 1,327 1,291 1,317 1,327 22 Over 10 years 424 424 424 424 424 424 424 424 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 Nonfinancial Statistics • September 1986 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1985 1986 1982 1983 1984 1985 Dec. Dec. Dec.' Dec. Nov. Dec. Jan. Feb. Mar. Apr. May' June Seasonally adjustec AADDJJUUSSTTEEDD FFOORR 1 Total reserves2 34.28 36.14 39.51 45.61 44.85 45.61 45.88 46.37 46.87' 47.28 48.58 49.46 2 Nonborrowed reserves 33.65 35.36 36.32 44.29 43.11 44.29 45.11 45.49 46.10 46.38 47.70 48.66 3 Nonborrowed reserves plus extended credit3 33.83 35.37 38.93 44.79 43.64 44.79 45.61 45.98 46.62 47.02 48.29 49.19 4 Required reserves 33.78 35.58 38.66 44.55 43.92 44.55 44.77 45.27 45.97 46.47 47.74 48.51 5 Monetary base4 170.04 185.39 199.17 216.72 215.25 216.72 218.40 219.79 221.26 222.36 224.90 226.64 Not seasonally adjusted 6 Total reserves2 35.01 36.86 40.57 46.84 45.08 46.84 47.11 45.68 46.34 47.94 47.71 49.22 7 Nonborrowed reserves 34.37 36.09 37.38 45.52 43.34 45.52 46.34 44.80 45.58 47.04 46.84 48.41 8 Nonborrowed reserves plus extended credit3 34.56 36.09 39.98 46.02 43.87 46.02 46.84 45.29 46.10 47.68 47.42 48.94 9 Required reserves 34.51 36.30 39.71 45.78 44.15 45.78 46.00 44.59 45.44 47.14 46.87 48.27 10 Monetary base4 173.07 188.66 202.34 220.36 216.04 220.36 218.74 216.78 218.99' 222.13 223.61 227.05 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 41.85 38.89 40.70 48.14 46.38 48.14 48.06 46.65 47.27 48.88 48.42 49.96 12 Nonborrowed reserves 41.22 38.12 37.51 46.82 44.64 46.82 47.29 45.77 46.51 47.99 47.54 49.15 13 Nonborrowed reserves plus extended credit3 41.41 38.12 40.09 47.41 45.07 47.41 47.79 46.22 47.17 48.22 48.24 49.83 14 Required reserves 41.35 38.33 39.84 47.09 45.45 47.09' 46.95 45.55 46.38 48.08 47.58 49.01 15 Monetary base4 180.42 192.26 204.18 223.53 218.96 223.53 221.59 219.57 221.70 224.88 226.12 229.69 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.. MMaarr.. AApprr.. MMaayy June Seasonally adjusted 1 Ml 479.9 527.1 558.5 626.6 638.4 646.1 658.6 666.6 7 M2 1,952.6 2,186.0 2,373.8 2,565.8 2,591.2 2,620.8' 2,647.0 2,667.4 M3 2,443.5 2,697.3 2,986.5 3,199.9' 3,260.3' 3,289.0' 3,303.5' 3,321.1 4 L 2,850.1 3,163.5 3,532.3 3,837.0' 3,890.5' 3,913.1' 3,945.0 n.a. 5 Debt 4,661.3 5,192.0 5,952.0 6,809.8 7,012.3' 7,069.4' 7,129.5 n.a. Ml components 6 Currency2 134.3 148.3 158.5 170.6 173.9 174.4 175.8 176.6 7 Travelers checks3 4.3 4.9 5.2 5.9 6.1 6.1 6.1 6.2 8 Demand deposits4 237.9 242.7 248.4 271.5 273.2 275.6' 281.6 284.8 9 Other checkable deposits5 103.4 131.3 146.3 178.6 185.2 189.9 195.1 198.9 Nontransactions components 10 In M26 1,472.7 1,658.9 1,815.4 1,939.2 1,952.8 1,974.7' 1,988.4 2,000.8 11 In M3 only7 490.9 511.3 612.7 634. 1' 669.1' 668.2' 656.5' 653.7 Savings deposits9 12 Commercial Banks 163.7 133.4 122.3 124.5 112255..66'' 126.6 128.9' 130.9 13 Thrift institutions 194.2 173.2 167.3 179.1 181.2 184.9 189.7' 194.4 Small denomination time deposits9 14 Commercial Banks 380.4 351.1 387.2 384.1 389.0 387.9 384.8 381.6 15 Thrift institutions 472.4 434.1 500.3 496.2 505.7 508.2' 506.4' 504.3 Money market mutual funds 16 General purpose and broker/dealer 185.2 138.2 167.5 176.5 186.2 191.4 193.4 197.7 17 Institution-only 51.1 43.2 62.7 64.6 70.2 74.1 76.1 75.0 Large denomination time deposits10 18 Commercial Banks" 262.1 228.7 263.7 279.1 287.1' 287.0 281.4 280.8 19 Thrift institutions 65.8 101.1 150.2 157.3 163.4 165.0 164.8' 164.5 Debt components 20 Federal debt 979.2 1,173.0 1,367.3 1,586.3 11,,662288..22 1,638.8 1,656.2 n.a. 21 Non-federal debt 3,682.1 4,019.0 4,584.7 5,223.5 5,384.1' 5,430.6 5,473.3 n.a. Not seasonally adjusted 77 Ml 490.9 538.8 570.5 639.9 630.5 652.8 651.7 669.0 73 M2 1,958.6 2,192.8 2,380.8 2,573.9 2,593.2 2,630.4' 2,637.9 2,669.7' 74 M3 2,453.3 2,707.9 2,997.9 3,212.6' 3,260.6' 3,295.4' 3,296.7' 3,321.8 75 L 2,856.4 3,170.1 3,537.5 3,843.2' 3,894.6' 3,923.2' 3,931.7 n.a. 26 4,655.7 5,186.5 5,946.3 6,803.9 6,985.2' 7,040.8' 7,103.8' n.a. Ml components 27 Currency2 136.5 150.5 160.9 173.1 117722..33 173.6 175.8 177.4 28 Travelers checks3 4.1 4.6 4.9 5.5 5.8 5.8 5.9 6.5 79 Demand deposits4 246.2 251.3 257.3 281.3 267.1 278.6 276.7 285.5 30 Other checkable deposits5 104.1 132.4 147.5 180.1 185.3 194.7 193.3' 199.6 Nontransactions components 31 M26 1,467.7 1.654.0 1,810.3 1,934.0 1,962.7 1,977.6' 1,986.3' 2,000.7 32 M3 only7 494.7 515.1 617.0 638.7' 667.4' 665.0' 658.8' 652.2 Money market deposit accounts 33 Commercial banks 26.3 230.5 267.2 332.4 340.4' 344.7 348.5 355.0 34 Thrift institutions 16.9 148.7 149.7 179.6 180.2 180.4 182.1 185.2 Savings deposits8 35 Commercial Banks 162.1 113322..22 112211..44 123.5 112244..99 112277..22 112299..55 132.1 36 Thrift institutions 193.1 172.3 166.5 178.3 181.6 185.8 190.5' 195.0 Small denomination time deposits9 37 Commercial Banks 380.1 351.1 387.6 384.8 387.2 384.4 382.2' 380.5 38 Thrift institutions 471.7 434.2 501.2 497.6 504.6 505.4 502.5' 501.4 Money market mutual funds 39 General purpose and broker/dealer 185.2 138.2 167.5 176.5 186.2 191.4 193.4 197.7 40 Institution-only 51.1 43.2 62.7 64.6 70.2 74.1 76.1 75.0 Large denomination time deposits10 41 Commercial Banks11 265.2 230.8 265.5 280.9 287.7' 283.5 280.7 279.1 42 Thrift institutions 65.8 101.4 150.6 157.8 163.2 164.0 164.3' 164.0 Debt components 43 Federal debt 976.4 11,,117700..22 1,364.7 1,583.7 11,,663333..33 1,644.6 1,660.6 n.a. 44 Non-federal debt 3,679.3 4,016.3 4,581.6 5,220.2 5,352.0' 5,396.1' 5,443.2 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • September 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 Dec. Jan. Feb. Mar. Apr. May Seasonally adjusted DEBITS TO Demand deposits2 1 All insured banks 109,642.3 128,440.8 154,556.0 189,203.0 169,894.2 179,139.6 182,841.8 192,847.2 189,819.7 2 Major New York City banks 47,769.4 57,392.7 70,445.1 89,415.1 79,324.3 85,298.6 89,350.3 95,699.5 87,846.7 3 Other banks 61,873.1 71,048.1 84,110.9 99,787.9 90,569.9 93,841.0 93,491.5 97,147.7 101,973.0 4 ATS-NOW accounts3 1,405.5 1,588.7 1,920.8 2,452.5 2,027.5 2,193.5 2,266.0 2,088.7 2,255.6 5 Savings deposits4 741.4 633.1 539.0 418.6 362.4 364.6 356.7 385.2 389.7 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 379.7 434.4 496.5 581.9 531.8 560.8 566.0 593.6 569.7 7 Major New York City banks 1,528.0 1,843.0 2,168.9 2,567.0 2,306.3 2,473.8 2,517.7 2,635.1 2,457.8 8 Other banks 240.9 268.6 301.8 343.7 317.7 329.3 325.1 336.6 342.8 9 ATS-NOW accounts3 15.6 15.8 16.7 19.8 16.1 17.2 17.7 16.0 17.0 10 Savings deposits4 5.4 5.0 4.5 3.4 2.9 3.0 2.9 3.1 3.1 DEBITS TO Not seasonally adjusted Demand deposits2 11 All insured banks 109,517.6 128,059.1 154,108.4 192,060.0 180,495.6 161,655.6 179,715.2 195,373.5 184,827.4 12 Major New York City banks 47,707.4 57,282.4 70,400.9 92,551.5 84,880.9 77,376.9 87,757.0 95,408.5 85,189.6 13 Other banks 64,310.2 70,776.9 83,707.8 99,508.5 95,614.7 84,278.6 91,958.3 99,965.0 99,637.8 14 ATS-NOW accounts3 1,397.0 1,579.5 1,903.4 2,354.4 2,406.1 2,065.3 2,349.0 2,393.2 2,256.6 15 MMDA5 567.4 848.8 1,179.0 1,493.2 1,543.8 1,334.9 1,600.4 1,638.8 1,557.9 16 Savings deposits4 742.0 632.9 538.7 405.3 392.4 331.1 362.3 418.7 377.8 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 379.9 433.5 497.4 574.9 554.2 520.0 569.5 600.1 569.4 18 Major New York City banks 1,510.0 1,838.6 2,191.1 2,594.1 2,393.7 2,314.0 2,494.1 2,661.7 2,487.0 19 Other banks 240.5 267.9 301.6 333.4 329.4 303.8 328.0 345.0 343.2 70 ATS-NOW accounts3 15.5 15.7 16.6 18.8 18.9 16.4 18.3 17.9 17.1 71 MMDA5 2.8 3.5 3.8 4.5 4.6 4.0 4.7 4.8 4.5 22 Savings deposits4 5.4 5.0 4.5 3.3 3.2 2.7 3.0 3.4 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 Nonfinancial Statistics • September 1986 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1985 1986 CCaatteeggoorryy July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June Seasonally adjusted 1111 TTTToooottttaaaallll llllooooaaaannnnssss aaaannnndddd sssseeeeccccuuuurrrriiiittttiiiieeeessss2222 1,822.2 1,833.9 1,847.2 1.855.5 1,876.0 1,900.4 1,930.0 1,935.5 1,944.6 1,947.9 1,957.5 1,963.8 2222 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss 275.4 275.1 275.5 274.2 276.0 273.1 268.2 273.6 269.5 270.0 274.1 274.9 3333 OOOOtttthhhheeeerrrr sssseeeeccccuuuurrrriiiittttiiiieeeessss 148.5 150.7 153.6 157.3 163.3 177.6 192.5 188.1 183.3 182.1 181.9 183.6 4444 TTTToooottttaaaallll llllooooaaaannnnssss aaaannnndddd lllleeeeaaaasssseeeessss2222 1,398.2 1,408.0 1,418.0 1.424.0 1,436.8 1,449.7 1,469.3 1,473.7 1,491.8 1,495.8 1,501.5 1,505.4 5555 CCCCoooommmmmmmmeeeerrrrcccciiiiaaaallll aaaannnndddd iiiinnnndddduuuussssttttrrrriiiiaaaallll 488.5 489.7 492.1 492.7 495.7 499.5 502.1 502.4 506.1 507.8 506.7 508.7 6666 BBBBaaaannnnkkkkeeeerrrrssss aaaacccccccceeeeppppttttaaaannnncccceeeessss hhhheeeelllldddd3333........ 5.2 5.1 4.9 4.9 4.9 4.9 4.9 4.8 4.9 5.2 5.6 6.1 7777 OOOOtttthhhheeeerrrr ccccoooommmmmmmmeeeerrrrcccciiiiaaaallll aaaannnndddd iiiinnnndddduuuussssttttrrrriiiiaaaallll 483.4 484.6 487.1 487.8 490.7 494.7 497.2 497.6 501.2 502.6 501.0 502.7 8888 UUUU....SSSS.... aaaaddddddddrrrreeeesssssssseeeeeeeessss4444 474.4 475.6 478.3 479.4 482.4 486.0 488.0 488.4 491.3 492.7 490.6 493.1 9999 NNNNoooonnnn----UUUU....SSSS.... aaaaddddddddrrrreeeesssssssseeeeeeeessss4444.... .... .... .... 9.0 9.0 8.8 8.4 8.3 8.7 9.3 9.2 9.9 9.8 10.5 9.5 11110000 RRRReeeeaaaallll eeeessssttttaaaatttteeee 402.2 405.9 409.5 414.0 418.0 422.4 427.1 431.4 436.1 440.7 446.4 450.6 11111111 IIIInnnnddddiiiivvvviiiidddduuuuaaaallll 280.0 282.9 285.4 287.5 289.7 291.5 294.6 297.4 299.5 301.1 303.0 304.5 11112222 SSSSeeeeccccuuuurrrriiiittttyyyy 40.9 39.0 39.7 39.2 39.8 40.1 44.1 43.4 50.3 47.9 46.3 42.4 11113333 NNNNoooonnnnbbbbaaaannnnkkkk ffffiiiinnnnaaaannnncccciiiiaaaallll iiiinnnnssssttttiiiittttuuuuttttiiiioooonnnnssss 30.8 31.4 31,5 31.3 32.0 32.6 32.6 31.9 32.3 32.4 33.3 34.7 11114444 AAAAggggrrrriiiiccccuuuullllttttuuuurrrraaaallll 38.9 38.6 38.3 37.9 37.1 36.3 35.9' 35.4' 34.9' 34.7' 34.6 34.4 11115555 SSSSttttaaaatttteeee aaaannnndddd ppppoooolllliiiittttiiiiccccaaaallll ssssuuuubbbbddddiiiivvvviiiissssiiiioooonnnnssss 47.9 48.8 48.8 49.3 50.0 52.8 60.5 60.3 60.2 59.8 59.5 59.4 11116666 FFFFoooorrrreeeeiiiiggggnnnn bbbbaaaannnnkkkkssss 9.9 9.7 9.6 9.3 9.0 9.1 9.1 9.2 9.2 9.2 9.4 9.5 11117777 FFFFoooorrrreeeeiiiiggggnnnn ooooffffffffiiiicccciiiiaaaallll iiiinnnnssssttttiiiittttuuuuttttiiiioooonnnnssss ............ 6.5 6.2 6.5 6.6 6.7 6.9 7.0 7.0 6.8 5.3 5.1 6.4 11118888 LLLLeeeeaaaasssseeee ffffiiiinnnnaaaannnncccciiiinnnngggg rrrreeeecccceeeeiiiivvvvaaaabbbblllleeeessss ........ .... 17.8 18.0 18.1 18.3 18.4 18.8 19.4 19.6 19.8 19.9 19.8 20.0 11119999 AAAAllllllll ooootttthhhheeeerrrr llllooooaaaannnnssss 34.8 37.7 38.5 38.0 40.3 39.6 36.8' 35.7' 36.6' 37.2' 37.4 34.7 Not seasonally adjusted 22220000 TTTToooottttaaaallll llllooooaaaannnnssss aaaannnndddd sssseeeeccccuuuurrrriiiittttiiiieeeessss2222 1,819.0 1,826.9 1,845.4 1,851.8 1,875.7 1,912.6 1,934.8 1.932.4 1,944.1 1,950.5 1,956.7 1,965.5 22221111 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss 275.2 273.4 274.1 270.3 273.7 271.0 267.7 275.0 273.2 274.0 275.4 276.2 2 2 2 2 2 2 2 2 2 3 2 3 2 3 2 3 TTTT OOOO oooo tttthhhh ttttaaaa eeee llll rrrr llll ssss oooo eeee aaaa cccc nnnn uuuu ssss rrrriiii aaaa tttt nnnn iiiieeee dddd ssss lllleeeeaaaasssseeeessss2222 1,3 1 9 4 7 6 . . 0 7 1,4 1 0 5 2 0 . . 9 5 1,4 1 1 5 7 3 . . 7 6 1,4 1 2 5 4 6 . . 7 8 1,4 1 3 6 8 3 . . 7 3 1,4 1 6 7 2 8 . . 9 7 1,4 1 7 9 3 3 . . 3 8 1.4 1 6 8 8 8 . . 5 9 1,4 1 8 8 7 3 . . 1 9 1,4 1 9 8 4 1 . . 7 8 1,4 1 9 8 9 2 . . 0 2 1,5 1 0 8 6 2 . . 7 5 2222 2222 4444 5555 CCCCoooo BBBB mmmm aaaa mmmm nnnnkkkk eeeerrrr eeee cccc rrrrssss iiii aaaallll aaaa cccc aaaa cccc nnnn eeee dddd pppp tttt iiii aaaa nnnn nnnn dddd cccc uuuu eeeessss ssss tttt hhhh rrrriiii eeee aaaa lllldddd llll.... 3333.... .... .... ... ... . . 488 5 . . 6 2 487 5 . . 9 0 491 4 . . 4 8 49 4 2. . 0 8 494 5 . . 8 0 501 5 . . 5 2 50 4 1 . . 9 4 50 4 0 . . 7 1 506 5 . . 9 0 510 5 . . 0 2 508 5 . . 5 5 509 6 . . 5 0 22226666 OOOOtttthhhheeeerrrr ccccoooommmmmmmmeeeerrrrcccciiiiaaaallll aaaannnndddd 2 2 2 2 2 2 2 2 7 8 7 8 7 8 7 8 NNNN UUUU oooo .... iiii SSSS nnnn nnnn .... ---- dddd UUUU aaaa uuuu dddd ssss .... tttt SSSS dddd rrrr .... rrrr iiii eeee aaaa aaaa llll ssss dddd ssss dddd eeeeeeee rrrreeee ssss4444 ssss sssseeeeeeeessss4444 4 4 7 8 4 9 3 . . . 1 2 3 4 4 7 8 9 3 2 . . . 3 6 8 4 4 7 8 9 7 6 . . . 1 5 6 4 4 7 8 8 7 8 . . . 4 2 8 4 4 8 8 1 8 9 . . . 0 8 7 4 4 8 9 9 7 6 . . . 3 0 4 4 4 8 9 9 7 6 . . . 2 3 5 4 4 8 9 6 9 5 . . . 1 3 4 4 5 9 0 9 2 1 . . . 2 7 9 4 5 9 0 9 5 4 . . . 5 4 9 4 5 9 0 9 3 3 . . . 7 3 0 4 5 9 0 4 9 3 . . . 0 4 5 22229999 RRRReeeeaaaallll eeeessssttttaaaatttteeee 402.1 406.1 410.5 415.2 419.2 423.3 427.3 430.6 434.9 439.5 445.2 450.2 33330000 IIIInnnnddddiiiivvvviiiidddduuuuaaaallll 279.2 283.2 286.7 289.0 291.0 294.8 297.0 296.3 296.8 298.6 301.1 303.1 33331111 SSSSeeeeccccuuuurrrriiiittttyyyy 39.2 36.6 37.5 38.6 41.0 45.4 46.8 42.6 49.4 48.4 45.6 42.5 33332222 NNNNoooonnnnbbbbaaaannnnkkkk ffffiiiinnnnaaaannnncccciiiiaaaallll iiiinnnnssssttttiiiittttuuuuttttiiiioooonnnnssss 30.9 31.6 31.7 31.1 32.1 33.4 32.9 31.3 31.7 32.2 33.1 34.6 33333333 AAAAggggrrrriiiiccccuuuullllttttuuuurrrraaaallll 39.7 39.5 39.2 38.5 37.2 36.0 35.2' 34.5' 34.(K 34.1' 34.5 34.9 33334444 SSSSttttaaaatttteeee aaaannnndddd ppppoooolllliiiittttiiiiccccaaaallll ssssuuuubbbbddddiiiivvvviiiissssiiiioooonnnnssss 47.9 48.8 48.8 49.3 50.0 52.8 60.5 60.3 60.2 59.8 59.5 59.4 33335555 FFFFoooorrrreeeeiiiiggggnnnn bbbbaaaannnnkkkkssss 9.9 9.4 9.7 9.5 9.3 9.5 9.3 9.3 9.1 9.0 9.1 9.2 33336666 FFFFoooorrrreeeeiiiiggggnnnn ooooffffffffiiiicccciiiiaaaallll iiiinnnnssssttttiiiittttuuuuttttiiiioooonnnnssss ............ 6.5 6.2 6.5 6.6 6.7 6.9 7.0 7.0 6.8 5.3 5.1 6.4 33337777 LLLLeeeeaaaasssseeee ffffiiiinnnnaaaannnncccciiiinnnngggg rrrreeeecccceeeeiiiivvvvaaaabbbblllleeeessss........ .... 17.8 17.9 18.1 18.2 18.3 18.8 19.6 19.8 19.8 19.9 19.9 20.0 33338888 AAAAllllllll ooootttthhhheeeerrrr llllooooaaaannnnssss 35.2 35.7 37.8 36.7 39.1 40.5' 36.3' 36.5' 37.4' 38.0' 37.5 37.0 1. Data are prorated averages of Wednesday estimates for domestically char- 2. Excludes loans to commercial banks in the United States. tered insured banks, based on weekly sample reports and quarterly universe 3. Includes nonfinancial commercial paper held. reports. For foreign-related institutions, data are averages of month-end estimates 4. United States includes the 50 states and the District of Columbia. based on weekly reports from large U.S. agencies and branches and quarterly NOTE. These data also appear in the Board's G.7 (407) release. For address, see reports from all U.S. agencies and branches, New York investment companies inside front cover. majority owned by foreign banks, and Edge Act corporations owned by domestically chartered and foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS' Monthly averages, billions of dollars 1985 1986 SSoouurrccee July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June Total nondeposit funds 1 Seasonally adjusted2 108.7'' 112.2' 114.0' 117.6' 120.8' 126.2' 129.5' 130.0' 139.2' 131.3' 132.5 129.3 2 Not seasonally adjusted 105.4 111.4 112.4 116.2 121.9 125.9 129.6 132.5 141.6 132.1 134.6 128.1 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 145.8' 142.2' 143.0' 143.4' 148.4' 152.8' 150.1' 151.0' 158.7' 157.7' 154.8 153.7 4 Not seasonally adjusted 142.4 141.5 141.4 142.0 149.4 152.4 150.1 153.6 161.2 158.6 156.8 152.5 5 Net balances due to foreign-related institutions, not seasonally adjusted -37.1 -30.0 -29.0 -25.8 -27.6 -26.6 -20.5 -21.0 -19.5 -26.4 -22.3 -24.3 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -38.3 -32.8 -30.7 -28.7 -30.3 -31.6 -28.0 -25.8 -26.5 -30.2 -29.3 -30.4 7 Gross due from balances 79.2 75.8 74.7 74.2 74.1 76.1 74.4 69.5 71.7 75.3 72.9 72.2 8 Gross due to balances 40.8 43.0 44.0 45.4 43.8 44.5 46.5 43.7 45.2 45.1 43.6 41.7 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted5 1.3 2.8 1.7 2.9 2.7 5.1 7.4 4.7 7.0 3.8' 7.1 6.1 10 Gross due from balances 54.6 55.1 56.0 55.4 56.1 56.8 57.7 60.0 60.7 62.5' 60.0 62.7 11 Gross due to balances 55.9 57.9 57.8 58.3 58.8 61.9 65.1 64.8 67.7 66.3 67.0 68.8 Security RP borrowings 12 Seasonally adjusted® 83.7 83.3 85.3 84.7 84.8 88.0 86.1 87.8 87.8 87.2 86.0 85.4 13 Not seasonally adjusted 80.4 82.6 83.7 83.4 85.9 87.7 86.1 90.4 90.2 88.1 88.0 84.2 U.S. Treasury demand balances7 14 Seasonally adjusted 20.5 16.1 14.9 4.7 13.5 17.5 19.0 21.1 15.7 17.4 21.3 15.1 15 Not seasonally adjusted 23.1 13.4 16.8 5.4 7.9 14.6 24.0 24.2 15.7 17.8 21.8 13.1 Time deposits, $100,000 or more8 16 Seasonally adjusted 324.2 327.2 330.8 333.9 335.9 337.6 349.4 351.8 347.7 346.9 340.3 339.8 17 Not seasonally adjusted 323.2 327.7 332.7 336.3 337.5 339.4 348.3 350.7 348.3 343.4 339.6 338.1 1. Commercial banks are those in the 50 states and the District of Columbia banks, term federal funds, overdrawn due from bank balances, loan RPs, and with national or state charters plus agencies and branches of foreign banks, New participations in pooled loans. York investment companies majority owned by foreign banks, and Edge Act 4. Averages of daily figures for member and nonmember banks. corporations owned by domestically chartered and foreign banks. 5. Averages of daily data. Data for lines 1-4 and 12-17 have been revised in light of benchmarking and 6. Based on daily average data reported by 122 large banks. revised seasonal adjustment. 7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from commercial banks. Averages of daily data. nonbanks and not seasonally adjusted net Eurodollars. Includes averages of 8. Averages of Wednesday figures. Wednesday data for domestically chartered banks and averages of current and NOTE. The seasonally adjusted series for total nondeposit funds (line 1) and previous month-end data for foreign-related institutions. federal funds, RPs, and other borrowings from nonbanks (line 3) have been 3. Other borrowings are borrowings on any instrument, such as a promissory revised back to November 1980. The revised data are available on request from note or due bill, given for the purpose of borrowing money for the banking the Banking Section, Division of Research and Statistics, Board of Governors of business. This includes borrowings from Federal Reserve Banks and from foreign the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • September 1986 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars 1985 1986 AAccccoouunntt Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June ALL COMMERCIAL BANKING INSTITUTIONS1 1 Loans and securities 1,958.2 1,976.4 1,985.8 2,035.6 2,068.7 2,065.2 2,078.8 2,091.4 2,113.4 2,101.3 2,105.5 2 Investment securities 400.3 403.8 402.4 410.5 420.4 432.5 432.8 427.2 429.5 430.9 432.6 3 U.S. government securities 257.8 258.1 252.9 254.9 253.9 251.9 255.1 253.7 255.8 257.7 259.6 4 Other 142.5 145.7 149.6 155.6 166.5 180.6 177.7 173.5 173.6 173.2 173.0 3 Trading account assets 24.2 26.4 25.0 32.0 31.1 30.1 34.0 30.1 27.8 27.0 27.4 6 Total loans 1,533.6 1,546.2 1,558.4 1,593.1 1,617.2 1,602.6 1,612.0 1,634.2 1,656.1 1,643.5' 1,645.5 / Interbank loans 129.4 128.6 132.4 149.0 150.6 140.4 143.5 146.0 155.7 146.2' 139.2 8 Loans excluding interbank 1,404.3 1,417.6 1,425.9 1,444.2 1,466.7 1,462.2 1,468.5 1,488.1 1,500.4 1,497.2 1,506.3 y Commercial and industrial 487.8 492.3 491.7 495.8 500.2 496.7 501.8 508.5 510.5 506.2' 512.3 10 Real estate 407.4 411.5 416.7 420.2 423.7 428.7 431.5 435.9 441.7 446.4 451.4 n Individual 284.9 287.4 290.3 292.0 296.0 297.4 296.4 296.9 300.4 301.1' 304.0 12 All other 224.2 226.3 227.2 236.2 246.7 239.4 238.7 246.9 247.8 243.6' 238.7 13 Total cash assets 190.2 189.6 191.5 209.0 213.3 187.3 193.7 198.1 209.9 221.0 196.0 14 Reserves with Federal Reserve Banks 24.6 24.8 19.5 20.4 27.6 21.9 26.2 29.1 25.5 30.2 27.9 15 Cash in vault 22.7 22.1 22.6 21.4 22.2 23.0 22.7 21.8 22.3 23.9 23.0 16 Cash items in process of collection ... 62.6 61.6 68.1 82.1 79.5 64.2 66.9 68.8 80.7 84.6 67.3 17 Demand balances at U.S. depository institutions 30.7 30.6 31.5 35.8 36.0 31.3 31.8 31.1 34.7 36.8 32.0 18 Other cash assets 49.6 50.6 49.8 49.4 48.0 47.0 46.1 47.4 46.7 45.5 45.8 19 Other assets 190.7 196.2 189.2 197.1 201.9 187.0 186.5 195.3 207.0 195.9' 196.6 20 Total assets/total liabilities and capital ... 2,339.1 2,362.2 2,366.5 2,441.8 2,483.8 2,439.6 2,458.9 2,484.8 2,530.3 2,518.3' 2,498.1 21 Deposits 1,684.3 1,690.5 1,713.6 1,751.7 1,772.5 1,739.5 1,746.4 1,762.8 1,798.4 1,807.4' 1,791.9 22 Transaction deposits 476.3 475.2 491.7 522.2 536.9 488.8 492.1 502.5 540.7 542.7 523.3 23 Savings deposits 438.3 440.1 445.8 450.4 452.0 454.2 457.2 462.0 467.8 477.3' 482.4 24 Time deposits 769.7 775.3 776.2 779.1 783.6 796.5 797.1 798.3 789.9 787.5' 786.3 23 Borrowings 313.7 328.3 313.6 356.1 367.8 364.4 374.7 373.1 390.7 367.4 366.8 26 Other liabilities 177.3 179.0 173.7 167.9 175.8 167.6 169.1 179.3 170.4 173.1 168.5 27 Residual (assets less liabilities) 163.8 164.4 165.5 166.0 167.7 168.2 168.8 169.7 170.8 170.3' 170.9 MEMO 28 U.S. government securities (including trading account) 271.9 275.2 268.6 274.8 269.7 269.8 278.4 273.7 274.0 275.1 276.5 29 Other securities (including trading account) 152.6 155.1 158.8 167.7 181.8 192.8 188.4 183.6 183.3 182.8 183.5 DOMESTICALLY CHARTERED COMMERCIAL BANKS2 30 Loans and securities 1,856.8 1,869.9 1,879.5 1,926.0 1,954.3 1,954.3 1,964.0 1,972.4 1,993.3 1,985.3 1,990.0 31 Investment securities 390.2 392.9 391.1 399.5 409.9 421.1 420.8 416.0 416.1 417.1 419.6 32 U.S. government securities 253.1 253.1 247.4 250.1 249.0 247.0 249.6 248.5 248.8 250.2 253.1 3 3 3 4 Tra O d t i h n e g r account assets 1 2 3 4 7. . 1 2 1 2 3 6 9. . 7 4 1 2 4 5 3 . . 0 8 1 3 4 2 9 . . 0 4 1 3 6 1 0 . . 1 9 1 3 7 0 4 . . 1 1 1 3 7 4 1 . . 0 2 1 3 6 0 7 . . 1 5 1 2 6 7 7 . . 8 2 1 2 6 7 6 . . 0 9 1 2 6 7 6 . . 4 5 35 Total loans 1,442.4 1,450.6 1,463.4 1,494.5 1,513.4 1,503.1 1,509.2 1,526.3 1,549.4 1,541.3' 1,543.0 36 Interbank loans 106.0 104.2 108.7 124.1 123.8 115.8 115.8 120.2 129.3 123.3 117.3 37 Loans excluding interbank 1,336.4 1,346.4 1,354.6 1,370.4 1,389.5 1,387.3 1,393.5 1,406.1 1,420.1 1,418.0' 1,425.8 38 Commercial and industrial 438.0 440.2 439.3 441.8 445.3 442.5 446.2 448.2 452.3 449.8' 452.5 39 Real estate 402.1 406.1 411.5 415.0 418.4 423.6 426.4 430.7 436.3 440.7 445.8 40 Individual 284.6 287.1 290.0 291.7 295.7 297.1 296.2 296.6 300.1 300.8' 303.6 41 All other 211.7 213.1 213.8 222.0 230.1 224.1 224.7 230.7 231.4 226.7' 223.9 42 Total cash assets 174.1 173.5 175.7 193.4 197.2 171.1 179.1 182.7 194.3 205.8 180.1 43 Reserves with Federal Reserve Banks 23.6 24.2 18.3 19.2 25.8 21.0 25.5 28.4 24.4 28.7 26.3 44 Cash in vault 22.7 22.0 22.6 21.4 22.2 23.0 22.6 21.7 22.2 23.8 22.9 43 Cash items in process of collection ... 62.3 61.3 67.9 81.8 79.3 63.8 66.5 68.4 80.3 84.2 66.7 46 Demand balances at U.S. depository institutions 29.0 29.1 30.1 33.9 34.3 29.4 30.1 29.4 33.0 35.1 30.2 47 Other cash assets 36.4 36.8 36.8 37.1 35.7 34.0 34.3 34.7 34.3 34.0 34.0 48 Other assets 141.9 142.8 141.1 146.2 150.0 137.8 134.6 144.0 150.3 142.8 144.1 49 Total assets/total liabilities and capital .. . 2,172.8 2,186.1 2,196.3 2,265.6 2,301.6 2,263.1 2,277.8 2,299.1 2,337.9 2,334.0 2.314.1 50 Deposits 1,638.4 1,643.1 1,666.4 1,704.6 1,724.4 1,689.6 1,698.2 1,713.1 1,749.1 1,758.7' 1,741.4 31 Transaction deposits 469.5 468.3 485.0 515.3 529.5 481.6 484.8 495.0 533.1 535.3' 515.5 32 Savings deposits 436.7 438.5 444.1 448.6 450.3 452.4 455.3 460.1 465.8 475.2' 480.3 33 Time deposits 732.2 736.3 737.3 740.7 744.7 755.7 758.1 758.1 750.1 748.1' 745.6 34 Borrowings 254.2 263.8 252.2 285.0 295.7 298.0 304.9 304.8 309.1 294.2 293.5 55 Other liabilities 119.5 117.9 115.4 113.0 116.9 110.5 109.0 114.6 112.0 113.9 111.5 56 Residual (assets less liabilities) 160.7 161.3 162.4 162.9 164.6 165.0 165.6 166.5 167.7 167.2' 167.8 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 Apr. 30 May 7 May 14 May 21 May 28' June 4 June 11 June 18 June 25 1 Cash and balances due from depository institutions 101,565 94,666' 97,035' 96,703' 111,801 103,270 93,824 95,853 93,038 2 Total loans, leases and securities, net 943,308' 933,265' 926,110' 934,016 930,101 938,639 927,386 933,286 929,040 3 U.S. Treasury and government agency 92,541 93,772' 93,671 93,603 92,750 93,194 91,576 93,060 93,736 4 Trading account 21,505 21,908' 22,805 22,004 20,719 21,410 19,220 20,204 20,233 5 Investment account, by maturity 71,036 71,864 70,866 71,599 72,031 71,784 72,356 72,856 73,503 6 One year or less 19,229' 19,248' 19,099' 18,747' 19,062 19,468 19,181 19,114 18,772 7 Over one through five years 33,343' 35,403' 34,144' 34,953' 35,206 33,589 34,530 34,443 34,447 8 Over five years 18,464' 17,213' 17,623' 17,899' 17,763 18,727 18,644 19,299 20,284 9 Other securities 69,254 68,300 67,586 67,470 68,003 67,617 67,037 67,268 68,279 10 Trading account 5,192 4,738 4,001 3,934 4,535 4,148 4,098 4,397 5,251 11 Investment account 64,062 63,562 63,585 63,536 63,468 63,469 62,938 62,871 63,028 12 States and political subdivisions, by maturity 56,912 56,466 56,548 56,508 56,396 56,212 55,894 55,834 55,882 13 One year or less 9,648 9,379 9,345 9,194' 9,035 8,809 8,704 8,696 8,601 14 Over one year 47,264 47,087' 47,202 47,314' 47,362 47,403 47,190 47,138 47,281 15 Other bonds, corporate stocks, and securities 7,149 7,096 7,037 7,028 7,071 7,256 7,044 7,037 7,146 16 Other trading account assets 4,830 5,051 4,870 4,851 5,422 5,391 5,190 5,192 5,577 17 Federal funds sold1 70,081 62,694 56,024 61,542 59,868 65,473 59,944 61,116 54,003 18 To commercial banks 43,878 37,729 32,271 35,034 35,709 39,653 34,587 36,426 31,724 19 To nonbank brokers and dealers in securities 17,391 16,636 15,819 17,718 15,960 16,373 15,644 15,462 14,851 70 To others 8,812 8,329 7,934 8,790 8,200 9,447 9,714 9,228 7,428 71 Other loans and leases, gross2 726,525 723,399' 723,937 726,544 724,066 727,157 723,870 726,904 727,621 77 Other loans, gross2 710,631 707,491' 708,036 710,637 708,160 711,151 707,846 710,856 711,565 ?3 Commercial and industrial2 260,976 261,411 260,914 258,845 258,091 259,433 259,208 258,809 259,818 74 Bankers acceptances and commercial paper 2,156 2,295 2,514 2,427 2,395 2,633 2,531 2,692 2,605 75 All other 258,821 259,116 258,400 256,417 255,696 256,800 256,677 256,117 257,213 76 U.S. addressees 254,277 254,575 253,897 251,951 251,295 252,661 252,474 251,998 253,271 27 Non-U.S. addressees 4,543 4,541 4,502 4,466 4,401 4,138 4,203 4,119 3,942 78 Real estate loans2 187,521 188,036' 189,181 190,106 189,828 189,828 190,485 191,456 191,381 79 To individuals for personal expenditures 134,186' 134,110' 134,407' 134,447' 134,737 135,056 135,117 135,589 136,011 30 To depository and financial institutions 43,639 44,062 43,692 45,324 44,815 46,490 45,483 46,219 45,453 31 Commercial banks in the United States 13,892 14,556 13,901 14,705 14,385 15,216 14,064 14,483 14,224 3? Banks in foreign countries 5,420 5,218 4,860 5,550 5,618 5,655 5,331 5,519 5,369 33 Nonbank depository and other financial institutions 24,326 24,288 24,932 25,069 24,812 25,619 26,088 26,217 25,860 34 For purchasing and carrying securities 21,958 18,170 18,257 20,540 18,625 18,293 17,011 16,767 16,610 35 To finance agricultural production 6,226 6,251 6,290 6,308 6,276 6,209 6,224 6,222 6,233 36 To states and political subdivisions 36,418 36,318 36,260 36,309 36,213 36,148 36,097 36,261 36,371 37 To foreign governments and official institutions 3,307 3,405 