Federal Reserve Bulletin, 1988-01

VOLUME 74 • NUMBER 1 • JANUARY 1988 \ FEDERAL RESERVE ^ a' 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 • Donald L. Kohn • Michael J. Prell • 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 L DEVELOPMENTS IN THE U.S. loans, before the Subcommittee on Con- FINANCIAL SYSTEM SINCE THE sumer Affairs of the Senate Committee on MID-1970S Banking, Housing, and Urban Affairs, November 18, 1987. Some of the most profound financial 31 H. Robert Heller, Member, Board of Govchanges in U.S. history have occurred since ernors, discusses criminal misconduct and the end of 1976, including new kinds of insider abuse in our nation's financial instiinvestment and credit arrangements that tutions and says that significant progress have been accompanied by derivative inhas been made in dealing with these probstruments such as financial futures, options, lems, before the Subcommittee ori Comand swaps. merce, Consumer and Monetary Affairs of the House Committee on Government Op- 14 TREASURY AND FEDERAL RESERVE erations, November 19, 1987. FOREIGN EXCHANGE OPERATIONS The dollar came under heavy downward 38 ANNOUNCEMENTS pressure in mid-August and again in Octo- Announcement of 1988 fee schedules for ber to close the three-month period under services provided by the Federal Reserve review down 7 to 8 percent on balance Banks. against major foreign currencies. Amendment to Regulation Z. 18 INDUSTRIAL PRODUCTION Proposals affecting real estate investment Industrial production increased an esti- and development activites in a holding commated 0.6 percent in October. pany framework. Contract awarded for automated currency- 20 STATEMENTS TO CONGRESS processing equipment. Alan Greenspan, Chairman, Board of Gov- 40 RECORD OF FOLIC Y ACTIONS OF THE ernors, presents the views of the Board on FEDERAL OPEN MARKET COMMITTEE modernizing our financial system to adapt it to the important changes in technology and At its meeting on September 22, 1987, all of competition that have already transformed the members of the Committee indicated financial markets here and abroad, before that they preferred or could accept a directhe Subcommittee on Financial Institutions tive that called for maintaining the slightly Supervision, Regulation and Insurance of firmer degree of reserve pressure that had the House Committee on Banking, Finance been sought in recent weeks. With regard to and Urban Affairs, November 18, 1987. possible adjustments during the intermeet- 27 Martha R. Seger, Member, Board of Gov- ing period, the members indicated that ernors, discusses the rapid expansion of somewhat greater reserve restraint or home equity lines of credit and says that the somewhat lesser reserve restraint would be Board shares with the Congress the goal acceptable depending on developments rethat consumers receive adequate informa- lating to inflation, the strength of the busition when they contract for home equity ness expansion, and the performance of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

dollar in foreign exchange markets, while Ai FINANCIAL AND BUSINESS STATISTICS also taking account of the behavior of the A3 Domestic Financial Statistics monetary aggregates. The contemplated A44 Domestic Nonfinancial Statistics provision of reserves was expected to be A53 International Statistics consistent with growth in M2 and M3 at annual rates of around 4 percent and around A69 GUIDE TO TABULAR PRESENTATION, 6 percent respectively, for the four-month STATISTICAL RELEASES, AND SPECIAL period from August to December. Growth TABLES in Ml was expected to remain relatively slow over the same period. Because of the A76 BOARD OF GOVERNORS AND STAFF unusual uncertainty relating to the behavior of Ml and in keeping with the decision not A78 FEDERAL OPEN MARKET COMMITTEE to set a longer-run target for this aggregate, AND STAFF, ADVISORY COUNCILS the Committee decided to continue the practice of not specifying a numerical ex- A80 FEDERAL RESERVE BOARD pectation for its short-run growth. The PUBLICATIONS members agreed that the intermeeting range for the federal funds rate should be raised A83 INDEX TO STATISTICAL TABLES from 4 to 8 percent to 5 to 9 percent. A85 FEDERAL RESERVE BANKS, BRANCHES, LEGAL DEVELOPMENTS AND OFFICES Various bank holding company, bank ser- A86 MAP OF FEDERAL RESERVE SYSTEM vice corporation, and bank merger orders; and pending cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the U.S. Financial System since the Mid-1970s Thomas D. Simpson, Associate Director, Divi- 1. Debt owed by domestic nonfinancial sectors sion of Research and Statistics, prepared this Billions of dollars article. An earlier version of this article was presented at a conference on The New Financial Amount outstanding SSeeccttoorr System in Madrid, Spain, on October 8 and 9, 1976:4 1987:2 1987. The conference was organized by the Fundacion fondo para la Investigacion Economica y 1. U.S. government (Treasury) 515.8 1,873.9 a. Held by commercial banks 105.7 194.4 Social and the Fondation Internationale des Sci- b. Held by others 409.1 1,679.5 2. State and local governments 233.5 535.1 ences Humaines. a. Held by commercial banks 99.8 127.0e b. Held by others 145.6 408.1 3. Nonfinancial corporations 586.2 1,767.8 Since the mid-1970s, the United States has seen a. Banks 171.3 526.5 b. Commercial paper 11.0 67.9 some of the most profound financial change in its c. Corporate bonds 277.2 714.6 history. New kinds of investment and credit d. Other1 127.2 458.8 arrangements have proliferated at a bewildering MEMO Equity (market value) 787.6 2,834.7 pace, accompanied by derivative instruments 4. Farms and unincorporated businesses 322.5 1,094.4 such as financial futures, options, and swaps. a. Bank loans 32.8 67.0 Underlying many of these developments has b. Mortgages and other 289.7 982.4 5. Households 851.7 2,704.6 been an economy buffeted by inflation and disin- a. Consumer debt 243.9 719.3 Owed to commercial banks 118.0 317.6 flation and by large fiscal and external deficits. At Owed to others 125.9 401.7 the same time, competition in the financial mar- b. Home mortgages 529.4 1,724.2 c. Other debt 78.4 261.1 ketplace has become more intense, the U.S. 6. Total domestic nonfinancial debt ... 2,509.7 7,930.8 financial system has become more integrated MEMO GNP 1,843.7 4,457.1 with those abroad, and some parts of the finan- Debt as a percentage of GNP 136.1 177.9 cial system have been deregulated. 1. Includes mortgages and industrial development bonds, A perspective on this change can be gained by e Estimated. examining the expansion of debt owed by domestic nonfinancial sectors, shown in table 1. Be- than a tenth—implying a massive absorption by tween 1976 and mid-1987, aggregate debt (line 6) the nonbank public, including foreign purchasmore than tripled, while the gross national prod- ers. The rise in state and local debt over this uct, a very rough index of the capacity to service period (line 2) was less dramatic, again with most this debt, rose much less. As a consequence, the of it accumulated by nonbank holders. ratio of debt to GNP, which had been relatively The private sectors—households and nonfistable for most of the postwar period before the nancial businesses—also have been heavy borearly 1980s, has climbed markedly in recent rowers, especially in recent years. Businesses years. Pacing the expansion in total debt has (line 3) have tapped commercial banks and the been the indebtedness of the U.S. government bond market in volume; also of note is the sharp (line 1), which grew nearly %\V2 trillion over the rise in commercial paper, a nonbank source of 10!/2-year period, with the bulk of the expansion short-term funds used by a growing number of occurring during the 1980s. The share of out- firms. standing federal debt held by commercial banks Growth of household indebtedness (line 5), (line la) fell from about a fifth to only a little more including mortgages and consumer credit, also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • January 1988 has been substantial. A surge in revolving con- measured by the consumer price index—picked sumer credit—mostly at commercial banks—as- up in the late 1970s from already advanced sociated with a proliferation and growing use of levels; reached a peak of about 13 percent in 1979 credit cards captured much attention around the and 1980; and then fell off sharply. This inflamid-1980s. The trillion-dollar-plus advance in tionary experience profoundly affected the pubhome mortgages (line 5b) has provided the raw lic's expectations of inflation, which were a primaterial for a growing array of mortgage securi- mary factor in boosting interest rates in this ties; in addition, a portion of the buildup of period and in influencing wage negotiations in the mortgage debt has reflected borrowing against labor markets. Many consumers borrowed large accumulated home equity, a type of credit that sums, which they expected to repay in greatly has become popular of late while other forms of inflated dollars: real estate investments, which household debt have been losing their tax de- had been performing well in the inflationary ductibility. setting, were especially favored. In the event, Because this period of rapid debt expansion after 1981, earnings and prices, including real also has been one of unrealized expectations and estate prices, grew much less rapidly than exsevere hardship for many, certain parts of the pected, placing debt-servicing strains on many financial system, especially in the commercial borrowers. bank and thrift (or savings) sectors have experi- Fiscal deficits widened sharply in the early enced severe strains. These strains have been 1980s, reaching the $200 billion area (5 percent of evident in the earnings performance of the bank GNP) in the expansion years 1985 and 1986 and thrift industries, including massive losses by (chart 2). The resulting pressures on financial many thrift institutions and impairment of the markets are widely thought to have contributed industry's insurance fund. The financial system to the dollar's strength over much of the first half has been responding to financial losses by devel- of the 1980s, and to a worsening current account oping new ways of shifting risk. A better under- position (chart 2). The growing availability of standing of trends in the U.S. financial system savings from abroad likely acted to limit upward over the past ten years can be gained by reviewing the overall economic and financial background. 2. Current account deficit, federal deficit, and exchange value of the U.S. dollar Percent of GNP ECONOMIC AND FINANCIAL BACKGROUND Federal deficit A major feature of the economic setting over the past decade or so has been the inflation-disinflation process. As chart 1 shows, inflation—as Current account _J I I Index, March 1973 = 100 1. Consumer price index Exchange value of the U.S. dollar1 — 150 1. Index of weighted average exchange value of the U.S. dollar 1. Growth from fourth quarter to fourth quarter, except for 1987, against currencies of other Group of Ten countries plus Switzerland. when data shown are through the third quarter. Weights are global trade from 1972 through 1976 for each of the G-10. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the U.S. Financial System since the Mid-1970s 3 movements in domestic interest rates. Foreign 3. Debt ratios sources of funds thus reduced the extent to which interest-sensitive sectors of the economy, such as housing and investment, were constrained by resource transfers necessitated by large fiscal deficits. Conversely, export industries and those competing with imports bore more of the burden of the adjustment, and weaker earnings in these industries added to debt-servicing strains. The agricultural sector was particularly hard 1970 1975 1980 1985 1987 hit. Prices paid to U.S. farmers over the first half of the 1980s were depressed by the strong dollar and enlarged supplies of non-U.S. producers. it has for most of this period been accompanied Weak output prices contributed to the sharp by a massive buildup of financial assets. Those decline in farm income. Weaker income, together household units that have accumulated large with historically high interest rates over much of amounts of assets along with debt have built a this period, placed heavy debt-servicing strains cushion in the event that debt-servicing strains on farm borrowers and stress on many of their become excessive. The large buildup of debt in creditors. A plunge in the value of farmland used the corporate sector has been associated with a as collateral exacerbated the situation. wave of mergers, acquisitions, and corporate Energy producers, especially around the mid- restructurings, in which equity has been retired 1980s, also were adversely affected by external with the proceeds of debt issuance. Corporations developments, in particular the decline in oil that have increased their leverage in this way are prices. Although lower energy prices enabled the viewed as more vulnerable to an earnings disrupincomes of many borrowers to stretch further, tion, although many analysts believe that such energy producers experienced a sharp drop in higher levels of corporate leveraging impose their earnings and in their ability to service their more discipline on management to maximize debts. Owing to the geographic concentration of earnings from the corporation's assets and the energy industry, this development contrib- thereby to enlarge the cash flow available for uted to a generalized weakness in the so-called debt service. oil patch, most notably Texas. In reflection of the various debt strains, delin- BanklQaii$.to several heavily indebted devel- quency rates on bank loans have been very high oping countries also have soured. These coun- in recent years (table 2). In particular, farm loan tries have had difficulties servicing their external delinquencies have been on the order of 10 debt because of weak markets for their exports, percent or higher. Delinquencies on commercial high interest costs on these loans over much of and industrial loans, real estate loans, and conthis period, and their macroeconomic and struc- sumer loans, while distinctly lower than on farm tural policies. While much progress has been loans, have been at historically high levels. Loan made by these countries as a group, interest charge-offs, which generally follow delinquenpayments on some loans have been disrupted, cies, have risen considerably in recent years, and banks in the United States and elsewhere with increases evident in all major categories. have made large provisions for losses on devel- Downgradings of corporate debt in relation to oping-country debt. upgradings (chart 4) are another indicator of Meanwhile, debt growth in the household and credit quality in the business sector. Over the business sectors has greatly outpaced income in 1980s, the number of downgradings has been recent years (chart 3), adding to concerns about very high. Indeed, in the economic expansion credit quality. The degree to which the surge in since the 1981-82 recession, an unusually high household debt has strained the household sector number of bonds have been downgraded in that is somewhat uncertain because, in the aggregate, the number of downgradings typically falls as an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4 Federal Reserve Bulletin • January 1988 2. Delinquency rates at large insured commercial banks, by type of loan1 Delinquent loans as a percent of average amount outstanding, annual rate 1986 19873 TTyyppee ooff llooaann 1199883322 1199884422 1199885522 Q1 Q2 Q3 Q4 Q1 Q2 Real estate loans 6.61 5.79 5.25 5.46 5.30 5.02 5.19 5.44 5.08 Commercial and industrial loans .. 7.39 6.18 5.59 5.55 5.72 5.79 5.52 6.45 6.33 Consumer loans 2.65 2.59 3.01 3.38 3.20 3.17 3.33 3.44 3.29 Farm loans 10.85 11.14 9.39 12.60 12.52 10.58 10.36 13.87 12.66 Other loans in domestic offices4. 3.78 2.64 2.47 2.22 2.10 2.04 2.03 7.14 6.77 Loans in foreign offices 4.95 5.76 5.50 4.62 4.55 4.39 4.52 n.a. n.a. Total 5.74 5.11 4.73 4.59 4.55 4.44 4.46 5.82 5.57 MEMO Total for all banks — 5.54 5.01 4.78 4.84 4.79 4.62 4.61 5.72 5.45 1. Delinquent loans include nonaccrual loans, as well as those past Thus, loans previously reported for foreign offices are now included in due 30 days or more and still accruing. These data are for banks with loans by type. Also, in contrast to earlier data, which are averages of at least $300 million in assets, except the last row, which is calculated quarter ends, first-quarter data for 1987 are calculated on an end-offor all insured U.S.-chartered commercial banks. quarter basis. 2. Figures for 1983, 1984, and 1985 are averages of quarterly data. 4. Beginning in 1987, includes other loans booked in foreign offices, 3. Series break: Beginning in March 1987, banks report delinquent n.a. Not available. loans in domestic offices and foreign offices on a consolidated basis. expansion matures. In part, downgradings in short-term interest rates. As shown in table 3, recent years have reflected the sharp rise in both short-term and long-term rates became corporate leveraging. much more volatile beginning in late 1979 and Overall, the period since the mid-1970s has continuing through the early 1980s. Volatility been one of greater interest rate risk. Interest diminished subsequently, but it remains above that rate volatility increased greatly at the end of the of the 1970s. These events heightened the sensi- 1970s—at a time of higher interest rates (chart tivity of financial market participants to interest 5)—an event widely associated with the Federal rate risk, leading to many behavioral adaptations Reserve's shift to a reserves-based operating and new financial products—including financial procedure in October 1979. The objective of the futures and options. In particular, savings instioperating procedure was to obtain tighter control tutions that traditionally had raised short-term over the money stock in order to curb infla- funds to hold long-term assets sought various tionary pressures more effectively. A by-product ways to control and limit exposure to interest of this change was more scope for movements in rate risk; some did so through changes in portfo- 4. Changes in Moody's corporate bond ratings 5. Treasury rates1 Number Downgrades / V 150 / 100 / 50 i 1 1 1 1 I 1 1 1 1 1 1 1 1 i 1975 1980 1985 1987 1975 1980 1985 1987 Data for 1987 plotted through the second quarter. 1. Monthly data. SOURCE. Moody's Investors Service. 2. Before February 1977, data shown are for 20-year Treasury bonds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the U.S. Financial System since the Mid-1970s 5 3. Interest rate volatility measured as the standard 5 percent in earnings). In the thrift industry deviation of daily change (chart 7), earnings were depressed in the early Basis points 1980s by the adverse movement in interest margins accompanying the sharp rise in rate levels. Certificates of Period Treasury bills deposit Treasury bonds Subsequently, the top half of the industry has (3-month) (30-year) (3-month) recovered, while the poorer earners have slipped 1975-791 .... 7.1 6.0 2.7 dramatically. The bottom segment of the indus- 1979-822 — 28.9 32.4 14.4 try has created extraordinary difficulties for the 1982-873 8.1 8.9 8.0 Federal Savings and Loan Insurance Corpora- 1. September 1975 through August 1979 for 3-month bills and CDs. tion, which has recently required legislative ac- For the 30-year bond, the period is September 1977 through August tion to provide more financial resources to deal 1979. 2. October 1979 through September 1982. with insolvent institutions. 3. October 1982 through September 1987. The earnings problems faced by U.S. banking lio management, including the use of interest rate and thrift organizations added to their costs of futures and other hedging instruments. raising funds in the wholesale markets. More- J< Other developments have had a significant over, regulatory policy has shifted toward inimpact on the financial system since the mid- creased capital requirements for banks and thrift 1970s. The deregulation of deposit rates began in institutions. As capital requirements have bemid-1978, when a new retail deposit instrument, come more binding, banks and thrift institutions the six-month money market certificate, was have sought new ways of conducting business introduced with a regulatory rate ceiling that without adding to their assets that are subject to adjusted with rates in the open market. In early such requirements and have turned to so-called 1980, the Congress enacted the Depository Insti- off-balance-sheet activities and loan sales. tutions Deregulation and Monetary Control Act, The increasing sophistication of borrowers and landmark legislation that mandated the removal lenders in the financial marketplace is another of all interest rate ceilings in an orderly fashion important factor contributing to change in the by April 1986. In practice, rate ceilings were financial system. Against the backdrop of the taken off in stages, with the final measures oc- computer revolution and vast improvements in curring in early 1986. At present, banks are telecommunications, investors have become prohibited from paying interest only on demand more aware of alternatives and more sensitized deposits. to differentials in yields and risk, while borrow- Asset quality problems of U.S. banks have ers have become more aware of alternative bortaken their toll on bank earnings, especially for rowing opportunities. Closely related to the some institutions (chart 6). Earnings as a per- growing awareness of investment and borrowing centage of assets weakened over much of the alternatives has been a rising level of competition 1980s, with the erosion being highly pronounced at the poorer-performing institutions (the lowest 7. Dispersion of thrift institution earnings Return on assets, percent 6. Dispersion of commercial bank earnings Return on assets, percent _ 95th percentile -> 50th percentile industry average + 0 5th percentile's^ 2 1 1 1 1 1 1 1 1 1 1 1 1975 1980 1985 1987 Annual data for FSLIC-insured institutions. For 1987, data are for Annual data. For 1987, data are for the first half (annual rate). the first quarter (annual rate). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

6 Federal Reserve Bulletin • January 1988 in the financial marketplace. In the banking sec- has centered on the possible contribution of tor, foreign banks have gained a presence in U.S. these instruments to market volatility—including credit markets by establishing a large number of the collapse on October 19—while users of these banking offices, mainly in major money centers, instruments have been reassessing the degree to and have aggressively pursued U.S. customers which they satisfy hedging needs, especially in by emphasizing credit services and offering at- the event of extreme market turbulence. tractive terms. The number of branches and Interest rate futures were introduced in 1976 agencies of foreign banks has more than tripled and have figured prominently in efforts to shift over the past decade, while their share of the interest rate risk in the more volatile rate enviloan market—especially business loans—has ronment of the late 1970s and early 1980s. Interclimbed. est rate futures are one means available to com- Access by businesses to the open markets has mercial banks and savings institutions to limit improved over this period, most visibly in the their exposure to interest rate risk associated commercial paper market, which has expanded with maturity mismatches, traditionally a more several-fold from only about $10 billion outstand- serious problem for thrift institutions, which ing in the mid-1970s. Many borrowers have en- have depended on short-term deposits to fund tered this market, aided by bank credit lines long-term mortgages. Interest rate futures also supporting their paper issuance or by bank stand- have been used by underwriters of credit market by letters of credit. Also, a growing number of instruments to limit their exposure to interest firms has been able to tap the bond market for rate risk while they are originating and distributlong-term credit as the high-yield or "junk bond" ing new issues. Perhaps the major users of intermarket mushroomed in the mid-1980s. est rate futures, however, have been securities dealers with large trading-account positions. While many types of interest rate futures are RESPONSES OF THE available, those on Treasury bills, Eurodollar U.S. FINANCIAL SYSTEM deposits, and Treasury bonds have come to dominate the market. Because the correlation Against the background of heightened interest between prices for these instruments and those rate and credit risk and growing competition, on other securities is less than perfect, market financial institutions and markets have re- participants using such futures contracts to cover sponded in many ways, only some of which can positions in other securities are left with some be highlighted in this article. Among the more risk, so-called basis risk. On occasion, hedgers important have been the increasing reliance on using contracts in these instruments, especially futures markets as a means of shifting risk, futures on Treasury bonds, to cover positions in generally more prompt adjustment of deposit and other securities, such as mortgage securities, loan rates to changes in open market rates, have incurred appreciable losses owing to differoff-balance-sheet activities and asset sales by ential movements in prices. depositories, and securitization of credit. Futures and options on stock indexes were introduced around the time of the advance in Financial Futures prices of equities in 1982. These instruments enable market participants to shift the risk asso- Activity in financial futures and options has ciated with generalized market price developsoared since the introduction of these instru- ments. To many investors, the availability of ments in the 1970s. The number of contracts and futures and options has been viewed as a means types of users of these so-called derivative in- of protecting the value of a portfolio of securities, struments have expanded greatly, contributing to so-called portfolio insurance, by selling a futures the sharp rise in trading volume. A great deal of contract or acquiring a put option on a stock attention has focused on the markets for financial price index matching the securities actually held futures and options in the wake of the stock by the investor. Thus, losses arising from a market crash in October 1987. Public scrutiny market decline can be limited. Others have come Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the U.S. Financial System since the Mid-1970s 7 to view the futures and options markets as a tion of retail deposit rates, together with competlow-cost means of participating in general ad- itive forces, has led to prompter adjustment of vances or declines in markets; transactions costs deposit rates to movements in open market rates. associated with positions in options and futures The resulting pressures on costs also have contypically have been lower than those for cash tributed to the faster adjustment of loan rates to positions. As a consequence, price movements open market rates. This development has been frequently occur in futures and options contracts especially significant for small and medium-sized before they appear in the cash market; indeed, banks. Larger banks traditionally have relied many sophisticated arbitrage strategies have more on wholesale funds and have long been been developed to profit from this disparity. under more pressure to keep loan rates in align- Particularly controversial have been computer- ment with those in the open market: their wholedriven "program trading" strategies involving sale borrowing costs, primarily the rates on CDs the purchase or sale of a diversified basket of and federal funds, tend to move closely with stocks. Some believe that program trading, in- other open market rates, and their customers cluding arbitrage strategies, has contributed to tend to have better access to competing sources stock market volatility in recent years, especially of credit. Before the late 1970s, when the deregto the collapse in mid-October 1987. Studies have ulation process began, deposit and loan rates at been undertaken to examine the causes of that small and medium-sized banks moved very little, collapse, with particular emphasis on the role of even when open market rates swung quite portfolio insurance and arbitrage strategies. In sharply. Since deregulation began, such rates at addition, difficulties in getting prompt execution small- and medium-sized banks have become of orders in the cash market and the apparent more responsive to market developments. tendency for index futures to trade below com- The pricing of business loans also became parable prices in the cash market at that time more directly tied to open market rates over this have led to a reexamination of the use of index period, especially at larger banks. Contributing futures and options for hedging or arbitrage by to the shift from the prime rate, an administered many in the market. rate, to an open market reference rate were In principle, financial futures and options have foreign banks that were seeking a market share in enabled market participants to shift interest rate the United States through their branches and and market risk toward economic units that may agencies. Today, business loan customers combe better positioned and more willing to absorb monly have loan commitments with both prime it. As previously noted, the availability of finan- and open market base-rate options. In practice, cial futures and options probably has encouraged customers of the money center banks elect loans more underwriting and trading, tending to en- with a money market reference rate more often hance liquidity and affording borrowers greater than they choose prime rate loans, as table 4 access to the markets. On the other hand, hedg- shows. In May 1987, only a fifth of business loans ers using these instruments still are left with the extended by the very large money center banks risk that the price of the hedging instrument and the underlying position being hedged can di- 4. Pricing of business loan extensions at U.S. banks, verge, especially under turbulent market condi- May 1987 tions. In addition, futures and options contracts Percent of loan extensions enable those who are ill-equipped to handle the risk to engage more easily in speculation, with Nine money Other large Reference rate Other banks center banks banks' adverse consequences for other participants as well as for the functioning of the financial mar- Prime rate 21.1 29.0 54.0 kets. Federal funds rate... 37.7 25.8 16.7 Other domestic money market rate 25.5 20.7 12.0 Pricing of Loans and Deposits Foreign rate 4.3 9.4 6.2 Other 11.4 15.1 11.0 At commercial banks, the process of deregula- 1. Banks with assets of about $5 billion or more. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

8 Federal Reserve Bulletin • January 1988 were linked to the prime rate, while nearly two- banking organizations has fallen for many prefifths were linked to the federal funds rate and mium customers, as open market credit has another one-fourth were tied to other domestic become relatively less costly to them. money market rates, such as the CD or Treasury bill rate. Loans linked to interest rates outside Capital Requirements, Standby Letters of the United States (including the LIBOR) and Credit, and Loan Sales priced in other ways represented only a small fraction of the total. At other large banks, the In the midst of the profound changes taking place prime-based share is a little larger, and the open- in the financial system, the capital requirements market-based share, smaller but still well above on the large banks have been stiffened, in recogthat of a decade earlier. Most business loans nition of the increased risk exposure of these made by the smaller banks continue to be tied to banks and a desire to limit exposure of the the prime, although market-based lending by federal deposit insurance fund. Capital requirethese institutions has become significant. ments for the large banks were tightened both Meanwhile, some larger banks have sought to formally, by specifying a minimum primary capuse deregulated retail deposits as a means of ital ratio, and informally, through the examinareducing their dependence on wholesale funds. tion and applications process. Because off-bal- Retail deposits generally have been viewed as a ance-sheet activities were initially excluded from more stable source of funds than are wholesale or formal capital requirements, banks had an incenmanaged liabilities, especially at a time when the tive to expand such activities in lieu of placing availability of funds in the wholesale market loans on their books. In particular, standby letappears to be sensitive to shifts in sentiment ters of credit soared from about $40 billion in about the strength of banking organizations. 1980 to almost $170 billion in 1985 (chart 8) . Moreover, some institutions evidently have Through a standby letter of credit (SLC), a bank viewed the substitution of core deposits for could support the commercial paper, notes, or wholesale funds as a means of lowering interest bonds of a customer without maintaining the costs over the long run; at times, banks have level of capital that would be required if the used their freedom to set retail deposit rates to customer's obligation had been booked as a loan. bid aggressively for such balances, apparently The market regards the customer's obligation expecting to reduce their rates after an introduc- backed by the SLC much as it regards the bank's tory period or roll them over at lower rates. For obligation, thereby securing the customer access example, the share of assets funded by retail core to markets on terms comparable with those for deposits rose appreciably from a very low level the bank. This development has encouraged the at large money center banks in late 1982, after a separation of the credit support function of commajor deregulatory measure that introduced the mercial banks from the funding function. Since money market deposit account, and it has subse- 1985, however, the volume of SLCs has leveled quently edged higher. off as regulators have increasingly taken SLCs Viewed somewhat differently, the concern about the quality of large bank loan portfolios, 8. Standby letters of credit at all heightened since 1982 by events involving devel- insured commercial banks oping-country debt, has added to the premium Billions of dollars over open market rates that banks, some highly vulnerable banks in particular, have had to pay —150 on wholesale deposits, while also adding to the attractiveness of federally insured retail deposits. ^ ^ 1 00 The added premium that many banks now pay has put upward pressure on bank costs, and — 50 therefore more high-grade corporate borrowers 1 I 1 I 1 1 1 1 1 have gone directly to the open market for credit. 1976 1980 1985 1987 In essence, the attractiveness of credit offered by Quarterly data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the U.S. Financial System since the Mid-1970s 9 into account informally in the examination and of asset returns to the new higher level of market applications review processes, as the credit rat- rates. As a consequence, savings institutions ings of some banks deteriorated relative to their incurred record losses in the early 1980s and top customers, and as support grew for a pro- failures soared. posed risk-based capital standard that would Many of the surviving institutions have deinclude such off-balance-sheet activities in the voted greater effort to managing interest rate formal computation of capital requirements. That risk. These institutions and their supervisors now proposal took on an international dimension follow more closely their exposure to interest when authorities of the United States and the rate risk by monitoring gaps between the matu- United Kingdom proposed common treatment of rities of assets and liabilities. Several methods capital standards and, subsequently, when other have been used to shorten the repricing interval nations became involved. on assets and to lengthen the repricing interval Larger banks also have increasingly originated on liabilities. One is the adjustable-rate mortgage loans with a view to selling them or offering (ARM). Such mortgages typically have the same participations. In this way, they can collect orig- maturity as the standard fixed-rate mortgage but ination and servicing fees by advancing credit to carry interest rates that adjust at regular intervals an established customer yet need not hold capital to a benchmark rate. Commonly used benchmark against it, provided the buyer of the loan does not rates are the yield on one-year Treasury securihave recourse to the bank in the event of default ties and a published measure of the cost of funds (through a standby letter of credit or other guar- to savings institutions. The share of conventional antee). To date, banks—including foreign mortgages with adjustable-rate features was onebanks—presumably with less binding capital re- half or more of the total originated from mid-1983 quirements have bought a good portion of such to late 1985, a time when initial rates on these loans sold by large banks. This development mortgages were low compared with those on further unbundles the traditional banking rela- fixed-rate mortgages. Borrowers nonetheless tionship by separating the lending function, in continue to show a preference for fixed-rate this case into origination and funding compo- mortgages. Strong borrower interest in ARMs nents. Although most of these asset sales have has been evident only when rather large rate taken the form of business loans, a few banks, differentials between ARMs and fixed-rate mortwith the aid of investment bankers, have struc- gages have prevailed, with such differentials entured sales of automobile loans and other receiv- larged at times by concessionary terms granted ables, most notably credit card receivables, in by the lender in the first year of the mortgage. the form of pass-through participations in a pool Moreover, data on refinancings in 1986 and early of such claims or bonds backed by receivables. 1987 indicate that many ARM borrowers are quick to refinance with fixed-rate mortgage credit when such rates fall markedly. Adaptations by Savings Institutions Another method used by savings institutions to shorten the effective maturity of their assets is Savings institutions better appreciated the extent the collateralized mortgage obligation (CMO). of their vulnerability to interest rate risk in the The CMO is a multiclass pay-through bond seearly 1980s after the rise in the level of interest cured by mortgages or mortgage securities. Rerates across the maturity spectrum. This increase payments (including prepayments) are applied to in interest rates quickly added to the cost of different classes of bondholders at different rates. funds at thrift institutions, predominantly for The CMO enables the cash flow from a pool of shorter-term deposits, while returns on holdings mortgages, which is inherently uncertain because of fixed-rate mortgages did not register a com- of the prepayment option to be structured into pensating increase. Indeed, under these circum- various broad maturity classes. Savings institustances mortgage borrowers with relatively low tions have found the short maturity classes of fixed rates became less inclined to prepay, lead- CMOs an attractive form in which to hold morting to an even more sluggish upward adjustment gage assets because such CMOs have effective Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

10 Federal Reserve Bulletin • January 1988 maturities more in line with maturities on deposit acquired interest-only portions of mortgage pools liabilities and because they have yields that ex- as a hedge. ceed those on highly liquid money market instru- Meanwhile, the savings industry has rements. Recently, CMOs have been offered with sponded to maturity imbalances, higher capital an adjustable-rate feature, further enhancing the requirements, and borrower preferences for appeal to many thrift institutions. As noted be- fixed-rate mortgages by originating fixed-rate low, CMO issuance has soared in recent years, mortgages for sale. In this way, thrift institutions with savings institutions thought to be important can meet customer demands for mortgages and holders of the short maturity classes. In some earn an origination and servicing fee while not cases, thrift institutions retain the shorter matu- aggravating maturity mismatches or adding to rity classes of CMOs that they themselves issue capital requirements. Fixed-rate mortgages are while in others they acquire these classes from sold to other depository institutions but most other issuers. often to the Federal National Mortgage Associa- Savings institutions also have attempted to tion (FNMA) or the Federal Home Loan Mortlengthen effective maturities of liabilities. A tech- gage Corporation (FHLMC), two federally renique used by many savings institutions is the lated agencies that play a central role in the interest rate swap, in which the thrift in effect secondary mortgage market. These institutions trades an adjustable-rate obligation—that is, a pool such mortgages and issue pass-throughs, by regularly repriced obligation—for a fixed-rate which holders receive an undivided interest in obligation. The overall swap market has grown the pool. Savings institutions also swap mortdramatically from virtually nothing in the early gages for mortgage pass-through securities that 1980s to several hundred billion dollars recently, contain the mortgages sold. Pass-through securiwith savings institutions holding a significant ties are more liquid than the underlying mortshare of the fixed-rate component. gages and can be used as collateral for certain Savings institutions also compete aggressively kinds of borrowing. Another federal institution, for longer-term retail deposits. In relation to the Government National Mortgage Association commercial banks they typically offer a larger (GNMA), guarantees payments on pass-through premium for time deposit balances than for more securities issued against pools of federally inliquid accounts and generally have been more sured mortgage loans. successful than commercial banks in attracting time deposits, despite adverse publicity about the financial condition of the thrift Securitization industry. Another device recently developed by savings The securitization of loans, another major recent institutions to reduce risk is the mortgage strip, development in financial markets, has been most in which the interest flow from a pool of mort- evident for mortgages. The most prominent ingages and the principal are divided and sold as strument is the mortgage pass-through security. separate interest-only and principal-only securi- As chart 9 illustrates, mortgage pass-throughs ties. For the interest-only security, the average have grown from miniscule proportions of all length of the interest flow depends on the level of residential mortgage debt in the early 1970s to interest rates. As interest rates fall and principal about one-third, or $600 billion, in mid-1987. The prepayments pick up, cash flow on the interest- strong growth in mortgages in 1985 and 1986 and only security declines. Conversely, if interest borrower preference for fixed-rate mortgages rates rise and prepayment activity slows, cash helped to boost pass-through volume substanflow on the interest-only security improves. As a tially. Federally related mortgage passconsequence, the interest-only security is throughs—those guaranteed or issued by thought to be a hedge against a rise in market GNMA, FNMA, and FHLMC—account for all rates for an institution with a maturity mismatch but a small portion of mortgage pass-throughs. in the form of more long-term assets than liabil- The standardization requirements for underlying ities. Some thrift institutions reportedly have mortgages, the liquidity generated by the size of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the U.S. Financial System since the Mid-1970s 11 9. Home mortgage debt outstanding been used to enhance both types of passthroughs. Banks selling off such loans are able to Trillions of dollars relieve some pressure on capital positions while collecting origination and servicing fees. For such consumer receivables, prepayment uncertainty is minimal, in part because the incentive to prepay when interest rates change is relatively small. At present, the amount of securitized automobile and credit card receivables is rather small, on the order of $15 billion, mostly in the form of automobile securities. While banks have 1. Pools include GNMA, FHLMC, and FNMA pass-throughs only. been the only issuers of credit card pass-through the market, and the federal support of the pools securities, automobile finance subsidiaries are have led to their dominance in the market. Nev- thought to have a larger share in the securitizaertheless, even though such securities are not tion of automobile paper. viewed as entailing much, if any, credit risk to The term "securitization" has been applied to investors, they do embody a significant amount much more than pools of mortgages and conof prepayment risk. As already noted, mortgage sumer loans and their derivative instruments. prepayments tend to rise as mortgage rates fall— Some have viewed as securitization the sale of reflecting refinancing of existing mortgages and business loans and the growing reliance on the more turnover of homes—and to decline as mort- commercial paper market by firms that had been gage rates increase; this relationship is a rela- heavily dependent on commercial banks; such tively loose one, however, and thus the slippages loans and paper may be enhanced by bank add to prepayment uncertainty and risk. Conse- standby letters of credit or loan commitments. In quently, mortgage pass-through yields contain a addition, the growing ability of many lower-rated premium over federal government securities, firms to tap the bond market as an alternative to with comparable expected maturities, that re- long-term bank financing has been regarded as flects such prepayment uncertainty. This pre- securitization. Clearly, the wider availability of mium tends to vary directly with interest rate information on such credits and in the case of volatility. low-rated bonds, the recognition of the benefits Mortgage pass-through securities have become of diversification (including through mutual the raw material for various derivative products. funds), have reinforced the securitization trend. These include the CMOs and interest-only and Issuance of high-yield (or below-investmentprincipal-only obligations issued by private enti- grade) bonds roughly doubled from mid-1985 to ties. Such instruments represent an alternative mid-1987, at a time when investors also absorbed for dealing with prepayments and prepayment a larger volume of bonds offered by investmentuncertainty. In view of the complexity of admin- grade issuers (see chart 10). The market for istering mortgage securities—such as assembling and maintaining records on the underlying mortgages, principal and interest payments, and pre- 10. Gross issuance of nonfinancial corporate bonds payments—the introduction of these instruments and development of these markets have been highly dependent on advances in computer and information technology. The concept of the pass-through subsequently has been extended to other kinds of loans, mainly automobile loans and credit card receivables. The latter represent unsecured loans while the former, like mortgages, are collateralized by the 1983 1985 1987 automobiles being financed; letters of credit have Quarterly data, not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

12 Federal Reserve Bulletin • January 1988 low-grade bonds, however, received a setback points in the Treasury rate. In the spring of 1987, following the mid-October stock market crash— at a time when bond prices plunged in close as investors evidently reassessed the prospects association with a plunge in the dollar, stories for debt service in the event of an economic abounded of mortgage lenders adjusting their slowdown or a less favorable climate for asset rates daily, or even more frequently, in conjuncsales—and the volume of offerings has fallen tion with developments in foreign exchange marmarkedly. Whether the market can kets and domestic credit markets. regain its earlier momentum remains an open question. As securitized assets work their way into investor portfolios and compete with traditional CONCLUSION securities, the linkage between interest rates on loans that can be securitized and those on open The financial system in the United States has market instruments becomes tighter. Not only been affected greatly over the past decade or so does investor behavior directed toward maximiz- by drastic alterations in the economic setting. ing yield—adjusted for credit, interest rate, and Interest rates have swung widely over this peprepayment risk—act to bring rates on loans that riod, in large part reflecting changing inflation can be securitized into line, but the originators of experience and expectations; in addition, interest loans and the underwriters of securitized assets rates have come to be viewed as inherently more must keep a close eye on yields on competing volatile than was thought in the mid-1970s. While assets in investor portfolios when they make the U.S. economy has been expanding steadily loans or acquire them for securitization. Table 5 since late 1982 and overall slack in resource illustrates the tightening linkages between the utilization has diminished, debt-servicing strains commitment rate on fixed-rate home loans and on many borrowers have been substantial. These the 10-year Treasury bond yield, a maturity that strains have reflected not only a much-diminis roughly comparable with the expected life of ished rate of inflation, including that on real 30-year mortgages. The change in the mortgage estate acquired as an inflation hedge, but also a rate measured in basis points in the week follow- depressed agricultural sector, weakness in the ing a change in the Treasury yield (standardized energy sector, and other imbalances associated to be a 10-basis-point change) has quadrupled with large fiscal deficits and a massive erosion in from the 1975-79 period to the 1986-87 period. the U.S. net export position. Bank lenders also In the late 1970s, the short-run responsiveness of have been affected by the debt problems of some mortgage rates was minimal: a change of only 2 developing countries. basis points on average per each change of 10 The confluence of these events—resulting to basis points in Treasury yields. Responsiveness an important degree from disinflation, global picked up a little over the first half of the 1980s, economic slack, and a strong dollar—clearly was and in the past couple of years, with the surge in not envisioned by financial institutions and marthe volume of mortgage pass-throughs, the kets. Nevertheless, it has had a pronounced change in the mortgage rate climbed to more than effect on attitudes and behavior. Participants in 8 basis points on average per change of 10 basis financial markets generally have become more aware and sensitive to interest rate and credit risk. Against this background, a growing array of 5. Change in mortgage rate in week after change in financial products have been developed to enable 10-year Treasury yield1 financial institutions and others to adjust and Basis points shift risk exposure to better suit their preferences and absorption capacities. The degree to which 1975-79 2.0 risk can be limited through derivative products, 1980-82 3.2 1983-85 4.0 however, has been called into question by events 1986~87 82 surrounding the stock market crash in October 1. The mortgage rate is the commitment rate on fixed-rate home 1987. loans. Both rates are weekly averages; 1987 observations are through mid-November. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in the U.S. Financial System since the Mid-1970s 13 Commercial banks and savings institutions Federal exposure continues to be important in have experienced large loan losses, owing to the the market for mortgage pass-through securities, concentration of debt-servicing strains on their the largest area of securitization thus far. Indeed, customers. Measures taken by these institutions ifftW^yjlfll heightened concern about credit in recent years to limit risk exposure are ex- quality and financial stability, investors §eem to pected to reduce their vulnerability to economic have sought the protection df a direct or indirect shocks in the future. The growing use of hedging federal credit enhancement. Nevertheless, many instruments is one such development. However, investors are adding riskier securities to their many of these instruments, especially those in- portfolios, such as below-investment-grade volving mortgages and their uncertain prepayments, bonds. The associated risks of borrower default contain elements of risk that are not fully known are thus passed directly to investor portfolios and may not be fully understood by all users. rather than to the capital positions of banks and The securitization of loans is another method thrift institutions. developed by depository institutions to manage These developments, by affecting the incirisk. Commercial banks and savings institutions dence of economic losses and the exposure of the have been able to continue to originate and financial system, may influence spending behavservice credit by selling loans, while avoiding ior and the way the economy functions. Spending losses associated with changes in credit or inter- behavior may change if economic losses are est rate risk, provided that these loans are not absorbed directly into the public's portfolios sold with recourse to the originator. When re- rather than being absorbed by the capital posicourse is provided, however, the capital posi- tions of banks and thrift institutions. More imtions of these institutions and their federal de- portant, the securitization process has hastened posit insurance funds are exposed. Also of some the effect of interest rate and credit market concern are the consequences for bank and thrift developments on loan markets. Moreover, in this portfolios of selling loans if they represent high- era of tighter integration of U.S. financial markets er-quality credits. In these circumstances, the with those abroad, international influences on average quality of loans remaining in the loan domestic credit markets, including loan markets, portfolios could decline. are growing. • ! Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

14 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period August Meanwhile, the dollar benefited from developthrough October 1987, provides information on ments abroad. Doubts persisted that the German Treasury and System foreign exchange opera- economy had shaken off the weakness so appartions. It was prepared by Sam Y. Cross, Man- ent early in the year. Disappointing figures for ager of Foreign Operations of the System Open German industrial production and employment Market Account and Executive Vice President in stood in sharp contrast with indicators from the charge of the Foreign Group of the Federal United States and Japan that pointed to a Reserve Bank of New York.1 brighter outlook. Against this background, there were substantial long-term capital outflows from The dollar came under heavy downward pressure Germany during the summer. Also, increasing in mid-August and again in October to close the hostilities in the Persian Gulf raised the possibilthree-month period under review down 7 to 8 ity of a disruption of oil shipments, which would percent on balance against major foreign curren- have greater adverse effects on Europe where oil cies. There were three episodes of U.S. interven- inventories stood at relative low levels. When, in tion in the exchange markets during this period. addition, reports of a violent riot in Mecca on The U.S. authorities intervened first to restrain August 1 revived interest in the dollar as a safe the dollar's rise in early August and then to haven, the dollar rose abruptly. As it passed its support the dollar in late August-early Septem- highs of March against the mark, market particber and again in late October. ipants began to sense that the dollar might ad- As the period opened, the dollar was extending vance much further. The demand for dollars an advance that had begun in late spring. Market became intense, and commercial and other interparticipants had been impressed by official ef- ests began defensively to bid for dollars. forts to stabilize dollar rates earlier in the year, On August 4, with the dollar's rise against the both through heavy intervention and through mark accelerating, the Trading Desk at the Fedcoordination of economic policies among the eral Reserve Bank of New York intervened on major nations. The dollar had shown increasing behalf of the U.S. authorities to resist the upward resilience to potentially adverse developments. pressure. In keeping with the Louvre accord, the The U.S. external performance finally appeared U.S. authorities continued to intervene to foster to be improving, with U.S. net exports in real greater exchange rate stability on subsequent terms rising for three consecutive quarters. The days, selling a total of $631 million against marks U.S. economy was relatively bouyant, with out- by August 10. The intervention by the U.S. put and employment up significantly, especially authorities was undertaken in cooperation with in the manufacturing sector. Thus market partic- the authorities in Germany and other countries. ipants bid for dollar-denominated assets, believ- On August 11, the dollar touched a seven-month ing that they offered attractive investment oppor- high of DM1.9030 against the mark, up 2V4 pertunities with limited exchange rate risk. cent from the end of July. On August 14, the report of a U.S. trade deficit of $15.7 billion for June brought into question the view that the U.S. trade performance was on an 1. The charts for the report are available on request from improving trend. Not only was the deficit larger Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. than in any previous month in 1987, but also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

15 deterioration was pervasive, appearing in every coordination with the Bank of Japan, the German regional and commodity group. The exchange Bundesbank, and several other central banks. market response to this disappointing news was The announcement of an increase of Vi perlimited initially. Many market participants tem- centage point in the Federal Reserve's discount porarily postponed selling dollars in the expecta- rate to 6 percent on September 4 helped to tion that the resilience the dollar had shown to interrupt the dollar's decline. This action, which negative news earlier in the summer would reap- was undertaken to signal the intent of the Federal pear, and that they could avoid taking any signif- Reserve "to deal effectively and in a timely way icant exchange rate loss. But a few days later, with potential inflationary pressures," helped when the dollar failed to show signs of renewed reassure market participants. As the month probuoyancy, heavy selling emerged as many mar- gressed, the dollar benefited in addition from ket participants perceived that further postpone- further increases in U.S. market interest rates. ment of dollar sales could expose them to sub- The dollar also firmed in anticipation of, and then stantial exchange rate risk. A decline in dollar following, meetings in Washington late in Seprates began. By early September the dollar had tember at which the Finance Ministers and Cendeclined to lows of ¥140.35 against the yen and tral Bank Governors of the Group of Seven (G-7) DM1.7880 against the mark, levels not seen since reaffirmed their commitment to cooperate closely late spring. to foster the stability of exchange rates around The dollar's decline was accompanied by a rise current levels. News that President in inflation expectations. Although there was Reagan would sign legislation mandating further little evidence of a generalized increase in infla- reductions in the U.S. fiscal deficit also encourtion, the U.S. economy was operating at rela- aged the market's sense of progress in the G-7's tively high levels of employment and capacity efforts to coordinate economic policies to proutilization, and there were some signs of upward mote the adjustment of external imbalances. pressure on materials prices. Against this back- Against this background, demand for dollars ground, some market participants worried that a increased, particularly on the part of some forfurther dollar depreciation would quickly be re- eign investors who reportedly bought dollars to flected in price increases for a wide range of remove hedges on their U.S. investments, given imports and import-competing products. In these the renewed expectation that the dollar would circumstances, U.S. market interest rates, par- remain reasonably stable. Even the report on ticularly at the long end of the market, moved September 11 of a U.S. trade deficit for July of sharply upward. Some also argued that U.S. $16.5 billion had only a limited effect on exinterest rates would have to be higher to com- change rates. By the beginning of October, the pensate investors for the risk that the dollar dollar recovered to DM1.8500 against the mark might decline further. and ¥147.60 against the yen. In late August and early September, when At the same time, however, market particidollar rates moved toward levels that had not pants began to feel that, in view of the diminished been tested since the period of dollar weakness pressures on exchange rates, foreign monetary of the late spring, the U.S. authorities intervened authorities would place more emphasis on other on several occasions. The Desk purchased a total policy objectives. Officials of both the German of $389.5 million against Japanese yen on five and Japanese central banks had for some time occasions between August 24 and September 2. been publicly emphasizing the importance of After the dollar moved through DM1.80 against responding promptly to a possible renewal of the mark on September 2, trading conditions inflationary pressures. In both countries, money deteriorated briefly not only in the foreign ex- supply growth was well above official targets or change market but also in the domestic securities projections. In Japan, price rises in equity and markets, and the Desk purchased $50 million real estate markets were interpreted as indicating against marks along with its continuing opera- excess liquidity and potential inflationary prestions in yen. The Desk's operations in late Au- sures. Moreover, in both countries the beneficial gust and early September were undertaken in effects of declining oil prices and currency appre- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

16 Federal Reserve Bulletin • January 1988 ciation on domestic prices were wearing off, so 1. Federal Reserve reciprocal currency arrangements that price indexes were beginning to tilt upward. Millions of dollars Notwithstanding the continued disappointment about economic growth in Germany, market par- Amount of Institution facility, ticipants expected the monetary authorities of October 31, 1987 both countries to take advantage of any oppor- Austrian National Bank 250 tunity to absorb liquidity. As operators moved to National Bank of Belgium 1,000 Bank of Canada 2,000 secure their funding needs, long-term interest National Bank of Denmark 250 rates remained under upward pressure and short- Bank of England 3,000 Bank of France 2,000 term interest rates started to rise as well. Then, German Federal Bank 6,000 Bank of Italy 3,000 Japanese officials announced new curbs on com- Bank of Japan 5,000 mercial bank lending for the October-December Bank of Mexico 700 quarter; rumors began to circulate that the Bank Netherlands Bank 500 Bank of Norway 250 of Japan would soon raise its discount rate; and Bank of Sweden 300 Japan's long-term credit banks raised their prime Swiss National Bank 4,000 lending rate by more than had been expected. In Bank for International Settlements Dollars against Swiss francs 600 Germany, the key interest rate on the Bundes- Dollars against other authorized European bank's repurchase agreements moved progres- currencies 1,250 sively to moderately higher levels, from 3.60 Total 30,100 percent in mid-September to 3.85 percent by mid-October, following sharp increases in short- authorities had decided to let the dollar depreciterm money market rates. ate to a lower level. Consequently, the dollar, As interest rates moved higher abroad, market which had moved down to around the DM1.80 participants took the view that, given the com- level in the days immediately following the remitment to exchange rate stability, interest rates lease of the trade figures, moved decisively bein the United States must move up at least as low this level during the weekend of October 17. much to maintain sufficient interest rate differen- In the turmoil immediately surrounding the sharp tials. In this context, the announcement on Oc- decline in world equity markets on October 19, tober 14 of another large U.S. trade deficit for dollar rates moved without clear direction as August at first had a much more pronounced market participants positioned themselves defenimpact on securities and equities markets than on sively. The dollar then gained temporary support the exchange markets. from news that Secretary Baker and German But over the following days, the exchange officials had met in Frankfurt and had agreed to markets grew more concerned about the lack of continue economic cooperation under the adjustment in the U.S. trade performance and Louvre agreement. perceived greater scope for a further downward But soon strong downward pressure on the movement of the dollar. Then, comments by dollar resumed. Press commentary about the Secretary of the Treasury Baker—to the effect U.S.-German discussions in Frankfurt suggested that surplus countries should not raise interest that an agreement had been reached on a lower rates in the expectation that U.S. interest rates range for the dollar. In addition, all interest rates would surely follow, and that the Louvre frame- in the United States fell sharply after the stock work could accomodate further currency adjust- market decline, as investors shifted back into ments—imparted new uncertainties to the mar- securities with fixed interest rates, particularly kets. A press article asserting that Secretary Treasury bills and bonds. While interest rates Baker wanted to see the dollar decline was abroad also declined, they declined less than widely assumed to be true, despite his express U.S. interest rates so that interest rate differendenial of its accuracy. In these circumstances, tials favoring the dollar contracted sharply. Later some market participants questioned the depth of on, pessimism about efforts to reduce the U.S. international cooperation, and others speculated fiscal deficit weighed on the dollar. Also, there that, in the context of the Louvre accord, the was widespread commentary in the press ques- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 17 2. Net profits or losses (-) on U.S. Treasury and buy foreign currencies. They sold a total of Federal Reserve current foreign exchange $899.5 million equivalent of German marks and operations1 Japanese yen. The Treasury and Federal Reserve Millions of dollars intervened in equal amounts. The Treasury sold $284.75 million equivalent of yen and $165.0 U.S. Treasury Period Federal Exchange million equivalent of marks. The Federal Re- Reserve Stabilization Fund serve sold $169.75 million equivalent of yen and $280.0 million equivalent of German marks. In August 1, 1987- October 31, 1987 92.6 117.2 the intervention activity early in the period, the Valuation profits and losses Federal Reserve and Treasury each bought on outstanding assets and liabilities as of $315.5 million equivalent of German marks. The October 31, 1987 2,099.9 1,790.7 Federal Reserve also bought from customers 1. Data are on a value-date basis. $85.3 million equivalent of Japanese yen during the period. From August 1 through October 31, the Fedtioning the priority for the United States of eral Reserve and the Treasury's Exchange Stastabilizing exchange rates in view of concerns bilization Fund (ESF) realized profits of $92.6 that the stock market decline might seriously million and $117.2 million respectively. Valued at weaken U.S. economic activity. exchange rates at the end of October, the valua- Selling pressure on the dollar became intense tion gains on outstanding foreign currency balon October 27 when the dollar declined below its ances were $2,099.9 million for the Federal Relows of last May against the mark. In order to serve and $1,790.7 million for the Treasury's resist a further decline in the dollar-mark rate, ESF. These valuation gains represent the inthe Desk entered the market on behalf of the crease in the dollar value of outstanding currency U.S. authorities. While these operations for a assets valued at end-of-period exchange rates time stabilized the rate, the dollar again moved compared with the rates prevailing at the time the sharply lower following commentary that the foreign currencies were acquired. U.S. authorities were prepared to allow the dol- The Federal Reserve and the ESF invest forlar to decline considerably further. Although the eign currencies acquired in the market as a result U.S. Treasury denied that the remarks reflected of their foreign operations in a variety of instru- U.S. government policies, strong selling pressure ments that yield market-related rates of return persisted, and the Desk continued to intervene, and that have a high degree of quality and operating in yen as well as in marks. Over the liquidity. Under the Monetary Control Act of three days, the U.S. authorities bought a total of 1980, the Federal Reserve is authorized to invest $395 million against marks and $65 million in securities issued by foreign governments, and against yen. These operations were conducted in as of October 31, 1987, $980.1 million equivalent cooperation with the Bank of Japan, the German of its foreign currency holdings were invested in Bundesbank, and other central banks. On Octo- such securities. In addition, the Treasury held ber 29, the dollar traded as low as DM1.7220 the equivalent of $2,473.5 million of its foreign against the mark, close to its previous all-time currency holdings in such securities as of the end low of eight years earlier, and ¥137.15 against of October. the yen, its lowest level in 40 years. The dollar On October 30, the Treasury Department closed the period only slightly higher at through the ESF joined with several central DM1.7275 and ¥138.30, down 7 percent and VA banks to provide a multilateral near-term credit percent respectively, from levels at the end of facility totaling $500 million for the Central Bank July. of the Argentine Republic. The ESF's portion of In summary, over the three months U.S. mon- the facility was $200 million. No drawing was etary authorities intervened both to sell and to made during the period under review. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

18 Industrial Production Released for publication November 16 duction in October was about 5 percent higher than it was a year earlier. Industrial production increased 0.6 percent in In market groups, output of consumer goods October, with more than half of the gain related picked up again in October after little change in to an increase in production of motor vehicles. September. Auto assemblies, which had been Revised data now indicate that industrial produc- noticeably depressed in August and September tion was unchanged in September; the total index to annual rates of about 6.0 million units, rose to for August and July was not revised. At 131.7 a rate of 7.3 million units in October. In additon, percent of the 1977 average, total industrial pro- assemblies of both light and heavyweight trucks Ratio scale, 1977=100 All series are seasonally adjusted. Latest figures: October. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

19 1977 = 100 Percentage change from preceding month Percentage change, Group 1987 1987 Oct. 1986 to Oct 1987 Sept. Oct. June July Aug. Sept. Oct. Major market groups Total industrial production 130.9 131.7 .7 1.2 .3 .0 .6 5.1 Products, total 139.7 141.0 .7 1.2 .2 .0 .9 5.1 Final products 138.4 139.9 .5 1.2 .3 .1 1.1 5.3 Consumer goods 128.4 129.9 -.1 1.3 .2 -.6 1.2 4.1 Durable 118.1 122.1 -2.3 2.5 .5 -2.3 3.3 4.5 Nondurable 132.3 132.8 .7 .9 .2 .0 .4 4.0 Business equipment... 146.6 148.4 1.8 1.0 -.1 .7 1.3 6.5 Defense and space 191.3 192.1 -.3 .0 .7 .7 .4 3.5 Intermediate products... 144.2 144.6 1.1 1.2 -.2 -.4 .3 4.6 Construction supplies. 132.4 132.4 1.8 1.2 -.7 .2 .0 4.0 Materials 118.8 119.0 .8 1.1 .4 -.1 .1 5.1 Major industry groups Manufacturing 135.7 136.8 .6 1.2 .1 .0 .9 5.5 Durable 133.6 135.3 .4 1.2 .1 .0 1.3 5.2 Nondurable 138.6 139.0 .9 1.1 .1 .0 .3 5.9 Mining 101.0 101.5 .0 .0 1.1 .7 .5 5.5 Utilities 111.0 110.8 -.2 1.6 1.2 -1.4 -.1 2.0 NOTE. Indexes are seasonally adjusted. increased sharply in October. However, produc- the year. Outside the consumer goods sector, tion of home goods—especially furniture and production of business equipment increased 1.3 appliances—fell slightly after having dropped percent further in October; so far this year, sharply in the preceding month. The index for production of business equipment has been rising home goods, which had risen rapidly in the last about VA percent at an annual rate. In October, part of 1986, has declined at an annual rate of gains were widespread, with an especially large about V/2 percent during the first 10 months of increase in transit equipment, which includes autos and trucks for business use. Among intermediate products, construction supplies were unchanged during the month, but output of sup- Total industrial production—Revisions plies for business rose 0.6 percent. Materials Estimates as shown last month and current estimates output was little changed in October as a gain in durables—mainly metals and parts for consumer Percentage change Index (1977=100) from previous durable goods and equipment—was about offset MMoonntthh months by declines in nondurable and energy materials. Previous Current Previous Current In industry groups, manufacturing output rose 0.9 percent in October with a gain of 1.3 percent July 130.6 130.6 1.1 1.2 in durables and a rise of 0.3 percent in nondur- August 131.0 131.0 .3 .3 September 131.2 130.9 .2 .0 ables. Mining output increased 0.5 percent, but October 131.7 ... .6 production by utilities edged down. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

20 Statements to Congress Statement by Alan Greenspan, Chairman, Board with securities firms that is now prohibited by the of Governors of the Federal Reserve System, Glass-Steagall Act. before the Subcommittee on Financial Institu- Our own analysis of the broader proposals tions Supervision, Regulation and Insurance of leads us to the conclusion that they have many the Committee on Banking, Finance and Urban positive elements that deserve continuing atten- Affairs, U.S. House of Representatives, Novem- tion, but that it would be appropriate at this time ber 18, 1987. to concentrate attention on the specific suggestion to repeal the Glass-Steagall Act. It is our view that this action would respond effectively to It is my pleasure today to present the Federal the marked changes that have taken place in the Reserve Board's views on modernizing our fi- financial marketplace here and abroad, and nancial system to adapt it to the important would permit banks to operate in areas in which changes in technology and competition that have they already have considerable experience and already transformed financial markets here and expertise. Moreover, repeal of Glass-Steagall abroad. You have set an agenda for a searching would provide significant public benefits consisinquiry into the proper organization and func- tent with a manageable increase in risk. Accordtions of depository institutions, and it is impor- ingly, we would suggest that the attention of the tant that this work be completed promptly so that committee should focus on the Glass-Steagall the process of evolutionary development of our Act, and we recommend that this law should be financial system may go forward in an orderly repealed insofar as it prevents bank holding way. The foundation now being laid in this companies from being affiliated with firms encommittee and in the Senate Banking Committee gaged in securities underwriting and dealing acprovides an historic opportunity to take a crucial tivities. We prefer this comprehensive approach first step that can set our course for the future. to the piecemeal removal of restrictions on un- The Board has for some years taken the posi- derwriting and dealing in specific types of secution that our laws regarding financial structure rities such as revenue bonds or commercial paneed substantial revision. Developments have per. This limited approach would artificially significantly eroded the ability of the present distort capital markets and prevent financial instructure to sustain competition and safe and stitutions from assuring benefits to customers by sound financial institutions in a fair and equitable maximizing their competitive advantage in parway. It is essential that the Congress put in place ticular markets. a new, more flexible framework. A very persuasive case has been made for Recently a great deal of attention has been adoption of the repeal proposal. It would allow focused, properly we think, on revising the laws lower costs and expanded services for consumthat govern our financial structure. The aim of ers of financial services through enhanced comthese proposals is to permit the affiliation of a petition in an area in which additional competibroader variety of financial and commercial or- tion would be highly desirable. It would ganizations with banks, while attempting to as- strengthen banking institutions, permitting them sure that affiliated banks are not adversely af- to compete more effectively at home and abroad fected by this relationship. Much of this thinking in their natural markets for credit that have been has now centered on a specific proposal by transformed by revolutionary developments in Senate Banking Committee Chairman Proxmire computer and communications technology. It to permit the affiliation of banking organizations could be expected to result in attracting more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

21 equity capital to the banking industry when more fact, reduce underwriting spreads and, in the capital is needed. In sum, the securities activities process, lower financing costs to businesses large of banking organizations can provide important and small, as well as to state and local governpublic benefits without impairing the safety and ments. In addition, participation by bank holding soundness of banks if they are conducted by company subsidiaries in dealing in currently inexperienced managers, in adequately capitalized eligible securities is likely to enhance secondary companies, and in a framework that insulates the market liquidity to the benefit of both issuers and bank from its securities affiliates. investors. These, we believe, are important pub- In reaching these conclusions, we are guided lic benefits that will assist in making our econby the principles set down in the Bank Holding omy more efficient and competitive. Company Act of 1970, which requires the Board Studies of the market structure of investment to consider, in determining the appropriateness banking suggest that at least portions of this of new activities for bank holding companies, industry are concentrated. The most recent eviwhether they will produce benefits to the public dence in this regard is provided in the September such as greater convenience, increased competi- report of the House Committee on Government tion, or gains in efficiency. It also asks us to Operations, which presented data supporting its evaluate whether these gains may be outweighed conclusion that corporate securities underwriting by possible adverse effects, such as undue con- is highly concentrated. The five largest undercentration of resources, decreased or unfair com- writers of commercial paper account for more petition, conflicts of interest, or unsound banking than 90 percent of the market; the five largest practices. underwriters of all domestic corporate debt ac- These are the principles that the Congress has count for almost 70 percent of the market; and set down to guide the evolution of the banking the five largest underwriters of public stock issystem. They made good sense then and they sues account for almost half of the market. make good sense today. Over the years we have I would emphasize that concentration per se interpreted these principles to be consistent with need not lead to higher consumer costs because our efforts to promote competitive and efficient the possibility that new firms will enter a market capital markets and to protect impartiality in the may be sufficient to achieve competitive prices. granting of credit, to avoid the risk of systemic However, it is just in this regard that the Glassfailure of the insured depository system, and to Steagall Act is particularly constraining because prevent the extension of the federal safety net to bank holding companies with their existing exnonbanking activities. In our view, achieving pertise in many securities activities and their these goals is fully consistent with permitting broad financial skills and industry network more bank holding companies to engage in securities generally would be the most likely potential activities. In short, in my testimony today I will competitors of investment banks if not conexplain why we believe that changes in the strained by law. Glass-Steagall Act will have major public bene- It is also important to emphasize that the fits. I will also explain why we believe that with changes in the Glass-Steagall Act that we supthe right structure and careful implementation, port would be likely to yield cost savings in local the changes in the law that we support can be and regional corporate underwriting and dealing accomplished without adverse effects. markets. At a minimum, local and regional firms The major public benefit of Glass-Steagall would acquire access to capital markets that is modification would be lower customer costs and similar not only to the access now available to increased availability of investment banking large corporations, but also to that currently services, both resulting from increased competi- available to municipalities whose general obligation and the realization of possible economies of tion bonds are underwritten by local banks. scale and scope from coordinated provision of Another area of substantial expected public commercial and investment banking services. benefit is the encouragement of the free flow of We believe that the entry of bank holding com- investment capital. Both we at the Board and the panies into securities underwriting would, in Congress have stressed the importance of im- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

22 Federal Reserve Bulletin • January 1988 proving the capital ratios of banking organiza- possible for borrowers and lenders to deal with tions, and it can reasonably be assumed that each other more directly in an informed way. expansion of banking organizations into securi- On-line data bases, coupled with powerful comties markets would make them more attractive puters and wide-ranging telecommunication fainvestments. Equally important, banks and secu- cilities, can now provide potential investors with rities firms would be free to deploy their capital virtually the same timely credit and market inforover a wider range of activities designed to serve mation that was once available only to the interthe public better. mediaries. There is another important reason why the These developments mean that investors are Glass-Steagall Act should be changed. Develop- increasingly able to make their own evaluations ments in computer and communications technol- of credit risk, to deal directly with borrowers, ogy have reduced the economic role of commer- and, especially with the increasing institutionalcial banks and enhanced the function of ization of individuals' savings, creditors are in a investment banking. These permanent and fun- position to develop their own portfolios and damental changes in the environment for con- strategies to balance and hedge risk. Thus, the ducting financial business cannot be halted by franchise of bank intermediation, the core elestatutory prohibitions, and the longer the law ment of a bank's comparative advantage, and its refuses to recognize that fundamental and per- main contribution to the economic process— manent changes have occurred the less relevant credit evaluation and the diversification of risk— it will be as a force for stability and competitive have been made less valuable by this information fairness in our financial markets. Attempts to revolution. Examples of new financial products hold the present structure in place will be de- that have resulted from this technological innofeated through the inevitable loopholes that in- vation and that challenge traditional bank loans novation forced by competitive necessity will abound—the explosion in the use of commercial develop, although there will be heavy costs in paper, the rapid growth of mortgage-backed seterms of competitive fairness and respect for law curities, and the recent development of consumthat are so critical to a safe and sound financial er-loan-backed securities or consumer-receivsystem. able-related (CRR) securities. There are many The significance of the technological develop- others. Our concern is that these real changes in ments to which I have referred is that the key the way that providers of credit utilize financial role of banks as financial intermediaries has been intermediaries have reduced the basic competiundermined. The heart of financial intermedia- tiveness of banks and that the trend toward direct tion is the ability to obtain and use information. investor-borrower linkages will continue. The high cost of gathering and using facts in the Banks, of course, have not stood still while past meant that banks and other intermediaries these vast changes were taking place around could profit from their cumulative store of knowl- them. Indeed, they have responded to the techedge about borrowers by making significantly nological revolution by participating in it. Loan more informed credit decisions than most other guarantees and other off-balance-sheet arrangemarket participants. These other market partici- ments, private placement of corporate debt, pants were thus obliged to permit depository commercial paper placement, loan participations intermediaries to make credit decisions in finan- and sales, and interest rate and currency swaps cial markets and therefore allow bank credit to are examples. Similarly, the foreign offices of substitute for what would otherwise be their own U.S. banks and their foreign subsidiaries and direct acquisition of credit market instruments. affiliates have been actively engaging abroad in a Computer and telecommunications technology wide variety of securities activities. These activhave altered this process dramatically. The real ities include securities that are ineligible in the cost of recording, transmitting, and processing United States for banks to underwrite and deal, information has fallen sharply in recent years, such as corporate debt and equity. In the corpolowering the cost of information processing and rate debt market, for example, U.S. banks' forcommunication for banks. But it has also made it eign subsidiaries served lead roles in underwrit- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 23 ings approaching $17 billion in 1986, or about 10 decided that we would recommend the necessary percent of the volume of such debt managed by changes only because we believe that a framethe 50 firms most active in the Eurosecurities work can be put in place that can assure that the market last year. These and other essentially potential risks from securities activities can be investment banking activities have permitted effectively managed. The events since October banks to continue to service those customers 19 have not altered our view that it is both seeking to rely increasingly on securities mar- necessary to proceed to modernize our financial kets. Nevertheless, in their home market, banks system and that it is possible to do so in a way are sharply limited by the Glass-Steagall Act in that will maintain the safety and soundness of competing for the business of acting as interme- depository institutions. diaries in the process of providing credit, in the The Congress adopted the Glass-Steagall Act new financial environment a process that has more than 50 years earlier because it believed been transformed by technological change and that banks had suffered serious losses as a result one that is a natural extension of the banking of their participation in investment banking. The business. Congress also thought that bank involvement in In short, the Congress should modify the finan- the promotional aspects of the investment bankcial structure to conform to these changes. If the ing business would produce a variety of "subtle Congress does not act, but rather maintains the hazards" to the banking system, such as conflicts existing barriers of the Glass-Steagall Act, bank- of interest and loss of public confidence. In ing organizations will continue to seek ways to answer to these concerns we believe that expeservice customers who have increasingly direct rience has shown that the risks of investment access to capital markets. But banking organiza- banking to depository institutions are containtions are nearing the limits of their ability to act able, that the regulatory framework established within existing law; and spending real resources in the securities laws minimizes the impact of to interpret outmoded law creatively is hardly conflicts of interest, that the federal safety net wise. Without the repeal of Glass-Steagall, implemented through deposit insurance and acbanks' share of credit markets is likely to de- cess to Federal Reserve credit will avoid the cline—as it already has in our measures of short- potential for panic withdrawals from banks if and intermediate-term business credit. A soundly affiliated securities firms experience losses, and structured change in the law will allow financial that banks can be effectively insulated from their markets to serve us better by lowering costs to securities affiliates through an appropriate strucusers while strengthening financial institutions tural framework. within a framework that will protect the financial Bank holding company examinations indicate integrity of banks. that U.S. banking organizations have generally The basic principles that I outlined at the shown an ability to manage the inherent risks of outset require us to take into account not only both their domestic and foreign securities activpublic benefits but also possible adverse effects, ities in a prudent and responsible manner. Of all including unsound banking practices, which the domestic bank failures in the 1980s, to our clearly include the concept of excessive risk, knowledge none has been attributed to underconflicts of interest, impairment of competition, writing losses. Indeed, we are unaware of any and undue concentration of resources. These significant losses in recent years owing to underconcerns have been heightened by the unprece- writing of domestically eligible securities. For dented stock market decline that occurred on that matter, research over the past 50 years October 19, 1987, and the subsequent market concludes, contrary to the Congress' view at the volatility. time, that the securities activities of banks were We had reached our decision to endorse repeal not a cause of the Great Depression and that of the Glass-Steagall Act before these events banks with securities affiliates did not fail in occurred. When we made our decision, we had proportionately greater numbers than banks very much in mind that there are risks involved more generally. in underwriting and dealing in securities and we The investment banking experience of U.S. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

