Federal Reserve Bulletin, 1987-09

VOLUME 73 • NUMBER 9 • SEPTEMBER 1987 FEDERAL RESERVE £V t- BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost • Griffith L. Garwood • Edwin M. Truman The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 687 THE ANGUISH OF CENTRAL BANKING Interim statement on reducing risks on by Arthur F. Burns large-dollar transfer systems. Arthur F. Burns, Chairman of the Board of New members appointed to Large Dollar Governors from 1970 to 1978, gave this Payments System Advisory Group. address as the Per Jacobsson Lecture on Establishment of Office of Inspector Gener- September 30, 1979. It is reprinted in memal and appointment of the first Inspector ory of Dr. Burns, who died on June 26, General. 1987. Proposed actions. 699 STAFF STUDIES Availability of revised list of OTC stocks In "Stock Market Volatility," the authors subject to margin regulations. examine whether innovations in trading strategies—arbitrage trading, program trad- 711 RECORD OF POLICY ACTIONS OF THE ing, and portfolio insurance—affect volatili- FEDERAL OPEN MARKET COMMITTEE ty in the prices of stock. At its meeting on May 19, 1987, all but one of the members of the Committee indicated 701 INDUSTRIAL PRODUCTION that they favored or could accept a directive Industrial production increased an estimat- that called for some increase in the degree ed 0.2 percent in June. of reserve pressure beyond that sought in recent weeks, taking account of the possi- 703 STATEMENT TO CONGRESS bility that such firming might be accomplished through an increase in the discount Paul A. Volcker, Chairman, Board of Govrate. Subsequent to some initial firming in ernors, touches on some of the main points reserve conditions, the members indicated in the "Monetary Policy Report to the that somewhat greater reserve restraint Congress," and says that we will need to would be acceptable, and somewhat lesser work to correct the large imbalances in our reserve restraint might be acceptable, later internal and external economic positions, in the intermeeting period depending on before the House Committee on Banking, developments relating to inflation and the Finance, and Urban Affairs, July 21, 1987. performance of the dollar in foreign ex- [Chairman Volcker presented identical teschange markets, while also giving considertimony before the Senate Committee on ation to the behavior of the monetary aggre- Banking, Housing, and Urban Affairs on gates and the strength of the business July 23, 1987.] expansion. This approach to policy implementation was expected to be consistent 706 ANNOUNCEMENTS with growth in M2 and M3 at annual rates of around 6 percent or less for the three-month Alan Greenspan sworn in as Chairman of period from March to June. Over the same the Board of Governors. period growth in Ml was expected to re- Restructuring of interest rate charges on main well below its pace in 1986; the members would continue to evaluate this aggrediscount window borrowings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

gate in the light of the performance of the Ai FINANCIAL AND BUSINESS STATISTICS broader monetary aggregates and other fac- A3 Domestic Financial Statistics tors. The members agreed that the inter- A44 Domestic Nonfinancial Statistics meeting range for the federal funds rate, A53 International Statistics which provides a mechanism for initiating consultation of the Committee when its A69 GUIDE TO TABULAR PRESENTATION, boundaries are persistently exceeded, STATISTICAL RELEASES, AND SPECIAL should be left unchanged at 4 to 8 percent. TABLES 717 LEGAL DEVELOPMENTS A76 BOARD OF GOVERNORS AND STAFF Various bank holding company, bank service corporation, and bank merger orders; A78 FEDERAL OPEN MARKET COMMITTEE and pending cases. AND STAFF; ADVISORY COUNCILS 759 MEMBERSHIP OF THE BOARD OF A80 FEDERAL RESERVE BOARD GOVERNORS OF THE FEDERAL PUBLICATIONS RESERVE SYSTEM, 1913-87 A83 INDEX TO STATISTICAL TABLES List of appointive and ex officio members. A85 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A86 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Arthur F. Burns The Anguish of Central Banking Arthur F. Burns, who died on June 26, 1987, was Burns gave as the sixteenth Per Jacobsson Lec- Chairman of the Board of Governors of the ture, at Belgrade, Yugoslavia, on September 30, Federal Reserve System from 1970 to 1978. The 1979. The Federal Reserve reprints the lecture as following article is a reprint of the address Dr. a memorial to Dr. Burns. The international monetary system, which has markets. But uneasiness about the monetary been in almost constant turmoil during this de- system, particularly about the future of the dolcade, has benefited recently from several devel- lar, has continued and in fact intensified this opments. Under the amended Articles of Agree- summer. There have been ample reasons for ment, the International Monetary Fund can exer- concern—among them, the political convulsions cise firm surveillance over the exchange rate in Iran, the enormous new increases in oil prices policies of its members and is therefore now in a by OPEC, the narrowing at times of interest rate position to move the nations of the world toward differentials between New York and foreign a rule of law in international monetary affairs. money market centers, and the limited progress Another promising development is the establish- in developing an effective energy policy in the ment of the European Monetary System, with United States. While all these factors contributthe aim of maintaining relatively stable exchange ed to nervousness, what has been most disturbrates within the Common Market. ing to foreign exchange markets in recent months A third positive development is recognition by is the reacceleration of inflation in the United the United States that the persisting deficits in its States and in much of the rest of the world. Even international current account must be eliminat- Germany and Switzerland no longer qualify as ed, and that in the meantime decisive interven- islands of stability. tion to protect the external value of the dollar This unhappy development is one more indicamay well be needed. The conventional theory tion, if any were needed, that the current instathat a depreciating currency is beneficial to a bility in international finance is largely a consenation's foreign trade and to its overall economic quence of the chronic inflation of our times and activity has lost its appeal within the American that stability will not return to the international government. The officials concerned with eco- monetary system until reasonably good control nomic policy have learned that whatever merit over inflationary forces has been achieved in the may in some circumstances attach to this theory, major industrial nations—and especially in the it is a dangerous guide for a country whose United States. This critical consideration at once currency is still the centerpiece of the interna- raises serious questions: Why is the worldwide tional monetary system. "Benign neglect" of the disease of inflation proving so stubborn? Why is external value of the dollar came to an end it not yielding to the various efforts of the affectdramatically, and I would hope irrevocably, in ed nations, including some determined efforts, to November 1978. bring it to an end? Why, in particular, have This and other constructive developments sug- central bankers, whose main business one might gested earlier in 1979 that a closer approach to suppose is to fight inflation, been so ineffective in international equilibrium was under way, and dealing with this worldwide problem? calm returned for a while to foreign exchange To me, as a former central banker, the last of these questions is especially intriguing. One of the time-honored functions of a central bank is to NOTE. Permission to reprint this address was given by the protect the integrity of its nation's currency, Per Jacobsson Foundation. Dr. Burns acknowledged the counsel and assistance of Dr. Arthur Broida. both domestically and internationally. In mone- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

688 Federal Reserve Bulletin • September 1987 tary policy central bankers have a potent means years after the mid-1950s. These pressures were for fostering stability of the general price level. more substantial in some countries than in the By training, if not also by temperament, they are United States, but in none did inflation appear to inclined to lay great stress on price stability, and be out of control. their abhorrence of inflation is continually rein- From 1958 through 1964, the United States forced by contacts with one another and with enjoyed a remarkable degree of price stability. like-minded members of the private financial During that stretch of six years, the wholesale community. And yet, despite their antipathy to price index remained virtually unchanged and inflation and the powerful weapons they could the consumer price index rose at an annual rate wield against it, central bankers have failed so of only a little more than 1 percent. And then the utterly in this mission in recent years. In this inflation that has ever since been plaguing the paradox lies the anguish of central banking. American economy got under way. Average My aim today is to consider the causes of this wholesale prices rose at an annual rate of 2 paradox and its implications for the future. Much percent from 1964 to 1968, 4 percent from 1968 to of what I say will inevitably reflect lessons that I 1972, and 10 percent from 1972 to 1978. This learned during my service as Chairman of the pattern of accelerating price increases is found in Federal Reserve Board over an eight-year period other countries also, although rates of increase that ended about eighteen months ago. This may have varied widely, and in most industrial nabe a good time to reflect on that experience; a tions the acceleration began later—typically in year ago I was probably too close to it to have 1969 or 1970. the necessary perspective, and a year from now Analyses of the inflation that the United States the sharpness of my impressions may have begun has experienced over the past fifteen years freto fade. quently proceed in three stages. First are consid- I shall focus mainly, although not exclusively, ered the factors that launched inflation in the on the United States. That is the area that I know mid-1960s, particularly the governmental fine best, and I also believe the American experi- tuning inspired by the New Economics and the ence—despite some unique aspects—is fairly loose financing of the war in Vietnam. Next are representative of that of other industrial coun- considered the factors that led to subsequent tries. The developing nations have their own strengthening of inflationary forces, including characteristic sources and patterns of inflation. further policy errors, the devaluations of the Nevertheless, in our interdependent world, eco- dollar in 1971 and 1973, the worldwide economic nomic conditions in the United States and other boom of 1972-73, the crop failures and resulting industrial countries are bound to have a signifi- surge in world food prices in 1973-74, the excant bearing on the fortunes of developing traordinary increases in oil prices that became countries. effective in 1974, and the sharp deceleration of productivity growth from the late 1960s onward. Finally, attention is turned to the process where- By way of introduction, I might note that during by protracted experience with inflation has led to much of the period since the end of World War widespread expectations that it will continue in II, overall economic developments were, in the the future, so that inflation has acquired a momain, satisfactory. By prewar standards, reces- mentum of its own. sions were brief and mild through the mid-1960s, I have no quarrel with analyses of this type. both in the United States and in other industrial They are distinctly helpful in explaining the countries; world trade expanded rapidly under a American inflation and, with changes here and beneficent regime of stable exchange rates; and there, that in other nations also. At the same living standards rose impressively throughout time, I believe that such analyses overlook a the developed world. In most industrial countries more fundamental factor: the persistent inflationinflationary pressures were troublesome from ary bias that has emerged from the philosophic time to time—as in the immediate postwar years, and political currents that have been transformduring the Korean hostilities, and for a couple of ing economic life in the United States and else- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Arthur F. Burns • The Anguish of Central Banking 689 where since the 1930s. The essence of the unique other New Deal measures laid the foundations of inflation of our times and the reason central an activist government—a government responsibankers have been ineffective in dealing with it ble not only for relieving suffering and insuring can be understood only in terms of those cur- against economic adversity, but also for limiting rents of thought and the political environment "harmful" competition, subsidizing "worththey have created. while" activities, and redressing unequal bal- Historically, Americans have had deep faith in ances of market power. In less than a decade the the concept of progress—in the idea that it was government became a leading actor on the ecorealistic to expect to better one's own lot and nomic stage. that of one's family in the course of a lifetime. Just as Americans were persuaded during the During the greater part of America's history, depression that the federal government should government intervention in economic life was help the unemployed, so they were taught by the only peripheral. Personal progress was generally experience of World War II to look to governviewed as a reward for personal effort—assisted, ment to prevent unemployment in the first place. perhaps, by good fortune. Provision for bad Under the compulsions of war, the government times or other contingencies of life was deemed had demonstrated that it could assure gainful prudent, but that was a private responsibility. employment for every willing hand. It therefore The American's way through life lay along the seemed reasonable—and not only to the followroad of self-reliance; only in extremity did he ers of Keynes—to expect government to do the look to government or his neighbors for econom- same in a time of peace. In 1944, when President ic assistance. Roosevelt set forth the basis of his postwar This tradition of individualism was shattered domestic program in an "Economic Bill of by the cataclysmic events of the 1930s and 1940s. Rights," he put "the right to a useful and remu- The breakdown of economic order during the nerative job" at the head of the list. With the war Great Depression was unprecedented in its scale ended, the Employment Act of 1946 explicitly and scope, and it strained the precept of self- proclaimed the federal government's responsibilreliance beyond the breaking point. With one- ity to promote "maximum employment," and quarter of the labor force unemployed, personal this came to mean "full employment" as a courage and moral stamina could guarantee nei- matter of law as well as popular usage. ther a job nor a livelihood. Succor finally came Armed with the Employment Act of 1946, the through a political idea that was novel to a government sought to demonstrate that it could majority of the American people but compelling combat unemployment with preventive as well nonetheless—namely, that the federal govern- as curative measures. In fact, the period from ment had a far larger responsibility in the eco- World War II to the mid-1960s was marked not nomic sphere than it had hitherto assumed. only by a dampening of the business cycle but Under the New Deal the federal government also by persistent increases in the prosperity of undertook extensive projects of public construc- American families. On the one side, rising intion and offered work relief as well. It gave direct comes, reflecting substantial gains in labor prorelief to the needy—a function previously per- ductivity, made possible rising consumption, formed only by local authorities or private chari- greater leisure, and better provision for retirety. It established unemployment insurance and ment. On the other side, a steady stream of new old-age pensions. It took steps to raise wages and and often improved consumer goods tended to prices with a view to fostering economic recov- sustain the growth of aggregate demand. The ery. And beyond these innovative actions, the extensive development of consumer credit instifederal government greatly extended the range of tutions made it easier for people to acquire its regulatory activities. It intervened massively automobiles, household appliances, and other in the securities market, in banking, in the public goods and services, the desire for which was utilities industry, in the housing market, and in continually being whetted by alluring advertisethe farm sector; and it gave labor unions broad ments and the illustrations of potential life styles new rights and powers. Together, these and broadcast by television and the movies. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

690 Federal Reserve Bulletin • September 1987 seemingly inexorable rise in living standards for innocence of the day, the administration in office the bulk of the population was reflected in up- attempted to respond to the growing demands for ward trends in the proportion of families that social and economic reform while waging war in owned their own home, that owned a summer Vietnam on a rising scale. Under the rubric of the home, that possessed one, two, and even three New Economics, a more activist policy was automobiles, that had telephones, that owned adopted for the purpose of increasing the rate of televison sets, clothes washers, and food freez- economic growth and reducing the level of unemers; also in the proportion of the population that ployment. Under the rubrics of the New Frontier had graduated from high school and from col- and the Great Society, broad-scale efforts were lege, that traveled abroad, that owned corporate made to stitch up open seams in the fabric of stock, that carried life insurance, and so on. affluence—inadequate or unequal education, This experience of economic progress housing, medical care, nutrition. Under the rustrengthened the public's expectations of prog- brics of civil rights and citizen participation, ress. What had once been a quiet personal minorities and other disadvantaged groups were feeling that the long future would be better than given political weapons to maintain, consolidate, the past, particularly for one's children, was and extend their gains. transformed during the postwar years into an The interplay of governmental action and priarticulate and widespread expectation of steady vate demands had an internal dynamic that led to improvement in living standards—indeed, into a their concurrent escalation. When the governfeeling of entitlement to annual increases in real ment undertook in the mid-1960s to address such income. "unfinished tasks" as reducing frictional unem- But the rapid rise in national affluence did not ployment, eliminating poverty, widening the create a mood of contentment. On the contrary, benefits of prosperity, and improving the quality the 1960s were years of social turmoil in the of life, it awakened new ranges of expectation United States, as they were in other industrial and demand. Once it was established that the key democracies. In part, the unrest reflected discon- function of government was to solve problems tent by blacks and other minorities with prevail- and relieve hardships—not only for society at ing conditions of social discrimination and eco- large but also for troubled industries, regions, nomic deprivation—a discontent that erupted occupations, or social groups—a great and growduring the "hot summers" of the middle 1960s in ing body of problems and hardships became burning and looting. In part, the social unrest candidates for governmental solution. New techreflected growing feelings of injustice by or on niques for bringing pressure on the Congress— behalf of other groups—the poor, the aged, the and also on the state legislatures and other physically handicapped, ethnics, farmers, blue- elected officials—were developed, refined, and collar workers, women, and so forth. In part, the exploited. The Congress responded by pouring unrest reflected a growing rejection by middle- out a broad stream of measures that involved class youth of prevailing institutions and cultural government spending, special tax relief, or reguvalues. In part, it reflected the more or less lations mandating private spending. Every demsudden recognition by broad segments of the onstration of a successful tactic in securing population that the economic reforms of the New rights, establishing entitlements, or extracting Deal and the more recent rise in national afflu- other benefits from government led to new applience had left untouched problems in various cations of that tactic. Various groups found a areas of American life—social, political, eco- powerful ally in the federal courts, which repeatnomic, and environmental. And interacting with edly struck down legislative or administrative all these sources of social disturbance were the limitations on access to government benefits. heightening tensions associated with the Viet- Even government employees, particularly at the nam War. state and municipal levels, discovered the pecuniary rewards of shedding genteel notions of In the innocence of the day, many Americans public service and pressing economic demands came to believe that all of the new or newly with a strident militancy. discovered ills of society should be addressed promptly by the federal government. And in the Many results of this interaction of government Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Arthur F. Burns • The Anguish of Central Banking 691 and citizen activism proved wholesome. Their economy, and so too did the expanding role of cumulative effect, however, was to impart a government regulation. Traditional ways of prostrong inflationary bias to the American econo- tecting particular groups against competition— my. The proliferation of government programs such as raising farm price supports, increasing led to progressively higher tax burdens on both minimum wages, and imposing import quotas— individuals and corporations. Even so, the will- did not lose their appeal as inflation kept soaring. ingness of government to levy taxes fell distinct- On the contrary, all these devices of raising costs ly short of its propensity to spend. Since 1950, and prices were liberally employed even in the the federal budget has been in balance in only face of accelerating inflation during 1977 and five years. Since 1970, a deficit has occurred in 1978. Also troublesome were the newer social every year. Not only that, but the deficits have regulations—those concerned with health, safebeen mounting in size. Budget deficits have thus ty, and the environment—that kept multiplying become a chronic condition of federal finance; during the 1970s. However laudable in purpose, they have been incurred when business condi- much of this regulatory apparatus was conceived tions were poor and also when business was in haste and with little regard to the costs being booming. But when the government runs a bud- imposed on producers. Substantial amounts of get deficit, it pumps more money into the pocket- capital that might have gone into productivitybooks of people than it withdraws from their enhancing investments by private industry were pocketbooks; the demand for goods and services thus diverted into uses mandated by the regulatherefore tends to increase all around. That is the tors. Improvements in productivity were also way the inflation that has been raging since the slowed by the discouragement of business inmid-1960s first got started and later kept being vestment that resulted from the increasing burnourished. den of income and capital gains taxes. Progress The pursuit of costly social reforms often went in equipping the work force with new plant and hand in hand with the pursuit of full employment. equipment proceeded much less rapidly during In fact, much of the expanding range of govern- the 1970s than during the 1950s or 1960s, and this ment spending was prompted by the commitment shortfall contributed to the productivity slump to full employment. Inflation came to be widely and thus to the escalation of costs and prices. viewed as a temporary phenomenon—or, provid- Additional forces on the side of supply contribed it remained mild, as an acceptable condition. uted to the inflationary bias. As the income- "Maximum" or "full" employment, after all, maintenance programs established by governhad become the nation's major economic goal— ment were liberalized, incentives to work tended not stability of the price level. That inflation to diminish. Some individuals, both young and ultimately brings on recession and otherwise old, found it agreeable to live much of the time nullifies many of the benefits sought through off unemployment insurance, food stamps, and social legislation was largely ignored. Even con- welfare checks—perhaps supplemented by interservative politicians and businessmen began mittent jobs in an expanding underground econoechoing Keynesian teachings. It therefore my. Even enterprising and ambitious individuals seemed only natural to federal officials charged who sought permanent jobs could be more leiwith economic responsibilities to respond quick- surely or more discriminating in their search ly to any slackening of economic activity—at when the government, besides pursuing a fulltimes, in fact, as in the early days of 1977, to employment policy, provided a protective insheer illusions of such slackening—but to pro- come umbrella during jobless periods. In such an ceed very slowly and cautiously in responding to environment, employed workers could demand evidence of increasing pressure on the nation's and often achieve longer vacations with pay and resources of labor and capital. Fear of immediate more frequent holidays and sick leave, besides unemployment—rather than fear of current or enjoying coffee breaks and other social rites on eventual inflation—thus came to dominate eco- the job. In such an environment, they could nomic policymaking. afford to reject a pay cut or a small wage increase This weighting of the scales of government when their employer pleaded serious financial policy inevitably gave an inflationary twist to the difficulties. Thus the number of individuals Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

692 Federal Reserve Bulletin • September 1987 counted as unemployed could rise even at times subject to this provision of law, and that has when job vacancies, wages, and the consumer limited its practical scope for restrictive acprice level were rising. tions—quite apart from the fact that some mem- The philosophic and political currents that bers of the Federal Reserve family had themtransformed economic life and brought on selves been touched by the allurements of the secular inflation in the United States have run New Economics. Every time the government strong also in other industrial countries. Rising moved to enlarge the flow of benefits to the economic expectations of people, wider citizen population at large, or to this or that group, the participation in the political arena, governmental assumption was implicit that monetary policy commitments to full employment, liberal in- would somehow accommodate the action. A come-maintenance programs, expanding govern- similar tacit assumption was embodied in every mental regulations, and increasingly pressing de- pricing decision or wage bargain arranged by mands on government for the solution of private parties or the government. The fact that economic and social problems—all these became such actions could in combination be wholly common features of the industrial democracies. incompatible with moderate rates of monetary And just as the rapid expansion of government expansion was seldom considered by those who activities in the United States was accompanied initiated them, despite the frequent warnings by by persistent budget deficits and inflation, that the Federal Reserve that new fires of inflation too happened in other industrial countries. In- were being ignited. If the Federal Reserve then deed, other countries have often practiced loose sought to create a monetary environment that fell governmental finance and inflation on a more seriously short of accommodating the upward intensive scale than has the United States. pressures on prices that were being released or reinforced by governmental action, severe diffi- And so I finally come to the role of central culties could be quickly produced in the econobankers in the inflationary process. The world- my. Not only that, the Federal Reserve would be wide philosophic and political trends on which I frustrating the will of the Congress, to which it have been dwelling inevitably affected their atti- was responsible—a Congress that was intent on tudes and actions. In most countries, the central providing additional services to the electorate bank is an instrumentality of the executive and on assuring that jobs and incomes were branch of government—carrying out monetary maintained, particularly in the short run. policy according to the wishes of the head of Facing these political realities, the Federal government or the ministry of finance. Some Reserve was still willing to step hard on the industrial democracies, to be sure, have substan- monetary brake at times—as in 1966, 1969, and tially independent central banks, and that is 1974—but its restrictive stance was not maincertainly the case in the United States. Viewed in tained long enough to end inflation. By and large, the abstract, the Federal Reserve System had the monetary policy came to be governed by the power to abort the inflation at its incipient stage principle of undernourishing the inflationary fifteen years ago or at any later point, and it has process while still accommodating a good part of the power to end it today. At any time within that the pressures in the marketplace. The central period, it could have restricted the money supply banks of other industrial countries, functioning and created sufficient strains in financial and as they did in a basically similar political environindustrial markets to terminate inflation with ment, appear to have behaved in much the same little delay. It did not do so because the Federal fashion. Reserve was itself caught up in the philosophic In describing as I just have the anguish of and political currents that were transforming central banking in a modern democracy, I do not American life and culture. mean to suggest that central bankers are free The Employment Act of 1946 prescribes that from responsibility for the inflation that is our "it is the continuing policy and responsibility of common inheritance. After all, every central the Federal Government to . . . utilize all its bank has some room for discretion, and the range plans, functions, and resources ... to promote is considerable in the more independent central maximum employment." The Federal Reserve is banks. As the Federal Reserve, for example, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Arthur F. Burns • The Anguish of Central Banking 693 kept testing and probing the limits of its freedom this lag of recognition, and, once again, I believe to undernourish the inflation, it repeatedly that other central banks at times have made evoked violent criticism from both the Executive similar mistakes. Branch and the Congress and therefore had to While misinterpretations of unemployment devote much of its energy to warding off legisla- statistics or other current information have contion that could destroy any hope of ending infla- sequences for all public policymaking, there are tion. This testing process necessarily involved other problems of interpretation to which the political judgments, and the Federal Reserve central banker's calling is peculiarly subject. may at times have overestimated the risks at- Monetary theory is a controversial area. It does taching to additional monetary restraint. not provide central bankers with decision rules Any such errors of political judgment are ex- that are at once firm and dependable. To be sure, tremely hard to identify; but I believe, in any every central banker has learned from the event, that errors of economic or financial judg- world's experience that an expanding economy ment have in practice been far more significant. requires expanding supplies of money and credit, In a rapidly changing world the opportunities for that excessive creation of money will over the making mistakes are legion. Even facts about longer run cause or validate inflation, and that current conditions are often subject to misinter- declining interest rates will tend to stimulate pretation. Statistics on unemployment in the economic expansion while rising interest rates United States provide a good example. Even will tend to restrict it; but this knowledge stops before World War II ended, some economists short of mathematical precision. were trying to determine how much frictional Partly as a result of the chronic inflation of our and structural unemployment would exist when times, central bankers have been giving closer the demand for labor and the supply of labor attention to the money supply than did their were in balance; in other words, the rate of predecessors; but they continue to be seriously unemployment that would reflect a state of full concerned with the behavior of interest rates. employment. Before long, a broad consensus They face difficult questions about the relative developed that an unemployment rate of about 4 weight to be given to measures of money and percent corresponded to a practical condition of interest rates in the short run and long run; about full employment, and that figure became en- the concept or concepts of money that are most shrined in economic writing and policymaking. significant for policy purposes; about the inter- Conditions in labor markets, however, did not pretation of such developments as the growth of stand still. A huge influx of women and young Eurocurrency deposits and credits; about the people into the labor force, the liberalization of length and regularity of the lags with which unemployment insurance, the spread of welfare changes in monetary growth rates influence busiprograms, the progressive lifting of statutory ness activity and prices; about the likely changes minimum wages, the increasing proportion of in monetary velocity as a consequence of institufamilies having more than one worker, and the tional innovations and business cycle developincrease of national affluence itself—all these ments; and so on and on—as any student of changes in the economic and social environment central banking and monetary theory well served to render the conventional 4 percent knows. And there are more fundamental probfigure obsolete. The unemployment rate corre- lems about potential conflicts between domestic sponding to full employment is now widely be- and international objectives, about the approprilieved to be about 5Vi or 6 percent, and the 1979 ate response to exceptional events not encomreport of the Council of Economic Advisers passed by theory, and about the precise releappears to concur in that judgment. But govern- vance of any theory based on past experience to mental policymakers, while generally aware of a world where behavioral patterns are continualwhat was happening in the labor market, were ly evolving. slow to recognize the changing meaning of unemployment statistics, whether viewed as a mea- It is clear, therefore, that central bankers can sure of economic performance or as a measure of make errors—or encounter surprises—at practihardship. The Federal Reserve did not escape cally every stage of the process of making mone- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

694 Federal Reserve Bulletin • September 1987 tary policy. In some respects, their capacity to market interest rates gave to financial instituerr has become larger in our age of inflation. tions and their customers to change their ways of They are accustomed, as are students of finance doing business. Commercial banks responded to generally, to think of high and rising market rising rates by economizing on non-interest-bearinterest rates as a restraining force on economic ing reserves, and their customers responded by expansion. That rule of experience, however, economizing on non-interest-bearing demand detends to break down once expectations of infla- posits. Both banks and large corporations develtion become widespread in a country. At such a oped new sources of funds in the Eurodollar time, lenders expect to be paid back in cheaper market and the domestic commercial paper marcurrency, and they are therefore apt to demand ket. Banks developed new techniques of liability higher interest rates. Since borrowers have simi- management by exploiting these sources as well lar expectations, they are willing to comply. An as the vast potential of the federal funds market "inflation premium" thus gets built into nominal and the market for negotiable certificates of interest rates. In principle, no matter how high deposit. Other financial institutions—including the nominal interest rate may be, as long as it savings banks, savings and loan associations, stays below or only slightly above the inflation credit unions, and money market mutual funds— rate, it very likely will have perverse effects on developed new transactions services in connecthe economy; that is, it will run up costs of doing tion with customer accounts on which they paid business but do little or nothing to restrain over- interest. Banks fought this competition for transall spending. In practice, since inflationary ex- actions balances by offering large depositors pectations, and therefore the real interest rates special services that reduced the average level of implied by any given nominal rate, vary among balances they had to carry and by employing individuals, central bankers cannot be sure of the various ingenious means to pay interest on balmagnitude of the inflation premium that is built ances that were held in large part for transactions into nominal rates. In many countries, however, purposes. these rates have at times in recent years been so Developments of these kinds have had proclearly below the ongoing inflation rate that one found consequences for the environment in can hardly escape the impression that, however which American monetary policy operates. Not high or outrageous the nominal rates may appear long ago, the thrust of monetary restraint was to observers accustomed to judging them by a conveyed more by reductions in the availability historical yardstick, they have utterly failed to of credit—particularly residential mortgage credaccomplish the restraint that central bankers it—than by rising interest rates; at present, rising sought to achieve. In other words, inflation has interest rates are the primary channel of reoften taken the sting out of interest rates— straint. This means that a higher level of interest especially, as in the United States, where inter- rates is required to achieve any given degree of est payments can be deducted for income tax restraint—quite apart from the effects of inflation purposes. premiums that I discussed earlier. But how much In addition to these direct effects of inflation, higher is not clear; only time will tell. Not long there are other effects that raise doubts about the ago, changes in Ml, the familiar monetary aggremeaning of particular growth rates of the mone- gate confined to currency and demand deposits, tary aggregates. I have in mind changes in finan- reflected reasonably well changes in the aggrecial practices that evolved in the United States gate volume of transactions balances; at present, during the 1960s—particularly during the bouts with new alternatives to bank demand deposits with tight money in 1966 and 1969—and that emerging all the time, a lower rate of growth in culminated in an explosion of financial innova- Ml is required to achieve any given degree of tions in the 1970s. restraint. But how much lower is not clear; only Many of these changes were facilitated by time will tell. Nor is it clear what other monetary regulatory actions or the development of new aggregate, if any would be more serviceable than computer technology. But the driving force be- the traditional Ml as a monetary indicator. As a hind them was the incentive that sharply rising result of these effects of inflation, central bank- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Arthur F. Burns • The Anguish of Central Banking 695 ing has lost its moorings not only in interest prices; it results in labor agreements in key rates: that has happened to a large extent also in industries that call for substantial wage increases the case of the monetary aggregates—certainly in in later years without regard to the state of the United States and perhaps in other countries business then; and through the use of indexing as well. formulas, it leads to automatic increases in other There is no need to expand further on the wages as well as in social security payments, opportunities for misjudgment that in recent various other pensions, and welfare benefits, in years have surrounded policymaking at central rents on many properties, and in the prices of banks. Some uncertainty, of course, has always many commodities acquired under long-term characterized monetary policy, just as it has contracts. On the other hand, unintended central characterized policy decisions generally, wheth- bank effects of a restrictive type do not ramify in er in public or private life. It should be noted, similar fashion. To develop any significant mohowever, that lags in recognizing some of the mentum in unwinding inflation, they would need developments I have been discussing—with re- to be both large and repetitive—a combination spect to unemployment rates, interest rates, and that can hardly occur under prevailing conditions growth rates of the monetary aggregates—would in the industrial democracies. tend to bias policy toward monetary ease. More- If my analysis of central banking in the modern over, the emergence of an inflationary psycholo- environment is anywhere near the mark, two gy in industrial countries has imparted an asym- conclusions immediately follow. First, central metry to the consequences of monetary errors, banks have indeed been participants in the inflaeven if the errors themselves occurred as often in tionary process in which the industrial countries one direction as the other. have been enmeshed, but their role has been There is a profound difference between the subsidiary. Second, while the making of moneeffects of mistaken judgments by a central bank tary policy requires continuing scrutiny and can in our age of inflation and the effects of such stand considerable improvement, we would look judgments a generation or two ago. In earlier in vain to technical reforms as a way of eliminattimes, when a central bank permitted excessive ing the inflationary bias of industrial countries. creation of money and credit in times of prosperi- What is unique about our inflation is its stubborn ty, the price level would indeed tend to rise. But persistence, not the behavior of central bankers. the resulting inflation was confined to the expan- This persistence reflects the fundamental forces sion phase of the business cycle; it did not persist on which I dwelt earlier in this address—namely, or gather force beyond that phase. Therefore, the philosophic and political currents of thought people generally took it for granted that the that have impinged on economic life since the advance of prices would be followed by a decline Great Depression and particularly since the midonce a business recession got under way. That is 1960s. no longer the case. My conclusion that it is illusory to expect Nowadays, businessmen, farmers, bankers, central banks to put an end to the inflation that trade union leaders, factory workers, and house- now afflicts the industrial democracies does not wives generally proceed on the expectation that mean that central banks are incapable of stabilizinflation will continue in the future, whether ing actions; it simply means that their practical economic activity is booming or receding. Once capacity for curbing an inflation that is continualsuch a psychology has become dominant in a ly driven by political forces is very limited. country, the influence of a central bank error that Historically, central banks have helped to slow intensified inflation may stretch out over years, down the pace of economic activity at certain even after a business recession has set in. For in times and to stimulate economic activity at other our modern environment, any rise in the general times. They have also contributed to economic price level tends to develop a momentum of its stability by serving as lenders of last resort or own. It stimulates higher wage demands, which even going beyond that traditional function. Durare accommodated by employers who feel they ing this decade alone, the Federal Reserve can recover the additional costs through higher moved on at least two occasions to prevent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

696 Federal Reserve Bulletin • September 1987 financial crises that otherwise could easily have experience. Recent disturbing trends in economoccurred. I have in mind particularly the failure ic and social life, particularly the persistence and of the Penn Central Transportation Company in acceleration of inflation, have led to much soul- June 1970 and the failure of the Franklin National searching by leaders of thought and opinion. Bank in October 1974. In the former case, the Among economists, the Keynesian school has inability of Penn Central to refinance its out- lost much of its erstwhile vigor, self-confidence, standing commercial paper caused consternation and influence. Economists are no longer focusing among holders of commercial paper generally. so exclusively on unemployment and govern- To prevent a financial panic the Federal Reserve mental management of aggregate demand. They put aside its monetary targets for a while, opened are paying more attention to the management of the discount window wide, and changed its regu- aggregate supply—to the need to strengthen inlations so that commercial banks could raise centives to work and innovate, to ways of stimufunds in the open market to finance firms unable lating saving and investment, to the importance to renew their maturing commercial paper. In the of eliminating barriers to competition, to ways of Franklin National case, the Federal Reserve reducing the regulatory burdens imposed on inloaned to that troubled international bank almost dustry, and to other means of bolstering business $2 billion; and while these advances were out- confidence. Many economists now recognize standing it was possible to arrange a takeover by that much of reported unemployment is volunanother bank that protected the interests of tary, that curbing inflation and reducing involun- Franklin's depositors and customers. These ac- tary unemployment are complementary rather tions were influenced by a feeling of responsibil- than competitive goals, that persistent governity for the financial system as a whole—interna- mental deficits and excessive creation of money tional as well as domestic. The central banks of tend to feed the fires of inflation, that the high some other countries, notably the Bank of En- savings rate that usually prevails in the early gland, have likewise discharged constructively stages of inflation is eventually succeeded by the function of serving as lenders of last resort, minimal savings, and that when this stage is and the entire concept of central bank responsi- reached it becomes very much harder to bring bility has been both widened and clarified inflation under control. through discussions in recent years at the Bank The intellectual ferment in the world's democfor International Settlements. racies is having its influence not only on busi- All this and much more deserves to be noted nessmen and investors, but also on politicians, about central banks—especially their tireless ef- trade union leaders, and even housewives; for all forts to awaken the citizens of their respective of them have been learning from experience and countries to the economic and social dangers from one another. In the United States, for posed by inflation. But whatever the virtues or example, people have come to feel in increasing shortcomings of central banks may be, the fact numbers that much of the government spending remains that alone they will be able to cope only sanctioned by their compassion and altruism was marginally with the inflation of our times. The falling short of its objectives: that urban blight persistent inflation that plagues the industrial was continuing, that the quality of public schools democracies will not be vanquished—or even was deteriorating, that crime and violence were substantially curbed—until new currents of increasing, that welfare cheating was still widethought create a political environment in which spread, that collecting unemployment insurance the difficult adjustments required to end inflation was becoming a way of life for far too many—in can be undertaken. short, that the relentless increases of government spending were not producing the social benefits expected from them and yet were adding to the taxes of hard-working people and to the already There are some signs, as yet tenuous and inconhigh prices they had to pay at the grocery store clusive, that such a change in the intellectual and and everywhere else. In my judgment, such political climate of the democracies is getting feelings of resentment and frustration are largely under way. One of the characteristic features of a responsible for the conservative political trend democracy is that it encourages learning from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Arthur F. Burns • The Anguish of Central Banking 697 that has developed of late in the United States. ing inflation. That has happened in the past, and And I gather from the results of recent elections it may happen again. elsewhere that concern about inflation and disen- If the United States and other industrial counchantment with socialist solutions are increasing tries are to make real headway in the fight against also in other industrial countries. Fighting infla- inflation it will first be necessary to rout inflation is therefore being accorded a higher priority tionary psychology—that is, to make people feel by policymakers in Europe and in much of the that inflation can be, and probably will be, rest of the world. brought under control. Such a change in national In the United States a great majority of the psychology is not likely to be accomplished by public now regard inflation as the Number One marginal adjustments of public policy. In view of problem facing the country, and this judgment is the strong and widespread expectations of inflaaccepted by both the Congress and the Execu- tion that prevail at present, I have therefore tive Branch. Some steps have therefore been reluctantly come to believe that fairly drastic taken within the past year to check the rapid rise therapy will be needed to turn inflationary psyof federal spending, to lower certain taxes in the chology around. interest of encouraging business investment, and The precise therapy that can serve a nation yet to bring down the still large budget deficit. best is not easy to identify, and what will work Pressures to augment the privileges of trade well in one country may work poorly in another. unions have been resisted by the Congress. In the case of the American inflation, which has Some government regulations—as in the case of become a major threat to the well-being of much airlines and crude oil—have been eased. And of the world as well as of the American people, it even restrictive moves by the Federal Reserve, would seem wise to me at this juncture of history which not long ago would have stirred anger and for the government to adopt a basic program anxiety in government circles, have been accept- consisting of four parts. The first of these would ed with equanimity. Symbolic of the changed be a legislative revision of the federal budgetary political atmosphere was the announcement of process that would make it more difficult to run an increase in the Federal Reserve discount rate budget deficits and that would serve as the initial on the very day this July when a sizable decline step toward a constitutional amendment directed of the nation's overall production was being to the same end. The second part would be a reported for the spring quarter. commitment to a comprehensive plan for dis- The present widespread concern about infla- mantling regulations that have been impeding the tion in the United States is an encouraging devel- competitive process and for modifying others opment, but no one can yet be sure how far it will that have been running up costs and prices go or how lasting it will prove. The changes that unnecessarily. The third part would be a binding have thus far occurred in fiscal, monetary, and endorsement of restrictive monetary policies unstructural policies have been marginal adjust- til the rate of inflation has become substantially ments. American policymakers tend to see merit lower. And the fourth part would consist of in a gradualist approach because it promises a legislation scheduling reductions of business taxreturn to general price stability—perhaps with a es in each of the next five years—the reduction delay of five or more years but without requiring to be quite small in the first two years but to significant sacrifices on the part of workers or become substantial in later years. This sort of tax their employers. But the very caution that leads legislation would release powerful forces to impolitically to a policy of gradualism may well lead prove the nation's productivity and thereby exert also to its premature suspension or abandonment downward pressure on prices; and it would also in actual practice. Economic life is subject to all help in the more immediate future to ease the sorts of surprises and disturbances: business difficult adjustments forced on many businesses recessions, labor unrest, foreign troubles, mo- and their employees by the adoption of the first nopolistic shocks, elections, and governmental three parts of the suggested program. upsets. One or another such development, espe- I wish I could close this long address by cially a business recession, could readily over- expressing confidence that a program along the whelm and topple a gradualist timetable for curb- lines I have just sketched, or any other construc- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

698 Federal Reserve Bulletin • September 1987 tive and forceful program for dealing with infla- system is postponed by more false starts. But if tion, will be undertaken in the near future in the political patience in individual countries is se- United States or elsewhere. That I cannot do verely tested as that happens, the learning protoday. I am not even sure that many of the cess will also be speeded. The conservative trend central bankers of the world, having by now that now appears to be under way in many of the become accustomed to gradualism, would be industrial democracies will then gather strength; willing to risk the painful economic adjustments and unless political leadership falls into irresponthat I fear are ultimately unavoidable. I would sible hands, the inflationary bias that has been therefore not be surprised if the return to reason- sapping the economic and moral vitality of the able price stability in the industrial democracies democracies can finally be routed. • and thereby to an orderly international monetary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

699 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 STOCK MARKET VOLATILITY Carolyn D. Davis and Alice P. White—Staff, Board of Governors Prepared as a staff study in the spring of 1987 Dramatic changes in stock market indexes during op; and if other market participants are buying the past year have generated questions about and selling financial instruments based on fundafundamental shifts in the volatility of share mental economic information, price movements prices. Although volatility in stock prices inev- will reflect that information. itably results when investors' expectations about Advances in computer technology have facilicorporate earnings and interest rates change, tated the development of computerized procesome observers maintain that innovations in dures that process information for use by market trading techniques have introduced additional participants, produce buy and sell orders, and volatility into equity markets. This study reviews send these orders to exchanges for execution. these innovations—arbitrage trading, program This technique, program trading, permits large trading, and portfolio insurance—and examines portfolios to be traded as though they were several aspects of volatility in share prices to individual stocks. The simultaneous execution of determine whether it has changed measurably large program trades can increase volatility if since the techniques were put into active use. prices overshoot new equilibrium values. An Traders use arbitrage techniques to generate analysis of the behavior of prices during periods profits from price discrepancies between related of heavy program trading suggests that changes financial instruments. Such trading has been in prices have resulted from shifts in investors' criticized because arbitrageurs need consider perceptions but that these shifts may have oconly relative prices and costs and do not neces- curred more quickly than otherwise because of sarily base their decisions on economic informa- program trading. tion. Nonetheless, prices must change in at least The third innovation in trading, portfolio insurone market before arbitrage opportunities devel- ance, refers to hedging strategies designed to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

700 Federal Reserve Bulletin • September 1987 protect portfolios of securities against declines in niques in the 1980s. An analysis of returns on prices. Its development has been facilitated by stock issues of individual companies supports the existence of stock-index futures markets. the conclusion that the recent volatility of these The use of portfolio insurance techniques is issues does not appear to be cause for concern. controversial because it may precipitate sales of Unexpected changes in fundamental macrostocks in declining markets. If stocks became economic conditions, particularly fluctuations in underpriced in light of economic conditions, business activity and interest rates, appear relahowever, opportunities for buying would be cre- tively important in explaining changes in the ated for speculators and other market partici- volatility of share prices throughout recent decpants, and the price spiral would end. ades. The largest fluctuations in share prices Despite changes in the methods of trading during the postwar era occurred in the midstock-related instruments, little evidence links 1970s, a time of highly uncertain economic conthese innovations to volatility in the stock mar- ditions. When one controls for variability in ket. The authors examine changes in aggregate economic and financial conditions, however, the indexes, which represent portfolios of stocks, for movements in stock prices appear similar over various time periods, holding periods, and mea- time. sures of volatility. The movements of stock The empirical evidence presented in this study indexes suggest that the dispersion of daily re- provides little support for the position that the turns in 1986 and 1987, when index-related trad- behavior of stock prices in the aggregate has ing is believed to have been heavy, was typical of changed substantially as the use of stock-related that observed since 1970. The 1970s and 1980s instruments has expanded. Measures of volatility appear to be somewhat more volatile than the range widely from year to year, and shifts in 1950s and 1960s. However, this increase in vola- volatility are most noticeable in the longer term tility began well before the extensive use of when underlying macroeconomic conditions also derivative instruments and new trading tech- have been more volatile. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

701 Industrial Production Released for publication July 15 risen at an annual rate of 2.4 percent compared with a gain of less than 1 percent over the 12 Industrial production increased 0.2 percent in months of 1986. The current level of the index is June, after having risen 0.5 percent in May. 128.2 percent of the 1977 average. Revisions to the March, April, and May indexes In market groups, total output of consumer indicate slightly higher production levels than goods was about unchanged in June; slight gains were previously published. The June increase in the output of home goods and nondurable was paced by gains in the production of materi- consumer items were offset by reduced producals. So far this year, industrial production has tion of motor vehicles. Autos were assembled at Ratio scale, 1977 = 100 140 Products TOTAL INDEX 120 Materials 100 80 140 MANUFACTURING Durable MATERIALS Durable 120 Nondurable • Nondurable vc / X./ — 100 Energy 1 1 1 1 1 1 8800 INTERMEDIATE PRODUCTS Business supplies - Construction supplies 240 140 MOTOR VEHICLES AND PARTS FINAL PRODUCTS Defense and space 200 120 160 100 140 80 20 100 60 80 1981 1983 1985 1987 1981 1983 1985 1987 All series are seasonally adjusted. Latest figures: June. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

702 Federal Reserve Bulletin • September 1987 1977 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Group 1987 1987 JJJuuunnneee 111999888666 tttooo JJJuuunnneee May June Feb. Mar. Apr. May June 111999888777 Major market groups Total industrial production 128.0 128.2 .5 .1 .0 .5 .2 3.2 Products, total 136.5 136.4 .9 .1 -.5 .6 -.1 3.0 Final products 135.2 135.1 1.0 .0 -.5 .6 -.1 3.1 Consumer goods 127.3 127.1 .6 .0 -.7 .6 -.1 2.2 Durable 119.6 118.3 2.0 -1.0 -2.6 1.3 -1.0 3.5 Nondurable 130.2 130.4 .2 .3 .0 .3 .2 1.8 Business equipment.. 141.3 141.1 1.9 .0 -.2 .6 -.1 3.3 Defense and space... 187.1 187.6 .7 .0 .0 .3 .3 5.2 Intermediate products.. 140.9 140.8 .4 .5 -.4 .8 -.1 2.8 Construction supplies 127.9 127.1 .1 .1 -1.0 .6 -.6 2.4 Materials 116.4 117.2 .0 .1 .6 .4 .7 3.6 Major industry groups Manufacturing 132.8 132.8 .7 .2 .0 .4 .0 3.6 Durable 130.4 130.4 1.1 .1 -.5 .4 .0 3.4 Nondurable 136.1 136.2 .1 .4 .7 .3 .1 3.8 Mining 97.0 97.7 -1.0 .3 .1 .4 .7 -1.2 Utilities 110.7 112.2 .1 -.1 -.8 1.9 1.3 3.2 NOTE. Indexes are seasonally adjusted. an annual rate of 6.9 million units, compared of motor vehicle assemblies. Output of defense with a rate of 7.1 million in May; output of equipment posted another small gain in June—so lightweight trucks also was reduced in June. far in 1987 this sector has shown more moderate Production of business equipment also was gains than in recent years. Production of conlittle changed in June; further gains occurred in struction supplies retreated in June after having commercial, manufacturing, and construction increased in May and was slightly below levels at and farm machinery, but output of transit equip- the end of last year; the recent sluggishness ment fell—owing largely to the reduced volume probably reflects weaker construction activity so far in 1987. In June, gains occurred in the production of durable, nondurable, and energy materials as Total industrial production—Revisions well. In the nondurable category advances con- Estimates as shown last month and current estimates tinued in the output of textiles, paper, and chemi- Percentage change cals. Energy materials advanced sharply in June Index (1977=100) from previous MMoonntthh months due largely to increased electricity generation. In industry groups, manufacturing output was Previous Current Previous Current unchanged overall in June at a level about 3!/2 March 127.3 127.3 .0 .1 percent higher than it was a year earlier. Mining April 127.2 127.3 -.1 .0 May 127.8 128.0 .5 .5 output increased in June—in particular, coal and 112288..22 .2 metal mining. Output by utilities rose sharply. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

703 Statement to Congress Statement by Paul A. Volcker, Chairman, Board modities, some of which had been deeply deof Governors of the Federal Reserve System, pressed, remain well above their levels of earlier before the Committee on Banking, Finance and this year. Urban Affairs, U.S. House of Representatives, The approach of the Federal Reserve toward July 21, 1987. the provision of reserves has not changed since May. However, growth in the various monetary I appreciate this, my last, opportunity to appear aggregates slowed further in the second quarter. before you as Chairman of the Federal Reserve A reduction in the rate of growth of those aggre- Board in connection with the semiannual review gates from the relatively high levels of 1986 had of monetary policy. You have the official been both anticipated and desired by the Federal Report of the Board of Governors before you, Open Market Committee, as reported to you in and I will be blessedly brief in touching February. However, it is also true that, with upon some of the main points. (See "Mone- institutional and market developments importary Policy Report to the Congress," Fed- tantly affecting the relationships between the eral Reserve Bulletin, August 1987, pages various measures of money and the variables we 633-46.) ultimately care about, judgments about the ap- As you know, the economy has continued to propriate growth of the aggregates have become grow this year, carrying the expansion well into both more difficult and more dependent on preits fifth year. At the same time, however, the vailing economic and market circumstances. inflation rate has accelerated appreciably relative For that reason, the Committee did not set to the low rate prevailing in 1986. forth a particular target range for M1 this year in A change in that direction has been widely February. That judgment was reaffirmed at the anticipated in response to the rebound in oil meeting earlier this month. M2 is currently runprices and the depreciation of the dollar. Never- ning below, and M3 around, the lower ends of theless, the size and pervasiveness of the price their 5Vi to %Vi percent ranges established in increases—which have included many nonen- February. The Committee decided not to change ergy materials as well as services—affected the those ranges for 1987. In doing so, however, psychology and expectations in financial mar- there was agreement that, depending on further kets, particularly in April and early May. Recur- evidence with respect to emerging trends in rent concerns about the dollar internationally economic activity, inflation, and domestic and also at times affected the mood of domestic international financial markets, actual growth markets, and interest rates rose rather sharply around the lower ends of those ranges may well for a time. remain appropriate. Through the early part of the year, Federal In judging appropriate monetary growth during Reserve operations placed minimal pressure on the course of the year, or from year to year, bank reserve positions. As reported earlier, how- account needs to be be taken of the apparent ever, beginning in late April definite but modest increase in the sensitivity of demands for money, steps were taken to increase reserve pressures and for money-like assets, to absolute and relasomewhat. Perceptions of that action appeared tive changes in market interest rates. Interest to help calm concerns about the future course of rates administered by institutions, especially the dollar and inflation. those on transaction accounts, tend to lag market Most interest rates, long- and short-term, have rates both when interest rates are rising and retraced part of the earlier rise. However, long- when they are falling (of course, no explicit term interest rates and prices of sensitive com- interest can be paid on demand deposits). At the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin • September 1987 same time, the cost and effort involved in shifting latter. At the same time, now and for some years funds between types of accounts, or into and out ahead, we will need to work to narrow and of market instruments, has greatly diminished. ultimately correct the large imbalances in our Experience suggests that, as a result of these internal and external economic positions—adfactors, demand deposits, negotiable order of justments that necessarily have implications for withdrawal (NOW) accounts, and money market the policies and prospects of other countries as deposit accounts all tend to grow relatively slow- well. What is at issue is whether we can make ly, if at all, when market rates are rising (as those necessary adjustments while sustaining during the second quarter) but much faster than progress toward the broader goals. normally as market rates fall, as during 1985 and In some areas, developments in the past six 1986. Those differences in growth rates in money months have been strongly encouraging in that will tend to be reflected in inverse movements in respect. the velocity (that is, the measured rate of turn- • The evidence by now is pretty clear that, in over) of money rather than commensurate real terms, our trade balance is improving, even changes in economic activity or prices. in the face of continuing sluggish growth, high The sensitivity of velocity to changes in interunemployment, and excess capacity abroad. est rates makes it more difficult to judge the • While growth in domestic consumption has appropriate rate of monetary growth—particularslowed—one essential part of the adjustment ly over periods as short as a quarter or a year— process—the expansion of domestic output and and impossible without reference to the stream employment has been well maintained, and unof available evidence on economic activity, employment, at close to 6 percent, has dropped prices, and other factors. This year, too, conto the lowest level in this decade. Manufacturing cerns about the international performance of the has picked up and prospects for business investdollar have at times had a significant bearing on ment may be improving. operational decisions. Specifically, the tighten- • Helped by some large unanticipated capital ing of reserve availability in the spring was gains tax receipts, this year's budget deficit will related in substantial part to the desirability, in apparently be driven even below earlier expectalight of the substantial cumulative depreciation tions, and thus very substantially below the fiscal over the previous two years and other economic 1986 level. policy undertakings here and abroad, of main- • Internationally, leading nations are not only taining reasonable stability in the external value agreed upon the desirability of greater exchange of the dollar. That judgment is, as you know, rate stability but appear to be working more shared with the administration and the finance effectively to that end. ministers and central bank governors of other • In another area demanding a high level of leading industrialized countries. international cooperation, the basic approach for Looking ahead to 1988, the Open Market Comdealing with the international debt problems has mittee decided tentatively to reduce the target continued to be implemented with substantial ranges for M2 and M3 xh percentage point to 5 to success despite doubts and challenges by some. 8 percent. While recognizing the inevitable range of uncertainty I referred to earlier, some reduc- Of central importance, there has been continution in the target ranges clearly appeared appro- ing evidence of restraint and discipline on costs priate in recognition of the importance of assur- and wages in much of American industry, offering that the temporary bulge in price increases ing the prospect of lower rates of inflation in the foreseen for this year not become a base for a months ahead. Over time, that must be an absorenewed inflationary process. The appropriate lutely essential element in maintaining our interrange for 1988 will, of course, again be reviewed national competitiveness as well as in restoring with care at the start of the year. domestic stability after the bulge in prices this More broadly, policy has to be judged against year. progress toward the more basic goals of growth At the same time, it would be nonsense for me and stability—and it seems to me fatuous to think to claim that all is safely and securely on path. the first could long be sustained without the The remaining risks and problems are apparent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to Congress 705 Even the otherwise satisfying fall in the unem- will have challenge aplenty. But I, as I have ployment rate this year implicitly has a discour- spelled out earlier, would like to think there is aging aspect. Outside of manufacturing, the sta- something upon which to build as well. tistics suggest that productivity growth is quite Finally, I would like to acknowledge specifidismal—so slow, in fact, that I cannot dismiss cally the usefulness from my standpoint of these the thought that the reported statistics may part- regular semiannual hearings on monetary policy. ly reflect measurement error. You and I are both conscious of the special But no error of measurement can entirely position of the Federal Reserve System within explain away that our private saving, in historical the overall framework of government. The long or in international context, remains so low, or terms of members of the Board of Governors, the that our federal deficit remains so large, or that participation of the regional Federal Reserve we, the putative leader of the western world, are Banks in the policy process, our budgetary auso dependent on other people's capital. Despite tonomy, and the professionalism of our staff are the better news on this year's federal deficit, all designed to provide some insulation, in decidsome projections of future deficits are assuming ing upon money creation, against partisan or current programs are being raised rather than passing political pressures. reduced and the political impasse over doing In our system of government, however, insulasomething about it apparently remains. In the tion cannot be equated to isolation, and particucircumstances, the Gramm-Rudman-Hollings larly isolation from reporting and accountability targets are threatening to become pie in the sky. to the Congress and to the public. These hearings The already slow growth in other industrial- are an important element in that discipline. I ized countries appears to have slowed further have welcomed the opportunity they have prothis year, working against the adjustments need- vided for us to consult with the Congress and to ed in trade and current account positions among explain our purposes, our approaches, and our Japan, Western Europe, and the United States. problems in dealing with a complicated, changing And, in that environment the dangers of protec- economic environment. And I want to express tionist trade legislation and a breakdown in the my appreciation as well for the many courtesies servicing of international debts are enlarged. you have extended me personally over these past For all those reasons and more, my very able eight years as we have worked together to foster successor, and the Federal Reserve generally, economic stability and growth. • Chairman Volcker presented identical testimony before the Senate Committee on Banking, Housing, and Urban Affairs, July 23, 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Announcements ALAN GREENSPAN BECOMES the laws of arithmetic which would make all of the CHAIRMAN OF THE BOARD OF GOVERNORS foregoing possible. At a White House ceremony on August 11, 1987, Earlier, Chairman Volcker submitted his resig- Alan Greenspan took the oath of office as Chair- nation as a member of the Board of Governors. man and a member of the Board of Governors. His August 3 letter to President Reagan follows: The oath was administered by Vice President George Bush. August 3, 1987 The Senate confirmed Dr. Greenspan for the positions on August 3 following a hearing on July The President 21 by the Senate Committee on Banking, Hous- The White House Washington, D.C. ing, and Urban Affairs. At the ceremony, Dr. Greenspan made the Dear Mr. President: following remarks: I understand that Senate confirmation of Alan Mr. President, Mr. Vice President, Friends: A little Greenspan as Chairman and Governor of the Federal more than than two months ago in the White House Reserve Board is likely this week. What technically Press Room down the hall the President announced remains is for me to submit my formal resignation as that he was nominating me to replace Paul Volcker. At Governor so that he can take office for the unexpired that time I indicated to the President, and today I portion of my term. I do so now, effective upon his repeat, how much I appreciate his confidence in me to swearing-in, which I understand is tentatively schedact as a replacement for Paul whose career at the Fed uled for the week of August 10. has been one with few parallels in the history of this nation's public service. As we agreed informally, I will continue to serve as Chairman through that date. Since the nomination I have received innumerable best wishes from friends, new and old, from all over the world. I am particularly saddened, however, that May I also thank you again, Mr. President, and Mrs. Dr. Arthur F. Burns, former Council of Economic Reagan, for your gracious presence and remarks at my Advisers and Federal Reserve Board Chairman, and "farewell dinner" at the State Department last week. Barbara and I will gratefully remember the occasion as my mentor for 35 years through graduate school and the highlight of my rite of passage back to private life. thereafter, is not able to be with us today. Faithfully yours, I would particularly like to thank the staff of the Federal Reserve who along with Paul have been exceptionally gracious with their time and efforts to Paul A. Volcker bring me up to speed for this extraordinary challenge. I also wish to thank the Senate Banking Committee and the Senate as a whole who confirmed my nomination. RESTRUCTURING OF Perhaps I should also thank in advance the creators INTEREST RATE CHARGES of all those events that will make the next four years ON DISCOUNT WINDOW BORROWING easy going: inflation which always stays put, a stock market which is always a bull, a dollar which is always In the interest of simplification, the Federal stable, interest rates which stay low, and employment which stays high. But, most assuredly, I would be Reserve Board on July 27, 1987, announced a thankful to those who have the capability of repealing restructuring of interest rates that are charged on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 707 borrowings from the discount window for ex- remain in effect pending reevaluation of the tended credit. The new structure will apply a Board's risk reduction program. flexible rate that will vary with market interest Large-dollar-funds-transfer networks are an rates to extended credit outstanding for more integral part of the payments and clearing mechathan 30 days. nism. A daylight overdraft occurs when a deposi- No change is being made in the basic discount tory institution sends funds over Fedwire in rate for adjustment credit, which remains at 5Vi excess of the balance in its reserve or clearing percent. account or sends more funds over a private The new simplified structure of rates for ex- network than it has received. tended credit provides for use of the basic dis- The Board's May 1985 policy statement recount rate for the first 30 days of borrowing, quired privately owned large dollar payment followed by a flexible rate for borrowings of networks using Federal Reserve net settlement more than 30 days. The flexible rate will be services to achieve the following: (1) require somewhat above the rates on market sources of each participant to establish a limit on the maxifunds to depository institutions but in no case mum net transfer amount that it is willing to will the rate charged be less than the basic receive from each other participant ("bilateral discount rate plus 50 basis points. Under the net credit limit") and (2) establish for each extended credit program, credit is made avail- participant a maximum amount of net transfers able to institutions experiencing exceptional fi- ("sender net debit cap") that the participant can nancial strains over a prolonged period of time. transfer over that network. The policy also Currently, the structure of rates applied to strongly encouraged each depository institution extended credit is a complex mixture of fixed and incurring daylight overdrafts on Fedwire or parflexible rates that depends on the time that credit ticipating on a private network to adopt a crosshas been outstanding and on the size of the system sender net debit cap designed to limit the borrowing institution. Under this structure, the amount of risk an institution presents across all basic rate generally has applied to the first 60 systems combined. days of extended credit borrowing and the basic The interim policy statement modifies the May rate plus 1 percentage point to the next 90 days. 1985 policy as follows: After 150 days, Reserve Banks have charged a • Reduces in two stages the current sender net rate equal to the basic rate plus 2 percentage debit cap by 25 percent—15 percent on January points or a flexible rate related to market rates. 14, 1988, and the balance on May 19, 1988, This flexible rate has been subject to a floor of unless subsequent events suggest that the second the basic rate plus 1 percentage point. step would disrupt the payments system or finan- In taking this action, the Board approved cial markets. requests from the Boards of Directors of all 12 • Exempts depository institutions from self- Reserve Banks to establish the new structure. evaluation guidelines if their board of directors The new rates will take effect on July 30. approves a de minimis net debit cap of the smaller of 20 percent of adjusted primary capital INTERIM STATEMENT ON REDUCING RISKS or $500,000. Implementation of this provision ON LARGE-DOLLAR TRANSFER SYSTEMS' would be no later than December 3, 1987, or earlier at the discretion of Reserve Banks. The Federal Reserve Board adopted on July 30, • Imposes a $50 million limit on book-entry 1987, an interim statement of its policy on reduc- securities transfers over Fedwire. ing risks on large-dollar transfer systems. This • Subjects the clearing procedures of primary interim policy supersedes the policy statement dealers to review by the Federal Reserve Bank of adopted by the Board on May 17, 1985, and will New York. • Permits interaffiliate Fedwire transfers resulting in daylight overdrafts, provided certain safe- 1. The text of the interim policy statement is available on guards are observed. request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. • Permits depository institution holding compa- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Federal Reserve Bulletin • September 1987 nies to centralize their wire transfer operations at Nathan C. Collins one or more of their subsidiaries, provided cer- Executive Vice President Valley National Bank of Arizona tain safeguards are observed. Phoenix, Arizona NEW MEMBERS APPOINTED Donald R. Hollis TO LARGE DOLLAR PAYMENTS SYSTEM Executive Vice President ADVISORY GROUP First Chicago Corporation Chicago, Illinois The Federal Reserve Board announced on July Roger K. Lindland 30, 1987, the appointment of new members to the Senior Executive Vice President Large Dollar Payments System Advisory Group and Chief Financial Officer for terms of three years to replace members Great American First Savings Bank San Diego, California whose terms have expired. The Large Dollar Payments System Advisory David O. Nordby Group reports to the Board of Governors— Executive Vice President through the Board's Payments System Policy Continental Illinois Corporation Committee—and is responsible for suggestions Chicago, Illinois on all matters associated with the Boards's de- Peter C. Palmieri sire to further reduce risk on large-dollar transfer Vice Chairman systems. Irving Trust Company The four new members are the following: New York, New York Seymour R. Rosen Charles J. Buchta Vice President Executive Vice President Citibank, N.A. Operating Service Group New York, New York First Interstate Bank of California Los Angeles, California Flavian E. Zeugin First Vice President James T. Byrne Swiss Bank Corporation Senior Vice President New York, New York Morgan Guaranty Trust Company New York, New York ESTABLISHMENT OF OFFICE Kerby Crowell OF INSPECTOR GENERAL Executive Vice President and Chief Financial Officer The Board of Governors announced on July 8, Stillwater National Bank Stillwater, Oklahoma 1987, the establishment of an independent Office of Inspector General. This action, consistent Michael Urkowitz with policies and approaches being adopted more Executive Vice President generally in government in recent years, is de- Chase Manhattan Bank, N.A. signed to focus responsibility more appropriately New York, New York for certain auditing and operations review func- Other members of the Advisory Group include tions. the following: The purpose of the Office, as well as its duties, responsibilities, authorities, and protections, is Roland K. Bullard, II (Chairman of the Advisory explained in its charter. It is hoped that the Group) Office will work in such a way as to further Vice Chairman CoreStates Financial Corporation enhance the administrative effectiveness and the Philadelphia, Pennsylvania high reputation of the Board for probity, evenhandedness, and discretion in the exercise of its William P. Ballard responsibilities. The Inspector General will re- Senior Executive Vice President port to the Board under the general supervision Citizens & Southern Georgia Corporation Atlanta, Georgia of the Chairman. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 709 On July 21, 1987, the Board announced the This List of Marginable OTC Stocks superpromotion of Brent L. Bowen, Assistant Con- sedes the revised list that was effective on May troller, Office of the Controller, to fill the recent- 12, 1987. Changes that have been made in the ly established position of Inspector General. list, which now includes 3,237 OTC stocks, are as follows: 224 stocks have been included for the first time, 195 under national market system (NMS) designation; 28 stocks previously on the PROPOSED ACTIONS list have been removed for substantially failing to meet the requirements for continued listing; 61 The Federal Reserve Board has extended stocks have been removed for reasons such as through August 7, 1987, the period for comment listing on a national securities exchange or inon its revised proposal to charge assessments volvement in an acquisition. and fees for certain supervisory activities, specif- The list includes all OTC securities designated ically for inspection and supervision of the parby the Board pursuant to its established criteria ent company and nondepository subsidiaries of as well as all securities qualified for trading in the bank holding companies as well as for supervis- NMS. This list includes all securities qualified ing Edge act corporations and for processing for trading in tier 1 of the NMS through August applications. 11 and those in tier 2 through July 21, 1987. Additional OTC securities may be designated as NMS securities in the interim between the AVAILABILITY OF Board's quarterly publications and will be imme- REVISED LIST OF OTC STOCKS diately marginable. The next publication of the SUBJECT TO MARGIN REGULATIONS Board's list is scheduled for October 1987. Besides NMS-designated securities, the Board The Federal Reserve Board published on July 24, will continue to monitor the market activity of 1987, a revised list of over-the-counter (OTC) other OTC stocks to determine which stocks stocks that are subject to its margin regulations, meet the requirements for inclusion and contineffective August 11, 1987. ued inclusion on the list. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

711 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 19, 1987 million units in April. Single-family starts rose during the month, but multifamily starts fell Domestic Policy Directive sharply as high vacancy rates and the elimination of some tax advantages for investment in income The information reviewed at this meeting sug- properties continued to depress apartment congested that economic activity has been expand- struction. ing at a moderate pace, despite some weakness Business fixed investment has shown signs of in the industrial sector. However, the rate of improvement from the depressed level early in inflation has risen in recent months, reflecting the year. Shipments of nondefense capital goods especially the impact of higher prices for energy rose and orders inched up in February and and non-oil imports. March. Outlays for construction of commercial Labor demands grew at a brisk pace in April. and industrial structures have continued trending The household survey indicated a sharp increase down in recent months. New commitments, in employment and an unusually large decline in however, have firmed recently. unemployment. As a result, the unemployment Inflation rates have been higher so far this rate fell to 6.3 percent, 0.4 percentage point year. The CPI rose at a 6.2 percent annual rate below its first-quarter average. Payroll employ- between December and March, compared with a ment rose considerably in April with gains con- rate of 2.5 percent in the fourth quarter. Much of centrated again in trade and services. Manufac- the first-quarter acceleration was caused by the turing employment has changed little on balance rebound in energy prices, which now appear to so far this year, and the factory workweek have adjusted to the bulk of the year-end runup dropped sharply in April, partly because of the in the price of imported crude. Larger price observance of religious holidays during the sur- increases also were posted for a number of vey week. consumer goods, probably reflecting the influ- The industrial production index declined 0.4 ence of higher import prices. At the producer percent in April following a smaller drop in level, too, large price increases were posted in a March. Most of the decline in output in April was few industries that had been subject to strong associated with cutbacks in motor vehicles, al- import competition, such as chemicals and pathough small but widespread reductions were per. Commodity prices began moving higher in evident in other areas. Cutbacks in auto produc- the latter part of 1986 and have risen noticeably tion and a pickup in sales slowed the growth in since the Committee's meeting on March 31. dealer stocks, but the level of stocks remained However, wage growth has continued at relativehigh. Outside of autos, trade inventories did not ly moderate rates, with the index for average appear excessive, while inventory-sales ratios in hourly earnings rising at about the same pace as manufacturing were near record lows. in 1986. As a result of the higher auto sales, real In foreign exchange markets, the dollar was consumer spending appeared to be strong. Ex- under heavy downward pressure over much of cluding autos and nonconsumer items, retail the intermeeting period, and intervention pursales rose moderately in April. Housing starts chases were substantial. In the latter part of the were down somewhat from their first-quarter period, the dollar was bolstered by slightly firmer average. Total starts were at an annual rate of 1.7 monetary conditions in the United States and by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin • September 1987 easier conditions in Japan, Germany, and the through repurchase agreements. Nevertheless, United Kingdom. On balance, the dollar dropped partly reflecting technical factors, borrowing at 1 percent, with declines of about 4 percent the discount window rose substantially, averagagainst the yen and V/i percent against sterling, ing around $800 million over the intermeeting the two strongest major currencies over this period. interval. Economic activity in most major foreign The federal funds rate firmed somewhat over industrial nations continued to be relatively slug- the period. Most other interest rates also rose, gish in the first quarter, except in the United with the largest increases occurring in long-term Kingdom and Italy. In March, the merchandise markets. The downward pressures on the dollar trade deficit was close to the average for January created uncertainty among market participants and February and about the same as the fourth- about private demands for dollar assets, the quarter rate. prospects for U.S. inflation, and the response of At its meeting in March, the Committee adopt- monetary policy. In addition, rising commodity ed a directive that called initially for maintaining and producer prices both reflected and added to the existing degree of pressure on reserve posi- concerns about the inflation outlook. Most bond tions. The members decided that somewhat yields increased slightly over a percentage point greater reserve restraint might be acceptable since the March meeting. Commitment rates for depending on developments in foreign exchange fixed-rate mortgages rose somewhat more, remarkets, taking into account the behavior of the flecting increased lender caution in a volatile rate monetary aggregates, the strength of the busi- environment. Short-term rates were up lA to 1 ness expansion, progress against inflation, and percentage point, including three lA percentage conditions in domestic credit markets. M2 and point increases in the prime rate. M3 were expected to grow at annual rates of Growth of all of the monetary aggregates about 6 percent or less from March through June, picked up substantially in April. Ml was boosted while growth in Ml was expected to slow sub- by the tax-related surge in transactions balances. stantially from the pace in 1986. The intermeet- Partly reflecting these tax effects, growth in M2 ing range for federal funds was left unchanged at also picked up, though remaining fairly moder- 4 to 8 percent. ate. Growth in M3 was boosted by the need to In light of downward pressures on the dollar, fund stronger expansion in bank credit. The the provision of reserves was cautious at times growth of the broader aggregates was consistent during the intermeeting period, and open market with the Committee's expectations for the March operations were adjusted in a slightly less accom- to June period and left these aggregates in April modative direction in late April. At the same just below the lower ends of their ranges estabtime, uncertainty associated with transactions lished by the Committee for the year. Liquid related to a huge volume of tax payments in mid- deposits ran off at the end of April and in early April complicated the management of reserves May as the tax payments cleared, reversing during the intermeeting period. Demands for much of the previous bulge in Ml. reserves strengthened substantially, reflecting The staff projections continued to suggest that increases in required reserves associated with a real GNP would grow at a moderate rate through steep rise in transactions balances near mid- the end of 1987. A primary contributor to the month. In the second half of the month, as these projected growth remained the foreign sector. payments cleared, Treasury balances at Federal The decline in the value of the dollar was expect- Reserve Banks rose sharply and absorbed re- ed to make American products more competiserves, at times more rapidly than had been tive, boosting exports despite the effects of relaestimated. This decline in reserves was largely tively weak foreign economic growth and offset by a sizable volume of outright purchases damping expansion in the volume of imports. of U.S. government securities, which necessitat- The growth in domestic purchases was likely to ed two temporary increases in the intermeeting be restrained by constraints on government limit on changes in the System's portfolio, as spending, high vacancy rates in the office and well as by large temporary injections of reserves rental housing markets, and increased mortgage Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 713 rates. In addition, rising import prices were bearing on the outlook for inflation and on that expected to moderate the growth of real personal for overall business activity. Earlier declines in incomes and thus consumer expenditures, espe- the exchange value of the dollar had resulted in cially in the light of an already low personal higher import prices—an adjustment process that saving rate. However, business equipment undoubtedly was still under way—and further spending was projected to resume a moderate dollar depreciation, if it occurred, would add to uptrend partly in response to a growing export future inflation pressures. In this regard, memmarket. Inflation was expected to moderate after bers noted that some domestic producers were accelerating in the first quarter but to remain raising their prices as those of competing imports appreciably above the average pace in 1986. went up, thereby adding to the inflation impact of With output growing at a rate approximating that a lower dollar. In general, however, while the of potential GNP, the unemployment rate was depreciation of the dollar had undoubtedly conexpected to remain close to the lower level tributed to inflationary expectations, direct eviachieved recently. dence of an inflation impact on domestic pricing In the Committee's discussion of current and was still fairly limited. prospective business conditions, the members With respect to the course of domestic busigave attention to indications that inflationary ness activity, a number of members commented expectations had worsened in recent weeks. that developments in recent months were in line Some commented that the somewhat faster rise with earlier projections, and while there were of various price measures thus far in 1987 was both domestic and foreign risks to sustained not unexpected, given the depreciation of the expansion, further growth at a moderate pace dollar, the energy situation, and supply condi- remained a reasonable expectation. As at previtions for some agricultural products. To a consid- ous meetings, the members generally expected erable extent, those developments appeared to domestic demands to be relatively sluggish over involve special factors that might normally be the quarters ahead, and they felt that significant expected to result in one-time adjustments to the progress in reducing the nation's foreign trade general level of prices. However, it also was deficit was needed to support the expansion. noted that the rising prices, including the upturn Some members expressed concern that the imin commodity prices in recent weeks, had be- provement in the trade balance would be limited come associated with an appreciable deteriora- over the quarters ahead. While further progress tion in inflationary attitudes, judging from condi- could be anticipated as exporters and importers tions in financial markets and contacts with continued to adjust to a lower value of the dollar, many business executives around the country. such progress might be restrained in particular There were regional differences in inflationary by sluggish economic growth in foreign industrial expectations, to be sure, and some members nations. Nonetheless, the members generally exobserved that reactions in financial markets had pected continuing improvement in net exports probably been overdone. Nonetheless, most of and many felt that it would provide considerable the members believed that there was an in- impetus for domestic growth. creased risk of more inflation than they had On the domestic side no sector of the economy expected earlier, particularly if inflationary atti- was believed likely to contribute much strength tudes became imbedded in future wage settle- to the expansion, and weaknesses persisted in a ments. On the other hand, some members point- number of key sectors such as energy, agriculed out that underlying pressures on resources ture, and nonresidential construction. Moreover, could remain damped and inflation relatively the recent rise in mortgage rates was likely to subdued, given the outlook for less than robust have some impact on housing demand. Howeveconomic growth in the United States and er, in their review of business developments in abroad and a worldwide oversupply of some different parts of the country, several members commodities. reported on indications of some improvement The prospective behavior of the dollar in for- recently in local conditions and others noted that eign exchange markets was a key uncertainty difficulties in the agriculture and energy sectors Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • September 1987 were, at the least, no longer intensifying. Busi- incur an undue risk of stalling the economic ness sentiment also appeared to have improved expansion at a time when, in this view, underlyin many parts of the country. More generally, ing inflation pressures were likely to remain in while the members recognized the risks of a check. Most members saw a lesser and relatively shortfall from current projections, especially giv- limited risk to the expansion under current ecoen the persisting weaknesses and financial prob- nomic conditions and one that needed to be lems in some sectors of the economy, current accepted given the pressures on the dollar and developments on the whole appeared to be con- the potential for inflation. sistent with continuing moderate growth in over- In the view of several Committee members, all business activity. the desired reserve restraint might be more ap- At its meeting in February the Committee had propriately achieved by means of an immediate agreed on policy objectives that called for mone- increase in the discount rate, providing a more tary growth ranges for the period from the fourth overt means of reassuring financial markets with quarter of 1986 to the fourth quarter of 1987 of regard to the System's continuing commitment 51/2 to 8!/ percent for both M2 and M3. The to an anti-inflationary policy; others felt a possi- 2 associated range for growth in total domestic ble discount rate increase should, in effect, be nonfinancial debt was set at 8 to 11 percent. The held in reserve for use if a more visible signal Committee anticipated that growth in Ml would became desirable. In any event, any decision slow in 1987 from its very rapid pace in 1986, but with respect to the discount rate lay with the the members decided not to establish a numerical Board of Governors, and all but one of the target for the year; instead, the appropriateness Committee members agreed that, in the absence of Ml changes would be evaluated during the of a near-term rise in the discount rate, open year in the light of the behavior of Ml velocity, market operations would be directed toward developments in the economy and financial mar- some increase in the degree of reserve pressure kets, and the nature of emerging price pressures. beyond that sought in recent weeks (but not In the Committee's discussion of policy imple- necessarily greater than that prevailing recently). mentation for the weeks immediately ahead, If the discount rate were increased shortly after members noted that unsettled reserve conditions the meeting, such firming through open market associated with tax payments and related flows operations would not be necessary, at least in the of funds had produced a greater degree of pres- early part of the intermeeting period. sure on reserve positions from time to time in With regard to factors that might trigger some recent weeks than had deliberately been sought, adjustment in open market operations during the even after the slight firming move of late April. intermeeting period, the members generally Market expectations about Federal Reserve poli- agreed that both inflationary developments and cy intentions also seemed to contribute to higher the dollar should receive special emphasis. In short-term interest rates at times. All but one of particular, should inflation or inflationary expecthe members indicated that they wished at least tations seem to be intensifying or the dollar come to maintain the generally firmer reserve condi- under renewed downward pressure, the Committions that had prevailed most recently, even tee would be ready to see some prompt further though such conditions had not been fully antici- firming of reserve conditions. At the same time, pated in Desk operations, and a number felt that the members did not rule out the possibility of some slight further firming might be appropriate. some easing during the period ahead, but they The members generally agreed that some firming viewed the potential need for a correction in that of reserve conditions had been desirable to direction as less likely. In keeping with the counter the apparent intensification of inflation- Committee's usual approach toward policy imary expectations in recent weeks and to help plementation, any decision to alter reserve obstabilize the dollar in the foreign exchange mar- jectives during the intermeeting period should kets. In another view any monetary restraint take account of the behavior of the monetary beyond what had been sought recently would not aggregates and the overall performance of the be desirable because additional tightening would economy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 715 In their consideration of the near-term outlook od depending on developments relating to inflafor growth of the monetary aggregates, the mem- tion and the performance of the dollar in foreign bers took note of an analysis, which suggested exchange markets, while also giving considerthat the broader aggregates would expand at ation to the behavior of the monetary aggregates moderate rates over the balance of the second and the strength of the business expansion. This quarter. The outsized tax payments of mid-April approach to policy implementation was expected had continued to affect the broad aggregates as to be consistent with growth in M2 and M3 at well as Ml through early May. Beyond that, M2 annual rates of around 6 percent or less for the was likely to grow a little more slowly than three-month period from March to June. Over income, given the slight restraining effects of the the same period growth in Ml was expected to recent rise in interest rates that would be felt in remain well below its pace in 1986; the members coming months. M3 expansion was less likely to would continue to evaluate this aggregate in the be affected by interest rate movements, at least light of the performance of the broader monetary in the near term, and was expected to be sus- aggregates and other factors. The members tained by issuance of managed liabilities to sup- agreed that the intermeeting range for the federal port credit growth at depository institutions. On funds rate, which provides a mechanism for a cumulative basis through June, growth in M2 initiating consultation of the Committee when its would remain somewhat below the lower bound boundaries are persistently exceeded, should be of the growth "cone" representing the Commit- left unchanged at 4 to 8 percent. tee's 5Vi to 8V2 percent range for the year, though At the conclusion of the meeting, the following within the parallel lines associated with the end domestic policy directive was issued to the Fedpoints of that range; growth in M3 would be very eral Reserve Bank of New York: near the lower bound of its growth cone and well within its parallel band. Under prevailing circum- The information reviewed at this meeting suggests stances, Committee members indicated that they on balance that economic activity is expanding at a were willing to accept relatively limited growth moderate pace in the current quarter. Total nonfarm in the broader aggregates, at least for now, but a payroll employment rose considerably further in April, with most of the gains continuing to be in the servicefew observed that such growth signaled the need producing sectors. The civilian unemployment rate fell for caution. Growth in Ml also was believed to 6.3 percent from 6.6 percent in March. In April, likely to moderate greatly on average in May and industrial production declined after increasing at a June, after its surge in April. However, because moderate rate in the first quarter. Total retail sales of the persisting uncertainties about the behavior changed little but were up somewhat from their average level in the first quarter. Housing starts were down of Ml, most of the members indicated a continusomewhat in April from their first-quarter average. ing preference for not specifying a numerical Recent indicators of business capital spending point to growth expectation for this aggregate in the some recovery over the near term from a depressed Committee's policy directive. level in the first quarter. Consumer and producer prices have risen more rapidly this year, primarily At the conclusion of the Committee's discusreflecting sizable increases in prices of energy and sion, all but one of the members indicated that non-oil imports. Labor cost increases have remained they favored or could accept a directive that relatively moderate in recent months. called for some increase in the degree of reserve Growth of M2 and M3 strengthened in April from a pressure beyond that sought in recent weeks, sluggish pace in February and March, but for 1987 to date expansion of these two aggregates has been taking account of the possibility that such firming slightly below the lower ends of their respective ranges might be accomplished through an increase in the established by the Committee for the year. Ml surged discount rate. Subsequent to some initial firming in April prompted by exceptionally large tax payin reserve conditions through a reduced avail- ments. Expansion in total domestic nonfinancial debt ability of reserves or through an increase in the has moderated somewhat thus far this year. Most interest rates have risen considerably since the March discount rate, the members indicated that some- 31 meeting of the Committee, with the largest inwhat greater reserve restraint would be acceptcreases occurring in longer-term markets. able, and somewhat lesser reserve restraint In foreign exchange markets, the dollar was under might be acceptable, over the intermeeting peri- heavy downward pressure over most of the intermeet- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • September 1987 ing period and intervention purchases of dollars were operational decisions during the year might target substantial. Recently the dollar has tended to stabilize, appropriate growth in Ml from time to time in the light but on balance its trade-weighted value against the of circumstances then prevailing, including the rate of other G-10 currencies declined over the period. In growth of the broader aggregates. March the merchandise trade deficit was close to the In the implementation of policy for the immediate average for January and February. future, the Committee seeks to increase somewhat the The Federal Open Market Committee seeks mone- degree of reserve pressure sought in recent weeks, tary and financial conditions that will foster reasonable taking into account the possibility of a change in the price stability over time, promote growth in output on discount rate. Somewhat greater reserve restraint a sustainable basis, and contribute to an improved would, or somewhat lesser reserve restraint might, be pattern of international transactions. In furtherance of acceptable depending on indications of inflationary these objectives the Committee at its February meet- pressures and on developments in foreign exchange ing established growth ranges of 5>/2 to 8V2 percent for markets, as well as the behavior of the aggregates and both M2 and M3, measured from the fourth quarter of the strength of the business expansion. This approach 1986 to the fourth quarter of 1987. The associated is expected to be consistent with growth in M2 and M3 range for growth in total domestic nonfinancial debt over the period from March through June at annual was set at 8 to 11 percent for 1987. rates of around 6 percent or less. Growth in Ml is With respect to Ml, the Committee recognized that, expected to remain well below its pace during 1986. based on experience, the behavior of that aggregate The Chairman may call for Committee consultation if must be judged in the light of other evidence relating to it appears to the Manager for Domestic Operations economic activity and prices; fluctuations in Ml have that reserve conditions during the period before the become much more sensitive in recent years to next meeting are likely to be associated with a federal changes in interest rates, among other factors. During funds rate persistently outside a range of 4 to 8 1987, the Committee anticipates that growth in Ml percent. should slow. However, in the light of its sensitivity to a variety of influences, the Committee decided at the Votes for this action: Messrs. Volcker, Corrigan, February meeting not to establish a precise target for Angell, Boehne, Boykin, Heller, Johnson, Keehn, its growth over the year as a whole. Instead, the and Stern. Vote against this action: Ms. Seger. appropriateness of changes in Ml during the course of the year will be evaluated in the light of the behavior of Ms. Seger dissented because she did not want its velocity, developments in the economy and finanto lean on the side of any tightening of reserve cial markets, and the nature of emerging price pressures. conditions beyond the firming that had occurred In that connection, the Committee believes that, since the March meeting. She was concerned particularly in the light of the extraordinary expansion that the degree of reserve pressure prevailing of this aggregate in recent years, much slower mone- recently, which was somewhat greater than intary growth would be appropriate in the context of tended, represented a risk to an already weak continuing economic expansion accompanied by signs economic expansion. She noted that the negative of intensifying price pressures, perhaps related to significant weakness of the dollar in exchange mar- effects of recent increases in interest rates had kets, and relatively strong growth in the broad mone- not yet been felt in the economy. She also tary aggregates. Conversely, continuing sizable in- referred to recent indications of moderating creases in Ml could be accommodated in growth in the monetary aggregates, and she did circumstances characterized by sluggish business acnot expect inflationary pressures to persist in the tivity, maintenance of progress toward underlying price stability, and progress toward international equi- context of excess production capacity and comlibrium. As this implies, the Committee in reaching modity surpluses worldwide. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

