Federal Reserve Bulletin, 1987-04

VOLUME 73 • NUMBER 4 • APRIL 1987 FEDERAL RESERVE 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 cr • nittee 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 239 MONETARY POLICY REPORT Economic Committee of the U.S. Con- TO THE CONGRESS gress, February 2, 1987. The current economic expansion has en- 279 Wayne D. Angell, Member, Board of Govtered its fifth year, ranking it among the ernors, provides the views of the Board on longest of the postwar period; monetary the issue of delayed availability, and specifexpansion, while adequate to support orically on S. 344, the Fair Deposit Availabilderly economic growth, needs to be consisity Act of 1987, before the Senate Committent with continuing progress over time in tee on Banking, Housing, and Urban reducing the underlying rate of inflation. Affairs, February 5, 1987. 255 BASIC BANKING 282 Chairman Volcker reviews the conduct of monetary policy against the background of On October 2, 1986, the Federal Financial economic and financial developments here Institutions Examination Council approved and abroad, concentrating on more general a policy statement that endorses and enconsiderations underlying the policy apcourages private sector efforts to offer basic proaches of the Federal Reserve, and says banking services. This article focuses on that these approaches must fit into a broadthe basic banking issue, its origins, and er pattern of complementary action both in recent developments. the United States and in other countries if the common objective of sustained econom- 270 STAFF STUDIES ic expansion and price stability is to be reached, before the Senate Committee on "Determinants of Corporate Merger Activi- Banking, Housing, and Urban Affairs, Febty: A Review of the Literature" reviews the ruary 19, 1987. [Chairman Volcker presentrelevant theoretical literature regarding the ed identical testimony before the House major determinants of corporate merger ac- Committee on Banking, Finance and Urban tivity and examines the empirical evidence Affairs, February 26, 1987.] bearing on the aptness of the suggested explanations. 290 Chairman Volcker discusses recent and prospective developments in domestic and 272 INDUSTRIAL PRODUCTION international economic policies and says that what is required in dealing with the Industrial production increased an estimatdistortions and imbalances within our econed 0.4 percent in January. omy and internationally is complementary actions, here and abroad, on budgets, on 275 STATEMENTS TO CONGRESS monetary policies, and on maintaining appropriate exchange rates and an open trad- Paul A. Volcker, Chairman, Board of Goving order, before the Senate Committee on ernors, discusses domestic and internationthe Budget, February 24, 1987. al economic policies and says that although much more remains to be done, there is 296 ANNOUNCEMENTS some evidence that the needed economic adjustments are beginning, before the Joint Meeting of Consumer Advisory Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

New edition of Bank Holding Company change markets, progress against inflation, Supervision Manual available. and conditions in domestic and international credit markets. The members agreed that Comments requested on proposed riskthe intermeeting range for the federal funds based capital framework for banks and rate, which provides a mechanism for initibank holding companies; comment requestating consultation of the Committee when ed on two notices to be used by financial its boundaries are persistently exceeded, institutions to notify federal regulators of should be left unchanged at 4 to 8 percent. their status under the Government Securities Act of 1986; comment period extended 305 LEGAL DEVELOPMENTS on proposals to reduce the risks on largedollar payment systems and on proposed Various bank holding company, bank serrulemaking to permit bank holding compa- vice corporation, and bank merger orders; nies to engage in limited real estate invest- and pending cases. ment activities. 299 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE AI FINANCIAL AND BUSINESS STATISTICS At its meeting on December 15-16, 1986, all A3 Domestic Financial Statistics of the members of the Committee indicated A44 Domestic Nonfinancial Statistics that they favored a directive that called for A53 International Statistics no change in the degree of pressure on reserve positions. The members expected A69 GUIDE TO TABULAR PRESENTATION, this approach to policy implementation to STATISTICAL RELEASES, AND SPECIAL be consistent with growth of both M2 and TABLES M3 at an annual rate of about 7 percent over the four-month period from November to A70 BOARD OF GOVERNORS AND STAFF March. Because the behavior of Ml remained subject to unusual uncertainty, the All FEDERAL OPEN MARKET COMMITTEE members decided they would continue to AND STAFF; ADVISORY COUNCILS evaluate this aggregate in the light of the performance of the broader monetary ag- A74 FEDERAL RESERVE BOARD gregates and other factors. The members PUBLICATIONS indicated that slightly greater reserve restraint or somewhat lesser reserve restraint AH INDEX TO STATISTICAL TABLES would be acceptable over the intermeeting period depending on the behavior of the A19 FEDERAL RESERVE BANKS, BRANCHES, monetary aggregates, taking into account AND OFFICES the strength of the business expansion, the performance of the dollar in foreign ex- A80 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February balance; failure to do so would be damaging to 19, 1987, pursuant to the Full Employment and confidence and disruptive to the financial mar- Balanced Growth Act of 1978.1 kets. Many of our major trading partners, which have depended greatly on external surpluses to buoy their economies over the past few years, MONETAR Y POLIC Y AND THE must act to open their markets more fully and to ECONOMIC OUTLOOK FOR 1987 foster sustained growth in domestic demand; without such action, prospects for world growth The current economic expansion in the United as well as for reducing our own trade deficit States has entered its fifth year, ranking it among would be impaired, the risks of protectionism the longest of the postwar period. While substan- would rise, and prospects for the dollar would be tial imbalances and risks that must be dealt with more uncertain. And, if we are to capitalize on forcefully and effectively have emerged in the those trading opportunities and promote ecocourse of the expansion, important groundwork nomic and financial stability at home, labor and also has been laid for continued growth through management must avoid a return to the inflation- 1987 and beyond. Significantly, price trends thus ary behavior of the past. Oil prices have firmed far have remained favorable, reflecting not only recently, and the sizable decline in the dollar is the dramatic drop in crude oil prices in early 1986 likely to exert upward pressure on other prices in but also continued restraint on labor costs in the months ahead; the challenge is to prevent many sectors. Interest rates have moved lower such developments from triggering a cumulative and stock prices higher, reducing the cost of price-wage spiral. capital for investment and enhancing wealth. In that context, Federal Reserve policy has a Furthermore, processes are in train that should critical role to play. Monetary expansion, while help correct the major imbalances that have been adequate to support orderly economic growth, plaguing the economy: action has been taken to needs to be consistent with continuing progress cut the deficit in the federal budget, and the over time in reducing the underlying rate of foreign exchange value of the dollar has moved inflation. As the experience of recent years has to levels that have made U.S. firms more com- demonstrated, such a policy—in part by bolsterpetitive in world markets and that should help ing confidence in financial markets and providing correct the imbalance in the U.S. external ac- a framework of greater certainty for private counts. decisionmaking—can make a substantial contri- While the potential for further economic prog- bution to the maintenance of expansion and the ress thus appears considerable, those gains will reduction of unemployment. In the short run, a be secured only if there is timely and construc- variety of factors—such as interest rate movetive action by decisionmakers in the public and ments, regulatory changes, and institutional inprivate sectors. The Congress and the adminis- novations, among others—may alter consideratration must follow up the steps already taken bly the amount of funds the public wishes to hold and make basic programmatic changes that will in monetary form. Over time, however, expanensure continuing movement toward budgetary sion of the money stock measures clearly must moderate from recent rates if destabilizing pressures are to be avoided. The Federal Open 1. The charts for the report are available on request from Market Committee has established targets for Publications Services, Board of Governors of the Federal 1987 with that fact in mind, but it will continue to Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

240 Federal Reserve Bulletin • April 1987 interpret the movements in the monetary aggre- of interest rate movements. Both M2 and M3 gates in light of developments in the economy expanded almost 9 percent last year, ending 1986 and in domestic and international financial mar- just within the upper bound of their annual target kets and the potential for inflationary pressures. ranges. In the credit markets, short-term rates of interest declined about 2 percentage points through A Brief Review of the Past Year the first three quarters of the year. Since that time, short-term rates have backed up some, first Economic activity continued to expand moder- reflecting pressure around the end of the year ately in 1986, at about the pace that has pre- from a huge volume of tax-related transactions vailed, on average, since mid-1984. This growth and more recently from investors' response to was sufficient to create 2Vi million new payroll stronger-than-anticipated economic news and jobs, and the unemployment rate drifted down to concerns about weakness in the dollar. Longerthe area of 63A percent at year-end. term bond rates have fallen more than 2 percent- Further progress was made in 1986 toward the age points since the end of 1985, with most of the objective of overall price stability. Wage and decline occurring in the first four months of 1986 price behavior continued to be influenced by the in response to an improved inflation outlook and anti-inflationary thrust of policies put in place sluggish growth in economic activity. After midsome time ago—and by the ongoing adjustment April, Treasury bond rates fluctuated in a relaof expectations to the new environment. Thus, tively narrow range, but corporate and municipal while the plunge in world crude oil prices con- bond rates trended lower—reaching the lowest tributed importantly to the sharp slowing in levels since the late 1970s. inflation last year, prices outside the energy area The declines in interest rates contributed to also decelerated on average. Running counter to the vigorous pace of household spending last past cyclical patterns, labor cost pressures re- year by reducing borrowing costs and boosting mained subdued, with nominal wage gains across asset values. Housing starts, which are particua broad range of occupations and industries larly sensitive to interest rate developments, rose continuing to move toward less inflationary a bit, despite the drag of a depressed economy in rates—rates that are more consistent with trends regions heavily dependent on oil and agriculture. in labor productivity. In contrast, capital spending declined over the The Federal Reserve encouraged continued course of the year, largely because of the sharp economic expansion last year by supplying am- cutback in oil drilling; more broadly, investment ple reserves for the banking system and reducing was restrained by an overhang of office and other the discount rate four times, by a total of 2 commercial space and the weak pace of activity percentage points. A large portion of the re- in major segments of the manufacturing sector. serves provided were to accommodate the strong The disparity between household spending and demand for Ml-type deposits. Last year, Ml business investment is indicative of the imbalgrew in excess of 15 percent, and its velocity— ances that characterized the U.S. economy in the ratio of nominal gross national product to 1986. Indeed, economic performance throughout money—declined more than 9 percent, unprece- the current expansion has varied considerably dented during the postwar years. In part, this across industries and regions of the country. In rapid money growth reflected the public's re- some cases, such as agriculture, special circumsponse to changes in interest rates, which made stances have played a role. But more fundamenit more attractive to hold negotiable order of tally, the imbalances are rooted in the enorwithdrawal (NOW) accounts and demand depos- mous—and partly related—deficits in our its. However, last year's growth was well in external accounts and in the federal budget. excess of what would be expected based on past Although the foreign exchange value of the relationships among money, interest rates, and dollar has fallen sharply from its peak in early income. Growth in the broader aggregates was 1985—at least relative to the currencies of the more in line with past experience, taking account major industrialized countries—the nation's Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 241 trade deficit deepened last year. The increased Ranges of growth for monetary and debt aggregates price competitiveness of U.S. producers contrib- Percent change, fourth quarter to fourth quarter uted to a sizable improvement in real export Aggregate 1987 1986 growth, but the pickup was damped by the relatively slow pace of economic activity abroad. M2 5 5 V V i t to 8 V m 4 6 to 9 M3 to 6 to 9 At the same time, the volume of imports contin- Debt 8 to 11 8 to 11 ued to rise rapidly through most of last year, in part because the pass-through of the dollar depreciation into import prices was limited by the effect for 1986 and are below the actual growth ability of foreign exporters and U.S. distributors rates last year. Indeed, in an environment withto absorb much of the exchange rate swing in out the dramatic movements in interest rates of their profit margins. Also, American buyers ap- recent years, only small changes in the velocity parently have developed strong preferences for of these aggregates would be anticipated. Accertain foreign goods, and the newly industrial- cordingly, the Committee now expects growth of ized and developing countries continued to rely M2 and M3 this year to be in the middle parts of disproportionately on U.S. markets. With import their ranges. penetration remaining on an uptrend, domestic The FOMC elected not to establish a specific production continued to expand less rapidly than target range for Ml at this time because of domestic demand. uncertainties about its underlying relationship to The federal budget deficit also remains huge, the behavior of the economy and its sensitivity to despite substantial deficit-reducing actions taken a variety of economic and financial circumby the administration and the Congress. Official stances and assumptions at particular points in estimates suggest that the deficit for fiscal 1987 time. With the deregulation of deposit rates and will be in the range of $175 billion—a good deal the attendant changes in the composition of Ml, less than the record $221 billion figure of a year the narrow money measure has become much earlier but still equal to a historically high 4 more responsive in the short run to changes in percent of GNP. Further cuts in the federal interest rates, and possibly to other factors afdeficit are essential, in the context of movement fecting the portfolio decisions of households. toward better external balance, to ensure that an Moreover, only with the passage of time will it adequate flow of domestic saving is available to become possible to assess with any precision the support needed domestic investment. longer-term trend in growth of Ml, under current institutional arrangements, relative to nominal GNP. Given these circumstances, the appropri- Monetary Policy for 1987 ateness of different rates of growth of Ml cannot be assessed in isolation; rather, the movement of As noted above, the members of the Federal this aggregate necessarily will be evaluated in the Open Market Committee (FOMC) believe that a light of expansion in M2 and M3, growth of the reduction in the growth of the money supply domestic economy, and emerging price presmeasures, over time, will be needed if the econo- sures, which in turn are partly related to changes my is to achieve noninflationary growth and in the value of the dollar. external equilibrium. The precise timing and Clearly, there are circumstances in which degree of that moderation in monetary expansion much slower growth of Ml would be appropriwill depend on prevailing circumstances in the ate. For example, if, in the context of an expand- U.S. economy and in domestic and international ing economy, inflationary forces appeared financial markets. The Committee has estab- threatening, the dollar was exhibiting significant lished target ranges for M2 and M3 of 5YI to 8V2 weakness on exchange markets, and the broader percent from the fourth quarter of 1986 to the aggregates were growing rapidly, a less accomfourth quarter of 1987, the same as those tenta- modative approach to reserve provision would tively agreed upon in July. The ranges for M2 be necessary. In those circumstances, monetary and M3 are V2 percentage point below those in velocity likely would accelerate, and much slow- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Federal Reserve Bulletin • April 1987 er growth of Ml would be both a natural and some cases undermining the financial strength of essential development. Conversely, it could be corporations as they become more highly leverappropriate to accommodate, in the short run, aged. Moreover, firms may have a wider gap further sizable increases in Ml in circumstances than they did last year between internally genercharacterized by sluggish business activity and ated funds and investment expenditures, owing maintenance of progress toward underlying price in part to higher corporate tax bills. stability and international equilibrium. As this Growth of household debt also is expected to implies, the Committee will continue to monitor be about the same as last year. Growth of Ml behavior carefully, assessing the growth of consumer installment credit clearly is deceleratthe aggregate in the context of other financial and ing, but growth of mortgage debt should be economic developments. And, depending on cir- robust, reflecting both a good housing market cumstances, it is possible that at some time in the and the substitution of home equity lines of year the Committee might set more specific credit for installment borrowing. objectives for Ml. The Committee will continue to monitor the growth of debt. Growth of domestic nonfinancial Economic Projections sector debt in recent years consistently has exceeded both the Committee's expectations and, The Committee believes that its monetary objecmore important, the expansion of income by a tives are consistent with continued moderate wide margin. This is a matter of concern, for it growth in economic activity and a relatively has resulted in potential fragilities in the nation's modest upturn in inflation in 1987 that would be financial structure. Although the range for the attributable almost entirely to higher import debt measure has been kept at 8 to 11 percent, prices and a rebound in energy costs. As indicatthe same as in 1986, that range implies a signifi- ed in the table, the central tendency of the cant slowing from the pace of almost 13 percent forecasts of Committee members and other Relast year—but to a rate still in excess of that serve Bank Presidents is for growth in real GNP expected for income. With a reduced federal of about 21/2 to 3 percent. Such an increase in deficit, borrowing by the federal government will output would be expected to generate substantial slow. Also, new constraints imposed by tax gains in employment, and the jobless rate is reform legislation should reduce the presence of projected to drift down a bit over the year. state and local governments in the financial mar- Prices, as measured by the implicit deflator for kets. Borrowing by nonfinancial business firms is GNP, are expected to rise 3 to V/i percent. It expected to grow at about the same rate as last should be noted that the rise in energy and year. Tax reform should result in some reduction import prices likely will have a somewhat greater in the volume of equity shares retired in connec- effect on consumer prices, so that measures such tion with mergers and other corporate restructur- as the CPI may rise faster than the GNP deflaings, but such activity—and the attendant bor- tor—a pattern that emerged in the second half of rowing—appears likely to remain significant, in 1986. Economic projections for 1987 Percent FOMC members and other FRB Presidents CCoonnggrreessssiioonnaall IItteemm AAddmmiinniissttrraattiioonn BBuuddggeett OOffffiiccee Central Range tendency Change, fourth quarter to fourth quarter Nominal GNP 4>/2 to 7'/: 53/4 to 6V2 6.9 6.5 Real GNP 2 to 4 2^2 to 3 3.2 3.0 Implicit deflator for GNP 2V2 to 4 3to3V2 3.6 3.4 Average level in the fourth quarter Unemployment rate 6V2 to 6V41 6V2 to 63/4i 6.5 6.61 1. Civilian unemployment rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 243 The forecasts of the Committee members and The effect of the dollar depreciation on prices the other Reserve Bank Presidents assume that is likely to be felt more strongly in 1987. In the Congress will make further progress in reduc- addition, crude oil prices have rebounded in the ing the federal budget deficit. Continuing evi- past few months, reversing part of the sharp drop dence of fiscal restraint is viewed as crucial in that occurred early last year. However, the famaintaining financial conditions that are condu- vorable trend in wages and other costs, comcive to balanced growth and an improved pattern bined with sizable productivity gains in manufacof international transactions. turing, provides the opportunity for absorbing In the Committee's view, orderly growth in these short-run price shocks while maintaining a GNP has become increasingly dependent upon a sense of progress toward greater underlying substantial improvement in real net exports. The price stability. The Committee's projections aninternational competitiveness of U.S. firms ticipate that neither significant capacity conclearly has benefited from the decline in the straints nor strong labor market pressures will dollar, and this should bolster export growth and develop and that domestic firms will not squanhelp curb the expansion in imports. But there der the opportunity to regain markets in a shortstill is considerable uncertainty about some of sighted effort to expand profit margins unduly as the other factors affecting the external sector. In demand for their products increases. particular, the increase in exports is contingent The central tendency projections of real GNP on a satisfactory pace of economic activity and inflation are slightly lower than the forecasts abroad over time, on continued progress in han- of the administration. However, given the uncerdling international debt problems, and on en- tainty of economic forecasting, the differences hanced access to foreign markets. On the import are not significant, and, in fact, the administraside, the improvement is predicated on a sub- tion's projections are well within the full range of stantial rise in the relative price of foreign goods. expectations among Committee members and That unfortunately carries with it some domestic other Reserve Bank Presidents. inflationary risks, underscoring the need for prudent fiscal and monetary policies. Slower growth of domestic demand is expect- THE PERFORMANCE OF THE ECONOMY ed to release resources to the external sector in DURING THE PAST YEAR 1987. Consumer spending is projected to rise less rapidly than in 1986, given that the saving rate The economy completed a fourth consecutive has fallen to an extremely low level and real year of expansion in 1986, with real gross nationincome gains in 1987 are likely to be damped by al product increasing about 2lA percent. The rise rising energy and nonpetroleum import prices. in overall activity last year was similar to the And while the sharp rise in the value of financial gains that have been recorded, on balance, since assets should continue to buoy household spend- mid-1984 and was sufficient to create 2Vi million ing, debt burdens remain troublesome for many new payroll jobs. The jobless rate for civilians families. Housing activity overall is expected to continued to edge down and, at year-end, was be well maintained, even though multifamily 63/ 4 percent. building will be inhibited by high vacancy rates Inflation slowed sharply in 1986, with virtually and adverse tax changes. Nonresidential con- all broad measures of price trends showing their struction also will be depressed by a sizable smallest increases in many years. Although the overhang of office space; the recent firming in oil sharpness of the deceleration owed much to prices may well signal an end to the sharp specific developments in the markets for oil and contraction in oil drilling, but relatively little other commodities, the favorable inflation perimprovement seems likely at current price levels. formance also represented at a fundamental level In contrast, equipment spending by industry the continuation of trends in wage and price generally is anticipated to be supported by the behavior fostered by policies in place since the continuing need to modernize and to cut costs, as early part of the decade. well as by the improved sales prospects associat- Although output continued to grow in 1986, ed with a more positive foreign trade outlook. the economy still was characterized by pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Federal Reserve Bulletin • April 1987 nounced imbalances. These were reflected in terms, even though income growth was only marked disparities in economic performance moderate, on average, for the second year in a across industries and regions of the country. In row. Real disposable income soared in the first particular, domestic oil exploration and invest- half because of the plunge in energy prices, but ment was cut back sharply, and only massive dropped after midyear, as wage and salary gains federal subsidies sustained many farm enter- remained sluggish and farm and interest income prises faced with sharply lower crop prices. In declined. Consequently, the personal saving rate addition, major segments of the industrial sector fell to about 4 percent, the lowest annual average continued to struggle with intense foreign com- in nearly 40 years. petition, and relatively low rates of capacity Consumer spending has been bolstered by utilization—along with a glut of office space— lower interest rates, which have reduced borrowdepressed capital spending. ing costs and boosted asset values. Rising stock The most serious imbalances continue to be in prices alone have added several hundred billions the external sector and in the federal budget— of dollars to household wealth since late 1985. developments that are linked. Although the for- Household debt also increased further last year, eign exchange value of the dollar against the in part reflecting the desire of consumers to other G-10 currencies has declined roughly 40 liquify the gains in their asset values. The rise in percent over the past two years, the nation's debt was somewhat smaller than in the preceding trade balance continued to deteriorate in 1986. few years, but still large enough to push mea- Growth in the volume of exports did pick up in sures of debt burdens to new highs. For a sizable response to the enhanced international competi- number of families, especially in parts of the tiveness of U.S. firms, although the rebound was country hard hit by economic adversities, servicdamped somewhat by the relatively slow growth ing these debts became more difficult, as eviof the economies of our major trading partners. denced by higher consumer loan delinquencies However, import volumes continued to expand and charge-offs and high mortgage delinquenrapidly through most of the year, in part because cies. much of the swing in exchange rates apparently The growth in consumption last year was was absorbed in the profit margins of foreign paced by strong gains in purchases of durable exporters and U.S. distributors, thereby limiting goods, while spending on nondurables and serincreases in the prices of imported goods. As a vices was up at about the same rate as in the result, the current account deficit continued to preceding few years. Within the durables categowiden, reaching the $150 billion range in 1986. ry, sales of new cars rose to about WVT. million The federal budget deficit also increased, hit- units. Effective prices of new cars were held ting $221 billion in fiscal 1986; the deficit vastly down by a series of below-market finance incenexceeded official targets, as underestimates of tive programs for domestic makes and by the program costs and shortfalls in revenues offset introduction of low-priced imports from Korea the deficit-reducing actions taken by the adminis- and Yugoslavia. At the same time, sales of tration and the Congress. Recent estimates sug- Japanese and European models remained brisk, gest that the deficit for fiscal year 1987 will despite appreciable increases in their sticker decline to the neighborhood of $175 billion, prices. Outlays for other durables also rose subwhich is a good deal less than that of a year stantially last year, as purchases of home elecearlier, but considerably more than the Gramm- tronics products advanced sharply and sales of Rudman-Hollings target of $144 billion. furniture and appliances were supported in part by the robust pace of home sales in recent years. Housing activity continued to expand in 1986. The Household Sector Total housing starts edged up to 1.8 million units for the year as a whole, their highest level since The household sector was the major contributor the late 1970s. Single-family homebuilding into overall growth again last year. Consumer creased about 10 percent, bolstered not only by a spending increased a robust 4 percent in real sizable decline in mortgage rates—which brought Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 245 fixed-rate loan rates back to single-digits for the second year in a row; however, at year-end such first time since 1978—but also by continuing stocks appeared to be roughly in line with nearfavorable demographic trends. In contrast, mul- term sales prospects. At auto dealers, there were tifamily activity dropped off considerably over sharp fluctuations in stocks, but little net change the course of the year. In part, the slowdown over the course of the year; drops in inventories reflected the restraining influence of record-high coincided mainly with the timing of special invacancy rates on rental units, especially in key centive programs that pushed sales to record markets in the South. Also, several provisions of levels as well as with a burst in sales in Decemthe recent tax legislation have reduced the profit- ber in anticipation of tax changes in 1987. ability of building rental housing. Aftertax economic profits in the nonfinancial corporate sector, although at fairly high levels relative to GNP, were essentially unchanged The Business Sector overall from 1985 levels. There was considerable diversity in the performance of individual indus- Business spending on plant and equipment de- tries. The petroleum industry experienced a clined 5VI percent in real terms in 1986. Much of sharp drop in profits associated with the fall in oil the drop in investment was attributable to the prices. On the other hand, petroleum-using insharp cutback in oil and gas well drilling, which dustries such as chemicals and plastics fared fell almost 50 percent over the year. But invest- relatively well. ment outside the energy sector also was general- Given these movements in business investly lackluster, as many firms—especially in the ment and corporate earnings, internal funds in tradable goods sector—trimmed expansion plans the aggregate were nearly sufficient to meet the in light of relatively low rates of utilization of basic financing needs of nonfinancial corporaexisting capacity and continuing uncertainties tions. However, some firms continued to borrow about future sales trends. Investment in comput- heavily to fund massive retirements of equity in ers and other office machines remained on the association with mergers, buyouts, and share reduced growth path that has been evident since repurchases. At the same time, the drop in longthe fading of the high-tech spending boom in term interest rates to the lowest levels in a 1985, reflecting in part concerns about the pro- decade afforded businesses the opportunity to ductivity-enhancing potential of some of these improve their financial positions by selling bonds products. More broadly, transitory tax consider- and retiring older, high-coupon securities or ations also helped to depress equipment spend- short-term debt. ing in 1986. In late 1985, the widely anticipated elimination of the investment tax credit prompted many firms to accelerate spending from early The External Sector 1986; although there also was some tax-related speedup of spending in late 1986, it appears to Widening U.S. trade and current account deficits have been comparatively small. Outlays for non- have aroused deep concern because of their residential structures outside the energy area, implications both for the orderly expansion of which rose extraordinarily rapidly over the first the domestic economy and for international fifew years of the expansion, fell in 1986. The nancial stability. The foreign exchange value of decline in office construction, for which vacancy the dollar, which had declined about 20 percent rates have reached extraordinarily high levels, against a weighted average of the currencies of was especially sharp. other Group of Ten (G-10) countries from Febru- Inventory investment generally remained sub- ary 1985 to December 1985, has fallen an addidued in 1986. In an environment of sluggish tional 20 percent since that time. Because the orders and stable or falling prices, manufacturers U.S. inflation rate over the past two years was continued to trim their stocks. In the retail and approximately the same as the average inflation wholesale trade sector, inventories of goods oth- rate in other G-10 countries, the decline in the er than automobiles increased moderately for the real value of the dollar (that is, adjusted for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Federal Reserve Bulletin • April 1987 relative inflation rates) was similar to the nomi- imported goods have risen, U.S. distributors nal decline. As measured by broader exchange- have absorbed some of that increase. Also, since rate indexes, which include the currencies of early 1985, the dollar has appreciated in real major developing countries as well, the real terms relative to the currencies of Canada and decline in the value of the dollar was somewhat some developing countries, which account for smaller, in part because some of those countries almost half of U.S. nonpetroleum imports. allowed their currencies to depreciate as part of Meanwhile, the volume of merchandise exan effort to improve their external positions. On ports picked up last year. This improvement such broader measures, the appreciation of the mainly reflected the enhanced international comdollar in real terms through early 1985 also was petitiveness of U.S. goods in foreign markets smaller. that stemmed from the decline in the dollar, as The decline in the dollar over the past year was the pace of foreign economic activity generally associated with a fall in interest rates on dollar- remained sluggish. Growth last year for the madenominated assets relative to rates on assets jor industrialized countries as a group was slower denominated in other currencies. Moreover, than in 1985, in part because of a pronounced some correction of the dollar's external value deceleration in Japan, while activity in many was seen to be an essential element in the developing countries was damped by subdued process of reducing over time the huge U.S. growth in the industrialized world and the concurrent account deficit—which widened to the tinuing pressures associated with the need to $150 billion range in 1986—and restoring better meet external debt-servicing obligations. Weakbalance in the United States and world econo- ness in world commodity prices also has aggramies. The apparently muted response of the vated the financial difficulties of many developcurrent account to the dollar's depreciation ing nations, including oil-exporting countries. through most of 1986 contributed to sharp downward pressure on the dollar in early 1987. The volume of merchandise imports rose The Government Sector sharply in 1986, with increases widespread across products and countries of origin. Petro- Even though the administration and the Conleum imports surged as prices plunged and do- gress have taken significant actions in the past mestic production contracted, and nonpetroleum few years to reduce the federal budget deficit, it imports continued to grow at about the rapid has remained huge. In fiscal year 1986, the fiscal 1985 pace. In part, the sustained strength of imbalance hit a record $221 billion, exceeding the nonpetroleum imports reflected the relatively previous year's figure by more than $8 billion. moderate increase to date in prices of these Revenue growth last year was restrained by the goods. As measured by the index compiled by relatively moderate rise in nominal income, the Bureau of Labor Statistics, prices of nonpe- while demands on a number of programs, espetroleum imports were up 8V2 percent over the cially in the agriculture and health areas, were year, with sizable increases for products such as strong. Although the budgetary program put in automobiles, other consumer goods, and some place for fiscal year 1987 was nominally consistypes of capital equipment. Nonetheless, the rise tent with the Gramm-Rudman-Hollings deficit in the overall index was somewhat smaller than target of $144 billion, the administration and the historical patterns would suggest, given the typi- Congressional Budget Office recently have pubcal lags between movements in exchange rates lished estimates in the range of $175 billion, and import prices. The weak response of import equal to about 4 percent of GNP—still a high prices was attributable in part to the ability of ratio historically. exporters to the United States, whose profit Excluding changes in farm inventories held by margins had widened substantially during the the Commodity Credit Corporation (CCC), fedperiod of dollar appreciation in the early 1980s, eral purchases of goods and services rose appreto absorb initially a large proportion of the dol- ciably last year. Over the course of 1986, defense lar's depreciation. In some cases when prices of purchases in real terms grew about 7 percent, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 247 similar to the increases that have been recorded Wages continued on a path of moderation in since the early 1980s. Excluding CCC purchases, 1986. Hourly compensation in the nonfarm prireal nondefense outlays, which have shown little vate sector, as measured by the employment cost net change in recent years, were essentially flat. index, rose about 31/4 percent, 3A percentage Purchases of goods and services by state and point less than in 1985. The deceleration in wages local governments rose briskly last year, mainly reflected the continued slack in labor markets as reflecting a surge in construction activity. An well as the reduction in price inflation, and was upswing in the school-age population in recent widespread across industries and occupations. In years has led to a step-up in school building, and the unionized sector, wage increases have been numerous programs are under way to expand especially small, and a number of alternative, and improve basic infrastructure. The growth in more flexible compensation arrangements—inoverall outlays has been sustained despite con- cluding the substitution of lump-sum payments cerns about the financial condition of the sector. for general wage increases—have been adopted. Excluding some special one-time inflows—such Compensation for white-collar workers, alas previously escrowed oil lease payments—the though continuing to rise more rapidly than for combined surplus of operating and capital ac- other groups, also moderated in 1986. counts for the sector as a whole fell to near zero Unit labor costs in the nonfarm business sector in 1986. Many states, including most of those in were well contained last year, given the relativethe energy and agricultural regions, have re- ly moderate increase in wages and a small adsponded to budgetary pressures by raising taxes vance in labor productivity. Gains in output per and cutting spending. hour, however, have averaged less than 1 percent per year since 1984, suggesting that the underlying trend in productivity for the business Labor Markets sector as a whole has improved only slightly from the very low pace of the 1970s and remains Nonfarm payroll employment increased 2Vi mil- well below the pace of earlier in the postwar lion in 1986, about the same as the robust 1985 period. In contrast, productivity in manufacpace, and continued strong in January of this turing over the past three years has increased year. Hiring in trade and services again was quite about 3V 2 percent per year, in part because vigorous, with especially large increases for busi- intense foreign competition has induced many ness and health services. In contrast, manufac- producers to modernize their factories and turing employment contracted over the first streamline their operations. three quarters of 1986. However, factory hiring picked up in the autumn in response to an Price Developments apparent firming in industrial activity. Employment gains in nondurable industries, in which The fixed-weighted price index for GNP rose output has risen steadily, have been widespread about 2V2 percent in 1986, down from an increase in recent months; meanwhile, hiring at firms of 3!/2 percent in 1985. The increase was the producing durable goods has remained spotty. smallest in more than two decades. Some other The growth in jobs last year slightly exceeded popular measures of prices decelerated even the rise in the labor force. As a result, the civilian more markedly. The consumer price index for unemployment rate edged down, to 63A percent goods and services rose only about 1 percent, at year-end. Labor force participation main- and the producer price index for finished goods tained its upward trend; women continued to actually fell 2Vi percent. enter the work force in large numbers, in part The greater deceleration in the CPI and PPI responding to expanding job opportunities, and than in the GNP price measure is a reflection of participation rates for adult men held steady. the greater importance of energy prices in those Overall, the number of persons employed rela- indexes. The movements in energy prices over tive to the working-age civilian population the past year or so have been striking. World reached 61 percent—a new high. crude oil prices dropped from $26 per barrel in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Federal Reserve Bulletin • April 1987 late 1985 to the $11 per barrel range around MONETAR Y POLICY AND midyear; these prices trended up over the second FINANCIAL MARKETS IN 1986 half and recently have risen to around $18 per barrel in the wake of the agreement on produc- The Federal Reserve faced continuing challenges tion limits reached at the meeting of the Organi- in 1986, not only in discerning the underlying zation of Petroleum Exporting Countries in late trends in a complex domestic and international December. The drop in crude oil prices in the economic setting, but also in specifying approprifirst half was reflected fairly rapidly in prices of ate policy actions in a financial environment gasoline and home heating oil, which fell about marked by a rapid pace of structural change. As 30 percent over the course of the year. There in previous years, and in keeping with the Full also were declines in charges for electricity and Employment and Balanced Growth Act, money natural gas, but they were much smaller than and credit aggregates were used as a means of those on refined petroleum products. On bal- assessing and characterizing policy. At the same ance, retail energy prices declined 20 percent last time, however, in targeting and interpreting year. The effects of the recent firming in oil these aggregates, and in reaching operational prices are already evident in general indexes: the decisions with respect to the degree of reserve PPI jumped 0.6 percent in January, owing largely pressures and the discount rate, the evaluation of to the rebound in gasoline and heating oil prices. signals provided by a broad range of economic Price increases outside the energy area gener- and financial indicators played a large role. ally remained moderate in the past year. Retail At its meeting in February 1986, the Federal food prices rose 4 percent, a bit more than in Open Market Committee established target 1985, reflecting the effects of last summer's heat growth ranges, measured from the fourth quarter wave in the Southeast. However, prices of retail of 1985 to the fourth quarter of 1986, of 3 to 8 goods excluding food and energy continued to percent for Ml and 6 to 9 percent for both M2 slow and, on balance, were up only V/2 percent. and M3. The associated monitoring range for The influence of the depreciating dollar on con- growth of domestic nonfinancial debt was set at 8 sumer goods prices was highly variable across to 11 percent. Based on the experience of recent sectors and relatively small overall. There were years, the Committee recognized that the relasizable increases in dockside prices for foreign tionship between Ml and economic activity was cars and for some types of home electronic and subject to particularly great uncertainty. Accordphotographic equipment, and retail prices of ingly, the FOMC agreed to evaluate movements such goods have accelerated. But there was little in Ml in light of their consistency with the evidence of any significant aggregate impact on patterns in other monetary aggregates, developother consumer goods. Prices for nonenergy ments in the economy and financial markets, and services also slowed somewhat last year but still potential inflationary pressures. rose about 5 percent, boosted by continued large Ml was well above its annual target range at increases for medical services and higher premi- the time of the July FOMC meeting. The availums for various types of insurance. able evidence suggested that the rapid growth of Prices for many basic industrial commodities Ml reflected shifts in portfolios toward liquid continued to decline over the first three quarters assets in the context of declining market interest of 1986. Excess capacity in some basic industries rates rather than excessive money growth with and the generally abundant world supplies of potential inflationary consequences. Against this many primary commodities contributed impor- background, the Committee concluded that Ml tantly to the weakness in these prices. Sluggish growth above the existing range would be acindustrial activity in the United States and other ceptable, provided the broader aggregates exlarge economies also was a factor. Prices in a panded within their target ranges, price presnumber of these markets have turned up in sures remained subdued, and the economy recent months, possibly in response to the firm- continued to expand at a moderate pace. The ing in U.S. industrial activity. Nonetheless, in- Committee reaffirmed the target ranges for M2 dustrial commodity prices still are well below the and M3 at its July meeting. Data at that time most recent peaks reached in mid-1984. showed that both of these aggregates had ex- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 249 panded near the midpoints of their ranges, and that an unduly precipitous decline of the dollar Committee members felt that growth within against the currencies of our major trading partthose ranges for the year was still consistent with ners could contribute to inflationary pressures in the overall policy objectives of reducing inflation the United States. To help limit the effect on the further, promoting sustainable growth in output, value of the dollar, the first reduction in the and contributing to an improved pattern of inter- discount rate was a coordinated action with other national transactions. In the first half of the year, major central banks; similarly, the reduction in the growth of domestic nonfinancial debt exceed- April was accompanied by a cut in the Bank of ed both its monitoring range and the growth of Japan's discount rate. nominal GNP, as it had in previous years. The Committee was concerned about the burdens and potential instabilities associated with the Money, Credit, and Monetary Policy persistence of rapid debt growth and felt that raising the monitoring range for debt would cre- M2 expanded almost 9 percent in 1986, placing ate an inappropriate benchmark for evaluating this aggregate near the upper bound of its annual long-term trends. As such, the existing range was growth target. Although in recent years this maintained, but the FOMC thought that debt aggregate has exhibited a tighter relationship growth could well exceed its upper bound. with nominal GNP than Ml, M2 velocity still The growth of M2 quickened in the second half registered a decline of 4 percent last year and of the year, and M3 expanded at a somewhat reached its lowest level in decades. The buildup faster pace as well. However, both of the broad- of M2 balances relative to income probably reer aggregates ended the year within—although flected incentives to place savings in various near the upper bounds of—their target ranges. components of the aggregate whose offering The growth of Ml accelerated further in the rates were falling more slowly than market intersecond half of the year, resulting in a record est rates. postwar decline in velocity for 1986. The growth The slowest adjustments in rates on retail of nonfinancial debt slowed slightly in the second deposits last year were made in short-term achalf of the year, but still exceeded its monitoring counts. Depository institutions have been relucrange by nearly 2 percentage points. tant to adjust savings deposit rates downward Pressure on reserve positions of depository because many of these accounts have representinstitutions, as reflected in a relatively low vol- ed a stable, profitable source of funds for many ume of borrowing at Federal Reserve Banks, years. Rates on NOW accounts also have fallen changed little over the course of 1986. The only slightly. Much larger declines were regisbroadly accommodative thrust of policy also was tered on time deposits, reflecting not only manifest in the four reductions in the discount quicker adjustment to market rates but also the rate between March and August. In part, the pattern of rate movements in the credit markets, discount rate cuts were intended to keep this rate in which long-term rates fell much more than in line with the yields on short-term market short-term rates in late 1985 and early 1986. The instruments, but they also were taken in the changing structure of deposit rates at banks and context of hesitant worldwide economic growth, thrift institutions has led to a pronounced shift in an improved inflation outlook, and growth of the the composition of M2: inflows to transaction broader monetary aggregates within their annual deposits, savings deposits, money market depostarget ranges. it accounts, and money market mutual fund In setting monetary policy the FOMC focused shares were very strong last year, while small considerable attention on the nation's trade defi- time deposits ran off, marking the second concit and on the foreign exchange value of the secutive year of zero or negative growth. dollar. The Committee members generally The weakness in small time deposits in 1985 viewed the narrowing in the trade deficit as a key and 1986 also could reflect "rate shock." As to achieving a sustainable and more even expan- existing time deposits matured, savers with highsion of activity across the economy. At the same yielding deposits acquired several years ago time, however, the Committee was concerned were unable to reinvest the funds at comparable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 Federal Reserve Bulletin • April 1987 returns. A sizable portion of maturing deposits The broad shift to liquid assets greatly affected evidently was placed in liquid instruments in M2 the behavior of Ml. The narrow monetary aggrewhile savers searched for other investment op- gate expanded more than 15 percent in 1986, portunities. Yield-conscious investors also may marking the second consecutive year of doublehave been lured from time deposits by attractive digit growth. The velocity of Ml fell 9Vi percent returns on some nondeposit instruments. For last year, compared with a decline of 5XA percent example, stock and bond mutual funds grew in 1985. Since 1981 the velocity of Ml has rapidly in 1985 and 1986 after stagnating during declined 16 percent—a remarkable development most of the 1970s and early 1980s, and the in view of its tendency to climb about 3 percent issuance of savings bonds was strong in the per year in the previous two decades. summer and fall before their minimum yield was Much of the rapid growth in narrow money lowered from IV2 to 6 percent. over the past two years appeared to be related to M3 also ended 1986 near the upper bound of its the effects of the sharp decline in market interest annual range, increasing 83/4 percent over the rates on incentives to hold both NOW accounts year. Growth of M3 close to that of M2 is not and demand deposits. Since their peak in the surprising, given that M2 constitutes four-fifths latter part of 1984, short-term market interest of the larger aggregate. The remaining share is rates have fallen about 5 percentage points, to dominated by large time deposits and certain their lowest levels in nine years, while NOW other managed liabilities of depository institu- account rates have changed considerably less. tions. Credit growth at banks and thrift institu- Although more rapid money growth generally tions remained quite strong last year, but with would be expected in an environment of declinthe exception of the first quarter, the use of ing rates, the expansion of Ml last year and in managed liabilities in M3 was light as growth of 1985 was in excess of what would be indicated by core deposits largely was sufficient to fund asset the historical relationships among money, interexpansion. Large CDs expanded only 3 percent est rates, and income. on balance in 1986, with commercial banks pay- About half of the growth of Ml in both 1985 ing down their outstanding CDs during much of and 1986 occurred in interest-bearing checkable the year and thrift institutions also doing so in the deposits. Because depository institutions have fourth quarter. The weakness in CDs was wide- adjusted the rates paid on NOW accounts only spread as institutions relied more on other man- sluggishly, the spreads between the rates on aged liabilities, such as term repurchase agree- these deposits and those on substitutes have ments (RPs), included in M3, and advances from narrowed substantially. For example, between Federal Home Loan Banks, not included in M3. the first quarter of 1986, when interest rates on Growth of money and debt1 Percentage changes at annual rates Domestic Period Ml M2 M3 nonfinancial sector debt Fourth quarter to fourth quarter 1979 77..99 88..22 10.4 12.2 1980 7.3 8.9 9.6 9.6 1981 5.1 (2.4)2 9.2 12.3 9.9 1982 8.6 9.1 9.9 8.9 1983 10.2 12.1 9.8 11.5 1984 5.4 7.9 10.7 13.9 1985 12.1 (12.7P 8.8 7.7 13.5 1986 15.2 8.9 8.8 12.9 Quarterly growth 1986: 1 8.8 55..33 77..77 15.4 2 15.5 9.4 8.7 10.3 3 16.5 10.6 9.7 12.0 4 17.0 9.0 7.8 11.5 1. Ml, M2, and M3 incorporate effects of benchmark and seasonal 3. Ml figure in parentheses is the annualized growth rate from the adjustment revisions made in February 1987. second to the fourth quarter of 1985. 2. Ml figure in parentheses is adjusted for shifts to NOW accounts in 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 251 NOW accounts were fully deregulated, and the ing in anticipation of tax reform restrictions. In fourth quarter of last year, the spread between the household sector, mortgage borrowing the three-month Treasury bill rate and the aver- strengthened, but a marked decrease in the exage rate on NOW accounts at commercial banks pansion of consumer installment credit from the shrank from 135 basis points to 53 basis points. elevated rates in previous years contributed to a Similarly, the average rate on NOW accounts moderation in overall growth of household inlate last year was not far below that on six-month debtedness. A continuation of corporate finansmall time deposits. cial restructurings buoyed expansion of business The growth of demand deposits also acceler- debt, despite the maintenance of a moderate gap ated last year, amounting to nearly 12 percent between capital spending and internal funds. from the fourth quarter of 1985 to the fourth Growth of federal sector debt remained strong. quarter of 1986. As with other checkable depos- In implementing policy in 1986, the FOMC its, lower short-term interest rates are an impor- generally accommodated through open market tant influence on the growth of demand deposits operations the strong demand for reserves assobecause they reduce incentives to economize on ciated with the rapid growth of transaction baltransaction balances. Also, some demand depos- ances. In the context of prospects for slow its are held by business firms in exchange for growth of real economic activity, disinflationary services provided by banks, and these compen- trends in wages and prices, and growth of the sating balance requirements typically are en- broader monetary aggregates within their target larged as market rates decline. While these ef- ranges, four reductions in the discount rate were fects were important elements behind the implemented between March and August. expansion of demand deposits throughout 1986, Early in the year, all the monetary aggregates the apparent response to declining interest rates slowed sharply, with M2 dropping below its was much larger than would be expected from annual target range. Also, evidence suggested historical experience. that the economy was growing sluggishly, and Another element in the growth of demand the outlook for inflation improved as oil prices deposits apparently was the large volume of fell. In this environment, market interest rates financial transactions that occurred in 1986. For began to decline in mid-February, and the Federexample, because of certain payment proce- al Reserve reduced the discount rate V2 percentdures—such as funds held in escrow accounts age point to 7 percent in early March. At the and transferred by officer's check rather than by time, there was concern that unilateral action to wire—the massive volume of mortgage origina- lower interest rates might cause an excessive tions and prepayments last year could have influ- reaction in the foreign exchange market, in enced the movement of demand deposits. In which the dollar had been under downward presaddition, a flurry of financial transactions around sure. Accordingly, the reduction was timed to year-end, induced in part by impending tax law correspond with similar actions by the central changes, temporarily boosted demand deposits banks of West Germany, Japan, and several sharply. other industrialized nations. Domestic nonfinancial debt expanded almost With the economy expanding slowly and un- 13 percent last year, a slightly slower pace than derlying price pressures continuing to moderate, in the two previous years but still above both the interest rates fell further throughout March and Committee's monitoring range and the growth of into April. By mid-April, most market interest nominal GNP.2 Debt issuance by the state and rates had reached their lowest levels since the local sector dropped off substantially from the late 1970s. At that time, the Federal Reserve pace set in 1985, when it was boosted by borrow- instituted another reduction in the discount rate to catch up with and to ratify the declines in market rates. 2. When measured from the end of December to the end of December, domestic nonfinancial debt expanded 11 Vi per- After mid-April, interest rates rose for a short cent last year. The fourth-quarter-to-fourth-quarter growth time as market participants focused on an upturn cited in the text is higher because of the surge in debt at the in oil prices, an acceleration in the growth of the end of 1985 and the arithmetical effects of quarterly averaging. monetary aggregates, and a further decline in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 Federal Reserve Bulletin • April 1987 foreign exchange value of the dollar. By the end the exceptional volume of tax-related transacof June, however, a steady flow of weak statis- tions. As firms rushed to complete mergers and tics began to reveal anemic growth in real eco- buyouts, and households stepped up their sales nomic activity in the second quarter. An im- of assets to realize capital gains, the demand for provement in activity had been expected by the transaction balances and business loans surged. FOMC for the second half of the year, but the This heavy volume of financing also was reflectrebound now appeared likely to be less vigorous ed in unusually strong reserve demands by dethan previously anticipated and perhaps delayed pository institutions. The System added reserves because of continued disappointing movements freely to accommodate this demand, but the in our trade position and the effects of pending pressure nevertheless showed through to shorttax reform legislation on business investment. term rates. Shortly after the turn of the year, Accordingly, shortly after the July FOMC meet- short-term rates moved back toward their earlier ing, the Board approved another cut of Vi point in levels. The dollar, however, was under substanthe discount rate to 6 percent. tial downward pressure in early 1987; disappoint- The final reduction in the discount rate last ing figures on the U.S. trade deficit prompted year took place after the August FOMC meeting. selling of the dollar on exchange markets, and The last two reductions in the discount rate in this pressure intensified with reported sugges- 1986 were adopted without similar action by tions by some U.S. policymakers that, particuforeign central banks. Unilateral action to lower larly in the absence of more growth-oriented interest rates carried the risk of adding to the policies abroad, further dollar depreciation might downward pressure on the dollar and possibly be necessary to correct the nation's external feeding a source of inflationary pressure. How- imbalance. ever, the Federal Reserve thought that prevailing economic and financial conditions warranted such a risk, realizing that the provision of re- Other Developments in Financial Markets serves could be tightened through open market operations if adverse developments were to As long-term interest rates declined last spring to arise. their lowest levels in eight years, the volume of While the value of the dollar fluctuated consid- corporate bond issuance surged to record levels. erably after the reduction in the discount rate in Indeed, the volume of domestic corporate bonds August, it showed no distinct downward move- sold last year was nearly twice the previous ment until around year-end. Short-term interest record set in 1985. Much of the bond issuance rates declined about 1 percentage point over the last year was used to refund higher-cost debt or summer months, moving either in anticipation to pay down short-term credit. With the stock of, or in response to, the reductions in the market continuing to register impressive gains discount rate. Long-term rates were about un- last year, new equity issuance also reached recchanged on balance over the summer, but more ord levels. Of the gross proceeds from new concern about interest rate prospects developed equity issues sold last year, about 30 percent was in early fall. Economic indicators began signaling raised by firms issuing stock in the public market a pickup in the pace of economic activity, and for the first time. rising prices of oil and precious metals, along The retirement of high-coupon bonds, the rewith the potential effects of the cumulative de- duced dependence on short-term credit, and the cline in the value of the dollar, seemed to raise issuance of new equity shares tended to improve concerns about the outlook for inflation. Over conventional measures of corporate balance that period and through the remainder of the sheet strength. However, massive volumes of year, the FOMC attempted to keep a steady outstanding equity were retired through mergers, degree of reserve pressure, and market interest acquisitions, buyouts, and other restructurings, rates fluctuated within a fairly narrow range. resulting in the third consecutive year of large Even so, short-term interest rates moved high- net equity retirements. Reflecting the financing er as the year-end approached, owing, in part, to patterns in recent years, the aggregate debt- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 253 equity ratio of nonfinancial corporations, on a it receded to about 12 percent from the 15 to 20 "book" basis, swelled to a record level. When percent pace of recent years. Nevertheless, instated at market values, however, the robust stallment debt continued to grow faster than gains in share prices have kept debt-equity ratios income, and the ratio of such debt to income well below levels that generally prevailed during established another record. With mortgage debt the 1970s. With interest rates trending down in expanding rapidly, the ratio of overall household recent years, interest-coverage ratios have crept debt to income also reached a new high. While up, suggesting that the ability of firms in the assets of the household sector have increased aggregate to service their debt has not deteriorat- sharply in recent years, many individuals have ed. These modest gains, however, have been experienced difficulty in meeting their financial achieved in relatively benign market and eco- commitments. The number of personal bankruptnomic circumstances. cies accelerated dramatically in 1985 and 1986, Because of the large pay down of equity, the with bankruptcies last year surging well beyond ability of some corporations to weather econom- the historical experience. Strains were particuic shocks has waned. The weak financial struc- larly evident in the area of credit card debt, as tures of some firms, along with strains in certain delinquency rates on revolving balances inindustries, led to more than $3 billion of corpo- creased appreciably. Delinquency rates on other rate bond defaults in 1986, an amount that dwarfs categories of installment debt and mortgage the experience in nearly every other year of the loans fell some last year, although they were at postwar period. Concern that other firms also much higher levels than in previous expansions. may have problems in meeting their financial For some households, debt-servicing burdens obligations is reflected in the pace of bond down- were reduced last year by the refinancing of highgradings, which last year totaled more than three rate mortgages or the decline in interest payor four times that of the late 1970s. ments on their adjustable-rate mortgages. Firms with downgraded debt typically find While the economy has grown continuously their securities trading at higher interest rates in for more than four years, the expansion has been the secondary market. In general, however, uneven and has left certain sectors under severe quality spreads between private debt securities strains. The problems faced by firms in the of different grades have been relatively stable in mining, energy, agricultural, and many manufacrecent years, suggesting that investors have not turing industries are well known, as are those of been alarmed at the credit quality of corporations a number of heavily indebted developing counin the aggregate and have not attempted to limit tries. The difficulties in these areas are feeding their portfolios to higher-rated issues.3 During through to the financial intermediaries supplying the first half of 1986, spreads between the yields them credit. Last year, for example, 136 comon corporate bonds and Treasury securities wid- mercial banks failed—compared with a total of ened considerably, but this appeared to be relat- only seven in 1981. Many of these institutions ed to the heavy volume of corporate issues and a had heavy credit exposures to the oil industry, revaluation of call and refunding provisions on while more than 40 percent of the failed banks long-term obligations. A narrowing of these held large amounts of agricultural loans. spreads early in 1987 has reversed much of the The impact of the distress in the farm sector earlier increase. also has been severe for the Farm Credit System, The expansion of household debt slowed last the government-sponsored agency that holds year as the growth of consumer installment cred- about 25 percent of outstanding farm debt in the United States. The losses of the banks in the 3. The interest rate spreads between investment-grade and System probably exceeded $2 billion last year, speculative issues widened about 50 basis points for a short largely reflecting provisions for loan losses, and time after the bankruptcy filing by LTV Corporation in July. the System's capital surplus soon will be ex- Low-rated or unrated bonds also experienced substantial yield increases for a time later in the year, when concerns hausted if losses do not abate. The Congress last about the liquidity of that market segment surfaced in con- fall approved regulatory accounting procedures nection with the insider trading scandal; that widening has for the Farm Credit System that will allow the been reversed since the beginning of 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

254 Federal Reserve Bulletin • April 1987 banks to report higher net income figures than tainly have contributed heavily. For 1986, about generally accepted accounting principles would one-quarter of the thrift industry will report permit. The higher reported income may ease negative net income, and the long-term prospects some of the problems within the System relating for many of these institutions are unfavorable. to the preservation of capital and help to justify Moreover, the Federal Savings and Loan Insurcharging borrowers more competitive rates. By ance Corporation has inadequate resources to themselves, however, the accounting procedures manage these problems effectively. do not provide substantive relief. While the many stresses and financial vulnera- The financial condition of the thrift industry as bilities are not amenable to correction through a whole has improved markedly since the early general monetary policy, they do influence the part of the decade, but the difficulties of many economic environment and represent a potentialinstitutions have intensified. As interest rates fell ly disruptive and destabilizing element in finanfrom their elevated levels in 1981 and 1982, the cial markets. The Federal Reserve has been average cost of funds at thrift institutions de- called upon to play a positive role through its clined much more rapidly than the average yield regulatory and supervisory functions. For examon their assets. The industry as a whole returned ple, steps have been taken to reduce the risks to profitability in 1983, and aggregate earnings associated with large payments made by wire have jumped since then. Net income for the transfer, and several proposals have been made industry in 1986 probably was strong again, to ensure the capital adequacy of commercial although it is likely to have been below that of banks. Many of the financial and sectoral stress- 1985. es will take considerable time to alleviate, and At the same time, asset quality problems have will require a stable monetary environment, rebecome increasingly important for a sizable num- dress of the imbalances in the nation's federal ber of these institutions. While some of these budget and international trade positions, and— problems are associated with economically dis- importantly—prudent private behavior, encourtressed regions of the country, overly aggressive aged as necessary by sound regulation. • investment strategies of some institutions cer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

255 Basic Banking This article was prepared by Glenn B. Canner of swings in the general level of economic activity, the Board's Division of Research and Statistics and new competition from largely unregulated and Ellen Maland of the Board's Division of providers of financial services. The changes have Consumer and Community Affairs. Julia A. afforded consumers new opportunities to invest Springer provided research assistance. and save in various financial instruments that yield rates of return determined by market On October 2, 1986, the Federal Financial Insti- forces. They have also led financial institutions tutions Examination Council approved a policy to change the way services are offered and priced statement that endorses and encourages private to generate income, manage risk, and reduce sector efforts to offer basic banking services. The costs. council's action, prompted by a recommendation Financial institutions have adopted strategies made by the Federal Reserve Board, occurred at to respond to changing market pressures: explica time of heightened interest in the subject by itly pricing services previously offered without consumer groups, legislators, industry trade as- charge, consolidating or eliminating unprofitable sociations, and individual financial institutions. services, and closing branch offices to reduce This article discusses the definition and origins of overhead expenses. Implementing these stratethe basic banking issue, explores the positions gies affects consumers in different ways. Explicit taken by various proponents of basic banking, pricing of services, for example, makes consumand reports highlights of research on the subject. ers consider the true cost of the services they It also examines responses to the issue by the receive. Before the deregulation of interest rates, banking industry and its regulators. The article financial institutions had to compete for consumconcludes by raising several questions about the ers' deposits using various nonprice means, such potential effectiveness and consequences of pro- as longer banking hours, extensive branch netviding basic banking services. works, premiums, free or low-fee checking, and nonexistent or low minimum-balance requirements on checking and savings accounts. Such BACKGROUND nonprice competition, of course, suggests an inefficient allocation of society's scarce re- In recent years, significant changes have oc- sources. For example, because inexpensive curred in the structure, the marketing practices, checking was widely available, many consumers and the regulation of the financial services indus- established multiple checking accounts with try.1 These changes are the consequence of rapid small balances, when fewer accounts—or even technological developments, declining inflation, one—might have sufficed. While many changes in the financial marketplace have favorably affected consumers, concern has been raised that some of the changes 1. For example, the Depository Institutions Deregulation may have adversely affected certain segments of and Monetary Control Act of 1980, in particular, has accelerated the evolution of the banking industry. Among other the population. A particular concern is that pricchanges, that act (1) authorized financial institutions nation- ing services explicitly and reducing the number wide to offer NOW accounts (interest-bearing checking acof branches in some areas may either price some counts); (2) created the Depository Institutions Deregulation Committee to phase out over six years interest rate ceilings consumers out of the market for deposit services on deposits; and (3) required the Federal Reserve System to or deny them convenient access to services. establish fees for many services it had previously provided Another concern is that some of the changes may without charge. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

256 Federal Reserve Bulletin • April 1987 curtail access to credit because credit may be Lifeline banking was the term originally used by more difficult to obtain if a person does not have those advocating the provision of financial seran account with a financial institution. Out of vices at reduced prices. The term was drawn from these concerns has developed a movement advo- the public utilities where it referred to providing at cating that depository institutions provide basic least the minimum level of energy or telephone banking services. services necessary for health and comfort for those too poor to afford the usual charges. Use of What Is Basic Banking? the term for financial services drew criticism from those who felt that banking services do not cany the same life-or-death connotations that some A uniformly accepted definition of basic banking utility services do. The critics suggested that use has not evolved from the public debate. Conseof what they considered an emotion-laden phrase quently, an element of uncertainty exists about obscures the practical elements of the issue. Over what kinds of services and associated prices time, then, lifeline has largely given way to basic. constitute a basic banking program. Neverthe- Although the phrase basic financial services is less, several working definitions, which vary in sometimes used to indicate that financial instituspecificity, have been offered. Most generally, tions other than banks are involved, basic bankbasic banking has been defined as the minimum ing has come to be the popular designation. level of financial services that should be available to all citizens, regardless of income (see inset). A more specific approach defines basic banking in checks cost 50 cents each. In still another apterms of the financial needs that should be met. proach, an advisory group formed by the New An example of this approach is the policy state- York State Banking Department called for a ment by the Federal Financial Institutions Ex- passbook savings account with low or no miniamination Council (FFIEC), which identifies mum-balance requirements on which interest three fundamental needs: a safe and accessible would be earned on virtually all balances.2 A place to keep money, a way to obtain cash, and a limited number of deposits and withdrawals (perway to make payments to third parties. (See the haps eight per month) would be permitted withappendix for the text of the statement.) Although out charge, and three free money orders would the statement does not address the issue of the be provided. price that should be assessed for basic financial One aspect of the basic banking issue on which services, it does explicitly state that such ser- no consensus exists is to whom the services vices should be offered in a manner consistent should be offered. Some feel that access to basic with safe and sound business practices. services should be based on an inability to pay Various approaches to the provision of basic (determined perhaps by an income test or evibanking services have evolved. Most include an dence of receipt of public benefits). Others beaccount that can be used for transactions, with lieve that such services should be universally reduced fees and low minimum-balance require- available. Many of those who shun eligibility ments. Many also include the cashing of checks tests believe that basic banking services, proper- (particularly government checks) for both those ly designed, are likely to satisfy the modest who hold accounts and those who do not. For needs of those intended to benefit while being example, one bank offers a checking account too limited to appeal to the general public. with no required minimum balance and unlimited check-writing privileges provided deposits and PROPONENTS OF BASIC BANKING withdrawals are made through automated teller machines. A fairly high fee is assessed for con- Advocates of basic banking contend that recent ducting a transaction with bank personnel if the changes in banking practices have adversely transaction could have been done by machine. In affected less affluent individuals and communianother instance, a thrift institution offers an account with a $10 opening balance but no required minimum balance on which eight free 2. Speech by Vincent Tese, New York State Superintendent of Banks, before the 90th Annual Convention of the checks may be written each month; additional New York State Bankers Association, June 11, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Basic Banking 257 ties. They see rising service charges and mini- half of a coalition of nine California consumer mum-balance requirements taking an increasing groups, the petition asserted that recent banking proportion of the resources of lower-income peo- practices—including special efforts to attract ple, and they allege that branch closings have wealthy customers and requiring credit cards to effectively eliminated banking services in some open accounts—effectively shut low-income communities. They believe that these develop- consumers out of the banking system creating, as ments have harmed low-income people by forc- the title states, a "crisis for the poor." Although ing some out of the banking system, by prevent- the petition was rejected by the banking superining others from entering the system, and by tendent, its contents provide an example of the imposing financial hardship on those who remain services and associated prices proponents of in the system. Proponents of basic banking wor- basic banking support. Specifically, the petition ry that saving is being discouraged and that some called for requiring banks (1) to offer those with people have to rely more on the use of cash for annual incomes of $11,000 or less savings actransactions, with its attendant inconveniences counts without fees and inexpensive checking and dangers. Moreover, they contend that access accounts with 10 free checks per month, (2) to to credit may be reduced because in their view eliminate the requirement of a credit card to open credit may be more difficult to obtain without a an account, (3) to cash government checks for deposit account. free, and (4) to charge no more than $1.00 for a Supporters of basic banking consider banking money order. The petition also proposed that a services to be almost a necessity in today's finding be required that' 'public convenience and economy. They believe that banks and other advantage are preserved" before bank offices are regulated financial institutions have a special closed or replaced by automated teller machines. obligation to address these needs because of the Although denying the petitioners' request for nature of their charters and the publicly backed adoption of new regulations, the banking superbenefits they receive—deposit insurance and intendent did encourage the petitioners to work regulatory oversight, for example. directly with the financial services industry to resolve informally the problems cited in the petition.4 Consumer and Community Organization The concerns reflected in the California peti- Activity tion have been echoed by other groups. Several national consumer organizations, including the Over the past several years, consumer and com- Consumer Federation of America, the Consummunity organizations have become increasingly ers Union, the American Association of Retired vocal in their demands that financial institutions Persons, and the Association of Community Ordo more to make their services both affordable ganizations for Reform Now (ACORN), as well and accessible to all segments of the public. The as state and local organizations, have devoted techniques they employ cover a wide range: considerable attention in recent years to the filing petitions and suits, working on joint indus- issue of availability and aflfordability of financial try-consumer task forces, publicizing surveys of services. These groups argue that a need for fees, supporting legislation, protesting bank ap- basic banking services exists, particularly among plications, organizing sit-ins, and picketing. lower-income consumers. The organizations cite One of the earliest formal demands for basic as the basis for their concern the growing number banking was an administrative petition filed in of complaints they receive and the evidence from August 1984 with California's attorney general surveys they conduct about increasing service and state banking superintendent.3 Filed on be- Gray Panthers, the Oakland Citizens Committee for Urban Renewal, the League of United Latin American Citizens, the 3. "Petty Larceny: Excessive Bank Charges Produce Sacramento Urban League, Progressive Senior Citizens, and Banking Crisis for the Poor; An Administrative Petition to the San Francisco Chapter of the National Organization for Ensure Essential Banking Services for All California Con- Women (NOW). sumers," filed by Public Advocates, Inc., of San Francisco 4. Letter, Louis Carter, California Superintendent of on August 7, 1984, on behalf of Consumer Action, Self-Help Banks, to Law Offices of Public Advocates, Inc., Septemfor the Elderly, Black Women Organized for Political Action, ber 6, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 Federal Reserve Bulletin • April 1987 charges.5 In some cases, organizations have tak- banks fail to offer or to publicize the availability en more direct action, such as demonstrations at of low-cost deposit accounts and have restrictive banks and at the offices of a banking trade policies for cashing government checks. Some association to demand wider availability of basic agreements between banks and protesting groups banking services. have required banks to look at the feasibility of There has been a noticeable increase in the opening branches in "unbanked" or "underfrequency with which local groups have pressed banked" neighborhoods. for commitments to provide basic banking ser- Besides filing formal protests, an increasing vices from banks and bank holding companies number of community groups have been inforapplying to the Federal Reserve and other regu- mally pressing their demands for basic services latory agencies for approval to merge with or with banks that are considering applications. The acquire another bank. Under the Community result has been several agreements in which Reinvestment Act (CRA), the agencies are re- banks have committed to offer transaction acquired to take into account an applicant's record counts at reduced prices, to cash government of meeting the credit needs of its entire commu- checks for noncustomers, and to lower fees for nity, including low- and moderate-income neigh- cashing government checks.8 borhoods. Community organizations sometimes challenge such applications, contending that the Legislative Activity banks have not met these needs.6 (The number of protests lodged with the Federal Reserve System Local, state, and federal legislators have exthat were based on alleged violations of the CRA pressed concern about the availability and afhas increased from 7 in 1983-84 to 39 in 1985-86. fordability of banking services. For example, in However, although the number of applications late 1982, the Philadelphia City Council considprotested on CRA grounds has grown in recent ered, although it did not approve, a proposed years, in relation to the total number of applica- ordinance that would require banks to notify the tions processed by the Federal Reserve, the city in advance of a branch closing.9 The city number of CRA-based protests is small.) Most of treasurer would then hold a public hearing to these protests focus on credit needs, but about decide whether the closing was justified; if not, half of the recent protests have included com- city deposits would be withdrawn from the instiplaints about the lack of other banking services. tution. One such protest in 1984 alleged that a bank's At least 15 states have considered basic bankpattern of branch closings discriminated against ing legislation. New York was one of the first minority and low- and moderate-income resi- states to consider such legislation, although it dents, thus depriving them of essential services.7 has not adopted any to date. In April 1984, the Many of the most recent protests allege that governor submitted a bill to the state legislature that would require state-chartered banks and thrift institutions to offer "lifeline" accounts in 5. San Francisco Consumer Action and Consumer Federareturn for allowing the institutions to exercise tion of America, "Bank Fees on Consumer Accounts: A 10- State Survey," May 17, 1984; "Bank Fees on Consumer expanded insurance powers.10 The legislation Accounts: The Second Annual National Survey," May 28, 1985; and "Bank Fees on Consumer Accounts: The Third Annual National Survey," June 2, 1986. Press release high- 8. In 16 out of 22 agreements recently reviewed by Federal lighting results of survey on availability of banking services, Reserve staff, basic banking was a negotiated issue. See also ACORN, New Orleans, Louisiana, April 17, 1986. See "It "Group Pushes for 'Lifeline' Bank Services," St. Louis Pays to Comparison Shop "American Banker, December 19, Post-Dispatch, December 5, 1985; "Demands for Local 1984, and "Consumer Group's Study Says Rhode Island Credit Shape More Bank Mergers," American Banker, June Banks Overcharge for Checking," American Banker, 2, 1986; and "Chase Promises Low-Cost Basic Banking March 17, 1986. Services When It Opens in Arizona," American Banker, 6. See, for example, "Hibernia Refuses Compromise with August 12, 1986. Community Group," American Banker, May 30, 1986, and 9. "Bill Aimed at Branch-Closers,"American Banker, De- "Acorn Fails in Bid to Block Phoenix Bank Acquisition," cember 27, 1982. American Banker, August 27, 1986. 10. "Cuomo Offers Bills with New Banking Powers," 7. See "Order Approving Acquisition of a Bank, Citicorp, American Banker, April 19, 1984. No action was taken on the New York, New York,"FEDERAL RESERVE BULLETIN, vol. bill at that time, and the bill was reintroduced as the Gover- 70 (May 1984), pp. 431-33. nor's Program Bill, Senate 7648/Assembly 9670 (1986). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Basic Banking 259 was based on recommendations made by the test or receive public benefits.15 The law also DeWind Commission, a group representing both requires banks to cash federal and state governindustry and consumer interests formed to con- ment checks. The Pennsylvania law authorizes duct a broadly based study of the effects of the state banking department to ensure that financial deregulation.11 Part of the final report "basic transaction account services" are availexpressed concern that increases in fees and able from institutions applying for interstate closings of branches might leave some consum- banking privileges.16 The law leaves the definiers and some communities without access to tion of such services to the banking department. even minimal banking services. Another recom- The issue of basic banking has also attracted mendation of the DeWind Commission called for the attention of federal legislators. Although no advance notice of branch closings. Under rules federal legislation pertaining to basic banking has adopted by the state banking board in July 1984, been enacted, several bills have been introduced the superintendent of banks, whenever determin- in recent years. In the fall of 1984, a bill was ing that a closing would significantly reduce the introduced in the House of Representatives that availability of services, is authorized to call would require the regulators of financial institumeetings with the institution and community tions to study the issue of basic banking services leaders to seek a way to replace the branch with and offer recommendations to the Congress other banking facilities. about what should be done "to encourage sav- The first state to adopt a law dealing directly ings by individuals and to assist individuals in with fees on deposit accounts was Massachu- cashing checks."17 The following year, three setts. In October 1984, that state prohibited more bills were introduced in the House. Two of state-chartered banks from assessing service these defined in some detail the kinds of deposit charges on savings or checking accounts held by accounts depository institutions would be reanyone 65 years and older or 18 years and quired to offer.18 The third bill would have younger.12 In 1985, Rhode Island adopted a simi- amended the CRA to require financial regulators lar law, prohibiting the assessment of charges on to consider in applications an institution's record savings accounts for those 17 years of age or of providing basic financial services to all memyounger, as long as the balance is under $500.13 bers of its community, including low- and moder- In 1986, three states adopted laws to require ate-income members.19 financial institutions to offer basic banking services. Illinois requires institutions to offer "basic checking accounts" to those 65 years and older; Consumer Advisory Council Activity the accounts must allow 10 free checks a month and cannot require initial deposits of more than Established by the Congress in 1976, the Con- $100.14 Minnesota and Pennsylvania have made sumer Advisory Council provides advice to the basic banking part of their interstate banking Federal Reserve Board on consumer protection laws: institutions involved in interstate banking matters. The council consists of 30 individuals, are obligated to offer basic banking services. The including representatives of consumers and the Minnesota law defines with some specificity the financial services industry, academics, and rep- "basic services transaction account" that must resentatives from state government agencies. In be offered (six free checks and six free transac- July 1984, the council formed a committee to tions at an automated teller machine allowed per review in greater depth the basic banking issue month and no periodic service charges) with eligibility restricted to those who meet an income 15. Reciprocal Interstate Banking Act, ch. 339, 2 Minn. Legis. Serv. 66 (West 1986) (to be codified at Minn. Stat. §§ 46.044, 48.512). 16. Act of June 25, 1986, Act. No. 1986-69, 4 Penn. Legis. 11. Report of the Temporary State Commission on Bank- Serv. 109 (Purdon 1986) (to be codified at 7 Pa. Cons. Stat. ing, Insurance and Financial Services, February 15, 1984. § 116(i)-(k)). 12. Mass. Gen. Laws Ann. ch. 167D, § 2 (West supp. 17. H.R. 6435, 98 Cong. 2 Sess. (1984). 1986). 18. H.R. 2011, 99 Cong. 1 Sess. (1985); H.R. 2661, 99 13. R.I. Gen. Laws § 19-11-11 (Supp. 1986). Cong. 1 Sess. (1985). 14. 111. Ann. Stat. ch. 17, § 504 (Smith-Hurd supp. 1986). 19. H.R. 15, 99 Cong. 1 Sess. (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

260 Federal Reserve Bulletin • April 1987 and asked the Federal Reserve staff to prepare a the Survey Research Center of the University of study of changes in bank service charges and Michigan, collected detailed information on detheir effect on consumers. The committee con- posit accounts held by nationally representative cluded that basic banking services were needed samples of U.S. families. for low- and moderate-income consumers, that a voluntary approach was preferable to a legisla- Characteristics of Deposit Account tive mandate, and that the Federal Reserve and Holders other agencies should actively encourage the institutions they supervise to offer such services. In 1983, roughly 79 percent of all families held a The council endorsed the committee's conclu- checking account (see table l).22 In addition, 9 sions and, in October 1985, recommended that percent of all families held a savings account but the Board of Governors issue a policy statement no checking account. Taken together, these staon basic banking. tistics imply that approximately 12 percent, or roughly 9.5 million families, in 1983 held neither AVAILABLE EVIDENCE CONCERNING a checking nor a savings account (table 2). The BASIC BANKING vast majority of these families had no other deposit accounts in a financial institution in 1983. The Federal Reserve Board and others have The 1983 survey affords an opportunity to undertaken extensive research to assess recent examine the characteristics of families that do changes in the way financial institutions price not maintain a deposit account in a financial their deposit services. In general, this research institution. Although families without deposit indicates that, in the past few years, fees charged accounts are in all income, age, and education on transaction accounts have increased more groups, most of these families are concentrated quickly than the general level of prices in the in relatively few categories (see table 2). Overeconomy and that minimum-balance require- whelmingly, the most common attribute of famments on deposit accounts have risen at about ilies without a deposit account is low income. the same rate as prices overall.20 The financial Thirty-six percent of families in the lowest quinbehavior of American families has also been tile for family income (family income less than investigated, and some of this research is directly $8,400) did not have a deposit account in 1983. In relevant to the basic banking issue. contrast, almost all families in the highest quin- As noted earlier, proponents of basic banking tile for family income (income more than have expressed concern that many Americans $37,000) had a checking account, a savings achave no deposit account in a financial institution count, or both. Overall, 57 percent of all families and that the proportion of certain groups of without an account in 1983 fell into the lowest families in this category appears to have in- quintile for family income (table 2, column 3). creased in recent years. Evidence on these Families without a high-school diploma also points comes from two consumer surveys, the make up a substantial fraction of all the families 1977 Consumer Credit Survey and the 1983 Sur- without a deposit account. While these lessvey of Consumer Finances, jointly sponsored by educated families are 28 percent of all families the Federal Reserve and other government agen- (data not shown in tables), they account for 59 cies.21 These surveys, which were conducted by percent of all families without a deposit account. Since families without a deposit account tend to be poor, examining the demographic charac- 20. See Glenn B. Canner and Robert D. Kurtz, Service Charges as a Source of Bank Income and Their Impact on teristics of these lower-income families in some Consumers, Staff Studies 145 (Board of Governors of the detail is informative (see table 3). The data reveal Federal Reserve System, 1985), tables B.1-B.7, pp. 21-25. 21. For a summary of basic results of these surveys, see Thomas A. Durkin and Gregory E. Elliehausen, 1977 Consumer Credit Survey (Board of Governors of the Federal Reserve System, 1977), and Robert B. Avery and others, 22. Checking accounts include non-interest-bearing de- "Survey of Consumer Finances, 1983,"FEDERAL RESERVE mand deposit and NOW accounts but exclude money market BULLETIN, vol. 70 (September 1984), pp. 679-92. deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Basic Banking 261 1. Checking and savings account holdings of families Changes in Deposit Account Holdings with selected characteristics, 1977 and 1983 Percent of group Evidence from consumer surveys indicates that roughly 10 percent of families did not maintain Hold checking Hold savings account account only1 deposit accounts in either 1977 or 1983. Close FFaammiillyy ggrroouupp inspection of the survey data shows that between 1977 1983 1977 1983 those two years certain groups of families experi- Family income (decile)2 enced a decline in account ownership. For exam- Lowest 56 44 14 13 Second 58 58 15 13 ple, the proportion of families headed by a Third 75 65 15 11 Fourth 79 77 12 11 younger person having a checking account de- Fifth 86 80 10 11 Sixth 89 87 7 7 creased, as did the proportion of families in the Seventh 89 90 8 8 lowest income group (table 1). Moreover, the Eighth 96 93 3 5 Ninth 96 95 3 4 proportion of lower-income and younger families Highest 96 97 1 3 without any deposit account increased over this Age offamily head period (table 2). (years) Less than 25 73 63 16 16 Some proponents of basic banking contend 25-34 83 75 8 10 35-44 88 83 5 7 that the decline in account ownership (particular- 45-54 86 81 9 7 55-64 83 83 7 7 ly among the poor) is a consequence of financial 65-74 79 82 9 6 deregulation. However, underlying changes in 75 or more 71 76 16 9 the demographic composition of the population Education offamily head 0-8 grades 63 59 14 12 9-11 grades 69 66 13 10 High-school diploma 87 80 7 10 Some college 90 84 8 8 2. Proportion of families not holding a depository College degree 97 95 3 3 account, by family groups with selected Ail families 81 79 9 9 characteristics, 1977 and 1983 Percent of group except as noted 1. These families hold a savings account but not a checking account. Cumulative 2. A difference of less than about 11 percentage points between percentage 1977 and 1983 is not statistically significant. of all families SOURCES: Thomas A. Durkin and Gregory E. Elliehausen, 1977 Family group 1977 1983 without a de- Consumer Credit Survey (Board of Governors of the Federal Reserve posit ac- System, 1977); Robert B. Avery and others, "Survey of Consumer count, 1983 Finances, 1983," FEDERAL RESERVE BULLETIN, vol. 70 (September 1984), pp. 679-92. Family income (quintile)1 28 36 57 10 17 84 that low-income families headed by unmarried Third 4 2 95 Fourth 2 2 99 nonwhites, regardless of age, are disproportion- Highest * 1 100 ately represented among families without ac- Age of family head (years) counts. Particularly noteworthy is the dispropor- Less than 25 11 22 13 25-34 9 14 39 tionate number of families headed by unmarried 35-44 7 10 54 45-54 6 11 68 nonwhite women that had no checking or savings 55-64 10 10 80 account. Families headed by such nonwhite 65-74 12 13 92 75 or more 14 15 100 women (regardless of age) are 17 percent of total Education of family head low-income families but 34 percent of all low- 0-8 grades 23 29 33 income families without a deposit account. Over- 9-11 grades 18 25 59 High-school diploma 5 10 84 all, regardless of age or income, families headed Some college 2 8 95 College degree 1 3 100 by nonwhite women are 7 percent of all families but make up 27 percent of all families without All families2 9 12 100 accounts. Married families with a nonwhite head 1. A difference of less than about 6 percentage points between 1977 also are disproportionately represented among and 1983 is not statistically significant. 2. A difference of less than about 2 percentage points between 1977 families without accounts: they are 9 percent of and 1983 is not statistically significant. all families but 17 percent of all families without a *Less than 0.5 percent. checking or savings account. SOURCES: Durkin and Elliehausen, 1977 Consumer Credit Survey, Avery and others, "Survey of Consumer Finances, 1983." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

262 Federal Reserve Bulletin • April 1987 3. Distribution of account holdings by families with incomes of less than $10,000 and by all families, by selected characteristics of head, 1983 Percent1 Families with incomes of less than $10,000 All families Head of family Neither Savings Neither Savings savings nor Checking savings nor Checking checking account account Total checking account account Total only only account account Less than 50 years of age Unmarried White male 6 7 Nonwhite male . 1 2 White female ... 9 9 Nonwhite female 16 2 4 Married White 22 34 31 Nonwhite 10 5 6 More than 50 years of age Unmarried White male 5 8 6 6 4 5 3 3 Nonwhite male . 4 5 1 2 3 2 * 1 White female ... 10 14 32 22 8 7 11 10 Nonwhite female 15 10 4 8 11 5 1 3 Married White 6 6 17 12 8 12 25 22 Nonwhite 8 4 3 5 7 4 2 3 Total 100 100 100 100 100 100 100 100 1. Details may not add to totals because of rounding. Factors," memorandum to the Board of Governors of the Federal SOURCES: Robert B. Avery and Gregory E. Elliehausen, "Addition- Reserve System (June 6, 1986), table 2. al Evidence on Deposit Account Ownership Changes and Usage and differences in prevailing economic condi- tion of the population rather than changes in tions at the times of the 1977 and 1983 surveys regulation or underlying consumer behavior.23 provide a competing explanation. Survey findings indicate, for example, that a substantially higher proportion of families in the lowest in- Reasons for Lack of Account Ownership come decile were unemployed in 1983 than in 1977. Since only about one-fifth of unemployed Whereas the socioeconomic attributes of families families in this income group held either a check- without accounts are relatively well known, ing or a savings account in 1983, growth in the much less information is available on the reasons proportion of lower-income families that were that these families do not have accounts. Such unemployed between 1977 and 1983 may account information is important because it improves our for part of the decline in measured ownership of understanding of the financial behavior of such deposit accounts among all families in this in- families and helps indicate the potential demand come category. for basic banking services. Changes in the demographic composition of As noted earlier, before 1980, service fees and the population between 1977 and 1983 may also minimum-balance requirements on checking or account for the differences in checking account savings accounts either did not exist or had holdings among the poor. In particular, there levels much lower than they are today. Neverwere significantly more low-income families theless, in 1977, 9 percent of all families did not headed by a female in 1983 than in 1977 (data not hold a deposit account. Factors other than the shown in tables). Because this group is less likely than other families to hold accounts, the decline 23. Robert B. Avery and Gregory E. Elliehausen, "Addiin account ownership among the poor may re- tional Evidence on Deposit Account Ownership Changes and Usage Factors," memorandum to the Board of Governors of flect in substantial part changes in the composithe Federal Reserve System, June 6, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Basic Banking 263 pricing of deposit services seem to explain the 4. Reasons given by consumers for closing or never behavior of these families. Although no available opening a checking account, 19851 information specifically explains consumers' Percent decisions to hold deposit accounts in 1977, re- Never cent surveys that focus directly on the current Closed a opened a financial behavior of consumers may help the Reason2 c a h c e c c o k u i n n t g checking account understanding of the reasons that certain families do not hold deposit accounts.24 Major reasons All reasons, total 100 100 In 1985, the Unidex Corporation conducted Do not need account 21 22 one such survey.25 Families that had closed their Cannot afford account 43 44 Do not want account 26 29 only checking account as well as families that Not convenient 10 6 had never held such an account were asked Subcategories of reasons about their motivation for these decisions (table Do not need account, total 100 100 Do not need account 10 11 4). In all cases a respondent's answer was fol- Use savings account instead 19 33 Do not make enough transactions 71 56 lowed by questions soliciting a more specific Cannot afford account, total 100 100 response. Nearly half of the consumers reported Cannot afford account 6 11 that they either did not want a checking account Do not have enough money to make account worthwhile 83 87 or did not need such an account. Among those Cannot afford service charges 11 2 who indicated they did not want an account, Do not want account 100 29 most stated that they preferred to use cash or Do not want account 6 13 Prefer to use cash or money order ... 35 62 money orders or had difficulty keeping an ac- Have trouble keeping account balance 45 13 count balance. Some indicated they did not trust Do not trust institution 14 13 financial institutions. Not convenient 100 100 A substantial number of respondents (43 per- Not convenient 58 55 Banking hours not convenient 12 36 cent of those who had closed an account and 44 No bank nearby 30 9 percent of those who had never had a checking 1. Respondents are low-income families without a checking acaccount) also stated that they could not afford count. The number of respondents who closed a checking account was such an account. When questioned further, most 206, and the number who never opened a checking account was 312. Details may not add to totals because of rounding. of these families indicated they did not have 2. Subcategories represent probing for specific reason. enough money to make having an account worth- SOURCE: Unidex Corporation, "Low-Income Checking Study," sponsored by the American Bankers Association, February 1985. while. Some respondents also mentioned high service fees as the reason they could not afford an account. Specifically, 11 percent of those who ly small group of consumers also reported they closed an account because they could not afford either had closed their only checking account or it cited high service fees as the reason for their had never had such an account because it was decision, and 2 percent of those who had never inconvenient. When questioned further, some of had an account because they could not afford it these consumers specifically noted that no financited high service fees as the reason.26 A relative- cial institution was located conveniently for them. In June 1986, the Federal Reserve Board sponsored a survey that collected information about 24. One limitation of these surveys is that they were deposit account ownership from a nationally conducted by telephone. As a result, families without phones representative sample of families.27 Those famcould not be contacted. Whether the behavior of such families (most of whom have low incomes) is similar to that of other families, particularly other low-income families, is percent had recently given up their checking accounts; 23 unknown. percent of these families cited high service fees or minimum- 25. The survey included 527 low- and moderate-income balance requirements as the reason they dropped their checkfamilies without a checking account. See "Low-Income ing account. "The Money Order User Profile," survey by J. Checking Study," survey by Unidex Corporation on behalf Maclachlan and Associates on behalf of Travelers Express of the American Bankers Association, February 1985. Company, Inc., April 1985. 26. A recent survey sponsored by the Travelers Express 27. Survey of Consumer Attitudes, conducted by the Uni- Company found that among regular users of money orders 14 versity of Michigan, Survey Research Center, June 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

264 Federal Reserve Bulletin • April 1987 ilies without a checking or savings account were 5. Reasons given by consumers for having neither a asked why they did not hold a deposit account. checking nor a savings account, 19861 Although the number of respondents without Respondents accounts in the sample was relatively small, the RReeaassoonn responses were consistent with those found in Number Percent2 the Unidex survey. No consumers in the June Prefer currency or money orders 9 13 survey mentioned high service fees or minimum Would not write enough checks or have enough money to make account balance requirements as the main reason for not worthwhile 42 63 having an account. The majority of respondents High service charges or minimum-balance requirements 0 0 without an account indicated they would not Inconvenient hours or location 2 3 Other 5 7 write enough checks or did not have enough Don't know 9 13 money to make having an account worthwhile Total 6677 110000 (table 5). Thirteen percent of respondents indicated they preferred to use currency or money 1. The survey asked each respondent: What is the most important reason that you do not now have a checking or savings account—is it orders, rather than checks, to conduct their because you prefer to use currency or money orders, because you do financial affairs. In addition, a small group (3 not write enough checks or have enough money to make an account worthwhile, because the service charges or minimum balance requirepercent) of respondents stated that they did not ments are too high, because the bank does not have convenient hours have a deposit account because financial institu- or locations, or what? 2. Details do not add to totals because of rounding. tions were either inconveniently located or not SOURCE: Survey of Consumer Attitudes, conducted by the Univeropen at convenient hours. sity of Michigan, Survey Research Center, June 1986. Although direct evidence on the financial habits of families without accounts is limited, some bills a month. This latter figure is consistent with data are available for analysis. Like other fam- the finding that most families without accounts ilies, those without deposit accounts incur bills have particularly low expenditures. associated with shelter, utilities, and the like. Analysis of data from the 1984 Currency and Unlike families with checking accounts, howev- Transaction Account Usage Survey sponsored er, these families rely primarily on cash and by the Federal Reserve Board provides further money orders to pay bills.28 Results of the June evidence that most families without deposit ac- 1986 Survey of Consumer Attitudes indicate that counts have minimal demand for financial ser- 47 percent of families without accounts reported vices.29 Using survey data obtained from families using money orders in the previous month com- with deposit accounts, a statistical model was pared with only 6 percent of families with check- developed to predict account usage on the basis ing accounts (data not shown in tables). Sixty-six of income and other demographic characterispercent of families with savings accounts but no tics.30 This model was used to forecast the manchecking accounts reported using money orders ner in which low-income families without acin the previous month. On average, families counts would use such accounts if they had without accounts used only three money orders them. The model predicts that low-income famper month. These findings are consistent with ilies currently without checking accounts would those reported in the 1985 Unidex survey. That hold account balances averaging about one-half survey found that roughly half (48 percent) of the that of other low-income families and would families without a checking account regularly use write only one-half as many checks. This result money orders to pay bills and that 70 percent of occurs primarily because families currently withthese families typically pay no more than five out accounts have, on average, lower incomes 28. Families without checking accounts most frequently use money orders to pay utility, rent, mortgage, insurance, 29. The 1984 Currency and Transaction Account Usage medical, and charge account bills. See J.L. Pierce, "The Survey collected detailed information from consumers about Users of Money Orders," paper prepared for the Symposium their payment practices, including their sources and uses of on Money Orders and Travelers Checks, California State cash. See Robert B. Avery and others, "The Use of Cash and Banking Department, San Francisco, December 8-9, 1977. Transaction Accounts by American Families," FEDERAL Further evidence on the use of money orders is found in RESERVE BULLETIN, vol. 72 (February 1986), pp. 87-108. "Money Order User Profile." 30. Avery and Elliehausen, "Additional Evidence," table 4. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Basic Banking 265 and expenditures than low-income families that 6. Proportion of commercial banks offering basic have checking accounts. banking services, by size of assets, selected years RESPONSES TO CALLS FOR BASIC BANKING Percent Bank assets Plan to The banking industry and several state and feder- (millions of dollars) 1984 1985 offer1 al regulatory agencies have responded to the Less than 50 9.9 10.7 4.3 calls for basic banking. The responses have been 50-99 9.8 15.9 25.6 100-499 10.7 21.0 42.0 diverse, ranging over a wide spectrum. 500-999 17.4 32.3 35.5 1,000 or more 19.8 24.6 45.6 13.4 21.1 38.0 Industry Response 1. In 1985, these banks stated they planned to offer basic banking Whereas some financial institutions have chosen services. 2. This is an average weighted by the total number of banks in each to offer basic banking services, others have op- asset class. posed the idea that they should have to develop SOURCE: Retail Deposit Services Reports (Washington, DC: American Bankers Association, 1984 and 1985). such special programs. Some of these institutions believe that they already offer regular banking products that meet basic banking needs. For can Bankers Association (ABA) revealed that 21 example, many institutions have traditionally percent of all commercial banks offered a basic offered savings accounts with low or no fees and banking account, up from 13 percent in 1984 sold money orders. Such an arrangement gives (table 6). The survey also found that 38 percent consumers an opportunity to pay bills without of the banks without a basic banking program using cash and provides a safe place to hold had plans to initiate such services. According to funds. the ABA survey, larger banks, most of which are Regardless of whether they have decided to located in urban areas, are more likely than offer basic banking services, some institutions smaller banks to offer basic banking services. A question whether such services really constitute survey of large financial institutions conducted in a "right" or "necessity," and some question 1985 by Trans Data Corporation found that 24 whether the evidence supports the contention percent of the largest banks and thrift institutions that people have in fact been forced out of the offered basic banking accounts and a similar banking system. They ask why banks and other percentage planned to begin offering such acregulated financial institutions should be re- counts during 1986.32 A Credit Union National quired to provide services at reduced prices Association survey of its members in the spring when similar demands are not made of sellers of of 1985 found that 75 percent of credit unions other goods and services. They contend that that offer share draft accounts imposed no mainbanks should not be treated like public utilities tenance or per draft fees.33 and suggest that, if the government believes all Besides conducting surveys to gather informapeople should have specific banking services, the tion about available basic banking services, nagovernment should provide subsidies. tional and state trade associations have spon- A number of financial institutions have chosen sored research on consumer attitudes about to make basic banking services available. Such changes in service charges, the effect of branch services have long been offered to certain groups closings, reasons for not holding an account, and (particularly to the elderly in the form of senior the need for and desirability of basic banking citizens accounts), and an increasing number of accounts. Several trade associations have made institutions are developing programs available to special efforts to encourage their members to the general public.31 A 1985 survey by the Ameri- 32. Retail Packaging, Lifelines and Deregulation 1986 (Salisbury, Maryland: Trans Data Corporation, Deposits and 31. Surveys of commercial banks indicate that 74 percent Credit Products Program, 1985). of banks olfer "free" checking account services to senior 33. Credit Union National Association, "Credit Union citizens. Pricing of Bank Services and Loans (Austin, Texas: Service Charges and Check Hold Policies" (Madison, Wis- Sheshunoff and Company, 1983). consin: July 1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

266 Federal Reserve Bulletin • April 1987 develop and market voluntarily products that basic banking issue in June 1986. The discussion will provide banking services at affordable was initiated in response to the Consumer Advisprices. The ABA and the Consumer Bankers ory Council's recommendation described earlier. Association, for example, have called on their The Board deferred action on a proposed policy member institutions to respond to the demands statement to review the results of research then for basic banking services and have provided under way concerning changes in account ownmodels to guide the development and marketing ership and reasons for not holding accounts. of such programs. Both organizations have also Board members were also interested in learning alerted their members to related matters—such more about how successful the banking trade as the importance of careful evaluation of pro- associations had been in encouraging voluntary posed branch closings and the problems caused action by their member institutions. Finally, by requiring credit cards for opening accounts— some Board members expressed concern about and have encouraged the development of alterna- whether the policy statement would be perceived tive policies. incorrectly as mandating the provision of basic banking services. The Board again considered the question in Regulatory Agency Response September 1986 and at this meeting approved a policy statement. The Board was influenced by Concerns about the accessibility and affordabili- the Consumer Advisory Council's request that ty of services have been voiced by various state the Board not delay approval of the policy stateand federal regulatory agencies. The New York ment. Council members felt that Board action State Banking Department, for instance, con- would strengthen the industry's voluntary efforts vened a joint industry-consumer task force to and might reduce the likelihood of burdensome turn the DeWind Commission's recommenda- legislation. The policy statement ultimately aptions into concrete legislative proposals for basic proved by the Board differs from the draft origbanking accounts. Both the Office of the Comp- inally considered in that the statement emphatroller of the Currency (OCC) and the Federal sizes supporting and encouraging trade Reserve System have arranged several meetings, associations to address actively the interest in conferences, and seminars with bankers and basic banking services. consumer representatives to discuss basic banking services and related issues. The OCC sent two letters to national banks in ISSUES TO WATCH 1985 alerting them to the possible problems associated with changes in banking practices. The As noted, a growing number of financial institufirst letter urged banks to take steps to minimize tions are implementing basic banking programs. the adverse effect branch closings and reduction Efforts by trade associations to encourage the of services can have on communities, particular- development of such programs, along with rely low- and moderate-income communities. The cent endorsement by regulatory agencies of such letter suggested using objective criteria for deci- actions, will likely accelerate this trend. Despite sions about cutbacks, considering whether other the relatively rapid development of basic banking institutions exist in the neighborhood, and giving plans, the effectiveness and the profitability of advance notice of closings to residents. Later in these programs still need to be assessed. 1985, the OCC issued a banking circular encouraging banks to develop and promote basic banking services to customers.34 Effectiveness The Federal Reserve Board first discussed the Whether reduced fees for deposit account services will prove attractive to families without 34. Banking Circular on Basic Banking Services, Office of the Comptroller of the Currency, August 23, 1985. such accounts is unclear. When asked why they Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Basic Banking 267 do not hold a deposit account, many families cite banking, they have stated that such programs affordability of banking services in general or say should be implemented in a manner consistent they do not have enough money or transactions with the safety and soundness of the institution. to make an account worthwhile. Yet few families The clear implication is that institutions should specifically cite high service charges and high attempt to develop products that meet the needs minimum-balance requirements as the reasons of their potential basic banking customers withthey have no deposit account. Furthermore, the out losing money. The ability of depository insticost of using nondepository providers of finan- tutions to implement programs in this manner is cial services (such as check-cashing facilities and unclear. For instance, a 1986 survey by the sellers of money orders) raises a question about Consumer Bankers Association found that 61 the importance of price compared with other percent of the banks offering basic banking plans factors in the decision about whether or not to operated them on a break-even or profitable hold an account. Finally, lowering the price for basis.35 A similar survey, conducted by the ABA services does not address the concern expressed in 1986, found that 53 percent of banks offering by the small proportion of families without ac- basic banking plans operated them on a breakcounts who cite inconvenient hours of operation even or profitable basis.36 or location of banking facilities as the main reason they do not hold an account. Thus, although reduced charges for deposit account ser- Competitive Equity vices ifiay be attractive to the most price-sensitive families without accounts, whether the ma- Competitive equity is a third area meriting attenjority of families without accounts will be drawn tion. The market for most types of transaction to basic banking services is an open question. account services is local in nature. Thus the type Evaluation of the effectiveness of basic bank- of community in which a financial institution ing programs must include how well such pro- operates will have a direct bearing on potential grams are reaching targeted groups. The market- demand for its basic banking services. Instituing practices of institutions offering basic tions in predominately lower-income neighborbanking will have a bearing on the number of hoods may find the demand for their basic bankfamilies that seek such services. Financial insti- ing accounts far different from that found by tutions may find effective marketing difficult institutions in higher-income locations. If basic because they may be unaccustomed to selling banking programs cannot be operated profitably, products to such families. Moreover, these fam- or at least on a break-even basis, institutions ilies undoubtedly have developed relationships located in lower-income areas that offer such with nondepository providers of financial ser- accounts will operate at a competitive disadvanvices and may be reluctant to change established tage. Ironically, this situation could create an financial habits. Without special outreach efforts incentive for office relocations, potentially hurtin both marketing and education, institutions ing all bank customers in the area. may find basic banking programs largely unused or used by groups for whom the plans are really These and other issues will need to be more not intended—college students, for example. fully explored as basic banking services become more common and assessments are made of how well such services meet the purposes for which they were intended. Profitability Besides the effectiveness of basic banking pro- 35. Consumer Bankers Association, "Basic Banking Sergrams, issues related to the profitability of such vices Survey" (Arlington, Virginia: November 1986). 36. American Bankers Association, "Survey of Basic/Noservices warrant attention. Although the regula- Frills Banking Services: Management Summary of Results" tory agencies have endorsed the concept of basic (Washington, DC: January 26, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

268 Federal Reserve Bulletin • April 1987 APPENDIX explicitly price their products, consolidate or eliminate services they believe to be unprofit- The following is the text of the policy statement able, and close branch offices. In many inapproved by the Federal Financial Institutions stances, institutions have increased service Examination Council on October 2, 1986. The charges, imposed new fees, and raised minimum FFIEC consists of representatives from the five balance requirements. federal agencies that regulate financial institu- While such adaptation may be a necessary tions: the Federal Deposit Insurance Corpora- response to competitive markets, considerable tion, the Federal Home Loan Bank Board, the concern has developed about the potential im- Federal Reserve Board, the National Credit pact of these changes in effectively denying or Union Administration, and the Office of the reducing convenient access of many individuals Comptroller of the Currency. The policy state- to the payments system and to safe depositories ment was also approved by three associations of for small savings. Because credit availability is state supervisors: the Conference of State Bank often dependent on an account relationship with Supervisors, the National Association of State a financial institution, access to credit for low- Credit Union Supervisors, and the National As- income or young consumers may also be adsociation of State Savings and Loan Supervisors. versely affected. While a significant number of consumers have never had a deposit account, some research Joint Policy Statement on Basic studies reflect declines in account ownership that Financial Services may be cause for concern. For example, between 1977 and 1983 the proportion of families headed The Board of Governors of the Federal Reserve by a younger person having checking accounts System, Federal Deposit Insurance Corporation, decreased, as did the number of families from the Federal Home Loan Bank Board, National Cred- lowest income group, regardless of age. The it Union Administration, Office of the Comptrol- proportion of young families having either a ler of the Currency, Conference of State Bank savings or a checking account also declined. Supervisors, National Association of State Cred- While the cause of these declines is not always it Union Supervisors, and National Association clear, the surveys do suggest that a significant of State Savings and Loan Supervisors are issu- number of individuals or families do not have a ing this joint policy statement to encourage the deposit relationship of any kind. efforts of trade associations and individual de- Legislation dealing with basic financial serpository institutions regarding the offering of vices has been introduced at both the federal and "basic financial services."1 state level[s] as a result of these concerns. The The economic environment in which financial industry has also responded. Many financial ininstitutions operate has changed over the past stitutions have independently undertaken to defew years, due in part to increased competition velop and implement new measures to meet from outside the traditional depository institu- minimum consumer needs. They are offering tion structure, increased cost of funds following basic services, such as low-cost transaction and deregulation of interest rates, and interest rate savings accounts with low or no minimum balvolatility. As a consequence, many institutions ances, accounts for consumers who use a limited have had to adopt new strategies to market their number of checks or drafts, and other accounts services, generate income, manage risk, and on which minimal charges are made for account reduce costs. Some institutions have begun to maintenance. Institutions that have for years offered such services to particular groups of customers are now advertising their availability more widely. Other institutions are exploring and finding ways to maintain a physical presence in 1. The Comptroller of the Currency previously issued a low- and moderate-income neighborhoods even banking circular on this subject to all national banks in while reducing the expense normally associated August 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Basic Banking 269 with full branch facilities. Trade groups too have • the need for a way to obtain cash (including, joined in these efforts to encourage the offering for example, the cashing of government checks); of such services at affordable prices. The Ameri- • the need for a way to make third party can Bankers Association and Consumer Bankers payments. Association, for example, have called upon their We believe that industry trade associations members to address the continuing interest in have a key role to play in this effort, and are in a basic banking services. position to encourage a constructive response The member agencies of the Federal Financial without the rigidities of legislation or regulation. Institutions Examination Council and the associ- We realize that some associations have such ations of state supervisors wish to encourage programs already under way. such efforts by trade associations and individual These programs could usefully: depository institutions that promote the offering 1. Encourage members to offer and approof basic financial services, consistent with safe priately publicize low-cost basic financial serand sound business practices. While the specific vices such as those listed above. type of services will, of course, vary because of 2. Survey the current availability of such differences in local needs and in the characteris- services among member institutions. tics of individual institutions, we encourage ef- 3. Make available to members not providing forts to meet certain minimum needs of all con- such services material reflecting the successful sumers, in particular: experiences of other organizations. • the need for a safe and accessible place to keep money; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

270 Staff Studies The staffs of the Board of Governors of the indicate concurrence by the Board of Governors, Federal Reserve System and of the Federal by the Federal Reserve Banks, or by the mem- Reserve Banks undertake studies that cover a bers of their staffs. wide range of economic and financial subjects. Single copies of the full text of each of the From time to time the results of studies that are studies or papers summarized in the BULLETIN of general interest to the professions and to are available without charge. The list of Federal others are summarized in the FEDERAL RESERVE Reserve Board publications at the back of each BULLETIN. BULLETIN includes a separate section entitled The analyses and conclusions set forth are "Staff Studies" that lists the studies that are those of the authors and do not necessarily currently available. STUDY SUMMARY DETERMINANTS OF CORPORATE MERGER ACTIVITY: A REVIEW OF THE LITERATURE Mark Warshawsky—Staff, Board of Governors Prepared as a staff study in the fall of 1986 Merger and restructuring activity among corpo- to explain merger activity. These are not by any rations has increased dramatically in recent means mutually exclusive and might all be releyears. The high level of activity has attracted vant in varying degree in different periods and considerable attention owing to the size and circumstances. The dominant view, for which prominence of the corporations involved, the empirical studies have provided support, is that predominant use of debt (in particular, low-grade mergers and takeovers primarily reflect efforts to "junk" bonds) to finance the activity, and the wrest corporate control from inefficient, ensuccess of hostile raiders in forcing changes in trenched management in order to realize the full management and in corporate policies. Particular potential of a firm's assets. In the recent period, concern has been expressed about the significant the targets of many threatened or actual takecutbacks in corporate expenditures and staff that overs have been firms that seemed to have larger often result after completion of a takeover or cash flows than they could profitably plow back restructuring. More recently, several cases of into their basic businesses given the long-range "insider" trading in stocks of target firms have growth prospects of their industries. These firms led to enforcement actions. These concerns have in effect were forced to distribute that excess prompted several proposals to curb takeovers. cash flow by exchanging debt for equity. In other This paper reviews the relevant theoretical instances, firms were forced to sell productive literature, much of it recent, regarding the major assets that they were unable to manage effectivedeterminants of corporate merger activity and ly. Any rise in share prices after restructuring or examines the empirical evidence bearing on the takeover reflects the market's expectation that aptness of the suggested explanations. It also the actions taken will improve a firm's profitabiladdresses the issue of increased leverage. ity. The literature suggests four major hypotheses The second hypothesis focuses on tax consid- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

271 erations. A merger may afford important tax are eased (again, something that has occurred in advantages through a rise in the asset "basis" for recent years). depreciation allowances and other purposes, the The fourth hypothesis states that mergers and capture of tax-loss carryovers, or enhanced le- acquisitions are stimulated by financial market verage. As an explanation of the choice of a inefficiencies that leave corporate equities undermerger to realize tax savings, this hypothesis valued relative to their intrinsic worth. In this suffers from the fact that many of these tax view, which is a commonplace in popular acadvantages can be achieved by alternative trans- counts of market activity, acquirers are shopping actions—for example, through partial asset sales for "bargains," that is, buying existing physical or debt-for-equity swaps. Tax factors, however, assets more cheaply than they can be manufacmay contribute to the profitability of mergers, tured or built. Many corporate managers believe even if the choice of this transaction is primarily that raiders essentially "steal" corporate assets motivated by other considerations. Consequent- by purchasing shares at prices below their true ly, tax factors may play a significant, although value. Such undervaluations, which are indepenlargely secondary, role in the prices paid for dent of managerial inefficiency, tax considertarget companies and in the number of mergers ations, or the extent of market power, result undertaken. from the inability of the market to correctly value The third hypothesis maintains that mergers corporate assets. Market undervaluation is more are motivated by the desire to limit competition likely during times of major economic disturand gain market power. Logic suggests that bances and uncertainties when stock market merger activity might increase when some devel- prices generally reach their trough. Distinguishopment (such as major deregulatory actions of ing financial market inefficiencies empirically the sort seen in recent years or a slowing of from the corporate control case would be diffigrowth in demand for an industry's product) cult; existing studies on market efficiency are not intensifies competition among firms and thereby conclusive, and not surprisingly, any evidence of enhances the desire to find relief from market such inefficiencies is disputed by those who pressures through combination. Alternatively, believe the markets do a good job of valuing mergers will increase when antitrust restraints corporate shares. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

272 Industrial Production Released for publication February 16 manufacturing nearly 2 percent higher, but mining about 12 percent lower, than it was a year Industrial production increased an estimated 0.4 earlier. percent in January following a rise of 0.3 percent In market groups, output of consumer goods (downward revised) in December. Moderate rose 0.5 percent in January as production of gains prevailed in most sectors, except home nondurable consumer goods continued to adgoods and energy materials. At 126.9 percent of vance at its recent strong pace. However, output the 1977 average, industrial output in January of durable consumer goods was little changed, on was 0.6 percent above that of a year earlier, with balance, following a sharp gain in December. Ratio scale, 1977 = 100 140 Products TOTAL INDEX 120 100 80 140 MANUFACTURING Durable MATERIALS Durable 120 Nondurable • — Nondurable " / "N y/ 100 80 160 CONSUMER GOODS INTERMEDIATE PRODUCTS Nondurable 140 Business supplies 120 / Durable 100 / / w 80 — Construction supplies J I I 140 MOTOR VECHICLES AND PARTS FINAL PRODUCTS Defense and space 120 100 Business equipment 80 Consumer goods 60 1981 1983 1985 1987 1981 1983 1985 1987 All series are seasonally adjusted. Latest figures: January. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

273 1977 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Group 1986 1987 1986 1987 JJJaaannn... 111999888666 tttooo JJJaaannn... Dec. Jan. Sept. Oct. Nov. Dec. Jan. 111999888777 Major market groups Total industrial production 126.4 126.9 -.1 .3 .6 .3 .4 .6 Products, total 135.2 135.9 -.4 .6 .4 .5 .5 1.4 Final products 133.9 134.6 -.3 .4 .4 .6 .5 .5 Consumer goods 127.1 127.8 -.7 .4 .6 1.3 .5 3.2 Durable 121.1 121.3 1.4 -1.0 1.3 2.8 .2 4.6 Nondurable 129.3 130.1 -1.4 .8 .4 .8 .7 2.8 Business equipment.. 138.3 138.9 .0 -.2 -.1 -.4 .4 -1.8 Defense and space... 185.3 186.7 .6 1.4 .2 .2 .8 4.5 Intermediate products.. 139.6 140.3 -.6 1.3 .4 .2 .5 4.5 Construction supplies 126.9 127.9 .4 .3 .7 -.2 .8 3.1 Materials 114.4 114.6 .3 -.2 .9 .1 .2 -.7 Major industry groups Manufacturing 131.0 131.8 .3 .4 .5 1.8 Durable 129.3 129.8 .0 .4 .5 .2 Nondurable 133.5 134.5 .7 .3 .6 4.0 Mining 95.4 95.6 -.6 1.2 -1.3 -11.6 111.0 Utilities 111.2 .9 1.7 .0 -1.3 NOTE. Indexes are seasonally adjusted. Production of home appliances, which expanded level more than 5 percent higher than it was a rapidly in late 1986, retreated in January, and year earlier. Among materials, both durables and auto assemblies fell to an annual rate of 7.5 nondurables posted gains in January, but energy million units from a rate of 7.9 million in Decem- materials declined about 1 percent following a ber; these declines were offset by increases in similar drop in December. Within nondurables, output of trucks and home goods other than recent strength has been concentrated in chemiappliances. cals and paper, which may have benefited, in Production of business equipment rose 0.4 part, from increased exports of these products. percent in January, with all major categories In industry groups, output in the manufacposting gains, but the overall January level re- turing sector rose 0.6 percent in January, while mains almost 2 percent lower than it was a year output of mining and utilities was about unearlier. Output of defense and space equipment changed. Within manufacturing, gains were largincreased further. Following a small decline in est in nondurables, which rose 0.7 percent. Pro- December, the output of construction supplies duction of durables increased 0.4 percent; the rose 0.8 percent in January and production of gain was damped by further declines in the business supplies rose 0.3 percent further to a production of metals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

275 Statements to Congress Statement by Paul A. Volcker, Chairman, Board in some important import prices are occurring. of Governors of the Federal Reserve System, Because of those factors, we cannot reasonably before the Joint Economic Committee of the expect so satisfactory a statistical result in 1987. U.S. Congress, February 2, 1987. There is, however, encouraging evidence of continuing restraint on costs and in pricing behavior. I am pleased to appear once again before this Most significantly, the trend toward moderation committee to discuss the economic situation. As in nominal wage and salary increases has continyou know, the Federal Reserve will be submit- ued in almost all sectors of the economy, and ting its semiannual report on monetary policy to productivity gains in manufacturing, if not in the Congress later this month. My testimony at other sectors, have been sizable during the exthat time will provide a full account of recent pansion. monetary developments and will report on the My purpose, however, is not to express satisdecisions to be made by the Federal Open Mar- faction or complacency over past performance. ket Committee regarding money and credit tar- What will count is whether we can build upon gets for 1987. Therefore, in my statement today I and sustain that progress. And the obstacles and will be emphasizing more general considerations roadblocks are evident. of domestic and international economic policies. You are all too familiar with regional and The economy is now in the fifth year of sectoral disparities in performance. Manufacexpansion, making it among the longest. During turing has been relatively sluggish for two years this time about IIV2 million jobs have been or more. Much of agriculture is depressed decreated, and the unemployment rate has fallen spite massive federal assistance. The energy more than 4 percentage points from its peak in industry has been hard hit. Conversely, employ- 1982, reaching 63A percent in December. In con- ment in services and finance has been expanding trast to the experience of the 1970s, real incomes rapidly. of households have risen steadily in recent years. Overall, higher levels of consumption have In the business sector, aftertax profits have been driving the economy over the past two recovered both absolutely and relative to overall years, while investment and domestic savings gross national product. Interest rates, in contrast have lagged, hardly a sustainable combination. to the usual cyclical pattern, are lower today The exuberance of financial markets and the than when the expansion started. rapid pace of debt creation have been accompa- These substantial economic gains were accom- nied by evident pressures on some sectors of the panied by—and I believe fundamentally depen- financial system, rising loan losses, and the risks dent upon—consistent progress toward the ob- implied by greater leveraging of many busijective of overall price stability. Consumer prices nesses. rose a scant 1.1 percent last year, and producer Plainly, in their particulars, many of the strains prices actually declined—a performance unri- and imbalances in our economy can be traced to valed since the early 1960s. specific circumstances beyond the reach of We know, of course, that such extraordinary broad fiscal or monetary policies. For instance, progress reflected, in large measure, the transi- there is a worldwide tendency toward growing tory influence of the sharp drop in oil prices that surpluses of basic agricultural commodities. The occurred early last year; that movement has been sharp break in oil prices has also been an internapartially reversed recently. Moreover, given the tional market event. Both of those circumstances size of the fall in dollar exchange rates against have contributed to the strains on some lending other leading industrialized countries, increases institutions. But, through it all, two disturbing, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

276 Federal Reserve Bulletin • April 1987 and partly related, currents run strongly—our has been the case at times in the distant past in trade and budget deficits. Those are matters that the United States and in other countries more must be addressed—indeed can only be con- recently. But we are not making that match structively addressed—by appropriate national now—it's consumption that has been leading the policies. And if we delay, the adjustments will economic parade. become even more difficult, compounding the In that context, the challenge for economic risks for the future. policy over the next few years is clear enough. The direct effects of the trade deficit are clear We have to work toward better external and enough. Burgeoning imports over several years, internal balance at the same time. The adjustwhile exports in real terms have risen much more ments required are large. Given our extended slowly, largely account for the overall sluggish- position, the difficulties and risks are substantial. ness of manufacturing. With capacity ample, that We do not want to achieve the needed external sluggishness feeds back on spending for plant adjustments by recession, nor can we reasonably and equipment. float off our debts by rekindling inflation—and I The effects of the budget deficit, in current do not think it is realistic to think we have the circumstances, may be less obvious—after all, as option of trading one of those possibilities for the many have noted, interest rates have fallen while other. the deficits have been so large, the huge new That may sound like abstraction. I will be issues of Treasury securities have found a mar- more specific. ket, and private debt creation has been high as One requirement is progress in reducing our well. How is that possible when, to take one trade deficit. That, on the face of it, will bring simple benchmark, our federal deficit has aver- benefits to manufacturing in the United States. aged about two-thirds of the net savings generat- The potential is huge—to close our $150 billion ed by our economy over the past four years? trade deficit by increased manufacturing (and I In effect, the answer is that we are drawing on do not see any other practical avenue) implies a the savings of others: in 1986, the net influx of 15 to 20 percent increase in industrial output over foreign capital appears to have exceeded all the the coming years above and beyond that required savings generated by individuals in the United to support domestic growth. While a surge of States. That capital influx is the mirror image of that kind would be welcome in many respects, the deficit in our current account—we cannot, at the challenge is to achieve it without renewed one and the same time, borrow abroad (net) to inflationary pressure in that sector. That will cover a domestic investment-savings imbalance require continuing restraint on costs, more modand run a balanced current account. ernization, and in time more capacity, which in In a sense we have been fortunate. We have turn will require both money and real resources. been able to increase consumption rather rapid- By definition, as we close the current account ly, sustain overall growth, and reduce inflation deficit, those funds and real resources will no and interest rates even in the face of a large longer be available from abroad. So we will have federal budget deficit by calling upon other na- to increase our own savings or reduce other tions' savings, which they have readily provided. demands on savings at home. The obvious candi- But the cost has been a rising trade deficit and date—again, as a practical matter, it must be the increasing international indebtedness, strong largest "contributor"—is a reduction in our fedpressures on manufacturing in the here and now, eral budget deficit. And, unless productivity in and an unsustainable pattern of economic activi- the economy as a whole is to dramatically inty for the future fraught with political as well as crease above the recent trend of 1 percent or economic risks. so—and unhappily there is no solid evidence for that—we will not be able to close the gap in trade Stated simply, we are living beyond our and meet our domestic investment needs without means—individuals, businesses, and governslowing the growth in domestic consumption ment have collectively been spending more than well below the 4 percent pace it has averaged we produce. That might be acceptable if we were during the current expansion. matching the foreign borrowing with a surge in productive investment in the United States. That In concept, all those things are "doable." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 277 They provide the outline of an appropriate eco- prices no longer fall. But monetary policy, in nomic strategy. The result would be a more particular, must remain alert to the need to avoid balanced economy, greatly enhancing the pros- any sense of cumulating inflationary pressures. pects for sustained growth and greater exchange Over the past year or more, as inflation has rate and financial stability. subsided and with limited economic growth, the In fact, I believe we are beginning to make Federal Reserve has been able to accommodate a progress in the required directions. But, in a rapid growth in money and the discount rate has sense, we have so far only set the stage. Many been reduced on several occasions. Clearly, redifficult decisions lie ahead. newed inflationary pressures and weakness in • In the current fiscal year, some significant the dollar externally would be factors limiting progress toward reducing the extraordinary bud- our flexibility. In that context, your efforts to get deficit appears to be under way. But, as you deal with the budget deficit are even more central well know, sustaining that progress will require to the financial and economic outlook. still more difficult decisions this year, and for the • In the end, the efficiency, competitiveness, years beyond. The Gramm-Rudman-Hollings and salesmanship of U.S. industry, and its ability targets have signaled your intentions, but more to resist cost increases, will be critical. As I important than those numerical targets is specific indicated earlier, there are encouraging signs of action by the Congress to ensure that the deficit improved productivity in manufacturing. As a will, in fact, continue to decline year by year. result, profits and cash flow have been reason- Without that progress, it is difficult to see how ably well maintained even as prices of goods we could manage to reduce the trade deficit— have remained virtually stable. and with it the net capital flow from abroad— All that has been achieved during a period of without jeopardizing growth, progress toward intense competitive pressure from abroad and at lower interest rates, and financial and price sta- a time of little growth. The challenge will be to bility at home. maintain that performance as prices of competi- • The large realignment of exchange rates over tive imports increase, as export markets imthe past two years should enable our industry to prove, and as new needs for capacity arise. If compete much more aggressively with other ma- not, the gains from the realignment of currencies jor industrialized countries. But that construc- will be frittered away. tive development should not obscure the fact The point has often been made that despite the that a declining dollar at some point has high longer-run benefits for the economy as a whole, costs and risks as well. It generates inflationary recent tax changes may tend to inhibit plant and pressures. Uncertainties about the future direc- equipment spending in some industries. On the tion of currency values could dampen the willing- other hand, the buoyancy of the financial marness of others to place or maintain funds in the kets should reduce the cost of capital and pro- United States—funds upon which, for the time vide fresh opportunities for consolidating finanbeing, we are utterly dependent to finance inter- cial resources and balance sheet strength. Those nal needs. opportunities should be used constructively and A self-generating cumulative process of cur- not be dissipated in excessive leveraging and rency depreciation and inflation serves no one's financial risk-taking that could in the end jeoparinterest. Economic history is littered with exam- dize our stability. ples of countries that acted as if currency depre- The burden of my comments is that there are ciation alone could substitute for other action to gross distortions and imbalances in the economy restore balance and competitiveness to their that we must deal with forcibly and effectively. economies. But we also have a lot upon which to build. The • That history emphasizes the need for national outlines of an effective approach are clear policy to remain strongly oriented toward main- enough. Major elements of that approach are in taining greater price stability. As I indicated place. But we will also need time and patience— earlier, the good performance of the key price and they are in short supply. indexes in 1986 probably cannot be matched this For instance, the deterioration in our trade year as we absorb higher import prices and oil balance appears to have ended, but signs that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

278 Federal Reserve Bulletin • April 1987 corner has been turned are not yet decisive. achieving better international balance in a frame- Meanwhile, the inevitable adjustments in the work of world growth. Naturally these countries, energy industry, in agriculture, and in commer- too, want to maintain and consolidate greater cial building are continuing to work against eco- price stability. But with their currencies apprecinomic growth in many areas. In these circum- ated, the opportunity to do so consistent with stances, stronger growth in 1987, as well as more more rapid growth will be enhanced by cheaper sustainable growth over time, is heavily depen- and more available imports. dent on the realization of significant gains in Sometimes, and I think unfortunately, that trade. need for complementary adjustment abroad is One temptation is to try to speed that pro- framed in political terms as a request for "help" cess—and to vent our understandable frustration by the United States to resolve our own probabout restrictive trade policies of others—by lems. But what is at issue is not a narrow concept resorting to broad-brush protectionism. But such of help for us or any single country; rather it is a course, it seems to me, would invite almost what is required to achieve, in an interdependent certain failure. The lesson of experience is that world, the sustainable world growth and stability world trade and economic activity would be we all want. In that respect, no country heavily depressed together. Indeed, given the greater dependent on trade is an island. Sooner or later, degree of economic and financial interdepen- the necessary adjustments in trade will be made. dence of nations today, the risks and potential The issue is whether they will be made in an losses are all the greater. orderly way, in a framework of open markets and At the same time, that very interdependence growth, or with excessive currency instability, or means that we cannot be successful unless other protectionism, or both. countries are taking constructive complementary Our own responsibilities in that connection, as actions to maintain their own growth, to keep I have outlined, are unmistakable. But those their markets open, and to deal with legitimate measures inevitably impact others, and a better complaints of unfair trading practices. international balance cannot be achieved, in the The United States and its currency are a major interests of the United States and its trading force in the world economy and financial system. partners, without constructive complementary In that context, I can readily understand the policies abroad. concern expressed abroad about instability in the Moreover, such responsibilities extend bedollar exchange markets and about the potential yond the main industrialized countries to others, impact on their own economies. At a time of particularly in the Far East, that have achieved rather sluggish growth among the main industri- rapid growth largely by penetrating foreign maralized countries, abrupt further changes in the kets open to them, most of all in the United dollar could undercut business planning and in- States. To the extent that some of those counvestment. We in the United States obviously tries have large and growing external surpluses, have nothing to gain—and a great deal to lose— the time has come clearly for them to open their from any interruption in growth abroad. markets more broadly. In doing so, the benefits But it is equally obvious that the needed of their growth to their own consumers will be improvement in our trade position must be enhanced, even as they contribute to easing the matched by others absorbing increased imports problems of worldwide adjustments. and facing stronger export competition; logically I want to emphasize, too, that all these acand constructively, those changes should be tions—by the United States, by other industrialborne primarily by countries with huge external ized countries, and by certain newly industrialsurpluses. For countries that have been depen- ized countries—are a necessary part of achieving dent on large export surpluses to support growth, the healthy economic environment essential for that poses difficult adjustment problems, the other developing countries to constructively deal mirror image of ours. In those cases, the plain with their problems. The heavily indebted counneed is to encourage domestic growth, while also tries, in particular, must be able to penetrate maintaining the kind of open markets and recep- export markets outside the United States. tivity to imports that are a necessary part of What I have tried to outline this morning is the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 279 broad directions that I believe U.S. policy must aged by the degree to which some of the needed take—is in fact taking—during 1987 and the policies are in place. There is some evidence that years ahead. And I think there are signs as well the needed economic adjustments are beginning. that the need for complementary policies abroad What seems to me important, as we assess is increasingly well understood. progress in 1987, is not so much whether we in Plainly, much more remains to be done. I do the United States—at least within some reasonnot underestimate the difficulties. Right now, our able range—reach some specific rate of overall own growth is hesitant, and the indicators of economic growth. Rather, our emphasis in polieconomic activity abroad have not been entirely cymaking should be on whether the necessary reassuring. The general ebullience of financial adjustments are clearly under way and will in markets masks some strains and weaknesses that fact be sustained. will need continuing attention. Despite the prog- We will not eliminate the budget deficit or the ress of the past, the cooperative effort to deal trade deficit easily or quickly and certainly not in with the acute debt problems in Latin America 1987. By the same token, we cannot expect to by the countries themselves, by the international achieve an appropriate balance in our internal financial institutions, and by leading banks needs savings and investment in so short a period of fresh impetus. With oil and commodity prices time nor sharply improve productivity. As a now stable or even rising, maintaining the sense practical matter, a sudden spurt in growth abroad of progress toward general price stability will be will not be a solvent for our problems. more difficult, particularly in the United States. What we collectively can do—and what we Needed policy changes, here and abroad, even must do—is act with force and conviction in the when accepted conceptually, are hard to imple- necessary directions. In doing so we will lay the ment with the needed vigor. base for sustained noninflationary growth not At the same time, I think we should be encour- just in 1987 but for years beyond. • Statement by Wayne D. Angell, Member, Board First, additional regulatory authority is needed to of Governors of the Federal Reserve System, make improvements to the check collection and before the Subcommittee on Consumer Affairs of return process, thus reducing or eliminating the the Committee on Banking, Housing, and Urban risk to depository institutions of making funds Affairs, U.S. Senate, February 5, 1987. available more promptly. Second, there is a strong and straightforward case that if they delay availability of deposited funds, depository insti- I welcome this opportunity to provide the views tutions should clearly disclose their policies to of the Federal Reserve Board on the issue of consumers. delayed availability and specifically on S. 344, S. 344 also contains a third element—schedthe Fair Deposit Availability Act of 1987. We ules that dictate the maximum holds that a deshare your frustration with the check hold prac- pository institution may place on the proceeds of tices of some depository institutions and with the deposits. The Federal Reserve Board believes inefficiencies of the return-item process. There- that mandatory schedules raise difficult problems fore, we are eager to work with you and the in minimizing risks to depository institutions and committee to devise a legislative remedy to the maximizing consumer benefits. We have felt that delayed availability problem. I am personally primary emphasis should be placed on improvesympathetic with the goals of S. 344; my family ments in the disclosure and payment system. experienced some of the problems faced by However, the Board does believe that availabilmany consumers when we moved from Kansas ity schedules could be a workable component of to Washington, D.C., last year. the delayed availability legislation. S. 344 contains the basic elements to achieve an effective Legislation addressing the delayed availability availability schedule. issue should contain two essential elements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

280 Federal Reserve Bulletin • April 1987 EXPEDITED FUNDS AVAILABILITY mandatory schedules must accommodate the return of all checks, but rather that the schedules Availability schedules should be designed so as should not be designed so that individuals can not to encourage check fraud by basing the rely on obtaining availability before the check is schedules on the time normally needed to clear returned. and return checks. Although this time period is If mandatory availability schedules are adoptcurrently lengthy, it can be shortened to provide ed, the current check collection and return cycle for relatively prompt availability schedules if the must be shortened to provide the most expedi- Board is given additional authority to implement tious availability to consumers while limiting the initiatives to expedite the check collection proc- risk of increased check kiting. Federal Reserve ess. authority to make needed improvements in the The Board is concerned that requiring avail- check system is crucial to accomplish this ability before the receiving institution can rea- objective as well as to improve the check collecsonably be expected to learn of the return of an tion system generally and thereby reduce the risk unpaid check will encourage check fraud, includ- to institutions from returned checks, even if ing kiting. It would be relatively easy to perpe- those checks are not covered by mandatory trate a check fraud under a system in which availability schedules. Today, the Federal Reinstitutions are required to make funds available serve's regulatory authority generally applies to customers before there is any opportunity to only to those checks that it clears. While the learn of nonpayment. Federal Reserve has devoted significant atten- If an individual knows that funds must be tion to improvements in the return-item process, made available before a check can be returned, our lack of regulatory authority has lessened our all he would have to do is to open accounts at effectiveness in making significant progress in two local institutions. Both accounts would be this arena. maintained in a proper manner for sufficient time If legislation is passed under section 5(b) of to satisfy any new account exception. After that S. 344, the Board would propose several initiatime, suppose the individual writes a check sub- tives to improve the return process. One such ject to the availability schedule against nonsuffi- initiative that the Board might propose would be cient funds on his account in one institution and to require the payer institution to return checks deposits it in his account at the other institution. to the institution of first deposit within a speci- If the schedules are too stringent, the institu- fied time frame. This requirement would effection in which the check was deposited would be tively prohibit the use of the mail for most return required to make the funds available to the items. The mail is used now for more than 11 individual depositing the check before learning percent of returns, slowing the trip back to the that the item would be returned unpaid. If the depositing institution as much as several days. individual withdraws the funds and leaves before This requirement would expedite returns at relathe check is returned, that institution would be tively little cost to the industry, but would be unable to charge the check back when it ulti- effective only if it were applicable to all checks mately receives the return item, and it would regardless of how they are cleared. suffer a loss for the amount of the deposit. This initiative could also entail permitting in- Similar schemes involving dozens of institutions stitutions to return checks directly to the institucould be easily accomplished.1 tion of first deposit, bypassing intermediate en- While we recognize that this type of check dorsers. This practice is not authorized by three fraud can occur today, requiring funds availabil- jurisdictions, but section 5(b) would provide the ity before the completion of the normal collec- Board with the authority to preempt the laws of tion and return cycle will tend to encourage this these jurisdictions, thus making the use of direct type of check fraud. This is not to say that returns feasible on a widespread scale. A further initiative involves the automation of return items through the use of the same efficient 1. The attachments to this statement are available on mechanism used to collect checks. A recent test request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. of this concept by the Federal Reserve, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 281 American Bankers Association, and 75 deposi- vide an exception for foreign checks, since the tory institutions proved quite promising, reduc- receiving institution will not learn of the nonpaying the time to return checks an average of more ment of these checks within the time frame than one-third. However, the cost of this pro- established in the bill. Similarly, general excepgram falls on the institution that is returning the tions for new accounts, large dollar deposits, and check, while the benefits of the expedited return other types of checks recognized in section 5(c) accrue to the institution of first deposit. There- of S. 344 may also be warranted. fore, its use is not likely to be widespread In summary, the expedited availability apwithout the Federal Reserve having the authority proach taken in section 5(b) of S. 344 provides to create incentives for payer institutions to the needed authority for the Federal Reserve to participate in the program. improve the check system and provides the These examples illustrate the steps that could Board with sufficient flexibility in setting the be taken to accelerate the return of checks if availability schedules so as to not encourage additional regulatory authority were granted to check kiting schemes. However, it is essential the Board. This authority should be sufficiently that these schedules allow for exceptions for broad to enable the Board to consider not only limited classes of checks, as provided in section the specific initiatives contained in the legislation 5(c)(2) of S. 344. With the addition of these but also additional proposals, perhaps not envi- exceptions, and certain other technical changes, sioned today. we believe that the approach taken in section With these improvements to the check collec- 5(b) would ensure that customers obtain prompt tion system, a relatively prompt availability availability on the funds they deposit, without schedule would be possible. A schedule of no exposing depository institutions to significant longer than four intervening business days, with risks. an additional business day added when deter- In contrast, the approach taken in section 5(c) mined necessary by the Board, would be work- of the bill, which calls for availability at the time able. Therefore, to the extent that the schedule in of provisional credit, subject to broad excepsection 5(b) of S. 344 is based on business days, tions, would likely result in increased check it sets a realistic goal for availability of all fraud since institutions would be required to checks. Because many local and regional checks provide availability before any opportunity to are collected more promptly, the Board would learn of the return of the unpaid item. In addiadopt more expeditious schedules for the large tion, this alternative does not give the Board the majority of checks. Under this schedule, deposi- authority to expedite the check system, and thus tors seeking to perpetrate a fraud would not be does not address one of the underlying causes of able to rely on obtaining availability before the the delayed availability problem. check is returned. If the Board implemented the expedited availability system under section 5(b), it would have DISCLOSURES the authority to establish only very limited exceptions to the schedules. However, even under As I stated earlier, disclosures are an essential an expedited system, not all checks will be element in any delayed availability legislation. returned within the time frames established for However, we believe that the disclosure proviavailability. Therefore, it is important that any sions in S. 344 can be made more flexible, mandatory availability schedules adopted con- particularly for those institutions that do not tain adequate authority for the Board to establish routinely place holds on deposits. For example, exceptions, not only for instances in which the an alternative could be provided for these instituinstitution has specific reason to doubt the col- tions, in which notice would be required when a lectibility of an individual check, but also for hold is placed on a given deposit that falls within those classes of checks that may impose in- one of the exceptions of the bill. This notice creased risk even though the individual check requirement would be in lieu of the disclosure raises no particular suspicion that it is uncollect- requirements. This approach would significantly ible. For example, it may be necessary to pro- lessen the compliance burden on institutions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

282 Federal Reserve Bulletin • April 1987 that, except in rare situations, do not delay months. The Board should be given continuing availability. For institutions that do regularly authority to make further improvements to the place holds on their customers' deposits, the check system and to modify the availability disclosure requirements set forth in S. 344 would schedule if warranted by these improvements. apply. The Board is also concerned that the require- Further, the subcommittee may also wish to ment for establishing an Expedited Funds Availconsider limiting the disclosure requirements to ability Council may slow rather than facilitate consumer accounts. Providing the required dis- payment systems improvements. The council closures for all corporate accounts would be a would duplicate the responsibilities of several very complex undertaking since the availability other groups, such as the Consumer Advisory of deposits is often tied to the level of required Council, which are already in existence. In addiclearing balances and other account terms. Cor- tion, there are other technical amendments that porate accountholders are typically far more we would like to propose. The Board staff will be familiar with their institution's availability sched- pleased to work with your staff to develop the ules than are consumer accountholders. Even most effective legislative remedy to the delayed with this limitation, a number of small businesses availability problem. may, as a practical matter, still be given the In summary, we believe that legislation that disclosures required by the bill. Given the poten- requires disclosure and provides authority to the tial civil liability for failing to follow the require- Federal Reserve to improve the return-item ments for consumer accounts, many institutions process and establish availability schedules will would likely simply treat small business accounts be beneficial to consumers and ensure that the as consumer accounts to avoid a time-consuming costs to the banking industry are reasonable. process of distinguishing between the two. Again, I am pleased to be here today and would Finally, a number of other provisions of S. 344 be glad to discuss the delayed availability issue in bear further consideration. Under the bill, the more detail as the members of the subcommittee Board's authority to make payment system im- desire. • provements could be construed to expire after 48 Statement by Paul A. Volcker, Chairman, Board pattern of complementary action both in the of Governors of the Federal Reserve System United States and in other countries if the combefore the Committee on Banking, Housing, and mon objective of sustained economic expansion Urban Affairs, U.S. Senate, February 19, 1987. and price stability is to be reached. I appreciate this opportunity to review once again with this committee the conduct of mone- THE ECONOMIC SETTING tary policy against the background of economic and financial developments here and abroad. As The current economic expansion—now extendusual, a more detailed review of last year, of the ing into its fifth year—is already among the prospective ranges for monetary and credit longest in peacetime history. It is unusual in growth established by the Federal Open Market other respects as well, including the absence of Committee (FOMC), and of the Committee's certain signs of cyclical excesses that often deprojections for economic activity and inflation velop after years of expansion. For instance, are set out in the Board's formal Humphrey- inventories have been held well within past rela- Hawkins Report delivered to you earlier. (See tionships to sales, and spending by manufacturpages 239-54 of this BULLETIN.) This morning, I ers for plant and equipment has, if anything, want to concentrate on more general consider- been restrained relative to prospective needs. ations underlying the policy approaches of the While the overall rate of economic growth has Federal Reserve. I will emphasize particularly been rather moderate since mid-1984, averaging how those approaches must fit into a broader about 2Vi percent per year, that growth has been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 283 maintained despite strong pressures on sizable the influx of capital from abroad cannot be traced sectors of the economy. Oil exploration and to a surge in productive investment. development activity and agricultural prices It is not sustainable from an economic perhave both been heavily affected by worldwide spective to pile up foreign debts while failing to surpluses. Commercial construction in many ar- make the investment that we need both to genereas is suffering from earlier overbuilding. Re- ate growth and to earn the money to service the gions of the country in which those impacts have debts. been particularly large have thus remained rela- It is not supportable politically, as the prestively depressed. Difficult as those regional con- sures on our industrial base are transmuted into ditions have been, however, many of the neces- demands for protection. sary adjustments are well advanced and other Ultimately it will not be supportable from an areas of the economy have been moving strongly international perspective either, as the confiahead. dence that underlies the flow of foreign savings More importantly, both the inflation rate and will be eroded. interest rates, after four years of expansion, are Sooner or later, the process will stop. The only substantially lower than when the recovery start- question is how. ed. Homebuilding is being well maintained, and both capital and labor appear available to support further growth for some time without undue THE BROAD POLICY APPROACH strain on resources. Certainly, conditions in financial markets, with stock prices exuberant and In concept, we could shut off the flow of imports interest rates generally as low as at any time by aggressive, broad-brush protectionist measince the mid-1970s, appear supportive of new sures. But the result would be to drive up the rate investment. of inflation and interest rates here, to damage But if the traditional indicators of cyclical growth abroad, and to invite retaliation. Instead problems are largely absent, it is also evident of sustained and orderly growth, we would invite that the economy is struggling with structural worldwide recession. distortions and imbalances that, for us, have We could try to drive the dollar much lower— little precedent. Economic activity over the past or complacently sit back while the market forces two years has been supported largely by con- produce that result. But that too would undersumption. That has been at the expense of re- mine the hard-won gains against inflation and duced personal saving rates that, by world stan- would risk dissipating the flow of foreign capital dards, were already chronically low. At the same that we, for the time being, need. The stability of time, the huge federal deficit is absorbing a financial markets would be jeopardized, and exdisproportionate amount of our limited savings. port prospects could be undercut by adverse For a time, we have largely escaped the ad- effects on growth abroad. verse consequences for financial markets of that Faced with similar circumstances, many smallinsidious combination of low saving rates and er countries might reasonably embark upon high federal deficits by drawing on capital from strong austerity programs—indeed sooner or latabroad—the flow of which in 1986 actually ex- er they would be forced to undertake such proceeded all the savings by U.S. households. The grams. Large doses of fiscal and monetary reother side of that coin, however, is a massive straint would be taken, risking recession in the trade and current account deficit, restraining short run, but also anticipating that exports growth in manufacturing generally and incen- would respond vigorously, imports would detives for the industrial investment that we will cline, and their economies would soon resume need in the years ahead. growth on a much sounder footing. But, in the The simple facts are that we are spending more context of a sluggish growth of the world econothan we produce and that we are unable to my, for the United States to take that course finance at home both our investment needs and would entail particularly high risks and the rethe federal deficit. Those conditions are not sults would be problematical at best. sustainable for long—not when, as at present, There is a reasonable alternative. It is more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

284 Federal Reserve Bulletin • April 1987 complicated, but at the same time much more Success, in my mind, will not be measured so promising. much by whether we meet some preordained We can draw upon a combination of policy arbitrary target but by whether in fact a reasoninstruments to encourage the needed adjust- ably steady downward pace in the deficit is ments. Results may take time. But those results maintained as the economy grows—and mainwill come with greater certainty—and they tained by measures that can be sustained, year should be consistent with maintaining growth after year. Failing that, it is hard to see how a here and abroad, with progress toward underly- sustained decline in the trade deficit, if possible ing price stability, and with open markets. at all in the face of huge budget deficits, will That is, in fact, the course on which we are bring net benefit to the economy. The clear embarked. To be sure, its success will require an implication would be congested capital markets, unusual combination of discipline, patience, and higher interest rates, strong inflationary dangers, international cooperation. However, given the and threats to growth. stakes not just for the United States but for others, I do not think there is any real choice. Important steps have already been taken in the INTERNATIONAL CONSISTENCY needed directions. Most obviously, the value of the dollar vis-a-vis the currencies of other indus- Inevitably, because we loom so large in the trialized countries has declined substantially, world economy, marked improvement in our placing our industry in a much stronger competi- trade balance will be matched by noticeable tive position. The volume of exports is rising, deterioration elsewhere. Appropriately, that despite relatively slow growth abroad. The dete- should take place largely in the major countries rioration in the trade deficit overall appears to with exceptionally large surpluses—notably Jahave been stemmed, even if clear evidence of a pan and Germany, both of which are now experireversal is still lacking. Moreover, while the encing some decline in real net exports. That depreciation of the dollar inevitably carries in its process cannot take place smoothly and effectrain rising import prices, we have been fortunate tively unless those countries and others are able that the initial impact on the overall price level to maintain a strong momentum of internal dewas more than offset by falling oil and other mand. commodity prices. The underlying inflation rate, For years, those countries have been depenmeasured by trends in wages relative to produc- dent for growth mainly on high and rising export tivity, has continued to fall. surpluses. In both instances, some shift toward We have also been fortunate that the flow of domestic demand was apparent in 1986, encourcapital from abroad, buoyed by the rising stock aged partly by some relaxation of monetary and bond markets here and by some declines in policies. That points in the needed direction. But interest rates abroad, has been well maintained there are also signs that their growth, overall, as the dollar depreciated. Nevertheless, as we may be faltering, as exports have declined. At succeed in reducing our current account deficit, the same time, relatively high levels of unemthe net capital inflow will decline as well. That ployment and unused capacity, together with emphasizes the critical importance of moving sharp appreciation of their currencies, offer subahead with further reductions in the federal bud- stantial protection against a resurgence of inflaget deficit, which absorbs so much of our own tionary pressures that they, understandably, savings. want to avoid. The progress being made in that direction this Quite obviously, the needed reorientation of year is heartening. But that can only be a start. economic policies—essentially the complement The projected reduction of $40 billion to $50 of our own—is no easier to achieve in those billion this year is from a record high deficit of countries than here. Certainly, the nature and more than $220 billion in fiscal 1986—more than design of the needed measures will be—indeed is 5 percent of the gross national product—and it is being—strongly debated within those countries. being assisted by some temporary factors. Prog- What is critical from a world perspective is not ress next year will be harder. the precise nature of the measures or their exact Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 285 timing, but that, at the end of the day, they are tives for exports of the developing countries to successful in maintaining a strong momentum of shift to Europe and Japan. At the same time, growth even as they absorb more imports from imports by the developing world from the United the rest of the world. States have become much more price competi- One danger is that, in the absence of stronger tive than a year or two earlier. domestic growth, pressures will intensify for more appreciation of their currencies, undercut- THE DEBT SITUATION ting further their own economic prospects. Given the size of the exchange rate adjustments already I cannot neglect emphasizing one further conmade, greater instability in that area seems nei- tinuing threat to growth and financial stability ther in their interest nor ours. involving the developing countries. Management Some newly industrialized countries also have of the debt problems of Latin America and some clear responsibilities for contributing to a better other developing countries is again at a critical world balance. Taiwan and Korea, in particular, stage. The reason is not that progress is absent. have, or are building, external surpluses that are To the contrary, most of the heavily indebted large even by the standards of the traditional countries have been growing—if for the most industrial powers. Part of that reflects a strong part far below their potential—debt burdens are competitive position, but both also maintain a tending to move lower relative to exports or strong wall of protectionist barriers. The very other measures of capacity to pay, and new strength of their external positions points—in the financing needs have been reduced. Perhaps interests of their own citizens as consumers, as most encouraging, there has been definite, if well as of world equilibrium—to the need for sometimes hesitant, progress toward liberalizing more forceful action to increase imports, wheth- trade, opening markets, and reducing internal er by reducing tariffs, by lifting other trade economic distortions, with the World Bank playrestrictions or by exchange rate changes. ing a particularly helpful role. Success in these efforts, I must emphasize, At the same time, any failure of the industrialwill not necessarily or primarily be measured by ized countries collectively to achieve a satisfacchanges in our own bilateral trade vis-a-vis par- tory rate of growth would clearly impair prosticular countries. An open competitive trading pects for the developing countries to find the order is by its nature multilateral, and we and markets they need. More immediately, in recent others should judge equilibrium in a worldwide months, the process of reaching agreement on context. adequately supportive and timely financing pro- In that connection, most of the developing grams, whether by restructuring existing debts or world, already carrying heavy debt burdens, is in by arranging what new loans are necessary, has no position to revalue currencies or to absorb conspicuously slowed. much higher imports (from the United States or In their particulars, the reasons are as varied from others) without more or less parallel in- as the complexity of the individual financing creases in their exports. In recent years, howev- programs themselves, most of which require the er, the United States has, in fact, absorbed the agreement of hundreds of banks around the great bulk of what increase in exports Latin world. In some instances, policy setbacks in the America has had—their exports to Europe and borrowing countries have complicated the task. Japan have apparently increased little if at all. But I also suspect the very fact that progress has For us to close our markets to them now would been made over the past five years—most eviassuredly thwart prospects for expansion, and dently in reducing the exposure of banks relative with it the encouraging progress that has been to capital to something like half of what it was in made toward both more open, competitive econ- 1982—has had the unfortunate effect of dulling a omies and political democracy. What is needed sense of urgency and cooperation by some. I do instead is greater access by those countries to not want to deny the progress. But to fail to carry growing markets in Europe and Japan as well as through on past efforts now would plainly jeoparhere. The recent changes in exchange rates in the dize much of that success and threaten new industrial world certainly provide greater incen- strains on the financial system. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

286 Federal Reserve Bulletin • April 1987 IMPLICATIONS FOR U.S. POLICY premium on maintaining discipline and sound judgment amid potentially conflicting criteria. Several key implications of all this for the United States should be clear. RAPID GROWTH OF MONEY AND LIQUIDITY First, the process of restoring external balance requires first of all that we tend to our inescap- Throughout 1986, monetary policy accommodatable responsibilities to deal with our budget ed a relatively rapid growth in the various monedeficit. That is not just because we are danger- tary aggregates; the narrowly measured money ously dependent on foreign savings but because supply—Ml—grew at a particularly rapid pace. progress abroad is, as a practical matter, likely to The discount rate was reduced four times by a be stymied without constructive leadership from total of 2 percentage points, more or less in line the largest and the strongest nation. Should with reductions in market interest rates. The we instead resort to closing our markets, be degree of reserve pressures, measured by averindifferent to the depreciation of our own curren- age adjustment borrowings of depository institucy, and permit inflationary forces to regain the tions from the Federal Reserve, was relatively upper hand, then there would be no basis for low throughout 1986, and has remained so since. confidence in the United States. Prospects for This generous provision of reserves and exeffective complementary action abroad, or for pansion in money took place in, and appeared growth for the world economy, would be dim justified by, an environment of restrained ecoindeed. nomic growth and declining inflationary pres- Second, we have to recognize that the needed sures. The latter, to be sure, was dramatically adjustments will require a relative shift of finan- and importantly reinforced by a temporary faccial and real resources into internationally com- tor—the sudden collapse in the price of the petitive industry and away from consumption world's most important commodity, oil. But, and federal deficits. Without a sharp rise in potentially more lasting indicators of inflationary overall productivity from the rate of 1 percent or pressure—the rate of increase in workers' comso characteristic of most of the 1970s and pensation and in prices of some services that 1980s—and I see no reason to suggest that trend respond slowly to changes in the economic enviwill change abruptly—the recent rate of increase ronment—were also trending downward. For in consumption is simply unsustainable for long. much of the year, most commodity prices other Instead, more of our growth will need to be than oil, measured in dollars, were falling despite reflected in net exports and business investment, the depreciation of the dollar in the exchange and less savings will be available to finance markets. Moreover, the sizable declines in longgovernment. term interest rates seemed to reflect some easing Fortunately, performance with respect to pro- of fears of a resurgence of inflationary pressures ductivity growth and restraint on costs in the key in the future. manufacturing sectors has been relatively strong Nonetheless, the possibility of renewed infladuring the period of economic expansion. That tion remains of concern both in the markets and reinforces prospects for a stronger competitive within the Federal Reserve. One potential chanposition internationally. The challenge will be to nel for renewed inflationary pressures would be maintain that performance in the face of a depre- an excessive fall of the dollar in the exchange ciated currency, higher import prices, and more markets. At times during the past year, such sizable needs for new investment to meet domes- exchange rate considerations prompted particutic and export opportunities. lar caution in the conduct of policy. The timing of Finally, achieving these goals in the context of operational decisions with respect to the dissustained growth and reasonable price stability is count rate or the provision of reserves was beyond the capacity of any single policy instru- affected; on occasion close coordination with the ment. Quite obviously, monetary policy will actions of other central banks was particularly have a critical role to play. In doing so, it has the important. potential advantage of more flexibility than other More generally, intensive analytic work during policy instruments. But there will also be a heavy the year suggested that much of the relatively Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 287 rapid growth in the various monetary aggregates percent per year—a trend established during a was closely related (with lags) to the rather sharp period of generally rising inflation and interest declines in market interest rates late in 1985 and rates—clearly does not provide a reasonable the early months of 1986. The responsiveness of base forjudging appropriate Ml growth today. money demand to changes in interest rates is a Historically, there has been little or no trend in well-established phenomenon. What is new in M2 velocity. Even so the current level is historithe present institutional setting is the increased cally a bit low relative to other periods of low or sensitivity of that relationship, most particularly declining interest rates. for Ml. Today, interest rates paid on transaction All of this poses new questions in setting accounts widely used by individuals are close to monetary targets to help guide the conduct of rates paid on competing financial instruments. monetary policy. In the broadest terms, a level- That is because interest rates on those accounts ing, and even some decline, in velocity could be have not declined nearly as much as market rates welcomed as an appropriate sign of growing or those on longer-term deposit accounts. Conse- confidence in the value of holding money during quently, there has been a strong incentive to a period of disinflation. But explanations revolvtransfer funds to negotiable order of withdrawal ing around declining interest rates and greater (NOW), and to some extent savings, accounts confidence in price stability beg the larger issue. and away from other, less liquid instruments. Not all the increases in money can be ade- Demand deposits, which are largely held by quately explained by interest rate relationships, businesses and pay no interest, also grew sub- nor can we be certain about what interest rate is stantially more rapidly than in earlier years. In appropriate. Confidence is hard to win and easy part, that was also a reflection of declining to lose. We need to be conscious of the fact that market rates; banks demanded larger balances in the effects of excessive money creation on inflacompensation for services provided businesses, tion may only be evident with lags—possibly and depositors found alternative uses of liquid quite long. balances relatively less attractive. As a consequence, we cannot avoid relying Because of its composition, Ml was particular- upon a large element of judgment in deciding ly influenced by these shifts and grew 15 percent. what, considering all the prevailing circum- That was far in excess of the target set at the start stances, money growth is appropriate. of the year, when the Federal Open Market Obviously, so far as 1986 is concerned, the Committee drew attention to the uncertainties FOMC made the judgment that relatively strong surrounding that aggregate, and above any post- growth in the aggregates, and particularly Ml, war historical experience as well. could be accommodated consistent with the Both M2 and M3 ended the year within—but more basic objectives of orderly growth and just within—their target ranges. Even so, the price stability. Neither the rate of economic increases of almost 9 percent were about as large growth, nor the margins of available resources, as most earlier years, when inflation and the rate nor underlying cost trends, nor the movement of of economic growth were higher. sensitive commodity prices suggested money With inflation down and real growth moderate, growth was setting in train renewed inflationary these rapid increases in monetary growth meant forces. that all measures of velocity (that is, the ratio of The continuing rapid rate of debt throughout nominal GNP to money) declined. That was the economy—running far above the rate of particularly evident in the case of Ml; the decline economic growth since 1982—has raised one in velocity of 9 percent was greater than in any warning flag. In one sense, the enormous volume year since World War II. of purely financial activity, especially at year- While velocity often moves erratically in the end but also at times earlier, reinforced other short run and a decline is typical of periods of factors increasing the demand for money. But falling interest rates, last year extended and from another point of view, the ready availability amplified a pattern that has persisted since inter- of reserves and money was also a factor facilitatest rates peaked in 1981 and 1982. The earlier ing that same increase in financial activity. postwar upward trend in Ml velocity of about 3 The implicit dangers should be clear. More Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

288 Federal Reserve Bulletin • April 1987 leveraging of corporations, aggressive lending to or reliable information for the Congress or for consumers already laboring under heavy debt market participants. burdens, and less equity in homes all increase the Instead, the Committee will monitor Ml closevulnerability of the economy to economic risk— ly in the light of other information, including to higher interest rates, to recession, or to both. whether or not changes in that aggregate tend to The fact that after four years of expansion, many reinforce or negate concerns arising from movemeasures of credit quality are tending to deterio- ments in M2 and M3. More broadly, the approrate rather than to improve, and that too many priateness of changes in Ml will depend upon depository institutions are strained, should be evaluation of the growth of the economy and its warning enough. sustainability and the nature of any emerging Restraining more speculative uses of credit by price pressures. Among the important factors more restrictive monetary policy is, of course, influencing such judgments may be the perforpossible. But that blunt approach inevitably has mance of the dollar in the exchange markets. implications for all credit and for the real econo- I recognize that the success of that approach my as well as for financial activity. It cannot rests on good judgment and a degree of presubstitute for prudent appreciation of the risks in science. It is justified only by the fact that setting highly aggressive lending by those engaged in out a precise Ml target—and weighing it heavily financial markets, reinforced and encouraged by in policy implementation, whatever the circumregulatory and supervisory approaches sensitive stances—would run greater risks for the econoto the potential problems. my. I would point out that the sensitivity of Ml to THE APPROACH TO 1987 interest rates and other developments will not always work in the direction of relatively high In evaluating this experience, the Committee growth. To the contrary, action to reduce the remains highly conscious of the long historical rate of Ml growth, promptly and substantially, patterns that relate high rates of monetary would be called for in a context of strongly rising growth over time to inflation. Consequently, in economic activity and signs of emerging and approaching 1987, it starts with the strong pre- potential price pressures, perhaps related to sigsumption that such growth should be moderated. nificant weakness of the dollar externally. In that Reflecting that intent, the tentative target ranges connection, the Committee explicitly reserves for M2 and M3 set out last July of 5Vi to SVi the possibility, in making shorter-run operational percent were reaffirmed. While those ranges are decisions from meeting to meeting, to use Ml only slightly below those set a year earlier, the along with M2 and M3 as a benchmark. Con- Committee expects that the actual outcome versely, lower interest rates in a context of weak should be much closer to the middle of the range growth and further progress toward reducing (and near the anticipated growth in nominal inflation pressures would suggest an accommo- GNP), assuming interest rates prove to be more dative approach toward Ml growth. stable than in recent years. In fact, the statistical and other signals provid- While anticipating much slower growth than in ed about economic activity and prices seldom are 1986, the Committee did not set out a specific unambiguous or have the same directional implitarget range for Ml. Given the developments of cations for policy. In evaluating the evidence as recent years, uncertainty obviously remains it does appear, the Committee will naturally be about the long-term relationship between Ml and sensitive to the desirability of maintaining the nominal GNP. That uncertainty about the trend forward momentum of the economy, as well as might be encompassed by a relatively wide target encouraging greater price stability. Quite obvirange. However, the shorter-term sensitivity of ously, our task in that respect will be eased to the Ml currently to interest rates and other econom- extent fiscal policy is consistent with the needed ic and financial variables realistically would re- internal and external adjustments. quire so wide a range (or tolerance for move- Most members believe that GNP growth of 2VI ments outside its bounds) as to provide little to 3 percent is now likely, although a few individguidance for the FOMC's operational decisions ual members have higher or lower projections. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 289 Such growth should be consistent with continu- distortions and imbalances within our economy ing sizable gains in employment and a slight and internationally. Unless dealt with forcibly downward tilt in the unemployment rate. Mem- and effectively, those imbalances will impair bers also agree that the rate of price increase is both growth and price stability—and the adverse very likely to be greater than last year, essential- implications will be amplified by the effects on ly because oil prices are expected to average other countries. Moreover, those imbalances will higher and because of the virtual inevitability of not yield to any single instrument of policy, higher import prices. The forecasts bunch in the however wisely conducted. Instead, what are 3 to 3Vi percent area for the GNP deflator. That required are complementary actions here and would be about as low as in 1985 despite the abroad—on budgets, on monetary policies, and special factors working toward higher prices this on maintaining appropriate exchange rates and year. an open trading order. So far as inflation is concerned, what is critical I know none of that is easy. Many countries is that such a bulge in prices related to identifi- are involved, and all of them have tough political able temporary external developments not be decisions to make. Nor are the key decisions translated into a broad-based cumulative upward entirely in the hands of governmental authorities. movement. As you well know, just such a cumu- American industry, in particular, has the challative inflationary process started in the 1960s lenge to build upon the efforts of recent years and then extended well over a decade into the toward effective control of costs and greater 1980s. It was eventually brought to an end, but efficiency, and to seek out and exploit the greater only with great effort and at considerable cost. market opportunities that exist today. Banks The scars of that experience remain. around the world, despite the frustrations build- Against that background, participants both in ing over time, will need to maintain and reinforce financial markets and in business have persis- their efforts to deal cooperatively and constructently been skeptical of prospects for lasting tively with the pressing debt problems of their price stability in making investment and pricing borrowers at home and abroad. decisions. They are bound to be alert and respon- From one point of view, it may seem like a lot sive to any sense of adverse change in the to ask. But equally, there is a lot to be gained. underlying inflation trend, with implications for We already have achieved a long economic interest rates, exchange rates, and pricing poli- expansion. We have managed to combine that cies. The consequences for the economy would expansion with progress toward price stability— clearly be undesirable. and that progress has made possible lower inter- In effect, neither the internal nor the external est rates. Financial markets more generally resetting permits thinking of trading off more infla- flect renewed confidence. And the broad outline tion for more growth. Nor would inflation ease of policies that can preserve and extend those the problem of international adjustment; quite to gains are by now well known. the contrary, it would both undercut some of our To fail to act upon those policies—to instead competitive gains and threaten the orderly inflow retreat into protectionism, to relax on inflation, of funds from abroad. The implications for cau- to fail to deal with the deficit—may in some ways tion in the conduct of monetary policy are evi- appear to be the course of least resistance. But dent. those are also precisely the ways by which we would turn our back to the bright promise before CONCLUDING COMMENTS us. It is only a concerted effort here and abroad In sum, we face, at one and the same time, most that will extend and reinforce the economic difficult and most promising economic circum- expansion, consolidate the progress toward price stances. stability, and provide the international environ- They are difficult because there are obvious ment in which all countries can prosper. • Chairman Volcker presented identical testimony before the House Committee on Banking, Finance and Urban Affairs, February 26, 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

290 Federal Reserve Bulletin • April 1987 Statement by Paul A. Volcker, Chairman, Board ed. Homebuilding is being well maintained, and of Governors of the Federal Reserve System, both capital and labor appear available to supbefore the Committee on the Budget, U.S. Sen- port further growth for some time without undue ate, February 24, 1987. strain on resources. Certainly, conditions in financial markets, with stock prices exuberant and I appreciate the opportunity to appear before this interest rates generally as low as at any time committee today. As you know, the Federal since the mid-1970s, appear supportive of new Reserve submitted its semiannual monetary poli- investment. cy report to the Congress last week. That report, But if the traditional indicators of cyclical which we have distributed to you, describes in problems are largely absent, it is also evident detail our plans for monetary policy, including that the economy is struggling with structural the Federal Open Market Committee's ranges for distortions and imbalances that, for us, have growth of money and credit. My prepared re- little precedent. Economic activity over the past marks this morning will be confined to more two years has been supported largely by congeneral considerations of domestic and interna- sumption. That has been at the expense of retional economic policies within the context of duced personal saving rates that, by world stanrecent and prospective developments. dards, were already chronically low. At the same time, the huge federal deficit is absorbing a disproportionate amount of our limited savings. For a time, we have largely escaped the ad- THE ECONOMIC SETTING verse consequences for financial markets of that insidious combination of low saving rates and The current economic expansion—now extend- high federal deficits by drawing on capital from ing into its fifth year—is already among the abroad—the flow of which in 1986 actually exlongest in peacetime history. It is unusual in ceeded all the savings by U.S. households. The other respects as well, including the absence of other side of that coin, however, is a massive certain signs of cyclical excesses that often de- trade and current account deficit, restraining velop after years of expansion. For instance, growth in manufacturing generally and inceninventories have been held well within past rela- tives for the industrial investment that we will tionships to sales, and spending by manufactur- need in the years ahead. ers for plant and equipment has, if anything, The simple facts are that we are spending more been restrained relative to prospective needs. than we produce and that we are unable to While the overall rate of economic growth has finance at home both our investment needs and been rather moderate since mid-1984, averaging the federal deficit. Those conditions are not about 2Vi percent per year, that growth has been sustainable for long—not when, as at present, maintained despite strong pressures on sizable the influx of capital from abroad cannot be traced sectors of the economy. Oil exploration and to a surge in productive investment. development activity and agricultural prices It is not sustainable from an economic perhave both been heavily affected by worldwide spective to pile up foreign debts while failing to surpluses. Commercial construction in many ar- make the investment that we need both to genereas is suffering from earlier overbuilding. Re- ate growth and to earn the money to service the gions of the country in which those impacts have debts. been particularly large have thus remained rela- It is not supportable politically, as the prestively depressed. Difficult as those regional con- sures on our industrial base are transmuted into ditions have been, however, many of the neces- demands for protection. sary adjustments are well advanced, and other Ultimately it will not be supportable from an areas of the economy have been moving strongly international perspective either, as the confiahead. dence that underlies the flow of foreign savings More importantly, both the inflation rate and will be eroded. interest rates, after four years of expansion, are Sooner or later, the process will stop. The only substantially lower than when the recovery start- question is how. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 291 THE BROAD POLICY APPROACH not just for the United States but for others, I do not think there is any real choice. In concept, we could shut off the flow of imports Important steps have already been taken in the by aggressive, broad-brush protectionist mea- needed directions. Most obviously, the value of sures. But the result would be to drive up the rate the dollar vis-a-vis the currencies of other indusof inflation and interest rates here, to damage trialized countries has declined substantially, growth abroad, and to invite retaliation. Instead placing our industry in a much stronger competiof sustained and orderly growth, we would invite tive position. The volume of exports is rising, worldwide recession. despite relatively slow growth abroad. The dete- We could try to drive the dollar much lower— rioration in the trade deficit overall appears to or complacently sit back while the market forces have been stemmed, even if clear evidence of a produce that result. But that too would under- reversal is still lacking. Moreover, while the mine the hard-won gains against inflation, and depreciation of the dollar inevitably carries in its would risk dissipating the flow of foreign capital train rising import prices, we have been fortunate that we, for the time being, need. The stability of that the initial impact on the overall price level financial markets would be jeopardized, and ex- was more than offset by falling oil and other port prospects could be undercut by adverse commodity prices. The underlying inflation rate, effects on growth abroad. measured by trends in wages relative to produc- Both of those courses were specifically reject- tivity, has continued to fall. ed by the finance ministers and Central Bank Given the size of the adjustments in the exgovernors at their meeting in Paris last weekend. change rate already made among the major coun- Faced with similar circumstances, many small- tries, there is a point beyond which further er countries might reasonably embark upon instability would damage both our objectives and strong austerity programs—indeed sooner or lat- those of our trading partners. Against that backer they would be forced to undertake such pro- ground, the ministers and governors of the leadgrams. Large doses of fiscal and monetary re- ing industrialized countries collectively agreed straint would be taken, risking recession in the last weekend that "their currencies are within short run, but also anticipating that exports ranges broadly consistent with underlying ecowould respond vigorously, imports would de- nomic fundamentals" on the assumption certain cline, and their economies would soon resume broad economic policies are carried out. growth on a much sounder footing. But, in the We have been fortunate that the flow of capital context of sluggish growth of the world econo- from abroad, buoyed by the rising stock and my, for the United States to take that course bond markets here and by some declines in would entail particularly high risks and the re- interest rates abroad, was well maintained as the sults would be problematical at best. dollar depreciated. Nevertheless, as we succeed There is a reasonable alternative. It is more in reducing our current account deficit, the net complicated, but at the same time much more capital inflow will decline as well. That emphapromising. sizes the critical importance of one of the policy We can draw upon a combination of policy assumptions referred to in the weekend stateinstruments to encourage the needed adjust- ment—that the United States move ahead with ments. Results may take time. But those results further reductions in the federal budget deficit, will come with greater certainty—and they which absorbs so much of our own savings. should be consistent with maintaining growth The progress being made in that direction this here and abroad, with progress toward underly- year is heartening. But that can only be a start. ing price stability, and with open markets. The projected reduction of $40 billion to $50 That is, in fact, the course on which we billion this year is from a record high deficit of collectively are embarked, and the course that more than $220 billion in fiscal 1986—more than was endorsed at the meetings in Paris. 5 percent of the gross national product—and it is To be sure, its success will require an unusual being assisted by some temporary factors. Progcombination of discipline, patience, and interna- ress next year will be harder. tional cooperation. However, given the stakes Success, in my mind, will require a reasonably Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

292 Federal Reserve Bulletin • April 1987 steady downward pace in the deficit as the interests of their own citizens as consumers, as economy grows—and that progress will need to well as of world equilibrium—to the need for be maintained by measures that can be sus- more forceful action to increase imports, whethtained, year after year. Failing that, it is hard to er by reducing tariffs, by lifting other trade see how a sustained decline in the trade deficit, if restrictions, or by exchange rate changes. possible at all in the face of huge budget deficits, Success in these efforts, I must emphasize, will bring net benefit to the economy. The clear will not necessarily or primarily be measured by implication would be congested capital markets, changes in our own bilateral trade vis-a-vis parhigher interest rates, strong inflationary dangers, ticular countries. An open competitive trading and threats to growth. order is by its nature multilateral, and we and others should judge equilibrium in a worldwide context. INTERNATIONAL CONSISTENCY In that connection, most of the developing world, already carrying heavy debt burdens, is in Inevitably, because we loom so large in the no position to revalue currencies or to absorb world economy, marked improvement in our much higher imports (from the United States or trade balance will be matched by noticeable from others) without more or less parallel indeterioration elsewhere. Appropriately, that creases in their exports. In recent years, howevshould take place largely in the major countries er, the United States has, in fact, absorbed the with exceptionally large surpluses—notably Ja- great bulk of what increase in exports Latin pan and Germany, both of which are now experi- America has had—their exports to Europe and encing some decline in real net exports. That Japan have apparently increased little if at all. process cannot take place smoothly and effec- For us to close our markets to them now would tively unless those countries and others are able assuredly thwart prospects for expansion, and to maintain a strong momentum of internal de- with it the encouraging progress that has been mand. made toward both more open, competitive econ- For years, those countries have been depen- omies and political democracy. What is needed dent for growth mainly on high and rising export instead is greater access by those countries to surpluses. In both instances, some shift toward growing markets in Europe and Japan as well as domestic demand was apparent in 1986, encour- here. The recent changes in exchange rates in the aged partly by some relaxation of monetary industrial world certainly provide greater incenpolicies. That points in the needed direction. tives for exports of the developing countries to Again, the Paris statement provided an indica- shift to Europe and Japan. At the same time, tion of the intent of Japan and Germany, along imports by the developing world from the United with others, to sustain growth by stimulating States have become much more price competidomestic demand if necessary. tive than a year or two earlier. What is critical from a world perspective is not the precise nature of these measures or their exact timing, but that, at the end of the day, THE DEBT SITUATION those countries are successful in maintaining a strong momentum of growth even as they absorb I cannot neglect emphasizing one further conmore imports from the rest of the world. tinuing threat to growth and financial stability Some newly industrialized countries also have involving the developing countries. Management clear responsibilities for contributing to a better of the debt problems of Latin America and some world balance. Taiwan and Korea, in particular, other developing countries is again at a critical have, or are building, external surpluses that are stage. The reason is not that progress is absent. large even by the standards of the traditional To the contrary, most of the heavily indebted industrial powers. Part of that reflects a strong countries have been growing—if for the most competitive position, but both also maintain a part far below their potential—debt burdens are strong wall of protectionist barriers. The very tending to move lower relative to exports or strength of their external positions points—in the other measures of capacity to pay, and new Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 293 financing needs have been reduced. Perhaps the largest and strongest nation. Should we inmost encouraging, there has been definite, if stead resort to closing our markets, be indifferent sometimes hesitant, progress toward liberalizing to depreciation of our own currency, and permit trade, opening markets, and reducing internal inflationary forces to regain the upper hand, then economic distortions, with the World Bank play- there would be no basis for confidence in the ing a particularly helpful role. United States. Prospects for effective comple- At the same time, any failure of the industrial- mentary action abroad, or for growth for the ized countries collectively to achieve a satisfac- world economy, would be dim indeed. tory rate of growth would clearly impair pros- Second, we have to recognize that the needed pects for the developing countries to find the adjustments will require a relative shift of finanmarkets they need. More immediately, in recent cial and real resources into internationally commonths, the process of reaching agreement on petitive industry and away from consumption adequately supportive and timely financing pro- and federal deficits. Without a sharp rise in grams, whether by restructuring existing debts or overall productivity from the rate of 1 percent or by arranging what new loans are necessary, has so characteristic of most of the 1970s and conspicuously slowed. 1980s—and I see no reason to suggest that trend Now, the largest of the debtor countries, Bra- will change abruptly—the recent rate of increase zil, after a period of strong expansion, large trade in consumption is simply unsustainable for long. surpluses, and greater price stability, is again Instead, more of our growth will need to be experiencing pronounced inflationary pressures reflected in net exports and business investment, and economic difficulties. Its suspension of most and less savings will be available to finance external interest payments to private creditors government. underscores the urgency of coming to grips with Fortunately, performance with respect to proits internal economic difficulties as well as devel- ductivity growth and restraint on costs in the key oping an appropriate financing program. I sus- manufacturing sectors has been relatively strong pect that the very fact that progress has been during the period of economic expansion. That made over the past five years—until recently in reinforces prospects for a stronger competitive Brazil as in a number of other countries and most position internationally. The challenge will be to evidently in reducing the exposure of banks maintain that performance in the face of a deprerelative to capital to something like half of what it ciated currency, higher import prices, and more was in 1982—has had the unfortunate effect of sizable needs for new investment to meet domesdulling a sense of urgency and cooperation in tic and export opportunities. dealing with the remaining problems. I do not Finally, achieving these goals in the context of want to deny the progress. But to fail in carrying sustained growth and reasonable price stability is through on past efforts or in dealing with the new beyond the capacity of any single policy instrupoints of strain would plainly jeopardize past ment. Quite obviously, monetary policy will successes and threaten new strains on the finan- have a critical role to play. In doing so, it has the cial system. potential advantage of more flexibility than other policy instruments. But there will also be a heavy premium on maintaining discipline and sound IMPLICATIONS FOR U.S. POLICY judgment amid potentially conflicting criteria. Several key implications of all this for the United States should be clear. MONETARY POLICY First, the process of restoring external balance requires first of all that we tend to our inescap- Looking back, monetary policy has accommoable responsibilities to deal with our budget dated a relatively rapid growth in the various deficit. That is not just because we are danger- monetary aggregates for some time; in 1986, the ously dependent on foreign savings but because discount rate was reduced four times by a total of progress abroad is, as a practical matter, likely to 2 percentage points, more or less in line with be stymied without constructive leadership from reductions in market interest rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

294 Federal Reserve Bulletin • April 1987 This generous provision of reserves and ex- opments not be translated into a broad-based pansion in money took place in, and appeared cumulative upward movement. As you well justified by, an environment of restrained eco- know, just such a cumulative inflationary procnomic growth and declining inflationary pres- ess started in the 1960s and then extended well sures. The latter, to be sure, was dramatically over a decade into the 1980s. It was eventually and importantly reinforced by a temporary fac- brought to an end, but only with great effort and tor—the sudden collapse in the price of the at considerable cost. The scars of that experiworld's most important commodity, oil. But, ence remain. potentially more lasting indicators of inflationary Against that background, participants both in pressure—the rate of increase in workers' com- financial markets and in business have persispensation and in prices of some services that tently been skeptical of prospects for lasting respond slowly to changes in the economic envi- price stability in making investment and pricing ronment—were also trending downward. For decisions. They are bound to be alert and responmuch of the year, most commodity prices other sive to any sense of adverse change in the than oil, measured in dollars, were falling despite underlying inflation trend, with implications for the depreciation of the dollar in the exchange interest rates, exchange rates, and pricing polimarkets. Moreover, the sizable declines in long- cies. The consequences for the economy would term interest rates seemed to reflect some easing clearly be undesirable. of fears of a resurgence of inflationary pressures In effect, neither the internal nor external in the future. setting permits thinking of trading off more infla- Nonetheless, the possibility of renewed infla- tion for more growth. Nor would inflation ease tion remains of concern both in the markets and the problem of international adjustment; quite to within the Federal Reserve. One potential chan- the contrary, it would both undercut some of our nel for renewed inflationary pressures would be competitive gains and threaten the orderly inflow an excessive fall of the dollar in the exchange of funds from abroad. Naturally, in the conduct markets. of monetary policy, we will want to encourage Moreover, the continuing rapid expansion of continuing economic expansion. But we also debt throughout the economy—running far want to see as long an expansion as possible. To above the rate of economic growth since 1982— that end, the threat of renewed inflation will has raised one warning flag. The implicit dangers require continuing caution to avoid excessive should be clear. More leveraging of corpora- increases in money and credit. Clearly, further tions, aggressive lending to consumers already sizable declines in the federal budget deficit will laboring under heavy debt burdens, and less make our job in the Federal Reserve easier. equity in homes all increase the vulnerability of the economy to economic risk—to higher interest rates, to recession, or to both. The fact that, CONCLUDING COMMENTS after four years of expansion, many measures of credit quality are tending to deteriorate rather In sum, we face, at one and the same time, most than improve, and that too many depository difficult and most promising economic circuminstitutions are strained, should be warning stances. enough. They are difficult because there are obvious As we look ahead, the Federal Reserve re- distortions and imbalances within our economy mains highly conscious of the long historical and internationally. Unless dealt with forcibly patterns that relate high rates of monetary and effectively, those imbalances will impair growth over time to inflation. both growth and price stability—and the adverse In 1987, the effects of the depreciation of the implications will be amplified by the effects on dollar and the rebound in oil prices are very other countries. Moreover, those imbalances will likely to be reflected in somewhat larger in- not yield to any single instrument of policy, creases in consumer prices than occurred last however wisely conducted. Instead, what are year. What is critical is that such a bulge in prices required are complementary actions here and related to identifiable temporary external devel- abroad—on budgets, on monetary policies, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 295 on maintaining appropriate exchange rates and est rates. Financial markets more generally rean open trading order. flect renewed confidence. And the broad outline I know none of that is easy. Many countries of policies that can preserve and extend those are involved, and all of them have tough political gains are by now well known. decisions to make. Nor are the key decisions To fail to act upon those policies—to instead entirely in the hands of governmental authorities. retreat into protectionism, to relax on inflation, American industry, in particular, has the chal- to fail to deal with the deficit—may in some ways lenge to build upon the efforts of recent years appear to be the course of least resistance. But toward effective control of costs and greater those are also precisely the ways by which we efficiency, and to seek out and exploit the greater would turn our back to the bright promise before market opportunities that exist today. us. From one point of view, it may seem like a lot It is only a concerted effort here and abroad to ask. But equally, there is a lot to be gained. that will extend and reinforce the economic We already have achieved a long economic expansion, consolidate the progress toward price expansion. We have managed to combine that stability, and provide the international environexpansion with progress toward price stability— ment in which all countries can prosper. • and that progress has made possible lower inter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

296 Announcements MEETING OF dividend payments, the revised inspection ap- CONSUMER ADVISORY COUNCIL proaches to parent company cash flow and liquidity, the inspection review of funding poli- The Federal Reserve Board announced that its cies, parent company supervision and control of Consumer Advisory Council met on March 19 subsidiary lending and investment activities, use and 20, in sessions open to the public. The and development of a consolidated plan, budget- Council's function is to advise the Board on the ing, risk management, securities lending, and exercise of the Board's responsibilities under the repurchase agreements. The nonbank activities Consumer Credit Protection Act and on other section of the Manual has also been expanded to matters on which the Board seeks its advice. include the nonbank activities authorized by Regulation Y through June 30, 1986. Those activities approved or denied by Board order and not BANK HOLDING COMPANY SUPERVISION specifically authorized by Regulation Y are also MANUAL: NEW EDITION NOW AVAILABLE included. The Manual includes an expanded table of The Division of Banking Supervision and Regu- contents and an alphabetical index keyed to all of lation has completely updated, revised, and re- the section and subsection titles and numbers, formatted the Bank Holding Company Supervi- allowing for easier identification and location of sion Manual. The new inspection Manual selected topics. The numbering system has been includes supervisory developments, policies, revised and expanded to allow for insertion of and procedures through June 1986. The Decem- new topics as the manual is periodically updated. ber 1986 publication is available for purchase at Comments and suggestions on the Manual con- $40.00 per copy by writing to Publications Ser- tent should be directed to the Director of vices, Board of Governors of the Federal Re- Banking Supervision and Regulation, Board of serve System, Washington, D.C. 20551. Governors of the Federal Reserve System, The new Manual implements the System's Washington, D.C. 20551. intensified on-site inspection program that calls for more frequent and in-depth inspections tar- PROPOSED ACTIONS geted to review certain larger and weaker organizations. The intensified inspection program was the The Federal Reserve Board requested comment result of a Board policy statement issued in on a proposed risk-based capital framework for October 1985 designed to strengthen, System- banks and bank holding companies. Comment wide, the supervision of banks and bank holding should be received by the Board on this matter companies. Besides strengthening on-site inspec- by May 13, 1987. tion activity, the policies also call for greater off- The Federal Reserve Board also requested site surveillance, increased efforts to better com- comment on two notices that would be used by municate the results of inspections to the senior financial institutions to notify their federal regumanagement of bank holding companies, and the lators of their status under the Government Seuse of limited and targeted inspections. curities Act of 1986. Comment must be received Other prominent new topics are the following: by the Board by March 27. the April 1985 Capital Adequacy Guidelines, the The Federal Reserve Board has extended the November 1985 Board policy statement on cash comment period on most of its proposals issued Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

297 on December 10, 1986, to reduce the risks on The Board also sought comment on the conlarge-dollar payment systems. The comment pe- cept of charging a fee for all daylight overdrafts riod has been extended from February 27 to in accounts maintained with the Federal Reserve April 3 for the proposals concerning the risks that are subject to the net debit cap. Comment is associated with book-entry securities transfers, requested by April 13. the reduction of existing levels for net debit caps, The Federal Reserve Board also extended the the establishment of a "de minimis" cap catego- comment period to March 25 on its proposed ry, and the adoption of limits on interaffiliate rulemaking to permit bank holding companies to Fedwire transfers. The comment period for the engage in limited real estate investment activiproposed changes to the automated clearing- ties. house (ACH) procedures has been extended from March 16 to April 3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

299 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON DECEMBER 15-16, 1986 Capacity utilization in manufacturing, mining, and utilities rose 0.3 percentage point in Novem- Domestic Policy Directive ber to 79.3 percent. Nonetheless, utilization has changed little on balance since March and is 2XH The information reviewed at this meeting sug- points below its most recent peak in the summer gested that economic activity was continuing to of 1984. expand at a moderate pace in the current quarter. Sales of domestic cars fell sharply after the Payroll employment increased considerably in expiration of cut-rate financing incentive pro- October and November; hiring in manufacturing grams in early October. These sales averaged rose somewhat in both months after declining on less than 7 million units at an annual rate over the balance since the beginning of the year. Apart October-November period, compared with the from sales of motor vehicles, which dropped off strong 91/2 million unit pace for the third quarter with the end of financing incentive programs, as a whole. Excluding autos, gasoline, and nonconsumer spending has posted sizable gains in consumer items, retail sales in November rose recent months. Business investment spending, 0.9 percent paced by continued strength in purhowever, has remained sluggish, while housing chases of furniture and appliances and in other starts have weakened. At the same time, the nonauto durables. In addition, data for earlier trade balance has shown only limited indications months were revised upward slightly. of improvement. Increases in labor costs still Business investment appears to have remained were moderate, but price increases have been sluggish. Shipments of nondefense capital goods somewhat higher than earlier in the year because increased in October, and construction spending of developments in food and energy markets. has firmed in recent months, but prospects for Total nonfarm payroll employment rose about such spending have continued to be affected V4 million in both October and November. Much adversely by high vacancy rates and reactions to of the gain was in the private service-producing tax reform. In contrast, sales of heavy-weight sector, but factory employment also rose moder- trucks fell markedly in October, and business ately, and the workweek lengthened. Aggregate purchases of cars and light trucks also probably hours for production and nonsupervisory work- declined sharply after the sales incentive proers in November were a full percentage point grams ended. At the same time, new orders for above the third-quarter average. The civilian nondefense capital goods fell 5 percent. Initial unemployment rate stayed at 7 percent in No- surveys of capital spending plans for 1987 sugvember for the third consecutive month. gested that overall nominal spending on plant Gains in employment and hours worked were and equipment is likely to change little from the associated with a sizable pickup in industrial 1986 level. production in November. The industrial produc- Housing starts continued to decline in Novemtion index rose 0.6 percent last month, after ber. During the month total private housing essentially no change over the previous three starts, at 1.6 million units, were a bit below the months. Increases in output were evident in most reduced pace of September and October. Singlemajor marketing groups, with only energy mate- family starts were virtually unchanged from their rials showing a marked decline, although auto rate during the preceding two months, but were assemblies were about unchanged from October. below their level earlier in the year; new home Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

300 Federal Reserve Bulletin • April 1987 sales also have remained below their previous smallest in recent months as exports of agriculpace in recent months. Multifamily starts de- tural products rose somewhat and imports declined further in November in response to high clined moderately. vacancy rates and adverse changes in tax laws. At its meeting on November 5, the Committee Price increases, although still moderate, have adopted a directive that called for maintaining been somewhat higher than earlier in the year the existing degree of pressure on reserve posipartly because of developments in food and tions. This action was expected to be consistent energy markets. The consumer price index rose with growth in both M2 and M3 at annual rates of 0.2 percent in October and the producer price 7 to 9 percent from September to December. index was up 0.2 percent in November. In the Growth in Ml over the same period was expectfood sector, some upward price pressure contin- ed to moderate from its exceptional pace during ued to be evident, although increases in food the previous several months. The Committee prices slowed from the rapid pace during the agreed that the growth in Ml would continue to summer. In addition, energy prices turned down be evaluated in light of the behavior of the a bit at both the retail and refinery levels, despite broader monetary aggregates and other factors. the firming of crude oil prices in spot markets The members also decided that slightly greater or since midsummer. Excluding food and energy, slightly lesser reserve restraint might be acceptthe CPI rose 0.4 percent in October, somewhat able depending on the behavior of the monetary faster than earlier in the year as new car prices aggregates, taking into account the strength of increased sharply. Wage inflation has picked up the business expansion, developments in foreign a bit recently, but has continued at a moderate exchange markets, progress against inflation, pace. and conditions in domestic and international The trade-weighted value of the dollar against credit markets. The intermeeting range for federother G-10 currencies has declined somewhat on al funds was maintained at 4 to 8 percent. balance since the November 5 meeting of the M2 growth slowed substantially in November Committee. Exchange rates have been affected to a 6V2 percent annual rate, and M3 growth by news about the pace of economic activity, moderated further to a 5V2 percent annual rate; developments in the U.S. trade balance, and through November both M2 and M3 were just prospects for monetary actions in the United inside the upper bounds of their 6 to 9 percent States and in key industrial nations abroad. growth ranges established by the Committee for Short-term interest rates rose moderately 1986. Ml accelerated again in November, reachabroad, about in line with movements in U.S. ing a rate of 21 percent, as growth in demand rates, while differentials in long-term interest deposits surged. Ml growth has remained far in rates moved slightly against dollar assets. Over excess of GNP growth so far this year and its the period, the dollar declined about 2 percent velocity is expected to fall at a historically high against the mark and was essentially unchanged rate. against the yen, but the dollar's depreciation had Growth of total reserves picked up sharply been somewhat larger in early December. As of over the intermeeting period largely because of a mid-December, the value of the dollar in relation surge in required reserves against transaction to other major currencies was little changed on deposits. In addition, excess reserves increased balance from the level prevailing in August. from almost $750 million in the previous three Economic activity in major foreign industrial months to around $1 billion on average in Nocountries was mixed in the third quarter. The vember, reflecting mainly the usual patterns U.S. merchandise trade deficit was estimated to around holidays and social security payment be about the same in the third quarter as in the dates. Adjustment plus seasonal borrowing in the previous three quarters. Exports were flat in the two complete maintenance periods since the quarter, while the value of oil imports was close November FOMC meeting averaged about $300 to that in the second quarter as price declines million, down somewhat from the average over about offset volume increases. Very preliminary the previous intermeeting period. Even so, the data indicated that the deficit in October was the funds rate firmed from around 5Vs percent at the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 301 time of the last meeting to well above 6 percent in other business information as pointing to a fifth early December. More recently, the federal year of moderate expansion. Such expansion funds rate has averaged close to 6 percent. might be accompanied by some rise in the rate of With the federal funds rate firmer through inflation, primarily reflecting the effects of the much of the intermeeting period, other short- dollar's depreciation and energy-sector developterm market rates rose 15 to 50 basis points. ments. However, bond yields generally were about un- The members again gave considerable attenchanged to down 25 basis points. Rates on com- tion to the outlook for foreign trade. An improvemitments for fixed-rate home mortgages dropped ment in trade generally was viewed as an essenabout Vi percentage point, moving toward a more tial factor in sustaining a moderate rate of normal alignment with Treasury bond yields. business expansion in the context of perhaps Although stock prices fell initially on the an- diminishing growth in overall domestic demands. nouncement of insider trading violations related Unfortunately, there was no convincing evito takeover activity, on balance they showed dence thus far of a turnaround in the trade little change over the period. balance, and a number of members commented The staff projections presented at this meeting that the expected improvement could be relativesuggested that real GNP would continue to grow ly limited next year. On the favorable side, the at a moderate rate through the end of 1987. depreciation of the dollar evidently had en- Prospects for an improvement in real net exports hanced the competitive position of U.S. firms, of goods and services continued to be a key and individual reports of expanding export opelement shaping the 1987 forecast; export growth portunities appeared to be multiplying as well as was expected to accelerate next year and import indications of an improved ability of many U.S. growth to moderate as world trade flows adjust- firms to compete domestically with imports. As ed to increased U.S. competitiveness. Gross they had at earlier meetings, the members redomestic purchases were projected to be rela- ferred to a number of factors that were inhibiting tively sluggish through the end of 1987, reflecting an overall improvement in net exports, including mainly a shift toward fiscal restraint, the likely limited expansion in many industrial nations weakness in multifamily housing and nonresiden- abroad and strong competition from a number of tial construction, and the damping influence of countries whose currencies had not appreciated higher import prices on the growth of real income against the dollar. One member also stressed that and consumption. Inflation was expected to pick persisting debt problems in several developing up a bit in early 1987 as a consequence of the countries constituted an element of vulnerability dollar's depreciation and higher energy prices. for international financial markets and interna- In the Committee's discussion of current and tional trade and also for the U.S. economy. prospective economic developments, members With regard to the domestic economy, a numgenerally agreed that continuing expansion at a ber of members commented that consumer exmoderate pace remained a reasonable expecta- penditures on durables, especially automobiles, tion for the year ahead, but a number of members and some business spending appeared to have emphasized the risks of a shortfall from current been accelerated into 1986 in reaction to proviprojections, especially in the early part of 1987. sions of the tax reform legislation. Compensating In particular, members mentioned the risks that adjustments in such spending later could have a the expected improvement in the nation's foreign restraining effect on economic growth, notably trade might be relatively disappointing next year during the first part of 1987. Nonetheless, a few and that overall business spending might remain members referred to the possibility that consumsluggish. A few members also referred to the er spending might be well maintained during 1987 possibility of slower growth in consumer spend- as a whole. The latter acknowledged the inhibiting. On balance, however, while no important ing effects of the growth in consumer debt, but sector of the domestic economy seemed likely to they stressed the favorable implications of cumube a source of substantial strength in 1987, the lative increases in the total assets and net worth members read current economic indicators and of consumers and the positive impact of reduc- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

302 Federal Reserve Bulletin • April 1987 tions in personal income tax rates. The outlook nary discussion of the factors bearing on approfor business spending continued to be uncertain priate ranges for the various monetary aggreand in some respects unpromising, especially gates in 1987. Most of the attention was devoted with regard to multifamily housing and nonresi- to the issue of whether a range should be estabdential construction; both areas would be ad- lished for Ml, given the uncertainty surrounding versely affected by high vacancy rates and nega- behavior of that aggregate and its velocity in tive reactions to the tax reform legislation. There recent years. While most members currently did were further reports of plant closings, notably in not favor establishing a formal target range for the Midwest. However, one member observed Ml growth in 1987, many of them believed that that business spending for plant and equipment this aggregate should continue to be monitored might well hold up in response to continuing or evaluated in light of information about the growth in overall economic activity. As usual, economy, prices, and the broad monetary aggrethe prospects for inventory accumulation were gates and other financial variables. The Commituncertain and would be affected by the outlook tee will complete its review of the role of Ml and for prices. the ranges for the broad aggregates for 1987 at its With regard to the outlook for prices and February meeting. wages, members generally agreed that increases In the Committee's discussion of policy implemight be somewhat larger in 1987, reflecting the mentation for the period immediately ahead, all impact of rising import prices and indications of a of the members indicated that they were in favor turnaround in oil prices. However, the prospect of directing open market operations, at least of only moderate economic growth and contin- initially, toward maintaining unchanged condiued margins of slack in labor and product mar- tions of reserve availability. For now, monetary kets suggested that strong wage pressures were policy was deemed to be exerting an appropriate not likely over the year ahead. One member degree of pressure on reserve positions in light of observed that agricultural conditions worldwide the growth of the broader monetary aggregates suggested an absence of pressure on food prices. within—though at the upper ends of—their long- Moreover, generally limited growth in key indus- er-run ranges, and the generally favorable prostrial nations together with an ample availability pects for sustained, albeit moderate, economic of productive resources abroad implied continu- growth. ing strong competitive pressures and restrained The members recognized that the outlook for advances in prices of U.S. imports. Even so, a the monetary aggregates remained uncertain, nosomewhat higher rate of inflation appeared to be tably in the case of Ml. According to an analysis in prospect for next year. presented at this meeting, a moderate trend in At its meeting in July, the Committee had the growth of M2 and M3 might be anticipated, agreed on tentative ranges of 5V2 to 8V2 percent given the outlook for fairly limited growth in for growth in both M2 and M3 during the period economic activity and an abatement of the effrom the fourth quarter of 1986 to the fourth fects of earlier interest rate declines. For the quarter of 1987. The associated range for growth months ahead, growth in the broader aggregates in total domestic nonfinancial debt was set at 8 to might be well within the Committee's tentative 11 percent for 1987. In the case of Ml the ranges for 1987 on the assumption that there Committee had indicated on a more tentative would be no significant changes in market interbasis than usual that it might retain the 1986 est rates. The outlook for Ml growth remained range of 3 to 8 percent for 1987. Such a range highly uncertain, although underlying forces implied a marked reduction from the Ml growth seemed consistent with a considerable slowing experienced in 1986 and provisionally assumed over time from the extraordinary expansion exthat the relationship of Ml to income, interest perienced during 1986. Some concern was exrates, and other economic variables next year pressed that the failure of such a slowing to occur would be broadly consistent with earlier histori- and the associated large provision of reserves cal experience. could eventually have inflationary consequences. Even with some moderation over com- At this meeting the Committee held a prelimi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 303 ing months, Ml might continue to expand at progress against inflation, and conditions in dorates markedly in excess of the growth in nomi- mestic and international credit markets. The nal GNP. In view of the uncertainties that were members agreed that the intermeeting range for involved and in keeping with the Committee's the federal funds rate, which provides a mechapractice since mid-1986, the members did not nism for initiating consultation of the Committee want to indicate specific expectations with re- when its boundaries are persistently exceeded, gard to Ml growth in the operational paragraph should be left unchanged at 4 to 8 percent. of the Committee's directive. Nonetheless, it At the conclusion of the meeting, the following was understood that growth of this aggregate domestic policy directive was issued to the Fedwould continue to be evaluated in light of the eral Reserve Bank of New York: behavior of the broader monetary aggregates and other economic and financial developments. The information reviewed at this meeting suggests that economic activity continues to grow at a moderate In their discussion of possible intermeeting pace in the current quarter. Total nonfarm payroll adjustments in the degree of reserve pressure, employment grew appreciably further in October and the members thought it unlikely that develop- November, and employment in manufacturing also ments would warrant more than a minor, if any, rose after declining on balance in previous months. The civilian unemployment rate remained at 7.0 perchange in reserve conditions during the weeks cent in November for the third consecutive month. ahead. All of the members understood that some Industrial production picked up considerably in Nosmall adjustment in either direction might be vember. Total retail sales rose moderately last month appropriate under certain circumstances. How- after changing little on balance over September and ever, in the context of what they perceived as October. Housing starts have weakened and business capital spending generally appears to have remained greater downside risks in the outlook for ecosluggish. Preliminary data for the U.S. merchandise nomic activity, several believed that policy imtrade deficit in October suggest a moderate narrowing. plementation should remain especially alert to Broad measures of prices have firmed somewhat in developments that might call for somewhat easi- recent months due to developments in food and energy er reserve conditions. It was noted in this con- markets. Labor cost increases this year have remained moderate compared with other recent years. nection that the relative stability of the dollar in Growth of M2 slowed substantially in November, foreign exchange markets over the past few while growth of M3 remained moderate. Expansion of months provided greater flexibility for potential these two aggregates for the year through November easing actions. has been just below the upper end of their respective At the conclusion of the Committee's discus- ranges established by the Committee for 1986. In November growth of Ml accelerated to a very rapid sion, all of the members indicated that they rate. Expansion in total domestic nonfinancial debt favored a directive that called for no change in remains appreciably above the Committee's monitorthe degree of pressure on reserve positions. The ing range for 1986. Short-term interest rates have risen members expected this approach to policy imple- somewhat since the November 5 meeting of the Commentation to be consistent with growth of both mittee, while long-term rates have declined on balance. In foreign exchange markets the trade-weighted M2 and M3 at an annual rate of about 7 percent value of the dollar against other G-10 currencies has over the four-month period from November to declined moderately on balance since the November March. Because the behavior of Ml remained meeting. subject to unusual uncertainty, the members The Federal Open Market Committee seeks monedecided they would continue to evaluate this tary and financial conditions that will foster reasonable aggregate in the light of the performance of the price stability over time, promote growth in output on a sustainable basis, and contribute to an improved broader monetary aggregates and other factors. pattern of international transactions. In furtherance of The members indicated that slightly greater rethese objectives the Committee agreed at the July serve restraint or somewhat lesser reserve re- meeting to reaffirm the ranges established in February straint would be acceptable over the intermeet- for growth of 6 to 9 percent for both M2 and M3, ing period depending on the behavior of the measured from the fourth quarter of 1985 to the fourth quarter of 1986. With respect to Ml, the Committee monetary aggregates, taking into account the recognized that, based on the experience of recent strength of the business expansion, the perforyears, the behavior of that aggregate is subject to mance of the dollar in foreign exchange markets, substantial uncertainties in relation to economic activi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

304 Federal Reserve Bulletin • April 1987 ty and prices, depending among other things on the in total domestic nonfinancial debt was provisionally responsiveness of Ml growth to changes in interest set at 8 to 11 percent for 1987. rates. In light of these uncertainties and of the substan- In the implementation of policy for the immediate tial decline in velocity in the first half of the year, the future, the Committee seeks to maintain the existing Committee decided that growth of Ml in excess of the degree of pressure on reserve positions. This action is previously established 3 to 8 percent range for 1986 expected to be consistent with growth in M2 and M3 would be acceptable. Acceptable growth of Ml over over the period from November to March at an annual the remainder of the year would depend on the behav- rate of about 7 percent. Growth in Ml will continue to ior of velocity, growth in the other monetary aggre- be appraised in the light of the behavior of M2 and M3 gates, developments in the economy and financial and the other factors cited below. Slightly greater markets, and price pressures. Given its rapid growth in reserve restraint or somewhat lesser reserve restraint the early part of the year, the Committee recognized would be acceptable depending on the behavior of the that the increase in total domestic nonfinancial debt in aggregates, taking into account the strength of the 1986 may exceed its monitoring range of 8 to 11 business expansion, developments in foreign exchange percent, but felt an increase in that range would markets, progress against inflation, and conditions in provide an inappropriate benchmark for evaluating domestic and international credit markets. The Chairlonger-term trends in that aggregate. man may call for Committee consultation if it appears For 1987 the Committee agreed on tentative ranges to the Manager for Domestic Operations that reserve of monetary growth, measured from the fourth quartfer conditions during the period before the next meeting of 1986 to the fourth quarter of 1987, of 5Vi to 8V2 are likely to be associated with a federal funds rate percent for M2 and M3. While a range of 3 to 8 percent persistently outside a range of 4 to 8 percent. for Ml in 1987 would appear appropriate in the light of most historical experience, the Committee recognized that the exceptional uncertainties surrounding the be- Votes for this action: Messrs. Volcker, Corrigan, havior of Ml velocity over the more recent period Angell, Guffey, Heller, Mrs. Horn, Messrs. Johnwould require careful appraisal of the target range at son, Melzer, Morris, and Ms. Seger. Votes against the beginning of 1987. The associated range for growth this action: None. Absent and not voting: Mr. Rice. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

305 Legal Developments ORDERS ISSUED UNDER BANK HOLDING not have any significant adverse effect upon the con- COMPANY ACT, BANK MERGER ACT, BANK centration of banking resources in the state. SERVICE CORPORATION ACT, AND FEDERAL Bank operates in the Otoe County banking market,2 RESERVE ACT where it is the largest of eight commercial banking organizations, controlling 27.5 percent of the total Orders Issued Under Section 3 of the Bank deposits in commercial banks in the market. Neither Holding Company Act Applicant nor any of its principals is associated with any other commercial banking organization in the Bellevue Capital Company relevant market. Consummation of this proposal Bellevue, Nebraska would not have any adverse effect on existing competition in any relevant market. Accordingly, consider- Order Approving Acquisition of a Bank ations relating to competitive considerations under the Act are consistent with approval. Bellevue Capital Company, Bellevue, Nebraska, a The financial and managerial resources of Applibank holding company within the meaning of the Bank cant, Bellevue, and Bank are consistent with approval. Holding Company Act ("Act"), 12 U.S.C. § 1841 This proposal is essentially a reorganization of existing et seq., has applied for the Board's approval pursuant ownership interests, and no additional debt will be to section 3(a)(3) of the Act, to acquire 99 percent of incurred as a result of this transaction. The purpose of the voting shares of Otoe County National Bank and the proposal is to permit Applicant to use certain tax Trust Company, Nebraska City, Nebraska ("Bank"). benefits that have accrued to Bank, which will en- Notice of the application, affording interested per- hance the debt-servicing capabilities of Applicant. sons an opportunity to submit comments, has been Considerations relating to the convenience and needs given in accordance with section 3(b) of the Act (51 of the communities to be served also are consistent Federal Register 43,974 (1986)). The time for filing with approval. comments has expired, and the Board has considered Based on the foregoing and other facts of record, the the application and all comments received in light of Board has determined that the application should be the factors set forth in section 3(c) of the Act. and hereby is approved. The transaction shall not be Applicant is a one-bank holding company by virtue consummated before the thirtieth calendar day followof its control of Bank of Bellevue, Bellevue, Nebraska ing the effective date of this Order, or later than three ("Bellevue"). Applicant, with deposits of $43.8 mil- months after the effective date of this Order, unless lion,1 is the 64th largest banking organization in Ne- such period is extended for good cause by the Board or braska, controlling 0.3 percent of the total deposits in by the Federal Reserve Bank of Kansas City pursuant commercial banking organizations in the state. Upon to delegated authority. consummation of this proposal, Applicant will become By order of the Board of Governors, effective the 27th largest commercial banking organization in February 2, 1987. Nebraska and control deposits of $78.2 million, representing 0.6 percent of the total deposits in commercial Voting for this action: Vice Chairman Johnson and Goverbanking organizations in the state. Applicant's princi- nors Seger, Angell, and Heller. Absent and not voting: pal controls Bank and thus, this proposal represents a Chairman Volcker. reorganization of Bank's ownership from individuals to a corporation controlled by the same individuals. JAMES MCAFEE Accordingly, consummation of this proposal would [SEAL] Associate Secretary of the Board 2. The Otoe County banking market is approximated by Otoe 1. All banking data are as of December 31, 1985. County, Nebraska. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

306 Federal Reserve Bulletin • April 1987 Northfield Bancshares, Inc. titure by First Bank System, Minneapolis, Minnesota Northfield, Minnesota ("First Bank System"), a large regional bank holding company, of Bank to a small bank holding company. Order Approving Formation of a Bank Holding Under these circumstances, the Board is particularly Company concerned with the financial strength and future prospects of the bank to be divested, in part because of the Northfield Bancshares, Inc., Northfield, Minnesota, uncertainty associated with a change in ownership has applied for the prior approval of the Board under from a large regional banking organization to a bank section 3 of the Bank Holding Company Act of 1956, holding company with substantially fewer resources to as amended (12 U.S.C. § 1841 et seq.) (the "Act"), to support the bank. acquire 100 percent of the voting shares of First Bank These concerns are mitigated in this case by several (N.A.) — Northfield, Northfield, Minnesota factors. First, First Bank System has agreed to retain ("Bank"). an investment in Applicant until Applicant's initial Notice of the application, affording opportunity for leverage is reduced. Second, although Applicant will interested persons to submit comments and views, has incur a certain amount of debt in connection with the been duly published (51 Federal Register 43,974 proposed transaction, it appears that Applicant will (1986)). The time for filing comments has expired, and have sufficient flexibility to retire the debt without the Board has considered the application and all adversely affecting the capital position of Bank. In comments received in light of the factors set forth in addition, in contemplation of this transaction, First section 3(c) of the Act (12 U.S.C. § 1842(c)). Bank System has taken steps to strengthen Bank's Applicant is a nonoperating corporation formed for loan portfolio. All of these factors are designed to the purpose of acquiring Bank. Bank is the 153rd strengthen the acquiring organization and to facilitate largest commercial banking organization in Minnesota the transfer of Bank to new ownership, thus ensuring with $29.7 million in total deposits, representing .09 that Bank will be financially protected following the percent of total deposits in Minnesota.1 Consumma- divestiture. tion of the proposal would not have a significant effect In light of these and other facts of record, the on the concentration of banking resources in Minne- financial and managerial resources and future prossota. pects of Applicant and Bank are consistent with ap- Bank operates in the Northfield banking market,2 proval of the proposal. Considerations relating to the where it is the fourth largest commercial bank in the convenience and needs of the communities to be market, controlling 9.04 percent of the deposits in served are also consistent with approval. commercial banks in the market. Principals of Appli- Based on the foregoing and other facts of record, the cant are not affiliated with any other depository insti- Board has determined that the application should be, tution in the market. Based on all the facts of record, and hereby is, approved. The acquisition of Bank shall consummation of this proposal would not result in any not be consummated before the thirtieth calendar day significant adverse effects on existing or potential following the effective date of this Order, unless such competition or increase the concentration of banking period is extended for good cause by the Board or by resources in any relevant area. Accordingly, the Board the Federal Reserve Bank of Minneapolis, acting concludes that competitive considerations are consis- pursuant to delegated authority. tent with approval. By order of the Board of Governors, effective The Board has indicated on previous occasions that February 13, 1987. a bank holding company should serve as a source of financial and managerial strength to its subsidiary Voting for this action: Chairman Volcker and Governors banks, and that the Board would closely examine the Johnson, Seger, and Angell. Absent and not voting: Governor Heller. condition of an applicant in each case with this consideration in mind.3 This application represents the dives- WILLIAM W. WILES [SEAL] Secretary of the Board 1. Data are as of June 30, 1985. 2. The Northfield banking market is approximated by Rice County and the townships of Warsaw, Holden, and Kenyon in Goodhue secure the Board's approval. Section 3(c) of the Act provides that the County. Board must, in every case, consider, among other things, the financial 3. The Bank Holding Company Act requires that before an organi- and managerial resources of both the applicant company and the bank zation is permitted to become a bank holding company and thus obtain to be acquired. The Board's action in this case is based on a the benefits associated with the holding company structure, it must consideration of such factors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 307 State First Financial Corporation Applicant and Bank compete in the Texarkana mar- Texarkana, Arkansas ket.4 Applicant is the largest of eight commercial banking organizations in the market, controlling 32.7 Order Approving Acquisition of a Bank percent of total deposits in commercial banking organizations in the market.5 Bank is the sixth largest State First Financial Corporation, Texarkana, Arkan- commercial banking organization in the market, consas, has applied for the Board's approval under section trolling 6.4 percent of the total deposits in commercial 3(a)(3) of the Bank Holding Company Act ("Act") banks in the market. Upon consummation of the (12 U.S.C. § 1842(a)(3)) to acquire American National proposal, Applicant's share of the deposits would Bank, Texarkana, Texas ("Bank"). increase to 39.1 percent. The Texarkana market is Notice of the application, affording an opportunity considered to be highly concentrated, with the four for interested persons to submit comments, has been largest commercial banks controlling 80.0 percent of given in accordance with section 3(b) of the Act (51 the deposits in commercial banks in the market. The Federal Register 41,837 (1986)). The time for filing Herfindahl-Hirschman Index ("HHI") for the market comments has expired, and the Board has considered is 2035 and would increase by 418 points to 2453 upon the application and all comments received in light of consummation of the proposal.6 the factors set forth in section 3(c) of the Act Although consummation of the proposal would elim- (12 U.S.C. § 1842(c)). inate some existing competition between Applicant Section 3(d) of the Act, 12 U.S.C. § 1842(d), the and Bank in the Texarkana banking market, numerous Douglas Amendment, prohibits the Board from ap- other commercial banking organizations would remain proving an application by a bank holding company to as competitors in the market. In addition, the presence acquire a bank located outside the bank holding com- of six thrift institutions, controlling approximately 33.4 pany's home state, unless such acquisition is "specifi- percent of the market's total deposits,7 mitigates the cally authorized by the statute laws of the state in anticompetitive effects of the transaction.8 Thrift instiwhich such bank is located, by language to that effect tutions already exert a considerable competitive influand not merely by implication."1 ence in the market as providers of consumer, real Effective January 1, 1987, Texas enacted an inter- estate, and commercial loans in addition to traditional state banking statute that permits out-of-state bank thrift services. Based upon the above considerations, holding companies to acquire established Texas banks the Board concludes that consummation of the proposand bank holding companies.2 The Texas Banking al is not likely to substantially lessen competition in Department has informed the Board that it has no the Texarkana banking market.9 objection to this proposal. Based on the foregoing, the The financial and managerial resources of Appli- Board has determined that the proposed acquisition is cant, its subsidiary banks, and Bank are consistent specifically authorized by the statute laws of Texas and thus Board approval is not prohibited by the Douglas Amendment. 4. The Texarkana market is approximated by the counties of Miller Applicant is the tenth largest banking organization and Little River, Arkansas, and Bowie County, Texas. 5. Market data are as of June 30, 1986, and reflect known holding in Arkansas, operating two subsidiary banks with total company acquisitions approved and mergers consummated through deposits of $295.7 million, representing 2.0 percent of December 31, 1986. the total deposits in commercial banks in Arkansas.3 6. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)), any market in which the Bank is the 586th largest bank in Texas, with $56.0 post-merger HHI is above 1800 is considered highly concentrated, and million in deposits, representing less than one percent the Department is likely to challenge a merger that increases the HHI by more than 50 points. The Department has informed the Board that of the total deposits in commercial banks in Texas. a bank merger or acquisition generally will not be challenged (in the Consummation of this proposal would not have a absence of other factors indicating anticompetitive effects) unless the significant adverse effect on the concentration of bank- post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. ing resources in Arkansas or Texas. 7. Thrift institution deposit data are as of June 30, 1985. 8. The Board has previously indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. National City Corporation, 70 FEDERAL RESERVE 1. A bank holding company's home state for purposes of the BULLETIN 743 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE Douglas Amendment is that state in which the total deposits of its BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL banking subsidiaries were largest on July 1, 1966, or on the date it RESERVE BULLETIN 802 (1983); First Tennessee National Corporabecame a bank holding company, whichever date is later. 12 U.S.C. tion, 69 FEDERAL RESERVE BULLETIN 298 (1983). § 1842. Applicant's home state is Arkansas. 9. If 50 percent of deposits held by thrift institutions in the 2. Tex. Rev. Civ. Stat. Ann. art. 342-916 (Vernon 1986). The Texas Texarkana banking market were included in the calculation of market statute requires that the majority of the directors of any bank be Texas concentration, the share of total deposits held by the four largest residents. organizations in the market would be 68.4 percent. Applicant would 3. Banking data are as of December 31, 1985, and reflect holding control 26.2 percent of the market's deposits and Bank would control company acquisitions approved and mergers consummated through 5.1 percent of the market's deposits. The HHI would increase by 268 October 31, 1986. points to 1714. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

308 Federal Reserve Bulletin • April 1987 with approval. Considerations relating to the conve- second largest banking organization in Florida, connience and needs of the communities to be served are trolling deposits in that state of $9.7 billion, representalso consistent with approval. Based on the foregoing ing 13.2 percent of the total deposits in commercial and other facts of record, the Board has determined banks in Florida. In addition, Applicant is the largest that consummation of the proposed transaction would banking organization in Tennessee with total deposits be in the public interest and that the application should of $4.2 billion, representing 14.4 percent of state be approved. deposits. Bank is the 94th largest commercial banking On the basis of the record, the application is ap- organization in Tennessee and controls deposits of proved for the reasons summarized above. The trans- $53.0 million, representing 0.2 percent of the deposits actions shall not be consummated before the thirtieth in commercial banks in Tennessee. Consummation of calendar day following the effective date of this Order, this proposal would have no significant effect on the or later than three months after the effective date of concentration of banking resources in Tennessee, this Order, unless such period is extended for good Florida, or Georgia. cause by the Board or by the Federal Reserve Bank of Section 3(d) of the Act (12 U.S.C. § 1842(d)), the St. Louis pursuant to delegated authority. Douglas Amendment, prohibits the Board from ap- By order of the Board of Governors, effective proving an application by a bank holding company to February 9, 1987. acquire a bank located outside the bank holding company's home state,2 unless the state where the bank to Voting for this action: Chairman Volcker and Governors be acquired is located has specifically authorized the Seger, Angell, and Heller. Absent and not voting: Governor acquisition by language to that effect and not merely Johnson. by implication. Applicant's home state is Florida. The Board has previously determined that Tennessee's JAMES MCAFEE interstate banking statute expressly authorizes a Flori- [SEAL] Associate Secretary of the Board da bank holding company, such as Applicant, to acquire a Tennessee bank holding company, such as Company.3 Accordingly, approval of Applicant's pro- SunTrust Banks, Inc. posal to acquire a bank holding company in Tennessee Atlanta, Georgia is not barred by the Douglas Amendment. Applicant and Bank compete directly in the Nash- Order Approving Acquisition of a Bank Holding ville banking market.4 Applicant is the largest of 17 Company commercial banking organizations operating in the market, with total deposits of $2.1 billion, representing SunTrust Banks, Inc., Atlanta, Georgia, and its wholly 32.6 percent of the total deposits in commercial banks owned subsidiary, Third National Corporation, Nash- in the market. Bank is the ninth largest commercial ville, Tennessee (together, "Applicant"), bank hold- banking organization in the market, with total deposits ing companies within the meaning of the Bank Holding of $53.0 million, representing 0.8 percent of the total Company Act of 1956, as amended (12 U.S.C. § 1841 deposits in commercial banks in the market. Upon et seq.) ("Act"), have applied for the Board's approv- consummation of the proposal, Applicant's share of al under section 3(a)(5) of the Act to merge with the deposits in commercial banks in the market would Peoples Bancshares, Inc., Lebanon, Tennessee increase to 33.4 percent. The Nashville banking mar- ("Company"), and thereby to acquire indirectly The ket is considered to be highly concentrated, with the Peoples Bank, Lebanon, Tennessee ("Bank"). four largest commercial banks controlling 84.4 percent Notice of the applications, affording interested of the deposits in commercial banks in the market. The persons an opportunity to submit comments, has been Herfindahl-Hirschman Index ("HHI") for the market given in accordance with section 3(b) of the Act (51 Federal Register 44,524 (1986)). The time for filing comments has expired, and the Board has considered the applications and all comments received in light of the factors set forth in section 3(c) of the Act. Applicant is the second largest banking organization in Georgia, with total Georgia deposits of $5.2 billion,1 2. A bank holding company's home state is that state in which the representing 15.3 percent of the total deposits in operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the commercial banks in the state. Applicant is also the company became a bank holding company, whichever is later. 3. SunTrust Banks Inc., 73 FEDERAL RESERVE BULLETIN 67 (1986). 4. The Nashville banking market is approximated by Davidson, 1. All banking data are as of June 30, 1986. Rutherford, Williamson, Wilson, Robinson and Sumner Counties. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 309 is 2135 and would increase by 55 points to 2190 upon By order of the Board of Governors, effective consummation of the proposal.5 February 10, 1987. Although consummation of the proposal would eliminate some existing competition between Applicant Voting for this action: Chairman Volcker and Governors and Bank in the Nashville market, numerous other Seger, Angell, and Heller. Absent and not voting: Governor Johnson. commercial banking organizations would remain as competitors in the market upon consummation. In addition, the presence of ten thrift institutions that JAMES MCAFEE [SEAL] Associate Secretary of the Board control approximately 20.1 percent of the market's total deposits mitigates the anticompetitive effects of the transaction.6 Thrift institutions already exert a Orders Issued Under Section 4 of the Bank considerable competitive influence in the market as Holding Company Act providers of commercial and industrial loans in addition to traditional thrift services. Based upon the United Virginia Bankshares, Inc. above considerations, the Board concludes that con- Richmond, Virginia summation of the proposal is not likely to substantially lessen competition in the Nashville banking market.7 The financial and managerial resources of Appli- Order Approving an Application to Purchase and cant, its subsidiary banks, and Bank are consistent Sell Precious Metals and Coins for the Account of with approval. Considerations relating to the conve- Customers nience and needs of the communities to be served are also consistent with approval. Based upon the forego- United Virginia Bankshares, Inc., Richmond, Virgining and other facts of record, the Board has deter- ia, a bank holding company within the meaning of the mined that consummation of the proposed transaction Bank Holding Company Act, 12 U.S.C. § 1841 would be in the public interest and that the applica- et seq. ("BHC Act"), has applied pursuant to section tions should be approved. 4(c)(8) of the BHC Act and section 225.23(a) of the Board's Regulation Y, 12 C.F.R. § 225.23(a), to On the basis of the record, the applications are engage de novo through its subsidiary, United Virginia approved for the reasons summarized above. The Brokerage, Inc., Richmond, Virginia ("Company"), transaction shall not be consummated before the thirtiin the purchase and sale of gold and silver bullion and eth calendar day following the effective date of this coins for the account of its customers. Order, or later than three months after the effective Notice of the application, affording interested perdate of this Order, unless such period is extended for sons an opportunity to submit comments, has been good cause by the Board or by the Federal Reserve duly published (51 Federal Register 44,124 (1986)). Bank of Atlanta pursuant to delegated authority. The time for filing comments has expired, and the Board has considered the application and all comments received in light of the public interest factors set forth in section 4(c)(8) of the BHC Act. Company proposes to engage in the purchase and sale of silver and gold bullion and coins for the account 5. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), any market in which the of customers. Company will not engage in the purpost-merger HHI is above 1800 is considered highly concentrated. chase and sale of platinum and palladium,1 nor will it The Department has informed the Board that a bank merger or deal in gold or silver for its own account. In addition, acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI Company does not propose to extend credit, and does is at least 1800 and the merger increases the HHI by at least 200 not propose to offer investment advice to customers in points. connection with the proposed services. 6. The Board has previously indicated that thrift institutions have become, or have the potential to become, major competitors of Applicant is a multibank holding company with commercial banks. National City Corporation, 70 FEDERAL RESERVE three subsidiary banks in Virginia, Maryland, and the BULLETIN 743 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE BULLETIN 225 (1984); General Bancshares Corporation, 69 Federal District of Columbia, controlling total deposits of Reserve Bulletin 802 (1983); First Tennessee National Corporation, 69 approximately $6.3 billion.2 Company has obtained FEDERAL RESERVE BULLETIN 298 (1983). 7. If 50 percent of deposits held by thrift institutions in the Nashville banking market were included in the calculation of market concentration, the share of total deposits held by the four largest 1. In Standard and Chartered Banking Group Ltd., 38 Federal organizations in the market would be 74.8 percent. Applicant would Register 27,552 (1973), the Board found that the activities of dealing in control 28.9 percent of the market's deposits and Bank would control platinum and palladium were not authorized for national banks and 0.8 percent of the market's deposits. The HHI would increase by 40 were not closely related to banking. points to 1750. 2. Data are as of September 30, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

310 Federal Reserve Bulletin • April 1987 approval to engage in discount securities brokerage in sections 225.4(d) and 225.23(b) (12 C.F.R. activities permissible for bank holding companies un- §§ 225.4(d) and 225.23(b)), and to the Board's authorder section 225.25(b)(15) of the Board's Regulation Y, ity to require such modification or termination of the 12 C.F.R. § 225.25(b)(15). activities of a bank holding company or any of its The proposed activities of Company are essentially subsidiaries as the Board finds necessary to assure identical to activities previously approved by the compliance with the provisions and purposes of the Board.3 In addition, banks have traditionally engaged BHC Act and the Board's regulations and order issued in the purchase and sale of gold and silver bullion.4 thereunder, or to prevent evasion thereof. Thus, the Board concludes that Applicant's proposal The activity shall be commenced not later than three to engage in the purchase and sale of bullion and coins months after the effective date of this Order, unless for the account of customers is closely related to such period is extended for good cause by the Board or banking. by the Federal Reserve Bank of Richmond, pursuant In order to approve this application, the Board is to delegated authority. also required to determine that the performance of the By order of the Board of Governors, effective proposed activities by Applicant "can reasonably be February 9, 1987. expected to produce benefits to the public . . . that outweigh possible adverse effects ...."(12 U.S.C. Voting for this action: Chairman Volcker and Governors § 1843(c)(8)). Consummation of Applicant's proposal Seger, Angell, and Heller. Absent and not voting: Governor Johnson. will result in increased convenience to customers. In addition, the Board expects that the entry of Applicant into the market for these services will increase the JAMES MCAFEE [SEAL] Associate Secretary of the Board level of competition among providers of these services. Accordingly, the Board concludes that the performance of the proposed activities by Applicant can reasonably be expected to produce benefits to the ORDERS ISSUED UNDER SECTIONS 3 AND 4 OF public. THE BANK HOLDING COMPANY ACT The Board has also considered the potential for adverse effects that may be associated with this pro- Maryland National Corporation posal. There is no evidence in the record that consum- Baltimore, Maryland mation of the proposed transactions would result in any adverse effects such as decreased competition, Order Conditionally Approving the Acquisition of a undue concentration of resources, unfair competition, Bank, a Bank Holding Company and its Nonbank conflicts of interest, or unsound banking practices. Subsidiaries Applicant's proposal to buy and sell gold and silver bullion and coins is a fee-generating, nonleveraged Maryland National Corporation, Baltimore, Maryactivity that the Board believes would not have an land, a bank holding company within the meaning of adverse effect on Applicant's financial resources. Ac- the Bank Holding Company Act of 1956, as amended cordingly, the financial and managerial resources of ("BHC Act" or "Act") (12 U.S.C. § 1841 et seq.), Applicant and its subsidiaries overall are consistent has applied for the Board's approval under section with approval of the application. 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to acquire Based upon a consideration of ail the facts of record, American Security Corporation, Washington, D.C. the Board concludes that the balance of the public ("ASC"), and thereby indirectly to acquire ASC's interest factors that it is required to consider under subsidiary bank, American Security Bank, Washingsection 4(c)(8) is favorable. Accordingly, the applica- ton, D.C. ("Bank"). In order to effect the transaction, tion is hereby approved. Applicant proposes to form an interim bank holding This determination is subject to all of the conditions company subsidiary to be merged with ASC. set forth in the Board's Regulation Y, including those ASC engages through two nonbanking subsidiaries in the provision of financial advice and discount brokerage services. ASC also engages directly and through one subsidiary in certain otherwise impermis- 3. Texas American Bancshares, Inc., 72 FEDERAL RESERVE BUL- sible travel agency, general insurance, and real estate LETIN 501 (1986); First Interstate Bancorp, 71 FEDERAL RESERVE brokerage, leasing and property management activities BULLETIN 467 (1985). See also, The Hongkong and Shanghai Bankon the basis of grandfather privileges provided in ing Corp., 72 FEDERAL RESERVE BULLETIN 345 (1986); Standard and Chartered Banking Group Ltd., 38 Federal Register 27,552 (1973). section 4(a)(2) of the Act, 12 U.S.C. § 1843(a)(2). 4. See, e.g., 12 U.S.C. § 24(7) (national banks are explicitly permit- Applicant has applied under section 4(c)(8) of the Act ted to buy and sell coins and bullion). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 311 (12 U.S.C. § 1843(c)(8)) and sections 225.25(b)(4) and code4 permits a District bank holding company to (b)(15) of Regulation Y (12 C.F.R. §§ 225.25(b)(4) and acquire a banking organization in that state,5 and by (b)(15)) to acquire the financial advisory and discount resolution dated October 7, 1986, the District of Cobrokerage activities of ASC's nonbank subsidiaries. lumbia City Council has indicated that the statute laws Applicant further has requested approval to retain of Maryland and the District are reciprocal and pro- ASC's grandfathered travel agency, general insurance, vide a basis for authorizing the proposed acquisition. and real estate brokerage, leasing and property man- The Board therefore concludes that approval of the agement activities following consummation of its pro- proposed acquisition is not prohibited by the Douglas posal. Amendment. Notice of the applications, affording an opportunity Applicant's lead subsidiary bank competes with for interested persons to submit comments, has been Bank in the District of Columbia banking market.6 given in accordance with sections 3 and 4 of the Act Applicant is the seventh largest of 65 commercial (51 Federal Register 37,493 (October 22, 1986)). The banking organizations in the District of Columbia time for filing comments has expired, and the Board market. Applicant controls deposits of $1 billion, has considered the applications and all comments representing 4.5 percent of the total deposits in comreceived in light of the factors set forth in section 3(c) mercial banks in that area. Bank is the fourth largest of the Act (12 U.S.C. § 1842(c)) and the consider- commercial banking organization in the market, conations specified in section 4(c)(8) of the Act. trolling domestic deposits of $2.2 billion, representing Applicant is the largest commercial banking organi- 9.7 percent of the total deposits in commercial banks zation in Maryland with 19.4 percent of the total in the market. Upon acquisition of Bank, Applicant deposits in commercial banks in that state. Applicant's would become the second largest commercial banking lead bank subsidiary operates 203 branch offices and organization in the Washington, D.C. market and controls total domestic deposits of $5.2 billion. ASC is would control 14.2 percent of the $22.2 billion total the second largest commercial banking organization in deposits in commercial banks in that area.7 the District of Columbia, with 24.7 percent of the total The Washington, D.C., banking market is uncondeposits in commercial banks in the District. ASC's centrated, and would remain so after consummation of sole bank subsidiary operates 31 branches and con- the proposed acquisition. The share of deposits held trols total domestic deposits of $2.5 billion.1 by the four largest commercial banking organizations Section 3(d) of the Act (12 U.S.C. § 1842(d)), the in the market is 50.4 percent and the Herfindahl- Douglas Amendment, prohibits the Board from ap- Hirschman Index ("HHI") for the market is 816 proving an application by a bank holding company to points.8 An alternative definition of the District of acquire control of any bank located outside of the Columbia product market to include 50 percent of the holding company's home state,2 unless such acquisi- deposits held by thrift institutions would further mitition is "specifically authorized by the statute laws of gate any adverse competitive effects arising from the state in which such bank is located, by language to Applicant's proposal.9 Shares of the expanded market that effect and not merely by implication." Applicant's held by Applicant and ASC would decline to 3.2 and home state is Maryland. The statute laws of the District of Columbia permit a 4. Md. Fin. Inst. Code Ann. § 5-1001 et seq. (Supp. 1985). bank holding company located within a defined region 5. James Madison, Ltd., 72 FEDERAL RESERVE BULLETIN 50 that includes Maryland to acquire an established Dis- (1987). trict of Columbia bank or bank holding company, 6. The District of Columbia banking market is defined as the Washington, D.C., Ranally Metropolitan Area, which comprises the provided the acquiror's home state permits reciprocal District of Columbia; all of Arlington, Fairfax and Prince William acquisitions of banks in that state by bank holding Counties; and portions of Fauquier, Loudon and Stafford Counties; companies located in the District.3 The Board has the cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park in Virginia; and substantially all of Montgomery, Prince previously determined that the Maryland banking Georges, and Charles Counties, plus small portions of Anne Arundel, Calvert, Carroll, Frederick, and Howard Counties in Maryland. 7. Market deposit data are as of June 30, 1985. 8. Consummation of the proposed transaction would increase the market's HHI by 87 to 903 points and increase the four-firm concentration ratio by 4.5 to 54.9 percent. The transaction, therefore, is 1. State deposit data are as of June 30, 1986. Applicant also unlikely to be challenged by the Department of Justice under its operates a credit card bank in Delaware. merger guidelines, 49 Federal Register 26,823 (1984). 2. A bank holding company's home state is that state in which the 9. The Board has previously indicated that thrift institutions have operations of the bank holding company's banking subsidiaries were become, or have the potential to become, major competitors of principally conducted on July 1, 1966, or the date on which the commercial banks. National City Corporation, 70 FEDERAL RESERVE company became a bank holding company, whichever is later. BULLETIN 743 (1984); NCNB Corporation, 70 FEDERAL RESERVE 3. D.C. Code Ann. § 26-801 et seq. (Supp. 1986), as amended by BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL the District of Columbia Regional Interstate Banking Act of 1985, RESERVE BULLETIN 802 (1983); First Tennessee National Corpora- D.C. Law 6-276. tion, 69 FEDERAL RESERVE BULLETIN 298 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

312 Federal Reserve Bulletin • April 1987 6.9 percent respectively, and the HHI would increase Based on a careful analysis of section 4 of the BHC 44 points to 466. The Board notes that numerous large Act, its legislative history, and prior Board decisions, commercial banking organizations currently operate in the Board concludes that grandfather privileges prothe District of Columbia market and several others vided by section 4(a)(2) of the Act are proprietary to have undertaken plans to establish a presence there. those companies which qualified for the grandfather On the basis of these and all other facts of record, the privilege as of December 31, 1970, and that a company Board concludes that consummation of the proposed may not acquire such grandfather privileges by acquirtransaction would not have a significant adverse effect ing a company that previously qualified for such on existing or probable future competition in the privileges. District of Columbia market. Section 4 of the BHC Act prohibits a bank holding The financial and managerial resources and future company from acquiring direct or indirect ownership prospects of Applicant, ASC and their respective bank or control of any company (other than a bank) or subsidiaries are consistent with approval of the appli- engaging in activities other than banking or managing cation. Considerations relating to the convenience and or controlling banks unless the acquisition or activity needs of the communities to be served are also consis- falls within one of the specifically enumerated exceptent with approval. tions in the Act to this general prohibition. 12 U.S.C. The Board has also considered Applicant's pro- § 1841(a). While there is an exception to this prohibiposed acquisition of ASC's subsidiaries engaged in tion for one-bank holding companies that were first financial advisory and discount brokerage activities brought under the Act by the 1970 Amendments,11 the under the proper incident to banking criteria of section exception does not by its terms apply to Applicant. 4(c)(8) of the Act. The market for these activities is The section of the Act upon which ASC relies for its nationwide and unconcentrated. Because Applicant grandfather privileges (section 4(a)(2)) pertains only to does not currently provide financial advisory services a "company covered in 1970." Under section 4(a)(2) and because Applicant's share of the discount broker- of the Act, a "company covered in 1970" may engage age market is de minimis, the proposed acquisition of in any nonbanking activity in which it was lawfully ASC's two nonbanking subsidiaries would not elimi- engaged on June 30, 1968, and continuously since that nate any significant existing competition. In view of date. A "company covered in 1970" is defined to the great number of prospective providers of financial mean a company that became a bank holding company advisory and discount brokerage services, the pro- as a result of the 1970 Amendments and that would posed acquisition is unlikely to have a significant have been a bank holding company on June 30,1968, if adverse effect on probable future competition. Fur- those amendments had been in effect on that date. thermore, there is no evidence in the record to indicate 12 U.S.C. § 1841(b). This grandfather right applies that approval of this aspect of Applicant's proposal only to a company that: (1) involuntarily became a would result in undue concentration of resources, bank holding company by operation of law when the unfair competition, conflicts of interest, unsound 1970 Amendments were passed,12 and (2) would have banking practices or other adverse effects. The Board been a bank holding company on June 30, 1968, had the Act applied to one-bank holding companies on that therefore concludes that the balance of public interest date.13 factors it must consider under section 4(c)(8) of the Act is favorable and consistent with approval of Appli- Applicant does not qualify as a "company covered cant's request to engage in permissible financial advis- in 1970" because it did not control a bank on the ory and discount brokerage activities. June 30, 1968, grandfather date.14 Further, there is no In addition to its applications under section 4(c)(8), provision in the BHC Act for the transfer of grandfa- Applicant seeks further approval from the Board to retain certain otherwise impermissible travel agency, 11. Prior to the 1970 Amendments (enacted on December 31, 1970), general insurance, and real estate brokerage, leasing the BHC Act applied only to companies that controlled two or more and property management activities conducted direct- banks. The 1970 Amendments extended the coverage of the Act to one-bank holding companies for the first time. ly by ASC and one insurance subsidiary. ASC has 12. See, Orwig and Company, Inc., 62 FEDERAL RESERVE BULLEconducted these activities on the basis of a grandfather TIN 160 (1975). provision in the Act for certain bank holding compa- 13. A grandfathered company is not free to conduct any nonbanking activity it desires. It may continue to engage only in those nies that, like ASC, were brought within the coverage activities in which it had been engaged continuously since June 30, of the Act as a result of enactment of the 1970 1968 (as well as any additional activities that are generally permissible Amendments.10 for bank holding companies). A grandfathered company may not expand its grandfathered activities through the acquisition of a going concern, but instead is limited to the acquisition of de novo compa- 10. See, Board Order, dated July 21, 1976, concluding that ASC nies. 12 U.S.C. §§ 1843(a)(2) and (c)(ll). could retain these otherwise impermissible nonbanking activities 14. Applicant was organized on December 9, 1968, and obtained under the grandfather provision in section 4(a)(2) of the Act. control of a bank on April 30, 1969. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 313 ther rights from one bank holding company to another, privileges under section 4(a)(2) of the Act.17 Further, unless, under a Board interpretation, the second com- the Board notes that interpreting the Act to permit the pany qualifies as the "successor" to the first compa- acquisition of a grandfathered company would open a ny.15 A "successor" is defined in the Act as a compa- substantial loophole in the Act by allowing a nonny that acquires a bank from a bank holding company grandfathered holding company to engage in a wide in such a manner that there is no substantial change in variety of nonbanking activities by acquiring one or the control of the bank or the beneficial ownership of more of the numerous bank holding companies with that bank.16 Here, because there is a complete change existing grandfather rights. in the ownership of ASC's shares, Applicant is not a The legislative history of the 1970 Amendments also "successor" as that term is used in the BHC Act. demonstrates that the grandfather provision in ques- Thus, under the terms of section 4 of the BHC Act, tion was intended only for the select companies that Applicant may not acquire control of a company qualified for the privilege in 1970, and that it was not a engaged in the nonbanking activities in question. The transferable right that could be passed from one bank fact that the proposed acquisition is to be made holding company to another.18 through the intermediary of a grandfathered bank Prior Board determinations have uniformly conholding company does not change this result, because strued the grandfather provision in a narrow manner Applicant must also independently qualify under the and have restricted the ability to transfer such rights. Act to acquire the company. In Wyoming Bancorporation,19 the Board conditioned Applicant contends that because ASC will continue the acquisition of a bank holding company with grandto exist as a separate holding company after the fathered insurance agency activities on the cessation acquisition, ASC should be entitled to retain its grand- of those activities by the acquiring bank holding comfather status and continue to engage in otherwise pany, since "grandfather rights may not be transimpermissible nonbanking activities. In other words, ferred." Likewise, in Hathdel, Inc., supra., the Board Applicant argues that ASC does not forego its status as permitted a company to acquire and retain the granda "grandfathered" bank holding company even though fathered rights of an existing one-bank holding compait becomes a subsidiary of Applicant, a non-grandfath- ny, but only because the succeeding company qualiered bank holding company. fied as a "successor" to the existing holding This argument incorrectly focuses on whether ASC company.20 may continue to engage in grandfathered activities, The narrow interpretation given the grandfather and ignores the more fundamental question whether provisions may also be illustrated by the decision of Applicant may acquire a company engaged in such the Board in Orwig and Company, Inc.21 The Board activities. While it is true that the BHC Act permits determined that in order to be a "company covered in ASC to continue to engage in grandfathered activities, 1970" the company must have controlled the same Applicant as an acquiring bank holding company must bank on June 30, 1968, and December 31, 1970, and also comply with the nonbanking restrictions of the Act. As noted, there is a strict prohibition against a bank holding company acquiring directly or indirectly any company engaged in nonbanking activities unless they are closely related to banking (or qualify under 18. See e.g., 115 Cong. Rec. S 15,700 (daily ed. September 16, one of the other limited exceptions in the Act). There 1970) (Remarks of Senator Hart): When any legislative body is asked to pass a grandfather clause, it is either is no provision in the Act excusing compliance by a engaged in the process of balancing equities or of conferring a benefit on a bank holding company with this prohibition in the case select group and denying the same to all others. The only group with any of the acquisition of a company exercising grandfather equities in this case are those one-bank holding companies formed in line with the historical purposes of the exemption. Accord: 115 Cong. Rec. S 15,701-2 (daily ed. September 16, 1970) (Remarks of Senator Proxmire); 116 Cong. Rec. S 15,691 (daily ed. September 16, 1970) (Remarks of Senator Williams) relating to an 15. Hathdel, Inc., 38 Federal Register 21,220 (1973) See also, analogous proposed grandfather provision; 116 Cong. Rec. S 15,695 American Security Corp., supra. (daily ed. September 16, 1970) (Remarks of Senator Mondale); 116 16. 12 U.S.C. § 1841(e). Cong. Rec. H 11,792 (daily ed. December 16, 1970), reprinting letter, 17. Applicant contends that its claim to ASC's grandfather privi- dated November 17, 1970, from Deputy Attorney General Richard G. leges is supported by the Board's BankAmerica/Seafirst decision, 69 Kleindeinst. FEDERAL RESERVE BULLETIN 568 (1983), in which the Board permit- 19. 59 FEDERAL RESERVE BULLETIN 180 (1973). ted Seafirst to continue to sell credit-related property and casualty 20. See, MorAmerica Financial Corp., 39 Federal Register 36,391 insurance (an activity which had been approved by the Board) (1974), where the Board denied "successor" status to a company following its acquisition by BankAmerica, which had never secured seeking to merge with another bank holding company which had Board approval to sell such insurance. Reliance on this decision by grandfather rights. In this decision, the Board noted that the legisla- Applicant is misplaced. Seafirst claimed grandfather rights to continue tive history of the statute indicates that the purpose of the "succesto sell credit-related insurance under the Garn-St Germain Depository sor" provision was to close a loophole in the Act, and not to expand Institutions Act of 1982, Public Law 97-320, rather than under the the grandfather exemptions to section 4. indefinite grandfather provisions of section 4(a)(2) of the Act. 21. 62 FEDERAL RESERVE BULLETIN 160 (1975). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

314 Federal Reserve Bulletin • April 1987 continuously between those dates. The Board based impermissible nonbanking activities or to conform this conclusion on the rationale that grandfather provi- them to the Act. Accordingly, approval of this applicasions were enacted because of a legislative concern tion is conditioned upon Applicant's divestiture or about the disruption of holding company relationships termination, within two years of consummation of the that existed from at least June 30, 1968. The Board proposal, of ASC's impermissible nonbanking activiconcluded that if a company controlled one bank on ties, unless within that time Applicant secures Board June 30, 1968, and voluntarily relinquished that con- approval to retain any of the activities under section trol position prior to the enactment of the 1970 Amend- 4(c)(8) of the Act. ments, it was not within the scope of the Congress' Based on the foregoing and other facts of record and concern, even though it may have acquired control of conditioned upon Applicant's divestiture of ASC's a different bank prior to December 31, 1970. previously grandfathered travel agency, general insur- The Board also notes that its interpretation of the ance, and real estate brokerage, leasing and property grandfather provisions of the Act is in accord with management activities within two years from the date general principles of statutory construction. The of consummation of the proposal, the Board has grandfather provision in section 4(a)(2) is an exception determined that the applications under sections 3(a)(3) to the general requirement of the Act requiring the and 4(c)(8) should be, and hereby are approved. The divestiture of non-conforming nonbanking activities or acquisition of ASC and Bank shall not be consummatdivestiture of all subsidiary banks. Under the rules of ed before the thirtieth calendar day following the statutory interpretation, an exception to a general rule effective date of this Order, or later than three months is to be narrowly construed.22 The Board also notes after the effective of this Order, unless such period is that the statement by the House managers for the 1970 extended for good cause by the Board or by the Amendments states that the Board should interpret Federal Reserve Bank of Richmond, acting pursuant exemptions in those amendments "as narrowly as to delegated authority. The determinations as to Applipossible in order that all bank holding companies cant's nonbanking activities are subject to all of the which should be covered under the Act in order to conditions contained in Regulation Y, including those protect the public interest will, in fact, be covered."23 in sections 225.4(d) and 225.23(b)(3) (12 C.F.R. For the foregoing reasons, the Board has concluded §§ 225.4(d) and 225.23(b)(3)), and to the Board's authat Applicant may not acquire ASC except on condi- thority to require such modification or termination of tion that ASC terminate or divest its impermissible the activities of a holding company or any of its nonbanking activities. In accordance with its policy,24 subsidiaries as the Board finds necessary to assure the Board believes it appropriate to provide Applicant compliance with the provisions and purposes of the with a period of time to divest or terminate ASC's Act and the Board's regulations and orders issued thereunder, or to prevent evasions thereof. By order of the Board of Governors, effective February 13, 1987. Voting for this action: Chairman Volcker and Governors 22. See e.g., Honeywell Inc. v. United States, 551 F.2d 182, 186 Johnson, Seger, and Angell. Absent and not voting: Gover- (Ct. CI. 1981) (grandfather clauses are to be narrowly construed); United States v. Allan Drug Corp., 357 F.2d 7134, 718 (10th Cir. 1966) nor Heller. (same). 23. H.R. Rep. No. 1747, 91st Cong. 2d Sess. 23 (1970). WILLIAM W. WILES 24. See, Security Pacific Corporation, 72 FEDERAL RESERVE BUL- LETIN 800, 802, n.12 (1986). [SEAL] Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 315 ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors Recent applications have been approved by the Board of Governors as listed below. Copies are available upon request to Publications Services, Division of Support Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Effective Applicant Bank(s) ^^ Oregon Pacific Financial, Inc., Santiam Valley Bank, February 25, 1987 Portland, Oregon Aumsville, Oregon By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Cattlemen's Financial Services, Cattlemen's State Bank, Dallas February 5, 1987 Inc., Austin, Texas Austin, Texas CCSB Corporation, Charlevoix County State Bank, Chicago February 6, 1987 Charlevoix, Michigan Charlevoix, Michigan Central Wisconsin Bankshares, Bank of Plover, Chicago February 12, 1987 Inc., Plover, Wisconsin Wausau, Wisconsin Commerce Bancshares, Inc., Bank of Commerce, St. Louis February 9, 1987 Greenwood, Mississippi Greenwood, Mississippi Commerce Union Corporation, First National Bancorp of Atlanta February 3, 1987 Nashville, Tennessee Lewisburg, Inc., Lewisburg, Tennessee Conover Bancorporation, The First National Bank in Chicago February 6, 1987 Creston, Iowa Creston, Creston, Iowa CB&T Bancshares, Inc., First Community Bancshares of Atlanta February 11, 1987 Columbus, Georgia Tifton, Inc., Tifton, Georgia F & M National Corporation, The Middleburg National Bank, Richmond February 17, 1987 Winchester, Virginia Middleburg, Virginia First of America Bank Lewiston State Bank, Chicago February 20, 1987 Corporation, Lewiston, Michigan Kalamazoo, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

316 Federal Reserve Bulletin • April 1987 Section 3—Continued . i • . r, , , . Reserve Effective Applicant Bank(s) , , Bank date First State Bancshares, Inc., Iron County Security Bank, St. Louis February 11, 1987 Farmington, Missouri Ironton, Missouri Founders Bancorp, Inc., Founders Bank of Arizona, San Francisco February 13, 1987 Scottsdale, Arizona Scottsdale, Arizona Hartland Bancshares, Inc., Farmers State Bank of Hartland, Minneapolis February 5, 1987 Hartland, Minnesota Hartland, Minnesota Hawaii National Bancshares, Hawaii National Bank, San Francisco January 14, 1987 Inc., Hololulu, Hawaii Honolulu, Hawaii Key Centurion Bancshares, Union Bancorp of West Virginia, Richmond February 11, 1987 Inc., Inc., Charleston, West Virginia Clarksburg, West Virginia Key Centurion Bancshares, Wayne Bancorp, Inc., Richmond February 11, 1987 Inc., Wayne, West Virginia Charleston, West Virginia NBD Bancorp, Inc., USAmeribancs, Inc., Chicago January 27, 1987 Detroit, Michigan Highland Park, Illinois NBD Valley Corporation, Detroit, Michigan Norwest Corporation, Dial Bank, Minneapolis February 23, 1987 Minneapolis, Minnesota Sioux Falls, South Dakota Pacific National Bancshares, Commerce Bank of Pacific, N.A., St. Louis February 5, 1987 Inc., Pacific, Missouri Chesterfield, Missouri Ranco Bancshares, Inc., Sudan Bancshares, Inc., Dallas February 4, 1987 Spur, Texas Sudan, Texas Southwest Bancshares, Inc., Buffalo Bank, Kansas City November 28, 1986 Hermitage, Missouri Buffalo, Missouri First National Bank, Republic, Missouri Citizens State Bank of Polk County, Bolivar, Missouri Humansville Bank, Humansville, Missouri Turner Bancshares, Inc., Kaw Valley Bancshares, Inc., Kansas City January 22, 1987 Kansas City, Kansas Kansas City, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 317 Section 4 Nonbanking Reserve Effective Applicant Compan y/Acti vity Bank date Banc One Corporation, American Fletcher Mortgage Cleveland January 22, 1987 Columbus, Ohio Company, Inc., Indianapolis, Indiana American Fletcher Financial Services, Inc., Marion, Indiana Deposit Guaranty Corporation, GulfNet, Inc., Atlanta February 24, 1987 Jackson, Mississippi New Orleans, Louisiana First Commerce Corporation, New Orleans, Louisiana First Capital Corporation, Jackson, Mississippi Hibernia Corporation, New Orleans, Louisiana First National Financial Corporation, Vicksburg, Mississippi Eastman National Bankshares, Eastman Company, Kansas City December 24, 1986 Inc., Newkirk, Oklahoma Newkirk, Oklahoma Norwest Corporation, financing, credit-related Minneapolis February 23, 1987 Minneapolis, Minnesota insurance, and data processing Norwest Corporation, home mortgage redemption Minneapolis February 23, 1987 Minneapolis, Minnesota insurance San Diego Financial joint venture reinsurance of group San Francisco February 5, 1987 Corporation, credit insurance risk San Diego, California Sections 3 and 4 . .. Bank(s)/Nonbanking Reserve Effective Company Bank date FNB Corp, First National Bank in Mount Chicago December 30, 1986 Mount Clemens, Michigan Clemens, Mount Clemens, Michigan credit life and disability reinsurance directly related to extensions of credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

318 Federal Reserve Bulletin • April 1987 ORDERS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Effective Applicant Bank(s) date M&I Marshall & Ilsley Bank, M&I Bay View State Bank, Chicago January 30, 1987 Milwaukee, Wisconsin Milwaukee, Wisconsin M&I Silver Spring Bank, Milwaukee, Wisconsin M&I Bank of Greenfield, Greenfield, Wisconsin Orrville Savings Bank, Orrville Interim Bank, Cleveland February 10, 1987 Orrville, Ohio Orrville, Ohio 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. Jones v. Volcker, No. 87-0427 (D.D.C., filed Feb. 19, Optical Coating Laboratory, Inc. v. United States, 1987). No. 288-86C (U.S. Claims Ct., filed May 6, 1986). Bankers Trust New York Corp. v. Board of Governors, CBC, Inc. v. Board of Governors, No. 86-1001 (10th No. 87-1035 (D.C. Cir., filed Jan. 23, 1987). Cir., filed Jan. 2, 1986). Securities Industry Association v. Board of Gover- Howe v. United States, et al., No. 86-889 (U.S. S.Ct. nors, et al, No. 87-1030 (D.C.Cir., filed Jan. 20, filed Dec. 6, 1985). 1987). Myers, et al. v. Federal Reserve Board, No. 85-1427 Grimm v. Board of Governors, No. 87-4006 (2nd Cir., (D. Idaho, filed Nov. 18, 1985). filed Jan. 16, 1987). Souser, et al. v. Volcker, et al., No. 85-C-2370, et al. Independent Insurance Agents of America, et al. v. (D. Colo., filed Nov. 1, 1985). Board of Governors, Nos. 86-1572, 1573, 1576 Podolak v. Volcker, No. C85-0456, et al. (D. Wyo., (D.C. Cir., filed Oct. 24, 1986). filed Oct. 28, 1985). Securities Industry Association v. Board of Gover- Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa, nors, No. 86-2768 (D.D.C., filed Oct. 7, 1986). filed Oct. 22, 1985). Independent Community Bankers Association of Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D. South Dakota v. Board of Governors, No. 86-5373 Minn., filed Oct. 21, 1985). (8th Cir., filed Oct. 3, 1986). Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D. Jenkins v. Board of Governors, No. 86-1419 (D.C. Neb., filed Oct. 16, 1985). Cir., filed July 18, 1986). Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D., Securities Industry Association v. Board of Gover- filed Oct. 8, 1985). nors, No. 86-1412 (D.C. Cir., filed July 14, 1986). Independent Community Bankers Associaton of South Adkins v. Board of Governors, No. 86-3853 (4th Cir., Dakota v. Board of Governors, No. 84-1496 (D.C. filed May 14, 1986). Cir., filed Aug. 7, 1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 319 Urwyler, et al. v. Internal Revenue Service, et al., No. Brown v. United States Congress, et al., No. 84-2887- 85-2877 (9th Cir., filed July 18, 1985). 6(IG) (S.D. Cal., filed Dec. 7, 1984). Wight, et al. v. Internal Revenue Service, et al., No. Melcher v. Federal Open Market Committee, No. 84- 85-2826 (9th Cir., filed July 12, 1985). 1335 (D.D.C., filed Apr. 30, 1984). Florida Bankers Association v. Board of Governors, Florida Bankers Association, et al. v. Board of Gover- No. 84-3883 and No. 84-3884 (11th Cir., filed Feb. nors, Nos. 84-3269, 84-3270 (11th Cir., filed April 15, 1985). 20, 1984). Florida Department of Banking v. Board of Gover- Securities Industry Association v. Board of Governors, No. 84-3831 (11th Cir., filed Feb. 15, 1985), nors, No. 86-5089, et al. (D.C. Cir., filed Oct. 24., and No. 84-3832 (11th Cir., filed Feb. 15, 1985). 1980). Lewis v. Volcker, et al, No. 86-3210 (6th Cir., filed Jan. 14, 1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics A19 All reporting banks A20 Banks in New York City A21 Branches and agencies of foreign banks MONEY STOCK AND BANK CREDIT A22 Gross demand deposits—individuals, partnerships, and corporations A3 Reserves, money stock, liquid assets, and debt measures A4 Reserves of depository institutions, Reserve FINANCIAL MARKETS Bank credit A5 Reserves and borrowings—Depository A23 Commercial paper and bankers dollar institutions acceptances outstanding A5 Selected borrowings in immediately available A23 Prime rate charged by banks on short-term funds—Large member banks business loans A24 Interest rates—money and capital markets A25 Stock market—Selected statistics POLICY INSTRUMENTS A26 Selected financial institutions—Selected assets and liabilities A6 Federal Reserve Bank interest rates A7 Reserve requirements of depository institutions A8 Maximum interest rates payable on time and FEDERAL FINANCE savings deposits at federally insured institutions A9 Federal Reserve open market transactions A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation FEDERAL RESERVE BANKS A30 Gross public debt of U.S. Treasury—Types and ownership A10 Condition and Federal Reserve note statements A31 U.S. government securities dealers— All Maturity distribution of loan and security Transactions holdings A32 U.S. government securities dealers—Positions and financing A33 Federal and federally sponsored credit MONETARY AND CREDIT AGGREGATES agencies—Debt outstanding A12 Aggregate reserves of depository institutions and monetary base SECURITIES MARKETS AND A13 Money stock, liquid assets, and debt measures CORPORATE FINANCE A15 Bank debits and deposit turnover A16 Loans and securities—All commercial banks A34 New security issues—State and local governments and corporations A35 Open-end investment companies—Net sales and COMMERCIAL BANKING INSTITUTIONS asset position A35 Corporate profits and their distribution A17 Major nondeposit funds A18 Assets and liabilities, last-Wednesday-of-month series Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • April 1987 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 A53 U.S. international transactions—Summary A54 U.S. foreign trade 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 1986' 1986' 11998877 Q1 Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. Reserves of depository institutions2 1 Total 13.1 18.0 23.5 21.5 11.5 13.7 32.6 40.5 21.7 2 Required 12.3 19.8 23.9 19.9 12.0 13.4 27.7 32.3 28.8 3 Nonborrowed 19.1 17.9 23.8 22.4 8.4 17.9 35.2 39.3 27.4 4 Monetary base3 8.3 9.0 10.1 10.3 5.7 9.2 13.4 14.1 16.0 Concepts of money, liquid assets, and debt4 5 Ml 8.8 15.5 16.5 17.0 10.7 14.4 18.8 30.5 11.7 6 M2 5.3 9.4 10.6 9.1 7.9 10.6 6.2 10.3 9.3 7 M3 7.7 8.7 9.7 7.9 8.8 7.2 6.0 9.7 8.8 8 L 8.1 7.1 8.2 8.2 8.9 7.8 7.4 9.0 n.a. 9 Debt 15.5 10.3 12.0 11.5 11.9 9.3 12.1 13.5 n.a. Nontransaction components 10 In M25 4.2 7.4 8.6 6.4 6.9 9.3 1.8 3.4 8.4 11 In M3 only6 17.3 6.1 6.4 3.4 12.7 -6.3 5.4 7.0 6.8 Time and savings deposits Commercial banks 12 Savings7 1.9 13.4 25.0 36.9 31.4 40.0 36.2 34.4 41.2 13 Small-denomination time8 3.9 -2.5 -7.5 -10.7 -9.2 -13.2 -13.3 -3.9 .0 14 Large-denomination time9,10 16.0 -3.5 -1.5 .4 -1.2 -6.2 7.1 8.3 15.2 Thrift institutions 15 Savings7 5.9 16.0 21.0 23.0 18.9 25.8 21.7 19.6 29.5 16 Small-denomination time 4.8 .3 -3.4 -6.4 -3.6 -8.2 -8.2 -6.8 -5.9 17 Large-denomination time9 6.6 11.2 2.8 -7.3 -4.5 -9.8 -12.2 -5.4 -10.1 Debt components4 18 Federal 17.0 11.6 14.5 12.6 11.4 9.8 16.0 18.6 n.a. 19 Nonfederal 15.0 9.8 11.2 11.1 12.0 9.2 10.9 11.9 n.a. 20 Total loans and securities at commercial banks" 12.7 4.1 10.6 9.1 13.0 2.2 8.8 17.4 18.4 1. Unless otherwise noted, rates of change are calculated from average commercial banks, money market funds (general purpose and broker/dealer), amounts outstanding in preceding month or quarter. foreign governments and commercial banks, and the U.S. government. Also 2. Figures incorporate adjustments for discontinuities associated with the subtracted is a consolidation adjustment that represents the estimated amount of implementation of the Monetary Control Act and other regulatory changes to demand deposits and vault cash held by thrift institutions to service their time and reserve requirements. To adjust for discontinuities due to changes in reserve savings deposits. requirements on reservable nondeposit liabilities, the sum of such required M3: M2 plus large-denomination time deposits and term RP liabilities (in reserves is subtracted from the actual series. Similarly, in adjusting for discontin- amounts of $100,000 or more) issued by commercial banks and thrift institutions, uities in the monetary base, required clearing balances and adjustments to term Eurodollars held by U.S. residents at foreign branches of U.S. banks compensate for float also are subtracted from the actual series. worldwide and at all banking offices in the United Kingdom and Canada, and 3. The monetary base not adjusted for discontinuities consists of total balances in both taxable and tax-exempt, institution-only money market mutual reserves plus required clearing balances and adjustments to compensate for float funds. Excludes amounts held by depository institutions, the U.S. government, at Federal Reserve Banks plus the currency component of the money stock less money market funds, and foreign banks and official institutions. Also subtracted is the amount of vault cash holdings of thrift institutions that is included in the a consolidation adjustment that represents the estimated amount of overnight RPs currency component of the money stock plus, for institutions not having required and Eurodollars held by institution-only money market mutual funds. reserve balances, the excess of current vault cash over the amount applied to L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term satisfy current reserve requirements. After the introduction of contemporaneous Treasury securities, commercial paper and bankers acceptances, net of money reserve requirements (CRR), currency and vault cash figures are measured over market mutual fund holdings of these assets. the weekly computation period ending Monday. Debt: Debt of domestic nonfinancial sectors consists of outstanding credit Before CRR, all components of the monetary base other than excess reserves market debt of the U.S. government, state and local governments, and private are seasonally adjusted as a whole, rather than by component, and excess nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conreserves are added on a not seasonally adjusted basis. After CRR, the seasonally sumer credit (including bank loans), other bank loans, commercial paper, bankers adjusted series consists of seasonally adjusted total reserves, which include acceptances, and other debt instruments. The source of data on domestic excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt currency component of the money stock plus the remaining items seasonally data are based on monthly averages. Growth rates for debt reflect adjustments for adjusted as a whole. discontinuities over time in the levels of debt presented in other tables. 4. Composition of the money stock measures and debt is as follows: 5. Sum of overnight RPs and Eurodollars, money market fund balances Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults (general purpose and broker/dealer), MMDAs, and savings and small time of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits deposits less the estimated amount of demand deposits and vault cash held by at all commercial banks other than those due to domestic banks, the U.S. thrift institutions to service their time and savings deposit liabilities. government, and foreign banks and official institutions less cash items in the 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, process of collection and Federal Reserve float; and (4) other checkable deposits money market fund balances (institution-only), less a consolidation adjustment (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer that represents the estimated amount of overnight RPs and Eurodollars held by service (ATS) accounts at depository institutions, credit union share draft institution-only money market mutual funds. accounts, and demand deposits at thrift institutions. The currency and demand 7. Excludes MMDAs. deposit components exclude the estimated amount of vault cash and demand 8. Small-denomination time deposits—including retail RPs—are those issued deposits respectively held by thrift institutions to service their OCD liabilities. in amounts of less than $100,000. All IRA and Keogh accounts at commercial M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) banks and thrifts are subtracted from small time deposits. issued by all commercial banks and overnight Eurodollars issued to U.S. residents 9. Large-denomination time deposits are those issued in amounts of $100,000 by foreign branches of U.S. banks worldwide, Money Market Deposit Accounts or more, excluding those booked at international banking facilities. (MMDAs), savings and small-denomination time deposits (time deposits—includ- 10. Large-denomination time deposits at commercial banks less those held by ing retail RPs—in amounts of less than $100,000), and balances in both taxable and money market mutual funds, depository institutions, and foreign banks and tax-exempt general purpose and broker/dealer money market mutual funds. 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 • April 1987 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 1987 1986 1987 Nov. Dec. Jan. Dec. 17 Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 219,190 226,527 230,490 224,476 227,065 232,826 231,444 229,012 227,489 234,201 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 193,043 199,939 202,966 198,668 200,640 203,718 204,343 203,060 201,377 203,376 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 192,284 197,057 199,842 197,512 197,069 197,175 198,500 200,393 200,589 200,250 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 759 2,882 3,124 1,156 3,571 6,543 5,843 2,667 788 3,126 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 7,968 8,129 8,268 7,956 8,064 8,604 8,605 8,036 7,862 8,398 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 7,867 7,829 7,786 7,829 7,829 7,829 7,829 7,829 7,798 7,719 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 101 300 482 127 235 775 776 207 64 679 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 802 829 586 644 554 1,818 698 311 398 979 1111100000 FFFFFllllloooooaaaaattttt 974 1,302 1,712 1,094 1,413 1,764 951 751 1,051 4,324 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 16,403 16,328 16,958 16,113 16,395 16,922 16,847 16,854 16,801 17,123 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,065 11,065 11,060 11,067 11,065 11,064 11,062 11,058 11,059 11,059 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt.................... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 17,516 17,541 17,593 17,538 17,548 17,558 17,569 17,583 17,597 17,611 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 205,069 209,228 207,962 208,350 209,759 211,636 211,199 208,782 206,978 205,945 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 456 435 437 436 433 430 434 433 434 443 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 3,117 3,658 9,824 3,524 3,391 5,340 5,959 4,306 9,302 16,853 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 233 232 226 266 211 237 241 221 217 230 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 2,064 2,230 2,353 2,421 2,273 2,219 2,281 2,619 2,268 2,183 2222200000 OOOOOttttthhhhheeeeerrrrr 522 477 506 539 390 458 850 351 394 460 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 6,345 6,404 6,412 6,406 6,411 6,425 6,163 6,452 6,360 6,451 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 34,984 37,488 36,441 36,158 37,828 39,723 37,967 39,507 35,210 35,323 End-of-month figures Wednesday figures 1986 1987 1986 1987 Nov. Dec. Jan. Dec. 17 Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 221,673 241,760 230,331 230,336 228,775 241,760 229,514 230,747 231,483 234,730 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 196,293 211,316 202,486 200,631 200,491 211,316 202,484 204,608 204,438 204,412 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 194,876 197,625 199,318 197,418 196,742 197,625 198,625 198,183 202,032 201,565 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 1,417 13,691 3,168 3,213 3,749 13,691 3,859 6,425 2,406 2,847 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 8,177 10,143 8,576 8,234 8,127 10,143 8,404 8,206 7,922 8,442 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 7,829 7,829 7,719 7,829 7,829 7,829 7,829 7,829 7,719 7,719 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 348 2,314 857 405 298 2,314 575 377 203 723 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 557 1,565 513 1,965 468 1,565 334 325 382 3,923 3333322222 FFFFFllllloooooaaaaattttt 748 1,261 716 2,974 2,619 1,261 1,510 333 1,823 756 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 15,898 17,475 18,040 16,532 17,070 17,475 16,782 17,275 16,918 17,197 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,070 11,064 11,062 11,068 11,064 11,064 11,058 11,056 11,059 11,059 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt ............... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 17,517 17,567 17,623 17,547 17,557 17,567 17,581 17,595 17,609 17,623 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 206,878 211,995 205,374 208,754 211,051 211,995 210,248 207,867 206,646 205,643 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 445 427 446 437 430 427 433 431 434 443 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 2,529 7,588 15,746 4,536 3,681 7,588 4,070 5,549 15,742 17,744 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 225 287 226 345 177 287 184 226 240 236 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,802 1,812 1,786 1,805 1,812 1,812 1,813 1,814 1,804 1,804 4444422222 OOOOOttttthhhhheeeeerrrrr 425 917 453 471 375 917 300 359 330 517 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 6,480 6,088 7,201 6,257 6,415 6,088 6,275 6,298 6,157 6,303 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 36,494 46,295 32,802 41,364 38,473 46,295 39,848 41,872 33,816 35,740 1. Includes securities loaned—fully guaranteed by U.S government securities stock. Revised data not included in this table are available from the Division of pledged with Federal Reserve Banks—and excludes any securities sold and Research and Statistics, Banking Section. scheduled to be bought back under matched sale-purchase transactions. 3. Excludes required clearing balances and adjustments to compensate for 2. Revised for periods between October 1986 and February 1987. During this float. interval, outstanding gold certificates were inadvertently in excess of the gold NOTE. For amounts of currency and coin held as reserves, see table 1.12. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.12 RESERVES AND BORROWINGS Depository Institutions Millions of dollars Monthly averages8 RRReeessseeerrrvvveee ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1983 1984 1985 1986 Dec. Dec. Dec. June July Aug. Sept. Oct. Nov. Dec. 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss''''' 21,138 21,738 27,620 29,499 30,313 30,165 31,922 32,947 34,803 37,360 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh22222 20,755 22,316 22,956 22,805 23,098 23,451 23,384 23,753 23,543 24,071 33333 VVVVVaaaaauuuuulllllttttt cccccaaaaassssshhhhh uuuuussssseeeeeddddd tttttooooo sssssaaaaatttttiiiiisssssfffffyyyyy rrrrreeeeessssseeeeerrrrrvvvvveeeee rrrrreeeeeqqqqquuuuuiiiiirrrrreeeeemmmmmeeeeennnnntttttsssss33333 ..... 17,908 18,958 20,522 20,439 20,716 21,112 21,267 21,676 21,595 22,199 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 2,847 3,358 2,434 2,366 2,381 2,339 2,117 2,078 1,947 1,872 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss55555 38,894 40,696 48,142 49,938 51,029 51,277 53,189 54,623 56,399 59,560 66666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 38,333 39,843 47,085 49,007 50,118 50,538 52,463 53,877 55,421 58,191 77777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss66666 561 853 1,058 931 910 740 726 746 978 1,369 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 774 3,186 1,318 803 741 872 1,008 841 752 827 99999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 96 113 56 108 116 144 137 99 70 38 1111100000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss77777 2 2,604 499 531 378 465 570 497 418 303 Biweekly averages of daily figures for weeks ending 1986 1987 Oct. 22 Nov. 5 Nov. 19 Dec. 3 Dec. 17 Dec. 31 Jan. 14 Jan. 28 Feb. IIP Feb. 25p 1111111111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss''''' 33,007 33,557 34,945 35,189 36,527 38,659 38,710 35,228 33,026 33,704 1111122222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh22222 23,955 23,208 23,405 23,871 23,485 24,729 24,583 25,028 27,327 25,237 1111133333 VVVVVaaaaauuuuulllllttttt cccccaaaaassssshhhhh uuuuussssseeeeeddddd tttttooooo sssssaaaaatttttiiiiisssssfffffyyyyy rrrrreeeeessssseeeeerrrrrvvvvveeeee rrrrreeeeeqqqqquuuuuiiiiirrrrreeeeemmmmmeeeeennnnntttttsssss33333 ..... 21,914 21,204 21,570 21,806 21,725 22,758 22,815 23,012 24,680 22,834 1111144444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 2,041 2,004 1,835 2,065 1,733 1,971 1,768 2,017 2,647 2,403 1111155555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss55555 54,921 54,921 56,515 56,995 58,251 61,417 61,525 58,239 57,705 56,538 1111166666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 54,170 53,947 55,599 55,865 57,511 59,369 60,680 57,033 56,208 55,513 1111177777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss66666 751 814 916 1,130 740 2,048 845 1,206 1,497 1,025 1111188888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 771 899 811 610 514 1,186 505 689 425 680 1111199999 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnngggggsssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 88 93 68 63 34 37 28 36 56 81 2222200000 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss77777 488 476 437 368 310 282 215 227 265 299 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 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks' Averages of daily figures, in millions of dollars 1986 and 1987 week ending Monday BByy mmaattuurriittyy aanndd ssoouurrccee Dec. 22 Dec. 29 Jan. 5' Jan. 12' Jan. 19' Jan. 26 Feb. 2 Feb. 9 Feb. 16 Federal funds purchased, repurchase agreements, and other selected borrowing in immediately available funds From commercial banks in the United States 1 For one day or under continuing contract 80,932 78,638 91,167 84,218 81,469 78,809 78,255 80,428 76,752 2 For all other maturities 7,790 9,148 8,287 7,915 8,788 8,331 8,052 8,229 8,773 From other depository institutions, foreign banks and foreign official institutions, and United States government agencies 3 For one day or under continuing contract 34,382 31,199 33,292 37,498 35,447 32,459 38,995 39,005 38,912 4 For all other maturities 6,126 7,026 5,951 6,646 7,236 7,220 6,175 5,920 6,599 Repurchase agreements on United States government and federal agency securities in immediately available funds Brokers and nonbank dealers in securities 5 For one day or under continuing contract 9,798 9,972R 12,479 12,948 11,670 13,593 13,194 12,909 13,932 6 For all other maturities 9,099 7,613' 5,942 7,731 9,759 9,611 9,043 9,734 10,371 All other customers 7 For one day or under continuing contract 29,384 26,786 29,064 30,806 29,307 28,291 28,016 27,793 26,707 8 For all other maturities 11,233 14,973' 11,565 10,247 10,097 10,719 10,690 10,431 10,630 MEMO: Federal funds loans and resale agreements in immediately available funds in maturities of one day or under continuing contract 9 To commercial banks in the United States 28,024 30,563 33,044 33,777 30,719 29,211 34,026 31,178 28,125 10 To all other specified customers2 9,076 10,205 10,480 10,424 10,219 11,606 12,671 10,978 12,254 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. 2. Brokers and nonbank dealers in securities; other depository institutions; Digitized for FRASER foreign banks and official institutions; and United States government agencies. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • April 1987 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 2/25/87 date rate 2/25/87 rate 2/25/87 rate 2/25/87 rate Boston SVi 8/21/86 6 5Vi 6 6 '/> 7 71h 8/21/86 New York 8/21/86 8/21/86 Philadelphia 8/22/86 8/22/86 Cleveland 8/21/86 8/21/86 Richmond 8/21/86 8/21/86 Atlanta 8/21/86 8/21/86 Chicago 8/21/86 8/21/86 St. Louis 8/22/86 8/22/86 Minneapolis 8/21/86 8/21/86 Kansas City 8/21/86 8/21/86 Dallas 5^/2 8/21/86 6V2 IVi 8/21/86 San Francisco... 8/21/86 6 5'/2 6 7 8/21/86 Range of rates in recent years3 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. 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 lxh 7'/> Aug. 21 73/4 73/4 11998822—— JJuullyy 20 im-12 11 Vi 1974— Apr. 25 7>/i-8 8 Sept. 22 8 8 23 11 Vi 11 Vi 3 0 Oct. 16 8-8 Vi m AAuugg.. 2 ll-ll'/i 11 Dec. 9 73/4-8 73/4 20 8'/2 3 11 11 16 73/4 73/4 Nov. 1 sl/2-m 91/2 16 10 '/> 10'/! 3 m 9>/i 27 10-10'/2 10 1975— Jan. 6 71/4-73/4 73/4 30 10 10 10 7'/4-73/4 71/4 July 20 10 10 Oct. 12 9Vi-10 9'/! 24 IVA 71/4 Aug. 17 10-10'/! W>/2 13 91/2 91/2 Feb. 5 63/4-7'/4 63/4 20 10'/> 10'/! Nov. 22 9-9 '/2 9 7 63/4 63/4 Sept. 19 lO'/j-ll 11 26 9 9 Mar. 10 61/4—63/4 6'/4 21 11 11 Dec. 14 8Vi-9 9 14 6V4 61/4 Oct. 8 11-12 12 15 8'/2-9 8'/> May 16 6-61/4 6 10 12 12 17 8'/! 8>/2 23 6 6 Feb. 15 12-13 13 11998844—— AApprr.. 9 8'/2-9 9 1976— Jan. 19 51/2-6 51/? 19 13 13 13 9 9 23 SV2 5'/. May 29 12-13 13 Nov. 21 8'/>-9 8>/2 Nov. 22 51/4-51/! 51/4 30 12 12 26 8>/i m 26 51/4 51/4 June 13 11-12 11 Dec. 24 8 8 16 1977— Aug. 30 51/4-53/4 51/4 July 28 10-11 10 11998855—— MMaayy 20 7Vi-8 lX/l 3 1 5'/4-53/4 53/4 29 10 10 24 7'/2 71/2 Sept. 2 53/4 53/4 Sept. 26 11 11 Oct. 26 6 6 Nov. 17 12 12 1986— Mar. 7 i-m 7 Dec. 5 12-13 13 10 1 7 1978— Jan. 9 6-61/> 61/! 8 13 13 AApprr.. 21 6V1-I 6V2 20 6 '/> 6'/2 23 61/2 6'/2 May 11 6W-7 7 May 5 13-14 14 July 11 6 6 12 7 7 14 14 AAuugg.. 21 5'/2-6 5'A July 3 7-7'/t IVA Nov. 2 13-14 13 22 5Vi 5>/2 July 10 IVA 71/4 6 13 13 Dec. 4 12 12 In effect Feb. 25, 1987 5'Vi 5'/! 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 xh 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 and again on Jan. 28, 1987; the 1981, and 1982. rate may be either the same as that for adjustment credit or a fixed rate xh percent In 1980 and 1981, the Federal Reserve applied a surcharge to short-term higher. adjustment credit borrowings by institutions with deposits of $500 million or more 2. Applicable to advances when exceptional circumstances or practices involve that had borrowed in successive weeks or in more than 4 weeks in a calendar only a particular depository institution and to advances when an institution is quarter. A 3 percent surcharge was in effect from Mar, 17, 1980, through May 7, under sustained liquidity pressures. As an alternative, for loans outstanding for 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and into account rates on market sources of funds, but in no case will the rate charged to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective be less than the basic rate plus one percentage point. Where credit provided to a Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for particular depository institution is anticipated to be outstanding for an unusually applying the surcharge was changed from a calendar quarter to a moving 13-week prolonged period and in relatively large amounts, the time period in which each 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 TTyy dd ppee ee pp oo oo ff ss ii dd tt ee ii pp nn oo ttee ssii rr tt vv ,, aall aa nndd Monetary Control Act TTyy dd pp ee ee pp oo oo ff ss ii dd tt ee ii pp nn oo ttee ss rr ii vv tt,, aa ll aa 55 nn dd Monetary Control Act6 Percent Effective date Percent Effective date Net demand2 Net transaction accounts1 7 12/30/76 3 12/30/86 9>/z 12/30/76 1122 1122//3300//8866 $10 million-$100 million 113/4 12/30/76 $100 million-$400 million 123/4 12/30/76 Nonpersonal time deposits9 Over $400 million 16'/4 12/30/76 By original maturity Less than l'/i years 3 10/6/83 Time and savings2>3 11 VVii yyeeaarrss oorr mmoorree 0 10/6/83 Savings 3 3/16/67 Eurocurrency liabilities TTiimmee44 AAllll ttyyppeess 3 11/13/80 $0 million-$5 million, by maturity 30-179 days 3 3/16/67 180 days to 4 years 2'/2 1/8/76 4 years or more 1 10/30/75 Over $5 million, by maturity 30-179 days 6 12/12/74 180 days to 4 years IVi 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 of foreign 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 was established at $2.4 requirements for reserve city banks and for other banks. Reserve cities were million. Effective with the reserve computation period beginning Dec. 31, 1985, designated under a criterion adopted effective Nov. 9, 1972, by which a bank the amount of the exemption was established at $2.6 million. Effective Dec. 30, having net demand deposits of more than $400 million was considered to have the 1986, the amount of the exemption is $2.9 million. In determining the reserve character of business of a reserve city bank. The presence of the head office of requirements of a depository institution, the exemption shall apply in the such a bank constituted designation of that place as a reserve city. Cities in which following order: (1) nonpersonal money market deposit accounts (MMDAs) there were Federal Reserve Banks or branches were also reserve cities. Any described in 12 CFR section 204.2 (d)(2); (2) net NOW accounts (NOW accounts banks having net demand deposits of $400 million or less were considered to have less allowable deductions); (3) net other transaction accounts; and (4) nonpersonal the character of business of banks outside of reserve cities and were permitted to time deposits or Eurocurrency liabilities starting with those with the highest maintain reserves at ratios set for banks not in reserve cities. reserve ratio. With respect to NOW accounts and other transaction accounts, the Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances exemption applies only to such accounts that would be subject to a 3 percent due from domestic banks to their foreign branches and on deposits that foreign reserve requirement. branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent 6. For nonmember banks and thrift institutions that were not members of the respectively. The Regulation D reserve requirement of borrowings from unrelated Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, banks abroad was also reduced to zero from 4 percent. 1987. For banks that were members on or after July 1, 1979, but withdrew on or Effective with the reserve computation period beginning Nov. 16, 1978, before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends domestic deposits of Edge corporations were subject to the same reserve on Oct. 24, 1985. For existing member banks the phase-in period of about three requirements as deposits of member banks. years was completed on Feb. 2, 1984. All new institutions will have a two-year 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as phase-in beginning with the date that they open for business, except for those Christmas and vacation club accounts were subject to the same requirements as institutions that have total reservable liabilities of $50 million or more. savings deposits. 7. Transaction accounts include all deposits on which the account holder is The average reserve requirement on savings and other time deposits before permitted to make withdrawals by negotiable or transferable instruments, payimplementation of the Monetary Control Act had to be at least 3 percent, the ment orders of withdrawal, and telephone and preauthorized transfers (in excess minimum specified by law. of three per month) for the purpose of making payments to third persons or others. 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent However, MMDAs and similar accounts offered by institutions not subject to the was imposed on large time deposits of $100,000 or more, obligations of affiliates, rules that permit no more than six preauthorized, automatic, or other transfers per and ineligible acceptances. This supplementary requirement was eliminated with month of which no more than three can be checks—are not transaction accounts the maintenance period beginning July 24, 1980. (such accounts are savings deposits subject to time deposit reserve requirements.) Effective with the reserve maintenance period beginning Oct. 25, 1979, a 8. The Monetary Control Act of 1980 requires that the amount of transaction marginal reserve requirement of 8 percent was added to managed liabilities in accounts against which the 3 percent reserve requirement applies be modified excess of a base amount. This marginal requirement was increased to 10 percent annually by 80 percent of the percentage increase in transaction accounts held by beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and all depository institutions determined as of June 30 each year. Effective Dec. 31, was eliminated beginning July 24, 1980. Managed liabilities are defined as large 1981, the amount was increased accordingly from $25 million to $26 million; time deposits, Eurodollar borrowings, repurchase agreements against U.S. effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million; government and federal agency securities, federal funds borrowings from non- effective Jan. 1, 1985, to $29.8 million; and effective Dec. 31, 1985, to $31.7 member institutions, and certain other obligations. In general, the base for the million. Effective Dec. 30, 1986, the amount was increased to $36.7 million. marginal reserve requirement was originally the greater of (a) $100 million or (b) 9. In general, nonpersonal time deposits are time deposits, including savings the average amount of the managed liabilities held by a member bank, Edge deposits, that are not transaction accounts and in which a beneficial interest is corporation, or family of U.S. branches and agencies of a foreign bank for the two held by a depositor that is not a natural person. Also included are certain reserve computation periods ending Sept. 26, 1979. For the computation period transferable time deposits held by natural persons, and certain obligations issued beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease to depository institution offices located outside the United States. For details, see in an institution's U.S. office gross loans to foreigners and gross balances due section 204.2 of Regulation D. from foreign offices of other institutions between the base period (Sept. 13-26, 1979) and the week ending Mar. 12, 1980, whichever was greater. For the NOTE. Required reserves must be held in the form of deposits with Federal computation period beginning May 29, 1980, the base was increased by iVi Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a percent above the base used to calculate the marginal reserve in the statement Federal Reserve Bank indirectly on a pass-through basis with certain approved week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was institutions. 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 • April 1987 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions1 Percent per annum Commercial banks mut S u a a v l i s n a g v s i n a g n s d b l a o n a k n s a ( s t s h o r c if i t a t i i n o s n t s it u a t n io d ns)1 In effect Feb. 28, 1987 In effect Feb. 28, 1987 TTTyyypppeee ooofff dddeeepppooosssiiittt Percent Effective date Percent Effective date 3 2 1 N M Sa e o v g n i o n e t y g ia s b m le a rk o e rd t 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 ( ( ( 2 3 4 ) ) ) 12 4 / 1 1 / / 1 4 1 / / / 8 8 8 2 6 6 ( ( ( 3 4 2 ) ) ) 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) 1/1/86 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 5l/i percent. 5. Before Jan. 1, 1986, deposits of less than $1,000 were subject to an interest 3. Before ]an. 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'/t 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 1986 TTyyppee ooff ttrraannssaaccttiioonn 11998833 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec. U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 18,888 20,036 22,214 1,402 867 2,940 861 992288 3,318 55,,442222 2 Gross sales 3,420 8,557 4,118 0 0 0 0 0 0 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 2,400 7,700 3,500 0 0 0 0 0 0 0 Others within 1 year 5 Gross purchases 484 1,126 1,349 0 0 0 0 0 190 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shift 18,887 16,354 19,763 1,152 579 1,715 1,053 974 2,974 1,280 8 Exchange -16,553 -20,840 -17,717 -1,957 -1,253 -4,087 -1,892 -529 -1,810 -1,502 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 0 0 0 00 889933 00 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -15,533 -13,709 -17,459 -1,152 -386 -1,194 -1,053 -969 -2,414 -1,280 13 Exchange 11,641 16,039 13,853 1,957 1,253 2,587 1,892 529 1,510 1,502 5 to 10 years 14 Gross purchases 890 536 458 0 0 0 0 0 223366 0 15 Gross sales 0 300 100 0 0 0 0 0 0 0 16 Maturity shift -2,450 -2,371 -1,857 0 -193 -520 0 -5 -560 0 17 Exchange 2,950 2,750 2,184 0 0 1,000 0 0 200 0 Over 10 years 18 Gross purchases 383 441 293 0 0 0 0 0 115588 00 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -904 -275 -447 0 0 0 0 0 0 0 21 Exchange 1,962 2,052 1,679 0 0 500 0 0 100 0 All maturities 22 Gross purchases 22,540 23,776 26,499 1,402 867 2,940 861 928 4,795 55,,442222 23 Gross sales 3,420 8,857 4,218 0 0 0 0 0 0 0 24 Redemptions 2,487 7,700 3,500 0 0 0 0 0 0 0 Matched transactions 578,591 808,986 866,175 80,219 70,928 60,460 73,179 77,262 60,146 91,404 26 Gross purchases 576,908 810,432 865,968 80,674 69,659 60,011 70,817 81,892 60,232 88,730 Repurchase agreements 27 Gross purchases 105,971 127,933 134,253 5,640 18,657 0 1144,,771177 55,,667700 1166,,888888 4444,,330033 28 Gross sales 108,291 127,690 132,351 5,640 18,657 0 8,403 11,984 15,471 32,028 29 Net change in U.S. government securities 12,631 8,908 20,477 1,857 -403 2,491 4,814 -756 6,298 15,023 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 292 256 162 0 * 90 93 125 0 Repurchase agreements 33 Gross purchases 8,833 11,509 22,183 11,,669911 4,984 00 22,,667788 995522 11,,662222 55,,448888 34 Gross sales 9,213 11,328 20,877 1,691 4,984 0 869 2,761 1,274 3,522 35 Net change in federal agency obligations -672 -76 1,144 0 * -90 1,809 -1,902 223 1,965 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 1,857 -403 22,,440011 66,,662233 --22,,665588 66,,552222 1166,,998888 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 • April 1987 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1986 1987 1986 1987 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 Nov. Dec. Jan. Consolidated condition statement ASSETS 1 Gold certificate account 11,084 11,084 11,084 11,084 11,075 11,084 11,084 11,075 2 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3 485 490 508 530 545 507 485 553 Loans 4 To depository institutions 1,565 334 325 382 3,923 557 1,565 513 5 Other 0 0 0 0 0 0 0 0 Acceptances—Bought outright 6 Held under repurchase agreements 0 00 00 00 00 00 00 00 Federal agency obligations 7 Bought outright 7,829 7,829 7,829 77,,771199 7,719 77,,882299 77,,882299 77,,771199 8 Held under repurchase agreements 2,314 575 377 203 723 348 2,314 857 U.S. government securities Bought outright 9 Bills 103,775 104,775 104,333 108,182 107,715 101,026 103,775 110055,,446688 10 Notes 68,126 68,126 68,126 68,126 68,126 68,126 68,126 68,126 11 Bonds 25,724 25,724 25,724 25,724 25,724 25,724 25,724 25,724 12 Total bought outright1 197,625 198,625 198,183 202,032 201,565 194,876 197,625 199,318 13 Held under repurchase agreements 13,691 3,859 6,425 2,406 2,847 1,417 13,691 3,168 14 Total U.S. government securities 211,316 202,484 204,608 204,438 204,412 196,293 211,316 202,486 15 Total loans and securities 223,024 211,222 213,139 212,742 216,777 205,027 223,024 211,575 16 Items in process of collection 8,938 8,724 6,562 11,976 6,674 4,721 8,938 5,947 17 Bank premises 661 662 661 663 660 654 661 665 Other assets 18 Denominated in foreign currencies2 9,475 9,439 9,446 9,460 9,465 9,179 9,475 10,276 19 All other3 7,339 6,681 7,168 6,795 7,072 6,065 7,339 7,099 20 Total assets 266,024 253,320 253,586 258,268 257,286 242,255 266,024 252,208 LIABILITIES 21 Federal Reserve notes 195,360 193,616 191,239 190,026 189,024 190,327 195,360 188,763 Deposits 22 To depository institutions 48,107 41,661 43,686 35,620 37,544 38,296 48,107 3344,,558888 23 U.S. Treasury—General account 7,588 4,070 5,549 15,742 17,744 2,529 7,588 15,746 24 Foreign—Official accounts 287 184 226 240 236 225 287 226 25 Other 917 300 359 330 517 425 917 453 26 Total deposits 56,899 46,215 49,820 51,932 56,041 41,475 56,899 51,013 77 Deferred credit items 7,677 7,214 6,229 10,153 5,918 3,973 7,677 5,231 28 Other liabilities and accrued dividends4 2,340 2,203 2,249 2,105 2,252 2,242 2,340 2,268 29 Total liabilities 262,276 249,248 249,537 254,216 253,235 238,017 262,276 247,275 CAPITAL ACCOUNTS 30 Capital paid in 1,874 1,875 1,874 1,876 1,877 1,860 1,874 1,877 31 1,874 1,873 1,873 1,873 1,874 1,781 1,874 1,873 32 Other capital accounts 0 324 302 303 300 597 0 1,183 33 Total liabilities and capital accounts 266,024 253,320 253,586 258,268 257,286 242,255 266,024 252,208 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 162,381 165,515 163,606 165,049 163,606 164,411 162,381 163,927 Federal Reserve note statement 35 Federal Reserve notes outstanding 231,603 230,980 230,797 231,322 231,326 231,281 231,603 231,694 36 LESS: Held by bank 36,243 37,364 39,558 41,296 42,302 40,954 36,243 42,931 37 Federal Reserve notes, net 195,360 193,616 191,239 190,026 189,024 190,327 195,360 188,763 Collateral held against notes net: 38 Gold certificate account 11,084 11,084 11,084 11,084 11,075 11,084 11,084 11,075 39 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. government and agency securities 179,258 177,514 175,137 173,924 172,931 174,225 179,258 172,670 42 Total collateral 195,360 193,616 191,239 190,026 189,024 190,327 195,360 188,763 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 1987 1986 1987 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 Nov. 28 Dec. 31 Jan. 30 1 Loans—Total 1,565 334 325 382 3,923 557 1,565 513 2 3 W 16 i t d h a i y n s 1 t 5 o d 9 a 0 y d s ays ; 1,55 1 3 2 3331 32 3 2 37 8 4 3,920 3 54 1 5 2 1,55 1 3 2 50 5 8 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 211,316 202,484 204,608 204,438 204,412 196,293 211,316 202,486 10 Within 15 days1 20,480 14,191 16,096 16,494 13,726 7,625 20,480 8,522 11 16 days to 90 days 53,611 50,768 51,124 53,048 53,124 54,077 53,611 57,100 12 91 days to 1 year 62,239 62,539 62,402 59,915 62,581 59,068 62,239 61,883 13 Over 1 year to 5 years 36,469 36,469 36,469 36,484 36,484 37,006 36,469 36,484 14 Over 5 years to 10 years 15,451 15,451 15,451 15,431 15,431 15,451 15,451 15,431 15 Over 10 years 23,066 23,066 23,066 23,066 23,066 23,066 23,066 23,066 16 Federal agency obligations—Total 10,143 8,404 8,206 7,922 8,442 8,177 10,143 8,576 17 Within 15 days1 2,704 825 526 366 907 653 2,704 1,041 18 16 days to 90 days 809 958 954 862 801 851 809 801 19 91 days to 1 year 1,224 1,215 1,220 1,318 1,338 1,376 1,224 1,338 20 Over 1 year to 5 years 3,854 3,854 3,814 3,718 3,733 3,730 3,854 3,733 21 Over 5 years to 10 years 1,178 1,178 1,318 1,300 1,305 1,193 1,178 1,305 22 Over 10 years 374 374 374 358 358 374 374 358 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 • April 1987 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1986 1987 IItteemm DD 1199 ee 88 cc 33 ..'' DD 1199 ee 88 cc 44 // DD 1199 ee 88 cc 55 // DD 1199 ee 88 cc 66 .. June' July' Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS'' 11 TToottaall rreesseerrvveess22 36.16 39.48 45.52 55.64 49.35 50.48 51.32 51.81 52.40 53.82 55.64 56.64 22 NNoonnbboorrrroowweedd rreesseerrvveess 35.38 36.29 44.20 54.81 48.55 49.74 50.45 50.80 51.56 53.07 54.81 56.06 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt33 35.38 38.90 44.70 55.11 49.08 50.12 50.91 51.37 52.06 53.49 55.11 56.29 44 RReeqquuiirreedd rreesseerrvveess 35.59 38.66 44.55 54.27 48.51 49.58 50.58 51.08 51.66' 52.85 54.27 55.58 55 MMoonneettaarryy bbaassee44 185.38 199.15 216.70 238.84' 226.51 228.35 230.60' 231.69' 233.46' 236.07' 238.84' 242.04 Not seasonally adjusted 6 Total reserves2 36.87 40.53 46.75 57.17' 49.11 50.31 50.62 51.55 52.34 54.11 57.17 58.25 7 Nonborrowed reserves 36.09 37.35 45.43 56.34 48.30 49.57 49.75 50.54 51.50 53.36 56.34 57.67 8 Nonborrowed reserves plus extended credit3 36.10 39.95 45.93 56.64 48.83 49.95 50.22' 51.11 52.00 53.77 56.64 57.90 9 Required reserves 36.31 39.71 45.78 55.80 48.27 49.41 49.88 50.82 51.60 53.13 55.80 57.19 10 Monetary base4 188.65 202.29 220.26 243.04 226.91 230.01 230.76 231.51 233.04 236.91 243.04 242.82 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 38.89 40.67 48.05 59.56 49.85 51.02 51.28 53.19 54.62 56.40 59.56 59.67 12 Nonborrowed reserves 38.12 37.48 46.73 58.73 49.04 50.28 50.41 52.18 53.78 55.65 58.73 59.09 13 Nonborrowed reserves plus extended credit3 38.12 40.06 47.32 59.04 49.72 50.68 50.90 52.76 54.15 56.15 59.04 59.32 14 Required reserves 38.33 39.84 47.08 58.19 49.01 50.12 50.54 52.46 53.88 55.42 58.19 58.60 15 Monetary base4 192.26 204.13 223.45 247.71 229.56 232.54 233.32 235.07 237.26 241.27 247.71 246.77 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 1987 1983 1984 1985 1986 Dec/ Dec/ Dec/ Dec/ Oct/ Nov/ Dec/ Jan. Seasonally adjusted 1 Ml 526.9 557.5 627.0 730.5 701.4 712.4 730.5 737.7 7 M2 2,184.6 2,369.1 2,569.6 2,798.2 2,760.4 2,774.6 2,798.2 2,819.4 M3 2,692.8 2,985.7 3,205.6 3,487.7 3,442.9 3,460.2 3,487.7 3,512.7 4 L 3,154.6 3,528.1 3,838.3 4,140.2 4,085.4 4,110.4 4,140.2 n.a. 5 Debt 5,210.1 5,949.8 6,778.6 7,604.4 7,444.7 7,519.8 7,604.4 n.a. Ml components Currency2 148.3 158.5 170.6 183.5 181.2 182.4 183.5 186.0 7 Travelers checks3 4.9 5.2 5.9 6.4 6.4 6.4 6.4 6.5 8 Demand deposits4 242.3 248.3 272.2 308.3 293.4 297.8 308.3 305.1 9 Other checkable deposits5 131.4 145.5 178.3 232.3 220.4 225.9 232.3 240.1 Nontransactions components 10 In M26 1,657.7 1,811.6 1,942.6 2,067.7 2,059.0 2,062.1 2,067.7 2,081.8 11 In M3 only7 508.2 616.6 636.1 689.5 682.5 685.6 689.5 693.2 Savings deposits9 1? Commercial Banks 133.2 122.2 124.6 154.5 145.8 150.2 154.5 115599..77 13 Thrift institutions 173.0 166.6 179.0 211.7 204.6 208.3 211.7 216.9 Small denomination time deposits9 14 Commercial Banks 350.9 386.6 383.9 364.7 370.0 365.9 364.7 364.7 15 Thrift institutions 432.9 498.6 500.3 488.5 494.7 491.3 488.5 486.1 Money market mutual funds 16 General purpose and broker/dealer 138.2 167.5 176.5 207.5 206.9 207.1 207.5 208.9 17 Institution-only 43.2 62.7 65.1 84.1 84.5 84.4 84.1 84.0 Large denomination time deposits10 18 Commercial Banks11 230.0 269.6 284.1 291.9 288.3 290.0 291.9 295.6 19 Thrift institutions 96.2 147.3 152.1 155.1 157.4 155.8 155.1 153.7 Debt components 7.0 Federal debt 1,172.8 1,367.6 1,587.0 1,806.9 1,755.9 1,779.3 1,806.9 n.a. 21 Non-federal debt 4,037.3 4,582.2 5,191.6 5,797.6 5,688.8 5,740.5 5,797.6 n.a. Not seasonally adjusted 22 Ml 538.3 570.3 641.0 746.6 698.9 715.5 746.6 744.4 23 M2 2,191.6 2,378.3 2,580.6 2,811.7 2,756.8 2,776.8 2,811.7 2,829.7 24 M3 2,702.4 2,997.6 3,218.9 3,502.9 3,439.4 3,464.5 3,502.9 3,523.5 25 L 3,163.1 3,538.8 3,850.2 4,153.7 4,079.7 4,113.3 4,153.7 n.a. 26 Debt 5,204.5 5,944.0 6,772.0 7,597.2 7,427.2 7,504.0 7,597.2 n.a. Ml components 27 Currency2 150.6 160.8 173.1 186.2 180.9 183.2 186.2 184.6 78 Travelers checks3 4.6 4.9 5.5 6.0 6.5 6.1 6.0 6.0 79 Demand deposits4 251.0 257.2 282.0 319.5 293.0 300.1 319.5 311.0 30 Other checkable deposits5 132.2 147.4 180.4 235.0 218.5 226.0 235.0 242.8 Nontransactions components 31 M26 1,653.3 1,808.1 1,939.6 2,065.1 2,057.9 2,061.3 2,065.1 2,085.3 32 M3 only7 510.8 619.2 638.3 691.2 682.6 687.7 691.2 693.8 Money market deposit accounts 33 Commercial banks 230.4 267.4 332.5 379.0 372.6 375.9 379.0 381.6 34 Thrift institutions 148.5 150.0 180.7 192.3 191.9 192.7 192.3 192.4 Savings deposits8 35 Commercial Banks 132.2 121.4 123.9 153.8 146.4 150.3 153.8 159.1 36 Thrift institutions 172.4 166.2 178.8 211.7 204.8 209.0 211.7 217.2 Small denomination time deposits9 37 Commercial Banks 351.1 386.7 383.8 364.4 371.3 366.7 364.4 364.4 38 Thrift institutions 433.5 499.6 501.5 489.6 496.1 492.9 489.6 489.1 Money market mutual funds 39 General purpose and broker/dealer 138.2 167.5 176.5 207.5 206.9 207.1 207.5 208.9 40 Institution-only 43.2 62.7 65.1 84.1 84.5 84.4 84.1 84.0 Large denomination time deposits10 41 Commercial Banks11 231.6 271.2 285.6 293.3 289.5 290.8 293.3 296.8 42 Thrift institutions 96.3 147.3 151.9 154.7 157.8 156.0 154.7 154.1 Debt components 43 Federal debt 1,170.2 1,364.7 1,583.7 1,803.3 1,748.6 1,771.7 1,803.3 n.a. 44 Non-federal debt 4,034.3 4,579.2 5,188.3 5,793.9 5,678.6 5,732.3 5,793.9 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • April 1987 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 b> Debt: Debt of domestic nonfinancial sectors consists of outstanding credit money market mutual funds, depository institutions, and foreign banks anc 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. Bank group, or type of customer 1983' 19841 19851 July Aug. Sept. Seasonally adjusted Demand deposits2 1 All insured banks 128,440.8 154,556.0 189,534.1 188,874.2 194,457.3 197,997.9 197,222.5 187,594.4 206,689.6 2 Major New York City banks 57,392.7 70,445.1 91,212.9 91,040.8 92,961.7 95,252.0 95,919.7 96,829.5 95,831.3 3 Other banks 71,048.1 84,110.9 98,321.4 97,833.4 101,495.6 102,745.9 101,302.9 90,764.9 110,858.4 4 ATS-NOW accounts3 1,588.7 1,920.8 2,351.1 2,320.1 2,414.8 2,704.8 2,292.5 2,501.0 2,960.8 5 Savings deposits4 633.1 539.0 410.3 417.4 421.0 428.4 456.5 424.9 533.7 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 434.4 496.5 561.8 556.4 567.6 573.9 569.6 538.2 560.7 7 Major New York City banks 1,843.0 2,168.9 2,460.6 2,417.2 2,437.0 2,519.8 2,493.4 2,513.2 2,251.6 8 Other banks 268.6 301.8 327.4 324.2 333.4 334.5 329.2 292.8 340.0 9 ATS-NOW accounts3 15.8 16.7 16.8 16.8 16.9 18.4 15.2 16.1 18.3 10 Savings deposits4 5.0 4.5 3.1 3.2 3.2 3.1 3.2 2.9 3.5 DEBITS TO Not seasonally adjusted Demand deposits2 11 All insured banks 128,059.1 154,108.4 189,443.3 198,657.9 186,892.9 198,433.5 204,618.4 167,465.5 226,263.1 12 Major New York City banks 57,282.4 70,400.9 91,294.4 96,686.1 88,807.6 96,489.1 98,837.9 85,849.7 106,935.2 13 Other banks 70,776.9 83,707.8 98,149.0 101,971.8 98,085.3 101,944.4 105,780.4 81,615.8 119,327.9 14 ATS-NOW accounts3 1,579.5 1,903.4 2,338.4 2,240.4 2,140.8 2,524.1 2,231.9 2,255.1 2,841.5 15 MMDA5 848.8 1,179.0 1,599.3 1,575.9 1,530.6 1,612.9 1,607.4 1,434.0 2,058.2 16 Savings deposits4 632.9 538.7 404.3 419.9 413.7 414.2 449.2 382.7 503.6 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 433.5 497.4 564.0 587.8 554.7 577.6 593.5 476.4 600.3 18 Major New York City banks 1,838.6 2,191.1 2,494.3 2,620.6 2,421.9 2,603.6 2,656.9 2,225.4 2,483.2 19 Other banks 267.9 301.6 327.9 338.7 326.6 332.6 343.9 260.8 357.4 20 ATS-NOW accounts3 15.7 16.6 16.8 16.3 15.1 17.3 14.9 14.6 17.4 21 MMDA5 3.5 3.8 4.5 4.4 4.2 4.4 4.4 3.8 5.5 22 Savings deposits4 5.0 4.5 3.1 3.2 3.1 3.0 3.2 2.6 3.3 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 • April 1987 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1986 1987 CCaatteeggoorryy Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec/ Jan. Seasonally adjusted 1 Total loans and securities2 1,935.5 1,944.6 1,947.9 1,957.5 1,963.7 1,985.0 2,007.7 2,029.6 2,034.0 2,049.0 2,078.7 2,110.6 2 U.S. government securities 273.6 269.5 270.0 274.1 274.8 285.4 290.9 294.3 299.6 304.8 309.1 313.9 3 Other securities 188.1 183.3 182.1 181.9 183.6 186.1 192.3 200.7 196.7 194.8 193.4 188.7 4 Total loans and leases2 1,473.7 1,491.8 1,495.8 1,501.5 1,505.3 1,513.4 1,524.5 1,534.7 1,537.7 1,549.5 1,576.2 1,608.0 5 Commercial and industrial 502.4 506.1 507.8 506.7 508.7 508.7 510.4 512.1 514.1 520.3 536.9 551.2 6 Bankers acceptances held3.. 4.8 4.9 5.2 5.6 6.1 5.8 5.9 6.3 6.4 6.1 5.9 66..33 7 Other commercial and industrial 497.6 501.2 502.6 501.0 502.6 502.8 504.4 505.8 507.8 514.1 531.0 544.9 8 U.S. addressees4 488.4 491.3 492.7 490.6 493.1 493.8 495.4 496.9 499.0 505.4 522.5 535.9 9 Non-U.S. addressees4 9.2 9.9 9.8 10.5 9.5 9.0 9.1 8.9 8.8 8.7 8.5 9.0 10 Real estate 431.4 436.1 440.7 446.4 450.7 455.9 461.4 465.9 470.8 476.6 486.4 494.5 11 Individual 297.4 299.5 301.1 303.0 304.5 305.6 306.9 308.8 309.8 311.1 313.0 314.2 12 Security 43.4 50.4 48.0 46.4 42.5 44.8 44.2 44.4 39.5 40.1 3377..33 3388..66 13 Nonbank financial institutions 31.8 32.2 32.3 33.3 34.7 34.2 34.4 35.1 35.7 35.3 35.6 35.8 14 Agricultural 35.4 34.9 34.6 34.1 33.7 33.3 33.3 33.2 33.1 33.2 33.2 3333..22 15 State and political subdivisions 60.3 60.2 59.8 59.5 59.4 59.0 59.4 59.4 58.5 57.8 57.0 57.1 16 Foreign banks 9.2 9.2 9.2 9.3 9.5 9.5 9.3 9.4 9.1 9.0 9.6 9.8 17 Foreign official institutions ... 7.0 6.8 5.3 5.1 6.4 6.5 6.5 6.4 6.4 6.2 6.2 6.3 18 Lease financing receivables... 19.6 19.8 19.9 19.8 20.0 20.0 20.2 20.4 20.4 21.0 21.7 21.7 19 All other loans 35.8 36.6 37.3 37.9 35.4 35.8r 38.5 39.7 40.3 38.9 39.3 45.6 Not seasonally adjusted 20 Total loans and securities2 1,932.4 1,944.1 1,950.5 1,956.7 1,965.4 1,981.4 1,999.8 2,027.3 2,029.2 2,048.6 2,092.6 2,116.2 21 U.S. government securities 275.0 273.2 274.0 275.4 276.2 285.3 289.1 292.6 295.2 302.5 306.8 313.4 2 2 3 2 T O o th ta e l r l s o e a c n u s r i a t n ie d s leases2 1,4 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 1,5 1 1 8 2 3 . . 1 9 1,5 1 1 9 8 2 . . 7 1 1, 2 5 0 3 0 4 . . 7 0 1,5 1 3 9 7 6 . . 7 3 1,5 1 5 9 1 4 . . 3 8 1,5 1 9 9 1 4 . . 2 6 1,6 1 1 8 2 9 . . 9 9 2 2 4 5 Co B m a m nk e e rc rs ia l a c a c n e d p t i a n n d c u es s tr h i e a l l d . 3 . . . 50 4 0 . . 7 1 50 5 6 . . 0 9 51 5 0 . . 2 0 50 5 8 . . 5 5 50 6 9 . . 0 4 50 6 8 . . 0 6 50 5 8 . . 9 3 51 6 1 . . 1 2 51 6 3 . . 2 1 51 6 9 . . 2 3 53 6 9 . . 3 4 55 6 0 . . 2 8 26 Other commercial and 2 2 7 8 N U o . i S n n . d - U u ad s . t S d r . r i a e l a s s d e d e r s e 4 s sees4... 4 4 9 8 9 5 6 . . . 1 4 3 4 5 9 0 2 9 1 . . . 7 2 9 4 5 9 0 9 5 4 . . . 5 4 9 4 5 9 0 9 3 3 . . . 7 3 0 5 4 0 9 9 3 4 . . . 4 4 0 4 5 9 0 9 3 2 . . . 3 3 6 4 5 9 0 9 3 2 . . . 4 1 4 4 5 9 0 9 5 5 . . . 3 2 9 4 5 9 0 9 7 6 . . . 2 9 8 r 5 50 1 9 3 3 . . . 2 8 0 5 52 3 8 4 3 . . . 4 8 2 5 5 4 3 8 4 5 . . . 9 5 6 29 Real estate 430.6 434.9 439.5 445.2 450.2 455.8 461.7 466.9 472.2 478.1 487.4 494.7 30 Individual 296.3 296.8 298.6 301.1 303.1 304.9 307.2 310.2 311.4 312.4 316.5 316.7 31 Security 42.6 49.5 48.5 45.6 42.5 43.0 41.3 41.8 38.7 41.3 42.2 41.0 32 Nonbank financial institutions 31.2 31.6 32.2 33.1 34.6 34.3 34.6 35.3 35.5 35.4 36.6 36.1 33 Agricultural 34.5 34.0 33.9 34.1 34.2 34.1 34.1 33.9 33.6 33.2 32.9 32.6 34 State and political subdivisions 60.3 60.2 59.8 59.5 59.4 59.0 59.4 59.4 58.5 57.8 57.0 57.1 35 Foreign banks 9.3 9.1 9.0 9.1 9.2 9.4 9.1 9.4 9.3 9.3 10.1 10.0 36 Foreign official institutions .. 7.0 6.8 5.3 5.1 6.4 6.5 6.5 6.4 6.4 6.2 6.2 6.3 37 Lease financing receivables.. 19.8 19.8 19.9 19.9 20.0 20.0 20.1 20.3 20.3 20.9 21.7 21.9 38 All other loans 36.6 37.5 38.1 37.9 37.7 36.5 36.3 39.1 38.9 37.4 41.3 45.8 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 19862' 1987 SSoouurrccee Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Total nondeposit funds 1 Seasonally adjusted3 132.3 142.1 135.3 137.4 134.3 136.0 137.8 142.4 140.0 114433..22 114433..44 115522..22 2 Not seasonally adjusted 134.8 144.3 135.6 138.5 132.1 132.9 137.7 141.7 139.1 144.7 143.5 151.7 Federal funds, RPs, and other borrowings from nonbanks4 3 Seasonally adjusted 152.9 160.8 160.8 158.8 158.0 165.5 167.3 166.7 167.3 116655..00 116622..44 116677..33 4 Not seasonally adjusted 155.3 163.0 161.0 159.9 155.7 162.3 167.2 166.0 166.4 166.5 162.5 166.8 5 Net balances due to foreign-related institutions, not seasonally adjusted -20.5 -18.7 -25.5 -21.3 -23.7 -29.5 --2299..55 --2244..33 --2277..33 --2211..88 --1199..00 --1155..11 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted5 -25.8 -26.5 -30.2 -29.3 -30.5 -33.8 -31.2 -29.2 -31.9 -28.7 -30.7 --2255..66 7 Gross due from balances 69.4 71.7 75.2 72.9 72.2 73.9 75.2 74.0 73.5 70.8 73.4 70.8 8 Gross due to balances 43.6 45.2 45.1 43.6 41.7 40.1 44.0 44.8 41.6 42.1 42.7 45.2 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted6 5.2 7.8 4.7 8.0 6.8 4.3 11..77 4.9 44..77 6.9 1111..77 1100..55 10 Gross due from balances 60.0 60.6 62.5 60.0 62.8 64.2 66.3 67.9 68.3 68.7 70.8 74.6 11 Gross due to balances 65.2 68.4 67.2 67.9 69.6 68.6 67.9 72.7 72.9 75.7 82.5 85.1 Security RP borrowings 12 Seasonally adjusted' 89.7 90.0 90.1 89.9 90.2 95.1 95.8 9955..77 9966..55 9955..99 9955..44 9977..55 13 Not seasonally adjusted 92.2 92.1 90.4 91.0 87.9 92.0 95.7 95.0 95.6 97.4 95.5 97.0 U.S. Treasury demand balances8 14 Seasonally adjusted 20.1 16.2 17.0 19.1 17.7 15.4 1144..55 16.5 1177..11 2233..22 2211..22 2211..33 15 Not seasonally adjusted 24.2 15.7 17.8 21.8 16.1 16.8 11.1 18.2 15.3 15.3 19.2 27.5 Time deposits, $100,000 or more9 16 Seasonally adjusted 349.5 346.5 346.3 341.9 341.8 341.1 344.3 344.2 334422..77 334433..33 334455..77 335500..22 17 Not seasonally adjusted 350.9 348.5 343.6 340.5 339.2 338.3 344.0 345.5 343.8 344.1 347.1 351.4 1. Commercial banks are those in the 50 states and the District of Columbia 4. Other borrowings are borrowings on any instrument, such as a promissory with national or state charters plus agencies and branches of foreign banks, New note or due bill, given for the purpose of borrowing money for the banking York investment companies majority owned by foreign banks, and Edge Act business. This includes borrowings from Federal Reserve Banks and from foreign corporations owned by domestically chartered and foreign banks. banks, term federal funds, overdrawn due from bank balances, loan RPs, and 2. Data for lines 1-4 and 12-17 have been revised in light of benchmarking and participations in pooled loans. revised seasonal adjustment. 5. Averages of daily figures for member and nonmember banks. 3. Includes seasonally adjusted federal funds, RPs, and other borrowings from 6. Averages of daily data. nonbanks and not seasonally adjusted net Eurodollars. Includes averages of 7. Based on daily average data reported by 122 large banks. Wednesday data for domestically chartered banks and averages of current and 8. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at previous month-end data for foreign-related institutions. commercial banks. Averages of daily data. 9. Averages of Wednesday figures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • April 1987 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars 1986 1987 AAccccoouunntt Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. ALL COMMERCIAL BANKING INSTITUTIONS1 1 Loans and securities 2,091.4 2,113.4 2,101.3 2,105.5 2,134.0 2,154.4 2,171.1 2,173.2 2,218.1 2,303.7 2,276.4 2 Investment securities 427.2 429.5 430.9 432.6 445.7 455.1 464.6 467.4 470.4 474.8 477.3 3 U.S. government securities 253.7 255.8 257.7 259.6 269.6 272.2 275.9 281.8 286.2 291.7 295.3 4 Other 173.5 173.6 173.2 173.0 176.1 183.0 188.7 185.6 184.3 183.1 182.0 5 Trading account assets 30.1 27.8 27.0 27.4 28.7 29.3 27.9 26.0 28.1 27.8 26.4 6 Total loans 1,634.2 1,656.1 1,643.5 1,645.5 1,659.6 1,670.0 1,678.5 1,679.9 1,719.5 1,801.1 1,772.7 7 Interbank loans 146.0 155.7 146.2 139.2 148.6 149.4 145.3 146.8 161.0 173.4 166.0 8 Loans excluding interbank 1,488.1 1,500.4 1,497.2 1,506.3 1,511.0 1,520.6 1,533.2 1,533.1 1,558.6 1,627.7 1,606.7 9 Commercial and industrial 508.5 510.5 506.2 512.3 507.3 510.1 512.1 512.6 520.2 563.5 546.9 10 Real estate 435.9 441.7 446.4 451.4 457.6 463.2 467.7 473.5 479.3 494.8 496.9 11 Individual 296.9 300.4 301.1 304.0 305.6 308.4 310.5 311.8 312.8 319.6 316.0 12 All other 246.9 247.8 243.6 238.7 240.5 238.8 242.9 235.2 246.3 249.9 246.9 13 Total cash assets 198.1 209.9 221.0 196.0 206.2 205.8 196.6 200.4 223.9 270.7 211.2 14 Reserves with Federal Reserve Banks 29.1 25.5 30.2 27.9 28.2 27.9 27.8 31.2 31.7 40.8 32.9 IS Cash in vault 21.8 22.3 23.9 23.0 23.3 23.7 22.9 23.5 22.2 25.7 23.6 16 Cash items in process of collection ... 68.8 80.7 84.6 67.3 72.1 73.5 66.3 66.2 86.5 111.2 74.4 17 Demand balances at U.S. depository institutions 31.1 34.7 36.8 32.0 33.8 33.6 32.3 32.6 37.7 42.7 33.4 18 Other cash assets 47.4 46.7 45.5 45.8 48.7 47.1 47.4 46.9 45.8 50.4 46.7 19 Other assets 195.3 207.0 195.9 196.6 196.6 196.2 200.8 198.2 201.9 225.3 199.9 20 Total assets/total liabilities and capital ... 2,484.8 2,530.3 2,518.3 2,498.1 2,536.7 2,556.4 2,568.4 2,571.8 2,643.9 2,799.7 2,687.5 21 Deposits 1,762.8 1,798.4 1,807.4 1,791.9 1,819.5 1,833.6 1,830.8 1,843.7 1,896.8 2,014.6 1,894.5 22 Transaction deposits 502.5 540.7 542.7 523.3 540.0 544.2 537.4 547.5 594.8 689.6 576.2 23 Savings deposits 462.0 467.8 477.3 482.4 490.8 497.7 504.4 514.8 521.7 533.9 531.1 24 Time deposits 798.3 789.9 787.5 786.3 788.7 791.7 789.0 781.4 780.3 791.1 787.3 23 Borrowings 373.1 390.7 367.4 366.8 379.2 377.3 388.1 380.0 394.1 410.6 429.3 26 Other liabilities 179.3 170.4 173.1 168.5 168.6 174.7 177.5 175.1 180.2 199.8 188.2 27 Residual (assets less liabilities) 169.7 170.8 170.3 170.9 169.4 170.8 172.1 173.1 172.8 174.8 175.4 MEMO 28 U.S. government securities (including trading account) 273.7 274.0 275.1 276.5 288.8 289.8 292.5 298.5 303.6 307.5 313.7 29 Other securities (including trading account) 183.6 183.3 182.8 183.5 185.6 194.6 200.0 194.8 195.0 195.0 190.0 DOMESTICALLY CHARTERED COMMERCIAL BANKS2 30 Loans and securities 1,972.4 1,993.3 1,985.3 1,990.0 2,014.0 2,029.4 2,039.8 2,046.2 2,090.2 2,150.5 2,132.1 31 Investment securities 416.0 416.1 417.1 419.6 432.5 440.2 448.0 450.6 454.4 456.8 459.0 32 U.S. government securities 248.5 248.8 250.2 253.1 263.2 264.5 267.5 272.9 278.1 282.4 286.2 33 Other 167.5 167.2 166.9 166.5 169.4 175.7 180.5 177.8 176.4 174.4 172.8 34 Trading account assets 30.1 27.8 27.0 27.4 28.7 29.3 27.9 26.0 28.1 27.8 26.4 35 Total loans 1,526.3 1,549.4 1,541.3 1,543.0 1,552.8 1,559.8 1,564.0 1,569.6 1,607.6 1,665.9 1,646.7 36 Interbank loans 120.2 129.3 123.3 117.3 122.7 123.1 118.9 122.5 137.8 142.5 138.3 37 Loans excluding interbank 1,406.1 1,420.1 1,418.0 1,425.8 1,430.1 1,436.7 1,445.1 1,447.1 1,469.9 1,523.4 1,508.4 38 Commercial and industrial 448.2 452.3 449.8 452.5 448.4 448.4 447.2 447.2 453.9 486.7 474.3 39 Real estate 430.7 436.3 440.7 445.8 451.9 457.3 461.7 467.6 472.7 487.8 490.4 40 Individual 296.6 300.1 300.8 303.6 305.3 308.1 310.1 311.5 312.4 319.1 315.7 41 All other 230.7 231.4 226.7 223.9 224.6 222.9 226.1 220.8 230.8 229.8 228.1 42 Total cash assets 182.7 194.3 205.8 180.1 187.8 189.3 180.4 183.1 207.6 251.3 194.1 43 Reserves with Federal Reserve Banks 28.4 24.4 28.7 26.3 27.2 26.6 26.9 29.7 29.8 39.6 31.2 44 Cash in vault 21.7 22.2 23.8 22.9 23.2 23.7 22.8 23.4 22.2 25.6 23.6 45 Cash items in process of collection ... 68.4 80.3 84.2 66.7 71.7 73.1 65.9 65.5 86.1 110.9 74.0 46 Demand balances at U.S. depository institutions 29.4 33.0 35.1 30.2 32.0 31.9 30.5 30.9 35.8 40.3 31.7 47 Other cash assets 34.7 34.3 34.0 34.0 33.6 34.1 34.4 33.6 33.7 34.8 33.7 48 Other assets 144.0 150.3 142.8 144.1 143.2 141.7 145.5 142.7 143.0 166.0 142.9 49 Total assets/total liabilities and capital ... 2,299.1 2,337.9 2,334.0 2,314.1 2,345.0 2,360.3 2,365.7 2,372.1 2,440.8 2,567.7 2,469.1 50 Deposits 1,713.1 1,749.1 1,758.7 1,741.4 1,768.0 1,779.9 1,775.2 1,788.6 1,840.5 1,952.8 1,836.3 51 Transaction deposits 495.0 533.1 535.3 515.5 532.1 536.1 529.3 539.7 586.8 680.8 567.9 52 Savings deposits 460.1 465.8 475.2 480.3 488.7 495.5 502.1 512.5 519.2 531.4 528.6 53 Time deposits 758.1 750.1 748.1 745.6 747.2 748.2 743.8 736.5 734.5 740.6 739.7 54 Borrowings 304.8 309.1 294.2 293.5 300.5 295.5 305.2 299.3 312.6 321.6 340.3 55 Other liabilities 114.6 112.0 113.9 111.5 110.3 117.3 116.4 114.2 118.0 121.7 120.2 56 Residual (assets less liabilities) 166.5 167.7 167.2 167.8 166.2 167.7 168.9 169.9 169.6 171.6 172.3 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 1987 Dec. 3 Dec. 10 Dec. 17 Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan. 21 1 Cash and balances due from depository institutions 107,197' 105,565' 112,948' 107,969' 134,935 107,814 108,955 112,965 2 Total loans, leases and securities, net 996,381' 984,060' 995,980' 1,009,141' 1,019,096 1,020,976 1,015,867 1,013,577 3 U.S. Treasury and government agency 118,357 115,870 114,182 115,153 113,806 114,702 114,806 115,483 4 Trading account 25,356 23,497 21,815 21,424 19,896 18,975 19,447 20,966 5 Investment account, by maturity 93,001 92,373 92,367 93,730 93,909 95,727 95,359 94,518 6 One year or less 17,70C 17,626' 17,629' 17,587' 17,816 18,939 18,693 18,422 7 Over one through five years 42,314 41,614 41,690 42,116' 42,293 42,501 41,957 41,511 8 Over five years 32,987' 33,133' 33,048' 34,027' 33,800 34,287 34,709 34,585 9 Other securities 71,458' 71,037' 70,685r 71,774' 72,190 69,464 68,454 68,150 10 Trading account 5,373 5,106 5,395 5,967 7,227 4,496 3,716 3,539 11 Investment account 66,085r 65,931' 65,29C 65,808' 64,963 64,968 64,738 64,611 12 States and political subdivisions, by maturity.. 56,301 56,128 5555,,779922 55,922 54,659 54,159 53,967 53,798 13 One year or less 8,920 8,960 88,,889988'' 8,707 8,140 7,572 7,470 7,515 14 Over one year 47,381 47,167 46,894 47,216 46,519 46,587 46,497 46,283 15 Other bonds, corporate stocks, and securities . 9,784' 9,803' 9,497r 9,885' 10,304 10,810 10,771 10,812 16 Other trading account assets 6,256 6,059 5,371 4,984 5,179 4,337 3,766 4,751 17 Federal funds sold1 61,764 57,038 61,900 57,710 51,363 61,039 63,779 58,961 18 To commercial banks 39,434 33,204 39,911 36,223 31,372 40,056 41,060 36,185 19 To nonbank brokers and dealers in securities 15,136 15,869 14,806 14,697 13,858 13,435 14,781 15,364 20 To others 7,194 7,966 7,182 6,791 6,133 7,548 7,938 7,412 21 Other loans and leases, gross2 760,551 756,064 765,830 781,336 798,314 793,731 787,424 788,569 22 Other loans, gross2 743,020 738,404 748,196 763,536 780,374 775,738 769,455 770,514 23 Commercial and industrial2 266,275' 265,738' 268,849' 275,999' 289,127 286,811 283,242 281,315 24 Bankers acceptances and commercial paper . 2,725 2,452 2,582 2,464 2,426 2,357 2,381 2,539 25 All other 263,550' 263,286' 266,267' 273,535' 286,701 284,454 280,861 278,776 26 U.S. addressees 259,702' 259,424' 262,438' 269,640' 282,922 280,724 277,165 274,921 27 Non-U.S. addressees 3,847 3,861 3,830 3,895 3,779 3,730 3,696 3,855 28 Real estate loans2 203,786' 204,797' 206,324' 207,306' 209,814 213,475 214,203 214,584 29 To individuals for personal expenditures 142,557 142,970 143,777 145,014 145,397 145,013 144,401 143,885 30 To depository and financial institutions 50,010 48,999' 49,876 53,511 56,176 53,627 52,733 54,594 31 Commercial banks in the United States 17,683 16,975 18,118 20,266 20,502 20,503 20,572 20,979 32 Banks in foreign countries 5,644 5,447 5,098 6,681 6,696 5,744 5,470 6,952 33 Nonbank depository and other financial institutions 26,683 26,576' 26,659 26,564 28,978 27,380 26,692 26,663 34 For purchasing and carrying securities 16,991 15,131 17,257 17,962 14,368 14,163 14,093 14,158 35 To finance agricultural production 5,669 5,598 5,592 5,611 5,784 5,616 5,503 5,375 36 To states and political subdivisions 35,104 34,819 34,684 34,724 34,525 34,717 34,920 34,845 37 To foreign governments and official institutions .... 3,305 3,128 3,042 2,982 3,347 3,130 3,210 3,368 38 AH other 19,323 17,223' 18,793 20,426 21,836 19,185 17,149 18,388 39 Lease financing receivables 17,531 17,661 17,634 17,800 17,939 17,993 17,970 18,056 40 LESS: Unearned income 4,988 5,007 5,009 5,041 5,031 5,056 5,069 5,063 41 Loan and lease reserve2 17,016 17,001 16,978 16,777 16,725 17,242 17,293 17,275 42 Other loans and leases, net2 738,546 734,055 743,842 759,518 776,558 771,432 765,062 766,232 43 All other assets 129,207' 127,172' 130,888' 132,081' 141,936 130,977 126,522 124,014 44 Total assets 1,232,785 1,216,798' 1,239,816 1,249,191 1,295,966 1,259,766 1,251,343 1,250,555 45 Demand deposits 242,311 235,205' 244,491 251,829 289,619 245,676 233,105 241,012 46 Individuals, partnerships, and corporations 183,584 181,457 187,437 191,677' 222,598 191,032 182,577 183,217 States and political subdivisions 5,425 5,702 6,138 5,956 6,975 5,905 5,557 6,071 U.S. government 3,919 2,425 1,491 3,022 1,815 2,650 3,158 4,218 Depository institutions in United States 27,979 27,049' 28,735 30,080' 33,985 27,152 25,290 28,468 Banks in foreign countries 6,825 6,988 5,714 7,298 7,767 7,355 5,860 8,331 Foreign governments and official institutions 914 707 758 948 887 803 743 891 Certified and officers' checks 13,664 10,877 14,218 12,848 15,592 10,780 9,920 9,816 53 Transaction balances other than demand deposits 55,286 54,910 55,829 56,954 60,137 61,718 60,227 58,796 54 Nontransaction balances 500,998 502,109 501,358 504,161 509,133 517,245 516,675 516,674 55 Individuals, partnerships and corporations 463,08C 464,128' 463,460' 466,169' 470,730 479,157 478,055 478,443 56 States and political subdivisions 26,300' 26,261' 25,966' 25,73C 25,813 25,756 26,250 26,152 57 U.S. government 794 784 752 754 762 780 783 671 58 Depository institutions in the United States 9,683 9,855 10,090 10,45c 10,792 10,554 10,520 10,349 59 Foreign governments, official institutions and banks ... 1,140 1,081 1,090 1,058 1,035 998 1,067 1,058 60 Liabilities for borrowed money 263,922 253,061 265,774 259,041 261,730 267,566 270,484 262,372 61 Borrowings from Federal Reserve Banks 373 0 1,439 0 443 0 0 5 62 Treasury tax-and-loan notes 7,355 2,102 15,253 17,578 18,550 17,958 18,993 19,629 63 All other liabilities for borrowed money3 256,194 250,959 249,082 241,462 242,736 249,608 251,491 242,738 64 Other liabilities and subordinated note and debentures. 85,435 86,191 87,412 92,428 89,674 81,360 83,974 84,432 65 Total liabilities 1,147,951 1,131,476' 1,154,864 1,164,413 1,210,292 1,173,565 1,164,465 1,163,287 66 Residual (total assets minus total liabilities)4 84,834 85,322 84,952 84,778 85,674 86,201 86,878 87,268 MEMO 67 Total loans and leases (gross) and investments adjusted5. 961,268' 955,890' 959,939' 974,47C 988,977 982,714 976,598 978,751 68 Total loans and leases (gross) adjusted2-5 765,198 762,924 769,701 782,557 797,803 794,211 789,572 790,366 69 Time deposits in amounts of $100,000 or more 151,357 151,902' 151,273' 153,832' 154,365 154,891 155,666 156,149 70 Loans sold outright to affiliates—total6 1,631 1,713 1,756 1,654' 1,598 1,623 1,748 1,764 71 Commercial and industrial 950 1,003 1,004 1,088 1,013 1,053 1,182 1,190 72 Other 680 710 752 566' 585 570 566 574 73 Nontransaction savings deposits (including MMDAs) 222,687 223,531 223,718 223,850 227,984 232,253 231,245 231,024 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 • April 1987 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures except as noted 1986 1987 AAccccoouunntt Dec. 3 Dec. 10 Dec. 17 Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 1 Cash and balances due from depository institutions 26,092 28,839 30,069 25,957 32,884 23,241 29,606 26,664 32,952 2 Total loans, leases and securities, net1 216,340 212,332 216,971 219,590 219,526 220,193 220,232 220,952 224,049 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 14,172 13,809 13,580 13,500 13,529 13,748 13,182 13,179 13,335 6 One year or less 1,503 1,437 1,415 1,419 1,423 1,850 1,569 1,583 1,357 7 Over one through five years 5,689 5,355 5,404 5,395 5,330 4,916 4,637 4,631 4,440 8 Over five years 6,980 7,016 6,761 6,686 6,775 6,982 6,976 6,965 7,538 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 16,213 16,167 15,879 16,447 16,484 16,230 16,097 16,093 16,154 12 States and political subdivisions, by maturity 14,174 14,162 14,176 14,648 14,616 14,050 13,981 13,960 13,940 13 One year or less 1,793 1,781 1,809 1,787 1,696 1,448 1,425 1,597 1,587 14 Over one year 12,381 12,380 12,368 12,862 12,920 12,602 12,556 12,363 12,353 15 Other bonds, corporate stocks and securities 2,039 2,006 1,703 1,799 1,868 2,180 2,116 2,133 2,214 16 Other trading account assets2 0 0 0 0 0 0 0 0 0 Loans and leases 17 Federal funds sold3 25,740 25,711 27,740 24,440 20,477 21,706 25,000 24,095 26,680 18 To commercial banks 12,308 11,183 14,556 11,797 10,054 9,450 12,162 10,773 10,076 19 To nonbank brokers and dealers in securities 7,549 8,034 7,459 7,267 5,858 6,184 6,759 7,640 8,583 20 To others 5,883 6,494 5,725 5,376 4,565 6,072 6,079 5,682 8,022 21 Other loans and leases, gross 166,675 163,109 166,228 171,608 175,324 175,035 172,491 174,112 174,402 22 Other loans, gross 162,378 158,833 161,936 167,307 171,026 170,734 168,205 169,805 170,081 23 Commercial and industrial 62,287 61,764 62,323 63,980 67,561 67,488 65,647 64,796 65,909 24 Bankers acceptances and commercial paper 956 680 742 548 544 615 590 779 768 25 All other 61,331 61,084 61,582 63,432 67,016 66,873 65,056 64,017 65,141 26 U.S. addressees 60,978 60,708 61,214 63,044 66,585 66,438 64,598 63,490 64,686 27 Non-U.S. addressees 352 375 368 388 432 436 459 527 455 28 Real estate loans 35,406 35,727 35,994 36,557 37,504 38,244 38,454 38,540 38,541 29 To individuals for personal expenditures 19,996 20,116 20,208 20,483 20,750 20,989 20,829 20,803 20,695 30 To depository and financial institutions 18,787 18,033 18,891 20,479 21,610 22,025 21,368 23,200 21,460 31 Commercial banks in the United States 9,225 8,848 9,778 10,716 11,321 12,451 12,076 12,395 12,204 32 Banks in foreign countries 2,724 2,679 2,462 3,076 3,061 2,982 2,823 4,202 2,979 33 Nonbank depository and other financial institutions 6,839 6,505 6,650 6,686 7,229 6,591 6,468 6,603 6,277 34 For purchasing and carrying securities 9,203 8,177 9,221 9,501 6,091 6,430 6,750 6,540 6,980 35 To finance agricultural production 310 297 325 334 346 260 236 231 240 36 To states and political subdivisions 8,664 8,410 8,381 8,429 8,413 8,535 8,769 8,760 8,749 37 To foreign governments and official institutions 990 839 771 722 1,072 908 989 1,136 1,062 38 All other 6,734 5,469 5,822 6,822 7,679 5,856 5,162 5,799 6,446 39 Lease financing receivables 4,297 4,276 4,292 4,302 4,298 4,300 4,286 4,307 4,321 40 LESS: Unearned income 1,551 1,553 1,565 1,569 1,562 1,578 1,582 1,582 1,583 41 Loan and lease reserve 4,909 4,912 4,892 4,837 4,728 4,948 4,957 4,943 4,940 42 Other loans and leases, net 160,215 156,644 159,771 165,203 169,035 168,509 165,952 167,586 167,879 43 All other assets4 71,372 69,144 71,900 71,241 79,865 66,894 63,178 62,208 61,762 44 Total assets 313,805 310,314 318,940 316,789 332,275 310,328 313,016 309,825 318,762 Deposits 45 Demand deposits 63,939 63,874 66,194 66,372 78,411 61,673 59,464 64,512 65,564 46 Individuals, partnerships, and corporations 42,231 44,555 45,484 45,521 55,129 44,102 43,072 44,768 43,905 47 States and political subdivisions 713 704 614 728 1,106 705 719 821 686 48 U.S. government 850 466 215 587 245 380 561 627 439 49 Depository institutions in the United States 7,101 6,951 7,370 7,900 9,213 5,747 5,918 6,313 7,285 50 Banks in foreign countries 5,560 5,663 4,500 5,814 6,453 6,023 4,560 7,011 5,848 51 Foreign governments and official institutions 764 568 608 795 681 641 610 734 617 52 Certified and officers' checks 6,720 4,967 7,404 5,028 5,583 44,,007744 44,,002255 44,,223399 66,,778833 53 Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers) 6,800 6,808 7,097 7,434 7,742 7,907 7,753 7,584 7,449 54 Nontransaction balances 95,480 95,238 95,920 96,345 97,844 98,981 98,629 99,180 98,517 55 Individuals, partnerships and corporations 86,122 86,027 87,009 87,482 88,643 89,943 89,513 90,124 89,336 56 States and political subdivisions 6,442 6,392 6,118 6,008 6,064 5,940 6,093 6,177 6,165 57 U.S. government 64 62 59 56 50 50 50 37 38 58 Depository institutions in the United States 2,240 2,167 2,145 2,221 2,524 2,540 2,441 2,322 2,448 59 Foreign governments, official institutions and banks 611 589 588 579 563 508 531 520 530 60 Liabilities for borrowed money 83,625 80,213 83,973 80,317 80,216 80,801 82,980 74,184 81,178 61 Borrowings from Federal Reserve Banks 0 0 800 0 0 0 0 0 2,990 62 Treasury tax-and-loan notes 1,532 440 3,652 4,392 4,609 4,506 4,610 4,825 4,824 63 All other liabilities for borrowed money5 82,094 79,772 79,521 75,925 75,608 76,295 78,370 69,359 73,364 64 Other liabilities and subordinated note and debentures 36,388 36,270 37,919 39,087 39,978 33,037 36,140 36,341 38,053 65 Total liabilities 286,232 282,402 291,104 289,555 304,191 282,398 284,965 281,802 290,760 66 Residual (total assets minus total liabilities)6 27,573 27,912 27,836 27,234 28,084 27,930 28,050 28,024 28,002 MEMO 67 Total loans and leases (gross) and investments adjusted1'7 201,268 198,766 199,094 203,482 204,440 204,818 202,532 204,311 208,292 68 Total loans and leases (gross) adjusted7 170,882 168,789 169,634 173,535 174,427 174,840 173,252 175,039 178,802 69 Time deposits in amounts of $100,000 or more 34,390 34,229 34,093 34,743 35,176 35,727 35,491 36,057 35,885 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 BANKS1 Assets and Liabilities Millions of dollars, Wednesday figures 1986 1987 AAccccoouunntt Dec. 3 Dec. 1C Dec. 17 Dec. 24 Dec. 31' Jan. 7 Jan. 14 Jan. 21 Jan. 28 1 Cash and due from depository institutions. 10,195 9,625 9,616 9,651 11,946 9,997 9,790 9,990 10,191 2 Total loans and securities 77,993 77,381 81,849 87,080 91,699 85,084 84,204 86,466 86,081 3 U.S. Treasury and govt, agency securities 5,985 6,231 6,100 6,066 6,508 6,715 6,460 6,630 6,430 4 Other securities 5,463 5,626 5,678 5,846 6,102 6,118 6,158 6,256 6,453 5 Federal funds sold2 5,502 5,002 5,664 5,137 6,671 4,612 5,513 7,463 6,645 6 To commercial banks in the United States 4,589 4,028 4,717 4,218 5,675 3,308 3,864 5,856 4,880 7 To others 913 973 947 918 9% 1,303 1,648 1,606 1,765 8 Other loans, gross 61,042 60,523 64,407 70,032 72,418 67,639 66,073 66,116 66,553 9 Commercial and industrial 37,74C 37,246 38,570 41,090 43,214 40,951 40,183 40,530 40,767 10 Bankers acceptances and commercial paper 3,033 3,111 2,999 3,031 3,170 3,039 2,893 2,988 2,987 11 All other 34,707' 34,135 35,571 38,058 40,044 37,912 37,290 37,542 37,781 12 U.S. addressees 32,459' 31,987 33,354 35,620 37,989 35,764 35,085 35,324 35,364 13 Non-U.S. addressees 2,248 2,147 2,217 2,438 2,054 2,149 2,205 2,218 2,416 14 To financial institutions 15,056 15,021 16,034 17,378 17,310 16,059 15,974 15,546 15,798 15 Commercial banks in the United States. 11,749 11,573 12,360 13,388 12,770 11,916 11,981 11,785 12,044 16 Banks in foreign countries 1,031 1,048 1,099 1,038 1,249 1,092 1,092 990 1,048 17 Nonbank financial institutions 2,276 2,401 2,575 2,952 3,290 3,051 2,900 2,772 2,706 18 To foreign govts, and official institutions .. 510 512 518 505 548 525 527 556 576 19 For purchasing and carrying securities .. 2,363 2,655 3,635 4,852 5,105 3,900 3,496 3,602 3,610 20 All other 5,373' 5,089 5,649 6,207 6,242 6,204 5,892 5,883 5,802 21 Other assets (claims on nonrelated parties).. 22,878 22,608 23,286 22,894 23,673 22,378 22,723 22,756 22,913 22 Net due from related institutions 12,410 13,419 14,281 16,498 14,427 15,988 16,615 14,980 13,701 23 Total assets 123,476 123,034 129,032 136,122 141,745 133,448 133,332 134,191 132,886 24 Deposits or credit balances due to other than directly related institutions 37,383 37,425 38,849 40,348 42,414 38,694 39,572 39,745 39,225 25 Transaction accounts and credit balances3 3,600 3,502 3,960 3,578 3,975 3,191 3,576 3,809 3,488 26 Individuals, partnerships, and corporations 2,006 1,987 2,082 2,180 1,888 1,884 1,843 1,969 1,859 27 Other 1,593 1,515 1,878 1,398 2,086 1,308 1,733 1,840 1,629 28 Nontransaction accounts4 33,784 33,923 34,889 36,770 38,440 35,502 35,9% 35,936 35,737 29 Individuals, partnerships, and corporations 27,270 27,418 28,367 30,112 31,525 28,774 29,114 29,275 28,868 30 Other 6,514 6,505 6,522 6,658 6,915 6,728 6,882 6,661 6,869 31 Borrowings from other than directly related institutions 47,890 45,776 48,447 53,087 50,791 55,698 53,770 54,113 5511,,223344 32 Federal funds purchased5 24,298 23,176 24,656 23,552 21,822 31,088 28,147 28,405 26,191 33 From commercial banks in the United States 16,445 15,112 15,092 14,516 12,046 20,112 18,361 17,123 16,001 34 From others 7,853 8,064 9,564 9,036 9,776 10,976 9,786 11,282 10,190 35 Other liabilities for borrowed money 23,591 22,600 23,790 29,535 28,968 24,610 25,623 25,707 25,042 36 To commercial banks in the United States 20,606 19,506 20,556 25,540 24,628 21,691 22,580 22,133 21,864 37 To others 2,985 3,094 3,234 3,996 4,341 2,919 3,042 3,574 3,178 38 Other liabilities to nonrelated parties 24,735 24,746 25,433 25,296 25,119 24,077 24,519 24,517 24,967 39 Net due to related institutions 13,468 15,086 16,303 17,391 23,421 14,979 15,472 15,817 17,460 40 Total liabilities 123,476 123,034 129,032 136,122 141,745 133,448 133,332 134,191 132,886 MEMO 41 Total loans (gross) and securities adjusted6 61,655 61,780 64,772 69,473 73,254 69,859 68,359 68,824 69,157 42 Total loans (gross) adjusted6 50,206 49,923 52,993 57,562 60,644 57,026 55,741 55,938 56,275 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 • April 1987 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 11998811 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc.. DDeecc.. June34 Sept. Dec. Mar. June' Sept. 1 All holders—Individuals, partnerships, and corporations 288.9 291.8 293.5 302.7 298.4 299.3 321.0 307.4 322.4 333.6 2 Financial business 28.0 35.4 32.8 31.7 27.9 28.1 32.3 31.8 32.3 35.9 3 Nonfinancial business 154.8 150.5 161.1 166.3 164.5 167.2 178.5 166.6 180.0 185.9 4 Consumer 86.6 85.9 78.5 81.5 82.8 82.0 85.5 84.0 86.4 86.3 5 Foreign 2.9 3.0 3.3 3.6 3.7 3.5 3.5 3.4 3.0 3.3 6 Other 16.7 17.0 17.8 19.7 19.5 18.5 21.2 21.6 20.7 22.2 Weekly reporting banks 1985 1986 11998811 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc.. DDeecc..22 June3-4 Sept. Dec. Mar. June1, Sept.P 7 All holders—Individuals, partnerships, and corporations 137.5 144.2 146.2 157.1 151.2 153.6 168.6 159.7 168.5 174.7 8 Financial business 21.0 26.7 24.2 25.3 22.1 22.7 25.9 25.5 25.7 28.9 9 Nonfinancial business 75.2 74.3 79.8 87.1 83.7 85.5 94.5 86.8 93.1 94.8 10 Consumer 30.4 31.9 29.7 30.5 31.0 31.6 33.2 32.6 34.9 35.0 11 Foreign 2.8 2.9 3.1 3.4 3.5 3.3 3.1 3.3 2.9 3.2 12 Other 8.0 8.4 9.3 10.9 10.9 10.5 12.0 11.5 11.9 12.8 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 1986 Instrument DDeecc.. DDeecc.. Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Commercial paper (seasonally adjusted unless noted otherwise) 1 A11 issuers 166,436 187,658 237,586 300,899 332,330 311,435 326,601 326,567 329,516 321,907 332,330 Financial companies3 Dealer-placed paper4 2 Total 34,605 44,455 56,485 78,443 100,942 90,038 94,084 97,994 99,688 9933,,554488 110000,,994422 3 Bank-related (not seasonally adjusted) 2,516 2,441 2,035 1,602 2,265 1,772 1,799 1,980 2,172 2,031 2,265 Directly placed paper5 4 Total 8844,,339933 97,042 110,543 135,504 152,159 142,121 149,200 147,497 147,163 146,434 152,159 5 Bank-related (not seasonally adjusted) 32,034 35,566 42,105 44,778 40,860 39,067 40,415 37,455 38,957 39,205 40,860 6 Nonfinancial companies6 47,437 46,161 70,558 86,952 79,229 79,276 83,317 81,076 82,665 81,925 79,229 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 79,543 78,309 78,364' 68,4iy 64,974' 66,437 64,480 67,009 65,920 64,952 64,974 Holder 8 Accepting banks 10,910 9,355 9,811 11,197' 13,423' 11,577 12,127 13,101 12,569 12,787 13,423 9 Own bills 9,471 8,125 8,621 9,471' 11,707' 9,257 9,794 11,001 10,178 10,951 11,707 10 Bills bought 1,439 1,230 1,191 1,726 1,716 2,320 2,333 2,101 2,391 1,835 1,716 Federal Reserve Banks 11 Own account 1,480 418 0 0 0 0 0 0 0 0 0 12 Foreign correspondents 949 729 671 937 1,317 931 897 924 1,131 1,052 1,317 13 Others 66,204 67,807 67,881' 56,279' 50,234' 53,929 51,456 52,984 52,220 51,113 50,234 Basis 14 Imports into United States 17,683 15,649 17,845' 15,147 14,67c 15,601 15,796 16,612 15,980 15,354' 14,670 15 Exports from United States 16,328 16,880 16,305' 13,204 12,94c 13,781 12,948 12,693 12,612 12,699' 12,940 16 All other 45,531 45,781 44,214' 40,062' 37,364' 37,056 35,736 37,704 37,327' 36,899 37,364 1. Effective Dec. 1, 1982, there was a break in the commercial paper series. The 4. Includes all financial company paper sold by dealers in the open market. key changes in the content of the data involved additions to the reporting panel, 5. As reported by financial companies that place their paper directly with the exclusion of broker or dealer placed borrowings under any master note investors. agreements from the reported data, and the reclassification of a large portion of 6. Includes public utilities and firms engaged primarily in such activities as bank-related paper from dealer-placed to directly placed. communications, construction, manufacturing, mining, wholesale and retail trade, 2. Correction of a previous misclassification of paper by a reporter has created transportation, and services. a break in the series beginning December 1983. The correction adds some paper to 7. Beginning October 1984, the number of respondents in the bankers acceptnonfinancial and to dealer-placed financial paper. ance survey were reduced from 340 to 160 institutions—those with $50 million or 3. Institutions engaged primarily in activities such as, but not limited to, more in total acceptances. The new reporting group accounts for over 95 percent commercial, savings, and mortgage banking; sales, personal, and mortgage of total acceptances activity. financing; factoring, finance leasing, and other business lending; insurance underwriting; and other investment activities. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective Date Average rate 11.50 1985—Jan. 15 10.50 1984—Jan. 11.00 1985—Aug. 12.00 May 20 10.00 Feb. 11.00 Sept. 12.50 June 18 9.50 Mar. 11.21 Oct. 13.00 Apr. 11.93 Nov. 12.75 1986—Mar. 7 9.00 May 12.39 Dec. 12.50 Apr. 21 8.50 June 12.60 1986—Jan.. 12.00 July 11 8.00 July 13.00 Feb., 1 1 1 1 1 0 . . . 2 7 7 5 5 5 Aug. 26 7.50 A O S N e u c o p t g v . t . . 1 1 1 1 2 1 2 3 . . . . 9 7 5 0 7 7 8 0 J M A M u p n a a r y r e . . , , , Dec. 11.06 July. 1985—Jan.. 10.61 Aug. Feb. 10.50 Sept. Mar. 10.50 Oct., Apr. 10.50 Nov. May. 10.31 Dec. June 9.78 1987—Jan. . July. 9.50 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 • April 1987 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 1987 1987, week ending IInnssttrruummeenntt 11998844 11998855 11998866 Oct. Nov. Dec. Jan. Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 MONEY MARKET RATES 1 Federal funds1-2 10.22 8.10 6.80 5.85 6.04 6.91 6.43 9.20 7.62 6.01 6.01 6.13 2 Discount window borrowing1'2,3 8.80 7.69 6.33 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 Commercial paper4'5 3 1-month 10.05 7.94 6.62 5.74 5.84 6.63 5.95 7.31 6.01 5.90 5.87 5.94 4 3-month 10.10 7.95 6.49 5.68 5.76 6.10 5.84 6.32 5.87 5.80 5.79 5.87 i 6-month 10.16 8.01 6.39 5.61 5.69 5.88 5.76 6.00 5.77 5.73 5.71 5.78 Finance paper, directly placed4'5 6 1-month 9.97 7.91 6.58 5.74 5.79 6.32 5.86 6.89 5.83 5.79 5.75 5.86 7 3-month 9.73 7.77 6.38 5.56 5.67 5.81 5.59 6.05 5.57 5.57 5.44 5.61 8 6-month 9.65 7.75 6.31 5.50 5.58 5.74 5.60 6.03 5.76 5.54 5.41 5.55 Bankers acceptances5-6 9 3-month 10.14 7.92 6.39 5.58 5.67 5.96 5.74 6.08 5.72 5.71 5.69 5.81 10 6-month 10.19 7.96 6.29 5.52 5.59 5.78 5.65 5.86 5.64 5.63 5.60 5.71 Certificates of deposit, secondary market7 11 1-month 10.17 7.97 6.61 5.71 5.80 6.66 5.94 7.32 6.00 5.91 5.85 5.92 12 3-month 10.37 8.05 6.52 5.69 5.76 6.04 5.87 6.22 5.90 5.85 5.82 5.88 13 6-month 10.68 8.25 6.51 5.70 5.76 5.95 5.85 6.06 5.86 5.84 5.80 5.87 14 Eurodollar deposits, 3-month8 10.73 8.28 6.71 5.88 5.96 6.23 6.10 6.16 6.06 6.08 6.10 6.14 U.S. Treasury bills5 Secondary market9 15 3-month 9.52 7.48 5.98 5.18 5.35 5.53 5.43 5.65 5.46 5.35 5.35 5.51 16 6-month 9.76 7.65 6.03 5.26 5.41 5.55 5.44 5.64 5.49 5.41 5.33 5.47 17 1-year 9.92 7.81 6.08 5.41 5.48 5.55 5.46 5.64 5.49 5.45 5.38 5.50 Auction average10 18 3-month 9.57 7.47 5.96 5.18 5.35 5.49 5.45 5.53 5.38 5.23 5.44 5.58 19 6-month 9.80 7.64 6.03 5.26 5.42 5.53 5.47 5.55 5.43 5.27 5.43 5.59 20 1-year 9.91 7.76 6.07 5.44 5.45 5.60 5.44 n.a. n.a. n.a. 5.44 n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 10.89 8.43 6.46 5.72 5.80 5.87 5.78 5.97 5.80 5.76 5.69 5.82 22 2-year 11.65 9.27 6.87 6.28 6.28 6.27 6.23 6.36 6.22 6.22 6.18 6.26 23 3-year 11.89 9.64 7.06 6.56 6.46 6.43 6.41 6.54 6.38 6.39 6.37 6.46 24 5-year 12.24 10.13 7.31 6.83 6.76 6.67 6.64 6.79 6.63 6.63 6.58 6.66 25 7-year 12.40 10.51 7.55 7.24 7.08 6.97 6.92 7.07 6.91 6.92 6.86 6.96 26 10-year 12.44 10.62 7.68 7.43 7.25 7.11 7.08 7.20 7.05 7.07 7.03 7.15 27 20-year 12.48 10.97 7.85 7.61 7.42 7.28 n.a. 7.36 n.a. n.a. n.a. n.a. 28 30-year 12.39 10.79 7.80 7.70 7.52 7.37 7.39 7.45 7.33 7.37 7.33 7.47 Composite13 29 Over 10 years (long-term) 11.99 10.75 8.14 8.04 7.81 7.67 7.60 7.74 7.57 7.58 7.54 7.67 State and local notes and bonds Moody's series14 30 Aaa 9.61 8.60 6.95 6.44 6.19 6.29 6.12 6.25 6.15 6.10 6.05 6.05 31 Baa 10.38 9.58 7.76r 7.23 7.13 7.25 6.93 7.20 6.35 7.05 7.00 7.05 32 Bond Buyer series15 10.10 9.11 7.32 7.08 6.85 6.86 6.61 6.85 6.70 6.65 6.54 6.56 Corporate bonds Seasoned issues16 33 All industries 13.49 12.05 9.71 9.54 9.37 9.23 9.04 9.22 9.12 9.03 8.98 9.01 34 Aaa 12.71 11.37 9.02 8.86 8.68 8.49 8.36 8.49 8.40 8.33 8.31 8.37 35 Aa 13.31 11.82 9.47 9.33 9.20 9.02 8.86 9.01 8.93 8.83 8.81 8.83 36 A 13.74 12.28 9.95 9.72 9.51 9.41 9.23 9.41 9.32 9.26 9.15 9.16 37 Baa 14.19 12.72 10.39 10.24 10.07 9.97 9.72 9.97 9.82 9.70 9.65 9.68 38 A-rated, recently-offered utility bonds17 13.81 12.06 9.61 9.48 9.31 9.08 8.92 9.14 8.92 8.88 8.84 8.81 MEMO: Dividend/price ratio18 39 Preferred stocks 11.59 10.49 8.76 8.17 8.07 8.18 7.91 8.21 7.99 7.91 7.86 7.89 40 Common stocks 4.64 4.25 3.48 3.49 3.40 3.38 3.17 3.47 3.28 3.20 3.14 3.07 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 1986 1987 IInnddiiccaattoorr 11998844 11998855 11998866 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 92.46 108.09 136.00 137.37 140.82 138.32 140.91 137.06 136.74 140.84 142.12 151.17 2 Industrial 108.01 123.79 155.85 158.59 163.15 158.06 160.10 156.52 156.56 162.10 163.85 175.60 3 Transportation 85.63 104.11 119.85 122.21 120.65 112.03 111.24 114.06 120.04 122.27 121.26 126.61 4 Utility 46.44 56.75 71.35 68.65 70.69 74.20 77.84 74.56 73.38 75.77 76.07 78.54 5 Finance 89.28 114.21 147.18 151.28 151.73 150.23 152.90 145.56 143.89 142.97 144.29 153.32 6 Standard & Poor's Corporation (1941-43 = 10)1 ... 160.50 186.84 236.34 238.46 245.30 240.18 245.00 238.27 237.36 245.09 248.61 264.51 7 American Stock Exchange2 (Aug. 31, 1973 = 50) 207.96 229.10 264.38 274.22 281.18 269.93 268.55 264.30 257.82 265.14 264.65 289.02 Volume of trading (thousands of shares) 8 New York Stock Exchange 91,084 109,191 141,306 127,624 126,151 137,709 128,661 150,831 131,155 154,770 148,228 192,419 9 American Stock Exchange 6,107 8,355 11,846 11,870 12,795 10,320 9,885 10,853 8,930 10,513 12,272 14,755 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 22,470 28,390 36,840 32,370 32,480 33,170 34,550 34,580 36,310 37,090 36,840 34,960 Free credit balances at brokers4 11 Margin-account5 1,755 2,715 4,880 2,405 2,585 2,570 3,035 3,395 3,805 3,765 4,880 5,060 12 Cash-account 10,215 12,840 19,000 12,970 13,570 14,600 14,210 14,060 14,445 15,045 19,000 17,395 Margin-account debt at brokers (percentage distribution, end of period)6 13 Total 100.0 100.0 100.0 100.0 By equity class (in percentf 14 Under 40 18.0 34.0 30.0 31.0 15 40-49 18.0 20.0 19.0 20.0 16 50-59 16.0 19.0 22.0 20.0 17 60-69 9.0 11.0 12.0 13.0 18 70-79 5.0 8.0 8.0 8.0 19 80 or more 6.0 8.0 9.0 8.0 Special miscellaneous-account balances at brokers (end of period)6 20 Total balances (millions of dollars)8 75,840 99,310 109,620 112,401 Distribution by equity status (percent) 21 Net credit status 59.0 58.0 58.0 59.0 Debt status, equity of 22 60 percent or more 29.0 31.0 33.0 32.0 23 Less than 60 percent 11.0 11.0 9.0 9.0 Margin requirements (percent of market value and effective date)9 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 and dealers. Data items that are no longer reported include distributions of margin companies. With this change the index includes 400 industrial stocks (formerly debt by equity status of the account and special miscellaneous-account 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 balances. financial. 7. Each customer's equity in his collateral (market value of collateral less net 2. Beginning July 5, 1983, the American Stock Exchange rebased its index debit balance) is expressed as a percentage of current collateral values. effectively cutting previous readings in half. 8. Balances that may be used by customers as the margin deposit required for 3. Beginning July 1983, under the revised Regulation T, margin credit at additional purchases. Balances may arise as transfers based on loan values of broker-dealers includes credit extended against stocks, convertible bonds, stocks other collateral in the customer's margin account or deposits of cash (usually sales acquired through exercise of subscription rights, corporate bonds, and govern- proceeds) occur. ment securities. Separate reporting of data for margin stocks, convertible bonds, 9. Regulations G, T, and U of the Federal Reserve Board of Governors, and subscription issues was discontinued in April 1984, and margin credit at prescribed in accordance with the Securities Exchange Act of 1934, limit the broker-dealers became the total that is distributed by equity class and shown on amount of credit to purchase and carry margin stocks that may be extended on lines 17-22. securities as collateral by prescribing a maximum loan value, which is a specified 4. Free credit balances are in accounts with no unfulfilled commitments to the percentage of the market value of the collateral at the time the credit is extended. brokers and are subject to withdrawal by customers on demand. Margin requirements are the difference between the market value (100 percent) 5. New series beginning June 1984. and the maximum loan value. The term "margin stocks" is defined in the 6. In July 1986, the New York Stock Exchange stopped reporting certain data corresponding regulation. items that were previously obtained in a monthly survey of a sample of brokers Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • April 1987 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1986 AAccccoouunntt 11998833 11998844 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Savings and loan associations 1 Assets 773,417 903,488 943,029 947,302 954,869 963,274 954,226' 957,952' 965,035' 957,303' 961,939' 964,198' 963,163 7 Mortgages 449944,,778899 555555,,227777 576,608 574,732 575,177 574,992 565,037' 565,353' 566,438' 557,137' 557,303' 556,780' 553,552 98,482 99,332 103,415 108,324 113,158' 113,099' 113,619 117,675' 121,238' 122,420' 122,847 4 Cash and investment securities1 . 104,274 124,801 127,028 131,464 132,351' 134,881 130,877 132,791' 138,864' 138,552' 138,532' 141,504' 142,841 5 Other 174,354 223,396 239,394 241,104 247,339 253,400' 258,31C 259,806' 259,731' 261,613' 266,101' 265,914' 266,769 6 Liabilities and net worth 773,417 903,488 943,029 947,302 954,869 963,274 954,226' 957,952' 965,035' 957,303' 961,939' 964,198' 963,163 7 Savings capital 634,455 725,045 747,016 752,056 750,299 751,138 744,026 747,020 749,020 743,517' 742,682' 740,095' 740,920 8 Borrowed money 92,127 125,666 131,671 133,407 140,427 145,032 148,054' 146,578' 148,535 155,735' 152,626' 156,896' 156,814 9 FHLBB 52,626 64,207 71,214 70,464 73,815 73,520 73,553 75,058 75,594 80,364 75,295 75,626' 80,129 10 Other 39,501 61,459 60,457 62,943 66,612 71,512 74,501' 71,520' 72,941 75,371' 77,331' 81,270' 76,685 11 Other 15,968 17,944 23,125 20,078 21,978 24,722 20,792 22,782' 24,703' 15,463' 23,264' 24,097' 20,557 12 Net worth2 30,867 34,833 41,217 41,760 42,163 42,382 41,353' 41,571' 42,776' 42,588' 43,365' 43,110' 42,871 MEMO N Mortgage loan commitments outstanding3 54,113 61,305 52,542 54,366 55,818 57,997 57,200 55,687 53,180 51,163' 49,887' 48,222' 41,650 FSLlC-insured federal savings banks 14 Assets 64,969 98,559 146,508 152,823 155,686 164,129 180,124 183,317' 186,810' 196,228' 202,106' 204,927' 211,368 15 Mortgages 38,698 57,429 81,641 85,028 86,598 89,108 99,758 101,759 103,020 108,217' 110,830' 112,138' 113,403 16 Mortgage-backed securities.... 7,172 9,949 16,367 17,851 18,661 19,829 21,598 23,247 24,097 26,440' 27,516' 28,326' 29,825 17 Other 6,595 10,971 13,759 13,923 14,590 15,083 16,774 17,025 17,056 18,492 18,693' 19,265' 19,784 18 Liabilities and net worth 64,969 98,559 146,508 152,823 155,686 164,129 180,124 183,317' 186,810' 196,228' 202,106' 204,927' 211,368 19 Savings capital 53,227 79,572 114,743 119,434 121,133 126,123 138,168 140,610 142,858 149,074' 152,834 154,447' 157,600 20 Borrowed money 7,477 12,798 21,254 22,747 23,1% 25,686 28,502 28,722 29,390 32,319 33,430 33,937' 37,079 71 FHLBB 4,640 7,515 11,283 12,064 12,476 12,830 15,301 15,866 16,123 16,853 17,382 17,863' 19,897 ?? Other 2,837 5,283 9,971 10,683 10,720 12,856 13,201 12,856 13,267 15,466 16,048 16,074' 17,182 73 Other 1,157 1,903 3,397 3,291 3,758 4,338 4,279 4,564' 4,914' 4,671' 5,324' 5,652' 5,749 24 Net worth 3,108 4,286 7,114 7,349 7,599 7,982 9,175 9,422' 9,647 10,163' 10,522 10,891' 10,939 MEMO 25 Mortgage loan commitments outstanding3 2,151 3,234 7,718 8,330 8,287 8,762 9,410 10,134 9,770 10,221' 9,356' 9,957' 8,687 Savings banks 26 Assets 193,535 203,898 218,119 221,256 222,542 226,495 223,367 224,569 227,011 228,854 230,919 232,577 Loans 27 Mortgage 97,356 102,895 109,702 110,271 111,813 112,417 110,958 111,971 113,265 114,188 116,648 117,612 28 Other 19,129 24,954 32,501 34,873 34,591 35,500 36,692 36,421 37,350 37,298 36,130 36,149 Securities 29 U.S. government 15,360 14,643 12,474 12,313 12,013 13,210 12,115 12,297 12,043 12,357 12,585 13,037 30 Mortgage-backed securities... 18,205 19,215 21,525 21,593 21,885 22,546 22,413 22,954 21,161 23,216 23,437 24,051 31 State and local government... 2,177 2,077 2,297 2,306 2,372 2,343 2,281 2,309 2,400 2,407 2,347 2,290 32 Corporate and other 25,375 23,747 20,707 20,403 20,439 20,260 2,036 20,862 20,602 20,902 21,156 20,749 33 Cash 6,263 4,954 5,646 5,845 5,570 6,225 5,301 4,651 5,018 4,811 5,195 5,052 n.a. 34 Other assets 9,670 11,413 13,267 13,652 13,859 13,994 13,244 13,104 13,172 13,675 13,421 13,637 35 Liabilities 193,535 203,898 218,119 221,256 222,542 226,495 223,367 224,569 227,011 228,854 230,919 232,577 36 Deposits 172,665 180,616 186,777 188,960 189,025 190,310 189,109 188,615 189,937 190,210 190,334 190,858 37 Regular4 170,135 177,418 182,890 184,704 184,580 185,716 183,970 183,433 184,764 185,002 185,254 185,958 38 Ordinary savings 38,554 33,739 32,693 33,021 33,057 33,577 34,008 34,166 34,530 35,227 36,165 36,739 39 Time 95,129 104,732 104,588 105,562 105,550 105,146 103,083 102,374 102,668 102,191 101,125 102,240 40 Other 2,530 3,198 3,887 4,256 4,445 4,594 5,139 5,182 5,173 5,208 5,080 4,900 41 Other liabilities 10,154 12,504 17,793 18,412 19,074 21,384 19,226 20,641 21,360 21,947 23,319 24,254 42 General reserve accounts 10,368 10,510 13,211 13,548 14,114 14,519 14,731 15,084 15,427 16,319 16,8% 17,146 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37—Continued 1986 AAccccoouunntt 11998833 11998844 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Credit unions5 43 Total assets/liabilities and capital . 81,961 93,036 122,623 126,653 128,229 132,415 134,703 137,901 139,233 140,496 143,662 145,653 44 Federal 54,482 63,205 80,024 82,275 83,543 86,289 87,579 89,539 90,367 91,981 93,257 94,638 45 State 27,479 29,831 42,599 44,378 44,686 46,126 47,124 48,362 48,866 48,515 50,405 51,015 46 Loans outstanding 50,083 62,561 74,207 75,300 76,385 76,774 77,847 79,647 80,656 81,820 83,388 84,635 n.a. 47 Federal 32,930 42,337 48,059 48,633 49,756 49,950 50,613 51,331 52,007 53,042 53,434 53,877 48 State 17,153 20,224 26,148 26,667 26,629 26,824 27,234 28,316 28,649 28,778 29,954 30,758 49 Savings 74,739 84,348 110,541 114,579 116,703 120,331 122,952 125,331 126,268 128,125 130,483 131,778 50 Federal 49,889 57,539 73,227 75,698 77,112 79,479 80,975 82,596 83,132 84,607 86,158 87,009 51 State 24,850 26,809 37,314 38,881 39,591 40,852 41,977 42,735 43,136 43,518 44,325 44,769 Life insurance companies 52 Assets 654,948 722,979 839,856 848,535 855,605 863,610 872,359 877,919 887,255 892,304 910,691 Securities 53 Government 50,752 63,899 76,761 77,965 78,494 79,051 78,284 78,722 79,188 81,636 84,858 54 United States6 28,636 42,204 53,264 54,289 54,705 55,120 54,197 54,321 54,487 56,698 59,802 55 State and local 9,986 8,713 9,588 9,674 9,869 9,930 10,114 10,350 10,472 10,606 10,712 56 Foreign7 12,130 12,982 13,909 14,002 13,920 14,001 13,973 14,051 14,229 14,332 14,344 57 Business 322,854 359,333 435,758 440,963 445,573 450,279 455,119 455,013 463,135 462,540 473,860 n.a. n.a. 58 Bonds 257,986 295,998 354,911 357,196 361,306 364,122 367,966 369,704 374,670 378,267 386,293 59 Stocks 64,868 63,335 80,847 83,767 84,267 86,157 87,153 85,309 88,465 84,273 87,567 60 Mortgages 150,999 156,699 172,997 174,823 175,951 177,554 180,041 182,542 183,943 185,268 189,460 61 Real estate 22,234 25,767 29,356 29,804 30,059 30,025 30,350 31,151 31,844 31,725 32,184 62 Policy loans 54,063 54,505 54,267 54,273 54,272 54,351 57,342 54,249 54,247 54,273 54,152 63 Other assets 54,046 63,776 57,351 57,753 57,492 57,802 58,290 58,792 57,905 58,086 58,006 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 toted, in "other assets." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • April 1987 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1986 1987 111999888444 111999888555 111999888666 Aug. Sept. Oct. Nov. Dec. Jan. U.S. budget1 1 Receipts, total 666,457 734,057 769,091 56,523 78,013 59,012 52,967 78,035 81,771 2 On-budget n.a. 547,886 568,862 41,404 59,978 43,865 38,158 60,694 62,981 3 Off-budget n.a. 186,170 200,228 15,119 18,035 15,147 14,809 17,341 18,790 4 Outlays, total 851,796 945,987 989,789 84,434 81,750 84,267 79,973 90,112 83,942 5 On-budget n.a. 769,180 806,291 68,112 65,614 68,780 63,639 75,623 68,176 6 Off-budget n.a. 176,807 183,498 16,322 16,136 15,486 16,334 14,489 15,766 7 Surplus, or deficit (-), total -185,339 -211,931 -220,698 -27,911 -3,737 -25,255 -27,006 -12,077 -2,170 8 On-budget n.a. -221,294 -237,428 -26,708 -5,636 -24,915 -25,481 -14,930 -5,195 9 Off-budget n.a. 9,363 16,371 -1,203 1,898 -340 -1,524 2,853 3,024 Source of financing (total) 10 Borrowing from the public 170,817 197,269 235,745 20,278 22,188 5,936 40,352 22,824 44,,335533 11 Cash and monetary assets (decrease, or increase (-))2 5,636 10,673 -18,044 10,298 -21,313 18,131 -2,721 -14,751 -9,564 12 Other3 8,885 3,989 2,997 -2,665 2,862 1,188 -10,625 4,004 7,381 MEMO 13 Treasury operating balance (level, end of period) 22,345 17,060 31,384 10,428 31,384 13,616 17,007 30,945 41,307 14 Federal Reserve Banks 3,791 4,174 7,514 1,106 7,514 2,491 2,529 7,588 15,746 15 Tax and loan accounts 18,553 12,886 23,870 9,322 23,870 11,126 14,478 23,357 25,561 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 1985 1986 1986 1987 111999888555 111999888666 HI H2 HI H2 Nov. Dec. Jan. RECEIPTS 1 All sources 734,057 769,091 380,618 364,790 394,345 387,524 52,967 78,035 81,771 2 Individual income taxes, net 334,531r 348,959 166,783 169,987 169,444 183,156 24,122 33,584 46,466 3 Withheld 298,941 314,838' 149,288 155,725 153,919 164,071 24,242 30,733 26,375 4 Presidential Election Campaign Fund ... 35 36 29 6 31 4 0 0 0 5 Nonwithheld 101,328 105,994 76,155 22,295 78,981 27,733 1,143 3,585 20,254 6 Refunds 65,743 71,873 58,684 8,038 63,488 8,652 1,263 734 163 Corporation income taxes 7 Gross receipts 77,413 80,442 42,193 36,528 41,946 42,108 2,716 16,531 4,332 8 Refunds 16,082 17,298 8,370 7,751 9,557 8,230 968 839 872 9 Social insurance taxes and contributions, net 265,163 283,901 144,598 128,017 156,714 134,006 21,751 22,267 25,664 10 Employment taxes and contributions1 234,646 255,062 126,038 116,276 139,706 122,246 19,015 21,625 24,266 11 Self-employment taxes and contributions2 10,468 11,840 9,482 985 10,581 1,338 223 0 795 12 Unemployment insurance 25,758 24,098 16,213 9,281 14,674 9,328 2,377 196 1,024 13 Other net receipts3 4,759 4,742' 2,350 2,458 2,333 2,429 360 446 375 14 Excise taxes 35,992 32,919 17,259 18,470 15,944 15,947 2,488 3,003 2,840 15 Customs deposits 12,079 13,323 5,807 6,354 6,369 7,282 1,090 1,098 1,135 16 Estate and gift taxes 6,422 6,958 3,204 3,323 3,487 3,649 488 695 652 17 Miscellaneous receipts4 18,539' 19,887 9,144 9,861 10,002 9,605 1,279 1,696 1,554 OUTLAYS 18 All types 946,223 989,789 463,842 487,188 486,037 505,739 79,973 90,112 83,942 19 National defense 252,748 273,369 124,186 134,675 135,367 138,544 20,907 24,401 22,057 20 International affairs 16,176 14,471 6,675 8,367 5,384 8,876' 1,986 1.14C 358 21 General science, space, and technology... 8,627 9,017 4,230 4,727 12,519 4,594 708 843 562 22 Energy 5,685 4,792 680 3,305 2,484 2,735 553 485 390 23 Natural resources and environment 13,357 13,508 5,892 7,553 6,245 7,141 973 1,253 1,003 24 Agriculture 25,565 31,169 11,705 15,412 14,482 16,160 3,162 3,751 4,063 25 Commerce and housing credit 4,229 4,258 -260 644 860 3,647 182 -314 717 26 Transportation 25,838 28,058 11,440 15,360 12,658 14,745 2,399 2,409 1,870 27 Community and regional development .... 7,680 7,510 3,408 3,901 3,169 3,494 478 548 477 28 Education, training, employment, social services 29,342 29,662 14,149 14,481 14,712 15,268 2,504 2,8% 2,358 7.9 Health 33,542 35,936 16,945 17,237 17,872 19,814 3,153 3,032 3,148 30 Social security and medicare 254,446 190,850 128,351 129,037 135,214 138,2% 22,182 23,378 22,640 31 Income security 128,200 120,686 65,246 59,457 60,786 59,628 9,130 11,625 11,301 32 Veterans benefits and services 26,352 26,614 11,956 14,527 12,193 14,497 797 3,641 2,227 33 Administration of justice 6,277 6,555 3,016 3,212 3,352 3,360 505 684 482 34 General government 5,228 6,796 2,857 3,634 3,566 2,786 371 895 166 35 General-purpose fiscal assistance 6,353 6,430 2,659 3,391 2,179 2,767 -2 226 -21 36 Net interest5 129,436 135,284 65,143 67,448 68,054 65,816' 12,441 10,958' 12,583 37 Undistributed offsetting receipts6 -32,759 -33,244 -14,436 -17,953 -17,193 -17,426 -2,455 -2,694 -2,440 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 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • April 1987 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1984 1985 1986 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 1,576.7 1,667.4 1,715.1 1,779.0 1,827.5 1,950.3 1,991.1 2,063.6 2,129.5 2 Public debt securities 1,572.3 1,663.0 1,710.7 1,774.6 1,823.1 1,945.9 1,986.8 2,059.3 2,125.3 3 Held by public 1,309.2 1,373.4 1,415.2 1,460.5 1,506.6 1,597.1 1,634.3 1,684.9 1,742.4 4 Held by agencies 263.1 289.6 295.5 314.2 316.5 348.9 352.6 374.4 382.9 5 Agency securities 4.5 4.5 4.4 4.4 4.4 4.4 4.3 4.3 4.2 6 Held by public 3.4 3.4 3.3 3.3 3.3 3.3 3.2 3.2 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 1,573.0 1,663.7 1,711.4 1,775.3 1,823.8 1,932.4 1,973.3 2,060.0 2,111.0 9 Public debt securities 1,571.7 1,662.4 1,710.1 1,774.0 1,822.5 1,931.1 1,972.0 2,058.7 2,109.7 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 1,573.0 1,823.8 1,823.8 1,823.8 1,823.8 2,078.7 2,078.7 2,078.7 2,111.0 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 11998822 11998833 11998844 11998855 Q4 Ql Q2 Q3 1 Total gross public debt 1,197.1 1,410.7 1,663.0 1,945.9 1,945.9 1,986.8 2,059.3 2,125.3 By type 2 Interest-bearing debt 1,195.5 1,400.9 1,660.6 1,943.4 1,943.4 1,984.2 2,056.7 2,122.7 3 Marketable 881.5 1,050.9 1,247.4 1,437.7 1,437.7 1,472.8 1,498.2 1,564.3 4 Bills 311.8 343.8 374.4 399.9 399.9 393.2 396.9 410.7 5 Notes 465.0 573.4 705.1 812.5 812.5 842.5 869.3 896.9 6 Bonds 104.6 133.7 167.9 211.1 211.1 223.0 232.3 241.7 7 Nonmarketable1 314.0 350.0 413.2 505.7 505.7 511.4 558.5 558.4 8 State and local government series 25.7 36.7 44.4 87.5 87.5 88.5 98.2 102.4 9 Foreign issues2 14.7 10.4 9.1 7.5 7.5 6.7 5.3 4.1 in Government 13.0 10.4 9.1 7.5 7.5 6.7 5.3 4.1 u Public 1.7 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 68.0 70.7 73.1 78.1 78.1 79.8 82.3 85.6 13 Government account series3 205.4 231.9 286.2 332.2 332.2 336.0 372.3 365.9 14 Non-interest-bearing debt 1.6 9.8 2.3 2.5 2.5 2.6 2.6 .4 By holder4 15 U.S. government agencies and trust funds 209.4 236.3 289.6 348.9 348.9 352.6 374.4 382.9 16 Federal Reserve Banks 139.3 151.9 160.9 181.3 181.3 184.8 183.8 190.8 17 Private investors 848.4 1,022.6 1,212.5 1,417.2 1,417.2 1,473.1 1,502.7 1,553.3 18 Commercial banks 131.4 188.8 183.4 192.2 192.2 195.1 197.2 212.5 19 Money market funds 42.6 22.8 25.9 25.1 25.1 29.9 22.8 24.9 70 Insurance companies 39.1 56.7 76.4 93.2 93.2 95.8 n.a. n.a. 21 Other companies 24.5 39.7 50.1 59.0 59.0 59.6 59.8 67.0 22 State and local governments 127.8 155.1 179.4 n.a. n.a. n.a. n.a. n.a. Individuals 23 Savings bonds 68.3 71.5 74.5 79.8 79.8 81.4 83.8 87.1 74 Other securities 48.2 61.9 69.3 75.0 75.0 76.2 73.9 69.0 75 Foreign and international5 149.5 166.3 192.9 214.6 214.6 225.4 239.8 256.3 26 Other miscellaneous investors6 217.0 259.8 360.6 n.a. n.a. n.a. n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Consists of investments of foreign and international accounts. Excludes nontion Administration; depository bonds, retirement plan bonds, and individual interest-bearing notes issued to the International Monetary Fund. retirement bonds. 6. Includes savings and loan associations, nonprofit institutions, credit unions, 2. Nonmarketable dollar-denominated and foreign currency-denominated se- mutual savings banks, corporate pension trust funds, dealers and brokers, certain ries held by foreigners. U.S. government deposit accounts, and U.S. government-sponsored agencies. 3. Held almost entirely by U.S. government agencies and trust funds. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Data for Federal Reserve Banks and U.S. government agencies and trust Statement of the Public Debt of the United States; data by holder. Treasury funds are actual holdings; data for other groups are Treasury estimates. Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Par value; averages of daily figures, in millions of dollars 1986 1987 1986 1987 IItteemm 11998844 11998855 11998866 Nov/ Dec/ Jan. Dec. 24' Dec. 31' Jan. 7 Jan. 14 Jan. 21 Jan. 28 Immediate delivery2 1 U.S. government securities 52,778 75,331 95,422 96,369 88,650 112,337 76,468 64,589 101,187 120,451 117,570 107,280 By maturity 7. Bills 26,035 32,900 34,249 32,166 33,166 45,148 30,688 31,053 44,163 49,549 49,542 38,226 3 Other within 1 year 1,305 1,811 2,116 2,119 2,353 3,013 2,734 2,125 3,695 3,141 2,588 2,484 4 1-5 years 11,733 18,361 24,664 25,811 22,022 24,697 21,559 13,916 20,922 25,062 27,596 24,063 5 5-10 years 7,606 12,703 20,435 20,756 19,383 23,967 12,095 11,959 20,239 25,887 22,851 25,443 6 Over 10 years 6,099 9,556 13,959 15,517 11,726 15,512 9,393 5,536 12,168 16,812 14,992 17,065 By type of customer 7 U.S. government securities dealers 2,919 3,336 3,646 3,801 3,269 3,452 2,480 2,1% 3,464 2,910 4,490 2,991 8 U.S. government securities brokers 25,580 36,222 49,355 50,091 44,050 59,844 36,977 29,754 53,338 65,387 61,034 59,714 9 All others3 24,278 35,773 42,205 41,960 40,783 48,343 37,010 32,638 44,385 52,153 52,045 44,574 10 Federal agency securities 7,846 11,640 16,726 19,909 20,159 21,410 19,164 11,561 15,489 18,820 26,100 26,124 11 Certificates of deposit 4,947 4,016 4,352 3,859 3,676 6,103 3,829 2,739 5,399 5,867 5,999 6,934 12 Bankers acceptances 3,243 3,242 3,273 2,852 2,529 3,390 2,141 1,791 3,866 3,494 3,366 2,795 n Commercial paper 1100,,001188 12,717 16,645 16,550 16,516 19,339 18,133 14,278 22,515 17,908 20,212 17,173 Futures transactions4 14 Treasury bills 6,947 5,561 3,311 2,801 1,909 2,879 940 1,260 2,162 2,785 2,851 3,070 15 Treasury coupons 4,503 6,069 7,170 6,374 5,519 7,025 3,434 3,020 6,025 8,018 6,982 7,324 16 Federal agency securities 262 240 12 21 0 0 * 1 * 0 0 * Forward transactions5 17 U.S. government securities 1,364 1,283 1,873 2,419 2,066 2,053 3,061 1,313 1,103 2,087 2,857 1,927 18 Federal agency securities 2,843 3,857 7,823 10,257 9,933 10,698 9,7% 4,299 7,331 11,837 15,903 9,8% 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 NOTE. Data for the period May 1 to Sept. 30, 1986, are partially estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • April 1987 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1986 1987 1986 1987 Nov. Dec.' Jan. Dec. 31' Jan. 7 Jan. 14 Jan. 21 Jan. 28 Positions Net immediate2 1 U.S. government securities 5,429 7,391 13,049 14,367' 10,219 13,172 8,919 10,384 12,240 17,083 15,400 2 Bills 5,500 10,075 12,726 14,967 10,979 13,396 9,760 10,895 13,205 17,702 13,895 3 Other within 1 year 63 1,050 3,698 2,030 2,969 3,463 3,034 3,346 3,062 3,424 3,803 4 1-5 years 2,159 5,154 9,297 8,419 6,815 9,185 8,291 7,819 7,857 8,388 11,940 5 5-10 years -1,119 -6,202 -9,504 -8,131 -6,977 -7,175 -7,712 -6,824 -6,543 -7,116 -7,983 6 Over 10 years -1,174 -2,686 -3,169 -2,916 -3,567 -5,696 -4,453 -4,852 -5,341 -5,315 -6,255 7 Federal agency securities 15,294 22,860 33,075 30,258' 34,694 31,258 34,543 29,543 30,909 33,432 31,730 8 Certificates of deposit 7,369 9,192 10,533 9,954' 10,049 9,439 9,442 9,187 8,610 9,814 9,795 9 Bankers acceptances 3,874 4,586 5,533 5,244 5,072 4,756 4,703 4,508 3,930 4,928 5,370 10 Commercial paper 3,788 5,570 8,087 9,630 9,789 9,973 10,065 8,716 8,726 10,769 10,906 Futures positions 11 Treasury bills -4,525 -7,322 -18,063 -15,972 -16,170 -15,293 -14,305 -15,233 -15,641 -16,578 -14,340 12 Treasury coupons 1,794 4,465 3,493 4,022 3,359 5,230 4,247 4,144 4,801 4,330 6,393 13 Federal agency securities 233 -722 -153 -82 -89 -92 -90 -92 -92 -92 -93 Forward positions 14 U.S. government securities -1,643 -911 -2,303 -781 -2,101 183 -2,775 -1,315 -1,539 416 2,434 15 Federal agency securities -9,205 -9,420 -11,920 -14,634' -17,058 -16,649 -14,446 -13,678 -18,489 -19,093 -16,036 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 44,078 68,035 98,954 108,790 109,241 n.a. 101,861 129,183 130,627 128,525 n.a. 17 Term agreements 68,357 80,509 108,693 117,299 123,297 n.a. 130,498 115,555 128,658 125,274 n.a. Repurchase agreements5 18 Overnight and continuing 75,717 101,410 141,735 146,960 149,315 n.a. 138,766 163,641 175,674 177,665 n.a. 19 Term agreements 57,047 70,076 102,640 115,968 120,500 n.a. 133,497 111,563 115,342 114,066 n.a. 1. Data for dealer positions and sources of financing are obtained from reports reverses to maturity, which are securities that were sold after having been submitted to the Federal Reserve Bank of New York by the U.S. government obtained under reverse repurchase agreements that mature on the same day as the securities dealers on its published list of primary dealers. securities. Data for immediate positions do not include forward positions. Data for positions are averages of daily figures, in terms of par value, based on 3. Figures cover financing involving U.S. government and federal agency the number of trading days in the period. Positions are net amounts and are shown securities, negotiable CDs, bankers acceptances, and commercial paper. on a commitment basis. Data for financing are in terms of actual amounts 4. Includes all reverse repurchase agreements, including those that have been borrowed or lent and are based on Wednesday figures. arranged to make delivery on short sales and those for which the securities 2. Immediate positions are net amounts (in terms of par values) of securities obtained have been used as collateral on borrowings, that is, matched agreements. owned by nonbank dealer firms and dealer departments of commercial banks on a 5. Includes both repurchase agreements undertaken to finance positions and commitment, that is, trade-date basis, including any such securities that have "matched book" repurchase agreements. been sold under agreements to repurchase (RPs). The maturities of some NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially repurchase agreements are sufficiently long, however, to suggest that the securi- estimated. ties involved are not available for trading purposes. Immediate positions include 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 1986 AAggeennccyy 11998833 11998844 11998855 July Aug. Sept. Oct. Nov. Dec. 1 Federal and federally sponsored agencies 240,068 271,220 293,905 298,361 299,211 302,411 305,011 n.a. 2 Federal agencies 33,940 35,145 36,390 35,768 36,132 36,473 36,716 36,952 3 Defense Department1 243 142 71 45 40 37 36 35 4 Export-Import Bank2'3 14,853 15,882 15,678 14,953 14,953 14,274 14,274 14,274 5 Federal Housing Administration4 194 133 115 115 115 117 123 124 n.a. 6 Government National Mortgage Association participation certificates' 2,165 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service6 1,404 1,337 1,940 1,854 1,854 3,104 3,104 3,104 8 Tennessee Valley Authority 14,970 15,435 16,347 16,562 16,931 16,702 16,940 17,176 9 United States Railway Association6 111 51 74 74 74 74 74 74 10 Federally sponsored agencies7 206,128 236,075 257,515 262,593 263,079 265,938 268,295 n.a. n a. 11 Federal Home Loan Banks 48,930 65,085 74,447 83,081 85,997 87,133 87,146 86,891 88, /52 12 Federal Home Loan Mortgage Corporation 6,793 10,270 11,926 12,818 12,801 13,548 14,007 n.a. n.a. 13 Federal National Mortgage Association 74,594 83,720 93,896 93,417 92,286 91,629 93,272 93,477 93,563 14 Farm Credit Banks 72,816 71,193 68,851 62,857 61,575 63,073 63,079 62,693 62,328 15 Student Loan Marketing Association8 3,402 5,745 8,395 10,420 10,420 10,555 10,791 11,102 11,795 MEMO 16 Federal Financing Bank debt 135,791 145,217 153,373 155,526 156,132 156,873 157,371 157,452 Lending to federal and federally sponsored 17 Export-Import Bank3 14,789 15,852 15,670 14,947 14,947 14,268 14,268 14,268 18 Postal Service6 1,154 1,087 1,690 1,604 1,604 2,854 2,854 2,854 19 Student Loan Marketing Association 5,000 5,000 5,000 5,000 5,000 4,970 4,970 4,970 n a. 20 Tennessee Valley Authority 13,245 13,710 14,622 14,937 15,306 15,077 15,515 15,751 21 United States Railway Association6 111 51 74 74 74 74 74 74 Other Lending10 22 Farmers Home Administration 55,266 58,971 64,234 65,174 65,274 65,374 65,374 65,374 23 Rural Electrification Administration 19,766 20,693 20,654 21,321 21,398 21,460 21,506 21,531 24 Other 26,460 29,853 31,429 32,469 32,529 32,796 32,810 32,630 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 DomesticN onfinancial Statistics • April 1987 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1986 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998844 11998855 11998866 oorr uussee May June July Aug. Sept. Oct. Nov. Dec. 1 A1I issues, new and refunding1 106,641 214,189 134,606 13,215 12,611 19,833 25,965 4,532 8,825 10,085 14,082 Type of issue 2 General obligation 26,485 52,622 44,801 7,115 6,326 6,531 5,931 1,267 2,104 1,427 4,254 3 Revenue 80,156 161,567 89,806 6,100 6,285 13,302 20,034 3,265 6,721 8,658 9,828 Type of issuer 4 State 9,129 13,004 14,935 2,825 1,705 2,879 2,121 9 697 111 %1 5 Special district and statutory authority2 63,550 134,363 79,291 6,427 6,351 10,589 15,714 3,275 5,757 7,761 9,414 6 Municipalities, counties, townships 33,962 66,822 40,374 3,962 4,554 6,365 8,125 1,248 2,371 2,213 3,707 7 Issues for new capital, total 94,050 156,050 79,195 7,155 8,178 13,165 17,810 2,558 3,789 4,085 8,831 Use of proceeds 8 Education 7,553 16,658 16,948 1,827 1,694 2,800 2,926 558 928 1,486 1,588 9 Transportation 7,552 12,070 11,666 273 947 3,164 1,460 827 1,195 976 588 10 Utilities and conservation 17,844 26,852 35,383 3,450 1,583 4,425 6,292 1,365 2,3% 3,239 2,330 11 Social welfare 29,928 63,181 17,332 1,424 1,518 1,186 2,554 812 2,098 2,635 3,944 12 Industrial aid 15,415 12,892 5,594 264 255 975 489 138 499 331 2,159 13 Other purposes 15,758 24,398 47,433 5,978 6,614 7,281 12,245 832 1,708 1,418 3,473 1. Par amounts of long-term issues based on date of sale. SOURCES. Securities Data Company beginning April 1986. Public Securities 2. Includes school districts beginning April 1986. Association for earlier data. This new data source began with the November BULLETIN. 1.46 NEW SECURITY ISSUES Corporations Millions of dollars 1986 Type of issue or issuer, 11998844 11998855 11998866 or use May June July Aug. Sept. Oct. Nov. Dec. 1 All issues1 132,531 201,269 294,218 19,564 25,776 21,093 24,245 16,093 28,582 28,867 25,041 2 Bonds2 109,903 165,754 232,395 13,050 20,756 16,766 18,481 12,830 23,476 22,268 18,800 Type of offering 3 Public 73,579 119,559 232,395 13,050 20,756 16,766 18,481 12,830 23,476 22,268 18,800 4 Private placement 36,324 46,195 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 5 Manufacturing 24,607 52,228 52,872 3,939 5,368 2,535 4,536 2,345 2,055 3,378 3,300 6 Commercial and miscellaneous 13,726 15,140 19,220 1,776 2,056 3,409 1,045 1,405 1,067 1,213 2,066 7 Transportation 4,694 5,743 4,262 427 250 497 550 375 170 0 70 8 Public utility 10,679 12,957 25,535 1,709 1,948 1,470 2,098 1,915 2,537 2,587 2,448 9 Communication 2,997 10,456 13,430 712 810 465 1,615 417 1,255 1,158 776 10 Real estate and financial 53,199 69,232 117,080 4,487 10,324 8,390 8,638 6,373 16,392 13,933 10,140 11 Stocks3 22,628 35,515 61,823 6,514 5,020 4,327 5,764 3,263 5,106 6,599 6,241 Type 12 Preferred 4,118 6,505 11,514 856 1,284 726 1,290 402 817 1,390 1,293 13 Common 18,510 29,010 50,309 5,658 3,736 3,601 4,474 2,861 4,289 5,209 4,948 Industry group 14 Manufacturing 4,054 5,700 14,206 1,827 1,132 746 982 250 570 2,565 1,753 15 Commercial and miscellaneous 6,277 9,149 9,234 953 421 917 803 1,009 1,271 535 691 16 Transportation 589 1,544 2,395 372 154 179 57 28 511 15 186 17 Public utility 1,624 1,966 3,788 346 406 305 208 174 410 218 870 18 Communication 419 978 1,509 74 140 107 379 0 59 104 106 19 Real estate and financial 9,665 16,178 30,691 2,942 2,767 2,073 3,335 1,802 2,285 3,162 2,635 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 1986 IItteemm 11998855 11998866 May June July Aug. Sept. Oct. Nov/ Dec. INVESTMENT COMPANIES1 1 Sales of own shares2 222,670 411,747 31,251 30,619 35,684 32,636 34,690 37,150 33,672 44,670 2 Redemptions of own shares3 132,440 239,340 16,706 18,921 21,508 20,102 21,338 20,782 20,724 34,779 3 Net sales 90,230 172,407 14,545 11,698 14,176 12,534 13,352 16,368 12,948 9,891 4 Assets4 251,695 424,088 343,926 356,040 360,050 387,547 381,872 402,644 416,939 424,088 5 Cash position5 20,607 30,783 28,184 28,083 28,080 28,682 29,540 30,826 29,579 30,783 6 Other 231,088 393,305 315,742 327,957 331,970 358,865 352,332 371,818 387,360 393,305 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 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1 Corporate profits with inventory valuation and capital consumption adjustment 213.7 264.7 280.6 265.0 266.4 274.3 296.3 285.6 296.4 293.1 302.0 2 Profits before tax 207.6 235.7 223.1 221.9 213.8 213.8 229.2 235.8 222.5 227.7 240.4 3 Profits tax liability 77.2 95.4 91.8 87.8 87.8 87.1 95.8 96.4 95.7 99.0 104.4 4 Profits after tax 130.4 140.3 131.4 134.1 126.0 126.7 133.4 139.4 126.9 128.8 135.9 5 Dividends 71.5 78.3 81.6 80.1 80.9 81.4 81.6 82.5 85.2 87.5 88.8 6 Undistributed profits 58.8 62.0 49.8 54.0 45.1 45.3 51.8 57.0 41.7 41.2 47.2 7 Inventory valuation -10.9 -5.5 -.6 -1.6 -.5 1.6 6.1 -9.4 16.5 10.6 6.1 8 Capital consumption adjustment 17.0 34.5 58.1 44.7 53.2 58.9 61.0 59.2 57.3 54.8 55.5 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 • April 1987 1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities Billions of dollars, except for ratio 1985 1986 AAccccoouunntt 11998800 11998811 11998822 11998833 11998844 Ql Q2 Q3 Q4 Ql 1 Current assets 1,328.3 1,419.6 1,437.1 1,575.9 1,703.0 1,722.7 1,734.6 1,763.0 1,784.6 1,795.7 2 Cash 127.0 135.6 147.8 171.8 173.6 167.5 167.1 176.3 189.2 195.3 3 U.S. government securities 18.7 17.7 23.0 31.0 36.2 35.7 35.4 32.6 33.0 31.0 4 Notes and accounts receivable 507.5 532.5 517.4 583.0 633.1 650.3 654.1 661.0 671.5 663.4 5 Inventories 543.0 584.0 579.0 603.4 656.9 665.7 666.7 675.0 666.0 679.6 6 Other 132.1 149.7 169.8 186.7 203.2 203.5 211.2 218.0 224.9 226.3 7 Current liabilities 890.6 971.3 986.0 1,059.6 1,163.6 1,174.1 1,182.9 1,211.9 1,233.6 1,222.3 8 Notes and accounts payable 514.4 547.1 550.7 595.7 647.8 636.9 651.7 670.4 682.7 668.4 9 Other 376.2 424.1 435.3 463.9 515.8 537.1 531.2 541.5 550.9 553.9 10 Net working capital 437.8 448.3 451.1 516.3 539.5 548.6 551.7 551.1 551.0 573.4 11 MEMO: Current ratio1 1.492 1.462 1.458 1.487 1.464 1.467 1.466 1.455 1.447 1.469 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. 1985 1986 1987 IInndduussttrryy 11998844 11998855 1199886611 Q2 Q3 Q4 Ql Q2 Q3 Q41 Ql> 1 Total nonfarm business 354.44 387.13 380.69 387.86 389.23 397.88 377.94 375.92 374.55 394.34 386.82 Manufacturing 2 Durable goods industries 66.24 73.27 69.96 74.34 72.99 75.47 68.01 68.33 69.31 74.17 67.86 3 Nondurable goods industries 72.58 80.21 74.81 79.91 81.48 82.79 76.02 73.35 69.89 80.00 73.36 Nonmanufacturing 4 Mining 16.86 15.88 11.24 16.56 15.89 15.25 12.99 11.22 10.15 10.62 10.36 Transportation 5 Railroad 6.79 7.08 6.72 7.38 7.79 6.74 6.22 6.77 7.31 6.60 6.37 6 Air 3.56 4.79 6.04 3.71 5.17 6.07 6.58 5.77 5.69 6.12 7.22 7 Other 6.17 6.15 5.87 6.35 5.85 6.34 5.42 5.74 6.03 6.30 6.26 Public utilities 8 Electric 37.03 36.11 33.96 36.00 35.58 36.38 34.21 33.81 33.91 33.91 33.34 9 Gas and other 10.44 12.71 12.57 12.61 12.86 13.41 12.82 12.74 11.99 12.72 12.97 10 Commercial and other2 134.75 150.93 159.50 150.99 151.62 155.42 155.67 158.18 160.25 163.91 169.08 •Trade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1985 1986 AAccccoouunntt 11998822 11998833 11998844 Q2 Q3 Q4 Ql Q2 Q3 Q4 ASSETS Accounts receivable, gross 1 Consumer 78.1 87.4 96.7 106.0 116.4 120.8 125.5 134.7 146.7 146.1 2 Business 101.4 113.4 135.2 144.6 141.4 152.8 159.7 160.3 152.7 165.0 3 Real estate 20.2 22.5 26.3 28.4 29.0 30.4 31.5 32.4 33.8 35.2 4 Total 199.7 223.4 258.3 279.0 286.5 304.0 316.7 327.5 333.2 346.3 Less: 5 Reserves for unearned income 31.9 33.0 36.5 38.6 41.0 40.9 41.3 41.8 43.6 42.5 6 Reserves for losses 3.5 4.0 4.4 4.8 4.9 5.0 5.1 5.2 5.5 6.0 7 Accounts receivable, net 164.3 186.4 217.3 235.6 240.6 258.1 270.3 280.4 284.1 297.8 8 All other 30.7 34.0 35.4 39.5 46.3 46.8 50.6 52.1 63.1 61.7 9 Total assets 195.0 220.4 252.7 275.2 286.9 304.9 321.0 332.5 347.2 359.6 LIABILITIES 10 Bank loans 18.3 18.7 21.3 18.5 18.2 21.0 20.4 22.9 25.3 30.6 11 Commercial paper 51.1 59.7 72.5 82.6 93.6 96.9 102.0 106.4 110.6 115.2 Debt 12 Other short-term 12.7 13.9 16.2 16.6 16.6 17.2 18.5 20.9 21.6 23.1 13 Long-term 64.4 68.1 77.2 85.7 86.4 93.0 100.0 101.8 105.3 106.0 14 All other liabilities 21.2 30.1 33.1 36.9 36.6 39.6 41.4 40.4 43.2 43.6 15 Capital, surplus, and undivided profits 27.4 29.8 32.3 34.8 35.7 37.1 38.8 40.2 41.3 41.1 16 Total liabilities and capital 195.0 220.4 252.7 275.2 286.9 304.9 321.0 332.5 347.2 359.6 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 DDDeeeccc... 333111,,, 111999888666''' Oct. Nov. Dec. Oct. Nov. Dec. Oct. Nov. Dec. 1 Total 164,989 5,751 1,197 1,736 32,469 26,641 30,872 26,718 25,444 29,136 Retail financing of installment sales 2 Automotive (commercial vehicles) 17,429 281 -422 -418 1,359 651 720 1,078 1,073 1,138 3 Business, industrial, and farm equipment 20,210 11 168 177 965 1,195 1,611 954 1,027 1,434 Wholesale financing 4 Automotive 22,078 4,592 1,194 -1,021 13,818 9,895 9,973 9,226 8,701 10,994 5 Equipment 5,017 134 149 93 715 883 945 581 734 852 6 All other 7,778 149 315 58 2,043 1,857 22,,114411 11,,889933 11,,554422 22,,008833 Leasing 7 Automotive 18,610 248 -90 1,497 1,018 766 1,733 770 856 236 8 Equipment 43,151 -10 -237 1,244 1,770 1,290 1,985 1,780 1,527 741 9 Loans on commercial accounts receivable and factored commercial accounts receivable 16,185 -267 -125 -681 9,201 8,806 9,170 9,468 8,931 9,851 10 All other business credit 14,531 613 245 786 1,580 1,298 2,593 966 1,053 1,808 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 DomesticN onfinancial Statistics • April 1987 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1986 1987 IItteemm 11998844 11998855 11998866 July Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 96.8 104.1 118. f 115.7 117.9 124.0 127.5 124.2 124.8r 133.4 2 Amount of loan (thousands of dollars) 73.7 77.4 86.2r 83.4 84.8 90.4 93.9 92.5 93.2' 98.1 3 Loan/price ratio (percent) 78.7 77.1 75.2 73.9 74.5 75.2 75.6 76.2 76.4 75.6 4 Maturity (years) 27.8 26.9 26.6 26.2 26.5 27.1 27.9 27.3 27.4' 27.8 5 Fees and charges (percent of loan amount)2 2.64 2.53 2.48 2.35 2.40 2.49 2.66 2.64 2.46' 2.28 6 Contract rate (percent per annum) 11.87 11.12 9.82 9.89 9.84 9.74 9.57 9.45 9.28 9.17 Yield (percent per annum) 7 FHLBB series5 12.37 11.58 10.25' 10.30 10.26 10.17 10.02 9.91 9.69' 9.55 8 HUD series4 13.80 12.28 10.07 10.28 9.88 9.96 9.89 9.47 9.33 9.09 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5. 13.81 12.24 9.91 10.01 9.80 9.90 9.80 9.26 9.21 8.79 10 GNMA securities6 13.13 11.61 9.30 9.31 9.11 9.17 9.06 8.83 8.62 8.46 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 83,339 94,574 98,048 97,255 96,675 97,717 98,402 98,210 97,895 96,382 12 FHA/VA-insured 35,148 34,244 29,683 30,766 28,451 26,658 25,435 24,300 23,121 22,155 13 Conventional 48,191 60,331 68,365 66,489 68,224 71,059 72,967 73,910 74,774 74,227 Mortgage transactions (during period) 14 Purchases 16,721 21,510 30,826 3,343 3,800 4,649 3,784 2,549 2,336 1,364 15 Sales 978 1,301 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Mortgage commitments1 16 Contracted (during period) 21,007 20,155 32,98 7 3,270 3,840 4,248 2,375 1,811 1,272 948 17 Outstanding (end of period) 6,384 3,402 3,386 7,706 7,671 7,252 5,740 4,625 3,386 2,258 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 18 Total 9,283 12,399 13,795 14,010 13,359 12,905 12,315 19 FHA/VA 910 841 692 739 729 722 707 20 Conventional 8,373 11,558 13,103 13,271 12,630 12,183 11,607 Mortgage transactions (during period) 21 Purchases 21,886 44,012 n.a. 8,518 10,458 12,486 11,566 9,862 n.a. n.a. 22 Sales 18,506 38,905 8,113 10,132 13,072 11,417 10,510 Mortgage commitments9 23 Contracted (during period) 32,603 48,989 7,863 13,707 10,658 9,356 11,233 24 Outstanding (end of period) 13,318 16,613 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 11998844 11998855 11998866 Q4 Ql Q2 Q3 Q4 1 All holders 2,036,158 2,268,423' 2,556,620 2,268,423' 2,317,641' 2,385,417' 2,466,597' 2,556,620 7 1- to 4-family 1,320,444 1,468,273' 1,668,285 1,468,273' 1,4%,282' 1,545,311' 1,605,598' 1,668,285 3 Multifamily 185,414 213,816' 244,122 213,816' 221,587' 229,186' 236,595' 244,122 4 Commercial 418,300 480,719' 545,185 480,719' 495,879' 509,337' 524,235' 545,185 5 112,000 105,615 99,028 105,615 103,893 101,583' 100,169' 99,028 6 Selected financial institutions 1,272,206 1,391,894' 1,504,721 1,391,894' 1,410,344' 1,436,865' 1,465,757' 1,504,721 7 Commercial banks1 379,498 429,196' 500,163 429,196' 441,0%' 455 ,%5' 474,542' 500,163 8 1- to 4-family 196,163 213,434' 240,378 213,434' 216,290' 221,644' 229,340' 240,378 9 Multifamily 20,264 23,373' 30,010 23,373' 25,389' 26,840' 28,250' 30,010 10 Commercial 152,894 181,032' 216,771 181,032' 187,620' 195,247' 204,480' 216,771 11 Farm 10,177 11,357 13,004 11,357 11,797 12,234' 12,472 13,004 1? Savings banks 154,441 177,263 224,901 177,263 188,154 203,398' 215,036' 224,901 13 1- to 4-family 107,302 121,879 155,229 121,879 131,381 142,174' 149,786' 155,229 14 Multifamily 19,817 23,329 30,291 23,329 23,980 26,543' 28,400' 30,291 15 Commercial 27,291 31,973 39,277 31,973 32,707 34,577' 36,762' 39,277 16 Farm 31 82 104 82 86 104 88' 104 17 Savings and loan associations 555,277 583,236 553,552 583,236 574,732 565,037' 557,139' 553,552 18 1- to 4-family 421,489 432,422 404,034 432,422 420,073 413,865' 408,152' 404,034 19 Multifamily 55,750 66,410 67,282 66,410 67,140 66,020' 65,827' 67,282 70 Commercial 77,605 83,798 81,734 83,798 86,860 84,618' 82,644' 81,734 71 Farm 433 606 502 606 659 534' 5W 502 7.7 Life insurance companies 156,699 171,797 190,869 171,797 174,823 180,041 185,269 190,869 ?3 1- to 4-family 14,120 12,381 13,027 12,381 12,605 12,608 12,927 13,027 74 Multifamily 18,938 19,894 20,709 19,894 20,009 20,181 20,709 20,709 75 Commercial 111,175 127,670 145,863 127,670 130,569 135,924 140,213 145,863 76 Farm 12,466 11,852 11,270 11,852 11,640 11,328 11,420 11,270 27 Finance companies2 26,291 30,402 35,236 30,402 31,539 32,424 33,771 35,236 78 Federal and related agencies 158,993 166,928 157,049 166,928 165,041 161,398 159,505 157,049 29 Government National Mortgage Association 2,301 1,473 897 1,473 1,533 876 887 897 30 1- to 4-family 585 539 47 539 527 49 48 47 31 Multifamily 1,716 934 850 934 1,006 827 839 850 32 Fanners Home Administration 1,276 733 480 733 704 570 457 480 33 1- to 4-family 213 183 140 183 217 146 132 140 34 Multifamily 119 113 50 113 33 66 57 50 35 Commercial 497 159 120 159 217 111 115 120 36 Farm 447 278 170 278 237 247 153 170 37 Federal Housing and Veterans Administration 4,816 4,920 4,899 4,920 4,964 5,094 4,966 4,899 38 1- to 4-family 2,048 2,254 2,303 2,254 2,309 2,449 2,331 2,303 39 Multifamily 2,768 2,666 2,5% 2,666 2,655 2,645 2,635 2,5% 40 Federal National Mortgage Association 87,940 98,282 97,895 98,282 98,795 97,295 97,717 97,895 41 1- to 4-family 82,175 91,966 90,718 91,966 92,315 90,460 90,508 90,718 4? Multifamily 5,765 6,316 7,177 6,316 6,480 6,835 7,209 7,177 43 Federal Land Banks 52,261 47,498 40,719 47,498 45,422 43,369 42,119 40,719 44 1- to 4-family 3,074 2,798 2,3% 2,798 2,673 2,552 2,478 2,3% 45 Farm : 49,187 44,700 38,323 44,700 42,749 40,817 39,641 38,323 46 Federal Home Loan Mortgage Corporation 10,399 14,022 12,159 14,022 13,623 14,194 13,359 12,159 47 1- to 4-family 9,654 11,881 10,927 11,881 12,231 11,890 11,127 10,927 48 Multifamily 745 2,141 1,232 2,141 1,392 2,304 2,232 1,232 49 Mortgage pools or trusts3 332,057 415,042 575,301 415,042 440,701 475,615 522,721 575,301 50 Government National Mortgage Association 179,981 212,145 259,373 212,145 220,348 229,204 241,230 259,373 51 1- to 4-family 175,589 207,198 253,388 207,198 215,148 223,838 235,664 253,388 57 Multifamily 4,392 4,947 5,985 4,947 5,200 5,366 5,566 5,985 53 Federal Home Loan Mortgage Corporation 70,822 100,387 170,393 100,387 110,337 125,903 146,871 170,393 54 1- to 4-family 70,253 99,515 165,856 99,515 108,020 123,676 143,734 165,856 55 Multifamily 569 872 4,537 872 2,317 2,227 3,137 4,537 56 Federal National Mortgage Association 36,215 54,987 97,174 54,987 62,310 72,377 86,359 97,174 57 1- to 4-family 35,965 54,036 95,791 54,036 61,117 71,153 85,171 95,791 58 Multifamily 250 951 1,383 951 1,193 1,224 1,188 1,383 59 Farmers Home Administration 45,039 47,523 48,361 47,523 47,706 48,131 48,261 48,361 60 1- to 4-family 21,813 22,186 21,682 22,186 22,082 21,987 21,782 21,682 61 Multifamily 5,841 6,675 7,453 6,675 6,943 7,170 7,353 7,453 6? Commercial 7,559 8,190 8,459 8,190 8,150 8,347 8,409 8,459 63 Farm 9,826 10,472 10,767 10,472 10,531 10,627 10,717 10,767 64 Individuals and others4 272,902 294,559 319,549 294,559 301,555 311,539 318,614 319,549 65 1- to 4-family 153,710 165,199 177,133 165,199 167,755 174,3% 178,647 177,133 66 Multifamily 48,480 55,195 64,567 55,195 57,850 60,938 63,193 64,567 67 Commercial 41,279 47,897 52,961 47,897 49,756 50,513 51,612 52,961 68 Farm 29,433 26,268 24,888 26,268 26,194 25,692 25,162 24,888 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 • April 1987 1.55 CONSUMER INSTALLMENT CREDIT14 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1986 nuiuer, ana type oi creuu 11998855 11998866 Apr. May June July Aug. Sept. Oct. Nov/ Dec. Amounts outstanding (end of period) 1 Total 535,098 594,929 555,810 562,267 567,653 573,216 576,609 584,334 591,542 594,824 594,929 By major holder 2 Commercial banks 240,7% 257,653 247,498 248,681 249,753 251,197 251,908 253,329 255,805 258,678 257,653 3 Finance companies2 120,095 145,378 128,728 131,172 134,933 137,197 138,938 144,559 146,862 146,218 145,378 4 Credit unions 75,127 83,998 77,957 78,474 79,095 80,130 80,622 81,374 82,500 83,104 83,998 5 Retailers3 39,187 40,907 39,826 40,139 40,076 40,251 40,351 40,445 40,641 40,716 40,907 6 Savings institutions 55,555 63,641 58,024 60,247 60,352 61,051 61,421 61,331 62,414 62,832 63,641 / Gasoline companies 4,337 3,352 3,777 3,554 3,445 3,389 3,368 3,295 3,320 3,277 3,352 By major type of credit 8 Automobile 206,482 241,800 215,814 218,965 222,606 226,234 228,814 236,280 240,548 241,095 241,800 9 Commercial banks 92,764 98,695 93,013 93,157 93,261 94,014 94,686 95,842 97,359 98,259 98,695 10 Credit unions 30,577 34,187 31,728 31,939 32,191 32,613 32,813 33,119 33,577 33,823 34,187 11 Finance companies 73,391 97,762 80,685 83,221 86,520 88,862 90,578 %,598 98,695 98,016 97,762 12 Savings institutions 9,750 11,157 10,386 10,648 10,634 10,745 10,736 10,721 10,916 10,9% 11,157 13 Revolving 118,2% 127,914 123,442 124,545 124,720 125,577 125,915 126,012 126,514 128,095 127,914 14 Commercial banks 73,893 81,213 78,421 79,151 79,397 79,998 80,133 80,160 80,273 81,706 81,213 15 Retailers 34,560 36,052 35,170 35,449 35,390 35,542 35,639 35,688 35,861 35,918 36,052 16 Gasoline companies 4,337 3,352 3,777 3,554 3,445 3,389 3,368 3,295 3,320 3,277 3,352 17 Savings institutions 5,506 7,297 6,075 6,392 6,488 6,649 6,775 6,869 7,059 7,194 7,297 18 Mobile home 25,461 25,069 25,513 25,560 25,479 25,398 25,215 24,958 24,995 25,025 25,069 19 Commercial banks 9,578 9,090 9,264 9,215 9,1% 9,156 9,086 9,071 9,075 9,094 9,090 20 Finance companies 9,116 8,612 9,286 9,115 9,077 8,989 8,882 8,681 8,611 8,598 8,612 21 Savings institutions 6,767 7,367 6,%3 7,230 7,206 7,253 7,248 7,206 7,309 7,333 7,367 22 Other 184,859 200,145 191,041 193,197 194,847 1%,007 1%,665 197,084 199,485 200,610 200,145 23 Commercial banks 64,561 68,655 66,800 67,158 67,898 68,030 68,003 68,256 69,098 69,618 68,655 24 Finance companies 37,588 39,005 38,757 38,836 39,336 39,345 39,479 39,281 39,556 39,604 39,005 25 Credit unions 44,550 49,811 46,228 46,535 46,903 47,517 47,809 48,255 48,922 49,280 49,811 26 Retailers 4,627 4,855 4,656 4,690 4,686 4,710 4,712 4,758 4,780 4,798 4,855 27 Savings institutions 33,533 37,820 34,600 35,977 36,024 36,405 36,662 36,535 37,130 37,309 37,820 Net change (during period) 28 Total 81,518 59,831 4,871 6,457 5,386 5,563 3,393 7,725 7,208 3,282 105 By major holder 29 Commercial banks 31,638 16,857 2,326 1,183 1,072 1,444 711 1,421 2,476 2,873 -1,025 30 Finance companies2 23,%9 25,283 1,306 2,444 3,761 2,264 1,741 5,621 2,303 -644 -840 31 Credit unions 8,583 8,871 1,004 517 621 1,035 492 752 1,126 604 894 32 Retailers3 2,126 1,720 -18 313 -63 175 100 94 196 75 191 33 Savings institutions 15,225 8,086 451 2,223 105 699 370 -90 1,083 418 809 34 Gasoline companies -24 -985 -198 -223 -109 -56 -21 -73 25 -43 75 By major type of credit 35 Automobile 33,360 35,318 1,453 3,151 3,641 3,628 2,580 7,466 4,268 547 705 3b Commercial banks 8,864 5,931 -364 144 104 753 672 1,156 1,517 900 436 37 Credit unions 1,963 3,610 408 211 252 422 200 306 458 246 364 38 Finance companies 18,728 24,371 1,269 2,536 3,299 2,342 1,716 6,020 2,097 -679 -254 39 Savings institutions 3,805 1,407 138 262 -14 111 -9 -15 195 80 161 40 Revolving 19,782 9,618 1,311 1,103 175 857 338 97 502 1,581 -181 41 Commercial banks 15,748 7,320 1,400 730 246 601 135 27 113 1,433 -493 42 Retailers 1,4% 1,492 -18 279 -59 152 97 49 173 57 134 43 Gasoline companies -24 -985 -198 -223 -109 -56 -21 -73 25 -43 75 44 Savings institutions 2,562 1,791 128 317 % 161 126 94 190 135 103 45 Mobile home 1,277 -392 -71 47 -81 -81 -183 -257 37 30 44 46 Commercial banks -45 -488 -84 -49 -19 -40 -70 -15 4 19 -4 47 Finance companies -45 -504 -41 -171 -38 -88 -107 -201 -70 -13 14 48 Savings institutions 1,367 600 54 267 -24 47 -5 -42 103 24 34 49 Other 27,099 15,286 2,178 2,156 1,650 1,160 658 419 2,401 1,125 -465 50 Commercial banks 7,071 4,094 1,373 358 740 132 -27 253 842 520 -%3 51 Finance companies 5,286 1,417 79 79 500 9 134 -198 275 48 -599 52 Credit unions 6,620 5,261 595 307 368 614 292 446 667 358 531 53 Retailers 630 228 0 34 -4 24 2 46 22 18 57 54 Savings institutions 7,492 4,287 131 1,377 47 381 257 -127 595 179 511 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 1986 IItteemm 11998844 11998855 11998866 June July Aug. Sept. Oct. Nov. Dec. INTEREST RATES Commercial banks' 1 48-month new car2 13.71 12.91 n.a. n.a. n.a. 11.00 n.a. n.a. 10.58 n.a. 2 24-month personal 16.47 15.94 n.a. n.a. n.a. 14.70 n.a. n.a. 14.19 n.a. 3 120-month mobile home2 15.58 14.96 n.a. n.a. n.a. 13.95 n.a. n.a. 13.49 n.a. 4 Credit card 18.77 18.69 n.a. n.a. n.a. 18.15 n.a. n.a. 18.09 n.a. Auto finance companies New car 14.62 11.98 9.44 9.35 9.31 9.29 5.40 6.12 11.83 11.71 6 Used car 17.85 17.59 15.95 16.06 15.83 15.56 15.23 15.17 15.20 15.12 OTHER TERMS3 Maturity (months) 7 New car 48.3 51.5 50.0 49.5 49.9 50.4 44.5 45.3 53.4 53.3 8 Used car 39.7 41.4 42.6 42.7 42.8 42.9 42.5 42.2 42.6 42.7 Loan-to-value ratio 9 New car 88 91 91 89 89 90 92 92 93 93 10 Used car 92 94 97 97 97 97 98 97 97 98 Amount financed (dollars) 11 New car 9,333 9,915 10,665 10,608 10,748 10,756 11,162 11,340 11,160 10,835 12 Used car 5,691 6,089 6,555 6,611 6,614 6,569 6,763 6,746 6,946 7,168 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 • April 1987 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1984 1985 1986 HI H2 HI H2 HI' H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .... 375.8 387.4 548.8 756.3 869.3 827.7 727.8 784.8 732.6 1,006.1 705.2 950.7 By sector and instrument 2 U.S. government 87.4 161.3 186.6 198.8 223.6 214.3 181.3 216.3 201.8 245.5 211.3 217.5 3 Treasury securities 87.8 162.1 186.7 199.0 223.7 214.7 181.5 216.4 201.9 245.5 211.4 218.0 4 Agency issues and mortgages -.5 -.9 -.1 -.2 -.1 -.3 -.2 -.1 -.1 -.1 -.1 -.5 5 Private domestic nonfinancial sectors 288.5 226.2 362.2 557.5 645.7 613.3 546.5 568.5 530.8 760.6 494.0 733.2 6 Debt capital instruments 155.5 148.3 252.8 314.0 461.7 447.0 298.4 329.6 355.4 568.0 384.3 509.7 7 Tax-exempt obligations 23.4 44.2 53.7 50.4 152.4 48.5 42.8 58.0 67.5 237.3 15.9 81.1 8 Corporate bonds 22.8 18.7 16.0 46.1 73.9 109.2 31.2 61.1 72.7 75.1 129.2 89.1 9 Mortgages 109.3 85.4 183.0 217.5 235.4 289.4 224.5 210.5 215.2 255.7 239.2 339.5 10 Home mortgages 72.2 50.5 117.1 129.9 150.3 200.6 135.2 124.7 133.1 167.5 156.4 244.7 11 Multifamily residential 4.8 5.4 14.1 25.1 29.2 30.4 27.5 22.7 24.6 33.7 30.9 29.9 12 Commercial 22.2 25.2 49.0 63.3 62.4 64.4 62.9 63.7 60.3 64.4 59.3 69.5 13 Farm 10.0 4.2 2.8 -.8 -6.4 -6.0 -1.1 -.5 -2.8 -10.0 -7.4 -4.6 14 Other debt instruments 133.0 77.9 109.5 243.5 184.0 166.3 248.1 238.9 175.4 192.6 109.6 223.5 15 Consumer credit 22.6 17.7 56.8 95.0 96.6 67.9 98.7 91.3 97.3 95.9 75.3 61.2 16 Bank loans n.e.c 57.0 52.9 25.8 80.1 41.3 80.2 91.9 68.4 24.9 57.7 22.0 138.4 17 Open market paper 14.7 -6.1 -.8 21.7 14.6 -9.3 24.8 18.7 12.3 16.9 -15.7 -2.9 18 Other 38.7 13.4 27.7 46.6 31.4 27.4 32.7 60.5 40.9 22.0 28.1 26.8 19 By borrowing sector 288.5 226.2 362.2 557.5 645.7 613.3 546.5 568.5 530.8 760.6 494.0 733.2 20 State and local governments 6.8 21.5 34.0 27.4 107.8 60.0 25.2 29.6 56.8 158.7 35.7 84.2 21 Households 121.4 88.4 188.0 239.5 295.0 291.2 232.8 246.2 253.6 336.4 231.8 351.1 22 Farm 16.6 6.8 4.3 .1 -13.6 -11.7 -.4 .5 -5.9 -21.3 -15.2 -8.3 23 Nonfarm noncorporate 38.5 40.2 76.6 97.1 92.8 100.7 101.4 92.7 85.6 99.9 95.7 105.7 24 Corporate 105.2 69.2 59.3 193.4 163.7 173.2 187.4 199.5 140.7 186.8 145.9 200.5 25 Foreign net borrowing in United States 23.5 16.0 17.4 6.1 1.7 14.4 35.5 -23.3 -4.1 7.5 24.3 4.4 26 Bonds 5.4 6.7 3.1 1.3 4.0 5.2 1.1 1.5 5.5 2.6 7.1 3.3 27 Bank loans n.e.c 3.0 -5.5 3.6 -6.6 -2.8 -2.1 -2.2 -11.1 -6.1 .4 1.4 -5.6 28 Open market paper 3.9 1.9 6.5 6.2 6.2 11.5 18.0 -5.6 4.2 8.2 20.6 2.4 29 U.S. government loans 11.1 13.0 4.1 5.3 -5.7 -.2 18.7 -8.1 -7.8 -3.6 -4.8 4.4 30 Total domestic plus foreign 399.3 403.4 566.2 762.4 871.0 842.0 763.3 761.5 728.4 1,013.5 729.5 955.1 Financial sectors 31 Total net borrowing by financial sectors 101.9 90.1 94.0 139.0 186.9 242.0 134.2 143.8 154.8 218.9 189.0 295.0 By instrument 32 U.S. government related 47.4 64.9 67.8 74.9 101.5 171.1 69.8 80.0 92.9 110.2 129.5 212.7 33 Sponsored credit agency securities 30.5 14.9 1.4 30.4 20.6 12.4 29.1 31.8 25.3 15.9 4.4 20.5 34 Mortgage pool securities 15.0 49.5 66.4 44.4 79.9 159.0 40.7 48.2 67.6 92.1 124.3 193.7 35 1.9 .4 1.1 -.4 2.2 .8 -1 5 36 Private financial sectors 54.5 25.2 26.2 64.1 85.3 71.0 64.4 63.8 61.9 108.8 59.6 82.4 37 Corporate bonds 4.4 12.5 12.1 23.3 36.5 22.3 17.3 29.3 35.3 37.7 28.7 15.9 38 Mortgages * .1 * .4 .1 .1 .4 .4 * .1 .6 -.5 39 Bank loans n.e.c 1.2 1.9 -.1 .7 2.6 3.6 -.1 1.4 .9 4.2 2.4 4.7 40 Open market paper 32.7 9.9 21.3 24.1 32.0 25.2 31.1 17.0 13.9 50.1 14.4 36.1 41 Loans from Federal Home Loan Banks 16.2 .8 -7.0 15.7 14.2 19.8 15.7 15.7 11.7 16.7 13.5 26.2 By sector 42 Sponsored credit agencies 32.4 15.3 1.4 30.4 21.7 12.1 29.1 31.8 25.3 18.1 5.2 18.9 43 Mortgage pools 15.0 49.5 66.4 44.4 79.9 159.0 40.7 48.2 67.6 92.1 124.3 193.7 44 Private financial sectors 54.5 25.2 26.2 64.1 85.3 71.0 64.4 63.8 61.9 108.8 59.6 82.4 45 Commercial banks 11.6 11.7 5.0 7.3 -4.9 -2.2 15.4 -.9 -9.2 -.6 -6.7 2.3 46 Bank affiliates 9.2 6.8 12.1 15.6 14.5 4.5 23.7 7.5 13.7 15.3 1.7 7.2 47 Savings and loan associations 15.5 2.5 -2.1 22.7 22.3 31.3 20.2 25.1 12.1 32.6 23.1 39.5 48 Finance companies 18.5 4.3 11.4 17.8 52.8 36.9 4.3 31.3 44.8 60.9 40.6 33.2 49 REITs -.2 * -.2 .8 .5 .5 .8 .8 .5 .5 .9 .1 All sectors 50 Total net borrowing 501.3 493.5 660.2 901.4 1057.8 1084.1 897.5 905.3 833.3 1,232.4 918.6 1250.1 51 U.S. government securities 133.0 225.9 254.4 273.8 324.2 385.8 251.2 296.4 294.8 353.5 340.0 431.7 52 State and local obligations 23.4 44.2 53.7 50.4 152.4 48.5 42.8 58.0 67.5 237.3 15.9 81.1 53 Corporate and foreign bonds 32.6 37.8 31.2 70.7 114.4 136.6 49.6 91.9 113.5 115.3 165.0 108.3 54 Mortgages 109.2 85.4 183.0 217.8 235.4 289.4 224.8 210.8 215.2 255.7 239.7 339.0 55 Consumer credit 22.6 17.7 56.8 95.0 96.6 67.9 98.7 91.3 97.3 95.9 75.3 61.2 56 Bank loans n.e.c 61.2 49.3 29.3 74.2 41.0 81.7 89.6 58.8 19.8 62.3 25.9 137.5 57 Open market paper 51.3 5.7 26.9 52.0 52.8 27.4 73.8 30.1 30.4 75.2 19.3 35.5 58 Other loans 68.0 27.6 24.8 67.6 41.0 46.7 67.1 68.1 44.8 37.3 37.5 55.8 External corporate equity funds raised in United States 59 Total new share issues -3.3 33.6 67.0 -31.1 37.5 115.3 -40.1 -22.2 33.3 41.6 149.6 81.1 60 Mutual funds 6.0 16.8 32.1 38.0 103.4 187.6 39.3 36.6 93.6 113.1 201.5 173.6 61 All other -9.3 16.8 34.9 -69.1 -65.9 -72.3 -79.4 -58.8 -60.4 -71.5 -52.0 -92.6 62 Nonfinancial corporations -11.5 11.4 28.3 -77.0 -81.6 -80.8 -84.5 -69.4 -75.7 -87.5 -68.7 -92.7 63 Financial corporations 1.9 4.0 2.7 6.7 11.7 6.7 5.9 7.6 11.0 12.4 8.3 5.1 64 Foreign shares purchased in United States .3 1.5 3.9 1.2 4.0 1.8 -.7 3.0 4.3 3.6 8.5 -4.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates. 1984 1985 1986 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998811 11998822 11998833 11998844 11998855 11998866 HI H2 HI H2 HI' H2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 375.8 387.4 548.8 756.3 869.3 827.7 727.8 784.8 732.6 1,006.1 705.2 950.7 By public agencies and foreign ? Total net advances 104.4 115.4 115.3 154.6 203.3 313.0 113322..55 117766..66 220011..88 220044..99 226611..33 336644..66 3 U.S. government securities 17.1 22.7 27.6 36.0 47.2 85.5 26.8 45.2 53.1 41.3 77.4 93.5 4 Residential mortgages 23.5 61.0 76.1 56.5 94.6 156.5 52.7 60.2 85.6 103.7 121.0 191.9 5 FHLB advances to savings and loans 16.2 .8 -7.0 15.7 14.2 19.8 15.7 15.7 11.7 16.7 13.5 26.2 6 Other loans and securities 47.7 30.8 18.6 46.5 47.3 51.2 37.5 55.5 51.4 43.2 49.4 53.0 Total advanced, by sector 7 U.S. government 24.0 15.9 9.7 17.4 17.8 14.2 9.0 25.7 28.8 6.7 14.6 13.8 8 Sponsored credit agencies 48.2 65.5 69.8 73.3 101.5 170.6 74.0 72.5 98.2 104.9 127.3 214.0 9 Monetary authorities 9.2 9.8 10.9 8.4 21.6 30.2 8.8 8.0 23.7 19.5 9.8 50.6 10 Foreign 23.0 24.1 24.9 55.5 62.4 98.0 40.7 70.4 51.0 73.8 109.7 86.2 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 47.4 64.9 67.8 74.9 101.5 171.1 6699..88 8800..00 9922..99 111100..22 112299..55 221122..77 12 Foreign 23.5 16.0 17.4 6.1 1.7 14.4 35.5 -23.3 -4.1 7.5 24.3 4.4 Private domestic funds advanced N Total net advances 342.3 352.9 518.7 682.7 769.2 700.1 700.5 664.9 619.6 918.8 597.7 803.2 14 U.S. government securities 115.9 203.1 226.9 237.8 277.0 300.3 224.4 251.2 241.7 312.2 262.5 338.2 15 State and local obligations 23.4 44.2 53.7 50.4 152.4 48.5 42.8 58.0 67.5 237.3 15.9 81.1 16 Corporate and foreign bonds 19.8 14.8 14.6 32.6 41.2 75.3 25.6 39.6 49.7 32.7 96.4 54.3 17 Residential mortgages 53.5 -5.3 55.0 98.5 84.8 74.5 109.9 87.0 72.0 97.5 66.2 82.7 18 Other mortgages and loans 145.9 96.9 161.5 279.1 228.1 221.3 313.6 244.7 200.4 255.9 170.1 273.0 19 LESS: Federal Home Loan Bank advances 16.2 .8 -7.0 15.7 14.2 19.8 15.7 15.7 11.7 16.7 13.5 26.2 Private financial intermediation 70 Credit market funds advanced by private financial institutions 320.2 261.9 391.9 550.5 554.4 659.2 581.8 519.1 471.3 637.4 572.5 746.6 71 Commercial banking 106.5 110.2 144.3 168.9 186.3 203.2 184.2 153.5 133.8 238.8 106.9 299.8 77 Savings institutions 26.2 21.8 135.6 149.2 83.4 109.6 173.5 124.9 63.0 103.9 101.4 117.8 73 Insurance and pension funds 93.5 86.2 97.8 124.0 141.0 137.3 144.5 103.5 121.8 160.1 124.6 150.1 24 Other finance 94.0 43.7 14.1 108.3 143.6 209.1 79.5 137.2 152.7 134.5 239.6 178.8 75 Sources of funds 320.2 261.9 391.9 550.5 554.4 659.2 581.8 519.1 471.3 637.4 572.5 746.6 76 Private domestic deposits and RPs 214.5 195.2 212.2 317.6 204.8 253.3 300.2 334.9 203.0 206.6 224.5 282.3 27 Credit market borrowing 54.5 25.2 26.2 64.1 85.3 71.0 64.4 63.8 61.9 108.8 59.6 82.4 78 Other sources 51.2 41.5 153.4 168.8 264.2 334.9 217.2 120.4 206.5 322.0 288.4 381.9 79 Foreign funds -23.7 -31.4 16.3 5.4 17.7 14.7 3.0 7.8 11.2 24.3 .9 28.6 30 Treasury balances -1.1 6.1 -5.3 4.0 10.3 1.9 -.1 8.2 14.4 6.1 -5.5 9.4 31 Insurance and pension reserves 89.6 92.5 110.6 112.5 107.0 120.2 146.5 78.5 97.4 116.6 104.5 135.9 32 Other, net -13.6 -25.7 31.8 46.8 129.2 198.1 67.8 25.9 83.5 175.0 188.5 208.1 Private domestic nonfinancial investors 33 Direct lending in credit markets 76.6 116.3 153.0 196.4 300.2 111.9 183.1 209.6 210.2 390.2 8844..88 139.0 34 U.S. government securities 37.1 69.9 95.5 132.9 150.9 65.7 142.2 123.6 130.8 171.0 53.4 78.2 35 State and local obligations 11.1 25.0 39.0 29.6 59.2 6.4 25.0 34.3 20.5 98.0 -24.5 37.3 36 Corporate and foreign bonds -4.0 2.0 -12.7 -3.4 13.2 11.5 -26.8 19.9 25.4 1.0 44.6 -21.6 37 Open market paper 1.4 -1.3 15.1 8.9 51.8 7.0 15.7 2.2 7.3 96.3 -13.0 27.1 38 Other 31.0 20.6 16.2 28.3 25.1 21.3 26.9 29.7 26.3 24.0 24.3 18.0 39 Deposits and currency 222.4 204.5 229.7 321.1 215.1 274.9 311.3 330.9 215.9 214.3 241.6 308.3 40 Currency 9.5 9.7 14.3 8.6 12.4 14.4 13.1 4.1 15.8 9.0 10.9 18.0 41 Checkable deposits 18.5 18.6 28.8 27.8 42.0 99.2 29.4 26.3 18.2 65.8 83.9 114.6 47 Small time and savings accounts 47.3 135.7 215.3 150.7 137.5 117.9 136.4 164.9 167.1 108.0 117.5 118.3 43 Money market fund shares 107.5 24.7 -44.1 47.2 -2.2 20.8 30.2 64.2 4.2 -8.6 29.0 12.7 44 Large time deposits 36.0 5.2 -6.3 84.9 14.0 1.6 93.4 76.5 -.8 28.9 2.0 1.3 45 Security RPs 5.2 11.1 18.5 7.0 13.4 13.7 10.8 3.1 14.3 12.5 -7.9 35.3 46 Deposits in foreign countries -1.7 -.4 3.1 -5.1 -2.1 7.1 -2.0 -8.2 -2.9 -1.3 6.2 8.1 47 Total of credit market instruments, deposits and currency 299.0 320.7 382.7 517.4 515.3 386.7 494.4 540.5 426.0 604.5 326.4 447.3 48 Public holdings as percent of total 26.2 28.6 20.4 20.3 23.3 37.2 17.4 23.2 27.7 20.2 35.8 38.2 49 Private financial intermediation (in percent) 93.6 74.2 75.5 80.6 72.1 94.2 83.1 78.1 76.1 69.4 95.8 93.0 50 Total foreign funds -.7 -7.3 41.3 60.9 80.1 112.7 43.7 78.2 62.2 98.1 110.5 114.8 MEMO: Corporate equities not included above 51 Total net issues -3.3 33.6 67.0 -31.1 37.5 115.3 -40.1 -22.2 33.3 41.6 149.6 81.1 57 Mutual fund shares 6.0 16.8 32.1 38.0 103.4 187.6 39.3 36.6 93.6 113.1 201.5 173.6 53 Other equities -9.3 16.8 34.9 -69.1 -65.9 -72.3 -79.4 -58.8 -60.4 -71.5 -52.0 -92.6 54 Acquisitions by financial institutions 19.9 27.6 46.8 8.2 33.3 27.8 -4.1 20.6 54.0 12.6 35.4 20.3 55 Other net purchases -23.2 6.0 20.2 -39.4 4.1 87.5 -36.0 -42.7 -20.7 29.0 114.2 60.7 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 20fline 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 • April 1987 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures' 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1986 1987 MMeeaassuurree 11998844 11998855 11998866 May June July Aug. Sept. Oct. Nov. Dec.' Jan. 1 Industrial production 121.8 124.5 126.2 124.2 124.2 124.9 125.1 124.9 125.3 126.0 126.4 126.9 Market groupings 2 Products, total 127.1 131.7 134.0 132.4 132.4 133.2 133.8 133.3 134.0 134.5 135.2 135.9 3 Final, total 127.8 132.0 133.9 131.6 131.1 132.0 132.6 132.2 132.7 133.4 134.2 134.6 4 Consumer goods 118.2 120.7 123.8 124.3 124.4 125.2 125.1 124.2 124.7' 125.4' 127.1 127.8 5 Equipment 140.5 147.1 147.5 141.2 140.0 141.0 142.5 142.8 143.3' 143.4' 143.0 143.7 6 Intermediate 124.9 130.6 134.2 135.1 137.0 137.3 137.8 137.0 138.7' 139.3' 139.6 140.3 7 Materials 114.6 114.7 115.5 113.0 113.1 113.6 113.2 113.5 113.3 114.4' 114.4 114.6 Industry groupings 8 Manufacturing 123.9 127.1 129.4 128.2 128.3 129.2 129.5 129.5 129.9 130.4' 131.0 131.8 Capacity utilization (percent)2 9 Manufacturing 80.5 80.1 79.8 79.4 79.3 79.7 79.7 79.6 79.(f 79.8' 80.1 80.3 10 Industrial materials industries 82.0 80.2 78.1 78.0 78.3 77.9 78.1 77.8' 78.4' 78.4 78.4 11 Construction contracts (1982 = 100)3 135.0' 148.0' 155.(K 153.CK 159.0' 157.0' 155^ 155.0- 151.0' 156.0' 155.0 150.0 12 Nonagricultural employment, total4 114.5 118.5 121.5 121.2 121.1 121.4 121.6 121.9 122.3 122.6 122.8 123.4 13 Goods-producing, total 101.6 102.9 102.5 102.6 102.1 102.2 102.2 102.1 102.1 102.3 102.4 102.9 14 Manufacturing, total 98.6 98.7 97.5 97.5 97.2 97.1 97.1 97.0 97.1 97.3 97.4 97.5 15 Manufacturing, production-worker ... 94.1 93.5 92.1 92.1 91.8 91.7 91.7 91.7 91.8 92.1 92.3 92.4 16 Service-producing 120.0 125.0 129.4 129.0 129.0 129.4 129.7 130.2 130.7 131.0 131.4 131.9 17 Personal income, total 193.5 206.2 216.9 216.6 216.6 217.2 217.6 218.2 218.8' 219.2' 220.6 220.7 18 Wages and salary disbursements 184.8 197.8 208.6 207.1 207.6 208.5 209.6 210.1 211.5 212.5 212.8 214.0 19 Manufacturing 164.6 172.5 176.7 176.1 175.4 175.5 176.6 176.5 179.0 177.8' 178.0 178.7 20 Disposable personal income5 193.6 205.0 215.5 215.9 215.5 215.8 215.9 216.4 216.7' 216.8' 217.8 219.4 21 Retail sales (1977 = 100)6 179.0 190.6 199.9 197.0 197.5 198.9 201.7 213.0 201.9 200.9' 210.1 198.0 Prices7 22 Consumer 311.1 322.2 328.4 326.3 327.9 328.0 328.6 330.2 330.5 330.8 331.1 333.1 23 Producer finished goods 291.1 293.7 289.6 288.9 289.3 287.6 288.1 287.3' 290.5 290.7 289.9 291.7 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 1. 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. 1986 1987 CCaatteeggoorryy 11998844 11998855 11998866 June July Aug. Sept. Oct. Nov. Dec.' Jan. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 178,602 180,440 182,822 182,732 182,906 183,074 183,261 183,450 183,628 183,815 184,092 2 Labor force (including Armed Forces)1 115,763 117,695 120,078 120,234 120,341 120,370 120,536 120,678 120,940 120,854 121,299 3 Civilian labor force 113,544 115,461 117,834 118,005 118,117 118,124 118,272 118,414 118,675 118,586 119,034 Employment 4 Nonagricultural industries2 101,685 103,971 106,434 106,449 106,763 107,010 106,845 107,030 107,217 107,476 107,866 5 Agriculture 3,321 3,179 3,163 3,164 3,124 3,057 3,142 3,162 3,215 3,161 3,145 Unemployment 6 Number 8,539 8,312 8,237 8,392 8,230 8,057 8,285 8,222 8,243 7,949 8,023 7 Rate (percent of civilian labor force) ... 7.5 7.2 7.0 7.1 7.0 6.8 7.0 6.9 6.9 6.7 6.7 8 Not in labor force 62,839 62,745 62,744 62,498 62,565 62,704 62,725 62,772 62,688 62,961 62,793 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 94,461 97,698 100,168 99,843 100,105 100,283 100,560 100,826 101,068' 101,293 101,741 10 Manufacturing 19,412 19,426 19,187 19,135 19,121 19,123 19,105 19,118 19,156' 19,183 19,186 11 Mining 974 969 792 772 768 753 743 746 742' 740 729 12 Contract construction 4,345 4,661 4,961 4,947 4,980 5,012 5,010 5,001 4,993 4,997 5,139 13 Transportation and public utilities 5,171 5,300 5,285 5,167 5,288 5,255 5,316 5,316 5,351' 5,359 5,363 14 Trade 22,134 23,195 23,829 23,773 23,841 23,893 23,924 24,007 24,056' 24,053 24,238 15 Finance 5,682 5,924 6,304 6,295 6,334 6,364 6,388 6,409 6,429' 6,469 6,491 16 Service 20,761 21,929 23,073 23,072 23,176 23,255 23,300 23,359 23,451' 23,567 23,684 17 Government 15,984 16,295 16,738 16,682 16,597 16,628 16,774 16,870 16,890' 16,925 16,911 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • April 1987 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1986 1986 1986 Ql Q2 Q3 Q4' Ql Q2 Q3 Q4 Ql Q2 Q3 Q4' Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 125.0 124.4 125.0 125.9 156.3 157.1 157.9 158.7 80.0 79.2 79.1 79.3 2 Mining 105.4 99.9 96.6 95.9 132.4 132.1 131.9 131.7 79.6 75.6 73.2 72.8 3 Utilities 110.5 108.9 108.8 110.6 136.3 136.9 137.5 138.1 81.1 79.5 79.1 80.1 4 Manufacturing 128.4 128.4 129.4 130.4 160.5 161.4 162.4 163.4 80.0 79.5 79.7 79.8 5 Primary processing ... 111.5 111.1 112.1 113.9 133.6 134.0 134.6 135.1 83.5 82.9 83.3 84.3 6 Advanced processing . 138.5 138.9 139.7 140.4 176.7 177.9 179.1 180.4 78.4 78.0 78.0 77.8 7 Materials 114.5 113.3 113.4 114.0 144.2 144.7 145.3 145.8 79.4 78.3 78.1 78.2 8 Durable goods 120.9 118.8 118.8 120.0 159.9 160.7 161.5 162.2 75.6 73.9 73.6 74.0 9 Metal materials .... 79.0 75.1 73.1 75.9 115.0 114.5 114.0 113.4 68.7 65.6 64.2 66.9 10 Nondurable goods 115.7 116.9 119.7 120.7 139.0 139.5 139.9 140.4 83.2 83.8 85.6 86.0 11 Textile, paper, and chemical.. 116.2 117.0 120.4 121.6 138.4 138.8 139.2 139.6 83.9 84.3 86.5 87.1 12 Paper 128.8 130.1 135.1 135.0 137.3 138.1 138.9 139.7r 93.8 94.2 97.3 96.7 13 Chemical 115.3 115.4 117.7 119.5 144.0 144.3 144.7 145.CK 80.1 80.0 81.4 82.4 14 Energy materials 102.2 100.6 98.6 97.8 121.1 121.3 121.4 121.6 84.4 82.9 81.2 80.4 Previous cycle1 Latest cycle2 1986 1986 High Low High Low Jan. May June July Aug. Sept. Oct/ Nov/ Dec/ Jan. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 80.9 79.1 79.0 79.2 79.2 79.0 79.0 79.4 79.5 79.7 16 Mining 92.8 87.8 95.2 76.9 81.6 75.5 74.9 73.5 73.1 72.9 72.5 73.4 72.5 72.7 17 Utilities 95.6 82.9 88.5 78.0 82.7 79.3 79.2 79.9 78.8 78.7 79.3 80.5 80.4 80.2 18 Manufacturing 87.7 69.9 86.5 68.0 80.8 79.4 79.3 79.7 79.7 79.6 79.6 79.8 80.1 80.3 19 Primary processing ... 91.9 68.3 89.1 65.1 84.4 82.9 82.7 82.9 83.2 83.7 83.8 84.4 84.7 20 Advanced processing . 86.0 71.1 85.1 69.5 79.2 78.0 77.7 78.4 78.0 77.6 77.8 77.7 77.9 21 Materials 92.0 70.5 89.1 68.4 80.1 78.1 78.0 78.3 77.9 78.1 77.8 78.4 78.4 78.4 22 Durable goods 91.8 64.4 89.8 60.9 76.5 73.7 73.2 73.7 73.5 73.5 73.6 74.2 74.1 74.3 23 Metal materials 99.2 67.1 93.6 45.7 71.0 65.2 63.2 63.8 63.8 64.8 65.2 65.4 67.1 67.0 24 Nondurable goods .... 91.1 66.7 88.1 70.6 83.7 83.5 84.3 85.0 85.5 86.1 85.8 85.6 86.5 87.1 25 Textile, paper, and chemical 92.8 64.8 89.4 68.6 84.3 84.2 85.1 85.6 86.5 87.4 87.0 86.7 87.7 88.4 ">6 98.4 70.6 97.3 79.9 94.6 93.1 95.9 97.8 97.9 96.1 95.7 96.0 98.2 77 92.5 64.4 87.9 63.3 80.8 80.2 80.4 80.2 81.2 82.6 82.5 81.7 82.9 28 Energy materials 94.6 86.9 94.0 82.2 85.1 82.9 83.1 82.3 80.6 80.7 79.7 81.2 80.4 79.4 1. Monthly high 1973; monthly low 1975. NOTE. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly highs 1978 through 1980; monthly lows 1982. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value • Monthly data are seasonally adjusted 1977 1986 1987 pro- 11998855 Grouping por- avg. tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct/ Nov. Dec." Jan.e Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 123.8 126.2 125.3 123.6 124.7 124.2 124.2 124.9 125.1 124.9 125.3 126.0 126.4 126.9 2 Products 57.72 130.8 134.0 132.9 131.2 132.7 132.4 132.4 133.2 133.8 133.3 134.0 134.5 135.2 135.9 3 Final products 44.77 131.1 133.9 132.8 130.6 132.1 131.6 131.1 132.0 132.6 132.2 132.7 133.1 133.9 134.6 4 Consumer goods 25.52 120.2 123.8 123.3 121.8 124.5 124.3 124.4 125.2 125.1 124.2 124.7 125.4 127.1 127.8 5 Equipment 19.25 145.4 147.5 145.4 142.3 142.3 141.2 140.0 141.0 142.5 142.8 143.3 143.4 143.0 143.7 6 Intermediate products 12.94 130.0 134.2 133.4 133.3 134.5 135.1 137.0 137.3 137.8 137.0 138.7 139.3 139.6 140.3 7 Materials 42.28 114.2 115.5 114.8 113.3 113.8 113.0 113.1 113.6 113.2 113.5 113.3 114.4 114.4 114.6 Consumer goods 8 Durable consumer goods 6.89 112.9 116.0 116.6 112.4 115.9 113.8 114.3 116.3 115.7 117.4 116.3 117.8 121.1 121.3 9 Automotive products 2.98 114.0 116.2 117.6 110.4 116.4 113.2 113.7 116.4 114.5 117.0 112.7 114.2 118.1 120.4 10 Autos and trucks 1.79 112.0 118.2 119.4 106.3 115.1 110.3 112.2 114.5 110.4 116.8 107.7 107.6 115.6 119.1 11 Autos, consumer 1.16 98.9 105.5 107.1 93.7 100.8 94.8 99.3 95.3 87.8 96.2 91.9 92.3 99.5 95.2 12 Trucks, consumer .63 136.3 141.7 142.1 129.6 141.5 139.1 136.1 150.3 152.4 155.1 137.1 136.0 145.6 13 Auto parts and allied goods 1.19 116.9 113.3 114.9 116.6 118.4 117.4 116.1 119.1 120.7 117.3 120.1 124.2 121.8 122.3 14 Home goods 3.91 112.2 115.8 115.8 113.9 115.5 114.3 114.8 116.3 116.7 117.7 119.0 120.6 123.4 122.1 15 Appliances, A/C and TV 1.24 131.0 133.2 135.1 133.7 138.8 133.9 137.5 138.9 139.4 141.2 142.6 146.2 152.6 145.9 16 Appliances and TV 1.19 131.8 135.7 137.6 136.0 140.6 135.8 139.1 141.6 142.5 143.5 144.3 147.9 154.5 17 Carpeting and furniture .96 119.8 125.1 124.4 121.2 121.8 123.3 122.5 126.6 125.8 126.2 128.8 131.1 132.6 18 Miscellaneous home goods 1.71 94.3 98.0 97.0 95.5 95.0 95.0 94.1 94.1 95.1 96.0 96.5 96.3 97.2 19 Nondurable consumer goods 18.63 122.9 126.6 125.8 125.3 127.7 128.1 128.1 128.4 128.6 126.7 127.8 128.2 129.3 130.1 20 Consumer staples 15.29 129.0 132.8 132.3 131.6 134.3 135.0 135.1 135.3 135.5 133.6 134.4 134.9 136.0 136.8 21 Consumer foods and tobacco 7.80 128.8 130.1 131.1 130.3 131.9 132.4 133.3 132.2 133.2 131.0 131.6 132.6 134.1 22 Nonfood staples 7.49 129.2 135.6 133.5 133.0 136.7 137.7 137.0 138.5 137.9 136.3 137.2 137.4 137.9 138.8 23 Consumer chemical products .. 2.75 149.1 156.3 158.3 156.4 163.1 162.4 163.6 166.4 163.4 161.1 161.7 161.0 161.3 24 Consumer paper products 1.88 141.9 148.9 143.4 143.1 145.1 148.6 147.1 146.4 147.7 145.7 150.3 151.6 151.8 25 Consumer energy 2.86 101.8 107.0 103.2 104.0 106.0 106.8 104.8 106.6 107.1 106.3 105.2 105.5 106.3 26 Consumer fuel 1.44 88.6 94.1 92.0 92.2 93.7 96.4 91.8 91.2 94.9 92.0 90.8 91.7 93.5 27 Residential utilities 1.42 115.3 120.1 114.5 116.1 118.4 117.5 118.1 122.3 119.6 120.9 119.8 119.6 Equipment 28 Business and defense equipment 18.01 146.0 149.1 147.8 145.5 146.6 146.0 145.1 146.4 147.8 148.0 148.4 148.3 147.9 148.6 29 Business equipment 14.34 139.6 141.5 140.5 137.7 138.6 137.9 136.6 137.9 139.3 139.3 139.1 138.9 138.3 138.9 30 Construction, mining, and farm .. 2.08 64.3 65.3 63.0 59.5 58.6 60.9 61.9 60.6 58.3 58.1 58.0 56.6 56.3 31 Manufacturing 3.27 110.7 113.0 112.9 112.4 111.9 111.9 111.7 112.6 113.3 113.0 112.7 110.9 111.2 111.3 32 Power 1.27 83.5 82.9 82.3 82.0 83.0 82.9 83.5 81.7 81.7 80.3 80.5 79.5 80.7 81.0 33 Commercial 5.22 217.9 217.8 216.8 214.3 213.4 212.9 208.2 214.5 217.5 215.1 215.4 217.3 216.0 217.1 34 Transit 2.49 105.4 112.7 111.7 104.3 112.1 107.3 108.8 103.9 106.9 113.3 111.8 110.7 109.1 109.7 35 Defense and space equipment 3.67 170.6 178.7 176.3 176.2 178.0 178.0 178.4 179.5 181.0 182.0 184.6 184.9 185.3 186.7 Intermediate products 36 Construction supplies 5.95 118.3 124.0 122.6 122.6 123.6 123.5 124.1 124.0 125.4 125.9 126.3 127.1 126.9 127.9 37 Business supplies 6.99 140.0 142.9 142.6 142.5 143.8 145.0 147.9 148.6 148.4 146.4 149.3 149.7 150.3 38 General business supplies 5.67 143.9 147.2 146.7 146.4 148.0 148.3 151.6 153.3 152.5 151.2 154.1 153.7 154.2 39 Commercial energy products 1.31 122.9 124.4 124.9 125.6 125.8 130.7 131.9 128.3 130.6 125.8 128.8 132.4 133.7 Materials 40 Durable goods materials 20.50 121.4 122.2 121.3 119.3 120.2 118.4 117.8 118.8 118.8 118.9 119.2 120.4 120.4 121.0 41 Durable consumer parts 4.92 100.3 103.5 103.2 99.9 99.3 96.4 96.3 96.7 95.2 95.3 97.0 98.0 98.8 99.4 42 Equipment parts 5.94 158.0 153.8 153.0 153.7 154.8 152.3 151.8 154.3 155.6 154.8 153.5 154.5 154.1 155.0 43 Durable materials n.e.c 9.64 109.7 112.2 111.0 108.0 109.4 108.8 107.9 108.2 108.1 108.8 109.4 110.8 110.7 111.1 44 Basic metal materials 4.64 84.8 85.2 83.0 79.6 82.9 78.9 76.7 77.4 76.9 78.4 78.8 82.1 81.0 45 Nondurable goods materials 10.09 112.2 116.2 116.1 114.8 116.5 116.5 117.7 118.9 119.7 120.6 120.3 120.1 121.6 122.6 46 Textile, paper, and chemical materials 7.53 112.2 116.5 116.5 115.5 115.9 116.9 118.2 119.0 120.5 121.8 121.3 121.0 122.6 123.8 47 Textile materials 1.52 98.7 104.1 107.5 105.7 106.7 108.4 109.5 111.2 113.4 116.0 114.3 115.0 113.9 48 Pulp and paper materials 1.55 124.1 129.7 128.8 128.0 129.0 128.6 132.7 135.6 136.0 133.7 133.5 134.2 137.4 49 Chemical materials 4.46 112.7 116.2 115.4 114.5 114.5 115.7 116.1 115.9 117.5 119.7 119.5 118.5 120.4 50 Miscellaneous nondurable materials 2.57 112.1 115.4 115.0 112.8 118.2 115.3 116.4 118.3 117.2 117.1 117.5 117.6 118.7 51 Energy materials 11.69 103.4 103.0 102.1 101.4 100.4 100.5 100.8 99.9 97.9 98.0 96.9 98.7 97.7 96.6 52 Primary energy 7.57 107.2 106.9 106.7 107.4 106.2 106.7 106.5 104.8 103.7 103.8 102.7 104.8 102.9 53 Converted fuel materials 4.12 96.4 95.8 93.6 90.5 89.7 89.2 90.4 90.9 87.3 87.4 86.2 87.5 88.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • April 1987 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1986 11998877 Grouping SIC pro- 1985 code por- avg. tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct/ Nov. Dec.P Jan. Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 110.0 109.8 106.8 105.4 104.2 103.1 102.6 101.8 100.9 100.8 100.7 102.1 101.4 101.4 2 Mining 9.83 108.8 108.1 105.1 103.0 101.0 99.8 98.9 97.1 96.4 96.2 95.6 96.7 95.4 95.6 3 Utilities 5.96 111.9 112.5 109.7 109.3 109.4 108.5 108.6 109.7 108.3 108.3 109.3 111.2 111.2 111.0 4 Manufacturing 84.21 126.4 129.4 128.7 127.2 128.7 128.2 128.3 129.2 129.5 129.5 129.9 130.4 131.0 131.8 5 Nondurable 35.11 125.1 129.3 128.7 127.7 129.6 129.9 131.2 131.7 132.2 131.4 132.3 132.8 133.5 134.5 6 Durable 49.10 127.3 129.5 128.7 126.8 128.1 127.0 126.2 127.4 127.5 128.1 128.1 128.6 129.3 129.8 Mining 7 Metal 10 .50 75.0 73.5 77.2 75.9 76.0 72.0 65.9 69.2 70.9 70.7 68.5 8 Coal 11.12 1.60 126.8 130.8 126.5 124.7 124.4 124.0 127.3 120.2 122.2 120.8 117.6 130.1 124.8 9 Oil and gas extraction 13 7.07 106.2 104.9 101.1 99.2 96.2 95.1 93.3 92.4 90.7 91.0 90.5 89.4 88.8 88.7 10 Stone and earth minerals 14 .66 118.3 113.5 116.8 111.6 115.0 112.4 114.5 111.8 114.8 111.7 116.4 115.2 114.8 Nondurable manufactures 11 Foods 20 7.96 130.2 132.0 132.9 132.2 133.1 133.7 134.6 134.3 135.1 134.3 133.7 134.1 134.9 12 Tobacco products 21 .62 100.2 93.8 97.0 93.6 100.3 101.6 97.6 97.9 97.1 89.8 100.1 99.7 13 Textile mill products 22 2.29 103.2 107.9 109.9 108.0 111.4 111.3 112.6 113.4 114.7 116.0 116.1 117.9 117.7 14 Apparel products 23 2.79 100.9 105.5 102.8 102.8 103.1 102.6 101.7 102.5 102.5 102.7 104.2 105.1 106.1 15 Paper and products 26 3.15 127.6 133.6 132.6 132.4 134.1 133.2 137.2 138.1 138.6 136.9 137.8 139.5 141.4 16 Printing and publishing 27 4.54 153.9 160.9 156.7 157.8 161.6 161.9 164.0 165.4 164.6 163.0 167.8 168.5 168.5 170.0 17 Chemicals and products 28 8.05 127.1 131.7 132.0 130.2 132.8 131.5 134.2 134.1 134.4 133.9 133.9 132.9 133.5 18 Petroleum products 29 2.40 86.8 94.7 90.1 88.6 91.3 95.7 91.8 90.6 94.0 93.3 91.1 91.5 92.5 93.5 19 Rubber and plastic products 30 2.80 146.9 150.2 151.1 147.8 146.8 150.1 152.2 155.5 155.5 154.9 157.6 159.0 160.0 20 Leather and products 31 .53 68.5 65.4 64.8 62.7 61.5 59.5 57.9 61.9 62.0 59.4 60.2 61.3 61.1 Durable manufactures 21 Lumber and products 24 2.30 113.4 120.5 120.3 120.7 121.3 121.6 120.9 120.8 122.5 125.0 125.9 129.3 22 Furniture and fixtures 25 1.27 139.7 141.2 143.2 142.9 145.9 146.2 147.1 149.5 148.3 147.7 149.2 148.6 150.4 23 Clay, glass, stone products 32 2.72 115.5 120.0 119.3 120.0 121.6 120.2 120.8 119.6 119.7 121.6 118.1 120.6 121.6 24 Primary metals 33 5.33 80.5 82.4 80.3 76.3 78.1 74.8 71.4 73.6 73.4 74.1 74.2 76.8 74.7 74.2 25 Iron and steel 331.2 3.49 70.4 72.2 69.5 64.3 65.6 60.2 58.3 61.7 60.8 61.1 62.2 64.8 62.0 26 Fabricated metal products 34 6.46 107.3 109.2 108.5 107.6 108.2 106.5 106.6 105.7 105.9 107.3 108.3 107.1 108.4 109.4 27 Nonelectrical machinery 35 9.54 145.3 144.9 143.9 141.7 140.8 141.3 140.4 142.6 142.6 140.9 142.2 141.6 140.7 141.7 28 Electrical machinery 36 7.15 168.4 166.1 164.8 165.2 166.8 166.0 163.2 166.8 167.2 166.9 167.7 168.2 169.9 170.0 29 Transportation equipment 37 9.13 121.4 128.2 127.5 122.6 126.2 124.1 125.1 125.6 125.1 127.7 125.2 125.6 127.5 127.9 30 Motor vehicles and parts. 371 5.25 111.5 116.5 116.4 108.1 112.6 108.7 110.6 111.2 108.2 112.2 107.1 107.9 111.5 112.2 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 134.9 143.9 142.6 142.4 144.8 145.0 144.7 145.2 148.0 148.7 149.7 149.6 149.3 149.1 32 Instruments 38 2.66 139.1 141.5 141.9 142.0 142.4 140.3 139.9 141.7 142.0 141.7 140.3 141.1 142.2 142.5 33 Miscellaneous manufactures... 39 1.46 96.1 100.9 100.9 99.0 99.2 101.0 98.3 97.5 98.3 97.7 99.0 98.9 100.6 Utilities 34 Electric 44..1177 111199..77 111199..77 111199..55 111199..88 112211..66 112211..77 112233..11 112255..44 112222..44 112222..88 112233..88 112255..22 112255..55 Gross value (billions of 1978 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,650.9 1.702.1 1,686.5 1,660.8 1,686.3 1,687.6 1,676.7 1,669.9 1,681.3 1,677.8 1,683.9 1,690.8 1,703.9 1.716.2 36 Final 405.7 1,282.3 1.321.2 1,310.3 1,282.5 1,307.0 1,301.1 1,289.5 1,282.7 1,292.6 1,292.3 1,292.5 1,297.3 1,309.3 1.323.3 37 Consumer goods 272.7 820.7 850.7 845.3 832.0 852.3 852.4 843.8 842.3 846.9 839.8 839.3 846.2 861.4 869.1 38 Equipment 133.0 461.7 470.5 465.1 450.4 454.7 448.7 445.7 440.4 445.7 452.5 453.2 451.1 447.9 454.1 39 Intermediate 111.9 368.6 380.8 376.2 378.3 379.3 386.4 387.2 387.1 388.7 385.5 391.4 393.4 394.6 393.0 • 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. 1986 IItteemm 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,682 1,733 1,750 1,834 1,885 1,788 1,792 1,759 1,673 1,603 1,565 1,613 1,910 7 1-family 922 957 1,071 1,043 1,139 1,092 1,121 1,093 1,039 1,047 1,006 991 1,168 3 2-or-more-family 759 777 679 791 746 696 671 666 634 556 559 622 742 4 Started 1,749 1,742 1,806' 1,887' 1,945' 1,848' 1,842' 1,786' 1,800' 1,689' 1,657' 1,637' 1,808 5 1-family 1,084 1,072 1,179 1,195' 1,220' 1,219 1,212' 1,147' 1,18c 1,123' 1,114' 1,129' 1,225 6 2-or-more-family 665 669 626 692' 725' 629 630' 639' 62C 56V 543 508' 583 7 Under construction, end of period1 1,051 1,063 1,085 1,099 1,135 1,132 1,151 1,157 1,164 1,154 1,142' 1,123' 1,111 8 1-family 556 539 590 574 586 597 612 623 630 626 625 615 9 2-or-more-family 494 524 495 526 549 534 539 533 533 527 517' 507' 497 10 Completed 1,652 1,703 1,754 1,806 1,693 1,829 1,620 1,761 1,763 1,743 1,732' 1,771' 1,883 11 1-family 1,025 1,072 1,118 1,153 1,127 1,140 1,060 1,067 1,128 1,110 1,168' 1,174' 1,158 12 2-or-more-family 627 631 637 653 566 689 560 694 635 633 564' 597' 725 13 Mobile homes shipped 296 284 244 241' 251' 239 232' 238' 231' 243' 241' 237' 251 Merchant builder activity in 1-family units 14 Number sold 639 688 748 924 880 787 722 698 618 745' 678' 685' 772 15 Number for sale, end of period1 358 350 366 338 336 336 340 349 352 355' 357' 354' 362 Price (thousands of dollars)2 Median 16 Units sold 80.0 84.3 92.3 88.7 92.5 92.1 91.2 94.1 91.5 95.C 96.C 95.C 95.5 17 Units sold 97.5 101.0 112.5 108.0 110.3 114.6 110.9 116.8 113.2 114.C 114.9' 114.6' 122.6 EXISTING UNITS (1-family) 18 Number sold 2,868 3,217 3,566 3,200 3,570 3,450 3,390 3,470 3,610 3,770 3,810 3,910 4,060 Price of units sold (thousands of dollars)2 19 Median 72.3 75.4 80.2 79.8 80.2 83.2 82.6 79.9 8822..00 79.4 79.4 80.4 80.8 20 Average 85.9 90.6 98.2 96.8 98.1 101.7 102.1 99.2 100.3 96.8 97.3 99.1 100.6 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 327,209 555,570 $76,856 368,027 373,904 374,483 375,397 380,722 382,603 382,581 384,317 378,444 374,903 V 271,973 292,792 305,700 298,868 303,320 302,573 304,567 309,003 310,155 308,617 310,704 308,609 303,751 73 Residential 155,148 158,818 174,551 165,645 170,520 172,491 174,478 178,821 178,761 178,480 181,858 182,154 178,623 74 Nonresidential, total 116,825 133,974 131,149 133,223 132,800 130,082 130,089 130,182 131,394 130,137 128,846 126,455 125,128 Buildings 75 Industrial 13,746 15,769 13,611 13,354 14,557 13,658 13,027 12,866 12,543 13,180 12,948 13,428 12,739 76 Commercial 48,100 59,626 51,901 60,716 59,763 57,368 57,443 58,132 60,054 58,001 56,273 54,834 54,253 77 Other 12,547 12,619 13,436 13,131 13,006 13,131 13,263 13,277 13,315 14,001 14,341 13,956 13,833 28 Public utilities and other 42,432 45,960 52,201 46,022 45,474 45,925 46,356 45,907 45,482 44,955 45,284 44,237 44,303 79 Public 55,232 62,777 71,154 69,159 70,583 71,910 70,830 71,719 72,448 73,964 73,613 69,836 71,152 30 Military 2,839 3,283 3,847 3,673 3,725 3,637 3,761 3,553 4,132 5,050 3,695 3,722 3,847 31 Highway 16,343 19,998 21,383 22,673 23,155 23,240 22,001 21,603 21,607 20,552 20,465 18,371 18,932 37 Conservation and development 4,654 4,952 4,919 4,598 4,947 4,729 4,657 4,415 4,294 4,841 6,425 4,635 5,159 33 Other 31,396 34,544 41,005 38,215 38,756 40,304 40,411 42,148 42,415 43,521 43,028 43,108 43,214 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 • April 1987 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted C m h o a n ng th e s f e ro a m rli e 1 r 2 Change ( a f t r o a m nn u 3 a m l o ra n t t e h ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm JJJaaannn... 1986' 1986' 1987 111999888777 11998866 11998877 (((111999666777 JJaann.. JJaann.. === 111000000)))''' Mar. June Sept. Dec. Sept. Oct. Nov. Dec. Jan. CONSUMER PRICES2 1 All items 3.9 1.4 -1.3 1.6 2.0 2.5 .3 .2 .2 .2 .7 333.1 2 Food 2.7 4.2 -.9 3.9 8.4 4.1 .4 .4 .4 .2 .4 328.9 3 Energy items 2.5 -17.1 -32.3 -12.6 -21.0 -9.9 .4 -1.9 -.5 -.2 3.0 352.2 4 All items less food and energy 4.4 3.7 4.4 3.3 3.7 3.7 .3 .4 .3 .2 .5 333.6 5 Commodities 2.1 1.4 1.2 .3 2.6 1.4 .1 .1 .1 .1 .6 265.5 6 Services 5.9 5.1 6.5 4.9 4.3 5.1 .3 .6 .4 .3 .5 407.5 PRODUCER PRICES 7 Finished goods 1.3 -1.5 -10.5 .7 -.4 1.1 .3 .3 .1 -.1 .6 291.7 8 Consumer foods .5 1.8 -7.6 8.2 11.2 1.1 -.1 .6 .0 -.4 -1.8 280.0 9 Consumer energy -1.5 -31.7 -62.9 -20.7 -42.7 -18.4 1.8 -3.1 -1.1 -.9 9.9 478.5 10 Other consumer goods 2.4 3.0 4.1 .9 2.3 4.1 .2 .6 .3 .1 .5 263.2 11 Capital equipment 2.2 2.4 1.1 2.4 2.0 3.3 .3 .4 .3 .1 .2 311.2 12 Intermediate materials3 -.6 -3.3 -9.8 -5.1 -1.5 -1.2 .4 -.3 .0 .0 1.0 312.9 13 Excluding energy -.3 .6 -.7 -1.2 1.5 1.1 .2 .2 .1 .0 .4 306.2 Crude materials 14 Foods -7.6 -2.0 -22.6 5.9 18.1 -3.8 -1.0 1.5 -1.3 -1.2 -3.0 227.1 15 Energy -3.3 -22.0 -51.3 -29.1 -19.6 -10.4 2.6 1.0 -.7 -3.0 10.0 571.6 16 Other -3.4 2.1 25.9 6.6 -24.1 8.0 -.5 1.1 .7 .1 .5 251.0 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 11998844 11998855 11998866RR Q4 Q1 Q2 Q3 Q4' GROSS NATIONAL PRODUCT 1 3,765.0 3,998.1 4,206.5 4,087.7 4,149.2 4,175.6 4,240.7 4,260.6 By source 2 Personal consumption expenditures 2,428.2 2,600.5 2,763.1 2,667.9 2,697.9 2,732.0 2,799.8 22,,882222..55 3 Durable goods 331.2 359.3 388.4 362.0 360.8 373.9 414.5 404.3 4 Nondurable goods 870.1 905.1 932.7 922.6 929.7 928.4 932.8 939.7 5 Services 1,227.0 1,336.1 1,442.0 1,383.2 1,407.4 1,429.8 1,452.4 1,478.5 6 Gross private domestic investment 662.1 661.1 684.1 669.5 708.3 687.3 675.8 665.3 7 Fixed investment 598.0 650.0 676.3 672.6 664.4 672.8 680.3 687.8 8 Nonresidential 416.5 458.2 459.3 474.0 459.2 457.5 459.0 461.4 9 Structures 139.3 154.8 143.1 157.2 154.6 141.5 139.5 136.8 10 Producers' durable equipment 277.3 303.4 316.2 316.8 304.6 316.0 319.5 324.6 11 Residential structures 181.4 191.8 217.0 198.6 205.3 215.3 221.3 226.3 1? Change in business inventories 64.1 11.1 7.8 -3.1 43.8 14.5 -4.5 -22.5 13 Nonfarm 56.6 12.2 8.3 16.7 41.2 10.5 -10.3 -8.3 14 Net exports of goods and services -58.7 -78.9 -105.2 -105.3 -93.7 -104.5 -108.9 -113.6 15 Exports 382.7 369.8 372.3 368.2 374.8 363.0 370.8 380.7 16 Imports 441.4 448.6 477.5 473.6 468.5 467.5 479.7 494.3 17 Government purchases of goods and services 733.4 815.4 864.5 855.6 836.7 860.8 874.0 886.5 18 311.3 354.1 366.6 380.9 355.7 367.6 369.3 374.0 19 State and local 422.2 461.3 497.9 474.7 480.9 493.3 504.7 512.5 By major type of product 70 3,700.9 3,987.0 4,198.7 44,,009900..88 44,,110055..44 44,,116611..22 44,,224455..22 44,,228833..11 ?1 1,576.7 1,630.2 1,671.4 1,644.1 1,669.0 1,661.6 1,680.2 1,674.7 77 Durable 675.0 700.2 716.8 709.1 710.6 703.1 730.1 723.4 73 Nondurable 901.7 930.0 954.6 935.0 958.4 958.5 950.1 951.3 74 1,813.1 1,959.8 2,105.4 2,025.5 2,057.7 2,087.4 2,125.2 2,151.2 25 Structures 375.1 408.1 429.8 418.1 422.6 426.7 435.3 434.7 76 Change in business inventories 64.1 11.1 7.8 -3.1 43.8 14.5 -4.5 -22.5 77 Durable goods 39.2 6.6 -.7 9.5 28.6 -.1 -15.6 -15.8 28 Nondurable goods 24.9 4.5 8.6 -12.7 15.3 14.6 11.1 -6.7 29 MEMO: Total GNP in 1982 dollars 3,489.9 3,585.2 3,675.5 3,622.3 3,655.9 3,661.4 3,686.4 3,698.3 NATIONAL INCOME 30 3,032.0 3,222.3 3,385.1 3,287.3 3,340.7 3,376.4 3,396.1 n.a. 31 Compensation of employees 2,214.7 2,368.2 2,498.0 2,423.6 2,461.5 2,480.2 2,507.4 2,542.8 37 Wages and salaries 1,837.0 1,965.8 2,073.5 2,012.8 2,044.1 2,058.8 2,081.1 2,109.8 33 Government and government enterprises 346.2 372.2 395.7 381.6 387.2 392.5 398.4 404.4 34 Other 1,490.6 1,593.9 1,677.8 1,631.1 1,656.8 1,666.3 1,682.7 1,705.4 35 Supplement to wages and salaries 377.7 402.4 424.5 410.9 417.4 421.3 426.3 433.0 36 Employer contributions for social insurance 193.1 205.5 215.7 209.1 212.9 214.1 215.9 220.1 37 Other labor income 184.5 196.9 208.8 201.7 204.5 207.3 210.4 213.0 38 Proprietors' income1 236.9 254.4 279.2 262.1 265.3 289.1 277.5 284.9 39 Business and professional1 205.3 225.2 252.7 232.7 240.9 249.6 258.0 262.2 40 Farm1 31.5 29.2 26.5 29.4 24.4 39.5 19.6 22.7 41 Rental income of persons2 8.3 7.6 15.0 8.3 12.8 16.3 16.2 14.8 42 Corporate profits1 264.7 280.7 299.7 285.6 296.4 293.1 302.0 n.a. 43 Profits before tax3 235.7 223.2 235.4 235.8 222.5 227.7 240.4 n.a. 44 Inventory valuation adjustment -5.5 -.6 6.5 -9.4 16.5 10.6 6.1 -7.2 45 Capital consumption adjustment 34.5 58.1 56.8 59.2 57.3 54.8 55.5 59.4 46 Net interest 307.4 311.4 294.2 307.6 304.9 297.7 292.9 281.5 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • April 1987 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1985 1984 1985 Q4 Q1 Q2 Q3 PERSONAL INCOME AND SAVING 1 Total personal income 3,110.2 3,314.5 3,486.1 3,382.9 3,432.6 3,483.3 3,498.8 2 Wage and salary disbursements 1.836.8 1,966.1 2,073.5 2,012.8 2,044.1 2,058.8 2,081.1 3 Commodity-producing industries 577.8 607.7 623.2 617.7 622.0 620.8 621.8 4 Manufacturing 439.1 460.1 471.2 467.5 470.5 468.8 470.0 5 Distributive industries 442.2 469.8 487.9 478.9 485.2 484.3 488.3 6 Service industries 470.6 516.4 566.7 534.6 549.6 561.3 572.6 7 Government and government enterprises 346.2 372.2 395.7 381.6 387.2 392.5 398.4 8 Other labor income 184.5 196.9 208.8 201.7 204.5 207.3 210.4 9 Proprietors' income1 236.9 254.4 279.2 262.1 265.3 289.1 277.5 10 Business and professional1 205.3 225.2 252.7 232.7 240.9 249.6 258.0 11 Farm1 31.5 29.2 26.5 29.4 24.4 39.5 19.6 12 Rental income of persons2 8.3 7.6 15.0 8.3 12.8 16.3 16.2 13 Dividends 74.7 76.4 81.2 76.7 79.1 81.1 82.0 14 Personal interest income 446.9 476.2 475.0 480.6 480.8 480.1 473.8 15 Transfer payments 455.6 487.1 513.7 493.6 504.7 510.1 518.5 16 Old-age survivors, disability, and health insurance benefits 235.7 253.4 266.8 256.8 263.2 264.1 269.6 17 LESS: Personal contributions for social insurance 133.5 150.2 160.3 152.9 158.6 159.5 160.8 18 EQUALS: Personal income 3,110.2 3,314.5 3,486.1 3,382.9 3,432.6 3,483.3 3.498.8 19 LESS: Personal tax and nontax payments 439.6 486.5 514.1 500.7 497.5 504.8 519.0 20 EQUALS: Disposable personal income 2,670.6 2,828.0 2,972.0 2,882.2 2,935.1 2,978.5 2.979.9 21 LESS: Personal outlays 2.501.9 2,684.7 2,858.0 2,756.4 2,789.4 2,825.5 2,895.8 22 EQUALS: Personal saving 168.7 143.3 116.3 125.8 145.6 153.1 84.1 MEMO Per capita (1982 dollars) 23 Gross national product 14,721.1 14,982.0 15,219.4 15,079.9 15,188.0 15,178.9 15,245.6 24 Personal consumption expenditures 9,475.4 9,713.7 10,016.9 9,790.3 9,857.1 9,984.4 10,124.0 25 Disposable personal income 10,421.0 10,563.0 10,774.0 10,577.0 10,723.0 10,886.0 10,776.0 26 Saving rate (percent) 6.3 5.1 3.8 4.4 5.0 5.1 2.8 GROSS SAVING 27 Gross saving 573.3 551.5 536.1 524.1 583.2 539.7 517.2 28 Gross private saving 674.8 687.8 677.9 679.2 708.3 713.0 650.5 29 Personal saving 168.7 143.3 116.3 125.8 145.6 153.1 84.1 3 3 0 1 U Co n r d p is o t r r a ib te u t i e n d v e c n o t r o p ry o ra v t a e l u p a r t o io fi n t s a 1 djustment - 9 5 1 . . 5 0 10 - 7 .6 .3 10 6 8 . . 5 6 1 - 0 9 6 . . 4 8 11 1 5 6 . . 5 5 10 10 6 . . 6 6 10 6 8 . .8 1 Capital consumption allowances 32 Corporate 253.9 268.2 280.2 273.3 275.3 278.9 281.6 33 Noncorporate 161.2 268.2 280.2 173.4 171.8 174.4 176.0 34 Wage accruals less disbursements .0 169.0 175.0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts -101.5 .0 .0 -155.1 -125.1 -173.3 -133.3 36 Federal -170.0 -198.0 -204.9 -217.6 -195.0 -232.2 -197.4 37 State and local 68.5 61.7 63.1 62.5 69.9 58.9 64.0 38 Capital grants received by the United States, net .0 .0 .0 .0 .0 .0 .0 39 Gross investment 571.4 545.9 541.5 525.7 579.6 544.3 527.5 40 Gross private domestic 662.1 661.1 684.1 669.5 708.3 687.3 675.8 41 Net foreign -90.7 -115.2 -142.7 -143.8 -128.6 -143.0 -148.3 42 Statistical discrepancy 5.4 4.6 10.3 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 Q3 Q4 Ql Q2 Q3 P 1 Balance on current account -46,605 -106,466 -117,677 -28,455 -33,695 -34,038 -34,413 -36,280 •> -32,275 -31,510 -31,020 -35,458 -40,206 3 Merchandise trade balance2 -67,080 -112,522 -124,439 -31,675 -37,352 -36,459 -35,669 -37,669 4 Merchandise exports 201,820 219,900 214,424 52,498 52,727 53,661 55,149 55,318 5 Merchandise imports -268,900 -332,422 -338,863 -84,173 -90,079 -90,120 -90,818 -92,987 6 Military transactions, net -370 -1,827 -2,917 -619 -1,322 -1,066 -695 -624 7 Investment income, net3 24,841 18,751 25,188 8,262 9,255 6,517 5,325 5,509 8 Other service transactions, net 5,484 1,288 -525 -422 -32 -7 705 681 9 Remittances, pensions, and other transfers -3,194 -3,621 -3,787 -914 -937 -954 -834 -789 10 U.S. government grants (excluding military) -6,286 -8,536 -11,196 -3,087 -3,307 -2,069 -3,245 -3,388 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,005 -5,523 -2,824 -422 -540 -250 --220099 --11,,334466 12 Change in U.S. official reserve assets (increase, -) -1,196 -3,130 -3,858 -121 -3,148 -115 16 280 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -66 -979 -897 -264 -189 -274 -104 163 15 Reserve position in International Monetary Fund -4,434 -995 908 388 168 344 366 508 16 Foreign currencies 3,304 -1,156 -3,869 -245 -3,126 -185 -246 -391 17 Change in U.S. private assets abroad (increase, -)3 -43,821 -14,987 -25,754 -5,324 -19,579 -12,533 -25,357 -28,016 18 Bank-reported claims -29,928 -11,127 -691 4,009 -8,485 6,333 -14,387 -20,507 19 Nonbank-reported claims -6,513 5,081 1,665 -1,517 418 -2,842 -1,220 n.a. 20 U.S. purchase of foreign securities, net -7,007 -5,082 -7,977 -1,664 -1,411 -6,133 -1,664 163 21 U.S. direct investments abroad, net3 -373 -3,859 -18,752 -6,152 -10,101 -9,891 -8,806 -7,672 22 Change in foreign official assets in the United States (increase, +) 5,968 3,037 -1,324 2,577 -1,322 2,469 14,704 15,839 7.3 U.S. Treasury securities 6,972 4,690 -546 -81 -1,976 3,256 14,538 12,262 24 Other U.S. government obligations -476 13 -295 46 -171 -177 -644 -276 25 Other U.S. government liabilities4 725 436 483 58 263 288 679 954 26 Other U.S. liabilities reported by U.S. banks 545 555 522 2,932 722 -1,261 662 3,201 27 Other foreign official assets5 -1,798 -2,657 -1,488 -378 -160 363 -531 -302 28 Change in foreign private assets in the United States (increase, +)3 79,528 99,730 128,430 33,088 53,158 34,151 32,822 53,294 29 U.S. bank-reported liabilities 50,342 33,849 40,387 7,276 20,427 8,434 3,553 32,187 30 U.S. nonbank-reported liabilities -118 4,704 -1,172 589 2,232 -2,057 -1,644 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 8,721 23,059 20,500 7,484 5,676 7,666 3,807 597 32 Foreign purchases of other U.S. securities, net 8,636 12,759 50,859 11,628 22,441 18,686 23,018 17,078 33 Foreign direct investments in the United States, net3 11,947 25,359 17,856 6,111 2,382 1,422 4,088 3,432 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 11,130 27,338 23,006 -1,343 5,125 10,316 12,437 -3,771 36 --33,,668877 33,,777711 11,,221166 --11,,550055 --33,,999933 37 Statistical discrepancy in recorded data before seasonal adjustment 11,130 27,338 23,006 2,344 1,354 9,100 13,942 222 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -1,196 -3,130 -3,858 -121 -3,148 -115 1166 228800 39 Foreign official assets in the United States (increase, +) 5,243 2,601 -1,807 2,519 -1,585 2,181 14,025 14,885 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 -1,831 -1,002 1,421 -1,938 -2,828 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 194 190 64 15 28 22 12 15 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing; military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • April 1987 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are not seasonally adjusted. 1986 IItteemm 11998833 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 200,486 217,865 213,146 19,070 17,707 17,604 17,518 19,33(K 18,595 18,431 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 258,048 325,726 345,276 31,764 34,121 29,476 28,695 30,018 36,187 27,795 3 Trade balance -57,562 107,861 -132,129 -12,694 -16,414 -11,871 -11,177 -10,688 -17,592 -9,364 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 1986 1987 TTyyppee 11998833 11998844 11998855 July Aug. Sept. Oct. Nov. Dec. Jan. 1 Total 33,747 34,934 43,191 47,430 48,161 48,086 47,089 47,824 48,427 49,348 2 Gold stock, including Exchange Stabilization Fund1 11,121 11,096 11,090 11,084 11,084 11,084 11,066 11,070 11,064 11,062 3 Special drawing rights2,3 5,025 5,641 7,293 8,085 8,250 8,295 8,090 8,310 8,395 8,470 4 Reserve position in International Monetary Fund2 11,312 11,541 11,952 12,114 12,017 11,922 11,575 11,659 11,730 11,834 5 Foreign currencies4 6,289 6,656 12,856 16,147 16,810 16,785 16,358 16,785 17,238 17,982 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 1986 1987 AAsssseettss 11998833 11998844 11998855 July Aug. Sept. Oct. Nov. Dec. Jan .p 1 Deposits 190 267 480 233 227 342 303 224 287 226 Assets held in custody 2 U.S. Treasury securities1 117,670 118,000 121,004 144,527 148,263 152,275 156,076 156,919 155,835 159,597 3 Earmarked gold2 14,414 14,242 14,245 14,131 14,120 14,115 14,110 14,057 14,048 14,041 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 1986 AAsssseett aaccccoouunntt June July Aug. Sept. Oct. Nov. Dec.'' All foreign countries 1 Total, all currencies 477,090 453,656 458,012 467,565 454,886 461,440 474,567 446,581 446,555 456,627 7. Claims on United States 115,542 113,393 119,713 117,812 113,474 117,661 116,392' 112,078' 108,363 113,133 Parent bank 82,026 78,109 87,201 82,565 79,387 83,779 82,302 79,999 76,205 81,984 4 Other banks in United States2 1 , 13,664 13,057 14,039 13,527 13,072 13,624 11,659 11,904 13,685 5 Nonbanks2 21,620 19,455 21,208 20,560 20,810 20,466' 20,420' 20,254 17,464 6 Claims on foreigners 342,689 320,162 315,680 324,216 314,354 315,583 328,553' 305,562' 308,393 314,384 7 Other branches of parent bank 96,004 95,184 91,399 98,406 92,641 93,435 103,278 90,412 91,570 97,788 8 Banks 117,668 100,397 102,960 105,648 103,095 102,849 107,503 100,707 103,292 105,281 9 Public borrowers 24,517 23,343 23,478 23,279 23,578 23,720 23,505 24,215 23,357 23,520 10 Nonbank foreigners 107,785 101,238 97,843 96,883 95,040 95,579 94,267r 90,228' 90,174 87,795 11 Other assets 18,859 20,101 22,619 25,537 27,058 28,196 29,622 28,941 29,799 29,110 12 Total payable in U.S. dollars 371,508 350,636 336,288 327,639 313,703 318,375 330,597 309,087 306,633 317,485 H Claims on United States 113,436 111,426 116,645 113,519 109,263 113,636 112,133 107,612 104,224 109,190 14 Parent bank 80,909 77,229 85,971 81,073 78,025 82,261 80,753 78,335 74,705 80,574 15 Other banks in United States2 13,500 12,454 12,907 12,373 12,180 12,802 10,544 10,986 12,830 16 Nonbanks2 20,697 18,220 19,539 18,865 19,195 18,578 18,733 18,533 15,786 17 Claims on foreigners 247,406 228,600 209,905 203,934 194,102 194,643 207,701 190,030 190,663 196,491 18 Other branches of parent bank 78,431 78,746 72,689 75,883 69,135 68,604 78,400 67,835 67,835 73,704 19 Banks 93,332 76,940 71,748 66,751 65,033 64,940 68,596 62,836 64,919 66,464 70 Public borrowers 17,890 17,626 17,252 16,498 16,684 16,788 16,521 17,455 16,821 16,586 21 Nonbank foreigners 60,977 55,288 48,216 44,802 43,250 44,311 44,184 41,904 41,088 39,737 22 Other assets 10,666 10,610 9,738 10,186 10,338 10,096 10,763 11,445 11,746 11,804 United Kingdom 23 Total, all currencies 158,732 144,385 148,599 151,593 145,448 145,619 151,596 142,398 143,800 140,917 74 Claims on United States 34,433 27,675 33,157 31,364 30,223 29,839 30,879 30,747 28,940 24,599 75 Parent bank 29,111 21,862 26,970 25,106 24,252 23,466 24,291 24,800 22,671 19,085 76 Other banks in United States2 -> 1,429 1,106 1,365 1,369 1,448 2,092 1,314 1,534 1,612 77 Nonbanks2 4,384 5,081 4,893 4,602 4,925 4,4% 4,633 4,735 3,902 78 Claims on foreigners 119,280 111,828 110,217 113,739 108,156 109,024 113,368 105,534 108,147 109,508 79 Other branches of parent bank 36,565 37,953 31,576 34,670 31,613 31,828 34,678 31,268 29,%0 33,422 30 Banks 43,352 37,443 39,250 39,430 38,393 38,048 40,204 37,836 41,145 39,468 31 Public borrowers 5,898 5,334 5,644 5,236 5,229 5,336 5,086 5,157 5,038 4,990 32 Nonbank foreigners 33,465 31,098 33,747 34,403 32,921 33,812 33,400 31,273 32,004 31,628 33 Other assets 5,019 4,882 5,225 6,490 7,069 6,756 7,349 6,117 6,713 6,810 34 Total payable in U.S. dollars 126,012 112,809 108,626 104,013 97,641 97,771 103,228 97,295 97,119 95,028 35 Claims on United States 33,756 26,868 32,092 29,944 28,848 28,446 29,512 29,312 27,564 23,193 36 Parent bank 28,756 21,495 26,568 24,693 23,888 22,972 23,826 24,323 22,106 18,526 37 Other banks in United States2 1 1,363 1,005 1,102 1,131 1,194 1,848 1,110 1,364 1,475 38 Nonbanks2 4,010 4,519 4,149 3,829 4,280 3,838 3,879 4,094 3,192 39 Claims on foreigners 88,917 82,945 73,475 70,697 65,472 66,465 70,325 64,873 66,298 68,138 40 Other branches of parent bank 31,838 33,607 26,011 27,559 24,258 24,657 27,151 24,632 23,223 26,361 41 Banks 32,188 26,805 26,139 22,825 21,938 21,636 22,917 21,011 24,020 23,251 47 Public borrowers 4,194 4,030 3,999 3,777 3,793 3,838 3,778 3,859 3,811 3,677 43 Nonbank foreigners 20,697 18,503 17,326 16,536 15,483 16,334 16,479 15,371 15,244 14,849 44 Other assets 3,339 2,996 3,059 3,372 3,321 2,860 3,391 3,110 3,257 3,697 Bahamas and Caymans 45 Total, all currencies 152,083 146,811 142,055 138,944 134,238 137,526 143,082 134,060 131,306 142,592 46 Claims on United States 75,309 77,296 74,864 70,883 69,812 73,047 71,918 68,624' 66,021 76,620 47 Parent bank 48,720 49,449 50,553 44,183 43,867 47,694 46,635 44,476 42,166 53,068 48 Other banks in United States2 1 "li coo 11,544 11,204 11,730 11,201 10,813 10,641 9,557 9,628 11,156 49 Nonbanks2 16,303 13,107 14,970 14,744 14,540 14,652'" 14,591' 14,227 12,396 50 Claims on foreigners 72,868 65,598 63,882 64,043 60,363 60,167 66,610' 59,612' 59,436 61,433 51 Other branches of parent bank 20,626 17,661 19,042 20,585 16,682 16,539 22,763 16,985 18,139 18,803 57 Banks 36,842 30,246 28,192 27,078 27,160 27,065 27,779 26,205 25,743 27,519 53 Public borrowers 6,093 6,089 6,458 6,405 6,551 6,675 6,434 7,263 6,697 6,929 54 Nonbank foreigners 12,592 11,602 10,190 9,975 9,970 9,888 9,634' 9,159' 8,857 8,182 55 Other assets 3,906 3,917 3,309 4,018 4,063 4,312 4,544 5,824 5,849 4,539 56 Total payable in U.S. dollars 145,641 141,562 136,794 132,353 127,910 130,723 136,615 127,361 t24,744 136,813 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 • April 1987 3.14 Continued 1986 June July Aug. Sept. Oct. Nov. Dec.? All foreign countries 57 Total, all currencies 477,090 453,656 458,012 467,565 454,886 461,440 474,567 446,581 446,555 456,627 58 Negotiable CDs3 n.a. 37,725 34,607 34,683 32,656 31,475 33,642 32,444 32,926 31,642 59 To United States 188,070 147,583 155,538 149,848 141,599 145,488 151,281 141,126 137,101 151,639 60 Parent bank 81,261 78,739 83,914 85,126 81,299 79,564 87,927 75,777 75,087 82,510 61 Other banks in United States 29,453 18,409 16,894 16,118 14,191 15,151 14,153 14,791 14,661 15,599 62 Nonbanks 77,356 50,435 54,730 48,604 46,109 50,773 49,201 50,558 47,353 53,530 63 To foreigners 269,685 247,907 245,942 262,329 259,133 262,978 269,322 253,202 256,476 253,729 64 Other branches of parent bank 90,615 93,909 89,529 97,717 91,144 91,307 102,245 87,883 87,853 95,146 65 Banks 92,889 78,203 76,814 81,008 82,854 85,239 81,953 80,709 83,655 77,789 66 Official institutions 18,896 20,281 19,523 20,480 20,608 20,637 20,109 19,436 18,831 17,835 67 Nonbank foreigners 68,845 55,514 60,076 63,124 64,527 65,795 65,015 65,174 66,137 62,959 68 Other liabilities 19,335 20,441 21,925 20,705 21,498 21,499' 20,322 19,809' 20,052 19,617 69 Total payable in U.S. dollars 388,291 367,145 353,470 346,428 330,183 333,581 349,259 323,699 319,885 336,406 70 Negotiable CDs3 n.a. 35,227 31,063 31,076 28,970 28,091 30,560 29,206 29,752 28,467 71 To United States 184,305 143,571 150,161 142,730 133,908 137,805 143,627 133,301 129,2% 143,654 72 Parent bank 79,035 76,254 80,888 81,066 77,048 75,391 83,790 71,858 71,042 78,435 73 Other banks in United States 28,936 17,935 16,264 15,323 13,507 14,364 13,173 13,768 13,808 14,545 74 Nonbanks 76,334 49,382 53,009 46,341 43,353 48,050 46,664 47,675 44,446 50,674 75 To foreigners 194,139 178,260 163,361 163,943 158,314 158,931 167,356 153,536 153,437 156,777 76 Other branches of parent bank 73,522 77,770 70,943 75,805 68,065 66,878 77,464 65,077 63,638 71,181 77 Banks 57,022 45,123 37,323 33,745 34,827 36,460 35,358 33,802 35,177 33,847 78 Official institutions 13,855 15,773 14,354 13,772 14,091 14,125 13,697 13,320 13,139 12,371 79 Nonbank foreigners 51,260 39,594 40,741 40,621 41,331 41,468 40,837 41,337 41,483 39,378 80 Other liabilities 9,847 10,087 8,885 8,679 8,991 8,754 7,716 7,656 7,400 7,508 United Kingdom 81 Total, all currencies 158,732 144,385 148,599 151,593 145,448 145,619 151,596 142,398 143,800 140,917 82 Negotiable CDs3 n.a. 34,413 31,260 31,396 29,295 28,279 30,352 28,847 28,984 27,781 83 To United States 55,799 25,250 29,422 26,270 22,671 22,831 26,540 24,610 22,714 24,703 84 Parent bank 14,021 14,651 19,330 15,892 13,300 14,188 17,399 14,014 13,811 14,469 85 Other banks in United States 11,328 3,125 2,974 1,997 1,999 2,148 2,062 2,382 2,313 2,666 86 Nonbanks 30,450 7,474 7,118 8,381 7,372 6,495 7,079 8,214 6,590 7,568 87 To foreigners 95,847 77,424 78,525 84,362 83,707 84,880 85,554 80,252 83,320 79,452 88 Other branches of parent bank 19,038 21,631 23,389 27,029 25,106 24,962 28,272 24,194 23,733 25,036 89 Banks 41,624 30,436 28,581 30,505 31,678 32,250 31,190 31,001 34,192 30,860 90 Official institutions 10,151 10,154 9,676 9,543 9,074 9,330 8,652 8,068 7,875 6,836 91 Nonbank foreigners 25,034 15,203 16,879 17,285 17,849 18,338 17,440 16,989 17,520 16,720 92 Other liabilities 7,086 7,298 9,392 9,565 9,775 9,629 9,150 8,689 8,782 8,981 93 Total payable in U.S. dollars 131,167 117,497 112,697 108,375 101,095 101,397 108,249 99,820 99,321 99,707 94 Negotiable CDs3 n.a. 33,070 29,337 29,135 27,015 26,114 28,490 26,927 27,166 26,169 95 To United States 54,691 24,105 27,756 24,214 20,065 20,403 24,039 21,960 20,184 22,104 % Parent bank 13,839 14,339 18,956 15,331 12,648 13,707 16,984 13,591 13,438 14,021 97 Other banks in United States 11,044 2,980 2,826 1,817 1,738 1,879 1,735 2,108 2,009 2,325 98 Nonbanks 29,808 6,786 5,974 7,066 5,679 4,817 5,320 6,261 4,737 5,758 99 To foreigners 73,279 56,923 51,980 51,056 49,932 50,855 52,645 47,491 48,921 48,109 100 Other branches of parent bank 15,403 18,294 18,493 20,455 17,868 17,790 21,305 17,289 16,689 17,951 101 Banks 29,320 18,356 14,344 13,073 14,251 15,056 14,491 14,123 15,855 15,203 102 Official institutions 8,279 8,871 7,661 6,914 6,658 6,724 6,015 5,685 5,655 4,934 103 Nonbank foreigners 20,277 11,402 11,482 10,614 11,155 11,285 10,834 10,394 10,722 10,021 104 Other liabilities 3,197 3,399 3,624 3,970 4,083 4,025 3,075 3,442 3,050 3,325 Bahamas and Caymans 105 Total, all currencies 152,083 146,811 142,055 138,944 134,238 137,526 143,082 134,060 131,306 142,592 106 Negotiable CDs3 n.a. 615 610 567 565 470 527 683 784 847 107 To United States 111,299 102,955 103,813 98,897 96,636 99,585 102,012 95,840' 94,436 105,229 108 Parent bank 50,980 47,162 44,811 47,014 47,862 44,417 49,981 43,470 43,597 48,622 109 Other banks in United States 16,057 13,938 12,778 12,868 11,131 11,952 10,986 11,144 11,131 11,646 110 Nonbanks 44,262 41,855 46,224 39,015 37,643 43,216 41,045 41,226 39,708 44,961 111 To foreigners 38,445 40,320 35,053 37,340 34,827 35,216 38,447 35,427 33,841 34,400 112 Other branches of parent bank 14,936 16,782 14,075 15,882 13,561 13,368 15,918 13,574 12,527 12,631 113 Banks 11,876 12,405 10,669 9,991 9,636 10,216 10,158 8,964 8,545 8,614 114 Official institutions 1,919 2,054 1,776 2,427 2,468 2,386 2,834 2,665 2,577 2,719 115 Nonbank foreigners 11,274 9,079 8,533 9,040 9,162 9,246 9,537 10,224 10,192 10,436 116 Other liabilities 2,339 2,921 2,579 2,140 2,210 2,255 2,0% 2,110 2,245 2,116 117 Total payable in U.S. dollars 148,278 143,582 138,322 134,606 130,075 133,256 138,733 130,084 127,252 138,774 3. Before June J984, 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 1986 IItteemm 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec.? 1 Total1 180,552 178,356 194,562 198,784 203,364 209,608 211,053 210,966 211,125 By type 2 Liabilities reported by banks in the United States2 26,089 26,734 26,142 25,143 25,482 29,544 27,188 27,743 26,994 3 U.S. Treasury bills and certificates3 59,976 53,252 65,790 70,721 74,766 75,095 75,457 75,132 75,674 U.S. Treasury bonds and notes 4 Marketable 69,019 77,108 84,113 85,561 85,622 87,546 91,052 91,104 91,506 5 Nonmarketable4 5,800 3,550 1,800 1,300 1,300 1,300 1,300 1,300 1,300 6 U.S. securities other than U.S. Treasury securities5 19,668 17,712 16,717 16,059 16,194 16,123 16,056 15,687 15,651 By area 1 Western Europe1 69,776 74,418 79,641 81,524 83,874 87,261 88,590 87,707 87,774 8 Canada 1,528 1,314 1,529 1,627 1,535 1,626 1,699 1,891 2,004 9 Latin America and Caribbean 8,561 11,141 11,046 11,242 10,801 10,353 10,047 9,111 8,381 10 Asia 93,954 86,459 97,359 100,070 102,362 105,598 105,336 105,418 106,013 11 Africa 1,264 1,824 1,717 1,525 1,958 1,864 1,715 1,544 1,464 12 Other countries6 5,469 3,200 3,270 2,796 2,834 2,906 3,666 5,295 5,489 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 Dec. Mar.' June' Sept. 1 Banks' own liabilities 4,844 5,219 8,586 15,368 21,336 24,088 29,227 2 Banks' own claims 7,707 7,231 11,984 16,294' 19,800 21,138 24,516 3 Deposits 4,251 2,731 4,998 8,437' 11,383 11,465 13,818 4 Other claims 3,456 4,501 6,986 7,857 8,417 9,673 10,698 5 Claims of banks' domestic customers1 676 1,059 569 580 1,426 1,385 1,660 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 • April 1987 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1986 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998833 11998844 11998855 June July' Aug/ Sept. Oct. Nov. Dec.f 1 All foreigners 369,607 407,306 435,726 457,879' 470,842 487,452 505,464 497,018' 511,947 537,456 2 Banks' own liabilities 279,087 306,898 341,070 346,192' 342,515 355,941 372,368 362,309' 377,707 404,073 3 Demand deposits 17,470 19,571 21,107 21,66c 19,693 20,246 21,388 21,730 24,772 23,530 4 Time deposits1 90,632 110,413 117,278 115,163' 117,010 122,286 125,840 123,503' 125,651 131,191 5 Other2 25,874 26,268 29,305 32,012' 30,894 33,779 36,834 36,303' 35,567 40,325 6 Own foreign offices3 145,111 150,646 173,381 177,357' 174,917 179,630 188,307 180,773 191,718 209,027 7 Banks' custody liabilities4 90,520 100,408 94,656 111,687 128,327 131,511 133,095 134,710 134,240 133,383 8 U.S. Treasury bills and certificates' 68,669 76,368 69,133 82,701 86,789 89,586 9900,,446677 9911,,330055 9900,,335511 9900,,227711 9 Other negotiable and readily transferable instruments6 17,467 18,747 17,964 14,729 14,702 14,507 14,430 15,085 14,360 15,451 10 Other 4,385 5,293 7,558 14,257 26,836 27,417 28,198 28,319 29,529 27,661 11 Nonmonetary international and regional organizations7 5,957 4,454 5,821 3,441 3,974 5,253 3,038 3,902 4,315 4,826 12 Banks' own liabilities 4,632 2,014 2,621 891 1,857 4,090 1,721 2,426 2,944 2,977 13 Demand deposits 297 254 85 79 156 165 180 175 135 199 14 Time deposits1 3,584 1,267 2,067 551 1,209 3,233 1,243 1,939 2,299 2,166 15 Other2 750 493 469 262 492 691 299 312 511 611 16 Banks' custody liabilities4 1,325 2,440 3,200 2,550 2,118 1,163 1,317 1,476 1,371 1,849 17 U.S. Treasury bills and certificates 463 916 1,736 1,619 991 129 218 308 262 259 18 Other negotiable and readily transferable instruments6 862 1,524 1,464 918 1,126 1,033 1,099 1,162 1,104 1,590 19 Other 0 0 0 13 0 1 0 6 5 0 20 Official institutions8 79,876 86,065 79,985 92,402' 96,467 101,371 104,640 102,645 102,875 102,668 21 Banks' own liabilities 19,427 19,039 20,835 23,399' 22,647 23,834 26,821 24,064 25,165 24,526 22 Demand deposits 1,837 1,823 2,077 2,131 1,608 1,582 1,895 1,840 2,188 2,121 23 Time deposits1 7,318 9,374 10,949 10,55c 10,475 10,257 10,918 10,389 11,286 10,447 24 Other2 10,272 7,842 7,809 10,718' 10,564 11,995 14,008 11,835 11,691 11,957 25 Banks' custody liabilities4 60,448 67,026 59,150 69,004 73,820 77,538 77,819 78,581 77,710 78,142 26 U.S. Treasury bills and certificates3 54,341 59,976 53,252 65,790 70,721 74,766 75,095 75,457 75,132 7755,,667744 27 Other negotiable and readily transferable instruments6 6,082 6,966 5,824 2,996 2,892 2,624 2,524 2,920 2,446 2,323 28 Other 25 84 75 218 207 148 199 204 132 145 29 Banks9 226,887 248,893 275,589 284,335' 292,554 301,879 318,552 310,650 324,734 349,533 30 Banks' own liabilities 205,347 225,368 252,723 255,37C 251,300 260,794 276,496 268,436 282,484 309,721 31 Unaffiliated foreign banks 60,236 74,722 79,341 78,013' 76,383 81,165 88,188 87,663 90,766 100,694 32 Demand deposits 8,759 10,556 10,271 10,273' 9,142 9,304 9,295 9,714 11,626 10,234 33 Time deposits1 37,439 47,095 49,510 48,196' 49,059 52,411 58,006 55,63C 57,533 64,420 34 Other2 14,038 17,071 19,561 19,544 18,181 19,451 20,887 22,319' 21,608 26,040 35 Own foreign offices3 145,111 150,646 173,381 177,357' 174,917 179,630 188,307 180,773 191,718 209,027 36 Banks' custody liabilities4 21,540 23,525 22,866 28,964 41,254 41,084 42,057 42,214 42,250 39,812 37 U.S. Treasury bills and certificates 10,178 11,448 9,832 10,688 10,934 1100,,554433 1100,,663355 1100,,660011 1100,,449911 99,,996622 38 Other negotiable and readily transferable instruments6 7,485 7,236 6,040 5,448 5,585 5,526 5,538 5,532 5,468 5,366 39 Other 3,877 4,841 6,994 12,828 24,735 25,016 25,883 26,081 26,291 24,484 40 Other foreigners 56,887 67,894 74,331 77,701' 77,847 78,949 79,233 79,822' 80,022 80,430 41 Banks' own liabilities 49,680 60,477 64,892 66,531' 66,711 67,223 67,331 67,383' 67,114 66,850 42 Demand deposits 6,577 6,938 8,673 9,177' 8,786 9,196 10,018 10,000 10,824 10,975 43 Time deposits 42,290 52,678 54,752 55,866' 56,267 56,386 55,673 55,546' 54,533 54,158 44 Other2 813 861 1,467 1,488' 1,657 1,642 1,640 1,838 1,757 1,717 45 Banks' custody liabilities4 7,207 7,417 9,439 11,169 11,136 11,726 11,903 12,439 12,908 13,580 46 U.S. Treasury bills and certificates 3,686 4,029 4,314 4,604 4,143 4,149 4,519 4,939 4,465 44,,337777 47 Other negotiable and readily transferable instruments6 3,038 3,021 4,636 5,367 5,099 5,325 5,268 5,472 5,342 6,172 48 Other 483 367 489 1,198 1,894 2,253 2,115 2,028 3,100 3,032 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,346 10,476 9,845 6,419 6,492 6,569 6,554 6,759 6,609 7,343 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 1986 AArreeaa aanndd ccoouunnttrryy 11998833 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec.P 1 Total 369,607 407,306 435,726 457,879'' 470,842' 487,452' 505,464 497,018' 511,947 537,456 2 Foreign countries 363,649 402,852 429,905 454,438' 466,867' 482,199' 502,426 493,116' 507,632 532,631 3 Europe 138,072 153,145 164,114 166,918' 163,337' 166,939' 173,930 173,485' 175,791 180,343 4 Austria 585 615 693 1,013 988 1,035 1,073 1,018 1,197 1,180 5 Belgium-Luxembourg 2,709 4,114 5,243 5,224 5,343 5,114 6,165 6,024' 6,836 6,890 6 Denmark 466 438 513 519 560 643 483 478 604 480 7 Finland 531 418 496 49C 449 365 406 606 448 557 8 France 9,441 12,701 15,541 19,862 20,171' 21,469 21,339 21,242' 21,641 22,846 9 Germany 3,599 3,358 4,835 5,14c 6,001' 6,062' 5,559 6,624 5,856 5,386 in Greece 520 699 666 657 604 570 623 646 755 706 ii Italy 8,462 10,762 9,667 8,917' 8,746' 9,269 8,836 8,807' 9,304 10,865 17 Netherlands 4,290 4,731 4,212 4,224 4,682 4,495 4,952 4,826' 4,410 5,558 13 Norway 1,673 1,548 948 710 497 542 576 654 512 719 14 Portugal 373 597 652 795 711 791 758 738 685 700 1*5 Spain 1,603 2,082 2,114 2,069 1,894 1,979 2,082 2,297 2,197 2,348 16 Sweden 1,799 1,676 1,422 1,118 1,267 944 1,293 1,016' 1,301 920 17 Switzerland 32,246 31,740 29,020 27,843' 28,455 29,064 29,207 29,848' 30,406 31,235 18 Turkey 467 584 429 586 310 285 448 401 1,263 454 19 United Kingdom 60,683 68,671 76,728 82,313' 78,20C 79,954' 86,215 84,297' 84,058 85,431 70 Yugoslavia 562 602 673 661 542 482 562 515 544 630 71 Other Western Europe1 7,403 7,192 9,635 3,997 3,366 3,292' 2,724 2,938 3,308 2,706 77 U.S.S.R 65 79 105 89 48 32 84 25 16 23 23 Other Eastern Europe2 596 537 523 690 506 553 545 484' 452 710 24 Canada 16,026 16,059 17,427 22,926 22,359 23,933 24,150 24,340 25,753 26,256 75 Latin America and Caribbean 140,088 153,381 167,856 169,644' 182,617' 187,924' 196,704 187,968' 189,383 207,902 76 Argentina 4,038 4,394 6,032 6,229 6,336 6,096 6,069 5,748 5,202 4,723 77 Bahamas 55,818 56,897 57,657 60,082' 60,764 67,044' 69,123 64,106 62,613 72,300 78 Bermuda 2,266 2,370 2,765 2,513 2,201 2,248' 2,199 1,918 2,549 2,964 79 Brazil 3,168 5,275 5,373 5,185 5,134 5,168' 5,359 5,361 4,684 4,360 30 British West Indies 34,545 36,773 42,674 43,271' 56,432' 55,928' 61,635 58,713' 61,465 70,872 31 Chile 1,842 2,001 2,049 2,270 2,227 2,139 2,426 2,398' 2,325 2,051 37 Colombia 1,689 2,514 3,104 33,,441199 3,334 3,315 3,373 3,775 3,873 4,280 33 Cuba 8 10 11 88 7 8 7 6 6 7 34 Ecuador 1,047 1,092 1,239 1,262 1,196 1,232 1,260 1,216 1,199 1,235 35 Guatemala 788 896 1,071 1,108 1,123 1,140 1,129 1,126 1,129 1,122 36 Jamaica 109 183 122 185 184 177 187 151 153 181 37 Mexico 10,392 12,303 14,060 13,633 12,985 13,609 13,137 13,197' 13,488 13,586 38 Netherlands Antilles 3,879 4,220 4,875 4,358 4,382 4,383 4,775 4,645 4,706 4,846 39 Panama 5,924 6,951 7,514 6,687' 6,640' 6,392' 6,415 6,522' 6,729 6,858 40 Peru 1,166 1,266 1,167 1,254 1,158 1,149 1,256 1,167 1,145 1,162 41 Uruguay 1,244 1,394 1,552 1,664 1,687 1,636 1,589 1,608 1,610 1,532 47 Venezuela 8,632 10,545 11,922 11,733' 12,058 11,56c 11,709 11,392 11,670 10,450 43 Other Latin America and Caribbean 3,535 4,297 4,668 4,783 4,770 4,701' 5,056 4,917 4,835 5,373 44 58,570 71,187 72,280 86,976' 91,669 96,021 100,058 99,325' 107,025 108,959 China 45 Mainland 249 1,153 1,607 1,469 1,795 1,185 1,938 1,585 1,450 1,476 46 Taiwan 4,051 4,990 7,786 13,683 14,331 15,608 16,129 16,528' 17,540 18,980 47 Hong Kong 6,657 6,581 8,067 8,656 8,934 9,026 9,349 8,662' 9,347 9,189 48 India 464 507 712 695 562 685 651 755 701 674 49 Indonesia 997 1,033 1,466 1,416 1,572 1,474 1,611 1,530 1,528 1,553 50 Israel 1,722 1,268 1,601 1,725 1,731 1,686 2,109 1,986 2,380 1,890 51 Japan 18,079 21,640 23,077 31,325 36,286 38,221 39,951 41,311 46,155 47,658 57 Korea 1,648 1,730 1,665 1,414 1,392 1,251 1,282 1,446 1,128 1,147 53 Philippines 1,234 1,383 1,140 1,306 1,363 1,458 1,400 1,707 1,720 1,870 54 Thailand 747 1,257 1,358 1,068 1,104 1,080 1,100 1,115 1,083 1,104 55 Middle-East oil-exporting countries3 12,976 16,804 14,523 14,581 12,739 13,227 13,056 12,045 13,010 12,369 56 Other Asia 9,748 12,841 9,276 9,638 9,861 11,121 11,481 10,654 10,984 11,051 57 Africa 2,827 3,396 4,883 4,291 3,962' 4,227 4,158 3,973 4,018 3,985 58 Egypt 671 647 1,363 1,079 820 1,088 843 640 710 703 59 Morocco 84 118 163 87 93 82 91 86 84 92 60 South Africa 449 328 388 414 530' 438 318 347 264 278 61 Zaire 87 153 163 92 65 60 80 79 96 74 62 Oil-exporting countries4 620 1,189 1,494 1,463 1,368 1,371 1,625 1,623 1,593 1,518 63 Other Africa 917 961 1,312 1,156 1,086 1,189 1,203 1,199 1,272 1,319 64 Other countries 8,067 5,684 3,347 3,682 2,924 3,155 3,425 4,026 5,662 5,186 65 Australia 7,857 5,300 2,779 2,943 2,173 2,459 2,785 2,943 4,286 4,262 66 All other 210 384 568 739 751 696 640 1,083 1,376 924 67 Nonmonetary international and regional organizations 5,957 4,454 5,821 3,441 3,974 5,253 3,038 3,902 4,315 4,826 68 International 5,273 3,747 4,806 2,471 2,714 4,147 1,759 2,748 3,232 3,575 69 Latin American regional 419 587 894 845 922 916 972 957 927 969 70 Other regional5 265 120 121 126 338 190 307 197 157 281 1. Includes the Bank for International Settlements. Beginning April 1978, also 4. Comprises Algeria, Gabon, Libya, and Nigeria. includes Eastern European countries not listed in line 23. 5. Asian, African, Middle Eastern, and European regional organizations, 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German except the Bank for International Settlements, which is included in "Other Democratic Republic, Hungary, Poland, and Romania. Western Europe." 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • April 1987 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 1986 AArreeaa aanndd ccoouunnttrryy 11998833 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec." 1 Total 391,312 400,162 401,608 403,952' 403,491' 403,760' 416,577 406,286' 417,502 444,382 2 Foreign countries 391,148 399,363 400,577 403,496' 402,999' 403,340' 416,376 405,9IY 417,331 441,399 3 Europe 91,927 99,014 106,413 104,505' 100,319' 100,323 106,735 103,622' 106,348 106,401 4 Austria 401 433 598 609 619 694 654 619 748 739 5 Belgium-Luxembourg 5,639 4,794 5,772 7,243 6,113 6,990 6,574 7,689 8,149 7,491 6 Denmark 1,275 648 706 750 856 783 807 796 764 688 7 Finland 1,044 898 823 983 1,041 964' 1,085 1,111 1,176 1,128 8 France 8,766 9,157 9,124 9,455 9,583 9,483 10,209 9,514' 9,499 11,156 9 Germany 1,284 1,306 1,267 1,095 1,426 1,181 1,599 1,320 1,654 1,317 10 Greece 476 817 991 629 622 660 706 626 792 628 11 Italy 9,018 9,119 8,848 7,474 7,266 5,981 6,797 7,681' 8,323 8,942 12 Netherlands 1,267 1,356 1,258 1,407 1,427 1,254 2,039 2,114 2,424 2,363 13 Norway 690 675 706 905 614 698 732 711 712 633 14 Portugal 1,114 1,243 1,058 776 789 757 734 699 682 706 13 Spain 3,573 2,884 1,908 2,001 1,863 1,757' 1,995 1,922 1,722 1,459 16 Sweden 3,358 2,230 2,219 2,478 2,906 2,396' 2,487 2,375 2,343 1,943 17 Switzerland 1,863 2,123 3,171 3,553 2,617 3,306 2,665 2,661 3,574 3,047 18 Turkey 812 1,130 1,200 1,856 1,709 1,649 1,586 1,612 3,527 1,534 19 United Kingdom 47,364 56,185 62,566 58,283' 56,247' 57,856' 61,997 58,094' 56,610 58,206 20 Yugoslavia 1,718 1,886 1,964 2,005 1,902 1,852 1,871 1,886 1,897 1,833 21 Other Western Europe1 477 596 998 1,258' 1,102 508' 791 799 600 556 22 U.S.S.R 192 142 130 568 504 528 405 296 225 634 23 Other Eastern Europe2 1,598 1,389 1,107 1,176 1,112 1,026 1,002 1,097 927 1,3% 24 Canada 16,341 16,109 16,482 18,270 18,303 19,401 18,112 19,532 20,338 20,892 25 Latin America and Caribbean 205,491 207,862 202,674 200,739' 202,203' 197,879' 205,579 196,413 196,512 210,344 26 Argentina 11,749 11,050 11,462 12,077' 12,282 12,009 12,119 12,243 12,017 12,075 27 Bahamas 59,633 58,009 58,258 57,076' 56,250 55,465' 61,705 53,557 53,%7 58,694 28 Bermuda 566 592 499 274 432 373 320 452 447 1,379 29 Brazil 24,667 26,315 25,283 24,855 24,915 24,762 24,856 24,738 25,880 25,435 30 British West Indies 35,527 38,205 38,881 40,050' 41,923 39,836 40,360 39,535 39,248 45,789 31 Chile 6,072 6,839 6,603 6,507 6,513' 6,449 6,489 6,514 6,526 6,540 32 Colombia 3,745 3,499 3,249 2,789 2,776 2,642 2,633 2,674 22,,666655 2,818 33 Cuba 0 0 0 0 0 0 0 0' 11 0 34 Ecuador 2,307 2,420 2,390 2,397 2,366 2,375 2,387 2,42 (K 2,395 2,431 35 Guatemala3 129 158 194 136 113 127 135 122 138 140 36 Jamaica3 215 252 224 244 209 209 224 209' 216 198 37 Mexico 34,802 34,885 31,799 31,399 31,168 30,839 31,037 31,061' 30,659 30,477 38 Netherlands Antilles 1,154 1,350 1,340 1,086 996 1,060 1,133 972 911 1,038 39 Panama 7,848 7,707 6,645 5,860 6,280 5,862 6,377 6,094 5,354 5,423 40 Peru 2,536 2,384 1,947 1,738 1,703 1,677 1,600 1,625 1,618 1,637 41 Uruguay 977 1,088 960 931 927 936 1,051 930 943 1,045 42 Venezuela 11,287 11,017 10,871 11,304 11,363' 11,289 11,177 11,180 11,014 12,802 43 Other Latin America and Caribbean 2,277 2,091 2,067 2,015 1,985 1,969 1,977 2,086 2,513 2,423 44 67,837 66,316 66,212 7722,,007722'' 74,253 7777,,881111'' 7788,,007733 7788,,555588 8866,,220099 9955,,883388 China 45 Mainland 292 710 639 567 779 526 758 758 793 787 46 Taiwan 1,908 1,849 1,535 1,238 1,089 1,637 1,903 1,528 1,812 2,675 47 Hong Kong 8,489 7,293 6,796 7,526 8,445 8,632 8,883 8,337 7,598 8,300 48 India 330 425 450 440 372 375 355 316 327 321 49 Indonesia 805 724 698 675 720 729 689 694 722 718 50 Israel 1,832 2,088 1,991 1,772 1,567 1,541 1,622 1,630 1,615 1,648 51 Japan 30,354 29,066 31,249 38,524 40,902 43,327 42,751 45,167 53,265 59,482 52 Korea 9,943 9,285 9,226 9,016' 8,900 8,495' 7,846 7,023 6,569 7,162 53 Philippines 2,107 2,555 2,224 2,393 2,168 2,128 2,148 2,071 1,972 2,202 54 Thailand 1,219 1,125 845 706 711 736 636 611 595 576 55 Middle East oil-exporting countries4 4,954 5,044 4,298 3,680 2,919 2,764 3,724 3,3% 3,778 4,115 56 Other Asia 5,603 6,152 6,260 5,535 5,680 6,921 6,758 7,027 7,162 7,854 57 Africa 6,654 6,615 5,407 4,971 4,817 4,693 4,651 4,531 4,737 4,621 58 Egypt 747 728 721 740 701 633 593 577 560 567 59 Morocco 440 583 575 642 615 617 636 621 621 598 60 South Africa 2,634 2,795 1,942 1,705 1,661 1,683 1,607 1,549 1,586 1,531 61 Zaire 33 18 20 17 17 21 33 35 27 27 62 Oil-exporting countries5 1,073 842 630 415 413 445 511 545 690 688 63 Other 1,727 1,649 1,520 1,452 1,410 1,294 1,271 1,203 1,253 1,209 64 Other countries 2,898 3,447 3,390 2,939 3,103 3,232 3,225 3,259 3,187 3,303 65 Australia 2,256 2,769 2,413 2,023 2,159 2,293 2,221 2,143 1,985 1,952 66 All other 642 678 978 916 945 940 1,004 1,115 1,202 1,350 67 Nonmonetary international and regional organizations6 164 800 1,030 456 493 420 200 372 171 2,983 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 1986 TTyyppee ooff ccllaaiimm 11998833 11998844 11998855 June' July Aug/ Sept. Oct/ Nov. Dec.'' 1 Total 444444422222226666666,,,,,,,222222211111115555555 444444433333333333333,,,,,,,000000077777778888888 444444433333330000000,,,,,,,444444488888889999999 444444433333332222222,,,,,,,777777766666662222222 444444444444448888888,,,,,,,444444422222226666666 444444,,338822 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 333333399999991111111,,,,,,,333333311111112222222 444444400000000000000,,,,,,,111111166666662222222 444444400000001111111,,,,,,,666666600000008888888 444444400000003333333,,,,,,,999999955555552222222 403,491 403,760 444444411111116666666,,,,,,,555555577777777777777 406,286 417,502 444444,,338822 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 55555557777777,,,,,,,555555566666669999999 66666662222222,,,,,,,222222233333337777777 66666660000000,,,,,,,555555500000007777777 66666660000000,,,,,,,666666633333339999999 60,667 60,046 66666660000000,,,,,,,666666600000003333333 60,745 60,668 6644,,887777 44 OOwwnn ffoorreeiiggnn ooffffiicceess'' 111111144444446666666,,,,,,,333333399999993333333 111111155555556666666,,,,,,,222222211111116666666 111111177777774444444,,,,,,,222222266666661111111 111111188888881111111,,,,,,,999999900000006666666 181,590 182,170 111111199999993333333,,,,,,,333333355555555555555 182,548 189,093 221100,,332266 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222223333333,,,,,,,888888833333337777777 111111122222224444444,,,,,,,999999933333332222222 111111111111116666666,,,,,,,666666655555554444444 111111111111113333333,,,,,,,000000044444445555555 114,099 115,922 111111111111116666666,,,,,,,888888800000008888888 117,392 120,266 112222,,993366 66 DDeeppoossiittss 44444447777777,,,,,,,111111122222226666666 44444449999999,,,,,,,222222222222226666666 44444448888888,,,,,,,333333377777772222222 44444447777777,,,,,,,000000099999993333333 49,324 52,410 55555552222222,,,,,,,111111177777778888888 53,074 52,834 5566,,338811 77 OOtthheerr 77777776666666,,,,,,,777777711111111111111 77777775555555,,,,,,,777777700000006666666 66666668888888,,,,,,,222222288888882222222 66666665555555,,,,,,,999999955555551111111 64,775 63,512 66666664444444,,,,,,,666666633333330000000 64,319 67,431 6666,,555555 88 AAllll ootthheerr ffoorreeiiggnneerrss 66666663333333,,,,,,,555555511111114444444 55555556666666,,,,,,,777777777777777777777 55555550000000,,,,,,,111111188888885555555 44444448888888,,,,,,,333333366666663333333 47,136 45,621 44444445555555,,,,,,,888888811111111111111 45,601 47,475 4466,,224433 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 33333334444444,,,,,,,999999900000003333333 33333332222222,,,,,,,999999911111116666666 22222228888888,,,,,,,888888888888881111111 22222228888888,,,,,,,888888811111110000000 33333331111111,,,,,,,888888844444449999999 2222222,,,,,,,999999966666669999999 3333333,,,,,,,333333388888880000000 3333333,,,,,,,333333333333335555555 3333333,,,,,,,444444477777775555555 3333333,,,,,,,777777744444443333333 11 Negotiable and readily transferable 22222226666666,,,,,,,000000066666664444444 22222223333333,,,,,,,888888800000005555555 11111119999999,,,,,,,333333333333332222222 22222220000000,,,,,,,666666622222220000000 22222222222222,,,,,,,333333333333337777777 12 Outstanding collections and other 5555555,,,,,,,888888877777770000000 5555555,,,,,,,777777733333332222222 6666666,,,,,,,222222211111114444444 4444444,,,,,,,777777711111115555555 5555555,,,,,,,777777766666669999999 13 MEMO: Customer liability on 33333337777777,,,,,,,777777711111115555555 33333337777777,,,,,,,111111100000003333333 22222228888888,,,,,,,444444488888887777777 22222228888888,,,,,,,333333322222228888888 22222227777777,,,,,,,111111177777772222222 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 .... 46,337 40,714 37,78C 46,200 47,464 48,575 44,515 43,690 44,903 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 Dec. Mar. June Sept. 1 228,150 243,715 243,952 227,903 221,172' 222,559' 224,317 By borrower 7 Maturity of 1 year or less' 173,917 176,158 167,858 160,824 152,666' 152,551' 154,731 3 Foreign public borrowers 21,256 24,039 23,912 26,302 23,845 23,164' 22,392 4 All other foreigners 152,661 152,120 143,947 134,522 128,821' 129,388' 132,339 5 Maturity of over 1 year1 54,233 67,557 76,094 67,078 68,50& 70,008 69,586 6 Foreign public borrowers 23,137 32,521 38,695 34,512 36,681 37,177 38,115 7 All other foreigners 31,095 35,036 37,399 32,567 31,825' 32,830 31,471 By area Maturity of 1 year or less' 8 Europe 50,500 56,117 58,498 56,585 53,435' 57,927' 59,331 9 Canada 7,642 6,211 6,028 6,401 5,899 6,078' 5,968 10 Latin America and Caribbean 73,291 73,660 62,791 63,328 59,537' 57,399' 57,814 11 37,578 34,403 33,504 27,966 28,032' 25,777' 26,713 12 Africa 3,680 4,199 4,442 3,753 3,331 3,297 3,038 13 All other2 1,226 1,569 2,593 2,791 2,433 2,072' 1,866 Maturity of over 1 year1 14 Europe 11,636 13,576 9,605 7,634 7,809' 7,934 7,285 15 Canada 1,931 1,857 1,882 1,805 1,925 2,256 1,861 16 Latin America and Caribbean 35,247 43,888 56,144 50,674 52,165 53,572 54,147 17 3,185 4,850 5,323 4,502 4,251 4,034 3,990 18 Africa 1,494 2,286 2,033 1,538 1,634 1,497 1,479 19 All other2 740 1,101 1,107 926 722 714 824 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 • April 1987 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1-2 Billions of dollars, end of period 1984 1985 1986 AArreeaa oorr ccoouunnttrryy 11998822 11998833 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept.P 1 Total 436.1 433.9 406.4 405.7 405.5 396.8 394.9 391.9 394.3 390.9 391.4 2 G-10 countries and Switzerland 179.6 167.8 147.5 148.1 153.0 146.7 152.0 148.5 156.4 159.8 158.6 3 Belgium-Luxembourg 13.1 12.4 9.8 8.7 9.3 8.9 9.5 9.3 8.3 9.0 8.5 4 France 17.1 16.2 14.3 14.1 14.5 13.5 14.8 12.3 13.8 15.1 14.6 5 Germany 12.7 11.3 10.0 9.0 8.9 9.6 9.8 10.5 11.2 11.5 12.5 6 Italy 10.3 11.4 9.7 10.1 10.0 8.6 8.4 9.8 8.5 9.3 8.1 7 Netherlands 3.6 3.5 3.4 3.9 3.8 3.7 3.4 3.7 3.5 3.4 3.9 8 Sweden 5.0 5.1 3.5 3.2 3.1 2.9 3.1 2.8 2.9 2.9 2.7 9 Switzerland 5.0 4.3 3.9 3.9 4.2 4.0 4.1 4.4 5.4 5.6 4.8 10 United Kingdom 72.1 65.3 57.1 60.3 65.4 65.7 67.1 64.6 68.5 68.9 70.1 11 Canada 10.4 8.3 8.1 7.9 9.1 8.1 7.6 7.0 6.2 6.8 6.1 12 Japan 30.2 29.9 27.7 27.1 24.7 21.7 24.3 24.2 28.1 27.4 27.4 13 Other developed countries 33.5 36.0 36.2 33.6 32.8 32.3 32.0 30.4 31.6 30.6 29.4 14 Austria 1.9 1.9 1.8 1.6 1.6 1.6 1.7 1.6 1.6 1.7 1.7 15 Denmark 2.4 3.4 2.9 2.2 2.1 1.9 2.1 2.4 2.5 2.4 2.3 16 Finland 2.2 2.4 1.9 1.9 1.8 1.8 1.8 1.6 1.9 1.6 1.7 17 Greece 3.0 2.8 3.2 2.9 2.9 2.9 2.8 2.6 2.5 2.6 2.3 18 Norway 3.3 3.3 3.2 3.0 2.9 2.9 3.4 2.9 2.7 3.0 2.7 19 Portugal 1.5 1.5 1.6 1.4 1.4 1.3 1.4 1.3 1.1 1.0 1.0 20 7.5 7.1 6.9 6.5 6.4 5.9 6.1 5.8 6.4 6.4 6.7 21 Turkey 1.4 1.7 2.0 1.9 1.9 2.0 2.1 1.9 2.3 2.5 2.1 22 Other Western Europe 2.3 1.8 1.7 1.7 1.7 1.8 1.7 2.0 2.4 2.1 1.6 23 South Africa 3.7 4.7 5.0 4.5 4.2 3.9 3.3 3.2 3.2 3.1 3.1 24 Australia 4.3 5.4 6.1 6.0 6.1 6.2 5.6 5.0 4.9 4.2 4.2 25 OPEC countries3 26.9 28.4 24.4 24.9 24.5 22.8 22.7 21.6 20.7 20.6 20.0 26 Ecuador 2.2 2.2 2.1 2.2 2.2 2.2 2.2 2.1 2.2 2.1 2.1 27 Venezuela 10.5 9.9 9.2 9.3 9.3 9.3 9.0 8.9 8.7 8.8 8.7 28 Indonesia 2.9 3.4 3.2 3.3 3.3 3.1 3.1 3.0 3.3 3.0 2.8 29 Middle East countries 8.5 9.8 7.3 7.9 7.4 6.1 6.2 5.5 4.8 5.0 4.7 30 African countries 2.8 3.0 2.5 2.3 2.3 2.2 2.3 2.0 1.8 1.7 1.7 31 Non-OPEC developing countries 106.5 110.8 111.6 111.8 110.8 110.0 107.8 105.1 103.5 101.4 99.6 Latin America 32 Argentina 8.9 9.5 9.1 8.7 8.6 8.6 8.9 8.9 8.9 9.2 9.3 33 Brazil 22.9 23.1 26.3 26.3 26.4 26.6 25.5 25.6 25.7 25.3 25.2 34 Chile 6.3 6.4 7.1 7.0 7.0 6.9 6.6 7.0 7.0 7.1 7.1 35 Colombia 3.1 3.2 2.9 2.9 2.8 2.7 2.6 2.7 2.3 2.2 2.0 36 Mexico 24.2 25.8 26.0 25.7 25.5 25.3 24.4 24.2 24.0 23.8 23.8 37 2.6 2.4 2.2 2.2 2.2 2.1 1.9 1.8 1.7 1.6 1.5 38 Other Latin America 4.0 4.2 3.9 3.9 3.8 3.7 3.5 3.4 3.3 3.3 3.4 Asia China 39 Mainland .2 .3 .5 .7 .7 .3 1.1 .5 .6 .6 .6 40 Taiwan 5.3 5.2 5.1 5.1 5.3 5.5 5.1 4.5 4.3 3.7 4.3 41 India .5 .9 1.0 .9 .9 .9 1.1 1.2 1.2 1.3 1.3 42 2.3 1.9 1.7 1.8 1.7 2.3 1.5 1.6 1.3 1.6 1.4 43 Korea (South) 10.7 11.2 10.3 10.6 10.4 10.0 10.4 9.4 9.5 8.6 7.3 44 Malaysia 2.1 2.8 2.9 2.7 2.7 2.8 2.7 2.4 2.2 2.0 2.1 45 Philippines 6.3 6.1 5.9 6.0 6.1 6.0 6.0 5.7 5.6 5.7 5.4 46 Thailand 1.6 2.2 1.8 1.8 1.7 1.6 1.6 1.4 1.3 1.1 1.0 47 Other Asia 1.1 1.0 .9 1.1 1.1 .9 .9 1.0 .9 .8 .7 Africa 48 Egypt 1.2 1.5 1.2 1.2 1.1 1.0 1.0 1.0 .9 .9 .7 49 Morocco .7 .8 .8 .8 .8 .8 .9 .9 .9 .9 .9 50 Zaire .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 51 Other Africa4 2.4 2.3 1.9 2.1 2.2 2.0 2.0 1.9 1.9 1.7 1.6 52 Eastern Europe 6.2 5.3 4.5 4.4 4.3 4.3 4.6 4.2 4.0 4.0 3.3 53 U.S.S.R .3 .2 .2 .1 .2 .3 .2 .1 .3 .3 .1 54 Yugoslavia 2.2 2.4 2.3 2.3 2.2 2.2 2.4 2.2 2.0 2.0 1.9 55 Other 3.7 2.8 2.1 2.0 1.9 1.8 1.9 1.8 1.7 1.7 1.4 56 Offshore banking centers 66.0 68.9 65.1 65.6 63.2 63.9 58.8 65.4 61.5 57.2 62.6 57 Bahamas 19.0 21.7 23.3 21.5 20.1 21.1 16.6 21.4 21.5 17.3 20.0 58 Bermuda .9 .9 1.0 .9 .7 .9 .8 .7 .7 .4 .5 59 Cayman Islands and other British West Indies 12.8 12.2 11.1 11.8 12.3 12.1 12.3 13.4 11.3 12.8 13.2 60 Netherlands Antilles 3.3 4.2 3.1 3.4 3.3 3.2 2.3 2.3 2.3 2.3 1.9 61 Panama5 7.5 5.8 5.6 6.7 5.5 5.4 6.1 6.0 5.9 5.5 6.8 62 Lebanon .1 .1 .1 .1 .1 .1 .0 .1 .1 .1 .1 63 Hong Kong 13.3 13.8 11.6 11.4 11.4 11.4 11.4 11.5 11.4 9.4 10.4 64 Singapore 9.1 10.3 9.4 9.8 9.9 9.7 9.4 9.9 8.4 9.3 9.7 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 17.5 16.8 17.1 17.3 16.9 16.9 17.3 16.9 16.7 17.2 17.8 1. The banking offices covered by these data are the U.S. offices and foreign from $50 million to $150 million equivalent in total assets, the threshold now branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. applicable to all reporting branches. Offices not covered include (1) U.S. agencies and branches of foreign banks, and 3. Besides the Organization of Petroleum Exporting Countries shown individ- (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are ually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq, adjusted to exclude the claims on foreign branches held by a U.S. office or another Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well foreign branch of the same banking institution. The data in this table combine as Bahrain and Oman (not formally members of OPEC). foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims 4. Excludes Liberia. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 5. Includes Canal Zone beginning December 1979. foreign banks and those constituting claims on own foreign branches). 6. Foreign branch claims only. 2. Beginning with June 1984 data, reported claims held by foreign branches 7. Includes New Zealand, Liberia, and international and regional organizahave been reduced by an increase in the reporting threshold for "shell" branches tions. 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 1985 1986 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998822 11998833 11998844 Sept. Dec. Mar. June Sept.? 1 Total 27,512 25,346 29,357 25,533' 27,662' 25,635 24,222 24,380 2 Payable in dollars 24,280 22,233 26,389 22,634' 24,352' 22,022 20,692 20,633 3 Payable in foreign currencies 3,232 3,113 2,968 2,899' 3,310' 3,613 3,530 3,747 By type 4 Financial liabilities 11,066 10,572 14,509 12,092' 13,437' 12,328 11,117 11,620 5 Payable in dollars 8,858 8,700 12,553 10,05c 11,313' 10,205 9,177 9,418 6 Payable in foreign currencies 2,208 1,872 1,955 2,041' 2,123' 2,123 1,940 2,201 7 Commercial liabilities 16,446 14,774 14,849 13,441 14,225 13,307 13,105 12,760 8 Trade payables 9,438 7,765 7,005 5,694 6,685 5,598 5,503 5,592 9 Advance receipts and other liabilities 7,008 7,009 7,843 7,747 7,540 7,710 7,602 7,168 10 Payable in dollars 15,423 13,533 13,836 12,584 13,039 11,817 11,516 11,214 11 Payable in foreign currencies 1,023 1,241 1,013 857 1,186 1,490 1,590 1,546 By area or country Financial liabilities 12 Europe 6,501 5,742 6,728 6,816' 7,616' 6,971 6,705 7,254 13 Belgium-Luxembourg 505 302 471 367 329 338 288 322 14 France 783 843 995 849 857 851 701 501 15 Germany 467 502 489 509' 434' 371 262 289 16 Netherlands 711 621 590 624 745 630 651 708 17 Switzerland 792 486 569 593 676 702 561 692 18 United Kingdom 3,102 2,839 3,297 3,584' 4,254' 3,736 3,960 4,272 19 Canada 746 764 863 826 760 753 287 282 20 Latin America and Caribbean 2,751 2,596 5,086 2,619 3,184' 2,788 2,404 2,269 21 Bahamas 904 751 1,926 1,145 1,123' 954 859 863 22 Bermuda 14 13 13 4 4 13 14 4 23 Brazil 28 32 35 23 29 26 27 28 24 British West Indies 1,027 1,041 2,103 1,234 1,843' 1,610 1,362 1,256 25 Mexico 121 213 367 28 15 20 30 18 26 Venezuela 114 124 137 3 3 4 3 5 27 Asia 1,039 1,424 1,777 1,767 1,815' 1,799 1,660 1,790 28 Japan 715 991 1,209 1,136 1,198' 1,192 1,189 1,354 29 Middle East oil-exporting countries2 169 170 155 82 82 78 43 3 30 Africa 17 19 14 14 12 12 12 4 31 Oil-exporting countries3 0 0 0 0 0 0 0 2 32 All other4 12 27 41 50' 5 C 4 49 21 Commercial liabilities 33 Europe 3,831 3,245 4,001 3,897 4,074 3,915 3,761 4,337 34 Belgium-Luxembourg 52 62 48 56 62 66 58 75 35 France 598 437 438 431 453 382 357 369 36 Germany 468 427 622 601 607 546 512 628 37 Netherlands 346 268 245 386 364 545 587 613 38 Switzerland 367 241 257 289 379 251 283 360 39 United Kingdom 1.027 732 1,095 858 976 957 861 1,086 40 Canada 1,495 1,841 1,975 1,383 1,449 1,442 1,351 1,240 41 Latin America and Caribbean 1,570 1,473 1,871 1,262 1,088 1,097 1,304 843 42 Bahamas 16 1 7 2 12 26 10 37 43 Bermuda 117 67 114 105 77 210 294 172 44 Brazil 60 44 124 120 58 64 107 43 45 British West Indies 32 6 32 15 44 7 35 38 46 Mexico 436 585 586 415 430 256 235 196 47 Venezuela 642 432 636 311 212 364 488 207 48 Asia 8,144 6,741 5,285 5,353 6,046 5,384 5,068 4,781 49 Japan 1,226 1,247 1,256 1,567 1,799 2,039 2,095 2,114 50 Middle East oil-exporting countries2-5 5,503 4,178 2,372 2,109 2,829 2,171 1,731 1,528 51 Africa 753 553 588 572 587 486 569 578 52 Oil-exporting countries3 277 167 233 235 238 148 215 176 53 All other4 651 921 1,128 975 982 983 1,053 980 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • April 1987 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1985 1986 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998822 11998833 11998844 Sept. Dec. Mar. June Sept.P 1 Total 28,725 34,911 29,901 28,626' 28,437' 30,927 32,519 32,262 2 Payable in dollars 26,085 31,815 27,304 25.76C 26,135' 28,740 30,337 29,787 3 Payable in foreign currencies 2,640 3,0% 2,597 2,866 2,302 2,187 2,182 2,475 By type 4 Financial claims 17,684 23,780 19,254 19,22C 18,451' 21,540 23,324 23,165 5 Deposits 13,058 18,4% 14,621 15,331' 15,204' 18,146 20,034 18,554 6 Payable in dollars 12,628 17,993 14,202 14,627' 14,589' 17,689 19,479 18,066 7 Payable in foreign currencies 430 503 420 704 615 457 555 488 8 Other financial claims 4,626 5,284 4,633 3,889 3,248 3,394 3,290 4,611 9 Payable in dollars 2,979 3,328 3,190 2,351 2,213 2,301 2,269 3,392 10 Payable in foreign currencies 1,647 1,956 1,442 1,538 1,035 1,093 1,021 1,220 11 Commercial claims 11,041 11,131 10,646 9,406 9,986 9,387 9,195 9,097 12 Trade receivables 9,994 9,721 9,177 7,932 8,6% 8,086 7,858 7,925 13 Advance payments and other claims 1,047 1,410 1,470 1,475 1,290 1,301 1,337 1,172 14 Payable in dollars 10,478 10,494 9,912 8,782 9,333 8,750 8,589 8,329 15 Payable in foreign currencies 563 637 735 624 652 637 606 767 By area or country Financial claims 16 Europe 4,873 6,488 5,762 6,463 6,53c 6,859 8,877 9,338 17 Belgium-Luxembourg 15 37 15 12 10 10 11 67 18 France 134 150 126 132 184 217 257 418 19 Germany 178 163 224 158 223 172 148 129 20 Netherlands 97 71 66 127 61 61 hi 44 21 Switzerland 107 38 66 53 74 166 177 138 22 United Kingdom 4,064 5,817 4,864 5,736 5,725' 5,986 8,051 8,315 23 Canada 4,377 5,989 3,988 4,038' 3.26C 4,024 4,464 3,690 24 Latin America and Caribbean 7,546 10,234 8,216 7,619' 7,841' 9,934 9,151 9,300 25 Bahamas 3,279 4,771 3,306 2,321' 2,698' 3,500 3,251 2,912 26 Bermuda 32 102 6 5 6 2 17 19 27 Brazil 62 53 100 92 78 77 75 101 28 British West Indies 3,255 4,206 4,043 4,642' 4,571' 5,904 5,359 5,871 29 Mexico 274 293 215 201 180 178 176 173 30 Venezuela 139 134 125 73 48 43 42 40 31 698 764 %1 %9 696 621 111 673 32 Japan 153 297 353 725 475 350 499 387 33 Middle East oil-exporting countries2 15 4 13 6 4 2 2 2 34 Africa 158 147 210 104 103 87 89 84 35 Oil-exporting countries3 48 55 85 31 29 27 25 18 36 All other4 31 159 117 26 21 14 20 81 Commercial claims 37 Europe 3,826 3,670 3,801 3,235 3,533 3,387 3,304 3,345 38 Belgium-Luxembourg 151 135 165 158 175 148 131 123 39 France 474 459 440 360 426 384 390 412 40 Germany 357 349 374 336 346 3% 414 397 41 Netherlands 350 334 335 286 284 221 237 183 42 Switzerland 360 317 271 208 284 248 221 232 43 United Kingdom 811 809 1,063 779 898 793 668 830 44 Canada 633 829 1,021 1,100 1,023 1,060 970 929 45 Latin America and Caribbean 2,526 2,695 2,052 1,660 1,753 1,599 1,590 1,665 46 Bahamas 21 8 8 18 13 27 24 29 47 Bermuda 261 190 115 62 93 82 148 132 48 Brazil 258 493 214 211 206 231 194 206 49 British West Indies 12 7 7 7 6 7 24 23 50 Mexico 775 884 583 416 510 388 320 299 51 Venezuela 351 272 206 149 157 172 180 190 52 3,050 3,063 3,073 2,712 2,982 2,606 2,649 2,471 53 Japan 1,047 1,114 1,191 884 1,016 801 846 788 54 Middle East oil-exporting countries2 751 737 668 541 638 630 691 597 55 Africa 588 588 470 434 437 491 447 456 56 Oil-exporting countries3 140 139 134 131 130 167 171 168 57 All other4 417 286 229 264 257 244 235 231 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 1986 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998844 11998855 D Ja e n c . . - June July Aug. Sept. Oct. Nov. Dec." U.S. corporate securities STOCKS 1 Foreign purchases 59,834 81,995 147,919 11,176 13,275' 12,045 12,206 10,979' 12,034 13,923 2 Foreign sales 62,814 77,054 129,855 10,832 11,261' 10,615 10,948 12,300' 12,085 12,784 3 Net purchases, or sales (—) -2,980 4,941 18,064 344 2,014' 1,430 1,258 -1,322' -52 1,139 4 Foreign countries -3,109 4,857 18,272 464 2,079' 1,470 1,303 -1,179' -18 1,059 5 Europe -3,077 2,057 9,436 192 577' 824 587 -1,124' -485 416 6 France -405 -438 462 219 182 105 30 -92 -69 113 7 Germany -50 730 339 -174 -130 -42 9 -104 -3 22 8 Netherlands -357 -123 936 97 52 50 36 -19 -50 14 9 Switzerland -1,542 -75 1,559 -134 -198 44 70 -405 -236 47 10 United Kingdom -677 1,665 4,702 38 482' 521 462 -481 -114 225 11 Canada 1,691 356 795 131 214 97 93 -115' 42 101 12 Latin America and Caribbean 495 1,718 2,535 60 271' 108 145 154 367 -272 13 Middle East1 -1,992 238 977 -236 181 78 58 -51 -92 268 14 Other Asia -378 296 3,859 288 830 376 346 16 80 445 15 Africa -22 24 298 -3 30 -1 -13 39 23 17 16 Other countries 175 168 373 32 -23 -13 86 -97 48 84 17 Nonmonetary international and regional organizations 129 84 -208 -121 -65 -40 -45 -143 -34 80 BONDS2 18 Foreign purchases 39,296 86,587 122,659 8,964 8,937 9,420 10,160 9,712 9,232 11,977 19 Foreign sales 26,399 42,455' 71,840 5,686 5,679 5,348 5,585 5,527 6,032 7,863 20 Net purchases, or sales (-) 12,897 44,132' 50,819 3,278 3,259 4,072 4,575 4,185 3,200 4,114 21 Foreign countries 12,600 44,227' 50,161 2,798 3,197 4,077 4,871 4,457 2,881 4,377 22 Europe 11,697 40,047 39,266 2,763 2,395 2,484 3,386 3,475 2,102 3,064 73 France 207 210 388 -6 6 20 -29 0 328 32 24 Germany 1,724 2,001 -251 -3 -91 -81 26 82 -108 -19 75 Netherlands 100 222 387 -37 -39 98 51 -55 113 52 76 Switzerland 643 3,987 4,530 490 180 564 30 265 204 -117 77 United Kingdom 8,429 32,762 33,855 2,214 2,213 1,917 3,414 3,177 1,416 2,760 78 Canada -62 190 548 55 85 110 2 88 154 153 79 Latin America and Caribbean 376 498 1,483 63 250 160 64 101 67 116 30 Middle East1 -1,230 -2,648' -2,951 -632 -718 -40 -169 -33 -355 -258 31 Other Asia 1,817 6,091 11,684 480 1,177 1,329 1,586 819 926 1,297 32 Africa 1 11 17 3 -3 5 6 -3 3 4 33 Other countries 0 38 114 66 11 29 -4 11 -15 3 34 Nonmonetary international and regional organizations 297 -95 657 480 61 -4 -296 -273 319 -263 Foreign securities 35 Stocks, net purchases, or sales (-) -1,101 -3,892' -1,492 -238 404 -83 676 1,256' 390 27 36 Foreign purchases 14,816 20,861' 49,880 3,775 4,310 4,610 5,091 6,324' 4,149 4,597 37 Foreign sales 15,917 24,754' 51,372 4,013 3,907 4,694 4,415 5,068' 3,758 4,570 38 Bonds, net purchases, or sales (-) -3,930 -3,999' -3,162 1,540 359 1,232 -2,231 2,151 -680 -455 39 Foreign purchases 56,017 81,21Gr 165,591 15,632 13,559 14,086 15,182 16,249' 12,599 16,128 40 Foreign sales 59,948 85,214' 168,753 14,091 13,200 12,854 17,412 14,098' 13,278 16,583 41 Net purchases, or sales (—), of stocks and bonds .... -5,031 -7,891 -4,653 1,302 762 1,149 -1,555 3,407' -289 -428 42 Foreign countries -4,642 -8,954 -5,781 1,122 438 1,090 -1,492 3,078' -292 -876 43 Europe -8,655 -9,887 -17,650 -1,332 -683 -714 -3,379 -647' -984 -1,372 44 Canada 542 -1,686' -884 16 245 263 111 88 -109 -263 45 Latin America and Caribbean 2,460 1,846' 3,420 742 278 127 351 502' 16 158 46 1,356 659' 11,180 1,639 659 1,337 1,852 3,194' 802 1,482 47 Africa -108 75' 55 3 9 1 3 -1 4 6 48 Other countries -238 38 -1,903 55 -70 75 -430 -58 -21 -886 49 Nonmonetary international and regional organizations -389 1,063 1,128 180 324 59 -63 330 3 448 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 • April 1987 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1986 1986 Country or area 11998844 11998855'' Jan.- Dec. June July Aug. Sept. Oct. Nov. Dec.? Transactions, net purchases or sales (-) during period1 1 Estimated total2 21,501 29,208 24,307 3,112 -279' 754' 4,993 3,093 -2,298 -1,254 2 Foreign countries2 16,496 28,768 25,455 2,230 2,705 2,217' 3,997 2,778 -340 -227 3 Europe2 11,014 4,303 17,327 2,562 2,544 2,442 -685 3,135 -668 1,301 4 Belgium-Luxembourg 287 476 343 82 -46 180 239 4 -53 75 5 Germany2 2,929 1,917 7,805 357 818 1,050 1,133 2,560 716 -347 6 Netherlands 449 269 1,312 -64 1,756 -64 -313 112 38 -29 7 Sweden 40 976 132 16 42 -25 85 -6 -70 -236 8 Switzerland2 656 773 415 349 -278 52 -53 449 -499 -322 9 United Kingdom 5,188 -1,810 4,725 698 610 1,207 -1,970 153 -285 1,072 10 Other Western Europe 1,466 1,701 2,5% 1,125 -358 43 195 -136 -515 1,089 11 Eastern Europe 0 0 0 0 0 0 0 0 0 0 12 Canada 1,586 -188 874 -302 67 105 -198 -230 19 297 13 Latin America and Caribbean 1,418 4,315 901 -460 28 -37 220 -219 74 97 14 Venezuela 14 248 -69 -170 -72 -294 266 69 -139 29 15 Other Latin America and Caribbean 536 2,336 1,131 -290 96 255 32 -314 5 97 16 Netherlands Antilles 869 1,731 -161 0 5 2 -78 26 208 -30 17 Asia 2,431 19,919 5,178 515 -137 -132' 4,848 -58 -250 -2,079 18 Japan 6,289 17,909 3,800 223 273 683 4,395 -453 88 -2,104 19 -67 112 -54 -5 6 -1 11 -13 2 -14 20 All other 114 308 1,229 -80 198 -160 -200 163 482 171 21 Nonmonetary international and regional organizations 5,009 442 -1,148 882 -2,984' -1,462 996 314 -1,958 -1,481 22 International 4,612 -436 -1,474 899 -2,829' -1,511 890 365 -2,010 -1,414 23 Latin American regional 0 18 157 5 0 0 39 -5 0 0 MEMO 24 Foreign countries2 16,496 28,768 25,455 2,230 2,705 2,217' 3,997 2,778 -340 -227 25 Official institutions 505 8,135 14,351 1,612 1,448 61 1,877 3,506 52 401 26 Other foreign2 15,992 20,631 11,106 619 1,257 2,156' 2,119 -727 -393 -628 Oil-exporting countries 27 Middle East3 -6,270 -1,547 -1494 -290 14 -239 -205 -377 --11,,001166 -14 28 Africa4 -101 7 5 0 2 -1 2 -1 11 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria. notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on Jan. 31, 1987 Rate on Jan. 31, 1987 Rate on Jan. 31, 1987 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria.. 3.5 Jan. 1987 France1 7.25 Dec. 1986 Norway 8.0 June 1983 Belgium . 8.5 Jan. 1987 Germany, Fed. Rep. of 3.5 Mar. 1986 Switzerland 3.5 Jan. 1987 Brazil... 49.0 Mar. 1981 Italy 12.0 May 1986 United Kingdom2. Canada.. 7.74 Jan. 1987 Japan 3.0 Oct. 1986 Venezuela Oct. 1985 Denmark 7.0 Oct. 1983 Netherlands 4.5 Mar. 1986 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government commerdiscounts Treasury bills for 7 to 10 days. cial banks or brokers. For countries with more than one rate applicable to such 2. Minimum lending rate suspended as of Aug. 20, 1981. discounts or advances, the rate shown is the one at which it is understood the NOTE. Rates shown are mainly those at which the central bank either discounts central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1986 1987 CCoouunnttrryy,, oorr ttyyppee 11998844 11998855 11998866 July Aug. Sept. Oct. Nov. Dec. Jan. 1 Eurodollars 10.75 8.27 6.70 6.54 6.06 5.88 5.88 5.96 6.23 6.10 ? United Kingdom 9.91 12.16 10.87 9.91 9.79 10.05 11.08 11.12 11.30 10.98 3 Canada 11.29 9.64 9.18 8.45 8.50 8.38 8.45 8.39 8.34 7.95 4 Germany 5.96 5.40 4.58 4.61 4.56 4.48 4.56 4.67 4.80 4.45 5 Switzerland 4.35 4.92 4.19 4.80 4.30 4.13 3.96 3.88 4.08 3.63 Netherlands 6.08 6.29 5.56 5.69 5.28 5.17 5.32 5.48 6.03 5.58 7 France 11.66 9.91 7.68 7.13 7.09 7.07 7.38 7.51 7.92 8.49 8 Italy 17.08 14.86 12.60 11.70 11.18 10.84 10.85 11.05 11.40 11.39 9 Belgium 11.41 9.60 8.04 7.25 7.25 7.25 7.29 7.38 7.39 7.88 10 Japan 6.32 6.47 4.96 4.62 4.68 4.71 4.75 4.39 4.40 4.23 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 • April 1987 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1986 1987 CCoouunnttrryy//ccuurrrreennccyy 11998844 11998855 11998866 Aug. Sept. Oct. Nov. Dec. Jan. 1 Australia/dollar1 87.937 70.026 67.093 61.23 62.21 63.83 64.45 65.95 66.09 2 Austria/schilling 20.005 20.676 15.260 14.502 14.349 14.111 14.251 13.996 13.087 3 Belgium/franc 57.749 59.336 44.662 42.701 42.315 41.635 42.069 41.381 38.616 4 Brazil/cruzeiro 1841.50 6205.10 13.051 13.84 13.84 13.98 14.10 14.54 15.58 5 Canada/dollar 1.2953 1.3658 1.3896 1.3885 1.3872 1.3885 1.3863 1.3801 1.3605 6 China, P.R./yuan 2.3308 2.9434 3.4615 3.7129 3.7150 3.7257 3.7314 3.7314 3.7314 7 Denmark/krone 10.354 10.598 8.0954 7.7657 7.7278 7.5607 7.6444 7.5235 7.0591 8 Finland/markka 6.0007 6.1971 5.0721 4.9377 4.9190 4.8684 4.9576 4.8980 4.6419 9 France/franc 8.7355 8.9799 6.9256 6.7215 6.6835 6.5628 6.6206 6.5296 6.2007 10 Germany/deutsche mark 2.8454 2.9419 2.1704 2.0621 2.0415 2.0054 2.0243 1.9880 1.8596 11 Greece/drachma 112.73 138.40 139.93 134.68 135.07 135.44 139.12 140.13 134.80 12 Hong Kong/dollar 7.8188 7.7911 7.8037 7.8003 7.8026 7.7999 7.7974 7.7931 7.7698 13 India/rupee 11.348 12.332 12.597 12.567 12.676 12.848 13.076 13.149 13.029 14 Ireland/pound1 108.64 106.62 134.14 134.67 134.53 135.89 134.64 136.78 143.90 15 Italy/lira 1756.10 1908.90 1491.16 1420.33 1410.23 1387.67 1401.08 1379.44 1317.17 16 Japan/yen 237.45 238.47 168.35 154.18 154.73 156.47 162.85 162.05 154.83 17 Malaysia/ringgit 2.3448 2.4806 2.5830 2.6121 2.6174 2.6245 2.6131 2.5966 2.5701 18 Netherlands/guilder 3.2083 3.3184 2.4484 2.3242 2.3050 2.2663 2.2870 2.2470 2.0978 19 New Zealand/dollar1 57.837 49.752 52.456 50.068 47.950 50.392 51.382 51.339 53.605 20 Norway/krone 8.1596 8.5933 7.3984 7.3534 7.3429 7.3611 7.5401 7.5294 7.1731 21 Portugal/escudo 147.70 172.07 149.80 146.17 146.83 147.24 149.54 148.61 142.90 22 Singapore/dollar 2.1325 2.2008 2.1782 2.1601 2.1680 2.1777 2.1922 2.1900 2.1510 23 South Africa/rand1 69.534 45.57 43.952 38.39 43.36 44.42 44.37 44.94 47.70 24 South Korea/won 807.91 861.89 884.61 886.45 883.06 879.22 873.54 868.43 862.86 25 Spain/peseta 160.78 169.98 140.04 134.11 134.10 133.43 136.10 134.49 129.54 26 Sri Lanka/rupee 25.428 27.187 27.933 28.187 28.297 28.407 28.471 28.532 28.578 27 Sweden/krona 8.2706 8.6031 7.1272 6.9365 6.9191 6.8901 6.9683 6.9081 6.6188 28 Switzerland/franc 2.3500 2.4551 1.7979 1.6616 1.6537 1.6433 1.6858 1.6647 1.5616 29 Taiwan/dollar 39.633 39.889 37.837 37.422 36.885 36.647 36.438 36.001 35.304 30 Thailand/baht 23.582 27.193 26.314 26.093 26.120 26.129 26.278 26.239 26.037 31 United Kingdom/pound1 133.66 129.74 146.77 148.61 146.98 142.64 142.38 143.93 150.54 MEMO 32 United States/dollar2 138.19 143.01 112.22 107.50 107.15 106.58 107.90 106.54 101.13 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

69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) .... Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1986 A87 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference Assets and liabilities of commercial banks, March 31, 1983 August 1983 A70 Assets and liabilities of commercial banks, June 30, 1983 December 1983 A68 Assets and liabilities of commercial banks, September 30, 1983 March 1984 A68 Assets and liabilities of commercial banks, December 31, 1985 January 1987 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1985 September 1986 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1986 November 1986 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1986 December 1986 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1986 March 1987 A70 Terms of lending at commercial banks, February 1986 May 1986 A70 Terms of lending at commercial banks, May 1986 July 1986 A70 Terms of lending at commercial banks, August 1986 December 1986 A70 Terms of lending at commercial banks, November 1986 February 1987 A70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman MARTHA R. SEGER MANUEL H. JOHNSON, Vice Chairman WAYNE D. ANGELL 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 MARTHA BETHEA, Deputy Associate Director THOMAS D. SIMPSON, Deputy Associate Director LAWRENCE SLIFMAN, Deputy Associate Director OFFICE OF THE SECRETARY PETER A. TINSLEY, Deputy Associate Director SUSAN J. LEPPER, Assistant Director WILLIAM W. WILES, Secretary RICHARD D. PORTER, Assistant Director BARBARA R. LOWREY, Associate Secretary MARTHA S. SCANLON, Assistant Director JAMES MCAFEE, Associate Secretary JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, Assistant Director (Administration) DIVISION OF CONSUMER AND COMMUNITY AFFAIRS DIVISION OF INTERNATIONAL FINANCE GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director EDWIN M. TRUMAN, Director ELLEN MALAND, Assistant Director LARRY J. PROMISEL, Senior Associate Director DOLORES S. SMITH, Assistant Director CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser DIVISION OF BANKING DONALD B. ADAMS, Assistant Director SUPERVISION AND REGULATION PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director WILLIAM TAYLOR, Director RALPH W. SMITH, JR., Assistant Director FRANKLIN D. DREYER, Deputy 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 1. On loan from the Federal Reserve Bank of Chicago. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

71 and Official Staff H. ROBERT HELLER 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 JOHN H. PARRISH, Assistant Director FLORENCE M. YOUNG, Adviser GEORGE E. LIVINGSTON, Controller BRENT L. BOWEN, Assistant Controller DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director OFFICE OF THE EXECUTIVE DIRECTOR FOR INFORMATION RESOURCES MANAGEMENT ALLEN E. BEUTEL, Executive Director STEPHEN R. MALPHRUS, Associate 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 RICHARD C. STEVENS, Assistant Director PATRICIA A. WELCH, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • April 1987 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL H. ROBERT HELLER MARTHA R. SEGER EDWARD G. BOEHNE MANUEL H. JOHNSON GARY H. STERN ROBERT H. BOYKIN SILAS KEEHN NORMAND R.V. BERNARD, Assistant Secretary RICHARD W. LANG, Associate Economist MICHAEL BRADFIELD, General Counsel DAVID E. LINDSEY, Associate Economist JAMES H. OLTMAN, Deputy General Counsel MICHAEL J. PRELL, Associate Economist JAMES L. KICHLINE, Economist ARTHUR J. ROLNICK, Associate Economist EDWIN M. TRUMAN, Economist (International) HARVEY ROSENBLUM, Associate Economist PETER FOUSEK, Associate Economist KARL A. SCHELD, Associate Economist DONALD L. KOHN, 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 JOHN G. MEDLIN JR., President JULIEN L. MCCALL, Vice President JOHN F. MCGILLICUDDY, DEWALT H. ANKENY, JR., AND F. PHILLIPS GILTNER, Directors JOHN P. LAWARE, First District CHARLES T. FISHER III, Seventh District JOHN F. MCGILLICUDDY, Second District DONALD N. BRANDIN, Eighth District SAMUEL A. MCCULLOUGH, Third District DEWALT H. ANKENY, JR., Ninth District JULIEN L. MCCALL, Fourth District F. PHILLIPS GILTNER, Tenth District JOHN G. MEDLIN, JR., Fifth District GERALD W. FRONTERHOUSE, Eleventh District BENNETT A. BROWN, Sixth District JOHN D. MANGELS, Twelfth District HERBERT V. PROCHNOW, SECRETARY WILLIAM J. KORSVIK, ASSOCIATE SECRETARY Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 and Advisory Councils CONSUMER ADVISORY COUNCIL EDWARD N. LANGE, Seattle, Washington, Chairman STEVEN W. HAMM, Columbia, South Carolina, Vice Chairman EDWIN B. BROOKS, JR., Richmond, Virginia JOHN M. KOLESAR, Cleveland, Ohio JONATHAN A. BROWN, Washington, D.C. ALAN B. LERNER, Dallas, Texas JUDITH N. BROWN, Edina, Minnesota FRED S. MCCHESNEY, Chicago, Illinois MICHAEL S. CASSIDY, New York, New York RICHARD L. D. MORSE, Manhattan, Kansas THERESA FAITH CUMMINGS, Springfield, Illinois HELEN E. NELSON, Mill Valley,California RICHARD B. DOBY, Denver, Colorado SANDRA R. PARKER, Richmond, Virginia RICHARD H. FINK, Washington, D.C. JOSEPH L. PERKOWSKI, Centerville, Minnesota NEIL J. FOGARTY, Jersey City, New Jersey BRENDA L. SCHNEIDER, Detroit, Michigan STEPHEN GARDNER, Dallas, Texas JANE SHULL, Philadelphia, Pennsylvania KENNETH A. HALL, Jackson, Mississippi TED L. SPURLOCK, Dallas, Texas ELENA G. HANGGI, Little Rock, Arkansas MEL R. STILLER, Boston, Massachusetts ROBERT J. HOBBS, Boston, Massachusetts CHRISTOPHER J. SUMNER, Salt Lake City, Utah RAMON E. JOHNSON, Salt Lake City, Utah EDWARD J. WILLIAMS, Chicago, Illinois ROBERT W. JOHNSON, West Lafayette, Indiana MICHAEL ZOROYA, St. Louis, Missouri THRIFT INSTITUTIONS ADVISORY COUNCIL MICHAEL R. WISE, Denver, Colorado, President JAMIE J. JACKSON, Houston, Texas, Vice President GERALD M. CZARNECKI, Mobile, Alabama DONALD F. MCCORMICK, Livingston, New Jersey JOHN C. DICUS, Topeka, Kansas JANET M. PAVLISKA, Arlington, Massachusetts BETTY GREGG, Phoenix, Arizona HERSCHEL ROSENTHAL, Miami, Florida THOMAS A. KINST, Hoffman Estates, Illinois WILLIAM G. SCHUETT, Milwaukee, Wisconsin RAY MARTIN, Los Angeles, California GARY L. SIRMON, Walla Walla, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; Mail Stop 138, Board of Governors of the Federal Reserve 10 or more to one address, $1.25 each. System, Washington, D.C. 20551. When a charge is indicat- PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. ed, remittance should accompany request and be made $13.50 each. payable to the order of the Board of Governors of the Federal FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updat- Reserve System. Remittance from foreign residents should ed at least monthly. (Requests must be prepaid.) be drawn on a U.S. bank. Stamps and coupons are not Consumer and Community Affairs Handbook. $75.00 per accepted. year. Monetary Policy and Reserve Requirements Handbook. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- $75.00 per year. TIONS. 1984. 120 pp. Securities Credit Transactions Handbook. $75.00 per year. ANNUAL REPORT. Federal Reserve Regulatory Service. 3 vols. (Contains all ANNUAL REPORT: BUDGET REVIEW, 1985-86. three Handbooks plus substantial additional material.) FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or $200.00 per year. $2.00 each in the United States, its possessions, Canada, Rates for subscribers outside the United States are as and Mexico; 10 or more of same issue to one address, follows and include additional air mail costs: $18.00 per year or $1.75 each. Elsewhere, $24.00 per Federal Reserve Regulatory Service, $250.00 per year. year or $2.50 each. Each Handbook, $90.00 per year. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A of Part I only) 1976. 682 pp. $5.00. MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. BANKING AND MONETARY STATISTICS. 1941-1970. 1976. WELCOME TO THE FEDERAL RESERVE. 1,168 pp. $15.00. PROCESSING AN APPLICATION THROUGH THE FEDERAL RE- ANNUAL STATISTICAL DIGEST SERVE SYSTEM. August 1985. 30 pp. 1974-78. 1980. 305 pp. $10.00 per copy. WRITING IN STYLE AT THE FEDERAL RESERVE. August 1984. 1981. 1982. 239 pp. $ 6.50 per copy. 93 pp. $2.50 each. 1982. 1983. 266 pp. $ 7.50 per copy. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1983. 1984. 264 pp. $11.50 per copy. 440 pp. $9.00 each. 1984. 1985. 254 pp. $12.50 per copy. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1985. 1986. 231 pp. $15.00 per copy. December 1986. 264 pp. $10.00 each. HISTORICAL CHART BOOK. Issued annually in Sept. $1.25 each in the United States, its possessions, Canada, and Mexico; 10 or more to one address, $1.00 each. Elsewhere, $1.50 each. CONSUMER EDUCATION PAMPHLETS SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- Short pamphlets suitable for classroom use. Multiple copies RIES OF CHARTS. Weekly. $21.00 per year or $.50 each in are available without charge. the United States, its possessions, Canada, and Mexico; 10 or more of same issue to one address, $19.50 per year or $.45 each. Elsewhere, $26.00 per year or $.60 each. Alice in Debitland THE FEDERAL RESERVE ACT, and other statutory provisions Consumer Handbook on Adjustable Rate Mortgages affecting the Federal Reserve System, as amended Consumer Handbook to Credit Protection Laws through April 20, 1983, with Supplements covering Fair Credit Billing amendments through August 1986. 576 pp. $7.00. Federal Reserve Glossary REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- A Guide to Business Credit and the Equal Credit Opportunity ERAL RESERVE SYSTEM. Act ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Guide to Federal Reserve Regulations Regulation Z) Vol. I (Regular Transactions). 1969. 100 How to File A Consumer Credit Complaint pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each If You Borrow To Buy Stock volume $2.25; 10 or more of same volume to one If You Use A Credit Card address, $2.00 each. Series on the Structure of the Federal Reserve System FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY The Board of Governors of the Federal Reserve System UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one The Federal Open Market Committee address, $1.50 each. Federal Reserve Bank Board of Directors THE BANK HOLDING COMPANY MOVEMENT TO 1978: A Federal Reserve Banks COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to Organization and Advisory Committees one address, $2.25 each. What Truth in Lending Means to You Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 PAMPHLETS FOR FINANCIAL INSTITUTIONS REVIEW OF THE TECHNIQUES AND LITERATURE, by Short pamphlets on regulatory compliance, primarily suit- Kenneth Rogoff. October 1983. 15 pp. ablefor banks, bank holding companies and creditors. 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTER- VENTION, AND INTEREST RATES: AN EMPIRICAL IN- VESTIGATION, by Bonnie E. Loopesko. November Limit of 50 copies 1983. Out of print. 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET INTERVENTION: A REVIEW OF THE LITERATURE, by The Board of Directors' Opportunities in Community Rein- Ralph W. Tryon. October 1983. 14 pp. Out of print. vestment 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET The Board of Directors' Role in Consumer Law Compliance INTERVENTION: APPLICATIONS TO CANADA, GERMA- Combined Construction/Permanent Loan Disclosure and NY, AND JAPAN, by Deborah J. Danker, Richard A. Regulation Z Haas, Dale W. Henderson, Steven A. Symansky, and Community Development Corporations and the Federal Re- Ralph W. Tryon. April 1985. 27 pp. Out of print. serve 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECONO- Construction Loan Disclosures and Regulation Z MY, by Darrell Cohen and Peter B. Clark. January Finance Charges Under Regulation Z 1984. 16 pp. Out of print. How to Determine the Credit Needs of Your Community 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF Regulation Z: The Right of Rescission FINANCIAL DEREGULATION, INTERSTATE BANKING, The Right to Financial Privacy Act AND FINANCIAL SUPERMARKETS, by Stephen A. Signature Rules in Community Property States: Regulation B Rhoades. February 1984. Out of print. Signature Rules: Regulation B 138. ANTITRUST LAWS, JUSTICE DEPARTMENT GUIDE- Timing Requirements for Adverse Action Notices: Regula- LINES, AND THE LIMITS OF CONCENTRATION IN LOtion B CAL BANKING MARKETS, by James Burke. June 1984. What An Adverse Action Notice Must Contain: Regulation B 14 pp. Out of print. Understanding Prepaid Finance Charges: Regulation Z 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN THE UNITED STATES, by Thomas D. Simpson and Patrick M. Parkinson. August 1984. 20 pp. 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF STAFF STUDIES: Summaries Only Printed in the THE LITERATURE, by John D. Wolken. November Bulletin 1984. 38 pp. Out of print. Studies and papers on economic and financial subjects that 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAYare of general interest. Requests to obtain single copies of MENT COSTS, by William Dudley. November 1984. the full text or to be added to the mailing list for the series 15 pp. Out of print. may be sent to Publications Services. 142. MERGERS AND ACQUISITIONS BY COMMERCIAL BANKS, 1960-83, by Stephen A. Rhoades. December 1984. 30 pp. Out of print. Staff Studies 115-125 are out of print. 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF THE ELECTRONIC FUND TRANSFER ACT: RECENT SURVEY EVIDENCE, by Frederick J. Schroeder. April 114. MULTIBANK HOLDING COMPANIES: RECENT EVI- 1985. 23 pp. Out of print. DENCE ON COMPETITION AND PERFORMANCE IN 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- BANKING MARKETS, by Timothy J. Curry and John T. SUMER CREDIT REGULATIONS: THE TRUTH IN LEND- Rose. Jan. 1982. 9 pp. ING AND EQUAL CREDIT OPPORTUNITY LAWS, by 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- Gregory E. Elliehausen and Robert D. Kurtz. May KET INTERVENTION, by Donald B. Adams and Dale 1985. 10 pp. W. Henderson. August 1983. 5 pp. Out of print. 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- AND THEIR IMPACT ON CONSUMERS, by Glenn B. VENTION: JANUARY-MARCH 1975, by Margaret L. Canner and Robert D. Kurtz. August 1985. 31 pp. Out Greene. August 1984. 16 pp. Out of print. of print. 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, garet L. Greene. October 1984. 40 pp. Out of print. by Thomas F. Brady. November 1985. 25 pp. 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) VENTION: OCTOBER I98O-OCTOBER 1981, by Margaret INDEXES OF THE MONETARY AGGREGATES, by Helen L. Greene. August 1984. 36 pp. T. Farr and Deborah Johnson. December 1985. 42 pp. 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON IN- 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF TERNATIONAL TRADE AND OTHER ECONOMIC VARIA- THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA- BLES: A REVIEW OF THE LITERATURE, by Victoria S. TION RESULTS, by Flint Brayton and Peter B. Clark. Farrell with Dean A. DeRosa and T. Ashby McCown. December 1985. 17 pp. January 1984. Out of print. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- IN BANKING BEFORE AND AFTER ACQUISITION, by DEUTSCHE MARK INTERVENTION, by Laurence R. Stephen A. Rhoades. April 1986. 32 pp. Jacobson. October 1983. 8 pp. 150. STATISTICAL COST ACCOUNTING MODELS IN BANK- 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BE- ING: A REEXAMINATION AND AN APPLICATION, by TWEEN EXCHANGE RATES AND INTERVENTION: A John T. Rose and John D. Wolken. May 1986. 13 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT Survey of Consumer Finances, 1983: A Second Report. PRICING FROM 1983 THROUGH 1985, by Patrick I. 12/84. Mahoney, Alice P. White, Paul F. O'Brien, and Mary Union Settlements and Aggregate Wage Behavior in the M. McLaughlin. January 1987. 30 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 Countries. 10/85. REPRINTS OF BULLETIN ARTICLES Recent Developments in the Bankers Acceptance Market. 1/86. Most of the articles reprinted do not exceed 12 pages. The Use of Cash and Transaction Accounts by American Families. 2/86. Limit of 10 copies Financial Characteristics of High-Income Families. 3/86. U. S. International Transactions in 1985. 5/86. Foreign Experience with Targets for Money Growth. 10/83. Prices, Profit Margins, and Exchange Rates. 6/86. Intervention in Foreign Exchange Markets: A Summary of Agricultural Banks under Stress. 7/86. Ten Staff Studies. 11/83. Foreign Lending by Banks: A Guide to International and A Financial Perspective on Agriculture. 1/84. U.S. Statistics. 10/86. Survey of Consumer Finances, 1983. 9/84. Recent Developments in Corporate Finance. 11/86. Bank Lending to Developing Countries. 10/84. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