24 Federal Reserve Bulletin • January 1988 banking organizations in foreign markets has see as the major elements of such a system. been favorable, and their operations have been Fundamental to our recommendation on generally profitable in the last decade or so. This Glass-Steagall is the view that the safe and sound is not to say that there have been no problems. In operation of banks requires that securities activthe mid-1970s some large U.S. banks encoun- ities involving significant risk be conducted betered problems with their London merchant bank hind walls designed to separate, insofar as possubsidiaries in connection with venture capital sible, the bank from the risks associated with the investments and the development of the Euro- securities activities. Let me note at this point, bond market. More recently, in the post-Big that some have argued that insulating walls can- Bang era, U.S. banks' securities affiliates and not completely protect a bank from the risks of subsidiaries have shared in the transitional diffi- its affiliates. Management has a natural incentive culties that arose in the London securities mar- in periods of stress to assist endangered compoket. All of these problems appear to have been in nents of what it sees as one entity, and depositors the nature of "start-up" difficulties rather than are free to withdraw their funds from the bank if long-term safety and soundness concerns. In they perceive—correctly or incorrectly—a threat these situations, and even in the perspective of to the bank's safety from losses at affiliates. The the unprecedented stock market decline, risks task before you is to reduce the risk, taking into have been contained and losses have been small account public benefits relative to the risk, to relative to the capital of the bank or the holding acceptable levels. This effort will require clear company parent. rules and a firm expression of public policy that Finally, I would note that empirical studies corporate conduct that passes on the risks of invariably find that underwriting and dealing are securities activities to insured depository instituriskier than the total portfolio of other banking tions is unacceptable. functions in the sense that the variability of We see two major elements to an approach to returns to securities activities exceeds that of the developing a practical insulating structure: returns to the combination of other banking 1. The holding company structure should be functions. It is also important to note, however, used to institutionalize separation between a that the average return to securities activities is bank and a securities affiliate. also usually found to exceed the average return 2. The resulting institutional fire walls should to the combination of other banking functions. In be strengthened by limiting transactions, particaddition, there is evidence of some potential for ularly credit transactions, between the bank and limited diversification gains, or overall bank risk a securities affiliate. reduction, for banks being allowed increased First, we would take maximum advantage of securities powers. the legal doctrine of corporate separateness. Un- The preliminary evidence on the limited effects der this rule, a separately incorporated company of recent stock market events on securities firms normally is not held liable for the actions of other reinforces several conclusions drawn previously. companies even if they are commonly owned or First, while securities activities are clearly risky, there is a parent-subsidiary relationship. If effecthe risks can be managed prudently. Second, tive separation can be achieved, a bank would securities activities of bank holding companies not be liable for the actions of its securities should be monitored and supervised in such a affiliate and the benefits of the federal safety net way as to control the risk to an affiliated bank. would not be conferred on the securities affiliate. Third, the events of recent weeks highlight We believe that this goal is most effectively the need to have capital adequate to absorb achieved if securities activities take place in a unexpected shocks and to maintain an institu- direct subsidiary of a holding company rather tional and legal structure that minimizes the than in a bank or a subsidiary of a bank. The degree to which securities underwriting and Board has long supported the holding company dealing risk could be passed to affiliated banks. framework as the most effective method of ac- As I have stressed, such a system can be estab- complishing separation, and it was with these lished. I would now like to turn to what we goals in mind that, in 1984, the Board joined the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 25 Department of the Treasury in supporting legis- iaries than would be the case if these activities lation to use the holding company framework to were conducted in a holding company affiliate. broaden the securities and other powers of affil- Similarly, the holding company technique iates of banks. The Board believes that the would be more effective in minimizing any comholding company approach, reinforced by the petitive advantage banks would have in raising measures I will outline below, has several impor- funds because of their association with the federal tant advantages over other methods of expanding safety net and their ability to collect deposits. the powers of banking organizations. First, any The second major element of the separateness losses that may be incurred by the securities structure is to assure that corporate separateness affiliate would not be reflected in the balance fire walls are not impaired and that the risks of sheets or income statements of the bank, as they securities activities are not passed on to an would under normal accounting rules if the bank affiliated bank. We suggest several measures to conducted the securities activities directly or accomplish this goal: through a subsidiary of the bank. A bank affil- • Bank lending to, and purchase of assets iated with a securities firm through a holding from, a securities affiliate should be prohibited. company structure thereby obtains the advan- • Banks should not be able to enhance the tages of the holding company's diversification creditworthiness of securities underwritten by a into securities activities without the disadvan- securities affiliate through guarantees or other tages that necessarily flow from the bank con- techniques. ducting the securities activities directly or • Banks should not lend to issuers of securities through a subsidiary of the bank. underwritten by a securities affiliate for the pur- Second, it is difficult, if not impossible from a pose of paying interest or principal on such practical standpoint, for a bank to avoid assum- securities. ing responsibility and liability for the obligations • Banks should not be able to lend to customof its direct subsidiaries. Experience has shown ers for the purpose of purchasing securities unthat the direct ownership link between a bank derwritten by a securities affiliate. and its subsidiaries creates a powerful public • Appropriate rules should limit interlocks beperception that the condition of the bank is tied tween the officers and directors of banks and to the condition and financial success of its those of affiliated securities firms. subsidiaries. • A securities affiliate should be required to Third, because of the direct ownership link prominently disclose that its obligations or the between the bank and its subsidiary, any breach securities that it underwrites are not the obligaof insulating walls that may be constructed be- tions of any bank and are not insured by a federal tween the bank and its subsidiary would be more agency. likely to result in the loss of protection from the • A securities affiliate should be adequately legal doctrine of corporate separateness than capitalized. would the same breach in the wall between a Under this approach, rules should be put in bank holding company and a securities affiliate. place that will prevent use of the credit facilities This is simply a function of the fact that there is of the bank for the benefit of the securities no direct ownership link between the bank and affiliate, and to this end, in constructing these the securities affiliate. walls, a premium should be placed on arrange- Fourth, separation of a bank and an affiliated ments that are simple, clear, and easy to apply, securities firm through a holding company helps and that will not be subject to erosion by interpromote competitive equity. Securities activities pretation. that are conducted directly within a depository It is with these principles in mind that we institution or in a subsidiary of a depository approach one of the most important issues in institution are much more likely to benefit from separating banks from their securities affiliates— association with the federal safety net through the question of whether a bank should be able to increased public confidence in securities offer- lend to or purchase assets from its securities ings made by the insured banks and their subsid- affiliates. We considered that lending may be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

26 Federal Reserve Bulletin • January 1988 appropriate as a way of taking maximum advan- competitive fairness, but also would permit a tage of the synergies that can be achieved be- transferring of the risks of securities activities to tween a bank and securities affiliates to the the federal safety net. For the same reasons, benefit of customers and that, as we have de- loans to customers for the purpose of buying scribed here today, securities activities are the securities underwritten by a securities affiliate or natural extension of the credit facilities provided to a company whose securities have been underby banks. We also considered that rules now written by a securities affiliate for the purpose of exist limiting the amount of credit that a bank can repaying interest or principal due on such secuprovide to an affiliate and requiring that this rities should not be permitted. Prohibiting these lending be at arms-length and adequately collat- transactions will establish a sound fire wall. eralized. Another major purpose of fire walls is to Nevertheless, our experience indicates that prevent conflicts of interest that are competithese limitations, embodied in sections 23A and tively unfair and that can impair confidence in 23B of the Federal Reserve Act, do not work as banking institutions. As I mentioned, this probeffectively as we would like and, because of their lem is effectively dealt with by the disclosure complexity, are subject to avoidance by creative requirements and other provisions of the securiinterpretation, particularly in times of stress. On ties laws. The already built-in protection of these the other hand, a prohibition on an affiliated laws should be strengthened by other provisions. bank's loans to and purchases of assets from its We would recommend that a securities affiliate securities affiliate would sharply limit the transfer must disclose its relationship to an affiliated bank of the risk of securities activities to the federal and plainly state that the securities it sells are not safety net and would eliminate one of the key deposits and are not insured by a federal agency. factors viewed by the courts as justifying In addition, we should reinforce the require- "piercing the corporate veil" between the bank ments of existing law by providing that a securiand its nonbank affiliates— that operations of the ties affiliate cannot sell securities to an affiliated securities affiliate are financed and supported by bank or its trust accounts during an underwriting the resources of the affiliated bank. For these period or 30 days thereafter or otherwise sell reasons, and because of the desirability of having securities to the bank or its trust accounts unless a clear rule that is not subject to avoidance, we the sale is at established market prices. decided to recommend to you that we have a We would also recommend that neither banks simple rule that banks should not be permitted to nor their securities affiliates be able to share lend to, or purchase assets from, their securities confidential customer information without the affiliates. A securities affiliate would, however, customer's consent and that a bank cannot exbe free under our proposal, to borrow from its press an opinion on securities being sold by its holding company parent—an entity that is not securities affiliate without disclosing that its afprotected by the safety net. filiate is selling that security. As another step to A similar limitation was proposed in the recent prevent conflicts of interest, we would suggest study by the House Government Operations that a securities affiliate could not sell securities Committee. We would support only one very backed by loans originated by its affiliate bank limited exception to this rule. We propose allow- unless the securities are rated by an independent ing fully collateralized intraday borrowing by a rating organization. securities underwriter and dealer from an affil- We believe that the fire walls that are proposed iated bank to support U.S. government and will substantially augment the existing insulation agency securities clearing operations. of banks from affiliates that is now provided by For similar reasons and as I have already the Bank Holding Company Act. Besides these outlined, we would recommend that a bank measures, perhaps the best insulator is adequate should not be able to guarantee or extend its capital for both banks and securities affiliates. letter of credit, or otherwise support securities Adequate authority should be provided to assure issued by a securities affiliate. Allowing such that holding companies involving banks and sepractices would not only raise the question of curities activities should be adequately capital- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 27 ized. In particular, investments by bank holding sures that we recommend should be put in place companies in securities firms should not be per- to effectively deal with these problems. mitted if the investment would cause the holding The guidelines that the Congress has estabcompany to fall below minimum capital require- lished for expansion of banking activities require ments. a concern for whether expansion of securities With these safeguards in place, we do not powers will lead to a concentration of resources believe it is necessary to prevent a bank and a in the securities or banking industries. We besecurities affiliate from jointly marketing banking lieve that repeal of Glass-Steagall should have and securities products or from using a similar the opposite effect. As I have stressed today it corporate name. Here we believe that an analysis will increase the number of viable competitors in of the trade-off between corporate separateness both the banking and securities industries, enon the one hand, and taking advantage of the hancing competition in both. As a result, we efficiency and convenience to customers that can doubt that the Congress need go beyond the be achieved through coordinated marketing on requirements of the antitrust laws to anticipate a the other, indicates that the gains to separateness problem with concentration of resources in the would be small and the losses to efficiency would emerging financial services industry. However, be high. The requirement of separate names because we see as one of the major advantages to would be artificial, particularly because securi- repeal to be an expected increase in competition, ties law disclosure would, in any event, require and because we could understand anxieties that an affiliate to inform the users of its services of its this goal might be impaired by a combination of association with a banking enterprise. Similarly, the largest banking and securities firms, the as I pointed out at the outset, the market for Board would not oppose a limited provision securities is only an extension of the market for aimed at preventing the largest banking and other banking products and to deny a banking securities organizations from consolidating. organization the ability to sell both products We commend this committee for its active role would lose much of the gains for the economy in considering one of the most important issues that we seek to achieve through the association that now faces our financial markets. We between the two. Moreover, there would be no strongly recommend that you adopt legislation to competitive unfairness in this arrangement since repeal the Glass-Steagall Act and to put in its the broad relaxation of the Glass-Steagall re- place a new framework allowing the affiliation of quirements that we propose would enable secu- banking organizations and securities firms. We rities firms to own banks as well as bank holding urge you to allow the moratorium on banking companies to own securities affiliates. activities contained in Title II of the Competitive The important point is whether these measures Equality Banking Act (CEBA) to expire on would cause the risks of securities activities to be March 1, 1988, as the law now provides. We passed on to banking institutions and to the believe that these measures will ensure a more federal safety net. As I indicated, the Board responsive, competitive, and safe financial believes that the corporate separateness mea- system. • Statement by Martha R. Seger, Member, Board attention lately. There has been a substantial of Governors of the Federal Reserve System, growth in this type of credit since 1984, with before the Subcommittee on Consumer Affairs of outstanding balances totaling approximately $40 the Committee on Banking, Housing, and Urban billion at the end of 1986. We believe that the Affairs, U.S. Senate, November 18, 1987. total may now be as high as $70 billion and could reach $80 billion by year-end. I appreciate the opportunity to appear before this This rapid expansion in home equity lines is subcommittee to discuss home equity lines of probably attributable to several factors. For excredit, a subject that has received increased ample, the plans have provided consumers con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

28 Federal Reserve Bulletin • January 1988 venient access to credit at interest rates that are other debts and to finance home improvements. relatively low compared with other means of Forty-five percent of account holders had no financing consumer spending. Tax laws phasing balances outstanding on their home equity lines, out the deductibility of interest for nonmortgage while the median amount outstanding for account consumer debt have made home equity loans holders with unpaid balances was $14,800. more desirable to tax-conscious borrowers. In During the past year, the Board has received addition, competition among financial institu- inquiries from financial institutions, trade associtions to offer diverse financial services to their ations, consumer groups, and the Congress concustomers has resulted in vigorous marketing of cerning home equity lines of credit. Much of the home equity lines, often at low introductory discussion has focused on the current disclosure interest rates and discounted fees. requirements for these loans, and whether these Recently, the Board and other bank regulatory requirements are adequate. In response to these agencies changed the reporting requirements for inquiries, the Board has been reviewing its curcredit secured by real estate to provide more rent regulatory requirements, with the goal of complete and accurate information on household ensuring that consumers receive sufficient inforborrowing through home equity lines of credit. mation before contracting for this type of credit. This change should provide more accurate information for an important segment of the market, and enable us to better gauge the growth of this POSSIBLE REGULATOR Y ACTIONS type of credit and the effect it is having on other consumer borrowing. Since home equity programs are more complex In addition, the Board has conducted con- than other types of open-end credit plans and sumer surveys this year to gather information pose a greater risk to consumers if they fail to that will allow us to better understand consumer understand the terms and conditions of the plan, usage of home equity lines of credit. These the Board, like the Congress, is concerned about surveys, which were conducted in March and whether the existing disclosure requirements un- April of this year, included 1,300 families, 930 of der the Truth in Lending Act and Regulation Z whom were homeowners. As of April 1987, 6 ensure that consumers receive adequate informapercent of the homeowners surveyed had estab- tion about these types of loans when they conlished home equity lines of credit, and an addi- tract for a particular plan. tional 1 percent had applied for these credit lines. During the past year, Board staff has been The surveys indicated that consumer awareness considering the issue of home equity lending of home equity lines of credit is high. Eighty within the context of Truth in Lending disclosure percent of all the homeowners surveyed stated requirements. The staff's analysis indicates that that they were aware of the existence of such the current regulatory requirements for open-end credit plans, although a majority of the respon- credit may not adequately reflect the complexidents who had not yet opened such credit ac- ties that are present in most home equity procounts indicated no interest in establishing a grams. Specifically, the staff has focused on the home equity credit line in the future. content, timing, and format of the disclosures The surveys also revealed that those home- required under Regulation Z as possible candiowners who had established home equity lines dates for regulatory change. At this time, our tended to have higher family incomes, more staff is preparing a proposal that would amend equity in their homes, and were younger and Regulation Z to address these issues and expects better educated than the average homeowner. to present their recommendations to the Board Besides these findings, the surveys showed that, within a few weeks. Although the review is still relative to other types of credit lines, home in process, and neither the staff nor the Board equity accounts tended to be for larger amounts, has made any firm decisions about what can and with the median size of an account approxi- should be done, I would like to share with you mately $25,000. The most common reasons given some of the particular issues we have been for using home equity accounts were to pay off considering. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 29 Under current requirements, when a home and conditions of the plans for which they conequity plan is opened, a creditor need only give tract. To the extent that the current regulatory general disclosures about how the finance charge requirements fail to meet this goal, it might be will be determined, what other charges will be necessary to require that disclosures about these imposed, the security interest being taken, and plans be segregated from other information. the consumer's billing rights. Creditors are not At this point, I would like to mention that at its required to disclose certain items, such as their meeting in October 1987 the Board's Consumer right to unilaterally change the terms and condi- Advisory Council generally endorsed the idea of tions of the plan, or the possibility that a balloon requiring additional disclosures for home equity payment may be required as part of the plan. It is lines in advertisements and in initial account conceivable that Regulation Z could be amended disclosure statements. The Council also supto require disclosure of these features. There also ported the idea of requiring creditors to provide may be a need to require more disclosures in disclosures for these loans at an earlier stage of home equity line advertisements. A question the credit-granting process than is currently reraised in this regard is whether disclosing a quired. In addition, Council members saw the payment term in an advertisement should require need to have these disclosures highlighted in a disclosure of other material terms, such as the manner that would alert consumers to material annual percentage rate or fees to be charged information about the terms and conditions of under the plan. In considering any additional these programs. disclosure requirements, however, the Board is guided by the principle that disclosures should provide consumers with essential information, LEGISLATIVE PROPOSALS without overloading them with less important information or unnecessarily raising creditors' The subcommittee has asked that we comment compliance costs. on legislation concerning home equity lines that Another area that we have identified as one to was introduced in the House. H.R. 3011, which look into concerns the timing of disclosures. was introduced by Congressman Price, would Regulation Z currently permits open-end credit amend the Truth in Lending Act to establish disclosures to be given anytime before the first additional disclosure and advertising requiretransaction. In the case of home equity lines of ments for open-end credit plans secured by the credit, therefore, consumers may not receive consumer's dwelling. The bill would change the disclosures about the terms and conditions of the requirements concerning the content, timing, and plan until closing. Since many home equity credit format of the Truth in Lending disclosures that plans involve large application fees and tend to are now required for home equity lines of credit. be more complex than other types of open-end Currently, the Truth in Lending Act and Regulacredit, an argument can be made for requiring tion Z treat home equity lines of credit like other disclosure of the fees, terms, and conditions of types of open-end credit plans. As a result, such plans at an earlier time in the credit process. creditors only are required to give the disclosures Finally, concern has been expressed that con- that I previously outlined. H.R. 3011 would sumers may not fully understand the terms and require creditors to give more extensive detailed conditions of the programs. This concern may be disclosures about home equity loans. For examdue, in part, to the complexity of these plans and ple, it would require more disclosures concerning the fact that the underlying contracts could run the annual percentage rate, including disclosure several pages in length. Currently, Regulation Z of the maximum amount that the rate could does not require any special format for open-end change in a one-year period, and if no limit exists disclosures. As a result, in most cases, the dis- on annual rate increases, a statement to that closures given for these plans are not segregated effect. The bill would also add an example, based from the contractual provisions or highlighted in on an amount outstanding of $10,000 showing the any standard manner. We believe that consumers payment terms under the plan and would require should be alerted to the most important terms creditors to disclose their ability to unilaterally Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

30 Federal Reserve Bulletin • January 1988 change the terms and conditions of the plan. about the cost of a credit transaction, the Board These disclosures, among others, would gener- would generally support this goal. The Board, ally have to be given at the time of application, however, generally opposes the imposition of which is earlier than current requirements, and substantive restrictions on a particular loan prodwould have to be segregated from other disclo- uct absent sufficient evidence that such restricsures, which is also a departure from current tions are necessary to prevent misleading or requirements. H.R. 3011 would also add a new abusive practices. At this time, we are unaware advertising section to the Truth in Lending Act of any evidence that such practices exist. Morefor home equity lines. over, to the extent that imposing substantive The Board generally supports the approach restrictions could affect a creditor's ability to taken in H.R. 3011 to require additional disclo- offer this type of loan product, consumers who sures for home equity plans at an earlier stage of might otherwise enjoy the advantages that such a the credit-granting process. The Board also be- product offers could be adversely affected. For lieves that material information about these plans example, H.R. 3468 would prohibit plans that should be presented in a manner that will alert allow interest-only payments, a feature that consumers to the most important information might be attractive to consumers who prefer the about the cost of their credit transaction. To the lower monthly payments offered by these plans extent that H.R. 3011 addresses these concerns and who fully understand that a balloon payment about the content, timing, and format of disclo- may result. In addition, the bill would prohibit sures given to consumers, the Board generally rate floors for home equity loans with a variable favors the bill's intent. rate feature. Such a restriction could adversely affect a creditor's ability to offer a home equity H.R. 3468, which was introduced by Congressproduct, since creditors have fixed operating man Schumer, would also amend the Truth in costs that may necessitate their placing limits on Lending Act to require additional disclosure and the minimum rate that can be offered to consumadvertising requirements for home equity loans. ers. Moreover, prohibiting creditors from setting The bill would require certain disclosures to be rate floors may be ineffective since creditors may given with each home equity application. For be obliged to seek alternative sources of revenue example, creditors would have to disclose more through increased fees and transaction charges, information about the annual percentage rate and or through the imposition of higher maximum fees charged under a particular plan, as well as interest rates or greater interest rate margins. provide more information about a plan's pay- The Board, therefore, urges the Congress not to ment terms. Creditors would also have to give an adopt legislation that might unnecessarily restrict example of the periodic payments that would the offering of products that, in many cases, have been required under the plan over a 15-year benefit consumers, particularly absent sufficient period. The bill would also impose additional evidence that such restrictions are necessary to disclosure requirements for advertisements of prevent misleading or abusive practices. home equity loans. Perhaps the most significant feature of H.R. 3468, however, is the fact that it would impose additional substantive requirements on home equity loans, such as prohibiting the establishment of rate floors and payment CONCLUSION schedules that would permit interest-only payments, and prohibiting credit extensions in ex- I can assure you that the Federal Reserve Board cess of 75 percent of a dwelling's fair market shares the goal that consumers receive adequate value. information at a relevant stage of the credit- As I indicated in my comments on H.R. 3011, granting process when they contract for home the Board generally supports the idea of in- equity loans. We believe that it is particularly creased disclosures for home equity loans. To important that consumers understand these prothe extent that H.R. 3468 would require creditors grams since they may pose a greater risk because to provide consumers with more information of their complexity, the large credit lines gener- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 31 ally involved, and the possibility of losing one's dence of a clear and unequivocal need for such home. On the other hand, I want to urge the action. Congress not to restrict the terms and conditions We look forward to working with you on this of home equity programs without sufficient evi- important subject. • Statement by H. Robert Heller, Member, Board which, of course, required substantial follow-up of Governors of the Federal Reserve System, efforts by the individual agencies, include the before the Subcommittee on Commerce, Con- following: sumer, and Monetary Affairs of the Committee • The Working Group developed, and then on Government Operations, U.S. House of Rep- each of the banking agencies implemented, a resentatives, November 19, 1987. uniform criminal referral form for use by all financial institutions subject to the regulatory I welcome the opportunity to appear before you jurisdiction of the agencies. Based on our initial on behalf of the Federal Reserve System to experience in using this criminal referral form, discuss criminal misconduct and insider abuse in the Working Group recently reviewed and modour nation's financial institutions. Let me assure ified it to enhance its effectiveness. you at the outset that the Federal Reserve shares • Each agency has developed, or is in the final this committee's continuing interest in seeing stages of developing, an automated system to that necessary arrangements are in place to facil- monitor and track criminal referral information itate the effective detection, referral, and prose- submitted to the agency by its examiners and the cution of white-collar crime involving financial financial institutions that it regulates. The statisinstitutions, arrangements that we hope and ex- tical information that will be detailed later was pect will also help to prevent such crimes. made possible by the use of the Federal Re- In my judgment, many positive steps have serve's new computer system. already been taken by federal regulatory and law • The Department of Justice developed and enforcement agencies, in large measure in re- implemented the "significant" referral tracking sponse to the recommendations of this commit- system. This system keeps track of all referrals tee, and I want to begin by reviewing them with from the regulatory agencies that involve you. Thereafter, I intend to discuss what we have amounts in excess of $200,000 or in which the learned from the data on criminal referral and following occur: (1) a senior officer or director of enforcement actions that we have been collecting a financial institution is suspected or (2) there is in the past couple of years and then to address concern that an activity might undermine the other questions that the committee raised in its integrity of the supervisory process or have letter inviting me to appear here today. systemic implications. • Lists of contact persons with responsibilities for criminal referral, investigation, and prosecu- ACTIONS TAKEN TO DATE tion at each of the banking and criminal justice agencies have been prepared and disseminated Actions that have been taken to deal with crim- throughout the regulatory agencies' staffs and inal offenses that involve financial institutions in those of the FBI and the U.S. Attorneys' Offices. large part have been set in motion through the • Examiner training has been greatly enhanced efforts of the Interagency Bank Fraud Enforce- through the expansion of the Examination Counment Working Group, which is comprised of cil's White Collar Crime course and joint FBI representatives from each of the federal financial and banking agency training courses that are held institution regulatory agencies, the Department throughout the country. I will discuss these iniof Justice, the Federal Bureau of Investigation, tiatives in greater detail later in my testimony. and the Farm Credit Administration. The princi- • The members of the Working Group are now pal accomplishments of this Working Group, developing a series of uniform instructions for all Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

32 Federal Reserve Bulletin • January 1988 agency examiners who are assigned to assist in and bank holding companies, it will shed light on criminal investigations to better prepare them for the nature of the problems of criminal miscontheir duties. duct or insider abuse that are being encountered • Guidelines for the Uniform Bank Bribery Act by all regulatory and law enforcement agencies. were developed by the members of the Working As is true for other agencies, our data for state Group in compliance with recent legislation. member banks and bank holding companies • With the encouragement of the Working show large increases in the volume of criminal Group, the Department of Justice has made referrals. During the last few months of 1985 white-collar crime involving financial institutions (when the new criminal referral form was introa top priority for investigation and prosecution duced and in use for the first time), the Federal by the FBI and the various Offices of the U.S. Reserve received only 111 such referrals. But in Attorneys. 1986 the total number of referrals jumped to I believe this record demonstrates that the 1,154; and in the first half of 1987 alone, the Federal Reserve and the other regulatory and law Federal Reserve received 1,044 such referrals. It enforcement agencies have worked diligently is also noteworthy that the number of "signifover the past few years to improve their abilities icant" referrals that were submitted by the Fedto address the problems of criminal misconduct eral Reserve to the Fraud Section of the Criminal and insider abuse. These efforts have led to a Division of the Department of Justice has risen dramatic increase in the number of cases—into from 18 in the latter part of 1985 to 49 in 1986 and the thousands—that have been identified and to 74 so far this year. About one-half of the referred to the FBI for investigation, and, when significant referrals involve insiders, such as ofthe evidence warrants, to the Offices of U.S. ficers and directors; and the other half, outsiders, Attorneys for prosecution. One important result such as bank customers. of the improvements in this process is that a Cases of insider abuse that do not involve a substantially larger number of criminal cases has criminal offense but instead involve violations of been investigated by the FBI. Despite the con- banking laws, rules, and regulations or unsafe or certed efforts of the law enforcement agencies, unsound practices and are addressed by formal however, the very substantial increase in the enforcement actions on our part have also gone numbers of suspected criminal offenses that have up over this period. Moreover, in keeping with been detected and referred has led to the creation our objective of focusing a greater part of our of a tremendous backlog of cases to be processed efforts on ridding the system of individuals who by the FBI and the Department of Justice. Thus, cause harm, an increasing percentage of our total much remains to be done before it can be said enforcement actions has been taken against peothat the problem of white-collar crime in our ple in their individual capacities rather than financial institutions has been brought under against their banks and holding companies. For effective control, and that will no doubt require example, the Federal Reserve staff between 1984 the allocation of additional resources to the task, and the present date issued 38 suspension, reparticularly at the law enforcement agencies. moval, and prohibition orders, compared with only three such actions in the period from 1980 to 1983. SCOPE AND NATURE OF PROBLEMS AT While the statistics emphasize the growth that STATE MEMBER BANKS AND BANK has occurred in the number of problems of crim- HOLDING COMPANIES inal misconduct and insider abuse, it is important to put them in the proper perspective by provid- As I have indicated, the Federal Reserve has put ing a breakdown of their nature and the extent to in place an automated system to track referrals which they have affected banking organizations. from state member banks and bank holding com- Our data show the following: panies. I believe the committee will find of inter- 1. Out of the total of 2,300 referrals, 80 percent est a review of this information. While its focus is related to alleged criminal misconduct involving on information pertaining to state member banks losses or potential losses of less than $10,000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 33 The vast majority of these small crime-related processed by the FBI and Offices of U.S. Attorreferrals involved teller defalcations, credit card neys, and such processing and the investigative fraud, and mysterious disappearances. An addi- follow-up, we know from our own experience in tional 16 percent pertained to losses in the carrying out enforcement actions, place a large $10,000 to $200,000 range. Thus, "significant" burden on limited staff resources. As just one referrals, which either involve crimes in excess example, in a very recent removal action underof $200,000 or involve senior financial institution taken by the Board, several staff lawyers worked insiders, accounted for about 5 percent of the for a month preparing a suspension case, litigattotal. ing the action in federal court (with the assistance 2. The 2,300 referrals involving individuals of a U.S. Attorney's Office) and finally negotiatreceived by the Federal Reserve since the new ing a settlement of the matter. While the Board uniform criminal referral form was put into use in successfully removed the individual from the August 1985 were submitted by 255 state member bank where he had caused great harm, the effort banks and 29 bank holding companies. Or, put placed a relatively extensive claim on our limited differently, approximately 23 percent of all state resources. I am certain that the level of resources memuer banks and about one-half of 1 percent of needed to investigate and then prosecute an all bank holding companies filed criminal refer- individual under the criminal laws in just one rals during this period. I might note that the case must be at least as large—a matter that I am relatively low incidence of referrals involving sure representatives from the Department of bank holding companies reflects the fact that Justice can confirm. banks, rather than bank holding companies, hold Thus, it is clear that the FBI and the Justice the majority of liquid assets—particularly cash— Department are facing a very difficult challenge. the object of many smaller criminal offenses. We in the Federal Reserve are prepared to pro- 3. Of the 37 state member banks that have vide our assistance in helping to meet this chalfailed since 1984, a review of our records re- lenge, and indeed have been providing such vealed that criminal misconduct was principally assistance recently. For example, in one case responsible in 5 cases. involving two bank holding companies, two in- Assuming our statistics are generally repre- sured banks, an insured federal savings bank, sentative of the experience of all agencies, their and 10 insiders, the legal and examination staffs implications are that the great majority of the of the Board and a Reserve Bank uncovered cases of criminal misconduct that have been extensive fraudulent schemes being directed by detected and referred to the FBI and Justice the individuals through the bank holding compa- Department have involved relatively small sums nies. As a first step, our staff convened a meeting of money that did not, in any material manner, with representatives from the state banking deaffect the safety or soundness of financial insti- partment, the Federal Home Loan Bank Board tutions. In addition, the great majority of state (FHLBB), the Office of the Comptroller of the member banks and bank holding companies have Currency (OCC), and the Federal Deposit Insurnot suffered from any instances of criminal mis- ance Corporation (FDIC) to coordinate civil enconduct. But, while the cases involving signifi- forcement actions, and then they worked with cant offenses constitute a relatively small propor- the FBI and the U.S. Attorney to explain the tion of all offenses detected, it is important to complex schemes, which have already lead to the remember that their absolute number appears to failure of the savings bank and substantial losses have been growing rapidly and that criminal to the several financial institutions, including a misconduct and insider abuse have played a Federal Land Bank. We expect indictments in significant role in the failure of some state mem- this case very shortly. ber banks. Thus, there is obvious need to deci- In another case, one of our most senior Resively address the problems. serve Bank examiners has been assigned, for the We would emphasize to the committee that past 18 months, to assist federal and state prossuch actions will require a heavy commitment of ecutors in connection with the failures of several resources. All referrals, large and small, must be state insured thrift associations. To date, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

34 Federal Reserve Bulletin • January 1988 state has won eight convictions of some of the A recent case demonstrates this problem. Fedcustomers and officers and directors of the finan- eral Reserve examiners found extensive evicial institutions, and extremely long prison sen- dence of reciprocal loans between a state memtences have been set as punishments in recogni- ber bank and the officers and directors of several tion of the serious nature of the crimes. other financial institutions in its area. Several million dollars of poorly documented and apparently fraudulent loans were made by the bank's president to the officers and directors of the other AREAS OF CONCERN banks and thrift associations in return for a like amount of loans to the president and perhaps The committee has asked me to comment on a other bank officers and directors. Our examiners number of areas of concern. I will address sevimmediately contacted the FBI and the U.S. eral of these, but time and space limitations Attorney in order to alert them to the problem; prevent me from giving in-depth answers to each but, we could not relay any account information of the questions you raised in your letter. We will without the notification of the bank's insiders or provide written responses to all questions not the issuance of a Grand Jury subpoena. Since fully covered in my formal remarks. there was no sitting Grand Jury, the FBI could not act quickly because the notification procedures would have alerted the wrongdoers and had a negative impact on the investigation of the THE RIGHT TO FINANCIAL PRIVACY ACT fraudulent loans. AND RULE 6(e) Interestingly, in connection with this matter, The first area involves the Right to Financial the FBI could not provide information about an Privacy Act and Rule 6(e) of the Federal Rules of important ongoing investigation of the bank's Criminal Procedure. As Board staff reported to president to us because of the limitations and the committee in response to your October 15 restrictions of Rule 6(e) of the Federal Rules of inquiries, we have not found the Right to Finan- Criminal Procedure. Because of these Grand cial Privacy Act to be an impediment to the Jury secrecy rules, we had not been advised criminal referral process from the point of view about an extensive investigation of this individof individual banks. Out of the 2,300 referrals ual's activities. received at the Federal Reserve between August The committee should consider whether the 1985 and June 1987, in only one case did a relevant laws need to be amended. With respect referring bank fail to identify the name of a to the Right to Financial Privacy Act, the staffs of suspect and in only five others did banks limit the the banking agencies recently completed an inamount of information provided in their forms teragency package of proposed amendments. because of perceived problems with the Right to This legislative proposal was approved by the Financial Privacy Act. Board of Governors a few weeks earlier and, The Right to Financial Privacy Act, however, once it has been approved by the other agencies, does place limitations and restrictions on the it will be submitted to the Congress by all of us. banking agencies in their ability to transfer cer- Simply, the Right to Financial Privacy Act tain information to the FBI and the Department amendments would permit the free transfer of of Justice. When Federal Reserve examiners find information that is lawfully in the hands of bank information in the account records of a bank examiners, such as through a bank examination, customer that relate to criminal misconduct, the to the criminal justice agencies. examiners cannot freely provide the information to the criminal justice agencies. We can, by law, AVAILABILITY OF REPORTS OF tell the OCC and the FDIC, but we cannot tell the EXAMINATION FBI without following the cumbersome notification procedures of the Right to Financial Privacy The committee is also interested in the recent Act. proposed amendment to the Board's Rules Re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 35 garding Availability of Information that deals zations, on the other hand, rely on internal with the release of reports of examination and auditors to provide needed reports to manageinspection of state member banks and bank hold- ment and to the directors. While the Board ing companies to the bank's agents, such as encourages the use of outside auditors, we are accountants or counsel. The proposed revision to reluctant to endorse a requirement that all orgathe Board's regulations in this area would permit nizations must have an outside audit, because of the routine release of such reports to a bank's or the added costs that would impose on smaller holding company's agents, if certain procedures organizations and because, in general, we believe are followed by the financial institutions and the internal audits can serve adequately the needs of agents—procedures that are principally designed these smaller organizations. In cases in which to maintain the confidential nature of the reports our examiners find internal audit systems to be of examination and inspection prepared by the deficient, we instruct banks to improve them Federal Reserve. and, under appropriate circumstances, to seek A final version of the regulation has not been outside audit assistance as well. prepared by Board staff because they are still examining public comments. It seems to me that the final regulation should enable the accountants of a financial institution to review the findings of an examination during the course of an audit and EXAMINER TRAINING AND MANPOWER should make the release of the report as simple as LEVELS possible. I am aware of the letter of October 9,1987, you Since the committee first started its examination sent to us on this matter that recommended that of the problems associated with criminal misconthe regulatory agencies be required to make their duct and insider abuse, the Federal Reserve, in examination reports directly available to the au- cooperation with the other banking agencies, the ditors of a banking organization. I will make sure FBI, and the Department of Justice, has greatly that your position is given careful consideration expanded its training of examiners to enhance by the Board when it reviews this matter. I might their abilities to detect, refer, and, when necesnote in this connection that it is our experience sary, assist criminal investigations and prosecuthat almost all independent public accountants tions. Between 1985 and this date, more than 25 request access to an institution's examination training sessions of the joint FBI-banking agency reports and are routinely granted such access. bank fraud course and the Examination Council's White Collar Crime course have been held. The Federal Reserve has sent more than 100 of AUDITS its most senior examiners through these courses and has provided very experienced examiners The Federal Reserve is well aware of the impor- and attorneys to teach them. tant role that auditors play in promoting the safe With regard to the level of the Federal Reand sound operation of banks. Their reports serve's examiner manpower, I am pleased to provide needed information to managers and report that since the implementation of the Feddirectors of banking institutions and also to their eral Reserve's enhanced supervision program creditors and stockholders, thus facilitating the over the last two years, examiner levels have influence that market discipline can exert on the increased substantially. We require the annual operation of institutions. Our examiners also examination of all state member banks and the review the reports of auditors when they begin an semiannual examination of all "problem" state examination. member banks. These additional resources, to Most, if not all, banking organizations of me- gether with cooperative alternative examination dium and larger size, as well as a great many arrangements we have with state banking agensmaller organizations, employ the service of out- cies, have enabled us to meet our major examiside auditors. Most of the very smallest organi- nation goals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

36 Federal Reserve Bulletin • January 1988 INTERAGENCY SHARING OF INFORMATION tained at their Reserve Banks and are available to AND COORDINATION WITH LAW the criminal justice agencies upon request. ENFORCEMENT AGENCIES ROLE OF DIRECTORS The Federal Reserve recognizes the great importance of sharing information with other regula- The board of directors plays a critical role in tory agencies and in cooperating with and assistassuring that a banking organization is operated ing law enforcement agencies to carry out their in a safe and sound manner and is in full compliduties. Since the Federal Reserve often takes ance with laws and regulations. For this reason, enforcement actions against bank holding comit has long been a fundamental tenant of the law panies with national and state nonmember bank and Federal Reserve policy that directors are subsidiaries, it is particularly important that the accountable for carrying out their legal and fidu- OCC and the FDIC be advised of these actions. ciary responsibilities. We have also taken a num- Likewise, information concerning all removal ber of steps to make sure that directors are and prohibition actions taken by the Board is properly informed of the condition of their instisent to each of the other federal financial institututions. For example, in accordance with procetion supervisory agencies to ensure that the dures that were implemented under the Board's individual subject to the Board's order does not recently enhanced supervision program, a senior reenter the banking industry at another nonofficial of a Reserve Bank meets with the board Federal Reserve supervised institution. of directors of all problem financial institutions Information concerning criminal referrals is immediately following the conclusion of the Reshared with the other agencies on a periodic serve Bank's examination. In addition, when basis. Our current system for the sharing of informal or formal enforcement action is necesinformation about all referrals received by the sary, the Federal Reserve requires each director Federal Reserve is not meant to be a long-term of the institution to sign the supervisory enforcesolution to the problem of disseminating such ment action. information among all of the banking and crimi- Finally, upon completion of an examination or nal justice agencies. We are awaiting the impleinspection in which significant problems are unmentation of the FBI's Field Office Information covered, the Federal Reserve sends a summary Management System, which is expected to keep report to each director of the institution setting track of all criminal referrals submitted to each of forth in clear and precise language the nature and the banking agencies, correlate the information, severity of the bank's and bank holding comand highlight those repeat offenders who move pany's weaknesses and the responsibilities of the from one institution to another after having comdirectors to take action to correct them. mitted relatively small crimes. We have also supported the FDIC in its efforts Obviously, in making and following up on to develop guidelines on the responsibility of criminal referrals, communication and cooperdirectors for overseeing the activities of their ation among the agencies are vital. Our examinainstitutions, and the Board recently approved tion and supervisory staffs have worked closely having the Federal Reserve join with the FDIC with the FBI and the Justice Department and are and the OCC in issuing such guidelines. This not aware of any situations in which these agenaction underscores the Federal Reserve's view of cies have been dissatisfied with the timeliness the critical importance of informed and responand adequacy of information provided by the sible directors for the health of financial institu- Federal Reserve or our response to requests for tions. assistance. Within the Federal Reserve System, it is our policy that all examiners make all necessary referrals as soon as suspected criminal CONCLUSION activities are uncovered, rather than wait until the conclusion of an examination. Moreover, the To sum up, we recognize that insider abuse and work papers of our examiners are always main- criminal misconduct are serious problems that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 37 require a timely and effective response by regu- Moreover, while we recognize that much has lators of depository institutions and criminal jus- been done, we also know that we have a considtice agencies. And, of course, it is also important erable way to go before we can be fully satisfied to stress the critical role of the directors of such with our accomplishments. institutions in assuring that their institutions are Besides improving our ability to identify and operated in a safe and sound manner and in full refer questionable practices, the actions we have compliance with laws and regulations. I believe taken should have another benefit. Over time, we that it is fair to say that we have made significant believe that these actions as they are improved progress in dealing with these problems. The and strengthened, together with our more fresteps I have outlined today have improved our quent on-site examination schedule, will increase ability to identify and refer questionable activi- the likelihood that perpetrators of questionable ties in a timely fashion, and we have also acts will be caught. In the long run, it is our hope strengthened our ability to assist law enforce- that this deterrent effect will serve to discourage ment agencies in investigating criminal activities. or prevent the kinds of illegal or questionable The support and encouragement of this commit- activities that this committee and the regulatory tee, it should be pointed out, have been impor- agencies are working so hard to address. • tant in our efforts to make these improvements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

38 Announcements FEE SCHEDULES ANNOUNCED FOR Federal Reserve's priced services been furnished SERVICES OF FEDERAL RESERVE BANKS by a private business firm. The Federal Reserve Board announced on November 9, 1987, the 1988 fee schedules for ser- REGULATION Z: AMENDMENT vices provided by the Reserve Banks. The majority of the 1988 fees are the same as those The Federal Reserve Board approved on Nocurrently imposed, and they become effective vember 6, 1987, a final rule that amends Regula- January 1, 1988. tion Z (Truth in Lending) to implement a provi- The fee schedules apply to check collection, sion of the Competitive Equality Banking Act of automated clearinghouse, wire transfer of funds 1987 regarding adjustable-rate mortgage caps. and net settlement, definitive safekeeping, non- The amendment requires creditors that offer cash collection, and book-entry services for non- adjustable-rate mortgages, for both open- and Treasury securities. Fee schedules for the check closed-end credit, to set a limit on the maximum collection service will be distributed by the Re- interest rate that may be charged. Determination serve Banks; fee schedules for the remaining of the maximum rate is within the creditor's services are available from Publications Ser- discretion. vices, Board of Governors of the Federal Re- The amendment applies only to closed-end serve System, Washington, D.C. 20551. transactions (such as a traditional second mort- In 1988, total costs for priced services, includ- gage) or open-end plans (such as home equity ing the Private Sector Adjustment Factor lines of credit) entered into on or after December (PSAF), are projected to be $647.1 million. Total 9, 1987, the effective date of the law. Under the revenue is estimated at $658.8 million, resulting amendment, creditors are required to specify in in a recovery rate of 101.8 percent. However, the their credit contracts the maximum interest rate recovery rate for wire transfers of funds and net that may be imposed during the term of the settlement services may be lower due to addi- obligation. tional expenses associated with improving services and implementing new contingency backup arrangements. PROPOSED ACTIONS As a result of the Expedited Funds Availability provision in the Competitive Equality Banking The Federal Reserve Board requested comment Act, Reserve Banks will offer beginning Septem- on proposals affecting real estate investment and ber 1, 1988, new services to speed the return of development activities in a holding company unpaid checks. The costs and revenues associ- framework. Comment was requested by Decemated with these services are not included in the ber 4, 1987, on whether the Board, in evaluating 1988 check collection fees. bank holding company proposals, should pro- At the same time, the Board approved the 1988 hibit banks and savings banks in a holding com- PSAF for Reserve Bank priced services of $76.2 pany from engaging in real estate and developmillion—an increase of 7.5 percent over the 1986 ment activities and whether these activities level. The PSAF is an allowance for the taxes should be confined to nonbank subsidiaries of that would have been paid and the return on bank holding companies. capital that would have been provided had the The Board also requests comment on (1) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

39 whether member banks, not in a holding com- ation system that will replace current equipment. pany system, should be subject to interaffiliate The first unit is to be delivered in two years. lending restrictions and (2) whether the Board The $39.5 million contract was approved by should impose special capital requirements on the Board of Governors. The equipment counts real estate subsidiaries of holding company and sorts currency, detects counterfeit, and debanks. stroys unfit currency by shredding. The increased speed of the second-generation equipment and the automation of functions previously done by hand will contribute substantially to a CONTRACT AWARDED FOR AUTOMATED reduction in the cost of processing currency and CURRENCY-PROCESSING EQUIPMENT will increase the productivity of the cash operations areas in the Reserve Banks. The Federal Reserve announced on November Among the expected advantages of the second- 30, 1987, the award of a contract for the manu- generation equipment are a reduction of 40 perfacture of new automated currency-processing cent in labor costs; an increase of 20 percent in equipment that is expected to meet the nation's output; improved accuracy, fitness, authenticaneeds through the rest of this century. tion detectors, and security; and reduction in the Acting on behalf of the 12 Federal Reserve size of shredded material to facilitate disposal. Banks, the Federal Reserve Bank of Cleveland The purchase is a major step in a continuing awarded the contract to Recognition Equipment, effort by the Federal Reserve Banks to reduce Inc. of Irving, Texas, to provide a second-gener- the cost of providing the public with fit currency. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

40 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON SEPTEMBER 22,1987 end-of-model-year discounts and financing incentives. However, a considerable decrease in do- Domestic Policy Directive mestic car sales in the first ten days of September suggested that the effectiveness of the incentive The information reviewed at this meeting sug- programs might be waning. Retail spending on gested that economic activity was expanding in consumer goods excluding autos and gasoline the current quarter at a pace similar to that in the continued to advance at a moderate pace in July first half of the year. Output and employment and August to a level slightly above the secondappeared to have registered solid gains in the quarter average. Housing starts edged down to third quarter, with particular strength in the an annual rate of 1.58 million units, as a decline industrial sector of the economy. On the spend- in single-family starts more than offset some ing side, outlays for consumption and business increase in multifamily construction. The run-up equipment have risen noticeably this quarter, but in mortgage interest rates during April and May construction has been weak. Price advances has damped housing demand, as reflected in the have eased in recent months after a sharp rise reduced pace of housing starts and sales in recent earlier in the year, and wage increases have months. Multifamily starts have remained close remained subdued. to the average rate in the second quarter but Industrial production rose further in August substantially below that recorded during the first after large gains in other recent months; the three months of the year. Business fixed invest- August level was more than 7 percent (annual ment appeared to be strengthening, particularly rate) above the second-quarter average. Business for equipment. In July, shipments of nondefense equipment and materials have been the strongest capital goods were 2Vi percent above the secondcomponents of industrial output in recent quarter average, and orders for these goods rose months, but advances have been widespread substantially in recent months. Spending for nonamong major market groupings. residential structures has continued to trend Nonfarm payroll employment increased again lower, albeit at a slower rate than over the past in August; although the gain was half the size of couple of years, partly because of renewed the July increase, the average change in the two strength in petroleum drilling. Inventories in midmonths was close to the pace of the first half of summer appeared to be moderate in most segthe year. The average workweek also rose in ments of the nonfarm business sector. At auto August and, coupled with the employment gains, dealers, the quickened selling pace in August, pushed up aggregate hours of production and combined with scaled-back production, reduced nonsupervisory workers significantly. Hiring re- inventories to more comfortable levels. For remained strong in services, but employment lev- tailers other than auto dealers, stocks increased eled off in manufacturing after a large gain in at a relatively slow rate, and the inventory-sales July. The unemployment rate was unchanged at ratio edged down in August. As a result of the 6.0 percent in August, about three-quarters of a apparently conservative inventory stance in manpercentage point lower than at the beginning of ufacturing, factory stocks have remained generthe year. ally lean, with the July inventory-shipments ratio near its lowest point in the current cycle. Retail sales have increased considerably in recent months. Auto sales have been boosted by Preliminary data suggested that the nominal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

41 U.S. merchandise trade deficit was essentially greater reserve restraint would, or slightly lesser unchanged in July from its June level despite reserve restraint might, be acceptable depending substantial increases in the quantity and prices of on indications of inflationary pressures, the oil imports. However, the July deficit was larger strength of the business expansion, developthan the second-quarter average. In real terms, ments in foreign exchange markets, as well as the the second-quarter deficit on goods in the GNP behavior of the monetary aggregates. M2 and M3 accounts narrowed only slightly further because were expected to grow at annual rates of around a rebound in the quantity of oil and non-oil 5 percent from June through September, while imports largely offset a substantial rise in the growth in Ml was expected to pick up from the quantity of exports. The surplus on services in much reduced pace of recent months. The interthe GNP accounts narrowed in real terms. The meeting range for federal funds was left unaverage pace of economic growth in the major changed at 4 to 8 percent. foreign industrial economies increased in the Total and nonborrowed reserves resumed exsecond quarter after a very weak first quarter. A pansion in August, primarily because of higher rebound in German GNP in the second quarter levels of excess reserves. In the maintenance reversed a first-quarter decline but left GNP no period after the August meeting, federal funds higher than its third-quarter 1986 level. Real generally traded in a 6V2 to 63A percent range, GNP also resumed growing in the second quarter though the rate moved a bit higher around the in France and Italy, while real GNP in Canada end of August when markets began to expect that and the United Kingdom showed continued the System would tighten policy. In light of the strength. In Japan, real GNP did not grow in the potential for greater inflation, associated in part second quarter on average as a more rapid rise in with weakness in the dollar, a decision was made domestic demand was offset by the negative in early September to reduce marginally the contribution of the external sector; however, availability of reserves through open market opindustrial production picked up in June and July. erations. On September 4 the discount rate was While cumulative surpluses in the trade and raised from 5V2 percent to 6 percent. After the current accounts of Japan and Germany for the discount rate increase, federal funds traded year to date remained at or near a record rate, mainly in the 7 to 7lA percent area. In the two data for recent months indicate some adjustment, maintenance periods completed since the August especially for Japan. meeting, adjustment plus seasonal borrowing Price increases have eased in recent months; averaged about $530 million. the CPI and PPI for finished goods both rose 0.2 Other interest rates rose substantially over the percent in July, and the August PPI was un- intermeeting period. Market interest rates moved changed. The deceleration in these price mea- up early in the period amid pressures on the sures from the pace in the first half of the year dollar, concerns about inflation, and expectalargely reflected a downturn in food prices and tions of policy-firming actions by the Federal smaller energy price increases. Producer prices Reserve. Rates rose further after the increase in for finished foods fell sharply in August, and the discount rate, particularly short-term rates; although the effect of rising oil prices continued also, commercial banks raised the prime rate by to be evident, declines in both spot and contract Vi percentage point. On balance, market rates prices were likely to damp retail energy prices by were up Vi to 3A percentage point over the early autumn. Excluding food and energy, the intermeeting period. Most stock price indexes CPI rose in July at around the reduced pace of reached new highs in late August but subsethe second quarter and the comparable PPI in- quently retreated to levels 2Vi to 6 percent below creased moderately over the first two months of those at the time of the August meeting. the current quarter. The weighted-average foreign exchange value At its meeting on August 18, the Committee of the dollar in terms of the other G-10 currencies adopted a directive that called for maintaining declined about 2Vi percent in the weeks immedithe existing degree of pressure on reserve posi- ately following the August meeting. The main tions. The members decided that somewhat factor in the dollar's depreciation appeared to be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

42 Federal Reserve Bulletin • January 1988 greater pessimism about the pace of adjustment moderate in the second half of 1987, but to move of external imbalances, following the release of back up in 1988, reflecting pressures from rising U.S. merchandise trade data that were worse import prices. Moreover, with the civilian unemthan market participants had expected. More- ployment rate projected to edge lower, the over, prospects for growth abroad relative to that pickup in prices was expected to push up labor in the United States suggested only a limited costs and compensation gains next year. contribution from this source to external adjust- In the Committee's discussion of the economic ment. The dollar rose somewhat later in the situation and outlook, members commented that period after the increase in the discount rate, current indicators of business activity were genreducing its net decline over the intermeeting erally favorable and pointed on balance to conperiod to about IV2 percent. tinuing expansion at a moderate pace. A number Growth in the monetary aggregates increased of members believed that any deviation from in August from the sluggish pace of previous current expectations was likely to be in the months. The acceleration of M2 in August partly direction of faster growth. However, some saw reflected faster growth in its Ml component as factors in the outlook that would be likely to the runoff in demand deposits ended and the restrain any potential for a substantially stronger growth of other checkable deposits accelerated expansion, and one view stressed the vulnerabilslightly. The strongest growth among nontrans- ity of the expansion to a slowdown. With regard actions components of M2 occurred in RP liabil- to the outlook for inflation, members noted that ities at banks, which rose sharply in association developments in financial markets suggested with a surge in acquisitions of Treasury securities some buildup in inflationary expectations, but for trading accounts, and in money market mu- they also stressed that there was no current tual funds. Bolstered by the expansion in M2 and evidence of an upturn in broad measures of by faster growth in managed liabilities, M3 ex- inflation. Nonetheless, several expressed conpanded at a IV2 percent annual rate in August. cern about the risks of some intensification in Over July and August the broader monetary price and wage pressures. Others saw greater aggregates increased at annual rates of 4 to 5 prospects that the rate of inflation might hold percent, and for the year through August their around current levels or possibly decline. cumulative growth remained below the low ends In their discussion of specific developments of their target ranges for 1987, with M2 substan- bearing on the outlook for domestic business tially below its range. activity, members observed that key economic The staff economic projections had changed indicators provided evidence of appreciable moonly marginally since the August FOMC meet- mentum in the business expansion. Individual ing. Somewhat stronger growth was anticipated members also reported that local business condiover the near term, but real GNP still was tions appeared to be strengthening in many parts expected to expand at a moderate rate through of the country, although recovery in some previthe end of 1988. Improvement in the external ously depressed areas or sectors of the economy sector was projected to provide substantial im- was still quite modest or tentative, with current petus for real growth as changes in the foreign activity still well below earlier peaks. It was exchange value of the dollar boosted U.S. ex- suggested that the expansion could be characterports and damped import growth. In contrast, ized currently as better balanced than earlier, growth in domestic spending would probably be with favorable implications for its sustainability. relatively subdued. Rising import prices associ- At the same time, some members believed that ated with the fall in the value of the dollar were the risks of appreciably more rapid expansion likely to limit increases in real income and con- were relatively limited in the context of considsumer spending; budgetary pressures probably erable progress in reducing the federal budget would constrain government purchases; and ris- deficit, restrained monetary expansion, and an ing mortgage rates and high vacancy rates were increased level of interest rates. Some members expected to damp construction activity. As in also noted that increasing domestic demands and previous forecasts, inflation was projected to the prospects for improvement in the foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 43 trade balance had greatly reduced the odds of a problem would become much more difficult for shortfall in the expansion from current expecta- policymakers. A number of other members saw a tions. lesser risk that inflation would intensify over the The members continued to view the very large period ahead. Highly competitive conditions deficits in the federal budget and in the foreign continued to characterize many markets, both trade balance as issues of fundamental concern. domestic and international, and businessmen Although a great deal of progess had been made were persisting in their efforts to curb their costs in reducing the federal deficit in the current fiscal of production. It also was noted that a portion of year, the outlook for needed further progress was the gains in output and employment was occuruncertain. The trade deficit also had improved in ring in previously depressed industries where the real terms, though not in nominal terms, over the availability of labor and other production recourse of recent quarters. The members gener- sources was concentrated. In this view monetary ally expected at least some progress to be made policy had been sufficiently tight, with relatively on the latter basis as foreign trade patterns and low monetary growth, and in the context of a less prices were adjusted over time to the reduced expansionary fiscal policy, the economy was not value of the dollar in foreign exchange markets. seen as likely to generate excessive demand However, the timing and extent of such improve- pressures over the next several quarters. ment remained subject to considerable uncer- At its meeting in July the Committee reviewed tainty, and differing views were expressed re- the basic policy objectives that it had set in garding the most likely prospects for net exports February for growth of the monetary and debt and the underlying pressures on the dollar. The aggregates in 1987 and established tentative obmembers agreed that the vigor of the domestic jectives for expansion of those aggregates in expansion would depend to a substantial extent 1988. For the period from the fourth quarter of on foreign trade developments. Some members 1986 to the fourth quarter of 1987, the Committee noted that with shrinking margins of excess ca- reaffirmed the ranges established in February pacity in labor markets, overall domestic de- involving growth of 5Vi to 8V2 percent for both mands would need to remain relatively moderate M2 and M3. Given developments through midto provide room for growth in export production; year, the Committee agreed that growth in these in that regard continuing progress in reducing the aggregates around the lower ends of their ranges federal budget deficit was essential. might be appropriate, depending on the circum- Turning to the outlook for inflation, members stances. The monitoring range for expansion in commented that the sharp decline in unemploy- total domestic nonfinancial debt also was left ment this year together with anecdotal evidence unchanged at 8 to 11 percent for 1987. For 1988 of labor shortages in many areas of the country the Committee agreed on tentative reductions of had not triggered any general increases in wage Vi percentage point to growth ranges of 5 to 8 rates thus far. Additionally, the members did not percent for both M2 and M3. The Committee also see in recent indicators any evidence of an up- reduced the associated range for growth in total turn in the general level of prices. However, domestic nonfinancial debt by Vi percentage several expressed concern that the economy point to IVi to 10V2 percent for 1988. With might have reached the point where employment respect to Ml, the Committee decided at the July and production levels would tend to be associ- meeting not to set a specific target for the remainated with stronger pressures on wages and der of 1987 or to establish a tentative range for prices, particularly if the business expansion 1988. It was understood that all the ranges for proved to be more vigorous than was generally 1988 were provisional and that they would be anticipated. Of particular concern was the pros- reviewed early next year in the light of intervenpect that rising prices of internationally traded ing developments. The issues involved with esgoods could foster a more general increase in tablishing a target for Ml would be carefully domestic prices and lead to higher wages. Be- reappraised at the beginning of 1988. cause such developments would reflect broader In the Committee's discussion of policy impleand more permanent cost factors, the inflation mentation for the weeks immediately ahead, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

44 Federal Reserve Bulletin • January 1988 most of the members indicated that they were in which depository institutions would adjust their favor of directing open market operations, at offering rates on interest-bearing deposits. In least initially, toward achieving the increased light of the uncertainties that were involved, degree of reserve pressure that had been sought judgments about appropriate rates of monetary in recent weeks. No change in policy would be growth would need to rely on accompanying involved, given the decision in early September economic and financial developments. to reduce the availability of reserves; however, With regard to possible adjustments in policy because implementation of that decision had not implementation during the intermeeting period, yet been reflected in actual pressures on reserves the members generally felt that there should be or in money markets, an unchanged policy at this no presumptions about the likely direction of meeting would imply some slight firming from the such adjustments, if any. A number of members actual reserve conditions that had prevailed re- commented that, taking account of earlier policy cently. A few members expressed a preference firming decisions, monetary policy was now apfor maintaining the existing degree of reserve propriately positioned under the circumstances pressure. The members agreed that the differ- that were most likely to prevail. While a few ences in question were slight and that, against the members felt that the Committee should remain background of earlier policy-firming actions, sig- especially alert to developments that might call nificant further changes in policy were not desir- for somewhat firmer reserve conditions, others able at this time. In the latter connection, some did not want the directive to lean in the direction members urged that particular caution be exer- of still further firming, given the slight initial cised in implementing policy following today's firming that was already contemplated. The meeting in order not to convey a misleading members generally agreed that in addition to impression of the System's policy intentions. developments relating to the outlook for infla- In reaching their decisions the members took tion, any reserve adjustments during the interaccount of a staff analysis that suggested that meeting period should give weight to ongoing even without any increase in reserve pressures business developments and the performance of money growth was likely to remain fairly sub- the dollar in foreign exchange markets. In keepdued over the months ahead. This outlook re- ing with the Committee's usual approach, it also flected in large measure the expected effects on was understood that any decision to alter reserve money demand of the increase in market interest objectives during the intermeeting period would rates associated in part with the decisions in take account of the behavior of monetary aggreearly September to achieve slightly firmer re- gates. serve conditions and to raise the discount rate. In The members generally supported a proposal the circumstances, growth of M2 might continue to raise the existing intermeeting range for the at about its average pace of recent months and on federal funds rate by 1 percentage point to 5 to 9 a cumulative basis remain appreciably below the percent. One member expressed concern that the Committee's range for the year. Growth in M3 higher range might be misinterpreted as signaling might pick up marginally from its recent pace, future firming action. Others pointed out, howending the year around the lower limit of its ever, that the increase was a technical adjustrange for 1987. Given its particular sensitivity to ment intended to take account of the rise in the interest rates, growth in Ml for the balance of the federal funds rate over the course of recent year was expected to slow further from its con- weeks and to provide a more symmetrical range siderably reduced pace thus far in 1987. The around the current rate. By itself the increase members recognized that projections of mone- would have no significance for policy. The fedtary growth necessarily involved a wide range of eral funds range provides a mechanism for initiuncertainty. In particular, developments in the ating consultation of the Committee when its months ahead would depend importantly on the boundaries are persistently exceeded. unknown extent to which holders of money as- At the conclusion of the Committee's discussets would respond to the higher market interest sion, all of the members indicated that they rates that had emerged and also on the extent to preferred or could accept a directive that called Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 45 for maintaining the slightly firmer degree of re- both M2 and M3 remained below the lower ends of the serve pressure that had been sought in recent ranges established by the Committee for the year; growth in Ml has been at a much reduced pace in 1987. weeks. With regard to possible adjustments dur- Expansion in total domestic nonfinancial debt has ing the intermeeting period, the members indimoderated this year. Interest rates have risen considcated that somewhat greater reserve restraint or erably since the meeting on August 18. On September somewhat lesser reserve restraint would be ac- 4, the Federal Reserve Board approved an increase in ceptable depending on developments relating to the discount rate from 5l/z to 6 percent. In foreign exchange markets, the trade-weigh ted value of the inflation, the strength of the business expansion, dollar in terms of the other G-10 currencies has deprethe performance of the dollar in foreign exchange ciated on balance since the latest meeting; some of the markets, while also taking account of the behav- decline in the dollar early in the intermeeting period ior of the monetary aggregates. The contem- was later reversed. plated provision of reserves was expected to be The Federal Open Market Committee seeks monetary and financial conditions that will foster reasonable consistent with growth in M2 and M3 at annual price stability over time, promote growth in output on rates of around 4 percent and around 6 percent a sustainable basis, and contribute to an improved respectively, for the four-month period from pattern of international transactions. In furtherance of August to December. Growth in Ml was ex- these objectives the Committee agreed at its meeting pected to remain relatively slow over the same in July to reaffirm the ranges established in February period. Because of the unusual uncertainty relat- for growth of 5V2 to 8V2 percent for both M2 and M3 measured from the fourth quarter of 1986 to the fourth ing to the behavior of Ml and in keeping with the quarter of 1987. The Committee agreed that growth in decision not to set a longer-run target for this these aggregates around the lower ends of their ranges aggregate, the Committee decided to continue may be appropriate in light of developments with the practice of not specifying a numerical expec- respect to velocity and signs of the potential for some strengthening in underlying inflationary pressures, tation for its short-run growth. The members provided that economic activity is expanding at an agreed that the intermeeting range for the federal acceptable pace. The monitoring range for growth in funds rate should be raised from 4 to 8 percent to total domestic nonfinancial debt set in February for the 5 to 9 percent. the year was left unchanged at 8 to 11 percent. At the conclusion of the meeting the following For 1988, the Committee agreed on tentative ranges of monetary growth, measured from the fourth quarter domestic policy directive was issued to the Fedof 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 IOI/2 percent. The information reviewed at this meeting suggests With respect to Ml, the Committee recognized that, on balance that economic activity is expanding in the based on experience, the behavior of that aggregate current quarter at a pace similar to that in the first half must be judged in the light of other evidence relating to of the year. Total nonfarm payroll employment rose economic activity and prices; fluctuations in Ml have further in August after a large increase in July. The become much more sensitive in recent years to civilian unemployment rate remained at 6.0 percent, changes in interest rates, among other factors. Bewell below its level at the start of the year. Industrial cause of this sensitivity, which has been reflected in a production increased further in August following large sharp slowing of the decline in Ml velocity over the gains in other recent months. Consumer spending, first half of the year, the Committee again decided at bolstered by a rise in auto sales, posted a large the July meeting not to establish a specific target for increase in August. Recent indicators of business growth in Ml over the remainder of 1987 and no capital spending point to some strength, particularly in tentative range was set for 1988. The appropriateness equipment outlays. Housing starts fell in August to a of changes in Ml this year will continue to be evalulevel a little below their average in other recent ated in the light of the behavior of its velocity, develmonths. Preliminary data suggest that the nominal opments in the economy and financial markets, and U.S. merchandise trade deficit was unchanged in July the nature of emerging price pressures. The Commitfrom its June level but larger than the second-quarter tee welcomes substantially slower growth of Ml in average. The rise in consumer and producer prices has 1987 than in 1986 in the context of continuing ecoslowed in recent months, reflecting favorable price nomic expansion and some evidence of greater infladevelopments in food and energy. tionary pressures. The Committee in reaching operational decisions over the balance of the year will take Growth of the monetary aggregates strengthened in account of growth in Ml in the light of circumstances August, but for 1987 through August, expansion of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

46 Federal Reserve Bulletin • January 1988 then prevailing. The issues involved with establishing Votes for this action: Messrs. Greenspan, Corria target for Ml will be carefully appraised at the gan, Angell, Boehne, Boy kin, Heller, Kelley, beginning of 1988. Keehn, Johnson, Ms. Seger, and Mr. Stern. Votes In the implementation of policy for the immediate against this action: None. future, the Committee seeks to maintain the degree of pressure on reserve positions sought in recent weeks. On every business day from October 19 to 30, Somewhat greater reserve restraint or somewhat 1987, the Committee conferred by telephone and lesser reserve restraint would be acceptable depending reviewed the extremely volatile conditions that on indications of inflationary pressures, the strength of the business expansion, developments in foreign ex- had developed in financial markets. The memchange markets, as well as the behavior of the aggre- bers agreed on the need for special flexibility in gates. This approach is expected to be consistent with open market operations during this period for growth in M2 and M3 over the period from August meeting the liquidity requirements of the ecothrough December at annual rates of around 4 percent nomic and financial system. Such an approach to and around 6 percent, respectively. Ml is expected to continue to grow relatively slowly. The Chairman may policy implementation was deemed to be consiscall for Committee consultation if it appears to the tent with the directive adopted at the meeting on Manager for Domestic Operations that reserve condi- September 22, but it was understood that policy tions during the period before the next meeting are would have to be kept under particularly close likely to be associated with a federal funds rate perreview. sistently outside a range of 5 to 9 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

47 Legal Developments AMENDMENT TO REGULATION Z Part 226—Truth in Lending The Board of Governors is amending 12 C.F.R. Part 1. The authority citation for 12 C.F.R. Part 226 is 226, its Regulation Z, by issuing a final rule to imple- revised to read as follows: ment section 1204 of the Competitive Equality Banking Act of 1987 (Pub. L. No. 100-86, 101 State. 552). Authority: Section 105, Truth in Lending Act, as Section 1204 provides that, effective December 9, amended by section 605, Pub. L. 96-221, 94 Stat. 170 1987, any adjustable rate mortgage loan originated by (15 U.S.C. 1604 et seq.)-, section 1204(c), Competitive a creditor must include a limitation on the maximum Equality Banking Act, Pub. L. 100-86, 101 Stat. 552. interest rate that may apply during the term of the loan. The final rule, incorporating the new law into 2. Part 226 is amended by revising paragraphs 226.1(a), Regulation Z, limits the scope of section 1204 to (d)(4) and (e) to read as follows: dwelling-secured consumer credit, that is subject to the Truth in Lending Act and Regulation Z, in which a Subpart A—General creditor may make interest rate changes during the term of the credit obligation—whether those changes Section 226.1—Authority, purpose, coverage, are tied to an index or formula or are within the organization, enforcement and liability. creditor's discretion. The rule applies the statutory requirement to both closed-end and open-end credit. (a) Authority: This regulation, known as Regulation Z, As a result, effective December 9, 1987, creditors are is issued by the Board of Governors of the Federal required to set a lifetime maximum interest rate on all Reserve System to implement the federal Truth in credit obligations secured by a dwelling that require Lending and Fair Credit Billing Acts, which are convariable-rate disclosures under Regulation Z, where tained in title I of the Consumer Credit Protection Act, the interest rate may increase. In addition, creditors as amended (15 U.S.C. 1601 et seq.). This regulation offering open-end lines of credit secured by a dwelling also implements title XII, section 1204 of the Competin which the creditor has the contractual right to itive Equality Banking Act of 1987 (Pub. L. 100-86, change the interest rate—the periodic rate and corre- 101 Stat. 552). Information-collection requirements sponding annual percentage rate—on an account are contained in this regulation have been approved by the also required to set a lifetime maximum interest rate Office of Management and Budget under the proviapplicable during the plan. The rule applies only to sions of 44 U.S.C. 3501 et seq. and have been assigned credit obligations entered into on or after December 9, 1987. OMB No. 7100-0199. Creditors must specify the lifetime maximum rate of interest that may be imposed on obligations subject to ^^ * * * section 1204 in their credit contracts (the instrument (4) Subpart D contains rules on oral disclosures. signed by the consumer that imposes personal liabil- Spanish language disclosure in Puerto Rico, record ity). Determination of the maximum rate is within the retention, effect on state laws, state exemptions, creditor's discretion. Until October 1, 1988, compliand rate limitations. ance with section 1204—specifying the maximum interest rate in credit contracts—meets the requirement in Regulation A that creditors disclose limitations on rate increases as part of the variable rate (e) Enforcement and liability. Section 108 of the act disclosures for open-end credit plans and closed-end contains the administrative enforcement provisions. credit transactions. Sections 112, 113, 130, 131, and 134 contain provisions Effective December 9, 1987, the Board amends 12 relating to liability for failure to comply with the C.F.R. Part 226 as follows: requirements of the act and the regulation. Section Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

48 Federal Reserve Bulletin • January 1988 1204(c) of Title XII of the Competitive Equality Bank- (b) Sections 265.2(b)(10) and 265.2(f)(48): "Director of ing Act of 1987, Pub. L. No. 100-86, 101 Stat. 552, Banking Supervision and Regulation" ; incorporates by reference administrative enforcement (c) Section 265.2(f)(26): "Director of the Board's Diand civil liability provisions of sections 108 and 130 of vision of Banking Supervision and Regulation". the act. 3. The following sections are amended by removing the words indicated below and inserting in their place the words "directors and staff directors": 3. A new section 226.30 is added to Subpart D to read (a) Section 265.2(b)(ll): "directors"; as follows: (b) Section 265.2(c)(29): "Directors". Subpart D—Miscellaneous 4. The introductory text of section 265.2(c) is revised to read as follows: Section 226.30—Limitation on rates (c) The Staff Director of the Division of Banking Supervision and Regulation (or, in the Staff Director's A creditor shall include in any consumer credit con- absence, the Acting Staff Director) is authorized: tract secured by a dwelling and subject to the act and this regulation the maximum interest rate that may be imposed during the term of the obligation 50 when: 5. Sections 265.2(c)(26), 265.2(c)(29), and 265.2(c)(34) (a) In the case of closed-end credit, the annual per- are amended by removing the word "Director", which centage rate may increase after consummation, or appears once in section (c)(26), once in section (c)(34), (b) In the case of open-end credit, the annual percent- and twice in section (c)(29), and inserting in its place age rate may increase during the plan. the words "Staff Director". 6. Section 265.2(g) is revised to read as follows: (g) The Staff Director of the Division of International AMENDMENT TO RULES REGARDING Finance (or, in the Staff Director's absence, the Acting DELEGA TION OF A UTHORITY Staff Director) is authorized, under the provisions of the sixth paragraph of section 14 of the Federal Re- The Secretary of the Board of Governors has ap- serve Act (12 U.S.C. 358), to approve the establishproved technical amendments to 12 C.F.R. Part 265, ment of foreign accounts with the Federal Reserve its Rules Regarding Delegation of Authority, to reflect Bank of New York. changes in titles of Board officials exercising delegated authority. Effective June 17, 1987, the Secretary of the Board amends 12 C.F.R. Part 265 as follows: ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT AND BANK MERGER ACT Part 265—Rules Regarding Delegation of Orders issued Under Section 3 of the Bank Authority Holding Act 1. The authority citation for Part 265 continues to read CBTC Holding Company, Inc. as follows: Paris, Tennessee Authority: Sec. ll(k), 38 Stat. 261 and 80 Stat. 1314 (12 U.S.C. 248(k). Order Approving Formation of a Bank Holding Company 2. The following sections are amended by removing the words indicated below and inserting in their place CBTC Holding Company, Inc., Paris, Tennessee the words "Staff Director of the Division of Banking ("Applicant"), has applied for the Board's approval Supervision and Regulation": under section 3(a)(1) of the Bank Holding Company (a) Section 265.1a(a)(2): "Director of the Division of Act, as amended (12 U.S.C. § 1842(a)(1)) ("BHC Banking Supervision and Regulation"; Act"), to become a bank holding company by acquiring 100 percent of the voting shares of Commercial Holding Company, Inc., Paris, Tennessee ("Company"), and thereby indirectly acquire control of 50. Compliance with this section will constitute compliance with Commercial Bank and Trust Company, Paris, Tennesthe disclosure requirements on limitations on increases in footnote 12 to sections 226.6(a)(2) and 226.18(f)(2) until October 4, 1988. see ("Bank"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 49 Notice of the application, affording an opportunity months after the effective date of this Order, unless for interested persons to submit comments, has been such period is extended for good cause by the Board or given in accordance with section 3(b) of the BHC Act the Federal Reserve Bank of St. Louis, acting pursu- (12 U.S.C. § 1842(b)). The time for filing comments ant to delegated authority. has expired and the Board has considered the applica- By order of the Board of Governors, effective Notion and all comments received in light of the factors vember 23, 1987. set forth in section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). Voting for this action: Chairman Greenspan and Governors Applicant, a non-operating corporation with no sub- Johnson, Seger, and Heller. Absent and not voting: Goversidiaries, was organized for the purpose of becoming a nors Angell and Kelley. bank holding company by acquiring Company and thereby indirectly acquiring Bank, which holds depos- JAMES MCAFEE its of $110.3 million.1 Upon acquisition of Bank, [SEAL] Associate Secretary of the Board Applicant would control the 45th largest bank in Tennessee, representing .034 percent of total deposits Eastern Michigan Financial Corporation in commercial banks in the state. Croswell, Michigan Bank is the largest of three banking organizations in the relevant market and holds 70 percent of the total Order Approving Acquisition of a Bank deposits in commercial banks in that market.2 Principals of Applicant and Bank are not affiliated with any Eastern Michigan Financial Corporation ("Eastern other depository organizations in the market. Based Michigan"), Croswell, Michigan, a bank holding comon the facts of record, consummation of the proposed pany within the meaning of the Bank Holding Comtransaction would not result in any adverse effects pany Act ("Act"), 12 U.S.C. § 1842 et seq., has upon competition or increase concentration of banking applied pursuant to section 3(a)(3) of the Act, 12 resources in any relevant area. Accordingly, the Board U.S.C. § 1843(a)(3), to acquire Sanilac County Bank, concludes that competitive considerations under the Deckerville, Michigan ("Bank"). BHC Act are consistent with approval of the applica- Notice of the application, affording interested pertion. sons an opportunity to submit comments, has been Applicant will become a bank holding company by given in accordance with section 3(b) of the Act, 52 acquiring control of Company. By the instant pro- Federal Register 30,251 (1987). The time for filing posal, Applicant's principals propose to place acquisi- comments has expired, and the Board has considered tion debt in Applicant. The Board has previously the application and all comments received in light of indicated that a bank holding company should serve as the factors set forth in section 3(c) of the Act. a source of financial and managerial strength for its Eastern Michigan is the 78th largest commercial subsidiary banks.3 Although Applicant will incur debt banking organization in Michigan, controlling deposits in connection with this proposal, it appears that Ap- of $56.6 million, representing 0.1 percent of total plicant will be able to service its debt, particularly in deposits in commercial banking organizations in the view of Bank's favorable earnings record and sound state.1 Bank is the 118th largest commercial banking financial condition. In light of the above, the Board organization in Michigan, controlling deposits of $35.4 views the financial and managerial resources of Appli- million, representing less than one percent of total cant, Company, and Bank as consistent with approval. deposits in commercial banking organizations in the Considerations relating to the convenience and needs state. Upon consummation of this proposal, Eastern of the communities to be served are also consistent Michigan would become the 47th largest commercial with approval. banking organization in the state, controlling $92 mil- Based on the foregoing and other facts of record, the lion in deposits, representing less than one percent of Board has determined that the application should be, total deposits in commercial banking organizations in and hereby is, approved. The transaction shall not be the state. Consummation of the proposal would not consummated before the thirtieth calendar day follow- increase significantly the concentration of banking ing the effective date of this Order, or later than three resources in Michigan. Eastern Michigan's subsidiary bank competes directly with Bank in the Sanilac County banking 1. All banking data are as of December 31, 1986. 2. The relevant banking'market is approximated by Henry County, Tennessee. 3. See, CNB Bancorp, Danville, Illinois (73 FEDERAL RESERVE BULLETIN 598 (1987)). 1. All banking data are as of June 30, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

