Federal Reserve Bulletin, 1988-02

VOLUME 74 • NUMBER 2 • FEBRUARY 1988 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. / , / _V / ; " ' • :./> • PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost • Griffith L. Garwood • Donald L. Kohn • Michael J. Prell • Edwin M. Truman If; ft" , y, 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 79 STATE AND LOCAL GOVERNMENT 106 ANNOUNCEMENTS FINANCE IN THE CURRENT EXPANSION New members named to Consumer Advis- The aggregate fiscal position of the state ory Council. and local government sector has deterio- Appointment of new chairman of the Pricrated markedly during the current expaning Policy Committee. sion, moving from a large surplus in the operating and capital account in 1983 to Increase in net transaction accounts to deficits in 1987. which 3 percent reserve requirement will apply. 89 INDUSTRIAL PRODUCTION Operational changes to automated clearinghouse mechanism. Industrial production increased an estimated 0.4 percent in November. Amendment to Regulation T. Amendment to Regulation Z. 91 STATEMENTS TO CONGRESS Approval of bank holding company application. Alan Greenspan, Chairman, Board of Governors, presents the views of the Board on Extension of comment period on a program modernizing the U.S. financial system to to permit state member banks to amortize adapt it to the important changes in tech- losses on qualified agricultural loans. nology and competition that have already Proposal for new regulation to carry out transformed financial markets here and provisions of the Expedited Funds Availabroad and suggests that the Glass-Steagall ability Act; proposal to amend Regulation Z Act be repealed insofar as it prevents bank to require increased disclosures about home holding companies from being affiliated equity lines of credit much earlier in the with firms engaged in securities underwritcredit-granting process. ing and dealing activities, before the Senate Committee on Banking, Housing, and Ur- Proposed revisions to official staff commenban Affairs, December 1, 1987. taries on Regulations B, E, and Z. Admission of seven state banks to member- 103 Chairman Greenspan discusses the role of ship in the Federal Reserve System. commodity prices in the international coordination of economic policy and says that he believes the Federal Reserve should not 112 RECORD OF POLICY ACTIONS OF THE be required to report to the Congress a FEDERAL OPEN MARKET COMMITTEE projected range for the movement of an -A index of commodity prices, before the Sub- At the FOMC meeting on November 3, committees on Domestic Monetary Policy 1987, all of the members indicated their and on International Finance, Trade and support of a directive that called for main- Monetary Policy of the House Committee taining the degree of reserve pressure that on Banking, Finance and Urban Affairs, had been sought in recent days. The mem- December 18, 1987. bers recognized that the volatile conditions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

in financial markets and related uncertain- intermeeting range for the federal funds ties in the business outlook might continue rate, which provides a mechanism for initito indicate the need for special flexibility in ating consultation of the Committee when the conduct of open market operations. its boundaries are persistently exceeded, Such an approach to policy implementation should be reduced from 5 to 9 percent to 4 would depend in particular on the strength to 8 percent. of demands for liquidity stemming from recent and prospective developments in financial markets. To the extent that the 121 LEGAL DEVELOPMENTS functioning of those markets permitted a Various bank holding company, bank serreturn to more normal open market operavice corporation, and bank merger orders; tions, the members indicated that someand pending cases. what lesser reserve restraint would be acceptable, while slightly greater reserve restraint might be acceptable, depending on Al FINANCIAL AND BUSINESS STATISTICS the strength of the business expansion, in- A3 Domestic Financial Statistics dications of inflation, the performance of A44 Domestic Nonfinancial Statistics the dollar in foreign exchange markets, with A53 International Statistics account also taken of the behavior of the monetary aggregates. The members be- A69 GUIDE TO TABULAR PRESENTATION, lieved that the outlook for monetary growth STATISTICAL RELEASES, AND SPECIAL over the months ahead was subject to un- TABLES usual uncertainty, but the contemplated reserve conditions were thought likely to be A82 BOARD OF GOVERNORS AND STAFF consistent with somewhat faster growth in M2 and M3 than had been expected earlier; such growth might center on annual rates of A84 FEDERAL OPEN MARKET COMMITTEE around 6 to 7 percent for the period from AND STAFF; ADVISORY COUNCILS September through December. Largely reflecting the bulge in October, growth in Ml A86 FEDERAL RESERVE BOARD in the fourth quarter as a whole was ex- PUBLICATIONS pected to be well above its average pace in the previous several months. However, be- A89 INDEX TO STATISTICAL TABLES cause of the very substantial uncertainty that still surrounded the outlook for Ml, the A91 FEDERAL RESERVE BANKS, BRANCHES, Committee decided to continue its practice AND OFFICES of not specifying a numerical expectation for its growth. The members agreed that the A92 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

State and Local Government Finance in the Current Expansion Laura S. Rubin of the Board's Division of Re- scribes the effects of the Tax Reform Act of 1986 search and Statistics prepared this article. Sylvia on state and local governments, as well as recent L. Lucas provided research assistance. developments in municipal securities markets. The state and local government sector has seen THE FIRST HALF OF THE 1980S enormous change during the current economic expansion. The aggregate fiscal position has de- The state and local sector was hit hard by backteriorated markedly, moving from a large surplus to-back recessions in 1980 and 1982 (table 1). in the operating and capital account in 1983, the And, the sector recorded deficits in both those first year of the expansion, to deficits in 1987. years despite a marked contraction in the growth Several factors are responsible for the fiscal of expenditures. The cyclical deterioration in erosion. Construction spending surged earlier in budgetary positions in the early 1980s was comthe expansion, financed in part with tax-exempt pounded by sharp reductions in federal grants, debt raised in the capital markets. At the same which fell more than 10 percent in nominal terms time, federal aid was reduced, and weakness in between the fourth quarter of 1980 and the first the energy and agriculture sectors cut revenues quarter of 1982. The reaction was belt tightening, in major areas of the country. in which employment declined for nearly two Growth in construction outlays has abated in years, a development unprecedented in the postrecent quarters, easing fiscal strain; but, at the war history of the sector (chart 1). In addition, same time, federal grants are not expected to rise during the recessionary period, real outlays for appreciably, and regional difficulties, while di- construction continued the descent that had beminishing, remain. This article discusses devel- gun in 1969; by 1983, spending was barely half opments in the state and local sector during the the peak of 1968. economic expansion and the current fiscal posi- The cyclical expansion in economic activity tion of these governments. The article also de- began in late 1982; but when budgets were 1. Fiscal developments in the state and local sector Percent change except as noted1 SSuurrpplluuss Receipts Real purchases ((ddeeffiicciitt--))22 PPeerriioodd EExxppeennddiittuurreess ((bbiilllliioonnss ooff ddoollllaarrss)) Total Taxes Grants Total Construction 1980 -.3 10.6 11.1 9.3 9.9 -.3 -5.3 1981 4.2 5.8 10.3 -8.6 6.2 -1.3 -10.5 1982 -1.8 6.5 7.9 .0 6.4 .6 .0 1983 4.4 10.0 12.4 1.8 6.0 1.5 -4.9 1984 19.8 9.6 9.7 12.0 8.8 4.4 9.0 1985 16.0 7.2 7.3 7.7 8.7 4.0 6.5 1986 7.4 5.8 7.1 -.9 8.8 4.6 11.0 1987 -5.03 6.0 7.8 .9 7.5 2.6 -2.0 «St ¥ws" j 1**' • • 1. Annual percent changes are measured from fourth quarter to 2. Operating and capital accounts, excluding social insurance fourth quarter; data for 1987 are from fourth quarter 1986 to third funds. quarter 1987, at an annual rate. 3. Average of three quarters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • February 1988 1. Employment and construction in the 2. Capital stock per capita, state and local sector state and local sector Thousands of 1982 dollars Millions ^T 6 Employment 5 10 4 5 II 1 • 1 II • 111 II11 H 11 1 H 111 R I I 1 I 1 II I 1 I l i l M l l M i a i l l B l l l B I I I H I l l B l l l BI Billions of 1982 dollars 1950 1960 1970 1980 1987 Construction 1948-86, annual data net of depreciation; 1987, staff estimate of third-quarter data. 60 SOURCE. U.S. Department of Commerce. 40 spending on construction during the preceding 15 years resulted in a decline in the real net capital stock per capita for the state and local sector by 20 I-NIIIIII II • 1 II H M1 ILL 1 I 11 a 111 H I 1981, the first in the postwar period (chart 2). 1950 I960 1970 1980 1987 With highways, sewers, and water supply facili- 1946-86, annual data; 1987, employment is average of first three ties in need of repair and expansion, an apparent quarters, construction is annual rate for first three quarters. SOURCE. U.S. Department of Labor and U.S. Department of gap existed between the actual stock of capital Commerce. and the desired stock. Dramatic events such as the collapse of a major bridge in Connecticut in planned and tax proposals were set forth during June 1983 heightened public concern. Other isthe late winter and spring of 1983, most forecastsues began to surface. Birth rates turned around ers were expecting only moderate growth in the in 1977, leading to a rise in the school-age popueconomy and the outlook for many state and lation by 1984, and to the need to expand and local governments remained dismal. Sizable tax renovate the school system (chart 3). The surge increases were deemed necessary, and plansin homebuilding during the mid-1980s stimulated were made to slow outlays further. These policonstruction of roads and sewers. Also, overcies, it was hoped, would produce balanced crowding in prisons forced many governments to budgets—perhaps even small surpluses—in the improve correctional facilities. year ahead. The surprise came from the strength By 1984, many state and local governments of the economic recovery. With retail sales, as had embarked on sizable investment programs. well as personal and corporate income, expand- For the sector as a whole, growth in real outlays ing more rapidly than anticipated, state and local government tax receipts shot up more than 12 percent in 1983, the largest advance in 11 years; 3. State and local school construction total receipts, including grants, rose 10 percent. Billions of 1982 dollars Millions At the same time, the growth in expenditures slowed to 6 percent, and the sector reported a sizable surplus in its operating and capital accounts, excluding social insurance funds, by the second half of 1983. With the improved fiscal stance and expectations of continued growth in receipts, state and local governments began to address a perceived need for increasing investment in the infrastruc- 1965 1970 1975 1980 1985 1987 ture. Together with normal depreciation and a Quarterly data. steadily growing population, the reduction in SOURCE. U.S. Department of Commerce. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

State and Local Government Finance in the Current Expansion 81 for construction averaged nearly 9 percent annu- The energy states—Alaska, Louisiana, Monally between 1984 and 1986. Some of the largest tana, New Mexico, North Dakota, Oklahoma, increases were in real spending for fire, police, Texas, and Wyoming—have been heavily depenand, most important, corrections facilities. Real dent on revenue from severance taxes, which are expenditures on school construction, as well as based on the quantity or value of extracted building of sewers and water supply systems, natural resources. Receipts from these taxes also rose dramatically, while the increase in have fallen substantially in recent years. For spending on highways and roads was relatively example, the $10 per barrel drop in the price of moderate. Overall, the upswing in construction oil during the first half of 1986 was estimated to renewed the growth of the net real capital stock have cost most of these states 5 to 10 percent of of state and local governments; per capita, the total expected revenue. Secondary effects on capital stock rose in 1986 for the first time since businesses\were?significant as well. im Oil prices, though recovered somewhat from The turnaround in capital spending likely their lows in July 1986, are still depressed below would have been even stronger but for special those that spurred the boom in local economies; factors that clouded prospects for state and local and budgetary pressures have continued to governments in the mid-1980s. These included squeeze government spending. All of the energy unusual economic stresses in certain regions of states cut the budgets that had been enacted into the country and continuing and potential cuts in law in fiscal 1987; and several made cuts in fiscal federal grants. In addition, an overhaul of the 1986. federal tax code under consideration at that time In contrast, throughout this period, New Enraised many questions for state and local officials. gland, the West Coast, and the Mid-Atlantic states enjoyed fiscal health. The economies of Regional Stresses the Great Lakes states grew steadily, if slowly, during the expansion, as their budgetary posi- During the 1980s, the financial situation varied tions strengthened after the recessions in the dramatically among state and local governments. early 1980s. The regions confronting the greatest problems il {IT?: - * v.- ' were primarily those dependent on agriculture Federal Grants and energy-related industries. Real net farm in- v> ijOHJjiV-:. come fell 46 percent in 1980, and through 1986 Federal grants became a far less important remained below the levels typical of the 1960s source of state and local revenue in the early and 1970s. Profits and sales of agricultural equip- 1980s, falling from a high of 23 percent of receipts ment retailers were reduced as well. As a conse- in the late 1970s to 19 percent in 1982. During the quence, states and localities dependent on sales economic expansion, federal aid did increase, and income tax receipts generated by these ac- but more slowly than other sources of revenue; tivities suffered. and its share of state and local receipts fell, to However, the picture in the farm belt has less than 16 percent in the third quarter of last improved in the past two years for several rea- year (chart 4). sons. First, federal government subsidies were The tendency to reduce aid to state and local increased in 1986, adding substantially to net governments reflected budgetary restraint at the farm income. Second, input costs have fallen off federal level. Among specific programs, general in recent years, in part because oil prices and revenue-sharing, which funneled about $4.5 bilinterest rates have declined, and thus profit mar- lion per year of unrestricted funds to local govgins have widened for many farmers. As a result, ernments during the first half of the 1980s, was real net -w«s lip substantially in elijifiiated after fiscal 1986. ,'Axi^i^^/Xilikfi 1986, and in 1987, it is estimated, it rose above its cutback in the growth of grants for community previous high nine years earlier; and so tax development, urban renewal, unemployment asrevenues in most farm states have trended up in sistance, and education, all of which fell as a recent years, d percent of gross national product. In other areas, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • February 1988 4. Federal aid as a percentage of total state and local receipts. But, now that plans state and local revenue of most of the affected states are decided, it appears that the "windfall" for the sector will be Percent largely forgone: many states have reduced tax rates or increased personal exemptions and stan- 2200 dard deductions, under political pressure to maintain the revenue neutrality of federal tax —— 1155 reform at the state level. Sixteen states—many of J. " 1100 them in the energy or farm belt—are retaining all or a portion of their increase; but because they 111 m 11 1 • 1 II 11 1 1 1 II II1I III II III II II i ll are relatively small, their combined windfall is 1950 1960 1970 1980 1987 quite modest, amounting to about $1 billion. 1946-86, annual data; 1987, third-quarter data. SOURCE. U.S. Department of Commerce. Thus the base-broadening aspect of tax reform should have little net effect on the potential for federal aid grew relative to GNP; in particular, spending in the sector as a whole. the growing concern about infrastructure stimu- Tax reform also acted to curtail offerings of lated a rise in highway grants. municipal securities. On the supply side, the definition of a public-purpose bond was nar- Tax Reform rowed, and issuance of private-purpose debt was restricted. (See appendix A for a discussion of Also influencing state and local decisionmaking these provisions.) These restrictions appear to during the mid-1980s was the uncertainty about have hampered the sale of debt in the tax-exempt tax reform and about its eventual consequences market, the traditional source of funds for about for state and local finances, although it appears 40 percent of state and local construction outthat, on balance, the Tax Reform Act of 1986 will lays. On the demand side, some traditional instihave few negative repercussions for the sector. tutional participants now have less incentive to One particularly worrisome possibility under invest in tax-exempt bonds; and the value of the consideration in the mid-1980s was the elimina- tax exemption to many high-income individuals tion of the deductibility of state and local income, has fallen as a result of the reduction in the sales, and property taxes in the computation of highest income tax rates. Although the net effect taxable income for federal tax purposes. The on demand has been cushioned by the eliminaresult, it was feared, would be pressure to reduce tion of many alternative tax-sheltered investstate and local taxes, eventually necessitating ments, the overall effect of reductions in both cutbacks in spending. In the end, the act elimi- demand for and offerings of tax-exempt securinated only the deductibility of sales taxes, thus ties appears to have been a decrease in relative blunting the effect on future tax receipts. demand. The base-broadening aspects of tax reform increased both federal adjusted gross income and The Current Status of the federal taxable income. Thus collections were State and Local Sector expected to increase in the 35 states that link their personal income taxes to one of those Boosted by the surge in outlays for construction aggregates. In contrast, income tax receipts were in the early years of the recovery, growth in total expected to fall in those states—Rhode Island, real purchases by state and local governments Nebraska, Vermont, and North Dakota—that has averaged 3.5 percent per year during the couple their personal tax codes to federal tax current economic expansion. This rate compares liability, which reform was expected to curtail. with the virtual absence of growth during the Without offsetting action, the net result of the early 1980s and a 2.7 percent rate during the base-broadening provisions would have been an 1970s. But, during the past two years, receipts added $6 billion in state personal income tax have not kept pace with outlays. The deterioracollections in fiscal 1988, less than 1 percent of tion in the fiscal position of the sector was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

State and Local Government Finance in the Current Expansion 83 substantial in 1986, especially after taking ac- tive session; indeed, many of these reductions count of special temporary inflows, which in- were in train before the start of the legislative cluded the settlement of federal-state disputes on sessions. Thirty-three states raised taxes, prienergy-related matters as well as the acceleration marily during the regularly scheduled legislative of the final revenue-sharing payment. sessions of winter and spring 1987. (These tax The weakening in the budgetary position of hikes do not include the adjustments made to state and local governments continued in 1987, compensate for the effects of federal tax reform, and by the third quarter the sector had registered discussed earlier.) Almost all of the increases a deficit in its operating and capital accounts, were in general sales taxes and in excise taxes on which excludes social insurance funds, for four motor fuels, cigarettes, and alcoholic beverages, consecutive quarters. Information available the types of taxes preferred in recent years. about state budgets indicates weakness in their Many of the budget adjustments, both expendioperating as well as capital accounts. In every ture cuts and tax hikes, were in energy and farm state except Vermont the general funds budget states. must be balanced; in several cases a balanced Real purchases of goods and services by state budget over a two-year period is the goal. The and local governments slowed during the two general funds budget is the main operational middle quarters of calendar 1987, probably in budget for state governments. On the expendi- part because of the recent budget cuts. The ture side it includes compensation for employees reduction in the pace of outlays was due to as well as outlays for nondurable goods, other weakness in real construction activity, which services, and debt service; but it typically does declined in both quarters, as pressure in operatnot include spending for construction. During ing accounts spilled over into capital budgeting. fiscal year 1987, which ended June 30 in all but However, sihcfe September, Sending foi* Strucfour states, the cash balance for the general funds tures has picked up 4s r^al outlays for highways budgets of all the states represented an unusually and water supply facilities rose above the highs small share of expenditures (table 2). recorded earlier in the year. In contrast, con- Facing the erosion of their general funds bud- struction of schools said o&ef £tate and local gets, many states took action to forestall further buildings, which include correctional facilities, deterioration in their fiscal positions. Their first remained well below previous levels. recourse was to cut outlays from planned levels. Unlike the deficits of postwar years up until During fiscal 1987, 24 states cut their budgets, the late 1960s, those in the state and local sector with the majority of reductions in the 3 to 5 during the past year can be attributed only partly percent range. In most states, the governor can to construction spending. Between 1948 and effect such cuts without calling a special legisla- 1968, growth in real construction outlays aver- 2. Balances in state general funds, year-end, aged 9 percent per year, and deceits wett>,refiscal years 1978-871 corded every year in the sector's combined operating and capital account. Construction Year-end balance Balance as a percent of Fiscal year (billions of dollars) expenditures spending in nominal terms climbed from 17 percent of total expenditures in 1947 to 28 percent in 1978 8.9 8.6 1956 and accounted for at least 23 percent 1979 11.2 8.7 1980 11.8 9.0 through 1968 (chart 5). In comparison, during the 1981 6.5 4.4 1982 4.5 3.0 mid-1980s, the share of construction spending remained around 10 percent; and even though 1983 2.0 1.3 1984 5.6 3.3 nominal outlays for construction have fallen al- 1985 8.0 4.3 1986 5.4 2.6 most 2 percent over the past year, operating and 1987e 3.5 1.6 capital account deficits have persisted during the r vmf •> , OTgr 1. Does not include balances from budget stabilization funds, but same period. The current fiscal erosion thus does carry over balance from previous year, appears to be largely the result of an imbalance e Estimate. SOURCE. National Association of State Budget Officers. between expenditures and receipts in operating aceoilBtfc/ Qver, the past year*' as^nstniction Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • February 1988 5. Construction outlays and the proposed legislative deadlines. All types of taxstate and local budget position exempt issues contributed to the bulge in vol- Percent ume, which was caused by the effort to avoid a variety of restrictions on public- and privatepurpose bonds as well as on advance refundings that tax reform proposals in the House of Representatives would have imposed. In 1986, offerings fell back to $147 billion; issuance fluctuated throughout the year in response to various legislative proposals and to the postponement of the effective date of tighter restrictions on publicpurpose bonds. Surplus or deficit of combined operating and capital accounts Issuance of advance refunding bonds remained relatively heavy between 1985 and the first quarter of 1987. Proceeds of advance refundings are invested until they can be used to redeem bonds sold earlier at higher interest rates. (For an expanded discussion of refunding bonds, see appendix B.) In 1985, sales of these bonds increased, partly in anticipation of proposals for 1947-87, annual data; 1987, average of first three quarters at annual rate. tax reform that would limit the number of times rtr- J? : ! • - • an offering could be refunded in advance. But spending has fallen, outlays for goods and sereven after the proposed effective starting date for vices other than compensation have increased tax reform, January 1, 1986, and after passage of more rapidly relative to receipts than have total the legislation, advance refundings continued expenditures. And, state and local governments heavy. Falling interest rates during this period reacted to weakness in the general funds acseem to have been the primary motive for issucounts by hiking taxes and cutting budgets in the ance of these bonds (chart 7). Consequently, it first half of 1987. was not surprising that offerings of tax-exempt refunding bonds shrank when rates jumped more than a percentage point in the second quarter of THE TAX-EXEMPT BOND MARKET r. -T 1987. : >m ••: Tax-exempt bond issuance was near its 1986 As noted above, the volume of tax-exempt bond pace in the winter of 1987, when offerings of offerings has declined substantially since passage refunding bonds were still sizable. After that, of the Tax Reform Act of 1986 (chart 6). Issuance however, refunding volume fell off, so that total had climbed steadily after 1981, surging to $214 billion in 1985 when many issuers rushed to beat 7. Offerings of tax-exempt refunding bonds 6. Total offerings of tax-exempt bonds Billions of dollars 1981 1983 1985 1987 Quarterly data at annual rates. Annual averages of monthly data. SOURCE. The Bond Buyer, Securities Data Co., and Public Securi- SOURCE. Securities Data Co. and Public Securities Association. ties Association. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

State and Local Government Finance in the Current Expansion 85 issuance of tax-exempt bonds was below the 8. Municipal bond yields 1983 rate during the remainder of the year. Most Percent of the reduction in offerings to raise new capital apparently was due to the tightened restrictions in tax reform. Some of the decline may have . ' .. . • reflected the intentions of state and local officials 10 to slow construction spending in the near term in light of fiscal problems, despite the need for expansion and renewal of the infrastructure. In- 1 1 1 1 1 1 1 1 < complete data indicate that the volume of bonds 1981 1983 1985 1987 sold to raise funds for public-purpose construc- Data are Bond Buyer monthly index of yields on 30-year revenue tion projects—education, transportation, and bonds. utilities—has declined sharply since 1985, alsures mounted in the second half of that year as though the provisions in tax reform affecting issuers came to market ahead of the restrictions these bonds were considerably less restrictive on bonds set forth in the Deficit Reduction Act of than those on private-purpose securities. 1984. Similar reactions to deadlines in the Tax Faced with the recent reduction in tax-exempt Reform Act of 1986 pushed up the ratio of bond issuance, the municipal finance industry tax-exempt yields to taxable yields in late 1985 has undergone a retrenchment, including the and again in mid-1986. The rise in 1986 was dismissal of many employees. Since mid-October exacerbated by a reduction in the rate on 30-year 1987, more than a dozen investment banking Treasury bonds between early spring and midfirms and commercial banks have announced August. The ratio then trended down until Sepelimination or cutbacks of their municipal secutember 1987, largely in response to the sharp rities business. Along with the reduced volume, curtailment of the supply of tax-exempt offervolatile market conditions and thin underwriting ings. margins have been cited as reasons for the cut- The behavior of many of the traditional invesbacks. tors in the tax-exempt market has changed dramatically since the passage of tax reform. Com- Tax-Exempt Bond Rates mercial banks became steady net liquidators of tax-exempt securities, after the 80 percent de- Interest rates on tax-exempt revenue bonds duction for interest costs tied to purchasing and peaked at a record 14.2 percent in January 1982, carrying tax-exempt bonds was eliminated for and then declined to 7.0 percent in January 1987. securities acquired on or after August 8,1986. On By the end of the year, rates stood about IV2 the other hand, tax reform appears to have had percentage points higher (chart 8). Interest rates little effect on property and casualty insurance on tax-exempt bonds do not necessarily move in companies. Indeed, when the industry returned tandem with those on taxable securities. Indeed, to profitability in 1986 after two years marked by the ratio between the two responds to institutional as well as cyclical factors (chart 9). For 9. Ratio of tax-exempt yields to taxable yields1 example, during the recession years of the 1980s, Ratio property and casualty insurance companies and 1.1 commercial banks—the major institutional investors in tax-exempt securities—reduced their pur- V —10 chases of tax-exempt securities as lower profits lessened their need to shelter income (chart 10). .9 Without their participation, rates on tax-exempts .8 rose relative to rates on taxable securities. Beginning in 1984, institutional factors, partic- 1 1 1 1 1 1 1 1 1981 1983 1985 1987 ularly changes in federal tax law, were felt in the 1. Ratio of the Bond Buyer index of yields on 30-year revenue market for tax-exempts. Supply and rate pres- bonds to yields on 30-year Treasury bonds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • February 1988 10. Purchases of state and local government problem with the prospect of an increase in obligations by major market participants redemptions because municipal markets at the Percent of total long end are not very liquid. To position them- • Mutual funds + Money market funds selves better, most of the funds restructured their Households 9nn assets to secure a larger cash position during the 13 Commercial banks • Property and casualty spring, as many funds sold long-term tax-exempt insurance companies securities. After a brief period during the summer, when they expanded their assets, tax-exempt mutual funds again began to liquidate their holdings. Taxable Municipal Bonds • Starting virtually from zero, offerings of taxable 1981 1983 1985 1987 municipal securities grew during much of 1986, Annual data; 1987 is average of first three quarters at annual rate. and by the end of October nearly $4 billion of SOURCE. Flow of Funds Section, Division of Research and Statistaxable municipals had been sold. Almost all of tics. the offerings were bonds that would not have severe underwriting losses, its participation in qualified for tax-exempt status under the new tax the tax-exempt market expanded. law. Issuance was predominantly for private The role of individual investors and the way in purposes: 60 percent was for housing, and which they invest in tax-exempt securities have around 15 percent each was for agriculture and changed markedly in recent years. The popular- development. Most of these taxable municipal ity of tax-exempt mutual funds and unit invest- bonds were well received by the market; they ment trusts grew during the 1980s. These invest- were purchased largely by investors that tradiments afforded individual investors access to the tionally buy corporate bonds, such as pension tax-exempt market, which otherwise would have funds. More than half of the 1986 volume of been closed to them if they lacked the resources taxable municipals was accounted for by 10 or expertise to buy securities directly. Moreover, offerings that were backed by guaranteed investin recent years, tax-exempt funds have afforded ment contracts (GICs), through which arbitrage individuals liquidity—for example, through trans- profits were ensured. action features such as check writing and ex- In the fall of 1986, analysts generally expected change privileges with other mutual funds. a further rapid expansion of these offerings; However, holdings of tax-exempt bond and estimates of 1987 activity reached as high as $40 money market funds fell during the second quar- billion. But, in November 1986, issuance of GICter of 1987. According to some reports, part of backed bonds was halted in the wake of diffithe decline was accounted for by diversions of culties at the leading underwriter of these secufunds to meet the one-time enlargement in in- rities. In November and December, when no come tax payments. In addition, when interest GlC-backed bonds were sold, about 22 taxable rates turned sharply upward, many investors issues came to market; many of them were under became uneasy and tried to liquidate their hold- $1 million. Most of the issues at year-end were ings. Most of the long-term funds were caught off for economic development or for housing; many guard when redemptions quickened in the spring. were insured or backed by bank letters of credit, Because the municipal yield curve is so steep, and several were privately placed. the opportunity cost of remaining fairly liquid is The problems of the GlC-backed bonds apparquite high. Hence, during the years that interest ently thwarted the development of the taxable rates were falling and the value of principal was municipal market: few offerings backed by GICs rising, the funds found that their best strategy were issued in 1987. Offerings of other taxable was to keep as much of their portfolios as possi- municipal securities continued to be sold; total ble in longer-term securities. Doing so became a issuance of taxable municipal securities in 1987 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

State and Local Government Finance in the Current Expansion 87 was estimated at a bare $3.8 billion. Several less than it was during the first half of the decade. announcements of arbitrage securities were As a result, tax reform could mean higher conmade—the proceeds of these securities were to struction costs for state and local governments be reinvested in other taxable securities with the unless funds from sources such as tax revenue or intention of earning arbitrage profits—only to be grants are available. Much still needs to be done withdrawn. However, in the fourth quarter, ac- to modernize and expand the infrastructure, and tual sales of a planned $1 billion offering totaled many of the fundamental factors affecting the $250 million in notes and $600 million in commer- demand for further outlays have not changed. cial paper. The school-age population continues to grow, as does the prison population. Eventually, an expansion of real spending on schools, roads, sew- THE OUTLOOK FOR THE STATE AND LOCAL ers, and prisons will likely be forthcoming. SECTOR In addition to the familiar worries about federal aid, oil prices, and tax reform, the future The state and local sector as a whole is currently path of tax receipts has reportedly concerned experiencing fiscal weakness. An unusual num- some state and local officials. After the stock ber of states took action during fiscal 1987 to halt market collapse last October slashed household the erosion of their budgetary positions, and sector wealth, concern centered on the general further adjustments by several governments are economic outlook and on prospects for consumer already under way. Despite these adjustments, spending. Any drop in retail sales means a drop budgetary pressures are likely to remain intense, in receipts of state and local sales and excise for these reasons: taxes; and other tax collections could be af- • Federal aid to state and local governments is fected. At least one government has already not expected to rise appreciably in the near term. acted. In late October, New York City, affected In light of the appropriations and reconciliation by the apparent contraction in the securities bills for fiscal year 1988 enacted in December industry as well as the general aspects of the 1987, grants are expected to be little changed in collapse, ordered a 90-day job freeze and susreal terms from the level in fiscal year 1987. pended a pay raise for 4,000 city workers. • Uncertainties regarding their own fiscal situa- Planned outlays for repairs to streets, sewers, tions continue to plague the energy states. Al- and parks were curtailed. City officials, it was though oil prices rose from their lows of 18 reported, feared a reduction in revenue from months ago, they have fallen back somewhat and taxes based on personal income, business profits, are still well below the peaks that were associated and real estate values. with rapid economic expansion in the oil patch. The outlook for the budget position in the state • The effects of the tax reform legislation on and local sector thus is very uncertain. Many of the sector appear to have been a contraction in the external factors point toward further deteriofferings of tax-exempt bonds and a rise in rela- oration in operating accounts. But, government tive costs. In 1987, the margin between the yields officials appear to be attentive to current events, on newly issued 30-year tax-exempt bonds and and they have shown resourcefulness in dealing on taxable bonds was almost Vi percentage point with fiscal imbalances. APPENDIX A: TAX REFORM AND THE compared with 25 percent under earlier law. MUNICIPAL BOND MARKET Among private-purpose issues, all industrial development bonds (IDBs) and housing bonds have Under tax reform, the definition of a public- been placed under a set of state-by-state volume purpose obligation was narrowed. Generally, a caps, which limited issuance to about $21 billion bond will lose its tax-exempt status if more than in 1986 and in 1987 and to less than $14 billion a 10 percent of its proceeds benefit a private entity, year thereafter. Issuance of these bonds was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • February 1988 estimated at around $55 billion, $60 billion, and can take an 80 percent deduction for the interest $75 billion in 1983, 1984, and 1985 respectively. costs of purchasing and carrying tax-exempt Single-family housing bonds are scheduled to be bonds; an exception is made for bonds of goveliminated after 1988, and the exemption for ernmental units that reasonably expect to issue small-issue IDBs that are intended for manufac- no more than $10 million of public-purpose bonds turing purposes will end after 1989. (The exemp- or bonds of private exempt entities within a tion for commercial small-issue IDBs ended after calendar year. The tax incentives for property 1986.) Moreover, bonds for industrial parks, pol- and casualty insurance companies to hold taxlution control, and parking, sports, convention, exempt bonds also were reduced. These instituand trade-show facilities lost their tax-exempt tional investors had been important participants status entirely. In contrast, bonds for private in the tax-exempt market: at the end of 1985, exempt entities, such as nonprofit hospitals and commercial banks held about $230 billion in colleges, as well as IDBs for airports, docks, and tax-exempt debt, accounting for more than a wharves, are still exempt and are not subject to third of the total; property and casualty compaannual volume caps. nies held 12 percent. Under tax reform, all arbitrage earnings after Another important provision of the tax reform an initial six-month period have to be rebated to legislation included interest earned on newly the Treasury; previously, the arbitrage period for issued private-purpose tax-exempt debt, except public-purpose capital improvement bonds was that of private exempt entities, in the calculation three years. In addition, the number of times a of the alternative minimum tax for individuals bond can be refunded in advance has been lim- and corporations. In addition, interest on both ited. outstanding and future tax-exempt bonds held by The tax bill also weakened the incentives of businesses has been included in the definition of certain traditional institutional investors for hold- gross income for computation of the corporate ing tax-exempt securities. For acquisitions on or minimum tax. Previously, interest on tax-exempt after August 8,1986, commercial banks no longer debt was not subject to any minimum tax. APPENDIX B: TAX-EXEMPT REFUNDING before their maturity or next call date. Housing BONDS and industrial development bonds may not be refunded in advance. Current and advance re- Refunding bonds are long-term tax-exempt secu- fundings cannot be separated in the available rities issued with the sole purpose of refinancing data on total refundings. However, qualitative outstanding bonds. Generally, refundings are un- reports suggest that most of the refunding activdertaken to reduce debt-service costs, although ity since 1982 was done "in advance" to take there are other reasons, such as a desire to advantage of lower interest rates. Historically, restructure debt. A significant cost saving typi- total refundings have been closely associated cally accrues when the new issue bears a rate 2 to with movements in interest rates. 3 percentage points below that on the outstand- Proceeds of advance refunding bonds typically ing bond. are invested in SLGs (special nonmarketable "Current" refundings are used when outstand- Treasury securities issued to state and local ing bonds may be refinanced in the immediate governments). SLGs are convenient investments future, usually within 90 days of the sale of the for the proceeds of advance refunding bonds refunding bonds. All tax-exempt bonds may be because they are issued to yield a specified rate refinanced with current refundings. But, only of interest in accordance with Treasury arbitrage public-purpose tax-exempt bonds and those is- regulations. Moreover, the maturities of SLGs sued on behalf of private nonprofit institutions can be tailored to match those of the bonds to be may be refunded in "advance"—that is, well refunded. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

89 Industrial Production Released for publication December 14 In market groups, output of consumer goods was about unchanged in November and, on bal- Industrial production increased 0.4 percent in ance, has changed little since August. Among November following an upward revised October durables, auto assemblies in November were at gain of 0.9 percent. In November, gains were an annual rate of 7.1 million units, compared with widespread with the exception of the motor a rate of 7.3 million units in October. Production vehicle industry. At 132.5 percent of the 1977 of trucks for business and consumer use declined average, total industrial production in November as well. Output of home goods, after having was 5.4 percent higher than it was a year earlier. fallen sharply in September, rose 1.2 percent in Ratio scale, 1977 = 100 1981 1983 1985 1987 1981 1983 1985 1987 All series are seasonally adjusted. Latest figures: November. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Federal Reserve Bulletin • February 1988 1977 = 100 Percentage change from preceding month Percentage cchhaannggee,, Group 1987 1987 NNoovv.. 11998866 ttoo NNoovv.. 11998877 Oct. Nov. July Aug. Sept. Oct. Nov. Major market groups Total industrial production 132.0 132.5 1.2 .5 -.3 .9 .4 5.4 Products, total 140.8 141.2 1.2 .3 -.5 1.1 .3 5.3 Final products 139.4 139.7 1.2 .4 -.5 1.3 .2 5.1 Consumer goods 129.3 129.4 1.3 .4 -1.4 1.4 .1 3.6 Durable 123.5 123.1 2.5 .7 -2.4 4.3 -.3 4.8 Nondurable 131.5 131.8 .9 .3 -1.1 .4 .2 3.1 Business equipment.., 148.6 149.5 i.O .1 .4 1.6 .6 7.7 Defense and space — 189.6 189.7 .0 .2 .0 .3 .1 2.3 Intermediate products.., 145.3 146.1 1.2 .2 -.4 .4 .6 5.8 Construction supplies, 132.6 133.2 1.2 -.5 -.1 .2 .5 4.7 Materials 120.1 120.6 1.1 .7 .1 .5 .5 5.6 Major industry groups Manufacturing 137.0 137.5 1.2 .2 -.1 .9 .4 5.7 Durable 136.1 136.6 1.2 .2 -.2 1.9 .4 5.9 Nondurable 138.3 138.8 1.1 .2 -.1 -.3 .4 5.4 Mining 101.9 101.6 .0 1.7 .8 .1 -.2 4.3 Utilities 113.6 114.3 1.6 1.6 -1.7 2.4 .6 4.3 NOTE. Indexes are seasonally adjusted. October and 0.5 percent in November, with the commercial equipment; indeed, since turning up gains in production of carpets and furniture and sharply in the period from May to June, producappliances. Production of business equipment tion in these categories has increased 8.3 percent continued to expand, growing 0.6 percent in and 5.5 percent (not an annual rate) respectively. November. The increase primarily reflected con- Only transit equipment, which includes autos tinued strength in manufacturing equipment and and trucks, fell in November. Output of defense and space equipment was little changed again. Supplies for both construction and business Total industrial production—Revisions gained in November, which boosted the output Estimates as shown last month and current estimates of intermediate products 0.6 percent. Materials output rose 0.5 percent in both October and Percentage change Index (1977=100) from previous November, which brought the gain over the year MMoonntthh months to 5.6 percent. Previous Current Previous Current In industry groups, manufacturing output rose 0.4 percent in November as both durables and August 131.0 131.2 .3 .5 nondurables were up 0.4 percent. Mining output September 130.9 130.9 .0 -.3 October 131.7 132.0 .6 .9 declined 0.2 percent, but production by utilities November 132.5 ... .4 rose 0.6 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

91 Statements to Congress Statement by Alan Greenspan, Chairman, Board more efficient, more competitive in the world of Governors of the Federal Reserve System, economy, and, equally important, more stable. before the Committee on Banking, Housing, and At the same time, I would also like to thank Urban Affairs, U.S. Senate, December 1, 1987. Senators Wirth and Graham for their most useful contribution to the legislative effort now going I welcome this opportunity to present the Fed- forward in this committee. eral Reserve Board's views on modernizing our The Board has for some years taken the posifinancial system to adapt it to the important tion that our laws regarding financial structure changes in technology and competition that have need substantial revision. Developments have already transformed financial markets here and eroded significantly the ability of the present abroad. Earlier this year, during its consideration structure to sustain competition and safe and of the Competitive Equality Banking Act sound financial institutions in a fair and equitable (CEBA), this committee came to the conclusion way. that the laws governing financial activities are in Recently, a great deal of attention has been need of major repairs and that there is an urgent focused, in this committee and elsewhere, on need for congressional action to this end. As I proposals to permit the affiliation of a broader read the record, this committee, and then the variety of financial and commercial organizations Congress as a whole, accepted the task of recon- with banks, while attempting to assure that affilciling the present outdated financial structure iated banks are not adversely affected by this with the realities of a changed marketplace for relationship. Our own analysis of these useful financial services and pledged to move ahead contributions leads us to the conclusion that they promptly to develop the necessary legislation. have many positive elements that deserve con- The majority and minority leadership of this tinuing attention, but that it would be appropriate committee have now taken a major step toward at this time to concentrate on the specific profulfillment of this promise by putting before you, posal contained in the Financial Modernization with their full endorsement, a bill that addresses Act to repeal the Glass-Steagall Act. what is perhaps the single most important anom- It is our view that enactment of this legislation aly that now plagues our financial system—the would respond effectively to the marked changes artificial separation of commercial and invest- that have taken place in the financial marketplace ment banking. That bill—S. 1886, the Financial here and abroad, and would permit banks to Modernization Act of 1987—is also precedent operate in areas in which they already have setting because it establishes a framework that considerable experience and expertise. Morecan be tested, and, if it proves adequate as we over, repeal of Glass-Steagall would provide expect it will, should serve as a foundation on significant public benefits consistent with a manwhich to build more generally for the future. ageable increase in risk. I want to express the appreciation of the Board Accordingly, we would suggest that the attento Chairman Proxmire and Senator Garn for tion of the committee should focus on the Glassproviding this committee with an excellent Steagall Act, and we recommend that this law framework on which to launch the necessary be repealed insofar as it prevents bank holding reforms. In our view, we now have an historic companies from being affiliated with firms enopportunity to put the financial system on a gaged in securities underwriting and dealing sounder footing—perhaps a unique opportunity activities. We would not recommend that you to make it more responsive to consumer needs, address at this time the more generally compre- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • February 1988 hensive, but in some important ways more lim- to evaluate whether these gains may be outited, approach taken in the very interesting pro- weighed by possible adverse effects such as posals put forward in S. 1891 by Senators Wirth undue concentration of resources, decreased or and Graham, about which I will comment in unfair competition, conflicts of interest, or unmore detail at the conclusion of my testimony. sound banking practices. On the other hand, we very much prefer a full These are the principles that the Congress has repeal of Glass-Steagall to a piecemeal removal set down to guide the evolution of the banking of restrictions on underwriting and dealing in system. They made good sense then and they specific types of securities such as revenue bonds make good sense today. Over the years we have or commercial paper. This technique would arti- interpreted these principles to be consistent with ficially distort capital markets and prevent finan- our efforts to promote competitive and efficient cial institutions from assuring benefits to custom- capital markets and to protect impartiality in the ers by maximizing their competitive advantage in granting of credit, to avoid the risk of systemic particular markets of their choice. failure of the insured depository system, and to prevent the extension of the federal safety net to nonbanking activities. In our view, achieving REASONS FOR REPEAL OF THE these goals is fully consistent with permitting GLASS-STEAGALL ACT bank holding companies to engage in securities activities. In short, in my testimony today I will A very persuasive case has been made for adop- outline why we believe that changes in the Glasstion of the repeal proposal. It would allow lower Steagall Act should have major public benefits. I costs and expanded services for consumers will also explain why we believe that with the through enhanced competition in an area in right structure and careful implementation the which additional competition would be highly changes in the law that we support can be desirable. It would strengthen banking institu- accomplished without adverse effects. tions, permitting them to compete more effectively at home and abroad in their natural mar- Public Benefits kets for credit that have been transformed by revolutionary developments in computer and The major public benefit of Glass-Steagall modcommunications technology. It could be ex- ification would be lower customer costs and pected to result in attracting more equity capital increased availability of investment banking to the banking industry when more capital is services, both resulting from increased competineeded. In sum, the securities activities of bank- tion and the realization of possible economies of ing organizations can provide important public scale and scope from coordinated provision of benefits without impairing the safety and sound- commercial and investment banking services. ness of banks if they are conducted by experi- We believe that the entry of bank holding comenced managers, in adequately capitalized com- panies into securities underwriting would, in panies, and in a framework that insulates the fact, reduce underwriting spreads and, in the bank from its securities affiliates. process, lower financing costs to businesses large and small as well as to state and local govern- Evaluation Criteria ments. In addition, participation by bank holding company subsidiaries in dealing in currently in- In reaching these conclusions, we have been eligible securities is likely to enhance secondary guided by the principles set down in the Bank market liquidity to the benefit of both issuers and Holding Company Act of 1970, which require the investors. These, we believe, are important pub- Board to consider, in determining the appropri- lic benefits that will assist in making our econateness of new activities for bank holding com- omy more efficient and competitive. panies, whether they will produce benefits to the Studies of the market structure of investment public such as greater convenience, increased banking suggest that at least portions of this competition, or gains in efficiency. It also asks us industry are concentrated. The most recent evi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 93 dence in this regard is provided in the September Steagall Act should be changed. Developments Report of the House Committee on Government in computer and communications technology Operations, which presented data supporting its have reduced the economic role of commercial conclusion that corporate securities underwriting banks and enhanced the function of investment is highly concentrated. The five largest under- banking. These permanent and fundamental writers of commercial paper account for more changes in the environment for conducting finanthan 90 percent of the market; the five largest cial business cannot be halted by statutory prohiunderwriters of all domestic corporate debt bitions, and the longer the law refuses to recognize account for almost 70 percent of the market; and that fundamental and permanent changes have the five largest underwriters of public stock is- occurred, the less relevant it will be as a force for sues account for almost half of the market. stability and competitive fairness in our financial I would emphasize that concentration per se markets. Attempts to hold the present structure in need not lead to higher consumer costs because place will be defeated through the inevitable loopthe possibility that new firms will enter a market holes that innovation forced by competitive necesmay be sufficient to achieve competitive prices. sity will develop, although there will be heavy However, it is just in this regard that the Glass- costs in terms of competitive fairness and respect Steagall Act is particularly constraining because for law that are so critical to a safe and sound bank holding companies with their existing ex- financial system. pertise in many securities activities and their The significance of these technological develbroad financial skills and industry network more opments is that the key role of banks as financial generally would be the most likely potential intermediaries has been undermined. The heart competitors of investment banks if not con- of financial intermediation is the ability to obtain strained by law. and use information. The high cost of gathering It is also important to emphasize that the and using facts in the past meant that banks and changes in the Glass-Steagall Act that we sup- other intermediaries could profit from their cuport would be likely to yield cost savings in local mulative store of knowledge about borrowers by and regional corporate underwriting and dealing making significantly more informed credit decimarkets. At a minimum, local and regional firms sions than most other market participants. These would acquire access to capital markets that is other market participants were thus obliged to similar not only to the access now available to permit depository intermediaries to make credit large corporations but also to that currently decisions in financial markets and therefore allow available to municipalities whose general obliga- bank credit to substitute for what would othertion bonds are underwritten by local banks. wise be their own direct acquisition of credit Another area of substantial expected public market instruments. benefit is the encouragement of the free flow of Computer and telecommunications technology investment capital. Both we at the Board and the has altered this process dramatically. The real Congress have stressed the importance of im- cost of recording, transmitting, and processing proving the capital ratios of banking organiza- information has fallen sharply in recent years, tions, and it can reasonably be assumed that lowering the cost of information processing and expansion of banking organizations into securi- communication for banks. But it has also made it ties markets should make them more attractive possible for borrowers and lenders to deal with investments. Equally important, banks and secu- each other more directly in an informed way. rities firms would be free to deploy their capital On-line data bases, coupled with powerful comover a wider range of activities designed to serve puters and wide-ranging telecommunication fathe public better. cilities, can now provide potential investors with virtually the same timely credit and market infor- Effect of Computer and Communication mation that was once available only to the inter- Technology mediaries. These developments mean that investors are There is another important reason why the Glass- increasingly able to make their own evaluations Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • February 1988 of credit risk, to deal directly with borrowers, customers seeking to rely increasingly on secuand, especially with the increasing institutional- rities markets—provided that the securities are ization of individuals' savings, that creditors are issued abroad. In their home market, banks in a position to develop their own portfolios and continue to be sharply limited by the Glass-Steastrategies to balance and hedge risk. Thus, the gall Act in competing for the business of acting as franchise of bank intermediation, the core ele- intermediaries in the process of investors providment of a bank's comparative advantage, and its ing credit to corporations, just at the time that the main contribution to the economic process— new financial environment transformed by techcredit evaluation and the diversification of risk— nological change has made such intermediation a have been made less valuable by this information natural extension of the banking business. revolution. Examples of new financial products that have resulted from this technological inno- The Need for Reform vation and that challenge traditional bank loans abound—the explosion in the use of commercial In short, the Congress should modify the finanpaper, the rapid growth of mortgage-backed se- cial structure to conform to these changes. If the curities, and the recent development of con- Congress does not act, but rather maintains the sumer loan-backed securities or consumer- existing barriers of the Glass-Steagall Act, bankreceivable-related securities. There are many ing organizations will continue to seek ways to others. Our concern is that these changes in the service customers who have increasingly direct way that providers of credit utilize financial access to capital markets. But banking organizaintermediaries have reduced the basic competi- tions are nearing the limits of their ability to act tiveness of banks and that the trend toward direct within existing law; and spending real resources investor-borrower linkages will continue. to interpret outmoded law creatively is hardly wise. Without the repeal of Glass-Steagall, Banks' Response to New Competitive banks' share of credit markets is likely to de- Conditions at Home and Overseas cline—as it already has in our measures of shortand intermediate-term business credit. Society Banks, of course, have not stood still while these would lose the existing expertise and infrastrucvast changes were taking place around them. ture of banking and would bear the cost of the Indeed, they have responded to the technological redeployment of bank resources as personnel revolution by participating in it. Loan guarantees and capital move to nonbanking organizations. and other off-balance-sheet arrangements, pri- Instead, a soundly structured change in the law vate placement of corporate debt, commercial will allow financial markets to serve us better by paper placement, loan participations and sales, lowering costs to users while strengthening finanand interest rate and currency swaps are exam- cial institutions within a framework that will ples. Similarly, the foreign offices of U.S. banks protect the financial integrity of banks. and their foreign subsidiaries and affiliates have been actively engaging abroad in a wide variety of securities activities. These include securities, such as corporate debt and equity, that are EVALUATION OF POSSIBLE ADVERSE ineligible in the United States for banks to un- EFFECTS derwrite and deal, such as corporate debt and equity. In the corporate debt market, for exam- The basic principles that I outlined at the outset ple, U.S. banks' foreign subsidiaries served lead require us to take into account not only public roles in underwritings approaching $17 billion in benefits but also possible adverse effects includ- 1986, or about 10 percent of the volume of such ing unsound banking practices, which clearly debt managed by the 50 firms most active in the include the concept of excessive risk, conflicts of Eurosecurities market last year. These and other interest, impairment of competition, and undue essentially investment banking activities have concentration of resources. These concerns have permitted banks to continue to service those been heightened by the unprecedented decline in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 95 the stock market that occurred on October 19, not a cause of the Great Depression and that 1987, and the subsequent market volatility. banks with securities affiliates did not fail in proportionately greater numbers than banks Effect of Stock Market Developments more generally. The investment banking experience of U.S. We had reached our decision to endorse repeal of banking organizations in foreign markets has the Glass-Steagall Act before these events oc- been favorable, and their operations have been curred. When we made our decision we had very generally profitable in the last decade or so. This much in mind that there are risks involved in is not to say that there have been no problems. In underwriting and dealing in securities, and we the mid-1970s some large U.S. banks encoundecided that we would recommend the necessary tered problems with their London merchant bank changes only because we believe that a frame- subsidiaries in connection with venture capital work can be put in place that can assure that the investments and the development of the Europotential risks from securities activities can be bond market. More recently, in the post-Big effectively managed. The events since October Bang era, U.S. banks' securities affiliates and 19 have not altered our view that it is both subsidiaries have shared in the transitional diffinecessary to proceed to modernize our financial culties that arose in the London securities marsystem and that it is possible to do so in a way ket. All of these problems appear to have been in that will maintain the safety and soundness of the nature of "start-up" difficulties rather than depository institutions. long-term safety and soundness concerns. In The preliminary evidence on the limited effects these situations, and even in the perspective of of recent stock market events on securities firms the unprecedented stock market decline, risks reinforces several conclusions drawn previously. have been contained, and losses have been small First, while securities activities are clearly risky, relative to the capital of the bank or the holding the risks can be managed prudently. Second, company parent. securities activities of bank holding companies Finally, I would note that empirical studies should be monitored and supervised in such a invariably find that underwriting and dealing are way as to control the risk to an affiliated bank. riskier than the total portfolio of other banking Third, the events of recent weeks highlight the functions in the sense that the variability of need to have capital adequate to absorb unex- returns to securities activities exceeds that of the pected shocks and to maintain an institutional returns to the combination of other banking and legal structure that minimizes the degree to functions. It is also important to note, however, which securities underwriting and dealing risk that the average return to securities activities is could be passed to affiliated banks. also usually found to exceed the average return to the combination of other banking functions. In Assessment of Risk addition, there is evidence of some potential for limited diversification gains, or overall risk re- Bank holding company examinations indicate duction, for banks being allowed increased secuthat U.S. banking organizations have generally rities powers. shown an ability to manage the inherent risks of The Congress adopted the Glass-Steagall Act both their domestic and foreign securities activ- more than 50 years earlier because it believed ities in a prudent and responsible manner. Of all that banks had suffered serious losses as a result the domestic bank failures in the 1980s, to our of their participation in investment banking. The knowledge none has been attributed to under- Congress also thought that bank involvement in writing losses. Indeed, we are unaware of any the promotional aspects of the investment banksignificant losses in recent years owing to under- ing business would produce a variety of "subtle writing of domestically eligible securities. For hazards" to the banking system such as conflicts that matter, research over the past 50 years of interest and loss of public confidence. In concludes, contrary to the view of the Congress answer to these concerns, we believe that the at the time, that bank securities activities were risks of investment banking to depository insti- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1988 tutions are containable, that the regulatory of the importance of these provisions, I would framework established in the securities laws min- like to examine them with you in some detail. imizes the impact of conflicts of interest, that the federal safety net implemented through deposit Importance of the Holding Company insurance and access to Federal Reserve credit Framework will avoid the potential for panic withdrawals from banks if affiliated securities firms experi- S. 1886 would require that new securities activience losses, and that banks can be effectively ties made possible under this bill would have to insulated from their securities affiliates through take place in a subsidiary of a bank holding an appropriate structural framework. company and not in a bank or a direct subsidiary As I have stressed, such an insulating frame- of a bank. We believe that this is a sound work can be established. I would now like to turn decision because it provides the best separation to what we see as its major elements. that institutional arrangements can provide between a bank and a securities affiliate. In our judgment, this is the most effective structure for NEED FOR FIRE WALLS assuring that decisionmaking in securities firms is not affected by the benefits of the federal safety Fundamental to our recommendation on repeal net, for minimizing the need for the regulatory of Glass-Steagall, and to our assessment that framework that is a necessary consequence of potential adverse effects of securities activities maintaining the safety net, and, of course, for are clearly manageable, is the view that securi- avoiding risks to the safety net itself. Achieving ties activities can be conducted behind walls these goals is essential to any plans for permitting designed to separate, insofar as possible, the broader ownership of banks and wider powers bank from the risks associated with the securities for bank holding companies. activities. We see two major elements to an There has not been unanimous agreement on approach toward developing a practical insulat- this point, and I think it is important to examine ing structure: the advantages of the holding company ap- 1. The holding company structure should be proach. used to institutionalize separation between a First, there is an important legal reason. The bank and a securities affiliate. holding company mechanism takes maximum 2. The resulting institutional fire walls should advantage of the doctrine of corporate separatebe strengthened by limiting transactions, partic- ness—the legal rule that provides that a sepaularly credit transactions, between the bank and rately incorporated company normally is not held a securities affiliate. liable for the actions of other companies even if At the same time, and without impairing the they are commonly owned or there is a parentnecessary separation, the structure should not be subsidiary relationship. However, because of the so rigid as to prevent affiliated organizations from direct ownership link between a bank and its providing the users of financial products with the subsidiary, any breach of insulating walls is improved service and reductions in cost that can much more likely to result in bank liability for the come from the joint ownership of securities and actions of its security subsidiary because the line banking organizations. We believe that it is both of authority to direct operations runs from the possible and desirable to accomplish both bank parent to that subsidiary. The same breach goals—establishing fully adequate fire walls in a in the wall between a bank holding company and context that achieves the economic benefits of a securities affiliate, on the other hand, is much joint ownership. less likely to involve the affiliated bank simply It is here that we believe the Financial Mod- because of the fact that there is no direct ownerernization Act makes such a major contribution. ship link between the bank and the securities Using the holding company framework as a fo- affiliate. cus, it establishes a system of fire walls that we Second, there is a vital point of accounting and believe is both workable and effective. Because the resulting market perceptions of the health of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 97 the bank. Any losses that may be incurred by the zations without a change in ownership to be securities firm owned directly by a bank would exempt from securities act registration. Second, be reflected in the balance sheets and income the bill allows banks to continue to conduct statements of the bank under normal accounting presently authorized securities activities and also rules. That would not be the case if the holding permits them to engage in underwriting municicompany owns the securities afliliate directly. pal revenue bonds and brokerage of mutual When a securities firm's losses are reflected funds. We understand the Securities and Exdirectly on the financial statements of the bank, change Commission's (SEC's) concerns about the market's evaluation of the health of the bank assuring that functional regulation prevails in this will inevitably be adversely affected. area, and we believe that, consistent with appro- Third, it is difficult, if not impossible from a priate exceptions for small banks, these probpractical standpoint, for a bank to avoid assum- lems are resolvable. ing responsibility and liability for the obligations of its direct subsidiaries. Experience has shown that the direct ownership link between a bank STRENGTHENING