Federal Reserve Bulletin, 1987-10

VOLUME 73 • NUMBER 10 • OCTOBER 1987 FEDERAL RESERVE mv* 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 761 CHANGES IN CONSUMER INSTALLMENT Proposed amendment to Regulation T con- DEBT. EVIDENCE FROM cerning the exercise of employee-owned THE 1983 AND 1986 SURVEYS stock options. OF CONSUMER FINANCES Admission of two state banks to member- This article uses survey data to examine ship in the Federal Reserve System. recent changes in consumer installment 789 RECORD OF POLICY ACTIONS OF THE debt, making particular use of the fact that FEDERAL OPEN MARKET COMMITTEE the 1983 and 1986 surveys interviewed the same families. At its meeting on July 7, 1987, the Committee reviewed its objectives established in 779 TREASURY AND FEDERAL RESERVE February for growth of the monetary and FOREIGN EXCHANGE OPERATIONS debt aggregates in 1987 and set tentative objectives for growth in 1988. For the peri- During the three-month period ending in od from the fourth quarter of 1986 to the July, the dollar first stabilized and then fourth quarter of 1987, the Committee deadvanced modestly to close up 6V2 percent cided not to change the ranges set in Februagainst the Japanese yen and roughly 4 ary for growth of 51/2 to 8V2 percent for both percent against the German mark and other M2 and M3. The Committee agreed that European currencies. growth in these aggregates around the lower ends of their ranges might be appropriate, 783 STAFF STUDIES depending on the circumstances. The moni- In "The Effects on Consumers and Credi- toring range for expansion in total domestic tors of Proposed Ceilings on Credit Card nonfinancial debt also was left unchanged at Interest Rates," the authors focus on the 8 to 11 percent for 1987. For 1988 the likely effects of restrictive rate ceilings on Committee agreed on tentative reductions the availability of credit cards and on possi- of V2 percentage point to ranges of 5 to 8 ble creditor responses to lowered revenue. percent for both M2 and M3. The Committee also reduced the associated range for 785 INDUSTRIAL PRODUCTION growth in total domestic nonfinancial debt by V2 percentage point to IV2 to IOV2 percent Industrial production increased an estimatfor 1988. With respect to Ml, the Commited 0.8 percent in July. tee decided not to set a specific target for growth over the remainder of 1987 or to 787 ANNOUNCEMENTS establish a tentative range for 1988. It was understood that all the ranges for 1988 were Change in the discount rate. provisional and that they would be re- Amendments to Regulation E. viewed in early 1988 in the light of intervening developments. The issues involved with Amendment to Regulation K. establishing a target for Ml would be care- Amendment to Regulation T. fully reappraised at the beginning of 1988. Statement of Guidance for reporting activi- With regard to the implementation of ties of nonbank banks. policy for the period immediately ahead, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

the Committee agreed on the desirability of 799 LEGAL DEVELOPMENTS a directive that called for no change in the Various bank holding company, bank serdegree of pressure on reserve positions. vice corporation, and bank merger orders; Some firming or some easing of reserve and pending cases. conditions would be acceptable depending especially on developments relating to infla- AI FINANCIAL AND BUSINESS STATISTICS tion and the performance of the dollar in foreign exchange markets, while also taking A3 Domestic Financial Statistics account of the behavior of the monetary A44 Domestic Nonfinancial Statistics aggregates and the strength of the business A53 International Statistics expansion. This approach to policy implementation was expected to be consistent A69 GUIDE TO TABULAR PRESENTATION, with growth of M2 and M3 at annual rates of STATISTICAL RELEASES, AND SPECIAL around 5 percent and IV2 percent respec- TABLES tively, over the three-month period from June to September. Over the same period, A76 BOARD OF GOVERNORS AND STAFF growth in Ml was expected to resume after declining on balance in May and June but to A78 FEDERAL OPEN MARKET COMMITTEE remain well below its pace in 1986. The AND STAFF; ADVISORY COUNCILS members agreed that the intermeeting range for the federal funds rate, which provides a A80 FEDERAL RESERVE BOARD mechanism for initiating consultation of the PUBLICATIONS Committee when its boundaries are persistently exceeded, should be left unchanged A83 INDEX TO STATISTICAL TABLES at 4 to 8 percent. A84 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

Changes in Consumer Installment Debt: Evidence from the 1983 and 1986 Surveys of Consumer Finances This article was prepared by Robert B. Avery, decrease in interest rates. While little of the Gregory E. Elliehausen, and Arthur B. Kennickell growth in aggregate debt payments can be attribof the Board's Division of Research and uted to changes in demographics other than the Statistics, with the assistance of Aliki Antonatos, general increase in population, the growth does Charles Luckett, and Phoebe Roaf. appear to be closely linked to increases in income and was greatest among families with high Consumer installment debt has grown substan- income. tially during the current economic expansion. By Second, the types of credit consumers use 1986, the level of such debt outstanding had have changed in importance. Credit cards appear reached a record high relative to disposable to be playing a greater role in consumer borrowincome. Aggregate data, however, reveal little ing than they had previously. The surveys also about the behavior underlying this growth. suggest that between 1983 and 1986 only a small Household surveys provide an opportunity to amount of home equity credit (mortgage debt) learn who borrows, how much is borrowed, and was substituted for consumer installment credit. for what purposes the credit is used. That three-quarters of the families with consum- This article uses survey data to examine the er installment debt were homeowners, however, elements underlying the recent rise in consumer suggests a potential for such substitution. Since installment debt, which consists of credit card the 1986 survey, the substitution of mortgage debt, automobile and home improvement loans, credit for consumer credit may have increased in and other regular-payment loans for durables and response to changes in the federal tax law and to personal expenses. The data are from the 1983 the heavy promotion of home equity lines of and 1986 Surveys of Consumer Finances, which credit. were sponsored by the Board of Governors of Third, the debt burdens of families as meathe Federal Reserve System, the U.S. Depart- sured by the ratio of their payments to their ment of Health and Human Services, and six income vary considerably over time. Only a few other government agencies. In general, house- families appear to carry heavy debt burdens over hold surveys allow one to examine the distribu- long periods: most families with heavy debt tion of debt over the population in terms of burdens appear to reduce their ratio of payments income, age, and other demographic characteris- to income substantially, primarily through intics. A particularly valuable feature of the 1983 creases in their income. Nevertheless, some conand 1986 surveys is that the same families were cern about this group seems warranted. The interviewed in both years; this continuity allows share of aggregate payments made by families one to link changes in consumer debt with with large payments relative to their income rose changes in the economic circumstances of specif- substantially between 1983 and 1986, despite the ic families. relatively small change in the number of such Several findings emerge from this study. First, families. debt-service payments have risen at a much Finally, more than 80 percent of the families slower rate than the stock of debt has. This that have consumer installment debt also have finding can be explained by a gradual lengthening financial assets or home equity sufficient to perof contract maturities and, more recently, a mit liquidating their debts in emergencies. This Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

762 Federal Reserve Bulletin • October 1987 finding appears to hold for more than half of the 2. Ratio of consumer installment debt to disposable families with high payments relative to their income income. AGGREGATE CHANGES IN CONSUMER DEBT IN RECENT YEARS The growth in consumer credit from 1983 to 1986 is the most recent expansion in a cyclical pattern that has characterized the period since World War II (see the FEDERAL RESERVE BULLETIN for 1970 1974 1978 1982 1986 June 1985). The first half of the 1970s marked the Shaded areas represent periods of economic recession. end of a long period of moderate growth in consumer debt. In the following years, consumer growth in consumer debt slowed dramatically. borrowing expanded sharply (chart 1). Consumer Between 1979 and 1982, consumer installment installment credit outstanding grew at an average credit outstanding grew at an annual compound compound annual rate of 15 percent between rate of less than 6 percent per year. During this 1976 and 1979, compared with the 10 percent rate period, constraints on the supply of credit bethat prevailed between 1970 and 1975. came important. Market rates of interest rose to Several factors contributed to the acceleration state ceilings; as a result, lenders limited credit. of consumer debt in the late 1970s. Coincident Besides these constraints, the federal governwith the quickening of inflation after 1975, con- ment's short-lived program in 1980 to control sumers increased their use of installment credit credit led creditors to adopt restrictive measures. to finance purchases of durables. At the same Consumer borrowing expanded rapidly after time, the maturities of contracts on new consum- the 1981-82 recession. From the end of the er loans began to lengthen. The lengthening of recession until the beginning of 1987, consumer contract maturities reduced the rate at which installment credit outstanding grew at an average debt had to be repaid, and thus a given stock of compound annual rate of 18 percent. Much of outstanding debt implied a lighter burden of debt this growth reflected the normal pattern in an service than otherwise would have been the economic expansion. case. The reduction in the rate of debt repayment lowered consumers' monthly payments, proba- SOME LIMITATIONS OF AGGREGATE bly stimulated the demand for credit, and further MEASURES increased the stock of outstanding debt. Finally, an increase in the use of credit cards appears also Changes in the aggregate stock of consumer to have contributed to this growth. installment debt may not fully reflect the changes During the recessions of 1980 and 1981-82, in the role of debt or their relation to other economic changes. One adjustment that is often made to this aggregate measure is to divide it by 1. Consumer installment credit outstanding aggregate disposable personal income; this ratio Ratio scale, billions of dollars is commonly used as an indicator of the burden of such debt on households (chart 2). Even with the adjustment, this measure has a serious limitation: changes in the ratio have no simple relation to changes in the circumstances of individual households. Such information is best obtained from household surveys. Another limitation of the stock measure of consumer installment debt is that, in the short 1970 1974 1978 1982 1986 run, changes in the level of installment payments are believed to be tied more closely to changes in Shaded areas represent periods of economic recession. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 763 household behavior than are changes in the stock credit card balances. Closed-end consumer credof debt. Unfortunately, information on aggregate it includes all consumer installment debt with consumer installment payments is not available, regularly scheduled payments. Financed balthough it can be estimated from household sur- ances on credit cards include only the part of the vey data. charges appearing on families' most recent credit card statements that remain after the most recent payments. Thus this measure of payments does not reflect the portion of the reported aggregate SURVEY MEASURES stock of credit card debt that is attributable to the use of credit cards as a convenient substitute for Comprehensive household survey data are avail- currency or checks (see the FEDERAL RESERVE able for only a few years during the 1970-86 BULLETIN for March 1987). The construction of period. The Survey Research Center of the Uni- these payment variables is discussed more fully versity of Michigan conducted Surveys of Con- in the appendix. Many families pay more on both sumer Finances in 1970, 1977, 1983, and 1986. credit card debt and closed-end consumer debt; These surveys collected information on family the payment variable used here represents their assets, debts, income, employment, and demo- minimum monthly obligation. graphic characteristics. (For a more detailed The surveys indicate that monthly payments description of the surveys, see the appendix.) on consumer installment debt measured in this For the 1986 survey, respondents to the 1983 way have risen less rapidly than the correspondsurvey were reinterviewed. Thus, using the 1983 ing aggregate of consumer installment debt has. and 1986 surveys, one can study changes in the While the volume of consumer installment credit consumer installment debt of individual families grew at an average compound annual rate of 17.9 over a period during which aggregate consumer percent from 1983 to 1986, monthly payments debt grew rapidly, and one can relate those increased at an annual rate of 11.5 percent (table changes to the family's income and assets. 1). This finding is consistent with the effects of From the data collected in the four surveys, an changes in the terms of typical loan contracts: estimate of payments on consumer installment the continuing trend toward longer contract madebt was constructed to correspond as closely as turities and, since the early 1980s, lower interest possible to payments on the measured aggregate rates. For example, a borrower with typical stock. Payments on consumer installment debt terms for a new-car loan could have borrowed 21 are defined throughout the rest of this article as percent more in early 1986 than in early 1983 for the sum of scheduled monthly payments on the same monthly payment. closed-end consumer credit and 5 percent of The surveys enable one to estimate more than financed balances on credit cards, which is com- aggregate totals. In particular, they allow the monly the minimum payment on outstanding association of debt and debt payments with a 1. Aggregate and survey-based measures of debt, selected years, 1970-86' Percent, except as noted Memo: Measure 1970 1977 1983 1986 WWeeiigghhtteedd aavveerraaggee,, i ' 11997700--8866 Aggregate Consumer installment debt outstanding (billions of dollars) 100.5 210.0 337.0 551.8 253.8 Annua] compound rate of change from preceding period 11.2 8.2 17.9 11.2 Ratio of installment debt to disposable income 14.2 15.1 14.1 19.6 15.0 Survey-based Payments per month (billions of dollars) 2.7 5.0 7.7 10.6 5.8 Annual compound rate of change from preceding period 8.1 7.3 11.5 8.4 Families with debt 52.6 56.4 56.9 58.5 55.9 Mean ratio of debtors' payments to income 10.4 10.9 9.3 10.0 10.2 1. Figures in this and all subsequent tables are based on data supplied by families with a head 25 years of age or more (see the appendix). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

764 Federal Reserve Bulletin • October 1987 broad range of economic and demographic char- tween income, automobile purchases, the use of acteristics. One can determine the types of fam- credit cards, and the growth in consumer credit. ilies that have consumer debt; examine the While the surveys show a strong association of changes in their debt; and, by looking at the the levels of family debt with demographic charabilities of debtors to repay their loans, explore acteristics and with expenditures for durables the issue of debt burden. For example, a simple other than automobiles, these factors appear to survey measure of payments, the mean ratio of explain very little about the growth in debt. monthly payments on family debt to gross monthly family income, gives a different picture of the perceived recent rise in debt burden than Debt and Demographic Change that given by the aggregate measure: whereas the aggregate ratio of installment debt to disposable Much of the recent increase in consumer debt is income has increased more than 5 percentage commonly attributed to demographic changes in points over all, the survey-based ratio of pay- the population. The use a family makes of conments to income has changed only slightly over sumer installment debt has been traditionally the past 16 years (see table 1). The next sections viewed as closely associated with its stage in the show how this apparent stability masks complex life cycle. A fundamental concept of the economchanges. ic life cycle is that at different points in life a family's income and desired expenditures may not match. The income of young families is SURVEY EVIDENCE ON CHANGES IN DEBT generally below its long-term level, yet families in that stage must bear the large costs of furnish- The 1983 and 1986 surveys allow a more detailed ing a place to live and of rearing children. Theory look at the factors connected with the recent rise leads one to expect that these families try to in consumer debt. They reveal some ties be- bridge the temporary gap between income and 2. Use of consumer installment credit by families with selected characteristics, 1983 and 1986 Percent, except as noted 1983 1986 MMeemmoo:: FFFaaammm--- MMoonntthhllyy MMMeeedddiiiaaannn FFFaaammm--- MMoonntthhllyy MMMeeedddiiiaaannn DDiissttrriibbuuttiioonn ooff FFFFaaaammmmiiiillllyyyy cccchhhhaaaarrrraaaacccctttteeeerrrriiiissssttttiiiicccc www iiillliii iii eee ttthhh sss pp ((dd aa oo yy ll mm llaa ee rr nn ss)) tt rrraaa ppp tttiii aaa ooo yyy --- ooofff ooo SSS fff hhh ttt aaa ooo rrr ttt eee aaa lll www iiillliii iii eee ttthhh sss pp ((dd aa oo yy ll mm llaa ee rr nn ss)) tt rrraaa ppp tttiii aaa ooo yyy --- ooofff ooo SSS fff hhh ttt aaa ooo rrr ttt eee aaa lll ffaammiilliieess cccooonnn--- mmmeeennntttsss pppaaayyy--- cccooonnn--- mmmeeennntttsss pppaaayyy--sssuuummmeeerrr tttooo iiinnn--- mmmeeennntttsss sssuuummmeeerrr tttooo iiinnn--- mmmeeennntttsss 11998833 11998866 dddeeebbbttt Mean Median cccooommmeee dddeeebbbttt Mean Median cccooommmeee Income (1986 dollars) Less than 10,000 ... 30.2 87 50 12.2 5.2 33.2 81 45 8.8 4.2 19.8 20.0 10,000-19,999 51.8 116 80 7.6 14.5 51.7 131 100 8.6 12.4 23.9 23.3 20,000-34,999 68.9 168 142 7.1 31.4 69.5 201 150 7.2 28.3 26.9 25.8 35,000-49,999 73.4 211 187 6.0 23.4 76.9 266 215 6.5 24.6 15.0 15.3 50,000 or more 62.2 283 216 4.2 25.5 65.0 386 250 4.9 30.5 14.4 15.5 Age of head (years) 25-34 70.7 171 138 77..22 30.0 6688..99 206 173 7.4 27.5 24.6 24.7 35-44 74.6 196 150 6.5 31.2 77.2 250 192 7.8 32.5 21.2 21.5 45-54 65.2 192 153 6.8 21.2 70.1 274 145 6.1 22.4 16.8 14.9 55-64 50.5 164 108 5.6 13.6 53.5 192 88 4.8 13.2 16.3 16.4 65 or more 21.2 89 40 4.5 4.0 25.4 101 45 4.4 4.5 21.1 22.5 Type of occupancy Homeowner 58.5 194 158 6.3 7766..99 60.3 238 160 6.4 79.8 67.2 70.9 Renter 53.6 131 92 6.9 23.1 54.3 163 100 7.6 20.2 32.8 29.1 Race or national origin of head Caucasian 56.3 176 138 6.2 82.7 5599..00 223 150 6.4 85.0 82.9 82.6 Nonwhite or Hispanic 59.6 169 101 7.9 17.2 56.2 195 100 8.0 15.0 17.1 17.4 All families with head 25 years of age or more 56.9 175 134 6.6 100.0 58.5 218 145 6.6 100.0 100.0 100.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 765 3. Actual and projected consumer installment payments by families with selected characteristics, 1983-86 Percent Increase in AAccttuuaall MMeemmoo:: AAccttuuaall 11998866 payments, 1983-86 ggrroowwtthh iinn PPrrooppoorrttiioonn ooff sshhaarree ooff iinnccoommee ppeerr FFaammiillyy cchhaarraacctteerriissttiicc aallll ffaammiilliieess,, ppaayymmeennttss11 ffaammiillyy,, 11998866"" ((22)) Projected2 Actual 11998833--8866 ((11)) (3) (4) ((55)) Head 25-44 years of age Unmarried, no children 10.6 10.9 30.0 88.7 47.4 Married, no children 5.0 8.8 -5.6 16.3 26.3 Married, youngest child under 6 12.6 19.7 25.6 54.6 17.5 Married, youngest child over 6 10.7 14.7 14.5 0.4 13.8 Head 45 years of age or more Married, children 5.9 8.2 -8.1 -0.2 21.0 Married, no children, not working3 11.1 3.5 20.1 22.4 10.0 Married, no children, working 13.7 19.5 15.8 62.8 3.8 Unmarried, no children, not working3 15.9 3.0 48.1 164.0 21.9 Unmarried, no children, working 6.6 5.5 11.9 76.6 29.1 Head over 25 years, unmarried, with children 8.0 6.2 19.1 45.1 45.8 All families with head 25 years of age or more 100.0 100.0 14.2 38.3 14.3 1. Details may not add to totals because of rounding. 3. Head of family not in labor force. 2. Payments are projected by multiplying 1983 group payments by the rate of inflation and by the population increase for each group. expenditure by borrowing. Many economists each group on the bases of inflation and of the have speculated that, during the past several growth in the number of each type of family. The years, credit has expanded in part because the 14.2 percent figure at the bottom of the column is "baby boom" generation has moved into the life- the weighted average of the predictions for each cycle phase most associated with the purchase of group and thus is an estimate of payment growth major durables, which are typically tied to the accounting for both population shifts and for use of installment credit. overall population growth. If debt payments of The distribution of debt payments across vari- all groups had increased equally at the rate of ous income and age groups in 1986 is broadly growth of the overall population and of inflation, consistent with the life-cycle theory (table 2). payments would have grown by 19 percent over The use of debt, in terms both of incidence and of this period. That this number is greater than the payment levels, is highest for families whose 14.2 percent growth projected taking account of heads are 25 to 54 years of age and lowest among demographic shifts and overall growth suggests families with heads 55 years of age and older. that these shifts have damped the growth of Thus a shift of population toward younger fam- credit. ilies, which are likely to be heavy users of debt, The projections of 14.2 percent and 19 percent may be expected to raise aggregate borrowing. are both much lower than the 38.3 percent Survey data suggest, however, that demo- growth in payments observed between the two graphic changes from 1983 to 1986 may have surveys. The unexplained difference is reflected actually damped the growth of debt in the popu- in broad deviations of predicted and actual inlation. In particular, while the proportion of creases for almost all the subgroups, as shown by families with heads between 25 and 45 years of the comparison of columns 3 and 4 of table 3. age increased from 1983 to 1986, the proportion These figures suggest that, with the exception of of families of older unmarried people, which young married couples with children six years of generally hold little debt, grew even faster. Cal- age or older, each group had actual growth of culations presented in table 3 take some account payments in 1986 larger than their predicted of demographic shifts by first dividing families growth. The behavior of the exceptional group is into 10 representative life-cycle groups. Column somewhat puzzling. The actual increase for this 3 shows the growth in payments predicted for group, which is largely the same as the 35- to 44- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

766 Federal Reserve Bulletin • October 1987 year-old group in table 2, was very small despite families to have debts and to have larger-thana projected increase higher than average. average installment debt payments in 1986 (com- One explanation of this anomaly may be the pare with the last row of table 2). However, the relatively slow growth in income for this group incidence, level, and share of total payments of (column 5 of table 3). As noted in the December these families, except for automobile purchasers, 1986 issue of the FEDERAL RESERVE BULLETIN, changed only slightly over the three-year period. sluggish growth in purchases of automobiles and Families that purchased automobiles appear to other durables has been linked to the income have significantly increased their share of debt performance of this group. One of the other two payments. The increase is even greater when the groups with less than average income growth— calculations exclude financed credit card payhouseholds with nonworking, married head; who ments (not shown in the table). The increase in are more than 45 years of age—had an actual the use of automobile credit relative to other increase in payments only slightly larger than closed-end credit may be due to promotional predicted. These findings suggest that the growth subsidies offered by automobile finance compain debt payments is closely linked to the growth nies. in income. This conclusion highlights the impor- There are indications that the kinds of purtance of changes in income in explaining the chases for which debt is used may have changed. aggregate growth of payments from 1983 to 1986. The survey data suggest that the role of credit As shown in table 2, the share of payments made cards in debt payments has increased substanby families in the highest income category grew tially, though the share of the aggregate stock of from 25.5 to 30.5 percent. This group had the consumer installment debt that credit cards achighest growth in income as well (not shown in count for remains comparatively small. The prothe tables). portion of families having credit card debt, whether alone or in combination with closed-end Debt and Purchases debt, increased 5.7 percentage points between 1983 and 1986 (see table 5). Estimated payments More than 85 percent of the debts observed in for financed credit card debt, as shown in the last 1986 were debts acquired since 1983 and thus column of the table, rose from 16.9 percent of almost surely were connected to purchases over total installment payments in 1983 to 25.3 perthe intervening period. In the traditional view, cent in 1986. This increase, in which virtually most consumer installment debt is closely associ- every income and age group participated, acated with expenditures for large durables and counts for almost half of the increase in installautomobiles. Indeed, as table 4 shows, families ment debt payments since 1983. Such a large who made large purchases between 1983 and share is surprising given that interest rates on 1986 were more likely than the group of all credit cards did not fall as rapidly as other rates 4. Consumer installment debt for families with selected major expenditures between 1983 and 1986 Percent, except as noted 1983 1986 Expenditure Fa w d m e i i b t l h t i es p ( m M d a o o y e n l m d l t a i h e a r l n s n y ) t p M r a a t c o y t e o i m d o m i i n e a e o - n n f t p s a g a E h d l r y l x a i o m t p r 1 u u e e 9 e p r n 8 n e o 's - 3 t f s Fa d w m e i i b t l h t i es p m ( M d a o o y e n l m d l t a i h e a r l n s n y ) t p M r a a c to y t o e i m d m o in i e a e o - n n f t p s g a a E h d l r y l x a i o m t p r 1 u u e e 9 e p r n 8 e n o 's - 6 t f s Move 66.5 129 7.1 31.5 63.7 160 6.8 34.1 Major purchase New house 69.6 170 7.2 16.4 70.2 180 6.0 17.0 Automobile 67.8 143 6.6 62.7 71.6 200 7.7 78.7 Other1 72.6 200 6.9 41.8 73.9 225 6.7 49.5 Major medical expense 59.2 180 8.2 24.2 62.3 182 8.0 28.1 College for children 72.9 160 5.2 14.8 74.1 198 5.1 19.8 1. Hobby or recreation items and home improvements totaling $3,000.00 or more. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 767 5. Distribution of families with selected characteristics, by type of consumer installment debt, 1986 Percent Memo: Share of Both debt Family characteristic No debt ca C rd re d o i n t l y e C n l d o s o e n d l y ca c r r d e d a i n t d Total1 payments attributed closed-end to credit card debt Income (dollars) Less than 10,000 66.8 16.5 14.0 2.8 100.0 19.0 10,000-19,999 48.3 24.3 13.1 14.3 100.0 27.6 20,000-34,999 30.5 30.9 17.7 20.9 100.0 25.2 35,000-49,999 23.1 30.9 13.4 32.6 100.0 27.8 50,000 or more 35.0 22.9 15.8 26.4 100.0 23.3 Age of head (years) 25-34 31.1 26.3 20.5 22.1 100.0 26.9 35-44 22.8 28.3 16.6 32.3 100.0 26.0 45-54 29.9 29.3 17.5 23.2 100.0 20.9 55-64 46.5 28.1 13.1 12.3 100.0 26.7 65 or more 74.6 16.4 6.8 2.2 100.0 28.2 All families with head 25 years of age or more 1983 43.1 15.9 19.0 22.0 100.0 16.9 1986 41.5 25.2 14.9 18.4 100.0 25.3 1. Details may not add to totals because of rounding. did over this period. Moreover, promotional increase in mortgage debt was used for purposes subsidies of closed-end debt, particularly for other than housing and thus could have substitutautomobiles, should have contributed, at least ed for other kinds of debt. indirectly, to proportionately less borrowing on Survey evidence suggests that mortgage debt credit cards. This apparent contradiction may was indeed used that way but with only a small arise from changes in the way families use credit effect on the overall level of consumer debt (table card debt. A great part of the unpaid balances on credit cards may be treated by families not as 6. New mortgage borrowing, homeowning families with heads 25 years of age and more, 1983-86' long-term installment debt but rather as payments that are delayed for a few months to Memo accommodate mismatches in their patterns of PPPeeerrrccceeennnttt NNNeeettt nnneeewww income and expenditure. Families using credit ooofff mmmooorrrttt--- Stock of consum- HHHooouuusssiiinnnggg aaannnddd gggrrrooouuuppp er debt of famgggaaagggeee fffiii--- PPeerrcceenntt cards in this way may be less sensitive to differ- mmmooorrrtttgggaaagggeee ssstttaaatttuuusss wwwiiittthhh nnnaaannnccciiinnnggg ooff aallll ilies with new ooofff hhhooommmeeeooowwwnnneeerrr nnneeewww mortgages (bilentials in interest rates. mmmooorrrttt--- ((( ooo bbb fff iii llllll ddd iiiooo ooo nnn lll--- sss ii ff ll aa iiee mm ss -- 33 lions of dollars) gggaaagggeee lllaaarrrsss)))222 1983 1986 Substitution between Mortgage and Consumer Debt No move, 1983-86 No mortgage in 1983 4.4 22.0 24.4 2.9 2.4 Survey measures of consumer installment pay- Mortgage in 1983 12.2 64.1 31.2 17.3 18.6 ments from 1983 to 1986 may understate the true change in the use of consumer debt because the Move to new home, relation between consumer debt and mortgage 1983-86 No mortgage in debt has changed. Driven by a significant drop in 1983 42.8 3.0 .9 1.5 1.2 interest rates and by the spreading use of new Mortgage in 1983 91.5 2.6 3.1 8.4 12.5 mortgage instruments, outstanding family mortgage debt, according to survey estimates, grew 1. Includes only those who owned homes in both 1983 and 1986. 2. Amount outstanding on current mortgage less amount of retired 45 percent over the three years, while reported mortgage that would have been outstanding in 1986. For movers, the property values increased only 26 percent. This net change in home value including selling costs was also subtracted. 3. This column does not sum to 100.0 because the table covers difference in growth suggests that some of the homeowners only. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

768 Federal Reserve Bulletin • October 1987 6). Of homeowners with mortgages in 1983, more In the future, borrowers likely will substitute than 12 percent of those who did not move during mortgage financing more extensively for tradithe three years ending in 1986 refinanced their tional consumer credit. The 1986 tax law gradualmortgages, and more than 4 percent of those ly eliminates tax deductibility of interest payhomeowners without a mortgage in 1983 took out ments on most consumer loans. Given sufficient a mortgage (or home equity loan) over this home equity, however, all expenditures financed period. Further, more than 80 percent of the by home mortgages will still be fully deductible. families moving from one owned home to anoth- The potential for substituting mortgage debt for er (the average of the last two rows of the first consumer debt is considerable. In 1986, the column of table 6 weighted by population) are aggregate home equity of families with consumer estimated to have taken out new mortgage debt. installment debts was 3.4 times the stock of such The total net new financing from these mortgages debts. As table 7 shows, homeowners are also (the sum of the numbers in the second column) is considerably more likely than others to have equivalent to more than one-sixth of the consum- consumer debt, and a significant portion of nearer debt outstanding in 1986. Determining what ly every group of homeowners has both mortportion of these funds was substituted for con- gage and consumer debt. sumer debt is difficult, however. Those families acquiring new mortgage financing actually in- CHANGES IN DEBT-PAYMENT BURDENS creased their consumer debt over the three years, although their share of total outstanding Because the 1983 and 1986 surveys interviewed debt fell from 18 percent to 12 percent (not the same families, they reveal the effects of shown in the table). If these families had main- changes in families' economic circumstances on tained their dollar amount of borrowings so that consumer installment debt and debt burden. The they continued to account for 18 percent of total most striking finding is that debt burdens of consumer installment debt outstanding, aggre- individual families vary greatly over time, a fact gate outstanding debt would have been 5.9 per- that is obscured in data from separate crosscent higher, other things being equal. This com- section surveys. Most families with relatively parison suggests that the substitution of heavy debt in 1983 had lighter burdens by 1986. mortgage debt for consumer credit in 1983-86 Virtually all families that had such heavy debt in was small. 1986 had lighter burdens in 1983. 7. Distribution of families with selected characteristics, by mortgage and consumer installment debt, 1986 Percent Homeowners1 Others1 MMeemmoo:: Mortgage SShhaarree ooff FFaammiillyy cchhaarraacctteerriissttiicc Consumer and Consumer ggrroouupp No installment Mortgage consumer No installment oowwnniinngg debt debt only only installment debt debt hhoommeess debt Income (dollars) Less than 10,000 56.3 24.6 9.3 9.9 68.6 31.4 58.6 10,000-19,999 39.1 18.1 13.0 29.8 42.8 57.2 59.6 20,000-34,999 17.8 15.9 12.6 53.6 30.5 69.5 70.3 35,000-49,999 11.1 14.3 11.4 62.8 26.7 73.3 84.8 50,000 or more 12.4 7.5 21.5 58.7 46.1 53.9 91.2 Age of head (years) 25 34 6.2 7.0 18.9 67.9 37.9 62.1 53.0 35-44 4.2 8.5 16.3 71.1 28.5 71.5 70.7 45-54 11.7 20.1 14.2 54.0 46.2 53.8 80.2 55-64 31.2 24.2 13.1 31.5 54.7 45.3 79.1 65 or more 65.3 19.8 7.7 7.2 80.8 19.2 78.7 All families with head 25 years of age or more y^ijiiMiv ! 1983 27.5 14.5 14.0 44.0 46.4 53.6 67.2 1986 26.0 15.9 13.7 44.4 45.7 54.3 70.9 1. Details may not add to 100 percent because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 769 8. Distribution of families with heads 25 years of age and older, by ratio of consumer debt payments to income, selected years, 1970-86 Percent Memo: Share of 1986 debt payments Debt status 1970 1977 1983 1986 allotted to credit card debt No debt 47.4 43.6 43.1 41.5 Ratio of debt payments to income 1-9 percent 33.0 34.7 37.6 38.9 40.0 10-29 percent 17.5 19.3 17.0 16.9 18.5 30 percent or more 2.2 2.4 2.3 2.7 11.7 All families1 100.0 100.0 100.0 100.0 25.3 1. Details may not add to totals because of rounding. Debt burden is difficult to measure. Debt pay- fined for 1986, as indicated by the column headments, while reflecting the obligation of families, ings. For example, 28.4 percent of the 1983 highdo not necessarily reflect the ability of families to payment group had no debts at all in 1986, and pay. The fraction of family income obligated to only 8.9 percent of the families that were in the debt service can nevertheless be used as a crude highest debt payment group in 1983 were still in measure of debt burden. To examine changes in that group in 1986 (fourth row). For the other two burden thus measured, we divided the families groups of families with debts in 1983, a majority surveyed into four groups: those with no con- had the same debt-payment burden or a lighter sumer debt, those with payments of 1 to 9 one by 1986. percent of gross income, those with payments of 10 to 29 percent, and those with payments of 30 Sources of Change percent or more of gross income. Though the proportion of families with no consumer debt The debt burden of a household may change for was somewhat higher in 1970 than in later years, many reasons. Family finances may be affected the proportion of debtors in these groups by changes in the composition of the family, by changed little after 1970 (table 8). the aging of its members, by large purchases that As is clear from the changes in the debts of require financing, and by events such as becomindividual families in the 1983 and 1986 surveys ing unemployed. These changes, in turn, may reported in table 9, much variability underlies affect family borrowing and debt-payment burthis apparent stability. The rows show the per- dens. In the short run, changes in debt likely will centage of families that moved from a given lag changes in income. Families faced with a payment group in 1983 to payment groups de- shortfall in income cannot immediately curtail 9. Distribution of families with heads 25 years of age and older and with selected ratios of consumer debt payments to income in 1983, by ratio of payments to income in 1986 Percent Ratio of payments to income, 1986 RRaattiioo ooff ppaayymmeennttss ttoo iinnccoommee,, 11998833 No consumer 30 percent or ffaamm AA iill ll ii ll eess11 1-9 percent 10-29 percent debt more No consumer debt 68.5 19.9 8.9 2.7 100.0 Debt 1-9 percent 22.9 55.4 19.8 1.9 100.0 10-29 percent 22.8 47.0 26.2 4.0 100.0 30 percent or more 28.4 28.6 34.2 8.9 100.0 AU families 41.5 38.9 16.9 2.7 100.0 1. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

770 Federal Reserve Bulletin • October 1987 10. Selected data on consumer installment debt, by change in respondent's status, 1983-86 1983 1986 CChhaannggee iinn rreessppoonnddeenntt''ss ssttaattuuss,, Percent of Median Percent of Median 11998833--8866 group with monthly Median ratio group with monthly Median ratio consumer payment of payments consumer payment of payments installment (dollars) to income installment (dollars) to income debt debt Separated or divorced 55.2 88 6.8 55.9 100 7.4 Widowed 32.3 75 7.6 31.2 50 6.0 Married 72.5 140 10.1 74.3 225 6.0 Had child 73.2 125 6.8 76.5 200 7.2 their outstanding loans without drawing on their newly married couples, the payment burden fell, assets or declaring bankruptcy. Similarly, fam- probably because their income significantly inilies may regard some increases in income as creased (not shown in the table). temporary and be unwilling to take on new debt. The survey data reveal that changes in income Changes in family structure appear to have a are as important as changes in debt payments in significant effect on families' debt burdens (table the shifting of families' debt burdens (table 11). 10). For all these families, except those in which For example, as shown in the last column of the the respondent had been widowed, the incidence table, most families that had the highest ratios of of debt and the level of payments increased. For payments to income in 1986 had experienced 11. Debt and income characteristics of families classified by ratio of consumer installment debt payments to income in 1983, by payment ratio in 1986 Percent, except as noted Ratio of payments to income in 1986 AAllll Item 11998866 No 30 ggrroouuppss consumer 1-9 10-29 percent percent percent debt or more All groups, 1983 Median monthly 1986 payments (dollars) 145 0 75 300 375 Median annual 1986 income (dollars) 22,704 15,000 30,550 24,000 10,000 Median change in income, 1983-86 7.1 -1.6 13.2 13.3 -20.9 Proportion making major purchases, 1983-86' 61.2 43.2 71.5 80.1 72.3 Families with increase in monthly payments, 1983-86 38.7 0 55.0 87.1 94.9 No consumer debt Median monthly 1986 payments (dollars) 91 0 47 204 260 Median annual 1986 income (dollars) 15,000 13,000 25,000 16,000 4,342 Median change in income, 1983-86 1.3 -.9 11.1 11.5 -67.8 Proportion making major purchases, 1983-861 49.2 40.3 64.5 77.3 70.5 Families with increase in monthly payments, 1983-86 31.5 0 100.0 100.0 100.0 1-9 percent of income Median monthly 1986 payments (dollars) 147 0 85 306 5% Median annual 1986 income (dollars) 29,312 22,000 34,000 25,000 17,750 Median change in income, 1983-86 7.1 -7.8 10.4 6.7 -33.2 Proportion making major purchases, 1983-86' 70.9 57.0 72.7 80.7 83.9 Families with increase in monthly payments, 1983-86 53.8 0 60.1 94.6 94.9 10-29 percent of income Median monthly 1986 payments (dollars) 186 0 80 365 575 Median annual 1986 income (dollars) 26,000 17,172 30,000 30,000 15,200 Median change in income, 1983-86 15.7 7.1 23.0 28.0 -12.0 Proportion making major purchases, 1983-86' 68.2 32.8 75.1 85.7 73.7 Families with increase in monthly payments, 1983-86 25.8 0 6.3 73.7 86.9 30 percent or more of income Median monthly 1986 payments (dollars) 200 0 125 228 200 Median annual 1986 income (dollars) 20,000 12,000 23,000 20,000 5,484 Median change in income, 1983-86 75.0 23.5 119.2 75.0 -2.2 Proportion making major purchases, 1983-86' 52.1 55.2 66.1 43.9 28.4 Families with increase in monthly payments, 1983-86 22.3 0 9.6 31.3 100.0 1. Major purchases include automobiles, major durables, hobby or recreation items, and home improvements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 771 declines in their income over the previous three Some of the observed movements of families years; the median decline was 20.9 percent. to lower ratio groups may have resulted from Also, virtually all high-debt families in 1986 (94.9 bankruptcy rather than from the repayment of percent) had increased their level of payments. debts. From aggregate data, we estimated that Families with debts in 1986 that had lower pay- about 1 percent of families in the 1986 survey ment ratios than they had in 1983 substantially probably declared bankruptcy over the precedincreased their income and, in general, were ing three years (such information was not collectmore likely to have decreased their level of ed in the surveys). Under the extreme assumppayments. Income increases were particularly tion that all families subsequently declaring dramatic for families that had had the highest bankruptcy were in the 1983 high-ratio group—a ratios in 1983 but had lower ones in 1986, sug- very unlikely correspondence—at most one-third gesting that these families may have been experi- of the 1983 high-ratio families could have reencing temporarily low income in 1983. This duced their debt burdens through bankruptcy. change in income, combined with the decrease in Thus the general lightening in the debt-payment payments for almost 80 percent of the 1983 high- burdens for the 1983 high-ratio group most likely ratio group, led to the striking reduction of debt- reflects improvement in income rather than liquipayment burden for this group in 1986. dation of debts through bankruptcy. Purchases also played a part in changes in debt-payment burdens. Except for families that were in the group with high payment ratios in Families with Heavy Debt-Payment both years, debtors who stayed in the same Burdens group or moved to a higher one were also more likely than the population as a whole to have Families in the group with the highest ratios of made a major purchase. payments to income are of particular concern. 12. Families with selected characteristics and heavy debt in 1986, by 1983 debt-payment group Percent, except as noted Ratio of payments to income in 1983 MMeemmoo:: AAllll FFaammiillyy cchhaarraacctteerriissttiicc iinn 11998866 No 30 ffaammiilliieess consumer 1-9 10-29 percent wwiitthh ddeebbtt debt percent percent or more iinn 11998866 Family income (dollars) Less than 10,000 72.5 25.9 32.9 69.6 11.3 10,000-19,999 11.6 52.7 20.1 13.9 20.6 20,000-34,999 14.8 13.5 28.6 16.5 30.7 35,000-49,999 * 7.1 18.4 * 20.1 50,000 or more 1.1 .9 # * 17.2 All incomes1 100.0 100.0 100.0 100.0 100.0 Median change in income, 1983-86 (dollars) -6,777 -6,373 -2,900 -123 2,700 Age of head (years) 25 34 16.7 27.6 19.1 * 29.1 35-44 31.7 29.2 24.9 30.4 28.3 45 54 3.4 3.1 25.5 12.0 17.8 55 to 64 12.2 36.7 23.8 12.9 15.0 35.9 3.5 6.9 44.8 9.8 All ages' 100.0 100.0 100.0 100.0 100.0 Type of debt Credit card 77..55 86.7 6633..33 43.3 74.5 Closed-end 97.4 92.5 96.2 100.0 56.9 All types2 100.0 100.0 100.0 100.0 100.0 Major expense, 1983-86 Purchase of car 7700..55 78.9 60.5 28.4 64.3 Other purchase 3.7 49.2 40.2 16.5 35.3 Medical 45.0 42.7 17.5 44.8 22.0 All major expenses3 86.4 89.7 83.0 73.2 79.4 1. Details may not add to 100.0 percent because of rounding. 3. Totals of details exceed the reported total because some families 2. Totals of details exceed 100.0 percent because some families had made more than one type of major purchase, both types of debt. *Less than 0.05 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

772 Federal Reserve Bulletin • October 1987 Because of their heavy payment burden, they families that had heavy burdens of debt payment may have the greatest potential for default. in both years were similar to the group that had While this group is small, their debt appears to be no debt in 1983. sufficient so that default would have some dis- In contrast to the families with no debt or with ruptive effects on lenders. To assess that con- a high payment ratio in 1983, those families cern, we examined in more detail the changes in whose payment burdens increased from the lowthe economic circumstances of the 1986 high- er levels (1-29 percent) in 1983 to the highest ratio group. ones in 1986 generally were younger and were Table 12 presents the characteristics of fam- more likely to have income only somewhat beilies that had heavy debt-payment burdens in low average than to be poor. For them, incurring 1986 classified by their 1983 payment groups. debt was more likely to be associated with a rise Families that went from no debt in 1983 to a high in a broad range of expenditures, as reflected in debt-payment ratio in 1986 appear very different the higher proportion of credit card payments in from those that went from a low or moderate their debt service. These families, too, were ratio to a high one. Families that went from no more likely than the population of all debtors in debt to a high ratio were more likely to be in 1986 to have bought a car in the prior three years. lower income groups in 1986 and were disproportionately elderly. Moreover, their income decreased more than that of the other groups over the three-year period. Most of the debt acquired Changes in the Distribution by the group was closed-end, rather than credit of Total Payments card, debt and was associated largely with buying a car or with major medical expenditures. As Despite the similar proportion of families in the noted earlier, because of their generally low or high-ratio groups in 1983 and 1986, the share of reduced income, borrowing for any major pur- payments made by families with high payment chase was more likely to have caused them to ratios rose dramatically (table 13). The top panel have a high ratio of payments to income. The of the table shows the percentage of all families 13. Distribution of 1983 payment-ratio groups and 1983 and 1986 payments, by 1986 payment-ratio groups Percent 1986 ratio of payments to income AAllll 11998866 11998833 rraattiioo ooff ppaayymmeennttss ttoo iinnccoommee ggrroouuppss11 No 1-9 10-29 30 consumer percent percent percent debt or more All groups Families 100.0 41.5 38.9 16.9 2.7 Total 1983 payments 100.0 20.3 51.6 25.2 2.9 Total 1986 payments 100.0 0 37.1 46.6 16.3 No consumer debt Families 40.5 27.8 8.1 3.6 1.1 Total 1983 payments 0 0 0 0 0 Total 1986 payments 19.6 0 5.9 6.9 6.8 1-9 percent of income Families 38.1 8.7 21.1 7.6 .7 Total 1983 payment* 37.4 8.3 20.5 8.3 .4 Total 1986 payments 47.6 0 21.4 22.4 3.8 10-29 percent of income Families 19.5 4.4 9.2 5.1 .8 Total 1983 payments 55.8 10.4 28.8 14.4 2.2 Total 1986 payments 30.1 0 9.2 15.6 5.3 30 percent or more of income Families 1.9 .5 .5 .6 .2 Total 1983 payments 6.8 1.6 2.4 2.4 .3 Total 1986 payments 2.6 0 .6 1.6 .4 1. Because the figures in this table are based on the families interviewed both in 1983 and in 1986 and are weighted to reflect the structure of the 1986 population, the percentage of families here differs slightly from that in table 8. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 773 14. Relation of assets to debt of payment-ratio groups, 1986' Percent Financial assets plus home Financial assets Home equity equity PPaayymmeenntt--rraattiioo ggrroouupp Ratio to Proportion Ratio to Proportion Ratio to Proportion debt of all whose assets debt of all whose assets debt of all whose assets respondents exceed their respondents exceed their respondents exceed their in group2 debt in group2 debt in group2 debt 1-9 percent 75.4 67.7 81.7 72.4 94.1 90.4 10-29 percent 48.8 24.0 70.7 58.8 80.4 65.6 30 percent or more 41.3 12.3 50.6 51.0 70.6 53.8 All families with head 25 years of age or more 1983 50.3 51.1 77.2 66.0 87.2 80.4 1986 56.8 52.2 71.1 67.4 83.5 81.4 1. Based on families with heads 25 years of age and more. coverage up to the amount of its consumer installment debt, and the 2. To reflect implicit debt coverage at the level of the individual denominator is total consumer installment debt. family, the numerator is the sum over all families of each family's in each payment-ratio group, and the rest shows lenders of second mortgages generally will lend the percentage of total 1983 and 1986 payments only 80 percent of home equity for consumer each group accounted for. Thus the 16.3 percent debts, 75 percent of families still had financial figure in the third row of the fifth column is the assets or usable home equity at least as great as share of total 1986 payments made by the 1986 their consumer debts, and 77 percent of debt was high-ratio group, a figure significantly higher covered in this way (these data are not shown in than the 6.8 percent share of total 1983 payments the table). made by the 1983 high-ratio group (next-to-last Families with the smallest ratio of payments to row of the first column). Shares of payments, income also had the highest ratio of assets to like the ratios of payments to income, are highly debt, but even families with high ratios of payvariable. The 1986 high-ratio group made only ments to income had assets to offset 71 percent 2.9 percent of total payments in 1983. Similarly, of their debts. In 1986, more than half the group by 1986 the share of payments by the 1983 high- with the highest debt-payment burden had finanratio group had fallen to only 2.6 percent. Fam- cial assets or home equity at least as large as ilies that were in the middle-ratio groups in both their consumer debts. 1983 and 1986 made more than two-thirds of the Although home equity constitutes most of this total payments. implicit debt coverage, financial assets offered significant coverage (see the first two columns of table 14). That the majority of families with CREDIT RISK consumer installment debts have financial assets greater than the value of their debts suggests that The potential for credit risk suggested by the borrowing decisions are part of more complex overall rise in the ratio of total payments on portfolio decisions. Further work with the 1983 consumer installment debt to income and by the and 1986 surveys will explore these connections. increase in the share of total payments by the group with high ratios of payments to income is a cause for some concern. Survey evidence may CONCLUSIONS temper this concern. In both the 1983 and the 1986 surveys, about While the data from the 1983 and 1986 surveys four-fifths of families had assets of greater value are not sufficient to explain fully the great inthan their consumer debts outstanding (table 14). crease in consumer installment debt between In 1986, 83.5 percent of consumer installment these years, they do suggest that such debt has debt outstanding, evaluated family by family, more complex variations over time than might be was matched by financial assets or home equity implied by either aggregate data or simple cross- (the fifth row of the fifth column). Given that section surveys. In spite of the recent sharp rise Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

774 Federal Reserve Bulletin • October 1987 in aggregate consumer installment debt, the sur- ilies with high debt-payment burdens in 1983 veys offer evidence of a smaller rise in the were able to improve their positions through associated debt-service payments. While cross- growth in income by 1986. Whether those in the section surveys give an appearance of stability in 1986 high-ratio group will be able to improve the patterns of debt holdings and debt burdens, their positions may depend on overall economic observation of the same families over the 1983- conditions. During 1983-86, the economy's ex- 86 period indicates that the debt positions of pansion, the decrease in unemployment, and the families move considerably over time. increase in disposable income probably aided the The survey evidence on credit risk suggests lightening of the burden of families that had high that most consumer debt is, at least implicitly, ratios of payments to income in 1983. If economcovered by family assets, even for those families ic growth moderates, families in the current highwith the highest ratios of debt payments to ratio group may find reducing their debt-payment income. Moreover, according to the data, fam- burdens more difficult. APPENDIX: PREPARATION OF SURVEY DATA sample was selected using a method known as multistage area probability sampling, which This appendix briefly discusses the collection draws a representative sample of housing units and the preparation of the data used in the text. or households in the contiguous 48 states of the Issues include the design and the content of the United States exclusive of individuals on military surveys, the editing procedures employed to deal bases and in institutions.2 The supplemental with problems of missing data, the construction high-income sample of the 1983 survey was inof sampling weights used to calculate the popula- tended to increase the representation of wealthy tion estimates, and definitions for debt variables. families in the survey. The high-income sample was drawn from a large sample of 1980 tax returns using multifaceted sampling criteria. The Survey Design sampling procedure was designed to preserve the privacy of tax information and to protect the Most of the survey data in this article were identity of survey respondents. The results redrawn from the 1983 and 1986 Surveys of Con- ported in this article are based on the full 1983 sumer Finances conducted by the Survey Re- sample, which includes the supplemental highsearch Center of the University of Michigan income observations.3 under the direction of Richard T. Curtin.1 The The unit of observation was the family. A sample for the 1983 survey consists of an area "family" consists of all individuals living togethprobability sample (3,665 households in the final sample) and a supplementary sample of high- 2. See Leslie Kish, Survey Sampling (Wiley, 1965). income respondents drawn from tax files (438 3. The distribution of consumer debt in the 1983 area cases in the final sample). The area probability probability sample differs only slightly from that in the full 1983 sample, which includes the high-income observations. Hence, consumer credit statistics from the full 1983 sample can be compared with statistics from the cross-section sam- 1. Data were used also from the 1970 and 1977 Surveys of ples in the 1970 and 1977 surveys. For variables that have Consumer Finances; see George Katona, Louis Mandell, and highly skewed distributions, however, the full 1983 sample is Jay Schmeideskamp, 1970 Survey of Consumer Finances not comparable to 1970 and 1977 cross-section samples. See (Institute for Social Research, 1971), and Thomas A. Durkin Robert B. Avery, Gregory E. Elliehausen, and Arthur B. and Gregory E. Elliehausen, 1977 Consumer Credit Survey Kennickell, "Measuring Wealth with Survey Data: An Eval- (Board of Governors of the Federal Reserve System, 1978). uation of the 1983 Survey of Consumer Finances," Research Data from the 1983 and 1986 Surveys of Consumer Finances Papers in Banking and Financial Economics 99 (Board of are available from the National Technical Information Ser- Governors of the Federal Reserve System, Division of Revices, 5285 Port Royal Road, Springfield, Virginia 22161. search and Statistics, Financial Studies Section, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 775 er in the same household who are related by A.l. Composition of the sample of the 1986 Survey blood, marriage (including partnership), or adop- of Consumer Finances tion. A "family" may also be a single individual. In a few cases, when two or more families lived Percent of Percent of 1983 group in a household, only the primary or economically Family characteristic 1983 sample also in 1986 sample dominant family was interviewed. The head of the family or a financially knowledgeable spouse Age (years) and marital status was selected as a respondent. in 1983 24 or less Respondents were interviewed in person for 75 Married 3.3 64.7 Unmarried male 2.1 56.0 minutes. The interview solicited a detailed inven- Unmarried female 2.6 46.7 tory of the families' assets and liabilities, includ- 25-34 Married 13.5 65.6 ing all deposit accounts, stocks, bonds, business Unmarried male 4.1 59.2 Unmarried female 5.0 58.0 and property holdings, homes, insurance, auto- 35-44 mobiles, pensions, and all debts and mortgages. Married 13.6 70.7 Unmarried male 1.8 71.1 Besides the standard demographic data, income Unmarried female 4.1 62.1 45-54 information, and work history, information was Married 10.5 70.9 obtained on the respondent's use and under- Unmarried male 1.7 50.6 Unmarried female 3.2 66.5 standing of credit and other financial services. 55-64 Married 9.8 72.1 Interviewing took place between February and Unmarried male 1.5 48.9 Unmarried female 3.7 70.6 July of 1983. 65 or more The 1986 survey reinterviewed respondents to Married 9.9 60.6 Unmarried male 1.8 41.4 the 1983 survey. If the respondent had been Unmarried female 7.7 55.1 divorced or separated since the 1983 interview, 1983 income (dollars) 10,000 or less 24.0 46.5 both the original respondent and the former 10,000-19,999 26.8 62.4 spouse were included in the 1986 sample. Other 20,000-34,999 26.1 70.8 35,000-49,999 12.9 75.8 members who left the family to form new house- 50,000 or more 10.2 77.6 holds, however, were not included. As in the Race or national origin of head earlier survey, the unit of observation was the Caucasian 82.6 67.5 Nonwhite or Hispanic 17.4 47.6 family. 1983 ratio of payments to The questionnaire for the 1986 survey covered income No consumer debt 43.5 57.6 the marital history of the respondent and the 1-9 percent 36.9 69.5 spouse, the disposition of wealth in divorce or 10-29 percent 17.3 68.9 30 percent or more 2.4 62.1 upon death of a spouse, changes in employment All families 100.0 64.0 of the respondent and the spouse, purchases and sales of houses since 1983, refinancings of mortgages, purchases of automobiles, expenditures deemed inadequate for representing change in for consumer durables, current debt payments that group. Statistics computed from the 1983 and asset holdings, attitudes about saving, ex- survey, which should be representative of all age penditures for children's education, charitable groups, suggest that the exclusion of families in activities, unusual expenses and income, and the under-25 group will reduce measured outtotal family income in the 1983-86 period. standing debt 5.5 percent and installment debt The 2,822 interviews were conducted by tele- payments 6.1 percent. phone from June to September 1986; they lasted an average of 27 minutes. Table A.l summarizes the sample composition for the 1986 survey. Errors of Sampling, Reporting, and The samples used for this article include only Nonresponse families with heads 25 years of age or older. The reason for using this subsample is that the design The results of this survey, and the estimates of for the 1986 survey undersampled new house- population characteristics derived from it, are holds in the under-25 age group and hence was subject to errors based on the degree to which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

776 Federal Reserve Bulletin • October 1987 A.2. Approximate 95 percent sampling errors of respondents to report accurately helped to minisurvey estimates of percentages in the 1983 and mize response errors. The data were also careful- 1986 surveys and of changes in percentages ly checked for inconsistencies in coding and between the two surveys' editing to eliminate such errors to the extent Percent feasible. Changes Third, because some families selected for parbetween Survey results Full 1983 Full 1986 1983 and ticipation in the survey could not be interviewed, sample sample su 1 rv 9 e 8 y 6 s2 the survey estimates are subject to nonresponse errors. If nonresponse arose randomly in the 50 1.5 1.8 2.4 sample, it should have caused no bias in esti- 30 1.4 1.6 2.2 20 1.2 1.4 1.9 mates of population statistics. Making such a 10 .9 1.1 1.4 5 .7 .8 1.0 judgment is difficult in large multipurpose sur- 1 .3 .4 .5 veys such as the Survey of Consumer Finances. One can, however, partially correct for nonre- 1. 1.96 standard errors. 2. For estimates based on the full samples of each survey. sponse errors by observing how the sample interviewed differs from the population in the distribution of certain characteristics as a result of the sample differs from the general population, to both sampling and nonresponse errors. To the errors arising during the interview, and to errors degree that these deviations result from systemderived from incomplete responses. atic tendencies in the population, the sampling First, all estimates based on the survey data weights used in all calculations in this article are subject to sampling error, which is a measure compensate for biases in sampling and nonreof the random deviation of the survey findings sponse. resulting from the selection of a particular sam- Finally, observations with missing values for ple. Table A.2 contains the approximate sam- some of the variables are another source of error pling errors associated with the percentage esti- in the survey estimates, similar to that arising mates made with various sample sizes, assuming from failure to secure an interview. Statistical a confidence interval of 95 percent.4 The odds methods were used to estimate missing values are 95 in 100 that the estimated percentages based on other information reported by responreported lie within a range—the confidence inter- dents. All missing values were imputed in the val—equal to the reported percentages plus or data used to prepare this article.5 minus the sampling error. For example, for estimates based on the entire 1986 survey sample, the 95 percent confidence interval for an estimat- Sampling Weights ed value of 20 percent is approximately 18.6 to 21.4 percent. The final samples in the 1983 and 1986 Surveys of Second, because undoubtedly some respon- Consumer Finances differ from a purely random dents misunderstood the questions, lacked inter- sample of U.S. households in two principal est in the survey, or falsified responses, the ways. First, the surveys were designed to sample survey estimates are subject to reporting errors. wealthy households at a higher rate than the rest Such errors likely arose also because interview- of the population. Second, sampling errors in the ers misinterpreted responses or asked questions 1983 sample and nonresponse during the first or in an inconsistent manner. For these surveys, second interview could have caused the final training interviewers carefully and motivating samples to differ from the population. One means 4. For the approximate sampling errors associated with 5. See Graham Kalton, Compensating for Missing Survey other sample sizes and reported percentages from a survey, Data (Institute for Social Research, 1983), for a discussion of assuming a confidence interval of 95 percent, see Katona, the benefits of imputation. See Avery, Elliehausen, and Mandell, and Schmeideskamp, 1970 Survey, table 14-2, Kennickell, "Measuring Wealth," for a discussion of missing p. 251. This source also provides a table of approximate values and imputation in the 1983 Survey of Consumer sampling errors for differences in percentages. Finances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Consumer Installment Debt 20 of making formal correction for deviations of the Preparation of Debt Variables final sample from the population was to use sampling weights in the calculation of the statis- Respondents to the 1983 survey were asked to tics.6 report the purpose, the amount borrowed, the The Weight for the 1983 survey is a revised origination date, the interest rate, the size and version of the weight used in the article on the frequency of payment, and the scheduled num- 1983 Survey of Consumer Finances in the March ber of payments for each consumer loan and 1986 issue of the FEDERAL RESERVE BULLETIN.7 mortgage. These data were sufficient to compute The revised weight was designed to provide a the family's debt outstanding at the time of the better mesh of the area probability and high- interview, as well as its scheduled payments. income samples. Weights were adjusted so that Also, respondents were asked to report financed the weighted number of high-income families balances on all lines of credit; on loans without was the same as an estimate obtained from the scheduled payments; and on credit cards after Internal Revenue Service tax file model for they had made their previous payments. 1982.8 In 1986, respondents were asked similar ques- Weights for the 1986 survey were designed to tions about their mortgages and financed balcompensate for the possibility that respondents ances on credit cards; but, because of time to a 1983 survey who could be reached three constraints, they were asked to report only the years later might not be fully representative of size and frequency of payments for regularthe 1986 population. This situation might occur payment consumer loans. Therefore, the precise both because attrition is not random, as suggest- amount outstanding could be computed only for ed by the large differences in response rates for mortgages, credit cards, and loans without reguthe demographic groups in table A.l, and be- lar payments. Total outstanding 1986 balances on cause the distribution of families changes as a installment loans were estimated for each family result of aging, marriage, divorce, and immigra- using ratios based on typical terms prevailing tion. The initial 1986 weight was computed by during 1983-86 and the reported debt payments. adjusting the 1983 weight for sample attrition These are rough estimates, however, and were (measured separately for a number of sample used only to estimate the collateralization of subgroups). This weight was further adjusted to consumer debt by home equity and financial bring estimated population totals for various assets reported in text tables 6 and 14. groups defined by age and marital status into line The figures for monthly payments reported in with estimates obtained from the March 1986 this article include only scheduled payments on Current Population Survey.9 certain loans and 5 percent of the reported unpaid credit card balances, which is the typical 6. See D.G. Horwitz and D.J. Thompson, "A Generaliza- minimum monthly payment required for a credit tion of Sampling without Replacement from a Finite Uni- card account with no new charges. All mortgage, verse," Journal of the American Statistical Association, vol. property, and business loans were excluded. 48 (December 1952), pp. 396-404. 7. Robert B. Avery and Gregory E. Elliehausen, "Finan- Loans without regularly scheduled payments and cial Characteristics of High-Income Families," FEDERAL payments on open-ended lines of credit also were RESERVE BULLETIN, vol. 72 (March 1986), pp. 163-77. excluded. The payment variable is an estimate of 8. For technical details, see Robert B. Avery, Gregory E. Elliehausen, and Arthur B. Kennickell, "Reconciling Flow- the monthly payment obligation and may not of-Funds and Survey-Based Measures of Household Wealth" reflect the actual payments made by families. (paper presented at the annual meeting of the American Loan payments were constructed in this man- Statistical Association, San Francisco, August 18, 1987). 9. Not all bias in the 1986 sample can be fully corrected by ner to correspond as closely as possible to payweights. For example, some of the respondents to the 1983 ments that would be made on aggregate consumsurvey—such as divorced people who lived with their parer installment debt. Nevertheless, loan estimates ents—would not have been selected as respondents in a 1986 cross-section survey because they were no longer family from the survey are still likely to differ from heads or spouses of family heads. Thus the weighted 1986 aggregate totals because of unavoidable accountsample slightly distorts homeownership and other age-related ing differences. For example, aggregate consumvariables. Most of the other distortions are believed to be er debt totals cover all credit card debt, includminor. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

778 Federal Reserve Bulletin • October 1987 ing current charges and financed balances. aggregate estimates more closely than may ap- Aggregate debt totals reported by many finance pear possible at first glance.10 Caution should companies include prepaid interest payments nevertheless be used in drawing exact compariand thus overstate the amount outstanding. Per- sons. sonal borrowing for business purposes is included in the aggregate consumer credit statistics, but it is excluded from survey estimates. Recon- 10. Avery, Elliehausen, and Kennickell, "Reconciling ciliation of these factors can align survey and Flow-of-Funds and Survey-Based Measures." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

779 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period May noted, as well, that a decline in U.S. final domesthrough July 1987, provides information on Trea- tic demand was reported in the first quarter data sury and System foreign exchange operations. It on gross national product. Consequently, many was prepared by Sam Y. Cross, Manager of market participants remained skeptical that the Foreign Operations of the System Open Market authorities would attach a high enough priority to Account and Executive Vice President in charge exchange rate stability to alter domestic economof the Foreign Group of the Federal Reserve ic policies if necessary. Bank of New York.' Thus, traders retained their bearish attitude toward the dollar, even though they were aware Early in May, the dollar moved down against that the authorities of the Group of Seven (G-7) major foreign currencies, continuing a trend that industrial nations had intervened to purchase had prevailed throughout the year. But during dollars in substantial amounts since late March. the rest of the three-month period ending in July, There was skepticism that private investors, the dollar first stabilized and then advanced already experiencing substantial exchange rate modestly to close up 6V2 percent against the losses on their dollar portfolios, would continue Japanese yen and roughly 4 percent against the to place funds in the United States. Although German- mark and other European currencies. long-term interest rate differentials favoring dol- The U.S. authorities intervened in the market lar assets were at their highest levels since the during three episodes in the period. dollar was at its peak in 1985, market participants As the May-July period opened, many market questioned whether this interest rate advantage participants were not yet convinced that the would prove sufficient to induce heavy participaauthorities of the major industrialized countries tion by Japanese and other investors in the U.S. were committed to exchange rate stability. To be sure, statements by both U.S. and Japanese 1. Federal Reserve reciprocal currency arrangements officials during preceding weeks had been inter- Millions of dollars preted as indicating a genuine concern about the effects of further sharp downward movements in Amount of Institution facility, dollar rates and a willingness to cooperate close- July 31, 1987 ly to foster exchange rate stability. Nevertheless, Austrian National Bank 250 traders were disappointed that, after the dollar's National Bank of Belgium 1,000 Bank of Canada 2,000 2'/2-year decline, progress in diminishing the National Bank of Denmark 250 world's external imbalances was so slow. They Bank of England 3,000 Bank of France 2,000 were mindful of the intense political pressure in German Federal Bank 6,000 Bank of Italy 3,000 the United States over trade issues and wary that Bank of Japan 5,000 there might be new calls for a lower dollar. They Bank of Mexico 700 were concerned that any further exchange rate Netherlands Bank 500 Bank of Norway 250 decline might add to domestic inflation. They Bank of Sweden 300 Swiss National Bank 4,000 Bank for International Settlements Dollars against Swiss francs 600 Dollars against other authorized European currencies 1,250 1. The charts for the report are available on request from Publications Services, Board of Governors of the Federal Total 3300,,110000 Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

780 Federal Reserve Bulletin • October 1987 Treasury's refunding operation early in May. at which it stood ready to sell three-day Treasury The dollar therefore continued to decline during bills. These actions were interpreted by the marthe first week of May. It moved down to kets as indicating that the German authorities DM1.7590, its lowest level against the mark in were willing to join the Japanese and U.S. cennearly seven years. Against the yen, it eased tral banks in adjusting monetary policies to foster back to ¥137.95, not far above the 40-year low exchange rate stability. touched just weeks before. Other developments also helped to reduce In these circumstances, the U.S. authorities selling pressures against the dollar. After Japaentered the market in early May, in keeping with nese authorities urged financial institutions in the February agreement in Paris and the Wash- Japan to refrain from speculative dollar sales and ington agreement in April to contain the intense required these institutions to report their foreign selling pressure on the dollar. On the first two exchange positions much more frequently, tradbusiness days of May, the Trading Desk at the ers in Tokyo became reluctant to make sizable Federal Reserve Bank of New York purchased dollar sales. Later in May, the prospect for $140 million against marks and $20 million greater economic policy convergence improved against yen in the first intervention episode of the when Japan's Parliament finally approved the period under review. budget for the fiscal year ending March 1988, Meanwhile, market participants had taken paving the way for an extraordinary parliamentanote of comments made by Chairman Volcker ry session during the summer to draw up a and by Japanese Prime Minister Nakasone in late supplementary budget aimed at expanding do- April, indicating that the central banks of the two mestic demand. Then, following reports of an countries were willing to adjust their monetary attack on a U.S. naval vessel in the Persian Gulf, policies in a way that would lend support to the the dollar also began to derive some benefit from dollar. Mr. Nakasone announced that the Bank the view that a disruption in oil supplies would be of Japan would act to ease short-term interest relatively less detrimental to the United States rates. Mr. Volcker stated that the Federal Re- than to many other developed countries. In reserve had "snugged up" monetary policy in light sponse to these developments, the dollar graduof the exchange rate pressure. Short-term inter- ally moved up from its early May lows to trade at est rate differentials had already widened in favor DM1.7830 and at ¥140.40 on May 18. of the dollar even before these comments, as The underlying market sentiment toward the U.S. market rates responded to growing inflation dollar remained cautious, however, and the dolconcerns. But when U.S. interest rates contin- lar was still vulnerable to potentially adverse ued to firm and these differentials continued to news. In fact, two episodes did occur between expand in May, market participants came in- mid-May and early June that temporarily precipcreasingly to see the industrialized countries as itated renewed bouts of selling pressure against committed to exchange rate stability. the dollar. The first occurred on May 19 when a At the same time, some of the worst fears in major U.S. money-center bank announced a the markets proved to be unfounded. It soon restructuring of its capital and loan-loss reserves became clear that Japanese institutions had, in that would imply a substantial reported loss for fact, made sizable bond purchases at the May the second quarter. The second episode occurred Treasury refunding. Reports that the U.S. unem- on June 2 following the announcement that Paul ployment rate had fallen to 6.3 percent in April Volcker would not serve a third term as Chairand that producer prices had increased sharply man of the Federal Reserve Board. In both by 0.7 percent for the same month were seen as episodes the U.S. authorities intervened to blunt giving the U.S. monetary authorities both more the selling pressures. In the first, the Desk purroom and a greater need to tighten policy. Mean- chased a total of $133 million against the mark, while, officials in Japan indicated that they were partly in New York and partly in Pacific markets willing to guide money market rates lower. Also, in coordination with the Bank of Japan. In the the Bundesbank lowered the minimum rate on its second, the Desk purchased a total of $410 repurchase agreements and reduced the lower million against marks along with $103 million limit for money market rates by cutting the rate against yen in New York and in the Far East. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 781 This latter operation was undertaken in cooper- many of the United States' trading partners. ation with the Bundesbank, the Bank of France, Although there were some indications that the the Bank of Italy, and the Bank of Japan. In both Japanese economy was beginning to recover episodes, the intervention operations helped re- from the depressing effects of the yen's earlier assure market participants, and the dollar rise, news in Germany that manufacturing orders promptly moved up to levels higher than had and retail sales had declined in May and that prevailed beforehand. Market participants began unemployment remained high underscored marto feel that the dollar was regaining notable ket views about the underlying weakness of the resiliency. economy there. Even in the United Kingdom, In mid-June, at the time of the Venice summit the European country with the most optimistic meeting, the leaders of the G-7 industrial nations outlook just a few months before, a series of reaffirmed the earlier Paris and Washington disappointing statistics tended to suggest that the agreements with respect to exchange rates. economy was beginning to overheat and raised Moreover, the communique announced a plan questions in the market about the near-term for enhanced multilateral surveillance, including outlook for sterling-denominated bonds and more extensive use of medium-term economic stocks. objectives and interim performance indicators. Against this background, market participants The call for improved surveillance, though seen began to buy back dollars previously sold. Reby some observers as a sign that international ports of increased corporate demand ahead of economic policy cooperation would increase in the quarter-end, buying by Japanese investors to the future, left market participants initially disap- reduce hedges on U.S. investments, and repointed that no concrete initiatives to support the newed investor interest in U.S. securities circudollar were forthcoming. But the dollar softened lated in the market. Meanwhile, rising tensions in only temporarily during the meeting, subse- the Persian Gulf and talk of large dollar purquently reversing the decline without interven- chases from the Middle East tended to strengthtion support. en the dollar's role as a store of value and By late June, traders were becoming increas- currency of choice for flight capital at times of ingly impressed with the resilience that the dollar political uncertainty. had shown to adverse news in the preceding Thus, the dollar moved up steadily for several weeks. In addition, the dollar began to benefit weeks after mid-June and then firmed within a from the release of several economic statistics fairly narrow range for the rest of the period and other evidence suggesting a better-than-ex- under review. The more stable dollar, together pected performance for the U.S. economy. Dur- with the receding of inflationary fears following a ing the course of the summer, anecdotal reports report of a slowdown in producer price inflation of rising export volumes gave market partici- for May, gave a lift to U.S. bond prices and led to pants a basis for seeing the external sector as a an easing of market interest rates generally. At growing source of demand. Preliminary esti- the same time, some of the bullish sentiment that mates of the GNP data for the second quarter had prevailed in the Japanese and German bond released in mid-July, indicating that the change markets faded, so that interest rate differentials in the level of net exports was positive for the favoring the dollar narrowed somewhat. third consecutive quarter, seemed to confirm this As the dollar firmed, market participants came view. Under these circumstances, the market increasingly to expect the G-7 central banks to showed only short-lived disappointment when, intervene at some point to sell dollars in an effort in the middle of July, the U.S. trade figures to restrain the dollar's rise. Traders assumed that showed a modest widening in the deficit to $14.4 the U.S. authorities would try to retain the billion in May after having declined in March and favorable trade effects of the dollar's deprecia- April. Indeed, this was yet another occasion tion of the past two years and noted that the U.S. when selling pressure against the dollar was authorities had sold dollars in early March at quickly shaken off. around DM1.87 against the mark. They were also By contrast, market participants were becom- aware that, with central bank money in Germany ing disappointed about the economic outlook for growing more rapidly than targeted by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