50 Federal Reserve Bulletin • January 1988 market.2 Eastern Michigan is the second largest com- that mitigates the anticompetitive effects of this promercial banking organization in the market, with de- posal in the Sanilac County banking market.5 posits of $44.2 million, representing 17.2 percent of In addition, Bank has faced severe financial and total deposits in commercial banks in the market. managerial problems in recent years that have resulted Bank is the fourth largest commercial banking organi- in a decline in Bank's ability to perform as a strong zation in the market, with $35.4 million in deposits, competitor in the market.6 Moreover, the Sanilac representing 13.8 percent of total deposits in commer- County banking market is not an attractive market for cial banks in the market. Upon consummation of this entry by an outside firm, having lagged behind similar proposal, Eastern Michigan would remain the second Michigan counties in terms of deposit and population largest commercial banking organization in the mar- growth. Accordingly, in view of all of the facts of ket, with $79.6 million in deposits, representing 31.0 record, the Board has determined that consummation percent of the total commercial banking deposits in the of this proposal would not have a significant adverse market. The market is considered highly concentrated, effect on existing competition in the Sanilac County with a four-firm concentration ratio of 82.3 percent. banking market. The Herfindahl-Hirschman Index ("HHI") of the The financial and managerial resources of Eastern market is 2142 and would increase by 475 points to Michigan and its subsidiary bank are consistent with 2617 upon consummation of this proposal.3 approval. The Board has considered the fact that Bank Although consummation of this proposal would has experienced some managerial and financial diffieliminate existing competition between Eastern Mich- culties, and consummation of this proposal will imigan and Bank in the Sanilac County banking market, prove the prospects of Bank by providing Bank with numerous other commercial banks would continue to the financial and managerial resources to continue to operate in the market after consummation of this serve the convenience and needs of the community. proposal. In addition, the Board has considered the Considerations relating to the convenience and needs presence of thrift institutions in the banking market in of the community to be served are also consistent with its analysis of this proposal. The Board previously has approval. indicated that thrift institutions have become, or have Based on the foregoing and other facts of record, the the potential to become, major competitors of com- Board has determined that the application should be, mercial banks.4 Thrift institutions already exert a and hereby is, approved. The acquisition shall not be considerable competitive influence in the market as consummated before the thirtieth calendar day followproviders of NOW accounts and consumer loans, and ing the effective date of this Order or later than three many are engaged in the business of making commer- months after the effective date of this Order, unless cial loans. Based upon the number, size, market share such period is extended for good cause by the Board, and commercial lending activities of thrift institutions or by the Federal Reserve Bank of Chicago, acting in the market, the Board has concluded that thrift pursuant to delegated authority. institutions exert a significant competitive influence By order of the Board of Governors, effective November 23, 1987. Voting for this action: Chairman Greenspan and Governors 2. The Sanilac County banking market is approximated by Sanilac Johnson, Seger, and Heller. Absent and not voting: Gover- County, Michigan. nors Angell and Kelley. 3. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)), any market in which the post-merger HHI is over 1800 is considered highly concentrated, and JAMES MCAFEE the Department is likely to challenge a merger that increases the HHI [SEAL] Associate Secretary of the Board by more than 50 points unless other factors indicate that the merger will not substantially lessen competition. The Department of Justice has informed the Board that a bank merger or acquisition is not likely to be challenged (in the absence of other factors indicating an anticompetitive effect) unless the post-merger 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 acquisitions for anti-competitive effects implicitly recognizes the competitive effects of limited purpose lenders and 5. If 50 percent of the deposits controlled by thrift institutions were other non-depository financial entities. included in the calculation of market concentrations, Eastern Michi- 4. The Board has previously indicated that thrift institutions have gan and Bank would control 15.7 percent and 12.5 percent of total become, or have the potential to become, major competitors of market deposits, respectively. The HHI would increase by 393 points commercial banks. National City Corporation, 70 FEDERAL RESERVE to 2204 upon consummation of the proposal. BULLETIN 743 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE 6. In this regard, the Michigan Department of Commerce has BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL opined that the "advantages offered by the proposed transaction far RESERVE BULLETIN 802 (1983); and First Tennessee National Corpo- outweigh the disadvantages created by the elimination of competiration, 69 FEDERAL RESERVE BULLETIN 298 (1983). tion" in the market. 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Legal Developments 51 Meridian Bancorp, Inc. conditions substantially similar to those imposed by Reading, Pennsylvania Delaware law.3 In addition, Meridian's aggregate deposits in all eligible states exceeds its aggregate depos- Order Approving Acquisition of a Bank its in states not designated as eligible states. Based on the foregoing, the Board has determined that, as of Meridian Bancorp, Inc., Reading, Pennsylvania ("Me- January 1, 1988, the proposed acquisition is specifiridian"), a bank holding company within the meaning cally authorized by the statute laws of Delaware and of the Bank Holding Company Act (the "Act") thus Board approval is not prohibited by the Douglas (12 U.S.C. § 1841 et seq.), has applied for the Board's Amendment, subject to Applicant's obtaining the apapproval pursuant to section 3(a)(3) of the Act, to proval required pursuant to section 843(a) of the acquire all of the voting shares of Delaware Trust Delaware Statutes.4 Company, Wilmington, Delaware ("Delaware Meridian is the fifth largest commercial banking Trust"). organization in Pennsylvania, controlling deposits of Notice of the application, affording interested per- $5.4 billion, representing 5.3 percent of the deposits in sons an opportunity to submit comments, has been commercial banking organizations in the state.5 Delapublished (52 Federal Register 27,460 (1987)). The ware Trust is the third largest commercial banking time for filing comments has expired, and the Board organization in Delaware, controlling deposits of has considered the application and all comments re- $951.8 million, representing 16 percent of the deposits ceived in light of the factors set forth in section 3(c) of in the state. Consummation of this proposal would not the Act. have any significant adverse effect upon the concen- Section 3(d) of the Act (12 U.S.C. § 1842(d)), the tration of banking resources in either Pennsylvania or Douglas Amendment, prohibits the Board from ap- Delaware. proving an application by a bank holding company to Meridian and Delaware Trust do not compete diacquire control of any bank located outside of the bank rectly in any banking market. Accordingly, consumholding company's home state unless the acquisition is mation of this proposal would not result in any adverse "specifically authorized by the statute laws of the state effect upon existing competition in any relevant bankin which such bank is located, by language to that ing market. The Board has also considered the effects effect and not merely by implication."1 of the proposed acquisition on probable future compe- Meridian's home state is Pennsylvania and Dela- tition in the markets in which Meridian or Delaware ware Trust's home state is Delaware. Effective Janu- Trust, but not both, compete. In light of the existence ary 1, 1988, the interstate banking statutes of Delaware of numerous potential entrants into the relevant bankwill authorize bank holding companies located in "el- ing markets, the Board has concluded that consummaigible states" to acquire a Delaware bank with the tion of this proposal would not have any significant approval of the Delaware State Commissioner, pro- adverse effect on probable future competition in any vided the bank holding company's aggregate deposits relevant market. in all eligible states exceeds its aggregate deposits in The financial and managerial resources of Meridian, states not designated as eligible states. An "eligible its subsidiary banks, and Delaware Trust are considstate" is defined as a state that authorizes the acqui- ered satisfactory and consistent with approval. In sition of banks in that state by a Delaware bank considering the convenience and needs of the commuholding company on substantially the same terms and nities to be served, the Board has taken into account conditions, and is limited to Maryland, New Jersey, the records of Meridian and Delaware Trust under the Ohio, Pennsylvania, the District of Columbia, and Community Reinvestment Act, 12 U.S.C. § 2901 Virginia.2 et seq. ("CRA"). The CRA requires the Board, in its Effective August 24, 1986, Pennsylvania interstate evaluation of a bank holding company application, to banking statutes authorize bank holding companies in assess the record of an applicant in meeting the credit a region including Delaware, to acquire banks and needs of the entire community, including low- and bank holding companies in Pennsylvania on terms and moderate-income neighborhoods, consistent with safe 1. A bank holding company's home state is the state in which the operations of the bank holding company's subsidiary banks were 3. Pa. Stat. Ann. tit. 7, § 116 (Purdon Supp. 1987). principally located on July 1, 1966, or on the date on which the 4. In addition to obtaining approval from the Delaware State company became a bank holding company, whichever is later. Commissioner, Meridian must obtain approval from the Pennsylvania 2. Del. Code Ann. tit. 5, § 841 et seq as added by The Delaware Department of Banking. Pa. Stat. Ann. 7 § 116(h). Interstate Banking Act of 1987, 66 Del. Laws Ch. 32 (1987). 5. State deposit data are as of December 31, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

52 Federal Reserve Bulletin • January 1988 and sound operation. The Board has received com- lending programs indicates that the bank does not ments from the COLT Coalition, the Community engage in discriminatory practices and is active in Development Coalition, Inc., and the Delaware Com- lending to the low- to moderate-income segments of its munity Reinvestment Action Council (collectively service areas in terms of real estate, student, and "Protestants"), organizations that represent low- and commercial loans. In addition, Meridian has indicated moderate-income and minority individuals and groups that Delaware Trust will enhance its service to its in Philadelphia and Delaware, regarding Meridian's community by advertising in a free local newspaper, as and Delaware Trust's CRA performances. Protestants part of its regular advertising activities, as well as by contend that Meridian's subsidiary, Meridian Bank, advertising in Spanish. Reading, Pennsylvania, and Delaware Trust have Furthermore, Meridian has informed the Board of failed to adequately assess the credit needs of low- and its intentions to improve its CRA record by undertakmoderate-income persons in their communities, and ing a number of specific measures, including the that both Meridian Bank and Delaware Trust engage in following: discriminatory credit practices. 1. Develop a plan that addresses ways to meet credit In accordance with the Board's practice and proce- needs in low- and moderate-income areas of the dures for handling protested applications,6 the Board Philadelphia community and the prospective Wilreviewed the allegations made by the Protestants and mington community; Meridian's response to the allegations. In an attempt 2. Increase awareness and marketing of special to resolve the concerns raised by the protests, Merid- credit programs that can be utilized by residents ian has met privately with the Protestants on several who fall outside the bank's traditional lending criteoccasions to discuss the issues raised by the Protes- ria; tants. Moreover, Meridian, the Community Develop- 3. Relocate CRA statements in branch locations to ment Coalition, Inc., and the Delaware Community make them more accessible to the public; Reinvestment Action Council have announced that 4. Develop a mechanism for more effective monitorthey have reached an agreement in principle that ing of CRA-related efforts and needs across regions will resolve many of the issues raised by these protes- in the bank's service area; tants. Meridian anticipates that the preliminary agree- 5. Expand participation in local reinvestment proment will be formalized, in writing, as soon as practi- grams relative to residential real estate loans; cable. 6. Expand the CRA statement to include special Initially, the Board notes that Meridian Bank and credit programs currently being offered which en- Delaware Trust have received satisfactory CRA as- hance the afifordability of credit products; sessments from their primary supervisory agencies. 7. Enhance training of branch personnel with re- Both Delaware Trust and Meridian Bank have a com- spect to the disclosure requirements of the Home pliance officer and a specialist who monitor the banks' Mortgage Disclosure Act; and compliance with CRA and other consumer laws. With 8. Adopt a Spanish CRA notice for use in Hispanic regard to Meridian Bank, the Board notes that al- communities in Reading and Philadelphia. though there is some disparity between real estate credit extensions that the bank has made to low- to The Board expects that all these measures will be moderate-income areas and other areas in Philadel- implemented in a timely fashion. phia, Meridian Bank has, overall, a favorable record in In addition, the agreement in principle that has been meeting the credit needs of the communities it serves. reached between the Community Development Coali- Meridian Bank actively ascertains the credit needs of tion, Inc., the Delaware Community Reinvestment its communities by officer call programs and partici- Action Council and Meridian provides the following: pating in a wide variety of community groups, and 1. $700,000 is to be earmarked by Meridian and offers a wide range of credit services. In particular, Delaware Trust over a five-year period in Wilming- Meridian Bank is especially active in providing credit ton and Philadelphia for economic and community for 1-4 family residential housing, agricultural, and development, and mortgage programs including small business lending throughout Pennsylvania. credit counseling; With regard to Delaware Trust, the Board notes that 2. Establishment of local advisory committees in the bank is active in determining the needs of its both cities to make recommendations to the banks community by participating in a variety of community on specific economic development projects in their groups and trade fairs. A review of Delaware Trust's respective communities. Those requests might include monies to be used in matching funds programs, specific projects, or projects tied to city and 6. See 12 C.F.R. § 262.25(c). state economic development programs; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 53 3. $10 million in loans to be made annually, on a NBD Bancorp, Inc. noncumulative basis, over a five-year period in low- Detroit, Michigan and moderate-income areas in Delaware. The credit will be in the form of residential mortgages, home NBD Northern Corporation improvement and residential and community devel- Detroit, Michigan opment loans, state and regional authority debt issues, and loans to small businesses; Order Approving Acquisition of a Bank Holding 4. $2 million in loans to be made annually, on a Company and Formation of a Bank Holding noncumulative basis, will be made available in Phil- Company adelphia over the same five-year period for similar types of lending programs; and NBD Bancorp, Inc., Detroit, Michigan ("NBD"), a 5. The banks have agreed to place deposits up to bank holding company within the meaning of the Bank $750,000 into interest-bearing accounts of qualifying Holding Company Act of 1956, as amended ("BHC community-based neighborhood credit unions in Act") (12 U.S.C. § 1841 et seq.), and its wholly owned Wilmington and Philadelphia to be used for small nonoperating subsidiary, NBD Northern Corporation, loans to residents in those communities. Detroit, Michigan ("NBD Northern") (together, "Applicants"), have applied for the Board's approval Based on the overall satisfactory CRA record of under section 3 of the BHC Act (12 U.S.C. § 1842) to Meridian Bank and Delaware Trust, and all the facts of merge NBD Northern with State National Corporarecord, the Board concludes that convenience and tion, Evanston, Illinois ("State National"), and needs considerations in this case are consistent with thereby acquire State National's two subsidiary approval of the application.7 banks: State National Bank, Evanston, Illinois Based on the foregoing and other facts of record, the ("Evanston Bank"), and The Bank and Trust Com- Board has determined that the application should be, pany of Arlington Heights, Arlington Heights, Illinois and hereby is, approved. The acquisition of Delaware ("Arlington Bank"). Trust shall not be consummated before the thirtieth Notice of the applications, affording an opportunity calendar day following the effective date of this Order, for interested persons to submit comments, has been or later than three months after the effective date given in accordance with section 3(b) of the BHC Act. of this Order, unless such period is extended for The time for filing comments has expired, and the good cause by the Board or by the Federal Reserve Board has considered the applications and all com- Bank of Philadelphia acting pursuant to delegated ments received in light of the factors set forth in authority. section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). By order of the Board of Governors, effective No- Section 3(d) of the BHC Act (12 U.S.C. § 1842(d)), vember 30, 1987. the Douglas Amendment, prohibits the Board from approving an application by a bank holding company Voting for this action: Chairman Greenspan and Governors to acquire a bank located outside of the bank holding Johnson, Seger, Angell, Heller, and Kelley. company's home state, unless the acquisition is specifically authorized by the statute laws of the state in JAMES MCAFEE which such bank is located, by language to that effect [SEAL] Associate Secretary of the Board and not merely by implication.1 NBD's home state is Michigan. The Board has previously determined that the statute laws of Illinois specifically authorize Michigan bank holding companies, such as NBD, to acquire an Illinois bank or bank holding company.2 Accordingly, approval of NBD's proposal is not barred by the Douglas Amendment. 7. The Community Development Coalition, Inc., and the Delaware Community Reinvestment Action Council requested that the Board order a public meeting and public hearing. Under the Board's rules, the Board may hold a public meeting or hearing on an application to clarify factual issues related to the application and to provide an 1. A bank holding company's home state for the purposes of the opportunity for testimony, if appropriate. 12 C.F.R. §§ 262.3(d) and Douglas Amendment is that state in which the total deposits of its 262.25(d). In this case the Federal Reserve Bank of Philadelphia has banking subsidiaries were largest on July 1, 1966, or on the date it arranged private meetings for this purpose and the parties have became a bank holding company, whichever date is later. 12 U.S.C. § reached an agreement in principle regarding the CRA issues. Based on 1842(d). this and other facts of record, the Board has determined that a public 2. First America Bank Corporation, 73 FEDERAL RESERVE BULLEmeeting or hearing would serve no useful purpose. Accordingly, the TIN 175 (1987); NBD Bancorp, Inc., 73 FEDERAL RESERVE BULLETIN request for a public meeting or hearing is denied. 316 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

54 Federal Reserve Bulletin • January 1988 NBD, with 33 subsidiary banks in Michigan, Illinois, ment Act ("CRA") (12 U.S.C. § 2901 et seq.).6 The and Indiana, holds total domestic deposits of $14.2 Board has received comments regarding the CRA billion.3 NBD is the seventh largest commercial bank- record of Evanston Bank from the Evanston Neighing organization in Illinois with deposits of $1.6 billion, borhood Conference, a coalition of Evanston neighrepresenting 1.5 percent of the total deposits in com- borhood and public interest groups (collectively, mercial banks in that state. NBD Northern is a non- "protestants").7 Protestants allege, inter alia, that operating subsidiary formed for the purpose of acquir- Evanston Bank has not met the credit needs of Evaning State National. State National, with 2 subsidiary ston's low- and moderate-income and minority combanks holding total domestic deposits of $563 million, munities and has not taken adequate measures to is the 27th largest commercial banking organization in ascertain the credit needs of the community it serves. Illinois holding 0.5 percent of the total deposits in In accordance with the Board's practice and procecommercial banks in that state. Upon consummation dure for handling protested applications,8 the Board of this proposal, NBD would become the fifth largest has reviewed the protestants' allegations and the recommercial banking organization in Illinois holding 2.0 sponses of Applicants and Evanston Bank. In an percent of the total deposits in commercial banks in attempt to resolve the concerns addressed in the that state. Consummation of this proposal would not protest, the parties met on two occasions to discuss have any significant adverse effects on the concentra- the issues raised by protestants. The parties, however, tion of banking resources in Illinois. were unable to come to a resolution of their differ- NBD operates in the Chicago banking market,4 ences. where it is the fifth largest of 256 commercial banking Initially, the Board notes that NBD's and State organizations, controlling 2.3 percent of total deposits National's subsidiary banks have received satisfactory in commercial banks. State National also operates in CRA assessments from their primary supervisory the Chicago market where it is the 18th largest com- agencies. Further, the Board has reviewed Evanston mercial banking organization, controlling 0.9 percent Bank's lending record in Evanston's low- and moderof total deposits in commercial banks. Upon consum- ate-income and minority neighborhoods and concludes mation of this proposal, NBD would remain the fifth that Evanston Bank does not discriminate in its lendlargest commercial banking organization in the mar- ing to such neighborhoods.9 ket, controlling 3.2 percent of total deposits in com- Evanston Bank has represented to protestants the mercial banks. steps it will take to adequately ascertain and meet the The Chicago banking market is, and would continue convenience and needs of the communities it serves. to be after consummation of the proposed acquisi- In particular, Evanston Bank has stated its intent to tions, an unconcentrated market.5 In view of the work with NBD's mortgage lending subsidiary to market shares and small increase in concentration provide FHA and VA financing which it does not resulting from the proposal, the Board concludes that currently provide. Applicants have represented to the consummation of these acquisitions would not have a Board that they will support and monitor Evanston significant adverse effect on existing competition in the Bank's efforts to ascertain and meet the credit needs of Chicago banking market. the Evanston community. Based on Applicants' and The financial and managerial resources of NBD, its Evanston Bank's representations, the overall satisfacsubsidiary banks, NBD Northern, Evanston Bank and Arlington Bank are considered generally satisfactory and consistent with approval of these applications. 6. The CRA requires the Board, in its evaluation of a bank holding In considering the convenience and needs of the company application, to take into account the record of an applicant communities to be served, the Board has taken into in meeting the credit needs of the entire community, including lowand moderate-income neighborhoods, consistent with safe and sound account the records of the subsidiary banks of NBD operation. 12 U.S.C. § 2903. and State National under the Community Reinvest- 7. The comments submitted by the Evanston Neighborhood Conference were joined by several Aldermen of the City of Evanston and several neighborhood associations. 8. See 12 C.F.R. § 262.25(c). 9. Only one of 19 census tracts in Evanston is considered low- and 3. All banking data are as of June 30, 1986. moderate-income. Evanston Bank in 1984-86 made 5.4 percent of its 4. The Chicago banking market is approximated by Cook, Lake, total home purchase loans in Evanston and 8.9 percent of its total and DuPage Counties, Illinois. home improvement loans in Evanston in that census tract. Three 5. Consummation of the proposed transaction would increase the census tracts in Evanston are considered to be predominately minormarket's Herfindahl-Hirschman Index ("HHI") by 4 points, from 777 ity. In those census tracts, Evanston Bank in 1984-86 made 23.6 to 781. The market is considered unconcentrated under the Depart- percent of its total home purchase loans in Evanston and 30.4 percent ment of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), of its total home improvement loans. Accordingly, Evanston Bank's and the increase in the HHI resulting from the transaction is not within lending in Evanston low- and moderate-income and predominately the parameters the Department of Justice has stated are likely to result minority census tracts has been proportionate with its lending in other in its challenging the transaction. Evanston census tracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 55 tory CRA record of NBD's and State National's Applicant is a nonoperating corporation formed to subsidiary banks, and other facts of record, the Board acquire Bank. Bank is the 373rd largest commercial has determined that convenience and needs consider- banking organization in Kansas, with total deposits of ations are consistent with approval of these $13.3 million, representing 0.6 percent of the total applications.10 deposits in commercial banks in the state.1 Consum- Based on the foregoing and other facts of record, the mation of the transaction would not result in an Board has determined that these applications should increase in the concentration of banking resources in be, and hereby are, approved. The transactions shall Kansas. not be consummated before the thirtieth calendar day Bank operates in the Riley County banking market,2 following the effective date of this Order or later than where it is the fifth largest of seven commercial banks, three months after the effective date of this Order, controlling 3.9 percent of total deposits in commercial unless such period is extended for good cause by the banks in the market. Principals of Applicant are not Board or the Federal Reserve Bank of Chicago, acting affiliated with any other commercial banking organizapursuant to delegated authority. tion in the market. Consummation of this proposal By order of the Board of Governors, effective No- would not result in any adverse effects upon competivember 13, 1987. tion or increase the concentration of banking resources in any relevant area. Accordingly, the Board concludes that competitive considerations under the Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, Heller and Kelley. Act are consistent with approval. Applicant proposes to acquire Bank with existing JAMES MCAFEE funds and borrow additional funds to make a capital [SEAL] Associate Secretary of the Board injection into Bank. The capital injection will improve the condition of Bank and enhance its future pros- Riley County Bancshares, Inc. pects. Based upon the facts of record, including com- Riley, Kansas mitments made by Applicant and its principals in connection with this application, the financial and Order Approving Formation of a Bank Holding managerial resources and future prospects of Appli- Company cant and Bank are consistent with approval. Considerations relating to convenience and needs of the Riley County Bancshares, Inc., Riley, Kansas, has community to be served also are consistent with applied for the Board's approval under section 3(a)(1) approval of the application. of the Bank Holding Company Act of 1956, as Based on the foregoing and other facts of record, the amended (the "Act") (12 U.S.C. § 1842(a)(1)), to Board has determined that consummation of the transbecome a bank holding company by acquiring 97 action would be in the public interest and that the percent of the outstanding voting shares of Riley State application should be, and hereby is, approved. The Bank, Riley, Kansas ("Bank"). transaction shall not be consummated before the thir- Notice of the application, affording opportunity for tieth calendar day following the effective date of this interested persons to submit comments, has been Order, or later than three months following the effecgiven in accordance with section 3(b) of the Act. The tive date of this Order, unless such period is extended time for filing comments has expired and the Board has for good cause by the Board or by the Federal Reserve considered the application and all comments received Bank of Kansas City, acting pursuant to delegated in light of the factors set forth in section 3(c) of the Act authority. (12 U.S.C. § 1842(c)). By order of the Board of Governors, effective November 16, 1987. 10. Protestants have requested that the Board conduct a public Voting for this action: Chairman Greenspan and Governors hearing to receive testimony on the issues presented by these appli- Johnson, Seger, Angell, and Kelley. Absent and not voting: cations. Under the Board's rules, the Board may hold a public hearing Governor Heller. on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. § 262.25(d). In the Board's view, the parties have had ample oppor- JAMES MCAFEE tunity to present their arguments in writing and to respond to one [SEAL] Associate Secretary of the Board another's submissions. Based on Applicants' and Evanston Bank's representations concerning Evanston Bank's future efforts to ascertain and meet the convenience and needs of Evanston, and other facts of record, the Board has determined that a hearing will serve no useful 1. All banking data are as of December 31, 1985. purpose. Accordingly, protestants' request for a public hearing is 2. The Riley County banking market is defined as Riley County, denied. Kansas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

56 Federal Reserve Bulletin • January 1988 SouthTrust Corporation state by Alabama bank holding companies on a recip- Birmingham, Alabama rocal basis. Based on its review of the relevant Florida and Order Approving Acquisition of Bank Holding Alabama statutes, the Board has determined that the Companies Alabama statute satisfies the conditions of the Florida regional interstate banking statute and that Florida has SouthTrust Corporation, Birmingham, Alabama, has by statute expressly authorized an Alabama bank applied for the Board's approval under section 3(a)(3) holding company, such as Applicant, to acquire a of the Bank Holding Company Act of 1956, as Florida bank or bank holding company, such as Vista amended ("BHC Act") (12 U.S.C. § 1841 et seq.), to and BFC. In this regard, each of the banks to be acquire the shares of Vista Banks, Inc. ("Vista"), acquired in this case satisfies the longevity require- Ormond Beach, Florida, and its subsidiary banks, ment in the Florida statute. The Office of the Florida Vista Bank of Volusia County, De Leon Springs, State Comptroller agrees that the Alabama statute Florida, and Vista Bank of Marion County, Belleview, satisfies the reciprocity requirements of the Florida Florida; and to acquire Bank of Florida Corporation interstate banking provisions. Accordingly, the Board ("BFC"), St. Petersburg, Florida, and its bank sub- concludes that approval of Applicant's proposal to sidiary, Bank of Florida, St. Petersburg, Florida.1 acquire banks in Florida is authorized under Florida Notice of these applications, affording interested law and is not barred by the Douglas Amendment. persons an opportunity to submit comments, has been Applicant, a multi-bank holding company controlpublished. The time for filing comments has expired, ling 27 banks throughout Alabama with total assets of and the Board has considered the applications and all approximately $5.8 billion, is the second largest bankcomments received, including comments submitted by ing organization in Alabama.2 Applicant currently Neighborhood Services Inc., and the Greater Birming- owns two bank subsidiaries, with total assets of apham Ministries ("Protestants"), in light of the factors proximately $111 million, in Florida. set forth in section 3(c) of the BHC Act. Vista, with total assets of approximately $112.3 The Douglas Amendment to the BHC Act prohibits million, and BFC, with total assets of approximately the Board from approving an application by any bank $120 million, are among the smaller commercial bankholding company to acquire a bank located outside of ing organizations in Florida, each controlling less than the bank holding company's home state unless the one percent of total deposits in commercial banking state law in which the target bank is located specifi- organizations in Florida. Upon consummation of the cally authorizes such an acquisition. 12 U.S.C. § proposal, Applicant would control less than one per- 1842(d). The Florida state law permits a bank holding cent of the total deposits in commercial banking orgacompany located in the Southeastern region, which nizations in Florida. Based on the facts of this case, includes Alabama, to acquire a Florida bank or bank the Board believes that consummation of the proposal holding company provided that Florida bank holding would have no significantly adverse effect on the companies are permitted to acquire banks in the home concentration of banking resources in Florida. state of the acquiring bank holding company on a Vista Bank of Volusia County operates in the West reciprocal basis. 19 FLA. STAT. ANN. § 658.295(3) Volusia County banking market;3 Vista Bank of Ma- (West 1984). Florida law also requires that the banking rion County operates in the Marion County banking organization to be acquired must have been in exist- market;4 and Bank of Florida operates in the Pinellas ence and continuously operating for more than two County banking market.5 Each of these banks is years prior to the acquisition. among the smaller banking organizations in their re- Effective July 1, 1987, Alabama state law permits a spective markets, and neither of Applicant's Florida bank holding company located in the Southern region, bank subsidiaries operates in any of these three banking markets. Based on the facts of record in this case, including Florida, to acquire an Alabama bank or bank consummation of this proposal would not result in any holding company upon approval of an application by adverse effect upon existing or future competition, or the Alabama Superintendent of Banks. 4 ALA. CODE § 5-13A-3 (1986). Like Florida, Alabama state law requires that the home state of the acquiring bank holding company permit acquisitions of banks in that 2. Banking data are as of June 30, 1987. 3. The West Volusia County banking market is comprised of the cities of De Bary, De Land, Deltona, Orange City, Lake Helen and De Leon Springs, Florida. 4. The Marion County banking market is approximated by Marion 1. BFC also owns Bank of Florida, N.A., Chiefland, Florida. County, Florida. Applicant has committed to divest this bank prior to consummation of 5. The Pinellas County banking market is approximated by Pinellas this proposal. County, Florida. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 57 increase the concentration of banking resources, in Based on these and all of the other facts of record in any relevant market. Accordingly, the Board con- this case, the Board concludes that convenience and cludes that competitive factors are consistent with needs considerations are consistent with approval of approval. these applications. The financial and managerial resources of Applicant Based on the foregoing and other facts of record, the and Bank are considered satisfactory and consistent Board has determined that the applications should be, with approval. In considering the convenience and and hereby are, approved. The transaction shall not be needs of the communities to be served, the Board has consummated before the thirtieth calendar day followtaken into account Applicant's record under the Com- ing the effective date of this Order, or later than three munity Reinvestment Act (12 U.S.C. § 2901 et seq.) months after the effective date of this Order, unless ("CRA"). The CRA requires the Board, in its evalu- such period is extended for good cause by the Board or ation of a bank holding company application, to assess by the Federal Reserve Bank of Atlanta, acting purthe record of an applicant in meeting the credit needs suant to delegated authority. of the entire community, including low- to moderate- By order of the Board of Governors, effective Noincome neighborhoods, consistent with safe and sound vember 13, 1987. operation. The Board has received comments from the Protestants, which represent low-income and minority Voting for this action: Chairman Greenspan and Governors groups and individuals in Birmingham, Alabama, re- Johnson, Seger, Angell, Heller, and Kelley. garding the CRA record of Applicant and one of its subsidiary banks, SouthTrust Bank of Alabama, N.A. JAMES MCAFEE ("Bank"), Birmingham, Alabama. Protestants con- [SEAL] Associate Secretary of the Board tend that Applicant and Bank have failed to serve the convenience and needs of low-income and minority persons in the Birmingham area.6 Valley National Corporation The Board has carefully reviewed the record of Phoenix, Arizona Applicant and Bank in meeting the convenience and needs of all segments of its community and the com- Order Approving the Acquisition of a Bank ments submitted by Protestants. The Board notes that Applicant has received satisfactory CRA ratings at its most recent examination in May, 1987. Bank and its Valley National Corporation, Phoenix, Arizona mortgage company subsidiary are active in making ("Valley National"), a bank holding company within home improvement loans in low- to moderate-income the meaning of the Bank Holding Company Act (12 areas of Birmingham, with 26 percent of their home U.S.C. § 1841 et seq.) ("BHC Act"), has applied for improvement loans originating in low- to moderate- the Board's approval under section 3(a)(3) of the BHC income neighborhoods in 1986. Home improvement Act (12 U.S.C. § 1842(a)(3)) to acquire California loans by Bank accounted for nearly 50 percent of all Valley Bank, Fresno, California ("Bank"). home improvement loans extended in predominantly Notice of the application, affording an opportunity minority neighborhoods in Birmingham by commercial for interested persons to submit comments, has been banking organizations operating in this metropolitan given in accordance with section 3(b) of the BHC Act area in 1984 and 1985. Bank and its mortgage company (52 Federal Register 26,083 (1987)). The time for filing subsidiary have also participated in several commu- comments has expired, and the Board has considered nity development projects to construct and renovate the application and all comments received, including housing in low- to moderate-income neighborhoods in comments in opposition to the application from the Birmingham. The Board also notes that Bank has PPEP Housing Development Corporation ("PPEP"), sought approval to open an additional branch office Tucson, Arizona, and the Salt Lake Citizens Conthat would serve primarily low-income neighborhoods gress, Salt Lake City, Utah (collectively, the "Protesin Birmingham. tants"), in light of the factors set forth in section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). Section 3(d) of the BHC Act, 12 U.S.C. § 1842(d), 6. Protestants contend that Applicant has not done enough to help the Douglas Amendment, prohibits the Board from meet the credit needs of low income and minority individuals in approving an application by a bank holding company Birmingham, particularly in the area of housing finance; that Applicant may be impeding the flow of credit to low-income and primarily to acquire a bank located outside the holding comminority neighborhoods; that Applicant's participation in local devel- pany's home state, unless such acquisition is "specifopment and redevelopment projects has not been adequate; and that ically authorized by the statute laws of the state in Applicant's CRA statement indicates that Applicant does not adequately assess the credit needs of the community. which such bank is located, by language to that effect Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