3,354 3,322 3,439 3,184 3,208 3,292 3,212 38 All other 16,399' 15,727' 15,681' 15,436' 16.136 16,509 15,013 16,239 16,476 39 Lease financing receivables 15,894 15,908 15,900 15,907 15,906 16,006 16,024 16,048 16,056 40 LESS: Unearned income 4,970' 4,934 4,939 4,935 4,940 4,914 4,921 4,937 4.945 41 Loan and lease reserve2 14,952' 15,018 15,039 15,060 15,069 15,279 15,310 15,316 15,230 47 Other loans and leases, net2 706,603' 703,447' 703,959 706,550 704,057 706,963 703,639 706,651 707,446 43 All other assets 131,896' 131,118 129,324 127,990 124,619 130,660 128,056 127,664 125,730 44 Total assets 1,176,769' 1,159,049' 1,152,470' 1,158,709' 1,166,520 1,172,569 1,149,266 1,156,804 1,147,809 45 Demand deposits 222,137' 207,079' 208,639' 203,902' 223,193 225,299 211,345 215,386 208,226 46 Individuals, partnerships, and corporations 166,992' 158,424' 161,814' 155,894' 166,907 172,054 163,241 163,343 158,800 47 States and political subdivisions 6,036 5,151 4,640 5,056 5,055 4,893 4,382 5,589 5,868 48 U.S. government 4,767 2,925 2,437 1,132 1,862 4,505 2,673 4,624 1,898 49 Depository institutions in United States 24,632 23,746' 23,167' 23,841' 27,054 25,543 23,453 24,715 23,940 50 Banks in foreign countries 6,451 5,990 6,319 6,209 6,613 6,260 6,099 6,448 6,472 51 Foreign governments and official institutions 878 809 800 796 952 846 795 926 804 5? Certified and officers' checks 12,381 10,033 9,460 10.974 14,750 11,198 10,701 9,741 10,443 53 Transaction balances other than demand deposits 44,278' 45,08(K 44,426' 44,500' 44,434 47,115 46,709 46,219 45,124 54 Nontransaction balances 490,134 490,863' 491,108' 492,425 492,198 494,071 494,482 492,482 492,219 55 Individuals, partnerships and corporations 451,872 452,342' 452,557 453,659 453,484 455,779 456,054 454,391 453,970 56 States and political subdivisions 25,753 25,795 26,052 26,315 26,318 25,658 25,801 25,466 25,616 57 U.S. government 683 671 674 762 761 790 844 866 854 58 Depository institutions in the United States 10,258 10,488 10,305 10,190 10,223 10,427 10,423 10,402 10,498 59 Foreign governments, official institutions and banks 1,567 1,566 1,520 1,498 1,412 1,416 1,359 1,357 1,282 60 Liabilities for borrowed money 252,508 250,943 242,378 246,116 238,390 240.155 231,871 239,441 236,846 61 Borrowings from Federal Reserve Banks 305 397 339 677 269 531 391 445 268 67 Treasury tax-and-loan notes 17,532 17,739 15,580 11,164 7,912 5,294 1,070 12,736 18,341 63 All other liabilities for borrowed money3 234,671 232,807 226,458 234,275 230,209 234,330 230,410 226,260 218,236 64 Other liabilities and subordinated note and debentures 85,843' 83,128 83,826 89,811 86,359 83,972 82,592 81,427 83,140 65 Total liabilities 1,094,901' 1,077,093' 1,070,377' 1,076,755' 1,084,574 1,090,614 1,067,000 1,074,955 1,065,555 66 Residual (total assets minus total liabilities)4 81,868 81,956 82,092 81,954 81,947 81,956 82,266 81,849 82,254 MEMO 67 Total loans and leases (gross) and investments adjusted5 905.460 900,932' 899,916 904,272 900,017 903,963 898,967 902,630 903,267 68 Total loans and leases (gross) adjusted2 5 738,836 733,808' 733,789 738,348 733,841 737,761 735,164 737,110 735,676 69 Time deposits in amounts of $100,000 or more 155,906' 155,978' 155,921' 155,760' 155,436 155,395 155,083 154,362 153,897 70 Loans sold outright to affiliates—total6 1,701' 1,685' 1,685' 1,533' 1,504 1,458 1,431 1,463 1,405 71 Commercial and industrial 1,038 1,049 1,057 958 950 913 905 939 855 7? Other 662' 636' 628' 575' 554 545 526 524 549 73 Nontransaction savings deposits (including MMDAs) 200,603' 201,529' 202,226' 204.066' 204,081 206,017 206,867 206,323 206,377 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 • September 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 Apr. 30 May 7 May 14 May 21 May 28 June 4 June 11 June 18 June 25 1 Cash and balances due from depository institutions 26,606 23,896 23,601 25,982 31,236 26,129 22,984 22,613 24,072 2 Total loans, leases and securities, net1 204,196' 197,328 194,687 200,641 198,991 201,936 197,436 199,959 195,545 Securities 3 U.S. Treasury and government agency2 0 0 0 0 0 0 0 0 0 4 Trading account2 0 0 0 0 0 0 0 0 0 5 Investment account, by maturity 10,673 10,674 10,096 9,983 9,601 10,120 9,892 9,717 9,543 6 One year or less 1,375 1,394 1,382 1,306 1,114 1,226 1,072 1,056 1,020 7 Over one through five years 6,087 6,470 5,383 5,215 5,214 4,959 4,919 4,626 4,722 8 Over five years 3,210 2,810 3,332 3,462 3,272 3,935 3,901 4,034 3,801 9 Other securities2 0 0 0 0 0 0 0 0 0 10 Trading account2 0 0 0 0 0 0 0 0 0 11 Investment account 15,462 15,439 15,447 15,324 15,310 15,217 15,035 15,008 15,118 12 States and political subdivisions, by maturity 13,262 13,254 13,299 13,234 13,232 13,226 13,203 13,175 13,133 13 One year or less 1,706 1,715 1,712 1,694 1,685 1,712 1,714 1,678 1,618 14 Over one year 11,557 11,539 11,587 11,540 11,546 11,514 11,489 11,498 11,515 15 Other bonds, corporate stocks and securities 2,200 2,184 2,148 2,091 2,078 1,990 1,832 1,833 1,985 16 Other trading account assets2 0 0 0 0 0 0 0 0 0 Loans and leases 17 Federal funds sold3 31,808 27,241 25,643 29,556 28,608 30,682 29,213 30,598 25,733 18 To commercial banks 16,289 12,260 11,630 13,954 13,989 14,504 12,382 14,669 12,114 19 To nonbank brokers and dealers in securities 8,800 8,447 8,063 8,939 8,207 8,642 8,882 8,655 7,740 20 To others 6,719 6,534 5,949 6,662 6,412 7,535 7,948 7,273 5,880 21 Other loans and leases, gross 151,907 149,645 149,232 151,522 151,218 151,716 149,154 150,506 150,958 22 Other loans, gross 148,870 146,600' 146,236 148,517 148,206 148,687 146,113 147,451 147,895 23 Commercial and industrial 57,988 57,977 58,087 56,638 56,696 56,742 56,603 56,251 57,108 24 Bankers acceptances and commercial paper 488 512 618 666 542 592 549 511 580 25 All other 57,500 57,465 57,469 55,972 56,154 56,150 56,054 55,740 56,528 26 U.S. addressees 56,738 56,702 56,707 55,246 55,478 55,718 55,619 55,328 56,093 27 Non-U.S. addressees 762 763 762 725 675 432 435 412 435 28 Real estate loans 31,286 31,355 31,683 31,925 32,005 31,808 31,885 32,113 32,159 29 To individuals for personal expenditures 17,926 17,956 18,094 18,116 18,167 18,237 18,297 18,348 18,442 30 To depository and financial institutions 14,849 14,934 14,119 15,402 15,587 16,638 16,075 16,611 16,249 31 Commercial banks in the United States 5,880 6,194 5,667 6,548 6,459 7,314 6,747 7,229 7,008 32 Banks in foreign countries 2,293 2,200 1,827 2,130 2,397 2,336 2,125 2,373 2,284 33 Nonbank depository and other financial institutions 6,676 6,540 6,626 6,724 6,731 6,987 7,203 7,008 6,958 34 For purchasing and carrying securities 11,664 9,294 9,264 11,578 10,091 9,894 8,689 8,707 8,432 35 To finance agricultural production 319 311 295 300 301 296 285 285 279 36 To states and political subdivisions 9,259 9,248 9,258 9,307 9,211 9,186 9,191 99,,227788 9,326 37 To foreign governments and official institutions 856 959 879 857 %3 776 823 888888 811 38 All other 4,722 4,568' 4,556 4,396 5,185 5,111 4,264 4,970 5,089 39 Lease financing receivables 3,037 3,045 2,9% 3,005 3,012 3,030 3,041 3,055 3,063 40 LESS: Unearned income 1,443 1,435 1,434 1,438 1,440 1,447 1,449 1,460 1,473 41 Loan and lease reserve 4,211 4,242 4,297 4,306 4,306 4,353 4,409 4,409 4,335 42 Other loans and leases, net 146,253' 143,969' 143,501 145,778 145,472 145,917 143,2% 144,637 145,150 43 All other assets4 73,456 74,334 73,336 72,672 71,611 76,256 72,726 71,979 71,903 44 Total assets 304,258' 295,554' 291,624 299,295 301,838 304,321 293,146 294,552 291,519 Deposits 45 Demand deposits 58,576 53,619' 52,385 53,883 61,506 59,756 52,544 55,605 55,552 46 Individuals, partnerships, and corporations 39,112 35,962' 35,826 35,823 39,514 41,649 35,308 37,458 36,705 47 States and political subdivisions 688 589 594 584 614 664 546 734 1,262 48 U.S. government 715 556 486 143 332 892 514 867 264 49 Depository institutions in the United States 6,167 6,033 5,410 5,832 5,863 5,877 5,292 6,217 6,382 50 Banks in foreign countries 5,127 4,818 5,070 4,989 5,225 4,956 4,981 5,273 5,151 51 Foreign governments and official institutions 684 646 642 640 784 708 665 769 658 52 Certified and officers' checks 6,082 5,014 4,358 5,872 99,,117755 55,,000099 55,,223388 44,,228866 55,,112299 53 Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers) 4,785 4,903 4,837 4,884 4,909 5,169 5,201 5,279 5,248 54 Nontransaction balances 91,402 91,423' 91,469 92,083 91,576 92,290 92,466 91,602 91,198 55 Individuals, partnerships and corporations 82,136 82,103' 82,334 82,664 82,490 83,124 83,126 82,448 82,196 56 States and political subdivisions 5,876 5,939 5,976 6,162 6,095 5,999 6,101 5,997 6,033 57 U.S. government 48 47 47 125 120 119 174 174 78 58 Depository institutions in the United States 2,496 2,488 2,249 2,273 2,097 2,267 2,295 2,221 22,,220022 59 Foreign governments, official institutions and banks 846 846 863 859 774 781 768 763 668888 60 Liabilities for borrowed money 87,809 84,546 82,235 84,163 81,933 85,562 82,028 81,962 78,532 61 Borrowings from Federal Reserve Banks 0 0 0 0 0 0 0 0 0 62 Treasury tax-and-loan notes 4,894 4,895 4,167 2,850 2,073 2,122 194 3,309 4,592 63 All other liabilities for borrowed money5 82,914 79,651 78,068 81,312 79,860 83,440 81,834 78,653 73,940 64 Other liabilities and subordinated note and debentures 35,368 34,597 34,256 37,871 35,556 35,081 34,359 33,792 34,346 65 Total liabilities 277,941' 269,089' 265,183 272,885 275,481 277,858 266,598 268,241 264,876 66 Residual (total assets minus total liabilities)6 26,318 26,465 26,441 26,411 26,357 26,463 26,548 26,311 26,643 MEMO 67 Total loans and leases (gross) and investments adjusted17 187,681 184,545' 183,121 185,883 184,289 185,917 184,165 183,930 182,232 68 Total loans and leases (gross) adjusted7 161,546 158,432' 157,578 160,576 159,378 160,579 159,238 159,205 157,570 69 Time deposits in amounts of $100,000 or more 34,880 34,684 34,476 34,794 34,288 34,779 34,428 34,003 33,456 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' Assets and Liabilities Millions of dollars, Wednesday figures 1986 AAccccoouunntt Apr. 30 May 7 May 14 May 21 May 28 June 4 June 11 June 18 June 25 1 Cash and due from depository institutions . 9,451' 8,932 9,194 8,705 9,202 10,224 9,149 10,126 9,793 2 Total loans and securities 69,422' 68,394' 67,15c 67,865' 67,036 67,615 66,538 67,739 66,675 3 U.S. Treasury and govt, agency securities 4,946 4,952 4,938 5,089 5,256 5,517 5,066 4,618 4,649 4 Other securities 4,169' 4,167' 4,204' 4,207' 4,384 4,421 4,429 4,445 4,469 5 Federal funds sold2 4,318 4,752 3,563 5,105 3,628 3,886 4,146 4,893 3,125 6 To commercial banks in the United States 3,314 3,740 2,492 3,928 2,386 2,746 3,036 4,024 2,457 7 To others 1,004 1,011 1,071 1,177 1,242 1,141 1,110 869 668 8 Other loans, gross 55,988' 54,524' 54,444' 53,464' 53,768 53,790 52,895 53,783 54,432 9 Commercial and industrial 32,148' 32,051' 31,55c 31,028 31,089 32,201 31,882 32,365 33,113 10 Bankers acceptances and commercial paper 2,372' 2,605 2,626 2,659 2,616 2,705 2,604 2,854 2,912 11 All other 29,776' 29,446' 28,924' 28,368 28,473 29,497 29,278 29,511 30,201 12 U.S. addressees 27,511' 27,151' 26,622' 26,065 26,042 26,726 26,996 27,207 27,900 13 Non-U.S. addressees 2,265 2,295 2,302 2,304 2,431 2,770 2,282 2,304 2,301 14 To financial institutions 15,863 15,862 15,347 15,044 15,025 14,486 14,216 14,224 14,056 15 Commercial banks in the United States . 12,929 12,628 12,065 11,548 11,604 11,082 10,771 10,720 10,919 16 Banks in foreign countries 953 988 1,004 980 931 962 889 1,034 891 17 Nonbank financial institutions 1,981 2,247 2,278 2,517 2,490 2,442 2,556 2,470 2,247 18 To foreign govts, and official institutions .. 641 555 550 557 559 559 554 584 609 19 For purchasing and carrying securities .. 3,428 2,152 3,040 2,831 3,053 2,573 2,221 2,544 2,557 20 All other 3,907' 3,903' 3,957' 4,003' 4,042 3,970 4,022 4,065 4,095 21 Other assets (claims on nonrelated parties).. 22,024 22,000 22,088 22,336 21,937 21,576 22,390 21,858 21,802 22 Net due from related institutions 14,744 14,324 12,871 12,342 12,346 11,859 12,136 11,677 12,162 23 Total assets 115,641' 113,650' 111,302' 111,248' 110,522 111,273 110,212 111,399 110,432 24 Deposits or credit balances due to other than directly related institutions.... 32,821 32,386 32,060 32,059 32,047 31,299 31,256 31,754 33,408 25 Transaction accounts and credit balances3 2,961 3,245 2,903 3,057 3,085 3,092 2,866 3,294 3,460 26 Individuals, partnerships, and corporations 1,667 1,789 1,901 1,670 1,614 1,564 1,594 1,609 1,767 27 Other 1,294 1,456 1,002 1,387 1,472 1,529 1,272 1,685 1,694 28 Nontransaction accounts4 29,860 29,140 29,157 29,002 28,961 28,207 28,389 28,460 29,947 29 Individuals, partnerships, and corporations 24,626 23,855 23,865 23,726 23,886 23,294 23,420 23,517 24,501 30 Other 5,234 5,286 5,292 5,277 5,076 4,912 4,969 4,943 5,446 31 Borrowings from other than directly related institutions 46,673' 45,810 42,003 42,690 42,132 45,829 43,504 4466,,442211 4422,,559911 32 Federal funds purchased5 25,163' 23,930 20,267 20,491 20,416 23,845 21,886 24,276 20,600 33 From commercial banks in the United States 18,224' 16,874 13,964 13,977 13,587 16,033 14,123 17,543 13,820 34 From others 6,939 7,056 6,302 6,514 6,829 7,812 7,762 6,733 6,780 35 Other liabilities for borrowed money.... 21,510 21,880 21,736 22,199 21,715 21,983 21,618 22,145 21,991 36 To commercial banks in the United States 19,648 20,005 19,726 19,684 19,147 19,519 18,965 19,330 19,002 37 To others 1,863 1,875 2,010 2,515 2,568 2,464 2,653 2,815 2,989 38 Other liabilities to nonrelated parties 23,695' 23,634 23,824 23,396 23,313 23,231 23,828 23,310 23,392 39 Net due to related institutions 12,451' 11,819' 13,415' 13,102' 13,030 10,914 11,624 9,914 11,041 40 Total liabilities 115,641' 113,650' 111,302' 111,248' 110,522 111,273 110,212 111,399 110,432 MEMO 41 Total loans (gross) and securities adjusted6 53,178' 52,026' 52,592' 52,389' 53,047 53,786 52,730 52,994 53,299 42 Total loans (gross) adjusted6 44,063' 42,907' 43,45C 43,092' 43,406 43,848 43,235 43,932 44,181 1. Effective Jan. 1, 1986, the reporting panel includes 65 U.S. branches and 4. Includes savings deposits, money market deposit accounts, and time agencies of foreign banks that include those branches and agencies with assets of deposits. $750 million or more on June 30, 1980, plus those branches and agencies that had 5. Includes securities sold under agreements to repurchase. reached the $750 million asset level on Dec. 31, 1984. 6. Exclusive of loans to and federal funds sold to commercial banks in the 2. Includes securities purchased under agreements to resell. United States. 3. Includes credit balances, demand deposits, and other checkable deposits. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • September 1986 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances, not seasonally adjusted Commercial banks TTyyppee ooff hhoollddeerr 1985' 1986 11998800 11998811 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar.3'4 June Sept. Dec. Mar. 1 All holders—Individuals, partnerships, and corporations 315.5 288.9 291.8 293.5 302.7 286.3 298.4 299.3 321.0 307.4 2 Financial business 29.8 28.0 35.4 32.8 31.7 27.3 27.9 28.1 32.3 31.8 3 Nonfinancial business 162.8 154.8 150.5 161.1 166.3 157.9 164.5 167.2 178.5 166.6 4 Consumer 102.4 86.6 85.9 78.5 81.5 78.9 82.8 82.0 85.5 84.0 5 Foreign 3.3 2.9 3.0 3.3 3.6 3.6 3.7 3.5 3.5 3.4 6 Other 17.2 16.7 17.0 17.8 19.7 18.7 19.5 18.5 21.2 21.6 Weekly reporting banks 1985' 1986 11998800 11998811 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc.. DDeecc.. DDeecc..22 Mar.3'4 June Sept. Dec. Mar. 7 All holders—Individuals, partnerships, and corporations 147.4 137.5 144.2 146.2 157.1 147.7 151.2 153.6 168.6 159.7 8 Financial business 21.8 21.0 26.7 24.2 25.3 21.9 22.1 22.7 25.9 25.5 9 Nonfinancial business 78.3 75.2 74.3 79.8 87.1 82.3 83.7 85.5 94.5 86.8 10 Consumer 35.6 30.4 31.9 29.7 30.5 30.2 31.0 31.6 33.2 32.6 11 Foreign 3.1 2.8 2.9 3.1 3.4 3.4 3.5 3.3 3.1 3.3 12 Other 8.6 8.0 8.4 9.3 10.9 9.8 10.9 10.5 12.0 11.5 1. Figures include cash items in process of collection. Estimates of gross thrift institutions. Historical data have not been revised. The estimated volume of deposits are based on reports supplied by a sample of commercial banks. Types of such deposits for December 1984 is $5.0 billion at all insured commercial banks depositors in each category are described in the June 1971 BULLETIN, p. 466. and $3.0 billion at weekly reporting banks. Figures may not add to totals because of rounding. 4. Historical data back to March 1985 have been revised to account for 2. Beginning in March 1984, these data reflect a change in the panel of weekly corrections of bank reporting errors. Historical data before March 1985 have not reporting banks, and are not comparable to earlier data. Estimates in billions of been revised, and may contain reporting errors. Data for all commercial banks for dollars for December 1983 based on the new weekly reporting panel are: financial March 1985 were revised as follows (in billions of dollars): all holders, -.3; business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other, financial business, -.8; nonfinancial business, -.4; consumer, .9; foreign, .1; 9.5. other, -.1. Data for weekly reporting banks for March 1985 were revised as 3. Beginning March 1985, financial business deposits and, by implication, total follows (in billions of dollars): all holders, -.1; financial business, - .7; nonfinangross demand deposits have been redefined to exclude demand deposits due to cial business, -.5; consumer, 1.1; foreign, .1; other, -.2. 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 D 19 e 8 c 1 . D 19 e 8 c 2 . D 19 e 8 c 3 . D 19 e 8 c 4 . D 19 e 8 c 5 . Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 165,829 166,436 187,658 237,586 300,899 300,899 302,160 297,862 301,110 297,108 309,843 Financial companies3 Dealer-placed paper* 2 Total 3300,,333333 34,605 44,455 56,485 78,443 78,443 79,048 78,136 84,071 83,871 87,423 3 Bank-related (not seasonally adjusted) 6,045 2,516 2,441 2,035 1,602 1,602 1,410 1,475 1,348 1,520 1,575 Directly placed paper5 4 Total 81,660 84,393 97,042 110,543 135,504 135,504 134,584 134,443 135,510 135,801 114422,,225522 5 Bank-related (not seasonally adjusted) 26,914 32,034 35,566 42,105 44,778 44,778 37,418 36,948 37,013 37,835 39,009 6 Nonfinancial companies6 53,836 47,437 46,161 70,558 86,952 86,952 88,528 85,283 81,529 77,436 80,168 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 69,226 79,543 78,309 77,121 68,115' 68,115 68,314 67,188 66,882 66,235 66,759 Holder 8 Accepting banks 10,857 10,910 9,355 9,811' 11,174 11,174 11,145 12,331 13,061 12,287 12,216 9 Own bills 9,743 9,471 8,125 8,621 9,448 9,448 9,407 10,105 10,722 10,261 10,254 10 Bills bought 1,115 1,439 1,230 1,191 1,726 1,726 1,738 2,225 2,339 2,026 1,962 Federal Reserve Banks 11 Own account 195 1,480 418 0 0 0 0 0 0 0 0 12 Foreign correspondents 1,442 949 729 671 937 937 898 874 877 746 664 13 Others 56,731 66,204 67,807 66,639 56,004 56,004 56,271 53,984 52,944 53,202 53,880 Basis 14 Imports into United States 14,765 17,683 15,649 17,560 15,147 15,147 14,820 14,806 13,595 14,464 15,094 15 Exports from United States 15,400 16,328 16,880 15,859 13,204 13,204 12,951 13,115 13,410 13,473 13,574 16 All other 39,060 45,531 45,781 43,702 39,765' 39,765 40,543' 39,268 39,878 38,299 38,091 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 Rate Effective Date Month Average Month rate 11.50 1985—Jan. 15 10.50 1984--Jan 11.00 1985—Apr 12.00 May 20 10.00 Feb 11.00 May 12.50 June 18 9.50 Mar 11.21 June 13.00 Apr 11.93 July 12.75 1986—Mar. 7 9.00 May 12.39 Aug 12.50 Apr. 21 8.50 June 12.60 Sept 12.00 July 13.00 Oct 11.75 Aug 13.00 Nov 11.25 Sept 12.97 Dec 10.75 Oct 12.58 Nov 11.77 1986—Jan Dec 11.06 Feb Mar 1985--Jan 10.61 Apr Feb 10.50 May 10.50 June 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 • September 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 Mar. Apr. May June May 30 June 6 June 13 June 20 June 27 MONEY MARKET RATES 1 Federal funds1-2 9.09 10.22 8.10 7.48 6.99 6.85 6.92 6.85 6.95 6.89 6.87 6.86 2 Discount window borrowing12'3 8.50 8.80 7.69 7.10 6.83 6.50 6.50 6.50 6.50 6.50 6.50 6.50 Commercial paper4 5 3 1-month 8.87 10.05 7.94 7.30 6.75 6.72 6.79 6.75 6.83 6.82 6.78 6.74 4 3-month 8.88 10.10 7.95 7.20 6.60 6.62 6.71 6.69 6.78 6.77 6.69 6.64 5 6-month 8.89 10.16 8.01 7.08 6.47 6.53 6.63 6.61 6.75 6.71 6.59 6.51 Finance paper, directly placed4 5 6 1-month 8.80 9.97 7.91 7.24 6.69 6.73 6.80 6.77 6.85 6.85 6.76 6.72 7 3-month 8.70 9.73 7.77 7.15 6.49 6.46 6.61 6.57 6.63 6.68 6.58 6.58 8 6-month 8.69 9.65 7.75 7.10 6.44 6.33 6.53 6.45 6.58 6.58 6.49 6.50 Bankers acceptances5-6 9 3-month 8.90 10.14 7.92 7.09 6.48 6.54 6.60 6.61 6.74 6.64 6.54 6.52 10 6-month 8.91 10.19 7.96 6.94 6.36 6.45 6.49 6.54 6.72 6.60 6.38 6.34 Certificates of deposit, secondary market7 11 1-month 8.96 10.17 7.97 7.33 6.74 6.68 6.79 6.72 6.82 6.82 6.78 6.76 12 3-month 9.07 10.37 8.05 7.24 6.60 6.65 6.73 6.71 6.83 6.81 6.68 6.62 13 6-month 9.27 10.68 8.25 7.23 6.57 6.64 6.72 6.71 6.86 6.82 6.67 6.59 14 Eurodollar deposits, 3-month8 9.56 10.73 8.28 7.42 6.80 6.86 6.95 6.91 7.01 7.01 6.94 6.91 U.S. Treasury bills5 Secondary market9 IS 3-month 8.61 9.52 7.48 6.56 6.06 6.15 6.21 6.24 6.42 6.29 6.10 6.07 16 6-month 8.73 9.76 7.65 6.57 6.08 6.19 6.27 6.32 6.48 6.38 6.19 6.08 17 1-year 8.80 9.92 7.81 6.59 6.06 6.25 6.32 6.37 6.55 6.43 6.21 6.14 Auction average10 18 3-month 8.52 9.57 7.47 6.59 6.06 6.12 6.21 6.15 6.33 6.31 6.11 6.09 19 6-month 8.76 9.80 7.64 6.60 6.07 6.16 6.28 6.21 6.41 6.39 6.18 6.13 20 1-year 8.86 9.91 7.83 6.61 5.94 6.17 6.59 n.a. n.a. 6.59 n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 9.57 10.89 8.43 7.03 6.44 6.65 6.73 6.79 7.00 6.85 6.61 6.54 22 2-year 10.21 11.65 9.27 7.21 6.70 7.07 7.18 7.26 7.49 7.32 7.07 6.93 23 3-year 10.45 11.89 9.64 7.30 6.86 7.27 7.41 7.47 7.74 7.57 7.25 7.14 74 5-year 10.80 12.24 10.13 7.46 7.05 7.52 7.64 7.70 8.02 7.83 7.45 7.33 25 7-year 11.02 12.40 10.51 7.67 7.16 7.65 7.75 7.86 8.16 7.93 7.59 7.42 26 10-year 11.10 12.44 10.62 7.78 7.30 7.71 7.80 7.88 8.23 7.98 7.62 7.45 27 20-year 11.34 12.48 10.97 8.09 7.50 7.81 7.69 7.75 8.05 7.85 7.54 7.40 28 30-year 11.18 12.39 10.79 7.96 7.39 7.52 7.57 7.57 7.84 7.70 7.46 7.36 Composite13 29 Over 10 years (long-term) 10.84 11.99 10.75 8.13 7.59 8.02 8.23 8.19 8.55 8.44 8.10 7.92 State and local notes and bonds Moody's series14 30 Aaa 8.80 9.61 8.60 6.73 6.81 7.22 7.49 7.30 7.50 7.70 n.a. 7.25 31 Baa 10.17 10.38 9.58 7.58 7.45 7.84 8.14 7.90 8.10 8.25 n.a. 8.00 32 Bond Buyer series15 9.51 10.10 9.11 7.08 7.20 7.54 7.87 7.70 7.97 8.08 7.82 7.59 Corporate bonds Seasoned issues16 33 All industries 12.78 13.49 12.05 9.79 9.51 9.69 9.73 9.75 9.87 9.82 9.68 9.59 34 Aaa 12.04 12.71 11.37 9.00 8.79 9.09 9.13 9.14 9.29 9.19 9.08 9.01 35 Aa 12.42 13.31 11.82 9.49 9.21 9.43 9.49 9.50 9.60 9.59 9.46 9.35 36 A 13.10 13.74 12.28 10.15 9.83 9.94 9.96 9.99 10.13 10.05 9.89 9.81 37 Baa 13.55 14.19 12.72 10.50 10.19 10.29 10.34 10.37 10.47 10.43 10.29 10.20 38 A-rated, recently-offered utility bonds17 12.73 13.81 12.06 9.41 9.26 9.50 9.65 9.60 9.70 9.66 9.70 9.55 MEMO: Dividend/price ratio19 39 Preferred stocks 11.02 11.59 10.49 9.13 8.97 9.00 8.89 8.93 8.98 8.88 8.91 8.79 40 Common stocks 4.40 4.64 4.25 3.50 3.43 3.42 3.36 3.32 3.36 3.40 3.35 3.33 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 92.63 92.46 108.09 107.57 113.93 119.33 120.16 126.43 133.97 137.25 137.37 140.82 ? Industrial 107.45 108.01 123.79 123.65 130.53 136.77 137.13 144.03 152.75 157.35 158.59 163.15 3 Transportation 89.36 85.63 104.11 103.72 108.61 113.52 115.72 124.18 128.66 125.92 122.21 120.65 4 Utility 47.00 46.44 56.75 55.84 59.07 61.69 62.46 65.18 68.06 69.35 68.65 70.69 5 Finance 95.34 89.28 114.21 112.36 122.83 128.86 132.36 142.13 153.94 154.83 151.28 151.73 6 Standard & Poor's Corporation (1941-43 = 10)1 .. . 160.41 160.50 186.84 186.18 197.45 207.26 208.19 219.37 232.33 237.97 238.46 245.30 7 American Stock Exchange2 (Aug. 31, 1973 = 50) 216.48 207.96 229.10 225.00 236.53 243.28 245.27 246.09 264.91 270.59 274.22 281.18 Volume of trading (thousands of shares) 8 New York Stock Exchange 85,418 91,084 109,191 110,569 122,263 133,446 130,872 152,590 160,755 146,330 127,624 126,151 9 American Stock Exchange 8,215 6,107 8,355 7,648 9,183 11,890 11,105 14,057 15,902 13,503 11,870 12,795 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 23,000 22,470 28,390 26,350 26,400 28,390 26,810 27,450 29,090 30,760 32,370 32,480 Free credit balances at brokers4 11 Margin-account5 1,755 2,715 1,715 2,080 2,715 2,645 2,545 2,715 3,065 2,405 2,585 12 Cash-account 8,430 10,215 12,840 9,630 10,340 12,840 11,695 12,355 13,920 14,340 12,970 13,570 Margin-account debt at brokers (percentage distribution, end of period) 13 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in percent)6 14 Under 40 22.0 18.0 34.0 37.0 35.0 34.0 32.0 28.0 29.0 29.0 30.0 31.0 15 40-49 22.0 18.0 20.0 22.0 20.0 20.0 21.0 19.0 19.0 20.0 19.0 20.0 16 50-59 16.0 16.0 19.0 17.0 19.0 19.0 19.0 21.0 22.0 20.0 22.0 20.0 17 60-69 9.0 9.0 11.0 10.0 11.0 11.0 11.0 13.0 13.0 13.0 12.0 13.0 18 70-79 6.0 5.0 8.0 7.0 7.0 8.0 8.0 9.0 8.0 9.0 8.0 8.0 19 80 or more 6.0 6.0 8.0 7.0 8.0 8.0 9.0 10.0 9.0 9.0 9.0 8.0 Special miscellaneous-account balances at brokers (end of period) 20 Total balances (millions of dollars)7 58,329 75,840 99,310 92,250 95,240 99,310 99,290 104,228 103,450 105,790 109,620 112,401 Distribution by equity status (percent) 21 Net credit status 63.0 59.0 58.0 58.0 57.0 58.0 59.0 60.0 61.0 59.0 58.0 59.0 Debt status, equity of 22 60 percent or more 28.0 29.0 31.0 31.0 32.0 31.0 33.0 32.0 31.0 33.0 33.0 32.0 23 Less than 60 percent 9.0 11.0 11.0 11.0 11.0 11.0 8.0 8.0 8.0 8.0 9.0 9.0 Margin requirements (percent of market value and effective date)8 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 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 • September 1986 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1985 1986 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Savings and loan associations' 1 Assets 773,417 902,449 919,955 928,948 929,896 935,987 945,445 952,281 942,224 946,691 951,617 957,760 966,239 2 Mortgages 494,789 555,277 570,341 574,220 575,685 580,810 583,290 585,852 580,904 578,945 577,171 577,857 577,616 3 Mortgage-backed securities.... 94,836 96,731 100,508 99,093 %,849 %,921 97,380 99,014 99,310 102,736 107,392 4 Cash and investment securities1 . 104,274 125,358 118,381 120,411 116,339 116,083 124,893 127,832 123,967 127,869 132,307 132,747 136,230 5 Other 174,354 221,814 231,236 234,319 237,875 239,0% 237,263 238,597 237,355 239,880 242,139 247,154 252,391 6 Liabilities and net worth 773,417 902,449 919,955 928,948 929,896 935,987 945,445 952,281 942,224 946,691 951,617 957,760 966,239 7 Savings capital 634,455 724,301 740,585 743,018 742,292 743,454 746,576 752,259 747,455 749,289 754,836 752,922 753,598 8 Borrowed money 92,127 126,169 734,734 124,289 128,822 131,205 135,454 139,018 131,989 132,028 133,864 139,421 144,268 9 FHLBB 52,626 64,207 683,386 70,584 71,665 72,639 72,370 73,888 71,488 71,199 70,422 73,358 73,504 10 Other 39,501 61,962 51,348 53,705 57,157 58,566 63,084 65,130 60,501 60,829 63,442 66,063 70,764 11 Other 15,968 17,215 21,219 22,919 19,952 22,080 23,640 19,940 21,787 23,907 20,814 22,904 25,661 12 Net worth2 30,867 34,764 38,416 38,722 38,871 39,247 39,775 41,065 40,992 41,468 42,083 42,513 42,713 MEMO 13 Mortgage loan commitments outstanding3 54,113 61,800 62,765 60,243 59,310 58,662 58,793 55,834 52,387 54,317 56,110 57,993 60,023 FSLlC-insured federal savings banks' 14 Assets 64,969 98,559 118,463 121,939 127,005 128,415 130,754 131,858 141,785 146,513 152,777 155,685 164,155 15 Mortgages 38,698 57,429 66,228 68,601 71,010 72,093 72,852 72,356 78,997 81,645 84,698 86,595 89,164 16 Mortgage-backed securities.... 