782 Federal Reserve Bulletin • October 1987 2. Drawings and repayments by foreign central banks under special swap arrangement with the U.S. Treasury1 Millions of dollars; drawings or repayments (-) Central bank drawing Amount of Outstanding, Outstanding, on the U.S. Treasury facility May 1, May June July July 31, 1987 1987 Central Bank of the Argentine Republic... 225.0 225.0 0 0 -225.0 (2) 1. Data are on a value-date basis. 2. No facility Bundesbank for the year, the German central change—$683 million equivalent of marks and bank might try to absorb liquidity once the dollar $123 million equivalent of yen. These operations strengthened—either through domestic mone- were financed equally from Federal Reserve and tary operations or by selling dollars in the ex- U.S. Treasury balances. change market. As the rate approached DM1.87, On July 15, the Central Bank of the Argentine rumors circulated in the market at various times Republic fully repaid a $500 million multilateral that the Federal Reserve or the Bundesbank short-term credit facility provided by the U.S. were selling dollars. As long as some market Treasury through the Exchange Stabilization participants believed the central banks would Fund (ESF) and the central banks of several effectively contain any significant upward pres- other countries. As noted in the previous report, sure against the dollar, there was little incentive the full amount was drawn on March 9. The for them to build up speculative long positions in ESF's portion of the facility was $225 million. the dollar. In the period from May 1 through July 31, the Consequently, the dollar fluctuated generally Federal Reserve and the ESF realized profits of in a narrow range through the end of July. It $103.2 million and $109.7 million respectively on closed the three-month reporting period at sales of foreign currency. As of July 31, cumula- DM1.8600, up 53A percent against the mark, and tive bookkeeping or valuation gains on outstandat ¥150.05, up S3A percent against the yen, from ing foreign currency balances were $1,580.2 milits lows in early May. On a trade-weighted basis lion for the Federal Reserve and $1,422.8 million in terms of the other G-10 currencies, as mea- for the Treasury's ESF. These valuation gains sured by the index developed by the staff of the represent the increase in the dollar value of Federal Reserve Board, the dollar had risen outstanding foreign currency assets valued at nearly 4 percent during the three-month period. end-of-period exchange rates, compared with the During the period, the U.S. authorities sold a rates prevailing at the time the currencies were total of $806 million equivalent of foreign ex- acquired. The Federal Reserve and the ESF regularly invest foreign currency balances acquired in the 3. Net profits or losses (—) on U.S. Treasury and market as a result of their foreign exchange Federal Reserve current foreign exchange operations' operations in a variety of instruments that yield market rates of return and that have a high Millions of dollars degree of quality and liquidity. A portion of the U.S. Treasury Federal Reserve's invested balances—$953.6 Federal Exchange Period Reserve Stabilization million equivalent as of July 31, 1987—were held Fund in securities issued by foreign governments un- May 1, 1987- der the authority provided by the Monetary July 31, 1987 103.2 109.7 Valuation profits and Control Act of 1980. The Treasury also held losses on outstanding some of its invested balances—$2,537.2 million assets and liabilities as of July 31, 1987 1,580.2 1,422.8 equivalent as of the same date—in such securities. 1. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

783 Staff Studies The staffs of the Board of Governors of the indicate concurrence by the Board of Governors, Federal Reserve System and of the Federal by the Federal Reserve Banks, or by the mem- Reserve Banks undertake studies that cover a bers of their staffs. wide range of economic and financial subjects. Single copies of the full text of each of the From time to time the results of studies that are studies or papers summarized in the BULLETIN of general interest to the professions and to are available without charge. The list of Federal others are summarized in the FEDERAL RESERVE Reserve Board publications at the back of each BULLETIN. BULLETIN includes a separate section entitled The analyses and conclusions set forth are "Staff Studies" that lists the studies that are those of the authors and do not necessarily currently available. STUDY SUMMARY THE EFFECTS ON CONSUMERS AND CREDITORS OF PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES Glenn B. Canner and James T. Fergus—Staff, Board of Governors Prepared as a staff study in the spring of 1987 Most interest rates have fallen substantially since ly from studies that have evaluated the effects on the early 1980s, but those on credit card debt consumers of interest rate restrictions at the have changed relatively little. This disparity has state level. led to assertions that credit card rates are exces- The study concludes that the imposition of sive in view of the decline in the funding costs of restrictive ceilings on credit card interest rates card issuers. As a consequence, the Congress may be associated with wide-ranging and largely considered legislation in 1986 that would have unpredictable effects on consumers. While card imposed a nationwide rate ceiling on credit card holders who typically incur finance charges may accounts. benefit initially from mandated reductions in the This study focuses on issues raised by the rates they pay, these same consumers are likely proposed federal limits on credit card interest to be adversely affected by compensatory acrates, including the likely effects of such restric- tions that card issuers could take either to reduce tive rate ceilings on the availability of credit card costs or to bolster other sources of revenue. services to different groups of consumers. It also Such actions are also likely to have an adverse explores the consequences, for consumers, of effect on other groups of consumers such as possible creditor responses to rate ceilings such credit card applicants, who may face more reas modifications of nonrate prices of card ser- strictive credit-screening standards. vices, alterations in other terms on credit card Moreover, some adverse consequences of a accounts, and the raising of prices on merchan- nationwide ceiling on credit card rates could be dise. Evidence for the staff study comes primari- felt even by those consumers who do not use Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

784 Federal Reserve Bulletin • October 1987 credit cards. For example, retailers might in- Higher retail prices could mean that customers crease some merchandise prices—either to help who usually pay in cash—including lower-inoffset reduced finance-charge revenue on retailer come families who cannot obtain credit cards— credit card plans or as a result of higher fees they would subsidize buyers who use credit card must pay to banks to process credit card charges. services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

785 Industrial Production Released for publication August 14 als has generally accelerated in recent months, whereas certain earlier sources of expansion— Industrial production increased 0.8 percent in construction supplies and defense equipment— July, after upward revised increases of 0.4 per- have shown little net gain so far in 1987. At 129.8 cent in June and 0.7 percent in May. Gains in percent of the 1977 average, the total index in July were widespread among products and mate- July was almost 4 percent higher than it was a rials. The strength evident thus far in 1987 has year earlier. arisen from quite different sectors than the In market groups, output of consumer goods growth in 1986. Output of equipment and materi- advanced 0.7 percent in July after an uneven Ratio scale, 1977 = 100 140 - Products - TOTAL INDEX 120 Materials 100 80 i i i 1 1 1 140 MANUFACTURING Durable ^— MATERIALS Durable - 120 _ Nondurable • - - Nondurable ^ — 100 Energy — 1 1 1 1 1 1 80 I 1 1 1 1 1 INTERMEDIATE PRODUCTS Business supplies 240 Construction supplies 240 OIL AND GAS DRILLING FINAL PRODUCTS 200 Defense and space 200 160 160 120 140 100 20 Consumer goods 80 100 80 60 1981 1983 1985 1987 1981 1983 1985 1987 All series are seasonally adjusted. Latest figures: July. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

786 Federal Reserve Bulletin • October 1987 1977 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Group 1987 1987 JJJuuulllyyy 111999888666 tttooo JJJuuulllyyy June July Mar. Apr. May June July 111999888777 Major market groups Total industrial production 128.8 129.8 .1 .1 .7 .4 .8 3.9 Products, total 137.2 138.2 .1 -.4 1.0 .1 .8 3.8 Final products 135.8 136.9 .0 -.4 .8 .1 .8 3.7 Consumer goods 127.9 128.8 .0 -.7 .9 .1 .7 2.9 Durable 119.2 119.9 -1.0 -2.6 1.7 -.7 .6 3.1 Nondurable 131.1 132.0 .3 .0 .7 .3 .7 2.8 Business equipment.. 142.5 143.7 .0 .0 .8 .4 .9 4.2 Defense and space... 185.9 186.3 .0 -.3 .2 -.3 .2 3.7 Intermediate products.. 141.9 142.7 .5 -.4 1.4 .0 .6 3.9 Construction supplies 127.6 128.3 .1 -.9 .7 -.6 .6 3.5 Materials 117.3 118.2 .1 .8 .2 .7 .8 4.1 Major industry groups Manufacturing. 133.6 134.7 2 .1 .5 .3 .8 4.2 Durable 130.9 132.0 1 -.4 .5 .2 .8 3.6 Nondurable . 137.2 138.4 4 .7 .6 .4 .9 5.1 Mining 98.4 99.4 3 .5 .5 .9 1.1 2.4 Utilities 112.7 113.3 1 -.5 3.3 .1 .6 3.3 NOTE. Indexes are seasonally adjusted. performance in recent months. Automotive pro- creased strongly in July, largely reflecting gains duction increased sharply, owing entirely to a in the output of clothing and food. sizable increase in light truck production of Output of business equipment was up 0.9 which a large portion is for consumer use. Auto percent, as marked gains continued in construcassemblies, however, were reduced during the tion and mining, manufacturing, and commercial month to an annual rate of 6.7 million units from equipment. Output of defense and space equipa 6.9 million rate in June, and some further cuts ment was up only slightly in July and has are anticipated. Production of goods for the changed little on balance thus far in 1987. Prohome fell back in July after having increased in duction of construction supplies increased 0.6 May and June. Output of this sector has retreat- percent in July, but it, too, has been essentially ed from very high levels at the end of 1986, yet flat since the end of 1986. remains almost 5 percent higher than it was a Production of materials was up 0.8 percent in year earlier. Nondurable consumer goods in- July, bolstered by a sharp gain in durable materials such as metals, particularly steel, and equipment parts. Nondurable materials, such as textiles, paper, and chemicals, continued to show Total industrial production—Revisions output gains. Estimates as shown last month and current estimates In industry groups, manufacturing production Percentage change rose 0.8 percent in July, with strong gains in both Index (1977=100) from previous MMoonntthh months durable and nondurable industries. Output of mines posted a strong gain for the third consecu- Previous Current Previous Current tive month, reflecting renewed strength in metal April 127.3 127.4 .0 .1 mining as well as increases in coal and oil and gas May 128.0 128.3 .5 .7 June 128.2 128.8 .2 .4 extraction. Production by utilities also increased July 129.8 ... .8 in July. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

787 Announcements CHANGE IN THE DISCOUNT RATE • The information needed to identify the transaction in accordance with Regulation E, includ- The Federal Reserve Board approved on Sep- ing the terminal location, must be sent to the tember 4, 1987, an increase in the discount rate account-holding financial institution (AHFI). from 5Vi percent to 6 percent, effective immedi- • The time periods available to the consumer ately. for notice of errors and lost or stolen debit cards The decision reflects the intent of the Federal must be extended, and certain additional disclo- Reserve to deal effectively and in a timely way sures must be provided. with potential inflationary pressures. The amendments also will require AHFIs to In taking the action, the Board voted on re- include a description of these EFT transactions quests submitted by the Boards of Directors of on periodic statements provided to their customthe Federal Reserve Banks of New York and ers. To facilitate compliance for AHFIs, disclo- Cleveland. The Board subsequently approved sure of the terminal location will not be required similar requests by the Federal Reserve Banks of until July 1, 1990. Also, financial institutions Philadelphia, Atlanta, Chicago, and Kansas City, with assets of $25 million or less will not be also effective on September 4; by the Federal required to comply with any aspect of the regula- Reserve Bank of Richmond, effective September tion as to these EFT transactions (except to 5; by the Federal Reserve Bank of Minneapolis, cooperate with the service provider in the inveseffective September 8; by the Federal Reserve tigation of errors) until July 1, 1990. Banks of Boston, St. Louis, and San Francisco, effective September 9; and by the Federal Reserve Bank of Dallas, effective September 11. AMENDMENT TO REGULATION K The discount rate is the interest rate that is charged depository institutions when they bor- The Federal Reserve Board announced on Aurow from their District Federal Reserve Banks. gust 12, 1987, that it has liberalized the provisions of Regulation K (International Banking Operations) to permit certain investments abroad AMENDMENTS TO REGULATION E by U.S. banking organizations through debt-forequity swaps. The Federal Reserve Board approved on August The amendment is effective immediately. 13, 1987, amendments to Regulation E (Electron- However, the Board also has requested comic Fund Transfers (EFT)) that eliminate the peri- ments by September 30, 1987, as part of a odic statement requirement for providers of EFT continuing review of regulations governing debtservices that do not hold consumer accounts. for-equity investments. The amendments apply, for example, to retailers The purpose of the amendment is to provide that offer point-of-sale EFT services to consum- additional flexibility for U.S. banking organizaers and clear the transactions through the auto- tions to make investments in companies being mated clearinghouse system. privatized in heavily indebted developing coun- Elimination of the periodic statement require- tries. The eligible countries would be developing ment is subject to the following conditions: countries that have engaged in restructurings of • The debit card issued to consumers must sovereign debt held by foreign creditors since include an address or telephone number to be 1980. used to contact the service provider. The amendment will permit a U.S. banking Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

788 Federal Reserve Bulletin • October 1987 organization to acquire as much as 100 percent of adopted Competitive Equality Banking Act of the shares of a foreign nonfinancial company in 1987. 1 the following circumstances: The new law provides grandfather privileges to • The nonfinancial company must be in the nonbanking companies that on March 5 conprocess of being transferred from public to pri- trolled a nonbank bank and required those comvate ownership. panies to report to the Board on the bank's • The country in which the company is located activities. The report must be filed within 60 days must be a heavily indebted developing country. of the August 10 enactment date. • The shares must be acquired through a debt- A number of companies qualifying under the for-equity swap. grandfather' provision have requested guidance • The shares must be held by the bank holding as to where the report should be filed and what it company or its subsidiaries. should contain. The report should be filed with • The ownership interest must be divested the District Bank in the Federal Reserve District within five years from the date of acquisition, where the nonbank bank is located; it should unless the Board extends the time for good indicate the date the company acquired the noncause, but in no event longer than a total of ten bank bank; and it should describe each of the years. nonbank bank's activities. PROPOSED ACTION AMENDMENT TO REGULATION T The Federal Reserve Board has approved a The Federal Reserve Board approved on August proposed amendment to Regulation T (Credit by 24, 1987, an amendment to Regulation T (Credit Brokers and Dealers) to permit broker-dealers to by Brokers and Dealers) that revises the defini- aid in the exercise of employee-owned stock tion of over-the-counter margin bonds to include options. Comments on the proposed amendment any "mortgage related security." should be received by the Board by September The principal effect of the amendment permits 28, 1987. a broker-dealer to give "good faith" loan value in a margin account to any "mortgage related SYSTEM MEMBERSHIP: ADMISSION OF security" that is privately placed. STATE BANKS A "mortgage related security" that has been publicly offered generally was already eligible for The following state banks were admitted to memcredit at a broker-dealer. bership in the Federal Reserve System during the The amendment was effective August 27, 1987. period July 1 through July 31, 1987: Florida Mary Esther Emerald Coast State Bank STATEMENT OF GUIDANCE FOR REPORTING Pennsylvania ACTIVITIES OF NONBANK BANKS Philadelphia First Bank of Philadelphia The Federal Reserve Board issued on August 21, 1987, a statement of guidance for companies that 1. Copies of the statement are available on request from control a nonbank bank and must report the Publications Services, Board of Governors of the Federal bank's activities to the Board under the newly Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

789 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON JULY 7,1987 Partly because of the lagging auto sales, consumer spending in real terms has been sluggish in Domestic Policy Directive recent months, though above its first-quarter pace. Outlays for services have continued to The information reviewed at this meeting sug- advance steadily, but total auto sales dropped gested that economic activity expanded at a back noticeably in May to the slow pace experimoderate pace in the second quarter, as consum- enced in the first quarter. Excluding autos, outer expenditures grew at a relatively modest pace, lays for durables have been flat on balance since business capital spending experienced some re- the end of 1986, while spending on nondurable covery, and the trade deficit apparently contin- goods has edged down. ued to narrow in volume terms. Producer and Housing activity has dropped back from its consumer prices slowed in May, after sizable elevated pace early this year. Total starts fell to increases earlier in the year that reflected, to a an annual rate of 1.62 million units in May. considerable extent, higher energy prices. Rising Single-family starts were down appreciably, apimport prices also contributed to higher consum- parently reflecting the upturn in mortgage interer prices. Wage increases have remained rela- est rates after March. Multifamily starts intively limited in recent months. creased somewhat from an extremely low level Payroll employment rose modestly further in in April but remained below the first-quarter May and June, following substantial increases in average. the first four months of the year, with the gains Business fixed investment has rebounded after again concentrated in the service-producing sec- a tax-related decline at the beginning of the year. tor. Employment advances in the goods-produc- Shipments of nondefense capital goods were ing sector were lackluster as manufacturing em- about flat in April and May but on average were ployment rose minimally. In June, the household above the first-quarter level. Outlays for nonresisurvey indicated a small drop in employment, dential structures turned up in May, with the but the labor force fell noticeably. As a result, gains fairly widespread; and petroleum-drilling the unemployment rate fell 0.2 percentage point activity has continued to recover. In addition, to 6.1 percent; most of the drop in employment new orders for nondefense capital goods, excludwas attributed to fewer young people than nor- ing aircraft, picked up in the spring and new mal entering the labor force as of the early June commitments for nonresidential construction survey week. have moved up slightly. The index of industrial production rose 0.5 Inventory investment apparently slowed in the percent in May; and following upward revisions second quarter from its its rapid first-quarter to the three preceding months, the index was 2Vi pace. Production cutbacks trimmed auto invenpercent (annual rate) above the first-quarter av- tories, but the level of dealer stocks still was erage. The recent growth reflects in part the relatively high. Outside of autos, inventory increased production of business equipment, es- changes have been relatively small in recent pecially high-technology capital goods, and of a months and inventory-sales ratios have rewide variety of consumer goods. In the motor mained low. vehicles sector, however, auto assemblies have The U.S. merchandise trade deficit in nominal slowed in recent months due to relatively de- terms was about unchanged in the first quarter pressed sales and large dealer stocks. from its value in the final quarter of 1986. Prelim- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

790 Federal Reserve Bulletin • October 1987 inary data suggest that the deficit declined in rial Day weekend when an imminent increase in April as exports rose and imports fell from their the discount rate was expected by market particifirst-quarter rate. Economic activity has re- pants. Total reserves decreased at an annual rate mained sluggish in most major foreign industrial of about 2 percent between April and June, nations so far this year. Real GNP and industrial reflecting a falloff in required reserves associated production declined sharply in Germany in the with a net contraction in Ml. first quarter, although industrial production M2 grew only a little on balance in May and picked up in April and May. Japan has shown the June, bringing its growth rate for the March to reverse pattern with declines in industrial pro- June period to 23A percent, and its Ml compoduction registered in both April and May. nent declined over the two months. While some Inflation rates slowed in May. The consumer of the weakness in May reflected the unwinding price index (CPI) rose 0.3 percent, after more of the previous tax-related buildup, more generrapid increases earlier this year. Increases in ally these aggregates appear to have been subretail energy prices, which had boosted prices stantially affected by the increase in market during the first quarter, were smaller in April and interest rates among other factors this year. May and accounted for much of the slower rise in Expansion in M3 was better maintained as banks consumer prices. However, the price of crude oil and thrift institutions continued to fund a moderhas advanced further since mid-April, which ate pace of credit extension, and for the March to suggests upward pressure on retail energy prices June period this aggregate increased at an annual in the period ahead. Excluding food and energy, rate of 5Vi percent. The growth of M2 in 1987 the CPI has risen about 1 percentage point faster through June left this aggregate below the lower so far this year than in 1986 partly because of end of the growth "cone" representing the Commore rapid increases in consumer goods that mittee's 5Vi to SVz percent range for the year, and have high import proportions. Wage inflation, in growth of M3 around the lower end of its 5Vi to contrast, has remained relatively low for the year 8V2 percent growth cone. to date. Early in the intermeeting period interest rates At its meeting on May 19, the Committee remained near the higher levels reached in the adopted a directive that called for increasing weeks before the May meeting, as markets consomewhat the degree of reserve pressure from tinued to reflect concerns about the course of that sought in the weeks just before the meeting, inflation and the dollar. However, rates subsetaking into account the possibility of a change in quently declined in response to a sharp drop in the discount rate. The members agreed that some commodity prices, a firmer dollar, and an somewhat greater reserve restraint would, or abatement of inflation fears. The federal funds somewhat lesser reserve restraint might, be ac- rate continued to average around 63/4 percent ceptable depending on developments relating to during the intermeeting period, but other shortinflation and the dollar in foreign exchange mar- term interest rates were down 10 to 55 basis kets, as well as the behavior of the monetary points on balance. Longer-term Treasury yields aggregates and the strength of the business ex- were about 60 basis points lower and corporate pansion. M2 and M3 were expected to grow at bond rates declined about half that much. The annual rates of around 6 percent or less from commitment rate for fixed-rate mortgages fell March through June, while growth in Ml was slightly since the May FOMC meeting, but still expected to be well below its pace in 1986. The was well above the low established earlier in the intermeeting range for federal funds was left year. Stock price indexes increased strongly unchanged at 4 to 8 percent. over most of the period to record levels. Adjustment plus seasonal borrowing at the The dollar strengthened somewhat during the discount window averaged $580 million for the intermeeting period, boosted in part by the anthree complete maintenance periods since the nouncement of an economic stimulus package in May meeting, close to its average level around Japan as well as better than expected economic the time of that meeting. Borrowing during the and price news for the United States. On balfirst full maintenance period after the May meet- ance, the weighted-average foreign exchange ing was heavy, particularly over the long Memo- value of the dollar against other G-10 currencies Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 791 moved up by about 33A percent since the May In keeping with the usual practice at meetings meeting, including increases of nearly VA per- when the Committee considers its long-run obcent against the yen and 33A percent against the jectives for monetary growth, the members of mark. Over the same period, bond rates rose the Committee and the Federal Reserve Bank substantially in Germany and Japan, and with presidents not currently serving as members U.S. long-term rates declining somewhat, the presented specific projections of economic rate differentials narrowed. growth, the rate of unemployment, and changes The staff projections suggested that real GNP in the overall price level. With regard to the rate would grow at a moderate rate through the end of of expansion in real GNP, the projections had a 1987 and perhaps slow slightly from this pace in central tendency of 2Vi to 3 percent for 1987 as a 1988. Improvement in the external sector was whole and the same central tendency for 1988, expected to be a major factor contributing to though with a slightly wider range of individual growth in overall output. Growth in domestic forecasts for next year. Projections of growth in demand was anticipated to be sluggish over the nominal GNP centered on ranges of 6XA to 7 forecast horizon. In particular, the rise in import percent for 1987 and 53A to 7 percent for 1988. prices associated with the fall in the dollar was The rate of unemployment was not expected to expected to hold down real income gains deviate significantly from current levels; the cenand thus consumer expenditures. Construction tral tendency of the forecasts was 6.2 to 6.4 spending was anticipated to be damped by high percent for the fourth quarter of 1987 and 6.0 to vacancy rates for office structures and rental 6.5 percent for the fourth quarter of 1988. With housing and recent increases in mortgage rates, respect to the rate of inflation, as indexed by the while the expansion of government expenditures GNP deflator, the projections centered on rates would likely be held down by budgetary limita- of 33A percent for 1987 and 4 percent for 1988. In tions. Business equipment spending, however, making these forecasts, the members took acshould rise moderately in coming quarters, re- count of the Committee's objectives for moneflecting continued modernization efforts and ex- tary growth established at this meeting. The panding domestic production. Inflation rates members also assumed that fluctuations in the were forecast to edge down over the second half exchange value of the dollar would not be of of this year but then to move up again in 1988, sufficient magnitude to affect the projections primarily due to increases in nonpetroleum im- significantly. port prices. Moreover, with the civilian unem- While the central tendency of the members' ployment rate projected to remain close to 6lA forecasts suggested some moderation in the rate percent, labor market slack would have a reof expansion from the pace currently indicated duced influence in damping inflationary presfor the first half of this year, business activity sures. was thought likely to be better balanced in that a In the Committee's discussion of the economic number of previously depressed industries, notasituation and outlook, the members generally bly in manufacturing, would benefit from further agreed that business activity was likely to ex- growth in net exports. Some members commentpand at a moderate pace over the balance of the ed that relatively moderate expansion in line with year. Greater uncertainty surrounded the out- that forecast by most of the members would look for 1988, but most of the members felt that represent a satisfactory economic performance further moderate growth also was a reasonable under foreseeable circumstances. In this view expectation for next year. In general, the mem- appreciably faster growth would incur a considbers anticipated relatively sluggish expansion in erable risk of increased inflationary pressures domestic demands over the projection horizon, and the resulting distortions would threaten the and as at earlier meetings they believed that sustainability of the expansion itself. Relatively sustained growth in overall activity would de- rapid growth in domestic demands, in particular, pend to an important extent on the achievement would be inconsistent with needed external adof significant improvement in the nation's bal- justment. ance of trade. Most of the members anticipated a In the Committee's discussion of various facmarginally higher rate of price increase in 1988. tors bearing on the business outlook, some mem- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

792 Federal Reserve Bulletin • October 1987 bers commented that the growth in consumer occur, would deal a major setback to the effort to demands seemed likely to be reasonably well restore price stability. The members also obmaintained, especially in the services area, based served that potential developments in world oil on current trends and on prior cyclical experi- prices were a major uncertainty in the inflation ence. Others gave more weight to recent indica- outlook. tions of softness in overall consumer spending At this meeting the Committee reviewed its and, in the context of increased consumer debt ranges for growth of monetary and debt aggreburdens and a relatively low saving rate, they gates in 1987 and established tentative ranges for saw relatively weak growth as a more likely 1988 within the framework of the Full Employprospect for the next several quarters. The mem- ment and Balanced Growth Act of 1978 (the bers generally expected further improvement in Humphrey-Hawkins Act).1 At its meeting on net exports as both importers and exporters February 10-11, 1987, the Committee had adoptcontinued to adjust to a lower value of the dollar, ed growth ranges of 5l/z to 8V2 percent for both but the extent of such improvement remained M2 and M3 for the period from the fourth quarter subject to considerable uncertainty. The possi- of 1986 to the fourth quarter of 1987. The associbility of relatively limited economic expansion in ated range for growth in total domestic nonfinankey foreign industrial countries was again cited cial debt was set at 8 to 11 percent. The Commitas a negative factor. With regard to the federal tee had anticipated that growth in Ml would slow budget deficit, the members emphasized that in 1987 from its very rapid pace in 1986, but the further reductions were essential to assure satis- members had decided not to establish a numerifactory economic performance over time. The cal target for the year; instead, the appropriateoutlook for continuing progress in lowering the ness of Ml changes would be evaluated during deficit was uncertain, but any reduction in the the year in the light of the behavior of Ml deficit would tend to relieve pressures on finan- velocity, developments in the economy and ficial markets, particularly in the context of dimin- nancial markets, and potential inflationary presished inflows of funds from abroad as the balance sures. of trade improved, and would enhance the ability In the course of the Committee's review of the of the domestic economy to fund needed private ranges for 1987, most of the members indicated a capital formation. preference for not changing the existing ranges The members differed to some extent in their set in February, but some sentiment also was assessments of the outlook for inflation, although expressed in favor of a slightly lower range for most expected higher import prices to contribute M2. The members took account of the sharp to slightly greater price pressures in the period deceleration in the growth of the broader aggrethrough 1988. In one view, there was a consider- gates thus far in 1987, especially in M2. Howevable risk that rising import prices would have a er, with the advance in business activity evidencsizable impact on domestic pricing decisions as ing reasonable momentum and velocity showing well. That risk might be augmented by efforts to signs of increasing in the context of rising interraise wages in line with increasing inflation, est rates associated with a pickup in inflation and particularly with reduced levels of unemploy- a weaker dollar, the members viewed such a ment and possible pressures on capacity in some development as acceptable. industries experiencing strong export demand. According to a staff analysis prepared for this Other members commented, however, that most meeting, the relatively weak growth in the moneindustries were still operating appreciably below tary aggregates in the first half of the year capacity, including in many cases industries that appeared to reflect a number of developments had been depressed earlier by the effects of the whose impact might be greatly diminished over dollar's appreciation; some members also noted that most commodities remained in ample supply on world markets. A key factor tending to limit inflationary pressures was the continuing moder- 1. The midyear Monetary Policy Report prepared pursuant to this legislation was transmitted to the Congress on July 21, ation in overall wage increases, but the members 1987, and was published in the FEDERAL RESERVE BULLErecognized that a substantial upturn, if it were to TIN, vol. 73 (August 1987), pp. 633-46. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 793 coming quarters. To some extent, special factors financial developments, including the behavior related to the tax reform legislation may have of the dollar in foreign exchange markets. helped to depress the growth in M2, while The members anticipated that growth in the growth in M3 also was restrained by some unusu- debt of nonfinancial sectors would remain well al patterns in funding asset expansion at deposi- within its monitoring range for the year, reflecttory institutions. However, the available evi- ing a marked reduction from the expansion in dence suggested that a substantial portion of the other recent years. The reduced rate of expanslowing in monetary growth could be attributed sion was in large measure the consequence of a to relatively slow adjustments in deposit interest lower federal deficit and some slowing in state rates to rising market rates. Opportunity costs of and local government borrowing. However, with holding money balances had increased over the growth in private debt remaining relatively spring after an extended period of declines. By strong and that in federal debt still on the high the time of the meeting, rates on many compo- side, expansion in total nonfinancial debt apnents of the broad aggregates had adjusted to the peared likely to continue to exceed that in nomihigher market rates and the impact of wider nal GNP and average close to its pace of recent opportunity costs on overall M2 and M3 growth months over the balance of the year. appeared to be abating. The analysis concluded Turning to Ml, the members considered that growth in M2 could be expected to pick up whether or not a specific numerical range should over the balance of the year to a rate closer to the be reestablished for its growth over the balance expansion in nominal GNP, assuming steady of this year or tentatively for 1988. The sharp reserve conditions and market interest rates near slowing of Ml growth thus far in 1987 following a current levels, and for the year as a whole M2 long period of rapid expansion, while appropriate might expand at a rate around the lower end of in the circumstances of the first half of the year, the Committee's existing range. Growth in M3 provided further evidence that this aggregate had also might strengthen somewhat over the balance become highly sensitive to movements in interest of the year, leaving this aggregate well within its rates and other factors. The members concluded range. that the prospective behavior of Ml remained In further discussion a number of members subject to exceptional uncertainties, and no took the view that the existing M2 range should member favored establishing a specific target not be "fine tuned" at this time despite the range at this time. However, the behavior of this outlook for actual growth near the bottom of the aggregate, evaluated in the light of other ecorange for 1987 as a whole. The members recog- nomic and financial developments, would be nized that in light of the weakness during the first taken into account in implementing policy over half of the year and the uncertainties that were the second half of the year. The Committee also involved, growth in this aggregate might in fact discussed MIA—a narrower measure of aggrebe somewhat below the lower end of the range gate transactions accounts that includes demand for 1987. The latter development, if it occurred, deposits plus currency in circulation but exwould be acceptable provided it was associated cludes other checkable deposits from Ml. The with some strengthening in M2 velocity and members noted that the characteristics of this satisfactory economic performance; in particu- aggregate probably also had changed in recent lar, a very limited pickup in M2 growth might be years as households shifted transactions deposits appropriate should the dollar tend to weaken or from demand to NOW accounts and more busiinflation concerns intensify. A number of mem- nesses adopted sophisticated techniques for bers expressed concern that a reduction in the managing their cash balances. The velocity of M2 range at this point might be misread as an this aggregate had varied less than that of Ml, indication of intended firming in monetary poli- but given the uncertainties in its relationship to cy. On the other hand, several members ob- the economy and prices, the members saw no served that they would not endorse an easier advantage at this time in introducing MIA as a policy posture solely for the purpose of assuring formal guide to policy. M2 growth within the Committee's existing At the conclusion of the Committee's review, range without regard for ongoing economic and all of the members indicated that they favored, or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

794 Federal Reserve Bulletin • October 1987 could accept, a proposal not to change the ranges ance of the year will take account of growth in Ml in for growth in the broader aggregates or the the light of circumstances then prevailing. The issues monitoring range for nonfinancial debt that had involved with establishing a target for Ml will be carefully reappraised at the beginning of 1988. been established in February for the year 1987. Growth in both M2 and M3 around the lower Votes for this action: Messrs. Volcker, Corrigan, ends of their ranges might be acceptable depend- Angell, Boehne, Boykin, Heller, Johnson, Keehn, ing on developments relating to their velocities Kelley, Ms. Seger, and Mr. Stern. Votes against and attendant economic and financial conditions, this action: None. notably the strength of inflationary pressures. No numerical range would be established for Ml With regard to the tentative ranges for 1988, all growth in 1987, or tentatively for 1988, but Ml but one member of the Committee felt that some developments, weighed in the context of emerg- reduction in the broader aggregates from their ing economic and financial conditions, would be 1987 ranges would be consistent with the Comtaken into account in reaching operational deci- mittee's longer-run objective of fostering progsions over the balance of 1987, and the desirabil- ress toward price stability while also encouraging ity of a numerical range for 1988 would be sustained expansion in business activity. A mareassessed early next year in the light of circum- jority indicated a preference for reducing the M2 stances at that time. range by Vi percentage point. Of these, a number Thereupon, the Committee approved the fol- commented that, should economic and financial lowing paragraphs relating to its objectives for conditions warrant, they would be prepared to the broader aggregates and nonfinancial debt in support a further reduction of V2 percentage point 1987 and the role of Ml: when the tentative ranges were reviewed in February 1988. Some sentiment was expressed for lowering the M2 range by a full percentage The Committee agreed at this meeting to reaffirm point at this time on the ground that such a the ranges established in February for growth of 5V2 to 8V2 percent for both M2 and M3, measured from the reduction appeared fully consistent with satisfacfourth quarter of 1986 to the fourth quarter of 1987. tory economic growth and with the reduced rate The Committee agreed that growth in these aggregates of inflation that was anticipated and desired over around the lower ends of their ranges may be approprithe longer run; in this view a smaller reduction ate in light of developments with respect to velocity might not appear sufficiently decisive with reand signs of the potential for some strengthening in underlying inflationary pressures, provided that eco- spect to restraining inflation. However, one nomic activity is expanding at an acceptable pace. The member expressed concern that a reduction of monitoring range for growth in total domestic nonfi- more than Vi percentage point would establish a nancial debt set in February for the year was left lower limit that might not be consistent with unchanged at 8 to 11 percent. adequate economic growth, at least insofar as With respect to Ml, the Committee recognized that, could be foreseen at this time. In light of the based on experience, the behavior of that aggregate must be judged in the light of other evidence relating to uncertainties that were involved some members economic activity and prices; fluctuations in Ml have also indicated that they could support a proposal become much more sensitive in recent years to to widen the tentative range for M2 in the expecchanges in interest rates, among other factors. Betation that it might be narrowed later. Others cause of this sensitivity, which has been reflected in a objected to a wider range on the ground that, sharp slowing of the decline in Ml velocity over the first half of the year, the Committee again decided not because of the Committee's focus on the broader to establish a specific target for growth in Ml over the aggregates, such a range might be viewed as remainder of 1987 and no tentative range has been set weakening the importance of the Committee's for 1988. The appropriateness of changes in Ml this monetary targets. year will continue to be evaluated in the light of the behavior of its velocity, developments in the economy At the conclusion of the Committee's discusand financial markets, and the nature of emerging sion, all but one of the members indicated that price pressures. The Committee welcomes substantial- they could accept a reduction of V2 percentage ly slower growth of Ml in 1987 than in 1986 in the point in the tentative ranges for M2 and M3 and context of continuing economic expansion and some in the monitoring range for nonfinancial debt in evidence of greater inflationary pressures. The Committee in reaching operational decisions over the bal- 1988. It was understood that all these ranges Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 795 were provisional and that they, along with the some strengthening in money growth over the possibility of establishing a numerical range for third quarter. Even so, the cumulative expansion Ml, would be reviewed in early 1988 in the light of M2 through September might still be someof intervening developments. what below the Committee's target range for the The following paragraph relating to the ranges year; growth in M3 might move this aggregate for 1988 was approved for inclusion in the do- closer to the middle of the Committee's 1987 mestic policy directive: range by September. The outlook for growth in Ml remained uncertain, but a relatively moder- For 1988, the Committee agreed on tentative ranges ate rate of expansion in this aggregate over the of monetary grow th, measured from the fourth quarter third quarter appeared consistent with stable of 1987 to the fourth quarter of 1988, of 5 to 8 percent for both M2 and M3. The Committee provisionally set reserve conditions and the Committee's expectathe associated range for growth in total domestic tions for the broader aggregates. nonfinancial debt at IVi to IOV2 percent. Most members felt that there should be no presumption about the likely direction of any Votes for this action: Messrs. Volcker, Corrigan, intermeeting adjustment in policy implementa- Angell, Boehne, Boykin, Heller, Johnson, Keehn, tion. The market concerns about inflation and Kelley, and Stern. Vote against this action: Ms. Seger. downward pressures on the dollar that had argued for a relatively prompt firming of reserve Ms. Seger dissented because she did not want conditions at the time of the May meeting had to reduce at this time the tentative M2 and M3 eased somewhat, and growth in the monetary ranges for 1988 below those established for this aggregates had been quite restrained in recent year. In her view the performance of key sectors months. One member felt that policy implemenof the domestic economy implied a relatively tation should be especially alert to developments weak business expansion, and she did not antici- that might call for some easing, given the risks in pate enough offsetting support from gains in this view that indicators of business activity foreign trade. In the circumstances, inflationary might prove to be weaker than expected and a pressures seemed likely to remain subdued, and related belief that the risks of greater inflation she concluded that a policy consistent with mon- were limited. The members generally indicated etary growth within this year's ranges would that attention should continue to be given to probably be needed to sustain the expansion in developments bearing on the outlook for infla- 1988. She recognized that the economic outlook tion and the performance of the dollar in foreign was surrounded by a great deal of uncertainty, exchange markets, but in keeping with the Comand she would be prepared to lower the M2 and mittee's usual approach to policy implementa- M3 ranges early next year if intervening develop- tion, any decision to alter reserve objectives ments seemed to warrant such a reduction. during the intermeeting period would take ac- In the Committee's discussion of policy imple- count of the behavior of the monetary aggregates mentation for the weeks immediately ahead, all and the overall performance of the economy. of the members indicated that they were in favor At the conclusion of the Committee's discusof continuing to direct open market operations sion, all of the members agreed on the desirabiltoward maintaining the existing degree of reserve ity of a directive that called for no change in the availability. Recent financial developments, in- degree of pressure on reserve positions. Some cluding indications of some easing in inflationary firming or some easing of reserve conditions sentiment and the emergence of a more stable would be acceptable depending especially on dollar in foreign exchange markets, along with developments relating to inflation and the perevidence of continued moderate expansion in formance of the dollar in foreign exchange marbusiness activity did not point to the need for any kets, while also taking account of the behavior of change in reserve conditions at this time. The the monetary aggregates and the strength of the outlook for monetary expansion also seemed business expansion. This approach to policy consistent with such a stance since unchanged implementation was expected to be consistent reserve conditions and relatively stable market with growth of M2 and M3 at annual rates of rates were thought likely to be associated with around 5 percent and IVi percent respectively, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

796 Federal Reserve Bulletin • October 1987 over the three-month period from June to Sep- tary and financial conditions that will foster reasonable tember. Over the same period, growth in Ml was price stability over time, promote growth in output on expected to resume after declining on balance in a sustainable basis, and contribute to an improved pattern of international transactions. In furtherance of May and June but to remain well below its pace these objectives the Committee agreed at this meeting in 1986. Because the behavior of Ml was still to reaffirm the ranges established in February for subject to unusual uncertainty and in keeping growth of 5V2 to 8V2 percent for both M2 and M3, with its decision regarding the longer-run target, measured from the fourth quarter of 1986 to the fourth the Committee decided to continue its practice of quarter of 1987. The Committee agreed that growth in these aggregates around the lower ends of their ranges not specifying a numerical expectation for its may be appropriate in light of developments with short-run growth. The members agreed that the respect to velocity and signs of the potential for some intermeeting range for the federal funds rate, strengthening in underlying inflationary pressures, which provides a mechanism for initiating con- provided that economic activity is expanding at an sultation of the Committee when its boundaries acceptable pace. The monitoring range for growth in total domestic nonfinancial debt set in February for are persistently exceeded, should be left unthe year was left unchanged at 8 to 11 percent. changed at 4 to 8 percent. For 1988, the Committee agreed on tentative ranges At the conclusion of the meeting the following of monetary growth, measured from the fourth quarter domestic policy directive was issued to the Fed- of 1987 to the fourth quarter of 1988, of 5 to 8 percent eral Reserve Bank of New York: for both M2 and M3. The Committee provisionally set the associated range for growth in total domestic nonfinancial debt at IV2 to KM percent. The information reviewed at this meeting suggests With respect to Ml, the Committee recognized that, on balance that economic activity expanded at a based on experience, the behavior of that aggregate moderate pace in the second quarter. In May and must be judged in the light of other evidence relating to June, total nonfarm payroll employment rose modestly economic activity and prices; fluctuations in Ml have further, with most of the gains continuing to be in the become much more sensitive in recent years to service-producing sectors. The civilian unemployment changes in interest rates, among other factors. Berate fell to 6.1 percent in June and was down apprecia- cause of this sensitivity, which has been reflected in a bly from its average level in the first quarter. Industrial sharp slowing of the decline in Ml velocity over the production increased substantially in May after rising first half of the year, the Committee again decided not moderately on balance in earlier months of the year. to establish a specific target for growth in Ml over the Consumer spending appears to have increased in the remainder of 1987 and no tentative range has been set second quarter, but housing starts were down some- for 1988. The appropriateness of changes in Ml this what further in May to a level considerably below their year will continue to be evaluated in the light of the first-quarter average. Recent indicators of business behavior of its velocity, developments in the economy capital spending point to some recovery, particularly and financial markets, and the nature of emerging in equipment outlays, from a depressed level in the price pressures. The Committee welcomes substantialfirst quarter. In April the merchandise trade deficit ly slower growth of Ml in 1987 than in 1986 in the was smaller than in March and below the monthly context of continuing economic expansion and some average for the first quarter. The rise in consumer and evidence of greater inflationary pressures. The Comproducer prices moderated in May but for the year to mittee in reaching operational decisions over the baldate prices have risen more rapidly than in 1986, ance of the year will take account of growth in Ml in primarily reflecting sizable increases in prices of ener- the light of circumstances then prevailing. The issues gy and non-oil imports. Wage increases have remained involved with establishing a target for Ml will be relatively moderate in recent months. carefully reappraised at the beginning of 1988. M2 increased slightly in May and June while growth In the implementation of policy for the immediate of M3 remained moderate. For 1987 through June, future, the Committee seeks to maintain the existing expansion of M2 has been below the lower end of the degree of pressure on reserve positions. Somewhat range established by the Committee for the year, and greater reserve restraint or somewhat lesser reserve growth of M3 around the lower end of its range. restraint would be acceptable depending on indica- Following a surge in April, Ml contracted on balance tions of inflationary pressures and on developments in in May and June. Expansion in total domestic nonfi- the aggregates and the strength of the business exnancial debt has moderated this year. pansion. This approach is expected to be consistent Most interest rates have declined somewhat on with growth in M2 and M3 over the period from June balance since the May 19 meeting of the Committee. In through September at annual rates of around 5 and lxh foreign exchange markets, the trade-weighted value of percent, respectively. Growth in Ml, while picking up the dollar against the other G-10 currencies has risen from recent levels, is expected to remain well below its on balance since the May meeting. pace during 1986. The Chairman may call for Commit- The Federal Open Market Committee seeks mone- tee consultation if it appears to the Manager for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 797 Domestic Operations that reserve conditions during Votes for the short-run operational paragraph: the period before the next meeting are likely to be Messrs. Volcker, Corrigan, Angell, Boehne, Boyassociated with a federal funds rate persistently out- kin, Heller, Johnson, Keehn, Kelley, Ms. Seger, side a range of 4 to 8 percent. and Mr. Stern. Votes against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

799 Legal Developments AMENDMENT TO REGULATION E Section 205.14—Services Offered by Financial Institutions Not Holding Consumer's Account The Board of Governors is amending 12 C.F.R. Part 205, its Regulation E, by issuing a final rule amending (a) Compliance by service-providing institution. * * * the requirements concerning electronic fund transfer ("EFT") services initiated by non-account-holding financial institutions (at point of sale, for example) and processed through the automated clearing house sys- (2) Sections 205.7, 205.8, and 205.9 shall require the tem for debiting to a customer's account. The amendservice-providing institution to provide those discloments eliminate the periodic statement requirement sures and documentation that are within its knowlfor persons that provide EFT services to consumers, edge and the purview of its relationship with the but do not hold consumer accounts, if they: consumer. The service-providing institution need (1) issue a debit card to the consumer that includes not furnish a periodic statement to the consumer an address or telephone number to be used by the under section 205.9(b), if the service-providing insticonsumer to contact the service provider; tution: (2) send information needed to identify the transac- (i) Issues a debit card, to be used by the consumer tion in accordance with Regulation E to the accountto initiate electronic fund transfers, that bears the holding financial institution; and name of the service-providing institution and an (3) extend the time periods available to the consumaddress or telephone number that can be used to er for notice of errors and lost or stolen debit cards, contact the service-providing institution; and give certain additional disclosures. The amend- (ii) Transmits the applicable transaction identifiment also requires account-holding financial institucation information specified by section 205.9(b)(1) tions to include a description of these EFT transacto the consumer's account-holding institution, in tions on periodic statements provided to their the format prescribed by the automated clearing customers. house system used to clear the fund transfers; (iii) Discloses to the consumer, in addition to the Effective November 15, 1987. However, disclosure information required by section 205.7, that the of the terminal location will not be required until July service-providing institution (not the account- 1, 1990; and account-holding institutions with assets of holding institution) is responsible for all electronic $25 million or less will not be required to comply fund transfers made with the debit card, and that (except to cooperate with the service provider in the all inquiries and error notices related to such investigation of errors) until July 1, 1990. The Board transfers should be directed to the service-providamends 12 C.F.R. Part 205 as follows: ing institution; that the service-providing institution will not issue a periodic statement, and that the consumer should retain all terminal receipts to verify transactions; and that the consumer must Part 205—Electronic Fund Transfers notify the service-providing institution concerning loss or theft of the debit card; 1. The authority citation for Part 205 continues to read (iv) Provides on or with the receipts required by as follows: section 205.9(a) the address and telephone number to be used for inquiries and error notices and for reporting the loss or theft of the debit card; Authority: Pub. L. 95-630, 92 Stat. 3730 (15 U.S.C. and 1693b). (v) Extends the time period set forth in section 205.6(b)(1) for notice of loss or theft of a debit 2. Section 205.14 is amended by revising paragraphs card, from 2 business days to 4 business days after (a)(2) and (b) as follows: the consumer learns of the loss or theft; and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

800 Federal Reserve Bulletin • October 1987 extends the time periods set forth in sections Section A(ll)—Disclosure From Service- 205.6(b)(2) and 205.11(b)(1) for reporting unautho- Providing Institution That Does Not Send rized transfers or alleged errors, from 60 days to Periodic Statements (§ 205.14(a)(2)) 90 days following the transmittal of a periodic statement. ALL QUESTIONS ABOUT TRANSACTIONS MADE WITH YOUR (NAME OF CARD) CARD jf: * jf; sfc MUST BE DIRECT TO US (NAME OF SERVICE PROVIDER), AND NOT TO THE BANK OR OTH- (b) Compliance by account-holding institution. An ER FINANCIAL INSTITUTION WHERE YOU account-holding institution described in paragraph (a) HAVE YOUR ACCOUNT. We are responsible for of this section need not comply with the requirements the (name of service) service and for resolving any errors in transactions made with your (name of card) of the act and this regulation with respect to electronic card. fund transfers to or from the consumer's account made by the service-providing institution, except that the We will not send you a periodic statement listing account-holding institution shall: transactions that you make using your (name of card) (1) Comply with section 205.9 by providing a period- card. The transactions will appear only on the stateic statement and describing each transaction from ment issued by your bank or other financial institution. the service-providing institution that is debited or SAVE THE RECEIPTS YOU ARE GIVEN WHEN credited to the consumer's account in accordance YOU USE YOUR (NAME OF CARD) CARD, AND with section 205.9(b);13 but the account-holding in- CHECK THEM AGAINST THE ACCOUNT stitution has no liability for failure to provide this STATEMENT YOU RECEIVE FROM YOUR information if the failure is due to its not having BANK OR OTHER FINANCIAL INSTITUTION. If received the necessary information from the ser- you have any questions about one of these transacvice-providing institution in the prescribed format; tions, call or write us at (telephone number and and address) (the telephone number and address indicated (2) Comply with section 205.11 by promptly provid- below). ing to the service-providing institution, upon its IF YOUR (NAME OF CARD) CARD IS LOST OR request, information or copies of documents re- STOLEN, NOTIFY US AT ONCE by calling or quired for the purpose of investigating alleged errors writing to us at (telephone number and address). or for furnishing copies of documents to the consumer; and by honoring debits to the account in accordance with section 205.11(f)(2). AMENDMENT TO REGULATION K The Board of Governors is amending 12 C.F.R. Part 211, its Regulation K, by issuing a final rule to permit 3. Appendix A is amended by revising the first sen- investors to acquire from foreign governments ownertence of the introductory language and by adding ship of certain foreign companies engaged in nonfinansection A(ll) as follows: cial activities in the context of exchanging debt obligations of the government for equity ownership interest in the companies. APPENDIX A—Model Disclosure Clauses Effective immediately, the Board amends 12 C.F.R. Part 211 as follows: This appendix contains model disclosure clauses for Part 211—International Banking Operations optional use by financial institutions to facilitate compliance with the disclosure requirements of sections - 1. The authority citation for 12 C.F.R. Part 211 is 205.5(a)(3), (b)(2), and (b)(3), 205.6(a)(3), 205.7, and revised to read as follows: 205.14(a)(2). * * * * * * ** Authority: 12 U.S.C. 221 et seq.; 12 U.S.C. 1841 et seq.; Pub. L. 95-369; 92 Stat. 607; 12 U.S.C. 3101 et seq.; Title II, Pub. L. 97-290, 96 Stat. 1235; Title IX, 13. Account-holding institutions shall not be required to furnish the Pub. L. 98-181, 97 Stat. 1153, 12 U.S.C. 3901 et seq. terminal location as part of the transaction description until July 1, 1990. In addition, account-holding institutions with assets of $25 2. Part 211 is amended by adding a new paragraph (f) million or less shall not be required to comply with section 205.9(b) until July 1, 1990. to section 211.5, as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 801 Section 211.5—Investments and Activities that are engaged in the same or related lines of Abroad business as the company. (f) Investment made through debt-for-equity conver- AMENDMENT TO REGULATION T sions (1) Permissible Investment. In addition to an invest- The Board of Governors is amending 12 C.F.R. Part ment that may be made under other provisions of 220, its Regulation T, by revising the definition of this section, a bank holding company may acquire "OTC margin bond." The amended definition will up to and including 100 percent of the shares of (or include any "mortgage related security," a term deother ownership interest in) a foreign company if: fined in the Secondary Mortgage Market Enhance- (i) the shares are acquired from the government of ment Act of 1984 and in section 3(a)(41) of the Securian eligible country or from its agencies or instru- ties Exchange Act of 1934. mentalities; Effective August 27, 1987, the Board amends (ii) the shares are acquired by conversion of 12 C.F.R. Part 220 as follows: sovereign debt obligations of the eligible country either through a direct exchange of debt obliga- Part 220—Credit by Brokers and Dealers tions or a payment for the debt in local currency, the proceeds of which are used to purchase the 1. The authority citation for Part 220 continues to read shares; as follows: (iii) the shares are held by the bank holding company or its subsidiaries, provided however Authority: 15 U.S.C. sections 78c, 78h, 78q, and 78w. that such shares may not be held by a U.S. insured bank or its subsidiaries; 2. Part 220 is amended by removing the period and (iv) the shares are divested within five years of adding "; or " at the end of paragraph (r)(2)(iii) and acquisition unless the Board extends such time adding a new paragraph (r)(3) as follows: period for good cause shown but no such extensions may in the aggregate exceed five years; and Section 220.2—Definitions (v) an investment shall be made under this paragraph in accordance with the investment proce- (r) "OTC margin bond" means: dures of paragraph (c) of this section and shall be (3) A "mortgage related security" as defined in subject to paragraph (b)(3)(i)(A) and (B) of this seciton 3(a)(41) of the Act. section. (2) Definitions. For purposes of this paragraph: ORDERS ISSUED UNDER BANK HOLDING (i) an "eligible country" means a country that, COMPANY ACT, BANK MERGER ACT, BANK since 1980, has restructured its sovereign debt SERVICE CORPORATION ACT, AND FEDERAL held by foreign creditors; and RESERVE ACT (ii) "investment" shall have the meaning set forth in section 211.2(i) of this part and, for purposes of Orders Issued Under Section 3 of the Bank this paragraph, shall include loans or other exten- Holding Company Act sions of credit by the bank holding company or its affiliates to a company acquired pursuant to this Baltimore Bancorp paragraph. Baltimore, Maryland (3) Conditions. Order Approving the Acquisition and Formation of a (i) Any company acquired pursuant to this para- Bank Holding Company graph shall not bear a name similar to the name of the acquiring bank holding company or any of its Baltimore Bancorp, Baltimore, Maryland ("Banaffiliates; and corp"), a bank holding company within the meaning of (ii) Neither the bank holding company nor its the Bank Holding Company Act ("Act"), 12 U.S.C. affiliates shall provide to any company acquired § 1842 et seq., has applied pursuant to section 3(a)(3) pursuant to this paragraph any confidential busi- of the Act, 12 U.S.C. §1843(a)(3), to acquire Metroness or other information concerning customers politan Holding Company, Washington, D.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

802 Federal Reserve Bulletin • October 1987 ("MHC"), and thereby indirectly to acquire MHC's cent of the total deposits in commercial banking orgabanking subsidiary, Metropolitan Bank of Bethesda, nizations in the state. Consummation of this proposal Bethesda, Maryland ("Metro Bank"), the successor would not have any significant adverse effect upon the by conversion to Metropolitan Federal Savings and concentration of banking resources in the state. Loan Association of Bethesda, Bethesda, Maryland Bancorp competes directly with Metro Bank in ("MFSL"). MHC has applied for the Board's approv- three banking markets: Annapolis, Frederick County al pursuant to section 3(a)(1) of the Act to become a and Washington, D.C.3 Bancorp and Metro Bank are bank holding company by acquiring Metro Bank; and among the smaller banking organizations in each of has applied pursuant to section 3(a)(3) of the Act to these markets, controlling together less than 5 percent acquire 16.7 percent of the Bank of Baltimore, Balti- of deposits in commercial banks in each of the marmore, Maryland.1 kets.4 Moreover, consummation of the proposal would Notice of the applications, affording interested per- increase concentration in the markets, as measured by sons an opportunity to submit comments, has been the Herfindahl-Hirschman Index ("HHI"), only given in accordance with section 3(b) of the Act, 52 slightly. The HHI in each of the markets would Federal Register 9,708 (1987). The time for filing increase by fewer than 10 points. Based upon the comments has expired, and the Board has considered foregoing, the Board concludes that consummation of the applications and all comments received in light of the proposal would not have a substantial adverse the factors set forth in section 3(c) of the Act. competitive effect in any relevant banking market. Metro Bank is the commercial bank successor to In evaluating these applications, the Board has MFSL, a federally chartered savings and loan associa- considered the financial resources of Bancorp and the tion, the accounts of which are insured by the Federal effect on those resources of the proposed acquisition. Savings and Loan Insurance Corporation ("FSLIC"). The Board has stated and continues to believe that MFSL has adopted a conversion plan by which it will capital adequacy is an especially important factor in convert to a state-chartered savings and loan associa- the analysis of bank holding company proposals, partion and then will convert to Metro Bank, a state- ticularly in transactions where a significant acquisition chartered commercial bank, the accounts of which is proposed.5 In this regard, the Board has stated that would be insured by the Federal Deposit Insurance banking organizations experiencing substantial growth Corporation ("FDIC"). internally and by acquisition, such as Applicant, Because Metro Bank, at the time of acquisition by should maintain a strong capital position substantially Bancorp, will accept demand deposits and be engaged above the minimum levels specified in the Capital in the business of making commercial loans, Metro Adequacy Guidelines without significant reliance on Bank would be a "bank" for purposes of the Act, and intangibles, particularly goodwill.6 Bancorp and MHC properly have applied to acquire Bancorp's existing tangible primary and total capital Metro Bank under section 3 of the Act, which governs ratios are well above the minimum levels specified in the acquisition of banks by bank holding companies. the Board's Capital Adequacy Guidelines.7 In order to Bancorp, with deposits of $1.9 billion,2 is the sev- effect the proposed acquisition, Bancorp will incur a enth largest commercial banking organization in Mary- substantial amount of goodwill upon consummation of land, controlling 6.7 percent of the total deposits in the proposed acquisition, although its tangible primary commercial banking organizations in the state. Upon capital ratio would still be above the minimum level the conversion of MFSL to Metro Bank, MHC will specified in the Board's Guidelines. Moreover, Bancontrol deposits of $426.9 million, representing 1.1 corp has in connection with this application committed percent of the total deposits in commercial banking organizations in the state. Upon consummation of this proposal, Bancorp would become the sixth largest commercial banking organization in Maryland and 3. The Annapolis banking market is defined as the Annapolis control deposits of $2.3 billion, representing 7.8 per- Ranally Metro Area ("RMA"). The Frederick banking market is defined as all of Frederick County, Maryland, except for the small southeast portion included in the Washington, D.C. RMA banking market. The Washington, D.C. banking market is defined as the Washington, D.C. RMA. 4. All market banking data are as of June 30, 1985. 1. Upon consummation, Bancorp proposes to merge MHC into a 5. See e.g., Chase Manhattan Corporation, 70 FEDERAL RESERVE newly formed, wholly owned subsidiary of Bancorp and to merge BULLETIN 529 (1984); NCNB Corporation, 69 FEDERAL RESERVE Metro Bank into its banking subsidiary, Bank of Baltimore. Thus, BULLETIN 49 (1983). after consummation, Metro Bank will no longer exist as a separate 6. National City Corporation, 70 FEDERAL RESERVE BULLETIN banking organization and MHC will be a wholly owned subsidiary of 743, 746 (1984). Bancorp, controlling 16.7 percent of the shares of the Bank of 7. Capital Adequacy Guidelines, 50 Federal Register 16,057, Baltimore. 16,066-67 (April 24, 1985) (71 FEDERAL RESERVE BULLETIN 445 2. State deposit data are as of December 31, 1986. (1985)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 803 to strengthen its tangible primary capital ratio follow- Board or by the Federal Reserve Bank of Richmond ing consummation of the proposal. acting pursuant to delegated authority. Based upon a review of all the facts of record, the By order of the Board of Governors, effective Board has determined that the financial and manageri- August 3, 1987. al resources of Bancorp and MHC are consistent with approval. Considerations relating to the convenience Voting for this action: Vice Chairman Johnson and Goverand needs of the communities to be served also are nors Seger, Angell, Heller, and Kelley. Absent and not voting: Chairman Volcker. consistent with approval of this application. Metro Bank's nonbanking subsidiary, Metropolitan JAMES MCAFEE Insurance Services, Inc., although currently inactive, [SEAL] Associate Secretary of the Board is authorized to engage in general insurance activities that generally are impermissible for bank holding companies. Accordingly, Bancorp has agreed that it will cause Metropolitan Insurance Services, Inc. to Community First Minnesota Bankshares, Inc. cease business prior to MHC becoming a bank holding Fargo, North Dakota company. The Board notes that this application involves the Order Approving Formation of a Bank Holding acquisition of a bank that results from the conversion Company of a non-failing, FSLIC-insured state savings bank. The acquisition proposed here, however, does not fall Community First Minnesota Bankshares, Inc., Fargo, within the scope of the Board's policy and rulings North Dakota, has applied for the Board's approval regarding acquisitions of thrift institutions under sec- under section 3(a)(1) of the Bank Holding Company tion 4 of the Act8 or the provisions of the 1982 Garn-St Act ("Act") (12 U.S.C. § 1842(a)(1)), to become a Germain Depository Institutions Act regarding acqui- bank holding company by acquiring the following sitions of thrift institutions. Upon its acquisition by banks from First Bank System, Inc., Minneapolis, Bancorp, Metro Bank will accept demand deposits and Minnesota ("First Bank System"): First Bank Benengage in commercial lending, and will be subject to all son, National Association, Benson, Minnesota; First the banking standards of the Act. Bank (N.A.)—Little Falls, Little Falls, Minnesota; The Board expects that Bancorp will comply with all First Bank Southwest, National Association, Marstate and federal requirements necessary for consum- shall, Minnesota; The First State Bank in Paynesville, mation of the acquisition, and the Board's approval of Paynesville, Minnesota; First Bank of Wheaton, Nathis application under the Act is not intended to tional Association, Wheaton, Minnesota; and The preempt any such requirements.9 The Board has previ- First National Bank in Windom, Windom, Minnesota ously stated that its approval of transactions under ("Banks"). section 3 of the Act does not relieve an applicant or the Notice of the application, affording an opportunity bank involved of the responsibility to obtain approval for interested persons to submit comments, has been under other federal or state laws and regulations and published (52 Federal Register 17,334 (1987)). The does not shield an applicant from the consequences of time for filing comments has expired, and the Board violations of other laws.10 has considered the application and all comments re- Based on the foregoing and other facts of record, the ceived1 in light of the factors set forth in section 3(c) of Board has determined that the applications should be, the Act (12 § U.S.C. § 1842(c)). and hereby are, approved. The transactions shall not Applicant is a nonoperating corporation formed for be consummated before the thirtieth calendar day the purpose of acquiring Banks from First Bank Sysfollowing the effective date of this Order, or later than three months after the effective date of this Order, unless such period is extended for good cause by the 1. Comments were submitted by The Independent Insurance Agents of America, The National Association of Casualty and Surety Agents, The National Association of Life Underwriters, The National Association of Professional Insurance Agents, and The National Association of Surety Bond Producers (collectively the "Trade Asso- 8. D.H. Baldwin Company, 63 FEDERAL RESERVE BULLETIN 280 ciations"). The Trade Associations allege that a lease arrangement (1977). between Banks and an independently owned and operated insurance 9. The Board may not approve an application that would result in a agency will cause Applicant to be engaged in insurance activities violation of federal or state law. Whitney National Bank v. Bank of prohibited by section 4(c)(8) of the Act. The Board has carefully New Orleans, 379 U.S. 411 (1964). considered the comments submitted by the Trade Associations, 10. Hartford National Corporation (Order dated June 1, 1987); Applicant's response, and all the facts of record, and has concluded Comerica Inc., 73 FEDERAL RESERVE BULLETIN 599 (1987); Safra- that the proposed lease arrangement, as modified by Applicant, will Corp, 73 FEDERAL RESERVE BULLETIN 137 (1987); The One Bancorp, not cause Applicant to be engaged in impermissible insurance activi- 73 FEDERAL RESERVE BULLETIN 55, 135 (1987). ties for purposes of the Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

804 Federal Reserve Bulletin • October 1987 tem. Upon consummation of the proposal, Applicant By order of the Board of Governors, effective will control total deposits of approximately $199.3 August 17, 1987. million, representing less than one percent of total deposits in commercial banking organizations in the Voting for this action: Chairman Greenspan and Governors state, and would become the tenth largest commercial Johnson, Seger, Heller, and Kelley. Absent and not voting: banking organization in the state.2 Based on all the Governor Angell. facts of record, the Board believes that consummation of the proposal would have no significantly adverse WILLIAM W. WILES effect on the concentration of banking resources in [SEAL] Secretary of the Board Minnesota. The Board has considered the effects of the proposal upon competition in the relevant banking markets.3 Community First North Dakota Bankshares, Applicant does not currently operate any banking or Inc. nonbanking subsidiary in any market in which Banks Fargo, North Dakota operate. Moreover, upon consummation of the proposal, a significant number of competitors will remain Order Approving Formation of a Bank Holding in each market in which the Banks operate. Based on Company all the facts of record, the Board believes that consummation of the proposal would not result in any signifi- Community First North Dakota Bankshares, Inc., cantly adverse effect on existing or potential competi- Fargo, North Dakota, has applied for the Board's tion or increase the concentration of banking approval under section 3(a)(1) of the Bank Holding resources in any relevant banking market. Thus, com- Company Act ("Act") (12 U.S.C. § 1842(a)(1)), to petitive factors are consistent with approval. become a bank holding company by acquiring the The financial and managerial resources of the Appli- following banks from First Bank System, Inc., Minnecant and Banks are consistent with approval, especial- apolis, Minnesota ("First Bank System"): The First ly in light of Applicant's plan to increase its consolidat- State Bank of Cooperstown, Cooperstown, North ed capital position. Considerations relating to the Dakota; First National Bank in Lidgerwood, Lidgerconvenience and needs of the communities to be wood, North Dakota; First Bank of North Dakota served are also consistent with approval. (N.A.) Wahpeton, Wahpeton, North Dakota; and The Based on the foregoing and other facts of record, First National Bank and Trust Company of Dickinson, including certain commitments made by Applicant, the Dickinson, North Dakota ("Banks"). Board has determined that the application should be Notice of the application, affording an opportunity and hereby is approved. The acquisition should not be for interested persons to submit comments, has been consummated before the thirtieth calendar day follow- published (52 Federal Register 17,334 (1987)). The ing the effective date of this Order or later than three time for filing comments has expired, and the Board months after the effective date of this Order, unless has considered the application and all comments resuch period is extended for good cause by the Board or ceived1 in light of the factors set forth in section 3(c) of by the Federal Reserve Bank of Minneapolis, acting the Act (12 U.S.C. § 1842(c)). pursuant to delegated authority. Applicant is a nonoperating corporation formed for the purpose of acquiring Banks from First Bank System. Upon consummation of the proposal, Applicant 2. Banking data are as of December 31, 1986. will control total deposits of approximately $140.8 3. Benson Bank operates in the Benson banking market, which is million, representing 2.3 percent of total deposits in approximated by part of Swift County, Minnesota. Little Falls Bank operates in the Little Falls banking market, which is approximated by Morrison County and part of Todd County, all in Minnesota. 1. Comments were submitted by The Independent Insurance Marshall Bank operates in the Marshall banking market, which is Agents of America, The National Association of Casualty and Surety approximated by Lincoln and Lyon Counties, and parts of Murray, Agents, The National Association of Life Underwriters, The National Redwood, and Yellow Medicine Counties, all in Minnesota. Association of Professional Insurance Agents, and The National Paynesville Bank operates in the St. Cloud banking market, which Association of Surety Bond Producers (collectively the "Trade Assois approximated by Stearns and Benton Counties, and part of Sher- ciations"). The Trade Associations allege that a lease arrangement burne County, all in Minnesota. between Banks and an independently owned and operated insurance Wheaton Bank operates in the Watertown banking market, which is agency will cause Applicant to be engaged in insurance activities approximated by Codington, Roberts, Grant, Clark, Hamlin, and prohibited by section 4(c)(8) of the Act. The Board has carefully Deuel Counties, South Dakota; and Big Stone and Traverse Counties, considered the comments submitted by the Trade Associations, and parts of Lac Qui Parle County, Minnesota. Applicant's response, and all the facts of record, and has concluded Windom Bank operates in the Worthington banking market, which that the proposed lease arrangement, as modified by Applicant, will is approximated by Cottonwood, Jackson, and Nobles Counties, and not cause Applicant to be engaged in impermissible insurance activipart of Murray County, all in Minnesota. ties for purposes of the Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 805 commercial banking organizations in the state, and Community First South Dakota Bankshares, would become the sixth largest commercial banking Inc. organization in the state.2 Based on all the facts of Fargo, North Dakota record, the Board believes that consummation of the proposal would have no significantly adverse effect on Order Approving Formation of a Bank Holding the concentration of banking resources in North Da- Company kota. The Board has considered the effects of the proposal Community First South Dakota Bankshares, Inc., upon competition in the relevant banking markets.3 Fargo, North Dakota, has applied for the Board's Applicant does not currently operate any banking or approval under section 3(a)(1) of the Bank Holding nonbanking subsidiary in any market in which Banks Company Act ("Act") (12 U.S.C. § 1842(a)(1)), to operate. Moreover, upon consummation of the pro- become a bank holding company by acquiring six de posal, a significant number of competitors will remain novo state-chartered banks: Community First State in each market in which the Banks operate. Based on Bank of Hot Springs, Hot Springs, South Dakota; all the facts of record, the Board believes that consum- Community First State Bank of Huron, Huron, South mation of the proposal would not result in any signifi- Dakota; Community State Bank in Lemmon, Lemcantly adverse effect on existing or potential competi- mon, South Dakota; Community First State Bank of tion or increase the concentration of banking Platte, Platte, South Dakota; Community First State resources in any relevant banking market. Thus, com- Bank of Redfield, Redfield, South Dakota; and Competitive factors are consistent with approval. munity First State Bank of Vermillion, Vermillion, The financial and managerial resources of Applicant South Dakota ("Banks"). These banks are being and Banks are consistent with approval, especially in formed to purchase the assets and assume the deposit light of Applicant's plan to increase its consolidated and other liabilities of nine branches of First Bank capital position. Considerations relating to the conve- South Dakota, N.A., Sioux Falls, South Dakota, a nience and needs of the communities to be served are subsidiary of First Bank System, Inc., Minneapolis, also consistent with approval. Minnesota ("First Bank System"), located in the communities in which the Banks propose to operate. Based on the foregoing and other facts of record, including certain commitments made by Applicant, the Notice of the application, affording an opportunity Board has determined that the application should be for interested persons to submit comments, has been and hereby is approved. The acquisition should not be published (52 Federal Register 17,334 (1987)). The consummated before the thirtieth calendar day follow- time for filing comments has expired, and the Board ing the effective date of this Order or later than three has considered the application and all comments remonths after the effective date of this Order, unless ceived1 in light of the factors set forth in section 3(c) of such period is extended for good cause by the Board or the Act (12 U.S.C. § 1842(c)). by the Federal Reserve Bank of Minneapolis, acting Applicant is a nonoperating corporation formed for pursuant to delegated authority. the purpose of acquiring, through Banks, certain By order of the Board of Governors, effective branches of First Bank South Dakota, N.A. Upon August 17, 1987. consummation of the proposal, Applicant will control total deposits of approximately $388.0 million, repre- Voting for this action: Chairman Greenspan and Governors senting 4.6 percent of total deposits in commercial Johnson, Seger, Heller, and Kelley. Absent and not voting: banking organizations in the state, and would become Governor Angell. WILLIAM W. WILES [SEAL] Secretary of the Board 1. Comments were submitted by The Independent Insurance Agents of America, The National Association of Casualty and Surety 2. Banking data are as of December 31, 1986. Agents, The National Association of Life Underwriters, The National 3. Cooperstown Bank operates in the Jamestown banking market, Association of Professional Insurance Agents, and The National which is approximated by Eddy, Foster, Stutsman, Barnes, and Association of Surety Bond Producers (collectively the "Trade Asso- LaMoure Counties and parts of Griggs and Dickey Counties, all in ciations"). The Trade Associations allege that a lease arrangement North Dakota. between Banks and an independently owned and operated insurance Dickinson Bank operates in the Dickinson banking market, which is agency will cause Applicant to be engaged in insurance activities approximated by Dunn, Billings, Golden Valley, Slope, Stark, and prohibited by section 4(c)(8) of the Act. The Board has carefully Hettinger Counties, all in North Dakota. considered the comments submitted by the Trade Associations, Lidgerwood Bank and Wahpeton Bank both operate in the Wahpe- Applicant's response, and all the facts of record, and has concluded ton-Breckenridge banking market, which is approximated by Sargeant that the proposed lease arrangement, as modified by Applicant, will County and parts of Richland County in North Dakota, and part of not cause Applicant to be engaged in impermissible insurance activi- Wilken County, Minnesota. ties for purposes of the Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