717 Legal Developments ORDERS ISSUED UNDER BANK HOLDING Applicant, with deposits of $386.3 million1 after the COMPANY ACT, BANK MERGER ACT, BANK conversion of Atico, would be the seventeenth largest SERVICE CORPORATION ACT, AND FEDERAL commercial banking organization in Florida, control- RESERVE ACT ling 0.5 percent of the total deposits of commercial banking organizations in the state. Intercontinental is Orders Issued Under Section 3 of the Bank the fifteenth largest commercial banking organization Holding Company Act in the state, controlling deposits of $476.2 million, representing 0.6 percent of the total deposits in com- Atico Financial Corporation mercial banking organizations in the state. Upon con- Miami, Florida summation of this proposal, Applicant will become the ninth largest commercial banking organization in Flor- Order Approving Formation of a Bank Holding ida and will control deposits of $862.5 million, repre- Company senting 1.1 percent of the total deposits in commercial banking organizations in the state. Consummation of Atico Financial Corporation, Miami, Florida, has ap- this proposal would not have any significant adverse plied for the Board's approval pursuant to section effect upon the concentration of banking resources in 3(a)(1) of the Bank Holding Company Act ("Act") the state. (12 U.S.C. § 1842(a)(1)) to become a bank holding Applicant competes directly with Intercontinental in company by acquiring 99 percent of the voting shares the Miami-Fort Lauderdale banking market.2 Upon of Atico Savings Bank ("Atico") and 94 percent of the conversion of Atico, Applicant would be the fourvoting shares of Intercontinental Bank ("Interconti- teenth largest of 84 commercial banking organizations, nental"), both of Miami, Florida. controlling 1.8 percent3 of the total deposits in com- Notice of the application, affording interested per- mercial banks in the market. Intercontinental is the sons an opportunity to submit comments, has been tenth largest commercial banking organization in the duly published (52 Federal Register 10,931 (1987)). market, controlling 2.2 percent of the total deposits in The time for filing comments has expired, and the commercial banking organizations in the market. Board has considered the application and all com- Upon consummation of this proposal, Applicant ments received in light of the factors set forth in would become the sixth largest commercial banking section 3(c) of the Act. organization and would control 4.0 percent of the total Applicant, a unitary savings and loan holding com- deposits in commercial banking organizations in the pany, is the parent company of Atico, a state-char- market. The Herfindahl-Hirschman Index ("HHI") tered savings bank, the accounts of which are insured would increase by 8 points to 9214 and the market by the Federal Savings and Loan Insurance Corpora- would remain unconcentrated. Accordingly, consumtion ("FSLIC"). Intercontinental is a state-chartered mation of this proposal is unlikely to lessen substancommercial bank, the accounts of which are insured tially competition in the Miami-Fort Lauderdale bankby the Federal Deposit Insurance Corporation ing market. ("FDIC"). Applicant proposes to become a multibank holding company by acquiring Intercontinental and by converting Atico to a state-chartered commercial bank, the accounts of which would be insured by 1. State banking data are as of June 30, 1986. State banking data do not include the deposits of a recently acquired branch in Orlando, the FDIC. Because Atico, at the time of its conversion Florida. to an FDIC insured institution, will accept demand 2. The Miami-Fort Lauderdale banking market is approximated by deposits and makes commercial loans, Atico would be Dade and Broward Counties, Florida. 3. Market banking data are as of June 30, 1985. a "bank" for purposes of the Act. Accordingly, Appli- 4. Under the revised Department of Justice Merger Guidelines (49 cant properly has applied to become a bank holding Federal Register 26,823 (June 29, 1984)), any market in which the company under section 3 of the Act, which governs post-merger HHI is less than 1000 is considered unconcentrated, and the Department generally will not challenge a bank merger or acquisithe acquisition of banks by bank holding companies. tion resulting in a post-merger HHI of less than 1000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • September 1987 Atico currently engages through wholly owned sub- Intercontinental and the need for expeditious Board sidiaries in certain real estate investment activities that action, the acquisition of Intercontinental may be are authorized by state law. Applicant has agreed that consummated at any time on or after the fifth calendar Atico will divest the real estate investment activities of day following the effective date of this Order. Appliits subsidiaries within two years of consummation of cant's acquisition of Atico in connection with its this proposal in accordance with section 4(a)(2) of the conversion to an FDIC insured commercial bank shall Act. not be consummated before the thirtieth calendar day In evaluating these applications, the Board has following the effective date of this Order.7 Neither considered the financial resources of Applicant and acquisition shall be consummated later than three the effect on those resources of the proposed acquisi- months after the effective date of this Order unless tions. The Board has stated and continues to believe such period is extended for good cause by the Board or that capital adequacy is an especially important factor by the Federal Reserve Bank of Atlanta acting pursuin the analysis of bank holding company proposals. In ant to delegated authority. this regard, Applicant has committed that upon forma- By order of the Board of Governors, effective tion of the bank holding company, it will maintain the July 20, 1987. tangible primary capital ratios of each of the two subsidiary depository institutions and of the consoli- Voting for this action: Chairman Volcker and Governors dated organization at a level well in excess of the Johnson, Angell, and Heller. Absent and not voting: Gover- Board's minimum capital guidelines. Additionally, Ap- nors Seger and Kelley. plicant intends to further strengthen the capital position of the organization through the sale of capital JAMES MCAFEE stock in the near future. [SEAL] Associate Secretary of the Board Based upon these and other facts of record, the Board concludes that the financial and managerial resources of Applicant's resulting organization are First Empire State Corporation consistent with approval. In reaching this decision, the Buffalo, New York Board has considered carefully the recommendations for approval of the transaction by the State of Florida Order Approving Acquisition of a Bank and, in particular, that this proposal will address Intercontinental's financial condition. Considerations First Empire State Corporation, Buffalo, New York, a relating to the convenience and needs of the communi- bank holding company within the meaning of the Bank ties to be served are consistent with approval of this Holding Company Act ("Act") (12 U.S.C. § 1842 application. (a)(1)), has applied for the Board's approval pursuant The Board expects that Applicant will comply with to section 3(a)(3) of the Act (12 U.S.C. § 1842 all state and federal requirements necessary for con- (a)(3)) to acquire up to 100 percent of the voting shares summation of the acquisition, and the Board's approv- of Bank of Richmondville, Richmondville, New York al of this application under the Act is not intended to ("Bank"). preempt any such requirements.5 The Board has previ- Notice of the application, affording interested perously stated that its approval of transactions under sons an opportunity to submit comments, has been section 3 of the Act does not relieve an applicant or the duly published (52 Federal Register 10,265 (1987)). bank involved of the responsibility to obtain approval The time for filing comments has expired, and the under other federal or state laws and regulations and Board has considered the application and all comdoes not shield an applicant from the consequences of ments received in light of the factors set forth in violations of other laws.6 section 3(c) of the Act. Based on the foregoing, the Board has determined Applicant is the sixteenth largest commercial bankthat consummation of the proposal would be in the ing organization in New York, holding deposits of $2.3 public interest and that the application should be and billion, representing less than one percent of the total hereby is approved. In light of the comments of the deposits in commercial banking organizations in the Comptroller of Florida concerning the condition of 5. The Board may not approve an application that would result in a 7. In the event that Applicant acquires Intercontinental without violation of federal or state law. Whitney National Bank v. Bank of consummating the proposed conversion of Atico from a thrift institu- New Orleans & Trust Co., 379 U.S. 411 (1965). tion to an FDIC-insured bank, Applicant would have two years under 6. Hartford National Corporation, (Order dated June 1, 1987); section 4(a)(2) of the Act to divest the shares of the subsidiary thrift Comerica Inc., 73 FEDERAL RESERVE BULLETIN 599 (1987). institution. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 719 state.1 Bank is among the smallest commercial bank- dures to prevent a recurrence of similar violations. ing organizations in the state, controlling deposits of The record reflects that Bank's primary regulator has $34.6 million, representing less than one percent of the advised the Board that Bank's new procedures adetotal deposits in commercial banking organizations in quately address concerns raised by the prior violathe state. Upon consummation of this proposal, Appli- tions. cant would remain the sixteenth largest commercial For the foregoing reasons and based upon a review banking organization in New York and would control of all of the facts of record, the Board concludes that less than one percent of the total deposits in commer- the managerial resources of Applicant and Bank are cial banking organizations in the state. Consummation consistent with approval. The Board also finds that the of this proposal would not result in a significant financial resources of Applicant and Bank are consisincrease in the concentration of banking resources in tent with approval. New York. Existing management of Bank has submitted com- Bank is the nineteenth largest of 21 commercial ments opposing this proposal. In addition, the Board banking organizations in the Albany banking market,2 has received more than 60 comment letters and peticontrolling less than one percent of the total deposits tions in opposition to this proposal from certain comin the market. Applicant does not operate in the munity members, as well as certain customers and Albany banking market. Accordingly, consummation shareholders of Bank. of the proposal would not have any significant adverse These commenters are concerned that Bank will effect on existing competition in the market. cease to be an independent bank characterized by a The Board also has considered the effect of the friendly, small town orientation if this application is proposed acquisition on probable future competition approved, because Applicant is a large non-local bank in the Albany banking market. In view of the numer- holding company. In addition, the commenters argue ous potential entrants into the market, the Board that this proposed transaction will not serve the needs concludes that consummation of the proposed transac- of the community. They argue that small depositors, tion would not have any significant adverse effect on currently able to maintain accounts at Bank due to probable future competition in any relevant market. Bank's low minimum balance requirements, will not In its evaluation of Applicant's managerial re- be able to maintain those accounts if Applicant acsources, the Board has considered certain violations quires Bank and implements its policies. Some comby Applicant's lead bank, Manufacturers and Traders menters also suggest that customers will terminate Trust Company, Buffalo, New York ("M&T"), of the their relationships with Bank if ownership and man- Currency and Foreign Transactions Reporting Act agement change. ("CFTRA") and the regulations thereunder.3 The Board has carefully considered the comments in In this regard, the Board notes that Applicant volun- opposition to this proposal. The commenters primarily tarily brought the subject violations to the attention of extol the virtues of Bank and do not raise issues that the appropriate supervisory authorities after they were reflect adversely on the management of Applicant or discovered through Applicant's internal audit pro- its record in meeting the convenience and needs of the gram. Moreover, Applicant has voluntarily reported communities it serves. these previously unreported currency transactions, There is no evidence in the record to support the and has implemented new compliance procedures to commenters' suggestion that Bank may not adequately prevent similar violations from occurring in the future. serve the needs of small depositors if the application is In addition, an examination conducted by the appro- approved. Moreover, Applicant has indicated that, priate supervisory authority has determined that upon achieving control of Bank, it will continue M&T's new compliance procedures are sufficient to Bank's record of service to the community and, in ensure future compliance with the CFTRA. particular, to small depositors. Indeed, Applicant pro- The Board also has considered certain violations by poses new services for Bank, including home equity Bank of the CFTRA. Bank has corrected these viola- loans, variable-rate installment loans, ATM machines, tions and has implemented new compliance proce- discount brokerage services, variable-rate credit cards and international banking, which would serve to enhance the Bank's provision of services to its community. Accordingly, after careful review of all the comments submitted and the facts of record in this case, 1. Statewide banking data are as of December 31, 1986. the Board has determined that the comments do not 2. The Albany banking market is approximated by the following counties: Albany, Columbia, Fulton, Greene, Hamilton, Montgom- warrant denial of this application. The Board therefore ery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren, and concludes that convenience and needs considerations Washington, all in New York. Market data are as of June 30, 1985. are consistent with approval of this application. 3. 31 U.S.C. § 5311 et seq.; 31 C.F.R. § 103. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • September 1987 Based on the foregoing and other facts of record, the percent of total deposits in the state. Consummation of Board has determined that the application should be this proposal would not result in a significant increase and hereby is approved. This transaction shall not be in the concentration of banking resources in Connecticonsummated before the thirtieth calendar day follow- cut. ing the effective date of this Order, or later than three Applicant and Bank both compete in the Hartford months after the effective date of this Order, unless and Old Saybrook banking markets. In the Hartford such period is extended for good cause by the Board or banking market,2 Applicant is the second largest of 17 by the Federal Reserve Bank of New York pursuant to commercial banking institutions, controlling deposits delegated authority. of $2.5 billion,3 which represents 36.4 percent of total By order of the Board of Governors, effective deposits in commercial banks in the market. Bank is July 6, 1987. among the smaller commercial banking institutions in the Hartford market, controlling deposits of $6.2 million, which represents less than one percent of the Voting for this action: Chairman Volcker and Governors Johnson, Seger, Angell, Heller, and Kelley. market's total commercial bank deposits. Upon consummation of this proposal, Applicant would remain the second largest commercial banking institution in JAMES MCAFEE [SEAL] Associate Secretary of the Board Hartford, and would control 37 percent of the market's total deposits in commercial banks. The Herfindahl- Hirschman Index ("HHI")4 would increase by only 6 points to 3079, and the Hartford market would remain highly concentrated. In view of the small amount of Hartford National Corporation competition that would be eliminated, consummation Hartford, Connecticut of this proposal would not have a significant adverse effect on existing competition in the Hartford banking Order Approving Acquisition of a Bank market.5 Hartford National Corporation, Hartford, Connecti- Applicant and Bank also compete in the Old Saycut, a bank holding company within the meaning of the brook banking market.6 Applicant is the second largest Bank Holding Company Act ("Act") (12 U.S.C. § of six commercial banking institutions in the Old 1841 et seq.), has applied for the Board's approval Saybrook market, controlling deposits of $49.5 milunder section 3(a)(3) of the Act (12 U.S.C. § lion, which represents 25.7 percent of total deposits in 1842(a)(3)), to acquire Chester Bank, Chester, Con- commercial banks in the market. Bank is the largest necticut ("Bank"). commercial banking institution in the Old Saybrook Notice of this application, affording an opportunity banking market, controlling deposits of $62.2 million, for interested persons to submit comments, has been which represents 32.3 percent of the market's total given in accordance with section 3 of the Act (52 commercial bank deposits. Upon consummation of Federal Register 10,265 (1987)). The time for filing this proposal, Applicant would become the largest comments has expired, and the Board has considered commercial banking institution in the Old Saybrook this application and all comments received in light of the factors set forth in section 3(c) of the Act. 2. The Hartford banking market is approximated by the Hartford Applicant controls six banking subsidiaries located Rand McNally Area ("RMA") minus the Tolland County township of in Massachusetts and Connecticut. Applicant is the Mansfield and the Windham County township of Windham, plus the Windham County township of Ashford, the Hartford County township second largest commercial banking organization in of Hartland and the Tolland County township of Union, and the Connecticut, with deposits of $7.0 billion,1 represent- remaining portions of Plymouth and East Haddam not already including approximately 26 percent of the total deposits in ed in the RMA. 3. Market deposit data are as of June 30, 1985. commercial banks in the state. Bank is the 23rd largest 4. Under the revised Department of Justice Merger Guidelines (49 commercial banking institution in Connecticut, with Federal Register 26,823 (June 29, 1984)), any market in which the post-merger HHI is over 1800 is considered highly concentrated, and deposits of $89.5 million, representing less than one the Department is likely to challenge a merger that increases the HHI percent of the total deposits in commercial banks in by more than 50 points unless other factors indicate that the merger the state. Upon consummation of this proposal, Appli- will not substantially lessen competition. The Department of Justice has informed the Board that a bank merger or acquisition is likely to cant would remain the second largest commercial be challenged (in the absence of other factors indicating an anticombanking organization in Connecticut, controlling 26.4 petitive effect) if the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. 5. The Board also has considered the competitive effects of thrifts 1. State deposit data are as of December 31, 1986, and do not in the Hartford banking market. reflect Applicant's pending acquisition of the successor to The Sav- 6. The Old Saybrook banking market is approximated by the ings and Loan Association of Southington, Southington, Connecticut, Middlesex County townships of Old Saybrook, Chester, Essex, approved by the Board on June 1, 1987. Westbrook and Deep River. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 721 market, and would control $111.7 million in deposits, institutions, and together account for 33.2 percent of representing 58.0 percent of the total deposits in total deposits in banks and thrifts in the market. commercial banks in the market. The HHI in the Old Moreover, all six thrifts in the Old Saybrook market Saybrook market would increase 1661 points to 4049 conduct, in effect, a commercial banking business as and the four-firm concentration ratio would increase authorized under Connecticut law.9 Four of the six from 89.1 percent to 96.0 percent. thrifts in the market (including the market's first and The potential adverse competitive effects of this third largest depository institutions) are chartered as proposal are substantially mitigated, however, by con- savings banks, which traditionally in Connecticut have sideration of certain unique facts and circumstances offered significant competition to local commercial present in this case: the large number of remaining banks in the provision of a full range of financial competitors relative to the size of the market, the very services. In particular, thrifts in the Old Saybrook substantial commercial banking services provided by market (savings banks and S&L's alike) provide a full savings banks and savings and loan associations, and array of commercial banking services in addition to the unusual location and configuration of the Old offering traditional thrift products — characteristics Saybrook market. These three factors, taken together, which are reflected in the asset composition of their substantially mitigate the anticompetitive effects of the portfolios. For example, the ratio of commercial and combination of Applicant and Bank in the Old Say- industrial loans (other than those secured by real brook market. estate) to total assets for thrifts in the market is First, ten other depository institutions (four com- approximately 9.0 percent, well above the 1.6 percent mercial banks and six thrift institutions) would remain national average for thrifts on a nationwide basis. The in the Old Saybrook market, a large number of inde- ratio of commercial loans secured by real estate to pendent competitors relative to the size of the market. total assets for thrifts in the Old Saybrook market is Together, these institutions account for $314.7 million 11.2 percent, the same as that for commercial banks in (73.8 percent) of the $426.4 million of total deposits in the market. In addition, the ratio of consumer loans to the market. These institutions, along with nondeposi- total assets for thrifts in the market, at 12.9 percent, is tory financial service providers, would continue to nearly equivalent to the 14 percent ratio for commercompete with Applicant after consummation of its cial banks in the market. Moreover, all thrift instituproposal. tions in the Old Saybrook market offer commercial Second, thrift institutions7 currently exert a consid- demand deposit accounts, and 5 of the six institutions erable competitive influence in the Old Saybrook offer personal demand deposit accounts. market as providers of transaction accounts and con- Third, the facts of record show that the potential sumer loans. All six thrifts also are exercising the anticompetitive effects of this acquisition are lessened liberal commercial lending powers authorized under by certain unique characteristics of the Old Saybrook state law to thrift institutions.8 These thrifts control banking market. The Board previously has indicated deposits of $233.9 million, which represent approxi- that the relevant banking market should reflect commately 55 percent of the total deposits in all banks and mercial and banking realities and should consist of the thrifts in the market. The first and third ranked deposi- localized area where customers can practically turn for tory institutions in the Old Saybrook market are thrift alternatives.10 The Board therefore has considered the geographic setting of the Old Saybrook banking market, labor force commuting patterns, and the ease of access to, as well as ready availability of, financial 7. The Board previously has indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 (1984); The Chase Manhattan Corporation, 70 FEDER- AL RESERVE BULLETIN 529 (1984); NCNB Bancorporation, 69 FEDER- AL RESERVE BULLETIN 802 (1983); First Tennessee Corporation, 69 FEDERAL RESERVE BULLETIN 298 (1983). 9. In 1983, Connecticut statutes were amended to remove limita- 8. If 50 percent of the deposits controlled by thrift institutions in tions on personal and business demand deposit activity and increase the Old Saybrook market were included in the calculation of market permissible commercial loan activity. Currently, 30 percent of the concentration, the four-firm concentration ratio would be 63.9 per- assets of Connecticut thrifts can be invested in commercial loans. On cent, and the HHI would increase 644 points to 1901. Applicant would October 1, 1987, the permissible level increases to 40 percent. On rank first among banks and thrifts in the market, controlling 36.1 October 1, 1988, all limitations will be removed and thrifts will be percent of the market's deposits. authorized to transact, in effect, a general banking business. If 100 percent of the deposits controlled by thrift institutions in the 10. Pikeville National Corporation, 71 FEDERAL RESERVE BULLE- Old Saybrook market were included in the calculation of market TIN 240 (1985); Dacotah Bank Holding Company, 70 FEDERAL concentration, the four-firm concentration ratio would be 59.4 per- RESERVE BULLETIN 347 (1984); Wyoming Bancorporation, 68 FEDERcent, and the HHI would increase 338 points to 1527. Applicant would AL RESERVE BULLETIN 313 (1982), a£Td, 729 F.2d 687 (10th Cir. 1984); rank first among banks and thrifts in the market, controlling 26.2 Independent Bank Corporation, 67 FEDERAL RESERVE BULLETIN 436 percent of the market's deposits. (1981). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • September 1987 services provided by out-of-market institutions, in New Haven and New London markets. Information terms of assessing the competitive effects of Appli- supplied by Applicant shows that eight commercial cant's proposal. banks located outside the Old Saybrook market regu- The Old Saybrook banking market is characterized larly advertise their services in the New Haven and by a highly unusual location and configuration unlike New London papers distributed in the Old Saybrook any market previously considered by the Board. The market. All local television stations, and two of three market is one of 12 designated markets in Connecticut radio stations, servicing the Old Saybrook market also and encompasses a seven by 15 mile strip in the south- originate from the surrounding New Haven or New central portion of the state. Old Saybrook also is London market areas. Out-of-market commercial among the smallest of 97 commercial banking markets banks advertising their products and services over designated in the entire New England area. Of the five these stations would, of necessity, be directing their towns in the market, Old Saybrook is the only busi- solicitations at Old Saybrook banking customers. Finess center, and it is located at the market's southern- nally, Applicant has compiled data which show that most tip. The Old Saybrook banking market is sur- small businesses in the Old Saybrook market have rounded by three RMAs,11 but none of the five towns designated over a dozen out-of-market banking instituin the market is included in any of these areas. The Old tions to serve as their primary commercial lender. Saybrook banking market lies in close proximity to the Applicant also has identified 26 non-depository incentral business districts of New London (15 miles), stitutions offering credit services that solicit customers New Haven (27 miles), and Hartford (40 miles). The in the Old Saybrook banking market. Eighteen of these Old Saybrook banking market is influenced to an institutions specialize in mortgage credit. In addition, unusual degree by each of these surrounding commu- at least 23 securities and bond brokers actively solicit nities, but the facts of record suggest that it is not customers in the market. Of these 49 institutions, only strongly tied to any one central business area so as to 6 are physically located in the market. render it an integal part of one of these markets. In sum, the unusual geographic characteristics of In addition to the market's geographic configura- the Old Saybrook market, the strong influence on the tion, commuting patterns traditionally have provided market of the three surrounding business centers, the important indications of economic and commercial significant exposure of customers in the Old Saybrook integration in defining market areas.12 In the Old market to the financial services offered by out-of- Saybrook banking market, a large portion of the daily market institutions, and evidence that Old Saybrook work force (29 percent) commutes to surrounding customers turn to out-of-market institutions for certain communities. The distribution of total commuters is financial services, all contribute to the unique attridiffuse, however (11.3 percent to New Haven, 8.6 butes of the Old Saybrook market. In the Board's percent to New London and 9.3 percent to Hartford), view, these factors, along with the significant competiand thus fails to definitively tie the Old Saybrook tive influence of thrifts in the market, and the exismarket to any one business center. tence of numerous remaining providers of financial Applicant also has provided local advertising infor- services to both consumer and commercial customers, mation, which suggests that consumer and commercial substantially mitigate the anticompetitive effects of customers in the Old Saybrook banking market are this proposal in the Old Saybrook market and render readily exposed to and solicited by financial service competitive factors consistent with approval. The providers in surrounding market areas. The Old Say- Board therefore concludes that consummation of Apbrook market has a weekly newspaper, but receives plicant's proposal would not have a significant adverse local daily newspaper service from the surrounding effect upon existing competition in any relevant market. The financial and managerial resources of Applicant and Bank are consistent with approval. Considerations relating to the convenience and needs of the communi- 11. Rand McNally, Inc., delineates RMAs for the business comties to be served also are consistent with approval of munity and can be used to indicate areas of economic and social integration. An RMA includes a central city or cities, any adjacent this application. continuously built-up area, and other communities not connected to Based on the foregoing and other facts of record, the the city by continuously built-up territory if the bulk of their population is supported by commuters to the central city and its adjacent Board has determined that the application should be, built-up areas, and provided their population density is fairly high. A and hereby is, approved. The transaction shall not be place generally meets the commuting requirement if at least 20 percent consummated before the thirtieth calendar day followof its labor force commutes to the central city or its adjacent areas. 1987 Rand McNally Commercial Atlas & Marketing Guide, 118th ing the effective date of this Order, or later than three Edition. months after the effective date of this Order, unless 12. Sunwest Financial Services, Inc., 73 FEDERAL RESERVE BULsuch period is extended for good cause by the Board or LETIN 463 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 723 by the Federal Reserve Bank of Boston, acting pursu- of the proposal would not eliminate any existing ant to delegated authority. competition. By order of the Board of Governors, effective Applicant also seeks to acquire Ladysmith, and thus July 14, 1987. indirectly to acquire Pioneer, a Wisconsin bank. Section 3(d) of the Act (12 U.S.C. § 1842(d)), the Voting for this action: Vice Chairman Johnson and Gover- Douglas Amendment, prohibits the Board from apnors Seger, Angell, Heller, and Kelley. Absent and not proving an application by a bank holding company to voting: Chairman Volcker. acquire a bank located outside the holding company's home state, unless such acquisition is "specifically JAMES MCAFEE authorized by the statute laws of the state in which [SEAL] Associate Secretary of the Board such bank is located, by language to that effect and not merely by implication."2 The statute laws of Wisconsin, Wis. Stat. Ann. § 221.58 (West Supp. 1986), authorize an out-of-state bank holding company with Houston Bancorporation, Inc. its principal place of business in one of eight "regional St. Paul, Minnesota states," including Minnesota, to acquire a Wisconsin bank that operated in Wisconsin prior to May 9, 1986, Order Approving Acquisition of Bank Holding if the Wisconsin Commissioner of Banks determines Companies and a Bank that the "regional state" permits Wisconsin bank holding companies to acquire banks or bank holding Houston Bancorporation, Inc., St. Paul, Minnesota, a companies located in that state. bank holding company within the meaning of the Bank The Wisconsin Commissioner of Banks and the Holding Company Act (12 U.S.C. § 1841 et seq.) Minnesota Commissioner of Commerce have conclud- ("Act"), has applied for the Board's approval under ed that the statute laws of Minnesota and Wisconsin section 3 of the Act (12 U.S.C. § 1842) to acquire "appear to be compatible and to permit interstate Citizens State Bank of Hayfield ("Citizens"), Hay- acquisitions of banks and bank holding companies field, Minnesota, and to merge with Ladysmith Corpo- between two states."3 Based on the foregoing, includration ("Ladysmith"), St. Paul, Minnesota, and Cot- ing the Board's review of the statutes involved, the tage Grove Bancorporation, Inc. ("CGB"), St. Paul, Board has determined that the proposed acquisition is Minnesota, and thus indirectly acquire The Pioneer specifically authorized by the statute laws of Wiscon- National Bank of Ladysmith ("Pioneer"), Ladysmith, sin and is thus permissible under the Douglas Amend- Wisconsin, and Minnesota National Bank of Cottage ment, subject to the decision of the Wisconsin Com- Grove, Cottage Grove, Minnesota. missioner of Banks not to disapprove this transaction Notice of the applications, affording interested per- pursuant to subsections 221.58(4)(b) and (6) of the sons an opportunity to submit comments, has been Wisconsin Statutes, Wis. Stat. Ann. §§ 221.58(4)(b) given in accordance with section 3(b) of the Act. The and 221.58(6). The Board's Order is specifically conditime for filing comments has expired, and the Board tioned upon satisfaction of the state regulatory rehas considered the applications and all comments quirement that the Wisconsin Commissioner of Banks received in light of the factors set forth in section 3(c) not disapprove this application. of the Act (12 U.S.C. § 1842(c)). Applicant has no subsidiaries in the state of Wiscon- Applicant, CGB and Citizens are among the smaller sin and does not compete in any market in the state. commercial banking organizations in the state of Min- Accordingly, consummation of this proposal would nesota. Upon consummation of this proposal, Appli- not eliminate any significant competition in the relecant would become the 31 st largest commercial bank- vant market in Wisconsin. ing organization in the state of Minnesota, controlling The Board concludes that the financial and managetotal deposits of $90.1 million, representing 0.25 per- rial resources of Applicant, its subsidiary bank and the cent of total deposits in commercial banking organiza- banking organizations to be acquired are consistent tions in the state.1 Consummation of this proposal with approval of these applications. In reaching this would not result in a significant increase in the concentration of banking resources in Minnesota. Since Applicant and the banks to be acquired do not 2. A bank holding company's home state for purposes of the operate in the same banking markets, consummation Douglas Amendment is that state in which the total deposits of its banking subsidiaries were largest on July 1, 1966, or on the date it became a bank holding company, whichever date is later. 12 U.S.C. § 1842. 3. Cooperative Agreement Between the State of Wisconsin and the 1. All banking data are as of June 30, 1986. State of Minnesota, dated February 6, 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • September 1987 conclusion, the Board notes that these transactions Applicant controls two subsidiary banks with total involve a restructuring of the existing ownership inter- deposits of $54.7 million, representing approximately ests of Applicant's principal, and no new acquisition 0.1 percent of the total deposits in commercial banks debt is involved in the proposal. The Board has also in Minnesota.1 Bank is the 506th largest commercial considered, in its assessment of capital adequacy, that banking organization in Minnesota, controlling deposactions taken in conjunction with these applications its of $8.4 milliion representing approximately .02 will improve the capital position of Applicant and its percent of the total deposits in commercial banking subsidiary banks, as well as the chain banking organi- organizations in the state. Consummation of this prozation controlled by Applicant's principal shareholder. posal would not significantly increase the concentra- In addition, Applicant has submitted a plan to further tion of banking resources in the state of Minnesota. improve the tangible primary capital ratio of the chain Applicant's subsidiary banks and Bank compete in banking organization. On the basis of the foregoing, the Minneapolis/St. Paul banking market.2 Applicant's banking factors are consistent with approval of these subsidiary banks control 0.4 percent of the deposits in applications. Considerations relating to the conve- commercial banks in the market.3 Bank, with deposits nience and needs of the communities to be served also of $8.4 million, is the 121st largest of 124 banks in the are consistent with approval of these transactions. market, controlling .03 percent of deposits in commer- Based on the foregoing and other facts of record, the cial banks in the market. Upon consummation of this Board has determined that the applications should be, proposal, Applicant would control less than 0.5 perand hereby are, approved, subject to the express cent of total deposits in commercial banks in the condition, with regard to the Wisconsin acquisition, Minneapolis/St. Paul market, and the Herfindahlthat the Wisconsin Commissioner of Banks not disap- Hirschman Index would increase by one point to 2153. prove the proposed acquisition. The transactions shall Consummation of this proposal would not have any not be consummated before the thirtieth calendar day significant adverse effect upon competition in any following the effective date of this Order or later than banking market, and competitive considerations are three months after the effective date of this Order, consistent with approval. unless such period is extended for good cause by the Bank's majority shareholder, Anchor Bancorp, Inc. Board or by the Federal Reserve Bank of Minneapolis, ("Anchor"), and Anchor's principal shareholder acting pursuant to delegated authority. ("Protestants"), filed comments opposing this propos- By order of the Board of Governors, effective al, arguing that the proposed acquisition of less than an July 15, 1987. absolute majority of the voting shares of Bank will result in the failure of Applicant to serve as a source of financial and managerial strength to Bank.4 Protes- Voting for this action: Chairman Volcker and Governors Johnson, Seger, Angell, Heller, and Kelley. tants also challenge whether such a minority investment in Bank will weaken Applicant's financial condi- JAMES MCAFEE tion. [SEAL] Associate Secretary of the Board The Board has evaluated the financial and managerial resources of Applicant and Bank and finds them to be consistent with approval. This transaction will be McLeod Bancshares, Inc. accomplished through an exchange of shares, and Hutchinson, Minnesota Applicant will incur no acquisition debt as a result of Order Approving Acquisition of a Bank McLeod Bancshares, Inc., Hutchinson, Minnesota, 1. All banking data are as of December 31, 1986. 2. The Minneapolis/St. Paul banking market is approximated by the has applied pursuant to section 3(a)(3) of the Bank Minneapolis/St. Paul RMA adjusted to include all of Carver and Scott Holding Company Act ("BHC Act" or "Act"), Counties and Lanesburgh Township in Le Sueur County. 3. As of June 30, 1985. 12 U.S.C. § 1841 et seq., to acquire 24.5 percent of 4. Protestants also argue that the value of Applicant's stock to be the voting shares of Exchange State Bank, St. Paul, received by Applicant's principal is excessive compared to the value Minnesota ("Bank"). of Bank stock Applicant's principal will exchange with Applicant. In questioning the appropriate ratio of shares to be exchanged, Anchor's Notice of the application, affording interested perprincipal shareholder argues that as a minority shareholder of Applisons an opportunity to submit comments, has been cant his interest in Applicant will be diluted. The price to be set for the given in accordance with section 3(b) of the Act. The purchase of bank stock and, in particular, the proper ratio for exchange of shares is a matter appropriately left to the parties to the time for filing comments has expired, and the Board transaction, who in this case have already sought recourse to the has considered the application and all comments re- courts to resolve these issues. Further, it does not appear that such issues are within the scope of factors the Board may consider. See ceived in light of the factors set forth in section 3(c) of Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 (10th the Act. Cir. 1973). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 725 the transaction. Consequently, Applicant will not rely Northeast Bancorp, Inc. upon dividends of Bank to service any debt. Based North East, Maryland upon this fact and the fact that the condition of Bank is satisfactory, this proposed investment, which is actu- Order Approving Formation of a Bank Holding ally a transfer to a holding company of an interest held Company by Applicant's majority shareholder for seven years, will not impair Applicant's financial resources. Conse- Northeast Bancorp, Inc., North East, Maryland, has quently, this case can be distinguished from the applied for the Board's approval under section 3(a)(1) Board's decision in the case of NBC Co., 60 FEDERAL of the Bank Holding Company Act of 1956, as amend- RESERVE BULLETIN 782 (1974), in which the Board ed ("BHC Act") (12 U.S.C. § 1842(a)(1)), to become denied the acquisition of a minority interest in a bank a bank holding company by acquiring 80 percent or to which the bank's absolute majority shareholder more of the outstanding voting stock of First National objected. Moreover, unlike the NBC Co. case, the Bank of North East, North East, Maryland ("Bank"). majority shareholder of Bank, Anchor, is itself a bank Notice of the application, affording interested perholding company to which the Board may look as a sons an opportunity to submit comments, has been source of strength for Bank. given in accordance with section 3(b) of the BHC Act. Applicant's principal has no representation on The time for filing comments has expired and the Bank's board of directors and it is not anticipated that Board has considered the application and all com- Applicant will be so represented. As a result, this ments received in light of the factors set forth in transaction will not "perpetuate or aggravate dissen- section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). sion in Bank's management" — a basis cited by the Applicant is a nonoperating corporation with no Board for denial of an application to acquire a minority subsidiaries formed for the purpose of acquiring Bank. interest in NBC Co. Id. 784. Applicant also has the Bank is the 48th largest commercial banking organizanecessary resources to serve as a source of financial tion in the State of Maryland, with total deposits of strength to Bank. Moreover, Bank's condition is satis- $40.8 million, representing less than 0.2 percent of the factory and Anchor is considered to be a source of total deposits in commercial banks in the state.1 strength to Bank, particularly in view of its recent Bank is the 39th largest of 57 commercial banking injection of capital into Bank. Accordingly, there is no organizations in the Wilmington banking market,2 conextraordinary need for Applicant to play a more active trolling 0.3 percent of the total deposits in commercial role as a source of financial strength to Bank. After banks.3 Principals of Applicant are not affiliated with careful review of the comments submitted and all of any other depository organization in the market. Conthe facts of record in this case, the Board has deter- summation of this proposal would not result in any mined that the comments submitted do not warrant adverse effects upon competition or increase the condenial of this application. Financial and managerial centration of banking resources in any relevant marfactors and future prospects of Applicant, its subsid- ket. Accordingly, the Board concludes that competiiary banks, and Bank are consistent with approval. tive considerations under the BHC Act are consistent Considerations relating to the convenience and needs with approval. of the community to be served are also consistent with In its evaluation of Applicant's managerial reapproval. sources, the Board has considered certain violations Based on the foregoing and other facts of record, the by Bank of the Currency and Foreign Transactions Board has determined that the application should be Reporting Act ("CFTRA") and the regulations thereand hereby is approved. This transaction shall not be under.4 Applicant has taken appropriate remedial acconsummated before the thirtieth calendar day follow- tion to correct such violations and prevent their recuring the effective date of this Order, or later than three rence. The corrective measures include the months after the effective date of this Order, unless development of a new compliance policy, enhanced such period is extended for good cause by the Board, audit procedures, and additional training for Bank's or by the Federal Reserve Bank of Minneapolis pursu- personnel. In addition, Bank's primary regulator, the ant to delegated authority. By order of the Board of Governors, effective July 10, 1987. Voting for this action: Chairman Volcker and Governors 1. All banking data are as of June 30, 1986, unless otherwise Seger, Angell, and Kelley. Absent and not voting: Governors indicated. Johnson and Heller. 2. The Wilmington banking market is defined as Cecil County, Maryland; Chester County, Pennsylvania; Salem County, New Jersey; and New Castle County, Delaware. JAMES MCAFEE 3. Market data are as of June 30, 1985. [SEAL] Associate Secretary of the Board 4. 31 U.S.C. § 5311, et seq.; 31 C.F.R. § 103. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin • September 1987 Office of the Comptroller of the Currency, has indicat- Applicant, with total assets of approximately $63.2 ed that all CFTRA violations were corrected and that a billion,1 is the second largest bank in the Netherlands subsequent examination did not reveal any additional and the 48th largest banking organization worldwide. violations. Through its subsidiaries, Applicant engages in various The financial and managerial resources and future permissible banking and nonbanking activities. prospects of Applicant and Bank are considered con- Company will engage in the following nonbanking sistent with approval of the proposal. Considerations activities: relating to the convenience and needs of the communi- (1) portfolio investment advisory services for a small ty to be served are consistent with approval. number of investment partnerships; Based on the foregoing and other facts of record, the (2) feasibility studies for corporations; and Board has determined that the application should be, (3) valuation services (including valuations of comand hereby is, approved. This transaction shall not be panies or one or more integral parts) for purposes of consummated before the thirtieth calendar day follow- acquisitions, mergers or divestitures; tender offer ing the effective date of this Order, or later than three evaluations; advice for management or for bankmonths after the effective date of this Order, unless ruptcy court on the viability and capital adequacy of such period is extended for good cause by the Board or financially troubled companies (and on the fairness the Federal Reserve Bank of Richmond, acting pursu- of bankruptcy reorganization); valuation opinions ant to delegated authority. on transactions in publicly held securities; valua- By order of the Board of Governors, effective tions on the fair market value of employee stock July 2, 1987. ownership trusts; periodic valuation of stock of privately owned companies; and valuations of large Voting for this action: Chairman Volcker and Governors blocks of securities of publicly owned companies. Johnson, Seger, Angell, and Kelley. Absent and not voting: Governor Heller. Portfolio investment advisory services have been determined by the Board to be closely related to JAMES MCAFEE banking and permissible for bank holding companies. [SEAL] Associate Secretary of the Board (12 C.F.R. § 225.25(b)(4)(iii)). The Board previously has determined by Order that the activities of providing feasibility studies for corporations and valuation services are closely related to banking and permissible Orders Issued Under Section 4 of the Bank for bank holding companies.2 Holding Company Act In order to approve this application, the Board must Amsterdam-Rotterdam Bank N.V. also find that the performance of the proposed activi- Amsterdam, The Netherlands ties "can reasonably be expected to produce benefits to the public, such as greater convenience, increased Order Approving Application to Acquire Amsterdam competition, or gains in efficiency, that outweigh Pacific Corporation possible adverse effects, such as undue concentration of resources, decreased or unfair competition, con- Amsterdam-Rotterdam Bank N.V., Amsterdam, The flicts of interests, or unsound banking practices." In Netherlands, a foreign bank subject to the provisions this regard, Company will be a de novo entrant into the of the Bank Holding Company Act (12 U. S.C. § 1841 financial services market and will enhance competition by widening the range of firms from which companies et seq.) (the "Act"), has applied for the Board's may choose. approval pursuant to section 4(c)(8) of the Act The Board notes that the primary capital ratio of (12 U.S.C. § 1843(c)(8)) to acquire up to 100 percent Applicant, as publicly reported, is below the minimum of the voting shares of Amsterdam Pacific Corporacapital guidelines established by the Board for U.S. tion, San Francisco, California ("Company"), and bank holding companies. The Board has also considthereby to engage de novo in certain nonbanking ered all of the information available to the Board activities. Notice of the application, affording interested persons an opportunity to submit comments, has been published (52 Federal Register 13,521 (1987)). The time for filing comments has expired, and the Board has considered the application and all comments re- 1. Data are as of December 31, 1986. ceived in light of the factors set forth in section 4(c)(8) 2. Security Pacific Corporation, 71 FEDERAL RESERVE BULLETIN 118 (1985); Signet Banking Corporation, 73 FEDERAL RESERVE BULof the Act. LETIN 59 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 727 regarding the financial condition of Applicant and The approval is also subject to the Board's authority to made adjustments in accordance with U.S. regulatory require such modification or termination of the activiand accounting practices. In light of these facts and the ties of a bank holding company or any of its subsidiarfact that Company will be established de novo, will be ies as the Board finds necessary to assure compliance small in comparison to Applicant, and will engage in with the provisions and purposes of the Act and the permissible nonbanking activities, the Board has de- Board's regulations and orders issued thereunder, or termined that the financial resources of Applicant are to prevent evasion thereof. consistent with approval of this application. The man- The transaction shall not be consummated later than agerial resources of Applicant also are consistent with three months after the effective date of this Order, approval. unless such period is extended for good cause by the The Board believes that concerns regarding con- Board, or by the Federal Reserve Bank of New York flicts of interest and related adverse effects that may pursuant to delegated authority. be associated with financial feasibility studies can be By order of the Board of Governors, effective substantially mitigated through the imposition of con- July 30, 1987. ditions designed to prevent such adverse effects. The Board finds that the appropriate conditions to mitigate Voting for this action: Vice Chairman Johnson and Goversuch adverse effects are as follows: nors Seger, Heller, and Kelley. Absent and not voting: (1) Company's financial advisory activities shall not Chairman Volcker and Governor Angell. encompass the performance of routine tasks or operations for a customer on a daily or continuous JAMES MCAFEE basis; [SEAL] Associate Secretary of the Board (2) Disclosure will be made to each potential customer of Company that Company is an affiliate of Applicant; (3) Advice will be rendered by Company on an BankAmerica Corporation explicit fee basis without regard to correspondent San Francisco, California balances maintained by a customer of Company at Applicant or any depository subsidiary of Appli- Order Approving the Issuance and Sale of Payment cant; and Instruments (4) Company will not make available to Applicant or any of its subsidiaries confidential information re- BankAmerica Corporation, San Francisco, California ceived from Company's clients. ("BAC"), a bank holding company within the meaning of the Bank Holding Company Act ("Act") Under these conditions, the Board concludes that (12 U.S.C. § 1841(c)) has applied for the Board's Applicant's performance of financial feasibility studies approval under section 4(c)(8) of the Act and secis unlikely to result in any undue concentration of tions 225.23 and 225.25(b)(12) of the Board's Regularesources, decreased or unfair competition, unsound tion Y (12 C.F.R. §§ 225.23 and 225.25(b)(12)), to banking practices, or other adverse effects. engage de novo in the issuance and sale of general The Board has also considered whether adverse purpose, variably denominated payment instruments effects such as conflicts of interest or unsound banking with a maximum face value of $10,000. BAC proposes practices may be associated with the conduct of valua- to market these instruments to consumer and business tion services by a bank holding company subsidiary customers through financial institutions including its and has determined that no significant adverse effects lead bank and certain other subsidiaries across the would result from the Board's approval of these activi- United States and abroad.1 ties. Notice of the application, affording interested per- Based on the foregoing analysis and all the facts of sons an opportunity to submit comments has been record, the Board has determined that the balance of published (52 Federal Register 12,250 (April 15, the public interest factors it is required to consider 1987)). The time for filing comments has expired, and under section 4(c)(8) of the Act is favorable. Accordingly, the application should be and hereby is approved. This determination is subject to the conditions set forth in this Order for the avoidance of conflicts of interest and the conditions set forth in the Board's Regulation Y, including those in sections 225.4(d) and 1. This application is substantially similar to one that the Board approved on March 16,1984. BAC never issued instruments above the 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)). $1,000 limit, however. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Federal Reserve Bulletin • September 1987 the Board has considered the application and all undue concentration of resources, decreased or unfair comments received in light of the public interest competition, conflicts of interests, or unsound banking factors set forth in section 4(c)(8) of the Act. practices." 12 U.S.C. § 4(c)(8). BAC controls total consolidated assets of $99.1 The type of money orders and official checks that billion and total deposits of $82.2 billion, and is the BAC proposes to issue are marketed locally on the second largest bank holding company in the United retail level by a variety of financial and non-financial States.2 BAC's lead bank, Bank of America N.T. & firms.6 Only a few large institutions market these S.A. ("Bank"), controls deposits of $56.8 million and instruments on a national basis, however. The internais the largest commercial banking organization in tional payment instruments market also is highly con- California.3 BAC also engages, through various non- centrated because few organizations have the estabbank subsidiaries, in mortgage banking, commercial lished network and operational resources necessary to lending and leasing, credit-related insurance, invest- conduct a worldwide payment instruments business. ment advisory, and financial management consulting There are further barriers to entry on a worldwide activities. scale, in that the issuance and sale of payment instru- BAC proposes to engage de novo in the issuance and ments typically is a low unit price, high volume sale of general purpose, variably denominated pay- business that requires extensive management experment instruments drawn on BAC with a maximum face tise combined with an efficient sales and servicing value of $10,000. These instruments will include do- operation. BAC indicates that it already has these mestic and international money orders and two types systems and resources in place by virtue of its prior of official checks. BAC proposes to market these application to engage in the issuance of payment instruments to consumer and business customers instruments activity. through foreign and domestic financial institutions, BAC seeks to increase the maximum denomination including Bank and certain other of BAC's subsidiar- on its payment instruments in order to generate addiies. BAC also proposes to use these instruments in lieu tional revenue from existing business. BAC maintains of certain internal payments, including payroll and that such expanded authority is essential for it to dividend checks currently drawn on Bank.4 successfully compete with other bank and nonbank The Board previously has determined that the issu- issuers of payment instruments. As an additional beneance and sale of money orders and similar payment fit of its proposal, BAC expects improved parent instruments with a maximum face value of $1,000 is company liquidity through an increase in investable closely related to banking. 12 C.F.R. § 225.25(b)(12). funds. The record shows that BAC's sale and issuance The Board also has approved by order a limited of larger denominated money orders would increase number of applications to engage in the issuance of competition in this field and enhance the convenience payment instruments with a $10,000 maximum face of the purchaser. BAC contends that these instruvalue.5 In each case, the Board determined that an ments would enjoy ready acceptability, and thus increase in the maximum denomination of payment would provide benefits to the public. BAC also coninstruments would not affect the fundamental nature of tends that its proposed activity would not lead to the activity as otherwise permitted under Regula- unsound banking practices or other adverse effects. In tion Y. this respect, BAC states that it already has reduced In order to approve this application under section significantly the risk of loss associated with these 4(c)(8), the Board must find that BAC's performance instruments by adopting extensive system-wide conof the proposed activity could "reasonably be expect- trol procedures. ed to produce benefits to the public, such as greater In considering previous applications regarding variconvenience, increased competition, or gains in effi- ably denominated payment instruments, the Board ciency, that outweigh possible adverse effects, such as expressed concern that the issuance of instruments in denominations larger than $1,000 would result in an adverse effect on the reserve base. The Board noted that reserve requirements serve as an essential tool of monetary policy, and that the soundness of that policy 2. Asset data for BAC are as of March 31, 1987, and deposit data would be jeopardized by the erosion of reservable are as of December 31, 1986. 3. Deposit data for Bank are as of June 30, 1986. deposits in the banking system. The Board therefore 4. As an incident to this activity, BAC proposes that its wholly conditioned its grant of approval on the requirement owned subsidiary BA Cheque Corporation will continue to provide marketing and distribution services. 5. BankAmerica Corporation, 70 FEDERAL RESERVE BULLETIN 364 (1984); See also, RepublicBank Corporation, 71 FEDERAL RESERVE BULLETIN 724 (1985); Citicorp, 71 FEDERAL RESERVE BULLETIN 58 6. Money orders typically are used to transmit funds of consumers (1985). who do not or cannot maintain checking accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 729 that a bank holding company applicant submit weekly the Bank Holding Company Act, 12 U.S.C. § 1841 reports of its daily payment instruments operations. et seq. ("BHC Act"), has applied for the Board's The Board deemed this requirement as essential to approval under section 4(c)(8) of the BHC Act, monitor the effects of such proposals on the reserve 12 U.S.C. § 1843(c)(8), and section 225.21(a) of the base. The Board also underscored its authority under Board's Regulation Y, 12 C.F.R. § 225.21(a), to ensection 19 of the Federal Reserve Act (12 U.S.C. gage through a wholly owned subsidiary, Chase Home § 461(a)), to impose reserve requirements if necessary Mortgage Corporation ("Company"), Montvale, New to avoid a significant reduction in the reserve base, or Jersey, in underwriting and dealing in, to a limited to avoid other adverse effects that might result from extent, certain residential mortgage-related securities such proposals. In keeping with this policy determina- that are ineligible for underwriting and dealing in by tion, BAC has committed to submit to the Board state member banks under the Glass-Steagall Act.1 weekly reports of its daily payment instruments activi- Applicant has previously received approval under ty. Accordingly, in light of this commitment, the section 4(c)(8) of the BHC Act for Company to engage Board believes that public benefits outweigh potential in mortgage banking activity encompassing originatadverse effects of BAC's expanded payment instru- ing, pooling, and servicing mortgage loans.2 The proments proposal. posed new underwriting and dealing activities would Based upon the foregoing and other considerations be provided in addition to the previously approved reflected in the record of this application, the Board mortgage banking activities, with Company serving has determined that the balance of the public interest customers through offices in New Jersey, New York, factors it is required to consider under section 4(c)(8) Florida, Maryland, Massachusetts, New Hampshire, is favorable. This determination is subject to all of the Pennsylvania, Texas, and Virginia. considerations set forth in Regulation Y, including Applicant, with consolidated assets of $94.8 billion,3 sections 225.4(d) and 225.23(b), and to the Board's is the third largest banking organization in the nation. authority to require such modification or termination It operates seven subsidiary banks in New York, of the activities of a holding company or any of its Maryland, Ohio, Delaware, Florida, and Arizona and subsidiaries as the Board finds necessary to assure engages in a broad range of permissible nonbanking compliance with, or prevent evasion of, the provisions activities in the United States and abroad. and purposes of the Act and the Board's regulations Notice of the application, affording interested perand orders issued thereunder. sons an opportunity to submit comments on the pro- The activity approved hereby shall be commenced posal, has been published (52 Federal Register 7,026 not later than three months after the effective date of (1987)). The time for filing comments has expired, and this Order, unless such period is extended for good the Board has considered the application and all cause by the Board or by the Federal Reserve Bank of comments received in light of the factors set forth in San Francisco, acting pursuant to delegated authority. section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). By order of the Board of Governors, effective The Board has previously authorized Applicant to July 21, 1987. underwrite, place and deal in commercial paper to a limited extent through a separate commercial finance Voting for this action: Vice Chairman Johnson and Gover- subsidiary on the basis that the subsidiary would not nors Seger, Angell, and Kelley. Abstaining from this action: be "engaged principally" in underwriting and dealing Governor Heller. Absent and not voting: Chairman Volcker. in securities within the meaning of section 20 of the Glass-Steagall Act.4 The Chase Manhattan Corpora- JAMES MCAFEE tion, 73 FEDERAL RESERVE BULLETIN 367 (1987). In [SEAL] Associate Secretary of the Board that case, Applicant agreed to limit its commercial paper activity so that the gross revenues derived from The Chase Manhattan Corporation New York, New York 1. 12 U.S.C. §§ 24 Seventh and 335. 2. These activities are authorized for bank holding companies Order Conditionally Approving Application to under section 225.25(b)(1) of Regulation Y. 12 C.F.R. § 225.25(b)(1). Underwrite and Deal in Mortgage-Related Securities 3. Banking data are as of December 31, 1986. 4. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits to a Limited Extent the affiliation of a member bank with "any corporation . . . engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of The Chase Manhattan Corporation, New York, New stocks, bonds, debentures, notes, or other securities . . . ." Company York, a bank holding company within the meaning of is a member bank affiliate for purposes of section 20. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

730 Federal Reserve Bulletin • September 1987 the subsidiary's commercial paper underwriting, banking within the meaning of section 4(c)(8) of the placement and dealing service did not in any year BHC Act provided Applicant limits Company's activiexceed 5 percent of its gross revenues from commer- ties as described in the CiticorplMorganlBankers Trust cial lending activity and that its underwriting, dealing Order.7 and placement activities did not exceed 5 percent of Accordingly, the Board has determined to approve the commercial paper market. In this case, Applicant the application subject to the revenue and market proposes the same quantitative limitations on Compa- share limitations proposed by Applicant and to the ny's underwriting and dealing activity in the mortgage- prudential framework of terms and conditions estabrelated securities proposed by Applicant.5For the rea- lished in the Citicorp/Morgan/Bankers Trust Order sons set forth in the Chase Order, the Board has relating to underwriting and dealing in ineligible mortdetermined that Applicant's proposal to underwrite gage-related securities, including limitations to adand deal in 1-4 family mortgage-related securities dress conflicts of interest and other possible adverse would not violate section 20 of the Glass-Steagall Act. effects addressed in that Order. The Board hereby In every application under section 4(c)(8) of the adopts and incorporates herein by reference the rea- BHC Act, the Board must find that the proposed soning and analysis contained in the Chase and Citiactivity is "so closely related to banking . . . as to be a corp/Morgan/Bankers Trust Orders. proper incident thereto." This statutory standard re- The Board's approval of this application extends quires that two separate tests be met for an activity to only to proposed activities conducted within the limibe permissible for a bank holding company. First, the tations of the Chase and CiticorplMorganlBankers Board must determine that the activity is, as a general Trust Orders, including the Board's reservation of matter, "closely related to banking." Second, the authority to establish additional limitations to ensure Board must find in a particular case that the perfor- that the subsidiary's activities are consistent with mance of the activity by the applicant bank holding safety and soundness, conflict of interest and other company may reasonably be expected to produce relevant considerations under the BHC Act. Underpublic benefits that outweigh possible adverse effects. writing and dealing in the approved securities in any In several recent decisions, the Board has deter- manner other than as approved in those Orders8 is not mined that underwriting and dealing in, to a limited within the scope of the Board's approval and is not extent, 1-4 family mortgage-related securities is close- authorized for Company. ly related to banking for purposes of section 4(c)(8). As the Board noted in the CiticorplMorganlBankers For the reasons stated in these prior decisions, the Trust Order, Congress has under consideration legisla- Board finds that Company's proposed activities which tion that would prohibit Board approval of an underare the same as those involved in these previous writing application, such as this, between March 6, decisions are closely related to banking.6 1987, and March 1, 1988. While this moratorium For the reasons set forth in the Board's Citicorp/ legislation has not yet been enacted into law, the Morgan!Bankers Trust Order, the Board also con- Board calls to Applicant's attention that it may be cludes that Applicant's proposal to engage through required by subsequent Congressional action to cease Company in underwriting and dealing in 1-4 family its underwriting and dealing activities approved in this mortgage-related securities is a proper incident to Order. The Board retains jurisdiction over the application to act to carry out the requirements of any legislation adopted by Congress that would affect Applicant's conduct of underwriting and dealing activities under this Order and the BHC Act. 5. Specifically, Applicant has agreed to limit Company's proposed activities so that the gross revenues from Company's underwriting and dealing in ineligible mortgage-related securities do not exceed 5 percent of Company's gross revenues during any two calendar year period and Company's underwriting and dealing activity does not account for more than 5 percent of the total amount of that type of security underwritten or dealt in domestically during the previous 7. Applicant has also proposed to underwrite and deal in certain year. mortgage-related securities backed by whole mortgage loans originat- 6. Citicorp!J.P. Morgan & Co. Incorporated/Bankers Trust New ed by its banking affiliates. The Board considered at length whether to York Corporation, 73 FEDERAL RESERVE BULLETIN 473 (1987). See permit an underwriting subsidiary to underwrite and deal in its also, Chemical New York Corporation, 73 FEDERAL RESERVE BULLE- affiliates' securities in its CiticorplMorganlBankers Trust Order. For TIN 616 (1987); The Chase Manhattan Corporation, 73 FEDERAL the reasons set forth in that Order, the Board has determined that RESERVE BULLETIN 607 (1987); Manufacturers Hanover Corporation, Applicant may not underwrite and deal in its affiliates' securities. 73 FEDERAL RESERVE BULLETIN 620 (1987); Security Pacific Corpo- 8. Company may also provide services that are necessary incidents ration, 73 FEDERAL RESERVE BULLETIN 622 (1987); PNC Financial to these approved activities. The incidental services should be taken Corporation, 73 FEDERAL RESERVE BULLETIN 742 (Order dated into account in computing the gross revenue and market share limits July 1, 1987); and Marine Midland Banks, Incorporated, 73 FEDERAL on the subsidiary's ineligible underwriting and dealing activities, to RESERVE BULLETIN 738 (Order dated July 14, 1987). the extent such limits apply to particular incidental activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 731 The Board's determination is subject to all of the limited extent in a mortgage lending affiliate. This conditions set forth in the Board's Regulation Y, application, like the Bankers Trust and Chase applicaincluding those in sections 225.4(d) and 225.23(b), and tions to place, underwrite and deal in commercial to the Board's authority to require modification or paper through commercial lending affiliates, does not termination of the activities of a bank holding compa- raise the issue under section 20 of the Glass-Steagall ny or any of its subsidiaries as the Board finds Act of using a bank-eligible securities underwriting necessary to assure compliance with, and to prevent affiliate for ineligible underwriting and dealing. As we evasion of, the provisions of the BHC Act and the indicated previously, we agree generally with the Board's regulations and orders issued thereunder. nature of the limitations placed upon the securities While the U.S. Court of Appeals for the Second activities approved by the Board in the Citicorp, J.P. Circuit has stayed the CiticorplMorganlBankers Trust Morgan and Bankers Trust applications. Our point of Order as well as subsequent Board orders approving difference involved the type of underwriting subsidiary the underwriting applications of a number of other proposed in those cases, an issue that does not arise in bank holding companies, the Board has determined this case. not to stay this Order. The Board notes that the court's actions were in response to a request by the Securities July 17, 1987 Industry Association (the "SIA") which was based solely on the grounds that the approved activities would be conducted by bank holding company subsid- Chemical New York Corporation iaries that are engaged principally in underwriting and New York, New York dealing in those kinds of securities that banks may underwrite and deal in directly, an issue not presented The Chase Manhattan Corporation by the instant application. In this case, the Board New York, New York notes that the SIA has not requested that the court stay, and no court has stayed, the Board's Orders Bankers Trust New York Corporation approving the applications of Chase, to underwrite, New York, New York place and deal in commercial paper or Bankers Trust, to place commercial paper,9 both through commercial Citicorp finance subsidiaries. New York, New York The transaction shall not be consummated later than three months after the effective date of this Order, Manufacturers Hanover Corporation unless such period is extended for good cause by the New York, New York Board or the Federal Reserve Bank of New York, pursuant to delegated authority. Security Pacific Corporation By order of the Board of Governors, effective Los Angeles, California July 17, 1987. Order Approving Applications to Engage in Limited Voting for this action: Chairman Volcker and Governors Underwriting and Dealing in Consumer-Receivable- Johnson, Seger, Angell, Heller, and Kelley. Related Securities JAMES MCAFEE Chemical New York Corporation, The Chase Manhat- [SEAL] Associate Secretary of the Board tan Corporation, Bankers Trust New York Corporation, Citicorp, Manufacturers Hanover Corporation, all of New York, New York, and Security Pacific Corporation, Los Angeles, California (collectively Concurring Statement by Chairman Volcker and "Applicants"), bank holding companies within the Governor Angell meaning of the Bank Holding Company Act ("BHC Act"), have each applied for the Board's approval We join with the majority of the Board in giving under section 4(c)(8) of the BHC Act and section approval for the Chase application to underwrite and 225.21(a) of the Board's Regulation Y, 12 C.F.R. deal in 1-4 family mortgage-related securities to a § 225.21(a), to engage through wholly owned subsidiaries, Chemical Securities, Inc., Chase Manhattan Securities, Inc., BT Securities Corporation, Citicorp Securities, Inc., Manufacturers Hanover Securities 9. Bankers Trust New York Corporation, 73 FEDERAL RESERVE Corporation, and Security Pacific Securities, Inc., BULLETIN 138 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

732 Federal Reserve Bulletin • September 1987 respectively, in underwriting and dealing in, on a Register 6,218 and 8,365 (1987)). Most of the public limited basis, consumer-receivable-related securities comments on the applications were favorable. Four ("CRRs"). The Board has not previously approved commenters, including the Securities Industry Associthe proposed underwriting and dealing activity in ation ("SIA"), a trade association of the investment CRRs for a bank holding company. banking industry, and the Investment Company Insti- CRRs are a new type of security, first issued in 1985, tute, a trade association of the mutual fund industry, consisting of debt obligations that are secured by or opposed one or more of the applications (collectively represent an interest in a diversified pool of loans to or the "protestants"). The protestants objected to the receivables from consumers, such as loans to individ- proposed activity for CRRs for the reasons they opuals to finance the purchase of automobiles or person- posed the types of underwriting and dealing in the al credit card accounts. Although most of the CRRs bank-ineligible securities previously approved by the underwritten to date have been collateralized by auto- Board. In addition, the SIA expressed the view that mobile receivables, CRRs backed by credit card re- the proposed activity differs from previously approved ceivables recently have been distributed. activity and could lead to adverse effects. The mechanisms and techniques applied to the In April and May, 1987, the Board authorized Applisecuritization and distribution of CRRs resemble those cants to underwrite and deal in, to a limited extent, used for mortgage-related securities. Both types of commercial paper, 1-4 family mortgage-related securisecurities generally use either a pass-through or a pay- ties, and certain municipal revenue bonds.1 In its through structure. In both structures, consumer re- Orders, the Board concluded that the underwriting ceivables from many individual borrowers are sold to subsidiaries would not be "engaged principally" in an issuing vehicle like a trust. Principal and interest underwriting or dealing in securities within the meanpayments on the underlying receivables are collected ing of section 20 of the Glass-Steagall Act,2 provided by a servicing agent, typically the originator of the they derived no more than 5 percent of their total gross receivables, and remitted to the issuer or a trustee for revenues from underwriting and dealing in ineligible the issuer. The transaction with investors is generally securities over any two year period and their understructured so that the aggregate payments expected to writing and dealing activities did not exceed 5 percent be collected on the underlying receivables will exceed of the market for each particular type of security the payment obligation to investors. The excess funds involved. The Board further found that, subject to the constitute the residual value of the pool of receivables, prudential framework of limitations established in which may be retained by the originator or servicer, those cases to address the potential for conflicts of become a reserve fund that serves as credit support or interest, unsound banking practices or other adverse recourse for an issuer of a letter of credit or bond effects, the proposed underwriting and dealing activisupporting the CRRs, or which, in some cases, may be ties were so closely related to banking as to be a sold separately to investors. proper incident thereto within the meaning of section Applicants previously received Board approval un- 4(c)(8) of the BHC Act. In the case of CRRs, the Board der section 4(c)(8) of the BHC Act for the above concluded that the record then before it did not mentioned subsidiaries (collectively the "underwriting provide a sufficient evidentiary basis for it to make the subsidiaries") to underwrite and deal in U.S. govern- formal findings required by the BHC Act, but stated ment and agency and state and municipal securities that it would reconsider the matter within 60 days of its that state member banks are authorized to underwrite Order on the basis of fuller submissions. and deal in under section 16 of the Glass-Steagall Act In every application under section 4(c)(8) of the (12 U.S.C. §§ 24 Seventh and 335) (hereinafter "bank- BHC Act, the Board must find that the proposed eligible securities"). The Applicants previously applied to engage through those underwriting subsidiaries in underwriting, dealing or placing commercial paper, 1-4 family mortgage-related securities, certain 1. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust municipal revenue bonds (including "public-owner- New York Corporation, 73 FEDERAL RESERVE BULLETIN 473 (1987); ship" industrial development bonds), and CRRs (here- Chemical New York Corporation, 73 FEDERAL RESERVE BULLETIN 616 (1987); The Chase Manhattan Corporation, 73 FEDERAL RESERVE inafter "bank-ineligible securities"). BULLETIN 607 (1987); Citicorp (commercial paper), 73 FEDERAL Notice of the applications for underwriting and RESERVE BULLETIN 618 (1987); Manufacturers Hanover Corporation, dealing activity in bank-ineligible securities including 73 FEDERAL RESERVE BULLETIN 620 (1987); Security Pacific Corporation, 73 FEDERAL RESERVE BULLETIN 622 (1987); and PNC Finan- CRRs, affording interested persons an opportunity to cial Corporation, 73 FEDERAL RESERVE BULLETIN 742 (Order dated submit comments on the proposals, has been pub- July 1, 1987). 2. Section 20 (12 U.S.C. § 377) provides that lished (51 Federal Register 42,300 (1986), 52 Federal ... no member bank shall be affiliated . . . with any . . . organization Register 1,380 (1987), 51 Federal Register 16,590 engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of (1986), 50 Federal Register 20,847 (1985), 52 Federal stocks, bonds, debentures, notes, or other securities. . . . Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 733 activity is "so closely related to banking . . . as to be a involved in conducting the proposed activity with proper incident thereto." This statutory standard re- respect to CRRs. In each case the underwriter must quires that two separate tests be met for an activity to perform substantially identical functions of evaluating be permissible for a bank holding company. First, the prepayment risk, analyzing credit and cash flow from a Board must determine that the activity is, as a general pool of numerous individuals' loans, negotiation or matter, "closely related to banking." Second, the bidding, distribution and dealing. Board must find in a particular case that the perform- In addition, banks also now directly perform some ance of the activity by the applicant bank holding of the functions involved in the proposed activity, company may reasonably be expected to produce since banks now perform the function of selecting the public benefits that outweigh possible adverse effects. consumer loans that form the pool of interests which are then sold to investors. Banks also advise issuers of A. Closely Related to Banking Analysis CRRs and assist issuers in privately placing these securities. Based on guidelines established in the National Couri- The SIA maintains there are differences between the er decision, a particular activity may be found to meet proposed activity and the previously approved securithe "closely related to banking" test if it is demon- ties underwriting and dealing activity, such as the strated that: newness of the market for CRRs and distinctions (1) banks generally have in fact provided the pro- between consumer loans and mortgages that banks are posed activity; eligible to underwrite. The Board has concluded, (2) banks generally provide services that are opera- however, that these differences do not detract signifitionally or functionally so similar to the proposed cantly from the functional and operational similarities activity so as to equip them particularly well to between the proposed activity in CRRs and activities provide the proposed activity; or conducted by banks involving bank-eligible mortgage- (3) banks generally provide services that are so related securities. In this regard, the Board notes that integrally related to the proposed activity as to banks were active in the early stages of the analogous require their provision in a specialized form.3 market for residential mortgage-related securities and have substantial expertise with regard to the charac- The Board concludes that underwriting and dealing teristics of consumer receivables that may vary from in CRRs is closely related to banking on the basis that the characteristics of mortgage loans. banks provide services that are operationally and functionally so similar to the proposed services that B. Proper Incident to Banking Analysis banking organizations are particularly well equipped to provide them. In accordance with section 16 of the In order to approve an application to engage in a Glass-Steagall Act, banks underwrite and deal in nonbanking activity under section 4(c)(8) of the Act, certain mortgage-related securities that are issued or the Board must determine that a proposed activity is a guaranteed by the United States or by agencies. In- "proper incident" to banking by determining whether cluded among these bank-eligible securities are securi- the performance of the activity by the applicant bank ties that represent interests in pools of mortgage loans holding company may reasonably be expected to profor residential housing purposes made by banks and duce public benefits, such as greater convenience, other financial institutions. These kinds of securities increased competition, or gains in efficiency, that are very similar to CRRs. Both CRRs and bank- outweigh possible adverse effects, such as undue eligible mortgage-related securities represent interests concentration of resources, decreased or unfair comin pools of loans made by financial institutions to petition, conflicts of interest, or unsound banking individuals to finance the purchase of housing or practices. 12 U.S.C. § 1843(c)(8). Based upon the facts consumer goods and services. of record and for the reasons and subject to the The techniques involved in underwriting and dealing limitations set out below, the Board finds that underin bank-eligible mortgage-related securities are the writing and dealing in CRRs may reasonably be exsame, or substantially the same, as those that would be pected to result in substantial public benefits that outweigh possible adverse effects. 1. Public Benefits 3. National Courier Association v. Board of Governors of the In CiticorplMorgan/Bankers Trust, the Board conclud- Federal Reserve System, 516 F.2d 1229, 1237 (D.C. Cir. 1975). The National Courier guidelines are not the exclusive basis for a closely ed that Applicant's bank-ineligible securities underrelated determination. Id. at 1237. The Board may consider any other writing and dealing activities would result in signifibasis that may demonstrate that the activity has a close relationship to banking. 49 Federal Register 806 (1984). cant benefits to the public in the form of increased Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