7,172 9,949 12,572 13,232 14,323 14,549 15,386 15,675 16,284 16,366 17,853 18,661 19,848 17 Other 6,595 10,971 10,979 11,505 11,591 11,832 11,895 11,724 13,324 13,766 13,931 14,597 15,043 18 Liabilities and net worth 64,969 98,559 118,463 121,939 127,005 128,415 130,754 131,858 141,785 146,513 152,777 155,685 164,155 19 Savings capital 53,227 79,572 95,056 97,176 101,330 101,874 102,937 103,464 111,808 114,743 119,402 121,133 126,143 20 Borrowed money 7,477 12,798 15,341 16,296 17,228 17,672 18,606 19,324 20,133 21,248 22,704 23,189 25,679 21 FHLBB 4,640 7,515 9,371 9,547 9,821 9,935 10,353 10,511 11,150 11,283 12,064 12,476 12,830 22 Other 2,837 5,283 5,970 6,749 7,407 7,737 8,253 8,813 8,983 9,%5 10,640 10,713 12,849 23 Other 1,157 1,903 2,575 2,890 2,556 2,894 3,113 2,732 2,984 3,403 3,315 3,763 4,346 24 Net worth 3,108 4,286 5,491 5,577 5,891 5,975 6,098 6,338 6,860 7,118 7,355 7,599 7,985 MEMO 25 Mortgage loan commitments outstanding3 2,151 3,234 5,151 5,515 5,832 5,653 5,636 5,355 6,707 7,718 8,333 8,287 8,766 Savings banks' 26 Assets 193,535 203,898 213,824 215,298 215,560 215,893 216,793 216,776 216,673 218,119 221,256 222,542 226,495 Loans 27 Mortgage 97,356 102,895 106,441 107,322 108,842 109,171 109,494 110,371 108,973 109,702 110,271 11,813 112,417 28 Other 1199,,112299 24,954 30,339 30,195 29,672 29,967 31,217 30,876 31,752 32,501 34,873 34,591 35,500 Securities 29 U.S. government 15,360 14,643 13,960 13,868 13,686 13,734 13,434 13,111 12,568 12,474 12,313 12,013 13,210 30 Mortgage-backed securities... 18,205 19,215 19,779 20,101 20,368 20,012 19,828 19,481 21,372 21,525 21,593 21,885 22,546 31 State and local government... 2,177 2,077 2,086 2,105 2,107 2,163 2,148 2,323 2,298 2,297 2,306 2,372 2,343 32 Corporate and other 25,375 23,747 23,738 23,735 23,534 23,039 22,816 21,199 20,828 20,707 20,403 20,439 20,260 33 Cash 6,263 4,954 4,544 4,821 4,916 4,893 4,771 6,225 5,645 5,646 5,845 5,570 6,225 34 Other assets 9,670 11,413 12,937 13,151 12,345 12,914 13,085 13,113 13,237 13,267 13,652 13,859 13,994 35 Liabilities 193,535 203,898 213,824 215,298 215,560 215,893 216,793 216,776 216,673 218,119 221,256 222,542 226,495 36 Deposits 172,665 180,616 186,824 187,207 187,722 187,239 187,552 185,972 186,321 186,777 188,960 189,025 190,310 37 Regular4 170,135 177,418 182,881 183,222 183,560 183,296 183,716 181,921 182,399 182,890 184,704 184,580 185,716 38 Ordinary savings 38,554 33,739 33,495 33,398 33,252 33,303 33,638 33,018 32,365 32,693 33,021 33,057 33,577 39 Time 95,129 104,732 104,737 104,448 104,668 104,024 104,116 103,311 104,436 104,588 105,562 105,550 105,146 40 Other 2,530 3,198 3,943 3,985 4,162 3,943 3,836 4,051 3,922 3,887 4,256 4,445 4,594 41 Other liabilities 10,154 12,504 15,137 15,971 15,546 15,9% 16,309 17,414 17,086 17,793 18,412 19,074 21,384 42 General reserve accounts 10,368 10,510 11,453 11,704 11,882 12,299 12,567 12,823 12,925 13,211 13,548 14,114 14,519 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37 Continued 1985 1986 AAccccoouunntt 11998833 11998844 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Credit unions5' 43 Total assets/liabilities and capital . 81,961 93,036 107,991 111,150 113,016 114,783 117,029 118,010 118,933 122,623 126,653 128,229 44 Federal 54,482 63,205 72,932 74,869 75,567 76,415 77,829 77,861 78,619 80,024 82,275 83,543 45 State 27,479 29,831 35,059 36,281 37,449 38,368 39,200 40,149 40,314 42,599 44,378 44,686 46 Loans outstanding 50,083 62.561 67,662 69,171 70,765 71,811 72,404 73,513 73,513 74,207 75,300 76,385 nn aa.. 47 Federal 32,930 42.337 44,963 46,036 46,702 47,065 47,538 47,933 48,055 48,059 48,633 49,756 48 State 17,153 20.224 22,699 23,135 24,063 24,746 24,866 25,580 25,458 26,148 26,667 26,629 49 Savings 74,739 84,348 98,026 99,834 101,318 103,677 105,384 105,963 107,238 110,541 114,579 116,703 50 Federal 49,889 57,539 67,070 68,087 68,592 70,063 71,117 70,926 72,166 73,227 75,698 77,112 51 State 24,850 26,809 30,956 31,747 32,726 33,614 34,267 35,037 35,072 37,314 38,881 39,591 Life insurance companies' 52 Assets 654,948 722,979 772,452 778,293 783,828 791,483 802,024 816,203 824,850 834,492 843,994 Securities 53 Government 50,752 63,899 68,983 69,975 71,095 72,334 73,451 77,230 77,966 78,733 79,574 54 United States6 28,636 42,204 46,514 47,343 48,181 49,300 50,321 53,559 53,979 55,019 55,700 55 State and local 9,986 8,713 8,980 9,201 9,293 9,475 9,615 10,086 10,373 10,027 10,083 56 Foreign7 12,130 12,982 13,489 13,431 13,621 13,559 13,515 13,585 13,614 13,687 13,791 57 Business 322,854 359,333 393,386 397,202 399,474 403,832 410,141 414,424 420,835 429,090 434,747 n a. n.a. 58 Bonds 257,986 295,998 321,752 325,647 329,133 331,675 335,129 337,205 343,003 347,122 349,314 59 Stocks 64,868 63,335 71,634 71,555 70,341 72,157 75,012 77,219 77,832 81,968 85,433 60 Mortgages 150,999 156,699 162,690 163,027 163,929 165,687 167,306 170,460 171,275 171,705 173,418 61 Real estate 22,234 25,767 28,240 28,450 28,476 28,637 28,844 28,662 28,709 29,069 29,470 62 Policy loans 54,063 54,505 54,300 54,238 54,225 54,142 54,121 54,200 54,187 54,164 54,158 63 Other assets 54,046 63,776 64,853 65,401 66,629 57,313 68,161 71,227 56,886 56,237 57,388 1. Holdings of stock of the Federal Home Loan Banks are in "other assets." FSLIC-insured federal savings banks: Estimates by the FHLBB for federal 2. Includes net undistributed income accrued by most associations. savings banks insured by the FSLIC and based on monthly reports of federally 3. As of July 1985, data include loans in process. insured institutions. 4. Excludes checking, club, and school accounts. Savings banks: Estimates by the National Council of Savings Institutions for all 5. Data include all federally insured credit unions, both federal and state savings banks in the United States and for FDIC-insured savings banks that have chartered, serving natural persons. converted to federal savings banks. 6. Direct and guaranteed obligations. Excludes federal agency issues not Credit unions: Estimates by the National Credit Union Administration for guaranteed, which are shown in the table under "Business" securities. federally chartered and federally insured state-chartered credit unions serving 7. Issues of foreign governments and their subdivisions and bonds of the natural persons. International Bank for Reconstruction and Development. Life insurance companies: Estimates of the American Council of Life Insurance NOTE. Savings and loan associations: Estimates by the FHLBB for all for all life insurance companies in the United States. Annual figures are annualassociations in the United States based on annual benchmarks for non-FSLIC- statement asset values, with bonds carried on an amortized basis and stocks at insured associations and the experience of FSLIC-insured associations. year-end market value. Adjustments for interest due and accrued and for differences between market and book values are not made on each item separately but are included, in total, in "other assets." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • September 1986 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1986 111999888333 111999888444 111999888555 Jan. Feb. Mar. Apr. May June U.S. budget1 1 Receipts, total 600,562 666,457 733,9% 76,710 53,370 49,557 91,438 46,246 77,024 2 On-budget n.a. n.a. n.a. 57,465 38,417 32,203 69,130 30,004 58,400 3 Off-budget n.a. n.a. n.a. 19,245 14,953 17,355 22,308 16,242 18,624 4 Outlays, total 808,273 851,7% 945,927 83,201 77,950 79,700 81,510 85,642 78,034 5 On-budget n.a. n.a. n.a. 68,146 61,963 63,660 67,276 69,611 60,982 6 Off-budget n.a. n.a. n.a. 15,055 15,987 16,040 14,234 16,031 17,052 7 Surplus, or deficit (-), total -207,711 -185,339 -211,931 -6,492 -24,580 -30,142 9,928 -39,396 -1,011 8 On-budget n.a. n.a. n.a. -10,682 -23,546 -31,457 1,854 -39,607 -2,583 9 Off-budget n.a. n.a. n.a. 4,190 -1,034 1,315 8,074 211 1,572 Source of financing (total) 10 Borrowing from the public 212,424 170,817 197,269 12,660 16,010 8,441 14,213 17,%0 18,500 11 Cash and monetary assets (decrease, or increase (-))2 -9,889 5,636 10,673 -9,503 12,969 14,093 -22,542 22,774 -13,065 12 Other3 5,176 8,885 3,989 3,334 -4,400 7,608 -1,599 -1,338 -4,424 MEMO 13 Treasury operating balance (level, end of period) 37,057 22,345 17,060 40,215 26,326 12,246 34,417 12,808 24,641 14 Federal Reserve Banks 16,557 3,791 4,174 16,228 5,026 3,280 11,550 3,083 3,143 15 Tax and loan accounts 20,500 18,553 12,886 23,987 21,300 8,966 22,867 9,725 21,498 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 FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr 1984 1985 1986 1986 111999888444 111999888555 H2 HI H2 HI Apr. May June RECEIPTS 1 All sources 666,457 733,996 341,392 380,618 364,790 394,345 91,438 46,246 77,024 •>I ndividual income taxes, net 295,960 330,918 157,229 166,783 169,987 169,444 45,120 9,820 36,412 3 Withheld 279,350 298,941 145,210 149,288 155,725 153,919 21,905 28,564 24,868 4 Presidential Election Campaign Fund ... 35 35 5 29 6 31 10 7 4 Nonwithheld 81,346 97,685 19,403 76,155 22,295 78,981 42,555 3,7% 13,411 6 Refunds 64,770 65,743 7,387 58,684 8,038 63,488 19,350 22,546 1,871 Corporation income taxes 7 Gross receipts 74,179 77,413 35,190 42,193 36,528 41,946 11,192 2,813 1111,,669988 8 Refunds 17,286 16,082 6,847 8,370 7,751 9,557 2,476 1,365 1,031 9 Social insurance taxes and contributions. net 241,902 268,805 118,690 144,598 128,017 156,714 31,756 28,745 24,399 10 Employment taxes and contributions' 212,180 238,288 105,624 126,038 116,276 139,706 28,391 20,844 23,672 11 Self-employment taxes and contributions2 8,709 10,468 1,086 9,482 985 10,581 6,510 643 1,407 12 Unemployment insurance 25,138 25,758 10,706 16,213 9,281 14,674 2,999 7,461 346 13 Other net receipts3 4,580 4,759 2,360 2,350 2,458 2,333 366 440 381 14 Excise taxes 37,361 35,865 18,961 17,259 18,470 15,944 2,512 2,669 2,800 15 Customs deposits 11,370 12,079 6,329 5,807 6,354 6,369 1,087 1,040 1,161 16 Estate and gift taxes 6,010 6,422 3,029 3,204 3,323 3,487 680 686 514 17 Miscellaneous receipts4 16,965 18,576 8,812 9,144 9,861 10,002 1,568 1,838 1,071 OUTLAYS 18 All types 851,781 946,323 446,944 463,842 487,188'' 486,039 81,510 85,642 78,034 19 National defense 227,413 252,748 118,286 124,186 134,675 135,367 22,842 23,765 22,462 70 International affairs 15,876 16,176 8,550 6,675 8,367 5,384 732 1,654 785 21 General science, space, and technology ... 8,317 8,627 4,473 4,230 4,727 4,191 761 737 615 7? Energy 7,086 5,685 1,423 680 3,305 2,984 358 357 732 73 Natural resources and environment 12,593 13,357 7,370 5,892 7,553 6,245 1,130 1,007 1,216 24 Agriculture 13,613 25,565 8,524 11,705 15,412 14,482 3,489 3,008 1,405 25 Commerce and housing credit 6,917 4,229 2,663 -260 644 860 604 43 893 2.6 Transportation 23,669 25,838 13,673 11,440 15,360 12,658 2,271 2,201 2,475 27 Community and regional development .... 7,673 7,680 4,836 3,408 3,901 3,169 638 599 651 28 Education, training, employment, social services 27,579 29,342 13,737 14,149 14,481 14,712 2,440 22,,228877 22,,221155 79 Health 30,417 33,542 15,692 16,945 17,237 17,872 3,205 3,021 3,202 30 Social security and medicare 235,764 254,446 119,613 128,351 129,037 135,214 22,234 22,253 24,678 31 Income security 112,668 128,200 61,558 65,246 59,457 60,786 11,113 10,960 6,843 37 Veterans benefits and services 25,614 26,352 13,317 11,956 14,527 12,193 2,340 3,455 914 33 Administration of justice 5,660 6,277 2,992 3,016 3,212 3,352 546 533 549 34 General government 5,053 5,228 2,552 2,857 3,634 3,566 -48 576 1,185 35 General-purpose fiscal assistance 6,768 6,353 3,458 2,659 3,391 2,179 885 -142 40 36 Net interest' 111,058 129,436 61,293 65,143 67,448 68,054 10,359 11,766 9,939 37 Undistributed offsetting receipts6 -31,957 -32,759 -17,061 -14,436 -17,953 -17,193 -4,387 -2,437 -2,765 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 Financial Statistics • September 1986 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1984 1985 1986 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 1,468.3 1,517.2 1,576.7 1,667.4 1,715.1 1,779.0 1,827.5 1,950.3 1,991.1 2 Public debt securities 1,463.7 1.512.7 1,572.3 1,663.0 1,710.7 1,774.6 1,823.1 1,945.9 1,986.8 3 Held by public 1,223.9 1,255.1 1,309.2 1,373.4 1,415.2 1,460.5 1,506.6 1,597.1 1,634.3 4 Held by agencies 239.8 257.6 263.1 289.6 295.5 314.2 316.5 348.9 352.6 5 Agency securities 4.6 4.5 4.5 4.5 4.4 4.4 4.4 4.4 4.3 6 Held by public 3.5 3.4 3.4 3.4 3.3 3.3 3.3 3.3 3.2 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 1,464.5 1,513.4 1,573.0 1,663.7 1,711.4 1,775.3 1,823.8 1,932.4 1,973.3 9 Public debt securities 1,463.1 1,512.1 1,571.7 1,662.4 1,710.1 1,774.0 1,822.5 1,931.1 1,972.0 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 1,520.0 1,573.0 1,823.8 1,823.8 1,823.8 1,823.8 2,078.7 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 1986 TTyyppee aanndd hhoollddeerr 11998811 11998822 11998833 11998844 Q2 Q3 Q4 Q1 1 Total gross public debt 1,028.7 1,197.1 1,410.7 1,663.0 1.774.6 1.823.1 1,945.9 1,986.8 By type 2 Interest-bearing debt 1,027.3 1,195.5 1,400.9 1,660.6 1,759.8 1,821.0 1,943.4 1,984.2 3 Marketable 720.3 881.5 1,050.9 1.247.4 1.310.7 1.360.2 1,437.7 1.472.8 4 Bills 245.0 311.8 343.8 374.4 381.9 384.2 399.9 ' 393.2 5 Notes 375.3 465.0 573.4 705.1 740.9 776.4 812.5 842.5 6 Bonds 99.9 104.6 133.7 167.9 187.9 199.5 211.1 223.0 7 Nonmarketable1 307.0 314.0 350.0 413.2 449.1 460.8 505.7 511.4 8 State and local government series 23.0 25.7 36.7 44.4 53.9 62.8 87.5 88.5 9 Foreign issues2 19.0 14.7 10.4 9.1 8.3 6.6 7.5 6.7 10 Government 14.9 13.0 10.4 9.1 8.3 6.6 7.5 6.7 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 75.4 77.0 78.1 79.8 13 Government account series3 196.7 205.4 231.9 286.2 311.0 313.9 332.2 336.0 14 Non-interest-bearing debt 1.4 1.6 9.8 2.3 14.8 2.1 2.5 2.6 By holder4 15 U.S. government agencies and trust funds 203.3 209.4 236.3 289.6 314.2 316.5 348.9 352.6 16 Federal Reserve Banks 131.0 139.3 151.9 160.9 169.1 169.7 181.3 184.8 17 Private investors 694.5 848.4 1,022.6 1.212.5 1,292.0 1,338.2 1,417.2' 1.458.9 18 Commercial banks 111.4 131.4 188.8 183.4 196.3 196.9 192.2 195.1 19 Money market funds 21.5 42.6 22.8 25.9 24.8 22.7 25.1 29.8 20 Insurance companies 29.0 39.1 56.7 76.4 85.0 88.6 93.2 95.8 21 Other companies 17.9 24.5 39.7 50.1 54.9' 59.C 59.0' 59.6 22 State and local governments 104.3 127.8 155.1 179.4 198.9 n.a. n.a. n.a. Individuals 23 Savings bonds 68.1 68.3 71.5 74.5 76.7 78.2 79.8 81.4 24 Other securities 42.7 48.2 61.9 69.3 72.0 73.2 75.V 75.7 25 Foreign and international5 136.6 149.5 166.3 192.9 200.7 209.8 214.6 220.2 26 Other miscellaneous investors6 163.0 217.0 259.8 360.6 386.9 n.a. n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Consists of investments offoreign 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 Sratement 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 Apr/ May' June May 21' May 28' June 4 June 11 June 18 June 25 Immediate delivery2 1 U.S. government securities 42,135 52,778 75,331 99,948 91,721 90,104 97,164 75,911 100,877 87,634 93,304 86,050 By maturity 2 Bills 22,393 26,035 32,900 36,359 33,501 32,489 37,599 23,271 38,734 36,732 32,951 25,601 3 Other within 1 year 708 1,305 1,811 1,790 2,046 2,266 1,840 2,063 1,684 1,413 2,503 2,716 4 1-5 years 8,758 11,733 18,361 22,621 23,315 23,226 26,881 24,578 22,980 20,176 23,582 26,585 5-10 years 5,279 7,606 12,703 21,640 17,025 20,982 15,254 15,502 24,785 19,496 22,377 20,112 6 Over 10 years 4,997 6,099 9,556 17,538 15,833 11,141 15,590 10,497 12,694 9,817 11,892 11,037 By type of customer 7 U.S. government securities dealers 2,257 2,919 3,336 4,078 3,633 3,710 3,501 2,630 4,321 3,374 4,037 33,,446655 S U.S. government securities brokers 21,045 25,580 36,222 52,365 47,967 47,415 51,840 37,860 52,099 49,444 48,534 44,740 9 All others3 18,833 24,278 35,773 43,506 40,121 38,979 41,824 35,421 44,457 34,816 40,733 37,846 10 Federal agency securities 5,576 7,846 11,640 15,002 14,329 16,390 16,456 12,582 14,539 13,026 19,750 18,760 11 Certificates of deposit 4,333 4,947 4,016 4,881 4,073 4,740 4,706 3,890 4,523 3,955 4,930 4,706 12 Bankers acceptances 2,642 3,243 3,242 3,852 2,963 3,272 3,437 2,678 2,895 2,770 3,662 3,312 13 Commercial paper 8,036 10,018 12,717 16,054 15,269 17,093 16,293 15,250 15,510 16,028 18,021 16,416 Futures transactions4 14 Treasury bills 6,655 6,947 5,561 4,397 4,308 2,906 6,226 2,174 5,231 3,880 2,489 1,831 15 Treasury coupons 2,501 4,503 6,069 8,372 7,768 7,182 9,853 6,392 10,176 7,881 6,473 5,933 16 Federal agency securities 265 262 240 6 51 17 19 49 24 10 26 4 Forward transactions5 17 U.S. government securities 1,493 1,364 1,283 1,255 1,520 1,705 1,788 1,377 1,640 493 2,197 2,350 18 Federal agency securities 1,646 2,843 3,857 8,151 6,183 6,730 7,774 5,037 5,664 7,261 9,015 4,925 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 • September 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 Apr. May June May 28 June 4 June 11 June 18 June 25 Positions Net immediate2 1 U.S. government securities 14,082 5,429 7,391 18,318' 9,615' 11,981 10,703' 10,213 9,625 10,075 13,111 2 Bills 10,800 5,500 10,075 17,010 9,487' 10,495 9,108' 8,093 10,294 10,772 11,254 3 Other within 1 year 921 63 1,050 5,834 6,280 6,167 6,577 6,458 6,192 6,031 6,317 4 1-5 years 1,912 2,159 5,154 9,352 6,242 6,949 5,178 5,586 5,389 5,343 8,272 5 5-10 years -78 -1,119 -6,202 -10,195 -9,344 -9,317 -7,825 -7,634 -9,347 -9,865 -10,622 6 Over 10 years 528 -1,174 -2,686 -3,683' -3,049 -2,314 -2,335 -2,289 -2,902 -2,206 -2,109 7 Federal agency securities 7,313 15,294 22,860 36,164' SS.BO' 35,014 36,201 34,499 35,684 37,059 34,014 8 Certificates of deposit 5,838 7,369 9,192 10,738' 10,973 11,530 10,979 11,310 11,266 11,123 11,481 9 Bankers acceptances 3,332 3,874 4,586 5,537 5,460 5,466 4,915 5,231 5,001 5,085 5,716 10 Commercial paper 3,159 3,788 5,570 8,148 7,379 7,989 6,453 7,331 7,828 8,669 7,255 Futures positions 11 Treasury bills -4,125 -4,525 -7,322 -26,431 -19,205' -14,061 -18,243 -14,708 -12,241 -15,130 -14,432 12 Treasury coupons -1,033 1,794 4,465 2,763' 2,649 2,331 2,114' 2,542 2,833 2,449 2,027 13 Federal agency securities 171 233 -722 -82 -70 -95 -113 -114 -107 -97 -82 Forward positions 14 U.S. government securities -1,936 -1,643 -911 -1,888 -1,985 -2,633 -1,609 -3,016 -3,698 -2,452 -1,942 15 Federal agency securities -3,561 -9,205 -9,420 -11,543' -11,488' -10,490 -10,809 -9,640 -11,288 -11,455 -9,692 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 29,099 44,078 68,035 90,823 94,145 92,366 93,733 96,484 92,254 94,067 88,988 17 Term agreements 52,493 68,357 80,509 109,742 112,611 108,761 111,452 109,192 116,604 106,960 106,733 Repurchase agreements5 18 Overnight and continuing 57,946 75,717 101,410 141,918 140,171 137,536 138,711 145,160 130,323 141,746 138,596 19 Term agreements 44,410 57,047 77,748 103,705 107,095 102,427 105,526 98,839 112,296 99,536 96,700 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 Dec. Jan. Feb. Mar. Apr. May 1 Federal and federally sponsored agencies 237,787 240,068 271,220 293,905 290,596 292,043 291,525 293,336 n.a. 2 Federal agencies 33,055 33,940 35,145 36,390 36,400 36,376 35,927 35,530 36,110 3 Defense Department1 354 243 142 71 66 63 59 55 52 4 Export-Import Bank2-3 14,218 14,853 15,882 15,678 15,677 15,677 15,257 15,257 15,256 5 Federal Housing Administration4 288 194 133 115 113 109 108 114 118 6 Government National Mortgage Association participation certificates5 2,165 2,165 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service6 1,471 1,404 1,337 1,940 1,940 1,940 1,940 1,940 1,940 8 Tennessee Valley Authority 14,365 14,970 15,435 16,347 16,365 16,348 16,324 15,925 16,505 9 United States Railway Association6 194 111 51 74 74 74 74 74 74 10 Federally sponsored agencies7 204,732 206,128 236,075 257,515 254,196 255,667 255,598 257,806 n.a. 11 Federal Home Loan Banks 55,967 48,930 65,085 74,447 73,201 73,201 74,778 76,527 78,718 12 Federal Home Loan Mortgage Corporation 4,524 6,793 10,270 11,926 13,044 13,695 12,963 13,492 n.a. 13 Federal National Mortgage Association 70,052 74,594 83,720 93,896 92,658 93,179 92,414 92,401 92,629 14 Farm Credit Banks 73,004 72,816 71,193 68,851 66,600 66,188 65,930 65,188 64,629 15 Student Loan Marketing Association8 2,293 3,402 5,745 8,395 8,693 9,404 9,513 10,198 10,400 MEMO 16 Federal Financing Bank debt 126,424 135,791 145,217 153,373 153,709 153,418 153,455 153,508 155,076 Lending to federal and federally sponsored 17 Export-Import Bank3 14,177 14,789 15,852 15,670 15,670 15,670 15,250 15,250 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 14,622 14,690 14,673 14,649 14,250 14,830 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 64,234 64,354 63,774 63,464 63,829 64,544 23 Rural Electrification Administration 17,157 19,766 20,693 20,654 20,678 20,739 20,959 21,061 21,154 24 Other 22,774 26,460 29,853 31,429 31,553 31,798 32,369 32,354 32,534 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 • September 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 All issues, new and refunding1 86,421 106,641 214,189 20,780 32,144 57,430 1,572 3,255 7,636 11,914 13,262 Type of issue 2 General obligation 21,566 26,485 52,622 5,852 6,695 8,754 751 1,021 2,895 4,815 8,468 3 U.S. government loans2 96 16 14 0 0 0 0 0 n.a. n.a. n.a. 4 Revenue 64,855 80,156 161,567 14,928 25,449 48,676 821 2,234 4,741 7,099 4,794 5 U.S. government loans2 253 17 27 6 7 0 0 0 n.a. n.a. n.a. Type of issuer 6 State 7,140 9,129 13,004 1,337 1,648 2,146 296 255 n.a. n.a. n.a. 7 Special district and statutory authority 51,297 63,550 134,363 12,374 21,563 39,147 579 1,715 n.a. 8 Municipalities, counties, townships, school districts 27,984 33,962 66,822 6,371 21,563 16,137 697 1,285 n.a. n.a. n.a. 9 Issues for new capital, total 72,441 94,050 156,050 13,984 21,362 46,788 1,350 1,887 2,763 6,405 6,856 Use of proceeds 10 Education 8,099 7,553 16,658 1,518 1,954 3,901 370 422 i 1 1 11 Transportation 4,387 7,552 12,070 1,264 3,734 3,480 246 347 T T t 12 Utilities and conservation 13,588 17,844 26,852 2,924 3,266 7,070 315 212 13 Social welfare 26,910 29,928 63,181 4,305 8,672 22,589 6 110 i 1 | 14 Industrial aid 7,821 15,415 12,892 1,507 2,029 3,583 0 190 1 1 1 15 Other purposes 11,637 15,758 24,398 2,466 1,707 6,165 413 606 1 t T 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May p 1 All issues' 120,299 132,531 201,501 11,595 13,568 19,429 16,981 23,901 30,341' 33,297 18,631 2 Bonds2 68,718 109,903 165,986 9,271 10,913 14,440 13,581 19,439 24,82<K 27,691 13,200 Type of offering 3 Public 47,594 73,579 119,789 9,271 10,913 14,440 13,581 19,439 24,82(K 27,691 13,200 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 1,953 4,072 2,704 4,5% 3,950 8,895 7,975 3,939 6 Commercial and miscellaneous 7,540 13,726 15,215 898 933 735 624 1,216 790 2,640 1,776 7 Transportation 3,833 4,694 5,743 348 125 187 633 373 303' 614 All 8 Public utility 9,125 10,679 12,957 863 1,114 1,090 820 2,540 2,133 3,330 1,709 9 Communication 3,642 2,997 10,456 690 100 2,318 0 1,200 1,907 3,115 712 10 Real estate and financial 27,577 53,199 69,337 4,519 4,569 7,407 6,908 10,160 10,793 10,017 4,637 11 Stocks3 51,579 22,628 35,515 2,324 2,655 4,989 3,400 4,462 5,521 5,606 5,431 Type 12 Preferred 7,213 4,118 6,505 406 782 908 570 975 1,160 751 781 13 Common 44,366 18,510 29,010 1,918 1,873 4,081 2,830 3,487 4,361 4,855 4,650 Industry group 14 Manufacturing 14,135 4,054 5,700 279 746 1,045 827 1,269 851 1,434 807 15 Commercial and miscellaneous 13,112 6,277 9,149 403 596 1,220 683 434 607 910 938 16 Transportation 2,729 589 1,544 113 21 200 78 302 355 158 372 17 Public utility 5,001 1,624 1,966 408 12 201 176 153 357 165 346 18 Communication 1,822 419 978 41 5 146 231 282 0 27 71 19 Real estate and financial 14,780 9,665 16,178 1,080 1,275 2,177 1,405 2,022 3,351 2,912 2,897 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, SOURCES. IDD Information Services, Inc., Securities and Exchange Commisemployee stock plans, investment companies other than closed-end, intracorpo- sion and the Board of Governors of 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May INVESTMENT COMPANIES' 1 Sales of own shares2 107,480 222,670' 22,099 20,585 23,560 32,466 27,489 33,764 37,656 31,459 2 Redemptions of own shares3 77,032 132,440 10,653 11,138 18,337 15,836 11,860 15,085 21,699 16,439 3 Net sales 30,448 90,23(Y 11,446 9,447 5,223 16,630 15,629 18,679 15,957 15,020 4 Assets4 137,126 251,695 218,720 237,410 251,536 265,487 292,002 315,245 329,684 343,773 5 Cash position5 12,181 20,607 21,987 21,894 20,590 22,425 23,716 27,639 29,599 29,425 6 Other 124,945 231,088 196,733 215,516 230,946 243,062 268,286 287,606 300,085 314,348 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 Q1 Q2 Q3 Q4 QL' 1 Corporate profits with inventory valuation and capital consumption adjustment 213.7 264.7 280.6 271.7 259.8 265.0 266.4 274.3 296.3 285.6 296.4 2 Profits before tax 207.6 235.7 223.1 246.5 225.1 221.9 213.8 213.8 229.2 235.8 224.3 3 Profits tax liability 77.2 95.4 91.8 101.6 89.3 87.8 87.8 87.1 95.8 96.4 89.1 4 Profits after tax 130.4 140.3 131.4 144.8 135.8 134.1 126.0 126.7 133.4 139.4 135.2 5 Dividends 71.5 78.3 81.6 78.1 79.0 80.1 80.9 81.4 81.6 82.5 85.2 6 Undistributed profits 58.8 62.0 49.8 66.7 56.8 54.0 45.1 45.3 51.8 57.0 50.0 7 Inventory valuation -10.9 -5.5 -.6 -4.9 -1.8 -1.6 -.5 1.6 6.1 -9.4 16.5 8 Capital consumption adjustment 17.0 34.5 58.1 30.2 36.5 44.7 53.2 58.9 61.0 59.2 55.6 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • September 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 11998866'' Q4 Ql Q2 Q3 Q4 Ql Q21 Q3' 1 Total nonfarm business 354.44 386.41 387.25 368.29 371.16 387.83 388.90 397.74 376.08 387.42 388.87 3 2 M N D a u o n r n u a d f b a u l c e r t a ur b g in o le g o d g s o o in d d s u i s n t d ri u e s s t ries 6 7 6 2 . .5 2 8 4 8 7 0 3 . . 0 1 1 4 7 7 7 2 . . 0 0 9 9 7 7 5 1 . . 5 4 3 3 7 69 5 . . 8 7 7 8 8 73 0 . .3 % 6 7 8 2 1 . . 8 1 5 9 8 75 2 . . 8 7 7 0 7 6 5 7 . . 3 7 2 4 7 7 5 2 . . 8 2 0 0 7 7 7 1 . . 0 4 4 2 4 N M o i n n m in a g n ufacturing 16.86 15.88 12.35 17.00 15.66 16.51 15.94 15.40 12.85 12.61 12.49 7 6 S Tra O A R n a t ir s h i p l e r o r o r a t d a tion 6 3 6 . . . 1 5 7 7 6 9 6 4 7 . . . 7 0 1 8 6 3 5 6 5 . . . 7 4 9 4 4 8 6 6 3 . . .6 4 1 5 4 8 4 6 6 . . . 0 2 0 1 0 2 6 3 7 . . . 3 4 6 7 8 6 5 5 8 . . . 7 1 2 7 3 0 6 6 6. . . 6 0 3 1 6 9 6 5 5 . . . 5 8 4 4 2 0 5 6 5 . . . 1 9 9 1 5 4 6 5 7 . . . 3 7 1 1 8 2 1 9 8 0 C Pu o G E b m l l a i m e s c c e t a u r r n c i t d c i i l a i o l t i t e a h s n e d r other2 1 3 3 1 7 4 0 . . . 0 7 4 3 5 4 1 3 1 5 6 2 0 . . . 1 6 6 2 7 2 1 3 1 6 3 2 1 . . . 6 7 1 5 5 6 1 3 1 4 5 1 1 . . . 4 5 1 0 2 3 1 3 1 4 6 1 5 . . . 6 8 1 5 1 6 1 3 1 5 6 2 1 . . . 0 4 0 4 3 2 1 3 5 1 5 1 2 . . . 3 6 8 4 9 0 1 3 1 5 6 3 4 . . . 4 8 4 5 1 4 1 3 1 5 4 2 5 . . . 3 8 2 3 2 7 1 3 1 6 4 3 1 . . . 4 2 1 9 2 0 1 3 6 1 2 3 2 . . . 