806 Federal Reserve Bulletin • October 1987 the third largest commercial banking organization in Board or by the Federal Reserve Bank of Minneapolis, the state.2 Based on all the facts of record, the Board acting pursuant to delegated authority. believes that consummation of the proposal would By order of the Board of Governors, effective have no significantly adverse effect on the concentra- August 17, 1987. tion of banking resources in South Dakota. The Board has considered the effects of the proposal Voting for this action: Chairman Greenspan and Governors upon competition in the relevant banking markets.3 Johnson, Seger, Heller, and Kelley. Absent and not voting: Governor Angell. Applicant does not currently operate any banking or nonbanking subsidiary in any market in which Banks will operate. Moreover, upon consummation of the WILLIAM W. WILES [SEAL] Secretary of the Board proposal, a significant number of competitors will remain in each market in which the Banks will operate. Based on all the facts of record, the Board believes that consummation of the proposal would not result in Genbeach Company, Inc. any significantly adverse effect on existing or potential Beattyville, Kentucky competition or increase the concentration of banking resources in any relevant banking market. Thus, com- Order Approving Formation of a Bank Holding petitive factors are consistent with approval. Company The financial and managerial resources of Applicant and Banks are consistent with approval, especially in Genbeach Company, Inc., Beattyville, Kentucky, has light of Applicant's plan to increase its consolidated applied for the Board's approval under section 3(a)(1) capital position. Considerations relating to the conve- of the Bank Holding Company Act ("Act") nience and needs of the communities to be served are (12 U.S.C. § 1842(a)(1)), to become a bank holding also consistent with approval. company by acquiring 57.2 percent of the outstanding Based on the foregoing and other facts of record, voting shares of Peoples Exchange Bancorp, Inc., including certain commitments made by Applicant, the Beattyville, Kentucky ("Bancorp"), a one-bank hold- Board has determined that the application should be ing company by virtue of its control of Peoples Exand hereby is approved. The acquisitions should not change Bank of Beattyville ("Bank"). be consummated before the thirtieth calendar day Notice of the application, affording opportunity for following the effective date of this Order or later than interested persons to submit comments, has been three months after the effective date of this Order, given in accordance with section 3(b) of the Act (52 unless such period is extended for good cause by the Federal Register 20,780 (1987)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of 2. Banking data are as of June 30, 1985. the factors set forth in section 3(c) of the Act 3. Hot Springs Bank operates in the Rapid City banking market, (12 U.S.C. § 1842(c)). which is approximated by Butte, Lawrence, Pennington, Custer, Fall River, Haakon, Jackson, and Bennett Counties, and part of Meade Applicant is a nonoperating company that has been County, all in South Dakota. formed for the purpose of becoming a bank holding Huron Bank operates in the Huron banking market, which is approximated by Hand, Beadle, Buffalo, Jerauld, and Sanborn Coun- company by acquiring the shares of Bancorp currently ties, and parts of Miner and Kingsbury Counties, all in South Dakota. held by two of Applicant's principals, who are mem- Lemmon Bank operates in the Buffalo-Bowman banking market, bers of the same family. Upon consummation of the which is approximated by Harding County and part of Perkins County, South Dakota, and Adams and Bowman Counties, North proposal, the principals' shares of Bancorp would be Dakota. exchanged for shares of Applicant. Thus, this proposal Platte Bank and its Corsica branch operate in the Mitchell banking essentially represents a restructuring of existing ownmarket, which is approximated by Hanson, Aurora, Brule, Davison, Douglas, Charles Mix, and Hutchinson Counties, all in South Dakota. ership interests.1 Redfield Bank operates in the Aberdeen banking market, which is Bank is the 116th largest commercial banking orgaapproximated by McPherson, Edmunds, Faulk, Brown, Spink, Marshall, and Day Counties, South Dakota, and parts of Dickey County, nization in Kentucky, with total deposits of $48 mil- North Dakota. The Gettysburg Branch of Redfield Bank operates in lion, representing 0.19 percent of the total deposits in the Pierre banking market, which is approximated by Sulley, Hyde, commercial banks in the state.2 Bank operates in the Stanley, Hughes, Jones, and Lyman Counties, and parts of Potter County, all in South Dakota. The Clark Branch of Redfield Bank operates in the Watertown banking market, which is approximated by Codington, Roberts, Grant, Clark, Hamlin, and Deuel Counties, South Dakota; and Traverse and Big Stone Counties, and parts of Lac 1. Prior to consummation, shares of Bancorp representing less than Qui Parle County, Minnesota. 1 percent of the outstanding voting shares would be transferred by one Vermillion Bank operates in the Vermillion banking market, which of the principals to a third member of the family. These shares would is approximated by Clay County and part of Union County, both in also be exchanged for shares of Applicant. South Dakota. 2. All banking data are as of December 31, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 807 Lee-Owsley banking market.3 The principals of Appli- ments received in light of the factors set forth in cant are not associated with any other banking organi- section 3(c) of the Act. zation in this market. Consummation of this proposal Applicant is the fifth largest commercial banking would not result in any adverse effect upon competi- organization in Tennessee, controlling deposits of $1.8 tion or increase the concentration of banking re- billion, representing 5.8 percent of the total deposits in sources in the relevant area. Accordingly, the Board commercial banking organizations in the state.1 Bank concludes that competitive considerations under the is one of the smaller commercial banking organizations Act are consistent with approval. in Tennessee, with deposits of $25 million, represent- The financial and managerial resources and future ing less than 1 percent of the total deposits in commerprospects of Applicant, Bancorp, and Bank are con- cial banking organizations in the state. Consummation sidered consistent with approval of the proposal. Con- of this proposal would not have any significant adverse siderations relating to the convenience and needs of effect upon the concentration of banking resources in the community to be served also are consistent with the state. approval. Applicant and Bank compete directly in the Gibson Based on the foregoing and other facts of record, the County banking market.2 Applicant, with deposits of Board has determined that the application should be, $104.5 million, is the largest of 12 commercial banking and hereby is, approved. This transaction shall not be organizations in the market, controlling 28.6 percent of consummated before the thirtieth calendar day follow- the total deposits in commercial banking organizations ing the effective date of this Order, or later than three in the market.3 Bank is the market's fourth largest months after the effective date of this Order, unless commercial banking organization and controls 6.4 such period is extended for good cause by the Board or percent of the total deposits in commercial banking the Federal Reserve Bank of Cleveland, acting pursu- organizations in the market. Upon consummation of ant to delegated authority. the proposal, Applicant would control 35.1 percent of By order of the Board of Governors, effective the deposits in commercial banks in the market. The August 6, 1987. Gibson County market is considered moderately concentrated with a four-firm concentration ratio of 65.3 Voting for this action: Vice Chairman Johnson and Gover- percent which, upon consummation, would increase to nors Seger, Angell, Heller, and Kelley. Absent and not 71.7 percent. The Herfindahl-Hirschman Index voting: Chairman Volcker. ("HHI") would increase by 369 points to 1852.4 Although consummation of this proposal would JAMES MCAFEE eliminate some existing competition between Appli- [SEAL] Associate Secretary of the Board cant and Bank in the Gibson County banking market, numerous other commercial banking organizations would continue to operate in the market. In addition, Union Planters Corporation the Board has considered the presence of thrift institu- Memphis, Tennessee tions in the market in its analysis of this proposal. The Board previously has indicated that thrift insti- Order Approving Acquisition of a Bank tutions have become, or have the potential to become, Union Planters Corporation, Memphis, Tennessee, a bank holding company within the meaning of the Bank Holding Company Act ("Act") (12 U.S.C. § 1841 et seq.), has applied for the Board's approval under section 3(a)(3) of the Act to acquire at least 90 percent 1. State banking data are as of December 31, 1986. of the voting shares of Bank of Trenton and Trust 2. The Gibson County banking market is approximated by Gibson County, Tennessee. Company, Trenton, Tennessee ("Bank"). 3. Market banking data are as of June 30, 1986. Notice of the application, affording interested per- 4. Under the revised Department of Justice Merger Guidelines (40 sons an opportunity to submit comments, has been Federal Register 26,823) a market in which the post-merger HHI is over 1800 is considered concentrated. In such markets, the Departduly published (52 Federal Register 19,926 (1987)). ment is likely to challenge a merger that increases the HHI by more The time for filing comments has expired, and the than 50 points. The Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence Board has considered the application and all comof other factors indicating anticompetitive effects) unless the postmerger HHI is at least 1800 and the merger increases the HHI by at least 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticom- 3. The Lee-Owsley banking market consists of Lee and Owsley petitive effects implicitly recognizes the competitive effect of limited counties in Kentucky. purpose lenders and other nondepository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

808 Federal Reserve Bulletin • October 1987 major competitors of commercial banks.5 Three thrift 10, 1987, prohibits the Board from approving an appliinstitutions operate offices in the Gibson County bank- cation by a bank holding company to acquire a compaing market, controlling 21.6 percent of the market's ny, including a state bank, that is engaged, directly or total deposits. These institutions compete with com- through a subsidiary, in any insurance agency or mercial banks in the market as providers of a wide underwriting activities beyond those permitted in exarray of deposit and lending services to consumer and emptions (A) through (G) to the insurance prohibitions commercial customers. In view of these facts, the contained in the 1982 Garn-St Germain Act amend- Board has concluded that thrift institutions exert a ments to section 4(c)(8) of the Act. Applicant has significant competitive influence that mitigates the committed to conduct its insurance agency activities anticompetitive effects of this proposal in the Gibson pursuant to the terms of exemption C. Accordingly, County market.6 On the basis of the foregoing, the the Board's approval of the application is not preclud- Board concludes that consummation of the proposal ed by Title II of CEBA. would not have a substantial adverse competitive Based on the foregoing and other facts of record, the effect in the Gibson County banking market. Board has determined that the application should be, The financial and managerial resources of Applicant and hereby is, approved. The acquisition of Bank shall and Bank are consistent with approval. Considerations not be consummated before the thirtieth calendar day relating to the convenience and needs of the communi- following the effective date of this Order, or later than ties to be served also are consistent with approval. three months after the effective date of this Order, As part of this proposal, Applicant will acquire unless such period is extended for good cause by the indirectly Bank's insurance agency subsidiary that Board or by the Federal Reserve Bank of St. Louis, engages in general insurance activities in Trenton, a acting pursuant to delegated authority. town with a population of fewer than 5,000 residents. By order of the Board of Governors, effective In reviewing the application, the Board has considered August 20, 1987. the comments of various insurance groups7 asserting that exemption C to the insurance prohibitions con- Voting for this action: Chairman Greenspan and Governors tained in the 1982 Garn-St Germain Act amendments Johnson, Angell, and Heller. Absent and not voting: Goverto the Act8 may not be used by bank holding compa- nors Seger and Kelley. nies, such as Applicant, that do not have their principal place of banking business in a town with a popula- WILLIAM W. WILES [SEAL] Secretary of the Board tion of fewer than 5,000 residents. The Board, however, previously has determined in its insurance rulemaking proceeding and by Order that exemption C does not impose such a requirement on bank holding Orders Issued Under Section 4 of the Bank companies that engage in general insurance activities Holding Company Act in towns under 5,000 in population.9 In this regard, Title II of the Competitive Equality Banking Act of Hong Kong and Shanghai Banking Corporation 1987 ("CEBA"), which was signed into law on August Hong Kong, B.C.C. Kellett, N.V. Curacao, Netherlands Antilles 5. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 (1984); The Chase Manhattan Corporation,70 FEDERAL RESERVE BULLETIN 529 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE HSBC Holdings, B.V. BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL Amsterdam, The Netherlands RESERVE BULLETIN 802 (1983); First Tennessee Corporation, 69 FEDERAL RESERVE BULLETIN 298 (1983). 6. If 50 percent of deposits held by thrift institutions in the Gibson Marine Midland Banks, Inc. County banking market were included in the calculation of market Buffalo, New York concentration, Applicant would control 25.2 percent of the market's total deposits and Bank would control 5.7 percent of such deposits. Upon consummation, the HHI would increase by 286 points to 1501. Order Approving the Issuance and Sale of Variably 7. Comments were received from the Association of Life Under- Denominated Payment Instruments writers, National Association of Professional Insurance Agents, Independent Insurance Agents of America, Inc., National Association of Casualty and Surety Agents, and National Association of Surety Bond Hong Kong and Shanghai Banking Corporation, Hong Producers. 8. 12 U.S.C. § 1843(c)(8)(C)(i). Kong, B.C.C., Kellett N.V., Curacao, Netherlands 9. 12 C.F.R. § 225.25(b)(8)(iii); see also Amendments to Regula- Antilles, HSBC Holdings, B.V., Amsterdam, The tion Y Governing Permissible Insurance Activities for Bank Holding Netherlands and Marine Midland Banks, Inc., Buffalo, Companies, 51 Federal Register 36,201 (1986); First United Bancshares, Inc., 73 FEDERAL RESERVE BULLETIN 162 (1987). New York ("Marine") (collectively referred to as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 809 "Applicants"), each a bank holding company within action account reserve requirements that serve as an the meaning of the Bank Holding Company Act essential tool of monetary policy. Accordingly, the ("BHC Act"), have applied for the Board's approval Board conditioned its approval on the requirement under section 4(c)(8) of the BHC Act (12 U.S.C. that Applicant file with the Board weekly reports of § 1843(a)(3)) and section 225.23(a)(3) of the Board's daily data on this activity. Regulation Y (12 U.S.C. § 225.23(a)(3) to engage In Wells Fargo & Company,5 the Board approved a through a newly formed subsidiary, Marine Midland proposal to engage in the issuance and sale of official Payment Services, Inc., in the issuance and sale of checks with no maximum limitation on the face payment instruments, as follows: amount subject to certain commitments designed to (1) domestic money orders up to a maximum face mitigate the potential adverse effects on monetary value of $10,000; and policy. Applicants have made these same commit- (2) official checks with no maximum limitation on ments. the face amount, but subject to certain conditions. Specifically, Applicants have committed that they will deposit into a demand deposit account at Marine These instruments would be sold throughout New Bank the proceeds of any official check having a face York exclusively through branches of Marine's sub- value in excess of $10,000, and the proceeds of each sidiary, Marine Midland Bank, N.A. ("Marine item will remain in the demand account until the Bank").1 respective payment instrument is paid. Weekly reports Notice of the application, affording interested per- will be made of daily data showing separately the sons an opportunity to submit comments, has been aggregate value of all outstanding instruments (includpublished (52 Federal Register 24,532 (1987)). The ing money orders as well as official checks) with face time for filing comments has expired, and the Board values of up to $10,000, as well as the aggregate value has considered the application and all comments re- of all official checks with face values exceeding ceived in light of the public interest factors set forth in $10,000. section 4(c)(8) of the BHC Act. In light of the commitments and procedures outlined Marine controls total consolidated assets of approxi- above, the Board has determined that its concerns mately $24 billion and is the seventh largest bank regarding potential adverse effects on the reserve base holding company in the state of New York based on have been sufficiently mitigated as to be consistent total domestic deposits in Marine Bank.2 Applicants with approval. The Board's approval to engage in this also engage in a number of nonbanking activities. activity is subject to the continued evaluation of its Regulation Y includes on the list of permissible potential adverse effects on monetary policy. If the nonbanking activities the issuance and sale of money Board discerns such effects in the future, it would orders and other similar consumer-type payment in- require appropriate modification of the activity and the struments with a face value not exceeding $1,000.3 The imposition of additional reserve requirements. Board also has approved by order, a number of In order to approve this application under section applications to engage in the issuance of payment 4(c)(8), the Board must find that Applicants' perforinstruments with a $10,000 maximum face value.4 In mance of the proposed activity could "reasonably be each case, the Board determined that the issuance and expected to produce benefits to the public, such as sale of payment instruments in increased denomina- greater convenience, increased competition, or gains tions would not affect the fundamental nature of the in efficiency, that outweigh possible adverse effects, activity as otherwise permitted under Regulation Y. In such as undue concentration of resources, decreased those orders, the Board also expressed its concern or unfair competition, conflicts of interests, or unover potential adverse effects on monetary policy sound banking practices." 12 U.S.C. § 1843(c)(8). because such instruments are not subject to the trans- Consistent with the Board's findings in the Wells Fargo Order, the record here reflects that the sale of these larger denominated money orders by Applicants would increase competition in this field, provide great- 1. Applicant proposes to furnish data processing, marketing, and er convenience for purchasers, result in gains in effiservicing assistance in connection with its payment instrument activi- ciency and generally make these instruments more ties. These activities are permissible pursuant to section 4(c)(1)(C) of the BHC Act. readily available to the public. There is no evidence in 2. Asset data are as of March 31, 1987, and deposit data are as of the record that consummation of this proposal would December 31, 1986. 3. 12 C.F.R. § 225.25(b)(12). 4. BankAmerica Corporation, 70 FEDERAL RESERVE BULLETIN 364 (1984) and Order approved July 21, 1987; see also Chase Manhattan 5. Wells Fargo & Company, 72 FEDERAL RESERVE BULLETIN 148 Corporation, 71 FEDERAL RESERVE BULLETIN 905 (1985); Citicorp, 71 (1986). See also, FirstBank Holding Company of Colorado, 72 FEDER- FEDERAL RESERVE BULLETIN 58 (1985). AL RESERVE BULLETIN 662 (1986). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

810 Federal Reserve Bulletin • October 1987 result in unsound banking practices, unfair competi- JPM Equities proposes to conduct these activities tion, conflicts of interests, or undue concentration of from offices in New York City and London, England, resources. Accordingly, the Board believes that public for its affiliates and for institutional customers in the benefits of the proposal outweigh any potential ad- United States and abroad. verse effects. On June 3, 1986, the Federal Reserve Bank of New Based upon the foregoing and other considerations York, pursuant to authority delegated by the Board, reflected in the record, the Board has determined that approved JPM's application to engage through JPM the balance of the public interest factors it is required Equities in brokerage activities in accordance with to consider under section 4(c)(8) is favorable. This section 225.225(b)(15) of the Board's Regulation Y. determination is subject to all of the conditions set JPM now proposes to expand the activities of JPM forth in Regulation Y, including sections 225.4(d) and Equities to include providing to institutional custom- 225.23(b), and to the Board's authority to require such ers and its affiliates,2 in conjunction with its brokerage modification or termination of the activities of a hold- services, various investment advisory services, ining company or any of its subsidiaries as the Board cluding portfolio investment advice and research, genfinds necessary to assure compliance with the provi- eral economic advice, and forecasting. The Board has sions and purposes of the BHC Act and the Board's approved the separate provision of investment advisoregulations and orders issued thereunder, or to pre- ry services by bank holding company subsidiaries and vent evasion thereof. has incorporated this activity into Regulation Y. The activity shall be commenced no later than three (12 C.F.R. § 225.25(b)(4)). months after the effective date of this Order, unless Notice of the application, affording interested parsuch period is extended for good cause by the Board or ties an opportunity to comment, has been duly pubby the Federal Reserve Bank of New York, acting lished (51 Federal Register 42,004 (1986)). The time for pursuant to delegated authority. filing comments has expired, and the Board has con- By order of the Board of Governors, effective sidered the application and all comments received, August 17, 1987. including comments opposing the proposal from the Securities Industry Association (the "SIA"), a nation- Voting for this action: Chairman Greenspan and Governors al trade association of the securities industry, in light Johnson, Seger, Angell, Heller, and Kelley. of the public interest factors set forth in section 4(c)(8) of the BHC Act. WILLIAM W. WILES The Board previously has determined by Order that [SEAL] Secretary of the Board the combination of investment advice and securities execution services to institutional customers is a permissible activity for bank holding companies under J.P. Morgan & Co. Incorporated section 4(c)(8) of the BHC Act, and does not constitute New York, New York the underwriting or public sale of securities under section 20 of the Glass-Steagall Act. National West- Order Approving Application to Engage in Combined minister Bank PLC, et al., 72 FEDERAL RESERVE Investment Advisory and Securities Execution Services J.P. Morgan & Co. Incorporated ("JPM"), New York, New York, a bank holding company within the meaning of the Bank Holding Company Act ("Act" or Investment Company Act of 1940; or a corporation, partnership, proprietorship, organization or institutional entity that regularly "BHC Act"), has applied, pursuant to section 4(c)(8) invests in the types of securities as to which investment advice is of the BHC Act (12 U.S.C. § 1843(c)(8)) and section given, or that regularly engages in transactions in securities; 225.23(a)(3) of the Board's Regulation Y (12 C.F.R. (2) an employee benefit plan with assets exceeding $5,000,000, or whose investment decisions are made by a bank, insurance compa- § 225.23(a)(3)), to expand the authority of its wholly ny or investment advisor registered under the Investment Advisors owned subsidiary, J.P. Morgan Equities Inc. ("JPM Act of 1940; Equities"), to include the provision of investment (3) a natural person whose individual net worth (or joint net worth with his or her spouse) at the time of receipt of the investment advisory services for "Institutional Customers."1 advice or brokerage services exceeds $5,000,000; (4) a broker-dealer or option trader registered under the Securities Exchange Act of 1934, or other securities professional; or (5) an entity all of the equity owners of which are institutional customers. 1. An Institutional Customer is defined by JPM to be: 2. The provision of such services by JPM Equities to other JPM (1) a bank (acting in an individual or fiduciary capacity); an affiliates is a permissible servicing activity under section 225.22(a) of insurance company; a registered investment company under the Regulation Y, 12 C.F.R. § 225.22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 811 BULLETIN 584 (1986) ("NatWest"). That determina- proposed activity as to require their provision in a tion recently has been upheld by the U.S. Court of specialized form.4 Appeals for the District of Columbia Circuit in Securi- In the NatWest Order, the Board determined in the ties Industry Association v. Board of Governors, context of an application by an individual bank holding et al„ No. 86-1412 (slip op. July 7, 1987). company that the combined offering by the same The current proposal parallels in almost all respects subsidiary of investment advisory and securities exethe NatWest proposal, and thus raises substantially cution services to institutional customers is closely identical issues to those resolved by the Board in its related to banking. In NatWest, the Board found that approval of that application. In this regard, the Board the proposed activities represented the combination of has carefully considered the comments filed by the two permissible activities in such a way that it did not SI A regarding this proposal, which incorporated by alter the functional nature of the activities. The Board reference its comments to the NatWest proposal. The also determined that the joint offering of brokerage and SIA also urges the Board to defer consideration of this investment advice was a proper incident to banking. application until resolution of the NatWest litigation in The proposed activities here are identical to those order to avoid a multiplicity of suits. approved in that case, except that JPM Equities would Upon consideration of the entire record of the exercise limited investment discretion at a customer's instant application, the analysis contained in the specific request. NatWest Order,3 and for the additional reasons set Although JPM Equities anticipates that, as a general forth below, the Board concludes that the activities matter, its institutional customers will want to make proposed herein are closely related to banking and a their own investment decisions, JPM Equities also proper incident thereto under section 4(c)(8) of the desires to make available to such customers a service BHC Act, and that consummation of the proposal typically offered by similar firms: that within defined would not result in a violation of the Glass-Steagall parameters established by the client, JPM Equities Act. Accordingly, the Board has determined to ap- would be authorized to exercise discretion in buying prove the application. and selling securities on behalf of the client. Such investment discretion would be exercised only I. BHC Act Factors at the request of a client; JPM Equities does not intend to market or solicit managed accounts. Moreover, Section 4(c)(8) imposes a two-step test for determining JPM Equities would obtain the consent of its client the permissibility of nonbanking activities for bank before engaging in securities transactions on the cliholding companies: ent's behalf with an affiliate of JPM Equities. Each (1) whether the activity is closely related to banking; client would receive confirmation of each transaction, and as well as monthly statements which would indicate in (2) whether the activity is a "proper incident" to detail the terms of each transaction executed on the banking—that is, whether the proposed activity can client's behalf. Each client would, therefore, always reasonably be expected to produce benefits to the be aware of the scope of JPM Equities' activities for its public that outweigh possible adverse effects. account. The discretion proposed by Applicant has traditionally been performed by banks and is encompassed A. Closely Related to Banking Analysis within the investment advisory activity previously approved by the Board, as the Supreme Court recog- Based on guidelines established in the National Couri- nized in Board of Governors v. Investment Company er case, a particular activity may be found to meet the Institute, 450 U.S. 46 (1981) ("/C///"): "closely related to banking" test if it is demonstrated that banks generally have in fact provided the proposed activity; that banks generally provide services that are operationally or functionally so similar to the proposed activity as to equip them particularly well to provide the proposed activity; or that banks generally 4. National Courier Association v. Board of Governors, 516 F.2d provide services that are so integrally related to the 1229 (D.C. Cir. 1975). However, the National Courier guidelines are not the exclusive basis for finding a close relationship between a proposed activity and banking. The Board has stated that in acting on a request to engage in a new nonbanking activity, it will consider any other factor that an applicant may advance to demonstrate a reasonable or close connection or relationship of the activity to banking. 49 3. The Board hereby incorporates by reference its rationale for Federal Register 794 , 806 (1984); Securities Industry Association v. approval of the NatWest proposal. Board of Governors, 468 U.S. 207, 210-11 n.5 (1984) ("Schwab"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

812 Federal Reserve Bulletin • October 1987 The services of an investment advisor are not significant- 1. Public Benefits of the Proposal ly different from the traditional fiduciary functions of banks. The principal activity of an investment advisor is The proposal will result in public benefits because to manage the investment portfolio of its advisee—to JPM Equities will enter the brokerage market as a invest and reinvest the funds of the client. Banks have engaged in that sort of activity for decades. de novo competitor. In addition, the ability to offer the combined services at the same location will result in 1CI1I, 450 U.S. at 55.5 increased efficiencies for JPM Equities, as well as In the Board's view, the addition of investment increased convenience for its customers. discretion to the activities previously approved in the NatWest Order does not appear to alter the functional 2. Analysis of Potential Adverse Effects nature of the component activities. The only apparent difference between conducting the activities separate- The activity proposed here is substantially similar to ly under the current provisions of Regulation Y and that approved by the Board in the NatWest Order. In conducting them together as proposed by JPM Equi- like fashion, Applicant has made a series of committies, would be that JPM Equities would receive a ments and conditions regarding the conduct of this single fee for both services. The Board does not activity that parallel in pertinent part the commitments believe that this difference is sufficiently material to and conditions in the NatWest Order that were derender the combined activities not closely related to signed to address the potential for adverse effects banking. Accordingly, the Board concludes that the arising from the combination of investment advice and proposed activity is closely related to banking. execution services. Subject to these commitments and conditions, the Board has determined that the addition of limited investment discretion to full-service brokerage is a proper incident to banking.7 B. The "Proper Incident to Banking" Analysis As an initial matter, banks, bank holding companies, and their subsidiaries have traditionally managed mon- With respect to the "proper incident" requirement, ey in discretionary accounts for their customers. The section 4(c)(8) of the BHC Act requires the Board to addition of such discretionary activity to existing consider whether the performance of the activity by an investment advisory and brokerage activities would affiliate of a holding company "can reasonably be not appear to increase measurably any likelihood of expected to produce benefits to the public, such as abuse of this trust company function, or increase the greater convenience, increased competition, or gains likelihood of abuse with respect to the investment in efficiency that outweigh possible adverse effects, advisory and brokerage components of the activity. such as undue concentration of resources, decreased The elements of investment discretion, advice, and or unfair competition, conflicts of interests, or un- execution services are directly present in (or may be sound banking practices." linked with) existing trust company accounts and An issue raised by this proposal is whether the closed-end investment companies operated by such combination of investment discretion with the previ- institutions. ously approved investment advisory and securities In addition, the record reflects that the intended brokerage services would produce the type of adverse customers for investment advice — institutional cuseffects, such as conflicts of interests or unsafe or tomers — will have the opportunity and the incentive unsound banking practices mentioned in the BHC Act, to monitor closely the activity in their accounts, and to or the "subtle hazards" that the Supreme Court has identify readily any abuses that might occur. The stated the Glass-Steagall Act intended to prevent, efforts Applicant will undertake to ensure that no such as damage to the reputation of the bank or the confidential information is communicated between "churning" of brokerage commissions,6 that would JPM Equities and its commercial lending affiliates outweigh any public benefits associated with the pro- (except when a client of JPM Equities specifically posal. requests that certain information regarding the client be shared with another affiliate) are sufficient to assure that JPM will not use these discretionary accounts in an attempt to shore up the financial position of corporations borrowing from JPM Equities' commercial 5. The exercise of investment discretion by bank holding companies is also the type of activity authorized as a trust company function under the provisions of Regulation Y. 12 C.F.R. § 225.25(b)(3). Sovran Financial Corporation, 73 FEDERAL RESERVE BULLETIN 744 (Order dated July 15, 1987). 7. The Board made a substantially similar determination in the 6. See e.g., Schwab, 468 U.S. at 220-21JCIII, 450 U.S. at 66-67. recently approved Sovran Order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 813 lending affiliates, particularly inasmuch as Applicant its NatWest analysis and the recently approved Sovexpects that such investment discretion would be ran Order. In the Board's view, these differences do exercised only in "rare circumstances." not warrant denial of the proposal, or require the Finally, it does not appear likely that the manage- imposition of new or changed conditions on the conment of discretionary accounts by JPM Equities will duct of the proposed activity in order that the activity lead it to churn its accounts or make unsuitable remain a proper incident to banking. investments for its clients, substantially for the rea- In sum, the addition of investment discretion to sons already outlined in the Board's NatWest Order. what is essentially the activity previously approved by That is, JPM Equities would be a full-service broker- the Board in its NatWest Order does not represent a dealer under the Securities Exchange Act of 1934, material change to the nature or conduct of that would be registered under the Investment Advisors activity that would alter the Board's prior determina- Act of 1940, and would be a member of the National tions that: Association of Securities Dealers. It would, therefore, (1) the activity is closely related to banking; and be subject to the anti-fraud provisions of these statutes (2) the activity is a proper incident to banking, that and the fiduciary rules and regulations imposed there- is, the proposal is likely to result in public benefits under, which prohibit the churning of customer ac- that outweigh adverse effects. counts and the recommendation of unsuitable securities. II. Consistency With the Glass-Steagall Act The addition of investment discretion to the proposed activity would not change this analysis since the The Board previously has determined, and the U.S. following additional factors regarding the proposal Court of Appeals in the NatWest decision has upheld, should serve to minimize the potential for churning: that the combined offering by a bank holding company (1) the nature of the investment discretion to be subsidiary of investment advisory and securities exeexercised; cution services does not constitute the "public sale" (2) JPM Equities' intended clients — institutional of securities for purposes of section 20 of the Glasscustomers — are likely to be financially sophisticat- Steagall Act.9 JPM Equities now proposes to add to ed and able to detect the presence of churning; and these combined services limited investment discre- (3) confirmation of each transaction will be provided tion. The Board concludes that the addition of such to the client, in addition to monthly statements investment discretion to these combined services which would indicate in detail the terms of each would not convert these activities to the public sale of transaction executed on the client's behalf. securities. The U.S. Supreme Court stated in the ICIII case In addition to the exercise of limited investment that "[t]he management of a customer's investment discretion by JPM Equities, this application also pro- portfolio—even when the manager has the power to poses certain changes in the structure and operation of sell securities owned by the customer—is not the kind the combined activities that distinguish it slightly from of selling activity that Congress contemplated when it the NatWest proposal.8 The Board has carefully con- enacted § 21" of the Glass-Steagall Act, 450 U.S. at sidered the record with respect to these proposed 63, because when the advisor acts in this situation it is modifications to the conduct of the activity, in light of "for the account of its customer—not for its own account." Id., at 66 n.37. There is no reason to believe that the Court's holding with respect to section 21, which prohibits any entity "engaged in the business of . . . selling" securities from receiving deposits, would 8. These differences are: (1) the corporate title of JPM Equities resembles that of Applicant's bank subsidiary; (2) JPM Equities will offer discount brokerage services, without investment advice, to non-institutional customers; (3) JPM Equities will receive certain back-office support services 9. The Glass-Steagall provisions relevant to this proposal are from its affiliates; section 20's prohibition on the affiliation between a member bank and (4) at the specific request of a client, JPM Equities would provide a "corporation . . . engaged principally in the issue, flotation, underinformation about that client (such as an investment profile) to a writing, public sale or distribution at wholesale or retail or through commercial lending affiliate, if such client is an existing customer of syndicate participation of stocks ... or securities" and section 32's that affiliate; and prohibition on an officer or director interlock between a member bank (5) research personnel at JPM Equities from time to time may and a company primarily engaged in such activities. JPM is affiliated provide corporate or industry profiles to its foreign securities with a member bank and therefore must comply with both of these affiliates (but JPM Equities would not be made aware of those sections. For ease of discussion, this Order will refer only to section securities that the affiliate carries in its inventory). 20, although the analysis is equally applicable to section 32. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

814 Federal Reserve Bulletin • October 1987 not be equally applicable to the "public sale" provi- statute is correct or to shed light on possibly ambigusion in section 20.10 ous statutory language. Where, as here, the activity is Moreover, in NatWest the court upheld the Board's permissible under the literal terms of the statute, the conclusion that the combined provision of brokerage subtle hazards analysis is unnecessary to determine and investment advice would not constitute the public the legality of the activity under the Glass-Steagall sale of securities because the company providing the Act. 72 FEDERAL RESERVE BULLETIN at 594. services did not purchase any securities for its own In NatWest, the court upheld the Board's determiaccount from an issuer, did not make a market for nation that the combined provision of brokerage and securities with its own funds, and did not offer securi- investment advice would not give rise to any of the ties to the public as agent of the issuer of the securi- subtle hazards at which the Glass-Steagall Act was ties.11 The addition of limited investment discretion to aimed. As explained above, the addition of investment the combined activities of investment advice and bro- discretion to the activities approved by the Board in kerage services does not, in the Board's view, result in NatWest does not increase the likelihood of any JPM Equities' purchasing securities for its own ac- conflicts of interest or other abuses. A review of the count or functioning as an agent for an issuer of record under the proper incident to banking test consecurities. Indeed, as the ICIII case points out, if the tained in the separate statutory provisions of the BHC Glass-Steagall Act were intended to prohibit the man- Act indicates that the proposed activity would not give agement of a customer investment portfolio — even rise to such subtle hazards, especially in view of the when the manager has the power to sell securities Applicant's adoption, in substantial part, of the comowned by the customer — then "the statute would mitments made and the conditions set forth in the prohibit banks from continuing to manage accounts in NatWest Order. Accordingly, the Board finds that the a fiduciary capacity or as agent for an individual. We proposed activity is consistent with the terms and do not believe Congress intended that such a reading spirit of the Glass-Steagall Act. be given § 21 [of the Glass-Steagall Act]." 450 U.S. at 63. When viewed in light of the relevant Board and Supreme Court precedents, the Board believes that III. Conclusion the addition of investment discretion to the combined offering of investment advisory and securities broker- Based upon the foregoing and other considerations age services to institutional customers does not trans- reflected in the record, the Board has determined that form the activity into a public sale for purposes of the the public benefits associated with consummation of Glass-Steagall Act. this proposal can reasonably be expected to outweigh Nor, in the Board's view, would the oft-cited "sub- possible adverse effects, and that the balance of the tle hazards" underlying enactment of the Glass-Stea- public interest factors that the Board is required to gall Act — such as conflicts of interest; the failure to consider under section 4(c)(8) of the BHC Act is provide unbiased investment advice; the churning of favorable. Accordingly, the application is hereby apbrokerage accounts; the possible damage to a bank's proved, subject to the commitments made by Applireputation arising from the activities of its securities cant and the conditions (whether explicitly stated or affiliates — render the proposed activities inconsistent incorporated by reference) in this Order.13 This deterwith the terms or spirit of that act. The Board notes mination is further subject to all of the conditions set that the U.S. Court of Appeals for the District of forth in the Board's Regulation Y, including those in Columbia Circuit, both in its NatWest decision and in sections 225.4(d) and 225.23(b), and to the Board's the Bankers Trust II case,12 has confirmed the Board's authority to require modification or termination of the activities of the holding company or any of its subsidview that a subtle hazards analysis is undertaken only iaries as the Board finds necessary to assure compliin order to confirm that the literal interpretation of the 10. In fact, the Supreme Court has specifically noted that "a less 13. With respect to the SIA's comments regarding a proposed delay stringent standard should apply to determine whether a holding of the Board's decision on this proposal in order to await the outcome company has violated section 20 than is applied to a determination of of the pending NatWest litigation as well as to avoid prospective whether a bank has violated sections 16 and 21." ICIII, 450 U.S. at 61 litigation, the Board notes that the U.S. Court of Appeals for the n.26. District of Columbia Circuit has only recently upheld the Board's 11. The courts have left open the question whether "best efforts" approval of the NatWest application. Further, the Board does not underwriting is covered by the Glass-Steagall Act. 468 U.S. at 218 believe it appropriate to suspend the regulatory process because of the n.17. prospect of potential litigation, especially in view of the recent 12. Securities Industry Association v. Board of Governors, 807 favorable judicial ruling on a virtually identical proposal. Accordingly, F.2d 1052 (D.C. Cir. 1986). the SIA's request is denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 815 ance with the provisions and purposes of the BHC Act Exchange, the Chicago Board Options Exchange, Inc. and the Board's regulations and orders issued thereun- and the Chicago Board Options Clearing Corporation der, or to prevent evasion thereof. ("protestants"). This transaction shall not be consummated later In addition, the Board received a number of comthan three months after the effective date of this ments from members of Congress expressing concerns Order, unless such period is extended for good cause similar to those presented by the protesting exby the Board, or by the Federal Reserve Bank of New changes. Two favorable comments were received from York, pursuant to delegated authority. primary dealers in U.S. government securities (Citi- By order of the Board of Governors, effective corp and Greenwich Capital Markets, Inc.). August 5, 1987. Voting for this action: Vice Chairman Johnson and Governors Seger, Angell, Heller, and Kelley. Absent and not I. Description of the Options Trading System voting: Chairman Volcker. Applicant proposes to establish and operate a propri- JAMES MCAFEE etary system for trading put and call options on United [SEAL] Associate Secretary of the Board States Treasury securities. The system would be used by government securities dealers and other institutions that wish to trade in options on Treasury securities. Security Pacific Corporation The system would allow participants to acquire op- Los Angeles, California tions on Treasury securities without disclosing their identity to other market participants. The options Order Approving Application to Establish an traded through the system differ from the standardized Automated Trading System for Options On United futures and options contracts on U.S. government States Government Securities securities that are traded on the protesting exchanges in that many of the terms of each option traded in the Security Pacific Corporation, Los Angeles, California system will be variable and the subject of negotiation ("Applicant"), a bank holding company within the between participants (as is customary in the over-themeaning of the Bank Holding Company Act ("BHC counter markets). However, some limited terms of the Act") (12 U.S.C. § 1841 et seq.), has applied for the options will be standardized to promote liquid trad- Board's approval under section 4(c)(8) of the BHC Act ing.2 (12 U.S.C. § 1843(c)(8)), and section 225.25(a) of the Applicant's proposed subsidiaries would provide Board's Regulation Y (12 C.F.R. § 225.25(a)) to en- services to participants in the trading system. SPOT gage de novo, through two wholly owned subsidiaries, will act as a "blind broker" for the system partici- Security Pacific Options Trading Corporation pants. Specifically, SPOT will provide an automated ("SPOT") and Security Pacific Options Services Cor- communications network linking video display termiporation ("SPOSC"), in securities brokerage, clear- nals in participants' offices. The communication neting, and other services in connection with a system for work would disseminate to the participants bid and ask the trading of options on United States Treasury quotations by participants on options on Treasury securities. securities. If participants wish to accept a quotation Applicant, with total consolidated assets of $64.0 transmitted through the network, SPOT would exebillion, is the third largest banking organization in cute the transactions at the direction of the partici- California and the seventh largest nationwide.1 It pants. SPOT will act solely as agent; it will not take a operates six bank subsidiaries and engages in a broad position for its own account in the options traded.3 range of permissible nonbanking activities in the United States and abroad. Notice of the proposal, affording interested persons an opportunity to submit comments on the proposal, has been published (51 Federal Register 47,060 (1986)). The Board received adverse comments from 2. Initially participants in the system will be able to trade put and the Chicago Board of Trade, the Chicago Mercantile call options based upon delivery of 200 specific issues of couponbearing Treasury securities. Eventually, the system will encompass options on the full range of Treasury securities, from bills to all coupon bearing obligations. 3. SPOT will provide these brokerage services to customers with- 1. Banking statistical data are as of March 31, 1987, and banking out recourse and will receive compensation in the form of commisstructure data are as of April 15, 1987. sions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

816 Federal Reserve Bulletin • October 1987 Dealers that trade options through the system will In addition, Applicant's lead subsidiary bank, Senot enter into transactions directly with each other. curity Pacific National Bank, Los Angeles, California Each party to an options transaction will buy an option ("Bank"), would provide a standby letter of credit to from or sell an option to a third party unaffiliated with GOC in the amount of $35 million. GOC would be able Applicant, GECC Options Corporation ("GOC"), a to draw on the letter of credit in the event of a default wholly owned subsidiary of General Electric Credit by one or more of the participants on an obligation to Corporation ("GECC").4 GOC will issue all options GOC. traded in the system. GECC will unconditionally guarantee the options.5 At the time GOC issues an option to one participant in the transaction, GOC will issue an II. Bank Holding Company Act offsetting option on exactly the same terms with the other participant, thus in effect running a "matched In every application under section 4(c)(8) of the BHC book." Act, the Board must find that the proposed activity is Applicant's subsidiary, SPOSC, will act as clearing "so closely related to banking ... as to be a proper agent with respect to transactions effected through the incident thereto." This statutory standard requires system, comparing, matching, clearing, and settling that two separate tests be met for an activity to be the purchase of the option contracts. SPOSC would permissible for a bank holding company. First, the also calculate and hold the margin that participants Board must determine that the activity is, as a general writing options would be required to deposit to secure matter, "closely related to banking." Second, the their contingent obligations under those options. Board must find in a particular case that the perfor- SPOSC would also establish rules and procedures to mance of the activity by the applicant bank holding govern the operations of the system, relating to, for company may reasonably be expected to produce example, the hours and places of trading, position public benefits that outweigh possible adverse effects. limits and capital adequacy standards for individual The protestants have raised a number of issues in participants, and unfair and fraudulent trading prac- opposition to the subject proposal under the BHC Act. tices, and would establish a mechanism for enforcing In summary, the protestants allege that: these rules. SPOSC will also operate facilities to store Closely related to banking: The proposed activities and update options trading information and will engage go beyond previously approved brokerage and clearin other similar incidental services. ing activities and are not closely related to traditional Finally, SPOSC will also be responsible for deter- banking activities. mining which institutions may become participants in Public Benefits versus Adverse Effects: No substanthe options trading system. Participation in the system tial public benefits would result from the proposal and, is open to any person designated as a primary dealer in any event, public benefits would be outweighed by by the Federal Reserve Bank of New York and to possible adverse effects. other institutional customers that meet certain finan- Glass-Steagall Act: The proposed activities would cial and other requirements to be established by violate the Banking Act of 1933 ("Glass-Steagall SPOSC.6 Act"). Hearing request: There exist disputed material facts for which a hearing is required before the Board may consider the merits of the proposal. 4. GECC is a subsidiary of General Electric Financial Services, 1. Closely Related to Banking Analysis Inc., which in turn is a subsidiary of the General Electric Company. General Electric Financial Services, Inc. controls 80 percent of the Based on guidelines established in the National Courishares of Kidder, Peabody, an investment banking firm. None of the activities relating to the options trading system will be conducted in er decision, a particular activity may be found to meet offices identifiable with Kidder; there will be no interlocks, and no the "closely related to banking" test if it is demontandem operations. On the basis of this legal, physical and functional strated that: separation, Kidder might apply to be a participant in the system. 5. The issuance of the options by GOC allows government securi- (1) banks generally have in fact provided the proties dealers and other institutions to trade options anonymously posed activity; without revealing their market positions, and without having to assess the creditworthiness of the other participant to the transaction in each (2) banks generally provide services that are operacase. tionally or functionally so similar to the proposed 6. The majority of participants are expected to be commercial activity as to equip them particularly well to provide banks, brokers, dealers, and other institutional investors, including pension funds and trust departments. the proposed activity; or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 817 (3) banks generally provide services that are so among dealers does not fall within the scope of the integrally related to the proposed activity as to discount retail securities brokerage described in secrequire their provision in a specialized form.7 tion 225.25(b)(15) of Regulation Y. As the Board explained when it adopted this provision of Regulation In its Regulation Y, the Board has determined that Y, the provision was intended to cover the activities providing securities brokerage services and perfor- involved in the Board's BankAmericalSchwab deciming activities of a trust company are permissible for sion,8 which involved a retail broker that executed bank holding companies. 12 U.S.C. 225.25(b)(15), orders from the public for all types of securities both (b)(3). Applicant maintains the proposed services of on exchanges and in the over-the-counter markets. In SPOSC and SPOT fall within these previously ap- contrast, SPOT's brokerage services also involve creproved activities. The protestants contend that the ation of a communications network linking terminals proposal does not meet the closely related to banking in participants' offices and would be provided only test on the basis that the functions involved in this with respect to options on Treasury securities and only activity go beyond previously approved clearing and to a limited group of government securities dealers and brokerage activities. In particular, the protestants ar- other institutions that participate in the trading sysgue that securities brokers do not maintain their own tem.9 trading markets, and that clearing agencies perform The Board has, however, previously determined by only largely ministerial functions in connection with order that acting as a broker's broker in the interdealer the clearance and settlement of securities transactions market is closely related to banking. Independent and do not engage in administration and enforcement Bankers Financial Corporation,71 FEDERAL RESERVE of rules relating to the trading of securities. Protestants BULLETIN 651 (1985)(municipal securities); Chemical contend that banks have no expertise or experience in New York Corporation!Liberty Brokerage, 73 FEDERsuch functions and thus they are not closely related to AL RESERVE BULLETIN 362 (1987) (U.S. government banking. securities). For example, Independent Bankers in- As discussed below, the Board believes the highly volved a proposal by a subsidiary of that bank holding specialized brokerage and clearing functions to be company to enter into a joint venture with Mills & provided by SPOT and SPOSC are significantly differ- Allen PLC, a London based firm engaged in communient from the kind of retail discount brokerage and cations and securities activities, to become one of a traditional securities and options clearing functions limited number of U.S. interdealer brokers in municidescribed in the provisions of Regulation Y. In addi- pal securities, which are not traded on the exchanges. tion, although Applicant describes the proposed oper- The broker involved, like SPOT, proposed to act as a ations of SPOT and SPOSC as separate, stand-alone "blind broker"—standing between buyer and seller to activities, the Board notes that the functions of the two assure the anonymity of traders. The Board found that companies would be closely interrelated and thus their this function is closely related to the retail securities operations should be viewed as a single activity. brokerage activities performed by banks. In Liberty However, the fact that the proposed activities are not Brokerage, the Board subsequently determined that currently on the list of permissible activities in Regula- serving as a blind broker in U.S. government securition Y does not preclude the Board from finding that ties, including disseminating price quotations on they meet the closely related to banking test in the closed-circuit display screens located in dealer trading statute, if the Board finds that there is a sufficiently rooms, is closely related to banking. close functional relationship between the proposed SPOT would provide essentially the same kind of activities and traditional banking functions. services with respect to options on Treasury securities as the brokers' brokers in the previous approvals (a) Blind brokerage. As described above, SPOT will provide with respect to other types of securities. The provide an automated communications network Board finds that the traditional brokerage activities of among the dealers participating in the system that will banks are operationally and functionally so similar to allow SPOT to execute orders by participants to enter SPOT's proposed services that banking organizations into the options traded in the system. The Board concludes that this kind of blind brokering of options 8. 69 FEDERAL RESERVE BULLETIN 105 (1983), affirmed in Securities Industry Ass'n v. Board of Governors, 468 U.S. 207 (1984). 9. In 1984, the San Francisco Reserve Bank, acting pursuant to 7. National Courier Association v. Board of Governors of the delegated authority, approved a notice by Applicant to engage in Federal Reserve System, 516 F.2d 1229, 1237 (D.C. Cir. 1975)). The discount brokerage through RMJ. RMJ was a government securities National Courier guidelines are not the exclusive basis for a closely "broker's broker" that operated an automated network of trading related determination. Id. at 1237. The Board may consider any other screens located in dealer's offices. But RMJ did not provide services basis that may demonstrate that the activity has a close relationship to exclusively to participants in a trading system administered by Applibanking. 49 Federal Register 806 (1984). cant. Applicant subsequently divested RMJ. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

818 Federal Reserve Bulletin • October 1987 are particularly well equipped to provide them.10 Ac- banking for purposes of section 4(c)(8). In determining cordingly, the Board finds that these activities are the amount of required margin, SPOSC would be closely related to banking. required to make an assessment both of an individual participant's financial ability to perform its obligations (b) Clearing options and related functions. SPOSC as well as an assessment of the cost of buying or selling will perform several functions in connection with the the underlying Treasury securities in the event of proposed trading system. First, SPOSC will clear and nonperformance.12 settle options traded through the system. The Board As a result of their traditional lending and other has previously recognized that clearing of securities functions, banks have special expertise in assessing, transactions has traditionally been performed by trust monitoring and reducing credit risk by setting and departments of banks, and trust department functions administering collateral requirements and other forms are permissible for bank holding companies under of risk amelioration. In addition, banks possess special Regulation Y. 12 C.F.R. 225.25(b)(3). In addition, the expertise in risk management in the U.S. government Board previously has authorized futures commission securities market as a result of their extensive activimerchant subsidiaries of bank holding companies to ties as dealers in those securities. Banks are among the combine futures and options execution and clearing largest participants in the market for Treasury securiactivities. See section 225.25(b)(18) of Regulation Y ties and exchange-traded options and futures relating (execution and clearance of futures traded on com- to Treasury securities. Banks also play an important modity exchanges) and Citicorp, 70 FEDERAL RE- role in the over-the-counter market for options on SERVE BULLETIN 591 (1984) (execution and clearance Treasury securities and in this role have developed of options on government securities traded on securi- experience in managing their positions and monitoring ties exchanges). Accordingly, the Board finds that the and placing limitations on the positions of other partic- SPOSC's clearance of options on Treasury securities ipants with whom they deal directly in this market. traded through SPOT'S automated quotation system In addition, the Board is of the view that SPOSC's involves identical operations and thus is closely relatrole in establishing rules governing the trading of ed to banking. options through SPOT's automatic quotation system is SPOSC would also perform other activities: setting a necessary incident to operation of such a system. margin requirements and establishing and enforcing These functions are necessary for the safe and efficient rules governing the trading of options through SPOT operation of the quotation system and for the protecand the clearing of those options transactions. The tion of those institutions that use the system. As noted Board has not previously approved such activities for above, banks provide clearing agency services in a bank holding company. In the Board's view, howev- connection with securities transactions, and clearing er, these activities are permissible for SPOSC under agencies generally issue rules regarding operation of section 4(c)(8). The Board finds that SPOSC's setting these clearing functions and establish procedures for and assuring the maintenance of margin against partic- enforcing the rules.13 Those rules are very similar to ipants' contingent obligations to perform options they the kind of rules and procedures that SPOSC would have written is so functionally similar to traditional establish with regard to the automated quotation syscredit-risk functions of banks that banking organiza- tem.14 tions are particularly well equipped to provide this service.11 Thus, this activity is closely related to 10. Protestant the Chicago Board of Trade ("CBOT") asserts that SPOT's functions would go beyond mere brokerage because unlike 12. The amount of required margin is based upon two components the typical broker SPOT would execute orders from both sides of the considered in conjunction with an options pricing model. The first transaction—both the purchaser and the writer of the option being component is a "mark to market" factor, which represents the net traded. This fact does not, however, distinguish SPOT's activities amount of the estimated cost of liquidating a participant's short from what even retail brokers do in executing orders in the over-the- position with respect to options written (by buying or selling the counter markets, where in order to execute an order to buy or sell a underlying securities at the current market price in order to perform security the broker must solicit a comparable sell or buy order in order the option or by acquiring an offsetting option), offset by the estimated to complete the transaction. Also, as CBOT points out, SPOT would proceeds from liquidating the participant's long position on options it seek to execute orders only from those dealers and other institutions holds. The second component of the required margin is a performance that have been admitted to the trading system. Brokers typically factor that involves a calculation of maximum potential cost that might execute orders with any market maker or in any market if that method be incurred due to adverse market trends that occur before a defaultof execution is the most efficient. The Board finds, however, that this ing participant's position can be completely liquidated. limitation on SPOT's activities does not alter the basic function SPOT 13. See generally 15 U.S.C. § 78q-1(b)(3), 12 C.F.R. 208.8(g)-(i). performs, only the class of customers for which the services would be 14. SPOSC will also store data on options traded through the performed. system. The function is a permissible one either as an incidental 11. See, e.g., F.R.R.S. 113-1579.1 (Policy Statement on Repur- operation necessary to SPOSC's clearing activity or as an independent chase Transactions). data processing function. 12 C.F.R. 225.25(b)(7). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 819 The protestants allege that the services proposed by banking practices. The Board finds that provision of Applicant and its affiliate, viewed in their entirety, are the proposed services by Applicant's subsidiaries, functionally equivalent to operating a securities "ex- SPOT and SPOSC, can reasonably be expected to change" for trading options on Treasury securities result in public benefits that outweigh possible adverse that would not be registered as required under the effects. securities laws.15 However, status as an exchange, either under the securities laws or in common under- (a) Public Benefits. The Board finds that this proposal standing, is not, in the Board's view, determinative of is likely to result in some public benefits. permissibility under the "closely related to banking" Increased Competition. The automated quotation test of section 4(c)(8), which looks to the functional system on Treasury options would be a de novo ensimilarity of nonbanking activities to banking func- trant into the market for options on U.S. government tions, not their precise legal status. Except in cases securities and approval could reasonably be expected where a valid law prohibits consummation of a particu- to increase competition in this market by affording lar proposal by a bank holding company, the Board is dealers and other institutional investors an alternative not required to consider every law that might apply to method to hedge portfolio risk or to discover price an acquisition by a bank holding company in reviewing movements in the market. It has long been recognized the transaction under the BHC Act.16 Moreover, that unless there is evidence to the contrary, com- Board approval of a transaction under the BHC Act mencement of an activity de novo is presumed to does not excuse a bank holding company from compli- result in benefits to the public through increased ance with all other laws that may apply. competition. See 12 C.F.R. 225.24. The Board also notes that the staff of the Securities Protestant CBOT argues that no public benefits are and Exchange Commission has advised Applicant that likely because the existing securities exchanges on the staff will not recommend enforcement action which Treasury options are traded already provide a against Applicant, its affiliates, or participants in the sufficiently liquid marketplace for those seeking to system for violations of the Securities Exchange Act if hedge exposure in their securities portfolio or to assess the system is not registered as an exchange with the price trends. But the undisputed facts show that SEC under the Exchange Act.17 Applicant's system would trade nonstandardized options whose terms would be established by the parties 2. Balance of Public Benefits and Adverse Effects to the option transaction themselves and thus would facilitate trades that are not available on the protestant With respect to the proper incident requirement of exchanges. section 4(c)(8), the Board must consider whether the Greater Convenience and Increased Efficiency. For performance of the proposed nonbanking activity by these reasons, the Board also finds that the proposal is an affiliate of a bank holding company can reasonably likely to lead to greater convenience for institutions be expected to produce benefits to the public, such as seeking to engage in options transactions. This proposgreater convenience, increased competition, or gains al is likely, in the Board's view, to improve the in efficiency, that outweigh possible adverse effects, liquidity and thus the overall efficiency of this market such as undue concentration of resources, decreased by providing a convenient means for price discovery or unfair competition, conflicts of interest, or unsound and by allowing participants to enter into nonstandardized options transactions particularly suited to their own needs without losing anonymity and without the burden of assessing the creditworthiness of the contra 15. The Securities Exchange Act defines "exchange" as any organization that constitutes, maintains or provides a market place or parties. facilities for bringing together purchasers and sellers of securities. 15 U.S.C. § 78c(a)(l). Section 5 of the Exchange Act prohibits, among other things, broker-dealers, through use of the mails or (b) Adverse Effects. The protestants maintain that the interstate commerce, from using the facility of an exchange unless that proposal would give rise to unsound banking pracexchange is registered with the Commission or is exempted from registration. 15 U.S.C. § 78e. tices, conflicts of interest, unfair or decreased compe- 16. See Whitney Nat'I Bank v. Bank of New Orleans and Trust Co., tition, and undue concentration of resources. Based on 379 U.S. 411, 418-19 (1965); Plaza Bank of Westport v. Board of the record of the application, and after careful consid- Governors, 575 F.2d 1248, 1251 (8th Cir. 1978). 17. The staffs position was conditioned on, among other things, eration of the comments of the protestants and other Applicant's provision to the staff of certain information concerning the interested parties, the Board finds that the potential actual operation of the system. Although the staff's no-action letter states that it expresses no legal conclusion regarding the applicability for unsound banking practices, conflicts of interest, of the federal securities laws, the SEC staff, in explaining its views to and other adverse effects, is not likely to result from the Commission members, characterized Applicant's proposed activithis proposal under the limitations adopted by Applities, not as an exchange, but as equivalent at least as proposed to those of a blind broker and a clearing corporation. cant and established by the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

820 Federal Reserve Bulletin • October 1987 Unsound Banking Practices. The Board has careful- The protestants assert that the amount of Bank's ly considered the protestants' allegations with respect letter of credit could be unilaterally increased. Howevto unsound banking practices. However, the Board er, Applicant has committed that the amount of Bank's finds that the risk of loss to Applicant would not be liability under the letter of credit would not be inexcessive or inconsistent with prudent banking stan- creased without prior review of the Board and the dards. As discussed below, the risk of loss to Appli- Comptroller. There are no other agreements that might cant is substantially mitigated by the structure and affect Applicant's financial liability to GOC or GECC limitations Applicant has adopted to guard against in connection with the operation of the quotation and possible adverse effects. execution system.22 The Board recognizes, however, Liability on the Options Traded. As explained that Bank may extend lines of credit to GOC or its above, neither SPOT nor SPOSC would be parties to affiliates that could be used in practice to cover losses the options traded by the participants. Participants incurred by GOC over and above the $35 million limit trading options through the system will each enter into specified in the letter of credit, thereby increasing an option contract with GOC, a company unaffiliated Applicant's risk of loss through operation of the syswith Applicant and its subsidiaries.18 Thus, GOC will tem. In order to assure that any risk of loss remains assume legal liability to perform all options it writes in within the current manageable levels, the Board reconnection with trades effected through the system.19 quires, as a condition of approval of the application, Should GOC incur losses in connection with the that any credit extended to GOC or any of its affiliates system's operation, Bank's letter of credit in favor of be extended under different terms, at different times, GOC will allow GOC to require Bank to cover the first and for different purposes than if GOC had drawn on $35 million of such losses.20 However, in the Board's the letter of credit. In the Board's opinion, these judgment, the letter of credit arrangements included in safeguards are sufficient to protect Applicant and its the proposal do not involve an excessive risk of loss to subsidiaries against unwarranted financial loss as a Applicant. The maximum amount of Bank's liability result of these proposals. under the letter of credit is well within the bank's Likelihood of Losses in the System. The protestants lending limit to any individual borrower.21 Bank must assert that even if the General Electric affiliates, and review the financial condition of each participant to not SPOT and SPOSC, have undertaken the direct determine whether it meets the criteria established by credit risk of the system, in the event of catastrophic SPOSC before the participant may trade through the or extreme events, such as insolvency of the issuer system. Bank will continually monitor the creditwor- and guarantor of the options or computer failure, thiness of each participant. The Office of the Comp- Applicant may be held responsible for losses incurred troller of the Currency, Bank's primary regulator, has because of its overall operation of the system, or reviewed the terms of the letter of credit and found the because of some negligent act by Applicant. Signifitransaction to be consistent with national banking cant losses suffered by participants, the protestants laws. argue, could also damage public confidence in Applicant and its subsidiary banks. In the Board's judgment, however, the possibility that Applicant might be held responsible for losses 18. GOC's parent corporation, GECC, a large financial services incurred by others trading in the system is extremely company, will unconditionally guarantee GOC's liability under the remote. As the Board has previously noted, the funcoptions. tions to be performed by Applicant are functionally 19. GOC's possible liability will be minimized by the fact that for each option it writes in favor of a participant to a trade, GOC will hold and operationally similar to the functions Applicant an offsetting option from the other participant to the trade. If the performs in its banking operations, such as retail holder of the option chooses to exercise the put or call, GOC would in turn exercise the offsetting put or call with the other participant. If that brokerage activities. The Board does not believe that participant fails to perform, GOC might incur a loss. The requirements the functions of SPOT and SPOSC with respect to the for maintenance of margin and for substantial financial resources for operation of the proposed specialized trading system participants are designed to minimize the risk of loss in such cases. 20. In authorizing bank holding companies to execute and clear in options would entail more risk of being held liable certain types of options traded on major commodity exchanges, the for losses suffered by customers or of damage to the Board has required that the parent bank holding company itself may not become a member of the exchange or clearing association. 12 C.F.R. 225.25(b)(18). This requirement is designed to insulate the parent from possible contingent and unlimited liability for assessments by the clearing corporation of members to cover the obligations of any other members. See Citicorp, 68 FEDERAL RESERVE BULLETIN 776, 779 (1982). Here, in contrast, none of Applicant's affiliates would be 22. As explained below, SPOT and SPOSC would adopt a series of subject to such assessments. safeguards to minimize the risk that options traded through the system 21. See 12 U.S.C. § 84. Currently the bank's legal lending limit, on would result in losses to GOC for which Bank would become liable an unsecured basis, is in excess of $280 million. under the letter of credit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 821 reputation of affiliated banks than the functions per- options traded through the system is particularly sigformed by banking organizations in conducting these nificant here because certain of the specific financial similar activities.23 In any event, Applicant has pro- safeguards of the system, the margin system, trading posed a number of safeguards to prevent signficant limits and enforcement of other limits against system trading losses. Applicant has committed that without participants, are inadequate. However, given that Apprior Board review: plicant's direct liability for system losses is strictly (1) the aggregate "matched book" amount of limited to the letter of credit from Bank, the Board Treasury securities underlying all options outstand- cannot conclude that the proposed design of the sysing in the system at any time will not be permitted to tem would result in undue risk to Applicant. exceed $15 billion; and In particular, protestant the Chicago Mercantile (2) the maximum potential system exposure (the Exchange asserts that SPOSC will not be able to calculation of the "worst case" possible overnight compute accurate margin requirements because there exposure of GOC and GECC) will be monitored is little secondary trading in many of the options daily and will not exceed the lesser of $60 million or traded in the system or in the underlying securities for 200 percent of the available outstanding balance of such options and thus current market prices will not be the letter of credit. Trading limits would also be available. However, Applicant represents, and the imposed on each participant, tied to the aggregate protestants have not disputed, that SPOSC will rely in margin obligations that a participant would be per- establishing margin on a pricing model developed by mitted to incur. an independent consultant based on an option pricing model used by many primary dealers and other finan- Applicant has also made commitments to ensure cial institutions. Applicant has described in reasonable that SPOT and SPOSC will remain adequately capital- detail the methods to be employed in computing ized. SPOT and SPOSC initially will each have $1 required margin and the Board is unable to conclude million in capital, and twice each year capital will be that the proposed margin procedures are so inadequate adjusted so that the combined capital of SPOT and as to present an excessive risk of loss to Applicant or SPOSC will be at least 10 percent of the average its subsidiaries.25 maximum potential system exposure for the prior six Protestants also allege that the quotation and execumonths. In addition, Applicant has, in its procedures tion system would involve inordinate risk of loss for the system, in the contractual provisions under because the system would not be subject to the which it would act as agent for participants, and in its regulatory requirements of the securities laws applicainsurance coverage, taken steps to keep the potential ble to securities exchanges. To the extent these allegaliability of SPOT and SPOSC to a minimum.24 tions raise concerns about the protection of investors The Board has also considered the protestants' trading the options, the Board notes that Congress has allegations that the likelihood of substantial losses on allocated responsibility for protecting participants in the nation's securities markets to the SEC under the provisions of the Securities Exchange Act. As explained above, the Commission's staff believes that at least at this time Applicant need not comply with the 23. The CBOT contends that Applicant has not shown the ability to conduct the proposed activities, pointing to allegations that another requirements applicable to securities exchanges under securities clearing subsidiary of Applicant in New York failed to that law. The Board does not believe that it should discover certain fraudulent practices by a government securities substitute its judgment for that of the SEC or its staff in dealer using those services that led to the failure of that dealer. The Board notes that these allegations are the subject of pending litigation. this critical area of SEC responsibility. However, these assertions are not relevant here because as a result of Moreover, the fact that the proposed system will not the Government Securities Act of 1986, which was not in effect at the time of these alleged practices, SPOSC would be required to register be registered as an exchange with the SEC in no way as a clearing agency under section 17A of the Securities Exchange Act implies a lack of regulatory supervision. By virtue of and the rules of the SEC issued pursuant to this section. These rules the Government Securities Act of 1986, SPOSC will be are designed to prevent fraudulent practices in the performance of clearing activities. subject to SEC regulation applicable to clearing agen- 24. Protestants also allege that, to avoid incurring losses in particu- cies. Section 17A(b)(3)(F) of the Securities Exchange lar options traded, participants might argue that the options were traded on an unregistered exchange in violation of the Securities Exchange Act and, therefore, are void under section 29 of that Act. It is unlikely that such an eventuality would result in such significant liability in connection with the system that it would adversely affect Applicant or its subsidiaries. Even if the courts were to determine that 25. Applicant has also explained that enforcement of trading posithe options were unlawful because they were traded on an unregis- tion limits against participants by rejecting trades that exceed such tered "exchange," the courts nevertheless have refused to allow a limits would not interfere with any trading strategy by the participants party to such a contract to obtain an unfair advantage by attempting to involved because parties to a rejected trade would be notified of this have the contract voided. fact immediately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

822 Federal Reserve Bulletin • October 1987 Act (15 U.S.C. § 78q-1(b)(3)(F)) requires clearing the system so that credit information concerning paragencies to adopt rules that are similar to the regula- ticipants is not disclosed to those engaged in Applitory scheme imposed on securities exchanges.26 In- cant's primary dealer or capital markets activities. cluded in the SEC's extensive oversight responsibility Moreover, in performing the proposed services, over clearing agencies is the requirement that each SPOT and SPOSC will obtain up-to-date information agency have adequate disciplinary procedures to en- concerning trading in options by participants in the force its internal rules. In addition, under the Govern- system and their overall market strategies. The protesment Securities Act of 1986, SPOT must register with tants allege that Applicant may use this market inforthe SEC as a government securities broker. As a mation obtained by SPOT and SPOSC in trading for its result, SPOT will be subject to the financial responsi- own account, especially if Applicant's government bility and other rules promulgated by the Department securities dealer operation trades options through the of Treasury under that Act. In addition, as a condition system. of the SEC staffs no-action position on applicability of Applicant has committed that its government securiregulations governing exchanges, the staff has stated ties dealer operation will not execute trades through that it will continue to review the operation of the the options system without first providing Board staff system. In addition, the Board will continue to moni- an opportunity to review the proposed participation. tor Applicant, SPOT, and SPOSC after consummation While this limitation serves, at least at this time, to through the bank holding company inspection process. minimize possible conflicts of interest, the Board does Conflicts of Interest. The Board has also considered not believe this limitation alone is adequate to elimiwhether the proposed system would result in conflicts nate all potential conflicts. Accordingly, the Board of interest, including those suggested by the protes- requires as a condition of its approval of the applicatants relating to access to confidential information, tion, that Applicant establish procedures to assure that possible insider trading, impairment of credit judg- information obtained by personnel of SPOT and ment, a "salesman's stake" and possible trading for SPOSC relating to the trading of options through the the account of public investors. Given the limitations quotation system is not transmitted in any manner to on the activity and the restrictions adopted by Appli- those individuals involved in Applicant's government cant as discussed below, the Board believes there securities dealing operations.27 would not be a significant potential for conflicts to Impairment of credit judgment. The Board also arise from the proposal. considered the possibility that the operation of the Use of confidential or inside information. The system could tempt Bank or Applicant's other lending Board notes that Bank will have access to confidential subsidiaries to extend unsound credit, for example, to information concerning the financial condition of par- support the creditworthiness of a participant in order ticipants in the system in order to assure their credit- to permit it to trade in the system. The Board notes worthiness. Applicant also deals in government securi- that the possibility of this type of unsound lending is ties for its own account as a primary dealer. However, mitigated to some extent by the insulation of the the Board finds no potential that this confidential proposed system from the credit operations of Applicustomer information obtained in connection with cant's separate lending subsidiaries. Applicant's proposal would be misused. Banking and The likelihood of impairment of credit judgment is nonbanking subsidiaries of bank holding companies also limited by the lack of incentive for unsound routinely obtain such information in their traditional extensions of credit to participants or to the GE fiduciary, lending and permissible securities brokerage affiliates. Incurring such risk would be fundamentally and clearing activities. Applicant has committed that it inconsistent with Applicant's deliberate structuring of will implement procedures to assure the confidential- the system to minimize risk to itself. Moreover, ity of any information it obtains by virtue of its role in SPOT's and SPOSC's activities would account for only a small portion of Applicant's banking and nonbanking operations. 26. These rules must be designed "to promote the prompt and accurate clearance and settlement of securities transactions, to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible, to foster cooperation and coordination with persons engaged in the clearance 27. In Compagnie Financiere de Suez, 72 FEDERAL RESERVE and settlement of securities transactions, to remove impediments to BULLETIN 141 (1986), the Board recognized the potential conflicts and perfect the mechanism of a national system for the prompt and between a company's trading in foreign exchange for its own account accurate clearance and settlement of securities transactions, and, in and its role as a specialist in foreign currency on the floor of an general to protect investors and the public interest; and are not exchange. However, the Board's disapproval of that proposal was designed to permit unfair discrimination in the admission of partici- based in large part on the fact that a specialist must trade for its own pants or among participants in the use of the clearing agency. . . ." account in order to create an orderly market for the security involved, 15 U.S.C. § 78q-l(b)(3)(F). which SPOT and SPOSC will not do. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 823 In addition, Applicant has committed that Bank will pant to trade ahead of its customer or allocate the best not extend credit to any participant in the system for price on an identical option to the participant's own the sole identifiable purpose of meeting margin re- account. Furthermore, in view of the highly sophistiquirements on options traded through the system. The cated business acumen of investors that are likely to Board believes, however, that Applicant's lending be drawn to this market, the Board does not believe subsidiaries might nevertheless have an incentive to that investors would continue to use the services of extend credit that indirectly would be used to finance a any participant that executes orders to its own advanparticipant's obligations arising out of the options tage over that of its customers. system. Thus, the Board requires as a condition of its Unfair or Decreased Competition. Applicant seeks approval of this application that any credit extended to to engage de novo in the proposed brokerage, clearing, system participants by Applicant's lending subsidiar- and related activities. Thus, the proposal does not ies be on different terms, at different times, and for involve a combination of existing competitors or the different purposes than if the subsidiary lent funds elimination of any existing provider of services and directly to cover the participant's margin call. would not result in any decreased competition. Promotional interest of Applicant. With respect to The Board has also carefully considered the protesthe protestants' allegation that Applicant would have a tants' argument that approval would result in unfair promotional interest in the system, the Board notes competitive advantages. The protestants allege that initially that the BHC Act and the Glass-Steagall Act Applicant would have a competitive advantage over do not prohibit a bank holding company from promot- the protesting exchanges in, for example, not being ing permissible nonbanking services. The Board has, subject to regulation as an exchange and in enjoying however, carefully considered whether Applicant "safety net" guarantees from the federal government would acquire a "salesman's interest" that would be because SPOT and SPOSC would be affiliated with likely to impair Applicant's provision of fiduciary or federally insured banks. In addition, protestants allege other services to customers. that because Applicant and the system participants The possibility that such a conflict of interest might would have access to the quotes for options traded arise is minimized by the fact, as previously noted, through SPOT and SPOSC, they would enjoy an unfair that Applicant's role will be limited to acting as agent competitive advantage over non-participants in the to execute and clear options contracts negotiated by overall government securities markets. The Board third party participants. For these services, Appli- finds that this proposal would not result in unfair cant's subsidiaries will receive brokerage commissions competition for the following reasons. and other transaction-based fees from participants. Any advantage SPOT and SPOSC might obtain from Applicant will not have the investment stake and risk not having to comply with all of the regulatory requireof an underwriter or dealer in the specific options ments applicable to a securities exchange under the securities. securities laws results solely from the fact that the staff Trading by participants for the account of custom- of the SEC has decided, at least at the present, not to ers. The protestants also allege that participants in initiate enforcement action to require compliance with Applicant's system would be subject to a conflict of these requirements.28 As the Board has previously interest if the participant begins to trade options for noted, disparities or advantages based on the legal the account of its own customers as well as for its own structure governing the conduct of specific activities account. The Board notes that this would not present a are not the kind of factors Congress intended the conflict of interest issue with respect to Applicant, Board to assess as unfair competition in section since Applicant would not trade on the system. 4(c)(8).29 Moreover, as discussed above, Applicant, In addition, as previously noted, unlike standard- while it is subject to a different regulatory framework ized options currently traded on exchanges, the op- than the framework for securities exchanges, is not tions to be traded in the system will be customized to free from regulation in the conduct of the proposed the particular needs and investment strategies of the activity. participants or their customers. Accordingly, it does With respect to protestants' claim concerning unfair not appear to the Board that there is anywhere near advantage based on the federal "safety net" guaranthe same potential for conflicts of interests between tees for banks, there is no evidence that SPOT or participants and their customers as are present in the case of standardized options traded on exchanges, i.e., it is considerably less likely that a participant and its customer would seek to purchase or sell an identical 28. The staff's decision was at least tacitly approved by members of option in the same time frame. Thus, as a practical the Commission. See transcript of meeting of SEC on August 8, 1986. 29. BankAmerica Corporation!Schwab, 69 FEDERAL RESERVE matter, it would be much more difficult for a partici- BULLETIN 105, 111 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