734 Federal Reserve Bulletin • September 1987 competition in the bank-ineligible securities market, For the reasons set forth above and in the Board's greater convenience to customers and gains in efficien- CiticorplMorgan/Bankers Trust Order, the Board concy in the provision of services. Applicants' proposals cludes that Applicants' proposals to engage through with respect to CRRs also represent a de novo expan- subsidiaries in underwriting and dealing in CRRs sion into a new market, and thus may be expected to would not result in a violation of section 20 of the increase competition. Public benefits in the form of Glass-Steagall Act and is closely related and a proper reduced financing costs, increased availability of ser- incident to banking within the meaning of section vices to issuers and investors, market innovation, and 4(c)(8) of the BHC Act provided Applicants limit their increased market efficiency may also be expected to underwriting subsidiaries' activities in all bank-ineligiresult. ble securities as set forth in the Citicorp!Morgan! Bankers Trust Order.5 Accordingly, the Board has 2. Adverse Effects determined to approve the proposals subject to all of the terms and conditions established in the Citicorp! In Citicorp!Morgan!Bankers Trust, the Board consid- Morgan!Bankers Trust Order. The Board hereby ered at length whether adverse effects would be asso- adopts and incorporates herein by reference the reaciated with a limited amount of underwriting and soning and analysis contained in the Citicorp!Morgan! dealing in bank-ineligible 1-4 family mortgage-related Bankers Trust Order. The Board's approval in this securities, municipal revenue bonds and commercial case is limited to underwriting and dealing in securities paper performed by a bank holding company subsid- representing an interest in or backed by a diversified iary under the prudential framework adopted by the pool of loans to or receivables from individuals for the Board in the Order. The Board concluded that under purpose of financing the purchase of consumer goods the safeguards imposed in those cases there was no and services. evidence that the activity would be likely to result in The Board's approval of these proposals extends any significant adverse effects. Although the market only to activities conducted within the limitations of for CRRs is relatively new, there has not been any section 225.25(b)(16) of the Board's Regulation Y and evidence that underwriting and dealing in CRRs would the Citicorp!Morgan!Bankers Trust Order, including involve greater risk or other adverse effects than the Board's reservation of authority to establish addiunderwriting and dealing in the bank-ineligible securi- tional limitations to ensure that the subsidiaries activities previously approved by the Board, or that the ties are consistent with safety and soundness, conflict possible adverse effects from underwriting and dealing of interest and other relevant considerations under the in the CRRs type of security would be substantially BHC Act. Underwriting and dealing in the approved different from those the Board identified and analyzed securities in any manner other than as approved in that with respect to the previously approved bank-ineligi- Order6 is not within the scope of the Board's approval ble securities. In view of the similarity between the and is not authorized for the underwriting subsidiaries. securities involved in these proposals and the bankineligible 1-4 family mortgage-related securities involved in activities the Board has previously approved, and for the reasons set forth in the Citicorp/ ing standards designed to eliminate high risk accounts); whether the originators have low levels of delinquency and loss performance; the Morgan/Bankers Trust Order, the Board believes it is structural characteristics of the transaction; and the credit enhanceappropriate to require the proposed activity to be ment to protect investors. "Asset-Backed Securitization CreditReconducted in accordance with the same requirements view," Standard & Poor's CreditWeek (March 16, 1987). 5. For the reasons set forth in the Citicorp!Morgan/Bankers Trust established in that Order. These include the require- Order, the Board concludes that the Applicants' proposals to underment that the securities be rated as investment quality write and deal in CRRs through their underwriting subsidiaries would not result in a violation of the Glass-Steagall Act, provided these (i.e., in one of the top four categories) by a nationally subsidiaries derive no more than 5 percent of their total gross recognized rating agency.4 revenues from underwriting and dealing in the approved bank-ineligible securities, including CRRs, over any two-year period, and their underwriting and dealing activities do not exceed 5 percent of the market for each particular type of security involved during the previous calendar year. With respect to the market limitation estab- 4. The Board notes that Standard & Poor's has indicated that in lished in that Order, the Board believes it is appropriate to treat CRRs assessing CRRs it would rely on: the ability of the pool to generate and 1-4 family mortgage-related securities as a single category for the sufficient cash flow so that holders are paid principal and interest as time being, in view of the similarity between CRRs and these scheduled; the historical performance of the portfolio in relation to mortgage-related securities. industry or product norms and portfolio characteristics (such as 6. The underwriting subsidiaries may also provide services that are delinquency, loss and repayment statistics, audit procedures and necessary incidents to the approved activities. The incidental services accounting systems); the originating and servicing operations and the should be taken into account in computing the gross revenue and development and maintenance of stringent lending criteria and credit market share limits on the underwriting subsidiaries' ineligible underpolicies; the geographic diversity in the pool to reduce risks associated writing and dealing activities, to the extent such limits apply to with regional economic downturns; the pool selection (with underwrit- particular incidental activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 735 As the Board noted in the CiticorplMorganlBankers er, for the reasons set forth in our dissenting statement Trust Order, Congress has under consideration legisla- in the CiticorplMorganlBankers Trust Order, we retion that would prohibit Board approval of underwrit- gret we are unable to join the majority in approving ing applications, such as these, between March 6, 1987 these applications to engage in the activity through and March 1, 1988. While this moratorium legislation government securities affiliates. has not yet been enacted into law, the Board calls to Applicants' attention that they may be required by July 14, 1987 subsequent Congressional action to cease their underwriting and dealing activities approved in this Order. The Board retains jurisdiction over the applications to Manufacturers National Corporation act to carry out the requirements of any legislation Detroit, Michigan adopted by Congress that would affect Applicants' conduct of underwriting and dealing activities under Order Approving Expansion of Activities of Trust this Order and the BHC Act. Company to Include Deposit-Taking and Consumer The Board's determination is subject to all of the Lending conditions set forth in the Board's Regulation Y, including those in sections 225.4(d) and 225.23(b), and Manufacturers National Corporation, Detroit, Michito the Board's authority to require modification or gan, a bank holding company within the meaning of termination of the activities of a bank holding compa- the Bank Holding Company Act (12 U.S.C. § 1841 ny or any of its subsidiaries as the Board finds et seq.) (the "BHC Act" or "Act"), has applied for necessary to assure compliance with, and to prevent the Board's approval under section 4(c)(8) of the Act evasion of, the provisions of the BHC Act and the (12 U.S.C. § 1843(c)(8)) and section 225.23(a)(1) of the Board's regulations and orders issued thereunder. Board's Regulation Y (12 C.F.R. § 225.23(a)(1)), to The Board notes that the SIA has sought judicial expand the activities of its subsidiary, Manufacturers review in the U.S. Court of Appeals for the Second National Trust Company of Florida, North Palm Circuit of the CiticorplMorganlBankers Trust Order as Beach, Florida ("Company"), to include the accepwell as subsequent Board Orders approving the under- tance of savings, time, and demand deposits and the writing applications of Chemical, Chase, Manufactur- making of consumer loans. These activities have been ers Hanover and Security Pacific to which this Order previously determined by the Board to be closely pertains. The Board notes that the court has stayed the related to banking. 12 C.F.R. § 225.25(b)(1); U.S. effectiveness of the Board Orders pending judicial Trust Corporation, 70 FEDERAL RESERVE BULLETIN review. In light of the pendency of this litigation, the 371 (1984). Board has determined that this Order should be stayed Notice of the application, affording an opportunity for such time as the stay of the prior decisions is for interested persons to comment, has been published effective. (52 Federal Register 9,541 (1987)). The time for filing By order of the Board of Governors, effective comments and views has expired, and the Board has July 14, 1987. considered the application and all comments received in light of the factors set forth in section 4(c)(8) of the Voting for this action: Governors Johnson, Seger, and Act (12 U.S.C. § 1843(c)(8)). Kelley. Voting against this action: Chairman Volcker and Applicant, with total consolidated assets of $7.7 Governor Angell. Absent and not voting: Governor Heller. billion,1 is the fourth largest commercial banking organization in Michigan. Company is a national banking JAMES MCAFEE organization chartered by the Office of the Comptrol- [SEAL] Associate Secretary of the Board ler of the Currency ("OCC") in 1984 as a limitedpurpose trust company. It engages in activities nor- Dissenting Statement of Chairman Volcker and mally performed by a trust company, such as the Governor Angell provision of fiduciary, investment advisory, agency and custody services. Its original charter did not As a matter of policy, we believe that bank holding authorize Company to engage in deposit-taking or companies should be permitted to underwrite and deal lending activities. in consumer-receivable-related securities within the limitations established by the Board, and we would approve these proposals in subsidiaries other than subsidiaries whose predominant activity was underwriting and dealing in government securities. Howev- 1. Asset data are as of March 31, 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Federal Reserve Bulletin • September 1987 Company now proposes to expand its trust company deposit-taking and consumer lending activities,6 the activities to offer various forms of savings, time, and Board considered a 1984 Florida statute that prohibits demand deposits. Company also intends to offer loans the acquisition of nonbank banks in Florida.7 The to individuals for personal, family, household, or statute generally prevents a bank holding company, charitable purposes. Company has received the per- whether headquartered in Florida or outside Florida, mission of the OCC to engage in the proposed expand- from acquiring an institution located in Florida that ed list of activities. takes deposits insured by the FDIC unless the institu- Applicant has stated that because Company will not tion qualifies as a "bank" under the BHC Act. In engage in the business of making commercial loans, addition, the statute prohibits a nonbanking company Company will not be a "bank" as defined in section 2 from acquiring a bank in Florida unless the company is of the BHC Act,2 and thus Board approval of the a bank holding company. In the Chemical Order, the application is not barred by the interstate banking Board concluded that the Florida statute, as it applies limitations of the Douglas Amendment to the BHC to bank holding companies, was not consistent with Act.3 the Commerce Clause of the U.S. Constitution and In approving an application by U.S. Trust Corpora- was not authorized under the Douglas Amendment to tion to expand the powers of its Florida trust company the BHC Act. Thus, for the reasons explained in the subsidiary to include certain deposit-taking and con- Board's Order in Chemical, the Board concludes that sumer lending activities, the Board concluded that a the Florida statute does not bar Board approval of this bank holding company could acquire, on an interstate application under the BHC Act.8 basis, a nationally chartered nonbank bank that would accept demand deposits but not make commercial Limitations on Nonbank Banks loans.4 The Board's determination has been upheld in a decision by the U.S. Court of Appeals for the Applicant intends to operate Company as a nonbank Eleventh Circuit.5 bank in accordance with the Board's U.S. Trust decision. As in the U.S. Trust case, the Board believes it is State Law Considerations appropriate to take action to ensure that Company is not used as a vehicle for evasion of the Act's bank In approving an application by Chemical New York definition. In U.S. Trust, the Board conditioned its Corporation ("Chemical"), to expand the powers of approval on the following limitations and is likewise its Florida trust company subsidiary to include certain requiring them in this proposal: 1. Applicant will not operate the demand-deposit taking activities of the nonbank bank in tandem with any other subsidiary or other financial institution; 2. The BHC Act defines the term "bank" to include any institution 2. Applicant will not link in any way the demand chartered under the laws of the United States or any state that accepts deposit and commercial lending services that dedeposits that the depositor has a legal right to withdraw on demand and that engages in the business of making commercial loans. fine a bank under the Act; and 12 U.S.C. § 1841(c). An institution that is chartered as a bank but that 3. The nonbank bank will not engage in any does not perform one of the two essential functions required for transactions with affiliates, other than the pay- "bank" status under the BHC Act has been referred to as a "nonbank bank." ment of dividends to Applicant or the infusion of 3. 12 U.S.C. § 1842(d). The Douglas Amendment prohibits Board capital by Applicant into the nonbank bank, withapproval of an application by a bank holding company to acquire a out the Board's approval. bank outside the holding company's home state unless the state in which the bank is located has by statute authorized the acquisition. The Douglas Amendment applies only to the acquisition of banks as In the Board's view, these conditions preclude the defined in the Act and has no applicability in the case of nonbanking companies. Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 47, type of linked or integrated operations that could 49 (1980). otherwise render Company a bank for purposes of the 4. U.S. Trust Corporation, 70 FEDERAL RESERVE BULLETIN 371 Act. On the basis of Applicant's proposed adherence (1984) ("U.S. Trust"). Applicant states that Company's excess funds will be invested in investment securities permitted for national banks under 12 U.S.C. section 24 (seventh). Applicant further has committed that Company will not channel funds into any commercial lending affiliate of Company. Accordingly, it appears that Company will not engage in the business of making commercial loans, either directly or indirectly. 6. Chemical New York Corporation, 73 FEDERAL RESERVE BULLE- 5. Florida Dept. of Banking & Finance v. Board of Governors, 760 TIN 731 (Order dated May 29, 1987). F.2d 1135 (11th Cir. 1985), vacated and remanded for further consid- 7. Fla. Stat. Ann. § 658.296 (West 1984 and Supp. 1987). eration in light of Dimension U.S , 106 S. Ct. 875 (1986), on 8. The Board notes that Chemical brought an action in the U.S. remand, 800 F.2d 1534 (11th Cir. 1986), cert, denied, 55 U.S.L.W. District Court for the Northern District of Florida on June 1, 1987, 3706 (U.S. April 21, 1987) (No. 86-1024). challenging the constitutionality of the Florida law. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 737 to these conditions and for the reasons set out more FDIC-insured banks.10 While this legislation has not fully in the Board's decision in U.S. Trust, the Board yet been enacted, the Board calls to Applicant's concludes that Company will not be a bank as that attention that it may be required by subsequent Conterm is defined in the Act. gressional action to limit the activities of Company. Applicant has requested Board approval pursuant to The Board retains jurisdiction over the application to the third U.S. Trust condition to engage in certain act to carry out the requirements of any legislation transactions with affiliates. Applicant, through its lead adopted by Congress that would affect Company's bank, Manufacturers National Bank, currently pro- activities. vides certain services to Company on an arm's-length Based upon the foregoing and other facts of record, basis, and has requested that it be permitted to contin- the Board has determined that the Florida statute, as it ue to provide these services upon consummation of applies to bank holding companies seeking to acquire the proposal. They involve securities custodial ar- nonbank banks in Florida, is inconsistent with the rangements, investment advisory services, as well as Commerce Clause and is not a bar to approval of this certain internal support services. These services are application, and that the balance of public interest conducted in such a manner that customers of Compa- factors the Board is required to consider under section ny would not have direct contact with Applicant or 4(c)(8) of the Act is favorable. Accordingly, the appliany of its affiliates providing the services. cation is hereby approved. Consummation of the pro- In the Chemical proposal, the Board permitted posal is subject to the conditions set forth in this Order Chemical to conduct these activities. For the reasons and the conditions set forth in the Board's Regulation stated in the Board's Chemical Order, the Board has Y, including those in sections 225.4(d) and 225.23(b). In addition, Company may not engage directly or determined that it is appropriate to permit Applicant to indirectly in any activity other than those explicitly conduct these activities. approved by the Board in this Order.11 The Board finds no evidence that consummation of this proposal, subject to the limitations and conditions Approval is also subject to the Board's authority to described above, would result in any conflicts of require modification or termination of the activities of interest, unfair competition, unsound banking prac- the holding company or any of its subsidiaries as the tices or other adverse effects. Due to the de novo Board finds necessary to assure compliance with the nature of this proposal, there will not be any decrease provisions and purposes of the Act and the Board's in competition. Indeed, consummation of the proposal regulations and orders issued thereunder, or to premay reasonably be expected to result in increased vent evasion thereof. The activity shall be commenced competition. not later than three months after the effective date of this Order, unless such period is extended for good Need for Congressional Action cause by the Board or by the Federal Reserve Bank of Chicago, pursuant to delegated authority. In accord- The Board has previously indicated its reluctance to ance with the provisions of section 225.23(b)(iii) of approve nonbank bank acquisitions in view of the Regulation Y, the Board's approval is required for potential presented by such acquisitions to alter signif- additional acquisitions by Applicant of nonbank banks icantly the nation's banking structure without Con- or for the establishment of offices of Company located gressional action on the underlying policy issues.9 For in a state other than Florida. the reasons stated in the Board's previous orders, the By order of the Board of Governors, effective Board continues to believe that Congressional action July 1, 1987. to close the nonbank bank loophole is imperative. The fact that the Board is required by the technical aspects Voting for this action: Chairman Volcker and Governors of the bank definition in the BHC Act to approve this Seger, Angell, and Kelley. Absent and not voting: Governors Johnson and Heller. application should not be construed as encouragement to Applicant to consummate this proposal or to others to pursue similar acquisitions. JAMES MCAFEE In this regard, the Board notes that the United [SEAL] Associate Secretary of the Board States Senate has recently passed legislation that would eliminate the nonbank bank loophole in the BHC Act by redefining the term "bank" to include 10. S.790 (The Competitive Equality Banking Act of 1987), 100th Cong., 1st Sess. (1987). 11. In this regard, the Board notes that because Company is not considered a bank under the BHC Act, the provisions of section 225.22(d)(1) of Regulation Y would not be applicable to exempt the acquisition or activities of Company from Board approval under 9. See, e.g., U.S. Trust, supra. section 4 of the Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin • September 1987 Marine Midland Banks, Incorporated (1987)). The Securities Industry Association ("SIA"), Buffalo, New York a trade association of the investment banking industry, opposes the application for the reasons stated in its Order Conditionally Approving Application to earlier protests to similar applications by Citicorp, J.P. Underwrite and Deal in Certain Securities to a Morgan & Co. Incorporated and Bankers Trust New Limited Extent York Corporation. The Bank Capital Markets Association commented in favor of the application. Marine Midland Banks, Incorporated, Buffalo, New The Board has previously determined that under- York, a bank holding company within the meaning of writing and dealing in bank-eligible securities is closely the Bank Holding Company Act, 12 U.S.C. § 1841 related to banking under section 4(c)(8) of the BHC et seq. ("BHC Act"), and parent bank holding compa- Act. 12 C.F.R. § 225.25(b)(16). In addition, the Board nies: The Hongkong and Shanghai Banking Corpora- concludes that Company's performance of this activity tion, Hong Kong, B.C.C.; Kellett N.V., Curacao, may reasonably be expected to result in public benefits Netherlands Antilles; and HSBC Holdings B.V., Am- which would outweigh adverse effects under the propsterdam, The Netherlands; have applied for the er incident to banking standard of section 4(c)(8) of the Board's approval under section 4(c)(8) of the BHC Act BHC Act. Accordingly, Applicants may engage and section 225.21(a) of the Board's Regulation Y, through Company in underwriting and dealing in bank- 12 C.F.R. § 225.21(a), to engage through a wholly eligible securities to the extent that state member owned subsidiary, Marine Midland Capital Markets banks are authorized by section 16 of the Glass- Corporation ("Company"), in underwriting and deal- Steagall Act. ing in, on a limited basis, the following securities: On April 30, the Board approved applications by (1) municipal revenue bonds, including certain in- Citicorp, J.P. Morgan and Bankers Trust to underdustrial development bonds; write and deal in, through their bank-eligible securities (2) residential mortgage-related securities; underwriting subsidiaries, 1-4 family mortgage- (3) consumer-receivable-related securities ("CRRs"); backed securities, municipal revenue bonds (and cerand tain industrial development bonds) and (except for (4) commercial paper.1 Citicorp) commercial paper.3 The Board concluded that the underwriting subsidiaries would not be "en- In addition, Applicants have applied for approval gaged principally" in underwriting or dealing in securiunder section 4(c)(8) of the BHC Act for Company to ties within the meaning of section 20 of the Glassunderwrite and deal in U.S. government and agency Steagall Act4 provided they derived no more than 5 and state and municipal securities that state member percent of their total gross revenues from underwriting banks are authorized to underwrite and deal in under and dealing in the approved securities over any twosection 16 of the Banking Act of 1933 (the "Glass- year period and their underwriting and dealing activi- Steagall Act") (12 U.S.C. § 24 Seventh) (hereinafter ties did not exceed 5 percent of the market for each "bank-eligible securities"). Company would engage in particular type of security involved. The Board further the proposed underwriting and dealing activities found that, subject to the prudential framework of through offices in New York, New York. limitations established in those cases to address the Marine Midland Banks, Incorporated, with consoli- potential for conflicts of interest, unsound banking dated assets of $22.2 billion,2 is the nineteenth largest practices or other adverse effects, the proposed underbanking organization in the nation. It operates two writing and dealing activities were so closely related to banking subsidiaries in New York and Delaware and banking as to be a proper incident thereto within the engages in a broad range of permissible nonbanking activities in the United States and abroad. Notice of the application, affording interested per- 3. CiticorplMorganlBankers Trust, supra. The Board subsequently sons an opportunity to submit comments on the pro- approved similar applications by a number of other bank holding companies. Chemical New York Corporation, 73 FEDERAL RESERVE posal, has been published (52 Federal Register 17,829 BULLETIN 616 (1987); The Chase Manhattan Corporation, 73 FEDER- AL RESERVE BULLETIN 607 (1987); Citicorp (to underwrite and deal in commercial paper), 73 FEDERAL RESERVE BULLETIN 618 (1987); Manufacturers Hanover Corporation, 73 FEDERAL RESERVE BULLE- TIN 620 (1987); Security Pacific Corporation, 73 FEDERAL RESERVE 1. Applicant proposes to limit Company's underwriting and dealing BULLETIN 622 (1987); and PNC Financial Corporation, 73 FEDERAL activity in these securities in the same manner and to the same extent RESERVE BULLETIN 742 (Order dated July 1, 1987). as proposed by Bankers Trust in its application to underwrite and deal 4. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits in these securities. See Citicorp, J.P. Morgan & Co. Incorporated, the affiliation of a member bank with "any corporation . . . engaged Bankers Trust New York Corporation, 73 FEDERAL RESERVE BULLE- principally in the issue, flotation, underwriting, public sale, or distri- TIN 473, 477 n.ll (1987). bution at wholesale or retail or through syndicate participation of 2. Banking data are as of December 31, 1986. stocks, bonds, debentures, notes, or other securities . . . ." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 739 meaning of section 4(c)(8) of the BHC Act. On July 14, tion that would prohibit Board approval of an underthe Board subsequently decided that underwriting and writing application, such as this, between March 6, dealing in CRRs is so closely related to banking as to 1987 and March 1, 1988. While this moratorium legislabe a proper incident thereto within the meaning of tion has not yet been enacted into law, the Board calls section 4(c)(8) of the BHC Act.5 to Applicants' attention that they may be required by For the reasons set forth in the Board's Citicorp! subsequent Congressional action to cease their under- Morgan!Bankers Trust and Chemical Orders, the writing and dealing activities approved in this Order. Board concludes that Applicants' proposal to engage The Board retains jurisdiction over the application to through Company in underwriting and dealing in mu- act to carry out the requirements of any legislation nicipal revenue bonds,6 1-4 family mortgage-related adopted by Congress that would affect Applicants' securities, commercial paper and consumer-receiv- conduct of underwriting and dealing activities under able-related securities would not result in a violation of this Order and the BHC Act. section 20 of the Glass-Steagall Act and is closely The Board's determination is subject to all of the related and a proper incident to banking within the conditions set forth in the Board's Regulation Y, meaning of section 4(c)(8) of the BHC Act provided including those in sections 225.4(d) and 225.23(b), and Applicants limit Company's activities as provided in to the Board's authority to require modification or those Orders. Accordingly, the Board has determined termination of the activities of a bank holding compato approve the underwriting application subject to all ny or any of its subsidiaries as the Board finds of the terms and conditions established in the Citicorp! necessary to assure compliance with, and to prevent Morgan!Bankers Trust and Chemical Orders. The evasion of, the provisions of the BHC Act and the Board hereby adopts and incorporates herein by refer- Board's regulations and orders issued thereunder. ence the reasoning and analysis contained in those The Board notes that the SIA has sought judicial Orders. review in the U.S. Court of Appeals for the Second The Board's approval of this application extends Circuit of the Citicorp!Morgan/Bankers Trust Order as only to activities conducted within the limitations of well as subsequent Board orders approving the undersection 225.25(b)(16) of the Board's Regulation Y and writing applications of a number of other bank holding the Citicorp!Morgan!Bankers Trust and Chemical Or- companies. The Board notes that the court has stayed ders, including the Board's reservation of authority to the effectiveness of the Board Orders pending judicial establish additional limitations to ensure that the sub- review. In light of the pendency of the litigation, the sidiary's activities are consistent with safety and Board has determined that this Order should be stayed soundness, conflict of interest and other relevant for such time as the stay of the prior decisions is considerations under the BHC Act. Underwriting and effective. dealing in the approved securities in any manner other By order of the Board of Governors, effective than as approved in those Orders7 is not within the July 14, 1987. scope of the Board's approval and is not authorized for Company. Voting for this action: Governors Johnson, Seger, and As the Board noted in the Citicorp/Morgan/Bankers Kelley. Voting against this action: Chairman Volcker and Governor Angell. Absent and not voting: Governor Heller. Trust Order, Congress has under consideration legisla- JAMES MCAFEE [SEAL] Associate Secretary of the Board 5. Chemical New York Corporation, The Chase Manhattan Corporation, Bankers Trust New York Corporation, Citicorp, Manufacturers Hanover Corporation, and Security Pacific Corporation, 73 Dissenting Statement of Chairman Volcker and FEDERAL RESERVE BULLETIN 731 (Order dated July 14, 1987) (hereinafter the "Chemical Order"). Governor Angell 6. The industrial development bonds approved in those applications and for Applicants in this case are only those tax exempt bonds in which the governmental issuer, or the governmental unit on behalf For the reasons set forth in our dissenting statement in of which the bonds are issued, is the owner for federal income tax the Citicorp!Morgan!Bankers Trust Order and the Orpurposes of the financed facility (such as airports, mass commuting der approving the applications of a number of bank facilities, and water pollution control facilities). Without further approval from the Board, Company may underwrite or deal in only holding companies to engage in underwriting and these types of industrial development bonds. dealing in consumer-receivable-related securities, we 7. Company may also provide services that are necessary incidents regret we are unable to join the majority in approving to these approved activities. The incidental services should be taken into account in computing the gross revenue and market share limits this application. on the underwriting subsidiaries' ineligible underwriting and dealing activities, to the extent such limits apply to particular incidental activities. July 14, 1987 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Federal Reserve Bulletin • September 1987 MNC Financial, Inc. noted, however, that it would not require divestiture Baltimore, Maryland of all nonbanking operations if, within that two-year interval, Applicant secured approval under section Order Approving Application to Retain Insurance 4(c)(8) of the BHC Act to retain any of Company's Agency Activities previously grandfathered activities. Soon thereafter, Applicant filed this application for approval to retain MNC Financial, Inc., Baltimore, Maryland, a regis- Company's and ASI's general insurance agency activitered bank holding company within the meaning of the ties pursuant to Title VI of the Garn-St Germain Bank Holding Company Act ("BHC Act") (12 U.S.C. Depository Institutions Act of 1982 ("Garn-St Ger- § 1841 et seq.), has applied for the Board's approval main Act"), codified at sections 4(c)(8)(A) through (G) under section 4(c)(8)(D) of the BHC Act (12 U.S.C. of the BHC Act. (12 U.S.C. §§ 1843(c)(8)(A) through § 1843(c)(8)(D)) and section 225.25(b)(8)(iv) of Regula- (G)). tion Y (12 C.F.R. § 225.25(b)(8)(iv)) to retain the in- Notice of this application, affording opportunity for surance agency activities of its subsidiary, American interested persons to submit comments, has been duly Security Corporation, Washington, D.C. ("Compa- published (52 Federal Register 9,215 (1987)). The time ny"), which is also a bank holding company. These for filing comments has expired, and the Board has activities primarily include comprehensive lines of considered the application and all comments received3 property and casualty insurance and exclude general in light of the public interest factors set forth in section life insurance sales. Company currently conducts 4(c)(8) of the BHC Act. these insurance activities in the District of Columbia Title VI of the Garn-St Germain Act amended the and Virginia through an unincorporated division, and nonbanking prohibitions in section 4 of the BHC Act in Maryland, through a separate subsidiary corpora- to provide that insurance agency and underwriting tion, American Security Insurance Corporation of activities are not permissible for bank holding compa- Maryland ("ASI"). nies. Title VI provided seven specific exceptions to Applicant is the largest commercial banking organi- this prohibition, however, including grandfather rights zation in Maryland with 19.4 percent of the total under one of the exemptions for "any insurance deposits in commercial banks in that state. Applicant's agency activity which was engaged in by the bank lead bank subsidiary operates 203 branch offices in holding company or any of its subsidiaries on May 1, Maryland and controls total domestic deposits of $5.2 1982" (hereinafter "exemption D"), 12 U.S.C. billion. Applicant, through Company, is the second § 1843(c)(8)(D).4 Applicant claims that Company and largest commercial banking organization in the District ASI were engaged lawfully in general insurance agenof Columbia, with 24.7 percent of the total deposits in cy activities on May 1, 1982, the applicable grandfacommercial banks there. Applicant's sole bank subsid- ther date under exemption D, and that Company and iary in the District of Columbia operates 31 branches ASI therefore may be permitted to continue these and controls total domestic deposits of $2.5 billion.1 insurance agency operations even after their recent Applicant also engages through wholly owned subsid- acquisition by Applicant. iaries in various nonbanking activities which the Board Protestants argue that Company and ASI were not previously has determined are permissible for bank engaged lawfully in insurance on May 1, 1982, because holding companies. they never received formal Board approval pursuant On February 13, 1987, the Board approved Appli- to an application filed under section 4(c)(8) of the BHC cant's application under section 3 of the BHC Act to Act. Protestants argue that exemption D extends only acquire Company, subject to the condition that it to credit-related property and casualty insurance, and divest within two years certain otherwise impermissi- limits subsequent activities to those states where such ble nonbanking activities previously conducted by Company pursuant to grandfather privileges granted under section 4(a)(2) of the BHC Act.2 The Board 3. The Board received comments in opposition to Applicant's proposal from the Independent Insurance Agents of America, Inc.; National Association of Life Underwriters; National Association of Professional Insurance Agents; National Association of Casualty & Surety Agents; and National Association of Surety Bond Producers 1. State deposit data are as of December 31, 1986, and exclude ("Protestants"). Applicant's credit card bank in Delaware. 4. On October 3, 1986, the Board amended Regulation Y to include 2. Maryland National Corporation, 73 FEDERAL RESERVE BULLE- the insurance agency activities delineated in the seven exemptions to TIN 310 (1987). The Board concluded that grandfather rights under the Garn-St Germain Act in the list of activities that the Board has section 4(a)(2) of the BHC Act accrue only to one-bank holding found to be closely related to banking within the meaning of section companies, like Company, that first became subject to the BHC Act 4(c)(8) of the Act and thus permissible for bank holding companies. 51 by enactment of the 1970 Amendments, and that MNC is not such a Federal Register 36,201 (1986), codified at 12 C.F.R. § 225.25(b)(8) company. 12 U.S.C. § 1843(a)(2). (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 741 insurance was conducted on the grandfather date. In conducted by Applicant or other entities within Appliany event, Protestants contend that exemption D cant's organization. Company and ASI therefore may rights expire upon the acquisition of a grandfathered retain their exemption D grandfather privileges after company by another bank holding company. acquisition by Applicant.8 Eligibility under Exemption D. The record demon- Geographic Scope of Activities. Under the terms of strates that on May 1, 1982, Company and AS I were section 4(c)(8)(D),9 however, Company and ASI may engaged lawfully in general insurance agency activi- continue to conduct grandfathered insurance activities ties. Company and ASI therefore meet the literal only in Company's home state, the District of Columqualifications for grandfather rights under exemption bia, the adjacent states of Maryland and Virginia, and D. Company began conducting a general insurance any other state in which either Company or ASI was agency in the District of Columbia and Virginia in engaged in insurance activities on May 1, 1982. Con- 1957, and in Maryland in 1978. In 1976, the Board trary to Applicant's view, then, the scope of grandfadetermined that Company was entitled to conduct ther authority granted to Company and ASI does not these activities by virtue of grandfather rights granted extend nationwide.10 The facts of record show that under section 4(a)(2) of the BHC Act to bank holding Company and ASI have confined their grandfathered companies, such as Company, which were brought insurance operations to the District of Columbia, within the coverage of the BHC Act by enactment of Virginia and Maryland, and that neither Company or the 1970 Amendments. 12 U.S.C. § 1843(a)(2).5 ASI, ASI has ever received approval from the insurance Company's insurance subsidiary in Maryland, was commission in any other state to conduct insurance established pursuant to section 4(c)(ll) of the BHC operations. Because Company and ASI were autho- Act, which allows any banking organization that quali- rized on May 1, 1982, to engage in insurance only in fies for grandfather rights under the 1970 Amendments the District of Columbia, Virginia and Maryland, they to establish a subsidiary company, as long as the new may not now expand their grandfathered insurance company engages only in activities permitted for its activities under exemption D to other states. grandfathered parent organization. 12 U.S.C. Proper Incident to Banking. In considering any § 1843(c)(ll). The insurance activities of Company application under section 4(c)(8) of the BHC Act, the and ASI in Virginia, Maryland and the District of Board must determine whether the proposed activity Columbia therefore are eligible for exemption D grand- is a proper incident to banking; that is, whether father privileges. As the Board determined in the performance of the activity can reasonably be expect- Sovran case,6 neither the language of exemption D nor ed to produce benefits to the public that outweigh its legislative history supports Protestants' contention possible adverse effects. As a result of Applicant's that grandfather privileges under exemption D are proposal, consumers in the District of Columbia, Virlimited to credit-related property and casualty insur- ginia and Maryland would benefit from ongoing access ance or to activities previously approved by Board to Company and ASI as a source of insurance products order under section 4(c)(8) of the BHC Act. and services. The continuation of grandfathered oper- Retention of Grandfather Privileges. In its Sovran ations by Company and ASI thus would serve to decision, the Board also concluded that any company that is entitled to engage in insurance agency activities under exemption D does not lose those rights upon its acquisition by another bank holding company, provid- 8. The Board incorporates herein by reference the findings and ed that the grandfathered entity retains its separate analysis in its Sovran decision regarding the types of insurance agency activities covered by exemption D and regarding the retention of corporate structure, and its insurance activities are not grandfather privileges under exemption D following acquisition of the conducted by other companies within the acquiring grandfathered company by another banking organization. banking organization.7 In the instant case, following 9. Specifically, exemption D limits the geographic scope of permitted activities to: its acquisition by Applicant, Company would remain sales of insurance at new locations of the same bank holding company or the as a separate bank holding company, and ASI would same subsidiary or subsidiaries with respect to which insurance was sold on May 1, 1982, or approved to be sold on or before May 1, 1982, if such new remain a separate nonbank subsidiary thereof, and locations are confined to the State in which the principal place of business of their grandfathered insurance activities would not be the bank holding company is located, any State or States immediately adjacent to such State, and any State or States in which insurance activities were conducted by the bank holding company or any of its subsidiaries on May 1, 1982, or were approved to be conducted by the bank holding company or any of its subsidiaries on or before May 1, 1982. 10. This conclusion is unaltered by the absence of a geographic limitation in the Board's July 21, 1976 Order regarding Company's 5. See American Security Corporation, Order dated July 21, 1976. section 4(a)(2) grandfather privileges. Applicant has applied to retain 6. Sovran Financial Corporation, Order dated June 29, 1987. the insurance activities under section 4(c)(8)(D), which limits the 7. See also, BankAmerica Corporation, 69 FEDERAL RESERVE geographic scope of the activities conducted. As noted, Applicant's BULLETIN 568 (1983); Fuji Bank, Limited, 69 FEDERAL RESERVE application to retain Company's insurance activities under section BULLETIN 50 (1983). 4(a)(2) was denied by the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin • September 1987 maintain existing business relationships and expecta- certain industrial development bonds, and commercial tions, and also would preserve Company and ASI as paper.1 viable competitors in the insurance agency industry. In addition, Applicant has applied under section 4(c) Conversely, there is no evidence to suggest that Appli- (8) of the BHC Act for Company to underwrite and cant's proposal would result in undue concentration of deal in U.S. government and agency and state and resources, unfair or decreased competition, conflicts municipal securities that state member banks are auof interest or other adverse effects. The balance of thorized to underwrite and deal in under section 16 of public interest factors therefore is favorable in terms the Banking Act of 1933 (the "Glass-Steagall Act") of Company's and ASI's ability to continue their (12 U.S.C. §§ 24 Seventh and 335) (hereinafter "eligigrandfathered insurance operations in the District of ble securities"). Company would engage in the pro- Columbia, Virginia and Maryland following acquisi- posed underwriting and dealing activities through oftion by Applicant. fices in Pittsburgh. Based on the foregoing and other facts of record, the Applicant, with consolidated assets of $27.0 billion,2 Board has determined that the application under sec- is the twenty-second largest banking organization in tion 4 should be, and hereby is, approved. This the nation. It operates 17 subsidiary banks in Pennsyldetermination is subject to all of the conditions set vania, Kentucky, Indiana and Delaware and engages forth in Regulation Y, and provided that the insurance in a broad range of permissible nonbanking activities activities are conducted solely by Company and ASI, in the United States. which must remain as independent subsidiaries of Notice of the application, affording interested per- Applicant. It is also subject to the Board's authority to sons an opportunity to submit comments on the prorequire such modifications or termination of activities posal, has been published (52 Federal Register 13,757 of the bank holding company or any of its subsidiaries (1987)). The Board received two comments on the as the Board finds necessary to assure compliance proposal. The Securities Industry Association with, and prevent evasions of, the provisions and ("SIA"), a trade association of the investment bankpurposes of the Act and the Board's regulations and ing industry, opposes the application for the reasons orders issued thereunder. stated in its earlier protests to similar applications by By order of the Board of Governors, effective Citicorp, J.P. Morgan & Co. Incorporated and Bank- July 2, 1987. ers Trust New York Corporation. The Bank Capital Markets Association commented in favor of the appli- Voting for this action: Chairman Volcker and Governors cation. Johnson, Seger, Angell, and Kelley. Absent and not voting: The Board has previously determined that under- Governor Heller. writing and dealing in eligible securities is closely related to banking under section 4(c)(8) of the BHC JAMES MCAFEE Act. 12 C.F.R. § 225.25(b)(16). In addition, the Board [SEAL] Associate Secretary of the Board concludes that Company's performance of this activity may reasonably be expected to result in public benefits which would outweigh adverse effects under the proper incident to banking standard of section 4(c)(8) of the PNC Financial Corp BHC Act. Accordingly, Applicant may engage Pittsburgh, Pennsylvania through Company in underwriting and dealing in eligible securities to the extent that state member banks Order Conditionally Approving Application to are authorized by section 16 of the Glass-Steagall Act. Underwrite and Deal in Certain Securities to a On April 30, the Board approved applications by Limited Extent Citicorp, J.P. Morgan and Bankers Trust to underwrite and deal in, through their eligible securities PNC Financial Corp, Pittsburgh, Pennsylvania, a bank underwriting subsidiaries, 1-4 family mortgageholding company within the meaning of the Bank backed securities, municipal revenue bonds (and cer- Holding Company Act, 12 U.S.C § 1841 et seq. tain industrial development bonds) and (except for ("BHC Act"), has applied for the Board's approval under section 4(c)(8) of the BHC Act and section 225.21(a) of the Board's Regualtion Y, 12 C.F.R 1. Applicant proposes to limit Company's underwriting and dealing activity in these securities in the same manner and to the same extent § 225.21(a), to engage through a wholly owned subsid- as proposed by J.P. Morgan in its application to underwrite and deal in iary, PNC Investment Company, Pittsburgh , Pennsyl- these securities as well as mortage-backed securities. See Citicorp! J.P. Morgan & Co. Incorporated/Bankers Trust New York Corporavania ("Company"), in underwriting and dealing in, tion, 73 FEDERAL RESERVE BULLETIN 473, 477 n.ll (1987). on a limited basis, municipal revenue bonds, including 2. Banking data are as of March 31, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 743 Citicorp) commercial paper.3 The Board concluded ties are consistent with safety and soundness, conflict that the underwriting subsidiaries would not be "en- of interest and other relevant considerations under the gaged principally" in underwriting or dealing in securi- BHC Act. Underwriting or dealing in the approved ties within the meaning of section 20 of the Glass- securities in any manner other than as approved in that Steagall Act4 provided they derived no more than 5 Order6 is not within the scope of the Board's approval percent of their total gross revenues from underwriting and is not authorized for Company. and dealing in the approved securities over any two- As the Board noted in the CiticorplMorganlBankers year period and their underwriting and dealing activi- Trust Order, Congress has under consideration legislaties did not exceed 5 percent of the market for each tion that would prohibit Board approval of an underparticular type of security involved. The Board further writing application, such as this, between March 6, found that, subject to the prudential framework of 1987, and March 1, 1988. While this moratorium limitations established in those cases to address the legislation has not yet been enacted into law, the potential for conflicts of interest, unsound banking Board calls to Applicant's attention that it may be practices or other adverse effects, the proposed under- required by subsequent Congressional action to cease writing and dealing activities were so closely related to its underwriting and dealing activities approved in this banking as to be a proper incident thereto within the Order. The Board retains jurisdiction over the applicameaning of section 4(c)(8) of the BHC Act. tion to act to carry out the requirements of any For the reasons set forth in the Board's Citicorp/ legislation adopted by Congress that would affect Morgan/Bankers Trust Order, the Board concludes Applicant's conduct of underwriting and dealing activthat Applicant's proposal to engage through Company ities under this Order and the BHC Act. in underwriting and dealing in municipal revenue The Board's determination is subject to all of the bonds5 and commercial paper would not result in a conditions set forth in the Board's Regulation Y, violation of section 20 of the Glass-Steagall Act and is including those in sections 225.4(d) and 225.23(b), and closely related and a proper incident to banking within to the Board's authority to require modification or the meaning of section 4(c)(8) of the BHC Act, provid- termination of the activities of a bank holding compaed Applicant limits Company's activities as provided ny or any of its subsidiaries as the Board finds in the CiticorplMorganlBankers Trust Order. Accord- necessary to assure compliance with, and to prevent ingly, the Board has determined to approve the under- evasion of, the provisions of the BHC Act and the writing application subject to all of the terms and Board's regulations and orders issued thereunder. conditions established in the CiticorplMorganlBankers The Board notes that the SIA has sought judicial Trust Order. The Board hereby adopts and incorpo- review in the U.S. Court of Appeals for the Second rates herein by reference the reasoning and analysis Circuit of the CiticorplMorganlBankers Trust Order, contained in the CiticorplMorganlBankers Trust as well as subsequent Board Orders approving the Order. underwriting applications of a number of other bank The Board's approval of this application extends holding companies. The Board notes that the court has only to activities conducted within the limitations of stayed the effectiveness of the Board Orders pending section 225.25(b)(16) of the Board's Regulation Y and judicial review. In light of the pendency of the litigathe CiticorplMorganlBankers Trust Order, including tion, the Board has determined that this Order should the Board's reservation of authority to establish addi- be stayed for such time as the stay of the prior tional limitations to ensure that the subsidiary's activi- decisions is effective. By order of the Board of Governors, effective July 1, 1987. 3. CiticorplMorganlBankers Trust, supra. The Board subsequently approved similar applications by Chemical New York Corporation, Voting for this action: Governors Johnson, Seger, and The Chase Manhattan Corporation, Citicorp (to underwrite and deal in commercial paper), Manufacturers Hanover Corporation and Se- Kelley. Voting against this action: Chairman Volcker and curity Pacific Corporation. Orders dated May 18, 1987. Governor Angell. Absent and not voting: Governor Heller. 4. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits the affiliation of a member bank with "any corporation . . . engaged principally in the issue, flotation, underwriting, public sale, or distri- JAMES MCAFEE bution at wholesale or retail or through syndicate participation of [SEAL] Associate Secretary of the Board stocks, bonds, debentures, notes, or other securities . . . ." 5. The industrial development bonds approved in those applications and for Applicant in this case are only those tax exempt bonds in which the governmental issuer, or the governmental unit on behalf of 6. Company may also provide services that are necessary incidents which the bonds are issued, is the owner for federal income tax to these approved activities. The incidental services should be taken purposes of the financed facility (such as airports, mass commuting into account in computing the gross revenue and market share limits facilities, and water pollution control facilities). Without further on the underwriting subsidiaries' ineligible underwriting and dealing approval from the Board, Company may underwrite or deal in only activities, to the extent such limits apply to particular incidental these types of industrial development bonds. activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

744 Federal Reserve Bulletin • September 1987 Dissenting Statement of Chairman Volcker and bank, Sovran Bank, N.A., to SIC and to engage in one Governor Angell new activity through SIC. These activities are: (1) acting as an investment advisor to a registered For the reasons set forth in our dissenting statement in investment company;4 the Citicorp!Morgan!Bankers Trust Order, we regret (2) providing portfolio investment advice; we are unable to join the majority in approving this (3) providing financial advice to state and local application. governments; July 1, 1987 (4) providing advice in connection with financing transactions for non-affiliated financial and nonfi- Sovran Financial Corporation nancial institutions; and Norfolk, Virginia (5) providing, on an explicit fee basis, discretionary management of short-term monies for a small num- Order Approving an Application to Provide Certain ber of corporate or other institutional clients. Investment Advisory Services The first three activities are permissible under Regu- Sovran Financial Corporation, Norfolk, Virginia, a lation Y (12 C.F.R. § 225.25(b)(4)(ii), (iii), (v)). bank holding company within the meaning of the Bank The Board previously has determined by Order that Holding Company Act of 1956, as amended (12 U.S.C. the fourth activity is closely related to banking and § 1841 et seq.) (the "Act"), has applied for the permissible for bank holding companies.5 In these Board's approval under section 4(c)(8) of the Act cases, however, the Board noted concerns regarding (12 U.S.C. § 1843(c)(8)) and section 225.23 of the conflicts of interest and related adverse effects that Board's Regulation Y (12 C.F.R. § 225.23), to expand may be associated with financial feasibility studies. the activities of its subsidiary, Sovran Investment Applicant has committed to abide by the conditions Corporation, Richmond, Virginia ("SIC"), to include established in these cases to avoid adverse effects. certain investment advisory services.1 Specifically, Applicant has agreed that: Notice of the application, affording interested per- (1) SIC's financial advisory activities shall not ensons an opportunity to submit comments on the pro- compass the performance of routine tasks or operaposal, has been duly published (52 Federal Register tions for a customer on a daily or continuous basis; 16,312 (1987)). The time for filing comments has (2) Disclosure will be made to each potential cusexpired, and the Board has considered the application tomer of SIC that SIC is an affiliate of Applicant; and all comments received in light of the public (3) Advice rendered by SIC on an explicit fee basis interest factors set forth in section 4(c)(8) of the Act. will be without regard to correspondent balances Applicant, a multibank holding company, has total maintained by a customer of SIC at Applicant or any consolidated assets of approximately $14.6 billion.2 depository subsidiary of Applicant; and Applicant also engages through certain subsidiaries in (4) SIC will not make available to Applicant or any other nonbanking activities permissible for bank hold- of its subsidiaries confidential information received ing companies.3 from SIC's clients. Applicant proposes to transfer certain activities currently being conducted by its largest subsidiary Under these conditions, the Board concludes that Applicant's performance of financial feasibility studies is unlikely to result in any undue concentration of resources, decreased or unfair competition, unsound banking practices, or other adverse effects. The fifth activity, providing, on an explicit fee basis, 1. SIC previously has received authorization from the Board to: (1) provide discount securities brokerage services; (2) buy and sell, as agent on behalf of unaffiliated persons, options on securities issued or guaranteed by the U.S. Government and its agencies, and options on 4. This is the only activity of the five activities not currently being U.S. and foreign money market instruments; (3) purchase and sell conducted by Sovran Bank, N.A. gold and silver bullion and gold coins solely for the account of 5. Security Pacific Corporation (Duff & Phelps, Inc.), 71 FEDERAL customers; (4) underwrite and deal in government obligations and RESERVE BULLETIN 118 (1985); Signet Banking Corporation, 73 money market instruments; (5) provide investment advice relating FEDERAL RESERVE BULLETIN 59 (1987). In both Security Pacific solely to government obligations and money market instruments; (6) Corporation and Signet Banking Corporation, a broader form of provide certain fiduciary services; and (7) provide cash management financial feasibility studies was approved, which included providing services. advice in connection with mergers, acquisitions, and divestitures, as 2. Banking data are as of March 31, 1987. well as providing advice in connection with financing transactions. 3. Applicant previously has been authorized to engage through Sovran has not requested authority to provide advice in connection Sovran Capital Management, Richmond, Virginia ("SCM"), in the with mergers, acquisitions, and divestitures, only advice in connecprovision of investment or financial advice on a fee basis. tion with financing transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 745 discretionary management of short-term monies for a federal securities laws. Further, SIC will observe the small number of corporate or other institutional cli- standards of care and conduct applicable to fiduciaents, is a trust-type function that has been provided by ries. In addition, SIC will use the best method of banks and that is authorized under Regulation Y execution for transactions and will not utilize the (12 C.F.R. §§ 225.25(b)(3) and (4)). The Comptroller brokerage or execution capabilities of SIC for any of the Currency specifically has concluded that ac- transaction without the written consent of the cuscounts of this type may be managed through the tomer. commercial department of a national bank, and such All of the activities sought to be approved by this accounts are treated as subject to Part 9 of the application are to be provided, with one exception, Comptroller's Regulations regarding fiduciary powers through separate SIC employees who will not themof national banks.6 selves handle brokerage transactions for any custom- Applicant currently conducts this activity at one of ers, and who will not be involved in underwriting or its subsidiary banks, Sovran Bank, N.A., and pro- dealing activities.7 All of the activities sought to be poses to transfer the activity to SIC. In performing this approved by this application will be conducted by SIC activity, SIC will hold funds of a particular customer in personnel whose office will be maintained separate a separate account and will not pool or commingle and apart from any retail banking offices of any of such funds with any other account handled by SIC or Applicant's banking affiliates. SIC will be maintained any affiliate of SIC. Investment criteria will be speci- and will hold itself out to the public as a separate and fied by each individual customer, and SIC will select distinct corporate entity with its own name, properspecific investments according to that criteria. The ties, assets, liabilities, books, and records. Except for only discretion exercised by SIC will be with regard to the provision of investment advice and execution choosing specific issuers within the type of invest- services to other affiliates (as a permissible servicing ments specified by the customer and with regard to activity under 12 C.F.R. § 225.22(a)) and the receipt choosing the maturity of certain investments. The by SIC of certain operational support from its affiliates customer will be charged an explicit fee for the man- under one or more service contracts, SIC will conduct agement which will be based on assets under manage- its business separate from that of its bank affiliates, ment. and its agreements with customers will indicate that In order to approve this application, the Board must SIC is solely responsible for its contractual obligations also find that the performance of the proposed activity and commitments. All of SIC's notices, tickets, ad- "can reasonably be expected to produce benefits to vices, confirmations, correspondence and similar docthe public, such as greater convenience, increased umentation will be clearly imprinted so as to avoid competition, or gains in efficiency, that outweigh confusion on the part of customers or others between possible adverse effects, such as undue concentration SIC's business and that of its bank affiliates. In of resources, decreased or unfair competition, con- addition, SIC offices will be located in areas separate flicts of interest, or unsound banking practices." Ap- from areas utilized by the retail functions of its bank plicant's proposal represents a corporate reorganiza- affiliates. tion wherein activities currently performed by one of Based upon a consideration of all the relevant facts, its subsidiary banks, Sovran Bank, N.A., and one new the Board concludes that the balance of the public activity will be conducted by SIC. Because the pro- interest factors that the Board is required to consider posal essentially would result in a transfer of the under section 4(c)(8) is favorable. The financial and activities within the same corporate structure, approv- managerial resources of Applicant are consistent with al of the application would have no adverse competi- approval. Accordingly, the application is hereby aptive effects. proved. This determination is subject to the conditions With regard to the possibility of any conflicts of set forth in sections 225.4(d) and 225.23(b)(3) of Reguinterest, SIC will register with the Securities and lation Y, and to the Board's authority to require such Exchange Commission as a registered investment ad- modification or termination of the activities of a bank visor in connection with this activity and thereby will holding company or any of its subsidiaries as the be subject to applicable requirements of both state and Board finds necessary to assure compliance with the 6. 12 C.F.R. § 9. These regulations include a requirement that a national bank exercising investment discretion with respect to an 7. The one exception is that individuals who handle the small account shall adopt and follow written policies and procedures number of short-term discretionary accounts will handle brokerage intended to ensure that its brokerage placement practices comply with transactions for those accounts as well as for certain other nonall applicable laws and regulations (12 C.F.R. § 9.5). discretionary corporate accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

746 Federal Reserve Bulletin • September 1987 provisions and purposes of the Act and the Board's rities brokerage.2 These activities are authorized for regulations and orders issued thereunder, or to pre- bank holding companies pursuant to the Board's Reguvent evasion thereof. lation Y, 12 C.F.R. §§ 225.25(b)(1), (4), (8), (15). Ap- The transaction shall not be consummated later than plicant also has provided notice to the Board under three months after the effective date of this Order, section 4(c)(14) of the Act of its intention to invest in unless such period is extended for good cause by the Rainier International Trading Company, an export Board or by the Federal Reserve Bank of Richmond, trading company. Finally, Applicant has provided pursuant to delegated authority. notice to the Board under 12 C.F.R. § 211.4(b)(3) of its By order of the Board of Governors, effective intention to indirectly acquire control of the Edge Act July 15, 1987. corporation subsidiaries of Rainier, Rainier International Bank and Rainier Bank International. Voting for this action: Chairman Volcker and Governors Notice of the applications, affording opportunity for Johnson, Seger, Angell, Heller, and Kelley. interested persons to submit comments and views, has been duly published (52 Federal Register 16,312 JAMES MCAFEE (1987)). The time for filing comments has expired, and [SEAL] Associate Secretary of the Board the Board has considered the applications and all comments received in light of the factors set forth in sections 3(c) and 4(c)(8) of the Act. Orders Issued Under Sections 3 and 4 of the Applicant, with approximately $28 billion in domes- Bank Holding Company Act tic deposits, is the third largest commercial banking organization in California, controlling approximately Security Pacific Corporation 13.5 percent of total deposits in commercial banks in Los Angeles, California California.3 Rainier is the second largest commercial banking organization in Washington with domestic Order Approving Acquisition of a Bank Holding deposits of approximately $5.7 billion, controlling ap- Company and Its Banking and Nonbanking proximately 22.1 percent of the total deposits in com- Subsidiaries mercial banks in Washington. Section 3(d) of the Act (12 U.S.C. § 1842(d)), the Security Pacific Corporation, Los Angeles, California, Douglas Amendment, prohibits the Board from apa bank holding company within the meaning of the proving any application by a bank holding company to Bank Holding Company Act of 1956, as amended (the acquire control of any bank located outside of the "Act") (12 U.S.C. § 1841 et seq.), has applied for the holding company's home state,4 unless such acquisi- Board's approval under section 3 of the Act tion is "specifically authorized by the statute laws of (12 U.S.C. § 1842) to acquire Rainier Bancorporation, the State in which [the] bank is located, by language to Seattle, Washington ("Rainier"), and thereby to ac- that effect and not merely by implication." Effective quire indirectly Rainier National Bank, Seattle, Wash- July 1, 1987, Washington law permits an out-of-state ington, Rainier Bank Oregon, N.A., Portland, Oregon, banking organization that meets the requirements of United Bank, A Savings Bank, Tacoma, Washington, Washington law, including a reciprocity requirement, and Rainier Bank Alaska, N.A., Anchorage, Alaska.1 to acquire a bank located in Washington.5 The Wash- Applicant also has applied for the Board's approval ington Supervisor of Banking has indicated that Appliunder section 4(c)(8) of the Act (12 U.S.C. cant has satisfied the requirements of Washington law. § 1843(c)(8)) to acquire Rainier Mortgage Company, Oregon law permits a California bank holding compa- Seattle, Washington, and thereby engage in mortgage ny, with the permission of the Oregon Banking Superbanking; Rainier Real Estate Advisers, Inc., Seattle, visor, to acquire an Oregon bank.6 The Oregon Bank- Washington, and thereby engage in investment advice; Rainier Credit Life Insurance Company, Seattle, Washington, and thereby engage in the sale of creditrelated insurance; and Rainier Brokerage Services, 2. In connection with this application, SPC/RAB also has applied to Inc., Seattle, Washington, and thereby engage in secu- acquire these nonbanking subsidiaries and has provided notice of investment in Rainier International Trading Company and the Edge Act corporation subsidiaries of Rainier. 3. Statewide banking data are as of December 31, 1986. 4. A bank holding company's home state is that state in which the 1. Applicant will acquire Rainier through the merger of Rainier into operations of the bank holding company's banking subsidiaries were SPC/RAB Acquisition, Inc. ("SPC/RAB"), a Delaware corporation principally conducted on July 1, 1966, or the date on which the and a wholly owned, special purpose subsidiary of Applicant. In company became a bank holding company, whichever is later. connection with this application, SPC/RAB has applied to become a 5. Wash. Rev. Code § 30.04.232 (1986). bank holding company by acquiring Rainier. 6. Or. Rev. Stat. § 715.065(b)(A) (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 747 ing Supervisor has indicated that Applicant's 33.9 percent of total deposits in commercial banks in acquisition of Rainier Bank Oregon, N.A., Portland, the market. The HHI would increase by 287 points to Oregon, is permissible. An out-of-state bank holding 2418. company may acquire an Alaska bank unless the bank In the Grays Harbor County banking market, Appliis a "recently formed bank."7 Rainier Bank Alaska, cant is the seventh largest of eight commercial banking N.A., Anchorage, Alaska, is not, under the statute, a organizations with deposits of approximately $15 mil- "recently formed bank,"8 and the Alaska Director of lion, controlling approximately 5.3 percent of total Banking and Securities has indicated that Applicant's deposits in commercial banks in the market.12 Rainier acquisition of Rainier Bank Alaska, N.A. is permissi- is the largest banking organization, with deposits of ble. Based on the foregoing factors and its own review approximately $106 million, controlling approximately of the record, the Board has determined that the 37.5 percent of total deposits in commercial banking proposed acquisition is specifically authorized by the organizations in the market. Upon consummation, statute laws of Washington, Oregon, and Alaska, and Applicant would become the largest organization in thus Board approval is not prohibited by the Douglas the market, with deposits of approximately $121 mil- Amendment. lion, controlling approximately 42.8 percent of total Applicant competes with Rainier in three banking deposits in commercial banks in the market. The markets in Oregon and Washington.9 Grays Harbor County banking market is considered highly concentrated, with an HHI of 2164. Upon In the Portland banking market, Applicant is the consummation, the HHI would increase by 398 points third largest of 22 commercial banking organizations to 2562. with deposits of approximately $483 million, controlling approximately 7.6 percent of total deposits in Although consummation of this proposal would commercial banks in the market.10 Rainier is the ninth eliminate some existing competition between Applilargest banking organization with deposits of approxi- cant and Rainier in these banking markets, certain mately $80 million, controlling approximately 1.3 per- facts of record mitigate the adverse competitive effects cent of total deposits in commercial banks in the of the proposal in these markets. Numerous other market. Upon consummation, Applicant would con- commercial banking organizations would continue to tinue to be the third largest organization, with deposits operate in each market after consummation of the of approximately $563 million, controlling approxi- proposal. In addition, the Board has considered the mately 8.9 percent of total deposits in commercial presence of thrift institutions in these markets in its banks in the market. The Portland banking market is analysis of this proposal. considered highly concentrated, with a Herfindahl- The Board previously has indicated that thrift insti- Hirschman Index ("HHI") of 2540. However, upon tutions have become, or have the potential to become, consummation, the HHI would increase by only 20 major competitors of commercial banks.13 Thrift instipoints to 2560. tutions already exert a considerable competitive influ- In the Longview banking market, Applicant is the ence in the market as providers of a wide array of sixth largest of eight commercial banking organiza- deposit and lending services to consumer and commertions with deposits of approximately $11 million, con- cial customers. In view of these facts, the Board has trolling approximately 5.0 percent of total deposits in concluded that thrift institutions exert a significant commercial banks in the market.11 Rainier is the competitive influence that mitigates the anticompetisecond largest banking organization with deposits of tive effects of this proposal in the Grays Harbor approximately $63 million, controlling approximately County and Longview markets.14 28.7 percent of total deposits in commercial banks in On the basis of the foregoing, the Board concludes the market. Upon consummation, Applicant would become the largest organization, with deposits of approximately $74 million, controlling approximately 12. The Grays Harbor County banking market is approximated by Grays Harbor County, Washington. 13. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 (1984); The Chase Manhattan Corporation, 70 FEDERAL RESERVE BULLETIN 529 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE 7. Alaska Stat. § 06.05.235(e) (1986). BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL 8. Alaska Stat. § 06.05.235(g). RESERVE BULLETIN 802 (1983); First Tennessee Corporation, 69 9. All local banking market data are as of June 30, 1985. FEDERAL RESERVE BULLETIN 298 (1983). 10. The Portland banking market is approximated by the Portland 14. If thrift institutions are included in the analysis at 50 percent, RMA, which consists of Multnomah County and parts of Clackamas, Applicant is the ninth largest of 15 depository organizations in the Columbia, Marion, Washington, and Yamhill Counties, all in Oregon, Longview market, with approximately 3.5 percent of market deposits. and part of Clark County, Washington. Rainier is the second largest depository organization in the market, 11. The Longview banking market is approximated by the Long- with approximately 19.9 percent of market deposits. Upon consumview, Washington, RMA, which consists of parts of Cowlitz County, mation, Applicant would become the largest depository organization Washington, and Columbia County, Oregon. in the market, with a market share of approximately 23.4 percent. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

748 Federal Reserve Bulletin • September 1987 that consummation of the proposal would not have a considerations, the Board concludes that financial substantial adverse competitive effect in any of these factors are consistent with approval of the application. banking markets. Managerial factors also are consistent with approval. The Board also has considered the effects of Appli- In considering the convenience and needs of the cant's proposal on probable future competition in communities to be served, the Board has taken into markets in which Applicant and Rainier do not com- account the records of Applicant and Rainier under the pete. In light of the number of probable future entrants Community Reinvestment Act ("CRA"), 12 U.S.C. into these markets, the Board concludes that consum- § 2901 et seq.11 The Board has received comments mation of this proposal would not have a significant from the South End Seattle Community Organization adverse effect on probable future competition in any ("SESCO"), Seattle, Washington, regarding the CRA relevant banking market. records of Applicant and Rainier.18 In an attempt to In evaluating this application, the Board has consid- resolve the concerns raised by the protest, Applicant ered the financial resources of Applicant and the effect and Rainier have met with SESCO to discuss the on these resources of the proposed acquisition. The issues raised by SESCO. Board has stated and continues to believe that capital SESCO's comments are similar to comments filed adequacy is an especially important factor in the by SESCO in connection with Rainier's applications to analysis of bank holding company proposals, particu- acquire Mount Hood Security Bank, Gresham, Orelarly in transactions where a significant acquisition is gon (now Rainier Bank Oregon, N.A., Portland, Oreproposed.15 gon), and United Bank, A Savings Bank, Tacoma, In this regard, the Board expects that banking Washington.19 SESCO's basic assertion is that Rainier organizations experiencing substantial growth inter- is not meeting the credit needs of the South End nally and by acquisition, such as Applicant, should neighborhood of Seattle, Washington. The Board has maintain a strong capital position substantially above reviewed the record of Rainier in serving the credit the minimum levels specified in the Capital Adequacy and deposit needs of the South End community of Guidelines without significant reliance on intangibles, Seattle. The Board's analysis indicates that Rainier's particularly goodwill.16 The Board will carefully ana- record in lending to low- and moderate-income areas lyze the effect of expansion proposals on the preserva- compares favorably to its record in other portions of tion or achievement of such capital positions. the Seattle MSA. In addition, in connection with the The Board has reviewed this case in the light of Mount Hood application, Rainier made a number of Applicant's capital and asset position. The Board CRA-related commitments, and Rainier's progress in notes that this transaction is a share-for-share ex- meeting these commitments is reasonable considering change which involves no acquisition debt, and that the short period of time since they went into effect. Applicant has recently strengthened its capital posi- Further, Applicant has committed that SPC/RAB, as tion through the issuance of primary capital instru- successor to Rainier, will abide by these commitments. In addition, Applicant recognizes the desirabil- ments. ity of continuing to strengthen its capital base. The The Board also notes that both Applicant and Rain- Board intends to monitor Applicant's progress toward ier have satisfactory CRA records. Accordingly, based this objective. Accordingly, on the basis of the above on all the facts of record, the Board concludes that HHI would increase by 139 points, from 1315 to 1454. In the Grays Harbor County market, thrifts control 66.0 percent of the combined deposits of bank and thrifts. If thrift 17. The CRA requires the Board, in its evaluation of a bank holding institutions are included in the analysis at 50 percent, Applicant is company application, to assess the record of an applicant in meeting the eleventh largest of 12 depository organizations, with approxi- the credit needs of the entire community, including the low- and mately 2.7 percent of market deposits. Rainier is the largest moderate-income neighborhoods, consistent with safe and sound depository organization in the market, with approximately 19.1 operation. percent of deposits. Upon consummation, Applicant would be- 18. SESCO generally alleges: (1) the South End neighborhood of come the largest depository organization in the market and Seattle, Washington, is a low- and moderate-income neighborhood; control approximately 21.8 percent of deposits in the market. The (2) SESCO is an effective community organization working for HHI would increase by 103 points, from 1269 to 1372. reinvestment in the South End; (3) Rainier has a poor history of 15. See e.g., Chase Manhattan Corporation, 70 FEDERAL RESERVE lending in the South End; (4) Rainier unreasonably has refused to BULLETIN 529 (1984); NCNB Corporation, 69 FEDERAL RESERVE work with SESCO to improve its South End lending; and (5) Applicant BULLETIN 49 (1983). has a dubious commitment to community reinvestment, especially in 16. Capital Adequacy Guidelines, 50 Federal Register 16,057, Washington. 16,066-67 (April 24, 1985) (71 FEDERAL RESERVE BULLETIN 445 19. Rainier Bancorporation (Mount Hood Security Bank), 73 FED- (1985)); National City Corporation, 70 FEDERAL RESERVE BULLETIN ERAL RESERVE BULLETIN 55 (1987); Rainier Bancorporation (United 743, 746 (1984). Bank), 73 FEDERAL RESERVE BULLETIN 216 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 749 convenience and needs considerations are consistent tion or termination of the activities of a holding with approval of the applications.20 company or any of its subsidiaries as the Board finds As indicated earlier, Applicant also has applied, necessary to assure compliance with the provisions pursuant to section 4(c)(8), to acquire the nonbanking and purposes of the Act and the Board's regulations subsidiaries of Rainier. Applicant operates nonbank- and orders issued thereunder, or to prevent evasion ing subsidiaries that compete with Rainier in the thereof. activities of residential and commercial mortgage By order of the Board of Governors, effective banking, commercial finance and factoring, automo- July 20, 1987. bile floor finance and indirect leasing, consumer finance, manufactured housing finance, and equipment Voting for this action: Vice Chairman Johnson and Goverleasing. The markets for these activities have numer- nors Seger, Angell, Heller, and Kelley. Absent and not voting: Chairman Volcker. ous competitors and are regional or national in scope. Accordingly, the Board concludes that this proposal JAMES MCAFEE will not have any significant adverse effect upon [SEAL] Associate Secretary of the Board competition in any relevant market. There is no evidence in the record to indicate that approval of this proposal would result in undue concentration of resources, decreased or unfair competi- The Sumitomo Trust & Banking Co., Ltd. tion, conflicts of interests, unsound banking practices, Osaka, Japan or other adverse effects on the public interest. Accordingly, the Board has determined that the balance of Order Approving Formation of a Bank Holding public interest factors it must consider under section Company and a Nonbanking Joint Venture 4(c)(8) of the Act is favorable and consistent with approval of the applications to acquire Company's The Sumitomo Trust & Banking Co., Ltd., Osaka, nonbanking subsidiaries and activities. Japan has applied for the Board's approval under The Board also has considered the notice of Appli- section 3(a)(1) of the Bank Holding Company Act cant's proposed investment in Rainier International (12 U.S.C. § 1842(a)(1)) ("BHC Act") to become a Trading Company under section 4(c)(14) of the Act bank holding company by acquiring all of the voting and the acquisition of control of Rainier International shares of Sumitomo Trust & Banking Co. (U.S.A.) Bank and Rainier Bank International under the Edge ("Bank"), New York, New York, a de novo bank. Act. Based on the facts of record, the Board has Applicant also has applied for the Board's approval, determined that disapproval of the proposed invest- pursuant to section 4(c)(8) of the BHC Act (12 U.S.C. ments is not warranted. § 1843(c)(8)) and section 225.23(a) of the Board's Based on the foregoing and other facts of record, the Regulation Y (12 C.F.R. § 225.23(a)), to engage in Board has determined that the applications should be, investment advisory activities that are permissible for and hereby are, approved. The acquisition of Rainier bank holding companies under section 225.25(b)(4) of shall not be consummated before the thirtieth calendar Regulation Y (12 C.F.R. § 225.25(b)(4)) through a joint day following the effective date of this Order, or later venture between Applicant and Security Pacific Corthan three months after the effective date of this poration ("Security Pacific"), Los Angeles, Califor- Order, unless such period is extended for good cause nia. Applicant and Security Pacific would each acquire by the Board or by the Federal Reserve Bank of San 50 percent of the voting shares of Sumitrust Security Francisco, acting pursuant to delegated authority. The Pacific Investment Managers, Inc. ("Company"), Los determinations as to Applicant's nonbanking activities Angeles, California, a de novo corporation serving are subject to all of the conditions contained in Regula- customers throughout the United States and Japan. tion Y, including those in sections 225.4(d) and Notice of the applications, affording an opportunity 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), for interested persons to submit comments, has been and to the Board's authority to require such modifica- given in accordance with sections 3 and 4 of the BHC Act. 51 Federal Register 28,982, 32,962 (1986). The time for filing comments has expired, and the Board 20. SESCO has also requested that the Board order a public hearing has considered the applications and all comments to enable SESCO and other interested persons to present evidence received in light of the factors set forth in section 3(c) substantiating its allegations. Although section 3(b) of the Act does as well as the considerations specified in section 4(c) not require a formal hearing in this instance, the Board may, in any case, order an informal or formal hearing. In light of the commitment of the BHC Act (12 U.S.C. §§ 1842(c) and 1843(c)). made by Applicant and other facts of record, the Board has deter- Applicant, with total assets of approximately $113.6 mined that a hearing would serve no useful purpose. Accordingly, SESCO's request for a public hearing is denied. billion, is the 22nd largest bank world-wide and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