58 Federal Reserve Bulletin • January 1988 and not merely by implication."1 The statute laws of The financial and managerial resources of Valley California authorize an out-of-state bank holding com- National, its subsidiaries, and Bank are considered pany, with the approval of the California Superinten- satisfactory and consistent with approval. dent of Banks, to acquire a California bank or bank In considering the convenience and needs of the holding company provided that the state laws of the communities to be served, the Board has also taken acquiring institution has substantial reciprocity with into account the record of Valley National under the California law and that the transaction will not have an Community Reinvestment Act (12 U.S.C. § 2901 et adverse effect on the public's convenience in seq.) ("CRA"). The CRA requires the Board, in its California.2 evaluation of a bank holding company application, to The California Superintendent of Banks has found assess the record of an applicant in meeting the credit that Arizona has an interstate banking statute that has needs of the entire community, including low- and substantial reciprocity with California.3 Based on its moderate-income neighborhoods, consistent with safe own review of the record, the Board has determined, and sound operation. as required by the Douglas Amendment, that the With regard to Valley National's CRA record, the proposed acquisition is specifically authorized by the Board has considered the extensive comments from statute laws of California, subject to Valley National's both Salt Lake Citizens Congress and PPEP. Salt Lake obtaining the approval of the California Superinten- Citizens Congress requests that the Board not approve dent of Banks pursuant to section 3776 of California the application until Valley National's Utah subsid- Financial Code. iary, Valley Bank & Trust ("VB&T"), provides loans Valley National is the largest banking organization to low- and moderate-income areas and cashes govin Arizona, operating one subsidiary bank with total ernment checks for persons with valid identification. deposits of $9.2 billion, representing approximately PPEP requests that the Board not approve the appli- 38.8 percent of the total deposits in commercial banks cation until Valley National's Arizona subsidiary, Valin Arizona.4 Valley National also operates commercial ley National Bank ("VNB"), demonstrates that it is banks in Utah. Bank is the 170th largest of 432 meeting the credit needs of low- and moderate-income commercial banking organizations in California, con- residents in rural service areas and that Valley Natrolling total deposits of $73.0 million, representing tional has a satisfactory CRA performance in rural less than 1 percent of total deposits in commercial service areas. banks in California. Consummation of the proposal In accordance with the Board's practice and procewould not have any significant adverse effect upon the dures for handling protested applications,5 the Board concentration of banking resources in Arizona or reviewed the CRA record of VB&T and VNB, the California. allegations made by Protestants, and Valley National's Valley National and Bank do not compete directly in response. Valley National has met with Protestants in any banking market. Accordingly, consummation of an attempt to address their concerns. The parties, the proposal would not eliminate any significant exist- however, were unable to come to a resolution of their ing competition in any relevant banking market. The differences. Board has also considered the effects of the proposed With regard to VB&T's performance, the Board acquisition on probable future competition in the mar- notes that the bank has a number of programs in place kets in which Valley National or Bank, but not both, that are monitored by an executive vice president who compete. In light of the existence of numerous poten- reports directly to the President of VB&T. VB&T is tial entrants into the relevant markets, the Board active in providing home purchase and home improveconcludes that consummation of the proposed trans- ment loans to most of the low- and moderate-income action would not have any significant adverse effect on census tracts served by VB&T. In addition, the record probable future competition in any relevant banking indicates that VB&T participates in several commumarket. nity development activities, including serving as an SBA preferred lender, participating in a home improvement loan program initiated by a local development agency, investing in municipal bonds, supporting Utah's guaranteed student loan program, and collabo- 1. A bank holding company's home state is the state in which the rating with many neighborhood groups. operations of the bank holding company's subsidiary banks were principally conducted on July 1, 1966, or the date on which the The Board has also considered the CRA record of company became a bank holding company, whichever is later. 12 U.S.C. § 1842(d). Valley National's home state is Arizona. VNB. A full-time CRA compliance officer monitors 2. Cal. Financial Code § 3770 et seq. (West 1968 and Supp. 1987). 3. See December 23, 1986, letter to Valley National Corporation from the California Superintendent of Banks. 4. All state banking data are as of December 31, 1986. 5. See 12 C.F.R. § 265.25(c). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 59 the CRA activities of VNB and reports directly to an calendar day following the effective date of this Order, officer of VNB who is a member of the executive or later than three months after the effective date of committee of VNB and the executive committee of this Order, unless such period is extended for good Valley National. VNB has an existing program to cause by the Board or by the Federal Reserve Bank of ascertain community credit needs which involves us- San Francisco, acting pursuant to delegated authority. ing marketing and other surveys to determine the By order of the Board of Governors, effective Nocredit needs of the communities it serves, as well as vember 30, 1987. having its officers and directors participate in a variety of community organizations. VNB advertises its ser- Voting for this action: Chairman Greenspan and Governors vices through radio, television, print, and billboard Johnson, Seger, Angell, Heller, and Kelley. media; is active in providing mortgage and home improvement loans; participates in FHA Title I lend- JAMES MCAFEE ing programs; and has a CRA loan program designed [SEAL] Associate Secretary of the Board to offer extended-term loans to residents of federally designated low- to-moderate-income level census tracts. With respect to the Protestants' assertions, a review Orders Issued Under Sections 3 and 4 of the of VNB's loan portfolio indicates that there is a Bank Holding Company Act reasonable distribution of loans between urban and rural areas, given the fact that over 75 percent of the Comerica Incorporated state's population resides in Phoenix and Tucson. In Detroit, Michigan order to strengthen its CRA performance in certain low- and moderate-income census tracts within the Order Approving the Acquisition of a Bank Phoenix and Tuscon MS As, VNB has agreed to strengthen its marketing and consumer education ef- Comerica Incorporated, Detroit, Michigan ("Comeforts in all segments of its service area. VNB will rica"), a bank holding company within the meaning of expand throughout the state its special lending pro- the Bank Holding Company Act of 1956, as amended grams geared to low- and moderate-income persons, (the "Act") (12 U.S.C. § 1841 et seq.), has applied for especially in rural areas. Based on all the facts of the Board's approval under section 3(a)(3) of the Act record, the Board concludes that the convenience and (12 U.S.C. § 1842(a)(3)) to convert Comerica-Midneeds of the communities to be served are consistent west, N.A., Toledo, Ohio, to a full service bank with approval.6 ("Bank").1 Bank currently operates as a credit card Based on the foregoing and other facts of record, the bank, pursuant to section 4(c)(8) of the Act (12 U.S.C. Board has determined that the application should be, § 1843(c)(8)).2 and hereby is, approved, subject to the express con- Notice of the applications, affording an opportunity dition that Valley National obtain the approval of the for interested persons to submit comments, has been California Superintendent of Banks pursuant to sec- published (52 Federal Register 29,727 (1987)). The tion 3776 of the California Financial Code. This trans- time for filing comments has expired, and the Board action shall not be consummated before the thirtieth has considered the applications and all comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). Section 3(d) of the Act (12 U.S.C. § 1842(d)), the Douglas Amendment, prohibits the Board from ap- 6. PPEP has also requested the Board to order a public meeting or hearing to receive public testimony on the issues presented by this proving an application by a bank holding company to application. Although section 3(b) of the BHC Act does not require a acquire control of any bank located outside of the bank public meeting or formal hearing in this instance, the Board may, in holding company's home state unless the acquisition is any case, order a public meeting or formal hearing. See 12 C.F.R. § 262.3(e). The Board's Rules of Procedure also provide that a public "specifically authorized by the statute laws of the meeting may be held to clarify factual issues related to an application or to provide an opportunity for interested persons to testify. 12 C.F.R. § 262.25(d). However, in its request for a hearing or a meeting, PPEP does not present any material questions of fact that are in dispute. In accordance with the Board's guidelines, Valley National and PPEP have met privately to discuss this application and have exchanged extensive correspondence. In the Board's view, the parties 1. Comerica Bank-Detroit, a state member bank of the Federal have had ample opportunity to present their arguments in writing and Reserve System, also has applied to establish an off-site electronic to respond to one another's submissions. In light of these facts and facility at 445 State Street, Detroit, Michigan, pursuant to section 9 of other facts of record, the Board has determined that a public hearing the Federal Reserve Act, 12 U.S.C. § 321. or public meeting is not necessary to clarify the factual record in this 2. 69 FEDERAL RESERVE BULLETIN 923 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 Federal Reserve Bulletin • January 1988 State in which such bank is located, by language to ances that it will meet the convenience and needs of that effect and not merely by implication."3 Appli- the low- and moderate-income individuals within the cant's home state is Michigan. The statute laws of city limits of Detroit, an area that Comerica currently Ohio authorize the acquisition of a bank or bank services. Protestants allege that Comerica engages in a holding company in Ohio by a bank holding company pattern of racial discrimination in granting credit in located in a contiguous state, if the contiguous state Detroit. The Protestants also request that the Board has a reciprocal agreement.4 The Board has previously order a public hearing, and use of discovery. determined that the Michigan and Ohio banking laws In accordance with the Board's practice and proceare reciprocal and has allowed Ohio bank holding dure for handling protested applications,9 the Federal companies to acquire Michigan banks.5 Accordingly, Reserve Bank of Chicago encouraged the parties to consummation of the proposal is not barred by section meet to clarify the issues under the CRA. The parties 3(d) of the Act. met and were unable to come to a resolution of their Comerica is the second largest commercial banking differences. organization in Michigan, with deposits of $8.2 billion, In response to the Protestants' comments, the representing 13.2 percent of the total deposits in Board notes that Comerica's subsidiary banks, specifcommercial banks in the state.6 Because Comerica ically its lead bank, Comerica Bank-Detroit, has redoes not operate a full service bank in Ohio, consum- ceived a satisfactory CRA assessment from the Board mation of this proposal would have no substantial during its most recent CRA examination. Comerica effect on the concentration of banking resources in has also informed the Board that Bank has instituted a that state. CRA Committee, which is composed of senior officers Bank will operate in the Toledo banking market.7 from each business division of Bank, that will meet Because Comerica currently does not operate in this regularly to monitor Bank's CRA compliance. The market, consummation of this proposal would have no CRA Committee will report directly to the Public significant adverse effect on competition in this mar- Responsibility Committee of Comerica's Board of ket. Directors. The financial and managerial resources of Comerica Bank has a program in place to ascertain community and its subsidiary banks are consistent with approval credit needs through the involvement of its officers in of this application. several community and professional organizations. In considering the convenience and needs of the Comerica also advertises its services through newspacommunities to be served, the Board has taken into pers of general circulation, as well as through minoriaccount Comerica's record under the Community Re- ty-owned publications, television, and local radio aninvestment Act (12 U.S.C. § 2901 etseq.) ("CRA"),8 nouncements. Bank is active in providing mortgage and two individual comments ("Protestants") re- and home improvement loans, in state and federal ceived from residents of Detroit, Michigan. The Prot- housing programs. Moreover, there is no evidence in estants have requested that the Board not approve the the record to indicate that borrowers in low- to modapplication until Comerica provides adequate assur- erate-income neighborhoods were unjustifiably denied credit. Accordingly, based upon all the evidence, including the programs and measures Comerica has undertaken to serve the convenience and needs of the community, 3. A bank holding company's home state for purposes of the including low- and moderate-income segments of that Douglas Amendment is that state in which the total deposits of its banking subsidiaries were the largest on July 1, 1966, or on the date it community, the Board concludes that convenience became a bank holding company, whichever date is later. 12 U.S.C. and needs considerations are consistent with approval § 1842(d). of these applications.10 The Federal Reserve Bank of 4. Ohio Rev. Code Ann. § 1101.05 (Anderson 1986). 5. See Order approving the application by Ameritrust, Cleveland, Chicago will monitor Comerica's CRA program to Ohio, and First Indiana Bancorp, Elkhart, Indiana, to acquire First National Bank & Trust Company, Sturgis, Michigan. (Order by the Federal Reserve Bank of Cleveland dated July 25, 1986). 6. Deposit data are as of December 31, 1986. 7. The Toledo banking market is defined as Lucas and Wood Counties, except for the city of Fostoria, Fulton County, Ottawa County, and Sandusky County, all in Ohio; and Whiteford, Bedford, 9. See 12 C.F.R. § 262.25(c). and Erie townships in Monroe County, Michigan. 10. Although section 3(b) of the Act does not require a formal 8. The CRA requires the Board, in its evaluation of bank holding hearing in this instance, the Board may, in any case, order a formal or company applications and applications for domestic branches of state informal hearing. In the Board's view, the parties have had ample member banks, to assess the record of an applicant in meeting the opportunity to present their arguments in writing and to respond to credit needs of the entire community, including low- and moderate- one another's submissions. In light of these facts, the Board has income neighborhoods consistent with safe and sound operation of the determined that a hearing would serve no useful purpose. Accordbank. ingly, Protestants' request for a public hearing is hereby denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 61 ensure compliance with the Community Reinvestment bank holding companies pursuant to the Board's Reg- Act. ulation Y (12 C.F.R. § 225.25(b)(1)). Based on the foregoing and other facts of record, the Notice of the applications, affording interested per- Board has determined that the applications should be, sons an opportunity to submit comments, has been and hereby are, approved. The conversion shall not published (52 Federal Register 37,013 (1987)). The take place before the thirtieth calendar day following time for filing comments has expired, and the Board the effective date of this Order, or later than three has considered the applications and all comments months after the effective date of this Order, and the received in light of the factors set forth in sections 3(c) proposed off-site automated teller machine should not and 4(c)(8) of the BHC Act. be established later than three months after the effec- Equimark is the eleventh largest commercial banktive date of the Order, unless such period is extended ing organization in Pennsylvania, with approximately for good cause by the Board or by the Federal Reserve $2.1 billion in deposits, representing 2.0 percent of the Bank of Chicago, acting pursuant to delegated author- total deposits in commercial banking organizations in ity. the state.2 Liberty is the 33rd largest commercial By order of the Board of Governors, effective No- banking organization in Pennsylvania, with deposits of vember 17, 1987. approximately $357.8 million, representing less than 1 percent of the total deposits in commercial banks in the state. Upon consummation of the proposal, Equi- Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Kelley. Absent and not voting: mark will become the tenth largest commercial bank- Governor Heller. ing organization in Pennsylvania, controlling deposits of approximately $2.5 billion, representing 2.3 percent JAMES MCAFEE of the total deposits in commercial banks in the state. [SEAL] Associate Secretary of the Board Equimark and Liberty compete in the Philadelphia/ Trenton banking market.3 Equimark is the 29th largest of 52 commercial banking organizations in the market,4 controlling less than 1 percent of the total Equimark Corporation deposits in commercial banks in the market. Liberty is Pittsburgh, Pennsylvania the sixteenth largest commercial banking organization in the market, controlling less than 1 percent of the Order Approving the Acquisition of a Bank Holding total deposits in commercial banks in the market. Company Upon consummation of the proposal, Equimark would become the thirteenth largest commercial banking Equimark Corporation, Pittsburgh, Pennsylvania organization in the market, controlling 1.2 percent of ("Equimark"), a bank holding company within the total deposits in commercial banks in the market. the meaning of the Bank Holding Company Act The Philadelphia/Trenton banking market is consid- (12 U.S.C. § 1841 et seq.) (the "BHC Act"), has ered unconcentrated, with a Herfindahl-Hirschman applied for the Board's approval under section 3(a)(3) Index ("HHI") of 965. Upon consummation, the HHI of the BHC Act (12 U.S.C. § 1842(a)(3)) to acquire would increase by 1 point to 966.5 Accordingly, the Liberty Financial Group, Inc., Horsham, Pennsylva- Board concludes that consummation of the proposal nia ("Liberty"), and thereby indirectly to acquire would not have a substantial adverse competitive Liberty Savings Bank, Horsham, Pennsylvania effect in the Philadelphia/Trenton banking market. ("Liberty Bank"), an FDIC-insured savings bank.1 Applicant has also applied under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) to acquire Liberty Service Corporation, Horsham, Pennsylvania 2. State banking data are as of March 31, 1987. 3. The Philadelphia/Trenton banking market is approximated by the ("LSC"), and thereby engage in the activities of Pennsylvania Counties of Bucks, Chester, Delaware, Montgomery making, acquiring and servicing loans or other exten- and Philadelphia; and the New Jersey Counties of Burlington, Camsions of credit. These activities are authorized for den, Gloucester and Mercer. 4. Market banking data are as of June 30, 1986. 5. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)), any market in which the post-merger HHI is less than 1000 is considered unconcentrated and the Department will not challenge a merger or acquisition resulting in 1. As an FDIC-insured institution, Bank would qualify as a "bank" an HHI of less than 1000, except in extraordinary circumstances. The under section 2(c) of the BHC Act, as amended by section 101(a) of Department has informed the Board that a bank merger or acquisition the Competitive Equality Banking Act of 1987 ("CEBA"), Pub. L. generally will not be challenged (in the absence of other factors No. 100-86, 100 Stat. 552, 554 (1987) (to be codified at 12 U.S.C. § indicating anticompetitive effects) unless the post-merger HHI is at 1841(c)). least 1800 and the merger increases the HHI by at least 200 points. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 Federal Reserve Bulletin • January 1988 Based upon a review of all the facts of record, the Fleet Financial Group, Inc. Board has determined that the financial and manage- Providence, Rhode Island rial resources of Equimark and Liberty are consistent with approval. Considerations relating to the conve- Order Approving the Merger of Bank Holding nience and needs of the communities to be served also Companies and the Acquisition of Banking and are consistent with approval of this application. Nonbanking Subsidiaries Equimark has also applied, pursuant to section 4(c)(8) of the BHC Act, to acquire Liberty Bank's Fleet Financial Group, Inc., Providence, Rhode Island nonbanking subsidiary, LSC, and engage in the activ- ("Fleet"), a bank holding company within the meanities of commercial and consumer finance. The mar- ing of the Bank Holding Company Act of 1956, as kets for these activities have numerous competitors amended (the "Act") (12 U.S.C. § 1841 et seq.), has and are regional or national in scope. Accordingly, the applied for the Board's approval under section 3 of the Board concludes that this proposal would not have any Act (12 U.S.C. § 1842) to merge with Norstar Bansignificant adverse effect upon competition in any corp, Inc., Albany, New York ("Norstar"), and relevant market. thereby to acquire its subsidiary banks: Norstar Bank Liberty Bank engages, through LSC and its subsid- of Upstate New York, Albany, New York; Norstar iary, Wynnewood Plaza, Inc., in real estate invest- Bank, N.A., Buffalo, New York; LI Holding Comment and development activities authorized by state pany, and its subsidiary, Norstar Bank of Long Island, law. Equimark has committed that, upon consumma- Hempstead, New York; Norstar Bank of the Hudson tion, Liberty Bank will not engage directly or indi- Valley, N.A., Newburgh, New York; Norstar Bank of rectly in real estate investment or development activ- Commerce, New York, New York; Norstar Bank of ities impermissible under the BHC Act, except to Maine, Portland, Maine; Norstar Bank of Central New complete its existing projects. Equimark has commit- York, Syracuse, New York; and United National ted to complete these projects and divest of them Bank, Callicoon, New York.1 within two years of consummation of the proposal, Fleet also seeks approval to acquire the successor to unless during such period Equimark receives approval the merger of its bank holding company subsidiary, pursuant to an application under section 4(c)(8) of the Merrill Bankshares Company, Bangor, Maine, with BHC Act to retain such activities, or the Board Norstar Bankshare Association of Maine, Lewiston, otherwise determines that these activities are permis- Maine. In conjunction with this application, The Mersible under the BHC Act. rill Trust Company, a state member bank, has applied Liberty Bank's nonbanking subsidiary, Liberty Ser- for the Board's approval under section 18(c) of the vice Insurance Agency, Inc., although currently inac- Federal Deposit Insurance Act and section 9 of the tive, is authorized to engage in general insurance Federal Reserve Act (12 U.S.C. § 321) to merge with activities that generally are impermissible for bank Norstar Bank of Maine, Portland, Maine. holding companies. Equimark has committed that Lib- Fleet has also applied under section 4(c)(8) of the erty Service Insurance Agency, Inc. will remain inac- Act (12 U.S.C. § 1843(c)(8)) to acquire the nonbanktive and will be dissolved as soon as practicable, ing subsidiaries of Norstar listed in Appendix A to this following consummation of the proposal. Order. Based on the foregoing and other facts of record, the Notice of the applications, affording interested per- Board has determined that the applications should be, sons an opportunity to submit comments, has been and hereby are, approved. The acquisition of Liberty published (52 Federal Register 29,435 (1987) and 52 shall not be consummated before the thirtieth calendar Federal Register 31,814 (1987)). The time for filing day following the effective date of this Order, or later comments has expired, and the Board has considered than three months after the effective date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of 1. As a result of the merger, the resulting institution will operate Cleveland acting pursuant to delegated authority. under the charter of Fleet and with the title Fleet/Norstar Financial By order of the Board of Governors, effective No- Group, Inc. In connection with the transaction, Fleet and Norstar have granted vember 30, 1987. to each other an option to purchase up to 24.99 percent of the outstanding common stock of their respective organizations. Applicant has also applied for approval to exercise its option if any of Voting for this action: Chairman Greenspan and Governors several preconditions occur. Johnson, Seger, Angell, Heller, and Kelley. Fleet and Norstar individually own 4.9 percent of the voting capital stock of Indian Head Banks, Inc., Nashua, New Hampshire. Fleet and Norstar have committed to reduce the aggregate investment in JAMES MCAFEE this company to below 5 percent prior to consummation of the [SEAL] Associate Secretary of the Board proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 63 the applications and all comments received in light of bank holding company.5 Under recently enacted legthe factors set forth in sections 3(c) and 4(c)(8) of the islation, Rhode Island will allow New York bank Act and the Bank Merger Act.2 holding companies to acquire Rhode Island banks after Fleet controls five banking subsidiaries located in January 1, 1988, on a reciprocal basis. The Office of Rhode Island, Maine, Connecticut, and Massachu- the New York Superintendent of Banks has informed setts. Fleet is the largest commercial banking organi- the Board that it has no objection to this proposal. zation in Rhode Island, controlling deposits of $3.6 Moreover, the Board has previously determined that billion, representing 43.5 percent of the total deposits Fleet's and Norstar's acquisitions in Maine were auin commercial banks in Rhode Island.3 Fleet also is the thorized by the Douglas Amendment.6 Accordingly, fifth largest commercial banking organization in Fleet's proposal to acquire Norstar's New York and Maine, controlling deposits of $658.8 million, which Maine subsidiaries is not barred by the Douglas represents 13.0 percent of the total deposits in com- Amendment. mercial banks in the state. Norstar operates seven Fleet currently owns two banks in Connecticut. banking subsidiaries in New York and Maine. Norstar Under Connecticut law, Fleet, a New England bank is the tenth largest commercial banking organization in holding company authorized to make acquisitions in New York, controlling deposits of $8.9 billion, repre- Connecticut, ceases to be a New England bank holdsenting 3.3 percent of the total deposits in commercial ing company if it acquires subsidiary banks with their banks in New York. Norstar is the fourth largest principal places of business outside the New England commercial banking organization in Maine, controlling region.7 Once a bank holding company ceases to be a deposits of $680.5 million, representing 13.4 percent of New England bank holding company, the Connecticut the total deposits in commercial banks in Maine. Upon Banking Commissioner is required to order the immeconsummation of the proposed acquisition and all diate divestiture of all Connecticut banking instituplanned divestitures, Fleet would become the largest tions.8 The Connecticut Banking Commissioner has commercial banking organization in Maine, and its informed the Board that Connecticut law would not share of total deposits in commercial banks would bar consummation of the proposal but that he would increase to $1.2 billion, representing approximately thereafter be required by statute to order Fleet to 24.0 percent of the deposits in that state. Consumma- divest its Connecticut subsidiaries. Fleet has provided tion of this proposal would have no significant adverse to the Banking Commissioner a draft that addresses effect upon the concentration of commercial banking the divestiture requirements to the satisfaction of the resources in Maine. Connecticut Banking Commissioner.9 Section 3(d) of the Act (12 U.S.C. § 1842(d)), the Unlike Connecticut law, Massachusetts law con- Douglas Amendment, prohibits the Board from ap- tains no express divestiture requirement. Accordingly, proving an application by a bank holding company to the Board's authorization for Fleet's acquisition of its acquire control of any bank located outside of the Massachusetts banking subsidiaries continues unafholding company's home state, unless such acquisition fected by Fleet's proposed merger and acquisition of is "specifically authorized by the statute laws of the banking subsidiaries located outside of the New En- State in which [the] bank is located, by language to gland region. that effect and not merely by implication." Fleet's Based on the foregoing and other facts of record, the home state is Rhode Island.4 The statute laws of New Board has determined that the proposed acquisition is York expressly authorize the acquisition of a banking specifically authorized by the statute laws of New institution in New York by a bank holding company York and Maine and is not inconsistent with the laws that controls a bank located in another state, if that of Connecticut and Massachusetts. Thus, Board apstate authorizes the acquisition of a financial institu- proval of the proposal is not prohibited by the Douglas tion in that state on a reciprocal basis by a New York Amendment. 2. The Board received one comment in opposition to this proposal 5. N.Y. Banking Law § 142-b (McKinney 1987). based on a customer's problem with a checking account in Fleet's 6. Fleet Financial Group, Inc., 70 FEDERAL RESERVE BULLETIN bank in Rhode Island. The Comptroller of the Currency currently is 834 (1984) (Maine and Connecticut statutes); Norstar Bancorp Inc., 69 investigating this complaint. In light of the facts in the record in this FEDERAL RESERVE BULLETIN 306 (1983). The Rhode Island Departcase, the Board has determined that this comment does not warrant ment of Business Regulation, Banking Division, has informed the denial of this application. Board that the application raises no issues under Rhode Island law. 3. State deposit data are as of March 31, 1987, and market deposit 7. Conn. Gen. Stat. Ann. § 36-552(j) (West 1987). For purposes of data are as of June 30, 1986. this provision, the New England region includes Connecticut, Maine, 4. A bank holding company's home state is that state in which the Massachusetts, New Hampshire, Rhode Island, and Vermont. operations of the bank holding company's banking subsidiaries were 8. Conn. Gen. Stat. Ann. § 36-553 (West 1987). principally conducted on July 1, 1966, or the date on which the 9. Fleet is required, of course, to comply with any divestiture company became a bank holding company, whichever is later. ordered by the Connecticut Banking Commissioner. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Federal Reserve Bulletin • January 1988 Fleet and Norstar compete directly in the following The Board previously has indicated that thrift instinine Maine banking markets: Bangor, Augusta, Far- tutions have become, or have the potential to become, mington, Machias, Guilford, Calais, Lincoln, Milli- major competitors of commercial banks.13 Thrift instinocket, and Portland. tutions already exert a considerable competitive influ- In the Bangor banking market,10 Fleet is the largest ence in the market as providers of a wide array of of six commercial banking organizations, controlling deposit and lending services to consumer and commer- $273.8 million in deposits, which represents 55.1 per- cial customers. The three state-chartered savings cent of the total deposits in that area. Norstar is the banks operating in the Bangor banking market are second largest commercial banking organization in the sizable and provide substantial competition to the six Bangor market, controlling $77.1 million in deposits, commercial banks in the market for a full range of which represents 15.5 percent of total deposits in financial services. These thrifts control 45.8 percent of commercial banks in the market. The Bangor market is the market's deposits and rank as the second, third, highly concentrated, with the four largest commercial and fourth largest depository institutions in the marbanking organizations controlling 91.1 percent of the ket. deposits in commercial banks in this market. Upon Moreover, all three savings banks in the Bangor consummation of this proposal, Fleet would remain market conduct a commercial banking business as the largest commercial banking organization, control- authorized under Maine law and offer a full range of ling $350.9 million in deposits, representing 70.6 per- financial services. In particular, thrifts provide a full cent of market share. The four-firm concentration ratio array of commercial banking services in addition to in Bangor would increase 6 points to 97.1 percent and offering traditional thrift products. For example, the the Herfindahl-Hirschman Index ("HHI") would in- ratio of commercial and industrial loans (other than crease by 1708 points to 5272.11 those secured by real estate) to total assets for thrifts In order to mitigate the adverse competitive effects in the market is approximately 6.1 percent, well above that would otherwise result from consummation of this the 2.2 percent average for thrifts on a nationwide proposal, Fleet has committed to divest, on or before basis. Moreover, the number of commercial demand consummation of the merger, three offices in the deposit accounts in the savings banks is significant. Bangor market to a competitor that currently com- Thrifts in the Bangor market have commercial lendpetes in this market.12 In addition to Fleet's proposed ing officers and active commercial lending departdivestiture, the Board has considered the unusually ments. A significant portion of small businesses in the strong competition from the three state-chartered sav- Bangor market recently secured financing from a savings banks in the Bangor market. These factors and ings bank located in the Bangor market. On the basis other market characteristics substantially mitigate the of these factors, particularly the competition offered anticompetitive effects of the combination of Fleet and by savings banks in the commercial market, the Board Norstar in this market. finds that consummation of this proposal will not have a signifcant effect on competition in this banking market.14 10. The Bangor banking market includes the Bangor Metropolitan In the Augusta banking market,15 Fleet is the second Statistical Area ("MSA") plus Alton, Amherst, Argyle, Bradford, Bradley, Carmel, Charlestown, Clifton, Corinth/East Corinth, Dixmont, Etna, Greenbush, Greenfield, Hudson, LaGrange, Levant, Milford, Newburgh and Stetson in Penobscot County; Bucksport, 13. National City Corporation, 70 FEDERAL RESERVE BULLETIN Castine, Dedham, Orland, Otis and Verona in Hancock County; and 743 (1984); The Chase Manhattan Corporation, 70 FEDERAL RESERVE Frankfort, Prospect and Stockton Springs in Waldo County. BULLETIN 529 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE 11. Under the revised Department of Justice Merger Guidelines, 49 BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL Federal Register 26,823 (June 29, 1984), a market in which the RESERVE BULLETIN 802 (1983); First Tennessee Corporation, 69 post-merger HHI is above 1800 is considered highly concentrated. In FEDERAL RESERVE BULLETIN 298 (1983). such markets, the Department is likely to challenge a merger that 14. The Board previously has indicated the appropriateness of increases the HHI by more than 50 points. The Department has considering market factors in a specific market, including thrift informed the Board that a bank merger or acquisition generally will deposits at a level greater than 50 percent, when analyzing the not be challenged (in the absence of other factors indicating anticom- anticompetitive effects of a proposal. Hartford National Corporation, petitive effects) unless the post-merger HHI is at least 1800 and the 73 FEDERAL RESERVE BULLETIN 720 (1987). merger increases the HHI by at least 200 points. The Justice Depart- If 75 percent of the deposits controlled by thrift institutions in the ment has stated that the higher than normal HHI thresholds for Bangor market were included with the proposed divestiture, Fleet screening bank mergers for anticompetitive effects implicitly recog- would rank first among banks and thrifts in the market, controlling a nizes the competitive effect of limited-purpose lenders and other combined 36.5 percent of the market's deposits. The HHI would non-depository financial entities. increase 200 points to 2128. 12. The Board's Policy with regard to divestitures intended to 15. The Augusta banking market consists of Kennebec County plus remedy the anticompetitive effects resulting from a merger or acqui- the Somerset County townships of Canaan, Fairfield and Smithfield; sition proposal requires that divestitures must occur on or before the Waldo County townships of Freedom, Palermo, Thorndike, Troy consummation. Barnett Banks of Florida, Inc., 68 FEDERAL RESERVE and Unity; the Lincoln County townships of Jefferson, Somerville, BULLETIN 190 (1982); InterFirst Corporation, 68 FEDERAL RESERVE and Whitefield; the Kennebec County townships of Hibbets Gore; and BULLETIN 243 (1982). the Knox County township of Washington. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 65 largest of six commercial banking organizations, con- The adverse competitive effects of this proposal in trolling $106.0 million in deposits, which represents the Calais, Lincoln, and Millinocket markets are mit- 24.3 percent of total deposits in commercial banks in igated by Fleet's commitment to divest either its the market. Norstar is the third largest commercial offices or Norstar's offices in these markets prior to or banking organization in Augusta, controlling $88.6 concurrent with consummation of the proposal. On the million in deposits, which represents 20.3 percent of basis of these divestiture commitments, the Board total deposits in commercial banks in that market. The concludes that consummation of the proposal would Augusta banking market is highly concentrated with have no significant adverse effect in any of these the four largest commercial banks controlling 92.0 banking markets. percent of deposits in that area. Following acquisition In the Portland market, consummation of the proof Norstar, Fleet would be the largest commercial posal would result in an increase of less than 50 points banking organization in the market, controlling 44.6 in the HHI and Fleet/Norstar would control less than percent of the deposits in commercial banks in the 10 percent of the deposits in commercial banks in the market. The four-firm concentration ratio would in- market.21 Accordingly, the Board concludes that concrease by 7.3 points to 99.3 percent and the HHI for summation of the proposal would have no significant the market would increase by 983 points to 3600. As in adverse effect in this market. the Bangor market, however, thrift institutions are On the basis of the above facts and other facts of significant competitors in the market. Accordingly, on record, the Board finds that consummation of Fleet's the basis of thrift competition in the Augusta market, proposal would not have a significant adverse effect on the Board concludes that consummation of the pro- existing competition in any relevant market. The posal would not have a substantial adverse competi- Board also has considered the effects of Fleet's protive effect in this banking market.16 posal on probable future competition in markets in In the Farmington17 and Machias18 banking mar- which Fleet and Norstar do not both compete. In light kets, Fleet would become the largest commercial of the market concentration and the number of probbanking organization in the market upon consumma- able future entrants into the markets, the Board contion of the proposal. Each market is highly concen- cludes that consummation of this proposal would not trated, with the four largest banks controlling 95.4 and have a significant adverse effect on probable future 100 percent respectively of the deposits in commercial competition in any relevant market. banks in the market. In Guilford,19 Fleet would be the The financial and managerial resources of Fleet and only commercial banking organization in the market. Norstar are consistent with approval. No additional In order to alleviate the anticompetitive effects that debt will be incurred in connection with the proposal. would otherwise result from consummation of this In addition, Fleet's existing and pro forma consoliproposal, Fleet has committed to divest some of its or dated capital levels are above the Board's minimum Norstar's offices in these markets on or prior to the guidelines and exceed peer group averages.22 Considproposed merger. These divestitures and the signifi- erations relating to the convenience and needs of the cant influence of thrift institutions in these markets communities to be served by Fleet's and Norstar's mitigate the anticompetitive effect of this proposal.20 subsidiary banks also are consistent with approval of this application. Fleet also has applied, pursuant to section 4(c)(8), to 16. If thrift institutions are included in the analysis at 50 percent, acquire certain nonbanking subsidiaries of Norstar. Fleet and Norstar would control 28.5 percent of the total market Fleet operates leasing, mortgage banking, discount deposits. The HHI would increase by 418 points to 1773. 17. The Farmington banking market consists of Livermore and Livermore Falls in Androscoggin County; Avon, Carrabasset Valley, Chesterville, Crockertown, Farmington, Freeman, Industry, Jay, Jerusalem, Kingfield, Madrid, Mount Abraham, New Sharon, New Vineyard, Perkins, Phillips, Salem, Strong, Temple, Washington, Weld and Wilton in Franklin County; and the township of New In the Machias market, Fleet and Norstar would control 19.0 Portland in Somerset County. percent of the total market deposits. The HHI would increase by 42 18. The Machias banking market is comprised of the southern points to 2651. portion of Washington County. In the Guilford market, Fleet and Norstar would control 46.9 19. The Guilford banking market consists of the southern portion of percent of the total market deposits. The HHI would increase by 97 Piscataquis County. points to 3618. Fleet proposes to divest to a company that does not 20. The following data indicates the market share and the change in currently operate in the market. the HHI if 50 percent of the deposits controlled by thrift institutions 21. The Portland banking market consists of the Portland Ranally and the described divestitures were included in the calculation of Metropolitan Area ("RMA") plus Baldwin, Casco, Naples, Pownal, market concentration in these banking markets: and Sebago in Cumberland County; and Dayton, Hollis, Kennebunk, In the Farmington market, Fleet and Norstar would control 22.4 Kennebunkport, Limington, Lyman, and North Kennebunkport in percent of the total market deposits. The HHI would increase by 207 York County. points to 1941. However, Fleet proposes to divest to the most 22. Capital Adequacy Guidelines for Bank Holding Companies and commercially active thrift institution in Maine. State Member Banks, 12 C.F.R. Part 225, Appendix A. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Federal Reserve Bulletin • January 1988 brokerage services, and consumer and commercial APPENDIX A lending subsidiaries that directly compete with Norstar and its subsidiaries in these activities. Consum- Nonbanking Subsidiaries To Be Acquired mation of the proposal, however, would have a de minimis effect on existing competition in each of Norstar Leasing Services, Inc., and thereby engage in these markets and there are numerous competitors for equipment leasing and certain commercial lending these services. Accordingly, the Board concludes activities; Norstar Auto Lease, Inc., and thereby that the proposal would not have any significant ad- engage in automobile leasing; Norstar Investment Adverse effect on existing or probable future competition visory Services, Inc., and thereby engage in activities in any relevant market. Furthermore, there is no providing portfolio management, investment advice, evidence in the record to indicate that approval of this and consumer financial counseling; Norstar Trust proposal would result in undue concentration of re- Company, and thereby engage in trust and financial sources, decreased or unfair competition, conflicts of management services; Norstar Mortgage Corporation, interest, unsound banking practices, or other adverse and thereby engage in residential mortgage loan origeffects on the public interest. Accordingly, the Board ination and servicing and the provision of related has determined that the balance of public interest advisory services; Chapdelaine & Company Governfactors it must consider under section 4(c)(8) of the ment Securities, Inc., and thereby engage in acting as Act is favorable and consistent with approval of the a broker of government securities on behalf of other applications to acquire the nonbanking subsidiaries of brokers who are principal dealers in such securities; Norstar. Norlife Reinsurance Company, and thereby engage in Based on the foregoing and other facts of record, the acting as a reinsurer of credit life, credit accident and Board has determined that the applications under health insurance and mortgage life and mortgage accisections 3 and 4 of the Act and the Bank Merger Act dent and health insurance sold in connection with should be and hereby are approved, subject to Fleet's extensions of credit to consumers; Adams, McEntee commitments and divestiture proposals. This approval & Company, Inc., and thereby engage in the sale and is also subject to the condition that Fleet obtain all underwriting of state and municipal securities and required state approvals and comply with any required brokerage of certain mutual fund shares; Altman, divestitures under state law. The acquisition of Nor- Brown & Everett, Inc., and thereby engage in actuarstar shall not be consummated before the thirtieth ial and employee benefits consulting services; Norstar calendar day following the effective date of this Order, Brokerage Corporation and its wholly owned subsidor later than three months after the effective date of iary, NB Clearing Corporation, and thereby engage in this Order, unless such period is extended for good retail discount brokerage services; Norstar Data Sercause by the Board or by the Federal Reserve Bank of vices, Inc., and thereby provide data processing ser- Boston, acting pursuant to delegated authority. The vices to affiliates of parent company and, in the past, determinations as to Fleet's nonbanking activities are to third persons; and Norstar Trust Company of Florsubject to all of the conditions contained in Regulation ida, N.A., and thereby engage in general trust serv- Y, including those in sections 225.4(d) and 225.23(b)(3) ices. The Board has determined that these activities (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), and to the are closely related to banking and permissible for bank Board's authority to require such modification or holding companies. 12 C.F.R. §§ 225.23(b)(1), (3), termination of the activities of a holding company or (4), (5), (7), (8), (15), (16), (20) and the Board's Orders any of its subsidiaries as the Board finds necessary to dated June 19, 1985 and August 19, 1986. assure compliance with the provisions and purposes of the Act and the Board's regulations and orders issued Dissenting Statement of Governor Angell thereunder, or to prevent evasion thereof. By order of the Board of Governors, effective I believe this application raises serious questions con- November 9, 1987. cerning the sufficiency of the research data used in analyzing the anticompetitive effects of mergers and acquisitions especially in those markets with a small Voting for this action: Vice Chairman Johnson and Gover- number of financial competitors. Without adequate nors Seger and Heller. Voting against this action: Governor empirical research, I am concerned that the Board will Angell. Absent and not voting: Chairman Greenspan and approve transactions with substantial anticompetitive Governor Kelley. effects especially in the areas of small business and agricultural lending. I believe it is important for the JAMES MCAFEE Board to determine the extent and nature of the [SEAL] Associate Secretary of the Board services that actually are provided by the competitors Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 67 of banks in these markets, and I would encourage market,3 Valley is the second largest of eleven comapplicants to provide this information in the future. mercial banking organizations, controlling $743.0 million in deposits, which represents 31.8 percent of total November 10, 1987 deposits in commercial banks in the market. Security is the seventh largest commercial banking organization Orders Issued Under the Bank Merger Act in the Las Vegas market, controlling $60 million in deposits, which represents 2.6 percent of total depos- Valley Bank of Nevada its in commercial banks in the market. The Las Vegas Las Vegas, Nevada banking market is highly concentrated, with the four largest commercial banks controlling 90.9 percent of Order Approving the Merger of Banks the total deposits in commercial banks in the market. Following the proposed merger, Valley would remain Valley Bank of Nevada, Las Vegas, Nevada the second largest commercial banking organization in ("Valley"), the sole subsidiary of Valley Capital Cor- the market, controlling 34.4 percent of total deposits in poration, Las Vegas, Nevada, a bank holding com- commercial banks. The Las Vegas market would pany within the meaning of the Bank Holding Com- remain highly concentrated and the Herfindahlpany Act, has applied for the Board's approval under Hirschman Index ("HHI")4 would increase by 163 the Bank Merger Act (12 U.S.C. § 1828(c)) to merge points to 3175. with Security Bank of Nevada, Reno, Nevada ("Se- In the Douglas County banking market,5 Valley is curity"), under the charter and title of Valley. the smallest of five commercial banking organizations, Notice of this application, affording interested per- controlling $8.0 million in deposits, which represents sons an opportunity to submit comments and views, 5.2 percent of total deposits in commercial banks in has been given in accordance with the Bank Merger the market. Security is the fourth largest commercial Act and the Board's Rules of Procedure (12 C.F.R. banking organization in the market, controlling $17.0 § 262.3(b)). As required by the Bank Merger Act, million in deposits, which represents 11.0 percent of reports of the competitive effects of the merger were total deposits in commercial banks in the market. The requested from the United States Attorney General, Douglas County banking market is highly concenthe Comptroller of the Currency, and the Federal trated, with the four largest commercial banks control- Deposit Insurance Corporation. The time for filing ling 94.9 percent of total deposits in commercial banks comments has expired and the Board has considered in the market. Following the proposed merger, Valley the application and all comments received in light of would become the second largest commercial banking the factors and considerations set forth in the Bank organization in the market, controlling 16.2 percent of Merger Act. total deposits in commercial banks. The Douglas Valley is the second largest of fifteen banking orga- County market would remain highly concentrated, and nizations in Nevada, controlling $1.3 billion in depos- the HHI would increase by 114 points to 3745. its, which represents 21.3 percent of the total deposits In the Reno banking market,6 Valley is the third in commercial banks in the state.1 Security is the fifth largest of five commercial banking organizations, conlargest commercial banking organization in Nevada, trolling $148 million in deposits, which represents 9.9 controlling $429.0 million in deposits, which repre- percent of total deposits in commercial banks in the sents 7.3 percent of the total deposits in commercial market. Security is the second largest commercial banks in the state. Upon consummation of the proposed merger, Valley will remain the second largest commercial banking organization in Nevada, control- 3. The Las Vegas, Nevada banking market is approximated by the Las Vegas Rand McNally Metropolitan Area ("RMA"). ling $1.7 billion in deposits, representing 28.6 percent 4. Under the revised Department of Justice Merger Guidelines (49 of total deposits in commercial banks in the state. Federal Register 26,823 (1984)) a market in which the post-merger Consummation of this proposal would not have any HHI is over 1800 is considered concentrated. In such markets, the Department is likely to challenge a merger that increases the HHI by significant adverse effect on the concentration of bank- more than 50 points. The Department has informed the Board that a ing resources in Nevada. bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anti-competitive effects) unless the Valley and Security compete directly in the post-merger HHI is at least 1800 and the merger increases the HHI by Las Vegas, Douglas County, Reno and Carson City at least 200 points. The Justice Department has stated that the higher banking markets.2 In the Las Vegas banking than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited purpose lenders and other non-depository financial entities. 5. The Douglas County banking market is approximated by Douglas County, Nevada. 1. State deposit data are as of December 31, 1986. 6. The Reno, Nevada banking market is approximated by the Reno 2. Market data are as of June 30, 1986. RMA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Federal Reserve Bulletin • January 1988 banking organization in the Reno market, controlling ket shares and commercial lending activities of thrift $237 million in deposits, which represents 15.8 percent institutions in their markets, the Board has concluded of total deposits in commercial banks in the market. that thrift institutions exert a significant competitive The Reno banking market is highly concentrated, with influence that mitigates the anti-competitive effects of the four largest commercial banks controlling 95.5 this proposal in all four banking markets.9 percent of total deposits in commercial banks in the On the basis of the above facts and other facts of market. Following the proposed merger, Valley would record, the Board concludes that consummation of become the second largest commercial banking orga- Valley's proposal would not have a significantly adnization in the market, controlling 25.7 percent of total verse effect on existing competition in any relevant deposits in commercial banks. The Reno market market. would remain highly concentrated and the HHI would The Board also has considered the effects of Valincrease by 313 points to 3871. ley's proposal on probable future competition in the In the Carson City banking market,7 Valley is the markets in which Valley and Security do not second largest of six commercial banking organiza- compete.10 In light of the attractiveness of a given tions, controlling $71.0 million in deposits, which market for entry on a de novo basis, the Board represents 25.1 percent of the deposits in commercial concludes that consummation of this proposal would banks. Security is the third largest commercial bank- not have a significant adverse effect on probable future ing organization in the market, controlling $39.0 mil- competition in any relevant market. lion in deposits, which represents 13.9 percent of total The Board also has considered Valley's managerial deposits in commercial banks in the market. The resources, particularly with regard to previous viola- Carson City market is highly concentrated, with the tions of the Currency and Foreign Transactions Refour largest commercial banks controlling 87.6 percent porting Act (31 U.S.C. § 5311 et seq.) ("CFTRA") of total deposits there. Upon consummation of this uncovered at Valley's report of examination in June proposal, Valley would become the largest commer- 1985. When reporting violations were discovered, Valcial banking organization in the market, controlling ley initiated a comprehensive internal audit of CFTRA $110.0 million in deposits, representing 39.0 percent of compliance at each of its branch offices.11 Valley also the market share. The market would remain highly undertook comprehensive remedial and preventative concentrated, and the HHI would increase by 698 points to 3029. Consummation of the proposed merger would eliminate some existing competition between Valley and 9. The following data indicate the market share and the change in Security in all four markets in which these banks the HHI if 50 percent of the deposits controlled by thrift institutions were included in the calculation of market concentration after concompete. The Board notes, however, that several summation of this proposal: other commercial banking organizations would con- In the Las Vegas market, Valley and Security would control 19.7 tinue to operate in each market after consummation of percent and 1.6 percent of total market deposits, respectively, and the HHI would increase by 63 points to 1639. Valley's proposal. In addition, the Board has consid- In the Douglas County market, Valley and Security would control ered the presence of thrift institutions in these markets 4.1 percent and 8.4 percent of total deposits, respectively, and the in its analysis of the proposal. Thrift institutions ac- HHI would increase by 34 points to 2415. In the Reno County market, Valley and Security would control 7.6 count for a significant percentage of the total deposits percent and 12.1 percent of total market deposits, respectively, and in each of these banking markets. The Board previ- the HHI would increase by 182 points to 2530. In addition to the market share that thrift institutions have in the ously has indicated that thrift institutions have be- Carson City market, the Board notes that 70 percent of Valley's come, or have the potential to become, major compet- deposits is represented by state government deposits. Valley's market itors of commercial banks.8 Thrift institutions already share in that market (25.1 percent) drops significantly if only individual, partnership and corporation ("IPC") deposits are included in the exert a considerable competitive influence in the maranalysis. The Board has previously determined that IPC deposits may ket as providers of NOW accounts and consumer be the proper focus of the competitive analysis in mergers and loans, and many are engaged in the business of making acquisitions in markets, such as those including state capitals, in which government deposits constitute a relatively large share of total commercial loans. Based upon the number, size, mardeposits. See, for example, United Bank Corporation of New York, 66 FEDERAL RESERVE BULLETIN 61 (1980). Based on IPC deposits only, and with the inclusion of the deposits of the market's four thrift institutions included at 50 percent, Valley and Security would control 7. The Carson City, Nevada banking market is approximated by the 6.7 percent and 12.7 percent of total deposits, respectively, and the Carson City RMA. HHI would increase by 168 points to 1711. 8. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 10. "Policy Statement of the Board of Governors of the Federal (1984); The Chase Manhattan Corporation, 70 FEDERAL RESERVE Reserve System for Assessing Competitive Factors Under the Bank BULLETIN 529 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE Merger Act and the Bank Holding Company Act," 47 Federal BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL Register 9017 (March 3, 1982). RESERVE BULLETIN 802 (1983); First Tennessee Corporation, 69 11. Based on a report of this audit, the Department of Treasury has FEDERAL RESERVE BULLETIN 298 (1983). assessed $192,000 in civil money penalties against Valley. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 69 actions. It installed an updated computer software addition, considerations relating to the convenience package which aggregates cash transactions among all and needs of the communities to be served by Valley of Valley's branches and also provides a mechanism and Security also are consistent with approval. for centralized verification of currency transaction Based on the foregoing and all other facts of record, reports. Valley also established CFTRA training for all and subject to Valley's assurances and commitments, bank employees and included CFTRA compliance as a the Board has determined that this application under topic in all officer continuing education programs. In the Bank Merger Act should be and hereby is apaddition, Valley appointed a CFTRA compliance of- proved. The merger of Security with Valley shall not ficer for each branch and charged its Audit Depart- be consummated before the thirtieth calendar day ment with the ongoing assessment of the bank's ex- following the effective date of this Order or later than empt lists and currency transaction reports. The Board three months after the effective date of this Order, has considered these measures as well as Valley's unless such period is extended for good cause by the improved CFTRA performance and its ongoing coop- Board or by the Federal Reserve Bank of San Francieration with all law enforcement and regulatory au- sco, pursuant to delegated authority. thorities. Based on these considerations, Valley's as- By order of the Board of Governors, effective Nosurances, and all other facts of record, the Board vember 30, 1987. concludes that Valley's overall compliance with CFTRA is satisfactory and that Valley's managerial Voting for this action: Chairman Greenspan and Governors resources therefore are consistent with approval of Johnson, Seger, Angell, Heller, and Kelley. this proposal. The financial resources of Valley and Security are JAMES MCAFEE consistent with approval of this merger proposal. In [SEAL] Associate Secretary of the Board ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date A & P Holding Co., Community National Bank, Minneapolis November 25, 1987 North Branch, Minnesota North Branch, Minnesota A T Acquisition Corporation, Midwest National Bank, Cleveland November 6, 1987 Cleveland, Ohio Indianapolis, Indiana Ameritrust Corporation, Midwest National Bank, Cleveland November 5, 1987 Cleveland, Ohio Indianapolis, Indiana Ameritrust Indiana Corporation, A T Acquisition Corporation, Cleveland November 6, 1987 Cleveland, Ohio Cleveland, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Bulletin • January 1988 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Atlantic Bancorporation, Glendale Bank of Pennsylvania, Philadelphia November 16, 1987 Voorhees, New Jersey Philadelphia, Pennsylvania Bank of Montreal, Commercial State Bank, Chicago November 4, 1987 Montreal, Quebec, Canada Phoenix, Arizona Bankmont Financial Corp., New York, New York Harris Bankcorp, Inc., Chicago, Illinois BankFirst Corp., Bank First, N.A., Richmond November 10, 1987 McLean, Virginia McLean, Virginia BCB Financial Services Berks County Bank (In Philadelphia October 30, 1987 Corporation, Organization), Reading, Pennsylvania Reading, Pennsylvania BMR Bancorp, Inc., Citizens Bank of Americus, Atlanta October 27, 1987 Atlanta, Georgia Americus, Georgia Bankworcester Corporation, Worcester County Institution for Boston November 12, 1987 Worcester, Massachusetts Savings, Worcester, Massachusetts Berthoud Bancorp Employee Berthoud Bancorp, Inc., Kansas City October 23, 1987 Stock Ownership Plan, Berthoud, Colorado Berthoud, Colorado C & L Banking Corporation, C & L Bank of Bristol, Atlanta November 13, 1987 Bristol, Florida Bristol, Florida CNB Bancorp, Inc., Lake Shore National Bank, Chicago October 26, 1987 Danville, Illinois Danville, Illinois Cardinal Bancshares, Inc., Union Bank and Trust Company, Cleveland November 19, 1987 Lexington, Kentucky Irvine, Kentucky Chillicothe Bancshares, Inc., Bosworth Bancshares, Inc., Kansas City November 25, 1987 Chillicothe, Missouri Chillicothe, Missouri Citizens Financial Corporation Citizens Financial Corporation, Chicago November 25, 1987 Employee Stock Ownership Fort Atkinson, Wisconsin Plan and Trust, Fort Atkinson, Wisconsin Dublin Bancshares, Inc., First National Bank of Dublin, Dallas November 20, 1987 Dublin, Texas Dublin, Texas Eldorado Bancorp, American Merchant Bank, San Francisco November 24, 1987 Tustin, California Newport Beach, California Elkcorp., Inc., The Elk State Bank, Kansas City October 21, 1987 Clyde, Kansas Clyde, Kansas Embry Bankshares, Inc., Embry National Bank, Atlanta October 29, 1987 Atlanta, Georgia Atlanta, Georgia ENB Holding Company, San Marcos National Bank, San Francisco October 26, 1987 Escondido, California San Marcos, California F & M Financial Services Citizens Community Bankshares, Chicago October 28, 1987 Corporation, Inc., Menomonee Falls, Wisconsin Wittenberg, Wisconsin Fifth Third Bancorp, Firstbancorporation of Batesville, Cleveland November 6, 1987 Cincinnati, Ohio Batesville, Indiana 1st American Bancorp, Inc., 1st American Bank for Savings, Boston November 19, 1987 Boston, Massachusetts Boston, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 71 Section 3—Continued . „ , , Reserve Effective x Applicant Bank(s) Bank date First Business Bancshares of First Business Bank of Kansas City, Kansas City November 25, 1987 Kansas City, Inc., National Association, Kansas City, Missouri Kansas City, Missouri First City, Inc., First City, A Federal Savings Bank, St. Louis November 2, 1987 Memphis, Tennessee Memphis, Tennessee First Empire State Corporation, The East New York Savings Bank, New York October 30, 1987 Buffalo, New York New York, New York First Financial Corporation, FSB Corporation, Chicago November 13, 1987 Terre Haute, Indiana Sullivan, Indiana First Mid-Illinois Bancshares, Eagle Bank of Charleston, Chicago November 20, 1987 Inc., Charleston, Illinois Mattoon, Illinois First National Cincinnati First Sidney Banc Corp., Cleveland October 28, 1987 Corporation, Sidney, Ohio Cincinnati, Ohio First National Hayes Center American State Bank, Kansas City November 19, 1987 Corp., McCook, Nebraska Hayes Center, Nebraska First of America Bank Erie Financial Corp., Chicago November 23, 1987 Corporation, Monroe, Michigan Kalamazoo, Michigan First Peoples Financial First Bank of Philadelphia, Philadelphia November 6, 1987 Corporation, Philadelphia, Pennsylvania Haddon Township, New Jersey First Security Corporation of State Financial Bancshares, Inc., Cleveland November 25, 1987 Kentucky, Richmond, Kentucky Lexington, Kentucky First Security Affiliates, Inc., Lexington, Kentucky First Southern Bancorp, Inc., Nabanco, Inc., Cleveland November 19, 1987 Stanford, Kentucky Lancaster, Kentucky Lincoln County National Bank, Stanford, Kentucky First State Bank of Wayne County, Monticello, Kentucky First Sun Capital Corporation, Columbia Bancorp, Inc., Richmond November 6, 1987 Columbia, South Carolina Columbia, South Carolina First Union Corporation, Bank of Bellevue, Richmond November 20, 1987 Charlotte, North Carolina Nashville, Tennessee FMB Financial Holdings, Inc., Farmers and Merchants Bank, Atlanta November 6, 1987 Fayetteville, Georgia Fayetteville, Georgia FNB Financial Corp., Farmers National Bank, St. Louis November 18, 1987 Scottsville, Kentucky Scottsville, Kentucky FNB Financial Corporation, The First National Bank of Philadelphia October 26, 1987 McConnellsburg, Pennsylvania McConnellsburg, McConnellsburg, Pennsylvania Golden Bancshares, Inc., Golden State Bank, St. Louis November 4, 1987 Golden, Illinois Golden, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin • January 1988 Section 3—Continued Reserve Effective AApppplliiccaanntt BBaannkk((ss)) Bank date Gower Bancshares, Inc., Farmers Bank of Gower, Kansas City November 19, 1987 Gower, Missouri Gower, Missouri Heritage Enterprises II, FMB Financial Holdings, Inc., Atlanta November 6, 1987 Fayetteville, Georgia Fayetteville, Georgia Intrex Financial Services, Inc., Lawrence Savings Bank, Boston November 12, 1987 Lawrence, Massachusetts Lawrence, Massachusetts Kanbanc, Inc., Farmers State Bank of Walnut, Kansas City November 25, 1987 Shawnee Mission, Kansas Walnut, Kansas Laddonia State Bancshares, Inc., Laddonia State Bank, St. Louis November 2, 1987 Laddonia, Missouri Laddonia, Missouri Langdon Bank Holding Company, First Bank of Langdon, Minneapolis October 26, 1987 Walhalla, North Dakota Langdon, North Dakota Lincoln Financial Corporation, Harbor Country Banking Chicago November 17, 1987 Fort Wayne, Indiana Corporation, Three Oaks, Michigan Linton Bancshares, Inc., The First National Bank of Linton, Minneapolis November 24, 1987 Bismarck, North Dakota Linton, North Dakota Litchfield Bancshares Company, Litchfield National Bank, St. Louis November 20, 1987 Litchfield, Illinois Litchfield, Illinois Magna Group, Inc., The First National Bank of Wood St. Louis November 3, 1987 Belleville, Illinois River, Wood River, Illinois Magna Group, Inc., McLean County Bancshares, Inc., St. Louis November 3, 1987 Belleville, Illinois Bloomington, Illinois MCB Acquisition Company, Belleville, Illinois Marine Corporation, Commercial Bancshares, Inc., Chicago October 22, 1987 Springfield, Illinois Champaign, Illinois Marion Bancshares Inc., Marion Bank & Trust Company, Atlanta October 30, 1987 Marion, Alabama Marion, Alabama Maryville Bancshares, Inc., Savannah Bancshares, Inc., Kansas City November 25, 1987 Chillicothe, Missouri Chillicothe, Missouri Merchants Bancshares, Inc., Merchants Bank & Trust Company, Atlanta October 23, 1987 Bay St. Louis, Mississippi Bay St. Louis, Mississippi Mid-Mo Bancshares, Inc., Security Bank of Auxvasse, St. Louis October 23, 1987 Auxvasse, Missouri Auxvasse, Missouri Minonk Bancshares, Inc., Washburn Bancshares, Inc., Chicago November 5, 1987 Minonk, Illinois Washburn, Illinois National Bancorp, Inc., The American National Bank of Chicago November 20, 1987 Melrose Park, Illinois DeKalb, DeKalb, Illinois New Bank of Mora, Kanabec State Bank, Minneapolis November 24, 1987 Mora, Minnesota Mora, Minnesota North Arkansas Bancshares, Inc., First State Bank of Newport, St. Louis November 16, 1987 Jonesboro, Arkansas Newport, Arkansas Northern Financial, Inc., Presque Isle Bank, Chicago November 12, 1987 Rogers City, Michigan Rogers City, Michigan Northland Insurance Agency, Selin Corporation, Chicago November 10, 1987 Inc., Chicago, Illinois Chicago, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 73 Section 3—Continued Reserve Effective AApppplliiccaanntt BBaannkk((ss)) Bank date Old National Bancorp, Farmers Bank & Trust Co., St. Louis November 20, 1987 Evansville, Indiana Madisonville, Kentucky Pikeville National Corporation, Commercial Bank of West Liberty, Cleveland November 6, 1987 Pikeville, Kentucky West Liberty, Kentucky Riggs National Corporation, The Riggs National Bank of Richmond October 26, 1987 Washington, D.C. Maryland, Rockville, Maryland Roseville Bankshares, Inc., Roseville State Bank, Chicago November 20, 1987 Roseville, Illinois Roseville, Illinois Royal Bancshares, Inc., Centre National Bank-Farmers Dallas November 20, 1987 Farmers Branch, Texas Branch, Farmers Branch, Texas St. Croix Banco, Inc., Stanley Bancorporation, Inc., Minneapolis November 19, 1987 New Richmond, Wisconsin Stanley, Wisconsin Polk County Banco, Inc., Balsam Lake, Wisconsin Salem Bancorp, Inc., Salem Bank, Inc., St. Louis November 10, 1987 Salem, Kentucky Salem, Kentucky Sandy Spring Bancorp, Inc., Sandy Spring National Bank of Richmond November 3, 1987 Olney, Maryland Maryland, Olney, Maryland Security Bancshares of Marion Peoples Bank, St. Louis October 30, 1987 County, Inc., Gravel Switch, Kentucky Springfield, Kentucky Security Chicago Corp., OSWEGO BANCSHARES, INC., Chicago November 19, 1987 Chicago, Illinois Oswego, Illinois Selin Corporation, American National Bank, Chicago November 10, 1987 Chicago, Illinois South Chicago Heights, Illinois American National Bank and Trust Company of Waukegan, Waukegan, Illinois First National Bank of Crystal Lake, Crystal Lake, Illinois Gurnee National Bank, Gurnee, Illinois Wauconda National Bank and Trust Company, Wauconda, Illinois Shelby Bancshares, Inc., Shelby Bank, St. Louis November 24, 1987 Bartlett, Tennessee Bartlett, Tennessee South Banking Company, Georgia Peoples Bankshares, Atlanta November 20, 1987 Alma, Georgia Baxley, Georgia SouthTrust Corporation, First Bancshares, Inc., Atlanta November 13, 1987 Birmingham, Alabama Marianna, Florida SouthTrust Corporation, Gulf/Bay Financial Corporation, Atlanta November 19, 1987 Birmingham, Alabama Tampa, Florida The Summit Bancorporation, Yardville National Bancorp, New York October 30, 1987 Summit, New Jersey Yardville, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Bulletin • January 1988 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date TJM Financial Corporation, First Farmers Bank and Trust Co. St. Louis November 10, 1987 Lexington, Kentucky Owenton, Kentucky Trustcorp, Inc., Ypsilanti Savings Bank, Cleveland November 16, 1987 Toledo, Ohio Ypsilanti, Michigan Trustcorp of Michigan, Inc., Adrian, Michigan United Community Corporation, Kiamichi Bancshares, Inc., Kansas City October 27, 1987 Oklahoma City, Oklahoma Hugo, Oklahoma First Madill Bancorporation, Madill, Oklahoma First Prague Bancorporation, Inc., Prague, Oklahoma Arbuckle Corporation, Inc., Sulphur, Oklahoma Walhalla Bank Holding Company, Langdon BHC, Minneapolis October 26, 1987 Walhalla, North Dakota Langdon, North Dakota Washburn Bancshares, Inc., The Washburn Bank, Chicago November 5, 1987 Washburn, Illinois Washburn, Illinois Whitley City Bancshares, Inc., McCreary Bancshares, Inc., Cleveland November 5, 1987 Whitley City, Kentucky Whitley City, Kentucky Section 4 Applicant Nonbanking Company/Activity ^Bank^ ^cfote^ Centerre Bancorporation, engage in the purchase, issuance St. Louis November 2, 1987 St. Louis, Missouri and servicing of consumer loans through the issuance of credit cards establish Centerre Bank of Delaware, New Castle, Delaware Cook Investment, Inc., Gage, Inc., Kansas City October 30, 1987 Beatrice, Nebraska Beatrice, Nebraska Dakota Bankshares, Inc. provide data processing and data Minneapolis October 23, 1987 Fargo, North Dakota transmission services, data bases, and facilities that are for financial, banking, and economic purposes First Bancorp of Tonkawa, Inc., retain indirect control of Burton Kansas City October 28, 1987 Tonkawa, Oklahoma Insurance Trust, Tonkawa, Oklahoma First Bank System, Inc., Erickson Agency, Inc., Minneapolis October 23, 1987 Minneapolis, Minnesota Minot, North Dakota First Union Corporation, acquire certain assets of Ashley Richmond November 10, 1987 Charlotte, North Carolina Securities Corporation, Naples, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 75 Section 4—Continued Applicant Nonbanking Company/Activity ^Bank^ ^date^ First Western Bancorporation, continue to engage in general Kansas City November 13, 1987 La Jara, Colorado insurance activities Independent Bankshares, Inc., First Independent Computers, Inc., Dallas November 12, 1987 Abilene, Texas Abilene, Texas provide data processing and data transmission services through a joint venture with CCS Processing Services, Inc., Maitland, Florida Midwest Financial Group, Inc. Central Computing Company, Chicago October 29, 1987 Peoria, Illinois Decatur, Illinois Republic Bancorp, Inc., Mayflower Mortgage Corporation, Chicago October 27, 1987 Ann Arbor, Michigan Plymouth, Michigan Security Pacific Corporation, retain certain insurance agency San Francisco November 9, 1987 Los Angeles, California activities of Rainier Mortgage SPC/RAB Acquisition Company, Corporation, Seattle, Washington Los Angeles, California Selin Corporation, data processing and data Chicago November 10, 1987 Chicago, Illinois transmission services Signal Bancshares, Inc., certain assets of Hampton Agency, Minneapolis November 20, 1987 West St. Paul, Minnesota Inc., Hampton, Minnesota Sovran Financial Corporation, Dresser Leasing Corporation, Richmond October 26, 1987 Norfolk, Virginia Pittsburgh, Pennsylvania Sections 3 and 4 . .. Banks/Nonbanking Reserve Effective Company/Activity Bank date Cumberland Valley Bancshares, Garrett Financial Services, Inc., Atlanta November 16, 1987 Inc., Goodlettsville, Tennessee Goodlettsville, Tennessee First Cumberland Bank, Madison, Tennessee First National Agency, Inc., of First BancShares, Inc., of Cold Minneapolis November 17, 1987 Cold Spring, Spring, Cold Spring, Minnesota Cold Spring, Minnesota retain its general insurance agency activities First National Bank of Cold Spring, Cold Spring, Minnesota Old Kent Financial Corporation, Illinois Regional Bancorp, Inc., Chicago October 29, 1987 Grand Rapids, Michigan Elmhurst, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Bulletin • January 1988 ORDERS ISSUED UNDER BANK MERGER ACT Reserve Effective Applicant Bank(s) Bank date Bank One, Mansfield, acquire certain assets and assume Cleveland November 4, 1987 Mansfield, Ohio certain liabilities of the Galion, Ohio branch of Chase Bank of Ohio, Mentor, Ohio Central Bank of the South, Central Bank, Atlanta October 23, 1987 Birmingham, Alabama Cahaba Heights, Alabama Chemical Bank Bay Area, Chemical Bank Cass City, Chicago November 17, 1987 Bay City, Michigan Cass City, Michigan Citizens Trust and Savings Bank, CB Bank, Chicago November 9, 1987 South Haven, Michigan South Haven, Michigan Comerica Bank—Detroit, Comerica Bank—Livonia, Chicago November 25, 1987 Detroit, Michigan Livonia, Michigan Comerica Bank—Metro East, National Association, Sterling Heights, Michigan Comerica Bank—Metro West, National Association, Novi, Michigan Comerica Bank—Southfield, Southfield, Michigan Comerica Bank—Troy, Troy, Michigan Comerica Bank—Warren, N.A., Warren, Michigan The Commercial Bank, acquire three branches of Maryland Richmond October 23, 1987 Bel Air, Maryland National Bank, Baltimore, Maryland First Community Bank—Adrian First Community Bank, Inc., Richmond November 13, 1987 Buckhannon, Inc., Princeton, West Virginia Buckhannon, West Virginia Johnstown Bank and Trust The First National Bank of Philadelphia November 6, 1987 Company, Avonmore, Johnstown, Pennsylvania Avonmore, Pennsylvania Newco Bank, Ypsilanti Savings Bank, Cleveland November 16, 1987 Ypsilanti, Michigan Ypsilanti, Michigan Old Kent Bank and Trust Old Kent Bank of Greenville, Chicago October 30, 1987 Company, Greenville, Michigan Grand Rapids, Michigan Old Kent Bank of Fremont, Fremont, Michigan Old Kent Bank and Trust Old Kent Bank of Kentwood, Chicago November 12, 1987 Company, Kentwood, Michigan Grand Rapids, Michigan Peoples Bank of Bloomington, The First National Bank of Normal, Chicago October 27, 1987 Bloomington, Illinois Normal, Illinois State Bank of Freeport, Rock City Bank, Chicago November 19, 1987 Freeport, Illinois Rock City, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 77 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. National Association of Casualty and Surety Agents, Grimm v. Board of Governors, No. 87-4006 (2d Cir., et al., v. Board of Governors, No. 87-1644 (D.C. filed Jan. 16, 1987). Cir., filed Nov. 4, 1987). Independent Insurance Agents of America, et al. v. Teichgraeber v. Board of Governors, No. 87-2505-0 Board of Governors, Nos. 86-1572,1573,1576 (D.C. (D. Kan., filed Oct. 16, 1987). Cir., filed Oct. 24, 1986). Securities Industry Association v. Board of Gover- Independent Community Bankers Association of nors, No. 87-4135 (2d Cir., filed Oct. 8, 1987). South Dakota v. Board of Governors, No. 86-5373 Independent Insurance Agents of America, Inc. v. (8th Cir., filed Oct. 3, 1986). Board of Governors, No. 87-4118 (2d Cir., filed Jenkins v. Board of Governors, No. 86-1419 (D.C. Sept. 17, 1987). Cir., filed July 18, 1986). Citicorp v. Board of Governors, No. 87-1475 (D.C. Securities Industry Association v. Board of Gover- Cir., filed Sept. 9, 1987). nors, No. 86-1412 (D.C. Cir., filed July 14, 1986). Securities Industry Association v. Board of Gover- CBC, Inc. v. Board of Governors, No. 86-1001 (10th nors, No. 87-4115 (2d Cir., filed Sept. 9, 1987) Cir., filed Jan. 2, 1986). Board of Trade of the City of Chicago, et al. v. Board Myers, et al. v. Federal Reserve Board, No. 85-1427 of Governors, No. 87-2389 (7th Cir., filed Sept. 1, (D. Idaho, filed Nov. 18, 1985). 1987). Souser, et al. v. Volcker, et al., No. 85-C-2370, et al. Barrett v. Volcker, No. 87-2280 (D.D.C., filed August (D. Colo., filed Nov. 1, 1985). 17, 1987). Podolak v. Volcker, No. C85-0456, et al. (D. Wyo., Northeast Bancorp v. Board of Governors, No. filed Oct. 28, 1985). 87-1365 (D.C. Cir., filed July 31, 1987). Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa, National Association of Casualty & Insurance Agents filed Oct. 22, 1985). v. Board of Governors, Nos. 87-1354, 87-1355 (D.C. Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D. Cir., filed July 29, 1987). Minn., filed Oct. 21, 1985). The Chase Manhattan Corporation v. Board of Gov- Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D. ernors, No. 87-1333 (D.C. Cir., filed July 20, 1987). Neb., filed Oct. 16, 1985). Securities Industry Association v. Board of Gover- Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D., nors, Nos. 87-4091, 87-4093, 87-4095 (2d Cir., filed filed Oct. 8, 1985). July 1 and July 15, 1987). Independent Community Bankers Association of Lewis v. Board of Governors, Nos. 87-3455, 87-3545 South Dakota v. Board of Governors, No. 84-1496 (11th Cir., filed June 25, August 3, 1987). (D.C. Cir., filed Aug. 7, 1985). Securities Industry Association v. Board of Gover- Urwyler, et al. v. Internal Revenue Service, et al., No. nors, et al. No. 87-4041 and consolidated cases (2d 85-2877 (9th Cir., filed July 18, 1985). Cir., filed May 1, 1987). Wight, et al. v. Internal Revenue Service, et al., No. Securities Industry Association v. Board of Gover- 85-2826 (9th Cir., filed July 12, 1985). nors, et al., No. 87-1169 (D.C. Cir., filed April 17, Brown v. United States Congress, et al., No. 1987). 84-2887-6(IG) (S.D. Cal., filed Dec. 7, 1984). Bankers Trust New York Corp. v. Board of Governors, Melcher v. Federal Open Market Committee, No. No. 87-1035 (D.C. Cir., filed Jan. 23, 1987). 86-5692 (D.C. Cir., 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 A26 Selected financial institutions—Selected assets POLICY INSTRUMENTS and liabilities A7 Federal Reserve Bank interest rates A8 Reserve requirements of depository institutions FEDERAL FINANCE A9 Federal Reserve open market transactions A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays FEDERAL RESERVE BANKS A30 Federal debt subject to statutory limitation A30 Gross public debt of U.S. Treasury—Types and A10 Condition and Federal Reserve note statements ownership All Maturity distribution of loan and security A31 U.S. government securities dealers— holdings Transactions A32 U.S. government securities dealers—Positions and financing MONETARY AND CREDIT AGGREGATES A3 3 Federal and federally sponsored credit agencies—Debt outstanding A12 Aggregate reserves of depository institutions and monetary base A13 Money stock, liquid assets, and debt measures SECURITIES MARKETS AND A15 Bank debits and deposit turnover CORPORATE FINANCE A16 Loans and securities—All commercial banks A34 New security issues—State and local governments and corporations COMMERCIAL BANKING INSTITUTIONS A35 Open-end investment companies—Net sales and asset position A17 Major nondeposit funds A35 Corporate profits and their distribution A18 Assets and liabilities, last-Wednesday-of-month A36 Nonfinancial corporations—Assets and series liabilities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin • January 1988 A36 Total nonfarm business expenditures on new A55 Foreign branches of U.S. banks—Balance sheet plant and equipment data A37 Domestic finance companies—Assets and A57 Selected U.S. liabilities to foreign official liabilities and business credit institutions REAL ESTATE REPORTED BY BANKS IN THE UNITED STATES A38 Mortgage markets A57 Liabilities to and claims on foreigners A39 Mortgage debt outstanding A58 Liabilities to foreigners A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on CONSUMER INSTALLMENT CREDIT foreigners A61 Banks' own claims on unaffiliated foreigners A40 Total outstanding and net change A62 Claims on foreign countries—Combined A41 Terms domestic offices and foreign branches FLOW OF FUNDS REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES A42 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit A63 Liabilities to unaffiliated foreigners markets A64 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS A65 Foreign transactions in securities SELECTED MEASURES A66 Marketable U.S. Treasury bonds and notes— Foreign transactions A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment INTEREST AND EXCHANGE RATES A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A67 Discount rates of foreign central banks A49 Housing and construction A67 Foreign short-term interest rates A50 Consumer and producer prices A68 Foreign exchange rates A51 Gross national product and income A52 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special International Statistics Tables SUMMARY STATISTICS SPECIAL TABLES A53 U.S. international transactions—Summary A70 Terms of lending at commercial banks, A54 U.S. foreign trade August 3-7, 1987 A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve Banks 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 Q4 Ql Q2 Q3' June July' Aug.' Sept.' Oct. Reserves of depository institutions2 1 24.3 16.4 8.0 -1.6 -13.3 -2.2 5.7 -1.0 13.7 2 Required 22.8 16.5 8.4 -.5 -15.9 6.9 .1 4.0 7.1 3 Nonborrowed 25.3 18.5 5.4 -.4 -8.1 * 6.3 -7.2 13.9 4 Monetary base 11.0 11.3 6.8 4.7 .5 4.7 6.5 5.0 11.9 Concepts of money, liquid assets, and debt4 5 Ml 17.0 13.1 6.4 .0 -10.4 1.6 5.6 .3 15.0 6 M2 9.3 6.4 2.3 3.1 .5 2.7 6.5 5.7 6.8 7 M3 8.3 6.5 4.3r 5.2 5.8' 2.7 7.7 6.0 7.9 8 L 8.4 6.3 3.3' 4.2 4.1' -1.6 7.9 8.7 n.a. 9 Debt 12.7r 10.4r 8.3r 7.7 7.9 6.0 8.1 9.4 n.a. Nontrqnsaction components 10 In M2 6.7 4.1 .9' 4.2 4.4 3.1 6.9 7.5 4.0 11 In M3 only6 4.3 6.9 12.4r 13.4 26.7' 2.6 12.4 7.2 11.8 Time and savings deposits Commercial banks 12 Savings7 36.9 37.3 24.1 7.8 6.9 7.5 9.5 .0 -3.4 13 Small-denomination time® -10.7 -4.9 -4.6 8.0 10.1 11.0 6.6 6.2 18.6 14 Large-denomination time9,10 .1 9.7 18.3 4.1 16.2 -4.6 .0 -.4 13.4 Thrift institutions 15 Savings 23.2 27.3 25.9 7.1 12.6 2.0 8.5 -2.5 -9.9 16 Small-denomination time -6.4 -4.2 1.0 10.1 9.6 12.5 12.1 10.1 12.8 17 Large-denomination time -7.0 -9.5 -8.4 10.7 8.9 9.6 13.5 17.2 29.4 Debt components4 18 Federal 11.7 12.2 8.8 5.9 ' 7.5 1.9 8.8 6.5 n.a. 19 Nonfederal 13.0 9.8r 8.1 8.2 8.0 7.3 7.9 10.3 n.a. 20 Total loans and securities at commercial banks11 8.8 10.1 7.0 5.6 3.6' 1.3 10.8 9.7 10.4 1. Unless otherwise noted, rates of change are calculated from average commercial banks, money market funds (general purpose and broker/dealer), amounts outstanding in preceding month or quarter. foreign governments and commercial banks, and the U.S. government. Also 2. Figures incorporate adjustments for discontinuities associated with the subtracted is a consolidation adjustment that represents the estimated amount of implementation of the Monetary Control Act and other regulatory changes to demand deposits and vault cash held by thrift institutions to service their time and reserve requirements. To adjust for discontinuities due to changes in reserve savings deposits. requirements on reservable nondeposit liabilities, the sum of such required M3: M2 plus large-denomination time deposits and term RP liabilities (in reserves is subtracted from the actual series. Similarly, in adjusting for 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 Federi 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 • January 1988 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending 1987 1987 Aug. Sept. Oct. Sept. 16 Sept. 23 Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 231,606 240,591 241,841 236,459 251,912 241,835 237,908 236,547 242,444 248,500 2 U.S. government securities1 206,708 214,298 214,787 211,026 223,407 214,861 211,909 210,880 215,059 220,197 3 Bought outright 206,187 211,468 210,822 211,026 214,425 211,713 211,909 210,880 210,168 210,726 4 Held under repurchase agreements.. 521 2,830 3,965 0 8,982 3,148 0 0 4,891 9,471 5 Federal agency obligations 7,764 8,399 8,747 7,623 10,013 8,558 7,623 7,623 8,860 10,165 6 Bought outright 7,623 7,623 7,601 7,623 7,623 7,623 7,623 7,623 7,607 7,567 7 Held under repurchase agreements.. 141 776 1,146 0 2,390 935 0 0 1,253 2,598 8 Acceptances 0 0 0 0 0 0 0 0 0 0 9 Loans 630 956 959 1,026 976 1,197 1,193 902 1,111 751 10 Float 702 774 751 770 822 877 877 707 879 494 11 Other Federal Reserve assets 15,802 16,164 16,597 16,014 16,694 16,717 16,305 16,435 16,535 16,893 12 Gold stock2 11,068 11,068 11,084 11,068 11,068 11,068 11,079 11,086 11,086 11,086 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 17,930 17,981 18,028 17,977 17,987 17,997 18,004 18,018 18,032 18,046 ABSORBING RESERVE FUNDS 15 Currency in circulation 216,805 217,718 218,734 218,742 217,459 216,549 217,420 218,958 219,087 218,978 16 Treasury cash holdings2 471 459 470 458 460 459 464 475 472 469 Reserve Banks 17 Treasury 3,409 10,585 8,828 4,207 21,647 14,355 5,341 3,281 12,191 13,822 18 Foreign 237 248 259 255 198 263 287 208 251 298 19 Service-related balances and adjustments 1,937 1,930 2,029 1,908 1,965 1,999 2,070 1,943 1,926 1,960 20 Other 331 390 402 371 376 484 447 350 385 391 21 Other Federal Reserve liabilities and capital 6,667 7,213 7,236 7,053 7,668 7,094 6,971 7,034 7,342 7,365 22 Reserve balances with Federal Reserve Banks3 35,765 36,115 38,014 37,527 36,214 34,716 39,010 38,421 34,924 39,365 End-of-month figures Wednesday figures 1987 1987 Aug. Sept. Oct. Sept. 16 Sept. 23 Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 231,689 238,823 246,896 241,092 261,278 238,823 237,931 239,536 243,453 251,276 24 U.S. government securities1 207,238 211,941 217,614 215,220 231,599 211,941 210,942 212,094 213,804 219,707 25 Bought outright 207,238 211,941 209,319 215,220 214,370 211,941 210,942 212,094 210,208 211,453 26 Held under repurchase agreements.... 0 0 8,295 0 17,229 0 0 0 3,596 8,254 27 Federal agency obligations 7,623 7,623 10,483 7,623 11,073 7,623 7,623 7,623 8,706 11,646 28 Bought outright 7,623 7,623 7,567 7,623 7,624 7,623 7,623 7,623 7,567 7,568 29 Held under repurchase agreements.... 0 0 2,916 0 3,449 0 0 0 1,139 4,078 30 Acceptances 0 0 0 0 0 0 0 0 0 0 31 Loans 566 1,941 587 672 935 1,941 1,382 929 3,160 753 32 Float 510 248 609 877 522 248 1,300 2,138 1,134 2,031 33 Other Federal Reserve assets 15,752 17,070 17,603 16,700 17,149 17,070 16,684 16,752 16,649 17,139 34 Gold stock2 11,068 11,075 11,085 11,068 11,068 11,075 11,085 11,086 11,085 11,085 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 17,956 18,006 18,058 17,986 17,996 18,006 18,016 18,030 18,044 18,058 ABSORBING RESERVE FUNDS 37 Currency in circulation 216,471 216,776 219,842 218,365 217,010 216,776 218,176 219,523 219,053 219,427 38 Treasury cash holdings2 463 460 467 460 459 460 473 472 472 468 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 3,763 9,120 8,898 9,479 25,657 9,120 2,816 3,745 14,323 14,324 40 Foreign 295 456 236 282 218 456 220 200 221 301 41 Service-related balances and adjustments 1,709 1,706 1,733 1,718 1,719 1,706 1,705 1,714 1,713 1,732 42 Other 284 419 477 503 324 419 372 348 309 371 43 Other Federal Reserve liabilities and capital 6,964 6,663 7,950 7,180 7,996 6,663 6,948 6,884 7,076 7,167 44 Reserve balances with Federal Reserve Banks3 35,782 37,321 41,454 37,177 41,976 37,321 41,338 40,783 34,436 41,647 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 1987 Dec. Dec. Dec. Mar. Apr. May June July Aug. Sept. 1 Reserve balances with Reserve Banks1 21,738 27,620 37,360 35,318 37,807 36,466 36,309 36,110 35,616 36,685 2 Total vault cash2 22,313 22,953 24,071 23,759 23,353 23,693 24,380 24,631 24,649 24,860 3 Vault3 18,958 20,522 22,199 21,743 21,587 21,873 22,475 22,728 22,745 23,128 4 Surplus4 3,355 2,431 1,872 2,016 1,767 1,820 1,905 1,903 1,904 1,732 5 Total reserves5 40,696 48,142 59,560 57,061 59,393 58,339 58,784 58,838 58,361 59,813 6 Required reserves 39,843 47,085 58,191 56,146 58,566 57,260 57,594 58,078 57,329 59,020 7 Excess reserve balances at Reserve Banks 853 1,058 1,369 916 827 1,079 1,190 761 1,032 793 8 Total borrowings at Reserve Banks 3,186 1,318 827 527 993 1,035 776 672 647 940 9 Seasonal borrowings at Reserve Banks 113 56 38 91 120 196 259 283 279 231 10 Extended credit at Reserve Banks 2,604 499 303 264 270 288 273 194 132 409 Biweekly averages of daily figures for weeks ending 1987 July 15 July 29 Aug. 12 Aug. 26 Sept. 9 Sept. 23 Oct. 7 Oct. 21 Nov. 4 Nov. 18" 11 Reserve balances with Reserve Banks1 37,083 35,221 35,850 35,173 36,294 36,866 36,826 36,672 38,324 37,558 12 Total vault cash2 24,238 25,029 24,306 25,074 24,288 25,146 25,026 26,183 25,174 25,188 13 Vault' 22,470 23,002 22,439 23,115 22,446 23,475 23,313 24,410 23,464 23,623 14 Surplus4.. 1,769 2,027 1,867 1,959 1,842 1,672 1,713 1,773 1,710 1,565 15 Total reserves 59,553 58,223 58,289 58,288 58,740 60,340 60,139 61,082 61,788 61,181 16 Required reserves 59,081 57,240 57,488 57,116 57,546 59,825 59,306 60,115 60,256 60,665 17 Excess reserve balances at Reserve Banks6 472 983 801 1,173 1,194 515 833 967 1,532 516 18 Total borrowings at Reserve Banks 696 652 564 719 647 1,001 1,195 1,007 677 561 19 Seasonal borrowings at Reserve Banks 271 294 289 286 241 226 230 183 169 125 20 Extended credit at Reserve Banks 261 133 120 128 173 531 469 482 390 334 1. Excludes required clearing balances and adjustments to compensate for computation period by institutions having required reserve balances at Federal float. Reserve Banks plus the amount of vault cash equal to required reserves during the 2. Dates refer to the maintenance periods in which the vault cash can be used maintenance period at institutions having no required reserve balances. to satisfy reserve requirements. Under contemporaneous reserve requirements, 6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy maintenance periods end 30 days after the lagged computation periods in which reserve requirements less required reserves. the balances are held. 7. Extended credit consists of borrowing at the discount window under the 3. Equal to all vault cash held during the lagged computation period by terms and conditions established for the extended credit program to help institutions having required reserve balances at Federal Reserve Banks plus the depository institutions deal with sustained liquidity pressures. Because there is amount of vault cash equal to required reserves during the maintenance period at not the same need to repay such borrowing promptly as there is with traditional institutions having no required reserve balances. short-term adjustment credit, the money market impact of extended credit is 4. Total vault cash at institutions having no required reserve balances less the similar to that of nonborrowed reserves. amount of vault cash equal to their required reserves during the maintenance 8. Before February 1984, data are prorated monthly averages of weekly period. averages; beginning February 1984, data are prorated monthly averages of 5. Total reserves not adjusted for discontinuities consist of reserve balances biweekly averages. with Federal Reserve Banks, which exclude required clearing balances and NOTE. These data also appear in the Board's H.3 (502) release. For address, see adjustments to compensate for float, plus vault cash used to satisfy reserve inside front cover. requirements. Such vault cash consists of all vault cash held during the lagged Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • January 1988 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 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 Aug. 3 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 74,810 72,633 68,755 66,856 73,997 74,109 69,704 68,682 68,983 2 For all other maturities 9,362 9,325 8,719 8,430 11,099 8,691 88,,662266 88,,882299 99,,662244 From other depository institutions, foreign banks and foreign official institutions, and United States government agencies 3 For one day or under continuing contract 35,114 34,380 31,698 33,067 26,568 33,873 31,478 31,316 32,783 4 For all other maturities 8,503 8,508 8,378 8,502 11,895 8,167 7,384 7,122 7,206 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 10,497 10,459 9,664 9,958 8,076 10,541 11,515 13,115 13,711 6 For all other maturities 14,421 14,413 13,794 12,793 12,327 11,214 10,797 11,725 1122,,220099 All other customers 7 For one day or under continuing contract 24,985 25,470 24,139 25,518 22,802 25,558 26,375 26,482 27,082 8 For all other maturities 8,561 8,289 8,882 9,029 ll,456r 8,278' 8,373 8,363 8,123 MEMO: Federal funds loans and resale agreements in immediately available funds in maturities of one day or under continuing contract 9 To commercial banks in the United States 28,156' 25,759r 26,713'' 27,376' 35,382' 33,375' 31,101 28,293 29,247 10 To all other specified customers2 13,824' 14,086r 14,672' 12,656' 13,031' 13,702' 13,109 13,347 13,690 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 Al 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels AAddjjuussttmmeenntt CCrreeddiitt Extended Credit2 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 11/27/87 Date Rate 11/27/87 Date Rate 11/27/87 Date Rate Effective Date Boston 6 9/9/87 SVl 6 9/9/87 5Vi 7.45 11/19/87 7.55 11/5/87 New York 9/4/87 9/4/87 11/19/87 11/5/87 Philadelphia 9/4/87 9/4/87 11/19/87 11/5/87 Cleveland 9/4/87 9/4/87 11/19/87 11/5/87 Richmond 9/5/87 9/5/87 11/19/87 11/5/87 Atlanta 9/4/87 9/4/87 11/19/87 11/5/87 Chicago 9/4/87 9/4/87 11/19/87 11/5/87 St. Louis 9/9/87 9/9/87 11/19/87 11/5/87 Minneapolis 9/8/87 9/8/87 11/19/87 11/5/87 Kansas City 9/4/87 9/4/87 11/19/87 11/5/87 Dallas 9/11/87 9/11/87 11/19/87 11/5/87 San Francisco ... 6 9/9/87 5W 6 9/9/87 SYi IAS 11/19/87 7.55 11/5/87 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or Effective date A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. Ba of n k Effective date A le l v l e F l) . — R. Banks N.Y. Banks N.Y. Banks In effect Dec. 31, 1977 6 6 1980—July 28 10-11 10 1984—Apr. 9 8V4-9 9 1978—Jan. 9 6-6 Yi 6Y2 29 10 10 13 9 9 20 6Yi 6Y2 Sept. 26 11 11 Nov. 21 8Vi-9 m May 11 6Vi-7 7 Nov. 17 12 12 26 %Yi 12 1 7 Dec. 5 12-13 13 Dec. 24 8 8 July 3 7-7V4 7V4 10 7V4 IV\ 1981—May 5 13-14 14 1985—May 20 7W-8 Aug. 21 73/4 73/4 8 14 14 24 m m Sept. 22 8 8 Nov. 2 13-14 13 Oct. 16 8-8W 8W 6 13 13 1986—Mar. 7 1-lVi 1 Nov. 20 1 8V 8 5 - V 9V i 4 9 8V V 2 i Dec. 4 12 12 Apr. 2 1 1 0 6Y 1 1 -I 6 1 Vi 3 9Vl 9 Vi 1982—July 20 11VS-12 11 Yi July 11 6 6 23 11V4 11 Yi Aug. 12 5W-6 5V? 1979—July 20 10 10 Aug. 2 11-llVi 11 22 5 Yi 5Yi Aug. 17 10-10W 10W 3 11 11 20 10VS 10W 16 10 Vi 10^ 1987—Sept. 4 5Vl-6 6 Sept. 19 10W-11 11 27 lO-lOVi 10 11 6 6 21 11 11 30 10 10 Oct. 8 11-12 12 ' Oct. 12 9V4-10 9 Yi In effect November 27, 1987 6 6 10 12 12 13 9 Vi 9 Yi Nov. 22 9-9Vl 9 1980—Feb. 15 12-13 13 26 9 9 19 13 13 Dec. 14 8W-9 9 May 29 12-13 13 15 8Vi>-9 m 30 12 12 17 8 Vi 8 Vi June 13 11-12 11 16 11 11 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 that 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 Yi 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 Domestic Nonfinancial Statistics • January 1988 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the TTyyppee ooff ddeeppoossiitt,, aanndd Monetary Control Act ddeeppoossiitt iinntteerrvvaall Percent of deposits Effective date Net transaction accounts*'4 $0 million-$40.5 million 333333 111111222222//////333333000000//////888888666666 111111222222 111111222222//////333333000000//////888888666666 Nonpersonal time deposits By original maturity 333333 111111000000//////666666//////888888666666 000000 111111000000//////666666//////888888333333 Eurocurrency liabilities 333333 111111111111//////111111333333//////888888000000 1. Reserve requirements in effect on Dec. 31, 1987. 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. 29, increase in the total reservable liabilities of all depository institutions, measured 1987, the amount was increased from $36.7 million to $40.5 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. 29, 1987, the exemption was raised from $2.9 deposits, that are not transaction accounts and in which a beneficial interest is million to $3.2 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 1987 TTyyppee ooff ttrraannssaaccttiioonn 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 20,036 22,214 22,602 1,062 4,226 1,697 575 575 499 4,528 2 Gross sales 8,557 4,118 2,502 0 653 0 22 912 0 0 J Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 7,700 3,500 1,000 0 0 0 0 4,572 0 3,657 Others within 1 year 5 Gross purchases 1,126 1,349 190 0 1,232 0 535 0 0 443 6 Gross sales 0 0 0 0 0 0 0 0 0 300 7 Maturity shift 16,354 19,763 18,673 1,762 1,375 4,063 1,715 1,437 2,723 1,500 8 Exchange -20,840 -17,717 -20,179 -1,799 -522 -1,336 -1,812 -613 -1,787 -917 9 Redemptions 0 0 0 0 0 0 0 0 0 * 1 to 5 years 10 Gross purchases 1,638 2,185 893 0 3,642 0 1,394 0 5 2,551 11 Gross sales 0 0 0 0 0 0 0 200 0 0 12 Maturity shift -13,709 -17,459 -17,058 -1,762 -1,373 -1,804 -1,715 -1,397 -2,122 -1,500 13 Exchange 16,039 13,853 16,984 1,799 522 1,111 1,812 613 1,612 917 5 to 10 years 14 Gross purchases 536 458 236 0 914 0 312 0 0 619 15 Gross sales 300 100 0 0 0 0 0 0 0 0 16 Maturity shift -2,371 -1,857 -1,620 0 -3 -2,259 0 -40 -601 0 17 Exchange 2,750 2,184 2,050 0 0 150 0 0 100 0 Over 10 years 18 Gross purchases 441 293 158 0 669 0 251 0 0 493 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 75 0 0 75 0 All maturities 22 Gross purchases 23,776 26,499 24,078 1,062 10,683 1,697 3,066 575 504 8,633 2 i Gross sales 8,857 4,218 2,502 0 653 0 22 1,112 0 300 24 Redemptions 7,700 3,500 1,000 0 0 0 0 4,572 0 3,657 Matched transactions 25 Gross sales 808,986 866,175 927,997 72,306 83,822 91,642 87,228 80,304 60,731 61,321 26 Gross purchases 810,432 865,968 927,247 73,476 82,494 92,137 87,128 80,037 62,594 61,347 Repurchase agreements2 27 Gross purchases 127,933 134,253 170,431 5,657 37,653 59,340 24,167 3,298 9,013 34,080 28 Gross sales 127,690 132,351 160,268 5,657 23,881 73,111 22,108 2,058 12,311 34,080 29 Net change in U.S. government securities 8,908 20,477 29,989 2,231 22,474 -11,580 5,002 -4,136 -931 4,702 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 37 * 0 59 0 0 Repurchase agreements2 33 Gross purchases 11,509 22,183 31,142 897 9,265 16,071 3,907 929 2,369 7,174 34 Gross sales 11,328 20,877 30,522 897 5,908 19,428 2,910 996 3,298 7,174 35 Net change in federal agency obligations -76 1,144 222 0 3,320 -3,357 997 -126 -929 0 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 2,231 25,794 -14,936 5,999 -4,262 -1,861 4,702 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 • January 1988 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1987 1987 Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Aug. Sept. Oct. Consolidated condition statement ASSETS 1 Gold certificate account 11,075 11,085 11,086 11,085 11,085 11,068 11,075 11,085 2 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3 449 454 456 465 455 446 449 461 Loans 4 To depository institutions 1,941 1,382 929 3,160 753 566 1,941 587 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 7,623 7,623 7,623 7,567 7,568 7,623 7,623 7,567 8 Held under repurchase agreements 0 0 0 1,139 4,078 0 0 2,916 U.S. Treasury securities Bought outright 9 Bills 105,785 104,786 105,938 103,752 104,998 104,888 105,785 102,863 10 Notes 78,544 78,544 78,544 78,844 78,844 75,252 78,544 78,844 11 Bonds 27,612 27,612 27,612 27,612 27,611 27,098 27,612 27,612 12 Total bought outright2 211,941 210,942 212,094 210,208 211,453 207,238 211,941 209,319 13 Held under repurchase agreements 0 0 0 3,5% 8,254 0 0 8,295 14 Total U.S. Treasury securities 211,941 210,942 212,094 213,804 219,707 207,238 211,941 217,614 15 Total loans and securities 221,505 219,947 220,646 225,670 232,106 215,427 221,505 228,684 16 Items in process of collection 6,287 7,758 11,716 7,777 7,870 5,025 77,,553322 7,197 17 Bank premises 688 693 696 696 694 686 668888 698 Other assets 18 Denominated in foreign currencies3 8,038 8,044 8,059 8,065 8,071 8,244 8,038 8,268 19 All other4 8,344 7,947 7,997 7,888 8,374 6,822 8,344 8,637 20 Total assets 261,404 260,946 265,674 266,664 273,673 252,736 262,649 270,048 LIABILITIES 21 Federal Reserve notes 199,680 201,089 202,422 201,943 202,292 119999,,442244 119999,,668800 220022,,771122 Deposits 22 To depository institutions 39,027 43,043 42,497 36,149 43,379 37,491 39,027 4433,,118877 23 U.S. Treasury—General account 9,120 2,816 3,745 14,323 14,324 3,763 9,120 88,,889988 24 Foreign—Official accounts 456 220 200 221 301 295 456 236 25 Other 419 372 348 309 371 284 419 477 26 Total deposits 49,022 46,451 46,790 51,002 58,375 41,833 49,022 52,798 77 Deferred credit items 6,039 6,458 9,578 6,643 5,839 4,515 7,284 6,588 28 Other liabilities and accrued dividends 2,386 2,626 2,540 2,725 2,807 2,280 2,386 3,134 29 Total liabilities 257,127 256,624 261,330 262,313 269,313 248,052 258,372 265,232 CAPITAL ACCOUNTS 30 Capital paid in 2,009 2,009 2,012 2,015 2,017 1,984 2,009 2,019 31 Surplus 1,873 1,873 1,873 1,873 1,873 1,874 1,873 1,873 32 Other capital accounts 395 440 459 463 470 826 395 924 33 Total liabilities and capital accounts 261,404 260,946 265,674 266,664 273,673 252,736 262,649 270,048 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international account 182,078 187,437 189,376 188,315 188,156 183,931 182,078 188,247 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 252,932 253,305 253,419 253,470 253,666 250,354 252,932 253,538 36 LESS: Held by bank 53,252 52,216 50,995 51,527 51,374 50,930 53,252 50,826 37 Federal Reserve notes, net 199,680 201,089 202,422 201,943 220022,,229922 119999,,442244 119999,,668800 220022,,771122 Collateral held against notes net: 38 Gold certificate account 11,075 11,085 11,086 11,085 11,085 11,068 11,075 11,085 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 183,587 184,986 186,318 185,840 186,189 183,338 183,587 186,609 42 Total collateral 199,680 201,089 202,422 201,943 202,292 199,424 199,680 202,712 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 TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1987 1987 Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Aug. 31 Sept. 30 Oct. 30 1 Loans—Total 1,941 1,382 929 3,160 753 566 1,941 587 2 Within 15 days 1,878 1,282 836 3,122 715 466 1,878 525 3 16 days to 90 days 61 98 93 38 38 100 61 62 4 91 days to 1 year 2 2 0 0 0 0 2 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 211,941 210,942 212,094 213,804 219,707 207,238 211,941 217,614 10 Within 15 days1 12,767 7,861 10,594 13,269 19,528 8,671 12,767 13,609 11 16 days to 80 days 49,795 52,544 50,961 49,702 51,179 53,685 49,795 51,679 12 91 days to 1 year 67,296 68,454 68,456 68,727 66,894 65,878 67,296 70,220 13 Over 1 year to 5 years 42,435 42,435 42,435 42,513 42,513 40,467 42,435 42,513 14 Over 5 years to 10 years 14,819 14,819 14,819 14,764 14,764 14,201 14,819 14,764 15 Over 10 years 24,829 24,829 24,829 24,829 24,829 24,336 24,829 24,829 16 Federal agency obligations—Total 7,623 7,623 7,623 8,706 11,646 7,623 7,623 10,483 17 Within 15 days1 359 145 101 1,324 4,218 315 359 3,056 18 16 days to 90 days 602 751 746 606 757 726 602 757 19 91 days to 1 year 1,446 1,511 1,476 1,546 1,474 1,353 1,446 1,474 20 Over 1 year to 5 years 3,615 3,615 3,673 3,603 3,574 3,663 3,615 3,574 21 Over 5 years to 10 years 1,321 1,371 1,396 1,411 1,407 1,286 1,321 1,407 22 Over 10 years 280 230 231 216 216 280 280 215 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • January 1988 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1987 11998833 11998844 11998855 11998866 IItteemm DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. Apr. May June July Aug. Sept. Oct. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS'' 11 TToottaall rreesseerrvveess22 36.11 39.91 46.06 56.17 56.85 57.95 58.35 57.71 57.60 57.88 57.83 58.49 22 NNoonnbboorrrroowweedd rreesseerrvveess 35.33 36.72 44.74 55.34 56.32 56.96 57.32 56.93 56.93 57.23 56.89 57.54 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt33 35.33 39.33 45.24 55.64 56.59 57.23 57.60 57.20 57.12 57.36 57.29' 57.99 44 RReeqquuiirreedd rreesseerrvveess 35.55 39.06 45.00 54.80 55.94 57.13 57.27 56.52 56.84 56.84 57.03 57.37 55 MMoonneettaarryy bbaassee 185.23 199.60 217.32 239.51 244.56 246.59 248.37 248.48 249.46 250.80 251.85' 254.34 Not seasonally adjusted 6 Total reserves2 36.81 40.94 47.24 57.64 56.07 58.37 57.30 57.63 57.74 57.39 57.50 58.03 7 Nonborrowed reserves 36.04 37.75 45.92 56.81 55.54 57.38 56.26 56.85 57.07 56.74 56.56 57.08 8 Nonborrowed reserves plus extended credit3 36.04 40.35 46.42 57.11 55.80 57.65 56.55 57.12 57.27 56.88 56.96r 57.53 9 Required reserves 36.25 40.08 46.18 56.27 55.15 57.54 56.22 56.43 56.98 56.36 56.70 56.91 10 Monetary base4 188.50 202.70 220.82 243.63 241.92 246.07 246.83 249.29 251.42 251.42 251.6C 253.28 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 38.89 40.70 48.14 59.56 57.06 59.39 58.34 58.78 58.84 58.36 59.81r 61.10 12 Nonborrowed reserves 38.12 37.51 46.82 58.73 56.53 58.40 57.30 58.01 58.17 57.71 58.87r 60.15 13 Nonborrowed reserves plus extended credit 38.12 40.09 47.41 59.04 56.82 58.19 58.03 58.34 58.37 57.76 58.85 61.21 14 Required reserves 38.33 39.84 47.08 58.19 56.15 58.57 57.26 57.59 58.08 57.33 59.02 59.98 15 Monetary base4 192.26 204.18 223.53 247.71 244.98 249.24 249.94 252.54 254.67 254.36 255.69 258.07 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 . June July' Aug/ Sept/ Seasonally adjusted 1 Ml 526.9 557.5 627.0 730.5 747.6 751.1 751.3 760.7 2 M2 2,184.6 2,369.1 2,569.5 2,801.2 2,848.0 2,863.4 2,876.9 2,893.3 M3 2,692.8 2,985.4 3,205.2 3,492.2'' 3,585.5 3,608.5 3,626.5 3,650.3 4 L 3,154.6 3,528.1 3,837.6 4,139.9 4,223.7 4,251.6 4,282.3 n.a. 5 Debt 5,195.5 5,932.9 6,746.9 7,601.6' 7,956.6 8,010.6 8,073.2 n.a. Ml components 6 Currency2 148.3 158.5 170.6 183.5 192.1 193.2 194.5 196.2 7 Travelers checks3 4.9 5.2 5.9 6.4 6.8 6.9 7.0 7.0 8 Demand deposits 242.3 248.3 272.2 308.3 296.2 296.4 294.1 300.4 9 Other checkable deposits 131.4 145.5 178.3 232.2 252.6 254.6 255.6 257.2 Nontransactions components 10 In M2 1,657.7 1,811.5 1,942.5 2,070.7' 2,100.4 2,112.4 2,125.6 2,132.6 11 In M3 only 508.2 616.3 635.7 691^ 737.5 745.1 749.6 757.0 Savings deposits8 12 Commercial Banks 133.2 122.2 124.6 154.5 176.6 178.0 178.0 177.5 13 Thrift institutions 173.0 166.6 179.0 211.8 240.1 241.8 241.3 239.3 Small denomination time deposits9 14 Commercial Banks 350.9 386.6 383.9 364.7 363.4 365.4 367.3 373.0 15 Thrift institutions 432.9 498.6 500.3 488.7 495.1 500.1 504.3 509.7 Money market mutual funds 16 General purpose and broker/dealer 138.2 167.5 176.5 207.6 209.8 212.8 216.5 219.3 17 Institution-only 43.2 62.7 65.1 84.1 83.4 83.4 80.7 81.6 Large denomination time deposits10 18 Commercial Banks 230.0 269.6 284.1 291.8 313.7 313.7 313.6 317.1 19 Thrift institutions 96.2 147.3 152.1 155.3 151.4 153.1 155.3 159.1 Debt components 20 Federal debt 1,170.8 1,365.3 1,584.3 1,803.9 1,888.6 1,902.5 1,912.9 n.a. 21 Nonfederal debt 4,024.6 4,567.6 5,162.6 5,797.8' 6,068.0 6,108.1 6,160.3 n.a. Not seasonally adjusted 22 Ml 538.3 570.3 641.0 746.5 751.5 749.4 749.4 757.7 73 M2 2,191.6 2,378.3 2,580.5 2,814.7 2,855.1 2,861.5 2,869.7 2,889.3 24 M3 2,702.4 2,997.2 3,218.4 3,507.5 3,585.3 3,604.0 3,621.3 3,646.0 25 L 3,163.1 3,538.8 3,849.4 4,153.3' 4,223.9 4,248.2 4,277.1 n.a. 26 5,189.7 5,927.1 6,740.7 7,594.9 7,933.1 7,989.0 8,057.1 n.a. Ml components 27 Currency 150.6 160.8 173.1 186.2 193.8 194.1 194.3 195.9 28 Travelers checks 4.6 4.9 5.5 6.0 7.7 7.9 7.6 7.0 29 Demand deposits4 251.0 257.2 282.0 319.5 298.6 294.8 293.3 299.8 30 Other checkable deposits 132.2 147.4 180.4 235.0 251.4 252.6 254.3 255.0 Nontransactions components 31 M26 1,653.3 1,808.0 1,939.5 2,068.2 2,103.6 2,112.1 2,120.2 2,131.6 32 M3 only 510.8 618.9 637.9 692.8 730.2 742.5 751.6 756.7 Money market deposit accounts 33 Commercial Banks 230.4 267.4 332.5 379.0 365.3 364.1 362.5 359.1 34 Thrift institutions 148.5 150.0 180.7 192.4 182.9 179.6 176.8 173.6 Savings deposits8 35 Commercial Banks 132.2 121.4 123.9 153.8 178.4 178.2 177.9 178.3 36 Thrift institutions 172.4 166.2 178.8 211.8 241.8 240.0 239.2 239.4 Small denomination time deposits9 37 Commercial Banks 351.1 386.7 383.8 364.4 363.9 366.8 369.0 374.0 38 Thrift institutions 433.5 499.6 501.5 489.8 494.7 499.3 503.6 511.0 Money market mutual funds 39 General purpose and broker/dealer 138.2 167.5 176.5 207.6 209.8 212.8 216.5 219.3 40 Institution-only 43.2 62.7 65.1 84.1 83.4 83.4 80.7 81.6 Large denomination time deposits10 41 Commercial Banks 231.6 227711..22 285.6 293.2 310.4 313.1 314.9 318.3 42 Thrift institutions 96.3 147.3 151.9 154.9 150.7 153.2 155.7 159.5 Debt components 43 Federal debt 1,170.2 11,,336644..77 1,583.7 1,803.3 1,872.4 1,887.4 1,899.9 n.a. 44 Nonfederal debt 4,019.5 4,562.4 5,156.9 5,791.6 6,060.7 6,101.6 6,157.2 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • January 1988 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 TURNOVER1 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 19842'' 19852'' 1986 '' Mar/ Apr/ May' June' July Aug. Seasonally adjusted Demand deposits 1 All insured banks 131,463.1 156,091.6 188,345.9 217,241.7 217,788.4 217,393.9 212,421.0 219,492.2 221,725.9 2 Major New York City banks 57,327.3 70,585.8 91,397.6 106,103.9 105,174.7 107,719.8 103,031.9 106,415.1 109,060.6 3 Other banks , 74,135.9 85,505.9 96,948.3 111,137.8 112,613.7 109,674.0 109,389.1 113,077.1 112,665.3 4 ATS-NOW accounts4 1,549.1 1,823.5 2,182.5 2,297.8 2,384.3 2,310.5 2,417.4 2,498.7 2,333.3 5 Savings deposits 414.7 384.9 403.5 498.4 508.1 488.5 565.7 548.2 518.9 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 441.0 500.3 556.5 615.5 607.0 598.4 601.6 628.6 623.3 7 Major New York City banks 1,837.2 2,196.9 2,497.8 2,766.0 2,670.0 2,627.8 2,673.2 2,836.0 2,718.8 8 Other banks 277.8 305.7 321.2 353.3 352.6 340.3 347.8 362.8 357.0 9 ATS-NOW accounts4 15.3 15.8 15.6 13.5 13.8 13.3 13.9 14.3 13.2 10 Savings deposits 3.3 3.2 3.0 3.0 3.0 2.8 3.3 3.1 3.0 Not seasonally adjusted Demand deposits3 11 All insured banks 131,450.6 156,052.3 188,506.5 222,225.4 228,142.6 208,310.0 221,038.4 228,764.2 214,145.9 12 Major New York City banks 57,282.4 70,559.3 91,500.0 108,971.4 111,399.0 101,203.2 106,171.3 111,157.7 103,822.8 13 Other banks 74,164.2 85,493.1 97,006.6 113,254.1 116,743.5 107,106.7 114,867.0 117,606.5 110,323.1 14 ATS-NOW accounts4 1,552.2 1,826.4 2,184.6 2,269.8 2,564.0 2,262.9 2,466.9 2,466.0 2,226.4 15 MMDA 862.3 1,223.9 1,609.4 1,800.1 2,175.9 1,851.2 1,987.9 2,002.7 1,752.7 16 Savings deposits 415.2 385.3 404.1 479.1 563.3 483.7 565.2 576.5 524.2 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 441.1 499.9 556.7 643.2 634.8 584.0 625.0 651.7 612.5 18 Major New York City banks 1,838.6 2,196.3 2,499.1 2,813.0 2,825.8 2,556.8 2,801.5 2,928.4 2,721.9 19 Other banks 277.9 305.6 321.2 369.2 364.9 337.8 363.8 375.7 354.2 20 ATS-NOW accounts4 15.4 15.8 15.6 13.3 14.4 13.2 14.3 14.3 12.8 21 MMDA 3.5 4.0 4.5 4.8 5.8 5.1 5.4 5.5 4.8 22 Savings deposits 3.3 3.2 3.0 2.9 3.3 2.8 3.3 3.3 3.0 1. These series have been revised to reflect new benchmark adjustments and 3. Represents accounts of individuals, partnerships, and corporations and of revised seasonal factors as well as some revisions of reported data. Historical states and political subdivisions. tables containing revised data for earlier periods may be obtained from the 4. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- Banking Section, Division of Monetary Affairs, Board of Governors of the counts authorized for automatic transfer to demand deposits (ATS). ATS data are Federal Reserve System, Washington, D.C. 20551. available beginning December 1978. These data also appear on the Board's G.6 (406) release. For address, see inside 5. Excludes ATS and NOW accounts, MMDA and special club accounts, such front cover. as Christmas and vacation clubs. 2. Annual averages of monthly figures. 6. Money market deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • January 1988 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1986 1987 r* * Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Seasonally adjusted 1 Total loans and securities2 2,063.5 2,089.8 2,118.3 2,119.7 2,126.2 2,147.3 2,160.6 2,167.1 2,169.5 2,189.0 2,206.7 2,225.8 2 U.S. government securities 304.1 309.9 316.3 315.2 314.3 315.8 320.1 316.9 319.8 328.6 331.7r 332.3 3 Other securities 197.9 196.9 190.2 193.8 195.5 197.2 197.6 198.5 196.9 194.9 194.6r 194.2 4 Total loans and leases2 1,561.5 1,583.0 1,611.8 1,610.7 1,616.4 1,634.3 1,642.9 1,651.7 1,652.8 1,665.5 1,680.4 1,699.3 5 Commercial and industrial ..... 525.7 541.4 554.1 553.8 551.7 553.9 555.9 558.0 555.5 555.6 560.5r 565.7 6 Bankers acceptances held ... 6.4 6.4 6.8 6.8 6.2 6.5 6.8 6.8 6.7 77..55 ii..yy 77..77 7 Other commercial and 8 U. in S. d u a s d tr d i r a e l ssees4.. 5 5 1 1 0 9 . . 7 2 5 5 2 3 5 5 . . 7 0 5 5 3 4 7 7 . . 8 2 5 54 3 6 7 . . 9 9 5 54 3 5 6 . . 5 9 5 5 3 4 9 7 . . 0 4 5 5 4 4 0 9 . . 9 0 5 5 4 5 2 1 . . 8 2 5 54 4 8 0 . . 9 6 5 54 4 8 0 . . 1 0 5 5 4 5 5 3 . . 0 lr r 5 5 5 5 0 8 . . 0 0 y Non-U.S. addressees 8.5 9.3 9.4 9.0 8.6 8.4 8.1 8.4 8.3 8.1 8.1 7.9 10 Real estate 479.6 489.0 499.2 504.0 511.0 517.9 526.3 537.2 544.1 551.3 556.2 564.3 a Individual 312.6 314.2 314.9 315.2 315.7 316.6 316.7 314.5 314.6 316.9 318.9 320.4 12 Security 40.1 38.7 37.7 38.5 38.3 43.6 42.0 42.2 41.7 4444..00 4455..00 4455..44 13 Nonbank financial institutions 34.9 35.2 35.7 34.7 35.0 35.4 35.4 33.9 31.9 30.9 30.8r 31.5 14 Agricultural 32.2 31.8 31.4 30.8 30.0 29.8 29.9 29.9 30.0 3300..22 3300..22 3300..44 15 State and political subdivisions 58.7 57.9 57.8 57.2 57.0 56.0 55.2 54.4 53.2 52.6 52.5r 52.6 16 Foreign banks 10.0 10.4 10.6 10.3 9.7 9.9 9.9 10.3 9.4 9.5 9.8 11.1 17 Foreign official institutions 5.9 5.8 5.9 6.1 6.7 6.7 5.8 5.3 5.2 5.1 5.1 5.5 18 Lease financing receivables .... 22.0 22.2 22.1 22.2 22.3 22.6 22.9 23.1 23.2 23.3 23.8 23.8 19 All other loans 39.9 36.4 42.4 38.0 38.9 41.9 43.1 42.9^ 44.0 46.1 47.6 48.7 Not seasonally adjusted 20 Total loans and securities2 2,064.2 2,105.2 2,123.7 2,121.6 2,127.8 2,148.4 2,157.9 2,166.8 2,164.5 2,180.5 2,204.2r 2,216.1 21 U.S. government securities 303.2 308.3 314.6 318.9 317.2 317.7 319.7 317.4 321.0 327.5 330.4r 328.4 2 2 2 3 T O o th ta e l r l s o e a c n u s r i a t n ie d s leases2 1,5 1 6 9 2 8 . . 6 3 1,5 1 9 9 8 8 . . 7 1 1,6 1 1 9 5 3 . . 4 7 1,6 1 0 9 8 4 . . 6 1 1,6 1 1 9 6 4 . . 2 4 1,6 1 3 9 5 5 . . 4 2 1,6 1 4 9 1 6. . 8 4 1,6 1 5 9 2 7 . . 4 1 1,6 1 4 9 8 4 . . 7 8 1,6 1 5 9 7 5 . . 7 3 l,6 1 7 9 8 5 . . 2 5 r 1,6 1 9 9 2 4. . 8 9 24 Commercial and industrial ..... 525.2 544.3 552.4 551.7 554.5 556.5 557.5 559.1 554.6 552.7 559.3 563.0 25 Bankers acceptances held3... 6.6 6.7 6.7 6.7 6.2 6.4 6.7 6.9 6.8 77..44 77..66'' 77..55 26 Other commercial and industrial 518.5 537.6 545.8 545.0 548.3 550.0 550.8 552.3 547.8 545.3 551.7r 555.5 2277 U.S. addressees4. 509.5 528.8 537.1 536.3 539.9 541.6 542.5 543.7 539.0 536.8 543.3 547.2 28 Non-U.S. addressees 9.1 8.8 8.7 8.7 8.4 8.4 8.3 8.6 8.8 8.5 8.4 8.3 29 Real estate 480.7 489.9 499.3 503.1 509.8 516.7 525.4 536.8 544.3 551.5 557.3 565.3 30 Individual 313.7 317.8 317.9 314.7 313.3 314.4 314.8 313.2 313.5 316.7 319.8 321.4 31 Security 40.4 41.0 39.4 37.5 38.6 45.1 42.0 43.0 40.9 4411..55 4433..44 4433..88 32 Nonbank financial institutions 35.4 36.3 35.7 33.8 33.8 34.8 34.9 33.9 31.9 31.1 31.5r 31.7 33 Agricultural 32.3 31.5 30.7 29.9 29.1 29.1 29.7 30.3 30.7 3311..00 3311..11 3311..11 34 State and political subdivisions 58.7 57.9 57.8 57.2 57.0 56.0 55.2 54.4 53.2 52.6 52.5r 52.6 3355 Foreign banks 10.1 10.9 10.7 10.5 9.7 9.5 9.6 10.0 9.4 9.3 10.0 11.1 36 Foreign official institutions 5.9 5.8 5.9 6.1 6.7 6.7 5.8 5.3 5.2 5.1 5.1 5.5 J7 Lease financing receivables .... 21.8 22.2 22.4 22.4 22.5 22.7 22.9 23.2 23.1 23.2 23.6 23.5 38 All other loans 38.5 41.2 43.1 41.5 41.2 43.9 43.6 43.2 42.0 42.9 44.6r 43.9 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 All 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1986 1987 SSoouurrccee Nov. Dec. Jan. Feb. Mar. Apr. May June July' Aug. Sept. Oct. Total nondeposit funds 1 Seasonally adjusted 145.3 146.5 155.2' 159.6 164.1 160.9' 169.6' 165.8' 115588..88 165.6' 176.9' 117755..88 2 Not seasonally adjusted 146.9 146.6 154.7' 162.3 166.5 161.0' 170.4' 163.0' 155.6 165.6' 176.3' 174.8 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 167.2 165.5' 171.0 171.6 170.4 171.3' 169.6 167.7 166.5 166.9' 166.0' 165.4 4 Not seasonally adjusted 168.7' 165.7 170.5 174.3 172.7 171.4 170.4 165.0 163.3 167.0' 165.3' 164.5 5 Net balances due to foreign-related institutions, not seasonally adjusted -21.9 -19.0 -15.7 -12.0 -6.3 -10.4' ..00'' -l^ -7.8 -1.3 10.9 10.4 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -28.7 -30.6 -26.1 -23.8 -21.1 -23.0 -15.5 -15.5 -22.2 -17.7 -11.8 --1144..77 7 Gross due from balances 70.8 73.3 71.5 68.3 66.0 70.5 68.5 67.1 66.4 64.5 64.3 68.1 8 Gross due to balances 42.1 42.7 45.4 44.5 44.9 47.5 53.0 51.5 44.2 46.8 52.5 53.5 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted 6.9 11.5 10.4 11.8 14.8 12.6' 15.5' 13.6' 14.5 16.4 22.7 25.0 10 Gross due from balances 68.8 70.9 75.1 72.9' 71.1 72.7' 75.5' 77.2' 77.2 77.5' 77.1 79.6 11 Gross due to balances 75.6 82.5 85.5 84.7 85^ 85.3 91.0 90.8 91.7 93.8 99.8 104.6 Security RP borrowings 1 1 2 3 N Se o a t so se n a a s l o ly n a a l d ly j u a s d te j d u sted 9 99 8 . . 7 1 9 9 8 8 . . 5 6 1 1 0 0 1 0 . . 1 6 1 9 0 7 0 . . 7 4 9 97 5 . . 4 1 9 98 8 . . 7 6 1 9 0 9 0 . . 2 0 1 9 0 8 1 . . 7 4 ' 1 9 02 9 . . 5 4 1 1 0 0 5 5 . . 2 3 ' ' 1 v 0 a 8 n .6 . ' y 1 10 0 7 8 . . 7 6 U.S. Treasury demand balances 14 Seasonally adjusted 23.2 21.2 21.3 23.2 17.7 20.7 26.1 27.9 24.7 29.1 23.3 3355..66 15 Not seasonally adjusted 15.3 19.2 27.5 28.6 17.1 21.6 30.8 25.5 26.6 21.6 25.5 30.7 Time deposits, $100,000 or more8 16 Seasonally adjusted 343.2 345.6 350.1 351.1 354.1 359.8 366.2 372.9 371.8 370^ 370.5' 377.8 17 Not seasonally adjusted 343.9 347.0 351.3 353.2 356.4 357.2 364.8 369.8 368.6 370.2 371.7' 379.0 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 • January 1988 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1986 1987 AAccccoouunntt Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept/ Oct. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2,314.3 2,284.8 2,279.4 2,279.2 2,306.2 2,318.9 2,313.4 2,324.3 2,342.2 2,368.8 2,215.2 2 Investment securities 479.6 482.2 484.7 486.2 492.5 495.4 493.2 497.7 501.7 502.6 480.4 3 U.S. government securities 292.6 296.1 298.8 299.5 305.1 307.0 303.4 308.2 312.7 312.7 304.8 4 Other 187.0 186.1 185.9 186.7 187.5 188.4 189.8 189.4 189.0 189.9 175.6 5 Trading account assets 27.8 26.4 29.0 25.2 23.3 21.4 20.2 20.4 20.0 19.5 19.7 6 Total loans 1,807.0 1,776.3 1.765.6 1,767.8 1,790.3 1,802.1 1,800.0 1,806.2 1,820.5 1,846.7 1,715.1 V Interbank loans 168.9 160.1 156.7 154.3 151.8 160.4 150.9 157.5 162.5 158.3 133.1 8 Loans excluding interbank 1,638.1 1,616.2 1,608.9 1,613.5 1,638.5 1,641.7 1,649.1 1,648.7 1,658.0 1,688.3 1,582.0 9 Commercial and industrial 568.2 551.1 551.5 555.3 555.5 558.2 558.0 551.8 551.6 564.6 471.9 10 Real estate 497.5 499.9 503.5 510.7 519.0 527.4 539.1 547.3 552.7 559.1 566.7 11 Individual 320.4 317.0 314.7 313.1 315.2 314.8 312.6 314.5 317.2 321.0 322.5 12 All other 252.0 248.3 239.2 234.4 248.9 241.3 239.5 235.2 236.6 243.6 220.8 13 Total cash assets 273.7 214.4 206.3 203.8 209.7 230.8 213.1 207.1 209.3 221.6 205.1 14 Reserves with Federal Reserve Banks. 41.2 33.4 28.4 31.1 29.8 37.9 33.8 32.8 37.6 33.3 36.5 15 Cash in vault 25.7 23.7 23.5 22.9 24.0 25.1 24.2 24.4 24.6 24.4 24.9 16 Cash items in process of collection ... 111.3 74.5 71.4 68.1 74.5 81.3 74.4 68.6 65.6 81.3 78.2 17 Demand balances at U.S. depository institutions 43.3 34.0 33.0 32.7 33.9 37.2 31.1 31.6 31.4 32.6 31.1 18 Other cash assets 52.3 48.8 50.1 49.0 47.5 49.3 49.7 49.6 50.0 50.0 34.4 19 Other assets 224.8 201.3 201.1 202.1 204.0 208.7 203.8 189.0 190.7 200.6 131.1 20 Total assets/total liabilities and capital.... 2,812.8 2,700.5 2,686.8 2,685.2 2,719.9 2,758.3 2,730.4 2,720.4 2,742.2 2,791.0 2,551.3 21 Deposits 2,018.0 1,898.3 1,895.5 1,899.6 1,919.5 1,939.1 1,923.4 1,924.6 1,926.4 1,968.4 1,905.3 22 Transaction deposits 691.1 577.8 569.2 568.8 590.7 596.9 578.2 573.7 572.6 610.7 587.8 23 Savings deposits 535.0 532.3 535.9 539.7 535.1 538.6 535.0 536.0 535.2 532.7 527.0 24 Time deposits 791.9 788.2 790.3 791.2 793.6 803.6 810.1 814.9 818.6 825.0 790.5 25 Borrowings 414.5 432.7 425.6 414.9 422.7 435.6 428.3 424.0 435.1 424.6 346.7 26 Other liabilities 199.6 188.0 184.6 188.7 195.2 200.3 201.3 201.1 209.2 225.0 129.1 27 Residual (assets less liabilities) 180.6 181.5 181.2 181.9 182.5 183.3 177.4 170.7 171.4 172.9 170.2 MEMO 28 U.S. government securities (including trading account) 308.4 314.5 320.1 316.7 318.9 320.6 315.8 322.6 326.3 332266..66 331188..88 29 Other securities (including trading account) 198.9 194.1 193.7 194.7 196.9 196.1 197.6 195.5 195.4 195.5 181.3 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,154.4 2,136.7 2,130.3 2,121.7 2,146.9 2,156.2 2,151.9 2,157.7 2,174.9 2,191.8 2,215.2 31 Investment securities 459.3 461.5 463.3 463.6 470.0 471.5 469.8 473.8 478.1 478.2 480.4 32 U.S. Treasury securities 283.0 286.8 289.2 289.4 295.2 296.7 294.0 298.4 302.7 302.1 304.8 33 Other 176.3 174.8 174.1 174.2 174.8 174.8 175.9 175.4 175.3 176.1 175.6 34 Trading account assets 27.8 26.4 29.0 25.2 23.3 21.4 20.2 20.4 20.0 19.5 19.7 35 Total loans 1,667.3 1,648.8 1,638.0 1,632.9 1,653.6 1,663.3 1,661.8 1,663.5 1,676.9 1,694.1 1,715.1 36 Interbank loans 137.9 134.3 130.5 124.1 124.2 128.6 121.5 122.9 129.5 124.8 133.1 37 Loans excluding interbank 1,529.5 1,514.5 1,507.5 1,508.8 1,529.3 1,534.7 1,540.4 1,540.6 1,547.4 1,569.3 1,582.0 38 Commercial and industrial 488.2 475.5 474.1 474.6 473.5 475.3 471.7 466.0 464.7 471.1 471.9 39 Real estate 490.3 493.2 497.0 504.1 512.0 520.3 532.1 539.9 544.9 551.1 558.9 40 Individual 320.1 316.7 314.4 312.7 314.9 314.5 312.3 314.2 316.8 320.6 322.2 41 All other 230.9 229.2 221.9 217.4 229.0 224.7 224.3 220.6 221.0 226.4 229.0 42 Total cash assets 253.5 196.6 188.9 186.5 192.5 213.2 195.3 189.1 190.1 201.4 205.1 43 Reserves with Federal Reserve Banks. 39.7 31.2 27.1 29.7 27.2 35.9 32.1 31.4 36.2 31.0 36.5 44 Cash in vault 25.7 23.6 23.5 22.8 24.0 25.0 24.1 24.4 24.6 24.4 24.9 45 Cash items in process of collection ... 110.9 74.0 71.0 67.7 74.0 80.9 73.9 68.1 65.1 80.7 78.2 46 Demand balances at U.S. depository institutions 40.8 32.2 31.1 31.1 31.9 35.1 29.3 29.8 29.8 30.6 31.1 47 Other cash assets 36.4 35.6 36.4 35.2 35.4 36.2 35.9 35.4 34.4 34.7 34.4 48 Other assets 165.0 141.5 144.0 143.4 144.4 143.1 134.4 121.8 121.5 135.9 131.1 49 Total assets/liabilities and capital 2,572.8 2,474.8 2,463.2 2,451.5 2,483.8 2,512.5 2,481.5 2,468.7 2,486.5 2,529.1 2,551.3 50 Deposits 1,957.0 1,840.8 1,838.2 1,840.7 1,857.1 1,876.5 1,861.5 1,863.9 1,864.7 1,906.3 1,905.3 51 Transaction deposits 682.2 569.4 561.3 560.5 582.2 588.4 569.7 565.6 564.3 602.0 587.8 52 Savings deposits 533.0 530.3 533.9 537.7 533.1 536.6 533.0 533.9 533.0 530.6 527.0 53 Time deposits 741.8 741.1 743.0 742.5 741.8 751.4 758.8 764.4 767.3 773.7 790.5 54 Borrowings 322.9 341.7 336.1 319.1 328.2 337.1 328.6 321.1 335.8 326.5 346.7 55 Other liabilities 115.5 114.0 110.8 113.0 119.1 118.8 117.1 116.1 117.6 126.5 129.1 56 Residual (assets less liabilities) 177.5 178.3 178.1 178.8 179.4 180.2 174.3 167.6 168.3 169.8 170.2 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 AAccccoouunntt Sept. T Sept. 9' Sept. 16r Sept. 23r Sept. 30r Oct. 7 Oct. 14 Oct. 21 Oct. 28 1 Cash and balances due from depository institutions 97,724 110,655 106,601 104,115 104,707 100,228 117,582 98,119 110,800 2 Total loans, leases and securities, net 1,004,227 1,006,962 1,009,732 1,012,246 1,015,438 1,009,371 1,011,601 1,030,019 1,025,503 3 U.S. Treasury and government agency 116,822 119,128 117,293 117,401 115,655 114,569 113,784 115,461 116,726 4 Trading acount 13,257 14,088 13,307 14,236 13,860 13,222 12,405 14,775 13,977 Investment account, by maturity 103,564 105,040 103,986 103,165 101,796 101,347 101,378 100,686 102,748 6 One year or less 17,103 17,101 17,064 16,948 16,980 16,936 17,019 16,740 16,028 7 Over one through five years 46,993 47,951 47,795 47,322 45,412 44,922 44,795 44,151 45,184 8 Over five years 39,468 39,987 39,128 38,895 39,403 39,490 39,564 39,794 41,536 9 Other securities 67,924 67,384 67,264 67,256 68,199 67,189 67,098 67,015 67,564 10 Trading account 3,050 2,720 2,960 3,083 2,930 2,361 2,390 2,470 2,645 11 Investment account 64,875 64,664 64,304 64,173 65,269 64,828 64,708 64,546 64,919 1? States and political subdivisions, by maturity 49,550 49,422 49,087 48,976 48,807 48,345 48,294 48,178 48,212 13 One year or less 5,492 5,436 5,155 5,129 5,163 5,184 5,189 5,109 5,120 14 Over one year 44,058 43,986 43,932 43,846 43,644 43,161 43,105 43,068 43,092 IS Other bonds, corporate stocks, and securities 15,324 15,243 15,217 15,197 16,462 16,483 16,414 16,368 16,707 16 Other trading account assets 3,330 3,250 2,856 2,927 2,694 3,177 3,137 2,804 3,024 17 Federal funds sold1 65,531 64,744 66,609 69,426 65,828 64,936 66,166 74,333 69,364 18 To commercial banks 36,142 39,639 39,414 41,139 40,156 40,267 40,702 46,976 41,389 19 To nonbank brokers and dealers in securities 21,310 18,246 19,212 20,748 17,585 17,098 18,094 19,449 19,416 70 To others 8,079 6,858 7,983 7,539 8,086 7,572 7,369 7,907 8,560 71 Other loans and leases, gross 789,894 791,776 795,026 794,536 802,053 798,384 800,329 809,252 807,762 7? Other loans, gross 770,375 772,236 775,533 774,999 782,846 779,155 781,124 790,000 788,472 73 Commercial and industrial 269,578 269,688 271,293 272,221 275,452 274,473 274,095 273,657 275,123 74 Bankers acceptances and commercial paper 2,359 2,372 2,346 2,179 2,168 2,203 2,348 2,234 2,404 75 All other 267,218 267,315 268,948 270,042 273,284 272,270 271,746 271,423 272,720 76 U.S. addressees 264,114 264,249 265,861 267,032 270,354 269,148 268,776 268,428 269,690 27 Non-U.S. addressees 3,104 3,066 3,087 3,010 2,930 3,122 2,970 2,994 3,030 78 Real estate loans 234,302 234,890 236,317 236,629 237,063 239,253 240,040 240,590 240,583 79 To individuals for personal expenditures 143,007 143,083 143,290 143,550 143,209 142,857 142,928 143,179 143,669 30 To depository and financial institutions 49,592 51,075 50,086 48,180 48,925 47,728 50,160 50,491 51,581 31 Commercial banks in the United States 21,897 22,508 21,176 21,033 20,560 20,236 21,446 22,322 22,751 3? Banks in foreign countries 5,019 5,510 5,606 4,586 4,757 4,515 5,696 5,296 5,566 33 Nonbank depository and other financial institutions . 22,676 23,057 23,304 22,560 23,608 22,977 23,019 22,873 23,264 34 For purchasing and carrying securities 15,678 14,626 16,406 16,111 17,089 16,130 14,994 22,089 18,088 35 To finance agricultural production 5,604 5,634 5,620 5,625 5,712 5,744 5,725 5,681 5,645 36 To states and political subdivisions 31,496 31,455 31,517 31,486 31,686 31,738 31,622 31,449 31,322 37 To foreign governments and official institutions 2,912 2,781 2,777 2,843 2,841 2,830 2,938 2,881 2,997 38 All other 18,206 19,004 18,226 18,353 20,868 18,402 18,622 19,982 19,462 39 Lease financing receivables 19,519 19,540 19,493 19,537 19,206 19,229 19,206 19,252 19,291 40 LESS: Unearned income 4,726 4,739 4,726 4,755 4,716 4,691 4,713 4,714 4,737 41 Loan and lease reserve 34,548 34,581 34,590 34,545 34,276 34,194 34,200 34,132 34,200 4? Other loans and leases, net 750,619 752,456 755,710 755,236 763,061 759,499 761,416 770,406 768,825 43 All other assets 118,602 119,930 116,917 115,991 126,716 123,766 122,693 123,987 126,758 44 Total assets 1,220,553 1,237,546 1,233,250 1,232,351 1,246,862 1,233,366 1,251,876 1,252,125 1,263,061 45 Demand deposits 225,016 226,271 227,180 214,715 240,176 216,205 237,498 225,552 230,413 46 Individuals, partnerships, and corporations 175,618 175,704 174,713 166,684 185,413 168,924 185,413 176,610 178,260 47 States and political subdivisions 6,022 5,098 5,761 5,731 6,165 4,862 4,999 5,490 5,335 48 U.S. government 1,530 2,476 4,771 2,873 3,113 2,748 1,918 1,410 2,077 49 Depository institutions in United States 24,642 26,808 24,588 21,277 27,326 23,745 27,651 25,272 24,378 50 Banks in foreign countries 6,536 6,833 7,162 6,103 6,872 6,118 7,291 6,654 7,174 51 Foreign governments and official institutions 1,189 984 935 1,026 973 840 976 966 922 57 Certified and officers' checks 9,479 8,367 9,250 11,021 10,313 8,968 9,250 9,150 12,267 53 Transaction balances other than demand deposits 62,351 62,916 62,428 59,809 60,364 62,050 61,455 60,995 60,103 54 Nontransaction balances 525,982 525,084 524,854 524,514 526,443 531,057 530,669 532,822 533,817 55 Individuals, partnerships and corporations 489,182 488,297 488,185 487,580 488,792 493,347 493,074 495,671 496,316 56 States and political subdivisions 25,678 25,652 25,478 25,729 25,824 25,527 25,693 25,662 25,569 57 U.S. government 777 832 813 631 816 802 811 620 795 58 Depository institutions in the United States 9,536 9,496 9,587 9,758 10,226 10,562 10,289 10,082 10,347 59 Foreign governments, official institutions and banks .... 809 806 790 817 786 819 802 786 790 60 Liabilities for borrowed money 243,481 258,354 255,511 259,749 247,201 254,729 253,656 262,588 263,678 61 Borrowings from Federal Reserve Banks 0 787 161 330 1,148 980 580 2,720 275 67 Treasury tax-and-loan notes 9,252 8,634 23,448 22,009 21,129 19,312 18,870 22,928 22,857 63 All other liabilities for borrowed money2 234,229 248,932 231,902 237,409 224,924 234,437 234,206 236,940 240,546 64 Other liabilities and subordinated note and debentures .. 86,432 87,228 85,842 96,107 94,698 90,701 89,317 91,014 95,943 65 Total liabilities 1,143,262 1,159,853 1,155,814 1,154,894 1,168,883 1,154,742 1,172,595 1,172,971 1,183,954 66 Residual (total assets minus total liabilities)3 77,290 77,693 77,435 77,457 77,979 78,624 79,281 79,154 79,107 MEMO 67 Total loans and leases (gross) and investments adjusted4 .. 985,463 984,134 988,459 989,373 993,713 987,753 988,366 999,567 1,000,300 68 Total loans and leases (gross) adjusted4 797,386 794,372 801,045 801,790 807,164 802,817 804,348 814,287 812,987 69 Time deposits in amounts of $100,000 or more 163,917 162,866 163,376 164,695 165,016 168,973 168,518 170,013 171,715 70 Loans sold outright to affiliates—total5 1,739 1,692 1,661 1,720 1,731 1,760 1,835 1,843 1,780 71 Commercial and industrial 1,201 1,159 1,150 1,224 1,243 1,249 1,333 1,333 1,271 77 Other 537 533 511 495 488 511 503 510 510 73 Nontransaction savings deposits (including MMDAs) 228,807 228,941 227,946 226,343 227,123 227,240 227,168 226,879 224,998 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 • January 1988 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures except as noted Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 1 Cash balances due from depository institutions 21,515 29,498 25,771 29,470 24,899' 25,586 32,338 23,613 31,405 2 Total loans, leases and securities, net1 215,139 215,157 215,393 219,799 218,796' 213,240 215,854 226,060 221,491 Securities 3 U.S. Treasury and government agency2 0 0 0 0 0 0 0 0 0 4 Trading account 0 0 0 0 0 0 0 0 0 5 Investment account, by maturity 13,871 14,465 14,206 13,991 14,003 13,863 13,975 13,874 14,486 6 One year or less 1,962 1,981 2,112 1,921 1,950 1,912 1,982 1,922 1,427 7 Over one through five years 5,128 5,125 4,718 4,683 4,666 4,573 4,570 4,377 4,442 8 Over five years 6,781 7,359 7,376 7,386 7,387 7,378 7,424 7,574 8,618 9 Other securities 0 0 0 0 0 0 0 0 0 10 Trading account2 0 0 0 0 0 0 0 0 0 11 Investment account 16,644 16,548 16,532 16,477 16,491 16,520 16,480 16,444 16,518 12 States and political subdivisions, by maturity 13,707 13,661 13,646 13,607 13,528 13,567 13,558 13,526 13,510 13 One year or less '. 1,017 971 942 933 944 921 929 874 863 14 Over one year 12,689 12,690 12,703 12,674 12,584 12,646 12,629 12,652 12,647 15 Other bonds, corporate stocks and securities 2,938 2,886 2,886 2,870 2,963 2,953 2,922 2,918 3,008 16 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 17 Federal funds sold3 30,411 28,349 27,471 32,844 29,068 26,783 27,532 32,036 28,582 18 To commercial banks 11,240 13,428 11,360 15,008 12,688 11,713 11,369 14,353 11,572 19 To nonbank brokers and dealers in securities 13,105 10,194 10,496 12,477 10,674 9,736 11,359 12,364 11,472 20 To others 6,065 4,727 5,616 5,360 5,706 5,335 4,804 5,319 5,538 21 Other loans and leases, gross 170,080 171,725 173,098 172,392 175,071' 171,781 173,630 179,406 177,641 22 Other loans, gross 165,209 166,841 168,188 167,457 170,585' 167,287 169,170 174,951 173,148 23 Commercial and industrial 57,121 57,390 58,221 58,705 59,37c 58,976 59,111 58,055 59,197 24 Bankers acceptances and commercial paper 473 503 494 463 475' 496 550 456 441 25 All other 56,648 56,887 57,727 58,242 58,894' 58,480 58,561 57,599 58,756 26 U.S. addressees 56,144 56,433 57,241 57,808 58,474' 57,882 58,084 57,138 58,249 27 Non-U.S. addressees 503 454 486 435 421 598 477 462 507 28 Real estate loans 44,176 44,330 44,668 44,794 44,675 44,752 44,680 44,677 44,457 29 To individuals for personal expenditures 21,696 21,749 21,832 21,939 21,931' 21,964 22,075 22,155 22,214 30 To depository and financial institutions 19,808 21,371 20,685 19,740 20,409' 19,568 21,499 21,863 22,955 31 Commercial banks in the United States 10,901 11,818 10,839 10,879 11,184' 10,876 11,697 12,267 12,609 32 Banks in foreign countries 2,731 3,309 3,485 2,493 2,710' 2,516 3,480 3,286 3,498 33 Nonbank depository and other financial institutions 6,176 6,244 6,361 6,367 6,515 6,176 6,321 6,310 6,849 34 For purchasing and carrying securities 7,494 6,610 7,993 7,432 7,897 6,986 6,585 12,041 8,839 35 To finance agricultural production 284 300 302 304 328 320 323 324 337 36 To states and political subdivisions 7,727 7,714 7,741 7,731 7,839 7,847 7,821 7,781 7,737 37 To foreign governments and official institutions 768 634 647 724 745 734 797 747 855 38 All other 6,134 6,742 6,098 6,087 7,390 6,139 6,278 7,306 6,556 39 Lease financing receivables 4,871 4,883 4,909 4,935 4,486 4,494 4,460 4,456 4,493 40 LESS: Unearned income 1,511 1,526 1,527 1,546 1,528 1,532 1,547 1,552 1,560 41 Loan and lease reserve 14,356 14,404 14,386 14,359 14,309' 14,176 14,217 14,149 14,176 42 Other loans and leases, net 154,213 155,795 157,184 156,487 159,234' 156,074 157,865 163,705 161,905 43 All other assets4 56,629 55,895 53,305 52,752 57,077' 57,030 56,632 59,526 60,634 44 Total assets 293,283 300,550 294,470 302,021 300,772' 295,856 304,824 309,199 313,530 Deposits 45 Demand deposits 58,230 59,013 58,501 59,535 65,610' 55,632 62,241 61,314 66,510 46 Individuals, partnerships, and corporations 40,388 40,667 40,374 40,715 44,795' 37,682 43,303 42,725 44,896 47 States and political subdivisions 956 776 842 788 890 831 766 861 991 48 U.S. government 179 407 616 512 547 476 269 196 314 49 Depository institutions in the United States 6,192 7,169 5,683 5,275 8,159' 6,845 6,588 7,187 7,040 50 Banks in foreign countries 5,420 5,647 6,027 4,984 5,642' 4,991 6,170 5,532 5,773 51 Foreign governments and official institutions 1,035 828 783 882 837' 699 844 843 788 52 Certified and officers' checks 4,060 3,518 4,177 6,378 4,740 4,108 4,300 3,971 6,709 53 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,146 8,196 8,183 7,909 8,012 8,159 8,034 8,025 7,888 54 Nontransaction balances 100,360 99,921 100,493 99,342 99,769 102,090 101,897 101,635 102,270 55 Individuals, partnerships and corporations 91,566 91,162 91,774 90,623 91,017 93,120 92,734 92,362 93,095 56 States and political subdivisions 6,696 6,695 6,660 6,664 6,686 6,736 6,956 6,990 6,895 57 U.S. government 47 59 48 49 53 47 54 68 70 58 Depository institutions in the United States 1,658 1,603 1,619 1,609 1,629 1,780 1,759 1,832 1,832 59 Foreign governments, official institutions and banks ... 392 401 392 398 383 407 394 382 378 60 Liabilities for borrowed money 67,833 75,446 68,936 71,111 64,145 70,906 74,108 78,348 75,705 61 Borrowings from Federal Reserve Banks 0 0 0 0 410 450 0 2,400 0 62 Treasury tax-and-loan notes 2,185 2,124 5,566 5,720 4,736' 4,811 4,830 5,840 5,792 63 All other liabilities for borrowed money 65,648 73,321 63,370 65,391 58,999' 65,644 69,278 70,108 69,913 64 Other liabilities and subordinated note and debentures ... 36,371 35,544 36,085 41,810 40,614' 36,335 35,350 36,691 38,192 65 Total liabilities 270,940 278,119 272,198 279,707 278,151' 273,123 281,630 286,013 290,565 66 Residual (total assets minus total liabilities)6 22,344 22,430 22,271 22,315 22.62C 22,733 23,194 23,186 22,966 MEMO 67 Total loans and leases (gross) and investments adjusted1'7 208,865 205,840 209,108 209,817 210,760' 206,359 208,552 215,141 213,046 68 Total loans and leases (gross) adjusted 178,350 174,828 178,370 179,349 180,266' 175,976 178,0% 184,823 182,042 69 Time deposits in amounts of $100,000 or more 37,178 36,767 37,312 36,701 36,891 38,952 38,628 38,832 38,751 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 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30r Oct. 7 Oct. 14 Oct. 21 Oct. 28 1 Cash and due from depository institutions ... 9,187 10,762 10,253 10,248 11,738 9,864 9,451 9,800 9,695 2 Total loans and securities 93,941 96,792 98,290 99,592 99,614 97,165 98,710 101,124 101,145 3 U.S. Treasury and govt, agency securities ... 7,425 7,204 7,391 7,970 7,318 7,389 7,330 7,441 6,946 4 Other securities 7,913 7,915 7,914 7,860 8,029 8,019 7,958 7,853 7,753 5 Federal funds sold 7,472 8,891 8,078 9,224 7,196 7,298 9,041 10,787 12,234 6 To commercial banks in the United States . 6,090 7,271 6,206 7,296 5,691 5,858 7,744 8,900 10,399 7 To others 1,382 1,620 1,872 1,927 1,505 1,440 1,297 1,887 1,835 8 Other loans, gross 71,131 72,782 74,907 74,539 77,070 74,459 74,382 75,043 74,212 9 Commercial and industrial 46,454 47,598 49,447 49,183 50,165 49,018 48,871 49,487 49,415 10 Bankers acceptances and commercial paper 3,834 3,986 4,116 3,951 3,827 3,876 3,996 3,912 3,916 11 All other 42,620 43,612 45,331 45,232 46,338 45,142 44,875 45,575 45,499 12 U.S. addressees 40,248 41,114 42,913 42,825 43,912 42,756 42,468 43,150 43,120 13 Non-U.S. addressees 2,371 2,498 2,418 2,407 2,426 2,386 2,407 2,425 2,379 14 To financial institutions 15,222 15,204 15,748 16,047 16,769 16,485 16,336 15,798 15,360 15 Commercial banks in the United States.. 11,340 11,280 11,850 11,986 12,521 12,230 11,994 11,292 11,304 16 Banks in foreign countries 986 1,042 1,079 1,138 1,340 1,196 1,299 1,465 1,117 17 Nonbank financial institutions 2,896 2,881 2,818 2,923 2,908 3,059 3,042 3,041 2,938 18 To foreign govts, and official institutions .. 355 424 356 342 385 395 409 387 385 19 For purchasing and carrying securities .... 2,379 2,805 2,765 2,184 2,876 1,685 1,750 2,505 2,287 20 All other 6,721 6,750 6,592 6,783 6,875 6,876 7,016 6,866 6,766 21 Other assets (claims on nonrelated parties) .. 27,887 27,771 27,718 28,140 28,787 28,690 28,487 28,872 28,513 22 Net due from related institutions 17,145 15,632 16,690 16,138 14,893 15,746 15,414 15,940 14,019 23 Total assets 148,160 150,958 152,950 154,120 155,032 151,466 152,063 155,736 153,372 24 Deposits or credit balances due to other than directly related institutions 43,044 43,744 43,601 44,098 43,652 42,133 42,504 42,285 42,811 25 Transaction accounts and credit balances . 3,360 3,658 3,394 3,536 3,644 3,193 3,433 3,337 3,531 26 Individuals, partnerships, and corporations 2,129 2,302 2,163 2,114 2,029 2,217 2,045 2,215 1,984 27 Other 1,231 1,356 1,230 1,422 1,616 976 1,388 1,121 1,547 28 Nontransaction accounts 39,684 40,086 40,207 40,562 40,007 38,941 39,071 38,949 39,280 29 Individuals, partnerships, and corporations 32,244 32,569 32,788 33,323 32,399 31,663 31,840 31,880 32,118 30 Other 7,440 7,517 7,419 7,238 7,608 7,278 7,231 7,069 7,163 31 Borrowings from other than directly related institutions 53,897 53,023 56,222 54,777 55,302 56,947 55,804 58,085 53,854 32 Federal funds purchased5 25,347 24,419 26,872 25,092 25,328 27,613 26,372 28,002 25,454 33 From commercial banks in the United States 12,817 13,103 14,356 12,190 13,630 14,839 15,082 16,902 16,093 34 From others 12,530 11,315 12,516 12,902 11,698 12,774 11,289 11,101 9,361 35 Other liabilities for borrowed money 28,549 28,604 29,349 29,684 29,974 29,334 29,432 30,082 28,400 36 To commercial banks in the United States 22,368 22,452 22,283 22,975 23,674 23,001 22,971 23,297 22,054 37 To others 6,181 6,152 7,066 6,710 6,300 6,332 6,461 6,785 6,345 38 Other liablities to nonrelated parties 31,132 31,489 31,264 32,646 32,498 32,674 32,563 32,929 33,127 39 Net due to related institutions 20,088 22,702 21,863 22,599 23,580 19,711 21,191 22,437 23,580 40 Total liabilities 148,160 150,958 152,950 154,120 155,032 151,466 152,063 155,736 153,372 MEMO 41 Total loans (gross) and securities adjusted .. 76,511 78,241 80,234 80,310 81,402 79,077 78,972 80,932 79,442 42 Total loans (gross) ajdusted6 61,172 63,121 64,929 64,481 66,054 63,669 63,685 65,638 64,742 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 • January 1988 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1 Billions of dollars, estimated daily-average balances, not seasonally adjusted Commercial banks TTyyppee ooff hhoollddeerr 1986 1987 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc.. DDeeccjj''44 June Sept. Dec. Mar. June Sept. 1 All holders—Individuals, partnerships, and corporations 291.8 293.5 302.7 321.0 322.4 333.6 363.6 335.9 340.2 n.a. 2 Financial business 35.4 32.8 31.7 32.3 32.3 35.9 41.4 35.9 36.6 n.a. 3 Nonfinancial business 150.5 161.1 166.3 178.5 180.0 185.9 202.0 183.0 187.2 n.a. 4 Consumer 85.9 78.5 81.5 85.5 86.4 86.3 91.1 88.9 90.1 n.a. 5 Foreign 3.0 3.3 3.6 3.5 3.0 3.3 3.3 2.9 3.2 n.a. 6 Other 17.0 17.8 19.7 21.2 20.7 22.2 25.8 25.2 23.1 n.a. Weekly reporting banks 1986 1987 11998822 11998833 11998844 11998855 DDeecc.. DDeecc.. DDeecc..22 DDeecc..33''44 June Sept. Dec. Mar. June Sept. 7 All holders—Individuals, partnerships, and corporations 144.2 146.2 157.1 168.6 168.5 174.7 195.1 178.1 179.3 179.1 8 Financial business 26.7 24.2 25.3 25.9 25.7 28.9 32.5 28.7 29.3 29.3 9 Nonfinancial business 74.3 79.8 87.1 94.5 93.1 94.8 106.4 94.4 94.8 96.0 10 Consumer 31.9 29.7 30.5 33.2 34.9 35.0 37.5 36.8 37.5 37.2 11 Foreign 2.9 3.1 3.4 3.1 2.9 3.2 3.3 2.8 3.1 3.1 12 Other 8.4 9.3 10.9 12.0 11.9 12.8 15.4 15.5 14.6 13.5 1. Figures include cash items in process of collection. Estimates of gross thrift institutions. Historical data have not been revised. The estimated volume of deposits are based on reports supplied by a sample of commercial banks. Types such deposits for December 1984 is $5.0 billion at all insured commercial banks of depositors in each category are described in tne June 1971 BULLETIN, p. 456. 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 1987 1982 1983 1984 1985 1986 Dec. Dec. Dec. Dec. Dec. Apr. May June July Aug. Sept. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 166,436 187,658 237,586 300,899 331,016 346,769 354,249 348,741 348,247 352,737 358,828 Financial companies3 Dealer-placed paper4 2 Total 34,605 44,455 56,485 78,443 100,207 103,957 105,397 108,691 107,709 111100,,771144 115,570 3 Bank-related (not seasonally adjusted) 22,,551166 22,,444411 22,,003355 11,,660022 22,,226655 22,,330077 22,,442299 22,,443300 22,,331111 22,,440044 22,,559900 Directly placed paper 4 Total 84,393 97,042 110,543 135,504 152,385 163,421 169,225 161,921 162,185 116633,,662200 116666,,116699 5 Bank-related (not seasonally adjusted) 32,034 35,566 42,105 44,778 40,860 48,604 48,401 47,862 46,354 45,487 46,815 6 Nonfinancial companies6 47,437 46,161 70,558 86,952 78,424 79,391 79,627 78,129 78,353 78,403 77,089 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 79,543 78,309 78,364 68,413 64,974 66,752 67,790 69,622 68,495 68,645' 68,771 Holder 8 Accepting banks 10,910 9,355 9,811 11,197 13,423 11,180 11,201 11,234 10,664 10,870' 10,521 9 Own bills 9,471 8,125 8,621 9,471 11,707 9,783 9,569 9,661 9,630 9,905' 9,400 10 Bills bought 1,439 1,230 1,191 1,726 1,716 1,396 1,631 1,573 1,035 965 1,121 Federal Reserve Banks 11 Own account 1,480 418 0 0 0 0 0 0 0 0 0 12 Foreign correspondents 949 729 671 937 1,317 1,519 1,547 1,717 1,463 1,397 1,467 13 Others 66,204 67,807 67,881 56,279 50,234 54,052 55,032 56,671 56,367 56,379' 56,784 Basis 14 Imports into United States 17,683 15,649 17,845 15,147 14,670 15,116 15,361 16,179 17,431 17,087' 17,198 15 Exports from United States 16,328 16,880 16,305 13,204 12,960 13,836 14,028 14,161 14,659 14,967' 15,046 16 All other 45,531 45,781 44,214 40,062 37,344 37,838 38,401 39,281 36,405 36,590' 36,526 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 Rate Effective Date Rate Month Av r e a r t a e ge Month 10.50 1987—Apr. 1 7.75 1985—Jan. 10.61 July 10.00 May 1 8.00 Feb. 10.50 Aug. 9.50 IS 8.25 Mar. 10.50 Sept. Sept. 4 8.75 Apr. 10.50 Oct. 9.00 Oct. 7 9.25 May 10.31 Nov. 8.50 ?? 9.00 June 9.78 Dec. 8.00 Nov. s 8.75 July 9.50 7.50 Aug. 9.50 1987—Jan. Sept. 9.50 Feb. Oct. 9.50 Mar. Nov. 9.50 Apr. Dec. 9.50 May June 1986—Jan. 9.50 July Feb. 9.50 Aug. Mar. 9.10 Sept. Apr. 8.83 Oct.. May 8.50 Nov. June 8.50 NOTE. These data also appear in the Board's H.15 (519) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • January 1988 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 July Aug. Sept. Oct. Oct. 2 Oct. 9 Oct. 16 Oct. 23 Oct. 30 MONEY MARKET RATES 1 Federal funds1'2 10.22 8.10 6.80 6.58 6.73 7.22 7.29 7.56 7.43 7.59 7.37 7.03 2 Discount widow borrowing1,2,3 8.80 7.69 6.33 5.50 5.50 5.95 6.00 6.00 6.00 6.00 6.00 6.00 Commercial paper ' 3 1-month 10.05 7.94 6.62 6.57 6.62 7.26 7.38 7.45 7.52 7.86 7.26 6.95 4 3-month 10.10 7.95 6.49 6.65 6.71 7.37 7.89 7.64 8.02 8.55 7.82 7.33 5 6-month 10.16 8.01 6.39 6.72 6.81 7.55 7.96 7.82 8.13 8.64 7.90 7.35 Finance paper, directly placed4. 6 1-month 99..9977 77..9911 66..5588 6.53 6.56 7.20 7.28 7.41 7.48 7.83 7.05 6.83 7 3-month 9.73 7.77 6.38 6.48 6.49 7.08 7.40 7.30 7.45 8.04 7.25 7.03 8 6-month 9.65 7.75 6.31 6.35 6.34 6.90 7.17 7.12 7.25 7.63 7.14 6.80 Bankers acceptances5,6 9 3-month 1100..1144 7.92 6.39 6.59 6.64 7.31 7.85 7.63 8.04 8.59 7.73 7.25 10 6-month 10.19 7.96 6.29 6.65 6.75 7.48 7.92 7.81 8.17 8.66 7.79 7.24 Certificates of deposit, secondary market7 11 1-month 1100..1177 7.97 6.61 6.60 6.63 7.25 7.39 7.46 7.53 7.81 7.32 6.96 U 3-month 10.37 8.05 6.52 6.70 6.75 7.37 8.02 7.80 8.19 8.73 7.90 7.42 13 6-month 10.68 8.25 6.51 6.87 7.02 7.74 8.19 8.11 8.41 8.95 8.05 7.50 14 Eurodollar deposits,, 3-month8 10.73 8.28 6.71 6.87 6.91 7.51 8.29 7.79 8.24 8.69 8.81 7.73 U.S. Treasury bills Secondary market9 15 3-month 99..5522 7.48 5.98 5.69 6.04 6.40 6.13 6.62 6.65 6.98 5.70 5.17 16 6-month 9.76 7.65 6.03 5.76 6.15 6.64 6.69 6.86 7.08 7.52 6.33 5.93 17 1-year 9.92 7.81 6.08 6.24 6.54 7.11 7.05 7.30 7.50 7.70 6.72 6.30 Auction average 18 3-month 99..5577 7.49 5.97 5.78 6.00 6.32 6.40 6.59 6.49 6.96 6.84 5.12 19 6-month 9.80 7.66 6.02 5.86 6.14 6.57 6.86 6.83 6.96 7.34 7.21 5.98 20 1-year 9.94 7.81 6.07 6.22 6.52 6.74 6.89 7.32 n.a. n.a. n.a. 6.45 CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities 71 1-year 10.89 8.43 6.46 6.68 7.03 7.67 7.59 7.88 8.10 8.33 7.22 6.73 22 2-year 11.65 9.27 6.87 7.44 7.75 8.34 8.40 8.58 8.83 9.13 8.09 7.60 2.3 3-year 11.89 9.64 7.06 7.74 8.03 8.67 8.75 8.89 9.10 9.43 8.54 8.01 74 5-year 12.24 10.13 7.31 8.01 8.32 8.94 9.08 9.17 9.39 9.73 8.90 8.38 25 7-year 12.40 10.51 7.55 8.27 8.59 9.26 9.37 9.48 9.65 9.97 9.23 8.71 26 10-year 12.44 10.62 7.68 8.45 8.76 9.42 9.52 9.61 9.78 10.11 9.36 8.90 27 20-year 12.48 10.97 7.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 30-year 12.39 10.79 7.80 8.64 8.97 9.59 9.61 9.75 9.84 10.13 9.49 9.05 Composite 29 Over 10 years (long-term) 1111..9999 1100..7755 88..1144 8.70 8.97 9.58 9.61 9.72 9.82 10.10 9.49 9.07 State and local notes and bonds Moody's series14 30 Aaa 9.61 8.60 6.95 7.18 7.24 7.66 7.90 7.85 7.95 8.45 7.65 7.60 31 Baa 10.38 9.58 7.76 8.37 8.31 8.67 8.85 8.70 8.85 9.40 8.70 8.60 32 Bond Buyer series15 10.10 9.11 7.32 7.72 7.81 8.26 8.70 8.53 8.66 9.17 8.72 n.a. Corporate bonds Seasoned issues16 33 All industries 13.49 12.05 9.71 9.92 10.24 10.64 10.97 10.79 10.91 11.13 11.13 10.75 34 Aaa 12.71 11.37 9.02 9.42 9.67 10.18 10.52 10.34 10.48 10.73 10.68 10.25 35 Aa 13.31 11.82 9.47 9.64 9.86 10.35 10.74 10.48 10.63 10.91 10.95 10.56 36 A 13.74 12.28 9.95 10.00 10.20 10.72 10.98 10.85 10.91 11.11 11.13 10.84 37 Baa 14.19 12.72 10.39 10.61 10.80 11.31 11.62 11.49 11.61 11.78 11.77 11.35 38 A-rated, recently-offered utility bonds17 1133..8811 12.06 9.61 10.17 10.37 10.84 11.07 11.08 11.24 11.50 10.75 10.60 MEMO: Dividend/price ratio18 39 Preferred stocks 1111..5599 10.49 8.76 88..2255 8.32 8.64 8.99 8.70 8.76 8.91 9.09 9.18 40 Common stocks 4.64 4.25 3.48 2.83 2.69 2.78 3.25 2.76 2.78 2.92 3.46 3.84 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 1987 IInnddiiccaattoorr 11998844 11998855 11998866 Feb. Mar. Apr. May June July Aug. Sept. Oct. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 92.46 108.09 136.00 160.23 166.43 163.88 163.00 169.58 174.28 184.18 178.39 157.13 2 Industrial 108.01 123.79 155.85 189.17 198.95 199.03 198.78 206.61 214.12 226.49 219.52 189.86 3 Transportation 85.63 104.11 119.87 135.49 138.55 137.91 141.30 150.39 157.49 164.02 158.58 140.95 4 Utility 46.44 56.75 71.36 78.19 77.15 72.74 71.64 74.25 74.18 78.20 76.13 73.27 5 Finance 89.28 114.21 147.19 158.41 162.41 150.52 145.97 152.73 152.27 160.94 154.08 137.35 6 Standard & Poor's Corporation (1941-43 = 10)1 160.50 186.84 236.34 280.93 292.47 289.32 289.12 301.36 310.09 329.36 318.66 280.16 7 American Stock Exchange2 (Aug. 31, 1973 = 50) 207.96 229.10 264.38 315.60 332.55 330.65 328.77 334.49 348.68 361.52 353.72 306.34 Volume of trading (thousands of shares) 8 New York Stock Exchange 91,084 109,191 141,385 183,478 180,251 187,135 170,898 163,380 180,356 193,477 177,319 277,026 9 American Stock Exchange 6,107 8,355 11,846 14,962 15,678 14,420 11,655 12,813 12,857 13,604 12,381 18,173 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 22,470 28,390 36,840 35,740 38,080 39,820 38,890 38,420 40,250 41,640 44,170 38,250 Free credit balances at brokers4 11 Margin-account 1,755 2,715 4,880 4,470 4,730 4,660 4,355 3,680 4,095 4,240 4,270 8,415 12 Cash-account 10,215 12,840 19,000 17,325 17,370 17,285 16,985 15,405 15,930 16,195 15,895 18,455 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 5, 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 0 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 • January 1988 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1986 1987 AAccccoouunntt 11998844 11998855 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Savings and loan associations 1 Assets 903,488 948,781 961,894 964,096 963,316 935,516 936,877 939,722' 944,291' 952,729' 949,058' 949,239' 955,254 2 Mortgage-backed securities .. 97,303 121,606 122,682 123,257 129,340 128,856 129,279' 134,743' 141,030' 140,448' 140,711' 143,881 Cash and investment securities 124,801 126,712 138,213 141,510 142,700 132,733 135,884 138,727' 136,37c 138,293 138,040' 138,447' 137,280 4 Other 223,396 238,833 250,781 250,297 251,769 261,869 263,782 266,407' 274,834' 283,680' 285,395' 287,465' 292,682 5 Liabilities and net worth 903,488 948,781 961,894 964,096 963,316 935,516 936,877 939,722' 944,291' 952,729' 949,058' 949,239' 955,254 6 Savings capital 725,045 750,071 742,747 740,066 741,081 721,759 722,276 722,601 716,830 718,662 715,659 761,391 717,298 7 Borrowed money 125,666 138,798 152,567 156,920 159,742 153,373 152,173 158,175 165,881 171,277 175,073 174,153 178,553 8 FHLBB 64,207 73,888 75,295 75,626 80,194 75,552 75,671 76,469 77,857 78,583 79,188' 80,111' 79,546 9 Other 61,459 64,910 77,272 81,294 79,548 77,821 76,502 81,706 88,024 92,694 95,99C 95,295' 98,966 10 Other 17,944 19,045 23,255 24,078 20,071 19,773 21,823 18,958' 20,87C 22,631' 19,582' 20,68C 21,848 11 Net worth2 34,833 41,064 43,326 43,034 42,423 40,606 40,601 40,040' 40,741' 40.19C 38,635' 37,985' 37,534 FSLIC-insured federal savings banks 12 Assets 98,559 131,868 202,106 204,918 210,562 235,428 235,763 241,418' 246,277 253,007 264,099' 268,808' 272,081 13 Mortgages 57,429 72,355 110,826 112,117 113,638 136,770 136,489 138,882' 140,854' 144,581' 150,420' 152,880' 154,053 14 Mortgage-backed securities 9,949 15,676 27,516 28,324 29,766 33,570 34,634 36,088' 37.50C 39,371' 40,992' 42,712' 43,531 15 Other 10,971 11,723 18,697 19,266 19,034 15,769 16,060 16,605' 17,034' 17,200 17,936' 17,557' 17,790 16 Liabilities and net worth 98,559 131,868 202,106 204,918 210,562 235,428 235,763 241,418' 246,277 253,007 264,099' 268,808' 272,081 17 Savings capital 79,572 103,462 152,834 154,447 157,872 176,741 178,676 178,672' 180,637 182,802 189,998 193,890 194,853 18 Borrowed money 12,798 19,323 33,430 33,937 37,329 40,614 39,777 43,915 46,125 49,896 53,214 53,700 55,641 19 FHLBB 7,515 10,510 17,382 17,863 19,897 20,730 20,226 21,104 21,718 22,788 24,486 24,981 25,546 20 Other 5,283 8,813 16,048 16,074 17,432 19,884 19,551 22,815' 24,407 27,108 28,753 28,654' 30,095 71 Other 1,903 2,732 5,330 5,652 4,263 5,304 5,480 5,265 5,547 6,044 5,983 6,143 6,455 22 Net worth 4,286 6,351 10,511 10,883 11,098 12,774 13,151 13,564 13,978 14,272 14,884 15,146' 15,135 Savings banks 23 Assets 203,898 216,776 230,919 232,577 236,866 235,603 238,074 240,739 243,454 245,906 244,760 246,833 249,888 Loans 24 Mortgage 102,895 110,448 116,648 117,612 118,323 119,199 119,737 121,178 122,769 124,936 128,217 129,624 130,721 25 Other 2244,,995544 3300,,887766 3366,,113300 3366,,114499 3355,,116677 3366,,112222 3377,,220077 3388,,001122 3377,,113366 3377,,331133 3355,,220000 3355,,559911 3366,,779933 Securities 26 U.S. government 14,643 13,111 12,585 13,037 14,209 13,332 13,525 13,631 13,743 13,650 13,549 13,498 13,720 27 Mortgage-backed securities .. 19,215 19,481 23,437 24,051 25,836 26,220 26,893 27,463 28,700 28,739 27,785 28,252 28,913 28 State and local government .. 2,077 2,323 2,347 2,290 2,185 2,180 2,168 2,041 2,063 2,053 2,059 2,050 2,038 29 Corporate and other 23,747 21,199 21,156 20,749 20,459 19,795 19,770 19,598 19,768 19,956 18,803 18,821 18,573 30 Cash 4,954 6,225 5,195 5,052 6,894 5,239 5,143 5,703 5,308 5,176 4,939 4,806 4,823 31 Other assets 11,413 13,113 13,421 13,637 13,793 13,516 13,631 13,713 13,967 14,083 14,208 14,191 14,307 32 Liabilities 203,898 216,776 230,919 232,577 236,866 235,603 238,074 240,739 243,454 245,906 244,760 246,833 249,888 33 Deposits 180,616 185,972 190,334 190,858 192,194 191,441 192,559 193,693 193,347 194,742 193,274 194,549 195,895 34 Regular3 177,418 181,921 185,254 185,958 186,345 186,385 187,597 188,432 187,791 189,048 187,669 188,783 190,335 35 Ordinary savings 33,739 33,018 36,165 36,739 37,717 38,467 39,370 40,558 41,326 41,967 42,178 41,928 41,767 36 Time 104,732 103,311 101,125 101,240 100,809 100,604 100,922 100,896 100,308 100,607 100,604 102,603 105,133 37 Other 3,198 4,051 5,080 4,900 5,849 5,056 4,962 5,261 5,556 5,694 5,605 5,766 5,560 38 Other liabilities 12,504 17,414 23,319 24,254 25,274 24,710 25,663 27,003 29,105 30,436 30,515 31,655 32,467 39 General reserve accounts 10,510 12,823 16,896 17,146 18,105 18,236 18,486 18,830 19,423 19,603 19,549 19,718 20,471 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37—Continued 1986 1987 AAccccoouunntt 11998844 11998855 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Credit unions4 40 Total assets/liabilities and capital 93,036 118,010 143,662 145,653 147,726 149,383 149,751 153,253 154,549 156,086 160,644 41 Federal 63,205 77,861 93,257 94,638 95,483 96,801 96,753 98,799 99,751 100,153 104,150 42 State 29,831 40,149 50,405 51,015 52,243 52,586 52,998 54,454 54,798 55,933 56,494 43 Loans outstanding 62,561 73,513 83,388 84,635 86,137 85,984 85,651 86,101 87,089 87,765 90,912 44 Federal 42,337 47,933 53,434 53,877 55,304 55,313 54,912 55,118 55,740 55,952 58,432' 45 State 20,224 25,580 29,954 30,758 30,833 30,671 30,739 30,983 31,349 31,813 32,480 46 Savings 84,348 105,963 130,483 131,778 134,327 135,907 136,441 138,810 140,014 141,635 148,283 47 Federal 57,539 70.926 86,158 87,009 87,954 89,717 89,485 91,042 92,012 97,189 96,137 48 State 26,809 35,037 44,325 44,769 46,373 46,130 46,956 47,768 48,002 49,248 52,146 Life insurance companies 49 Assets 722,979 825,901 914,223' 925,475' 937,551 948,665 961,937 978,455 978,455 985,942 995,576 1,005,592 Securities 50 Government 63,899 75,230 81,344' 83,736' 84,640 84,923 88,003 90,337 89,711 89,554 87,279 88,199 51 United States5 42,204 51,700 55,402' 57,533' 59,033 59,596 62,724 65,661 64,621 64,201 61,405 62,461 52 State and local 8,713 9,708 11,776' 11,988' 11,659 11,245 11,315 10,860 11,068 11,208 11,485 11,277 53 Foreign6 12,982 13,822 14,166' 14,215' 13,948 14,082 13,964 13,816 14,022 14,145 14,389 14,461 n a. 54 Business 359,333 423,712 482,040' 490,091' 492,807 504,582 514,328 519,766 522,097 528,789 537,507 555,423 55 Bonds 295,998 346,216 393,286' 399,986' 401,943 408,788 415,004 417,933 420,474 425,788 432,095 448,146 56 Stocks 63,335 77,496 88,754' 90,105' 90,864 95,794 99,324 101,833 101,623 103,001 105,412 107,277 57 Mortgages 156,699 171,797 187,775' 190,243' 193,842 194,213 194,935 195,743 197,315 198,760 200,382 201,297 58 Real estate 25,767 28,822 31,464' 31,759' 31,615 31,718 32,003 31,834 32,011 32,149 32,357 32,699 59 Policy loans 54,505 54,369 54,249' 54,222' 54,055 53,832 53,806 53,652 53,572 53,468 53,378 53,338 60 Other assets 63,776 71,971 77,351' 75,424' 80,592 79,397 78,842 82,105 83,749 83,222 84,390 85,420 1. Holdings of stock of the Federal Home Loan Banks are in "other assets." Savings banks: Estimates by the National Council of Savings Institutions for all 2. Includes net undistributed income accrued by most associations. savings banks in the United States and for FDIC-insured savings banks that have 3. Excludes checking, club, and school accounts. converted to federal savings banks. 4. Data include all federally insured credit unions, both federal and state Credit unions: Estimates by the National Credit Union Administration for chartered, serving natural persons. federally chartered and federally insured state-chartered credit unions serving 5. Direct and guaranteed obligations. Excludes federal agency issues not natural persons. guaranteed, which are shown in the table under "Business" securities. Life insurance companies: Estimates of the American Council of Life Insurance 6. Issues of foreign governments and their subdivisions and bonds of the for all life insurance companies in the United States. Annual figures are annual- International Bank for Reconstruction and Development. statement asset values, with bonds carried on an amortized basis and stocks at NOTE: Savings and loan associations: Estimates by the FHLBB for all year-end market value. Adjustments for interest due and accrued and for associations in the United States based on annual benchmarks for non-FSLIC- differences between market and book values are not made on each item separately insured associations and the experience of FSLIC-insured associations. but are included, in total, in "other assets." FSLIC-insured federal savings banks: Estimates by the FHLBB for federal savings banks insured by the FSLIC and based on monthly reports of federally insured institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • January 1988 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal Fiscal Fiscal Type of account or operation year year year 1987 1985 1986 1987 May June July Aug. Sept. Oct. U.S. budget1 1 Receipts, total 734,057 769,091 854,143 47,691 82,945 64,223 60,213 92,410 62,354 2 On-budget 547,886 568,862 640,741 30,205 64,222 47,880 43,511 73,755 45,992 3 Off-budget 186,171 200,228 213,402 17,486 18,723 16,343 16,703 18,656 16,362 4 Outlays, total 946,316 990,231r 1,002,147 83,435 83,366 86,491 81,940 77,140 93,095 5 On-budget 769,509 806,733' 808,315 66,389 66,221 70,806 65,071 60,497 76,910 6 Off-budget 176,807 183,498 193,832 17,046 17,145 15,685 16,869 16,643 16,185 7 Surplus, or deficit (-), total -212,260 -221,140' -148,005 -35,744 -420 -22,268 -21,727 15,270 -30,741 8 On-budget -221,623 -237,871' -167,575 -36,184 -1,998 -22,926 -21,561 13,257 -30,918 9 Off-budget 9,363 16,731' 19,570 440 1,578 658 -166 2,013 176 Source of financing (total) 10 Borrowing from the public 197,269 236,187 150,070 9,655 -3,103 33,060 -8,060 27,282 11 Operating cash (decrease, or increase 13,367 -14,324 -5,052 22,638 -6,966 20,655 -3,219 -13,800 -1,879 12 Other2 1,630 -723 2,986 -1,478 -2,801 4,716 -8,115 6,590 5,338 MEMO 13 Treasury operating balance (level, end of period) 17,060 31,384 36,436 33,106 40,072 19,417 22,635 36,436 38,315 14 Federal Reserve Banks 4,174 7,514 9,120 6,383 13,774 5,365 3,764 9,120 8,898 15 Tax and loan accounts 12,886 23,870 27,316 26,723 26,298 14,052 18,872 27,316 29,416 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 Fiscal Fiscal SSoouurrccee oorr ttyyppee year year 1985 1986 1987 1987 1986 1987 H2 HI H2 HI Aug. Sept. Oct. RECEIPTS 1 AH sources 769,091 854,143 364,790 394,345 387,524 447,282 60,213 92,410 62,354 2 Individual income taxes, net 348,959 392,557 169,987 169,444 183,156 205,157 26,884 39,797 32,429 3 Withheld 314,803 322,463 155,725 153,919 164,071 156,760 25,008 24,569 30,122 4 Presidential Election Campaign Fund 36 33 6 31 4 30 1 0 1 5 Non withheld 105,994 142,957 22,295 78,981 27,733 112,421 3,108 17,127 3,563 6 Refunds 71,873 72,896 8,038 63,488 8,652 64,052 1,233 1,899 1,256 Corporation income taxes 7 Gross receipts 80,442 102,859 36,528 41,946 42,108 52,396 2,549 21,636 3,633 8 Refunds 17,298 18,933 7,751 9,557 8,230 10,881 983 1,129 1,778 9 Social insurance taxes and contributions, net 283,901 303,318 128,017 156,714 134,006 163,519 25,712 25,403 22,177 10 Employment taxes and contributions 255,062 273,185 116,276 139,706 122,246 146,696 21,447 2233,,778888 20,797 11 Self-employment taxes and contributions 11,840 13,987 985 10,581 1,338 12,020 0 1,590 0 12 Unemployment insurance 24,098 25,418 9,281 14,674 9,328 14,514 3,912 1,246 950 13 Other net receipts 4,742 4,715 2,458 2,333 2,429 2,310 354 368 430 14 Excise taxes 32,919 32,510 18,470 15,944 15,947 15,845 2,698 2,808 2,574 15 Customs deposits 13,327 15,032 6,354 6,369 7,282 7,129 1,370 1,278 1,317 16 Estate and gift taxes 6,958 7,493 3,323 3,487 3,649 3,818 587 587 608 17 Miscellaneous receipts 19,884 19,307 9,861 10,002 9,605 10,299 1,396 2,032 1,392 OUTLAYS 18 All types 990,231 1,002,147 487,201r 486,058r 505,448r 502,983' 81,940 77,140 93,095 19 National defense 273,375 282,016 134,675 135,367 138,544 142,886' 24,387 22,132 25,928 20 International affairs 14,152 11,761 8,367 5,384 8,876 4,374' 146 1,712 1,004 21 General science, space, and technology .... 8,976 9,188 4,727 12,519 4,594 4,324 823 860 1,118 22 Energy 4,735 4,176 3,305 2,484 2,735 2,335 341 -197 499 73 Natural resources and environment 13,639 13,225 7,553 6,245 7,141 6,175' 1,075 1,157 1,336 24 Agriculture 31,449 26,493 15,412 14,482 16,160 11,824 1,336 1,383 5,177 25 Commerce and housing credit 4,823 5,235 644 860 3,647 4,893 355 -547 1,625 76 Transportation 28,117 26,228 15,360 12,658 14,745 12,113 2,405 2,505 2,306 27 Community and regional development 7,233 5,334 3,901 3,169 3,494 3,108 464 -602 742 28 Education, training, employment, social services 30,585 28,721 14,481 14,712 15,287' 14,182 2,757 2,178 2,455 79 Health 35,935 39,968 17,237 17,872 18,795' 20,318 3,419 3,332 3,613 30 Social security and medicare 268,921 282,473 129,037 135,214 138,299r 142,864 22,929' 23,425' 26,320 31 Income security 119,796 123,499 59,457 60,786 60,628' 62,248 8,788 9,880 10,241 32 Veterans benefits and services 26,356 26,801 14,527 12,193 14,447' 12,264 1,121 2,168 3,645 33 Administration of justice 6,603 7,507 3,212 3,352 3,360 3,626 634 766 674 .34 General government 6,104 6,005 3,634 3,566 2,786 3,344' 598 379 -231 35 General-purpose fiscal assistance 6,431 1,621 3,391 2,179 2,886' 337' 62 428 241 36 Net interest 136,008 138,519 67,448 68,054 65,816' 70,110 13,064 10,284 11,431 37 Undistributed offsetting receipts6 -33,007 -36,622 -17,953 -17,193 - 17,376' -18,104' -2,764 -4,106 -2,688 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. SOURCES. U.S. Department of the Treasury, "Monthly Treasury Statement of 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous Receipts and Outlays of the U.S. Government," and the U.S. Office of Managereceipts. ment and Budget, 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 • January 1988 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1985 1986 1987 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding 1,779.0 1,827.5 1,950.3 1,991.1 2,063.6 2,129.5 2,218.9 2,250.7 2,313.1 2 Public debt securities 1,774.6 1,823.1 1,945.9 1,986.8 2,059.3 2,125.3 2,214.8 2,246.7 2,309.3 3 Held by public 1,460.5 1,506.6 1,597.1 1,634.3 1,684.9 1,742.4 1,811.7 1,839.3 1,871.1 4 Held by agencies 314.2 316.5 348.9 352.6 374.4 382.9 403.1 407.5 438.1 5 Agency securities 4.4 4.4 4.4 4.3 4.3 4.2 4.0 4.0 3.8 6 Held by public 3.3 3.3 3.3 3.2 3.2 3.2 3.0 2.9 2.8r 7 Held by agencies 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.0R 8 Debt subject to statutory limit 1,775.3 1,823.8 1,932.4 1,973.3 2,060.0 2,111.0 2,200.5 2,232.4 2,295.0 9 Public debt securities 1,774.0 1,822.5 1,931.1 1,972.0 2,058.7 2,109.7 2,199.3 2,231.1 2,293.7 10 Other debt1 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 11 MEMO: Statutory debt limit 1,823.8 1,823.8 2,078.7 2,078.7 2,078.7 2,111.0 2,300.0 2,300.0 2,320.0 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 Type and holder 1983 1984 1985 Q3 Q4 Q1 Q2 1 Total gross public debt 1,410.7 1,663.0 1,945.9 2,214.8 2,125.3 2,214.8 2,246.7 2,309.3 By type 2 Interest-bearing debt 1,400.9 1,660.6 1,943.4 2,212.0 2,122.7 2,212.0 2,244.0 2,306.7 3 Marketable 1,050.9 1,247.4 1,437.7 1,619.0 1,564.3 1,619.0 1,635.7 1,659.0 4 Bills 343.8 374.4 399.9 426.7 410.7 426.7 406.2 391.0 5 Notes 573.4 705.1 812.5 927.5 896.9 927.5 955.3 984.4 6 Bonds 133.7 167.9 211.1 249.8 241.7 249.8 259.3 268.6 7 Nonmarketable1 350.0 413.2 505.7 593.1 558.4 593.1 608.3 647.7 8 State and local government series 36.7 44.4 87.5 110.5 102.4 110.5 118.5 125.4 9 Foreign issues 10.4 9.1 7.5 4.7 4.1 4.7 4.9 5.1 10 Government 10.4 9.1 7.5 4.7 4.1 4.7 4.9 5.1 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 70.7 73.1 78.1 90.6 85.6 90.6 93.0 95.2 13 Government account series 231.9 286.2 332.2 386.9 365.9 386.9 391.4 421.6 14 Non-interest-bearing debt 9.8 2.3 2.5 2.8 2.6 2.8 2.7 2.6 By holder4 15 U.S. government agencies and trust funds 236.3 289.6 348.9 403.1 382.9 403.1 407.5 438.1 16 Federal Reserve Banks 151.9 160.9 181.3 211.3 190.8 211.3 n.a. 212.3 17 Private investors 1,022.6 1,212.5 1,417.2 1,602.0 1,553.3 1,602.0 1,641.4 1,657.7 18 Commercial banks 188.8 183.4 192.2 232.1 212.5 232.1 232.0 237.1 19 Money market funds 22.8 25.9 25.1 28.6 24.9 28.6 18.8 20.6 20 Insurance companies 56.7 76.4 95.8 106.9 100.9 106.9 n.a. n.a. 21 Other companies 39.7 50.1 59.0 68.8 65.7 68.8 72.1 n.a. 22 State and local Treasurys 155.1 179.4 n.a. n.a. n.a. n.a. Individuals 23 Savings bonds 71.5 74.5 79.8 92.3 87.1 92.3 94.7 96.8 24 Other securities 61.9 69.3 75.0 65.6 68.7 65.6 63.3 63.4 25 Foreign and international 166.3 192.9 212.5 251.5 253.2 251.5 260.4 269.9 26 Other miscellaneous investors 259.8 360.6 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 11998844 11998855 11998866 Aug. Sept.' Oct. Sept. 23 Sept. 3C Oct. 7 Oct. 14 Oct. 21 Oct. 28 Immediate delivery 1 U.S. Treasury securities 52,778 75,331 95,447 104,958' 108,185 138,937 88,093' 109,455 113,184 114,587 172,975 155,441 By maturity 2 Bills 26,035 32,900 34,249 35,761 35,683 41,000 25,521 38,150 33,760 33,508 51,411 45,443 3 Other within 1 year 1,305 1,811 2,115 2,937 2,992 4,405 2,809 3,660 3,439 3,219 4,680 5,378 4 1-5 years 11,733 18,361 24,667 28,363 27,377 41,107 20,543' 31,013 31,329 33,932 50,106 48,013 5 5-10 years 7,606 12,703 20,455 20,400' 25,973 34,061 23,663 22,720 29,536 29,127 42,385 36,646 6 Over 10 years 6,099 9,556 13,961 17,497 16,160 18,365 15,559 13,912 15,120 14,802 24,393 19,961 By type of customer 7 U.S. government securities dealers 2,919 3,336 3,646 3,074 2,478 2,688 1,905 3,233 2,784 2,502 2,765 2,581 8 U.S. government securities brokers 25,580 36,222 49,368 57,430' 63,814 81,144 53,427 62,887 67,820 69,745 101,567 90,832 9 All others3 24,278 35,773 42,218 43,778 41,240 54,085 32,761' 43,334 42,579 42,339 68,642 62,029 10 Federal agency securities — 7,846 11,640 16,746 16,079 15,797 18,586 15,312' 13,229 15,839 15,095 21,460 20,205 11 Certificates of deposit 4,947 4,016 4,355 3,475 3,234 4,927 2,833 3,163 4,841 4,879 4,922 5,142 12 Bankers acceptances 3,243 3,242 3,272 2,765 2,799 3,362 2,426 2,773 3,565 3,066 3,466 3,320 13 Commercial paper 10,018 12,717 16,660 15,606 16,155 19,394 15,711 16,725 20,359 17,441 20,631 18,752 Futures contracts 14 Treasury bills 6,947 5,561 3,311 2,786 2,748 4,056 1,889 2,926 1,756 2,575 7,183 4,072 15 Treasury coupons 4,533 6,085 7,175 8,953' 11,981 11,462 11,651' 9,647 9,413 11,834 13,892 11,876 16 Federal agency securities — 264 252 16 10 1 8 0 0 0 0 2 30 Forward transactions 17 U.S. Treasury securities 1,364 1,283 1,876 1,697 788 2,653 503' 1,369 2,502 1,229 4,475 2,084 18 Federal agency securities — 2,843 3,857 7,830 8,448' 8,292 7,676 8,437 6,146 5,877 8,602 9,783 7,054 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 • January 1988 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1987 1987 IItteemm 11998844 11998855 11998866 Aug. Sept/ Oct. Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Positions Net immediate2 1 U.S. Treasury securities 5,429 7,391 13,055 -10,684' -23,337 -15,435 -28,447' -20,140 -19,751 -18,222 -7,332 2 Bills 5,500 10,075 12,723 5,586 2,404 7,257 -423 3,915 4,107 7,151 12,428 3 Other within 1 year 63 1,050 3,699 461 -760 -620 -825 -796 -819 -679 -349 4 1-5 years 2,159 5,154 9,297 -6,009 -10,137 -4,931 -10,856' -8,748 -8,695 -6,776 965 5 5-10 years -1,119 -6,202 -9,504 -5,718' -8,100 -8,724 -9,043' -7,571 -7,293 - 8,887 -10,335 6 Over 10 years -1,174 -2,686 -3,161 -5,004 -6,745 -8,418 -7,300 -6,941 -7,050 -9,030 -10,041 7 Federal agency securities 15,294 22,860 33,066 33,311 33,679 34,002 33,326 32,164 34,849 36,157 34,242 8 Certificates of deposit 7,369 9,192 10,533 7,862 7,968 7,537 7,859 7,618 7,466 7,223 7,714 9 Bankers acceptances 3,874 4,586 5,535 3,444 3,016 2,879 2,799 3,243 2,760 2,282 2,950 10 Commercial paper 3,788 5,570 8,087 5,800 6,388 7,426 5,821 66,,117700 66,,115544 77,,331177 99,,229999 Futures positions 11 Treasury bills -4,525 -7,322 -18,062 -2,013 -200 2,489 222 1,527 2,319 3,825 2,320 12 Treasury coupons 1,794 4,465 3,489 6,275' 7,295 8,812 6,085' 7,481 8,8% 10,051 8,815 13 Federal agency securities 233 -722 -153 -95 -96 -100 -96 -96 -96 -104 -105 Forward positions 14 U.S. Treasury securities -1,643 -911 -2,304 -1,873 -191 228 24(K 933 -220 -1,580 1,079 15 Federal agency securities -9,205 -9,420 -11,909 -22,436 -21,797 -22,774 -21,092 -22,471 -23,343 -23,511 -22,871 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 44,078 68,035 98,954 128,059 139,783 131,194 144,143 135,485 131,605 133,620 126,850 17 Term 68,357 80,509 108,693 160,684 164,707 164,441 154,291 116611,,007755 116600,,550066 116633,,882299 117711,,664422 Repurchase agreements 18 Overnight and continuing 75,717 101,410 141,735 174,219 182,494 177,013 179,279 178,623 175,346 181,217 175,048 19 Term 57,047 70,076 102,640 127,429 125,741 123,372 120,288 121,016 117,922 122,567 131,033 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 Apr. May June July Aug. Sept. 1 Federal and federally sponsored agencies 271,220 293,905 307,361 306,909 308,547 310,854 313,859 316,940 2 Federal agencies 35,145 36,390 36,958 36,531 36,587 36,968 36,963 37,845 3 Defense Department1 142 71 33 23 21 20 18 16 4 Export-Import Bank2,3 15,882 15,678 14,211 13,813 13,813 13,416 13,416 13,416 5 Federal Housing Administration 133 115 138 165 168 169 175 174 n a. 6 Government National Mortgage Association participation certificates 2,165 2,165 22,,116655 11,,996655 11,,996655 11,,996655 11,,996655 11,,996655 7 Postal Service6 1,337 1,940 3,104 3,104 3,104 3,718 3,718 4,603 8 Tennessee Valley Authority 15,435 16,347 17,222 17,376 17,431 17,595 17,586 17,586 9 United States Railway Association 51 74 85 85 85 85 85 85 10 Federally sponsored agencies7 237,012 257,515 270,553 270,378 271,960 273,886 276,896 279,095 11 Federal Home Loan Banks 65,085 74,447 88,752 94,606 95,931 99,680 100,976 102,422 104,380 12 Federal Home Loan Mortgage Corporation 10,270 11,926 13,589 14,850 14,637 12,097 12,309 14,150 n.a. 13 Federal National Mortgage Association 83,720 93,896 93,563 89,741 90,514 91,039 91,637 91,568 92,618 14 Farm Credit Banks 72,192 68,851 62,478 57,251 56,648 56,648 55,715 55,408 55,276 15 Student Loan Marketing Association8 5,745 8,395 12,171 13,930 14,230 14,422 16,259 15,547 16,389 MEMO 16 Federal Financing Bank debt9 145,217 153,373 157,510 157,177 157,331 157,506 157,302 158,117 n. a. Lending to federal and federally sponsored 17 Export-Import Bank 15,852 15,670 14,205 13,807 13,807 13,410 13,410 13,410 18 Postal Service6 1,087 1,690 2,854 2,854 2,854 3,468 3,468 4,353 19 Student Loan Marketing Association 5,000 5,000 4,970 4,970 4,970 4,970 4,970 4,970 20 Tennessee Valley Authority 13,710 14,622 15,797 15,996 16,051 16,215 16,206 16,206 n.a. 21 United States Railway Association6 51 74 85 85 85 85 85 85 Other Lending10 22 Farmers Home Administration 58,971 64,234 65,374 65,254 65,304 65,199 6655,,004499 6655,,006699 23 Rural Electrification Administration 20,693 20,654 21,680 21,487 21,525 21,539 21,529 21,503 24 Other 29,853 31,429 32,545 32,724 32,735 32,620 32,585 32,521 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 • January 1988 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1987 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept.' Oct. 1 All issues, new and refunding1 106,641 214,189 147,011 14,591 6,708 6,037 10,718 6,967 6,500 5,510 5,905 Type of issue 2 Genera] obligation 26,485 52,622 46,346 3,853 3,363 2,872 3,329 2,238 1,975 1,755 1,213 3 Revenue 80,156 161,567 100,664 10,738 3,345 3,165 7,389 4,729 4,525 3,755 4,691 Type of issuer 4 State 9,129 13,004 14,474 1,217 419 1,002 1,138 834 398 535 385 5 Special district and statutory authority2 63,550 134,363 89,997 10,004 4,665 3,019 6,453 3,951 4,508 3,712 4,502 6 Municipalities, counties, townships 33,962 78,754 42,541 3,370 1,624 2,017 3,127 2,182 1,594 1,263 1,017 7 Issues for new capital, total 94,050 156,050 83,490 4,480 3,117 3,848 7,552 4,478 5,084 4,340 3,981 Use of proceeds 8 Education 7,553 16,658 16,948 659 774 789 1,554 773 869 653 454 9 Transportation 7,552 12,070 11,666 111 98 194 705 647 226 311 137 10 Utilities and conservation 17,844 26,852 35,383 444 571 561 1,410 835 462 603 662 11 Social welfare 29,928 63,181 17,332 991 468 454 1,082 465 903 647 945 12 Industrial aid 15,415 12,892 5,594 368 33 161 401 457 1,591 300 532 13 Other purposes 15,758 24,398 47,433 1,907 1,295 1,689 2,399 1,301 1,033 1,826 1,251 1. Par amounts of long-term issues based on date of sale. SOURCES. Securities Data Company beginning 1986. Public Securities Associ- 2. Includes school districts beginning April 1986. ation for earlier data. This new data source began with the November BULLETIN. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1987 Type of issue or issuer, or use 1985 1986 Feb. Apr. May July Aug/ Sept. 1 All issues 155,741r 239,015 423,726 27,048 37,953 23,735 19,969 28,445 27,394' 21,869 29,069 2 Bonds2 133,113' 203,500 355,293 23,281 28,143 19,518 13,431 22,093 22,054' 17,666 23,449 Type of offering 3 Public, domestic 74,175'' 119,559 231,936 20,274 23,388 17,634 11,394 20,564 19,028' 14,833' 21,800 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 3,007 4,755 1,884 2,037 1,530 3,026 2,833 1,649 Industry group 6 Manufacturing 32,804 63,973 91,548 4,253 7,180 2,734 5,035 4,104 5,552 3,337 3,506 7 Commercial and miscellaneous 14,792 17,066 40,124 1,884 4,261 1,683 754 2,061 1,037 1,281 1,479 8 Transportation 4,784 6,020 9,971 176 521 168 21 0 343 296 25 9 Public utility 10,996 13,649 31,426 2,715 794 1,370 572 2,091 1,654 1,533 1,652 10 Communication 3,400 10,832 16,659 410 710 175 138 205 119 856 930 11 Real estate and financial 66,336' 91,958 165,564 13,844 14,678 13,389 6,912 13,632 13,350 10,358 15,857 12 Stocks3 22,628 35,515 68,433 3,767 9,810 4,217 6,538 6,352 5,340 4,203' 5,620 Type 13 Preferred 4,118 6,505 11,514 905 2,257 526 1,170 1,202 1,157 906 1,078 14 Common 18,510 29,010 50,316 2,862 7,553 3,691 5,368 5,150 4,183 3,297 4,542 15 Private placement3 6,603 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 4,054 5,700 15,027 814 2,016 653 1,066 1,438 1,046 370 948 17 Commercial and miscellaneous 6,277 9,149 10,617 437 2,366 2,203 1,516 1,353 879 996 681 18 Transportation 589 1,544 2,427 191 299 230 3 492 379 0 11 19 Public utility 1,624 1,966 4,020 509 907 297 374 329 472 85 522 20 Communication 419 978 1,825 9 57 18 200 199 294 277 75 21 Real estate and financial 9,665 16,178 34,517 1,807 4,165 816 3,379 2,541 2,270 2,475 3,383 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 1987 IItteemm 11998855 11998866 Feb. Mar. Apr. May June July Aug.' Sept. INVESTMENT COMPANIES1 1 Sales of own shares2 222,670 411,751' 36,307 40,378 42,857 28,295 28,637 27,970 26,455 24,834 2 Redemptions of own shares3 132,440 239,394 21,576 24,730 37,448 23,453 23,693 22,807 22,561 28,323 3 Net sales 90,230 172,357' 14,731 15,648 5,409 4,842 4,944 5,763 3,894 -3,489 4 Assets4 251,695 424,156 490,643 506,752 502,487 500,634 516,866 531,022 539,171 521,007 20,607 30,716 35,279 37,090 43,009 39,158 41,467 41,587 40,802 42,371 6 Other 231,088 393,440 455,364 469,662 459,478 461,476 475,099 489,435 498,369 478,636 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 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1 Corporate profits with inventory valuation and capital consumption adjustment 266.9 277.6 284.4 277.8 288.0 282.3 286.4 281.1 294.0 296.8 313.7 2 Profits before tax 239.9 224.8 231.9 233.5 218.9 224.4 236.3 247.9 257.0 268.7 282.1 3 Profits tax liability 93.9 96.7 105.0 99.1 98.1 102.1 106.1 113.9 128.0 134.2 140.6 4 Profits after tax 146.1 128.1 126.8 134.4 120.9 122.3 130.2 134.0 129.0 134.5 141.5 5 Dividends 79.0 81.3 86.8 81.7 84.3 86.6 87.7 88.6 90.3 92.4 95.2 6 Undistributed profits 67.0 46.8 40.0 52.7 36.6 35.7 42.5 45.4 38.7 42.1 46.3 7 Inventory valuation -5.8 -.8 6.5 -9.8 17.8 11.3 6.0 -8.9 -11.3 -20.0 -16.1 8 Capital consumption adjustment 32.8 53.5 46.0 54.2 51.3 46.7 44.0 42.1 48.2 48.0 47.7 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 • January 1988 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 • Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1986 1987 IInndduussttrryy 11998855 11998866 1199887711 Ql Q2 Q3 Q4 Ql Q2 Q31 Q41 1 Total nonfarm business 387.13 379.47 389.07 380.04 376.21 375.50 386.09 374.23 377.65 398.04 406.37 Manufacturing 2 Durable goods industries 73.27 69.14 71.23 68.71 68.56 69.42 69.87 70.47 68.76 73.24 72.44 3 Nondurable goods industries 80.21 73.56 75.17 76.39 73.62 70.01 74.20 70.18 72.03 77.23 81.22 Nonmanufacturing 4 Mining 15.88 11.22 10.75 13.13 11.29 10.14 10.31 10.31 11.02 11.06 10.60 Transportation 5 Railroad 7.08 6.66 6.29 6.50 6.70 7.02 6.41 5.55 5.77 6.79 7.05 6 Air 4.79 6.26 6.70 6.53 5.87 5.78 6.84 7.46 5.72 6.62 7.02 7 Other 6.15 5.89 6.52 5.47 5.83 6.01 6.25 5.97 6.19 7.05 6.88 Public utilities 8 Electric 36.11 33.91 31.96 34.25 33.77 33.81 33.78 30.85 31.13 32.93 32.95 9 Gas and other 12.71 12.47 12.56 12.92 12.66 12.00 12.34 12.75 12.35 12.66 12.49 10 Commercial and other2 150.93 160.38 167.89 156.14 157.91 161.31 166.08 160.70 164.69 170.46 175.70 •Trade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade: finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1986 1987 AAccccoouunntt 11998833 11998844 11998855 Ql Q2 Q3 Q4 Ql Q2 Q3 ASSETS Accounts receivable, gross 1 Consumer 83.3 89.9 113.4 117.2 125.1 137.1 136.5 133.9 rn.o' 144.4 7 Business 113.4 137.8 158.3 165.9 167.7 161.0 174.8 182.8 189.0 188.7 Real estate 20.5 23.8 28.9 29.9 30.8 32.1 33.7 35.1 36.9r 38.3 4 Total 217.3 251.5 300.6 312.9 323.6 330.2 345.0 351.8 363.9' 371.5 Less: Reserves for unearned income 30.3 33.8 39.2 40.0 40.7 42.4 41.4 40.4 41.2 42.8 6 Reserves for losses 3.7 4.2 4.9 5.0 5.1 5.4 5.8 5.9 6.2 6.6 7 Accounts receivable, net 183.2 213.5 256.5 268.0 277.8 282.4 297.8 305.5 316.5' 322.1 8 All other 34.4 35.7 45.3 48.8 48.8 59.9 57.9 59.0 si.r 65.0 9 Total assets 217.6 249.2 301.9 316.8 326.6 342.3 355.6 364.5 374.2R 387.1 LIABILITIES 10 Bank loans 18.3 20.0 20.6 19.0 19.2 20.2 22.2 17.3 17.2 16.2 11 Commercial paper 60.5 73.1 99.2 104.3 108.4 112.8 117.8 119.1 120.4' 123.5 Debt 12 Other short-term 11.1 12.9 12.5 13.4 15.4 16.0 17.2 21.6 24.4r 26.9 13 Long-term 67.7 77.2 93.1 101.0 105.2 109.8 115.6 118.4 121.5' 128.0 14 All other liabilities 31.2 34.5 40.9 42.3 40.1 44.1 43.4 46.3 48.3' 48.7 15 Capital, surplus, and undivided profits 28.9 31.5 35.7 36.7 38.4 39.4 39.4 41.8 42.3' 43.8 16 Total liabilities and capital 217.6 249.2 301.9 316.8 326.6 342.3 355.6 364.5 374.2' 387.1 NOTE. Components may not add to totals because of rounding. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts re- AAAccccccooouuunnntttsss ceivable Extensions Repayments rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuu SSS ttt eee sssttt ppp aaa ttt nnn ... ddd 333 iii 000 nnn ggg 1987 1987 1987 111999888777111 July Aug. Sept. July Aug. Sept. July Aug. Sept. 1 Total 188,711 3,403 1,400 1,754 29,883 29,862 30,294 26,480 28,282 28,540 Retail financing of installment sales 2 Automotive (commercial vehicles) 32,181 879 1,206 -16 1,318 1,351 1,365 438 145 1,382 3 Business, industrial, and farm equipment 24,070 502 65 529 1,865 1,644 1,688 1,363 1,579 1,158 Wholesale financing 4 Automotive 21,901 -173 -1,572 -1,029 10,704 11,335 10,810 10,877 12,907 11,839 5 Equipment 5,517 94 73 -1 624 601 710 530 528 711 6 All other 8,782 127 152 223 3,186 3,251 3,251 3,059 3,100 3,028 Leasing 7 Automotive 21,556 410 560 561 1,357 1,086 1,340 947 526 779 8 Equipment 40,682 332 280 422 1,128 1,403 952 796 1,123 530 9 Loans on commercial accounts receivable and factored commercial accounts receivable 18,110 853 331 248 8,344 7,712 8,488 7,490 7,382 8,240 10 All other business credit 15,912 379 306 817 1,358 1,298 1,690 979 992 873 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 • January 1988 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1987 IItteemm 11998844 11998855 11998866 Apr. May June July Aug. Sept. Oct. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms 1 Purchase price (thousands of dollars) 96.8 104.1 118.1 136.9 132.9 131.8 134.6 141.2 140.2 143.9 2 Amount of loan (thousands of dollars) 73.7 77.4 86.2 100.9 99.0 97.5 99.4 102.6 100.8 105.3 3 Loan/price ratio (percent) 78.7 77.1 75.2 75.2 76.1 75.9 75.4 75.0 74.6 75.1 4 Maturity (years) 27.8 26.9 26.6 27.1 28.0 28.0 27.9 27.8 27.3 28.4 5 Fees and charges (percent of loan amount)2 2.64 2.53 2.48 2.23 2.26 2.40 2.42 2.19 2.08 2.36 6 Contract rate (percent per annum) 11.87 11.12 9.82 8.84 8.99 9.05 9.01 9.01 9.03 8.87 Yield (percent per year) 1 FHLBB series3 12.37 11.58 10.25 9.21 9.37 9.45 9.41 9.38 9.37 9.26 8 HUD series4 13.80 12.28 10.07 10.11 10.44 10.29 10.22 10.37 lO^' n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 13.81 12.24 9.91 10.02 10.61 10.33 10.38 10.55 10.71r n.a. 10 GNMA securities6 13.13 11.61 9.30 8.85 9.40 9.50 9.59 9.77 10.40 10.53 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 83,339 94,574 98,048 94,404 94,064 94,064 94,154 94,600 94,884 95,097 12 FHA/VA-insured 35,148 34,244 29,683 21,765 21,999 21,892 21,730 21,555 21,620 21,481 13 Conventional 48,191 60,331 68,365 72,639 72,065 72,173 72,424 73,045 73,264 73,617 Mortgage transactions (during period) 14 Purchases 16,721 21,510 30,826 2,118 1,718 1,690 1,569 1,613 1,743 1,278 Mortgage commitments1 15 Contracted (during period) 21,007 20,155 32,987 3,208 1,726 1,745 2,373 2,276 1,842 1,566 16 Outstanding (end of period) 6,384 3,402 3,386 4,421 4,410 4,448 5,071 5,690 5,627 5,046 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 9,283 12,399 13,517 12,492 12,442 12,598 12,834 12,924r 4 A 18 FHA/VA 910 841 746 708 688 382 684 679" T T| 19 Conventional 8,373 11,559 12,771 11,784 11,754 11,903 12,150 12,245' 1 Mortgage transactions (during period) 20 Purchases 21,886 44,012 103,474 9,777 7,995 7,864 7,252 5,031r n.a. n.a. 21 Sales 18,506 38,905 100,236 9,848 7,767 7,447 6,831 4,723r 1 1 Mortgage commitments9 22 Contracted (during period) 32,603 48,989 110,855 8,408 7,182 7,330 5,611 4,506r t 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 1. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Based on transactions on first day of subsequent month. Large securities swap programs, while the corresponding data for FNMA exclude swap monthly movements in average yields may reflect market adjustments to changes activity. in maximum permissable contract rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A39 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1986 1987 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998844 11998855 11998866 Q3 Q4 Ql Q2' Q3' 1 All holders 2,035,238 2,269,173 2,566,734' 2,471,574 2,566,734r 2,662,331' 2,754,471 2,827,622 2 1- to 4-family 1,318,545 1,467,409 1,666,421' 1,607,799 1,666,421' 1,712,109' 1,778,306 1,830,432 3 Multifamily 185,604 214,045 246,984' 237,661 246,984' 257,286' 266,383 272,757 4 Commercial 419,444 482,029 556,569' 526,535 556,569' 599,384' 617,627 633,167 5 111,645 105,690 96,760r 99,579 96,760' 93,552' 92,155 91,266 6 Selected financial institutions 1,269,702 1,390,394 1,507,289' 1,464,213 1,507,289' 1,560,403' 1,607,771 1,646,764 7 Commercial banks2 379,498 429,196 502,534 474,658 502,534 519,474' 544,381 563,553 8 1- to 4-family 196,163 213,434 235,814 228,593 235,814 243,518' 255,672 264,983 9 Multifamily 20,264 23,373 31,173 28,623 31,173 29,515' 30,496 30,995 10 Commercial 152,894 181,032 222,799 204,996 222,799 233,234' 244,385 253,261 11 Farm 10,177 11,357 12,748 12,446 12,748 13,207' 13,828 14,314 12 Savings institutions3 709,718 760,499 777,312 772,175 777,312 810,099' 826,110 840,251 13 1- to 4-family 528,791 554,301 558,412 557,938 558,412 557,234' 569,594 580,605 14 Multifamily 75,567 89,739 97,059 94,227 97,059 103,791' 105,871 107,629 15 Commercial 104,896 115,771 121,236 119,406 121,236 148,274' 149,842 151,213 16 Farm 464 688 605 604 605 800' 803 804 17 Life insurance companies 156,699 171,797 193,842' 185,269 193,842' 195,743' 200,382 204,632 18 1- to 4-family 14,120 12,381 12,827r 12,927 12,827' 12,903' 12,745 12,745 19 Multifamily 18,938 19,894 20,952' 20,709 20,952' 20,934' 21,663 21,863 20 Commercial 111,175 127,670 149,111' 140,213 149,111' 151,420' 155,611 159,811 21 Farm 12,466 11,852 10,952r 11,420 10,952' 10,486' 10,363 10,213 22 Finance companies 23,787 28,902 33,601 32,111 33,601 35,087 36,898 38,328 23 Federal and related agencies 158,993 166,928 203,800 159,505 203,800 199,509 196,514 191,561 24 Government National Mortgage Association 2,301 1,473 889 887 889 687 667 654 25 1- to 4-family 585 539 47 48 47 46 45 44 26 Multifamily 1,716 934 842 839 842 641 622 610 27 Farmers Home Administration 1,276 733 48,421 457 48,421 48,203 48,085 42,978 28 1- to 4-family 213 183 21,625 132 21,625 21,390 21,157 18,111 29 Multifamily 119 113 7,608 57 7,608 7,710 7,808 7,903 30 Commercial 497 159 8,446 115 8,446 8,463 8,553 6,592 31 Farm 447 278 10,742 153 10,742 10,640 10,567 10,372 3? Federal Housing and Veterans Administration 4,816 4,920 5,047 4,966 5,047 5,177 5,268 5,175 33 1- to 4-family 2,048 2,254 2,386 2,331 2,386 2,447 2,531 2,435 34 Multifamily 2,768 2,666 2,661 2,635 2,661 2,730 2,737 2,740 35 Federal National Mortgage Association 87,940 98,282 97,895 97,717 97,895 95,140 94,064 94,884 36 1- to 4-family 82,175 91,966 90,718 90,508 90,718 88,106 87,013 87,901 37 Multifamily 5,765 6,316 7,177 7,209 7,177 7,034 7,051 6,983 38 Federal Land Banks 52,261 47,498 39,984 42,119 39,984 37,362 35,833 34,930 39 1- to 4-family 3,074 2,798 2,353 2,478 2,353 2,198 2,108 2,055 40 Farm 49,187 44,700 37,631 39,641 37,631 35,164 33,725 32,875 41 Federal Home Loan Mortgage Corporation 10,399 14,022 11,564 13,359 11,564 12,940 12,597 12,940 42 1- to 4-family 9,654 11,881 10,010 11,127 10,010 11,774 11,172 11,570 43 Multifamily 745 2,141 1,554 2,232 1,554 1,166 1,425 1,370 44 Mortgage pools or trusts6 332,057 415,042 529,763 522,721 529,763 571,705 612,340 641,239 45 Government National Mortgage Association 179,981 212,145 260,869 241,230 260,869 277,386 290,444 302,016 46 1- to 4-family 175,589 207,198 255,132 235,664 255,132 271,065 283,357 294,647 47 Multifamily 4,392 4,947 5,737 5,566 5,737 6,321 7,087 7,369 48 Federal Home Loan Mortgage Corporation 70,822 100,387 171,372 146,871 171,372 186,295 200,284 208,350 49 1- to 4-family 70,253 99,515 166,667 143,734 166,667 180,602 194,238 201,786 50 Multifamily 569 872 4,705 3,137 4,705 5,693 6,046 6,564 51 Federal National Mortgage Association 36,215 54,987 97,174 86,359 97,174 107,673 121,270 130,540 52 1- to 4-family 35,965 54,036 95,791 85,171 95,791 106,068 119,617 128,770 53 Multifamily 250 951 1,383 1,188 1,383 1,605 1,653 1,770 54 Farmers Home Administration 45,039 47,523 348 48,261 348 351 342 333 55 1- to 4-family 21,813 22,186 142 21,782 142 154 149 144 56 Multifamily 5,841 6,675 0 7,353 0 0 0 0 57 Commercial 7,559 8,190 132 8,409 132 127 126 124 58 Farm 9,826 10,472 74 10,717 74 70 67 65 59 Individuals and others7 274,486 2%, 809 325,882 325,135 325,882 330,714 337,846 348,058 60 1- to 4-family 154,315 165,835 180,896 183,255 180,896 179,517 182,010 186,308 61 Multifamily 48,670 55,424 66,133 63,886 66,133 70,146 73,924 76,961 67 Commercial 42,423 49,207 54,845 53,396 54,845 57,866 59,110 62,166 63 Farm 29,078 26,343 24,008 24,598 24,008 23,185 22,802 22,623 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 • January 1988 1.55 CONSUMER INSTALLMENT CREDIT1-4 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1987 Jan. Feb. Mar. Apr. May June July Aug/ Sept. Amounts outstanding (end of period) 1 Total 522,805 577,784 578,578 579,591 579,913 583,595 583,276 587,821 591,175 596,182 602,243 By major holder 2 Commercial banks 242,084 261,604 261,694 262,105 261,933 263,433 263,463 264,396 265,085 265,893 269,132 3 Finance companies 113,070 136,494 135,802 136,009 136,050 137,091 136,398 138,038 138,745 140,689 142,648 4 Credit unions 72,119 77,857 78,284 78,492 78,569 79,255 79,476 80,585 81,492 82,486 83,084 5 Retailers3 38,864 40,586 40,617 40,644 40,469 40,467 40,318 40,287 40,364 40,391 40,482 6 Savings institutions 52,433 58,037 58,906 59,031 59,488 59,826 60,045 60,983 61,910 63,080 63,193 7 Gasoline companies 4,235 3,205 3,276 3,311 3,405 3,522 3,576 3,532 3,580 3,643 3,703 By major type of credit 8 Automobile 208,057 245,055 245,472 246,064 246,290 247,663 247,578 250,130 250,980 254,013 257,255 y Commercial banks 93,003 100,709 101,389 101,688 101,528 101,781 102,189 102,810 102,829 103,382 104,593 10 Credit unions 35,635 39,029 39,243 39,347 39,386 39,730 39,841 40,396 40,851 41,349 41,649 11 Finance companies 70,091 93,274 92,617 92,780 93,032 93,738 93,089 94,270 94,455 96,193 97,900 12 Savings institutions 9,328 12,043 12,223 12,249 12,344 12,414 12,459 12,654 12,846 13,089 13,113 13 Revolving 122,021 134,938 134,916 135,663 135,166 136,706 136,869 137,401 138,741 139,837 141,861 14 Commercial banks 75,866 85,652 85,395 86,053 85,567 86,929 87,133 87,590 88,685 89,535 91,401 15 Retailers 34,695 36,240 36,277 36,308 36,141 36,139 36,009 35,971 36,021 36,022 36,087 16 Gasoline companies 4,235 3,205 3,276 3,311 3,405 3,522 3,576 3,532 3,580 3,643 3,703 17 Savings institutions 5,705 7,713 7,829 7,845 7,906 7,951 7,980 8,105 8,228 8,383 8,398 18 Credit unions 1,520 2,128 2,139 2,145 2,147 2,166 2,172 2,202 2,227 2,254 2,271 19 Mobile home 25,488 25,710 25,852 25,789 25,614 25,626 25,542 25,685 25,860 25,695 25,600 20 Commercial banks 9,538 8,812 8,787 8,739 8,725 8,698 8,615 8,609 8,626 8,518 8,450 21 Finance companies 9,391 9,028 9,077 9,045 8,823 8,816 8,785 8,807 8,839 8,623 8,580 22 Savings institutions 6,559 7,870 7,988 8,005 8,067 8,112 8,142 8,269 8,395 8,554 8,569 23 Other 167,239 172,081 172,338 172,076 172,844 173,600 173,287 174,605 175,594 176,637 177,527 24 Commercial banks 63,677 66,431 66,122 65,625 66,113 66,026 65,527 65,387 64,945 64,458 64,687 25 Finance companies 33,588 34,192 34,108 34,183 34,196 34,537 34,524 34,962 35,452 35,874 36,168 26 Credit unions 34,964 36,700 36,901 36,999 37,036 37,359 37,463 37,986 38,413 38,882 39,164 27 Retailers 4,169 4,346 4,340 4,336 4,327 4,328 4,310 4,315 4,343 4,369 4,395 28 Savings institutions 30,841 30,412 30,867 30,932 31,172 31,349 31,463 31,955 32,441 33,054 33,113 Net change (during period) 29 Total 76,622 54,979 794 1,013 322 3,682 -319 4,545 3,354 5,007 6,061 By major holder 30 Commercial banks 32,926 19,520 90 411 -172 1,500 30 933 689 808 3,239 31 Finance companies 23,566 23,424 -692 207 41 1,041 -693 1,640 707 1,944 1,959 32 Credit unions 6,493 5,738 427 208 77 686 221 1,109 907 994 598 33 Retailers3 1,660 1,722 31 27 -175 -2 -149 -31 77 27 91 34 Savings institutions 12,103 5,604 869 125 457 338 219 938 927 1,170 113 35 Gasoline companies -126 -1,030 71 35 94 117 54 -44 48 63 60 By major type of credit 36 Automobile 35,705 36,998 417 592 226 1,373 -85 2,552 850 3,033 3,242 37 Commercial banks 9,103 7,706 680 299 -160 253 408 621 19 553 1,211 38 Credit unions 5,330 3,394 214 104 39 344 111 555 455 498 300 39 Finance companies 17,840 23,183 -657 163 252 706 -649 1,181 185 1,738 1,707 40 Savings institutions 3,432 2,715 180 26 95 70 45 195 192 243 24 41 Revolving 22,401 12,917 -22 747 -497 1,540 163 532 1,340 1,096 2,024 42 Commercial banks 17,721 9,786 -257 658 -486 1,362 204 457 1,095 850 1,866 43 Retailers 1,488 1,545 37 31 -167 -2 -130 -38 50 1 65 44 Gasoline companies -126 -1,030 71 35 94 117 54 -44 48 63 60 45 Savings institutions 2,771 2,008 116 16 61 45 29 125 123 155 15 46 Credit unions 547 608 11 6 2 19 6 30 25 27 17 47 Mobile home 778 222 142 -63 -175 12 -84 143 175 -165 -95 48 Commercial banks -85 -726 -25 -48 -14 -27 -83 -6 17 -108 -68 49 Finance companies -405 -363 49 -32 -222 -7 -31 22 32 -216 -43 50 Savings institutions 1,268 1,311 118 17 62 45 30 127 126 159 15 51 Other 17,738 4,842 257 -262 768 756 -313 1,318 989 1,043 890 52 Commercial banks 6,187 2,754 -309 -497 488 -87 -499 -140 -442 -487 229 53 Finance companies 6,131 604 -84 75 13 341 -13 438 490 422 294 54 Credit unions 616 1,736 201 98 37 323 104 523 427 469 282 55 Retailers 172 177 -6 -4 -9 1 -18 5 28 26 26 56 Savings institutions 4,632 -429 455 65 240 177 114 492 486 613 59 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 1987 IItteemm 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept. INTEREST RATES Commercial banks1 1 48-month new car2 13.71 12.91 11.33 n.a. n.a. 10.23 n.a. n.a. 10.37 n.a. 2 24-month personal 16.47 15.94 14.82 n.a. n.a. 14.00 n.a. n.a. 14.22 n.a. 3 120-month mobile home2 15.58 14.% 13.99 n.a. n.a. 13.23 n.a. n.a. 13.24 n.a. 4 Credit card 18.77 18.69 18.26 n.a. n.a. 17.92 n.a. n.a. 17.85 n.a. Auto finance companies 5 New car 14.62 11.98 9.44 10.59 10.81 10.69 10.64 10.52 9.63 8.71 6 Used car 17.85 17.59 15.95 14.40 14.49 14.45 14.47 14.53 14.53 14.58 OTHER TERMS3 Maturity (months) 7 New car 48.3 51.5 50.0 53.7 54.3 53.5 53.6 53.4 52.1 50.7 8 Used car 39.7 41.4 42.6 44.9 45.0 45.2 45.4 45.5 45.4 45.2 Loan-to-value ratio 9 New car 88 91 91 94 94 93 93 93 93 93 10 Used car 92 94 97 99 98 98 98 98 98 98 Amount financed (dollars) 11 New car 9,333 9,915 10,665 10,641 10,946 11,176 11,214 11,267 11,374 11,455 12 Used car 5,691 6,089 6,555 7,145 7,234 7,373 7,479 7,527 7,763 7,476 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 • January 1988 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1984 1985 1986 1987 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998822 11998833 11998844 11998855 11998866 HI H2 HI H2 HI H2 HI Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 388.9 550.2 753.9 854.8 833.4 717.3 790.4 722.7 986.8 676.9 989.9 568.3 By sector and instrument 161.3 186.6 198.8 223.6 214.3 190.4 207.2 220044..88 224422..55 220077..22 222211..55 115511..44 3 Treasury securities 162.1 186.7 199.0 223.7 214.7 190.7 207.3 204.9 242.5 207.4 222.0 151.7 4 -.9 -.1 -.2 -.1 -.3 -.2 -.1 -.1 -.1 -.1 -.5 -.4 5 Private domestic nonfinancial sectors 227.6 363.6 555.1 631.1 619.0 526.9 583.3 518.0 744.3 469.6 768.4 417.0 6 Debt capital instruments 148.3 253.4 313.6 447.8 445.0 284.7 342.5 350.4 545.2 363.4 546.7 407.1 7 Tax-exempt obligations 44.2 53.7 50.4 136.4 35.4 33.8 67.0 67.0 205.8 -16.9 87.7 20.0 8 18.7 16.0 46.1 73.8 121.7 22.5 69.8 62.2 85.3 135.3 108.1 89.0 9 85.4 183.6 217.1 237.7 298.0 228.5 205.7 221.2 254.2 245.0 350.9 298.1 10 Home mortgages 50.5 117.5 129.7 151.9 199.4 139.5 119.9 139.2 164.7 163.8 234.9 217.5 11 Multifamily residential 5.4 14.2 25.1 29.2 33.0 27.8 22.4 25.0 33.4 31.2 34.8 27.7 17 25.2 49.3 63.2 62.5 73.9 62.6 63.8 59.5 65.5 58.9 88.9 62.5 13 4.2 2.6 -.9 -6.0 -8.3 -1.4 -.4 -2.5 -9.5 -8.9 -7.7 -9.6 14 Other debt instruments 79.3 110.2 241.5 183.3 164.0 242.2 240.8 167.5 199.1 106.2 221.8 9.9 15 19.3 56.6 90.4 94.6 65.8 94.7 86.2 95.3 93.9 71.0 60.6 15.7 16 50.4 23.2 67.1 38.6 66.5 71.2 63.0 21.0 56.2 12.2 120.8 -40.2 17 Open market paper -6.1 -.8 21.7 14.6 -9.3 26.6 16.8 14.4 14.8 -13.1 -5.5 4.5 18 Other 15.8 31.3 62.2 35.5 41.0 49.7 74.7 36.8 34.2 36.2 45.9 29.9 19 By borrowing sector 227.6 363.6 555.1 631.1 619.0 526.9 583.3 518.0 744.3 469.6 768.4 417.0 70 State and local goveraments 21.5 34.0 27.4 91.8 46.4 16.2 38.6 56.3 127.2 3.1 89.7 28.6 71 90.0 188.2 234.6 293.4 279.9 235.0 234.2 259.8 327.1 232.8 326.9 224.0 77 6.8 4.1 -.1 -13.9 -15.1 -.5 .4 -7.0 -20.8 -16.8 -13.3 -19.5 73 40.2 77.0 97.0 93.1 115.9 101.8 92.2 85.7 100.5 96.2 135.5 92.8 24 Corporate 69.0 60.3 196.0 166.7 192.0 174.3 217.8 123.2 210.3 154.3 229.7 91.2 75 Foreign net borrowing in United States 16.0 17.3 8.3 1.2 9.0 36.1 -19.4 -5.8 8.2 21.5 -3.5 -12.6 76 6.6 3.1 3.8 3.8 2.6 1.3 6.3 5.5 2.1 6.2 -1.1 -1.1 77 -5.5 3.6 -6.6 -2.8 -1.0 -1.3 -11.9 -5.8 .1 1.5 -3.5 -3.5 78 Open market paper 1.9 6.5 6.2 6.2 11.5 16.6 -4.3 2.8 9.6 19.1 3.9 -5.3 29 U.S. government loans 13.0 4.1 5.0 -6.0 -4.0 19.5 -9.6 -8.2 -3.7 -5.3 -2.7 -2.8 30 Total domestic plus foreign 404.8 567.5 762.2 856.0 842.4 753.4 771.0 716.9 995.0 698.3 986.4 555.7 Financial sectors 31 Total net borrowing by financial sectors... 90.3 99.3 151.9 199.0 291.1 153.0 150.7 175.1 222.8 238.8 343.4 317.5 By instrument 32 U.S. government related 64.9 67.8 74.9 101.5 174.3 72.5 77.3 96.8 106.3 133.8 214.8 180.2 33 Sponsored credit agency securities 14.9 1.4 30.4 20.6 13.2 29.4 31.5 26.6 14.6 6.4 20.0 7.8 34 Mortgage pool securities 49.5 66.4 44.4 79.9 161.4 43.1 45.8 70.3 89.5 126.6 196.3 171.8 35 Loans from U.S. government .4 1.1 -.4 2.2 .8 -1.5 .5 36 Private financial sectors 25.4 31.5 77.0 97.4 116.8 80.5 73.5 78.3 116.5 105.0 128.6 137.4 37 Corporate bonds 12.7 17.4 36.2 48.6 68.7 30.8 41.5 48.9 48.3 70.9 66.5 92.5 38 Mortgages .1 * .4 .1 .1 .4 .4 * .1 .6 -.5 .2 39 Bank loans n.e.c 1.9 -.1 .7 2.6 4.0 .6 .7 2.3 2.9 4.0 4.0 -7.4 40 Open market paper 9.9 21.3 24.1 32.0 24.2 32.1 16.0 14.6 49.4 15.1 33.4 38.3 41 Loans from Federal Home Loan Banks .8 -7.0 15.7 14.2 19.8 16.5 14.9 12.5 15.9 14.4 25.2 13.6 By sector 42 Sponsored credit agencies 15.3 1.4 30.4 21.7 12.9 29.4 31.5 26.6 16.8 7.2 18.5 8.3 43 Mortgage pools 49.5 66.4 44.4 79.9 161.4 43.1 45.8 70.3 89.5 126.6 196.3 171.8 44 Private financial sectors 25.4 31.5 77.0 97.4 116.8 80.5 73.5 78.3 116.5 105.0 128.6 137.4 45 Commercial banks 11.7 5.0 7.3 -4.9 -3.6 19.8 -5.3 -4.7 -5.0 -2.7 -4.6 4.4 46 Bank affiliates 6.8 12.1 15.6 14.5 4.6 20.4 10.8 10.2 18.9 -1.7 10.9 21.6 47 Savings and loan associations 2.5 -2.1 22.7 22.3 29.3 22.0 23.3 14.2 30.4 25.5 33.1 30.7 48 Finance companies 4.5 12.9 18.9 53.9 50.2 8.2 29.6 49.7 58.1 53.1 47.2 27.2 49 REITs -.2 -.1 .1 -.7 -.3 .2 .1 -.6 -.8 .6 -1.3 -.2 50 CMO Issuers .2 3.7 12.4 12.2 36.7 9.8 15.0 9.5 14.9 30.2 43.3 53.7 All sectors 51 Total net borrowing 495.1 666.8 914.1 1,054.9 1,133.5 906.4 921.8 892.1 1,217.8 937.1 1,329.8 873.2 52 U.S. government securities .. 225.9 254.4 273.8 324.2 389.0 263.1 284.5 301.7 346.6 340.2 437.8 331.0 53 State and local obligations ... 44.2 53.7 50.4 136.4 35.4 33.8 67.0 67.0 205.8 -16.9 87.7 20.0 54 Corporate and foreign bonds . 38.0 36.5 86.1 126.1 192.9 54.6 117.6 116.6 135.7 212.4 173.5 180.5 55 Mortgages 85.4 183.6 217.4 237.7 298.0 228.8 206.0 221.2 254.2 245.6 350.4 298.3 56 Consumer credit 19.3 56.6 90.4 94.6 65.8 94.7 86.2 95.3 93.9 71.0 60.6 15.7 57 Bank loans n.e.c 46.7 26.7 61.1 38.3 69.5 70.4 51.8 17.5 59.2 17.7 121.3 -51.0 58 Open market paper 5.7 26.9 52.0 52.8 26.4 75.4 28.6 31.8 73.7 21.0 31.7 37.5 59 Other loans 30.0 28.4 82.9 44.8 56.5 85.7 80.0 41.1 48.6 46.1 66.9 41.1 External corporate equity funds raised in United States 60 Total new share issues 25.8 61.8 -36.4 19.9 91.6 -47.9 -24.9 3.0 36.7 100.8 82.3 61.8 61 Mutual funds 8.8 27.2 29.3 85.7 163.3 26.5 32.2 64.2 107.1 155.5 171.1 123.3 67 All other 17.0 34.6 -65.7 -65.8 -71.7 -74.4 -57.1 -61.2 -70.4 -54.7 -88.7 -61.5 63 Nonfinancial corporations 11.4 28.3 -74.5 -81.5 -80.8 -79.5 -69.4 -75.5 -87.5 -68.7 -92.7 -70.0 64 Financial corporations 4.2 2.6 7.8 12.0 8.3 6.8 8.8 11.2 12.8 7.5 9.1 6.7 65 Foreign shares purchased in United States 1.4 3.7 .9 3.7 .7 -1.6 3.5 3.1 4.3 6.6 -5.1 1.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates. 1984 1985 1986 1987 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998822 11998833 11998844 11998855 11998866 HI H2 HI H2 HI H2 HI 1 Total funds advanced in credit markets to domestic nonfinancial sectors 388.9 550.2 753.9 854.8 833.4 717.3 790.4 722.7 986.8 676.9 989.9 568.3 By public agencies and foreign 2 Total net advances 114.9 114.0 157.6 202.3 317.3 132.7 182.5 195.8 208.7 264.1 370.6 241.3 3 U.S. government securities 22.3 26.3 39.3 47.1 84.8 27.6 51.0 50.3 43.9 74.0 95.6 46.3 4 Residential mortgages 61.0 76.1 56.5 94.6 158.5 55.5 57.4 88.6 100.7 123.8 193.2 164.9 5 FHLB advances to savings and loans .8 -7.0 15.7 14.2 19.8 16.5 14.9 12.5 15.9 14.4 25.2 13.6 6 Other loans and securities 30.8 18.6 46.2 46.3 54.2 33.2 59.2 44.4 48.2 52.0 56.5 16.5 Total advanced, by sector 7 U.S. government 15.9 9.7 17.1 16.8 9.5 7.5 26.6 25.1 8.4 10.8 8.2 -4.1 8 Sponsored credit agencies 65.5 69.8 74.3 101.5 175.5 73.3 75.2 96.4 106.7 128.2 222.8 167.7 9 Monetary authorities 9.8 10.9 8.4 21.6 30.2 12.0 4.8 27.5 15.8 13.2 47.2 10.8 10 Foreign 23.7 23.7 57.9 62.3 102.1 39.8 75.9 46.8 77.8 111.9 92.3 66.9 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 64.9 67.8 74.9 101.5 174.3 72.5 77.3 96.8 106.3 133.8 214.8 180.2 12 Foreign 16.0 17.3 8.3 1.2 9.0 36.1 -19.4 -5.8 8.2 21.5 -3.5 -12.6 Private domestic funds advanced 13 Total net advances 354.8 521.3 679.5 755.2 699.3 693.2 665.7 618.0 892.5 568.0 830.6 494.6 14 U.S. government securities 203.6 228.1 234.5 277.0 304.2 235.5 233.5 251.3 302.7 266.3 342.2 284.7 15 State and local obligations 44.2 53.7 50.4 136.4 35.4 33.8 67.0 67.0 205.8 -16.9 87.7 20.0 16 Corporate and foreign bonds 14.7 14.5 35.1 40.8 84.3 17.3 53.0 39.7 42.0 100.8 67.8 61.6 17 Residential mortgages -5.3 55.0 98.2 86.4 73.8 111.7 84.8 75.5 97.4 71.3 76.4 80.3 18 Other mortgages and loans 98.3 162.4 276.9 228.8 221.4 311.5 242.3 197.0 260.6 161.0 281.8 61.6 19 LESS: Federal Home Loan Bank advances .8 -7.0 15.7 14.2 19.8 16.5 14.9 12.5 15.9 14.4 25.2 13.6 Private financial intermediation 20 Credit market funds advanced by private financial institutions 274.2 395.8 559.8 579.5 726.1 587.5 532.1 483.8 675.2 638.9 813.2 485.1 21 Commercial banking 110.2 144.3 168.9 186.3 194.7 192.2 145.5 143.3 229.4 117.2 272.3 49.9 22 Savings institutions 22.9 135.6 150.2 83.0 105.8 167.0 133.5 54.5 111.4 94.5 117.2 85.7 23 Insurance and pension funds 96.6 100.1 121.8 156.0 175.9 148.3 95.3 139.4 172.5 170.6 181.2 213.3 24 Other finance 44.5 15.8 118.9 154.2 249.6 80.0 157.8 146.5 161.9 256.7 242.4 136.2 25 Sources of funds 274.2 395.8 559.8 579.5 726.1 587.5 532.1 483.8 675.2 638.9 813.2 485.1 26 Private domestic deposits and RPs 196.2 215.4 316.9 213.2 272.8 280.2 353.5 191.4 235.0 252.2 293.4 15.1 27 Credit market borrowing 25.4 31.5 77.0 97.4 116.8 80.5 73.5 78.3 116.5 105.0 128.6 137.4 28 Other sources 52.6 148.9 165.9 268.9 336.4 226.8 105.1 214.1 323.6 281.7 391.1 332.6 2.9 Foreign funds -31.4 16.3 5.4 17.7 12.4 10.9 -.1 21.3 14.2 12.3 12.5 41.8 30 Treasury balances 6.1 -5.3 4.0 10.3 1.7 -2.8 10.8 13.9 6.6 -4.2 7.6 -4.4 31 Insurance and pension reserves 106.0 109.7 118.6 141.0 152.5 162.5 74.6 118.6 163.4 138.6 166.4 234.4 32 Other, net -28.1 28.2 37.9 99.9 169.8 56.1 19.7 60.3 139.4 134.9 204.6 60.8 Private domestic nonfinancial investors 33 Direct lending in credit markets 106.0 157.0 196.7 273.2 90.1 186.2 207.1 212.5 333.9 34.1 146.1 146.9 34 U.S. government securities 68.5 99.3 123.6 145.3 43.4 162.8 84.3 156.2 134.5 37.4 49.4 69.9 35 State and local obligations 25.0 40.3 30.4 47.6 -.8 10.4 50.4 14.8 80.4 -68.7 67.2 21.7 36 Corporate and foreign bonds * -11.6 5.2 11.8 34.4 -26.4 36.9 15.4 8.2 68.1 .8 39.0 37 Open market paper -5.7 12.0 9.3 43.9 -4.8 15.6 3.0 3.5 84.2 -16.3 6.7 7.7 38 Other 18.2 17.0 28.1 24.6 17.9 23.8 32.5 22.6 26.6 13.6 22.1 8.5 39 Deposits and currency 205.5 232.8 320.4 223.5 293.2 286.8 354.0 198.3 248.7 262.0 324.4 10.2 40 Currency 9.7 14.3 8.6 12.4 14.4 13.7 3.6 15.9 8.8 10.7 18.2 10.0 41 Checkable deposits 18.0 28.6 27.9 41.4 97.7 26.0 29.8 14.6 68.2 79.9 115.5 -28.5 42 Small time and savings accounts 136.0 215.7 150.1 139.1 122.5 129.0 171.2 161.5 116.7 115.4 129.5 33.9 43 Money market fund shares 33.5 -39.0 49.0 8.9 43.8 24.5 73.4 10.6 7.1 46.9 40.6 -4.6 44 Large time deposits -2.4 -8.4 84.9 7.2 -9.3 92.0 77.9 -7.6 21.9 * -18.7 1.5 45 Security RPs 11.1 18.5 5.0 16.6 18.3 8.7 1.2 12.2 21.1 10.0 26.5 12.7 46 Deposits in foreign countries -.4 3.1 -5.1 -2.1 5.9 -7.1 -3.1 -9.0 4.9 -.9 12.8 -14.9 47 Total of credit market instruments, deposits and currency 311.5 389.9 517.1 496.7 383.3 473.0 561.1 410.7 582.6 296.0 470.5 157.1 48 Public holdings as percent of total 28.4 20.1 20.7 23.6 37.7 17.6 23.7 27.3 21.0 37.8 37.6 43.4 49 Private financial intermediation (in percent) 77.3 75.9 82.4 76.7 103.8 84.7 79.9 78.3 75.6 112.5 97.9 98.1 50 Total foreign funds -7.7 40.0 63.3 80.1 114.5 50.7 75.8 68.1 92.0 124.2 104.9 108.7 MEMO: Corporate equities not included above 51 Total net issues 25.8 61.8 -36.4 19.9 91.6 -47.9 -24.9 3.0 36.7 100.8 82.3 61.8 52 Mutual fund shares 8.8 27.2 29.3 85.7 163.5 26.5 32.2 64.2 107.1 155.5 171.1 123.3 53 Other equities 17.0 34.6 -65.7 -65.8 -71.7 -74.4 -57.1 -61.2 -70.4 -54.7 -88.7 -61.5 54 Acquisitions by financial institutions 25.9 51.1 19.7 42.8 48.2 -.2 39.7 58.8 26.8 56.6 39.7 65.5 55 Other net purchases -.1 10.7 -56.1 -22.9 43.4 -47.7 -64.6 -55.8 10.0 44.2 42.6 -3.6 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, less outstanding may be obtained from Flow of Funds Section, Division of Research claims on forfeign affiliates and dedposits 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 • January 1988 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1987 MMeeaassuurree 11998844 11998855 11998866 Feb. Mar. Apr. May June July Aug.' Sept.' Oct. 1 Industrial production 121.4 123.8 125.1 127.1 127.4 127.4 128.2 129.1 130.6 131.0 130.9 131.7 Market groupings 2 Products, total 126.7 130.8 133.2 136.0 136.4 135.8 136.9 137.8 139.5' 139.7 139.7 141.0 3 Final, total 127.3 131.1 132.3 134.8 135.1 134.5 135.5 136.2 137.9' 138.3 138.4 139.9 4 Consumer goods 118.0 120.2 124.5 126.4 126.7 125.5 127.3 127.2 128.9' 129.2 128.4 129.9 5 Equipment 139.6 145.4 142.7 146.0 146.2 146.4 146.3 148.1 149.7' 150.3 151.7 153.2 6 Intermediate 124.7 130.0 136.4 139.9 140.9 140.3 141.8 143.3 145.0' 144.8 144.2 144.6 7 Materials 114.2 114.2 113.9 114.9 115.2 115.9 116.3 117.2 118.5' 119.0 118.8 119.0 Industry groupings 8 Manufacturing 123.4 126.4 129.1 131.6 132.4 132.4 133.2 134.0 135.6' 135.7 135.7 136.8 Capacity utilization (percent)2 9 Manufacturing 80.5 80.1 79.8 80.0 80.3 80.2 80.4 80.8 81.5 81.4 81.2 81.7 10 Industrial materials industries 82.0 80.2 78.5 78.7 78.7 79.1 79.3 79.8 80.6' 80.8 80.6 80.6 11 Construction contracts (1982 = 100)3 135.0 148.0 155.0 151.0 165.0 162.0 149.0 161.0 163.0 171.0 157.0 166.0 12 Nonagricultural employment, total4 114.6 118.3 120.8 122.7 122.9 123.2 123.3 123.5 123.8 124.0 124.2 124.8 13 Goods-producing, total 101.6 102.4 102.4 101.6 101.7 101.7 101.7 101.7 102.1 102.2 102.3 102.8 14 Manufacturing, total 98.4 97.8 96.5 96.4 96.5 96.6 96.6 96.6 97.0 97.2 97.4 97.7 15 Manufacturing, production-worker.... 94.1 92.9 91.2 91.4 91.4 91.5 91.6 91.6 92.1 92.2 92.5 92.9 16 Service-producing 120.0 125.0 128.9 131.5 131.8 132.2 132.4 132.6 132.9 133.1 133.3 134.1 17 Personal income, total 193.4 207.0 219.9 228.4 229.1 230.3 230.7 231.1 232.5 233.7 235.0 238.9 18 Wages and salary disbursements 185.0 198.7 210.2 218.0 218.6 219.5 220.7 221.2 222.3 224.2 225.5 227.1 19 Manufacturing , 164.6 172.8 176.4 179.1 179.2 178.9 179.9 180.0 180.1 182.0 183.4 184.3 20 Disposable personal income 193.5 206.0 219.1 227.5 228.1 222.5 229.6 228.9 230.3 231.3 232.5 236.8 21 Retail sales 179.0 190.6 199.9 206.3 206.8 207.4 207.3 209.6 210.9 214.0 211.7 211.5 Prices7 22 Consumer (1967 = 100) 311.1 322.2 328.4 334.4 335.9 337.7 338.7 340.1 340.8 342.7 344.4 345.3 23 Producer finished goods (1967 = 100) ... 291.1 293.7 289.7r 292.3 292.6 294.9 295.8 296.2' 297.8 297.2 296.7 298.2 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. 1987 CCaatteeggoorryy 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept. Oct. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 178,602 180,440 182,822 184,436 184,597 184,777 184,941 185,127 185,264 185,428 185,575 2 Labor force (including Armed Forces)1 115,763 117,695 120,078 121,479 121,588 122,237 121,755 122,194 122,564 122,128 122,625 3 Civilian labor force 113,544 115,461 117,834 119,222 119,335 119,993 119,517 119,952 120,302 119,861 120,361 4 Nonagricultural industries 101,685 103,971 106,434 108,084 108,545 109,112 109,079 109,508 109,989 109,602 109,903 5 Agriculture 3,321 3,179 3,163 3,284 3,290 3,335 3,178 3,219 3,092 3,170 3,283 6 Number 8,539 8,312 8,237 7,854 7,500 7,546 7,260 7,224 7,221 7,089 7,174 7 Rate (percent of civilian labor force) 7.5 7.2 7.0 6.6 6.3 6.3 6.1 6.0 6.0 5.9 6.0 8 Not in labor force 62,839 62,745 62,744 62,957 63,009 62,540 63,186 62,933 62,700 63,300 62,950 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 94,496 97,519 99,610 101,329 101,598 101,708 101,818 102,126 102,275r 102,396' 102,945 10 Manufacturing 19,378 19,260 18,994 18,995 19,011 19,018 19,015 19,104 19,129' 19,174' 19,237 11 Mining 966 927 783 722 729 735 738 744 751' 758' 762 17 Contract construction 4,383 4,673 4,904 5,032 5,019 4,999 5,008 5,002 5,006R 4,978' 5,019 13 Transportation and public utilities 5,159 5,238 5,244 5,333 5,348 5,344 5,350 5,363 5,377 5,406' 5,422 14 Trade 22,100 23,073 23,580 23,902 23,969 23,980 24,007 24,071 24,063' 24,132' 24,212 IS Finance 5,689 5,955 6,297 6,526 6,558 6,576 6,586 6,608 6,624R 6,626 6,633 16 Service 20,797 22,000 23,099 23,842 23,926 24,025 24,083 24,214 24,279' 24,274' 24,424 17 Government 16,023 16,394 16,710 16,977 17,038 17,031 17,031 17,020 17,046' 17,048' 17,236 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • January 1988 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1986 1987 1986 1987 1986 1987 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 125.9 126.9 128.2 130.9 158.7 159.5 160.4 161.3 79.4 79.5 79.9 81.2 2 Mining 96.9 98.8 99.0 100.0 130.8 130.4 129.7 129.0 74.1 75.8 76.3 77.5 3 Utilities 109.1 108.1 108.3 110.1 137.3 137.7 138.3 138.8 79.4 78.5 78.3 79.3 4 Manufacturing 130.4 131.6 133.2 135.9 163.4 164.5 165.6 166.7 79.8 80.0 80.5 81.5 5 Primary processing 113.4 114.3 116.1 119.1 137.5 138.2 139.0 139.8 82.5 82.7 83.5 85.2 6 Advanced processing, . 