824 Federal Reserve Bulletin • October 1987 SPOSC, or the participants who would use their finds the possibility of voluntary tying would be reservices, would enjoy any unfair advantage resulting mote given that eligibility to use SPOT's and SPOSC's from those federal guarantees. SPOT and SPOSC are services is determined by pre-established and objecnonbanking subsidiaries of a bank holding company, tive financial criteria and the dealers and other inveslegally separate and apart from Applicant's subsidiary tors may use a number of sources of options and other banks. Accordingly, they would not have access to risk reduction services, including the exchanges and funding from federally insured deposits or the Federal the over-the-counter markets. Reserve's discount window, and transfers to SPOT Undue concentration of resources. The Board has and SPOSC from banking affiliates would be subject to carefully considered the possibility, alleged by the the lending limitations and collateral requirements of protestants, that the proposal would result in an undue the Federal Reserve Act.30 concentration of resources. The Board finds that the The Board also finds that Applicant's control over proposal is unlikely to lead to any such possible membership in the system and thus its access to adverse effects. quotes and other trading information disseminated The Board has previously noted that Applicant will through the system will not result in unfair or de- enter into the proposed activity de novo; no acquisicreased competition in the government securities mar- tion of significant financial assets by Applicant is kets. While access to participation in the system and involved. Moreover, the addition of Applicant as a thus to the market information that would be dissemi- provider of options services to dealers and investors in nated through it is limited, the limitation on participa- U.S. government securities would promote deconcention does not represent the type of unfair or unethical tration in the market for trading in options contracts business conduct (as defined by common law or under and other forms of risk reduction used by dealers and state or federal law) that constitutes unfair competition investors. under the BHC Act. BankAmericalSchwab, 69 FEDER- AL RESERVE BULLETIN at 110. III. Glass-Steagall Act SPOSC has specified the criteria for determining membership in the system, and these criteria relate The Board has also considered the protestants' argusolely to capital adequacy and financial responsibility ments that this proposal would violate the Banking Act standards that are essential in a system where partici- of 1933 ("Glass-Steagall Act"), which restricts the pants trade without knowledge of the identity of the securities underwriting and similar activities of banks contra party.31 Moreover, there is no restriction and their affiliates. against the disclosure of quotation information by As is relevant here, section 20 of the Act prohibits participants to third parties. the affiliation of a member bank with a firm that is Moreover, the possibility that access to the system "engaged principally ... in the issue, flotation, undermight be tied to the use of other products or services writing, public sale, or distribution" of securities. offered by Applicant or its subsidiaries is also not a 12 U.S.C. § 377. Protestants allege that SPOT and likely adverse effect. An explicit attempt to tie ser- SPOSC will be affiliates of Bank, a member bank, and vices or products by Applicant would be unlawful that they would be engaged principally in issuing and pursuant to the anti-tying provisions of the Bank underwriting the options traded through the quotation Holding Company Act Amendments of 1970 and execution system. The Board concludes that the (12 U.S.C. §§ 1971-72). The Board has also consid- proposed activities of SPOT and SPOSC would not ered the possibility of more subtle tying that might violate the terms of the applicable Glass-Steagall Act occur when implicitly coerced joint sales of Appli- provisions. SPOT and SPOSC will not, in the Board's cant's products result from a customer's belief that he view, be engaged in issuing or underwriting securities, or she stands a better chance of obtaining a scarce or any similar activity restricted by section 20.32 product by purchasing another product or service from An "issuer" of a security is generally considered to the same seller. Where products or services are in be the entity that creates the rights and obligations ample supply, such tie-ins are unlikely. The Board 32. Options on U.S. government securities are deemed to be "securities" and futures on U.S. government securities are deemed to 30. See 12 U.S.C. §§ 371c, 375b, 1828(j); 12 C.F.R. 215.4(a). be "commodities" for purposes of the 1982 "Accord" amendments to 31. Although the Board noted in Liberty Brokerage that the Depart- the Securities Exchange Act and the Commodity Exchange Act ment of Justice was investigating the possibility of restraint of trade dividing the regulatory jurisdiction of the SEC and the CFTC over under an arrangement between interdealer brokers that would limit options and futures instruments the trading in which is regulated by access to primary dealers, that concern does not arise here because these agencies. 15 U.S.C. § 77b; 7 U.S.C. § 2(a). In defining the participation is open to any qualified entity, not just primary dealers. scope of the term "securities" used in provisions of the Glass- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 825 reflected by the security and makes the initial transfer the options because Applicant would be a partner in of the security to another.33 Under this proposal, GOC in a joint venture to issue the options and however, GOC is the sole issuer of the options. When because Bank's letter of credit to GOC at least in part participants anonymously agree upon terms, GOC will guarantees GOC's obligation on the options. Applicant write options with the participants on the negotiated will, however, maintain an arms-length contractual terms, creating rights in the participants that are relationship with GOC and GECC under which these enforceable only against GOC (or, contingently, entities will receive a share of fees generated from against GECC, the guarantor of the options issued by options transactions. Under this proposal, Applicant is GOC). Neither SPOT nor SPOSC will be a party or not acquiring an equity interest in GOC or GECC, and undertake any liability with respect to the options those entities are not acquiring an equity interest in contracts. Applicant or any of its subsidiaries. Accordingly, the In addition, the protestants maintain that the pro- Board is unable to conclude that these separate entiposal would render Applicant an "underwriter" of ties are jointly engaged in the issuance or underwriting options. In the ordinary meaning of the term, an of options contracts. underwriter purchases a new issue of securities from Moreover, the Board has concluded that Bank's the issuer at a stated price and then resells them to the issuance of a letter of credit to GOC would not make public.34 The term "underwriter" can also refer to a Bank an "underwriter" of securities within the meanperson who undertakes to offer securities to the public ing of the Glass-Steagall Act. It is clear that Bank acting only as agent on behalf of an issuer.35 SPOT and makes no offer of options contracts on behalf of the SPOSC will act as execution and clearing agents at the issuer and would not acquire the options contracts. direction of the participants that wish to enter into Under this proposal, Bank's letter of credit is a contracts that they negotiate with each other through contractual arrangement, separate from the option the use of computer screens and telephone communi- contracts, under which Bank agrees to pay GOC in the cations. SPOT and SPOSC will not make any offer of event of participants' defaults up to the amount of the options contracts on behalf of the issuer, GOC. In letter of credit. The Board notes that for many years addition, SPOT and SPOSC will not perform the banking organizations have entered into contractual typical functions of an underwriter—such as market- arrangements to guarantee the obligations of issuers of ing, setting the price for an issue, purchasing a part of securities. These credit arrangements have never been an issue if it cannot be sold to the public, and agreeing understood to be violations of the provisions of the to use best efforts to distribute an issue. Nor will Glass-Steagall Act. SPOT or SPOSC be engaged in dealing in the contracts Protestants also allege that the proposal would viowithin the meaning of section 20, since they will not late the policy of the Glass-Steagall Act, giving rise to purchase any contracts for their own accounts.36 certain of the "subtle hazards" the Act seeks to The Board has also considered the protestants' eliminate (relating to possible damage to the reputation allegations that in economic reality Applicant should of Applicant's banking affiliates or a salesman's internonetheless be considered the issuer or underwriter of est that might lead to unsound credit practices). However, the "subtle hazards" have never alone caused the Supreme Court to hold that an activity violates or is permitted by the Glass-Steagall Act. The analysis of such hazards only reinforced the Court's conclusion Steagall Act, the Supreme Court found relevant the statutory definithat the activity in question was permitted or prohibittion of "security" in the securities laws enacted at the same time as Glass-Steagall in Securities Industry Association v. Board of Gover- ed as a matter of statutory interpretation of the plain nors (Bankers Trust /), 468 U.S. 137 (1984). It is unresolved whether meaning of the terms of the Act.37 As explained above, the 1982 "Accord" amendment to the Securities Exchange Act of 1934 would be as relevant. The Board does not reach this issue and the activities of SPOT and SPOSC do not fall within assumes, for purposes of its analysis of the application of the Glass- the plain meaning of the Glass-Steagall Act prohibi- Steagall Act here, that the options contracts issued by GOC are tions. securities. 33. See section 2(4) of the Securities Act of 1933 (15 U.S.C. Moreover, the Board has considered the alleged § 77b(4)); Federal Reserve Board Staff Study, Commercial Bank hazards in its evaluation of the proposal under section Private Placement Activities 86 (1977). 4(c)(8) of the BHC Act and has for the reasons 34. Securities Industry Ass'n v. Board of Governors (Schwab), 468 U.S. 207, 217-18 & n.17 (1984). 35. Federal Reserve Board, Statement Concerning Applicability of the Glass-Steagall Act to the Commercial Paper Placement Activities of Bankers Trust Company (June 4, 1985), 22. The courts have left 37. Securities Industry Association v. Board of Governors, 807 open the question of whether this "best efforts" underwriting is F.2d 1052, 1069 (D.C. Cir. 1986), cert, denied, 55 U.S.L.W. 3853 covered by the Act. See Schwab, 468 U.S. at 218 n.17. (1987). See, e.g., Investment Company Institute v. Camp, 401 U.S. 36. Citicorp/J.P. Morgan & Co. Incorporated/Bankers Trust New 617 (1971); Board of Governors v. Investment Company Institute, 450 York Corporation, 73 FEDERAL RESERVE BULLETIN 473, 481 (1987). U.S. 46 (1981); Bankers Trust I; Schwab. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

826 Federal Reserve Bulletin • October 1987 explained above concluded these hazards would be reach in applying the terms of the BHC Act.40 These unlikely, given the limitations on the proposed activi- types of issues do not dispute any statements of fact ty, which include restrictions on the involvement of and clearly do not warrant the conduct of an evidentia- Applicant's banking affiliates in the proposal. ry hearing in order to resolve. The second category of alleged factual disputes IV. Request for Formal Hearing involves questions that seek additional information with respect to the manner in which the proposed Each of the protestants has requested that the Board activities would be conducted.41 To the extent these conduct a formal evidentiary hearing with respect to requests for additional information are material to this proposal. Section 4(c)(8) of the BHC Act specifies issues the Board must consider,42 those requests do that the Board provide "due notice and opportunity not dispute any facts already in the record. Some of for hearing" before approving any application under the areas of inquiry raised by these questions have that section. The Board's Regulation Y provides that been responded to by supplemental information in the the Board will order a hearing on a proposal under record.43 In any event, it is the Board's judgment, for section 4(c)(8) "only if there are disputed issues of the reasons explained above, that the proposed activimaterial fact that cannot be resolved in some other ties have been described in sufficient detail to allow manner." 12 C.F.R. 225.23(g). This standard incorpo- the Board to consider the activity under the applicable rates the criteria established by the courts for deter- statutory standards. mining when a hearing must be held with respect to a Of particular significance with respect to these sugsection 4(c)(8) proposal. As the courts have stated, gested inquiries is the fact that Applicant's proposal involves proposed new activities. Any formal hearing [A] protestant does not become entitled to an evidentiary on the issues proposed by the protestants would hearing merely on request, or on a bald or conclusory necessarily inquire exclusively into future conduct, allegation that ... a dispute exists. The protestant which cannot, even under the most exhaustive adjudimust make a minimal showing that material facts are in dispute, thereby demonstrating that an inquiry in depth catory procedures, be predicted with accuracy. There is appropriate. is no reason to believe that, if a hearing were conducted on this proposal, Applicant's witnesses would Connecticut Bankers Ass' n v. Board of Governors, 627 testify that the proposed activities would be conducted F.2d 245, 251 (D.C. Cir. 1980).38 other than as described in Applicant's written submis- After reviewing the protestants' requests for hear- sions in the record. Moreover, in this case there is no ing, the Board concludes that the protestants have failed to demonstrate that facts material to the Board's decision on this proposal are disputed. Applicant has described in detail the manner in which the activities, which would be initiated de novo, are to be conducted. The Board's approval of this proposal extends only 40. Included in this category are questions relating to whether the to the facts described by Applicant.39 proposed activities go beyond permissible activities approved for Each of the protestants has submitted a list of brokers or clearing agents, whether Applicant or its subsidiaries would be subject to contingent liability for losses sustained by GOC or alleged factual issues in dispute, but in the Board's by system participants, and whether there is a private right of action view a careful examination of these issues reveals that for violation of the Securities Exchange Act provisions requiring none of the protestants dispute any of the facts materi- registration of securities exchanges. 41. Included within this category are questions related to whether al to the Board's decision in this case. Accordingly, a the amount of Bank's letter of credit to GOC would be increased, what formal evidentiary hearing in this case would serve no procedures would apply to protect against abusive trading practices, whether market information obtained by SPOT and SPOSC would be purpose and is not required. used by Applicant in trading for its own account, whether non- The alleged issues of material fact identified by the participants would have access to quotations disseminated throughprotestants fall into three general categories. In the out the system, what safeguards will protect customers of participants if participants also trade for the account of customers, what criteria first category are issues relating solely to questions of will be used in determining what institutions may be participants, and law or to the ultimate conclusions the Board must whether SPOT and SPOSC personnel would have working relationships with other affiliates of Applicant. 42. As explained above, for example, since Applicant will assume direct liability for only the first $35 million of losses connected with the system, questions related to the detailed specific measures for preventing losses are of only marginal relevance since it is highly 38. See Independent Bankers Ass'n of Georgia v. Board of Gover- unlikely that Applicant would be held liable for trading losses incurred nors, 516 F.2d 1206, 1220 (D.C. Cir. 1975) (an agency is not required by system participants or GOC. to conduct an evidentiary hearing if interested parties disputed none of 43. For example, Applicant has committed that the amount of the material facts on which the agency's decision could rest). Bank's letter of credit in favor of GOC would not be increased without 39. See 12 C.F.R. 225.23(b)(3). further supervisory approval. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 827 record of past conduct of the activities at issue that or otherwise, any bank holding company or subsidiary could be used to challenge Applicant's testimony.44 or affiliate thereof to engage in the operation of a The third category of asserted factual disputes in- nondealer marketplace in options, between March 6, volves questions calling for some judgment or predic- 1987, and March 1, 1988. The Board calls Applicant's tion with respect to the operation of the proposed attention to these provisions and notes that the Board activity, such as whether the margin and market risk retains jurisdiction over the application to act to carry procedures to be used by the system will be adequate, out the requirements of such legislation at such time as whether trading limits imposed would be adequate, they may become law. and whether self-imposed limitations on insider trad- This determination is subject to the conditions set ing would be sufficient.45 Such inquiries are not de- forth in section 225.4(c) of Regulation Y and the signed to dispute facts in the record or even to elicit Board's authority to require such modification or new facts. Rather than challenging existing facts, these termination of the activities of a holding company or questions call into question inferences and opinions any of its subsidiaries as the Board finds necessary to drawn from the undisputed facts.46 A formal hearing is assure compliance with the provisions and purposes of unnecessary to resolve these kinds of issues. Accord- the BHC Act and the Board's regulations and orders ingly, the protestants' requests for a hearing are de- issued thereunder, or to prevent evasion thereof. nied. The proposed activities shall not commence later than three months after the effective date of this Conclusion Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of San Based upon the foregoing and other considerations Francisco. reflected in the record, the Board has determined that By order of the Board of Governors, effective the public benefits associated with consummation of August 5, 1987. this proposal can reasonably be expected to outweigh possible adverse effects, and that the balance of the Voting for this action: Vice Chairman Johnson and Goverpublic interest factors, which the Board is required to nors Seger, Angell, Heller, and Kelley. Absent and not voting: Chairman Volcker. consider under section 4(c)(8) of the BHC Act, is favorable. Accordingly, the application is hereby approved. JAMES MCAFEE The Board notes that Congress has under consider- [SEAL] Associate Secretary of the Board ation legislation (Conf. Rep. No. 100-261) that provides that the Board may not allow by action, inaction, Trustcorp, Inc. Toledo, Ohio Order Denying Application to Retain Shares of a 44. In this respect, the application here differs fundamentally from other cases in which a hearing has been ordered by the courts. E.g., General Insurance Agency American Bancorporation v. Board of Governors, 509 F.2d 29 (8th Cir. 1974) (acquisition of going concern that was already conducting Trustcorp, Inc., Toledo, Ohio, a registered bank holdthe proposed activity). 45. A number of the alleged issues on which a hearing is allegedly ing company within the meaning of the Bank Holding required are immaterial to the issues the Board must consider, such as Company Act ("BHC Act") (12 U.S.C. § 1841 whether the proposed activities constitute a securities market. 46. There is no merit to the protestants' contention that Applicant et seq.), has applied for the Board's approval under has withheld from the Board meaningful information relating to its section 4(c)(8)(G) of the BHC Act (12 U.S.C. proposal or that the Board has withheld such information from the § 1843(c)(8)(G)) and section 225.25(b)(8)(vii) of Reguprotestants. Applicant, in connection with the submission of its proposal for Board consideration, provided extensive documents lation Y (12 C.F.R. § 225.25(b)(8)(vii)) to retain describing the proposed system in substantial detail. Copies of all of shares of St. Joseph Insurance Agency, Inc., South these documents were made available to protestants without delay Bend, Indiana ("Agency"), a company that proposes with one exception—a document containing the proprietary, technical design specifications for SPOT and SPOSC. The Board determined to engage in general insurance agency activities on a not to make that document public because the document contained nationwide basis. confidential commercial or financial information which is exempt from public disclosure pursuant to 5 U.S.C. § 552(b)(4) and because Notice of this application, affording opportunity for disclosure, while not necessary for meaningful comment in light of all interested persons to submit comments, has been duly the other documents submitted by Applicant that explained each aspect of the system, would be likely to cause substantial harm to the published (51 Federal Register 37,237 (1986)). The competitive position of Applicant. time for filing comments has expired, and the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

828 Federal Reserve Bulletin • October 1987 has considered all comments received1 in light of the ties.3 Agency continued to engage in insurance agency public interest factors set forth in section 4(c)(8) of the activities pursuant to this Board approval until June BHC Act. 30, 1982. On that date, several months before passage On December 1, 1986, the Federal Reserve Bank of of the Garn-St Germain Act, Agency sold its ac- Cleveland ("Reserve Bank"), acting pursuant to dele- counts, books, records, customer lists and goodwill gated authority, approved Applicant's application un- associated therewith, to another local insurance agender section 3 of the BHC Act to acquire St. Joseph cy. In connection with this transaction, Agency en- Bancorporation, Inc., South Bend, Indiana ("St. Jo- tered into a five-year non-compete agreement with seph"). Action on Applicant's section 4 application to that agency covering the local St. Joseph County engage in general insurance activities through St. market. That agreement required that Agency refer all Joseph's insurance agency subsidiary, Agency, was insurance agency business in the St. Joseph market to deferred in order to permit the Board to more fully the purchasing agency for a fee, but allowed Agency to consider the question of Agency's authority to engage conduct business outside of St. Joseph County. Dein general insurance agency operations pursuant to spite the sale of its assets in June 1982, Agency has exemption G of Title VI of the Garn-St Germain maintained its status as a corporation in good standing Depository Institutions Act of 1982 ("Garn-St Ger- as well as its license to engage in general insurance main Act"). (12 U.S.C. § 1843(c)(8)(G)). agency business under the laws of Indiana. Agency Title VI of the Garn-St Germain Act amended also has retained officers and directors, rented office section 4(c)(8) of the BHC Act to provide that the space and produced periodic financial reports. Agency Board may not determine insurance agency and under- has employed no full-time personnel, but occasionally writing activities are closely related to banking, and, has hired a part-time insurance consultant.4 therefore, permissible for bank holding companies. The most significant issue presented by this propos- Title VI provided seven specific exemptions to this al is whether such exemption G grandfather rights as general prohibition, however, including exemption G, St. Joseph and Agency may possess may be retained which permits bank holding companies to engage in after Agency's acquisition by Applicant. In the insurance agency activities "where the activity is Board's view, analysis of this issue must begin with performed or shares of the company involved are the fact that Applicant is seeking to acquire a company owned, directly or indirectly, by a bank holding com- engaged in a nonbanking activity—operation of a pany . . . which, prior to January 1, 1971, was en- general insurance agency—and section 4 of the BHC gaged, directly or indirectly, in insurance agency ac- Act prohibits a bank holding company from making an tivities as a consequence of approval by the Board acquisition of a nonbanking company unless the acqui- . . . ." 12 U.S.C. § 1843(c)(8)(G).2 sition falls within one of the exceptions to the general St. Joseph Bancorporation is one of a small group of prohibition of section 4. The principal exception to this companies that potentially qualify for exemption G prohibition is section 4(c)(8) which permits the acquisirights because in 1961 the Board approved the applica- tion of nonbanking companies engaged in activities the tion of St. Joseph Agency, Inc., a predecessor to St. Board has determined are "closely related to bank- Joseph, to engage in general insurance agency activi- ing". Section 4(c)(8), however, contains a specific restriction on insurance activities, providing that such activities are not "closely related to banking." Thus, 1. The following insurance trade groups ("Protestants") have filed comments in opposition to the proposed transaction: the Independent 3. St. Joseph Agency, Inc., 47 FEDERAL RESERVE BULLETIN 290 Insurance Agents of America, Inc.; the National Association of (1961). Between 1961 and 1982, St. Joseph undertook several corpo- Casualty and Surety Agents; the National Association of Surety Bond rate reorganizations which resulted in Agency converting from a Producers; the National Association of Life Underwriters; and the direct subsidiary of the bank holding company to a direct subsidiary of National Association of Professional Insurance Agents. St. Joseph Bank and Trust Company ("Bank"), St. Joseph's subsid- The following commenters support Applicant's claim to acquire iary bank. Agency and its grandfather rights: Mellon Bank, N.A.; First Security 4. The Board recognizes that Applicant's claim to succeed to Corporation; Insurance/Financial Affiliates of America, Inc.; Insur- Agency's exemption G grandfather rights is based on the presumption ance/Banking Council of America; First Virginia Bank, Inc.; United that Agency itself has such grandfather rights. Protestants contend Banks of Colorado Inc.; Bremer Financial Corp.; Norwest Corpora- that Agency discontinued its insurance activities by virtue of its June tion; and First Bank System. 1982 sale of assets. As a result, Protestants argue that Agency has 2. On October 3, 1986, the Board amended its Regulation Y forfeited its grandfather rights. (12 C.F.R. § 225.25(b)(8) (1987)) to include the insurance agency Applicant, on the other hand, notes that exemption G imposes no activities delineated in the seven exemptions to the Garn-St Germain requirement that a qualifying company be "continuously engaged" in Act among the list of activities which the Board has found to be insurance activities from that date of Board approval. The Board has closely related to banking and thus permissible for bank holding determined that Agency's grandfather rights lapsed when St. Joseph companies under section 4(c)(8) of the BHC Act. 51 Federal Register was acquired by Applicant, and, therefore, the Board has not found it 36,201 (1986). necessary to decide this issue. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 829 under the literal terms of section 4 of the BHC Act, that Congress, which enacted Title VI to limit the Applicant may not acquire Agency because it is en- scope of insurance powers that could be exercised by gaged in an impermissible activity—operation of a bank holding companies, intended the substantial general insurance agency. powers of exemption G should be exercised by compa- Applicant attempts to avoid this general prohibition nies with the potential to expand so significantly the against nonbanking activities in section 4 and the scope and amount of insurance sold and the locations specific limitation on insurance activities in section from which such insurance is offered. 4(c)(8) by arguing that it may rely on exemption G of Moreover, Applicant's claim to preserve Agency's section 4(c)(8). This provision by its terms does not exemption G grandfather rights would run counter to apply to Applicant, however, because Applicant was the Board's general position that grandfather rights not engaged prior to January 1, 1971, directly or under section 4 of the BHC Act are to be narrowly indirectly, in insurance agency activities as a conse- construed, and that the applicant itself, and not only quence of Board approval. Applicant nevertheless the proposed bank holding company subsidiary, must contends that Agency and St. Joseph retain eligibility qualify for any exemption from the nonbanking prohiunder exemption G, and that Applicant's indirect bitions of the BHC Act.6 The Board notes that there is ownership of Agency is irrelevant to this determina- no support in the terms of exemption G or its legislation. Applicant argues that St. Joseph does not forego tive history to justify a departure from the Board's its status as a "grandfathered" bank holding company traditional reading of grandfather provisions under even after it becomes a subsidiary of a nongrandfath- section 4 of the Act. ered entity. In the Board's view, this argument incor- In this respect, exemption G is distinguishable from rectly focuses on whether St. Joseph itself continues exemption D of the Garn-St Germain Act. (12 U.S.C. to qualify for exemption G grandfather benefits, and § 1843(c)(8)(D)). In prior decisions with respect to ignores the more fundamental question whether Appli- exemption D, the Board has not required the subsidcant may acquire a company engaged in otherwise iary with grandfather rights to terminate its insurance impermissible insurance agency operations. agency activities upon acquisition by another bank As the Board has previously noted, the prohibitions holding company.7 The Board's decisions were based in section 4 against nonbanking activities apply to all on the terms,8 limited scope and unique legislative bank holding companies, and each bank holding com- history of exemption D. That legislative history makes pany must independently qualify under some provi- clear that the entire focus of exemption D is on the sion of section 4 in order to undertake a nonbanking subsidiary conducting the grandfathered activity, and endeavor.5 Thus, regardless of whether the BHC Act exemption D rights attach only to that subsidiary permits Agency or St. Joseph to engage in grandfath- rather than to its parent corporation and may not ered insurance operations, Applicant, as an acquiring generally be expanded to other components of the bank holding company, also must comply with the bank holding company system. The impact of shifting nonbanking restrictions of the BHC Act. control of an exemption D subsidiary is more limited than under exemption G because the grandfathered The Board notes that the unrestricted nature of exemption D entity must continue to conduct the exemption G rights prevents the Board as a practical activity directly. It may sell only the types of insurmatter from viewing such rights as attaching only to ance already sold (or the equivalent) and it may do so the exemption G company without effect on the aconly in a limited number of states. quiring nongrandfathered bank holding company. Exemption G rights permit Agency to engage in the sale For the foregoing reasons, the Board concludes that of all types of insurance to the general public from any such exemption G rights as St. Joseph and Agency location. Agency, for example, could operate in every may have possessed expired when St. Joseph was office of Applicant and could solicit every customer of acquired by Applicant and Applicant is not entitled to Applicant for any type of insurance. There is little engage, directly or through Agency, in general insurdistinction between Agency conducting such activities ance activities pursuant to exemption G. This decision and Applicant conducting them directly. Moreover, given the scope of exemption G rights, the resources, size and office network of a larger company could 6. Id. greatly expand the range of insurance agency activities 7. See, Sovran Financial Corp., 73 FEDERAL RESERVE BULLETIN of an exemption G company. There is no indication 672 (1987); Maryland National Corp., Order dated July 1, 1987. Accord, BankAmerica Corp, 69 FEDERAL RESERVE BULLETIN 568 (1983); Fuji Bank Ltd., 70 FEDERAL RESERVE BULLETIN 50 (1984). 8. The Board notes that by its terms exemption D, unlike exemption G, confers the authorization to conduct insurance agency activi- 5. See, e.g., Maryland National Corporation, 73 FEDERAL RE- ties directly in the subsidiary that was actually conducting the activity SERVE BULLETIN 310 (1987). on May 1, 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

830 Federal Reserve Bulletin • October 1987 is reached without prejudice to Applicant's claim to Holding Company Act (12 U.S.C. § 1841 et seq.) (the more limited grandfather rights pursuant to exemption "Act"), has applied for the Board's approval under D. In this regard, the Board notes that Agency appears section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to to have a claim that it qualifies initially for exemption acquire First United Financial Services, Inc., Arling- D rights. Agency was engaged lawfully in insurance ton Heights, Illinois ("First United"), and thereby activities on May 1, 1982, the grandfather date in indirectly acquire Oak Park Trust & Savings Bank, exemption D, and despite the sale on June 30, 1982, of Oak Park, Illinois; Mount Prospect State Bank, Mount substantially all of its assets, Agency has not re- Prospect, Illinois; Bloomingdale State Bank, Bloomnounced or abandoned its Board authorization under ingdale, Illinois; The Dunham Bank, St. Charles, the BHC Act to conduct insurance operations. On the Illinois; and United National Bank, Arlington Heights, contrary, retention of its insurance license and corpo- Illinois.1 Applicant also has applied under section rate shell, the limited duration of its covenant not to 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) to acquire compete, as well as to continue referral of customers Arlington Mortgage Company, Arlington Heights, Illiand receipt of a fixed percentage of premiums from nois, and thereby engage in the activities of making, such referral customers as fees, are evidence of an acquiring and servicing loans or other extensions of intent not to abandon Agency. As noted above, the credit; Arlington Commercial Finance, Arlington Board has determined, based on the terms, legislative Heights, Illinois, and thereby engage in the activities history and limited scope of benefits conferred, that of making, acquiring and servicing loans or other exemption D rights alone among bank holding compa- extensions of credit, and leasing personal or real ny grandfather rights, may survive the acquisition of a property; First United Trust Company, Oak Park, grandfathered subsidiary by a nongrandfathered bank- Illinois, and thereby engage in trust company funcing firm. The Board is unable to finally determine tions; and B.I.P. Incorporated, Bloomingdale, Illinois, whether Agency has exemption D rights in the absence and thereby engage in data processing activities. of an application raising the issue. The Board will act These activities are authorized for bank holding comexpeditiously on any such application as Applicant panies pursuant to the Board's Regulation Y may file. (12 C.F.R. § 225.25(b)(1), (3), (5), and (7)). For the foregoing reasons, the Board has deter- Notice of the applications, affording opportunity for mined that such exemption G grandfather rights as interested persons to submit comments, has been Agency may have possessed expired upon the acquisi- published (52 Federal Register 18,608, 24,342 (1987)). tion of St. Joseph by Applicant and that Applicant's The time for filing comments has expired, and the application directly or indirectly to retain shares of Board has considered the applications and all com- Agency pursuant to exemption G grandfather rights ments received in light of the factors set forth in should be, and hereby is, denied. sections 3(c) and 4(c)(8) of the Act. By order of the Board of Governors, effective Applicant is the largest commercial banking organi- August 4, 1987. zation in Illinois with approximately $14.2 billion in domestic deposits, representing approximately 13.7 Voting for this action: Vice Chairman Johnson, and Gover- percent of the total deposits in commercial banks in nors Seger, Angell, and Heller. Abstaining from this action: the state.2 First United is the 16th largest commercial Governor Kelley. Absent and not voting: Chairman Volcker. banking organization in Illinois with domestic deposits of approximately $824.6 million, representing approxi- JAMES MCAFEE mately 0.8 percent of the total deposits in commercial [SEAL] Associate Secretary of the Board banks in Illinois. Upon consummation of the proposal, Applicant would control deposits of approximately $15.0 billion, representing approximately 14.5 percent Orders Issued Under Sections 3 and 4 of the of the total deposits in commercial banks in the state. Bank Holding Company Act Consummation of this proposal would not have a significant effect on the concentration of banking re- First Chicago Corporation sources in Illinois. Chicago, Illinois Order Approving Acquisition of a Bank Holding 1. Applicant will acquire First United through a merger of First United with First Chicago Acquisition Corporation, Chicago, Illinois Company ("Acquisition Corporation"), a wholly owned subsidiary of Applicant. In connection with this application, Acquisition Corporation has applied to become a bank holding company and to acquire First First Chicago Corporation, Chicago, Illinois, a bank United's nonbanking subsidiaries. holding company within the meaning of the Bank 2. Data are as of June 30, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 831 Applicant and First United compete in the Chicago tain a strong capital position substantially above the banking market.3 Applicant is the largest commercial minimum levels specified in the Capital Adequacy banking organization in the market, controlling ap- Guidelines without significant reliance on intangibles, proximately 21.1 percent of total deposits in commer- particularly goodwill.7 The Board will carefully anacial banks in the market. First United is the 13th lyze the effect of expansion proposals on the preservalargest commercial banking organization in the mar- tion or achievement of such capital positions. ket, controlling deposits of approximately $772.9 mil- The Board has reviewed this case in the light of lion, representing approximately 1.2 percent of total Applicant's capital and improved financial position. deposits in commercial banks in the market. Upon The Board notes that although this transaction inconsummation of the proposal, Applicant would re- volves some debt, the larger part of the transaction main the largest commercial banking organization in will be funded with equity and Applicant has strengththe market, controlling approximately 22.3 percent of ened its capital position through the issuance of pritotal deposits in commercial banks in the market. The mary capital instruments. In addition, Applicant rec- Chicago banking market is considered unconcentrat- ognizes the desirability of maintaining a strong capital ed, with a Herfindahl-Hirschman Index ("HHI") of base, and the Board intends to monitor Applicant's 790. Upon consummation, the HHI would increase by capital position in the future. Accordingly, on the basis 51 points to 841.4 Accordingly, the Board concludes of the above considerations, the Board concludes that that consummation of the proposal would not have a financial and managerial factors are consistent with substantial adverse competitive effect in the Chicago approval of this application. Convenience and needs of banking market. the communities to be served are also consistent with First United also operates in the Aurora banking approval of this application. market, a market where Applicant does not compete.5 Applicant also has applied, pursuant to section The Aurora market is unconcentrated, however, and 4(c)(8), to acquire the nonbanking subsidiaries of First thus, the Board concludes that consummation of this United. Applicant operates nonbanking subsidiaries proposal would not have a significant adverse effect on that compete with First United in the activities of probable future competition in any relevant market. commercial and consumer finance, leasing, and trust In evaluating this application, the Board has consid- services. The markets for these activities have numerered the financial resources of Applicant and the effect ous competitors and are regional or national in scope. on these resources of the proposed acquisition. The Accordingly, the Board concludes that this proposal Board has stated and continues to believe that capital would not have any significant adverse effect upon adequacy is an especially important factor in the competition in any relevant market. analysis of bank holding company proposals, particu- There is no evidence in the record to indicate that larly in transactions where a significant acquisition is approval of this proposal would result in undue conproposed.6 centration of resources, decreased or unfair competi- In this regard, the Board expects that banking tion, conflicts of interests, unsound banking practices, organizations experiencing significant growth internal- or other adverse effects on the public interest. Accordly and by acquisition, such as Applicant, should main- ingly, the Board has determined that the balance of public interest factors it must consider under section 4(c)(8) of the Act is favorable and consistent with 3. The Chicago banking market is approximated by Cook, Lake and approval of the applications to acquire First United's DuPage counties in Illinois. nonbanking subsidiaries and activities. 4. Under the revised Department of Justice Merger Guidelines, (49 Federal Register 26,823 (June 29, 1984)), any market in which the Based on the foregoing and other facts of record, the post-merger HHI is less than 1000 is considered unconcentrated and Board has determined that the applications should be, the Department will not challenge a merger or acquisition resulting in and hereby are, approved. The acquisition of First an HHI of less than 1000, except in extraordinary circumstances. The Department has informed the Board that a bank merger or acquisition United shall not be consummated before the thirtieth generally will not be challenged (in the absence of other factors calendar day following the effective date of this Order, indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. or later than three months after the effective date of The Justice Department has stated that the higher than normal HHI this Order, unless such period is extended for good thresholds for screening bank mergers for anticompetitive effects cause by the Board or by the Federal Reserve Bank of implicitly recognizes the competitive effect of limited purpose lenders and other nondepository financial entities. 5. The Aurora banking market is approximated by the southern portion of Kane County, Piano, Bristol, Oswego, Fox, and Kendall townships in Kendall County, and Sandwich township in DeKalb County, all in Illinois. 7. Capital Adequacy Guidelines, 50 Federal Register 16,057, 6. See e.g., Chase Manhattan Corporation, 70 FEDERAL RESERVE 16,066-67 (April 24, 1985) (71 FEDERAL RESERVE BULLETIN 445 BULLETIN 529 (1984); NCNB Corporation, 69 FEDERAL RESERVE (1985)); National City Corporation, 70 FEDERAL RESERVE BULLETIN BULLETIN 49 (1983). 743, 746 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

832 Federal Reserve Bulletin • October 1987 Chicago, acting pursuant to delegated authority. The is one of the smaller commercial banking organizations determinations as to Applicant's nonbanking activities in Kansas, controlling less than 0.1 percent of the total are subject to all of the conditions contained in Regula- deposits in commercial banking organizations in the tion Y, including those in sections 225.4(d) and state.1 Consummation of this acquisition would not 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), result in a significant increase in the concentration of and to the Board's authority to require such modifica- banking resources in Kansas. tion or termination of the activities of a holding Bank is the third larjgest of three banks in the company or any of its subsidiaries as the Board finds Edwards County, Kansas, banking market, controlling necessary to assure compliance with the provisions 19.3 percent of the total deposits in commercial banks and purposes of the Act and the Board's regulations operating in the market. Applicant does not control and orders issued thereunder, or to prevent evasion any banking or nonbanking subsidiaries in the Edthereof. wards County banking market. Based on these and By order of the Board of Governors, effective Au- other facts of record, the Board believes that consumgust 3, 1987. mation of this proposal is not likely to have a significantly adverse effect upon competition in any relevant Voting for this action: Vice Chairman Johnson and Gover- banking market. Accordingly, the Board concludes nors Seger, Angell, Heller, and Kelley. Absent and not that competitive factors are consistent with approval. voting: Chairman Volcker. The financial and managerial resources and future prospects of Applicant and Bank are considered con- JAMES MCAFEE sistent with approval, especially in light of commit- [SEAL] Associate Secretary of the Board ments made by Applicant and its principal in connection with this application. Although Applicant will incur debt in connection with this proposal, Applicant appears capable of servicing the debt while maintain- Jason Bankshares, Inc. ing capital at an adequate level. Considerations relat- Offerle, Kansas ing to the convenience and needs of the community to be served are consistent with approval. Order Approving Formation of a Bank Holding Applicant has also applied, pursuant to exemption C Company of section 4(c)(8) of the Act and section 225.25(b)(8)(iii) of the Board's Regulation Y Jason Bankshares, Inc., Offerle, Kansas, has applied (12 C.F.R. 225.25(b)(8)(iii», to conduct general insurfor the Board's approval pursuant to section 3(a)(1) of ance agency activities in a place that has a population the Bank Holding Company Act (12 U.S.C. § not exceeding 5,000 residents. The Board has deter- 1842(a)(1)) ("Act") to become a bank holding compa- mined that general insurance agency activities are ny by acquiring all of the voting shares of Offerle closely related to banking where the bank holding Investment Co., Inc., a registered bank holding com- company engages in these activities in a place where pany, and its subsidiary, The Farmers State Bank, the bank holding company has a lending office and the Offerle, Kansas ("Bank"). Jason Bankshares has also population does not exceed 5,000 residents.2 Appliapplied for Board approval pursuant to section cant proposes to continue to engage in general insur- 4(c)(8)(C) of the Act (12 U.S.C. § 1843(8)(C» to ance activities conducted by Offerle Investment Co., conduct general insurance agency activities in Offerle, Inc., in Offerle, Kansas. Offerle, Kansas, is a town Kansas. with a population of less than 5,000, and is the Notice of the applications, affording interested per- community in which the Bank is located and operates. sons an opportunity to submit comments, has been There is no evidence in the record indicating that given in accordance with sections 3(b) and section 4(c) consummation of the proposal would result in any of the Act. The time for filing comments has expired, undue concentration of resources, adverse effects on and the Board has considered the applications and all competition, conflicts of interests, unsound banking comments received in light of the factors set forth in practices, or any other adverse effects. Moreover, the sections 3 and 4 of the Act. Applicant is a nonoperating corporation formed for the purpose of becoming a bank holding company by acquiring Bank. Applicant proposes to merge with Offerle Investment Co., Inc., upon consummation of the proposal and to hold shares of Bank directly. 1. All banking data are as of December 31, 1985. 2. 12 C.F.R. 225.25(b)(8)(iii); 51 Federal Register 36,201 (Octo- Bank, with total assets of approximately $8.9 million, ber 9, 1986). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 833 Board also has determined that the balance of the 225.23(b)), and to the Board's authority to require public interest factors the Board is required to consid- such modification or termination of the activities of a er under section 4(c)(8) of the Act is favorable. holding company or any of its subsidiaries as the Accordingly, based upon the foregoing and other Board finds necessary to assure compliance with, or to facts of record, the Board had determined that the prevent evasion of, the provisions and purposes of the applications under sections 3 and 4 of the Act should Act and the Board's regulations and orders issued be, and hereby, are approved. The transactions shall thereunder. not be consummated before the thirtieth day following By order of the Board of Governors, effective the effective date of this Order, unless such period is August 17, 1987. extended for good cause by the Board or by the Federal Reserve Bank of Kansas City, pursuant to Voting for this action: Chairman Greenspan and Governors delegated authority. The determination regarding the Johnson, Seger, Angell, Heller, and Kelley. nonbanking activities of Applicant is subject to all the conditions set forth in Regulation Y, including sections WILLIAM W. WILES 225.4(d) and 225.23(b) (12 C.F.R. 225.4(d) and [SEAL] Secretary of the Board ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Allegheny Valley Bancorp, Inc. Allegheny Valley Bank of Cleveland August 10, 1987 Pittsburgh, Pennsylvania Pittsburgh Pittsburgh, Pennsylvania Bancshares 2000, Inc. Bank 2000 of Reston, National Richmond August 24, 1987 McLean, Virginia Association Reston, Virginia Bank of Jackson Employee BOJ Bancshares, Inc. Atlanta July 30, 1987 Profit Sharing Plan and Jackson, Louisiana Money Purchase Pension Plan Jackson, Louisiana Banks of Mid-America, Inc. F & M Bancorporation, Inc. Kansas City August 13, 1987 Oklahoma City, Oklahoma Tulsa, Oklahoma Blissfield Bank Corporation The Blissfield State Bank Chicago July 30, 1987 Blissfield, Michigan Blissfield, Michigan Central Wisconsin Bankshares, Peoples' Bancshares of Antigo, Chicago July 30, 1987 Inc. Inc. Wausau, Wisconsin Antigo, Wisconsin Citizens Investments, Inc. Sun National Bank Philadelphia August 5, 1987 Vineland, New Jersey Medford, New Jersey Commercial Bancorp, Inc. The Commercial Bank St. Louis July 30, 1987 Obion, Tennessee Obion, Tennessee Community Bancshares of Community National Bank Kansas City August 5, 1987 Chanute, Inc. Chanute, Kansas Chanute, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

834 Federal Reserve Bulletin • October 1987 Section 3—Continued r, w x Reserve Effective Applicant Bank(s) ^ Bank Cornerstone Financial Cornerstone Bank Boston August 14, 1987 Corporation Nashua, New Hampshire Derry, New Hampshire Crown Bancshares II, Inc. Johnson County Bankshares, Inc. Kansas City August 28, 1987 Topeka Kansas Prairie Village, Kansas Devon Holding Company, Inc. Dominion Bank Philadelphia August 18, 1987 Bala Cynwyd, Pennsylvania Devon, Pennsylvania DNB Financial De Anza National Bank San Francisco July 31, 1987 Riverside, California Riverside, California F & M Bancorporation, Inc. The Security State Bank Chicago August 7,1987 Kaukauna, Wisconsin Amherst Junction, Wisconsin FIRSTBANK CORP. Comerica Bank—West Branch, Chicago August 7, 1987 Alma, Michigan N.A. West Branch, Michigan Comerica Bank-Central Sheherd, Michigan First Financial Services, Inc. Packers Management Company, Kansas City June 16, 1987 Falls City, Nebraska Inc. Omaha, Nebraska First Highland Corp. The First National Bank of St. Louis August 21, 1987 Highland, Illinois Highland Highland, Illinois First Midwest Corporation of State Bank of Union Chicago August 21, 1987 Delaware Union, Illinois Elm wood Park, Illinois First State Fremont, Inc. First State Bank Kansas City August 21, 1987 Fremont, Nebraska Fremont, Nebraska First Union Bancorporation, The First National Bank of Chicago August 4, 1987 Inc. Triumph Streator, Illinois Triumph, Illinois First United Bancorporation Anderson National Bank Richmond August 19, 1987 Anderson, South Carolina Anderson, South Carolina First Wisconsin Corporation Shelard Bancshares, Inc. Chicago August 4, 1987 Milwaukee, Wisconsin St. Louis Park, Minnesota FNB Financial Corporation The First National Bank of Cleveland August 6, 1987 Shelby, Ohio Shelby Shelby, Ohio Forsyth Bancshares, Inc. First State Bank of Forsyth Minneapolis August 26, 1986 Forsyth, Montana Forsyth, Montana Gratiot Bancshares, Inc. Gratiot State Bank Chicago August 14, 1987 Gratiot, Wisconsin Gratiot, Wisconsin Groesbeck Bancshares, Inc. Farmers State Bank Dallas August 5, 1987 Groesbeck, Texas Groesbeck, Texas Hancock Bancorp, Inc. Hancock Bank and Trust St. Louis August 4, 1987 Hawesville, Kentucky Company Hawesville, Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 835 Section 3—Continued . .. „ . , . Reserve Effective Applicant Bank(s) Bank date Hardwick Holding Company Calhoun First National Bank Atlanta July 30, 1987 Dalton, Georgia Calhoun, Georgia Henrietta Bancshares, Inc. First State Bank, Dallas August t4, 1987 Henrietta, Texas Hubbard, Texas Key Centurion Bancshares, Inc. The Cental National Bank of Richmond August 12, 1987 Charleston, West Virginia Buckhannon Buckhannon, West Virginia Liberty Bancorp of Georgia The Gordon Bank Atlanta July 31, 1987 Clayton, Georgia Gordon, Georgia Longview Financial Corporation Lindale Bancshares, Inc. Dallas August 5, 1987 Longview, Texas Lindale, Texas Magna Group, Inc. Firstplace Financial Corporation St. Louis July 31, 1987 Belleville, Illinois Lincoln, Illinois FFC Acquisition Company Belleville, Illinois Miles Bancshares, Inc. Bowen State Bank St. Louis July 29, 1987 Advance, Missouri Bowen, Illinois Minnesota-Wisconsin Town and Country Bancshares, Minneapolis August 28, 1987 Bancshares, Inc. Inc. Newport, Minnesota Newport, Minnesota NESB Corp. New England Savings Bank Boston July 31, 1987 New London, Connecticut New London, Connecticut Ottawa Bancshares, Inc. Lyon County State Bancshares, Kansas City August 19, 1987 Ottawa, Kansas Inc. Emporia, Kansas Park Falls Agency, Inc. Bradley Bank Minneapolis August 17, 1987 Park Falls, Wisconsin Tomahawk, Wisconsin PEOTONE BANCORP, INC. Rock River Bancorporation, Inc. Chicago August 4, 1987 Peotone, Illinois Oregon, Illinois Rock River Bancorporation United Bank of Ogle County, Chicago August 4, 1987 Oregon, Illinois National Association Oregon, Illinois Rocky Mountain The Bank of Aspen Kansas City August 27, 1987 Bancorporation, Inc. Aspen, Colorado Aspen, Colorado SB&T Corporation Smyrna Bank & Trust Company Atlanta August 24, 1987 Smyrna, Georgia Smyrna, Georgia Security Chicago Corp. First State Bancorp of Princeton, Chicago August 10, 1987 Chicago, Illinois Illinois Princeton, Illinois Security National Corporation Security National Bank of Atlanta August 12, 1987 Maitland, Florida America Maitland, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

836 Federal Reserve Bulletin • October 1987 Section 3—Continued .. t. w -w Reserve Effective Applicant Bank(s) ^ Bank State Bancorp, Inc. Terra Alta Bank Richmond August 20, 1987 Bruceton Mills, West Virginia Terra Alta, West Virginia Stillman BancCorp, Inc. United Bank of Rochelle Chicago August 21, 1987 Stillman Valley, Illinois Rochelle, Illinois Suburban Bancorp, Inc. Woodstock State Bancorp, Inc. Chicago August 6, 1987 Palatine, Illinois Woodstock, Illinois Success Financial Group, Inc. Lincolnshire Bancshares, Inc. Chicago August 19, 1987 Lincolnshire, Illinois Lincolnshire, Illinois Bell wood Bancorporation, Inc. Bellwood, Illinois TCB Investments, Inc. Tri-County Bancshares, Inc. Kansas City June 19, 1987 Kansas City, Missouri El Dorado Springs, Missouri Trustcorp, Inc. Midwest Bancorp, Inc. Cleveland July 31, 1987 Toledo, Ohio Columbus, Indiana Trustcorp, Inc. Citizens Trust Bancorp, Inc. Cleveland August 18, 1987 Toledo, Ohio Ann Arbor, Michigan United Missouri Bancshares, United Missouri Bank, U.S.A. Kansas City August 13, 1987 Inc. Wilmington, Delaware Kansas City, Missouri Valley Bancorp, Inc. Lyons Bancorp, Inc. Kansas City July 29, 1987 Brighton, Colorado Brighton, Colorado Wesbanco, Inc. First Financial Bancorp, Inc. Cleveland August 5, 1987 Wheeling, West Virginia Wheeling, West Virginia Wesbanco, Inc. Bank of Sissonville Cleveland August 3, 1987 Wheeling, West Virginia Sissonville, West Virginia Woodstock Acquisition Corp. Woodstock State Bancorp, Inc. Chicago August 6, 1987 Woodstock, Illinois Woodstock, Illinois Zappco,Inc. Melrose Bancshares, Inc. Minneapolis August 20, 1987 St. Cloud, Minnesota Melrose, Minnesota Section 4 Nonbanking Effective Applicant Bank Activity/Company date Allied Irish Banks, P.L.C. First Maryland Cheque Richmond August 24, 1987 Dublin, Ireland Corporation First Maryland Bancorp Baltimore, Maryland Baltimore, Maryland issuance and sale of money orders and data processing management First State Banking Corporation McKellips Insurance Company, Minneapolis August 20, 1987 Alcester, South Dakota Inc. Alcester, South Dakota Brandon Insurance Agency Brandon, South Dakota Valley Springs Insurance Agency Valley Springs, South Dakota data processing services Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 837 Section 4—Continued Nonbanking Effective Applicant Bank Activity/Company date HUNTLEY BANCSHARES, Rohrson Insurance Agency Chicago August 12, 1987 INC. Hampshire, Illinois Huntley, Illinois Madelia Bancshares, Inc. Madelia Agency, Inc. Minneapolis August 5, 1987 Madelia, Minnesota Madelia, Minnesota making, acquiring, and servicing loans Marshall & Ilsley Corporation Software Development Chicago August 26, 1987 Milwaukee, Wisconsin Corporation Fort Lauderdale, Florida Midwest Financial Group, Inc. Midwest Financial Investment Chicago August 11, 1987 Peoria, Illinois Management Company Peoria, Illinois investment advisory services OMNIBANCORP MSHC, Inc. Kansas City August 28, 1987 Denver, Colorado Denver, Colorado mortgage lending activities Ozark Bankshares, Inc. Ozark Financial Services, Inc. St. Louis August 20, 1987 Ozark, Arkansas Ozark, Arkansas Ozark Commercial Corporation Tulsa, Oklahoma Sections 3 and 4 .. Bank(s)/Nonbanking Reserve Effective pp Company Bank date Dominion Bankshares First Springfield National Richmond August 20, 1987 Corporation Corporation Roanoke, Virginia Springfield, Tennessee ORDERS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date The Blissfield State Bank Blissfield Interim Bank Chicago July 30, 1987 Blissfield, Michigan Blissfield, Michigan Norstar Bank of Long Island Norstar Bank of Commerce New York August 4, 1987 Hempstead, New York New York, New York Norstar Bank of Upstate NY Norstar Bank of the Hudson New York August 5, 1987 Albany, New York Valley, N.A. Newburgh, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