HOLDING COMPANY and its subsidiaries creates a powerful public FIRE WALLS perception that the condition of the bank is tied to the condition and financial success of its The second major element of the separateness subsidiaries. structure is to assure that the holding company Fourth, separation of a bank and an affiliated fire walls are not impaired by transactions besecurities firm through a holding company helps tween a bank and an affiliated securities firm, promote competitive equity. Securities activities with the consequence of the risks of securities that are conducted directly within a depository activities being passed on to an affiliated bank. institution or in a subsidiary of a depository We believe that section 102 of S. 1886 is fully institution are much more likely to benefit from adequate to do this essential strengthening job. It association with the federal safety net through clearly addresses the following key issues: (1) increased public confidence in securities offer- interaffiliate credit transactions and guarantees; ings made by the insured banks and their subsid- (2) lending to support underwritten securities; (3) iaries than would be the case if these activities officer and director interlocks; and (4) adequacy were conducted in a holding company affiliate. of disclosure and other conflict of interest prob- Similarly, the holding company technique would lems. be more effective in minimizing any competitive advantage that banks would have in raising funds Prohibition on Lending by a Bank to a because of their association with the federal Securities Affiliate safety net and their ability to collect deposits. Thus, we believe that the advantages of the In reviewing these fire-wall-strengthening meaholding company structure are both self-evident sures, we consider one of the most important and and overwhelming. Larger banking companies difficult to be the prohibition on a bank being able that are most likely to be heavily involved in to lend to, or purchase assets from, its securities securities activities should have no serious orga- affiliate. There are strong arguments on both nizational problems with implementing this ap- sides. In formulating our position on this issue, proach. we took into account the major advantages of a For the smaller banking firms that do not have straightforward prohibition on lending to securiholding companies, the bill has two constructive ties affiliates, thus insulating the bank from the solutions. First, to ease the regulatory and cost risks of securities activities, and weighed against barriers to the establishment of holding compa- it the benefits that could be achieved in terms of nies, section 201 provides for expedited, almost better service to customers. automatic, Board approval of applications to We also considered that rules now exist limitform such holding companies, and section 202 ing the amount of credit that a bank can provide allows such formations that are simply reorgani- to an affiliate and requiring that this lending be at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • February 1988 arms-length and adequately collateralized. Our iated banks to companies whose securities have experience indicates, however, that these limita- been underwritten by a securities affiliate for the tions, embodied in sections 23A and 23B of the purpose of repaying interest or principal due on Federal Reserve Act, do not work as effectively such securities. We agree that these prohibitions as we would like and, because of their complex- are essential to establishing sound fire walls. ity, are subject to avoidance by creative interpretation, particularly in times of stress. Preventing Conflicts of Interest— On the other hand, we came to the conclusion Disclosure that a prohibition on an affiliated bank's loans to, and purchases of assets from, its securities affil- Another major purpose of fire walls is to prevent iate would sharply limit the transfer of the risk of conflicts of interest that can impair confidence in securities activities to the federal safety net. It banking institutions. The disclosure requirewould also eliminate one of the key factors ments and other provisions of the securities laws viewed by the courts as justifying "piercing the already have made an effective contribution to corporate veil" between the bank and its non- dealing with this issue. Nevertheless, we welbank affiliates—that operations of the securities come the strengthening of these already built-in affiliate are financed and supported by the re- protections by the provisions of section 102, sources of an affiliated bank. For these reasons, which require, under rules established by the and because of the desirability of having a clear SEC, a securities affiliate to disclose its relationrule that is not subject to avoidance, we agree ship to an affiliated bank and to state plainly that with the provisions of section 102 that prohibit the securities it sells are not deposits and are not banks from lending to, or purchasing assets from, insured by a federal agency. their securities affiliates except for collateralized lending for intraday government securities clear- Officer and Director Interlocks ing. We also agree, as allowed by S. 1886, that a The prohibition in section 102 on officers and securities affiliate should be free to borrow from directors of a securities affiliate serving at the its holding company parent. The holding com- same time as an officer or director of any affilpany is not protected by the federal safety net, iated bank is also important in maintaining the and competitive fairness requires that the parent principle of corporate separateness and to avoidof a securities affiliate should be able to support ing conflicts of interest. For this reason we are its affiliate in the same manner as the corporate somewhat concerned about the complete exempparents of investment firms that are unaffiliated tion in this section from this limitation for banks with banks. with total assets of $500 million or less. To permit the operating efficiencies that smaller banks may Other Transaction Limitations achieve from using common management officials without severely eroding the corporate sep- For very similar reasons we agree, as provided in arateness of the bank, we recommend that these section 102, that a bank should not be able to banking organizations be permitted to have interguarantee, extend its letter of credit to, or other- locking officials with a securities affiliate, but be wise support securities issued by a securities required to maintain a majority of the board of affiliate. Allowing such practices would not only directors of the securities affiliate that are not raise the question of competitive fairness, but also directors of the banking organization. also would permit a transfer of the risks of securities activities to the federal safety net. This Other Conflict of Interest Safeguards section would also prevent, during the underwriting period and for 30 days thereafter, loans from In addition, S. 1886 reinforces the requirements a bank affiliate to customers for the purpose of of existing law by providing that a securities buying securities underwritten by a securities affiliate cannot sell securities from its portfolio to affiliate. Finally, it would stop loans from affil- an affiliated bank at any time or place securities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 99 with its trust accounts during an underwriting However, in calculating the regulatory capital period, or for 30 days thereafter. S. 1886 also for the holding company, S. 1886 would deduct helps to assure objectivity when a securities from the assets of the holding company all loans affiliate underwrites securities originated by an to the securities subsidiary, and thus the holding affiliated bank by a requirement that those secu- company would not be required to hold capital to rities must be rated by an unaffiliated, nationally support these assets. We feel that any advances recognized rating agency. Finally, we note with by a holding company to a securities affiliate that approval that under the bill neither banks nor are not considered capital by the functional regtheir securities affiliates would be able to share ulator should not be deducted from the holding confidential customer information without the company's assets and capital. Rather, they customer's consent and that a bank cannot ex- should be supported by capital at the holding press an opinion on securities being sold by its company, just as advances to other subsidiaries securities affiliate without disclosing that its af- require capital support. filiate is selling that security. To do otherwise would be to promote unlimited leveraging in the holding company, thereby weakening or eliminating the ability of the hold- Capital Adequacy ing company to act as a source of strength to its subsidiary banks. With this modification, section We believe that the fire walls that are established 102 would not only assure that the securities by S. 1886 will substantially augment the existing affiliate broker-dealer will be regulated as to insulation of banks from affiliates that is now capital adequacy by the SEC, but would also provided by the Bank Holding Company Act. have the beneficial effect of requiring a bank Besides these measures, perhaps the best insula- holding company to maintain capital sufficient to tor is adequate capital for both banks and secu- absorb losses suffered by the securities affiliate rities affiliates. without impairing the holding company's ability Accordingly, authority should be provided to to serve as a source of strength to its bank assure that holding companies owning banks and subsidiaries. This result is consistent with the securities companies should be adequately capi- provisions of section 102, which provide that the talized. Consequently, we fully support the pro- Board can reject a notice to establish a securities visions of section 102, which require that invest- affiliate if it would be inconsistent with a bank ments by bank holding companies in securities holding company's obligation to serve as a firms should not be permitted if the investment source of strength to its subsidiary banks. would cause the holding company to fall below minimum capital requirements. Support for Functional Regulation Moreover, to assure that a securities affiliate of a banking organization is regulated as to capital At this point, I believe it would be appropriate to adequacy in the same manner as other securities stress the full support of the Board for the firms, section 102, in calculating the capital ade- concepts of functional regulation incorporated quacy of a bank holding company that acquires a into S. 1886. We agree that a securities subsidsecurities firm, excludes from the holding com- iary of a bank holding company carrying out the pany's capital and assets any resources of the functions of a broker-dealer should be subject to holding company that are invested in the capital the net capital requirements of the SEC and of the securities affiliate. We agree that the should, indeed, be regulated by that body once it investment of a holding company in its securities has been established. subsidiary may be deducted from the capital of As I have stressed, however, we do believe the bank holding company in determining its that there is a proper role for regulation of a capital adequacy. Such deductions should in- company that owns a bank. As provided under clude any asset of the holding company that is current law, a company that owns a bank should considered capital in the securities subsidiary by have competent management, should be adeits functional regulator. quately capitalized, and should be open to review Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin • February 1988 in as unobtrusive a manner as is possible consis- services that are functionally so closely linked. tent with achieving these goals. After all, one of the major purposes of allowing This position is consistent with our support for the affiliations that could be established by rethe provisions of section 102, which exempt a pealing Glass-Steagall is to permit, in a competsecurities firm that owns a bank from normal itively neutral manner, the users of securities holding company capital and examination re- services to benefit from a higher level of compequirements if at least 80 percent of its assets and tition. Thus, in our view, the approach taken in revenues are derived from, or devoted to, secu- the bill of permitting use of similar names and rities activities. Even in this situation, S. 1886 coordinated marketing of products is appropridoes not ignore the importance of capital. If an ate. We believe that a prohibition on these activexempt company's bank falls below minimum ities would produce only small gains for bank capital levels, the Board can require restoration insulation, but the losses to efficiency would be of minimal capital levels within 30 days, and in high. the absence of compliance can order the termi- The requirement of separate names would be nation of control within 180 days. In the context artificial, particularly because securities law disof the situation in which a firm is overwhelmingly closure would, in any event, require an affiliate to a securities firm, this framework has our full inform the users of its services of its association support. This is a unique provision that may, if it with a banking enterprise. Similarly, as I pointed works successfully, provide a precedent for de- out earlier, the market for securities is only an veloping the complex of measures that are extension of the market for other banking prodneeded to allow broader ownership of banks and ucts and to deny a banking organization the to protect the federal safety net. ability to sell both products would lose much of We also support minimizing regulatory bur- the gains for the economy that we seek to dens whenever possible. Accordingly, we en- achieve through the association between the two. dorse the provisions of Title II generally on Moreover, there would be no competitive unfair- "Expedited Procedures" and, particularly, sec- ness in this arrangement since the broad relaxtion 203 of the bill that speeds up the procedure ation of the Glass-Steagall requirements that is for holding company applications for approved proposed by S. 1886 would enable securities holding company activities by changing it into a firms to own banks as well as bank holding no-objection arrangement and by eliminating the companies to own securities affiliates. cumbersome requirements for formal hearings. The important point is whether these measures We also endorse the provisions of the bill that would cause the risks of securities activities to be allow the Board to take into account technolog- passed on to banking institutions and to the ical or other innovations in the provision of federal safety net. As I indicated, the Board banking or banking-related services in making believes that the corporate separateness meajudgments on whether an activity is so closely sures that we recommend, and that have been related to banking as to be a proper incident adopted in S. 1886, should effectively deal with thereto. We believe that these provisions, which these problems. have had the Board's support for several years, will reduce regulatory burdens and introduce needed flexibility into the regulatory process. CONCENTRATION OF RESOURCES The guidelines the Congress has established for COORDINATED ACTIVITIES expansion of banking activities require a concern for whether expansion of securities powers will With the strong system of fire walls that are lead to a concentration of resources in the secucontained in S. 1886 in place, we believe it is rities or banking industries. We believe that appropriate to allow the joint banking-securities repeal of Glass-Steagall should have the opposite enterprise the opportunity to realize the effi- effect. As I have stressed today, it will increase ciencies that may be achieved by combining the number of viable competitors in both the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 101 banking and securities industries, enhancing 3. It would establish minimum standards of competition in both. As a result, we doubt that capital adequacy for financial holding companies the Congress need go beyond the requirements of and their affiliates. the antitrust laws to anticipate a problem with Fundamental to this approach is a broad exconcentration of resources in the emerging finan- pansion of the financial activities in which bank cial services industry. However, because we see holding companies may engage, including an as one of the major advantages to repeal to be an explicit repeal of the Glass-Steagall Act. The bill expected increase in competition, and because also provides for the extension of a limited we could understand anxieties that this goal degree of prudential regulation to financial holdmight be impaired by a combination of the largest ing companies, which are companies that include banking and securities firms, the Board does not affiliates that offer uninsured transaction acoppose the limited provisions of section 102 of counts, to include capital adequacy standards as S. 1886 aimed at preventing the largest banking well as reserve requirements. Also fundamental and securities organizations from consolidating. to this concept is the separation of banking and commerce by providing that a commercial holding company cannot own a bank that offers federally insured deposits. COMMENTS ON S. 1891—THE FINANCIAL The third major element of the bill is the SERVICES OVERSIGHT ACT establishment of a National Electronic Payments Corporation for the purpose of operating a mixed The Financial Modernization Act deals with the public-private corporation that would establish problems of our financial system by focusing on and operate a national electronic payment systhe specific question of securities powers, an tem to facilitate large dollar transactions, includarea that is of great importance to the financial ing book-entry transfers of U.S. government system. While it sets up a framework that could securities. The corporation would also be rebe used as a precedent for the consideration of sponsible for the establishment of standards for other products and services, it does not deal with utilization of this system and for improvements those issues at this time, leaving this question in the technological capability and reliability of open for further consideration in the future. We the system as a whole. This enterprise, capitalbelieve that this is the right way to proceed at this ized with funds from the Federal Reserve System time. and by the private shareholders, would provide A different approach has been taken by for direct access to the system not only by banks, S. 1891, the proposed Financial Services Over- but also by other financial organizations that sight Act introduced by Senators Wirth and have transactions in funds and government secu- Graham, which establishes a comprehensive rities of a magnitude sufficient to make their framework for the conduct of the financial serv- participation as shareholders in the new corpoices business in the United States. As a first step ration appropriate. toward this objective, the bill establishes a Fi- The Board finds this proposal to be a careful nancial Services Oversight Commission, with a and very thoughtful approach to the difficult membership drawn from the banking agencies, problems that this committee is attempting to the SEC, the Commodity Futures Trading Com- grapple with today. As Senator Wirth pointed out mission, and the state insurance commissioners. in introducing S. 1891, the bill incorporates a This broadly based Commission would have proposal made by President Gerald Corrigan of three essential functions: the Federal Reserve Bank of New York, and thus 1. It would define the types of activities in the Board is fully familiar with both its structure which bank holding companies, financial holding and objectives. companies, and commercial holding companies could engage. Desirability of Coordinated Regulation 2. It would be charged with enforcing compliance with the regulations defining new activities. One of the proposals in the bill that we find to be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • February 1988 particularly useful is the provision on establish- institution. This format may be too rigid, and the ing a Financial Services Oversight Commission bill does not give the commission specific enough to bring together the various regulatory interests instructions as to the basis for its decisions, nor that affect our highly integrated financial mecha- do we believe that it is possible now for the nism. The need for greater regulatory coordina- Congress to write the needed comprehensive tion could not have been brought out more instructions. For example, no guidance is proclearly than in the recent stock market develop- vided on the fire walls to separate banking and ments in which we saw the complex interactions nonbanking activities that the Board considers to of securities, commodities, and banking markets. be essential to an adequate framework for ex- Similarly, I have emphasized in my testimony panded activities of companies that own banks. today that securitized products are a natural Rather, it seems to us that there are major extension of the market for banking activities, advantages to proceeding on an incremental babut at this point it is also important to stress that sis starting with securities powers in which the securities firms have undertaken many of the rationale for change has been clearly established. activities that have been traditionally thought of In this way, we can have the benefits of change as unique to banking. Again, we have examples while gaining experience with the systems that in the news, such as bridge lending, but there are are necessary to assure that this change is carried many others as well, including foreign exchange out in a responsible and effective manner. As transactions and the offering of transaction ac- conditions evolve over time, a more flexible counts. structure will allow both the Congress and the These overlaps in functions suggest not only regulators the opportunity to be more responsive that rigid lines between providers of securities to the needs of customers and less dependent on and banking services are impractical but also that rigid formulas that may not be practical. more coordination of regulatory activities is highly desirable. For example, as we seek to National Electronic Payments Corporation establish a worldwide, risk-based capital system for banking organizations that will apply capital Finally, we have given considerable thought to standards to a considerable variety of now off- the concept of a National Electronic Payments balance-sheet activities, our ability to do so, and Corporation. There is much to be said for its the stability of markets, will be adversely af- emphasis on spurring technological improvefected if almost identical activities of securities ments, on arrangements for liquidity reserves to firms are not subject to the same type of capital protect the integrity of that system, and on adequacy requirements. Thus, a broadly repre- limiting intraday overdrafts. However, we are sentative financial regulatory body with adequate not sure that the mechanism proposed in the bill authority to coordinate financial regulation needs is the most efficient and cost-effective way of careful consideration as the Congress makes the achieving its worthwhile goals. The issues that it essential changes necessary to adapt the financial raises warrant further study. system to the new realities of competition and technology. We urge that further thought should be given to how this approach could be inte- APPLICATION OF S. 1886 grated with S. 1886. TO SAVINGS AND LOAN INSTITUTIONS Concerns about the Authority of the FSOC Finally, I would like to note that S. 1886 does not apply to savings and loan institutions or to their We are concerned, however, about taking the holding companies. However, it would seem Financial Services Oversight Commission con- appropriate that the framework that is being cept further at this time by establishing separate developed by this committee for the proper concategories of bank, financial, and commercial duct of securities activities to protect the federal holding companies, together with authority in the safety net, to prevent conflicts of interest, and to commission to fix the activities of each type of assure competitive equality within a structure of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 103 functional regulation should be equally applica- for capitalization of large troubled institutions, or ble to these institutions. We understand, how- other solutions that the legislative process is ever, the concerns about the effect of these uniquely capable of working out. rules on the possible willingness of securities We commend this committee for its active role firms to put capital into troubled savings and in considering one of the most important issues loan institutions at a time when the industry that now faces our financial markets. We and its regulators are attempting to deal with strongly recommend that you adopt legislation to large losses in a considerable number of institu- repeal the Glass-Steagall Act and to put in its tions. place a new framework allowing the affiliation of Thus, the Congress has to reconcile conflicting banking organizations and securities firms as public policy objectives—the need to deal with provided in the Financial Modernization Act present losses in a constructive way, and at the proposed by Chairman Proxmire and Senator same time to protect the future health of depos- Garn. itory institutions when engaging in a new activ- We also urge you to allow the moratorium on ity. I have no easy answers to this dilemma, banking activities contained in Title II of the Comexcept to suggest that it be kept under review so petitive Equality Banking Act to expire on March that this committee can work, in close consulta- 1, 1988, as the law now provides. We believe that tion with the Federal Home Loan Bank Board, these measures will ensure a more responsive, on such ideas as transition periods, exceptions competitive, and safe financial system. • Statement by Alan Greenspan, Chairman, Board ". . .the United States is prepared to consider of Governors of the Federal Reserve System, utilizing, as an additional indicator in the ecobefore the Subcommittees on Domestic Mone- nomic coordination process, the relationship tary Policy and on International Finance, Trade among our currencies and a basket of commodiand Monetary Policy of the Committee on Bank- ties, including gold. . . . We are proposing coning, Finance and Urban Affairs, U.S. House of sideration of a commodity price indicator as an Representatives, December 18, 1987. analytical tool and an improvement to our indicator process, to be used in conjunction with I welcome the opportunity to appear here this other measures of our economic performorning to discuss the role of commodity prices mance. ..." in the international coordination of economic I believe Secretary Baker was right to suggest policy. The fact that the Subcommittees on Do- the possibly useful role an index of commodity mestic Monetary Policy and on International prices could play in an international context. He Finance, Trade and Monetary Policy are meeting was also right to emphasize that it would be a jointly on this topic I take to be symptomatic of technical supplement to existing procedures. the impossibility of distinguishing between the International policy discussions quite naturally domestic and the international aspects of eco- center on the adjustment of external imbalances nomic policy in today's financial environment. and the stability of exchange rates. These are Much attention in the press and elsewhere, matters that simply cannot be addressed unilatfollowing Secretary Baker's speech at the annual erally. One country's deficit is someone else's meeting of the World Bank and the International surplus. If the U.S. current account deficit is to Monetary Fund on September 30, has been fo- decline, the combined surplus of the rest of the cused on the possibility of adoption by the world must decline correspondingly. United States of a commodity standard, perhaps Similarly, an exchange rate is the relative price even a gold standard, to control its monetary of two currencies. The currency of one country economic policy. But that is a misreading of cannot depreciate without the currency of an- Secretary Baker's remarks. He said only that other appreciating. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1988 We must not lose sight of the fact, however, terms of the other currencies included in the SDR that—as important as these variables are—they basket. In this situation, it would not be approare not in themselves the ultimate objectives of priate to interpret the rise in dollar prices of policy. Nor would the achievement of stable commodities as indicating a generalized flight exchange rates and balanced external positions from all currencies. ensure a healthy world economy. It is conceiv- We must also be wary of special factors that able, for example, that in the extreme, all nations may affect the prices of individual commodities could be undergoing simultaneous domestic re- so strongly as to move overall commodity price cession, even as external equilibrium prevails. averages significantly in the short run. Especially More germane to our discussion this morning is when the causes are of a transitory character— the possibility that exchange rates could be sta- for example, a temporary supply disruption—the ble in a world of rampant global inflation. To use proper macroeconomic policy responses may the jargon of the economics profession, relative well be different from those appropriate to major prices—including exchange rates—can be stable, cyclical booms in commodity markets. For this but the general price level can move up or down reason the coverage of any index used in the unless it is anchored to something. international context should be broad. We need to make certain, as we seek stability Moreover, while a general rise or fall in the for the world economy, that we do not put in prices of commodities, which are traded internaplace policies and procedures that foster a flight tionally, could indicate global inflation or deflafrom currencies generally. Prices of internation- tion and in general may provide an earlier warnally traded commodities can provide useful infor- ing of potential inflation danger than measures mation in identifying such a phenomenon. When such as consumer or even wholesale prices, it there is a flight from currency, the flight is toward would have little to say about what policymakers goods or commodities. This is not to say that in any individual country should do. A much various measures of domestic wage and price broader range of information, relating not just inflation in individual countries and other indica- to the world economy but to the economic pertors of actual or potential pressures on resources formance and prospects of each individual counare not important also in analyzing global infla- try, is necessary to disentangle the forces at tion. Indeed, such domestic measures of inflation work and to determine appropriate courses of are already included among the indicators uti- action. lized in international reviews of the consistency Let me discuss briefly the role of one particular and compatability of economic policies. commodity, gold. The appeal of a more formal It is important to note that rising commodity role for gold in the monetary system, as I sugprices expressed in dollars are not necessarily a gested in a statement to the Commission on the sign of global inflation. Commodity prices must Role of Gold in the Domestic and International be rising in terms of all currencies if they are to Monetary Systems in November 1981, is that it be taken as evidence of a problem of potential would impose discipline not just on monetary global inflation. If the prices of a basket of policy but on federal budget policy, as well. commodities are rising on average in terms of Unlimited dollar conversion into gold would limit one currency but falling in terms of other curren- the government's ability to issue dollar claims. If cies, we can infer essentially only that there has you cannot finance deficits, you cannot create been a change in exchange rates. For example, them or sustain them. However, there are too the Economist index of commodity prices, ex- many practical problems associated with restopressed in U.S. dollars, averaged 2.9 percent ration of a gold standard, not the least of which is higher in November this year than in October. the huge block of outstanding dollar claims in Over the same period, that index, expressed in world financial markets today, to make this a special drawing rights (SDRs), averaged 1.3 per- useful avenue of development. I believe that the cent lower in November than in October. The conclusion of the Gold Commission remains difference reflects the decline in the dollar over valid today, namely that ". . .under present cirthat period of about 6 percent on average in cumstances, restoring a gold standard does not Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 105 appear to be a fruitful method for dealing with the U.S. economy. Included in that category are continuing problem of inflation."1 commodity prices. In affirming this, we should That judgment, however, is quite consistent distinguish between what we must evaluate, in a with the view that the price of gold should be technical sense, and what we do. In particular, included along with prices of other commodities we should avoid any automatic policy response as one indicator of global inflation or disinflation. to movements in commodity prices. Gold is relevant and useful in that regard wholly This view of the manner in which the Federal because of the historic and widespread percep- Reserve should conduct policy is fully consistion of gold as an indicator of a flight from tent, I believe, with our obligations under the currency. However, we must be careful not to Full Employment and Balanced Growth Act of interpret every change in the price of gold as 1978. To respond to a question posed by Chairmeaning that. Like prices of other commodities, man Neal in his letter to me, I also believe that we must consider whether it is changing in terms the Federal Reserve should not be required to of just some currencies or of all currencies. report a projected range for the movement of an Again, most if not all of the rise in the dollar price index of commodity prices. Our reports to the of gold over the past couple of years simply Congress currently include discussion of a broad reflects the dollar's decline. As in the case of range of economic variables, and commodity other commodities, special demand or supply prices typically have been among them. Beyond factors need to be considered in connection with that, it would not make sense for us to cite a the price of gold. Nevertheless, the fact remains range for some commodity price index besides that a significant flight from currencies in general the ranges we report for the growth of money and without an increase in the price of gold in terms credit aggregates. The growth of money and of those currencies is unlikely. credit is much more directly influenced by our actions than are commodity prices. Moreover, information on market expectations CONCLUSION of commodity prices is already available in the form of futures prices, and it would be neither The mandate for economic policy in the United meaningful nor constructive for the Federal Re- States and elsewhere should be to maintain the serve to add another view. Indeed, it is conceivmaximum growth in real income and output that able that such an action, if it were seen as having is feasible over the long run. A necessary condi- policy content, might well perturb established tion for accomplishing that important objective is behavioral relationships in such a way as to a stable price level, the responsibility for which obscure or distort the information value of comhas traditionally been assigned in large part to the modity prices. central bank, in our case to the Federal Reserve. Instead, it makes more sense for us to focus on In attempting to achieve our objectives, the helping to achieve the long-run growth of the Federal Reserve must take into account and economy and its precondition, stable prices. respond to all factors that significantly affect the Moreover, we should work with central banks and finance ministries in other countries to enhance prospects for the sustainable growth of the world economy. Those are difficult tasks, and 1. See U.S. Department of the Treasury, Report to the we would be foolish to ignore information, such Congress of the Commission on the Role of Gold in the as is contained in commodity prices, that could Domestic and International Monetary Systems, vol. I (Treasury, March 1982), p. 17. help us. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Announcements NEW MEMBERS NAMED on the committee for consumer affairs of the Presi- TO CONSUMER ADVISORY COUNCIL dent's Federal Energy Commission. Dr. Albanese is currently on the boards of directors of Armstrong World Industries, Inc., Duke Power Company, and The Federal Reserve Board on December 14, Jefferson-Pilot Corporation. 1987, named 11 new members to its Consumer Advisory Council to replace those members Stephen Brobeck, Washington, D.C., has been Exwhose terms are expiring and designated a new ecutive Director of the Consumer Federation of Amer- Chairman and Vice Chairman of the Council for ica since 1980, after having previously served as a 1988. board member and vice president. CFA is the nation's The Consumer Advisory Council was estab- largest consumer advocacy organization, representing lished by the Board in 1976, at the direction of 220 groups with more than 30 million members. He was formerly president of Cleveland Consumer Action the Congress, to represent the interests of the and Cleveland Consumer Action Foundation, and financial industry and consumers. The Council taught American Studies at Case Western Reserve advises and consults with the Board in the exer- University. Mr. Brobeck frequently testifies before cise of the Board's functions under the Con- congressional committees, and has co-authored two sumer Credit Protection Act and on other con- books, The Bank Book and The Product Safety Book. He serves on the boards of directors of the Institute for sumer-related matters of interest to the Board. Civil Justice, National Center for Financial Services, The Council consists of 30 members whose Joint Council on Economic Education, Citizens for three-year terms are staggered. Tax Justice, National Committee for Responsive Phi- Mr. Steven W. Hamm was designated as lanthropy, National Coalition for Consumer Education, Public Voice for Food and Health Policy, and the Chairman to succeed Mr. Edward N. Lange, a Tele-Consumer Hotline. partner with the law firm of Davis, Wright, Todd, Reise and Jones in Seattle, Washington. Mr. Hamm is Administrator for the South Carolina Betty Tom Chu, Monterey, California, is Chairman of the Board and CEO of Trust Savings Bank, a $150- Department of Consumer Affairs. His term on million-plus institution. She previously served as Depthe Council runs through December 1988. uty Counsel to the Los Angeles School District and Mr. Edward J. Williams, Senior Vice Presi- Deputy Corporations Commissioner for the State of dent-Consumer Banking Group for Harris Trust California. Ms. Chu was the founder, chairman, presand Savings Bank in Chicago, Illinois, was ident, and managing officer of the nation's first Chinese-controlled, federal savings and loan. She is curnamed Vice Chairman to succeed Mr. Hamm. rently a member of the Federal Savings and Loan He will serve on the Council through December Advisory Council. She is also a director of the Cali- 1988. fornia Savings and Loan League and former chairman The 11 new members, named for three-year of the American League of Financial Institutions, terms beginning January 1, are the following: which represents minority savings and loan institutions in the nation. Naomi G. Albanese, Greensboro, North Carolina, retired after 24 years as a professor of home econom- Jerry D. Craft, Atlanta Georgia, is Senior Vice ics at the University of North Carolina, Greensboro. President of First National Bank of Atlanta and has She has been active in a number of professional been in banking since 1969. He joined First Atlanta in societies and in community activities on the Board of 1982 and currently has responsibility for First Retail the Greater Greensboro Housing Foundation. In Electronic Services and Bankcard Division for the 1981-82, Dr. Albanese served as chairman of the American Bankers Association and is on the Board of board of directors of the Federal Reserve Bank of the Consumer Bankers Association. Mr. Craft has Richmond, Charlotte Branch. In 1974-75, she served been on the faculty of the Stonier Graduate School of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

107 Banking and is involved in a variety of community manager and held progressively more senior manageactivities. ment positions before becoming President in April 1986. In October 1987, he was elected Chairman of the Board. Mr. Odom is interested in expanding the range Donald C. Day, Boston, Massachusetts, is President of financial services that Ford Credit offers to consumof New England Securities Corp., and has been with ers. He is currently involved in developing a special New England Mutual Life Insurance Company since finance plan to extend credit to first-time auto buyers 1972. He was named Senior Vice President in 1981. He and economically disadvantaged groups. He also plays is also Executive Vice President of New England a principal role in special programs with the more than Mutual Funds. Mr. Day is a former vice chairman of 125 black-owned Lincoln-Mercury dealerships. Mr. the District Business Conduct Committee of the Na- Odom reviews all complaints received at the executive tional Association of Securities Dealers. office and has instituted a program to measure consumer satisfaction with credit services offered by the Robert A. Hess, Washington, D.C., has been Pres- company's 138-branch U.S. network. He is currently a ident and General Manager since 1970 of the Wright member of the Board of Trustees of the Joint Council Patman Congressional Federal Credit Union, an $80 on Economic Education, a national organization that million credit union in Washington, D.C., serving the sponsors economic education programs (kindergarten Members of Congress and employees of the House of through grade 12) throughout the nation. Representatives. Mr. Hess is currently Chairman of the National Association of Federal Credit Unions, after having previously served as Treasurer, and has Sandra Phillips, Pittsburgh, Pennsylvania, is Execbeen a Director-at-Large since 1980. He is a former utive Director of the Oakland Planning and Developmember of the board of directors of the International ment Corporation, a nonprofit community planning Credit Union Association. His volunteer activities and real estate development organization. OPDC grew have included more than 10 years on the boards of the out of People's Oakland, which Ms. Phillips headed as National Capitol Central Federal Credit Union and the director, a community advocacy group that set long- Metropolitan Area Credit Union Management Associ- range recommendations for development, together ation. Mr. Hess served six years on the Washington with procedures for carrying them out. In the past Area Credit Union Promotion Committee, which is several years, OPDC has purchased and renovated a affiliated with the District of Columbia Credit Union former school to house very low-income elderly and League, and currently serves on the League's Educa- handicapped residents and an apartment building to tion Committee. house chronic mentally ill residents. It has built 102 units of new housing for low- and moderate-income homeowners, with another 64 units under construc- A.J. (Jack) King, Kalispell, Montana, is the Chair- tion. OPDC is a co-general partner in a joint venture man and Executive Vice President of the Valley Bank that is building a 430-car garage, a hotel, and an office of Kalispell, a $58 million bank serving 10,000 resi- building, all in the Oakland community. Through the dents in Northwestern Montana. He serves as Chair- OPDC, Ms. Phillips also has helped to build a strong man and President of First Security Bank, also in network of cooperation between the University of Kalispell. Mr. King was instrumental in a recent Pittsburgh, several hospitals, and the Oakland commucommunity development project that brought both nity. jobs and revenues to the town and that resulted in a new $18 million shopping center and motel complex adjacent to the city center. He is currently involved in Ralph E. Spurgin, Columbus, Ohio, is President and a second community development project. Mr. King is CEO of the Limited Credit Services, Inc., and has on the Executive Committee of the Independent Bank- responsibility for the credit operations of six subsiders Association of America and is a past president and iaries including The Limited, Leraers, and Lane Bryfirst chairman of the Association. He is also a past ant. He was previously with J.C. Penney Company, president of the Montana Independent Bankers Asso- Inc. for 20 years, where he last held the position of ciation. Mr. King was appointed by the Governor of General Credit Manager, Planning and Development. Montana to two terms on the State Banking Board, a Mr. Spurgin is currently a Director of the Credit board created by the state legislature to assist the Management Division of the National Retail Merchants Association, after having served in various Bank Commissioner in the approval of state charters capacities including Chairman of the Credit Bureau for commercial banks. For three years, he served on Task Force. the Advisory Council for the School of Business at the University of Montana. Lawrence Winthrop, Portland, Oregon, is President William E. Odom, Dearborn, Michigan, is Chairman of the Consumer Credit Counseling Service of Oregon, of the Board of Ford Motor Credit Company. He Inc. He is currently a trustee of the National Foundajoined Ford Credit in 1966 as the Detroit district tion for Consumer Credit and Executive Director of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • February 1988 the Associated Western Consumer Credit Counseling Elena Hanggi Services. For 15 years Mr. Winthrop was with the J.C. President Penney Company as Regional Credit Manager for the Association of Community Pacific Northwest. Organizations for Reform Now Little Rock, Arkansas The other members of the Council are the (December 31, 1989) following (the date each term expires appears in parentheses): Robert J. Hobbs Senior Attorney National Consumer Law Center Edwin B. Brooks, Jr. Boston, Massachusetts President (December 31, 1988) Security Federal Savings & Loan Association (December 31, 1988) Ramon E. Johnson Professor of Finance Judith N. Brown University of Utah National Treasurer Salt Lake City, Utah American Association of Retired Persons (December 31, 1989) Edina, Minnesota (December 31, 1989) Robert W. Johnson, Ph.D. Michael S. Cassidy Professor of Management Senior Vice President Director, Credit Research Center Chase Manhattan Bank, N.A. Purdue University New York, New York West Lafayette, Indiana (December 31, 1988) (December 31, 1988) Richard B. Doby John M. Kolesar Bank Commissioner President State of Colorado Ameritrust Development Bank Denver, Colorado Cleveland, Ohio (December 31, 1989) (December 31, 1988) Richard H. Fink Alan B. Lerner President Senior Executive Vice President Citizens for a Sound Economy Associates Corporation of North America Washington, D.C. Dallas, Texas (December 31, 1989) (December 31, 1988) Neil J. Fogarty Richard L.D. Morse Attorney Professor of Family Economics Hudson County Legal Services Kansas State University Jersey City, New Jersey Manhattan, Kansas (December 31, 1988) (December 31, 1989) Stephen Gardner Assistant Attorney General Sandra R. Parker Consumer Protection Division Chairman, Banking Committee State of Texas Richmond United Neighborhoods Dallas, Texas Richmond, Virginia (December 31, 1988) (December 31, 1988) Kenneth A. Hall Jane Shull President (South Division) Director First United Bank Institute for the Study of Civic Values Picayune, Mississippi Philadelphia, Pennsylvania (December 31, 1988) (December 31, 1988) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 109 APPOINTMENT OF CHAIRMAN OF are subject to a zero percentage reserve require- PRICING POLICY COMMITTEE ment from $2.9 million to $3.2 million of total reservable liabilities. The Federal Reserve Board announced on De- Additionally, the Board increased the reportcember 23, 1987, the appointment of Silas ing cutoff level distinguishing weekly reporters Keehn, President of the Federal Reserve Bank of from quarterly reporters from $28.6 million to Chicago, as the Chairman of the Pricing Policy $30.0 million of total deposits and other reserv- Committee of the Federal Reserve System, effec- able liabilities. tive January 1, 1988. Mr. Keehn has been a These adjustments took effect beginning Demember of the committee since January 1, 1987. cember 15, 1987. Mr. Keehn succeeds Edward G. Boehne, Pres- The Board made the changes in accordance ident of the Federal Reserve Bank of Philadel- with provisions of the Monetary Control Act. phia. Mr. Boehne had been Chairman of the The act requires the Board to amend its Regula- Pricing Policy Committee since July 1, 1984. tion D (Reserve Requirements of Depository The committee has also appointed Gary H. Institutions) annually to increase the amount of Stern, President of the Federal Reserve Bank of transaction accounts subject to a 3 percent re- Minneapolis, as a member of the committee to fill serve requirement. The annual adjustment must the vacancy created by Mr. Boehne's departure be 80 percent of the annual percentage change in from the committee. the transaction accounts held by all depository The committee is also composed of the follow- institutions. The growth in total net transaction ing: accounts of all depository institutions from June Governor Wayne D. Angell, Chairman of the 30, 1986, to June 30, 1987, was 13.0 percent. The Federal Reserve Bank Activities Committee, statutory amount thus requires an increase of Federal Reserve Board; Henry R. Czerwinski, $3.8 million over last year's amount to $40.5 First Vice President, Federal Reserve Bank of million. Kansas City; William H. Wallace, First Vice The Board is also required by the Garn-St President, Federal Reserve Bank of Dallas; and, Germain Depository Institutions Act of 1982 to Theodore E. Allison, Staff Director for Federal amend Regulation D to adjust the amount of a Reserve Bank Activities, Federal Reserve depository institution's total reservable liabilities Board. that are exempt from reserve requirements for Jack Guynn, First Vice President, Federal the upcoming year by 80 percent of any annual Reserve Bank of Atlanta, remains Executive percentage increase in total reservable liabilities Director (but not a member) of the committee for all depository institutions. Growth in total through December 31, 1988. reservable liabilities was 12.6 percent from June The committee reviews policies and proce- 30, 1986, to June 30, 1987, requiring an increase dures related to the provision of Reserve Bank in the reserve requirement exemption to $3.2 priced services to depository financial institu- million. tions under the Monetary Control Act of 1980. The Board is also increasing the reporting cutoff level distinguishing weekly reporters from quarterly reporters from $28.6 million to $30.0 INCREASE IN RESERVABLE TRANSACTION million of total deposits and other reservable ACCOUNTS AND LIABILITIES liabilities. The cutoff level is indexed to 80 percent of the annual percentage increase in total The Federal Reserve on December 3, 1987, an- deposits and other reservable liabilities for all nounced an increase in the net transaction ac- depository institutions. The annual adjustment of counts to which the 3 percent reserve require- the cutoff level is computed as of June 30 of each ment will apply in 1988 from $36.7 million to year. Institutions with total deposits and other $40.5 million. reservable liabilities below the reserve require- The Board also increased the amount of a ment exemption amount of $3.2 million are excused from reporting even on a quarterly basis if depository institution's reservable liabilities that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1988 their deposits can be estimated from other The principal effect of the amendment is to sources. provide a simplified method whereby brokers and dealers may temporarily finance the acquisition of stock under employee stock option pro- OPERATIONAL CHANGES TO AUTOMATED grams without violating the general principles of CLEARINGHOUSE MECHANISM Regulation T. In general, the structure of a cash account does The Federal Reserve Board has approved oper- not permit a person to pay for the purchase of a ational changes to the Reserve Banks' automated security with the proceeds of its sale nor does the clearinghouse (ACH) mechanism that are de- structure of a margin account allow a withdrawal signed to reduce risk. These changes become of cash if the effect is to lower a customer's effective July 18, 1988. equity in the account. The amendment, which is The measures approved by the Board call for effective January 25, 1988, will supersede these uniform Reserve Bank procedures to monitor provisions in Regulation T in this narrow area by ACH credit payments originated by institutions permitting the creditor to treat the receipt of an experiencing financial difficulties. The proce- exercise notice as if it were the stock itself. dures are designed to reduce the likelihood that Reserve Banks would have to reserve ACH credit payments should the institution originating REGULATION Z. AMENDMENT the credit payments fail before the transactions are settled. The Federal Reserve Board has adopted an Earlier deadlines will be set for the return of amendment to its Regulation Z (Truth in Lend- ACH debit transactions of $2,500 or more. In ing) that will require creditors to provide con- 1988 the new deadlines will be 8:00 p.m. (eastern sumers with more extensive information about time) for nonautomated returns and the regular the variable-rate feature of closed-end adjustable night deposit deadlines for the automated re- rate mortgages (ARMs) that have maturities of turns. In addition, return information will be longer than one year and are secured by the taken by telephone for institutions that cannot consumer's principal dwelling. The Board's final meet the new paper return-item deadlines; how- rule becomes effective October 1, 1988, but credever, institutions will be charged $6,000 per itors may comply immediately. return item for this service. The Board's amendment requires creditors to If institutions that originate ACH credit pay- provide consumers with a more detailed descripments are closed on the settlement day, the tion of the variable-rate feature. An historical institutions' reverse or clearing accounts will be example that shows the effect that actual changes charged for the transactions as if they were open. in index values would have had on payments on This policy will apply to both voluntary and a $10,000 loan must be given to the consumer. mandatory holidays because the institutions And, creditors must provide a statement of the making these payments are aware of their obli- initial and maximum interest rates and payments gations one or two days before the settlement for a $10,000 loan originated at the most recent date. interest rate shown in the historical example. The amendment to the regulation also requires that prospective borrowers be given an educa- REGULATION T: AMENDMENT tional brochure about ARMs, either The Consumer Handbook on Adjustable Rate Mortgages The Federal Reserve Board announced on De- published by the Board and the Federal Home cember 23, 1987, approval of an amendment to Loan Bank Board, or a suitable substitute. Regulation T (Credit by Brokers and Dealers) to All of this information must be given to the enable broker-dealers to help employees exer- consumer at the time an application form is cise stock options awarded in connection with provided or before the consumer pays a nonretheir employment. fundable fee, whichever occurs earlier. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 111 BANK HOLDING COMPANY APPLICATION Board said it would be unable to extend the time APPROVED for comment beyond the 60-day period. The Federal Reserve Board also issued for The Federal Reserve Board announced on De- public comment on December 22, 1987, a procember 14, 1987, its approval of the application posal to amend its Regulation Z (Truth in Lendof Bank of New England Corporation, Boston, ing), to require creditors to give consumers in- Massachusetts, to engage in (1) placing third- creased disclosures about home equity lines of party commercial paper as agent; and (2) under- credit much earlier in the credit process. Comwriting and dealing in certain municipal revenue ment is requested by February 8, 1988. bonds, one- to four-family mortgage-related securities, commercial paper, and consumerreceivable-related securities through its wholly PROPOSED REVISIONS TO OFFICIAL STAFF owned subsidiary, BNE Capital Market Com- COMMENTARIES ON REGULATIONS B, E, pany, Boston, Massachusetts. In accordance AND Z with Title II of the Competitive Equality Banking Act of 1987, the Board has delayed the effective The Federal Reserve Board issued for public date of its Order with respect to the proposed comment on December 10, 1987, proposed reviunderwriting and dealing activity. sions to the official staff commentaries for three of its consumer credit protection regulations, Regulation B (Equal Credit Opportunity), Regulation E (Electronic Fund Transfers), and Regu- EXTENSION OF COMMENT PERIOD lation Z (Truth in Lending). The Federal Reserve Board announced on December 11,1987, an extension to January 8,1988, SYSTEM MEMBERSHIP: ADMISSION OF of the comment period on a program to permit STATE BANKS state member agricultural banks to amortize losses on qualified agricultural loans. The following state banks were admitted to mem- The Board allowed the extension even though bership in the Federal Reserve System during the its final rule regarding this matter became effec- period December 1 through December 31, 1987: tive November 9, 1987, and information on amortized loans will appear on reports of condition Delaware beginning December 31, 1987. New Castle Fidelity Bank The program was created by Title VIII of the Delaware Competitive Equality Banking Act of 1987. Florida Hollywood Florida First International Bank Alachua. . .United Citizens Bank of Alachua PROPOSED ACTIONS County Pennsylvania The Federal Reserve Board issued for public Berks County Berks County Bank comment on December 3, 1987, a proposed new Philadelphia Princeton Bank regulation to carry out provisions of the Expe- of Pennsylvania dited Funds Availability Act. Philadelphia County Glendale Bank Comment should be submitted to the Board by of Pennsylvania February 8, 1988. Because of the lead time Virginia needed by banks to comply with the new law, the Chesapeake Bank of Hampton Roads Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON NOVEMBER 3,1987 gains across both durable and nondurable goods industries. Job growth elsewhere, however, has 1. Domestic Policy Directive slowed; construction employment dropped in September, and hiring in the finance, insurance, The economic information available at this meet- and real estate grouping was damped in part by ing was reviewed in the context of the extraordi- slower mortgage originations. The civilian unemnary developments in financial markets since the ployment rate continued to edge down in Sep- Committee meeting on September 22. Over the tember, touching 5.9 percent. period, equity prices had fallen sharply and a Retail sales declined somewhat in September, record drop in mid-October was accompanied by but consumer spending rose substantially in the falling interest rates and heightened preferences third quarter, reflecting primarily an incentivefor safety and liquidity. The economic effects of induced increase in outlays on motor vehicles. such developments were not yet clear. At the With the expiration of the incentives at the end of time of the meeting, data relating to nationwide September, sales of domestic autos dropped business activity were available only for the sharply. Purchases of other goods were about period prior to the mid-October collapse in stock unchanged last quarter because of continued prices. Such data showed that the economy had softness in the demand for big-ticket items as expanded at a fairly brisk pace in the third well as for most types of nondurables. However, quarter; growth in the industrial sector was es- outlays for services rose appreciably. pecially robust, spurred by a sharp pickup in Housing activity through September continued business investment and a further expansion in to be limited by the effects of higher mortgage exports. Prices continued to rise at a relatively interest costs and elevated rental vacancy rates. moderate rate in recent months, and even with Building permits were flat in September and, fairly strong labor demands and a considerably although starts picked up to an annual rate of reduced unemployment rate, wages accelerated 1.67 million units, they remained well below the only slightly. pace of early this year. Industrial production rose somewhat further in Business fixed investment was strong in the September after a large increase earlier in the third quarter, paced by a surge in purchases of summer. In the third quarter as a whole, output computers, a bulge in purchases of motor vehiwas up nearly 9 percent at an annual rate, with cles, and a substantial increase in spending on large gains in most major groupings. Production other types of equipment. Outlays on structures of business equipment was especially strong, also recorded a large rise, as petroleum drilling apparently reflecting improved foreign as well as activity expanded sharply, spending by public domestic demand for U.S. products. Materials utilities increased appreciably, and office conoutput also continued to strengthen, but auto struction firmed. The advance spending indicaassemblies were reduced sharply in August and tors available through September also pointed to September. continued strength. Recent events in financial Labor demand, on balance, remained strong. markets were expected to lead to some reassess- Nonfarm payroll employment rose again in Sep- ment of spending plans, but investment outlays tember. Manufacturing employment posted a siz- would be supported in the near term by projects able rise in the third quarter, with widespread that were already under way. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

113 Inventory investment was held down in the rose 0.2 percent in September, as retail energy third quarter by a sharp liquidation of stocks at prices fell but food prices rose. Excluding food automobile dealers. Based on data available and energy items, consumer prices have slowed a through August, the level of stocks in other trade bit recently from the average pace over the first categories rose somewhat further but generally seven months of the year. Price increases for did not appear to be excessive in relation to finished goods at the producer level also have sales. In the manufacturing sector, the stronger remained moderate. However, prices for interorders received since last spring contributed to mediate and crude materials (apart from food and an increase in the pace of inventory accumula- energy) have continued to rise substantially, retion that was fairly widespread by industry and flecting the higher levels of industrial activity, the by stage of fabrication; nonetheless, inventory- lower exchange value of the dollar, and the sales ratios in most industries remained low at effects on petroleum-based products of earlier the end of August. increases in crude oil prices. Wage trends have The U.S. merchandise trade deficit in July- remained moderate, although increases in the August was estimated to have been marginally past few months have been slightly larger than larger than in the second quarter on a seasonally earlier in the year. adjusted basis; both imports and exports rose At its meeting on September 22, the Commitsubstantially over the two months. A surge in oil tee adopted a directive that called for maintaining imports, most of which went into domestic the degree of pressure on reserve positions that inventories, accounted for about half of the had been sought since early September. The July-August rise in total imports. Nonagricul- members decided that somewhat greater or tural exports continued to grow at a rapid pace, somewhat lesser reserve restraint would be acwith shipments of commercial aircraft showing ceptable depending on indications of inflationary particular strength in July. Agricultural exports pressures, the strength of the business expanalso picked up markedly. sion, developments in foreign exchange markets, Indicators of business conditions in major for- as well as the behavior of the monetary aggreeign industrial countries generally suggested gates. Adjustment plus seasonal borrowing in the somewhat faster economic expansion in the third first complete reserve maintenance period folquarter than the weak average pace of the first lowing the September meeting increased to a half of the year, while inflation abroad remained daily average of about $725 million, boosted in low. In Japan, industrial production in the third part by unusual borrowing related to Reserve quarter was noticeably above the average level Bank computer problems. Apart from higher for the first half of the year. The trade surplus levels around the quarter-end, federal funds was down slightly in nominal terms in the third traded in a IVA to IVi percent range during that quarter, and more substantially in real terms. At maintenance period. Federal funds and other the same time, consumer prices in Japan were interest rates subsequently rose through midslightly above their year-earlier level, while October as market participants appeared to anwholesale prices showed a smaller four-quarter ticipate monetary tightening in an environment of decline than in previous quarters. German indus- firmer policy abroad, concerns about the dollar, trial production rebounded significantly in Au- and pessimism about the prospects for domestic gust, after declines in the previous two months, inflation. but the average level for July-August was still After declining appreciably in the first half of below its year-earlier level. Consumer prices in the month, stock prices plunged on October 19 in Germany in the third quarter were slightly above chaotic trading. Most interest rates fell sharply. their level of a year earlier. Output in the United The Committee held daily telephone conferences Kingdom continued to grow at a healthy pace, in the last two weeks of October to assess the while that in France and Italy slowed some- extraordinary developments in financial markets. what. The members agreed on the need to assure Increases in U.S. consumer prices have been adequate liquidity in a period of continuing volrelatively moderate in recent months. The CPI atility in domestic and international financial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • February 1988 markets, and in particular on the need to meet Equity prices fluctuated sharply after their promptly any unusual liquidity requirements of collapse on October 19, but most major stock the economic and financial system in this period. indexes have recovered to levels somewhat They recognized that special flexibility in the above their October lows. Markets for fixedconduct of open market operations was called for income securities also were quite volatile after after the stock market collapse. Accordingly, mid-October, but yields fell substantially on balreserves were provided generously on a daily ance, with rates on long-term Treasury and highbasis, often at an atypically early hour. In the grade corporate bonds reversing much of their process, operations were directed toward some runup since August. In recent days, bond mareasing in reserve market conditions. The degree kets generally have retained their earlier gains, as of pressure that was sought on reserve positions market participants have appeared to reassess was reduced shortly after October 19 and again the outlook for the economy, inflation, and monlate in the month, but actual operations contin- etary policy. In short-term markets, Treasury bill ued to be guided by day-to-day developments. rates have shown net declines of around WA Growth in nonborrowed reserves surged in late percentage points since mid-October, in associa- October as open market operations accommo- tion with the easing of reserve conditions as well dated substantially enlarged desires for excess as increased demands for safe and liquid instrureserves and a large increase in required reserves ments, while rates on some private money marassociated with a sharp rise in transactions de- ket instruments have fallen somewhat less. In posits. general, pressures in financial markets appeared In addition to providing liquidity to the finan- to have moderated to some extent, although the cial markets through open market operations, the markets continued to be characterized by an Federal Reserve assisted the Treasury market by unusual degree of anxiety and uncertainty. relaxing some of the constraints on its collateral- The dollar moved lower during the first half of ized lending of Treasury securities to primary October, especially after the release of U.S. dealers. Committee members agreed on a tempo- trade data on October 14 intensified market conrary suspension of the size limits imposed on cern over the failure of the U.S. current account loans of securities to individual dealers and the balance to improve. Though the dollar firmed requirement that such loans not be related to temporarily immediately following the worldshort sales.1 wide stock market collapse and reports of Sec- The federal funds rate dropped from above IVi retary Baker's meeting with German officials, by percent just before October 19 to 7 percent and the latter part of October the dollar again came below immediately following the stock market under downward pressure amid widespread collapse; borrowing at the discount window av- speculation that dollar exchange rates under the eraged $525 million in the reserve maintenance Louvre accord would be allowed to adjust downperiod ending October 21 and excess reserves ward. In addition, interest rates in the United rose substantially, reflecting cautious reserve States had dropped substantially relative to those management by depository institutions. During in other major industrial countries. Over the the early part of the current reserve maintenance entire intermeeting period, the dollar declined by period, federal funds traded mostly in a 7 to llA about AVi percent in terms of a weighted average percent range, but more recently the funds rate of other G-10 currencies. moved below 7 percent after large injections of The plunge in equity prices prompted moves to reserves by the Desk. Borrowing in the current short-term liquid assets, and growth of money, reserve maintenance period was running well especially Ml, appears to have accelerated in below that in the previous period. October. Demand deposits rose sharply around the time of the stock market collapse, perhaps reflecting the huge increase in financial transactions associated with the market turmoil. M2 1. Secretary's note: The temporary liberalization of secugrowth was bolstered as well by an increase in rities lending terms was terminated effective November 19, 1987. assets of money market funds, which may have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 115 been associated in part with shifts from equity stressed that, while the direction of the adjustmarket funds. Even so, growth in M2 through ment was clear, it still was too early to quantify October was estimated to have remained well the impact of the recent disturbances in financial below its long-run range. Expansion in M3 was markets. No data were available on the overall boosted by increases in the managed liabilities of performance of the economy since mid-October. banks, partly to finance a sharp rise in security Most business contacts around the country reloans. This aggregate has continued to increase ported little or no immediate changes in retail at about the lower bound of its range for the year. sales activity or in business investment plans, but Growth of nonfinancial debt has remained uncertainties about prospective business condiaround the middle of its long-run monitoring tions clearly had increased. A more cautious range. attitude had emerged in the business community The staff projection suggested that the decline and possibly also among consumers. in equity prices would lead to weaker economic Members commented that the staff forecast of growth through the end of 1988 than was ex- somewhat reduced economic growth over the pected at the time of the September meeting. The next several quarters was a reasonable expectaeconomy would be supported to an extent by the tion, but one that presumed the return of confidecline in interest rates and the lower dollar. dence and more normal conditions in financial However, the effects of these developments on markets. Accordingly, the risks of a different domestic demand and net exports were thought outcome, notably in the direction of more weaklikely to offset only part of the adverse impact of ness, were viewed as much greater than usual. sharply lower equity prices on consumers and The prospects for satisfactory economic perbusinesses. Consumption was expected to be formance clearly depended on the restoration of relatively subdued in the quarters immediately generally stable financial conditions that would in ahead, reflecting the termination of automobile turn foster the basic confidence that was needed sales incentive programs as well as stock market to sustain long-term investments in business capdevelopments, but to pick up later next year. ital and in the debt and equity markets. The Real business fixed investment was projected to timing of such a development could not be pregrow at a slow pace given the outlook for sales. dicted, but the members agreed that progress in Housing construction was likely to drop some- reducing the federal budget deficit could play a what in the near term, but that decline was key role by relieving market concerns and uncerforecast to be stemmed by lower mortgage rates. tainties. Indeed, recently renewed efforts to cut The outlook for real net exports of goods and the budget deficit had contributed to a marginal services remained favorable, but with domestic reduction of tensions in key financial markets. demands weaker, the unemployment rate proba- Despite the uncertainties that were involved, a bly would move up somewhat. Against this back- few members stressed that the outlook for susground, the projected increases in prices and tained economic growth still could be viewed as wages over the coming year were expected to be basically promising. Available data indicated an somewhat less than previously expected. None- appreciable momentum in the current expansion, theless, some pickup in price pressures still at least through the third quarter, and recent might be observed in association with sizable declines in interest rates along with an increasing increases in nonpetroleum import prices. ability of domestic firms to compete with foreign In the Committee's discussion of current and producers constituted elements of strength in the prospective economic developments, the mem- business picture. The view also was expressed bers focused on the potential effects of the recent that both the financial and the nonfinancial secturbulence in financial markets. They generally tors of the economy were better balanced than agreed that the sharp decline in stock prices and earlier in the current business expansion. A less the still unsettled conditions in financial markets optimistic view pointed to the possibility that portended weaker growth in economic activity, consumer and business spending might continue at least for the nearer term, but also a lower risk to be inhibited by the negative impact of stock of any substantial pickup in inflation. Members price declines on wealth positions, the cost of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1988 equity capital, and more generally on consumer the basic policy objectives that it had set in and business confidence. One member observed February for growth of the monetary and debt that a recession could not be ruled out and aggregates in 1987 and established tentative obincoming data on the economy would need to be jectives for expansion of those aggregates in scrutinized with special care for signs of greater 1988. For the period from the fourth quarter of weakness than now were expected. 1986 to the fourth quarter of 1987, the Committee The members continued to view further im- reaffirmed the ranges established in February provement in real net exports as a key to sustain- that included growth of 5Yi to 8V2 percent for ing moderate expansion in business activity, es- both M2 and M3. Given developments through pecially in the context of potentially weaker mid-year, the Committee agreed that growth in domestic demands than had been anticipated these aggregates around the lower ends of their earlier. The prospects for continuing gains ranges might be appropriate, depending on the seemed favorable, given the depreciation of the circumstances. The monitoring range for expandollar and indications of considerable improve- sion in total domestic nonfinancial debt also was ments in the productivity of U.S. manufacturers. left unchanged at 8 to 11 percent for 1987. For Tending to support such an outlook were reports 1988 the Committee agreed on tentative reducfrom various parts of the country indicating that tions of Vi percentage point to growth ranges of 5 many domestic firms were competing more effec- to 8 percent for both M2 and M3. The Committee tively in export markets and with importers. At also reduced the associated range for growth in the same time, some members commented that total domestic nonfinancial debt by Vi percentage improvement in the nation's nominal net export point to IVi to IOI/2 percent for 1988. With position continued to be held back by the vigor- respect to Ml, the Committee decided at the July ous efforts of foreign firms to maintain market meeting not to set a specific target for the remainshares at the expense of profit margins as their der of 1987 or to establish a tentative range for own currencies appreciated in relation to the 1988. It was understood that all the ranges for dollar. As they had at earlier meetings, mem- 1988 were provisional and that they would be bers observed that trade developments would reviewed early next year in the light of intervendepend to an important extent on the eco- ing developments. The issues involved with esnomic performance of key foreign industrial tablishing a target for Ml would be carefully nations. reappraised at the beginning of 1988. Turning to the prospects for wages and prices, In the Committee's discussion of policy implea number of members indicated that they saw in mentation for the weeks immediately ahead, the recent developments a potential for somewhat members generally agreed on the basic desirabilless inflation than they had anticipated earlier. ity of directing open market operations toward The large decline in stock prices had reduced maintaining the easier conditions that had develinflation expectations, and the weakening in the oped in money markets. This would involve outlook for economic growth implied less pres- about the degree of pressure on reserve positions sures on wages and prices. Other developments that had been sought most recently. The memthat would tend to curb inflation included indica- bers recognized that the still unsettled conditions tions of ongoing improvement of labor produc- in financial markets and related uncertainties in tivity in manufacturing and the substantial slow- the economic outlook might continue to call for down in monetary growth this year. On the other the more flexible and accommodative approach hand, reference also was made to pressures on to policy that had characterized operations since capacity in a number of industries, including October 19. This approach implied giving more some that competed actively with foreign pro- weight than usual to money market conditions in ducers. A sizable further decline in the dollar, order to facilitate the return to a more normal should it occur, would exacerbate price and wage functioning of financial markets and to minimize pressures in those industries and in the economy the chances that the Committee's intentions more generally. would be misinterpreted. Such an approach also At its meeting in July, the Committee reviewed could help to assure that shifting demands for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 117 liquidity and reserves would be accommodated tainty surrounding projections of monetary without undesirable fluctuations in money mar- growth was considerably greater than usual. In ket conditions. As financial markets continued to particular, the extent to which heightened prefstabilize, open market operations would be erences for liquidity and substantial variations in phased into a more normal approach to policy the volume of financial transactions might affect that was oriented more fully to a provision of future demand for money balances was difficult reserves keyed to pressures on reserve positions. to gauge. Moreover, it was hard to assess how The transition would need to be executed with quickly the money markets and depository instia great deal of caution under the still sen- tutions would move to reestablish a more normal sitive market circumstances that were fore- structure of short-term market and deposit interseen. est rates and in particular how fully the opportu- Committee members agreed that the lower nity costs of holding money balances would be interest rates that had emerged since mid-Oc- adjusted in the period ahead. On the assumption tober were needed to help offset the effects of the that conditions in financial markets would gradsharp decline in stock prices. It was acknowl- ually return to more normal patterns but that edged that the interest rate reductions increased some residual of the heightened demands for the risks for the dollar in the foreign exchange liquidity would remain, the reserve conditions markets, particularly in the absence of similar that were contemplated might be accompanied reductions abroad, but in the opinion of a number by somewhat faster growth in M2 and M3 in the of members those risks were manageable. Some current quarter than had occurred in the third members expressed concern, however, that a quarter. The members understood that such further substantial depreciation in the dollar, if it growth implied expansion in M2 for the year that were to materialize, would have seriously ad- would be well below the Committee's range and verse consequences for domestic prices and in- growth in M3 that was close to the lower end of terest rates and might indeed trigger another its range. Growth in Ml continued to be particcrisis in domestic and international financial mar- ularly difficult to project in present circumkets. stances, but a considerable slowing after the To the extent that market developments per- October bulge was seen as likely over the balmitted a more normal focus on the implementa- ance of the quarter. tion of a desirable degree of pressure on reserve Given the Committee's current approach to positions, attention might need to be given during open market operations, the members anticithe intermeeting period to a possible adjustment pated that the federal funds rate would continue in such reserve conditions depending on eco- to fluctuate generally in a fairly narrow band nomic and financial developments and the behav- close to recent levels. Nonetheless, most of the ior of the monetary aggregates. All of the mem- members agreed that the usual, relatively wide bers could foresee possible adjustments in either range to trigger a consultation should continue to direction under alternative potential circum- be set for the federal funds rate. A majority stances. However, in light of the uncertainties favored a reduction in the range from the current that continued to dominate financial markets and 5 to 9 percent to 4 to 8 percent. While the the risks that the recent developments could midpoint of the current range would be centered depress business activity, nearly all believed that approximately on the expected average trading policy implementation should remain especially level, some members commented that a rise alert to developments that might call for some- toward 9 percent would have destabilizing effects what easier reserve conditions. in the period ahead. Moreover, a 4 to 8 percent In keeping with the Committee's usual ap- range might be viewed as more in keeping with proach, it was understood that any decision to the recent thrust in monetary policy and the alter reserve objectives during the intermeeting expectation that intermeeting adjustments, if period should take account of the behavior of the any, were likely to be in the direction of easier monetary aggregates. The members took note of reserve conditions. a staff analysis, which indicated that the uncer- At the conclusion of the Committee's discus- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1988 sion, all of the members indicated their support was reviewed against the backdrop of extraordinary of a directive that called for maintaining the developments in financial markets in the period since the previous Committee meeting on September 22. degree of reserve pressure that had been sought Share prices in the stock market were down sharply. in recent days. The members recognized that the Following a particularly large decline of stock prices in volatile conditions in financial markets and re- mid-October, interest rates fell steeply and increases lated uncertainties in the business outlook might that had occurred during the first part of the intermeetcontinue to indicate the need for special flexi- ing period subsequently were more than reversed on most types of debt obligations. Foreign exchange bility in the conduct of open market operations. markets were relatively calm over most of the inter- Such an approach to policy implementation meeting period, but the dollar came under significant would depend in particular on the strength of downward pressure late in the period. demands for liquidity stemming from recent and In the third quarter economic activity had expanded prospective developments in financial markets. at a fairly brisk pace. Total nonfarm payroll employ- To the extent that the functioning of those mar- ment rose further in September, with the manufacturing sector continuing to record relatively sizable gains. kets permitted a return to more normal open The civilian unemployment rate edged down to 5.9 market operations, the members indicated that percent. Industrial production increased somewhat somewhat lesser reserve restraint would be ac- further in September following large gains in other ceptable, while slightly greater reserve restraint recent months. Retail sales declined somewhat in might be acceptable, depending on the strength September, but consumer spending, bolstered by a rise in auto sales, posted a large increase over the third of the business expansion, indications of inflaquarter. Business capital spending was strong in the tion, the performance of the dollar in foreign third quarter and forward indicators pointed to conexchange markets, with account also taken of the tinuing gains. Housing starts were up in September but behavior of the monetary aggregates. The mem- were little changed in the third quarter from their bers believed that the outlook for monetary second-quarter average. The nominal U.S. merchandise trade deficit narrowed in August, but the Julygrowth over the months ahead was subject to August average remained above the second-quarter unusual uncertainty, but the contemplated rerate. The rise in consumer and producer prices was serve conditions were thought likely to be con- relatively moderate in recent months following more sistent with somewhat faster growth in M2 and rapid increases earlier in the year. M3 than had been expected earlier; such growth Growth of the monetary aggregates appeared to might center on annual rates of around 6 to 7 have strengthened in October, with some of the strength reflecting heightened demands for transaction percent for the period from September through balances and other liquid assets in the latter part of the December. Largely reflecting the bulge in Octo- month. Even so, for 1987 through October, expansion ber, growth in Ml in the fourth quarter as a of M2 evidently moved closer to, but remained below, whole was expected to be well above its average the lower end of the range established by the Commitpace in the previous several months. However, tee for the year, while growth of M3 was around the lower end of its range. Expansion in total domestic because of the very substantial uncertainty that nonfinancial debt has remained on a more moderate still surrounded the outlook for Ml, the Commit- trend in recent months. tee decided to continue its practice of not speci- The Federal Open Market Committee seeks monefying a numerical expectation for its growth. The tary and financial conditions that will foster reasonable members agreed that the intermeeting range for price stability over time, promote growth in output on a sustainable basis, and contribute to an improved the federal funds rate, which provides a mechapattern of international transactions. In furtherance of nism for initiating consultation of the Committee these objectives the Committee agreed at its meeting when its boundaries are persistently exceeded, in July to reaffirm the ranges established in Februaryshould be reduced from 5 to 9 percent to 4 to 8 for growth of 5V2 to 8V2 percent for both M2 and M3 percent. measured from the fourth quarter of 1986 to the fourth quarter of 1987. The Committee agreed that growth in At the conclusion of the meeting the following these aggregates around the lower ends of their ranges domestic policy directive was issued to the Fed- may be appropriate in light of developments with eral Reserve Bank of New York: respect to velocity and signs of the potential for some strengthening in underlying inflationary pressures, provided that economic activity is expanding at an The economic information available at this meeting acceptable pace. The monitoring range for growth in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 119 total domestic nonfinancial debt set in February for the expected to be consistent with growth in M2 and M3 year was left unchanged at 8 to 11 percent. over the period from September through December at For 1988, the Committee agreed on tentative ranges annual rates of about 6 to 7 percent, but more rapid of monetary growth, measured from the fourth quarter growth is possible should preferences for liquidity be of 1987 to the fourth quarter of 1988, of 5 to 8 percent particularly strong. Over the same period, growth in for both M2 and M3. The Committee provisionally set Ml is expected to be well above its average pace in the the associated range for growth in total domestic previous several months. The Chairman may call for nonfinancial debt at IV2 to IOV2 percent. Committee consultation if it appears to the Manager With respect to Ml, the Committee recognized that, for Domestic Operations that reserve conditions durbased on experience, the behavior of that aggregate ing the period before the next meeting are likely to be must be judged in the light of other evidence relating to associated with a federal funds rate persistently outeconomic activity and prices; fluctuations in Ml have side a range of 4 to 8 percent. become much more sensitive in recent years to changes in interest rates, among other factors. Be- Votes for this action: Messrs. Greenspan, Corricause of this sensitivity, which has been reflected in a gan, Angell, Boehne, Boykin, Heller, Johnson, sharp slowing of the decline in Ml velocity over the Keehn, Kelley, Ms. Seger, and Mr. Stern. Votes first half of the year, the Committee again decided at against this action: None. the July meeting not to establish a specific target for growth in Ml over the remainder of 1987 and no tentative range was set for 1988. The appropriateness 2. Authorization for Domestic Open of changes in Ml this year will continue to be evalu- Market Operations ated in the light of the behavior of its velocity, developments in the economy and financial markets, and Effective November 4, 1987, the Committee apthe nature of emerging price pressures. The Committee welcomes substantially slower growth of Ml in proved a temporary increase of $3 billion, to $9 1987 than in 1986 in the context of continuing eco- billion, in the limit between Committee meetings nomic expansion and some evidence of greater infla- on changes in System Account holdings of U.S. tionary pressures. The Committee in reaching operagovernment and federal agency securities specitional decisions over the balance of the year will take fied in paragraph 1(a) of the Authorization for account of growth in Ml in the light of circumstances then prevailing. The issues involved with establishing Domestic Operations. The increase was effective a target for Ml will be carefully reappraised at the for the intermeeting period ending with the close beginning of 1988. of business on December 16, 1987. In the implementation of policy for the immediate future, the Committee seeks to maintain the degree of pressure on reserve positions sought in recent days. Votes for this action: Messrs. Greenspan, Corri- The Committee recognizes that the volatile conditions gan, Angell, Boehne, Boykin, Heller, Johnson, in financial markets and uncertainties in the economic Keehn, Kelley, Ms. Seger, and Mr. Stern. Votes outlook may continue to call for a special degree of against this action: None. flexibility in open market operations, depending, in particular, on demands for liquidity growing out of This action was taken on the recommendation recent or prospective developments in financial marof the Manager for Domestic Operations. The kets. Apart from such considerations, somewhat Manager had advised that the normal leeway of lesser reserve restraint would, or slightly greater reserve restraint might, be acceptable depending on the $6 billion for changes in the System's Account strength of the business expansion, indications of probably would not be sufficient over the interinflationary pressures, developments in foreign ex- meeting period because of seasonal increases in change markets, as well as the behavior of the monecurrency in circulation and required reserves; tary aggregates. While the outlook for monetary such increases could be enlarged even further if growth over the months ahead is subject to unusual current financial market tensions persisted. uncertainty, the contemplated reserve conditions are Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

121 Legal Developments AMENDMENTS TO REGULATIONS D AND Q 3. Section 204.2(a)(l)(v) is amended by removing "four" and replacing it with "one and one-half' The Board of Governors is amending 12 C.F.R. Part where it refers to years. 204, its Regulation D, and 12 C.F.R. Part 217, its Regulation Q. The Board is amending Part 204 and 4. Section 204.2(a)(l)(vii)(C) is amended by removing Part 217 by rescinding obsolete published interpreta- "is not subject to federal interest rate ceilings,." tions of Regulation Q and by revising others to reflect the expiration, on March 31, 1986, of the Depository 5. Section 204.122(b) is revised as follows: Institutions Deregulation Act of 1980 ("DIDA"), as well as to clarify and simplify them. The Board is Section 204.122—Secondary market activities preserving some of the revised interpretations by of International Banking Facilities reclassifying them as interpretations of Regulation D. The Board is also making technical corrections to Regulation D and to several interpretations in Regula- (b) Consistent with the Board's intent, IBFs may tion D by removing unnecessary references or by purchase IBF-eligible assets1 from, or sell such assets incorporating clarifications that have been published to, any domestic or foreign customer provided that the elsewhere. transactions are at arm's length without recourse. Effective March 31, 1986, the Board amended its However, an IBF of a U.S. depository institution may Regulations D and Q to reflect the expiration of the not purchase assets from, or sell such assets to, any DID A. The expiration of the DID A and the amend- U.S. affiliate of the institution establishing the IBF; an ments to Regulations D and Q eliminated rate ceilings IBF of an Edge or Agreement corporation may not on the payment of interest on deposits and rendered purchase assets from, or sell assets to, any U.S. many of the Regulation Q interpretations obsolete. affiliate of the Edge or Agreement corporation or to The amendments to the interpretations of Regulations U.S. branches of the Edge or Agreement corporation D and Q hereby adopted are technical and conform the or to U.S. branches of the Edge or Agreement corposurviving interpretations to the current Regulations D ration other than the branch1 establishing the IBF; and and Q. an IBF of a U.S. branch or agency of a foreign bank Effective December 31, 1987, 12 C.F.R. Part 204 may not purchase assets from, or sell assets to any and 12 C.F.R. Part 217 are amended as follows: U.S. affiliates of the foreign bank or to any other U.S. branch or agency of the same foreign bank.2 (This would not prevent an IBF from purchasing (or selling) Part 204—Reserve Requirements of Depository assets directly from (or to) any IBF, including an IBF Institutions of an affiliate, or to the institution establishing the IBF; such purchases from the institution establishing the Part 217—Interest on Deposits IBF would continue to be subject to Eurocurrency reserve requirements except during the initial four- 1. The authority citation for 12 C.F.R. Part 204 con- week transition period.) Since repurchase agreements tinues to read as follows: are regarded as loans, transactions involving repurchase agreements are permitted only with customers Authority: 12 U.S.C. §§ 248(a), 248(c), 371a, 371b, 461, 601, 611; 12 U.S.C. § 3105; 12 U.S.C. § 461. 1. In order for an asset to be eligible to be held by an IBF, the obligor or issuer of the instrument, or in the case of bankers' 2. The authority citation for 12 C.F.R. Part 217 conacceptances, the customer and any endorser or acceptor, must be an tinues to read as follows: IBF-eligible customer. 2. Branches of Edge or Agreement corporations and agencies and branches of foreign banks that file a consolidated report for reserve Authority: 12 U.S.C. §§ 248, 371, 371a, 371b, 461, requirements purposes (FR 2900) are considered to be the establishing 1828, 3105. entity of an IBF. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1988 who are otherwise eligible to deal with IBFs, as AFRICA specified in Regulation D. African Development Bank. Banque Centrale des Etats de l'Afrique Equatorial et 6. Section 204.123 is amended by removing from its du Cameroun. first paragraph the sentence, "A parallel exemption in Banque Centrale des Etats d'Afrique del'Ouest. Regulation Q ... (12 C.F.R. 217.1(f)(1))." Conseil de l'Entente. East African Community. 7. Section 204.124(a) is amended by removing from Organisation Commune Africaine et Malagache. the sentence, "A parallel exemption in Regulation Q Organization of African Unity. . . . (12 C.F.R. 217.1(f)(2))." Union des Etats de l'Afrique Centrale. Union Douaniere et Economique de l'Afrique 8. Footnote 4 of section 204.2(c)(l)(iv)(E) is amended Centrale. by removing "217.126" and replacing it with "204.125" and section 217.126 is redesignated as Union Douaniere des Etats de l'Afrique de l'Ouest. section 204.125, and revised to read as follows: ASIA Section 204.125—Foreign, international, and Asia and Pacific Council. supranational entities whose deposits are Association of Southeast Asian Nations. exempt from reserves Bank of Taiwan. Korea Exchange Bank. The entities referred to in section 204.2(c)(l)(iv)(E) are: MIDDLE EAST EUROPE Central Treaty Organization. Regional Cooperation for Development. Bank for International Settlements. 9. Section 217.137 is redesignated as section 204.126, European Atomic Energy Community. and revised to read as follows: European Coal and Steel Community. The European Communities. Section 204.126—Depository institution European Development Fund. participation in "Federal funds" market European Economic Community. European Free Trade Association. (a) Under section 204.2(a)(l)(vii)(A), there is an ex- European Fund. emption from Regulation D for member bank obliga- European Investment Bank. tions in nondeposit form to another bank. To assure the effectiveness of the limitations on persons who sell LATIN AMERICA Federal funds to depository institutions, Regulation D applies to nondocumentary obligations undertaken by Andean Development Corporation. a depository institution to obtain funds for use in its Andean Subregional Group. banking business, as well as to documentary obliga- Caribbean Development Bank. tions. Under section 204.2(a)(l)(vii) of Regulation D, a Caribbean Free Trade Association. depository institution's liability under informal ar- Caribbean Regional Development Agency. rangements as well as those formally embodied in a Central American Bank for Economic Integration. document are within the coverage of Regulation D. The Central American Institute for Industrial Re- (b) The exemption in section 204.2(a)(l)(vii)(A) applies search and Technology. to obligations owed by a depository institution to a Central American Monetary Stabilization Fund. domestic office of any entity listed in that section (the East Caribbean Common Market. "exempt institutions"). The "exempt institutions" Latin American Free Trade Association. explicitly include another depository institution, for- Organization for Central American States. eign bank, Edge or agreement corporation, New York Permanent Secretariat of the Central American Gen- Investment (article XII) Company, the Export-Import eral Treaty of Economic Integration. Bank of the United States, Minbanc Capital Corp., River Plate Basin Commission. and certain other credit sources. The term "exempt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 123 institutions" also includes subsidiaries of depository market as contrary to the exemption contained in institutions: section 204.2(a)(l)(vii)(A) of Regulation D regardless (1) that engage in businesses in which their parents of whether the nondepository institution third party is are authorized to engage; or a party to the initial transaction or thereafter becomes (2) the stock of which by statute is explicitly eligible a participant in the transaction through purchase of all for purchase by national banks. or part of the obligation held by the "selling" depos- (c) To assure that this exemption for liabilities to itory institution. exempt institutions is not used as a means by which (c) The Board regards the notice requirements set out nondepository institutions may arrange through an in 12 C.F.R. 204.126 as applicable to IDLP-type transexempt institution to "sell" Federal funds to a depos- actions as described herein so that a depository instiitory institution, obligations within the exemption tution "selling" Federal funds must provide to the must be issued to an exempt institution for its own purchaser: account. In view of this requirement, a depository (1) notice of its intention, at the time of the initial institution that "purchases" Federal funds should transaction, to sell or participate out its loan conascertain the character (not necessarily the identity) of tract to a nondepository third party, and the actual "seller" in order to justify classification of (2) full and prompt notice whenever it (the "selling" its liability on the transaction as "Federal funds pur- depository institution) subsequently sells or particichased" rather than as a deposit. Any exempt institu- pates out its loan contract to a non-depository third tion that has given general assurance to the purchasing party. depository institution that sales by it of Federal funds ordinarily will be for its own account and thereafter 11. Section 217.146 is redesignated as section 204.128, executes such transactions for the account of others, and revised to read as follows: should disclose the nature of the actual lender with respect to each such transaction. If it fails to do so, the Section 204.128—Deposits at foreign branches depository institution would be deemed by the Board guaranteed by domestic office of a depository as indirectly violating section 19 of the Federal Re- institution serve Act and Regulation D. (a) In accepting deposits at branches abroad, some 10. Section 217.138 is redesignated as section 204.127, depository institutions may enter into agreements and revised to read as follows: from time to time with depositors that in effect guarantee payment of such deposits in the United States if Section 204.127—Nondepository participation the foreign branch is precluded from making payment. in "Federal funds" market The question has arisen whether such deposits are subject to Regulation D, and this interpretation is (a) The Board has considered whether the use of intended as a clarification. "interdepository institution loan participations" (b) Section 19 of the Federal Reserve Act which ("IDLPs") which involve participation by third par- establishes reserve requirements does not apply to ties other than depository institutions in Federal funds deposits of a depository institution "payable only at an transactions, comes within the exemption from office thereof located outside of the States of the "deposit" classification for certain obligations owed United States and the District of Columbia" by a depository institution to an institution exempt in (12 U.S.C. 371a; 12 C.F.R. 204.1(c)(5)). The Board section 204.2(a)(l)(vii)(A) of Regulation D. An IDLP ruled in 1918 that the requirements of section 19 as to transaction is one through which an institution that has reserves to be carried by member banks do not apply sold Federal funds to a depository institution, subse- to foreign branches (1918 Fed. Res. Bull. 1123). The quently "sells" or participates out that obligation to a Board has also defined the phrase "Any deposit that is nondepository third party without notifying the obli- payable only at an office located outside the United gated institution. States," in section 204.2(t) of Regulation D, 12 C.F.R. (b) The Board's interpretation regarding Federal funds 204.2(t). transactions (12 C.F.R. 204.126) clarified that a depos- (c) The Board believes that this exemption from reitory institution's liability must be issued to an exempt serve requirements should be limited to deposits in institution described in section 204.2(a)(l)(vii)(A) of foreign branches as to which the depositor is entitled, Regulation D for its own account in order to come under his agreement with the depository institution, to within the nondeposit exemption for interdepository demand payment only outside the United States, liabilities. The Board regards transactions which result regardless of special circumstances. The exemption is in third parties gaining access to the Federal funds intended principally to enable foreign branches of U.S. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • February 1988 depository institutions to compete on a more nearly at least seven years2 and equal basis with banks in foreign countries in accord- (ii) provides that once any such repayment of ance with the laws and regulations of those countries. principal begins, all scheduled repayments shall A customer who makes a deposit that is payable solely be made at least annually and the amount repaid at a foreign branch of the depository institution as- in each year is no less than in the prior year; sumes whatever risk may exist that the foreign country (5) is issued subject to a requirement that no repayin which a branch is located might impose restrictions ment (other than a regularly scheduled repayment on withdrawals. When payment of a deposit in a already approved by the appropriate Federal bank foreign branch is guaranteed by a promise of payment regulatory agency), including but not limited to a at an office in the United States if not paid at the payment pursuant to acceleration of maturity, may foreign office, the depositor no longer assumes this be made without the prior written approval of the risk but enjoys substantially the same rights as if the appropriate Federal bank regulatory agency;3 and deposit had been made in a U.S. office of the deposi- (6) is in an amount of at least $500. tory institution. To assure the effectiveness of Regu- (b) The appropriate Federal bank regulatory agency lation D and to prevent evasions thereof, the Board may approve the issuance of an obligation that is less considers that such guaranteed foreign-branch depos- than $500 if such lesser amount is necessary: its must be subject to that regulation, (1) to satisfy the preemptive rights of shareholders in (d) Accordingly, a deposit in a foreign branch of a the case of a convertible debt obligation; depository institution that is guaranteed by a domestic (2) to maintain a ratable unit offering to holders of office is subject to the reserve requirements of Regu- preemptive rights in the case of an obligation issued lation D the same as if the deposit had been made in exclusively as part of a unit including shares of stock the domestic office. This interpretation is not designed which are subject to such preemptive rights; or in any respect to prevent the head office of a U.S. bank (3) to satisfy shareholders' ratable claims in the case from repaying borrowings from, making advances to, of an obligation issued wholly or partially in exor supplying capital funds to its foreign branches, change for shares of voting stock or assets pursuant subject to Eurocurrency liability reserve require- to a plan of merger, consolidation, reorganization, ments. or other transaction where the issuer will acquire either a majority of such shares of voting stock or all 12. Section 217.153 is redesignated as section 204.129, or substantially all of the assets of the entity whose and revised to read as follows: assets are being acquired; and has been approved by the appropriate Federal bank regulatory agency as Section 204.129—Serial, sinking fund an addition to the capital structure of the issuing redemption, and amortized issues as capital bank. (c) The appropriate Federal bank regulatory agency (a) Section 204.2(a)(l)(vii) contains several exceptions may approve the issuance of an obligation that is less which exclude certain liabilities from the definition of than $500 if such lesser amount is necessary to meet all "deposit." For a member bank, the exception in of the requirements in the preceding clause except the section 204.2(a)(l)(vii)(C) means any liability that: maturity requirement or the requirement that sched- (1) Bears on its face, in bold face type, the following: uled repayments shall be in amounts at least equal to those made in a previous year; and with respect to "This obligation is not a deposit and is not insured by the which the appropriate Federal bank regulatory agency Federal Deposit Insurance Corporation." has determined that exigent circumstances require the issuance of such obligations without regard to the (2) is subordinated to the claims of the depositors; provisions of this part; or was issued or publicly (3) is unsecured and is ineligible as collateral for a offered before June 30, 1970, with an original maturity loan by the issuing bank and expressly states so on of more than two years. its face; (d) Total outstanding capital notes should not exceed (4) (i) Has an original maturity of at least seven 50 percent of a State member bank's equity capital. years or, in the case of a liability that provides for any type of scheduled repayments of principal, has an average maturity1 of 2. In a serial issue, the member bank may offer no note with a maturity of less than five years. 3. For the purposes of this part, the "appropriate Federal bank 1. The "average maturity" of an obligation or issue repayable in regulatory agency" is the Comptroller of the Currency in the case of scheduled periodic payments shall be the weighted average of the national bank and the Board of Governors in the case of a State maturities of all such scheduled repayments. member bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 125 (e) The issuance must be consistent with the Board's (2) All organizations that are operated for profit are capital adequacy guidelines (Appendix A to Regula- not eligible to maintain NOW accounts at depository tion Y, 12 C.F.R. Part 225.) institutions. (3) The following types of organizations described in 13. Section 217.157 is redesignated as section 204.130, the cited provisions of the Internal Revenue Code and revised to read as follows: are among those not eligible to maintain NOW accounts: Section 204.130—Eligibility for NOW Accounts (i) Credit unions and other mutual depository institutions described in section 501(c)(14) of the (a) Summary. In response to many requests for rul- Internal Revenue Code (26 U.S.C. (I.R.C. 1954) ings, the Board has determined to clarify the types of section 501(c)(14)); entities that may maintain NOW accounts at member (ii) Mutual insurance companies described in secbanks. tion 501(c)(15) of the Internal Revenue Code (b) Individuals. (26 U.S.C. (I.R.C. 1954) section 501(c)(15)); (1) Any individual may maintain a NOW account (iii) Crop financing organizations described in regardless of the purposes that the funds will serve. section 501(c)(16) of the Internal Revenue Code Thus, deposits of an individual used in his or her (26 U.S.C. (I.R.C. 1954) section 501(c)(16)); business including a sole proprietor or an individual (iv) Organizations created to function as part of a doing business under a trade name is eligible to qualified group legal services plan described in maintain a NOW account in the individual's name or section 501(c)(20) of the Internal Revenue Code in the "DBA" name. However, other entities orga- (26 U.S.C. (I.R.C. 1954) section 501(c)(20)); or nized or operated to make a profit such as corpora- (v) Farmers' cooperatives described in section tions, partnerships, associations, business trusts, or 521 of the Internal Revenue Code (26 U.S.C. other organizations may not maintain NOW ac- (I.R.C. 1954) section 521). counts. (d) Governmental units. Governmental units are gen- (2) Pension funds, escrow accounts, security depos- erally eligible to maintain NOW accounts at member its, and other funds held under various agency banks. NOW accounts may consist of funds in which agreements may also be classified as NOW accounts the entire beneficial interest is held by the United if the entire beneficial interest is held by individuals States, any State of the United States, county, municor other entities eligible to maintain NOW accounts ipality, or political subdivision thereof, the District of directly. The Board believes that these accounts are Columbia, the Commonwealth of Puerto Rico, Amersimilar in nature to trust accounts and should be ican Samoa, Guam, any territory or possession of the accorded identical treatment. Therefore, such funds United States, or any political subdivision thereof. may be regarded as eligible for classification as (e) Funds held by a fiduciary. Under current provi- NOW accounts. sions, funds held in a fiduciary capacity (either by an (c) Nonprofit organizations. individual fiduciary or by a corporate fiduciary such as (1) A nonprofit organization that is operated primar- a bank trust department or a trustee in bankruptcy), ily for religious, philanthropic, charitable, educa- including those awaiting distribution or investment, tional, political or other similar purposes may main- may be held in the form of NOW accounts if all of the tain a NOW account. The Board regards the beneficiaries are otherwise eligible to maintain NOW following kinds of organizations as eligible for NOW accounts. The Board believes that such a classification accounts under this standard if they are not operated should continue since fiduciaries are required to invest for profit: even temporarily idle balances to the greatest extent feasible in order to responsibly carry out their fidu- (i) Organizations described in section 501(c)(3) ciary duties. The availability of NOW accounts prothrough (13), and (19) of the Internal Revenue vides a convenient vehicle for providing a short-term Code (26 U.S.C. (I.R.C. 1954) section 501(c)(3) return on temporarily idle trust funds of beneficiaries through (13) and (19)); eligible to maintain accounts in their own names. (ii) Political organizations described in section 527 of the Internal Revenue Code (26 U.S.C. (I.R.C. (f) Grandfather provision. In order to avoid unduly 1954) section 527); and disrupting account relationships, a NOW account (iii) Homeowners and condominium owners asso- established at a member bank on or before August ciations described in section 528 of the Internal 31, 1981, that represents funds of a nonqualifying en- Revenue Code (26 U.S.C. (I.R.C. 1954) section tity that previously qualified to maintain a NOW 528), including housing cooperative associations account may continue to be maintained in a NOW that perform similar functions. account. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1988 14. Section 217.159 is redesignated as section 204.131, on the party from whom it purchases the instrument by and revised to read as follows: deducting the amount of the penalty from the purchase price. The Board recognizes, however, that secondary Section 204.131—Participation by a depository market sales of time deposits are often done without institution in the secondary market for its own regard to the identity of the original owner of the time deposits deposit. Such sales typically involve a pool of time deposits with the price based on the aggregate face (a) Background. In 1982, the Board issued an interpre- value and average rate of return on the deposits. A tation concerning the effect of a member bank's pur- depository institution purchasing time deposits from chase of its own time deposits in the secondary market persons other than the person to whom the deposit in order to ensure compliance with regulatory restric- was originally issued should be aware of the parties tions on the payment of interest on time deposits, with named on each of the deposits it is purchasing but the prohibition against payment of interest on demand through failure to inspect the deposits prior to the deposits, and with regulatory requirements designed purchase may not be aware at the time it purchases a to distinguish between time deposits and demand pool of time deposits that it originally issued one or deposits for federal reserve requirement purposes (47 more of the deposits in the pool. In such cases, if a FR 37,878, Aug. 27, 1982). The interpretation was purchasing depository institution does not wish to designed to ensure that the regulatory early with- assess an applicable early withdrawal penalty, the drawal penalties in Regulation Q used to achieve these deposit may be sold immediately in the secondary three purposes were not evaded through the purchase market as an alternative to imposing the early withby a member bank or its affiliate of a time deposit of drawal penalty. the member bank prior to the maturity of the deposit. (d) Purchases by Affiliates. On a consolidated basis, if (b) Because the expiration of the Depository Institu- an affiliate (as defined in section 204.2(q) of Regulation tions Deregulation Act (Title II of Pub. L. 96-221) on D) of a depository institution purchases a CD issued April 1,1986, removed the authority to set interest rate by the depository institution, the purchase does not ceilings on deposits, one of the purposes for adopting reduce their consolidated liabilities and could be acthe interpretation was eliminated. The removal of the complished primarily to assist the depository instituauthority to set interest rate ceilings on deposits re- tion in avoiding the requirements of the Board's Regquired the Board to revise the early withdrawal pen- ulation D. Because the effect of the early withdrawal alties which were also used to distinguish between penalty rule could be easily circumvented by purtypes of deposits for reserve requirement purposes. chases of time deposits by affiliates, such purchases Effective April 1, 1986, the Board amended its Regu- are also regarded as early withdrawals of the time lation D to incorporate early withdrawal penalties deposit, and the purchase should be treated as if the applicable to all depository institutions for this pur- depository institution made the purchase directly. pose (51 FR 9,629, Mar. 20, 1986). Although the new Thus, the regulatory requirements for early withearly withdrawal penalties differ from the penalties drawal penalties apply to affiliates of a depository used to enforce interest rate ceilings, secondary mar- institution as well as to the institution itself. ket purchases still effectively shorten the maturities of (e) Depository institution acting as broker. The Board deposits and may be used to evade reserve require- believes that it is permissible for a depository instituments. This interpretation replaces the prior interpre- tion to facilitate the secondary market for its own time tation and states the application of the new early deposits by finding a purchaser for a time deposit that withdrawal penalties to purchases by depository insti- a customer is trying to sell. In such instances, the tutions and their affiliates of the depository institu- depository institution will not be paying out any of its tion's time deposits. The interpretation applies only to own funds, and the depositor does not have a guaransituations in which the Board's regulatory penalties tee that the depository institution will actually be able apply. to find a buyer. (c) Secondary market purchases under the rule. The (f) Third-party market-makers. A depository institu- Board has determined that a depository institution tion may also establish and advertise arrangements purchasing a time deposit it has issued should be whereby an unaffiliated third party agrees in advance regarded as having paid the time deposit prior to to purchase time deposits issued by the institution. maturity. The effect of the transaction is that the The Board would not regard these transactions as depository institution has cancelled a liability as op- inconsistent with the purposes that the early withposed to having acquired an asset for its portfolio. drawal penalty is intended to serve unless a depository Thus, the depository institution is required to impose institution pays a fee to the third party purchaser as any early withdrawal penalty required by Regulation D compensation for making the purchases or to remove Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 127 the risk from purchasing the deposits. In this regard, deposit until and including the day on which it is so any interim financing provided to such a third party by payable. a depository institution in connection with the institution's secondary market activity involving the institu- 18. Section 217.147 is redesignated and revised as tion's time deposits must be made substantially on the section 217.302 as follows: same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other similarly situated persons and Section 217.302—Premiums on deposits may not involve more than the normal risk of repayment. (a) Section 19(i) of the Federal Reserve Act and (g) Reciprocal arrangements. Finally, while a deposisection 217.3 of Regulation Q prohibits a member bank tory institution may enter into an arrangement with an from paying interest on a demand deposit. Premiums, unaffiliated third party wherein the third party agrees whether in the form of merchandise, credit, or cash, to stand ready to purchase time deposits held by the given by a member bank to a depositor will be redepository institution's customers, the Board will regarded as an advertising or promotional expense gard a reciprocal arrangement with another depository rather than a payment of interest if: institution for purchase of each other's time deposits (1) The premium is given to a depositor only at the as a circumvention of the early withdrawal penalty time of the opening of a new account or an addition rule and the purposes it is designed to serve. to, or renewal of, an existing account; (2) no more than two premiums per account are 15. Sections 217.101, 217.103, 217.105, 217.106 given within a 12-month period; and through 217.112, 217.114 through 217.121, 217.124, (3) the value of the premium or, in the case of 217.131 through 217.133, 217.135, 217.136, 217.139 articles of merchandise, the total cost (including through 217.141, 217.144, 217.150, 217.152, 217.155, taxes, shipping, warehousing, packaging, and han- 217.156, 217.158, and 217.160 are removed. dling costs) does not exceed $10 for deposits of less than $5,000 or $20 for deposits of $5,000 or more. 16. Sections 217.113, 217.148, and 217.151 are rede- (b) The costs of premiums may not be averaged. The signated as sections 217.601, 217.602, and 217.603, member bank should retain sufficient supporting docrespectively. umentation showing that the total cost of a premium, including shipping, warehousing, packaging, and han- 17. Section 217.134 is redesignated and revised as dling costs, does not exceed the applicable $10/$20 section 217.301 as follows: limitations and that no portion of the total cost of any premium has been attributed to development, adver- Section 217.301—Interest on time deposit tising, promotional, or other expenses. A member falling due on holiday bank is not permitted directly or indirectly to solicit or promote deposits from customers on the basis that the (a) After the date of "maturity" of any time deposit, funds will be divided into more than one account by such deposit is a demand deposit, and no interest may the institution for the purpose of providing more than be paid thereon for any period subsequent to the date two premiums per deposit within a 12-month period. of maturity unless the contract provides for an extension of up to 10 calendar days as per footnote 1 to 19. Section 217.161 is redesignated and revised as Regulation Q. section 217.201 as follows: (b) The date on which an obligation is due and payable is, of course, determined by the terms of the contract subject to State law, and in most jurisdictions an Section 217.201—Repurchase agreements obligation falling due on a Saturday, Sunday or a involving shares of a money market mutual holiday comes due on the next succeeding business fund whose portfolio consists wholly of United day. Under Regulation Q, the "maturity" of a time States Treasury and Federal agency securities certificate is the day it is legally due and payable; and the funds represented thereby do not become a demand deposit until after that date. Accordingly, where Such a repurchase agreement is not a "deposit" for a certificate by its terms falls due on a Saturday, purposes of Regulations D and Q. For the text of this Sunday or a holiday and under State law is due and interpretation, see the interpretations of the Board's payable on the next succeeding business day, this Part Regulation D at 12 C.F.R. 204.124. A related interpre- 217 would not preclude payment of interest on the tation also appears in Regulation H—Membership of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1988 State Banking Institutions in the Federal Reserve shall comply with the rules, regulations and forms System at 12 C.F.R. 208.123. adopted by the Securities and Exchange Commission ("Commission") pursuant to sections 12, 13, 14(a), * * * * * 14(c), 14(d), 14(f) and 16 of the 1934 Act (15 U.S.C. AMENDMENT TO REGULATIONS F AND H §§ 781, 78m, 78n(a), (c), (d), (f) and 78(p). The term "Commission" as used in those rules and regulations The Board of Governors is amending 12 C.F.R. Part shall with respect to securities issued by State member 206, its Regulation F, and 12 C.F.R. Part 208, its banks be deemed to refer to the Board unless the Regulation H, issued pursuant to section 12(i) of the context otherwise requires. Securities Exchange Act of 1934, as amended ("1934 (b) Elections permitted of State member banks with Act"). The amendment provides that State member total assets of $150 million or less. banks required by sections 12(b) and 12(g) of the 1934 (1) Notwithstanding paragraph (a) of this section or Act ("registered State member banks") to file certain the rules and regulations promulgated by the Cominformation with the Board must do so on the forms mission pursuant to the 1934 Act, a State member prescribed by the Securities and Exchange Commisbank that has total assets of $150 million or less as of sion ("SEC") for other entities subject to reporting the end of its most recent fiscal year and no foreign requirements under the 1934 Act. The amendment offices may elect to substitute for the financial rescinds the Board's present regulation dealing with statements required by the Commission's Form disclosures by registered State member banks under 10-Q the balance sheet and income statement from the 1934 Act, Regulation F, and adds the new securithe quarterly report of condition required to be filed ties disclosure requirement to Regulation H, which by such bank with the Board under section 9 of the governs the activities of State member banks gener- Federal Reserve Act (12 U.S.C. § 324) (Federal ally. The amendment will also permit, but not require, Financial Institutions Examination Council Forms a registered State member bank with no foreign offices 033 or 034). and total assets of $150 million or less to substitute the (2) A State member bank may not elect to file financial statements from its quarterly report of confinancial statements from its quarterly report of dition filed with the Board (Federal Financial Institucondition pursuant to paragraph (1) if the amounts tions Examination Council Forms 033 or 034) for the reported for net income, total assets or total equity financial statements normally required on SEC Form capital in those statements, which are prepared on 10-Q. the basis of federal bank regulatory reporting stan- Effective for all filings submitted after January 1, dards, would differ materially from such amounts 1988, the Board amends 12 C.F.R Part 206 and reported in financial statements prepared in accord- 12 C.F.R. Part 208 as follows: ance with generally accepted accounting principles ("GAAP"). Part 206—Removed and Reserved (3) A State member bank qualifying for and electing to file financial statements from its quarterly report Part 208—Membership of State Banking of condition pursuant to paragraph (1) in its Form Institutions in the Federal Reserve System 10-Q shall include earnings per share or net loss per share data prepared in accordance with GAAP and 1. The authority citation for Part 208 is revised to read disclose any material contingencies as required by as follows: Article 10 of the Commission's Regulation S-X (15 Authority: 12 U.S.C. §§ 248, 321-338, 486, 1814, 3907, C.F.R. § 210.10-01), in the Management's Discus- 3909; 15 U.S.C. § 781(i). sion and Analysis of Financial Condition and Results of Operations section of Form 10-Q. 2. Section 208.16 is added to read as follows: (c) Filing instructions, inspection of documents, and nondisclosure of certain information filed. Section 208.16—Reporting requirements for (1) All papers required to be filed with the Board State member banks subject to the Securities pursuant to the 1934 Act or regulations thereunder Exchange Act of 1934 shall be submitted to the Division of Banking Supervision and Regulation, Board of Governors of the (a) Filing requirements. Except as otherwise provided Federal Reserve System, 20th Street and Constituin this section, a State member bank the securities of tion Avenue, N.W., Washington, D.C. 20551. Mawhich are subject to registration pursuant to section terial may be filed by delivery to the Board, through 12(b) or section 12(g) of the Securities Exchange Act the mails, or otherwise. The date on which papers of 1934 (the "1934 Act") (15 U.S.C. §§ 781(b) and (g)) are actually received by the Board shall be the date Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 129 of filing thereof if all of the requirements with cation filed in accordance with this subparagraph respect to the filing have been complied with. shall be enclosed in a separate envelope marked (2) No filing fees specified by the Commission's "CONFIDENTIAL TREATMENT" and adrules shall be paid to the Board. dressed to Secretary, Board of Governors of the (3) Copies of the registration statement, definitive Federal Reserve System, Washington, D.C. 20551. proxy solicitation materials, reports and annual re- (iii) Pending the determination by the Board on ports to shareholders required by this section (ex- the objection filed in accordance with this paraclusive of exhibits) will be available for public graph, the confidential portion will not be disinspection at the Board's offices in Washington, closed by the Board. D.C., as well as at the Federal Reserve Banks of (iv) If the Board determines that the objection New York, Chicago, and San Francisco and at the shall be sustained, a notation to that effect will be Reserve Bank in the district in which the reporting made at the appropriate place in the statement, bank is located. report, or document. (4) Any person filing any statement, report, or (v) If the Board determines that the objection shall document under the 1934 Act may make written not be sustained because disclosure of the confiobjection to the public disclosure of any information dential portion is in the public interest, a finding contained therein in accordance with the procedure and determination to that effect will be entered set forth below: and notice of the finding and determination will be (i) The person shall omit from the statement, sent by registered or certified mail to the person. report, or document, when it is filed, the portion (vi) If the Board determines that the objection thereof that the person desires to keep undis- shall not be sustained pursuant to paragraph closed (hereinafter called the confidential por- (c)(4)(v), the confidential portion shall be made tion). The person shall indicate at the appropriate available to the public: place in the statement, report, or document that (A) 15 days after notice of the Board's determithe confidential portion has been so omitted and nation not to sustain the objection has been filed separately with the Board. given as required by paragraph (c)(4)(v) of this (ii) The person shall file with the copies of the section, provided that the person filing the statement, report, or document filed with the objection has not previously filed with the Board: Board a written statement that he intends in (A) as many copies of the confidential portion, good faith to seek judicial review of the finding each clearly marked "CONFIDENTIAL and determination; TREATMENT", as there are copies of the (B) 60 days after notice of the Board's determistatement, report, or document filed with the nation not to sustain the objection has been Board. Each copy of the confidential portion given as required by paragraph (c)(4)(v) of this shall contain the complete text of the item and, section and the person filing the objection has notwithstanding that the confidential portion filed with the Board a written statement that he does not constitute the whole of the answer, the intends to seek judicial review of the finding and entire answer thereto; except that in case the determination but has failed to file a petition for confidential portion is part of a financial state- judicial review of the Board's determination; or ment or schedule, only the particular financial (C) upon final judicial determination, if adverse statement or schedule need be included. All to the party filing the objection. copies of the confidential portion shall be in the (vii) If the confidential portion is made available to same form as the remainder of the statement, the public, a copy thereof shall be attached to report, or document; and each copy of the statement, report, or document (B) an application making objection to the dis- filed with the Board. closure of the confidential portion. Such application shall be on a sheet or sheets separate from the confidential portion, and shall AMENDMENT TO REGULATION T (1) identify the portion of the statement, report, or document that has been omitted, The Board of Governors is amending 12 C.F.R Part (2) include a statement of the grounds of objection, 220, its Regulation T, to permit broker-dealers to aid and in the exercise of company stock options owned by (3) include the name of each exchange, if any, with employees of the company, its subsidiaries, or affilwhich the statement, report, or document is filed. iates. In lieu of the securities to be received upon The copies of the confidential portion and the appli- exercise, the amendment will allow broker-dealers to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1988 accept a fully endorsed employee stock option and Part 226—Truth in Lending instructions to the issuer to deliver the securities to the broker-dealer. 1. The authority citation for 12 C.F.R. Part 226 con- Effective January 25, 1988, the Board amends tinues to read as follows: 12 C.F.R Part 220 as follows: Authority: Sec. 105, Truth in Lending Act, as amended 1. The authority citation for Part 220 continues to read by sec. 605, Pub. L. 96-221, 94 Stat. 170 (15 U.S.C. as follows: 1604 et seq.); sec. 1204(c), Competitive Equality Banking Act, Pub. L. 100-86, 101 Stat. 552. Authority: 15 U.S.C. sections 78c, 78g, 78h, 78q, and 78w. 2. Section 226.17 is amended by revising paragraph (b) to read as follows: 2. Part 220 is amended by adding a new paragraph (4) to 220.3(e) to read as follows: Section 226.17—General Disclosure Requirements Section 220.3—General Provisions (b) Time of disclosures. The creditor shall make disclosures before consummation of the transaction. In certain residential mortgage transactions, special tim- (e) Receipt of funds or securities. ing requirements are set forth in § 226.19(a). In certain variable-rate transactions, special timing requirements for variable-rate disclosures are set forth in § 226.19(b) (4) A creditor may accept, in lieu of securities, a and § 226.20(c). In certain transactions involving mail properly executed exercise notice for a stock option or telephone orders or a series of sales, the timing of issued by the customer's employer and instructions disclosures may be delayed in accordance with parato the issuer to deliver the resulting stock to the graphs (g) and (h) of this section. creditor. Prior to acceptance, the creditor must verify that the issuer will deliver the securities promptly and the customer must designate the ac- 3. Section 226.18 is amended by revising footnote 43 count into which the securities are to be deposited. and paragraph (f) to read as follows: Section 226.18—Content of Disclosures AMENDMENT TO REGULATION Z (f) Variable rate. The Board of Governors is amending 12 C.F.R. Part (1) If the annual percentage rate may increase after 226, its Regulation Z, to require creditors to provide consummation in a transaction not secured by the more information about the variable-rate feature of consumer's principal dwelling or in a transaction closed-end adjustable-rate mortgages than is currently secured by the consumer's principal dwelling with a required under Regulation Z. The amendments require term of one year or less, the following disclosures:43 creditors to distribute to consumers an educational (i) The circumstances under which the rate may booklet about adjustable-rate mortgages, and to proincrease. vide a more detailed description of the variable-rate (ii) Any limitations on the increase. feature, along with an historical example. The infor- (iii) The effect of an increase. mation must be provided at the time an application (iv) An example of the payment terms that would form is given to the consumer or before the consumer result from an increase. pays a nonrefundable fee, whichever is earlier. These (2) If the annual percentage rate may increase after revisions are intended to address concerns regarding consummation in a transaction secured by the conthe adequacy of information given to consumers apsumer's principal dwelling with a term greater than plying for adjustable-rate mortgages and regarding the one year, the following disclosures: creditor burden of duplicative federal regulations. Effective December 28, 1987, but optional compliance until October 1, 1988, the Board amends 43. Information provided in accordance with §§ 226.18(f)(2) and 12 C.F.R. Part 226 as follows: 226.19(b) may be substituted for the disclosures required by paragraph (f)(1) of this section. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 131 (i) The fact that the transaction contains a vari- est. The following disclosures, as applicable, shall able-rate feature. be provided: (ii) A statement that variable-rate disclosures (i) The fact that the interest rate, payment, or term have been provided earlier. of the loan can change. (ii) The index or formula used in making adjustments, and a source of information about the 4. Section 226.22 is amended by redesignating foot- index or formula. note 45a as 45d. (iii) An explanation of how the interest rate and payment will be determined, including an expla- 5. Section 226.19 is revised to read as follows: nation of how the index is adjusted, such as by the addition of a margin. (iv) A statement that the consumer should ask Section 226.19—Certain Residential Mortgage about the current margin value and current interand Variable-Rate Transactions est rate. (v) The fact that the interest rate will be dis- (a) Residential mortgage transactions subject to counted, and a statement that the consumer RES PA. should ask about the amount of the interest rate (1) Time of disclosure. In a residential mortgage discount. transaction subject to the Real Estate Settlement (vi) The frequency of interest rate and payment Procedures Act (12 U.S.C. 2601 et seq.) the creditor changes. shall make good faith estimates of the disclosures (vii) Any rules relating to changes in the index, required by § 226.18 before consummation, or interest rate, payment amount, and outstanding shall deliver or place them in the mail not later than loan balance including, for example, an explanathree business days after the creditor receives the tion of interest rate or payment limitations, negaconsumer's written application, whichever is eartive amortization, and interest rate carryover. lier. (viii) An historical example, based on a $10,000 (2) Redisclosure required. If the annual percentage loan amount, illustrating how payments and the rate in the consummated transaction varies from the loan balance would have been affected by interest annual percentage rate disclosed under § 226.18(e) rate changes implemented according to the terms by more than Vs of 1 percentage point in a regular transaction or more than lA of 1 percentage point in of the loan program. The example shall be based upon index values beginning in 1977 and be upan irregular transaction, as defined in § 226.22, the dated annually until a 15-year history is shown. creditor shall disclose the changed terms no later Thereafter, the example shall reflect the most than consummation or settlement. recent 15 years of index values. The example shall (b) Certain variable-rate transactions.45a If the annual reflect all significant loan program terms, such as percentage rate may increase after consummation in a negative amortization, interest rate carryover, transaction secured by the consumer's principal dwellinterest rate discounts, and interest rate and paying with a term greater than one year, the following ment limitations, that would have been affected disclosures must be provided at the time an application by the index movement during the period. form is provided or before the consumer pays a non-refundable fee, whichever is earlier:45b (ix) An explanation of how the consumer may calculate the payments for the loan amount to be (1) The booklet titled Consumer Handbook on Adborrowed based on the most recent payment justable Rate Mortgages published by the Board shown in the historical example. and the Federal Home Loan Bank Board, or a (x) The maximum interest rate and payment for a suitable substitute. $10,000 loan originated at the most recent interest (2) A loan program disclosure for each variable-rate rate shown in the historical example assuming the program in which the consumer expresses an intermaximum periodic increases in rates and payments under the program; and the initial interest rate and payment for that loan. (xi) The fact that the loan program contains a 45a. Information provided in accordance with variable-rate regula- demand feature. tions of other federal agencies may be substituted for the disclosures required by paragraph (b) of this section. (xii) The type of information that will be provided 45b. Disclosures may be delivered or placed in the mail not later in notices of adjustments and the timing of such than three business days following receipt of a consumer's application notices. when the application reaches the creditor by telephone, or through an intermediary agent or broker. (xiii) A statement that disclosure forms are avail- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1988 able for the creditor's other variable-rate loan (b)(7) Pursuant to section 262.3(i) of this chapter programs. (Rules of Procedure) to determine whether or not to grant a request for reconsideration or whether to 6. Section 226.20 is amended by adding paragraph (c) deny a request for stay of the effective date of any to read as follows: action taken by the Board with respect to an action as provided in that part. Section 226.20—Subsequent Disclosure Requirements ORDERS ISSUED UNDER THE BANK HOLDING (c) Variable-rate adjustments.45c An adjustment to the COMPANY ACT interest rate with or without a corresponding adjust Orders Issued Under Section 3 of the Bank ment to the payment in a variable-rate transaction Holding Company Act (1) The current and prior interest rates. (2) The index values upon which the current and Cardinal Bancorp II, Inc. prior interest rates are based. Washington, Missouri (3) The extent to which the creditor has foregone any increase in the interest rate. (4) The contractual effects of the adjustment, includ- Order Approving Formation of a Bank Holding ing the payment due after the adjustment is made, Company and a statement of the loan balance. (5) The payment, if different from that referred to in Cardinal Bancorp II, Inc., Washington, Missouri paragraph (c)(4) of this section, that would be re- ("Cardinal"), has applied for the Board's approval quired to fully amortize the loan at the new interest under section 3(a)(1) of the Bank Holding Company rate over the remainder of the loan term. Act, as amended (12 U.S.C. § 1842(a)(1)) ("Act"), to become a bank holding company by acquiring all of the voting shares of United Bank of Union, Union, Missouri ("Bank"). AMENDMENT TO RULES REGARDING Notice of the application, affording interested per- DELEGATION OF AUTHORITY sons an opportunity to submit comments, has been duly published (52 Federal Register 38,014 (1987)). The Board of Governors is amending 12 C.F.R. Part The time for filing comments has expired, and the 265, its Rules Regarding Delegation of Authority, to Board has considered the application and all comauthorize the Board's General Counsel to deny a ments received in light of the factors set forth in request for stay of the effective date of a Board order. section 3(c) of the Act. The Board itself would retain sole discretion to grant a Cardinal, a non-operating corporation with no subrequest for staff of the effectiveness of any decision. sidiaries, was organized for the purpose of becoming a Effective for any request for stay pending on De- bank holding company by acquiring Bank, which holds cember 28, 1987, or received thereafter. deposits of $92.8 million, representing less than one percent of the deposits in commercial banking organi- Part 265—Rules Regarding Delegation of zations in Missouri.1 Several principals of Cardinal are Authority currently affiliated with two other commercial banking organizations in Missouri. Upon consummation, Car- 1. The authority citation for 12 C.F.R. Part 265 con- dinal's principals would control less than one percent tinues to read as follows: of the deposits in commercial banks in the state. Accordingly, consummation of the proposal would not Authority: Sec. 11(K), 38 Stat. 261 and 80 Stat. 1314 increase significantly the concentration of banking (12 U.S.C. 248(k)). resources in Missouri. Cardinal's principals control the Bank of Washington, 2. Section 265.2(b)(7) is revised to read as follows: which competes directly with Bank in the Washington, 45c. Information provided in accordance with variable-rate subsequent disclosure regulations of other federal agencies may be substituted for the disclosure required by paragraph (c) of this section. 1. All banking data are as of December 31, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 133 Missouri banking market.2 Bank of Washington is the ington banking market.5 Accordingly, consummation of largest commercial banking organization in the market, this proposal would not substantially lessen competition controlling deposits of $111.8 million, representing ap- in any banking market. proximately 22.8 percent of the total deposits in com- The financial and managerial resources of Cardinal mercial banks in the market. Bank is the second largest and Bank are consistent with approval. Considerations commercial banking organization in the market and relating to the convenience and needs of the commucontrols approximately 19.0 percent of the total deposits nities to be served are also consistent with approval. in commercial banks in the market. Upon consumma- Based on the foregoing and other facts of record, the tion, Cardinal's principals would control $204.6 million Board has determined that the application should be, in deposits, representing approximately 41.7 percent of and hereby is, approved. The transaction shall not be the deposits in commercial banks in the market. The consummated before the thirtieth calendar day followfour-firm concentration ratio for the market is 70.3 per- ing the effective date of this Order, or later than three cent, and the Herfindahl-Hirschman Index ("HHI") for months after the effective date of this Order, unless the market would increase by 863 points to 2355, upon such period is extended for good cause by the Board or consummation of this proposal.3 the Federal Reserve Bank of St. Louis, acting pursu- Although consummation of this proposal would elim- ant to delegated authority. inate some existing competition between Bank of Wash- By order of the Board of Governors, effective Deington and Bank in the Washington banking market, cember 21, 1987. numerous other commercial banks, including offices of some of the largest institutions in the state, would Voting for this action: Vice Chairman Johnson and Govercontinue to operate in the market after consummation of nors Seger, Angell, and Kelley. Absent and not voting: this proposal. In addition, the Board has considered the Chairman Greenspan and Governor Heller. presence of thrift institutions in the banking market in its analysis of this proposal. The Board previously has WILLIAM W. WILES indicated that thrift institutions have become, or have [SEAL] Secretary of the Board the potential to become, major competitors of commercial banks.4 Thrift institutions already exert a consider- Orders Issued Under Section 4 of the Bank able competitive influence in the market as providers of Holding Company Act NOW accounts and consumer loans, and several are engaged in the business of making commercial loans. Bank of New England Corporation Based upon the number, size, market share and com- Boston, Massachusetts mercial lending activities of thrift institutions in the market, the Board has concluded that thrift institutions Order Approving Application to Underwrite and exert a significant competitive influence that mitigates Deal in Certain Securities to a Limited Extent and to the anticompetitive effects of this proposal in the Wash- Place Commercial Paper Bank of New England Corporation, Boston, Massachusetts, a bank holding company within the meaning of the Bank Holding Company Act, 12 U.S.C. § 1841 2. The Washington, Missouri, banking market is approximated by et seq. ("BHC Act"), has applied for the Board's Franklin County, Missouri, excluding the communities of Pacific and approval under section 4(c)(8) of the BHC Act and Berger, plus the community of Dutzow in Warren County, Missouri. 3. Under the revised Department of Justice Merger Guidelines (49 section 225.21(a) of the Board's Regulation Y, Federal Register 26,823 (June 29, 1984)), any market in which the 12 C.F.R. § 225.21(a), to engage through a wholly post-merger HHI is over 1800 is considered highly concentrated, and the Department is likely to challenge a merger that increases the HHI owned subsidiary, BNE Capital Market Company by more than 50 points unless other factors indicate that the merger ("Company"), in underwriting and dealing in, on a will not substantially lessen competition. The Department of Justice limited basis, the following securities: has informed the Board that a bank merger or acquisition is not likely to be challenged (in the absence of other factors indicating an (1) municipal revenue bonds, including certain inanticompetitive effect) unless the post-merger HHI is at least 1800 and dustrial development bonds; the merger increases the HHI by at least 200 points. The Justice Department has stated that the higher than normal HHI thresholds for (2) 1-4 family mortgage-related securities; screening bank acquisitions for anti-competitive effects implicitly recognizes the competitive effects of limited purpose lenders and other non-depository financial entities. 4. See, e.g, National City Corporation, 70 FEDERAL RESERVE 5. If 50 percent of the deposits controlled by thrift institutions were BULLETIN 743 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE included in the calculation of market concentration, Bank of Wash- BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL ington and Bank would control 18.9 percent and 15.7 percent of total RESERVE BULLETIN 802 (1983); and First Tennessee National Corpo- market deposits, respectively. The HHI would increase by 592 points ration, 69 FEDERAL RESERVE BULLETIN 298 (1983). to 1669 upon consummation of the proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1988 (3) commercial paper; and pany in underwriting and dealing in bank-eligible securi- (4) consumer-receivable-related securities ("CRRs") ties to the extent that state member banks are authorized (collectively "bank-ineligible securities").1 by section 16 of the Glass-Steagall Act. Applicant has also applied to act as agent and On April 30, the Board approved applications by adviser to issuers of commerical paper and other Citicorp, J.P. Morgan and Bankers Trust to undershort-term promissory notes in connection with the write and deal in, through their bank-eligible securities placement of such notes with institutional customers.2 underwriting subsidiaries, 1-4 family mortgage- In addition, Applicant proposes to underwrite and deal backed securities, municipal revenue bonds (and cerin securities that state member banks are permitted to tain industrial development bonds) and (except for underwrite and deal in under section 16 of the Banking Citicorp) commercial paper.4 The Board concluded Act of 1933 (the "Glass-Steagall Act") (12 U.S.C. that the underwriting subsidiaries would not be "en- §§ 24 Seventh and 335) (hereinafter "bank-eligible gaged principally" in underwriting or dealing in secusecurities"), as permitted by section 225.25(b)(16) of rities within the meaning of section 20 of the Glass- Regulation Y (12 C.F.R. § 225.25(b)(16)). Steagall Act5 provided they derived no more than 5 Applicant, with consolidated assets of $27.1 billion, percent of their total gross revenues from underwriting is the eighteenth largest banking organization in the and dealing in the approved securities over any twonation. It operates 13 subsidiary banks in Rhode year period and their underwriting and dealing activi- Island, Maine, Massachusetts and Connecticut and ties did not exceed 5 percent of the market for each engages in a broad range of permissible nonbanking particular type of security involved. The Board further activities in the United States.3 found that, subject to the prudential framework of limitations established in those cases to address the Notice of the application, affording interested parpotential for conflicts of interest, unsound banking ties an opportunity to submit comments, has been practices or other adverse effects, the proposed undergiven in accordance with section 3(b) of the BHC Act writing and dealing activities were so closely related to (52 Federal Register 43,799 (1987)). The Board rebanking as to be a proper incident thereto within the ceived two comments on the proposal. The Securities meaning of section 4(c)(8) of the BHC Act. On July 14, Industry Association, a trade association of the investthe Board subsequently decided that underwriting and ment banking industry, opposes the application for the dealing in CRRs is so closely related to banking as to reasons stated in its earlier protests to similar applicabe a proper incident thereto within the meaning of tions by Citicorp, J.P. Morgan & Co. Incorporated and section 4(c)(8) of the BHC Act.6 Bankers Trust New York Corporation. The Bank Capital Markets Association commented in favor of For the reasons set forth in the Board's Citicorp/ the application. Morgan/Bankers Trust and Chemical Orders, the Board The Board has previously determined that underwrit- concludes that Applicant's proposal to engage through ing and dealing in bank-eligible securities is closely Company in underwriting and dealing in municipal revrelated to banking under section 4(c)(8) of the BHC Act. enue bonds,7 1-4 family mortgage-related securities, 12 C.F.R. § 225.25(b)(16). In addition, the Board con- commercial paper and consumer-receivable-related secludes that Company's performance of this activity may curities would not result in a violation of section 20 of the reasonably be expected to result in public benefits which Glass-Steagall Act and is closely related and a proper would outweigh adverse effects under the proper inci- incident to banking within the meaning of section 4(c)(8) dent to banking standard of section 4(c)(8) of the BHC of the BHC Act provided Applicant limits Company's Act. Accordingly, Applicant may engage through Com- activities as provided in those Orders. Accordingly, the 4. CiticorplMorganlBankers Trust, supra. The Board subsequently approved similar applications by a number of other bank holding 1. Applicant proposes to conduct Company's underwriting and companies. dealing activity in these securities in the same manner and to the same 5. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits extent as previously approved by the Board in Citicorp, J.P. Morgan the affiliation of a member bank with "any corporation . . . engaged & Co. Incorporated, Bankers Trust New York Corporation, 73 FED- principally in the issue, flotation, underwriting, public sale, or distri- ERAL RESERVE BULLETIN 473 (1987) and Chemical New York Corpo- bution at wholesale or retail or through syndicate participation of ration, The Chase Manhattan Corporation, Bankers Trust New York stocks, bonds, debentures, notes, or other securities . . . ." Corporation, Citicorp, Manufacturers Hanover Corporation, and 6. Chemical, supra. Security Pacific Corporation, 73 FEDERAL RESERVE BULLETIN 731 7. The industrial development bonds approved in those applica- (1987). tions and for Applicant in this case are only those tax exempt bonds in 2. Applicant proposes to conduct Company's commercial paper which the governmental issuer, or the governmental unit on behalf of placement activity in the same manner and to the same extent as which the bonds are issued, is the owner for federal income tax approved in Bankers Trust New York Corporation, 73 FEDERAL purposes of the financed facility (such as airports, mass commuting RESERVE BULLETIN 138 (1987). facilities, and water pollution control facilities). Without further 3. Asset data are as of June 30, 1987. Banking data are as of approval from the Board, Company may underwrite or deal in only September 30, 1987. these types of industrial development bonds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 135 Board has determined to approve the underwriting ap- underwriting and dealing in bank-ineligible securities plication subject to all of the terms and conditions until the moratorium ends on March 1, 1988. established in the Citicorp/Morgan/Bankers Trust and With respect to Applicant's proposed commercial Chemical Orders. The Board hereby adopts and incor- paper placement activity, the Board in Bankers Trust porates herein by reference the reasoning and analysis ruled that commercial paper placement does not fall contained in those Orders. within the terms of the Glass-Steagall Act provided For the reasons set forth in the Board's Bankers the activity is conducted within the prudential frame- Trust commercial paper placement Order, the Board work of conditions established by the Board in its concludes that Applicant's proposal to place commer- Bankers Trust Order. The Board's determination was cial paper is also consistent with section 20 of the subsequently upheld by the Court of Appeals for the Glass-Steagall Act and permissible for bank holding District of Columbia Circuit and the U.S. Supreme companies under section 4(c)(8) of the BHC Act, Court has declined to review the matter.10 The morasubject to the prudential limitations of that Order. torium in CEBA also covers "any securities activity The Board's approval of this application extends not legally authorized in writing prior to March 5, only to activities conducted within the limitations of 1987." That provision, however, specifically exempts section 225.25(b)(16) of the Board's Regulation Y and "activities in which any bank holding company or the CiticorplMorganlBankers Trust, Chemical and subsidiary or affiliate thereof . . . acts only as an Bankers Trust Orders, including the Board's reserva- agent." Since commercial paper placement as protion of authority to establish additional limitations to posed by Applicant is an agency activity, the Board ensure that the subsidiary's activities are consistent has determined not to delay the effective date of its with safety and soundness, conflict of interest and approval of that activity. other relevant considerations under the BHC Act. The Board has also concluded that Applicant's Underwriting and dealing in the approved securities in proposed bank-eligible securities underwriting and any manner other than as approved in those Orders8 is dealing activity does not fall within the terms of the not within the scope of the Board's approval and is not moratorium. In its CiticorplMorganlBankers Trust Orauthorized for Company. der, the Board determined that the structure and The Board's determination is subject to all of the Congressional intent of the Glass-Steagall Act make conditions set forth in the Board's Regulation Y, clear that in light of the express authorization in including those in sections 225.4(d) and 225.23(b), and section 16 for member banks to underwrite bankto the Board's authority to require modification or eligible securities, the limitation of section 20 against a termination of the activities of the holding company or member bank affiliate being engaged principally in any of its subsidiaries as the Board finds necessary to underwriting securities does not encompass bankassure compliance with the provisions and purposes of eligible securities.11 In addition, the Board had apthe BHC Act and the Board's regulations and orders proved this activity in writing prior to March 5, 1987.12 issued thereunder, or to prevent evasion thereof. Accordingly, the Board has determined not to delay The Board notes that Title II of the Competitive the effective date of its approval for that activity. Equality Banking Act of 1987 ("CEBA"), enacted on The Board notes that the SIA has sought judicial August 10, 1987, prohibits the Board from authorizing a review in the U.S. Court of Appeals for the Second bank holding company to engage in underwriting or Circuit of the CiticorplMorganlBankers Trust Order to dealing in securities if that approval would require the which this Order pertains, as well as subsequent Board determination that the bank holding company would not Orders approving the bank-ineligible securities underbe engaged principally in such activities within the mean- writing applications of a number of other bank holding ing of section 20 of the Glass-Steagall Act, unless the companies. The Board notes that the court has stayed effective date of the Order is delayed until the expiration the effectiveness of these Board Orders pending judiof a moratorium time period established under CEBA.9 cial review. In light of the pendency of this litigation, Accordingly, the Board has determined to delay the the Board has determined that this Order should be effective date of this Order with respect to the proposed stayed with respect to the bank-ineligible securities underwriting and dealing activity for such time as the stay of the prior decisions is effective. 8. Company may also provide services that are necessary incidents to these approved activities. The incidental services should be taken 10. Securities Industry Association v. Board of Governors, 807 into account in computing the gross revenue and market share limits F.2d 1052 (D.C. Cir. 1986), cert, denied, 55 U.S.L.W. 3849 (1987). on the underwriting subsidiaries' ineligible underwriting and dealing 11. CiticorplMorganlBankers Trust, supra, at 478-481. activities, to the extent such limits apply to particular incidental 12. The Board added underwriting and dealing in bank-eligible activities. securities to its list of permissible nonbanking activities for bank 9. Pub. L. No. 100-86, §§ 201-02, 101 Stat. 552, 582 (1987). holding companies in 1984. 49 Federal Register 818 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1988 By order of the Board of Governors, effective De- My point is not merely one of legal formalisms. The cember 14, 1987. interpretation adopted by the majority would appear to make feasible, as a matter of law if not Board policy, Voting for this action: Chairman Greenspan and Governors the affiliations of banks with some of the principal Johnson, Seger, Angell, Heller, and Kelley. Dissenting in underwriting firms or investment houses of the counpart: Governor Angell. try. Such a legal result, I feel, is inconsistent with the intent of Congress in passing the Glass-Steagall Act. JAMES MCAFEE As the Board as a whole has repeatedly urged, the [SEAL] Associate Secretary of the Board plain and desirable remedy to this legal and substantive morass is a fresh Congressional mandate. I urge the Congress to provide straightforwardly the author- STATEMENT OF GOVERNOR ANGELL ity for bank holding companies to conduct, with ap- CONCURRING IN PART AND DISSENTING IN PART propriate safeguards, the kinds of activities permitted by the Board in its decision, the practical import of While I join the majority in approving Applicant's which is confined to a relative handful of large bank proposal to place commerical paper, I regret I am holding companies with substantial government secuunable to join the majority in approving Applicant's rities operations. proposal to underwrite and deal in bank-ineligible December 14, 1987 securities. As I have stated previously, the regret reflects the Centerre Bancorporation fact that, as a matter of policy, I support the idea that St. Louis, Missouri affiliates of bank holding companies underwrite and deal in commercial paper, municipal revenue bonds, Order Approving Acquisition of a Company Engaged 1-4 family mortgage-related securities and consumer- in Employee Benefits Consulting Services receivable-related securities, the activities involved in the Board's decision.1 Moreover, I agree generally Centerre Bancorporation, St. Louis, Missouri, a bank with the nature of the limitations placed upon the holding company within the meaning of the Bank activities in the Board decision, assuming the thresh- Holding Company Act (12 U.S.C. § 1841 et seq.) old question of their legality in the particular form ("Act"), has applied for the Board's approval under proposed can be answered affirmatively. section 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)), and My point of difference involves precisely that ques- section 225.23 of the Board's Regulation Y (12 C.F.R. tion of law. Section 20 of the Glass-Steagall Act § 225.23) to acquire through its subsidiary, Benefit provides that no member bank may be affiliated with Plan Services, Inc., Maryland Heights, Missouri any corporation engaged principally in the underwrit- ("BPS"), substantially all the assets and assume cering of stocks, bonds, debentures, notes or other secu- tain liabilities of Reed Employee Benefit Services, rities. I believe the plain words of the statute, read Inc., Maryland Heights, Missouri ("Company"), a together with earlier Supreme Court and circuit opin- company engaged in employee benefits consulting ions, as I understand them, indicate that government services. securities are indeed "securities" within the meaning Notice of the application, affording interested perof section 20. Consequently, it appears to me that the sons an opportunity to submit comments, has been application approved here, as a matter of law, involves duly published (52 Federal Register 34,844 (1987)). affiliations of member banks with corporations that are The time for filing comments has expired, and the in fact not only "principally engaged" in dealing and Board has considered the application and all comunderwriting in securities, but in fact would be wholly ments received in light of the public interest factors set engaged in such activities, thereby exceeding the forth in section 4(c)(8) of the Act. authority of law.2 Applicant, a bank holding company by virtue of its ownership of 13 commercial banks in Missouri, controls total deposits of approximately $4 billion, representing 9.4 percent of the deposits in commercial 1. I have joined earlier decisions of the Board authorizing some of banks in Missouri.1 Applicant also engages in certain these activities in non-securities affiliates. nonbanking activities, such as providing credit related 2. Without elaborating on the legal debate reviewed in the Board's Order, I wish to reiterate that I fully support earlier Board decisions insurance and trust company and brokerage services. allowing the underwriting and dealing of government securities to take place in an affiliate. My point of disagreement is whether that authoritycan, in effect, be used to bootstrap securities activities that Congress clearly wished to restrain or prohibit. 1. Data are as of December 31, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 137 Company provides a full range of employee benefits sources of Applicant also are consistent with approval. consulting services including design, implementation, Accordingly, the application is hereby approved. This administration, communication, and other services determination is subject to the conditions set forth in related to the establishment or enhancement of em- sections 225.4(d) and 225.23(b)(3) of the Board's Regployee benefit plans. The Board has previously ap- ulation Y, 12 C.F.R. §§ 225.4(d) and 225.23(b)(3). The proved applications by bank holding companies, in- approval is also subject to the Board's authority to cluding Applicant, to provide such consulting require modification or termination of the activities of services.2 Thus, the Board has concluded that the the holding company or any of its subsidiaries as the activity of providing employee benefits consulting Board finds necessary to assure compliance with the services is closely related to banking. provisions and purposes of the Act and the Board's In order to approve this application, the Board must regulations and orders issued thereunder, or to prealso find that the performance of the proposed activity vent evasion thereof. This transaction shall not be can reasonably be expected to produce benefits to the consummated later than three months after the effecpublic, such as greater convenience, increased com- tive date of this Order, unless such period is extended petition, or gains in efficiency, that outweigh possible for good cause by the Board or by the Federal Reserve adverse effects, such as undue concentration of re- Bank of St. Louis, pursuant to delegated authority. sources, decreased or unfair competition, conflicts of By order of the Board of Governors, effective Deinterests, or unsound banking practices. cember 7, 1987. Both Company and BPS provide employee benefits consulting services and conduct their business primar- Voting for this action: Chairman Greenspan and Governors ily in the St. Louis, Missouri, metropolitan area. The Seger, Angell, and Kelley. Absent and not voting: Governors market for such services is national in scope and is Johnson and Heller. characterized by relative ease of entry, which is reflected in the numerous existing and potential compet- JAMES MCAFEE itors for the provision of such services. In addition, [SEAL] Associate Secretary of the Board both Applicant's and Company's market shares are de minimis, and the combined organization would remain The Hongkong and Shanghai Banking a relatively small provider of such services. Accord- Corporation ingly, the Board concludes that the proposal would not Hong Kong have any significant adverse effect on existing competition in the relevant market. Kellet N.V., There is no evidence in the record to indicate that Curacao, Netherlands Antilles Applicant's proposed transaction would lead to any undue concentration of resources, decreased or unfair HSBC Holdings B.V. competition, unsound banking practices, or other ad- Amsterdam, The Netherlands verse effects. Indeed, the combination of services currently offered by Applicant's trust company sub- Marine Midland Banks, Inc. sidiary in tandem with BPS's employee benefits con- Buffalo, New York sulting activities should provide enhanced convenience for Company's customers and result in gains in Order Approving Acquisition of Shares in Subaru efficiency.3 Public benefit factors, therefore, favor Credit Corporation approval of the proposal. Based on the foregoing and all the facts of record, Marine Midland Banks, Inc., Buffalo, New York the Board has determined that the balance of public ("Marine Midland"), together with its parent compainterest factors it is required to consider under section nies, The Hongkong and Shanghai Banking Corpora- 4(c)(8) is favorable. The financial and managerial re- tion, Hong Kong ("HSBC"); Kellet N.V., Curacao, Netherlands Antilles ("Kellet"); and HSBC Holdings B.V., Amsterdam, The Netherlands ("Holdings"), all 2. See, e.g., Centerre Bancorporation, 73 FEDERAL RESERVE BUL- bank holding companies within the meaning of the LETIN 365 (1987); BankVermont Corporation, 72 FEDERAL RESERVE BULLETIN 377 (1986); Norstar Bancorp, Inc., 72 FEDERAL RESERVE Bank Holding Company Act (12 U.S.C. § 1841 etseq.) BULLETIN 729 (1986). ("BHC Act"), have applied for the Board's approval 3. Clients currently have the option to use any component of pursuant to section 4(c)(8) of the BHC Act (12 U.S.C. Applicant's employee benefits consulting services individually as well as the entire package of services, and Applicant has committed to § 1843(c)(8)) and section 225.23(a)(1) of Regulation Y continue to avoid tying any employee benefits consulting services to (12 C.F.R. § 225.23(a)(1)) to acquire through its the purchase of the entire employee benefits package or to any other service offered by Applicant or its subsidiaries. wholly owned subsidiary, Marine Midland Automo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1988 tive Financial Corporation, 50 percent of the voting the Subaru motor vehicles that are marketed and shares of Subaru Credit Corporation, Buffalo, New distributed by Subaru. Subaru had net sales of $1 York ("Company"), a de novo joint venture. The billion in the first half of 1987 and controls approxiremaining 50 percent of Company's shares would be mately 2 percent of the U.S. market for automobile owned by Subaru Financial Services, Inc., a wholly sales. Subaru, through SFC and its subsidiary, Subaru owned captive finance company subsidiary of Subaru Leasing Corporation, engages in lease financing of of America, Inc., Cherry Hill, New Jersey Subaru motor vehicles, originating $7.3 million in lease ("Subaru"). financing in 1986. Subaru and its subsidiaries do not Company would engage on a nationwide basis in engage to any significant extent in any other lending providing inventory financing of new and used Subaru activities. motor vehicles and other used motor vehicles for Subaru and its subsidiaries currently do not compete Subaru dealers, retail financing of motor vehicle sales to any significant extent in the activities Company will originated by Subaru dealers, and working capital and be engaged in. Applicants currently do not engage to capital equipment financing for Subaru dealers. Com- any significant extent in the sales financing or lease pany would also engage in financing of motor vehicles financing of Subaru motor vehicles. Further, Marine lease operations of Subaru dealers in New York, Midland through its subsidiaries other than Company Illinois, Utah and Colorado. Company may also en- will continue to engage in motor vehicle financing gage in leasing of motor vehicles by acquiring leases activities after consummation of this proposal, aloriginated by Subaru dealers. These activities have though it will not separately solicit new business from been determined by the Board to be closely related to Subaru dealers and customers. The proposed joint banking and permissible for bank holding companies venture, therefore, will not eliminate Marine Midland (12 C.F.R. § 225.25(b)(1) and (5)). or any other entity from competing in the motor Notice of the application, affording interested per- vehicle finance industry. sons an opportunity to submit comments, has been The motor vehicle finance industry is relatively published (52 Federal Register 34,716 (1987)). The unconcentrated with numerous competitors nationtime for filing comments has expired, and the Board wide. There are numerous banks, thrift institutions, has considered the application and all comments re- credit unions, captive and independent finance comceived in light of the public interest factors set forth in panies, and other entities engaged in extending motor section 4(c)(8) of the BHC Act. vehicle sales financing and lease financing in the HSBC, with total consolidated worldwide assets of United States. Accordingly, consummation of this $91.7 billion, is the 31st largest banking organization in proposal is not expected to result in any significant the world.1 Marine Midland's lead bank, Marine Mid- adverse competitive effect, either on existing or potenland Bank, N.A., Buffalo, New York ("MM Bank"), tial competition, or in the concentration of resources with total domestic deposits of $13.6 billion, is the in the motor vehicle finance industry. sixth largest commercial bank in the state of New In the past, the Board has expressed concern that a York.2 joint venture relationship such as this one, involving a HSBC, Kellet, Holdings and their subsidiaries other large banking organization and a large nonbanking than Marine Midland do not engage in motor vehicle firm, could lead to a matrix of relationships that could financing or leasing in the United States to any signif- undermine the legally mandated separation between icant extent. Marine Midland and its subsidiaries do banking and commerce.3 engage in motor vehicle sales financing and motor However, Marine Midland points to several aspects vehicle lease financing generally, but not in association of its proposal which mitigate against this result. with any motor vehicle manufacturer or distributor. Subaru and Marine Midland have signed an agreement Marine Midland originated approximately $2.8 billion which provides that Company will not expand any new in dealer inventory financing, $1.8 billion in retail sales activities without Marine Midland's knowledge and financing, and $678 million in lease financing in 1986. consent as well as prior authorization from the Federal Subaru is a subsidiary of Fuji Heavy Industries, Reserve System. The agreement does not place any Ltd. ("Fuji"), a diversified Japanese manufacturer limits on the activities of Subaru or Marine Midland, with sales of $4.3 billion in 1986. Fuji owns 49 percent other than on the independent solicitation of business of the outstanding voting stock of Subaru with the from Subaru dealers by Marine Midland. Subaru and remaining 51 percent widely held. Fuji manufactures 1. Worldwide banking data are as of December 31, 1986. 3. Amsterdam-Rotterdam Bank N.V., 70 FEDERAL RESERVE BUL- 2. New York banking data are as of June 30, 1987. LETIN 835 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 139 Marine Midland do not currently have or expect to Voting for this action: Chairman Greenspan and Governors have any other significant relationships. Johnson, Seger, Angell, and Kelley. Absent and not voting: Governor Heller. Company and its activities are not significant in comparison to the size and activities of Subaru or Marine Midland. Formation of this joint venture is not JAMES MCAFEE [SEAL] Associate Secretary of the Board expected to create any conflicts of interest or adversely influence Marine Midland in any creditor relationship with Subaru.4 Finally, Marine Midland has MCorp stated that Company will observe the anti-tying provi- Dallas, Texas sions of the BHC Act Amendments of 1970 and that Company will be treated as an affiliate for the purposes of section 23A of the Federal Reserve Act. Order Approving Acquisition of Data Processing Company Financial and managerial considerations are consistent with approval of this proposal. Moreover, there is MCorp, Dallas, Texas, and its wholly owned subsidno evidence in the record that consummation of this iary, MCorp Financial, Inc., Wilmington, Delaware, proposal would result in adverse effects, such as bank holding companies within the meaning of the unsound banking practices, unfair competition or un- Bank Holding Company Act ("Act"), 12 U.S.C. due concentration of resources. § 1841 et seq. (collectively referred to as "Ap- Marine Midland states that Company will provide it plicant"), have applied for the Board's approval purwith increased revenues and a broader customer base. suant to section 4(c)(8) of the Act (12 U.S.C. Company also will provide Subaru dealers and cus- § 1843(c)(8)) and section 225.23(a) of the Board's tomers with a more complete, readily available source Regulation Y (12 C.F.R. § 225.23(a)), for Applicant's of financing. Marine Midland notes that Company will subsidiary, MTech Corp, Irving, Texas, to acquire all benefit from Marine Midland's experience in the pro- of the outstanding common stock of Westmoreland vision of financing to motor vehicle dealers and cus- Computer Services, Inc. ("Westmoreland"), Greenstomers, and from Subaru's experience in establishing burg, Pennsylvania. Westmoreland engages in the dealerships and marketing motor vehicles. As a result, business of providing data processing and data trans- Marine Midland states that Company will provide mission services, of the type permitted for bank holdfinancing to its customers in a convenient, efficient and ing companies under section 4(c)(8) of the Act and competitive manner, and more effectively than either section 225.25(b)(7) of the Board's Regulation Y joint venture partner alone could provide. (12 C.F.R. § 225.25(b)(7)). Based upon the foregoing and all the facts of record, Notice of the application, affording interested perthe Board has determined that the balance of public sons an opportunity to submit comments, has been interest factors it is required to consider under section duly published (52 Federal Register 18,608 (1987)). 4(c)(8) is favorable. Accordingly, the application is The time for filing comments has expired, and the hereby approved. This determination is subject to all Board has considered the application and all comof the conditions set forth in the Board's Regulation Y, ments received in light of the public interest factors set including those in sections 225.4(d) and 225.23(b), and forth in section 4(c)(8) of the Act. to the Board's authority to require modification or In view of the facts of record, the Board concludes termination of the activities of the holding company or that Applicant's acquisition of Westmoreland would any of its subsidiaries as the Board finds necessary to not significantly affect competition in any relevant assure compliance with the provisions and purposes of market. Furthermore, there is no evidence in the the BHC Act and the Board's regulations and orders record to indicate that approval of this proposal would issued thereunder, or to prevent evasion thereof. This result in undue concentration of resources, unfai: transaction shall not be consummated later than three competition, conflicts of interest, unsound banking months after the effective date of this Order, unless practices, or other adverse effects on the public intersuch period is extended for good cause by the Board, est. The Board notes that the acquisition will be made or by the Federal Reserve Bank of New York, pursu- by Applicant's data processing subsidiary, MTech ant to delegated authority. Corp., using its own resources. The acquisition is very By order of the Board of Governors, effective De- small, will not increase parent company leverage, and cember 9, 1987. is expected by Applicant to result in increased service fee income. Accordingly, the Board has determined that the balance of the public interest factors it must 4. Indeed, the Board observes that Marine Midland's proposal is consider under section 4(c)(8) of the Act is favorable similar to another joint venture previously approved by the Board, Deutsche BankA.G., 65 FEDERAL RESERVE BULLETIN 436 (1979). and consistent with approval of the application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1988 Based on the foregoing and other facts of record, the Chicago, Illinois, has total assets of $145.5 million.1 Board has determined that the application should be, Shorebank also owns several community development and hereby is, approved. The acquisition shall not subsidiaries pursuant to section 225.25(b)(6) of Reguoccur later than three months after the effective date of lation Y (12 C.F.R. § 225.25(b)(6)).2 this Order, unless that period is extended for good Shorebank has established itself as a business-based cause by the Board or by the Federal Reserve Bank of private sector organization committed to urban devel- Dallas, acting pursuant to delegated authority. Appli- opment. Shorebank's management has extensive cant's acquisition of Westmoreland is subject to all of experience in community development and has sethe conditions set forth in Regulation Y, including cured support for its community development prosections 225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) grams from religious, charitable and corporate organiand 225.23(b)), and to the Board's authority to require zations. As a result of Shorebank's success in such modification or termination of activities of the community development activities, Shorebank has reholding company or any of its subsidiaries as the ceived numerous requests from community develop- Board finds necessary to assure compliance with the ment corporations, government agencies, financial inprovisions and purposes of the Act and the Board's stitutions, and others for assistance in designing and regulations and orders issued thereunder, or to pre- implementing economic development programs. Shorevent evasion thereof. bank has been providing such assistance, receiving only out-of-pocket expenses or a small honorarium. By order of the Board of Governors, effective December 22, 1987. With this application, Shorebank proposes to provide community development advice through SAS on Voting for this action: Vice Chairman Johnson and Gover- a fee-for-service basis to both depository and nonnors Seger, Angell, and Kelley. Absent and not voting: depository institutions, including non-profit commu- Chairman Greenspan and Governor Heller. nity organizations and other public and private organizations. These services will be provided on a JAMES MCAFEE national and an international basis for programs de- [SEAL] Associate Secretary of the Board signed primarily to promote community welfare through economic rehabilitation and development of Shorebank Corporation distressed low- and moderate-income communities. Chicago, Illinois In addition, SAS will coordinate the design and implementation of the "Chicago initiative." The ini- Order Approving Application to Provide tiative will attempt to reestablish the small commercial Community Development Advisory and Related and industrial market economy in distressed commu- Services nities. SAS will also provide ongoing advice regarding financing proposals and management support services Shorebank Corporation, Chicago, Illinois ("Shore- on a fee-for-service basis, acting as a facilitator bebank"), a bank holding company within the meaning tween investors and community development of the Bank Holding Company Act of 1956 (12 U.S.C. projects. § 1841 et seq. ) (the "BHC Act"), has applied for the In order to approve this application, the Board must Board's approval under section 4(c)(8) of the BHC Act determine: (12 U.S.C. § 1843(c)(8)) and section 225.23 of the (1) that the proposed activity is closely related to Board's Regulation Y (12 C.F.R. § 225.23) to engage banking; and de novo through its subsidiary, Shorebank Advisory Services, Inc., Chicago, Illinois ("SAS"), in providing advisory and related services to both depository and non-depository institutions for programs designed to promote community welfare. 1. Banking data are as of August 31, 1987. Notice of the application, affording interested per- 2. These subsidiaries are: City Lands Corp., Chicago, Illinois, sons an opportunity to submit comments on the pro- which was acquired to rehabilitate distressed real estate in Shorebank's primary service areas for the benefit of low- and moderateposal, has been published (52 Federal Register 45,247 income residents; The Neighborhood Institute and its wholly owned (1987)). The time for filing comments has expired, and subsidiary, TNI Development Corporation, both of Chicago, Illinois, the Board has considered the application and all which provide a wide range of services, such as job placement and training and the development of low- and moderate-income housing in comments received in light of the factors set forth in Shorebank's primary service areas; and The Neighborhood Fund, section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). Inc., Chicago, Illinois, which was created under section 301(d) of the Small Business Investment Act of 1958 to make loans and equity Shorebank, a bank holding company by virtue of its investments in small businesses owned by socially and economically 1973 acquisition of The South Shore Bank of Chicago, disadvantaged persons. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 141 (2) that the public benefits associated with the pro- addition, Shorebank's nonbanking subsidiaries have posed activity outweigh any possible adverse ef- constructed or rehabilitated over 1000 units of low- or fects. moderate-income housing units. These subsidiaries The Board has not previously determined that the also have invested approximately $2 million in minorprovision of community development advice is closely ity-owned small businesses and have managed a numrelated to banking. The Board has, however, permit- ber of job training and other social service programs in ted bank holding companies to make debt and equity the South Shore community. investments in community development corporations Further, banks in general have experience in the or projects (12 C.F.R. § 225.25(b)(6)),3 and has per- community development area. Banks are required, mitted community development corporations to pro- under the Community Reinvestment Act ("CRA"), to vide community development advice as part of their meet the credit needs of their local communities, other activities. including low- and moderate-income neighborhoods, In determining if an activity is closely related to consistent with the safe and sound operation of the banking under section 4(c)(8) of the BHC Act, the bank.6 As one aspect of their CRA obligation, many Board has relied on guidelines established by the banks have developed expertise in the area of commufederal courts. Under these guidelines, an activity may nity development. Therefore, the Board believes that be found to be closely related to banking if it is banks are particularly qualified to provide the prodemonstrated: posed services. For these reasons, the Board con- (1) that banks generally have, in fact, provided the cludes that the proposed activity is closely related to proposed services; banking. (2) that banks generally provide services that are With respect to the "proper incident" requirement, operationally or functionally so similar to the pro- section 4(c)(8) of the BHC Act requires the Board to posed services as to equip them particularly well to consider whether the performance of the activity by an provide the proposed services; or affiliate of a holding company "can reasonably be (3) that banks generally provide services that are so expected to produce benefits to the public, such as integrally related to the proposed activity as to greater convenience, increased competition, or gains require their provision in a specialized form.4 in efficiency that outweigh possible adverse effects, In this case, the record shows that Shorebank and its such as undue concentration of resources, decreased subsidiary bank, as well as banks in general, do or unfair competition, conflicts of interests, or unprovide services similar to those proposed here and sound banking practices." have developed expertise in the community develop- The proposal will result in public benefits because ment area. the provision of advice by SAS will enable the orga- Shorebank and its subsidiary bank, The South Shore nizations it advises to establish and maintain more Bank of Chicago ("Bank"), historically have been effective community development projects, particuvery active in community development. Upon acquir- larly in low-income areas. Shorebank's personnel are ing Bank, Shorebank initiated an aggressive reinvest- particularly skilled in creating and maintaining efficient ment program under which Bank extended $75.8 mil- and effective community development projects, and lion in development loans through the end of 1986.5 In the utilization of such resources in advising other organizations in community development activities will allow many low-income areas to benefit from Shorebank's expertise. Consummation of the proposal 3. The Board permitted investments in community development corporations to allow bank holding companies to participate in com- is not likely to result in decreased or unfair competimunity development activities based on their unique role in the tion, conflicts of interest, unsound banking practices, community. See 12 C.F.R. § 225.127 ("Bank holding companies posconcentration of resources, or other adverse sess a unique combination of financial and managerial resources making them particularly suited for a meaningful and substantial role effects. in remedying our social ills."). Based on the foregoing and all the facts of record, 4. National Courier Association v. Board of Governors, 516 F.2d 1229 (D.C. Cir. 1975). However, the National Courier guidelines are the Board has determined that the balance of the not the exclusive basis for finding a close relationship between a public interest factors it is required to consider under proposed activity and banking. The Board has stated that in acting on section 4(c)(8) is favorable. Accordingly, the applicaa request to engage in a new nonbanking activity, it will consider any other factor that an applicant may advance to demonstrate a reason- tion is hereby approved. This determination is subject able or close connection or relationship of the activity to banking. 49 to all of the conditions set forth in Regulation Y, Federal Register 794, 806 (1984); Securities Industry Association v. including sections 225.4(d) and 225.23(b), and to the Board of Governors, 468 U.S. 207, 210-11 n.5 (1984). 5. Development loans are defined as credits originated in the Bank's primary service area that contribute to the community's economic revitalization and that other banks would not make in the ordinary course of business. 6. 12 U.S.C. § 2901 et seq. ; see also 12 C.F.R. § 228. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1988 Board's authority to require such modification or Board's approval under section 4(c)(8) of the Act termination of the activities of a holding company or (12 U.S.C. § 1843(c)(8)) to acquire: Tilden of Florida, any of its subsidiaries as the Board finds necessary to Inc., Fort Lauderdale, Florida, and thereby to engage assure compliance with the provisions and purposes of in commercial lending activities; and FJN Corporathe BHC Act and the Board's regulations and orders tion, Jersey City, New Jersey, and thereby to engage issued thereunder, or to prevent evasion thereof. in leasing real property.2 These activities are autho- The activity shall be commenced no later than three rized for bank holding companies pursuant to the months after the effective date of this Order, unless Board's Regulation Y, 12 C.F.R. §§ 225.25(b)(1), (5). such period is extended for good cause by the Board or Notice of the applications, affording opportunity for by the Federal Reserve Bank of Chicago, acting pur- interested persons to submit comments and views, has suant to delegated authority. been published (52 Federal Register 41,777 (1987)). By order of the Board of Governors, effective De- The time for filing comments has expired, and the cember 21, 1987. Board has considered the applications and all comments received in light of the factors set forth in sections 3(c) and 4(c)(8) of the Act. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, and Kelley. Absent and not voting: Gover- NatWest Holdings Inc., with approximately $6.6 nors Angell and Heller. billion in domestic deposits, is the eleventh largest commercial banking organization in New York, con- JAMES MCAFEE trolling approximately 2.9 percent of total deposits in [SEAL] Associate Secretary of the Board commercial banks in New York.3 First Jersey is the fourth largest commercial banking organization in Orders Issued Under Sections 3 and 4 of the New Jersey, with domestic deposits of approximately Bank Holding Company Act $3.3 billion, controlling approximately 6.2 percent of the total deposits in commercial banks in New Jersey. National Westminster Bank PLC Section 3(d) of the Act, the Douglas Amendment, London, England prohibits the Board from approving an application by a bank holding company to acquire control of any bank Nat We st Holdings Inc. located outside of the holding company's home state,4 New York, New York unless such acquisition is "specifically authorized by the statute laws of the State in which [the] bank is Order Approving Acquisition of a Bank Holding located, by language to that effect and not merely by Company and its Banking and Nonbanking implication." 12 U.S.C. § 1842(d). The New Jersey Subsidiaries interstate banking statute5 contains a national reciprocal provision which permits an out-of-state bank hold- National Westminster Bank PLC, London, England, ing company to acquire control of a bank located in and Nat West Holdings Inc., New York, New York New Jersey if bank holding companies located in New Jersey are permitted to acquire banks in the acquiring (together, "Applicants"), have applied for the Board's bank holding company's home state on substantially approval under section 3 of the Bank Holding Comthe same terms and conditions. The provision of New pany Act (12 U.S.C. § 1842) ("Act") to acquire all the Jersey law, however, is not effective until a number of voting shares of First Jersey National Corporation, other states pass interstate banking legislation that is Jersey City, New Jersey ("First Jersey"), and thereby reciprocal with New Jersey, including four of the ten to acquire indirectly First Jersey's subsidiary banks: largest states in the United States in terms of domestic The First Jersey National Bank, Jersey City ; The First Jersey National Bank/Central, Trenton; The First Jersey National Bank South, Atlantic City; and The First holding company by acquiring the shares of First Jersey and National Jersey Bank/West, Denville; and First Jersey's bank Westminster Bank, USA, New York, New York ("Bank"), which is holding company subsidiary, First Jersey Fort Lee now a subsidiary of Holdings. Further, Bancorp has provided notice Corporation, Jersey City, and its bank subsidiary, The to the Board under 12 C.F.R. § 211.4(b)(3) of its intention to acquire control of Bank's Edge Act corporation subsidiary, National West- First Jersey National Bank/Fort Lee, Fort Lee, all in minster USA International Bank, Miami, Florida. New Jersey.1 Applicants also have applied for the 2. In connection with this application, Bancorp also has applied to acquire these nonbanking subsidiaries. 3. Banking data are as of June 30, 1986. 4. A bank holding company's home state is that state in which the 1. Applicants will acquire First Jersey through the merger of NWH operations of the bank holding company's banking subsidiaries were Acquisition Corporation, a subsidiary of National Westminster Ban- principally conducted on July 1, 1966, or the date on which the corp, Inc., Wilmington, Delaware ("Bancorp"), with First Jersey. In company became a bank holding company, whichever is later. connection with this proposal, Bancorp has applied to become a bank 5. N.J. Stat. Ann. § 17:9A-370 et seq. (West 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 143 commercial bank deposits. New York law permits competitive effect in the Metropolitan New York- New Jersey bank holding companies to acquire banks New Jersey banking market. in New York.6 The New Jersey Commissioner of The Board also has considered the effects of Appli- Banking has determined that, as of January 1, 1988, cants' proposal on probable future competition in the national reciprocal provisions of New Jersey law markets in which Applicants and First Jersey do not will become effective and that New York has enacted compete. In light of the number of probable future legislation which permits New Jersey bank holding entrants into those markets, the Board concludes that companies to acquire banks in New York. The Com- consummation of this proposal would not have a missioner also must make a specific determination significant adverse effect on probable future competiwith regard to the proposal at issue here, but has not tion in any relevant banking market. yet done so. The Commissioner, however, has in- In evaluating this application, the Board has considformed the Board that she anticipates making such a ered the financial resources of Applicants and the determination subject to the January 1, 1988, effective effect on these resources of the proposed acquisition. date. The Board has stated and continues to believe that Based on the foregoing factors and its own review of capital adequacy is an especially important factor in the record, the Board has determined that the pro- the analysis of bank holding company proposals, parposed acquisition is specifically authorized by the ticularly in transactions where a significant acquisition statute laws of New Jersey, and thus Board approval is is proposed.8 not prohibited by the Douglas Amendment, subject to In this regard, the Board expects that banking the January 1, 1988, effective date of New Jersey's organizations experiencing substantial growth international reciprocal interstate banking legislation and nally and by acquisition, such as Applicants, should the Commissioner's specific determination that the maintain a strong capital position substantially above proposal is consistent with the New Jersey interstate the minimum levels specified in the Capital Adequacy banking statute. The Board's Order is specifically Guidelines, without significant reliance on intangibles, conditioned on the Commissioner's favorable determi- particularly goodwill.9 The Board will carefully ananation. lyze the effect of expansion proposals on the preser- NatWest Holdings Inc. competes with First Jersey vation or achievement of such capital positions. in the Metropolitan New York - New Jersey banking The Board has reviewed this case in light of Applimarket.7 NatWest Holdings Inc. is the ninth largest of cants' capital position. The Board notes that Appli- 163 commercial banking organizations in the market, cants have issued more than sufficient new equity with deposits of approximately $6.6 billion, controlling since mid-1986 to fund this acquisition, and that Apapproximately 2.7 percent of total deposits in commer- plicants' pro forma tangible primary capital ratio will cial banks in the market. First Jersey is the sixteenth be well above the minimum primary capital ratio under largest commercial banking organization in the mar- the Board's Guidelines. The Board also notes that ket, with deposits of approximately $2.4 billion, con- although First Jersey's capital will be reduced through trolling approximately 1 percent of total deposits in the redemption of certain mandatory convertible decommercial banks in the market. Upon consumma- bentures, Applicants will make an equity contribution tion, NatWest Holdings Inc. would be the eighth to First Jersey to replace a significant portion of this largest commercial banking organization in the mar- capital. In addition, Applicants have committed to ket, with deposits of approximately $9 billion, control- contribute additional capital to First Jersey, if necesling approximately 3.7 percent of total deposits in sary to bring First Jersey's capital ratios to peer levels commercial banks in the market. The Metropolitan by year-end 1988. The financial resources of Appli- New York - New Jersey market is considered uncon- cants and First Jersey are considered generally satiscentrated, with a Herfindahl-Hirschman Index factory. Accordingly, on the basis of the above con- ("HHI") of 682. Upon consummation, the HHI would siderations, the Board concludes that financial factors increase by 5 points to 687. On the basis of the are consistent with approval of the applications. Manforegoing, the Board concludes that consummation of agerial factors, as well as convenience and needs the proposal would not have a substantial adverse considerations, also are consistent with approval. 6. N.Y. Banking Law § 142-b (McKinney 1987). 8. See e.g., Chase Manhattan Corporation, 70 FEDERAL RESERVE 7. The Metropolitan New York - New Jersey market includes New BULLETIN 529 (1984); NCNB Corporation, 69 FEDERAL RESERVE York City, Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, and BULLETIN 49 (1983). Westchester Counties in New York; Bergen, Essex, Hudson, Hun- 9. Capital Adequacy Guidelines, 50 Federal Register 16,057, terdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, 16,066-67 (April 24, 1985) (71 FEDERAL RESERVE BULLETIN 445 Sussex, Union, and Warren Counties in New Jersey; and parts of (1985)); National City Corporation, 70 FEDERAL RESERVE BULLETIN Fairfield County in Connecticut. 743, 746 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1988 As indicated earlier, Applicants also have applied, 1988, effective date of New Jersey's national recipropursuant to section 4(c)(8), to acquire the nonbanking cal interstate banking statute and the Commissioner's subsidiaries of First Jersey. Applicants operate non- favorable determination. The acquisition of First Jerbanking subsidiaries that compete with First Jersey in sey shall not be consummated before the thirtieth the activities of financing automobile and equipment calendar day following the effective date of this Order, leasing. The markets for these activities have numer- or later than three months after the effective date of ous competitors, are regional or national in scope, and this Order, unless such period is extended for good both Applicants and First Jersey hold small market cause by the Board or by the Federal Reserve Bank of shares. Accordingly, the Board concludes that this New York, acting pursuant to delegated authority. proposal will not have any significant adverse effect The determinations as to Applicants' nonbanking acupon competition in any relevant market. tivities are subject to all of the conditions contained in There is no evidence in the record to indicate that Regulation Y, including those in sections 225.4(d) and approval of this proposal would result in undue con- 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), centration of resources, decreased or unfair competi- and to the Board's authority to require such modification, conflicts of interests, unsound banking practices, tion or termination of the activities of a holding comor other adverse effects on the public interest. Accord- pany or any of its subsidiaries as the Board finds ingly, the Board has determined that the balance of necessary to assure compliance with the provisions public interest factors it must consider under section and purposes of the Act and the Board's regulations 4(c)(8) of the Act is favorable and consistent with and orders issued thereunder, or to prevent evasion approval of the applications to acquire First Jersey's thereof. nonbanking subsidiaries and activities. By order of the Board of Governors, effective De- The Board also has considered the notice of Ban- cember 21, 1987. corp's proposed acquisition of control of National Westminster USA International Bank, Miami, Flor- Voting for this action: Chairman Greenspan and Governors ida, under the Edge Act. Based on the facts of record, Johnson, Seger, and Kelley. Absent and not voting: Goverthe Board has determined that disapproval of the nors Angell and Heller. proposed investment is not warranted. Based on the foregoing and other facts of record, the Board has determined that the applications should be, JAMES MCAFEE and hereby are, approved, subject to the January 1, [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 . .. r> w \ Reserve Effective Applicant Bank(s) Bank date Abington Bancorp, Inc., Abington Savings Bank, Boston December 24, 1987 Abington, Massachusetts Abington, Massachusetts Landmark Bank for Savings, Whitman, Massachusetts Albright Bancorp, Inc., Albright National Bank of Richmond December 11, 1987 Kingwood, West Virginia Kingwood, Kingwood, West Virginia American Interstate The First National Bank of Paullina, Chicago December 1, 1987 Bancorporation, Inc., Paullina, Iowa Omaha, Nebraska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 145 Section 3—Continued . „ , , . Reserve Effective Applicant Bank(s) Bank date Arrow Bank Corp., Saratoga National Bank and Trust New York December 23, 1987 Glens Falls, New York Company, Saratoga Springs, New York Associated Acquisition VALDERS BANCORPORATION, Chicago December 1, 1987 Corporation, Valders, Wisconsin Green Bay, Wisconsin Associated Banc-Corp, Associated Acquisitions Chicago December 1, 1987 Green Bay, Wisconsin Corporation, Green Bay, Wisconsin Bank South Corporation, Heritage Trust, Atlanta November 30, 1987 Atlanta, Georgia Conyers, Georgia Blue Rapids Bancshares, Inc., The State Bank of Blue Rapids, Kansas City December 29, 1987 Blue Rapids, Kansas Blue Rapids, Kansas Boston Private Bancorp, Inc., Boston Private Bank and Trust Boston December 1, 1987 Boston, Massachusetts Company, Boston, Massachusetts Capac Bancorp, Inc., Capac State Savings Bank, Chicago December 15, 1987 Capac, Michigan Capac, Michigan Chester County Bancshares, Inc. Chester County Bank, St. Louis November 30, 1987 II, Henderson, Tennessee Henderson, Tennessee Citizens Bancgroup Inc., Citizens National Bank of Shawmut, Atlanta December 1, 1987 Valley, Alabama Valley, Alabama Citizens Bancorp of Delavan, Citizens Bank of Delavan, Chicago December 1, 1987 Inc., Delavan, Wisconsin Delavan, Wisconsin Commercial Bank Shares, Inc., The Commercial Bank, Richmond December 30, 1987 Honea Path, South Carolina Honea Path, South Carolina Dominion Bankshares Franklin First National Corporation, Richmond November 27, 1987 Corporation, Decherd, Tennessee Roanoke, Virginia Dominion Bankshares The Peoples National Bancorp, Inc., Richmond November 27, 1987 Corporation, Shelbyville, Tennessee Roanoke, Virginia Dominion Bankshares UNB Corporation, Richmond November 27, 1987 Corporation, Fayetteville, Tennessee Roanoke, Virginia Duco Bancshares, Community Bank of Galesburg, Chicago December 24, 1987 Villa Park, Illinois Galesburg, Illinois FGC Holding Company, First Guaranty Corporation, Cleveland December 16, 1987 Martin, Kentucky Martin, Kentucky FIH, L.P., First Interstate of Hawaii, Inc., San Francisco December 24, 1987 Beverly Hills, California Honolulu, Hawaii FIH, Inc., Beverly Hills, California First American Corporation, First Roane County Bancorp, Inc., Atlanta December 21, 1987 Nashville, Tennessee Rockwood, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • February 1988 Section 3—Continued Reserve Effective AApppplliiccaanntt BBaannkk((ss)) Bank date First Canyon Bancorporation, First Canyon Bancshares, Inc., Dallas December 1, 1987 Inc., Canyon, Texas Canyon, Texas FIRST CICERO BANC FIRST HARVEY BANC Chicago December 17, 1987 CORPORATION, CORPORATION, Oak Brook, Illinois Oak Brook, Illinois LA GRANGE PARK BANC CORPORATION, Oak Brook, Illinois First Commercial Corporation, First Security Corporation, St. Louis November 27, 1987 Little Rock, Arkansas Harrison, Arkansas First Delhi Corporation, Security Bancshares, Incorporated, Dallas December 21, 1987 Delhi, Louisiana Monroe, Louisiana First Liberty Bancorp, Inc., First Liberty National Bank, Richmond December 2, 1987 Washington, D.C Washington, D.C. The First National Bank of First Bemidji Holding Company, Minneapolis December 14, 1987 Bemidji Employee Stock Bemidji, Minnesota Ownership Plan and Trust, Bemidji, Minnesota First National Cincinnati Aurora First National Bancorp, Cleveland December 10, 1987 Corporation, Aurora, Indiana Cincinnati, Ohio First Wachovia Corporation, North Georgia Bancshares, Inc., Richmond December 23, 1987 Winston-Salem, North Carolina Canton, Georgia Heritage Racine Corporation, Bank of Hay ward, Chicago November 27, 1987 Racine, Wisconsin Hayward, Wisconsin Herky Hawk Financial Corp., Citizens State Bank, Chicago December 18, 1987 Hopkinton, Iowa Hopkinton, Iowa Hodco, Inc., Blackpipe State Bank, Minneapolis December 30, 1987 Martin, South Dakota Martin, South Dakota Kansas State Financial Central Financial Corporation, Kansas City November 27, 1987 Corporation, Wichita, Kansas Wichita, Kansas Klein Bancorporation, Inc., Oakley Holding Company, Minneapolis December 14, 1987 Chaska, Minnesota Buffalo, Minnesota Liberty National Bancorp, Inc., Indiana First National Bank, St. Louis November 27, 1987 Louisville, Kentucky Charlestown, Indiana CSB Bancshares, Inc., First Indiana Bank, National Louisville, Kentucky Association, Milltown, Indiana Malta Banquo, Inc., First Security Bank of Malta, Minneapolis December 17, 1987 Malta, Montana Malta, Montana McCamey Financial Corporation, McCamey Bancshares, Inc., Dallas December 1, 1987 McCamey, Texas McCamey, Texas Miami Corporation, Keekins Financial Corporation, Chicago December 4, 1987 Chicago, Illinois Downers Grove, Illinois Boulevard Bancorp, Inc., Citizens National Bank of Downers Chicago, Illinois Grove, Downers Grove, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 147 Section 3—Continued . ~ , , . Reserve Effective Applicant Bank(s) ^ date Midlantic Corporation, Midlantic National Bank/Delaware, New York December 1, 1987 Edison, New Jersey Wilmington, Delaware National Bancshares Waupun, The National Bank of Waupun, Chicago December 22, 1987 Inc., Waupun, Wisconsin Waupun, Wisconsin NBM Bancorp, Inc., National Bank of Montpelier, Cleveland December 24, 1987 Montpelier, Ohio Montpelier, Ohio Okawville Bancshares, Inc., Old Exchange National Bank, St. Louis November 24, 1987 Okawville, Illinois Okawville, Illinois Oxford Financial Corporation, Addison State Bank, Chicago November 30, 1987 Elmhurst, Illinois Addison, Illinois Peoples Bancorporation, Citizens National Bank, Richmond December 22, 1987 Rocky Mount, North Carolina Winston-Salem, North Carolina Pocahontas Bankshares The Bank of Oceana, Richmond December 30, 1987 Corporation, Oceana, West Virginia Bluefield, West Virginia Princeton National Bancorp, Inc., USA FIRSTRUST INC., Chicago December 21, 1987 Princeton, Illinois Oglesby, Illinois Security Bancshares, Inc., Security State Bank, Kansas City December 17, 1987 Scott City, Kansas Scott City, Kansas Security State Bancshares, Inc., First Security State Bank, St. Louis December 2, 1987 Charleston, Missouri Charleston, Missouri The National Bank of Caruthersville, Caruthersville, Missouri Sheridan National Agency, Sheridan National Bank, Kansas City November 30, 1987 Sheridan, Wyoming Sheridan, Wyoming Somerset Bancshares Somerset National Bank, Dallas November 30, 1987 Corporation, Inc., Somerset, Texas Somerset, Texas Southeast Banking Corporation, First City Bancorp, Inc., Atlanta December 29, 1987 Miami, Florida Gainesville, Florida Southwest Financial Group of Houghton State Bank, Chicago November 27, 1987 Iowa, Inc., Red Oak, Iowa Red Oak, Iowa The Sumitomo Bank, Limited, CPB, Inc., San Francisco December 24, 1987 Osaka, Japan Honolulu, Hawaii Suwannee Valley Bancshares, Inc., Bank of Florida, N.A., Atlanta December 17, 1987 Chiefland, Florida Chiefland, Florida Union Planters Corporation, Bank of East Tennessee, St. Louis December 10, 1987 Memphis, Tennessee Knoxville, Tennessee United New Mexico Financial United Bancshares, Inc., Dallas December 1, 1987 Corporation, Lubbock, Texas Albuquerque, New Mexico UP Financial, Inc., First National Bank in Ontonagon, Minneapolis December 28, 1987 Ashland, Wisconsin Ontonagon, Michigan Valley Bancshares, Inc., Valley Bank and Trust Company, Minneapolis November 27, 1987 Grand Forks, North Dakota Grand Forks, North Dakota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • February 1988 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Water Tower Bancorp, Inc., Belmont National Bank of Chicago, Chicago December 1, 1987 Chicago, Illinois Chicago, Illinois Westbank Financial Corporation, First Channahon Bancorp, Inc., Chicago November 27, 1987 Naperville, Illinois Channahon, Illinois Section 4 Nonbanking Reserve Effective Applicant Company/Activity Bank date Amsterdam-Rotterdam Bank, N.V., portfolio management and New York December 29, 1987 Amsterdam, The Netherlands investment advisory services Community Group, Inc., Community Financial Corporation, Atlanta November 23, 1987 Jasper, Tennessee Chattanooga, Tennessee First Bank System, Inc., First Trust Company, Inc., Minneapolis December 24, 1987 Minneapolis, Minnesota St. Paul, Minnesota First National of Nebraska, Inc., Data Management Products, Inc., Kansas City December 17, 1987 Omaha, Nebraska Omaha, Nebraska First NH Banks, Inc., New England Acceptance Boston December 22, 1987 Manchester, New Hampshire Corporation, Keene, New Hampshire Merchants National Corporation, retain the general insurance agency Chicago December 3, 1987 Indianapolis, Indiana activities of North Madison Insurance Agency, Inc., Madison, Indiana Quad County Bancshares, Inc., Viburnum Insurance Services, Inc., St. Louis December 3, 1987 Viburnum, Missouri Viburnum, Missouri Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date FV Inc., First Valley Corporation, New York December 23, 1987 Bethlehem, Pennsylvania Bethlehem, Pennsylvania United Jersey Banks, First Valley Corporation, New York December 23, 1987 Princeton, New Jersey Bethlehem, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 149 ORDERS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date County Bank Corp., Lapeer County Bank & Trust Co., Chicago December 14, 1987 Lapeer, Michigan Lapeer, Michigan First Trust and Savings Bank of First Trust and Savings Bank of Chicago November 27, 1987 Kankakee, Bradley, Kankakee, Illinois Bradley, Illinois Valley Bank and Trust Company, New Valley Bank, Minneapolis November 27, 1987 Grand Forks, North Dakota Grand Forks, North Dakota ORDERS APPROVED UNDER BANK SERVICE CORPORATION ACT By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date SunTrust Service Corporation, SunTrust Banks, Inc., Atlanta December 22, 1987 Orlando, Florida Atlanta, Georgia 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. Industry Association v. Board of Governors, No. Securities Industry Association v. Board of Gover- 87-4161 (2d Cir., filed Dec. 15, 1987). nors, No. 87-4115 (2d Cir., filed Sept. 9, 1987) Independent Insurance Agents of America, Inc. v. Board of Trade of the City of Chicago, et al. v. Board Board of Governors, No. 87-1686 (D.C. Cir., filed of Governors, No. 87-2389 (7th Cir., filed Sept. 1, Nov. 19,1987) 1987). National Association of Casualty and Surety Agents, Barrett v. Volcker, No. 87-2280 (D.D.C., filed Aug. et al., v. Board of Governors, No. 87-1644 (D.C. 17, 1987). Cir., filed Nov. 4, 1987). Teichgraeber v. Board of Governors, No. 87-2505-0 Northeast Bancorp v. Board of Governors, No. (D. Kan., filed Oct. 16, 1987). 87-1365 (D.C. Cir., filed July 31, 1987). Securities Industry Association v. Board of Gover- National Association of Casualty & Insurance Agents nors, No. 87-4135 (2d Cir., filed Oct. 8, 1987). v. Board of Governors, Nos. 87-1354, 87-1355 (D.C. Independent Insurance Agents of America, Inc. v. Cir., filed July 29, 1987). Board of Governors, No. 87-4118 (2d Cir., filed The Chase Manhattan Corporation v. Board of Gov- Sept. 17, 1987). ernors, No. 87-1333 (D.C. Cir., filed July 20, 1987). Citicorp v. Board of Governors, No. 87-1475 (D.C. Cir., filed Sept. 9, 1987). Securities Industry Association v. Board of Gover- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin • February 1988 nors, Nos. 87-4091, 87-4093, 87-4095 (2d Cir., filed Myers, et al. v. Federal Reserve Board, No. 85-1427 July 1 and July 15, 1987). (D. Idaho, filed Nov. 18, 1985). Lewis v. Board of Governors, Nos. 87-3455, 87-3545 Souser, et al. v. Volcker, et al., No. 85-C-2370, et al. (11th Cir., filed June 25, Aug. 3, 1987). (D. Colo., filed Nov. 1, 1985). Securities Industry Association v. Board of Gover- Podolak v. Volcker, No. C85-0456, et al. (D. Wyo., nors, et al. No. 87-4041 and consolidated cases (2d filed Oct. 28, 1985). Cir., filed May 1, 1987). Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa, Securities Industry Association v. Board of Gover- filed Oct. 22, 1985). nors, et al., No. 87-1169 (D.C. Cir., filed April 17, Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D. 1987). Minn., filed Oct. 21, 1985). Bankers Trust New York Corp. v. Board of Governors, Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D. No. 87-1035 (D.C. Cir., filed Jan. 23, 1987). Neb., filed Oct. 16, 1985). Grimm v. Board of Governors, No. 87-4006 (2d Cir., Alfson v. Wilkinson, et al., No. Al-85-267 (D. N.D., filed Jan. 16, 1987). filed Oct. 8, 1985). Independent Insurance Agents of America, et al. v. Independent Community Bankers Association of Board of Governors, Nos. 86-1572, 1573, 1576 South Dakota v. Board of Governors, No. 84-1496 (D.C. Cir., filed Oct. 24, 1986). (D.C. Cir., filed Aug. 7, 1985). Independent Community Bankers Association of Urwyler, et al. v. Internal Revenue Service, et al., No. South Dakota v. Board of Governors, No. 86-5373 85-2877 (9th Cir., filed July 18, 1985). (8th Cir., filed Oct. 3, 1986). Wight, et al. v. Internal Revenue Service, et al., No. Jenkins v. Board of Governors, No. 86-1419 (D.C. 85-2826 (9th Cir., filed July 12, 1985). Cir., filed July 18, 1986). Brown v. United States Congress, et al., No. Securities Industry Association v. Board of Gover- 84-2887-6(IG) (S.D. Cal., filed Dec. 7, 1984). nors, No. 86-1412 (D.C. Cir., filed July 14, 1986). Melcher v. Federal Open Market Committee, No. CBC, Inc. v. Board of Governors, No. 86-1001 (10th 86-5692 (D.C. Cir., filed April 30, 1984). Cir., filed Jan. 2, 1986). 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 ALL Gross demand deposits—individuals, MONEY STOCK AND BANK CREDIT partnerships, and corporations A3 Reserves, money stock, liquid assets, and debt measures FINANCIAL MARKETS A4 Reserves of depository institutions, Reserve Bank credit A23 Commercial paper and bankers dollar A5 Reserves and borrowings—Depository acceptances outstanding institutions A23 Prime rate charged by banks on short-term A6 Selected borrowings in immediately available business loans funds—Large member banks 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 A11 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

2 Federal Reserve Bulletin • February 1988 A36 Total nonfarm business expenditures on new A57 Selected U.S. liabilities to foreign official plant and equipment institutions A37 Domestic finance companies—Assets and liabilities and business credit REPORTED BY BANKS IN THE UNITED STATES REAL ESTATE A57 Liabilities to and claims on foreigners A58 Liabilities to foreigners A38 Mortgage markets A60 Banks' own claims on foreigners A39 Mortgage debt outstanding A61 Banks' own and domestic customers' claims on foreigners A61 Banks' own claims on unaffiliated foreigners CONSUMER INSTALLMENT CREDIT A62 Claims on foreign countries—Combined domestic offices and foreign branches A40 Total outstanding and net change A41 Terms REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES FLOW OF FUNDS A63 Liabilities to unaffiliated foreigners A42 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit A64 Claims on unaffiliated foreigners markets SECURITIES HOLDINGS AND TRANSACTIONS Domestic Nonfinancial Statistics A65 Foreign transactions in securities A66 Marketable U.S. Treasury bonds and notes— SELECTED MEASURES Foreign transactions A44 Nonfinancial business activity—Selected measures INTEREST AND EXCHANGE RATES A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization A67 Discount rates of foreign central banks A47 Industrial production—Indexes and gross value A67 Foreign short-term interest rates A49 Housing and construction A68 Foreign exchange rates A50 Consumer and producer prices A51 Gross national product and income A52 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables International Statistics S UMMAR Y ST A TISTICS SPECIAL TABLES A53 U.S. international transactions—Summary A70 Assets and liabilities of commercial banks, A54 U.S. foreign trade June 30, 1987 A54 U.S. reserve assets A76 Assets and liabilities of U.S. branches and A54 Foreign official assets held at Federal Reserve agencies of foreign banks, June 30, 1987 Banks A80 Pro forma balance sheet and income statement A55 Foreign branches of U.S. banks—Balance sheet for priced service operations, September 30, data 1987 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 Q1 Q2 Q3 July Aug. Sept. Oct.' Nov. Reserves of depository institutions2 1 Total 24.3 16.4 8.0 -1.6 -2.2 5.7 -1.0 13.9 -10.1 2 Required 22.8 16.5 8.4 -.5 6.9 .1 4.0 7.1 -6.3 3 Nonborrowed 25.3 18.5 5.4 -.4 # 6.3 -7.2 14.1 -3.7 4 Monetary base 11.0 11.3 6.8 4.7 4.7 6.5 5.0 11.9 8.3 Concepts of money, liquid assets, and debt4 5 Ml 17.0 13.1 6.4 .0 1.6 5.6 .3 15.0 -6.6 6 M2 9.3 6.4 2.3 3.1 2.7 6.5 5.7 7.2 -.1 7 M3 8.3 6.5 4.3 4.9f 2.3' 7.1' 5.7' 8.0 4.7 8 L 8.4 6.2' 3.2' 4.4' -1.1' 8.2' 8.4' 10.4 n.a. 9 Debt 12.5' 10.4 9.r 8.2' 6.8' 7.7' 8.9' 9.4 n.a. Nontrgnsaction components 10 In M2 6.7 4.1 .9 4.3' 3.1 6.9 7.6' 4.3 2.2 11 In M3 only6 4.3 6.6' 12.2' 11.8r .7' 9.3' 5.5' 11.1 23.3 Time and savings deposits Commercial banks 12 Savings' 36.9 37.3 24.1 7.8 7.5 9.5 .0 -3.4 -3.4 13 Small-denomination time -10.7 -4.9 -4.6 8.0 11.0 6.6 6.2 18.6 25.4 14 Large-denomination time • .1 9.7 18.3 4.1 -4.6 .0 -.4 13.0 23.8 Thrift institutions 15 Savings' 23.2 27.3 25.9 7.1 2.0 8.5 -2.5 -9.9 -22.1 16 Small-denomination time -6.4 -4.2 1.0 10.2' 12.5 12.1 10.3' 13.3 25.2 17 Large-denomination time -7.0 -9.5 -8.4 10.7 9.6 13.5 17.2 29.4 27.2 Debt components4 18 Federal 11.8r 12.2 8.8 5.9 1.8' 8.8 6.5 3.9 n.a. 19 Nonfederal 12.8r 9.8 9.2' 9.0' 8.4' 7.4' 9.7' 11.1 n.a. 20 Total loans and securities at commercial banks 8.8 10.1 7.0 5.7' 1.4' 10.8 9.7 10.4 -1.3 1. Unless otherwise noted, rates of change are calculated from average commercial banks, money market funds (general purpose and broker/dealer), amounts outstanding in preceding month or quarter. foreign governments and commercial banks, and the U.S. government. Also 2. Figures incorporate adjustments for discontinuities associated with the subtracted is a consolidation adjustment that represents the estimated amount of implementation of the Monetary Control Act and other regulatory changes to demand deposits and vault cash held by thrift institutions to service their time and reserve requirements. To adjust for discontinuities due to changes in reserve savings deposits. requirements on reservable nondeposit liabilities, the sum of such required M3: M2 plus large-denomination time deposits and term RP liabilities (in reserves is subtracted from the actual series. Similarly, in adjusting for discon- amounts of $100,000 or more) issued by commercial banks and thrift institutions, tinuities in the monetary base, required clearing balances and adjustments to term Eurodollars held by U.S. residents at foreign branches of U.S. banks compensate for float also are subtracted from the actual series. worldwide and at all banking offices in the United Kingdom and Canada, and 3. The monetary base not adjusted for discontinuities consists of total balances in both taxable and tax-exempt, institution-only money market mutual reserves plus required clearing balances and adjustments to compensate for float funds. Excludes amounts held by depository institutions, the U.S. government, at Federd 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 • February 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 Factors 1987 1987 Sept. Oct. Nov. Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 240,591 241,841 240,088 236,547 242,444 248,500 241,728 239,709 241,638 239,081 2 U.S. government securities' 214,298 214,787 214,695 210,880 215,059 220,197 214,534 213,563 215,319 215,088 3 Bought outright 211,468 210,822 213,706 210,880 210,168 210,726 210,151 212,218 214,381 215,088 4 Held under repurchase agreements.. 2,830 3,965 989 0 4,891 9,471 4,383 1,345 938 0 5 Federal agency obligations 8,399 8,747 7,956 7,623 8,860 10,165 9,208 7,968 8,090 7,567 6 Bought outright 7,623 7,601 7,567 7,623 7,607 7,567 7,567 7,567 7,567 7,567 7 Held under repurchase agreements.. 776 1,146 389 ' 0 1,253 2,598 1,641 401 523 0 8 Acceptances 0 0 0 0 0 0 0 0 0 0 9 Loans 956 959 610 902 1,111 751 603 516 605 681 10 Float 774 751 866 707 879 494 364 602 1,595 686 11 Other Federal Reserve assets 16,164 16,597 15,961 16,435 16,535 16,893 17,020 17,059 16,029 15,059 12 Gold stock2 11,068 11,084 11,084 11,086 11,086 11,086 11,085 11,084 11,085 11,083 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 17,981 18,028 18,102 18,018 18,032 18,046 18,073 18,089 18,101 18,115 ABSORBING RESERVE FUNDS 15 Currency in circulation 217,718 218,734 223,078 218,958 219,087 218,978 220,254 222,257 223,539 223,662 16 Treasury cash holdings2 459 470 471 475 472 469 468 474 474 472 Reserve Banks 17 Treasury 10,585 8,828 3,755 3,281 12,191 13,822 7,367 3,958 3,836 3,325 18 Foreign 248 259 299 208 251 298 270 316 261 279 19 Service-related balances and adjustments 1,930 2,029 2,063 1,943 1,926 1,960 2,072 1,945 2,017 1,845 20 Other 390 402 374 350 385 391 436 328 346 336 21 Other Federal Reserve liabilities and capital 7,213 7,236 7,418 7,034 7,342 7,365 7,682 7,586 7,336 7,192 22 Reserve balances with Federal Reserve Banks 36,115 38,014 36,834 38,421 34,924 39,365 37,355 37,038 38,033 36,187 End-of-month figures Wednesday figures 1987 1987 Sept. Oct. Nov. Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 238,823 246,896 245,472 239,536 243,453 251,276 236,113 240,416 237,916 239,681 24 U.S. government securities1 211,941 217,614 218,960 212,094 213,804 219,707 210,484 213,833 213,000 215,532 25 Bought outright 211,941 209,319 213,563 212,094 210,208 211,453 210,484 211,163 212,810 215,532 26 Held under repurchase agreements.... 0 8,295 5,397 0 3,596 8,254 0 2,670 190 0 27 Federal agency obligations 7,623 10,483 9,844 7,623 8,706 11,646 7,567 8,355 7,947 7,567 28 Bought outright 7,623 7,567 7,567 7,623 7,567 7,568 7,567 7,567 7,567 7,567 29 Held under repurchase agreements.... 0 2,916 2,277 0 1,139 4,078 0 788 380 0 30 Acceptances 0 0 0 0 0 0 0 0 0 0 31 Loans 1,941 587 790 929 3,160 753 573 473 662 602 32 Float 248 609 428 2,138 1,134 2,031 594 611 1,525 975 33 Other Federal Reserve assets 17,070 17,603 15,450 16,752 16,649 17,139 16,941 17,144 14,782 15,005 34 Gold stock2 11,075 11,085 11,082 11,086 11,085 11,085 11,085 11,084 11,083 11,083 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 18,006 18,058 18,127 18,030 18,044 18,058 18,085 18,099 18,113 18,127 ABSORBING RESERVE FUNDS 37 Currency in circulation 216,776 219,842 225,090 219,523 219,053 219,427 221,244 223,133 223,545 224,677 38 Treasury cash holdings2 460 467 465 472 472 468 469 474 473 466 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 9,120 8,898 3,594 3,745 14,323 14,324 3,149 3,260 2,921 2,767 40 Foreign 456 236 352 200 221 301 297 198 194 261 41 Service-related balances and adjustments 1,706 1,733 1,717 1,714 1,713 1,732 1,733 1,735 1,735 1,718 42 Other 419 477 450 348 309 371 328 325 310 482 43 Other Federal Reserve liabilities and capital 6,663 7,950 7,968 6,884 7,076 7,167 7,279 7,755 7,039 7,068 44 Reserve balances with Federal Reserve Banks 37,321 41,454 40,064 40,783 34,436 41,647 35,802 37,738 35,914 36,470 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. Apr. May June July Aug. Sept. Oct. 1 Reserve balances with Reserve Banks' 21,738 27,620 37,360 37,807 36,466 36,309 36,110 35,616 36,685 37,249 2 Total vault cash2 22,313 22,953 24,071 23,353 23,693 24,380 24,631 24,649 24,860 25,596 3 Vault3 18,958 20,522 22,199 21,587 21,873 22,475 22,728 22,745 23,128 23,857 4 Surplus 3,355 2,431 1,872 1,767 1,820 1,905 1,903 1,904 1,732 1,739 5 Total reserves 40,696 48,142 59,560 59,393 58,339 58,784 58,838 58,361 59,813 61,106 6 Required reserves 39,843 47,085 58,191 58,566 57,260 57,594 58,078 57,329 59,020 59,977 7 Excess reserve balances at Reserve Banks 853 1,058 1,369 827 1,079 1,190 761 1,032 793 1,128 8 Total borrowings at Reserve Banks 3,186 1,318 827 993 1,035 776 672 647 940 948 9 Seasonal borrowings at Reserve Banks 113 56 38 120 196 259 283 279 231 189 10 Extended credit at Reserve Banks 2,604 499 303 270 288 273 194 132 409 449 Biweekly averages of daily figures for weeks ending 1987 Aug. 26 Sept. 9 Sept. 23 Oct. 7 Oct. 21 Nov. 4 Nov. 18 Dec. 2 Dec. 16" Dec. 30" 11 Reserve balances with Reserve Banks1 35,173 36,294 36,866 36,826 36,672 38,353' 37,525' 37,069 38,302 37,119 12 Total vault cash2 25,074 24,288 25,146 25,026 26,183 25,174 25,188 25,802 25,372 26,960 13 Vault5 23,115 22,446 23,475 23,313 24,410 23,464 23,622' 23,999 23,833 25,100 14 Surplus ... % 1,959 1,842 1,672 1,713 1,773 1,710 1,566' 1,803 1,540 1,860 15 Total reserves 58,288 58,740 60,340 60,139 61,082 61,817' 61,147' 61,067 62,134 62,219 16 Required reserves 57,116 57,546 59,825 59,306 60,115 60,256 60,665 59,855 60,890 61,300 17 Excess reserve balances at Reserve Banks 1,173 1,194 515 833 967 1,561' 492' 1,213 1,245 920 18 Total borrowings at Reserve Banks 719 647 1,001 1,195 1,007 677 561 683 815 671 19 Seasonal borrowings at Reserve Banks .. 286 241 226 230 183 169 125 114 83 102 20 Extended credit at Reserve Banks 128 173 531 469 482 390 334 465 653 316 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 institutions having no required reserve balances. not the same need to repay such borrowing promptly as there is with traditional 4. Total vault cash at institutions having no required reserve balances less the short-term adjustment credit, the money market impact of extended credit is amount of vault cash equal to their required reserves during the maintenance similar to that of nonborrowed reserves. period. 8. Before February 1984, data are prorated monthly averages of weekly 5. Total reserves not adjusted for discontinuities consist of reserve balances averages; beginning February 1984, data are prorated monthly averages of with Federal Reserve Banks, which exclude required clearing balances and biweekly averages. adjustments to compensate for float, plus vault cash used to satisfy reserve NOTE. These data also appear in the Board's H.3 (502) release. For address, see requirements. Such vault cash consists of all vault cash held during the lagged inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • February 1988 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1 Averages of daily figures, in millions of dollars 1987 week ending Monday Maturity and source July 6r July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 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 66,856 74,019 74,109 69,704 68,682 68,983 72,747 71,952 2 For all other maturities 8,430 11,069 8,691 8,626 8,829 9,624 9,252 8,970 From other depository institutions, foreign banks and foreign official institutions, and United States government agencies 3 For one day or under continuing contract 33,067 26,598 33,873 31,478 31,316 32,783 32,923 32,524 4 For all other maturities 8,502 11,895 8,167 7,384 7,122 7,206 6,753 6,517 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 9,958 8,074 10,541 11,515 13,115 13,711 13,744 12,715 6 For all other maturities 12,793 12,327 11,214 10,797 11,725 12,209 12,363 12,546 All other customers 7 For one day or under continuing contract 25,518 22,809 25,558 26,375 26,482 27,082 27,417 27,613 8 For all other maturities 9,029 11,456 8,278 8,373 8,363 8,123 8,165 8,550 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 27,376 35,392 33,375 31,101 28,293 29,247 30,410 29,547 10 To all other specified customers 12,656 13,031 13,702 13,109 13,347 13,690 12,886 11,853 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. 2. Brokers and nonbank dealers in securities; other depository institutions; foreign banks and official institutions; and United States government agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels AAddjjuussttmmeenntt CCrreeddiitt Extended Credit2 aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall CCrreeddiitt11 First 30 days of Borrowing After 30 days of Borrowing3 BBBaaannnkkk 12/ O 31 n / 87 Ef D fe a c t t e i ve Pr R ev a i t o e us 12/ O 31 n / 87 Ef D fe a c t t e i ve Pr R ev a i t o e us 12/ O 3 n 1 /87 Ef D fe a c t t e i ve Pr R ev a i t o e us Effective Date Vi Boston 6 9/9/87 5 6 9/9/87 5 '/> 7.70 12/31/87 7.75 12/17/87 New York 9/4/87 9/4/87 12/31/87 12/17/87 Philadelphia 9/4/87 9/4/87 12/31/87 12/17/87 Cleveland 9/4/87 9/4/87 12/31/87 12/17/87 Richmond 9/5/87 9/5/87 12/31/87 12/17/87 Atlanta 9/4/87 9/4/87 12/31/87 12/17/87 Chicago 9/4/87 9/4/87 12/31/87 12/17/87 St. Louis 9/9/87 9/9/87 12/31/87 12/17/87 Minneapolis 9/8/87 9/8/87 12/31/87 12/17/87 Kansas City 9/4/87 9/4/87 12/31/87 12/17/87 Dallas 9/11/87 9/11/87 Vi 12/31/87 12/17/87 San Francisco ... 6 9/9/87 5'/! 6 9/9/87 5 7.70 12/31/87 7.75 12/17/87 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. Ba of n k Effective date A le l v l e F l) . — R. B o a f n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977. 6 66 V2 1980—July 28 10-11 10 1984—Apr. 9 8Vi>-9 9 1978-—Jan. 9 66-6V Vi 2 6V2 29 10 10 13 9 9K Vi May 2 1 0 1 6!/2-7 7 N Se o p v t . . 1 2 7 6 1 1 2 1 1 1 1 2 Nov. 2 2 1 6 88^->9 /2 m 12 7 7 Dec. 5 12-13 13 Dec. 24 8 8 July 1 3 0 7- 7 m 7 V 1/ 4 4 7 m V 4 1981—May 5 13-14 14 1985—May 20 lV IV i- i % 7VW/. i Aug. 21 73/4 8 14 14 24 Sept. 22 8 m8 Nov. 2 13-14 13 1-lVi 1 Oct. 16 8S-8 VW i 6 13 13 1986—Mar. 7 1 1 20 9Vl Dec. 4 12 12 10 m-i Nov. 1 UVl Apr. 21 6Vi 1979--July 20 3 9 1 '/ 0 > 9 1 V 0 I 1982—J A u u ly g . 2 2 2 3 0 1 1 1 1 l 1 l -l 41 lV / -1 ! t 2 ! 1 1 1 1 V 5 J A u u ly g . 2 1 1 2 1 2 5' 5 / 6 >V -6i 5 6 5 V V i i . Aug. 2 1 0 7 10I-1O0WV 2 l lO O V te i 1 3 6 I1O1 V2 1 10 1 W 1987—Sept. 4 5Vi-6 6 Sept. 19 10^-11 11 27 10-10W 10 11 6 6 21 11 11 30 10 10 Oct. 8 11-12 12 Oct. 12 9^-10 9V2 In effect December 31, 1987 6 6 10 12 12 13 9V4 9'/2 Nov. 22 9-9 Yl 9 1980--Feb. 1 1 9 5 12 1 - 3 1 3 1 1 3 3 Dec. 2 1 6 4 m9~ 9 9 9 May 29 12-13 13 15 8i/>-9 SV2 30 12 12 17 SV2 8VS 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 Vi percent higher. quarter. A 3 percent surcharge was in effect from Mar. 17, 1980 through May 7, 2. Extended credit is available to depository institutions, where similar assis- 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was tance is not reasonably available from other sources, when exceptional circum- adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and stances or practices involve only a particular institution or when an institution is to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981 the experiencing difficulties adjusting to changing market conditions over a longer formula for applying the surcharge was changed from a calendar quarter to a period of time. moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. 3. For extended-credit loans outstanding more than 30 days, a flexible rate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • February 1988 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Type of deposit, and Monetary Control Act deposit interval2 Effective date Net transaction accounts ' $0 million-$40.5 million 12/30/86 More than $40.5 million ... 12/30/86 Nonpersonal time deposits5 By original maturity Less than 1 Vi years 10/6/86 1 Vi years or more 10/6/83 Eurocurrency liabilities All types 11/13/80 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. Nonmem- other transaction accounts, the exemption applies only to such accounts that bers may maintain reserve balances with a Federal Reserve Bank indirectly on a would be subject to a 3 percent reserve requirement. pass-through basis with certain approved institutions. For previous reserve 3. Transaction accounts include all deposits on which the account holder is requirements, see earlier editions of the Annual Report and of the FEDERAL permitted to make withdrawals by negotiable or transferable instruments, pay- RESERVE BULLETIN. Under provisions of the Monetary Control Act, depository ment orders of withdrawal, and telephone and preauthorized transfers in excess of institutions include commercial banks, mutual savings banks, savings and loan three per month for the purpose of making payments to third persons or others. associations, credit unions, agencies and branches of foreign banks, and Edge However, MMDAs and similar accounts subject to the rules that permit no more 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. 15, 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 Apr. May June July Aug. Sept. Oct. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 20,036 22,214 22,602 4,226 1,697 575 575 499 4,528 1,095 2 Gross sales 8,557 4,118 2,502 653 0 22 912 0 0 300 J Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 7,700 3,500 1,000 0 0 0 4,572 0 3,657 0 Others within 1 year 5 Gross purchases 1,126 1,349 190 1,232 0 535 0 0 443 300 B Gross sales 0 0 0 0 0 0 0 0 300 0 / Maturity shift 16,354 19,763 18,673 1,375 4,063 1,715 1,437 2,723 1,500 816 8 Exchange -20,840 -17,717 -20,179 -522 -1,336 -1,812 -613 -1,787 -917 -1,178 9 Redemptions 0 0 0 0 0 0 0 0 * 0 1 to 5 years 10 Gross purchases 1,638 2,185 893 3,642 0 1,394 0 5 2,551 0 11 Gross sales 0 0 0 0 0 0 200 0 0 0 12 Maturity shift -13,709 -17,459 -17,058 -1,373 -1,804 -1,715 -1,397 -2,122 -1,500 -761 13 Exchange 16,039 13,853 16,984 522 1,111 1,812 613 1,612 917 1,178 5 to 10 years 14 Gross purchases 536 458 236 914 0 312 0 0 619 0 IS Gross sales 300 100 0 0 0 0 0 0 0 0 16 Maturity shift -2,371 -1,857 -1,620 -3 -2,259 0 -40 -601 0 -55 17 Exchange 2,750 2,184 2,050 0 150 0 0 100 0 0 Over 10 years 18 Gross purchases 441 293 158 669 0 251 0 0 493 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -275 -447 0 0 0 0 0 0 0 0 21 Exchange 2,052 1,679 1,150 0 75 0 0 75 0 0 All maturities 22 Gross purchases 23,776 26,499 24,078 10,683 1,697 3,066 575 504 8,633 1,395 23 Gross sales 8,857 4,218 2,502 653 0 22 1,112 0 300 300 24 Redemptions 7,700 3,500 1,000 0 0 0 4,572 0 3,657 0 Matched transactions 25 Gross sales 808,986 866,175 927,997 83,822 91,642 87,228 80,304 60,731 61,321 77,497 26 Gross purchases 810,432 865,968 927,247 82,494 92,137 87,128 80,037 62,594 61,347 73,779 Repurchase agreements2 2277 Gross purchases 127,933 134,253 170,431 37,653 59,340 24,167 3,298 9,013 34,080 65,675 28 Gross sales 127,690 132,351 160,268 23,881 73,111 22,108 2,058 12,311 34,080 57,380 29 Net change in U.S. government securities 8,908 20,477 29,989 22,474 -11,580 5,002 -4,136 -931 4,702 5,673 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 37 * 0 59 0 0 56 Repurchase agreements2 33 Gross purchases 11,509 22,183 31,142 9,265 16,071 3,907 929 2,369 7,174 18,523 34 Gross sales 11,328 20,877 30,522 5,908 19,428 2,910 996 3,298 7,174 15,607 35 Net change in federal agency obligations -76 1,144 222 3,320 -3,357 997 -126 -929 0 2,860 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 25,794 -14,936 5,999 -4,262 •1,861 4,702 8,533 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 DomesticN onfinancial Statistics • February 1988 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1987 1987 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 Sept. Oct. Nov. Consolidated condition statement ASSETS 1 Gold certificate account 11,085 11,085 11,084 11,083 11,083 11,075 11,085 11,082 2 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3 455 456 449 450 443 449 461 446 Loans 4 To depository institutions 753 573 473 662 602 1,941 587 790 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 7,568 7,567 7,567 7,567 7,567 7,623 7,567 7,567 8 Held under repurchase agreements 4,078 0 788 380 0 0 2,916 2,277 U.S. Treasury securities Bought outright 9 Bills 104,998 103,878 104,362 105,894 108,497 105,785 102,863 106,457 10 Notes 78,844 78,994 79,189 79,154 79,274 78,544 78,844 79,345 11 Bonds 27,611 27,612 27,612 27,762 27,761 27,612 27,612 27,761 12 Total bought outright 211,453 210,484 211,163 212,810 215,532 211,941 209,319 213,563 13 Held under repurchase agreements 8,254 0 2,670 190 0 0 8,295 5,397 14 Total U.S. Treasury securities 219,707 210,484 213,833 213,000 215,532 211,941 217,614 218,960 15 Total loans and securities 232,106 218,624 222,661 221,609 223,701 221,505 228,684 229,594 16 Items in process of collection 7,870 7,337 8,028 8,144 6,571 7,532 7,197 44,,990011 17 Bank premises 694 698 698 643 697 688 698 669988 Other assets 18 Denominated in foreign currencies3 8,071 8,217 8,034 7,854 7,864 8,038 8,268 8,064 19 All other4 8,374 7,980 8,412 6,285 6,444 8,344 8,637 6,688 20 Total assets 273,673 259,415 264,384 261,086 261,821 262,649 270,048 266,491 LIABILITIES 21 Federal Reserve notes 202,292 204,084 205,956 206,354 207,459 199,680 220022,,771122 220077,,887733 Deposits 22 To depository institutions 43,379 37,535 39,473 37,649 38,188 39,027 43,187 41,781 23 U.S. Treasury—General account 14,324 3,149 3,260 2,921 2,767 9,120 8,898 3,594 24 Foreign—Official accounts 301 297 198 194 261 456 236 352 25 Other 371 328 325 310 482 419 477 450 26 Total deposits 58,375 41,309 43,256 41,074 41,698 49,022 52,798 46,177 27 Deferred credit items 5,839 6,743 7,417 6,619 5,596 7,284 6,588 4,473 28 Other liabilities and accrued dividends 2,807 2,599 2,792 2,746 2,720 2,386 3,134 2,985 29 Total liabilities 269,313 254,735 259,421 256,793 257,473 258,372 265,232 261,508 CAPITAL ACCOUNTS 30 Capital paid in 2,017 2,021 2,023 2,026 2,032 2,009 2,019 2,032 31 Surplus 1,873 1,873 1,873 1,853 1,853 1,873 1,873 1,873 32 Other capital accounts 470 786 1,067 414 463 395 924 1,078 33 Total liabilities and capital accounts 273,673 259,415 264,384 261,086 261,821 262,649 270,048 266,491 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international account 188,156 188,247 188,770 192,067 191,618 182,078 188,928 193,044 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 253,666 253,834 254,111 254,473 254,458 252,932 253,538 254,499 36 LESS: Held by bank 51,374 49,750 48,155 48,119 46,999 53,252 50,826 46,626 37 Federal Reserve notes, net 202,292 204,084 205,956 206,354 207,459 199,680 220022,,771122 220077,,887733 Collateral held against notes net: 38 Gold certificate account 11,085 11,085 11,084 11,083 11,083 11,075 11,085 11,082 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 186,189 187,981 189,854 190,253 191,358 183,587 186,609 191,773 42 Total coUateral 202,292 204,084 205,956 206,354 207,459 199,680 202,712 207,873 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 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 Sept. 30 Oct. 30 Nov. 30 1 Loans—Total 753 573 473 662 602 1,941 587 790 2 Within 15 days 715 517 423 629 585 1,878 525 765 3 16 days to 90 days 38 56 50 33 17 61 62 25 4 91 days to 1 year 0 0 0 0 0 2 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. Treasury securities—Total 219,707 210,484 213,833 213,000 215,532 211,941 217,614 218,960 10 Within 15 days' 19,528 10,027 9,591 11,289 13,426 12,767 13,609 9,805 11 16 days to 80 days 51,179 47,698 51,502 45,820 49,133 49,795 51,679 52,165 12 91 days to 1 year 66,894 70,014 69,995 72,139 69,221 67,296 70,220 72.716 13 Over 1 year to 5 years 42,513 43,152 43,152 44,056 44,056 42,435 42,513 44,580 14 Over 5 years to 10 years 14,764 14,764 14,764 14,717 14,717 14,819 14,764 14.717 15 Over 10 years 24,829 24,829 24,829 24,979 24,979 24,829 24,829 24,977 16 Federal agency obligations—Total 11,646 7,567 8,355 7,947 7,567 7,623 10,483 9,843 17 Within 15 days' 4,218 0 895 727 240 359 3,056 2,527 18 16 days to 90 days 757 902 794 579 619 602 757 568 19 91 days to 1 year 1,474 1,469 1,583 1,558 1,668 1,446 1,474 1,621 20 Over 1 year to 5 years 3,574 3,574 3,460 3,460 3,437 3,615 3,574 3,524 21 Over 5 years to 10 years 1,407 1,407 1,407 1,407 1,387 1,321 1,407 1,387 22 Over 10 years 216 215 216 216 216 280 215 216 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 • February 1988 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1987 1983 1984 1985 1986 IItteemm Dec. Dec. Dec. Dec. Apr. May June July Aug. Sept. Oct/ Nov. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS1 1 Total reserves2 36.11 39.91 46.06 56.17 57.95 58.35 57.71 57.60 57.88 57.83 58.50 58.00 2 Nonborrowed reserves 35.33 36.72 44.74 55.34 56.96 57.32 56.93 56.93 57.23 56.89 57.55 57.38 3 Nonborrowed reserves plus extended credit 35.33 39.33 45.24 55.64 57.23 57.60 57.20 57.12 57.36 57.29 58.00 57.77 4 Required reserves 35.55 39.06 45.00 54.80 57.13 57.27 56.52 56.84 56.84 57.03 57.37 57.07 5 Monetary base 185.23 199.60 217.32 239.51 246.59 248.37 248.48 249.46 250.80 251.85 254.35 256.12 Not seasonally adjusted 6 Total reserves2 36.81 40.94 47.24 57.64 58.37 57.30 57.63 57.74 57.39 57.50 58.04 58.11 7 Nonborrowed reserves 36.04 37.75 45.92 56.81 57.38 56.26 56.85 57.07 . 56.74 56.56 57.09 57.48 8 Nonborrowed reserves plus extended credit 36.04 40.35 46.42 57.11 57.65 56.55 57.12 57.27 56.88 56.96 57.54 57.88 9 Required reserves 36.25 40.08 46.18 56.27 57.54 56.22 56.43 56.98 56.36 56.70 56.91 57.17 10 Monetary base4 188.50 202.70 220.82 243.63 246.07 246.83 249.29 251.42 251.42 251.60 253.29 256.86 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 38.89 40.70 48.14 59.56 59.39 58.34 58.78 58.84 58.36 59.81 61.11 61.22 17 Nonborrowed reserves 38.12 37.51 46.82 58.73 58.40 57.30 58.01 58.17 57.71 58.87 60.16 60.59 13 Nonborrowed reserves plus extended credit 38.12 40.09 47.41 59.04 58.19 58.03 58.34 58.37 57.76 58.85 61.22 60.80 14 Required reserves 38.33 39.84 47.08 58.19 58.57 57.26 57.59 58.08 57.33 59.02 59.98 60.28 15 Monetary base 192.26 204.18 223.53 247.71 249.24 249.94 252.54 254.67 254.36 255.69 258.08 261.71 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 disconti- requirements (CRR), currency and vault cash figures are measured over the nuities in the monetary base, required clearing balances and adjustments to weekly computation period ending Monday. compensate for float also are subtracted from the actual series. Before CRR, all components of the monetary base other than excess reserves 2. Total reserves not adjusted for discontinuities consist of reserve balances are seasonally adjusted as a whole, rather than by component, and excess with Federal Reserve Banks, which exclude required clearing balances and reserves are added on a not seasonally adjusted basis. After CRR, the seasonally adjustments to compensate for float, plus vault cash 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 . July' Aug. Sept.' Oct. Seasonally adjusted 1 Ml 526.9 557.5 627.0 730.5 751.1 751.3 760.7 756.6 2 M2 2,184.6 2,369.1 2,569.5 2,801.2 2,862.8 2,876.0' 2,892.8 2,892.3 M3 2,692.8 2,985.4 3,205.2 3,492.2 3,603.9 3,620.5' 3,643.9 3,658.4 4 L 3,154.6 3,528.1 3,837.6 4,139.9 4,253.0 4,282.2' 4,317.5 n.a. 5 Debt 5,195.5 5,932.9 6,746.9 7,598.5' 8,038.1 8,098.0' 8,161.5 n.a. Ml components 6 Currency 148.3 158.5 170.6 183.5 193.2 194.5 196.2 198.4 7 Travelers checks 4.9 5.2 5.9 6.4 6.9 7.0 7.0 7.0 8 Demand deposits 242.3 248.3 272.2 308.3 296.4 294.1 300.4 295.7 9 Other checkable deposits 131.4 145.5 178.3 232.2 254.6 255.6 257.2 255.6 Nontransactions components 10 In M26 1,657.7 1,811.5 1,942.5 2,070.7 2,111.7 2,124.7' 2,132.0 2,135.7 11 In M3 only 508.2 616.3 635.7 691.0 741.1 744.5' 751.2 766.1 Savings deposits8 12 Commercial Banks 133.2 122.2 124.6 154.5 178.0 178.0 177.5 177.0 13 Thrift institutions 173.0 166.6 179.0 211.8 241.8 241.3 239.3 235.0 Small denomination time deposits9 14 Commercial Banks 350.9 386.6 383.9 364.7 365.4 367.3 373.0 380.9 15 Thrift institutions 432.9 498.6 500.3 488.7 500.1 504.3 509.9 520.8 Money market mutual funds 16 General purpose and broker/dealer 138.2 167.5 176.5 207.6 212.2 215.5' 218.1 220.2 17 Institution-only 43.2 62.7 65.1 84.1 83.4 80.7 81.6 88.5 Large denomination time deposits10 18 Commercial Banks 230.0 269.6 284.1 291.8 313.7 313.6 317.0 323.2 19 Thrift institutions 96.2 147.3 152.1 155.3 153.1 155.3 159.1 162.7 Debt components 20 Federal debt 1,170.8 1,365.3 1,584.3 1,804.5' 1,902.8 1,913.1' 1,919.3 n.a. 21 Nonfederal debt 4,024.6 4,567.6 5,162.6 5,794.0r 6,135.3 6,184.9' 6,242.1 n.a. Not seasonally adjusted ?,?, Ml 538.3 570.3 641.0 746.5 749.4 749.4 757.7 759.7 23 M2 2,191.6 2,378.3 2,580.5 2,814.7 2,860.8 2,868.8' 2,888.7 2,894.7 24 M3 2,702.4 2,997.2 3,218.4 3,507.5 3,599.4 3,615.2' 3,639.6 3,662.7 25 L 3,163.1 3,538.8 3,849.4 4,153.3 4,249.6 4,277.0' 4,311.4 n.a. 26 Debt 5,189.7 5,927.1 6,740.6r 7,591.7' 8,016.5 8,081.9' 8,147.3 n.a. Ml components 27 Currency 150.6 160.8 173.1 186.2 194.1 194.3 195.9 199.3 28 Travelers checks 4.6 4.9 5.5 6.0 7.9 7.6 7.0 6.6 29 Demand deposits 251.0 257.2 282.0 319.5 294.8 293.3 299.8 298.0 30 Other checkable deposits 132.2 147.4 180.4 235.0 252.6 254.3 255.0 255.8 Nontransactions components 31 M26 1,653.3 1,808.0 1,939.5 2,068.2 2,111.4 2,119.4' 2,131.0 2,134.9 32 M3 only7 510.8 618.9 637.9 692.8 738.6 746.4' 750.9 768.0 Money market deposit accounts 33 Commercial Banks 230.4 267.4 332.5 379.0 364.1 362.5 359.1 357.2 34 Thrift institutions 148.5 150.0 180.7 192.4 179.6 176.8 173.6 169.2 Savings deposits8 35 Commercial Banks 113322..22 121.4 123.9 153.8 178.2 177.9 178.3 177.3 36 Thrift institutions 172.4 166.2 178.8 211.8 240.0 239.2 239.4 235.9 Small denomination time deposits9 37 Commercial Banks 351.1 386.7 383.8 364.4 366.8 369.0 374.0 381.5 38 Thrift institutions 433.5 499.6 501.5 489.8 499.3 503.6 511.1 522.2 Money market mutual funds 39 General purpose and broker/dealer 138.2 167.5 176.5 207.6 212.2 215.5' 218.1 220.2 40 Institution-only 43.2 62.7 65.1 84.1 83.4 80.7 81.6 88.5 Large denomination time deposits10 41 Commercial Banks 231.6 271.2 285.6 293.2 313.1 314.9 318.3 324.0 42 Thrift institutions 96.3 147.3 151.9 154.9 153.2 155.7 159.5 162.8 Debt components 43 Federal debt 11,,117700..22 1,364.7 1,583.7 1,804.0' 1,887.7 1,900.2' 1,909.8 n.a. 44 Nonfederal debt 4,019.5 4,562.4 5,156.9 5,787.8' 6,128.8 6,181.7' 6,237.5 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • February 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 nongovernment, and foreign banks and official institutions less cash items in the bank issuers. Travelers checks issued by depository institutions are included in process of collection and Federal Reserve float; and (4) other checkable deposits demand deposits. (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer 4. Demand deposits at commercial banks and foreign-related institutions other service (ATS) accounts at depository institutions, credit union share draft than those due to domestic banks, the U.S. government, and foreign banks and accounts, and demand deposits at thrift institutions. The currency and demand official institutions less cash items in the process of collection and Federal deposit components exclude the estimated amount of vault cash and demand Reserve float. Excludes the estimated amount of demand deposits held at deposits respectively held by thrift institutions to service their OCD liabilities. commercial banks by thrift institutions to service their OCD liabilities. M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) 5. Consists of NOW and ATS balances at all depository institutions, credit issued by all commercial banks and overnight Eurodollars issued to U.S. residents union share draft balances, and demand deposits at thrift institutions. Other by foreign branches of U.S banks worldwide, MMDAs, savings and small- checkable deposits seasonally adjusted equals the difference between the seasondenomination time deposits (time deposits—including retail RPs—in amounts of ally adjusted sum of demand deposits plus OCD and seasonally adjusted demand less than $100,000), and balances in both taxable and tax-exempt general purpose deposits. Included are all ceiling free "Super NOWs," authorized by the and broker/dealer money market mutual funds. Excludes individual retirement Depository Institutions Deregulation committee to be offered beginning Jan. 5, accounts (IRA) and Keogh balances at depository institutions and money market 1983. funds. Also excludes all balances held by U.S. commercial banks, money market 6. Sum of overnight RPs and overnight Eurodollars, money market fund funds (general purpose and broker/dealer), foreign governments and commercial balances (general purpose and broker/dealer), MMDAs, and savings and small banks, and the U.S. government. Also subtracted is a consolidation adjustment time deposits, less the consolidation adjustment that represents the estimated that represents the estimated amount of demand deposits and vault cash held by amount of demand deposits and vault cash held by thrift institutions to service thrift institutions to service their time and savings deposits. their time and savings deposits liabilities. M3: M2 plus large-denomination time deposits and term RP liabilities (in 7. Sum of large time deposits, term RPs, and term Eurodollars of U.S. amounts of $100,000 or more) issued by commercial banks and thrift institutions, residents, money market fund balances (institution-only), less a consolidation term Eurodollars held by U.S. residents at foreign branches of U.S. banks adjustment that represents the estimated amount of overnight RPs and Eurodolworldwide and at all banking offices in the United Kingdom and Canada, and lars held by institution-only money market funds. balances in both taxable and tax-exempt, institution-only money market mutual 8. Savings deposits exclude MMDAs. funds. Excludes amounts held by depository institutions, the U.S. government, 9. SmnaD-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. Bank group, or type of customer 1986 Apr. May June July Aug. Sept. DEBITS TO Seasonally adjusted Demand deposits 1 All insured banks 131,463.1 156,091.6 188,345.8'' 217,797.2'' 217,397.2' 212,414.4' 219,501.3' 221,729.0' 219,174.5 2 Major New York City banks 57,327.3 70,585.8 91,397.3'' 105,186.5' 107,724.1' 103,027.6' 106,428.9' 109,062.5' 105,161.2 3 Other banks 74,135.9 85,505.9 96,948.8'' 112,610.7' 109,673.1' 109,386.8' 113,072.3' 112,666.5' 114,013.3 4 ATS-NOW accounts4 1,549.1 1,823.5 2,182.5 2,384.2' 2,310.5 2,417.6' 2,498.7 2,333.1' 2,343.0 5 Savings deposits 414.7 384.9 403.5 508.1 488.5 565.8' 548.2 518.8' 523.6 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 441.0 500.3 556.5 607.0 598.5' 601.6 628.6 623.3 626.3 7 Major New York City banks 1,837.2 2,196.9 2,498.2' 2,670.3' 2,629.5' 2,671.6' 2,837.4' 2,718.2' 2,714.2 8 Other banks 277.8 305.7 321.2 352.6 340.3 347.8 362.8 357.0 366.4 9 ATS-NOW accounts4 15.3 15.8 15.6 13.8 13.3 13.9 14.3 13.2 13.2 10 Savings deposits 3.3 3.2 3.0 3.0 2.8 3.3 3.1 3.0 3.0 DEBITS TO Not seasonally adjusted Demand deposits 11 All insured banks 131,450.6 156,052.3 188,506.4' 228,142.6 208,310.0 221,038.4 228,764.2 214,145.9 216,710.3 12 Major New York City banks 57,282.4 70,559.2' 91,500.0 111,399.0 101,203.2 106,171.3 111,157.7 103,822.8 104,234.0 13 Other banks 74,164.2 85,493.1 97,006.6 116,743.5 107,106.7 114,867.0 117,606.5 110,323.1 112,476.2 14 ATS-NOW accounts4 1,552.2 1,826.4 2,184.6 2,564.0 2,262.9 2,466.9 2,466.0 2,226.4 2,408.9 15 MMDA® 862.3 1,223.9 1,609.4 2,175.9 1,851.2 1,987.9 2,002.7 1,752.7 1,833.2 16 Savings deposits 415.2 385.3 404.1 563.3 483.7 565.2 576.5 524.2 518.6 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 441.1 499.9 556.7 634.8 584.0 625.0 651.7 612.5 621.2 18 Major New York City banks 1,838.6 2,196.3 2,499.1 2,825.8 2,556.8 2,801.5 2,928.4 2,721.9 2,751.0 19 Other banks 277.9 305.6 321.2 364.9 337.8 363.8 375.7 354.2 361.7 20 ATS-NOW accounts4 15.4 15.8 15.6 14.4 13.2 14.3 14.3 12.8 13.7 21 MMDA° 3.5 4.0 4.5 5.8 5.1 5.4 5.5 4.8 5.1 22 Savings deposits 3.3 3.2 3.0 3.3 2.8 3.3 3.3 3.0 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 • February 1988 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1986 1987 Category Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Seasonally adjusted 1 Total loans and securities2 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 2,223.4 2 U.S. government securities 309.9 316.3 315.2 314.3 315.8 320.1 316.9 319.8 328.6 331.7 332.3 331.0 4 3 T O o th ta e l r l s o e a c n u s ri a t n ie d s leases2 1,5 1 8 9 3 6 . . 0 9 1,6 1 1 9 1 0 . . 8 2 1,6 1 1 9 0 3 . . 7 8 1,6 1 1 9 6 5 . . 4 5 1,6 1 3 9 4 7 . . 3 2 1,6 1 4 9 2 7 . . 9 6 1,6 1 5 9 1 8 . . 7 5 1,6 1 5 9 2 6 . . 8 9 1,6 1 6 9 5 4 . . 5 9 1,6 1 8 9 0 4 . . 4 6 1,6 1 9 9 9 4 . . 3 3 ' 1,6 1 9 9 6 6 . . 0 4 5 Commercial and industrial ..... 541.4 554.1 553.8 551.7 553.9 555.9 558.0 555.5 555.6 560.5 565.7 567.0 6 Bankers acceptances held ... 6.4 6.8 6.8 6.2 6.5 6.8 6.8 6.7 7.5 7.5 7.7 7.1 7 Other commercial and 9 8 N U i o . n S n d . - u U a s d . t S r d i . r a e l a s d s d e r e e s s 4 sees4 5 5 3 2 9 5 5 . . . 3 0 7 5 5 4 3 9 7 7 . . . 4 2 8 5 5 4 3 9 6 7 . . . 0 9 9 5 5 4 3 8 5 6 . . . 6 5 9 5 5 4 3 8 7 9 . . . 4 4 0 5 5 4 4 8 9 0 . . . 1 0 9 5 5 5 4 8 1 2 . . . 4 2 8 5 5 4 4 8 8 0 . . . 3 9 6 5 5 4 4 8 8 0 . . . 1 1 0 5 5 5 4 8 3 5 . . . 1 1 0 5 5 5 5 7 8 0 . . . 9 0 0 5 55 5 7 2 9 . . . 7 2 9 10 Real estate 489.0 499.2 504.0 511.0 517.9 526.3 537.2 544.1 551.3 556.2 564.3 570.9 11 Individual 314.2 314.9 315.2 315.7 316.6 316.7 314.5 314.6 316.9 318.9 320.4 321.6 12 Security 38.7 37.7 38.5 38.3 43.6 42.0 42.2 41.7 44.0 45.2r 46.4' 38.8 13 Nonbank financial institutions 35.2 35.7 34.7 35.0 35.4 35.4 33.9 31.9 30.9 30.8 31.5 31.6 14 Agricultural 31.8 31.4 30.8 30.0 29.8 29.9 29.9 30.0 30.2 30.2 30.4 30.8 15 State and political subdivisions 57.9 57.8 57.2 57.0 56.0 55.2 54.4 53.2 52.6 52.5 52.5' 52.1 16 Foreign banks 10.4 10.6 10.3 9.7 9.9 9.9 10.3 9.4 9.5 9.8 lO^ 9.2 17 Foreign official institutions 5.8 5.9 6.1 6.7 6.7 5.8 5.3 5.2 5.1 5.1 5.4' 5.2 18 Lease financing receivables 22.2 22.1 22.2 22.3 22.6 22.9 23.1 23.2 23.3 23.8 23.8 24.1 19 All other loans 36.4 42.4 38.0 38.9 41.9 43.1 42.8' 44.0 46.1 47.3' 48.C 45.0 Not seasonally adjusted 20 Total loans and securities2 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 2,204.2 2,216.1 2,224.2 21 U.S. government securities 308.3 314.6 318.9 317.2 317.7 319.7 317.4 321.0 327.5 330.4 328.4 330.3 2 2 2 3 O To 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 9 9 8 8 . . 7 1 1,6 1 1 9 5 3 . . 4 7 1,6 1 0 9 8 4. . 1 6 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 . . 4 8 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 1,6 1 7 9 8 5 . . 2 5 1,6 1 9 9 2 4 . . 9 8 1,6 1 9 9 7 6 . . 0 9 2 2 4 5 Co B m a m nk e e rc rs ia l a c a c n e d p t i a n n d c u e s s t ri h al e ld .. 3. . . . 54 6 4 . . 7 3 55 6 2 . . 7 4 55 6 1 . . 7 7 55 6 4 . . 2 5 55 6 6 . . 4 5 55 6 7 . . 7 5 55 6 9 . . 9 1 55 6 4 . .6 7 r 55 7 2 . . 4 7 55 7 9 . . 6 3 56 7 3 . . 5 0 56 7 6 . . 2 6 26 Other commercial and 27 U.S. i n a d d u d s r t e ri s a s l e es4 5 5 3 2 7 8 . . 6 8 5 5 4 3 5 7 . . 8 1 5 5 3 4 6 5 . . 3 0 5 5 4 3 8 9 . . 3 9 5 5 5 4 0 1 . . 0 6 5 54 5 2 0 . . 5 8 5 54 5 3 2 . . 7 3 5 5 4 3 7 9 . . 8 0 5 5 4 3 5 6 . . 3 8 5 5 5 4 1 3 . . 7 3 5 5 5 4 5 7 . . 5 2 5 5 5 5 9 1 . . 4 0 28 Non-U.S. addressees 8.8 8.7 8.7 8.4 8.4 8.3 8.6 8.8 8.5 8.4 8.3 8.4 29 Real estate 489.9 499.3 503.1 509.8 516.7 525.4 536.8 544.3 551.5 557.3 565.3 572.1 30 Individual 317.8 317.9 314.7 313.3 314.4 314.8 313.2 313.5 316.7 319.8 321.4 322.7 31 Security 41.0 39.4 37.5 38.6 45.1 42.0 43.0 40.9 41.5 43.6' 44.8' 39.0 32 Nonbank financial institutions 36.3 35.7 33.8 33.8 34.8 34.9 34.0' 31.9 31.1 31.5 31.6' 32.1 33 Agricultural 31.5 30.7 29.9 29.1 29.1 29.7 30.3 30.7 31.0 31.1 31.1 30.9 34 State and political subdivisions 57.9 57.8 57.2 57.0 56.0 55.2 54.4 53.2 52.6 52.5 52.5' 52.1 35 Foreign banks 10.9 10.7 10.5 9.7 9.5 9.6 10.0 9.4 9.3 10.0 lo.y 9.3 36 Foreign official institutions 5.8 5.9 6.1 6.7 6.7 5.8 5.3 5.2 5.1 5.1 5.4' 5.2 37 Lease financing receivables ... 22.2 22.4 22.4 22.5 22.7 22.9 23.2 23.1 23.2 23.6 23.5 23.8 38 All other loans 41.2 43.1 41.5 41.2 43.9 43.6 43.2 42.0 42.9 44.4 43.3' 43.3 1. These data also appear in the Board's G.7 (407) release. 3. Includes nonfinancial commercial paper held. 2. Excludes loans to commercial banks in the United States. 4. United States includes the 50 states and the District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1986 1987 SSoouurrccee Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Total nondeposit funds 1 Seasonally adjusted 146.5 155.2 159.6 164.1 160.9 169.6 165.8 158.8 165.5r 177.0' 175.8 173.0 2 Not seasonally adjusted 146.6 154.7 162.3 166.5 161.0 170.4 163. V 155.6 165.6 176.3 174.9' 174.6 Federal funds, RPs, and other borrowings from nonbanks 3 Seasonally adjusted 165.5 171.0 171.6 170.4 171.3 169.6 167.7 166.5 166.9 166.0 165.5' 166.3 4 Not seasonally adjusted 165.7 170.5 174.3 172.7 171.4 170.4 165.0 163.3 167.0 165.4' 164.5 167.9 5 Net balances due to foreign-related institutions, not seasonally adjusted -19.0 -15.7 -12.0 -6.3 -10.4 .0 -1.9 -7.8 -1.4' 10.9 10.3' 6.7 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -30.6 -26.1 -23.8 -21.1 -23.0 -15.5 -15.5 -22.2 -17.7 -11.8 -14.7 -17.0 7 Gross due from balances 73.3 71.5 68.3 66.0 70.5 68.5 67.1 66.4 64.5 64.3 68.1 70.8 8 Gross due to balances 42.7 45.4 44.5 44.9 47.5 53.0 51.5 44.2 46.8 52.5 53.4' 53.8 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted 11.5 10.4 11.8 14.8 12.6 15.5 13.6 14.5 16.3' 22.7 25.0 23.7 10 Gross due from balances 70.9 75.1 72.9 71.1 72.7 75.5 77.2 77.2 77.5 77.1 79.6 83.1 11 Gross due to balances 82.5 85.5 84.7 85.9 85.3 91.0 90.8 91.7 93.8 99.8 104.6 106.9 Security RP borrowings 12 Seasonally adjusted® 98.5 101.1 97.7 95.1 98.6 99.2 101.4 102.5 105.2 108.6 108.6 107.6 13 Not seasonally adjusted 98.6 100.6 100.4 97.4 98.7 100.0 98.7 99.4 105.3 107.9 107.7 109.2 U.S. Treasury demand balances 14 Seasonally adjusted 21.2 21.3 23.2 17.7 20.7 26.1 27.9 24.7 29.1 23.3 35.6 38.6 15 Not seasonally adjusted 19.2 27.5 28.6 17.1 21.6 30.8 25.5 26.6 21.6 25.5 30.7 25.8 Time deposits, $100,000 or more8 16 Seasonally adjusted 345.6 350.1 351.1 354.1 359.8 366.2 372.9 371.8 370.9 370.5 377.8 385.0 17 Not seasonally adjusted 347.0 351.3 353.2 356.4 357.2 364.8 369.8 368.6 370.2 371.7 379.0 385.8 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 • February 1988 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1987 Account Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 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 2,396.9 2,385.2 2 Investment securities 482.2 484.7 486.2 492.5 495.4 493.2 497.7 501.7 502.6 504.1 508.6 3 U.S. government securities 296.1 298.8 299.5 305.1 307.0 303.4 308.2 312.7 312.7 314.9 316.6 4 Other 186.1 185.9 186.7 187.5 188.4 189.8 189.4 189.0 189.9 189.2 192.0 5 Trading account assets 26.4 29.0 25.2 23.3 21.4 20.2 20.4 20.0 19.5 19.7 20.3 6 Total loans 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 1,873.1 1,856.3 7 Interbank loans 160.1 156.7 154.3 151.8 160.4 150.9 157.5 162.5 158.3 174.2 163.0 8 Loans excluding interbank 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 1,698.9 1,693.3 9 Commercial and industrial 551.1 551.5 555.3 555.5 558.2 558.0 551.8 551.6 564.6 564.1 566.2 10 Real estate 499.9 503.5 510.7 519.0 527.4 539.1 547.3 552.7 559.1 566.6 572.9 11 Individual 317.0 314.7 313.1 315.2 314.8 312.6 314.5 317.2 321.0 322.5 322.8 12 All other 248.3 239.2 234.4 248.9 241.3 239.5 235.2 236.6 243.6 245.6 231.4 13 Total cash assets 214.4 206.3 203.8 209.7 230.8 213.1 207.1 209.3 221.6 222.0 213.5 14 Reserves with Federal Reserve Banks. 33.4 28.4 31.1 29.8 37.9 33.8 32.8 37.6 33.3 38.6 34.1 15 Cash in vault 23.7 23.5 22.9 24.0 25.1 24.2 24.4 24.6 24.4 24.9 24.0 16 Cash items in process of collection ... 74.5 71.4 68.1 74.5 81.3 74.4 68.6 65.6 81.3 78.8 75.8 17 Demand balances at U.S. depository institutions 34.0 33.0 32.7 33.9 37.2 31.1 31.6 31.4 32.6 32.9 33.5 18 Other cash assets 48.8 50.1 49.0 47.5 49.3 49.7 49.6 50.0 50.0 46.8 46.2 19 Other assets 201.3 201.1 202.1 204.0 208.7 203.8 189.0 190.7 200.6 192.4 193.2 20 Total assets/total liabilities and capital 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 2,811.2 2,791.8 21 Deposits 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 1,967.4 1,970.1 22 Transaction deposits 577.8 569.2 568.8 590.7 596.9 578.2 573.7 572.6 610.7 596.5 590.4 23 Savings deposits 532.3 535.9 539.7 535.1 538.6 535.0 536.0 535.2 532.7 529.2 528.5 24 Time deposits 788.2 790.3 791.2 793.6 803.6 810.1 814.9 818.6 825.0 841.7 851.2 25 Borrowings 432.7 425.6 414.9 422.7 435.6 428.3 424.0 435.1 424.6 443.6 428.5 26 Other liabilities 188.0 184.6 188.7 195.2 200.3 201.3 201.1 209.2 225.0 226.9 220.3 27 Residual (assets less liabilities) 181.5 181.2 181.9 182.5 183.3 177.4 170.7 171.4 172.9 173.3 173.0 MEMO 28 U.S. government securities (including trading account) 314.5 320.1 316.7 318.9 320.6 315.8 322.6 326.3 326.6 328.8 331.0 29 Other securities (including trading account) 194.1 193.7 194.7 196.9 196.1 197.6 195.5 195.4 195.5 194.9 197.9 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 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 2,210.7 31 Investment securities 461.5 463.3 463.6 470.0 471.5 469.8 473.8 478.1 478.2 480.4 484.6 32 U.S. Treasury securities 286.8 289.2 289.4 295.2 296.7 294.0 298.4 302.7 302.1 304.8 305.9 33 Other 174.8 174.1 174.2 174.8 174.8 175.9 175.4 175.3 176.1 175.6 178.7 34 Trading account assets 26.4 29.0 25.2 23.3 21.4 20.2 20.4 20.0 19.5 19.7 20.3 35 Total loans 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 1,705.8 36 Interbank loans 134.3 130.5 124.1 124.2 128.6 121.5 122.9 129.5 124.8 133.1 129.6 37 Loans excluding interbank 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 1,576.3 38 Commercial and industrial 475.5 474.1 474.6 473.5 475.3 471.7 466.0 464.7 471.1 471.9 473.4 39 Real estate 493.2 497.0 504.1 512.0 520.3 532.1 539.9 544.9 551.1 558.9 564.9 40 Individual 316.7 314.4 312.7 314.9 314.5 312.3 314.2 316.8 320.6 322.2 322.5 41 All other 229.2 221.9 217.4 229.0 224.7 224.3 220.6 221.0 226.4 229.0 215.6 42 Total cash assets 196.6 188.9 186.5 192.5 213.2 195.3 189.1 190.1 201.4 205.1 196.6 43 Reserves with Federal Reserve Banks. 31.2 27.1 29.7 27.2 35.9 32.1 31.4 36.2 31.0 36.5 31.5 44 Cash in vault 23.6 23.5 22.8 24.0 25.0 24.1 24.4 24.6 24.4 24.9 23.9 45 Cash items in process of collection ... 74.0 71.0 67.7 74.0 80.9 73.9 68.1 65.1 80.7 78.2 75.4 46 Demand balances at U.S. depository institutions 32.2 31.1 31.1 31.9 35.1 29.3 29.8 29.8 30.6 31.1 31.8 47 Other cash assets 35.6 36.4 35.2 35.4 36.2 35.9 35.4 34.4 34.7 34.4 33.9 48 Other assets 141.5 144.0 143.4 144.4 143.1 134.4 121.8 121.5 135.9 131.1 124.4 49 Total assets/liabilities and capital 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 2,531.7 50 Deposits 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 1,908.5 51 Transaction deposits 569.4 561.3 560.5 582.2 588.4 569.7 565.6 564.3 602.0 587.8 581.9 52 Savings deposits 530.3 533.9 537.7 533.1 536.6 533.0 533.9 533.0 530.6 527.0 526.2 53 Time deposits 741.1 743.0 742.5 741.8 751.4 758.8 764.4 767.3 773.7 790.5 800.3 54 Borrowings 341.7 336.1 319.1 328.2 337.1 328.6 321.1 335.8 326.5 346.7 324.5 55 Other liabilities 114.0 110.8 113.0 119.1 118.8 117.1 116.1 117.6 126.5 129.1 128.8 56 Residual (assets less liabilities) 178.3 178.1 178.8 179.4 180.2 174.3 167.6 168.3 169.8 170.2 169.9 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 and insured nonmember banks. day of the month based on a sample of weekly reporting banks and quarter-end 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. 30' Oct. 7 Oct. 14r Oct. 21r Oct. 28r Nov. 4 Nov. 11 Nov. 18 Nov. 25 1 Cash and balances due from depository institutions 105,260 100,096 117,946 98,677 111,358 104,047 106,338 100,794 99,175 2 Total loans, leases and securities, net 1,015,743 1,010,425 1,012,098 1,030,451 1,025,873 1,028,725 1,019,353 1,019,937 1,013,391 3 U.S. Treasury and government agency 115,592 114,563 113,777 115,454 116,719 116,718 115,659 118,855 117,548 4 Trading acount 13,848 13,216 12,399 14,769 13,971 14,666 13,988 15,399 14,452 5 Investment account, by maturity 101,744 101,347 101,378 100,686 102,748 102,052 101,671 103,456 103,096 6 One year or less 16,930 16,936 17,019 16,748 16,028 15,884 15,953 15,934 15,798 7 Over one through five years 45,402 44,922 44,795 44,143 45,184 44,434 44,354 45,044 45,030 8 Over five years 39,413 39,490 39,564 39,794 41,536 41,734 41,363 42,478 42,268 9 Other securities 67,910 67,089 66,972 66,894 67,420 68,571 68,499 68,772 69,038 10 Trading account 2,943 2,382 2,385 2,470 2,623 2,596 2,467 2,415 2,551 11 Investment account 64,'967 64,707 64,587 64,424 64,798 65,975 66,031 66,357 66,486 12 States and political subdivisions, by maturity 48,512 48,223 48,172 48,055 48,090 47,846 47,797 47,598 47,541 13 One year or less 5,163 5,184 5,189 5,109 5,120 5,212 5,216 5,227 5,219 14 Over one year 43,349 43,039 42,983 42,946 42,970 42,633 42,580 42,370 42,322 15 Other bonds, corporate stocks, and securities 16,455 16,484 16,415 16,369 16,707 18,129 18,234 18,759 18,945 16 Other trading account assets 2,680 3,178 3,137 2,804 3,025 2,960 3,027 3,114 3,293 17 Federal funds sold1 65,820 65,558 66,163 74,313 69,345 74,436 69,181 66,010 61,422 18 To commercial banks 40,249 40,908 40,739 46,976 41,459 46,827 40,005 39,997 37,024 19 To nonbank brokers and dealers in securities 17,597 17,098 18,094 19,449 19,416 19,153 20,972 18,031 16,687 20 To others 7,974 7,552 7,330 7,887 8,470 8,455 8,204 7,982 7,712 21 Other loans and leases, gross 802,692 798,859 800,894 809,764 808,234 805,026 801,998 802,076 800,960 22 Other loans, gross 783,240 779,515 781,528 790,351 788,782 785,507 782,294 782,378 781,232 23 Commercial and industrial 275,160 274,229 273,962 273,675 275,102 276,798 276,220 276,269 275,525 24 Bankers acceptances and commercial paper 2,168 2,208 2,353 2,234 2,404 2,289 2,275 2,349 2,224 25 Mother 272,992 272,021 271,609 271,441 272,698 274,509 273,944 273,920 273,301 26 U.S. addressees 270,055 268,891 268,639 268,446 269,668 271,479 270,870 270,970 270,342 27 Non-U.S. addressees 2,937 3,130 2,970 2,994 3,030 3,030 3,075 2,950 2,959 28 Real estate loans 237,239 239,289 240,040 240,550 240,543 241,075 241,844 242,695 242,971 29 To individuals for personal expenditures 142,491 142,010 142,152 142,355 142,845 142,706 142,753 142,460 142,419 30 To depository and financial institutions 48,839 47,723 50,161 50,491 51,581 51,281 50,954 50,672 49,692 31 Commercial banks in the United States 20,575 20,236 21,446 22,322 22,751 22,363 22,669 21,992 22,038 32 Banks in foreign countries 4,772 4,510 5,696 5,2% 5,566 5,289 4,770 4,970 4,314 33 Nonbank depository and other financial institutions . 23,492 22,978 23,019 22,873 23,264 23,628 23,514 23,710 23,341 34 For purchasing and carrying securities 18,102 17,144 16,008 23,103 19,102 14,679 12,650 12,417 12,488 35 To finance agricultural production 5,712 5,744 5,725 5,681 5,645 5,601 5,504 5,578 5,508 36 To states and political subdivisions 31,996 31,859 31,743 31,570 31,444 31,474 31,366 31,461 31,301 37 To foreign governments and official institutions 2,864 2,852 2,938 2,881 2,997 2,888 2,840 2,844 2,813 38 Mother 20,837 18,665 18,798 20,044 19,524 19,004 18,164 17,981 18,514 39 Lease financing receivables 19,452 19,343 19,366 19,413 19,452 19,519 19,705 19,698 19,728 40 LESS: Unearned income 4,648 4,634 4,646 4,647 4,670 4,650 4,655 4,573 4,519 41 Loan and lease reserve 34,303 34,188 34,200 34,132 34,200 34,336 34,356 34,318 34,352 42 Other loans and leases, net 763,740 760,037 762,048 770,985 769,364 766,040 762,987 763,185 762,089 43 M other assets 126,182 123,503 122,111 123,447 126,269 127,920 125,709 124,367 119,818 44 Total assets 1,247,184 1,234,024 1,252,156 1,252,575 1,263,500 1,260,693 1,251,400 1,245,098 1,232,384 45 Demand deposits 239,982 216,661 237,516 225,531 230,393 234,023 223,223 224,986 217,828 46 Individuals, partnerships, and corporations 185,352 168,810 185,431 176,590 178,306 180,167 175,482 173,831 171,901 47 States and political subdivisions 6,119 4,862 4,999 5,490 5,335 5,493 5,138 5,346 5,601 48 U.S. government 3,112 2,748 1,918 1,410 2,078 4,581 1,461 3,852 2,190 49 Depository institutions in United States 27,232 24,315 27,651 25,272 24,378 24,947 25,261 24,798 23,154 50 Banks in foreign countries 6,872 6,118 7,291 6,654 7,174 6,928 6,445 6,604 6,467 51 Foreign governments and official institutions 973 840 976 966 922 810 848 651 755 52 Certified and officers' checks 10,320 8,968 9,250 9,150 12,200 11,098 8,587 9,906 7,761 53 Transaction balances other than demand deposits 60,381 62,050 61,455 60,995 60,121 62,477 61,824 61,228 60,792 54 Nontransaction balances 526,427 531,056 530,994 532,822 533,798 535,335 535,937 536,628 535,801 55 Individuals, partnerships and corporations 488,776 493,346 493,398 495,671 496,297 498,289 499,040 499,500 498,327 56 States and political subdivisions 25,812 25,527 25,693 25,662 25,569 25,345 25,159 25,088 25,357 57 U.S. government 816 802 811 620 795 773 748 764 832 58 Depository institutions in the United States 10,240 10,562 10,289 10,082 10,347 10,095 10,165 10,452 10,451 59 Foreign governments, official institutions and banks 784 819 802 786 790 833 825 824 834 60 Liabilities for borrowed money 247,698 255,208 253,770 263,055 264,120 258,036 259,410 250,943 245,592 61 Borrowings from Federal Reserve Banks 1,148 980 580 2,720 275 345 260 369 330 62 Treasury tax-and-loan notes 21,129 19,312 18,870 22,928 22,857 14,033 20,490 16,626 16,895 63 M other liabilities for borrowed money 225,422 234,916 234,320 237,407 240,988 243,658 238,660 233,948 228,366 64 Other liabilities and subordinated note and debentures .. 94,837 90,483 89,227 91,034 95,977 91,392 90,896 91,522 93,555 65 Total liabilities 1,169,326 1,155,458 1,172,961 1,173,437 1,184,410 1,181,263 1,171,291 1,165,307 1,153,568 66 Residual (total assets minus total liabilities)3 77,858 78,566 79,194 79,138 79,091 79,430 80,109 79,791 78,816 MEMO 67 Total loans and leases (gross) and investments adjusted .. 993,870 988,102 988,759 999,932 1,000,534 998,521 995,690 996,838 993,200 68 Total loans and leases (gross) adjusted 807,688 803,273 804,873 814,779 813,369 810,272 808,504 806,097 803,321 69 Time deposits in amounts of $100,000 or more 165,103 168,960 168,519 170,013 171,715 172,558 172,507 172,799 172,866 70 Loans sold outright to affiliates—total5 1,687 1,716 1,791 1,799 1,736 1,708 1,718 1,778 1,862 71 Commercial and industrial 1,243 1,249 1,333 1,333 1,271 1,248 1,263 1,321 1,402 72 Other 445 467 458 466 466 459 455 456 460 73 Nontransaction savings deposits (including MMDAs) 227,138 227,240 227,175 226,879 224,979 224,734 224,752 224,872 223,779 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 DomesticN onfinancial Statistics • February 1988 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures except as noted 1987 AAccccoouunntt Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 1 Cash balances due from depository institutions 25,498r 26,184' 32,937' 24,212' 32,003' 25,488 26,426 23,107 22,068 2 Total loans, leases and securities, net1 218,125R 212,569' 215,238' 225,445' 220,876' 219,018 214,596 214,864 210,656 Securities 3 U.S. Treasury and government agency 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 14,003 13,863 13,975 13,874 14,486 14,141 13,821 14,368 13,718 6 One year or less 1,950 1,912 1,982 1,922 1,427 1,441 1,469 1,517 1,498 7 Over one through five years 4,666 4,573 4,570 4,377 4,442 4,216 4,122 4,640 4,663 8 Over five years 7,387 7,378 7,424 7,574 8,618 8,483 8,230 8,212 7,557 9 Other securities 0 0 0 0 0 0 0 0 0 10 Trading account 0 0 0 0 0 0 0 0 0 11 Investment account 16,491 16,520 16,480 16,444 16,518 16,572 16,657 16,736 16,753 12 States and political subdivisions, by maturity 13,528 13,567 13,558 13,526 13,510 13,482 13,453 13,355 13,291 13 One year or less 944 921 929 874 863 788 795 786 775 14 Over one year 12,584 12,646 12,629 12,652 12,647 12,694 12,659 12,568 12,515 15 Other bonds, corporate stocks and securities 2,963 2,953 2,922 2,918 3,008 3,090 3,203 3,381 3,462 16 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 17 Federal funds sold 29,068 26,783 27,532 32,036 28,582 31,439 29,539 30,165 26,826 18 To commercial banks 12,688 11,713 11,369 14,353 11,572 14,259 11,479 14,241 11,953 19 To nonbank brokers and dealers in securities 10,674 9,736 11,359 12,364 11,472 11,826 12,850 10,959 9,992 20 To others 5,706 5,335 4,804 5,319 5,538 5,354 5,209 4,965 4,881 21 Other loans and leases, gross 174,296' 171,006' 172,901' 178,677' 176,911' 172,495 170,239 169,145 168,903 22 Other loans, gross 169,856r 166,558' 168,441' 174,221' 172,418' 167,986 165,726 164,656 164,383 23 Commercial and industrial 59,370 58,976 59,111 58,055 59,197 59,181 58,562 57,841 56,954 24 Bankers acceptances and commercial paper 475 496 550 456 441 438 380 411 358 25 All other 58,894 58,480 58,561 57,599 58,756 58,742 58,182 57,430 56,596 26 U.S. addressees 58,474 57,882 58,084 57,138 58,249 58,214 57,635 56,957 56,142 27 Non-U.S. addressees 421 598 477 462 507 529 547 473 455 28 Real estate loans 44,675 44,752 44,680 44,677 44,457 44,501 44,644 44,850 44,940 29 To individuals for personal expenditures 21,202' 21,235' 21,345' 21,426' 21,484' 21,522 21,596 21,139 21,266 30 To depository and financial institutions 20,409 19,568 21,499 21,863 22,955 21,852 21,738 21,475 21,306 31 Commercial banks in the United States 11,184 10,876 11,697 12,267 12,609 11,770 12,156 11,733 11,923 32 Banks in foreign countries 2,710 2,516 3,480 3,286 3,498 3,287 2,784 2,968 2,460 33 Nonbank depository and other financial institutions 6,515 6,176 6,321 6,310 6,849 6,795 6,798 6,774 6,923 34 For purchasing and carrying securities 7,897 6,986 6,585 12,041 8,839 5,882 4,394 4,794 5,037 35 To finance agricultural production 328 320 323 324 337 331 324 342 300 36 To states and political subdivisions 7,839 7,847 7,821 7,781 7,737 7,721 7,697 7,770 7,745 37 To foreign governments and official institutions 745 734 797 747 855 742 638 664 625 38 All other 7,390 6,139 6,278 7,306 6,556 6,254 6,132 5,781 6,210 39 Lease financing receivables 4,440' 4,448' 4,460 4,456 4,493 4,509 4,512 4,489 4,520 40 LESS: Unearned income 1,424' 1,427' 1,433' 1,438' 1,446' 1,438 1,444 1,365 1,348 41 Loan and lease reserve 14,309 14,176 14,217 14,149 14,176 14,190 14,216 14,186 14,196 42 Other loans and leases, net 158,563' 155,403' 157,250' 163,090' 161,290' 156,866 154,579 153,594 153,359 43 All other assets 57,093' 57,046' 56,648' 59,542' 60,650' 61,352 58,613 60,326 56,001 44 Total assets 300,716' 295,800' 304,824 309,199 313,530 305,858 299,635 298,296 288,726 Deposits 45 Demand deposits 65,610 55,632 62,241 61,314 66,510 63,618 56,801 60,251 54,185 46 Individuals, partnerships, and corporations 44,795 37,682 43,303 42,725 44,896 44,225 39,952 40,612 38,671 47 States and political subdivisions 890 831 766 861 991 879 1,066 889 791 48 U.S. government 547 476 269 196 314 870 261 717 367 49 Depository institutions in the United States 8,159 6,845 6,588 7,187 7,040 6,118 5,871 7,116 5,715 50 Banks in foreign countries 5,642 4,991 6,170 5,532 5,773 5,623 5,226 5,303 5,223 51 Foreign governments and official institutions 837 699 844 843 788 671 703 517 587 52 Certified and officers' checks 4,740 4,108 4,300 3,971 6,709 5,232 3,722 5,098 22,,883311 53 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,012 8,159 8,034 8,025 7,888 8,073 8,094 8,002 7,932 54 Nontransaction balances 99,769 102,090 101,897 101,635 102,270 101,446 101,376 101,404 101,097 55 Individuals, partnerships and corporations 91,017 93,120 92,734 92,362 93,095 92,300 92,527 92,574 92,342 56 States and political subdivisions 6,686 6,736 6,956 6,990 6,895 6,794 6,530 6,542 6,481 57 U.S. government 53 47 54 68 70 67 55 57 56 58 Depository institutions in the United States 1,629 1,780 1,759 1,832 1,832 1,870 1,876 1,844 1,833 59 Foreign governments, official institutions and banks 383 407 394 382 378 415 388 388 385 60 Liabilities for borrowed money 64,145 70,906 74,108 78,348 75,705 70,652 73,380 69,556 64,759 61 Borrowings from Federal Reserve Banks 410 450 0 2,400 0 0 0 0 0 62 Treasury tax-and-loan notes 4,736 4,811 4,830 5,840 5,792 3,283 5,007 4,222 4,327 63 All other liabilities for borrowed money 58,999 65,644 69,278 70,108 69,913 67,369 68,372 65,334 60,432 64 Other liabilities and subordinated note and debentures 40,559' 36,279' 35,350 36,691 38,192 38,767 36,398 35,763 37,632 65 Total liabilities 278,096' 273,067' 281,630 286,013 290,565 282,557 276,049 274,976 265,606 66 Residual (total assets minus total liabilities)6 22,620 22,733 23,194 23,186 22,966 23,301 23,586 23,321 23,120 MEMO 67 Total loans and leases (gross) and investments adjusted • 209,986' 205,583' 207,822' 214,411' 212,317' 208,618 206,620 204,441 202,325 68 Total loans and leases (gross) adjusted 179,492' 175,200' 177,366' 184,093' 181,313' 177,905 176,142 173,336 171,854 69 Time deposits in amounts of $100,000 or more 36,891 38,952 38,628 38,832 38,751 38,448 38,397 38,361 38,016 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 Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 1 Cash and due from depository institutions .. 11,738 9,864 9,451 9,800 9,695 10,434 10,013 10,922 9,970 2 Total loans and securities 99,629^ 97,18c 98,726' 101,139' 101,160' 97,204 96,081 98,486 96,156 3 U.S. Treasury and govt, agency securities.. 7,318 7,389 7,330 7,441 6,946 7,466 7,290 7,558 7,328 4 Other securities. 8,029 8,019 7,958 7,853 7,753 7,402 7,516 7,456 7,450 5 Federal funds sold 7,196 7,298 9.041 10,787 12,234 8,474 8,073 10,615 7,679 6 To commercial banks in the United States 5,691 5,858 7,744 8,900 10,399 6,730 6,081 8,191 5,663 7 To others 1,505 1,440 1,297 1,887 1,835 1,744 1,992 2,423 2,016 8 Other loans, gross 77,086' 74,474' 74,397' 75,058' 74,227' 73,860 73,202 72,857 73,698 9 Commercial and industrial 50,165 49,018 48,871 49,487 49,415 49,111 47,548 48,072 47,700 10 Bankers acceptances and commercial paper 3,827 3,876 3,996 3,912 3,916 3,361 1,553 1,448 1,501 11 All other 46,338 45,142 44,875 45,575 45,499 45,751 45,995 46,624 46,199 12 U.S. addressees 43,912 42,756 42,468 43,150 43,120 43,421 43.597 44,234 43,743 13 Non-U.S. addressees 2,426 2,386 2,407 2,425 2,379 2,330 2,398 2,391 2,456 14 To financial institutions 16,769 16,485 16,336 15,798 15,360 15,597 15,815 15,605 16,805 15' Commercial banks in the United States. 12,521 12,230 11,994 11,292 11,304 11,644 11,872 11,437 12,688 16 Banks in foreign countries 1,340 1,196 1,299 1,465 1,117 1,012 913 1,133 1,093 17 Nonbank financial institutions 2,908 3,059 3.042 3,041 2,938 2,940 3,029 3,035 3,024 18 To foreign govts, and official institutions . 385 395 409 387 385 388 400 407 403 19 For purchasing and carrying securities ... 2,876 1,685 1,750 2,505 2,287 2,062 2,339 1,655 1,738 20 All other 6,890' 6,892' 7,031' 6,881' 6,781' 6,701 7,100 7,118 7,052 21 Other assets (claims on nonrelated parties) . 28,795' 28,698' 28,495' 28,88c 28,521' 28,927 31,779 31,619 31,805 22 Net due from related institutions 14,893 15,746 15,414 15,940 14,019 15,953 14,071 13,816 16,081 23 Total assets 155,055' 151,489' 152,086' 155,759' 153,395' 152,517 151,945 154,844 154,012 24 Deposits or credit balances due to other than directly related institutions 43,652 42,133 42,504 42,285 42,811 42,748 42,400 41,918 41,849 25 Transaction accounts and credit balances3 3,644 3,193 3,433 3,337 3,531 3,528 3,344 3,222 2,918 26 Individuals, partnerships, and corporations 2,029 2,217 2,045 2,215 1,984 1,865 1,912 1,932 1,714 27 Other 1,616 976 1,388 1,121 1,547 1,663 1,433 1,290 1,205 28 Nontransaction accounts 40,007 38,941 39,071 38,949 39,280 39,219 39,056 38,696 38,931 29 Individuals, partnerships, and corporations 32,399 31,663 31,840 31,880 32,118 31,889 31,954 31,655 31,912 30 Other 7,608 7,278 7,231 7,069 7,163 7,330 7,102 7,042 7,018 31 Borrowings from other than directly related institutions 55,302 56,947 55,804 58,085 53,854 56,494 54,296 57,872 58,463 32 Federal funds purchased5 25,298' 27,583' 26,342' 27,968' 25.42C 27,448 25.598 28,195 27,249 33 From commercial banks in the United States 13,630 14,839 15,082 16,902 16,093 17,568 15,592 17,030 16,924 34 From others 11,668' 12,744' 11,259' 11,067' 9,327' 9,880 10,007 11,166 10,326 35 Other liabilities for borrowed money 30,004' 29,364' 29,462' 30,116' 28,434' 29,045 28,698 29,677 31,214 36 To commercial banks in the United States 23,674 23,001 22,971 23,297 22,054 22,742 22,672 23,826 24,298 37 To others 6,330' 6,362' 6,491' 6,819' 6,379' 6,303 6,027 5,851 6,916 38 Other liablities to nonrelated parties 32,498 32,674 32,563 32,929 33,127 33,004 32,830 32,928 33,016 39 Net due to related institutions 23,603' 19,734' 21,214' 22,46C 23,603' 20,272 22,417 22,124 20,683 40 Total liabilities 155,055' 151,489' 152,086' 155,759' 153,395' 152,517 151,945 154,844 154,012 MEMO 41 Total loans (gross) and securities adjusted6 . 81,417' 79,092' 78,987' 80,947' 79,457' 78,829 78,128 78,857 77,804 42 Total loans (gross) ajdusted 66,069' 63,684' 63,700' 65,653' 64,758' 63,960 63,322 63,843 63,026 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 • February 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.. DDeecc..33''44 June Sept. Dec. Mar. June Sept. 1 All holders—Individuals, partnerships, and corporations 291.8 293.5 302.7 321.0 322.4 333.6 363.6 335.9 340.2 339.0 2 Financial business 35.4 32.8 31.7 32.3 32.3 35.9 41.4 35.9 36.6 36.6 3 Nonfinancial business 150.5 161.1 166.3 178.5 180.0 185.9 202.0 183.0 187.2 188.2 4 Consumer 85.9 78.5 81.5 85.5 86.4 86.3 91.1 88.9 90.1 88.7 5 Foreign 3.0 3.3 3.6 3.5 3.0 3.3 3.3 2.9 3.2 3.2 6 Other 17.0 17.8 19.7 21.2 20.7 22.2 25.8 25.2 23.1 22.4 Weekly reporting banks 1986 1987 11998822 11998833 11998844 DDeecc.. DDeecc.. DDeecc..22 DDeecc..^^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 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 the June 1971 BULLETIN, p. 466. and $3.0 billion at weekly reporting banks. Figures may not add to totals because of rounding. 4. Historical data back to March 1985 have been revised to account for 2. Beginning in March 1984, these data reflect a change in the panel of weekly corrections of bank reporting errors. Historical data before March 1985 have not reporting banks, and are not comparable to earlier data. Estimates in billions of been revised, and may contain reporting errors. Data for all commercial banks for dollars for December 1983 based on the new weekly reporting panel are: financial March 1985 were revised as follows (in billions of dollars): all holders, -.3; business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other financial business, -.8; nonfinancial business, -.4; consumer, .9; foreign, .1; 9.5. other, -.1. Data for weekly reporting banks for March 1985 were revised as 3. Beginning March 1985, financial business deposits and, by implication, total follows (in billions of dollars): all holders, -.1; financial business, -.7; nonfinangross demand deposits have been redefined to exclude demand deposits due to cial business, -.5; consumer, 1.1; foreign, .1; other, -.2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1987 1982 1983 1984 1985 1986 IInnssttrruummeenntt Dec. Dec. Dec. Dec. Dec. May June July Aug. Sept. Oct. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 166,436 187,658 237,586 300,899 331,016 354,249 348,741 348,247 352,737 358,828 360,013 Financial companies3 Dealer-placed paper 2 Total 34,605 44,455 56,485 78,443 100,207 105,397 108,691 107,709 110,714 115,570 111,098 3 Bank-related (not seasonally 22,,551166 22,,444411 22,,003355 11,,660022 22,,226655 22,,442299 22,,443300 22,,331111 22,,440044 22,,559900 22,,668899 Directly placed paper 4 Total 84,393 97,042 110,543 135,504 152,385 169,225 161,921 162,185 163,620 166,169 171,392 5 Bank-related (not seasonally adjusted) 32,034 35,566 42,105 44,778 40,860 48,401 47,862 . 46,354 45,487 46,815 46,249 6 Nonfinancial companies 47,437 46,161 70,558 86,952 78,424 79,627 78,129 78,353 78,403 77,089 77,523 Bankers dollar acceptances (not seasonally adjusted)7 7 Total 79,543 78,309 78,364 68,413 64,974 67,779' 69,622 68,495 68,645 68,771 71,891 Holder 8 Accepting banks 10,910 9,355 9,811 11,197 13,423 11,201 11,234 10,664 10,870 10,521 10,856 9 Own bills 9,471 8,125 8,621 9,471 11,707 9,569 9,661 9,630 9,905 9,400 9,742 10 Bills bought 1,439 1,230 1,191 1,726 1,716 1,631 1,573 1,035 965 1,121 1,114 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 1,547 1,717 1,463 1,397 1,467 1,400 13 Others 66,204 67,807 67,881 56,279 50,234 55,032' 56,671 56,367 56,379 56,784 59,635 Basis 14 Imports into United States 17,683 15,649 17,845 15,147 14,670 15,361 16,179 17,431 17,087 17,198 17,814 15 Exports from United States 16,328 16,880 16,305 13,204 12,960 14,028 14,161 14,659 14,967 15,046 15,949 16 All other 45,531 45,781 44,214 40,062 37,344 38,390' 39,281 36,405 36,590 36,527' 38,122 1. Effective Dec. 1,1982, there was a break in the commercial paper series. The 4. Includes all financial company paper sold by dealers in the open market. key changes in the content of the data involved additions to the reporting panel, 5. As reported by financial companies that place their paper directly with the exclusion of broker or dealer placed borrowings under any master note investors. agreements from the reported data, and the reclassification of a large portion of 6. Includes public utilities and firms engaged primarily in such activities as bank-related paper from dealer-placed to directly placed. communications, construction, manufacturing, mining, wholesale and retail trade, 2. Correction of a previous misclassification of paper by a reporter has created transportation, and services. a break in the series beginning December 1983. The correction adds some paper 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 financing; factoring, finance leasing, and other business lending; insurance under- of total acceptances activity. writing; and other investment activities. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum 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 15 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 7? 9.00 June 9.78 Dec. 8.00 Nov. 5 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 • February 1988 1.35 INTEREST RATES Money and Capital Markets Averages, percent per year; weekly and monthly figures are averages of business day data unless otherwise noted. 1987 1987, week ending IInnssttrruummeenntt 11998844 11998855 11998866 Aug. Sept. Oct. Nov. Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 MONEY MARKET RATES 1 Federal funds1,2 10.22 8.10 6.80 6.73 7.22 7.29 6.69 7.03 6.43 6.68 6.77 6.78 2 Discount widow bon-owing ' ,3 8.80 7.69 6.33 5.50 5.95 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Commercial paper • 3 1-month 10.05 7.94 6.62 6.62 7.26 7.38 6.77 6.95 6.78 6.72 6.79 6.75 4 3-month 10.10 7.95 6.49 6.71 7.37 7.89 7.17 7.33 7.19 7.04 7.14 7.20 5 6-month 10.16 8.01 6.39 6.81 7.55 7.96 7.17 7.35 7.20 7.05 7.14 7.21 Finance paper, directly placed4' 6 1-month 99..9977 77..9911 66..5588 66..5566 77..2200 7.28 6.63 6.83 6.56 6.65 6.72 6.60 7 3-month 9.73 7.77 6.38 6.49 7.08 7.40 6.91 7.03 6.85 6.81 6.91 7.03 8 6-month 9.65 7.75 6.31 6.34 6.90 7.17 6.69 6.80 6.68 6.74 6.74 6.61 Bankers acceptances • 9 3-month 1100..1144 77..9922 6.39 6.64 7.31 7.85 7.07 7.25 7.05 6.94 7.06 7.14 10 6-month r 10.19 7.96 6.29 6.75 7.48 7.92 7.07 7.24 7.04 6.95 7.06 7.14 Certificates of deposit, secondary market 11 1-month 1100..1177 77..9977 6.61 6.63 77..2255 7.39 6.80 6.96 6.75 6.70 6.76 6.77 1? 3-month 10.37 8.05 6.52 6.75 7.37 8.02 7.24 7.42 7.26 7.13 7.18 7.26 13 6-month 10.68 8.25 6.51 7.02 7.74 8.19 7.31 7.50 7.30 7.21 7.29 7.33 14 Eurodollar deposits^ 3-month8 10.73 8.28 6.71 6.91 7.51 8.29 7.41 7.73 7.55 7.23 7.38 7.38 U.S. Treasury bills5 Secondary market 15 3-month 99..5522 77..4488 5.98 6.04 6.40 6.13 5.69 5.17 5.62 5.78 5.78 5.72 16 6-month 9.76 7.65 6.03 6.15 6.64 6.69 6.19 5.93 6.10 6.26 6.27 6.17 17 1-year „ 9.92 7.81 6.08 6.54 7.11 7.05 6.50 6.30 6.42 6.49 6.54 6.56 Auction average 18 3-month 99..5577 77..4499 5.97 6.00 6.32 6.40 5.81 5.12 5.80 5.74 6.01 5.70 19 6-month 9.80 7.66 6.02 6.14 6.57 6.86 6.23 5.98 6.24 6.24 6.33 6.11 20 1-year 9.94 7.81 6.07 6.52 6.74 6.89 6.48 6.45 n.a. n.a. n.a. 6.48 CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities 21 1-year 10.89 8.43 6.46 7.03 7.67 7.59 6.96 6.73 6.87 6.96 7.01 7.02 22 2-year 11.65 9.27 6.87 7.75 8.34 8.40 7.69 7.60 7.62 7.67 7.72 7.76 23 3-year 11.89 9.64 7.06 8.03 8.67 8.75 7.99 8.01 7.96 7.96 7.98 8.05 24 5-year 12.24 10.13 7.31 8.32 8.94 9.08 8.35 8.38 8.32 8.30 8.35 8.41 25 7-year 12.40 10.51 7.55 8.59 9.26 9.37 8.69 8.71 8.66 8.64 8.66 8.77 26 10-year 12.44 10.62 7.68 8.76 9.42 9.52 8.86 8.90 8.84 8.80 8.83 8.95 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 8.97 9.59 9.61 8.95 9.05 8.95 8.89 8.92 9.03 Composite 29 Over 10 years (long-term) 1111..9999 1100..7755 8.14 8.97 9.58 9.61 8.99 9.07 8.96 8.94 8.98 9.06 State and local notes and bonds Moody's series14 30 Aaa 9.61 8.60 6.95 7.24 7.66 7.90 7.50 7.60 7.50 7.55 7.50 7.45 31 Baa 10.38 9.58 7.76 8.31 8.67 8.85 8.47 8.60 8.45 8.55 8.50 8.40 32 Bond Buyer series 10.10 9.11 7.32 7.81 8.26 8.70 7.95 8.43 7.90 8.03 7.91 7.96 Corporate bonds Seasoned issues16 33 All industries 13.49 12.05 9.71 10.24 10.64 10.97 10.54 10.75 10.62 10.49 10.51 10.51 34 Aaa 12.71 11.37 9.02 9.67 10.18 10.52 10.01 10.25 10.08 9.97 9.97 10.01 35 Aa 13.31 11.82 9.47 9.86 10.35 10.74 10.27 10.56 10.42 10.22 10.22 10.21 36 A 13.74 12.28 9.95 10.20 10.72 10.98 10.63 10.84 10.70 10.58 10.61 10.61 37 Baa 14.19 12.72 10.39 10.80 11.31 11.62 11.23 11.35 11.28 11.18 11.22 11.22 38 A-rated, recently-offered utility bonds17 1133..8811 1122..0066 9.61 10.37 10.84 11.07 10.39 10.60 10.39 10.38 10.31 10.40 MEMO: Dividend/price ratio18 39 Preferred stocks 1111..5599 1100..4499 88..7766 88..3322 88..6644 8.99 9.11 9.18 9.20 9.06 9.15 9.02 40 Common stocks 4.64 4.25 3.48 2.69 2.78 3.25 3.66 3.84 3.59 3.70 3.65 3.69 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 of ten issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H. 15 (519) and G.13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1987 IInnddiiccaattoorr 11998844 11998855 11998866 Mar. Apr. May June July Aug. Sept. Oct. Nov. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 92.46 108.09 136.00 166.43 163.88 163.00 169.58 174.28 184.18 178.39 157.13 137.21 2 Industrial 108.01 123.79 155.85 198.95 199.03 198.78 206.61 214.12 226.49 219.52 189.86 163.42 3 Transportation 85.63 104.11 119.87 138.55 137.91 141.30 150.39 157.49 164.02 158.58 140.95 117.57 4 Utility 46.44 56.75 71.36 77.15 72.74 71.64 74.25 74.18 78.20 76.13 73.27 69.86 5 Finance 89.28 114.21 147.19 162.41 150.52 145.97 152.73 152.27 160.94 154.08 137.35 118.30 6 Standard & Poor's Corporation (1941-43 = 10)' 160.50 186.84 236.34 292.47 289.32 289.12 301.36 310.09 329.36 318.66 280.16 245.01 7 American Stock Exchange2 (Aug. 31, 1973 = 50) 207.% 229.10 264.38 332.55 330.65 328.77 334.49 348.68 361.52 353.72 306.34 249.42 Volume of trading (thousands of shares) 8 New York Stock Exchange 91,084 109,191 141,385 180,251 187,135 170,898 163,380 180,356 193,477 177,319 277,026 179,481 9 American Stock Exchange 6,107 8,355 11,846 15,678 14,420 11,655 12,813 12,857 13,604 12,381 18,173 11,268 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 22,470 28,390 36,840 38,080 39,820 38,890 38,420 40,250 41,640 44,170 38,250 34,180 Free credit balances at brokers4 11 Margin-account5 1,755 2,715 4,880 4,730 4,660 4,355 3,680 4,095 4,240 4,270 8,415 6,700 12 Cash-account 10,215 12,840 19,000 17,370 17,285 16,985 15,405 15,930 16,195 15,895 18,455 15,360 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance "margin securities" (as defined in the regulations) when such credit is collateracompanies. With this change the index includes 400 industrial stocks (formerly lized by securities. Margin requirements on securities other than options are the 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 difference between the market value (100 percent) and the maximum loan value of financial. collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 2. Beginning July 5, 1983, the American Stock Exchange rebased its index 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; effectively cutting previous readings in half. and Regulation X, effective Nov. 1, 1971. 3. Beginning July 1983, under the revised Regulation T, margin credit at On Jan. 1, 1977, the Board of Governors for the first time established in broker-dealers includes credit extended against stocks, convertible bonds, stocks Regulation T the initial margin required for writing options on securities, setting 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 • February 1988 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1986 1987 AAccccoouunntt 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Savings and loan associations 1 Assets 903,488 948,781 964,096 963,316 935,516 936,877 939,722 944,291 960,199' 949,107' 949,265r 955,254 956,743 2 Mortgage-backed securities 97,303 122,682 123,257 129,340 128,856 129,279 134,743 141,032' 140,620' 140,894' 144,058' 150,950 Cash and investment securities 124,801 126,712 141,510 142,700 132,733 135,884 138,727 136,370 138,295' 138,152' 138,521' 137,323' 131,719 4 Other 223,396 238,833 250,297 251,769 261,869 263,782 266,407 274,834 283,661' 285,426' 287,516' 292,737' 295,224 5 Liabilities and net worth 903,488 948,781 964,0% 963,316 935,516 936,877 939,722 944,291 960,199' 949,107' 949,265' 955,254 956,743 6 Savings capital 725,045 750,071 740,066 741,081 721,759 722,276 722,548' 716,798' 718,633' 715,662' 716,389' 717,259' 721,409 7 Borrowed money 125,666 138,798 156,920 159,742 153,373 152,173 158,175 165,881 171,278' 175,409' 174,357' 178,642' 180,360 8 FHLBB 64,207 73,888 75,626 80,194 75,552 75,671 76,469 77,857 78,583 79,188 78,888' 79,546 80,848 9 Other 61,459 64,910 81,294 79,548 77,821 76,502 81,706 88,024 92,695' 96,221' 95,469' 99,0%' 99,512 10 Other 17,944 19,045 24,078 20,071 19,773 21,823 18,958 20,870 22,621' 19,571' 20,677' 21,940' 19,157 11 Net worth2 34,833 41,064 43,034 42,423 40,606 40,601 40,040 40,741 41,223' 39,60c 39,027' 38,595' 36,9% FSLIC-insured federal savings banks 12 Assets 98,559 131,868 204,918 210,562 235,428 235,763 241,418 246,277 253,007 264,099 268,814' 272,087' 272,790 n Mortgages 57,429 72,355 112,117 113,638 136,770 136,489 138,882 140,854 144,581 150,421' 152,885' 154,058' 154,661 14 Mortgage-backed securities 9,949 15,676 28,324 29,766 33,570 34,634 36,088 37,500 39,371 40,992 42,712 43,531 44,412 15 Other 10,971 11,723 19,266 19,034 15,769 16,060 16,605 17,034 17,200 17,936 17,547' 17,779' 17,560 16 Liabilities and net worth 98,559 131,868 204,918 210,562 235,428 235,763 241,418 246,277 253,007 264,099 268,814' 272,087' 272,790 17 Savings capital 79,572 103,462 154,447 157,872 176,741 178,676 178,672 180,637 182,802 189,998 193,890 194,853 195,213 18 Borrowed money 12,798 19,323 33,937 37,329 40,614 39,777 43,919 46,125 49,8% 53,239' 53,652' 55,660' 56,540 19 FHLBB 7,515 10,510 17,863 19,897 20,730 20,226 21,104 21,718 22,788 24,486 24,981 25,546 26,287 70 Other 5,283 8,813 16,074 17,432 19,884 19,551 22,815 24,407 27,108 28,753 28,671' 30,114' 30,253 21 Other 1,903 2,732 5,652 4,263 5,304 5,480 5,265 5,547 6,044 5,983 6,143 6,455 5,631 22 Net worth 4,286 6,351 10,883 11,098 12,774 13,151 13,564 13,978 14,272 14,884 15,134' 15,123' 15,408 Savings banks 23 Assets 203,898 216,776 232,577 236,866 235,603 238,074 240,739 243,454 245,906 244,760 246,833 249,888 251,472 Loans 24 Mortgage 102,895 110,448 117,612 118,323 119,199 119,737 121,178 122,769 124,936 128,217 129,624 130,721 133,298 25 Other 2244,,995544 3300,,887766 3366,,114499 3355,,116677 3366,,112222 3377,,220077 3388,,001122 3377,,113366 3377,,331133 3355,,220000 3355,,559911 3366,,779933 3366,,113344 Securities 26 U.S. government 14,643 13,111 13,037 14,209 13,332 13,525 13,631 13,743 13,650 13,549 13,498 13,720 13,122 27 Mortgage-backed securities .. 19,215 19,481 24,051 25,836 26,220 26,893 27,463 28,700 28,739 27,785 28,252 28,913 29,655 28 State and local government .. 2,077 2,323 2,290 2,185 2,180 2,168 2,041 2,063 2,053 2,059 2,050 2,038 2,023 29 Corporate and other 23,747 21,199 20,749 20,459 19,795 19,770 19,598 19,768 19,956 18,803 18,821 18,573 18,431 30 Cash 4,954 6,225 5,052 6,894 5,239 5,143 5,703 5,308 5,176 4,939 4,806 4,823 4,484 31 Other assets 11,413 13,113 13,637 13,793 13,516 13,631 13,713 13,967 14,083 14,208 14,191 14,307 14,325 32 Liabilities 203,898 216,776 232,577 236,866 235,603 238,074 240,739 243,454 245,906 244,760 246,833 249,888 251,472 33 Deposits 180,616 185,972 190,858 192,194 191,441 192,559 193,693 193,347 194,742 193,274 194,549 195,895 1%,824 34 Regular3 177,418 181,921 185,958 186,345 186,385 187,597 188,432 187,791 189,048 187,669 188,783 190,335 191,376 35 Ordinary savings 33,739 33,018 36,739 37,717 38,467 39,370 40,558 41,326 41,%7 42,178 41,928 41,767 41,773 36 Time 104,732 103,311 101,240 100,809 100,604 100,922 100,8% 100,308 100,607 100,604 102,603 105,133 107,063 37 Other 3,198 4,051 4,900 5,849 5,056 4,%2 5,261 5,556 5,694 5,605 5,766 5,560 5,448 38 Other liabilities 12,504 17,414 24,254 25,274 24,710 25,663 27,003 29,105 30,436 30,515 31,655 32,467 32,827 39 General reserve accounts 10,510 12,823 17,146 18,105 18,236 18,486 18,830 19,423 19,603 19,549 19,718 20,471 20,407 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37—Continued 1986 1987 AAccccoouunntt 11998844 11998855 Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Credit unions4 40 Total assets/liabilities and capital. 93,036 118,010 145,653 147,726 149,383 149,751 153,253 154,549 156,086 160,644 41 Federal 63,205 77,861 94,638 95,483 96,801 96,753 98,799 99,751 100,153 104,150 42 State 29,831 40,149 51,015 52,243 52,586 52,998 54,454 54,798 55,933 56,494 43 Loans outstanding 62,561 73,513 84,635 86,137 85,984 85,651 86,101 87,089 87,765 90,912 n a. n a. n a. 44 Federal 42,337 47,933 53,877 55,304 55,313 54,912 55,118 55,740 55,952 58,432 45 State 20,224 25,580 30,758 30,833 30,671 30,739 30,983 31,349 31,813 32,480 46 Savings 84,348 105,963 131,778 134,327 135,907 136,441 138,810 140,014 141,635 148,283 47 Federal 57,539 70,926 87,009 87,954 89,717 89,485 91,042 92,012 97,189 96,137 48 State 26,809 35,037 44,769 46,373 46,130 46,956 47,768 48,002 49,248 52,146 Life insurance companies 49 Assets 722,979 825,901 925,475 937,551 948,665 961,937 978,455 978,455 985,942 995,576 1,005,592 1,017,018 Securities 50 Government 63,899 75,230 83,736 84,640 84,923 88,003 90,337 89,711 89,554 87,279 88,199 89,924 51 United States5 42,204 51,700 57,533 59,033 59,596 62,724 65,661 64,621 64,201 61,405 62,461 64,150 52 State and local 8,713 9,708 11,988 11,659 11,245 11,315 10,860 11,068 11,208 11,485 11,277 11,190 53 Foreign 12,982 13,822 14,215 13,948 14,082 13,964 13,816 14,022 14,145 14,389 14,461 14,584 n.a. 54 Business 359,333 423,712 490,091 492,807 504,582 514,328 519,766 522,097 528,789 537,507 555,423 551,701 55 Bonds 295,998 346,216 399,986 401,943 408,788 415,004 417,933 420,474 425,788 432,095 448,146 442,604 56 Stocks 63,335 77,496 90,105 90,864 95,794 99,324 101,833 101,623 103,001 105,412 107,277 109,097 57 Mortgages 156,699 171,797 190,243 193,842 194,213 194,935 195,743 197,315 198,760 200,382 201,297 202,241 58 Real estate 25,767 28,822 31,759 31,615 31,718 32,003 31,834 32,011 32,149 32,357 32,699 32,992 59 Policy loans 54,505 54,369 54,222 54,055 53,832 53,806 53,652 53,572 53,468 53,378 53,338 53,330 60 Other assets 63,776 71,971 75,424 80,592 79,397 78,842 82,105 83,749 83,222 84,390 85,420 57,126 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 Financial Statistics • February 1988 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1987 111999888555 111999888666 111999888777 June July Aug. Sept. Oct. Nov. U.S. budget1 1 Receipts, total 734,057 769,091 854,143 82,945 64,223 60,213 92,410 62,354 56,987 2 On-budget 547,886 568,862 640,741 64,222 47,880 43,511 73,755 45,992 40,630 3 Off-budget 186,171 200,228 213,402 18,723 16,343 16,703 18,656 16,362 13,357 4 Outlays, total 946,316 990,231 1,002,147 83,366 86,491 81,940 77,140 93,095 82,756 5 On-budget 769,509 806,733 808,315 66,221 70,806 65,071 60,497 76,910 65,986 6 Off-budget 176,807 183,498 193,832 17,145 15,685 16,869 16,643 16,185 16,770 7 Surplus, or deficit (-), toted -212,260 -221,140 -148,005 -420 -22,268 -21,727 15,270 -30,741 -25,769 8 On-budget -221,623 -237,871 -167,575 -1,998 -22,926 -21,561 13,257 -30,918 -25,356 9 Off-budget 9,363 16,731 19,570 1,578 658 -166 2,013 176 -414 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 2233,,660033 11 Operating cash (decrease, or increase (-k 13,367 -14,324 -5,052 -6,966 20,655 -3,219 -13,800 -1,879 17,164 12 Other 1,630 -723 2,986 -2,801 4,716 -8,115 6,590 5,338 -14,998 MEMO 13 Treasury operating balance (level, end of period) 17,060 31,384 36,436 40,072 19,417 22,635 36,436 3388,,331155 21,151 14 Federal Reserve Banks 4,174 7,514 9,120 13,774 5,365 3,764 9,120 88,,889988 3,595 15 Tax and loan accounts 12,886 23,870 27,316 26,298 14,052 18,872 27,316 29,416 17,556 1. In accordance with the Balanced Budget and Emergency Deficit Control Act international monetary fund; other cash and monetary assets; accrued interest of 1985, all former off-budget entries are now presented on-budget. The Federal payable to the public; allocations of special drawing rights; deposit funds; Financing Bank (FFB) activities are now shown as separate accounts under the miscellaneous liability (including checks outstanding) and asset accounts; agencies that use the FFB to finance their programs. The act has also moved two seigniorage; increment on gold; net gain/loss for U.S. currency valuation adjustsocial security trust funds (Federal old-age survivors insurance and Federal ment; net gain/loss for IMF valuation adjustment; and profit on the sale of gold. disability insurance trust funds) off-budget. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. 2. Includes SDRs; reserve position on the U.S. quota in the IMF; loans to Government" and the Budget of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr 1985 1986 1987 1987 111999888666 111999888777 H2 HI H2 HI Sept. Oct. Nov. RECEIPTS 1 All sources 769,091 854,143 364,790 394,345 387,524 447,282 92,410 62,354 56,987 2 Individual income taxes, net 348,959 392,557 169,987 169,444 183,156 205,157 39,797 32,429 25,039 3 Withheld 314,803 322,463 155,725 153,919 164,071 156,760 24,569 30,122 24,888 4 Presidential Election Campaign Fund 36 33 6 31 4 30 0 1 0 5 Nonwithheld 105,994 142,957 22,295 78,981 27,733 112,421 17,127 3,563 1,664 6 Refunds 71,873 72,896 8,038 63,488 8,652 64,052 1,899 1,256 1,512 Corporation income taxes 7 Gross receipts 80,442 102,859 36,528 41,946 42,108 52,396 21,636 3,633 2,558 8 Refunds 17,298 18,933 7,751 9,557 8,230 10,881 1,129 1,778 891 9 Social insurance taxes and contributions, net 283,901 303,318 128,017 156,714 134,006 163,519 25,403 22,177 23,756 10 Employment taxes and contributions1 255,062 273,185 116,276 139,706 122,246 146,696 23,788 20,797 20,731 11 Self-employment taxes and contributions 11,840 13,987 985 10,581 1,338 12,020 1,590 0 144 12 Unemployment insurance 24,098 25,418 9,281 14,674 9,328 14,514 1,246 950 2,661 13 Other net receipts 4,742 4,715 2,458 2,333 2,429 2,310 368 430 364 14 Excise taxes 32,919 32,510 18,470 15,944 15,947 15,845 2,808 2,574 2,854 15 Customs deposits 13,327 15,032 6,354 6,369 7,282 7,129 1,278 1,317 1,247 16 Estate and gift taxes 6,958 7,493 3,323 3,487 3,649 3,818 587 608 617 17 Miscellaneous receipts4 19,884 19,307 9,861 10,002 9,605 10,299 2,032 1,392 1,807 OUTLAYS 18 All types 990,231 1,002,147 487,201 486,058 505,448 502,983 77,140 93,095 82,756 19 National defense 273,375 282,016 134,675 135,367 138,544 142,886 22,132 25,928 21,366 20 International affairs 14,152 11,761 8,367 5,384 8,876 4,374 1,712 1,004 65 21 General science, space, and technology 8,976 9,188 4,727 12,519 4,594 4,324 860 1,118 867 22 Energy 4,735 4,176 3,305 2,484 2,735 2,335 -197 499 316 23 Natural resources and environment 13,639 13,225 7,553 6,245 7,141 6,175 1,157 1,336 1,121 24 Agriculture 31,449 26,493 15,412 14,482 16,160 11,824 1,383 5,177 3,139 25 Commerce and housing credit 4,823 5,235 644 860 3,647 4,893 -547 1,625 585 26 Transportation 28,117 26,228 15,360 12,658 14,745 12,113 2,505 2,306 2,304 27 Community and regional development 7,233 5,334 3,901 3,169 3,494 3,108 -602 742 450 28 Education, training, employment, social services 30,585 28,721 14,481 14,712 15,287 14,182 2,178 2,455 3,045 29 Health 35,935 39,968 17,237 17,872 18,795 20,318 3,332 3,613 3,744 30 Social security and medicare 268,921 282,473 129,037 135,214 138,299 142,864 23,425 23,979' 23,153 31 Income security 119,796 123,499 59,457 60,786 60,628 62,248 9,880 10,241 9,595 32 Veterans benefits and services 26,356 26,801 14,527 12,193 14,447 12,264 2,168 3,645 899 33 Administration of justice 6,603 7,507 3,212 3,352 3,360 3,626 766 674 649 34 General government 6,104 6,005 3,634 3,566 2,786 3,344 379 -231 1,085 35 General-purpose fiscal assistance 6,431 1,621 3,391 2,179 2,886 337 428 241 148 36 Net interest' 136,008 138,519 67,448 68,054 65,816 70,110 10,284 11,431 13,215 37 Undistributed offsetting receipts -33,007 -36,622 -17,953 -17,193 -17,376 -18,104 -4,106 -2,688 -2,990 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 • February 1988 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1985 1986 1987 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 1,827.5 1,950.3 1,991.1 2,063.6 2,129.5 2,218.9 2,250.7 2,313.1 2,354.3 2 Public debt securities 1,823.1 1,945.9 1,986.8 2,059.3 2,125.3 2,214.8 2,246.7 2,309.3 2,350.3 3 Held by public 1,506.6 1,597.1 1,634.3 1,684.9 1,742.4 1,811.7 1,839.3 1,871.1 1,893.1 4 Held by agencies 316.5 348.9 352.6 374.4 382.9 403.1 407.5 438.1 457.2 5 Agency securities 4.4 4.4 4.3 4.3 4.2 4.0 4.0 3.8 4.0 6 Held by public 3.3 3.3 3.2 3.2 3.2 3.0 2.9 2.8 3.0 7 Held by agencies 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.0 1.0 8 Debt subject to statutory limit 1,823.8 1,932.4 1,973.3 2,060.0 2,111.0 2,200.5 2,232.4 2,295.0 2,336.0 9 Public debt securities 1,822.5 1,931.1 1,972.0 2,058.7 2,109.7 2,199.3 2,231.1 2,293.7 2,334.7 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 2,078.7 2,078.7 2,078.7 2,111.0 2,300.0 2,300.0 2,320.0 2,800.0 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 Type and holder 1983 1984 1985 1986 Q4 Q1 Q2 Q3 1 Total gross public debt 1,410.7 1,663.0 1,945.9 2,214.8 2,214.8 2,246.7 2,309.3 2,350.3 By type 2 Interest-bearing debt 1,400.9 1,660.6 1,943.4 2,212.0 2,212.0 2,244.0 2,306.7 2,347.8 3 Marketable 1,050.9 1,247.4 1,437.7 1,619.0 1,619.0 1,635.7 1,659.0 1.676.0 4 Bills 343.8 374.4 399.9 426.7 426.7 406.2 391.0 378.3 5 Notes 573.4 705.1 812.5 927.5 927.5 955.3 984.4 1.005.1 6 Bonds 133.7 167.9 211.1 249.8 249.8 259.3 268.6 277.6 7 Nonmarketable1 350.0 413.2 505.7 593.1 593.1 608.3 647.7 671.8 8 State and local government series 36.7 44.4 87.5 110.5 110.5 118.5 125.4 129.0 9 Foreign issues 10.4 9.1 7.5 4.7 4.7 4.9 5.1 4.4 10 Government 10.4 9.1 7.5 4.7 4.7 4.9 5.1 4.4 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 70.7 73.1 78.1 90.6 90.6 93.0 95.2 97.0 13 Government account series3 231.9 286.2 332.2 386.9 386.9 391.4 421.6 440.7 14 Non-interest-bearing debt 9.8 2.3 2.5 2.8 2.8 2.7 2.6 2.5 By holder* 15 U.S. government agencies and trust funds 236.3 289.6 348.9 403.1 403.1 407.5 438.1 457.2 16 Federal Reserve Banks 151.9 160.9 181.3 211.3 211.3 196.4 212.3 211.9 17 Private investors 1,022.6 1,212.5 1,417.2 1,602.0 1,602.0 1,641.4 1,657.7 1,682.6 18 Commercial banks 188.8 183.4 192.2 232.1 232.1 232.0 237.1 250.5 19 Money market funds 22.8 25.9 25.1 28.6 28.6 18.8 20.6 n.a. 20 Insurance companies 56.7 76.4 95.8 106.9 106.9 n.a. n.a. n.a. 21 Other companies 39.7 50.1 59.0 68.8 68.8 73.4r 78.7 80.2 22 State and local Treasurys 155.1 179.4 n.a. n.a. n.a. n.a. n.a. n.a. Individuals 23 Savings bonds 71.5 74.5 79.8 92.3 92.3 94.7 96.8 98.5 24 Other securities 61.9 69.3 75.0 70.5r 70.5r 68.3r 68.6r 70.4 25 Foreign and international 166.3 192.9 212.5 251.5 251.5 250.7r 270. V 268.4 26 Other miscellaneous investors6 259.8 360.6 n.a. n.a. n.a. n.a. n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Consists of investments of foreign and international accounts. Excludes tion Administration; depository bonds, retirement plan bonds, and individual non-interest-bearing notes issued to the International Monetary Fund. retirement bonds. 6. Includes savings and loan associations, nonprofit institutions, credit unions, 2. Nonmarketable dollar-denominated and foreign currency-denominated se- mutual savings banks, corporate pension trust funds, dealers and brokers, certain ries held by foreigners. U.S. Treasury deposit accounts, and federally-sponsored agencies. 3. Held almost entirely by U.S. Treasury agencies and trust funds. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Data for Federal Reserve Banks and U.S. Treasury agencies and trust funds Statement of the Public Debt of the United States; data by holder. Treasury are actual holdings; data for other groups are Treasury estimates. Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transaction1 Par value; averages of daily figures, in millions of dollars 1987 1987 IItteemm 11998844 11998855 11998866 Sept. Oct. Nov. Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 Immediate delivery2 1 U.S. Treasury securities 52,778 75,331 95,445'' 108,185 138,937 95,689 172,975 155,441 121,579 108,283 88,500 86,651 By maturity ? Bills 26,035 32,900 34,247r 35,683 41,000 30,259 51,411 45,443 36,114 30,442 2288,,997700 2299,,446677 3 Other within 1 year 1,305 1,811 2,115 2,992 4,405 4,070 4,680 5,378 5,362 3,657 3,863 4,199 4 1-5 years 11,733 18,361 24,667 27,377 41,107 28,364 50,106 48,013 39,170 28,815 28,755 25,372 5-10 years 7,606 12,703 20,456' 25,973 34,061 19,153 42,385 36,646 26,046 23,119 14,588 18,208 6 Over 10 years 6,099 9,556 13,961 16,160 18,365 13,844 24,393 19,961 14,887 22,250 12,325 9,405 By type of customer / U.S. government securities dealers 2,919 3,336 3,67C 2,560' 2,750' 1,894 2,765 2,581 2,614 1,977 1,381 2,308 X U.S. government securities brokers 25,580 36,222 49,558' 64,384' 82,101' 55,448 101,567 90,832 72,254 63,613 51,658 47,509 9 All others3 24,278 35,773 42,218 41,240 54,085 38,346 68,642 62,029 46,711 42,693 35,461 36,834 10 Federal agency securities 7,846 11,640 16,748' 15,797 18,586 17,919 21,460 20,205 19,531 18,552 19,382 18,085 11 Certificates of deposit 4,947 4,016 4,355 3,234 4,927 3,392 4,922 5,142 4,105 3,782 3,100 3,329 1?. Bankers acceptances 3,243 3,242 3,272 2,799 3,362 2,727 3,466 3,320 3,168 2,482 2,740 2,997 13 Commercial paper 10,018 12,717 16,660 16,155 19,394 16,007 20,631 18,752 18,138 15,780 17,453 15,776 Futures contracts 14 Treasury bills 6,947 5,561 3,311 2,748 4,056 2,774 7,183 4,072 3,464 2,315 2,419 3,226 15 Treasury coupons 4,533 6,085 7,175 11,981 11,462 8,489 13,892 11,876 9,926 10,920 6,326 7,719 16 Federal agency securities 264 252 16 1 8 2 2 30 8 3 0 0 Forward transactions 17 U.S. Treasury securities 1,364 1,283 1,876 788 2,653 2,167 4,475 2,084 2,917 2,310 2,838 1,450 18 Federal agency securities 2,843 3,857 7,831' 8,292 7,676 7,191 9,783 7,054 6,787 9,137 8,552 5,885 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 sajes 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 • February 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'' Sept. Oct. Nov. Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 Positions Net immediate2 1 U.S. Treasury securities 5,429 7,391 12,912 -23,337 -15,440^ -6,978 -7,355' -8,383 -5,399 -8,855 -5,637 2 Bills 5,500 10,075 12,761 2,404 7,260'' 5,702 12,428 9,606 7,399 4,388 4,377 3 Other within 1 year 63 1,050 3,706 -760 -620 -565 -349 -176 -333 -856 -613 4 1-5 years 2,159 5,154 9,146 -10,137 -4,938' 1,637 942r 1,603 3,120 340 2,282 5 5-10 years -1,119 -6,202 -9,505 -8,100 -8,724 -6,214 -10,335 -10,139 -7,930 -5,516 -4,626 6 Over 10 years -1,174 -2,686 -3,197 -6,745 -8,418 -7,538 -10,041 -9,277 -7,655 -7,211 -7,058 7 Federal agency securities 15,294 22,860 32,984 33,679 34,002 29,108 34,242 30,374 29,694 30,537 27,615 8 Certificates of deposit 7,369 9,192 10,485 7,968 7,537 6,821 7,714 7,475 7,008 6,851 6,662 9 Bankers acceptances 3,874 4,586 5,526 3,016 2,879 3,151 2,950 3,298 3,377 3,168 3,066 10 Commercial paper 3,788 5,570 8,089 6,388 7,426 7,729 9,299 88,,556688 88,,889911 77,,996677 66,,556644 Futures positions 11 Treasury bills -4,525 -7,322 -18,059 -200 2,492' 1,158 2,320 2,027 1,042 1,250 594 12 Treasury coupons 1,794 4,465 3,473 7,295 s.stw' 9,170 8,815 8,678 9,150 9,479 9,334 13 Federal agency securities 233 -722 -153 -96 -100 -90 -105 -98 -92 -88 -88 Forward positions 14 U.S. Treasury securities -1,643 -911 -2,144 -191 229r 145 l,096r 1,847 2,465 -120 -1,605 15 Federal agency securities -9,205 -9,420 -11,840 -21,797 -22,78c -18,489 -22,887r -20,153 -20,105 -19,621 -16,262 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 44,078 68,035 98,954 139,783 131,194 n.a. 126,850 124,236 117,222 n.a. n.a. 17 Term 68,357 80,509 108,693 164,707 164,441 n.a. 117711,,664422 116666,,222211 117722,,220000 n.a. n.a. Repurchase agreements 18 Overnight and continuing 75,717 101,410 141,735 182,494 177,013 n.a. 175,048 171,557 145,276 n.a. n.a. 19 Term 57,047 70,076 102,640 125,741 123,372 n.a. 131,033 125,755 158,025 n.a. n.a. 1. Data for dealer positions and sources of financing are obtained from reports reverses to maturity, which are securities that were sold after having been submitted to the Federal Reserve Bank of New York by the U.S. 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 May June July Aug. Sept. Oct. 1 Federal and federally sponsored agencies 271,220 293,905 307,361 308,547 310,854 313,859 316,940 n.a. 2 Federal agencies 35,145 36,390 36,958 36,587 36,968 36,963 37,845 37,177 3 Defense Department 142 71 33 21 20 18 16 15 4 Export-Import Bank2,3 15,882 15,678 14,211 13,813 13,416 13,416 13,416 12,650 5 Federal Housing Administration 133 115 138 168 169 175 174 178 n.a. 6 Government National Mortgage Association participation certificates 2,165 2,165 2,165 1,965 1,965 1,965 1,965 1,965 7 Postal Service 1,337 1,940 3,104 3,104 3,718 3,718 4,603 4,603 8 Tennessee Valley Authority 15,435 16,347 17,222 17,431 17,595 17,586 17,586 17,766 9 United States Railway Association6 51 74 85 85 85 85 85 0 10 Federally sponsored agencies7 237,012 257,515 270,553 271,960 273,886 276,896 279,095 11 Federal Home Loan Banks 65,085 74,447 88,752 95,931 99,680 100,976 102,422 104,380 108,108 12 Federal Home Loan Mortgage Corporation 10,270 11,926 13,589 14,637 12,097 12,309 14,150 n.a. n.a. 13 Federal National Mortgage Association 83,720 93,896 93,563 90,514 91,039 91,637 91,568 92,618 94,298 14 Farm Credit Banks 72,192 68,851 62,478 56,648 56,648 55,715 55,408 55,276 55,854 15 Student Loan Marketing Association8 5,745 8,395 12,171 14,230 14,422 16,259 15,547 16,389 16,220 16 Financing Corporation n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 600 MEMO 17 Federal Financing Bank debt 145,217 153,373 157,510 157,331 157,506 157,302 158,117 157,252 n.a. Lending to federal and federally sponsored 18 Export-Import Bank3 15,852 15,670 14,205 13,807 13,410 13,410 13,410 12,644 19 Postal Service 1,087 1,690 2,854 2,854 3,468 3,468 4,353 4,353 20 Student Loan Marketing Association 5,000 5,000 4,970 4,970 4,970 4,970 4,970 4,970 21 Tennessee Valley Authority 13,710 14,622 15,797 16,051 16,215 16,206 16,206 16,386 n.a. 22 United States Railway Association6 51 74 85 85 85 85 85 0 Other Lending11 23 Farmers Home Administration 58,971 64,234 65,374 65,304 65,199 65,049 65,069 65,009 24 Rural Electrification Administration 20,693 20,654 21,680 21,525 21,539 21,529 21,503 21,197 25 Other 29,853 31,429 32,545 32,735 32,620 32,585 32,521 32,693 1. Consists of mortgages assumed by the Defense Department between 1957 8. Before late 1981, the Association obtained financing through the Federal and 1963 under family housing and homeowners assistance programs. Financing Bank (FFB). 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 9. The Financing Corporation, established in August 1987 to recapitalize the 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 4. Consists of debentures issued in payment of Federal Housing Administration October 1987. insurance claims. Once issued, these securities may be sold privately on the 10. The FFB, which began operations in 1974, is authorized to purchase or sell securities market. obligations issued, sold, or guaranteed by other federal agencies. Since FFB 5. Certificates of participation issued before fiscal 1969 by the Government incurs debt solely for the purpose of lending to other agencies, its debt is not National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing included in the main portion of the table in order to avoid double counting. and Urban Development; Small Business Administration; and the Veterans 11. Includes FFB purchases of agency assets and guaranteed loans; the latter Administration. contain loans guaranteed by numerous agencies with the guarantees of any 6. Off-budget. particular agency being generally small. The Farmers Home Administration item 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- consists exclusively of agency assets, while the Rural Electrification Administratures. Some data are estimated. tion entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 DomesticN onfinancial Statistics • February 1988 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1987 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998844 11998855 11998866 Apr. May June July Aug. Sept. Oct. Nov. 1 All issues, new and refunding1 106,641 214,189 147,011 6,708 6,037 10,718 6,967 6,500 5,510 6,257 7,113 Type of issue 2 General obligation 26,485 52,622 46,346 3,363 2,872 3,329 2,238 1,975 1,755 1,127 2,374 3 Revenue 80,156 161,567 100,664 3,345 3,165 7,389 4,729 4,525 3,755 5,130 4,739 Type of issuer 4 State 9,129 13,004 14,474 419 1,002 1,138 834 398 535 385 431 5 Special district and statutory authority 63,550 134,363 89,997 4,665 3,019 6,453 3,951 4,508 3,712 4,668 4,103 6 Municipalities, counties, townships 33,962 66,822 42,541 1,624 2,017 3,127 2,182 1,594 1,263 1,204 2,579 7 Issues for new capital, total 94,050 156,050 83,490 3,117 3,848 7,552 4,478 5,084 4,340 4,095 6,120 Use of proceeds 8 Education 7,553 16,658 16,948 786 789 1,554 773 869 653 480 808 9 Transportation 7,552 12,070 11,666 98 194 705 647 226 311 168 327 10 Utilities and conservation 17,844 26,852 35,383 360 518 1,313 823 424 491 590 981 11 Social welfare 29,928 63,181 17,332 364 454 1,082 465 903 647 896 1,651 12 Industrial aid 15,415 12,892 5,594 91 204 498 469 1,630 412 683 178 13 Other purposes 15,758 24,398 47,433 1,308 1,689 2,399 1,301 1,033 1,826 1,278 2,175 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 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 issues1 155,741 239,015 423,726 37,964' 23,735 19,969 28,446r 27,4ir 21,888' 29,293 20,360 2 Bonds2 133,113 203,500 355,293 28,154r 19,518 13,431 22,094r 22,071r 17,685' 23,635 17,341 Type of offering 3 Public, domestic 74,175 119,559 231,936 23,399 17,634 11,394 20,564 19,045' 14,852 21,975 15,845 4 Private placement, domestic3 36,324 46,195 80,761 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 22,613 37,781 42,596 4,755 1,884 2,037 1,530 3,026 2,833 1,660 1,496 Industry group 6 Manufacturing 32,804 63,973 91,548 7,180 2,734 5,035 4,104 5,552 3,343' 3,506 2,673 7 Commercial and miscellaneous 14,792 17,066 40,124 4,261 1,683 754 2,061 1,037 1,281 1,479 1,131 8 Transportation 4,784 6,020 9,971 521 168 21 0 343 296 25 263 9 Public utility 10,996 13,649 31,426 794 1,370 572 2,091 1,654 1,533 1,702 975 10 Communication 3,400 10,832 16,659 710 175 138 205 119 856 930 1,384 11 Real estate and financial 66,336 91,958 165,564 14,689 13,389 6,912 13,632 13,366' 10,377' 15,992 10,916 12 Stocks3 22,628 35,515 68,433 9,810 4,217 6,538 6,352 5,340 4,203 5,658 3,019 Type 13 Preferred 4,118 6,505 11,514 2,257 526 1,170 1,202 1,157 906 1,112 236 14 Common 18,510 29,010 50,316 7,553 3,691 5,368 5,150 4,183 3,297 4,546 2,783 66,,660033 nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. n a Industry group 16 Manufacturing 4,054 5,700 15,027 2,016 653 1,066 1,438 1,046 370 858 667 17 Commercial and miscellaneous 6,277 9,149 10,617 2,366 2,203 1,516 1,353 879 996 807 656 18 Transportation 589 1,544 2,427 299 230 3 492 379 0 11 40 19 Public utility 1,624 1,966 4,020 907 297 374 329 472 85 529 51 20 Communication 419 978 1,825 57 18 200 199 294 277 75 107 21 Real estate and financial 9,665 16,178 34,517 4,165 816 3,379 2,541 2,270 2,475 3,378 1,498 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 Mar. Apr. May June July Aug. Sept. Oct. INVESTMENT COMPANIES1 1 Sales of own shares2 222,670 411,751 40,378 42,857 28,295 28,637 27,970 26,455 24,834 25,990 2 Redemptions of own shares3 132,440 239,394 24,730 37,448 23,453 23,693 22,807 22,561 28,323 34,597 3 Net sales 90,230 172,357 15,648 5,409 4,842 4,944 5,763 3,894 -3,489 -8,607 4 Assets4 251,695 424,156 506,752 502,487 500,634 516,866 531,022 539,171 521,007 456,422 5 Cash position5 20,607 30,716 37,090 43,009 39,158 41,467 41,587 40,802 42,397' 40,929 6 Other 231,088 393,440 469,662 459,478 461,476 475,099 489,435 498,369 478,610' 415,493 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 QI Q2 Q3' 1 Corporate profits with inventory valuation and capita! consumption adjustment 266.9 277.6 284.4 277.8 288.0 282.3 286.4 281.1 294.0 296.8 314.9 2 Profits before tax 239.9 224.8 231.9 233.5 218.9 224.4 236.3 247.9 257.0 268.7 284.9 3 Profits tax liability 93.9 96.7 105.0 99.1 98.1 102.1 106.1 113.9 128.0 134.2 143.0 4 Profits after tax 146.1 128.1 126.8 134.4 120.9 122.3 130.2 134.0 129.0 134.5 141.9 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 46.7 7 Inventory valuation -5.8 -.8 6.5 -9.8 17.8 11.3 6.0 -8.9 -11.3 -20.0 -17.6 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 • February 1988 1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities1 Billions of dollars, except for ratio 1985 1986 AAccccoouunntt 11998800 11998811 11998822 11998833 11998844 Q1 Q2 Q3 Q4 Q1 1 Current assets 1,328.3 1,419.6 1,437.1 1,565.9 1,703.0 1,722.7 1,734.6 1,763.0 1,784.6 1,795.7 2 Cash 127.0 135.6 147.8 171.8 173.6 167.5 167.1 176.3 189.2 195.3 3 U.S. government securities 18.7 17.7 23.0 31.0 36.2 35.7 35.4 32.6 33.0 31.0 4 Notes and accounts receivable 507.5 532.5 517.4 583.0 633.1 650.3 654.1 661.0 671.5 663.4 5 Inventories 543.0 584.0 579.0 603.4 656.9 665.7 666.7 675.0 666.0 679.6 6 Other 132.1 149.7 169.8 186.7 203.2 203.5 211.2 218.0 224.9 226.3 7 Current liabilities 890.6 971.3 986.0 1,059.6 1,163.6 1,174.1 1,182.9 1,211.9 1,233.6 1,222.3 8 Notes and accounts payable 514.4 547.1 550.7 595.7 647.8 636.9 651.7 670.4 682.7 668.4 9 Other 376.2 424.1 435.3 463.9 515.8 537.1 531.2 541.5 550.9 553.9 10 Net working capital 437.8 448.3 451.1 516.3 539.5 548.6 551.7 551.1 551.0 573.4 11 MEMO: Current ratio2 1.492 1.462 1.459 1.487 1.464 1.467 1.466 1.455 1.447 1.469 1. For a description of this series, see "Working Capital of Nonfinancial 2. Ratio of total current assets to total current liabilities. Corporations" in the July 1978 BULLETIN, pp. 533-37. Data are not currently SOURCE. Federal Trade Commission and Bureau of the Census, available after 1986:1. 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1986 1987 1988 IInndduussttrryy 11998855 11998866 1199887711'' Q1 Q3 Q4 Q1 Q2 Q3 Q41 QL2 1 Total nonfarm business 387.13 379.47 390.57 376.21 375.50 386.09 374.23 377.65 393.13 417.25 427.97 Manufacturing 2 Durable goods industries 73.27 69.14 71.85 68.56 69.42 69.87 70.47 68.76 71.78 76.40 78.41 3 Nondurable goods industries 80.21 73.56 76.01 73.62 70.01 74.20 70.18 72.03 75.78 86.05 86.27 Nonmanufacturing 4 Mining 15.88 11.22 11.18 11.29 10.14 10.31 10.31 11.02 11.64 11.74 11.86 Transportation 5 Railroad 7.08 6.66 6.15 6.70 7.02 6.41 5.55 5.77 6.21 7.08 7.66 6 Air 4.79 6.26 6.53 5.87 5.78 6.84 7.46 5.72 5.91 7.03 8.35 7 Other 6.15 5.89 6.42 5.83 6.01 6.25 5.97 6.19 7.05 6.48 6.92 Public utilities 8 Electric 36.11 33.91 31.65 33.77 33.81 33.78 30.85 31.13 31.31 33.32 31.65 9 Gas and other 12.71 12.47 12.88 12.66 12.00 12.34 12.75 12.35 13.58 12.84 13.72 10 Commercial and other 150.93 160.38 167.89 157.91 161.31 166.08 160.70 164.69 169.87 176.29 183.15 •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 89.9 113.4 117.2 125.1 137.1 136.5 133.9 138.0 144.4 2 Business 113.4 137.8 158.3 165.9 167.7 161.0 174.8 182.8 189.0 188.7 3 Real estate 20.5 23.8 28.9 29.9 30.8 32.1 33.7 35.1 36.9 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: 5 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 57.7 65.0 9 Total assets 217.6 249.2 301.9 316.8 326.6 342.3 355.6 364.5 374.2 387.1 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 24.4 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 Extensions Repayments AAAccccccooouuunnntttsss receivable rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuu OOO tttsss ccc tttaaa ttt... nnn ddd 333111 iiinnn ggg 1987 1987 1987 111999888777111 Aug. Sept. Oct. Aug. Sept. Oct. Aug. Sept. Oct. 1 Total 193,597 1,400 1,754 4,337 29,862 30,294 30,929 28,282 28,540 26,592 Retail financing of installment sales 2 Automotive (commercial vehicles) 32,507 1,206 -16 735 1,351 1,365 1,159 145 1,382 424 3 Business, industrial, and farm equipment 24,431 65 529 258 1,644 1,688 1,526 1,579 1,158 1,268 Wholesale financing 4 Automotive 26,883 -1,572 -1,029 3,485 11,335 10,810 12,557 12,907 11,839 9,072 5 Equipment 5,608 73 -1 249 601 710 886 528 711 637 6 All other 7,625 152 223 -1,455 3,251 33,,225511 2,983 33,,110000 3,028 4,437 Leasing 7 Automotive 21,027 560 561 -197 1,086 1,340 1,117 526 779 1,314 8 Equipment 40,766 280 422 188 1,403 952 1,245 1,123 530 1,057 9 Loans on commercial accounts receivable and factored commercial accounts receivable 18,472 331 248 704 7,712 8,488 8,241 7,382 8,240 7,537 10 All other business credit 16,278 306 817 369 1,298 1,690 1,215 992 873 846 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 DomesticN onfinancial Statistics • February 1988 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1987 IItteemm 11998844 11998855 11998866 May June July Aug. Sept. Oct. Nov. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms 1 Purchase price (thousands of dollars) 96.8 104.1 118.1 132.9 131.8 134.6 141.2 140.2 145.3r 132.6 2 Amount of loan (thousands of dollars) 73.7 77.4 86.2 99.0 97.5 99.4 102.6 100.8 106. r 98.3 3 Loan/price ratio (percent) 78.7 77.1 75.2 76.1 75.9 75.4 75.0 74.6 75.(K 75.6 4 Maturity (years) 27.8 26.9 26.6 28.0 28.0 27.9 27.8 27.3 28.3r 28.2 5 Fees and charges (percent of loan amount)2 2.64 2.53 2.48 2.26 2.40 2.42 2.19 2.08 2.34' 2.35 6 Contract rate (percent per annum) 11.87 11.12 9.82 8.99 9.05 9.01 9.01 9.03 8.86' 8.96 Yield (percent per year) 7 FHLBB series3 12.37 11.58 10.25 9.37 9.45 9.41 9.38 9.37 9.25' 9.35 8 HUD series 13.80 12.28 10.07 10.44 10.29 10.22 10.37 10.86 10.87 n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 , 13.81 12.24 9.91 10.61 10.33 10.38 10.55 10.71 10.90 n.a. 10 GNMA securities6 13.13 11.61 9.30 9.40 9.50 9.59 9.77 10.40 10.53 9.96 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 83,339 94,574 98,048 94,064 94,064 94,154 94,600 94,884 95,097 95,411 12 FHA/VA-insured 35,148 34,244 29,683 21,999 21,892 21,730 21,555 21,620 21,481 21,510 13 Conventional 48,191 60,331 68,365 72,065 72,173 72,424 73,045 73,264 73,617 73,902 Mortgage transactions (during period) 14 Purchases 16,721 21,510 30,826 1,718 1,690 1,569 1,613 1,743 1,278 1,297 Mortgage commitments7 15 Contracted (during period) 21,007 20,155 32,987 1,726 1,745 2,373 2,276 1,842 1,566 2,899 16 Outstanding (end of period) 6,384 3,402 3,386 4,410 4,448 5,071 5,690 5,627 5,046 5,845 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 9,283 12,399 13,517 12,442 12,598 12,834 12,924 12,940 18 FHA/VA 910 841 746 688 694 684 679 672 19 Conventional 8,373 11,559 12,771 11,754 11,903 12,150 12,245 12,269 Mortgage transactions (during period) 70 Purchases 21,886 44,012 103,474 7,995 7,864 7,252 5,031 4,297 n.a. n.a. 21 18,506 38,905 100,236 7,767 7,447 6,831 4,723 4,160 Mortgage commitments9 22 Contracted (during period) 32,603 48,989 110,855 7,182 7,330 5,611 4,506 3,507 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associmajor institutional lender groups; compiled by the Federal Home Loan Bank ation guaranteed, mortgage-backed, fully modified pass-through securities, as- Board in cooperation with the Federal Deposit Insurance Corporation. suming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying 2. Includes all fees, commissions, discounts, and "points" paid (by the the prevailing ceiling rate. Monthly figures are averages of Friday figures from the borrower or the seller) to obtain a loan. Wall Street Journal. 3. Average effective interest rates on loans closed, assuming prepayment at the 7. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Based on transactions on first day of subsequent month. Large securities swap programs, while the corresponding data for FNMA exclude swap monthly movements in average yields may reflect market adjustments to changes activity. in maximum permissable contract rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A39 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1986 1987 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998844 11998855 11998866 Q3 Q4 QL Q2 Q3 1 All holders 2,035,238 2,269,173 2,566,734 2,472,285 2,566,734 2,662,331 2,754,471 2,827,622 2 1- to 4-family 1,318,545 1,467,409 1,666,421 1,607,857 1,666,421 1,712,109 1,778,306 1,830,432 3 Multifamily 185,604 214,045 246,984 237,754 246,984 257,286 266,383 272,757 4 Commercial 419,444 482,029 556,569 527,163 556,569 599,384 617,627 633,167 5 111,645 105,690 96,760 99,511 96,760 93,552 92,155 91,266 6 Selected financial institutions 1,269,702 1,390,394 1,507,289 1,464,924 1,507,289 1,560,403 1,607,771 1,646,764 7 Commercial banks 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 1? 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 IS 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 156,699 171,797 193,842 185,980 193,842 195,743 200,382 204,632 18 1- to 4-family 14,120 12,381 12,827 12,985 12,827 12,903 12,745 12,745 19 Multifamily 18,938 19,894 20,952 20,802 20,952 20,934 21,663 21,863 70 Commercial 111,175 127,670 149,111 140,841 149,111 151,420 155,611 159,811 71 Farm 12,466 11,852 10,952 11,352 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 75 1- to 4-family 585 539 47 48 47 46 45 44 76 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 79 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 32 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 34,93C 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 32,875r 41 Federal Home Loan Mortgage Corporation 10,399 14,022 11,564 13,359 11,564 12,940 12,597 12,94C 47 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 1,37c 44 Mortgage pools or trusts6 332,057 415,042 529,763 522,721 529,763 571,705 612,340 641,239r 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,J37 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 6,564r 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 0 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 274,486 296,809 325,882 325,135 325,882 330,714 337,846 348,058 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 • February 1988 1.55 CONSUMER INSTALLMENT CREDIT1-4 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1987 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998855 11998866 Feb. Mar. Apr. May June July Aug. Sept/ Oct. Amounts outstanding (end of period) 1 Total 522,805 577,784 579,591 579,913 583,595 583,276 587,821 591,175 596,182 602,607 606,346 By major holder 2 Commercial banks .... 242,084 261,604 262,105 261,933 263,433 263,463 264,3% 265,085 265,893 269,155 270,936 3 Finance companies ... 113,070 136,494 136,009 136,050 137,091 136,398 138,038 138,745 140,689 142,648 143,118 4 Credit unions 72,119 77,857 78,492 78,569 79,255 79,476 80,585 81,492 82,486 83,340 84,207 5 Retailers 38,864 40,586 40,644 40,469 40,467 40,318 40,287 40,364 40,391 40,482 40,848 6 Savings institutions ... 52,433 58,037 59,031 59,488 59,826 60,045 60,983 61,910 63,080 63,279 63,546 7 Gasoline companies ... 4,235 3,205 3,311 3,405 3,522 3,576 3,532 3,580 3,643 3,703 3,691 By major type of credit 8 Automobile 208,057 245,055 246,064 246,290 247,663 247,578 250,130 250,980 254,013 257,470 259,0% 9 Commercial banks .. 93,003 100,709 101,688 101,528 101,781 102,189 102,810 102,829 103,382 104,662 105,479 10 Credit unions 35,635 39,029 39,347 39,386 39,730 39,841 40,396 40,851 41,349 41,777 42,212 11 Finance companies.. 70,091 93,274 92,780 93,032 93,738 93,089 94,270 94,455 96,193 97,900 98,219 12 Savings institutions . 9,328 12,043 12,249 12,344 12,414 12,459 12,654 12,846 13,089 13,130 13,186 13 Revolving 122,021 134,938 135,663 135,166 136,706 136,869 137,401 138,741 139,837 141,704 143,272 14 Commercial banks .. 75,866 85,652 86,053 85,567 86,929 87,133 87,590 88,685 89,535 91,226 92,419 15 Retailers 34,695 36,240 36,308 36,141 36,139 36,009 35,971 36,021 36,022 36,087 36,416 16 Gasoline companies . 4,235 3,205 3,311 3,405 3,522 3,576 3,532 3,580 3,643 3,703 3,691 17 Savings institutions . 5,705 7,713 7,845 7,906 7,951 7,980 8,105 8,228 8,383 8,410 8,445 18 Credit unions 1,520 2,128 2,145 2,147 2,166 2,172 2,202 2,227 2,254 2,278 2,301 19 Mobile home 25,488 25,710 25,789 25,614 25,626 25,542 25,685 25,860 25,695 25,699 25,689 20 Commercial banks .. 9,538 8,812 8,739 8,725 8,698 8,615 8,609 8,626 8,518 8,538 8,462 21 Finance companies.. 9,391 9,028 9,045 8,823 8,816 8,785 8,807 8,839 8,623 8.580 8,610 22 Savings institutions . 6,559 7,870 8,005 8,067 8,112 8,142 8,269 8,395 8,554 8.581 8,617 23 Other 167,239 172,081 172,076 172,844 173,600 173,287 174,605 175,594 176,637 177,733 178,288 24 Commercial banks .. 63,677 66,431 65,625 66,113 66,026 65,527 65,387 64,945 64,458 64,728 64,576 25 Finance companies.. 33,588 34,192 34,183 34,196 34,537 34,524 34,962 35,452 35,874 36,168 36,289 26 Credit unions 34,964 36,700 36,999 37,036 37,359 37,463 37,986 38,413 38,882 39,285 39,694 27 Retailers 4,169 4,346 4,336 4,327 4,328 4,310 4,315 4,343 4,369 4,395 4,432 28 Savings institutions . 30,841 30,412 30,932 31,172 31,349 31,463 31,955 32,441 33,054 33,158 33,298 Net change (during period) 29 Total 76,622 54,979 1,013 322 3,682 -319 4,545 3,354 5,007 6,425 3,739 By major holder 30 Commercial banks 32,926 19,520 411 -172 1,500 30 933 689 808 3,262 1,781 31 Finance companies 23,566 23,424 207 41 1,041 -693 1,640 707 1,944 1,959 470 32 Credit unions 6,493 5,738 208 77 686 221 1,109 907 994 854 867 33 Retailers 1,660 1,722 27 -175 -2 -149 -31 77 27 91 366 34 Savings institutions 12,103 5,604 125 457 338 219 938 927 1,170 199 267 35 Gasoline companies -126 -1,030 35 94 117 54 -44 48 63 60 -12 By major type of credit 36 Automobile 35,705 36,998 592 226 1,373 -85 2,552 850 3,033 3,457 1,626 37 Commercial banks 9,103 7,706 299 -160 253 408 621 19 553 1,280 817 38 Credit unions 5,330 3,394 104 39 344 111 555 455 498 428 435 39 Finance companies 17,840 23,183 163 252 706 -649 1,181 185 1,738 1,707 319 40 Savings institutions 3,432 2,715 26 95 70 45 195 192 243 41 56 41 Revolving 22,401 12,917 747 -497 1,540 163 532 1,340 1,096 1,867 1,568 42 Commercial banks 17,721 9,786 658 -486 1,362 204 457 1,095 850 1,691 1,193 43 Retailers 1,488 1,545 31 -167 -2 -130 -38 50 1 65 329 44 Gasoline companies -126 -1,030 35 94 117 54 -44 48 63 60 -12 45 Savings institutions 2,771 2,008 16 61 45 29 125 123 155 27 35 46 Credit unions 547 608 6 2 19 6 30 25 27 24 23 47 Mobile home 778 222 -63 -175 12 -84 143 175 -165 4 -10 48 Commercial banks -85 -726 -48 -14 -27 -83 -6 17 -108 20 -76 49 Finance companies -405 -363 -32 -222 -7 -31 22 32 -216 -43 30 50 Savings institutions 1,268 1,311 17 62 45 30 127 126 159 27 36 51 Other 17,738 4,842 -262 768 756 -313 1,318 989 1,043 1,0% 555 52 Commercial banks 6,187 2,754 -497 488 -87 -499 -140 -442 -487 270 -152 53 Finance companies 6,131 604 75 13 341 -13 438 490 422 294 121 54 Credit unions 616 1,736 98 37 323 104 523 427 469 403 409 55 Retailers 172 177 -4 -9 1 -18 5 28 26 26 37 56 Savings institutions 4,632 -429 65 240 177 114 492 486 613 104 140 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 Apr. May June July Aug. Sept. Oct. INTEREST RATES Commercial banks1 1 48-month new car2 13.71 12.91 11.33 n.a. 10.23 n.a. n.a. 10.37 n.a. n.a. 2 24-month personal 16.47 15.94 14.82 n.a. 14.00 n.a. n.a. 14.22 n.a. n.a. 3 120-month mobile home2 15.58 14.96 13.99 n.a. 13.23 n.a. n.a. 13.24 n.a. n.a. 4 Credit card 18.77 18.69 18.26 n.a. 17.92 n.a. n.a. 17.85 n.a. n.a. Auto finance companies New car 14.62 11.98 9.44 10.81 10.69 10.64 10.52 9.63 8.71 10.31 6 Used car 17.85 17.59 15.95 14.49 14.45 14.47 14.53 14.53 14.58 14.76 OTHER TERMS3 Maturity (months) 7 New car 48.3 51.5 50.0 54.3 53.5 53.6 53.4 52.1 50.7 52.8 8 Used car 39.7 41.4 42.6 45.0 45.2 45.4 45.5 45.4 45.2 45.2 Loan-to-value ratio 9 New car 88 91 91 94 93 93 93 93 93 93 10 Used car 92 94 97 98 98 98 98 98 98 99 Amount financed (dollars) 11 New car 9,333 9,915 10,665 10,946 11,176 11,214 11,267 11,374 11,455 11,585 12 Used car 5,691 6,089 6,555 7,234 7,373 7,479 7,527 7,763 7,476 7,537 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 • February 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 2 U.S. eovernment 161.3 186.6 198.8 223.6 214.3 190.4 207.2 204.8 242.5 207.2 221.5 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 Agency issues and mortgages -.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 1? Commercial 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 Farm 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 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 16 Bank loans n.e.c 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 governments 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 7? 6.8 4.1 -.1 -13.9 -15.1 -.5 .4 -7.0 -20.8 -16.8 -13.3 -19.5 73 Nonfarm noncorporate 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 25 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 Telated 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 62 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 29 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/Iine 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 inflows 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 • February 1988 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1987 MMeeaassuurree 11998844 11998855 11998866 Mar. Apr. May June July Aug/ Sept/ Oct/ Nov. 1 Industrial production 121.4 123.8 125.1 127.4 127.4 128.2 129.1 130.6 131.2 130.9 132.0 132.5 Market groupings 2 Products, total 126.7 130.8 133.2 136.4 135.8 136.9 137.8 139.5 139.9 139.2 140.8 141.2 3 Final, total 127.3 131.1 132.3 135.1 134.5 135.5 136.2 137.9 138.4 137.7 139.4 139.7 4 Consumer goods 118.0 120.2 124.5 126.7 125.5 127.3 127.2 128.9 129.4 127.6 129.3 129.4 5 Equipment 139.6 145.4 142.7 146.2 146.4 146.3 148.1 149.7 150.2 151.0 152.8 153.4 6 Intermediate 124.7 130.0 136.4 140.9 140.3 141.8 143.3 145.0 145.3 144.7 145.3 146.1 7 Materials 114.2 114.2 113.9 115.2 115.9 116.3 117.2 118.5 119.4 119.5 120.1 120.6 Industry groupings 8 Manufacturing 123.4 126.4 129.1 132.4 132.4 133.2 134.0 135.6 135.9 135.7 137.0 137.5 Capacity utilization (percent)2 9 Manufacturing 80.5 80.1 79.8 80.3 80.2 80.4 80.8 81.5 81.5 81.3 81.8 82.0 10 Industrial materials industries 82.0 80.2 78.5 78.7 79.1 79.3 79.8 80.6 81.1 81.0 81.3 81.6 11 Construction contracts (1982 = 100)3 135.0 148.0 155.0 165.0 162.0 149.0 161.0 163.0 171.0 157.0 166.0 153.0 12 Nonagricultural employment, total4 114.6 118.3 120.8 122.9 123.2 123.3 123.5 123.8 124.0 124.2 124.9 125.2 13 Goods-producing, total 101.6 102.4 102.4 101.7 101.7 101.7 101.7 102.1 102.2 102.4 102.9 103.3 14 Manufacturing, total 98.4 97.8 96.5 96.5 96.6 96.6 96.6 97.0 97.2 97.4 97.8 98.1 15 Manufacturing, production-worker 94.1 92.6' 91.2 91.4 91.5 91.6 91.6 92.1 92.2 92.5 92.9 93.3 16 Service-producing 120.0 125.0 128.9 131.8 132.2 132.4 132.6 132.9 133.1 133.4 134.1 134.4 17 Personal income, total 193.4 207.0 219.9 229.1 230.3 230.7 231.1 232.6 233.9 235.3 239.5 238.5 18 Wages and salary disbursements 185.0 198.7 210.2 218.6 219.5 220.7 221.2 222.3 224.2 225.4 227.1 228.7 19 Manufacturing 164.6 172.8 176.4 179.2 178.9 179.9 180.0 180.1 182.0 183.7 184.6 185.6 20 Disposable personal income 193.5 206.0 219.1 228.1 222.5 229.6 228.9 230.4R 231.6 232.9 237.5 235.9 21 Retail sales 179.0 190.6 199.9 206.8 207.4 207.3 209.6 210.9 214.0 210.5 208.5 208.9 Prices7 22 Consumer (1967 = 100) 311.1 322.2 328.4 335.9 337.7 338.7 340.1 340.8 342.7 344.4 345.3 345.8 23 Producer finished goods (1967 = 100) ... 291.1 293.7 289.7 292.6 294.9 295.8 296.2 297.4R 297.2 296.7 298.2 298.1 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 Commerce, and other sources. NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, 3. Index of dollar value of total construction contracts, including residential, and indexes for series mentioned in notes 3 and 7 may also be found in the Survey nonresidential and heavy engineering, from McGraw-Hill Information Systems of Current Business. Company, F. W. Dodge Division. Figures for industrial production for the last two months are preliminary and 4. Based on data in Employment and Earnings (U.S. Department of Labor). estimated, respectively. 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 Apr. May June July Aug. Sept. Oct. Nov. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 178,602 180,440 182,822 184,597 184,777 184,941 185,127 185,264 185,428 185,575 185,737 2 Labor force (including Armed Forces)1 115,763 117,695 120,078 121,588 122,237 121,755 122,194 122,564 122,128 122,625 122,883 3 Civilian labor force 113,544 115,461 117,834 119,335 119,993 119,517 119,952 120,302 119,861 120,361 120,616 4 Nonagricultural industries2 101,685 103,971 106,434 108,545 109,112 109,079 109,508 109,989 109,602 109,903 110,333 5 Agriculture 3,321 3,179 3,163 3,290 3,335 3,178 3,219 3,092 3,170 3,283 3,167 Unemployment 6 Number 8,539 8,312 8,237 7,500 7,546 7,260 7,224 7,221 7,089 7,174 7,116 7 Rate (percent of civilian labor force) 7.5 7.2 7.0 6.3 6.3 6.1 6.0 6.0 5.9 6.0 5.9 8 Not in labor force 62,839 62,745 62,744 63,009 62,540 63,186 62,933 62,700 63,300 62,950 62,854 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 94,496 97,519 99,610 101,598 101,708 101,818 102,126 102,275 102,434' 102,970' 103,244 10 Manufacturing 19,378 19,260 18,994 19,011 19,018 19,015 19,104 19,129 19,169'' 19,245' 19,314 11 Mining 966 927 783 729 735 738 744 751 759' 764' 760 12 Contract construction 4,383 4,673 4,904 5,019 4,999 5,008 5,002 5,006 4,989' 5,044' 5,078 13 Transportation and public utilities 5,159 5,238 5,244 5,348 5,344 5,350 5,363 5,377 5,416r 5,428' 5,455 14 22,100 23,073 23,580 23,969 23,980 24,007 24,071 24,063 24,129' 24,230' 24,233 15 Finance 5,689 5,955 6,297 6,558 6,576 6,586 6,608 6,624 6,629' 6,644' 6,659 16 Service 20,797 22,000 23,099 23,926 24,025 24,083 24,214 24,279 24,295' 24,411' 24,499 17 Government 16,023 16,394 16,710 17,038 17,031 17,031 17,020 17,046 17,048 17,204' 17,246 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • February 1988 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1986 1987 1986 1987 1986 1987 SSeerriieess Q4 Q1 Q2 Q3R Q4 QL Q2 Q3 Q4 QL Q2 Q3R 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 99.0 100.6 130.8 130.4 129.7 129.0 74.1 75.8 76.3 78.0 3 Utilities 109.1 108.1 108.3 111.6 137.3 137.7 138.3 138.8 79.4 78.5 78.3 80.4 4 Manufacturing 130.4 131.6 133.2 135.7 163.4 164.5 165.6 166.7 79.8 80.0 80.5 81.4 5 Primary processing 113.4 114.3 116.1 119.2 137.5 138.2 139.0 139.8 82.5 82.7 83.5 85.2 6 Advanced processing 140.6 142.0 143.5 145.8 179.1 180.3 181.6 182.9 78.5 78.7 79.0 79.9 7 Materials 114.3 115.0 116.5 119.1 145.8 146.1 146.7 147.2 78.5 78.7 79.4 80.9 8 Durable goods 120.7 121.4 122.9 125.5 162.2 162.3 163.1 163.9 74.7 74.8 75.4 76.6 9 Metal materials 75.4 74.7 77.0 83.6 113.4 110.6 110.0 109.4 67.7 67.5 70.0 76.4 10 Nondurable goods 120.3 121.2 124.0 128.2 140.4 142.9 143.8 144.7 84.7 84.8 86.2 88.6 11 Textile, paper, and chemical .. 120.9 122.3 125.1 130.5 139.6 142.4 143.4 144.4 85.4 85.9 87.2 90.4 12 Paper 137.0 136.4 137.7 144.5 139.7 142.8 143.9 145. V 96.7 95.5 95.7 99.6 13 Chemical 120.3 122.9 125.3 130.7 145.0 148.8 149.8 150.9R 81.4 82.6 83.6 86.3 14 Energy materials 97.8 98.3 98.7 100.0 121.6 120.3 120.2 120.1 81.2 81.7 82.1 83.3 Previous cycle1 Latest cycle2 1986 1987 High Low High Low Nov. Mar. Apr. May June July Aug/ Sept/ Oct/ Nov. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 79.2 79.7 79.6 79.9 80.3 81.1 81.4 81.0 81.5 81.7 16 Mining 92.8 87.8 95.2 76.9 74.5 75.5 75.9 76.5 76.6 76.8 78.2 79.0 79.2 79.2 17 Utilities 95.6 82.9 88.5 78.0 79.8 78.2 76.8 79.2 79.0 80.2 81.3 79.8 81.6 82.0 18 Manufacturing 87.7 69.9 86.5 68.0 79.6 80.3 80.2 80.4 80.8 81.5 81.5 81.3 81.8 82.0 19 Primary processing.... 91.9 68.3 89.1 65.1 82.5 83.1 83.5 83.2 84.0 85.4 85.3 85.1 85.6 85.9 20 Advanced processing.. 86.0 71.1 85.1 69.5 78.3 79.1 78.7 79.2 79.2 79.8 79.9 79.5 80.1 80.2 21 Materials 92.0 70.5 89.1 68.5 78.5 78.7 79.1 79.3 79.8 80.6 81.1 81.0 81.3 81.6 22 Durable goods 91.8 64.4 89.8 60.9 74.6 75.2 75.0 75.1 75.9 76.5 76.6 76.7 77.5 77.7 23 Metal materials ,, 99.2 67.1 93.6 45.7 68.6 68.7 68.8 69.7 71.5 73.9 77.5 77.9 81.1 80.7 24 Nondurable goods 91.1 66.7 88.1 70.7 83.9 84.8 86.5 86.2 86.1 88.4 88.6 88.7 87.9 88.1 25 Textile, paper, and chemical 92.8 64.8 89.4 68.8 84.4 85.8 87.5 87.1 87.1 90.0 90.5 90.7 89.9 90.2 76 98.4 70.6 97.3 79.9 96.5 94.6 95.1 95.7 96.3 100.5 99.9 98.4 97.3 77 92.5 64.4 87.9 63.5 79.9 8822..22 83.9 83.9 83.1 85.1 86.4 87.4 87.1 28 Energy materials 94.6 86.9 94.0 82.3 82.1 8800..88 81.3 82.1 82.8 82.4 84.0 83.5 83.7 84.4 1. Monthly high 1973; monthly low 1975. NOTE. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly highs 1978 through 1980; monthly lows 1982. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value 4 Monthly data are seasonally adjusted 1977 1986 1987 pro- 1986 GGrroouuppss por- AVG. tion Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug/ Sept. Oct." Nov/ Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 125.0 126.0 126.7 126.5 127.2 127.3 127.4 128.4 129.1 130.6 131.2 130.9 132.0 132.5 7 Products 57.72 133.2 134.5 135.0 134.9 136.1 136.2 137.2 137.2 137.8 139.5 139.9 139.2 140.8 141.2 3 Final products 44.77 132.3 133.1 133.7 133.6 135.0 135.0 134.5 135.8 136.2 137.9 138.4 137.7 139.4 139.7 4 Consumer goods 25.52 124.5 125.6 127.2 126.8 127.5 127.5 126.6 128.2 127.2 128.9 129.4 127.6 129.3 129.4 5 Equipment 19.25 142.7 143.1 142.2 142.8 144.9 145.0 144.9 145.8 148.1 149.7 150.2 151.0 152.8 153.4 6 Intermediate products 12.94 136.4 139.2 139.7 139.1 139.7 140.4 139.9 142.1 143.3 145.0 145.3 144.7 145.3 146.1 7 Materials 42.28 113.9 114.3 115.2 115.2 115.1 115.2 116.2 116.3 117.2 118.5 119.4 119.5 120.1 120.6 Consumer goods 8 Durable consumer goods 6.89 116.2 118.4 121.5 120.0 122.4 121.2 118.1 120.2 117.4 120.4 121.2 118.3 123.5 123.1 9 Automotive products 2.98 115.1 114.6 117.7 117.6 123.5 121.2 115.7 118.0 114.9 117.5 118.0 113.8 123.8 122.1 10 Autos and trucks 1.79 112.9 107.6 115.6 117.9 125.2 121.6 111.5 113.1 107.9 112.3 112.4 107.2 122.2 118.7 11 Autos, consumer 1.16 97.3 92.3 99.5 94.3 105.3 100.9 91.8 91.0 87.4 86.4 76.8 79.1 94.7 91.9 1? Trucks, consumer .63 141.8 136.0 145.6 161.9 162.1 159.9 148.1 154.2 146.0 160.4 178.4 159.4 N Auto parts and allied goods 1.19 118.4 125.2 120.8 117.1 121.0 120.5 121.9 125.3 125.4 125.3 126.6 123.8 126.2 127.1 14 Home goods 3.91 117.1 121.2 124.4 121.9 121.6 121.2 119.9 121.8 119.3 122.5 123.6 121.8 123.3 123.8 IS Appliances, A/C and TV 1.24 139.5 148.1 153.2 146.9 145.2 142.9 137.7 142.2 133.4 141.7 147.1 141.8 144.8 145.7 16 Appliances and TV 1.19 141.6 150.0 155.1 148.9 146.7 143.8 139.2 142.3 133.4 142.6 145.5 140.6 145.1 17 Carpeting and furniture .96 125.8 131.1 132.0 129.1 130.8 131.3 133.5 133.3 132.3 134.1 132.0 131.6 133.3 18 Miscellaneous home goods 1.71 96.0 96.3 99.4 99.8 99.3 99.8 99.4 100.7 101.8 102.2 102.0 101.8 102.2 19 Nondurable consumer goods 18.63 127.5 128.3 129.4 129.2 129.4 129.8 129.8 131.1 130.9 132.1 132.5 131.0 131.5 131.8 70 Consumer staples 15.29 97.0 135.0 136.0 135.9 135.9 136.5 136.4 137.7 137.6 138.9 139.2 137.7 138.2 138.7 71 Consumer foods and tobacco 7.80 134.1 132.6 133.9 132.9 134.0 134.8 134.4 135.6 136.0 137.2 137.4 137.1 137.2 77 Nonfood staples 7.49 131.9 137.4 138.2 139.0 137.9 138.2 138.5 139.9 139.2 140.6 141.2 138.4 139.3 139.8 71 Consumer chemical products 2.75 136.5 161.0 163.1 165.9 164.7 165.7 164.7 165.9 164.4 165.7 167.4 163.6 162.2 74 Consumer paper products 1.88 161.2 151.5 150.1 149.4 147.8 147.5 148.9 152.9 153.1 153.8 153.9 153.0 153.4 75 Consumer energy 2.86 147.4 105.5 106.4 106.3 105.7 105.8 106.5 106.4 105.9 108.0 107.7 104.6 108.0 76 Consumer fuel 1.44 105.7 91.7 92.2 95.0 92.5 94.1 94.5 92.1 91.9 92.7 91.4 91.6 92.1 27 Residential utilities 1.42 92.8 119.6 120.8 117.8 119.2 117.7 118.7 121.0 120.2 123.6 124.3 117.7 Equipment 78 Business and defense equipment 18.01 147.1 148.1 147.0 147.7 150.1 150.1 150.0 150.8 153.2 154.4 154.5 155.0 156.9 157.7 79 Business equipment 14.34 138.6 138.6 137.1 138.1 140.8 140.8 140.8 141.7 144.2 145.6 145.6 146.3 148.6 149.5 30 Construction, mining, and farm 2.08 59.8 56.6 58.2 57.2 56.8 58.1 58.6 61.2 63.0 65.0 66.4 65.8 66.7 66.9 31 Manufacturing 3.27 112.0 109.6 108.8 110.1 111.5 110.9 111.1 111.5 117.2 120.4 120.9 122.0 123.0 123.9 37 Power 1.27 81.6 79.5 80.2 79.6 81.2 81.7 82.4 84.0 84.0 81.8 82.8 80.9 81.6 81.8 33 Commercial 5.22 214.6 217.3 213.7 215.9 218.4 219.7 220.9 222.0 226.7 227.9 227.7 229.3 230.9 233.3 34 Transit 2.49 109.2 110.7 108.9 109.5 117.4 114.0 110.4 110.1 105.4 106.1 104.7 105.0 112.4 111.2 35 Defense and space equipment 3.67 180.3 184.9 185.8 185.2 186.5 186.6 186.1 186.5 188.6 188.7 189.1 189.1 189.6 189.7 Intermediate products 36 Construction supplies 5.95 124.7 126.8 127.9 128.3 128.4 128.5 127.3 128.3 131.5 133.1 132.5 132.4 132.6 113333..22 37 Business supplies 6.99 146.4 149.7 149.8 148.3 149.4 150.5 150.5 153.8 153.4 155.2 156.3 155.2 156.2 38 General business supplies 5.67 150.6 153.7 154.3 153.3 154.1 155.2 155.5 158.2 158.5 160.5 161.0 160.5 161.7 39 Commercial energy products 1.31 128.3 132.4 130.3 126.8 128.8 130.3 129.0 135.0 131.1 132.3 135.8 132.1 132.3 Materials 40 Durable goods materials 20.50 119.7 120.4 120.7 120.5 121.5 121.8 122.2 121.6 124.0 125.2 125.5 125.9 127.5 128.0 41 Durable consumer parts 4.92 98.5 98.0 98.8 99.0 100.0 98.9 96.2 95.2 99.2 98.5 99.6 98.8 99.5 99.0 47 Equipment parts 5.94 153.9 154.5 154.2 154.0 155.6 155.8 157.1 156.0 158.3 159.3 159.5 160.2 162.1 163.2 43 Durable materials n.e.c 9.64 109.4 110.7 111.2 110.8 111.5 112.6 114.1 113.9 115.5 117.7 117.9 118.6 120.5 121.0 44 Basic metal materials 4.64 80.0 82.1 80.3 79.2 80.3 80.8 81.8 81.9 83.6 86.6 90.4 90.9 93.8 94.0 45 Nondurable goods materials 10.09 118.3 120.2 123.2 123.2 122.5 122.8 125.4 125.3 124.1 127.6 128.3 128.7 127.7 128.3 46 Textile, paper, and chemical materials 7.53 118.9 121.0 124.7 125.0 123.6 124.0 126.9 126.5 125.1 129.6 130.6 131.3 130.4 131.1 47 Textile materials 1.52 110.6 115.6 116.1 116.5 115.8 118.5 125.0 111.9 117.8 116.7 116.5 113.9 48 Pulp and paper materials 1.55 132.1 134.2 140.2 137.9 136.7 134.7 137.4 137.4 139.0 145.4 145.0 143.2 141.9 49 Chemical materials 4.46 117.1 118.5 122.3 123.4 121.8 122.1 125.0 125.0 124.9 128.1 130.4 132.2 132.1 50 Miscellaneous nondurable materials ... 2.57 116.5 117.6 118.5 118.0 119.0 119.2 121.1 122.0 120.9 122.0 121.4 121.0 51 Energy materials 11.69 99.9 98.7 98.8 98.9 97.6 97.0 97.5 99.3 99.4 99.0 100.9 100.2 100.4 101.2 57 Primary energy 7.57 105.5 104.8 105.1 104.1 102.6 101.5 102.3 103.6 104.0 102.5 104.6 104.6 104.0 53 Converted fuel materials 4.12 89.6 87.6 87.3 89.4 88.5 88.9 88.7 91.4 91.0 92.5 94.1 92.2 93.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • February 1988 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1986 1987 Groups SIC 1986 code avg. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug/ Sept. Oct." Nov/ Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 103.4 102.0 101.6 102.6 102.4 101.9 101.4 103.1 103.0 103.7 105.4 105.2 106.3 106.4 2 Mining 9.83 99.6 97.5 97.1 99.4 98.8 98.3 98.6 99.2 99.2 99.2 100.9 101.7 101.9 101.6 3 Utilities 5.96 109.6 109.6 109.0 108.0 108.5 107.9 106.0 109.6 109.4 111.2 112.9 110.9 113.6 114.3 4 Manufacturing 84.21 129.1 130.1 131.3 130.7 131.6 132.4 132.4 133.2 134.0 135.6 135.9 135.7 137.0 137.5 5 Nondurable 35.11 130.9 131.7 133.4 132.7 132.9 133.7 134.6 135.7 136.9 138.5 138.8 138.7 138.3 138.8 6 Durable 49.10 127.9 129.0 129.7 129.3 130.8 131.5 130.9 131.4 132.0 133.5 133.8 133.6 136.1 136.6 Mining I Metal 10 .50 71.1 76.2 74.1 73.6 71.2 65.7 71.7 70.7 71.4 79.3 81.4 8 Coal 11.12 1.60 124.2 129.8 125.4 136.4 131.7 122.3 121.9 127.2 128.8 127.9 130.5 133.3 133.5 134.7 9 Oil and gas extraction 13 7.07 94.7 89.6 89.8 91.2 90.9 92.4 93.1 92.1 91.8 91.8 93.0 93.3 93.4 92.9 10 Stone and earth minerals 14 .66 113.9 123.2 122.5 116.1 122.1 123.8 125.4 127.6 128.5 130.7 130.3 130.7 131.1 Nondurable manufactures II Foods 20 7.96 133.6 135.3 136.7 134.6 136.4 137.3 136.0 137.4 137.7 138.5 138.8 139.7 138.4 12 Tobacco products 21 .62 96.6 96.4 93.4 89.9 99.9 101.1 99.6 106.6 107.0 110.4 105.7 13 Textile mill products 22 2.29 113.2 112.2 113.4 109.2 110.8 112.6 116.6 115.7 117.2 118.3 119.8 118.5 117.9 14 Apparel products 23 2.79 103.6 103.8 104.9 106.1 106.5 105.4 105.3 106.4 107.7 109.7 108.4 106.8 15 Paper and products 26 3.15 136.4 139.6 141.1 139.7 139.9 139.9 140.5 141.3 142.6 148.8 148.9 146.8 144.4 16 Printing and publishing 27 4.54 163.4 164.8 166.4 166.3 164.4 167.6 169.2 171.4 174.1 174.0 174.7 175.4 176.6 117777..00 17 Chemicals and products 28 8.05 133.0 132.3 135.7 136.4 135.7 135.3 137.3 138.1 139.3 140.8 142.3 142.4 141.7 18 Petroleum products 29 2.40 92.1 92.5 93.5 95.6 91.6 92.1 94.0 92.6 92.3 94.1 92.9 93.5 93.8 92.8 19 Rubber and plastic products 30 2.80 153.3 155.2 157.1 155.3 156.2 158.6 160.5 162.2 165.4 167.2 164.8 165.2 165.4 20 Leather and products 31 .53 61.3 61.0 60.2 58.9 59.8 59.4 60.2 61.4 60.8 59.2 61.3 60.8 61.5 Durable manufactures 21 Lumber and products 24 2.30 123.4 130.3 133.5 128.5 129.6 128.9 127.8 130.3 131.1 132.8 131.1 128.3 127.9 22 Furniture and fixtures 25 1.27 146.7 145.6 148.8 143.5 145.0 149.9 148.2 150.5 153.9 156.2 155.2 155.9 156.7 23 Clay, glass, stone products 32 2.72 120.2 118.7 119.4 121.9 118.8 119.8 120.6 117.2 117.9 118.8 116.5 117.6 118.6 24 Primary metals 33 5.33 75.8 75.5 73.4 72.8 75.1 77.0 76.1 77.0 78.8 81.4 85.1 84.6 88.8 8899..55 25 Iron and steel 331.2 3.49 63.4 63.5 61.3 59.5 62.3 65.4 65.0 65.7 68.3 70.9 76.0 74.6 79.7 26 Fabricated metal products 34 6.46 107.4 108.3 109.6 108.4 108.3 110.5 109.9 108.5 111.1 111.1 110.1 111.2 112.8 113.7 27 Nonelectrical machinery 35 9.54 141.9 144.5 144.8 143.4 145.5 148.5 150.4 149.7 151.8 155.3 154.3 157.0 158.7 160.5 28 Electrical machinery 36 7.15 166.5 167.9 170.4 170.4 171.0 168.5 168.4 171.1 170.5 172.5 174.3 172.8 174.0 174.9 29 Transportation equipment 37 9.13 125.8 126.9 126.8 129.0 132.7 132.2 127.8 129.4 126.5 127.6 128.1 125.6 131.8 130.4 30 Motor vehicles and parts 371 5.25 110.9 109.1 109.7 112.0 117.7 116.5 109.8 112.0 107.4 109.4 109.1 105.6 116.1 114.2 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 146.1 151.1 150.1 151.9 153.0 153.4 152.3 153.1 152.4 152.3 153.9 152.5 153.0 152.3 32 Instruments 38 2.66 141.3 139.3 140.2 139.5 142.0 140.3 142.8 142.1 144.5 143.8 146.3 144.4 145.5 114455..99 33 Miscellaneous manufactures 39 1.46 99.3 100.9 103.8 101.6 101.6 103.9 101.4 101.9 101.2 100.5 102.2 102.1 101.0 Utilities 34 Electric 4.17 112222..22 124.4 122.6 112211..66 112222..33 112233..66 112222..33 112288..88 112288..88 113311..00 113322..00 112277..55 113300..55 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,702.2 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 1,741.7 1,733.7 1,768.6 1,768.1 36 Final 405.7 1,314.5 1,296.6 1,307.3 1,310.9 1,329.2 1.330.3 1,316.5 1,324.7 1,320.1 1.326.6 1,334.9 1,328.9 1,360.1 1,359.1 37 Consumer goods 272.7 853.8 846.5 857.1 860.0 865.3 868.1 857.1 862.8 855.1 863.2 866.4 855.9 876.3 876.6 38 Equipment 133.0 458.2 450.0 450.2 450.9 463.9 462.2 459.4 461.9 465.0 463.5 468.5 473.0 483.8 482.6 39 Intermediate 111.9 387.6 390.2 393.4 390.7 389.5 394.9 393.6 398.4 400.3 405.9 406.8 404.8 408.5 409.0 • A major revision of the industrial production index and the capacity (July 1985), pp. 487-501. The revised indexes for January through June 1985 were utilization rates was released in July 1985. See "A Revision of the Index of shown in the September BULLETIN. Industrial Production" and accompanying tables that contain revised indexes NOTE. These data also appear in the Board's G. 12.3 (414) release. For address, (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1987 IItteemm 11998844 11998855 11998866 Jan. Feb. Mar. Apr. May June July' Aug/ Sept/ Oct. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,682 1,733 1,750 1,652 1,676 1,719 1,598 1,493 1,517 1,487 1,502 1,502 1,463 2 1-family 922 957 1,071 1,085 1,204 1,150 1,058 1,009 1,039 993 1,023 992 977 3 2-or-more-family 759 777 679 567 472 569 540 484 478 494 479 510 486 4 Started 1,749 1,742 1,805 1,816 1,838 1,730 1,643 1,606 1,586 1,598 1,585 1,685 1,523 S 1-family 1,084 1,072 1,179 1,253 1,303 1,211 1,208 1,130 1,088 1,143 1,111 1,211 1,102 6 2-or-more-family 665 669 626 563 535 519 435 476 498 455 474 474 421 7 Under construction, end of period1 . 1,051 1,063 1,074 1,089 1,096 1,085 1,070 1,061 1,059 1,053 1,049 1,054 1,051 8 1-family 556 539 583 609 621 618 623 621 620 623 625 631 633 9 2-or-more-family 494 524 490 480 476 467 446 441 439 430 424 423 418 10 Completed 1,652 1,703 1,756 1,956 1,726 1,689 1,830 1,621 1,601 1,698 1,666 1,574 1,536 11 1-family 1,025 1,072 1,120 1,217 1,107 1,141 1,148 1,158 1,101 1,120 1,067 1,106 1,102 12 2-or-more-family 627 631 637 739 619 548 682 463 500 578 599 468 434 13 Mobile homes shipped 296 284 244 242 231 228 227 222 231 245 233 244 238 Merchant builder activity in 1-family units 14 Number sold 639 688 748 712 740 720 733 649 641 671 675 658 672 15 Number for sale, end of period1 358 350 361 358 358 358 359 355 359 359 361 361 359 Price (thousands of dollars)2 Median 16 Units sold 80.0 84.3 92.2 98.5 95.2 98.4 96.5 104.9 109.0 105.0 106.8 106.9 106.0 17 Units sold 97.5 101.0 112.2 122.1 121.3 119.5 118.1 126.6 135.8 128.6 128.5 133.9 123.9 EXISTING UNITS (1-family) 18 Number sold 2,868 3,217 3,566 3,480 3,690 3,680 3,560 3,770 3,500 3,430 3,410 3,450 3,570 Price of units sold (thousands of dollars) 19 Median 72.3 75.4 80.3 82.1 85.0 85.6 85.0 85.2 85.2 86.2 85.1 85.1 84.8 20 Average 85.9 90.6 98.3 100.1 104.3 104.9 105.0 106.3 106.0 107.6 105.3 106.2 106.3 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 328,643 355,995 388,815 384,716 401,644 388,303 396,222 396,680 397,191 398,465 402,872 410,874 410,616 22 Private 270,978 291,665 316,589 310,170 326,453 312,203 320,483 321,414 324,256 323,847 329,831 332,950 333,915 23 Residential 153,849 158,475 187,147 187,813 203,115 190,812 199,523 195,871 200,864 198,005 200,241 205,062 204,781 24 Nonresidential, total 117,129 133,190 129,442 122,357 123,338 121,391 120,960 125,543 123,392 125,842 129,590 127,888 129,134 Buildings 2S Industrial 13,746 15,769 13,747 12,094 12,112 11,354 11,492 13,376 13,023 13,005 13,659 14,387 13,523 26 Commercial 39,357 51,315 48,592 50,881 53,071 52,285 50,924 53,224 51,831 52,537 54,055 52,800 54,039 27 Other 12,547 12,619 13,216 14,755 14,776 15,143 14,950 14,926 14,769 15,317 14,888 15,079 15,554 28 Public utilities and other 51,479 53,487 53,887 44,627 43,379 42,609 43,594 44,017 43,769 44,983 46,988 45,622 46,018 29 Public 57,662 64,326 72,225 74,546 75,191 76,100 75,739 75,266 72,935r 74,618 73,041 77,924 76,701 30 Military 2,839 3,283 3,919 4,100 2,806 3,893 3,403 4,397 4,352 5,009 4,193 6,083 4,308 31 Highway 18,772 21,756 23,360 23,508 23,260 23,575 22,673 22,607 21,704 22,441 22,005 23,489 24,938 32 Conservation and development... 4,654 4,746 4,668 5,155 4,883 4,792 5,551 4,839 5,498 5,328 5,127 4,978 5,477 33 Other 31,397 34,541 40,278 41,783 44,242 43,840 44,112 43,423 41,381r 41,840 41,716 43,374 41,978 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 • February 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 NNNooovvv... 1986 1987 1987 111999888777 11998866 11998877 (((111999666777 NNoovv.. NNoovv.. === 111000000)))111 Dec. Mar. June Sept. July' Aug.' Sept. Oct. Nov. CONSUMER PRICES2 1 AU items 1.3 4.5 2.5 6.2 4.6 3.6 .2 .5 .2 .4 .3 345.8 2 4.4 3.2 4.1 2.5 6.5 1.4 -.2 .0 .5 .4 .1 335.1 3 Energy items -19.6 9.3 -9.9 26.1 7.9 5.0 .1 1.7 -.5 -.9 .8 373.5 4 All items less food and energy 3.8 4.4 3.7 5.2 4.0 3.7 .3 .4 .2 .5 .3 347.0 5 Commodities 1.3 3.9 1.4 5.1 3.8 3.0 .3 .1 .3 .5 .3 276.6 6 Services 5.2 4.6 5.1 5.3 3.8 4.2 .4 .5 .1 .5 .3 423.5 PRODUCER PRICES 7 Finished goods -1.9 2.5 1.8 4.3 3.9 2.7 .2 .2 .3 -.2 .0 298.1 8 Consumer foods 4.2 .6 1.0 -6.7 12.7 -1.7 -.3 -1.2 1.1 -.1 .3 284.9 9 Consumer energy -37.8 13.2 -12.5 59.8 5.5 2.0 1.7 2.6 -3.7 -1.0 -.8 513.5 10 Other consumer goods 3.0 2.3 4.4 4.2 -.2 4.9 .3 .3 .6 .0 .0 268.7 11 Capital equipment 2.2 1.3 3.4 .4 1.2 4.4 .1 .3 .7 -.4 .1 314.3 12 Intermediate materials3 -4.4 5.4 -1.2 7.8 5.7 4.6 .6 .5 .0 .5 .4 327.2 13 Excluding energy .2 4.7 1.2 3.3 4.6 5.0 .4 .4 .5 .9 .5 319.3 Crude materials 14 Foods .1 -.4 -2.7 -10.3 34.8 -6.2 -1.9 -.1 .5 1.3 -3.0 235.8 15 Energy -27.1 11.4 -.5 50.0 11.4 6.1 2.9 1.4 -2.7 -1.7 -1.1 598.3 16 Other -.1 23.5 8.5 15.9 31.9 37.1 2.9 1.3 3.8 4.1 .9 301.8 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 4,524.0 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 3,011.3 3 Durable goods 335.5 368.7 402.4 427.6 419.8 396.1 409.0 436.8 4 Nondurable goods 867.3 913.1 939.4 940.0 946.3 969.9 982.1 986.4 5 Services 1,227.6 1,347.5 1,458.0 1,469.5 1,492.4 1,527.7 1,552.6 1,588.1 6 Gross private domestic investment 664.8 641.6 671.0 660.8 660.2 699.9 702.6 707.4 7 Fixed investment 597.1 631.6 655.2 657.3 666.6 648.2 662.3 684.5 8 Nonresidential 416.0 442.6 436.9 433.5 439.7 422.8 434.6 456.6 9 Structures 141.1 152.5 137.4 131.1 132.9 128.7 129.7 137.1 10 Producers' durable equipment 274.9 290.1 299.5 302.4 306.7 294.1 304.9 319.5 11 Residential structures 181.1 189.0 218.3 223.8 226.9 225.4 227.7 227.9 12 Change in business inventories 67.7 10.0 15.7 3.5 -6.4 51.6 40.3 22.9 13 Nonfarm 60.5 13.6 16.8 -.9 5.1 48.7 27.3 11.1 14 Net exports of goods and services -58.9 -79.2 -105.5 -110.5 -116.9 -112.2 -118.4 -123.7 15 Exports 383.5 369.9 376.2 376.6 383.3 397.3 416.5 439.2 16 Imports 442.4 449.2 481.7 487.1 500.2 509.5 534.8 562.9 17 Government purchases of goods and services 735.9 818.6 869.7 878.5 886.3 896.2 917.1 929.0 18 Federal 310.5 353.9 366.2 371.2 368.6 366.9 379.6 382.1 19 State and local 425.3 464.7 503.5 507.3 517.7 529.3 537.6 546.9 By major type of product 20 Final sales, total 3,704.5 4,000.3 4,219.3 4,262.4 4,294.6 4,326.0 4,404.8 4,501.1 21 Goods 1,581.3 1,637.9 1,693.8 1,703.6 1,698.9 1,738.7 1,763.5 1,798.3 22 Durable 681.5 704.3 726.8 735.8 737.3 747.0 756.7 785.7 23 Nondurable 899.9 933.6 967.0 967.8 961.6 991.7 1,006.8 1,012.6 24 Services 1,813.9 1,969.2 2,116.2 2,136.6 2,160.0 2,212.0 2,252.2 2,289.3 25 Structures 376.9 403.1 425.0 425.7 429.3 426.9 429.4 436.4 26 Change in business inventories 67.7 10.0 15.7 3.5 -6.4 51.6 40.3 22.9 27 Durable goods 40.2 7.3 4.8 -12.1 -4.5 35.2 22.1 -1.9 28 Nondurable goods 27.5 2.7 10.9 15.6 -1.9 16.5 18.2 24.8 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 3,835.9 NATIONAL INCOME 30 Total 3,028.6 3,229.9 3,422.0 3,438.7 3,471.0 3,548.3 3,593.3 3,659.0 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 2,663.5 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 2,226.5 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 1,802.3 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 234.5 257.3 289.8 292.5 297.8 320.9 323.1 322.7 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 40.6 41 Rental income of persons2 8.5 9.0 16.7 17.2 18.4 20.0 18.9 17.3 42 Corporate profits1 266.9 277.6 284.4 286.4 281.1 294.0 296.8 314.9 43 Profits before tax 240.0 224.8 231.9 236.3 247.9 257.0 268.7 284.9 44 Inventory valuation adjustment -5.8 -.7 6.5 6.0 -8.9 -11.3 -20.0 -17.6 45 Capital consumption adjustment 32.7 53.5 46.0 44.0 42.1 48.2 48.0 47.7 46 Net interest 304.8 315.3 326.1 327.5 321.7 323.6 331.1 340.6 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 • February 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 Q1 Q2 Q3' 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 3,761.0 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 2,226.1 3 Commodity-producing industries 577.6 609.2 623.3 622.8 628.4 632.9 635.0 641.8 4 Manufacturing 439.1 460.9 470.5 470.0 474.5 477.2 479.0 485.1 5 Distributive industries 442.8 473.0 497.1 498.6 504.7 511.5 518.9 526.3 6 Service industries 472.1 520.4 573.9 578.8 591.6 606.7 619.3 633.9 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' income1 234.5 257.3 289.8 292.5 297.8 320.9 323.1 322.7 10 Business and professional 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 40.6 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 444.7 476.5 497.6 498.1 496.8 499.8 506.3 520.0 456.6 489.7 518.3 523.6 526.6 533.7 541.5 545.8 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 3,761.0 19 LESS: Personal tax and nontax payments 440.2 485.9 512.2 515.3 532.0 536.1 578.0 565.7 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 3,195.3 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 3,106.5 22 EQUALS: Personal saving 164.1 127.1 130.6 108.9 109.0 138.4 93.2 88.8 MEMO Per capita (1982 dollars) 23 Gross national product 14,770.6 15,073.7 15,368.3 15,369.9 1155,,338877..66 1155,,552233..44 1155,,558866..44 1155,,771144..44 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 10,326.5 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 10,958.0 26 Saving rate (percent) 6.1 4.5 4.3 3.6 3.6 4.4 3.0 2.8 GROSS SAVING 568.5 531.3 532.0 516.2 515.3 554.3 551.3 559.3 28 Gross private saving 673.5 664.2 679.8 660.4 653.4 683.8 639.9 649.0 29 Personal saving 164.1 127.1 130.6 108.9 109.0 138.4 93.2 88.8 30 Undistributed corporate profits 94.0 99.6 92.6 92.6 78.5 75.6 70.1 76.8 31 Corporate inventory valuation adjustment -5.8 -.7 6.5 6.0 -8.9 -11.3 -20.0 -17.6 Capital consumption allowances 32 Corporate 254.5 269.1 282.8 284.3 289.3 229911..88 229944..55 229977..88 160.9 168.5 173.8 174.6 176.6 178.0 182.1 185.3 34 Government surplus, or deficit (-), national income and product accounts -105.0 -132.9 -147.8 -144.1 -138.1 --112299..55 --8888..66 --8899..77 35 Federal -169.6 -196.0 -204.7 -203.7 -188.7 -170.5 -139.2 -136.1 64.6 63.1 56.8 59.6 50.6 41.0 50.6 46.5 573.9 525.7 527.1 510.1 503.7 552.1 548.1 548.4 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 -159.0 40 Statistical discripancy 5.4 -5.6 -4.9 -6.1 -11.6 -2.2 -3.1 -10.9 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 1987 Item credits or debits 1984 1985 1986 Q3 Q4 Ql Q2 Q3P 1 Balance on current account -107,013 -116,394 -141,352 -36,583 -37,977 -36,784 -41,190 -43,378 2 Not seasonally adjusted -40,230 -36,398 -33,435 -42,006 -48,525 3 Merchandise trade balance2 -112,522 -122,148 -144,339 -37,115 -38,595 -38,757 -39,558 -39,832 4 Merchandise exports 219,900 215,935 224,361 56,534 57,021 56,992 60,097 65,263 5 Merchandise imports -332,422 -338,083 -368,700 -93,649 -95,616 -95,749 -99,655 -105,095 6 Military transactions, net -1,942 -3,338 -3,662 -815 -495 -37 29 -443 7 Investment income, net3 18,490 25,398 20,844 5,339 4,492 5,500 1,577 -267 8 Other service transactions, net 1,138 -1,005 1,463 342 759 -387 -146 95 9 Remittances, pensions, and other transfers -3,637 -4,079 -3,885 -875 -1,151 -1,017 -865 -872 10 U.S. government grants (excluding military) -8,541 -11,222 -11,772 -3,459 -2,987 -2,086 -2,227 -2,059 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -5,476 -2,831 -1,920 -1,454 225 -177 232 12 Change in U.S. official reserve assets (increase, —) -3,130 -3,858 312 280 132 1,956 3,419 32 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -979 -897 -246 163 -31 76 -171 -210 15 Reserve position in International Monetary Fund -995 908 1,500 508 283 606 335 407 16 Foreign currencies -1,156 -3,869 -942 -391 -120 1,274 3,255 -165 17 Change in U.S. private assets abroad (increase, -)3 -13,685 -24,711 -94,374 -23,304 -32,351 13,352 -18,137 -29,467 18 Bank-reported claims -11,127 -1,323 -59,039 -18,878 -31,800 25,686 -15,685 -21,249 19 Nonbank-reported claims 5,019 1,361 -3,986 685 170 -1,163 2,603 20 U.S. purchase of foreign securities, net -4,756 -7,481 -3,302 620 3,113 -1,345 384 -930 21 U.S. direct investments abroad, net3 -2,821 -17,268 -28,047 -5,731 -3,834 -9,826 -5,439 -7,288 22 Change in foreign official assets in the United States (increase, +) 2,987 -1,140 34,698 15,551 1,003 13,953 10,070 359 23 U.S. Treasury securities 4,690 -838 34,515 12,167 4,572 12,145 11,084 1,200 24 Other U.S. government obligations 13 -301 -1,214 -276 -117 -62 256 714 25 Other U.S. government liabilities 586 823 1,723 999 -607 -1,381 -1,504 -506 26 Other U.S. liabilities reported by U.S. banks 555 645 554 2,963 -2,435 3,611 547 -425 27 Other foreign official assets5 -2,857 -1,469 -302 -410 -360 -313 -624 28 Change in foreign private assets in the United States (increase, +)3 99,481 131,012 178,689 54,040 57,428 12,802 39,494 67,650 29 U.S. bank-reported liabilities 33,849 41,045 77,350 30,360 34,604 -13,614 14,823 48,872 30 U.S. nonbank-reported liabilities 4,704 -450 -2,791 -80 1,035 1,761 1,526 31 Foreign private purchases of U.S. Treasury securities, net 23,001 20,433 8,275 609 -3,074 -1,570 -2,211 -2,832 32 Foreign purchases of other U.S. securities, net 12,568 50,962 70,802 17,074 12,269 18,499 15,870 12,669 33 Foreign direct investments in the United States, net3 25,359 19,022 25,053 6,077 12,594 7,726 9,486 8,941 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 26,837 17,920 23,947 -8,530 11,750 -5,504 6,521 4,572 36 Owing to seasonal adjustments -4,153 3,904 2,652 -2,009 -5,177 37 Statistical discrepancy in recorded data before seasonal adjustment 26,837 17,920 23,947 -4,377 7,846 -8,156 8,530 9,749 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,130 -3,858 312 280 132 1,956 3,419 32 39 Foreign official assets in the United States (increase, +) excluding line 25 2,401 -1,963 32,975 14,552 1,610 15,334 11,574 865 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 -3,023 -5,195 -2,901 -2,651 -1,681 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 153 46 101 19 53 26 10 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • February 1988 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are not seasonally adjusted. 1987 IItteemm 11998844 11998855 11998866 Apr. May June July Aug. Sept. Oct. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 223,976 218,815 226,808 20,496 20,784 21,126 21,008 20,222 20,986 21,752 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses, c.i.f. value .... 346,364 352,463 382,964 33,459 34,822 36,838 37,483 35,905 35,062 39,383 3 Trade balance -122,389 -133,648 -156,156 -12,963 -14,039 -15,711 -16,475 -15,683 -14,076 -17,631 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 May June July Aug. Sept. Oct. Nov/ 1 Total 34,934 43,186 48,511' 45,913 45,140 44,318 45,944 45,070 46,200 46,779 2 Gold stock, including Exchange Stabilization Fund1 11,096 11,090 11,064 11,070 11,069 11,069 11,068 11,075 11,085 11,082 3 Special drawing rights2,3 5,641 7,293 8,395 8,904 8,856 8,813 9,174 9,078 9,373 9,937 4 Reserve position in International Monetary Fund 11,541 11,947 11,730 11,517 11,313 10,964 11,116 10,918 11,157 11,369 5 Foreign currencies4 6,656 12,856 17,322' 14,422 13,902 13,472 14,586 13,999 14,585 14,391 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- in the IMF also are valued on this basis beginning July 1974. tional accounts is not included in the gold stock of the United States; see table 3. Includes allocations by the International Monetary Fund of SDRs as follows: 3.13. Gold stock is valued at $42.22 per fine troy ounce. $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 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 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1987 AAsssseettss 11998844 11998855 11998866 May June July Aug. Sept. Oct. Nov/ 1 Deposits 267 480 287 319 318 261 294 456 236 351 Assets held in custody 2 U.S. Treasury securities 118,000 121,004 155,835 175,849 176,657 171,269 179,484 179,097 182,072 187,767 3 Earmarked gold3 14,242 14,245 14,048 14,031 14,034 14,010 14,022 14,015 13,998 13,965 1. Excludes deposits and U.S. Treasury securities held for international and 3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce, regional organizations. Earmarked gold is gold held for foreign and international accounts and is not 2. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. included in the gold stock of the United States. Treasury securities payable in dollars and in foreign currencies. 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 Apr. May June July Aug. Sept. Oct." All foreign countries 1 Total, all currencies 453,656 458,012 456,628 485,343 487,599' 475,188 470,391 473,540 489,840 517,463 2 Claims on United States 113,393 119,706 114,563 128,723' 127,009 123,400 123,687 124,759 137,201 135,576 3 Parent bank 78,109 87,201 83,492 94,422' 92,194' 89,376' 89,793' 89,958' 101,618 96,805 4 Other banks in United States 13,664 13,057 13,685 15,33C 17,048' 15,981' 14,303' 14,705' 15,929 17,826 5 Nonbanks 21,620 19,448 17,386 18,971' 17,767' 18,043' 19,591' 20,096 19,654 20,945 6 Claims on foreigners 320,162 315,676 312,955 321,344 328,280 319,546 314,078 314,747 319,355 345,950 7 Other branches of parent bank 95,184 91,399 96,281 93,669 101,309 101,326' 96,582 97,988 103,277 115,514 8 Banks 100,397 102,960 105,237 114,997 114,101 107,747 110,124 108,088 108,415 118,270 9 Public borrowers 23,343 23,478 23,706 22,892 23,295 22,59C 21,412 21,537 21,278 21,633 10 Nonbank foreigners 101,238 97,839 87,731 89,786 89,575 87,883 85,960 87,134 86,385 90,533 11 Other assets 20,101 22,630 29,110 35,276' 32,31c 32,242 32,626 34,034 33,284 35,937 12 Total payable in U.S. dollars 350,636 336,520 317,487 329,456' 336,414' 329,499 322,300 322,286 340,686 350,738 13 Claims on United States 111,426 116,638 110,620 122,932 121,551' 118,411 118,563 118,964 131,667 129,018 14 Parent bank 77,229 85,971 82,082 92,468' 90,159' 87,54C 87,779' 87,844' 99,759 94,616 15 Other banks in United States 13,500 12,454 12,830 13,521' 15,412' 14,669' 12,794' 12,816' 13,922 15,627 16 Nonbanks 20,697 18,213 15,708 16,943' 15,980' 16,202' 17,99C 18,304 17,986 18,775 17 Claims on foreigners 228,600 210,129 195,063 192,360 201,450' 198,465 190,590 189,958 195,073 207,892 18 Other branches of parent bank 78,746 72,727 72,197 66,916 75,014 75,771 72,515 73,327 77,699 85,654 19 Banks 76,940 71,868 66,421 69,244 69,525 67,287 65,673 64,106 64,506 68,920 20 Public borrowers 17,626 17,260 16,708 16,639 16,812 16,271 15,062 15,115 14,942 14,890 21 Nonbank foreigners 55,288 48,274 39,737 39,561 40,099' 39,136 37,340 37,410 37,926 38,428 22 Other assets 10,610 9,753 11,804 14,164' 13,413' 12,623 13,147 13,364 13,946 13,828 United Kingdom 23 Total, all currencies 144,385 148,599 140,917 149,998 154,371 146,678 149,760 148,039 149,836 163,511 24 Claims on United States 27,675 33,157 24,599 31,001 34,427 30,859 32,694 31,377 32,581 33,336 25 Parent bank 21,862 26,970 19,085 25,315 28,935 25,944 27,288 25,627 27,128 27,142 26 Other banks in United States 1,429 1,106 1,612 1,564 1,507 1,194 1,537 1,585 1,349 1,870 27 Nonbanks 4,384 5,081 3,902 4,122 3,985 3,721 3,869 4,165 4,104 4,324 28 Claims on foreigners 111,828 110,217 109,508 111,113 112,997 107,407 108,732 108,293 108,562 120,649 29 Other branches of parent bank 37,953 31,576 33,422 29,936 33,412 32,641 31,241 30,794 33,334 37,962 30 Banks 37,443 39,250 39,468 42,961 41,241 37,745 41,219 40,082 38,390 42,929 31 Public borrowers 5,334 5,644 4,990 4,964 5,234 4,684 4,617 4,761 4,725 4,881 32 Nonbank foreigners 31,098 33,747 31,628 33,252 33,110 32,337 31,655 32,656 32,113 34,877 33 Other assets 4,882 5,225 6,810 7,884 6,947 8,412 8,334 8,369 8,693 9,526 34 Total payable in U.S. dollars 112,809 108,626 95,028 99,398 104,622 97,672 99,170 96,510 99,736 105,534 35 Claims on United States 26,868 32,092 23,193 29,066 32,542 29,252 31,076 29,519 30,791 31,252 36 Parent bank 21,495 26,568 18,526 24,689 28,228 25,286 26,661 24,853 26,423 26,282 37 Other banks in United States 1,363 1,005 1,475 1,192 1,157 950 1,294 1,309 1,105 1,504 38 Nonbanks 4,010 4,519 3,192 3,185 3,157 3,016 3,121 3,357 3,263 3,466 39 Claims on foreigners 82,945 73,475 68,138 66,257 68,469 64,676 64,024 63,265 64,561 69,836 40 Other branches of parent bank 33,607 26,011 26,361 22,339 25,921 25,409 23,827 23,155 25,600 28,370 41 Banks 26,805 26,139 23,251 24,962 23,263 21,355 22,975 22,646 21,522 22,941 42 Public borrowers 4,030 3,999 3,677 3,712 3,785 3,470 3,400 3,473 3,377 3,426 43 Nonbank foreigners 18,503 17,326 14,849 15,244 15,500 14,442 13,822 13,991 14,062 15,099 44 Other assets 2,996 3,059 3,697 4,075 3,611 3,744 4,070 3,726 4,384 4,446 Bahamas and Caymans 45 Total, all currencies 146,811 142,055 142,592 146,954 141,832' 142,170 140,512 139,986 151,909 156,752 46 Claims on United States 77,296 74,864 78,048 78,903' 73,445 72,541 72,772 72,558 81,679 83,187 47 Parent bank 49,449 50,553 54,575 52,756' 46,463' 45,891' 46,256' 45,697' 53,668 53,093 48 Other banks in United States 11,544 11,204 11,156 12,702' 14,552' 13,684' 11,824' 12,097' 13,518 14,721 49 Nonbanks 16,303 13,107 12,317 13,445' 12,43c 12,966' 14,692' 14,764 14,493 15,373 50 Claims on foreigners 65,598 63,882 60,005 62,293 63,089 65,280 63,027 62,336 65,619 68,710 51 Other branches of parent bank 17,661 19,042 17,296 16,562 15,775 18,873 17,493 18,228 18,698 18,936 52 Banks 30,246 28,192 27,476 30,310 31,417 30,987 30,372 29,160 31,690 35,020 53 Public borrowers 6,089 6,458 7,051 7,247 7,304 7,025 7,046 6,873 6,987 7,017 54 Nonbank foreigners 11,602 10,190 8,182 8,174 8,593 8,395 8,116 8,075 8,244 7,737 55 Other assets 3,917 3,309 4,539 5,758' 5,298' 4,349 4,713 5,092 4,611 4,855 56 Total payable in U.S. dollars 141,562 136,794 136,813 138,961' 133,482' 135,323 131,636 130,985 142,385 145,674 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 • February 1988 3.14 Continued Liability account 1986 Apr. May June July Aug. Sept. All foreign countries 57 Total, all currencies 453,656 458,012 456,628 485,343 487,599' 475,188 470,391 473,540 489,840 517,463 58 Negotiable CDs 37,725 34,607 31,629 33,155 34,360 31,776 32,993 33,648 35,724 36,723 59 To United States 147,583 155,538 151,632 152,875 149,970 150,115 143,434 141,067 152,889 156,620 60 Parent bank 78,739 83,914 82,561 74,884' 74,324' 78,152' 71,543' 73,52C 79,690 79,614 61 Other banks in United States 18,409 16,894 15,646 17,16y 17,134' 16,814' 15,005' 15,289' 17,214 18,878 62 Nonbanks 50,435 54,730 53,425 60,822' 58,512' 55,149' 56,886' 52,258' 55,985 58,128 63 To foreigners 247,907 245,939 253,775 278,022 284,308' 274,061 274,407 278,888 280,651 303,052 64 Other branches of parent bank 93,909 89,529 95,146 94,590 101,769' 100,826 95,376 97,908 103,921 111,191 65 Banks 78,203 76,814 77,809 92,704 90,338' 81,229 87,734 87,449 85,512 98,098 66 Official institutions 20,281 19,520 17,835 21,293 23,058 22,264 21,528 21,016 20,116 20,235 67 Nonbank foreigners 55,514 60,076 62,985 69,435 69,143' 69,742 69,769 72,515 71,102 73,528 68 Other liabilities 20,441 21,928 19,592 21,291 18,961 19,236 19,557 19,937 20,576 21,068 69 Total payable in U.S. dollars 367,145 353,712 336,406 340,584 347,312' 340,985 334,218 333,673 352,135 361,788 70 Negotiable CDs 35,227 31,063 28,466 29,505 30,763 27,929 28,781 29,634 31,120 32,117 71 To United States 143,571 150,162 143,650 141,641 141,151 141,667 134,731 132,061 142,838 145,351 72 Parent bank 76,254 80,888 78,472 68,206' 69,839' 74,009' 66,874' 68,740' 74,413 74,136 73 Other banks in United States 17,935 16,264 14,609 15,711' 15,968' 15,602' 13,895' 14,086' 15,797 17,323 74 Nonbanks 49,382 53,010 50,569 57,724' 55,344' 52,056' 53,962' 49,235' 52,628 53,892 75 To foreigners 178,260 163,583 156,806 161,216 167,762' 163,505 162,766 163,728 169,343 175,519 76 Other branches of parent bank 77,770 71,078 71,181 67,278 74,764' 74,202 70,911 72,620 78,036 80,840 77 Banks 45,123 37,365 33,850 39,111 36,231' 31,812 35,250 35,104 35,202 40,078 78 Official institutions 15,773 14,359 12,371 14,318 16,068 15,985 15,806 15,527 14,209 13,323 79 Nonbank foreigners 39,594 40,781 39,404 40,509 40,699' 41,506 40,799 40,477 41,896 41,278 80 Other liabilities 10,087 8,904 7,484 8,222 7,636 7,884 7,940 8,250 8,834 8,801 United Kingdom 81 Total all currencies 144,385 148,599 140,917 149,998 154,371 146,678 149,760 148,039 149,836 163,511 82 Negotiable CDs 34,413 31,260 27,781 29,311 30,226 27.511 28,590 29,363 31,451 32,523 83 To United States 25,250 29,422 24,657 23,936 26,204 24.512 24,347 22,197 22,462 22,829 84 Parent bank 14,651 19,330 14,469 13,170 15,145 14,745 14,010 13,234 13,357 12,212 85 Other banks in United States , 3,125 2,974 2,649 2,205 2,273 2,109 2,021 1,875 2,073 2,407 86 Nonabnks 7,474 7,118 7,539 8,561 8,786 7,658 8,316 7,088 7,032 8,210 87 To foreigners 77,424 78,525 79,498 87,381 89,760 86,041 87,942 87,750 86,813 98,215 88 Other branches of parent bank 21,631 23,389 25,036 22,421 26,367 25,350 23,572 23,379 26,094 29,718 89 Banks 30,436 28,581 30,877 37,562 35,282 32,036 35,647 34,414 31,681 38,502 90 Official institutions 10,154 9,676 6,836 8,871 10,004 9,748 9,241 9,670 10,387 10,248 91 Nonbank foreigners 15,203 16,879 16,749 18,527 18,107 18,907 19,482 20,287 18,651 19,747 92 Other liabilities 7,298 9,392 8,981 9,370 8,181 8,614 8,881 8,729 9,110 9,944 93 Total payable in U.S. dollars 117,497 112,697 99,707 101,793 106,093 100,031 101,593 99,459 102,325 108,420 94 Negotiable CDs 33,070 29,337 26,169 27,189 28,345 25,695 26,397 27,264 28,776 29,991 95 To United States 24,105 27,756 22,075 21,144 23,474 21,850 21,689 19,573 19,528 18,780 96 Parent bank 14,339 18,956 14,021 12,352 14,528 14,252 13,399 12,608 12,609 11,244 97 Other banks in United States . 2,980 2,826 2,325 2,021 2,027 1,899 1,776 1,694 1,883 2,105 98 Nonbanks 6,786 5,974 5,729 6,771 6,919 5,699 6,514 5,271 5,036 5,431 99 To foreigners 56,923 51,980 48,138 49,708 51,116 49,089 50,294 49,484 50,386 55,209 100 Other branches of parent bank 18,294 18,493 17,951 14,367 18,430 17,654 16,171 15,565 17,994 20,018 101 Banks 18,356 14,344 15,203 19,498 15,555 13,566 16,330 15,767 14,359 17,786 102 Official institutions 8,871 7,661 4,934 5,786 7,214 7,283 7,203 7,872 8,060 7,115 103 Nonbank foreigners 11,402 11,482 10,050 10,057 9,917 10,586 10,590 10,280 9,973 10,290 104 Other liabilities 3,399 3,624 3,325 3,752 3,158 3,397 3,213 3,138 3,635 4,440 Bahamas and Caymans 105 Total, all currencies 146,811 142,055 142,592 146,954 141,832' 142,170 140,512 139,986 151,909 156,752 106 Negotiable CDs 615 610 847 883 1,092 1,067 1,119 975 886 890 107 To United States 102,955 103,813 105,248 107,545 101,695 103,007 99,240 97,244 107,245 111,925 108 Parent bank 47,162 44,811 48,648 43,120' 39,826' 43,288' 39,842' 40,889' 45,890 48,793 109 Other banks in United States , 13,938 12,778 11,715 13,601' 13,411' 13,382' 11,989' 12,276' 13,564 14,857 110 Nonbanks 41,855 46,224 44,885 50,824' 48,458' 46,337' 47,409' 44,079' 47,791 48,275 111 To foreigners 40,320 35,053 34,400 36,491 36,836' 36,004 37,988 39,437 41,277 42,147 112 Other branches of parent bank 16,782 14,075 12,631 13,891 13,354' 14,023 14,803 16,465 16,925 17,032 113 Banks 12,405 10,669 8,617 9,452 9,900' 7,943 9,395 9,514 10,395 11,587 114 Official institutions 2,054 1,776 2,719 2,937 3,072 3,185 3,263 2,935 1,786 2,113 115 Nonbank foreigners 9,079 8,533 10,433 10,211 io,5i(y 10,853 10,527 10,523 12,171 11,415 116 Other liabilities 2,921 2,579 2,097 2,035 2,209 2,092 2,165 2,330 2,501 1,790 117 Total payable in U.S. dollars .... 143,582 138,322 138,774 140,974 136,843' 137,763 135,376 134,354 145,354 149,274 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 Apr. May June July Aug. Sept. Oct/ 1 Total1 178,380 211,782 236,137 236,439 238,418 232,193 237,629r 238,920 250,899 By type 2 Liabilities reported by banks in the United States 26,734 27,868 33,034 31,896 31,754 31,391 29,593r 31,310 36,781 3 U.S. Treasury bills and certificates3 53,252 75,650 84,640 8811,,555533 8800,,666633 7733,,443355 7788,,221100 7755,,770011 7788,,881199 U.S. Treasury bonds and notes 4 Marketable 77,154 91,368 102,019 106,465 110,184 112,435 115,047 116,407 118,860 5 Nonmarketable 3,550 1,300 1,300 1,300 700 500 300 300 300 6 U.S. securities other than U.S. Treasury securities 17,690 15,596 15,144 15,225 15,117 14,432 14,479 15,202 16,139 By area 7 Western Europe1 74,447 88,623 106,171 108,677 111,405 107,695 106,873r 107,833 115,337 8 Canada 1,315 2,004 3,922 3,482 3,502 3,559 4,189 4,529 5,152 9 Latin America and Caribbean 11,148 8,372 9,295 7,923 7,519 7,918 8,710 8,558 9,048 10 86,448 105,868 109,842 109,464 108,654 105,495 109,484 109,339 113,830 11 1,824 1,503 1,284 1,628 1,405 1,590 1,837 1,619 1,474 12 Other countries6 3,199 5,412 5,621 5,265 5,933 5,937 6,537'' 7,042 6,056 1. Includes the Bank for International Settlements. bonds and notes payable in foreign currencies. 2. Principally demand deposits, time deposits, bankers acceptances, commer- 5. Debt securities of U.S. government corporations and federally sponsored cial paper, negotiable time certificates of deposit, and borrowings under repur- agencies, and U.S. corporate stocks and bonds. chase agreements. 6. Includes countries in Oceania and Eastern Europe. NOTE. Based on Treasury Department data and on data reported to the 3. Includes nonmarketable certificates of indebtedness (including those payable Treasury Department by banks (including Federal Reserve Banks) and securities in foreign currencies through 1974) and Treasury bills issued to official institutions dealers in the United States. of foreign countries. 4. Excludes notes issued to foreign official nonreserve agencies. Includes 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 Dec. Mar. June Sept. 1 Banks' own liabilities 555,,,222111999 888,,,555888666 111555,,,333666888 222999,,,555555666 333666,,,999000555 333666,,,000888333 444555,,,222222111 2 Banks' own claims 777,,,222333111 111111,,,999888444 111666,,,222999444 222555,,,999222000 333222,,,666111333 333222,,,888888444 444111,,,000444777 222,,,777333111 444,,,999999888 888,,,444333777 111333,,,999222333 111444,,,000777777 111000,,,999333555 111555,,,888444999 444,,,555000111 666,,,999888666 777,,,888555777 111111,,,999999777 111888,,,555333666 222111,,,999444999 222555,,,111999888 5 Claims of banks' domestic customers' 111,,,000555999 555666999 555888000 222,,,555000777 222,,,000111222 888888999 999999666 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 • February 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 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998844 11998855 11998866 Apr. May June July Aug. Sept. Oct.'' 1 All foreigners 407,306 435,726 539,238 553,980 557,735 541,039 542,849 550,310 583,915 605,739 2 Banks' own liabilities 306,898 341,070 406,075 413,735 417,889 401,903 409,547 410,949 445,987 463,903 3 Demand deposits 19,571 21,107 23,788 22,350 23,223 23,219 20,598 22,117 21,112 23,197 4 Time deposits' 110,413 117,278 131,691 131,794 132,973 133,186 134,209 137,561 148,322 152,202 5 Other2. 26,268 29,305 41,462 47,986 47,718 41,512 43,294 41,168 48,438 53,003 6 Own foreign offices3 150,646 173,381 209,134 211,605 213,975 203,986 211,446 210,103 228,116 235,501 7 Banks' custody liabilities4 100,408 94,656 133,163 140,245 139,846 139,135 133,302 139,361 137,928 141,836 8 U.S. Treasury bills and certificates5 76,368 69,133 90,392 97,928 95,959 9933,,668888 8888,,119933 9922,,770055 8899,,774477 9911,,661199 9 Other negotiable and readily transferable instruments6 18,747 17,964 15,417 14,590 15,790 16,371 15,632 15,259 16,042 15,881 10 Other 5,293 7,558 27,354 27,727 28.098 29,076 29,477 31,397 32,139 34,336 11 Nonmonetary international and regional organizations7 4,454 5,821 5,272 8,230 5,199 3,979 5,660 5,332 7,802 3,864 12 Banks' own liabilities 2,014 2,621 3,423 6,636 3,535 2,489 2,081 2,498 4,631 1,950 13 Demand deposits 254 85 199 334 106 72 76 44 80 144 14 Time deposits1 1,267 2,067 2,066 3,094 944 %7 584 807 1,340 1,076 15 Other2 493 469 1,158 3,207 2,486 1,451 1,420 1,647 3,211 730 16 Banks' custody liabilities4 2,440 3,200 1,849 1,594 1,664 1,490 3,579 2,834 3,171 1,914 17 U.S. Treasury bills and certificates 916 1,736 259 428 440 266 22,,333399 11,,663355 11,,779933 285 18 Other negotiable and readily transferable instruments6 1,524 1,464 1,590 1,152 1,224 1,224 1,240 1,193 1,378 1,624 19 Other 0 0 0 14 0 0 0 6 0 6 20 Oflficial institutions8 86,065 79,985 103,518 117,675 113,449 112,416 104,826 107,803 107,012 115,601 21 Banks' own liabilities 19,039 20,835 25,376 30,060 29,034 28,364 28,221 26,297 27,611 33,562 22 Demand deposits 1,823 2,077 2,267 1,829 2,089 1,745 1,711 1,907 1,799 1,867 23 Time deposits1 9,374 10,949 11,009 12,277 11,277 13,042 13,540 13,556 14,073 16,144 24 Other2 7,842 7,809 12,100 15,954 15,668 13,577 12,970 10,834 11,739 15,551 25 Banks' custody liabilities4 67,026 59,150 78,142 87,614 84,415 84,052 76,605 81,505 79,401 82,038 26 U.S. Treasury bills and certificates 59,976 53,252 75,650 84,640 81,553 8800,,666633 7733,,443355 7788,,221100 7755,,770011 7788,,881199 27 Other negotiable and readily transferable instruments6 6,966 5,824 2,347 2,819 2,715 3,141 2,950 3,151 3,540 2,995 28 Other 84 75 145 154 147 248 220 144 160 225 29 Banks9 248,893 275,589 350,637 350,635 359,093 346,818 355,782 357,868 388,730 407,011 30 Banks' own liabilities ' 225,368 252,723 310,400 311,654 319,495 305,679 313,948 314,867 344,991 360,583 31 Unaffiliated foreign banks 74,722 79,341 101,266 100,049 105,520 101,693 102,501 104,765 116,875 125,083 32 Demand deposits 10,556 10,271 10,303 9,782 10,808 10,298 8,588 9,901 9,781 11,359 33 Time deposits 47,095 49,510 64,516 64,296 67,725 67,097 67,280 69,021 77,798 80,209 34 Other 17,071 19,561 26,447 25,970 26,986 24,299 26,634 25,843 29,296 33,514 35 Own foreign offices3 150,646 173,381 209,134 211,605 213,975 203,986 211,446 210,103 228,116 235,501 36 Banks' custody liabilities4 23,525 22,866 40,237 38,981 39,598 41,139 41,834 43,000 43,739 46,427 37 U.S. Treasury bills and certificates 11,448 9,832 9,984 9,545 9,774 99,,006666 99,,114422 99,,110000 99,,220066 99,,227733 38 Other negotiable and readily transferable instruments6 7,236 6,040 5,165 4,090 4,213 5,611 5,850 5,320 5,221 5,735 39 Other 4,841 6,994 25,089 25,346 25,611 26,462 26,841 28,581 29,312 31,419 40 Other foreigners 67,894 74,331 79,810 77,441 79,994 77,825 76,582 79,308 80,371 79,263 41 Banks' own liabilities 60,477 64,892 66,876 65,385 65,825 65,371 65,298 67,286 68,754 67,808 42 Demand deposits 6,938 8,673 11,019 10,404 10,220 11,104 10,223 10,264 9,452 9,827 43 Time deposits 52,678 54,752 54,099 52,126 53,027 52,081 52,805 54,177 55,110 54,773 44 Other2 861 1,467 1,757 2,854 2,578 2,185 2,270 2,845 4,192 3,208 45 Banks' custody liabilities4 7,417 9,439 12,935 12,056 14,169 12,454 11,284 12,022 11,617 11,455 46 U.S. Treasury bills and certificates 4,029 4,314 4,500 3,315 4,192 33,,669944 33,,227766 33,,776611 33,,004466 33,,224422 47 Other negotiable and readily transferable instruments6 3,021 4,636 6,315 6,529 7,638 6,395 5,592 5,594 5,904 5,527 48 Other 367 489 2,120 2,212 2,340 2,366 2,415 2,667 2,668 2,686 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,476 9,845 7,4% 8,134 8,694 7,356 6,313 6,458 6,501 6,666 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. Data exclude "holdings of foreign branches, agencies, or wholly owned subsidiaries of head office or parent dollars" of the International Monetary Fund. foreign bank. 8. Foreign central banks, foreign central governments, and the Bank for 4. Financial claims on residents of the United States, other than long-term International Settlements. 9. Excludes central banks, which are included in "Official institutions." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A59 3.17 Continued 1987 AArreeaa aanndd ccoouunnttrryy 11998844 11998855 11998866 Apr. May June July Aug/ Sept. Oct." 1 Total 407,306 435,726 539,238 553,980 557,735 541,039 542,849 550,310 583,915 605,739 2 Foreign countries 402,852 429,905 533,965 545,750 552,536 537,059 537,190 544,978 576,113 601,875 3 Europe 153,145 164,114 180,491 192,008 207,149 204,713 204,810 203,848 213,724 234,042 4 Austria 615 693 1,181 1,058 921 974 795 1,066 1,281 1,171 5 Belgium-Luxembourg 4,114 5,243 6,729 7,906 9,335 9,558 9,154 9,754 10,460 10,738 6 Denmark 438 513 482 425 459 425 486 576 590 703 7 Finland 418 496 580 942 909 616 497 545 517 580 8 France :... 12,701 15,541 22,862 27,457 27,870 27,955 25,481 27,003 27,899 28,255 9 Germany 3,358 4,835 5,752 6,779 10,619 8,024 7,105 7,715 6,417 8,250 10 Greece 699 666 700 603 643 691 667 636 690 738 11 Italy 10,762 9,667 10,875 11,338 11,726 11,943 10,032 7,667 8,409 10,249 12 Netherlands 4,731 4,212 5,600 5,880 5,442 5,367 5,104 5,461 6,106 6,693 13 Norway 1,548 948 735 567 571 502 562 593 663 1,179 14 Portugal 597 652 699 660 607 704 586 700 684 724 15 Spain 2,082 2,114 2,407 2,244 2,194 2,322 2,103 2,287 2,526 2,683 16 Sweden 1,676 1,422 884 1,251 1,496 1,296 1,235 1,412 1,640 2,894 17 Switzerland 31,740 29,020 30,533 26,533 26,869 27,852 24,735 28,235 27,334 27,032 18 Turkey 584 429 454 833 378 455 365 514 398 2,388 19 United Kingdom 68,671 76,728 85,284 91,742 102,261 99,682 107,978 102,501 109,268 121,205 20 Yugoslavia 602 673 630 526 429 433 459 491 519 508 21 Other Western Europe1 7,192 9,635 3,322 4,572 3,849 5,208 6,282 6,016 7,673 7,350 22 U.S.S.R 79 105 80 32 37 36 550 45 51 87 23 Other Eastern Europe 537 523 702 659 532 671 632 630 600 617 24 Canada 16,059 17,427 26,345 25,306 24,522 21,914 21,232 22,556 26,052 25,727 25 Latin America and Caribbean 153,381 167,856 209,184 207,228 204,694 195,058 199,107 201,433 214,314 217,925 26 Argentina 4,394 6,032 4,757 4,412 4,786 4,795 5,123 5,074 4,674 5,075 27 Bahamas 56,897 57,657 73,619 72,102 69,428 66,325 62,518 62,461 71,490 73,305 28 Bermuda 2,370 2,765 2,922 2,181 2,594 2,172 2,317 2,270 2,244 2,437 29 Brazil 5,275 5,373 4,325 3,619 3,960 3,673 3,783 3,960 4,376 4,071 30 British West Indies 36,773 42,674 70,919 69,426 70,354 65,297 72,229 73,257 78,116 79,255 31 Chile 2,001 2,049 2,054 2,255 2,034 1,972 2,035 2,560 2,248 2,191 32 Colombia 2,514 3,104 4,285 4,353 4,289 44,,336633 44,,443311 4,449 4,180 4,166 33 Cuba 10 11 7 6 6 88 88 7 7 12 34 Ecuador 1,092 1,239 1,236 1,045 1,093 1,121 1,090 1,101 1,097 1,115 35 Guatemala 896 1,071 1,123 1,165 1,167 1,123 1,110 1,086 1,072 1,053 36 Jamaica 183 122 136 149 189 158 146 171 156 140 37 Mexico 12,303 14,060 13,745 15,104 13,955 13,857 14,160 14,549 14,265 14,328 38 Netherlands Antilles 4,220 4,875 4,916 5,797 5,171 5,183 5,291 5,338 5,218 5,305 39 Panama 6,951 7,514 6,886 7,111 7,341 7,131 6,988 7,130 7,187 7,466 40 Peru 1,266 1,167 1,163 1,086 1,095 1,137 1,145 1,200 1,203 1,202 41 Uruguay 1,394 1,552 1,537 1,533 1,507 1,504 1,536 1,485 1,492 1,493 42 Venezuela 10,545 11,922 10,439 10,592 10,292 10,164 10,082 10,146 9,824 9,868 43 Other 4,297 4,668 5,114 5,289 5,432 5,078 5,105 5,186 5,466 5,442 44 Asia 71,187 7722,,228800 108,806 111122,,229966 110077,,777744 110066,,773377 110022,,997711 110066,,999999 111111,,339966 111155,,224499 China 45 Mainland 1,153 1,607 1,476 1,889 1,842 1,737 1,744 2,011 1,773 1,699 46 Taiwan 4,990 7,786 18,902 19,461 17,331 16,346 16,436 15,377 15,197 18,299 47 Hong Kong 6,581 8,067 9,390 9,367 9,365 9,122 8,595 9,015 8,637 9,242 48 India 507 712 674 527 569 714 572 902 771 606 49 Indonesia 1,033 1,466 1,547 1,460 1,243 1,774 1,404 1,541 1,435 1,336 50 Israel 1,268 1,601 1,892 1,305 1,084 1,229 928 1,036 1,105 2,170 51 Japan 21,640 23,077 47,410 53,381 50,434 49,494 46,722 49,872 52,944 53,180 52 Korea 1,730 1,665 1,141 1,178 1,343 1,397 1,410 1,388 1,714 1,576 53 Philippines 1,383 1,140 1,866 1,427 1,312 1,222 1,148 1,208 1,152 1,330 54 Thailand 1,257 1,358 1,119 1,118 1,180 1,144 1,096 1,190 1,118 1,275 55 Middle-East oil-exporting countries3 16,804 14,523 12,352 11,363 10,860 11,448 11,676 12,676 14,043 13,659 56 Other 12,841 9,276 11,036 9,821 11,209 11,111 11,241 10,783 11,506 10,877 57 Africa 3,396 4,883 4,021 3,732 4,003 3,759 4,018 4,194 4,012 3,928 58 Egypt 647 1,363 706 871 1,052 1,011 1,113 1,158 1,118 1,104 59 Morocco 118 163 92 101 86 106 75 74 81 70 60 South Africa 328 388 270 288 198 188 229 227 199 280 61 Zaire 153 163 74 39 74 58 64 69 81 71 62 Oil-exporting countries4 1,189 1,494 1,519 1,212 1,267 1,111 1,275 1,331 1,178 1,081 63 Other 961 1,312 1,360 1,221 1,326 1,286 1,262 1,335 1,356 1,323 64 Other countries 5,684 3,347 5,118 5,181 4,394 4,878 5,052 5,948 6,616 5,004 65 Australia 5,300 2,779 4,196 4,293 3,589 4,113 4,333 5,019 5,641 4,011 66 All other 384 568 922 888 805 765 718 929 974 994 67 Nonmonetary international and regional organizations 4,454 5,821 5,272 8,230 5,199 3,979 5,660 5,332 7,802 3,864 68 International5 3,747 4,806 4,086 6,966 3,717 2,577 4,200 3,819 6,086 2,393 69 Latin American regional 587 894 1,033 845 994 1,047 1,075 1,070 1,126 1,155 70 Other regional6 120 121 154 420 488 356 384 443 591 316 1. Includes the Bank for International Settlements and Eastern European 4. Comprises Algeria, Gabon, Libya, and Nigeria. countries that are not listed in line 23. 5. Excludes "holdings of dollars" of the International Monetary Fund. 2. Comprises Bulgaria, Czechoslovakia, the German Democratic Republic, 6. Asian, African, Middle Eastern, and European regional organizations, 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." United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • February 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 AArreeaa aanndd ccoouunnttrryy 11998844 11998855 11998866 Apr. May June July Aug. Sept. Oct/ 1 Total 400,162 401,608 444,265 439,509 438,135 432,208 423,424 428,052r 447,103 461,420 2 Foreign countries 399,363 400,577 441,244 434,240 437,304 430,076 421,396 425,182r 442,584 458,858 3 Europe 99,014 106,413 107,446 108,052 116,501 114,132 108,093 104,732' 105,657 111,128 4 Austria 433 598 728 746 669 758 698 785 684 930 5 Belgium-Luxembourg 4,794 5,772 7,498 8,542 9,920 9,792 10,239 9,550 9,591 10,333 6 Denmark 648 706 688 546 541 716 614 878 747 818 7 Finland 898 823 947 1,116 1,036 1,035 1,037 1,031 1,266 1,089 8 France 9,157 9,124 11,356 10,817 12,075 12,036 11,673 12,530 12,781 14,345 9 Germany 1,306 1,267 1,820 1,379 1,508 1,548 2,009 l,333r 1,483 2,046 10 Greece 817 991 648 460 457 456 433 375 406 430 11 Italy 9,119 8,848 9,038 7,536 8,329 8,404 6,784 6,407r 6,541 7,425 12 Netherlands 1,356 1,258 3,299 3,030 2,946 5,744 4,429 3,078' 3,247 3,975 13 Norway 675 706 654 683 776 774 830 803 722 799 14 Portugal 1,243 1,058 739 615 641 659 645 667 638 570 15 Spain 2,884 1,908 1,492 1,977 2,107 1,848 1,830 1,945 2,204 1,859 16 Sweden 2,230 2,219 1,945 2,414 2,614 2,330 2,287 2,473 2,752 2,531 17 Switzerland 2,123 3,171 3,049 2,905 3,593 2,611 2,464 2,664 2,612 2,825 18 Turkey 1,130 1,200 1,543 1,559 1,623 1,785 1,753 1,757r 1,689 1,564 19 United Kingdom 56,185 62,566 58,337 59,876 64,001 59,748 56,565 54,687' 54,469 55,759 20 Yugoslavia 1,886 1,964 1,836 1,763 1,803 1,755 1,764 1,742 1,741 1,784 21 Other Western Europe1 596 998 540 648 493 559 647 548 619 549 22 U.S.S.R 142 130 345 375 357 582 420 521 549 473 23 Other Eastern Europe 1,389 1,107 944 1,065 1,012 993 974 958r 915 1,025 24 Canada 16,109 16,482 20,958 20,177 19,294 18,450 18,596 18,441 21,525 21,402 25 Latin America and Caribbean 207,862 202,674 208,832 209,524 204,272 201,887 200,885 202,602r 214,657 217,255 26 Argentina 11,050 11,462 12,104 12,129 12,335 12,256 12,158 12,22lr 11,857 12,106 27 Bahamas 58,009 58,258 59,342 62,634 58,314 56,463 53,034 55,940' 65,286 64,140 28 Bermuda 592 499 418 740 592 300 387 359 328 423 29 Brazil 26,315 25,283 25,703 26,006 25,690 25,493 25,992 26,586 26,050 25,747 30 British West Indies 38,205 38,881 46,306 43,592 44,355 43,782 44,755 43,486' 47,512 51,715 31 Chile 6,839 6,603 6,562 6,412 6,321 6,328 6,500 6,510 6,469 6,374 32 Colombia 3,499 3,249 2,826 2,686 2,650 2,649 2,743 2,784 2,729 2,731 33 Cuba 0 0 0 9 9 0 0 0 0 0 34 Ecuador 2,420 2,390 2,449 2,381 2,372 2,354 2,396 2,384 2,367 2,443 35 Guatemala3 158 194 140 120 115 109 107 105 124 131 36 Jamaica3 252 224 198 189 184 182 268 202 198 191 37 Mexico 34,885 31,799 30,660 30,125 30,055 30,293 31,141 30,696' 30,542 30,093 38 Netherlands Antilles 1,350 1,340 1,039 1,175 1,045 1,344 1,083 992 1,041 1,232 39 Panama 7,707 6,645 5,436 5,771 4,730 4,977 4,633 4,616 4,579 4,420 40 Peru 2,384 1,947 1,661 1,601 1,599 1,565 1,567 1,549 1,479 1,457 41 Uruguay 1,088 960 940 957 962 950 949 966 946 961 42 Venezuela 11,017 10,871 11,112 11,086 11,044 10,956 11,306 11,366 11,308 11,198 43 Other Latin America and Caribbean 2,091 2,067 1,938 1,910 1,900 1,884 1,868 1,839 1,840 1,892 44 Asia f 66,316 66,212 96,070 88,738 8899,,553344 8877,,990033 8866,,551155 9911,,990011'' 9933,,225533 110000,,441177 China 45 Mainland 710 639 787 1,360 1,175 993 929 919 894 548 46 Taiwan 1,849 1,535 2,678 3,278 3,592 3,301 2,487 2,772 2,980 4,219 47 Hong Kong 7,293 6,797 8,307 7,779 7,727 7,658 7,495 6,556 6,891 6,888 48 India 425 450 321 314 379 429 416 565 539 562 49 Indonesia 724 698 723 627 657 677 639 624 621 591 50 Israel 2,088 1,991 1,635 1,509 1,459 1,450 1,413 1,450 1,591 1,331 51 Japan 29,066 31,249 59,620 54,300 55,167 55,097 54,596 61,544' 60,121 65,777 52 Korea 9,285 9,226 7,182 5,352 6,076 5,314 4,954 4,589 4,583 4,983 53 Philippines 2,555 2,224 2,217 2,121 2,064 2,109 2,211 2,148 2,126 2,082 54 Thailand 1,125 845 578 461 540 552 565 545 452 443 55 Middle East oil-exporting countries4 5,044 4,298 4,122 4,496 3,697 3,808 3,914 4,315 4,848 5,063 56 Other Asia 6,152 6,260 7,901 7,142 7,001 6,514 6,897 5,875 7,607 7,930 57 Africa 6,615 5,407 4,650 4,800 4,876 4,707 4,705 4,739 4,702 5,376 58 Egypt 728 721 567 574 585 599 572 586 541 538 59 Morocco 583 575 598 565 566 563 568 603 582 605 60 South Africa 2,795 1,942 1,550 1,578 1,598 1,506 1,479 1,497 1,504 1,546 61 Zaire 18 20 28 41 43 39 38 35 40 38 62 Oil-exporting countries 842 630 694 801 840 818 866 862 888 1,531 63 Other 1,649 1,520 1,213 1,241 1,246 1,184 1,182 1,156 1,147 1,118 64 Other countries 3,447 3,390 3,289 2,949 2,828 2,996 2,601 2,766 2,791 3,280 65 Australia 2,769 2,413 1,944 2,065 1,897 1,980 1,693 1,686 1,834 2,034 66 All other 678 978 1,345 884 931 1,016 908 1,080 957 1,246 67 Nonmonetary international and regional organizations6 880000 1,030 3,021 5,268 830 2,132 2,029 2,870' 4,519 2,562 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 States1 Payable in U.S. Dollars Millions of dollars, end of period 1987 TTyyppee ooff ccllaaiimm 11998844 11998855 11998866 Apr. May June July Aug/ Sept. Oct." 11 TToottaall 444444333333333333,,,,,,000000777777888888 444444333333000000,,,,,,444444888888999999 444444777777888888,,,,,,111111888888777777 439,509 438,135 444444666666555555,,,,,,222222666666777777 423,424 428,052 444444888888111111,,,,,,000000222222999999 461,420 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444000000000000,,,,,,111111666666222222 444444000000111111,,,,,,666666000000888888 444444444444444444,,,,,,222222666666555555 439,509 438,135 444444333333222222,,,,,,222222000000888888 423,424 428,052 444444444444777777,,,,,,111111000000333333 461,420 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 666666222222,,,,,,222222333333777777 666666000000,,,,,,555555000000777777 666666444444,,,,,,111111111111222222 66,942 62,788 666666333333,,,,,,555555111111222222 64,778 65,620 666666666666,,,,,,999999000000777777 64,691 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111555555666666,,,,,,222222111111666666 111111777777444444,,,,,,222222666666111111 222222111111111111,,,,,,666666111111555555 207,042 203,682 111111999999999999,,,,,,222222777777333333 189,797 197,529 222222111111000000,,,,,,333333333333000000 219,678 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111222222444444,,,,,,999999333333222222 111111111111666666,,,,,,666666555555444444 111111222222222222,,,,,,777777111111555555 120,926 127,155 111111222222555555,,,,,,111111444444888888 123,888 121,881 111111222222777777,,,,,,000000666666111111 133,493 66 DDeeppoossiittss 444444999999,,,,,,222222222222666666 444444888888,,,,,,333333777777222222 555555777777,,,,,,444444888888444444 57,450 61,659 666666000000,,,,,,444444444444777777 59,655 56,882 555555999999,,,,,,777777444444444444 62,882 77 OOtthheerr 777777555555,,,,,,777777000000666666 666666888888,,,,,,222222888888222222 666666555555,,,,,,222222333333222222 63,476 65,495 666666444444,,,,,,777777000000111111 64,233 64,999 666666777777,,,,,,333333111111777777 70,611 88 AAllll ootthheerr ffoorreeiiggnneerrss 555555666666,,,,,,777777777777777777 555555000000,,,,,,111111888888555555 444444555555,,,,,,888888222222333333 44,599 44,511 444444444444,,,,,,222222777777555555 44,961 43,021 444444222222,,,,,,888888000000555555 43,559 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 333333222222,,,,,,999999111111666666 222222888888,,,,,,888888888888111111 333333333333,,,,,,999999222222222222 333333333333,,,,,,000000555555999999 333333333333,,,,,,999999222222555555 333333,,,,,,333333888888000000 333333,,,,,,333333333333555555 444444,,,,,,444444111111333333 333333,,,,,,444444777777444444 333333,,,,,,222222111111888888 11 Negotiable and readily transferable 222222333333,,,,,,888888000000555555 111111999999,,,,,,333333333333222222 222222444444,,,,,,000000444444444444 222222111111,,,,,,333333888888444444 222222222222,,,,,,000000777777111111 12 Outstanding collections and other 555555,,,,,,777777333333222222 666666,,,,,,222222111111444444 555555,,,,,,444444666666555555 888888,,,,,,222222000000222222 888888,,,,,,666666333333666666 13 MEMO: Customer liability on 333333777777,,,,,,111111000000333333 222222888888,,,,,,444444888888777777 222222555555,,,,,,666666333333111111 222222333333,,,,,,777777333333111111 222222111111,,,,,,777777777777888888 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 .... 40,714 38,102 42,129 45,521 44,860 38,046 40,203 40,627 39,442 n.a. 1. Data for banks' own claims are given on a monthly basis, but the data for 3. Assets owned by customers of the reporting bank located in the United claims of banks' own domestic customers are available on a quarterly basis only. States that represent claims on foreigners held by reporting banks for the account 2. U.S. banks: includes amounts due from own foreign branches and foreign of their domestic customers. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 4. Principally negotiable time certificates of deposit and bankers acceptances. regulatory agencies. Agencies, branches, and majority-owned subsidiaries of 5. Includes demand and time deposits and negotiable and nonnegotiable foreign banks: principally amounts due from head office or parent foreign bank, certificates of deposit denominated in U.S. dollars issued by banks abroad. For and foreign branches, agencies, or wholly owned subsidiaries of head office or description of changes in data reported by nonbanks, see July 1979 BULLETIN, parent foreign bank. p. 550. 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 Dec. Mar. June Sept." 1 Total 243,715 243,952 227,903 231,433 226,760 235,320 235,360 By borrower 2 Maturity of 1 year or less1 176,158 167,858 160,824 159,790 155,239 166,260 164,941 3 Foreign public borrowers 24,039 23,912 26,302 24,723 23,496 23,290 26,901 4 All other foreigners 152,120 143,947 134,522 135,068 131,743 142,970 138,039 5 Maturity over 1 year1 67,557 76,094 67,078 71,643 71,521 69,060 70,419 6 Foreign public borrowers 32,521 38,695 34,512 39,898 40,718 39,465 39,782 7 All other foreigners 35,036 37,399 32,567 31,745 30,803 29,594 30,637 By area Maturity of 1 year or less1 8 Europe 56,117 58,498 56,585 61,346 58,001 68,141 61,732 9 Canada 6,211 6,028 6,401 5,845 5,559 5,552 5,653 10 Latin America and Caribbean 73,660 62,791 63,328 56,174 54,321 55,326 58,023 11 Asia 34,403 33,504 27,966 29,291 30,969 30,875 32,064 12 Africa 4,199 4,442 3,753 2,882 3,148 2,980 2,877 13 All other2 1,569 2,593 2,791 4,252 3,240 3,385 4,591 Maturity of over 1 year 14 Europe 13,576 9,605 7,634 6,851 6,764 6,422 6,805 15 Canada 1,857 1,882 1,805 1,930 1,873 1,631 1,577 16 Latin America and Caribbean 43,888 56,144 50,674 56,415 56,540 55,524 55,097 17 Asia 4,850 5,323 4,502 4,120 4,151 3,340 3,535 18 Africa 2,286 2,033 1,538 1,539 1,630 1,522 1,612 19 All other2 1,101 1,107 926 787 564 621 1,793 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 • February 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 11998833 11998844 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1 Total 433.9 405.7 394.9 391.9 393.7 390.3 389.8 390.0 399.3r 388.3r 392.2 2 G-10 countries and Switzerland 167.8 148.1 152.0 148.5 156.9 160.1 158.9 157.6 165.1 158.8 156.4 3 Belgium-Luxembourg 12.4 8.7 9.5 9.3 8.4 9.0 8.5 8.4 9.1 8.5 8.2 4 France 16.2 14.1 14.8 12.3 13.8 15.1 14.7 13.8 13.4 12.6 13.8 5 Germany 11.3 9.0 9.8 10.5 11.3 11.5 12.5 11.7 12.8 11.3 10.6 6 Italy 11.4 10.1 8.4 9.8 8.5 9.3 8.1 9.0 8.6 7.5 6.7 7 Netherlands 3.5 3.9 3.4 3.7 3.5 3.4 3.9 4.6 4.4 7.3 4.8 8 Sweden 5.1 3.2 3.1 2.8 2.9 2.9 2.7 2.4 3.0 2.4 2.7 9 Switzerland 4.3 3.9 4.1 4.4 5.4 5.6 4.8 5.5 5.8 5.7 5.4 10 United Kingdom 65.3 60.3 67.1 64.6 68.8 69.2 70.3 71.9 74.3 72.4 71.9 11 Canada 8.3 7.9 7.6 7.0 6.4 6.9 6.1 5.4 5.2 4.6 4.7 12 Japan 29.9 27.1 24.3 24.2 28.0 27.2 27.4 25.0 28.5 26.4 27.7 13 Other developed countries 36.0 33.6 32.0 30.4 31.6 30.7 29.5 26.1 26.0 25.7 26.9 14 Austria 1.9 1.6 1.7 1.6 1.6 1.7 1.7 1.7 1.9 1.8 1.9 15 Denmark 3.4 2.2 2.1 2.4 2.5 2.4 2.3 1.7 1.7 1.6 1.6 16 Finland 2.4 1.9 1.8 1.6 1.9 1.6 1.7 1.4 1.4 1.5 1.4 17 Greece 2.8 2.9 2.8 2.6 2.5 2.6 2.3 2.3 2.1 2.0 1.9 18 Norway 3.3 3.0 3.4 2.9 2.7 3.0 2.7 2.4 2.2 2.2 2.4 19 Portugal 1.5 1.4 1.4 1.3 1.1 1.1 1.0 .8 .9 .8 .8 20 Spain 7.1 6.5 6.1 5.8 6.5 6.4 6.7 5.8 6.3 6.0 7.4 21 Turkey 1.7 1.9 2.1 1.9 2.3 2.5 2.1 2.0 1.9 2.1 1.9 22 Other Western Europe 1.8 1.7 1.7 2.0 2.4 2.1 1.6 1.4 1.4 1.5 1.7 23 South Africa 4.7 4.5 3.3 3.2 3.2 3.1 3.1 3.1 3.1 3.1 3.0 24 Australia 5.4 6.0 5.6 5.0 4.9 4.2 4.1 3.5 3.2 3.1 2.9 25 OPEC countries3 28.4 24.9 22.7 21.6 20.7 20.6 20.0 19.6 20.4 19.2 19.3 26 Ecuador 2.2 2.2 2.2 2.1 2.2 2.1 2.2 2.2 2.1 2.1 2.1 27 Venezuela 9.9 9.3 9.0 8.9 8.7 8.8 8.7 8.6 8.7 8.7 8.5 28 Indonesia 3.4 3.3 3.1 3.0 3.3 3.0 2.8 2.5 2.4 2.2 2.0 29 Middle East countries 9.8 7.9 6.2 5.5 4.7 5.0 4.6 4.5 5.5 4.5 5.1 30 African countries 3.0 2.3 2.3 2.0 1.8 1.7 1.7 1.7 1.7 1.7 1.7 31 Non-OPEC developing countries 110.8 111.8 107.8 105.1 103.9 102.0 100.0 99.7 100.2 100.1 97.3 Latin America 32 Argentina 9.5 8.7 8.9 8.9 8.9 9.2 9.3 9.5 9.6 9.5 9.3 33 Brazil 23.1 26.3 25.5 25.6 25.8 25.5 25.4 25.3 25.6 24.5 24.6 34 Chile 6.4 7.0 6.6 7.0 7.0 7.1 7.2 7.1 7.3 7.2 7.1 35 Colombia 3.2 2.9 2.6 2.7 2.3 2.2 2.0 2.1 2.0 2.0 2.0 36 Mexico 25.8 25.7 24.4 24.2 24.1 24.0 24.0 23.9 23.9 25.3 24.7 37 Peru 2.4 2.2 1.9 1.8 1.7 1.6 1.5 1.5 1.4 1.4 1.2 38 Other Latin America 4.2 3.9 3.5 3.4 3.3 3.3 3.3 3.1 3.0 2.9 2.8 Asia China 39 Mainland .3 .7 1.1 .5 .6 .6 .6 .4 .9 .6 .3 40 Taiwan 5.2 5.1 5.1 4.5 4.3 3.7 4.3 4.9 5.5 6.6 5.9 41 India .9 .9 1.1 1.2 1.2 1.3 1.3 1.2 1.7 1.7 1.9 42 Israel 1.9 1.8 1.5 1.6 1.3 1.6 1.4 1.5 1.4 1.3 1.3 43 Korea (South) 11.2 10.6 10.4 9.4 9.5 8.7 7.3 6.7 6.3 5.6 5.1 44 Malaysia 2.8 2.7 2.7 2.4 2.2 2.0 2.1 2.1 1.9 1.7 1.6 45 Philippines 6.1 6.0 6.0 5.7 5.6 5.7 5.4 5.4 5.4 5.4 5.4 46 Thailand 2.2 1.8 1.7 1.4 1.3 1.1 1.0 .9 .9 .8 .7 47 Other Asia 1.0 1.1 .9 1.0 .9 .8 .7 .7 .6 .8 .7 Africa 48 Egypt 1.5 1.2 1.0 1.0 .9 .9 .7 .7 .6 .6 .6 49 Morocco .8 .8 .9 .9 .9 .9 .9 .9 .9 .9 .8 50 Zaire .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 51 Other Africa4 2.3 2.1 2.0 1.9 1.9 1.7 1.6 1.6 1.4 1.3 1.3 52 Eastern Europe 5.3 4.4 4.6 4.2 4.0 4.0 3.4 3.2 3.1 3.4 3.4 53 U.S.S.R .2 .1 .2 .1 .3 .3 .1 .1 .1 .3 .5 54 Yugoslavia 2.4 2.3 2.4 2.2 2.0 2.0 1.9 1.7 1.6 1.7 1.7 55 Other 2.8 2.0 1.9 1.8 1.7 1.7 1.4 1.4 1.3 1.4 1.3 56 Offshore banking centers 68.9 65.6 58.8 65.4 60.1 56.2 60.9 64.0 66.V 63. or 67.4 57 Bahamas 21.7 21.5 16.6 21.4 21.4 17.1 19.9 22.3 24. lr 19.8r 26.4 58 Bermuda .9 .9 .8 .7 .7 .5 .4 .7 .8 .6 .6 59 Cayman Islands and other British West Indies 12.2 11.8 12.3 13.4 11.4 13.0 13.2 14.5 13.6 15.0 13.2 60 Netherlands Antilles 4.2 3.4 2.3 2.3 2.3 2.3 1.9 1.8 1.7 1.3 1.2 61 Panama 5.8 6.7 6.1 6.0 4.4 4.2 5.1 4.1 5.4 5.3 5.3 62 Lebanon .1 .1 .0 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 13.8 11.4 11.4 11.5 11.5 9.5 10.5 11.2 11.5 12.5 12.3 64 Singapore 10.3 9.8 9.4 9.9 8.5 9.3 9.7 9.4 8.8 8.4 8.3 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 16.8 17.3 17.3 16.9 16.4 16.8 17.2 19.8 18.6 18.1 21.4 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 another Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates), and Bahrain and foreign branch of the same banking institution. The data in this table combine Oman (not formally members of OPEC). foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims 4. Excludes Liberia. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 5. Includes Canal Zone beginning December 1979. foreign banks and those constituting claims on own foreign branches). 6. Foreign branch claims only. 2. Beginning with June 1984 data, reported claims held by foreign branches 7. Includes New Zealand, Liberia, and international and regional organizahave been reduced by an increase in the reporting threshold for "shell" branches tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 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 28,295 2 Payable in dollars 22,233 26,389 24,296 21,440 22,278 21,759 21,611 23,833 3 Payable in foreign currencies 3,113 2,968 3,389 3,686 3,839 3,719 5,408 4,463 By type 4 Financial liabilities 10,572 14,509 13,460 11,808 13,219 12,140 12,997 13,513 5 Payable in dollars 8,700 12,553 11,257 9,717 10,947 9,782 10,397 10,635 6 Payable in foreign currencies 1,872 1,955 2,203 2,091 2,272 2,358 2,600 2,878 7 Commercial liabilities 14,774 14,849 14,225 13,318 12,899 13,338 14,023 14,782 8 Trade payables 7,765 7,005 6,685 5,670 5,723 6,357 6,813 7,116 9 Advance receipts and other liabilities .. 7,009 7,843 7,540 7,648 7,175 6,981 7,210 7,666 10 Payable in dollars 13,533 13,836 13,039 11,723 11,331 11,977 11,215 13,198 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 9,212 13 Belgium-Luxembourg 302 471 329 390 424 245 205 257 14 France 843 995 857 686 501 644 742 807 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 6,209 19 Canada 764 863 839 367 362 399 431 441 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 countries2 . 170 155 82 43 3 8 7 7 30 Africa 19 14 12 12 4 1 3 1 31 Oil-exporting countries3 0 0 0 0 2 1 1 0 27 41 50 104 63 67 67 66 32 All other4 Commercial liabilities 3,245 4,001 4,074 3,817 4,367 4,457 4,383 4,972 33 Europe 62 48 62 58 75 100 85 111 34 Belgium-Luxembourg 437 438 453 358 370 340 278 419 35 France 427 622 607 561 637 722 589 593 36 Germany 268 245 364 586 613 493 372 339 37 Netherlands 241 257 379 284 361 385 484 557 38 Switzerland 732 1,095 976 864 1,138 1,301 1,287 1,370 39 United Kingdom 40 Canada 1,841 1,975 1,449 1,367 1,312 1,389 1,350 1,252 41 Latin America and Caribbean 1,473 1,871 1,088 1,242 846 873 1,075 1,032 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 88 45 British West Indies 6 32 44 35 45 48 88 64 46 Mexico 585 586 430 235 197 211 182 159 47 Venezuela 432 636 212 488 207 215 223 203 48 Asia 6,741 5,285 6,046 5,273 4,807 5,020 5,681 5,921 49 Japan 1,247 1,256 1,799 2,100 2,136 2,047 2,437 2,480 50 Middle East oil-exporting countries2' 4,178 2,372 2,829 1,985 1,492 1,668 1,931 1,870 51 Africa 553 588 587 567 585 622 520 523 52 Oil-exporting countries3 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 • February 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 31,279 2 Payable in dollars 31,815 27,304 26,457 31,669 31,302 30,771 30,716 28,180 3 Payable in foreign currencies 3,096 2,597 2,302 2,182 2,706 2,521 3,062 3,099 By type 4 Financial claims 23,780 19,254 18,774 24,709 24,795 23,461 24,192 21,540 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 6,143 9 Payable in dollars 3,328 3,190 2,213 2,287 4,435 4,089 4,700 4,868 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 9,831 9,586 9,739 12 Trade receivables 9,721 9,177 8,696 7,802 8,030 8,680 8,579 8,696 13 Advance payments and other claims 1,410 1,470 1,290 1,341 1,183 1,151 1,007 1,043 14 Payable in dollars 10,494 9,912 9,333 8,537 8,445 9,220 88,,770011 9,098 15 Payable in foreign currencies 637 735 652 606 767 611 888866 641 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 7,539 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 4,349 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 3,808 38 Belgium-Luxembourg 135 165 175 131 126 133 143 136 39 France 459 440 426 391 415 395 411 434 40 Germany 349 374 346 418 405 441 444 530 41 Netherlands 334 335 284 230 184 200 163 182 42 Switzerland 317 271 284 228 233 215 193 186 43 United Kingdom 809 1,063 898 674 853 926 1,012 1,040 44 Canada 829 1,021 1,023 965 950 919 909 922 45 Latin America and Caribbean 2,695 2,052 1,753 1,611 1,687 1,880 1,797 1,757 46 Bahamas 8 8 13 24 29 28 11 14 47 Bermuda 190 115 93 148 132 158 130 126 48 Brazil 493 214 206 193 207 236 211 200 49 British West Indies 7 7 6 29 23 48 22 14 50 Mexico 884 583 510 323 316 391 415 326 51 Venezuela 272 206 157 181 192 224 157 190 52 Asia 3,063 3,073 2,982 2,574 2,487 2,653 2,604 2,613 53 Japan 1,114 1,191 1,016 845 792 862 914 945 54 Middle East oil-exporting countries2 737 668 638 622 600 509 467 454 55 Africa 588 470 437 450 469 494 431 378 56 Oil-exporting countries3 139 134 130 170 168 135 141 123 57 All other4 286 229 257 237 234 220 233 261 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 Jan.- Apr. May June July Aug. Sept. Oct.p Oct. U.S. corporate securities STOCKS 1 Foreign purchases 81,995 148,101 221,545 20,735 19,632 18,682 23,645 24,774 22,464 30,206 2 Foreign sales 77,054 129,382 195,611 17,390 15,956 17,054 21,883 24,554 19,433 27,779 3 Net purchases, or sales (-) 4,941 18,719 25,933 3,345 3,676 1,628 1,763 220 3,031 2,427 4 Foreign countries 4,857 18,927 25,873 3,282 3,711 1,673 1,749 117 2,942 2,413 5 Europe 2,057 9,559 10,140 1,060 1,474 669 717 81 1,303 138 6 France -438 459 1,844 332 123 107 66 -69 -15 58 7 Germany 730 341 259 -101 118 -155 -96 28 -12 381 8 Netherlands -123 936 1,028 124 120 232 153 135 79 -40 9 Switzerland -75 1,560 1,154 306 351 -206 -80 -325 -435 294 10 United Kingdom 1,665 4,826 4,876 211 670 671 635 125 761 -625 11 Canada 356 817 815 252 48 -238 255 -21 -46 238 12 Latin America and Caribbean 1,718 3,030 1,920 36 363 290 387 188 157 -513 13 Middle East1 238 976 -841 21 -90 -26 -913 -255 135 558 14 Other Asia 296 3,876 13,084 1,790 1,686 1,009 1,290 171 1,242 2,014 15 Africa 24 297 118 59 45 -30 -14 16 20 7 16 Other countries 168 373 637 65 185 -1 27 -63 132 -30 17 Nonmonetary international and regional organizations 84 -208 60 62 -36 -45 14 102 90 15 BONDS2 18 Foreign purchases 86,587 123,149 93,135 9,857 8,963 10,364 9,407 7,027' 8,652 9,125 19 Foreign sales 42,455 72,499 67,263 6,559 6,823 8,305 6,509 5,638' 4,844 7,245 20 Net purchases, or sales (—) 44,132 50,650 25,872 3,297 2,140 2,060 2,898 1,389' 3,809 1,880 21 Foreign countries 44,227 49,803 25,817 3,107 2,270 1,968 2,889 l,548r 3,769 1,871 22 Europe 40,047 39,323 21,131 2,833 1,682 2,204 2,346 1,616' 3,140 930 73 France 210 389 242 -22 7 43 65 26 -37 55 74 Germany 2,001 -251 1 -121 -29 80 116 -22 -56 -98 75 Netherlands 222 387 284 47 38 37 -65 44 116 36 76 Switzerland 3,987 4,529 1,894 50 182 105 247 306' 166 136 77 United Kingdom 32,762 33,902 18,725 2,809 1,544 1,795 1,913 1,317' 2,819 1,020 78 Canada 190 548 1,115 161 23 49 87 -8 47 305 29 Latin America and Caribbean 498 1,468 2,216 123 254 -4 305 44' 624 513 30 Middle East1 -2,648 -2,961 -440 62 59 -128 -166 -14 -87 42 31 Other Asia 6,091 11,270 1,889 -73 252 -169 300 -93 52 65 37 Africa 11 16 23 1 7 8 1 -17 -6 24 33 Other countries 38 139 -27 0 -6 8 15 20 -1 -9 34 Nonmonetary international and regional organizations -95 847 55 190 -130 92 9 -159 4400 1100 Foreign securities 35 Stocks, net purchases, or sales (-) -3,941 -1,912 -285 -1,174 636 -257 -11 -373' 448 1,995 36 Foreign purchases 20,861 48,787 81,695 7,124 8,016 8,778 8,583 8,674' 8,657 12,768 37 Foreign sales 24,803 50,699 81,980 8,297 7,379 9,035 8,593 9,047 8,208 10,774 38 Bonds, net purchases, or sales (-) -3,999 -3,356 -4,102 -581 -1,117 2,281 -586 -235' -668 -2,807 39 Foreign purchases 81,216 166,786 168,136 19,020 20,049 25,799 16,314 12,292' 12,923 17,842 40 Foreign sales 85,214 170,142 172,238 19,601 21,166 23,518 16,900 12,527' 13,591 20,649 41 Net purchases, or sales (-), of stocks and bonds -7,940 -5,268 -4,387 -1,755 -481 2,024 -597 -608' -220 -813 42 Foreign countries -9,003 -6,352 -4,946 -1,889 -499 1,980 -323 -1,202' -540 -46 43 Europe -9,887 -17,893 -9,829 -2,704 -1,990 -31 -568 -890' -504 -944 44 Canada -1,686 -875 -3,714 -3 -418 -489 -596 -484 -263 -275 45 Latin America and Caribbean 1,797 3,484 496 259 204 106 -62 83' -20 -152 46 659 10,858 8,943 637 1,692 2,513 1,079 224 82 1,333 47 Africa 75 52 77 8 20 6 5 5 14 16 48 Other countries 38 -1,977 -919 -86 -8 -124 -182 -140 150 -25 49 Nonmonetary international and regional organizations 1,063 1,084 559 135 18 44 -274 594 320 -767 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 • February 1988 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1987 1987 Country or area 1985 1986 J O a c n t . . - Apr. May June July Aug. Sept. Oct." Transactions, net purchases or sales (-) during period1 1 Estimated total2 29,208 20,117 17,550 -2,985 -281 12,279 878 1,110 758 -934 2 Foreign countries2 28,768 21,220 19,740 -1,405 3,731 8,646 3,680 2,787 939 -5,193 3 Europe2 4,303 17,056 16,461 375 1,695 3,640 4,519 -1,007 -937 -789 4 Belgium-Luxembourg 476 349 787 -35 4 58 54 366 -25 128 5 Germany 1,917 7,670 10,353 1,106 1,417 1,534 1,516 780 130 31 6 Netherlands 269 1,283 -903 -22 352 111 204 -254 -50 -707 7 Sweden 976 132 0 32 -166 -183 76 -153 -156 4 8 Switzerland2 773 329 2,737 652 413 585 512 -688 -99 -617 9 United Kingdom -1,810 4,681 -241 -1,089 -524 617 1,115 -431 -1,001 -469 10 Other Western Europe 1,701 2,613 3,749 -230 198 913 1,042 -631 258 841 11 Eastern Europe 0 0 -22 -40 1 5 0 4 5 0 12 Canada -188 881 3,136 703 37 413 654 378 203 -389 13 Latin America and Caribbean 4,315 926 -2,314 -30 -381 780 -673 -675 -29 52 14 Venezuela 248 -95 114 14 11 -17 -4 30 55 -63 15 Other Latin America and Caribbean 2,336 1,129 -1,636 -176 -302 -514 15 -49 -155 -227 16 Netherlands Antilles 1,731 -108 -792 133 -90 1,311 -684 -656 72 341 17 19,919 1,345 111 -2,880 2,136 3,531 -671 4,318 1,767 -5,332 18 Japan 17,909 -22 -2,901 -2,561 -541 4,199 -597 1,839 799 -5,272 19 112 -54 -36 -15 11 -18 20 -24 3 2 20 All other 308 1,067 1,715 442 233 300 -168 -204 -68 1,263 21 Nonmonetary international and regional organizations 442 -1,102 -2,190 -1,580 -4,013 3,633 -2,802 -1,677 -180 4,258 22 International -436 -1,430 -1,074 -1,342 -3,147 3,515 -2,875 -1,722 111 4,319 23 Latin American regional 18 157 3 0 0 3 0 0 -10 0 Memo 24 Foreign countries2 28,768 21,220 19,740 -1,405 3,731 8,646 3,680 2,787 939 -5,193 25 Official institutions 8,135 14,214 27,492 2,489 4,447 3,719 2,251 2,612 1,360 2,453 26 Other foreign2 20,631 7,010 -7,753 -3,894 -715 4,927 1,428 175 -421 -7,645 Oil-exporting countries 27 Middle East3 -1,547 -1,529 -2,583 -120 636 -857 112 329 -509 -695 28 Africa4 7 5 18 0 0 1 0 0 0 -1 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria. notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on Nov. 30, 1987 Rate on Nov. 30, 1987 Rate on Nov. 30, 1987 Country Country Country Month Month Month Percent effective Percent effective Percent effective Austria.. 3.5 Jan. 1987 France 8.0 Nov. 1987 Norway 8.0 June 1983 Belgium . 7.25 July 1987 Germany, Fed. Rep. of. 3.0 Jan. 1987 Switzerland , 3.0 Nov. 1987 Brazil ... 49.0 Mar. 1981 Italy 12.0 Aug. 1987 United Kingdom' Canada.. 8.48 Nov. 1987 Japan 2.5 Feb. 1987 Venezuela 8.0 Oct. 1985 Denmark 7.0 Oct. 1983 Netherlands 4.0 Nov. 1987 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 May June July Aug. Sept. Oct. Nov. 1 Eurodollars 10.75 8.27 6.70 7.25 7.11 6.87 6.91 7.51 8.29 7.41 2 United Kingdom 9.91 12.16 10.87 8.79 8.85 9.17 9.95 10.12 9.92 8.87 3 Canada 11.29 9.64 9.18 8.22 8.40 8.61 9.11 9.32 9.12 8.70 4 Germany 5.96 5.40 4.58 3.73 3.67 3.83 3.93 3.98 4.70 3.92 5 Switzerland 4.35 4.92 4.19 3.63 3.77 3.60 3.55 3.51 4.03 3.65 6 Netherlands 6.08 6.29 5.56 5.11 5.15 5.21 5.27 5.31 5.63 4.99 7 France 11.66 9.91 7.68 8.09 8.18 7.83 7.88 7.85 8.15 8.66 8 Italy 17.08 14.86 12.60 10.15 10.67 10.92 11.96 12.36 11.85 11.36 9 Belgium 11.41 9.60 8.04 7.13 6.78 6.54 6.55 6.56 6.84 6.93 10 Japan 6.32 6.47 4.96 3.77 3.71 3.74 3.71 3.77 3.89 3.90 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 • February 1988 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1987 CCoouunnttrryy//ccuurrrreennccyy 11998844 11998855 11998866 June July Aug. Sept. Oct. Nov. 1 Australia/dollar1 87.937 70.026 67.093 71.79 70.79 70.72 72.68 71.12 68.60 2 Austria/schilling 20.005 20.676 15.260 12.793 12.996 13.041 12.765 12.674 11.843 3 Belgium/franc 57.749 59.336 44.662 37.712 38.329 38.528 37.657 37.494 35.190 4 Canada/dollar 1.2953 1.3658 1.3896 1.338 1.3262 1.3256 1.3154 1.3097 1.3167 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 6.8555 7.0179 7.1279 6.9893 6.9262 6.4962 7 Finland/markka 6.0007 6.1971 5.0721 4.4281 4.4882 4.5017 4.3954 4.3570 4.1392 8 France/franc 8.7355 8.9799 6.9256 6.0739 6.1530 6.1934 6.0555 6.0160 5.7099 9 Germany/deutsche mark 2.8454 2.9419 2.1704 1.8189 1.8482 1.8553 1.8134 1.8006 1.6821 10 Greece/drachma 112.73 138.40 139.93 136.06 139.313 140.63 138.40 138.61 132.42 11 Hong Kong/dollar 7.8188 7.7911 7.8037 7.8080 7.8090 7.8091 7.8035 7.8077 7.7968 12 India/rupee 11.348 12.332 12.597 12.837 13.01 13.085 12.993 12.995 12.972 13 Ireland/punt1 108.64 106.62 134.14 147.25 144.99 144.18 147.54 148.72 158.08 14 Italy/lira 1756.10 1908.90 1491.16 1316.50 1337.96 1344.18 1310.86 1302.58 1238.89 15 Japan/yen 237.45 238.47 168.35 144.55 150.29 147.33 143.29 143.32 135.40 16 Malay sia/ringgit 2.3448 2.4806 2.5830 2.5078 2.5414 2.5361 2.5189 2.5308 2.4989 17 Netherlands/guilder 3.2083 3.3184 2.4484 2.0490 2.0814 2.0903 2.0413 2.0267 1.8931 18 New Zealand/dollar1 57.837 49.752 52.456 58.686 59.644 58.923 63.352 64.031 61.915 19 Norway/krone 8.1596 8.5933 7.3984 6.7147 6.7632 6.7911 6.6505 6.6311 6.4233 20 Portugal/escudo 147.70 172.07 149.80 142.12 144.51 145.57 142.94 142.82 136.84 21 Singapore/dollar 2.1325 2.2008 2.1782 2.1176 2.1183 2.1082 2.0924 2.0891 2.0444 22 South Africa/rand1 69.534 45.57 43.952 49.41 48.52 48.16 48.86 48.79 50.67 23 South Korea/won 807.91 861.89 884.61 818.39 811.81 811.87 810.07 808.47 802.30 24 Spain/peseta 160.78 169.98 140.04 126.33 126.97 125.57 121.34 118.60 113.26 25 Sri Lanka/rupee 25.428 27.187 27.933 29.171 29.405 29.643 29.902 30.347 30.519 26 Sweden/krona 8.2706 8.6031 7.1272 6.3482 6.4466 6.4898 6.3844 6.3560 6.0744 27 Switzerland/franc 2.3500 2.4551 1.7979 1.5085 1.5365 1.5364 1.5029 1.4940 1.3825 28 Taiwan/dollar 39.633 39.889 37.837 31.226 31.114 30.290 30.151 30.036 29.813 29 Thailand/baht 23.582 27.193 26.314 25.779 26.041 25.926 25.765 25.783 25.495 30 United Kingdom/pound1 133.66 129.74 146.77 162.88 160.90 159.96 164.46 166.20 177.54 MEMO 31 United States/dollar2 138.19 143.01 112.22 97.78 99.36 99.43 97.23 96.65 91.49 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, 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 commercial banks, June 30, 1987 February 1988 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 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1987 February 1988 A76 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 Pro forma balance sheet and income statements for priced service operations, September 30,1987 . February 1988 A80 Digitized for FSRpAeScEiaRl tables begin on next page. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • February 1988 4.20 DOMESTIC AND FOREIGN OFFICES, Insured Commercial Bank Assets and Liabilities1-2 Consolidated Report of Condition, June 30, 1987 Millions of dollars Banks with foreign offices5-7 Bank o s f f w ic i e th s o d n o l m y8 e stic IItteemm TToottaa Total Foreign Domestic Over 100 Under 100 1 Total assets6 2,869,992 1,664,274 431,356 1,286,327 797,552 408,166 2 Cash and balances due from depository institutions 338,994 237,889 122,047 115,842 65,457 35,648 3 4 C C a a s s h h i i t t e e m m s s i i n n p p r r o o c c e e s s s s o o f f c c o o l ll l e e c c t t i i o o n n , a u n n d p u o n st p e o d s t d e e d b i d t e s, b i a ts n d a n c d u r c r o e i n n c y 79 n , . 6 a 4 . 2 1 n , . 7 a 6 . 4 7 6 7 6 , , 8 4 7 4 9 1 2 1 7 8 , , 3 9 1 4 1 5 1| 5 Currency and coin n.a. n.a. 11,438 8,366 | 6 Balances due from depository institutions in the United States 35,253 21,336 13,917 23,010 n.a. 7 Balances due from banks in foreign countries and foreign central banks n.a. 102,321 98,779 3,542 5,456 1 8 Balances due from Federal Reserve Banks 20,673 169 20,504 9,680 MEMO 1 9 Noninterest-bearing balances due from commercial banks in the United t States (included in balances due from depository institutions in the U.S.) n.a. n.a. 8,692 13,927 11,909 10 Total securities, loans and lease financing receivables, net 2,315,740 1,261,820 n.a. n.a. 698,926 354,994 11 Total securities, book value 486,260 194,859 25,896 168,963 171,087 120,314 12 U.S. Treasury securities and U.S. government agency and corporation obligations 293,742 101,795 954 100,841 106,550 85,398 13 U.S. Treasury securities n.a. 61,115 815 60,300 64,198 n.a. 14 U.S. government agency and corporation obligations n.a. 40,680 139 40,541 42,352 n.a. 15 All holdings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 61,625 31,601 105 31,496 17,213 12,811 16 Mother n.a. 9,079 34 9,045 25,138 n.a. 17 Securities issued by states and political subdivisions in the United States 126,648 52,989 830 52,158 47,070 26,590 18 Taxable 1,737 292 0 292 724 721 19 Tax-exempt 124,911 52,697 830 51,867 46,346 25,868 20 Other securities 65,870 40,076 24,112 15,964 17,467 8,326 nn aa.. 1155,,331188 11,,000077 1144,,331100 1177,,113399 22 All holdings of private certificates of participation in pools of residential mortgages 6,591 3,250 8 3,242 2,375 967 23 All other 34,192 12,068 1,000 11,068 14,764 7,360 24,759 23,105 1,654 328 25 Federal funds sold and securities purchased under agreements to resell 133,010 64,054 203 63,851 43,823 25,133 26 Total loans and lease financing receivables, gross 1,758,113 1,044,900 226,091 818,810 497,631 215,582 27 LESS: Unearned income on loans 14,990 6,623 2,097 4,526 5,712 2,654 28 Total loans and leases (net of unearned income) 1,743,125 1,038,279 223,996 814,284 491,918 212,928 29 LESS: Allowance for loan and lease losses 46,544 35,265 n.a. n.a. 7,898 3,381 30 LESS: Allocated transfer risk reserves 112 108 n.a. n.a. 3 0 31 EQUALS: Total loans and leases, net 1,696,470 1,002,907 n.a. n.a. 484,017 209,547 Total loans, gross, by category 32 Loans secured by real estate 550,481 226600,,776611 1177,,227755 224433,,448877 194,536 9955,,118844 33 Construction and land development 4 75,623 30,208 7,760 34 Farmland 1 1 1,525 3,779 8,492 n.a. n.a. n.a. 92,436 91,186 51,919 36 Multifamily (5 or more) residential properties i i 8,707 5,924 1,943 37 Nonfarm nonresidential properties t t 65,195 63,440 25,069 38 Loans to depository institutions 66,526 60,333 29,704 30,629 5,320 874 39 To commercial banks in the United States n a. 22,560 1,016 21,544 4,352 n.a. 40 To other depository institutions in the United States n a. 4,653 243 4,409 797 n.a. 41 To banks in foreign countries n.a. 33,120 28,445 4,676 170 n.a. 42 Loans to finance agricultural production and other loans to farmers 30,786 5,581 390 5,190 6,612 18,593 43 Commercial and industrial loans 580,620 404,356 110,637 293,718 128,029 48,236 44 To U.S. addressees (domicile) n.a. 306,077 15,829 290,248 127,478 n.a. 45 To non-U.S. addressees (domicile) n.a. 98,279 94,808 3,470 550 n.a. 46 Acceptances of other banks 3,382 1,182 410 772 1,148 1,053 47 U.S. banks n.a. 472 10 462 n.a. n.a. n.a. 711 400 311 n.a. n.a. 49 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 317,544 142,229 11,628 130,601 129,355 45,960 50 Credit cards and related plans 80,128 43,283 n.a. n.a. 34,800 2,045 51 Other (includes single payment and installment) 237,416 98,946 n.a. n.a. 94,555 43,915 52 Obligations (other than securities) of states and political subdivisions in the U.S. (includes nonrated industrial development obligations) 55,706 34,473 602 33,871 18,670 2,563 53 Taxable 2,124 621 0 621 1,306 197 53,582 33,852 602 33,250 17,364 2,366 124,867 112,324 50,870 61,454 9,992 2,552 56 Loans to foreign governments and official institutions n.a. 39,200 36,171 3,029 250 n.a. 57 Other loans n.a. 73,124 14,699 58,425 9,742 n.a. 58 Loans for purchasing and carrying securities n.a. n.a. n.a. 16,594 2,042 n.a. n.a. n.a. n.a. 41,831 7,700 n.a. 28,200 23,663 4,575 19,088 3,970 568 38,770 37,953 17,466 20,488 562 255 62 Premises and fixed assets (including capitalized leases) 43,285 22,225 1 n.a. 13,726 7,334 63 Other real estate owned 10,248 4,287 T n.a. 3,282 2,679 64 Investments in unconsolidated subsidiaries and associated companies 2,444 1,778 1 n.a. 618 47 65 Customers' liability on acceptances outstanding 37,752 37,358 n.a. n.a. 373 21 66 Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs ... n.a. n.a. 39,310 n.a. n.a. 4,410 2,954 1 n.a. 1,299 157 78,348 58,011 t n.a. 13,307 7,030 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A71 4.20 Continued Banks with foreign offices3'4 Bank o s f f w ic i e th s o d n o l m y5 e stic Total Total Foreign Domestic Over 100 Under 100 69 Total liabilities, limited-life preferred stock, and equity capital 2,869,992 1,664,274 n. a. n.a. 797,552 408,166 70 Total liabilities' 2,697,761 1,584,158 430,944 1,206,623 740,722 372,881 71 Limited-life preferred stock 84 67 n.a. n.a. 15 2 72 Total deposits 2,231,734 ,206,941 335,320 871,621 661,474 363,318 73 Individuals, partnerships, and corporations 178,964 769,715 599,307 330,859 74 U.S. government 1 3,288 1,989 785 75 States and political subdivisions in the United States 38,095 39,885 25,819 76 Commercial banks in the United States n.a. n.a. 33,663 11,348 1,838 7 7 7 8 B O a th n e k r s d in e p f o o s r i e t i o g r n y c i o n u st n i t t r u i t e i s o ns in the United States 1 I 1 1 5 8 , , 1 4 8 3 1 1 2,9 1 6 7 4 3 1 n , . 3 a 6 . 7 79 Foreign governments and official institutions 35,348 33,481 1,866 210 n.a. 80 Certified and official checks 20,275 12,052 671 11,381 5,603 2,620 81 All other8 n.a. n.a. 122,205 31 82 Total transaction accounts 318,645 200,862 99,169 83 Individuals, partnerships, and corporations 258,464 175,362 88,014 84 U.S. government 2,418 1,483 605 85 States and political subdivisions in the United States 8,649 9,723 6,868 86 Commercial banks in the United States n a. n.a. 24,983 6,792 508 87 Other depository institutions in the United States 3,917 1,812 545 88 Banks in foreign countries 7,821 79 n.a. 89 Foreign governments and official institutions 1,012 6 n.a. 90 Certified and official checks 11,381 55,,660033 2,620 91 All other 10 92 Demand deposits (included in total transaction accounts) 256,344 132,642 55,378 93 Individuals, partnerships, and corporations 197,951 111,489 48,615 94 U.S. government 2,410 1,458 588 95 States and political subdivisions in the United States 6,871 5,423 2,501 96 Commercial banks in the United States 24,983 6,788 506 97 Other depository institutions in the United States 3,917 1,795 538 98 Banks in foreign countries 7,821 77 n.a. 99 Foreign governments and official institutions 1,011 6 n.a. 100 Certified and official checks 11,381 5,603 2,620 101 Mother 10 102 Total nontransaction accounts 552,977 460,612 264,149 103 Individuals, partnerships, and corporations n.a. n.a. 511,251 423,945 242,845 104 U.S. government 870 506 179 105 States and political subdivisions in the United States 29,446 30,162 18,950 106 Commercial banks in the United States 8,680 4,556 1,331 107 U.S. branches and agencies of foreign banks 916 739 n.a. 108 Other commercial banks in the United States 7,764 3,817 n.a. 109 Other depository institutions in the United States 1,264 1,151 822 110 Banks in foreign countries 610 94 n.a. 111 Foreign branches of other U.S. banks 5 14 n.a. 112 Other banks in foreign countries 605 79 n.a. 113 Foreign governments and official institutions 855 203 n.a. 114 All other 21 115 Federal funds purchased and securities sold under agreements to repurchase.. 224,217 176,395 594 175,801 44,522 3,301 116 Demand notes issued to the U.S. Treasury n.a. n.a. n.a. 20,946 4,567 757 117 Other borrowed money 91,996 73,774 30, 898 42,876 17,293 930 118 Banks liability on acceptances executed and outstanding 37,859 37,465 7,181 30,284 374 21 119 Notes and debentures subordinated to deposits 17,170 14,635 n.a. n.a. 2,166 368 120 Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs... n.a. n.a. n.a. 14,098 n.a. n.a. 121 All other liabilities 68,516 54,002 n.a. n.a. 10,327 4,187 122 Total equity capital9 172,146 80,049 n.a. n.a. 56,814 35,283 MEMO 123 Holdings of commercial paper included in total loans, gross 1,320 663 657 1,033 n.a. 124 Total individual retirement accounts (IRA) and Keogh plan accounts 32,361 31,663 15,864 125 Total brokered deposits 24,305 4,159 646 126 Total brokered retail deposits 4,807 2,384 487 127 Issued in denominations of $100,000 or less 923 1,384 402 128 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 3,883 1,000 85 Savings deposits 129 Money market deposit accounts (MMDAs) 169,945 131,982 57,234 130 Other savings deposits (excluding MMDAs) 72,288 68,107 34,697 131 Total time deposits of less than $100,000 133,849 171 128,682 132 Time certificates of deposit of $100,000 or more n a. n a. 148,910 85,024 41,942 133 Open-account time deposits of $100,000 or more 27,984 4,020 1,595 134 All NOW accounts (including Super NOW) 57,975 65,213 41,815 135 Total time and savings deposits 615,277 528,832 307,941 Quarterly averages 136 Total loans 796,030 482,201 208,809 137 Obligations (other than securities) of states and political subdivisions in the United States 34,850 18,587 n.a. 138 Transaction accounts in domestic offices (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) 64,099 69,562 43,533 Nontransaction accounts in domestic offices 139 Money market deposit accounts (MMDAs) 171,653 133,699 57,887 140 Other savings deposits 71,838 68,100 34,174 141 Time certificates of deposit of $100,000 or more 146,273 84,357 42,165 142 All other time deposits 157,808 174,496 129,523 143 Number of banks 13,789 256 n.a. 2,355 11,178 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • February 1988 4.21 DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or more or with foreign offices1-2-3 Consolidated Report of Condition, June 30, 1987 Millions of dollars Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 1 2,083,879 1,693,550 1,330,636 362,914 390,329 2 Cash and balances due from depository institutions 181,299 152,240 118,443 33,797 29,059 3 Cash items in process of collection and unposted debits 85,386 78,278 61,059 17,219 7,108 4 Currency and coin 19,804 16,366 13,490 2,876 3,438 5 Balances due from depository institutions in the United States 36,927 25,177 20,734 4,443 11,750 6 Balances due from banks in foreign countries and foreign central banks 8,997 6,975 5,382 1,593 2,022 7 Balances due from Federal Reserve Banks 30,184 25,444 17,778 7,666 4,740 8 Total securities, loans and lease financing receivables, (net of unearned income) 1,753,926 1,409,815 1,120,544 289,272 344,110 9 Total securities, book value 340,050 260,092 203,827 56,266 79,958 10 U.S. Treasury securities 124,498 95,389 76,590 18,799 29,109 11 U.S. government agency and corporation obligations 82,892 62,297 50,592 11,705 20,595 12 All holdings of U.S. government-issued or guaranteed certificates of participation in pools of residential mortgages 48,709 40,267 31,947 8,320 8,443 13 All other 34,183 22,030 18,645 3,385 12,153 14 Securities issued by states and political subdivisions in the United States 99,228 78,530 58,216 20,314 20,698 15 1,016 626 520 107 390 16 Tax-exempt 98,212 77,904 57,696 20,208 20,308 17 Other domestic securities 31,449 22,167 17,943 4,224 9,282 18 All holdings of private certificates of participation in pools of residential mortgages 5,617 4,547 2,805 1,742 1,070 19 All other 25,832 17,620 15,138 2,482 8,213 20 Foreign securities 1,982 1,709 486 1,223 273 21 Federal funds sold and securities purchased under agreements to resell 107,674 89,478 66,425 23,053 18,195 22 Total loans and lease financing receivables, gross 1,316,441 1,067,999 856,221 211,778 248,441 23 LESS: Unearned income on loans 10,239 7,754 5,930 1,824 2,484 24 Total loans and leases (net of unearned income) 1,306,202 1,060,245 850,291 209,953 245,957 Total loans, gross, by category 25 Loans secured by real estate 443388,,002222 333355,,666611 228855,,222299 5500,,443322 110022,,336622 26 Construction and land development 105,830 86,424 70,861 15,563 19,406 27 5,304 3,598 3,154 445 1,705 28 1-4 family residential properties 183,622 137,999 118,475 19,524 45,624 29 Multifamily (5 or more) residential properties 14,631 11,478 10,000 1,478 3,154 30 Nonfarm nonresidential properties 128,635 96,162 82,740 13,422 32,473 31 Loans to commercial banks in the United States 25,896 22,447 17,507 4,940 3,449 32 Loans to other depository institutions in the United States 5,206 4,936 3,695 1,242 270 33 Loans to banks in foreign countries 4,846 4,763 2,631 2,132 83 34 Loans to finance agricultural production and other loans to farmers 11,802 9,399 8,365 1,034 2,403 35 Commercial and industrial loans 421,747 348,867 271,191 77,675 72,880 36 To U.S. addressees (domicile) 417,726 345,153 268,215 76,938 72,573 37 To non-U.S. addressees (domicile) 4,020 3,714 2,977 737 307 38 Acceptances of other banks10 1,920 1,382 1,260 122 538 39 Of U.S. banks 801 683 617 67 118 40 Of foreign banks 380 274 264 10 106 41 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 259,956 210,316 171,620 38,696 49,640 42 Loans to foreign governments and official institutions 3,279 3,123 2,247 876 156 43 Obligations (other than securities) of states and political subdivisions in the United States 52,541 44,030 32,955 11,075 8,510 44 1,927 1,358 1,194 164 568 45 50,614 42,672 31,761 10,911 7,942 46 68,167 62,288 42,895 19,393 5,878 47 Loans for purchasing and carrying securities 18,636 16,793 10,037 6,757 1,843 48 49,530 45,495 32,859 12,636 4,035 49 Lease financing receivables 23,058 20,786 16,626 4,161 2,271 50 Customers' liability on acceptances outstanding 29,789 28,922 19,751 9,172 866 51 Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs 39,310 36,151 27,852 8,299 3,159 52 Remaining assets 118,866 102,572 71,898 30,674 16,293 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A73 4.20 Continued Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 53 Total liabilities and equity capital 2,083,879 1,693,550 1,330,636 362,914 390,329 54 Total liabilities7 1,947,345 1,585,449 1,245,975 339,473 361,897 55 Total deposits 1,533,095 1,212,467 971,256 241,211 320,628 56 Individuals, partnerships, and corporations 1,369,022 1,077,728 867,315 210,413 291,294 57 U.S. government 5,277 4,434 3,839 595 843 58 States and political subdivisions in the United States 77,980 59,428 49,837 9,590 18,552 59 Commercial banks in the United States 45,011 40,616 31,361 9,255 4,395 60 Other depository institutions in the United States 8,145 6,558 4,987 1,572 1,586 61 Banks in foreign countries 8,603 8,053 4,032 4,022 550 62 Foreign governments and official institutions 2,076 1,689 792 897 387 63 Certified and official checks 16,985 13,963 9,097 4,866 3,021 64 Total transaction accounts 519,507 425,176 330,475 94,700 94,331 65 Individuals, partnerships, and corporations 433,826 349,005 275,536 73,469 84,821 66 3,901 3,292 2,768 524 610 67 States and political subdivisions in the United States 18,371 14,926 11,983 2,943 3,445 68 Commercial banks in the United States 31,775 30,332 23,246 7,086 1,443 69 Other depository institutions in the United States 5,729 5,060 3,618 1,442 670 70 Banks in foreign countries 7,900 7,636 3,770 3,866 264 71 Foreign governments and official institutions 1,018 960 457 503 59 72 Certified and official checks 16,985 13,963 9,097 4,866 3,021 73 Demand deposits (included in total transaction accounts) 388,986 325,043 246,446 78,597 63,942 74 Individuals, partnerships, and corporations 309,439 253,482 195,272 58,210 55,957 75 3,868 3,261 2,740 521 607 76 States and political subdivisions in the United States 12,294 10,367 8,265 2,103 1,927 77 Commercial banks in the United States 31,770 30,328 23,242 7,086 1,442 78 Other depository institutions in the United States 5,711 5,045 3,603 1,441 666 79 Banks in foreign countries 7,897 7,634 3,767 3,866 264 80 Foreign governments and official institutions 1,017 959 456 503 58 81 Certified and official checks 16,985 13,963 9,097 4,866 3,021 8? Total nontransaction accounts 1,013,589 787,292 640,781 146,510 226,297 83 Individuals, partnerships, and corporations 935,196 728,723 591,779 136,944 206,474 84 1,376 1,143 1,072 71 233 85 States and political subdivisions in the United States 59,608 44,502 37,854 6,647 15,107 86 Commercial banks in the United States 13,236 10,284 8,115 2,169 2,952 87 U.S. branches and agencies of foreign banks 1,655 1,073 1,022 51 582 88 Other commercial banks in the United States 11,581 9,211 7,093 2,118 2,370 89 Other depository institutions in the United States 2,415 1,499 1,369 130 917 90 Banks in foreign countries 704 417 262 155 286 91 Foreign branches of other U.S. banks 19 13 88 5 7 92 Other banks in foreign countries 685 405 225544 151 280 93 Foreign governments and official institutions 1,058 730 335 394 328 94 Federal funds purchased and securities sold under agreements to repurchase 220,323 199,561 154,401 45,160 20,762 95 Demand notes issued to the U.S. Treasury 25,512 23,466 17,441 6,025 2,047 % 60,169 52,604 36,502 16,101 7,565 97 Banks liability on acceptances executed and outstanding 30,658 29,790 20,600 9,191 886688 98 Notes and debentures subordinated to deposits 2,166 1,284 1,154 130 888822 99 Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs 14,098 10,944 8,204 2,740 3,155 100 75,422 66,277 44,621 21,655 9,145 101 136,534 108,101 84,661 23,441 28,432 MEMO 102 Holdings of commercial paper included in total loans, gross 1,690 1,288 11,,115599 112299 403 103 Total individual retirement accounts (IRA) and Keogh plan accounts 64,024 49,688 41,064 8,624 14,336 104 28,464 23,504 19,783 3,721 4,960 105 7,191 5,497 4,438 1,060 1,694 106 Issued in denominations of $100,000 or less 2,308 1,209 1,090 119 1,099 107 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 4,884 4,289 3,348 941 595 Savings deposits 108 Money market deposit accounts (MMDAs) 301,928 238,774 119933,,226666 45,508 63,154 109 140,395 108,675 85,180 23,495 31,720 110 Total time deposits of less than $100,000 305,327 228,680 193,343 35,337 76,647 111 Time certificates of deposit of $100,000 or more 233,934 182,655 149,771 32,884 51,279 112 Open-account time deposits of $100,000 or more 32,004 28,507 19,222 9,286 3,497 113 All NOW accounts (including Super NOW accounts) 123,188 94,500 78,764 15,735 28,689 114 Total time and savings deposits 1,144,110 887,424 724,810 162,614 256,686 Quarterly averages 115 1,278,231 1,037,382 828,189 209,193 240,849 116 Obligations (other than securities) of states and political subdivisions in the United States 53,437 44,993 33,181 11,812 8,444 117 Transaction accounts (NOW accounts, ATS accounts, and telephone preauthorized 133,660 103,283 84,417 18,866 30,377 Nontransaction accounts 118 Money market deposit accounts (MMDAs) 305,352 241,294 195,652 45,642 64,058 119 Other savings deposits 139,938 108,269 85,547 22,723 31,669 120 Time certificates of deposit of $100,000 or more 230,630 179,925 146,993 32,933 50,705 121 All other time deposits 332,304 252,363 207,758 44,605 79,941 122 2,611 1,504 1,271 233 1,107 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • February 1988 4.22 DOMESTIC OFFICES, Insured Commercial Bank Assets and Liabilities12-3 Consolidated Report of Condition, June 30, 1987 Millions of dollars Members NNoonn-- IItteemm mmeemmbbeerrss Total National State 1 Total assets6 2,492,045 1,865,670 1,471,731 393,939 626,375 2 Cash and balances due from depository institutions 216,948 168,199 131,859 36,340 48,749 3 Currency and coin 23,944 18,131 14,940 3,191 5,813 4 Noninterest-bearing balances due from commercial banks 34,528 19,804 16,376 3,427 14,724 5 Other 158,476 130,264 100,543 29,721 28,212 6 Total securities, loans, and lease financing receivables (net of unearned income) 2,112,301 1,560,052 1,243,308 316,744 552,249 7 Total securities, book value 460,364 308,274 243,186 65,088 152,090 8 U.S. Treasury securities and U.S. government agency and corporation obligations 292,788 191,313 154,428 36,885 101,476 9 Securities issued by states and political subdivisions in the United States 125,818 89,250 67,034 22,216 36,568 10 Taxable 1,737 889 734 155 848 11 Tax-exempt 124,081 88,361 66,301 22,060 35,719 12 Other securities 41,757 27,711 21,724 5,987 14,047 13 All holdings of private certificates of participation in pools of residential mortgages 6,583 4,971 3,116 1,856 1,612 14 All other 35,174 22,739 18,608 4,131 12,435 15 Federal funds sold and securities purchased under agreements to resell 132,807 101,253 76,325 24,928 31,554 16 Total loans and lease financing receivables, gross 1,532,022 1,159,438 930,664 228,773 372,584 17 LESS: Unearned income on loans 12,893 8,913 6,867 2,045 3,980 18 Total loans and leases (net of unearned income) 1,519,130 1,150,525 923,797 226,728 368,604 Total loans, gross, by category 19 Loans secured by real estate 533,206 375,799 317,906 5577,,889922 115577,,440088 20 Construction and land development 113,590 89,923 73,714 16,209 23,667 13,796 6,516 5,496 1,019 7,280 22 1-4 family residential properties 235,542 160,273 136,459 23,814 75,269 23 Multifamily (5 or more) residential properties 16,575 12,268 10,648 1,620 4,307 24 Nonfarm nonresidential properties 153,704 106,819 91,589 15,230 46,885 25 Loans to depository institutions 36,822 32,670 24,316 8,354 4,152 26 Loans to finance agricultural production and other loans to farmers 30,396 16,058 13,594 2,463 14,338 27 Commercial and industrial loans 469,983 370,358 288,742 81,616 99,625 28 Acceptances of other banks 2,972 1,875 1,682 193 1,097 29 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 305,916 230,125 187,795 42,330 7755,,779900 30 Obligations (other than securities) of states and political subdivisions in the United States .... 55,104 45,057 33,818 11,239 10,048 31 Nonrated industrial development obligations 2,124 1,438 1,262 176 686 32 Other obligations (excluding securities) 52,981 43,619 32,556 11,063 9,362 33 All other loans 73,998 66,495 46,013 20,482 7,503 34 Lease financing receivables 23,626 21,002 16,797 4,204 2,624 35 Customers' liability on acceptances outstanding 29,809 28,933 19,758 9,175 876 36 Net due from own foreign offices, Edge and agreement subsidiaries, and IBFs 39,310 36,151 27,852 8,299 3,159 37 Remaining assets 132,987 108,486 76,806 31,680 24,501 38 Total liabilities and equity capital 2,492,045 1,865,670 1,471,731 393,939 626,375 39 Total liabilities7 2,320,226 1,742,869 1,375,168 367,701 577,357 1,896,414 1,365,438 1,0%,984 268,454 530,975 41 Individuals, partnerships, and corporations 1,699,881 1,217,433 982,186 235,246 482,448 42 U.S. government 6,062 4,780 4,131 649 1,282 43 States and political subdivisions in the United States 103,798 69,310 58,005 11,305 34,489 44 Commercial banks in the United States 46,850 41,736 32,174 9,562 5,114 45 Other depository institutions in the United States 9,511 7,269 5,598 1,671 2,242 46 Certified and official checks 19,605 15,154 10,053 5,101 4,451 10,711 9,761 4,840 4,921 950 48 Total transaction accounts 618,676 467,043 365,025 102,019 151,633 49 Individuals, partnerships, and corporations 521,840 386,207 306,333 79,875 135,632 50 U.S. government 4,506 3,559 2,997 562 947 51 States and political subdivisions in the United States 25,240 17,475 14,096 3,379 7,765 52 Commercial banks in the United States 32,282 30,684 23,424 7,260 1,598 53 Other depository institutions in the United States 6,274 5,363 3,890 1,472 911 54 Certified and official checks 19,605 15,154 10,053 5,101 4,451 55 All other 8,928 8,600 4,229 4,371 328 56 Demand deposits (included in total transaction accounts) 444,363 349,080 266,189 82,891 95,283 57 Individuals, partnerships, and corporations 358,054 274,477 212,610 61,867 83,577 4,456 3,522 2,963 559 934 59 States and political subdivisions in the United States 14,795 11,302 9,039 2,263 3,493 60 Commercial banks in the United States 32,277 30,680 23,421 7,260 1,597 61 Other depository institutions in the United States 6,249 5,345 3,874 1,472 904 62 Certified and official checks 19,605 15,154 10,053 5,101 4,451 63 All other 8,924 8,597 4,226 4,371 327 1,277,738 898,395 731,960 166,436 379,342 65 Individuals, partnerships, and corporations 1,178,042 831,225 675,854 155,372 346,816 1,556 1,221 1,134 87 334 67 States and political subdivisions in the United States 78,559 51,835 43,909 7,926 26,724 68 Commercial banks in the United States 14,567 11,052 8,750 2,302 3,515 69 Other depository institutions in the United States 3,238 1,907 1,708 199 1,331 70 All other 1,783 1,161 611 550 622 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A75 4.22 Continued Members NNoonn-- IItteemm TToottaall mmeemmbbeerrss Total National State 71 Federal funds purchased and securities sold under agreements to repurchase 223,623 201,317 155,771 45,547 22,306 72 Demand notes issued to the U.S. Treasury 26,269 23,818 17,722 6,0% 2,451 73 Other borrowed money 61,098 53,172 36,858 16,314 7,927 74 Banks liability on acceptances executed and outstanding 30,679 29,801 20,607 9,194 878 75 Notes and debentures subordinated to deposits 2,534 1,359 1,220 140 1,175 76 Net due to own foreign offices, Edge and agreement subsidiaries, and IBFs 14,098 10,944 8,204 2,740 3,155 77 Remaining liabilities 79,609 67,964 46,006 21,957 11,645 78 Total equity capital9 171,819 122,801 96,563 26,238 49,018 MEMO 79 Assets held in trading accounts10 21,305 20,917 12,346 8,571 388 80 U.S. Treasury securities 9,155 9,116 4,687 4,429 39 81 U.S. government agency corporation obligations 4,609 4,600 2,344 2,255 9 82 Securities issued by states and political subdivisions in the United States 3,017 3,008 2,236 772 9 83 Other bonds, notes and debentures 490 490 295 195 0 84 Certificates of deposit 690 670 587 83 20 85 Commercial paper 135 135 132 3 0 86 Bankers acceptances 1,957 1,923 1,278 645 34 87 Other 703 692 523 169 11 88 Total individual retirement accounts (IRA) and Keogh plan accounts 79,888 56,039 46,316 9,724 23,849 89 Total brokered deposits 29,110 23,833 20,042 3,791 5,278 90 Total brokered retail deposits 7,679 5,759 4,645 1,115 1,919 91 Issued in denominations of $100,000 or less 2,710 1,413 1,255 158 1,297 92 Issued in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 4,969 4,346 3,389 957 622 Savings deposits 93 Money market deposit accounts (MMDAs) 359,161 264,037 214,003 50,034 95,124 94 Other savings deposits 175,092 123,214 96,848 26,366 51,878 95 Total time deposits of less than $100,000 434,009 279,630 234,894 44,736 154,379 96 Time certificates of deposit of $100,000 or more 275,876 202,418 166,519 35,900 73,457 97 Open-account time deposits of $100,000 or more 33,599 29,096 19,696 9,400 4,503 98 All NOW accounts (including Super NOW) 165,003 111,677 93,006 18,670 53,327 99 Total time and savings deposits 1,452,050 1,016,358 830,795 185,563 435,692 Quarterly averages 100 Total loans 1,487,040 1,126,072 900,599 225,473 360,968 101 Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) 177,193 121,017 99,112 21,905 56,176 Nontransaction accounts 102 Money market deposit accounts (MMDAs) 363,239 266,877 216,706 50,172 %,362 103 Other savings deposits ' 174,113 122,552 97,001 25,551 51,561 104 Time certificates of deposit of $100,000 or more 272,795 199,661 163,798 35,863 73,135 105 All other time deposits 461,827 303,571 249,554 54,017 158,255 106 Number of banks 13,789 5,790 4,693 1,097 7,999 1. Effective Mar. 31, 1984, the report of condition was substantially revised 5. The 'over 100' column refers to those respondents whose assets, as of June for commercial banks. Some of the changes are as follows: (1) Previously, banks 30 of the previous calendar year, were equal to or exceeded $100 million. (These with international banking facilities (IBFs) that had no other foreign offices were respondents file the FFIEC 032 or FFIEC 033 call report.) The 'under 100' column considered domestic reporters. Beginning with the Mar. 31, 1984 call report these refers to those respondents whose assets, as of June 30 of the previous calendar banks are considered foreign and domestic reporters and must file the foreign and year, were less than $100 million. (These respondents filed the FFIEC 034 call domestic report of condition; (2) banks with assets greater than $1 billion have report.) additional items reported; (3) the domestic office detail for banks with foreign 6. Since the domestic portion of allowances for loan and lease losses and offices has been reduced considerably ; and (4) banks with assets under $25 million allocated transfer risk reserve are not reported for banks with foreign offices, the have been excused from reporting certain detail items. components of total assets (domestic) will not add to the actual total (domestic). 2. The "n.a." for some of the items is used to indicate the lesser detail 7. Since the foreign portion of demand notes issued to the U.S. Treasury is not available from banks without foreign offices, the inapplicability of certain items to reported for banks with foreign offices, the components of total liabilities (foreign) banks that have only domestic offices and/or the absence of detail on a fully will not add to the actual total (foreign). consolidated basis for banks with foreign offices. 8. The definition of 'all other' varies by report form and therefore by column 3. All transactions between domestic and foreign offices of a bank are in this table. See the instructions for more detail. reported in "net due from" and "net due to." All other lines represent 9. Equity capital is not allocated between the domestic and foreign offices of transactions with parties other than the domestic and foreign offices of each bank. banks with foreign offices. Since these intraoffice transactions are nullified by consolidation, total assets and 10. Components of assets held in trading accounts are only reported for banks total liabilities for the entire bank may not equal the sum of assets and liabilities with total assets of $1 billion or more; therefore the components will not add to the respectively, of the domestic and foreign offices. totals for this item. 4. Foreign offices include branches in foreign countries, Puerto Rico, and in U.S. territories and possessions; subsidiaries in foreign countries; all offices of Edge act and agreement corporations wherever located and IBFs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Special Tables • February 1988 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1987 Millions of dollars All states2 New York California Illinois IItteemm inc T IB l o u F t d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 1 Total assets4 445,097 226,218 328,375 180,183 66,891 30,442 28,122 9,744 2 Claims on nonrelated parties 407,472 188,423 301,608 149,650 60,228 26,234 28,122 9,438 3 Cash and balances due from depository institutions 110,537 91,994 92,035 7755,,998822 1100,,661122 99,,998811 66,,227766 55,,003355 4 Cash items in process of collection and unposted debits 690 0 663 0 4 0 10 0 5 Currency and coin (U.S. and foreign) 25 n.a. 18 n.a. 2 n.a. 2 n.a. 6 Balances with depository institutions in United States 58,793 44,272 47,483 3355,,008844 6,709 66,,115500 33,,881111 22,,666699 7 U.S. branches and agencies of other foreign banks (including their IBFs) 50,823 41,602 40,774 3322,,772288 66,,225599 55,,999911 33,,229922 22,,559900 8 Other depository institutions in United States (including their IBFs) 7,970 2,670 6,709 22,,335577 450 159 519 80 y Balances with banks in foreign countries and with foreign central banks 48,617 47,722 41,665 40,897 3,840 3,831 2,389 2,366 10 Foreign branches of U.S. banks 2,209 2,151 1,929 11,,888877 87 86 157 151 11 Other banks in foreign countries and foreign central banks 46,409 45,571 39,736 39,010 3,754 3,745 2,232 2,215 12 Balances with Federal Reserve Banks 2,412 n.a. 2,206 n.a. 56 n.a. 64 n.a. 13 Total securities and loans 239,019 88,810 164,492 67,444 39,364 15,249 20,303 4,113 14 Total securities, book value 32,743 9,088 26,480 6,920 4,069 1,814 1,166 254 15 U.S. Treasury 6,740 n.a. 6,366 n.a. 151 n.a. 138 n.a. 16 Obligations of U.S. government agencies and corporations 3,375 n.a. 3,325 n.a. 39 n.a. 0 n.a. 1/ Other bonds, notes, debentures and corporate stock (including state and local securities) 22,629 9,088 16,789 6,920 3,879 1,814 1,028 254 18 Federal funds sold and securities purchased under agreements to resell 15,599 2,846 14,298 2,536 579 178 325 70 19 U.S branches and agencies of other foreign banks .... 9,105 940 8,275 752 378 110 198 20 20 Commercial banks in United States 3,237 782 2,987 778 79 0 31 0 21 Other 3,257 1,125 3,035 1,005 122 69 96 50 22 Total loans, gross 206,476 79,816 138,131 60,580 35,366 13,473 1199,,114433 3,858 23 Less: Unearned income on loans 201 93 119 56 71 37 66 0 24 Equals: Loans, net 206,275 79,723 138,012 60,524 35,295 13,435 19,137 3,858 Total loans, gross, by category 2255 Real estate loans 11,195 105 4,585 71 2,737 29 1,805 0 26 Loans to depository institutions 64,927 46,213 47,682 32,010 11,872 9,904 3,936 3,185 2V Commercial banks in United States (including IBFs) . 33,912 17,465 24,028 10,319 7,036 5,220 2,556 1,844 28 U.S. branches and agencies of other foreign banks . 30,579 16,746 21,241 9,812 6,651 5,056 2,462 1,797 29 Other commercial banks in United States 3,333 719 2,787 508 385 164 94 47 30 Other depository institutions in United States (including IBFs) 171 19 126 9 10 0 25 0 31 Banks in foreign countries 30,844 28,729 23,528 21,681 4,826 4,684 1,355 1,341 32 Foreign branches of U.S. banks 1,172 1,129 895 853 248 247 29 29 33 Other banks in foreign countries 29,672 27,600 22,632 20,828 4,579 4,437 1,326 1,312 34 Other financial institutions 5,370 715 3,364 617 843 57 797 28 35 Commercial and industrial loans 101,367 17,721 62,345 14,826 17,921 2,217 12,043 369 36 U.S. addressees (domicile) 79,258 116 44,511 104 15,267 13 11,568 0 37 Non-U.S. addressees (domicile) 22,108 17,605 17,834 14,723 2,654 2,204 475 369 38 Acceptances of other banks 827 21 743 15 42 0 17 6 39 U.S. banks 238 0 184 0 30 0 1 0 40 Foreign banks 589 21 559 15 12 0 16 6 41 Loans to foreign governments and official institutions (including foreign central banks) 16,652 14,769 14,411 12,831 1,252 11,,221100 299 270 42 Loans for purchasing or carrying securities (secured and unsecured) 3,792 28 3,145 28 594 0 20 0 43 All other loans 2,346 244 1,856 182 105 56 228 0 44 All other assets 42,317 4,772 30,784 3,689 9,673 826 1,218 220 45 Customers' liability on acceptances outstanding 29,388 n.a. 20,442 n.a. 8,013 n.a. 610 n.a. 46 U.S. addressees (domicile) 19,280 n.a. 11,335 n.a. 7,233 n.a. 582 n.a. 47 Non-U.S. addressees (domicile) 10,108 n.a. 9,106 n.a. 780 n.a. 29 n.a. 48 Other assets including other claims on nonrelated parties 12,929 4,772 10,342 3,689 1,660 826 608 220 49 Net due from related depository institutions5 37,625 37,794 26,767 3300,,553333 66,,666633 44,,220088 0 306 50 Net due from head office and other related depository institutions5 37,625 n.a. 26,767 n.a. 66,,666633 n.a. 0 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 37,794 n.a. 30,533 n.a. 4,208 n.a. 306 52 Total liabilities4 445,097 226,218 328,375 180,183 66,891 30,442 28,122 9,744 53 Liabilities to nonrelated parties 390,595 204,362 301,755 165,151 60,124 27,088 15,981 6,642 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies All 4.30 Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l n g o IB nl F y s 3 54 Total deposits and credit balances 57,901 162,990 48,399 146,204 1,814 9,306 2,952 3,069 55 Individuals, partnerships, and corporations 44,596 14,512 35,963 10,789 1,717 439 2,376 60 56 U.S. addressees (domicile) 34,596 186 29,004 179 532 0 2,185 0 57 Non-U.S. addressees (domicile) 10,000 14,326 6,959 10,610 1,186 439 191 60 58 Commercial banks in United States (including IBFs) . 8,581 55,013 7,947 48,440 36 4,723 553 1,425 59 U.S. branches and agencies of other foreign banks . 4,422 47,046 3,911 41,273 6 4,307 489 1,140 60 Other commercial banks in United States 4,158 7,967 4,036 7,167 31 417 64 285 61 Banks in foreign countries 2,012 83,478 1,936 77,239 17 4,090 2 1,567 62 Foreign branches of U.S. banks 243 7,846 243 6,774 0 686 0 317 63 Other banks in foreign countries 1,769 75,633 1,694 70,466 17 3,404 2 1,250 64 Foreign governments and official institutions (including foreign central banks) 854 9,937 796 9,687 11 53 3 17 65 All other deposits and credit balances 1,126 49 1,107 48 4 0 2 0 66 Certified and official checks 732 n.a. 649 n.a. 30 n.a. 17 n.a. 67 Transaction accounts and credit balances (excluding IBFs) 6,327 5,452 174 216 68 Individuals, partnerships, and corporations 3,665 2,991 135 193 69 U.S. addressees (domicile) 2,124 1,731 89 189 70 Non-U.S. addressees (domicile) 1,541 1,260 45 4 71 Commercial banks in United States (including IBFs) . 650 645 0 1 72 U.S. branches and agencies of other foreign banks . 82 81 0 0 73 Other commercial banks in United States 568 n.a. 564 n.a. 0 n. a. 0 n.a. 74 Banks in foreign countries 771 722 6 2 75 Foreign branches of U.S. banks 23 23 0 0 76 Other banks in foreign countries 748 699 6 2 77 Foreign governments and official institutions (including foreign central banks) 350 301 2 33 78 All other deposits and credit balances 159 144 1 1 79 Certified and official checks 732 649 30 17 80 Demand deposits (included in transaction accounts and credit balances) 4,916 4,248 99 203 81 Individuals, partnerships, and corporations 3,108 2,634 61 180 82 U.S. addressees (domicile) 1,802 1,521 33 176 83 Non-U.S. addressees (domicile) 1,306 1,113 27 4 84 Commercial banks in United States (including IBFs) . 58 54 0 1 85 U.S. branches and agencies of other foreign banks . 11 11 0 0 86 Other commercial banks in United States 47 n.a. 43 n a. 0 n. i. 0 n.a. 87 Banks in foreign countries 604 555 6 2 88 Foreign branches of U.S. banks 2 2 0 0 89 Other banks in foreign countries 602 554 6 2 90 Foreign governments and official institutions (including foreign central banks) 290 241 2 3 91 All other deposits and credit balances 124 115 0 1 92 Certified and official checks 732 649 30 17 93 Non-transaction accounts (including MMDAs, excluding IBFs) 51,574 42,948 1,641 2,736 94 Individuals, partnerships, and corporations 40,931 32,972 1,583 2,183 95 U.S. addressees (domicile) 32,472 27,274 443 1,996 96 Non-U.S. addressees (domicile) 8,459 5,698 1,140 187 97 Commercial banks in United States (including IBFs) . 7,931 7,302 36 552 98 U.S. branches and agencies of other foreign banks . 4,340 3,830 6 489 99 Other commercial banks in United States 3,590 n.a. 3,472 n.a. 30 n. a. 63 n.a. 100 Banks in foreign countries 1,241 1,215 11 0 101 Foreign branches of U.S. banks 220 220 0 0 102 Other banks in foreign countries 1,021 994 11 0 103 Foreign governments and official institutions (including foreign central banks) 504 495 9 0 104 All other deposits and credit balances 967 964 3 1 105 IBF deposit liabilities 162,990 146,204 9,306 3,069 106 Individuals, partnerships, and corporations 14,512 10,789 439 60 107 U.S. addressees (domicile) 186 179 0 0 108 Non-U.S. addressees (domicile) 14,326 10,610 439 60 109 Commercial banks in United States (including IBFs) . 55,013 48,440 4,723 1,425 110 U.S. branches and agencies of other foreign banks . 47,046 41,273 4,307 1,140 111 Other commercial banks in United States n.a. 7,967 n a. 7,167 n. i. 417 n.a. 285 112 Banks in foreign countries 83,478 77,239 4,090 1,567 113 Foreign branches of U.S. banks 7,846 6,774 686 317 114 Other banks in foreign countries 75,633 70,466 3,404 1,250 115 Foreign governments and official institutions (including foreign central banks) 9,937 9,687 53 17 116 All other deposits and credit balances 49 48 0 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Special Tables • February 1988 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1987'—Continued Millions of dollars All states2 New York California Illinois IItteemm inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 in T c I l B o u t F d a s i l n g o IB nl F y s 3 in T c IB l o u t F d a s i l n g o IB nl F y s 3 117 Federal funds purchased and securities sold under agreements to repurchase 40,620 3,085 30,332 1,607 7,369 1,339 2,292 8888 118 U.S. branches and agencies of other foreign banks ... 11,889 1,406 7,729 599 2,777 706 1,120 5555 119 Other commercial banks in United States 11,414 251 7,423 110 2,852 137 888 0 170 Other 17,317 1,428 15,180 98 1,740 496 285 33 121 Other borrowed money 87,979 34, 188 46,945 14,302 31,975 15,914 6,636 3,299 1?? Owed to nonrelated commercial banks in United States (including IBFs) 59,146 13,531 31,133 3,693 22,699 8,723 3,437 580 123 Owed to U.S. offices of nonrelated U.S. banks 26,720 2,648 16,650 986 7,485 1,1 08 1,823 86 174 Owed to U.S. branches and agencies of nonrelated foreign banks 32,425 10,883 14,482 2,707 15,214 7,315 1,614 495 M Owed to nonrelated banks in foreign countries 19,513 18,852 9,390 8,779 6,933 6,926 2,741 2,709 176 Owed to foreign branches of nonrelated U.S. banks .. 2,863 2,640 1,222 1,002 1,262 1,262 273 273 177 Owed to foreign offices of nonrelated foreign banks... 16,650 16,212 8,168 7,777 5,671 5,664 2,468 2,436 128 Owed to others 9,320 2,105 6,423 1,830 2,344 265 459 10 129 All other liabilities 41,106 3,799 29,875 3,038 9,660 529 1,032 185 130 Branch or agency liability on acceptances executed and outstanding 31,304 n.a. 21,776 n.a. 8,581 n.a. 611 n aa.. 131 Other liabilities to nonrelated parties 9,801 3,799 8,098 3,038 1,079 529 420 118855 132 Net due to related depository institutions5 54,502 21,856 26,620 15,032 6,767 3,354 12,141 3,102 133 Net due to head office and other related depository institutions5 54,502 n.a. 26,620 n.a. 6,767 n.a. 12,141 n a. 134 Net due to establishing entity, head office, and other related depository institutions5 n.a. 21,856 n.a. 15,032 n.a. 3,354 n.a. 3,102 MEMO 135 Non-interest bearing balances with commercial banks in United States 2,415 12 2,219 12 98 0 43 0 136 Holding of commercial paper included in total loans 576 396 79 84 137 Holding of own acceptances included in commercial and industrial loans 2,753 1,619 839 145 138 Commercial and industrial loans with remaining maturity of one year or less 55,742 31,256 11,141 7,953 139 Predetermined interest rates 35,066 n.a. 18,391 n.a. 8,399 n. a. 5,181 n.a. 140 Floating interest rates 20,676 12,865 2,742 2,772 141 Commercial and industrial loans with remaining maturity of more than one year 45,613 31,077 6,779 4,089 147. Predetermined interest rates 15,111 9,373 3,182 1,834 143 Floating interest rates 30,502 21,704 3,598 2,256 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A79 4.30 Continued Millions of dollars All states2 New York California Illinois IItteemm ex T I c B l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l ng o IB nl F y s 3 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnnaaaallll aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 67,879 59,094 1,616 3,007 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 39,636 32,873 1,120 2,259 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 111144447777 TTTTiiiimmmmeeee oooo rrrr CCCC mmmm DDDDssss oooo rrrr iiii eeee nnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 8,725 n 1 a. 8,109 n1 a. 312 nJ a. 238 n1 a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 19,518 18,112 184 509 All states2 New York California Illinois inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 3333,,993333 10,626 2277,,998866 8,540 33,,778800 1,700 11,,116600 254 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 5533,,881144 n.a. 2288,,776655 n.a. 2211,,119922 n.a. 22,,772233 n.a. 449999 222277 112222 4499 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, that no IBF data are reported for that item, either because the item is not an "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign eligible IBF asset or liability or because that level of detail is not reported for Banks." Details may not add to totals because of rounding. This form was first IBFs. From December 1981 through September 1985, IBF data were included in used for reporting data as of June 30, 1980, and was revised as of December 31, all applicable items reported. 1985. From November 1972 through May 1980, U.S. branches and agencies of 4. Total assets and total liabilities include net balances, if any, due from or due foreign banks had filed a monthly FR 886a report. Aggregate data from that report to related banking institutions in the United States and in foreign countries (see were available through the Federal Reserve statistical release G.ll, last issued on footnote 5). On the former monthly branch and agency report, available through July 10, 1980. Data in this table and in the G.ll tables are not strictly comparable the G.ll statistical release, gross balances were included in total assets and total because of differences in reporting panels and in definitions of balance sheet liabilities. Therefore, total asset and total liability figures in this table are not items. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. "Related banking institutions" includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of the bank, the bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent International Banking Facilities (IBFs). As of December 31, 1985, data for IBFs holding company (including subsidiaries owned both directly and indirectly). are reported in a separate column. These data are either included in or excluded 6. In some cases two or more offices of a foreign bank within the same from the total columns as indicated in the headings. The notation "n.a." indicates metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Special Tables • February 1988 4.31 Pro forma balance sheet for priced services of the Federal Reserve System Millions of dollars Item September 30, 1987 September 30, 1986 Short-term assets1 Imputed reserve requirement on clearing balances 217.3 213.4 Investment in marketable securities 1,593.7 1,564.6 Receivables 54.6 51.9 Materials and supplies 5.1 5.2 Prepaid expenses 8.2 7.0 Net items in process of collection 688.8 455.1 Total short-term assets 2,567.7 2,297.3 Long-term assets2 Premises 219.1 195.2 Furniture and equipment 108.7 114.5 Leases and leasehold improvements 3.1 3.8 Prepaid pension costs 14.0 Total long-term assets 345.0 313.5 Total assets 2,912.6 2,610.9 Short-term liabilities Clearing balances and balances arising from early credit of uncollected items 2,499.8 2,233.1 Short-term debt 67.9 64.2 Total short-term liabilities 2,567.7 2,297.3 Long-term liabilities Obligations under capital leases 1.2 1.6 Long-term debt 104.9 99.2 Total long-term liabilities 106.1 100.8 Total liabilities 2,673.7 2,398.1 Equity 238.9 212.8 Total liabilities and equity3 2,912.6 2,610.9 Details may not add to totals because of rounding. items in the process of collection and of deferred-availability items. However, 1. Short-term assets. The accounts "imputed reserve requirement on clearing because the gross amounts have no implications for income, costs, or the private balances" and "investment in marketable securities" reflect the Federal Re- sector adjustment factor (PSAF), and because the inclusion of these amounts serve's treatment of clearing balances that depository institutions maintain on could lead to distortions and misinterpretations of the assets employed in the deposit with the Reserve Banks. For balance sheet and income statement provision of priced services that must be financed, only the net amount is shown. presentation, clearing balances are reported in a manner comparable to the way That amount represents the assets that involve a financing cost. correspondent banks report compensating balances that respondent institutions 2. Long-term assets. Long-term assets reflected on the balance sheet have been hold with them: These respondent balances are subject to a reserve requirement established by the Federal Reserve, which must be satisfied either with vault cash allocated to priced services using a direct determination basis. That method uses or with nonearning balances maintained at a Reserve Bank. Following this model, the Federal Reserve's Planning and Control System to ascertain directly the value clearing balances maintained with Reserve Banks for priced-service purposes are of assets used solely in priced service operations, and to apportion the value of subject to imputed reserve requirements. Therefore, a portion of the clearing jointly used assets between priced and nonpriced services. In addition, an balances held with the Federal Reserve is classified on the asset side of the estimate of the assets of the Board of Governors directly involved in the balance sheet as required reserves and is reflected in a manner similar to vault development of priced services is included in long-term assets in the premises cash and due-from-bank balances normally shown on a correspondent bank's account. balance sheet. The remainder of clearing balances is assumed to be available for The category "long-term assets" also includes an allocation of prepaid pension investment. For these purposes, the Federal Reserve assumes that all such costs associated with priced services. The Federal Reserve Banks implemented balances are invested in three-month Treasury bills. Financial Accounting Standards Board Statement No. 87—Employers' Account- The amount of "net items in the process of collection'' represents float as of the ing for Pensions, effective January 1, 1987. In accordance with the statement's balance sheet date and is the difference between the value of items in the process terms, the Reserve Banks recognized a credit to expenses and an increase in this of collection (including checks, coupons, securities, wire transfers, and auto- long-term asset account. mated clearinghouse (ACH) transactions) and the value of deferred-availability 3. Liabilities and equity. A matched-book capital structure for those assets that items. The cost base for providing services that must be recovered under the are not "self-financing" has been used to determine the liability and equity Monetary Control Act includes the cost of float incurred by the Federal Reserve amounts. Short-term assets are financed with short-term debt. Long-term assets during the period valued at the federal funds rate. Conventional accounting are financed with long-term debt and equity in a proportion equal to the ratio of procedures would call for inclusion on a balance sheet of the gross amount of long-term debt and equity of the bank holding companies used in the PSAF model. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 4.32 Pro forma income statement for priced services of the Federal Reserve System1 Millions of dollars Quarter ending September 30 Nine months ending September 30 IItteemm 1987 1986 1987 1986 Income2 Services provided to depository institutions 163.8 156.7 484.3 465.4 Expenses3 Production expenses 127.9 124.1 375.3 368.0 Income from operations 35.8 32.6 109.0 97.5 Imputed costs4 Interest on float 6.9 3.9 17.2 1155..55 Interest on debt 4.0 3.3 12.1 10.0 Sales taxes 1.6 1.9 5.0 5.5 FDIC insurance .4 12.9 .4 9.5 1.4 35.7 1.1 32.0 Income from operations after imputed costs 22.9 23.0 73.3 65.5 Other income and expenses5 Investment income 31.5 26.6 86.9 8866..22 Earnings credits 28.9 2.6 25.2 1.4 83.9 3.0 80.1 6.1 Income before income taxes 25.5 24.5 76.3 71.5 Imputed income taxes6 8.7 9.2 25.9 26.9 Net income 16.9 15.3 50.4 44.6 Targeted return on equity6 7.3 6.8 22.0 20.5 Details may not add to totals because of rounding. In the table, unrecovered float includes float generated in providing services to 1. The income statement reflects income and expenses for priced services. government agencies or in other central bank services. Float recovered through Included in these amounts are imputed float costs, imputed financing costs, and income on clearing balances represents increased investable clearing balances as income related to clearing balances. a result of reducing imputed reserve requirements through the use of a CIPC 2. Income. Income represents charges to depository institutions for priced deduction for float when calculating the reserve requirement; this income then services. This income is realized through one of two methods: direct charges to reduces float required to be recovered through other means. As of adjustments to an institution's account, or charges against accumulated earnings credits. Income the institution's reserve or clearing balance, or valuing the float at the federal includes charges for per-item fees, fixed fees, package fees, explicitly priced float, funds rate and billing the institution directly, are ways of recovering midweek account maintenance fees, shipping and insurance fees, and surcharges. closing float and interterritory check float from depositing institutions. The float 3. Production expenses. Production expenses include direct, indirect, and recovered through per-item fees is valued at the federal fiinds rate and has been other general administrative expenses of the Federal Reserve Banks for providing added to the cost base subject to recovery in the third quarter of 1987. priced services. Included in this amount in 1987 is the reduction in expenses Also included in imputed costs is the interest on debt assumed necessary to because of implementation of Financial Accounting Standards Board Statement finance priced-service assets and the sales taxes and FDIC insurance assessment No. 87 (see note 2, table 4.31). Also included are the expenses of the staff of the that the Federal Reserve would have paid had it been a private business firm. Board of Governors working directly on the development of priced services, 5. Other income and expenses. The category "Other income and expenses" is which in both years amounted to $0.4 million in the third quarter and $1.3 million comprised of income on clearing balances and the cost of earnings credits granted in the first nine months. to depository institutions on their clearing balances. Income on clearing balances 4. Imputed costs. Imputed float costs represent the value of float to be represents the average coupon-equivalent yield on three-month Treasury bills recovered, either explicitly or through per-item fees, during the period. Float applied to the total clearing balance maintained, adjusted for the effect of reserve costs cover float incurred on checks, book-entry securities, noncash collection, requirements on clearing balances. Expenses for earnings credits are derived by ACH transactions, and wire transfers. applying the average federal funds rate to the required portion of clearing The following table reports the Federal Reserve's daily average float perfor- balances, and are adjusted for the net effect of reserve requirements on clearing mance and float recovery for the third quarter of 1987 in millions of dollars: balances. 6. Income taxes and return on equity. Imputed income taxes are calculated at Total float 755.5 the effective tax rate derived from a model consisting of the 25 largest bank Unrecovered float 43.8 holding companies. Float subject to recovery 711.7 The targeted return on equity represents the after-tax rate of return on equity Sources of float recovery based on the bank holding company model that the Federal Reserve would have Income on clearing balances 86.0 earned had it been a private business firm. As of adjustments 317.5 Direct charges 101.6 Per-item fees 206.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 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 G G R L I E F N F N I T E H . L L . O G N A EY R , W A O s O si D s , ta D nt i re D ct i o re r ctor J L O E Y ( V A C O E d N m K H i . n . i Z s G I t C r A a K R t L i A o E B n R E ) , D A I s A s N i , s t A an ss t is D ta i n r t e ct D o i r r ector ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DIVISION OF MONETARY AFFAIRS DIVISION OF BANKING SUPERVISION AND REGULATION DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director W F D R O I N A L L N E I K . A L M K I N L T I A D N . Y E, D L O R A R E s , s Y o S E c t R i a , a f t f D e e D p D i u r i e t r y c e t c o D t r o i r r ector1 R B N I R O C I R A H M N A A R F D N . D M D . A R P D . O V I . G R T A B E N E R , R , A N A s A s s R s is i D s t , a ta n S n t p t e D c D i i a r ir l e e c A c to t s o s r r i s tant to the Board FREDERICK M. STRUBLE, Associate Director WILLIAM A. RYBACK, Deputy Associate Director OFFICE OF THE INSPECTOR GENERAL STEPHEN C. SCHEMERING, Deputy Associate Director R H I E C R H B A E R R D T S A. P I B L I L E E R N N K , O A T s H si E s N ta , n D t e D pu ir ty e c A to s r s ociate Director BRENT L. BOWEN, Inspector General JOE M. CLEAVER, Assistant Director ANTHONY CORNYN, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRA1S. EORn loan from the Federal Reserve Bank of Chicago. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 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 Digitized for PFARTARSICEIAR A. WELCH, Assistant Director http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • February 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 J. TERRENCE MURRAY, First District CHARLES T. FISHER, III, Seventh District WILLARD C. BUTCHER, Second District DONALD N. BRANDIN, Eighth District SAMUEL A. MCCULLOUGH, Third District DEWALT H. ANKENY, JR., Ninth District THOMAS H. O'BRIEN, Fourth District F. PHILLIPS GILTNER, Tenth District FREDERICK DEANE, JR., Fifth District GERALD W. FRONTERHOUSE, Eleventh District BENNETT A. BROWN, Sixth District PAUL HAZEN, Twelfth District HERBERT V. PROCHNOW, SECRETARY WILLIAM J. KORSVIK, ASSOCIATE SECRETARY Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 and Advisory Councils CONSUMER ADVISORY COUNCIL STEVEN W. HAMM, Columbia, South Carolina, Chairman EDWARD J. WILLIAMS, Chicago, Illinois, Vice Chairman NAOMI G. ALBANESE, Greensboro, North Carolina ROBERT A. HESS, Washington, D.C. STEPHEN BROBECK, Washington, D.C. ROBERT J. HOBBS, Boston, Massachusetts EDWIN B. BROOKS, JR., Richmond, Virginia RAMON E. JOHNSON, Salt Lake City, Utah JUDITH N. BROWN, Edina, Minnesota ROBERT W. JOHNSON, West Lafayette, Indiana MICHAEL S. CASSIDY, New York, New York A. J. (JACK) KING, Kalispell, Montana BETTY TOM CHU, Monterey, California JOHN M. KOLESAR, Cleveland, Ohio JERRY D. CRAFT, Atlanta, Georgia ALAN B. LERNER, Dallas, Texas DONALD C. DAY, Boston, Massachusetts RICHARD L. D. MORSE, Manhattan, Kansas RICHARD B. DOBY, Denver, Colorado WILLIAM E. ODOM, Dearborn, Michigan RICHARD H. FINK, Washington, D.C. SANDRA R. PARKER, Richmond, Virginia NEIL J. FOGARTY, Jersey City, New Jersey SANDRA PHILLIPS, Pittsburgh, Pennsylvania STEPHEN GARDNER, Dallas, Texas JANE SHULL, Philadelphia, Pennsylvania KENNETH A. HALL, Picayune, Mississippi RALPH E. SPURGIN, Columbus, Ohio ELENA G. HANGGI, Little Rock, Arkansas LAWRENCE WINTHROP, Portland, Oregon THRIFT INSTITUTIONS ADVISORY COUNCIL JAMIE J. JACKSON, Houston, Texas, President GERALD M. CZARNECKI, Honolulu, Hawaii, Vice President ROBERT S. DUNCAN, Hattiesburg, Mississippi JOSEPH W. MOSMILLER, Baltimore, Maryland BETTY GREGG, Phoenix, Arizona JANET M. PAVLISKA, Arlington, Massachusetts THOMAS A. KINST, Hoffman Estates, Illinois LOUIS H. PEPPER, Seattle, Washington RAY MARTIN, Los Angeles, California WILLIAM G. SCHUETT, Milwaukee, Wisconsin JOE C. MORRIS, Emporia, Kansas DONALD B. SHACKELFORD, Columbus, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 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.) $200.00 per year. ANNUAL REPORT: BUDGET REVIEW, 1986-87. 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. CONSUMER EDUCATION PAMPHLETS 1986. 1987. 288 pp. $15.00 per copy. 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. Else- Consumer Handbook on Adjustable Rate Mortgages where, $1.50 each. Consumer Handbook to Credit Protection Laws Fair Credit Billing SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- RIES OF CHARTS. Weekly. $21.00 per year or $.50 each in Federal Reserve Glossary the United States, its possessions, Canada, and Mexico; A Guide to Business Credit and the Equal Credit Opportunity 10 or more of same issue to one address, $19.50 per year Act or $.45 each. Elsewhere, $26.00 per year or $.60 each. Guide to Federal Reserve Regulations THE FEDERAL RESERVE ACT, and other statutory provisions How to File A Consumer Credit Complaint affecting the Federal Reserve System, as amended If You Borrow To Buy Stock through April 20, 1983, with Supplements covering If You Use A Credit Card amendments through August 1986. 576 pp. $7.00. Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- The Federal Open Market Committee ERAL RESERVE SYSTEM. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Federal Reserve Bank Board of Directors Regulation Z) Vol. I (Regular Transactions). 1969. 100 Federal Reserve Banks pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each Organization and Advisory Committees volume $2.25; 10 or more of same volume to one address, $2.00 each. PAMPHLETS FOR FINANCIAL INSTITUTIONS FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY Short pamphlets on regulatory compliance, primarily suit- UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one able for banks, bank holding companies and creditors. address, $1.50 each. THE BANK HOLDING COMPANY MOVEMENT TO 1978: A COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to Limit of 50 copies one address, $2.25 each. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; The Board of Directors' Opportunities in Community Rein- 10 or more to one address, $1.25 each. vestment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A87 The Board of Directors' Role in Consumer Law Compliance VESTIGATION, by Bonnie E. Loopesko. November Combined Construction/Permanent Loan Disclosure and 1983. Out of print. Regulation Z 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET Community Development Corporations and the Federal Re- INTERVENTION: A REVIEW OF THE LITERATURE, by serve Ralph W. Tryon. October 1983. 14 pp. Out of print. Construction Loan Disclosures and Regulation Z 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET Finance Charges Under Regulation Z INTERVENTION: APPLICATIONS TO CANADA, GERMA- How to Determine the Credit Needs of Your Community NY, AND JAPAN, by Deborah J. Danker, Richard A. Regulation Z: The Right of Rescission Haas, Dale W. Henderson, Steven A. Symansky, and The Right to Financial Privacy Act Ralph W. Tryon. April 1985. 27 pp. Out of print. Signature Rules in Community Property States: Regulation B 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECONO- Signature Rules: Regulation B MY, by Darrell Cohen and Peter B. Clark. January Timing Requirements for Adverse Action Notices: Regula- 1984. 16 pp. Out of print. tion B 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF What An Adverse Action Notice Must Contain: Regulation B FINANCIAL DEREGULATION, INTERSTATE BANKING, Understanding Prepaid Finance Charges: Regulation Z AND FINANCIAL SUPERMARKETS, by Stephen A. Closing the Loan: A Consumer's Guide to Mortgage Settle- Rhoades. February 1984. Out of print. ment Costs 138. ANTITRUST LAWS, JUSTICE DEPARTMENT GUIDE- Refinancing Your Mortgage LINES, AND THE LIMITS OF CONCENTRATION IN LO- A Consumer's Guide to Lock-Ins CAL BANKING MARKETS, by James Burke. June 1984. 14 pp. Out of print. 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN THE UNITED STATES, by Thomas D. Simpson and Patrick M. Parkinson. August 1984. 20 pp. 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF STAFF STUDIES: Summaries Only Printed in the THE LITERATURE, by John D. Wolken. November Bulletin 1984. 38 pp. Out of print. Studies and papers on economic and financial subjects that 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAYare of general interest. Requests to obtain single copies of MENT COSTS, by William Dudley. November 1984. the full text or to be added to the mailing list for the series 15 pp. Out of print. may be sent to Publications Services. 142. MERGERS AND ACQUISITIONS BY COMMERCIAL BANKS, 1960-83, by Stephen A. Rhoades. December 1984. 30 pp. Out of print. Staff Studies 115-125 are out of print. 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF THE ELECTRONIC FUND TRANSFER ACT: RECENT SURVEY EVIDENCE, by Frederick J. Schroeder. April 114. MULTIBANK HOLDING COMPANIES: RECENT EVI- 1985. 23 pp. Out of print. DENCE ON COMPETITION AND PERFORMANCE IN 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- BANKING MARKETS, by Timothy J. Curry and John T. SUMER CREDIT REGULATIONS: THE TRUTH IN LEND- Rose. Jan. 1982. 9 pp. ING AND EQUAL CREDIT OPPORTUNITY LAWS, by Gregory E. Elliehausen and Robert D. Kurtz. May 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- KET INTERVENTION, by Donald B. Adams and Dale 1985. 10 pp. W. Henderson. August 1983. 5 pp. Out of print. 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- AND THEIR IMPACT ON CONSUMERS, by Glenn B. VENTION: JANUARY-MARCH 1975, by Margaret L. Canner and Robert D. Kurtz. August 1985. 31 pp. Out Greene. August 1984. 16 pp. Out of print. of print. 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84. garet L. Greene. October 1984. 40 pp. Out of print. by Thomas F. Brady. November 1985. 25 pp. 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) VENTION: OCTOBER I98O-OCTOBER 1981, by Margaret INDEXES OF THE MONETARY AGGREGATES, by Helen L. Greene. August 1984. 36 pp. T. Farr and Deborah Johnson. December 1985. 42 pp. 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON IN- 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF TERNATIONAL TRADE AND OTHER ECONOMIC VARIA- THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA- BLES: A REVIEW OF THE LITERATURE, by Victoria S. TION RESULTS, by Flint Bray ton and Peter B. Clark. Farrell with Dean A. DeRosa and T. Ashby McCown. December 1985. 17 pp. January 1984. Out of print. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- IN BANKING BEFORE AND AFTER ACQUISITION, by DEUTSCHE MARK INTERVENTION, by Laurence R. Stephen A. Rhoades. April 1986. 32 pp. Jacobson. October 1983. 8 pp. 150. STATISTICAL COST ACCOUNTING MODELS IN BANK- 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BE- ING: A REEXAMINATION AND AN APPLICATION, by 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. Mahoney, Alice P. White, Paul F. O'Brien, and Mary 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTER- M. McLaughlin. January 1987. 30 pp. VENTION, AND INTEREST RATES: AN EMPIRICAL IN- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A88 Survey of Consumer Finances, 1983. 9/84. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A REVIEW OF THE LITERATURE, by Mark J. War- Bank Lending to Developing Countries. 10/84. shawsky. April 1987. 18 pp. Survey of Consumer Finances, 1983: A Second Report. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis 12/84. and Alice P. White. September 1987. 14 pp. Union Settlements and Aggregate Wage Behavior in the 1980s. 12/84. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF The Thrift Industry in Transition. 3/85. PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, by Glenn B. Canner and James T. Fergus. A Revision of the Index of Industrial Production. 7/85. October 1987. 783 pp. Financial Innovation and Deregulation in Foreign Industrial 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark Countries. 10/85. J. Warshawsky. November 1987. 25 pp. Recent Developments in the Bankers Acceptance Market. 1/86. The Use of Cash and Transaction Accounts by American Families. 2/86. REPRINTS OF BULLETIN ARTICLES Financial Characteristics of High-Income Families. 3/86. Most of the articles reprinted do not exceed 12 pages. Prices, Profit Margins, and Exchange Rates. 6/86. Agricultural Banks under Stress. 7/86. Limit of 10 copies Foreign Lending by Banks: A Guide to International and U.S. Statistics. 10/86. Recent Developments in Corporate Finance. 11/86. Foreign Experience with Targets for Money Growth. 10/83. U.S. International Transactions in 1986. 5/87. Intervention in Foreign Exchange Markets: A Summary of Measuring the Foreign-Exchange Value of the Dollar. 6/87. Ten Staff Studies. 11/83. Changes in Consumer Installment Debt: Evidence from the A Financial Perspective on Agriculture. 1/84. 1983 and 1986 Surveys of Consumer Finances. 10/87. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A89 Index to Statistical Tables References are to pages A3-A81 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 Ownership by individuals, partnerships, and Assets and liabilities {See also Foreigners) corporations, 22 Banks, by classes, 18-20, 70-75 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 8 Federal Reserve System, 80-81 Reserves and related items, 3, 4, 5, 12 Financial institutions, 26 Deposits (See also specific types) Foreign banks, U.S. branches and agencies, 21, 76-79 Banks, by classes, 3, 18-20, 21, 71, 73, 75 Nonfinancial corporations, 36 Federal Reserve Banks, 4, 10 Automobiles Turnover, 15 Consumer installment credit, 40, 41 Discount rates at Reserve Banks and at foreign central Production, 47, 48 banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) Dividends, corporate, 35 BANKERS acceptances, 9, 23, 24 EMPLOYMENT, 45 Bankers balances, 18-20, 70, 72, 74 (See also Foreigners) Bonds (See also U.S. government securities) Eurodollars, 24 New issues, 34 Rates 24 FARM mortgage loans, 39 Branch banks, 21, 55, 76-79 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business activity, nonfinancial, 44 Federal credit agencies, 33 Business expenditures on new plant and equipment, 36 Federal finance Business loans (See Commercial and industrial loans) Debt subject to statutory limitation, and types and ownership of gross debt, 30 Receipts and outlays, 28, 29 Treasury financing of surplus, or deficit, 28 CAPACITY utilization, 46 Treasury operating balance, 28 Capital accounts Federal Financing Bank, 28, 33 Banks, by classes, 18, 71, 73, 75 Federal funds, 6, 17, 19, 20, 21, 24, 28 Federal Reserve Banks, 10 Federal Home Loan Banks, 33 Central banks, discount rates, 67 Federal Home Loan Mortgage Corporation, 33, 38, 39 Certificates of deposit, 24 Federal Housing Administration, 33, 38, 39 Commercial and industrial loans Federal Land Banks, 39 Commercial banks, 16, 19, 70, 72, 74, 76 Federal National Mortgage Association, 33, 38, 39 Weekly reporting banks, 19-21 Federal Reserve Banks Commercial banks Condition statement, 10 Assets and liabilities, 18-20 Discount rates (See Interest rates) Commercial and industrial loans, 16, 18, 19, 20, 21, 70-75 U.S. government securities held, 4, 10, 11, 30 Consumer loans held, by type, and terms, 40, 41 Federal Reserve credit, 4, 5, 10, 11 Loans sold outright, 19 Federal Reserve notes, 10 Nondeposit funds, 17 Federal Reserve System Number, by classes, 71, 73, 75 Balance sheet for priced services, 80 Real estate mortgages held, by holder and property, 39 Condition statement for priced services, 81 Time and savings deposits, 3 Federal Savings and Loan Insurance Corporation insured Commercial paper, 23, 24, 37 institutions, 26 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 33 Construction, 44, 49 Finance companies Consumer installment credit, 40, 41 Assets and liabilities, 37 Consumer prices, 44, 50 Business credit, 37 Consumption expenditures, 51, 52 Loans, 40, 41 Corporations Paper, 23, 24 Nonfinancial, assets and liabilities, 36 Financial institutions Profits and their distribution, 35 Loans to, 19, 20, 21 Security issues, 34, 65 Selected assets and liabilities, 26 Cost of living (See Consumer prices) Float, 4, 81 Credit unions, 26, 40. (See also Thrift institutions) Flow of funds, 42, 43 Currency and coin, 18, 70, 72, 74 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 21, 76-79 Customer credit, stock market, 25 Foreign currency operations, 10 Foreign deposits in U.S. banks, 4, 10, 19, 20 Foreign exchange rates, 68 DEBITS to deposit accounts, 15 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 18-21, 71, 73, 75 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A90 GOLD Real estate loans—Continued Certificate account, 10 Financial institutions, 26 Stock, 4, 54 Terms, yields, and activity, 38 Government National Mortgage Association, 33, 38, 39 Type of holder and property mortgaged, 39 Gross national product, 51 Repurchase agreements, 6, 17, 19, 20, 21 Reserve requirements, 8 HOUSING, new and existing units, 49 Reserves Commercial banks, 18, 71 INCOME, personal and national, 44, 51, 52 Depository institutions, 3, 4, 5, 12 Industrial production, 44, 47 Federal Reserve Banks, 10 Installment loans, 40, 41 U.S. reserve assets, 54 Insurance companies, 26, 30, 39 Residential mortgage loans, 38 Interest rates Retail credit and retail sales, 40, 41, 44 Bonds, 24 Consumer installment credit, 41 SAVING Federal Reserve Banks, 7 Flow of funds, 42, 43 Foreign central banks and foreign countries, 67 National income accounts, 51 Money and capital markets, 24 Savings and loan associations, 26, 39, 40, 42. (See also Mortgages, 38 Thrift institutions) Prime rate, 23 Savings banks, 26, 39, 40 International capital transactions of United States, 53-67 Savings deposits (See Time and savings deposits) International organizations, 57, 58, 60, 63, 64 Securities (See specific types) Inventories, 51 Federal and federally sponsored credit agencies, 33 Investment companies, issues and assets, 35 Foreign transactions, 65 Investments (See also specific types) New issues, 34 Banks, by classes, 18, 19, 20, 21, 26 Prices, 25 Commercial banks, 3, 16, 18-20, 39, 70 Special drawing rights, 4, 10, 53, 54 Federal Reserve Banks, 10, 11 State and local governments Federal Reserve System, 80-81 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, 72, 74 New issues, 34 Federal Reserve Banks, 4, 5, 7, 10, 11 Prices, 25 Federal Reserve System 80-81 Financial institutions, 26, 39 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 38, 39 MANUFACTURING TAX receipts, federal, 29 Capacity utilization, 46 Thrift institutions, 3. (See also Credit unions and Savings Production, 46, 48 and loan associations) Margin requirements, 25 Time and savings deposits, 3, 13, 17, 18, 19, 20, 21, 71, 73, Member banks (See also Depository institutions) 75 Federal funds and repurchase agreements, 6 Trade, foreign, 54 Reserve requirements, 8 Treasury cash, Treasury currency, 4 Mining production, 48 Treasury deposits, 4, 10, 28 Mobile homes shipped, 49 Treasury operating balance, 28 Monetary and credit aggregates, 3, 12 UNEMPLOYMENT, 45 Money and capital market rates, 24 U.S. government balances Money stock measures and components, 3, 13 Commercial bank holdings, 18, 19, 20 Mortgages (See Real estate loans) Treasury deposits at Reserve Banks, 4, 10, 28 Mutual funds, 35 U.S. government securities Mutual savings banks, (See Thrift institutions) Bank holdings, 18-20, 21, 30, 70, 72, 74 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, 72 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A91 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 To be announced 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 G. Alex Bernhardt 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 Warren H. Ross 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 Peyton Yates Sammie C. Clay Houston 77252 Walter M. Mischer, Jr. Robert Smith, IIP 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 Liggett' Seattle 98124 Carol A. 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. Digitized for FR1.A SSeEniRor Vice President. 2. Executive Vice President. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A92 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories [Se*, We °rth •s Hel eHa \ i'os*®* Minneapolis S" Omaha4 1 / i w (y R^w i Kansas City ! \ ^-Jichrng-' |OA/aAoma Ci'fy, "fe/es j (*" - - y y L.rr/eW Birmingka^^ Dallas® \ pH ) © yenftfitfa** I Mi""1 April 1984 * i i / ALASKA i i t i i © i ^ rx y y? 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