140.6 142.0 143.5 146.1 179.1 180.3 181.6 182.9 78.5 78.7 79.0 79.9 7 Materials 114.3 115.0 116.5 118.7 145.8 146.1 146.7 147.2 78.5 78.7 79.4 80.7 8 Durable goods 120.7 121.4 122.9 125.8 162.2 162.3 163.1 163.9 74.7 74.8 75.4 76.8 9 Metal materials 75.4 74.7 77.0 83.1 113.4 110.6 110.0 109.4 67.7 67.5 70.0 76.0 10 Nondurable goods 120.3 121.2 124.0 126.8 140.4 142.9 143.8 144.7 84.7 84.8 86.2 87.7 11 Textile, paper, and chemical ... 120.9 122.3 125.1 128.7 139.6 142.4 143.4 144.4 85.4 85.9 87.2 89.2 V 137.0 136.4 137.7 139.7 142.8 143.9 96.7 95.5 95.7 13 120.3 122.9 125.3 145.0 148.8 149.8 81.4 82.6 83.6 14 Energy materials 97.8 98.3 98.7 99.2 121.6 120.3 120.2 120.1 81.2 81.7 82.1 82.7 Previous cycle1 Latest cycle2 1986 1987 High Low High Low Oct. Feb. Mar. Apr. May June July' Aug/ Sept/ Oct. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 79.1 79.7 79.7 79.6 79.9 80.3 81.1 81.2 81.0 81.3 16 Mining 92.8 87.8 95.2 76.9 73.4 75.8 75.5 75.9 76.5 76.6 76.8 77.7 78.4 78.9 17 Utilities 95.6 82.9 88.5 78.0 79.2 78.8 78.2 76.8 79.2 79.0 80.2 81.0 79.8 79.6 18 Manufacturing 87.7 69.9 86.5 68.0 79.5 80.0 80.3 80.2 80.4 80.8 81.5 81.4 81.2 81.7 19 Primary processing.... 91.9 68.3 89.1 65.1 81.6 82.4 83.1 83.5 83.2 84.0 85.4 85.4 84.9 85.3 20 Advanced processing.. 86.0 71.1 85.1 69.5 80.1 79.0 79.1 78.7 79.2 79.2 79.8 79.7 79.5 80.2 21 Materials 92.0 70.5 89.1 68.5 77.9 78.7 78.7 79.1 79.3 79.8 80.6 80.8 80.6 80.6 22 Durable goods 91.8 64.4 89.8 60.9 74.2 74.7 75.2 75.0 75.1 75.9 76.5 76.5 76.1 76.5 23 Metal materials 99.2 67.1 93.6 45.7 76.9 67.8 68.7 68.8 69.7 71.5 73.9 77.3 77.1 78.0 24 Nondurable goods .... 91.1 66.7 88.1 70.7 84.1 84.6 84.8 86.5 86.2 86.1 88.4 88.5 88.7 88.2 25 Textile, paper, and chemical 92.8 64.8 89.4 68.8 84.7 85.4 85.8 87.5 87.1 87.1 90.0 90.4 90.5 89.9 •>6 98.4 70.6 97.3 79.9 94.9 95.6 94.6 95.1 95.7 96.3 100.5 99.9 99.1 11 92.5 64.4 87.9 63.5 81.2 82.3 82.2 83.9 83.9 83.1 85.1 86.1 86.6 28 Energy materials 94.6 86.9 94.0 82.3 80.4 81.9 80.8 81.3 82.1 82.8 82.4 83.2 83.0 82.7 1. Monthly high 1973; monthly low 1975. NOTE. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly highs 1978 through 1980; monthly lows 1982. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value A Monthly data are seasonally adjusted 1977 1986 1987 1986 GGrroouuppss por- AAVVGG.. tion Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Julyr Aug. Sept.'' Oct.e Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 125.0 125.3 126.0 126.7 126.5 127.2 127.3 127.4 128.4 129.1 130.6 131.0 130.9 131.7 7 Products 57.72 133.2 134.0 134.5 135.0 134.9 136.1 136.2 137.2 137.2 137.8 139.5 139.7 139.7 141.0 Final products 44.77 132.3 132.7 133.1 133.7 133.6 135.0 135.0 134.5 135.8 136.2 137.9 138.3 138.4 139.9 4 Consumer goods 25.52 124.5 124.7 125.6 127.2 126.8 127.5 127.5 126.6 128.2 127.2 128.9 129.2 128.4 129.9 Equipment 19.25 142.7 143.3 143.1 142.2 142.8 144.9 145.0 144.9 145.8 148.1 149.7 150.3 151.7 153.2 6 Intermediate products 12.94 136.4 138.7 139.2 139.7 139.1 139.7 140.4 139.9 142.1 143.3 145.0 144.8 144.2 144.6 7 Materials 42.28 113.9 113.3 114.3 115.2 115.2 115.1 115.2 116.2 116.3 117.2 118.5 119.0 118.8 119.0 Consumer goods 8 Durable consumer goods 6.89 116.2 116.3 118.4 121.5 120.0 122.4 121.2 118.1 120.2 117.4 120.4 120.9 118.1 122.1 9 Automotive products 2.98 115.1 112.7 114.6 117.7 117.6 123.5 121.2 115.7 118.0 114.9 117.5 118.0 114.0 123.4 10 Autos and trucks 1.79 112.9 107.7 107.6 115.6 117.9 125.2 121.6 111.5 113.1 107.9 112.3 112.4 107.2 122.2 11 Autos, consumer 1.16 97.3 91.9 92.3 99.5 94.3 105.3 100.9 91.8 91.0 87.4 86.4 76.8 79.1 94.7 1? Trucks, consumer .63 141.8 137.1 136.0 145.6 161.9 162.1 159.9 148.1 154.2 146.0 160.4 178.4 13 Auto parts and allied goods 1.19 118.4 120.1 125.2 120.8 117.1 121.0 120.5 121.9 125.3 125.4 125.3 126.4 124.I 125.3 14 Home goods 3.91 117.1 119.0 121.2 124.4 121.9 121.6 121.2 119.9 121.8 119.3 122.5 123.2 121.3 121.0 15 Appliances, A/C and TV 1.24 139.5 142.6 148.1 153.2 146.9 145.2 142.9 137.7 142.2 133.4 141.7 147.1 141.7 141.6 16 Appliances and TV 1.19 141.6 144.3 150.0 155.1 148.9 146.7 143.8 139.2 142.3 133.4 142.6 145.5 140.5 17 Carpeting and furniture .96 125.8 128.8 131.1 132.0 129.1 130.8 131.3 133.5 133.3 132.3 134.1 130.8 130.8 18 Miscellaneous home goods 1.71 96.0 96.5 96.3 99.4 99.8 99.3 99.8 99.4 100.7 101.8 102.2 101.6 101.2 19 Nondurable consumer goods 18.63 127.5 127.8 128.3 129.4 129.2 129.4 129.8 129.8 131.1 130.9 132.1 132.3 132.3 132.8 70 Consumer staples 15.29 97.0 134.4 135.0 136.0 135.9 135.9 136.5 136.4 137.7 137.6 138.9 139.2 139.3 139.9 71 Consumer foods and tobacco 7.80 134.1 131.6 132.6 133.9 132.9 134.0 134.8 134.4 135.6 136.0 137.2 137.3 138.0 77 Nonfood staples 7.49 131.9 137.2 137.4 138.2 139.0 137.9 138.2 138.5 139.9 139.2 140.6 141.2 140.7 141.2 73 Consumer chemical products 2.75 136.5 161.7 161.0 163.1 165.9 164.7 165.7 164.7 165.9 164.4 165.7 167.1 166.3 74 Consumer paper products 1.88 161.2 150.3 151.5 150.1 149.4 147.8 147.5 148.9 152.9 153.1 153.8 153.7 153.9 75 Consumer energy 2.86 147.4 105.2 105.5 106.4 106.3 105.7 105.8 106.5 106.4 105.9 108.0 108.2 107.4 76 Consumer fuel 1.44 105.7 90.8 91.7 92.2 95.0 92.5 94.1 94.5 92.1 91.9 92.7 91.4 91.5 27 Residential utilities 1.42 92.8 119.8 119.6 120.8 117.8 119.2 117.7 118.7 121.0 120.2 123.6 125.3 Equipment 78 Business and defense equipment 18.01 147.1 148.4 148.1 147.0 147.7 150.1 150.1 150.0 150.8 153.2 154.4 154.6 115555..77 115577..33 79 Business equipment 14.34 138.6 139.1 138.6 137.1 138.1 140.8 140.8 140.8 141.7 144.2 145.6 145.5 146.6 148.4 30 Construction, mining, and farm 2.08 59.8 58.0 56.6 58.2 57.2 56.8 58.1 58.6 61.2 63.0 65.0 66.0 66.2 66.4 31 Manufacturing 3.27 112.0 112.7 109.6 108.8 110.1 111.5 110.9 111.1 111.5 117.2 120.4 120.9 120.9 121.7 37 Power 1.27 81.6 80.5 79.5 80.2 79.6 81.2 81.7 82.4 84.0 84.0 81.8 83.3 82.8 83.3 33 Commercial 5.22 214.6 215.4 217.3 213.7 215.9 218.4 219.7 220.9 222.0 226.7 227.9 227.4 230.0 230.9 34 2.49 109.2 111.8 110.7 108.9 109.5 117.4 114.0 110.4 110.1 105.4 106.1 104.5 105.2 112.7 35 Defense and space equipment 3.67 180.3 184.6 184.9 185.8 185.2 186.5 186.6 186.1 186.5 188.6 188.7 190.1 191.3 192.1 Intermediate products 36 Construction supplies 5.95 124.7 126.3 126.8 127.9 128.3 128.4 128.5 127.3 128.3 131.5 133.1 132.2 132.4 113322..44 37 Business supplies 6.99 146.4 149.3 149.7 149.8 148.3 149.4 150.5 150.5 153.8 153.4 155.2 155.5 154.2 38 General business supplies 5.67 150.6 154.1 153.7 154.3 153.3 154.1 155.2 155.5 158.2 158.5 160.5 160.3 159.3 39 Commercial energy products 1.31 128.3 128.8 132.4 130.3 126.8 128.8 130.3 129.0 135.0 131.1 132.3 135.0 132.0 Materials 40 Durable goods materials 20.50 119.7 119.2 120.4 120.7 120.5 121.5 121.8 122.2 121.6 124.0 125.2 125.3 125.0 112255..88 41 Durable consumer parts 4.92 98.5 97.0 98.0 98.8 99.0 100.0 98.9 96.2 95.2 99.2 98.5 99.3 98.8 99.3 47 Equipment parts 5.94 153.9 153.5 154.5 154.2 154.0 155.6 155.8 157.1 156.0 158.3 159.3 159.4 159.3 160.4 43 Durable materials n.e.c 9.64 109.4 109.4 110.7 111.2 110.8 111.5 112.6 114.1 113.9 115.5 117.7 117.7 117.2 118.0 44 Basic metal materials 4.64 80.0 78.8 82.1 80.3 79.2 80.3 80.8 81.8 81.9 83.6 86.6 90.2 89.8 45 Nondurable goods materials 10.09 118.3 120.3 120.2 123.2 123.2 122.5 122.8 125.4 125.3 124.1 127.6 128.1 128.7 128.1 46 Textile, paper, and chemical 7.53 118.9 121.3 121.0 124.7 125.0 123.6 124.0 126.9 126.5 125.1 129.6 130.4 131.0 130.4 47 Textile materials 1.52 110.6 114.3 115.6 116.1 116.5 115.8 118.5 125.0 111.9 117.8 117.0 117.8 48 Pulp and paper materials 1.55 132.1 133.5 134.2 140.2 137.9 136.7 134.7 137.4 137.4 139.0 145.4 145.0 144.2 49 Chemical materials 4.46 117.1 119.5 118.5 122.3 123.4 121.8 122.1 125.0 125.0 124.9 128.1 130.0 130.9 50 Miscellaneous nondurable materials ... 2.57 116.5 117.5 117.6 118.5 118.0 119.0 119.2 121.1 122.0 120.9 122.0 121.1 51 Energy materials 11.69 99.9 96.9 98.7 98.8 98.9 97.6 97.0 97.5 99.3 99.4 99.0 99.9 99.6 99.3 57 Primary energy 7.57 105.5 102.7 104.8 105.1 104.1 102.6 101.5 102.3 103.6 104.0 102.5 103.8 103.7 53 Converted fuel materials 4.12 89.6 86.2 87.6 87.3 89.4 88.5 88.9 88.7 91.4 91.0 92.5 92.8 92.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • January 1988 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1987 Groups c S o I d C e p p r o o r - - 1 a 9 v 8 g 6 . tion Oct. Nov. Dec Jan. Feb. Mar. Apr. May June July' Aug. Sept.p Oct. Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 103.4 100.9 102.0 101.6 102.6 102.4 101.9 101.4 103.1 103.0 103.7 104.9 104.8 105.0 2 Mining 9.83 99.6 %.2 97.5 97.1 99.4 98.8 98.3 98.6 99.2 99.2 99.2 100.3 101.0 101.5 3 Utilities 5.96 109.6 108.6 109.6 109.0 108.0 108.5 107.9 106.0 109.6 109.4 111.2 112.5 111.0 110.8 4 Manufacturing 84.21 129.1 129.7 130.1 131.3 130.7 131.6 132.4 132.4 133.2 134.0 135.6 135.7 135.7 136.8 5 Nondurable 35.11 130.9 131.2 131.7 133.4 132.7 132.9 133.7 134.6 135.7 136.9 138.5 138.6 138.6 139.0 6 Durable 49.10 127.9 128.6 129.0 129.7 129.3 130.8 131.5 130.9 131.4 132.0 133.5 133.7 133.6 135.3 Mining 7 Metal 10 .50 70.9 71.1 76.2 74.1 73.6 71.2 65.7 71.7 70.7 71.4 79.2 8 Coal 11.12 1.60 124.2 123.6 129.8 125.4 136.4 131.7 122.3 121.9 127.2 128.8 127.9 130.5 133.3 136.0 9 Oil and gas extraction 13 7.07 94.7 89.2 89.6 89.8 91.2 90.9 92.4 93.1 92.1 91.8 91.8 92.2 92.5 92.5 10 Stone and earth minerals 14 .66 113.9 123.9 123.2 122.5 116.1 122.1 123.8 125.4 127.6 128.5 130.7 130.0 129.6 Nondurable manufactures 11 Foods 20 7.% 133.6 133.7 135.3 136.7 134.6 136.4 137.3 136.0 137.4 137.7 138.5 138.8 139.4 12 Tobacco products 21 .62 %.6 98.2 %.4 93.4 89.9 99.9 101.1 99.6 106.6 107.0 13 Textile mill products 22 2.29 113.2 110.2 112.2 113.4 109.2 110.8 112.6 116.6 115.7 117.2 118.3 119.5 119.3 14 Apparel products 23 2.79 103.6 103.9 103.8 104.9 106.1 106.5 105.4 105.3 106.4 107.7 109.7 107.8 15 Paper and products 26 3.15 136.4 138.8 139.6 141.1 139.7 139.9 139.9 140.5 141.3 142.6 148.8 148.9 148.0 16 Printing and publishing 27 4.54 163.4 164.4 164.8 166.4 166.3 164.4 167.6 169.2 171.4 174.1 174.0 174.1 173.9 174.0 17 Chemicals and products 28 8.05 133.0 133.3 132.3 135.7 136.4 135.7 135.3 137.3 138.1 139.3 140.8 142.0 142.4 18 Petroleum products 29 2.40 92.1 92.4 92.5 93.5 95.6 91.6 92.1 94.0 92.6 92.3 94.1 93.1 93.4 93.9 19 Rubber and plastic products 30 2.80 153.3 154.2 155.2 157.1 155.3 156.2 158.6 160.5 162.2 165.4 167.2 165.6 164.2 20 Leather and products 31 .53 61.3 59.4 61.0 60.2 58.9 59.8 59.4 60.2 61.4 60.8 59.2 61.3 60.2 Durable manufactures 21 Lumber and products 24 2.30 123.4 124.6 130.3 133.5 128.5 129.6 128.9 127.8 130.3 131.1 132.8 131.1 130.9 22 Furniture and fixtures 25 1.27 146.7 145.4 145.6 148.8 143.5 145.0 149.9 148.2 150.5 153.9 156.2 153.1 153.3 23 Clay, glass, stone products 32 2.72 120.2 117.3 118.7 119.4 121.9 118.8 119.8 120.6 117.2 117.9 118.8 116.7 116.6 24 Primary metals 33 5.33 75.8 73.1 75.5 73.4 72.8 75.1 77.0 76.1 77.0 78.8 81.4 84.8 84.5 85.1 25 Iron and steel 331.2 3.49 63.4 61.0 63.5 61.3 59.5 62.3 65.4 65.0 65.7 68.3 70.9 75.5 26 Fabricated metal products 34 6.46 107.4 108.9 108.3 109.6 108.4 108.3 110.5 109.9 108.5 111.1 111.1 109.9 110.1 111.1 27 Nonelectrical machinery 35 9.54 141.9 145.0 144.5 144.8 143.4 145.5 148.5 150.4 149.7 151.8 155.3 154.1 156.4 157.3 28 Electrical machinery 36 7.15 166.5 167.3 167.9 170.4 170.4 171.0 168.5 168.4 171.1 170.5 172.5 174.0 173.5 173.6 29 Transportation equipment 37 9.13 125.8 127.6 126.9 126.8 129.0 132.7 132.2 127.8 129.4 126.5 127.6 128.0 125.8 132.0 30 Motor vehicles and parts 371 5.25 110.9 110.3 109.1 109.7 112.0 117.7 116.5 109.8 112.0 107.4 109.4 109.1 105.8 115.7 31 Aerospace and miscellaneous transportation equipment .. 72-6.9 3.87 146.1 151.2 151.1 150.1 151.9 153.0 153.4 152.3 153.1 152.4 152.3 153.7 153.0 154.1 32 Instruments 38 2.66 141.3 139.1 139.3 140.2 139.5 142.0 140.3 142.8 142.1 144.5 143.8 146.1 144.8 146.2 33 Miscellaneous manufactures 39 1.46 99.3 100.0 100.9 103.8 101.6 101.6 103.9 101.4 101.9 101.2 100.5 100.4 100.5 Utilities 34 Electric 44..1177 112222..22 112244..00 112244..44 112222..66 112211..66 112222..33 112233..66 112222..33 112288..88 112288..88 113311..00 113322..66 113300..11 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total. 517.5 1,702.2 1,687.3 1,686.7 1,700.7 1,701.6 1,718.7 1.725.2 1,710.0 1,723.0 1,720.4 1.732.5 1,739.2 1,737.2 1,767.4 36 Final 405.7 1,314.5 1,2%.9 1,2%.6 1,307.3 1,310.9 1,329.2 1.330.3 1,316.5 1,324.7 1,320.1 1.326.6 1,333.9 1,334.4 1,360.7 37 Consumer goods. 272.7 853.8 843.5 846.5 857.1 860.0 865.3 868.1 857.1 862.8 855.1 863.2 865.6 860.1 876.1 38 Equipment 133.0 458.2 453.4 450.0 450.2 450.9 463.9 462.2 459.4 461.9 465.0 463.5 468.3 474.3 484.7 39 Intermediate 111.9 387.6 390.3 390.2 393.4 390.7 389.5 394.9 393.6 398.4 400.3 405.9 405.3 402.8 406.6 • 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 Dec. Jan. Feb. Mar. Apr. May June July' Aug.' Sept. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,682 1,733 1,750 1,862 1,652 1,676 1,719 1,598 1,493 1,517 1,487 1,502 1,502 7 1-family 922 957 1,071 1,184 1,085 1,204 1,150 1,058 1,009 1,039 993 1,023 992 3 2-or-more-family 759 777 679 678 567 472 569 540 484 478 494 479 510 4 Started 1,749 1,742 1,805 1,813 1,816 1,838 1,730 1,643 1,606 1,586 1,598 1,585 1,648 5 1-family 1,084 1,072 1,179 1,233 1,253 1,303 1,211 1,208 1,130 1,088 1,143 1,111 1,186 6 2-or-more-family 665 669 626 580 563 535 519 435 476 498 455 474 462 7 Under construction, end of period1 . 1,051 1,063 1,074 1,104 1,089 1,096 1,085 1,070 1,061 1,059 1,053 1,050 1,057 8 1-family 556 539 583 610 609 621 618 623 621 620 623 626 635 9 2-or-more-family 494 524 490 494 480 476 467 446 441 439 430 424 422 10 Completed 1,652 1,703 1,756 1,894 1,956 1,726 1,689 1,830 1,621 1,601 1,698 1,665 1,540 11 1-family 1,025 1,072 1,120 1,184 1,217 1,107 1,141 1,148 1,158 1,101 1,120 1,064 1,073 12 2-or-more-family 627 631 637 710 739 619 548 682 463 500 578 601 467 13 Mobile homes shipped 296 284 244 251 242 231 228 227 222 231 245 233 244 Merchant builder activity in 1-family units 14 Number sold 639 688 748 768 712 740 720 733 649 641 675 692 656 15 Number for sale, end of period 358 350 361 357 358 358 358 359 355 359 358 360 359 Price (thousands of dollars)2 Median 16 Units sold 80.0 84.3 92.2 95.0 98.5 95.2 98.4 96.5 104.9 109.0 104.0 106.5 115.6 17 Units sold 97.5 101.0 112.2 118.9 122.1 121.3 119.5 118.1 126.6 135.8 128.7 129.6 139.8 EXISTING UNITS (1-family) 18 Number sold 2,868 3,217 3,566 4,060 3,480 3,690 3,680 3,560 3,770 3,500 3,430 3,410 3,450 Price of units sold (thousands of dollars) 19 Median 72.3 75.4 80.3 80.8 82.1 85.0 85.6 85.0 85.2 85.2 86.2 85.1 85.1 20 Average 85.9 90.6 98.3 100.6 100.1 104.3 104.9 105.0 106.3 106.0 107.6 105.3 106.2 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 328,643 355,995 388,815 380,175 384,716 401,644 388,303 396,222 396,680 397,191' 399,674 400,067 406,337 22 Private 270,978 291,665 316,589 306,826 310,170 326,453 312,203 320,483 321,414 324,256' 324,954 328,180 329,711 23 Residential 153,849 158,475 187,147 181,682 187,813 203,115 190,812 199,523 195,871 200,864 198,063 199,440 200,733 24 Nonresidential, total 117,129 133,190 129,442 125,144 122,357 123,338 121,391 120,960 125,543 123,392' 126,891 128,740 128,978 Buildings 7S Industrial 13,746 15,769 13,747 13,207 12,094 12,112 11,354 11,492 13,376 13,023' 12,953 13,568 13,790 76 Commercial 39,357 51,315 48,592 54,809 50,881 53,071 52,285 50,924 53,224 51,831' 52,768 53,404 53,493 77 Other 12,547 12,619 13,216 14,231 14,755 14,776 15,143 14,950 14,926 14,769' 15,338 14,875 15,586 28 Public utilities and other 51,479 53,487 53,887 42,897 44,627 43,379 42,609 43,594 44,017 43,769' 45,832 46,893 46,109 29 Public 57,662 64,326 72,225 73,348 74,546 75,191 76,100 75,739 75,266 72,917' 74,720 71,887 76,626 30 Military 2,839 3,283 3,919 4,313 4,100 2,806 3,893 3,403 4,397 4,352 4,316 3,961 4,030 31 Highway 18,772 21,756 23,360 21,935 23,508 23,260 23,575 22,673 22,607 21,704 23,167 21,132 23,800 32 Conservation and development... 4,654 4,746 4,668 4,954 5,155 4,883 4,792 5,551 4,839 5,498 5,295 5,096 4,866 33 Other 31,397 34,541 40,278 42,146 41,783 44,242 43,840 44,112 43,423 41,363' 41,942 41,698 43,930 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 • January 1988 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 OOOcccttt... 1986 1987 1987 111999888777 11998866 11998877 (((111999666777 OOcctt.. OOcctt.. === 111000000)))111 Dec. Mar. June' Sept/ June' July' Aug. Sept. Oct CONSUMER PRICES2 1 All items 1.5 4.5 2.5 6.2 4.6 3.6 .4 .2 .5 .2 .4 345.3 2 4.5 3.6 4.1 2.5 6.5 1.4 .7 -.2 .0 .5 .4 335.3 3 Energy items -18.4 8.1 -9.9 26.1 7.9 5.0 1.5 .1 1.7 -.5 -.9 376.7 4 All items less food and energy 4.0 4.4 3.7 5.2 4.0 3.7 .2 .3 .4 .2 .5 346.1 Commodities 1.3 3.8 1.4 5.1 3.8 3.0 .0 .3 .1 .3 .5 275.6 6 Services 5.5 4.7 5.1 5.3 3.8 4.2 .2 .4 .5 .1 .5 422.6 PRODUCER PRICES 7 Finished goods -1.4 2.6 1.8 4.3 3.9 2.7 .2 .4 .0 .3 -.2 298.2 8 Consumer foods 5.7 .2 1.0 -6.7 12.7 -1.7 .1 -.2 -1.3 1.1 -.1 284.1 9 Consumer energy -36.9 13.8 -12.5 59.8 5.5 2.0 1.5 2.7 1.5 -3.7 -1.0 514.5 10 Other consumer goods 3.0 2.5 4.4 4.2 -.2 4.9 .1 .3 .3 .6 .0 269.1 11 Capital equipment 2.1 1.5 3.4 .4 1.2 4.4 -.1 .2 .2 .7 -.4 314.7 12 Intermediate materials3 -4.2 5.0 -1.2 7.8 5.7 4.6 .6 .7 .5 .0 .5 325.9 13 Excluding energy .1 4.3 1.2 3.3 4.6 5.0 .5 .5 .3 .5 .9 317.8 Crude materials 14 Foods 4.6 1.1 -2.7 -10.3 34.8 -6.2 -1.4 -2.2 .1 .5 1.3 237.7 15 Energy -28.1 13.2 -.5 50.0 11.4 6.1 1.5 3.8 .5 -2.7 -1.7 604.9 16 Other -1.7 23.9 8.5 15.9 31.9 37.1 3.9 3.2 1.0 3.8 4.1 300.1 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds. rental equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A51 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1986 1987 AAccccoouunntt 11998844 11998855 11998866 Q3 Q4 QL Q2 Q3R GROSS NATIONAL PRODUCT 1 Total 3,772.2 4,010.3 4,235.0 4,265.9 4,288.1 4,377.7 4,445.1 4,520.5 By source 2 Personal consumption expenditures 2,430.5 2,629.4 2,799.8 2,837.1 2,858.6 2,893.8 2,943.7 3,006.7 3 Durable goods 335.5 368.7 402.4 427.6 419.8 396.1 409.0 434.8 4 Nondurable goods 867.3 913.1 939.4 940.0 946.3 969.9 982.1 987.2 5 Services 1,227.6 1,347.5 1,458.0 1,469.5 1,492.4 1,527.7 1,552.6 1,584.7 6 Gross private domestic investment 664.8 641.6 671.0 660.8 660.2 699.9 702.6 707.4 7 Fixed investment 597.1 631.6 655.2 657.3 666.6 648.2 662.3 684.9 8 Nonresidential 416.0 442.6 436.9 433.5 439.7 422.8 434.6 456.8 9 Structures 141.1 152.5 137.4 131.1 132.9 128.7 129.7 136.6 10 Producers' durable equipment 274.9 290.1 299.5 302.4 306.7 294.1 304.9 320.2 11 Residential structures 181.1 189.0 218.3 223.8 226.9 225.4 227.7 228.1 12 Change in business inventories 67.7 10.0 15.7 3.5 -6.4 51.6 40.3 22.5 13 Nonfarm 60.5 13.6 16.8 -.9 5.1 48.7 27.3 8.6 14 Net exports of goods and services -58.9 -79.2 -105.5 -110.5 -116.9 -112.2 -118.4 -119.8 15 Exports 383.5 369.9 376.2 376.6 383.3 397.3 416.5 434.6 16 Imports 442.4 449.2 481.7 487.1 500.2 509.5 534.8 554.4 17 Government purchases of goods and services 735.9 818.6 869.7 878.5 886.3 896.2 917.1 926.1 18 Federal 310.5 353.9 366.2 371.2 368.6 366.9 379.6 378.8 19 State and local 425.3 464.7 503.5 507.3 517.7 529.3 537.6 547.3 By major type of product 70 Final sales, total 3,704.5 44,,000000..33 44,,221199..33 4,262.4 4,294.6 4,326.0 4,404.8 44,,449977..99 71 Goods 1,581.3 1,637.9 1,693.8 1,703.6 1,698.9 1,738.7 1,763.5 1,794.9 ?? Durable 681.5 704.3 726.8 735.8 737.3 747.0 756.7 780.6 23 Nondurable 899.9 933.6 967.0 967.8 961.6 991.7 1,006.8 1,014.3 24 Services 1,813.9 1,969.2 2,116.2 2,136.6 2,160.0 2,212.0 2,252.2 2,289.7 25 Structures 376.9 403.1 425.0 425.7 429.3 426.9 429.4 435.8 26 Change in business inventories 67.7 10.0 15.7 3.5 -6.4 51.6 40.3 22.5 27 Durable goods 40.2 7.3 4.8 -12.1 -4.5 35.2 22.1 -3.0 28 Nondurable goods 27.5 2.7 10.9 15.6 -1.9 16.5 18.2 25.6 29 MEMO Total GNP in 1982 dollars 3,501.4 3,607.5 3,713.3 3,718.0 3,731.5 3,772.2 3,795.3 3,833.4 NATIONAL INCOME 30 3,028.6 3,229.9 3,422.0 3,438.7 3,471.0 3,548.3 3,593.3 3,654.2 31 Compensation of employees 2,213.9 2,370.8 2,504.9 2,515.1 2,552.0 2,589.9 2,623.4 2,663.8 32 Wages and salaries 1,838.8 1,974.7 2,089.1 2,097.9 2,128.5 2,163.3 2,191.4 2,226.8 33 Government and government enterprises 346.1 372.3 394.8 397.7 403.8 412.2 418.1 424.2 34 Other 1,492.5 1,602.6 1,694.3 1,700.2 1,724.7 1,751.1 1,773.3 1,802.6 35 Supplement to wages and salaries 375.1 396.1 415.8 417.2 423.5 426.6 432.0 437.0 36 Employer contributions for social insurance 192.2 203.8 214.7 214.9 219.1 220.0 222.5 225.9 37 Other labor income 182.9 192.3 201.1 202.3 204.4 206.7 209.5 211.1 38 Proprietors' income1 234.5 257.3 289.8 292.5 297.8 320.9 323.1 321.4 39 Business and professional 204.0 227.6 252.6 256.2 261.2 269.7 275.8 282.1 40 Farm1 30.5 29.7 37.2 36.3 36.6 51.3 47.3 39.3 41 Rental income of persons2 8.5 9.0 16.7 17.2 18.4 20.0 18.9 17.3 42 Corporate profits1 266.9 277.6 284.4 286.4 281.1 294.0 296.8 313.7 43 Profits before tax3 240.0 224.8 231.9 236.3 247.9 257.0 268.7 282.1 44 Inventory valuation adjustment -5.8 -.7 6.5 6.0 -8.9 -11.3 -20.0 -16.1 45 Capital consumption adjustment 32.7 53.5 46.0 44.0 42.1 48.2 48.0 47.7 46 Net interest 304.8 315.3 326.1 327.5 321.7 323.6 331.1 338.0 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 • January 1988 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 Q3r PERSONAL INCOME AND SAVING 1 Total personal income 3,108.7 3,327.0 3,534.3 3,553.6 3,593.6 3,662.0 3,708.6 3,756.7 2 Wage and salary disbursements 1,838.6 1,974.9 2,089.1 2,097.9 2,128.5 2,163.3 2,191.4 2,226.6 3 Commodity-producing industries 577.6 609.2 623.3 622.8 628.4 632.9 635.0 641.5 4 Manufacturing 439.1 460.9 470.5 470.0 474.5 477.2 479.0 484.9 5 Distributive industries 442.8 473.0 497.1 498.6 504.7 511.5 518.9 526.6 6 Service industries 472.1 520.4 573.9 578.8 591.6 606.7 619.3 634.3 7 Government and government enterprises 346.1 372.3 394.8 397.7 403.8 412.2 418.1 424.2 8 Other labor income 182.9 192.3 201.1 202.3 204.4 206.7 209.5 211.1 9 Proprietors' income 234.5 257.3 289.8 292.5 297.8 320.9 323.1 321.4 10 Business and professional1 204.0 227.6 252.6 256.2 261.2 269.7 275.8 282.1 11 Farm1 30.5 29.7 37.2 36.3 36.6 51.3 47.3 39.3 12 Rental income of persons 8.5 9.0 16.7 17.2 18.4 20.0 18.9 17.3 13 Dividends 75.5 76.3 81.2 82.1 82.9 84.5 86.3 88.7 14 Personal interest income 444.7 476.5 497.6 498.1 496.8 499.8 506.3 516.6 15 Transfer payments 456.6 489.7 518.3 523.6 526.6 533.7 541.5 545.7 16 Old-age survivors, disability, and health insurance benefits ... 235.7 253.4 269.2 272.4 273.5 278.0 282.3 284.4 17 LESS: Personal contributions for social insurance 132.7 148.9 159.6 160.1 161.8 166.7 168.4 170.7 18 EQUALS: Personal income 3,108.7 3,327.0 3,534.3 3,553.6 3,593.6 3,662.0 3,708.6 3,756.7 19 LESS: Personal tax and nontax payments 440.2 485.9 512.2 515.3 532.0 536.1 578.0 565.6 20 EQUALS: Disposable personal income 2,668.6 2,841.1 3,022.1 3,038.2 3,061.6 3,125.9 3,130.6 3,191.1 21 LESS: Personal outlays 2,504.5 2,714.1 2,891.5 2,929.4 2,952.6 2,987.5 3,037.4 3,102.1 22 EQUALS: Personal saving 164.1 127.1 130.6 108.9 109.0 138.4 93.2 89.0 MEMO Per capita (1982 dollars) 23 Gross national product 14,770.6 15,073.7 15,368.3 15,369.9 15,387.6 15,523.4 15,586.4 15,704.2 24 Personal consumption expenditures 9,488.6 9,830.2 10,141.9 10,241.8 10,228.8 10,188.9 10,215.6 10,312.1 25 Disposable personal income 10,419.0 10,622.0 10,947.0 10,968.0 10,956.0 11,008.0 10,865.0 10,945.0 26 Saving rate (percent) 6.1 4.5 4.3 3.6 3.6 4.4 3.0 2.8 GROSS SAVING 27 Gross saving 568.5 531.3 532.0 516.2 515.3 554.3 551.3 558.6 28 Gross private saving 673.5 664.2 679.8 660.4 653.4 683.8 639.9 650.1 29 Personal saving 164.1 127.1 130.6 108.9 109.0 138.4 93.2 89.0 30 Undistributed corporate profits 94.0 99.6 92.6 92.6 78.5 75.6 70.1 77.9 31 Corporate inventory valuation adjustment -5.8 -.7 6.5 6.0 -8.9 -11.3 -20.0 -16.1 Capital consumption allowances 32 Corporate 254.5 269.1 282.8 284.3 289.3 291.8 229944..55 229977..88 33 Noncorporate 160.9 168.5 173.8 174.6 176.6 178.0 182.1 185.3 34 Government surplus, or deficit (-), national income and -105.0 -132.9 -147.8 -144.1 -138.1 -129.5 -88.6 -91.5 -169.6 -196.0 -204.7 -203.7 -188.7 -170.5 -139.2 -137.2 36 State and local 64.6 63.1 56.8 59.6 50.6 41.0 50.6 45.7 37 Gross investment 573.9 525.7 527.1 510.1 503.7 552.1 548.1 547.6 38 Gross private domestic 664.8 641.6 671.0 660.8 660.2 699.9 702.6 707.4 39 Net foreign -90.9 -115.9 -143.9 -150.7 -156.5 -147.7 -154.5 -159.8 40 Statistical discripancy 5.4 -5.6 -4.9 -6.1 -11.6 -2.2 -3.1 -11.1 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1986 Item credits or debits 1984 1985 Q2 Q3 Q4 Q1 Q2P 1 Balance on current account -116,394 -141,352 -33,755 -36,583 -37,977 -36,784 -41,097 2 Not seasonally adjusted -34,634 -40,230 -36,398 -33,435 -41,956 3 Merchandise trade balance2 -112,522 -122,148 -144,339 -33,651 -37,115 -38,595 -38,757 -39,525 4 Merchandise exports 219,900 215,935 224,361 56,928 56,534 57,021 56,992 59,975 5 Merchandise imports -332,422 -338,083 -368,700 -90,579 -93,649 -95,616 -95,749 -99,500 6 Military transactions, net -1,942 -3,338 -3,662 -1,054 -815 -495 -37 111 7 Investment income, net 18,490 25,398 20,844 4,587 5,339 4,492 5,500 1,608 8 Other service transactions, net 1,138 -1,005 1,463 530 342 759 -387 -387 9 Remittances, pensions, and other transfers -3,637 -4,079 -3,885 -918 -875 -1,151 -1,017 -913 10 U.S. government grants (excluding military) -8,541 -11,222 -11,772 -3,249 -3,459 -2,987 -2,086 -1,991 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,476 -2,831 -1,920 -242 15 225 -182 12 Change in U.S. official reserve assets (increase, -) -3,130 -3,858 312 16 280 132 1,956 3,419 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -979 -897 -246 -104 163 -31 76 -171 15 Reserve position in International Monetary Fund -995 908 1,500 366 508 283 606 335 16 Foreign currencies -1,156 -3,869 -942 -246 -391 -120 1,274 3,255 17 Change in U.S. private assets abroad (increase, -)3 -13,685 -24,711 -94,374 -25,303 -23,304 -32,351 13,352 -24,747 18 Bank-reported claims -11,127 -1,323 -59,039 -14,734 -18,878 -31,800 25,686 -20,195 19 Nonbank-reported claims 5,019 1,361 -3,986 -1,894 685 170 -1,163 20 U.S. purchase of foreign securities, net -4,756 -7,481 -3,302 -1,149 620 3,113 -1,345 93" 21 U.S. direct investments abroad, net3 -2,821 -17,268 -28,047 -7,526 -5,731 -3,834 -9,826 -4,645 22 Change in foreign official assets in the United States (increase, +) 2,987 -1,140 34,698 15,568 15,551 1,003 13,953 9,389 23 U.S. Treasury securities 4,690 -838 34,515 14,538 12,167 4,572 12,145 11,082 24 Other U.S. government obligations 13 -301 -1,214 -644 -276 -117 -62 256 25 Other U.S. government liabilities 586 823 1,723 925 999 -607 -1,381 -1,501 26 Other U.S. liabilities reported by U.S. banks 555 645 554 1,280 2,963 -2,435 3,611 -135 27 Other foreign official assets -2,857 -1,469 -531 -302 -410 -360 -313 28 Change in foreign private assets in the United States (increase, +)3 99,481 131,012 178,689 33,475 54,040 57,428 12,802 35,661 29 U.S. bank-reported liabilities 33,849 41,045 77,350 3,899 30,360 34,604 -13,614 15,150 30 U.S. nonbank-reported liabilities 4,704 -450 -2,791 -1,553 -80 1,035 1,761 31 Foreign private purchases of U.S. Treasury securities, net 23,001 20,433 8,275 3,705 609 -3,074 -1,570 '-2,562 32 Foreign purchases of other U.S. securities, net 12,568 50,962 70,802 22,888 17,074 12,269 18,499 15,858 33 Foreign direct investments in the United States, net3 25,359 19,022 25,053 4,536 6,077 12,594 7,726 7,215 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 26,837 17,920 23,947 10,241 -8,530 11,750 -5,504 17,557 36 Owing to seasonal adjustments -2,044 -4,153 3,904 2,652 -1,987 37 Statistical discrepancy in recorded data before seasonal adjustment 26,837 23,947 -4,377 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,130 -3,858 312 16 280 132 1,956 3,419 39 Foreign official assets in the United States (increase, +) excluding line 25 2,401 -1,963 32,975 14,643 14,552 1,610 15,334 10,890 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 -2,166 -3,023 -5,195 -2,626 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 153 46 101 11 19 53 26 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 • January 1988 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are not seasonally adjusted. 1987 IItteemm 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 223,976 218,815 226,808 21,776 20,496 20,784 21,126 21,008 20,222 20,986 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses, c.i.f. value .... 346,364 352,463 382,964 34,694 33,459 34,822 36,838 37,483 35,905 35,062 3 Trade balance -122,389 -133,648 -156,156 -12,918 -12,963 -14,039 -15,711 -16,475 -15,683 -14,076 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 Apr. May June July Aug. Sept. Oct." 1 Total 34,934 43,186 48,517 46,591 45,913 45,140 44,318 45,944 45,070 46,200 2 Gold stock, including Exchange Stabilization Fund1 11,096 11,090 11,064 11,076 11,070 11,069 11,069 11,068 11,075 11,085 3 Special drawing rights2'3 5,641 7,293 8,395 8,879 8,904 8,856 8,813 9,174 9,078 9,373 4 Reserve position in International Monetary Fund2 11,541 11,947 11,730 11,745 11,517 11,313 10,964 11,116 10,918 11,157 5 Foreign currencies4 6,656 12,856 17,328 14,891 14,422 13,902 13,472 14,586 13,999 14,585 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- 3. Includes allocations by the International Monetary Fund of SDRs as follows: tional accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 3.13. Gold stock is valued at $42.22 per fine troy ounce. 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based million on Jan. 1, 1981; plus transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4. Valued at current market exchange rates. From July 1974 through December 1980, 16 currencies were used; from January 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in the IMF also are valued on this basis beginning July 1974. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1987 AAsssseettss 11998844 11998855 11998866 Apr. May June July Aug. Sept. Oct." 1 Deposits 267 480 287 342 319 318 261 294 456 236 Assets held in custody 2 U.S. Treasury securities1 118,000 121,004 155,835 172,929 175,849 176,657 171,269 179,484 179,097 182,072 3 Earmarked gold 14,242 14,245 14,048 14,031 14,031 14,034 14,010 14,022 14,015 13,998 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 1987 Mar. Apr. May June July Aug. Sept." All foreign countries 1 Total, all currencies 453,656 458,012 456,628 457,180' 485,343' 487,598' 475,188' 470,391' 473,540' 489,838 2 Claims on United States 113,393 119,706 114,563 112,163r 128,722' 127,009' 123,400' 123,687' 124,759' 137,048 3 Parent bank 78,109 87,201 83,492 81,677 94,444 92,217 89,395 89,816 89,981 101,618 4 Other banks in United States 13,664 13,057 13,685 13,US' 15,366' 17,084' 16,021' 14,290' 14,682' 15,890 5 Nonbanks 21,620 19,448 17,386 17,373 18,912 17,708 17,984 19,581 20,096 19,540 6 Claims on foreigners 320,162 315,676 312,955 310,927' 321,344' 328,280' 319,546' 314,078' 314,747' 318,766 7 Other branches of parent bank 95,184 91,399 96,281 89,200 93,669 101,309 101,232 96,582 97,988 103,553 8 Banks 100,397 102,960 105,237 109,626' 114,997' 114,101' 107,747' 110,124' 108,088' 108,418 9 Public borrowers 23,343 23,478 23,706 22,666 22,892 23,295 22,684 21,412 21,537 21,205 10 Nonbank foreigners 101,238 97,839 87,731 89,435' 89,786' 89,575' 87,883' 85,96C 87,134' 85,590 11 Other assets 20,101 22,630 29,110 34,090' 35,277' 32,309' 32,242' 32,626' 34,034' 34,024 12 Total payable in U.S. dollars 350,636 336,520 317,487 306,297' 329,457' 336,415' 329,499' 322,300' 322,286' 340,684 13 Claims on United States 111,426 116,638 110,620 107,314' 122,932' 121,552' 118,411' 118,563' 118,964' 131,514 14 Parent bank 77,229 85,971 82,082 79,817 92,490 90,182 87,559 87,802 87,867 99,759 15 Other banks in United States 13,500 12,454 12,830 11,976' 13,557' 15,448' 14,709' 12,781' 12,793' 13,883 16 Nonbanks 20,697 18,213 15,708 15,521 16,885 15,922 16,143 17,980 18,304 17,872 17 Claims on foreigners 228,600 210,129 195,063 185,649' 192,360' 201,451' 198,465' 190,590' 189,958' 194,484 18 Other branches of parent bank 78,746 72,727 72,197 63,983 66,916 75,014 75,771 72,515 73,327 77,699 19 Banks 76,940 71,868 66,421 66,043' 69,244' 69,525' 67,287' 65,673' 64,106' 64,438 20 Public borrowers 17,626 17,260 16,708 16,347 16,639 16,812 16,271 15,062 15,115 14,940 21 Nonbank foreigners 55,288 48,274 39,737 39,276' 39,561' 40,100' 39,136' 37,34C 37,410' 37,407 22 Other assets 10,610 9,753 11,804 13,334' 14,165r 13,412' 12,623' 13,147' 13,364' 14,686 United Kingdom 23 Total, all currencies 144,385 148,599 140,917 145,486 149,998 154,371 146,678 149,760 148,039 149,836 24 Claims on United States 27,675 33,157 24,599 28,503 31,001 34,427 30,859 32,694 31,377 32,581 25 Parent bank 21,862 26,970 19,085 23,303 25,315 28,935 25,944 27,288 25,627 27,128 26 Other banks in United States 1,429 1,106 1,612 1,288 1,564 1,507 1,194 1,537 1,585 1,349 27 Nonbanks 4,384 5,081 3,902 3,912 4,122 3,985 3,721 3,869 4,165 4,104 28 Claims on foreigners 111,828 110,217 109,508 109,297 111,113 112,997 107,407' 108,732 108,293 108,562 29 Other branches of parent bank 37,953 31,576 33,422 28,782 29,936 33,412 32,641 31,241 30,794 33,610 30 Banks 37,443 39,250 39,468 42,537 42,961 41,241 37,745' 41,219 40,082 38,390 31 Public borrowers 5,334 5,644 4,990 4,897 4,964 5,234 4,684 4,617 4,761 4,725 32 Nonbank foreigners 31,098 33,747 31,628 33,081 33,252 33,110 32,337' 31,655 32,656 31,837 33 Other assets 4,882 5,225 6,810 7,686 7,884 6,947 8,412' 8,334 8,369 8,693 34 Total payable in U.S. dollars 112,809 108,626 95,028 95,007 99,398 104,622 97,672 99,170 96,510 99,736 35 Claims on United States 26,868 32,092 23,193 26,665 29,066 32,542 29,252 31,076 29,519 30,791 36 Parent bank 21,495 26,568 18,526 22,662 24,689 28,228 25,286 26,661 24,853 26,423 37 Other banks in United States 1,363 1,005 1,475 980 1,192 1,157 950 1,294 1,309 1,105 38 Nonbanks 4,010 4,519 3,192 3,023 3,185 3,157 3,016 3,121 3,357 3,263 39 Claims on foreigners 82,945 73,475 68,138 64,466 66,257 68,469 64,676 64,024 63,265 64,561 40 Other branches of parent bank 33,607 26,011 26,361 21,785 22,339 25,921 25,409 23,827 23,155 25,600 41 Banks 26,805 26,139 23,251 24,225 24,962 23,263 21,355 22,975 22,646 21,522 4? Public borrowers 4,030 3,999 3,677 3,660 3,712 3,785 3,470 3,400 3,473 3,377 43 Nonbank foreigners 18,503 17,326 14,849 14,796 15,244 15,500 14,442 13,822 13,991 14,062 44 Other assets 2,996 3,059 3,697 3,876 4,075 3,611 3,744 4,070 3,726 4,384 Bahamas and Caymans 45 Total, all currencies 146,811 142,055 142,592 134,367' 146,954' 141,831' 142,170' 140,512' 139,986' 151,909 46 Claims on United States 77,296 74,864 78,048 67,655' 78,902' 73,445 72,541 72,772 72,558 81,526 47 Parent bank 49,449 50,553 54,575 44,502 52,778 46,486 45,910 46,279 45,720 53,668 48 Other banks in United States 11,544 11,204 11,156 10,924' 12,738' 14,588' 13,724' 11,811' 12,074' 13,479 49 Nonbanks 16,303 13,107 12,317 12,229 13,386 12,371 12,907 14,682 14,764 14,379 50 Claims on foreigners 65,598 63,882 60,005 60,874' 62,293' 63,089' 65,280' 63,027' 62,336' 65,030 51 Other branches of parent bank 17,661 19,042 17,296 16,529 16,562 15,775 18,873 17,493 18,228 18,698 52 Banks 30,246 28,192 27,476 28,673' 30,310' 31,417' 30,987' 30,372' 29,16c 31,622 53 Public borrowers 6,089 6,458 7,051 7,038 7,247 7,304 7,025 7,046 6,873 6,985 54 Nonbank foreigners 11,602 10,190 8,182 8,634' 8,174' 8,593' 8,395' 8,116' 8,075' 7,725 55 Other assets 3,917 3,309 4,539 5,838' 5,759' 5,297' 4,349' 4,713' 5,092' 5,353 56 Total payable in U.S. dollars 141,562 136,794 136,813 127,338' 138,962' 133,483' 135,323' 131,636' 130,985' 142,385 1. Beginning with June 1984 data, reported claims held by foreign branches from $50 million to $150 million equivalent in total assets, the threshold now have been reduced by an increase in the reporting threshold for "shell" branches applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • January 1988 3.14 Continued 1987 LLiiaabbiilliittyy aaccccoouunntt 11998855 11998866 Mar. Apr. May June July Aug. Sept.'' All foreign countries 57 Total, all currencies 453,656 458,012 456,628 457,18C 485,343' 487,598' 475,188' 470,391' 473,54C 489,838 58 Negotiable CDs 37,725 34,607 31,629 34,873 33,155 34,360 31,776 32,993 33,648 35,724 59 To United States 147,583 155,538 151,632 141,891' 152,875' 149,970' 150,115' 143,434' 141,067' 152,895 60 Parent bank 78,739 83,914 82,561 71,183r 75,164' 74,644' 78,444' 71,609' 73,677' 79,688 61 Other banks in United States 18,409 16,894 15,646 13,695 16,913 16,898 16,575' 14,982 15,249' 17,263 62 Nonbanks 50,435 54,730 53,425 57,013' 60,798' 58,428' 55,096' 56,843' 52,141' 55,944 63 To foreigners 247,907 245,939 253,775 260,635 278,022 284,307 274,061' 274,407' 278,888' 280,643 64 Other branches of parent bank 93,909 89,529 95,146 88,276 94,590 101,774 100,826 95,376 97,908 103,921 65 Banks 78,203 76,814 77,809 84,543 92,704 90,333 81,229' 87,734 87,449 85,512 66 Official institutions 20,281 19,520 17,835 20,591 21,293 23,058 22,264' 21,528 21,016 20,116 67 Nonbank foreigners 55,514 60,076 62,985 67,225 69,435 69,142 69,742 69,769' 72,515' 71,094 68 Other liabilities 20,441 21,928 19,592 19,781 21,291 18,961 19,236' 19,557 19,937 20,576 69 Total payable in U.S. dollars 367,145 353,712 336,406 321,883' 340,584' 347,311' 340,985' 334,218' 333,673' 352,082 70 Negotiable CDs 35,227 31,063 28,466 31,148 29,505 30,763 27,929 28,781 29,634 31,120 71 To United States 143,571 150,162 143,650 132,943' 141,641' 141,151' 141,667' 134,731' 132,061' 142,844 72 Parent bank 76,254 80,888 78,472 66,052' 68,486' 70,159' 74,301' 66,940' 68,897' 74,411 73 Other banks in United States 17,935 16,264 14,609 12,593 15,455 15,732 15,363' 13,872' 14,046' 15,846 74 Nonbanks 49,382 53,010 50,569 54,298' 57,70C 55,26C 52,003' 53,919' 49,118' 52,587 75 To foreigners 178,260 163,583 156,806 149,949 161,216 167,761 163,505' 162,766' 163,728' 169,284 76 Other branches of parent bank 77,770 71,078 71,181 62,172 67,278 74,769 74,202 70,911 72,620 77,985 77 Banks 45,123 37,365 33,850 35,116 39,111 36,226 31,812' 35,250 35,104 35,202 78 Official institutions 15,773 14,359 12,371 13,392 14,318 16,068 15,985' 15,806 15,527 14,209 79 Nonbank foreigners 39,594 40,781 39,404 39,269 40,509 40,698 41,506 40,799' 40,477' 41,888 80 Other liabilities 10,087 8,904 7,484 7,843 8,222 7,636 7,884 7,940 8,250 8,834 United Kingdom 81 Total all currencies 144,385 148,599 140,917 145,486 149,998 154,371 146,678 149,760 148,039 149,836 82 Negotiable CDs 34,413 31,260 27,781 30,968 29,311 30,226 27,511 28,590 29,363 31,451 83 To United States 25,250 29,422 24,657 21,457 23,936 26,204 24,512 24,347 22,197 22,469 84 Parent bank 14,651 19,330 14,469 12,356 13,170 15,145 14,745 14,010 13,234 13,357 85 Other banks in United States 3,125 2,974 2,649 1,816 2,205 2,273 2,109 2,021 1,875 2,073 86 Nonabnks 7,474 7,118 7,539 7,285 8,561 8,786 7,658 8,316 7,088 7,039 87 To foreigners 77,424 78,525 79,498 83,699 87,381 89,760 86,041 87,942 87,750 86,806 88 Other branches of parent bank 21,631 23,389 25,036 21,780 22,421 26,367 25,350 23,572 23,379 26,094 89 Banks 30,436 28,581 30,877 35,538 37,562 35,282 32,036' 35,647 34,414 31,681 90 Official institutions 10,154 9,676 6,836 7,827 8,871 10,004 9,748' 9,241 9,670 10,387 91 Nonbank foreigners 15,203 16,879 16,749 18,554 18,527 18,107 18,907 19,482 20,287 18,644 92 Other liabilities 7,298 9,392 8,981 9,362 9,370 8,181 8,614 8,881 8,729 9,110 93 Total payable in U.S. dollars 117,497 112,697 99,707 98,967 101,793 106,093 100,031 101,593 99,459 102,325 94 Negotiable CDs 33,070 29,337 26,169 28,868 27,189 28,345 25,695 26,397 27,264 28,776 95 To United States 24,105 27,756 22,075 18,940 21,144 23,474 21,850 21,689 19,573 19,535 96 Parent bank 14,339 18,956 14,021 11,606 12,352 14,528 14,252 13,399 12,608 12,609 97 Other banks in United States 2,980 2,826 2,325 1,602 2,021 2,027 1,899 1,776 1,694 1,883 98 Nonbanks 6,786 5,974 5,729 5,732 6,771 6,919 5,699 6,514 5,271 5,043 99 To foreigners 56,923 51,980 48,138 47,531 49,708 51,116 49,089 50,294 49,484 50,379 100 Other branches of parent bank 18,294 18,493 17,951 14,471 14,367 18,430 17,654 16,171 15,565 17,994 101 Banks 18,356 14,344 15,203 18,027 19,498 15,555 13,566' 16,330 15,767 14,359 102 Official institutions 8,871 7,661 4,934 4,924 5,786 7,214 7,283' 7,203 7,872 8,060 103 Nonbank foreigners 11,402 11,482 10,050 10,109 10,057 9,917 10,586 10,590 10,280 9,966 104 Other liabilities 3,399 3,624 3,325 3,628 3,752 3,158 3,397 3,213 3,138 3,635 Bahamas and Caymans 105 Total, all currencies 146,811 142,055 142,592 134,367' 146,954' 141,831' 142,17c 140,512' 139,986' 151,909 106 Negotiable CDs 615 610 847 813 883 1,092 1,067 1,119 975 886 107 To United States 102,955 103,813 105,248 99,090' 107,545' 101,695' 103,007' 99,24C 97,244' 107,246 108 Parent bank 47,162 44,811 48,648 39,922' 43,40c 40,146' 43,58C 39,908' 41,046' 45,890 109 Other banks in United States 13,938 12,778 11,715 10,568 13,345 13,175 13,143 11,966 12,236' 13,613 110 Nonbanks 41,855 46,224 44,885 48,60C 50,80c 48,374' 46,284' 47,366' 43,962' 47,743 111 To foreigners 40,320 35,053 34,400 32,501 36,491 36,835 36,004 37,988' 39,437' 41,276 112 Other branches of parent bank 16,782 14,075 12,631 11,673 13,891 13,359 14,023 14,803 16,465 16,925 113 Banks 12,405 10,669 8,617 8,140 9,452 9,895 7,943 9,395 9,514 10,395 114 Official institutions 2,054 1,776 2,719 2,836 2,937 3,072 3,185 3,263 2,935 1,786 115 Nonbank foreigners 9,079 8,533 10,433 9,852 10,211 10,509 10,853 10,527' 10,523' 12,170 116 Other liabilities 2,921 2,579 2,097 1,963 2,035 2,209 2,092 2,165 2,330 2,501 117 Total payable in U.S. dollars 143,582 138,322 138,774 129,578' 140,974' 136,842' 137,763' 135,376' 134,354' 145,354 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 1987 IItteemm 11998855 11998866 Mar. Apr. May June July Aug. Sept." 1 Total1 178,380 211,782 226,840 236,137 236,439 238,418 232,193r 237,501'' 239,020 By type 2 Liabilities reported by banks in the United States 26,734 27,868 31,207 33,034 31,896 31,754 31,391r 29,465' 31,070 3 U.S. Treasury bills and certificates3 53,252 75,650 79,629 84,640 81,553 80,663 7733,,443355 78,210 7755,,770011 U.S. Treasury bonds and notes 4 Marketable 77,154 91,368 99,530 102,019 106,465 110,184 112,435 115,047 116,747 5 Nonmarketable 3,550 1,300 1,300 1,300 1,300 700 500 300 300 6 U.S. securities other than U.S. Treasury securities 17,690 15,596 15,174 15,144 15,225 15,117 14,432 14,479 15,202 By area 7 Western Europe1 74,447 88,623 99,822 106,171 108,677 111,405 107,695r 106,735' 107,901 8 Canada 1,315 2,004 5,110 3,922 3,482 3,502 3,559 4,189 4,529 9 Latin America and Caribbean 11,148 8,372 8,246 9,295 7,923 7,519 7,918r 8,710 8,558 10 Asia 86,448 105,868 108,450 109,842 109,464 108,654 105,495 109,484' 109,369 11 1,824 1,503 1,192 1,284 1,628 1,405 1,590 1,837 1,619 12 Other countries6 3,199 5,412 4,020 5,621 5,265 5,933 5,937 6,547 7,044 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 Sept. Dec. Mar. June' 1 Banks' own liabilities 5,219 8,586 15,368 29,528 29,556 36,905 36,083 2 Banks' own claims 7,231 11,984 16,294 24,134 25,920 32,613 32,884 3 Deposits 2,731 4,998 8,437 13,241 13,923 14,077 10,935 4 Other claims 4,501 6,986 7,857 10,893 11,997 18,536 21,949 5 Claims of banks' domestic customers 1,059 569 580 1,589 2,507 2,012 889 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 • January 1988 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1987 Holder and type of liability 1984 1985 Apr. May June July Aug. 1 All foreigners 407,306 435,726 539,238 531,086 553,980 557,735 541,039 542,849' 553,209 2 Banks' own liabilities 306,898 341,070 406,075 395,976 413,735 417,889 401,903 409,547' 415,686 3 Demand deposits 19,571 21,107 23,788 22,282 22,350 23,223 23,219 20,598' 22,127 4 Time deposits 110,413 117,278 131,691 125.109 131,794 132,973 133,186 134,209' 138,574 5 Other. 26,268 29,305 41,462 44,424 47,986 47,718 41,512 43,294' 40,343 6 Own foreign offices 150,646 173,381 209,134 204,162 211,605 213,975 203,986 211,446' 214,642 7 Banks' custody liabilities4 100,408 94,656 133,163 135.110 140,245 139,846 139,135 133,302 137,523 8 U.S. Treasury bills and certificates5 76,368 69,133 90,392 93,153 97,928 95,959 93,688 88,193 92,705 9 Other negotiable and readily transferable instruments 18,747 17,964 15,417 14,695 14,590 15,790 16,371 15,632 15,259 10 Other 5,293 7,558 27,354 27,262 27,727 28,098 29,076 29,477 29,559 11 Nonmonetary international and regional organizations 4,454 5,821 5,272 5,281 8,230 5,199 3,979 5,660' 4,945 12 Banks' own liabilities 2,014 2,621 3,423 3,901 6,636 3,535 2.489 2,081' 2,111 13 Demand deposits 254 85 199 246 334 106 72 76' 46 14 Time deposits1 1,267 2,067 2,066 1,227 3,094 944 967 584 816 15 Other2 493 469 1,158 2,428 3,207 2,486 1,451 1,420 1,249 16 Banks' custody liabilities4 2,440 3,200 1,849 1,379 1,594 1,664 1.490 3,579 2,834 17 U.S. Treasury bills and certificates 916 1,736 259 154 428 440 266 2,339 1,635 18 Other negotiable and readily transferable instruments6 1,524 1,464 1,590 1,225 1,152 1,224 1,224 1,240 1,193 19 Other 0 0 0 0 14 0 0 0 6 20 Official institutions8 86,065 79,985 103,518 110,836 117,675 113,449 112,416 104,826' 107,675 21 Banks' own liabilities 19,039 20,835 25,376 28,060 30,060 29,034 28,364 28,221' 26,169 22 Demand deposits 1,823 2,077 2,267 1,923 1,829 2,089 1,745 1,711' 1,907 23 Time deposits 9,374 10,949 11,009 10,806 12,277 11,277 13,042 13,54c 13,799 24 Other. 7,842 7,809 12,100 15,331 15,954 15,668 13,577 12.97C 10,464 2 2 5 6 Ba U nk .S s . ' T cu r s e t a o s d u y r y l i b a i b ll i s li t a i n es d 4 certificates5< 6 5 7 9 , , 0 9 2 7 6 6 5 53 9 , , 2 1 5 5 2 0 7 7 8 5 , , 1 6 4 5 2 0 8 7 2 9 , , 7 6 7 2 6 9 8 84 7 , , 6 6 4 1 0 4 8 8 4 1 , , 4 5 1 5 5 3 8 80 4 , , 6 0 6 5 3 2 7 7 6 3 , , 6 4 0 3 5 5 8 7 1 8 , , 5 2 0 1 5 0 27 Other negotiable and readily transferable instruments 6,966 5,824 2,347 3,015 2,819 2,715 3,141 2,950 3,151 28 Other 84 75 145 132 154 147 248 220 144 29 Banks9 248,893 275,589 350,637 338,946 350,635 359,093 346,818 355,782' 361,405 30 Banks' own liabilities 225,368 252,723 310,400 299,990 311,654 319,495 305,679 313,948' 320,244 31 Unaffiliated foreign banks 74,722 79,341 101,266 95,828 100,049 105,520 101,693 102,501' 105,602 32 Demand deposits 10,556 10,271 10,303 9,503 9,782 10,808 10.298 8,588' 9,911 33 Time deposits1 47,095 49,510 64,516 62,138 64,296 67,725 67,097 67,28C 69,916 34 Other. 17,071 19,561 26,447 24,187 25,970 26,986 24.299 26,634' 25,775 35 Own foreign offices3 150,646 173,381 209,134 204,162 211,605 213,975 203,986 211,446' 214,642 36 Banks' custody liabilities4 23,525 22,866 40,237 38,956 38,981 39,598 41,139 41,834 41.161 37 U.S. Treasury bills and certificates 11,448 9,832 9,984 9,759 9,545 9,774 9,066 9,142 9,100 38 Other negotiable and readily transferable instruments 7,236 6,040 5,165 4,171 4,090 4,213 5,611 5,850 5,320 39 Other 4,841 6,994 25,089 25,026 25,346 25,611 26,462 26,841 26,742 40 Other foreigners 67,894 74,331 79,810 76,023 77,441 79,994 77,825 76,582' 79,184 41 Banks' own liabilities 60,477 64,892 66,876 64,025 65,385 65,825 65,371 65,298' 67.162 42 Demand deposits 6,938 8,673 11,019 10,609 10,404 10,220 11,104 10,223' 10,263 43 Time deposits 52,678 54,752 54,099 50,938 52,126 53,027 52,081 52,805' 54,044 44 Other2 861 1,467 1,757 2,479 2,854 2,578 2,185 2,270 2,855 45 Banks' custody liabilities4 7,417 9,439 12,935 11,998 12,056 14,169 12,454 11,284 12,022 46 U.S. Treasury bills and certificates 4,029 4,314 4,500 3,610 3,315 4,192 3,694 3,276 3,761 47 Other negotiable and readily transferable instruments 3,021 4,636 6,315 6,285 6,529 7,638 6,395 5,592 5,594 48 Other 367 489 2,120 2,103 2,212 2,340 2,366 2,415 2,667 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,476 9,845 7,496 7,854 8,134 8,694 7,356 6,313 6,458 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 1987 AArreeaa aanndd ccoouunnttrryy 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept." 1 Total 407,306 435,726 539,238 531,086 553,980 557,735 541,039 542,849'" 553,209 583,185 2 Foreign countries 402,852 429,905 533,965 525,806 545,750 552,536 537,059 537,190'' 548,264 575,676 3 Europe 153,145 164,114 180,491 186,086 192,008 207,149 204,713 204,810' 208,225 213,978 4 Austria 615 693 1,181 799 1,058 921 974 795 1,066 1,276 5 Belgium-Luxembourg 4,114 5,243 6,729 7,232 7,906 9,335 9,558 9,154' 9,755 10,495 6 Denmark 438 513 482 623 425 459 425 486 576 597 7 Finland 418 496 580 947 942 909 616 497' 545 512 8 France 12,701 15,541 22,862 23,853 27,457 27,870 27,955 25,481' 26,995 27,864 9 Germany 3,358 4,835 5,752 7,477 6,779 10,619 8,024 7,105' 7,666 6,267 10 Greece 699 666 700 642 603 643 691 667 636 690 11 Italy 10,762 9,667 10,875 10,094 11,338 11,726 11,943 10,032' 7,671 8,411 12 Netherlands 4,731 4,212 5,600 4,970 5,880 5,442 5,367 5,104' 5,457 6,106 13 Norway 1,548 948 735 490 567 571 502 562' 593 661 14 Portugal 597 652 699 686 660 607 704 586 700 684 15 Spain 2,082 2,114 2,407 2,237 2,244 2,194 2,322 2,103' 2,267 2,542 16 Sweden 1,676 1,422 884 1,065 1,251 1,496 1,296 1,235 1,411 1,627 17 Switzerland 31,740 29,020 30,533 27,545 26,533 26,869 27,852 24,735' 28,351 27,323 18 Turkey 584 429 454 412 833 378 455 365 514 405 19 United Kingdom 68,671 76,728 85,284 91,903 91,742 102,261 99,682 107,978' 106,946 109,776 20 Yugoslavia 602 673 630 564 526 429 433 459 491 519 21 Other Western Europe1 7,192 9,635 3,322 3,902 4,572 3,849 5,208 6,282' 5,888 7,563 22 U.S.S.R 79 105 80 30 32 37 36 550 45 51 23 Other Eastern Europe 537 523 702 616 659 532 671 632' 650 610 24 Canada 16,059 17,427 26,345 26,595 25,306 24,522 21,914 21,232' 22,556 26,250 25 Latin America and Caribbean 153,381 167,856 209,184 196,521 207,228 204,694 195,058 199,107' 200,389 214,681 26 Argentina 4,394 6,032 4,757 4,730 4,412 4,786 4,795 5,123 5,246 4,675 27 Bahamas 56,897 57,657 73,619 62,978 72,102 69,428 66,325 62,518' 62,392 71,556 28 Bermuda 2,370 2,765 2,922 2,294 2,181 2,594 2,172 2,317' 2,285 2,298 29 Brazil 5,275 5,373 4,325 3,702 3,619 3,960 3,673 3,783' 3,965 4,383 30 British West Indies 36,773 42,674 70,919 70,438 69,426 70,354 65,297 72,229' 71,645 78,157 31 Chile 2,001 2,049 2,054 2,061 2,255 2,034 1,972 2,035 2,560 2,248 32 Colombia 2,514 3,104 4,285 4,275 4,353 4,289 4,363 4,431 4,449 4,187 33 Cuba 10 11 7 6 6 6 8 8 7 7 34 Ecuador 1,092 1,239 1,236 1,015 1,045 1,093 1,121 1,090 1,101 1,098 35 Guatemala 896 1,071 1,123 1,083 1,165 1,167 1,123 1,110 1,086 1,073 36 Jamaica 183 122 136 230 149 189 158 146 171 156 37 Mexico 12,303 14,060 13,745 13,256 15,104 13,955 13,857 14,160' 14,547 14,264 38 Netherlands Antilles 4,220 4,875 4,916 5,650 5,797 5,171 5,183 5,291 5,338 5,218 39 Panama 6,951 7,514 6,886 6,695 7,111 7,341 7,131 6,988' 7,323 7,1% 40 Peru 1,266 1,167 1,163 1,063 1,086 1,095 1,137 1,145 1,200 1,203 41 Uruguay 1,394 1,552 1,537 1,642 1,533 1,507 1,504 1,536 1,607 1,492 42 Venezuela 10,545 11,922 10,439 10,368 10,592 10,292 10,164 10,082' 10,285 10,003 43 Other Latin America and Caribbean 4,297 4,668 5,114 5,035 5,289 5,432 5,078 5,105 5,181 5,467 44 71,187 72,280 108,806 109,138 112,296 107,774 106,737 102,971' 110066,,996699 111100,,113399 China 45 Mainland 1,153 1,607 1,476 1,947 1,889 1,842 1,737 1,744 2,011 1,755 46 Taiwan 4,990 7,786 18,902 20,107 19,461 17,333 16,346 16,436 15,377 15,197 47 Hong Kong 6,581 8,067 9,390 9,184 9,367 9,365 9,122 8,595 9,012 8,342 48 India 507 712 674 512 527 569 714 572 902 771 49 Indonesia 1,033 1,466 1,547 1,415 1,460 1,243 1,774 1,404 1,541 1,435 50 Israel 1,268 1,601 1,892 1,670 1,305 1,084 1,229 928 1,036 1,115 51 Japan 21,640 23,077 47,410 49,166 53,381 50,434 49,494 46,722' 49,871 51,936 52 Korea 1,730 1,665 1,141 1,119 1,178 1,343 1,397 1,410 1,388 1,622 53 Philippines 1,383 1,140 1,866 1,740 1,427 1,312 1,222 1,148 1,208 1,111 54 Thailand 1,257 1,358 1,119 1,248 1,118 1,180 1,144 1,096' 1,186 1,118 55 Middle-East oil-exporting countries3 16,804 14,523 12,352 11,572 11,363 10,860 11,448 11,676' 12,676 14,039 56 Other Asia 12,841 9,276 11,036 9,459 9,821 11,209 11,111 11,241' 10,761 11,697 57 Africa 3,396 4,883 4,021 3,486 3,732 4,003 3,759 4,018 4,197 4,012 58 Egypt 647 1,363 706 775 871 1,052 1,011 1,113 1,162 1,118 59 Morocco 118 163 92 99 101 86 106 75 74 81 60 South Africa 328 388 270 184 288 198 188 229 227 199 61 Zaire 153 163 74 40 39 74 58 64 69 81 62 Oil-exporting countries 1,189 1,494 1,519 1,106 1,212 1,267 1,111 1,275 1,331 1,178 63 Other Africa 961 1,312 1,360 1,281 1,221 1,326 1,286 1,262 1,335 1,356 64 Other countries 5,684 3,347 5,118 3,980 5,181 4,394 4,878 5,052 5,928 6,616 65 Australia 5,300 2,779 4,196 3,023 4,293 3,589 4,113 4,333 4,998 5,641 66 All other 384 568 922 957 888 805 765 718' 929 975 67 Nonmonetary international and regional organizations 4,454 5,821 5,272 5,281 8,230 5,199 3,979 5,660' 4,945 7,509 68 International 3,747 4,806 4,086 4,294 6,966 3,717 2,577 4,200' 3,432 5,792 69 Latin American regional 587 894 1,033 783 845 994 1,047 1,075 1,070 1,126 70 Other regional5 120 121 154 204 420 488 356 384 443 591 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 • January 1988 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 1987 Area and country 11998844 11998855 11998866 Mar. Apr. May June July' Aug. 1 Total 400,162 401,608 444,265 417,290 439,509 438,135 432,208 423,424 426,159 2 Foreign countries 399,363 400,577 441,244 415,349 434,240 437,304 430,076 421,396 424,127 3 Europe 99,014 106,413 107,446 99,409 108,052 116,501 114,132 108,093 104,201 4 Austria 433 598 728 656 746 669 758 698 785 5 Belgium-Luxembourg 4,794 5,772 7,498 8,081 8,542 9,920 9,792 10,239 9,550 6 Denmark 648 706 688 623 546 541 716 614 878 7 Finland 898 823 947 993 1,116 1,036 1,035 1,037 1,031 8 France 9,157 9,124 11,356 9,864 10,817 12,075 12,036 11,673 12,530 9 Germany 1,306 1,267 1,820 1,648 1,379 1,508 1,548 2,009 1,325 10 Greece 817 991 648 535 460 457 456 433 375 11 Italy 9,119 8,848 9,038 6,987 7,536 8,329 8,404 6,784 6,413 12 Netherlands 1,356 1,258 3,299 2,326 3,030 2,946 5,744 4,429 3,071 13 Norway 675 706 654 667 683 776 774 830 803 14 Portugal 1,243 1,058 739 742 615 641 659 645 667 15 Spain 2,884 1,908 1,492 1,807 1,977 2,107 1,848 1,830 1,945 16 Sweden 2,230 2,219 1,945 2,461 2,414 2,614 2,330 2,287 2,473 17 Switzerland 2,123 3,171 3,049 2,338 2,905 3,593 2,611 2,464 2,664 18 Turkey 1,130 1,200 1,543 1,579 1,559 1,623 1,785 1,753 1,796 19 United Kingdom 56,185 62,566 58,337 54,105 59,876 64,001 59,748 56,565 54,117 20 Yugoslavia 1,886 1,964 1,836 1,840 1,763 1,803 1,755 1,764 1,742 21 Other Western Europe1 596 998 540 759 648 493 559 647 548 22 U.S.S.R 142 130 345 367 375 357 582 420 521 23 Other Eastern Europe 1,389 1,107 944 1,029 1,065 1,012 993 974 966 24 Canada 16,109 16,482 20,958 19,807 20,177 19,294 18,450 18,596 18,441 25 Latin America and Caribbean 207,862 202,674 208,832 199,245 209,524 204,272 201,887 200,885 202,550 26 Argentina 11,050 11,462 12,104 12,181 12,129 12,335 12,256 12,158 12,227 27 Bahamas 58,009 58,258 59,342 53,474 62,634 58,314 56,463 53,034 54,784 28 Bermuda 592 499 418 532 740 592 300 387 359 29 Brazil 26,315 25,283 25,703 26,059 26,006 25,690 25,493 25,992 26,586 30 British West Indies 38,205 38,881 46,306 43,226 43,592 44,355 43,782 44,755 43,428 31 Chile 6,839 6,603 6,562 6,425 6,412 6,321 6,328 6,500 6,510 32 Colombia 3,499 3,249 2,826 2,698 2,686 2,650 2,649 2,743 2,784 33 Cuba 0 0 0 6 9 9 0 0 0 34 Ecuador 2,420 2,390 2,449 2,338 2,381 2,372 2,354 2,396 2,384 35 Guatemala3 158 194 140 135 120 115 109 107 105 36 Jamaica 252 224 198 192 189 184 182 268 202 37 Mexico 34,885 31,799 30,660 29,846 30,125 30,055 30,293 31,141 31,851 38 Netherlands Antilles 1,350 1,340 1,039 965 1,175 1,045 1,344 1,083 992 39 Panama 7,707 6,645 5,436 5,460 5,771 4,730 4,977 4,633 4,616 40 Peru 2,384 1,947 1,661 1,600 1,601 1,599 1,565 1,567 1,549 41 Uruguay 1,088 960 940 959 957 962 950 949 966 42 Venezuela 11,017 10,871 11,112 11,304 11,086 11,044 10,956 11,306 11,366 43 Other Latin America and Caribbean 2,091 2,067 1,938 1,844 1,910 1,900 1,884 1,868 1,839 44 Asia 66,316 66,212 96,070 89,133 88,738 89,534 87,903 86,515 91,429 China 45 Mainland 710 639 787 1,373 1,360 1,175 993 929 919 46 Taiwan 1,849 1,535 2,678 2,914 3,278 3,592 3,301 2,487 2,772 47 Hong Kong 7,293 6,797 8,307 8,261 7,779 7,727 7,658 7,495 6,556 48 India 425 450 321 486 314 379 429 416 565 49 Indonesia 724 698 723 662 627 657 677 639 624 50 Israel 2,088 1,991 1,635 1,543 1,509 1,459 1,450 1,413 1,450 51 Japan 29,066 31,249 59,620 53,579 54,300 55,167 55,097 54,596 61,072 52 Korea 9,285 9,226 7,182 6,031 5,352 6,076 5,314 4,954 4,589 53 Philippines 2,555 2,224 2,217 2,282 2,121 2,064 2,109 2,211 2,148 54 Thailand 1,125 845 578 490 461 540 552 565 545 55 Middle East oil-exporting countries 5,044 4,298 4,122 5,152 4,496 3,697 3,808 3,914 4,315 56 Other Asia 6,152 6,260 7,901 6,361 7,142 7,001 6,514 6,897 5,875 57 Africa 6,615 5,407 4,650 4,871 4,800 4,876 4,707 4,705 4,739 58 Egypt 728 721 567 618 574 585 599 572 586 59 Morocco 583 575 598 584 565 566 563 568 603 60 South Africa 2,795 1,942 1,550 1,558 1,578 1,598 1,506 1,479 1,497 61 Zaire 18 20 28 42 41 43 39 38 35 62 Oil-exporting countries 842 630 694 861 801 840 818 866 862 63 Other 1,649 1,520 1,213 1,209 1,241 1,246 1,184 1,182 1,156 64 Other countries 3,447 3,390 3,289 2,884 2,949 2,828 2,996 2,601 2,766 65 Australia 2,769 2,413 1,944 1,992 22,,006655 1,897 1,980 1,693 1,686 66 All other 678 978 1,345 892 888844 931 1,016 908 1,080 67 Nonmonetary international and regional organizations 800 1,030 3,021 1,941 5,268 830 2,132 2,029 2,032 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 1987 TTyyppee ooff ccllaaiimm 11998844 11998855 11998866 Mar. Apr. May June Julyr Aug. Sept." 11 TToottaall 444444333333333333,,,,,,000000777777888888 444444333333000000,,,,,,444444888888999999 444444777777888888,,,,,,111111888888777777 444444444444888888,,,,,,777777333333000000 439,509 438,135 444444666666555555,,,,,,222222666666777777 423,424 426,159 445,492 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444000000000000,,,,,,111111666666222222 444444000000111111,,,,,,666666000000888888 444444444444444444,,,,,,222222666666555555 444444111111777777,,,,,,222222999999000000 439,509 438,135 444444333333222222,,,,,,222222000000888888 423,424 426,159 445,492 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 666666222222,,,,,,222222333333777777 666666000000,,,,,,555555000000777777 666666444444,,,,,,111111111111222222 666666444444,,,,,,000000222222999999 66,942 62,788 666666333333,,,,,,555555111111222222 64,778 64,782 66,149 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111555555666666,,,,,,222222111111666666 111111777777444444,,,,,,222222666666111111 222222111111111111,,,,,,666666111111555555 111111999999111111,,,,,,666666222222000000 207,042 203,682 111111999999999999,,,,,,222222777777333333 189,797 196,581 210,247 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111222222444444,,,,,,999999333333222222 111111111111666666,,,,,,666666555555444444 111111222222222222,,,,,,777777111111555555 111111111111777777,,,,,,555555000000333333 120,926 127,155 111111222222555555,,,,,,111111444444888888 123,888 121,735 126,151 66 DDeeppoossiittss 444444999999,,,,,,222222222222666666 444444888888,,,,,,333333777777222222 555555777777,,,,,,444444888888444444 555555444444,,,,,,111111222222111111 57,450 61,659 666666000000,,,,,,444444444444777777 59,655 56,831 60,220 77 OOtthheerr 777777555555,,,,,,777777000000666666 666666888888,,,,,,222222888888222222 666666555555,,,,,,222222333333222222 666666333333,,,,,,333333888888222222 63,476 65,495 666666444444,,,,,,777777000000111111 64,233 64,904 65,931 88 AAllll ootthheerr ffoorreeiiggnneerrss 555555666666,,,,,,777777777777777777 555555000000,,,,,,111111888888555555 444444555555,,,,,,888888222222333333 444444444444,,,,,,111111333333888888 44,599 44,511 444444444444,,,,,,222222777777555555 44,961 43,061 42,945 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 ...... 333333222222,,,,,,999999111111666666 222222888888,,,,,,888888888888111111 333333333333,,,,,,999999222222222222 333333111111,,,,,,444444333333999999 333333333333,,,,,,000000555555999999 333333,,,,,,333333888888000000 333333,,,,,,333333333333555555 444444,,,,,,444444111111333333 333333,,,,,,444444000000000000 333333,,,,,,444444777777444444 11 Negotiable and readily transferable 222222333333,,,,,,888888000000555555 111111999999,,,,,,333333333333222222 222222444444,,,,,,000000444444444444 222222000000,,,,,,555555555555111111 222222111111,,,,,,333333888888444444 12 Outstanding collections and other 555555,,,,,,777777333333222222 666666,,,,,,222222111111444444 555555,,,,,,444444666666555555 777777,,,,,,444444888888888888 888888,,,,,,222222000000222222 13 MEMO: Customer liability on 333333777777,,,,,,111111000000333333 222222888888,,,,,,444444888888777777 222222555555,,,,,,666666333333111111 222222555555,,,,,,444444444444999999 222222333333,,,,,,777777333333111111RRRRRR Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .... 40,714 38,102 42,129 43,575 45,521 44,860 38,046R 40,203 40,627 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 Sept. Dec. Mar. Juner 1 243,715 243,952 227,903 225,119 231,433 226,760 235,320 By borrower 7 Maturity of 1 year or less 176,158 167,858 160,824 155,610 159,790 155,239 166,260 3 Foreign public borrowers 24,039 23,912 26,302 22,528 24,723 23,496 23,290 4 All other foreigners 152,120 143,947 134,522 133,083 135,068 131,743 142,970 5 Maturity over 1 year1 67,557 76,094 67,078 69,509 71,643 71,521 69,060 6 Foreign public borrowers 32,521 38,695 34,512 38,350 39,898 40,718 39,465 7 All other foreigners 35,036 37,399 32,567 31,159 31,745 30,803 29,594 By area Maturity of 1 year or less1 8 Europe 56,117 58,498 56,585 59,664 61,346 58,001 68,141 9 Canada 6,211 6,028 6,401 6,204 5,845 5,559 5,552 10 Latin America and Caribbean 73,660 62,791 63,328 58,363 56,174 54,321 55,326 11 Asia 34,403 33,504 27,966 26,444 29,291 30,969 30,875 17 Africa 4,199 4,442 3,753 3,090 2,882 3,148 2,980 13 All other2 1,569 2,593 2,791 1,845 4,252 3,240 3,385 Maturity of over 1 year 14 Europe 13,576 9,605 7,634 7,237 6,851 6,764 6,422 15 Canada 1,857 1,882 1,805 1,930 1,930 1,873 1,631 16 Latin America and Caribbean 43,888 56,144 50,674 54,149 56,415 56,540 55,524 17 Asia 4,850 5,323 4,502 3,978 4,120 4,151 3,340 18 Africa 2,286 2,033 1,538 1,479 1,539 1,630 1,522 19 All other2 1,101 1,107 926 736 787 564 621 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 • January 1988 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1'2 Billions of dollars, end of period 1985 1986 1987 AArreeaa oorr ccoouunnttrryy 11998844 11998855 June Sept. Dec. Mar. June Sept. Dec. Mar. June 1 Total 433.9 405.7 396.8 394.9 391.9 393.7 390.3 389.8 390.0 398.9' 388.0' 2 G-10 countries and Switzerland 167.8 148.1 146.7 152.0 148.5 156.9 160.1 158.9 157.6 165.1' 158.8' 3 Belgium-Luxembourg 12.4 8.7 8.9 9.5 9.3 8.4 9.0 8.5 8.4 9.1 8.5 4 France 16.2 14.1 13.5 14.8 12.3 13.8 15.1 14.7 13.8 13.4 12.6 5 Germany 11.3 9.0 9.6 9.8 10.5 11.3 11.5 12.5 11.7 12.8' 11.3' 6 Italy 11.4 10.1 8.6 8.4 9.8 8.5 9.3 8.1 9.0 8.6 7.5 7 Netherlands 3.5 3.9 3.7 3.4 3.7 3.5 3.4 3.9 4.6 4.4 7.3 8 Sweden 5.1 3.2 2.9 3.1 2.8 2.9 2.9 2.7 2.4 3.0 2.4 9 Switzerland 4.3 3.9 4.0 4.1 4.4 5.4 5.6 4.8 5.5 5.8 5.7 10 United Kingdom 65.3 60.3 65.7 67.1 64.6 68.8 69.2 70.3 71.9 74.3 72.4 11 Canada 8.3 7.9 8.1 7.6 7.0 6.4 6.9 6.1 5.4 5.2 4.6 12 Japan 29.9 27.1 21.7 24.3 24.2 28.0 27.2 27.4 25.0 28.5 26.4 13 Other developed countries 36.0 33.6 32.3 32.0 30.4 31.6 30.7 29.5 26.1 26.0 25.7 14 Austria 1.9 1.6 1.6 1.7 1.6 1.6 1.7 1.7 1.7 1.9 1.8' 15 Denmark 3.4 2.2 1.9 2.1 2.4 2.5 2.4 2.3 1.7 1.7 1.6 16 Finland 2.4 1.9 1.8 1.8 1.6 1.9 1.6 1.7 1.4 1.4 1.5 17 Greece 2.8 2.9 2.9. 2.8 2.6 2.5 2.6 2.3 2.3 2.1 2.0 18 Norway 3.3 3.0 2.9 3.4 2.9 2.7 3.0 2.7 2.4 2.2 2.2 19 Portugal 1.5 1.4 1.3 1.4 1.3 1.1 1.1 1.0 .8 .9 .8 20 Spain 7.1 6.5 5.9 6.1 5.8 6.5 6.4 6.7 5.8 6.3 6.0 21 Turkey 1.7 1.9 2.0 2.1 1.9 2.3 2.5 2.1 2.0 1.9 2.1 22 Other Western Europe 1.8 1.7 1.8 1.7 2.0 2.4 2.1 1.6 1.4 1.4 1.5 23 South Africa 4.7 4.5 3.9 3.3 3.2 3.2 3.1 3.1 3.1 3.1 3.1 24 Australia 5.4 6.0 6.2 5.6 5.0 4.9 4.2 4.1 3.5 3.2 3.1 25 OPEC countries3 28.4 24.9 22.8 22.7 21.6 20.7 20.6 20.0 19.6 20.4 19.2 26 Ecuador 2.2 2.2 2.2 2.2 2.1 2.2 2.1 2.2 2.2 2.1 2.1 27 Venezuela 9.9 9.3 9.3. 9.0 8.9 8.7 8.8 8.7 8.6 8.7 8.7 28 Indonesia 3.4 3.3 3.1 3.1 3.0 3.3 3.0 2.8 2.5 2.4 2.2 29 Middle East countries 9.8 7.9 6.1 6.2 5.5 4.7 5.0 4.6 4.5 5.5 4.5 30 African countries 3.0 2.3 2.2 2.3 2.0 1.8 1.7 1.7 1.7 1.7 1.7 31 Non-OPEC developing countries 110.8 111.8 110.0 107.8 105.1 103.9 102.0 100.0 99.7 100.2' 100.1' Latin America 32 Argentina 9.5 8.7 8.6 8.9 8.9 8.9 9.2 9.3 9.5 9.6 9.5 33 Brazil 23.1 26.3 26.6 25.5 25.6 25.8 25.5 25.4 25.3 25.6 24.5 34 Chile 6.4 7.0 6.9 6.6 7.0 7.0 7.1 7.2 7.1 7.3 7.2 35 Colombia 3.2 2.9 2.7 2.6 2.7 2.3 2.2 2.0 2.1 2.0 2.0 36 Mexico 25.8 25.7 25.3 24.4 24.2 24.1 24.0 24.0 23.9 23.9 25.3 37 2.4 2.2 2.1 1.9 1.8 1.7 1.6 1.5 1.5 1.4 1.4 38 Other Latin America 4.2 3.9 3.7 3.5 3.4 3.3 3.3 3.3 3.1 3.0 2.9' Asia China 39 Mainland .3 .7 .3 1.1 .5 .6 .6 .6 .4 .9 .6 40 Taiwan 5.2 5.1 5.5 5.1 4.5 4.3 3.7 4.3 4.9 5.5 6.6 41 India .9 .9 .9 1.1 1.2 1.2 1.3 1.3 1.2 1.7 1.7 42 Israel 1.9 1.8 2.3 1.5 1.6 1.3 1.6 1.4 1.5 1.4 1.3 43 Korea (South) 11.2 10.6 10.0 10.4 9.4 9.5 8.7 7.3 6.7 6.3 5.6 44 Malaysia 2.8 2.7 2.8 2.7 2.4 2.2 2.0 2.1 2.1 1.9 1.7 45 Philippines 6.1 6.0 6.0 6.0 5.7 5.6 5.7 5.4 5.4 5.4 5.4 46 Thailand 2.2 1.8 1.6 1.7 1.4 1.3 1.1 1.0 .9 .9 .8 47 Other Asia 1.0 1.1 .9 .9 1.0 .9 .8 .7 .7 .6 .8 Africa 48 Egypt 1.5 1.2 1.0 1.0 1.0 .9 .9 .7 .7 .6 .6 49 Morocco .8 .8 .8 .9 .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 2.0 2.0 1.9 1.9 1.7 1.6 1.6 1.4 1.3 52 Eastern Europe 5.3 4.4 4.3 4.6 4.2 4.0 4.0 3.4 3.2 3.1 3.4 53 U.S.S.R .2 .1 .3 .2 .1 .3 .3 .1 .1 .1 .3 54 Yugoslavia 2.4 2.3 2.2 2.4 2.2 2.0 2.0 1.9 1.7 1.6 1.7 55 Other 2.8 2.0 1.8 1.9 1.8 1.7 1.7 1.4 1.4 1.3 1.4 56 Offshore banking centers 68.9 65.6 63.9 58.8 65.4 60.1 56.2 60.9 64.0 65.6 62.7' 57 Bahamas 21.7 21.5 21.1 16.6 21.4 21.4 17.1 19.9 22.3 2233..66 19.5' 58 Bermuda .9 .9 .9 .8 .7 .7 .5 .4 .7 ..88 .6 59 Cayman Islands and other British West Indies 12.2 11.8 12.1 12.3 13.4 11.4 13.0 13.2 14.5 13.6 15.0 60 Netherlands Antilles 4.2 3.4 3.2 2.3 2.3 2.3 2.3 1.9 1.8 1.7 1.3 61 Panama 5.8 6.7 5.4 6.1 6.0 4.4 4.2 5.1 4.1 5.4 5.3 62 Lebanon .1 .1 .1 .0 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 13.8 11.4 11.4 11.4 11.5 11.5 9.5 10.5 11.2 11.5 12.5 64 Singapore 10.3 9.8 9.7 9.4 9.9 8.5 9.3 9.7 9.4 8.8 8.4 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 16.8 17.3 16.9 17.3 16.9 16.4 16.8 17.2 19.8 18.6' 18.1' 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. This group comprises the Organization of Petroleum Exporting Countries (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are shown individually, other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, adjusted to exclude the claims on foreign branches held by a U.S. office or Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates), and Bahrain and another foreign branch of the same banking institution. The data in this table Oman (not 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 June Sept. Dec. Mar. June 1 Total 25,346 29,357 27,685 25,126 26,117 25,478 27,020 28,646 2 Payable in dollars 22,233 26,389 24,296 21,440 22,278 21,759 21,611 23,717 3 Payable in foreign currencies 3,113 2,968 3,389 3,686 3,839 3,719 5,408 4,929 By type 4 Financial liabilities 10,572 14,509 13,460 11,808 13,219 12,140 12,997 13,970 5 Payable in dollars 8,700 12,553 11,257 9,717 10,947 9,782 10,397 10,625 6 Payable in foreign currencies 1,872 1,955 2,203 2,091 2,272 2,358 2,600 3,345 7 Commercial liabilities 14,774 14,849 14,225 13,318 12,899 13,338 14,023 14,676 8 Trade payables 7,765 7,005 6,685 5,670 5,723 6,357 6,813 7,147 9 Advance receipts and other liabilities .. 7,009 7,843 7,540 7,648 7,175 6,981 7,210 7,530 10 Payable in dollars 13,533 13,836 13,039 11,723 11,331 11,977 11,215 13,092 11 Payable in foreign currencies 1,241 1,013 1,186 1,595 1,567 1,361 2,808 1,585 By area or country Financial liabilities 12 Europe 5,742 6,728 7,560 7,126 8,625 7,917 8,258 9,202 13 Belgium-Luxembourg 302 471 329 390 424 245 205 257 14 France 843 995 857 686 501 644 742 812 15 Germany 502 489 434 280 319 270 368 305 16 Netherlands 621 590 745 635 708 704 693 669 17 Switzerland 486 569 620 505 537 615 678 703 18 United Kingdom 2,839 3,297 4,254 4,333 5,705 5,148 5,312 6,194 19 Canada 764 863 839 367 362 399 431 907 20 Latin America and Caribbean 2,596 5,086 3,184 2,463 2,283 1,964 2,369 1,747 21 Bahamas 751 1,926 1,123 854 842 614 669 398 22 Bermuda 13 13 4 14 4 4 0 0 23 Brazil 32 35 29 27 28 32 26 22 24 British West Indies 1,041 2,103 1,843 1,426 1,291 1,163 1,545 1,223 25 Mexico 213 367 15 30 18 22 30 29 26 Venezuela 124 137 3 3 5 3 3 5 27 Asia 1,424 1,777 1,815 1,735 1,881 1,792 1,869 2,046 28 Japan 991 1,209 1,198 1,264 1,446 1,377 1,459 1,666 29 Middle East oil-exporting countries . 170 155 82 43 3 8 7 7 30 Africa . 19 14 12 12 4 1 3 1 0 0 0 0 2 1 1 0 31 Oil-exporting countries 32 All other4 27 41 50 104 63 67 67 66 Commercial liabilities 3,245 4,001 4,074 3,817 4,367 4,457 4,383 4,956 33 Europe 62 48 62 58 75 100 85 111 34 Belgium-Luxembourg 437 438 453 358 370 340 278 419 35 France 427 622 607 561 637 722 589 591 36 Germany 268 245 364 586 613 493 372 339 37 Netherlands 241 257 379 284 361 385 484 554 38 Switzerland 732 1,095 976 864 1,138 1,301 1,287 1,367 39 United Kingdom 40 Canada 1,841 1,975 1,449 1,367 1,312 1,389 1,350 1,250 41 Latin America and Caribbean 1,473 1,871 1,088 1,242 846 873 1,075 1,025 42 Bahamas 1 7 12 10 37 32 28 13 43 Bermuda 67 114 77 294 172 129 296 244 44 Brazil 44 124 58 45 43 59 81 87 45 British West Indies 6 32 44 35 45 48 88 64 46 Mexico 585 586 430 235 197 211 182 154 47 Venezuela 432 636 212 488 207 215 223 202 48 Asia 6,741 5,285 6,046 5,273 4,807 5,020 5,681 5,839 49 Japan 1,247 1,256 1,799 2,100 2,136 2,047 2,437 2,517 50 Middle East oil-exporting countries • 4,178 2,372 2,829 1,985 1,492 1,668 1,931 1,842 51 Africa . 553 588 587 567 585 622 520 523 52 Oil-exporting countries 167 233 238 215 176 196 170 166 53 All other4 921 1,128 982 1,053 982 977 1,014 1,083 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 • January 1988 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 June Sept. Dec. Mar. June 1 Total 34,911 29,901 28,760 33,851 34,007 33,292 33,778 30,994 2 Payable in dollars 31,815 27,304 26,457 31,669 31,302 30,771 30,716 27,897 3 Payable in foreign currencies 3,096 2,597 2,302 2,182 2,706 2,521 3,062 3,097 By type 4 Financial claims 23,780 19,254 18,774 24,709 24,795 23,461 24,192 21,487 5 Deposits 18,496 14,621 15,526 21,401 18,986 18,018 18,142 15,398 6 Payable in dollars 17,993 14,202 14,911 20,846 18,422 17,461 17,315 14,214 7 Payable in foreign currencies 503 420 615 555 565 556 827 1,183 8 Other financial claims 5,284 4,633 3,248 3,308 5,808 5,444 6,050 6,090 9 Payable in dollars 3,328 3,190 2,213 2,287 4,435 4,089 4,700 4,815 10 Payable in foreign currencies 1,956 1,442 1,035 1,021 1,374 1,354 1,350 1,275 11 Commercial claims 11,131 10,646 9,986 9,142 9,213 99,,883311 9,586 9,507 12 Trade receivables 9,721 9,177 8,696 7,802 8,030 88,,668800 8,579 8,507 13 Advance payments and other claims 1,410 1,470 1,290 1,341 1,183 1,151 1,007 1,000 14 Payable in dollars 10,494 9,912 9,333 8,537 8,445 9,220 8,701 8,868 15 Payable in foreign currencies 637 735 652 606 767 611 886 639 By area or country Financial claims 16 Europe 6,488 5,762 6,812 10,144 10,501 8,759 9,342 9,814 17 Belgium-Luxembourg 37 15 10 11 67 41 15 6 18 France 150 126 184 257 418 138 172 154 19 Germany 163 224 223 148 129 111 163 92 20 Netherlands 71 66 61 17 44 86 69 75 21 Switzerland 38 66 74 167 138 182 74 95 22 United Kingdom 5,817 4,864 6,007 9,328 9,478 7,957 8,496 9,192 23 Canada 5,989 3,988 3,260 4,422 3,970 4,063 3,873 3,329 24 Latin America and Caribbean 10,234 8,216 7,846 9,258 9,438 9,208 9,548 7,486 25 Bahamas 4,771 3,306 2,698 3,315 2,807 2,624 3,945 2,572 26 Bermuda 102 6 6 17 19 6 3 6 27 Brazil 53 100 78 75 105 73 71 103 28 British West Indies 4,206 4,043 4,571 5,402 6,060 6,078 5,128 4,296 29 Mexico 293 215 180 176 173 174 164 167 30 Venezuela 134 125 48 42 40 24 23 22 31 Asia 764 961 731 776 715 1,323 1,205 785 32 Japan 297 353 475 499 365 1,001 941 445 33 Middle East oil-exporting countries2 4 13 4 2 2 11 11 10 34 Africa 147 210 103 89 84 85 84 58 35 Oil-exporting countries3 55 85 29 25 18 28 19 9 36 All other4 159 117 21 20 86 22 140 16 Commercial claims 37 Europe 3,670 3,801 3,533 3,304 3,385 3,665 3,612 3,715 38 Belgium-Luxembourg 135 165 175 131 126 133 143 135 39 France 459 440 426 391 415 395 411 431 40 Germany 349 374 346 418 405 441 444 524 41 Netherlands 334 335 284 230 184 200 163 174 42 Switzerland 317 271 284 228 233 215 193 186 43 United Kingdom 809 1,063 898 674 853 926 1,012 984 44 Canada 829 1,021 1,023 965 950 919 909 897 45 Latin America and Caribbean 2,695 2,052 1,753 1,611 1,687 1,880 1,797 1,741 46 Bahamas 8 8 13 24 29 28 11 14 47 Bermuda 190 115 93 148 132 158 130 126 48 Brazil 493 214 206 193 207 236 211 198 49 British West Indies 7 7 6 29 23 48 22 14 50 Mexico 884 583 510 323 316 391 415 316 51 Venezuela 272 206 157 181 192 224 157 183 52 Asia 3,063 3,073 2,982 2,574 2,487 2,653 2,604 2,520 53 Japan 1,114 1,191 1,016 845 792 862 914 934 54 Middle East oil-exporting countries2 737 668 638 622 600 509 467 391 55 Africa 588 470 437 450 469 494 431 377 56 Oil-exporting countries 139 134 130 170 168 135 141 122 57 All other4 286 229 257 237 234 220 233 256 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 1987 Transactions, and area or country 1985 1986 J S a e n pt .- . Mar. Apr. May June July Aug. Sept." U.S. corporate securities STOCKS 1 Foreign purchases 81,995 148,101 191,343 23,064 20,735 19,632 18,682 23,645 24,774 22,468 2 Foreign sales 77,054 129,382 167,835 18,001 17,390 15,956 17,054 21,883 24,554 19,435 3 Net purchases, or sales (-) 4,941 18,719 23,508 5,063 3,345 3,676 1,628 1,763 220 3,033 4 Foreign countries 4,857 18,927 23,463 5,026 3,282 3,711 1,673 1,749 117 2,944 5 Europe 2,057 9,559 10,004 1,841 1,060 1,474 669 717 81 1,305 6 France -438 459 1,787 656 332 123 107 66 -69 -15 7 Germany 730 341 -121 19 -101 118 -155 -96 28 -12 8 Netherlands -123 936 1,068 69 124 120 232 153 135 79 9 Switzerland -75 1,560 860 177 306 351 -206 -80 -325 -435 10 United Kingdom 1,665 4,826 5,503 783 211 670 671 635 125 763 11 Canada 356 817 577 343 252 48 -238 255 -21 -46 12 Latin America and Caribbean 1,718 3,030 2,432 372 36 363 290 387 188 157 13 Middle East1 238 976 -1,398 -230 21 -90 -26 -913 -255 135 14 Other Asia 296 3,876 11,069 2,638 1,790 1,686 1,009 1,290 171 1,242 15 Africa 24 297 111 1 59 45 -30 -14 16 20 16 Other countries 168 373 668 61 65 185 -1 27 -63 132 17 Nonmonetary international and regional organizations 84 -208 -45 37 62 -36 -45 14 102 90 BONDS2 18 Foreign purchases 86,587 123,149 83,992 12,127 9,857 8,963 10,364 9,407 7,015 8,647 19 Foreign sales 42,455 72,499 59,967 8,274 6,559 6,823 8,305 6,509" 5,592 4,839 20 Net purchases, or sales (—) 44,132 50,650 24,025 3,853 3,297 2,140 2,060 2,898" 1,423 3,809 21 Foreign countries 44,227 49,803 23,979 4,000 3,107 2,270 1,968 2,889" 1,582 3,769 22 Europe 40,047 39,323 20,233 3,607 2,833 1,682 2,204 2,346" 1,647 3,140 23 France 210 389 187 81 -22 7 43 65 26 -37 24 Germany 2,001 -251 98 198 -121 -29 80 116 -22 -56 25 Netherlands 222 387 249 69 47 38 37 -65 44 116 26 Switzerland 3,987 4,529 1,764 558 50 182 105 247 312 166 27 United Kingdom 32,762 33,902 17,731 2,941 2,809 1,544 1,795 1,913' 1,343 2,819 28 Canada 190 548 810 190 161 23 49 87 -8 47 29 Latin America and Caribbean 498 1,468 1,614 65 123 254 -4 305 46 624 30 Middle East1 -2,648 -2,961 -482 -12 62 59 -128 -166 -14 -87 31 Other Asia 6,091 11,270 1,824 169 -73 252 -169 300 -93 52 32 Africa 11 16 -1 3 1 7 8 1 -17 -6 33 Other countries 38 139 -19 -22 0 -6 8 15 20 -1 34 Nonmonetary international and regional organizations -95 847 45 -147 190 -130 92 9 -159 40 Foreign securities 35 Stocks, net purchases, or sales (—) -3,941 -1,912 -2,279 -785 -1,174 636 -257 -11 -375 451 36 Foreign purchases 20,861 48,787 68,922 7,015 7,124 8,016 8,778 8,583 8,672 8,655 37 Foreign sales 24,803 50,699 71,201 7,799 8,297 7,379 9,035 8,593 9,047 8,204 38 Bonds, net purchases, or sales (-) -3,999 -3,356 -1,320 -632 -581 -1,117 2,281 -586' -263 -666 39 Foreign purchases 81,216 166,786 150,277 16,650 19,020 20,049 25,799 16,314' 12,306 12,891 40 Foreign sales 85,214 170,142 151,598 17,281 19,601 21,166 23,518 16,900" 12,569 13,558 41 Net purchases, or sales (-), of stocks and bonds -7,940 -5,268 -3,599 -1,416 -1,755 -481 2,024 -597' -637 -215 42 Foreign countries -9,003 -6,352 -4,892 -1,683 -1,889 -499 1,980 -323" -1,231 -504 43 Europe -9,887 -17,893 -8,879 -748 -2,704 -1,990 -31 -568 -918 -471 44 Canada -1,686 -875 -3,439 -226 -3 -418 -489 -596" -484 -263 45 Latin America and Caribbean 1,797 3,484 646 -416 259 204 106 -62 81 -20 46 659 10,858 7,613 290 637 1,692 2,513 1,079 224 85 47 Africa 75 52 61 -1 8 20 6 5 5 14 48 Other countries 38 -1,977 -893 -583 -86 -8 -124 -182 -140 151 49 Nonmonetary international and regional organizations 1,063 1,084 1,293 267 135 18 44 -274 594 288 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 • January 1988 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1987 1987 Country or area 1985 1986 J S a e n pt .- . Mar. Apr. May June July Aug. Sept.p Transactions, net purchases or sales (-) during period1 1 Estimated total2 29,208 20,117 18,535 7,040 -2,985 -281 12,279 878 1,110 808 2 Foreign countries2 28,768 21,220 24,982 4,149 -1,405 3,731 8,646 3,680 2,787 989 3 Europe2 4,303 17,056 17,268 5,837 375 1,695 3,640 4,519 -1,007 -919 4 Belgium-Luxembourg 476 349 659 -35 -35 4 58 54 366 -25 5 Germany2 1,917 7,670 10,337 2,141 1,106 1,417 1,534 1,516 780 145 6 Netherlands 269 1,283 -194 -212 -22 352 111 204 -254 -49 7 Sweden 976 132 -5 334 32 -166 -183 76 -153 -156 8 Switzerland 773 329 3,354 1,641 652 413 585 512 -688 -99 9 United Kingdom -1,810 4,681 230 328 -1,089 -524 617 1,115 -431 -999 10 Other Western Europe 1,701 2,613 2,909 1,640 -230 198 913 1,042 -631 258 11 Eastern Europe 0 0 -22 0 -40 1 5 0 4 5 12 Canada -188 881 3,525 709 703 37 413 654 378 203 13 Latin America and Caribbean 4,315 926 -2,366 -62 -30 -381 780 -673 -675 -29 14 Venezuela 248 -95 177 102 14 11 -17 -4 30 55 15 Other Latin America and Caribbean 2,336 1,129 -1,409 -156 -176 -302 -514 15 -49 -155 16 Netherlands Antilles 1,731 -108 -1,133 -8 133 -90 1,311 -684 -656 72 17 Asia 19,919 1,345 6,139 -2,379 -2,880 2,136 3,531 -671 4,318 1,797 18 Japan 17,909 -22 2,371 -2,457 -2,561 -541 4,199 -597 1,839 799 19 Africa 112 -54 -38 12 -15 11 -18 20 -24 3 20 Mother 308 1,067 453 32 442 233 300 -168 -204 -67 21 Nonmonetary international and regional organizations 442 -1,102 -6,449 2,890 -1,580 -4,013 3,633 -2,802 -1,677 -181 22 International -436 -1,430 -5,393 2,841 -1,342 -3,147 3,515 -2,875 -1,722 111 23 Latin American regional 18 157 3 11 0 0 3 0 0 -10 Memo 24 Foreign countries 28,768 21,220 24,982 4,149 -1,405 3,731 8,646 3,680 2,787 989 25 Official institutions 8,135 14,214 25,379 5,852 2,489 4,447 3,719 2,251 2,612 1,700 26 Other foreign 20,631 7,010 -398 -1,702 -3,894 -715 4,927 1,428 175 -711 Oil-exporting countries 27 Middle East3 -1,547 -1,529 -1,858 225 -120 636 -857 112 329 -479 28 Africa4 7 5 19 17 0 0 1 0 0 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 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 Oct. 31, 1987 Rate on Oct. 31, 1987 Rate on Oct. 31, 1987 Country Country Country Percent ef M fe o c n t t i h v e 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 Austria.. 3.5 Jan. 1987 France1 7.5 July 1987 Norway 8.0 June 1983 Belgium . 7.25 July 1987 Germany, Fed. Rep. of. 3.0 Jan. 1987 Switzerland 3.5 Jan. 1987 Brazil ... 49.0 Mar. 1981 Italy 12.0 Aug. 1987 United Kingdom2 Canada.. 8.26 Oct. 1987 Japan 2.5 Feb. 1987 Venezuela 8.0 Oct. 1985 Denmark 7.0 Oct. 1983 Netherlands 4.5 Mar. 1986 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government 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 Apr. May June July Aug. Sept. Oct. 1 Eurodollars 10.75 8.27 6.70 6.73 7.25 7.11 6.87 6.91 7.51 8.29 2 United Kingdom 9.91 12.16 10.87 9.72 8.79 8.85 9.17 9.95 10.12 9.92 3 Canada 11.29 9.64 9.18 7.62 8.22 8.40 8.61 9.11 9.32 9.12 4 Germany 5.96 5.40 4.58 3.85 3.73 3.67 3.83 3.93 3.98 4.70 5 Switzerland 4.35 4.92 4.19 3.65 3.63 3.77 3.60 3.55 3.51 4.03 6 Netherlands 6.08 6.29 5.56 5.31 5.11 5.15 5.21 5.27 5.31 5.63 7 France 11.66 9.91 7.68 7.87 8.09 8.18 7.83 7.88 7.85 8.15 8 Italy 17.08 14.86 12.60 10.03 10.15 10.67 10.92 11.% 12.36 11.85 9 Belgium 11.41 9.60 8.04 7.21 7.13 6.78 6.54 6.55 6.56 6.84 10 Japan 6.32 6.47 4.96 3.92 3.77 3.71 3.74 3.71 3.77 3.89 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 • January 1988 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1987 CCoouunnttrryy//ccuurrrreennccyy 11998844 11998855 11998866 May June July Aug. Sept. Oct. 1 Australia/dollar1 87.937 70.026 67.093 71.42 71.79 70.79 70.72 72.68 71.12 2 Austria/schilling 20.005 20.676 15.260 12.574 12.793 12.996 13.041 12.765 12.674 3 Belgium/franc 57.749 59.336 44.662 37.091 37.712 38.329 38.528 37.657 37.494 4 Canada/dollar 1.2953 1.3658 1.38% 1.3411 1.338 1.3262 1.3256 1.3154 1.3097 5 China, P.R./yuan 2.3308 2.9434 3.4615 3.7314 3.7314 3.7314 3.7314 3.7314 3.7314 6 Denmark/krone 10.354 10.598 8.0954 6.7333 6.8555 7.0179 7.1279 6.9893 6.9262 7 Finland/markka 6.0007 6.1971 5.0721 4.3604 4.4281 4.4882 4.5017 4.3954 4.3570 8 France/franc 8.7355 8.9799 6.9256 5.9748 6.0739 6.1530 6.1934 6.0555 6.0160 9 Germany/deutsche mark 2.8454 2.9419 2.1704 1.7881 1.8189 1.8482 1.8553 1.8134 1.8006 10 Greece/drachma 112.73 138.40 139.93 133.35 136.06 139.313 140.63 138.40 138.61 11 Hong Kong/dollar 7.8188 . 7.7911 7.8037 7.8049 7.8080 7.8090 7.8091 7.8035 7.8077 12 India/rupee.., 11.348 12.332 12.597 12.666 12.837 13.01 13.085 12.993 12.995 13 Ireland/pound 108.64 106.62 134.14 149.59 147.25 144.99 144.18 147.54 148.72 14 Italy/lira 1756.10 1908.90 1491.16 1290.80 1316.50 1337.% 1344.18 1310.86 1302.58 15 Japan/yen 237.45 238.47 168.35 140.48 144.55 150.29 147.33 143.29 143.32 16 Malay sia/ringgit 2.3448 2.4806 2.5830 2.4759 2.5078 2.5414 2.5361 2.5189 2.5308 17 Netherlands/guilder 3.2083 3.3184 2.4484 2.0154 2.0490 2.0814 2.0903 2.0413 2.0267 18 New Zealand/dollar1 57.837 49.752 52.456 57.639 58.686 59.644 58.923 63.352 64.031 19 Norway/krone 8.1596 8.5933 7.3984 6.6632 6.7147 6.7632 6.7911 6.6505 6.6311 20 Portugal/escudo 147.70 172.07 149.80 139.18 142.12 144.51 145.57 142.94 142.82 21 Singapore/dollar 2.1325 2.2008 2.1782 2.1202 2.1176 2.1183 2.1082 2.0924 2.0891 22 South Africa/rand1 69.534 45.57 43.952 49.87 49.41 48.52 48.16 48.86 48.79 23 South Korea/won 807.91 861.89 884.61 832.53 818.39 811.81 811.87 810.07 808.47 24 Spain/peseta 160.78 169.98 140.04 125.28 126.33 126.97 125.57 121.34 118.60 25 Sri Lanka/rupee 25.428 27.187 27.933 28.988 29.171 29.405 29.643 29.902 30.347 26 Sweden/krona 8.2706 8.6031 7.1272 6.2606 6.3482 6.4466 6.4898 6.3844 6.3560 27 Switzerland/franc 2.3500 2.4551 1.7979 1.4705 1.5085 1.5365 1.5364 1.5029 1.4940 28 Taiwan/dollar 39.633 39.889 37.837 32.354 31.226 31.114 30.290 30.151 30.036 29 Thailand/baht 23.582 27.193 26.314 25.629 25.779 26.041 25.926 25.765 25.783 30 United Kingdom/point1 133.66 129.74 146.77 166.66 162.88 160.90 159.96 164.46 166.20 MEMO 31 United States/dollar2 138.19 143.01 112.22 %.05 97.78 99.36 99.43 97.23 %.65 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 December 1987 A77 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, 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 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1987 November 1987 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 Terms of lending at commercial banks, August 1987 January 1988 A70 Pro forma balance sheet and income statements for priced service operations, June 30, 1987 November 1987 A74 Special tables begin on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • January 1988 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 3-7, 19871 A. Commercial and Industrial Loans2 Weighted Loan rate (percent) Loans AAmmoouunntt ooff Average aavveerraaggee made Partici- Characteristic loans size mmaattuurriittyy33 under pation ( o t f h o d u o s ll a a n r d s) s ( o t f h o d u o s ll a a n r d s) s DDaayyss WW e a ff v ee e e ii c gg r t hh a i tt g v ee e e dd 4 St ee a rr n rr d oo a rr55 r d q r I u a n a n t r e g t r e i - l 6 e ( c p o e m m r e c m n e t n i t t - ) ((pp l ee o rr a cc n ee s nn tt)) ALL BANKS 1 Overnight8 15,529,996 8,127 * 7.53 .04 7.25-7.79 78.5 5.6 2 One month and under 6,707,864 622 16 7.87 .16 7.25-8.12 81.9 7.0 3 Fixed rate 5,502,495 811 14 7.68 .16 7.19-7.93 81.7 6.7 4 Floating rate 1,205,369 302 21 8.71 .15 7.76-9.66 82.7 8.4 5 Over one month and under a year . 10,387,888 138 119 8.81 .18 7.84-9.65 76.2 13.8 6 Fixed rate 5,400,259 151 74 8.54 .23 7.59-9.38 74.7 19.6 7 Floating rate 4,987,630 127 167 9.09 .19 8.48-9.65 77.9 7.6 8 Demand9 11,085,901 234 * 8.79 .12 7.76-9.65 80.1 5.9 9 Fixed rate 1,099,847 442 * 7.55 .17 6.94-7.65 91.6 2.1 10 Floating rate 9,986,053 222 * 8.93 .12 8.51-9.65 78.9 6.3 11 Total short term 43,711,649 323 42 8.20 .15 7.36-8.75 78.9 7.8 12 Fixed rate (thousands of dollars)... 27,515,318 586 19 7.76 .12 7.26-7.97 78.9 8.4 13 1-24 226,738 7 107 11.22 .17 10.25-12.19 19.0 .2 14 25-49 124,988 31 114 10.55 .22 9.84-11.57 30.4 .1 15 50-99 134,771 62 90 10.20 .19 9.57-10.94 24.6 .8 16 100-499 488,361 177 70 9.49 .18 8.42-10.47 46.9 3.4 17 500-999 305,991 646 56 8.20 .08 7.58-8.64 77.9 4.2 18 1000 and over 26,234,470 8,765 16 7.66 .06 7.25-7.89 80.5 8.7 19 Floating rate (thousands of dollars) 16,196,331 184 138 8.96 .12 8.31-9.65 78.9 6.8 20 1-24 413,423 10 144 10.32 .10 9.58-10.86 68.5 .9 21 25-49 496,363 34 134 10.19 .11 9.38-10.75 70.7 4.8 22 50-99 770,480 65 143 9.94 .07 9.14-10.65 81.0 4.1 23 100-499 2,936,644 198 175 9.53 .02 8.75-10.20 82.2 5.6 24 500-999 1,385,636 666 164 9.22 .05 8.57-9.69 83.3 7.4 25 1000 and over 10,193,785 4,253 120 8.57 .11 7.65-9.31 78.0 7.7 Months 26 Total long term 4,107,851 226 52 8.78 .24 7.56-9.65 72.3 5.7 27 Fixed rate (thousands of dollars)... 1,631,886 209 57 8.68 .31 7.56-9.31 74.8 5.6 28 1-99 124,599 18 50 12.11 .34 10.25-12.75 14.7 1.5 29 100-499 68,226 206 54 10.41 .18 9.17-11.30 44.7 4.7 30 500-999 133,674 598 45 9.49 .62 8.99-10.20 37.9 53.7 31 1000 and over 1,305,388 7,515 59 8.18 .38 7.43-8.69 85.9 1.1 32 Floating rate (thousands of dollars) 2,475,965 239 48 8.84 .19 7.72-9.65 70.6 5.8 33 1-99 191,560 24 41 10.54 .18 9.65-11.63 38.2 1.5 34 100-499 358,589 193 51 10.14 .17 9.38-10.75 49.7 3.1 35 500-999 120,155 661 47 9.24 .13 8.57-9.65 64.4 3.3 36 1000 and over 1,805,660 5,039 48 8.38 .15 7.51-9.01 78.6 6.9 Loan rate (percent) Days PT»r_i-m e rat.e 11 Effective4 Nominal10 LOANS MADE BELOW PRIME12 37 Overnight8 14,789,118 9,862 7.47 7.20 8.25 80.1 6.5 38 One month and under 5,581,887 3,995 14 7.53 7.26 8.26 84.2 6.3 39 Over one month and under a year 4,314,622 974 102 7.70 7.45 8.36 79.2 10.8 40 Demand9 3,416,337 1,796 * 7.47 7.25 8.30 58.9 3.8 41 Total short term 28,101,964 3,045 22 7.51 7.26 8.27 78.2 6.8 42 Fixed rate 23,810,304 3,880 14 7.49 7.24 8.26 80.9 6.8 43 Floating rate 4,291,661 1,389 120 7.62 7.37 8.33 63.0 6.9 Months 44 Total long term 1,942,217 1,752 46 7.65 7.46 8.31 90.1 5.4 45 Fixed rate 960,376 1,578 51 7.68 7.52 8.35 84.1 7.3 46 Floating rate .. 981,842 1,963 42 7.62 7.40 8.28 96.0 3.4 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 4.23 Continued A. Commercial and Industrial Loans Continued Weighted Loan rate (percent) Loans Most Amount of AAvveerraaggee average mmaaddee Partici- common Characteristic ( o t f h ll o d oo u o aa s l nn l a a ss n r d s) s ( o t f h o d s u o iz s ll e a a n r d s) s mmaattuurriittyy33 WW av ee e iigg r hh a tt g ee e dd Standard q II u nn a tt r ee t rr i -- le co u m m n e d m n e t r i t - (p pp l e o aa r a tt c ii n e oo s n nn t ) pricing Days effective4 range6 (percent) LARGE BANKS 1 Overnight8 13,559,929 10,061 * 7.50 .07 7.25-7.72 76.0 3.6 Fed funds 2 One month and under 5,221,946 2,491 15 7.70 .10 7.19-7.93 83.1 6.0 Domestic 3 Fixed rate 4,516,988 4,488 14 7.57 .09 7.17-7.87 82.9 6.4 Domestic 4 Floating rate 704,958 647 19 8.52 .20 7.62-9.49 84.8 3.4 Domestic 5 Over one month and under a year 6,520,728 783 98 8.42 .11 7.59-9.11 82.7 17.2 Foreign 6 Fixed rate 4,210,278 2,724 66 8.32 .17 7.59-8.94 82.1 22.1 Foreign 7 Floating rate 2,310,450 341 157 8.58 .21 7.89-9.17 83.7 8.4 Prime 8 Demand9 6,782,199 531 * 8.71 .21 7.63-9.65 75.9 4.0 Prime 9 Fixed rate 462,720 1,734 * 7.61 .32 7.37-7.57 90.3 4.4 Domestic 10 Floating rate 6,319,479 505 * 8.79 .22 7.83-9.65 74.9 3.9 Prime 11 Total short term 32,084,802 1,307 29 7.98 .11 7.32-8.57 78.5 6.8 Fed funds 12 Fixed rate (thousands of dollars) 22,740,014 5,468 16 7.67 .09 7.25-7.89 78.8 7.6 Fed funds 13 1-24 7,126 10 104 10.18 .16 9.38-11.02 32.0 5.1 Prime 14 25-49 8,051 33 91 9.92 .43 9.58-10.67 21.4 1.2 Prime 15 50-99 15,679 66 88 9.44 .22 9.04-10.11 39.6 2.0 Prime 16 100-499 124,586 222 62 8.80 .11 8.21-9.58 63.1 2.6 Prime 17 500-999 160,198 673 50 8.34 .12 7.65-8.65 83.7 3.0 Domestic 18 1000 and over 22,424,374 10,361 16 7.66 .09 7.25-7.86 78.9 7.7 Fed funds 19 Floating rate (thousands of dollars) ... 9,344,787 458 124 8.72 .18 7.81-9.58 77.9 5.0 Prime 20 1-24 82,032 11 143 10.08 .12 9.20-10.75 83.0 .3 Prime 21 25-49 98,881 34 139 9.97 .13 9.11-10.75 82.0 .7 Prime 22 50-99 195,510 65 138 9.73 .07 9.11-10.20 83.2 1.1 Prime 23 100-499 1,020,245 209 145 9.45 .02 8.60-9.96 86.7 2.9 Prime 24 500-999 655,438 678 138 9.16 .08 8.57-9.66 84.8 6.7 Prime 25 1000 and over 7,292,681 5,421 119 8.52 .20 7.57-9.14 75.7 5.3 Prime Months 26 Total long term 2,752,198 1,450 52 8.28 .22 7.43-8.84 81.5 2.2 Domestic 27 Fixed rate (thousands of dollars)... 1,113,028 2,241 58 8.06 .29 7.43-8.57 87.9 .0 Foreign 28 1-99 7,666 27 49 11.54 .32 10.35-12.40 41.3 1.0 Other 29 100-499 13,900 255 52 10.65 .24 10.20-11.30 46.5 .0 Domestic 30 500-999 25,119 715 48 9.95 1.17 8.02-10.52 77.3 .0 Fed funds 31 1000 and over 1,066,343 8,876 59 7.96 .23 7.43-8.53 89.1 .0 Foreign 32 Floating rate (thousands of dollars) 1,639,170 1,169 47 8.42 .21 7.53-9.31 77.2 3.6 Domestic 33 1-99 24,517 34 40 10.19 .28 9.14-10.75 58.4 .2 Prime 34 100-499 77,910 226 47 9.59 .12 9.11-9.92 65.5 4.8 Prime 35 500-999 58,101 643 52 9.19 .22 8.57-9.73 77.7 .0 Prime 36 1000 and over 1,478,642 6,201 47 8.30 .23 7.44-8.84 78.1 3.8 Domestic Loan rate (percent) DDaayyss Prime ra*te 11 Effective4 Nominal10 LOANS MADE BELOW PRIME12 37 Overnight8 12,854,344 11,398 7.44 7.17 8.25 77.8 3.8 38 One month and under 4,635,102 5,903 14 7.50 7.24 8.25 83.9 5.9 39 Over one month and under a year 3,376,213 5,819 92 7.58 7.34 8.25 82.1 9.5 40 Demand9 2,280,917 4,426 * 7.50 7.27 8.25 40.0 1.5 41 Total short term 23,146,576 7,694 19 7.47 7.22 8.25 75.9 4.8 42 Fixed rate 19,910,195 8,559 12 7.46 7.20 8.25 79.4 4.9 43 Floating rate 3,236,381 4,745 115 7.56 7.32 8.25 54.2 4.6 Months 44 Total long term 1,664,677 7,236 46 7.58 7.40 8.25 93.7 0.3 45 Fixed rate 784,716 9,026 54 7.56 7.43 8.25 90.1 0.6 46 Floating rate .. 879,961 6,149 40 7.60 7.39 8.25 96.8 0.0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • January 1988 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 3-7, 1987'—Continued A. Commercial and Industrial Loans — Continued2 Weighted Loan rate (percent) Loans Amount of Average average made Partici- Characteristic (th l o o u a s n a s n ds (tho s u iz sa e nds maturity3 Weighted Standard Inter- co u m nd m er it - p lo at a i n o s n of dollars) of dollars) Days e a ff v e e c r t a i g v e e 4 error5 q r u a a n r g t e il 6 e (pe m r e c n e t n t) (percent) OTHER BANKS 1 Overnight8 1,970,067 19.1 2 One month and under 1,485,918 171 18 8.45 7.57-8.81 77.7 10.7 3 Fixed rate 985,508 170 14 8.18 7.50-8.24 76.6 8.3 4 Floating rate 500,410 172 24 8.97 8.04-9.66 79.7 15.5 5 Over one month and under a year . 3,867,161 58 153 9.46 8.53-10.20 65.3 8.1 6 Fixed rate 1,189,981 35 104 9.31 7.97-10.47 48.6 10.9 7 Floating rate 2,677,180 83 175 9.53 8.57-10.20 72.8 6.9 8 Demand9 4,303,702 124 8.92 8.30-9.65 86.7 8.9 9 Fixed rate 637,128 286 7.50 6.90-7.80 92.5 .4 10 Floating rate 3,666,574 113 9.16 8.57-9.65 85.7 10.4 11 Total short term 11,626,848 105 8.83 7.72-9.65 79.9 10.6 12 Fixed rate (thousands of dollars)... 4,775,304 112 34 8.17 7.39-8.19 79.5 12.4 13 1-24 219,611 6 107 11.26 10.25-12.19 18.6 .1 14 25-49 116,937 31 116 10.60 9.84-11.57 31.0 .1 15 50-99 119,092 62 90 10.30 9.58-11.20 22.7 .6 16 100-499 363,775 165 73 9.73 8.51-10.97 41.4 3.6 17 500-999 145,793 618 63 8.04 7.56-8.60 71.6 5.6 18 1000 and over 3,810,096 4,597 20 7.70 7.33-7.96 90.2 14.9 19 Floating rate (thousands of dollars) 6,851,544 101 151 9.29 8.57-9.92 80.2 9.4 20 1-24 331,391 9 144 10.38 9.65-10.97 65.0 1.1 21 25-49 397,482 34 133 10.25 9.58-10.75 67.9 5.9 22 50-99 574,970 65 145 10.01 9.38-10.75 80.3 5.2 23 100-499 1,916,399 192 187 9.57 8.84-10.20 79.8 7.0 24 500-999 730,198 655 180 9.27 8.57-9.92 81.9 8.0 25 1000 and over 2,901,104 2,758 122 8.72 8.10-9.58 83.5 13.6 Months 26 Total long term 1,355,652 83 9.80 8.87-10.53 53.5 12.9 27 Fixed rate (thousands of dollars)... 518,858 71 10.00 8.99-10.53 46.7 17.7 28 1-99 116,932 17 12.14 10.25-12.75 12.9 1.5 29 100-499 54,326 197 10.34 9.07-11.07 44.2 5.9 30 500-999 108,555 577 9.39 8.99-9.87 28.7 66.1 31 1000 and over 239,045 4,462 9.16 7.56-9.92 72.0 6.2 32 Floating rate (thousands of dollars) 836,795 93 9.68 8.77-10.52 57.8 10.0 33 1-99 167,043 23 10.59 9.65-11.85 35.2 1.6 34 100-499 280,679 185 10.30 9.65-10.75 45.3 2.6 35 500-999 62,054 679 9.29 8.57-9.65 51.9 6.5 36 1000 and over 327,018 2,727 8.75 7.81-9.38 81.2 21.2 Loan rate (percent) Days Prime rate Effective4 Nominal LOANS MADE BELOW PRIME12 37 Overnight8 1,934,775 5,203 7.67 7.39 8.25 95.4 24.5 38 One month and under 946,784 1,546 15 7.67 7.40 8.29 85.7 8.2 39 Over one month and under a year 938,409 244 136 8.13 7.85 8.75 68.7 15.3 40 Demand9 1,135,420 819 7.40 7.23 8.40 96.8 8.3 41 Total short term 4,955,388 797 7.70 7.44 8.39 88.8 15.9 42 Fixed rate 3,900,108 1,023 23 7.67 7.42 8.34 16.5 43 Floating rate 1,055,280 438 133 7.80 7.54 8.57 14.0 Months 44 Total long term 277,541 316 8.70 68.9 45 Fixed rate 175,660 337 8.21 7.95 8.81 57.1 37.6 46 Floating rate 101,881 285 7.72 7.49 8.51 89.0 33.2 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23 Continued B. Construction and Land Development Loans Loan rate (percent) AAmmoouunntt ooff AAvveerraaggee WWeeiigghhtteedd LLooaannss mmaaddee PPaarrttiiccii-llooaannss ssiizzee aavveerraaggee mmaa-- uunnddeerr ccoomm-- ppaattiioonn CChhaarraacctteerriissttiicc (( oo tt ff hh oo dd uu oo ss llll aa aa nn rr dd ss)) ss (( oo tt ff hh oo dd uu oo ss llll aa aa nn rr dd ss)) ss ((mm tt oo uu nn rr tt iitt hh yy ss ))33 W e a ff v e e e i c g r t h a i t g v e e e d 4 St e a r n r d o a r5 r d q r I u a n a n t r e g t r e i - l 6 e (( mm ppee iitt rr mm ccee ee nn nn tt tt )) ((pp ll ee oo rr aa cc nn ee ss nn tt)) ALL BANKS 1 Total 3,679,913 236 5 9.30 .11 8.75-9.65 88.4 16.0 2 Fixed rate (thousands of dollars) 1,944,077 327 3 9.23 .31 8.75-9.28 92.0 6.8 1-24 40,789 12 6 11.04 .25 10.47-12.13 41.6 36.8 4 25-49 40,700 34 18 11.12 .36 10.47-12.03 31.6 14.2 5 50-99 63,707 71 9 10.56 .50 10.47-10.97 12.7 11.3 6 100-499 36,819 175 9 10.13 .71 10.47-10.78 81.7 5.2 7 500 and over 1,762,062 11,236 2 9.08 .26 8.75-9.28 97.6 5.8 8 Floating rate (thousands of dollars) ... 1,735,836 180 8 9.38 .13 8.57-9.92 84.4 26.3 9 1-24 50,856 10 8 10.35 .12 9.66-10.75 84.3 1.6 10 25-49 52,673 36 7 9.85 .09 9.42-10.24 89.5 1.9 11 50-99 68,682 72 10 10.01 .10 9.65-10.75 78.9 3.6 17 100-499 306,440 200 13 9.55 .15 9.11-10.20 62.6 19.7 13 500 and over 1,257,185 3,256 7 9.25 .15 8.57-9.92 89.8 31.2 By type of construction 14 Single family 621,561 63 9 9.75 .15 9.17-10.47 67.1 19.1 IS Multifamily 218,765 177 5 9.65 .12 9.21-10.34 89.8 6.0 16 Nonresidential 2,839,587 626 4 9.18 .11 8.73-9.32 93.0 16.1 LARGE BANKS13 1 Total 2,814,435 1,512 3 9.14 .14 8.73-9.32 95.0 16.6 2 Fixed rate (thousands of dollars) 1,753,481 5,094 2 9.07 .36 8.75-9.28 97.5 5.9 3 1-24 1,510 11 9 10.20 .18 9.92-10.75 67.1 4.7 4 25-49 1,054 37 11 9.99 .51 9.92-10.75 54.8 .0 5 50-99 * * * * * * * * 6 100-499 3,829 215 18 7.23 1.06 1.13-10.75 71.8 50.4 7 500 and over 1,746,234 11,832 2 9.08 .34 8.75-9.28 97.6 5.8 8 Floating rate (thousands of dollars) ... 1,060,953 699 5 9.25 .18 8.57-9.79 91.0 34.4 9 1-24 5,701 11 10 9.80 .15 9.52-10.20 93.1 5.2 10 25-49 7,393 34 9 9.60 .09 9.11-9.92 88.1 5.9 11 50-99 14,718 73 8 9.71 .12 9.38-9.92 90.7 8.6 12 100-499 85,785 232 9 9.63 .13 9.31-9.92 76.8 7.5 13 500 and over 947,357 4,438 4 9.20 .23 8.51-9.69 92.3 37.6 By type of construction 14 Single family 189,325 355 6 9.24 .20 8.12-9.65 97.1 14.7 IS Multifamily 148,590 642 4 9.67 .15 9.21-10.34 96.4 4.2 16 Nonresidential 2,476,519 2,257 3 9.10 .16 8.73-9.28 94.8 17.5 OTHER BANKS13 1 Total 865,478 63 12 9.83 .09 9.11-10.47 66.9 13.8 2 Fixed rate (thousands of dollars) 190,596 34 10 10.66 .21 10.47-10.97 41.4 14.6 3 1-24 39,280 12 6 11.07 .40 10.47-12.13 40.6 38.0 4 25-49 39,646 34 18 11.15 .18 10.47-12.03 30.9 14.6 s 50-99 62,853 71 9 10.58 .30 10.47-10.97 12.0 11.2 6 7 5 1 0 0 0 0 - a 4 n 9 d 9 over 32,990 * 171 * 8 * 10.47 * .22 * 10.47-10.78 * 82.9 * .0 * 8 Floating rate (thousands of dollars) ... 674,883 83 13 9.60 .20 9.11-10.20 74.1 13.6 9 1-24 45,155 9 8 10.42 .11 9.92-10.75 83.1 l.l 10 25-49 45,279 36 7 9.89 .13 9.42-10.61 89.8 1.3 11 50-99 53,965 71 10 10.09 .14 9.65-10.75 75.6 2.2 12 100-499 220,656 190 14 9.51 .29 8.84-10.20 57.1 24.5 13 500 and over 309,828 1,795 13 9.41 .20 8.87-10.20 82.2 11.5 By type of construction 14 Single family 432,236 47 11 99..9977 .16 99..5588--1100..6655 53.9 21.1 IS Multifamily 70,175 70 8 9.60 .21 8.59-10.20 75.8 10.0 16 Nonresidential 363,068 106 14 9.71 .08 9.11-10.20 80.6 6.0 Note: 41.2 percent of construction and land development loans were priced For notes see end of table, relative to the prime rate. *Fewer than 10 sample loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • January 1988 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 3-7, 19871—Continued C. Loans to Farmers13 Size class of loans (thousands) Characteristic All sizes $1-9 $10-24 $25-49 $50-99 $100-249 and $2 5 o 0 v er ALL BANKS 1 Amount of loans (thousands of dollars) $972,091 $113,363 $107,665 $96,060 $140,093 $162,069 $352,841 2 i N W u e m ig b h e t r e d o f a v lo e a r n a s g e maturity (months)3 46,9 8 4 . 4 0 33,5 7 5 . 0 0 7,2 6 9 . 2 9 2,7 7 9 .3 7 1, 1 9 5 8 . 1 3 9 8 8 .6 9 3 5 3 .4 6 4 Weighted average interest rate (percent)4 10.41 11.54 11.19 11.09 10.98 10.59 9.32 5 Standard error .57 .39 .26 .48 .41 .53 .79 6 Interquartile rante 9.50-11.33 10.77-12.31 10.34-12.13 10.36-12.13 10.52-11.83 10.11-11.07 8.60-10.38 By purpose of loan 7 Feeder livestock 9.92 11.88 11.42 11.19 11.19 10.56 8.93 8 Other livestock 11.05 12.25 12.04 10.27 11.95 * * 9 Other current operating expenses 10.82 11.40 11.19 11.21 10.63 10.83 10.08 10 Farm machinery and equipment 10.77 11.39 10.22 * * * * 11 Farm real estate 10.88 11.59 11.76 * * * * 12 Other 9.77 12.04 10.24 11.57 10.79 9.93 9.00 Percentage of amount of loans 13 With floating rates 55.9 52.2 55.9 65.7 55.2 45.4 59.6 14 Made under commitment 59.9 46.9 50.6 51.8 47.2 52.3 77.7 By purpose of loan 15 Feeder livestock 29.6 14.7 10.9 20.8 36.8 17.7 45.2 16 Other livestock 3.8 4.3 6.4 2.4 7.0 * * 17 Other current operating expenses 46.8 68.4 69.2 57.5 30.7 54.4 32.9 18 Farm machinery and equipment 2.8 6.4 2.1 * * * * 19 Farm real estate 2.6 1.2 3.2 * * * * 20 Other 14.4 5.1 8.1 8.6 11.8 19.3 19.8 LARGE BANKS13 1 Amount of loans (thousands of dollars) $374,132 $8,197 $12,060 $16,781 $24,929 $43,127 $269,038 2 Number of loans 4,194 2,050 818 483 387 296 161 3 Weighted average maturity (months)3 5.1 5.3 6.2 6.4 6.5 7.8 4.7 4 Weighted average interest rate (percent)4 9.30 10.53 10.15 10.02 9.94 9.92 9.02 5 Standard error .55 .38 .16 .42 .35 .37 .74 6 Interquartile rante6 8.60-10.20 10.00-10.83 9.58-10.74 9.50-10.52 9.24-10.47 9.14-10.52 8.60-9.84 By purpose of loan / Feeder livestock 8.98 10.35 9.94 9.99 10.13 10.03 8.79 8 Other livestock 9.40 10.54 * 10.46 * * 9 Other current operating expenses 9.84 10.46 10.16 9.98 9.81 9.81 9.75 10 Farm machinery and equipment 10.28 11.09 * * * * * 11 Farm real estate 10.19 11.86 * * * * * 12 Other 9.05 10.47 10.18 10.08 9.97 9.87 8.73 Percentage of amount of loans 13 With floating rates 59.6 90.5 91.8 92.2 95.3 90.0 47.0 14 Made under commitment 93.2 82.4 85.3 84.7 91.8 91.7 94.7 By purpose of loan 15 Feeder livestock 42.5 9.7 15.2 19.3 22.2 27.2 50.5 16 Other livestock 3.0 1.4 * 7.5 * * # 17 Other current operating expenses 32.5 68.0 60.6 53.7 46.7 44.2 25.6 18 Farm machinery and equipment .6 5.2 * * * * * 19 Farm real estate .9 3.2 * * * * * 20 Other 20.5 12.6 16.3 14.8 22.6 19.7 21.2 OTHER BANKS13 1 Amount of loans (thousands of dollars) $597,959 $105,166 $95,604 $79,279 $115,165 $118,942 * 2 Number of loans 42,750 31,500 6,474 2,313 1,594 693 * 3 Weighted average maturity (months)3 9.4 7.1 7.0 7.4 16.6 8.8 * 4 Weighted average interest rate (percent)4 11.11 11.62 11.32 11.32 11.20 10.84 * 5 Standard error .12 .10 .20 .22 .19 .37 * 6 Interquartile rante 10.47-11.91 10.79-12.31 10.50-12.19 10.52-12.17 10.79-11.83 10.21-11.80 # By purpose of loan / Feeder livestock 11.09 11.96 11.69 11.42 11.32 * * 8 Other livestock 11.77 12.29 * * * * * 9 Other current operating expenses 11.18 11.47 11.31 11.44 10.93 * * 10 Farm machinery and equipment 10.82 11.41 * * * * * 11 Farm real estate 10.99 * * * * * * 12 Other 10.64 12.38 * * * * * For notes see end of table. *Fewer than 10 sample loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A75 4.23 Continued C. Loans to Farmers14—Continued Size class of loans (thousands) Characteristic All sizes $1-9 $10-24 $25-49 $50-99 $100-249 $250 and over Percentage of amount of loans 13 With floating rates 53.6 49.2 51.3 60.0 46.5 29.2 * 14 Made under commitment 39.1 44.2 46.3 44.8 37.6 38.0 * By purpose of loan 15 Feeder livestock 21.6 15.1 10.3 21.1 39.9 * 16 Other livestock 4.3 4.5 * * * * * 17 Other current operating expenses 55.7 68.4 70.3 58.3 27.2 * * 18 Farm machinery and equipment 4.1 6.5 * * * * * 19 Farm real estate 3.6 * * * * * * 20 Other 10.6 4.5 * * * * * *Fewer than 10 sample loans. differ by less than this amount from the average rate that would be found by a 1. The survey of terms of bank lending to business collects data on gross loan complete survey of lending at all banks. extensions made during the first full business week in the mid-month of each 6. The interquartile range shows the interest rate range that encompasses the quarter by a sample of 340 commercial banks of all sizes. A subsample of 250 middle 50 percent of the total dollar amount of loans made. banks also report loans to farmers. The sample data are blown up to estimate the 7. The most common base rate is that rate used to price the largest dollar lending terms at all insured commercial banks during that week. The estimated volume of loans. Base pricing rates include the prime rate (sometimes referred to terms of bank lending are not intended for use in collecting the terms of loans as a bank's "basic" or "reference" rate); the federal funds rate; domestic money extended over the entire quarter or residing in the portfolios of those banks. market rates other than the federal funds rate; foreign money market rates; and Construction and land development loans include both unsecured loans and loans other base rates not included in the foregoing classifications. secured by real estate. Thus, some of the construction and land development 8. Overnight loans are loans that mature on the following business day. loans would be reported on the statement of condition as real estate loans and the 9. Demand loans have no stated date of maturity. remainder as business loans. Mortgage loans, purchased loans, foreign loans, and 10. Nominal (not compounded) annual interest rates are calculated from survey loans of less than $1,000 are excluded from the survey. data on the stated rate and other terms of the loan and weighted by loan size. As of Dec. 31, 1985, assets of most of the large banks were at least $5.5 billion. 11. The prime rate reported by each bank is weighted by the volume of loans For all insured banks total assets averaged $165 million. extended and then averaged. 2. Beginning with the August 1986 survey respondent banks provide informa- 12. The proportion of loans made at rates below prime may vary substantially tion on the type of base rate used to price each commercial and industrial loan from the proportion of such loans outstanding in banks' portfolios. made during the survey week. This reporting change is reflected in the new 13. Among banks reporting loans to farmers (Table C), most "large banks" column on the most common base pricing rate in table A and footnote 13 from (survey strata 1 to 3) had over $600 million in total assets, and most "other banks" table B. (survey strata 4 to 6) had total assets below $600 million. 3. Average maturities are weighted by loan size and exclude demand loans. The survey of terms of bank lending to farmers now includes loans secured by 4. Effective (compounded) annual interest rates are calculated from the stated farm real estate. In addition, the categories describing the purpose of farm loans rate and other terms of the loan and weighted by loan size. have now been expanded to include "purchase or improve farm real estate." In 5. The chances are about two out of three that the average rate shown would previous surveys, the purpose of such loans was reported as "other." 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 INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director LYNN SMITH Fox, Special Assistant to the Board CHARLES J. SIEGMAN, Senior Associate Director BOB STAHLY MOORE, Special Assistant to the Board DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser DONALD B. ADAMS, Assistant Director LEGAL DIVISION PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director MICHAEL BRADFIELD, General Counsel RALPH W. SMITH, JR., Assistant Director J. VIRGIL MATTINGLY, JR., Deputy General Counsel RICHARD M. ASHTON, Associate General Counsel OLIVER IRELAND, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS RICKI R. TIGERT, Assistant General Counsel MARYELLEN A. BROWN, Assistant to the General Counsel MICHAEL J. PRELL, Director EDWARD C. ETTIN, Deputy Director JARED J. ENZLER, Associate Director OFFICE OF THE SECRETARY THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director WILLIAM W. WILES, Secretary ELEANOR J. STOCKWELL, Associate Director BARBARA R. LOWREY, Associate Secretary MARTHA BETHEA, Deputy Associate Director JAMES MCAFEE, Associate Secretary PETER A. TINSLEY, Deputy Associate Director MARK N. GREENE, Assistant Director MYRON L. KWAST, Assistant Director DIVISION OF CONSUMER SUSAN J. LEPPER, Assistant Director AND COMMUNITY AFFAIRS MARTHA S. SCANLON, Assistant Director DAVID J. STOCKTON, Assistant Director JOYCE K. ZICKLER, Assistant Director GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director LEVON H. GARABEDIAN, Assistant Director (Administration) ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DIVISION OF MONETARY AFFAIRS DIVISION OF BANKING DONALD L. KOHN, Director SUPERVISION AND REGULATION DAVID E. LINDSEY, Deputy Director BRIAN F. MADIGAN, Assistant Director WILLIAM TAYLOR, Staff Director RICHARD D. PORTER, Assistant Director FRANKLIN D. DREYER, Deputy Director' NORMAND R.V. BERNARD, Special Assistant to the Board DON E. KLINE, Associate Director FREDERICK M. STRUBLE, Associate Director WILLIAM A. RYBACK, Deputy Associate Director OFFICE OF THE INSPECTOR GENERAL STEPHEN C. SCHEMERING, Deputy Associate Director RICHARD SPILLENKOTHEN, Deputy Associate Director BRENT L. BOWEN, Inspector General 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. SUSS AN, Assistant Director LAURA M. HOMER, Securities Credit Officer 1. On loan from the Federal Reserve Bank of Chicago. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All and Official Staff H. ROBERT HELLER EDWARD W. KELLEY, JR. OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES S. DAVID FROST, Staff Director THEODORE E. ALLISON, Staff Director EDWARD T. MULRENIN, Assistant Staff Director PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF PERSONNEL CLYDE H. FARNSWORTH, JR., Director ELLIOTT C. MCENTEE, Associate Director DAVID L. SHANNON, Director DAVID L. ROBINSON, Associate Director JOHN R. WEIS, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director CHARLES W. WOOD, Assistant Director CHARLES W. BENNETT, Assistant Director JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director OFFICE OF THE CONTROLLER JOHN H. PARRISH, Assistant Director LOUISE L. ROSEMAN, Assistant Director GEORGE E. LIVINGSTON, Controller FLORENCE M. YOUNG, Adviser STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) 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