838 Federal Reserve Bulletin • October 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. Barrett v. Volcker, No. 87-2280 (D.D.C., filed August Securities Industry Association v. Board of Gover- 17, 1987). nors, No. 86-1412 (D.C. Cir., filed July 14, 1986). Northeast Bancorp v. Board of Governors, No. 87- Optical Coating Laboratory, Inc. v. United States, 1365 (D.C. Cir., filed July 31, 1987). No. 288-86C (U.S. Claims Ct., filed May 6, 1986). National Association of Casualty & Insurance Agents CBC, Inc. v. Board of Governors, No. 86-1001 (10th v. Board of Governors, Nos. 87-1354, 87-1355 (D.C. Cir., filed Jan. 2, 1986). Cir., filed July 29, 1987). Myers, et al. v. Federal Reserve Board, No. 85-1427 Air Continental, Inc. v. Federal Reserve Board of (D. Idaho, filed Nov. 18, 1985). Boston, et. al, No. 87-1877-N (D. Massachusetts, Souser, et al. v. Volcker, et al., No. 85-C-2370, et al. filed July 23, 1987). (D. Colo., filed Nov. 1, 1985). The Chase Manhattan Corporation v. Board of Gover- Podolak v. Volcker, No. C85-0456, et al. (D. Wyo., nors, No. 87-1333 (D.C. Cir., filed July 20, 1987). filed Oct. 28, 1985). Securities Industry Association v. Board of Gover- Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa, nors, Nos. 87-4091, 87-4093, 87-4095 (2d Cir., filed filed Oct. 22, 1985). July 1 and July 15, 1987). Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D. Lewis v. Board of Governors, Nos. 87-3455, 87-3545 Minn., filed Oct. 21, 1985). (11th Cir., filed June 25, August 3, 1987). Kurkowski v. Wilkinson, et al, No. CV-85-0-916 (D. Securities Industry Association v. Board of Gover- Neb., filed Oct. 16, 1985). nors, et al. No. 87-4041 and consolidated cases (2d Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D., Cir., filed May 1, 1987). filed Oct. 8, 1985). Securities Industry Association v. Board of Gover- Independent Community Bankers Association of nors, et al., No. 87-1169 (D.C. Cir., filed April 17, South Dakota v. Board of Governors, No. 84-1496 1987). (D.C. 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- 1335 (D.D.C., filed Apr. 30, 1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics A19 All reporting banks A20 Banks in New York City A21 Branches and agencies of foreign banks MONEY STOCK AND BANK CREDIT A22 Gross demand deposits—individuals, partnerships, and corporations A3 Reserves, money stock, liquid assets, and debt measures A4 Reserves of depository institutions, Reserve FINANCIAL MARKETS Bank credit A5 Reserves and borrowings—Depository A23 Commercial paper and bankers dollar institutions acceptances outstanding 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 • October 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, May 31, A54 U.S. foreign trade 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 01 Q2 Mar. Apr. May June' July Reserves of depository institutions2 1 Total 21.0 24.3 16.4 8.0 -.4 23.3 8.2 -13.3 -2.1 2 Required 21.9 22.8 16.5 8.4 5.9 25.5 3.1 -15.9 6.8 3 Nonborrowed 21.3 25.3 18.5 5.4 .2 13.6 7.5 -8.1 .1 4 Monetary base3 9.7 11.0 11.3 6.8 2.9 9.9 8.7 .5 4.8 Concepts of money, iquid assets, and debt4 5 Ml 16.5 17.0 13.1 6.4 3.4' 17.5' 4.5 -10.4 1.8 6 M2 10.6 9.2 6.3 2.4' 1.4 5.7' .3' 1.0 2.8 7 M3 9.7 8.0 6.4' 3.9" 1.6 5.4' 4.7r 5.2 n.a. 8 L 8.1 8.2 6.4 3.1 -2.9 3.9' 9.2 1.4 n.a. 9 Debt 12.5 12.1 10.4 9.2' 8.3' 9.9' 10.6' 9.8 n.a. Nontrgnsaction components 10 In M2y 8.6 6.6 4.0 .9' .7' 1.6' -1.2' 5.1 3.2 11 In M3 only6 6.2 3.2 6.4 10.3 2.6 4.3 22.6 21.8 -1.0 Time and savings deposits Commercial banks 12 Savings7 25.0 36.9 37.3 24.1 28.5 27.8 16.0 6.9 7.5 13 Small-denomination time -7.5 -10.7 -4.9 -4.5r -8.6 -8.3 -1.3 10.4 10.7 14 Large-denomination time -1.5 .1 9.7 18.3 12.2 27.7 18.8' 16.6 -5.0 Thrift institutions 15 Savings' 21.0 23.2 27.3 25.9r 28.6 30.5 17.4' 12.6 2.0 16 Small-denomination time -3.4 -6.4 -4.3 1.2' .C 1.2' -,5r 10.4 12.5 17 Large-denomination time 2.8 -7.0 -9.5 -8.4 -9.5 -19.1 2.4 8.9 8.8 Debt components4 18 Federal 14.7 11.5 9.7 9.6r 5.9 8.4 15.1 14.9 n.a. 19 Nonfederal 11.9 12.3 10.6 9.1' 9.0 10.4' 9.3' 8.3 n.a. 20 Total loans and securities at commercial banks 10.6 9.1 10.1 7.0 3.8 11.9 7.4 3.2 1.3 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 discon- amounts of $100,000 or more) issued by commercial banks and thrift institutions, tinuities 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 the amount of vault cash holdings of thrift institutions that is included in the is a consolidation adjustment that represents the estimated amount of overnight currency component of the money stock plus, for institutions not having required RPs and Eurodollars held by institution-only money market mutual funds. reserve balances, the excess of current vault cash over the amount applied to L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term satisfy current reserve requirements. After the introduction of contemporaneous Treasury securities, commercial paper and bankers acceptances, net of money reserve requirements (CRR), currency and vault cash figures are measured over market mutual fund holdings of these assets. the weekly computation period ending Monday. Debt: Debt of domestic nonfinancial sectors consists of outstanding credit Before CRR, all components of the monetary base other than excess reserves market debt of the U.S. government, state and local governments, and private are seasonally adjusted as a whole, rather than by component, and excess nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conreserves are added on a not seasonally adjusted basis. After CRR, the seasonally sumer credit (including bank loans), other bank loans, commercial paper, bankers adjusted series consists of seasonally adjusted total reserves, which include acceptances, and other debt instruments. The source of data on domestic excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt currency component of the money stock plus the remaining items seasonally data are based on monthly averages. Growth rates for debt reflect adjustments for adjusted as a whole. discontinuities over time in the levels of debt presented in other tables. 4. Composition of the money stock measures and debt is as follows: 5. Sum of overnight RPs and Eurodollars, money market fund balances Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults (general purpose and broker/dealer), MMDAs, and savings and small time of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits deposits less the estimated amount of demand deposits and vault cash held by at all commercial banks other than those due to domestic banks, the U.S. thrift institutions to service their time and savings deposit liabilities. government, and foreign banks and official institutions less cash items in the 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, process of collection and Federal Reserve float; and (4) other checkable deposits money market fund balances (institution-only), less a consolidation adjustment (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer that represents the estimated amount of overnight RPs and Eurodollars held by service (ATS) accounts at depository institutions, credit union share draft institution-only money market mutual funds. accounts, and demand deposits at thrift institutions. The currency and demand 7. Excludes MMDAs. deposit components exclude the estimated amount of vault cash and demand 8. Small-denomination time deposits—including retail RPs—are those issued deposits respectively held by thrift institutions to service their OCD liabilities. in amounts of less than $100,000. All IRA and Keogh accounts at commercial M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) banks and thrifts are subtracted from small time deposits. issued by all commercial banks and overnight Eurodollars issued to U.S. residents 9. Large-denomination time deposits are those issued in amounts of $100,000 by foreign branches of U.S. banks worldwide. Money Market Deposit Accounts or more, excluding those booked at international banking facilities. (MMDAs), savings and small-denomination time deposits (time deposits—includ- 10. Large-denomination time deposits at commercial banks less those held by ing retail RPs—in amounts of less than $100,000), and balances in both taxable and money market mutual funds, depository institutions, and foreign banks and tax-exempt general purpose and broker/dealer money market mutual funds. official institutions. Excludes individual retirement accounts (IRA) and Keogh balances at depository 11. Changes calculated from figures shown in table 1.23. institutions and money market funds. Also excludes all balances held by U.S. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • October 1987 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures 1987 1987 May June July June 17 June 24 July 1 July 8 July 15 July 22 July 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 241,800 235,851 233,463 231,766 240,768 241,794 236,717 234,054 232,936 230,331 2 U.S. government securities1 213,797 210,941 208,364 207,434 215,306 215,509 210,313 209,239 208,503 205,452 3 Bought outright 206,318 208,728 208,258 206,895 210,886 210,984 210,313 209,239 208,503 205,452 4 Held under repurchase agreements.... 7,479 2,213 106 539 4,420 4,525 0 0 0 0 5 Federal agency obligations 10,065 8,030 7,690 7,726 8,132 8,676 7,683 7,683 7,657 7,623 6 Bought outright 7,683 7,683 7,660 7,683 7,683 7,683 7,683 7,683 7,657 7,623 7 Held under repurchase agreements.... 2,382 347 30 43 449 993 0 0 0 0 8 Acceptances 0 0 0 0 0 0 0 0 0 0 9 Loans 1,179 737 673 651 823 888 718 673 507 796 10 Float 645 724 979 821 757 755 2,392 669 619 527 11 Other Federal Reserve assets 16,114 15,419 15,757 15,134 15,750 15,965 15,611 15,790 15,649 15,933 12 Gold stock2 11,073 11,069 11,069 11,069 11,069 11,069 11,069 11,069 11,069 11,069 13 Special drawing rights certificate account.. 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 14 Treasury currency outstanding 17,795 17,866 17,917 17,863 17,877 17,890 17,900 17,910 17,920 17,930 ABSORBING RESERVE FUNDS 15 Currency in circulation^ 212,064 214,465 216,400 214,795 214,356 214,612 216,901 217,243 216,202 215,462 16 Treasury cash holdings2 523 507 486 511 502 497 493 490 486 479 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 16,028 8,776 5,140 3,879 14,570 15,561 4,865 5,685 5,316 3,872 18 Foreign 314 246 258 228 237 303 243 271 249 254 19 Service-related balances and adjustments 2,095 2,072 2,200 2,239 2,036 1,990 2,116 2,072 2,418 2,060 20 Other 407 404 352 361 333 574 347 405 334 325 21 Other Federal Reserve liabilities and capital 6,910 6,814 6,664 6,891 6,950 6,903 6,630 6,771 6,724 6,599 22 Reserve balances with Federal Reserve Banks3 37,344 36,520 35,966 36,811 35,748 35,331 39,109 35,115 35,214 35,297 End-of-month figures Wednesday figures 1987 1987 May June July June 17 June 24 July 1 July 8 July 15 July 22 July 29 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 231,880 239,216 234,310 235,159 242,395 234,995 235,558 232,395 233,865 231,830 24 U.S. government securities' 207,304 212,306 208,170 210,326 216,671 209,604 210,080 207,460 209,230 206,296 25 Bought outright 207,304 210,248 204,871 206,555 210,712 209,604 210,080 207,460 209,230 206,296 26 Held under repurchase agreements.... 0 2,058 3,299 3,771 5,959 0 0 0 0 0 27 Federal agency obligations 7,683 8,679 8,553 7,985 8,394 7,683 7,683 7,683 7,623 7,623 28 Bought outright 7,683 7,683 7,623 7,683 7,683 7,683 7,683 7,683 7,623 7,623 29 Held under repurchase agreements.... 0 996 930 302 711 0 0 0 0 0 30 Acceptances 0 0 0 0 0 0 0 0 0 0 31 Loans 832 972 634 716 760 807 627 723 497 1,613 32 Float 922 1,579 507 772 645 1,324 1,463 789 646 163 33 Other Federal Reserve assets 15,139 15,680 16,446 15,360 15,925 15,577 15,705 15,740 15,869 16,135 34 Gold stock2 11,070 11,069 11,069 11,068 11,069 11,069 11,069 11,069 11,069 11,069 35 Special drawing rights certificate account.. 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 36 Treasury currency outstanding 17,823 17,889 17,939 17,875 17,889 17,899 17,909 17,919 17,929 17,939 ABSORBING RESERVE FUNDS 37 Currency in circulation^ 213,547 215,201 215,938 214,807 214,300 215,780 217,570 216,965 215,884 215,722 38 Treasury cash holdings2 514 492 470 503 499 492 490 490 483 470 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 6,383 13,774 5,365 8,126 16,356 10,005 6,142 3,351 6,038 4,711 40 Foreign 320 318 262 232 208 289 244 381 283 244 41 Service-related balances and adjustments 1,779 1,775 1,747 1,823 1,771 1,775 1,783 1,779 1,762 1,762 42 Other 372 458 281 389 374 490 322 618 286 342 43 Other Federal Reserve liabilities and capital 6,511 6,847 6,520 6,785 6,832 6,495 6,461 6,592 6,539 6,422 44 Reserve balances with Federal Reserve Banks3 36,365 34,327 37,754 36,456 36,031 33,655 36,542 36,225 36,606 36,184 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 April 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. Dec. Jan. Feb. Mar. Apr. May June 1 Reserve balances with Reserve Banks1 21,738 27,620 37,360 37,360 36,584 33,625 35,318 37,807 36,466 36,309 2 Total vault cash 22,313 22,953 24,071 24,071 25,049 25,889 23,759 23,353 23,693 24,380 3 Vault3 18,958 20,522 22,199 22,199 23,084 23,435 21,743 21,587 21,873 22,475 4 Surplus4. 3,355 2,431 1,872 1,872 1,965 2,454 2,016 1,767 1,820 1,905 5 Total reserves 40,696 48,142 59,560 59,560 59,668 57,060 57,061 59,393 58,339 58,784 6 Required reserves 39,843 47,085 58,191 58,191 58,600 55,849 56,146 58,566 57,260 57,594 7 Excess reserve balances at Reserve Banks6 853 1,058 1,369 1,369 1,068 1,211 916 827 1,079 1,190 8 Total borrowings at Reserve Banks 3,186 1,318 827 827 580 556 527 993 1,035 776 9 Seasonal borrowings at Reserve Banks 113 56 38 38 34 71 91 120 196 259 10 Extended credit at Reserve Banks 2,604 499 303 303 225 283 264 270 288 273 Biweekly averages of daily figures for weeks ending 1987 Apr. 8 Apr. 22 May 6 May 20 June 3' June IT July 1 July 15 July 29" Aug. 12"' 11 Reserve balances with Reserve Banks1 36,358 38,746 37,612 36,327 36,018 37,145 35,475 37,083 35,220 35,832 12 Total vault cash2 23,198 23,479 23,289 23,552 24,094 23,668 25,215 24,238 25,029 24,306 13 Vault 21,350 21,761 21,519 21,801 22,158 21,972 23,092 22,470 22,998 22,413 14 Surplus4 1,848 1,719 1,770 1,751 1,936 1,696 2,123 1,769 2,031 1,893 15 Total reserves5 57,708 60,506 59,131 58,128 58,176 59,117 58,567 59,553 58,218 58,245 16 Required reserves 57,029 59,703 58,115 57,066 57,042 58,313 56,947 59,081 57,245 57,465 17 Excess reserve balances at Reserve Banks6 679 804 1,016 1,063 1,134 804 1,620 472 974 780 18 Total borrowings at Reserve Banks 641 956 1,410 830 1,094 635 856 696 652 564 19 Seasonal borrowings at Reserve Banks 98 110 159 190 226 230 298 271 294 289 20 Extended credit at Reserve Banks 248 267 299 276 297 254 289 261 133 120 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 DomesticN onfinancial Statistics • October 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 Apr. 6 Apr. 13 Apr. 20 Apr. 27 May 4 May 11 May 18 May 25 June 1 Federal funds purchased, repurchase agreements, and other selected borrowing in immediately available funds From commercial banks in the United States 1 For one day or under continuing contract 80,467 81,639 80,380 72,677 74,589 72,245 74,184 70,799 71,703 2 For all other maturities 8,639 8,974 9,877 8,966 8,951 9,378 9,341 9,586 9,567 From other depository institutions, foreign banks and foreign official institutions, and United States government agencies 3 For one day or under continuing contract 38,912 42,536 35,818 35,509 36,261 37,474 34,183 34,329 34,356 4 For all other maturities 7,996 8,039 8,381 8,384 9,872 9,708 9,731 9,654 9,008 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 12,806 12,556 12,495 12,713 12,815 11,755 11,404 11,482 10,800 6 For all other maturities 9,347 9,869 13,167 13,596 15,000 14,898 15,298 15,980 14,975 All other customers 7 For one day or under continuing contract 26,225r 26,048 21,149 24,810 24,187 23,189 24,329 24,777 25,068 8 For all other maturities 9,940 10,332 12,483 9,038 8,7% 8,702 8,678 8,561 8,741 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 29,107 28,649 30,933 29,588 32,471r 27,344' 29,146 26,958 29,083 10 To all other specified customers 11,329 11,124 11,615 13,656 12,864 11,449 13,004 13,353 13,481 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 year Current and previous levels AAddjjuussttmmeenntt CCrreeddiitt Extended Credit3 aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall CCrreeddiitt11 First 30 days of Borrowing After 30 days of Borrowing3 BBBaaannnkkk On Effective Previous On Effective Previous On Effective Previous 8/26/87 Date Rate 8/26/87 Date Rate 8/26/87 Date Rate Effective Date Boston 5Vi 8/21/86 5 Vi 8/21/86 6 7.20 8/13/87 7.15 7/30/87 New York 8/21/86 8/21/86 8/13/87 7/30/86 Philadelphia 8/22/86 8/22/86 8/13/87 7/30/87 Cleveland 8/21/86 8/21/86 8/13/87 7/30/87 Richmond 8/21/86 8/21/86 8/13/87 7/30/87 Atlanta 8/21/86 8/21/86 8/13/87 7/30/87 Chicago 8/21/86 8/21/86 8/13/87 7/30/87 St. Louis 8/22/86 8/22/86 8/13/87 7/30/87 Minneapolis 8/21/86 8/21/86 8/13/87 7/30/87 Kansas City 8/21/86 8/21/86 8/13/87 7/30/87 Dallas 8/21/86 8/21/86 8/13/87 7/30/87 San Francisco ... 5Vi 8/21/86 6 5 Vi 8/21/86 6 7.20 8/13/87 7.15 7/30/87 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. B o a f n k Banks N.Y. Banks N.Y. Banks N.Y. I 1 n 9 7 e 4 ff — ec A t p D r. e c. 2 5 3 1, 1973 7V IV i-8 i 8 7 Vi 1978—A Se u p g t . . 2 2 2 1 73 8 /4 8 73 /4 11998822——JJuullyy 2 2 0 3 llV 11 i V -1 i 2 1 1 1 1 V V i i Dec. 3 1 9 6 0 7 V -V 8 /4 4 -8 7 7 8 3 3 / / 4 4 O N c o t v . . 2 1 1 6 0 8 8 V - 8 i 8 - V 9 ? i V / ! i 9 8 8 V !V/! i i AAuugg.. 16 2 3 11 1 - 0 1 l 1V l V i i 1 1 1 1 0 1 Vi 3 9 Vi 9Vi 27 lO-lOVi 10 1975—J F a e n b . . 2 1 5 6 4 0 6 i i V v 3 7 / ^ i 4 1 r - / - - 7 4 m V ' /4 M 7 7 6 7 V V 3 3 / / 4 4 4 4 1979—J A u u ly g . 1 2 2 7 0 0 10 l - o 1 1 w 0 0 Vl 1 1 lO 0 0 W Vi O N c o t v . . 2 3 1 1 2 0 2 3 9 9 V 9 - 1 9 iV 0 - V 1 >0 l 1 9 9 9 0 VVi i 7 63/4 6-V4 Sept. 19 10Vi-ll 11 26 9 9 M Ma a y r. 1 1 1 6 0 4 6V 6- 6 4 6 V - 1 6V 4 /4 4 6 6 6 V V 4 4 Oct. 2 1 1 8 0 11 1 1 - 2 1 1 2 1 1 1 1 2 2 Dec. 1 1 1 7 4 5 8 88 V V i iV - - 9 9 1 9 88 V V l 1 23 6 6 1980—Feb. 15 12-13 13 11998844——AApprr.. 9 8Vi-9 9 1976—Jan. 19 5Vi-6 <iVi 19 13 13 13 9 9 Nov. 2 2 2 3 5V 5 4 V -5 i Vi 5 5 1 V /4 i May 2 3 9 0 12 1 - 2 1 3 1 1 3 2 Nov. 2 2 1 6 8 8 V V i- i 9 88VVi 2 26 5V4 51/4 June 13 11-12 11 Dec. 24 8 8 1977—Aug. 3 3 0 1 5 5 V 1/4 4- - 5 5 V 3/4 4 5 5 V 3/4 4 July 2 2 1 8 9 6 10 1 1 - 0 1 1 1 1 1 1 0 1 0 11998855——MMaayy 2 2 0 4 7VIVi-8i I I V V i i Sept. 2 53/4 53/4 Sept. 26 11 11 1-lVl 1 Oct. 26 6 6 Nov. 17 12 12 1986—Mar. 7 1 Dec. 5 12-13 13 10 7 1978—Jan. 2 9 0 6- 6 6 1 V /! i 6 61 V /2 i 8 13 13 AApprr.. 2 2 1 3 66ViV-7 1 6 6 V V i i May 11 6Vi-7 7 1981—May 5. 13-14 14 July 11 6 6 July 1 3 2 7-7 7 ! /4 7 7^ 4 Nov. 2 8 13 1 - 4 1 4 1 1 4 3 AAuugg.. 2 2 1 2 5V 5 Vi-6i 5 5 V V i i July 10 7V4 7V4 6 13 13 Vi Dec. 4 12 12 In effect August 26, 1987 5 5Vi 1. Adjustment credit is available on a short-term basis to help depository somewhat above rates on market sources of funds ordinarily will be charged, but institutions meet temporary needs for funds thai cannot be met through reason- in no case will the rate charged be less than the basic discount rate plus 50 basis able alternative sources. After May 19,1986, the highest rate established for loans points. The flexible rate is re-established on the first business day of each to depository institutions may be charged on adjustment credit loans of unusual two-week reserve maintenance period. At the discretion of the Federal Reserve size that result from a major operating problem at the borrower's facility. Bank, the time period for which the basic discount rate is applied may be Seasonal credit is available to help smaller depository institutions meet regular, shortened. seasonal needs for funds that cannot be met through special industry lenders and 4. For earlier data, see the following publications of the Board of Governors: that arise from a combination of expected patterns of movement in their deposits Banking and Monetary Statistics, 1914-1941, and 1941-1970; Annual Statistical and loans. A temporary simplified seasonal program was established on Mar. 8, Digest, 1970-1979. 1985, and the interest rate was a fixed rate Vi percent above the rate on adjustment In 1980 and 1981, the Federal Reserve applied a surcharge to short-term credit. The program was re-established on Feb. 18, 1986 and again on Jan. 28, adjustment credit borrowings by institutions with deposits of $500 million or more 1987; the rate may be either the same as that for adjustment credit or a fixed rate that had borrowed in successive weeks or in more than 4 weeks in a calendar Vi percent higher. quarter. A 3 percent surcharge was in effect from Mar. 17, 1980 through May 7, 2. Extended credit is available to depository institutions, where similar assis- 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was tance is not reasonably available from other sources, when exceptional circum- adopted; the surcharge was subsequently raised to 3 percent on Dec. 5,1980, and stances or practices involve only a particular institution or when an institution is to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective experiencing difficulties adjusting to changing market conditions over a longer Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981 the period of time. formula for applying the surcharge was changed from a calendar quarter to a 3. For extended-credit loans outstanding more than 30 days, a flexible rate moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 DomesticN onfinancial Statistics • October 1987 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act Type of deposit, <tnd deposit interval' Net transaction accounts3,4 $0 million-$36.7 million.... More than $36.7 million ... NonpersonaI time deposits5 By original maturity Less than \V2 years 10/6/86 1V5 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 Dec. Jan. Feb. Mar. Apr. May June U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 20,036 22,214 22,602 5,422 997 191 1,062 4,226 1,697 575 2 Gross sales 8,557 4,118 2,502 0 583 3,581 0 653 0 22 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 7,700 3,500 1,000 0 0 800 0 0 0 0 Others within 1 year 5 Gross purchases 1,126 1,349 190 0 0 0 0 1,232 0 535 6 Gross sales 0 0 0 0 0 0 0 0 0 0 V Maturity shift 16,354 19,763 18,673 1,280 611 1,855 1,762 1,375 4,063 1,715 8 Exchange -20,840 -17,717 -20,179 -1,502 0 -4,954 -1,799 -522 -1,336 -1,812 9 Redemptions 0 0 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 1,638 2,185 893 0 0 0 0 3,642 0 1,394 11 Gross sales 0 0 0 0 0 252 0 0 0 0 12 Maturity shift -13,709 -17,459 -17,058 -1,280 -591 -1,650 -1,762 -1,373 -1,804 -1,715 13 Exchange 16,039 13,853 16,984 1,502 0 4,354 1,799 522 1,111 1,812 5 to 10 years 14 Gross purchases 536 458 236 0 0 0 0 914 0 312 15 Gross sales 300 100 0 0 0 0 0 0 0 0 16 Maturity shift -2,371 -1,857 -1,620 0 -20 -204 0 -3 -2,259 0 11 Exchange 2,750 2,184 2,050 0 0 400 0 0 150 0 Over 10 years 18 Gross purchases 441 293 158 0 0 0 0 669 0 251 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 0 0 200 0 0 75 0 All maturities 22 Gross purchases 23,776 26,499 24,078 5,422 997 191 1,062 10,683 1,697 3,066 23 Gross sales 8,857 4,218 2,502 0 583 3,833 0 653 0 22 24 Redemptions 7,700 3,500 1,000 0 0 800 0 0 0 0 Matched transactions 25 Gross sales 808,986 866,175 927,997 91,404 63,865 82,086 72,306 83,822 91,642 87,228 26 Gross purchases 810,432 865,968 927,247 88,730 65,145 81,387 73,476 82,494 92,137 87,128 Repurchase agreements2 2/ Gross purchases 127,933 134,253 170,431 44,303 36,373 0 5,657 37,653 59,340 24,167 28 Gross sales 127,690 132,351 160,268 32,028 46,897 3,168 5,657 23,881 73,111 22,108 29 Net change in U.S. government securities 8,908 20,477 29,989 15,023 -8,830 -8,307 2,231 22,474 -11,580 5,002 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 0 110 0 0 37 0 0 Repurchase agreements2 33 Gross purchases 11,509 22,183 31,142 5,488 4,714 0 897 9,265 16,071 3,907 34 Gross sales 11,328 20,877 30,522 3,522 6,171 857 897 5,908 19,428 2,910 35 Net change in federal agency obligations -76 1,144 222 1,965 -1,567 -857 0 3,320 -3,357 997 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 16,988 -10,397 -9,165 2,231 25,794 -14,936 5,999 1. Sales, redemptions, and negative figures reduce holdings of the System Open 2. In July 1984 the Open Market Trading Desk discontinued accepting bankers Market Account; all other figures increase such holdings. Details may not add to acceptances in repurchase agreements, totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • October 1987 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1987 1987 July 1 July 8 July 15 July 22 July 29 May June July Consolidated condition statement ASSETS 1 Gold certificate account 11,069 11,069 11,069 11,069 11,069 11,070 11,069 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 441 627 638 645 646 476 451 647 Loans 4 To depository institutions 807 627 723 497 1,613 832 972 634 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 7,623 7,623 7,683 7,683 7,623 8 Held under repurchase agreements 0 0 0 0 0 0 996 930 U.S. Treasury securities Bought outright 9 Bills 107,058 107,609 105,114 106,884 103,950 107,250 107,702 102,526 10 Notes 75,522 75,447 75,322 75,322 75,322 73,303 75,522 75,322 11 Bonds 27,024 27,024 27,024 27,024 27,024 26,751 27,024 27,023 12 Total bought outright- 209,604 210,080 207,460 209,230 206,2% 207,304 210,248 204,871 13 Held under repurchase agreements 0 0 0 0 0 0 2,058 3,299 14 Total U.S. Treasury securities 209,604 210,080 207,460 209,230 206,296 207,304 212,306 208,170 15 Total loans and securities 218,094 218,390 215,866 217,350 215,532 215,819 221,957 217,357 16 Items in process of collection 8,319 7,304 7,133 6,249 5,542 6,356 9,801 5,575 17 Bank premises 683 683 685 687 685 678 683 687 Other assets 18 Denominated in foreign currencies' 7,782 7,787 7,794 7,799 7,804 8,035 7,782 7,666 19 All other4 7,112 7,235 7,261 7,383 7,648 6,426 7,183 8,096 20 Total assets 258,518 258,113 255,464 256,200 253,944 253,878 263,944 256,115 LIABILITIES 21 Federal Reserve notes 198,814 200,778 200,174 199,083 198,898 196.714 198,255 199,115 Deposits 22 To depository institutions 35,369 38,325 38,004 38,368 37,950 38,144 36,102 39,501 23 U.S. Treasury—General account 10,005 6,142 3,351 6,038 4,711 6,383 13,774 5,365 24 Foreign—Official accounts 289 244 381 283 244 320 318 262 25 Other 490 322 618 286 342 372 458 281 26 Total deposits 46,153 45,033 42,354 44,975 43,247 45,219 50,652 45,409 27 Deferred credit items 7,056 5,841 6,344 5,603 5,379 5,434 8,190 5,071 28 Other liabilities and accrued dividends'* 2,265 2,232 2,358 2,288 2,186 2,300 2,356 2,341 29 Total liabilities 254,288 253,884 251,230 251,949 249,710 249,667 259,453 251,936 CAPITAL ACCOUNTS 30 Capital paid in 1,962 1,962 1.966 1,969 1,970 1,950 1,961 1,970 31 Surplus 1,873 1,873 1,873 1,873 1,873 1,873 1,873 1,872 32 Other capital accounts 395 394 395 409 391 388 657 337 33 Total liabilities and capital accounts 258,518 258,113 255,464 256,200 253,944 253,878 263,944 256,115 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international account 180,426 181,482 179,371 178,442 176,935 181,247 183,125 176,181 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 244,393 244,782 245,777 246,450 247,480 241,604 244,360 247,656 36 LESS: Held by bank 45,579 44,004 45,603 47,367 48,582 44,890 46,105 48,541 37 Federal Reserve notes, net 198,814 200,778 200,174 199,083 198,898 196,714 198,255 199,115 Collateral held against notes net: 38 Gold certificate account 11,069 11,069 11,069 11,069 11,069 11,070 11,069 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 182,727 184,691 184,087 182,996 182,811 180,626 182,168 183,028 42 Total collateral 198,814 200,778 200,174 199,083 198,898 196,714 198,255 199,115 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 1987 1987 July 1 July 8 July 15 July 22 July 29 May 29 June 30 July 31 1 Loans—Total 807 627 723 497 1,613 832 972 634 2 Within 15 days ... 660 472 571 471 1,582 752 887 503 3 16 days to 90 days 147 155 152 26 31 80 85 131 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 209,604 210.080 207,460 209,230 206,2% 207,304 212,306 208,170 10 Within 15 days' 10,383 11,215 8,345 11,592 12,059 8,970 8,789 12,461 11 16 days to 80 days 47,368 51,135 48,786 47,449 45,756 51,848 51.563 49,845 12 91 days to 1 year 70,894 66,846 69,657 69,517 67,809 66,885 70,995 65,929 13 Over 1 year to 5 years 41,956 41,881 41,709 41,709 41,709 41,160 41,956 40,972 14 Over 5 years to 10 years 14,742 14,742 14,702 14,702 14,702 14,430 14,742 14,702 150ver 10 years 24,261 24,261 24,261 24,261 24,261 24,011 24,261 24,261 16 Federal agency obligations—Total 7,683 7,683 7,683 7,623 7,623 7,683 8,679 8,553 17 Within 15 days1 22 81 68 132 164 281 1,229 1,093 18 16 days to 90 days 614 826 906 838 843 532 614 843 19 91 days to 1 year 1,659 1,389 1,300 1,311 1,307 1,521 1,449 1,307 20 Over 1 year to 5 years 3,814 3,814 3,826 3,774 3,741 3,763 3.814 3,741 21 Over 5 years to 10 years 1,294 1,293 1,303 1,288 1,288 1,306 1,293 1,289 22 Over 10 years 280 280 280 280 280 280 280 280 Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • October 1987 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1986 1987 1983 1984 1985 1986 IItteemm Dec. Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS' 1 Total reserves2 36.16 39.51 46.06 56.17 56.17 56.88 56.87 56.85 57.95 58.35 57.71 57.61 2 Nonborrowed reserves 35.38 36.32 44.74 55.34 55.34 56.30 56.32 56.33r 56.96 57.32 56.93 56.93 3 Nonborrowed reserves plus extended credit 35.38 38.93 45.24 55.64 55.64 56.53 56.60 56.59 57.23 57.60 57.20 57.12 4 Required reserves 35.59 38.66 45.00 54.80 54.80 55.82 55.66 55.94 57.13 57.27 56.52 56.84 5 Monetary base4 185.38 199.20 217.32 239.51 239.51 242.43 243.97 244.56 246.59 248.37 248.48 249.46 Notseasonallyadjusted 6 Total reserves2 36.87 40.57 47.24 57.64 57.64 58.73 56.09 56.07 58.37 57.30 57.63 57.74 7 Nonborrowed reserves 36.09 37.38 45.92 56.81 56.81 58.15 55.53 55.54 57.38 56.26 56.85 57.07 8 Nonborrowed reserves plus extended credit 36.10 39.98 46.42 57.11 57.11 58.38 55.81' 55.80' 57.65 56.55 57.12 57.27 9 Required reserves 36.31 39.71 46.18 56.27 56.27 57.66 54.88 55.15 57.54 56.22 56.44' 56.98 10 Monetary base4 188.65 202.34 220.82 243.63 243.63 243.42 240.82 241.93 246.07 246.83 249.29 251.42 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 38.89 40.70 48.14 59.56 59.56 59.67 57.06 57.06 59.39 58.34 58.78 58.84 12 Nonborrowed reserves 38.12 37.51 46.82 58.73 58.73 59.09 56.50 56.53 58.40 57.30 58.01 58.16 13 Nonborrowed reserves plus extended credit3 38.12 40.09 47.41 59.04 59.04 59.32 56.74 56.82 58.19 58.03 58.34 58.37 14 Required reserves 38.33 39.84 47.08 58.19 58.19 58.60 55.85 56.15 58.57 57.26 57.59 58.08 15 Monetary base4 192.26 204.18 223.53 247.71 247.71 246.75 244.22 244.98 249.24 249.94 252.54 254.67 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 requirements (CRR), currency and vault cash figures are measured over the discontinuities in the monetary base, required clearing balances and adjustments weekly computation period ending Monday. to 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 held during the lagged adjusted series consists of seasonally adjusted total reserves, which include computation period by institutions having required reserve balances at Federal excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted Reserve Banks plus the amount of vault cash equal to required reserves during the currency component of the money stock and the remaining items seasonally maintenance period at institutions having no required reserve balances. adjusted as a whole. 3. Extended credit consists of borrowing at the discount window under the 5. Reflects actual reserve requirements, including those on nondeposit liabiliterms and conditions established for the extended credit program to help ties, with no adjustments to eliminate the effects of discontinuities associated with depository institutions deal with sustained liquidity pressures. Because there is implementation of the Monetary Control Act or other regulatory changes to not the same need to repay such borrowing promptly as there is with traditional reserve requirements. short-term adjustment credit, the money market impact of extended credit is NOTE. Latest monthly and biweekly figures are available from the Board's similar to that of nonborrowed reserves. H.3(502) statistical release. Historical data and estimates of the impact on 4. The monetary base not adjusted for discontinuities consists of total reserves required reserves of changes in reserve requirements are available from the plus required clearing balances and adjustments to compensate for float at Federal Banking Section, Division of Research and Statistics, Board of Governors of the Reserve Banks and the currency component of the money stock less the amount Federal Reserve System, Washington, D.C. 20551. 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 IItteemm11 D 19 e 8 c 3 . D 19 e 8 c 4 . D 19 e 8 c 5 . D 19 e 8 c 6 . Apr/ Mayr June' July Seasonally adjusted 1 Ml 526.9 557.5 627.0 730.5 750.3 753.1 746.6 747.6 7 M2 2,184.6 2,369.1 2,569.5 2,800.1 2,837.9 2,838.7 2,840.3 2,846.0 M3 2,692.8 2,985.4 3,205.5 3,489.1 3,538.8 3,552.8 3,567.4 3,572.5 4 L 3,154.6 3,529.0 3,838.9 4,141.1 4,185.8 4,217.8 4,226.0 n.a. 5 Debt 5,206.2' 5,946.2 6,774.9 7,630.4 7,845.1 7,914.6 7,979.5 n.a. Ml components Currency2 148.3 158.5 170.6 183.5 188.9 190.2 191.1 192.1 7 Travelers checks 4.9 5.2 5.9 6.4 6.8 6.7 6.8 6.7 8 Demand deposits4 242.3 248.3 272.2 308.3 303.9 303.9 297.4 296.2 9 Other checkable deposits 131.4 145.5 178.3 232.2 250.7 252.2 251.2 252.5 Nontransactions components 10 In M26... 1,657.7 1,811.5 1,942.5 2,069.7 2,087.6 2,085.6 2,093.7 2,098.4 11 In M3 only 508.2 616.3 636.1 689.0 700.9 714.1 727.1 726.5 Savings deposits8 12 Commercial Banks 133.2 122.2 124.6 154.5 172.2 174.5 175.5 176.6 13 Thrift institutions 173.0 166.6 179.0 211.8 233.8 237.2 239.7 240.1 Small denomination time deposits9 14 Commercial Banks 350.9 386.6 383.9 364.7 357.5 357.1 360.2 363.4 15 Thrift institutions 432.9 498.6 500.3 488.7 486.1 485.9 489.9 494.9 Money market mutual funds 16 General purpose and broker/dealer 138.2 167.5 176.5 207.6 211.0 209.1 210.2 210.4 17 Institution-only 43.2 62.7 65.1 84.1 83.1 81.8 81.3 83.4 Large denomination time deposits10 18 Commercial Banks 230.0 269.6 284.1 291.8 305.9 310.7 314.9 313.6 19 Thrift institutions 96.2 147.3 152.1 155.3 148.7 149.0 150.1 151.2 Debt components 20 Federal debt 1,170.5 1,365.3 1,584.6 1,804.5 1,841.1 1,864.2 11,,888877..44 n.a. 21 Nonfederal debt 4,035.7r 4,580.9 5,190.3 5,825.9' 6,004.0 6,050.3 6,092.1 n.a. Not seasonally adjusted 7? Ml 538.3 570.3 641.0 746.5 757.5 744.9 749.1 751.5 73 M2 2,191.6 2,378.3 2,580.5 2,813.6 2,846.6 2.827.7 2,841.4 2,853.1 74 M3 2,702.4 2,997.2 3,218.8 3,504.4 3,546.9 3,543.0 3,565.3 3,572.4 75 L 3,163.1 3,539.7 3,850.7 4,154.5 4,193.8 4,202.2 4,225.3 n.a. 26 Debt 5,200.7 5,940.6 6,768.3 7,623.1' 7,817.5 7,878.2 7,937.7 n.a. Ml components 27 Currency" 150.6 160.8 173.1 186.2 188.0 190.2 191.9 193.8 28 Travelers checks3 4.6 4.9 5.5 6.0 6.4 6.5 7.1 7.7 29 Demand deposits4 251.0 257.2 282.0 319.5 305.8 298.8 298.8 298.7 30 Other checkable deposits5 132.2 147.4 180.4 235.0 257.4 249.4 251.3 251.4 Nontransactions components 31 M26 1,653.3 1,808.0 1,939.5 2,067.1 2,089.0 2,082.7 2,092.3 2,101.6 32 M3 only7 510.8 618.9 638.3 690.7 700.3 715.3 723.9 719.3 Money market deposit accounts 33 Commercial Banks 230.4 267.4 332.5 379.0 375.4 368.9 367.6 365.2 34 Thrift institutions 148.5 150.0 180.7 192.4 190.0 188.3 185.9 182.8 Savings deposits8 35 Commercial Banks 132.2 121.4 123.9 153.8 172.1 174.8 176.6 117788..44 36 Thrift institutions 172.4 166.2 178.8 211.8 234.0 237.8 240.8 241.8 Small denomination time deposits9 37 Commercial Banks 351.1 386.7 383.8 364.4 355.6 355.7 359.7 363.9 38 Thrift institutions 433.5 499.6 501.5 489.8 484.4 482.6 487.1 494.5 Money market mutual funds 39 General purpose and broker/dealer 138.2 167.5 176.5 207.6 211.0 209.1 210.2 210.4 40 Institution-only 43.2 62.7 65.1 84.1 83.1 81.8 81.3 83.4 Large denomination time deposits10 41 Commercial Banks 231.6 271.2 285.6 293.2 303.2 309.2 311.8 310.3 42 Thrift institutions 96.3 147.3 151.9 154.9 148.0 149.0 149.7 150.6 Debt components 43 Federal debt 11,,117700..22 1,364.7 1,583.7 1,803.3 1,846.7 1,857.8 1,869.1 n.a. 44 Nonfederal debt 4,030.5 4,575.8 5,184.5 5,819.8r 5,970.7 6,020.4 6,068.6 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • October 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 government, and foreign banks and official institutions less cash items in the nonbank issuers. Travelers checks issued by depository institutions are included process of collection and Federal Reserve float; and (4) other checkable deposits in 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. Smnall-denomination time deposits—including retail RPs—are those issued money market funds, and foreign banks and official institutions. Also subtracted in amounts of less than $100,000. All individual retirement accounts (IRA) and is a consolidation adjustment that represents the estimated amount of overnight Keogh accounts at commercial banks and thrifts are subtracted from small time RPs 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. 1987 Bank group, or type of customer 1986 Jan. Feb. Mar. Apr. May June DEBITS TO Seasonally adjusted Demand deposits 1 All insured banks 128,440.8 154,556.0 189,534.1 210,574.2 211,169.4 217,019.7 224,603.0 222,774.5 212,202.0 2 Major New York City banks 57,392.7 70,445.1 91,212.9 99,357.1 98,712.3 104,224.5 107,159.2 106,599.1 100,320.9 4 3 AT O S t - h N er O b W a n a ks c counts3i 71 1 , , 0 5 4 88 8 . . 7 1 84 1 , , 1 9 1 2 0 0 . . 9 8 98 2 , , 3 3 2 5 1 1 . . 4 1 11 2 1 , , 2 2 5 1 5 7 . . 7 1 11 2 2 , , 3 4 0 5 6 7 . . 0 1 11 2 2 , , 3 7 4 95 4 . . 2 6 11 2 7 , , 3 4 8 4 4 3 . . 7 7 11 2 6 , , 4 1 2 75 5 . . 4 1 11 2 1 , , 4 8 3 8 7 1 . . 0 1 5 Savings deposits 633.1 539.0 410.3 459.2 477.7 468.6 528.0 508.9 568.2 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 434.4 496.5 561.8 580.3 594.7 613.8 627.0 613.0 594.9 7 Major New York City banks 1,843.0 2,168.9 2,460.6 2,426.4 2,461.0 2,707.8 2,711.5 2,660.3 2,713.7 8 Other banks 268.6 301.8 327.4 345.5 357.0 358.0 368.5 359.3 349.9 9 ATS-NOW accounts3 15.8 16.7 16.8 13.4 13.5 13.6 13.6 13.9 14.0 10 Savings deposits 5.0 4.5 3.1 2.9 2.9 2.8 3.1 2.9 3.3 DEBITS TO Not seasonally adjusted Demand deposits 11 All insured banks 128,059.1 154,108.4 189,443.3 216,638.7 191,572.9 222,532.0 229,095.0 209,229.8 224,042.8 12 Major New York City banks 57,282.4 70,400.9 91,294.4 102,274.2 89,866.7 106,161.2 108,597.8 98,828.3 106,422.2 13 Other banks 70,776.9 83,707.8 98,149.0 114,364.5 101,706.2 116,370.8 120,497.3 110,401.5 117,620.6 14 ATS-NOW accounts3 1,579.5 1,903.4 2,338.4 2,679.2 2,173.2 2,422.7 2,735.8 2,420.5 2,617.4 15 MMDA 848.8 1,179.0 1,599.3 1,913.3 1,600.7 1,754.4 2,071.1 1,786.2 1,901.2 16 Savings deposits 632.9 538.7 404.3 499.0 434.6 476.2 570.8 492.4 571.5 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 433.5 497.4 564.0 579.9 550.0 641.0 635.1 582.7 630.0 18 Major New York City banks 1,838.6 2,191.1 2,494.3 2,345.5 2,273.2 2,742.6 2,755.6 2,496.3 2,816.8 19 Other banks 267.9 301.6 327.9 346.6 329.4 377.3 375.0 345.6 370.1 20 ATS-NOW accounts3 15.7 16.6 16.8 15.7 12.9 14.1 15.2 14.0 15.1 21 MMDA 3.5 3.8 4.5 5.1 4.3 4.7 5.6 4.9 5.2 22 Savings deposits 5.0 4.5 3.1 3.1 2.7 2.9 3.4 2.8 3.3 1. Annual averages of monthly figures. NOTE. Historical data for demand deposits are available back to 1970 estimated 2. Represents accounts of individuals, partnerships, and corporations and of in part from the debits series for 233 SMSAs that were available through June states and political subdivisions. 1977. Historical data for ATS-NOW and savings deposits are available back to 3. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- July 1977. Back data are available on request from the Banking Section, Division counts authorized for automatic transfer to demand deposits (ATS). ATS data 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 • October 1987 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1986 1987 CCaatteeggoorryy Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted 1 Total loans and securities2 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 2,169.0 2 U.S. government securities 291.5 294.9 299.6 304.1 309.9 316.3 315.2 314.3 315.8 320.1 316.7 319.7 3 Other securities 196.0 204.2 199.8 197.9 196.9 190.2 193.8 195.5 197.2 197.6 198.5 196.9 4 Total loans and leases" 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 1,652.4 5 Commercial and industrial ..... 515.2 517.3 520.0 525.7 541.4 554.1 553.8 551.7 553.9 555.9 558.1 555.6 6 Bankers acceptances held ... 6.5 6.6 6.7 6.4 6.4 6.8 6.8 6.2 6.5 6.8 6.8 6.7 7 Other commercial and industrial 508.7 510.7 513.3 519.2 535.0 547.2 546.9 545.5 547.4 549.0 551.3 548.9 8 U.S. addressees4 499.8 501.7 504.6 510.7 525.7 537.8 537.9 536.8 538.9 540.8 542.8 540.6 9 Non-U.S. addressees4 8.9 9.0 8.8 8.5 9.4 9.5 9.1 8.7 8.5 8.2 8.5 8.3 10 Real estate 464.8 468.9 474.2 479.6 489.0 499.2 504.0 511.0 517.9 526.3 536.8 544.0 11 Individual 308.1 309.9 311.2 312.6 314.2 314.9 315.2 315.7 316.6 316.7 314.6 314.3 12 Security 43.1 42.8 39.1 40.1 38.6 37.7 38.5 38.3 43.6 42.0 42.5 41.7 13 Nonbank financial institutions 34.5 34.9 35.5 34.9 35.2 35.7 34.7 35.0 35.4 35.4 33.9 31.9 14 Agricultural 33.0 32.7 32.4 32.2' 31.8' 31.4'' 30.8' 30.0' 29.8' 29.9' 29.9' 30.0 15 State and political subdivisions 60.1 60.0 59.3 58.7 57.9 57.8 57.2 56.9 56.0 55.2 54.4 53.2 16 Foreign banks 10.1 10.1 10.0 10.0 10.4 10.6 10.3 9.7 9.9 9.9 10.3 9.4 1/ Foreign official institutions 6.1 6.0 6.0 5.9 5.8 5.9 6.1 6.7 6.7 5.8 5.3 5.2 18 Lease financing receivables .... 20.7 21.1 21.8 22.0 22.2 22.1 22.2 22.3 22.6 22.9 23.0 23.2 19 All other loans 39.6 41.8 43.4 39.9' 36.4'' 42.4'' 38.0' 38.9' 41.9' 43.0' 42.4' 43.9 Not seasonally adjusted 20 Total loans and securities2 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 2,164.1 21 U.S. government securities 290.5 293.8 296.1 303.2 308.3 314.6 318.9 317.2 317.7 319.7 317.1 320.9 22 Other securities 196.2 205.0 200.1 198.3 198.1 193.7 194.1 194.4 195.2 196.8 197.0 194.8 23 Total loans and leases- 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 1,648.4 24 Commercial and industrial 512.8 516.1 517.8 525.2 544.3 552.4 551.7 554.5 556.5 557.5 559.3 554.7 25 Bankers acceptances held3... 6.3 6.7 6.6 6.6 6.7 6.7 6.7 6.2 6.4 6.7 6.9 6.8 26 Other commercial and industrial 506.5 509.4 511.2 518.5 537.6 545.8 545.0 548.3 550.0 550.8 552.4 547.9 27 U.S. addressees4 497.3 500.2 502.1 509.5 528.8 537.1 536.3 539.9 541.6 542.4 543.7 539.1 28 Non-U.S. addressees4 9.1 9.2 9.1 9.1 8.8 8.7 8.7 8.4 8.4 8.4 8.7 8.8 29 Real estate 464.9 469.9 475.1 480.7 489.9 499.3 503.1 509.8 516.7 525.4 536.5 544.2 30 Individual 307.9 310.8 312.3 313.7 317.8 317.9 314.7 313.3 314.4 314.8 313.2 313.2 31 Security 40.7 41.3 37.8 40.4 40.9 39.4 37.5 38.6 45.1 42.1 43.2 40.9 32 Nonbank financial institutions 34.8 35.6 35.6 35.4 36.4 35.7 33.8 33.8 34.8 34.9 34.0 31.9 33 Agricultural 33.9 33.7 33.1 32.3'' 31.5'' 30.7' 29.9' 29.1' 29.1' 29.7' 30.3' 30.7 34 State and political subdivisions 60.1 60.0 59.3 58.7 57.9 57.8 57.2 56.9 56.0 55.2 54.4 53.2 35 Foreign banks 9.9 10.3 10.0 10.1 10.9 10.7 10.5 9.7 9.5 9.6 10.0 9.4 36 Foreign official institutions 6.1 6.0 6.0 5.9 5.8 5.9 6.1 6.7 6.7 5.8 5.3 5.2 37 Lease financing receivables .... 20.6 21.0 21.5 21.8 22.2 22.4 22.4 22.5 22.7 22.9 23.0 23.1 38 All other loans 36.8 39.0 39.1 38.5r 41.2' 43.1'' 41.5' 41.2' 43.9' 43.5' 42.8' 41.9 1. These data also appear in the Board's G.7 (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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Total nondeposit fund£ 1 Seasonally adjusted* 137.9 142.6 140.5 144.2 145.0' 153.5 157.5 161.6 115577..55 116655..44 116600..77 115522..88 2 Not seasonally adjusted 137.8 141.9 139.6' 145.7 145. 1' 153.0 160.1 163.9 157.6 166.2 158.2' 149.8 Federal funds, RPs, and other borrowings from nonbanks 3 Seasonally adjusted 167.4 166.9 167.8 166.0 164.0 169.1 169.4 167.8 116677..77 116655..55 116622..66 116600..55 4 Not seasonally adjusted 167.3 166.2 166.9 167.5 164.1 168.6 172.0 170.1 167.8 166.2 160.0 157.5 5 Net balances due to foreign-related institutions, not seasonally adjusted -29.5 -24.3 -27.3 -21.8 -19.0r -15.6 --1111..99 --66..22 --1100..22 ..00 --11..99 --77..66 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally -31.2 -29.2 -31.9 -28.7 -30.6' -26.1 -23.7 -21.1 --2222..99 --1155..66 --1155..66 --2222..22 7 Gross due from balances 75.2 74.0 73.5 70.8 73.3'' 71.6 68.3 66.1 70.5 68.5 67.1 66.5 8 Gross due to balances 44.0 44.8 41.6 42.1 42.7 45.5 44.6 45.0 47.6 52.9 51.6' 44.2 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted' 1.7 4.9 4.6 6.9 11.6 10.5 11.8 14.9 12.7 15.5 13.7 14.6 10 Gross due from balances 66.3 67.9 68.2' 68.7 70.8 75.0 72.9 71.1 72.6 75.4 77.1 77.1 11 Gross due to balances 67.9 72.7 72.9 75.6 82.5 85.5 84.7 86.0 85.3 90.9 90.8 91.7 Security RP borrowings 1? Seasonally adjusted 95.9 95.9 97.0 96.9 97.0 99.2 95.5 92.5 95.3 95.1 96.4 96.5 13 Not seasonally adjusted 95.8 95.2 96.1 98.5 97.1 98.7 98.1 94.8 95.4 95.9 93.8 93.5 U.S. Treasury demand balances' 14 Seasonally adjusted 14.5 16.5 17.1 23.2 21.2 21.3 23.2 17.7 20.7 26.1 2277..99'' 2244..77 15 Not seasonally adjusted 11.1 18.2 15.3 15.3 19.2 27.5 28.6 17.1 21.6 30.8 25.5 26.6 Time deposits, $100,000 or more8 16 Seasonally adjusted 344.3 344.1 342.5 343.2 345.6 350.1 351.1 354.1 335599..88 336666..22 337722..99'' 337711..88 17 Not seasonally adjusted 344.0 345.5 343.7 343.9 347.0 351.3 353.2 356.4 357.2' 364.8' 369.8' 368.5 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 • October 1987 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1986 1987 AAccccoouunntt Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 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 2,323.3 2 Investment securities 469.4 471.9 475.4 479.6 482.2 484.7 486.2 492.5 495.4 493.0 497.4 3 U.S. government securities 276.6 282.8 287.3 292.6 296.1 298.8 299.5 305.1 307.0 303.2 308.0 4 Other 192.8 189.1 188.0 187.0 186.1 185.9 186.7 187.5 188.4 189.8 189.4 5 Trading account assets 27.9 26.0 28.1 27.8 26.4 29.0 25.2 23.3 21.4 20.1 20.4 6 Total loans 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 1,799.5' 1,805.5 7 Interbank loans 139.8 141.2 154.7 168.9 160.1 156.7 154.3 151.8 160.4 151.0 157.4 8 Loans excluding interbank 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 1,648.1 9 Commercial and industrial 515.9 517.2 524.9 568.2 551.1 551.5 555.3 555.5 558.2 558.2r 551.7 10 Real estate 470.5 476.2 481.8 497.5 499.9 503.5 510.7 519.0 527.4 538.7' 546.9 11 Individual 311.2 312.8 314.1 320.4 317.0 314.7 313.1 315.2 314.8 312.8 314.3 12 All other 244.9 237.8 248.2 252.0 248.3 239.2 234.4 248.9 241.3 238.9' 235.3 13 Total cash assets 199.3 203.5 227.0 273.7 214.4 206.3 203.8 209.7 230.8 213.2 207.1 14 Reserves with Federal Reserve Banks. 28.2 31.6 32.2 41.2 33.4 28.4 31.1 29.8 37.9 33.8 32.8 15 Cash in vault 22.9 23.5 22.2 25.7 23.7 23.5 22.9 24.0 25.1 24.2 24.4 16 Cash items in process of collection ... 66.2 66.2 86.5 111.3 74.5 71.4 68.1 74.5 81.3 74.4 68.6 17 Demand balances at U.S. depository institutions 32.8 33.1 38.3 43.3 34.0 33.0 32.7 33.9 37.2 31.1 31.7 18 Other cash assets 49.2 49.0 47.9 52.3 48.8 50.1 49.0 47.5 49.3 49.7 49.5 19 Other assets 201.4 198.6 202.2 224.8 201.3 201.1 202.1 204.0 208.7 204.1 189.2 20 Total assets/total liabilities and capital.... 2,580.4 2,585.3 2,656.5 2,812.8 2,700.5 2,686.8 2,685.2 2,719.9 2,758.3 2,729.9 2,719.6 21 Deposits 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 1,924.9 22 Transaction deposits 538.9 548.8 596.3 691.1 577.8 569.2 568.8 590.7 596.9 578.3 573.9 23 Savings deposits 505.5 516.0 522.9 535.0 532.3 535.9 539.7 535.1 538.6 535.1' 536.2 24 Time deposits 790.1 782.2 781.1 791.9 788.2 790.3 791.2 793.6 803.6 810.3' 814.8 25 Borrowings 391.6 383.3 397.4 414.5 432.7 425.6 414.9 422.7 435.6 428.2 423.5 26 Other liabilities 176.3 175.7 180.0 199.6 188.0 184.6 188.7 195.2 200.3 200.5 200.6 27 Residual (assets less liabilities) 178.1 179.2 178.9 180.6 181.5 181.2 181.9 182.5 183.3 177.4 170.6 MEMO 28 U.S. government securities (including trading account) 293.2 299.5 304.8 308.4 314.5 320.1 316.7 318.9 320.6 315.5 322.4 29 Other securities (including trading account) 204.1 198.4 198.8 198.9 194.1 193.7 194.7 196.9 196.1 197.6 195.4 DOMESTICALLY CHARTERED COMMERCIAL BANKS1 30 Loans and securities 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 2,156.7 31 Investment securities 450.5 452.9 457.1 459.3 461.5 463.3 463.6 470.0 471.5 469.6 473.6 32 U.S. Treasury securities 267.9 273.6 279.0 283.0 286.8 289.2 289.4 295.2 296.7 293.8 298.2 33 Other 182.5 179.3 178.2 176.3 174.8 174.1 174.2 174.8 174.8 175.8 175.4 34 Trading account assets 27.9 26.0 28.1 27.8 26.4 29.0 25.2 23.3 21.4 20.1 20.4 35 Total loans 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 1,661.2' 1,662.7 36 Interbank loans 115.6 118.8 133.0 137.9 134.3 130.5 124.1 124.2 128.6 121.5 122.7 37 Loans excluding interbank 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 1,540.0 38 Commercial and industrial 448.1 449.0 455.7 488.2 475.5 474.1 474.6 473.5 475.3 471.8' 466.0 39 Real estate 464.3 470.0 475.1 490.3 493.2 497.0 504.1 512.0 520.3 531.7' 539.5 40 Individual 310.9 312.5 313.8 320.1 316.7 314.4 312.7 314.9 314.5 312.5 313.9 41 All other 227.5 222.7 231.8 230.9 229.2 221.9 217.4 229.0 224.7 223.8 220.6 42 Total cash assets 182.5 185.6 210.0 253.5 196.6 188.9 186.5 192.5 213.2 195.4 189.1 43 Reserves with Federal Reserve Banks. 26.9 29.7 29.8 39.7 31.2 27.1 29.7 27.2 35.9 32.1 31.4 44 Cash in vault 22.9 23.5 22.2 25.7 23.6 23.5 22.8 24.0 25.0 24.1 24.4 45 Cash items in process of collection ... 65.8 65.6 86.1 110.9 74.0 71.0 67.7 74.0 80.9 73.8' 68.2 46 Demand balances at U.S. depository institutions 30.9 31.3 36.3 40.8 32.2 31.1 31.1 31.9 35.1 29.4 29.9 47 Other cash assets 36.0 35.5 35.6 36.4 35.6 36.4 35.2 35.4 36.2 35.9 35.3 48 Other assets 143.5 141.0 141.6 165.0 141.5 144.0 143.4 144.4 143.1 134.8 122.0 49 Total assets/liabilities and capital 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 2,467.9 50 Deposits 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 1,864.1 51 Transaction deposits 530.6 540.9 588.2 682.2 569.4 561.3 560.5 582.2 588.4 569.8 565.8 52 Savings deposits 503.7 514.1 520.8 533.0 530.3 533.9 537.7 533.1 536.6 533.1' 534.1 53 Time deposits 745.0 737.7 735.8 741.8 741.1 743.0 742.5 741.8 751.4 759.0' 764.3 54 Borrowings 306.9 301.3 314.1 322.9 341.7 336.1 319.1 328.2 337.1 328.5 320.6 55 Other liabilities 109.6 108.6 111.7 115.5 114.0 110.8 113.0 119.1 118.8 116.4 115.7 56 Residual (assets less liabilities) 174.9 176.0 175.8 177.5 178.3 178.1 178.8 179.4 180.2 174.3 167.4 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 Banking Section. Board of Governors of the Federal Reserve System, Washing- foreign-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 June 3 June 10 June 17 June 24 July 1 July 8 July 15 July 22 July 29 1 Cash and balances due from depository institutions 105,389 100,068' 103,833 102,919 122,818 96,723 108,152 96,111 96,851 2 Total loans, leases and securities, net L,019,562R 1,008,802' 1,008,924 999,318' 1,012,728 996,044 1,003,050 988,286 992,800 3 U.S. Treasury and government agency 111,940 110,809 109,782 108,014' 109,325 110,947 114,002 114,942 113,702 4 Trading acount 13,449 12,900 13,102 12,389' 12,577 13,253 15,890 15,520 14,359 5 Investment account, by maturity 98,490 97,909 96,680 95,624 96,748 97,695 98,112 99,421 99,343 6 One year or less 15,566 15,396 14,956 15,547 16,772 16,722 16,230 16,291 16,096 7 Over one through five years 44,422 44,201 44,118 43,106 42,466 42,684 42,995 43,928 44,254 8 Over five years 38,503 38,312 37,606 36,970 37,511 38,288 38,888 39,202 38,993 9 Other securities 67,805 68,013 68,203 68,888 67,782 66,767 66,874 67,121 67,544 10 Trading account 3,189 3,369 3,547 4,161 3,922 2,873 2.890 3,001 3,335 11 Investment account 64,616 64,644 64,655 64,726 63,859 63,894 63,984 64,120 64,209 12 States and political subdivisions, by maturity 51,188 51,096 51,038 50,920 49,853 49,831 49,856 49,945 49,983 13 One year or less 6,428 6,360 6,347 6,248 5,486 5,545 5.602 5,597 5,691 14 Over one year 44,760 44,736 44,691 44,672 44,367 44,286 44,254 44,348 44,292 15 Other bonds, corporate stocks, and securities 13,428 13,548 13,617 13,807 14,006 14,063 14,127 14,175 14,226 16 Other trading account assets 3,875 4,208 4,315 3,622 3,468 3,034 2,789 2,432 2,697 17 Federal funds sold1 69,204 60,292 61,583 59,545 74,688 63,448 69,700 59,563 63,556 18 To commercial banks 41,15<T 32,054 35,604 33,816 44,429 38,716 42,651 34,480 36,710 19 To nonbank brokers and dealers in securities 20,482' 20,378 19,099 18,892 22,701 19,102 18,996 18,184 19,721 20 To others 7,573 7,860 6,880 6,837 7,558 5,630 8,053 6,899 7,125 21 Other loans and leases, gross 794,438r 793,214' 795,132 790,402' 796,088 790,367 788,266 782,918 783,990 22 Other loans, gross 775,372 774,102 776,065 771,293' 777,241 771,488 769,348 763,980 765,032 23 Commercial and industrial 278,687' 278,128' 277,108' 275,296' 276,956 273,777 273,110 271,234 269,461 24 Bankers acceptances and commercial paper 2,162r 2,500 2,507 2,456 2,449 2,281 2,247 2,247 2,275 25 All other 276,525' 275,628' 274,601' 272,841' 274,507 271,496 270,863 268,987 267,186 26 U.S. addressees 273,326' 272,412' 271,420' 269,663' 271,404 268,419 267,794 265,961 264,130 27 Non-U.S. addressees 3,199' 3,216' 3,181' 3,178' 3,103 3,077 3,069 3,026 3,056 28 Real estate loans 227,074' 228,034' 230,718' 230,474' 230,826 230,857 231,045 231,082 231,802 29 To individuals for personal expenditures 140,970' 141,038' 140,494' 140,820' 141,089 140,956 140,967 141,139 141,670 30 To depository and financial institutions 52,725r 53,130' 52,914 51,072 51,620 51,885 51,108 49,047 49,833 31 Commercial banks in the United States 22,447r 22,138' 21,468 20,870 21,771 22,061 22,261 21,576 21,892 32 Banks in foreign countries 5,035 5,338 5,266 5,159 5,168 5,173 4,626 4,634 4,927 33 Nonbank depository and other financial institutions 25,243 25,655 26,180 25,042 24,681 24,651 24,221 22,837 23,014 34 For purchasing and carrying securities 15,771 15,162 14,835 14,377 15,546 14,292 14,304 13,461 14,432 35 To finance agricultural production 5,525 5,522 5,594' 5,627' 5,660 5,619 5,579 5,590 5,598 36 To states and political subdivisions 33,041' 32,933 33,097 32,633 32,117 32,189 32,135 31,948 31,909 37 To foreign governments and official institutions 2,958r 2,956' 3,072' 2,969' 2,986 2,938 2,980 3,071 2,867 38 All other 18,620 17,198 18,233 18,025' 20,440 18,974 18,120 17,406 17,460 39 Lease financing receivables 19,067' 19,113' 19,067 19,109 18,848 18,880 18,917 18,939 18,958 40 LESS: Unearned income 4,442' 4,461' 4,468 4,487 4,502 4,518 4,528 4,525 4,542 41 Loan and lease reserve 23,260r 23,274' 25,623 26,665 34,122 34,002 34,052 34,165 34,146 42 Other loans and leases, net 766,737' 765,480' 765,041 759,250' 757,464 751,847 749,685 744,229 745,301 43 All other assets 124,782' 119,586' 120,582 123,220' 130,223 126,221 126,774 123,830 119,739 44 Total assets 1,249,733' 1,228,457' 1,233,340 1,225,457' 1,265,769 1,218,988 1,237,976 1,208,227 1,209,390 45 Demand deposits 232,077 221,688 229,294 221,672' 265,470 223,024 239,998 215,380 215,173 46 Individuals, partnerships, and corporations 177,630 173,787 178,798 167,339' 202,898 174,256 185,989 167,541 166,280 47 States and political subdivisions 5,042 4,961 6,228 5,476 6,878 5,092 6,095 5,437 5,192 48 U.S. government 4,555 2,578 1,875 3,030 1,708 2,698 4,294 2,400 2,768 49 Depository institutions in United States 26,695 24,292 24,815 23,445' 33,020 23,844 27,215 23,077 23,125 50 Banks in foreign countries 6,358 6,502 5,889 7,776 7,151 6,501 6,342 6,210 7,032 51 Foreign governments and official institutions 1,012 1,059 1,262 979 1,213 1,028 1,105 1,023 1,014 52 Certified and officers' checks 10,784 8,507 10,427 13,627 12,601 9,606 8,957 9,691 9,763 53 Transaction balances other than demand deposits 61,650 60,902 60,585' 58,566' 60,909 61,098 60,439 59,826 59,387 54 Nontransaction balances 526,378 526,835 526,483 525,447 527,267 528,382 530,220 526,663 526,207 55 Individuals, partnerships and corporations 486,346' 487,052' 487,088' 486,313' 489,575 490,754 493,120 489,569 489,118 56 States and political subdivisions 28,303 28,205 27,749 27,522 26,266 26,253 25,788 25,815 25,664 57 U.S. government 920 897 897 888 908 922 928 915 896 58 Depository institutions in the United States 9,895' 9,773' 9,766' 9,885' 9,678 9,665 9,602 9,541 9,700 59 Foreign governments, official institutions and banks ... 914 907 983 839 840 788 783 823 828 60 Liabilities for borrowed money 255,756' 247,797 250,416 248,736' 252,357 249,235 251,358 247,663 247,027 61 Borrowings from Federal Reserve Banks 0 0 0 0 0 0 21 0 982 62 Treasury tax-and-loan notes 13,364 11,330 20,240 20,766 19,006 20,594 19,655 21,062 11,783 63 All other liabilities for borrowed money 242,392' 236,467 230,176 227,970' 233,351 228,641 231,681 226,600 234,262 64 Other liabilities and subordinated note and debentures . 89,413' 86,188' 83,996' 88,705' 84,164 80,909 79,576 82,482 85,508 65 Total liabilities 1,165,274' 1,143,410' 1,150,776 1,143,126' 1,190,168 1,142,648 1,161,591 1,132,014 1,133,302 66 Residual (total assets minus total liabilities)3 84,458' 85,047' 82,564 82,330 75,601 76,339 76,386 76,213 76,088 MEMO . 67 Total loans and leases (gross) and investments adjusted 983,667' 982,344' 981,943 975,783' 985,151 973,787 976,719 970,920 972,886 68 Total loans and leases (gross) adjusted 800,046' 799,314' 799,643 795,261' 804,576 793,038 793,054 786,426 788,944 69 Time deposits in amounts of $100,000 or more 165,648 165,823 165,500' 166,169' 163,471 165,465 165,528 164,886 164,875 70 Loans sold outright to affiliates—total 1,581 1,568 1,597 1,621 1,785 1,723 1,690 1,719 1,682 71 Commercial and industrial 1,023 1,009 1,032 1,051 1,222 1,126 1,124 1,139 1,127 72 Other 558 559 564 570 564 598 566 580 556 73 Nontransaction savings deposits (including MMDAs) 232,488 232,182 231,262 229,087 232,878 231,266 232,795 229,503 228,913 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 Nonfinancial Statistics • October 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 June 3 June 10 June 17 June 24 July 1 July 8 July 15 July 22 July 29 1 Cash balances due from depository institutions 25,602 26,669 23,217 29,880 38,582 22,074 29,764 23,823 23,208 2 Total loans, leases and securities, net1 223,501 219,222 218,048 216,253 217,860 208,595 213,756 206,393 211,225 Securities 3 U.S. Treasury and government agency* 0 0 0 0 0 0 0 00 00 4 Trading account2 0 0 0 0 0 0 0 0 0 5 Investment account, by maturity 14.483 13,931 13,863 13,865 13,751 13,783 13,844 13,948 13,914 6 One year or less 1,786 1,348 1,259 1,249 1,642 1,673 1,632 1,678 1,700 7 Over one through five years 5,616 5,638 5,712 5,666 5,125 5,093 5,253 5,372 5,372 8 Over five years 7,080 6,946 6,892 6,950 6,984 7,016 6,959 6,897 6,840 9 Other securities* 0 0 0 0 0 0 0 0 0 10 Trading account* 0 0 0 0 0 0 0 0 0 11 Investment account 16,507 16,494 16,533 16,550 16,179 16,228 16,260 16,294 16,401 12 States and political subdivisions, by maturity 14,036 13,989 13,970 13,939 13,474 13,506 13,510 13,517 13,593 13 One year or less 1,380 1,348 1,328 1,262 984 1,021 1,006 939 1,061 14 Over one year 12,656 12,640 12,641 12,677 12,490 12,485 12,504 12,578 12,532 15 Other bonds, corporate ^tocks and securities 2,471 2,505 2,563 2,610 2,705 2,722 2,750 2,777 2,808 16 Other trading account assets* 0 0 0 0 0 0 0 0 0 Loans and leases 28,358 26,984 25,812 26,621 30,713 23,829 30,135 24,557 28,124 18 To commercial banks 10,875 8,838 10,305 10,861 10,988 9,482 13,908 10,121 12,010 19 To nonbank brokers and dealers in securities 12,100 12,759 11,153 11,455 14,873 11,146 11,279 10,003 11,240 5,383 5,386 4,354 4,305 4,853 3,201 4,948 4,433 4,874 21 Other loans and leases, gross 175,252 172,978 173,931 171,637 173,037 170,515 169,293 167,354 168,542 170,487 168,193 169,203 166,888 168,270 165,733 164,502 162,530 163,732 23 Commercial and industrial 62,101 61,489 61,367 59,784 59,610 58,713 58,496 57,932 57,142 24 Bankers acceptances and commercial paper 532 606 557 538 556 465 503 437 479 25 All other 61,569 60,883 60,810 59,246 59,054 58,248 57,992 57,495 56,664 61,096 60,384 60,325 58,740 58,560 57,754 57,521 57,045 56,214 27 Non-U.S. addressees 474 499 485 506 494 493 472 449 450 43,060 43,228 43,497 43,676 43,662 43,560 43,423 43,484 44,176 29 To individuals for personal expenditures 20,777 20,827 20,939 20,948 20,884 20,895 20,968 21,046 21,247 30 To depository and financial institutions 21,112 21,073 21,356 21,226 21,527 21,007 20,322 19,696 19,887 31 Commercial banks in the United States 11,694 11,261 11,327 11,422 12,126 11,607 11,294 11,200 10,883 32 Banks in foreign countries 2,703 2,929 3,007 2,792 3,022 3,090 2,744 2,636 2,896 33 Nonbank depository and other financial institutions 6,716 6,884 7,022 7,012 6,380 6,309 6,284 5,861 6,108 34 For purchasing and carrying securities 8,340 7,464 7,130 6,310 6,757 6,186 6,481 5,698 6,895 35 To finance agricultural production 270 273 290 279 275 276 250 252 289 36 To states and political subdivisions 8,027 7,987 7,888 7,876 7,758 7,831 7,869 7,860 7,838 37 To foreign governments and official institutions 794 824 918 806 800 788 838 871 713 38 All other 6,004 5,026 5,817 5,981 6,998 6,477 5,855 5,689 5,544 39 Lease financing receivables 4,765 4,785 4,728 4,750 4,767 4,782 4,791 4,825 4,811 40 LESS: Unearned income 1,479 1,487 1,492 1,499 1,493 1,502 1,512 1,511 1,519 41 Loan and lease reserve 9,620 9,678 10,599 10,920 14,327 14,258 14,264 14,250 14,237 42 Other loans and leases, net 164,153 161,813 161,840 159,218 157,217 154,754 153,518 151,594 152,787 43 All other assets4 59,339 56,655 57,570 59,263 62,761 61,445 63,727 62,759 58,424 308,442 302,546 298,835 305,397 319,204 292,114 307,248 292,976 292,858 Deposits 45 Demand deposits 58,091 56,444 59,130 62,713 80,504 56,174 66,458 57,165 5555,,882288 46 Individuals, partnerships, and corporations 39,131 39,400 41,208 40,254 55,325 38,767 46,043 39,358 37,324 47 States and political subdivisions 636 667 704 689 1,197 877 1,591 867 674 48 U.S. government 869 417 170 525 176 476 825 411 537 49 Depository institutions in the United States 6,201 6,100 5,947 6,084 11,113 5,547 8,181 5,615 5,761 50 Banks in foreign countries 5,210 5,375 4,789 5,647 5,917 5,379 5,113 5,156 5,928 51 Foreign governments and official institutions 880 927 1,120 837 1,024 879 975 834 871 52 Certified and officers' checks 5,164 3,558 5,191 8,676 5,752 4,249 3,730 4,924 4,732 53 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,210 8,137 8,197 7,868 8,090 8,120 88,,003377 88,,000077 77,,993322 54 Nontransaction balances 100,106 99,279 99,024 98,586 100,088 99,749 101,245 99,689 99,534 55 Individuals, partnerships and corporations 91,118 90,351 90,222 89,880 91,354 90,836 92,450 90,915 90,709 56 States and political subdivisions 6,833 6,850 6,807 6,698 6,790 6,975 6,828 6,795 6,883 26 24 24 26 25 58 59 60 56 58 Depository institutions in the United States 1,633 1,566 1,512 1,536 1,473 1,470 1,500 1,512 1,478 59 Foreign governments, official institutions and banks 496 488 458 446 447 410 407 406 408 60 Liabilities for borrowed money 76,753 76,569 72,216 73,082 75,510 74,062 78,089 73,688 73,346 61 Borrowings from Federal Reserve Banks 0 0 0 0 0 0 0 0 900 62 Treasury tax-and-loan notes 3,132 2,853 4,939 5,115 4,563 4,727 4,536 4,799 2,594 63 All other liabilities for borrowed money 73,620 73,716 67,277 67,966 70,947 69,335 73,553 68,889 69,852 64 Other liabilities and subordinated note and debentures 39,780 36,498 35,628 38,195 33,618 32,014 31,460 32,594 34,477 65 Total liabilities 282,940 276,926 274,195 280,443 297,812 270,119 285,289 271,143 271,116 66 Residual (total assets minus total liabilities)6 25,502 25,620 24,640 24,954 21,392 21,994 21,959 21,833 21,741 MEMO 67 Total loans and leases (gross) and investments adjusted1, 212,032 210,288 208,507 206,389 210,567 203,266 204,330 200,833 204,088 68 Total loans and leases (gross) adjusted7 181,042 179,863 178,110 175,975 180,637 173,254 174,226 170,591 173,774 69 Time deposits in amounts of $100,000 or more 37,386 36,664 36,374 36,301 35,883 36,914 36,910 36,998 36,848 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 June 3 June 10 June 17 June 24 July 1 July 8 July 15 July 22 July 29 1 Cash and due from depository institutions ... 10,217 9,552 9,725 9,957 9,582 10,498 10,507 10,492 10,399 2 Total loans and securities 90,194 92,276 92,581 93,071 94,026 91,272 94,148 94,509 94,826 3 U.S. Treasury and govt, agency securities ... 6,913 6,670 6,772 6,487 6,612 6,462 6,527 6,801 6,754 4 Other securities 8,279 8,300 8,263 8,325 8,364 8,376 8,371 8,341 8,325 5 Federal funds sold" 4,599 5,933 5,971 5,924 6,601 5,089 7,267 7,651 7,937 6 To commercial banks in the United States . 4,006 5,284 5,155 5,208 6,003 4,544 6,649 7,024 7,124 7 To others 593 649 816 716 598 545 618 627 812 8 Other loans, gross 70,403 71,372 71,574 72,335 72,448 71,346 71,983 71,716 71,810 9 Commercial and industrial 44,145 45.271 45,920 46,224 46,175 45,575 45,524 45,526 45,762 10 Bankers acceptances and commercial paper 3,114 3,238 3,470 3,321 3,241 3,092 3,232 33,,332233 33,,660033 11 All other 41,031 42,033 42,450 42,903 42,933 42,483 42,291 42,203 42,159 12 U.S. addressees 38,516 39,525 39,860 40,258 40,118 39,475 39,498 39,542 39,491 13 Non-U.S. addressees 2,516 2,508 2,590 2,646 2,815 3,008 2,794 2,661 2,668 14 To financial institutions 17,514 17,414 17,062 17,506 16,929 17,053 17,566 17,359 17,284 15 Commercial banks in the United States.. 13,922 13,700 13,520 13,870 13,311 13,594 13,967 13,850 13,772 16 Banks in foreign countries 922 1,099 998 1,108 1,035 896 973 828 908 17 Nonbank financial institutions 2,670 2,616 2,543 2,528 2,583 2,564 2,626 2,680 2,604 18 To foreign govts, and official institutions .. 372 359 416 367 342 333 410 287 277 19 For purchasing and carrying securities .... 2,496 2,588 2,243 2,291 2,860 2,304 2,259 2,155 2,019 20 All other 5,877 5,740 5,933 5,948 6,142 6,080 6,223 6,388 6,468 21 Other assets (claims on nonrelated parties) .. 25,309R 25,043R 25,891 26,748 26,835 27,046 27,134 27,061 26,974 22 Net due from related institutions 17,706R 17,167 16,626 16,431 17,905 17,589 18,283 16,152 15,931 23 Total assets 143,427 144,038 144,824 146,208 148,348 146,405 150,072 148,214 148,131 24 Deposits or credit balances due to other than directly related institutions 43,628 43,457 42,636 42,743 42,184 42,132 42,142 4411,,881100 4411,,994488 25 Transaction accounts and credit balances' . 3,612 3,329 3,251 3,281 3,271 3,183 3,667 3,245 3,022 26 Individuals, partnerships, and corporations 2,191 2,083 2,029 1,969 1,967 2,016 22,,001155 22,,003322 11,,999922 27 Other 1,422 1,247 1,222 1,312 1,304 1,167 1,652 1,212 1,030 28 Nontransaction accounts 40,015 40.128 39,385 39,462 38,913 38,948 38,474 38,565 38,926 29 Individuals, partnerships, and corporations 32,828 32,951 31,707 31,777 30,757 30,965 30,700 3300,,664400 3311,,664466 30 Other 7,188 7,177 7,678 7,685 8,156 7,984 7,774 7,926 7,280 31 Borrowings from other than directly related institutions 57.340 56,515 56,605 55,199 59,054 58,802 60,717 5588,,117766 5577,,334455 32 Federal funds purchased 26,274 25,071 23,759 24,010 27,046 27,389 29,515 26,973 25,432 33 From commercial banks in the United States 16,366 13,894 13,866 13,253 16,649 16,110 19,516 1144,,775555 1133,,550088 34 From others 9,908 11,177 9,894 10,757 10,397 11,280 9,999 12,218 11,924 35 Other liabilities for borrowed money 31,065 31,444 32,846 31,189 32,008 31,412 31,201 31,202 31,913 36 To commercial banks in the United States 26,242 26,448 27,594 25,971 26,220 26,169 26,093 2255,,118855 2266,,113355 37 To others 4,823 4,996 5,252 5,217 5,788 5,243 5,108 6,017 5,778 38 Other liablities to nonrelated parties 28,723 28,660 29,857 30,299 30,186 30,394 30,399 30,307 30,543 39 Net due to related institutions 13,737 15,405 15,725 17,967 16,924 15,077 16,814 17,920 18,294 40 Total liabilities 143,427 144,038 144,824 146,208 148,348 146,405 150,072 148,214 148,131 MEMO 41 Total loans (gross) and securities adjusted .. 72,266 73,292 73,905 73,993 74,712 73,135 73,531 73,635 7733,,993300 42 Total loans (gross) ajdusted6 57,074 58,322 58,870 59,181 59,736 58,297 58,633 58,492 58,850 1. Effective Jan. 1, 1986, the reporting panel includes 65 U.S. branches and 4. Includes savings deposits, money market deposit accounts, and time deposagencies of foreign banks that include those branches and agencies with assets of its. $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 • October 1987 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1 Billions of dollars, estimated daily-average balances, not seasonally adjusted Commercial banks TTTyyypppeee ooofff hhhooollldddeeerrr 1986 1987 11998822 11998833 11998844 11998855 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June t 11111 AAAAAllllllllll hhhhhooooollllldddddeeeeerrrrrsssss—————IIIIInnnnndddddiiiiivvvvviiiiiddddduuuuuaaaaalllllsssss,,,,, pppppaaaaarrrrrtttttnnnnneeeeerrrrrssssshhhhhiiiiipppppsssss,,,,, aaaaannnnnddddd cccccooooorrrrrpppppooooorrrrraaaaatttttiiiiiooooonnnnnsssss 291.8 293.5 302.7 321.0 307.4 322.4 333.6 363.6 335.9 22222 FFFFFiiiiinnnnnaaaaannnnnccccciiiiiaaaaalllll bbbbbuuuuusssssiiiiinnnnneeeeessssssssss 35.4 32.8 31.7 32.3 31.8 32.3 35.9 41.4 35.9 44444 33333 CCCCC NNNNN ooooo ooooo nnnnn nnnnn sssss fffffiiiii uuuuu nnnnn mmmmm aaaaannnnn eeeeerrrrr ccccc iiiiiaaaaalllll bbbbbuuuuusssssiiiiinnnnneeeeessssssssss 1 8 5 5 0. . 5 9 1 7 6 8 1 . . 5 1 1 8 6 1 6 . . 5 3 1 8 7 5 8 . . 5 5 1 8 6 4 6 . . 0 6 1 8 8 6 0 . . 4 0 1 8 8 6 5 . . 3 9 2 9 0 1 2 . . 1 0 1 8 8 8 3 . . 9 0 n1.a. 55555 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 3.0 3.3 3.6 3.5 3.4 3.0 3.3 3.3 2.9 66666 OOOOOttttthhhhheeeeerrrrr 17.0 17.8 19.7 21.2 21.6 20.7 22.2 25.8 25.2 Weekly reporting banks 1986 1987 11998822 11998833 11998844 11998855 DDeecc.. DDeecc.. DDeecc..22 DDeecc..44 Mar. June Sept. Dec. Mar. June 77777 AAAAAllllllllll hhhhhooooollllldddddeeeeerrrrrsssss—————IIIIInnnnndddddiiiiivvvvviiiiiddddduuuuuaaaaalllllsssss,,,,, pppppaaaaarrrrrtttttnnnnneeeeerrrrrssssshhhhhiiiiipppppsssss,,,,, aaaaannnnnddddd cccccooooorrrrrpppppooooorrrrraaaaatttttiiiiiooooonnnnnsssss 144.2 146.2 157.1 168.6 159.7 168.5 174.7 195.1 ns.r 179.3 88888 FFFFFiiiiinnnnnaaaaannnnnccccciiiiiaaaaalllll bbbbbuuuuusssssiiiiinnnnneeeeessssssssss 26.7 24.2 25.3 25.9 25.5 25.7 28.9 32.5 28.7 29.3 99999 NNNNNooooonnnnnfffffiiiiinnnnnaaaaannnnnccccciiiiiaaaaalllll bbbbbuuuuusssssiiiiinnnnneeeeessssssssss 74.3 79.8 87.1 94.5 86.8 93.1 94.8 106.4 94.4 94.8 1111100000 CCCCCooooonnnnnsssssuuuuummmmmeeeeerrrrr 31.9 29.7 30.5 33.2 32.6 34.9 35.0 37.5 36.8 37.6 1111111111 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 2.9 3.1 3.4 3.1 3.3 2.9 3.2 3.3 2.8 3.1 1111122222 OOOOOttttthhhhheeeeerrrrr 8.4 9.3 10.9 12.0 11.5 11.9 12.8 15.4 15.5 14.6 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 such deposits for December 1984 is $5.0 billion at all insured commercial banks of 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; gross demand deposits have been redefined to exclude demand deposits due to nonfinancial 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 1987r IInnssttrruummeenntt D 19 e 8 c 2 . D 19 e 8 c 3 . D 19 e 8 c 4 . D 19 e 8 c 5 . D 19 e 8 c 6 . Jan. Feb. Mar. Apr. May June Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 166,436 187,658 237,586 300,899 331,016 337,190 336,677 338,797 346,769 354,249 348,741 Financial companies3 Dealer-placed paper 2 Total 34,605 44,455 56,485 78,443 100,207 101,964 102,939 102,889 103,957 105,397 108,691 3 Bank-related (not seasonally adjusted) 2,516 22,,444411 22,,003355 11,,660022 22,,226655 22,,228844 22,,117744 22,,111166 22,,330077 22,,442299 22,,443300 Directly placed paper 4 Total 84,393 97,042 110,543 135,504 152,385 157,252 158,955 159,333 163,421 169,225 161,921 5 Bank-related (not seasonally adjusted) 32,034 35,566 42,105 44,778 40,860 45,085 45,722 46,634 48,604 48,401 47,862 6 Nonfinancial companies6 47,437 46,161 70,558 86,952 78,424 77,973 74,784 76,575 79,391 79,627 78,129 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 79,543 78,309 78,364 68,413 64,974 65,049 65,144 65,954 66,752 67,779 69,622 Holder 8 Accepting banks 10,910 9,355 9,811 11,197 13,423 13,224 11,828 12,246 11,180 11,201 11,234 9 Own bills 9,471 8,125 8,621 9,471 11,707 10,662 10,006 10,516 9,784 9,569 9,661 10 Bills bought 1,439 1,230 1,191 1,726 1,716 2,561 1,821 1,730 1,3% 1,631 1,573 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 1,317 983 1,230 1,453 1,519 1,547 1,717 13 Others 66,204 67,807 67,881 56,279 50,234 50,843 52,087 52,255 54,052 55,032 56,671 Basis 14 Imports into United States 17,683 15,649 17,845 15,147 14,670 14,459 14,615 14,711 15,116 15,361 16,179 15 Exports from United States 16,328 16,880 16,305 13,204 12,960 12,783 12,876 13,083 13,836 14,028 14,161 16 All other 45,531 45,781 44,214 40,062 37,344 37,807 37,654 38,159 37,800 38,376 39,281 1. Effective Dec. 1, 1982, there was a break in the commercial paper series. 4. Includes all financial company paper sold by dealers in the open market. The key changes in the content of the data involved additions to the reporting 5. As reported by financial companies that place their paper directly with panel, 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 7. Beginning October 1984, the number of respondents in the bankers accepto nonfinancial and to dealer-placed financial paper. tance 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 financ- of total acceptances activity. ing; factoring, finance leasing, and other business lending; insurance underwriting; and other investment activities. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective Date Month Av r e a r te a ge Month Av r e a r te a ge 10.50 1986—July 11 8.00 1985—Jan. 10.61 1986—May 8.50 10.00 Aug. 20 7.50 Feb. 10.50 8.50 9.50 Mar. 10.50 July 8.16 1987—Apr. 1 7.75 Apr. 10.50 Aug 7.90 9.00 1986—May 1. 8.00 May 10.31 Sept 7.50 8.50 15. 8.25 June 9.78 Oct 7.50 July 9.50 Nov 7.50 Aug. 9.50 Dec 7.50 Sept. 9.50 Oct. 9.50 1987—Jan 7.50 Nov. 9.50 Feb 7.50 Dec. 9.50 Mar 7.50 Apr 7.75 1986—Jan. 9.50 8.14 Feb. 9.50 June 8.25 Mar. 9.10 July 8.25 Apr. 8.83 Aug 8.25 NOTE. These data also appear in the Board's H.15 (519) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • October 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 Apr. May June July July 3 July 10 July 17 July 24 July 31 MONEY MARKET RATES 1 10.22 8.10 6.80 6.37 6.85 6.73 6.58 6.61 6.64 6.52 6.57 6.63 7 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 paper ' 3 10.05 7.94 6.62 6.39 6.83 6.86 6.57 6.82 6.65 6.52 6.49 6.56 4 10.10 7.95 6.49 6.45 6.93 6.92 6.65 6.86 6.70 6.59 6.58 6.65 5 10.16 8.01 6.39 6.50 7.04 7.00 6.72 6.91 6.75 6.66 6.67 6.75 Finance paper, directly placed4. 6 9.97 7.91 6.58 6.28 6.78 6.80 6.53 6.74 6.61 6.46 6.47 6.53 7 9.73 7.77 6.38 6.22 6.74 6.77 6.48 6.63 6.54 6.43 6.43 6.48 8 9.65 7.75 6.31 6.14 6.47 6.50 6.35 6.40 6.38 6.32 6.34 6.33 Bankers acceptances 9 10.14 7.92 6.39 6.41 6.91 6.83 6.59 6.76 6.63 6.52 6.54 6.62 10 10.19 7.96 6.29 6.44 7.03 6.91 6.65 6.79 6.65 6.57 6.63 6.71 Certificates of deposit, secondary market7 11 10.17 7.97 6.61 6.42 6.81 6.84 6.60 6.83 6.64 6.56 6.56 6.58 V 10.37 8.05 6.52 6.52 6.99 6.94 6.70 6.88 6.73 6.64 6.65 6.72 13 10.68 8.25 6.51 6.65 7.24 7.15 6.87 7.04 6.87 6.79 6.84 6.94 14 10.73 8.28 6.71 6.73 7.25 7.11 6.87 7.08 6.93 6.84 6.79 6.90 U.S. Treasury bills* Secondary market9 15 9.52 7.48 5.98 5.64 5.66 5.67 5.69 5.68 5.61 5.58 5.66 5.94 16 9.76 7.65 6.03 5.90 6.05 5.99 5.76 5.88 5.56 5.56 5.82 6.10 17 9.92 7.81 6.08 6.09 6.52 6.35 6.24 6.25 6.20 6.11 6.26 6.40 Auction average 18 9.57 7.49 5.97 5.76 5.75 5.69 5.78 5.82 5.62 5.55 n.a. 6.14 19 9.80 7.66 6.02 5.93 6.11 5.99 5.86 6.00 5.68 5.54 n.a. 6.20 2200 9.91 7.76 6.07 5.92 6.56 6.54 6.22 n.a. 6.22 n.a. n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes aqd bonds11 Constant maturities1* ">1 10.89 8.43 6.46 6.50 7.00 6.80 6.68 6.71 6.61 6.53 6.71 6.88 11.65 9.27 6.87 7.02 7.76 7.57 7.44 7.44 7.36 7.35 7.46 7.62 n 11.89 9.64 7.06 7.32 8.02 7.82 7.74 7.72 7.65 7.65 7.77 7.91 ">4 12.24 10.13 7.31 7.57 8.26 8.02 8.01 7.96 7.91 7.93 8.05 8.18 12.40 10.51 7.55 7.83 8.47 8.27 8.27 8.20 8.14 8.19 8.33 8.45 76 12.44 10.62 7.68 8.02 8.61 8.40 8.45 8.35 8.32 8.38 8.52 8.62 77 12.48 10.97 7.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 78 12.39 10.79 7.80 8.25 8.78 8.57 8.64 8.48 8.45 8.56 8.75 8.86 Composite 79 11.99 10.75 8.14 8.31 8.79 8.63 8.70 8.60 8.56 8.63 8.78 8.89 State and local notes and bonds Moody's series14 30 9.61 8.60 6.95 7.20 7.61 7.48 7.18 7.30 7.15 7.15 7.10 7.20 31 Baa 10.38 9.58 7.76 8.29 8.78 8.68 8.37 8.55 8.40 8.35 8.25 8.30 37 10.10 9.11 7.32 7.55 8.00 7.79 7.72 7.81 7.67 7.66 7.72 7.73 Corporate bonds Seasoned issues16 33 13.49 12.05 9.71 9.35 9.82 9.87 9.92 9.85 9.83 9.88 9.95 10.04 34 12.71 11.37 9.02 8.85 9.33 9.32 9.42 9.33 9.31 9.36 9.46 9.56 35 Aa 13.31 11.82 9.47 9.15 9.59 9.65 9.64 9.60 9.57 9.59 9.66 9.77 36 A 13.74 12.28 9.95 9.36 9.83 9.98 10.00 9.93 9.92 9.98 10.04 10.10 37 Baa 14.19 12.72 10.39 10.04 10.51 10.52 10.61 10.52 10.52 10.57 10.62 10.74 38 A-rated, recently-offered utility bonds17 13.81 12.06 9.61 9.51 10.05 10.05 10.17 10.01 10.07 10.12 10.34 10.44 MEMO: Dividend/price ratio18 39 11.59 10.49 8.76 7.94 8.41 8.31 8.25 8.34 8.27 8.29 8.18 8.18 4400 4.64 4.25 3.48 2.99 3.02 2.92 2.83 2.87 2.84 2.81 2.84 2.78 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 15. General obligations only, with 20 years to maturity, issued by 20 state and 150-179 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 in an investment 16. Daily figures from Moody's Investors Service. Based on yields to maturity yield 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 often 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 Nov. Dec. Jan. Feb. Mar. Apr. May June July Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 92.46 108.09 136.00 140.84 142.12 151.17 160.23 166.43 163.88 163.00 169.58 174.28 2 Industrial 108.01 123.79 155.85 162.10 163.85 175.60 189.17 198.95 199.03 198.78 206.61 214.12 3 Transportation 85.63 104.11 119.87 122.27 121.26 126.61 135.49 138.55 137.91 141.30 150.39 157.49 4 Utility 46.44 56.75 71.36 75.77 76.07 78.54 78.19 77.15 72.74 71.64 74.25 74.18 5 Finance 89.28 114.21 147.19 142.97 144.29 153.32 158.41 162.41 150.52 145.97 152.73 152.27 6 Standard & Poor's Corporation (1941-43 = 10)' .... 160.50 186.84 236.34 245.09 248.61 264.51 280.93 292.47 289.32 289.12 301.36 310.09 7 American Stock Exchange (Aug. 31, 1973 = 50) 207.96 229.10 264.38 265.14 264.65 289.02 315.60 332.55 330.65 328.77 334.49 348.68 Volume of trading (thousands of shares) 8 New York Stock Exchange 91,084 109,191 141,385 154,776 148,228 192,419 183,478 180,251 187,135 170,898 163,380 180,356 9 American Stock Exchange 6,107 8,355 11,846 10,513 12,272 14,755 14,962 15,678 14,420 11,655 12,813 12,857 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 22,470 28,390 36,840 37,090 36,840 34,960 35,740 38,080 39,820 38,890 38,420 40,250 Free credit bala/tces at brokers4 11 Margin-account' 1,755 2,715 4,880 3,765 4,880 5,060 4,470 4,730 4,660 4,355 3,680 4,095 12 Cash-account 10,215 12,840 19,000 15,045 19,000 17,395 17,325 17,370 17,285 16,985 15,405 15,930 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 companies. With this change the index includes 400 industrial stocks (formerly collateralized by securities. Margin requirements on securities other than options 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 are the difference between the market value (100 percent) and the maximum loan financial. value of collateral as prescribed by the Board. Regulation T was adopted effective 2. Beginning July 5, 1983, the American Stock Exchange rebased its index Oct. 15, 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. effectively cutting previous readings in half. 11, 1968; 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 acquired through exercise of subscription rights, corporate bonds, and govern- it 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 Domestic Nonfinancial Statistics • October 1987 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1986 1987 AAccccoouunntt 11998844 11998855 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Savings and loan associations 1 Assets 903,488 948,781 957,945 965,032 957,229 961,894 964,0% 963,316 935,525' 936,945' 939,999 944,372' 959,454 2 Mortgages 555,291 583,235 565,353 566,438 557,137 557,303 556,780 553,552 n.a. n.a. n.a. n.a. n.a. 3 Mortgage-backed securities .... 97,303 113.100 113,621 117,617 121,606 122,682 123,257 129,338 128,855' 129,255 134,754' 141,055 4 Cash and investment securities1 124,801 126,712 132,787 138,863 138,619 138,213 141,510 142,700 133,011 136,221 138,787 136,170 138,002 5 Other 223,396 238,833 259,798 259,726 261,415 250,781 250,297 251,769 261,739 263,473 266,540 274,951 284,059 6 Liabilities and net worth 903,488 948,781 957,945 965,032 957,229 961,894 964,096 963,316 935,525' 936,945' 939,999 944,372' 959,454 7 Savings capital 725,045 750,071 747,020 749,020 743,518 742,747 740,066 741,081 721,765 722,283 724,118 717,080' 718.685 8 Borrowed money 125,666 138,798 146,578 148,541 155,748 152,567 156,920 159,742 153,363' 152,161' 158,236 165,942' 171,496 9 FHLBB 64,207 73,888 75,058 75,594 80,364 75,295 75,626 80,194 75,552 75,673 76,478 77,870 78,804 10 Other 61,459 64,910 71,520 72,947 75,384 77,272 81,294 79,548 77,811' 76,488' 81,758 88,072' 92,692 11 Other 17,944 19,045 22,785 24,706 15,461 23,255 24,078 20,071 19,764' 21,810" 18,676 20,483' 22,533 12 Net worth2 34,833 41,064 41,560 42,764 42,503 43,326 43,034 42,423 40,631' 40,689' 40,313 40,880' 40,231 MEMO 13 Mortgage loan commitments outstanding3 61,305 54,475 55,687 53,180 51,163 49,887 48,222 41,650 n.a. n.a. n.a. n.a. n.a. FSLIC-insured federal savings banks 14 Assets 98,559 131,868 183,317 186,810 196,225 202,106 204,918 210,562 235,428' 235,762' 241,425 246,277' 253,007 15 Mortgages 57,429 72,355 101,755 103,019 108,627 110,826 112,117 113,638 136,770' 136,489' 138,705 140,861 144,588 16 Mortgage-backed securities 9,949 15,676 23,247 24,097 26.431 27,516 28,324 29,766 33,570 34,634 36,104 37,511 39,382 17 Other 10,971 11,723 17,027 17,056 18,509 18,697 19,266 19,034 15,769' 16,059' 16,739 17,032' 17,201 18 Liabilities and net worth 98,559 131,868 183,317 186,810 196,225 202,106 204,918 210,562 235,428' 235,762 241,425 246,277' 253,007 19 Savings capital 79,572 103,462 140,610 142,858 149,074 152,834 154,447 157,872 176,741' 177,359' 178,689 180,642' 182,805 20 Borrowed money 12,798 19,323 28,722 29,390 32,319 33,430 33,937 37,329 40,614 39,777 43,915 46,125 49,896 21 FHLBB 7,515 10,510 15,866 16,123 16,853 17,382 17,863 19,897 20,730 20,226 21,104 21,718 22,788 72 Other 5,283 8,813 12,856 13,267 15,466 16,048 16,074 17,432 19,884 19,551 22,811 24,407 27,108 73 Other 1,903 2,732 4,564 4,914 4,666 5,330 5,652 4,263 5,303' 5,480' 5,251' 5,542' 6,041 24 Net worth 4,286 6,351 9,422 9,647 10,165 10,511 10,883 11,098 12,774' 13,151' 13,569' 13,977' 14,272 MEMO 25 Mortgage loan commitments outstanding3 3,234 5,355 10,139 9,770 10,221 9,356 9,952 8,686 n.a. n.a. n.a. n.a. n.a. Savings banks 26 Assets 203,898 216,776 224,569 227,011 228,854 230,919 232,577 236,866 235,603 238,074 240,739 243,454' 245,906 Loans 27 Mortgage 102,895 110,448 111,971 113,265 114,188 116,648 117,612 118,323 119,199 119,737 121,178 122,769' 124,936 28 Other 24,954 30,876 36,421 37,350 37,298 36,130 36,149 35,167 36,122 37,207 38,012 37,136' 37,313 Securities 29 U.S. government 14,643 13,111 12,297 12,043 12,357 12,585 13,037 14,209 13,332 13,525 13,631 13,743' 13,650 30 Mortgage-backed securities 19,215 19,481 22,954 21,161 23,216 23,437 24,051 25,836 26,220 26,893 27,463 28,700' 28,739 31 State and local government 2,077 2,323 2,309 2,400 2,407 2,347 2,290 2,185 2,180 2,168 2,041 2,063' 2,053 32 Corporate and other 23,747 21,199 20,862 20,602 20,902 21,156 20,749 20,459 19,795 19,770 19,598 19,768 19,956 33 Cash 4,954 6,225 4,651 5,018 4,811 5,195 5,052 6,894 5,239 5,143 5,703 5,308' 5,176 34 Other assets 11,413 13,113 13,104 13,172 13,675 13,421 13,637 13,793 13,516 13,631 13,713 13,967' 14,083 35 Liabilities 203,898 216,776 224,569 227,011 228,854 230,919 232,577 236,866 235,603 238,074 240,739 243,454' 245,906 36 Deposits 180,616 185,972 188,615 189,937 190,210 190,334 190,858 192,194 191,441 192,559 193,693 193,347' 194,742 37 Regular4 177,418 181,921 183,433 184,764 185,002 185,254 185,958 186,345 186,385 187,597 188,432 187,791' 189,048 38 Ordinary savings 33,739 33,018 34,166 34,530 35,227 36,165 36,739 37,717 38,467 39,370 40,558 41,326' 41,967 39 Time 104,732 103,311 102,374 102,668 102,191 101,125 101,240 100,809 100,604 100,922 100,896 100,308' 100,607 40 Other 3,198 4,051 5,182 5,173 5,208 5,080 4,900 5,849 5,056 4,962 5,261 5,556' 5,694 41 Other liabilities 12,504 17,414 20,641 21,360 21,947 23,319 24,254 25,274 24,710 25,663 27,003 29,105' 30,436 42 General reserve accounts ... 10,510 12,823 15,084 15,427 16,319 16,896 17,146 18,105 18,236 18,486 18,830 19,423' 19,603 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37—Continued 1986 1987 AAccccoouunntt 11998844 11998855 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Credit unions5 43 Total assets/liabilities and capital. 93,036 118,010 137,901 139,233 140,496 143,662 145,653 147,726 149,383 149,751 153,253 154,549 156,086 44 Federal 63,205 77,861 89,539 90,367 91,981 93,257 94,638 95,483 96,801 96,753 98,799 99,751 100,153 45 State 29,831 40,149 48,362 48,866 48,515 50,405 51,015 52,243 52,586 52,998 54,454 54,798 55,933 46 Loans outstanding 62,561 73,513 79,647 80,656 81,820 83,388 84,635 86,137 85,984 85,651 86,101 87,089 87,765 47 Federal 42,337 47,933 51,331 52,007 53,042 53,434 53,877 55,304 55,313 54,912 55,118 55,740 55,952 48 State 20,224 25,580 28,316 28,649 28,778 29,954 30,758 30,833 30,671 30,739 30,983 31,349 31.813 49 Savings 84,348 105,963 125,331 126,268 128,125 130,483 131,778 134,327 n.a. n.a. n.a. n.a. n.a. 50 Federal 57,539 70,926 82,596 83,132 84,607 86,158 87,009 87,954 89,717 89,485 91,042 92,012 97,189 51 State 26,809 35,037 42,735 43,136 43,518 44,325 44,769 46,373 46,130 46,956 47,768 48,002 49,248 Life insurance companies 52 Assets 722,979 825,901 877,919 887,255 892,304 860,682 910,691 920,771 931,962 943,421 955,269 Securities 53 Government 63,899 75,230 78,722 79,188 81,636 82,047 84,858 85,849 85,000 87,678 90,699 54 United States6 42,204 51,700 54,321 54,487 56,698 57,511 59,802 61,494 61,014 63,580 66,577 55 State and local 8,713 9,708 10,350 10,472 10,606 10,212 10,712 10,267 10,048 10,264 10,423 56 Foreign 12,982 13,822 14,051 14,229 14,332 14,324 14,344 14,088 13,938 13,834 13,699 n. a. n.a. 57 Business 359,333 423,712 455,013 463,135 462,540 467,433 473,860 474,485 487,837 497,143 501,622 58 Bonds 295,998 346,216 369,704 374,670 378,267 381,381 386,293 386,994 395,994 401,231 404,112 59 Stocks 63,335 77,496 85,309 88,465 84,273 86,052 87,567 87,491 91,843 95,912 97,510 60 Mortgages 156,699 171,797 182,542 183,943 185,268 186,976 189,460 192,975 193,395 193,957 194,689 61 Real estate 25,767 28,822 31,151 31,844 31,725 31,918 32,184 32,079 32,229 32,061 31,875 62 Policy loans 54,505 54,369 54,249 54,247 54,273 54,199 54,152 54,016 53,692 53,696 53,580 63 Other assets 63,776 71,971 76,214 74,898 76,862 77,798 76,177 81,367 79,809 78,886 82,804 1. Holdings of stock of the Federal Home Loan Banks are in "other assets." FSLIC-insured federal savings banks: Estimates by the FHLBB for federal 2. Includes net undistributed income accrued by most associations. savings banks insured by the FSLIC and based on monthly reports of federally 3. As of July 1985, data include loans in process. insured institutions. 4. Excludes checking, club, and school accounts. Savings banks: Estimates by the National Council of Savings Institutions for all 5. Data include all federally insured credit unions, both federal and state savings banks in the United States and for FDIC-insured savings banks that have chartered, serving natural persons. converted to federal savings banks. 6. Direct and guaranteed obligations. Excludes federal agency issues not Credit unions: Estimates by the National Credit Union Administration for guaranteed, which are shown in the table under "Business" securities. federally chartered and federally insured state-chartered credit unions serving 7. Issues of foreign governments and their subdivisions and bonds of the natural persons. International Bank for Reconstruction and Development. Life insurance companies: Estimates of the American Council of Life Insurance NOTE: Savings and loan associations: Estimates by the FHLBB for all for all life insurance companies in the United States. Annual figures are annualassociations in the United States based on annual benchmarks for non-FSLIC- statement asset values, with bonds carried on an amortized basis and stocks at insured associations and the experience of FSLIC-insured associations. year-end market value. Adjustments for interest due and accrued and for differences between market and book values are not made on each item separately but are included, in total, in "other assets." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • October 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 Feb. Mar. Apr. May June July U.S. budget1 1 Receipts, total 666,457 734,057 769,091 55,463 56,515 122,897 47,691 82,945 64,223 2 On-budget 500,382 547,886 568,862 37,919 38,469 99,083 30,205 64,222 47,880 Off-budget 166,075 186,171 200,228 17,544 18,046 23,814 17,486 18,723 16,343 4 Outlays, total 851,781 946,316 989,815 83,828 84,527 84,240 83,435 83,366 86,491 5 On-budget 685,968 769,509 806,318 67,138 67,872 69,215 66,389 66,221 70,806 6 Off-budget 165,813 176,807 183,498 16,690 16,655 15,025 17,046 17,145 15,685 7 Surplus, or deficit (-), total -185,324 -212,260 -220,725 -28,366 -28,012 38,657 -35,744 -420 -22,268 8 On-budget -185,586 -221,623 -237,455 -29,219 -29,403 29,867 -36,184 -1,998 -22,926 9 Off-budget 262 9,363 16,371 854 1,391 8,790 440 1,578 658 Source of financing (total) 10 Borrowing from the public 170,817 197,269 236,284 15,248 7,884 9,075 13,005 9,655 -3,103 11 Operating cash (decrease, or increase (-) 6,631 13,367 -14,324 16,491 15,846 -46,775 22,638 -6,966 20,655 12 Other2 7,875 1,630 -1,235 -3,456 4,506 -543 -1,478 -2,801 4,716 MEMO 13 Treasury operating balance (level, end of period) 30,426 17,060 31,384 24,816 8,969 55,744 33,106 40,072 19,417 14 Federal Reserve Banks 8,514 4,174 7,514 3,482 3,576 29,688 6,383 13,774 5,365 15 Tax and loan accounts 21,913 12,886 23,870 21,334 5,394 26,056 26,723 26,298 14,052 1. In accordance with the Balanced Budget and Emergency Deficit Control Act miscellaneous liability (including checks outstanding) and asset accounts; of 1985, all former off-budget entries are now presented on-budget. The Federal seigniorage; increment on gold; net gain/loss for U.S. currency valuation adjust- Financing Bank (FFB) activities are now shown as separate accounts under the ment; net gain/loss for IMF valuation adjustment; and profit on the sale of gold. agencies that use the FFB to finance their programs. The act has also moved two Reflecting the change in Monthly Treasury Statement classification, Table 2, social security trust funds (Federal old-age survivors insurance and Federal monthly data as well as fiscal year data now include monetary assets other than disability insurance trust funds) off-budget. operating cash with "other", sources of financing, (line 12). 2. Includes SDRs; reserve position on the U.S. quota in the IMF; loans to SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. international monetary fund; other cash and monetary assets; accrued interest Government" and the Budget of the U.S. Government. payable to the public; allocations of special drawing rights; deposit funds; 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 May June July RECEIPTS 1 All sources 734,057 769,091 364,790 394,345 387,524 447,282 47,691 82,945 64,223 2 Individual income taxes, net 334,531 348,959 169,987 169,444 183,156 205,157 9,275 40,521 31,889 3 Withheld 298,941 314,838 155,725 153,919 164,071 156,760 24,823 25,525 31,596 4 Presidential Election Campaign Fund .... 35 36 6 31 4 30 7 4 2 5 Nonwithheld 101,328 105,994 22,295 78,981 27,733 112,421 7,228 16,574 2,452 6 Refunds 65,743 71,873 8,038 63,488 8,652 64,052 22,782 1,583 2,160 Corporation income taxes 7 Gross receipts 77,413 80,442 36,528 41,946 42,108 52,396 2,885 1133,,557722 33,,881122 8 Refunds 16,082 17,298 7,751 9,557 8,230 10,881 1,042 2,599 1,454 9 Social insurance taxes and contributions, net 265,163 283,901 128,017 156,714 134,006 163,519 30,218 24,712 23,346 10 Employment taxes and contributions 234,646 255,062 116,276 139,706 122,246 146,6% 22,270 2233,,998811 2200,,889900 11 Self-employment taxes and contributions 10,468 11,840 985 10,581 1,338 12,020 732 11,,661122 115555 12 Unemployment insurance 25,758 24,098 9,281 14,674 9,328 14,514 7,529 315 2,038 13 Other net receipts 4,759 4,742 2,458 2,333 2,429 2,310 419 416 417 14 Excise taxes 35,992 32,919 18,470 15,944 15,947 15,845 2,633 3,099 2,908 15 Customs deposits 12,079 13,323 6,354 6,369 7,282 7,129 1,142 1,415 1,420 16 Estate and gift taxes 6,422 6,958 3,323 3,487 3,649 3,818 726 507 671 17 Miscellaneous receipts4 18,539 19,887 9,861 10,002 9,605 10,299 1,853 1,719 1,631 OUTLAYS 18 Ail types 946,316 989,815 487,188 486,037 504,785 503,338 83,435 83,366 86,491 19 National defense 252,748 273,369 134,675 135,367 138,544 142,846 23,471 24,694 24,126 20 International affairs 16,176 14,471 8,367 5,384 8,876 4,420 831 1,068 1,145 21 General science, space, and technology .... 8,627 9,017 4,727 12,519 4,594 4,324 779 836 836 22 Energy 5,685 4,792 3,305 2,484 2,735 2,335 356 598 256 23 Natural resources and environment 13,357 13,508 7,553 6,245 7,141 6,179 985 1,176 1,392 24 Agriculture 25,565 31,169 15,412 14,482 16,160 11,824 716 -342 1,462 25 Commerce and housing credit 4,229 4,258 644 860 3,647 4,889 997 703 232 26 Transportation 25,838 28,058 15,360 12,658 14,745 12,113 2,089 2,539 2,289 27 Community and regional development 7,680 7,510 3,901 3,169 3,494 3,108 585 584 603 28 Education, training, employment, social services 29,342 29,662 14,481 14,712 15,268 14,182 2,255 22,,114433 11,,885544 29 Health 33,542 35,936 17,237 17,872 19,814 20,318 3,544 3,525 3,466 30 Social security and medicare 254,446 190,850 129,037 135,214 138,2% 142,864 23,782 26,339 26,431 31 Income security 128,200 120,686 59,457 60,786 59,628 62,248 10,273 7,931 11,460 32 Veterans benefits and services 26,352 26,614 14,527 12,193 14,497 12,264 2,047 2,440 3,368 33 Administration of justice 6,277 6,555 3,212 3,352 3,360 3,626 646 690 754 34 General government 5,228 6,7% 3,634 3,566 2,786 3,238 358 1,448 209 35 General-purpose fiscal assistance 6,353 6,430 3,391 2,179 2,767 455 62 54 167 36 Net interest' 129,436 135,284 67,448 68,054 65,816 70,110 12,284 10,010 11,711 37 Undistributed offsetting receipts -32,759 -33,244 -17,953 -17,193 -17,426 -18,005 -2,626 -3,069 -2,831 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 Financial Statistics • October 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 2 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 Q1 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 2 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. government 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 Treasurys 155.1 179.4 n.a. n.a. n.a. n.a. n.a. n.a. Individuals 23 Savings bonds 71.5 74.5 79.8 92.3 83.8 87.1 92.3 94.7 24 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 tion Administration; depository bonds, retirement plan bonds, and individual non-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. Treasury agencies and trust funds Statement of the Public Debt of the United States; data by holder. Treasury are actual holdings; data for other groups are Treasury estimates. Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transaction1 Par value; averages of daily figures, in millions of dollars 1987 1987 IItteemm 11998844 11998855 11998866 Mayr June' July June 24 July 1 July 8 July 15 July 22 July 29 Immediate delivery2 1 U.S. Treasury securities 52,778 75,331 95,447 116,376 110,375 90,988 103,585 112,717 94,223 93,990 85,192 8811,,550055 By maturity ? Bills 26,035 32,900 34,249 36,915 35,309 32,410 26,908 37,942 36,439 33,263 26,649 26,112 3 Other within 1 year 1,305 1,811 2,115 3,084 3,446 3,575 2,585 4,052 3,854 3,420 2,846 4,050 4 1-5 years 11,733 18,361 24,667 30,992 26,593 22,177 30,174 26,978 21,306 22,022 21,387 19,434 5-10 years 7,606 12,703 20,455 22,726 27,509 19,410 25,792 28,681 20,042 20,684 20,421 18,083 6 Over 10 years 6,099 9,556 13,961 22,660 17,518 13,416 18,127 15,065 12,581 14,601 13,890 13,827 By type of customer 7 U.S. government securities dealers 2,919 3,336 3,646 2,801 2,822 2,3% 2,243 3,766 3,317 2,300 2,153 11,,555544 8 U.S. government securities brokers 25,580 36,222 49,368 63,082 58,797 48,812 55,136 59,572 49,776 50,812 46,773 4455,,998877 9 All others3 24,278 35,773 42,218 49,815 47,962 38,971 46,206 49,378 41,128 40,878 36,265 33,964 10 Federal agency securities 7,846 11,640 16,746 19,695 18,625 17,918 20,413 17,798 16,663 23,650 19,097 13,042 11 Certificates of deposit 4,947 4,016 4,355 3,880 3,973 3,938 3,649 3,788 4,667 4,249 3,813 3,523 1? Bankers acceptances 3,243 3,242 3,272 2,762 2,740 3,143 2,352 3,136 3,528 3,543 2,897 2,733 13 Commercial paper 10,018 12,717 16,660 18,375 17,227 17,882 15,493 19,523 19,782 18,515 16,645 15,576 Futures contracts 14 Treasury bills 6,947 5,561 3,311 4,128 2,810 2,080 2,021 2,351 1,549 2,029 1,777 22,,550077 15 Treasury coupons 4,533 6,085 7,175 10,374 8,001 6,813 6,723 6,471 6,179 7,361 6,350 7,178 16 Federal agency securities 264 252 16 6 13 6 19 0 8 0 0 21 Forward transactions" 17 U.S. Treasury securities 1,364 1,283 1,876 2,841 1,869 819 2,544 1,695 993 994 781 653 18 Federal agency securities 2,843 3,857 7,830 11,951 9,875 9,854 10,570 5,%1 8,355 13,647 11,277 7,603 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 5 business days contracts. from the date of the transaction for Treasury securities (Treasury bills, notes, and 2. Data for immediate transactions do not include forward transactions. bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • October 1987 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1987 1987 IItteemm 11998844 11998855 11998866 May June July July 1 July 8 July 15 July 22 July 29 Positions Net immediate' 1 U.S. Treasury securities 5,429 7,391 13,055 -13,475 -8,006' -8,888 -7,442 -3,314 -4,151 -8,315 -15,551 2 Bills 5,500 10,075 12,723 -5,943r 2,240' 5,018 1,948 7,374 8,860 6,244 657 3 Other within 1 year 63 1,050 3,699 3,527'' 2,106' 1.259 1,508 1,835 1,201 1,497 1,228 4 1-5 years 2,159 5,154 9,297 1,072 371 -2,326 2,473 389 -1,060 -3,393 -4,937 5 5-10 years -1,119 -6,202 -9,504 -7,636' -7,525'' -6,999 -7,120 -6,799 -6,916 -6,799 -7,271 6 Over 10 years -1,174 -2,686 -3,161 -4,494' -5,197 -5,839 -6,251 -6,114 -6,235 -5,863 -5,229 7 Federal agency securities 15,294 22,860 33,066 32,760 32,014' 33,197 31,002 32,074 34,430 35,128 31,869 8 Certificates of deposit 7,369 9,192 10,533 8,996 8,612 7.414 7,933 7,492 7,597 7,266 7,093 9 Bankers acceptances 3,874 4,586 5,535 3,712 3,777 3,188 3,916 3,915 3,315 2,915 2,689 10 Commercial paper 3,788 5,570 8,087 6,588 7,202'" 6,462 6,667 6,673 6,338 6,125 6,393 Futures positions 11 Treasury bills -4,525 -7,322 -18.062 1,779 -585' 918 -45 2,051 1,297 629 90 12 Treasury coupons 1,794 4,465 3,489 2,609 3,181' 6,1% 4,136 4,960 5,630 6,684 7,326 13 Federal agency securities 233 -722 -153 -98 -100 -96 -96 -96 -96 -96 -96 Forward positions 14 U.S. Treasury securities -1,643 -911 -2,304 -4,292'' -921 -1,759 -1,005 -1,486 -1,433 -1,666 -2,419 15 Federal agency securities -9,205 -9,420 -11,909 -20,339 -19,241' -20,161 -17,725 -19,285 -21,431 -21,718 -18,733 Financing1 Reverse repurchase agreements4 16 Overnight and continuing 44,078 68,035 98,954 122,078 100,701 124,938 126,344 113,887 124,534 125,703 133,211 17 Term agreements .. 68,357 80,509 108,693 151,163 149,724 150,323 144,974 143,952 149,616 149,427 156,483 Repurchase agreements' 18 Overnight and continuing 75,717 101,410 141,735 165,707 172,523 168,870 175,758 165,780 170,584 168,703 166,552 19 Term agreement 57,047 70,076 102,640 124,599 121,818 120,198 112,881 110,193 117,249 123,135 129,083 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. Treasury 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 5. Includes both repurchase agreements undertaken to finance positions and a 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 1987 AAggeennccyy 11998844 11998855 11998866 Jan. Feb. Mar. Apr. May June 1 Federal and federally sponsored agencies 271,220 293,905 307,361 305,114 305,603 305,033R 306,909 308,547 7 Federal agencies 35,145 36,390 36,958 37,041 37,073 36,660 36,531 36,587 3 Defense Department 142 71 33 32 27 24 23 21 4 Export-Import Bank2-3 15,882 15,678 14,211 14,211 14,211 13,813 13,813 13,813 5 Federal Housing Administration4 133 115 138 136 147 158 165 168 n a. 6 Government National Mortgage Association participation certificates' 2,165 2,165 2,165 2,165 22,,116655 22,,116655 11,,996655 11,,996655 7 Postal Service 1,337 1,940 3,104 3,104 3,104 3,104 3,104 3,104 8 Tennessee Valley Authority 15,435 16,347 17,222 17,308 17,334 17,311 17,376 17,431 9 United States Railway Association6 51 74 85 85 85 85 85 85 10 Federally sponsored agencies7 237,012r 257,515 270,553'' 268,073 268,530 266,948r 270,378 271,960 11 Federal Home Loan Banks 65,085 74,447 88,752 90,225 91.313 92,087 94,606 95,931 99,680 17 Federal Home Loan Mortgage Corporation 10,270 11,926 13,589 13,492 13,847 13,074' 14,850 14,637 n.a. 13 Federal National Mortgage Association 83,720 93,896 93,563 92,588 91,522 91,618 89,741 90,514 91,039 14 Farm Credit Banks 72,192r 68,851 62,478' 59,984 59,367 57,613' 57,251 56,648 56,601r 15 Student Loan Marketing Association 5,745 8,395 12,171 11,784 12,481 12,556' 13,930 14,230 14,422' MEMO 16 Federal Financing Bank debt 145,217 153,373 157,510 157,650 157,724 157,012 157,177 157,331 Lending to federal and federally sponsored 17 Export-Import Bank 15,852 15,670 14,205 14,205 14,205 13,807 13,807 13,807 18 Postal Service 1,087 1,690 2,854 2,854 2,854 2,854 2,854 2,854 19 Student Loan Marketing Association 5,000 5,000 4,970 4,970 4,970 4,970 4,970 4,970 n a. 20 Tennessee Valley Authority 13,710 14,622 15,797 15,928 15,954 15,931 15,996 16,051 21 United States Railway Association 51 74 85 85 85 85 85 85 Other Lending10 77 Farmers Home Administration 58,971 64,234 65,374 65,374 65,374 65,224 6655,,225544 6655,,330044 73 Rural Electrification Administration 20,693 20,654 21,680 21,719 21,749 21,473 21,487 21,525 24 29,853 31,429 32,545 32,515 32,533 32,668 32,724 32,735 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 Nonfinancial Statistics • October 1987 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1986 1987 TTyyppee ooff ii oo ss rr ss uu uu ee ssee oo rr iissssuueerr,, 11998844 11998855 11998866'' Dec. Jan. Feb. Mar. Apr. May June' July 1 All issues, new and refunding' 106,641 214,189 147,011 15,662 7,343 8,969 14,591 6,849 6,037 10,718 6,755 Type of issue 2 General obligation 26,485 52,622 46,346 4,426 1,100 3,643 3,853 3,449 2,872 3,329 2,271 3 Revenue 80,156 161,567 100,664 11,236 6,243 5,325 10,738 3,405 3,165 7,389 4,484 Type of issuer 4 State ^ 9,129 13,004 14,474 966' 153 1.364 1,217 427 1,001 1,125 803 5 Special district and statutory authority" 63,550 134,363 89,997 10,431 5,275 5,825 10,004 4,790 3,019 6,453 3,836 6 Municipalities, counties, townships 33,962 78,754' 42,541 4,265 1,915 1,781 3,370 1,637 2,017 3,127 2,101 7 Issues for new capital, total 94,050 156,050 83,490 10,050 1,930 2,774 4,480 3,237 3,848 7,552 4,672 Use of proceeds 8 Education 7,553 16,658 16,948 925 452 448 659 774 789 1,554 853 9 Transportation 7,552 12,070 11,666 356 92 145 111 98 194 705 644 10 Utilities and conservation 17,844 26,852 35,383 1,165 681 482 444 571 561 1,410 805 11 Social welfare 29,928 63,181 17,332 2,930' 380 527 991 468 454 1,082 622 1? Industrial aid 15,415 12,892 5,594 2,845 38 89 368 33 161 401 407 13 Other purposes 15,758 24,398 47,433 1,829 286 1,084 1,907 1,295 1,689 2,399 1,341 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 U.S. Corporations Millions of dollars 1986 1987 TTyyppee ooff ii oo ss rr ss uu uu ee ssee oo rr iissssuueerr,, 11998844 11998855 11998866 Nov. Dec. Jan. Feb. Mar. Apr. May June 1 All issues' 132,531 201,269 375,056 31,588 27,206 24,168 27,048 37,953 23,735 19,969 27,513 2 Bonds2 109,903 165,754 313,226 24,989 20,958 21,253 23,281 28,143 19,518 13,431 21,269 Type of offering 3 Public, domestic 73,579 119,559 232,465 22,028 18,920 20,250 20,274 23,388 17,634 11,394 20,000 4 Private placement, domestic3 36,324 46,195 80,761 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 22,613 37,781 42,596 2,961 2,038 1,003 3,007 4,755 1,884 2,037 1,529 Industry group 6 Manufacturing 24,607 52,128 78,584 3,928 4,153 4,638 4,253 7,180 2,734 5,035 4,104 7 Commercial and miscellaneous 13,726 15,140 37,277 1,621 2,432 1,253 1,884 4,261 1,683 754 2,057 8 Transportation 4,694 5,743 9,734 0 70 0 176 521 168 21 0 9 Public utility 10,679 12,957 31,058 2,587 2,498 1,491 2,715 794 1,370 572 2,034 10 Communication 2,997 10,456 15,489 1,158 776 65 410 710 175 138 205 11 Real estate and financial 53,199 69,332 141,086 15,696 11,029 13,806 13,844 14.678 13,389 6,912 12,869 12 Stocks3 22,628 35,515 68,433 6,599 6,248 2,915 3,767 9,810 4,217 6,538 6,244 Type 13 Preferred 4,118 6,505 11,514 1,390 1,293 429 905 2,257 526 1,170 1,177 14 Common 18,510 29,010 50,316 5,209 4,955 2,486 2,862 7.553 3,691 5,368 5,067 66,,660033 nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. Industry group 16 Manufacturing 4,054 5,700 15,027 2,565 1,781 365 814 2,016 653 1,066 1,505 17 Commercial and miscellaneous 6,277 9,149 10,617 535 709 148 437 2,366 2.203 1,516 1,149 18 Transportation 589 1,544 2,427 15 183 0 191 299 230 3 132 19 Public utility 1,624 1,966 4,020 218 873 237 509 907 297 374 689 20 Communication 419 978 1,825 104 101 16 9 57 18 200 511 21 Real estate and financial 9,665 16,178 34,517 3,162 2,601 2,149 1,807 4,165 816 3,379 2,258 1. Figures, which represent gross proceeds of issues maturing in more than one 2. Monthly data include only public offerings. year, are principal amount or number of units multiplied by offering price. 