5 7 3 9 3 9 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 Q1 Q2 Q3 Q4 Q1 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 ? Business 100.3 101.4 113.4 124.5 135.2 142.1 144.6 141.4 152.8 159.7 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 n 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 MMMaaayyy 333111,,, 111999888666""" Mar. Apr. May Mar. Apr. May Mar. Apr. May 1 159,649 2,668 464 -185 27,526 26,378 25,780 24,858 25,915 25,966 Retail financing of installment sales 2 Automotive (commercial vehicles) 15,751 126 197 421 1,044 1,115 1,358 918 918 936 3 Business, industrial, and farm equipment 20,189 27 -135 68 805 858 1,015 778 993 947 Wholesale financing 4 Automotive 26,288 2,097 169 -679 10,900 9,897 9,455 8,803 9,728 10,134 5 Equipment 4,745 63 70 3 526 545 467 463 475 464 6 All other 7,546 168 -73 -303 1,631 1,657 1,575 1,463 1,730 1,878 Leasing 7 Automotive 16,200 46 284 3 814 770 840 768 486 837 8 Equipment 39,932 -194 59 -38 1,309 1,275 1,256 1,503 1,216 1,294 9 Loans on commercial accounts receivable and factored commercial accounts receivable 16,886 322 -385 498 9,209 8,784 8,572 8,887 9,168 8,074 10 All other business credit 12,112 13 277 -159 1,288 1,477 1,244 1,275 1,200 1,402 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 • September 1986 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1985 1986 Dec. Ian. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 92.8 96.8 104.1 111.5 108.4 115.1 108.2 114.2 114.7' 123.2 2 Amount of loan (thousands of dollars) 69.5 73.7 77.4 80.3 77.6 84.3 79.6 83.9 83.0' 88.6 3 Loan/price ratio (percent) 77.1 78.7 77.1 75.0 74.4 75.6 75.4 75.9 74.7' 74.8 4 Maturity (years) 26.7 27.8 26.9 26.7 25.4 26.8 26.9 25.9 25.8' 26.7 5 Fees and charges (percent of loan amount)2 2.40 2.64 2.53 2.59 2.55 2.64 2.60 2.34 2.19 2.43 6 Contract rate (percent per annum) 12.20 11.87 11.12 10.47 10.40 10.21 10.04 9.87 9.84' 9.72 Yield (percent per annum) 7 FHLBB series3 12.66 12.37 11.58 10.94 10.89 10.68 10.50 10.27 10.22' 10.14 8 HUD series4 13.43 13.80 12.28 11.03 10.82 10.49 10.06 9.99 10.32' 10.38 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 13.11 13.81 12.24 10.70 10.78 10.59 9.77 9.80 10.07 9.98 10 GNMA securities6 12.25 13.13 11.61 10.39 10.25 9.79 9.44 9.17 9.23 9.57 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 74,847 83,339 94,574 98,282 98,671 98,820 98,795 98,746 98,096 97,295 12 FHA/VA-insured 37,393 35,148 34,244 33,684 33,583 33,466 33,368 33,246 32,558 31,241 13 Conventional 37,454 48,191 60,331 64,598 65,088 65,354 65,427 65,500 65,538 66,054 Mortgage transactions (during period) 14 Purchases 17,554 16,721 21,510 1,663 1,188 1,159 1,410 1,631 1,978 3,000 15 3,528 978 1,301 319 0 n.a. n.a. n.a. n.a. n.a. Mortgage commitments7 16 Contracted (during period) 18,607 21,007 20,155 1,858 1,315 2,578 1,917 3,774 3,538 3,049 17 Outstanding (end of period) 5,461 6,384 3,402 3,402 3,211 4,480 4,851 6,942 8,444 7,862 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period 18 Total 5,996 9,283 12,399 14,022 14,412 14,584 13,623 13,144 14,302 n.a. 19 FHA/VA 974 910 841 825 800 792 787 778 769 n.a. 20 Conventional 5,022 8,373 11,558 13,197 13,612 14,584 12,836 12,366 13,533 n.a. Mortgage transactions (during period) 21 Purchases 23,089 21,886 44,012 6,096 3,709 4,605 5,318 6,195 8,947 n.a. 22 Sales 19,686 18,506 38,905 5,202 3,107 4,286 5,897 5,591 7,354 n.a. Mortgage commitments9 23 Contracted (during period) 32,852 32,603 48,989 5,651 5,305 6,044 7,128 9,869 10,612 n.a. 24 Outstanding (end of period) 16,964 13,318 16,613 16,613 n.a. n.a. n.a. n.a. n.a. n.a. 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associamajor institutional lender groups; compiled by the Federal Home Loan Bank tion guaranteed, mortgage-backed, fully modified pass-through securities, assum- Board in cooperation with the Federal Deposit Insurance Corporation. ing prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the 2. Includes all fees, commissions, discounts, and "points" paid (by the prevailing ceiling rate. Monthly figures are averages of Friday figures from the borrower or the seller) to obtain a loan. Wall Street Journal. 3. Average effective interest rates on loans closed, assuming prepayment at the 7. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. 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 QL Q2 Q3 Q4 QL 1 1,811,540 2,024,483 2,256,778 2,071,279 2,128,471 2,190,661 2,256,778 2,303,698 7 1,189,811 1,319,667 1,471,012 1,347,511 1,384,248 1,427,675 1,471,012 1,497,458 3 158,718 179,074 204,311 184,886 190,004 195,488 204,311 208,784 4 350,389 414,040 474,755 427,242 443,400 458,735 474,755 491,823 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 8 182,514 197,225 214,817 199,617 204,439 210,203 214,817 218,354 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 P 131,940 154,441 177,278 161,032 165,705 174,427 177,278 188,177 13 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 IS 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 ">3 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 7S 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 78 Federal and related agencies 148,328 158,993 166,978 163,531 165,912 166,248 166,978 166,097 79 Government National Mortgage Association 3,395 2,301 1,473 1,964 1,825 1,640 1,473 1,533 30 630 585 539 576 564 552 539 527 31 Multifamily 2,765 1,716 934 1,388 1,261 1,088 934 1,006 37 Farmers Home Administration 2,141 1,276 733 1,062 790 577 733 704 33 1,159 213 183 156 223 185 183 217 34 173 119 113 82 136 139 113 33 35 Commercial 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 44,,991188 44,,992200 44,,995577 38 1,893 2,048 2,254 2,181 2,199 2,251 2,254 2,301 39 Multifamily 3,001 2,768 2,666 2,697 2,689 2,667 2,666 2,656 40 Federal National Mortgage Association 78,256 87,940 98,282 91,975 94,777 96,769 98,282 98,795 41 1- to 4-family 73,045 82,175 91,966 86,129 88,788 90,590 91,966 92,315 42 5,211 5,765 6,316 5,846 5,989 6,179 6,316 6,480 43 Federal Land Banks 52,010 52,261 47,548 52,104 51,056 49,255 47.548 46,485 44 3,081 3,074 2,798 3,064 3,006 2,895 2,798 2,735 45 Farm 48,929 49,187 44,750 49,040 48,050 46,360 44,750 43,750 46 Federal Home Loan Mortgage Corporation 7,632 10,399 14,022 11,548 12,576 13,089 14,022 13,623 47 7,559 9,654 11,881 10,642 11,288 11,457 11,881 12,231 48 73 745 2,141 906 1,288 1,632 2,141 1,392 49 Mortgage pools or trusts3 285,073 332,057 415,042 347,793 365,748 388,948 415,042 440,701 50 Government National Mortgage Association 159,850 179,981 212,145 185,954 192,925 201,026 212,145 220,348 51 155,950 175,589 207,198 181,419 188,228 196,198 207,198 215,148 52 Multifamily 3,900 4,392 4,947 4,535 4,697 4,828 4,947 5,200 53 Federal Home Loan Mortgage Corporation 57,895 70,822 100,387 76,759 83,327 91,915 100,387 110,337 54 57,273 70,253 99,515 75,781 82,369 90,997 99,515 108,020 55 Multifamily 622 569 872 978 958 918 872 2,317 56 Federal National Mortgage Association 25,121 36,215 54,987 39,370 42,755 48,769 54,987 62,310 57 25,121 35,965 54,036 38,772 41,985 47,857 54,036 61,117 58 n.a. 250 951 598 770 912 951 1,193 59 Farmers Home Administration 42,207 45,039 47,523 45,710 46,741 47,238 47,523 47,706 60 20,404 21,813 22,186 21,928 21,962 22,090 22,186 22,082 61 Multifamily 5,090 5,841 6,675 6,041 6,377 6,415 6,675 6,943 6? Commercial 7,351 7,559 8,190 7,681 8,014 8,192 8,190 8,150 63 Farm 9,362 9,826 10,472 10,060 10,388 10,541 10,472 10,531 64 Individuals and others4 247,358 263,933 284,430 268,415 273,337 279,351 284,430 289,019 65 141,758 151,871 164,710 153,574 157,807 162,970 164,710 167,604 66 38,786 42,017 45,417 43,715 43,520 44,100 45,417 46,103 67 35,169 40,977 47,108 42,081 43,344 44,511 47,108 48,375 68 Farm 31,645 29,068 27,195 29,045 28,666 27,770 27,195 26,937 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 • September 1986 1.55 CONSUMER INSTALLMENT CREDIT1-4 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1985 1986 noiuei, duu ype oi creuu 11998844 11998855 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Amounts outstanding (end of period) 1 Total 453,580 535,098 516,420 522,978 528,621 535,098 542,753 547,852 550,939 555,235' 560,625 By major holder 2 Commercial banks 209,158 240,796 233,545 235,364 238,620 240,796 243,256 244,761 245,172 247,498' 248,195 3 Finance companies2 96,126 120,095 114,927 117,565 118,356 120,095 123,717 126,001 127,422 128,154 130,625 4 Credit unions 66,544 75,127 72,433 73,474 74,117 75,127 75,810 76,431 76,953 77,957' 78,117 Retailers3 37,061 39,187 38,723 38,890 39,039 39,187 39,416 39,497 39,844 39,826 40,139 6 Savings institutions 40,330 55,555 52,656 53,509 54,307 55,555 56,290 57,048 57,573 58,024 59,995 / Gasoline companies 4,361 4,337 4,136 4,176 4,182 4,337 4,264 4,114 3,975 3,777 3,554 By major type of credit 8 Automobile 173,122 206,482 198,656 201,994 203,766 206,482 210,661 213,342 214,361 215,239' 218,058 y Commercial banks 83,900 92,764 90,784 91,402 92,127 92,764 93,489 93,828 93,377 93,013' 92,987 10 Credit unions 28,614 30,577 29,556 29,904 30,166 30,577 30,855 31,107 31,320 3311,,772288'' 31,793 n Finance companies 54,663 73,391 69,201 71,415 71,996 73,391 76,410 78,310 79,416 8800,,111111 82,674 12 Savings institutions 5,945 9,750 9,115 9,273 9,477 9,750 9,907 10,097 10,248 10,386 10,604 13 Revolving 98,514 118,296 113,850 115,218 117,050 118,296 119,682 120,724 122,131 123,442' 124,367 14 Commercial banks 58,145 73,893 70,453 71,507 73,076 73,893 74,991 75,953 77,021 78,421' 79,000 15 Retailers 33,064 34,560 34,264 34,382 34,486 34,560 34.770 34,843 35,188 35,170 35,449 16 Gasoline companies 4,361 4,337 4,136 4,176 4,182 4,337 4,264 4,114 3,975 3,777 3,554 17 Savings institutions 2,944 5,506 4,997 5,153 5,306 5,506 5,657 5,813 5,947 6,075 6,366 18 Mobile home 24,184 25,461 25,341 25,320 25,315 25,461 25,371 25,573 25,584 25,513' 25,505 iy Commercial banks 9,623 9,578 9,662 9,5% 9,584 9,578 9,457 9,566 9,348 9,264' 9,190 20 Finance companies 9,161 9,116 9,092 9,089 9,057 9,116 9,125 9,161 9,327 9,286 9,115 21 Savings institutions 5,400 6,767 6,587 6,635 6,674 6,767 6,789 6,846 6,909 6,963 7,199 22 Other 157,760 184,859 178,573 180,446 182,490 184,859 187,039 188,212 188,863 191,041' 192,694 23 Commercial banks 57,490 64,561 62,646 62,859 63,833 64,561 65,319 65,414 65,427 66,80C 67,018 24 Finance companies 32,302 37,588 36,634 37,061 37,303 37,588 38,182 38,530 38,678 38,757 38,836 23 Credit unions 37,930 44,550 42,877 43,570 43,951 44,550 44,955 45,323 45,633 46,228' 46,323 26 Retailers 3,997 4,627 4,459 4,508 4,553 4,627 4,646 4,653 4,656 4,656 4,690 2/ Savings institutions 26,041 33,533 31,957 32,448 32,850 33,533 33,937 34,291 34,469 34,600 35,827 Net change (during period) 28 Total 77,341 81,518 10,330 6,558 5,643 6,477 7,655 5,099 3,087 4,296' 5,390 By major holder 2y Commercial banks 39,819 31,638 2,901 1,819 3,256 2,176 2,460 1,505 411 2,326' 697 30 Finance companies2 9,961 23,969 5,470 2,638 791 1,739 3,622 2,284 1,421 732 2,471 31 Credit unions 13,456 8,583 495 1,041 643 1,010 683 621 522 1,004' 160 32 Retailers3 2,900 2,126 -28 167 149 148 229 81 347 -18 313 33 Savings institutions 11,038 15,225 1,541 853 798 1,248 735 758 525 451 1,971 34 Gasoline companies 167 -24 -49 40 6 155 -73 -150 -139 -198 -223 By major type of credit 33 Automobile 27,214 33,360 5,733 3,338 1,772 2,716 4,179 2,681 1,019 878' 2,819 36 Commercial banks 16,352 8,864 550 618 725 637 725 339 -451 -364' -26 37 Credit unions 3,223 1,963 -219 348 262 411 278 252 213 408' 65 38 Finance companies 4,576 18,728 5,130 2,214 581 1,395 3,019 1,900 1,106 695 2,563 3y Savings institutions 3,063 3,805 272 158 204 273 157 190 151 138 218 40 Revolving 20,145 19,782 1,477 1,368 1,832 1,246 1,386 1,042 1,407 1,311' 925 41 Commercial banks 15,949 15,748 1,374 1,054 1,569 817 1,098 962 1,068 1,400' 579 42 Retailers 2,512 1,496 -66 118 104 74 210 73 345 -18 279 43 Gasoline companies 167 -24 -49 40 6 155 -73 -150 -139 -198 -223 44 Savings institutions 1,517 2,562 218 156 153 200 151 156 134 128 291 45 Mobile home 1,990 1,277 168 -21 -5 146 -90 202 11 -71' -8 46 Commercial banks -199 -45 54 -66 -12 -6 -121 109 -218 -84' -74 47 Finance companies 544 -45 -22 -3 -32 59 9 36 166 -41 -171 48 Savings institutions 1,645 1,367 136 48 39 93 22 57 63 54 236 49 Other 27,992 27,099 2,952 1,873 2,044 2,369 2,180 1,173 651 2,178' 1,653 50 Commercial banks 7,717 7,071 923 213 974 728 758 95 13 1,373' 218 51 Finance companies 4,841 5,286 362 427 242 285 594 348 148 79 79 32 Credit unions 10,233 6,620 714 693 381 599 405 368 310 595' 95 53 Retailers 388 630 38 49 45 74 19 7 3 0 34 54 Savings institutions 4,813 7,492 915 491 402 683 404 354 178 131 1,227 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 Nov. Dec. Jan. Feb. Mar. Apr. May INTEREST RATES Commercial banks' 1 48-month new car2 13.92 13.71 12.91 12.39 n.a. n.a. 12.29 n.a. n.a. 11.45 7 24-month personal 16.68r 16.47 15.94 15.61 n.a. n.a. 15.52 n.a. n.a. 14.89 3 120-month mobile home2 16.08 15.58 14.96 14.66 n.a. n.a. 14.57 n.a. n.a. 13.97 4 Credit card 18.78 18.77 18.69 18.57 n.a. n.a. 18.48 n.a. n.a. 18.32 Auto finance companies New car 12.58 14.62 11.98 11.71 12.52 9.99 9.70 10.51 10.55 9.49 6 Used car 18.74 17.85 17.59 17.28 17.22 16.60 16.74 16.63 16.67 16.56 OTHER TERMS3 Maturity (months) 7 New car 45.9 48.3 51.5 52.0 52.1 51.2 51.3 51.0 50.6 49.4 8 Used car 37.9 39.7 41.4 41.5 41.4 42.8 42.5 42.4 42.5 42.5 Loan-to-value ratio 9 New car 86 88 91 92 92 92 92 90 89 89 10 Used car 92 92 94 95 95 95 95 95 96 97 Amount financed (dollars) 11 New car 8,787 9,333 9,915 10,205 9,925 10,064 10,074 10,306 10,402 10,521 12 Used car 5,033 5,691 6,089 6,167 6,255 6,165 6,194 6,207 6,281 6,393 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 Nonfinancial Statistics • September 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 & y, set-, or 11998811 - HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .... 341.8 372.7 395.3 542.9 765.9 898.2 506.0 579.7 713.4 818.4 729.2 11,,006666..66 By sector and instrument 2 U.S. government 79.2 87.4 161.3 186.6 198.8 223.6 221.9 151.2 172.2 225.4 183.2 263.6 3 Treasury securities 79.8 87.8 162.1 186.7 199.0 223.7 222.0 151.4 172.4 225.5 183.3 263.7 4 Agency issues and mortgages -.6 -.5 -.9 -.1 -.2 -.1 -.1 -.1 -.2 -.1 -.1 -.1 5 Private domestic nonfinancial sectors 262.6 285.3 234.1 356.3 567.1 674.5 284.1 428.5 541.2 593.1 546.0 803.0 6 Debt capital instruments 188.1 154.5 152.6 253.7 325.3 492.9 227.3 280.1 287.7 362.8 370.0 615.2 / Tax-exempt obligations 30.3 23.4 48.6 57.3 65.8 182.8 57.3 57.4 38.9 92.6 88.3 277.2 8 Corporate bonds 26.7 21.8 18.7 16.0 47.1 72.9 21.4 10.6 31.9 62.3 71.9 73.2 9 Mortgages 131.2 109.3 85.4 180.3 212.4 237.3 148.6 212.1 216.9 207.9 209.8 264.9 10 Home mortgages 94.2 72.2 50.5 116.9 130.7 155.3 98.7 135.2 135.6 125.7 130.8 180.0 11 Multifamily residential 7.6 4.8 5.4 11.9 20.7 26.1 6.1 17.6 23.6 17.7 22.3 30.0 12 Commercial 19.2 22.2 25.2 48.9 62.0 60.8 42.2 55.7 58.5 65.6 59.0 62.7 13 Farm 10.2 10.0 4.2 2.6 -1.0 -5.0 1.6 3.6 -.8 -1.2 -2.2 -7.8 14 Other debt instruments 74.5 130.8 81.4 102.6 241.9 181.6 56.8 148.4 253.5 230.2 175.9 187.7 15 Consumer credit 4.7 22.6 17.7 56.7 94.8 96.6 38.0 75.4 98.0 91.6 98.3 95.0 16 Bank loans n.e.c 37.0 54.7 54.2 26.8 79.5 39.4 13.7 39.8 89.9 69.0 28.3 51.0 1/ Open market paper 5.7 19.2 -4.7 -1.6 24.2 12.4 -10.0 6.9 33.5 15.0 16.9 7.9 18 Other 27.1 34.4 14.2 20.7 43.3 33.2 15.1 26.3 32.1 54.6 32.5 33.9 19 By borrowing sector 262.6 285.3 234.1 356.3 567.1 674.5 284.1 428.5 541.2 593.1 546.0 803.0 20 State and local governments 17.2 6.8 25.9 37.6 45.0 140.9 36.0 39.2 21.4 68.6 74.1 207.6 21 Households 118.9 119.7 87.9 187.4 239.2 294.0 152.3 222.6 236.0 242.3 244.3 343.9 22 Farm 15.2 16.6 6.8 4.1 -.1 -11.9 .8 7.4 -.7 .5 -7.6 -16.2 23 Nonfarm noncorporate 31.2 38.6 41.3 70.8 90.8 85.4 56.1 85.5 96.9 84.7 84.4 86.4 24 Corporate 80.1 103.6 72.1 56.4 192.3 166.1 39.0 73.8 187.7 196.9 150.7 181.2 25 Foreign net borrowing in United States 27.2 27.2 15.7 18.9 2.8 1.5 15.4 22.4 23.0 -17.4 -3.2 6.2 26 Bonds .8 5.4 6.7 3.8 4.1 3.9 4.6 2.9 1.1 7.0 5.1 2.7 21 Bank loans n.e.c 11.5 3.7 -6.2 4.9 -7.8 -3.1 11.4 -1.6 -4.5 -11.1 -5.4 -.8 28 Open market paper 10.1 13.9 10.7 6.0 2.5 -.6 -4.6 16.5 20.9 -16.0 -5.4 4.2 29 U.S. government loans 4.7 4.2 4.5 4.3 4.0 1.3 3.9 4.6 5.5 2.6 2.4 .1 30 Total domestic plus foreign 369.0 399.9 411.0 561.7 768.7 899.7 521.3 602.1 736.4 801.0 725.9 1,072.8 Financial sectors 31 Total net borrowing by financial sectors 57.6 89.0 80.2 89.2 138.2 193.7 69.1 109.3 126.5 149.9 167.2 220.1 By instrument 32 U.S. government related 44.8 47.4 64.9 67.8 74.9 101.6 66.2 69.4 69.6 80.1 92.7 110.4 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 79.9 70.3 62.5 39.7 49.2 66.7 93.1 ^ 1.2 1.9 .4 1 l 2 2 36 Private financial sectors 12.8 41.6 15.3 21.4 63.3 92.1 2.9 40.0 56.9 69.7 74.5 109.7 3/ Corporate bonds 1.8 3.5 13.7 12.6 25.9 31.2 10.3 14.9 20.7 31.1 32.2 29.8 38 Mortgages * * .1 * .4 .1 * * .4 .4 .1 39 Bank loans n.e.c -.9 .9 1.9 -.2 1.0 5.3 -3.3 3.0 -.5 2.4 1.7 9.2 40 Open market paper 4.8 20.9 -1.1 16.0 20.4 41.3 7.9 24.1 20.4 20.4 28.8 53.9 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 11.7 16.7 By sector 42 Sponsored credit agencies 25.6 32.4 15.3 1.4 30.4 21.7 -4.1 6.9 29.9 30.9 26.0 17.3 43 Mortgage pools 19.2 15.0 49.5 66.4 44.4 79.9 70.3 62.5 39.7 49.2 66.7 93.1 44 Private financial sectors 12.8 41.6 15.3 21.4 63.3 92.1 2.9 40.0 56.9 69.7 74.5 109.7 45 Commercial banks .5 .4 1.2 .5 4.4 5.4 .8 .2 4.8 3.9 5.2 5.7 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 22.1 -9.3 5.2 19.7 25.6 11.1 33.0 48 Finance companies -1.1 18.2 6.3 11.3 19.3 55.9 2.1 20.5 6.3 32.4 49.6 62.2 49 REITs -.5 -.2 * -.2 .8 .5 -.1 -.3 .8 .8 .5 .5 All sectors 50 Total net borrowing 426.6 488.9 491.2 651.0 906.9 1093.4 590.4 711.5 863.0 950.9 893.2 1,292.9 51 U.S. government securities 122.9 133.0 225.9 254.4 273.8 324.2 288.2 220.7 241.9 305.6 276.0 371.9 52 State and local obligations 30.3 23.4 48.6 57.3 65.8 182.8 57.3 57.4 38.9 92.6 88.3 277.2 53 Corporate and foreign bonds 29.3 30.7 39.0 32.4 77.1 108.0 36.3 28.4 53.8 100.5 109.3 105.7 54 Mortgages 131.1 109.2 85.4 180.3 212.7 237.3 148.6 212.0 217.2 208.2 209.8 264.9 55 Consumer credit 4.7 22.6 17.7 56.7 94.8 96.6 38.0 75.4 98.0 91.6 98.3 95.0 56 Bank loans n.e.c 47.7 59.2 49.9 31.5 72.7 41.7 21.8 41.2 84.9 60.4 24.6 59.4 57 Open market paper 20.6 54.0 4.9 20.4 47.1 53.1 -6.7 47.5 74.8 19.3 40.4 66.0 58 Other loans 40.1 56.7 19.9 17.9 63.0 49.7 6.9 29.0 53.4 72.7 46.6 52.9 External corporate equity funds raised in United States 59 Total new share issues 21,2 -3.3 33.6 66.3 -33.6 32.9 81.9 50.7 -41.2 -25.9 25.7 40.1 60 Mutual funds 4.5 6.0 16.8 31.5 37.1 105.3 35.3 27.7 39.0 35.3 92.0 118.6 bl All other 16.8 -9.3 16.8 34.8 -70.7 -72.4 46.6 23.0 -80.2 -61.2 -66.3 -78.4 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 5.3 2.6 2.4 5.0 5.3 5.1 5.4 64 Foreign shares purchased in United States 2.1 .3 1.5 4.0 1.1 4.0 5.7 2.2 -.7 2.9 4.3 3.6 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 341.8 372.7 395.3 542.9 765.9 898.2 506.0 579.7 713.4 818.4 729.2 1,066.6 By public agencies and foreign ? Total net advances 97.1 97.7 114.1 117.4 144.6 216.4 120.5 114.4 124.2 116655..11 119977..66 223366..99 3 U.S. government securities 15.8 17.1 22.7 27.6 36.0 45.7 41.0 14.1 30.5 41.4 48.0 45.1 4 Residential mortgages 31.7 23.5 61.0 76.1 56.5 94.7 80.2 72.1 52.8 60.1 86.0 103.4 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 61.8 11.4 30.2 25.0 48.1 52.0 71.6 Total advanced, by sector 7 U.S. government 23.7 24.0 15.9 9.7 17.1 17.4 9.1 10.3 7.8 26.4 18.1 16.8 8 Sponsored credit agencies 45.6 48.2 65.5 69.8 73.3 101.6 68.6 71.0 73.6 73.0 97.7 105.5 9 Monetary authorities 4.5 9.2 9.8 10.9 8.4 21.6 15.7 6.1 12.1 4.7 27.1 16.4 10 Foreign 23.3 16.2 22.8 27.1 45.9 75.7 27.2 27.0 30.7 61.0 54.7 98.2 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 44.8 47.4 64.9 67.8 7744..99 101.6 66.2 69.4 69.6 80.1 9922..77 111100..44 12 Foreign 27.2 27.2 15.7 18.9 2.8 1.5 15.4 22.4 23.0 -17.4 -3.2 6.2 Private domestic funds advanced 13 Total net advances 316.7 349.6 361.8 512.1 699.0 784.9 467.1 557.1 681.8 716.1 621.0 946.3 14 U.S. government securities 107.1 115.9 203.1 226.9 237.8 278.5 247.2 206.6 211.4 264.2 228.0 326.8 15 State and local obligations 30.3 23.4 48.6 57.3 65.8 182.8 57.3 57.4 38.9 92.6 88.3 277.2 16 Corporate and foreign bonds 19.3 18.8 14.8 14.9 34.8 33.6 21.4 8.5 25.3 44.3 43.5 23.0 17 Residential mortgages 70.0 53.5 -5.3 52.6 94.8 86.7 24.6 80.6 106.3 83.3 67.0 106.5 18 Other mortgages and loans 97.1 154.2 101.4 153.0 281.5 217.6 104.6 202.0 315.8 247.1 205.9 229.6 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 283.8 321.7 288.4 384.6 555.6 555.2 332.0 437.2 552.5 558.7 448.9 659.9 71 Commercial banking 100.6 102.3 107.2 136.1 181.7 196.6 121.0 151.3 195.2 168.1 142.6 251.9 ?? Savings institutions 54.5 27.8 30.1 139.8 146.3 86.0 131.3 148.3 167.9 124.7 57.4 114.8 73 Insurance and pension funds 94.5 97.6 107.4 94.2 119.0 125.2 83.0 105.3 112.0 126.0 101.6 148.7 24 Other finance 34.2 94.0 43.7 14.5 108.6 147.4 -3.3 32.3 77.4 139.9 147.3 144.5 75 Sources of funds 283.8 321.7 288.4 384.6 555.2 555.2 332.0 437.2 552.5 558.7 448.9 659.9 76 Private domestic deposits and RPs 169.6 211.9 196.2 209.3 298.8 194.5 203.8 214.8 292.2 305.5 177.9 208.5 27 Credit market borrowing 12.8 41.6 15.3 21.4 63.3 92.1 2.9 40.0 56.9 69.7 74.5 109.7 78 Other sources 101.3 68.2 77.0 153.9 193.5 268.6 125.3 182.4 203.4 183.5 196.5 341.7 79 Foreign funds -21.7 -8.7 -26.7 22.1 19.0 14.0 -14.2 58.5 27.2 10.9 10.7 15.4 30 Treasury balances -2.6 -1.1 6.1 -5.3 4.0 10.3 9.9 -20.6 1.2 6.8 19.3 .7 31 Insurance and pension reserves 83.7 90.7 103.2 95.1 110.3 116.7 83.5 106.8 119.5 101.2 100.6 132.9 32 Other, net 41.8 -12.7 -5.6 41.9 60.1 127.6 46.1 37.7 55.5 64.6 66.0 192.7 Private domestic nonfinancial investors 33 Direct lending in credit markets 45.8 69.5 88.7 148.9 206.7 321.8 137.9 159.9 186.3 227.1 246.6 396.1 34 U.S. government securities 24.6 29.3 32.1 88.3 125.8 164.1 96.9 79.7 126.3 125.3 119.1 206.5 35 State and local obligations 7.0 11.1 29.2 43.5 43.2 90.4 47.2 39.9 25.3 61.2 47.0 133.6 36 Corporate and foreign bonds -11.0 -3.9 8.1 -5.5 15.3 3.1 -10.8 -.3 7.5 23.0 40.3 -32.4 37 Open market paper -3.1 2.7 -.6 6.5 -1.4 37.2 -6.6 19.7 3.2 -6.1 11.7 62.8 38 Other 28.4 30.3 19.9 16.1 23.8 27.1 11.3 20.8 24.0 23.7 28.5 25.7 39 Deposits and currency 181.1 221.9 203.3 228.4 303.4 206.9 225.6 231.3 303.6 303.2 191.8 219.3 40 Currency 10.3 9.5 9.7 14.3 8.6 12.4 14.8 13.8 15.9 1.3 18.5 6.3 41 Checkable deposits 5.4 18.1 17.6 26.7 24.1 43.5 53.0 -.4 30.4 17.7 15.9 69.3 4? Small time and savings accounts 82.9 47.0 138.1 218.3 149.8 128.8 278.9 157.7 130.7 169.0 156.6 100.6 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 14.3 -55.1 43.4 97.6 69.6 -.5 28.6 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 * 7.0 2.7 -4.5 -3.6 -4.5 4.5 47 Total of credit market instruments, deposits and currency 226.9 291.4 292.0 377.3 510.1 528.7 363.5 391.2 489.9 530.3 438.4 615.4 48 Public holdings as percent of total 26.3 24.4 27.8 20.9 18.8 24.0 23.1 19.0 16.9 20.6 27.2 22.1 49 Private financial intermediation (in percent) 89.6 92.0 79.7 75.1 79.5 70.7 71.1 78.5 81.0 78.0 72.3 69.7 50 Total foreign funds 1.6 7.6 -3.9 49.2 64.9 89.7 13.0 85.5 57.9 71.9 65.4 113.6 MEMO: Corporate equities not included above 51 Total net issues 21.2 -3.3 33.6 66.3 -33.6 32.9 81.9 50.7 -41.2 -25.9 25.7 4400..11 5? Mutual fund shares 4.5 6.0 16.8 31.5 37.1 105.3 35.3 27.7 39.0 35.3 92.0 118.6 53 Other equities 16.8 -9.3 16.8 34.8 -70.7 -72.4 46.6 23.0 -80.2 -61.2 -66.3 -78.4 54 Acquisitions by financial institutions 24.9 20.9 36.9 56.7 10.3 43.8 76.4 36.9 2.1 18.5 60.7 23.9 55 Other net purchases -3.6 -24.3 -3.3 9.6 -43.9 -10.9 5.5 13.7 -43.4 -44.5 -35.0 16.2 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 • September 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 Oct. Nov. Dec. Jan. Feb. Mar.' Apr.' May' June 1 Industrial production 109.2 121.8 124.5 124.4 125.4 126.4 126.7 125.6 124.4 125.2 124.7 124.1 Market groupings 2 Products, total 113.9 127.1 131.7 131.8 133.5 134.1 134.4 133.1 132.1 133.1 132.6 131.8 3 Final, total 114.7 127.8 132.0 131.9 133.7 134.4 134.4 132.8 131.5 132.6 131.9 131.2 4 Consumer goods 109.3 118.2 120.7 120.8 122.7 124.2 123.9 123.2 122.5 124.4 123.9 123.7 5 Equipment 121.7 140.5 147.1 146.6 148.3 147.9 148.4 145.5 143.4 143.5 142.6 141.1 6 Intermediate 111.2 124.9 130.6 131.5 132.7 132.9 134.4 134.1 134.1 135.0 134.9 134.0 7 Materials 102.8 114.6 114.7 114.2 114.3 115.9 116.2 115.4 114.0 114.4 113.9 113.4 Industry groupings 8 Manufacturing 110.2 123.9 127.1 127.2 128.4 129.1 129.8 128.8 128.0 128.9 128.6 127.9 Capacity utilization (percent)2 9 Manufacturing 74.0 80.8 80.3 79.6 80.2 80.4 80.7 79.8 79.1 79.5 79.2 78.6 10 Industrial materials industries 75.3 82.3 80.2 79.3 79.2 80.1 80.2 79.6 78.5 78.7 78.3 77.9 11 Construction contracts (1977 = 100)3 138.0 150.0 161.0 168.0 162.0 162.0 146.0 162.0 149.0 176.0 160.0 161.0 12 Nonagricultural employment, total4 109.4 114.5 118.5 119.4 119.6 119.9 120.4 120.6 120.6 121.0 121.1 121.0 13 Goods-producing, total 95.9 101.6 102.9 102.3 102.4 102.6 103.1 102.9 102.5 102.9 102.6 102.1 14 Manufacturing, total 93.6 98.6 98.7 97.7 97.8 98.0 98.0 98.0 97.8 97.8 97.5 97.2 15 Manufacturing, production-worker ... 88.6 94.1 93.5 92.4 92.5 92.7 92.7 92.6 92.4 92.4 92.1 91.9 16 Service-producing 115.0 120.0 125.0 126.5 126.9 127.2 127.6 128.0 128.2 128.6 128.9 129.0 17 Personal income, total 176.4 193.6 206.2 208.9' 209.8' 212.6' 212.6' 213.7' 214.3 216.8 216.2 216.4 18 Wages and salary disbursements 168.6 184.6 197.8 200.9' 202.3' 204.4' 204.8' 205.7' 206.4 206.6 206.9 207.6 19 Manufacturing 149.0 164.6 172.5' 174.2' 174.9' 176.8' 176.6' 176.2' 176.4 175.5 175.7 175.1 20 Disposable personal income5 184.2' 202.6' 214.6' 217.1' 217.9' 221.1' 221.6' 222.8' 223.7 226.6 225.8 225.7 21 Retail sales (1977 = 100)6 162.0 179.0 190.6 190.6 191.6 194.0 194.8 194.5 193.7 195.4 196.7 197.0 Prices7 22 Consumer 298.4 311.1 322.2 325.5 326.6 327.4 328.4 327.5 326.0 325.3 326.3 327.9 23 Producer finished goods 285.2 291.1 293.7 294.7 296.4 297.2 296.0 291.9' 288.1 286.9 289.0 288.9 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 Nov. Dec. Jan. Feb. Mar. Apr. May' June HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 176,414 178,602 180,440 181,186 181,349 181,898 182,055 182,223 182,387 182,545 182,732 2 Labor force (including Armed Forces)1 113,749 115,763 117,695 118,376 118,466 119,014 119,322 119,445 119,473 119,898 120,345 3 Civilian labor force 111,550 113,544 115,461 116,130 116,229 116,786 117,088 117,207 117,234 117,664 118,116 Employment 4 Nonagricultural industries2 97,450 101,685 103,971 104,899 105,055 105,655 105,465 105,503 105,670 105,950 106,508 5 Agriculture 3,383 3,321 3,179 3,070 3,151 3,299 3,0% 3,285 3,222 3,160 3,165 Unemployment 6 Number 10,717 8,539 8,312 8,161 8,023 7,831 8,527 8,419 8,342 8,554 8,443 7 Rate (percent of civilian labor force) ... 9.6 7.5 7.2 7.0 6.9 6.7 7.3 7.2 7.1 7.3 7.1 8 Not in labor force 62,665 62,839 62,745 62,810 62,883 62,884 62,733 62,778 62,914 62,647 62,387 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 90,196 94,461 97,698 98,666 98,910 99,296 99,429 99,484 99,78y 99,908 99,819 10 Manufacturing 18,434 19,412 19,426 19,259 19,289 19,303 19,294 19,255 19,245' 19,200 19,144 11 Mining 952 974 969 907 901 897 880 852 821 788 769 12 Contract construction 3,948 4,345 4,661 4,765 4,787 4,901 4,864 4,838 4,972r 4,976 4,946 13 Transportation and public utilities 4,954 5,171 5,300 5,272 5,277 5,286 5,277 5,280 5,266' 5,262 5,170 14 Trade 20,881 22,134 23,195 23,385 23,431 23,564 23,638 23,669 23,715' 23,771 23,743 15 Finance 5,468 5,682 5,924 6,070 6,095 6,123 6,157 6,184 6,228' 6,256 6,275 16 Service 19,694 20,761 21,929 22,415 22,501 22,585 22,638 22,707 22,825' 22,912 23,057 17 Government 15,869 15,984 16,295 16,593 16,629 16,637 16,681 16,699 16,711' 16,743 16,715 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 • September 1986 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1985 1986 1985 1986 1985 1986 Q3 Q4 Ql' Q2 Q3 Q4 Ql Q2 Q3 Q4 QK Q2 Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 124.8 125.4 125.6 124.7 155.1 156.2 157.2 158.1 80.5 80.3 79.9 78.8 2 Mining 108.5 107.6 105.1 100.5 133.9 134.1 134.3 134.3 81.0 80.2 78.3 74.8 3 Utilities 111.4 113.7 113.1 112.1 135.4 136.3 136.9 137.3 82.3 83.4 82.6 81.6 4 Manufacturing 127.6 128.2 128.9 128.5 158.9 160.2 161.3 162.4 80.3 80.0 79.9 79.1 5 Primary processing ... 