750 Federal Reserve Bulletin • September 1987 second largest trust company in Japan.1 Applicant require careful consideration and which the Board engages in a variety of banking and trust activities on a continues to have under review. In this regard, the world-wide basis. Applicant operates a branch in New Board recently has announced a proposal to supple- York and an agency in Los Angeles, which have total ment its consideration of capital adequacy with a riskassets of $5.6 billion and $1.2 billion, respectively. based system that is simultaneously being proposed by Applicant has selected New York as its home state the Bank of England and the other domestic federal under the Board's Regulation K (12 C.F.R. banking agencies. 52 Federal Register 9,304 (1987). § 211.22(b)). The Board considers this proposal an important step Bank will serve the Metropolitan New York-New toward a more consistent and equitable international Jersey banking market2 and will seek business primari- norm for assessing capital adequacy. While the Board ly from domestic corporate and public sector custom- will continue to apply a case-by-case approach during ers with emphasis on specialized lending, fiduciary the pendency of discussions regarding this proposal, and other banking services not currently provided by once such a system is adopted applications by foreign Applicant's existing New York branch or Los Angeles banks seeking to make acquisitions in the United agency. Based upon the facts of record, including the States would be judged in the context of such guidede novo status of Bank, the Board concludes that the lines. proposed transaction would have no adverse effects on In the present instance, the primary capital ratio of competition. Accordingly, competitive considerations Applicant, as publicly reported, is well below the are consistent with approval. Board's capital adequacy guidelines.4 In similar cases, Section 3(c) of the Act requires the Board in every the Board has considered mitigating factors, including case to consider the financial resources of an applicant adjustments to an applicant's capital to reflect differorganization and the bank or bank holding company to ences in accounting and regulatory practices. After be acquired. The Board previously has stated that it certain adjustments to account for Japanese banking believes that the principles of national treatment and and accounting practices, including consideration of a competitive equity require, in general, that foreign modest portion of the unrealized appreciation in Applibanks seeking to establish or acquire banking organi- cant's portfolio of equity securities (after taking into zations in the United States meet the same general account possible fluctuations in valuation and the standards of strength, experience and reputation as are effects of taxation), Applicant's capital ratio more required of domestic banking organizations and that nearly approximates U.S. standards. The Board also foreign banks be able to serve on a continuing basis as has considered additional factors that mitigate its a source of strength to their banking operations in the concern. The Board has placed considerable emphasis United States.3 The Board is also aware that foreign on the fact that Applicant will establish Bank de novo, banks operate outside the United States in accordance and that Bank will be strongly capitalized and small in with different regulatory and supervisory require- relationship to Applicant. The Board notes further that ments, accounting principles, asset quality standards, Applicant is in compliance with the capital and other and banking practices and traditions, and that these financial requirements of Japanese banking organizadifferences make it difficult to compare the capital tions, and that Applicant has given the Board certain positions of domestic and foreign banks. assurances regarding its capital. The appropriate balancing of these concerns raises a The Board expects that Applicant will maintain number of complex issues which the Board believes Bank as among the more strongly capitalized banking organizations of comparable size in the United States. Based on these and other facts of record, including certain commitments made by Applicant, the Board 1. Banking data are as of March 31, 1987, based on the dollar/yen concludes that financial and managerial factors are exchange rate as of that date. Applicant's market rank is as of December 31, 1985. consistent with approval of this application to acquire 2. The Metropolitan New York-New Jersey market is defined to Bank. Considerations relating to the convenience and include New York City and Long Island, New York; Putnam, Orange, needs of the communities to be served are also consis- Westchester, Rockland and Sullivan Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, tent with approval. Passaic, Somerset, Sussex, Union and Warren Counties in New Applicant also has applied under section 4(c)(8) of Jersey; and portions of Fairfield County in Connecticut. the Act to engage through Company, a joint venture 3. See, Ljubljanska Banka-AssociatedBank, 72 FEDERAL RESERVE BULLETIN 489 (1986); The Mitsubishi Trust and Banking Corporation, subsidiary of Applicant and Security Pacific, in certain 72 FEDERAL RESERVE BULLETIN 256 (1986); The Industrial Bank of Japan, Ltd., 72 FEDERAL RESERVE BULLETIN 71 (1986); The Mitsubishi Bank, Limited, 70 FEDERAL RESERVE BULLETIN 518 (1984). See also Policy Statement on Supervision and Regulation of Foreign- Based Bank Holding Companies, Federal Reserve Regulatory Service 4. Capital Adequacy Guidelines, 50 Federal Register 16,057 (1985), 114-835 (1979). 71 FEDERAL RESERVE BULLETIN 445 (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 751 investment advisory nonbanking activities which the funds in Japan, but does not currently offer investment Board previously has approved for bank holding com- advisory services in the United States. Similarly, panies under Regulation Y. Initially, Applicant pro- Security Pacific has substantial experience in providposes to provide through Company investment advice ing investment advice to U.S. investors regarding U.S. to Japan-based and United States-based investment securities, but believes that entry by a U.S. investor advisors, including Applicant and a subsidiary of Se- into the Japanese market would be facilitated by the curity Pacific, Security Pacific Investment Managers, assistance of a Japanese partner. By establishing Com- Inc. ("SPIM"),5 regarding investments in United pany, Applicant and Security Pacific will be able to States and Japanese debt and equity securities. Appli- draw upon the investment expertise of each joint cant expects that United States and Japanese pension venture partner as to securities traded in their respecfunds initially will be the primary recipients of Compa- tive countries. The proposed joint venture will allow ny's services. In the future, Company may provide Applicant and Security Pacific to expand advisory users its investment advice directly. The Board previ- services to, and broaden the investment options of, ously has determined that the proposed nonbanking their United States and Japanese institutional customactivity is closely related and a proper incident to ers. Accordingly, the Board finds that the proposed banking under section 4(c)(8) in deciding to add it to joint venture may be expected to produce public the list of activities permissible for bank holding benefits in the form of greater convenience to customcompanies under section 225.25(b)(4) of Regulation Y ers and increased efficiency in the provision of invest- (12 C.F.R. § 225.25(b)(4)). ment advisory services. Section 4(c)(8) requires the Board to consider The Board finds no evidence in the record that the whether the Applicant's performance of the proposed proposed joint venture would lead Applicant into activities through Sumitrust would result in benefits to impermissible nonbanking activities. Both joint venthe public, such as greater convenience, increased turers in this case are banking organizations subject to competition, or gains in efficiency, that outweigh the requirements of section 4 of the BHC Act with possible adverse effects, such as undue concentration respect to this proposal. Moreover, Applicant and of resources, decreased or unfair competition, con- Security Pacific will each control 50 percent of the flicts of interest, or unsound banking practices. In its voting shares of Company so that no change in Comanalysis of the public benefits and possible adverse pany's activities may be effected without the consent effects of this proposal, the Board has taken into of both co-venturers. consideration the fact that Applicant would engage in The Board also has considered the possible adverse the proposed activity through a joint venture. Prior effects upon existing or potential competition as a decisions of the Board indicate a concern that joint result of this proposal. The Board notes that the ventures not lead to a matrix of relationships between likelihood of such effects is substantially mitigated by co-venturers which could erode the legally mandated the following factors. First, the market for investment separation of banking and commerce through a min- advice is highly competitive. Numerous banks, bank gling of permissible and impermissible activities, lead holding companies, investment banking firms and othto conflicts of interest, result in an undue concentra- ers provide this service. In addition, Applicant curtion of resources, or compromise the impartiality of a rently does not engage in investment advisory activity banking organization in the performance of credit in the United States and Company is being organized evaluation or fiduciary services.6 de novo. The Board therefore finds that consummation Applicant states that the purpose of its proposed of this proposal would not have a significant adverse joint venture with Security Pacific is to allow the effect on either existing or potential competition in any parties to offer a broader range of investment options relevant market. to their respective customers that neither joint ventur- There is no evidence that the proposed joint venture er could provide alone. Applicant operates and man- involving Sumitrust would result in unfair competiages funds entrusted by a large number of pension tion, unsound banking practices, conflicts of interest, or undue concentration of resources. In this regard, the Board notes that the provision of investment advice as permitted under section 225.25(b)(4)(iii) of 5. SPIM, an investment advisor registered under the Investment Regulation Y is subject to fiduciary standards and the Company Act of 1940, offers investment advisory services to institu- anti-tying provisions of the BHC Act (12 U.S.C. tional customers. §§ 1971 and 1972(1)), which the Board believes sub- 6. See, e.g., Independent Bankers Financial Corporation, 71 FED- ERAL RESERVE BULLETIN 651, 653 (1985); The Maybaco Company stantially address the possibility of conflicts of interest and Equitable Bancorporation, 69 FEDERAL RESERVE BULLETIN 375, or anti-competitive effects that could arise from Appli- 111 (1983), and Deutsche Bank AG, 67 FEDERAL RESERVE BULLETIN cant's proposal. 449, 451 (1981). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

752 Federal Reserve Bulletin • September 1987 Based on the foregoing and other facts of record, the financial institutions, in my opinion, are still far from Board has determined that the balance of public inter- being afforded the full opportunity to compete in est factors it must consider under section 4(c)(8) of the Japan. Act is favorable. The Board also has determined that July 17, 1987 considerations relating to the convenience and needs of the community to be served are consistent with Errata: approval. Accordingly, the Board has determined that the Hartford National Corporation applications under sections 3 and 4 of the Act should Hartford, Connecticut be, and hereby are, approved. The proposed acquisition of Bank shall not be consummated before the The following order which appeared on page 661 of the thirtieth calendar day following the effective date of August 1987 BULLETIN was incorrectly printed. The this Order. The proposal shall not be consummated corrected order is reprinted below. later than three months after the effective date of this Hartford National Corporation, Hartford, Connecti- Order, unless such period is extended for good cause cut, a bank holding company within the meaning of the by the Board or by the Federal Reserve Bank of New Bank Holding Company Act ("Act"), 12 U.S.C. York, pursuant to delegated authority. The determina- § 1841 et seq., has applied for the Board's approval tion as to Applicant's nonbanking activities is subject under section 3(a)(3) of the Act (12 U.S.C. to the conditions set forth in section 225.25(b)(4) of § 1842(a)(3)) to acquire the successor to the Savings Regulation Y (12 C.F.R. § 225.22(b)(4)), and the and Loan Association of Southington, Southington, Board's authority to require such modification or Connecticut ("Southington"). termination of the activities of a holding company or Notice of the application, affording interested perany of its subsidiaries as the Board finds necessary to sons an opportunity to submit comments, has been assure compliance with the provisions and purposes of given in accordance with section 3(b) of the Act, 52 the Act and the Board's regulations and orders issued Federal Register 7,487 (1987). The time for filing thereunder, or to prevent evasion thereof. comments has expired, and the Board has considered By order of the Board of Governors, effective the application and all comments received in light of July 16, 1987. the factors set forth in section 3(c) of the Act. Southington is a state chartered, stock savings and Voting for this action: Chairman Volcker and Governors loan association, the accounts of which are insured by Johnson, Angell, Heller, and Kelley. Voting against this the Federal Savings and Loan Insurance Corporation action: Governor Seger. ("FSLIC"). Applicant proposes to merge Southington with and into a de novo subsidiary of Applicant, State JAMES MCAFEE Savings Bank (In Organization) ("Bank"), a state [SEAL] Associate Secretary of the Board stock savings bank the accounts of which would be insured by the Federal Deposit Insurance Corporation Dissenting Statement of Governor Seger ("FDIC"). Since Bank, at the time of acquisition by Applicant, I dissent from the Board's action in this case. I believe will be a state chartered bank that accepts demand that foreign banking organizations whose publicly re- deposits and makes commercial loans, Bank is a ported capital is well below the Board's capital guide- "bank" for purposes of the Act, and Applicant properlines for U.S. banking organizations have an unfair ly has applied to acquire Bank under section 3 of the competitive advantage in the United States over do- Act, which governs the acquisition of banks by bank mestic banking organizations and should therefore be holding companies. judged against the same financial and managerial stan- Applicant, with deposits of $7 billion, is the second dards, including the Board's capital adequacy guide- largest commercial banking organization in Connectilines, as are applied to domestic banking organiza- cut, controlling 25.8 percent of the total deposits in tions. commercial banks in the state.1 After the merger of In addition, I am concerned that while this applica- Southington into Bank, Bank will control deposits of tion would permit a large Japanese banking organiza- $76.7 million, representing less than 1 percent of the tion to acquire a bank in the U.S., U.S. banking total deposits in commercial banking organizations in organizations are not permitted to make comparable the state.2 Upon consummation of this proposal, Apacquisitions in Japan. While some progress is being made in opening Japanese markets to U.S. banking organizations, U.S. banking organizations and other 1. State deposit data are as of December 31, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 753 plicant will continue to be the second largest commer- The acquisition proposed here, however, does not fall cial banking organization in Connecticut, with no within the scope of the Board's policy and rulings significant change in its market share or deposit size. regarding acquisitions of thrift institutions under sec- Consummation of this proposal therefore would not tion 4 of the Act6 or the provisions of the 1982 Garn-St have any significant adverse effect upon the concen- Germain Depository Institution Act regarding acquisitration of banking resources in the state. tions of thrift institutions. Upon its acquisition by Bank is located in the Hartford banking market, Applicant, Bank will accept demand deposits and where Applicant also competes.3 In the Hartford engage in commercial lending, and will be subject to all banking market, Applicant is the second largest of 17 the banking standards of the Act. commercial banking organizations, controlling depos- In addition, the Board expects that Applicant will its of $2.5 billion, which represents 35.8 percent of comply with all state and federal requirements necestotal deposits in commercial banks in the market.4 sary for consummation of the acquisition, and the Following the proposed merger, Bank will be the 13th Board's approval of this application under the Act is largest of 18 commercial banking organizations in not intended to preempt any such requirements.7 The Hartford, controlling deposits of $48.5 million, repre- Board has previously stated that its approval of transsenting less than 1 percent of the market share. actions under section 3 of the Act does not relieve an Following acquisition of Bank, Applicant would re- applicant or the bank involved of the responsibility to main the second largest commercial banking organiza- obtain approval under other federal or state laws and tion in the Hartford banking market, controlling 36.5 regulations and does not shield an applicant from the percent of the market's total commercial bank depos- consequences of violations of other laws.8 its. The Herfindahl-Hirschman Index ("HHI")5 Based on the foregoing and other facts of record, the would increase by only 8 points to 3079. Consumma- Board has determined that the application should be, tion of this proposal therefore is unlikely to substan- and hereby is, approved. This transaction shall not be tially lessen competition in the Hartford banking mar- consummated before the thirtieth day following the ket. effective date of this Order, or later than three months Based upon a review of all facts of record, the Board after the effective date of this Order, unless such has determined that the financial and managerial re- period is extended for good cause by the Board or by sources of Applicant, its subsidiary banks and Bank the Federal Reserve Bank of Boston, acting pursuant are consistent with approval. Considerations relating to delegated authority. to the convenience and needs of the communities to be By order of the Board of Governors, effective served also are consistent with approval of this pro- June 1, 1987. posal. The Board notes that this application involves the Voting for this action: Chairman Volcker and Governors acquisition of a bank that results from the merger of a Johnson, Seger, Angell, Heller, and Kelley. non-failing, FSLIC-insured state savings and loan association into an FDIC-insured state savings bank. JAMES MCAFEE [SEAL] Associate Secretary of the Board 2. Deposit data for Bank are calculated on a commercial banks only basis, based on financial information reported prior to Bank's conversion. 3. The Hartford banking market is approximated by the Hartford will not substantially lessen competition. The Department of Justice Rand McNally Area ("RMA"), minus the Windham County township has informed the Board that a bank merger or acquisition generally of Windham and the Tolland County township of Mansfield, plus the will not be challenged (in the absence of other facts indicating an Windham County township of Ashford, the Hartford County township anticompetitive effect) unless the post-merger HHI is at least 1800 and of Hartland, the Tolland County township of Union, and the remain- the merger increases the HHI by at least 200 points. ing portions of Plymouth and East Haddam not already included in the 6. D.H. Baldwin Company, 63 FEDERAL RESERVBULLETIN 280 RMA. (1977). 4. Market data are as of June 30, 1985. 7. The Board may not approve an application that would result in a 5. Under the revised Department of Justice Merger Guidelines (49 violation of federal or state law. Whitney National Bank v. Bank of Federal Register 26,823 (June 29, 1984)), any market in which the New Orleans, 379 U.S. 411 (1964). post-merger HHI is over 1800 is considered highly concentrated, and 8. The One Bancorp, 73 FEDERAL RESERVE BULLETIN 55, 135 the Department is likely to challenge a merger that increases the HHI (1987); SafraCorp, 73 FEDERAL RESERVE BULLETIN 137 (1987); by more than 50 points unless other factors indicate that the merger Comerica Incorporated (Order dated May 4, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

754 Federal Reserve Bulletin • September 1987 ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Adairsville Bancshares, Inc. Bank of Adairsville Atlanta July 20, 1987 Adairsville, Georgia Adairsville, Georgia Alvarado Bankshares, Inc. Alvarado National Bank Dallas July 20, 1987 Alvarado, Texas Alvarado, Texas American Bancorporation Citizens National Bank Flushing Cleveland July 8, 1987 Wheeling, West Virginia — St. Clairsville St. Clairsville, Ohio Asia Bancshares, Inc. Asia Bank, N.A. New York June 26, 1987 Flushing, New York Flushing, New York Baron II Bancshares, Inc. Security State Bank of Deer Minneapolis July 27, 1987 White Bear Lake, Minnesota Creek Deer Creek, Minnesota BayBanks, Inc. BayBank Connecticut, National Boston July 15, 1987 Boston, Massachusetts Association Farmington, Connecticut Bellbrook Bancorp, Inc. The Bellbrook Community Bank Cleveland July 2, 1987 Bellbrook, Ohio Bellbrook, Ohio Boatmen's Bancshares, Inc. Boatment's Bank of Delaware St. Louis July 24, 1987 St. Louis, Missouri New Castle, Delaware Brazos Bancshares, Inc. The First National Bank in Dallas July 17, 1987 Joshua, Texas Joshua Joshua, Texas Brown Deer Bank Profit Sharing Capital One Corp. Chicago July 7, 1987 Plan Brown Deer, Wisconsin Brown Deer, Wisconsin Camino Real Bancshares, Inc. Frio National Bank Dallas July 21, 1987 Carrizo Springs, Texas Pearsall, Texas CapitalBanc Corporation Capital National Bank New York July 15, 1987 New York, New York New York, New York Cenvest, Inc. The Central Bank for Savings Boston July 17, 1987 Meriden, Connecticut Meriden, Connecticut Citizens Equity Corporation The Citizens National Bank of Dallas July 20, 1987 Weatherford, Texas Weatherford Weatherford, Texas CommerceBancorp CommerceBank San Francisco June 25, 1987 Newport Beach, California Newport Beach, California Commonwealth Bancshares Liberty State Bank Philadelphia July 9, 1987 Corporation Mount Carmel Pennsylvania Williamsport, Pennsylvania Core States Financial Corp. The Montgomery National Bank Philadelphia July 9, 1987 Philadelphia, Pennsylvania Rocky Hill, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 755 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Credit and Commerce American NBG Financial Corporation Richmond June 26, 1987 Holdings, N.V. Atlanta, Georgia Curacao, Netherlands Antilles Credit and Commerce American Investment, B.V. Amsterdam, Netherlands First American Corporation Washington, D.C. First American Bankshares, Inc. Washington, D.C. Crews Banking Corporation Charlotte State Bank Atlanta July 29, 1987 Wauchula, Florida Port Charlotte, Florida EMF Corporation Blue Grass Savings Bank Chicago June 25, 1987 Blue Grass, Iowa Blue Grass, Iowa Farmers Bancorp, Inc. of Farmers Bank and Trust St. Louis July 17, 1987 Marion, Kentucky Company of Marion, Kentucky Marion, Kentucky Marion, Kentucky Fillmore County Bancshares, Canton State Bank Minneapolis July 15, 1987 Inc. Canton, Minnesota Canton, Minnesota First Capital Corporation Gateway Capital Corporation Atlanta July 28, 1987 Jackson, Mississippi Jackson, Mississippi First Citizens BancStock, Inc. The First National Bank in St. Atlanta July 23, 1987 Morgan City, Louisiana Mary Parish Morgan City, Louisiana FirstMorrill Co. First National Bank in Morrill Kansas City June 26, 1987 Omaha, Nebraska Morrill, Nebraska First Northwest Bancshares, First State Bank St. Louis July 21, 1987 Inc. Kenton, Tennessee Kenton, Tennessee 1st Source Corporation The Hamlet State Bank Chicago July 15, 1987 South Bend, Indiana Hamlet, Indiana First South Bancshares, Inc. Morgan City Bank & Trust Atlanta July 10, 1987 Morgan City, Louisiana Company Morgan City, Louisiana First Virginia Banks, Inc. United Bancorp of Maryland, Richmond July 16, 1987 Falls Church, Virginia Inc. Upper Marlboro, Maryland Greenfield Bancshares, Inc. Greenfield Banking Company St. Louis July 3, 1987 Greenfield, Tennessee Greenfield, Tennessee Illini Community Bancorp, Inc. Banc Shares, Inc. Chicago June 30, 1987 Springfield, Tennessee Greenview, Illinois Jefferson Bancorp, Inc. Broward Bancorp Atlanta July 10, 1987 Miami Beach, Florida Lauderdale Lakes, Florida Key Pacific Bancorp First NorthWest Bancorporation New York June 26, 1987 Anchorage, Alaska Seattle, Washington Lockwood Banc Group, Inc. Lockwood National Bank of Dallas July 1, 1987 Houston, Texas Houston Houston, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

756 Federal Reserve Bulletin • September 1987 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Magna Group, Inc. First Granite Bancorporation, St. Louis July 21, 1987 Belleville, Illinois Inc. FGB Acquisition Company Granite City, Illinois Belleville, Illinois Mountain Bank System, Inc. Valley Bank of Belgrade Minneapolis July 9, 1987 Whitefish, Montana Belgrade, Montana New Hampshire Savings Bank Seashore Bank Shares, Inc. Boston July 24, 1987 Corp. Seabrook, New Hampshire Concord, New Hampshire North Star Holding Company, Stutsman County State Bank Minneapolis July 16, 1987 Inc. Jamestown, North Dakota Jamestown, North Dakota Northern Plains Investment, North Star Holding Company, Minneapolis July 16, 1987 Inc. Inc. Jamestown, North Dakota Jamestown, North Dakota Peoples Bancorporation Citizens National Bank Richmond July 17, 1987 Rocky Mount, North Carolina Winston-Salem, North Carolina Peoples First Corporation First National Bank of La Center St. Louis July 14, 1987 Paducah, Kentucky La Center, Kentucky Security Bancorp of Tennessee, Bank of Crockett St. Louis July 13, 1987 Inc. Bells, Tennessee Halls, Tennessee Southlake Bancshares, Inc. Texas National Bank Dallas July 7, 1987 Southlake, Texas Southlake, Texas Susquehanna Bancshares, Inc. Spring Grove National Bank Philadelphia July 1, 1987 Lititz, Pennsylvania Spring Grove, Pennsylvania Tara Bankshares Corporation Tara State Bank Atlanta June 29, 1987 Riverdale, Georgia Riverdale, Georgia United Valley Financial Farmers State Bank San Francisco June 25, 1987 Lemoore, California Farmersville, California Wonder Bancorp, Inc. Wonder Lake State Bank Chicago July 10, 1987 Wonder Lake, Illinois Wonder Lake, Illinois Section 4 Nonbanking Reserve Effective Applicant Company/Activity Bank date Midwest Commerce Independent Leasing Services, Chicago July 7, 1987 Corporation Inc. Elkhart, Indiana Indianapolis, Indiana Montana Bancsystem, Inc. general insurance activities Minneapolis July 24, 1987 Billings, Montana Security Pacific Corporation Sumitrust Security Pacific San Francisco July 20, 1987 Los Angeles, California Investment Managers, Inc. Los Angeles, California investment advisory activities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 757 Section 4—Continued Nonbanking Reserve Effective Applicant Company/Activity Bank date Signet Banking Corporation Ford Brothers Finance Co., Inc. Richmond July 29, 1987 Richmond, Virginia Mount Rainier, Maryland Standard Chartered PLC Union Bancsystems, Inc. San Francisco June 25, 1987 London, England Sherman Oaks, California Standard Chartered Bank management consulting and data London, England processing Standard Chartered Overseas Holdings, Limited London, England Standard Chartered Inc. Los Angeles, California Union Bancorp Los Angeles, California Valley Bancorporation Valley Systems, Inc. Chicago July 3, 1987 Appleton, Wisconsin Appleton, Wisconsin data processing activities Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Key Atlantic Bancorp Key Bancshares of New York, New York June 26, 1987 Albany, New York Inc. Albany, New York Key Bancshares of Maine, Inc. Augusta, Maine Valley Bancorporation Community Banks, Inc. Chicago July 16, 1987 Appleton, Wisconsin Middleton, Wisconsin CBI Trust and Financial Services, Inc. Madison, Wisconsin ORDERS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Applicant Bank(s) Reserve Effective Bank Date First of America Bank—Central First of America Bank—Charlotte Chicago July 15, 1987 Lansing, Michigan Charlotte, Michigan First of America Bank—Central, First of America Bank—Grand Ledge, Chicago July 15, 1987 Lansing, Michigan Grand Ledge, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

758 Federal Reserve Bulletin • September 1987 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. National Association of Casualty & Insurance Agents Optical Coating Laboratory, Inc. v. United States, v. Board of Governors, Nos. 87-1354, 87-1355 (D.C. No. 288-86C (U.S. Claims Ct., filed May 6, 1986). Cir. filed July 29, 1987). CBC, Inc. v. Board of Governors, No. 86-1001 (10th Air Continental, Inc. v. Federal Reserve Board of Cir., filed Jan. 2, 1986). Boston, et. al., No. 87-1877-N (D. Massachusetts Myers, et al. v. Federal Reserve Board, No. 85-1427 filed July 23, 1987). (D. Idaho, filed Nov. 18, 1985). The Chase Manhattan Corporation v. Board of Gover- Souser, et al. v. Volcker, et al., No. 85-C-2370, et al. nors, No. 87-1333 (D.C. Cir. filed July 20, 1987). (D. Colo., filed Nov. 1, 1985). Securities Industry Association v. Board of Gover- Podolak v. Volcker, No. C85-0456, et al. (D. Wyo., nors, Nos. 87-4091, 87-4093, 87-4095 (2d Cir. filed filed Oct. 28, 1985). July 1 and July 15, 1987). Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa, Lewis v. Board of Governors, No. 87-3455 (11th Cir. filed Oct. 22, 1985). filed June 25, 1987). Farmer v. Wilkinson, et al, No. 4-85-CIVIL-1448 (D. Securities Industry Association v. Board of Gover- Minn., filed Oct. 21, 1985). nors, et al. No. 87-4041 and consolidated cases (2d Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D. Cir., filed May 1, 1987). Neb., filed Oct. 16, 1985). Securities Industry Association v. Board of Gover- Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D., nors, et al., No. 87-1169 (D.C. Cir., filed April 17, filed Oct. 8, 1985). 1987). Independent Community Bankers Associaton of South Jones v. Volcker, No. 87-0427 (D.D.C., filed Feb. 19, Dakota v. Board of Governors, No. 84-1496 (D.C. 1987). Cir., filed Aug. 7, 1985). Bankers Trust New York Corp. v. Board of Governors, Urwyler, et al. v. Internal Revenue Service, et al., No. No. 87-1035 (D.C. Cir., filed Jan. 23, 1987). 85-2877 (9th Cir., filed July 18, 1985). Securities Industry Association v. Board of Gover- Wight, et al. v. Internal Revenue Service, et al., No. nors, et al., No. 87-1030 (D.C.Cir., filed Jan. 20, 85-2826 (9th Cir., filed July 12, 1985). 1987). Florida Bankers Association v. Board of Governors, Grimm v. Board of Governors, No. 87-4006 (2d Cir., No. 84-3883 and No. 84-3884 (11th Cir., filed Feb. filed Jan. 16, 1987). 15, 1985). Independent Insurance Agents of America, et al. v. Florida Department of Banking v. Board of Gover- Board of Governors, Nos. 86-1572, 1573, 1576 nors, No. 84-3831 (11th Cir., filed Feb. 15, 1985), (D.C. Cir., filed Oct. 24, 1986). and No. 84-3832 (11th Cir., filed Feb. 15, 1985). Independent Community Bankers Association of Lewis v. Volcker, et al., No. 86-3210 (6th Cir., filed South Dakota v. Board of Governors, No. 86-5373 Jan. 14, 1985). (8th Cir., filed Oct. 3, 1986). Brown v. United States Congress, et al., No. 84-2887- Jenkins v. Board of Governors, No. 86-1419 (D.C. 6(IG) (S.D. Cal., filed Dec. 7, 1984). Cir., filed July 18, 1986). Melcher v. Federal Open Market Committee, No. 84- Securities Industry Association v. Board of Gover- 1335 (D.D.C., filed Apr. 30, 1984). nors, No. 86-1412 (D.C. Cir., filed July 14, 1986). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

759 Membership of the Board of Governors of the Federal Reserve System, 1913-87 APPOINTIVE MEMBERS1 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Charles S. Hamlin Boston Aug. 10, 1914 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg... .New York .do Term expired Aug. 9, 1918. Frederic A. Delano .Chicago .do Resigned July 21, 1918. W.P.G. Harding .... .Atlanta .do Term expired Aug. 9, 1922. Adolph C. Miller ... .San Francisco .do Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss New York .. .Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah Chicago .Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Piatt New York .. June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills Cleveland ... .Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell Minneapolis .May 12, 1921 Resigned May 12, 1923. Milo D. Campbell Chicago .Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger Cleveland ... .May 1, 1923 Resigned Sept. 15, 1927. George R. James St. Louis.... .May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.4 Edward H. Cunningham...Chicago do Died Nov. 28, 1930. Roy A. Young Minneapolis . .Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer New York ... .Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee Kansas City. .May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black Atlanta .May 19, 1933 Resigned Aug. 15, 1934. M.S. Szymczak Chicago .June 14, 1933 Reappointed in 1936 and 1948. Resigned May 31, 1961. J.J. Thomas Kansas City... do Served until Feb. 10, 1936.3 Marriner S. Eccles San Francisco .Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick New York .. .Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee Cleveland... do Served until Apr. 4, 1946.3 Ronald Ransom Atlanta do Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison Dallas .Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis Richmond... .June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper New York .. .Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans Richmond... .Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. ..St. Louis.... .Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton Boston .Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe Philadelphia .Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton Atlanta .Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell Minneapolis do Resigned June 30, 1952. Wm. McC. Martin, Jr New York .. .April 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A.L. Mills, Jr San Francisco .Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J.L. Robertson Kansas City... do Reappointed in 1964. Resigned Apr. 30, 1973. C. Canby Balderston Philadelphia... .Aug. 12, 1954 Served through Feb. 28, 1966. Paul E. Miller Minneapolis ... .Aug. 13, 1954 Died Oct. 21, 1954. Chas. N. Shepardson Dallas .Mar. 17, 1955 Retired Apr. 30, 1967. G.H. King, Jr Atlanta .Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell Chicago Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

760 Federal Reserve Bulletin • September 1987 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 J. Dewey Daane Richmond Nov. 29, 1963 Served until Mar. 8, 1974.3 Sherman J. Maisel San Francisco Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer Philadelphia Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill Dallas May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. Arthur F. Burns New York Jan. 31, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. John E. Sheehan St. Louis Jan. 4, 1972 Resigned June 1, 1975. Jeffrey M. Bucher San Francisco June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland Kansas City June 11, 1973 Resigned May 15, 1976. Henry C. Wallich Boston Mar. 8, 1974 Resigned Dec. 15, 1986 Philip E. Coldwell Dallas Oct. 29, 1974 Served through Feb. 29, 1980. Philip C. Jackson, Jr Atlanta July 14, 1975 Resigned Nov. 17, 1978. J. Charles Partee Richmond Jan. 5, 1976 Served until Feb. 7, 1986.3 StephenS. Gardner Philadelphia Feb. 13, 1976 Died Nov. 19, 1978. David M. Lilly Minneapolis June 1, 1976 Resigned Feb. 24, 1978. G. William Miller San Francisco Mar. 8, 1978 Resigned Aug. 6, 1979. Nancy H. Teeters Chicago Sept. 18, 1978 Served through June 27, 1984. Emmett J. Rice New York June 20, 1979 Resigned Dec. 31, 1986. Frederick H. Schultz Atlanta July 27, 1979 Served through Feb. 11, 1982. Paul A. Volcker Philadelphia Aug. 6, 1979 Resigned August 11, 1987. Lyle E. Gramley Kansas City May 28, 1980 Resigned Sept. 1, 1985. Preston Martin San Francisco Mar. 31, 1982 Resigned April 30, 1986. Martha R. Seger Chicago July 2, 1984 Wayne D. Angell Kansas City Feb. 7, 1986 Manuel H. Johnson Richmond Feb. 7, 1986 H. Robert Heller San Francisco Aug. 19, 1986 Edward W. Kelley, Jr Dallas May 26, 1987 Alan Greenspan, New York Aug. 11, 1987 Chairmen4 Vice Chairmen4 Charles S. Hamlin Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano Aug. 10, 1914-Aug. 9, 1916 W.P.G. Harding Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg Aug. 10, 1916-Aug. 9, 1918 Daniel R. Crissinger May 1, 1923-Sept. 15, 1927 Albert Strauss Oct. 26, 1918-Mar. 15, 1920 Roy A. Young Oct. 4, 1927-Aug. 31, 1930 Edmund Piatt July 23, 1920-Sept. 14, 1930 Eugene Meyer Sept. 16, 1930-May 10, 1933 J.J. Thomas Aug. 21, 1934-Feb. 10, 1936 Eugene R. Black May 19, 193 3-Aug. 15, 1934 Ronald Ransom Aug. 6, 1936-Dec. 2, 1947 Marriner S. Eccles Nov. 15, 1934-Jan. 31, 1948 C. Canby Balderston Mar. 11, 1955-Feb. 28, 1966 Thomas B. McCabe Apr. 15, 1948-Mar. 31, 1951 J.L. Robertson Mar. 1, 1966-Apr. 30, 1973 Wm. McC. Martin, Jr. ...Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell May 1, 1973-Feb. 13, 1976 Arthur F. Burns Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner Feb. 13, 1976-Nov. 19, 1978 G. William Miller Mar. 8, 1978-Aug. 6, 1979 Frederick H. Schultz July 27, 1979-Feb. 11, 1982 Paul A. Volcker Aug. 6, 1979-Aug. 11, 1987 Preston Martin Mar. 31, 1982-Mar. 31, 1986 Alan Greenspan Aug. 11, 1987- Manuel H. Johnson Aug. 22, 1986- EX-OFFICIO MEMBERS' Secretaries of the Treasury Comptrollers of the Currency W.G. McAdoo Dec. 23, 1913-Dec. 15, 1918 John Skelton Williams ...Feb. 2, 1914-Mar. 2, 1921 Carter Glass Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 David F. Houston Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes May 1, 1923-Dec. 17, 1924 Andrew W. Mellon Mar. 4, 1921-Feb. 12, 1932 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. Mills Feb. 12, 1932-Mar. 4, 1933 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 William H. Woodin Mar. 4, 1933-Dec. 31, 1933 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 Henry Morgenthau, Jr. ..Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the Secretary of the Treasury and the Comptroller of the Currency Federal Reserve Board was composed of seven members, including should continue to serve as members until Feb. 1, 1936, or until five appointive members, the Secretary of the Treasury, who was their successors were appointed and had qualified; and that ex-officio chairman of the Board, and the Comptroller of the thereafter the terms of members should be fourteen years and that Currency. The original term of office was ten years, and the five the designation of Chairman and Vice Chairman of the Board should original appointive members had terms of two, four, six, eight, and be for a term of four years. ten years respectively. In 1922 the number of appointive members 2. Date after words "Resigned" and "Retired" denotes final day was increased to six, and in 1933 the term of office was increased to of service. twelve years. The Banking Act of 1935, approved Aug. 23, 1935, 3. Successor took office on this date. changed the name of the Federal Reserve Board to the Board of 4. Chairman and Vice Chairman were designated Governor and Governors of the Federal Reserve System and provided that the Vice Governor before Aug. 23, 1935. Board should be composed of seven appointive members; that the 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 ALL 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 A6 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 A7 Federal Reserve Bank interest rates A8 Reserve requirements of depository institutions A9 Federal Reserve open market transactions FEDERAL FINANCE A28 Federal fiscal and financing operations FEDERAL RESERVE BANKS A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation A10 Condition and Federal Reserve note statements A30 Gross public debt of U.S. Treasury—Types and All Maturity distribution of loan and security ownership holdings A31 U.S. government securities dealers— Transactions A32 U.S. government securities dealers—Positions MONETAR Y AND CREDIT AGGREGA TES and financing A33 Federal and federally sponsored credit A12 Aggregate reserves of depository institutions agencies—Debt outstanding and monetary base A13 Money stock, liquid assets, and debt measures A15 Bank debits and deposit turnover A16 Loans and securities—All commercial banks SECURITIES MARKETS AND CORPORATE FINANCE COMMERCIAL BANKING INSTITUTIONS A34 New security issues—State and local governments and corporations A17 Major nondeposit funds A35 Open-end investment companies—Net sales and A18 Assets and liabilities, last-Wednesday-of-month asset position series A35 Corporate profits and their distribution Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • September 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 SPECIAL TABLES A53 U.S. international transactions—Summary A70 Terms of lending at commercial banks, A54 U.S. foreign trade May 31, 1987 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 1987 1987 Q3 Q4 Qi Q2 Feb.' Mar. Apr. May June Reserves of depository institutions2 1 Total 21.0 24.3 16.4 8.0 -.2 -.4 23.3 8.2 -13.0 2 Required 21.9 22.8 16.5 8.4 -3.3 5.9 25.5 3.1' -15.9 3 Nonborrowed 21.3 25.3 18.5 5.4 .3 .2 13.6 7.5' -7.9 4 Monetary base1 9.7 11.0 11.3 6.8 7.6 2.9 9.9 8.7 .6 Concepts of money, liquid assets, and debt4 .5 Ml 16.5 17.0 13.1 6.4 -.3 3.3' 17.7 4.5 -10.2 6 M2 10.6 9.2 6.3 2.6 -.3 1.4 6.1' .4' 1.3 7 M3 9.7 8.0 6.3' 4.1 1.3 1.6' 5.8' 4.8' 5.4 8 L 8.1 8.2 6.4' n.a. 2.4 -2.9' 4.2' 9.2 n.a. 9 Debt 12.5' 12. V 10.4' 9.0 5.2 8.2' 9.7' 10.2 n.a. Nontransaction components 10 M25 8.6 6.6 4.0' 1.2 -.3 .6 2.1' -1.0' 5.5 11 M3 only6 6.2 3.2r 6.4' 10.3 7.5 2.6' 4.3' 22.6' 21.8 Time and savings deposits Commercial banks 12 Savings7 25.0 36.9 37.3 24.1 34.5 28.5 27.8 16.0 6.9 13 Small-denomination time8 -7.5 -10.7 -4.9 -4.6 -6.9 -8.6 -8.3 -1.3 10.1 14 Large-denomination time910 -1.5 .1 9.7 18.3 1.2 12.2 27.7 18.4 17.0 Thrift institutions 15 Savings7 21.0 23.2 27.3 25.7 32.1 28.6' 30.5 16.9 12.7 16 Small-denomination time -3.4 -6.4 -4.3' 1.5 -2.7 .2 1.5' -.2' 11.8 17 Large-denomination time9 2.8 -7.0 -9.5' -8.4 -13.2 -9.5' -19.1 2.4 8.9 Debt components4 18 Federal 14.1" 11.5' 9.7' 9.5 3.0 5.9' 8.4' 15.1 n.a. 19 Nonfederal 11.9' 12. y 10.6' 8.8 5.9 9.0' 10.1' 8.7 n.a. 20 Total loans and securities at commercial banks" 10.6 9.1 10.1 7.0 .9 3.8 11.9 7.4 3.2 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: (I) 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 ail 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 • September 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 1987 1987 Apr. May June May 13 May 20 May 27 June 3 June 10 June 17 June 24 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 230,049 241,800 235,851 245,284 239,658 237,479 231,027 231,672 231,766 240,768 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 203,630 213,797 210,941 216,195 212,250 210,803 206,629 207,889 207,434 215,306 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 201,662 206,318 208,728 206,051 205,674 206,414 206,629 207,889 206,895 210,886 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 1,968 7,479 2,213 10,144 6,576 4,389 0 0 539 4,420 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 8,220 10,065 8,030 10,785 10,011 9,446 7,683 7,683 7,726 8,132 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 7,703 7,683 7,683 7,683 7,683 7,683 7,683 7,683 7,683 7,683 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 517 2,382 347 3,102 2,328 1,763 0 0 43 449 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 872 1,179 737 768 891 1,427 760 619 651 823 1111100000 FFFFFllllloooooaaaaattttt 604 645 724 210 1,016 674 928 493 821 757 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 16,723 16,114 15,419 17,327 15,491 15,129 15,026 14,988 15,134 15,750 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,079 11,073 11,069 11,074 11,072 11,072 11,070 11,070 11,069 11,069 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 17,744 17,795 17,866 17,783 17,797 17,811 17,835 17,849 17,863 17,877 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 209,684 212,064 214,465 211,745 212,004 212,890 213,783 214,502 214,795 214,356 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 530 523 507 528 525 520 513 514 511 502 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 7,163 16,028 8,776 21,006 14,940 12,684 5,067 3,712 3,879 14,570 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 279 314 246 317 286 258 282 223 228 237 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 2,211 2,095 2,072 1,951 2,041 1,955 2,206 2,103 2,239 2,036 2222200000 OOOOOttttthhhhheeeeerrrrr 424 407 404 375 374 362 385 364 361 333 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 6,896 6,910 6,814 6,988 6,932 6,848 6,507 6,613 6,891 6,950 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 36,701 37,344 36,520 36,248 36,443 35,863 36,207 37,577 36,811 35,748 End-of-month figures Wednesday figures 1987 1987 Apr. May June May 13 May 20 May 27 June 3 June 10 June 17 June 24 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 249,706 231,880 239,216 245,848 230,812 241,687 229,511 220,591 235,159 242,395 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss''''' 218,883 207,304 212,306 215,517 203,105 214,754 204,230 206,811 210,326 216,671 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 205,112 207,304 210,248 205,862 200,054 205,853 204,230 206,811 206,555 210,712 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 13,771 0 2,058 9,655 3,051 8,901 0 0 3,771 5,959 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 11,039 7,683 8,679 11,669 9,116 9,109 7,683 7,683 7,985 8,394 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 7,683 7,683 7,683 7,683 7,683 7,683 7,683 7,683 7,683 7,683 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss.................... 3,356 0 996 3,986 1,433 1,426 0 0 302 711 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 2,464 832 972 751 1,591 797 653 582 716 760 3333322222 FFFFFllllloooooaaaaattttt 126 922 1,579 364 1,846 1,557 1,624 452 772 645 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 17,914 15,139 15,680 17,547 15,154 15,470 15,321 15,063 15,360 15,925 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,076 11,070 11,069 11,073 11,071 11,070 11,070 11,069 11,068 11,069 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 17,767 17,823 17,889 17,795 17,809 17,823 17,847 17,861 17,875 17,889 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 210,265 213,547 215,201 212,077 212,355 213,706 214,218 214,941 214,807 214,300 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 531 514 492 526 520 512 511 514 503 499 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 29,688 6,383 13,774 19,914 12,608 10,832 4,359 2,811 8,126 16,356 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 343 320 318 258 297 355 296 234 232 208 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,812 1,779 1,775 1,791 1,793 1,778 1,779 1,822 1,823 1,771 4444422222 OOOOOttttthhhhheeeeerrrrr 533 372 458 394 446 375 378 389 374 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd 298 cccccaaaaapppppiiiiitttttaaaaalllll 7,057 6,511 6,847 6,676 6,789 6,285 6,514 6,785 6,832 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll 6,579 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 33,337 36,365 34,327 38,097 41,179 35,623 37,327 36,456 36,031 30,260 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 June 1987. At times during float. this 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 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1984 1985 1986 1986 1987 Dec. Dec. Dec. Nov. Dec. Jan. Feb. Mar. Apr. May 1 Reserve balances with Reserve Banks' 21,738 27,620 37,360 34,803 37,360 36.584 33,625 35,318 37,807 36,466 7 Total vault cash* 22,313 22,953 24,071 23,543 24,071 25,049 25,889 23,759 23,353 23,693 3 Vault3 18,958 20,522 22,199 21,595 22,199 23,084 23,435 21,743 21,587 21,873 4 Surplus 3,355 2,431 1,872 1,947 1,872 1,965 2,454 2,016 1,767 1,820 S Total reserves 40,696 48,142 59,560 56,399 59,560 59,668 57,060 57,061 59,393 58,339 6 Required reserves 39,843 47,085 58,191 55,421 58,191 58,600 55,849 56,146 58,566 57,260 7 Excess reserve balances at Reserve Banks6 853 1,058 1,369 978 1,369 1,068 1,211 916 827 1,079 8 Total borrowings at Reserve Banks 3,186 1,318 827 752 827 580 556 527 993 1,035 9 Seasonal borrowings at Reserve Banks 113 56 38 70 38 34 71 91 120 196 10 Extended credit at Reserve Banks 2,604 499 303 418 303 225 283 264 270 288 Biweekly averages of daily figures for weeks ending 1987 Mar. 11 Mar. 25 Apr. 8 Apr. 22 May 6 May 20 June 3 June 17 July V July 15'"' 11 Reserve balance^ with Reserve Banks1 35,400 34,809 36,358 38,746 37,612 36,327 36,022 37,189 35,496 37,117 12 Total vault cash* 23,662 24,077 23,198 23,479 23,289 23,552 24,094 23,668 25,215 24,238 13 Vault3 21,582 22,038 21,350 21,761 21,519 21,801 22,151 21,976 23,092 22,466 14 Surplus 2,080 2,039 1,848 1,719 1,770 1,751 1,943 1,692 2,123 1,773 15 Total reserves 56,982 56,847 57,708 60,506 59,131 58,128 58,173 59,165 58,588 59,583 16 Required reserves 56,021 55,866 57,029 59,703 58,115 57,066 57,048 58,307 56,941 59,066 17 Excess reserve balances at Reserve Banks6 961 981 679 804 1,016 1,063 1,125 858 1,647 517 18 Total borrowings at Reserve Banks 466 528 641 956 1,410 830 1,094 635 856 696 19 Seasonal borrowings at Reserve Banks 83 96 98 110 159 190 226 233 298 271 20 Extended credit at Reserve Banks 275 263 248 267 299 276 297 254 289 261 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 maintenance period at institutions having no required reserve balances. to 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic NonfinancialS tatistics • September 1987 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1 Averages of daily figures, in millions of dollars 1987 week ending Monday MMaattuurriittyy aanndd ssoouurrccee Mar. 16 Mar. 23 Mar. 30 Apr. 6 Apr. 13 Apr. 20' Apr. 27 May 4 May 11 Federal funds purchased, repurc hase agreements, and other selected borrowing in immediately available funds From commercial banks in the United States 1 For one day or under continuing contract 78,545 76,854 74,628 80,467 81,639 80,380 72,677 74,589 72,245 2 For all other maturities 8,385 8,387 8,312 8,639 8,974 9,877 8,966 8,951 9,378 From other depository institutions, foreign banks and foreign official institutions, and United States government agencies 3 For one day or under continuing contract 42,569r 39,346r 39,666' 3388,,991122'' 42,536'" 3355,,881188'' 35,509 3366,,226611 3377,,447744 4 For all other maturities 7,108' 7,001' 7,487'" 7,996' 8,039' 8,381' 8,384 9,872 9,708 Repurchase agreements on U.S. government and federal agency securities in immediately available funds Brokers and nonbank dealers in securities 5 For one day or under continuing contract 12,226 11,325 12,120 12,806 12,556 12,495 12,713 12,815 11,755 6 For all other maturities 9,638 10,345 10,525 9,347 9,869 13,167 13,596 15,000 14,898 All other customers 7 For one day or under continuing contract 26,848 25,636 25,813 26,223 26,048' 21,149 24,810 24,187 23,189 8 For all other maturities 9,209 9,399 9,874 9,940 10,332 12,483 9,038 8,796 8,702 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 26,854 25,703 23,914 29,107 28,649 30,933 29,588 32,481 27,347 10 To all other specified customers2 11,485 11,926 10,282 11,329 11,124 11,615 13,656 12,864 11,449 1. Banks with assets of $1 billion or more as of Dec. 31, 1977 . 2. Brokers and nonbank dealers in securities; other depository institutions; foreign banks and official institutions; and United States government agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit- SShhoorrtt--tteerrmm aaddjjuussttmmeenntt ccrreeddiitt aanndd sseeaassoonnaall ccrreeddiitt First 60 days of Next 90 days of FFFeeedddeeerrraaalll RRReeessseeerrrvvveee After 150 days borrowing borrowing BBBaaannnkkk EEffffeeccttiivvee ddaattee ffoorr ccuurrrreenntt rraatteess Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 7/28/87 date rate 7/28/87 rate 7/28/87 rate 7/28/87 rate Boston 5Vi 8/21/86 6 5V> 6 6Vi 7 IVi 8 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 8/21/86 8/21/86 San Francisco ... 5 Vi 8/21/86 6 5Vi 6 6 Vi 7 IVi 8 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 ll v e F l) . — R. B o a f n k Effective A le H v e F l) . — R. B o a f n k Effective date A le ll v e F l) . — R. B o a f n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1973 7 Vi 7 Vi 1978--Aug. 21 73/4 73/4 11998822——JJuullyy 20 11V^—12 11 Vi 1974—Apr. 25 7Vi-8 8 Sept. 22 8 8 23 llVi HVi 3 0 8 8 Oct. 16 8-8Vi SVi AAuugg.. 2 11-1IVi 11 Dec. 9 7V+-8 73/4 20 8 V2 8V2 3 11 11 16 73/4 73/4 Nov. 1 SV2-9V2 m 16 10 Vi lOVi 9V2 9 Vi 27 lO-lOVi 10 1975—Jan. 6 71/4-73/4 73/4 30 10 10 10 7V4-73/4 IV* 1979--July 20 10 10 Oct. 12 9Vi-10 91/! 24 71/4 IV* AAuugg.. 17 lO-lOVi lOVi 13 9Vi 9Vi Feb. 5 6-V4-7V4 63/4 70 10W lOVi Nov. 22 9-9Vi 9 7 63/4 63/4 SSeepptt.. 19 . 10Vi-ll 11 26 9 9 Mar. 10 61/4-63/4 6V4 21 11 11 Dec. 14 8Vi-9 9 14 6V4 6V4 Oct. 8 11-12 12 15 8Vi-9 8l/< May 16 6-6V4 6 10 12 12 17 8 Vi SVi 23 6 6 1980--Feb. 15 12-13 13 11998844——AApprr.. 9 8Vi-9 9 1976—Jan. 19 5vi-6 5 Vi 19 13 13 13 9 9 23 5Vi SVi MMaayy 79 12-13 13 Nov. 21 8Vi-9 SVz Nov. 22 5V4-5 Vi 5V4 30 12 12 26 8Vi 8Vi 26 5V4 5V4 June 13 11-12 11 Dec. 24 8 8 16 11 11 1977—Aug. 30 5V4-53/4 5V4 JJuullyy 78 10-11 10 11998855——MMaayy 20 7Vi-8 7Vi 3 1 5V4-53/4 53/4 29 10 10 24 IVi IVi Sept. 2 53/4 53/4 Sept. 76 11 11 Oct. 26 6 6 Nov. 17 12 12 1986—Mar. 7 1-1 Vi 1 Dec. 5 12-13 13 10 1 1 1978—Jan. 9 6-6 Vi 6 Vi 8 13 13 AApprr.. 21 6V1-I 6 Vi 20 6 Vi 6 Vi 23 6 Vi 6V1 May 11 6Vi-7 1 1981---MMaayy 5 13-14 14 July 11 6 6 12 7 1 8 14 14 AAuugg.. 21 5Vi-6 5Vi July 3 1-1V* IV4 Nov. ? 13-14 13 22 SVi 5Vi July 10 m m 6 13 13 Dec. 4 12 12 In effect July 28, 1987 5Vi 5Vi 1. After May 19, 1986, the highest rate within the structure of discount rates rate under this structure is applied may be shortened. See section 201.3(b)(2) of may be charged on adjustment credit loans of unusual size that result from a major Regulation A. operating problem at the borrower's facility. 3. Rates for short-term adjustment credit. For description and earlier data see A temporary simplified seasonal program was established on Mar. 8, 1985, and the following publications of the Board of Governors: Banking and Monetary the interest rate was a fixed rate Vi percent above the rate on adjustment credit. Statistics. 1914-1941. and 1941-1970; Annual Statistical Digest. 1970-1979, 1980. The program was re-established on Feb. 18, 1986 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 Vi 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