3. Data are not available on a monthly basis. Excludes secondary offerings, employee stock plans, investment companies other SOURCES. IDD Information Services, Inc., U.S. Securities and Exchange than closed-end, intracorporate transactions, equities sold abroad, and Yankee Commission and the Board of Governors of the Federal Reserve System. bonds. Stock data include ownership securities issued by limited partnerships. 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 Nov. Dec. Jan. Feb. Mar. Apr. May June INVESTMENT COMPANIES' 1 Sales of own shares2 222,670 411,483 33,672 44,796 50,116 36,307 40,378 42,857 28,295 28,652 2 Redemptions of own shares3 132,440 239,394 20,724 34,835 26,565 21,576 24,730 37,448 23,453 23,707 3 Net sales 90,230 172,089 12,948 9,961 23,551 14,731 15,648 5,409 4,842 4,945 4 Assets4 251,695 424,156 416,939 424,156 464,415 490,643 506,752 502,487 500,634 516,819 5 Cash position5 20,607 30,716 29,579 30,716 34,098 35,279 37,090 43,009 39,158 41,537 6 Other 231,088 393,440 387,360 393,440 430,317 455,364 469,662 459,478 461,476 475,282 1. Excluding money market funds. 5. Also includes all U.S. government securities and other short-term debt 2. Includes reinvestment of investment income dividends. Excludes reinvest- securities. ment of capital gains distributions and share issue of conversions from one fund to another in the same group. NOTE. Investment Company Institute data based on reports of members, which 3. Excludes share redemption resulting from conversions from one fund to comprise substantially all open-end investment companies registered with the another in the same group. Securities and Exchange Commission. Data reflect newly formed companies after 4. Market value at end of period, less current liabilities. their initial offering of securities. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1985 1986 1987 AAccccoouunntt 11998844 11998855 11998866 Q3 Q4 QL Q2 Q3 Q4 QL Q2 1 Corporate profits with inventory valuation and capital consumption adjustment 266.9 277.6 284.4 292.8 277.8 288.0 282.3 286.4 281.1 294.0 296.8 2 Profits before tax 239.9 224.8 231.9 230.2 233.5 218.9 224.4 236.3 247.9 257.0 268.7 3 Profits tax liability 93.9 96.7 105.0 100.5 99.1 98.1 102.1 106.1 113.9 128.0 134.2 4 Profits after tax 146.1 128.1 126.8 129.7 134.4 120.9 122.3 130.2 134.0 129.0 134.5 5 Dividends 79.0 81.3 86.8 81.2 81.7 84.3 86.6 87.7 88.6 90.3 92.4 6 Undistributed profits 67.0 46.8 40.0 48.5 52.7 36.6 35.7 42.5 45.4 38.7 42.2 7 Inventory valuation -5.8 -.8 6.5 6.5 -9.8 17.8 11.3 6.0 -8.9 -11.3 -20.0 8 Capital consumption adjustment 32.8 53.5 46.0 56.0 54.2 51.3 46.7 44.0 42.1 48.2 48.0 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • October 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 1,565.9 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 ratio2 1.492 1.462 1.459 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 1199887711 Q4 Ql Q2 Q3 Q4 Ql Q21 Q31 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 1987 AAccccoouunntt 11998822 11998833 11998844 11998855 QL Q2 03 Q4 QL Q2 ASSETS Accounts receivable, gross 1 Consumer 75.3 83.3 89.9 113.4 117.2 125.1 137.1 136.5 133.9 136.9 2 Business 100.4 113.4 137.8 158.3 165.9 167.7 161.0 174.8 182.8 189.0 3 Real estate 18.7 20.5 23.8 28.9 29.9 30.8 32.1 33.7 35.1 36.3 4 Total 194.3 217.3 251.5 300.6 312.9 323.6 330.2 345.0 351.8 362.1 Less: 5 Reserves for unearned income 29.9 30.3 33.8 39.2 40.0 40.7 42.4 41.4 40.4 41.2 6 Reserves for losses 3.3 3.7 4.2 4.9 5.0 5.1 5.4 5.8 5.9 6.2 7 Accounts receivable, net 161.1 183.2 213.5 256.5 268.0 277.8 282.4 297.8 305.5 314.8 8 All other 30.4 34.4 35.7 45.3 48.8 48.8 59.9 57.9 59.0 57.0 9 Total assets 191.5 217.6 249.2 301.9 316.8 326.6 342.3 355.6 364.5 371.8 LIABILITIES 10 Bank loans 16.5 18.3 20.0 20.6 19.0 19.2 20.2 22.2 17.3 17.2 11 Commercial paper 51.4 60.5 73.1 99.2 104.3 108.4 112.8 117.8 119.1 118.7 Debt 12 Other short-term 11.9 11.1 12.9 12.5 13.4 15.4 16.0 17.2 21.6 24.2 13 Long-term 63.7 67.7 77.2 93.1 101.0 105.2 109.8 115.6 118.4 120.4 14 All other liabilities 21.6 31.2 34.5 40.9 42.3 40.1 44.1 43.4 46.3 48.1 15 Capital, surplus, and undivided profits 26.4 28.9 31.5 35.7 36.7 38.4 39.4 39.4 41.8 43.1 16 Total liabilities and capital 191.5 217.6 249.2 301.9 316.8 326.6 342.3 355.6 364.5 371.8 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 AAAccccccooouuunnntttsss Changes ce in i v a a c b c le o unts re- Extensions Repayments rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg JJJuuunnneee 333000,,, 1987 1987 1987 111999888777111 Apr. May June Apr. May June Apr. May June 1 Total 188,999 3,534 2,904 1,714 29,212 28,101 30,390 25,678 25,197 28,677 Retail financing of installment sales 2 Automotive (commercial vehicles) 29,409 750 739 691 1,200 1,507 1,259 449 768 568 3 Business, industrial, and farm equipment 23,421 4 310 623 1,352 1,460 1,699 1,349 1,150 1,076 Wholesale financing 4 Automotive 30,328 620 1,133 298 11,474 10,709 11,701 10,854 9,577 11,404 5 Equipment 5,558 76 -16 115 690 513 591 614 530 476 6 All other 8,532 -25 75 -256 3,056 2,964 3,246 3,082 2.889 3,502 Leasing 7 Automotive 20,508 515 -78 3 1,136 1,455 1,171 622 1,533 1,168 8 Equipment 39,695 582 182 -14 970 838 1,019 388 655 1,033 9 Loans on commercial accounts receivable and factored commercial accounts receivable 16,701 723 96 -117 8,122 7,262 8,150 7,399 7,166 8,268 10 All other business credit 14,847 290 464 371 1,211 1,394 1,554 921 929 1,183 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 • October 1987 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1987 IItteemm 11998844 Jan. Feb. Mar. Apr. May June July Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 96.8 104.1 118.1 132.6 135.6 130.2 136.9 132.9 131.8 129.0 2 Amount of loan (thousands of dollars) 73.7 77.4 86.2 97.3 99.1 95.0 100.9 99.0 97.5 96.0 3 Loan/price ratio (percent) 78.7 77.1 75.2 75.5 75.3 74.3 75.2 76.1 75.9 76.0 4 Maturity (years) s 27.8 26.9 26.6 27.7 27.6 27.1 27.1 28.0 28.0 28.0 5 Fees and charges (percent of loan amount)" 2.64 2.53 2.48 2.23 2.21 2.20 2.23 2.26 2.40 2.50 6 Contract rate (percent per annum) 11.87 11.12 9.82 9.14 8.87 8.77 8.84 8.99 9.05 9.03 Yield (percent per year) 1 FHLBB series5 12.37 11.58 10.25 9.51 9.23 9.14 9.21 9.37 9.45 9.44 8 HUD series4 13.80 12.28 10.07 6.30' 6.40'' 6.45' 6.55' 6.65' 6.7(Y 6.70 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 13.81 12.24 9.91 8.79 8.81 8.94 10.02 10.61 10.33 n.a. 10 GNMA securities6 13.13 11.61 9.30 8.46 8.28 8.18 8.85 9.40 9.50 9.59 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 83,339 94,574 98,048 96,382 95,514 95,140 94,404 94,064 94,064 94,154 12 FHA/VA-insured 35,148 34,244 29,683 22.178 22,063 21,843 21,765 21,999 21,892 21,730 13 Conventional 48,191 60,331 68,365 74,204 73,451 73,297 72,639 72,065 72,173 72,424 Mortgage transactions (during period) 14 Purchases 16,721 21,510 30,826 1,346 979 1,435 2,118 1.718 1,690 1,569 Mortgage commitments7 15 Contracted (during period) 21,007 20,155 32,987 948 912 2,805 3,208 1,726 1,745 2,373 16 Outstanding (end of period) 6,384 3,402 3,386 2,258 2,175 3,539 4,421 4,410 4,448 5,071 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodJ8 17 Total 9,283 12,399 13,517 12,986 12,911 12,940 12,492 12,442 1 18 FHA/VA 910 841 746 686 722 717 708 688 T 19 Conventional 8,373 11,559 12,771 12,300 12,189 12,223 11,784 11,754 Mortgage transactions (during period) 1 20 Purchases 21,886 44,012 103,474 7.950 7,961 9,394 9,777 7,995 n.a. n a. 21 Sales 18,506 38,905 100,236 8,269 7,840 9,143 9,357 7,767 1 Mortgage commitments9 22 Contracted (during period) 32,603 48,989 110,855 7,685 9,197 9,669 8,408 7,182 T 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associmajor institutional lender groups; compiled by the Federal Home Loan Bank ation guaranteed, mortgage-backed, fully modified pass-through securities, as- Board in cooperation with the Federal Deposit Insurance Corporation. suming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying 2. Includes all fees, commissions, discounts, and "points" paid (by the 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 11998844rr 11998855'' 11998866'' Q2 Q3 Q4 Ql' Q2 1 All holders 2,035,238 2,269,173 2,565,867 2,386,022 2,471,574 2,565,867 2,659,478 2,744,720 ? 1- to 4-family 1,318,545 1,467,409 1,666,357 1,544,392 1,607,799 1,666,357 1,709,794 1,770,342 3 Multifamily 185,604 214,045 246,879 229,405 237,661 246,879 259,286 266,941 4 Commercial 419,444 482,029 555,825 511,038 526,535 555,825 597,082 615,839 5 111,645 105,690 96,806 101,187 99,579 %,806 93,316 91,598 6 Selected financial institutions 1,269,702 1,390,394 1,506,422 1,435,437 1,464,213 1,506,422 1,557,550 1,601,315 7 Commercial banks" 379,498 429,1% 502,534 456,163 474,658 502.534 517,271 542,575 8 1- to 4-family 196,163 213,434 235,814 221,640 228,593 235,814 241,512 251,701 9 Multifamily 20,264 23,373 31,173 26,799 28,623 31,173 31,745 33,585 10 Commercial 152,894 181,032 222,799 195,484 204,996 222,799 230,771 243,399 11 Farm 10,177 11,357 12,748 12,240 12,446 12,748 13,243 13,890 1? Savings institutions3 709,718 760,499 777,312 768,435 772,175 777,312 809,967 823,217 13 1- to 4-family 528,791 554,301 558,412 556,039 557,938 558,412 557,065 567,262 14 Multifamily 75,567 89,739 97,059 92,563 94,227 97,059 103,698 105,649 If Commercial 104,896 115,771 121,236 119,195 119,406 121,236 148,688 149,804 16 Farm 464 688 605 638 604 605 516 502 17 Life insurance companies 156,699 171,797 192,975 180,041 185,269 192,975 195,225 198,625 18 1- to 4-family 14,120 12,381 12,763 12,608 12,927 12.763 12,763 12,763 19 Multifamily 18,938 19,894 20,847 20,181 20,709 20,847 20,797 20,797 70 Commercial 111,175 127,670 148,367 135,924 140,213 148,367 151,167 154,767 71 Farm 12,466 11,852 10,998 11,328 11,420 10,998 10,498 10,298 22 Finance companies 23,787 28,902 33,601 30,798 32,111 33,601 35,087 36,898 73 Federal and related agencies 158,993 166,928 203,800 161,398 159,505 203,800 199,509 195,972 74 Government National Mortgage Association 2,301 1,473 889 876 887 889 687 665 75 1- to 4-family 585 539 47 49 48 47 46 45 76 Multifamily 1,716 934 842 827 839 842 641 620 77 Farmers Home Administration 1,276 733 48,421 570 457 48,421 48,203 48,085 78 1- to 4-family 213 183 21,625 146 132 21,625 21,390 21,157 79 Multifamily 119 113 7,608 66 57 7,608 7,710 7,808 30 Commercial 497 159 8,446 111 115 8,446 8,463 8,553 31 Farm 447 278 10,742 247 153 10,742 10,640 10,567 37. Federal Housing and Veterans Administration 4,816 4,920 5,047 5,094 4,966 5,047 5,177 5,254 33 1- to 4-family 2,048 2,254 2,386 2,449 2,331 2,386 2,447 2,504 34 Multifamily 2,768 2,666 2,661 2,645 2,635 2,661 2,730 2,750 35 Federal National Mortgage Association 87,940 98,282 97,895 97,295 97,717 97,895 95,140 94,064 36 1- to 4-family 82,175 91,966 90,718 90,460 90,508 90,718 88,106 87,013 37 Multifamily 5,765 6,316 7,177 6,835 7,209 7,177 7,034 7,051 38 Federal Land Banks 52,261 47,498 39,984 43,369 42,119 39,984 37,362 35,562 39 1- to 4-family 3,074 2,798 2.353 2,552 2,478 2,353 2,198 2,092 40 Farm 49,187 44,700 37,631 40,817 39,641 37,631 35,164 33,470 41 Federal Home Loan Mortgage Corporation 10,399 14,022 11,564 14,194 13,359 11,564 12,940 12,342 47 1- to 4-family 9,654 11,881 10,010 11,890 11,127 10,010 11,774 10,820 43 Multifamily 745 2,141 1,554 2,304 2,232 1,554 1,166 1,522 44 Mortgage pools or trusts6 332,057 415,042 529,763 475,615 522,721 529,763 571,705 612,188 45 Government National Mortgage Association 179,981 212,145 260,869 229,204 241,230 260,869 277,386 290,512 46 1- to 4-family 175,589 207,198 255,132 223,838 235,664 255,132 271,065 283,892 47 Multifamily 4,392 4,947 5,737 5,366 5,566 5,737 6,321 6,620 48 Federal Home Loan Mortgage Corporation 70,822 100,387 171,372 125,903 146,871 171,372 186,295 200,064 49 1- to 4-family 70,253 99,515 166,667 123,676 143,734 166,667 180,602 194,064 50 Multifamily 569 872 4,705 2,227 3,137 4,705 5,693 6,000 51 Federal National Mortgage Association 36,215 54,987 97,174 72,377 86,359 97,174 107,673 121,270 5? 1- to 4-family 35,965 54,036 95,791 71,153 85,171 95,791 106,068 119,540 53 Multifamily 250 951 1,383 1,224 1,188 1,383 1,605 1,730 54 Farmers Home Administration 45,039 47,523 348 48,131 48,261 348 351 342 55 1- to 4-family 21,813 22,186 142 21,987 21,782 142 154 149 56 Multifamily 5,841 6,675 0 7,170 7,353 0 0 0 57 Commercial 7,559 8,190 132 8,347 8,409 132 127 126 58 Farm 9,826 10,472 74 10,627 10,717 74 70 67 59 Individuals and others7 274,486 296,809 325,882 313,572 325,135 325,882 330,714 335,245 60 1- to 4-family 154,315 165,835 180,896 175,107 183,255 180,896 179,517 180,442 61 Multifamily 48,670 55,424 66,133 61,198 63,886 66,133 70,146 72,809 6? Commercial 42,423 49,207 54,845 51,977 53,396 54,845 57,866 59,190 63 Farm 29,078 26,343 24,008 25,290 24,598 24,008 23,185 22,804 1. Based on data from various institutional and governmental sources, with 5. FmHA-guaranteed securities sold to the Federal Financing Bank were some quarters estimated in part by the Federal Reserve. Multifamily debt refers reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986: 4, to loans on structures of five or more units. because of accounting changes by the Farmers Home Administration. 2. Includes loans held by nondeposit trust companies but not bank trust 6. Outstanding principal balances of mortgage pools backing securities insured departments. or guaranteed by the agency indicated. 3. Includes savings banks and savings and loan associations. Beginning 1987:1, 7. Other holders include mortgage companies, real estate investment trusts, data reported by FSLIC-insured institutions include loans in process and other state and local credit agencies, state and local retirement funds, noninsured contra assets. pension funds, credit unions, and other U.S. agencies. 4. Assumed to be entirely 1- to 4-family loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • October 1987 1.55 CONSUMER INSTALLMENT CREDIT1-4 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1986 1987 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayr June Amounts outstanding (end of period) 1 Total 522,805 577,784 576,874 577,656 577,784 578,578 579,591 579,913 583,595 583,276 586,737 By major holder 2 Commercial banks 242,084 261,604 260,940 262,949 261,604 261,694 262,105 261,933 263,433 263,463 264,167 3 Finance companies 113,070 136,494 138,038 136,314 136,494 135,802 136,009 136,050 137,091 136,398 138,038 4 Credit unions 72,119 77,857 76,995 77,508 77,857 78,284 78,492 78,569 79,255 79,476 79,713 5 Retailers 38,864 40,586 40,565 40,496 40,586 40,617 40,644 40,469 40,467 40,318 40,287 6 Savings institutions 52,433 58,037 57,046 57,168 58,037 58,906 59,031 59,488 59,826 60,045 60,999 7 Gasoline companies 4,235 3,205 3,289 3,221 3,205 3,276 3,311 3,405 3,522 3,576 3,532 By major type of credit 8 Automobile 208,057 245,055 243,400 243,005 245,055 245,472 246,064 246,290 247,663 247,578 249,539 9 Commercial banks 93,003 100,709 99,385 100,221 100,709 101,389 101,688 101,528 101,781 102,189 102,652 to Credit unions 35,635 39,029 38,597 38,854 39,029 39,243 39,347 39,386 39,730 39,841 39,959 11 Finance companies 70,091 93,274 93,786 92,188 93,274 92,617 92,780 93,032 93,738 93,089 94,270 12 Savings institutions 9,328 12,043 11,632 11,742 12,043 12,223 12,249 12,344 12,414 12,459 12,657 13 Revolving 122,021 134,938 133,816 134,391 134,938 134,916 135,663 135,166 136,706 136,869 137,258 14 Commercial banks 75,866 85,652 84,868 85,426 85,652 85,395 86,053 85,567 86,929 87,133 87,469 15 Retailers 34,695 36,240 36,190 36,137 36,240 36,277 36,308 36,141 36,139 36,009 35,971 16 Gasoline companies 4,235 3,205 3,289 3,221 3,205 3,276 3,311 3,405 3,522 3,576 3,532 17 Savings institutions 5,705 7,713 7,445 7,529 7,713 7,829 7,845 7,906 7,951 7,980 8,107 18 Credit unions 1,520 2,128 2,024 2,078 2,128 2,139 2,145 2,147 2,166 2,172 2,179 19 Mobile home 25,488 25,710 25,784 25,731 25,710 25,852 25,789 25,614 25,626 25,542 25,695 20 Commercial banks 9,538 8,812 9,025 8,951 8,812 8,787 8,739 8,725 8,698 8,615 8,617 21 Finance companies 9,391 9,028 9,149 9,091 9,028 9,077 9,045 8,823 8,816 8,785 8,807 22 Savings institutions 6,559 7,870 7,610 7,689 7,870 7,988 8,005 8,067 8,112 8,142 8,271 23 Other 167,239 172,081 173,874 174,529 172,081 172,338 172,076 172,844 173,600 173,287 174,245 24 Commercial banks 63,677 66,431 67,662 68,351 66,431 66,122 65,625 66,113 66,026 65,527 65,429 25 Finance companies 33,588 34,192 35,104 35,035 34,192 34,108 34,183 34,196 34,537 34,524 34,962 26 Credit unions 34,964 36,700 36,374 36,576 36,700 36,901 36,999 37,036 37,359 37,463 37,575 27 Retailers 4,169 4,346 4,375 4,359 4,346 4,340 4,336 4,327 4,328 4,310 4,315 28 Savings institutions 30,841 30,412 30,359 30,208 30,412 30,867 30,932 31,172 31,349 31,463 31,963 Net change (during period) 29 Total 76,622 54,979 5,594 782 128 794 1,013 322 3,682 -319 3,461 By major holder 30 Commercial banks 32,926 19,520 1,950 2,009 -1,345 90 411 -172 1,500 30 704 31 Finance companies2 23,566 23,424 2,522 -1,724 180 -692 207 41 1,041 -693 1,640 32 Credit unions 6,493 5,738 696 513 349 427 208 77 686 221 237 33 Retailers 1,660 1,722 110 -69 90 31 27 -175 -2 -149 -31 34 Savings institutions 12,103 5,604 359 122 869 869 125 457 338 219 954 35 Gasoline companies -126 -1,030 -44 -68 -16 71 35 94 117 54 -44 By major type of credit 36 Automobile 35,705 36,998 4,386 -395 2,050 417 592 226 1,373 -85 1,961 37 Commercial banks 9,103 7,706 1,328 836 488 680 299 -160 253 408 463 38 Credit unions 5,330 3,394 349 257 175 214 104 39 344 111 118 39 Finance companies 17,840 23,183 2,545 -1,598 1,086 -657 163 252 706 -649 1,181 40 Savings institutions 3,432 2,715 164 110 301 180 26 95 70 45 198 41 Revolving 22,401 12,917 693 575 547 -22 747 -497 1,540 163 389 42 Commercial banks 17,721 9,786 438 558 226 -257 658 -486 1,362 204 336 43 Retailers 1,488 1,545 104 -53 103 37 31 -167 -2 -130 -38 44 Gasoline companies -126 -1,030 -44 -68 -16 71 35 94 117 54 -44 45 Savings institutions 2,771 2,008 137 84 184 116 16 61 45 29 127 46 Credit unions 547 608 58 54 50 11 6 2 19 6 7 47 Mobile home 778 222 52 -53 -21 142 -63 -175 12 -84 153 48 Commercial banks -85 -726 9 -74 -139 -25 -48 -14 -27 -83 2 49 Finance companies -405 -363 -67 -58 -63 49 -32 -222 -7 -31 22 50 Savings institutions 1,268 1,311 110 79 181 118 17 62 45 30 129 51 Other 17,738 4,842 463 655 -2,448 257 -262 768 756 -313 958 52 Commercial banks 6,187 2,754 175 689 -1,920 -309 -497 488 -87 -499 -98 53 Finance companies 6,131 604 45 -69 -843 -84 75 13 341 -13 438 54 Credit unions 616 1,736 289 202 124 201 98 37 323 104 112 55 Retailers 172 177 6 -16 -13 -6 -4 -9 1 -18 5 56 Savings institutions 4,632 -429 -52 -151 204 455 65 240 177 114 500 1. The Board's series cover most short- and intermediate-term credit ex- 2. More detail for finance companies is available in the G.20 statistical release, tended to individuals that is scheduled to be repaid (or has the option of 3. Excludes 30-day charge credit held by travel and entertainment companies, repayment) in 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 Dec. Jan. Feb. Mar. Apr. May June INTEREST RATES Commercial banks1 1 48-month new car 13.71 12.91 11.33 n.a. n.a. 10.58 n.a. n.a. 10.35 n.a. 2 24-month personal 16.47 15.94 14.82 n.a. n.a. 14.19 n.a. n.a. 14.10 n.a. 3 120-month mobile home 15.58 14.96 13.99 n.a. n.a. 13.49 n.a. n.a. 13.42 n.a. 4 Credit card 18.77 18.69 18.26 n.a. n.a. 18.09 n.a. n.a. 18.10 n.a. Auto finance companies 5 New car 14.62 11.98 9.44 5.40 6.12 11.83 11.71 11.65 10.78 10.59 <6 Used car 17.85 17.59 15.95 15.23 15.17 15.20 15.12 14.62 14.56 14.40 OTHER TERMS3 Maturity (months) 7 New car 48.3 51.5 50.0 44.5 45.3 53.4 53.3 53.8 53.6 53.7 8 Used car 39.7 41.4 42.6 42.5 42.2 42.6 42.7 44.8 44.7 44.9 Loan-to-value ratio 9 New car 88 91 91 92 92 93 93 94 94 94 10 Used car 92 94 97 98 97 97 98 98 99 99 Amount financed (dollars) 11 New car 9,333 9,915 10,665 11,162 11,340 11,160 10,835 10,902 10,602 10,641 12 Used car 5,691 6,089 6,555 6,763 6,746 6,946 7,168 7,067 7,075 7,145 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 • October 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 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998811 11998822 11998833 11998844 11998855 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 221177..55 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 11 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 83.2 121.4 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 112299..55 221177..88 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 1.9 .4 1.1 -.4 2.2 .8 -1.5 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 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 1199..33 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 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 91.9 113.5 115.3 169.6 117.4 109.2 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 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 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 By public agencies and foreign ? Total net advances 104.4 115.4 115.3 154.6 203.3 311.1 113322..55 176.6 220011..88 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 99..00 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 69.8 80.0 9922..99 110.2 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 Total net advances 342.3 352.9 518.7 682.7 769.2 706.2 700.5 664.9 619.6 918.8 559922..11 882200..99 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 ?.<)C redit market funds advanced by private financial 320.2 261.9 391.9 550.5 554.4 647.9 581.8 519.1 471.3 637.4 557722..44 772244..00 71 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 V 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 73 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 ?"> 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 ?8 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 79 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 Treasury balances -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 7766..11 119900..00 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 4? 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 SI Total net issues -3.3 33.6 67.0 -31.1 37.5 119.5 -40.1 -22.2 33.3 41.6 114466..88 9922..33 5? 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 S3 Other equities -9.3 16.8 34.9 -69.1 -65.9 -72.1 -79.4 -58.8 -60.4 -71.5 -52.0 -92.3 54 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 Other net purchases -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 • October 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 Nov. Dec. Jan. Feb. Mar. Apr.' May' June' July 1 Industrial production 121.4 123.8 125.1 126.0 126.7 126.5 127.2 127.3 127.4 128.3 128.8 129.8 Market groupings 2 Products, total 126.7 130.8 133.2 134.5 135.0 134.9 136.1 136.2 135.7 137.0 137.2 138.2 3 Final, total 127.3 131.1 132.3 133.1 133.7 133.6 135.0 135.0 134.5 135.6 135.8 136.9 4 Consumer goods 118.0 120.2 124.5 125.6 127.2 126.8 127.5 127.5 126.6 127.8 127.9 128.8 5 Equipment 139.6 145.4 142.7 143.1 142.2 142.8 144.9 145.0 144.9 146.0 146.3 147.8 6 Intermediate 124.7 130.0 136.4 139.2 139.7 139.1 139.7 140.4 139.9 141.8 141.9 142.7 7 Materials 114.2 114.2 113.9 114.3 115.2 115.2 115.1 115.2 116.2 116.4 117.3 118.2 Industry groupings 8 Manufacturing 123.4 126.4 129.1 130.3 131.1 131.1 132.0 132.3 132.4 133.1 133.6 134.7 Capacity utilization (percent- 9 Manufacturing 80.5 80.1 79.8 79.7 80.0 79.9' 80.3' 80.3'' 80.2 80.4 80.5 81.0 10 Industrial materials industries 82.0 80.2 78.5 78.8 78.9 78.8 78.7 78.7 79.2 79.3 79.8 80.3 11 Construction contracts (1982 = 100)1 135.0 148.0 155.0 156.0 155.0 155.0' 151.0' 165.0' 162.0 149.0 161.0 163.0 12 Nonagricultural employment, total4 114.6 118.3 120.8 121.8 121.9 122.4 122.7 122.9 123.2 123.3 123.5 123.8 13 Goods-producing, total 101.6 102.4 102.4 101.2 101.2 101.5 101.6 101.7 101.7 101.7 101.8 102.1 14 Manufacturing, total 98.4 97.8 96.5 96.3 96.4 96.3 96.4 96.5 96.6 96.6 96.7 97.0 15 Manufacturing, production-worker.... 94.1 92.9 92.1 91.1 91.3 91.1 91.4 91.4 91.5 91.6 91.7 92.1 16 Service-producing 120.0 125.0 128.9 130.4 130.6 131.1 131.5 131.8 132.2 132.4 132.5 132.9 17 Personal income, total 193.4 207.0 219.9 223.3 224.8 225.9 228.4 229.1 230.2 231.0 231.6 232.5 18 Wages and salary disbursements 185.0 198.7 210.2 214.5 214.8 216.3 218.0 218.6 219.5 220.7 221.3 221.9 19 Manufacturing 164.6 172.8 176.4 177.4 177.7 178.5 179.1 179.2 178.9 179.9 180.1 180.0 20 Disposable personal income 193.5 206.0 219.1 221.8 222.7 224.3 227.5 228.1 222.6 229.9 229.4 230.3 21 Retail sales6 179.0 190.6 199.9 200.9 211.8 196.8 206.3 206.8 207.4 207.3 210.2 211.8 Prices7 22 Consumer (1967 = 100) 311.1 322.2 328.4 330.8 331.1 333.1 334.4 335.9 337.7 338.7 340.1 340.8 23 Producer finished goods (1967 = 100) ... 291.1 293.7 289.6 290.7 290.4 291.8 292.3 292.3 295.0 296.3 296.8 297.8 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 Dec. Jan. Feb. Mar. Apr. May June July HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 178,602 180,440 182,822 183,815 184,092 184,259 184,436 184,597 184,777 184,941 185,127 2 Labor force (including Armed Forces)1 115,763 117,695 120,078 120,854 121,299 121,610 121,479 121,588 122,237 121,755 122,194 3 Civilian labor force 113,544 115,461 117,834 118,586 119,034 119,349 119,222 119,335 119,993 119,517 119,952 Employment 4 Nonagricultural industries 101,685 103,971 106,434 107,476 107,866 108,146 108,084 108,545 109,112 109,079 109,508 Agriculture 3,321 3,179 3,163 3,161 3,145 3,236 3,284 3,290 3,335 3,178 3,219 Unemployment 6 Number 8,539 8,312 8,237 7,949 8,023 7,967 7,854 7,500 7,546 7,260 7,224 7 Rate (percent of civilian labor force).... 7.5 7.2 7.0 6.7 6.7 6.7 6.6 6.3 6.3 6.1 6.0 8 Not in labor force 62,839 62,745 62,744 62,961 62,793 62,649 62,957 63,009 62,540 63,186 62,933 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 94,496 97,519 99,610 100,567 100,919 101,150 101,329 101,598 101,708'' 101,811' 102,115 10 Manufacturing 19,378 19,260 18,994 18,970 18,956 18,986 18,995 19,011 19,018' 19,028' 19,098 11 Mining 966 927 783 724 718 719 722 729 735 737' 742 12 Contract construction 4,383 4,673 4,904 4,936 5,034 5,038 5,032 5,019 4,999' 5,010' 5,009 13 Transportation and public utilities 5,159 5,238 5,244 5,286 5,304 5,315 5,333 5,348 5,344' 5,351' 5,344 14 Trade 22,100 23,073 23,580 23,732 23,821 23,897 23,902 23,969 23,980' 23,997' 24,068 15 Finance 5,689 5,955 6,297 6,451 6,480 6,501 6,526 6,558 6,576 6,595' 6,614 16 Service 20,797 22,000 23,099 23,544 23,670 23,759 23,842 23,926 24,025' 24,051' 24,133 17 Government 16,023 16,394 16,710 16,924 16,936 16,935 16,977 17,038 17,031' 17,042 17,107 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day ; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 1987 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1986 1987 1986 1987 1986 1987 SSeerriieess Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2' Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 125.0 126.0 127.0 127.8 157.9 158.8 159.6 160.5 79.1 79.3 79.6 79.8 2 Mining 96.6 96.6 96.6 97.1 131.9 131.7 131.3 130.7 73.2 73.3 73.6 74.7 3 Utilities 108.8 110.4 109.5 110.5 137.5 138.1 138.7 139.3 79.1 79.9 79.0 80.0 4 Manufacturing 129.4 130.4 131.8 132.6 162.4 163.4 164.4 165.5 79.7 79.8 80.2 80.4 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 85.4 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 78.2 7 Materials 113.4 114.3 115.1 116.5 145.3 145.8 146.3 146.8 78.1 78.4 78.7 79.4 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 74.7 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 69.1 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 88.3 11 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 89.5 P 135.1 136.0 136.4 138.9 139.7 140.8 97.3 97.3 96.9 96.2 13 117.7 120.1 122.5 144.7 145.0 145.6 81.4 82.8 84.1 85.0 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 81.7 Previous cycle1 Latest cycle2 1986 1986 1987 High Low High Low July Nov. Dec. Jan. Feb. Mar. Apr/ May'" June July Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 79.2 79.4 79.6 79.4 79.7 79.6 79.5 79.9 80.1 80.5 16 Mining 92.8 87.8 95.2 76.9 73.5 73.9 73.8 73.9 73.3 73.6 74.2 74.6 75.4 76.3 17 Utilities 95.6 82.9 88.5 78.0 79.9 80.5 79.5 79.1 79.0 78.9 78.4 80.8 80.8 81.1 18 Manufacturing 87.7 69.9 86.5 68.0 79.7 79.8 80.0 79.9 80.3 80.3 80.2 80.4 80.5 81.0 19 Primary processing.... 91.9 68.3 89.1 65.1 82.9 84.4 85.0 84.8 84.7 84.8 85.3 85.4 85.5 86.4 20 Advanced processing.. 86.0 71.1 85.1 69.5 78.4 77.7 77.9 77.8 78.3 78.1 77.9 78.3 78.3 78.7 21 Materials 92.0 70.5 89.1 68.4 78.3 78.4 78.9 78.8 78.7 78.7 79.2 79.3 79.8 80.3 22 Durable goods 91.8 64.4 89.8 60.9 73.7 74.2 74.3 74.0 74.6 74.7 74.8 74.4 74.9 75.7 23 Metal materials 99.2 67.1 93.6 45.7 63.8 68.4 66.5 65.9 67.3 68.0 68.5 68.8 70.0 73.7 24 Nondurable goods .... 91.1 66.7 88.1 70.6 85.0 85.7 87.7 87.5 86.8 86.8 88.5 88.1 88.3 88.5 25 Textile, paper, and chemical 92.8 64.8 89.4 68.6 85.6 86.7 89.2 89.3 88.1 88.1 89.9 89.3 89.4 89.8 ">6 98.4 70.6 97.3 79.9 97.8 96.0 100.2 98.3 97.1 95.4 95.8 96.4 96.5 ">7 92.5 64.4 87.9 63.3 80.2 81.7 84.3 84.9 83.7 83.7 85.2 85.2 84.5 28 Energy materials 94.6 86.9 94.0 82.2 82.3 81.2 81.2 81.3 80.3 79.8 80.3 82.0 82.8 83.1 1. Monthly high 1973; monthly low 1975. NOTE. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly highs 1978 through 1980; monthly lows 1982. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value • Monthly data are seasonally adjusted 1977 1986 1987 1986 GGrroouuppss por- avg. tion July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. AApprr..'' May JJuunnee'''' JJuullyy'''' Index(1977 = 100) MAJOR MARKET 1 Total index 100.00 125.0 124.9 125.1 124.9 125.3 126.0 126.7 126.5 127.2 127.3 127.4 128.3 128.8 129.8 ? Products 57.72 133.2 133.2 133.8 133.3 134.0 134.5 135.0 134.9 136.1 136.2 135.7 137.0 137.2 138.2 Final products 44.77 132.3 132.0 132.6 132.2 132.7 133.1 133.7 133.6 135.0 135.0 134.5 135.6 135.8 136.9 4 Consumer goods 25.52 124.5 125.2 125.1 124.2 124.7 125.6 127.2 126.8 127.5 127.5 126.6 127.8 127.9 128.8 5 Equipment 19.25 142.7 141.0 142.5 142.8 143.3 143.1 142.2 142.8 144.9 145.0 144.9 146.0 146.3 147.8 6 Intermediate products 12.94 136.4 137.3 137.8 137.0 138.7 139.2 139.7 139.1 139.7 140.4 139.9 141.8 141.9 142.7 7 Materials 42.28 113.9 113.6 113.2 113.5 113.3 114.3 115.2 115.2 115.1 115.2 116.2 116.4 117.3 118.2 Consumer goods 8 Durable consumer goods 6.89 116.2 116.3 115.7 117.4 116.3 118.4 121.5 120.0 122.4 121.2 118.1 120.1 119.2 119.9 9 Automotive products 2.98 115.1 116.4 114.5 117.0 112.7 114.6 117.7 117.6 123.5 121.2 115.7 117.7 114.7 117.2 10 Autos and trucks 1.79 112.9 114.5 110.4 116.8 107.7 107.6 115.6 117.9 125.2 121.6 111.5 113.1 107.7 111.5 11 Autos, consumer 1.16 97.3 95.3 87.8 96.2 91.9 92.3 99.5 94.3 105.3 100.9 91.8 91.0 87.9 86.1 1? Trucks, consumer .63 141.8 150.3 152.4 155.1 137.1 136.0 145.6 161.9 162.1 159.9 148.1 154.2 N Auto parts and allied goods 1.19 118.4 119.1 120.7 117.3 120.1 125.2 120.8 117.1 121.0 120.5 121.9 124.6 125.2 125.7 14 Home goods 3.91 117.1 116.3 116.7 117.7 119.0 121.2 124.4 121.9 121.6 121.2 119.9 121.8 122.6 122.0 15 Appliances, A/C and TV 1.24 139.5 138.9 139.4 141.2 142.6 148.1 153.2 146.9 145.2 142.9 137.7 142.2 143.6 140.3 16 Appliances and TV 1.19 141.6 141.6 142.5 143.5 144.3 150.0 155.1 148.9 146.7 143.8 139.2 142.3 144.2 17 Carpeting and furniture .96 125.8 126.6 125.8 126.2 128.8 131.1 132.0 129.1 130.8 131.3 133.5 133.3 133.4 18 Miscellaneous home goods 1.71 96.0 94.1 95.1 96.0 96.5 96.3 99.4 99.8 99.3 99.8 99.4 100.7 101.4 19 Nondurable consumer goods 18.63 127.5 128.4 128.6 126.7 127.8 128.3 129.4 129.2 129.4 129.8 129.8 130.7 131.1 132.0 ?() Consumer staples 15.29 97.0 135.3 135.5 133.6 134.4 135.0 136.0 135.9 135.9 136.5 136.4 137.2 137.6 138.4 71 Consumer foods and tobacco 7.80 134.1 132.2 133.2 131.0 131.6 132.6 133.9 132.9 134.0 134.8 134.4 135.0 135.2 7? Nonfood staples 7.49 131.9 138.5 137.9 136.3 137.2 137.4 138.2 139.0 137.9 138.2 138.5 139.6 140.0 140.9 73 Consumer chemical products 2.75 136.5 166.4 163.4 161.1 161.7 161.0 163.1 165.9 164.7 165.7 164.7 165.4 165.4 165.4 74 Consumer paper products 1.88 161.2 146.4 147.7 145.7 150.3 151.5 150.1 149.4 147.8 147.5 148.9 152.4 153.4 ?5 Consumer energy 2.86 147.4 106.6 107.1 106.3 105.2 105.5 106.4 106.3 105.7 105.8 106.5 106.4 106.8 76 Consumer fuel 1.44 105.7 91.2 94.9 92.0 90.8 91.7 92.2 95.0 92.5 94.1 94.5 92.1 92.3 27 Residential utilities 1.42 92.8 122.3 119.6 120.9 119.8 119.6 120.8 117.8 119.2 117.7 118.7 121.0 Equipment 78 Business and defense equipment 18.01 147.1 146.4 147.8 148.0 148.4 148.1 147.0 147.7 150.1 115500..11 115500..00 115511..00 115511..33 115522..44 79 Business equipment 14.34 138.6 137.9 139.3 139.3 139.1 138.6 137.1 138.1 140.8 140.8 140.8 141.9 142.5 143.7 10 Construction, mining, and farm 2.08 59.8 60.6 58.3 58.1 58.0 56.6 58.2 57.2 56.8 58.1 58.6 61.7 63.0 31 Manufacturing 3.27 112.0 112.6 113.3 113.0 112.7 109.6 108.8 110.1 111.5 110.9 111.1 111.5 113.1 114.3 37 Power 1.27 81.6 81.7 81.7 80.3 80.5 79.5 80.2 79.6 81.2 81.7 82.4 84.0 82.7 83.4 33 Commercial 5.22 214.6 214.5 217.5 215.1 215.4 217.3 213.7 215.9 218.4 219.7 220.9 222.0 223.8 226.0 34 Transit 2.49 109.2 103.9 106.9 113.3 111.8 110.7 108.9 109.5 117.4 114.0 110.4 111.0 107.7 107.6 35 Defense and space equipment 3.67 180.3 179.5 181.0 182.0 184.6 184.9 185.8 185.2 186.5 186.6 186.1 186.5 185.9 186.3 Intermediate products 36 Construction supplies 5.95 124.7 124.0 125.4 125.9 126.3 126.8 127.9 128.3 128.4 128.5 127.3 128.3 127.6 128.3 37 Business supplies 6.99 146.4 148.6 148.4 146.4 149.3 149.7 149.8 148.3 149.4 150.5 150.5 153.4 154.1 38 General business supplies 5.67 150.6 153.3 152.5 151.2 154.1 153.7 154.3 153.3 154.1 155.2 155.5 157.6 159.3 39 Commercial energy products 1.31 128.3 128.3 130.6 125.8 128.8 132.4 130.3 126.8 128.8 130.3 129.0 135.0 131.6 Materials 40 Durable goods materials 20.50 119.7 118.8 118.8 118.9 119.2 120.4 120.7 120.5 121.5 121.8 122.2 121.8 122.7 124.1 41 Durable consumer parts 4.92 98.5 96.7 95.2 95.3 97.0 98.0 98.8 99.0 100.0 98.9 96.2 95.4 96.2 95.1 42 Equipment parts 5.94 153.9 154.3 155.6 154.8 153.5 154.5 154.2 154.0 155.6 155.8 157.1 156.1 157.2 159.3 43 Durable materials n.e.c 9.64 109.4 108.2 108.1 108.8 109.4 110.7 111.2 110.8 111.5 112.6 114.1 114.1 115.0 117.3 44 Basic metal materials 4.64 80.0 77.4 76.9 78.4 78.8 82.1 80.3 79.2 80.3 80.8 81.8 81.8 83.4 45 Nondurable goods materials 10.09 118.3 118.9 119.7 120.6 120.3 120.2 123.2 123.2 122.5 122.8 125.4 125.1 125.6 126.2 46 Textile, paper, and chemical materials 7.53 118.9 119.0 120.5 121.8 121.3 121.0 124.7 125.0 123.6 124.0 126.9 126.2 126.7 127.5 47 Textile materials 1.52 110.6 111.2 113.4 116.0 114.3 115.6 116.1 116.5 115.8 118.5 48 Pulp and paper materials 1.55 132.1 135.6 136.0 133.7 133.5 134.2 140.2 137.9 136.7 134.7 135.8 137.1 137.6 49 Chemical materials 4.46 117.1 115.9 117.5 119.7 119.5 118.5 122.3 123.4 121.8 122.1 124.4 124.7 123.8 50 Miscellaneous nondurable materials ... 2.57 116.5 118.3 117.2 117.1 117.5 117.6 118.5 118.0 119.0 119.2 121.1 122.0 51 Energy materials 11.69 99.9 99.9 97.9 98.0 96.9 98.7 98.8 98.9 97.6 97.0 97.5 99.6 100.6 100.9 52 Primary energy 7.57 105.5 104.8 103.7 103.8 102.7 104.8 105.1 104.1 102.6 101.5 102.3 103.1 104.1 53 Converted fuel materials 4.12 89.6 90.9 87.3 87.4 86.2 87.6 87.3 89.4 88.5 88.9 88.7 93.0 94.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • October 1987 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1986 1987 Groups c S o I d C e p p r o o r - - 1 av 98 g 6 . tion July Aug. Sept. Oct. Nov. Dec Jan. Feb. Mar. Apr.' May June'' July' Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 103.4 101.8 100.9 100.8 100.7 102.6 101.9 101.9 101.3 101.4 101.5 103.2 103.8 104.6 2 Mining 9.83 99.6 97.1 96.4 96.2 95.6 97.4 96.7 97.2 96.2 96.5 97.0 97.5 98.4 99.4 3 Utilities 5.96 109.6 109.7 108.3 108.3 109.3 111.2 110.6 109.5 109.6 109.5 109.0 112.6 112.7 113.3 4 Manufacturing 84.21 129.1 129.2 129.5 129.5 129.9 130.3 131.1 131.1 132.0 132.3 132.4 133.1 133.6 134.7 5 Nondurable 35.11 130.9 131.7 132.2 131.4 132.3 132.7 133.7 134.1 134.3 134.8 135.8 136.6 137.2 138.4 6 Durable 49.10 127.9 127.4 127.5 128.1 128.1 128.6 129.2 129.0 130.4 130.5 130.0 130.6 130.9 132.0 Mining 7 Metal 10 .50 69.2 70.9 70.7 68.5 68.3 73.5 72.1 72.0 71.6 66.7 71 7 8 Coal 11.12 1.60 124.2 120.2 122.2 120.8 117.6 130.1 124.3 133.5 127.7 121.8 121.6 126.6 130.1 132.1 9 Oil and gas extraction 13 7.07 94.7 92.4 90.7 91.0 90.5 90.4 90.9 89.9 89.5 91.0 92.0 91.2 91.6 92.3 10 Stone and earth minerals 14 .66 113.9 111.8 114.8 111.7 116.4 115.2 109.6 107.1 110.0 113.1 114.4 113.7 113.8 Nondurable manufactures 11 Foods 20 7.96 133.6 134.3 135.1 134.3 133.7 134.4 135.3 135.3 135.7 136.1 136.1 137.1 137.5 12 Tobacco products 21 .62 96.6 97.9 97.1 89.8 100.1 96.8 92.9 89.1 98.7 100.7 99.4 99 0 13 Textile mill products 22 2.29 113.2 113.4 114.7 116.0 116.1 117.8 118.4 118.0 118.4 119.3 122.9 122.5 124.1 14 Apparel products 23 2.79 103.6 102.5 102.5 102.7 104.2 105.1 107.2 107.4 107.1 106.6 108.1 15 Paper and products 26 3.15 136.4 138.1 138.6 136.9 137.8 139.5 141.6 139.8 140.5 139.2 139.9 140.9 141.6 16 Printing and publishing 27 4.54 163.4 165.4 164.6 163.0 167.8 168.5 167.7 168.1 166.7 168.2 171.4 174.0 174.8 175.6 17 Chemicals and products 28 8.05 133.0 134.1 134.4 133.9 133.9 132.3 134.6 137.4 137.7 138.3 138.2 138.0 138.5 18 Petroleum products 29 2.40 92.1 90.6 94.0 93.3 91.1 92.0 92.5 94.7 91.9 91.4 94.0 92.6 91.6 92.0 19 Rubber and plastic products.... 30 2.80 153.3 155.5 155.5 154.9 157.6 159.0 160.7 158.1 159.2 161.3 163.8 166.0 168.2 20 Leather and products 31 .53 61.3 61.9 62.0 59.4 60.2 61.3 59.4 58.3 59.6 59.1 59.3 61.2 59.8 Durable manufactures 21 Lumber and products 24 2.30 123.4 120.8 122.5 125.0 125.9 129.5 133.1 130.2 130.0 129.5 128.9 131.0 129.6 22 Furniture and fixtures 25 1.27 146.7 149.5 148.3 147.7 149.2 148.6 150.5 148.7 151.8 153.4 155.9 156.2 159.9 23 Clay, glass, stone products 32 2.72 120.2 119.6 119.7 121.6 118.1 120.6 121.7 122.8 121.5 122.7 122.9 121.4 120.1 24 Primary metals 33 5.33 75.8 73.6 73.4 74.1 74.2 76.8 73.5 73.6 76.3 77.5 76.8 77.5 77.8 80.7 25 Iron and steel 331.2 3.49 63.4 61.7 60.8 61.1 62.2 64.8 60.5 60.2 63.1 65.1 65.0 65.7 66.5 26 Fabricated metal products 34 6.46 107.4 105.7 105.9 107.3 108.3 107.1 108.3 108.0 108.2 108.8 108.6 107.9 109.1 109.2 27 Nonelectrical machinery 35 9.54 141.9 142.6 142.6 140.9 142.2 141.2 139.9 140.3 142.3 143.7 145.2 146.3 148.0 149.7 28 Electrical machinery 36 7.15 166.5 166.8 167.2 166.9 167.7 168.3 170.2 169.2 169.3 167.6 166.5 168.6 169.3 169.5 29 Transportation equipment 37 9.13 125.8 125.6 125.1 127.7 125.2 125.6 127.0 128.1 131.8 130.6 127.1 127.7 125.3 126.2 30 Motor vehicles and parts 371 5.25 110.9 111.2 108.2 112.2 107.1 107.9 111.2 112.2 117.8 115.5 109.3 110.1 106.7 107.8 31 Aerospace and miscellaneous transportation equipment 72-6.9 3.87 146.1 145.2 148.0 148.7 149.7 149.6 148.4 149.6 150.7 151.2 151.3 151.5 150.4 151.2 32 Instruments 38 2.66 141.3 141.7 142.0 141.7 140.3 141.1 142.4 142.5 143.3 142.0 144.1 143.5 144.7 145.0 33 Miscellaneous manufactures... 39 1.46 99.3 97.5 98.3 97.7 99.0 98.9 103.1 101.8 101.1 101.4 100.0 101.5 104.0 Utilities 34 Electric 44..1177 112222..22 112255..44 112222..44 112222..88 112233..88 112255..11 112233..55 112211..77 112222..33 112233..33 112233..44 112277..55 112266..88 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,702.2 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 1,713.3 1,726.5 1,716.6 1,722.3 36 Final 405.7 1,314.5 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 1,320.1 1,327.0 1,320.0 1,323.0 37 Consumer goods. 272.7 853.8 842.4 846.9 839.8 839.3 847.2 860.5 865.5 869.7 870.0 863.0 865.4 859.2 864.7 38 Equipment 133.0 458.2 440.4 445.7 452.5 453.2 450.4 446.2 449.6 462.2 460.4 457.1 461.6 460.8 458.3 39 Intermediate 111.9 387.6 387.1 388.7 385.5 391.4 393.2 395.3 391.9 389.5 393.9 393.3 399.5 396.6 399.3 A A major revision of the industrial production index and the capacity (July 1985). pp. 487-501. The revised indexes for January through June 1985 were utilization rates was released in July 1985. See "A Revision of the Index of shown in the September BULLETIN. Industrial Production" and accompanying tables that contain revised indexes NOTE. These data also appear in the Board's G.12.3 (414) release. For address, (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1986 1987 IItteemm 11998844 11998855 11998866 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May' June Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,682 1,733 1,750 1,687 1,664 1,667 1,862 1,652 1,676 1,719 1,598 1,493 1,517 ? 1-family 922 957 1,071 1,071 1,036 1,028 1,184 1,085 1,204 1,150 1,058 1,009 1,039 3 2-or-more-family 759 777 679 616 628 639 678 567 472 569 540 484 478 4 Started 1,749 1,742 1,805 1,689 1,657 1,637 1,813 1,816 1,838 1,730 1,643 1,606 1,597 5 1-family 1,084 1,072 1,179 1,123 1,114 1,129 1,233 1,253 1,303 1,211 1,208 1,130 1,096 6 2-or-more-family 665 669 626 566 543 508 580 563 535 519 435 476 501 7 Under construction, end of period1 1,051 1,063 1,074 1,154 1,142 1,125 1,104 1,089 1,096 1,085 1,070 1,063 1,067 8 1-family 556 539 583 627 625 619 610 609 621 618 623 621 625 9 2-or-more-family 494 524 490 527 518 506 494 480 476 467 446 442 443 10 Completed 1,652 1,703 1,756 1,740 1,745 1,774 1,894 1,956 1,726 1,689 1,830 1,615 1,572 11 1-family 1,025 1,072 1,120 1,113 1,165 1,158 1,184 1,217 1,107 1,141 1,148 1,156 1,078 12 2-or-more-family 627 631 637 627 580 616 710 739 619 548 682 459 494 13 Mobile homes shipped 296 284 244 243 241 237 251 242 231 228 227 222 231 Merchant builder activity in 1-family units 14 Number sold 639 688 748 744 675 691 768 712 740 1122VV 733 636 665588 15 Number for sale, end of period 358 350 361 355 357 353 357 358 358 358r 359 356 360 Price (thousands of dollars)2 Median 16 Units sold 80.0 84.3 92.2 95.0 96.4 94.0 95.0 98.5 95.2 98.4R 97.4 106.0 110.0 17 Units sold 97.5 101.0 112.2 114.0 114.9 113.6 118.9 122.1 121.3 119.5 118.6 128.6 139.7 EXISTING UNITS (1-family) 18 Number sold 2,868 3,217 3,566 3,710 3,760 3,850 4,060 3,480 3,690 3,680 3,560 3,770 3,500 Price of units sold (thousands of dollars)2 19 Median 72.3 75.4 80.3 80.3 79.4 80.4 80.8 82.1 85.0 8855..66 85.0 85.2 8855..22 20 Average 85.9 90.6 98.3 98.2 97.3 99.1 100.6 100.1 104.3 104.9 105.0 106.3 106.0 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 328,643 355,995 388,815 400,115 394,871 390,646 380,175 384,716 401,644 388,303 397,136 394,303 390,084 22 Private 270,978 291,665 316,589 324,886 322,929 320,417 306,826 310,170 326,453 312,203 320,841 319,665 317,877 23 Residential 153,849 158,475 187,147 198,786 192,592 194,463 181,682 187,813 203,115 190,812 199,523 193,089 195,457 24 Nonresidential, total 117,129 133,190 129,442 126,100 130,337 125,954 125,144 122,357 123,338 121,391 121,318 126,576 122,420 Buildings 25 Industrial 13,746 15,769 13,747 13,015 14,634 13,404 13,207 12,094 12,112 11,354 11,504 13,362 12,360 26 Commercial 39,357 51,315 48,592 55,235 56,121 54,193 54,809 50,881 53,071 52,285 50,920 53,039 50,476 27 Other 12,547 12,619 13,216 13,026 13,820 13,787 14,231 14,755 14,776 15,143 14,989 14,981 14,880 28 Public utilities and other 51,479 53,487 53,887 44,824 45,762 44,570 42,897 44,627 43,379 42,609 43,905 45,194 44,704 29 Public 57,662 64,326 72,225 75,229 71,942 70,229 73,348 74,546 75,191 76,100 76,295 74,638 72,207 30 Military 2,839 3,283 3,919 5,076 3,566 4,007 4,313 4,100 2,806 3,893 3,749 4,129 4,141 31 Highway 18,772 21,756 23,360 22,609 22,643 19,958 21,935 23,508 23,260 23,575 22,703 22,541 21,254 32 Conservation and development 4,654 4,746 4,668 4,741 4,726 4,647 4,954 5,155 4,883 4,792 5,649 4,800 5,490 33 Other 31,397 34,541 40,278 42,803 41,007 41,617 42,146 41,783 44,242 43,840 44,194 43,168 41,322 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 comparable with data in prior periods because of changes by the Bureau of the of 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 • October 1987 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier months earlier (at annual rate) Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm JJJuuulllyyy 1986 1987 1987 111999888777 11998866 11998877 (((111999666777 JJuullyy JJuullyy === 111000000)))111 Sept. Dec. Mar/ Juner Mar. Apr. May June July CONSUMER PRICES2 1 All items 1.6 3.9 2.0 2.5 6.2 4.6 .4 .4 .3 .4 .2 340.8 2 Food 3.4 4.2 8.4 4.1 2.5 6.5 -.1 .3 .5 .7 -.2 333.6 3 Energy items -16.2 4.3 -21.0 -9.9 26.1 7.9 1.0 .3 .2 1.5 .1 382.4 4 All items less food and energy 4.1 4.0 3.7 3.7 5.2 4.0 .5 .5 .3 .2 .3 339.9 5 Commodities 1.5 2.9 2.6 1.4 5.1 3.8 .7 .6 .3 .0 .3 269.6 6 Services 5.6 4.6 4.3 5.1 5.3 3.8 .4 .4 .3 .2 .4 416.0 PRODUCER PRICES 7 Finished goods -2.4 3.5 -.4 1.8 4.3 4.7 ,5r ,6r .3 .2 .2 297.8 8 Consumer foods 3.4 2.6 11.2 1.0 -6.7 14.3 .1 1.5 1.4 .5 -.6 287.6 9 Consumer energy -37.1 14.3 -42.7 -12.5 59.8 10.9 1.8r 1.7r .0 .9 1.5 527.5 10 Other consumer goods 2.3 2.7 2.3 4.4 4.2 -.3 .8' .C -.2 .1 .3 265.7 11 Capital equipment 1.9 1.9 2.0 3.4 .4 1.4 .1 ,2r .1 .0 .1 312.1 12 Intermediate materials3 -4.5 4.0 -1.5 -1.2 7.8 5.2 .3r .3 .4 .6 .8 322.8 13 Excluding energy -.5 3.0 1.5 1.2 3.3 4.5 .2 .2 .4 .5 .5 313.2 Crude materials 14 Foods 1.2 3.7 18.1 -2.7 -10.3 34.0 ,4r 4.1r 4.8 -1.4 -2.0 243.1 15 Energy -29.7 19.0 -19.6 -.5 50.0 15.8 1.0r ,lr 2.7 .9 2.8 629.5 16 Other 1.1 10.6 -24.1 8.5 15.9 33.7 -.3' .8r 2.4 4.2 2.9 276.4 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 Q3 Q4 Ql Q2' Q3 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 4,447.7 By source 7 Personal consumption expenditures 2,430.5 2,629.4 2,799.8 2,765.8 2,837.1 2.858.6 2,893.8 22,,994477..33 3 Durable goods 335.5 368.7 402.4 386.4 427.6 419.8 396.1 407.5 4 Nondurable goods 867.3 913.1 939.4 934.3 940.0 946.3 969.9 982.3 5 Services 1,227.6 1,347.5 1,458.0 1,445.1 1,469.5 1,492.4 1,527.7 1,557.5 6 Gross private domestic investment 664.8 641.6 671.0 679.4 660.8 660.2 699.9 700.9 7 Fixed investment 597.1 631.6 655.2 651.9 657.3 666.6 648.2 660.4 8 416.0 442.6 436.9 433.8 433.5 439.7 422.8 432.3 9 Structures 141.1 152.5 137.4 135.9 131.1 132.9 128.7 130.0 10 Producers' durable equipment 274.9 290.1 299.5 297.9 302.4 306.7 294.1 302.3 11 Residential structures 181.1 189.0 218.3 218.1 223.8 226.9 225.4 228.1 1? Change in business inventories 67.7 10.0 15.7 27.5 3.5 -6.4 51.6 40.4 13 Nonfarm 60.5 13.6 16.8 24.5 -.9 5.1 48.7 27.4 14 Net exports of goods and services -58.9 -79.2 -105.5 -100.8 -110.5 -116.9 -112.2 -118.6 IS 383.5 369.9 376.2 371.3 376.6 383.3 397.3 411.0 16 Imports 442.4 449.2 481.7 472.1 487.1 500.2 509.5 529.7 17 Government purchases of goods and services 735.9 818.6 869.7 867.2 878.5 886.3 896.2 918.2 18 310.5 353.9 366.2 368.4 371.2 368.6 366.9 380.3 19 State and local 425.3 464.7 503.5 498.8 507.3 517.7 529.3 537.8 By major type of product 70 Final sales, total 3,704.5 4,000.3 44,,221199..33 4,184.0 44,,226622..44 44,,229944..66 44,,332266..00 44,,440077..33 71 1,581.3 1,637.9 1,693.8 1,689.9 1,703.6 1,698.9 1,738.7 1,759.9 77 681.5' 704.3' 726.8' 717.0 735.8 737.3 747.0 750.1 73 Nondurable 899.9r 933.6' 967.0' 972.9 967.8 961.6 991.7 1,009.8 74 1,813.9' 1,969.2' 2,116.2' 2,097.9 2,136.6 2,160.0 2,212.0 2,257.6 25 Structures 376.9' 403.1' 425.0'' 423.8 425.7 429.3 426.9 430.2 76 Change in business inventories 67.7 10.0 15.7 27.5 3.5 -6.4 51.6 40.4 77 Durable goods 40.2' 7.3'' 4.8' 10.1 -12.1 -4.5 35.2 19.4 28 Nondurable goods 27.5'' 2.7'' 10.9' 17.5 15.6 -1.9 16.5 21.0 79 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 33,,779933..77 NATIONAL INCOME 30 3,028.6 3,229.9 3,422.0 3,414.1 3,438.7 3,471.0 3,548.3 3,597.8 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 2,623.7 3? 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 375.1 396.1 415.8 413.0 417.2 423.5 426.6 432.0 36 Employer contributions for social insurance 192.2 203.8 214.7 213.1 214.9 219.1 220.0 222.5 37 Other labor income 182.9 192.3 201.1 199.8 202.3 204.4 206.7 209.5 38 Proprietors' income1 234.5 257.3 289.8 298.1 292.5 297.8 320.9 327.7 39 Business and professional 204.0 227.6 252.6 250.1 256.2 261.2 269.7 276.0 40 Farm1 30.5 29.7 37.2 48.1 36.3 36.6 51.3 51.6 41 Rental income of persons" 8.5 9.0 16.7 17.4 17.2 18.4 20.0 18.9 47 Corporate profits1 266.9 277.6 284.4 282.3 286.4 281.1 294.0 296.5 43 Profits before tax 240.0 224.8 231.9 224.4 236.3 247.9 257.0 267.1 44 Inventory valuation adjustment -5.8 -.7 6.5 11.3 6.0 -8.9 -11.3 -18.8 45 Capital consumption adjustment 32.7 53.5 46.0 46.7 44.0 42.1 48.2 48.2 46 Net interest 304.8 315.3 326.1 328.7 327.5 321.7 323.6 331.1 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • October 1987 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1986 1987 AAccccoouunntt 11998844 11998855 11998866 Q3 Q4 Ql Q2' Q3 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 3,713.4 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 577.6 609.2 623.3 621.2 622.8 628.4 632.9 635.2 4 Manufacturing 439.1 460.9 470.5 468.7 470.0 474.5 477.2 479.1 5 Distributive industries 442.8 473.0 497.1 493.7 498.6 504.7 511.5 519.0 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' income 234.5 257.3 289.8 298.1 292.5 297.8 320.9 327.7 10 Business and professional 204.0 227.6 252.6 250.1 256.2 261.2 269.7 276.0 11 Farm1 30.5 29.7 37.2 48.1 36.3 36.6 51.3 51.6 12 Rental income of persons 8.5 9.0 16.7 17.4 17.2 18.4 20.0 18.9 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 456.6 489.7 518.3 514.5 523.6 526.6 533.7 541.5 16 Old-age survivors, disability, and health insurance benefits ... 235.7 253.4 269.2 266.4 272.4 273.5 278.0 282.3 17 LESS: Personal contributions for social insurance 132.7 148.9 159.6 158.8 160.1 161.8 166.7 168.4 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 3,713.4 19 LESS: Personal tax and nontax payments 440.2 485.9 512.2 504.2 515.3 532.0 536.1 578.0 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 3,135.4 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 3,041.4 22 EQUALS: Personal saving 164.1 127.1 130.6 166.0 108.9 109.0 138.4 94.0 MEMO Per capita (1982 dollars) 23 Gross national product 14,770.6' - 15,073.7' 15,368.3' 15,353.0 15,369.9 15,387.6 15,523.4 15,579.8 24 Personal consumption expenditures 9,488.6r 9,830.2' 10,141.9' 10,088.2 10,241.8 10,228.8 10,188.9 10,221.7 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 10,875.0 26 Saving rate (percent) 6.1 4.5 4.3 5.5 3.6 3.6 4.4 3.0 GROSS SAVING 27 Gross saving 568.5 531.3 532.0 538.7 516.2 515.3 554.3 549.5 28 Gross private saving 673.5 664.2 679.8 713.7 660.4 653.4 683.8 641.8 29 Personal saving 164.1 127.1 130.6 166.0 108.9 109.0 138.4 94.0 30 Undistributed corporate profits 94.0 99.6 92.6 93.6 92.6 78.5 75.6 71.4 31 Corporate inventory valuation adjustment -5.8 -.7 6.5 11.3 6.0 -8.9 -11.3 -18.8 Capital consumption allowances 32 Corporate 254.5 269.1 282.8 280.9 284.3 289.3 291.8 294.4 33 Noncorporate 160.9 168.5 173.8 173.2 174.6 176.6 178.0 182.0 34 Government surplus, or deficit (-), national income and product accounts -105.0 -132.9 -147.8 -175.0 -144.1 -138.1 -129.5 -92.3 35 Federal -169.6 -196.0 -204.7 -230.2 -203.7 -188.7 -170.5 -141.9 36 State and local 64.6 63.1 56.8 55.1 59.6 50.6 41.0 49.6 37 Gross investment 573.9 525.7 527.1 539.6 510.1 503.7 552.1 544.7 38 Gross private domestic 664.8 641.6 671.0 679.4 660.8 660.2 699.9 700.9 39 Net foreign -90.9 -115.9 -143.9 -139.8 -150.7 -156.5 -147.7 -156.2 40 Statistical discripancy 5.4 -5.6 -4.9 .9 -6.1 -11.6 -2.2 -4.8 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 Item credits or debits Ql Q2 Q3 Q4 Ql" 1 Balance on current account -107,013 -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 -1,454 219 1 1 1 2 3 4 Ch G S a p o n e l g d c e i a i l n d U ra .S w . in o g f fi r c ig ia h l ts r e ( s S e D rv R e s) a ssets (increase, -) -3 - , 9 1 7 3 9 0 0 -3 - , 8 8 9 5 7 8 0 -2 3 4 1 6 2 0 - - 1 2 1 7 5 4 0 -10 1 4 6 0 2 1 8 63 0 0 - 1 3 3 1 2 0 1,95 7 0 6 6 1 1 6 5 R Fo e r s e e i r g v n e c p u o r s r i e t n io c n i e i s n International Monetary Fund -1 - , 9 1 9 5 5 6 -3,8 9 6 0 9 8 1 -9 ,5 4 0 2 0 -1 3 8 4 5 4 -2 3 4 6 6 6 -3 5 9 0 1 8 -1 2 2 8 0 3 1,2 6 7 06 4 1 1 7 8 Ch B a a n n ge k - i r n e p U o . r S te . d p r c i l v a a im te s assets abroad (increase, -)3 - -1 1 1 3 , , 1 6 2 8 7 5 -2 -1 4 , , 3 7 2 1 3 1 - - 9 5 4 9 , , 3 0 7 3 4 9 -13 6 , , 4 3 1 7 5 3 - -1 2 4 5 , , 7 3 3 0 4 3 - - 2 1 3 8 , , 3 8 0 7 4 8 - -3 3 1 2 , , 8 3 0 5 0 1 2 1 7 6 , , 8 5 0 1 2 7 . 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 '-I,3i7' 21 U.S. direct investments abroad, net -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 liabilities4 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 -1,469 363 -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, net3 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 (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • October 1987 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are not seasonally adjusted. 1987 IItteemm 11998833 11998844 11998855 11998866 Jan. Feb. Mar. Apr. May June 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 205,639 223,976 218,815 226,808 16,755 19,360 21,776 20,496 20,784 21,126 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses, c.i.f. value .... 269,878 346,364 352,463 382,964 28,692 33,725 34,694 33.459 34,822 36.838 3 Trade balance -64,240 -122,389 -133,648 -156,156 -11,937 -14,365 -12,918 12,963 -14,039 -15,711 1. The Census basis data differ from merchandise trade data shown in table tions; military payments are excluded and shown separately as indicated above. 3.10, U.S. International Transactions Summary, for reasons of coverage and As of Jan. 1, 1987 census data are released 45 days after the end of the month. timing. On the export side, the largest adjustment is the exclusion of military sales Total exports and the trade balance reflect adjustments for undocumented exports (which are combined with other military transactions and reported separately in to Canada. the "service account" in table 3.10, line 6). On the import side, additions are made SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" for gold, ship purchases, imports of electricity from Canada, and other transac- (Department of Commerce, Bureau of the Census). 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1987 TTyyppee 11998844 11998855 11998866 Jan. Feb. Mar. Apr. May June July" 1 Total 34,934 43,186 48,517 49,386 49,358 48,824 46,591 45,913 45,140 44,318 2 Gold stock, including Exchange Stabilization Fund' 11,096 11,090 11,064 11,062 11,085 11,081 11,076 11,070 11,069 11,069 3 Special drawing rights2-3 5,641 7,293 8,395 8,470 8,615 8,740 8,879 8,904 8.856 8,813 4 Reserve position in International Monetary Fund" 11,541 11,947 11,730 11,872 11,699 11,711 11,745 11,517 11,313 10,964 5 Foreign currencies4 6,656 12,856 17,328 17,982 17,959 17,292 14,891 14,422 13,902 13,472 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. BeginningJuly 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 1987 AAsssseettss 11998844 11998855 11998866 Jan. Feb. Mar. Apr. May June July 1 Deposits 267 480 287 226 255 268 342 319 318 261 Assets held in custody 2 U.S. Treasury securities1 118,000 121,004 155,835 159,597 160,942 167,423 172,929 175,849 176,657 171,269 3 Earmarked gold2 14,242 14,245 14,048 14,041 14,046 14,036 14,031 14,031 14,034 14,010 1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. NOTE. Excludes deposits and U.S. Treasury securities held for international Treasury securities payable in dollars and in foreign currencies. and regional organizations. Earmarked gold is gold held for foreign and interna- 2. Earmarked gold is valued at $42.22 per fine troy ounce. tional accounts and is not included in the gold stock of the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A55 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1986 1987 AAsssseett aaccccoouunntt 11998833 11998844 11998855 Dec. Jan. Feb. Mar. Apr. May June? All foreign countries 1 Total, all currencies 477,090 453,656 458,012 456,628 457,298' 457,819 457,007' 485,166' 487,436 475,068 7 Claims on United States 115,542 113,393 119,706 114,685 116,035' 114,450 112,094' 128,069' 126,916 123,339 3 Parent bank 82,026 78,109 87,201 83,492 83,956' 82,588 81,677' 93,753' 92,218 89,395 4 Other banks in United States2 1 ,, ... 13,664 13,057 13,685 12,714 13,158 13,044 15,277 16,990 15,956 5 Nonbanks2 21,620 19,448 17,508 19,365 18,704 17,373' 19,039 17,708 17,988 6 Claims on foreigners 342,689 320,162 315,676 312,833 308,907' 310,687' 310,819' 321,699 328,087 319,868 7 Other branches of parent bank 96,004 95,184 91,399 96,281 91,543' 89,656 89,200 93,669' 101.309 101,232 8 117,668 100,397 102,960 105,237 105,384' 109,748 109,580 115,561' 113,971 107,130 9 Public borrowers 24,517 23,343 23,478 23,584 22,573' 22,418' 22,666' 22,765 23,295 22,684 10 Nonbank foreigners 107,785 101,238 97,839 87,731 89,407 88,865 89,373' 89,704 89,512 88,822 11 Other assets 18,859 20,101 22,630 29,110 32,356' 32,682' 34,094' 35,398 32,433 31,861 12 Total payable in U.S. dollars 371,508 350,636 336,520 317,487 308,712' 311,669 306,431' 329,259' 336,235 329,343 N Claims on United States 113,436 111,426 116,638 110,742 111,367' 110,011 107,245' 122,278' 121,458 118,353 14 Parent bank 80,909 77,229 85,971 82,082 82,194' 81,029 79,817' 91,798' 90,182 87,559 15 Other banks in United States2 1 13,500 12,454 12,830 11,531 12,102 11,907 13,468 15,354 14,647 16 Nonbanks2 20,697 18,213 15,830 17,642 16,880 15,521' 17,012 15,922 16,147 17 Claims on foreigners 247,406 228,600 210,129 194,941 185,547' 189,205 185,541' 192,715 201,261 198,408 18 Other branches of parent bank 78,431 78,746 72,727 72,197 65,732' 64,550 63,983 66,916' 75,014 75,771 19 Banks 93,332 76,940 71,868 66,421 63,608' 68,320 65,997 69,808' 69,395 66,877 70 Public borrowers 17,890 17,626 17,260 16,586 16,457 16,320 16,347' 16,512 16,812 16,271 21 Nonbank foreigners 60,977 55,288 48,274 39,737 39,750 40,015 39,214 39,479 40,040 39,489 22 Other assets 10,666 10,610 9,753 11,804 11,798' 12,453 13,645 14,266 13,516 12,582 United Kingdom 23 Total, all currencies 158,732 144,385 148,599 140,917 144,093 146,188 145,486 149,998 154,371 146,678 74 Claims on United States 34,433 27,675 33,157 24,599 28,720 28,851 28,503 31,001 34,427 30,859 7S Parent bank 29,111 21,862 26,970 19,085 23,330 23,326 23,303 25,315 28,935 25,944 76 Other banks in United States2 1,429 1,106 1,612 1,220 1,258 1,288 1,564 1,507 1,194 77 Nonbanks2 4,384 5,081 3,902 4,170 4,267 3,912 4,122 3,985 3,721 78 Claims on foreigners 119,280 111,828 110,217 109,508 108,720 110,274 109,297 111,113 112,997 107,789 79 Other branches of parent bank 36,565 37,953 31,576 33,422 30,218 29,575 28,782 29,936' 33,412 32,641 30 Banks 43,352 37,443 39,250 39,468 40,677 43,189 42,537 42,961' 41,216 37,181 31 Public borrowers 5,898 5,334 5,644 4,990 4,942 4,983 4,897 4,964 5,234 4,684 32 Nonbank foreigners 33,465 31,098 33,747 31,628 32,883 32,527 33,081 33,252 33,110 33,283 33 Other assets 5,019 4,882 5,225 6,810 6,653 7,063 7,686 7,884 6,947 8,030 34 Total payable in U.S. dollars 126,012 112,809 108,626 95,028 95,359 97,568 95,319 99,398 104,622 97,623 35 Claims on United States 33,756 26,868 32,092 23,193 27,070 27,290 26,665 29,066 32,542 29,252 36 Parent bank 28,756 21,495 26,568 18,526 22,673 22,749 22,662 24,689 28,228 25,286 37 Other banks in United States2 1,363 1,005 1,475 996 1,061 980 1,192 1,157 950 38 Nonbanks2 4,010 4,519 3,192 3,401 3,480 3,023 3,185 3,157 3,016 39 Claims on foreigners 88,917 82,945 73,475 68,138 65,022 66,872 64,466 66,257 68,469 64,676 40 Other branches of parent bank 31,838 33,607 26,011 26,361 22,720 22,578 21,785 22,339' 25,921 25,409 41 Banks 32,188 26,805 26,139 23,251 23,629 25,685 24,225 24,962' 23,263 20,998 47 Public borrowers 4,194 4,030 3,999 3,677 3,681 3,716 3,660 3,712 3,785 3,470 43 Nonbank foreigners 20,697 18,503 17,326 14,849 14,992 14,893 14,796 15,244 15,500 14,799 44 Other assets 3,339 2,996 3,059 3,697 3,267 3,406 4,188 4,075 3,611 3,695 Bahamas and Caymans 45 Total, all currencies 152,083 146,811 142,055 142,592 134,620' 133,229 134,189' 146,776' 141,668 142,048 46 Claims on United States 75,309 77,296 74,864 78,170 73,414' 68,873 67,586' 78,248' 73,351 72,480 47 Parent bank 48,720 49,449 50,553 54,575 48,807' 44,759 44,502' 52,086' 46,486 45,910 48 Other banks in United States2 1 11,544 11,204 11,156 10,625 10,924 10,855 12,649 14,494 13,659 49 Nonbanks2 16,303 13,107 12,439 13,982 13,190 12,229' 13,513 12,371 12,911 50 Claims on foreigners 72,868 65,598 63,882 59,883 56,076' 59,036 60,766' 62,770 63,021 65,220 51 Other branches of parent bank 20,626 17,661 19,042 17,296 14,511' 15,481 16,529 16,562 15,775 18,873 57 Banks 36,842 30,246 28,192 27,476 26,364' 28,139 28,568 30,917 31,352 30,934 53 Public borrowers 6,093 6,089 6,458 6,929 7,026 6,974 7,038' 7,120 7,304 7,025 54 Nonbank foreigners 12,592 11,602 10,190 8,182 8,175 8,442 8,631 8,171 8,590 8,388 55 Other assets 3,906 3,917 3,309 4,539 5,130' 5,320 5,837 5,758 5,296 4,348 56 Total payable in U.S. dollars 145,641 141,562 136,794 136,813 128,467' 126,605 127,160' 138,784' 133,323 135,207 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 • October 1987 3.14 Continued 1986 1987 iyo4 iyoj Dec. Jan. Feb. Mar. Apr. May JuneP All foreign countries 57 Total, all currencies 477,090 453,656 458,012 456,628 457,298' 457,819 457,007' 485,166' 487,436 475,068 58 Negotiable CDs3 n.a. 37,725 34,607 31,629 33,395 36,074 34,873 33,155 34,360 31,827 59 To United States 188,070 147,583 155,538 151,632 140,391' 140,341' 141,693' 152,698' 149,989 149,919 60 Parent bank 81,261 78,739 83,914 82,561 70,071r 73,095 71,092' 75,080' 74,551 78,369 61 Other banks in United States 29,453 18,409 16,894 15,646 15,051 13,602 13,695 16,913 16,908 16,560 62 Nonbanks 77,356 50,435 54,730 53,425 55,269' 53,644' 56,906' 60,705 58,530 54,990 63 To foreigners 269,685 247,907 245,939 253,775 262,780' 261,649' 260,659 278,022' 284,126 274,085 64 Other branches of parent bank 90,615 93,909 89,529 95,146 89,351' 88,524 87,867 94,590' 101,777 100,760 65 Banks 92,889 78,203 76,814 77,809 88,468' 86,037 84,976 92,704 90,236 81,619 66 Official institutions 18,896 20,281 19,520 17,835 19,532 19,818 20,591 21,293 23,058 21,965 67 Nonbank foreigners 68,845 55,514 60,076 62,985 65,429 67,270' 67,225 69,435 69,055 69,741 68 Other liabilities 19,335 20,441 21,928 19,592 20,732' 19,755 19,782 21,291 18,961 19,237 69 Total payable in U.S. dollars 388,291 367,145 353,712 336,406 322,920' 326,319 321,706' 340,408' 347,150 340,851 70 Negotiable CDs3 n.a. 35,227 31,063 28,466 29,921 32,407 31,148 29,505 30,763 27,980 71 To United States 184,305 143,571 150,162 143,650 131,876' 131,912' 132,765' 141,465' 141,087 141,457 72 Parent bank 79,035 76,254 80,888 78,472 65,443' 68,540 65,981' 68,403' 70,067 74,225 73 Other banks in United States 28,936 17,935 16,264 14,609 14,047 12,505 12,593 15,455 15,742 15,348 74 Nonbanks 76,334 49,382 53,010 50,569 52,386' 50,867' 54,191' 57,607 55,278 51,884 75 To foreigners 194,139 178,260 163,583 156,806 153,935' 154,416' 149,949 161,216 167,664 163,530 76 Other branches of parent bank 73,522 77,770 71,078 71,181 63,428' 63,640 62,172 67,278 74,769 74,136 77 Banks 57,022 45,123 37,365 33,850 36,864' 36,816 35,116 39,111 36,216 32,202 78 Official institutions 13,855 15,773 14,359 12,371 13,688 13,189 13,392 14,318 16,068 15,687 79 Nonbank foreigners 51,260 39,594 40,781 39,404 39,955 40,771' 39,269 40,509 40,611 41,505 80 Other liabilities 9,847 10,087 8,904 7,484 7,188' 7,584 7,844 8,222 7,636 7,884 United Kingdom 81 Total, all currencies 158,732 144,385 148,599 140,917 144,093 146,188 145,486 149,998 154,371 146,678 82 Negotiable CDs3 n.a. 34,413 31,260 27,781 29,432 32,233 30,968 29,311 30,226 27,511 83 To United States 55,799 25,250 29,422 24,657 19,465 22,501 21,433 23,936' 26,291 24,512 84 Parent bank 14,021 14,651 19,330 14,469 10,004 12,735 12,332 13,170' 15,145 14,745 85 Other banks in United States 11,328 3,125 2,974 2,649 2,154 2,154 1,816 2,205 2,273 2,109 86 Nonbanks 30,450 7,474 7,118 7,539 7,307 7,612 7,285 8,561 8,873 7,658 87 To foreigners 95,847 77,424 78,525 79,498 86,229 82,418 83,723 87,381' 89,673 86,041 88 Other branches of parent bank 19,038 21,631 23,389 25,036 23,595 21,230 21,371 22,421' 26,367 25,350 89 Banks 41,624 30,436 28,581 30,877 36,479 35,434 35,971 37,562 35,282 32,334 90 Official institutions 10,151 10,154 9,676 6,836 8,484 7,832 7,827 8,871 10,004 9,450 91 Nonbank foreigners 25,034 15,203 16,879 16,749 17,671 17,922 18,554 18,527 18,020 18,907 92 Other liabilities 7,086 7,298 9,392 8,981 8,967 9,036 9,362 9,370 8,181 8,614 93 Total payable in U.S. dollars 131,167 117,497 112,697 99,707 98,741 101,971 98,967 101,793 106,093 100,031 94 Negotiable CDs3 n.a. 33,070 29,337 26,169 27,701 30,175 28,868 27,189 28,345 25,695 95 To United States 54,691 24,105 27,756 22,075 16,829 19,894 18,940 21,144 23,561 21,850 % Parent bank 13,839 14,339 18,956 14,021 9,451 12,157 11,606 12,352 14,528 14,252 97 Other banks in United States 11,044 2,980 2,826 2,325 1,887 1,926 1,602 2,021 2,027 1,899 98 Nonbanks 29,808 6,786 5,974 5,729 5,491 5,811 5,732 6,771 7,006 5,699 99 To foreigners 73,279 56,923 51,980 48,138 51,174 48,610 47,531 49,708 51,029 49,089 100 Other branches of parent bank 15,403 18,294 18,493 17,951 16,386 14,691 14,471 14,367 18,430 17,654 101 Banks 29,320 18,356 14,344 15,203 18,626 18,207 18,027 19,498 15,555 13,864 102 Official institutions 8,279 8,871 7,661 4,934 6,096 5,176 4,924 5,786 7,214 6,985 10.3 Nonbank foreigners 20,277 11,402 11,482 10,050 10,066 10,536 10,109 10,057 9,830 10,586 104 Other liabilities 3,197 3,399 3,624 3,325 3,037 3,292 3,628 3,752 3,158 3,397 Bahamas and Caymans 105 Total, all currencies 152,083 146,811 142,055 142,592 134,620' 133,229 134,189' 146,776' 141,668 142,048 106 Negotiable CDs3 n.a. 615 610 847 995 855 813 883 1,092 1,118 107 To United States 111,299 102,955 103,813 105,248 99,052' 95,516' 98,912' 107,367' 101,542 102,824 108 Parent bank 50,980 47,162 44,811 48,648 40,869' 40,409 39,851' 43,315' 40,052 43,503 109 Other banks in United States 16,057 13,938 12,778 11,715 11,687 10,151 10,568 13,345 13,185 13,143 110 Nonbanks 44,262 41,855 46,224 44,885 46,496' 44,956' 48,493' 50,707 48,305 46,178 111 To foreigners 38,445 40,320 35,053 34,400 32,557' 34,758' 32,501 36,491 36,825 36,014 112 Other branches of parent bank 14,936 16,782 14,075 12,631 11,371' 12,972 11,673 13,891 13,359 14,023 113 Banks 11,876 12,405 10,669 8,617 8,080' 8,070 8,140 9,452 9,885 7,954 114 Official institutions 1,919 2,054 1,776 2,719 2,808 3,013 2,836 2,937 3,072 3,185 115 Nonbank foreigners 11,274 9,079 8,533 10,433 10,298 10,703' 9,852 10,211 10,509 10,852 116 Other liabilities 2,339 2,921 2,579 2,097 2,016' 2,100 1,963 2,035 2,209 2,092 117 Total payable in U.S. dollars 148,278 143,582 138,322 138,774 130,592 129,183 129,400' 140,796' 136,679 137,628 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 Dec. Jan. Feb. Mar. Apr.' May June" 1 Total1 180,348 178,380 211,706 213,416 215,512 227,043 235,937 236,012 236,455 By type ^ 2 Liabilities reported by banks in the United States" 26,090 26,734 27.626 27,629 29,438 31,237 32,661 31,296 29,791 3 U.S. Treasury bills and certificates' 59,976 53,252 75,650 75,718 75,434 79,629 84,640 81,553 80,663 U.S. Treasury bonds and notes 4 Marketable 69,019 77,154 91,534 93,032 93,866 99,703 102,192 106,638 110,188 S Nonmarketable , 5,800 3,550 1,300 1,300 1,300 1,300 1,300 1,300 700 6 U.S. securities other than U.S. Treasury securities 19,463 17,690 15,596 15,737 15,474 15,174 15,144 15,225 15,113 By area 7 Western Europe 69,818 74,447 88.289 89,681 90,914 99,711 105,720 107,966 109,069 8 Canada 1,528 1.315 2,004 3,383 3,761 5,110 3,922 3,482 3,502 9 Latin America and Caribbean 8,565 11,148 8.367 7,680 7,425 8,241 9,290 7,923 7,519 10 93,701 86,448 106,024 107,448 108,886 108,662 109,991 109,641 108,928 11 Africa 1,263 1,824 1.503 1,300 1,164 1,192 1,284 1,628 1,405 12 Other countries6 5,472 3,199 5.519 3,926 3,362 4,127 5,728 5,372 6,030 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 36,319 2 Banks' own claims 7,231 11,984 16,294 20,937 24,124 25,150 32,261 3 Deposits 2,731 4,998 8,437 11,072 13,220 13,173 13,722 4 Other claims 4,501 6,986 7,857 9,865 10,904 11,977 18,539 5 Claims of banks' domestic customers1 1,059 569 580 1,385 1,597 2,508 2,034 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 • October 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 Dec. Jan. Feb. Mar. Apr.' May June'' 1 A11 foreigners 369,607 407,306 435,726 538,895 525,505 522,597 524,768 552,326 555,635 539,492 2 Banks' own liabilities 279,087 306,898 341,070 404,760 392,094 388,147 389,715 412,186 415,626 400,315 3 Demand deposits 17,470 19,571 21,107 23,788 22,490 22,449 22,303 22,174 22,973 23,222 4 Time deposits 90,632 110,413 117,278 131,136 125,207 125,728 125,129 132,702 133,134 132,840 5 Other2 25,874 26,268 29,305 40,880 39,549 40,611 42,458 46,034 45,860 40,933 6 Own foreign offices3 145,111 150,646 173,381 208,956 204,848 199,359 199,825 211,275 213,659 203,320 7 Banks' custody liabilities4 90,520 100,408 94,656 134,134 133,411 134,450 135,054 140,141 140,010 139,178 8 U.S. Treasury bills and certificates 68,669 76,368 69,133 90,257 89,278 90,695 93,048 97,789 95,959 93,688 9 Other negotiable and readily transferable instruments6 17,467 18,747 17,964 16,523 14,656 13,839 14,744 14,625 15,953 16,582 10 Other 4,385 5,293 7,558 27,354 29,477 29,916 27,262 27,727 28,098 28,908 11 Nonmonetary international and regional organizations7 5,957 4,454 5,821 4,699 5,081 4,520 3,889 7,344 3,867 3,962 12 Banks' own liabilities 4,632 2,014 2,621 2,850 3,732 2,193 2,510 5,750 2,203 2,472 13 Demand deposits 297 254 85 199 183 157 246 159 106 72 14 Time deposits 3,584 1,267 2,067 2,066 2,515 1,488 1,230 3,100 960 950 15 Other2 750 493 469 584 1,034 548 1,033 2,490 1,137 1,451 16 Banks' custody liabilities4 1,325 2,440 3,200 1,849 1,349 2,326 1,379 1,594 1,664 1,490 17 U.S. Treasury bills and certificates 463 916 1,736 259 86 1,213 154 428 440 266 18 Other negotiable and readily transferable instruments6 862 1,524 1,464 1,590 1,261 1,112 1,225 1,152 1,224 1,224 19 Other 0 0 0 0 2 1 0 14 0 0 20 Official institutions8 79,876 86,065 79,985 103,275 103,346 104,872 110,866 117,302 112,849 110,454 21 Banks' own liabilities 19,427 19,039 20,835 25,134 25,403 26,880 28,103 29,675 28,433 26,401 22 Demand deposits 1,837 1,823 2,077 2,267 1,487 1,513 1,923 1,829 2,089 1,744 73 Time deposits1 7,318 9,374 10,949 10,752 11,335 11,385 11,135 12,527 11,017 12,226 24 Other2 10,272 7,842 7,809 12,115 12,580 13,982 15.044 15,318 15,327 12,431 25 Banks' custody liabilities4 60,448 67,026 59,150 78,142 77,944 77,992 82,763 87,627 84,415 84,052 26 U.S. Treasury bills and certificates' 54,341 59,976 53,252 75,650 75,718 75,434 79,629 84,640 81,553 80,663 27 Other negotiable and readily transferable instruments6 6,082 6,966 5,824 2,347 2,158 2,418 3,001 2,832 2,715 3,141 28 Other 25 84 75 145 69 140 132 154 147 248 29 Banks9 226,887 248,893 275,589 350,491 339,648 335,517 334,231 350,499 358,910 347,373 30 Banks' own liabilities 205,347 225,368 252,723 309,928 297,037 293,144 295,092 311,360 319,148 306,192 31 Unaffiliated foreign banks 60,236 74,722 79,341 100,971 92,189 93,785 95,268 100,084 105,489 102,872 32 Demand deposits 8,759 10,556 10,271 10,303 10,434 10,103 9,510 9,781 10,558 10,301 33 Time deposits1 37,439 47,095 49,510 64,245 57,912 60,007 61,856 64,926 68,113 67,872 34 Other2 14,038 17,071 19,561 26,424 23,844 23,675 23.902 25,378 26,818 24.700 35 Own foreign offices3 145,111 150,646 173,381 208,956 204,848 199,359 199,825 211,275 213,659 203.320 36 Banks' custody liabilities4 21,540 23,525 22,866 40,563 42,611 42,373 39,138 39,140 39,761 41,181 37 U.S. Treasury bills and certificates 10,178 11,448 9,832 9,962 9,826 10,486 9,744 9,538 9,774 9,066 38 Other negotiable and readily transferable instruments6 7,485 7,236 6,040 5,513 5,433 4,340 4,367 4,256 4,376 5,821 39 Other 3,877 4,841 6,994 25,089 27,352 27,547 25,026 25,346 25,611 26.294 40 Other foreigners 56,887 67,894 74,331 80,430 77,429 77,688 75,783 77,181 80,011 77,703 41 Banks' own liabilities 49,680 60,477 64,892 66,849 65,923 65,929 64,009 65,401 65,841 65,249 42 Demand deposits 6,577 6,938 8,673 11,019 10,386 10,676 10,623 10,405 10,220 11,105 43 Time deposits 42,290 52,678 54,752 54,073 53,446 52,848 50,908 52,148 53,043 51,792 44 Other2 813 861 1,467 1,757 2,091 2,405 2,479 2,848 2,578 2,352 45 Banks' custody liabilities4 7,207 7,417 9,439 13,580 11,507 11,759 11,773 11,780 14,169 12,454 46 U.S. Treasury bills and certificates 3,686 4,029 4,314 4,387 3,648 3,563 3,520 3,183 4,192 3,694 47 Other negotiable and readily transferable instruments6 3,038 3,021 4,636 7,074 5,804 5,969 6,150 6,385 7,638 6,395 48 Other 483 367 489 2,120 2,055 2,227 2,103 2,212 2,340 2,366 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,346 10,476 9,845 7,343 7,191 7,722 7,694 7,976 8,541 7,373 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 Dec. Jan. Feb. Mar. Apr.' May June'' 1 Total 369,607 407,306 435,726 538,895 525,505 522,597 524,768 552,326 555,635 539,492 2 Foreign countries 363,649 402,852 429,905 534,196 520,424 518,077 520,879 544,982 551,769 535,530 3 Europe 138,072 153,145 164,114 180,871 179,253 181,082 182,527 191,655 206,537 202,904 4 Austria 585 615 693 1,186 972 928 798 1,057 921 974 5 Belgium-Luxembourg 2,709 4,114 5,243 6,788 6,729 7,587 7,230 7,904 9,335 9,566 6 Denmark 466 438 513 485 449 520 623 425 459 425 7 Finland 531 418 496 580 565 762 937 942 909 616 8 France 9,441 12,701 15,541 22,850 21,372 22,654 23,835 27,399 27,858 27,947 9 Germany 3,599 3,358 4,835 5,823 6,813 5,907 7,412 6,419 10,077 7,115 10 Greece 520 699 666 706 745 749 641 601 643 691 11 Italy 8,462 10,762 9,667 10,875 9,375 8,489 10,101 11,337 11,726 11,943 1? Netherlands 4,290 4,731 4,212 5,558 5,155 5,354 4,968 5,967 5,442 4,787 13 Norway 1,673 1,548 948 737 678 554 495 567 571 503 14 Portugal 373 597 652 700 657 709 689 660 607 704 1") Spain 1,603 2,082 2,114 2,393 2,238 2,333 2,224 2,233 2,194 2,322 16 Sweden 1,799 1,676 1,422 889 884 1,062 1,065 1,251 1,496 1,297 17 Switzerland 32,246 31,740 29,020 30,967 28,913 27,555 27,544 26,500 27,074 28,639 18 Turkey 467 584 429 454 375 359 412 833 378 455 19 United Kingdom 60,683 68,671 76,728 85,352 87,911 90,105 88,390 91,765 102,308 99,395 20 Yugoslavia 562 602 673 631 554 565 564 526 429 433 71 Other Western Europe1 7,403 7,192 9,635 3,117 4,309 4,319 3,902 4,572 3,534 4,386 ?? U.S.S.R 65 79 105 80 21 23 30 32 37 36 23 Other Eastern Europe" 596 537 523 702 535 546 669 665 538 671 24 Canada 16,026 16,059 17,427 26,256 26,105 25,189 26,553 25,294 24,522 21,913 75 Latin America and Caribbean 140,088 153,381 167,856 208,949 195,666 191,636 195,412 206,806 204,528 195,523 76 Argentina 4,038 4,394 6,032 4,754 4,499 4,668 4,725 4,406 4,806 4,795 77 Bahamas 55,818 56,897 57,657 73,267 64,998 62,970 62,581 72,101 69,330 66,327 78 Bermuda 2,266 2,370 2,765 2,951 2,282 2,506 2,293 2,180 2,594 2,172 29 Brazil 3,168 5,275 5,373 4,321 3,813 3,797 3,693 3,616 3,960 3,673 30 British West Indies 34,545 36,773 42,674 71,151 66,775 65,509 69,860 69,213 70,266 65,156 31 Chile 1,842 2,001 2,049 2,053 2,208 2,046 2,060 2,253 2,034 1,972 37 Colombia 1,689 2,514 3,104 4.281 4,273 4,268 4,271 4,349 4,289 4,363 33 Cuba 8 10 11 7 6 7 6 6 26 8 34 Ecuador 1,047 1,092 1,239 1,235 1,049 1,120 1,014 1,044 1,093 1,121 35 Guatemala 788 896 1,071 1,122 1,124 1,081 1,082 1,164 1,167 1,122 36 Jamaica 109 183 122 136 149 145 230 149 189 158 37 Mexico 10,392 12,303 14,060 13,631 13,584 13,423 13,207 15,053 13,935 13,746 38 Netherlands Antilles 3,879 4,220 4,875 4,914 5,593 5,652 5,643 5,706 5,171 5,760 39 Panama 5,924 6,951 7,514 6,865 7,361 6,475 6,664 7,091 7,341 7,125 40 Peru 1,166 1,266 1,167 1,163 1,110 1,131 1,062 1,086 1,095 1,137 41 Uruguay 1,244 1,394 1,552 1,537 1,609 1,583 1,630 1,520 1,507 1,504 42 Venezuela 8,632 10,545 11,922 10,452 10,494 10,362 10,365 10,587 10,292 10,169 43 Other Latin America and Caribbean 3,535 4,297 4,668 5,109 4,741 4,894 5,026 5,280 5,432 5,218 44 58,570 71,187 72,280 108.969 112,058 113,439 108,942 112,345 107,784 106,549 China 45 Mainland 249 1,153 1,607 1,476 2,046 1,650 1,973 1,899 1,842 1,737 46 Taiwan 4,051 4,990 7,786 18,903 19,553 21,127 20,106 19,460 17,333 16,308 47 Hong Kong 6,657 6,581 8,067 9,518 9,388 9,329 9,160 9,357 9,365 9,123 48 India 464 507 712 673 663 686 500 526 569 714 49 Indonesia 997 1,033 1,466 1,548 1,410 1,591 1,414 1,460 1,243 1,773 50 Israel 1,722 1,268 1,601 1,890 1,761 1,892 1,666 1,302 1,084 1,229 51 Japan 18,079 21,640 23,077 47,437 49,997 50,921 48,983 53,392 50,434 49,334 57. Korea 1,648 1.730 1,665 1,141 1,058 1,017 1,129 1,177 1,343 1,401 53 Philippines 1,234 1,383 1,140 1,865 1,811 1,779 1,737 1,426 1,312 1,223 54 Thailand 747 1,257 1,358 1,120 1,282 1,224 1,235 1,131 1,174 1,144 55 Middle-East oil-exporting countries3 12,976 16,804 14,523 12,356 12,322 12,104 11,581 11,399 10,902 11,433 56 Other Asia 9,748 12,841 9,276 11,042 10,768 10,120 9,456 9,816 11,182 11,130 57 Africa 2,827 3,3% 4,883 4,019 3,661 3,499 3,457 3,702 4,003 3,757 58 Egypt 671 647 1,363 706 607 791 753 847 1,052 1,006 59 Morocco 84 118 163 92 74 76 99 101 86 106 60 South Africa 449 328 388 271 341 201 178 287 198 188 61 Zaire 87 153 163 74 54 42 40 39 74 58 62 Oil-exporting countries 620 1,189 1,494 1,518 1,336 1,156 1,108 1,212 1,267 1,115 63 Other Africa 917 961 1,312 1,358 1,248 1,233 1,278 1,216 1,326 1,285 64 Other countries 8,067 5,684 3,347 5,131 3,680 3,232 3,988 5,179 4,394 4,883 65 Australia 7,857 5,300 2,779 4,209 2,683 2,465 3,027 4,292 3,589 4,113 66 All other 210 384 568 922 997 767 960 888 805 770 67 Nonmonetary international and regional organizations 5,957 4,454 5,821 4,699 5,081 4,520 3,889 7,344 3,867 3,962 68 International 5,273 3,747 4,806 3,512 3,958 3,606 2,897 6,075 2,384 2,560 69 Latin American regional 419 587 894 1,033 960 762 788 850 994 1,047 70 Other regional' 265 120 121 154 164 152 204 420 488 356 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 • October 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 Dec. Jan. Feb. Mar. Apr. May June" 1 Total 391,312 400,162 401,608 444,257 421,086 417,258 414,321 439,040r 436,491 429,498 2 Foreign countries 391,148 399,363 400,577 441,273 421,017 417,081 413,777 434,309' 436,248 427,794 3 Europe 91,927 99,014 106,413 107,347 100,775 102,234 99,393 108,154' 115,387 114,467 4 Austria 401 433 598 728 641 549 660 750 668 782 3 Belgium-Luxembourg 5,639 4,794 5,772 7,503 7,556 8,905 8,083 8,544 9,956 9,757 6 Denmark 1,275 648 706 692 650 624 651 574 569 744 7 Finland 1,044 898 823 947 797 1,050 1,003 1,127 1,046 1,046 8 France 8,766 9,157 9,124 11,369 9,058 9,960 9,858 10,816' 12,076 12,029 9 Germany 1,284 1,306 1,267 1,818 2,269 1,725 1,632 1,371' 1,507 1,548 10 Greece 476 817 991 648 635 634 535 460 457 496 11 Italy 9,018 9,119 8,848 9,042 7,898 7,337 6,991 7,536 8,331 8,696 12 Netherlands 1,267 1,356 1,258 3,299 2,077 2,090 2,371 3,075 2,989 5,806 13 Norway 690 675 706 654 741 766 667 683 776 764 14 Portugal 1,114 1.243 1,058 706 677 679 737 615'' 641 659 15 Spain 3,573 2,884 1,908 1,459 1,479 1,637 1,768 1,977' 2,107 1,848 16 Sweden 3,358 2,230 2,219 1,945 2,280 2,422 2,464 2,417 2,618 2,333 17 Switzerland 1.863 2,123 3.171 3,049 2,622 2,413 2.338 2,905 3,593 2,614 18 Turkey 812 1,130 1,200 1,541 1,469 1,436 1,577 1,559 1,623 1,785 19 United Kingdom 47,364 56,185 62,566 58,282 55,856 56,387 54,035 59,864' 62,743 59,649 20 Yugoslavia 1,718 1,886 1,964 1,836 1,775 1,769 1,840 1,763 1,803 1,755 21 Other Western Europe1 477 596 998 540 522 477 781 670 515 581 22 U.S.S.R 192 142 130 345 396 401 367 375' 357 582 23 Other Eastern Europe2 1,598 1,389 1,107 944 1,379 971 1,032 1,073'' 1,012 993 24 Canada 16,341 16,109 16,482 20.958 20,749 19,186 19,829 20,225 19,341 19,112 25 Latin America and Caribbean 205,491 207,862 202,674 208,852 195,571 196,337 199,037 209,196' 204,255 201,438 26 Argentina 11,749 11,050 11,462 12,089 12,114 12,211 12,162 12,129' 12,335 12,254 27 Bahamas 59,633 58,009 58,258 59,547 52,090 52,952 53,679 62,639r 57,778 54,906 28 Bermuda 566 592 499 418 415 376 532 740 1,230 2,141 29 Brazil 24,667 26,315 25,283 25,666 25,798 25,810 26,082 25,986' 25,734 25,505 30 British West Indies 35,527 38,205 38,881 46,306 41,128 41,074 42,774 43,256'' 44,073 42,766 31 Chile 6,072 6,839 6,603 6,543 6,475 6,603 6,412 6,412' 6,326 6,554 32 Colombia 3,745 3.499 3,249 2,819 2,801 2,743 2,692 2,686' 2,650 2,648 33 Cuba 0 0 0 0 10 1 6 9 9 1 34 Ecuador 2,307 2,420 2,390 2,449 2,425 2,422 2,338 2,381 2,372 2,354 35 Guatemala3 129 158 194 140 133 145 135 120 115 109 36 Jamaica3 215 252 224 198 199 199 192 189 184 182 37 Mexico 34,802 34.885 31,799 30,607 30,289 29,999 29,817 30,119' 30.080 30,274 38 Netherlands Antilles 1,154 1,350 1,340 1,039 960 945 992 1,202 1,072 1,362 39 Panama 7,848 7,707 6,645 5,434 5,270 5,204 5,543 5,771' 4,791 4,933 40 Peru 2,536 2.384 1,947 1,643 1,635 1,626 1,593 1,601' 1,599 1,565 41 Uruguay 977 1,088 960 940 937 932 959 957 962 950 42 Venezuela 11,287 11,017 10,871 11,078 11,028 11,185 11,282 11,089' 11,046 11,032 43 Other Latin America and Caribbean 2,277 2,091 2,067 1,938 1,864 1,910 1,845 1,910 1,900 1,903 44 67,837 66,316 66,212 96,198 95,989 9911,,776677 8877,,778833 8888,,999900'' 8899,,557711 8855,,008855 China 45 Mainland 292 710 639 787 983 873 1,373 1,360' 1,175 993 46 Taiwan 1,908 1,849 1,535 2,675 2,617 2,890 2,910 3,278'' 3,592 3,300 47 Hong Kong 8,489 7,293 6,797 8,300 8,443 9,225 8,254 7,931' 7,725 7,638 48 India 330 425 450 321 333 325 486 314 379 429 49 Indonesia 805 724 698 718 699 679 652 627' 657 677 50 Israel 1,832 2,088 1,991 1,635 1,601 1,521 1,545 1,509 1,459 1,450 51 Japan 30,354 29,066 31,249 59,852 58,319 55,594 52,267 54,292 55,097 52,405 52 Korea 9,943 9,285 9.226 7,159 6,783 6,161 6,011 5,352' 6,078 5,210 53 Philippines 2,107 2,555 2,224 2,208 2,154 2,127 2,282 2,121 2,064 2,109 54 Thailand 1,219 1.125 845 577 521 557 492 461 540 552 55 Middle East oil-exporting countries4 4,954 5,044 4,298 4,122 5,483 4,892 5,150 4,598 3,797 3,806 56 Other Asia 5,603 6,152 6,260 7,845 8,053 6,922 6,362 7,148 7,009 6,513 57 Africa 6,654 6,615 5,407 4,621 4,618 4,678 4,853 4,795' 4,867 4,707 58 Egypt 747 728 721 567 577 593 618 574 585 599 59 Morocco 440 583 575 598 590 585 584 565 566 563 60 South Africa 2,634 2,795 1,942 1,531 1,534 1,548 1,550 1,578 1,591 1,506 61 Zaire 33 18 20 28 36 42 42 41 43 39 62 Oil-exporting countries 1,073 842 630 688 725 743 856 801' 840 818 63 Other 1,727 1,649 1,520 1,208 1,156 1,168 1,204 1,236 1,243 1,183 64 Other countries 2,898 3,447 3,390 3,297 3,316 2,878 2,882 2,949' 2,828 2,986 65 Australia 2,256 2,769 2,413 1,952 2,081 1,902 1,990 2,065' 1,897 1,980 66 All other 642 678 978 1,345 1,235 976 892 884 931 1,006 67 Nonmonetary international and regional organizations6 164 800 1,030 2,983 69 178 544 4,731' 244 1,703 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 Dec. Jan. Feb. Mar. Apr.' May June'' 11 TToottaall 444444222222666666,,,,,,222222111111555555 444444333333333333,,,,,,000000777777888888 444444333333000000,,,,,,444444888888999999 444444777777888888,,,,,,222222222222111111 421,086 417,258 444444444444555555,,,,,,888888999999999999'''''' 439,040 436,491 429,498 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 333333999999111111,,,,,,333333111111222222 444444000000000000,,,,,,111111666666222222 444444000000111111,,,,,,666666000000888888 444444444444444444,,,,,,222222555555777777 421,086 417,258 444444111111444444,,,,,,333333222222111111 439,040 436,491 429,498 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 555555777777,,,,,,555555666666999999 666666222222,,,,,,222222333333777777 666666000000,,,,,,555555000000777777 666666333333,,,,,,999999555555000000 61,794 61,709 666666222222,,,,,,777777333333777777 65,706 62,400 63,153 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111444444666666,,,,,,333333999999333333 111111555555666666,,,,,,222222111111666666 111111777777444444,,,,,,222222666666111111 222222111111111111,,,,,,777777555555999999 192,595 190,911 111111999999000000,,,,,,000000777777000000 206,944 203,583 196,802 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111222222333333,,,,,,888888333333777777 111111222222444444,,,,,,999999333333222222 111111111111666666,,,,,,666666555555444444 111111222222222222,,,,,,777777444444777777 121,036 120,287 111111111111777777,,,,,,000000666666333333 121,747 125,924 125,306 66 DDeeppoossiittss 444444777777,,,,,,111111222222666666 444444999999,,,,,,222222222222666666 444444888888,,,,,,333333777777222222 555555777777,,,,,,222222999999999999 54,376 55,526 555555333333,,,,,,666666555555222222 57,394 60,304 60,210 77 OOtthheerr 777777666666,,,,,,777777111111111111 777777555555,,,,,,777777000000666666 666666888888,,,,,,222222888888222222 666666555555,,,,,,444444444444777777 66,660 64,760 666666333333,,,,,,444444111111111111 64,353 65,620 65,096 88 AAllll ootthheerr ffoorreeiiggnneerrss 666666333333,,,,,,555555111111444444 555555666666,,,,,,777777777777777777 555555000000,,,,,,111111888888555555 444444555555,,,,,,888888000000111111 45,662 44,352 444444444444,,,,,,444444555555000000 44,643 44,584 44,238 99 CCllaaiimmss oof f bbaannkkss' ' ddoommeesstticic ccuussttoommeerrss""..... . 333333444444,,,,,,999999000000333333 333333222222,,,,,,999999111111666666 222222888888,,,,,,888888888888111111 333333333333,,,,,,999999666666444444 333333111111,,,,,,555555777777888888'''''' 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,,,,,,666666222222555555'''''''''''' 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 43,994 46,583 49,528 44,404' 46,773 45,513 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, p. and foreign branches, agencies, or wholly owned subsidiaries of head office or 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 States that represent claims on foreigners held by reporting banks for the account a 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. 1 Total 243,715 243,952 227,903 222,824 224,754 231,413 225,211 By borrower 2 Maturity of 1 year or less1 176,158 167,858 160,824 152,743 155,258 159,909 153,302 3 Foreign public borrowers 24,039 23,912 26,302 23,172 22,528 24,921 22,411 4 All other foreigners 152,120 143,947 134,522 129,571 132,731 134,988 130,891 5 Maturity over 1 year1 67,557 76,094 67,078 70,081 69,496 71,504 71,909 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 30904 By area Maturity of 1 year or less1 8 Europe 56,117 58,498 56,585 58,028 59,428 61,227 57,806 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 54,078 11 Asia 34,403 33,504 27,966 25,796 26.505 29,476 29,538 12 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 3,231 Maturity of over 1 year 14 Europe 13,576 9,605 7,634 7,945 7,230 6,826 6,954 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 • October 1987 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks12 Billions of dollars, end of period 1985 1986 1987 AArreeaa oorr ccoouunnttrryy 11998822 11998833 11998844 June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total 433.9 405.7 405.5 396.8 394.9 391.9 393.lr 389.9' 389.5' 390.0r 396.3 2 G-10 countries and Switzerland 167.8 148.1 153.0 146.7 152.0 148.5 156.6r 160.0' 158.9' 157.9 163.5r 3 Belgium-Luxembourg 12.4 8.7 9.3 8.9 9.5 9.3 8.3 9.0 8.5 8.4 9.1 4 France 16.2 14.1 14.5 13.5 14.8 12.3 13.8 15.1 14.7r 13.8 13.4 5 Germany 11.3 9.0 8.9 9.6 9.8 10.5 11.3 11.5 12.5 11.7 12.2r 6 Italy 11.4 10.1 10.0 8.6 8.4 9.8 8.5 9.3 8.1 9.0 8.6 7 Netherlands 3.5 3.9 3.8 3.7 3.4 3.7 3.5 3.4 3.9 4.6 4.4 8 Sweden 5.1 3.2 3.1 2.9 3.1 2.8 2.9 2.9 2.7 2.4 3.0 9 Switzerland 4.3 3.9 4.2 4.0 4.1 4.4 5.4 5.6 4.8 5.5 5.8 10 United Kingdom 65.3 60.3 65.4 65.7 67.1 64.6 68.6r 69.0r 70. lr 71.8 74.6 11 Canada 8.3 7.9 9.1 8.1 7.6 7.0 6.3 6.9 6.1 5.4 5.2 12 Japan 29.9 27.1 24.7 21.7 24.3 24.2 28.0 27.4 27.7 25.3 27.2 13 Other developed countries 36.0 33.6 32.8 32.3 32.0 30.4 31.6 30.6 29.4 26.0 26. lr 14 Austria 1.9 1.6 1.6 1.6 1.7 1.6 1.6 1.7 1.7 1.7 1.9 15 Denmark 3.4 2.2 2.1 1.9 2.1 2.4 2.5 2.4 2.3 1.7 1.8 16 Finland 2.4 1.9 1.8 1.8 1.8 1.6 1.9 1.6 1.7 1.4 1.4 17 Greece 2.8 2.9 2.9 2.9 2.8 2.6 2.5 2.6 2.3 2.3 2.1 18 Norway 3.3 3.0 2.9 2.9 3.4 2.9 2.7 3.0 2.7 2.4 2.1 19 Portugal 1.5 1.4 1.4 1.3 1.4 1.3 1.1 1.0 1.0 .8 .9 20 Spain 7.1 6.5 6.4 5.9 6.1 5.8 6.4 6.4 6.7 5.8 6.2 21 Turkey 1.7 1.9 1.9 2.0 2.1 1.9 2.3 2.5 2.1 2.0 1.9 22 Other Western Europe 1.8 1.7 1.7 1.8 1.7 2.0 2.4 2.1 1.6 1.4 1.6 23 South Africa 4.7 4.5 4.2 3.9 3.3 3.2 3.2 3.1 3.1 3.0 3.1 24 Australia 5.4 6.0 6.1 6.2 5.6 5.0 4.9 4.2 4.1 3.5 3.2 25 OPEC countries3 28.4 24.9 24.5 22.8 22.7 21.6 20.7 20.6 20.0 19.6 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 9.9 9.3 9.3 9.3 9.0 8.9 8.7 8.8 8.7 8.6 8.7 28 Indonesia 3.4 3.3 3.3 3.1 3.1 3.0 3.3 3.0 2.8 2.5 2.3r 29 Middle East countries 9.8 7.9 7.4 6.1 6.2 5.5 4.7 5.0 4.6 4.5 5.5 30 African countries 3.0 2.3 2.3 2.2 2.3 2.0 1.8 1.7 1.7 1.7 1.6 31 Non-OPEC developing countries 110.8 111.8 110.8 110.0 107.8 105.1 103.8 101.7 99.9 99.5 100.0 Latin America 32 Argentina 9.5 8.7 8.6 8.6 8.9 8.9 8.9 9.2 9.3 9.5 9.5 33 Brazil 23.1 26.3 26.4 26.6 25.5 25.6 25.7 25.4 25.3 25.3 25.6 34 Chile 6.4 7.0 7.0 6.9 6.6 7.0 7.0 7.1 7.2 7.1 7.3 35 Colombia 3.2 2.9 2.8 2.7 2.6 2.7 2.3 2.2 2.0 2.1 2.0 36 Mexico 25.8 25.7 25.5 25.3 24.4 24.2 24.1 23.9 23.9 23.9 23.9r 37 Peru 2.4 2.2 2.2 2.1 1.9 1.8 1.7 1.6 1.5 1.4 1.4 38 Other Latin America 4.2 3.9 3.8 3.7 3.5 3.4 3.3 3.3 3.3 3.1 3.0 Asia China 39 Mainland .3 .7 .7 .3 1.1 .5 .6 .6 .6 .4 .9 40 Taiwan 5.2 5.1 5.3 5.5 5.1 4.5 4.3 3.7 4.3 4.9 5.4 41 India .9 .9 .9 .9 1.1 1.2 1.2 1.3 1.3 1.2 1.7r 42 Israel 1.9 1.8 1.7 2.3 1.5 1.6 1.3 1.6 1.4 1.5 1.4 43 Korea (South) 11.2 10.6 10.4 10.0 10.4 9.4 9.5 8.7 7.3 6.7 6.2 44 Malaysia 2.8 2.7 2.7 2.8 2.7 2.4 2.2 2.0 2.1 2.1 1.9 45 Philippines 6.1 6.0 6.1 6.0 6.0 5.7 5.6 5.7 5.4 5.4 5.4 46 Thailand 2.2 1.8 1.7 1.6 1.7 1.4 1.3 1.1 1.0 .9 .9 47 Other Asia 1.0 1.1 1.1 .9 .9 1.0 .9 .8 .7 .7 .6 Africa 48 Egypt 1.5 1.2 1.1 1.0 1.0 1.0 .9 .9 .7 .7 .6 49 Morocco .8 .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 2.3 2.1 2.2 2.0 2.0 1.9 1.9 1.7 1.6 1.6 1.4 52 Eastern Europe 5.3 4.4 4.3 4.3 4.6 4.2 4.0 4.0 3.4 3.2 3.1 53 U.S.S.R .2 .1 .2 .3 .2 .1 .3 .3 .1 .1 .1 54 Yugoslavia 2.4 2.3 2.2 2.2 2.4 2.2 2.0 2.0 1.9 1.7 1.6 55 Other 2.8 2.0 1.9 1.8 1.9 1.8 1.7 1.7 1.4 1.4 1.3 56 Offshore banking centers 68.9 65.6 63.2 63.9 58.8 65.4 60.lr 56.3r 61.(T 64.2' 65.4r 57 Bahamas 21.7 21.5 20.1 21.1 16.6 21.4 21.5 17.3 20.0 22.5 23.8r 58 Bermuda .9 .9 .7 .9 .8 .7 .7 .5 .4 .7 .8 59 Cayman Islands and other British West Indies 12.2 11.8 12.3 12.1 12.3 13.4 11.3 13.0 13.2 14.5 13. Y 60 Netherlands Antilles 4.2 3.4 3.3 3.2 2.3 2.3 2.3 2.3 1.9 1.8 1.7 61 Panama- 5.8 6.7 5.5 5.4 6.1 6.0 4.4r 4.2r 5.1r 4.1r 5.5 62 Lebanon .1 .1 .1 .1 .0 .1 .1 .1 .1 .1 .1 63 Hong Kong 13.8 11.4 11.4 11.4 11.4 11.5 11.5 9.5 10.5 11.2 11.5 64 Singapore 10.3 9.8 9.9 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 16.8 17.3 16.9 16.9 17.3 16.9 16.3r 16.6r 17. C 19.6r IS.C 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 States1 Millions of dollars, end of period 1986 1987 Type, and area or country 11998833 11998844 11998855 Mar. June Sept. Dec. Mar. 1 Total 25,346 29,357 27,685 26,346 24,848 25,183 25,385 25,580 2 Payable in dollars 22,233 26,389 24,296 22,589 21,162 21,240 21,541 20,028 3 Payable in foreign currencies 3,113 2,968 3,389 3,757 3,686 3,943 3,844 5,551 By type 4 Financial liabilities 10,572 14,509 13,460 13,017 11,728 12,285 12,134 12,686 5 Payable in dollars 8,700 12,553 11,257 10,750 9,637 9,908 9,694 9,983 6 Payable in foreign currencies 1,872 1,955 2,203 2,267 2,091 2,376 2,440 2,703 7 Commercial liabilities 14,774 14,849 14,225 13,329 13,120 12,899 13,250 12.894 8 Trade payables 7,765 7,005 6,685 5,618 5,472 5,723 6,289 6,072 9 Advance receipts and other liabilities .. 7,009 7,843 7,540 7,711 7,648 7,175 6,961 6,822 10 Payable in dollars 13,533 13,836 13,039 11,839 11,525 11,331 11,847 10,046 11 Payable in foreign currencies 1,241 1,013 1,186 1,490 1,595 1,567 1,404 2,848 By area or country Financial liabilities 12 Europe 5,742 6,728 7,560 7,456 7,046 7,678 7,891 7,929 13 Belgium-Luxembourg 302 471 329 440 390 424 245 205 14 France 843 995 857 851 686 501 737 702 15 Germany 502 489 434 388 280 319 372 368 16 Netherlands 621 590 745 630 635 708 701 690 17 Switzerland 486 569 620 636 505 636 714 817 18 United Kingdom 2,839 3,297 4,254 4,167 4,252 4,660 4,830 4.886 19 Canada 764 863 839 832 367 362 402 431 20 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 23 Brazil 32 35 29 26 27 28 32 26 24 British West Indies 1,041 2,103 1,843 1,639 1,406 1,270 1,160 1,544 25 Mexico 213 367 15 20 30 18 22 30 26 Venezuela 124 137 3 3 3 5 3 3 27 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 countries- . 170 155 82 78 43 3 8 7 30 Africa 19 14 12 12 12 4 1 3 0 0 0 0 0 2 1 1 31 Oil-exporting countries3 27 41 50 32 104 76 79 88 32 All other4 Commercial liabilities 3,245 4,001 4,074 3,925 3,817 4,367 4,420 4,454 33 Europe 62 48 62 66 58 75 99 85 34 Belgium-Luxembourg 437 438 453 382 358 370 338 281 35 France 427 622 607 546 561 637 693 602 36 Germany 268 245 364 545 586 613 493 374 37 Netherlands 241 257 379 261 284 361 384 483 38 Switzerland 732 1,095 976 957 864 1,104 1,279 1,320 39 United Kingdom 40 Canada 1,841 1,975 1,449 1,445 1,367 1,312 1,386 1,350 41 Latin America and Caribbean 1,473 1,871 1,088 1,107 1,242 846 850 1,165 42 Bahamas 1 7 12 26 10 37 19 28 43 Bermuda 67 114 77 218 294 172 132 294 44 Brazil 44 124 58 64 45 43 59 81 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 4,931 49 Japan 1,247 1,256 1,799 2,039 2,100 2,136 2,046 2,443 50 Middle East oil-exporting countries2- 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 1,053 982 963 475 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 • October 1987 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1986 1987 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998833 11998844 11998855 Mar. June Sept. Dec. Mar. 1 Total 34,911 29,901 28,760 31,404 33,869 33,879 32,839 34,492 2 Payable in dollars 31,815 27.304 26,457 29.217 31,687 31,186 30,245 31,426 3 Payable in foreign currencies 3,096 2,597 2,302 2,187 2,182 2,693 2,594 3,067 By type 4 Financial claims 23,780 19,254 18,774 22,017 24,726 24,666 23,251 24,063 5 Deposits 18,496 14,621 15,526 18,633 21,418 19,262 18,167 18,239 6 Payable in dollars 17,993 14,202 14,911 18,176 20,863 18,698 17,614 17,491 7 Payable in foreign currencies 503 420 615 457 555 564 553 748 8 Other financial claims 5,284 4,633 3,248 3,384 3.308 5,404 5,083 5,824 9 Payable in dollars 3,328 3,190 2,213 2,291 2,287 4,042 3,799 4,481 10 Payable in foreign currencies 1,956 1,442 1,035 1,093 1,021 1,362 1,284 1,343 11 Commercial claims 11,131 10,646 9,986 9,387 9,142 9.213 9,588 10,429 12 Trade receivables 9,721 9,177 8,696 8,087 7,802 8,030 8,442 9,407 13 Advance payments and other claims 1,410 1,470 1,290 1,300 1,341 1,183 1,146 1,022 14 Payable in dollars 10,494 9,912 9,333 8,750 8,537 8,445 8,832 9,453 15 Payable in foreign currencies 637 735 652 637 606 767 756 976 By area or country Financial claims 16 Europe 6,488 5,762 6,812 7,204 10,155 10,452 8,656 9,265 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 91 140 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 8,437 23 Canada 5,989 3,988 3,260 4,020 4,429 3,956 4,056 3.828 24 Latin America and Caribbean 10,234 8,216 7,846 10,073 9,258 9,353 9,110 9,521 25 Bahamas 4,771 3,306 2,698 3,516 3,315 2,884 2,539 3,945 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 5,099 29 Mexico 293 215 180 178 176 173 173 164 30 Venezuela 134 125 48 43 42 40 24 23 31 Asia 764 961 731 619 776 740 1,317 1,220 32 Japan 297 353 475 350 499 390 986 957 33 Middle East oil-exporting countries" 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 3,618 38 Belgium-Luxembourg 135 165 175 148 131 126 127 143 39 France 459 440 426 384 391 415 387 418 40 Germany 349 374 346 399 418 401 428 454 41 Netherlands 334 335 284 221 230 184 199 163 42 Switzerland 317 271 284 247 228 233 213 195 43 United Kingdom 809 1,063 898 795 674 853 820 1016 44 Canada 829 1,021 1,023 1,061 965 950 909 1,821 45 Latin America and Caribbean 2.695 2,052 1,753 1,592 1,611 1,687 1,861 1,704 46 Bahamas 8 8 13 27 24 29 29 11 47 Bermuda 190 115 93 82 148 132 158 127 48 Brazil 493 214 206 217 193 207 229 211 49 British West Indies 7 7 6 7 29 23 55 22 50 Mexico 884 583 510 388 323 316 388 415 51 Venezuela 272 206 157 172 181 192 219 157 52 Asia 3,063 3,073 2,982 2,609 2,574 2,487 2,619 2620 53 Japan 1,114 1,191 1,016 801 845 792 840 936 54 Middle East oil-exporting countries" 737 668 638 630 622 600 506 466 55 Africa 588 470 437 491 450 469 464 425 56 Oil-exporting countries 139 134 130 167 170 168 134 141 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 Transactions, and area or country 1985 1986 Jan.- Dec. Jan. Feb. Mar. Apr. May June'' June U.S. corporate securities STOCKS 1 Foreign purchases 81,995 148,090 120,387 14,096 17,628 20,704 23,066 20,704 19,603 18,682 2 Foreign sales 77,054 129,382 101,963 12,320 15,964 17,599 18,003 17,392'' 15,952 17,054 3 Net purchases, or sales (-) 4,941 18,708 18,424 1,776 1,664 3,105 5,063 3,312 3,651 1,628 4 Foreign countries 4,857 18,916 18,585 1,696 1,744 3,204 5,026 3,250 3,687 1,673 5 Europe 2,057 9,559 7,862 557 1,061 1,786 1,841 1,027'' 1,478 669 6 France -438 459 1,804 113 140 446 656 332 123 107 7 Germany 730 341 -41 24 62 16 19 -101 118 -155 8 Netherlands -123 936 689 14 53 91 69 124 120 232 9 Switzerland -75 1,560 829 47 101 100 177 306 351 -206 10 United Kingdom 1,665 4,826 3,953 363 647 996 783 181 675 671 11 Canada 356 807 387 102 100 -118 343 252'' 48 -238 17 Latin America and Caribbean 1,718 3,029 1,671 220 308 331 372 36 334 290 13 Middle East1 238 976 -365 267 136 -175 -230 21 -90 -26 14 296 3,876 8,367 450 91 1,153 2,638 1,790 1,686 1,009 15 Africa 24 297 90 17 -1 15 1 59 45 -30 16 Other countries 168 373 572 84 49 212 61 65 185 -1 17 Nonmonetary international and regional organizations 84 -208 -161 80 -80 -100 37 6622 --3366 --4455 BONDS2 18 Foreign purchases 86,587 122,953 58,099 11,879 9,308 8,021 12,117 9,873'' 8,963 9,817 19 Foreign sales 42,455 72,499 42,174 7,741 7,180 5,457 8,281 6.559 6,823 7,874 20 Net purchases, or sales (—) 44,132 50,454 15,925 4,138 2,127 2,565 3,836 3.314' 2,140 1,943 21 Foreign countries 44,227 49,607 15,662 4,242 2,216 2,179 3,994 3,138' 2,270 1,866 7? Europe 40,047 39,126 13,022 3,065 1,372 1,402 3,600 2,864r 1,682 2,103 73 France 210 389 133 32 6 17 81 -22 7 43 74 Germany 2,001 -251 60 -19 -213 145 198 -121 -29 80 75 Netherlands 222 387 154 52 -7 -29 69 47 38 37 76 Switzerland 3.987 4,529 1,039 -117 66 78 558 50 182 105 77 United Kingdom 32,762 33,706 11,580 2,761 1,389 1,178 2,931 2,839' 1,544 1.698 78 Canada 190 548 683 153 -103 364 190 161 23 49 79 Latin America and Caribbean 498 1,468 639 102 103 98 65 123 254 -4 30 Middle East1 -2,648 -2,961 -215 -258 -57 -139 -12 62 59 -128 31 Other Asia 6,091 11,270 1,565 1,174 917 469 169 -73 252 -169 37 Africa 11 16 21 3 0 1 3 1 7 8 33 Other countries 38 139 -53 3 -16 -16 -22 0 -6 8 34 Nonmonetary international and regional organizations -95 847 263 -104 -88 386 -157 117766 --113300 7777 Foreign securities 35 Stocks, net purchases, or sales (-) -3,941 -1,912 -2,178 63 -204 -561 -708 -1,160" 669 -214 36 Foreign purchases 20,861 48,787 43,000 4,570 4,906 7,175 7,015 7,120 8,014 8,770 37 Foreign sales 24,803 50,699 45,177 4,507 5,110 7,736 7,722 8,280' 7,345 8,984 38 Bonds, net purchases, or sales (-) -3,999 -3,361 -94 -487 319 -70 -545 -579' -1,108 1,890 39 Foreign purchases 81,216 166,781 108,620 16,332 11,427 15,822 16,650 19,012 20,035 25,675 40 Foreign sales 85,214 170,142 108,714 16,818 11,108 15,891 17,195 19,591' 21,143 23,785 — 1,11*9 41 Net purchases, or sales (-), of stocks and bonds .... -7,940 -5,273 -2,272 -424 114 -631 -1,253 -439 1,676 42 Foreign countries -9,003 -6,357 -2,560 -873 -27 -711 -1,520 1,874' -457 2,028 43 Europe -9,887 -17,893 -6,753 -1,401 -226 -1,219 -682 -2,682' -1,952 8 44 Canada -1,686 -875 -2,106 -264 -3% -566 -202 -3 -414 -526 45 Latin America and Caribbean 1,797 3,479 661 233 389 104 -416 259 204 121 46 659 10,858 6,257 1,465 168 925 306 636 1,690 2,533 47 Africa 75 52 37 3 4 0 -1 8 20 6 48 Other countries 38 -1,977 -655 -909 34 45 -524 -91 -6 -112 49 Nonmonetary international and regional organizations 1,063 1,084 288 449 142 80 267 135 18 -353 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 • October 1987 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1987 1986 1987 Country or area 1985 1986 Jan.- Dec. Jan. Feb. Mar. Apr. May June'' June Transactions, net purchases or sales (-) during period1 1 Estimated total- 29,208 20,061 16,399 1,006 -436 961 7,028 -2,990 -248 12,084 2 Foreign countries- 28,768 21,164 17,323 -474 580 1,846 4,145 -1,405 3,731 8,426 3 Europe" 4,303 16,866 14,403 1,016 1,376 1,751 5,832 375 1,695 3,374 4 Belgium-Luxembourg 476 349 263 75 59 211 -35 -35 4 58 5 Germany" 1,917 7,531 7,637 -487 581 1,118 2,141 1,106 1,417 1,274 6 Netherlands 269 1,283 -95 -58 -366 41 -212 -22 352 111 7 Sweden 976 132 228 -236 -229 440 334 32 -166 -183 8 Switzerland2 773 310 3,680 -428 -135 473 1,641 652 413 636 9 United Kingdom -1,810 4,648 509 1,036 1,227 -15 328 -1,089 -524 582 10 Other Western Europe 1,701 2,613 2,218 1,114 236 -518 1,635 -230 198 896 11 Eastern Europe 0 0 -36 0 3 0 0 -40 1 0 12 Canada -188 881 2,290 297 846 -416 709 703 37 413 13 Latin America and Caribbean 4,315 875 -987 % -1,006 -290 -62 -30 -381 782 14 Venezuela 248 -95 96 29 -33 18 102 14 11 -17 15 Other Latin America and Caribbean 2,336 1,128 -1,219 95 -445 373 -156 -176 -302 -512 16 Netherlands Antilles 1,731 -159 135 -28 -528 -682 -8 133 -90 1,311 17 Asia 19,919 1,341 757 -2,067 -922 1,231 -2,378 -2,880 2,136 3,570 18 Japan 17,909 -77 315 -2,086 -76 1,767 -2,457 -2,561 -541 4,183 19 112 -54 -32 -14 6 -34 12 -15 11 -13 20 All other 308 1,255 892 198 280 -396 32 442 233 300 21 Nonmonetary international and regional organizations 442 -1,105 -924 1,478 -1,016 -885 2,883 -1,585 -3,980 3,659 22 International -436 -1,430 -49 1,412 -1,070 -886 2,833 — 1,347 -3,114 3,535 23 Latin American regional 18 157 13 0 0 0 11 0 0 3 Memo 24 Foreign countries2 28,768 21,164 17,323 -474 580 1,846 4,145 -1,405 3,731 8,426 25 Official institutions 8,135 14,380 18,653 309 1,498 834 5,837 2,489'' 4,447 3,550 26 Other foreign' 20,631 6,787 -1,331 -782 -918 1,012 -1,691 -3,894' -715 4,875 Oil-exporting countries 77 Middle East3 -1,547 -1,473 -1,797 -21 -721 -962 226 -120 636 -857 28 Africa4 7 5 20 0 1 1 17 0 0 1 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria, notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on July 31, 1987 Rate on July 31, 1987 Rate on July 31, 1987 Country Country Country Percent ef M fe o c n t t i h v e ef M fe o c n t t i h v e ef M fe o c n t t i h v e Austria.. 3.5 Jan. 1987 France 7.5 July 1987 Norway 8.0 June 1983 Belgium . 7.25 July 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 Kingdom" Canada.. 9.22 July 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 Feo- jary 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government comdiscounts Treasury bills for 7 to 10 days. mercial banks or brokers. For countries with more than one rate applicable to 2. Minimum lending rate suspended as of Aug. 20, 1981. such 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 1987 CCoouunnttrryy,, oorr ttyyppee 11998844 11998855 11998866 Jan. Feb. Mar. Apr. May June July 1 Eurodollars 10.75 8.27 6.70 6.10 6.32 6.37 6.73 7.25 7.11 6.87 2 United Kingdom 9.91 12.16 10.87 10.98 10.79 9.90 9.72 8.79 8.85 9.17 3 Canada 11.29 9.64 9.18 7.95 7.44 7.14 7.62 8.22 8.40 8.61 4 Germany 5.96 5.40 4.58 4.45 3.94 3.97 3.85 3.73 3.67 3.83 5 Switzerland 4.35 4.92 4.19 3.63 3.58 3.93 3.65 3.63 3.77 3.60 6 Netherlands 6.08 6.29 5.56 5.58 5.31 5.38 5.31 5.11 5.15 5.21 7 France 11.66 9.91 7.68 8.49 8.36 7.85 7.87 8.09 8.18 7.83 8 Italy 17.08 14.86 12.60 11.39 11.13 10.65 10.03 10.15 10.67 10.92 9 Belgium 11.41 9.60 8.04 7.88 7.75 7.49 7.21 7.13 6.78 6.54 10 Japan 6.32 6.47 4.96 4.23 3.98 4.00 3.92 3.77 3.71 3.74 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 • October 1987 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1987 CCoouunnttrryy//ccuurrrreennccyy 11998844 11998855 11998866 Feb. Mar. Apr. May June July 1 Australia/dollar 87.937 70.026 67.093 66.77 68.17 71.19 71.42 71.79 70.79 2 Austria/schilling 20.005 20.676 15.260 12.833 12.905 12.739 12.574 12.793 12.996 3 Belgium/franc 57.749 59.336 44.662 37.789 38.029 35.562 37.091 37.712 38.329 4 Brazil/cruzeiro 1841.50 6205.10 13.051 18.08 20.56 22.59 n.a. n.a. n.a. 5 Canada/dollar 1.2953 1.3658 1.3896 1.3340 1.3194 1.3183 1.3411 1.338 1.3262 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 6.8939 6.9166 6.8388 6.7333 6.8555 7.0179 8 Finland/markka 6.0007 6.1971 5.0721 4.5556 4.5102 4.4227 4.3604 4.4281 4.4882 9 France/franc 8.7355 8.9799 6.9256 6.0760 6.1091 6.0332 5.9748 6.0739 6.1530 10 Germany/deutsche mark 2.8454 2.9419 2.1704 1.8239 1.8355 1.8125 1.7881 1.8189 1.8482 11 Greece/drachma 112.73 138.40 139.93 133.88 134.68 133.502 133.35 136.06 139.313 12 Hong Kong/dollar 7.8188 7.7911 7.8037 7.7952 7.8017 7.8023 7.8049 7.8080 7.8090 13 India/rupee 11.348 12.332 12.597 13.062 12.924 12.8224 12.666 12.837 13.01 14 Ireland/pound1 108.64 106.62 134.14 145.93 145.54 147.49 149.59 147.25 144.99 15 Italy/lira 1756.10 1908.90 1491.16 1297.74 1305.90 1292.96 1290.80 1316.50 1337.96 16 Japan/yen 237.45 238.47 168.35 153.41 151.43 143.00 140.48 144.55 150.29 17 Malay sia/ringgit 2.3448 2.4806 2.5830 2.5418 2.5230 2.4861 2.4759 2.5078 2.5414 18 Netherlands/guilder 3.2083 3.3184 2.4484 2.0592 2.0731 2.0447 2.0154 2.0490 2.0814 19 New Zealand/dollar1 57.837 49.752 52.456 54.815 56.333 57.751 57.639 58.686 59.644 20 Norway/krone 8.1596 8.5933 7.3984 7.0067 6.9335 6.7781 6.6632 6.7147 6.7632 31 Portugal/escudo 147.70 172.07 149.80 141.62 141.48 140.339 139.18 142.12 144.51 22 Singapore/dollar 2.1325 2.2008 2.1782 2.1410 2.1418 2.1350 2.1202 2.1176 2.1183 23 South Africa/rand1 69.534 45.57 43.952 47.97 48.21 49.55 49.87 49.41 48.52 24 South Korea/won 807.91 861.89 884.61 857.38 856.11 845.00 832.53 818.39 811.81 25 Spain/peseta 160.78 169.98 140.04 128.62 128.86 126.975 125.28 126.33 126.97 26 Sri Lanka/rupee 25.428 27.187 27.933 28.662 28.823 28.902 28.988 29.171 29.405 27 Sweden/krona 8.2706 8.6031 7.1272 6.5016 6.4202 6.3210 6.2606 6.3482 6.4466 28 Switzerland/franc 2.3500 2.4551 1.7979 1.5403 1.5391 1.4968 1.4705 1.5085 1.5365 29 Taiwan/dollar 39.633 39.889 37.837 35.056 34.681 33.863 32.354 31.226 31.114 30 Thailand/baht 23.582 27.193 26.314 25.933 25.881 25.695 25.629 25.779 26.041 31 United Kingdom/point1 133.66 129.74 146.77 152.80 159.23 162.99 166.66 162.88 160.90 MEMO 32 United States/dollar 138.19 143.01 112.22 99.46 98.99 97.09 96.05 97.78 99.36 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

A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) .... Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1987 A89 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference 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 commercial banks, March 31, 1987 October 1987 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1986 December 1986 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1986 March 1987 A70 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 • October 1987 4.20 DOMESTIC AND FOREIGN OFFICES, Insured Commercial Bank Assets and Liabilities1-2 Consolidated Report of Condition, March 31, 1987 Millions of dollars Banks with foreign offices5'7 Bank o s f f w ic i e th s o d n o l m y8 e stic IItteemm TToottaall Total Foreign Domestic Over 100 Under 100 1 Total assets6 2,854,973 1,658,818 437,454 1,272,207 787,964 408,190 2 Cash and balances due from depository institutions 342,568 239,943 119,162 120,781 66,915 35,710 3 Cash items in process of collection, unposted debits, and currency 79,405 1,682 77,723 26,163 k 4 Cash items in process of collection and unposted debits and coin f n.a. n.a. 67,061 18,223 1 5 Currency and coin n.a. n.a. 10,662 7,941 n.a. 6 Balances due from depository institutions in the United States 1 34,989 20,595 14,394 23,141 1 7 Balances due from banks in foreign countries and foreign central banks n.a. 100,977 96,778 4,199 5,887 \ 8 Balances due from Federal Reserve Banks 1 24,571 107 24,465 11,724 MEMO 9 Noninterest-bearing balances due from commercial banks in the United 1 States (included in balances due from depository institutions in the U.S.) T n.a. n.a. 9,387 14,064 12,144 10 Total securities, loans and lease financing receivables, net 2,290,114 1,247,617 n.a. n.a. 687,912 354,586 11 Total securities, book value 481,226 192,091 26,573 165,518 171,166 117,969 12 U.S. Treasury securities and U.S. government agency and corporation obligations 216,961 99,661 657 99,004 105,147 12,152 13 U.S. Treasury securities n.a. 60,263 495 59,768 63,875 n.a. 14 U.S. government agency and corporation obligations n.a. 39,399 162 39,237 41,272 n.a. 15 All holdings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 59,117 30,518 129 30,389 16,446 12,152 16 All other n.a. 8,881 33 8,848 24,826 n.a. 17 Securities issued by states and political subdivisions in the United States 130,717 53,822 801 53,021 49,355 27,540 18 Taxable 2,170 248 0 248 907 1,014 19 Tax-exempt 128,547 53,574 801 52,773 48,447 26,526 20 Other securities 62,986 38,608 25,115 13,492 16,664 7,714 nn..aa.. 1122,,776600 888811 1111,,887799 1166,,332277 22 All holdings of private certificates of participation in pools of residential mortgages 6,294 3,326 0 3,326 2,011 957 23 All other 30,506 9,434 881 8,553 14,315 6,757 ">4 25,848 24,234 1,613 337 25 Federal funds sold and securities purchased under agreements to resell 127,232 52,467 233 52,234 43,407 31,358 26 Total loans and lease financing receivables, gross 1,725,937 1,028,111 228,871 799,240 486,576 211,249 27 LESS: Unearned income on loans 15,165 6,733 2,231 4,502 5,779 2,653 28 Total loans and leases (net of unearned income) 1,710,772 1,021,377 226,638 794,739 480,797 208,597 29 LESS: Allowance for loan and lease losses 29,008 18,213 n.a. n.a. 7,458 3,337 30 LESS: Allocated transfer risk reserves 107 106 n.a. n.a. 0 1 31 EQUALS: Total loans and leases, net 1,681,656 1,003,059 n.a. n.a. 473,339 205,259 Total loans, gross, by category 32 Loans secured by real estate 524,036 224477,,665500 16,727 230,923 184,488 91,898 33 Construction and land development n.a. n.a. n.a. 73,802 28,969 7,681 34 Farmland n.a. n.a. n.a. 1,482 3,685 8,048 35 1 4 family residential properties n.a. n.a. n.a. 87,163 85,862 49,951 36 Multifamily (5 or more) residential properties n.a. n.a. n.a. 8,265 5,677 1,934 37 Nonfarm nonresidential properties n.a. n.a. n.a. 60,211 60,295 24,284 38 Loans to depository institutions 67,293 60,224 30,082 30,142 6,262 806 39 To commercial banks in the United States n.a. 22,157 1,161 20,996 5,169 n.a. 40 To other depository institutions in the United States n.a. 4,635 222 4,414 792 n.a. 41 To banks in foreign countries n.a. 33,433 28,700 4,733 301 n.a. 42 Loans to finance agricultural production and other loans to farmers 29,151 5,328 391 4,937 6,310 17,513 43 Commercial and industrial loans 581,472 404,886 113,802 291,084 128,004 48,583 44 To U.S. addressees (domicile) n.a. 303,077 15,886 287,191 127,392 n.a. 45 To non-U.S. addressees (domicile) n.a. 101,809 97,917 3,892 612 n.a. 46 Acceptances of other banks 2,688 1,015 375 640 922 751 47 U.S. banks n.a. 289 23 267 n.a. n.a. 48 Foreign banks n.a. 725 352 374 n.a. n.a. 49 Loans to individuals for household, family and other personal expenditures (includes purchased paper) 313,506 140,321 11,846 128,474 127,282 45,903 50 Credit cards and related plans 78,702 42,492 n.a. n.a. 34,264 1,947 51 Other (includes single payment and installment) 234,803 97,829 n.a. n.a. 93,018 43,956 52 Obligations (other than securities) of states and political subdivisions in the U.S. (includes nonrated industrial development obligations) 58,075 36,189 597 35,592 19,242 2,644 53 Taxable 2,569 452 0 452 1,844 273 54 Tax-exempt 55,505 35,737 597 35,140 17,398 2,370 55 All other loans 122,076 109,419 50,456 58,963 10,056 2,602 56 Loans to foreign governments and official institutions n.a. 39,160 35,986 3,173 240 n.a. 57 Other loans n.a. 70,260 14,470 55,790 9,815 n.a. 58 Loans for purchasing and carrying securities n.a. n.a. n.a. 15,613 2,018 n.a. 59 All other loans n.a. n.a. n.a. 40,177 7,797 n.a. 60 Lease financing receivables 27,639 23,078 4,594 18,484 4,011 550 61 Assets held in trading accounts 43,024 41,593 18,603 22,990 1,035 396 62 Premises and fixed assets (including capitalized leases) 42,708 21,774 1 n.a. 13,586 7,348 63 Other real estate owned 9,742 3,916 t n.a. 3,155 2,671 64 Investments in unconsolidated subsidiaries and associated companies 2,531 1,861 1 n.a. 621 49 65 Customers' liability on acceptances outstanding 40,817 40,347 n.a. n.a. 449 22 66 Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs ... n.a. n.a. 1 40,294 n.a. n.a. 67 Intangible assets 4,073 2,705 I n.a. 1,215 153 68 Other assets 79,396 59,064 T n.a. 13,077 7,255 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A71 4.20 Continued Banks with foreign offices3 4 Bank o s f f w ic i e th s o d n o l m y5 e stic IItteemm TToottaall Total Foreign Domestic Over 100 Under 100 67 Total liabilities, limited-life preferred stock and equity capital 2,854,973 1,658,818 n.a. n.a. 787,964 408,190 68 Total liabilities7 2,671,722 1,566,497 436,988 1,180,351 731,922 373,303 69 Limited-life preferred stock 81 64 n.a. n.a. 15 1 70 2,204,632 1,183,218 331,796 851,423 656,504 364,910 71 Individuals, partnerships, and corporations 184,059 750,876 594,489 332,399 72 U.S. government 2,048 1,499 632 73 States and political subdivisions in the United States 35,804 40,255 26,173 74 Commercial banks in the United States n a. n.a. n.a. 36,526 11,806 1,788 75 Other depository institutions in the United States r 4,589 3,048 1,310 76 Banks in foreign countries r 7,943 192 n.a. 77 Foreign governments and official institutions 30,905 29,104 1,801 174 n.a. 78 Certified and official checks 20,075 12,461 627 11,834 5,044 2,571 79 All other8 n.a. n .a. 118,006 37 80 Total transaction accounts 311,518 197,031 98,958 81 Individuals, partnerships, and corporations 252,313 173,706 88,563 82 U.S. government 1,366 1,042 464 83 States and political subdivisions in the United States 6,837 8,435 6,452 84 Commercial banks in the United States n.a. n.a. n a. 26,766 6,936 409 85 Other depository institutions in the United States 4,061 1,779 486 86 7,245 81 n.a. 87 Foreign governments and official institutions 1,094 88 n.a. 88 Certified and official checks 11,834 55,,004444 2,571 89 All other 13 90 Demand deposits (included in total transaction accounts) 249,336 128,945 54,962 91 Individuals, partnerships, and corporations 191,505 109,540 48,608 92 U.S. government 1,362 1,004 446 93 States and political subdivisions in the United States 5,471 4,565 2,440 94 Commercial banks in the United States 26,766 6,931 408 95 Other depository institutions in the United States 4,060 1,769 476 % Banks in foreign countries 7,245 81 n.a. 97 Foreign governments and official institutions 1,092 7 n.a. 98 Certified and official checks 11,834 5,044 2,571 99 All other 13 100 Total nontransaction accounts 539,904 459,473 265,952 101 Individuals, partnerships, and corporations n.a. n.a. n a. 498,563 420,783 243,836 102 U.S. government 683 457 168 103 States and political subdivisions in the United States 28,967 31,820 19,721 104 Commercial banks in the United States 9,760 4,870 1,379 105 U.S. branches and agencies of foreign banks 888844 717 n.a. 106 Other commercial banks in the United States 88,,887766 4,153 n.a. 107 Other depository institutions in the United States 527 1,270 825 108 Banks in foreign countries 698 111 n.a. 109 Foreign branches of other U.S. banks 1111 88 n.a. 110 Other banks in foreign countries 668877 23 n.a. 111 Foreign governments and official institutions 707 166 n.a. 112 All other 24 113 Federal funds purchased and securities sold under agreements to repurchase 243,619 196,401 481 195,920 44,412 2,806 114 Demand notes issued to the U.S. Treasury n a. n.a. n.a. 4,315 1,241 215 115 Other borrowed money 91,959 74,274 31,351 42,923 16,908 777 116 Banks liability on acceptances executed and outstanding 40,993 40,527 9,123 31,404 445 21 117 Notes and debentures subordinated to deposits 17,158 14,594 n.a. n.a. 2,200 364 118 Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs n a. n a. n a. 10,549 n.a. n.a. 119 All other liabilities 67,590 53,167 n a. n.a. 10,213 4,210 120 Total equity capital9 183,170 92,257 n.a. n.a. 56,026 34,886 MEMO 121 Holdings of commercial paper included in total loans, gross 1,896 1,463 434 1,097 n.a. 122 Total individual retirement accounts (IRA) and Keogh plan accounts 30,196 30,163 15,250 123 23,615 3,627 611 124 Total brokered retail deposits 5,259 2,084 460 125 Issued in denominations of $100,000 or less 977 1,151 388 126 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 4,282 933 73 Savings deposits 127 Money market deposit accounts (MMDAs) 117755,,008877 136,438 59,376 128 Other savings deposits (excluding MMDAs) 67,867 65,623 33,524 129 Total time deposits of less than $100,000 127,778 169 128,372 130 Time certificates of deposit of $100,000 or more n.a. n.a. n.a. 141,468 84,131 43,100 131 Open-account time deposits of $100,000 or more 27,704 4,150 1,580 132 All NOW accounts (including Super NOW) 57,940 64,780 41,941 133 Total time and savings deposits 602,087 527,559 309,948 Quarterly averages 134 778833,,663355 447722,,885599 206,357 135 Obligations (other than securities) of states and political subdivisions in the United States 36,178 18,889 n.a. 136 Transaction accounts in domestic offices (NOW accounts, ATS accounts and telephone and preauthorized transfer accounts 82,974 69,608 44,349 Nontransaction accounts in domestic offices 137 Money market deposit accounts (MMDAs) 175,918 136,959 59,264 138 63,446 64,349 32,850 139 Time certificates of deposit of $100,000 or more 140,257 83,697 42,851 140 All other time deposits 154,781 175,255 130,863 141 Number of banks 13,895 256 n.a. 2,378 11,261 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • October 1987 4.21 DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or more or with foreign offices'-2 3 Consolidated Report of Condition, March 31, 1987 Millions of dollars Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 1 Total assets6 2,060,171 1,677,853 1,315,862 361,991 382,317 2 Cash and balances due from depository institutions 187,695 158,240 123,801 34,438 29,456 3 Cash items in process of collection and unposted debits 85,284 78,608 60,603 18,005 6,676 4 Currency and coin 18,602 15,308 12,554 2,754 3,294 5 Balances due from depository institutions in the United States 37,534 25,870 21,410 4,459 11,665 6 Balances due from banks in foreign countries and foreign central banks 10,086 7,756 6,049 1,708 2,330 7 Balances due from Federal Reserve Banks 36,188 30,698 23,185 7,513 5,491 8 Total securities, loans and lease financing receivables, (net of unearned income) 1,707,861 1,373,253 1,087,832 285,421 334,607 9 Total securities, book value 336,684 256,597 199,862 56,735 80,087 10 U.S. Treasury securities 123,643 94,311 75,339 18,972 29,331 11 U.S. government agency and corporation obligations 80,509 60,493 49,267 11,226 20,016 12 All holdings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 46,835 38,676 31,148 7,528 8,159 N All other 33,674 21,817 18,119 3,698 11,857 14 Securities issued by states and political subdivisions in the United States 102,376 80,558 59,304 21,254 21,818 15 1,156 637 535 101 519 16 Tax-exempt 101,220 79,922 58,769 21,153 21,298 17 Other domestic securities 28,206 19,573 15,432 4,140 8,633 18 All holdings of private certificates of participation in pools of residential mortgages 5,337 4,527 2,622 1,905 810 19 All other 22,868 15,046 12,810 2,235 7,823 20 Foreign securities 1,951 1,662 520 1,142 289 21 Federal funds sold and securities purchased under agreements to resell 95,640 79,072 59,215 19,856 16,569 22 Total loans and lease financing receivables, gross 1,285,817 1,045,363 834,682 210,681 240,454 23 LESS: Unearned income on loans 10,281 7,779 5,928 1,851 2,502 24 Total loans and leases (net of unearned income) 1,275,536 1,037,584 828,754 208,830 237,952 Total loans, gross, by category 25 Loans secured by real estate 415,411 318,351 270,460 47,891 9977,,005599 26 Construction and land development 102,771 83,832 68,691 15,141 18,938 77 Farmland 5,167 3,518 3,102 416 1,650 28 1-4 family residential properties 173,025 130,504 112,414 18,089 42,521 29 Multifamily (5 or more) residential properties 13,941 10,943 9,470 1,473 2,998 30 Nonfarm nonresidential properties 120,506 89,554 76,783 12,771 30,952 31 Loans to commercial banks in the United States 26,165 22,593 17,650 4,944 3,572 32 Loans to other depository institutions in the United States 5,206 4,980 3,892 1,088 226 33 Loans to banks in foreign countries 5,034 4,925 2,932 1,993 108 34 Loans to finance agricultural production and other loans to farmers 11,247 8,971 7,918 1,053 2,276 35 Commercial and industrial loans 419,087 346,517 266,623 79,894 72,570 36 To U.S. addressees (domicile) 414,583 342,552 263,349 79,202 72,031 37 To non-U.S. addressees (domicile) 4,504 3,965 3,274 692 539 38 Acceptances of other banks10 1,563 1,144 1,063 81 419 39 Of U.S. banks 561 447 406 41 114 40 429 336 332 5 93 41 Loans to individuals for household, family and other personal expenditures (includes purchased paper) 255,756 208,516 170,562 37,955 47,240 42 Loans to foreign governments and official institutions 3,414 3,254 2,362 892 160 43 Obligations (other than securities) of states and political subdivisions in the United States .... 54,834 45,926 34,264 11,662 8,908 44 2,296 1,514 1,285 230 782 45 Tax-exempt 52,538 44,411 32,979 11,432 8,127 46 65,605 59,979 40,939 19,040 5,626 47 Loans for purchasing and carrying securities 17,631 16,044 9,454 6,590 1,587 48 47,974 43,935 31,485 12,450 4,039 49 Lease financing receivables 22,495 20,206 16,017 4,189 2,289 50 Customers' liability on acceptances outstanding 30,838 29,884 20,901 8,983 955 51 Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs 40,294 36,012 26,901 9,111 4,282 52 133,777 116,477 83,328 33,149 17,300 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A73 4.21 Continued Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 53 Total liabilities and equity capital 2,060,171 1,677,853 1,315,862 361,991 382,317 54 Total liabilities7 1,912,273 1,557,908 1,223,233 334,675 354,365 55 1,507,927 1,190,428 951,610 238,818 317,499 56 Individuals, partnerships, and corporations 1,345,365 1,057,368 850,577 206,790 287,998 57 3,547 2,893 2,509 384 654 58 States and political subdivisions in the United States 76,059 57,027 47,776 9,251 19,032 59 Commercial banks in the United States 48,332 43,800 32,863 10,937 4,532 60 Other depository institutions in the United States 7,637 5,896 4,353 1,543 1,741 61 8,135 7,578 3,638 3,940 557 62 Foreign governments and official institutions 1,975 1,726 763 962 249 63 Certified and official checks 16,877 14,142 9,134 5,008 2,736 64 Total transaction accounts 508,549 417,546 324,998 92,548 91,003 65 Individuals, partnerships, and corporations 426,019 343,631 272,826 70,805 82,388 66 U.S. government 2,408 1,971 1,666 305 436 67 States and political subdivisions in the United States 15,272 12,218 9,908 2,310 3,054 68 Commercial banks in the United States 33,702 32,288 23,930 8,358 1,414 69 Other depository institutions in the United States 5,840 5,162 3,723 1,439 678 70 Banks in foreign countries 7,327 7,093 3,355 3,738 233 71 Foreign governments and official institutions 1,102 1,038 456 582 64 72 Certified and official checks 16,877 14,142 9,134 5,008 2,736 73 Demand deposits (included in total transaction accounts) 378,281 317,684 241,333 76,351 60,597 74 Individuals, partnerships, and corporations 301,045 247,598 192,260 55,338 53,447 75 2,366 1,993 1,630 303 433 76 States and political subdivisions in the United States 10,036 8,440 6,854 1,586 1,596 77 Commercial banks in the United States 33,697 32,284 23,926 8,358 1,413 78 Other depository institutions in the United States 5,829 5,153 3,716 1,436 676 79 Banks in foreign countries 7,326 7,093 3,355 3,738 233 80 Foreign governments and official institutions 1,099 1,037 455 582 62 81 Certified and official checks 16,877 14,142 9,134 5,008 2,736 8? Total nontransaction accounts 999,377 772,882 626,612 146,270 226,495 83 Individuals, partnerships, and corporations 919,346 713,736 577,751 135,985 205,609 84 U.S. government 1,139 922 842 80 218 85 States and political subdivisions in the United States 60,787 44,809 37,868 6,941 15,978 86 Commercial banks in the United States 14,631 11,512 8,934 2,578 3,118 87 U.S. branches and agencies of foreign banks 1,602 1,039 1,002 37 563 88 Other commercial banks in the United States 13,029 10,473 7,932 2.541 2,555 89 Other depository institutions in the United States 1,797 734 630 104 1,063 90 Banks in foreign countries 809 485 283 202 324 91 Foreign branches of other U.S. banks 99 13 8 5 86 9? Other banks in foreign countries 710 472 275 197 238 93 Foreign governments and official institutions 873 688 308 380 185 94 Federal funds purchased and securities sold under agreements to repurchase 240,332 218,957 165,122 53,835 21,375 95 Demand notes issued to the U.S. Treasury 5,556 5,050 3,575 1,476 506 % Other borrowed money 59,831 53,374 36,205 17,169 6,457 97 Banks liability on acceptances executed and outstanding 31,849 30,895 21,876 9,019 955 98 Notes and debentures subordinated to deposits 2,200 1,301 1,154 147 889988 99 Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs 10,549 9,792 8,579 1,213 775577 100 64,579 57,902 43,690 14,212 6,676 101 Total equity capital9 147,897 119,945 92,629 27,317 27,952 MEMO 10? Holdings of commercial paper included in total loans, gross 1,530 1,175 1,014 161 335555 103 Total individual retirement accounts (IRA) and Keogh plan accounts 60,359 46,749 38,595 8,154 13,610 104 Total brokered deposits 27,242 22,585 19,355 3,230 4,657 105 Total brokered retail deposits 7,342 5,793 4,902 890 1,550 106 Issued in denominations of $100,000 or less 2,128 1,267 1,223 44 861 107 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 5,215 4,525 3,679 846 689 Savings deposits 108 Money market deposit accounts (MMDAs) 311,526 245,288 119988,,331155 46,973 6666,,223377 109 Other savings accounts 133,490 103,242 80,611 22,631 30,249 110 Total time deposits of less than $100,000 296,909 221,741 187,666 34,075 75,168 111 Time certificates of deposit of $100,000 or more 225,598 174,304 141,564 32,740 51,294 11? Open-account time deposits of $100,000 or more 31,854 28,307 18,456 9,851 3,547 113 All NOW accounts (including Super NOW accounts) 122,720 93,958 78,455 15,503 28,762 114 Total time and savings deposits 1,129,646 872,744 710,277 162,467 256,902 Quarterly averages 115 1,256,494 1,022,439 816,630 205,809 223344,,005555 116 Obligations (other than securities) of states and political subdivisions in the United States 55,067 46,305 34,181 12,124 8,762 117 Transaction accounts (NOW accounts, ATS accounts and telephone preauthorized transfer accounts) 152,582 121,726 95,860 25,866 30,855 Nontransaction accounts 118 Money market deposit accounts (MMDAs) 312,877 246,637 199,951 46,686 66,239 119 Other savings deposits 127,795 98,278 77,200 21,079 29,517 170 Time certificates of deposit of $100,000 or more 223,953 173,543 141,866 31,677 50,410 121 All other time deposits 330,036 250,120 206,402 43,718 79,916 122 Number of banks 2,634 1,511 1,279 232 1,123 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • October 1987 4.22 DOMESTIC OFFICES, Insured Commercial Bank Assets and Liabilities12-3 Consolidated Report of Condition, March 31, 1987 Millions of dollars Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 1 Total assets6 2,468,361 1,850,604 1,457,957 392,647 617,757 2 Cash and balances due from depository institutions 223,406 174,030 137,132 36,898 49,376 3 Currency and coin 22,484 16,976 13,929 3,047 5,508 4 Noninterest-bearing balances due from commercial banks 35,594 20,796 17,319 3,476 14,799 5 Other 165,327 136,258 105,884 30,374 29,069 6 Total securities, loans, and lease financing receivables (net of unearned income) 2,065,785 1,524,071 1,211,458 312,613 541,714 7 Total securities, book value 454,653 303,743 238,316 65,427 150,910 8 U.S. Treasury securities and U.S. government agency and corporation obligations 286,867 187,203 150,777 36,426 99,664 9 Securities issued by states and political subdivisions in the United States 129,916 91,747 68,515 23,232 38,169 10 Taxable 2,170 979 817 162 1,191 11 Tax-exempt 127,746 90,768 67,698 23,070 36,978 12 Other securities 37,870 24,793 19,024 5,769 13,077 13 All holdings of private certificates of participation in pools of residential mortgages 6,294 4,942 2,939 2,003 1,353 14 All other 31,576 19,852 16,086 3,766 11,724 15 Federal funds sold and securities purchased under agreements to resell 126,998 93,692 71,651 22,041 33,307 16 Total loans and lease financing receivables, gross 1,497,066 1,135,588 908,374 227,214 361,478 17 LESS: Unearned income on loans 12,934 8,953 6,883 2,070 3,981 18 Total loans and leases (net of unearned income) 1,484,133 1,126,636 901,491 225,145 357,497 Total loans, gross, by category 19 Loans secured by real estate 507,309 335577,,330022 302,276 55,026 150,007 20 Construction and land development 110,452 87,391 71,650 15,742 23,060 13,216 6,294 5,332 963 6,921 22 1-4 family residential properties 222,976 151,959 129,758 22,201 71,017 23 Multifamily (5 or more) residential properties 15,876 11,740 10,131 1,609 4,136 24 Nonfarm nonresidential properties 144,790 99,917 85,406 14,512 44,872 25 Loans to depository institutions 37,211 33,001 24,934 8,066 4,210 26 Loans to finance agricultural production and other loans to farmers 28,760 15,373 12,975 2,398 13,387 467,670 368,315 284,508 83,807 99,355 28 Acceptances of other banks 2,314 1,499 1,348 151 815 29 Loans to individuals for household, family and other personal expenditures (includes purchased paper) 301,660 228,374 186,808 41,566 73,285 30 Obligations (other than securities) of states and political subdivisions in the United States 57,478 46,990 35,163 11,828 10,488 31 Nonrated industrial development obligations 2,569 1,626 1,380 246 944 32 Other obligations (excluding securities) 54,908 45,364 33,783 11,582 9,544 33 All other loans 71,621 64,319 44,175 20,144 7,302 34 Lease financing receivables 23,044 20,416 16,187 4,229 2,629 35 Customers' liability on acceptances outstanding 30,860 29,893 20,908 8,985 967 36 Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs 40,294 36,012 26,901 9,111 4,282 37 Remaining assets 148,311 122,610 88,459 34,151 25,701 38 Total liabilities and equity capital 2,468,361 1,850,604 1,457,957 392,647 617,757 39 Total liabilities7 2,285,576 1,716,054 1,353,455 362,599 569,522 1,872,837 1,344,607 1,078,714 265,893 528,229 41 Individuals, partnerships, and corporations 1,677,764 1,198,315 966,817 231,498 479,449 42 U.S. government 4,179 3,165 2,736 429 1,014 43 States and political subdivisions in the United States 102,232 67,072 56,101 10,971 35,160 44 Commercial banks in the United States 50,120 44,879 33,668 11,211 5,241 45 Other depository institutions in the United States 8,947 6,542 4,902 1,640 2,405 19,449 15,312 10,076 5,236 4,136 47 All other 10,147 9,322 4,417 4,905 825 48 Total transaction accounts 607,507 459,322 359,554 99,768 148,185 49 Individuals, partnerships, and corporations 514,583 381,116 303,958 77,158 133,467 50 U.S. government 2,872 2,175 1,837 338 697 51 States and political subdivisions in the United States 21,724 14,614 11,896 2,718 7,110 52 Commercial banks in the United States 34,111 32,576 24,055 8,521 1,535 53 Other depository institutions in the United States 6,326 5,391 3,918 1,473 935 54 Certified and official checks 19,449 15,312 10,076 5,236 4,136 55 All other 8,441 8,136 3,813 4,323 305 56 Demand deposits (included in total transaction accounts) 433,243 341,539 261,014 80,525 91,704 57 Individuals, partnerships, and corporations 349,653 268,653 209,752 58,901 81,000 58 U.S. government 2,813 2,129 1,794 335 684 59 States and political subdivisions in the United States 12.476 9,356 7,619 1,738 3,120 60 Commercial banks in the United States 34,105 32,571 24,051 8,521 1,534 61 Other depository institutions in the United States 6,305 5,378 3,908 1,470 927 62 Certified and official checks 19,449 15,312 10,076 5,236 4,136 63 All other 8,438 8,135 3,812 4,322 303 64 Total nontransaction accounts 1,265,329 885,285 719,160 166,125 380,044 65 Individuals, partnerships, and corporations 1,163,181 817,199 662,859 154,340 345,982 66 U.S. government 1,307 990 899 91 317 67 States and political subdivisions in the United States 80,508 52,458 44,205 8,253 28,050 68 Commercial banks in the United States 16,009 12,304 9,613 2,691 3,706 69 Other depository institutions in the United States 2,622 1,151 984 167 1,470 70 All other 1,706 1,186 604 582 520 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A75 4.22 Continued Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 71 Federal funds purchased and securities sold under agreements to repurchase 243,138 220,519 166,353 54,166 22,619 72 Demand notes issued to the U.S. Treasury 5,771 5,146 3,654 1,492 624 73 Other borrowed money 60,608 53,841 36,481 17,360 6,767 74 Banks liability on acceptances executed and outstanding 31,870 30,904 21,883 9,021 966 75 Notes and debentures subordinated to deposits 2,563 1,378 1,221 157 1,186 76 Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs 10,549 9,792 8,579 1,213 757 77 Remaining liabilities 68,789 59,659 45,149 14,510 9,130 78 Total equity capital9 182,785 134,549 104,501 30,048 48,236 MEMO 79 Assets held in trading accounts10 24,421 23,830 14,442 9,388 591 80 U.S. Treasury securities 11,307 11,272 6,118 5,154 35 81 U.S. government agency corporation obligations 3,670 3,628 2,150 1,478 42 82 Securities issued by states and political subdivisions in the United States 3,520 3,491 2,267 1,224 29 83 Other bonds, notes and debentures 433 431 280 151 2 84 Certificates of deposit 1,413 1,413 1,161 252 0 85 Commercial paper 129 129 129 0 0 86 Bankers acceptances 2,158 2,115 1,258 857 43 8877 Other 841 831 598 233 10 8888 Total individual retirement accounts (IRA) and Keogh plan accounts 75,609 52,853 43,653 9,200 22,756 89 Total brokered deposits 27,852 22,894 19,611 3,282 4,959 90 Total brokered retail deposits 7,803 6,027 5,098 929 1,776 91 Issued in denominations of $100,000 or less 2,516 1,459 1,382 77 1,056 92 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 5,287 4,567 3,715 852 720 Savings deposits 93 Money market deposit accounts (MMDAs) 370,902 271,675 220,035 51,639 99,227 94 Other savings deposits 167,014 117,319 91,901 25,418 49,695 95 Total time deposits of less than $100,000 425,281 272,621 229,211 43,409 152,661 % Time certificates of deposit of $100,000 or more 268,698 194,752 159,045 35,707 73,946 97 Open-account time deposits of $100,000 or more 33,434 28,918 18,966 9,952 4,516 98 All NOW accounts (including Super NOW) 164,660 111,246 92,797 18,449 53,415 99 Total time and savings deposits 1,439,594 1,003,068 817,700 185,368 436,526 Quarterly averages 100 Total loans 1,462,851 1,110,653 888,834 221,818 335522,,119988 101 Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) 196,931 140,002 110,540 29,462 56,929 Nontransaction accounts 102 Money market deposit accounts (MMDAs) 372,140 272,931 221,641 51,290 99,210 103 Other savings deposits 160,645 112,100 88,235 23,864 48,546 104 Time certificates of deposit of $100,000 or more 266,805 193,924 159,323 34,601 72,881 105 All other time deposits 460,899 301,832 248,691 53,141 159,066 106 Number of banks 13,895 5,844 4,752 1,092 8,051 1. Effective Mar. 31, 1984, the report of condition was substantially revised 5. The 'over 100' column refers to those respondents whose assets, as of June for commercial banks. Some of the changes are as follows: (1) Previously, banks 30 of the previous calendar year, were equal to or exceeded $100 million. (These with international banking facilities (IBFs) that had no other foreign offices were respondents file the FFIEC 032 or FFIEC 033 call report.) The 'under 100' column considered domestic reporters. Beginning with the Mar. 31, 1984 call report these refers to those respondents whose assets, as of June 30 of the previous calendar banks are considered foreign and domestic reporters and must file the foreign and year, were less than $100 million. (These respondents filed the FFIEC 034 call domestic report of condition; (2) banks with assets greater than $1 billion have report.) additional items reported; (3) the domestic office detail for banks with foreign 6. Since the domestic portion of allowances for loan and lease losses and offices has been reduced considerably; and (4) banks with assets under $25 million allocated transfer risk reserve are not reported for banks with foreign offices, the have been excused from reporting certain detail items. components of total assets (domestic) will not add to the actual total (domestic). 2. The "n.a." for some of the items is used to indicate the lesser detail 7. Since the foreign portion of demand notes issued to the U.S. Treasury is not available from banks without foreign offices, the inapplicability of certain items to reported for banks with foreign offices, the components of total liabilities (foreign) banks that have only domestic offices and/or the absence of detail on a fully will not add to the actual total (foreign). consolidated basis for banks with foreign offices. 8. The definition of 'all other' varies by report form and therefore by column 3. All transactions between domestic and foreign offices of a bank are in this table. See the instructions for more detail. reported in "net due from" and "net due to." All other lines represent 9. Equity capital is not allocated between the domestic and foreign offices of transactions with parties other than the domestic and foreign offices of each bank. banks with foreign offices. Since these intraoffice transactions are nullified by consolidation, total assets and 10. Components of assets held in trading accounts are only reported for banks total liabilities for the entire bank may not equal the sum of assets and liabilities with total assets of $1 billion or more; therefore the components will not add to the respectively, of the domestic and foreign offices. totals for this item. 4. Foreign offices include branches in foreign countries, Puerto Rico, and in U.S. territories and possessions; subsidiaries in foreign countries; all offices of Edge Act and Agreement corporations wherever located and IBFs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 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. BICOWN, 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 FRANKLIN D. DREYER, Deputy Director1 BRENT L. BOWEN, Inspector General 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