109.5 110.4 111.7 110.7 132.4 132.8 133.2 133.6 82.7 83.1 83.8 82.9 6 Advanced processing . 138.6 139.0 139.1 139.2 174.9 176.7 178.3 179.7 79.2 78.7 78.0 77.5 7 Materials 114.2 114.8 115.2 113.9 143.4 144.3 145.0 145.5 79.6 79.5 79.4 78.3 8 Durable goods 120.7 121.4 121.6 119.2 158.9 160.5 161.6 162.2 76.0 75.6 75.3 73.5 9 Metal materials .... 79.4 82.4 80.2 76.2 117.3 117.3 116.7 115.6 67.7 70.3 68.7 65.9 10 Nondurable goods.... 113.7 113.8 115.7 116.4 138.2 138.7 139.1 139.4 82.2 82.0 83.2 83.5 11 Textile, paper, and chemical.. 114.1 114.0 116.2 116.6 137.4 137.8 138.1 138.4 83.0 82.7 84.1 84.3 12 Paper 123.8 124.5 128.3 n.a. 136.3 136.5 136.8 n.a. 90.8 91.2 93.8 n.a. 13 Chemical 114.6 114.2 115.7 n.a. 142.6 143.1 143.5 n.a. 80.4 79.8 80.6 n.a. 14 Energy materials 103.2 104.2 103.6 102.5 120.6 120.9 121.2 121.5 85.5 86.1 85.4 84.3 Previous cycle1 Latest cycle2 1985 1985 1986 High Low High Low June Oct. Nov. Dec. Jan. Feb. Mar/ Apr/ Mayr June Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 80.5 79.8 80.3 80.7 80.8 79.9 79.0 79.4 78.9 78.3 16 Mining 92.8 87.8 95.2 76.9 82.7 80.9 79.7 80.0 80.0 78.4 76.4 76.0 74.7 73.6 17 Utilities 95.6 82.9 88.5 78.0 84.1 82.7 82.3 85.3 83.8 82.1 81.8 82.2 81.3 81.4 18 Manufacturing 87.7 69.9 86.5 68.0 80.1 79.6 80.2 80.4 80.7 79.8 79.1 79.5 79.2 78.6 19 Primary processing ... 91.9 68.3 89.1 65.1 82.0 83.1 83.0 83.3 84.8 83.9 82.9 83.3 83.1 82.1 20 Advanced processing . 86.0 71.1 85.1 69.5 79.3 78.0 79.0 79.0 78.8 78.1 77.2 77.9 77.5 77.1 21 Materials 92.0 70.5 89.1 68.4 80.1 79.3 79.2 80.1 80.2 79.6 78.5 78.7 78.3 77.9 22 Durable goods 91.8 64.4 89.8 60.9 76.5 75.2 75.8 75.8 76.4 75.2 74.2 74.1 73.5 73.0 23 Metal materials 99.2 67.1 93.6 45.7 69.0 69.4 70.8 70.7 71.3 68.4 66.4 66.8 66.6 64.4 24 Nondurable goods .... 91.1 66.7 88.1 70.6 81.0 81.9 81.5 82.7 83.5 83.7 82.4 83.5 83.5 83.4 25 Textile, paper, and chemical 92.8 64.8 89.4 68.6 81.4 82.4 82.1 83.5 84.3 84.6 83.4 84.2 84.3 84.4 •>6 98.4 70.6 97.3 79.9 90.5 88.8 90.1 9944..77 94.8 93.7 92.9 93.6 93.1 92.5 64.4 87.9 63.3 79.2 80.5 78.8 8800..11 81.1 80.9 79.9 80.4 81.0 28 Energy materials 94.6 86.9 94.0 82.2 87.3 86.2 84.7 87.4 85.9 85.7 84.7 84.7 84.4 83.9 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 11998855 1986 pro- 1985 Grouping por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. MayP Junef Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 124.5 124.3 124.1 125.2 125.1 124.4 125.4 126.4 126.7 125.6 124.4 125.2 124.7 124.1 2 Products 57.72 131.7 131.6 131.6 133.0 133.1 131.8 133.5 134.1 134.4 133.1 132.1 133.1 132.6 131.8 3 Final products 44.77 132.0 131.6 131.8 133.3 133.3 131.9 133.7 134.4 134.4 132.8 131.5 132.6 131.9 131.2 4 Consumer goods 25.52 120.7 120.4 120.1 121.5 121.8 120.8 122.7 124.2 123.9 123.2 122.5 124.4 123.9 123.7 5 Equipment 19.25 147.1 146.6 147.3 149.0 148.6 146.6 148.3 147.9 148.4 145.5 143.4 143.5 142.6 141.1 6 Intermediate products 12.94 130.6 131.4 130.7 132.0 132.3 131.5 132.7 132.9 134.4 134.1 134.1 135.0 134.9 134.0 7 Materials 42.28 114.7 114.3 113.8 114.5 114.2 114.2 114.3 115.9 116.2 115.4 114.0 114.4 113.9 113.4 Consumer goods 8 Durable consumer goods 6.89 112.9 112.0 111.3 114.0 112.9 111.4 115.5 116.8 116.6 116.3 113.0 116.2 113.4 113.5 9 Automotive products 2.98 115.1 113.4 115.0 120.0 117.8 112.9 116.8 116.6 117.0 118.3 112.8 118.6 115.2 116.4 10 Autos and trucks 1.79 112.0 109.4 113.7 120.2 116.6 108.7 113.7 112.0 116.2 118.8 107.6 116.0 110.7 113.0 11 Autos, consumer 1.16 98.9 97.0 101.1 101.3 98.8 92.3 94.9 99.9 103.6 107.0 95.1 101.0 94.5 99.6 12 Trucks, consumer .63 136.3 132.3 137.2 155.4 149.7 139.1 148.6 134.5 139.5 140.6 130.6 143.9 140.9 13 Auto parts and allied goods 1.19 119.7 119.4 116.8 119.6 119.5 119.3 121.4 123.4 118.2 117.7 120.6 122.5 122.0 121.5 14 Home goods 3.91 111.3 110.9 108.4 109.5 109.3 110.2 114.5 116.9 116.4 114.8 113.2 114.3 112.1 111.3 15 Appliances, A/C and TV 1.24 129.5 131.5 121.6 124.5 123.7 126.3 139.4 145.4 138.8 136.5 135.5 140.0 133.7 131.9 16 Appliances and TV 1.19 130.3 131.7 123.2 125.5 125.6 128.6 141.9 148.4 141.5 139.1 137.9 141.8 135.8 17 Carpeting and furniture .96 119.4 119.6 122.2 119.5 120.2 120.1 122.9 118.9 122.3 121.9 118.4 119.1 118.7 18 Miscellaneous home goods 1.71 93.6 91.2 91.2 93.0 92.7 92.9 91.9 95.2 96.9 95.1 94.1 93.1 92.7 19 Nondurable consumer goods 18.63 123.6 123.5 123.4 124.2 125.1 124.3 125.4 127.0 126.5 125.7 126.0 127.5 127.8 127.5 20 Consumer staples 15.29 129.4 129.6 129.3 130.3 131.0 130.1 131.0 133.0 132.2 131.7 132.2 133.8 134.3 134.3 21 Consumer foods and tobacco 7.80 129.7 130.5 130.1 130.8 131.5 129.5 130.7 132.4 131.3 131.9 131.1 132.6 132.9 22 Nonfood staples 7.49 129.1 128.7 128.5 129.7 130.5 130.6 131.2 133.6 133.1 131.5 133.3 135.0 135.7 135.4 23 Consumer chemical products .. 2.75 147.5 145.4 145.4 149.1 151.4 149.4 152.4 152.9 153.8 155.6 155.4 157.0 157.9 24 Consumer paper products 1.88 143.7 144.6 144.9 143.9 144.7 145.5 145.7 148.0 144.4 141.7 146.5 147.5 149.3 25 Consumer energy 2.86 101.9 102.2 101.5 101.8 101.0 102.9 101.4 105.6 105.8 102.1 103.5 105.8 105.5 26 Consumer fuel 1.44 88.5 88.8 89.2 91.1 85.8 90.2 90.1 92.3 93.9 91.4 91.0 93.6 94.2 27 Residential utilities 1.42 115.9 114.0 112.7 116.5 115.8 112.9 119.2 117.8 113.0 116.2 118.2 Equipment 28 Business and defense equipment 18.01 147.8 147.4 147.9 149.7 149.4 147.5 149.7 149.4 150.3 148.3 147.1 148.1 147.8 146.5 29 Business equipment 14.34 141.3 140.7 141.3 143.0 142.2 139.6 141.7 141.4 142.9 141.1 139.1 140.3 139.6 138.0 30 Construction, mining, and farm .. 2.08 67.7 67.7 68.6 67.2 67.0 65.9 68.2 68.3 67.7 65.3 62.4 61.9 61.0 31 Manufacturing 3.27 112.8 111.9 113.5 115.1 114.8 111.7 112.8 112.8 113.1 114.1 113.9 113.5 113.0 112.2 32 Power 1.27 83.6 84.1 85.6 84.5 85.1 85.5 84.7 87.1 84.5 83.4 82.5 82.8 83.5 82.7 33 Commercial 5.22 219.3 219.6 219.5 222.8 219.4 213.9 217.7 217.9 219.2 216.4 215.6 215.8 216.4 211.9 34 Transit 2.49 106.1 103.4 103.3 106.0 108.3 109.7 111.2 107.7 114.6 111.4 105.0 112.0 108.2 110.3 35 Defense and space equipment 3.67 173.6 173.4 173.9 175.5 177.5 178.7 180.7 180.7 179.3 176.7 178.5 178.8 179.5 179.7 Intermediate products 36 Construction supplies 5.95 119.0 119.2 119.4 121.5 121.3 120.0 120.9 120.7 124.0 123.5 123.5 124.2 124.3 123.0 37 Business supplies 6.99 140.5 141.7 140.3 140.9 141.7 141.2 142.7 143.3 143.2 143.1 143.0 144.1 143.9 38 General business supplies 5.67 144.4 146.1 144.4 145.1 145.4 144.8 146.7 146.8 147.2 146.7 146.9 148.0 148.4 39 Commercial energy products 1.31 123.7 122.7 122.7 122.5 125.7 125.7 125.3 128.1 125.9 127.5 126.4 127.3 124.6 Materials 40 Durable goods materials 20.50 121.8 120.8 120.2 121.8 120.2 120.4 121.7 122.1 123.2 121.5 120.0 120.1 119.1 118.5 41 Durable consumer parts 4.92 100.7 98.7 98.3 100.0 99.0 100.2 101.6 101.5 103.9 103.2 100.7 99.6 98.3 98.7 42 Equipment parts 5.94 159.0 157.3 157.0 158.7 156.5 154.0 155.0 155.1 154.8 154.0 153.4 154.0 152.5 152.3 43 Durable materials n.e.c 9.64 109.7 109.6 108.6 110.2 108.7 109.9 111.4 112.3 113.7 110.9 109.3 109.6 109.2 107.7 44 Basic metal materials 4.64 84.8 85.0 82.5 85.1 82.8 85.8 87.6 88.5 87.5 83.4 81.2 81.9 81.3 45 Nondurable goods materials 10.09 112.2 111.8 112.8 113.5 114.7 113.4 113.0 114.9 116.1 116.4 114.7 116.3 116.4 116.4 46 Textile, paper, and chemical materials 7.53 112.4 111.7 113.5 113.8 115.1 113.5 113.2 115.2 116.4 116.8 115.3 116.4 116.7 116.8 47 Textile materials 1.52 97.7 97.3 100.2 104.4 104.1 101.2 104.4 102.1 103.2 107.3 104.9 106.7 105.9 48 Pulp and paper materials 1.55 123.7 123.3 125.0 122.8 123.7 121.1 123.0 129.3 129.5 128.2 127.2 128.4 128.0 49 Chemical materials 4.46 113.6 112.6 114.0 113.8 115.9 115.0 112.8 114.8 116.3 116.1 114.6 115.5 116.4 50 Miscellaneous nondurable materials 2.57 111.3 112.0 110.8 112.7 113.5 113.3 112.5 113.9 115.3 115.2 113.2 116.1 115.5 51 Energy materials 11.69 104.3 105.1 103.5 102.7 103.4 104.2 102.5 105.8 104.1 103.9 102.7 102.9 102.6 102.0 52 Primary energy 7.57 107.8 109.0 107.4 106.4 106.8 108.2 106.7 109.0 106.8 107.6 107.1 107.9 107.2 53 Converted fuel materials 4.12 97.9 98.1 96.2 95.9 97.0 96.8 94.7 100.1 99.1 97.0 94.8 93.5 94.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1986 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1986 SIC pro- 1985 Grouping code por- avg. tion June July Aug. Sept. Oct. Nov. Dec Jan. Feb. Mar/ Apr. MayP June Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 110.6 111.6 109.4 109.1 110.3 109.9 108.9 110.8 110.2 108.0 106.2 106.2 2 Mining 9.83 109.0 110.6 108.7 108.3 108.4 108.4 106.9 107.4 107.4 105.3 102.7 102.1 3 Utilities 5.96 113.2 113.4 110.7 110.3 113.2 112.4 112.2 116.5 114.6 112.4 112.2 112.8 4 Manufacturing 84.21 127.1 126.7 126.9 128.2 127.7 127.2 128.4 129.1 129.8 128.8 128.0 128.9 5 Nondurable 35.11 125.6 125.5 125.6 126.6 126.9 126.4 127.3 128.0 129.1 128.5 128.3 129.3 6 Durable 49.10 128.2 127.6 127.9 129.4 128.3 127.7 129.2 129.9 130.4 129.0 127.7 128.5 Mining 1 Metal .50 75.1 77.5 60.9 73.1 71.4 74.2 78.3 74.3 75.5 77.2 78.1 8 Coal 1.60 127.5 134.0 128.0 127.7 126.3 130.1 125.5 128.0 130.6 124.9 123.5 124.5 9 Oil and gas extraction 7.07 106.3 106.9 106.9 105.5 106.0 104.8 103.5 104.4 103.6 101.4 98.5 97.1 10 Stone and earth minerals .66 118.8 117.9 116.6 117.7 119.3 120.4 119.0 114.0 117.1 120.2 115.2 120.7 Nondurable manufactures 11 Foods 7.96 131.8 132.2 132.6 132.5 130.7 131.4 132.6 133.2 133.8 133.0 134.0 12 Tobacco products .62 98.9 96.0 97.7 97.8 105.3 104.5 103.5 99.3 97.9 93.0 101.4 13 Textile mill products 2.29 102.5 103.3 104.1 106.3 106.7 104.9 108.0 106.3 107.4 110.4 108.4 110.0 14 Apparel products 2.79 101.8 99.2 100.6 100.4 101.8 102.6 103.9 105.0 105.8 103.6 104.0 104.3 15 Paper and products 3.15 127.4 127.1 129.0 127.5 128.6 127.3 128.2 132.3 133.1 132.1 132.0 132.0 16 Printing and publishing 4.54 155.3 156.7 154.3 156.3 156.2 157.0 159.0 158.4 158.9 155.4 158.1 160.0 17 Chemicals and products 8.05 127.1 126.4 126.4 128.2 129.0 127.9 128.0 128.5 130.5 130.9 131.1 132.0 18 Petroleum products 2.40 86.7 87.1 88.3 88.2 85.9 87.7 87.3 88.7 92.6 88.4 87.8 91.3 19 Rubber and plastic products... 2.80 147.0 145.5 145.6 148.0 148.6 148.7 150.5 150.0 150.5 150.7 149.0 147.3 20 Leather and products .53 70.9 71.5 72.2 72.7 72.3 71.4 72.1 69.9 67.5 67.0 65.4 64.6 Durable manufactures 21 Lumber and products 24 2.30 113.5 113.0 114.8 115.9 116.5 115.6 116.5 119.9 118.2 118.5 119.0 22 Furniture and fixtures 25 1.27 142.0 141.9 145.3 144.3 143.2 141.9 144.1 142.1 143.9 145.4 145.0 146.5 23 Clay, glass, stone products 32 2.72 114.8 116.1 115.1 116.2 116.2 115.6 115.2 118.2 120.2 118.8 120.0 121.5 24 Primary metals 33 5.33 80.6 78.3 79.0 82.0 80.3 83.1 83.6 81.7 84.9 80.7 77.4 78.1 25 Iron and steel 331.2 3.49 70.7 67.6 68.7 71.6 69.7 74.4 75.3 72.0 75.5 69.9 64.9 65.6 26 Fabricated metal products 34 6.46 107.8 107.4 107.3 107.8 107.5 108.4 107.9 108.8 109.3 109.4 108.5 108.6 27 Nonelectrical machinery 35 9.54 146.6 145.6 147.5 149.2 146.5 143.0 145.6 146.0 146.2 144.6 143.2 141.6 28 Electrical machinery 36 7.15 169.3 169.5 165.7 166.1 165.1 165.1 168.9 171.9 167.9 165.5 165.6 167.1 29 Transportation equipment 37 9.13 123.2 121.8 123.7 126.8 126.2 124.5 126.5 126.8 128.9 128.1 124.3 127.9 30 Motor vehicles and parts.... 371 5.25 112.8 110.5 112.8 116.8 115.3 111.7 114.5 115.4 117.8 117.8 110.4 114.8 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 137.5 137.1 138.5 140.4 141.1 141.9 142.9 142.3 144.0 142.1 143.1 145.6 32 Instruments 38 2.66 139.9 140.7 141.1 141.8 139.4 139.8 140.7 140.6 141.1 141.8 142.5 143.0 33 Miscellaneous manufactures... 39 1.46 96.4 96.8 95.9 97.2 96.4 95.9 94.5 96.3 99.0 97.2 97.9 Utilities 34 Electric Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 773.4 773.5 769.0 778.7 777.9 772.2 782.8 783.3 792.9 786.3 777.2 788.1 782.0 36 Final 405.7 614.8 614.0 610.1 618.6 617.8 613.0 622.4 622.1 629.2 623.7 614.6 624.9 618.8 37 Consumer goods . 272.7 364.8 364.0 361.7 366.2 365.6 363.8 370.5 373.6 375.0 373.9 370.5 379.1 374.8 38 Equipment 133.0 250.1 251.0 250.3 252.4 252.2 249.3 251.9 248.5 254.1 249.8 244.1 245.8 244.0 39 Intermediate 111.9 158.6 159.7 160.4 160.1 160.1 159.2 160.4 161.2 163.7 162.6 162.6 163.2 163.1 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb/ Mar/ Apr/ May Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,605 1,682 1,733 1,782 1,846 1,703 1,668 1,839 1,861 1,808 1,834 1,885 1,788 2 1-family 902 922 957 990 956 984 932 963 1,060 1,033 1,043 1,139 1,092 3 2-or-more-family 703 759 777 792 890 719 736 876 801 775 791 746 696 4 Started 1,703 1,749 1,742 1,737 1,653 1,784 1,654 1,882 2,034 2,001 1,960 2,019 1,860 S 1-family 1,067 1,084 1,072 1,071 1,006 1,118 1,006 1,098 1,335 1,202 1,221 1,242 1,247 6 2-or-more-family 635 665 669 666 647 666 648 784 699 799 739 777 613 7 Under construction, end of period1 1,003 1,051 1,063 1,079 1,065 1,089 1,087 1,088 1,094 1,110 1,099 1,133 1,134 8 1-family 524 556 539 582 568 578 570 561 571 581 574 587 599 9 2-or-more-family 479 494 524 499 496 512 517 528 522 529 526 546 535 10 Completed 1,390 1,652 1,703 1,720 1,778 1,541 1,721 1,762 1,778 1,725 1,806 1,683 1,814 11 1-family 924 1,025 1,072 1,032 1,100 1,072 1,095 1,141 1,075 1,038 1,153 1,125 1,132 12 2-or-more-family 466 627 631 688 678 469 626 621 703 687 653 558 682 13 Mobile homes shipped 296 296 284 286 283 291 287 285 280 266 240 249 239 Merchant builder activity in 1-family units 14 Number sold 622 639 688 708 681 637 722 729 735 741 916 864 764 15 Number for sale, end of period1 304 358 350 348 350 353 353 349 352 352 339 337 334 Price (thousands of dollars)2 Median 16 Units sold 75.5 80.0 84.3 83.3 84.6 85.4 87.2 87.9 86.6 89.7 88.2 92.5 92.3 17 Units sold 89.9 97.5 101.0 99.2 102.6 102.7 104.1 106.1 104.1 106.6 108.2 111.9 116.1 EXISTING UNITS (1-family) 18 Number sold 2,719 2,868 3,217 3,430 3,480 3,530 3,450 3,520 3,300 3,270 3,200 3,570 3,450 Price of units sold (thousands of dollars)2 19 Median 69.8 72.3 75.4 77.2 75.9 75.2 74.9 75.5 77.1 77.4 79.8 80.2 83.2 20 Average 82.5 85.9 90.6 93.2 91.4 91.2 90.3 91.8 93.0 93.1 96.8 98.1 101.7 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 279,240' 327,209' 355,57c 353,287' 361,337' 374,014' 357,630' 365,554' 373,378' 373,947 368,027 371,648 374,658 27. Private 228,527' 271,973' 292,792' 289,759' 296,024' 311,952' 294,425' 300,619' 305,366' 305,682 298,868 301,180 300,300 23 Residential 126,553' 155,148' 158,818' 154,866' 160,976' 174,840' 158,210' 161,786' 163,413' 164,713 165,645 167,792 169,815 24 Nonresidential, total 101,974' 116,825' 133,974' 134,893' 135,048' 137,112' 136,215' 138,833' 141,953' 140,969 133,223 133,388 130,485 Buildings 2S Industrial 12,863 13,746 15,769' 15,346' 15,822' 15,872' 16,095' 16,546' 15,783' 16,381 13,354 14,666 13,776 26 Commercial 35,789' 48,100' 59,626' 59,448' 60,994' 60,770' 61,185' 63,863' 65,222' 63,494 60,716 59,915 58,080 71 Other 11,838' 12,547' 12,619' 13,145' 12,859' 12,790' 12,748' 12,487' 12,781' 13,065 13,131 13,031 13.260 28 Public utilities and other 41,484' 42,432' 45.96C 46,954' 45,373' 47,68c 46,187' 45,937' 48,167' 48,029 46,022 45,776 45,369 79 Public 50,715 55,232' 62,777' 63,528' 65,312' 62,063' 63,205' 64,935' 68,013' 68,264 69,159 70,467 74,357 30 Military 2,544 2,839 3,283' 3,131' 3,628' 2,854' 3,598' 3,539' 3,407' 3,974 3,673 3,592 3.784 31 Highway 14,143 16,343' 19,998' 19,979' 19,516' 19,354' 19,854' 21,017' 22,129' 22,273 22,673 23,283 23.792 32 Conservation and development 4,820' 4,654' 4,952' 4,768' 5,255' 4,946' 5,090' 4,958' 5,614' 4,372 4,598 4,954 4,809 33 Other 29,208' 31,396 34,544' 35,65(y 36,913' 34,909' 34,663' 35,421' 36,863' 37,645 38,215 38,638 41,972 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 • September 1986 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (at annual rate) IIInnndddeeexxx llleeevvveeelll IIIttteeemmm JJJuuunnneee 1985 1986 1986 111999888666 11998855 11998866 (((111999666777 JJuunnee JJuunnee === 111000000)))111 Sept. Dec. Mar. June Feb. Mar. Apr. May June CONSUMER PRICES2 1 All items 3.7 1.7 2.4 5.3 -1.9 1.5 -.4 -.4 -.3 .2 .5 327.9 2 Food 2.4 2.5 2.1 5.9 -1.4 3.4 -.7 .1 .3 .4 .1 317.1 3 Energy items 1.9 -12.9 -3.2 3.3 -34.2 -12.5 -3.8 -6.5 -5.8 .3 2.3 380.6 4 AH items less food and energy 4.4 4.0 3.4 5.4 4.1 3.1 .2 .4 .4 .1 .3 325.9 5 Commodities 2.5 1.2 1.1 3.6 .3 -.5 -.1 -.1 -.1 -.1 .1 262.0 6 Services 5.6 5.7 4.8 6.5 6.5 5.2 .4 .6 .7 .2 .4 395.9 PRODUCER PRICES 7 Finished goods 1.1 -1.7 -2.4 9.2 -12.4 -.1 -1.6' -.9' -.6 .6 .0 288.9 8 Consumer foods -.8 2.4 -2.9 16.0 -7.4 5.3 -1.7' .3 .1 1.1 .0 275.1 9 Consumer energy -3.1 -28.3 -11.3 20.7 -67.6 -23.5 -9.9' -12.4' -8.4 2.7 -.6 531.5 10 Other consumer goods 2.6 2.2 .0 4.4 2.9 1.4 -.1 .8 .2 .2 .0 257.6 11 Capital equipment 2.2 1.8 -.9 5.6 .7 1.9 .1 .2' .3 .1 .1 305.8 12 Intermediate materials3 -.2 -4.0 -1.3 2.9 -11.9 -4.7 -1.4 -1.3 -1.0 -.3 .0 312.8 13 Excluding energy .6 -.7 -.7 .0 -1.2 -1.2 -.3 .1' -.3 .0 .0 303.9 Crude materials 14 Foods -10.2 -3.3 -20.6 47.0 -25.2 .5 -3.6' -1.1' -3.1 4.1 -.8 226.1 15 Energy -4.2 -26.5 -5.9 -4.0 -50.1 -35.5 -9.5' -6.7' -7.7 .2 -3.0 554.2 16 Other -9.3 1.1 -4.4 1.5 -3.7 10.5 -3.1' 1.8' 1.2 .2 1.1 250.0 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'' Q2 Q3 Q4 Ql' Q2 GROSS NATIONAL PRODUCT 1 Total 3,405.7 3,765.0 3,998.1 3,965.0 4,030.5 4,087.7 4,149.2 4,182.3 By source 2 Personal consumption expenditures 2,234.5 2,428.2 2,600.5 2,576.0 2,627.1 2,667.9 2,697.9 2,730.1 3 Durable goods 289.1 331.2 359.3 354.0 373.3 362.0 360.8 374.7 4 Nondurable goods 816.7 870.1 905.1 902.3 907.4 922.6 929.7 926.0 5 Services 1,128.7 1,227.0 1,336.1 1,319.7 1,346.4 1,383.2 1,407.4 1,429.4 6 Gross private domestic investment 502.3 662.1 661.1 667.1 657.4 669.5 708.3 691.4 7 Fixed investment 509.4 598.0 650.0 648.0 654.3 672.6 664.4 671.9 8 Nonresidential 356.9 416.5 458.2 459.2 459.8 474.0 459.2 457.3 9 Structures 124.0 139.3 154.8 156.1 155.0 157.2 154.6 142.1 10 Producers' durable equipment 232.8 277.3 303.4 303.1 304.7 316.8 304.6 315.2 11 Residential structures 152.5 181.4 191.8 188.8 194.5 198.6 205.3 214.6 1? Change in business inventories -7.1 64.1 11.1 19.1 3.1 -3.1 43.8 19.5 13 Nonfarm .4 56.6 12.2 10.4 3.2 16.7 41.2 12.4 14 Net exports of goods and services -6.1 -58.7 -78.9 -77.1 -83.7 -105.3 -93.7 -96.4 IS Exports 352.5 382.7 369.8 370.0 362.3 368.2 374.8 375.6 16 Imports 358.7 441.4 448.6 447.1 446.0 473.6 468.5 472.0 17 Government purchases of goods and services 675.0 733.4 815.4 799.0 829.7 855.6 836.7 857.2 18 Federal 283.5 311.3 354.1 340.9 360.9 380.9 355.7 364.8 19 State and local 391.5 422.2 461.3 458.1 468.8 474.7 480.9 492.4 By major type of product 70 Final sales, total 3,412.8 3,700.9 3,987.0 3,945.9 44,,002277..44 4,090.8 44,,110055..44 4,162.8 71 Goods 1,396.1 1,576.7 1,630.2 1,622.4 1,642.8 1,644.1 1,669.0 1,666.7 77 Durable 573.3 675.0 700.2 693.1 710.3 709.1 710.6 708.0 73 Nondurable 822.7 901.7 930.0 929.3 932.5 935.0 958.4 958.7 74 Services 1,682.5 1,813.1 1,959.8 1,935.4 1,971.9 2,025.5 2,057.7 2,089.3 25 Structures 327.1 375.1 408.1 407.2 415.9 418.1 422.6 426.3 26 Change in business inventories -7.1 64.1 11.1 19.1 3.1 -3.1 43.8 19.5 27 Durable goods -1.0 39.2 6.6 2.3 -2.7 9.5 28.6 1.6 28 Nondurable goods -6.1 24.9 4.5 16.7 5.8 -12.7 15.3 17.9 29 MEMO: Total GNP in 1982 dollars 3,279.1 3,489.9 3,585.2 3,567.6 3,603.8 3,622.3 3,655.9 3,665.7 NATIONAL INCOME 30 Total 2,719.5 3,032.0 3,222.3 3,201.4 3,243.4 3,287.3 3,340.7 n.a. 31 Compensation of employees 2,020.7 2,214.7 2,368.2 2,352.1 2,380.9 2,423.6 2,461.5 2,478.8 32 Wages and salaries 1,676.2 1,837.0 1,965.8 1,952.2 1,976.0 2,012.8 2,044.1 2,057.6 33 Government and government enterprises 324.3 346.2 372.2 368.6 374.2 381.6 387.2 392.7 34 Other 1,352.3 1,490.6 1,593.9 1,583.6 1,601.8 1,631.1 1,656.8 1,664.9 35 Supplement to wages and salaries 344.5 377.7 402.4 399.8 404.9 410.9 417.4 421.2 36 Employer contributions for social insurance 170.9 193.1 205.5 204.5 206.1 209.1 212.9 213.9 37 Other labor income 173.6 184.5 196.9 195.3 198.8 201.7 204.5 207.3 38 Proprietors' income1 190.9 236.9 254.4 255.5 249.3 262.1 265.3 288.0 39 Business and professional1 178.4 205.3 225.2 222.5 227.7 232.7 240.9 249.0 40 Farm1 12.4 31.5 29.2 33.0 21.6 29.4 24.4 39.1 41 Rental income of persons2 13.2 8.3 7.6 8.1 7.3 8.3 12.8 15.1 42 Corporate profits1 213.7 264.7 280.7 274.3 296.3 285.6 296.4 n.a. 43 Profits before tax3 207.6 235.7 223.2 213.8 229.2 235.8 224.3 n.a. 44 Inventory valuation adjustment -10.9 -5.5 -.6 1.6 6.1 -9.4 16.5 n.a. 45 Capital consumption adjustment 17.0 34.5 58.1 58.9 61.0 59.2 55.6 51.4 46 Net interest 281.0 307.4 311.4 311.4 309.7 307.6 304.9 299.1 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 • September 1986 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1985' 1986 AAccccoouunntt 11998833'' 11998844'' 11998855'' Q2 Q3 Q4 Ql' Q2 PERSONAL INCOME AND SAVING 2,838.6 3,110.2 3,314.5 3,298.7 3,323.2 3,382.9 3,432.6 3,480.0 2 Wage and salary disbursements 1,676.6 1,836.8 1,966.1 1,953.3 1,976.0 2,012.8 2,044.1 2,057.6 3 Commodity-producing industries 523.1 577.8 607.7 605.0 608.3 617.7 622.0 619.9 4 Manufacturing 397.4 439.1 460.1 457.3 460.7 467.5 470.5 468.0 5 Distributive industries 404.2 442.2 469.8 467.7 472.4 478.9 485.2 484.3 425.1 470.6 516.4 511.0 521.1 534.6 549.6 560.8 7 Government and government enterprises 324.3 346.2 372.2 369.6 374.2 381.6 387.2 392.7 8 Other labor income 173.6 184.5 196.9 195.3 198.8 201.7 204.5 207.3 9 Proprietors' income1 190.9 236.9 254.4 255.5 249.3 262.1 265.3 288.0 10 Business and professional1 178.4 205.3 225.2 222.5 227.7 232.7 240.9 249.0 11 Farm1 12.4 31.5 29.2 33.0 21.6 29.4 24.4 39.1 12 Rental income of persons2 13.2 8.3 7.6 8.1 7.3 8.3 12.8 15.1 13 Dividends 68.7 74.7 76.4 76.4 76.3 76.7 79.1 81.1 14 Personal interest income 393.1 446.9 476.2 475.3 475.2 480.6 480.8 480.5 442.6 455.6 487.1 484.1 491.1 493.6 504.7 509.7 16 Old-age survivors, disability, and health insurance benefits... 221.7 235.7 253.4 251.1 256.5 256.8 263.2 264.3 17 LESS: Personal contributions for social insurance 120.1 133.5 150.2 149.4 150.7 152.9 158.6 159.4 18 EQUALS: Personal income 2,838.6 3,110.2 3,314.5 3,298.7 3,323.2 3,382.9 3,432.6 3,480.0 19 LESS: Personal tax and nontax payments 410.5 439.6 486.5 456.4 491.2 500.7 497.5 500.8 20 EQUALS: Disposable personal income 2,428.1 2,670.6 2,828.0 2,842.3 2,832.0 2,882.2 2,935.1 2,979.2 21 LESS: Personal outlays 2,297.4 2,501.9 2,684.7 2,658.7 2,712.4 2,756.4 2,789.4 2,823.5 22 EQUALS: Personal saving 130.6 168.7 143.3 183.6 119.6 125.8 145.6 155.7 MEMO Per capita (1982 dollars) 23 Gross national product 13,963.7 14,721.1 14,980.9 14,928.1 1155,,004400..55 1155,,007799..99 15,188.0 1155,,119977..11 24 Personal consumption expenditures 9,138.5 9,475.4 9,713.0 9,673.8 9,774.4 9,790.3 9,857.1 9,978.8 25 Disposable personal income 9,930.0 10,421.0 10,563.0 10,674.0 10,537.0 10,577.0 10,723.0 10,889.0 26 Saving rate (percent) 5.4 6.3 5.1 6.5 4.2 4.4 5.0 5.2 GROSS SAVING 27 Gross saving 463.6 573.3 551.5 566.8 541.7 524.1 583.2 n.a. 28 Gross private saving 592.2 674.8 687.8 722.4 679.6 679.2 714.8 n.a. 29 Personal saving 130.6 168.7 143.3 183.6 119.6 125.8 145.6 155.7 30 Undistributed corporate profits1 65.0 91.0 107.3 105.8 118.8 106.8 122.1 n.a. 31 Corporate inventory valuation adjustment -10.9 -5.5 -.6 1.6 6.1 -9.4 16.5 n.a. Capital consumption allowances 242.7 253.9 226688..22 226666..66 270.1 227733..33 275.3 n.a. 153.9 161.2 169.0 166.5 171.2 173.4 171.8 173.9 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and -128.6 -101.5 -136.3 -155.6 -138.0 -155.1 -131.6 n.a. 36 Federal -176.0 -170.0 -198.0 -214.8 -197.5 -217.6 -201.6 n.a. 37 State and local 47.5 68.5 61.7 59.2 59.5 62.5 70.0 n.a. 38 Capital grants received by the United States, net .0 .0 .0 .0 .0 .0 .0 .0 39 Gross investment 468.8 571.4 545.9 555.0 536.2 525.7 579.6 557.6 40 Gross private domestic 502.3 662.1 661.1 667.1 657.4 669.5 708.3 691.4 -33.5 -90.7 -115.2 -112.0 -121.2 -143.8 -128.6 -133.8 42 Statistical discrepancy 5.2 -1.9 -5.5 -11.7 -5.5 1.6 -3.6 -3.6 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 1985 1986 IItteemm ccrreeddiittss oorr ddeebbiittss 11998833 11998844 11998855 QL Q2 Q3 Q4 Q1P 1 Balance on current account -46,605 -106,466 -117,676 -26,112 -29,417 -28,455 -33,695 -33,668 ~> -23,529 -30,363 -32,275 -31,510 -30,695 3 Merchandise trade balance2 -67,080 -112,522 -124,439 -25,045 -30,367 -31,675 -37,352 -36,585 4 Merchandise exports 201,820 219,900 214,424 55,324 53,875 52,498 52,727 53,548 5 Merchandise imports -268,900 -332,422 -338,863 -80,369 -84,242 -84,173 -90,079 -90,133 6 Military transactions, net -370 -1,827 -2,917 -246 -729 -619 -1,322 -945 7 Investment income, net3 24,841 18,751 25,187 2,219 5,449 8,262 9,255 6,820 8 Other service transactions, net 5,484 1,288 -524 -240 312 -422 -32 -73 9 Remittances, pensions, and other transfers -3,194 -3,621 -3,787 -1,056 -881 -914 -937 -968 10 U.S. government grants (excluding military) -6,286 -8,536 -11,196 -2,224 -2,577 -3,087 -3,307 -2,063 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,005 -5,523 -2,824 -807 -1,055 -422 -540 -146 12 Change in U.S. official reserve assets (increase, -) -1,196 -3,130 -3,858 -233 -356 -121 -3,147 -115 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -66 -979 -897 -264 -180 -264 -189 -274 15 Reserve position in International Monetary Fund -4,434 -995 908 281 72 388 168 344 16 Foreign currencies 3,304 -1,156 -3,869 -250 -248 -245 -3,126 -185 17 Change in U.S. private assets abroad (increase, -)3 -43,821 -14,987 -25,755 530 -1,382 -5,324 -19,579 -8,416 18 Bank-reported claims -29,928 -11,127 -691 335 3,450 4,009 -8,485 7,842 19 Nonbank-reported claims -6,513 5,081 1,665 1,058 1,706 -1,517 418 n.a. 20 U.S. purchase of foreign securities, net -7,007 -5,082 -7,977 -2,577 -2,325 -1,664 -1,411 -6,138 21 U.S. direct investments abroad, net3 -373 -3,859 -18,752 1,714 -4,213 -6,152 -10,101 -10,120 22 Change in foreign official assets in the United States (increase, +) 5,968 3,037 -1,324 11,066 8,486 2,577 -1,322 2,510 23 U.S. Treasury securities 6,972 4,690 -546 7,174 8,685 -81 -1,976 -3,256 24 Other U.S. government obligations -476 13 -295 -306 136 46 -171 -177 25 Other U.S. government liabilities4 725 436 483 -445 606 58 263 192 76 Other U.S. liabilities reported by U.S. banks 545 555 522 -3,025 -107 2,932 722 -1,124 27 Other foreign official assets5 -1,798 -2,657 -1,488 -116 -834 -378 -160 363 28 Change in foreign private assets in the United States (increase, +)3 79,528 99,730 128,431 25,313 16,872 33,088 53,158 36,974 29 U.S. bank-reported liabilities 50,342 33,849 40,387 12,078 606 7,276 20,427 8,582 30 U.S. nonbank-reported liabilities -118 4,704 -1,172 -2,156 -1,837 589 2,232 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 8,721 23,059 20,500 2,217 5,123 7,484 5,676 8,311 3? Foreign purchases of other U.S. securities, net 8,636 12,759 50,859 9,567 7,223 11,628 22,441 18,793 33 Foreign direct investments in the United States, net3 11,947 25,359 17,857 3,607 5,757 6,111 2,382 1,288 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 11,130 27,338 23,006 12,375 6,852 -1,343 5,125 2,861 36 11,,009944 --11,,117744 --33,,668877 33,,777711 11,,553355 37 Statistical discrepancy in recorded data before seasonal adjustment 11,130 27,338 23,006 11,282 8,026 2,344 1,354 1,326 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -1,196 -3,130 -3,858 -233 -356 -121 -3,147 -115 39 Foreign official assets in the United States (increase, +) 5,243 2,601 -1,807 -10,621 7,880 2,519 1,585 2,318 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) -8,283 -4,304 -6,599 -1,923 -1,843 -1,831 -1,002 1,395 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 194 119900 64 1100 1122 1155 2288 20 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing; military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • September 1986 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are not seasonally adjusted. 