A8 DomesticN onfinancial Statistics • September 1987 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Type of deposit, i^nd Monetary Control Act deposit interval" Effective date Net transaction accounts' '4 $0 million-$36.7 million.... 12/30/86 More than $36.7 million ... 12/30/86 Nonpersonal time deposits5 By original maturity Less than 1 Vi years 10/6/86 IVi years or more 10/6/83 Eurocurrency liabilities All types 11/13/80 1. Reserve requirements in effect on Dec. 31, 1986. Required reserves must be with those with the highest reserve ratio. With respect to NOW accounts and held in the form of deposits with Federal Reserve Banks or vault cash. other transaction accounts, the exemption applies only to such accounts that Nonmembers may maintain reserve balances with a Federal Reserve Bank would be subject to a 3 percent reserve requirement. indirectly on a pass-through basis with certain approved institutions. For previous 3. Transaction accounts include all deposits on which the account holder is reserve requirements, see earlier editions of the Annual Report and of the permitted to make withdrawals by negotiable or transferable instruments, pay- FEDERAL RESERVE BULLETIN. Under provisions of the Monetary Control Act, ment orders of withdrawal, and telephone and preauthorized transfers in excess of depository institutions include commercial banks, mutual savings banks, savings three per month for the purpose of making payments to third persons or others. and loan associations, credit unions, agencies and branches of foreign banks, and However, MMDAs and similar accounts subject to the rules that permit no more Edge corporations. than six preauthorized, automatic, or other transfers per month, of which no more 2. The Garn-St. Germain Depository Institutions Act of 1982 (Public Law than three can be checks, are not transaction accounts (such accounts are savings 97-320) requires that $2 million of reservable liabilities (transaction accounts, deposits subject to time deposit reserve requirements). nonpersonal time deposits, and Eurocurrency liabilities) of each depository 4. The Monetary Control Act of 1980 requires that the amount of transaction institution be subject to a zero percent reserve requirement. The Board is to adjust accounts against which the 3 percent reserve requirement applies be modified the amount of reservable liabilities subject to this zero percent reserve require- annually by 80 percent of the percentage increase in transaction accounts held by ment each year for the succeeding calendar year by 80 percent of the percentage all depository institutions, determined as of June 30 each year. Effective Dec. 30, increase in the total reservable liabilities of all depository institutions, measured 1986, the amount was increased from $31.7 million to $36.7 million. on an annual basis as of June 30. No corresponding adjustment is to be made in 5. In general, nonpersonal time deposits are time deposits, including savings the event of a decrease. On Dec. 30, 1986, the exemption was raised from $2.6 deposits, that are not transaction accounts and in which a beneficial interest is million to $2.9 million. In determining the reserve requirements of depository held by a depositor that is not a natural person. Also included are certain institutions, the exemption shall apply in the following order: (1) net NOW transferable time deposits held by natural persons and certain obligations issued accounts (NOW accounts less allowable deductions); (2) net other transaction to depository institution offices located outside the United States. For details, see accounts; and (3) nonpersonal time deposits or Eurocurrency liabilities starting section 204.2 of Regulation D. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1986 1987 TTyyppee ooff ttrraannssaaccttiioonn 11998844 11998855 11998866 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 20,036 22,214 22,602 3,318 5,422 997 191 1,062 4,226 1,697 2 Gross sales 8,557 4,118 2,502 0 0 583 3,581 0 653 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 7,700 3,500 1,000 0 0 0 800 0 0 0 Others within 1 year 5 Gross purchases 1,126 1,349 190 190 0 0 0 0 1,232 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shift 16,354 19,763 18,673 2,974 1,280 611 1,855 1,762 1,375 4,063 8 Exchange -20,840 -17,717 -20,179 -1,810 -1,502 0 -4,954 -1,799 -522 -1,336 9 Redemptions 0 0 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 1,638 2,185 893 893 0 0 0 0 3,642 0 11 Gross sales 0 0 0 0 0 0 252 0 0 0 12 Maturity shift -13,709 -17,459 -17,058 -2,414 -1,280 -591 -1,650 -1,762 -1,373 -1,804 13 Exchange 16,039 13,853 16,984 1,510 1,502 0 4,354 1,799 522 1,111 5 to 10 years 14 Gross purchases 536 458 236 236 0 0 0 0 914 0 15 Gross sales 300 100 0 0 0 0 0 0 0 0 16 Maturity shift -2,371 -1,857 -1,620 -560 0 -20 -204 0 -3 -2,259 17 Exchange 2,750 2,184 2,050 200 0 0 400 0 0 150 Over 10 years 18 Gross purchases 441 293 158 158 0 0 0 0 669 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -275 -447 0 0 0 0 0 0 0 0 21 Exchange 2,052 1,679 1,150 100 0 0 200 0 0 75 All maturities 22 Gross purchases 23,776 26,499 24,078 4,795 5,422 997 191 1,062 10,683 1,697 23 Gross sales 8,857 4,218 2,502 0 0 583 3,833 0 653 0 24 Redemptions 7,700 3,500 1,000 0 0 0 800 0 0 0 Matched transactions 25 Gross sales 808,986 866,175 927,997 60,146 91,404 63,865 82,086 72,306 83,822 91,642 26 Gross purchases 810,432 865,968 927,247 60,232 88,730 65,145 81,387 73,476 82,494 92,137 Repurchase agreements2 27 Gross purchases 127,933 134,253 170,431 16,888 44,303 36,373 0 5,657 37,653 59,340 28 Gross sales 127,690 132,351 160,268 15,471 32,028 46,897 3,168 5,657 23,881 73,111 29 Net change in U.S. government securities 8,908 20,477 29,989 6,298 15,023 -8,830 -8,307 2,231 22,474 -11,580 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 256 162 398 125 0 110 0 0 37 * Repurchase agreements2 33 Gross purchases 11,509 22,183 31,142 1,622 5,488 4,714 0 897 9,265 16,071 34 Gross sales 11,328 20,877 30,522 1,274 3,522 6,171 857 897 5,908 19,428 35 Net change in federal agency obligations -76 1,144 222 223 1,965 -1,567 -857 0 3,320 -3,357 BANKERS ACCEPTANCES 36 Repurchase agreements, net -418 0 0 0 0 0 0 0 0 0 37 Total net change in System Open Market Account 8,414 21,621 30,211 6,522 16,988 -10,397 -9,165 2,231 25,794 -14,936 1. Sales, redemptions, and negative figures reduce holdings of the System 2. In July 1984 the Open Market Trading Desk discontinued accepting bankers Open Market Account; all other figures increase such holdings. Details may not acceptances in repurchase agreements, add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic NonfinancialS tatistics • September 1987 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAccccoouunntt 1987 1987 May 27 June 3 June 10 June 17 June 24 Apr. May June Consolidated condition statement ASSETS 1 Gold certificate account 11,072 11,070 11,069 11,068 11,069 11,076 11,070 11,069 2 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5.018 5,018 5,018 5,018 3 Coin 484 466 463 469 463 517 476 451 Loans 4 To depository institutions 797 653 582 716 760 2,464 832 972 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 7,683 7.683 7,683 7,683 7,683 7,683 7,683 77,,668833 8 Held under repurchase agreements 1,426 0 0 302 711 3,356 0 996 U.S. Treasury securities Bought outright 9 Bills 105,799 104,176 106,757 106,501 108,166 105,058 107,250 110077,,770022 10 Notes 73,303 73.303 73,303 73,303 73,522 73,378 73,303 75,522 11 Bonds 26,751 26,751 26.751 26,751 276,024 26,676 26,751 27,024 12 Total bought outright2 205,853 204,230 206,811 206,555 210,712 205,112 207,304 210,248 13 Held under repurchase agreements 8,901 0 0 3,771 5,959 13,771 0 2,058 14 Total U.S. Treasury securities 214,754 204,230 206,811 210,326 216,671 218,883 207,304 212,306 15 Total loans and securities 224,660 212,566 215,076 219,027 225,825 232,386 215,819 221,957 16 Items in process of collection 9,379 8,242 6.209 7,527 6,440 6,203 6,356 9,801 17 Bank premises 678 679 679 683 680 675 678 683 Other assets 18 Denominated in foreign currencies 8,195 8,036 7,850 7,858 7,863 8,283 8,035 7,782 19 All other4 6,597 6,606 6,534 6,813 7,382 8,236 6,426 7,183 20 Total assets 266,083 252,683 252,898 258,463 264,740 272,394 253,878 263,944 LIABILITIES 21 Federal Reserve notes 196,882 197,348 198,055 197,903 197,373 193,547 196,714 198,255 Deposits 22 To depository institutions 42,957 37,402 39,149 38,279 37,802 35,149 38,144 3366,,110022 23 U.S. Treasury—General account 10,832 4,359 2,811 8,126 16,356 29,688 6,383 13,774 24 Foreign—Official accounts 355 296 234 232 208 343 320 318 25 Other 446 375 378 389 374 533 372 458 26 Total deposits 54,590 42,432 42,572 47,026 54,740 65,713 45,219 50,652 27 Deferred credit items 7,822 6,618 5,757 6,749 5,795 6,077 5,434 8,190 28 Other liabilities and accrued dividends 2,588 2,228 2,302 2,573 2,604 2,696 2,300 2,356 29 Total liabilities 261,882 248,626 248,686 254,251 260,512 268,033 249,667 259,453 CAPITAL ACCOUNTS 30 Capital paid in 1,950 1,952 1,953 1,954 1,956 1,921 1,950 1,961 31 Surplus 1,873 1,873 1,873 1,873 1,873 1,873 1,873 1,873 32 Other capital accounts 378 232 386 385 399 567 388 657 33 Total liabilities and capital accounts 266,083 252,683 252,898 258,463 264,740 272,394 253,878 263,944 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international account 179,473 182,495 178,565 179,846 177,808 174,715 181,247 183,125 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 241,622 241,896 242,158 243,010 243,945 240,164 241.604 244,360 36 LESS: Held by bank 44,740 44,548 44,103 45,107 46.572 46,617 44,890 46,105 37 Federal Reserve notes, net 196,882 197,348 198,055 197,903 197,373 193,547 196,714 198,255 Collateral held against notes net: 38 Gold certificate account 11,072 11,070 11,069 11,068 11.068 11,076 11,070 11,069 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. Treasury and agency securities 180,792 181,260 181,968 181,817 181.287 177,453 180,626 182,168 42 Total collateral 196,882 197,348 198,055 197,903 197,373 193,547 196,714 198,255 1. Some of these data also appear in the Board's H.4.1 (503) release. For 4. Includes special investment account at the Federal Reserve Bank of Chicago address, see inside front cover. in Treasury bills maturing within 90 days. 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities 5. Includes exchange-translation account reflecting the monthly revaluation at pledged with Federal Reserve Banks—and excludes securities sold and scheduled market exchange rates of foreign-exchange commitments. to be bought back under matched sale-purchase transactions. 3. Valued monthly at market exchange rates. 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 Type and maturity groupings May 27 June 3 June 10 June 17 June 24 Apr. 30 May 29 June 30 1 Loans—Total 797 653 582 716 760 2.464 832 972 2 Within 15 days 781 548 460 689 742 2.413 752 887 3 16 days to 90 days 16 105 122 27 18 51 80 85 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. Treasury securities—Total .. 214,754 204,230 206,811 210,326 216,671 218,883 207,304 212,306 10 Within 15 days1 21,002 9,440 10,860 11,801 17,979 21,640 8.970 8,789 11 16 days to 80 days 47,788 48,411 51,710 50,807 48,208 48,780 51,848 51,563 12 91 days to 1 year 66,364 66,838 64,700 68,177 68,987 66,830 66,885 70.995 13 Over 1 year to 5 years 41,160 41,100 41,100 41,100 42.494 41,159 41,160 41,956 14 Over 5 years to 10 years 14,430 14,430 14,430 14,430 14,742 16,538 14,430 14,742 15 Over 10 years 24,010 24,011 24,011 24.011 24.261 23.936 24,011 24,261 16 Federal agency obligations—Total 9,109 7.683 7,683 7,985 8,394 11,039 7,683 8,679 17 Within 15 days1 1,707 73 18 531 939 3.487 281 1,229 18 16 days to 90 days 532 777 759 618 619 669 532 614 19 91 days to 1 year 1,521 1.484 1,509 1,439 1.439 1.547 1,521 1,449 20 Over 1 year to 5 years 3,763 3,763 3,824 3.824 3,824 3,750 3,763 3,814 21 Over 5 years to 10 years 1,306 1,306 1,293 1,293 1,293 1,306 1,306 1,293 22 Over 10 years 280 280 280 280 280 280 280 280 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic NonfinancialS tatistics • September 1987 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 19i5 6 1987 item 1983 1984 1985 1986 Dec. Dec. Dec. Dec. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjustec ADJUSTED FOR 1 Total reserves2 36.16 39.51 46.06 56.17 54.49 56.17 56.88 56.87 56.85 57.95 58.35 57.72 2 Nonborrowed reserves 35.38 36.32 44.74 55.34 53.74 55.34 56.30 56.32 56.32r 56.96 57.32 56.94 3 Nonborrowed reserves plus extended credit3 35.38 38.93 45.24 55.64 54.16 55.64 56.53 56.60 56.59 57.23 57.60 57.21 4 Required reserves 35.59 38.66 45.00 54.80 53.51 54.80 55.82 55.66 55.94 57.13 57.27' 56.52 5 Monetary base4 185.38 199.20 217.32 239.51 236.88 239.51 242.43 243.97 244.56 246.59 248.37 248.49 Not seasonally adjusted 6 Total reserves2 36.87 40.57 47.24 57.64 54.59 57.64 58.73 56.09 56.07 58.37 57.30 57.64 7 Nonborrowed reserves 36.09 37.38 45.92 56.81 53.84 56.81 58.15 55.53 55.54 57.38 56.26 56.86 S Nonborrowed reserves plus extended credit3 36.10 39.98 46.42 57.11 54.26 57.11 58.38 55.82 55.81 57.65 56.55 57.13 9 Required reserves 36.31 39.71 46.18 56.27 53.61 56.27 57.66 54.88 55.15 57.54 56.22 56.43 10 Monetary base4 188.65 202.34 220.82 243.63 237.50 243.63 243.42 240.82 241.93 246.07 246.83 249.30 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 38.89 40.70 48.14 59.56 56.40 59.56 59.67 57.06 57.06 59.39 58.34 58.79 12 Nonborrowed reserves 38.12 37.51 46.82 58.73 55.65 58.73 59.09 56.50 56.53 58.40 57.30 58.02 13 Nonborrowed reserves plus extended credit5 38.12 40.09 47.41 59.04 56.15 59.04 59.32 56.74 56.82 58.19 58.03' 58.35 14 Required reserves 38.33 39.84 47.08 58.19 55.42 58.19 58.60 55.85 56.15 58.57 57.26 57.59 15 Monetary base4 192.26 204.18 223.53 247.71 241.27 247.71 246.75 244.22 244.98 249.24 249.94' 252.55 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 1987 1983 1984 1985 1986 DDeecc.. DDeecc.. DDeecc.. DDeecc.. MMaarr.. AApprr.. MMaayy June Seasonally adjusted 1 Ml 526.9 557.5 627.0 730.5 739.5 750.4 753.2 746.8 2 M2 2,184.6 2,369.1 2,569.5 2,800.1' 2,824.7' 2,839.1' 2,840.1' 2,843.2 M3 2,692.8 2,985.4 3,205.5 3,489.1' 3,523.1' 3,540.1' 3,554.2' 3,570.2 4 L 3,154.6 3,529.0 3,838.9 4,141.1' 4,172.4' 4,187.0' 4,219.2 n.a. 5 Debt 5,206.3 5,946.2' 6,774.9 7,630.4' 7,781.7' 7,844.6' 7,911.3 n.a. Ml components 6 Currency2 148.3 158.5 170.6 183.5 187.7 188.9 190.2 191.1 7 Travelers checks3 4.9 5.2 5.9 6.4 6.8 6.8 6.7 6.8 8 Demand deposits4 242.3 248.3 272.2 308.3 299.3 304.0 304.0 297.5 9 Other checkable deposits5 131.4 145.5 178.3 232.2' 245.7 250.8 252.3 251.3 Nontransactions components 10 In M26 1,657.7 1,811.5 1,942.5 2,069.7 2,085.1' 2,088.7' 2,086.9' 2,096.4 11 In M3 only7 508.2 616.3 636.1 689.0' 698.4' 700.9' 714.1' 727.1 Savings deposits8 12 Commercial Banks 133.2 122.2 124.6 154.5 168.3 172.2 174.5 175.5 13 Thrift institutions 173.0 166.6 179.0 211.8 228.0' 233.8' 237.1' 239.6 Small denomination time deposits9 14 Commercial Banks 350.9 386.6 383.9 364.7 360.0 357.5 357.1 360.1 15 Thrift institutions 432.9 498.6 500.3 488.7 485.9' 486.5' 486.4' 491.2 Money market mutual funds 16 General purpose and broker/dealer 138.2 167.5 176.5 207.6 211.6 211.8 210.3 211.3 17 Institution-only 43.2 62.7 65.1 84.1 84.9 83.1 81.8 81.3 Large denomination time deposits10 18 Commercial Banks" 230.0 269.6 284.1 291.8 299.0 305.9 310.6 315.0 19 Thrift institutions 96.2 147.3 152.1 155.3 151.1 148.7 149.0 150.1 Debt components 20 Federal debt 1,170.5' 1,365.3' 1,584.6' 1,804.5' 1,828.2' 1,841.1' 1,864.2 n.a. 21 Nonfederal debt 4,033.5 4,580.9' 5,190.3' 5,826.0' 5,953.5' 6,003.5' 6,047.0 n.a. Not seasonally adjusted 72 Ml 538.3 570.3 641.0 746.5 729.0 757.6 745.0 749.3 23 M2 2,191.6 2,378.3 2,580.5 2,813.6' 2,818.4' 2,847.8' 2,829.1' 2,844.3 24 M3 2,702.4 2,997.2 3,218.8 3,504.4' 3,520.2' 3,548.2' 3,544.4' 3,568.1 25 L 3,163.1 3,539.7 3,850.7 4,154.5' 4,175.7' 4,195.1' 4,203.6 n.a. 26 Debt 5,200.7 5,940.6' 6,768.3 7,623.0' 7,759.7' 7,817.2' 7,875.1 n.a. Ml components 27 Currency2 150.6 160.8 173.1 186.2 186.0 188.0 190.1 191.9 28 Travelers checks3 4.6 4.9 5.5 6.0 6.4 6.4 6.5 7.1 29 Demand deposits4 251.0 257.2 282.0 319.5 291.5 305.8 298.9 299.0 30 Other checkable deposits5 132.2 147.4 180.4 235.0 245.1 257.5 249.5 251.4 Nontransactions components 31 M26 1,653.3 1,808.0 1,939.5 2,067.1 2,089.4' 2,090.2' 2,084.0' 2,095.0 32 M3 only7 510.8 618.9 638.3 690.7' 701.8' 700.4' 715.3' 723.8 Money market deposit accounts 33 Commercial banks 230.4 267.4 332.5 379.0 378.2 375.4 368.8 367.5 34 Thrift institutions 148.5 150.0 180.7 192.4 192.3 190.1 188.3 186.0 Savings deposits8 35 Commercial Banks 132.2 121.4 123.9 153.8 167.2 172.1 174.9 176.7 36 Thrift institutions 172.4 166.2 178.8 211.8 227.9' 233.9 237.7 240.7 Small denomination time deposits9 37 Commercial Banks 351.1 386.7 383.8 364.4 359.6 355.6 355.6 359.7 38 Thrift institutions 433.5 499.6 501.5 489.8 486.1' 484.9' 483.1' 488.5 Money market mutual funds 39 General purpose and broker/dealer 138.2 167.5 176.5 207.6 211.6 211.8 210.3 211.3 40 Institution-only 43.2 62.7 65.1 84.1 84.9 83.1 81.8 81.3 Large denomination time deposits10 41 Commercial Banks" 231.6 271.2 285.6 293.2 301.3 303.2 309.2 311.9 42 Thrift institutions 96.3 147.3 151.9 154.9 151.2 148.0 149.0 149.8 Debt components 43 Federal debt 1,170.2 1,364.7 1,583.7 1,803.3 1,838.2' 1,846.7 1,857.8 n.a. 44 Nonfederal debt 4,030.5 4,575.8'' 5,184.5' 5,819.7' 5,921.4' 5,970.5' 6,017.3 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic NonfinancialS tatistics • September 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 by Debt: Debt of domestic nonfinancial sectors consists of outstanding credit money market mutual funds, depository institutions, and foreign banks and market debt of the U.S. government, state and local governments, and private official institutions. nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- NOTE; Latest monthly and weekly figures are available from the Board's H.6 sumer credit (including bank loans), other bank loans, commercial paper, bankers (508) release. Historical data are available from the Banking Section, Division of acceptances, and other debt instruments. The source of data on domestic Research and Statistics, Board of Governors of the Federal Reserve System, nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt Washington, D.C. 20551. data are based on monthly averages. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 1.22 BANK DEBITS AND DEPOSIT TURNOVER Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1986 1987 Dec. Jan. Feb. Mar. Apr. May DEBITS TO Seasonally adjusted Demand deposits2 1 All insured banks 128,440.8 154,556.0 189,534.1 206,689.6 210,574.2 211,169.4 217,019.7 224,603.0 222,774.5 2 Major New York City banks 57,392.7 70,445.1 91,212.9 95,831.3 99,357.1 98,712.3 104,224.5 107,159.2 106,599.1 3 Other banks 71,048.1 84,110.9 98,321.4 110,858.4 111,217.1 112,457.1 112,795.2 117,443.7 116,175.4 4 ATS-NOW accounts3 1,588.7 1,920.8 2,351.1 2,960.8 2,255.7 2,306.0 2,344.6 2,384.7 2,425.1 5 Savings deposits4 633.1 539.0 410.3 533.7 459.2 477.7 468.6 528.0 508.9 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 434.4 496.5 561.8 560.7 580.3 594.7 613.8 627.0 613.0 7 Major New York City banks 1,843.0 2,168.9 2,460.6 2,251.6 2,426.4 2,461.0 2,707.8 2,711.5 2,660.3 8 Other banks 268.6 301.8 327.4 340.0 345.5 357.0 358.0 368.5 359.3 9 ATS-NOW accounts3 15.8 16.7 16.8 18.3 13.4 13.5 13.6 13.6 13.9 10 Savings deposits4 5.0 4.5 3.1 3.5 2.9 2.9 2.8 3.1 2.9 DEBITS TO Not seasonally adjusted Demand deposits2 11 All insured banks 128,059.1 154,108.4 189,443.3 226,263.1 216,638.7 191,572.9 222,532.0 229,095.0 209,229.8 12 Major New York City banks 57,282.4 70,400.9 91,294.4 106,935.2 102,274.2 89,866.7 106,161.2 108,597.8 98,828.3 13 Other banks 70,776.9 83,707.8 98,149.0 119,327.9 114,364.5 101,706.2 116,370.8 120,497.3 110,401.5 14 ATS-NOW accounts3 1,579.5 1,903.4 2,338.4 2,841.5 2,679.2 2,173.2 2,422.7 2,735.8 2,420.5 15 MMDA5 848.8 1,179.0 1,599.3 2,058.2 1,913.3 1,600.7 1,754.4 2,071.1 1,786.2 16 Savings deposits4 632.9 538.7 404.3 503.6 499.0 434.6 476.2 570.8 492.4 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 433.5 497.4 564.0 600.3r 579.9' 550.0 641.0 635.1 582.7 18 Major New York City banks 1,838.6 2,191.1 2,494.3 2,483.2r 2,345.5r 2,273.2r 2,742.6 2,755.6 2,496.3 19 Other banks 267.9 301.6 327.9 357.4 346.6 329.4 377.3 375.0 345.6 20 ATS-NOW accounts3 15.7 16.6 16.8 17.4 15.7 12.9 14.1 15.2 14.0 21 MMDA5 3.5 3.8 4.5 5.5r 5.K 4.3' 4.7 5.6 4.9 22 Savings deposits4 5.0 4.5 3.1 3.3 3.1 2.7 2.9 3.4 2.8 1. Annual averages of monthly figures. NOTE. Historical data for demand deposits are available back to 1970 estimated 2. Represents accounts of individuals, partnerships, and corporations and of in part from the debits series for 233 SMSAs that were available through June states and political subdivisions. 1977. Historical data for ATS-NOW and savings deposits are available back to 3. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- July 1977. Back data are available on request from the Banking Section, Division counts authorized for automatic transfer to demand deposits (ATS). ATS data are of Research and Statistics, Board of Governors of the Federal Reserve System, available beginning December 1978. Washington, D.C. 20551. 4. Excludes ATS and NOW accounts, MMDA and special club accounts, such These data also appear on the Board's G.6 (406) release. For address, see inside as Christmas and vacation clubs. front cover. 5. Money market deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • September 1987 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1986 1987 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total loans and securities2 1,998.2 2,022.6 2,044.6 2,052.4 2,063.5 2,089.8 2,118.3 2,119.7 2,126.2 2,147.3 2,160.6 2,166.3 2 U.S. government securities 284.7 291.5 294.9 299.6 304.1 309.9 316.3 315.2 314.3 315.8 320.1 316.7 3 Other securities 189.7 196.0 204.2 199.8 197.9 196.9 190.2 193.8 195.5 197.2 197.6 198.5 4 Total loans and leases2 1,523.7 1,535.1 1,545.4 1,553.0 1,561.5 1,583.0 1,611.8 1,610.7 1,616.4 1,634.3 1,642.9 1,651.2 5 Commercial and industrial 512.6 515.2 517.3 520.0 525.7 541.4 554.1 553.8 551.7 553.9 555.9' 558.1 6 Bankers acceptances held3.. 6.1 6.5 6.6 6.7 6.4 6.4 6.8 6.8 6.2 6.5 6.8 6.8 7 Other commercial and industrial 506.5 508.7 510.7 513.3 519.2 535.0 547.2 546.9 545.5 547.4 549.0 551.3 8 U.S. addressees4 497.7 499.8 501.7 504.6 510.7 525.7 537.8 537.9 536.8 538.9 540.8 542.8 9 Non-U.S. addressees4.... 8.9 8.9 9.0 8.8 8.5 9.4 9.5 9.1 8.7 8.5 8.2 8.5 10 Real estate 458.3 464.8 468.9 474.2 479.6 489.0 499.2 504.0 511.0 517.9 526.3 536.8 11 Individual 306.3 308.1 309.9 311.2 312.6 314.2 314.9 315.2 315.7 316.6 316.7 314.6 12 Security 43.7 43.1 42.8 39.1 40.1 38.6 37.7 38.5 38.3 43.6 4422..00 4422..55 13 Nonbank financial institutions 34.5 34.5 34.9 35.5 34.9 35.2 35.7 34.7 35.0 35.4 35.4 33.9 14 Agricultural 33.2 33.0 32.7 32.4 32.1 31.7 31.2 30.7 30.1 29.5 29.3 29.2 15 State and political subdivisions 59.9 60.1 60.0 59.3 58.7 57.9 57.8 57.2 56.9 56.0 55.2 54.4 16 Foreign banks 10.3 10.1 10.1 10.0 10.0 10.4 10.6 10.3 9.7 9.9 9.9 10.3 17 Foreign official institutions ... 6.1 6.1 6.0 6.0 5.9 5.8 5.9 6.1 6.7 6.7 5.8 5.3 18 Lease financing receivables ... 20.5 20.7 21.1 21.8 22.0 22.2 22.1 22.2 22.3 22.6 22.9 23.0 19 All other loans 38.3 39.6 41.8 43.4 40.0 36.6 42.6 38.1 38.8 42.3r 43.6 43.2 Not seasonally adjusted 20 Total loans and securities2 1,993.7 2,015.1 2,042.3 2,044.0 2,064.2 2,105.2 2,123.7 2,121.6 2,127.8 2,148.4 2,157.9 2,166.1 21 U.S. government securities 285.6 290.5 293.8 296.1 303.2 308.3 314.6 318.9 317.2 317.7 319.7' 317.1 22 Other securities 187.5 196.2 205.0 200.1 198.3 198.1 193.7 194.1 194.4 195.2 196.8 197.0 23 Total loans and leases2 1,520.6 1,528.4 1,543.5 1,547.8 1,562.6 1,598.7 1,615.4 1,608.6 1,616.2 1,635.4 1,641.4 1,651.9 24 Commercial and industrial.... 512.1 512.8 516.1 517.8 525.2 544.3 552.4 551.7 554.5 556.5 557.5 559.3 25 Bankers acceptances held3.. 6.2 6.3 6.7 6.6 6.6 6.7 6.7 6.7 6.2 6.4 6.7 6.9 26 Other commercial and industrial 506.0 506.5 509.4 511.2 518.5 537.6 545.8 545.0 548.3 550.0 550.8 552.4 27 U.S. addressees4 496.8 497.3 500.2 502.1 509.5 528.8 537.1 536.3 539.9 541.6 542.4 543.7 28 Non-U.S. addressees4.... 9.2 9.1 9.2 9.1 9.1 8.8 8.7 8.7 8.4 8.4 8.4 8.7 29 Real estate 458.4 464.9 469.9 475.1 480.7 489.9 499.3 503.1 509.8 516.7 525.4 536.5 30 Individual 305.2 307.9 310.8 312.3 313.7 317.8 317.9 314.7 313.3 314.4 314.8 313.2 31 Security 42.7 40.7 41.3 37.8 40.4 40.9 39.4 37.5 38.6 45.1 42.1 4433..22 32 Nonbank financial institutions 34.5 34.8 35.6 35.6 35.4 36.4 35.7 33.8 33.8 34.8' 34.9 34.0 33 Agricultural 34.0 33.9 33.7 33.1 32.2 31.4 30.5 29.8 29.2 28.8 29.1 29.6 34 State and political subdivisions 59.9 60.1 60.0 59.3 58.7 57.9 57.8 57.2 56.9 56.0 55.2 54.4 35 Foreign banks 10.3 9.9 10.3 10.0 10.1 10.9 10.7 10.5 9.7 9.5 9.6 10.0 36 Foreign official institutions ... 6.1 6.1 6.0 6.0 5.9 5.8 5.9 6.1 6.7 6.7 5.8 5.3 37 Lease financing receivables... 20.5 20.6 21.0 21.5 21.8 22.2 22.4 22.4 22.5 22.7 22.9 23.0 38 All other loans 36.8 36.8 39.0 39.1 38.6 41.3 43.3 41.6 41.1 44.2 44.1 43.5 1. These data also appear in the Board's 0.1 (407) release. 3. Includes nonfinancial commercial paper held. 2. Excludes loans to commercial banks in the United States. 4. United States includes the 50 states and the District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1986 1987 SSoouurrccee July Aug. Sept. Oct. Nov. Dec. Jan.' Feb. Mar.' Apr. May June Total nondeposit funds 1 Seasonally adjusted2 136.1 137.9 142.6 140.5 144.2 144.9 153.5 157.5' 161.6 157.5' 165.4' 160.7 2 Not seasonally adjusted 132.9 137.8 141.9 139.5 145.7 145.0 153.0 160.1' 163.9 157.6' 166.2' 158.1 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 165.5 167.4 166.9 167.8 166.0 164.0 169.1 169.4' 167.8 167.7 165.5' 162.6 4 Not seasonally adjusted 162.4 167.3 166.2 166.9 167.5 164.1 168.6 172.0' 170.1 167.8 166.2 160.0 5 Net balances due to foreign-related institutions, not seasonally adjusted -29.5 -29.5 -24.3 -27.3 -21.8 -19.1 -15.6 -11.9' -6.2 -10.2' .0 -1.9 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -33.8 -31.2 -29.2 -31.9 -28.7 -30.7 -26.1 -23.7' -21.1 -22.9' -15.6' -15.6 7 Gross due from balances 73.9 75.2 74.0 73.5 70.8 73.4 71.6 68.3' 66.1 70.5' 68.5' 67.1 8 Gross due to balances 40.1 44.0 44.8 41.6 42.1 42.7 45.5 44.6 45.0 47.6 52.9' 51.5 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted5 4.3 1.7 4.9 4.6 6.9 11.6 10.5 11.8 14.9 12.7 15.5 13.7 10 Gross due from balances 64.2 66.3 67.9 68.3 68.7 70.8 75.0 72.9 71.1 72.6 75.4 77.1 11 Gross due to balances 68.6 67.9 72.7 72.9 75.6 82.5 85.5 84.7' 86.0 85.3 90.9 90.8 Security RP borrowings 12 Seasonally adjusted® 95.2 95.9 95.9 97.0 96.9 97.0 99.2 95.5 92.5 95.3 95.1 96.4 13 Not seasonally adjusted 92.0 95.8 95.2 96.1 98.5 97.1 98.7 98.1 94.8 95.4 95.9 93.8 U.S. Treasury demand balances7 14 Seasonally adjusted 15.4 14.5 16.5 17.1 23.2 21.2 21.3 23.2 17.7 20.7 26.1 27.8 15 Not seasonally adjusted 16.8 11.1 18.2 15.3 15.3 19.2 27.5 28.6 17.1 21.6 30.8 25.5 Time deposits, $100,000 or more8 16 Seasonally adjusted 341.1 344.3 344.1' 342.5' 343.2' 345.6 350.1 351.1 354.1 359.8 366.2 372.8 17 Not seasonally adjusted 338.3 344.0 345.5 343.7' 343.9' 347.0' 351.3 353.2 356.4 357.1 364.7 369.7 1. Commercial banks are those in the 50 states and the District of Columbia banks, term federal funds, overdrawn due from bank balances, loan RPs, and with national or state charters plus agencies and branches of foreign banks, New participations in pooled loans. York investment companies majority owned by foreign banks, and Edge Act 4. Averages of daily figures for member and nonmember banks. corporations owned by domestically chartered and foreign banks. 5. Averages of daily data. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from 6. Based on daily average data reported by 122 large banks. nonbanks and not seasonally adjusted net Eurodollars. 7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at 3. Other borrowings are borrowings on any instrument, such as a promissory commercial banks. Averages of daily data. note or due bill, given for the purpose of borrowing money for the banking 8. Averages of Wednesday figures. business. This includes borrowings from Federal Reserve Banks and from foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • September 1987 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series' Billions of dollars 1986 1987 AAccccoouunntt Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2,164.8 2,179.7 2,183.2 2,227.3 2,314.3 2,284.8 2,279.4 2,279.2 2,306.2 2,318.9 2,312.6 2 Investment securities 460.0 469.4 471.9 475.4 479.6 482.2 484.7 486.2 492.5 495.4 493.0 3 U.S. Treasury securities 272.9 276.6 282.8 287.3 292.6 296.1 298.8 299.5 305.1 307.0 303.2 4 Other 187.1 192.8 189.1 188.0 187.0 186.1 185.9 186.7 187.5 188.4 189.8 5 Trading account assets 29.3 27.9 26.0 28.1 27.8 26.4 29.0 25.2 23.3 21.4 20.1 6 Total loans 1,675.6 1,682.4 1,685.3 1.723.8 1,807.0 1,776.3 1,765.6 1,767.8 1,790.3 1,802.1 1,799.6 7 Interbank loans 145.5 139.8 141.2 154.7 168.9 160.1 156.7 154.3 151.8 160.4 151.0 8 Loans excluding interbank 1,530.1 1,542.5 1,544.1 1,569.1 1,638.1 1,616.2 1,608.9 1,613.5 1,638.5 1,641.7 1,648.6 9 Commercial and industrial 513.8 515.9 517.2 524.9 568.2 551.1 551.5 555.3 555.5 558.2 558.3 10 Real estate 466.5 470.5 476.2 481.8 497.5 499.9 503.5 510.7 519.0 527.4 538.5 11 Individual 308.8 311.2 312.8 314.1 320.4 317.0 314.7 313.1 315.2 314.8 312.8 12 All other 241.0 244.9 237.8 248.2 252.0 248.3 239.2 234.4 248.9 241.3 239.0 13 Total cash assets 208.3 199.3 203.5 227.0 273.7 214.4 206.3 203.8 209.7 230.8 213.2 14 Reserves with Federal Reserve Banks 28.3 28.2 31.6 32.2 41.2 33.4 28.4 31.1 29.8 37.9 33.8 15 Cash in vault 23.7 22.9 23.5 22.2 25.7 23.7 23.5 22.9 24.0 25.1 24.2 16 Cash items in process of collection . . . 73.5 66.2 66.2 86.5 111.3 74.5 71.4 68.1 74.5 81.3 74.4 17 Demand balances at U.S. depository institutions 34.0 32.8 33.1 38.3 43.3 34.0 33.0 32.7 33.9 37.2 31.1 18 Other cash assets 48.7 49.2 49.0 47.9 52.3 48.8 50.1 49.0 47.5 49.3 49.7 19 Other assets 194.8 201.4 198.6 202.2 224.8 201.3 201.1 202.1 204.0 208.1' 204.1 20 Total assets/total liabilities and capital ... 2,567.8 2,580.4 2,585.3 2,656.5 2,812.8 2,700.5 2,686.8 2,685.2 2,719.9 2,758.3r 2,729.9 21 Deposits 1,837.6 1,834.5 1,847.1 1,900.2 2,018.0 1,898.3 1,895.5 1,899.6 1,919.5 1,939.1 1,923.8 22 Transaction deposits 545.7 538.9 548.8 596.3 691.1 577.8 569.2 568.8 590.7 596.9 578.3 23 Savings deposits 499.2 505.5 516.0 522.9 535.0 532.3 535.9 539.7 535.1 538.6 535.0 24 Time deposits 792.6 790.1 782.2 781.1 791.9 788.2 790.3 791.2 793.6 803.6 810.5 25 Borrowings 379.8 391.6 383.3 397.4 414.5 432.7 425.6 414.9 422.7 435.6 428.2 26 Other liabilities 173.8 176.3 175.7 180.0 199.6 188.0 184.6 188.7 195.2 200.3r 200.5 27 Residual (assets less liabilities) 176.7 178.1 179.2 178.9 180.6 181.5 181.2 181.9 182.5 183.3 177.4 MEMO 28 U.S. government securities (including trading account) 290.6 293.2 299.5 304.8 308.4 314.5 320.1 316.7 318.9 320.6 315.5 29 Other securities (including trading account) 198.7 204.1 198.4 198.8 198.9 194.1 193.7 194.7 196.9 196.1 197.6 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,034.6 2,044.8 2,052.1 2,094.7 2,154.4 2,136.7 2,130.3 2,121.7 2,146.9 2,156.2 2,151.0 31 Investment securities 443.0 450.5 452.9 457.1 459.3 461.5 463.3 463.6 470.0 471.5 469.6 32 U.S. Treasury securities 265.0 267.9 273.6 279.0 283.0 286.8 289.2 289.4 295.2 296.7 293.8 33 Other 178.0 182.5 179.3 178.2 176.3 174.8 174.1 174.2 174.8 174.8 175.8 34 Trading account assets 29.3 27.9 26.0 28.1 27.8 26.4 29.0 25.2 23.3 21.4 20.1 35 Total loans 1,562.3 1,566.4 1,573.2 1,609.5 1,667.3 1,648.8 1,638.0 1,632.9 1,653.6 1,663.3 1,661.3 36 Interbank loans 119.7 115.6 118.8 133.0 137.9 134.3 130.5 124.1 124.2 128.6 121.5 37 Loans excluding interbank 1,442.7 1,450.8 1,454.3 1,476.4 1,529.5 1,514.5 1,507.5 1,508.8 1,529.3 1,534.7 1,539.7 38 Commercial and industrial 449.4 448.1 449.0 455.7 488.2 475.5 474.1 474.6 473.5 475.3 471.9 39 Real estate 460.4 464.3 470.0 475.1 490.3 493.2 497.0 504.1 512.0 520.3 531.5 40 Individual 308.5 310.9 312.5 313.8 320.1 316.7 314.4 312.7 314.9 314.5 312.5 41 All other 224.4 227.5 222.7 231.8 230.9 229.2 221.9 217.4 229.0 224.7 223.8 42 Total cash assets 191.2 182.5 185.6 210.0 253.5 196.6 188.9 186.5 192.5 213.2 195.4 43 Reserves with Federal Reserve Banks 26.6 26.9 29.7 29.8 39.7 31.2 27.1 29.7 27.2 35.9 32.1 44 Cash in vault 23.7 22.9 23.5 22.2 25.7 23.6 23.5 22.8 24.0 25.0 24.1 45 Cash items in process of collection ... 73.1 65.8 65.6 86.1 110.9 74.0 71.0 67.7 74.0 80.9 73.9 46 Demand balances at U.S. depository institutions 32.3 30.9 31.3 36.3 40.8 32.2 31.1 31.1 31.9 35.1 29.4 47 Other cash assets 35.5 36.0 35.5 35.6 36.4 35.6 36.4 35.2 35.4 36.2 35.9 48 Other assets 139.3 143.5 141.0 141.6 165.0 141.5 144.0 143.4 144.4 143.1'' 134.8 49 Total assets/total liabilities and capital . .. 2,365.0 2,370.8 2,378.7 2,446.3 2,572.8 2,474.8 2,463.2 2,451.5 2,483.8 2,512.5'' 2,481.1 50 Deposits 1,784.2 1,779.3 1,792.8 1,844.8 1,957.0 1,840.8 1,838.2 1,840.7 1,857.1 1,876.5 1,861.9 51 Transaction deposits 537.6 530.6 540.9 588.2 682.2 569.4 561.3 560.5 582.2 588.4 569.8 52 Savings deposits 497.4 503.7 514.1 520.8 533.0 530.3 533.9 537.7 533.1 536.6 533.0 53 Time deposits 749.3 745.0 737.7 735.8 741.8 741.1 743.0 742.5 741.8 751.4' 759.1 54 Borrowings 296.8 306.9 301.3 314.1 322.9 341.7 336.1 319.1 328.2 337.1 328.5 55 Other liabilities 110.5 109.6 108.6 111.7 115.5 114.0 110.8 113.0 119.1 118.8' 116.4 56 Residual (assets less liabilities) 173.5 174.9 176:0 175.8 177.5 178.3 178.1 178.8 179.4 180.2 174.3 1. Data have been revised because of benchmarking to new Call Reports and condition report data. Data for other banking institutions are estimates made for new seasonal factors beginning July 1985. Back data are available from the the last Wednesday of the month based on a weekly reporting sample of foreign- Banking Section, Board of Governors of the Federal Reserve System, Washing- related institutions and quarter-end condition reports. ton, D.C., 20551. 2. Commercial banking institutions include insured domestically chartered Figures are partly estimated. They include all bank-premises subsidiaries and commercial banks, branches and agencies of foreign banks. Edge Act and other significant majority-owned domestic subsidiaries. Loan and securities data Agreement corporations, and New York State foreign investment corporations. for domestically chartered commercial banks are estimates for the last Wednes- 3. Insured domestically chartered commercial banks include all member banks day of the month based on a sample of weekly reporting banks and quarter-end and insured nonmember banks. 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 1987 AAccccoouunntt Apr. 29 May 6 May 13 May 20 May 27 June 3 June 10 June 17 June 24 1 Cash and balances due from depository institutions 99,258 99,093' 100,312 94,589' 114,368' 105,389 100,069 103,833 102,919 2 Total loans, leases and securities, net 1,016,966 1,019,493' 1,007,593 1,021,292 1,014,493' 1,019,250 1,008,491 1,008,924 999,225 3 U.S. Treasury and government agency 110,969 111,298' 110,477 112,136 111,722 111,940 110,809 109,782 107,910 4 13,847 13,695' 12,705 14,496 13,612 13,449 12,900 13,102 12,286 Investment account, by maturity 97,123 97,603' 97,772 97,640 98,110 98,490 97,909 96,680 95,624 6 15,293 15,261 15,062 15,095 14,817 15,566 15,396 14,956 15,547 7 Over one through five years 42,055 43,314 43,348 44,825 44,760 44,422 44,201 44,118 43,106 8 39,774 39,028' 39,361 37,720 38,533 38,503 38,312 37,606 36,970 9 69,313 69,160' 68,619 68,245 68,18C 67,805 68,013 68,203 68,888 in 4,946 4,617 4,164 3,801 3,681' 3,189 3,369 3,547 4,161' li 64,367 64,543' 64,456 64,444 64,499 64,616 64,644 64,655 64,726 p States and political subdivisions, by maturity 51,528 51,333 51,348 51,338 51,394 51,188 51,096 51,038 50,920 13 6,629 6,604 6.566 6,515 6,501 6,428 6,360 6,347 6,248 14 44,899 44,729 44,782 44,823 44,893 44,760 44,736 44,691 44,672 15 Other bonds, corporate stocks, and securities 12,840 13,210' 13,107 13,106 13,105 13,428 13,548 13,617 13,807 16 Other trading account assets 4,535 4,385' 4,819 4,469 4,045 3,875 4,208 4,315 3,622 17 60,379 64,006' 56,248' 64,060' 61,706' 69,204 60,292 61,583 59,545 18 To commercial banks 35,833 37,788' 32,242' 35,865' 35,849' 41,147 32,054 35,604 33,816 19 To nonbank brokers and dealers in securities 16,539 18,006 16,655 18,588 17,494 20,485 20,378 19,099 18,892 70 8,007 8,212 7,351 9,607 8,364 7,573 7,860 6,880 6,837 ?1 Other loans and leases, gross 793,930 792,924' 789,791' 794,863' 792,906' 794,123 792,899 795,132 790,412 77 775,326 774,333' 771,196' 776,263' 774,228' 775,372 774,102 776,065 771,304 73 Commercial and industrial 277,296 278,633' 277,168' 280,512' 278,852' 278,671 278,113 277,273 275,444 74 Bankers acceptances and commercial paper 2,247 2,475 2,415 2,514 2,214 2,162 2,500 2,507 2,456 75 All other 275,049 276,158' 274,753' 277,998' 276,638' 276,509 275,613 274,767 272,988 76 U.S. addressees 271,734 272,816' 271.460' 274,653' 273,342' 273,321 272,408 271,596 269,821 27 Non-U.S. addressees 3,315 3,341 3,293 3,344 3,296 3,188 3,204 3,171 3,167 78 Real estate loans 221,383 222,344' 223.827' 225,816' 225,897' 226,902 227,862 230,323 230,075 79 To individuals for personal expenditures 141,928 141,467' 141,409' 141,114' 141,126' 141,142 141,210 140,701 141,032 30 To depository and financial institutions 53,490 54,628' 54,353' 54,154' 53,714' 52,729 53,134 52,914 51,072 31 Commercial banks in the United States 23,356 23,097' 23,233' 22,835' 23,645' 22,451 22,142 21,468 20,870 3? Banks in foreign countries 4,561 5,109 4,556 4,920 4,949 5,035 5,338 5,266 5,159 33 Nonbank depository and other financial institutions 25,573 26,422 26,564 26,398 25,121 25,243 25,655 26,180 25,042 34 For purchasing and carrying securities 20,435 16,577 15,234 15,299 14,465 15,771 15.162 14,835 14,377 35 To finance agricultural production 5,318 5,367 5,389 5,478 5,475 5,525 5,522 5,604 5,638 36 To states and political subdivisions 33,533 33,288' 33,232' 33,261' 33,207' 33,042 32,933 33,097 32,633 37 To foreign governments and official institutions 3,045 3,111 2,984 2,990 2,905 2,969 2,967 3,084 2,980 38 All other 18,897 18,918' 17,601 17,640 18,585' 18,620 17,198 18,233 18,054 39 Lease financing receivables 18,604 18,590 18,594 18,599 18,678 18,751 18,798 19,067 19,109 40 LESS: Unearned income 4,495 4,455 4,470 4,480 4,473 4,443 4,462 4,468 4,487 41 Loan and lease reserve 17,667 17,824 17,891 18,001 19,594 23,255 23,269 25,623 26,665 47 Other loans and leases, net 771,769 770,644' 767,430' 772,381' 768,839' 766,426 765,169 765,041 759,261 43 All other assets 125,988 124,878' 124,043' 120,838' 126,350' 125,030 119,834 120,582 123,222 44 Total assets 1,242,212 1,243,464' 1,231,948' 1,236,719' 1,255,211' 1,249,670 1,228,394 1,233,340 1,225,365 45 228,895 226,205' 217,924' 227,900' 231,733' 232,077 221,688 229,294 221,676 46 Individuals, partnerships, and corporations 176,883 174,649 172,111' 176,980' 179,457' 177,630 173,787 178,798 167,345 47 States and political subdivisions 5,585 5,913 4,763' 5,226 5,478 5,042 4,961 6,228 5,476 48 U.S. government 4,378 2,335 1,253' 4,083 1,288 4,555 2,578 1,875 3,030 49 Depository institutions in United States 23,857 25,570 23,355' 24,988 27,648' 26,695 24,292 24,815 23,444 50 Banks in foreign countries 6,338 6,846 5,892 6,324 6,774 6,358 6,502 5,889 7,776 51 Foreign governments and official institutions 1,076 1,148 959 922 1,128 1,012 1,059 1,262 979 57 Certified and officers' checks 10,777 9,743 9,591' 9,377 9,960 10,784 8,507 10,427 13,627 53 Transaction balances other than demand deposits 60,280 60,165 58,996 59,331 59,148 61,650 60,902 60,568 58,552 54 Nontransaction balances 516,208 517,195 518,242 520,744 523,201 526,378 526,835 526,483 525,447 55 Individuals, partnerships and corporations 478,130 478,411 479,174 480,996 483,352 486,341 487,047 487,083 486,308 56 States and political subdivisions 26,698 27,313 27,514 28,099 28,107 28,303 28,205 27,749 27,522 57 U.S. government 791 876 880 896 897 920 897 897 888 58 Depository institutions in the United States 9,698 9,722 9,791 9,860 9,934 9,900 9,778 9,770 9,890 59 Foreign governments, official institutions and banks 890 873 883 892 911 914 907 983 839 60 Liabilities for borrowed money 253,928 264,402 257,996 254,111 261,301' 255,757 247,797 250,416 248,635 61 Borrowings from Federal Reserve Banks 156 1,075 0 844 0 0 0 0 0 67 Treasury tax-and-loan notes 20,764 20,980 20,633 20,865 20,549 13,364 11,330 20,240 20,766 63 All other liabilities for borrowed money2 233,008 242,347 237,364 232,402 240,752' 242,393 236,467 230,176 227,869 64 Other liabilities and subordinated note and debentures 94,408 86,587' 89,491' 85,533' 90,796' 89,354 86,130 84,013 88,725 65 Total liabilities 1,153,720 1,154,554' 1,142,65c 1,147,619' 1,166,179' 1,165,216 1,143,351 1,150,776 1,143,035 66 Residual (total assets minus total liabilities)3 88,492 88,910' 89,299 89,100 89,032 84,454 85,043 82,564 82,330 MEMO 67 Total loans and leases (gross) and investments adjusted4 979,939 980,888' 974,478 985,074 979,066' 983,351 982,025 981,943 975,690 68 Total loans and leases (gross) adjusted4 795,121 796,044' 790,563 800,223 795,119' 799,730 798,995 799,643 795,271 69 Time deposits in amounts of $100,000 or more 159,599 159,952 160,485' 162,880 164,502 165,648 165,823 165,979 166,684 70 Loans sold outright to affiliates—total5 1,685 1,722 1,698 1,703 1,677 1,581 1,568 1,597 1,621 71 Commercial and industrial 1,215 1,177' 1,141' 1,116' 1,090' 1,023 1,009 1,032 1,051 77 Other 470 546' 558' 588' 588' 558 559 564 570 73 Nontransaction savings deposits (including MMDAs) 230,211 230,838 230,884' 230,901 231,157 232,488 232,182 231,262 229,087 1. Includes securities purchased under agreements to resell. 4. Exclusive of loans and federal funds transactions with domestic commercial 2. Includes federal funds purchased and securities sold under agreements to banks. repurchase; for information on these liabilities at banks with assets of $1 billion or 5. Loans sold are those sold outright to a bank's own foreign branches, more on Dec. 31, 1977, see table 1.13. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 3. This is not a measure of equity capital for use in capital-adequacy analysis or not a bank), and nonconsolidated nonbank subsidiaries of the holding company. for other analytic uses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic NonfinancialS tatistics • September 1987 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures except as noted 1987 AAccccoouunntt Apr. 29 May 6 May 13 May 20 May 27 June 3 June 10 June 17 June 24 1 Cash and balances due from depository institutions 24,078 23,225 22,904 21,202 28,872 25,602 26,669 23,217 29,880 2 Total loans, leases and securities, net1 226,815 229,013 221,084 227,461 223,290 223,501 219,222 218,048 216,253 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 14,218 14,100 14,038 14,382 14,081 14,483 13,931 13,863 13,865 6 One year or less 1,535 1,532 1,483 1,791 1,388 1,786 1,348 1,259 1,249 / Over one through five years 5,135 5,178 5,170 5,687 5,680 5,616 5,638 5,712 5,666 8 Over five years 7,547 7,390 7,385 6,904 7,013 7,080 6,946 6,892 6,950 y Other securities2 0 0 0 0 0 0 0 0 0 10 Trading account2 0 0 0 0 0 0 0 0 0 n Investment account 16,527 16,471 16,453 16,428 16,496 16,507 16,494 16,533 16,550 12 States and political subdivisions, by maturity 13,955 13,920 13,966 13,963 14,010 14,036 13,989 13,970 13,939 13 One year or less 1,395 1,404 1,392 1,388 1,386 1,380 1,348 1,328 1,262 14 Over one year 12,560 12,516 12,574 12,575 12,625 12,656 12,640 12,641 12,677 15 Other bonds, corporate stocks and securities 2,572 2,550 2,487 2,465 2,486 2,471 2,505 2,563 2,610 16 Other trading account assets2 0 0 0 0 0 0 0 0 0 Loans and leases 17 Federal funds sold3 26,681 30,730 24,226 28,361 26,007 28,358 26,984 25,812 26,621 18 To commercial banks 11,837 13,796 8,895 10,919 9,432 10,875 8,838 10,305 10,861 19 To nonbank brokers and dealers in securities 8,456 9,974 9,338 10,500 10,235 12,100 12,759 11,153 11,455 20 To others 6,388 6,960 5,992 6,942 6,340 5,383 5,386 4,354 4,305 21 Other loans and leases, gross 175,959 174,314 173,037 174,972 174,979 175,252 172,978 173,931 171,637 22 Other loans, gross 171,302 169,643 168,375 170,289 170,238 170,487 168,193 169,203 166,888 23 Commercial and industrial 61,118 61,790 61,721 63,360 62,272 62,101 61,489 61,367 59,784 24 Bankers acceptances and commercial paper 590 677 706 744 538 532 606 557 538 25 All other 60,527 61,113 61,014 62,616 61,734 61,569 60,883 60,810 59,246 26 U.S. addressees 60,096 60,656 60,554 62,136 61,240 61,096 60,384 60,325 58,740 27 Non-U.S. addressees 431 458 460 479 494 474 499 485 506 28 Real estate loans 40,895 41,201 41,599 42,297 42,427 43,060 43,228 43,497 43,676 29 To individuals for personal expenditures 20,908 20,940 20,949 20,716 20,781 20,777 20,827 20,939 20,948 30 To depository and financial institutions 21,792 22,275 22,086 21,435 22,224 21,112 21,073 21,356 21,226 31 Commercial banks in the United States 12,311 12,259 12,294 12,028 12,747 11,694 11,261 11,327 11,422 32 Banks in foreign countries 2,365 2,667 2,255 2,429 2,556 2,703 2,929 3,007 2,792 33 Nonbank depository and other financial institutions 7,117 7,349 7,536 6,979 6,920 6,716 6,884 7,022 7,012 34 For purchasing and carrying securities 11,265 7,902 7,512 7,825 7,418 8,340 7,464 7,130 6,310 35 To finance agricultural production 248 252 257 257 273 270 273 290 279 36 To states and political subdivisions 8,088 8,024 8,024 8,036 8,075 8,027 7,987 7,888 7,876 37 To foreign governments and official institutions 882 926 787 828 737 794 824 918 806 38 All other 6,108 6,333 5,440 5,533 6,031 6,004 5,026 5,817 5,981 39 Lease financing receivables 4,657 4,671 4,662 4,683 4,741 4,765 4,785 4,728 4,750 40 LESS: Unearned income 1,485 1,467 1,470 1,479 1,482 1,479 1,487 1,492 1,499 41 Loan and lease reserve 5,085 5,135 5,199 5,203 6,790 9,620 9,678 10,599 10,920 42 Other loans and leases, net 169,389 167,712 166,368 168,290 166,706 164,153 161,813 161,840 159,218 43 All other assets4 62,900 61,003 59,961 59,002 63,854 59,339 56,655 57,570 59,263 44 Total assets 313,793 313,242 303,950 307,665 316,016 308,442 302,546 298,835 305,397 Deposits 45 Demand deposits 59,405 58,373 52,845 59,437 60,741 58,091 56,444 59.130 62,713 46 Individuals, partnerships, and corporations 41,385 40,351 37,095 41,469 42,065 39,131 39,400 41,208 40,254 47 States and political subdivisions 556 848 515 682 615 636 667 704 689 48 U.S. government 713 370 112 809 189 869 417 170 525 49 Depository institutions in the United States 5,771 6,130 5,120 6,484 6,550 6,201 6,100 5,947 6,084 50 Banks in foreign countries 5,176 5,674 4,763 5,140 5,558 5,210 5,375 4,789 5,647 51 Foreign governments and official institutions 917 1,008 797 798 965 880 927 1,120 837 52 Certified and officers' checks 4,886 3,990 4,441 4,053 4,800 55,,116644 33,,555588 55,,119911 88,,667766 53 Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers) 8,135 8,023 7,865 7,950 7,858 8,210 8,137 8,197 7,868 54 Nontransaction balances 98,093 98,562 98,342 99,425 99,940 100,106 99,279 99,024 9988,,558866 55 Individuals, partnerships and corporations 89,705 89,866 89,563 90,350 90,799 91,118 90,351 90,222 8899,,888800 56 States and political subdivisions 6,123 6,494 6,558 6,838 6,908 6,833 6,850 6,807 6,698 57 U.S. government 31 25 25 32 28 26 24 24 26 58 Depository institutions in the United States 1,752 1,712 1,722 1,729 1,714 1,633 1,566 1,512 1,536 59 Foreign governments, official institutions and banks 482 465 473 476 492 496 488 458 446 60 Liabilities for borrowed money 73,209 78,771 73,061 71,971 75,998 76,753 76,569 72,216 73,082 61 Borrowings from Federal Reserve Banks 0 500 0 430 0 0 0 0 0 62 Treasury tax-and-loan notes 5,244 5,242 4,995 5,219 5,154 3,132 2,853 4,939 5,115 63 All other liabilities for borrowed money5 67,965 73,029 68,065 66,322 70,844 73,620 73,716 67,277 67,966 64 Other liabilities and subordinated note and debentures 45,586 39,900 42,134 39,153 41,760 39,780 36,498 35,628 38,195 65 Total liabilities 284,429 283,630 274,246 277,936 286,297 282,940 276,926 274,195 280,443 66 Residual (total assets minus total liabilities)6 29,365 29,612 29,704 29,729 29,719 25,502 25,620 24,640 24,954 MEMO 67 Total loans and leases (gross) and investments adjusted1-7 209,237 209,560 206,565 211,196 209,384 212,032 210,288 208,507 206,389 68 Total loans and leases (gross) adjusted7 178,492 178,989 176,074 180,386 178,806 181,042 179,863 178,110 175,975 69 Time deposits in amounts of $100,000 or more 35,955 36,465 36,431 37,326 37,289 37,386 36,664 36,374 36,301 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 1987 AAccccoouunntt Apr. 29 May 6 May 13 May 20 May 27 June 3 June 10 June 17 June 24 1 Cash and due from depository institutions . 10,282 10,654 9,951 9,863 10,168 10,217 9,552 9,725 9,957 2 Total loans and securities 92,318 91,055 90,421 92,540 94,518 90,194 92,276 92,581 93,071 3 U.S. Treasury and govt, agency securities 6,728 6,716 6,461 6,712 7,051 6,913 6,670 6,772 6,487 4 Other securities 7,493 7,884 7,921 8,070 8,100 8,279 8,300 8,263 8,325 5 Federal funds sold2 7,223 7,007 6,532 7,793 8,370 4,599 5,933 5,971 5,924 6 To commercial banks in the United States 5,759 5,930 5,701 6,872 7,820 4,006 5,284 5,155 5,208 7 To others 1,464 1,077 832 922 550 593 649 816 716 8 Other loans, gross 70,874 69,448 69,507 69,964 70,997 70,403 71,372 71,574 72,335 9 Commercial and industrial 44,208 43,894 43,876 44,583 44,519 44,145 45,271 45,920 46,224 10 Bankers acceptances and commercial paper 3,112 3,184 3,139 3,270 3,237 3,114 3,238 3,470 33,,332211 11 All other 41,096 40,710 40,737 41,313 41,282 41,031 42,033 42,450 42,903 12 U.S. addressees 38,835 38,438 38,467 38,945 39,006 38,516 39,525 39,860 40,258 13 Non-U.S. addressees 2,261 2,271 2,270 2,368 2,275 2,516 2,508 2,590 2,646 14 To financial institutions 15,922 15,397 16,452 16,536 16,953 17,514 17,414 17,062 17,506 15 Commercial banks in the United States . 12,173 11,650 12,729 12,666 13,116 13,922 13,700 13,520 13,870 16 Banks in foreign countries 953 908 924 1,061 950 922 1,099 998 1,108 17 Nonbank financial institutions 2,795 2,839 2,799 2,809 2,887 2,670 2,616 2,543 2,528 18 To foreign govts, and official institutions .. 839 746 657 572 595 372 359 416 367 19 For purchasing and carrying securities .. 4,412 3,900 2,968 2,697 3,105 2,496 2,588 2,243 2,291 20 All other 5,493 5,511 5,554 5,576 5,825 5,877 5,740 5,933 5,948 21 Other assets (claims on nonrelated parties).. 23,587 23,847 24,447 24,613 24,208 25,312 25,044 25,891 26,748 22 Net due from related institutions 13,753 14,863 14,246 16,921 16,283 17,704 17,167 16,626 16,431 23 Total assets 139,940 140,419 139,065 143,937 145,178 143,427 144,038 144,824 146,208 24 Deposits or credit balances due to other than directly related institutions.... 43,556 43,491 43,684 43,389 43,949 43,628 43,457 42,636 42,743 25 Transaction accounts and credit balances3 3,786 3,442 3,275 3,322 3,781 3,612 3,329 3,251 3,281 26 Individuals, partnerships, and corporations 2,035 2,019 1,993 2,066 2,046 2,191 2,083 2,029 11,,996699 27 Other 1,750 1,423 1,282 1,256 1,735 1,422 1,247 1,222 1,312 28 Nontransaction accounts4 3399,,777711 40,048 40,409 40,067 40,169 40,015 40,128 39,385 39,462 29 Individuals, partnerships, and corporations 32,299 32,480 32,849 32,492 32,887 32,828 32,951 31,707 31,777 30 Other 7,471 7,569 7,559 7,575 7,282 7,188 7,177 7,678 7,685 31 Borrowings from other than directly related institutions 54,106 53,936 50,976 58,021 55,359 57,340 56,515 56,605 5555,,119999 32 Federal funds purchased5 23,451 25,553 21,121 27,050 24,053 26,274 25,071 23,759 24,010 33 From commercial banks in the United States 12,771 15,394 10,997 15,121 14,509 16,366 13,894 13,866 13,253 34 From others 10,680 10,159 10,124 11,929 9,544 9,908 11,177 9,894 10,757 35 Other liabilities for borrowed money.... 30,655 28,383 29,855 30,971 31,305 31,065 31,444 32,846 31,189 36 To commercial banks in the United States 26,439 24,322 25,671 26,037 26,670 26,242 26,448 27,594 25,971 37 To others 4,216 4,061 4,184 4,933 4,635 4,823 4,9% 5,252 5,217 38 Other liabilities to nonrelated parties 27,024 27,271 27,828 28,044 27,630 28,723 28,660 29,857 30,299 39 Net due to related institutions 15,254 15,721 16,576 14,483 18,239 13,737 15,405 15,725 17,967 40 Total liabilities 139,940 140,419 139,065 143,937 145,178 143,427 144,038 144,824 146,208 MEMO 41 Total loans (gross) and securities adjusted6 74,386 73,475 71,991 73,002 73,582 72,266 73,292 73,905 73,993 42 Total loans (gross) adjusted6 60,165 58,875 57,609 58,220 58,431 57,074 58,322 58,870 59,181 1. Effective Jan. 1, 1986, the reporting panel includes 65 U.S. branches and 4. Includes savings deposits, money market deposit accounts, and time agencies of foreign banks that include those branches and agencies with assets of deposits. $750 million or more on June 30, 1980, plus those branches and agencies that had 5. Includes securities sold under agreements to repurchase. reached the $750 million asset level on Dec. 31, 1984. 6. Exclusive of loans to and federal funds sold to commercial banks in the 2. Includes securities purchased under agreements to resell. United States. 3. Includes credit balances, demand deposits, and other checkable deposits. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • September 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 1987 11998811 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Dec.34 Mar. June Sept. Dec. Mar/ 1 All holders—Individuals, partnerships, and corporations 288.9 291.8 293.5 302.7 321.0 307.4 322.4 333.6 363.6 335.9 2 Financial business 28.0 35.4 32.8 31.7 32.3 31.8 32.3 35.9 41.4 35.9 3 Nonfinancial business 154.8 150.5 161.1 166.3 178.5 166.6 180.0 185.9 202.0 183.0 4 Consumer 86.6 85.9 78.5 81.5 85.5 84.0 86.4 86.3 91.1 88.9 5 Foreign 2.9 3.0 3.3 3.6 3.5 3.4 3.0 3.3 3.3 2.9 6 Other 16.7 17.0 17.8 19.7 21.2 21.6 20.7 22.2 25.8 25.2 Weekly reporting banks 1985 1986 1987 11998811 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc.. DDeecc..22 Dec.3-4 Mar. June Sept. Dec. Mar. 7 A11 holders—Individuals, partnerships, and corporations 137.5 144.2 146.2 157.1 168.6 159.7 168.5 174.7 195.1 178.2 8 Financial business 21.0 26.7 24.2 25.3 25.9 25.5 25.7 28.9 32.5 28.7 9 Nonfinancial business 75.2 74.3 79.8 87.1 94.5 86.8 93.1 94.8 106.4 94.4 10 Consumer 30.4 31.9 29.7 30.5 33.2 32.6 34.9 35.0 37.5 36.8 11 Foreign 2.8 2.9 3.1 3.4 3.1 3.3 2.9 3.2 3.3 2.8 12 Other 8.0 8.4 9.3 10.9 12.0 11.5 11.9 12.8 15.4 15.5 1. Figures include cash items in process of collection. Estimates of gross thrift institutions. Historical data have not been revised. The estimated volume of deposits are based on reports supplied by a sample of commercial banks. Types of such deposits for December 1984 is $5.0 billion at all insured commercial banks depositors in each category are described in the June 1971 BULLETIN, p. 466. and $3.0 billion at weekly reporting banks. Figures may not add to totals because of rounding. 4. Historical data back to March 1985 have been revised to account for 2. Beginning in March 1984, these data reflect a change in the panel of weekly corrections of bank reporting errors. Historical data before March 1985 have not reporting banks, and are not comparable to earlier data. Estimates in billions of been revised, and may contain reporting errors. Data for all commercial banks for dollars for December 1983 based on the new weekly reporting panel are: financial March 1985 were revised as follows (in billions of dollars): all holders, -.3; business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other, financial business, -.8; nonfinancial business, -.4; consumer, .9; foreign, .1; 9.5. other, -.1. Data for weekly reporting banks for March 1985 were revised as 3. Beginning March 1985, financial business deposits and, by implication, total follows (in billions of dollars): all holders, -.1; financial business, -.7; nonfinangross demand deposits have been redefined to exclude demand deposits due to cial business, -.5; consumer, 1.1; foreign, .1; other, -.2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1986 1987 Instrument Dec. Dec. Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 166,436 187,658 237,586 300,899 331,016 331,016 337,189r 336,678' 338,797 346,769 354,249 Financial companies3 Dealer-placed paper4 2 Total 34,605 4444,,445555 56,485 78,443 100,207 100,207 101,964' 102,939 102,889 103,957 105,397 3 Bank-related (not seasonally adjusted) 2.516 2,441 2,035 1,602 2,265 2,265 2,284 2,174 2,116 2,307 2,429 Directly placed paper5 4 Total 84,393 97,042 110,543 135,504 152,385 152,385 157,252 158,955' 159,333 163,421 169,225 5 Bank-related (not seasonally adjusted) 32,034 35,566 42,105 44,778 40,860 40,860 45,085 45,722 46,634 48,604 48,401 6 Nonfinancial companies6 47,437 46,161 70,558 86,952 78,424 78,424 77,973 74,784 76,575 79,391 79,627 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 79,543 78,309 78,364 68,413 64,974 64,974 65,049 65,144 66,125' 66,752' 67,695 Holder 8 Accepting banks 10,910 9,355 9,811 11,197 13,423 13,423 13,224 11,828 12,294' 11,180' 11,176 9 Own bills 9.471 8,125 8,621 9,471 11,707 11,707 10,662 10,006 10,516 9,784' 9,548 10 Bills bought 1,439 1,230 1,191 1,726 1,716 1,716 2,561 1,821 1,730 1,396 1,628 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 1,317 983 1,230 1,453 1,519 1,547 13 Others 66,204 67,807 67,881 56,279 50,234 50,234 50,843 52,087 52,255 54,053' 54,972 Basis 14 Imports into United States 17,683 15,649 17,845 15,147 14,670 14,670 14,459 14,615 14,711 15,116' 15,374 15 Exports from United States 16,328 16,880 16,305 13,204 12,960 12,960 12,783 12,876 13,083 13,836' 13,946 16 All other 45,531 45,781 44,214 40,062 37,344 37,344 37,807 37,654 38,159 37,800' 38,375 1. Effective Dec. 1, 1982, there was a break in the commercial paper series. The 4. Includes all financial company paper sold by dealers in the open market. key changes in the content of the data involved additions to the reporting panel, 5. As reported by financial companies that place their paper directly with the exclusion of broker or dealer placed borrowings under any master note investors. agreements from the reported data, and the reclassification of a large portion of 6. Includes public utilities and firms engaged primarily in such activities as bank-related paper from dealer-placed to directly placed. communications, construction, manufacturing, mining, wholesale and retail trade, 2. Correction of a previous misclassification of paper by a reporter has created transportation, and services. a break in the series beginning December 1983. The correction adds some paper to 7. Beginning October 1984, the number of respondents in the bankers acceptnonfinancial and to dealer-placed financial paper. ance survey were reduced from 340 to 160 institutions—those with $50 million or 3. Institutions engaged primarily in activities such as, but not limited to, more in total acceptances. The new reporting group accounts for over 95 percent commercial, savings, and mortgage banking; sales, personal, and mortgage of total acceptances activity. financing; factoring, finance leasing, and other business lending; insurance underwriting; and other investment activities. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Rate Effective Date Month Average Month rate 10.50 1986—July 11 8.00 1985—Jan. 10.61 1986—May 10.00 Aug. 26 7.50 Feb. 10.50 June 9.50 Mar. 10.50 July 1987—Apr. 1 7.75 Apr. 10.50 Aug 9.00 May 1 8.00 May 10.31 Sept 8.50 15 8.25 June 9.78 Oct July 9.50 Nov Aug. 9.50 Dec Sept 9.50 Oct. 9.50 1987—Jan Nov 9.50 Feb Dec. 9.50 Mar Apr 1986—Jan. . 9.50 May Feb. 9.50 June Mar. 9.10 July Apr. 8.83 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 NonfinancialS tatistics • September 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. 1987 1987, week ending IInnssttrruummeenntt 11998844 11998855 11998866 Mar. Apr. May June May 29 June 5 June 12 June 19 June 26 MONEY MARKET RATES 1 Federal funds1-2 10.22 8.10 6.80 6.13 6.37 6.85 6.73 6.80 6.65 6.70 6.75 6.79 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 6.22 6.39 6.83 6.86 6.88 6.87 6.86 6.85 6.87 4 3-month 10.10 7.95 6.49 6.16 6.45 6.93 6.92 6.99 6.95 6.94 6.90 6.90 5 6-month 10.16 8.01 6.39 6.10 6.50 7.04 7.00 7.12 7.06 7.06 6.94 6.94 Finance paper, directly placed4-5 6 1-month 9.97 7.91 6.58 6.11 6.28 6.78 6.80 6.81 6.78 6.83 6.79 6.78 7 3-month 9.73 7.77 6.38 5.95 6.22 6.74 6.77 6.76 6.78 6.82 6.78 6.71 8 6-month 9.65 7.75 6.31 5.88 6.14 6.47 6.50 6.47 6.51 6.52 6.53 6.48 Bankers acceptances5-6 9 3-month 10.14 7.92 6.39 6.09 6.41 6.91 6.83 6.98 6.90 6.83 6.79 6.81 10 6-month 10.19 7.96 6.29 6.02 6.44 7.03 6.91 7.10 7.05 6.97 6.81 6.82 Certificates of deposit, secondary market7 11 1-month 10.17 7.97 6.61 6.18 6.42 6.81 6.84 6.86 6.85 6.84 6.81 6.86 12 3-month 10.37 8.05 6.52 6.17 6.52 6.99 6.94 7.03 6.99 6.98 6.88 6.91 13 6-month 10.68 8.25 6.51 6.18 6.65 7.24 7.15 7.33 7.25 7.26 7.06 7.05 14 Eurodollar deposits, 3-month8 10.73 8.28 6.71 6.37 6.73 7.25 7.11 7.36 7.21 7.18 7.08 77..0066 U.S. Treasury bills' Secondary market9 15 3-month 9.52 7.48 5.98 5.59 5.64 5.66 5.67 5.67 5.70 5.55 5.65 5.77 16 6-month 9.76 7.65 6.03 5.60 5.90 6.05 5.99 6.17 6.10 5.89 5.93 6.05 17 1-year 9.92 7.81 6.08 5.68 6.09 6.52 6.35 6.48 6.44 6.36 6.29 6.32 Auction average10 18 3-month 9.57 7.49 5.97 5.56 5.76 5.75 5.69 5.88 5.81 5.59 5.70 5.64 19 6-month 9.80 7.66 6.02 5.56 5.93 6.11 5.99 6.49 6.10 5.99 5.95 5.93 20 1-year 9.91 7.76 6.07 5.68 5.92 6.56 6.54 n.a. n.a. 6.54 n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 10.89 8.43 6.46 6.03 6.50 7.00 6.80 6.95 6.91 6.80 6.73 6.77 22 2-year 11.65 9.27 6.87 6.42 7.02 7.76 7.57 7.78 7.74 7.65 7.45 7.49 23 3-year 11.89 9.64 7.06 6.58 7.32 8.02 7.82 8.01 8.00 7.89 7.68 7.72 24 5-year 12.24 10.13 7.31 6.79 7.57 8.26 8.02 8.23 8.19 8.10 7.87 7.91 25 7-year 12.40 10.51 7.55 7.06 7.83 8.47 8.27 8.42 8.44 8.38 8.14 8.14 26 10-year 12.44 10.62 7.68 7.25 8.02 8.61 8.40 8.55 8.58 8.50 8.27 8.28 27 20-year 12.48 10.97 7.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 30-year 12.39 10.79 7.80 7.55 8.25 8.78 8.57 8.71 8.75 8.66 8.46 8.44 Composite13 29 Over 10 years (long-term) 11.99 10.75 8.14 7.62 8.31 8.79 8.63 8.73 8.79 8.70 8.49 8.52 State and local notes and bonds Moody's series14 30 Aaa 9.61 8.60 6.95 6.25 7.20 7.61 7.48 7.60 7.70 7.55 7.25 7.40 31 Baa 10.38 9.58 7.76 7.25 8.29 8.78 8.68 8.80 8.90 8.75 8.45 8.60 32 Bond Buyer series15 10.10 9.11 7.32 6.66 7.55 8.00 7.79 8.03 7.97 7.83 7.63 7.72 Corporate bonds Seasoned issues16 33 All industries 13.49 12.05 9.71 8.99 9.35 9.82 9.87 9.93 9.94 9.91 9.84 9.80 34 Aaa 12.71 11.37 9.02 8.36 8.85 9.33 9.32 9.40 9.38 9.36 9.30 9.25 35 Aa 13.31 11.82 9.47 8.84 9.15 9.59 9.65 9.73 9.74 9.70 9.60 9.59 36 A 13.74 12.28 9.95 9.13 9.36 9.83 9.98 9.98 10.01 10.00 9.97 9.94 37 Baa 14.19 12.72 10.39 9.61 10.04 10.51 10.52 10.58 10.61 10.58 10.48 10.43 38 A-rated, recently-offered utility bonds17 13.81 12.06 9.61 8.84 9.51 10.05 10.05 10.05 10.14 10.04 10.00 10.03 MEMO: Dividend/price ratio18 39 Preferred stocks 11.59 10.49 8.76 7.52 7.94 8.41 8.31 8.55 8.37 8.34 8.29 8.22 40 Common stocks 4.64 4.25 3.48 2.90 2.99 3.02 2.92 3.03 2.98 2.94 2.88 2.86 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 92.46 108.09 136.00 136.74 140.84 142.12 151.17 160.23 166.43 163.88 163.00 169.58 2 Industrial 108.01 123.79 155.85 156.56 162.10 163.85 175.60 189.17 198.95 199.03 198.78 206.61 3 Transportation 85.63 104.11 119.87' 120.04 122.27 121.26 126.61 135.49 138.55 137.91 141.30 150.39 4 Utility 46.44 56.75 71.36r 73.38 75.77 76.07 78.54 78.19 77.15 72.74 71.64 74.25 5 Finance 89.28 114.21 147.19' 143.89 142.97 144.29 153.32 158.41 162.41 150.52 145.97 152.73 6 Standard & Poor's Corporation (1941-43 = 10)' ... 160.50 186.84 236.34 237.36 245.09 248.61 264.51 280.93 292.47 289.32 289.12 301.36 7 American Stock Exchange2 (Aug. 31, 1973 = 50) 207.96 229.10 264.38 257.82 265.14 264.65 289.02 315.60 332.55 330.65 328.77 334.49 Volume of trading (thousands of shares) 8 New York Stock Exchange 91,084 109,191 141,385' 131,155 154,776' 148,228 192,419 183,478 180,251 187,135 170,898 163,380 9 American Stock Exchange 6,107 8,355 11,846 8,930 10,513 12,272 14,755 14,962 15,678 14,420 11,655 12,813 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 22,470 28,390 36,840 36,310 37,090 36,840 34,960 35,740 38,080 39,820 38,890 38,420 Free credit balances at brokers4 11 Margin-account5 1,755 2,715 4,880 3,805 3,765 4,880 5,060 4,470 4,730 4,660 4,355 3,680 12 Cash-account 10,215 12,840 19,000 14,445 15,045 19,000 17,395 17,325 17,370 17,285 16,985 15,405 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance "margin securities" (as defined in the regulations) when such credit is collateralcompanies. With this change the index includes 400 industrial stocks (formerly ized by securities. Margin requirements on securities other than options are the 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 difference between the market value (100 percent) and the maximum loan value of financial. collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 2. Beginning July 5, 1983, the American Stock Exchange rebased its index 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; effectively cutting previous readings in half. and Regulation X, effective Nov. 1, 1971. 3. Beginning July 1983, under the revised Regulation T, margin credit at On Jan. 1, 1977, the Board of Governors for the first time established in broker-dealers includes credit extended against stocks, convertible bonds, stocks Regulation T the initial margin required for writing options on securities, setting it acquired through exercise of subscription rights, corporate bonds, and govern- at 30 percent of the current market-value of the stock underlying the option. On ment securities. Separate reporting of data for margin stocks, convertible bonds, Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the and subscription issues was discontinued in April 1984. same as the option maintenance margin required by the appropriate exchange or 4. Free credit balances are in accounts with no unfulfilled commitments to the self-regulatory organization; such maintenance margin rules must be approved by brokers and are subject to withdrawal by customers on demand. the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC 5. New series beginning June 1984. approved new maintenance margin rules, permitting margins to be the price of the 6. These regulations, adopted by the Board of Governors pursuant to the option plus 15 percent of the market value of the stock underlying the option. Securities Exchange Act of 1934, limit the amount of credit to purchase and carry Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 DomesticN onfinancial Statistics • September 1987 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1986 1987 AAccccoouunntt 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Savings and loan associations 1 Assets 903,488 948,781 954,226 957,945 965,032 957,229 961,894 964,096 963,316 935,557r 937,274' 940,318 944,378 2 Mortgages 555,291 583,235 565,037 565.353 566,438 557.137 557,303 556.780 553,552 n.a. n.a. n.a. n.a. 3 Mortgage-backed securities.... 97,303 113,158 113.100 113,621 117.617 121,606 122,682 123,257 129,338' 128,508' 129,007 134,886 4 Cash and investment securities' . 124.801 126,712 130,877 132,787 138,863 138,619 138,213 141.510 142,700 133,011' 136,221' 138,787 136,170 5 Other 223,396 238,833 258,310 259.798 259,726 261,415 250,781 250,297 251,769 261,739' 263,473' 266,540 274,951 6 Liabilities and net worth 903,488 948,781 954,226 957,945 965,032 957,229 961,894 964,096 963,316 935,557' 937,274' 940,318 944,378 7 Savings capital 725,045 750,071 744,026 747,020 749,020 743,518 742,747 740,066 741,081 721,765' 722,283' 722,767 717,100 8 Borrowed money 125,666 138.798 148.054 146,578 148,541 155.748 152,567 156,920 159,742 153,361' 152,163' 158,119 165,926 9 FHLBB 64,207 73,888 73,553 75,058 75,594 80,364 75,295 75,626 80.194 75,552 75,673' 76,478 77,870 10 Other 61.459 64,910 74,501 71,520 72,947 75,384 77.272 81,294 79,548 77,809' 76,490' 81,641 88,056 11 Other 17,944 19,045 20,792 22,785 24.706 15,461 23,255 24,078 20,071 19,756' 21,820' 18,758 20,456 12 Net worth2 34,833 41,064 41,353 41.560 42,764 42,503 43,326 43,034 42,423 40,672' 41,002' 40.673 40,887 MEMO 13 Mortgage loan commitments outstanding3 61,305 54.475 57,200 55,687 53,180 51,163 49,887 48,222 41,650 n.a. n.a. n.a. n.a. FSLlC-insured federal savings banks 14 Assets 98,559 131,868 180,124 183,317 186,810 196,225 202,106 204,918 210,562 235,430' 235,764' 241,448 246,299 15 Mortgages 57.429 72,355 99,758 101,755 103,019 108,627 110,826 112,117 113,638 136,773' 136,493' 138,707 140.861 16 Mortgage-backed securities.... 9,949 15,676 21.598 23.247 24,097 26,431 27,516 28,324 29,766 33,570' 34,634' 36,105 37,511 17 Other 10,971 11.723 16,774 17,027 17,056 18,509 18,697 19,266 19,034 15,776' 16,066' 16,745 17,040 18 Liabilities and net worth 98,559 131,868 180,124 183,317 186,810 196,225 202,106 204,918 210,562 235,430' 235,764' 241,448 246,299 19 Savings capital 79,572 103,462 138.168 140,610 142,858 149,074 152,834 154,447 157,872 176,744' 177,362' 178,693 180,646 20 Borrowed money 12,798 19,323 28,502 28,722 29,390 32,319 33.430 33,937 37,329 40,614' 39,777' 43,915 46,125 21 FHLBB 7,515 10,510 15,301 15,866 16,123 16,853 17,382 17,863 19,897 20,730 20,226' 21,104 21,718 22 Other 5,283 8,813 13.201 12,856 13,267 15,466 16,048 16,074 17,432 19,884' 19,551' 22,811 24,407 23 Other 1,903 2,732 4,279 4.564 4,914 4,666 5,330 5,652 4,263 5,301' 5,478' 5,250 5,538 24 Net worth 4,286 6,351 9,175 9,422 9,647 10,165 10,511 10,883 11,098 12,775' 13,152' 13,591 13,999 MEMO 25 Mortgage loan commitments outstanding3 3,234 5.355 9,410 10,139 9,770 10,221 9,356 9,952 8,686 n.a. n.a. n.a. n.a. Savings banks 26 Assets 203,898 216,776 223,367 224,569 227,011 228,854 230,919 232,577 236,866 235,603 238,074 240,739 243,405 Loans 77 Mortgage 102,895 110,448 110,958 111,971 113,265 114,188 116,648 117,612 118,323 119,199 119,737 121,178 122,726 78 Other 24,954 30,876 36,692 36.421 37,350 37,298 36.130 36,149 35,167 36,122 37,207 38,012 37,141 Securities 79 U.S. government 14,643 13,111 12,115 12.297 12,043 12,357 12,585 13,037 14,209 13,332 13,525 13,631 13.741 30 Mortgage-backed securities... 19,215 19,481 22,413 22.954 21,161 23,216 23.437 24,051 25,836 26,220 26,893 27,463 28,697 31 State and local government... 2,077 2,323 2,281 2.309 2,400 2,407 2,347 2,290 2,185 2,180 2,168 2,041 2,062 37 Corporate and other 23,747 21,199 2,036 20,862 20,602 20,902 21,156 20,749 20,459 19,795 19,770 19,598 19,768 33 Cash 4,954 6,225 5,301 4.651 5,018 4,811 5,195 5,052 6,894 5,239 5,143 5,703 5,305 34 Other assets 11,413 13,113 13,244 13,104 13,172 13,675 13,421 13,637 13,793 13,516 13,631 13,713 13,965 35 Liabilities 203,898 216,776 223,367 224,569 227,011 228,854 230,919 232,577 236,866 235,603 238,074 240,739 243,405 36 Deposits 180,616 185,972 189,109 188,615 189,937 190.210 190.334 190,858 192,194 191,441 192,559 193,693 193,349 37 Regular4 177,418 181,921 183,970 183,433 184,764 185,002 185,254 185,958 186,345 186,385 187,597 188,432 187.796 38 Ordinary savings 33,739 33,018 34.008 34.166 34,530 35,227 36,165 36,739 37,717 38,467 39,370 40,558 41,322 39 Time 104,732 103,311 103,083 102.374 102,668 102,191 101,125 101,240 100,809 100.604 100,922 100,896 100,311 40 Other 3.198 4,051 5.139 5,182 5,173 5,208 5,080 4,900 5,849 5,056 4,962 5,261 5,553 41 Other liabilities 12,504 17,414 19,226 20.641 21,360 21,947 23,319 24,254 25,274 24,710 25,663 27,003 29,059 42 General reserve accounts 10,510 12,823 14.731 15,084 15,427 16,319 16,896 17,146 18,105 18,236 18,486 18,830 19,422 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37—Continued 1986 1987 AAccccoouunntt 11998844 11998855 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Credit unions5 43 Total assets/liabilities and capital . 93,036 118,010 134,703 137,901 139,233 140,496 143,662 145,653 147,726 44 Federal 63,205 77,861 87,579 89,539 90,367 91,981 93,257 94,638 95,483 45 State 29,831 40,149 47,124 48,362 48,866 48,515 50,405 51,015 52,243 46 Loans outstanding 62,561 73,513 77,847 79,647 80,656 81,820 83,388 84,635 86,137 n.a. n a. n a. n a. 47 Federal 42,337 47,933 50,613 51,331 52,007 53,042 53,434 53,877 55,304 48 State 20,224 25,580 27,234 28,316 28,649 28,778 29,954 30,758 30,833 49 Savings 84,348 105,963 122,952 125,331 126,268 128,125 130,483 131,778 134,327 50 Federal 57,539 70,926 80,975 82,596 83,132 84,607 86,158 87,009 87,954 51 State 26,809 35,037 41,977 42,735 43,136 43,518 44,325 44,769 46,373 Life insurance companies 52 Assets 722,979 825,901 872,359 877,919 887,255 892,304 860,682 910,691 920,771 931,962 943,421 Securities 53 Government 63,899 75,230 78,284 78,722 79,188 81,636 82,047 84,858 85,849 85,000 87,678 54 United States6 42,204 51,700 54,197 54,321 54,487 56,698 57,511 59,802 61,494 61,014 63,580 55 State and local 8,713 9,708 10,114 10,350 10,472 10,606 10,212 10,712 10,267 10,048 10,264 56 Foreign7 12,982 13,822 13,973 14,051 14,229 14,332 14,324 14,344 14,088 13,938 13,834 n a. n.a. 57 Business 359,333 423,712 455,119 455,013 463,135 462,540 467,433 473,860 474,485 487,837 497,143 58 Bonds 295,998 346,216 367,966 369,704 374,670 378,267 381,381 386,293 386,994 395,994 401,231 59 Stocks 63,335 77,496 87,153 85,309 88,465 84,273 86,052 87,567 87,491 91,843 95,912 60 Mortgages 156,699 171,797 180,041 182,542 183,943 185,268 186,976 189,460 192,975 193,395 193,957 61 Real estate 25,767 28,822 30,350 31,151 31,844 31,725 31,918 32,184 32,079 32,229 32,061 62 Policy loans 54,505 54,369 57,342 54,249 54,247 54,273 54,199 54,152 54,016 53,692 53,696 63 Other assets 63,776 71,971 74,223 76,214 74,898 76,862 77,798 76,177 81,367 79,809 78,886 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-FSLlC- statement asset values, with bonds carried on an amortized basis and stocks at insured associations and the experience of FSLIC-insured associations. year-end market value. Adjustments for interest due and accrued and for differences between market and book values are not made on each item separately but are included, in total, in "other assets." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic NonfinancialS tatistics • September 1987 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1987 111999888444 111999888555 111999888666 Jan. Feb. Mar. Apr. May June U.S. budget1 1 Receipts, total 666,457 734,057 769,091 81,771 55,463 56,515 122,897 47,691 82,945 2 On-budget 500,382 547,886 568,862 62.981 37,919 38,469 99,083 30,205 64,222 3 Off-budget 166,075 186,171 200,228 18,790 17,544 18,046 23,814 17,486 18,723 4 Outlays, total 851,781 946,316 989,815 83,942 83,828 84,527 84,240 83,435 83,366 5 On-budget 685,968 769,509 806,318 68,176 67,138 67,872 69,215 66,389 66,221 6 Off-budget 165,813 176.807 183,498 15,766 16,690 16,655 15,025 17,046 17,145 7 Surplus, or deficit (-), total -185,324 -212,260 -220,725 -2,170 -28,366 -28,012 38,657 -35,744 -420 8 On-budget -185,586 -221,623 -237,455 -5,195 -29,219 -29,403 29,867 -36,184 -1,998 9 Off-budget 262 9.363 16,371 3.024 854 1,391 8,790 440 1,578 Source of financing (total) 10 Borrowing from the public 170,817 197,269 236,284 4,353 15,248 7,884 9,075 13,005 9,655 11 Cash and monetary assets (decrease, or increase (-))" 6.631 13,367 -14,324 -9,564 16,574 15,621 -47,189 24,217 -6,434 12 Other3 7,875 1,630 -1,235 7,381 -3,456 4,506 -543 -1,478 -2,801 MEMO 13 Treasury operating balance (level, end of period) 30,426 17,060 31,384 41,307 24,816 8,969 55,744 33,106 40,072 14 Federal Reserve Banks 8,514 4,174 7,514 15,746 3,482 3,576 29,688 6,383 13,774 15 Tax and loan accounts 21,913 12,886 23,870 25,561 21,334 5,394 26,056 26,723 26,298 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 Budget of the U.S. Government. 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 1987 1987 111999888555 111999888666 H2 HI H2 HI Apr. May June RECEIPTS 1 All sources 734,057 769,091 364,790 394,345 387,524 447,282 122,897 47,691 82,945 i Individual income taxes, net 334,531 348,959 169,987 169,444 183,156 205,157 71,850 9,275 40,521 3 Withheld 298,941 314,838 155,725 153,919 164,071 156,760 26,943 24,823 25,525 4 Presidential Election Campaign Fund ... 35 36 6 31 4 30 7 7 4 5 Non withheld 101,328 105,994 22,295 78,981 27,733 112,421 62,939 7,228 16,574 6 Refunds 65,743 71,873 8,038 63,488 8,652 64,052 18,039 22,782 1,583 Corporation income taxes 7 Gross receipts 77,413 80,442 36,528 41,946 42,108 52,396 13,290 2,885 13,572 8 Refunds 16,082 17,298 7,751 9,557 8,230 10,881 2,101 1.042 2,599 9 Social insurance taxes and contributions, net 265,163 283,901 128,017 156,714 134,006 163,519 33,646 30,218 24,712 10 Employment taxes and contributions1 234,646 255,062 116,276 139,706 122,246 146,696 30,457 22,270 23,981 II Self-employment taxes and contributions2 10,468 11,840 985 10,581 1,338 12,020 7,403 732 1,612 17 Unemployment insurance 25,758 24,098 9,281 14,674 9,328 14,514 2,827 7,529 315 13 Other net receipts3 4,759 4,742 2,458 2,333 2,429 2,310 361 419 416 14 Excise taxes 35,992 32,919 18,470 15,944 15,947 15,845 2,471 2,633 3,099 15 Customs deposits 12,079 13,323 6,354 6,369 7,282 7,129 1,165 1,142 1,415 16 Estate and gift taxes 6,422 6,958 3,323 3,487 3,649 3,818 810 726 507 17 Miscellaneous receipts4 18,539 19,887 9,861 10,002 9,605 10,299 1,767 1,853 1,719 OUTLAYS 18 All types 946,316' 989,815' 487,188 486,037 504,785 503,338 84,240 83,435 83,366 19 National defense 252,748 273,369 134,675 135,367 138,544 142,846 24,407 23,471 24,694 '0 International affairs 16,176 14,471 8,367 5,384 8,876 4,420 163 831 1,068 General science, space, and technology ... 8,627 9,017 4,727 12,519 4,594 4,324 653 779 836 ??. Energy 5,685 4,792 3,305 2,484 2,735 2,335 361 356 598 73 Natural resources and environment 13,357 13,508 7,553 6,245 7,141 6,179 1,052 985 1,176 24 Agriculture 25,565 31,169 15,412 14,482 16,160 11,824 2,641 716 -342 Commerce and housing credit 4,229 4,258 644 860 3,647 4,889 1,129 997 703 76 Transportation 25,838 28,058 15,360 12,658 14,745 12,113 1,936 2,089 2,539 27 Community and regional development .... 7,680 7,510 3,901 3,169 3,494 3,108 592 585 584 28 Education, training, employment, social services 29,342 29,662 14,481 14,712 15,268 14,182 2,317 22,,225555 22,,114433 79 Health 33,542 35,936 17,237 17,872 19,814 20,318 3,672 3,544 3,525 30 Social security and medicare 254,446 190,850 129,037 135,214 138,296 142,864 23,615 23,782 26,339 31 Income security 128,200 120,686 59,457 60,786 59,628 62,248 11,282 10,273 7,931 3? Veterans benefits and services 26,352 26,614 14,527 12,193 14,497 12,264 2,360 2,047 2,440 33 Administration of justice 6,277 6,555 3,212 3,352 3,360 3,626 619 646 690 34 General government 5,228 6,796 3,634 3,566 2,786 3,238 196 358 1,448 3<I General-purpose fiscal assistance 6,353 6,430 3,391 2,179 2,767 455 179 62 54 36 Net interest' 129,436 135,284 67,448 68,054 65,816 70,110 11,295 12,284 10,010 37 Undistributed offsetting receipts6 -32,759 -33,244 -17,953 -17,193 -17,426 -18,005 -4,230 -2,626 -3,069 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 • September 1987 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1985 1986 1987 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 1,715.1 1,779.0 1,827.5 1,950.3 1,991.1 2,063.6 2,129.5 2,218.9 2,250.7 i Public debt securities 1,710.7 1,774.6 1,823.1 1,945.9 1,986.8 2,059.3 2,125.3 2,214.8 2,246.7 3 Held by public 1,415.2 1,460.5 1,506.6 1,597.1 1,634.3 1,684.9 1,742.4 1,811.7 1,839.3 4 Held by agencies 295.5 314.2 316.5 348.9 352.6 374.4 382.9 403.1 407.5 5 Agency securities 4.4 4.4 4.4 4.4 4.3 4.3 4.2 4.0 4.0 6 Held by public 3.3 3.3 3.3 3.3 3.2 3.2 3.2 3.0 2.9 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 1,711.4 1,775.3 1,823.8 1,932.4 1,973.3 2,060.0 2,111.0 2,200.5 2,232.4 9 Public debt securities 1,710.1 1,774.0 1,822.5 1,931.1 1,972.0 2,058.7 2,109.7 2,199.3 2,231.1 10 Other debt1 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 11 MEMO: Statutory debt limit 1,823.8 1,823.8 1,823.8 2,078.7 2,078.7 2,078.7 2,111.0 2,300.0 2,300.0 1. Includes guaranteed debt of Treasury and other federal agencies, specified SOURCES. Treasury Bulletin and Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District United States. of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1986 1987 TTyyppee aanndd hhoollddeerr 11998833 11998844 11998855 11998866 Q2 Q3 Q4 Ql 1 Total gross public debt 1,410.7 1,663.0 1,945.9 2,214.8 2,059.3 2,125.3 2,214.8 2,246.7 By type ? Interest-bearing debt 1,400.9 1,660.6 1,943.4 2,212.0 2,056.7 2,122.7 2,212.0 2,244.0 3 Marketable 1,050.9 1,247.4 1,437.7 1,619.0 1,498.2 1,564.3 1,619.0 1,635.7 4 Bills 343.8 374.4 399.9 426.7 396.9 410.7 426.7 406.2 5 Notes 573.4 705.1 812.5 927.5 869.3 896.9 927.5 955.3 6 Bonds 133.7 167.9 211.1 249.8 232.3 241.7 249.8 259.3 7 Nonmarketable1 350.0 413.2 505.7 593.1 558.5 558.4 593.1 608.3 8 State and local government series 36.7 44.4 87.5 110.5 98.2 102.4 110.5 118.5 9 Foreign issues2 10.4 9.1 7.5 4.7 5.3 4.1 4.7 4.9 10 Government 10.4 9.1 7.5 4.7 5.3 4.1 4.7 4.9 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 70.7 73.1 78.1 90.6 82.3 85.6 90.6 93.0 13 Government account series3 231.9 286.2 332.2 386.9 372.3 365.9 386.9 391.4 14 Non-interest-bearing debt 9.8 2.3 2.5 2.8 2.6 2.6 2.8 2.7 By holder4 15 U.S. Treasury and other federal agencies and trust funds 236.3 289.6 348.9 403.1 374.4 382.9 403.1 407.5 16 Federal Reserve Banks 151.9 160.9 181.3 211.3 183.8 190.8 211.3 n.a. 17 Private investors 1,022.6 1,212.5 1,417.2 1,602.0 1,502.7 1,553.3 1,602.0 1,641.4 18 Commercial banks 188.8 183.4 192.2 225.0 197.2 212.5 225.0 232.0 19 Money market funds 22.8 25.9 25.1 28.6 22.8 24.9 28.6 18.8 20 Insurance companies 56.7 76.4 95.8 106.9 97.7 100.9 106.9 n.a. 21 Other companies 39.7 50.1 59.0 68.8 61.2 65.7 68.8 72.1 22 State and local governments 155.1 179.4 n.a. n.a. n.a. n.a. n.a. n.a. Individuals 7.3 Savings bonds 71.5 74.5 79.8 92.3 83.8 87.1 92.3 94.7 74 Other securities 61.9 69.3 75.0 70.4 75.7 70.9 70.4 68.4 25 Foreign and international5 166.3 192.9 214.6 257.0 239.8 256.3 257.0 272.1 26 Other miscellaneous investors6 259.8 360.6 n.a. 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. Treasury deposit accounts, and federally sponsored agencies. 3. Held almost entirely by U.S. Treasury 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. TREASURY AND FEDERAL AGENCY SECURITIES TRANSACTIONS By Type of Transactions' Par value; averages of daily figures, in millions of dollars 1987 1987 IItteemm 11998844 11998855 11998866 Apr. May June May 20 May 27 June 3 June 10 June 17 June 24 Immediate delivery2 1 U.S. Treasury securities 52,778 75,331 95,447 138,007 116,386' 110,383 121,141 117,483 125,887 104,920 107,506 103,585 By maturity ? Bills 26,035 32,900 34,249 50,528 36,913 35,280 39,326 37,347 39,565 40,967 33,508 26,908 3 Other within 1 year 1,305 1,811 2,115 3,190 3,084 3,446 3,081 3,055 3,376 2,970 4,340 2,585 4 1-5 years 11,733 18,361 24,667 29,094 30,989' 26,620 35,876 33,065 28,951 22,812 24,469 30,174 5-10 years 7,606 12,703 20,455 31,476 22,716 27,520 20.788 23.522 32,100 22,807 28,340 25,792 6 Over 10 years 6,099 9,556 13,961 23,718 22,684 17,518 22,071 20,495 21,895 15,364 16,849 18,127 By type of customer 7 U.S. government securities dealers 2,919 3,336 3,646 3,113 2,801 2,816 2,939 2,007 3,862 2,930 2,455 22,,224433 8 U.S. government securities brokers 25,580 36,222 49,368 78,533 63,089 58,782 65,532 61,457 68,562 5577,,559922 57,892 55,136 9 All others3 24,278 35,773 42,218 55,648 49,818' 47,990 52,668 54,018 53,462 44,397 47,158 46,206 10 Federal agency securities 7,846 11,640 16,746 22,184 19,694 18,627 22,630 24,729 16,429 14,186 24,095 20,413 11 Certificates of deposit 4,947 4,016 4,355 4,964 3,880 3,973 3,832 4,733 4,586 3,977 4,309 3,649 1? Bankers acceptances 3,243 3,242 3,272 3,453 2,762 2,740 2,999 3,040 2,931 2,525 2,977 2,352 13 Commercial paper 10,018 12,717 16,660 17,914 18,375 17,227 19,638 18,606 19,217 16,942 17,638 15,493 Futures contracts4 14 Treasury bills 6,947 5,561 3,311 3,575 4,128 2,810 3,891 5,406 4,672 2,873 2,089 2,021 15 Treasury coupons 4,533 6,085 7,175 12,018 10,374 8,002 11,733 9,579 11,472 8,386 7,204 6,723 16 Federal agency securities 264 252 16 1 6 13 0 13 28 16 4 19 Forward transactions5 17 U.S. Treasury securities 1,364 1,283 1.876 2,760 2,840 1,887 2.272 2.534 2.837 918 1,214 2,544 18 Federal agency securities 2,843 3,857 7,830 15,961 11,951 9,875 16,074 14,021 7.391 8,936 15,281 10,570 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. Treasury 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 five business contracts. days from the date of the transaction for Treasury securities (Treasury bills, 2. Data for immediate transactions do not include forward transactions. notes, and bonds) or after thirty days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • September 1987 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing' Averages of daily figures, in millions of dollars 1987 1987 IItteemm 11998844 11998855 11998866 Apr. Mayr June May 27' June 3 June 10 June 17 June 24 Positions Net immediate2 1 U.S. Treasury securities 5,429 7,391 13,055 -6,965 -13,475 -7,950 -11,022 -9,363 -7,653 -6,632 -9,689 2 Bills 5,500 10,075 12,723 -779 -5,942 2,296 -6,020 -1,851 2,021 3,505 3,397 3 Other within 1 year 63 1,050 3,699 3,076 3,526 2,105 3,496 2,977 2,432 1,671 1,991 4 1-5 years 2,159 5,154 9,297 2,519 1,072 371 3,489 899 199 677 -1,630 5 5-10 years -1,119 -6,202 -9,504 -5,944 -7,641 -7,524 -8,555 -6,797 -7,338 -7,832 -8,112 6 Over 10 years -1,174 -2,686 -3,161 -5,836 -4,489 -5,197 -3,433 -4,592 -4,967 -4,653 -5,336 7 Federal agency securities 15,294 22,860 33,066 32,863 32,760 31,981 32,688 31,245 32,370 33,295 31,669 8 Certificates of deposit 7,369 9,192 10,533 8,502 8,9% 8,612 9,153 9,101 9,125 8,677 8,284 9 Bankers acceptances 3,874 4,586 5,535 3,694 3,712 3,777 3,503 3,258 3,658 3,883 3,949 10 Commercial paper 3,788 5,570 8,087 6,258 6,588 7,203 6,278 7,429 7,299 7,653 6,785 Futures positions U Treasury bills -4,525 -7,322 -18,062 -5,004 1,779 -579 3,716 1,251 120 -1,170 -1,503 12 Treasury coupons 1,794 4,465 3,489 3,936 2,609 3,182 2,183 2,555 2,633 2,551 3,763 13 Federal agency securities 233 -722 -153 -95 -98 -100 -98 -99 -107 -99 -99 Forward positions 14 U.S. Treasury securities -1,643 -911 -2,304 -2,386 -4,305 -921 -4,789 -1,761 -483 -1,280 -600 15 Federal agency securities -9,205 -9,420 -11,909 -15,767 -20,339 -19,236 -20,311 -18,414 -19,849 -20,461 -19,411 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 44,078 68,035 98,954 129,443 122,078 n.a. 124,737 133,473 12,896 127,070 121,960 17 Term agreements 68,357 80,509 108,693 133,833 151,163 n.a. 150,494 146,424 148,810 150,742 155,400 Repurchase agreements5 18 Overnight and continuing 75,717 101,410 141,735 176,340 165,707 n.a. 173,210 176,256 170,800 173,969 167,972 19 Term 57,047 70,076 102,640 108,841 124,599 n.a. 124,105 121,793 123,862 122,389 126,369 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. Treasury and federal agency securithe number of trading days in the period. Positions are net amounts and are shown ties, 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 1987 AAggeennccyy 11998833 11998844 11998855 Dec. Jan. Feb. Mar. Apr. May 1 Federal and federally sponsored agencies 240,068 271,220 293,905 307,361 305,114 305,603 305,033' n.a. 2 Federal agencies 33,940 35,145 36,390 36,958 37,041 37,073 36,660 36,531 3 Defense Department1 243 142 71 33 32 27 24 23 4 Export-Import Bank" 14,853 15,882 15,678 14,211 14,211 14,211 13,813 13,813 5 Federal Housing Administration4 194 133 115 138 136 147 158 165 n. a. 6 Government National Mortgage Association participation certificates 2,165 2,165 2,165 2,165 2,165 2,165 2,165 1,965 7 Postal Service6 1,404 1,337 1,940 3,104 3,104 3,104 3,104 3,104 8 Tennessee Valley Authority 14,970 15,435 16,347 17,222 17,308 17,334 17,311 17.376 9 United States Railway Association6 111 51 74 85 85 85 85 85 10 Federally sponsored agencies7 206,128 236,075 257,515 270,403 268,073 268,530 268,373'" n.a. 11 Federal Home Loan Banks 48,930 65,085 74,447 88,752 90,225 91,313 92,087 94,606 95,931 12 Federal Home Loan Mortgage Corporation 6,793 10,270 11,926 13,589 13,492 13,847 13,074' n.a. n.a. 13 Federal National Mortgage Association 74,594 83,720 93,896 93,563 92,588 91,522 91,618 89,741 90,514 14 Farm Credit Banks 72,816 71,193 68,851 62,328 59,984 59,367 58,364 57,251 57,051 15 Student Loan Marketing Association 3,402 5,745 8,395 12,171 11,784 12,481 13,230 13,930 14,230 MEMO 16 Federal Financing Bank debt 135,791 145,217 153,373 157,510 157,650 157,724 157,012 157,177 Lending to federal and federally sponsored agencies 17 Export-Import Bank' 14,789 15,852 15,670 14,205 14,205 14,205 13,807 13,807 18 Postal Service6 1,154 1,087 1,690 2,854 2,854 2,854 2,854 2,854 19 Student Loan Marketing Association 5,000 5,000 5,000 4,970 4,970 4,970 4,970 4,970 n a. 20 Tennessee Valley Authority 13,245 13,710 14,622 15,797 15,928 15,954 15,931 15,996 21 United States Railway Association6 111 51 74 85 85 85 85 85 Other Lending10 22 Farmers Home Administration 55,266 58,971 64,234 65,374 65,374 65,374 65,224 65,254 23 Rural Electrification Administration 19,766 20,693 20,654 21,680 21,719 21,749 21,473 21,487 24 Other 26,460 29,853 31,429 32,545 32,515 32,533 32,668 32,724 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 (FFB). 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 Admin- 10. Includes FFB purchases of agency assets and guaranteed loans; the latter istration; Department of Health, Education, and Welfare; Department of Housing contain loans guaranteed by numerous agencies with the guarantees of any and Urban Development; Small Business Administration; and the Veterans particular agency being generally small. The Farmers Home Administration item Administration. consists exclusively of agency assets, while the Rural Electrification Administra- 6. Off-budget. tion entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic NonfinancialS tatistics • September 1987 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1986 1987 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998844 11998855 11998866 Nov. Dec. Jan. Feb. Mar. Apr. May' June 1 All issues, new and refunding1 106,641 214,189 134,606 11,010 15,662 7,343 8,969 14,591 6,849' 6,037 9,674 Type of issue 2 General obligation 26,485 52,622 44,801 1,607 4,426 1,100 3,643 3,853 3,449 2,872 3,178 3 Revenue 80,156 161,567 89,806 9,403 11,236 6,243 5,325 10,738 3,405 3,165 6,496 Type of issuer 4 State 9,129 13,004 14,935 6 961 153 1,364 1,217 ' 427 1,001 1,132 5 Special district and statutory authority2 63,550 134,363 79,291 8,124 10,431 5,275 5,825 10,004 4,790 3,019 5,559 6 Municipalities, counties, townships 33,962 66,822 40,374 2,759 4,265 1,915 1,781 3,370 1,637 2,017 2,983 7 Issues for new capital, total 94,050 156,050 79,195 4,220 10,050 1,930 2,774 4,480 3,237 3,848 7,498 Use of proceeds 8 Education 7,553 16,658 16,948 566 925 452, 448 659 774 789 1,039 9 Transportation 7,552 12,070 11,666 843 356 92 145 111 98 194 708 10 Utilities and conservation 17,844 26,852 35,383 671 1,165 681 482 444 571 561 1,476 11 Social welfare 29,928 63,181 17,332 2,931 3,944 380 527 991 468 454 1,113 12 Industrial aid 15,415 12,892 5,594 483 2,845 38 89 368 33 161 325 13 Other purposes 15,758 24,398 47,433 483 1,829 286 1,084 1,907 1,295 1,689 2,840 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 1987 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998844 11998855 11998866 oorr uussee Oct. Nov. Dec. Jan. Feb. Mar. Apr.' May 1 All issues' 132,531 201,269 375,056 28,577 28,822 25,168 23,165 24,041r 33,145' 21,851 17,925 2 Bonds2 109,903 165,754 313,226 23,471 22,223 18,920 20,250 20,274' 23,335' 17,634 11,336 Type of offering 3 Public 73,579 119,559 232,465 23,471 22,223 18.920 20,250 20,274' 23,335' 17,634 11,336 4 Private placement3 36,324 46,195 80,761 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 5 Manufacturing 24,607 52,128 78,584 2,055 3,378 3,786 4,165 3,679 6,349 2,184 3,789 6 Commercial and miscellaneous 13,726 15,140 37,277 1,067 1,213 2,067 1,074 1,714 3,756' 1,365 467 7 Transportation 4,694 5,743 9,734 170 0 70 0 100 521 168 21 8 Public utility 10,679 12,957 31,058 2,537 2,587 2,498 1,491 2,715 694 1,370 572 9 Communication 2,997 10,456 15,489 1,255 1,158 776 65 250 31(K 100 138 10 Real estate and financial 53,199 69,332 141,086 16,387 13,888 9,723 13,455 11,817' 11,706' 12,448 6,349 11 Stocks 22,628 35,515 61,830 5,106 6,599 6,248 2,915 3,767 9,810 4,217 6,589 Type 12 Preferred 4,118 6,505 11,514 817 1,390 1,293 429 905 2,257 526 1,289 13 Common 18,510 29,010 50,316 4,289 5,209 4,955 2,486 2,862 7,553 3,691 5,300 Industry group 14 Manufacturing 4,054 5,700 14,234 570 2,565 1,781 365 814 2,016 653 1,185 15 Commercial and miscellaneous 6,277 9,149 9,252 1,271 535 709 148 437 2,366 2,203 1,424 16 Transportation 589 1,544 2,392 511 15 183 0 191 299 230 3 17 Public utility 1,624 1,966 3,791 410 218 873 237 509 907 297 374 18 Communication 419 978 1,504 59 104 101 16 9 57 18 200 19 Real estate and financial 9,665 16,178 30,657 2,285 3,162 2,601 2,149 1,807 4,165 816 3,403 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. Data are not available on a monthly basis. multiplied by offering price. Excludes offerings of less than $100,000, secondary SOURCES. IDD Information Services, Inc., U.S. Securities and Exchange offerings, undefined or exempted issues as defined in the Securities Act of 1933, Commission and the Board of Governors of the Federal Reserve System. employee stock plans, investment companies other than closed-end, intracorporate 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 1987 IItteemm 11998855 11998866'' Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.'' INVESTMENT COMPANIES' 1 Sales of own shares2 222,670 411,483 37,150 33,672 44,796 50,116 36,307 40,378 42,857 28,295 2 Redemptions of own shares3 132,440 239,394 20,782 20,724 34,835 26,565 21,576 24,730 37,448 23,453 3 Net sales 90,230 172,089 16.368 12.948 9.961 23,551 14,731 15,648 5,409 4,842 4 Assets4 251,695 424,156 402,644 416,939 424,156 464,415 490,643 506,752 502,487 500,669 5 Cash position5 20,607 30.716 30,826 29,579 30,716 34,098 35,279 37,090 43,009 38,375 6 Other 231,088 393,440 371,818 387,360 393.440 430,317 455,364 469,662 459,478 462,294 1. Excluding money market funds. 5. Also includes all U.S. Treasury 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. 1985' 1986' 1987' AAccccoouunntt 11998844RR 11998855'' 11998866'' Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1 Corporate profits with inventory valuation and capital consumption adjustment 266.9 277.6 284.4 274.2 292.8 277.8 288.0 282.3 286.4 281.1 294.0 2 Profits before tax 239.9 224.8 231.9 218.0 230.2 233.5 218.9 224.4 236.3 247.9 257.0 3 Profits tax liability 93.9 96.7 105.0 93.2 100.5 99.1 98.1 102.1 106.1 113.9 128.0 4 Profits after tax 146.1 128.1 126.8 124.8 129.7 134.4 120.9 122.3 130.2 134.0 129.0 5 Dividends 79.0 81.3 86.8 81.3 81.2 81.7 84.3 86.6 87.7 88.6 90.3 6 Undistributed profits 67.0 46.8 40.0 43.5 48.5 52.7 36.6 35.7 42.5 45.4 38.7 7 Inventory valuation -5.8 -.8 6.5 1.8 6.5 -9.8 17.8 11.3 6.0 -8.9 -11.3 8 Capital consumption adjustment 32.8 53.5 46.0 54.4 56.0 54.2 51.3 46.7 44.0 42.1 48.2 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • September 1987 1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities1 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 ratio- 1.492 1.462 1.458 1.487 1.464 1.467 1.466 1.455 1.447 1.469 1. For a description of this series, see "Working Capital of Nonfinancial 2. Ratio of total current assets to total current liabilities. Corporations" in the July 1978 BULLETIN, pp. 533-37. Data are not currently SOURCE. Federal Trade Commission and Bureau of the Census, available after 1986:1. 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1985 1986 1987 IInndduussttrryy 11998855 11998866 11998877'' Q4 Ql Q2 Q3 Q4 Ql Q21 Q3' 1 Total nonfarm business 387.13 379.27 390.89 397.88 377.94 375.92 374.55 388.69 372.24 392.02 397.06 Manufacturing 2 Durable goods industries 73.27 69.08 70.86 75.47 68.01 68.33 69.31 70.68 69.72 73.06 71.84 3 Nondurable goods industries 80.21 73.65 75.05 82.79 76.02 73.35 69.89 75.33 69.65 73.83 76.61 Nonmanufacturing 4 Mining 15.88 11.25 10.45 15.25 12.99 11.22 10.15 10.63 10.17 10.85 10.60 Transportation 5 Railroad 7.08 6.63 6.06 6.74 6.22 6.77 7.31 6.25 5.29 6.32 6.84 6 Air 4.79 6.26 6.76 6.07 6.58 5.77 5.69 6.99 7.55 6.76 6.36 7 Other 6.15 5.86 6.58 6.34 5.42 5.74 6.03 6.24 5.93 6.39 6.82 Public utilities 8 Electric 36.11 33.93 32.93 36.38 34.21 33.81 33.91 33.78 30.81 33.51 33.97 9 Gas and other 12.71 12.51 12.71 13.41 12.82 12.74 11.99 12.49 12.63 12.43 12.82 10 Commercial and other2 150.93 160.10 169.50 155.42 155.67 158.18 160.25 166.31 160.49 168.86 171.19 ATrade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1986 Q3 Q4 Ql Q2 Q3 Q4 ASSETS Accounts receivable, gross 1 Consumer 75.3 83.3 89.9 108.6 113.4 117.2 125.1 137.1 136.5 2 Business 100.4 113.4 137.8 143.7 158.3 165.9 167.7 161.0 174.8 3 Real estate 18.7 20.5 23.8 26.3 28.9 29.9 30.8 32.1 33.7 4 Total 194.3 217.3 251.5 278.6 300.6 312.9 323.6 330.2 345.0 Less: 5 Reserves for unearned income 29.9 30.3 33.8 38.0 39.2 40.0 40.7 42.4 41.4 6 Reserves for losses 3.3 3.7 4.2 4.6 4.9 5.0 5.1 5.4 5.8 7 Accounts receivable, net 161.1 183.2 213.5 236.0 256.5 268.0 277.8 282.4 297.8 30.4 34.4 35.7 46.3 45.3 48.8 48.8 59.9 57.9 8 All other 282.3 9 Total assets LIABILITIES 16.5 18.3 20.0 18.9 20.6 19.0 19.2 20.2 22.2 10 Bank loans 51.4 60.5 73.1 93.2 99.2 104.3 108.4 112.8 117.8 11 Commercial paper Debt 11.9 11.1 12.9 12.4 12.5 13.4 15.4 16.0 17.2 12 Other short-term 63.7 67.7 77.2 85.5 93.1 101.0 105.2 109.8 115.6 13 Long-term 21.6 31.2 34.5 38.2 40.9 42.3 40.1 44.1 43.4 14 All other liabilities 26.4 28.9 31.5 34.1 35.7 36.7 38.4 39.4 39.4 15 Capital, surplus, and undivided profits 16 Total liabilities and capital 191.5 217.6 249.2 282.3 301.9 316.8 326.6 342.3 355.6 NOTE. Components may not add to totals because of rounding. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments AAAccccccooouuunnntttsss receivable rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuu MMM tttsss aaa ttt yyy aaa nnn 333 ddd 111 iii ,,, nnn ggg 1987 1987 1987 111999888777111 Mar. Apr. May Mar. Apr. May Mar. Apr. May 1 Total 187,450 1,579 3,534 2,904 29,836 29,212 28,101 28,257 25,678 25,197 7 Re A ta u il t o f m in o a t n i c v i e n g ( c o o f m i m ns e t r a c ll i m al e n v t e h s ic a l l e es s ) 28,627 570 750 739 1,138 1,200 1,507 568 449 768 3 Business, industrial, and farm equipment 22,698 -40 4 310 1,255 1,352 1,460 1,295 1,349 1,150 Wholesale financing 4 Automotive 30,739 995 620 1,133 12,676 11,474 10,709 11,681 10,854 9,577 5 Equipment 5,464 -235 76 -16 672 690 513 907 614 530 6 All other 8,683 269 -25 75 3,064 3,056 2,964 2,795 3,082 2,889 Leasing 7 Automotive 20,495 77 515 -78 1,148 1,136 1,455 1,071 622 1,533 8 Equipment 39,525 440 582 182 995 970 838 555 388 655 9 Loans on commercial accounts receivable and factored commercial accounts receivable 16,791 -652 723 96 7,664 8,122 7,262 8,316 7,399 7,166 10 All other business credit 14,428 155 290 464 1,224 1,211 1,394 1,069 921 929 These data also appear in the Board's G.20 (422) release. For address, see 1. Not seasonally adjusted, inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • September 1987 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1986 1987 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 96.8 104.1 118.1 124.8 132.6R 135.6 130.2 136.9 132.9' 129.5 2 Amount of loan (thousands of dollars) 73.7 77.4 86.2 93.2 97.3 99.1 95.0 100.9 99.0' 95.5 3 Loan-price ratio (percent) 78.7 77.1 75.2 76.4 75.5 75.3 74.3 75.2 76.1' 75.8 4 Maturity (years) 27.8 26.9 26.6 27.4 27.7 27.6 27.1 27.1 28.0' 27.9 5 Fees and charges (percent of loan amount)2 2.64 2.53 2.48 2.46 2.23 2.21 2.20 2.23 2.26' 2.38 6 Contract rate (percent per annum) 11.87 11.12 9.82 9.28 9.14 8.87 8.77 8.84 8.99' 9.10 Yield (percent per year) 1 FHLBB series5 12.37 11.58 10.25 9.69 9.51 9.23 9.14 9.21 9.37' 9.50 8 HUD series4 13.80 12.28 10.07 9.33 9.09 9.04 9.19 10.11 10.44 10.29 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 13.81 12.24 9.91 9.21 8.79 8.81 8.94 10.02 10.61 10.33 10 GNMA securities6 13.13 11.61 9.30 8.62 8.46 8.28 8.18 8.85 9.40 9.50 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 83,339 94,574 98,048 97,895 96,382 95,514 95,140 94,404 94,064 94,064 12 FHA/VA-insured 35,148 34,244 29,683 23,121 22,178 22,063 21,843 21,765 21,999 21,892 13 Conventional 48,191 60,331 68,365 74,774 74,204 73,451 73,297 72,639 72,065 72,173 Mortgage transactions (during period) 14 Purchases 16,721 21,510 30,826 2,336 1,346 979 1,435 2,118 1,718 1,690 Mortgage commitments7 15 Contracted (during period) 21,007 20,155 32,987 1,272 948 912 2,805 3,208 1,726 1,745 16 Outstanding (end of period) 6,384 3,402 3,386 3,386 2,258 2,175 3,539 4,421 4,410 4,448 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)g 17 Total 9,283 12,399 13,517 11,564 12,986' 12,911' 12,940 12,492 k 18 FHA/VA 910 841 746 694 686 722' 717 708 T 19 Conventional 8,373 11,559' 12,771' 10,870 12,30c 12,189' 12,223 11,784 Mortgage transactions (during period) 1 20 Purchases 21,886 44,012 103,474 11,305 7,950 7,961 9,394 9,777 n a. n.a. 21 Sales 18,506 38,905 100,236 11,169 8,269 7,840 9,143 9,357 1 Mortgage commitments9 22 Contracted (during period) 32,603 48,989 110,855 8,742 7,685 9,197 9,669 8,408 T 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 OUTSTANDING1 Millions of dollars, end of period 1986 1987 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998844 11998855 11998866 Q1 Q2 Q3 Q4 Q1 1 Ail holders 2,033,654 2,266,923 2,566,386 2,315,962 2,383,989 2,469,796 2,566,386 2,625,342 7 1- to 4-family 1,317,940 1,466.773 1,667,055 1,494,603 1,543,681 1,607,113 1,667,055 1,711,106 3 Multifamily 185,414 213,816 246,925 221,587 229,145 237,410 246,925 250,254 4 Commercial 418,300 480,719 554,733 495,879 509,574 525,122 554,733 567,980 5 112.000 105,615 97,673 103,893 101,589 100,151 97,673 96,002 6 Selected financial institutions 1,269,702 1,390,394 1,508,599 1,408,665 1,435,437 1,464,213 1,508,599 1,525,130 7 Commercial banks2 379,498 429,196 502,534 441,096 456,163 474,658 502.534 518,998 8 1- to 4-family 196,163 213,434 235,814 216,290 221,640 228,593 235,814 241,871 9 Multifamily 20,264 23,373 31,173 25,389 26,799 28,623 31,173 31,869 10 Commercial 152,894 181,032 222,799 187,620 195,484 204,996 222,799 232,000 U Farm 10,177 11,357 12,748 1! ,797 12,240 12,446 12,748 13,258 1? Savings banks 154,441 177,263 226,409 188,154 203,398 215,036 226,409 227,087 13 1- to 4-family 107,302 121,879 156,236 131,381 142,174 149,786 156,236 156,683 14 Multifamily 19,817 23,329 30,476 23,980 26,543 28,400 30,476 30,574 15 Commercial 27,291 31,973 39.592 32,707 34,577 36,762 39,592 39,725 16 Farm 31 82 105 86 104 88 105 105 17 Savings and loan associations 555,277 583,236 553,080 574,732 565,037 557,139 553,080 547,383 18 1- to 4-family 421,489 432,422 403,611 420,073 413,865 408,152 403,611 399,042 19 Multifamily 55,750 66,410 66,898 67,140 66,020 65,827 66,898 66,781 70 Commercial 77,605 83,798 82,070 86,860 84,618 82,644 82,070 81,122 71 Farm 433 606 501 659 534 516 501 438 7? Life insurance companies 156,699 171,797 192,975 174,823 180,041 185,269 192,975 196,575 73 1- to 4-family 14,120 12,381 12,763 12,605 12,608 12,927 12,763 12,763 74 Multifamily 18,938 19,894 20,847 20,009 20,181 20,709 20,847 20,997 75 Commercial 111,175 127,670 148,367 130,569 135,924 140,213 148,367 151,867 26 Farm 12,466 11,852 10,998 11,640 11,328 11,420 10,998 10,948 27 Finance companies-1 23,787 28,902 33,601 29,860 30,798 32,111 33,601 35,087 7.8 Federal and related agencies 158,993 166,928 203,800 165,041 161,398 159,505 203,800 198,728 29 Government National Mortgage Association 2,301 1,473 889 1,533 876 887 889 846 30 1- to 4-family 585 539 47 527 49 48 47 46 31 Multifamily 1,716 934 842 1,006 827 839 842 800 37 Farmers Home Administration4 1,276 733 48,421 704 570 457 48,421 48,203 33 1- to 4-family 213 183 21,625 217 146 132 21,625 21,390 34 Multifamily 119 113 7,608 33 66 57 7,608 7,710 35 Commercial 497 159 8,446 217 111 115 8,446 8,463 36 Farm 447 278 10,742 237 247 153 10,742 10,640 37 Federal Housing and Veterans Administration 4,816 4,920 5,047 4,964 5,094 4,966 5,047 5,091 38 1- to 4-family 2,048 2,254 2,386 2,309 2,449 2,331 2,386 2,440 39 Multifamily 2,768 2,666 2,661 2,655 2,645 2,635 2,661 2,651 40 Federal National Mortgage Association 87,940 98,282 97,895 98,795 97,295 97,717 97,895 95,140 41 1- to 4-family 82,175 91,966 90,718 92,315 90,460 90,508 90,718 88,126 47 Multifamily 5,765 6,316 7,177 6,480 6,835 7,209 7,177 7,014 43 Federal Land Banks 52,261 47,498 39,984 45,422 43,369 42,119 39,984 38,684 44 1- to 4-family 3,074 2,798 2,353 2,673 2,552 2,478 2,353 2,276 45 Farm 49,187 44,700 37,631 42,749 40,817 39,641 37,631 36,408 46 Federal Home Loan Mortgage Corporation 10,399 14,022 11,564 13,623 14,194 13,359 11,564 10,764 47 1- to 4-family 9,654 11.881 10,010 12,231 11,890 11,127 10,010 9,610 48 Multifamily 745 2,141 1,554 1,392 2,304 2,232 1,554 1,154 49 Mortgage pools or trusts5 332,057 415.042 529,763 440,701 475,615 522,721 529,763 573,372 50 Government National Mortgage Association 179,981 212,145 260,869 220,348 229,204 241,230 260,869 277,386 51 1- to 4-family 175,589 207,198 255,132 215,148 223,838 235,664 255,132 271,065 57 Multifamily 4,392 4,947 5,737 5,200 5,366 5,566 5,737 6,321 53 Federal Home Loan Mortgage Corporation 70,822 100,387 171,372 110,337 125,903 146,871 171,372 187,962 54 1- to 4-family 70,253 99,515 166,667 108,020 123,676 143,734 166,667 182,857 55 Multifamily 569 872 4,705 2,317 2,227 3,137 4,705 5,105 56 Federal National Mortgage Association 36,215 54,987 97,174 62,310 72,377 86,359 97,174 107,673 57 1- to 4-family 35,965 54,036 95,791 61,117 71,153 85,171 95,791 106,068 58 Multifamily 250 951 1,383 1,193 1,224 1,188 1,383 1,605 59 Farmers Home Administration4 45,039 47,523 348 47,706 48,131 48,261 348 351 60 1- to 4-family 21,813 22,186 142 22,082 21,987 21,782 142 154 61 Multifamily 5,841 6,675 n.a. 6,943 7,170 7,353 n.a. n.a. 6? Commercial 7,559 8,190 132 8,150 8,347 8,409 132 127 63 Farm 9,826 10,472 74 10,531 10,627 10,717 74 70 64 Individuals and others6 272,902 294,559 324,224 301,555 311,539 323,357 324,224 328,112 65 1- to 4-family 153,710 165,199 180,159 167,755 174,396 182,569 180,159 181,628 66 Multifamily 48,480 55,195 65,864 57,850 60,938 63,635 65,864 67,673 67 Commercial 41,279 47,897 53,327 49,756 50,513 51,983 53,327 54,676 68 Farm 29,433 26,268 24,874 26,194 25,692 25,170 24,874 24,135 1. Based on data from various institutional and governmental sources, with reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986: 4, some quarters estimated in part by the Federal Reserve. Multifamily debt refers to because of accounting changes by the Farmers Home Administration. loans on structures of five or more units. 5. Outstanding principal balances of mortgage pools backing securities insured 2. Includes loans held by nondeposit trust companies but not bank trust or guaranteed by the agency indicated. departments. 6. Other holders include mortgage companies, real estate investment trusts, 3. Assumed to be entirely 1- to 4-family loans. state and local credit agencies, state and local retirement funds, noninsured 4. FmHA-guaranteed securities sold to the Federal Financing Bank were pension funds, credit unions, and other U.S. agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • September 1987 1.55 CONSUMER INSTALLMENT CREDIT" Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1986 1987 11998855 11998866 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May Amounts outstanding (end of period) 1 Total 522,805 577,784 571,280 576,874 577,656 577,784 578,578 579,591 579,913 583,595 583,037 By major holder 2 Commercial banks 242,084 261,604 258,990 260,940 262,949 261,604 261,694 262,105 261,933 263,433 263,146 3 Finance companies2 113,070 136,494 135,516 138,038 136,314 136,494 135,802 136,009 136,050 137,091 136,398 4 Credit unions 72,119 77,857 76,299 76,995 77,508 77,857 78,284 78,492 78,569 79,255 79,555 Retailers3 38,864 40,586 40,455 40,565 40,496 40,586 40,617 40,644 40,469 40,467 40,318 6 Savings institutions 52,433 58,037 56,687 57,046 57,168 58,037 58,906 59,031 59,488 59,826 60,045 7 Gasoline companies 4,235 3,205 3,333 3,289 3,221 3,205 3,276 3,311 3,405 3,522 3,576 By major type of credit 8 Automobile 208,057 245,055 239,014 243,400 243,005 245,055 245,472 246,064 246,290 247,663 247,507 y Commercial banks 93,003 100,709 98,057 99,385 100,221 100,709 101,389 101,688 101,528 101,781 102,079 10 Credit unions 35,635 39,029 38,248 38,597 38,854 39,029 39,243 39,347 39,386 39,730 39,880 ii Finance companies 70,091 93,274 91,241 93,786 92,188 93,274 92,617 92,780 93,032 93,738 93,089 12 Savings institutions 9,328 12,043 11,468 11,632 11,742 12,043 12,223 12,249 12,344 12,414 12,459 13 Revolving 122,021 134,938 133,123 133,816 134,391 134,938 134,916 135,663 135,166 136,706 136,814 14 Commercial banks 75,866 85,652 84,430 84,868 85,426 85,652 85,395 86,053 85,567 86,929 87,075 15 Retailers 34,695 36,240 36,086 36,190 36,137 36,240 36,277 36,308 36,141 36,139 36,009 16 Gasoline companies 4,235 3,205 3,333 3,289 3,221 3,205 3,276 3,311 3,405 3,522 3,576 17 Savings institutions 5,705 7,713 7,308 7,445 7,529 7,713 7,829 7,845 7,906 7,951 7,980 18 Credit unions 1,520 2,128 1,966 2,024 2,078 2,128 2,139 2,145 2,147 2,166 2,174 19 Mobile home 25,488 25,710 25,732 25,784 25,731 25,710 25,852 25,789 25,614 2255,,662266 25,483 20 Commercial banks 9,538 8,812 9,016 9,025 8,951 8,812 8,787 8,739 8,725 88,,669988 8,556 21 Finance companies 9,391 9,028 9,216 9,149 9,091 9,028 9,077 9,045 8,823 8,816 8,785 22 Savings institutions 6,559 7,870 7,500 7,610 7,689 7,870 7,988 8,005 8,067 8,112 8,142 23 Other 167,239 172,081 173,411 173,874 174,529 172,081 172,338 172,076 172,844 173,600 173,232 24 Commercial banks 63,677 66,431 67,487 67,662 68,351 66,431 66,122 65,625 66,113 66,026 65,435 25 Finance companies 33,588 34,192 35,059 35,104 35,035 34,192 34,108 34,183 34,196 34,537 34,524 26 Credit unions 34,964 36,700 36,085 36,374 36,576 36,700 36,901 36,999 37,036 37,359 37,500 27 Retailers 4,169 4,346 4,369 4,375 4,359 4,346 4,340 4,336 4,327 4,328 4,310 28 Savings institutions 30,841 30,412 30,411 30,359 30,208 30,412 30,867 30,932 31,172 31,349 31,463 Net change (during period) 29 Total 76,622 54,979 7,620 5,594 782 128 794 1,013 322 3,682 -558 By major holder 30 Commercial banks 32,926 19,520 1,508 1,950 2,009 -1,345 90 411 -172 1,500 -287 31 Finance companies2 23,566 23,424 6,251 2,522 -1,724 180 -692 207 41 1,041 -693 32 Credit unions 6,493 5,738 662 696 513 349 427 208 77 686 300 33 Retailers3 1,660 1,722 76 110 -69 90 31 27 -175 -2 -149 34 Savings institutions 12,103 5,604 -837 359 122 869 869 125 457 338 219 35 Gasoline companies -126 -1,030 -39 -44 -68 -16 71 35 94 117 54 By major type of credit 36 Automobile 35,705 36,998 7,814 4,386 -395 2,050 417 592 226 1,373 -156 3/ Commercial banks 9,103 7,706 1,186 1,328 836 488 680 299 -160 253 298 38 Credit unions 5,330 3,394 332 349 257 175 214 104 39 344 150 39 Finance companies 17,840 23,183 6,373 2,545 -1,598 1,086 -657 163 252 706 -649 40 Savings institutions 3,432 2,715 -77 164 110 301 180 26 95 70 45 41 Revolving 22,401 12,917 -57 693 575 547 -22 747 -497 1,540 108 42 Commercial banks 17,721 9,786 -115 438 558 226 -257 658 -486 1,362 146 43 Retailers 1,488 1,545 58 104 -53 103 37 31 -167 -2 -130 44 Gasoline companies -126 -1,030 -39 -44 -68 -16 71 35 94 117 54 45 Savings institutions 2,771 2,008 -17 137 84 184 116 16 61 45 29 46 Credit unions 547 608 56 58 54 50 11 6 2 19 8 47 Mobile home 778 222 -207 52 -53 -21 142 -63 -175 12 -143 48 Commercial banks -85 -726 -39 9 -74 -139 -25 -48 -14 -27 -142 49 Finance companies -405 -363 -121 -67 -58 -63 49 -32 -222 -7 -31 50 Savings institutions 1,268 1,311 -47 110 79 181 118 17 62 45 30 51 Other 17,738 4,842 70 463 655 -2,448 257 -262 768 756 -368 52 Commercial banks 6,187 2,754 476 175 689 -1,920 -309 -497 488 -87 -591 53 Finance companies 6,131 604 -2 45 -69 -843 -84 75 13 341 -13 54 Credit unions 616 1,736 274 289 202 124 201 98 37 332233 141 55 Retailers 172 177 18 6 -16 -13 -6 -4 -9 11 -18 56 Savings institutions 4,632 -429 -696 -52 -151 204 455 65 240 177 114 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 1987 IItteemm 11998844 11998855 11998866 Nov. Dec. Jan. Feb. Mar. Apr. May INTEREST RATES Commercial banks' 1 48-month new car2 13.71 12.91 11.33 10.58 n.a. n.a. 10.35 n.a. n.a. 10.23 2 24-month personal 16.47 15.94 14.82 14.19 n.a. n.a. 14.10 n.a. n.a. 14.00 3 120-month mobile home2 15.58 14.96 13.99 13.49 n.a. n.a. 13.42 n.a. n.a. 13.18 4 Credit card 18.77 18.69 18.26 18.09 n.a. n.a. 18.10 n.a. n.a. 17.92 Auto finance companies 5 New car 14.62 11.98 9.44 11.83 11.71 11.65 10.78 10.59 10.81 10.69 6 Used car 17.85 17.59 15.95 15.20 15.12 14.62 14.56 14.40 14.49 14.45 OTHER TERMS3 Maturity (months) 7 New car 48.3 51.5 50.0 53.4 53.3 53.8 53.6 53.7 54.3 53.5 8 Used car 39.7 41.4 42.6 42.6 42.7 44.8 44.7 44.9 45.0 45.2 Loan-to-value ratio 9 New car 88 91 91 93 93 94 94 94 94 93 10 Used car 92 94 97 97 98 98 99 99 98 98 Amount financed (dollars) II New car 9,333 9,915 10,665 11,160 10,835 10,902 10,602 10,641 10,946 11,176 12 Used car 5,691 6,089 6,555 6,946 7,168 7,067 7,075 7,145 7,234 7,373 1. Data for midmonth of quarter only. 3. At auto finance companies. 2. Before 1983 the maturity for new car loans was 36 months, and for mobile NOTE. These data also appear in the Board's G.19 (421) release. For address, home loans was 84 months. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • September 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 375.8 387.4 548.8 756.3 869.3 834.0 727.8 784.8 732.6 1,006.1 706.0 962.5 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 288.5 226.2 362.2 557.5 645.7 619.6 546.5 568.5 530.8 760.6 494.7 745.0 6 Debt capital instruments 155.5 148.3 252.8 314.0 461.7 461.7 298.4 329.6 355.4 568.0 392.3 531.2 7 Tax-exempt obligations 23.4 44.2 53.7 50.4 152.4 49.5 42.8 58.0 67.5 237.3 15.9 83.0 8 Corporate bonds 22.8 18.7 16.0 46.1 73.9 113.7 31.2 61.1 72.7 75.1 137.0 90.4 9 Mortgages 109.3 85.4 183.0 217.5 235.4 298.5 224.5 210.5 215.2 255.7 239.3 357.7 10 Home mortgages 72.2 50.5 117.1 129.9 150.3 199.2 135.2 124.7 133.1 167.5 156.1 242.3 n Multifamily residential 4.8 5.4 14.1 25.1 29.2 33.0 27.5 22.7 24.6 33.7 30.8 35.1 12 Commercial 22.2 25.2 49.0 63.3 62.4 73.7 62.9 63.7 60.3 64.4 59.7 87.7 13 Farm 10.0 4.2 2.8 -.8 -6.4 -7.4 -1.1 -.5 -2.8 -10.0 -7.4 -7.4 14 Other debt instruments 133.0 77.9 109.5 243.5 184.0 157.9 248.1 238.9 175.4 192.6 102.4 213.9 15 Consumer credit 22.6 17.7 56.8 95.0 96.6 65.8 98.7 91.3 97.3 95.9 70.6 61.6 16 Bank loans n.e.c 57.0 52.9 25.8 80.1 41.3 71.0 91.9 68.4 24.9 57.7 17.6 124.4 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 -3.0 18 Other 38.7 13.4 27.7 46.6 31.4 30.3 32.7 60.5 40.9 22.0 29.9 30.7 19 By borrowing sector 288.5 226.2 362.2 557.5 645.7 619.6 546.5 568.5 530.8 760.6 494.7 745.0 20 State and local governments 6.8 21.5 34.0 27.4 107.8 59.4 25.2 29.6 56.8 158.7 35.7 83.2 21 Households 121.4 88.4 188.0 239.5 295.0 282.1 232.8 246.2 253.6 336.4 222.4 342.3 22 Farm 16.6 6.8 4.3 .1 -13.6 -14.4 -.4 .5 -5.9 -21.3 -15.1 -13.7 23 Nonfarm noncorporate 38.5 40.2 76.6 97.1 92.8 114.6 101.4 92.7 85.6 99.9 94.4 134.7 24 Corporate 105.2 69.2 59.3 193.4 163.7 178.0 187.4 199.5 140.7 186.8 157.3 198.6 25 Foreign net borrowing in United States 23.5 16.0 17.4 6.1 1.7 9.7 35.5 -23.3 -4.1 7.5 24.3 -5.0 26 Bonds 5.4 6.7 3.1 1.3 4.0 3.2 1.1 1.5 5.5 2.6 7.1 -.8 27 Bank loans n.e.c 3.0 -5.5 3.6 -6.6 -2.8 -1.0 -2.2 -11.1 -6.1 .4 1.4 -3.5 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 -4.0 18.7 -8.1 -7.8 -3.6 -4.8 -3.1 30 Total domestic plus foreign 399.3 403.4 566.2 762.4 871.0 843.6 763.3 761.5 728.4 1,013.5 730.3 957.6 Financial sectors 31 Total net borrowing by financial sectors 101.9 90.1 94.0 139.0 186.9 248.4 134.2 143.8 154.8 218.9 185.9 310.9 By instrument 32 U.S. government related 47.4 64.9 67.8 74.9 101.5 173.7 69.8 80.0 92.9 110.2 129.5 217.8 33 Sponsored credit agency securities 30.5 14.9 1.4 30.4 20.6 12.6 29.1 31.8 25.3 15.9 4.4 20.8 34 Mortgage pool securities 15.0 49.5 66.4 44.4 79.9 161.4 40.7 48.2 67.6 92.1 124.3 198.6 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 74.8 64.4 63.8 61.9 108.8 56.4 93.1 37 Corporate bonds 4.4 12.5 12.1 23.3 36.5 26.6 17.3 29.3 35.3 37.7 25.5 27.7 38 Mortgages * .1 * .4 .1 .1 .4 .4 * .1 .6 -.4 39 Bank loans n.e.c 1.2 1.9 -.1 .7 2.6 4.0 -.1 1.4 .9 4.2 2.4 5.6 40 Open market paper 32.7 9.9 21.3 24.1 32.0 24.2 31.1 17.0 13.9 50.1 14.4 34.1 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 12.2 29.1 31.8 25.3 18.1 5.2 19.3 43 Mortgage pools 15.0 49.5 66.4 44.4 79.9 161.4 40.7 48.2 67.6 92.1 124.3 198.6 44 Private financial sectors 54.5 25.2 26.2 64.1 85.3 74.8 64.4 63.8 61.9 108.8 56.4 93.1 45 Commercial banks 11.6 11.7 5.0 7.3 -4.9 -3.6 15.4 -.9 -9.2 -.6 -6.7 -.5 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 7.4 47 Savings and loan associations 15.5 2.5 -2.1 22.7 22.3 29.2 20.2 25.1 12.1 32.6 23.1 35.3 48 Finance companies 18.5 4.3 11.4 17.8 52.8 44.1 4.3 31.3 44.8 60.9 37.5 50.6 49 REITs -.2 * -.2 .8 .5 .6 .8 .8 .5 .5 .9 .3 All sectors 50 Total net borrowing 501.3 493.5 660.2 901.4 1057.8 1092.1 897.5 905.3 833.3 1,232.4 916.2 1268.5 51 U.S. government securities 133.0 225.9 254.4 273.8 324.2 388.4 251.2 296.4 294.8 353.5 340.0 436.9 52 State and local obligations 23.4 44.2 53.7 50.4 152.4 49.5 42.8 58.0 67.5 237.3 15.9 83.0 53 Corporate and foreign bonds 32.6 37.8 31.2 70.7 114.4 143.5 49.6 91.9 113.5 115.3 169.6 117.4 54 Mortgages 109.2 85.4 183.0 217.8 235.4 298.6 224.8 210.8 215.2 255.7 239.9 357.3 55 Consumer credit 22.6 17.7 56.8 95.0 96.6 65.8 98.7 91.3 97.3 95.9 70.6 61.6 56 Bank loans n.e.c 61.2 49.3 29.3 74.2 41.0 74.0 89.6 58.8 19.8 62.3 21.4 126.6 57 Open market paper 51.3 5.7 26.9 52.0 52.8 26.4 73.8 30.1 30.4 75.2 19.3 33.4 58 Other loans 68.0 27.6 24.8 67.6 41.0 45.8 67.1 68.1 44.8 37.3 39.4 52.3 External corporate equity funds raised in United States 50 Total new share issues -3.3 33.6 67.0 -31.1 37.5 119.5 -40.1 -22.2 33.3 41.6 146.8 92.3 60 Mutual funds 6.0 16.8 32.1 38.0 103.4 191.7 39.3 36.6 93.6 113.1 198.7 184.6 61 All other -9.3 16.8 34.9 -69.1 -65.9 -72.1 -79.4 -58.8 -60.4 -71.5 -52.0 -92.3 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 7.0 5.9 7.6 11.0 12.4 8.3 5.7 64 Foreign shares purchased in United States .3 1.5 3.9 1.2 4.0 1.6 -.7 3.0 4.3 3.6 8.5 -5.3 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 375.8 387.4 548.8 756.3 869.3 834.0 727.8 784.8 732.6 1,006.1 706.0 962.5 Bv public agencies and foreign ? 104.4 115.4 115.3 154.6 203.3 311.1 132.5 176.6 201.8 220044..99 226677..66 335544..55 3 U.S. government securities 17.1 22.7 27.6 36.0 47.2 87.8 26.8 45.2 53.1 41.3 85.4 90.1 4 Residential mortgages 23.5 61.0 76.1 56.5 94.6 158.5 52.7 60.2 85.6 103.7 121.0 196.0 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 45.0 37.5 55.5 51.4 43.2 47.7 42.3 Total advanced, by sector 7 U.S. government 24.0 15.9 9.7 17.4 17.8 10.9 9.0 25.7 28.8 6.7 1122..99 9.0 8 Sponsored credit agencies 48.2 65.5 69.8 73.3 101.5 176.6 74.0 72.5 98.2 104.9 135.3 217.9 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 93.4 40.7 70.4 51.0 73.8 109.7 77.1 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 47.4 64.9 67.8 74.9 101.5 173.7 6699..88 8800..00 9922..99 111100..22 112299..55 221177..88 12 Foreign 23.5 16.0 17.4 6.1 1.7 9.7 35.5 -23.3 -4.1 7.5 24.3 -5.0 Private domestic funds advanced 13 342.3 352.9 518.7 682.7 769.2 706.2 700.5 664.9 619.6 918.8 592.1 820.9 14 U.S. government securities 115.9 203.1 226.9 237.8 277.0 300.6 224.4 251.2 241.7 312.2 254.5 346.8 15 State and local obligations 23.4 44.2 53.7 50.4 152.4 49.5 42.8 58.0 67.5 237.3 15.9 83.0 16 Corporate and foreign bonds 19.8 14.8 14.6 32.6 41.2 79.0 25.6 39.6 49.7 32.7 104.2 53.9 17 Residential mortgages 53.5 -5.3 55.0 98.5 84.8 73.7 109.9 87.0 72.0 97.5 65.9 81.4 18 Other mortgages and loans 145.9 96.9 161.5 279.1 228.1 223.2 313.6 244.7 200.4 255.9 165.0 281.9 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 320.2 261.9 391.9 550.5 554.4 647.9 581.8 519.1 471.3 637.4 572.4 724.0 ?1 Commercial banking 106.5 110.2 144.3 168.9 186.3 194.8 184.2 153.5 133.8 238.8 106.9 283.0 ?? Savings institutions 26.2 21.8 135.6 149.2 83.4 105.3 173.5 124.9 63.0 103.9 101.4 109.3 ?3 Insurance and pension funds 93.5 86.2 97.8 124.0 141.0 137.2 144.5 103.5 121.8 160.1 128.6 145.9 24 Other finance 94.0 43.7 14.1 108.3 143.6 210.5 79.5 137.2 152.7 134.5 235.6 185.8 75 Sources of funds 320.2 261.9 391.9 550.5 554.4 647.9 581.8 519.1 471.3 637.4 572.4 724.0 76 Private domestic deposits and RPs 214.5 195.2 212.2 317.6 204.8 242.3 300.2 334.9 203.0 206.6 224.5 260.3 27 Credit market borrowing 54.5 25.2 26.2 64.1 85.3 74.8 64.4 63.8 61.9 108.8 56.4 93.1 78 Other sources 51.2 41.5 153.4 168.8 264.2 330.8 217.2 120.4 206.5 322.0 291.5 370.5 ">9 Foreign funds -23.7 -31.4 16.3 5.4 17.7 12.4 3.0 7.8 11.2 24.3 .9 24.0 30 -1.1 6.1 -5.3 4.0 10.3 1.7 -.1 8.2 14.4 6.1 -5.5 9.0 31 Insurance and pension reserves 89.6 92.5 110.6 112.5 107.0 120.0 146.5 78.5 97.4 116.6 104.5 135.5 32 Other, net -13.6 -25.7 31.8 46.8 129.2 196.6 67.8 25.9 83.5 175.0 191.5 202.1 Private domestic nonfinancial investors 33 Direct lending in credit markets 76.6 116.3 153.0 196.4 300.2 133.1 183.1 209.6 210.2 390.2 76.1 190.0 34 U.S. government securities 37.1 69.9 95.5 132.9 150.9 81.0 142.2 123.6 130.8 171.0 41.4 120.9 35 State and local obligations 11.1 25.0 39.0 29.6 59.2 17.8 25.0 34.3 20.5 98.0 -21.8 57.4 36 Corporate and foreign bonds -4.0 2.0 -12.7 -3.4 13.2 12.3 -26.8 19.9 25.4 1.0 49.3 -24.7 37 Open market paper 1.4 -1.3 15.1 8.9 51.8 1.4 15.7 2.2 7.3 96.3 -13.8 16.7 38 Other 31.0 20.6 16.2 28.3 25.1 20.6 26.9 29.7 26.3 24.0 21.0 19.8 39 Deposits and currency 222.4 204.5 229.7 321.1 215.1 262.7 311.3 330.9 215.9 214.3 241.6 284.0 40 Currency 9.5 9.7 14.3 8.6 12.4 14.4 13.1 4.1 15.8 9.0 10.9 17.9 41 Checkable deposits 18.5 18.6 28.8 27.8 42.0 99.4 29.4 26.3 18.2 65.8 83.1 115.9 47 Samll time and savings accounts 47.3 135.7 215.3 150.7 137.5 123.1 136.4 164.9 167.1 108.0 119.5 126.7 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 -8.2 93.4 76.5 -.8 28.9 .9 -17.3 45 Security RPs 5.2 11.1 18.5 7.0 13.4 7.2 10.8 3.1 14.3 12.5 -7.9 22.3 46 Deposits in foreign countries -1.7 -.4 3.1 -5.1 -2.1 6.0 -2.0 -8.2 -2.9 -1.3 6.2 5.7 47 Total of credit market instruments, deposits and currency 299.0 320.7 382.7 517.4 515.3 395.8 494.4 540.5 426.0 604.5 317.8 474.0 48 Public holdings as percent of total 26.2 28.6 20.4 20.3 23.3 36.9 17.4 23.2 27.7 20.2 36.6 37.0 49 Private financial intermediation (in percent) 93.6 74.2 75.5 80.6 72.1 91.7 83.1 78.1 76.1 69.4 96.7 88.2 50 Total foreign funds -.7 -7.3 41.3 60.9 80.1 105.8 43.7 78.2 62.2 98.1 110.5 101.1 MEMO: Corporate equities not included above N -3.3 33.6 67.0 -31.1 37.5 119.5 -40.1 -22.2 33.3 41.6 146.8 92.3 i? Mutual fund shares 6.0 16.8 32.1 38.0 103.4 191.7 39.3 36.6 93.6 113.1 198.7 184.6 i3 -9.3 16.8 34.9 -69.1 -65.9 -72.1 -79.4 -58.8 -60.4 -71.5 -52.0 -92.3 i4 Acquisitions by financial institutions 19.9 27.6 46.8 8.2 33.3 25.2 -4.1 20.6 54.0 12.6 35.4 15.1 55 -23.2 6.0 20.2 -39.4 4.1 94.3 -36.0 -42.7 -20.7 29.0 111.4 77.2 NOTES BY LINE NUMBER. 31. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.57. 32. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 33. Line 13 less line 20 plus line 27. 6. Includes farm and commercial mortgages. 34-38. Lines 14-18 less amounts acquired by private finance plus amounts 11. Credit market funds raised by federally sponsored credit agencies, and net borrowed by private finance. Line 38 includes mortgages. issues of federally related mortgage pool securities. 40. Mainly an offset to line 9. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. Also sum of lines 28 and 47 less lines 40 and 46. 48. Line 2/line 1. 18. Includes farm and commercial mortgages. 49. Line 20/line 13. 26. Line 39 less lines 40 and 46. 50. Sum of lines 10 and 29. 27. Excludes equity issues and investment company shares. Includes line 19. 51. 53. Includes issues by financial institutions. 29. Foreign deposits at commercial banks, bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts branches, and liabilities of foreign banking agencies to foreign affiliates, outstanding may be obtained from Flow of Funds Section, Division of Research less claims on foreign affiliates and deposits by banking in foreign banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, 30. Demand deposits and note balances at commercial banks. D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • September 1987 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1986 1987 MMeeaassuurree 11998844 11998855 11998866 Oct. Nov. Dec. Jan. Feb.' Mar.' Apr.' May' June 1 Industrial production 121.4 123.8 125.1' 125.3 126.0 126.7 126.5 127.2 127.3 127.3 128.0 128.2 Market groupings 2 Products, total 126.7 130.8 133.2 134.0 134.5 135.0 134.9 136.1 136.2 135.6 136.5 136.4 3 Final, total 127.3 131.1 132.3 132.7 133.1 133.7 133.6 135.0 135.0 134.4 135.2 135.1 4 Consumer goods 118.0 120.2 124.5'' 124.7 125.6 127.2 126.8 127.5 127.5 126.6 127.3 127.1 5 Equipment 139.6 145.4 142.7 143.3 143.1 142.2 142.8 144.9 145.0 144.8 145.6 145.6 6 Intermediate 124.7 130.0 136.4 138.7 139.2 139.7 139.1 139.7 140.4 139.8 140.9 140.8 7 Materials 114.2 114.2 113.9 113.3 114.3 115.2 115.2 115.1 115.2 115.9 116.4 117.2 Industry groupings 8 Manufacturing 123.4 126.4 129.1 129.9 130.3 131.1 131.1 132.0 132.3 132.3 132.8 132.8 Capacity utilization (percent)2 9 Manufacturing 80.5 80.1 79.8 79.6 79.7 80.0 79.4' 79.7 79.6 79.4 79.7 79.7 10 Industrial materials industries 82.0 80.2 78.5 77.8 78.8 78.9 78.8 78.7 78.7 79.0 79.3 79.7 11 Construction contracts (1982 = 100)3 135.0 148.0 155.0 151.0 156.0 155.0 150.0 145.0 160.0 158.0 149.0 161.0 12 Nonagricultural employment, total4 114.6 118.3' 120.8' 121.5 121.8 121.9 122.4 122.7 122.9 123.2 123.3 123.4 13 Goods-producing, total 101.6 102.4 102.4 101.1 101.2 101.2 101.5 101.6 101.7 101.7 101.7 101.8 14 Manufacturing, total 98.4 97.8'' 96.5f 96.2 96.3 96.4 96.3 96.4 96.5 96.6 96.6 96.7 15 Manufacturing, production-worker.... 94.1 92.9 92.1 90.9 91.1 91.3 91.1 91.4 91.4 91.5 91.6 91.8 16 Service-producing 120.0 125.0 129.4 130.1 130.4 130.6 131.1 131.5 131.8 132.2 132.3 132.5 17 Personal income, total 193.4' 207.0' 219.9' 222.6' 223.3'" 224.8'" 225.9' 228.4 229.1 230.2 231.3 232.1 18 Wages and salary disbursements 185.0' 198.7' 210.2' 213.2'' 214.5' 214.8'" 216.3' 218.0 218.6 219.5 220.6 221.4 19 Manufacturing 164.6 172.8'' 176.4'' 178.8' 177.4' 177.7'" 178.5'" 179.1 179.2 178.9 179.8 180.0 20 Disposable personal income'' 193.5' 206.0' 219.1' 221.4'" 221.8'" 222.7' 224.3' 227.5 228.1 222.3 230.3 230.0 21 Retail sales6 179.0 190.6 199.9 201.9 200.9 211.8 196.8 206.3 206.8 207.4 206.7 206.7 Prices7 22 Consumer (1967 = 100) 311.1 322.2 328.4 330.5 330.8 331.1 333.1 334.4 335.9 337.7 338.7 340.1 23 Producer finished goods (1967 = 100) ... 291.1 293.7 289.6 290.7 290.7 290.4 291.8' 292.3 292.3 295.0 296.3 296.8 1. A major revision of the industrial production index and the capacity 5. Based on data in Survey of Current Business (U.S. Department of Comutilization rates was released in July 1985. See "A Revision of the Index of merce). Industrial Production" and accompanying tables that contain revised indexes 6. Based on Bureau of Census data published in Survey of Current Business. (1977 = 100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 7. Data without seasonal adjustment, as published in Monthly Labor Review. (July 1985), pp. 487-501. The revised indexes for January through June 1985 were Seasonally adjusted data for changes in the price indexes may be obtained from shown in the September BULLETIN. the Bureau of Labor Statistics. U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Com- NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, merce, and other sources. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 3. Index of dollar value of total construction contracts, including residential, of Current Business. nonresidential and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the last two months are preliminary and Company, F. W. Dodge Division. estimated, respectively. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1986 1987 CCaatteeggoorryy 11998844 11998855 11998866 Nov. Dec. Jan. Feb. Mar. Apr. May June HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 178,602 180,440 182,822 183,628 183,815 184,092 184,259 184,436 184,597 184,777 184,941 2 Labor force (including Armed Forces)1 115,763 117,695 120,078 120,940 120,854 121,299 121,610 121,479 121,588 122,237 121,755 3 Civilian labor force 113,544 115,461 117,834 118,675 118,586 119,034 119,349 119,222 119,335 119,993 119,517 4 Nonagricultural industries2 101,685 103,971 106,434 107,217 107,476 107,866 108,146 108,084 108,545 109,112 109,079 5 Agriculture 3,321 3,179 3,163 3,215 3,161 3,145 3,236 3,284 3,290 3,335 3,178 Unemployment 6 Number 8,539 8,312 8,237 8,243 7,949 8,023 7,967 7,854 7,500 7,546 7,260 7 Rate (percent of civilian labor force) ... 7.5 7.2 7.0 6.9 6.7 6.7 6.7 6.6 6.3 6.3 6.1 8 Not in labor force 62,839 62,745 62,744 62,688 62,961 62,793 62,649 62,957 63,009 62,540 63,186 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 94,496 97,519 99,610 100,415 100,567 100,919 101,150 101,329 101,598' 101,672' 101,788 10 Manufacturing 19,378 19,260 18,994 18,954 18,970 18,956 18,986 18,995 19,011 19,025' 19,029 11 Mining 966 927 783 730 724 718 719 722 729' 735 732 12 Contract construction 4,383 4,673 4,904 4,946 4,936 5,034 5,038 5,032 5,019r 4,995' 5,008 13 Transportation and public utilities 5,159 5,238 5,244 5,278 5,286 5,304 5,315 5,333 5,348' 5,347' 5,352 14 Trade 22,100 23,073 23,580 23,737 23,732 23,821 23,897 23,902 23,969' 23,983' 23,996 IS Finance 5,689 5,955 6,297 6,418 6,451 6,480 6,501 6,526 6,558' 6,576' 6,585 16 Service 20,797 22,000 23,099 23,452 23,544 23,670 23,759 23,842 23,926 23,997' 24,044 17 Government 16,023 16,394 16,710 16,900 16,924 16,936 16,935 16,977 17,038' 17,014' 17,042 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 1987 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 • September 1987 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1986 1987 1986 1987 1986 1987 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Qi Q2 Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 125.0 126.0 127.0 127.8 157.9 158.8 159.6 160.5 79.1 79.3 79.6 79.6 2 Mining 96.6 96.6 96.6 97.1 131.9 131.7 131.3 130.7 73.2 73.3r 73.6 74.3 3 Utilities 108.8 110.4 109.5 110.5 137.5 138.1 138.7 139.3 79.1 79.9 79.0' 79.3 4 Manufacturing 129.4 130.4 131.8 132.6 162.4 163.4 164.4 165.5 79.7 79.8 80.2 80.1 5 Primary processing 112.1 114.0 115.1 116.5 134.6 135.1 135.9 136.5 83.3 84.3 84.8'' 85.3 6 Advanced processing . 139.7 140.4 141.8 142.4 179.1 180.4 181.7 183.0 78.0 77.8 78.1 77.8 7 Materials 113.4 114.3 115.1 116.5 145.3 145.8 146.3 146.8 78.1 78.4 78.7 79.3 8 Durable goods 118.8 120.1 121.2 122.1 161.5 162.2 163.0 163.6 73.6 74.0 74.4 74.6 9 Metal materials 73.1 75.7 75.5 77.1 114.0 113.4 112.7 111.7 64.2 66.7 67.0 69.0 10 Nondurable goods 119.7 121.1 122.8 125.7 139.9 140.4 141.0 142.0 85.6 86.4 87.1 88.5 U Textile, paper, and chemical .. 120.4 122.4 124.2 127.2 139.2 139.6 140.4 141.4 86.5 87.6 88.5 89.9 V 135.1 136.0 136.4 138.9 139.7 140.8 97.3 97.3 96.9 13 117.7 120.1 122.5 144.7 145.0 145.6 81.4 82.8 84.1'' 14 Energy materials 98.6 98.2 97.8 98.7 121.4 121.6 121.6 121.5 81.2 80.7 80.5 81.3 Previous cycle1 Latest cycle2 1986 1986 1987 High Low High Low June Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May'' June Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 79.0 79.0 79.4 79.6 79.4 79.7 79.6 79.4 79.7 79.7 16 Mining 92.8 87.8 95.2 76.9 74.9 72.5 73.9 73.8 73.9 73.3 73.6 73.8 74.3 74.9 17 Utilities 95.6 82.9 88.5 78.0 79.2 79.3 80.5 79.5 79.1 79.0 78.9 78.1 79.5 80.4 18 Manufacturing 87.7 69.9 86.5 68.0 79.3 79.6 79.8 80.0 79.9 80.3 80.3 80.1 80.2 80.1 19 Primary processing.... 91.9 68.3 89.1 65.1 82.7 83.8 84.4 85.0 84.8 84.7 84.8 85.4 85.3 85.9 20 Advanced processing.. 86.0 71.1 85.1 69.5 77.7 77.8 77.7 77.9 77.8 78.3 78.1 77.8 78.0 77.7 21 Materials 92.0 70.5 89.1 68.4 78.0 77.8 78.4 78.9 78.8 78.7 78.7 79.0 79.3 79.7 22 Durable goods 91.8 64.4 89.8 60.9 73.2 73.6 74.2 74.3 74.0 74.6 74.7 74.8 74.4 74.7 23 Metal materials 99.2 67.1 93.6 45.7 63.2 65.2 68.4 66.5 65.9 67.3 68.0 68.6 68.7 69.7 24 Nondurable goods .... 91.1 66.7 88.1 70.6 84.3 85.8 85.7 87.7 87.5 86.8 86.8 88.0 88.6 88.9 25 Textile, paper, and chemical 92.8 64.8 89.4 68.6 85.1 87.0 86.7 89.2 89.3 88.1 88.1 89.4 90.0 90.4 ->6 98.4 70.6 97.3 79.9 95.9 95.7 96.0 100.2 98.3 97.1 95.4 95.8 97.2 ~>7 92 5 64.4 87.9 63.3 80.4 82.5 81.7 84.3 84.9 83.7 83.7 85.2 85.9 28 Energy materials 94.6 86.9 94.0 82.2 83.1 79.7 81.2 81.2 81.3 80.3 79.8 80.0 81.4 82.4 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 A Monthly data are seasonally adjusted 1977 11998866 1987 pro- 11998866 Groups por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. MayP June"1 Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 125.0 124.2 124.9 125.1 124.9 125.3 126.0 126.7 126.5 127.2 127.3 127.3 128.0 128.2 2 Products 57.72 133.2 132.4 133.2 133.8 133.3 134.0 134.5 135.0 134.9 136.1 136.2 135.6 136.5 136.4 3 Final products 44.77 132.3 131.1 132.0 132.6 132.2 132.7 133.1 133.7 133.6 135.0 135.0 134.4 135.2 135.1 4 Consumer goods 25.52 124.4 124.4 125.2 125.1 124.2 124.7 125.6 127.2 126.8 127.5 127.5 126.6 127.3 127.1 5 Equipment 19.25 142.7 140.0 141.0 142.5 142.8 143.3 143.1 142.2 142.8 144.9 145.0 144.8 145.6 145.6 6 Intermediate products 12.94 136.4 137.0 137.3 137.8 137.0 138.7 139.2 139.7 139.1 139.7 140.4 139.8 140.9 140.8 7 Materials 42.28 113.9 113.1 113.6 113.2 113.5 113.3 114.3 115.2 115.2 115.1 115.2 115.9 116.4 117.2 Consumer goods 8 Durable consumer goods 6.89 116.2 114.3 116.3 115.7 117.4 116.3 118.4 121.5 120.0 122.4 121.2 118.0 119.6 118.3 9 Automotive products 2.98 115.1 113.7 116.4 114.5 117.0 112.7 114.6 117.7 117.6 123.5 121.2 115.8 117.5 114.5 10 Autos and trucks 1.79 112.9 112.2 114.5 110.4 116.8 107.7 107.6 115.6 117.9 125.2 121.6 111.5 113.1 107.7 11 Autos, consumer 1.16 97.3 99.3 95.3 87.8 96.2 91.9 92.3 99.5 94.3 105.3 100.9 91.8 91.0 87.9 12 Trucks, consumer .63 141.8 136.1 150.3 152.4 155.1 137.1 136.0 145.6 161.9 162.1 159.9 148.1 13 Auto parts and allied goods 1.19 118.4 116.1 119.1 120.7 117.3 120.1 125.2 120.8 117.1 121.0 120.5 122.2 124.2 124.7 14 Home goods 3.91 117.1 114.8 116.3 116.7 117.7 119.0 121.2 124.4 121.9 121.6 121.2 119.8 121.1 121.3 15 Appliances, A/C and TV 1.24 139.5 137.5 138.9 139.4 141.2 142.6 148.1 153.2 146.9 145.2 142.9 137.7 142.2 141.6 16 Appliances and TV 1.19 141.6 139.1 141.6 142.5 143.5 144.3 150.0 155.1 148.9 146.7 143.8 139.2 142.3 17 Carpeting and furniture .96 125.8 122.5 126.6 125.8 126.2 128.8 131.1 132.0 129.1 130.8 131.3 133.0 132.9 18 Miscellaneous home goods 1.71 96.0 94.1 94.1 95.1 96.0 96.5 96.3 99.4 99.8 99.3 99.8 99.4 99.3 19 Nondurable consumer goods 18.63 127.5 128.1 128.4 128.6 126.7 127.8 128.3 129.4 129.2 129.4 129.8 129.8 130.2 130.4 20 Consumer staples 15.29 97.0 135.1 135.3 135.5 133.6 134.4 135.0 136.0 135.9 135.9 136.5 136.4 136.7 137.0 21 Consumer foods and tobacco 7.80 134.1 133.3 132.2 133.2 131.0 131.6 132.6 133.9 132.9 134.0 134.8 134.1 134.5 22 Nonfood staples 7.49 131.9 137.0 138.5 137.9 136.3 137.2 137.4 138.2 139.0 137.9 138.2 138.9 138.9 139.5 23 Consumer chemical products .. 2.75 136.5 163.6 166.4 163.4 161.1 161.7 161.0 163.1 165.9 164.7 165.7 165.7 165.3 24 Consumer paper products 1.88 161.2 147.1 146.4 147.7 145.7 150.3 151.5 150.1 149.4 147.8 147.5 148.9 151.4 25 Consumer energy 2.86 147.4 104.8 106.6 107.1 106.3 105.2 105.5 106.4 106.3 105.7 105.8 106.5 105.4 26 Consumer fuel 1.44 105.7 91.8 91.2 94.9 92.0 90.8 91.7 92.2 95.0 92.5 94.1 94.5 91.7 27 Residential utilities 1.42 92.8 118.1 122.3 119.6 120.9 119.8 119.6 120.8 117.8 119.2 117.7 118.7 Equipment 28 Business and defense equipment 18.01 147.1 145.1 146.4 147.8 148.0 148.4 148.1 147.0 147.7 150.1 150.1 149.9 150.6 150.6 29 Business equipment 14.34 138.6 136.6 137.9 139.3 139.3 139.1 138.6 137.1 138.1 140.8 140.8 140.5 141.3 141.1 30 Construction, mining, and farm .. 2.08 59.8 61.9 60.6 58.3 58.1 58.0 56.6 58.2 57.2 56.8 58.1 58.2 60.8 31 Manufacturing 3.27 112.0 111.7 112.6 113.3 113.0 112.7 109.6 108.8 110.1 111.5 110.9 111.1 111.5 111.8 32 Power 1.27 81.6 83.5 81.7 81.7 80.3 80.5 79.5 80.2 79.6 81.2 81.7 82.4 83.3 83.1 33 Commercial 5.22 214.6 208.2 214.5 217.5 215.1 215.4 217.3 213.7 215.9 218.4 219.7 220.2 220.8 221.6 34 Transit 2.49 109.2 108.8 103.9 106.9 113.3 111.8 110.7 108.9 109.5 117.4 114.0 110.4 110.8 107.5 35 Defense and space equipment 3.67 180.3 178.4 179.5 181.0 182.0 184.6 184.9 185.8 185.2 186.5 186.6 186.6 187.1 187.6 Intermediate products 36 Construction supplies 5.95 124.7 124.1 124.0 125.4 125.9 126.3 126.8 127.9 128.3 128.4 128.5 127.2 127.9 127.1 37 Business supplies 6.99 146.4 147.9 148.6 148.4 146.4 149.3 149.7 149.8 148.3 149.4 150.5 150.6 152.0 38 General business supplies 5.67 150.6 151.6 153.3 152.5 151.2 154.1 153.7 154.3 153.3 154.1 155.2 155.6 156.8 39 Commercial energy products 1.31 128.3 131.9 128.3 130.6 125.8 128.8 132.4 130.3 126.8 128.8 130.3 129.0 131.2 Materials 40 Durable goods materials 20.50 119.7 117.8 118.8 118.8 118.9 119.2 120.4 120.7 120.5 121.5 121.8 122.2 121.7 122.3 41 Durable consumer parts 4.92 98.5 96.3 96.7 95.2 95.3 97.0 98.0 98.8 99.0 100.0 98.9 96.2 95.5 95.6 42 Equipment parts 5.94 153.9 151.8 154.3 155.6 154.8 153.5 154.5 154.2 154.0 155.6 155.8 157.2 155.3 155.6 43 Durable materials n.e.c 9.64 109.4 107.9 108.2 108.1 108.8 109.4 110.7 111.2 110.8 111.5 112.6 114.0 114.4 115.4 44 Basic metal materials 4.64 80.0 76.7 77.4 76.9 78.4 78.8 82.1 80.3 79.2 80.3 80.8 81.9 81.7 45 Nondurable goods materials 10.09 118.3 117.7 118.9 119.7 120.6 120.3 120.2 123.2 123.2 122.5 122.8 124.7 125.8 126.5 46 Textile, paper, and chemical materials 7.53 118.9 118.2 119.0 120.5 121.8 121.3 121.0 124.7 125.0 123.6 124.0 126.2 127.3 128.1 47 Textile materials 1.52 110.6 109.5 111.2 113.4 116.0 114.3 115.6 116.1 116.5 115.8 118.5 121.5 120.8 48 Pulp and paper materials 1.55 132.1 132.7 135.6 136.0 133.7 133.5 134.2 140.2 137.9 136.7 134.7 135.8 138.2 49 Chemical materials 4.46 117.1 116.1 115.9 117.5 119.7 119.5 118.5 122.3 123.4 121.8 122.1 124.4 125.7 50 Miscellaneous nondurable materials 2.57 116.5 116.4 118.3 117.2 117.1 117.5 117.6 118.5 118.0 119.0 119.2 120.4 51 Energy materials 11.69 99.9 100.8 99.9 97.9 98.0 96.9 98.7 98.8 98.9 97.6 97.0 97.2 98.9 100.0 52 Primary energy 7.57 105.5 106.5 104.8 103.7 103.8 102.7 104.8 105.1 104.1 102.6 101.5 101.9 103.2 53 Converted fuel materials 4.12 89.6 90.4 90.9 87.3 87.4 86.2 87.6 87.3 89.4 88.5 88.9 88.7 90.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1987 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1987 Groups c S o I d C e p p r o o r - - a 1 v 9 g 8 . 6 tion June July Aug. Sept. Oct. Nov. Dec Jan. Feb. Mar/ Apr. May? June Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 103.4 102.6 101.8 100.9 100.8 100.7 102.6 101.9 101.9 101.3 101.4 101.1 102.2 103.2 2 Mining 9.83 99.6 98.9 97.1 96.4 96.2 95.6 97.4 96.7 97.2 96.2 96.5 96.6 97.0 97.7 3 Utilities 5.96 109.6 108.6 109.7 108.3 108.3 109.3 111.2 110.6 109.5 109.6 109.5 108.6 110.7 112.2 4 Manufacturing 84.21 129.1 128.3 129.2 129.5 129.5 129.9 130.3 131.1 131.1 132.0 132.3 132.3 132.8 132.8 5 Nondurable 35.11 130.9 131.2 131.7 132.2 131.4 132.3 132.7 133.7 134.1 134.3 134.8 135.7 136.1 136.2 6 Durable 49.10 127.9 126.2 127.4 127.5 128.1 128.1 128.6 129.2 129.0 130.4 130.5 129.9 130.4 130.4 Mining 7 Metal 10 .50 65.9 69.2 70.9 70.7 68.5 68.3 73.5 72.1 72.0 71.6 66.9 8 Coal 11.12 1.60 124.2 127.3 120.2 122.2 120.8 117.6 130.1 124.3 133.5 127.7 121.8 121.6 126.6 129.0 9 Oil and gas extraction 13 7.07 94.7 93.3 92.4 90.7 91.0 90.5 90.4 90.9 89.9 89.5 91.0 91.5 91.1 91.3 10 Stone and earth minerals 14 .66 113.9 114.5 111.8 114.8 111.7 116.4 115.2 109.6 107.1 110.0 113.1 113.3 111.9 Nondurable manufactures 11 Foods 20 7.96 133.6 134.6 134.3 135.1 134.3 133.7 134.4 135.3 135.3 135.7 136.1 135.8 136.5 12 Tobacco products 21 .62 96.6 97.6 97.9 97.1 89.8 100.1 96.8 92.9 89.1 98.7 100.7 101.0 13 Textile mill products 22 2.29 113.2 112.6 113.4 114.7 116.0 116.1 117.8 118.4 118.0 118.4 119.3 123.0 121.6 14 Apparel products 23 2.79 103.6 101.7 102.5 102.5 102.7 104.2 105.1 107.2 107.4 107.1 106.6 15 Paper and products 26 3.15 136.4 137.2 138.1 138.6 136.9 137.8 139.5 141.6 139.8 140.5 139.2 139.9 140.7 16 Printing and publishing 27 4.54 163.4 164.0 165.4 164.6 163.0 167.8 168.5 167.7 168.1 166.7 168.2 171.2 172.8 173.4 17 Chemicals and products 28 8.05 133.0 134.2 134.1 134.4 133.9 133.9 132.3 134.6 137.4 137.7 138.3 138.5 138.6 18 Petroleum products 29 2.40 92.1 91.8 90.6 94.0 93.3 91.1 92.0 92.5 94.7 91.9 91.4 93.0 91.6 91.0 19 Rubber and plastic products... 30 2.80 153.3 152.2 155.5 155.5 154.9 157.6 159.0 160.7 158.1 159.2 161.3 163.1 162.6 20 Leather and products 31 .53 61.3 57.9 61.9 62.0 59.4 60.2 61.3 59.4 58.3 59.6 59.1 59.3 61.3 Durable manufactures 21 Lumber and products 24 2.30 123.4 120.9 120.8 122.5 125.0 125.9 129.5 133.1 130.2 130.0 129.5 128.9 130.0 22 Furniture and fixtures 25 1.27 146.7 147.1 149.5 148.3 147.7 149.2 148.6 150.5 148.7 151.8 153.4 155.9 156.3 23 Clay, glass, stone products.... 32 2.72 120.2 120.8 119.6 119.7 121.6 118.1 120.6 121.7 122.8 121.5 122.7 123.2 122.4 24 Primary metals 33 5.33 75.8 71.4 73.6 73.4 74.1 74.2 76.8 73.5 73.6 76.3 77.5 77.0 77.9 78.7 25 Iron and steel 331.2 3.49 63.4 58.3 61.7 60.8 61.1 62.2 64.8 60.5 60.2 63.1 65.1 65.0 66.3 26 Fabricated metal products .... 34 6.46 107.4 106.6 105.7 105.9 107.3 108.3 107.1 108.3 108.0 108.2 108.8 109.0 108.2 109.2 27 Nonelectrical machinery 35 9.54 141.9 140.4 142.6 142.6 140.9 142.2 141.2 139.9 140.3 142.3 143.7 144.2 145.7 146.2 28 Electrical machinery 36 7.15 166.5 163.2 166.8 167.2 166.9 167.7 168.3 170.2 169.2 169.3 167.6 166.5 167.7 168.2 29 Transportation equipment 37 9.13 125.8 125.1 125.6 125.1 127.7 125.2 125.6 127.0 128.1 131.8 130.6 127.2 127.9 125.9 30 Motor vehicles and parts.... 371 5.25 110.9 110.6 111.2 108.2 112.2 107.1 107.9 111.2 112.2 117.8 115.5 109.3 110.1 106.5 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 146.1 144.7 145.2 148.0 148.7 149.7 149.6 148.4 149.6 150.7 151.2 151.4 152.0 152.1 32 Instruments 38 2.66 141.3 139.9 141.7 142.0 141.7 140.3 141.1 142.4 142.5 143.3 142.0 143.3 142.7 142.5 33 Miscellaneous manufactures... 39 1.46 99.3 98.3 97.5 98.3 97.7 99.0 98.9 103.1 101.8 101.1 101.4 100.9 99.7 Utilities 34 Electric 44..1177 112222..22 112233..11 112255..44 112222..44 112222..88 112233..88 112255..11 112233..55 112211..77 112222..33 112233..33 112222..99 112244..44 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,702.2 1,676.7 1,669.9 1,681.3 1,677.8 1,683.9 1,690.8 1,701.9 1,707.1 1,721.4 1,724.3 1,712.7 1,721.2 1,708.7 36 Final 405.7 1,314.5 1,289.5 1,282.7 1,292.6 1,292.3 1,292.5 1,297.6 1,306.7 1,315.1 1,331.9 1,330.5 1,319.3 1,323.1 1,314.9 37 Consumer goods 272.7 853.8 843.8 842.4 846.9 839.8 839.3 847.2 860.5 865.5 869.7 870.0 862.7 862.6 856.3 38 Equipment 133.0 458.2 445.7 440.4 445.7 452.5 453.2 450.4 446.2 449.6 462.2 460.4 456.6 460.5 458.6 39 Intermediate 111.9 387.6 387.2 387.1 388.7 385.5 391.4 393.2 395.3 391.9 389.5 393.9 393.3 398.1 393.9 • 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 1987 IItteemm 11998844 11998855 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.' Apr.' May Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,682 1,733 1,750 1,728 1,687 1,664 1,667 1,862 1,652 1,676 1,719 1,598 1,493 2 1-family 922 957 1,071 1,059 1,071 1,036 1,028 1,184 1,085 1,204 1,150 1,058 1,009 3 2-or-more-family 759 777 679 669 616 628 639 678 567 472 569 540 484 4 Started 1,749 1,742 1,805 1,800 1,689 1,657 1,637 1,813 1,816 1,838 1,730 1,643 1,602 5 1-family 1,084 1,072 1,179 1,180 1,123 1,114 1,129 1,233 1,253 1,303 1,211 1,208 1,119 6 2-or-more-family 665 669 626 620 566 543 508 580 563 535 519 435 483 7 Under construction, end of period1 1,051 1,063 1,074 1,163 1,154 1,142 1,125 1,104 1,089 1,096 1,085 1,071 1,065 8 1-family 556 539 583 628 627 625 619 610 609 621 618 624 622 9 2-or-more-family 494 524 490 534 527 518 506 494 480 476 467 447 443 10 Completed 1,652 1,703 1,756 1,757 1,740 1,745 1,774 1,894 1,956 1,726 1,689 1,824 1,602 11 1-family 1,025 1,072 1,120 1,124 1,113 1,165 1,158 1,184 1,217 1,107 1,141 1,141 1,139 12 2-or-more-family 627 631 637 633 627 580 616 710 739 619 548 683 463 13 Mobile homes shipped 296 284 244 231 243 241 237 251 242 231 228 227 222 Merchant builder activity in I-family units 14 Number sold 639 688 748 623 744 675 691 768 712 74CK 717 724 616 15 Number for sale, end of period1 358 350 361 352 355 357 353 357 358 358 358 360 356 Price (thousands of dollars)2 Median 16 Units sold 80.0 84.3 92.2 91.5 95.0 96.4 94.0 95.0 98.5 95.2' 98.5 97.9 106.8 Average 17 Units sold 97.5 101.0 112.2 113.2 114.0 114.9 113.6 118.9 122.1 121.3' 119.5 117.5 129.6 EXISTING UNITS (1-family) 18 Number sold 2,868 3,217 3,566 3,590 3,710 3,760 3,850 4,060 3,480' 3,690 3,680 3,560 3,770 Price of units sold (thousands of dollarsP 19 Median 72.3 75.4 80.3 82.0 80.3 79.4 80.4 80.8 82.1' 85.0 85.6 85.0 85.2 20 Average 85.9 90.6 98.3 100.3 98.2 97.3 99.1 100.6 100.1' 104.3 104.9 105.0 106.3 Value of new construction3 (millions of dollars)' CONSTRUCTION 21 Total put in place 328,643 355,995 388,815 395,292 400,115 394,871 390,646 380,175 384,716 401,644 388,303 397,262 398,563 22 Private 270,978 291,665 316,589 322,609 324,886 322,929 320,417 306,826 310,170 326,453 312,203 320,610 322,736 23 Residential 153,849 158,475 187,147 194,010 198,786 192,592 194,463 181,682 187,813 203,115 190,812 199,249 198,923 24 Nonresidential, total 117,129 133,190 129,442 128,599 126,100 113300,,333377 112255,,995544 112255,,114444 112222,,335577 112233,,333388 112211,,339911 112211,,336611 112233,,881133 Buildings 25 Industrial 13,746 15,769 13,747 13,217 13,015 14,634 13,404 13,207 12,094 12,112 11,354 11,504 12,030 26 Commercial 39,357 51,315 48,592 56,581 55,235 56,121 54,193 54,809 50,881 53,071 52,285 51,032 51,977 27 Other 12,547 12,619 13,216 12,900 13,026 13,820 13,787 14,231 14,755 14,776 15,143 14,999 15,462 28 Public utilities and other 51,479 53,487 53,887 45,901 44,824 45,762 44,570 42,897 44,627 43,379 42,609 43,826 44,344 29 Public 57,662 64,326 72,225 72,683 75,229 71,942 70,229 73,348 74,546 75,191 76,100 76,652 75,827 30 Military 2,839 3,283 3,919 4,158 5,076 3,566 4,007 4,313 4,100 2,806 3,893 3,749 4,180 31 Highway 18,772 21,756 23.360 23,732 22,609 22,643 19,958 21,935 23,508 23,260 23,575 22,916 23,345 32 Conservation and development 4,654 4,746 4,668 4,251 4,741 4,726 4,647 4,954 5,155 4,883 4,792 5,660 4,937 33 Other 31,397 34,541 40,278 40,542 42,803 41,007 41,617 42,146 41,783 44,242 43,840 44,327 43,365 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (1) 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 (2) 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 the originating agency. Permit Construction Reports (C-30-76-5), issued by the Bureau in July 1976. authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • September 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 rl ie 1 r 2 Change ( a f t r o a m nn 3 u a m l o r n at t e h ) s earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm JJJuuunnneee 1986 1987 1987 111999888777 11998866 11998877 (((111999666777 JJuunnee JJuunnee === 111000000)))111 Sept. Dec. Mar. June Feb/ Mar. Apr. May June CONSUMER PRICES2 1 All items 1.7 3.7 2.0 2.S 6.2 4.6 .4 .4 .4 .3 .4 340.1 ? Food 2.5 5.4 8.4 4.1 2.5 6.5 .3 -.1 .3 .5 .7 334.1 3 Energy items -12.9 .0 -21.0 -9.9 26.1 7.9 1.9 1.0 .3 .2 1.5 380.6 4 All items less food and energy 4.0 4.1 3.7 3.7 5.2 4.0 .3 .5 .5 .3 .2 339.1 5 Commodities 1.2 3.1 2.6 1.4 5.1 3.8 .0 .7 .6 .3 .0 270.1 6 Services 5.7 4.6 4.3 5.1 5.3 3.8 .4 .4 .4 .3 .2 414.1 PRODUCER PRICES 7 Finished goods -1.6 2.6 -.4 1.8 3.9 5.1 .1 .4 .7 .3 .2 296.8 8 Consumer foods 2.4 4.6 11.2 1.0 -6.7 14.3 -.1 .V 1.5 1.4 .5 287.7 9 Consumer energy -27.7 -2.9 -42.7 -12.5 57.6 12.4 2.5 1.5r 2.1 .0 .9 520.7 10 Other consumer goods 2.3 2.6 2.3 4.4 3.4 .5 -.2 .6' .2 -.2 .1 264.5 11 Capital equipment 1.9 1.8 2.0 3.4 .1 1.7 -.2 .1 .3 .1 .0 311.6 1? Intermediate materials3 -4.1 2.5 -1.5 -1.2 8.0 5.0 .5 .4 .3 .4 .6 320.3 13 Excluding energy -.7 2.6 1.5 1.2 3.3 4.5 .2 .2' .2 .4 .5 311.6 Crude materials 14 Foods -2.8 8.5 18.1 -2.7 -11.3 35.4 .0 .V 4.3 4.8 -1.4 246.5 15 Energy -25.3 8.6 -19.6 -.5 41.2 23.1 1.1 1.7 2.7 .9 612.2 16 Other 1.1 8.4 -24.1 8.5 16.3 33.3 -.4 -.2' .7 2.4 4.2 271.1 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds. rental equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A51 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1986' 1987 AAccccoouunntt 11998844'' 11998855'' 11998866'' Q2 Q3 Q4 Ql' Q2 GROSS NATIONAL PRODUCT 1 Total 3,772.2 4,010.3 4,235.0 4,211.6 4,265.9 4,288.1 4,377.7 4,448.8 By source 2 Personal consumption expenditures 2,430.5 2,629.4 2,799.8 2,765.8 2,837.1 2,858.6 2,893.8 2,944.0 3 Durable goods 335.5 368.7 402.4 386.4 427.6 419.8 396.1 409.7 4 Nondurable goods 867.3 913.1 939.4 934.3 940.0 946.3 969.9 977.0 5 Services 1,227.6 1,347.5 1,458.0 1,445.1 1,469.5 1,492.4 1,527.7 1,557.3 6 Gross private domestic investment 664.8 641.6 671.0 679.4 660.8 660.2 699.9 702.3 7 Fixed investment 597.1 631.6 655.2 651.9 657.3 666.6 648.2 658.8 8 Nonresidential 416.0 442.6 436.9 433.8 433.5 439.7 422.8 429.7 9 Structures 141.1 152.5 137.4 135.9 131.1 132.9 128.7 129.4 10 Producers' durable equipment 274.9 290.1 299.5 297.9 302.4 306.7 294.1 300.3 11 Residential structures 181.1 189.0 218.3 218.1 223.8 226.9 225.4 229.1 12 Change in business inventories 67.7 10.0 15.7 27.5 3.5 -6.4 51.6 43.5 13 Nonfarm 60.5 13.6 16.8 24.5 -.9 5.1 48.7 27.1 14 Net exports of goods and services -58.9 -79.2 -105.5 -100.8 -110.5 -116.9 -112.2 -108.6 IS Exports 383.5 369.9 376.2 371.3 376.6 383.3 397.3 413.3 16 Imports 442.4 449.2 481.7 472.1 487.1 500.2 509.5 521.9 17 Government purchases of goods and services 735.9 818.6 869.7 867.2 878.5 886.3 896.2 911.2 18 Federal 310.5 353.9 366.2 368.4 371.2 368.6 366.9 371.8 19 State and local 425.3 464.7 503.5 498.8 507.3 517.7 529.3 539.4 By major type of product 70 Final sales, total 3,704.5 4,000.3 4,219.3 4,184.0 4,262.4 4,294.6 4,326.0 44,,440055..33 71 Goods 1,581.3 1,637.9 1,693.8 1,689.9 1,703.6 1,698.9 1,738.7 1,764.4 77 Durable 675.0 700.2 716.8 717.0 735.8 737.3 747.0 761.1 23 Nondurable 901.7 930.0 953.7 972.9 967.8 961.6 991.7 1,003.3 24 Services 1,813.1 1,959.8 2,105.6 2,097.9 2,136.6 2,160.0 2,212.0 2,252.1 25 Structures 375.1 408.1 430.0 423.8 425.7 429.3 426.9 432.3 26 Change in business inventories 67.7 10.0 15.7 27.5 3.5 -6.4 51.6 43.5 27 Durable goods 39.2 6.6 -1.0 10.1 -12.1 -4.5 35.2 25.6 28 Nondurable goods 24.9 4.5 7.7 17.5 15.6 -1.9 16.5 17.9 29 MEMO: Total GNP in 1982 dollars 3,501.4 3,607.5 3,713.3 3,704.7 3,718.0 3,731.5 3,772.2 3,796.4 NATIONAL INCOME 30 Total 3,028.6 3,229.9 3,422.0 3,414.1 3,438.7 3,471.0 3,548.3 n.a. 31 Compensation of employees 2,213.9 2,370.8 2,504.9 2,487.6 2,515.1 2,552.0 2,589.9 2,623.4 32 Wages and salaries 1,838.8 1,974.7 2,089.1 2,074.6 2,097.9 2,128.5 2,163.3 2,191.6 33 Government and government enterprises 346.1 372.3 394.8 391.6 397.7 403.8 412.2 418.1 34 Other 1,492.5 1,602.6 1,694.3 1,683.0 1,700.2 1,724.7 1,751.1 1,773.5 35 Supplement to wages and salaries 375.1 396.1 415.8 413.0 417.2 423.5 426.6 431.9 36 Employer contributions for social insurance 192.2 203.8 214.7 213.1 214.9 219.1 220.0 222.4 37 Other labor income 182.9 192.3 201.1 199.8 202.3 204.4 206.7 209.5 38 Proprietors' income1 234.5 257.3 289.8 298.1 292.5 297.8 320.9 327.6 39 Business and professional1 204.0 227.6 252.6 250.1 256.2 261.2 269.7 276.1 40 Farm1 30.5 29.7 37.2 48.1 36.3 36.6 51.3 51.5 41 Rental income of persons2 8.5 9.0 16.7 17.4 17.2 18.4 20.0 21.8 42 Corporate profits1 266.9 277.6 284.4 282.3 286.4 281.1 294.0 n.a. 43 Profits before tax3 240.0 224.8 231.9 224.4 236.3 247.9 257.0 n.a. 44 Inventory valuation adjustment -5.8 -.7 6.5 11.3 6.0 -8.9 -11.3 -18.5 45 Capital consumption adjustment 32.7 53.5 46.0 46.7 44.0 42.1 48.2 48.8 46 Net interest 304.8 315.3 326.1 328.7 327.5 321.7 323.6 332.4 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • September 1987 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1986r 1987 AAccccoouunntt 11998844'' 11998855rr 11998866rr Q2 Q3 Q4 Qlr Q2 PERSONAL INCOME AND SAVING 1 Total personal income 3,108.7 3,327.0 3,534.3 3,526.6 3,553.6 3,593.6 3,662.0 3,716.4 2 Wage and salary disbursements 1,838.6 1,974.9 2,089.1 2,074.6 2,097.9 2,128.5 2,163.3 2,191.6 3 Commodity-producing industries 577.6 609.2 623.3 621.2 622.8 628.4 632.9 634.9 4 Manufacturing 439.1 460.9 470.5 468.7 470.0 474.5 477.2 478.9 5 Distributive industries 442.8 473.0 497.1 493.7 498.6 504.7 511.5 519.2 6 Service industries 472.1 520.4 573.9 568.1 578.8 591.6 606.7 619.4 7 Government and government enterprises 346.1 372.3 394.8 391.6 397.7 403.8 412.2 418.1 8 Other labor income 182.9 192.3 201.1 199.8 202.3 204.4 206.7 209.5 9 Proprietors' income1 234.5 257.3 289.8 298.1 292.5 297.8 320.9 327.6 10 Business and professional1 204.0 227.6 252.6 250.1 256.2 261.2 269.7 276.1 11 Farm1 30.5 29.7 37.2 48.1 36.3 36.6 51.3 51.5 12 Rental income of persons2 8.5 9.0 16.7 17.4 17.2 18.4 20.0 21.8 13 Dividends 75.5 76.3 81.2 81.0 82.1 82.9 84.5 86.3 14 Personal interest income 444.7 476.5 497.6 500.0 498.1 496.8 499.8 506.3 15 Transfer payments 456.6 489.7 518.3 514.5 523.6 526.6 533.7 541.6 16 Old-age survivors, disability, and health insurance benefits... 235.7 253.4 269.2 266.4 272.4 273.5 278.0 282.5 17 LESS; Personal contributions for social insurance 132.7 148.9 159.6 158.8 160.1 161.8 166.7 168.3 18 EQUALS; Personal income 3,108.7 3,327.0 3,534.3 3,526.6 3,553.6 3,593.6 3,662.0 3,716.4 19 LESS: Personal tax and nontax payments 440.2 485.9 512.2 504.2 515.3 532.0 536.1 577.9 20 EQUALS; Disposable personal income 2,668.6 2,841.1 3,022.1 3,022.4 3,038.2 3,061.6 3,125.9 3,138.5 21 LESS: Personal outlays 2,504.5 2,714.1 2,891.5 2,856.4 2,929.4 2,952.6 2,987.5 3,037.9 22 EQUALS: Personal saving 164.1 127.1 130.6 166.0 108.9 109.0 138.4 100.6 MEMO Per capita (1982 dollars) 23 Gross national product 14,767.6 15,075.2 15,369.6 15,353.0 1155,,336699..99 15,387.6 1155,,552233..44 1155,,559900..99 24 Personal consumption expenditures 9,486.7 9,831.1 10,142.8 10,088.2 10,241.8 10,228.8 10,188.9 10,220.5 25 Disposable personal income 10,419.0 10,622.0 10,947.0 11,024.0 10,968.0 10,956.0 11,008.0 10,897.0 26 Saving rate (percent) 6.1 4.5 4.3 5.5 3.6 3.6 4.4 3.2 GROSS SAVING 27 Gross saving 568.5 531.3 532.0 538.7 516.2 515.3 554.3 n.a. 28 Gross private saving 673.5 664.2 679.8 713.7 660.4 653.4 683.8 n.a. 29 Personal saving 164.1 127.1 130.6 166.0 108.9 109.0 138.4 100.6 30 Undistributed corporate profits' 94.0 99.6 92.6 93.6 92.6 78.5 75.6 n.a. 31 Corporate inventory valuation adjustment -5.8 -.7 6.5 11.3 6.0 -8.9 -11.3 -18.5 Capital consumption allowances 254.5 269.1 282.8 280.9 284.3 289.3 229911..88 229933..88 33 Noncorporate 160.9 168.5 173.8 173.2 174.6 176.6 178.0 179.3 34 Government surplus, or deficit (-), national income and product accounts -105.0 -132.9 -147.8 -175.0 -144.1 -138.1 -129.5 n.a. -169.6 -196.0 -204.7 -230.2 -203.7 -188.7 -170.5 n.a. 36 State and local 64.6 63.1 56.8 55.1 59.6 50.6 41.0 n.a. 37 Gross investment 573.9 525.7 527.1 539.6 510.1 503.7 552.1 553.5 38 Gross private domestic 664.8 641.6 671.0 679.4 660.8 660.2 699.9 702.3 39 Net foreign -90.9 -115.9 -143.9 -139.8 -150.7 -156.5 -147.7 -148.7 40 Statistical discrepancy 5.4 -5.6 -4.9 .9 -6.1 -11.6 -2.2 -2.2 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 1986' 1987 Item credits or debits 11998844'' 11998855rr 11998866'' Q1 Q2 Q3 Q4 Qlp 1 Balance on current account --110077,,001133 -116,394 -141,352 -33,040 -33,755 -36,583 -37,977 -37,122 2 Not seasonally adjusted -30,090 -34,634 -40,230 -36,398 -33,866 3 Merchandise trade balance- -112,522 -122,148 -144,339 -34,978 -33,651 -37,115 -38,595 -38,330 4 Merchandise exports 219,900 215,935 224,361 53,878 56,928 56,534 57,021 58,212 5 Merchandise imports -332,422 -338,083 -368,700 -88,856 -90,579 -93,649 -95,616 -96,542 6 Military transactions, net -1,942 -3,338 -3,662 -1,298 -1,054 -815 -495 198 7 Investment income, net 18,490 25,398 20,844 6,425 4,587 5,339 4,492 3,836 8 Other service transactions, net 1,138 -1,005 1,463 -168 530 342 759 264 9 Remittances, pensions, and other transfers -3,637 -4,079 -3,885 -943 -918 -875 -1,151 -993 10 U.S. government grants (excluding military) -8,541 -11,222 -11,772 -2,078 -3,249 -3,459 -2,987 -2,097 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,476 -2,831 -1,920 -240 -242 -1,454 15 219 12 Change in U.S. official reserve assets (increase, -) -3,130 -3,858 312 -115 16 280 132 1,956 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -979 -897 -246 -274 -104 163 -31 76 15 Reserve position in International Monetary Fund -995 908 1,500 344 366 508 283 606 16 Foreign currencies -1,156 -3,869 -942 -185 -246 -391 -120 1,274 17 Change in U.S. private assets abroad (increase, -)3 -13,685 -24,711 -94,374 -13,415 -25,303 -23,304 -32,351 16,517 18 Bank-reported claims -11,127 -1,323 -59,039 6,373 -14,734 -18,878 -31,800 27,802 19 Nonbank-reported claims 5,019 1,361 -3,986 -2,947 -1,894 685 170 20 U.S. purchase of foreign securities, net -4,756 -7,481 -3,302 -5,886 -1,149 620 3,113 -1,317 21 U.S. direct investments abroad, net3 -2,821 -17,268 -28,047 -10,955 -7,526 -5,731 -3,834 -9,968 22 Change in foreign official assets in the United States (increase, +) 2,987 -1,140 34,698 2,576 15,568 15,551 1,003 14,123 23 U.S. Treasury securities 4,690 -838 34,515 3,238 14,538 12,167 4,572 11,999 24 Other U.S. government obligations 13 -301 -1,214 -177 -644 -276 -117 -51 25 Other U.S. government liabilities 586 823 1,723 406 925 999 -607 -1,421 26 Other U.S. liabilities reported by U.S. banks 555 645 554 -1,254 1,280 2,963 -2,435 3,964 27 Other foreign official assets- -2,857 -1,469 -880 363 -531 -302 -410 -368 28 Change in foreign private assets in the United States (increase, +)3 99,481 131,012 178,689 33,746 33,475 54,040 57,428 13,435 29 U.S. bank-reported liabilities 33,849 41,045 77,350 8,487 3,899 30,360 34,604 -13,836 30 U.S. nonbank-reported liabilities 4,704 -450 -2,791 -2,193 -1,553 -80 1,035 31 Foreign private purchases of U.S. Treasury securities, net 23,001 20,433 8,275 7,035 3,705 609 -3,074 5,445 32 Foreign purchases of other U.S. securities, net 12,568 50,962 70,802 18,571 22,888 17,074 12,269 18,454 33 Foreign direct investments in the United States, net 25,359 19,022 25,053 1,846 4,536 6,077 12,594 3,372 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 26,837 17,920 23,947 10,488 10,241 -8,530 11,750 -9,128 36 Owing to seasonal adjustments 2,294 -2,044 -4,153 3,904 2,749 37 Statistical discrepancy in recorded data before seasonal adjustment 26,837 17,920 23,947 8,194 12,285 -4,377 7,846 -11,877 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,130 -3,858 312 -115 16 280 132 1,956 39 Foreign official assets in the United States (increase, +) excluding line 25 2,401 -1,963 32,975 2,170 14,643 14,552 1,610 15,544 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) -4,504 -6,709 -8,508 1,876 -2,166 -3,023 -5,195 -2,941 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 153 46 101 19 11 19 53 10 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 (1A) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • September 1987 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are not seasonally adjusted. 1986 1987 IItteemm 11998833 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. May 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 200,486 217,865 213,146 18,595 18,431 16,421 18,660 21,064 20,141 20,425 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 258,048 325,726 345,276 36,187 27,795 27,466 32,307 33,197 31,983 33,313 3 Trade balance -57,562 107,861 -132,129 -17,592 -9,364 -11,045 -13,647 -12,133 -11,842 -12,889 NOTE. The data through 1981 in this table are reported by the Bureau of Census not covered in Census statistics, and (2) the exclusion of military sales (which are data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of combined with other military transactions and reported separately in the "service export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in account" in table 3.10, line 6). On the import side, additions are made for gold, the Census basis trade data; this adjustment has been made for all data shown in ship purchases, imports of electricity from Canada, and other transactions; the table. Beginning with 1982 data, the value of imports are on a customs military payments are excluded and shown separately as indicated above. As of valuation basis. Jan. 1, 1987 census data are released 45 days after the end of the month. 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). the export side, the largest adjustments are: (1) the addition of exports to Canada 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1986 1987 TTyyppee 11998833 11998844 11998855 Dec. Jan. Feb. Mar. Apr. May June" 1 Total 33,747 34,934 43,186 48,517 49,386 49,358 48,824 46,591 45,913 45,140 2 Gold stock, including Exchange Stabilization Fund1 11,121 11,096 11,090 11,064 11,062 11,085 11,081 11,076 11,070 11,069 3 Special drawing rights2-3 5,025 5,641 7,293 8,395 8,470 8,615 8,740 8,879 8,904 8,856 4 Reserve position in International Monetary Fund" 11,312 11,541 11,947 11,730 11,872 11,699 11,711 11,745 11,517 11,313 5 Foreign currencies4 6,289 6,656 12,856 17,328 17,982 17,959 17,292 14,891 14,422 13,902 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 Dec. Jan. Feb. Mar. Apr. May June 1 Deposits 190 267 480 287 226 255 268 342 319 318 Assets held in custody 2 U.S. Treasury securities1 117,670 118,000 121,004 155,835 159,597 160,942 167,423 172,929 175,849 176,657 3 Earmarked gold2 14,414 14,242 14,245 14,048 14,041 14,046 14,036 14,031 14,031 14,034 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 Data" Millions of dollars, end of period 1986 1987 AAsssseett aaccccoouunntt 11998833 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 1 Total, all currencies 477,090 453,656 458,012 446,618 456,628 458,305 457,819 456,655 484,827 487,300 ? Claims on United States 115,542 113,393 119,706 110,404' 114,685' 116,190' 114,450' 111,865 127,730 126,847 Parent bank 82,026 78,109 87,201 78,264' 83,492' 84,111' 82,588' 81,325 93,414 92,014 4 Other banks in United States2 1 13,664 13,057 12,034 13,685 12,714' 13,158 13,044 15,277 16,484 5 Nonbanks2 21,620 19,448 20,106 17,508 19,365 18,704 17,496 19,039 18,349 6 Claims on foreigners 342,689 320,162 315,676 306,338r 312,833' 310,494' 311,461' 310,618' 321,699 327,952 7 Other branches of parent bank 96,004 95,184 91,399 89,592' 96,281r 92,364' 89,656' 89,200 93,288 101,309 8 Banks 117,668 100,397 102,960 103,293 105,237 105,386' 109,748 109,580 115,942 113,946 9 Public borrowers 24,517 23,343 23,478 23,314 23,584 23,337 23,192 22,543' 22,765 23,160 10 Nonbank foreigners 107,785 101,238 97,839 90,139 87,731 89,407 88,865' 89,295' 89,704 89,537 11 Other assets 18,859 20,101 22,630 29,876 29,110 31,621 31,908 34,172' 35,398 32,501 12 Total payable in U.S. dollars 371,508 350,636 336,520 306,683 317,487 309,719 311,669 306,079 328,920 336,031 n Claims on United States 113,436 111,426 116,638 106,265' 110,742' 111,522' 110,011' 107,016 121,939 121,389 14 Parent bank 80,909 77,229 85,971 76,746r 82,082r 82,349' 81,029' 79,465 91,459 89,978 15 Other banks in United States2 13,500 12,454 10,986 12,830 11,531 12,102 11,907 13,468 14,848 16 Nonbanks2 20,697 18,213 18,533 15,830 17,642 16,880 15,644 17,012 16,563 17 Claims on foreigners 247,406 228,600 210,129 188,672' 194,941' 186,370' 189,205' 185,418 192,715 201,126 18 Other branches of parent bank 78,431 78,746 72,727 65,857' 72,197' 66,553' 64,550' 63,983 66,535 75,014 19 Banks 93,332 76,940 71,868 64,920 66,421 63,610' 68,320 65,997 70,189 69,395 70 Public borrowers 17,890 17,626 17,260 16,820 16,586 16,457' 16,320 16,224 16,512 16,677 21 Nonbank foreigners 60,977 55,288 48,274 41,075 39,737 39,75C 40,015 39,214 39,479 40,040 22 Other assets 10,666 10,610 9,753 11,746 11,804 11,827 12,453 13,645 14,266 13,516 United Kingdom 23 Total, all currencies 158,732 144,385 148,599 143,806 140,917 144,093 146,188 145,486 149,998 154,371 74 Claims on United States 34,433 27,675 33,157 28,940 24,599 28,720 28,851 28,503 31,001 34,427 75 Parent bank 29,111 21,862 26,970 22,671 19,085 23,330 23,326 23,303 25,315 28,935 76 Other banks in United States2 1 1,429 1,106 1,534 1,612 1,220 1,258 1,288 1,564 1,507 77 Nonbanks2 4,384 5,081 4,735 3,902 4,170 4,267 3,912 4,122 3,985 7.8 Claims on foreigners 119,280 111,828 110,217 108,153 109,508 108,720 110,274 109,297 111,113 112,997 79 Other branches of parent bank 36,565 37,953 31,576 29,966 33,422 30,218 29,575 28,782 29,555 33,412 30 Banks 43,352 37,443 39,250 41,145 39,468 40,677 43,189 42,537 43,342 41,216 31 Public borrowers 5,898 5,334 5,644 5,038 4,990 4,942 4,983 4,897 4,964 5,234 32 Nonbank foreigners 33,465 31,098 33,747 32,004 31,628 32,883 32,527 33,081 33,252 33,135 33 Other assets 5,019 4,882 5,225 6,713 6,810 6,653 7,063 7,686 7,884 6,947 34 Total payable in U.S. dollars 126,012 112,809 108,626 97,125 95,028 95,359 97,568 95,319 99,398 104,622 3<i Claims on United States 33,756 26,868 32,092 27,564 23,193 27,070 27,290 26,665 29,066 32,542 36 Parent bank 28,756 21,495 26,568 22,106 18,526 22,673 22,749 22,662 24,689 28,228 37 Other banks in United States2 1,363 1,005 1,364 1,475 996 1,061 980 1,192 1,157 38 Nonbanks2 4,010 4,519 4,094 3,192 3,401 3,480 3,023 3,185 3,157 39 Claims on foreigners 88,917 82,945 73,475 66,304 68,138 65,022 66,872 64,466 66,257 68,469 40 Other branches of parent bank 31,838 33,607 26,011 23,229 26,361 22,720 22,578 21,785 21,958 25,921 41 Banks 32,188 26,805 26,139 24,020 23,251 23,629' 25,685 24,225 25,343 23,263 4? Public borrowers 4,194 4,030 3,999 3,811 3,677 3,681' 3,716 3,660 3,712 3,785 43 Nonbank foreigners 20,697 18,503 17,326 15,244 14,849 14,992' 14,893 14,796 15,244 15,500 44 Other assets 3,339 2,996 3,059 3,257 3,697 3,267 3,406 4,188 4,075 3,611 Bahamas and Caymans 45 Total, all currencies 152,083 146,811 142,055 131,363 142,592 135,627 133,229 133,837 146,437 141,464 46 Claims on United States 75,309 77,296 74,864 68,062' 78,170' 73,569' 68,873' 67,357 77,909 73,282 47 Parent bank 48,720 49,449 50,553 44,207' 54,575' 48,962' 44,759' 44,150' 51,747 46,282 4 4 8 9 O N t o h n e b r a b n a k n s k 2 s in United States2 1 _of. 1 1 1 6 , , 5 3 4 0 4 3 1 1 1 3 , , 2 1 0 0 4 7 1 9 4 , , 6 2 2 2 8 7 1 1 1 2 , , 1 4 5 3 6 9 1 1 0 3 , , 6 9 2 8 5 2 1 1 0 3 , , 9 1 2 9 4 0 1 1 0 2 , , 8 3 5 5 5 2 1 1 2 3 , , 6 5 4 1 9 3 1 1 3 3 , , 9 0 8 1 8 2 50 Claims on foreigners 72,868 65,598 63,882 57,452' 59,883' 56,899' 59,036' 60,643 62,770 62,886 51 Other branches of parent bank 20,626 17,661 19,042 16,155' 17,296' 15,332' 15,481' 16,529 16,562 15,775 5? Banks 36,842 30,246 28,192 25,743 27,476 26,366 28,139 28,568 30,917 31,352 53 Public borrowers 6,093 6,089 6,458 6,697 6,929 7,026 6,974 6,915 7,120 7,169 54 Nonbank foreigners 12,592 11,602 10,190 8,857 8,182 8,175 8,442' 8,631 8,171 8,590 55 Other assets 3,906 3,917 3,309 5,849 4,539 5,159 5,320 5,837 5,758 5,296 56 Total payable in U.S. dollars 145,641 141,562 136,794 124,801 136,813 129,474 126,605 126,808 138,445 133,119 1. Beginning with June 1984 data, reported claims held by foreign branches 2. Data for assets vis-a-vis other banks in the United States and vis-a-vis have been reduced by an increase in the reporting threshold for "shell" branches nonbanks are combined for dates before June 1984. from $50 million to $150 million equivalent in total assets, the threshold now applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • September 1987 3.14 Continued 1986 1987 Nov. Dec. Jan. Feb. Mar. Apr. May" All foreign countries 57 Total, all currencies 477,090 453,656 458,012 446,618 456,628 458,305 457,819 456,655 484,827 487,300 58 Negotiable CDs3 n.a. 37,725 34,607 32,926 31,629 33,395 36,074 34,873 33,155 34,360 59 To United States 188,070 147,583 155,538 137,029 151,632 140,072' 140,046 141,341 152,390 149,785 60 Parent bank 81,261 78,739 83,914 75,062 82,561 70,047 73,095 70,866 74,772 74,347 61 Other banks in United States 29,453 18,409 16,894 14,532 15,646 15,051' 13,602 13,695 16,913 16,908 62 Nonbanks 77,356 50,435 54,730 47,435 53,425 54,974 53,349 56,780 60,705 58,530 63 To foreigners 269,685 247,907 245,939 256,611 253,775 264,480' 261,944 260,659' 277,991 284,126 64 Other branches of parent bank 90,615 93,909 89,529 87.993 95,146 90,303 88,524 87,867 94,559 101,777 65 Banks 92,889 78,203 76,814 83,784 77,809 89,216' 86,037' 84,976 92,704 90,236 66 Official institutions 18,896 20,281 19,520 18,831 17,835 19,532 19,818 20,591 21,293 23,058 67 Nonbank foreigners 68,845 55,514 60,076 66,003 62,985 65,429 67,565' 67,225' 69,435 69,055 68 Other liabilities 19,335 20,441 21,928 20,052 19,592 20,358 19,755 19,782' 21,291 19,029 69 Total payable in U.S. dollars 388,291 367,145 353,712 320,348 336,406 323,900 326,319' 321,354 340,069 346,946 70 Negotiable CDs3 n.a. 35,227 31,063 29,752 28,466 29,921 32,407 31,148 29,505 30,763 71 To United States 184,305 143,571 150,162 129,224 143,650 131,557 131,617 132,413 141,126 140,883 72 Parent bank 79,035 76,254 80,888 71,017 78,472 65,419 68,540 65,755 68,064 69,863 73 Other banks in United States 28,936 17,935 16,264 13,679 14,609 14,047 12,505 12,593 15,455 15,742 74 Nonbanks 76,334 49,382 53,010 44,528 50,569 52,091 50,572 54,065 57,607 55,278 75 To foreigners 194,139 178,260 163,583 153,972 156,806 155,182 154,711' 149,949 161,216 167,664 76 Other branches of parent bank 73,522 77,770 71,078 64,178 71,181 64,380 63,640' 62,172 67,278 74,769 77 Banks 57,022 45,123 37,365 35,306 33,850 37,159 36,816' 35,116 39,111 36,216 78 Official institutions 13,855 15,773 14,359 13,139 12,371 13,688 13,189 13,392 14,318 16,068 79 Nonbank foreigners 51,260 39,594 40,781 41,349 39,404 39,955 41,066' 39,269 40,509 40,611 80 Other liabilities 9,847 10,087 8,904 7,400 7,484 7,240 7,584 7,844 8,222 7,636 United Kingdom 81 Total, all currencies 158,732 144,385 148,599 143,806 140,917 144,093 146,188 145,486 149,998 154,371 82 Negotiable CDs3 n.a. 34,413 31,260 28,984 27,781 29,432 32,233 30,968 29,311 30,226 83 To United States 55,799 25,250 29,422 22,585 24,657 19,465 22,501 21,433 23,967 26,291 84 Parent bank 14,021 14,651 19,330 13,811 14,469 10,004 12,735 12,332 13,201 15,145 85 Other banks in United States 11,328 3,125 2,974 2,184 2,649 2,154 2,154 1,816 2,205 2,273 86 Nonbanks 30,450 7,474 7,118 6,590 7,539 7,307 7,612 7,285 8,561 8,873 87 To foreigners 95,847 77,424 78,525 83,455 79,498 86,229 82,418 83,723 87,350 89,673 88 Other branches of parent bank 19,038 21,631 23,389 23,739 25,036 23,595 21,230 21,371 22,390 26,367 89 Banks 41,624 30,436 28,581 34,321 30,877 36,479 35,434 35,971 37,562 35,282 90 Official institutions 10,151 10,154 9,676 7,875 6,836 8,484 7,832 7,827 8,871 10,004 91 Nonbank foreigners 25,034 15,203 16,879 17,520 16,749 17,671 17,922 18,554 18,527 18,020 92 Other liabilities 7,086 7,298 9,392 8,782 8,981 8,967 9,036 9,362 9,370 8,181 93 Total payable in U.S. dollars 131,167 117,497 112,697 99,327 99,707 98,741 101,971' 98,967 101,793 106,093 94 Negotiable CDs3 n.a. 33,070 29,337 27,166 26,169 27,701 30,175 28,868 27,189 28,345 95 To United States 54,691 24,105 27,756 20,055 22,075 16,829 19,894 18,940 21,144 23,561 96 Parent bank 13,839 14,339 18,956 13,438 14,021 9,451 12,157 11,606 12,352 14,528 97 Other banks in United States 11,044 2,980 2,826 1,880 2,325 1,887 1,926 1,602 2,021 2,027 98 Nonbanks 29,808 6,786 5,974 4,737 5,729 5,491 5,811 5,732 6,771 7,006 99 To foreigners 73,279 56,923 51,980 49,056 48,138 51,174 48,610' 47,531 49,708 51,029 100 Other branches of parent bank 15,403 18,294 18,493 16,695 17,951 16,386 14,691' 14,471 14,367 18,430 101 Banks 29,320 18,356 14,344 15,984 15,203 18,626 18,207 18,027 19,498 15,555 102 Official institutions 8,279 8,871 7,661 5,655 4,934 6,096 5,176 4,924 5,786 7,214 103 Nonbank foreigners 20,277 11.402 11,482 10,722 10,050 10,066 10,536 10,109 10,057 9,830 104 Other liabilities 3,197 3,399 3,624 3,050 3,325 3,037 3,292 3,628 3,752 3,158 Bahamas and Caymans 105 Total, all currencies 152,083 146,811 142,055 131,363 142,592 135,627 133,229 133,837 146,437 141,464 106 Negotiable CDs3 n.a. 615 610 784 847 995 855 813 883 1,092 107 To United States 111,299 102,955 103,813 94,493 105,248 98,733 95,221 98,560 107,028 101,338 108 Parent bank 50,980 47,162 44,811 43,572 48,648 40,845 40,409 39,625 42,976 39,848 109 Other banks in United States 16,057 13,938 12,778 11,131 11,715 11,687 10,151 10,568 13,345 13,185 110 Nonbanks 44,262 41,855 46,224 39,790 44,885 46,201 44,661 48,367 50,707 48,305 111 To foreigners 38,445 40,320 35,053 33,841 34,400 33,831 35,053 32,501 36,491 36,825 112 Other branches of parent bank 14,936 16,782 14,075 12,661 12,631 12,323 12,972 11,673 13,891 13,359 113 Banks 11,876 12,405 10,669 8,545 8,617 8,402 8,070' 8,140 9,452 9,885 114 Official institutions 1,919 2,054 1,776 2,577 2,719 2,808 3,013 2,836 2,937 3,072 115 Nonbank foreigners 11,274 9,079 8,533 10,058 10,433 10,298 10,998' 9,852 10,211 10,509 116 Other liabilities 2,339 2,921 2,579 2,245 2,097 2,068 2,100 1,963 2,035 2,209 117 Total payable in U.S. dollars 148,278 143,582 138,322 127,309 138,774 131,572 129,183 129,048 140,457 136,475 3. Before June 1984, liabilities on negotiable CDs were included in liabilities to the United States or liabilities to foreigners, according to the address of the initial purchaser. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A57 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1986' 1987' IItteemm 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. May'' 1 Total1 180,348 178,380 211,158 211,706 213,416 215,512 227,043 235,824 235,788 By type 2 Liabilities reported by banks in the United Stales- 26,090 26,734 27.818 27,626 27,629 29,438 31,237 32,630 31,384 3 U.S. Treasury bills and certificates3 59,976 53,252 75.132 75,650 75,718 75,434 79,629 84,640 81,553 U.S. Treasury bonds and notes 4 Marketable 69,019 77,154 91,225 91,534 93,032 93,866 99,703 102,107 106,478 Nonmarketable4 5,800 3,550 1,300 1,300 1,300 1,300 1,300 1,300 1,300 6 U.S. securities other than U.S. Treasury securities5 19,463 17,690 15,683 15,596 15,737 15.474 15,174 15,147 15,073 By area 7 Western Europe1 69,818 74,447 87,840 88,289 89,681 90,914 99,711 105,600 107,597 8 Canada 1,528 1,315 1,892 2,004 3,383 3,761 5,110 3,922 3,482 9 Latin America and Caribbean 8,565 11,148 9.096 8,367 7,680 7.425 8,241 9,293 7,879 in 93,701 86,448 105.510 106,024 107,448 108,886 108,662 110,022 109,578 11 Africa 1,263 1,824 1,545 1,503 1,300 1,164 1,192 1,284 1,628 12 Other countries6 5,472 3,199 5.276 5,519 3,926 3,362 4,127 5,702 5,626 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 Currencies1 Millions of dollars, end of period 1986' 1987'' IItteemm 11998833 11998844 11998855 June Sept. Dec. Mar. 1 Banks' own liabilities 5,219 8,586 15,368 24,314 29,467 29,404 36,436 2 Banks' own claims 7,231 11,984 16,294 20,937 24,124 25,150 31,748 3 Deposits 2,731 4,998 8,437 11,072 13,220 13,173 13,929 4 Other claims 4,501 6,986 7,857 9,865 10,904 11,977 17,819 5 Claims of banks' domestic customers' 1,059 569 580 1,385 1,597 2,508 2,120 1. Data on claims exclude foreign currencies held by U.S. monetary author- States that represent claims on foreigners held by reporting banks for the accounts ities. of the domestic customers. 2. Assets owned by customers of the reporting bank located in the United Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • September 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'" 1987'' HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998833 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. May'' 1 All foreigners 369,607 407,306 435,726 513,633 538,895 525,505 522,597 524,768 551,449 553,394 2 Banks' own liabilities 279,087 306,898 341.070 378.439 404.760 392,094 388,147 389,715 411,333 413,895 3 Demand deposits 17,470 19.571 21.107 24,758 23.788 22,490 22,449 22,303 22,174 22,954 4 Time deposits1 90.632 110,413 117,278 125,429 131,136 125,207 125,728 125,129 133.278 133,878 5 Other 25,874 26.268 29,305 36,448 40,880 39,549 40,611 42,458 44,826 45,673 6 Own foreign offices1 145,111 150,646 173,381 191,805 208,956 204,848 199,359 199,825 211,055 211,390 7 Banks' custody liabilities4 90,520 100,408 94.656 135,193 134,134 133,411 134,450 135,054 140.117 139,500 8 U.S. Treasury bills and certificates5 68,669 76.368 69,133 90,351 90,257 89,278 90,695 93.048 97,789 95,971 9 Other negotiable and readily transferable instruments6 17,467 18.747 17,964 15,343 16,523 14,656 13,839 14,744 14.625 15,885 10 Other 4.385 5,293 7,558 29,499 27.354 29,477 29,916 27,262 27,702 27,644 11 Nonmonetary international and regional organizations7 5,957 4,454 5,821 4,565 4,699 5,081 4,520 3,889 6,830 3,819 12 Banks' own liabilities 4,632 2.014 2.621 3,194 2,850 3,732 2,193 2,510 5,236 2,155 13 Demand deposits 297 254 85 135 199 183 157 246 159 106 14 Time deposits1 3,584 1,267 2,067 2,299 2,066 2,515 1,488 1,230 3,100 960 15 Other 750 493 469 761 584 1,034 548 1,033 1,977 1,089 16 Banks' custody liabilities4 1,325 2,440 3,200 1.371 1,849 1,349 2,326 1,379 1,594 1,664 17 U.S. Treasurv bills and certificates 463 916 1,736 262 259 86 1,213 154 428 440 18 Other negotiable and readily transferable instruments6 862 1,524 1.464 1.104 1,590 1,261 1,112 1,225 1,152 1,224 19 Other 0 0 0 5 0 2 1 0 14 0 20 Official institutions8 79,876 86,065 79,985 102,951 103,275 103,346 104,872 110,866 117,271 112,937 21 Banks' own liabilities 19,427 19,039 20,835 25,206 25,134 25,403 26,880 28,103 29,643 28,522 22 Demand deposits 1,837 1,823 2.077 2.188 2,267 1,487 1,513 1,923 1.829 2.089 23 Time deposits1 7,318 9,374 10.949 11.288 10,752 11,335 11,385 11,135 13,084 11,784 24 Other2 10,272 7,842 7,809 11.731 12,115 12,580 13,982 15,044 14.731 14,649 25 Banks' custody liabilities4 60,448 67,026 59,150 77.744 78,142 77.944 77,992 82.763 87,627 84,415 26 U.S. Treasury bills and certificates 54,341 59,976 53,252 75.132 75,650 75,718 75,434 79,629 84,640 81,553 27 Other negotiable and readily transferable instruments6 6,082 6,966 5.824 2.480 2,347 2.158 2,418 3,001 2,832 2,715 28 Other 25 84 75 132 145 69 140 132 154 147 29 Banks9 226,887 248,893 275,589 326,033 350,491 339,648 335,517 334,231 350,128 356,431 30 Banks' own liabilities 205,347 225,368 252,723 282,863 309.928 297,037 293,144 295,092 311,012 317.195 31 Unaffiliated foreign banks 60,236 74,722 79,341 91.058 100,971 92,189 93,785 95,268 99,957 105,805 32 Demand deposits 8,759 10,556 10,271 11,611 10,303 10,434 10,103 9,510 9,781 10,558 33 Time deposits1 37.439 47,095 49,510 57.262 64,245 57,912 60,007 61,856 64,906 68,233 34 Other2 14,038 17,071 19,561 22.185 26,424 23,844 23,675 23,902 25.271 27,014 35 Own foreign offices1 145,111 150,646 173,381 191,805 208,956 204,848 199,359 199,825 211,055 211,390 36 Banks' custody liabilities4 21,540 23,525 22.866 43.170 40,563 42,611 42,373 39,138 39,116 39,236 37 U.S. Treasurv bills and certificates 10,178 11.448 9,832 10.491 9,962 9,826 10,486 9,744 9,538 9,786 38 Other negotiable and readily transferable instruments6 7,485 7,236 6,040 5.550 5,513 5.433 4,340 4,367 4,256 4,293 39 Other 3,877 4,841 6.994 27,129 25,089 27,352 27,547 25,026 25,322 25,158 40 Other foreigners 56,887 67,894 74,331 80,083 80,430 77,429 77,688 75,783 77,220 80,207 41 Banks' own liabilities 49,680 60,477 64,892 67.176 66,849 65,923 65.929 64,009 65.440 66,023 42 Demand deposits 6,577 6,938 8.673 10.824 11,019 10,386 10,676 10.623 10,405 10,202 43 Time deposits 42,290 52.678 54.752 54.580 54,073 53,446 52,848 50,908 52,188 52,901 44 Other 813 861 1,467 1.772 1,757 2,091 2,405 2,479 2,848 2,921 45 Banks' custody liabilities4 7,207 7,417 9.439 12.908 13.580 11,507 11,759 11,773 11,780 14,184 46 U.S. Treasury bills and certificates 3.686 4,029 4,314 4.465 4,387 3,648 3,563 3,520 3,183 4,192 47 Other negotiable and readily transferable instruments6 3,038 3.021 4,636 6,209 7,074 5,804 5,969 6,150 6,385 7,653 48 Other 483 367 489 2.234 2,120 2,055 2,227 2,103 2,212 2,340 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10.346 10,476 9,845 6.610 7,343 7,191 7,722 7,694 7,976 8,541 1. Excludes negotiable time certificates of deposit, which are included in securities, held by or through reporting banks. "Other negotiable and readily transferable instruments." 5. Includes nonmarketable certificates of indebtedness and Treasury bills 2. Includes borrowing under repurchase agreements. issued to official institutions of foreign countries. 3. U.S. banks: includes amounts due to own foreign branches and foreign 6. Principally bankers acceptances, commercial paper, and negotiable time subsidiaries consolidated in "Consolidated Report of Condition" filed with bank certificates of deposit. regulatory agencies. Agencies, branches, and majority-owned subsidiaries of 7. Principally the International Bank for Reconstruction and Development, and foreign banks: principally amounts due to head office or parent foreign bank, and the Inter-American and Asian Development Banks. foreign branches, agencies or wholly owned subsidiaries of head office or parent 8. Foreign central banks and foreign central governments, and the Bank for foreign bank. International Settlements. 4. Financial claims on residents of the United States, other than long-term 9. Excludes central banks, which are included in "Official institutions." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17 Continued 1986 1987 AArreeaa aanndd ccoouunnttrryy 11998833 11998844 11998855 Nov. Dec. Jan. Feb. Mar.' Apr. May'' 1 Total 369,607 407,306 435,726 513,633' 538,895' 525,505' 522,597' 524,768 551,449 553,394 2 Foreign countries 363,649 402,852 429,905 509,067' 534,196' 520,424' 518,077' 520,879 544,619 549,576 3 Europe 138,072 153,145 164.114 176,173'' 180,871'' 179,253' 181,082' 182,527 191,527 206,864 4 Austria 585 615 693 1,197 1,186 972 928 798 1,068 911 Belgium-Luxembourg 2,709 4,114 5,243 6,863 6,788 6,729 7,587'' 7,230 7,919 9,325 6 466 438 513 576 485 449 520 623 425 459 7 531 418 496 448 580 565 762 937 942 909 8 France 9,441 12,701 15.541 21,917 22.850' 21,372 22,654 23,835 27,396 27,858 9 Germany 3,599 3,358 4,835 5,856 5,823'" 6,813 5,907' 7,412 6,419 9,776 10 520 699 666 755 706 745 749 641 601 643 11 Italy 8,462 10,762 9,667 9,304 10,875'" 9,375'" 8,489 10,101 11,342 11,726 17 Netherlands 4,290 4.731 4,212 4,410 5,558 5,155' 5,354' 4.968 5,967 5,442 13 Norway 1,673 1,548 948 512 737'" 678 554 495 572 499 14 Portugal 373 597 652 685 700 657 709 689 660 607 15 Spain 1,603 2,082 2,114 2,197 2,393 2,238 2,333 2,224 2,233 2,194 16 Sweden 1,799 1.676 1,422 1,301 889 884 1,062 1,065 1,251 1,503 17 Switzerland 32,246 31,740 29,020 30,407' 30,967' 28,913' 27,555 27,544 26,505 27,062 18 467 584 429 418 454 375 359 412 833 378 19 United Kingdom 60,683 68,671 76,728 84,968' 85,352' 87,911' 90,105' 88,390 91,776 102,316 70 Yugoslavia 562 602 673 544 631 554 565 564 526 429 71 Other Western Europe1 7,403 7,192 9,635 3,347' 3,117' 4,309 4,319'' 3,902 4,395 3,950 77 U.S.S.R 65 79 105 16 80'' 21 23 30 32 37 23 Other Eastern Europe" 596 537 523 452 702 535 546 669 665 839 24 Canada 16,026 16,059 17,427 25,753 26,256 26,105' 25,189' 26,553 25,294 24,522 7s Latin America and Caribbean 140,088 153,381 167,856 190,406' 208,949' 195,666' 191,636' 195,412 206,470 202,092 76 Argentina 4,038 4,394 6.032 5,188'' 4.754 4,499' 4,668 4,725 4,406 4,806 77 55,818 56,897 57,657 63,173' 73,267' 64,998' 62,970' 62,581 71,735 69,263 78 2,266 2,370 2,765 2,579'' 2,951'' 2,282'" 2,506'' 2,293 2,180 2.595 79 Brazil 3,168 5,275 5,373 4,684 4,321 3,813 3,797 3,693 3,616 3,960 30 British West Indies 34,545 36,773 42,674 61.921' 71,151' 66,775' 65,509' 69,860 69,213 67,924 31 Chile 1,842 2,001 2,049 2,325 2,053 2,208 2,046 2,060 2,253 2,034 3? Colombia 1,689 2,514 3,104 3,873 4,281 4,273' 4,268 4,271 4,349 4,289 33 Cuba 8 10 11 6 7 6 7 6 6 26 34 Ecuador 1,047 1,092 1,239 1,199 1,235 1,049 1,120 1,014 1,044 1,093 35 788 896 1,071 1,129 1.122 1,124 1,081 1,082 1,164 1,167 36 109 183 122 153 136 149 145 230 149 189 37 10,392 12,303 14,060 13,544'' 13,631 13,584' 13,423' 13,207 15,053 13,909 38 Netherlands Antilles 3,879 4,220 4,875 4,706 4,914r 5,593 5,652'' 5,643 5,706 5,171 39 5,924 6,951 7,514 6,729 6,865 7,361 6,475' 6,664 7,122 7.341 40 Peru 1,166 1,266 1,167 1,146 1,163 1,110 1,131 1,062 1,086 1,094 41 1,244 1,394 1,552 1,610 1,537 1,609 1,583 1,630 1,545 1,507 47 Venezuela 8,632 10,545 11,922 11,592 10,452 10,494 10,362 10,365 10,563 10,254 43 Other Latin America and Caribbean 3,535 4,297 4,668 4,848'' 5,109' 4,741' 4,894 5,026 5,280 5,470 44 58,570 71,187 72,280 107,054 108,969' 112,058'' 113,439' 108,942 112,472 107,717 China 45 249 1,153 1,607 1,450 1,476 2,046 1,650' 1,973 1,899 11,,884411 46 Taiwan 4,051 4,990 7,786 17,540 18,903 19,553 21,127 20,106 19,460 17,305 47 Hong Kong 6.657 6,581 8,067 9,347 9,518' 9,388' 9,329' 9,160 9,340 9,341 48 India 464 507 712 701 673 663' 686 500 526 568 49 Indonesia 997 1,033 1,466 1,528 1,548 1,410 1,591 1,414 1,460 1,242 50 Israel 1,722 1,268 1,601 2,380 1.890 1,761 1,892 1,666 1,302 1,084 51 Japan 18,079 21,640 23.077 46,184 47,437'" 49,997 50,921' 48,983 53,526 50,413 5? Korea 1,648 1,730 1,665 1,128 1,141' 1,058'' 1,017'' 1,129 1,177 1.343 53 Philippines 1,234 1,383 1,140 1,720 1,865 1,811 1,779 1,737 1,426 1,310 54 Thailand 747 1,257 1,358 1,083 1,120 1,282 1,224 1,235 1,131 1,172 55 Middle-East oil-exporting countries 12,976 16,804 14,523 13,010 12,356 12,322'' 12,104' 11,581 11,409 10,917 56 Other Asia 9,748 12,841 9,276 10,984 11,042 10,768 10,120' 9,456 9,815 11,182 57 2,827 3,396 4,883 4,018 4,019' 3,661' 3,499 3,457 3,702 4.003 58 Egypt 671 647 1,363 710 706 607' 791 753 847 1,052 59 84 118 163 84 92 74 76 99 101 86 60 South Africa 449 328 388 264 271 341 201 178 287 198 61 87 153 163 96 74 54 42 40 39 74 62 Oil-exporting countries 620 1,189 1,494 1,593 1,518 1,336' 1,156 1,108 1,212 1,267 63 Other Africa 917 961 1,312 1,272 1,358 1,248' 1,233 1,278 1,216 1,326 64 Other countries 8,067 5,684 3,347 5,662 5,131' 3,680 3,232' 3,988 5,153 4,377 65 Australia 7,857 5,300 2,779 4,286 4,209' 2,683 2,465' 3,027 4,266 3.578 66 All other 210 384 568 1,376 922 997 767 960 888 799 67 Nonmonetary international and regional organizations 5,957 4,454 5,821 4,565' 4,699' 5,081 4,520 3,889 6,830 33,,881199 68 International 5,273 3,747 4,806 3,482' 3,512 3,958 3,606 2,897 5,561 2,336 69 Latin American regional 419 587 894 927 1,033 960 762 788 850 994 70 Other regional5 265 120 121 157 154' 164 152 204 420 488 1. Includes the Bank for International Settlements. Beginning April 1978, also United Arab Emirates (Trucial States). includes Eastern European countries not listed in line 23. 4. Comprises Algeria, Gabon, Libya, and Nigeria. 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German 5. Asian, African, Middle Eastern, and European regional organizations, Democratic Republic, Hungary, Poland, and Romania. except the Bank for International Settlements, which is included in "Other 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • September 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 1987 AArreeaa aanndd ccoouunnttrryy 11998833 11998844 11998855 Nov.'' Dec. Jan. Feb. Mar.' Apr. May.? 1 Total 391,312 400,162 401,608 417,669 444,257' 421,086' 417,258' 414,321 437,926 436,471 2 Foreign countries 391,148 399,363 400,577 417,423 441,273' 421,017' 417,081' 413,777 434,123 436,276 3 Europe 91,927 99,014 106,413 106,528 107,347' 100,775' 102,234' 99,393 108,064 115,370 4 Austria 401 433 598 734 728' 641' 549' 660 750 668 5 Belgium-Luxembourg 5,639 4,794 5,772 8,127 7,503' 7,556' 8,905' 8,083 8,544 9,946 6 Denmark 1,275 648 706 757 692' 650' 624' 651 574 569 7 Finland 1,044 898 823 1,176 947 797 1,050 1,003 1,127 1,046 8 France 8,766 9,157 9,124 9,555 11,369' 9,058' 9,960' 9,858 10,813 12,070 9 Germany 1,284 1,306 1,267 1,761 1,818' 2,269' 1,725' 1,632 1,374 1,507 10 Greece 476 817 991 792 648 635 634 535 460 457 11 Italy 9,018 9,119 8,848 8,378 9,042' 7,898' 7,337' 6,991 7,536 8,331 12 Netherlands 1,267 1,356 1,258 2,427 3,299' 2,077' 2,090' 2,371 3,075 2,989 13 Norway 690 675 706 712 654 741 766 667 683 776 14 Portugal 1,114 1,243 1,058 681 706 677 679 737 610 641 15 Spain 3,573 2,884 1,908 1,722 1,459 1,479 1,637 1,768 1,939 2,070 16 Sweden 3,358 2,230 2,219 2,335 1,945 2,280 2,422 2,464 2,417 2,618 17 Switzerland 1,863 2,123 3,171 3,574 3,049 2,622 2,413' 2,338 2,905 3,593 18 Turkey 812 1,130 1,200 1,539 1,541 1,469 1,436 1,577 1,559 1,623 19 United Kingdom 47,364 56,185 62,566 58,691 58,282' 55,856' 56,387' 54,035 59,821 62,769 20 Yugoslavia 1,718 1,886 1,964 1,816 1,836' 1,775 1,769 1,840 1,763 1,803 21 Other Western Europe1 477 596 998 600 540' 522' 477' 781 670 515 22 U.S.S.R 192 142 130 225 345 396 401' 367 378 357 23 Other Eastern Europe2 1,598 1,389 1,107 927 944 1,379 971 1,032 1,068 1,021 24 Canada 16,341 16,109 16,482 20,354 20,958' 20,749 19,186' 19,829 20,225 19,340 25 Latin America and Caribbean 205,491 207,862 202,674 196,441 208,852' 195,571' 196,337' 199,037 209,127 204,300 26 Argentina 11,749 11,050 11,462 12,028 12,089' 12,114 12,211 12,162 12,114 12,334 27 Bahamas 59,633 58,009 58,258 53,601 59,547' 52,090' 52,952' 53,679 62,753 57,778 28 Bermuda 566 592 499 447 418 415 376 532 740 1,242 29 Brazil 24,667 26,315 25,283 25,217 25,666' 25,798' 25,81CH" 26,082 26,214 25,734 30 British West Indies 35,527 38,205 38,881 40,488 46,306' 41,128 41,074' 42,774 42,946 44,011 31 Chile 6,072 6,839 6,603 6,536 6,543' 6,475' 6,603' 6,412 6,398 6,321 32 Colombia 3,745 3,499 3,249 2,665 2,819 2,801 2,743 2,692 2,679 2,650 33 Cuba 0 0 0 1 0 10' 1 6 9 9 34 Ecuador 2,307 2,420 2,390 2,413 2,449' 2,425 2,422 2,338 2,381 2,372 35 Guatemala3 129 158 194 138 140 133 145 135 120 115 36 Jamaica3 215 252 224 216 198 199 199 192 189 184 37 Mexico 34,802 34,885 31,799 30,776 30,607' 30,289' 29,999' 29,817 30,086 30,077 38 Netherlands Antilles 1,154 1,350 1,340 931 1,039 960 945' 992 1,202 1,072 39 Panama 7,848 7,707 6,645 5,354 5,434' 5,270 5,204 5,543 5,769 4,791 40 Peru 2,536 2,384 1,947 1,624 1,643' 1,635' 1,626' 1,593 1,595 1,599 41 Uruguay 977 1,088 960 943 940 937 932 959 957 962 42 Venezuela 11,287 11,017 10,871 11,044 11,078' 11,028' 11,185' 11,282 11,065 11,046 43 Other Latin America and Caribbean 2,277 2,091 2,067 2,020 1,938' 1,864 1,910 1,845 1,910 2,005 44 67,837 66,316 66,212 86,192 96,198' 95,989' 91,767' 8877,,778833 8888,,996677 8899,,557711 China 45 Mainland 292 710 639 793 787 983 873 1,373 1,450 1,177 46 Taiwan 1,908 1,849 1,535 1,811 2,675 2,617 2,890 2,910 3,194 3,592 47 Hong Kong 8,489 7,293 6,797 7,575 8,300' 8,443 9,225 8,254 7,922 7,725 48 India 330 425 450 327 321 333 325 486 314 379 49 Indonesia 805 724 698 722 718 699 679 652 621 657 50 Israel 1,832 2,088 1,991 1,605 1,635' 1,601' 1,521' 1,545 1,509 1,459 51 Japan 30,354 29,066 31,249 53,311 59,852 58,319' 55,594' 52,267 54,299 55,056 52 Korea 9,943 9,285 9,226 6,533 7,159' 6,783 6,161 6,011 5,331 6,119 53 Philippines 2,107 2,555 2,224 1,978 2,208' 2,154' 2,127' 2,282 2,121 2,064 54 Thailand 1,219 1,125 845 595 577 521 557 492 461 540 55 Middle East oil-exporting countries4 4,954 5,044 4,298 3,778 4,122 5,483 4,892 5,150 4,598 3,795 56 Other Asia 5,603 6,152 6,260 7,162 7,845 8,053 6,922 6,362 7,148 7,009 57 Africa 6,654 6,615 5,407 4,737 4,621 4,618' 4,678' 4,853 4,789 4,867 58 Egypt 747 728 721 560 567 577 593 618 574 585 59 Morocco 440 583 575 621 598 590 585 584 565 566 60 South Africa 2,634 2,795 1,942 1,586 1,531 1,534 1,548' 1,550 1,578 1,591 61 Zaire 33 18 20 27 28 36 42 42 41 43 62 Oil-exporting countries5 1,073 842 630 690 688 725 743 856 795 840 63 Other 1,727 1,649 1,520 1,253 1,208 1,156 1,168 1,204 1,236 1,243 64 Other countries 2,898 3,447 3,390 3,172 3,297 3,316' 2,878 2,882 2,950 2,828 65 Australia 2,256 2,769 2,413 1,980 1,952 2,081 1,902 1,990 22,,006666 1,897 66 All other 642 678 978 1,192 1,345 1,235' 976 892 888844 931 67 Nonmonetary international and regional organizations6 164 800 1,030 246 2,983 69' 178 544 3,804 195 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' 1987' TTyyppee ooff ccllaaiimm 11998833 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. May p 11 TToottaall 444444222222666666,,,,,,222222111111555555 444444333333333333,,,,,,000000777777888888 444444333333000000,,,,,,444444888888999999 417,669 444444777777888888,,,,,,222222222222111111 421,086 417,258 444444444444555555,,,,,,999999000000333333 437,926 436,471 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 333333999999111111,,,,,,333333111111222222 444444000000000000,,,,,,111111666666222222 444444000000111111,,,,,,666666000000888888 417,669 444444444444444444,,,,,,222222555555777777 421,086 417,258 444444111111444444,,,,,,333333222222111111 437,926 436,471 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 555555777777,,,,,,555555666666999999 666666222222,,,,,,222222333333777777 666666000000,,,,,,555555000000777777 61,305 666666333333,,,,,,999999555555000000 61,794 61,709 666666222222,,,,,,777777333333777777 65,450 62,354 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 111111444444666666,,,,,,333333999999333333 111111555555666666,,,,,,222222111111666666 111111777777444444,,,,,,222222666666111111 188,812 222222111111111111,,,,,,777777555555999999 192,595 190,911 111111999999000000,,,,,,000000777777000000 206,812 203,516 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111222222333333......888888333333777777 111111222222444444,,,,,,999999333333222222 111111111111666666,,,,,,666666555555444444 120,313 111111222222222222,,,,,,777777444444777777 121,036 120,287 111111111111777777,,,,,,000000666666333333 120,636 125,916 66 DDeeppoossiittss 444444777777,,,,,,111111222222666666 444444999999,,,,,,222222222222666666 444444888888,,,,,,333333777777222222 53,300 555555777777......222222999999999999 54,376 55,526 555555333333,,,,,,666666555555222222 57,394 60,309 77 OOtthheerr 777777666666,,,,,,777777111111111111 777777555555,,,,,,777777000000666666 666666888888,,,,,,222222888888222222 67,013 666666555555,,,,,,444444444444777777 66,660 64,760 666666333333,,,,,,444444111111111111 63,241 65,607 88 AAllll ootthheerr ffoorreeiiggnneerrss 666666333333,,,,,,555555111111444444 555555666666,,,,,,777777777777777777 555555000000,,,,,,111111888888555555 47,238 444444555555,,,,,,888888000000111111 45,662 44,352 444444444444,,,,,,444444555555000000 45,029 44,685 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 333333444444,,,,,,999999000000333333 333333222222,,,,,,999999111111666666 222222888888,,,,,,888888888888111111 333333333333,,,,,,999999666666444444 333333111111,,,,,,555555888888222222 222222,,,,,,999999666666999999 333333,,,,,,333333888888000000 333333,,,,,,333333333333555555 444444,,,,,,444444111111333333 333333,,,,,,444444000000222222 11 Negotiable and readily transferable 222222666666,,,,,,000000666666444444 222222333333,,,,,,888888000000555555 111111999999,,,,,,333333333333222222 222222444444,,,,,,000000444444444444 222222000000,,,,,,555555555555111111 12 Outstanding collections and other 555555,,,,,,888888777777000000 555555......777777333333222222 666666,,,,,,222222111111444444 555555,,,,,,555555000000888888 777777,,,,,,666666333333000000 13 MEMO: Customer liability on 333333777777,,,,,,777777111111555555 333333777777,,,,,,111111000000333333 222222888888,,,,,,444444888888777777 222222555555,,,,,,666666111111666666 222222555555,,,,,,444444444444999999 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 .... 46,337 40,714 38,102 45,351 43,994 46,583 49,528 44,378 46,671 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 1986' 1987 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998833 11998844 11998855 June Sept. Dec. Mar.P 1 Total 243,715 243,952 227,903 222,824 224,754 231,413 224,128 By borrower 2 Maturity of 1 year or less1 176,158 167,858 160,824 152,743 155,258 159,909 152,252 3 Foreign public borrowers 24,039 23,912 26,302 23,172 22,528 24,921 22,508 4 All other foreigners 152,120 143,947 134,522 129,571 132,731 134,988 129,744 5 Maturity of over 1 year1 67,557 76,094 67,078 70,081 69,496 71,504 71,876 6 Foreign public borrowers 32,521 38,695 34,512 37,582 38,350 39,783 41,005 7 All other foreigners 35,036 37,399 32,567 32,499 31,145 31,722 30,871 By area Maturity of 1 year or less1 8 Europe 56,117 58,498 56,585 58,028 59,428 61,227 57,821 9 Canada 6,211 6,028 6,401 6,103 6,199 5,840 5,504 10 Latin America and Caribbean 73,660 62,791 63,328 57,436 58,212 56,050 54,081 11 Asia 34,403 33,504 27,966 25,796 26,505 29,476 29,603 1? Africa 4,199 4,442 3,753 3,297 3,071 2,858 3,145 13 All other2 1,569 2,593 2,791 2,083 1,845 4,458 2,098 Maturity of over 1 year1 14 Europe 13,576 9,605 7,634 7,945 7,230 6,826 6,921 15 Canada 1,857 1,882 1,805 2,256 1,930 1,930 1,936 16 Latin America and Caribbean 43,888 56,144 50,674 53,621 54,137 56,337 56,623 17 Asia 4,850 5,323 4,502 4,043 3,976 4,081 4,197 18 Africa 2,286 2,033 1,538 1,497 1,479 1,534 1,626 19 All other2 1,101 1,107 926 719 744 795 573 1. Remaining time to maturity. 2. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • September 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 1985 1986 1987 Area or country 11998822 11998833 11998844 June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total 436.1 433.9 405.7 396.8 394.9 391.9 395.0' 391.7' 391.6' 391.5' 396.3' 2 G-10 countries and Switzerland 179.6 167.8 148.1 146.7 152.0 148.5 156.5' 159.9 158.8'' 157.9'' 163.4' 3 Belgium-Luxembourg 13.1 12.4 8.7 8.9 9.5 9.3 8.3 9.0 8.5 8.4 9.1 4 France 17.1 16.2 14.1 13.5 14.8 12.3 13.8 15.1 14.6 13.8 13.4' 5 Germany 12.7 11.3 9.0 9.6 9.8 10.5 11.3 11.5 12.5 11.7 12.1 6 Italy 10.3 11.4 10.1 8.6 8.4 9.8 8.5 9.3 8.1 9.0 8.6 7 Netherlands 3.6 3.5 3.9 3.7 3.4 3.7 3.5 3.4 3.9 4.6 4.4 8 Sweden 5.0 5.1 3.2 2.9 3.1 2.8 2.9 2.9 2.7 2.4 3.0 9 Switzerland 5.0 4.3 3.9 4.0 4.1 4.4 5.4 5.6 4.8 5.5 5.8 10 United Kingdom 72.1 65.3 60.3 65.7 67.1 64.6 68.5 68.9 70.0 71.8'' 74.6'" 11 Canada 10.4 8.3 7.9 8.1 7.6 7.0 6.3' 6.9' 6.1 5.4 5.2 12 Japan 30.2 29.9 27.1 21.7 24.3 24.2 28.0' 27.4 27.7 25.3 27.2'' 13 Other developed countries 33.5 36.0 33.6 32.3 32.0 30.4 31.6 30.6 29.4 26.0' 26.2 14 Austria 1.9 1.9 1.6 1.6 1.7 1.6 1.6 1.7 1.7 1.7 1.9 15 Denmark 2.4 3.4 2.2 1.9 2.1 2.4 2.5 2.4 2.3 1.7 1.8 16 Finland 2.2 2.4 1.9 1.8 1.8 1.6 1.9 1.6 1.7 1.4 1.4'' 17 Greece 3.0 2.8 2.9 2.9 2.8 2.6 2.5 2.6 2.3 2.3 2.1 18 Norway 3.3 3.3 3.0 2.9 3.4 2.9 2.7 3.0 2.7 2.4 2.1 19 Portugal 1.5 1.5 1.4 1.3 1.4 1.3 1.1 1.0 1.0 .8 .9 20 Spain 7.5 7.1 6.5 5.9 6.1 5.8 6.4 6.4 6.7 5.8 6.2 21 Turkey 1.4 1.7 1.9 2.0 2.1 1.9 2.3 2.5 2.1 2.0 1.9 22 Other Western Europe 2.3 1.8 1.7 1.8 1.7 2.0 2.4 2.1 1.6 1.4'' 1.6 23 South Africa 3.7 4.7 4.5 3.9 3.3 3.2 3.2 3.1 3.1 3.0'' 3.1 24 Australia 4.3 5.4 6.0 6.2 5.6 5.0 4.9 4.2 4.1 3.5 3.2 25 OPEC countries3 26.9 28.4 24.9 22.8 22.7 21.6 20.7 20.6 20.0 19.6r 20.2 26 Ecuador 2.2 2.2 2.2 2.2 2.2 2.1 2.2 2.1 2.2' 2.2 2.1 27 Venezuela 10.5 9.9 9.3 9.3 9.0 8.9 8.7 8.8 8.7 8.6 8.7 28 Indonesia 2.9 3.4 3.3 3.1 3.1 3.0 3.3 3.0 2.8 2.5 2.2 29 Middle East countries 8.5 9.8 7.9 6.1 6.2 5.5 4.7 5.0 4.6 4.5 5.5 30 African countries 2.8 3.0 2.3 2.2 2.3 2.0 1.8 1.7 1.7 1.7 1.6 31 Non-OPEC developing countries 106.5 110.8 111.8 110.0 107.8 105.1 103.8' 101.7'' 99.9' 99.5' 100.0' Latin America 32 Argentina 8.9 9.5 8.7 8.6 8.9 8.9 8.9 9.2 9.3 9.5 9.5 33 Brazil 22.9 23.1 26.3 26.6 25.5 25.6 25.7' 25.4'' 25.3'' 25.3' 25.6 34 Chile 6.3 6.4 7.0 6.9 6.6 7.0 7.0 7.1 7.2'' 7.1 7.3'' 35 Colombia 3.1 3.2 2.9 2.7 2.6 2.7 2.3 2.2 2.0 2.1 2.0 36 Mexico 24.2 25.8 25.7 25.3 24.4 24.2 24.1'' 23.9'' 23.9' 23.9' 23.8 37 Peru 2.6 2.4 2.2 2.1 1.9 1.8 1.7 1.6 1.5 1.4 1.4 38 Other Latin America 4.0 4.2 3.9 3.7 3.5 3.4 3.3 3.3 3.3 3.1 3.0 Asia China 39 Mainland .2 .3 .7 .3 1.1 .5 .6 .6 .6 .4 .9 40 Taiwan 5.3 5.2 5.1 5.5 5.1 4.5 4.3 3.7 4.3 4.9 5.4 41 India .5 .9 .9 .9 1.1 1.2 1.2 1.3 1.3 1.2 1.8 42 Israel 2.3 1.9 1.8 2.3 1.5 1.6 1.3 1.6 1.4 1.5'' 1.4 43 Korea (South) 10.7 11.2 10.6 10.0 10.4 9.4 9.5 8.7 7.3 6.7 6.2 44 Malaysia 2.1 2.8 2.7 2.8 2.7 2.4 2.2 2.0 2.1 2.1 1.9 45 Philippines 6.3 6.1 6.0 6.0 6.0 5.7 5.6 5.7 5.4 5.4 5.4 46 Thailand 1.6 2.2 1.8 1.6 1.7' 1.4 1.3 1.1 1.0 .9 .9 47 Other Asia 1.1 1.0 1.1 .9 .9 1.0 .9 .8 .7 .7 .6 Africa 48 Egypt 1.2 1.5 1.2 1.0 1.0 1.0 .9 .9 .7 .7 .6 49 Morocco .7 .8 .8 .8 .9 .9 .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 2.1 2.0 2.0 1.9 1.9 1.7 1.6 1.6 1.4 52 Eastern Europe 6.2 5.3 4.4 4.3 4.6 4.2 4.0 4.0 3.4 3.2 3.1 53 U.S.S.R .3 .2 .1 .3 .2 .1 .3 .3 .1 .1 .1 54 Yugoslavia 2.2 2.4 2.3 2.2 2.4 2.2 2.0 2.0 1.9 1.7 1.6 55 Other 3.7 2.8 2.0 1.8 1.9 1.8 1.7 1.7 1.4 1.4 1.3 56 Offshore banking centers 66.0 68.9 65.6 63.9 58.8 65.4 61.7r 57.6'' 62.7'' 65.2' 65.6' 57 Bahamas 19.0 21.7 21.5 21.1 16.6 21.4 21.5 17.3 20.0 22.5'' 23.7' 58 Bermuda .9 .9 .9 .9 .8 .7 .7 .5 .4 .7 .8 59 Cayman Islands and other British West Indies 12.8 12.2 11.8 12.1 12.3 13.4 11.3 13.0 13.2 14.5 13.5' 60 Netherlands Antilles 3.3 4.2 3.4 3.2 2.3 2.3 2.3 2.3 1.9 1.8 1.7 61 Panama 7.5 5.8 6.7 5.4 6.1 6.0 5.9 5.5 6.8 5.1 5.5 62 Lebanon .1 .1 .1 .1 .0 .1 .1 .1 .1 .1 .1 63 Hong Kong 13.3 13.8 11.4 11.4 11.4 11.5 11.5'' 9.5' 10.5' 11.2 11.5 64 Singapore 9.1 10.3 9.8 9.7 9.4 9.9 8.4 9.3 9.7 9.3 8.8 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 17.5 16.8 17.3 16.9 17.3 16.9 16.7 17.2 17.5 20.1 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 Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well another foreign branch of the same banking institution. The data in this table as Bahrain and Oman (nor formally members of OPEC). combine foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the 4. Excludes Liberia. claims of U.S. offices in table 3.18 (excluding those held by agencies and branches 5. Includes Canal Zone beginning December 1979. of 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 States' Millions of dollars, end of period 1986 1987 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998833 11998844 11998855 Mar. June Sept.' Dec. Mar.P 1 Total 25,346 29,357 27,685' 26,346' 24,848' 25,183 25,385 25,432 2 Payable in dollars 22,233 26,389 24,296' 22,589' 21,162' 21,240 21,541 20,176 3 Payable in foreign currencies 3,113 2,968 3,389 3,757 3,686' 3,943 3,844 5,256 By type 4 Financial liabilities 10,572 14,509 13,46c 13,017' 11,728' 12,285 12,134 12,562 5 Payable in dollars 8,700 12,553 11,257' 10,75c 9,637' 9,908 9,694 10,140 6 Payable in foreign currencies 1,872 1,955 2,203 2,267 2,091' 2,376 2,440 2,422 7 Commercial liabilities 14,774 14,849 14,225 13,329 13,120 12,899 13,250 12,870 8 Trade payables 7,765 7,005 6,685 5,618 5,472 5,723 6,289 6,050 9 Advance receipts and other liabilities 7,009 7,843 7,540 7,711 7,648 7,175 6,961 6,820 10 Payable in dollars 13,533 13,836 13,039 11,839 11,525 11,331 11,847 10,036 11 Payable in foreign currencies 1,241 1,013 1,186 1,490 1,595 1,567 1,404 2,834 By area or country Financial liabilities 12 Europe 5,742 6,728 7,560' 7,456' 7,046' 7,678 7,891 7,806 13 Belgium-Luxembourg 302 471 329 44C 39C 424 245 205 14 France 843 995 857 851 686 501 737 702 15 Germany 502 489 434 388 280 319 372 342 16 Netherlands 621 590 745 630 635 708 701 690 17 Switzerland 486 569 620' 636' 505' 636 714 772 18 United Kingdom 2,839 3,297 4,254 4,167' 4,252' 4,660 4,830 4,834 19 Canada 764 863 839 832 367 362 402 430 70 Latin America and Caribbean 2,596 5,086 3,184 2,810 2,463 2,283 1,969 2,366 21 Bahamas 751 1,926 1,123 958 874 863 621 668 22 Bermuda 13 13 4 4 14 4 4 0 2.3 Brazil 32 35 29 26 27 28 32 26 74 British West Indies 1,041 2,103 1,843 1,639 1,406' 1,270 1,160 1,388 25 Mexico 213 367 15 20 30 18 22 30 26 Venezuela 124 137 3 3 3 5 3 3 77 Asia 1,424 1,777 1,815 1,874' 1,735' 1,881 1,792 1,869 28 Japan 991 1,209 1,198 1,267' 1,264' 1,446 1,377 1,459 29 Middle East oil-exporting countries2 170 155 82 78 43 3 8 7 30 Africa 19 14 12 12 12 4 1 3 31 Oil-exporting countries3 0 0 0 0 0 2 1 1 32 All other4 27 41 50 32 104r 76 79 88 Commercial liabilities 33 Europe 3,245 4,001 4,074 3,925 3,817' 4,367 4,420 4,414 34 Belgium-Luxembourg 62 48 62 66 58 75 99 84 35 France 437 438 453 382 358 370 338 279 36 Germany 427 622 607 546 561 637 693 598 37 Netherlands 268 245 364 545 586 613 493 374 38 Switzerland 241 257 379 261 284 361 384 481 39 United Kingdom 732 1,095 976 957 864 1,104 1,279 1,298 40 Canada 1,841 1,975 1,449 1,445 1,367' 1,312 1,386 1,387 41 Latin America and Caribbean 1,473 1,871 1,088 1,107 1,242 846 850 1,147 42 Bahamas I 7 12 26 10 37 19 28 43 Bermuda 67 114 77 218 294 172 132 285 44 Brazil 44 124 58 64 45 43 59 73 45 British West Indies 6 32 44 7 35 45 48 88 46 Mexico 585 586 430 256 235 197 210 182 47 Venezuela 432 636 212 364 488 207 215 316 48 Asia 6,741 5,285 6,046 5,384 5,075 4,807 5,011 4,928 49 Japan 1,247 1,256 1,799 2,039 2,100 2,136 2,046 2,441 50 Middle East oil-exporting countries2 5 4,178 2,372 2,829 2,171 1,787 1,492 1,666 1,175 51 Africa 553 588 587 486 567 585 619 520 52 Oil-exporting countries3 167 233 238 148 215 176 197 170 53 All other4 921 1,128 982 983 1,053 982 963 474 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 • September 1987 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1986 1987 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998833 11998844 11998855 Mar. June Sept.' Dec. Mar.P 1 Total 34,911 29,901 28,760' 31,404' 33,869' 33,879 32,839 34,369 2 Payable in dollars 31,815 27,304 26,457' 29,217' 31,687' 31,186 30,245 31,358 3 Payable in foreign currencies 3,096 2,597 2,302 2,187 2,182 2,693 2,594 3,011 By type 4 Financial claims 23,780 19,254 18,774' 22,017' 24,726' 24,666 23,251 24,105 5 Deposits 18,496 14,621 15,526' 18,633' 21,418' 19,262 18,167 18,327 6 Payable in dollars 17,993 14,202 14,911' 18,176' 20,863' 18,698 17,614 17,610 7 Payable in foreign currencies 503 420 615 457 555 564 553 717 8 Other financial claims 5,284 4,633 3,248 3,384 3,308' 5,404 5,083 5,778 9 Payable in dollars 3,328 3,190 2,213 2,291 2,287' 4,042 3,799 4,448 10 Payable in foreign currencies 1,956 1,442 1,035 1,093 1,021 1,362 1,284 1,331 11 Commercial claims 11,131 10,646 9,986 9,387 9,142 9,213 9,588 10,264 12 Trade receivables 9,721 9,177 8,696 8,087 7,802 8,030 8,442 9,248 13 Advance payments and other claims 1,410 1,470 1,290 1,300 1,341 1,183 1,146 1,016 14 Payable in dollars 10,494 9,912 9,333 8,750 8,537 8,445 8,832 9,300 15 Payable in foreign currencies 637 735 652 637 606 767 756 964 By area or country Financial claims 16 Europe 6,488 5,762 6,812' 7,204' 10,155' 10,452 8,656 9,307 17 Belgium-Luxembourg 37 15 10 10 11 67 41 15 18 France 150 126 184 217 257 418 131 167 19 Germany 163 224 223 174 148 129 91 133 20 Netherlands 71 66 61 61 17 44 87 70 21 Switzerland 38 66 74 166 177 138 134 74 22 United Kingdom 5,817 4,864 6,007' 6,331' 9,328' 9,429 7,925 8,486 23 Canada 5,989 3,988 3,260 4,020 4,429 3,956 4,056 3,815 24 Latin America and Caribbean 10,234 8,216 7,846' 10,073 9,258' 9,353 9,110 9,547 25 Bahamas 4,771 3,306 2,698 3,516 3,315' 2,884 2,539 3,926 26 Bermuda 102 6 6 2 17 19 13 3 27 Brazil 53 100 78 77 75 105 67 72 28 British West Indies 4,206 4.043 4,571 6,034 5,402 5,949 6,057 5,145 29 Mexico 293 215 180 178 176 173 173 163 30 Venezuela 134 125 48 43 42 40 24 23 31 764 961 731' 619 776' 740 11,,331177 1,207 32 Japan 297 353 475 350 499 390 998866 943 33 Middle East oil-exporting countries2 4 13 4 2 2 2 11 11 34 Africa 147 210 103 87 89 84 85 84 35 Oil-exporting countries3 55 85 29 27 25 18 28 19 36 All other4 159 117 21 14 20 81 27 145 Commercial claims 37 Europe 3,670 3,801 3,533 3,390 3,304 3,385 3,520 3,487 38 Belgium-Luxembourg 135 165 175 148 131 126 127 138 39 France 459 440 426 384 391 415 387 411 40 Germany 349 374 346 399 418 401 428 447 41 Netherlands 334 335 284 221 230 184 199 162 42 Switzerland 317 271 284 247 228 233 213 190 43 United Kingdom 809 1,063 898 795 674 853 820 909 44 Canada 829 1,02! 1,023 1,061 965 950 909 1,813 45 Latin America and Caribbean 2,695 2,052 1,753 1,592 1,611 1,687 1,861 1,697 46 Bahamas 8 8 13 27 24 29 29 11 47 Bermuda 190 115 93 82 148 132 158 125 48 Brazil 493 214 206 217 193 207 229 209 49 British West Indies 7 7 6 7 29 23 55 23 50 Mexico 884 583 510 388 323 316 388 415 51 Venezuela 272 206 157 172 181 192 219 155 52 Asia 3,063 3,073 2,982 2,609 2,574 2,487 2,619 2,602 53 Japan 1,114 1,191 1,016 801 845 792 840 927 54 Middle East oil-exporting countries2 737 668 638 630 622 600 506 465 55 Africa 588 470 437 491 450 469 464 425 56 Oil-exporting countries3 139 134 130 167 170 168 134 142 57 All other4 286 229 257 244 237 234 215 241 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 1987 1986 1987 Jan.-May Nov. Dec. Jan. Feb. Mar. Apr. Mayf U.S. corporate securities STOCKS 1 Foreign purchases 81,995 148,090' 101,703 12,033 14,096 17,628' 20,704 23,066' 20,704 19,602 2 Foreign sales 77,054 129,382' 84,908 12,086 12,320 15,964' 17,599 18,003' 17,391 15,951 3 Net purchases, or sales (-) 4,941 18,708' 16,795 -52 1,776 1,664' 3,105 5,063' 3,312 3,651 4 Foreign countries 4,857 18,916' 16,911 -19 1,696 1,744' 3,204 5,026' 3,250 3,687 5 Europe 2,057 9,559 7,194 -486' 557 1,061 1,786 1,841' 1,028 1,478 6 France -438 459 1,698 -69 113 140 446 656 332 123 7 Germany 730 341 114 -3 24 62 16 19 -101 118 8 Netherlands -123 936 458 -50 14 53 91 69 124 120 9 Switzerland -75 1,560 1,036 -236 47 101 100 177' 306 351 10 United Kingdom 1,665 4,826 3,283 -114 363 647 996 783 181 675 11 Canada 356 807 624 41 102 100 -118 343 251 47 17. Latin America and Caribbean 1,718 3,029 1,381 367 220 308 331 372 36 334 13 Middle East1 238 976' -338 -92 267 136 -175 -230 21 -90 14 Other Asia 296 3,876' 7,358 80 450 91' 1,153 2,638 1,790 1.686 15 Africa 24 297 119 23 17 -1 15 1 59 45 16 Other countries 168 373 573 48 84 49 212 61 65 185 17 Nonmonetary international and regional organizations 84 -208 -116 -34 80 -80 -100 37 62 -36 BONDS2 18 Foreign purchases 86,587 122,953' 48,250 9,278' 11,879 9,308 8,021 12,117' 9,843 8,961 19 Foreign sales 42,455 72,499' 34,299 6,110' 7,741' 7,180' 5,457 8,281' 6,559 6,822 20 Net purchases, or sales (—) 44,132 50,454' 13,951 3,167' 4,138' 2,127' 2,565 3,836' 3,283 2,139 21 Foreign countries 44,227 49,607' 13,764 2,848' 4,242' 2,216' 2,179 3,994' 3,107 2,269 72 Europe 40,047 39,126' 10,898 2,095' 3,065' 1,372' 1,402 3,600' 2,833 1,690 73 France 210 389' 90 328 32 6 17 81 -22 7 74 Germany 2,001 -251 -20 -108 -19 -213 145 198 -121 -29 75 Netherlands 222 387 117 113 52 -7 -29 69 47 38 76 Switzerland 3,987 4,529 934 204 -117 66 78 558 50 182 77 United Kingdom 32,762 33,706' 9,823 1,411' 2,761' 1,389' 1,178 2,931' 2,809 1,516 78 Canada 190 548 634 154 153 -103 364 190 161 23 29 Latin America and Caribbean 498 1,468 633 66 102 103 98 65' 123 245 30 Middle East1 -2,648 -2,961 -88 -355 -258 -57 -139 -12 62 58 31 Other Asia 6,091 11,270' 1,734 902 1,174 917 469 169 -73 252 37 Africa 11 16 13 3 3 0 1 3 1 7 33 Other countries 38 139 -61 -15 3 -16 -16 -22 0 -6 34 Nonmonetary international and regional organizations -95 847 187 319 -104 -88 386 -157' 176 -130 Foreign securities 35 Stocks, net purchases, or sales (-) -3,941 -1,912' -1,961 331' 63' -204' -561 -708' -1156 668 36 Foreign purchases 20,861 48,787 34,227 4,095' 4,570' 4,906' 7,175 7,015' 7,120 8,011 37 Foreign sales 24,803 50,699' 36,187 3,764' 4,507' 5,110' 7,736 7,722 8,276 7,343 38 Bonds, net purchases, or sales (-) -3,999 -3,361' -1,594 -692' -487' 319' -70' -545' -585 -712 39 Foreign purchases 81,216 166,781' 83,131 12,666' 16,332' 11,427 15,822' 16,65C 19,012 20,221 40 Foreign sales 85,214 170,142' 84,725 13,358' 16,818' 11,108' 15,891 17,195' 19,597 20,933 41 Net purchases, or sales (—), of stocks and bonds .... -7,940 -5,273' -3,555 -360' -424' 114' -631' -1,253' -1,741 -44 42 Foreign countries -9,003 -6,357' -4,196 -362' -873' 27' -711' -1,520' -1,876 -62 43 Europe -9,887 -17,893' -6,698 -1,018' -1,401' -226' -1,219' -682' -2,684 -1,887 44 Canada -1,686 -875 -1,567 -106 -264 -396 -566 -202 -3 -400 45 Latin America and Caribbean 1,797 3,479' 540 16 233' 389 104 -416' 259 204 46 Asia 659 10,858' 4,041 760' 1,465' 168 925 306 636 2,007 47 Africa 75 52 31 4 3 4 0 -1 8 20 48 Other countries 38 -1,977 -542 -19 -909 34' 45 -524 -91 -6 49 Nonmonetary international and regional organizations 1,063 1,084' 641 2 449 142' 80 267' 135 18 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, ties sold abroad by U.S. corporations organized to finance direct investments Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). abroad. 2. Includes state and local government securities, and securities of U.S. government agencies and corporations. Also includes issues of new debt securi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • September 1987 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1987 1986 1987 11998855 11998866 Country or area Jan.- Nov. Dec. Jan. Feb. Mar. Apr. May May Transactions, net purchases or sales (-) during period1 1 Estimated total2 29,208 20,061' 4,312 -2,258' 1,006' -436 96 lr 7,028' -2,990 -252 2 Foreign countries2 28,768 21,164' 8,894 -300' -474' 580 1,846' 4,145' -1,405 3,728 3 Europe2 4,303 16,866' 11,030 -727 1,016' 1,376 1,751' 5,832' 375 1,696 4 Belgium-Luxembourg 476 349 208 -53 75 59 211 -35 -35 8 5 Germany2 1,917 7,531 6,366 700 -487 581 1,118 2,141 1,106 1,420 6 Netherlands 269 1,283 -206 38 -58 -366 41 -212 -22 352 7 Sweden 976 132 411 -70 -236 -229 440 334 32 -166 8 Switzerland2 773 310 3,043 -498 -428 -135 473 1,641 652 413 9 United Kingdom -1,810 4,648 -89 -335 1,036 1,227 -15' 328' -1,089 -540 10 Other Western Europe 1,701 2,613' 1,327 -510 1,114' 236 -518 1,635 -230 204 11 Eastern Europe 0 0 -31 0 0 3 0 0 -40 6 12 Canada -188 881 1,878 19 297 846 -416' 709' 703 37 13 Latin America and Caribbean 4,315 875' -1,760 76' 96' -1,006 -290 -62 -30 -372 14 Venezuela 248 -95 113 -139 29 -33 18 102 14 11 15 Other Latin America and Caribbean 2,336 1,128' -698 7' 95' -445 373' -156 -176 -293 16 Netherlands Antilles 1,731 -159 -1,176 208 -28 -528 -682 -8 133 -90 17 Asia 19,919 1,341' -2,800 -152 -2,067 -922 1,231 -2,378' -2,880 2,149 18 Japan 17,909 -77' -3,869 188 -2,086 -76 1,767 -2,457' -2,561 -541 19 Africa 112 -54 -19 2 -14 6 -34 12 -15 11 20 All other 308 1,255 566 482 198 280 -396 32 442 208 21 Nonmonetary international and regional organizations 442 -1,105 -4,583 -1,958 1,478 -1,016 -885' 2,883' -1,585 -3,980 22 International -436 -1,430 -3,584 -2,010 1,412 -1,070 -886 2,833' -1,347 -3,114 23 Latin American regional 18 157 11 0 0 0 0 11 0 0 MEMO 24 Foreign countries2 28,768 21,164' 8,894 -300' -474' 580 1,846' 4,145' -1,405 3,728 25 Official institutions 8,135 14,380' 14,944 133 309' 1,498 834 5,837 2,404 4,371 26 Other foreign2 20,631 6,787' -6,050 -433' -782 -918 1,012 -1,691' -3,810 -643 Oil-exporting countries 27 Middle East3 -1,547 -1473 -941 -1,014 -21 -721 -962 226 -120 636 28 Africa4 7 5 19 1 0 1 1 17 0 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than one 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 denominated in foreign residents publicly issued to private foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on June 30, 1987 Rate on June 30, 1987 Rate on June 30, 1987 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria. . 3.5 Jan. 1987 France1 7.75 Mar. 1987 Norway 8.0 June 1983 Belgium . 7.75 May 1987 Germany, Fed. Rep. of 3.5 Mar. 1986 Switzerland 3.5 Jan. 1987 Brazil... 49.0 Mar. 1981 Italy 11.5 Mar. 1987 United Kingdom2. Canada.. 8.59 June 1987 Japan 2.5 Feb. 1987 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 Dec. Jan. Feb. Mar. Apr. May June 1 Eurodollars 10.75 8.27 6.70 6.23 6.10 6.32 6.37 6.73 7.25 7.11 2 United Kingdom 9.91 12.16 10.87 11.30 10.98 10.79 9.90 9.72 8.79 8.85 3 Canada 11.29 9.64 9.18 8.34 7.95 7.44 7.14 7.62 8.22 8.40 4 Germany 5.96 5.40 4.58 4.80 4.45 3.94 3.97 3.85 3.73 3.67 5 Switzerland 4.35 4.92 4.19 4.08 3.63 3.58 3.93 3.65 3.63 3.77 6 Netherlands 6.08 6.29 5.56 6.03 5.58 5.31 5.38 5.31 5.11 5.15 7 France 11.66 9.91 7.68 7.92 8.49 8.36 7.85 7.87 8.09 8.18 8 Italy 17.08 14.86 12.60 11.40 11.39 11.13 10.65 10.03 10.15 10.67 9 Belgium 11.41 9.60 8.04 7.39 7.88 7.75 7.49 7.21 7.13 6.78 10 Japan 6.32 6.47 4.96 4.40 4.23 3.98 4.00 3.92 3.77 3.71 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • September 1987 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1987 CCoouunnttrryy//ccuurrrreennccyy 11998844 11998855 11998866 Jan. Feb. Mar. Apr. May June 1 Australia/dollar 87.937 70.026 67.093 66.09 66.77 68.17 71.19 71.42 71.79 2 Austria/schilling 20.005 20.676 15.260 13.087 12.833 12.905 12.739 12.574 12.793 3 Belgium/franc 57.749 59.336 44.662 38.616 37.789 38.029 35.562 37.091 37.712 4 Brazil/cruzeiro 1841.50 6205.10 13.051 15.58 18.08 20.56 22.59 n.a. n.a. 5 Canada/dollar 1.2953 1.3658 1.3896 1.3605 1.3340 1.3194 1.3183 1.3411 1.3387 6 China, P.R./yuan 2.3308 2.9434 3.4615 3.7314 3.7314 3.7314 3.7314 3.7314 3.7314 7 Denmark/krone 10.354 10.598 8.0954 7.0591 6.8939 6.9166 6.8388 6.7333 6.8555 8 Finland/markka 6.0007 6.1971 5.0721 4.6419 4.5556 4.5102 4.4227 4.3604 4.4281 9 France/franc 8.7355 8.9799 6.9256 6.2007 6.0760 6.1091 6.0332 5.9748 6.0739 10 Germany/deutsche mark 2.8454 2.9419 2.1704 1.8596 1.8239 1.8355 1.8125 1.7881 1.8189 11 Greece/drachma 112.73 138.40 139.93 134.80 133.88 134.68 133.502 133.35 136.06 12 Hong Kong/dollar 7.8188 7.7911 7.8037 7.7698 7.7952 7.8017 7.8023 7.8049 7.8080 13 India/rupee 11.348 12.332 12.597 13.029 13.062 12.924 12.8224 12.666 12.837 14 Ireland/pound1 108.64 106.62 134.14 143.90 145.93 145.54 147.49 149.59 147.25 15 Italy/lira 1756.10 1908.90 1491.16 1317.17 1297.74 1305.90 1292.% 1290.80 1316.50 16 Japan/yen 237.45 238.47 168.35 154.83 153.41 151.43 143.00 140.48 144.55 17 Malaysia/ringgit 2.3448 2.4806 2.5830 2.5701 2.5418 2.5230 2.4861 2.4759 2.5078 18 Netherlands/guilder 3.2083 3.3184 2.4484 2.0978 2.0592 2.0731 2.0447 2.0154 2.0490 19 New Zealand/dollar1 57.837 49.752 52.456 53.605 54.815 56.333 57.751 57.639 58.686 20 Norway/krone 8.1596 8.5933 7.3984 7.1731 7.0067 6.9335 6.7781 6.6632 6.7147 31 Portugal/escudo 147.70 172.07 149.80 142.90 141.62 141.48 140.339 139.18 142.12 22 Singapore/dollar 2.1325 2.2008 2.1782 2.1510 2.1410 2.1418 2.1350 2.1202 2.1176 23 South Africa/rand' 69.534 45.57 43.952 47.70 47.97 48.21 49.55 49.87 49.41 2.4 South Korea/won 807.91 861.89 884.61 862.86 857.38 856.11 845.00 832.53 818.39 25 Spain/peseta 160.78 169.98 140.04 129.54 128.62 128.86 126.975 125.28 126.33 26 Sri Lanka/rupee 25.428 27.187 27.933 28.578 28.662 28.823 28.902 28.988 29.171 27 Sweden/krona 8.2706 8.6031 7.1272 6.6188 6.5016 6.4202 6.3210 6.2606 6.3482 28 Switzerland/franc 2.3500 2.4551 1.7979 1.5616 1.5403 1.5391 1.4968 1.4705 1.5085 29 Taiwan/dollar 39.633 39.889 37.837 35.304 35.056 34.681 33.863 32.354 31.226 30 Thailand/baht 23.582 27.193 26.314 26.037 25.933 25.881 25.695 25.629 25.779 31 United Kingdom/point1 133.66 129.74 146.77 150.54 152.80 159.23 162.99 166.66 162.88 MEMO 32 United States/dollar 138.19 143.01 112.22 101.13 99.46 98.99 97.09 96.05 97.78 1. Value in U.S. cents. 3. Currency reform. 2. Index of weighted-average exchange value of U.S. dollar against the NOTE. Averages of certified noon buying rates in New York for cable transfers. currencies of 10 industrial countries. The weight for each of the 10 countries is the Data in this table also appear in the Board's G.5 (405) release. For address, see 1972-76 average world trade of that country divided by the average world trade of inside front cover. all 10 countries combined. Series revised as of August 1978 (see FEDERAL RESERVE BULLETIN, vol. 64, August 1978, p. 700). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) .... Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1987 A89 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference Assets and liabilities of commercial banks, March 31, 1986 June 1987 A70 Assets and liabilities of commercial banks, June 30, 1986 June 1987 A76 Assets and liabilities of commercial banks, September 30, 1986 July 1987 A70 Assets and liabilities of commercial banks, December 31, 1986 July 1987 A76 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 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1986 May 1987 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1987 August 1987 A70 Terms of lending at commercial banks, August 1986 December 1986 A70 Terms of lending at commercial banks, November 1986 February 1987 A70 Terms of lending at commercial banks, February 1987 May 1987 A70 Terms of lending at commercial banks, May 1987 September 1987 A70 Special tables begin on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • September 1987 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 4-8, 1987' A. Commercial and Industrial Loans2 Loans AAmmoouunntt AAvveerraaggee Weighted Loan rate (percent) made Partici- Characteristic (t o h f o u lo s a a n n s d s (tho s u iz s e a nds maturity-' co u m nd m e i r t - p l a o t a i n o s n of dollars) of dollars) Days e a f v fe e c r t a i g v e e 4 SSttaannddaarrdd q r u a a n r g ti e l 6 e (pe m r e c n e t n t) (percent) ALL BANKS 1 Overnight8 12,546,920 6,226 * 7.71 .07 7.39-7.92 83.3 2 One month and under 8,542,289 730 15 7.91 .09 7.47-8.10 78.9 9.3 3 Fixed rate 7,107,176 1,161 15 7.78 .07 7.45-7.99 79.1 9.9 4 Floating rate 1,435,113 257 18 8.55 .12 7.80-9.12 77.8 6.0 5 Over one month and under a year ... 9,707,040 116 153 8.94 .16 8.05-9.75 71.1 7.8 6 Fixed rate 3,595,494 105 99 8,73 .22 7.83-9.38 65.0 9.6 7 Floating rate 6,111,546 124 184 9.07 .14 8.30-9.75 74.6 6.7 8 Demand9 9,016,066 228 * 8.54 .15 7.63-9.38 68.9 4.5 9 Fixed rate 946,250 494 * 7.54 .52 7.35-8.00 91.7 10.5 10 Floating rate 8,069,816 215 * 8.65 .12 7.83-9.38 66.2 3.8 11 Total short term 39,812,315 291 53 8.24 .13 7.53-8.77 76.1 5.9 12 Fixed rate (thousands of dollars) .... 24,040,604 541 21 7.87 .11 7.45-8.06 80.0 6.4 13 1-24 232,461 7 100 11.34 .24 10.25-12.46 20.1 .2 14 25-49 125,402 32 102 10.47 .23 9.65-11.35 18.2 .1 15 50-99 164,268 70 123 11.48 .40 9.36-11.83 23.0 7.7 16 100-499 403,193 188 83 9.40 .22 8.24-9.96 43.1 6.3 17 500-999 343,933 664 54 8.20 .14 7.76-8.87 66.3 4.4 18 1000 and over 22,771,346 7,907 17 7.76 .05 7.45-8.01 82.3 6.5 19 Floating rate (thousands of dollars).... 15,771,712 171 150 8.81 .13 8.17-9.58 70.1 5.3 20 1-24 441,256 10 155 10.17 .15 9.38-10.79 68.5 1.4 21 25-49 491,451 33 144 9.81 .11 9.11-10.47 71.0 1.6 22 50-99 829,119 67 169 9.57 .10 8.84-10.11 73.3 1.8 23 100-499 2,832,086 191 164 9.27 .06 8.51-9.92 76.9 3.9 24 500-999 1,276,096 642 151 9.07 .06 8.30-9.65 79.9 9.9 25 1000 and over 9,901,705 4,708 143 8.47 .12 7.59-9.11 66.6 5.7 Months 26 Total long term 5,382,322 242 51 8.92 .14 8.03-9.79 81.7 27 Fixed rate (thousands of dollars) .... 1,048,728 116 60 8.94 .33 7.60-10.24 68.5 6.6 28 1-99 143,720 17 39 11.22 .37 10.00-11.85 13.8 3.0 29 100-499 102,823 176 51 10.20 .20 9.65-11.02 15.7 .9 30 500-999 66,977 667 49 9.24 .21 8.84-9.92 37.7 3.6 31 1000 and over 735,208 4,799 66 8.29 .37 7.38-8.75 89.4 8.4 32 Floating rate (thousands of dollars).... 4,333,595 330 48 8.92 .13 8.24-9.65 84.9 12.9 33 1-99 268,137 29 42 10.08 .13 9.31-10.75 44.5 1.3 34 100-499 588,187 203 49 9.34 .09 8.57-9.92 57.7 4.9 35 500-999 248,699 668 47 9.01 .13 8.30-9.58 84.3 17.8 36 1000 and over 3,228,572 5,285 49 8.74 .12 7.90-9.58 93.2 14.9 Loan rate (percent) DDaayyss PPrriimmee rraattee"" Effective4 Nominal10 LOANS MADE BELOW PRIME12 37 Overnight8 10,989,619 9,676 * 7.57 7.30 8.00 86.8 4.9 38 One month and under 6,713,199 4,475 14 7.62 7.35 8.00 81.5 9.6 39 Over one month and under a year ... 3,146,517 489 114 7.76 7.53 8.08 79.9 10.2 40 Demand9 3,044,396 2,389 * 7.42 7.19 8.00 38.3 2.6 41 Total short term 23,893,731 2,311 23 7.59 7.33 8.01 78.2 6.6 42 Fixed rate 19,885,597 3,511 13 7.59 7.33 8.00 83.5 7.4 43 Floating rate 4,008,134 857 126 7.57 7.34 8.05 52.3 3.0 Months 44 Total long term 1,682,269 1,476 50 7.66 7.43 8.09 14.1 45 Fixed rate 505,978 2,151 67 7.48 7.31 8.00 96.4 5.4 46 Floating rate 1,176,291 1,300 43 7.73 7.49 8.12 97.0 17.8 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 4.23 Continued A. Commercial and Industrial Loans Continued LLooaannss Characteristic ( o t f A o h f o m d u l o o o s l u a l a a n n n r s t d s s ) ( o t A f h o v d s u e o iz s r l a e a la g n r e d s s ) WW mm aa aa vv ee D tt ee ii uu a gg rr rr y aa hh ii s gg tt tt ee ee yy dd 33 W e W e aa ff vv ff ee ee ee ii cc gg rr tt aa hh ii gg tt vv ee ee ee dd L 44 oan r SS a tt ee t aa e rr nn rr dd oo (p aa rr55 e rr dd r cent) q r u a a n r g t e il 6 e ( cc p oo uu mm e mm nn r aa c dd mm dd e ee ee n ii rr tt t -- ) (p P p l e a a o r r t a c t i i n e o c s n n i - t) ccc ppp ooo MMM rrr bbb rrr mmm aaa iii aaa ccc ooo ttt mmm sss iii eee sss eee nnn 777 ttt ooo ggg nnn LARGE BANKS 1 Overnight8 9,774,641 9,486 * 7.75 .09 7.45-8.00 80.3 3.0 Fed funds 2 One month and under 6,271,095 2,832 15 7.80 .08 7.47-8.05 80.8 9.4 Domestic 3 Fixed rate 5,498,448 5,533 15 7.74 .07 7.46-7.98 79.7 10.1 Domestic 4 Floating rate 772,647 633 17 8.26 .10 7.70-8.32 89.1 4.5 Prime 5 Over one month and under a year 4,830,878 500 133 8.55 .12 7.75-9.20 81.8 6.5 Prime 6 Fixed rate 2,012,892 1,362 88 8.40 .13 7.76-9.20 71.7 8.5 Domestic 7 Floating rate 2,817,986 344 166 8.65 .17 7.71-9.38 89.0 5.2 Prime 8 Demand9 5,868,748 563 : 8.32 .25 7.50-9.04 59.9 2.0 Prime 9 Fixed rate 513,474 1,967 7.08 .96 7.34-7.80 88.3 6.7 Other 10 Floating rate 5,355,274 527 8.44 .21 7.56-9.11 57.2 1.6 Prime 11 Total short term 26,745,362 1,146 36 8.03 .11 7.50-8.33 76.2 5.0 Fed funds 12 Fixed rate (thousands of dollars) . 17,644,223 4,723 16 7.79 .06 7.46-8.06 79.9 5.9 Fed funds 13 1-24 7,398 9 103 10.00 .24 9.06-10.52 39.3 1.6 Prime 14 25-49 7,156 33 84 9.71 .36 8.80-10.43 41.5 .7 Prime 15 50-99 15,582 67 69 9.17 .14 8.33-9.57 45.2 .0 Prime 16 100-499 90,627 218 47 8.62 .13 8.06-9.31 71.5 1.4 Prime 17 500-999 144,189 660 37 8.25 .08 7.79-8.60 85.1 .0 Domestic 18 1000 and over 17,379,271 9,506 15 7.78 .06 7.46-8.06 79.9 5.9 Fed funds 19 Floating rate (thousands of dollars). 9,101,140 464 128 8.50 .18 7.59-9.11 69.1 3.2 Prime 20 1-24 79,047 11 164 9.77 .21 8.84-10.47 81.0 .2 Prime 21 25-49 104,122 34 148 9.64 .17 8.84-10.47 80.3 .5 Prime 22 50-99 194,756 67 169 9.42 .15 8.58-9.96 84.2 1.0 Prime 23 100-499 886,272 203 140 9.16 .11 8.31-9.71 81.9 1.8 Prime 24 500-999 560,175 654 138 9.00 .09 8.30-9.58 85.1 3.9 Prime 25 1000 and over 7,276,768 6,100 124 8.33 .18 7.50-8.84 65.7 3.5 Prime Months 26 Total long term 3,649,401 1,284 52 8.67 .13 7.65-9.42 94.0 13.1 Prime 27 Fixed rate (thousands of dollars) 561,262 1,422 70 8.36 .59 7.36-8.75 91.5 3.5 Foreign 28 1-99 5,812 25 43 10.98 .76 9.65-12.40 35.2 4.3 Prime 29 100-499 11,454 176 60 10.42 .26 9.92-10.88 37.8 .0 Other 30 500-999 7,760 650 48 8.61 .69 7.87-9.06 78.7 .0 Fed Funds 31 1000 and over 536,236 6,220 71 8.29 .62 7.36-8.75 93.5 3.7 Foreign 32 Floating rate (thousands of dollars) 3,088,138 1,261 49 8.73 .11 7.90-9.44 94.4 14.8 Prime 33 1-99 36,580 33 35 9.61 .17 8.84-10.20 71.1 3.8 Prime 34 100-499 155,661 225 45 9.11 .07 8.33-9.58 88.2 8.0 Prime 35 500-999 132,629 660 53 8.97 .27 8.30-9.44 91.9 18.4 Prime 36 1000 and over 2,763,268 6,083 49 8.69 .11 7.76-9.38 95.2 15.2 Prime Loan rate (percent) DDaayyss PPrriimmee rraattee1111 Effective4 Nominal10 LOANS MADE BELOW PRIME12 37 Overnight8 8,342,226 11,326 7.60 7.33 8.00 84.6 3.6 38 One month and under 5,202,665 6,810 15 7.62 7.36 8.00 79.9 9.7 39 Over one month and under a year 2,282,506 2,121 115 7.68 7.45 8.00 83.5 6.7 40 Demand9 2,529,629 6,112 7.39 7.15 8.00 26.3 1.1 41 Total short term 18,357,026 6,139 22 7.59 7.33 8.00 75.1 5.3 42 Fixed rate 14,969,505 8,008 12 7.61 7.34 8.00 81.7 6.1 43 Floating rate 3,387,521 3,022 133 7.50 7.27 8.00 46.1 2.0 Months 44 Total long term 1,372,919 5,304 51 7.59 7.37 8.00 99.7 12.4 45 Fixed rate .... 365,728 6,696 78 7.41 7.27 8.00 100.0 .0 46 Floating rate .. 1,007,191 4,931 42 7.65 7.41 8.00 99.6 16.9 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • September 1987 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 4-8, 1987'—Continued A. Commercial and Industrial Loans — Continued2 Amount Average W av e e ig ra h g te e d Loan rate (percent) L m o a a d n e s Particiof loans size maturity3 under pation Characteristic ( o t f h o d u o s l a la n r d s s ) ( o t f h o d u o s l a la n r d s s ) Days W e a f v f e e e i c g r t a h i g t v e e e d 4 Standard q r I u a n a n t r g e t r i e - l 6 e ( c p o e m m r e c m n e t n i t t - ) (p l e o r a c n e s n t) OTHER BANKS 1 Overnight8 2 One month and under 2,271,194 239 15 8.21 7.46-8.57 73.5 8.7 3 Fixed rate 1,608,728 314 14 7.93 7.45-8.01 77.1 9.2 4 Floating rate 662,466 152 19 8.90 8.30-9.66 64.6 7.6 5 Over one month and under a year 4,876.162 66 172 9.33 8.30-9.89 60.4 9.0 6 Fixed rate 1,582,602 114 9.16 7.98-9.85 56.4 11.0 7 Floating rate 3,293,560 200 9.42 8.77-9.89 62.3 8 Demand9 3,147.318 108 8.30-9.65 85.6 9.0 9 Fixed rate 432.777 262 7.36-8.30 95.7 14.9 10 Floating rate 2,714,542 99 9.06 8.30-9.92 84.0 11 Total short term 13,066,953 115 8.66 7.64-9.38 75.8 12 Fixed rate (thousands of dollars) . 6,396,381 157 34 8.07 7.45-8.13 80.5 7.9 13 1-24 225,064 7 100 11.38 10.38-12.47 19.5 .1 14 25-49 118,246 32 103 10.52 9.65-11.58 16.8 .1 15 50-99 148.686 70 128 11.72 9.39-12.13 20.7 8.5 16 100-499 312,566 181 93 9.62 8.26-10.47 34.8 7.7 17 500-999 199,744 667 67 8.16 7.64-9.04 52.6 7.5 18 1000 and over 5,392,075 5,126 23 7.69 7.42-7.96 89.7 8.4 19 Floating rate (thousands of dollars). 6,670,572 92 170 9.22 8.32-9.89 71.4 8.0 20 1-24 362,209 9 154 10.25 9.38-10.92 65.8 1.7 21 25-49 387,329 33 143 9.85 9.17-10.47 68.6 1.9 22 50-99 634,363 67 168 9.61 8.87-10.20 70.0 2.1 23 100-499 1,945,814 185 172 9.32 8.57-9.92 74.6 4.9 24 500-999 715,920 633 159 9.13 8.30-9.65 75.9 14.6 25 1000 and over 2,624,937 177 8.85 8.30-9.65 69.3 11.8 Months 26 Total long term 1,732,922 89 9.44 8.30-9.96 55.8 8.6 27 Fixed rate (thousands of dollars) 487,466 56 9.61 8.06-10.75 42.0 10.1 28 1-99 137,907 17 11.23 10.00-11.85 12.9 2.9 29 100-499 91,369 176 10.17 9.65-11.02 13.0 1.0 30 500-999 59,217 669 9.32 8.84-9.92 32.3 4.0 31 1000 and over 198,972 2,971 8.31 7.58-8.75 78.4 21.1 32 Floating rate (thousands of dollars) 1,245,456 116 9.38 8.33-9.92 61.2 8.0 33 1-99 231,557 28 10.15 9.38-11.02 40.3 .9 34 100-499 432,526 196 9.43 8.83-9.92 46.8 3.8 35 500-999 116,069 678 9.05 8.30-9.65 75.6 17.0 36 1000 and over 465,304 2,969 9.03 8.30-9.84 81.4 13.0 Loan rate (percent) Days Prime rate11 Effective4 Nominal10 LOANS MADE BELOW PRIME12 37 Overnight8 2,647,393 6,631 7.49 7.22 8.00 93.7 9.0 38 One month and under 1,510,534 2,052 11 7.59 7.33 8.01 87.1 9.6 39 Over one month and under a year 864,011 161 113 7.97 7.72 8.31 70.4 19.6 40 Demand9 514,767 598 7.57 7.36 8.02 97.3 10.0 41 Total short term 5,536,705 753 7.60 7.34 8.05 88.6 10.9 42 Fixed rate 4,916,092 1,296 17 7.55 7.29 8.01 88.9 11.2 43 Floating rate 620,613 175 103 7.96 7.70 8.35 85.7 8.4 44 Total long term 309,351 84.1 45 Fixed rate .... 140,250 777 7.66 7.42 87.1 19.6 46 Floating rate .. 169,101 241 8.23 7.94 81.6 23.4 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23 Continued B. Construction and Land Development Loans Loan rate (percent)13 AAmmoouunntt AAvveerraaggee WWeeiigghhtteedd LLooaannss PPaarrttiiccii-- CChhaarraacctteerriissttiicc ooff llooaannss ssiizzee aavveerraaggee mmaaddee uunnddeerr ppaattiioonn (( oo tt ff hh oo dd uu oo ss llll aa aa nn rr dd ss)) ss (( oo tt ff hh oo dd uu oo ss llll aa aa nn rr dd ss)) ss (( mm mm aa oo tt nn uu tt rr hh ii ss ttyy )) 33 W e a f v f e e e i c g r t a h i g t v e e e d 4 St e a r n ro d r a 5 r d q r I u a n a n t r g e t r i e - l 6 e ccoo (( mm ppee mm rrcc iitt ee mm nntt ee )) nn tt ((pp ll ee oo rr aa cc nn ee ss nn tt)) ALL BANKS 1 Total 2,605,961 161 16 9.13 .15 8.42-9.59 71.7 20.6 2 Fixed rate (thousands of dollars) .... 803,407 133 7 8.70 .36 8.03-9.59 52.7 2.5 1-24 35,897 9 9 11.06 .31 10.25-12.13 76.5 .0 4 25-49 33,910 38 20 10.32 .28 10.47-10.52 47.3 .8 50-99 69,670 80 27 11.85 .54 10.52-14.53 39.2 .0 6 100-499 27,240 187 21 9.39 .39 7.76-10.47 63.7 .0 7 500 and over 636,690 10,274 3 8.10 .36 7.10-8.84 52.6 3.1 8 Floating rate (thousands of dollars) .. 1,802,554 177 20 9.33 .07 9.11-9.65 80.2 28.7 9 1-24 54,012 10 9 10.15 .14 9.38-10.47 77.6 1.6 10 25-49 52,700 34 8 9.71 .10 9.23-10.38 73.1 2.4 11 50-99 100,369 70 U 9.85 .09 9.24-10.47 63.6 1.6 1? 100-499 275,807 208 16 9.49 .08 9.11-9.92 69.3 12.1 13 500 and over 1,319,666 3,188 22 9.20 .09 8.84-9.38 84.1 36.4 By type of construction 14 Single family 664,241 62 9 9.24 .21 8.06-9.92 84.8 10.3 15 Multifamily 85,342 128 16 9.38 .11 9.32-9.65 84.3 7.3 16 Nonresidential 1,856,378 387 19 9.08 .19 8.78-9.41 66.4 24.9 LARGE BANKS14 1 Total 1,646,333 1,242 18 8.76 .12 8.30-9.38 78.5 17.5 2 Fixed rate (thousands of dollars) .... 617,664 3,745 1 8.04 .52 7.10-8.84 52.1 3.2 3 1-24 888 11 10 9.77 .29 11.02-9.92 79.1 1.8 4 25-49 * * * * * * * * 5 50-99 * * * * * * * * 6 100-499 * * * * * * * * 7 500 and over 611,879 14,754 1 8.03 .63 7.10-8.84 51.9 3.2 8 Floating rate (thousands of dollars) .. 1,028,668 886 26 9.20 .10 8.84-9.38 94.3 26.0 9 1-24 4,027 11 10 9.67 .20 9.38-10.47 80.2 2.6 10 25-49 4,915 36 9 9.54 .18 9.38-9.92 71.3 3.8 11 50-99 10,972 75 11 9.45 .10 9.38-9.65 81.1 2.9 1? 100-499 77,098 226 13 9.47 .09 9.27-9.92 92.1 9.0 13 500 and over 931,656 5,036 28 9.17 .11 8.84-9.38 94.9 27.9 By type of construction 14 Single family 269,433 782 4 8.46 .41 8.06-9.11 95.6 12.4 15 Multifamily 59,341 251 19 9.42 .16 9.32-9.65 94.6 2.7 16 Nonresidential 1,317,558 1,769 21 8.79 .15 8.42-9.38 74.3 19.2 OTHER BANKS14 1 Total 959,629 65 13 9.77 .18 9.38-10.38 60.0 26.0 •> Fixed rate (thousands of dollars) .... 185,742 32 23 10.89 .37 10.14-11.60 54.5 .0 3 1-24 35,008 9 9 11.09 .25 10.25-12.13 76.4 .0 4 25-49 33,286 38 20 10.33 .35 10.47-10.52 46.5 .0 5 50-99 69,412 80 27 11.86 .70 10.52-14.53 38.9 .0 6 100-499 23,225 185 19 9.45 .44 7.76-10.47 62.8 .0 7 500 and over * * * * * * * * 8 Floating rate (thousands of dollars) . . 773,886 86 11 9.50 .07 9.31-9.92 61.3 32.3 9 1-24 49,985 10 9 10.19 .15 9.38-10.47 77.4 1.5 10 25-49 47,785 34 8 9.72 .09 9.23-10.38 73.3 2.3 11 50-99 89,396 70 12 9.90 .15 9.14-10.47 61.4 1.4 1? 100-499 198,709 201 17 9.50 .14 9.11-9.92 60.5 13.3 13 500 and over 388,010 1,694 8 9.29 .13 9.38-9.41 58.1 56.8 By type of construction 14 Single family 394,808 38 13 9.77 .16 9.38-10.47 77.4 8.9 15 Multifamily 26,001 60 10 9.30 .11 8.77-9.92 60.8 17.7 16 Nonresidential 538,820 133 14 9.79 .26 9.38-9.92 47.2 39.0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • September 1987 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 4-8, 1987'—Continued C. Loans to Farmers14 Size class of loans (thousands) Characteristic $250 All sizes $1-9 $10-24 $25-49 $50-99 $100-249 and over ALL BANKS 1 Amount of loans (thousands of dollars) 993,589 124,782 154,320 147,788 132,058 124,444 310,197 2 Number of loans 52,023 33,606 10,685 4,187 2,053 954 538 3 Weighted average maturity (months)3 22.8 8.2 8.7 13.1 19.1 10.6 52.5 4 Weighted average interest rate (percent)4 10.61 11.39 11.18 11.07 10.51 10.62 9.84 5 Standard error5 .61 .34 .34 .45 .42 .56 .61 6 Interquartile range6 9.84-11.83 10.73-12.21 10.50-12.10 10.38-11.95 9.89-11.35 9.46-12.00 9.31-10.02 By purpose of loan 7 Feeder livestock 10.72 11.23 11.37 11.16 11.00 1100..4433 1100..1133 8 Other livestock 9.59 10.79 10.92 10.27 * * 9.19 9 Other current operating expenses 10.94 11.46 11.25 11.21 10.35 11.03 9.72 10 Farm machinery and equipment 10.93 11.84 10.78 11.23 * * * 11 Farm real estate 11.02 9.95 10.89 * * * * 12 Other 10.00 11.67 10.21 10.49 9.93 9.20 9.95 Percentage of amount of loans 13 With floating rates 56.0 4499..66 4444..77 6644..55 5566..00 8844..33 4488..77 14 Made under commitment 52.7 44.1 42.9 42.1 33.6 61.1 70.9 By purpose of loan 15 Feeder livestock 20.7 1133..22 1133..44 2255..11 2277..00 2233..99 2211..33 16 Other livestock 6.5 3.9 4.2 4.5 * * 13.3 17 Other current operating expenses 45.8 72.6 71.6 45.2 42.7 56.8 19.5 1 1 8 9 F F a a r r m m r m e a al c h e i s n t e a r t y e and equipment 2 3 . . 5 9 4 2 . . 2 2 2 3 . . 8 6 8 * .4 * * * * * 20 Other 20.6 4.0 4.3 14.6 9.9 12.8 45.9 LARGE BANKS14 1 Amount of loans (thousands of dollars) 254,080 7,227 11,850 15,256 23,248 41,874 154,625 2 Number of loans 3,925 1,843 792 461 348 279 203 3 Weighted average maturity (months)3 8.2 7.4 7.5 6.7 6.0 9.6 8.5 4 Weighted average interest rate (percent)4 9.38 10.27 9.93 9.91 9.78 9.58 9.13 5 Standard error5 .58 .30 .28 .39 .32 .39 .44 6 Interquartile range6 8.78-9.92 9.73-10.75 9.31-10.51 9.38-10.47 9.29-10.38 9.00-10.15 8.51-9.50 By purpose of loan 7 Feeder livestock 9.49 10.09 99..7711 9.70 99..6699 99..7766 99..3311 8 Other livestock 8.64 10.56 * * * * * 9 Other current operating expenses 9.69 10.26 9.97 9.98 9.82 9.53 9.55 10 Farm machinery and equipment 10.12 10.96 * * * * * 11 Farm real estate 9.77 10.50 * * * * * 12 Other 9.25 10.10 9.73 9.91 9.83 9.43 9.03 Percentage of amount of loans 13 With floating rates 95.0 87.5 90.2 93.6 9900..22 110000..00 9955..11 14 Made under commitment 79.5 71.8 73.8 82.2 85.3 81.7 78.6 By purpose of loan 15 Feeder livestock 27.3 14.7 1155..55 2266..99 2266..88 3399..99 2255..55 16 Other livestock 12.9 4.0 * * * * * 17 Other current operating expenses 29.7 57.4 57.5 38.5 35.4 28.2 24.9 1 1 9 8 F F a a r r m m r m ea a l c h e i s n t e a r te y and equipment 1 . . 7 0 5 3 . . 7 5 * * * * * * * * * 20 Other 28.4 14.6 18.0 26.1 28.2 24.9 31.0 OTHER BANKS14 1 Amount of loans (thousands of dollars) 739.508 117,555 142,470 132,531 108,810 82,570 2 Number of loans 48,098 31,763 9,893 3,726 1,705 674 * 3 Weighted average maturity (months)3 25.7 8.2 8.8 13.7 20.8 10.9 * 4 Weighted average interest rate (percent)4 11.04 11.46 11.29 11.20 10.67 11.14 5 Standard error5 .18 .16 .19 .21 .27 .40 * 6 Interquartile range6 10.02-12.00 10.77-12.25 10.52-12.13 10.50-11.95 10.01-11.78 10.38-12.08 * By purpose of loan 1 Feeder livestock 1111..3355 1111..3311 1111..5533 1111..3355 * * 8 Other livestock 10.57 10.81 10.95 * * * * 9 Other current operating expenses 11.18 11.52 11.34 11.33 10.44 11.33 * 10 Farm machinery and equipment 10.98 11.92 10.76 * * * * 11 Farm real estate 11.13 9.89 * * * * 12 Other 10.41 12.10 10.44 10.62 * For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A75 4.23 Continued C. Loans to Farmers14—Continued Size class of loans (thousands) Characteristic All sizes $1-9 $10-24 $25-49 $50-99 $100-249 $250 and over Percentage of amount of loans 13 With floating rates 42.6 47.2 40.9 61.1 48.6 76.4 * 14 Made under commitment 43.5 42.4 40.3 37.5 22.6 50.6 * By purpose of loan 15 Feeder livestock 18.4 13.1 13.2 24.9 * * * 16 Other livestock 4.3 3.9 4.3 * * * * 17 Other current operating expenses 51.4 73.5 72.8 45.9 44.3 71.4 * 18 Farm machinery and equipment 4.9 4.1 3.7 * * * * 19 Farm real estate 3.1 2.1 * * * * * 20 Other 17.9 3.3 3.2 13.3 * * # *Fewer than 10 sample loans. 6. The interquartile range shows the interest rate range that encompasses the 1. The survey of terms of bank lending to business collects data on gross loan middle 50 percent of the total dollar amount of loans made. extensions made during the first full business week in the mid-month of each 7. The most common base rate is that rate used to price the largest dollar quarter by a sample of 340 commercial banks of all sizes. A subsample of 250 volume of loans. Base pricing rates include the prime rate (sometimes referred to banks also report loans to farmers. The sample data are blown up to estimate the as a bank's "basic" or "reference" rate); the federal funds rate; domestic money lending terms at all insured commercial banks during that week. The estimated market rates other than the federal funds rate; foreign money market rates; and terms of bank lending are not intended for use in collecting the terms of loans other base rates not included in the foregoing classifications. extended over the entire quarter or residing in the portfolios of those banks. 8. Overnight loans are loans that mature on the following business day. Construction and land development loans include both unsecured loans and loans 9. Demand loans have no stated date of maturity. secured by real estate. Thus, some of the construction and land development 10. Nominal (not compounded) annual interest rates are calculated from survey loans would be reported on the statement of condition as real estate loans and the data on the stated rate and other terms of the loan and weighted by loan size. remainder as business loans. Mortgage loans, purchased loans, foreign loans, and 11. The prime rate reported by each bank is weighted by the volume of loans loans of less than $1,000 are excluded from the survey. extended and then averaged. As of Dec. 31, 1985, assets of most of the large banks were at least $5.5 billion. 12. The proportion of loans made at rates below prime may vary substantially For all insured banks total assets averaged $165 million. from the proportion of such loans outstanding in banks' portfolios. 2. Beginning with the August 1986 survey respondent banks provide informa- 13. 73.4 percent of construction and land development loans were priced tion on the type of base rate used to price each commercial and industrial loan relative to the prime rate. made during the survey week. This reporting change is reflected in the new 14. Among banks reporting loans to farmers (Table C), most "large banks" column on the most common base pricing rate in table A and footnote 13 from (survey strata 1 to 3) had over $600 million in total assets, and most "other banks" table B. (survey strata 4 to 6) had total assets below $600 million. 3. Average maturities are weighted by loan size and exclude demand loans. The survey of terms of bank lending to farmers now includes loans secured by 4. Effective (compounded) annual interest rates are calculated from the stated farm real estate. In addition, the categories describing the purpose of farm loans rate and other terms of the loan and weighted by loan size. have now been expanded to include "purchase or improve farm real estate." In 5. The chances are about two out of three that the average rate shown would previous surveys, the purpose of such loans was reported as "other." differ by less than this amount from the average rate that would be found by a complete survey of lending at all banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MARTHA R. SEGER MANUEL H. JOHNSON, Vice Chairman WAYNE D. ANGELL OFFICE OF BOARD MEMBERS DIVISION OF RESEARCH AND STATISTICS JOSEPH R. COYNE, Assistant to the Board EDWARD C. ETTIN, Deputy Director DONALD J. WINN, Assistant to the Board DONALD L. KOHN, Deputy Director NORMAND R.V. BERNARD, Special Assistant to the Board (Monetary Policy and Financial Markets) LYNN SMITH FOX, Special Assistant to the Board MICHAEL J. PRELL, Deputy Director BOB S. MOORE, Special Assistant to the Board JARED J. ENZLER, Associate Director DAVID E. LINDSEY, Associate Director ELEANOR J. STOCKWELL, Associate Director LEGAL DIVISION MARTHA BETHEA, Deputy Associate Director THOMAS D. SIMPSON, Deputy Associate Director MICHAEL BRADFIELD, General Counsel LAWRENCE SLIFMAN, Deputy Associate Director J. VIRGIL MATTINGLY, JR., Deputy General Counsel PETER A. TINSLEY, Deputy Associate Director RICHARD M. ASHTON, Associate General Counsel SUSAN J. LEPPER, Assistant Director OLIVER IRELAND, Associate General Counsel RICHARD D. PORTER, Assistant Director RICKI R. TIGERT, Assistant General Counsel MARTHA S. SCANLON, Assistant Director MARYELLEN A. BROWN, Assistant to the General Counsel JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, Assistant Director (Administration) OFFICE OF THE SECRETARY DIVISION OF INTERNATIONAL FINANCE WILLIAM W. WILES, Secretary BARBARA R. LOWREY, Associate Secretary EDWIN M. TRUMAN, Staff Director JAMES MCAFEE, Associate Secretary LARRY J. PROMISEL, Senior Associate Director CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director DIVISION OF CONSUMER ROBERT F. GEMMILL, Staff Adviser AND COMMUNITY AFFAIRS DONALD B. ADAMS, Assistant Director PETER HOOPER III, Assistant Director GRIFFITH L. GARWOOD, Director KAREN H. JOHNSON, Assistant Director GLENN E. LONEY, Assistant Director RALPH W. SMITH, JR., Assistant Director ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DIVISION OF BANKING SUPERVISION AND REGULATION OFFICE OF THE INSPECTOR GENERAL WILLIAM TAYLOR, Staff Director BRENT L. BOWEN, Inspector General 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