77 Index to Statistical Tables References are to pages A3-A68 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 Ownership by individuals, partnerships, and Assets and liabilities {See also Foreigners) corporations, 22 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 7 Financial institutions, 26 Reserves and related items, 3, 4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Nonfinancial corporations, 36 Banks, by classes, 3, 18-20, 21 Automobiles Federal Reserve Banks, 4, io 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 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 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 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 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

78 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 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 TAX receipts, federal, 29 MANUFACTURING 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 Treasury deposits, 4, 10, 28 Reserve requirements, 7 Treasury operating balance, 28 Mining production, 48 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 Rates, 24 OPEN market transactions, 9 U.S. international transactions, 53-67 Utilities, production, 48 PERSONAL income, 52 Prices Consumer and producer, 44, 50 VETERANS Administration, 38, 39 Stock market, 25 Prime rate, 23 WEEKLY reporting banks, 19-21 Producer prices, 44, 50 Wholesale (producer) prices, 44, 50 Production, 44, 47 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

79 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 R. Opel E. Gerald Corrigan Virginia A. Dwyer Thomas M. Timlen Buffalo 14240 Mary Ann Lambertsen John T. Keane PHILADELPHIA 19105 Nevius M. Curtis Edward G. Boehne George E. Bartol III CLEVELAND* 44101 Charles W. Parry Karen N. Horn E. Mandell de Windt William H. Hendricks Cincinnati 45201 Owen B. Butler 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 Gloria L. Johnson Robert D. McTeer, Jr. Charlotte 28230 Wallace J. Jorgenson Albert D. Tinkelenberg Culpeper Communications John G. Stoides and Records Center 22701 ATLANTA 30303 Bradley Currey, Jr. Robert P. Forrestal Larry L. Prince Jack Guynn Delmar Harrison Birmingham 35283 Margaret E. M. Tolbert Fred R. Hen- Jacksonville 32231 Andrew A. Robinson James D. Hawkins Miami 33152 Robert D. Apelgren Patrick K. Barron Nashville 37203 C. Warren Neel Jeffrey J. Wells New Orleans 70161 Caroline K. Theus 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 Robert L. Virgil, Jr. Joseph P. Garbarini Little Rock 72203 James R. Rodgers John F. Breen Louisville 40232 Raymond M. Burse James E. Conrad Katherine H. Smythe Paul I. Black, Jr. Memphis 38101 John B. Davis, Jr. Gary H. Stern MINNEAPOLIS 55480 Michael W. Wright Thomas E. Gainor Warren H. Ross Robert F. McNellis Helena 59601 Irvine O. Hockaday, Jr. Roger Guffey KANSAS CITY 64198 Robert G. Lueder Henry R. Czerwinski James E. Nielson Wayne W. Martin Denver 80217 Oklahoma City 73125 Patience S. Latting William G. Evans Kenneth L. Morrison Robert D. Hamilton Omaha 68102 Bobby R. Inman Robert H. Boykin DALLAS 75222 Hugh G. Robinson William H. Wallace James L. Stull Mary Carmen Saucedo Sammie C. Clay H El o u P s a t s o o n 7 7 7 9 2 9 5 9 2 9 Walter M. Mischer, Jr. J. Z. Rowe Robert F. McDermott Thomas H. Robertson San Antonio 78295 Fred W. Andrew Robert T. Parry SAN FRANCISCO 94120 Robert F. Erburu Carl E. Powell Richard C. Seaver Thomas C. Warren Los Angeles 90051 Paul E. Bragdon Angelo S. Carella Portland 97208 Don M. Wheeler E. Ronald Liggett Salt Lake City 84125 John W. Ellis Gerald R. Kelly Seattle 98124 *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

80 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories April 1984 LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE REGULATORY SERVICE The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with exten- To promote public understanding of its regulatory sions of credit for the purchase of securities, together functions, the Board publishes the Federal Reserve with all related statutes, Board interpretations, rul- Regulatory Service, a three-volume looseleaf service ings, and staff opinions. Also included is the Board's containing all Board regulations and related statutes, list of OTC margin stocks. interpretations, policy statements, rulings, and staff The Consumer and Community Affairs Handbook opinions. For those with a more specialized interest in contains Regulations B, C, E, M, Z, AA, and BB and the Board's regulations, parts of this service are associated materials. published separately as handbooks pertaining to mon- For domestic subscribers, the annual rate is $200 for etary policy, securities credit, and consumer affairs. the Federal Reserve Regulatory Service and $75 for These publications are designed to help those who each handbook. For subscribers outside the United must frequently refer to the Board's regulatory materi- States, the price including additional air mail costs is als. They are updated at least monthly, and each $250 for the Service and $90 for each Handbook. All contains conversion tables, citation indexes, and a subscription requests must be accompanied by a check subject index. or money order payable to Board of Governors of the The Monetary Policy and Reserve Requirements Federal Reserve System. Orders should be addressed Handbook contains Regulations A, D, and Q plus to Publications Services, Mail Stop 138, Federal Rerelated materials. For convenient reference, it also serve Board, 20th Street and Constitution Avenue, contains the rules of the Depository Institutions N.W., Washington, D.C. 20551. Deregulation Committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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