1985 1986 IItteemm 11998833 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. May 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 200,486 217,865 213,146 17,721 16,994 17,006 17,735 18,913 17,965 17,431 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 258,048 325,726 345,276 30,010 30,728 32,005 28,895 31,972 28,762 30,272 3 Trade balance -57,562 107,861 -132,129 -12,290 -13,734 -14,999 -11,160 -13,059 -10,797 -12,842 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 Dec. Jan. Feb. Mar. Apr. May June 1 Total 33,958 33,747 34,934 43,191 43,673 45,505 44,919 46,491 45,260 46,635 2 Gold stock, including Exchange Stabilization Fund1 11,148 11,121 11,096 11,090 11,090 11,090 11,090 11,089 11,085 11,084 3 Special drawing rights2 3 5,250 5,025 5,641 7,293 7,441 7,960 7,839 8,098 8,066 8,213 4 Reserve position in International Monetary Fund2 7,348 11,312 11,541 11,952 11,824 12,172 12,025 12,242 11,789 12,109 5 Foreign currencies4 10,212 6,289 6,656 12,856 13,318 14,283 13,965 15,062 14,320 15,229 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 Dec. Jan. Feb. Mar. Apr. May June 1 Deposits 328 190 267 480 256 276 273 325 253 354 Assets held in custody 2 U.S. Treasury securities' 112,544 117,670 118,000 121,004 121,995 124,905 127,611 132,017 136,762 137,820 3 Earmarked gold2 14,716 14,414 14,242 14,245 14,193 14,172 14,167 14,160 14,145 14,128 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 Nov. Dec. Jan. Feb. Mar. Apr. MayP All foreign countries 1 Total, all currencies 469,712 477,090 453,656 455,935 458,012' 447,529 448,258 458,566 473,884 459,727 7 Claims on United States 91,805 115,542 113,393 115,519' 119,723' 116,797' 113,732' 118,461 122,435 117,562 Parent bank 61,666 82,026 78,109 82,327 87,201 84,410 80,944 85,164 88,961 83,339 4 Other banks in United States2 1 ->r\ 1 to 13,664 12,096 13,076 11,757 11,727 12,909 12,766 13,196 5 Nonbanks2 21,620 21,096' 19,446' 20,630' 21,061' 20,388 20,708 21,027 6 Claims on foreigners 358,493 342,689 320,162 317,566' 315,692' 308,662' 310,653' 315,762 325,301 316,216 7 Other branches of parent bank 91,168 96,004 95,184 89,580 91,399 88,393 88,482 91,586 95,238 90,785 8 Banks 133,752 117,668 100,397 102,907 102,950' 100,449 99,399 101,185 106,588 103,578 9 Public borrowers 24,131 24,517 23,343 23,613 23,395 23,350 23,603 23,675 23,551 23,823 10 Nonbank foreigners 109,442 107,785 101,238 101,466' 97,948' 96,470' 99,169' 99,316 99,924 98,030 11 Other assets 19,414 18,859 20,101 22,850 22,597 22,070 23,873 24,343 26,148 25,949 12 Total payable in U.S. dollars 361,982 371,508 350,636 329,622 336,288 321,703 315,295 322,871 330,298 322,437 n Claims on United States 90,085 113,436 111,426 112,353' 116,655' 113,737' 110,375' 114,908 118,583 113,671 14 Parent bank 61,010 80,909 77,229 81,162 85,971 83,264 79,609 83,841 87,583 82,045 1 1 6 5 N Ot o h n e b r a b n a k n s k 2 s in United States2 32,52/ 2 1 0 3 , , 6 5 9 0 7 0 1 11 9 , , 4 7 6 2 3 8 ' 1 12 8 , , 4 2 7 1 3 1 ' 1 11 9 , , 1 3 0 7 2 1 ' 1 11 9 , , 0 6 7 9 0 6 ' 1 1 2 8 , ,8 2 5 1 1 6 1 1 9 1 , , 1 87 2 1 9 1 12 9 , , 2 3 8 4 3 3 17 Claims on foreigners 259,871 247,406 228,600 207,324' 209,917' 198,806' 195,084' 198,582 201,816 197,800 18 Other branches of parent bank 73,537 78,431 78,746 70,548 72,689 68,748 67,630 70,910 73,109 69,692 19 Banks 106,447 93,332 76,940 69,646 71,738 65,779 63,310 63,320 65,478 64,682 70 Public borrowers 18,413 17,890 17,626 17,277 17,169 16,958 17,127 17,128 16,808 17,180 21 Nonbank foreigners 61,474 60,977 55,288 49,853' 48,321' 47,321' 47,017' 47,224 46,421 46,246 22 Other assets 12,026 10,666 10,610 9,945 9,716 9,160 9,836 9,381 9,899 10,966 United Kingdom 23 Total, all currencies 161,067 158,732 144,385 152,456 148,599 150,835 148,788 150,975 155,867 152,075 74 Claims on United States 27,354 34,433 27,675' 33,706' 33,157' 36,319' 33,482' 33,990 34,234 34,231 75 Parent bank 23,017 29,111 21,862' 26,718 26,970 29,837' 27,281 27,881 28,058 28,001 76 Other banks in United States2 1 1,429 1,289 1,106 1,173 1,133 1,129 1,386 1,312 77 Nonbanks2 4,384 5,699' 5,081' 5,309' 5,068' 4,980 4,790 4,918 28 Claims on foreigners 127,734 119,280 111,828 112,933' 110,217' 109,290' 109,802' 111,468 115,485 111,823 79 Other branches of parent bank 37,000 36,565 37,953 30,600 31,576 30,394 30,218 31,250 32,516 32,257 30 Banks 50,767 43,352 37,443 40,482 39,250 39,257 39,393 38,929 41,593 38,949 31 Public borrowers 6,240 5,898 5,334 5,735 5,644 5,949 6,065 5,833 5,642 5,427 32 Nonbank foreigners 33,727 33,465 31,098 36,116' 33,747' 33,15(K 34,126' 35,456 35,734 35,190 33 Other assets 5,979 5,019 4,882 5,817 5,225 5,226 5,504 5,517 6,148 6,021 34 Total payable in U.S. dollars 123,740 126,012 112,809 108,699 108,626 108,566 105,272 105,111 107,359 106,439 3S Claims on United States 26,761 33,756 26,868 32,487' 32,092' 35,303' 32,384' 32,746 32,959 32,841 36 Parent bank 22,756 28,756 21,495 26,210 26,568 29,470 26,874 27,393 27,629 27,584 37 Other banks in United States2 1 1,363 1,205 1,005 1,089 1,047 1,027 1,225 1,152 38 Nonbanks2 XUUU 4,010 5,072' 4,519' 4,744' 4,463' 4,326 4,105 4,105 39 Claims on foreigners 92,228 88,917 82,945 72,908' 73,475' 70,345' 69,597' 69,433 71,058 70,164 40 Other branches of parent bank 31,648 31,838 33,607 24,989 26,011 25,083 24,474 25,250 26,224 26,265 41 Banks 36,717 32,188 26,805 25,667 26,139 24,013 23,598 22,106 23,310 22,861 47 Public borrowers 4,329 4,194 4,030 3,982 3,999 4,252 4,367 4,223 4,012 3,937 43 Nonbank foreigners 19,534 20,697 18,503 18,270' 17,326' 16,997' 17,158' 17,854 17,512 17,101 44 Other assets 4,751 3,339 2,996 3,304 3,059 2,918 3,291 2,932 3,342 3,434 Bahamas and Caymans 45 Total, all currencies 145,156 152,083 146,811 133,645 142,055 130,413 128,851 135,210 135,998 132,122 46 Claims on United States 59,403 75,309 77,296 69,923 74,874 68,576 68,304 71,672 72,703 68,645 47 Parent bank 34,653 48,720 49,449 45,811 50,553 44,586 43,866 46,813 47,599 42,803 4 4 8 9 O N t o h n e b r a b n a k n s k 2 s in United States2 1r 24,/5U 1 1 1 6 , , 5 3 4 0 4 3 1 1 0 4 , , 0 0 8 3 2 0 1 1 1 3 , , 2 0 2 9 3 8 1 9 4 , , 8 1 6 2 7 3 1 9 4 , , 8 6 1 2 5 3 1 1 4 0 , , 0 7 8 7 3 6 1 1 4 0 , , 6 4 8 1 5 9 1 1 4 0 , , 9 9 3 0 6 6 50 Claims on foreigners 81,450 72,868 65,598 60,503 63,894 58,510 56,958 59,833 59,589 59,171 51 Other branches of parent bank 18,720 20,626 17,661 17,050 19,042 16,468 15,872 19,131 18,286 15,768 57 Banks 42,699 36,842 30,246 26,768 28,182 25,476 24,859' 24,571 25,256 26,290 53 Public borrowers 6,413 6,093 6,089 6,440 6,458 6,320 6,186 6,197 6,232 6,694 54 Nonbank foreigners 13,618 12,592 11,602 10,245 10,212 10,246 10,041' 9,934 9,815 10,419 55 Other assets 4,303 3,906 3,917 3,219 3,287 3,327 3,589 3,705 3,706 4,306 56 Total payable in U.S. dollars 139,605 145,641 141,562 127,997 136,794 124,981 122,980 129,187 129,322 125,681 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 • September 1986 3.14 Continued 1985 1986 Nov. Dec. Jan. Feb. Mar. Apr. May P All foreign countries 57 Total, all currencies 469,712 477,090 453,656 455,935 458,012' 447,529 448,258 458,566 473,884 459,727 58 Negotiable CDs3 n.a. n.a. 37,725 36,607 34,607 34,597 33,458 36,066 33,229 35,006 59 To United States 179,015 188,070 147,583 143,203 155,273 142,182 138,160 140,019 150,450 143,934 60 Parent bank 75,621 81,261 78,739 81,171 83,649 76,805 73,449 74,653 81,315 77,205 61 Other banks in United States 33,405 29,453 18,409 15,490 16,894 14,724 13,989 15,714 14,260 14,337 62 Nonbanks 69,989 77,356 50,435 46,542 54,730 50,653 50,722 49,652 54,875 52,392 63 To foreigners 270,853 269,685 247,907 252,171 245,942' 249,623 254,313 260,567 268,216 258,728 64 Other branches of parent bank 90,191 90,615 93,909 88,438 89,529 86,351 86,349 90,914 93,760 89,065 65 Banks 96,860 92,889 78,203 81,871 76,814' 84,158 83,834 84,806 89,603 84,414 66 Official institutions 19,614 18,896 20,281 21,658 19,523 19,935 21,885 20,672 20,735 20,792 67 Nonbank foreigners 64,188 68,845 55,514 60,204 60,076 59,179 62,245 64,175 64,118 64,457 68 Other liabilities 19,844 19,335 20,441 23,954 22,190 21,127 22,327 21,914 21,989 22,059 69 Total payable in U.S. dollars 379,270 388,291 367,145 345,810 353,470 337,194 330,729 340,246' 346,327 340,111 70 Negotiable CDs3 n.a. n.a. 35,227 32,838 31,063 31,182 30,202 32,418 29,912 31,513 71 To United States 175,528 184,305 143,571 137,070 149,896 136,784 132,067 133,823 143,663 137,387 72 Parent bank 73,295 79,035 76,254 77,892 80,623 73,897 70,111 71,317 77,782 73,671 73 Other banks in United States 33,040 28,936 17,935 14,926 16,264 14,011 13,293 14,923 13,467 13,565 74 Nonbanks 69,193 76,334 49,382 44,252 53,009 48,876 48,663 47,583 52,414 50,151 75 To foreigners 192,510 194,139 178,260 165,359 163,361 160,137 159,603 165,147' 164,645 162,472 76 Other branches of parent bank 72,921 73,522 77,770 69,261 70,943 67,174 65,938 70,458 71,833 68,708 77 Banks 57,463 57,022 45,123 39,682 37,323 38,469 36,690 37,476 37,235 37,457 78 Official institutions 15,055 13,855 15,773 15,905 14,354 14,796 15,849 14,703 14,737 14,151 79 Nonbank foreigners 47,071 51,260 39,594 40,511 40,741 39,698 41,126 42,510' 40,840 42,156 80 Other liabilities 11,232 9,847 10,087 10,543 9,150 9,091 8,857 8,858 8,107 8,739 United Kingdom 81 Total, all currencies 161,067 158,732 144,385 152,456 148,599 150,835 148,788 150,975 155,867 152,075 82 Negotiable CDs3 n.a. n.a. 34,413 32,708 31,260 30,788 29,419 32,217 29,898 31,734 83 To United States 53,954 55,799 25,250 27,933 29,422 29,901 26,705 22,945 28,450 27,505 84 Parent bank 13,091 14,021 14,651 18,167 19,330 19,845 16,783 13,724 17,231 16,624 85 Other banks in United States 12,205 11,328 3,125 2,453 2,974 2,264 1,965 2,793 1,966 2,175 86 Nonbanks 28,658 30,450 7,474 7,313 7,118 7,792 7,957 6,428 9,253 8,706 87 To foreigners 99,567 95,847 77,424 81,446 78,525 80,724 82,666 86,053 87,773 83,067 88 Other branches of parent bank 18,361 19,038 21,631 21,932 23,389 21,858 21,954 24,733 25,379 23,838 89 Banks 44,020 41,624 30,436 32,200 28,581 32,326 32,088 33,301 34,294 31,584 90 Official institutions 11,504 10,151 10,154 10,519 9,676 10,093 10,956 9,750 9,757 9,548 91 Nonbank foreigners 25,682 25,034 15,203 16,795 16,879 16,447 17,668 18,269 18,343 18,097 92 Other liabilities 7,546 7,086 7,298 10,369 9,392 9,422 9,998 9,760 9,746 9,769 93 Total payable in U.S. dollars 130,261 131,167 117,497 112,681 112,697 112,073 108,402 108,420' 110,376 109,335 94 Negotiable CDs3 n.a. n.a. 33,070 30,570 29,337 28,845 27,655 30,042 27,978 29,542 95 To United States 53,029 54,691 24,105 25,581 27,756 28,150 24,967 21,070 26,411 25,490 % Parent bank 12,814 13,839 14,339 17,651 18,956 19,461 16,513 13,405 16,867 16,233 97 Other banks in United States 12,026 11,044 2,980 2,295 2,826 2,090 1,835 2,596 1,774 1,944 98 Nonbanks 28,189 29,808 6,786 5,635 5,974 6,599 6,619 5,069 7,770 7,313 99 To foreigners 73,477 73,279 56,923 52,091 51,980 50,762 51,686 53,219' 52,262 50,441 100 Other branches of parent bank 14,300 15,403 18,294 16,687 18,493 16,614 16,829 19,068 19,297 18,043 101 Banks 28,810 29,320 18,356 15,840 14,344 14,872 14,457 14,731 14,125 14,114 102. Official institutions 9,668 8,279 8,871 8,357 7,661 8,242 8,747 7,839 7,449 6,953 103 Nonbank foreigners 20,699 20,277 11,402 11,207 11,482 11,034 11,653 11,581' 11,391 11,331 104 Other liabilities 3,755 3,197 3,399 4,439 3,624 4,316 4,094 4,089 3,725 3,862 Bahamas and Caymans 105 Total, all currencies 145,156 152,083 146,811 133,645 142,055 130,413 128,851 135,210 135,998 132,122 106 Negotiable CDs3 n.a. n.a. 615 747 610 1,076 1,237 1,132 629 634 107 To United States 104,425 111,299 102,955 92,508 103,548 91,918 91,705 97,304 98,705 93,849 108 Parent bank 47,081 50,980 47,162 43,509 44,546 38,850 39,380 43,535 43,383 40,478 109 Other banks in United States 18,466 16,057 13,938 11,874 12,778 11,185 10,854 11,604 11,014 10,738 110 Nonbanks 38,878 44,262 41,855 37,125 46,224 41,883 41,471 42,165 44,308 42,633 111 To foreigners 38,274 38,445 40,320 37,307 35,053 35,296 33,773 34,450 34,279 35,139 112 Other branches of parent bank 15,796 14,936 16,782 15,593 14,075 14,755 13,072 13,191 14,069 13,731 113 Banks 10,166 11,876 12,405 10,954 10,669 11,108 10,842 10,346 10,783 10,318 114 Official institutions 1,967 1,919 2,054 2,278 1,776 1,505 1,737 1,743 2,167 2,144 115 Nonbank foreigners 10,345 11,274 9,079 8,482 8,533 7,928 8,122 9,170 7,260 8,946 116 Other liabilities 2,457 2,339 2,921 3,083 2,844 2,123 2,136 2,324 2,385 2,500 117 Total payable in U.S. dollars 141,908 148,278 143,582 129,575 138,322 126,536 124,572 131,004 131,708 127,918 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 Nov. Dec. Jan. Feb. Mar. Apr. May? 1 Total1 177,950 180,552 179,971 178,743 180,773 180,335 181,047' 188,998 191,327 By type 2 Liabilities reported by banks in the United States2 25,534 26,089 29,276 26,611 28,233 26,456 25,472' 26,689 24,996 3 U.S. Treasury bills and certificates3 54,341 59,976 54,331 53,252 53,294 54,420 55,933 59,547 63,614 U.S. Treasury bonds and notes 4 Marketable 68,514 69,019 74,735 77,447 77,809 78,428 78,822 82,538 82,872 5 Nonmarketable4 7,250 5,800 3,550 3,550 3,550 3,150 2,750 2,300 1,800 6 U.S. securities other than U.S. Treasury securities5 22,311 19,668 18,079 17,883 17,887 17,881 18,070 17,924 18,045 By area 1 Western Europe1 67,645 69,776 76,832 74,290 74,355 72,826 72,414' 76,294 76,614 8 Canada 2,438 1,528 1,507 1,314 1,118 1,762 1,445 1,711 1,502 9 Latin America and Caribbean 6,248 8,561 10,871 11,121 11,506 10,228 10,414 10,775 10,597 10 Asia 92,572 93,954 85,876 86,995 89,088 90,268 91,423 94,807 97,444 11 Africa 958 1,264 1,629 1,824 1,897 1,786 1,846 1,833 1,718 12 Other countries6 8,089 5,469 3,256 3,199 2,809 3,465 3,505 3,578 3,452 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 1986 IItteemm 11998822 11998833 11998844 June Sept. Dec. Mar. 1 Banks' own liabilities 4,844 5,219 8,586 10,238 12,901 15,168 21,320 2 Banks' own claims 7,707 7,231 11,984 14,179 15,233 16,088 19,634 3 Deposits 4,251 2,731 4,998 7,308 8,540 8,329 11,318 4 Other claims 3,456 4,501 6,986 6,871 6,693 7,759 8,316 5 Claims of banks' domestic customers1 676 1,059 569 243 328 832 1,426 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 • September 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 Nov. Dec. Jan. Feb. Mar/ Apr. May P 1 AI1 foreigners 307,056 369,607 407,306 421,341 434,671 430,836 436,434 440,518 443,351 442,605 2 Banks' own liabilities 227,089 279,087 306,898 324,049 340,373 335,036 340,071 344,422 346,453 340,468 3 Demand deposits 15,889 17,470 19,571 20,940 21,107 19,648 19,659 20,195 19,751 19,675 4 Time deposits' 68,797 90,632 110,413 114,314 116,716 114,241 116,543 116,418 114,210 114,206 5 Other2 23,184 25,874 26,268 29,856 29,468 30,805 31,560 32,125 33,219 31,597 6 Own foreign offices3 119,219 145,111 150,646 158,939 173,082 170,342 172,309 175,685 179,273 174,990 7 Banks' custody liabilities4 79,967 90,520 100,408 97,292 94,298 95,800 96,362 96,096 96,898 102,137 8 U.S. Treasury bills and certificates5 55,628 68,669 76,368 73,189 68,785 6699,,880011 7722,,663311 7722,,771144 7744,,663311 8800,,119922 9 Other negotiable and readily transferable instruments6 20,636 17,467 18,747 16,979 17,964 17,946 15,547 15,329 13,776 13,917 10 Other 3,702 4,385 5,293 7,124 7,549 8,054 8,184 8,053 8,491 8,029 11 Nonmonetary international and regional organizations7 4,922 5,957 4,454 7,803 5,566 7,487 9,867 5,223 3,420 4,503 12 Banks' own liabilities 1,909 4,632 2,014 1,535 2,366 2,714 4,326 1,404 1,674 2,372 13 Demand deposits 106 297 254 252 85 96 184 102 138 99 14 Time deposits' 1,664 3,584 1,267 1,051 2,067 2,369 3,892 391 681 1,093 15 Other2 139 750 493 233 214 250 250 911 856 1,179 16 Banks' custody liabilities4 3,013 1,325 2,440 6,268 3,200 4,773 5,540 3,820 1,746 2,131 17 U.S. Treasury bills and certificates 1,621 463 916 5,069 1,736 3,216 4,219 22,,331111 768 11,,228822 18 Other negotiable and readily transferable instruments6 1,392 862 1,524 1,195 1,464 11,,555566 1,322 1,508 970 849 19 Other 0 0 0 5 0 11 0 0 7 0 20 Official institutions8 71,647 79,876 86,065 83,608 79,862 81,527 80,876 81,405 86,237 88,611 21 Banks' own liabilities 16,640 19,427 19,039 23,323 20,825 22,590 22,056 21,719 23,588 22,103 22 Demand deposits 1,899 1,837 1,823 2,018 2,077 1,638 1,602 1,917 1,832 1,810 23 Time deposits' 5,528 7,318 9,374 10,523 10,935 10,680 10,319 10,299 9,368 9,935 24 Other2 9,212 10,272 7,842 10,783 7,813 10,272 10,136 9,503 12,389 10,358 25 Banks' custody liabilities4 55,008 60,448 67,026 60,284 59,037 58,937 58,820 59,686 62,648 66,508 26 U.S. Treasury bills and certificates5 46,658 54,341 59,976 54,331 53,252 53,294 5544,,442200 5555,,993333 5599,,554477 6633,,661144 27 Other negotiable and readily transferable instruments6 8,321 6,082 6,966 5,848 5,711 5,526 4,052 3,585 2,916 2,754 28 Other 28 25 84 105 75 117 348 168 185 139 29 Banks9 185,881 226,887 248,893 255,021 274,991 266,460 269,788 278,967 278,066 273,207 30 Banks' own liabilities 169,449 205,347 225,368 233,188 252,290 243,740 247,127 255,921 255,015 249,521 31 Unaffiliated foreign banks 50,230 60,236 74,722 74,249 79,208 73,397 74,818 80,236 75,742 74,532 32 Demand deposits 8,675 8,759 10,556 10,043 10,271 9,792 9,659 9,692 8,689 9,037 33 Time deposits' 28,386 37,439 47,095 46,809 48,962 44,662 45,536 50,194 48,485 46,868 34 Other2 13,169 14,038 17,071 17,397 19,975 18,943 19,623 20,350 18,568 18,627 35 Own foreign offices3 119,219 145,111 150,646 158,939 173,082 170,342 172,309 175,685 179,273 174,989 36 Banks' custody liabilities4 16,432 21,540 23,525 21,832 22,701 22,720 22,661 23,046 23,051 23,687 37 U.S. Treasury bills and certificates 5,809 10,178 11,448 9,429 9,554 9,223 9,501 9,869 99,,881155 1100,,884411 38 Other negotiable and readily transferable instruments6 7,857 7,485 7,236 5,853 6,153 6,006 5,876 5,752 5,423 5,451 39 Other 2,766 3,877 4,841 6,551 6,994 7,491 7,283 7,426 7,813 7,395 40 Other foreigners 44,606 56,887 67,894 74,909 74,251 75,362 75,902 74,923 75,629 76,283 41 Banks' own liabilities 39,092 49,680 60,477 66,002 64,892 65,992 66,561 65,379 66,176 66,472 42 Demand deposits 5,209 6,577 6,938 8,627 8,673 8,122 8,214 8,484 9,093 8,729 43 Time deposits 33,219 42,290 52,678 55,932 54,752 56,530 56,796 55,534 55,677 56,309 44 Other2 664 813 861 1,444 1,467 1,340 1,550 1,361 1,406 1,433 45 Banks' custody liabilities4 5,514 7,207 7,417 8,907 9,359 9,370 9,341 9,544 9,453 9,811 46 U.S. Treasury bills and certificates 1,540 3,686 4,029 4,360 4,243 4,068 4,491 4,601 4,501 44,,445544 47 Other negotiable and readily transferable instruments6 3,065 3,038 3,021 4,084 4,636 4,858 4,297 4,483 4,465 4,862 48 Other 908 483 367 463 480 444 553 459 487 495 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 14,307 10,346 10,476 9,152 9,845 9,628 7,386 6,603 6,286 6,269 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 Nov. Dec. Jan. Feb. Mar. Apr. MayP 1 Total 307,056 369,607 407,306 421,341 434,671 430,836 436,434 440,518'' 443,351 442,605 2 Foreign countries 302,134 363,649 402,852 413,538 429,105 423,349 426,567 435,295' 439,931 438,102 3 Europe 117,756 138,072 153,145 163,433 163,438 161,234 157,176 157,033' 165,252 165,933 4 Austria 519 585 615 655 693 692 769 1,665 2,051 897 Belgium-Luxembourg 2,517 2,709 4,114 5,556 5,214 5,189 4,732 4,268 4,617 5,305 6 Denmark 509 466 438 624 513 536 533 536 752 523 7 Finland 748 531 418 497 491 373 506 354 619 514 8 France 8,171 9,441 12,701 15,863 15,540 15,595 15,148 15,906' 19,307 19,423 9 Germany 5,351 3,599 3,358 7,265 4,835 5,622 5,309 5,691 6,718 4,961 10 Greece 537 520 699 574 664 612 551 535 559 552 11 Italy 5,626 8,462 10,762 9,069 9,642 7,739 7,235 7,215 6,537 7,864 12 Netherlands 3,362 4,290 4,731 4,359 4,212 4,069 4,027 4,334 4,320 4,183 13 Norway 1,567 1,673 1,548 1,008 848 781 552 469 731 850 14 Portugal 388 373 597 619 652 706 685 705 674 800 IS Spain 1,405 1,603 2,082 2,122 2,113 1,899 1,794 1,772 1,919 1,879 16 Sweden 1,390 1,799 1,676 1,482 1,344 1,622 1,693 1,547 1,313 1,299 17 Switzerland 29,066 32,246 31,740 28,992 28,742 26,119 25,606 26,602' 27,233 26,848 18 Turkey 296 467 584 288 429 504 404 383 377 434 19 United Kingdom 48,172 60,683 68,671 74,595 76,571 80,563 80,100 78,585' 81,734 83,884 20 Yugoslavia 499 562 602 675 673 595 600 535 547 556 21 Other Western Europe1 7,006 7,403 7,192 8,619 9,635 7,643 6,441 5,286' 4,308 4,310 22 U.S.S.R 50 65 79 36 105 43 64 61' 287 34 23 Other Eastern Europe2 576 596 537 533 523 332 427 586' 649 816 24 Canada 12,232 16,026 16,059 16,428 17,426 18,037 21,466 22,497' 20,450 21,257 25 Latin America and Caribbean 114,163 140,088 153,381 155,202 167,745 161,389 161,061 164,875' 164,713 159,461 26 Argentina 3,578 4,038 4,394 5,899 6,029 5,786 5,551 5,155 5,627 6,075 27 Bahamas 44,744 55,818 56,897 53,394 57,621 53,809 54,647 55,791' 57,865 51,829 28 Bermuda 1,572 2,266 2,370 2,415 2,765 2,596 2,147 2,324 2,276 2,127 29 Brazil 2,014 3,168 5,275 5,614 5,369 6,049 5,759 6,096' 5,782 5,423 30 British West Indies 26,381 34,545 36,773 35,858 42,645 40,469 41,127 44,041' 41,265 42,014 31 Chile 1,626 1,842 2,001 2,867 2,042 2,019 1,997 2,084 2,147 2,223 32 Colombia 2,594 1,689 2,514 2,920 3,102 3,336 3,140 3,076 3,101 3,053 33 Cuba 9 8 10 7 11 16 6 6 7 7 34 Ecuador 455 1,047 1,092 1,253 1,238 1,211 1,172 1,209 1,199 1,166 35 Guatemala 670 788 896 1,087 1,071 1,146 1,132 1,126 1,128 1,097 36 Jamaica 126 109 183 150 122 244 126 144 173 201 37 Mexico 8,377 10,392 12,303 13,948 14,045 13,702 13,433 12,990 13,126 13,153 38 Netherlands Antilles 3,597 3,879 4,220 4,612 4,875 4,6% 4,560 4,561 4,859 4,798 39 Panama 4,805 5,924 6,951 6,502 7,492 7,416 7,161 7,286' 6,960 7,042 40 Peru 1,147 1,166 1,266 1,124 1,166 1,124 1,100 1,106' 1,116 1,132 41 Uruguay 759 1,244 1,394 1,534 1,549 1,730 1,727 1,567 1,646 1,690 42 Venezuela 8,417 8,632 10,545 11,345 11,919 11,467 11,741 11,670 11,727 11,728 43 Other Latin America and Caribbean 3,291 3,535 4,297 4,673 4,683 4,571 4,534 4,641 4,708 4,703 44 48,716 58,570 71,187 71,047 72,266 74,841 78,767 82,644' 81,682 83,716 China 45 Mainland 203 249 1,153 1,380 1,594 1,003 1,624 1,347' 1,550 973 46 Taiwan 2,761 4,051 4,990 7,427 7,799 9,092 9,661 10,837' 11,027 12,687 47 Hong Kong 4,465 6,657 6,581 8,170 8,062 8,215 8,194 8,706' 8,757 8,745 48 India 433 464 507 562 711 606 630 926 574 577 49 Indonesia 857 997 1,033 1,381 1,466 1,524 1,738 2,107 1,787 1,758 50 Israel 606 1,722 1,268 1,595 1,595 1,459 1,358 1,450' 1,490 1,661 51 Japan 16,078 18,079 21,640 21,689 23,077 25,047 26,397 28,274' 28,279 29,689 52 Korea 1,692 1,648 1,730 1,685 1,665 1,503 1,602 1,551 1,337 1,336 53 Philippines 770 1,234 1,383 1,189 1,140 942 1,086 978 1,051 1,332 54 Thailand 629 747 1,257 1,066 1,358 1,199 1,141 1,103 993 1,155 55 Middle-East oil-exporting countries3 13,433 12,976 16,804 14,941 14,523 15,174 16,308 15,384 14,418 14,056 56 Other Asia 6,789 9,748 12,841 9,961 9,276 9,076 9,028 9,980 10,419 9,747 57 Africa 3,124 2,827 3,396 3,989 4,883 4,643 4,359 4,260 4,173 4,227 58 Egypt 432 671 647 780 1,363 1,080 987 870 960 910 59 Morocco 81 84 118 145 163 98 92 91 85 92 60 South Africa 292 449 328 462 388 567 421 465 386 414 61 Zaire 23 87 153 140 163 73 92 95 90 105 62 Oil-exporting countries4 1,280 620 1,189 1,407 1,494 1,644 1,614 1,601 1,442 1,490 63 Other Africa 1,016 917 961 1,056 1,312 1,182 1,152 1,137 1,210 1,216 64 Other countries 6,143 8,067 5,684 3,440 3,347 3,205 3,739 3,987' 3,662 3,508 65 Australia 5,904 7,857 5,300 2,906 2,779 2,707 3,024 3,237' 3,058 2,744 66 All other 239 210 384 534 568 498 714 750 604 763 67 Nonmonetary international and regional organizations 4,922 5,957 4,454 7,803 5,566 7,487 9,867 5,223' 3,420 4,503 68 International 4,049 5,273 3,747 6,952 4,551 6,109 8,671 4,139 2,421 3,661 69 Latin American regional 517 419 587 580 894 909 863 916 823 732 70 Other regional5 357 265 120 271 121 470 333 168' 176 110 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 Eu: spean 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 • September 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 Nov. Dec. Jan. Feb. Mar. Apr. May? 1 Total 355,705 391,312 400,162 384,515 403,209 386,367 389,338 394,769' 401,041 396,487 2 Foreign countries 355,636 391,148 399,363 383,903 402,178 385,075 388,529 394,286' 400,539 396,076 3 Europe 85,584 91,927 99,014 106,915 108,360 104,277 100,139 100,458' 101,230 101,235 4 Austria 229 401 433 614 598 485 542 494 429 531 5 Belgium-Luxembourg 5,138 5,639 4,794 6,801 5,741 5,831 5,276 5,429' 5,502 5,667 6 Denmark 554 1,275 648 558 706 864 940 845 794 882 7 Finland 990 1,044 898 909 823 843 741 1,194 795 866 8 France 7,251 8,766 9,157 9,785 9,134 9,058 7,943 8,636' 8,902 8,861 9 Germany 1,876 1,284 1,306 1,355 1,257 1,211 1,309 1,374 1,339 1,176 10 Greece 452 476 817 854 991 933 884 798 764 723 11 Italy 7,560 9,018 9,119 7,765 8,833 7,482 6,913 7,297 6,709 6,811 12 Netherlands 1,425 1,267 1,356 1,389 1,258 1,248 1,249 1,394 1,380 1,384 13 Norway 572 690 675 755 697 692 652 613 786 746 14 Portugal 950 1,114 1,243 1,123 1,058 1,040 936 893' 874 850 13 Spain 3,744 3,573 2,884 2,199 1,908 1,801 1,885 1,866 1,701 1,986 16 Sweden 3,038 3,358 2,230 2,546 2,203 2,174 2,278 2,422 1,923 2,238 17 Switzerland 1,639 1,863 2,123 3,162 3,161 2,836 2,361 2,940 2,978 3,134 18 Turkey 560 812 1,130 1,269 1,200 1,512 1,519 1,587 1,584 1,649 19 United Kingdom 45,781 47,364 56,185 61,655 64,594 62,356 60,587 57,983' 60,581 59,652 20 Yugoslavia 1,430 1,718 1,886 1,879 1,964 1,901 1,953 1,978' 1,952 1,923 21 Other Western Europe1 368 477 596 1,082 998 716 734 1,166 649 491 22 U.S.S.R 263 192 142 128 130 169 287 424 477 489 23 Other Eastern Europe2 1,762 1,598 1,389 1,086 1,107 1,126 1,151 1,126' 1,111 1,174 24 Canada 13,678 16,341 16,109 16,209 16,466 17,279 18,280 17,945 18,814 17,929 25 Latin America and Caribbean 187,969 205,491 207,862 191,663 202,401 188,975 190,479 196,723' 198,986 194,957 26 Argentina 10,974 11,749 11,050 11,486 11,462 11,463 11,574 11,456 11,803 11,924 27 Bahamas 56,649 59,633 58,009 49,015 57,756' 49,712 49,646 55,691' 55,259 52,893 28 Bermuda 603 566 592 498 499 542 380 460 275 246 29 Brazil 23,271 24,667 26,315 25,376 25,283 25,209 25,129 25,379 25,357 25,338 30 British West Indies 29,101 35,527 38,205 37,063 38,640 34,345 36,475 36,880' 38,927 37,155 31 Chile 5,513 6,072 6,839 6,198 6,603 6,525 6,478 6,557 6,531 6,548 32 Colombia 3,211 3,745 3,499 3,222 3,259 3,185 3,044 22,,990033 2,861 2,822 33 Cuba 3 0 0 0 0 0 0 11 0 0 34 Ecuador 2,062 