All and Official Staff H. ROBERT HELLER EDWARD W. KELLEY, JR. 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 PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF PERSONNEL CLYDE H. FARNSWORTH, JR., Director ELLIOTT C. MCENTEE, Associate Director DAVID L. SHANNON, Director DAVID L. ROBINSON, Associate Director JOHN R. WEIS, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director CHARLES W. WOOD, Assistant Director CHARLES W. BENNETT, 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 DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, 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

78 Federal Reserve Bulletin • September 1987 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL H. ROBERT HELLER EDWARD W. KELLEY, JR. EDWARD G. BOEHNE MANUEL H. JOHNSON MARTHA R. SEGER ROBERT H. BOYKIN SILAS KEEHN GARY H. STERN ALTERNATE MEMBERS ROBERT P. BLACK ROBERT P. FORRESTAL ROBERT T. PARRY THOMAS M. TIMLEN STAFF DONALD L. KOHN, Secretary and Staff Adviser DAVID E. LINDSEY, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary MICHAEL J. PRELL, Associate Economist ROSEMARY R. LONEY, Deputy Assistant Secretary ARTHUR J. ROLNICK, Associate Economist MICHAEL BRADFIELD, General Counsel HARVEY ROSENBLUM, Associate Economist JAMES H. OLTMAN, Deputy General Counsel KARL A. SCHELD, Associate Economist EDWIN M. TRUMAN, Economist (International) CHARLES J. SIEGMAN, Associate Economist PETER FOUSEK, Associate Economist THOMAS D. SIMPSON, Associate Economist RICHARD W. LANG, 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. LA WARE, 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