A78 Federal Reserve Bulletin • January 1988 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 ERNEST T. PATRIKIS, 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, Colui ibia, 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, PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. Mail Stop 138, Board of Governors of the Federal Reserve $13.50 each. System, Washington, D.C. 20551. When a charge is indicat- FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updated, payment should accompany request and be made to the ed at least monthly. (Requests must be prepaid.) Board of Governors of the Federal Reserve System. Payment Consumer and Community Affairs Handbook. $75.00 per from foreign residents should be drawn on a U.S. bank. year. Stamps and coupons are not accepted. Monetary Policy and Reserve Requirements Handbook. $75.00 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- Securities Credit Transactions Handbook. $75.00 per year. TIONS. 1984. 120 pp. Federal Reserve Regulatory Service. 3 vols. (Contains all ANNUAL REPORT. three Handbooks plus substantial additional material.) ANNUAL REPORT: BUDGET REVIEW, 1986-87. $200.00 per year. FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or Rates for subscribers outside the United States are as $2.00 each in the United States, its possessions, Canada, follows and include additional air mail costs: and Mexico; 10 or more of same issue to one address, Federal Reserve Regulatory Service, $250.00 per year. $18.00 per year or $1.75 each. Elsewhere, $24.00 per Each Handbook, $90.00 per year. year or $2.50 each. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. of Part I only) 1976. 682 pp. $5.00. WELCOME TO THE FEDERAL RESERVE. BANKING AND MONETARY STATISTICS. 1941-1970. 1976. PROCESSING AN APPLICATION THROUGH THE FEDERAL RE- 1,168 pp. $15.00. SERVE SYSTEM. August 1985. 30 pp. ANNUAL STATISTICAL DIGEST INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1974-78. 1980. 305 pp. $10.00 per copy. 440 pp. $9.00 each. 1981. 1982. 239 pp. $ 6.50 per copy. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1982. 1983. 266 pp. $ 7.50 per copy. December 1986. 264 pp. $10.00 each. 1983. 1984. 264 pp. $11.50 per copy. 1984. 1985. 254 pp. $12.50 per copy. 1985. 1986. 231 pp. $15.00 per copy. 1986. 1987. 288 pp. $15.00 per copy. CONSUMER EDUCATION PAMPHLETS Short pamphlets suitable for classroom use. Multiple copies HISTORICAL CHART BOOK. Issued annually in Sept. $1.25 are available without charge. each in the United States, its possessions, Canada, and Mexico; 10 or more to one address, $1.00 each. Elsewhere, $1.50 each. Consumer Handbook on Adjustable Rate Mortgages SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- Consumer Handbook to Credit Protection Laws RIES OF CHARTS. Weekly. $21.00 per year or $.50 each in Fair Credit Billing the United States, its possessions, Canada, and Mexico; Federal Reserve Glossary 10 or more of same issue to one address, $19.50 per year A Guide to Business Credit and the Equal Credit Opportunity or $.45 each. Elsewhere, $26.00 per year or $.60 each. Act THE FEDERAL RESERVE ACT, and other statutory provisions Guide to Federal Reserve Regulations affecting the Federal Reserve System, as amended How to File A Consumer Credit Complaint through April 20, 1983, with Supplements covering If You Borrow To Buy Stock amendments through August 1986. 576 pp. $7.00. If You Use A Credit Card REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- Series on the Structure of the Federal Reserve System ERAL RESERVE SYSTEM. The Board of Governors of the Federal Reserve System ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— The Federal Open Market Committee Regulation Z) Vol. I (Regular Transactions). 1969. 100 Federal Reserve Bank Board of Directors pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each Federal Reserve Banks volume $2.25; 10 or more of same volume to one Organization and Advisory Committees address, $2.00 each. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one address, $1.50 each. PAMPHLETS FOR FINANCIAL INSTITUTIONS THE BANK HOLDING COMPANY MOVEMENT TO 1978: A Short pamphlets on regulatory compliance, primarily suit- COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to able for banks, bank holding companies and creditors. one address, $2.25 each. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; 10 or more to one address, $1.25 each. Limit of 50 copies Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 The Board of Directors' Opportunities in Community Rein- 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET vestment INTERVENTION: APPLICATIONS TO CANADA, GERMA- The Board of Directors' Role in Consumer Law Compliance NY, AND JAPAN, by Deborah J. Danker, Richard A. Combined Construction/Permanent Loan Disclosure and Haas, Dale W. Henderson, Steven A. Symansky, and Regulation Z Ralph W. Tryon. April 1985. 27 pp. Out of print. Community Development Corporations and the Federal Re- 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECONOserve MY, by Darrell Cohen and Peter B. Clark. January Construction Loan Disclosures and Regulation Z 1984. 16 pp. Out of print. Finance Charges Under Regulation Z 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF How to Determine the Credit Needs of Your Community FINANCIAL DEREGULATION, INTERSTATE BANKING, Regulation Z: The Right of Rescission AND FINANCIAL SUPERMARKETS, by Stephen A. The Right to Financial Privacy Act Rhoades. February 1984. Out of print. Signature Rules in Community Property States: Regulation B 138. ANTITRUST LAWS, JUSTICE DEPARTMENT GUIDE- Signature Rules: Regulation B LINES, AND THE LIMITS OF CONCENTRATION IN LO- Timing Requirements for Adverse Action Notices: Regula- CAL BANKING MARKETS, by James Burke. June 1984. tion B 14 pp. Out of print. What An Adverse Action Notice Must Contain: Regulation B 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN Understanding Prepaid Finance Charges: Regulation Z THE UNITED STATES, by Thomas D. Simpson and Patrick M. Parkinson. August 1984. 20 pp. 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF THE LITERATURE, by John D. Wolken. November STAFF STUDIES.- Summaries Only Printed in the 1984. 38 pp. Out of print. Bulletin 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAY- Studies and papers on economic and financial subjects that MENT COSTS, by William Dudley. November 1984. are of general interest. Requests to obtain single copies of 15 pp. Out of print. the full text or to be added to the mailing list for the series 142. MERGERS AND ACQUISITIONS BY COMMERCIAL may be sent to Publications Services. BANKS, 1960-83, by Stephen A. Rhoades. December 1984. 30 pp. Out of print. 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF Staff Studies 115-125 are out of print. THE ELECTRONIC FUND TRANSFER ACT: RECENT SURVEY EVIDENCE, by Frederick J. Schroeder. April 1985. 23 pp. Out of print. 114. MULTIBANK HOLDING COMPANIES: RECENT EVI- 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- DENCE ON COMPETITION AND PERFORMANCE IN SUMER CREDIT REGULATIONS: THE TRUTH IN LEND- BANKING MARKETS, by Timothy J. Curry and John T. ING AND EQUAL CREDIT OPPORTUNITY LAWS, by Rose. Jan. 1982. 9 pp. Gregory E. Elliehausen and Robert D. Kurtz. May 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- 1985. 10 pp. KET INTERVENTION, by Donald B. Adams and Dale 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME W. Henderson. August 1983. 5 pp. Out of print. AND THEIR IMPACT ON CONSUMERS, by Glenn B. 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- Canner and Robert D. Kurtz. August 1985. 31 pp. Out VENTION: JANUARY-MARCH 1975, by Margaret L. of print. Greene. August 1984. 16 pp. Out of print. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- by Thomas F. Brady. November 1985. 25 pp. garet L. Greene. October 1984. 40 pp. Out of print. 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- INDEXES OF THE MONETARY AGGREGATES, by Helen VENTION: OCTOBER 1980-OcTOBER 1981, by Margaret T. Farr and Deborah Johnson. December 1985. 42 pp. L. Greene. August 1984. 36 pp. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON IN- THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA- TERNATIONAL TRADE AND OTHER ECONOMIC VARIA- TION RESULTS, by Flint Brayton and Peter B. Clark. BLES: A REVIEW OF THE LITERATURE, by Victoria S. December 1985. 17 pp. Farrell with Dean A. DeRosa and T. Ashby McCown. January 1984. Out of print. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN BANKING BEFORE AND AFTER ACQUISITION, by 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- Stephen A. Rhoades. April 1986. 32 pp. DEUTSCHE MARK INTERVENTION, by Laurence R. 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 John T. Rose and John D. Wolken. May 1986. 13 pp. TWEEN EXCHANGE RATES AND INTERVENTION: A REVIEW OF THE TECHNIQUES AND LITERATURE, by 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT Kenneth Rogoff. October 1983. 15 pp. PRICING FROM 1983 THROUGH 1985, by Patrick I. 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTER- Mahoney, Alice P. White, Paul F. O'Brien, and Mary VENTION, AND INTEREST RATES: AN EMPIRICAL IN- M. McLaughlin. January 1987. 30 pp. VESTIGATION, by Bonnie E. Loopesko. November 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A 1983. Out of print. REVIEW OF THE LITERATURE, by Mark J. War- 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET shawsky. April 1987. 18 pp. INTERVENTION: A REVIEW OF THE LITERATURE, by 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis Ralph W. Tryon. October 1983. 14 pp. Out of print. and Alice P. White. September 1987. 14 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF Survey of Consumer Finances, 1983: A Second Report. PROPOSED CEILINGS ON CREDIT CARD INTEREST 12/84. RATES, by Glenn B. Canner and James T. Fergus. Union Settlements and Aggregate Wage Behavior in the October 1987. 783 pp. 1980s. 12/84. 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark The Thrift Industry in Transition. 3/85. J. Warshawsky. November 1987. 25 pp. A Revision of the Index of Industrial Production. 7/85. Financial Innovation and Deregulation in Foreign Industrial Countries. 10/85. Recent Developments in the Bankers Acceptance Market. REPRINTS OF BULLETIN ARTICLES 1/86. Most of the articles reprinted do not exceed 12 pages. The Use of Cash and Transaction Accounts by American 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 Lending by Banks: A Guide to International and Foreign Experience with Targets for Money Growth. 10/83. U.S. Statistics. 10/86. Intervention in Foreign Exchange Markets: A Summary of Recent Developments in Corporate Finance. 11/86. Ten Staff Studies. 11/83. U.S. International Transactions in 1986. 5/87. A Financial Perspective on Agriculture. 1/84. Measuring the Foreign-Exchange Value of the Dollar. 6/87. Survey of Consumer Finances, 1983. 9/84. Changes in Consumer Installment Debt: Evidence from the Bank Lending to Developing Countries. 10/84. 1983 and 1986 Surveys of Consumer Finances. 10/87. 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, 74 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 8 Financial institutions, 26 Reserves and related items, 3, 4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Nonfinancial corporations, 36 Banks, by classes, 3, 18-20, 21 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 40, 41 Turnover, 15 Production, 47, 48 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) BANKERS acceptances, 9, 23, 24 Dividends, corporate, 35 Bankers balances, 18-20 (See also Foreigners) Bonds (See also U.S. government securities) EMPLOYMENT, 45 New issues, 34 Eurodollars, 24 Rates, 24 Branch banks, 21, 55 FARM mortgage loans, 39 Business activity, nonfinancial, 44 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business expenditures on new plant and equipment, 36 Federal credit agencies, 33 Business loans (See Commercial and industrial loans) Federal finance Debt subject to statutory limitation, and types and CAPACITY utilization, 46 ownership of gross debt, 30 Capital accounts Receipts and outlays, 28, 29 Banks, by classes, 18 Treasury financing of surplus, or deficit, 28 Federal Reserve Banks, 10 Treasury operating balance, 28 Central banks, discount rates, 67 Federal Financing Bank, 28, 33 Certificates of deposit, 24 Federal funds, 6, 17, 19, 20, 21, 24, 28 Commercial and industrial loans Federal Home Loan Banks, 33 Commercial banks, 16, 19, 70-72 Federal Home Loan Mortgage Corporation, 33, 38, 39 Weekly reporting banks, 19-21 Federal Housing Administration, 33, 38, 39 Commercial banks Federal Land Banks, 39 Assets and liabilities, 18-20 Federal National Mortgage Association, 33, 38, 39 Federal Reserve Banks Commercial and industrial loans, 16, 18, 19, 20, 21, 70-72 Condition statement, 10 Consumer loans held, by type, and terms, 40, 41 Discount rates (See Interest rates) Loans sold outright, 19 U.S. government securities held, 4, 10, 11, 30 Nondeposit funds, 17 Federal Reserve credit, 4, 5, 10, 11 Real estate mortgages held, by holder and property, 39 Federal Reserve notes, 10 Terms of Lending, 70-75 Federal Savings and Loan Insurance Corporation insured Time and savings deposits, 3 institutions, 26 Commercial paper, 23, 24, 37 Federally sponsored credit agencies, 33 Condition statements (See Assets and liabilities) Finance companies Construction, 44, 49, 73 Assets and liabilities, 37 Consumer installment credit, 40, 41 Business credit, 37 Consumer prices, 44, 50 Loans, 40, 41 Consumption expenditures, 51, 52 Paper, 23, 24 Corporations Financial institutions Nonfinancial, assets and liabilities, 36 Loans to, 19, 20, 21 Profits and their distribution, 35 Selected assets and liabilities, 26 Security issues, 34, 65 Float, 4 Cost of living (See Consumer prices) Credit unions, 26, 40. (See also Thrift institutions) Flow of funds, 42, 43 Currency and coin, 18 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 21 Customer credit, stock market, 25 Foreign currency operations, 10 Foreign deposits in U.S. banks, 4, 10, 19, 20 Foreign exchange rates, 68 DEBITS to deposit accounts, 15 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 18-21 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

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 George N. Hatsopoulos Frank E. Morris Richard N. Cooper 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 Peter A. Benoliel 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 Robert A. Georgine Robert P. Black Hanne Merriman 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 Roy D. Terry Fred R. Herr1 Jacksonville 32231 E. William Nash, Jr. James D. Hawkins1 Miami 33152 Sue McCourt Cobb Patrick K. Barron1 Nashville 37203 Condon S. Bush Donald E. Nelson New Orleans 70161 Sharon A. Perlis Henry H. Bourgaux CHICAGO* 60690 Robert J. Day Silas Keehn Marcus Alexis Daniel M. Doyle Detroit 48231 Richard T. Lindgren Roby L. Sloan1 ST. LOUIS 63166 Robert L. Virgil, Jr. Thomas C. Melzer H. Edwin Trusheim James R. Bowen 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 Michael W. Wright Gary H. Stern John A. Rollwagen Thomas E. Gainor Helena 59601 Marcia S. Andersen Robert F. McNellis KANSAS CITY 64198 Irvine O. Hockaday, Jr. Roger Guffey Fred W. Lyons, Jr. Henry R. Czerwinski Denver 80217 James C. Wilson 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, III1 San Antonio 78295 Robert F. McDermott Thomas H. Robertson SAN FRANCISCO 94120 Robert F. Erburu Robert T. Parry Carolyn S. Chambers Carl E. Powell John F. Hoover1 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 Carol Nygren 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. 1. Senior Vice President. 2. Executive Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories Aflrii 1914 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