2,307 2,420 2,419 2,390 2,439 2,369 2,399 2,388 2,409 35 Guatemala3 124 129 158 197 194 174 167 167 124 132 36 Jamaica3 181 215 252 222 224 228 213 213 216 218 37 Mexico 29,552 34,802 34,885 32,424 32,255' 31,826 32,050 31,608' 32,351 31,871 38 Netherlands Antilles 839 1,154 1,350 1,071 1,340 1,022 1,043 927 839 1,430 39 Panama 10,210 7,848 7,707 6,519 6,650 6,532 5,859 6,179' 6,133 5,643 40 Peru 2,357 2,536 2,384 1,990 1,947 1,874 1,852 1,806 1,767 1,757 41 Uruguay 686 977 1,088 954 960 966 956 961 953 953 42 Venezuela 10,643 11,287 11,017 10,876 10,871 10,947 11,269 11,204' 11,285 11,583 43 Other Latin America and Caribbean 1,991 2,277 2,091 2,135 2,067 1,984 1,976 1,931' 1,917 2,034 44 Asia 60,952 67,837 66,316 60,578 66,166 6655,,889988 7711,,007733 7700,,772299'' 7733,,442200 7744,,006699 China 45 Mainland 214 292 710 748 639 750 820 902 593 703 46 Taiwan 2,288 1,908 1,849 1,258 1,535 1,300 1,243 1,403' 1,151 1,459 47 Hong Kong 6,787 8,489 7,293 6,472 6,796 6,923 7,602 8,208 8,134 8,325 48 India 222 330 425 439 450 332 284 479' 398 420 49 Indonesia 348 805 724 608 698 692 793 712' 716 736 50 Israel 2,029 1,832 2,088 1,958 1,991 1,834 1,697 1,617' 1,611 1,760 51 Japan 28,379 30,354 29,066 26,768 31,209 32,232 36,471 36,711 38,781 38,616 52 Korea 9,387 9,943 9,285 8,908 9,241 8,839 9,087 9,242 9,286 9,176 53 Philippines 2,625 2,107 2,555 2,285 2,224 2,206 2,224 2,336 2,325 2,270 34 Thailand 643 1,219 1,125 788 840 793 765 810 775 716 55 Middle East oil-exporting countries4 3,087 4,954 5,044 4,239 4,298 3,975 3,869 3,577 3,838 3,957 56 Other Asia 4,943 5,603 6,152 6,106 6,245 6,021 6,218 4,732 5,812 5,929 57 Africa 5,346 6,654 6,615 5,394 5,407 5,416 5,360 5,128 5,007 4,919 58 Egypt 322 747 728 685 721 677 690 653 639 627 59 Morocco 353 440 583 584 575 591 612 646 662 660 60 South Africa 2,012 2,634 2,795 1,848 1,942 1,965 1,856 1,799 1,716 1,743 61 Zaire 57 33 18 21 20 18 18 17 17 17 62 Oil-exporting countries5 801 1,073 842 677 630 582 562 488 465 417 63 Other 1,802 1,727 1,649 1,579 1,520 1,584 1,621 1,525 1,508 1,456 64 Other countries 2,107 2,898 3,447 3,144 3,379 3,230 3,199 3,305 3,082 2,966 65 Australia 1,713 2,256 2,769 2,341 2,401 2,409 2,367 2,473' 2,237 2,050 66 All other 394 642 678 803 978 821 832 832' 845 916 67 Nonmonetary international and regional organizations6 68 164 800 612 1,030 1,292 809 483 502 410 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 Nov. Dec. Jan. Feb. Mar/ Apr. May? 1 Total 333333399999996666666,,,,,,,000000011111115555555 444444422222226666666,,,,,,,222222211111115555555 444444433333333333333,,,,,,,000000077777778888888 444444433333332222222,,,,,,,000000099999990000000 444444411111119999999,,,,,,,888888811111113333333 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 333333355555555555555,,,,,,,777777700000005555555 333333399999991111111,,,,,,,333333311111112222222 444444400000000000000,,,,,,,111111166666662222222 384,515 444444400000003333333,,,,,,,222222200000009999999 386,367 389,338 333333399999994444444,,,,,,,777777766666669999999 401,041 396,487 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 44444445555555,,,,,,,444444422222222222222 55555557777777,,,,,,,555555566666669999999 66666662222222,,,,,,,222222233333337777777 59,920 66666660000000.......333333333333331111111 60,469 60,539 66666660000000,,,,,,,444444422222227777777 60,154 60,272 44 OOwwnn ffoorreeiiggnn ooffffiicceess'' 111111122222227777777,,,,,,,222222299999993333333 111111144444446666666,,,,,,,333333399999993333333 111111155555556666666,,,,,,,222222211111116666666 158,752 111111177777776666666,,,,,,,555555533333335555555 163,983 169,036 111111177777773333333,,,,,,,666666699999998888888 179,662 173,861 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222221111111,,,,,,,333333377777777777777 111111122222223333333,,,,,,,888888833333337777777 111111122222224444444,,,,,,,999999933333332222222 115,189 111111111111116666666,,,,,,,222222244444444444444 111,957 110,175 111111111111110000000,,,,,,,666666644444443333333 111,767 112,984 66 DDeeppoossiittss 44444444444444,,,,,,,222222222222223333333 44444447777777,,,,,,,111111122222226666666 44444449999999,,,,,,,222222222222226666666 47,610 44444447777777,,,,,,,444444411111116666666 45,694 44,160 44444444444444,,,,,,,999999988888885555555 46,367 47,493 77 OOtthheerr 77777777777777,,,,,,,111111155555553333333 77777776666666,,,,,,,777777711111111111111 77777775555555,,,,,,,777777700000006666666 67,578 66666668888888,,,,,,,888888822222229999999 66,263 66,015 66666665555555,,,,,,,666666655555558888888 65,400 65,491 88 AAllll ootthheerr ffoorreeiiggnneerrss 66666661111111,,,,,,,666666611111114444444 66666663333333,,,,,,,555555511111114444444 55555556666666,,,,,,,777777777777777777777 50,654 55555550000000,,,,,,,000000099999998888888 49,958 49,587 55555550000000,,,,,,,000000000000002222222 49,458 49,369 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 44444440000000,,,,,,,333333311111110000000 33333334444444,,,,,,,999999900000003333333 33333332222222,,,,,,,999999911111116666666 22222228888888,,,,,,,888888888888881111111 22222225555555,,,,,,,000000044444444444444 2222222,,,,,,,444444499999991111111 2222222,,,,,,,999999966666669999999 3333333,,,,,,,333333388888880000000 3333333,,,,,,,333333333333335555555 2222222,,,,,,,444444499999994444444 11 Negotiable and readily transferable 33333330000000,,,,,,,777777766666663333333 22222226666666,,,,,,,000000066666664444444 22222223333333,,,,,,,888888800000005555555 11111119999999.......333333333333332222222 11111117777777,,,,,,,888888855555559999999 12 Outstanding collections and other 7777777,,,,,,,000000055555556666666 5555555,,,,,,,888888877777770000000 5555555,,,,,,,777777733333332222222 6666666,,,,,,,222222211111114444444 4444444,,,,,,,666666699999992222222 13 MEMO: Customer liability on 33333338888888,,,,,,,111111155555553333333 33333337777777,,,,,,,777777711111115555555 33333337777777,,,,,,,111111100000003333333 22222228888888,,,,,,,111111188888880000000 22222228888888,,,,,,,555555533333336666666 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 .... 42,499 46,337 40,714 37,856 37,378 39,465 42,112 41,226 42,891 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 1986 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998822 11998833 11998844 June Sept. Dec. Mar. 1 Total 228,150 243,715 243,952 232,485 232,360 227,238 220,374 By borrower 2 Maturity of 1 year or less' 173,917 176,158 167,858 159,383 162,262 160,162 152,252 3 Foreign public borrowers 21,256 24,039 23,912 23,764 26,466 26,312 23,852 4 All other foreigners 152,661 152,120 143,947 135,619 135,797 133,850 128,400 5 Maturity of over 1 year' 54,233 67,557 76,094 73,102 70,098 67,076 68,123 6 Foreign public borrowers 23,137 32,521 38,695 37,554 36,257 34,510 36,674 7 All other foreigners 31,095 35,036 37,399 35,549 33,841 32,566 31,448 By area Maturity of 1 year or less1 8 Europe 50,500 56,117 58,498 56,369 58,403 56,425 53,440 9 Canada 7,642 6,211 6,028 6,160 6,100 6,386 5,855 10 Latin America and Caribbean 73,291 73,660 62,791 63,517 62,973 63,040 59,469 11 37,578 34,403 33,504 27,569 29,049 27,779 27,723 12 Africa 3,680 4,199 4,442 4,003 3,954 3,753 3,331 13 All other2 1,226 1,569 2,593 1,764 1,782 2,779 2,433 Maturity of over 1 year' 14 Europe 11,636 13,576 9,605 8,739 8,078 7,643 7,522 1.5 Canada 1,931 1,857 1,882 2,116 1,932 1,804 1,924 16 Latin America and Caribbean 35,247 43,888 56,144 53,507 52,049 50,662 52,068 17 3,185 4,850 5,323 5,123 5,217 4,502 4,252 18 Africa 1,494 2,286 2,033 1,996 1,665 1,538 1,634 19 All other2 740 1,101 1,107 1,622 1,157 926 722 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 • September 1986 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 1984 1985 1986 AArreeaa oorr ccoouunnttrryy22 11998811 11998822 11998833 June3 Sept. Dec. Mar. June Sept. Dec. Mar.P 1 Total 415.2 438.0 436.4 430.2 409.1 408.0 407.9 399.0 397.5 396.9 395.9 2 G-10 countries and Switzerland 175.5 179.7 167.8 157.6 147.6 148.1 153.2 146.6 151.5 150.5 156.9 3 Belgium-Luxembourg 13.3 13.1 12.4 10.9 9.8 8.7 9.3 8.9 9.5 9.3 8.3 4 France 15.3 17.1 16.2 14.2 14.3 14.1 14.6 13.5 14.8 12.3 13.8 5 Germany 12.9 12.7 11.3 10.9 10.0 9.0 8.9 9.6 9.8 10.5 11.2 6 Italy 9.6 10.3 11.4 11.5 9.7 10.1 10.0 8.6 8.3 9.8 8.5 7 Netherlands 4.0 3.6 3.5 3.0 3.4 3.9 3.8 3.7 3.4 3.8 3.5 8 Sweden 3.7 5.0 5.1 4.3 3.5 3.2 3.1 2.9 3.1 2.7 2.9 9 Switzerland 5.5 5.0 4.3 4.2 3.9 3.9 4.2 4.0 4.1 4.4 5.4 10 United Kingdom 70.1 72.1 65.3 60.3 57.1 60.3 65.4 65.7 66.9 66.6 69.2 11 Canada 10.9 10.4 8.3 8.9 8.1 7.9 9.1 8.1 7.5 7.0 6.1 12 Japan 30.2 30.2 29.9 29.3 27.7 27.1 24.7 21.7 24.0 24.1 28.1 13 Other developed countries 28.4 33.7 36.1 37.1 36.3 33.8 33.0 32.5 32.2 30.5 31.6 14 Austria 1.9 1.9 1.9 1.9 1.8 1.6 1.6 1.6 1.7 1.6 1.6 15 Denmark 2.3 2.4 3.4 3.1 2.9 2.2 2.1 1.9 2.1 2.4 2.5 16 Finland 1.7 2.2 2.4 2.3 1.9 1.9 1.8 1.8 1.8 1.6 1.9 17 Greece 2.8 3.0 2.8 3.3 3.2 2.9 2.9 2.9 2.8 2.6 2.5 18 Norway 3.1 3.3 3.3 3.2 3.2 3.0 2.9 2.9 3.4 2.9 2.7 19 Portugal 1.1 1.5 1.5 1.7 1.6 1.4 1.4 1.3 1.4 1.3 1.1 20 Spain 6.6 7.5 7.1 7.3 6.9 6.5 6.4 5.9 6.1 5.8 6.4 21 Turkey 1.4 1.4 1.7 2.0 2.0 1.9 1.9 2.0 2.1 1.9 2.3 22 Other Western Europe 2.1 2.3 1.8 1.9 1.7 1.7 1.7 1.8 1.7 2.0 2.4 23 South Africa 2.8 3.7 4.7 4.7 5.0 4.5 4.2 3.9 3.3 3.2 3.2 24 Australia 2.5 4.4 5.5 5.7 6.2 6.1 6.2 6.4 5.8 5.2 5.0 25 OPEC countries4 24.8 27.2 28.8 26.4 24.7 25.3 24.8 23.0 23.1 21.8 20.7 26 Ecuador 2.2 2.2 2.2 2.1 2.1 2.2 2.2 2.2 2.2 2.1 2.2 27 Venezuela 9.9 10.5 9.9 9.5 9.2 9.3 9.3 9.3 9.0 8.9 8.7 28 Indonesia 2.6 3.2 3.8 3.9 3.6 3.7 3.6 3.4 3.4 3.3 3.3 29 Middle East countries 7.5 8.5 9.9 8.2 7.3 7.9 7.4 6.1 6.2 5.5 4.7 30 African countries 2.5 2.8 3.0 2.7 2.5 2.3 2.3 2.2 2.3 2.0 1.8 31 Non-OPEC developing countries 96.3 106.8 111.3 112.7 112.1 112.2 111.3 110.4 108.2 105.5 103.6 Latin America 32 Argentina 9.4 8.9 9.5 9.2 9.1 8.7 8.6 8.6 8.9 8.9 8.9 33 Brazil 19.1 22.9 23.1 25.4 26.3 26.3 26.4 26.6 25.5 25.6 25.7 34 Chile 5.8 6.3 6.4 6.7 7.1 7.0 7.0 6.9 6.6 7.0 6.9 35 Colombia 2.6 3.1 3.2 3.0 2.9 2.9 2.8 2.7 2.6 2.7 2.3 36 Mexico 21.6 24.2 25.8 25.9 26.0 25.7 25.5 25.3 24.4 24.1 23.9 37 Peru 2.0 2.6 2.4 2.3 2.2 2.2 2.2 2.1 1.9 1.8 1.7 38 Other Latin America 4.1 4.0 4.2 4.1 3.9 3.9 3.7 3.6 3.5 3.4 3.6 Asia China 39 Mainland .2 .2 .3 .6 .5 .7 .7 .3 1.1 .5 .6 40 Taiwan 5.1 5.3 5.3 5.3 5.2 5.1 5.3 5.5 5.1 4.5 4.3 41 India .3 .6 1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.3 1.2 42 Israel 2.1 2.3 1.9 1.9 1.7 1.8 1.7 2.3 1.5 1.6 1.3 43 Korea (South) 9.4 10.9 11.3 11.2 10.4 10.8 10.5 10.2 10.5 9.6 9.5 44 Malaysia 1.7 2.1 2.9 2.7 3.0 2.8 2.8 2.8 2.8 2.4 2.2 45 Philippines 6.0 6.3 6.2 6.3 5.9 6.0 6.1 6.0 6.0 5.7 5.6 46 Thailand 1.5 1.6 2.2 1.9 1.8 1.8 1.7 1.6 1.6 1.4 1.3 47 Other Asia 1.0 1.1 1.0 1.1 1.0 1.2 1.1 1.0 1.1 1.1 .9 Africa 48 Egypt 1.1 1.2 1.5 1.4 1.2 1.2 1.1 1.0 1.0 1.0 .9 49 Morocco .7 .7 .8 .8 .8 .8 .8 .8 .9 ..99 .9 50 Zaire .2 .1 .1 .1 .1 .1 .1 .1 .1 ..11 .1 51 Other Africa5 2.3 2.4 2.3 1.9 1.9 2.1 2.2 2.0 2.0 1.9 1.9 52 Eastern Europe 7.8 6.2 5.3 4.9 4.5 4.4 4.3 4.3 4.6 4.2 4.0 53 U.S.S.R .6 .3 .2 .2 .2 .1 .2 .3 .2 .1 .3 54 Yugoslavia 2.5 2.2 2.4 2.3 2.3 2.3 2.2 2.2 2.4 2.2 2.0 55 Other 4.7 3.7 2.8 2.4 2.1 2.0 1.9 1.8 1.9 1.8 1.7 56 Offshore banking centers 63.7 66.6 70.2 73.9 66.4 66.7 64.2 65.0 60.3 67.2 62.6 57 Bahamas 19.0 19.0 21.8 27.4 23.3 21.5 20.0 21.1 16.6 22.1 21.0 58 Bermuda .7 .9 .9 .7 1.0 .9 .7 .9 .8 .7 .7 59 Cayman Islands and other British West Indies 12.4 12.8 12.2 12.2 11.1 11.8 12.3 12.1 12.3 13.2 11.3 60 Netherlands Antilles 3.2 3.3 4.1 3.3 3.1 3.4 3.3 3.2 2.3 2.3 2.3 61 Panama6 7.7 7.5 5.8 6.5 5.6 6.7 5.5 5.4 6.1 6.0 5.9 62 Lebanon .2 .1 .1 .1 .1 .1 .1 .1 .0 .1 .1 63 Hong Kong 11.8 13.9 15.0 13.5 12.7 12.5 12.4 12.6 12.7 12.9 12.9 64 Singapore 8.7 9.2 10.3 10.3 9.5 9.8 10.0 9.7 9.4 9.9 8.4 65 Others7 .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated8 18.8 17.9 17.0 17.6 17.4 17.5 17.2 17.3 17.6 17.2 16.5 1. The banking offices covered by these data are the U.S. offices and foreign 2. Revisions shown in this issue have been made in part to correct some branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. double-counting of claims held by foreign branches located in Puerto Rico, the Offices not covered include (1) U.S. agencies and branches of foreign banks, and U.S. Virgin Islands, and Guam. (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are 3. Beginning with June 1984 data, reported claims held by foreign branches adjusted to exclude the claims on foreign branches held by a U .S. office or another have been reduced by an increase in the reporting threshold for "shell" branches foreign branch of the same banking institution. The data in this table combine from $50 million to $150 million equivalent in total assets, the threshold now foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims applicable to all reporting branches. of U.S. offices in table 3.18 (excluding those held by agencies and branches of foreign banks and those constituting claims on own foreign 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 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998811 11998822 11998833 Dec. Mar. June Sept. Dec. 1 Total 28,618 27,512 25,346 29,357 26,206' 24,535' 25,184 27,018 2 Payable in dollars 24,909 24,280 22,233 26,389 23,429' 21,889' 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 14,484' 13,046' 13,441 14,162 8 Trade payables 10,818 9,438 7,765 7,005 7,015' 5,797' 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 13,556' 12,356' 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 77 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 31 Oil-exporting countries3 0 0 0 0 0 0 0 0 32 All other4 24 12 27 41 31 30 22 21 Commercial liabilities 33 Europe 3,770 3,831 3,245 4,001 3,500' 3,461' 3,897 4,011 34 Belgium-Luxembourg 71 52 62 48 37 53 56 62 3S France 573 598 437 438 40C 423' 431 453 36 Germany 545 468 427 622 587' 428' 601 607 37 Netherlands 220 346 268 245 272 284 386 364 38 Switzerland 424 367 241 257 228' 349' 289 379 39 United Kingdom 880 1,027 732 1,095 741' 73(V 858 976 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 1,713' 1,225' 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 276 642 432 636 393' 309 311 212 48 9,384 8,144 6,741 5,285 5,708' 5,246' 5,353 6,046 49 Japan 1,094 1,226 1,247 1,256 1,228' 1,219' 1,567 1,799 50 Middle East oil-exporting countries2 5 7,008 5,503 4,178 2,372 2,786 2,396 2,109 2,829 51 Africa 703 753 553 588 765 631' 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. NOTES TO TABLE 3.21—CONTINUED 4. Besides the Organization of Petroleum Exporting Countries shown individ- 6. Includes Canal Zone beginning December 1979. ually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq, 7. Foreign branch claims only. Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well 8. Includes New Zealand, Liberia, and international and regional organizaas Bahrain and Oman (not formally members of OPEC). tions. 5. Excludes Liberia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • September 1986 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' 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 29,901' 28,804' 26,750' 28,666' 28,071 2 Payable in dollars 32,582 26,085 31,815 27,304' 26,232' 24,121' 25,80c 25,769 3 Payable in foreign currencies 3,603 2,640 3,096 2,597 2,571 2,629 2,866 2,302 By type 4 Financial claims 21,142 17,684 23,780 19,254' 18,506' 16,695' 19,203' 18,031 3 Deposits 15,081 13,058 18,496 14,621' 14,50C 12,839' 15,315' 14,805 6 Payable in dollars 14,456 12,628 17,993 14,202' 14,003' 12,283' 14,611' 14,190 / Payable in foreign currencies 625 430 503 420 497 556 704 615 a 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 1100,,005555'' 9,463 10,040 12 Trade receivables 14,007 9,994 9,721 9,177 8,784 88,,668888'' 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 9,463' 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 4,596 4,873 6,488 5,762' 5,786' 5,477' 6,463' 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 4,864' 5,053' 4,900' 5,736' 5,492 23 Canada 6,755 4,377 5,989 3,988' 3,942' 3,756' 4,037' 3,256 24 Latin America and Caribbean 8,812 7,546 10,234 8,216' 7,721' 6,616' 7,603' 7,650 25 Bahamas 3,650 3,279 4,771 3,306' 3,052' 2,204' 2,315' 2,638 26 Bermuda 18 32 102 6 4 6 5 6 27 Brazil 30 62 53 100 98 96 92 78 28 British West Indies 3,971 3,255 4,206 4,043' 3,998' 3,747' 4,632' 4,440 29 Mexico 313 274 293 215 201 206 201 180 30 Venezuela 148 139 134 125 101 100 73 48 31 758 698 764 961 859' 640' 969 696 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 3,680' 3,235 3,533 38 Belgium-Luxembourg 234 151 135 165 149 212 158 175 39 France 776 474 459 440 375 408 360 426 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 967 633 829 1,021 1,248 1,065 1,100 1,023 45 Latin America and Caribbean 3,479 2,526 2,695 22,,005522 1,973 1,803' 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 1,022 775 884 583 493 468' 416 510 51 Venezuela 424 351 272 206 192 181' 149 157 52 3,959 3,050 3,063 3,073 2,985 2,707' 22,,771122 2,982 53 Japan 1,245 1,047 1,114 1,191 1,154 954' 888844 1,016 54 Middle East oil-exporting countries2 905 751 737 668 666 593 541 638 55 Africa 772 588 588 470 510 464' 434 437 56 Oil-exporting countries3 152 140 139 134 141 137' 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.- Nov. Dec. Jan. Feb. Mar. Apr. MayP May U.S. corporate securities STOCKS 1 Foreign purchases 59,834 81,819 61,222 8,409 11,172 8,729 10,585 13,503 15,306 13,099 2 Foreign sales 62,814 76,851 48,178 7,137 9,010 6,987 8,828 10,640 11,420 10,302 3 Net purchases, or sales (-) -2,980 4,968 13,045 1,273 2,161 1,743 1,756 2,863 3,886 2,797 4 Foreign countries -3,109 4,884 12,885 ' 1,362 1,996 1,755 1,737 2,816 3,822 2,755 5 Europe -3,077 2,068 8,397 948 1,339 1,173 1,393 2,205 2,049 1,577 6 France -405 -438 -18 -85 -105 -63 -68 -26 36 102 7 Germany -50 730 747 270 283 134 234 229 47 102 8 Netherlands -357 -122 755 47 125 109 121 166 123 236 9 Switzerland -1,542 -75 2,347 107 280 288 420 698 566 375 10 United Kingdom -677 1,674 3,557 579 700 615 634 1,021 719 568 11 Canada 1,691 355 233 -70 93 121 -59 77 50 43 1? Latin America and Caribbean 495 1,718 1,689 243 305 -68 213 198 862 482 13 Middle East1 -1,992 238 772 -174 227 208 -19 127 338 117 14 Other Asia -378 313 1,342 384 -25 268 154 122 376 421 15 Africa -22 24 206 -1 12 25 30 59 48 43 16 Other countries 175 168 247 32 44 26 24 28 98 70 17 Nonmonetary international and regional organizations 129 84 160 -89 165 -12 20 47 63 42 BONDS2 18 Foreign purchases 39,296 87,176 53,602 12,466 9,755 6,065 9,285 12,564 13,541 12,147 19 Foreign sales 26,199 43,068 29,602 4,284 4,558 2,939 4,936 7,420 8,960 5,347 20 Net purchases, or sales (-) 13,096 44,109 24,000 8,182 5,197 3,126 4,350 5,144 4,581 6,800 21 Foreign countries 12,799 44,203 23,367 7,824 5,555 3,229 4,201 4,843 4,391 6,704 77 Europe 11,697 40,042 19,424 6,835 5,176 2,840 3,123 3,690 3,536 6,235 73 France 207 210 37 -15 0 27 -33 -17 -23 83 24 Germany 1,724 2,001 -26 897 408 -2 45 -224 -73 228 75 Netherlands 100 222 204 158 13 85 3 25 2 89 76 Switzerland 643 3,987 2,891 804 1,013 235 511 459 1,231 456 77 United Kingdom 8,429 32,757 16,567 4,903 3,696 2,471 2,617 3,374 2,474 5,631 78 Canada -62 189 -88 110 19 2 -31 -198 75 63 79 Latin America and Caribbean 376 498 651 124 68 18 27 200 263 142 30 Middle East1 -1,030 -2,643 -750 -215 -435 -174 0 15 -389 -202 31 Other Asia 1,817 6,068 4,096 975 703 541 1,064 1,144 883 464 3? Africa 1 11 3 0 4 1 1 0 3 -2 33 Other countries 0 38 31 -5 19 2 17 -10 19 3 34 Nonmonetary international and regional organizations 297 -95 633 358 -358 -103 149 301 190 96 Foreign securities 35 Stocks, net purchases, or sales (-) -1,101 -3,895 -2,463 -303 -413 123 -772 -1,440 -1,668 1,294 36 Foreign purchases 14,816 21,006 18,441 2,159 2,740 2,509 2,933 3,618 4,388 4,992 37 Foreign sales 15,917 24,902 20,904 2,462 3,153 2,386 3,705 5,058 6,057 3,698 38 Bonds, net purchases, or sales (-) -3,930 -4,018 -5,004 272 -138 -67 -966 -3,003 -1,076 108 39 Foreign purchases 56,017 81,153 60,909 9,000 8,370 9,796 10,418 12,438 14,982 13,275 40 Foreign sales 59,948 85,171 65,913 8,728 8,507 9,862 11,385 15,441 16,058 13,167 41 Net purchases, or sales (-), of stocks and bonds .... -5,031 -7,913 -7,466 -31 -551 57 -1,738 -4,443 -2,744 1,402 42 Foreign countries -4,642 -8,977 -7,338 -254 -886 -31 -1,879 -4,119 -2,614 1,305 43 Europe -8,655 -9,926 -8,467 -1,046 -424 -379 -1,918 -3,840 -2,438 108 44 Canada 542 -1,686 -1,235 112 -394 -219 -319 -491 -286 80 45 Latin America and Caribbean 2,460 1,850 1,146 32 85 220 297 121 162 346 46 Asia 1,356 667 1,726 814 -352 395 563 127 -143 783 47 Africa -108 75 30 37 42 7 10 4 6 3 48 Other countries -238 43 -539 -204 156 -56 -512 -40 85 -16 49 Nonmonetary international and regional organizations -389 1,063 -128 223 335 88 140 -324 -130 98 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 • September 1986 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1986 1985 1986 11998844 11998855 Country or area M Ja a n y . - Nov. Dec. Jan. Feb. Mar. Apr. May Transactions, net purchases or sales (-) during period1 1 Estimated total2 21,501 29,786 14,696 2,500 6,460 -1,359 352 9,572 8,390 -2,258 2 Foreign countries2 16,496 29,303 12,978 2,276 3,066 -884 3,883 2,361 7,986 -368 3 Europe2 11,014 3,918 6,680 -995 180 114 1,818 1,813 1,531 1,405 4 Belgium-Luxembourg 287 476 -96 29 -44 33 -2 -196 29 39 5 Germany2 2,929 1,917 1,499 -101 302 132 459 322 117 468 6 Netherlands 449 269 -125 155 -82 26 -261 61 81 -31 7 Sweden 40 976 307 -42 -41 -200 193 -14 93 236 8 Switzerland2 656 760 733 -151 -116 68 115 22 163 366 9 United Kingdom 5,188 -2,186 3,278 -584 50 -60 1,388 1,474 -207 684 10 Other Western Europe 1,466 1,706 1,071 -301 111 116 -75 144 1,255 -370 11 Eastern Europe 0 0 13 0 0 0 0 0 0 13 12 Canada 1,586 -190 1,138 -394 -71 -461 -131 762 55 913 13 Latin America and Caribbean 1,418 4,312 1,170 735 90 107 584 227 1,222 -970 14 Venezuela 14 238 242 72 -41 -53 -63 127 196 36 15 Other Latin America and Caribbean 536 2,343 1,222 367 265 86 448 171 161 356 16 Netherlands Antilles 869 1,731 -294 296 -133 74 200 -70 865 -1,363 17 Asia 2,431 20,839 3,376 2,979 2,833 -584 1,311 -446 4,786 -1,691 18 Japan 6,289 18,859 1,624 3,039 902 -861 1,601 140 1,973 -1,229 19 Africa -67 112 -41 1 9 -8 -12 -18 -1 -2 20 All other 114 311 656 -51 25 -52 314 22 394 -22 21 Nonmonetary international and regional organizations 5,009 483 1,716 224 3,393 -474 -3,532 7,211 403 -1,892 22 International 4,612 -394 1,440 -15 3,001 -194 -3,766 6,957 342 -1,899 23 Latin American regional 0 18 118 8 7 14 51 23 30 0 MEMO 24 Foreign countries2 16,496 29,303 12,978 2,276 3,066 -884 3,883 2,361 7,986 -368 25 Official institutions 505 8,427 5,318 -236 2,712 362 619 394 3,716 227 26 Other foreign2 15,992 20,876 7,661 2,512 355 -1,246 3,264 1,967 4,270 -594 Oil-exporting countries 27 Middle East3 -6,270 -1,576 636 -413 740 222 -301 -607 1,336 -14 28 Africa4 -101 7 1 0 2 1 0 -2 1 1 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 June 30, 1986 Rate on June 30, 1986 Rate on June 30, 1986 CCoouunnttrryy CCoouunnttrryy CCoouunnttrryy Per- Month Per- Month Per- Month cent effective cent effective cent effective 444444......000000 AAAAAAuuuuuugggggg...... 111111999999888888555555 777777......000000 JJJJJJuuuuuunnnnnneeeeee 111111999999888888666666 888...000 JJJuuunnneee 111999888333 888888......000000 MMMMMMaaaaaayyyyyy 111111999999888888666666 GGeerrmmaannyy,, FFeedd.. RReepp.. ooff ...... 333333......555555 MMMMMMaaaaaarrrrrr...... 111111999999888888666666 444...000 MMMaaarrr... 111999888333 Brazil 444444999999......000000 MMMMMMaaaaaarrrrrr...... 111111999999888888111111 IIttaallyy 111111222222......000000 MMMMMMaaaaaayyyyyy 111111999999888888666666 888888......888888444444 JJJJJJuuuuuunnnnnneeeeee 111111999999888888666666 333333......555555 AAAAAApppppprrrrrr...... 111111999999888888666666 888...000 OOOcccttt... 111999888555 777777......000000 OOOOOOcccccctttttt...... 111111999999888888333333 444444......555555 MMMMMMaaaaaarrrrrr...... 111111999999888888666666 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 Dec. Jan. Feb. Mar. Apr. May June 1 Eurodollars 9.57 10.75 8.27 7.99 8.02 7.89 7.42 6.80 6.86 6.95 2 United Kingdom 10.06 9.91 12.16 11.66 12.78 12.60 11.70 10.43 10.16 9.70 3 Canada 9.48 11.29 9.64 9.25 10.23 11.81 10.94 9.57 8.60 8.72 4 Germany 5.73 5.96 5.40 4.80 4.65 4.47 4.49 4.48 4.58 4.59 5 Switzerland 4.11 4.35 4.92 4.13 4.08 3.85 3.84 4.04 4.32 4.96 6 Netherlands 5.58 6.08 6.29 5.79 5.71 5.74 5.44 5.23 5.76 5.90 7 France 12.44 11.66 9.91 8.92 8.95 8.81 8.28 7.66 7.21 7.23 8 Italy 18.95 17.08 14.86 14.71 14.88 15.91 16.05 13.62 12.35 11.78 9 Belgium 10.51 11.41 9.60 9.14 9.75 9.75 9.75 8.51 7.90 7.27 10 Japan 6.49 6.32 6.47 7.36 6.54 6.04 5.47 4.85 4.58 4.64 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 • September 1986 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1986 CCoouunnttrryy//ccuurrrreennccyy 11998833 11998844 11998855 Jan. Feb. Mar. Apr. May June 1 Australia/dollar1 90.14 87.937 70.026 70.00 69.93 70.79 72.28 72.72 68.89 2 Austria/schilling 17.968 20.005 20.676 17.151 16.389 15.976 15.965 15.667 15.699 3 Belgium/franc 51.121 57.749 59.336 49.843 47.748 46.603 46.394 45.497 45.633 4 Brazil/cruzeiro 573.27 1841.50 6205.10 11345.26 13020.00 13.843 13.84 13.84 13.84 5 Canada/dollar 1.2325 1.2953 1.3658 1.4070 1.4043 1.4009 1.3879 1.3757 1.3899 6 China, P.R./yuan 1.9809 2.3308 2.9434 3.2095 3.2152 3.2202 3.2143 3.2014 3.2115 7 Denmark/krone 9.1483 10.354 10.598 8.9468 8.6048 8.4096 8.3928 8.2479 8.2822 8 Finland/markka 5.5636 6.0007 6.1971 5.4131 5.2465 5.1517 5.1235 5.0967 5.1954 9 France/franc 7.6203 8.7355 8.9799 7.4821 7.1575 6.9964 7.2060 7.0967 7.1208 10 Germany/deutsche mark 2.5539 2.8454 2.9419 2.4384 2.3317 2.2752 2.2732 2.2277 2.2337 11 Greece/drachma 87.895 112.73 138.40 148.69 143.48 141.43 142.50 139.64 140.98 12 Hong Kong/dollar 7.2569 7.8188 7.7911 7.8081 7.8042 7.8125 7.7957 7.8080 7.8107 13 India/rupee 10.1040 11.348 12.332 12.243 12.370 12.289 12.393 12.466 12.599 14 Ireland/pound1 124.81 108.64 106.62 124.75 129.79 132.87 133.71 136.62 135.68 15 Italy/lira 1519.30 1756.10 1908.90 1663.14 1588.21 1548.43 1559.45 1528.50 1533.10 16 Japan/yen 237.55 237.45 238.47 199.89 184.85 178.69 175.09 167.03 167.54 17 Malaysia/ringgit 2.3204 2.3448 2.4806 2.4489 2.4704 2.5367 2.5981 2.5978 2.6231 18 Netherlands/guilder 2.8543 3.2083 3.3184 2.7489 2.6343 2.5678 2.5629 2.5082 2.5154 19 New Zealand/dollar1 66.790 57.837 49.752 51.657 53.177 52.820 56.127 56.666 54.585 20 Norway/krone 7.3012 8.1596 8.5933 7.5541 7.2789 7.1711 7.1603 7.4106 7.6117 21 Portugal/escudo 111.610 147.70 172.07 157.99 152.63 149.40 150.79 149.12 151.09 22 Singapore/dollar 2.1136 2.1325 2.2008 2.1289 2.1401 2.1600 2.1880 2.2157 2.2232 23 South Africa/rand1 89.85 69.534 45.57 42.40 47.94 49.04 48.77 45.67 39.49 24 South Korea/won 776.04 807.91 861.89 892.75 888.57 886.66 887.95 889.09 890.74 25 Spain/peseta 143.500 160.78 169.98 152.91 147.31 143.06 144.11 141.62 142.91 26 Sri Lanka/rupee 23.510 25.428 27.187 26.342 27.596 27.623 27.791 27.932 27.955 27 Sweden/krona 7.6717 8.2706 8.6031 7.5938 7.3997 7.2610 7.2433 7.1458 7.2124 28 Switzerland/franc 2.1006 2.3500 2.4551 2.0660 1.9547 1.9150 1.9016 1.8538 1.8406 29 Taiwan/dollar n.a. 39.633 39.889 39.405 39.239 39.027 38.689 38.460 38.163 30 Thailand/baht 22.991 23.582 27.193 26.676 26.492 26.418 26.429 26.327 26.400 31 United Kingdom/pound1 151.59 133.66 129.74 142.44 142.97 146.74 149.85 152.11 150.85 MEMO 32 United States/dollar2 125.34 138.19 143.01 123.65 118.77 116.05 115.67 113.27 113.77 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, 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 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1985 September 1986 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 Terms of lending at commercial banks, May 1986 July 1986 A70 Special tables begin on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • September 1986 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 19851 Millions of dollars All states2 New York California Illinois IItteemm in T c I l B o u t F d a s i l n g o IB nl F y s 3 in T c I l B o u t F d a s i l n g o IB nl F y s 3 in T c I l B o u t F d a s i l ng o IB nl F y s 3 in T c I l B o u t F d a s i l ng o IB nl F y s 3 1 Total assets4 311,562 152,871 231,028 119,995 49,534 21,759 16,265 6,390 7 Claims on nonrelated parties 286,233 133,979 215,222 105,060 42,786 19,488 16,208 6,291 3 Cash and balances due from depository institutions 67,273 52,592 56,924 44,174 5,643 5,113 3,894 3,062 4 Cash items in process of collection and unposted debits 224 0 179 0 2233 0 1100 0 5 Currency and coin (U.S. and foreign) 20 n.a. 14 n.a. 2 n.a. 2 n.a. 6 Balances with depository institutions in United States 36,125 24,573 29,944 20,016 3,490 3,057 2,090 1,339 7 U.S. branches and agencies of other foreign banks (including their IBFs) 29,524 23,046 23,990 18,673 3,231 2,925 1,868 1,298 8 Other depository institutions in United States (including their IBFs) 6,601 1,527 5,955 1,342 259 132 222222 42 9 Balances with banks in foreign countries and with foreign central banks 29,142 28,020 25,179 24,159 2,087 2,056 11,,775500 1,723 10 Foreign branches of U.S. banks 2,217 2,133 1,946 1,875 95 93 172 165 11 Other banks in foreign countries and foreign central banks 26,924 25,886 23,233 22,284 1,992 1,963 1,578 1,558 12 Balances with Federal Reserve Banks 1,762 n.a. 1,608 n.a. 41 n.a. 43 n.a. 13 Total securities and loans 182,035 78,345 129,395 58,443 30,715 13,992 11,582 3,088 14 Total securities, book value 18,667 7,151 15,555 5,490 2,407 1,484 528 133 15 U.S. Treasury 4,4% n.a. 4,255 n.a. 61 n.a. 170 n.a. 16 Obligations of U.S. government agencies and corporations 997766 n.a. 995566 n.a. 1188 n.a. 00 n.a. 17 Other bonds, notes, debentures and corporate stock (including state and local securities) 13,195 7,151 10,344 5,490 2,328 1,484 335588 133 18 Federal funds sold and securities purchased under agreements to resell 9,692 943 8,594 845 748 65 156 9 19 U.S branches and agencies of other foreign banks 6,042 531 5,314 504 470 15 140 2 20 Commercial banks in United States 1,768 35 1,606 21 78 0 9 0 21 Other 1,882 377 1,674 320 201 50 7 7 72 Total loans, gross 163,521 71,220 113,938 52,975 28,354 12,511 11,059 2,955 73 Less: Unearned income on loans 152 27 98 23 46 3 4 0 24 Equals: Loans, net 163,368 71,193 113,840 52,953 28,308 12,508 11,055 2,954 Total loans, gross, by category 75 Real estate loans 5,758 64 2,621 4466 11,,116666 1199 447788 00 7.6 Loans to depository institutions 55,842 37,907 40,390 26,092 11,027 8,669 3,046 2,124 77 Commercial banks in United States (including IBFs) . 30,657 14,986 21,492 8,825 6,958 5,012 1,841 1,010 7.8 U.S. branches and agencies of other foreign banks . 26,709 13,272 18,070 7,342 6,646 4,820 1,741 978 29 Other commercial banks in United States 3,948 1,713 3,423 1,484 312 192 100 32 30 Other depository institutions in United States (including IBFs) 100 28 74 2288 1122 0 00 00 31 Banks in foreign countries 25,085 22,893 18,823 17,239 4,057 3,657 1,205 1,114 32. Foreign branches of U.S. banks 988 888 727 681 247 193 9 9 33 Other banks in foreign countries 24,096 22,005 18,097 16,558 3,809 3,463 1,1% 1,105 34 Other financial institutions 4,839 461 3,532 375 341 59 939 18 35 Commercial and industrial loans 73,031 18,447 47,646 15,023 13,501 2,152 5,903 423 36 U.S. addressees (domicile) 49,952 101 29,231 99 10,802 0 5,353 0 37 Non-U.S. addressees (domicile) 23,079 18,346 18,415 14,924 2,699 2,151 550 423 38 Acceptances of other banks 1,206 30 1,055 21 120 2 12 7 39 U.S. banks 976 0 849 0 106 0 5 0 40 Foreign banks 230 30 206 21 14 2 7 7 41 Loans to foreign governments and official institutions (including foreign central banks) 15,878 13,989 12,635 11,165 11,,770022 1,557 443344 338833 42 Loans for purchasing or carrying securities (secured and unsecured) 5,575 154 5,219 115544 335533 0 00 00 43 All other loans 1,392 168 840 99 143 54 246 0 44 All other assets 27,232 2,099 20,309 1,597 5,680 318 575 133 45 Customers' liability on acceptances outstanding 20,887 n.a. 15,689 n.a. 4,682 n.a. 169 n.a. 46 U.S. addressees (domicile) 13,053 n.a. 8,799 n.a. 3,980 n.a. 156 n.a. 47 Non-U.S. addressees (domicile) 7,835 n.a. 6,890 n.a. 702 n.a. 13 n.a. 48 Other assets including other claims on nonrelated parties 6,345 2,099 4,620 1,597 998 318 406 133 49 Net due from related depository institutions5 25,329 18,892 15,805 14,935 6,748 2,271 57 99 50 Net due from head office and other related depository institutions5 25,329 n.a. 15,805 n.a. 66,,774488 n.a. 5577 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 18,892 n.a. 14,935 n.a. 2,271 n.a. 99 52 Total liabilities4 311,562 152,871 231,028 119,995 49,534 21,759 16,265 6,390 53 Liabilities to nonrelated parties 270,815 128,735 208,354 101,845 44,506 19,521 8,865 3,611 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A71 4.30 Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c I l B o u t F d a s l i ng o IB nl F y s 3 ex T c IB l o u t F d a s i l ng o IB nl F y s 3 ex T c IB l o u t F d a s i l ng o IB nl F y s 3 ex T c IB l o u t F d a s l i ng o IB nl F y s 3 54 Total deposits and credit balances 43,111 106,768 35,614 90,200 1,795 11,512 2,410 1,592 55 Individuals, partnerships, and corporations 31,524 12,842 25,011 9,873 1,375 338888 1,993 8800 56 U.S. addressees (domicile) 25,176 538 20,582 504 553 3333 1,885 00 57 Non-U.S. addressees (domicile) 6.348 12,304 4,429 9,369 821 355 108 80 58 Commercial banks in United States (including their IBFs) 5,825 37,684 5,319 29,803 75 6,673 339955 779966 59 U.S. branches and agencies of other foreign banks 3,224 30,458 2,852 23,950 39 55,,550033 333311 666677 60 Other commercial banks in United States 2,602 7,225 2,467 5,852 36 1,170 64 129 61 Banks in foreign countries 1,640 51,520 1,485 45,963 114 4,410 7 702 62 Foreign branches of U.S. banks 68 6,400 67 5,184 0 921 0 179 63 Other banks in foreign countries 1,572 45,120 1,418 40,779 114 3,489 7 523 64 Foreign governments and official institutions (including foreign central banks 3,452 4,710 3,242 44,,555500 119955 4400 2 1144 65 All other deposits and credit balances 286 12 235 11 9 0 11 0 66 Certified and official checks 384 n.a. 322 n.a. 27 n.a. 1133 n.a. 67 Transaction accounts and credit balances (excluding IBFs) 4,441 n.a. 3,709 n.a. 173 n.a. 115544 n.a. 68 Individuals, partnerships, and corporations 2,808 n.a. 2,235 n.a. 134 n.a. 137 n.a. 69 U.S. addressees (domicile) 1,844 n.a. 1,519 n.a. 94 n.a. 133 n.a. 70 Non-U.S. addressees (domicile) 964 n.a. 716 n.a. 40 n.a. 4 n.a. 71 Commercial banks in United States (including IBFs) . 180 n.a. 159 n.a. 11 n.a. 0 n.a. 72 U.S. branches and agencies of other foreign banks . 18 n.a. 17 n.a. 00 n.a. 0 n.a. 73 Other commercial banks in United States 162 n.a. 142 n.a. 11 n.a. 0 n.a. 74 Banks in foreign countries 664 n.a. 626 n.a. 55 n.a. 2 n.a. 75 Foreign branches of U.S. banks 18 n.a. 17 n.a. 0 n.a. 0 n.a. 76 Other banks in foreign countries 646 n.a. 609 n.a. 5 n.a. 2 n.a. 77 Foreign governments and official institutions (including foreign central banks) 331199 n.a. 330033 n.a. 1 n.a. 2 n.a. 78 All other deposits and credit balances 87 n.a. 64 n.a. 4 n.a. 11 n.a. 79 Certified and official checks 384 n.a. 322 n.a. 27 n.a. 1133 n.a. 80 Demand deposits (included in transaction accounts and credit balances) 3,569 n.a. 3,013 n.a. 9922 n.a. 114455 n.a. 81 Individuals, partnerships, and corporations 2,294 n.a. 1,856 n.a. 57 n.a. 128 n.a. 82 U.S. addressees (domicile) 1,481 n.a. 1,251 n.a. 33 n.a. 124 n.a. 83 Non-U.S. addressees (domicile) 814 n.a. 605 n.a. 25 n.a. 3 n.a. 84 Commercial banks in United States (including IBFs) . 141 n.a. 121 n.a. 11 n.a. 0 n.a. 85 U.S. branches and agencies of other foreign banks . 3 n.a. 3 n.a. 00 n.a. 0 n.a. 86 Other commercial banks in United States 138 n.a. 118 n.a. 1 n.a. 0 n.a. 87 Banks in foreign countries 536 n.a. 509 n.a. 5 n.a. 2 n.a. 88 Foreign branches of U.S. banks 15 n.a. 14 n.a. 0 n.a. 0 n.a. 89 Other banks in foreign countries 520 n.a. 494 n.a. 5 n.a. 2 n.a. 90 Foreign governments and official institutions (including foreign central banks) 119966 n.a. 119900 n.a. 11 n.a. 2 n.a. 91 All other deposits and credit balances 19 n.a. 16 n.a. 00 n.a. 11 n.a. 92 Certified and official checks 384 n.a. 322 n.a. 27 n.a. 1133 n.a. 93 Non-transaction accounts (including MMDAs, excluding IBFs) 38,670 n.a. 31,905 n.a. 11,,662222 n.a. 22,,225566 n.a. 94 Individuals, partnerships, and corporations 28,716 n.a. 22,776 n.a. 1,241 n.a. 1,856 n.a. 95 U.S. addressees (domicile) 23,333 n.a. 19,064 n.a. 459 n.a. 1,752 n.a. 96 Non-U.S. addressees (domicile) 5,383 n.a. 3,712 n.a. 782 n.a. 104 n.a. 97 Commercial banks in United States (including IBFs) . 5,646 n.a. 5,160 n.a. 74 n.a. 395 n.a. 98 U.S. branches and agencies of other foreign banks . 3,206 n.a. 2,834 n.a. 39 n.a. 331 n.a. 99 Other commercial banks in United States 2,439 n.a. 2,325 n.a. 35 n.a. 63 n.a. 100 Banks in foreign countries 976 n.a. 858 n.a. 109 n.a. 5 n.a. 101 Foreign branches of U.S. banks 50 n.a. 50 n.a. 0 n.a. 0 n.a. 102 Other banks in foreign countries 927 n.a. 809 n.a. 109 n.a. 5 n.a. 103 Foreign governments and official institutions (including foreign central banks) 3,133 n.a. 22,,994400 n.a. 119944 n.a. 00 n.a. 104 All other deposits and credit balances 199 n.a. 171 n.a. 5 n.a. 0 n.a. 105 IBF deposit liabilities n.a. 106,768 n.a. 90,200 n.a. 11,512 n.a. 1,592 106 Individuals, partnerships, and corporations n.a. 12,842 n.a. 9,873 n.a. 338888 n.a. 8800 107 U.S. addressees (domicile) n.a. 538 n.a. 504 n.a. 3333 n.a. 00 108 Non-U.S. addressees (domicile) n.a. 12,304 n.a. 9,369 n.a. 355 n.a. 8800 109 Commercial banks in United States (including IBFs) . n.a. 37,684 n.a. 29,803 n.a. 6,673 n.a. 779966 110 U.S. branches and agencies of other foreign banks . n.a. 30,458 n.a. 23,950 n.a. 5,503 n.a. 667 111 Other commercial banks in United States n.a. 7,225 n.a. 5,852 n.a. 1,170 n.a. 129 112 Banks in foreign countries n.a. 51,520 n.a. 45,963 n.a. 4,410 n.a. 702 in Foreign branches of U.S. banks n.a. 6,400 n.a. 5,184 n.a. 921 n.a. 179 114 Other banks in foreign countries n.a. 45,120 n.a. 40,779 n.a. 3,489 n.a. 523 115 Foreign governments and official institutions (including foreign central banks) n.a. 44,,771100 n.a. 44,,555500 n.a. 4400 n.a. 1144 116 All other deposits and credit balances n.a. 12 n.a. 11 n.a. 0 n.a. 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Special Tables • September 1986 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1985'—Continued Millions of dollars All states2 New York California Illinois IItteemm inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 in T c I l B o u t F d a s i l ng o IB nl F y s 3 117 Federal funds purchased and securities sold under agreements to repurchase 33,350 1,823 25,199 1,2% 6,756 506 953 20 IIS U.S. branches and agencies of other foreign banks 7,848 615 5,796 315 1,750 296 143 4 119 Other commercial banks in United States 17,049 57 11,980 53 4,231 3 633 0 170 Other 8,453 1,151 7,423 928 775 207 177 16 121 Other borrowed money 59,443 18,280 35,919 8,914 18,716 7,257 3,458 1,867 122 Owed to nonrelated commercial banks in United States (including IBFs) 44,361 8,276 25,360 2,874 15,839 4,791 1,904 416 123 Owed to U.S. offices of nonrelated U.S. banks 23,395 1,908 14,235 767 7,443 991 774 21 124 Owed to U.S. branches and agencies of nonrelated foreign banks 20,967 6,368 11,126 2,107 8,3% 3,800 1,130 395 125 Owed to nonrelated banks in foreign countries 9,683 8,900 5,666 4,970 2,492 2,461 1,449 1,423 126 Owed to foreign branches of nonrelated U.S. banks 1,047 978 334 295 496 468 208 206 127 Owed to foreign offices of nonrelated foreign banks 8,637 7,922 5,333 4,675 1,9% 1,993 1,241 1,217 128 Owed to others 5,398 1,104 4,893 1,070 385 5 105 28 129 All other liabilities 28,143 1,864 21,422 1,434 5,727 246 453 133 130 Branch or agency liability on acceptances executed and outstanding 22,982 n.a. 1177,,445588 n.a. 4,988 n.a. 117700 n.a. 131 Other liabilities to nonrelated parties 5,161 1,864 3,964 1,434 740 246 283 133 132 Net due to related depository institutions5 40,747 24,136 22,673 18,150 5,028 2,238 7,399 2,779 133 Net due to head office and other related depository institutions5 40.747 n.a. 22,673 n.a. 5,028 n.a. 7,399 n.a. 134 Net due to establishing entity, head office, and other related depository institutions5 n.a. 24,136 n.a. 18,150 n.a. 2,238 n.a. 2,779 MEMO 135 Non-interest bearing balances with commercial banks in United States 2,785 34 2,605 29 82 0 45 0 136 Holding of commercial paper included in total loans .... 672 n.a. 363 n.a. 247 n.a. 62 n.a. 137 Holding of own acceptances included in commercial and industrial loans 3,849 n.a. 2,930 n.a. 671 n.a. 177 n.a. 138 Commercial and industrial loans with remaining maturity of one year or less 48,358 n.a. 30,527 n.a. 9,223 n.a. 4,515 n.a. 139 Predetermined interest rates 29,473 n.a. 17,133 n.a. 7,122 n.a. 3,273 n.a. 140 Floating interest rates 18,885 n.a. 13,395 n.a. 2,101 n.a. 1,243 n.a. 141 Commercial and industrial loans with remaining maturity of more than one year 24,673 n.a. 17,119 n.a. 4,278 n.a. 1,388 n.a. 142 Predetermined interest rates 9,174 n.a. 5,786 n.a. 1,899 n.a. 549 n.a. 143 Floating interest rates 15,499 n.a. 11,333 n.a. 2,379 n.a. 838 n.a. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c I l B o u t F d a s i l ng o IB nl F y s 3 ex T c IB l o u t F d a s l i ng o IB nl F y s 3 ex T c I l B o u t F d a s l i ng o IB nl F y s 3 ex T c IB l o u t F d a s l i ng o IB nl F y s 3 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnnaaaallll aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 48,829 n.a. 41,503 n.a. 1,686 n.a. 2,751 n.a. 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 32,189 n.a. 26,568 n.a. 1,401 n.a. 1,953 n.a. 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 4,106 n.a. 3,885 n.a. 69 n.a. 123 n.a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 12,535 n.a. 11,049 n.a. 216 n.a. 675 n.a. All states2 New York California Illinois inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l ng o IB nl F y s 3 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 111155550000 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy 65,902 7,328 62,986 5,696 2,250 1,455 528 133 ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 40,261 n.a. 24,164 n.a. 13,908 n.a. 1,601 n.a. 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 466 217 117 46 n.a. 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, that no IBF data are reported for that item, either because the item is not an "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign eligible IBF asset or liability or because that level of detail is not reported for Banks." Details may not add to totals because of rounding. This form was first IBFs. From December 1981 through September 1985, IBF data were included in used for reporting data as of June 30, 1980, and was revised as of December 31, all applicable items reported. 1985. From November 1972 through May 1980, U.S. branches and agencies of 4. Total assets and total liabilities include net balances, if any, due from or due foreign banks had filed a monthly FR 886a report. Aggregate data from that report to related banking institutions in the United States and in foreign countries (see were available through the Federal Reserve statistical release G.ll, last issued on footnote 5). On the former monthly branch and agency report, available through July 10, 1980. Data in this table and in the G. 11 tables are not strictly comparable the G.l 1 statistical release, gross balances were included in total assets and total because of differences in reporting panels and in definitions of balance sheet liabilities. Therefore, total asset and total liability figures in this table are not items. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. "Related banking institutions" includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of the bank, the bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent International Banking Facilities (IBFs). As of December 31, 1985, data for IBFs holding company (including subsidiaries owned both directly and indirectly). are reported in a separate column. These data are either included in or excluded 6. In some cases two or more offices of a foreign bank within the same from the total columns as indicated in the headings. The notation "n.a." indicates metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 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 DONALD L. KOHN, Deputy Staff Director STEVEN M. ROBERTS, Assistant to the Chairman NORMAND R.V. BERNARD, Special Assistant to the Board BOB S. MOORE, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION JAMES L. KICHLINE, Director MICHAEL BRADFIELD, General Counsel EDWARD C. ETTIN, Deputy Director J. VIRGIL MATTINGLY, JR., Deputy General Counsel MICHAEL J. PRELL, Deputy Director RICHARD M. ASHTON, Associate General Counsel JARED J. ENZLER, Associate Director OLIVER IRELAND, Associate General Counsel DAVID E. LINDSEY, Associate Director RICKI R. TIGERT, Assistant General Counsel ELEANOR J. STOCKWELL, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel THOMAS D. SIMPSON, Deputy Associate Director LAWRENCE SLIFMAN, Deputy Associate Director MARTHA BETHEA, Assistant Director OFFICE OF THE SECRETARY SUSAN J. LEPPER, Assistant Director RICHARD D. PORTER, Assistant Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Assistant Director BARBARA R. LOWREY, Associate Secretary LEVON H. GARABEDIAN, Assistant Director JAMES MCAFEE, Associate Secretary (Administration) DIVISION OF CONSUMER DIVISION OF INTERNATIONAL FINANCE AND COMMUNITY AFFAIRS EDWIN M. TRUMAN, Director GRIFFITH L. GARWOOD, Director LARRY J. PROMISEL, Senior Associate Director JERAULD C. KLUCKMAN, Associate Director CHARLES J. SIEGMAN, Senior Associate Director GLENN E. LONEY, Assistant Director DAVID H. HOWARD, Deputy Associate Director DOLORES S. SMITH, Assistant Director ROBERT F. GEMMILL, Staff Adviser PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director DIVISION OF BANKING RALPH W. SMITH, JR., Assistant Director SUPERVISION AND REGULATION WILLIAM TAYLOR, Director WELFORD S. FARMER, Deputy Director1 FREDERICK R. DAHL, Associate Director DON E. KLINE, Associate 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 Digitized for FRAS1E. RO n loan from the Federal Reserve Bank of Richmond. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 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

76 Federal Reserve Bulletin • September 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 NORMAN R.V. BERNARD, Assistant Secretary RICHARD G. DAVIS, Associate Economist MICHAEL BRADFIELD, General Counsel THOMAS E. DAVIS, Associate Economist JAMES H. OLTMAN, Deputy General Counsel DONALD L. KOHN, Associate Economist JAMES L. KICHLINE, Economist DAVID E. LINDSEY, Associate Economist EDWIN M. TRUMAN, Economist (International) ALICIA H. MUNNELL, Associate Economist ANATOL B. BALBACH Associate Economist MICHAEL J. PRELL, Associate Economist JOHN M. DAVIS, 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

A77 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

A78 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

A79 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. Try on. 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

A80 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS Survey of Consumer Finances, 1983. 9/84. IN BANKING BEFORE AND AFTER ACQUISITION, by Bank Lending to Developing Countries. 10/84. Stephen A. Rhoades. April 1986. 32 pp. Survey of Consumer Finances, 1983: A Second Report. 150. STATISTICAL COST ACCOUNTING MODELS IN BANK- 12/84. ING: A REEXAMINATION AND AN APPLICATION, by Union Settlements and Aggregate Wage Behavior in the John T. Rose and John D. Wolken. May 1986. 13 pp. 1980s. 12/84. The Thrift Industry in Transition. 3/85. A Revision of the Index of Industrial Production. 7/85. Financial Innovation and Deregulation in Foreign Industrial REPRINTS OF BULLETIN ARTICLES Countries. 10/85. Most of the articles reprinted do not exceed 12 pages. Recent Developments in the Bankers Acceptance Market. 1/86. The Use of Cash and Transaction Accounts by American The Commercial Paper Market since the Mid-Seventies. 6/82. Families. 2/86. Foreign Experience with Targets for Money Growth. 10/83. Financial Characteristics of High-Income Families. 3/86. Intervention in Foreign Exchange Markets: A Summary of U.S. International Transactions in 1985. 5/86. Ten Staff Studies. 11/83. Prices, Profit Margins, and Exchange Rates. 6/86. A Financial Perspective on Agriculture. 1/84. Agricultural Banks under Stress. 7/86. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 Index to Statistical Tables References are to pages A3-A73 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, 70-73 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) BANKERS acceptances, 9, 23, 24 Dividends, corporate, 35 Bankers balances, 18-20 (See also Foreigners) Bonds (See also U.S. government securities) EMPLOYMENT, 45 New issues, 34 Eurodollars, 24 Rates 24 Branch banks, 21, 55, 70-73 FARM mortgage loans, 39 Business activity, nonfinancial, 44 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business expenditures on new plant and equipment, 36 Federal credit agencies, 33 Business loans (See Commercial and industrial loans) Federal finance Debt subject to statutory limitation, and types and ownership of gross debt, 30 CAPACITY utilization, 46 Receipts and outlays, 28, 29 Capital accounts Treasury financing of surplus, or deficit, 28 Banks, by classes, 18 Treasury operating balance, 28 Federal Reserve Banks, 10 Federal Financing Bank, 28, 33 Central banks, discount rates, 67 Federal funds, 5, 17, 19, 20, 21, 24, 28 Certificates of deposit, 24 Federal Home Loan Banks, 33 Commercial and industrial loans Federal Home Loan Mortgage Corporation, 33, 38, 39 Commercial banks, 16, 19, 70 Federal Housing Administration, 33, 38, 39 Weekly reporting banks, 19-21 Federal Land Banks, 39 Commercial banks Federal National Mortgage Association, 33, 38, 39 Assets and liabilities, 18-20 Federal Reserve Banks Commercial and industrial loans, 16, 18, 19, 20, 21, 70 Condition statement, 10 Consumer loans held, by type, and terms, 40, 41 Discount rates (See Interest rates) Loans sold outright, 19 U.S. government securities held, 4, 10, 11, 30 Nondeposit funds, 17 Federal Reserve credit, 4, 5, 10, 11 Real estate mortgages held, by holder and property, 39 Federal Reserve notes, 10 Time and savings deposits, 3 Federal Savings and Loan Insurance Corporation insured Commercial paper, 23, 24, 37 institutions, 26 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 33 Construction, 44, 49 Finance companies Consumer installment credit, 40, 41 Assets and liabilities, 37 Consumer prices, 44, 50 Business credit, 37 Consumption expenditures, 51, 52 Loans, 40, 41 Corporations Paper, 23, 24 Nonfinancial, assets and liabilities, 36 Financial institutions Profits and their distribution, 35 Loans to, 19, 20, 21 Security issues, 34, 65 Selected assets and liabilities, 26 Cost of living (See Consumer prices) Float, 4 Credit unions, 26, 40 (See also Thrift institutions) Flow of funds, 42, 43 Currency and coin, 18 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 21, 70-73 Customer credit, stock market, 25 Foreign currency operations, 10 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

A82 GOLD REAL estate loans Certificate account, 10 Banks, by classes, 16, 19, 20, 39 Stock, 4, 54 Financial institutions, 26 Government National Mortgage Association, 33, 38, 39 Terms, yields, and activity, 38 Gross national product, 51 Type of holder and property mortgaged, 39 Repurchase agreements, 5, 17, 19, 20, 21 Reserve requirements, 7 HOUSING, new and existing units, 49 Reserves Commercial banks, 18 INCOME, personal and national, 44, 51, 52 Depository institutions, 3, 4, 5, 12 Industrial production, 44, 47 Federal Reserve Banks, 10 Installment loans, 40, 41 U.S. reserve assets, 54 Insurance companies, 26, 30, 39 Residential mortgage loans, 38 Interest rates Retail credit and retail sales, 40, 41, 44 Bonds, 24 Consumer installment credit, 41 SAVING Federal Reserve Banks, 6 Flow of funds, 42, 43 Foreign central banks and foreign countries, 67 National income accounts, 51 Money and capital markets, 24 Savings and loan associations, 8, 26, 39, 40, 42 (See also Mortgages, 38 Thrift institutions) Prime rate, 23 Savings banks, 26, 39, 40 Time and savings deposits, 8 Savings deposits (See Time and savings deposits) International capital transactions of United States, 53-67 Securities (See specific types) International organizations, 57, 58, 60, 63, 64 Federal and federally sponsored credit agencies, 33 Inventories, 51 Foreign transactions, 65 Investment companies, issues and assets, 35 New issues, 34 Investments (See also specific types) Prices, 25 Banks, by classes, 18, 19, 20, 21, 26 Special drawing rights, 4, 10, 53, 54 Commercial banks, 3, 16, 18-20, 39 State and local governments Federal Reserve Banks, 10, 11 Deposits, 19, 20 Financial institutions, 26, 39 Holdings of U.S. government securities, 30 New security issues, 34 LABOR force, 45 Ownership of securities issued by, 19, 20, 26 Life insurance companies (See Insurance companies) Rates on securities, 24 Loans (See also specific types) Stock market, selected statistics, 25 Banks, by classes, 18-20 Stocks (See also Securities) Commercial banks, 3, 16, 18-20, 70 New issues, 34 Federal Reserve Banks, 4, 5, 6, 10, 11 Prices, 25 Financial institutions, 26, 39 Insured or guaranteed by United States, 38, 39 Student Loan Marketing Association, 33 MANUFACTURING TAX receipts, federal, 29 Capacity utilization, 46 Thrift institutions, 3 (See also Credit unions, Mutual Production, 46, 48 savings banks, and Savings and loan associations) Margin requirements, 25 Time and savings deposits, 3, 8, 13, 17, 18, 19, 20, 21 Member banks (See also Depository institutions) Trade, foreign, 54 Federal funds and repurchase agreements, 5 Treasury cash, Treasury currency, 4 Reserve requirements, 7 Treasury deposits, 4, 10, 28 Mining production, 48 Treasury operating balance, 28 Mobile homes shipped, 49 UNEMPLOYMENT, 45 Monetary and credit aggregates, 3,12 U.S. government balances Money and capital market rates, 24 Commercial bank holdings, 18, 19, 20 Money stock measures and components, 3, 13 Treasury deposits at Reserve Banks, 4, 10, 28 Mortgages (See Real estate loans) U.S. government securities Mutual funds, 35 Bank holdings, 18-20, 21, 30 Mutual savings banks, 8 (See also Thrift 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 OPEN market transactions, 9 Rates, 24 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

A83 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 Vacant 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

A84 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories April 1984 c i / ALASKA • / i / (12) cA i , nL?' Vl 77 //00 l i i i i i i i il 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