A77 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 • October 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 W. LEE HOSKINS 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

A79 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

A80 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. $14.50 each. 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

A81 PAMPHLETS FOR FINANCIAL INSTITUTIONS REVIEW OF THE TECHNIQUES AND LITERATURE, by Short pamphlets on regulatory compliance, primarily suit- Kenneth Rogoff. 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 1980-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

A82 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. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis Financial Innovation and Deregulation in Foreign Industrial and Alice P. White. September 1987. 14 pp. Countries. 10/85. Recent Developments in the Bankers Acceptance Market. 1/86. REPRINTS OF BULLETIN ARTICLES The Use of Cash and Transaction Accounts by American Most of the articles reprinted do not exceed 12 pages. Families. 2/86. Financial Characteristics of High-Income Families. 3/86. Limit of 10 copies 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

A83 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 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 18-20, 70-75 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, 71, 73, 75 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, 70, 72, 74 (See also Foreigners) Bonds (See also U.S. government securities) EMPLOYMENT, 45 New issues, 34 Eurodollars, 24 Rates, 24 Branch banks, 21, 55 FARM mortgage loans, 39 Business activity, nonfinancial, 44 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business expenditures on new plant and equipment, 36 Federal credit agencies, 33 Business loans (See Commercial and industrial loans) Federal finance Debt subject to statutory limitation, and types and CAPACITY utilization, 46 ownership of gross debt, 30 Capital accounts Receipts and outlays, 28, 29 Banks, by classes, 18, 71, 73, 75 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, 74 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, 70-75 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 Number, by classes, 71, 73, 75 Federal Reserve credit, 4, 5, 10, 11 Real estate mortgages held, by holder and property, 39 Federal Reserve notes, 10 Time and savings deposits, 3 Federal Savings and Loan Insurance Corporation insured Commercial paper, 23, 24, 37 institutions, 26 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 33 Construction, 44, 49, Finance companies Consumer installment credit, 40, 41 Assets and liabilities, 37 Consumer prices, 44, 50 Business credit, 37 Consumption expenditures, 51, 52 Loans, 40, 41 Corporations Paper, 23, 24 Nonfinancial, assets and liabilities, 36 Financial institutions Profits and their distribution, 35 Loans to, 19, 20, 21 Security issues, 34, 65 Selected assets and liabilities, 26 Cost of living (See Consumer prices) Float, 4 Credit unions, 26, 40. (See also Thrift institutions) Flow of funds, 42, 43 Currency and coin, 18, 70, 72, 74 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, 71, 73, 75 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 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, 71 INCOME, personal and national, 44, 51, 52 Depository institutions, 3, 4, 5, 12 Industrial production, 44, 47 Federal Reserve Banks, 10 Installment loans, 40, 41 U.S. reserve assets, 54 Insurance companies, 26, 30, 39 Residential mortgage loans, 38 Interest rates Retail credit and retail sales, 40, 41, 44 Bonds, 24 Consumer installment credit, 41 SAVING Federal Reserve Banks, 7 Flow of funds, 42, 43 Foreign central banks and foreign countries, 67 National income accounts, 51 Money and capital markets, 24 Savings and loan associations, 26, 39, 40, 42. (See also Mortgages, 38 Thrift institutions) Prime rate, 23 Savings banks, 26, 39, 40 International capital transactions of United States, 53-67 Savings deposits (See Time and savings deposits) International organizations, 57, 58, 60, 63, 64 Securities (See specific types) Inventories, 51 Federal and federally sponsored credit agencies, 33 Investment companies, issues and assets, 35 Foreign transactions, 65 Investments (See also specific types) New issues, 34 Banks, by classes, 18, 19, 20, 21, 26 Prices, 25 Commercial banks, 3, 16, 18-20, 39, 70 Special drawing rights, 4, 10, 53, 54 Federal Reserve Banks, 10, 11 State and local governments Financial institutions, 26, 39 Deposits, 19, 20 Holdings of U.S. government securities, 30 LABOR force, 45 New security issues, 34 Life insurance companies (See Insurance companies) Ownership of securities issued by, 19, 20, 26 Loans (See also specific types) Rates on securities, 24 Banks, by classes, 18-20 Stock market, selected statistics, 25 Commercial banks, 3, 16, 18-20, 70, 72, 74 Stocks (See also Securities) Federal Reserve Banks, 4, 5, 7, 10, 11 New issues, 34 Financial institutions, 26, 39 Prices, 25 Insured or guaranteed by United States, 38, 39 Student Loan Marketing Association, 33 MANUFACTURING Capacity utilization, 46 TAX receipts, federal, 29 Production, 46, 48 Thrift institutions, 3. (See also Credit unions 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, 71, 73, Federal funds and repurchase agreements, 6 75 Reserve requirements, 8 Trade, foreign, 54 Mining production, 48 Treasury cash, Treasury currency, 4 Mobile homes shipped, 49 Treasury deposits, 4, 10, 28 Monetary and credit aggregates, 3, 12 Treasury operating balance, 28 Money and capital market rates, 24 UNEMPLOYMENT, 45 Money stock measures and components, 3, 13 U.S. government balances Mortgages (See Real estate loans) Commercial bank holdings, 18, 19, 20 Mutual funds, 35 Treasury deposits at Reserve Banks, 4, 10, 28 Mutual savings banks, (See Thrift institutions) U.S. government securities Bank holdings, 18-20, 21, 30, 70, 72, 74 Dealer transactions, positions, and financing, 32 NATIONAL defense outlays, 29 Federal Reserve Bank holdings, 4, 10, 11, 30 National income, 51 Foreign and international holdings and transactions, 10, 30, 66 OPEN market transactions, 9 Open market transactions, 9 Outstanding, by type and holder, 26, 30 PERSONAL income, 52 Rates, 24 Prices U.S. international transactions, 53-67 Consumer and producer, 44, 50 Utilities, production, 48 Stock market, 25 Prime rate, 23 VETERANS Administration, 38, 39 Producer prices, 44, 50 Production, 44, 47 Profits, corporate, 35 WEEKLY reporting banks, 19-21 Wholesale (producer) prices, 44, 50 REAL estate loans Banks, by classes, 16, 19, 20, 39, 72 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 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 W. Lee Hoskins 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 DDaanniieell MM.. DDooyyllee 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 Memphis 38101 Katherine H. Smythe Paul I. Black, Jr. MINNEAPOLIS 55480 John B. Davis, Jr. Gary H. Stern Michael W. Wright Thomas E. Gainor Helena 59601 Warren H. Ross Robert F. McNellis KANSAS CITY 64198 Irvine O. Hockaday, Jr. Roger Guffey Robert G. Lueder Henry R. Czerwinski Denver 80217 James E. Nielson Enis Alldredge, Jr. Oklahoma City 73125 Patience S. Latting William G. Evans Omaha 68102 Kenneth L. Morrison Robert D. Hamilton DALLAS 75222 Bobby R. Inman Robert H. Boykin Hugh G. Robinson William H. Wallace Tony J. Salvaggio1 El Paso 79999 Mary Carmen Saucedo Sammie C. Clay Houston 77252 Walter M. Mischer, Jr. Robert Smith, III San Antonio 78295 Robert F. McDermott Thomas H. Robertson SAN FRANCISCO 94120 Fred W. Andrew Robert T. Parry Robert F. Erburu Carl E. Powell Los Angeles 90051 Richard C. Seaver Thomas C. Warren2 Portland 97208 Paul E. Bragdon Angelo S. Carella1 Salt Lake City 84125 Don M. Wheeler E. Ronald Liggett1 Seattle 98124 John W. Ellis Gerald R. Kelly1 *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER 1. Senior Vice President. http://fraser.2s.t loEuxiescfuetdiv.eo rVgi/c e President. Federal Reserve Bank of St. Louis

A86 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories 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