79 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, Picayune, 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

80 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, payment should accompany request and be made to the $13.50 each. Board of Governors of the Federal Reserve System. Payment FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updatfrom foreign residents should be drawn on a U.S. bank. ed at least monthly. (Requests must be prepaid.) Stamps and coupons are not accepted. Consumer and Community Affairs Handbook. $75.00 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- Monetary Policy and Reserve Requirements Handbook. TIONS. 1984. 120 pp. $75.00 per year. ANNUAL REPORT. Securities Credit Transactions Handbook. $75.00 per year. ANNUAL REPORT: BUDGET REVIEW, 1986-87. Federal Reserve Regulatory Service. 3 vols. (Contains all FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or three Handbooks plus substantial additional material.) $2.00 each in the United States, its possessions, Canada, $200.00 per year. and Mexico; 10 or more of same issue to one address, Rates for subscribers outside the United States are as $18.00 per year or $1.75 each. Elsewhere, $24.00 per follows and include additional air mail costs: year or $2.50 each. Federal Reserve Regulatory Service, $250.00 per year. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint Each Handbook, $90.00 per year. of Part I only) 1976. 682 pp. $5.00. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A BANKING AND MONETARY STATISTICS. 1941-1970. 1976. MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50each. 1,168 pp. $15.00. WELCOME TO THE FEDERAL RESERVE. ANNUAL STATISTICAL DIGEST PROCESSING AN APPLICATION THROUGH THE FEDERAL RE- 1974-78. 1980. 305 pp. $10.00 per copy. SERVE SYSTEM. August 1985. 30 pp. 1981. 1982. 239 pp. $ 6.50 per copy. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1982. 1983. 266 pp. $ 7.50 per copy. 440 pp. $9.00 each. 1983. 1984. 264 pp. $11.50 per copy. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1984. 1985. 254 pp. $12.50 per copy. December 1986. 264 pp. $10.00 each. 1985. 1986. 231 pp. $15.00 per copy. 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. SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- RIES OF CHARTS. Weekly. $21.00 per year or $.50 each in CONSUMER EDUCATION PAMPHLETS the United States, its possessions, Canada, and Mexico; Short pamphlets suitable for classroom use. Multiple copies 10 or more of same issue to one address, $19.50 per year are available without charge. or $.45 each. Elsewhere, $26.00 per year or $.60 each. THE FEDERAL RESERVE ACT, and other statutory provisions affecting the Federal Reserve System, as amended Consumer Handbook on Adjustable Rate Mortgages through April 20, 1983, with Supplements covering Consumer Handbook to Credit Protection Laws amendments through August 1986. 576 pp. $7.00. Fair Credit Billing REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- Federal Reserve Glossary ERAL RESERVE SYSTEM. A Guide to Business Credit and the Equal Credit Opportunity ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Act Regulation Z) Vol. I (Regular Transactions). 1969. 100 Guide to Federal Reserve Regulations pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each How to File A Consumer Credit Complaint volume $2.25; 10 or more of same volume to one If You Borrow To Buy Stock address, $2.00 each. If You Use A Credit Card FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY Series on the Structure of the Federal Reserve System UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one The Board of Governors of the Federal Reserve System address, $1.50 each. The Federal Open Market Committee THE BANK HOLDING COMPANY MOVEMENT TO 1978: A Federal Reserve Bank Board of Directors COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to Federal Reserve Banks one address, $2.25 each. Organization and Advisory Committees Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

81 PAMPHLETS FOR FINANCIAL INSTITUTIONS REVIEW OF THE TECHNIQUES AND LITERATURE, by Short pamphlets on regulatory compliance, primarily suit- Kenneth Rogoflf. October 1983. 15 pp. able for 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

82 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT Bank Lending to Developing Countries. 10/84. PRICING FROM 1983 THROUGH 1985, by Patrick I. Survey of Consumer Finances, 1983: A Second Report. Mahoney, Alice P. White, Paul F. O'Brien, and Mary 12/84. M. McLaughlin. January 1987. 30 pp. Union Settlements and Aggregate Wage Behavior in the 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A 1980s. 12/84. REVIEW OF THE LITERATURE, by Mark J. War- The Thrift Industry in Transition. 3/85. shawsky. April 1987. 18 pp. 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. Most of the articles reprinted do not exceed 12 pages. 1/86. The Use of Cash and Transaction Accounts by American Families. 2/86. Limit of 10 copies Financial Characteristics of High-Income Families. 3/86. Prices, Profit Margins, and Exchange Rates. 6/86. Agricultural Banks under Stress. 7/86. Foreign Experience with Targets for Money Growth. 10/83. Foreign Lending by Banks: A Guide to International and Intervention in Foreign Exchange Markets: A Summary of U.S. Statistics. 10/86. Ten Staff Studies. 11/83. Recent Developments in Corporate Finance. 11/86. A Financial Perspective on Agriculture. 1/84. U.S. International Transactions in 1986. 5/87. Survey of Consumer Finances, 1983. 9/84. Measuring the Foreign-Exchange Value of the Dollar. 6/87 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

83 Index to Statistical Tables References are to pages A3-A75 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20, 74 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 8 Financial institutions, 26 Reserves and related items, 3, 4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Nonfinancial corporations, 36 Banks, by classes, 3, 18-20, 21 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 40, 41 Turnover, 15 Production, 47, 48 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) BANKERS acceptances, 9, 23, 24 Dividends, corporate, 35 Bankers balances, 18-20 (See also Foreigners) Bonds (See also U.S. government securities) EMPLOYMENT, 45 New issues, 34 Eurodollars, 24 Rates 24 Branch banks, 21, 55, 70-73 FARM mortgage loans, 39 Business activity, nonfinancial, 44 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business expenditures on new plant and equipment, 36 Federal credit agencies, 33 Business loans (See Commercial and industrial loans) Federal finance Debt subject to statutory limitation, and types and CAPACITY utilization, 46 ownership of gross debt, 30 Capital accounts Receipts and outlays, 28, 29 Banks, by classes, 18 Treasury financing of surplus, or deficit, 28 Federal Reserve Banks, 10 Treasury operating balance, 28 Central banks, discount rates, 67 Federal Financing Bank, 28, 33 Certificates of deposit, 24 Federal funds, 6, 17, 19, 20, 21, 24, 28 Commercial and industrial loans Federal Home Loan Banks, 33 Commercial banks, 16, 19, 70-72 Federal Home Loan Mortgage Corporation, 33, 38, 39 Weekly reporting banks, 19-21 Federal Housing Administration, 33, 38, 39 Commercial banks Federal Land Banks, 39 Assets and liabilities, 18-20, 70-72 Federal National Mortgage Association, 33, 38, 39 Commercial and industrial loans, 16, 18, 19, 20, 21 Federal Reserve Banks Consumer loans held, by type, and terms, 40, 41 Condition statement, 10 Loans sold outright, 19 Discount rates (See Interest rates) Nondeposit funds, 17 U.S. government securities held, 4, 10, 11, 30 Real estate mortgages held, by holder and property, 39 Federal Reserve credit, 4, 5, 10, 11 Terms of Lending, 70-75 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, 73 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

84 GOLD Real estate loans—Continued Certificate account, 10 Financial institutions, 26 Stock, 4, 54 Terms, yields, and activity, 38 Government National Mortgage Association, 33, 38, 39 Type of holder and property mortgaged, 39 Gross national product, 51 Repurchase agreements, 6, 17, 19, 20, 21 Reserve requirements, 8 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 Commercial banks, 70-75 SAVING Consumer installment credit, 41 Flow of funds, 42, 43 Federal Reserve Banks, 7 National income accounts, 51 Foreign central banks and foreign countries, 67 Savings and loan associations, 26, 39, 40, 42. (See also Money and capital markets, 24 Thrift institutions) Mortgages, 38 Savings banks, 26, 39, 40 Prime rate, 23 Savings deposits (See Time and savings deposits) International capital transactions of United States, 53-67 Securities (See specific types) International organizations, 57, 58, 60, 63, 64 Federal and federally sponsored credit agencies, 33 Inventories, 51 Foreign transactions, 65 Investment companies, issues and assets, 35 New issues, 34 Investments (See also specific types) Prices, 25 Banks, by classes, 18, 19, 20, 21, 26 Special drawing rights, 4, 10, 53, 54 Commercial banks, 3, 16, 18-20, 39 State and local governments Federal Reserve Banks, 10, 11 Deposits, 19, 20 Financial institutions, 26, 39 Holdings of U.S. government securities, 30 New security issues, 34 LABOR force, 45 Ownership of securities issued by, 19, 20, 26 Life insurance companies (See Insurance companies) Rates on securities, 24 Loans (See also specific types) Stock market, selected statistics, 25 Banks, by classes, 18-20 Stocks (See also Securities) Commercial banks, 3, 16, 18-20, 70-75 New issues, 34 Federal Reserve Banks, 4, 5, 7, 10, 11 Prices, 25 Financial institutions, 26, 39 Insured or guaranteed by United States, 38, 39 Student Loan Marketing Association, 33 MANUFACTURING Capacity utilization, 46 TAX receipts, federal, 29 Production, 46, 48 Thrift institutions, 3. (See also Credit unions and Savings Margin requirements, 25 and loan associations) Member banks (See also Depository institutions) Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 Federal funds and repurchase agreements, 6 Trade, foreign, 54 Reserve requirements, 8 Treasury cash, Treasury currency, 4 Mining production, 48 Treasury deposits, 4, 10, 28 Mobile homes shipped, 49 Treasury operating balance, 28 Monetary and credit aggregates, 3,12 UNEMPLOYMENT, 45 Money and capital market rates, 24 U.S. government balances Money stock measures and components, 3, 13 Commercial bank holdings, 18, 19, 20 Mortgages (See Real estate loans) Treasury deposits at Reserve Banks, 4, 10, 28 Mutual funds, 35 U.S. government securities Mutual savings banks, (See Thrift institutions) Bank holdings, 18-20, 21, 30 Dealer transactions, positions, and financing, 32 Federal Reserve Bank holdings, 4, 10, 11, 30 NATIONAL defense outlays, 29 Foreign and international holdings and transactions, 10, National income, 51 30, 66 Open market transactions, 9 OPEN market transactions, 9 Outstanding, by type and holder, 26, 30 Rates, 24 PERSONAL income, 52 U.S. international transactions, 53-67 Prices Utilities, production, 48 Consumer and producer, 44, 50 Stock market, 25 Prime rate, 23 VETERANS Administration, 38, 39 Producer prices, 44, 50 Production, 44, 47 WEEKLY reporting banks, 19-21 Profits, corporate, 35 Wholesale (producer) prices, 44, 50 REAL estate loans Banks, by classes, 16, 19, 20, 39 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

85 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 William H. Stone, Jr. CLEVELAND* 44101 Charles W. Parry vacancy John R. Miller William H. Hendricks Cincinnati 45201 Owen B. Butler Charles A. Cerino1 Pittsburgh 15230 James E. Haas Harold J. Swart1 RICHMOND* 23219 Leroy T. Canoles, Jr. Robert P. Black Robert A. Georgine Jimmie R. Monhollon Baltimore 21203 Gloria L. Johnson Robert D. McTeer, Jr.1 Charlotte 28230 Wallace J. Jorgenson Albert D. Tinkelenberg1 Culpeper Communications John G. Stoides1 and Records Center 22701 ATLANTA 30303 Bradley Currey, Jr. Robert P. Forrestal Larry L. Prince Jack Guynn Delmar Harrison1 Birmingham ..35283 A. G. Trammell Fred R. Herr1 Jacksonville 32231 Andrew A. Robinson James D. Hawkins1 Miami 33152 Robert D. Apelgren Patrick K. Barron1 Nashville 37203 C. Warren Neel Donald E. Nelson 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. Sloan1 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 Enis Alldredge, Jr. D O e k n la v h e o r ma City 7 8 3 0 1 2 2 1 5 7 Patience S. Latting William G. Evans Kenneth L. Morrison Robert D. Hamilton Omaha 68102 Bobby R. Inman Robert H. Boy kin DALLAS 75222 Hugh G. Robinson William H. Wallace Tony J. Salvaggio1 Mary Carmen Saucedo Sammie C. Clay E H l o u P s a t s o o n 7 7 7 99 2 9 5 9 2 Walter M. Mischer, Jr. J. Z. Rowe1 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. Warren2 Los Angeles 90051 Paul E. Bragdon Angelo S. Carella1 Portland 97208 Don M. Wheeler E. Ronald Liggett1 Salt Lake City 84125 John W. Ellis Gerald R. Kelly1 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 F1R. ASeSnEioRr Vice President. http://fraser.s2t.l oEuxisefceudti.voer gV/ ice President. Federal Reserve Bank of St. Louis

86 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories '•tr/e Helena Minneapolis^ [T)\ \ v jS&^Sot* ®) £ t„J Omaha jacks**"11' .Hew Orleans 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 The Board also publishes the Consumer Handbook PUBLICATIONS to Credit Protection Laws, a complete guide to consumer credit protections. This 44-page booklet explains how to use the credit laws to shop for credit, The Federal Reserve Board publishes a series of apply for it, keep up credit ratings, and complain about pamphlets covering individual credit laws and topics, an unfair deal. as pictured below. The series includes such subjects as Copies of consumer publications are available free how the Equal Credit Opportunity Act protects wom- of charge from Publications Services, Mail Stop 138, en against discrimination in their credit dealings, how Board of Governors of the Federal Reserve System, to use a credit card, and how to use Truth in Lending Washington, D.C. 20551. Multiple copies for classinformation to compare credit costs. room use are also available free of charge. Fair Credit Billing What TVuth In Lending Means ToYou Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis