Federal Reserve Bulletin, 1988-10

VOLUME 74 • NUMBER 10 • OCTOBER 1988 FEDERAL RESERVE 1; BULLETIN A u BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost • Griffith L. Garwood • Donald L. Kohn • Michael J. Prell • Edwin M. Truman The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 633 EXCHANGE RATES, ADJUSTMENT, 654 RECORD OF POLICY ACTIONS OF THE AND THE J-CURVE FEDERAL OPEN MARKET COMMITTEE Commentary on the monthly trade statistics At its meeting on June 29-30, 1988, the often implies that it is the negative effects of Committee reviewed the ranges for growth a depreciation reflected in the J-curve that in the monetary and debt aggregates that it have been responsible for the continuation had established in February for 1988 and of the nominal trade deficit. The analysis in decided on tentative ranges for growth in this article suggests that though these ef- those measures in 1989. For 1988, the Comfects may in fact be evident in a temporary mittee decided not to change the ranges that phase before the deficit improves, they are it had set earlier. These included growth of relatively small and are not a major cause of 4 to 8 percent for both M2 and M3 for the the persistence of the U.S. trade deficit. period from the fourth quarter of 1987 to the fourth quarter of 1988. The monitoring range of 7 to 11 percent for growth in total 645 TREASURY AND FEDERAL RESERVE domestic nonfinancial debt also was re- FOREIGN EXCHANGE OPERATIONS tained for 1988. With regard to the tentative Market sentiment toward the dollar turned ranges in 1989, the Committee agreed to strongly positive during the three months reduce the range for M2 by a full percentage ending in July, and the dollar moved higher point and that for M3 by Vi percentage for most of the period. point. The monitoring range for expansion in total domestic nonfinancial debt also was lowered by Vi percentage point. It was 650 INDUSTRIAL PRODUCTION understood that all the ranges for next year Industrial production increased an esti- were provisional and that they would be mated 0.8 percent in July. reviewed in early 1989 in the light of intervening developments. 652 ANNOUNCEMENTS The Committee again decided not to set a specific range for Ml for 1988 or 1989, but Change in the discount rate. to continue to appraise the behavior of this Survey on the uses of financial services by monetary measure in terms of its velocity small businesses. and against the background of developments in the economy and financial markets Revisions to Regulation C. and the nature of emerging price pressures. Amendment to Regulation T. With regard to the implementation of policy for the period immediately ahead, Update to staff guidelines on Regulation the Committee adopted a directive that AA. called for a slight increase in the degree of Proposed amendment to Regulation CC. pressure on reserve positions. The members indicated that somewhat greater re- Changes in Board staff. serve restraint would be acceptable, or Admission of two state banks to member- slightly lesser reserve restraint might be ship in the Federal Reserve System. acceptable, depending on indications of in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

flationary pressures, the strength of the AI FINANCIAL AND BUSINESS STATISTICS business expansion, developments in for- These tables reflect data available as of eign exchange and domestic financial mar- August 29, 1988. kets, and the behavior of the monetary aggregates. The reserve conditions contem- A3 Domestic Financial Statistics plated by the Committee were expected to A44 Domestic Nonfinancial Statistics be consistent with growth in M2 and M3 at A53 International Statistics annual rates of about 5l/2 and 7 percent respectively over the three-month period A69 GUIDE TO TABULAR PRESENTATION, from June through September. The inter- STATISTICAL RELEASES, AND SPECIAL meeting range for the federal funds rate, TABLES which provides one mechanism for initiating consultation of the Committee when its A70 BOARD OF GOVERNORS AND STAFF boundaries are persistently exceeded, was left unchanged at 5 to 9 percent. AH FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS 663 LEGAL DEVELOPMENTS A74 FEDERAL RESERVE BOARD Various bank holding company, bank ser- PUBLICATIONS vice corporation, and bank merger orders; and pending cases. AH INDEX TO STATISTICAL TABLES A79 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A80 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Exchange Rates, Adjustment, and the J-Curve Ellen E. Meade of the Board's Division of Inter- declined over 40 percent in about two and onenational Finance prepared this article. Kathryn half years (chart l).1 Despite an uninterrupted A. Larin provided research assistance. Foot- decline of this magnitude, which might have been notes appear at the end of the article. expected, other things equal, to stimulate exports and restrain imports, the nominal trade and Because the exchange value of the dollar has current account deficits of the United States declined so much since early 1985 and because continued to widen through late 1987: by the last the monthly trade statistics have been scruti- quarter of that year, the nominal balance on nized so thoroughly for any sign of a turnaround merchandise trade had declined to a deficit of in the nominal trade balance, the phenomenon $165 billion (annual rate), and the current acthat has been called the J-curve has received count balance registered a deficit of $134 billion considerable attention. In fact, commentary on (chart 2);2 essentially, movements in the nominal the statistics often implies that it is the negative trade balance over this period have been mireffects of a depreciation reflected in the J-curve rored in the current account. During the first half that have been responsible for the continuation of 1988, the trade balance appears to have begun of the nominal trade deficit. The analysis in this its long-awaited improvement, as a marked article suggests that though these effects may in slackening in the growth of imports has reinfact be evident in a temporary phase before the forced a continuation of the strong growth in deficit improves, they have been relatively small exports. and are not a major cause of the persistence of These developments suggest that the J-curve the U.S. trade deficit. phenomenon in fact had a role in the latest Between early 1985 and the middle of 1988, the developments in the international accounts. The exchange value of the U.S. dollar in terms of the J-curve describes the graphic representation of currencies of other industrial countries registered the path the nominal trade balance—that is, the a sizable depreciation, reversing most of its rise balance expressed in current dollars—takes in in the early half of the decade. The weighted response to a depreciation of the dollar; it also average value of the dollar measured against the helps illuminate the difference between the adcurrencies of the other Group of Ten countries justments of the nominal balance and of the real 1. The G-10 trade-weighted value of the U.S. dollar 2. U.S. nominal external balances Index, March 1973 = 100 Billions of dollars 150 •125 •100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

634 Federal Reserve Bulletin • October 1988 balance. Just after a depreciation, the nominal the J-curve by examining the response of the trade balance continues moving into deeper def- nominal trade balance to a discrete change in icit for a time before the hoped-for response to exchange rates. In this simulation, the generated the depreciation takes hold. The line that balance J-curve does not include the secondary effects on traces on a graph thus dips down before turning the nominal trade balance of changes in income up, taking the shape of the letter J (as it does in and prices that would follow a change in exthe chart on the facing page). change rates. Two additional simulations exam- The adjustments to the changes in relative ine the J-curve resulting from a discrete change prices, and thus the adjustment in the nominal and from a continuous change in the dollar's trade balance, that are implied by shifts in ex- value, both when secondary effects on income change rates are expected to take place over and prices are considered. some reasonable period of time rather than im- The section that follows discusses the J-curves mediately. Still, the nominal trade balance has for three categories of trade that together acbeen unusually sluggish in responding to the count for a significant portion of U.S. exports decline in the value of the dollar since 1985. and imports: industrial supplies and materials, Meanwhile, the real merchandise trade bal- capital goods (excluding automobiles), and conance—that is, the quantity of goods exported sumer goods. The disaggregated J-curves highminus the quantity of goods imported, measured light the differences in the responses of individual in 1982 dollars—has moved from a deficit of over markets to changes in exchange rates. The next $180 billion in the third quarter of 1986 to one of section reports the results of an experiment in $118 billion in the second quarter of this year which the actual nominal trade balance is con- (chart 3). Of the two elements in the balance, the trasted with the one that would have resulted had export side has been primarily responsible for the dollar remained at its peak in the first quarter this improvement, as the decline in the value of of 1985. The difference between the actual and the dollar has made U.S. products more compet- the hypothetical nominal trade balance generates itive in foreign markets. a "J-curve," which is analyzed and discussed. A What is the expected response of the U.S. final section presents some concluding remarks. nominal trade balance following a depreciation of the dollar, and how important has the J-curve phenomenon been in the United States since THE TEXTBOOK J-CURVE 1985? In answering this question, this article first reviews the textbook definition of the J-curve In the textbook J-curve, dollar import prices rise and translates this definition into an empirical immediately following a depreciation of the dolmodel. Next, the empirical model is used to lar, completely incorporating the change in exsimulate the adjustment path resulting from a change rates (chart 4); on the other hand, export change in the dollar's exchange value. The first prices do not change. Meanwhile, the trade balsimulation illustrates the classic textbook case of ance in real terms responds more slowly. Over time the quantity of imports contracts as the rise in import prices relative to domestic prices acts 3. Net volume of U.S. merchandise exports to reduce the demand for imports, and the quantity of exports is stimulated by the decline in Billions of 1982 dollars U.S. export prices, expressed in foreign currency, relative to foreign prices. Initially, the increase in the price of imports is larger than the decline in the volume of imports, so that the nominal trade balance worsens. Later, after the volumes of exports and imports have adjusted sufficiently to outweigh the increase in import prices, the nominal trade balance improves. A key aspect of the J-curve phenomenon is that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Exchange Rates, Adjustment, and the J-Curve 635 4. Classic J-curve response to depends on domestic income and relative prices. a one-time depreciation of the dollar1 The nominal balance of trade is the value of ~ ~~ Percent exports less the value of imports. In algebraic terms, Import prices TB = X • p - M • p . x m In this expression, TB = trade balance in current dollars X = quantity of exports p = price of exports x M = quantity of imports p = price of imports. m Changes in exchange rates affect the nominal trade balance through four channels: directly through export and import prices, and indirectly J I I I I I I I through the response of export and import vol- Current dollars umes to an alteration in relative prices. The interaction of these direct and indirect effects creates the J-curve in the nominal trade balance.3'4 The more quickly import prices respond to the change in exchange rates and the more slowly import and export volumes adjust, the larger will be the initial worsening of the nominal trade balance and the longer will be the Quarter delay before a net improvement.5 1. Dollar depreciation takes place at the beginning of quarter 1. Lagged Adjustment prices of traded goods respond to a change in Empirical estimates of these trade equations can exchange rates before quantities of those goods be used to quantify the magnitude and length of adjust significantly to changes in relative prices. the textbook J-curve. In the partial-equilibrium model of the U.S. current account used for Channels of Transmission analysis and forecasting by the staff of the Federal Reserve Board (called here the Board staff The actual relationships between changes in ex- model), lags in adjustment play an important role change rates on the one hand and changes in in explaining the behavior of trade prices and prices and quantities of traded products on the volumes.6 (A partial-equilibrium model is one other that underlie the J-curve are somewhat that does not explain behavior completely, but more complicated than is depicted in the strict assumes some behavior is predetermined. For textbook case. Both export and import prices are example, the Board staff model describes the presumed to depend primarily on production U.S. current account, but assumes that the valcosts. If pricing is not strictly competitive, prices ues for U.S. gross national product and prices do not depend entirely on cost conditions in the are fixed. Thus changes in U.S. growth affect the producing country, but are adjusted in part to current account but changes in the current acreflect market conditions. For any one country, count do not affect GNP.) While the particular the volume of exports depends on foreign income representation of these lags may be somewhat and relative prices, while the volume of imports arbitrary, lags are necessary to capture the full Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

636 Federal Reserve Bulletin • October 1988 effect on one variable of the change in another.7 5. Model estimate of responses to a one-time In the Board staff model, 100 percent of a change 10 percent depreciation of the dollar1 in the foreign exchange value of the dollar has Percent been passed through to the prices of non-oil Non-oil import price imports on average over the past two decades (top panel of chart 5 and table l).8,9 This is a long-run response; although about one-half of the adjustment does occur within two quarters of the dollar's depreciation, the full adjustment of nonoil import prices is not complete for two years. This estimated response is more drawn out than Billions of 1982 dollars the response in the textbook case; because the full response does not occur immediately, the 50 initial worsening of the nominal trade balance is smaller than the one in the textbook case. In other words, the lagged adjustment of import Exports prices tends to weaken the initial J-curve effect. The volumes of exports and imports also ad- Imports •25 just slowly to changes in exchange rates. Estimates in the Board staff model suggest that the 2 4 6 8 10 12 volumes continue to respond for about two years Quarter to changes in the dollar's value (bottom panel of 1. Dollar depreciation takes place at the beginning of quarter 1. chart 5).10 The adjustment of export volume is gradual and smooth over the eight quarters. The volume of imports adjusts much more rapidly at first: over one-half of the adjustment appears three quarters after the change in exchange rates, to become aware of changes in the prices of as table 1 shows. alternative suppliers. Second, contract lags re- Several factors are responsible for these lags in sult because firms are committed to particular the adjustment of export and import volumes to suppliers for sustained periods. Finally, order or changes in relative prices.11 First, information or delivery lags measure the time between a firm's recognition lags reflect the time it takes for firms placement of an order with a supplier and its 1. Estimated responses of prices and volumes of traded goods to a 10 percent depreciation in the exchange value of the dollar, Board staff model1 Percent of the original price or volume Volume PPrriicceess ooff nnoonn--ooiill iimmppoorrttss QQQuuuaaarrrttteeerrr aaafffttteeerrr Non-oil imports Nonagricultural exports dddeeeppprrreeeccciiiaaatttiiiooonnn Change in quarter Cumulative change Change in quarter Cumulative change Change in quarter Cumulative change 0 2.7 2.7 -1.1 -1.1 .6 .6 1 2.1 4.8 -2.4 -3.5 1.2 1.8 2 1.7 6.5 -2.5 -6.0 1.3 3.1 3 1.3 7.8 -2.3 -8.3 1.6 4.7 4 1.0 8.8 -1.6 -9.9 1.6 6.3 5 .7 9.5 -1.1 -11.0 1.4 7.7 .4 9.9 -.4 -11.4 1.1 8.8 7 .2 10.1 -.2 -11.6 .7 9.5 1. For an appreciation, these changes would have the same abso- and imports. Agricultural exports and oil imports are treated sepalute value, but they would have the opposite sign. rately in the Board staff model. Responses shown are for the standard primary categories of exports Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Exchange Rates, Adjustment, and the J-Curve 637 delivery. All of these factors tend to stretch out AN ESTIMATED J-CURVE the J-curve. Estimates of the responsiveness of trade prices The Board staff model of the U.S. current acand volumes to changes in exchange rates will count was used to investigate the adjustment depend on the data used, the lag structure im- path of the nominal trade balance subsequent to posed, and the period of estimation. Assessing a depreciation of the dollar. This decline in the the likelihood of a particular adjustment re- dollar was presumed to occur exogenously, perquires two steps: first, examining the estimates haps by a shift in the preferences of the holders of the parameters of the various models, and of dollar-denominated assets, and not as a result then incorporating the way their J-curves re- of changes in fiscal or monetary policy.12 spond to alternative estimates of crucial elastic- Three simulations illustrate the effect of a ities. dollar depreciation on the U.S. trade balance. The first is similar to the textbook case, in that the adjustment path is traced out assuming no feedback effects to income and prices after a change in exchange rates.13 The second and third 6. Responses of the nominal external balances simulations consider two alternative paths of to a depreciation of the dollar dollar depreciation when the secondary effects are not suppressed. One-time depreciation with no feedback1 In the textbook simulation, the foreign ex- — 75 change value of the dollar in terms of the other G-10 currencies was presumed to depreciate 10 percent in the first period and remain constant thereafter.14 The nominal trade balance worsens somewhat initially, but shows net improvement by the second quarter after the shock (chart 6). One-time depreciation with feedback2 The negative portion of the "J" is quite shallow, and it is relatively short, because the response of import prices to the exchange rate change is delayed and because the volume of exports increases, as discussed above. Thus, the textbook simulation suggests that the U.S. nominal trade balance does not worsen much after a depreciation and that a net improvement occurs quite soon. (See the box on the current account.) The second simulation assumed a path for the dollar identical to the one in the textbook simulation, but incorporated feedback responses to the dollar's decline. The third simulation also included these secondary effects, but examined I I i I I I I I I I I I I I I I the results of a continuous decline in the dollar's 0 2 4 6 8 10 12 14 16 exchange value at an annual rate of 10 percent.15 Quarter Because domestic and foreign income, prices, 1. The dollar depreciates 10 percent in quarter 1 of the simulation and interest rates are predetermined in the Board and remains at the new lower level thereafter. No indirect feedbacks included. staff model, these simulations required some 2. The dollar depreciates 10 percent in quarter 1 of the simulation assumptions about the reactions of these variaand remains at the new lower level thereafter. These estimates include the indirect effects of the dollar's depreciation on prices, interest bles to the depreciation of the dollar. Feedbacks rates, and income. to these predetermined variables were obtained 3. The dollar depreciates at an annual rate of 10 percent beginning in quarter 1 of the simulation. These estimates include the indirect from simulations using the Federal Reserve effects of the dollar's depreciation on prices, interest rates, and Board staff's Multicountry Model (MCM) and income. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

638 Federal Reserve Bulletin • October 1988 The Current Account nated in foreign currencies that are held by foreign affiliates of U.S. corporations. In addition, there is The current account balance is a current dollar a smaller continuing positive effect as the flow of measure that includes the net balance on service income receipts that are denominated in foreign transactions and unilateral transfers as well as the currencies are translated into dollar terms. Since merchandise trade balance. Included in the service the dollar began to depreciate in the second quarter balance are net investment income and net income of 1985, capital gains on net investment-income from other service items (such as transportation receipts due to such revaluation effects have averand tourism). Although the service account has aged more than $11 billion at an annual rate; most moved from surplus toward deficit in the 1980s as of this sum is attributable to the effects of currency liabilities have accumulated to finance the deficit on revaluation. the current account, the very large deterioration in These revaluation effects are important in exthe current account during this period reflects plaining the J-curve in the current account (chart 6). mostly developments in the trade balance. For a discrete change in the value of the dollar, the Despite the close relationship between the cur- current account records an immediate improverent account and the nominal trade balance, the ment. After the initial positive revaluation effects, J-curve on the current account is not identical to the response of the current account is more in line the adjustment path of the trade balance. The with that of the trade balance. When the depreciareason is that net investment income receipts in- tion of the dollar is continuous, the current account crease immediately as the dollar depreciates. That shows a small initial improvement, and the revaluaimmediate increase reflects a capital gain from the tion effects are phased in continuously as the dollar revaluation of some assets and expenses denomi- declines. assuming an unchanged monetary policy (as in- trade balance depends on how long the dollar dexed by the rate of growth of M2) after the depreciation lasts; but even with a continuous, exchange rate shock.16'17 Thus, the feedbacks for smooth depreciation, the negative J-curve effect the predetermined variables correspond to esti- is small and soon overcome. mates of the changes in income, prices, and interest rates that would result from an outward shift in aggregate demand in the United States, SENSITIVITY OF THE J-CURVE given unchanged growth in money. When secondary effects are incorporated, the To assess the reliability of the simulation results, trade balance adjusts in roughly the same pattern it is necessary to know how sensitive the J-curve as it does in the textbook case, but the overall path is to changes in the estimates of key model improvement is somewhat less (chart 6). This parameters. Clearly, if the adjustment path were difference results because the feedback effects of highly sensitive to small variations of the paramthe depreciation serve to increase U.S. growth eters, then the response of the nominal external and lower foreign growth, increasing imports and balance to exchange rate shocks would be subreducing exports relative to the first simulation. ject to a good deal of uncertainty. The evidence After a continuous decline in the dollar, the in this area is mixed. In one model of bilateral effects on the external balance are stretched out trade flows, the timing but not the magnitude of (reflecting a series of overlapping J-curves result- the overall adjustment is sensitive to changes in ing from a small depreciation in the dollar each relationships between exchange rates and import quarter). As in the first and second simulations, prices.18 On the other hand, in the Board staff the trade balance worsens initially, but an im- model, neither the magnitude nor the timing of provement is evident by the sixth quarter. the adjustment path is very sensitive to changes As the simulation experiments illustrate, the in relationships between exchange rates and imlength of time between the initial depreciation of port prices. However, changes in the response of the dollar and an improvement in the nominal import volumes to relative prices (with no change Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Exchange Rates, Adjustment, and the J-Curve 639 in the sensitivity of import prices to exchange 2. Composition of U.S. trade, rates) generate a substantial movement in both by end-use category, 1987 the timing and the magnitude of the eventual Percent of volume adjustment.19 Non-oil While sensitivity analysis helps to assess the End-use category Exports imports likelihood of any particular predicted adjustment Foods, feeds, and beverages 111000...777 666...666 path, it is not suited to examining some issues. Non-oil industrial supplies 222444...999 222000...555 For instance, if the adjustment path is sensitive Capital goods (excluding automobiles). 333999...111 222777...555 Automobiles 888...333 111888...999 to factors that are not included in the empirical Consumer goods 666...000 222111...444 Other 111111...000 555...111 model, then the response to the determinants of trade flows, such as changes in exchange rates, Total, all end-use categories 111000000...000 111000000...000 may not be accurately predicted. Specifically, SOURCE. Survey of Current Business, vol. 68 (July 1988), table 4.4, exchange rate expectations may be important in p. 70. the adjustment of the trade balance.20 The expectation of further depreciation of the dollar could stimulate imports for a time, as importers tem- Until 1984, the United States was a heavy net porarily step up demand for products they expect exporter of industrial supplies; since that time, to be yet more expensive tomorrow. If expectanet trade in this sector has shown either a small tions are important, then using a model that surplus or a deficit, as imports of these products ignores them may well lead to underpredictions have grown (chart 7). Exports of capital goods of the magnitude of the initial negative portion of have tended to dominate imports and nominal the J-curve as well as of the time until a net trade has shown a surplus, while trade in conimprovement. As a related point, the response to sumer goods has been in deficit because imports exchange rates may depend on whether these in this category are so important. During the changes are perceived as permanent or transiearly 1980s, net nominal trade declined for all tory; if the model's equations do not make this three of these end-use categories, reflecting the distinction, then the model may not accurately effects of the substantial appreciation of the predict the overall response to the shock. dollar. The timing of the improvement in the trade position subsequent to the decline in the dollar since early 1985 has differed for these DISAGGREGATING THE J-CURVE categories, although by the middle of this year, each of the individual balances evidenced some The response of the aggregate nominal external improvement. Net nominal trade in industrial balance to changes in exchange rates is an amal- supplies began to improve in late 1986, while net gam of responses in individual markets. Market trade in capital goods did not begin to trend structure and behavior can differ markedly upward until the middle of 1987. The improve among product categories, so that the response in a particular market may look quite different from the aggregate response. To understand the 7. Nominal external balances for individual responses that compose this aggregate selected product categories adjustment process, it helps to examine trade Billions of dollars developments and J-curves for certain broad commodity groups. The examination here fo- ^ Capital goods 50 cuses on three of six broad end-use categories: « 25 non-oil industrial supplies, capital goods exclud- ^ + ing automobiles, and consumer goods, which ^ Industrial supplies and materials together accounted for about 80 percent of the volume of nonagricultural exports and about 70 Consumer goodsS^ percent of the volume of non-oil imports in 1987 (table 2).21 I i i i i i i 1978 1980 1982 1984 1986 1988 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

640 Federal Reserve Bulletin • October 1988 ment in both categories was generated largely by sumer goods appears unresponsive to exchange strong growth in exports reinforced by modera- rate changes. tion in the growth of imports. Consumer goods, The way the adjustment paths for the three on the other hand, have registered net improve- product groups differ helps explain the uncerment only over the first half of 1988, because tainty surrounding the aggregate J-curve. imports, stimulated by rising domestic demand, Changes in the dollar's exchange value may be have been slow to respond to the significant dominated by movements against one or several decline in the dollar. currencies, and not distributed proportionately The structure and the length of the adjustment against all currencies.23 The size and the timing lags in the estimated equations used to generate of the aggregate adjustment of the trade balance J-curves for industrial supplies, capital goods, will then depend on the size of the change in the and consumer goods are practically identical to exchange rate of the dollar against the currency those of the aggregate equations in the Board of each U.S. competitor; on the particular kind of staff model. Unlike the aggregate equations, trade involved; and on the characteristic rapid or however, these equations were estimated using sluggish response to exchange rate changes. For values of explanatory variables (such as produc- example, if the dollar depreciates relatively more tion costs, exchange rates, domestic prices, and against currencies of countries that are heavily income) that are specific to the particular cate- involved in trade of capital goods, then the net gory and therefore reflect the specific develop- improvement in the nominal trade balance will ments in that market.22 Although the individual occur immediately, other things equal. Examinaresponses were not constrained to "add up" to tion of the adjustment paths of the particular the aggregate response, the product adjustment products thus helps point up the range of uncerpath illustrates the process that underlies the tainty in the aggregate response. aggregate response. Like the textbook J-curve described above, the sectoral J-curves were generated assuming a one-time dollar depreciation of 10 percent in the THE J-CURVE AND PERSISTENCE first quarter of the simulation and no secondary OF THE TRADE DEFICIT effects to income and prices (chart 8). For industrial supplies, the initial negative path of the Many observers have concluded that the J-curve J-curve is quite deep, indicating the rapid re- phenomenon is responsible for the persistence of sponse of import prices of these products to the U.S. nominal trade deficit. A discussion of exchange rate changes. The negative portion is the recent behavior of import prices and a simushort, however, and a net improvement is soon lation with hypothetical, counterfactual assumprealized. The adjustment path of capital goods tions can test the validity of that conclusion. has no negative portion, while net trade in con- Import Prices 8. J-curve for selected product categories Estimates made with the Board staff model of the Billions of dollars adjustment lags in trade equations reflect average historical relationships among exchange rates, ^Industrial supplies and materials prices, and quantities. Over the past two years, -Capital goods — 5 import prices appear to have responded more slowly to the depreciation of the dollar than historical experience predicted. Since mid-1985, the actual rise in import prices on average, as measured by the implicit deflator for non-oil imports in the national income and product accounts, has been smaller than both the rise in the 6 8 10 Quarter model estimate of the deflator and the rise in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Exchange Rates, Adjustment, and the J-Curve 641 9. Non-oil import prices1 been partially responsible for the apparent unre- Index, 1980=100 sponsiveness of import prices to the decline in the dollar since early 1985. Foreign prices in dollars Non-oil import prices - V Model estimate / / Hypothetical J-Curve —N— — I OO In assessing the effect of the J-curve phenome- Non-oil import prices non on the nominal trade balance after the dollar Actual 75 depreciation that began in early 1985, the issue is 1 1 1 1 1 1 1 1 1 1 not whether the nominal trade balance has begun 1978 1980 1982 1984 1986 1988 to register net improvement, but rather whether 1. Foreign price levels are consumer price indexes in 10 industrial the nominal trade balance has improved more countries and 8 developing countries (in dollars). The measure of than it would have had the dollar never declined. import prices used is the NIPA implicit deflator for non-oil imports. This question can be addressed through a simuaverage level of foreign consumer prices in dol- lation exercise that traces out the path the nomlars (chart 9). inal trade balance would have taken had the Several developments explain the failure of dollar remained at the peak it reached in the first import prices to show the anticipated increase.24 quarter of 1985.25 The difference between the In brief, foreign suppliers appear to have re- actual and the estimated trade balance gives the sponded to the recent depreciation of the dollar "J-curve" for the hypothetical experiment (chart by cutting profit margins rather than by increas- 10).26 This exercise suggests that the J-curve ing dollar prices, thus slowing the increase in effects associated with the depreciation of the import prices relative to historical experience. dollar did not substantially worsen the nominal Furthermore, estimates of foreign production trade balance. On the other hand, those effects costs suggest that they may actually have been did tend to postpone the improvement in the declining somewhat (or at least increasing less nominal trade balance. In the hypothetical adthan foreign consumer prices) in some countries; justment path, the negative portion of the J-curve thus, estimates of import prices based on is deeper and lasts longer than that estimated for changes in foreign consumer prices could have a continuous decline in the dollar of 10 percent at meant an overprediction of the rise in import an annual rate. This difference appears because prices following the dollar's depreciation. Fi- the hypothetical J-curve is generated from a nally, the apparent lack of response of U.S. particular series of unequal continuous depreciimport prices also may be an artifact of the price measure. Prices of business machines (primarily computers and related products) have been de- 10. Effect of depreciation on nominal merchandise clining over the recent period, and the share of trade balance, counterfactual experiment business machines in overall imports has been Billions of dollars expanding. In a price index with variable weights, such as the NIPA implicit deflator, such developments tend to depress the overall level of import prices. Research by Federal Reserve Board staff indicates that while some erosion of foreign profit margins may have caused import prices to respond less than they have in the past, prices of imports excluding business machines have been predicted more accurately by standard model equations than have aggregate indexes of import prices. Such a difference suggests that import prices of business machines may have 1985 1986 1987 1988 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

642 Federal Reserve Bulletin • October 1988 ations; the average depreciation in 1986 ex- and imports—exports totalled roughly $250 bilceeded that recorded in 1985. Nevertheless, as lion in 1987, imports exceeded $400 billion—the chart 10 shows, the actual nominal trade balance rate of growth in exports must exceed the rate of improved relative to the hypothetical trade bal- growth in imports by a substantial margin for the ance beginning in the first quarter of 1987, and trade balance merely to remain unchanged. that improvement is estimated to have exceeded Thus, factors other than the J-curve phenomenon $65 billion by the middle of 1988. are largely responsible for the persistence of the U.S. trade deficit. CONCLUSION This article has discussed the adjustment path of NOTES the U.S. nominal trade balance in response to a decline in the exchange value of the dollar, 1. This index of the dollar exchange rate (foreign currency popularly termed the J-curve. Some analysts units per dollar) is a weighted average of bilateral exchange rates between the United States and the other Group of Ten have claimed that negative J-curve effects are countries (Canada, Belgium, France, Germany, Italy, Japan, responsible for the persistence of the U.S. trade Netherlands, Sweden, Switzerland, and the United Kingdeficit.27 The analysis presented in this article dom); the index is constructed using average weights for each country in multilateral trade for the years 1972 to 1976, with does not support that claim. First, in general, the March 1973 equal to 100. initial, negative portion of the adjustment path is 2. The current account experienced a transitory improveshallow and relatively short-lived (but depends ment in the fourth quarter of 1987 that was due to the on the particular path of the dollar depreciation). inclusion in direct investment receipts of the effects of the dollar's depreciation on the valuation of assets (and liabili- Furthermore, import prices have responded less ties) in foreign currencies associated with those investments. in the recent period to declines in the dollar's Thus, the worsening of the trade deficit in the fourth quarter exchange value than it seemed they would in the was partly offset in the current account. In the third quarter of 1987, the current account deficit was almost $170 billion at light of historical experience, thereby further an annual rate, and for the first quarter of this year it was muting the J-curve effect. Finally, according to about $148 billion. the results of a hypothetical simulation, regard- 3. While the textbook account of the J-curve considers both the direct and the indirect effects described here, it does less of the initial negative portion of the J-curve, not incorporate the secondary effects of a change in exchange since early last year the nominal trade balance rates on domestic and foreign income and prices. has been improving relative to the trade balance 4. The effect of changes in exchange rates on the prices of exports is small. While this effect is included in the simulation that would have ensued had the dollar never results discussed below, it is not highlighted in the discusdeclined from its peak. sion. 5. Throughout this article, it is assumed that a depreciation The question is, then, how to explain the of the dollar results eventually in a net improvement of the continued widening of the external deficit trade balance. Although this presumption is standard and is through the end of 1987. An answer to this supported by empirical findings, it is not necessarily true question involves several factors. First, the gap unless the Marshall-Lerner condition holds. The Marshall- Lerner condition specifies long-run responsiveness of export that developed during the early years of this and import volumes to a decline in exchange rates that is decade between the growth rates of U.S. income necessary if the trade balance is to improve; for example, if and domestic demand on one hand and foreign quantities of exports and imports are completely unchanged by a decline in the value of the dollar, then a net improvement income and domestic demand on the other, perin the trade balance will never materialize. sists. Accompanying this gap has been the wors- 6. William L. Helkie and Peter Hooper, "An Empirical ening of the Latin American debt problem, which Analysis of the External Deficit, 1980-86," in Ralph C. Bryant, Gerald Holtham, and Peter Hooper, eds., External has tended to slow the expansion of exports to Deficits and the Dollar (Brookings Institution, 1988), pp. 10many traditional U.S. markets. Second, because 56. the adjustment process involves long lags, the 7. A conference on comparative model performance at the Brookings Institution in January 1987 examined the paramesubstantial appreciation of the dollar through ters, system properties, historical tracking performance, and early 1985 continued for some time to have simulation results for six model groups. The different lag negative effects on the external balance. Third, structures for each model involved in the conference are summarized in External Deficits and the Dollar, annex, pp. given the large difference in the levels of exports 101-39. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Exchange Rates, Adjustment, and the J-Curve 643 8. The estimation period of the model is 1968:1 through of U.S. consumer prices and real GNP and for the change in 1984:4. Recent work by Baldwin and others has suggested the Treasury bill rate resulting from a one-time 10 percent that a structural shift in the relationship between exchange depreciation of the dollar: rates and import prices may have occurred during the 1980s. The evidence from this literature is that the effect of exchange rate changes on import prices has been attenuated; Variable 4 quarters 8 quarters 12 quarters 16 quarters this attentuation would tend, ceteris paribus, to weaken the initial negative J-portion in the adjustment of the trade Consumer prices balance. See Richard Baldwin, "Some Empirical Evidence (percent) 5 1.0 1.25 1.25 Real GNP on Hysteresis in Aggregate U.S. Import Prices," National (percent) .2 .4 .2 .0 Bureau of Economic Research Working Papers 2483 (January Treasury bill rate. .5 1.0 1.0 1.0 1988). 9. The Board staff model equation for the price of non-oil imports includes a measure of foreign prices, exchange rates, Feedbacks to foreign prices were of roughly the same magand an index of non-oil commodity prices as explanatory nitude (but in the opposite direction) as the feedback effects variables. Changes in exchange rates affect the price of to U.S. prices. The effects on foreign GNP were about twice non-oil imports both directly and indirectly through the effect the size (but in the opposite direction) of those on U.S. GNP. on commodity prices. The response in table 1 and chart 5 18. Jaime Marquez, "Income and Price Elasticities of includes both direct and indirect effects. Foreign Trade Flows: Econometric Estimation and Analysis 10. The adjustment paths traced out in charts 5, 6, and 8 of the U.S. Trade Deficit," International Finance Discussion were calibrated to the levels of trade in the first quarter of Papers 324 (Board of Governors of the Federal Reserve 1988. System, June 1988). 11. An earlier discussion of these adjustment factors is 19. Ellen E. Meade, "U.S. External Adjustment in Refound in Helen B. Junz and Rudolf R. Rhomberg, "Price sponse to the Lower Dollar: The J-Curve," in a volume Competitiveness in Export Trade Among Industrial Coun- edited by Donald Fair reporting a conference, "The Internatries," American Economic Review, vol. 63 (May 1973), pp. tional Adjustment Process," sponsored by the Soci6t6 Uni- 412-18.. versitaire Europ^enne de Recherches Financieres in Hel- 12. More generally, a change in the dollar's exchange value sinki, Finland, May 18-21, 1988 (forthcoming). can result from a variety of causes. Policy changes that affect 20. See John F. Wilson and Wendy E. Takacs, "Expectathe dollar ordinarily affect the path of other macroeconomic tions and the Adjustment of Trade Flows Under Floating variables that will also influence trade prices and volumes. Exchange-Rates: Leads, Lags and the J-Curve," Interna- For example, an easing of monetary policy that stimulates the tional Finance Discussion Papers 160 (Board of Governors of growth of income in addition to a depreciation of the dollar the Federal Reserve System, April 1980). could cause a worsening of the trade balance, if the stimulus 21. The foods, feeds, and beverages category is netted out to imports (from the increase in income) were to outweigh the of total exports to form nonagricultural exports. boost to exports (from the decline in the dollar). 22. For example, the export price of a category is explained 13. Unlike the strict textbook formulation, the simulated using the domestic producer price index for that category and J-curve includes the adjustment lags in the Board staff an index of the weighted average prices of foreign producers model. for that category (the weights are category-specific export 14. The exchange rate measure used in the Federal Reserve shares), converted to dollar terms using an exchange rate Board's model is an 18-country index, which includes 8 constructed with category-specific weights. For further dedeveloping countries (Brazil, Hong Kong, Malaysia, Mexico, tails on the category-specific variables and the construction the Philippines, Singapore, South Korea, and Taiwan) in of data, see Catherine L. Mann and Ellen E. Meade, "Emaddition to the G-10 countries. In this broader index, the G-10 pirical Analysis of Trade: A Disaggregated Approach" countries have a weight in multilateral trade of about 80 (Board of Governors of the Federal Reserve System, Novempercent. For all the simulation exercises, a nominal depreci- ber 1987). ation of 10 percent in the G-10 index was associated with a 5 23. Recall that the aggregate J-curve was generated assumpercent decline in real terms against the currencies of the 8 ing equal proportionate nominal depreciation against all G-10 developing countries. This decline translates into a real currencies, and equal proportionate real depreciation against decline of almost 9 percent in the G-18 index. For a detailed the currencies of the 8 developing countries. discussion of different weighted average indexes of exchange 24. For a detailed discussion of these reasons, see Peter rates, see B. Dianne Pauls, "Measuring the Foreign Ex- Hooper and Catherine L. Mann, The Emergence and Persischange Value of the Dollar," FEDERAL RESERVE BULLETIN, tence of the U.S. External Imbalance: 1980-87, Princeton vol. 73 (June 1987), pp. 411-22. Studies in International Finance (forthcoming). 15. By the end of the 16-quarter simulation horizon, the 25. The level of the G-10 trade-weighted dollar was 156 in nominal G-10 dollar had depreciated 32 percent and the real the first quarter of 1985. The average depreciation of the G-18 dollar index had declined 26 percent. dollar was 11 percent in 1985, 16 percent in 1986, and 13 16. The MCM is a multicountry macro model with individ- percent in 1987. The counterfactual simulation was generated ual sectors for the United States, Canada, Germany, Japan, using the Board staff model of the U.S. current account, and and Great Britain. For further details, see Hali J. Edison, assuming the rough feedbacks on income, prices, and interest Jaime R. Marquez, and Ralph W. Tryon, "The Structure and rates implied in note 17. Properties of the Federal Reserve Board Multicountry 26. The hypothetical trade balance discussed is not Model," Economic Modelling, vol. 4 (April 1987), pp. 115- adjusted to incorporate the model errors made during this 315. period. If the model errors made over the period of the 17. The following table gives the cumulative feedback dollar's depreciation are unbiased estimates of the model effects used in the reported simulations on the rate of increase errors that would have been made had the dollar never Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

644 Federal Reserve Bulletin • October 1988 declined, then the hypothetical trade balance should be response relies on little or no adjustment of export volumes adjusted to incorporate these errors. Including these errors after a change in the dollar, so that the eventual response of does not change the basic result of the simulation experiment: import prices draws out the negative portion of the J-curve. the negative portion of the adjustment path is relatively short, Finding a "delayed J-curve" is somewhat curious given that and the net improvement by mid-1988 is sizable. Koch and Rosensweig discuss evidence of a substantial 27. For example, Koch and Rosensweig have pointed to a responsiveness of export volumes to exchange rate changes. "delayed J-curve," due to the sluggish response of import See Jeffrey A. Rosensweig and Paul D. Koch, "The U.S. prices during the recent period. In their "delayed J-curve," Dollar and the 'Delayed J-Curve,' " Federal Reserve Bank of the net improvement in the trade balance is substantially Atlanta, Economic Review, vol. 73 (July/August 1988), pp. 2postponed relative to the textbook J-curve. This delayed 15. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

645 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period May Throughout the period, the dollar was buoyed through July 1988, provides information on Trea- by any new signs of strength in the U.S. econsury and System foreign exchange operations. It omy, which were thought likely to lead to a was prepared by Sam Y. Cross, Manager of tighter monetary policy and higher interest rates. Foreign Operations of the System Open Market With statistics measuring U.S. economic growth Account and Executive Vice President in charge continuing to point to greater gains than had of the Foreign Group of the Federal Reserve previously been expected, market participants Bank of New York.1 recognized that the focus of policy attention had shifted from concerns about recession to concerns about inflation. Statements by several Fed- Market sentiment toward the dollar turned eral Reserve officials had conveyed uneasiness strongly positive during the three months ending about the potential risks for inflation of relatively in July, and the dollar moved higher for most of tight labor markets and capacity constraints in the period. On balance, the dollar rose 9Vi persome industries. As it was, short-term interest cent in terms of other Group of Ten currencies on rates in the United States had already firmed a trade-weighted basis (Federal Reserve Board of somewhat between mid-March and the beginning Governors staff index). But the increase against of May, maintaining and in some cases, increasindividual currencies varied considerably. The ing interest differentials favoring investment in dollar rose approximately 12 percent against the dollar-denominated assets. German mark and most continental currencies, returning close to its level against the German Until mid-June, the factors supporting a higher mark of a year earlier. It advanced a more dollar were partially counterbalanced by uncermodest 6V2 percent and 9Va percent respectively tainty about the sustainability of external adjustagainst the Japanese yen and against sterling, ment and about official reactions to any rise in remaining well below its levels of a year earlier. dollar exchange rates. Thus, the dollar's rise Against the Canadian dollar, the dollar declined early in the period was relatively modest. The 1 Vz percent. dollar strengthened more decisively after mid- In keeping with the Group of Seven (G-7) June, with market participants increasingly perunderstandings about fostering exchange rate ceiving that international adjustment was indeed stability—most recently reiterated in the Eco- proceeding and that major industrial nations nomic Declaration at the Toronto Summit in might tolerate some further increase in the dollar. June—the U.S. authorities entered the market at For the period as a whole, the dollar's upward times to counter the dollar's rise, operating in movement against the mark was especially procoordination with other central banks. Market nounced. There were questions about the longersales of dollars by the U.S. authorities between term prospects for investment in the German late June and the end of July totaled $2.9 billion, economy, in part stemming from labor costs and all against German marks. continued concern over the government's intended imposition of withholding taxes on foreign investments in Germany. In these circumstances, there were heavy flows of capital out of 1. The charts for the report are available on request from Germany, amounting in the first half of 1988 to a Publications Services, Board of Governors of the Federal record DM50.6 billion. Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

646 Federal Reserve Bulletin • October 1988 The dollar's relative stability against the yen in export performance improved. As a consepart reflected favorable assessments of the out- quence, concerns about exchange rate risk dilook for the Japanese economy. In particular, minished, and investors became more confident market participants were impressed with the about investing in dollar-denominated assets to extent to which the Japanese economy appeared take advantage of the relatively high yields on to be adjusting to its external imbalances and fixed-income securities available in the United experiencing vigorous increases in domestic de- States. mand. Moreover, reports circulated in the market of increased demand for dollars by banks' customers. Many firms had previously established short- MAY TO MID-JUNE dollar positions on the expectation that the threeand-one-half-year decline of the dollar would The dollar rose gradually against the mark from continue well into 1988. When instead the dollar May until the middle of June. From its opening of firmed, several corporations and financial insti- DM1.6775, it moved irregularly higher, breaking tutions began to consider that the dollar's long through the DM1.70 level by mid-May and reach- decline had bottomed out. These market particiing DM1.7224 by mid-June. It showed little in- pants reportedly purchased dollars to avoid crease on balance against the yen, however. losses that might result from having to convert The dollar's rise partly reflected a widening foreign currency receivables at still higher dollar perception that U.S. economic growth continued levels. In this environment, market professionals to be buoyant and that the Federal Reserve's perceived that a large magnitude of dollar buying policy stance might be tightened if pressures on might come into the exchange market if exchange capacity became troublesome. The report in rate expectations were to shift in favor of the early May of a decline in U.S. civilian unemploy- dollar, and a sense of upside risk for the dollar ment to its lowest level in 14 years and of strong began to emerge. gains in manufacturing employment, together Under these circumstances, the market's longwith a larger-than-expected upward revision in standing bearish sentiment toward the dollar first-quarter figures for the gross national product lessened, but was not eliminated. One concern later that month, provided further evidence that was that tightening labor markets and capacity economic activity was expanding rapidly. The fact that the country's export sector and manufacturing industries were contributing strongly to 1. Federal Reserve reciprocal currency arrangements the economy's improved performance provided Millions of dollars reassurance that adjustment was well under way. Moreover, market participants detected that the Amount of Institution facility, Federal Reserve had adopted a firmer policy July 31, 1988 stance. With financial markets generally reas- Austrian National Bank 250 sured by the authorities' concern about inflation, National Bank of Belgium 1,000 U.S. long-term interest rates eased somewhat, Bank of Canada 2,000 National Bank of Denmark 250 and long-term interest rate differentials favoring Bank of England 3,000 Bank of France 2,000 the dollar generally narrowed, though they re- German Federal Bank 6,000 mained strongly positive. But as U.S. short-term Bank of Italy 3,000 interest rates rose, short-term differentials favor- Bank of Japan 5,000 Bank of Mexico 700 ing the dollar widened between the beginning of Netherlands Bank 500 May and mid-June, especially against the Euro- Bank of Norway 250 Bank of Sweden 300 pean currencies. Swiss National Bank 4,000 In addition, confidence in the efforts of G-7 Bank for International Settlements Dollars against Swiss francs 600 authorities to foster exchange rate stability had Dollars against other authorized European currencies 1,250 increased as the dollar traded in a relatively narrow range throughout the spring and U.S. Total 30,100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 647 constraints in the United States might undermine advantage of any increases in U.S. interest rates further adjustment as well as lead to a buildup of to increase their own interest rates. Monetary inflationary pressures. This concern was re- aggregates were growing relatively rapidly in a flected in the exchange markets when, on May number of countries. Also, during the first week 17, the dollar gained only modest ground from of June, officials of several industrial countries the announcement of an unexpected improve- openly expressed concerns about a potential rise ment in the U.S. trade deficit for March. This in inflation worldwide against a background of muted response occurred, in part, because the rising commodity prices. German and Japanese data recorded a sharp rise in imports that, if officials also noted the inflationary impact of the continued, might hinder further improvement in dollar's rise and underscored the importance of the trade balance. maintaining domestic price stability. Another element of uncertainty about how far In these circumstances, the dollar fluctuated the dollar might advance was the presumed re- irregularly upward, as market participants action of foreign monetary authorities to any adjusted their evaluations of official attitudes significant exchange rate move. For several toward exchange rate movements. In the middle months, rumors had circulated in the exchange of June, the dollar was trading about 2Vz percent markets that those central banks that had inter- higher on balance against the mark and other vened heavily to support the dollar in 1987 were European currencies and was unchanged on baltaking advantage of opportunities to sell dollars. ance against the yen from the beginning of the Talk of dollar sales by G-7 central banks intensi- period. fied shortly after the release of the March trade figures in mid-May. Throughout late May there was persistent talk in the market that the Bun- MID-JUNE THROUGH JULY desbank was regularly selling dollars. Gradually, market participants became convinced that for- As time passed, market participants became ineign officials would act to contain the dollar's rise creasingly impressed with the dollar's resilience, through intervention. At the end of May, the they noted that the dollar had shrugged off both Bundesbank began selling small amounts of dol- intervention and statements by foreign officials lars openly at the Frankfurt fixing. On June 3, the aimed at resisting the declines of their own Bundesbank reported sharp declines in its net currencies. They also watched for reactions to monetary reserves, particularly in the foreign the Bundesbank's June 21 decision to increase currency reserves component. From late May the interest rate on its repurchase agreements through mid-June, these declines, attributed by and looked to the upcoming communique from the market largely to dollar sales, amounted to the summit meeting in Toronto for further indi- DM7.4 billion. Press reports indicated that other cations of policy actions that might affect ex- G-7 countries might also seek to reduce their change rates. dollar holdings. On June 14, the announcement of a U.S. trade Market participants also began to anticipate deficit for April that was much smaller than that foreign monetary authorities would take expected reassured market participants that the 2. Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments (-) Central bank drawing Amount of Outstanding, Outstanding, on the U.S. Treasury facility as of May June July as of May 1, 1988 July 29, 1988 Central Bank of the Argentine Republic 550.0 160.0 -160.0 0 0 (2) National Bank of Yugoslavia 50.0 (2) 0 50.0 -16.1 33.9 Central Bank of Brazil 250.0 (2) 0 0 232.5 232.5 1. Data are on a value-date basis. 2. No facility. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

648 Federal Reserve Bulletin • October 1988 correction of global imbalances was continuing, dollar also came into demand after the report on even in the face of a relatively robust U.S. July 15 of May trade figures that reassured mareconomy. The market's concerns that strong ket participants that U.S. trade adjustment redomestic demand and capacity constraints would mained on track. Meanwhile, press coverage of limit the scope for further trade adjustment were Chairman Greenspan's congressional testimony diminished by the data for April, which showed a reinforced the expectation that the U.S. authordecline in imports. The dollar's reaction to this ities stood ready to counter inflationary presset of trade figures was stronger than that of the sures. Under these circumstances, the dollar previous month, with dollar exchange rates mov- generally moved up during early July, reaching ing up sharply to trade at DM1.7450 and Y126.50 its highs of the period against the mark and the soon after release of the trade figures. yen at DM1.8925 on July 18 and Y135.55 on July Later in June, the Economic Declaration is- 15 respectively. But by the end of July, the dollar sued after the Toronto Summit left the market was trading off its highs at DM1.8780 and with the impression that the G-7 monetary au- Y133.15 respectively. thorities would tolerate a further rise of the Between June 27 and July 29, the U.S. authordollar. Although the Declaration repeated the ities sold a total of $2.9 billion in the market, all precise words of the December 1987 statement against marks. Of the total, $1,317.5 million was by the G-7, the dollar was already 8 percent sold by the Federal Reserve and $1,612.5 million higher in terms of the mark than at the time of the was sold by the Treasury's Exchange Stabiliza- December statement. This different market envi- tion Fund (ESF). These operations were conronment, together with comments by several ducted in cooperation with other central banks. officials following the Toronto meetings, led to an In other industrialized countries, the authoriinterpretation that some further rise was accept- ties also intervened to sell dollars, on occasion in able. substantial amounts. In addition, interest rates in As a result of these developments, the dollar a number of foreign countries increased as the began to rise more quickly in late June. As the authorities sought to limit the decline of their dollar broke through DM1.80 and higher levels currencies against the dollar or otherwise renot previously anticipated, there were reports of spond to signs of quickening price pressures. corporations and financial institutions moving to In other operations, the U.S. authorities inreduce their short-dollar positions. There were creased holdings of foreign currencies by also dollar purchases associated with the cover- $1,282.3 million equivalent through sales of Speing of options positions that had been established cial Drawing Rights (SDRs) and dollars to other in anticipation of a continued dollar decline. official institutions and through receipt of princi- In these circumstances, the U.S. authorities pal repayments and interest payments due to the entered the market for the first time during the United States under the Supplementary Financperiod on June 27. The authorities continued to ing Facility of the International Monetary Fund. operate, intervening on 15 of the remaining 23 business days through the end of July and working closely in coordination with other central 3. Net profits or losses (-) on U.S. Treasury and Federal Reserve current foreign exchange banks to foster exchange rate stability. operations1 There were several occasions during July Millions of dollars when upward pressure on dollar rates was considerable. Some of these occurred when new U.S. Treasury economic statistics were released confirming the Federal Period Exchange Reserve buoyancy of the U.S. economy. The dollar was Stabilization Fund especially well bid, for example, after the July 8 report of a further decline in U.S. civilian unem- May 1, 1988-July 31, 1988 0 0 Valuation profits and losses on ployment and after the July 27 release of GNP outstanding assets and liabilities data pointing to a seasonally adjusted rate of as of July 31, 1988 1,101.2 856.7 growth of 3.1 percent for the second quarter. The 1. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 649 As of the end of July, cumulative bookkeeping Argentina. On May 31, the Central Bank of the or valuation gains on outstanding foreign cur- Argentine Republic fully repaid the $160 million rency balances were $1,101.2 million for the second drawing of a $550 million short-term Federal Reserve and $856.7 million for the ESF. financing facility provided by the U.S. Treasury These valuation gains represent the increase in through the Exchange Stabilization Fund, the dollar value of outstanding currency assets thereby fully liquidating the facility. valued at end-of-period exchange rates, compared with the rates prevailing at the time the Yugoslavia. On June 10, the U.S. Treasury, foreign currencies were acquired. through the ESF, together with the Bank for The Federal Reserve and the ESF regularly International Settlements (BIS) acting for several invest their foreign currency balances in a variety central banks, agreed to provide $250 million in of instruments that yield market-related rates of short-term financing facilities to the National return and that have a high degree of quality and Bank of Yugoslavia. On June 15, the National liquidity. A portion of the balances is invested in Bank of Yugoslavia drew the full $50 million of securities issued by foreign governments. As of the ESF facility. On July 1, $16.1 million was the end of July, holdings of such securities by the repaid. Federal Reserve amounted to $1,408.2 million equivalent, and holdings by the Treasury Brazil. On July 27, the U.S. Treasury, through amounted to the equivalent of $1,604.8 million. the ESF, together with the BIS acting for several During the period under review, the U.S. central banks, agreed to provide $500 million in Treasury, through the ESF, received repayment short-term financing facilities to Brazil. The of its financing facility for Argentina and partic- ESF's facility was $250 million. On July 29, the ipated in multilateral financing facilities for Yu- Central Bank of Brazil drew $232.5 million from goslavia and Brazil. the ESF facility. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

650 Industrial Production Released for publication August 15 tion of construction supplies remained sluggish. At 137.7 percent of the 1977 average, the total Industrial production increased 0.8 percent in index in July was 5.4 percent higher than it was a July, compared with the rise of 0.4 percent in year earlier. June. The July strength was mainly related to In market groups, output of consumer goods another sizable gain in the output of business advanced 0.3 percent further in July, reflecting equipment as well as to sharp increases in both gains in home goods, such as appliances, as well durable and nondurable materials. In contrast, as in nondurable consumer goods. Automobile auto assemblies decreased in July, and produc- assemblies in July, at an annual rate of 7.1 million Ratio scale, 1977 = 100 _ TOTAL INDEX 140 Products 120 Materials 100 80 _ MANUFACTURING 140 _ MATERIALS Nondurable Durable 120 - 100 Energy I 1 1 1 1 1 1982 1984 1986 1988 1982 1984 1986 1988 All series are seasonally adjusted. Latest figures: July. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

651 1977 = 100 Percentage change from preceding month Percentage ccchhhaaannngggeee,,, Group 1988 1988 JJJuuulllyyy 111999888777 tttooo JJJuuulllyyy 111999888888 June July Mar. Apr. May June July Major market groups Total industrial production 136.6 137.7 .2 .5 .5 .4 .8 5.4 Products, total 145.4 146.1 .2 .3 .5 .4 .5 4.8 Final products 143.9 144.8 .1 .5 .6 .4 .6 5.0 Consumer goods 133.0 133.4 -.1 .6 .5 .3 .3 3.5 Durable 125.2 124.8 -.2 2.4 2.0 -.4 -.3 3.7 Nondurable 135.8 136.6 -.1 .0 -.1 .6 .6 3.4 Business equipment... 158.2 159.7 .6 .8 1.4 .9 1.0 9.7 Defense and space 184.3 185.0 -.6 -1.1 -1.2 -.7 .4 -2.0 Intermediate products... 150.6 150.8 .3 -.2 .3 .3 .2 4.0 Construction supplies. 138.2 137.8 -.3 .2 .5 -.1 -.3 3.5 Materials 124.7 126.2 .3 .8 .5 .4 1.2 6.5 Major industry groups Manufacturing 142.0 143.1 .4 .6 .6 .2 .8 5.6 Durable 141.7 142.8 .3 .6 1.3 .1 .8 7.0 Nondurable 142.5 143.6 .5 .4 -.3 .4 .8 3.7 Mining 103.5 104.1 1.2 2.0 -1.6 .5 .6 4.9 Utilities 115.2 115.8 -2.0 -2.0 1.2 2.5 .6 4.2 NOTE. Indexes are seasonally adjusted. units, were down from June's rate of 7.5 million Output of construction supplies has changed units, and the production of light trucks for little, on balance, since February, and declined consumer use also decreased. The index for slightly in both June and July, owing mainly to a business equipment rose rapidly again in July, strike in the lumber industry. The strong gains in with all main sectors, except transit equipment, the output of materials in July reflected wideadvancing. spread gains, most notably in metals, paper, chemicals, and coal. Total industrial production—Revisions In industry groups, manufacturing output in- Estimates as shown last month and current estimates creased 0.8 percent in July. In durable manufacturing, the gains were largest in primary metals Percentage change Index (1977=100) from previous and nonelectrical machinery; large gains also MMoonntthh months occurred in several nondurable industries. Production at both utilities and mines rose 0.6 per- Previous Current Previous Current cent. April 135.4 135.4 .5 .5 May 136.1 136.1 .5 .5 June 136.6 136.6 .4 .4 July 137.7 .8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

652 Announcements CHANGE IN THE DISCOUNT RATE types of financial services they are using and the firms that supply them. The Federal Reserve Board announced on Au- The study is the first comprehensive analysis gust 9, 1988, an increase in the discount rate from of the effect of financial deregulation on small 6 percent to 6V2 percent, effective immediately. businesses and its implications for bank regula- The decision reflected the intent of the Federal tion. The information obtained will address ques- Reserve to reduce inflationary pressures. The tions in a variety of areas, including the demand action was also taken in light of the growing for currency and payments services, the effects spread of market interest rates over the discount of bank mergers and holding company acquisirate. tions of banks, and the impact of bank regulation In taking the action, the Board voted on re- on small businesses. quests submitted by the Boards of Directors of The traditional view has been that most small the Federal Reserve Banks of Boston, New businesses were financed by local commercial York, Philadelphia, Cleveland, Richmond, At- banks. The survey is designed to determine if this lanta, St. Louis, Kansas City, and San Franci- view is still appropriate, given the entry of new sco. The Board subsequently approved similar firms, such as thrift institutions and venture requests by the Federal Reserve Bank of Minne- capital firms, into the provision of payment and apolis, effective August 9; by the Federal Re- credit services. Does the small business still serve Bank of Chicago, effective August 10; and obtain its checking account, other bank acby the Federal Reserve Bank of Dallas, effective counts, and longer-term financing from its local August 11. The discount rate is the interest rate bank? Or, does the small firm, like large busithat is charged depository institutions when they nesses, have the option of selecting a wider borrow from their District Federal Reserve variety of services from both bank and nonbank Banks. firms located not just within its home town, but across the nation? SURVEY ON USES OF FINANCIAL SERVICES A report on the findings will be published in the BY SMALL BUSINESSES FEDERAL RESERVE BULLETIN early in 1990. The Federal Reserve Board on August 17, 1988, REVISIONS TO REGULATION C announced plans for a national survey to obtain information on the sources and use of credit and The Federal Reserve Board published on August other financial services by small businesses. 12, 1988, revisions to its Regulation C (Home The major purpose of the survey, which is Mortgage Disclosure) to incorporate recent conbeing cosponsored by the Small Business Admin- gressional amendments that extend the Home istration, is to determine how financial innova- Mortgage Disclosure Act (HMDA) permanently tion and the deregulation of financial markets and expand its coverage. The changes were have affected the financial behavior of small effective September 19. business firms. The HMDA and the Board's Regulation C Beginning in September, more than 4,000 ran- require financial institutions that have more than domly selected small business firms will be sur- $10 million in assets and have home or branch veyed, on a voluntary and confidential basis, by offices in metropolitan statistical areas (MSAs) or the Research Triangle Institute in North Caro- primary metropolitan statistical areas to disclose lina, which has been commissioned to conduct annually their originations and purchases of the survey. Businesses will be asked about the home mortgage and home improvement loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

653 Besides the permanent extension of the act, the ability of Funds and Collection of Checks) to Congress also expanded the act's coverage to conform the definition of "paying bank" to the include savings and loan service corporations Expedited Funds Availability Act as interpreted and mortgage banking subsidiaries of bank and by a recent court decision. The Board has savings and loan holding companies. The adopted amendments conforming to the court changes to the regulation also include redrafted decision on an interim basis to ensure that they instructions to the reporting forms to further are in place when the act takes effect on Septemsimplify and clarify them. ber 1, 1988. The Board requested comment by September 12, 1988, on the interim rule pending AMENDMENT TO REGULATION T consideration of a longer-term response to the court decision. The Federal Reserve Board approved on August 10, 1988, an amendment to Regulation T (Credit by Brokers and Dealers) to make certain foreign CHANGES IN BOARD STAFF sovereign debt securities marginable. The amendment was effective September 15, 1988. The Board of Governors announced the appoint- The amendment will permit brokers and deal- ment of Roger T. Cole to the official staff as ers to extend "good faith" loan value on long- Assistant Director in the Division of Banking term debt securities issued or guaranteed as a Supervision and Regulation, effective August 16, general obligation by a foreign sovereign, its 1988. Mr. Cole will have responsibility for the provinces, states, or cities, or a supranational Financial Analysis, Policy Development, and entity if there is available an explicit or implicit Policy Implementation Sections. rating of the entity in one of the two highest Mr. Cole came to the Board in September 1979 rating categories by a nationally recognized sta- as a senior financial analyst, and since November tistical rating organization. 1987 has acted as Assistant to the Staff Director. He has a B.A. in economics from Bucknell UPDATE TO STAFF GUIDELINES ON University and an M.A. from Johns Hopkins REGULATION AA University. The Board has also approved a restructuring of The Federal Reserve Board published on July 29, the Division of Banking Supervision and Regula- 1988, the second update to its staff guidelines on tions, which realigns the responsibilities of sevthe Credit Practices Rule under Regulation AA. eral division officers. The updated guidelines became effective August 1, 1988. The Board also announced the resignation of The Board's Credit Practices Rule, applicable Lynn Smith Fox, Special Assistant to the Board, to all banks and their subsidiaries, addresses effective September 9, 1988. unfair or deceptive acts or practices in the extending of consumer credit. The rule does not apply to loans for the purchase of real property. SYSTEM MEMBERSHIP: ADMISSION OF Banks are prohibited from using certain remedies STATE BANKS to enforce consumer credit obligations and from using a late charge practice commonly referred to The following state banks were admitted to memas "pyramiding." The rule also provides protec- bership in the Federal Reserve System during the tions for cosigners of consumer credit obliga- period August 1 through August 31, 1988: tions. Pennsylvania PROPOSED AMENDMENT Media Security First Bank TO REGULATION CC West Chester Bank of the Brandywine Valley The Federal Reserve Board has approved an interim rule amending Regulation CC (Avail- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

654 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON JUNE 29-30, 1988 1.38 million units in May, down from a rate of approximately 1 Vi million units over the preced- Domestic Policy Directive ing three months. Despite the decline, data on building permits and home sales suggested that The information reviewed at this meeting sug- the pace of housing activity was little changed. gested that economic activity was continuing to Business fixed investment also appeared to expand at a relatively vigorous pace, though have leveled off at a high rate recently. Outlays apparently not quite as rapidly as earlier this for structures increased in April, particularly in year. Growth in output was being sustained by the industrial sector, but new commitments for considerable strength in manufacturing; the latter nonresidential construction were trending down. appeared to reflect in part a continuing improve- While new orders for nondefense capital goods ment in the nation's trade balance as well as showed little change in April and May, the latest ongoing expansion in domestic demands. Vari- survey data implied further gains in capital ous measures of prices and wages suggested spending over the second half of 1988. Nonfarm some intensification of inflation in recent months. inventory investment in April remained close to Growth in nonfarm payroll employment mod- its first-quarter pace. The buildup in stocks conerated somewhat in April and May, particularly tinued to be sizable in manufacturing and wholein construction, trade, and services. However, sale trade and was concentrated in industries manufacturing employment and the average experiencing strong domestic and foreign deworkweek showed continued strength. In May, mand. At the retail level, nonauto inventory household employment fell sharply and reversed investment slowed sharply in April, while invena large gain in April. The civilian unemployment tories of automotive products rose somewhat rate rose from 5.4 percent in April to 5.6 percent after declining substantially in the first quarter. in May, but it remained slightly below the first- The U.S. merchandise trade deficit narrowed quarter average. in April on a seasonally adjusted basis, essen- Industrial production increased considerably tially reflecting a decline in imports across a wide in April and May. Assemblies of motor vehicles range of commodity categories. Exports fell and the production of capital goods rose substan- slightly in April after a large increase in March. tially in both months. The output of materials Real economic activity expanded strongly during also strengthened over the two months, but that the first quarter in most of the major foreign of nonauto consumer goods edged down. There industrial countries, but available indicators were widespread increases in capacity utilization pointed to some slowing in the second quarter, rates in April and May. Those rates have risen to while inflation remained subdued. high levels in primary processing industries. Over April and May, the consumer price index After increasing appreciably in the first quar- rose at about the average pace of the first quarter, retail sales were little changed on balance ter, despite a sizable advance in retail food and over April and May. Sales of durable goods energy prices. At the producer level, prices of edged down from recent advanced levels, while finished goods continued to increase in May at spending on nondurable goods extended the slug- the quickened pace of the previous two months. gish pattern in evidence over the previous two Prices of a broad range of commodities, particuquarters. Housing starts fell to an annual rate of larly agricultural goods, increased sharply in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

655 past few weeks, in part because of the effects of ditions, interacting with market expectations of a the drought. The rise in average hourly earnings tighter monetary policy and some seasonal presof private nonfarm workers picked up signifi- sures in the money market, contributed to an cantly in April and May. increase in the federal funds rate from about 7 The dollar firmed considerably in foreign ex- percent at the time of the May meeting to around change markets from late May through mid-June, 73/s to IV2 percent by mid-June. Subsequently, a and it subsequently appreciated further in the marginal further increase was sought in the dedays leading up to the Committee meeting. In gree of reserve restraint. This further adjustment relation to other G-10 currencies, the dollar fin- in open market operations was made in the ished the period on average about 6 percent context of a flow of economic information that above its level at the time of the previous Com- suggested a continuing risk of greater inflation mittee meeting on May 17. Continuing improve- and a directive that called for evaluating new ment in the U.S. trade balance and perceptions economic data with a greater readiness to tighten that inflationary pressures would be resisted with than to ease. Adjustment plus seasonal borrowtighter monetary policy helped to strengthen the ing averaged about $520 million in the reserve dollar. maintenance period ending June 29. Federal At its previous meeting in May, the Committee funds traded mostly around IVi percent during adopted a directive that called initially for main- this period but rose to around 8 percent late in taining the existing degree of pressure on reserve the month with the approach of the quarterly positions. The Committee agreed that some statement date. slight firming would be implemented after a short Most other short-term interest rates rose by lA interval following this meeting, assuming that to Vs percentage point during the intermeeting economic and financial conditions did not di- period. In contrast, bond yields declined by verge significantly from the members' expecta- about the same amount over the interval. Detions. In particular, the conduct of open market mands for long-term debt instruments appeared operations would take account of conditions in to be buoyed by improved prospects for the financial markets, the strength of the business dollar and by signs that the economic expansion expansion, indications of inflation, the perfor- might be moderating toward a more sustainable mance of the dollar in foreign exchange markets, pace in the context of perceptions that monetary and the behavior of the monetary aggregates. policy was being tightened in a timely manner. Later in the intermeeting period, some added Broad indexes of stock prices increased apprereserve restraint would be acceptable, or some ciably on balance over the period since mid-May. slight lessening of reserve pressure might be Growth of M2 and M3 slowed substantially in acceptable, depending on ongoing economic and May, and Ml was about unchanged. This weaker financial developments. The contemplated re- performance reflected mainly a runoff of taxserve conditions were expected to be associated related balances. Based on partial data through with growth in M2 and M3 at annual rates of 6 to midmonth, growth of the monetary aggregates 7 percent over the period from March to June. appeared to have rebounded in June, though it The members agreed that the intermeeting range remained below that registered earlier in the year for the federal funds rate should be raised by 1 as increases in market interest rates in recent percentage point to a range of 5 to 9 percent. months apparently began to damp demands for In accordance with the Committee's instruc- money. Expansion in total domestic nonfinancial tions, open market operations were directed debt thus far this year was estimated to have toward a slight increase in the degree of reserve moderated somewhat from the pace in 1987. pressure starting in the latter part of May. In the The staff projection prepared for this meeting two reserve maintenance periods ending June 15, suggested that the economy would expand at a adjustment plus seasonal borrowing rose to an more moderate pace in the quarters immediately average of $530 million. That average included a ahead. Growth in output would be held down by bulge over the Memorial Day holiday in late the effects of the drought on agricultural output, May. The implementation of firmer reserve con- a decline in automobile production, and a more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

656 Federal Reserve Bulletin • October 1988 restrained pace of nonfarm inventory accumula- etary growth that had accompanied the tightention than was thought to have occurred in recent ing of monetary policy over the spring would be months. Over the longer run, the course of the restraining demands over coming quarters, and economy would depend to an important extent they saw a lesser risk of a significant pickup in on developments in financial markets. To the inflation. In the view of these members, inflation degree that demands were strong, in a context of remained a major concern, but additional inforan anti-inflation monetary policy, this would mation was needed to assess whether the econshow through in pressures in those markets tend- omy was on a course that would lead to an ing to restrain domestic spending. The staff pro- intensification of price pressures. jection continued to anticipate a sluggish pace of In keeping with the usual practice at meetings consumer spending, substantially slower growth when the Committee considers its long-run obin business fixed investment, and subdued hous- jectives for monetary growth, the members of the ing activity; it also assumed a mildly restrictive Committee and the Federal Reserve Bank presifiscal policy. As in earlier projections, improve- dents not currently serving as members prepared ment in the trade balance was expected to con- specific projections of growth in real and nominal tribute substantially to continuing growth in GNP, the rate of unemployment, and changes in overall economic activity. Prices and wages were the overall price level. With regard to rates of expected to rise somewhat more rapidly in the expansion in real GNP, the projections had a quarters ahead because of the continuing effects central tendency of 23A to 3 percent for 1988 as a of the dollar's depreciation on prices of non-oil whole, implying a considerable slowing over the imports and of reduced margins of unutilized second half of the year; for the year 1989 the production resources. Increases in food prices as central tendency of the projections was 2 to 2Vi a consequence of drought conditions were also percent or close to that implied for the second expected to contribute to inflationary pressures half of this year. Projections of growth in nominal over the quarters immediately ahead. GNP centered on rates of 53A to 63A percent for In the Committee's discussion of the economic 1988 and 5 to 7 percent for 1989. The projected situation and outlook, the members generally rates of civilian unemployment had a central agreed that some moderation in the rate of eco- tendency of 5lA to 53A percent for the fourth nomic expansion was a reasonable expectation quarter of 1988 and 5l/2 to 6 percent for the fourth for the next several quarters. Indeed, although quarter of 1989. With respect to the rate of the specific rate of economic growth that would inflation, as indexed by the GNP deflator, the foster achievement of the Committee's price projections centered on rates of 3 to 33A percent stability goal could not be anticipated with any for 1988 and 3 to AVI percent for 1989. The degree of precision, the members generally somewhat higher midpoint of the central tenagreed that a considerably slower rate of expan- dency for 1989 overstated the anticipated pickup sion than appeared to have occurred in the first in inflation for technical reasons, including a shift half of 1988 would probably be needed, given in the composition of output that had produced already high utilization rates of labor and capital an unusually low increase in the deflator for the resources. Views differed, however, with regard first quarter of 1988. In making these projections to the likely extent of the slowing that might the members took account of the Committee's already be under way. Many members expressed objectives for monetary growth established at concern that, in the absence of tighter fiscal and this meeting and assumed that the fiscal policy monetary policies, the momentum of the econ- understandings reached by the Congress and the omy pointed to faster growth than would be administration in late 1987 would be fully impleconsistent with the Committee's objective of mented. The members also assumed that fluctucontaining inflationary pressures over time. ations in the exchange value of the dollar would Some other members gave more emphasis to not be of sufficient magnitude to affect economic recent data that seemed to point to more moder- growth and inflation materially in the period ate economic growth. They noted that the higher through the end of 1989. interest and exchange rates and the slower mon- In their review of developments bearing on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 657 prospects for the economy, the members gener- several parts of the country, but its ultimate ally agreed that the outlook for consumer and effects on the economy were difficult to predict. business spending pointed to slower growth in A timely improvement in moisture conditions domestic final demands over the next several might yet limit that impact for many producers. quarters, but they continued to anticipate that In areas unaffected by the drought, agricultural further improvement in the nation's trade bal- producers were benefiting from higher prices of ance would provide a major impetus to sustained agricultural commodities. moderate expansion in overall economic activity. During the Committee's discussion, the mem- There was uncertainty about strength of de- bers focused a great deal of attention on the mands in the economy from both domestic and outlook for prices and wages. Specific developforeign sources. Some recent data on consump- ments, such as rising import prices and the tion and investment seemed to suggest that de- impact of the drought on agricultural prices, were mands were moderating a bit in the second contributing to inflationary pressures. However, quarter; moreover, the rise in interest rates of more fundamental concern to members was would be damping domestic demands over com- the possibility that aggregate demand pressures ing quarters, and the higher dollar, if it persisted, in the economy might prove excessive in relation could restrain the pace of external adjustment. In to available labor and capital resources, espeaddition, money stock growth, taking 1987 and cially given the high levels of resource utilization the first half of 1988 together, had been much less already prevailing. By some measures, prices rapid than in previous years, and this suggested had risen somewhat more rapidly in recent some restraint in the economy. On the other months, although any associated worsening of hand, the economy seemed to have a good deal inflationary expectations, at least as reflected in of momentum and it was far from clear whether certain key financial markets, appeared to have the slowing, if any, would be sufficient to relieve been muted, perhaps by favorable reactions to growing pressures on resources. Consumption the System's tightening moves. With regard to seemed sluggish, but restrained consumer spend- wages, some members commented that recent ing was needed to allow production resources to wage data, on the whole, had an upward tilt. be shifted to sectors that competed in interna- Reports from different parts of the country sugtional markets. Reports from the Federal Re- gested that labor market conditions were relaserve Districts suggested that the improved in- tively taut in many, but not all, areas, but there ternational competitiveness of domestic were few reports of substantial acceleration in producers continued to boost manufacturing ac- rates of wage increases. Many business executivity and that capital spending to expand and tives were expressing concern, however, about modernize industry would likely continue fairly their continuing ability to restrain demands for robust, if below the extraordinary pace of the higher wages. For the moment, priority in labor first quarter. Economic activity abroad had been negotiations continued to be placed on job secursomewhat stronger than expected, and if that ity issues, and many business executives, facing pattern continued it would tend to boost de- domestic and foreign competition, continued to mands on U.S. exporters. emphasize measures to increase productivity and An important uncertainty in the economic out- hold down unit labor costs. look, at least in the view of some members, was Against the background of the Committee's the prospective performance of inventories. A views regarding the economic outlook and in somewhat reduced rate of inventory accumula- keeping with the requirements of the Full Emtion was desirable to prevent an excess buildup ployment and Balanced Growth Act of 1978 (the in relation to sales, but a surge in inventory Humphrey-Hawkins Act), the Committee at this investment could not be ruled out. Such a devel- meeting reviewed the ranges for growth in the opment would contribute to demand pressures monetary and debt aggregates that it had estaband would threaten the sustainability of the ex- lished in February for 1988 and decided on pansion. Members also noted that the drought tentative ranges for growth in those measures in was having an adverse impact on agriculture in 1989. The 1988 ranges included growth of 4 to 8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

658 Federal Reserve Bulletin • October 1988 percent for both M2 and M3 for the period from for 1989—especially in light of the uncertainty at the fourth quarter of 1987 to the fourth quarter of mid-1988 as to what economic and financial con- 1988. A monitoring range of 7 to 11 percent had ditions would prevail in 1989. With deposit rate been set for growth in total domestic nonfinancial deregulation, the aggregates had become more debt in 1988. For the year to date, cumulative interest sensitive, and it had become increasingly expansion of M2 and M3 had been in the upper difficult to anticipate very far in advance what portion of the ranges established by the Commit- rates of monetary growth would be appropriate. tee, while expansion in nonfinancial debt had Many members favored a reduction of a full been around the middle of its range. With regard percentage point in the M2 range. They viewed to Ml, the Committee had decided in February such a reduction as necessary to constrain innot to set a numerical target for 1988 but to come growth in a period when underlying inflaappraise the behavior of this monetary measure tion pressures could remain strong and velocity in terms of its velocity and against the back- could be increasing. Most other members faground of developments in the economy and vored a smaller reduction, or no reduction, in the financial markets and the nature of emerging money growth ranges. Some anticipated that the price pressures. expansion in business activity as 1989 began In the Committee's review of the ranges that might well be slower than most members curhad been set for 1988, all of the members found rently anticipated. Interest rates might also be acceptable a proposal to retain the current lower, thereby tending to damp velocity. Beranges. The Committee took account of a staff cause of uncertainty about the outlook, there was analysis that indicated that a moderation in the a risk that a part, or all, of any current reductions growth of M2 over the second half of 1988, might have to be reversed when the ranges were bringing M2 expansion to around the middle of reexamined in February, with adverse effects in the Committee's range for the year, was consis- terms of the public's perception of the System's tent with the slower growth of income that was anti-inflation resolve. In the view of these memboth expected and desirable. The slower M2 bers, the ranges could be adjusted downward in growth also would reflect the impact of the rise in February, when the outlook for 1989 would be in market interest rates in recent months in associ- clearer focus. On the other hand, one member ation with an expectation that depository institu- felt that a reduction of more than 1 percentage tions characteristically would not adjust offering point in the M2 range probably would be needed rates fully on their interest-bearing deposits or if progress was to be made in lowering the rate of would do so only after a considerable delay. inflation in 1989. Despite their differing prefer- Growth of M3 was projected to exceed that of ences and in recognition of the possibility of M2 during the remainder of 1988, reflecting needs revisions next February in these tentative to finance fairly robust credit growth at deposi- ranges, all but one member indicated they could tory institutions. Nonetheless, the growth of M3 accept a reduction of a full percentage point in was projected to remain well within the Commit- the M2 range. This would communicate the Systee's range for the year. Growth in total domestic tem's intention to restrain any tendency for innonfinancial debt was expected to remain near flation to accelerate next year and, indeed, to the middle of its range and thus still appreciably move over time toward price stability. In light of above the projected expansion in nominal GNP, the uncertainties, the Committee decided to rein part because of a widened corporate financing tain the 4-point width for all the aggregates in gap. 1989. Consideration would be given to narrowing the ranges to 3 percentage points when they were With regard to the ranges in 1989, the members reviewed in February. generally agreed that achievement of sustained economic expansion and concurrent progress The tentative range for M3 was reduced by Vz toward price stability would require that the percentage point and left somewhat higher than ranges continue to be ratcheted down over time. that for M2. Growth in M3 had shown a tendency However, views differed as to how much, if any, to exceed M2 growth over time and that pattern of this reduction should be scheduled at this time was expected to continue. The range for M3 had Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 659 been set above that for M2 in a number of earlier With respect to Ml, the Committee reaffirmed its years. The monitoring range for expansion in decision in February not to establish a specific target for 1988 and also decided not to set a tentative range total domestic nonfinancial debt also was lowfor 1989. The behavior of this aggregate will continue ered on a tentative basis by Vi percentage point to be evaluated in the light of movements in its from the range for 1988. In the economic envi- velocity, developments in the economy and financial ronment projected for 1989, growth in nonfinan- markets, and the nature of emerging price pressures. cial debt was believed likely to slow a bit from the already reduced pace now expected for all of Votes for this action: Messrs. Greenspan, Corri- 1988. Even so, with business loan demands ex- gan, Angell, Black, Forrestal, Heller, Hoskins, Johnson, Kelley, Parry, and Ms. Seger. Votes pected to remain relatively strong, growth in against this action: None. nonfinancial debt would probably continue to exceed that of nominal GNP by a considerable The following paragraph relating to the ranges margin. for 1989 was approved for inclusion in the do- The Committee again decided not to set a mestic policy directive: specific range for Ml for 1988 or 1989. The velocity of Ml had exhibited sharp swings in For 1989, the Committee agreed on tentative ranges recent years. The latter were in part the result of for monetary growth, measured from the fourth quarthe increased sensitivity of Ml to fluctuations in ter of 1988 to the fourth quarter of 1989, of 3 to 7 market interest rates since the deregulation of percent for M2 and V/z to IVi percent for M3. The deposit rate ceilings. The Committee concluded Committee set the associated monitoring range for that the prospective relationships between Ml growth in total domestic nonfinancial debt at 6Vi to 101/2 percent. It was understood that all these ranges and aggregate measures of economic perforwere provisional and that they would be reviewed in mance remained too uncertain to justify reliance early 1989 in the light of intervening developments. on this monetary aggregate as a guide for monetary policy, at least insofar as could be judged at Votes for this action: Messrs. Greenspan, Corrithis point for next year. Similarly, after Commitgan, Angell, Black, Forrestal, Heller, Hoskins, tee consideration most members preferred not to Johnson, Kelley, and Parry. Vote against this acmake use of another narrow monetary measure, tion: Ms. Seger. the monetary base, in guiding monetary policy. In recent years, the base had varied less in Ms. Seger dissented because she preferred to relation to economic activity and prices than had retain—at least for now—this year's ranges of 4 Ml, but its velocity had nonetheless fluctuated to 8 percent for growth in both M2 and M3 for substantially, and sometimes unpredictably, 1989. The economic outlook for next year refrom year to year. mained highly uncertain at this point, and she At the conclusion of this discussion, the Com- was concerned about reducing the ranges so far mittee approved for inclusion in the domestic in advance and incurring the risk of having to policy directive the following paragraphs relating reverse that decision next February. Such a to its objectives for the broader aggregates and reversal would create unnecessary uncertainty nonfinancial debt in 1988 and the role of Ml: about the conduct of monetary policy. She recognized that further reductions in the M2 and M3 The Federal Open Market Committee seeks mone- ranges might well be needed over time to bring tary and financial conditions that will foster price inflation under control, and she would be prestability over time, promote growth in output on a pared to lower those ranges early next year if sustainable basis, and contribute to an improved pateconomic conditions and prospects appeared to tern of international transactions. In furtherance of these objectives, the Committee reaffirmed at this warrant such an action at that time. meeting the ranges it had established in February for In the course of the Committee's discussion of growth of 4 to 8 percent for both M2 and M3, mea- policy implementation for the period immedisured from the fourth quarter of 1987 to the fourth ately ahead, considerable emphasis was given by quarter of 1988. The monitoring range for growth in some members to the desirability of avoiding any total domestic nonfinancial debt was also maintained at 7 to 11 percent for the year. impression of a reversal in what was widely Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

660 Federal Reserve Bulletin • October 1988 perceived as the thrust of policy in recent months slightly firmer reserve conditions was likely to be toward a gradual increase in the degree of re- associated with some slowing in the growth of straint. Several observed that the tightening ac- Ml and M2 during the months ahead, largely tions of recent months had had a salutary effect reflecting the impact on deposit growth of more on financial markets, and, as evidenced in part by attractive yields on short-term market instruthe performance of the bond markets, on infla- ments stemming from the recent rise in market tion expectations. The Committee did not con- rates. Growth in M3 might be better maintained template any easing of policy in the current as banks and thrift institutions continued to fieconomic environment, and some members were nance still sizable expansion in credit demands concerned that maintaining the degree of reserve through issuance of managed liabilities. In these pressure sought recently might well be inter- circumstances, cumulative growth in both M2 preted as a move to an easier policy once the and M3 through September would be expected to effects of seasonal pressures on money market remain in the upper halves of the Committee's interest rates subsided. In present circumstances 1988 ranges, albeit with M2 declining toward the such a development could have an exaggerated midpoint of its range. effect on inflationary attitudes and thus on the With regard to possible changes in the degree effectiveness of monetary policy. A slight in- of reserve pressure during the intermeeting pecrease in reserve pressure would help to maintain riod, all of the members agreed that operations the general thrust of policy and its perception by should be adjusted more readily toward further the markets; some further tightening could be tightening than toward some easing. However, assessed as new data, especially pertaining to those who preferred no change in the degree of inflation pressures, became available. Other reserve restraint, at least for now, also thought members preferred a somewhat greater degree of that the directive should incorporate such a prefirming immediately. They were concerned that sumption only if there were no immediate tightthere were substantial risks that the tightening ening. The relatively long span between meetings actions to date might not be sufficient to limit the and the importance of the forthcoming data to an expansion to a noninflationary pace, and some assessment of the evolving economic and price felt that an increase in the discount rate might outlook, might well require consideration of inhelpfully complement open market operations at termeeting adjustments in the stance of open this juncture. market operations in coming weeks. In addition, Some members favored steady reserve condi- developments in financial markets, especially the tions. They gave more emphasis to the antici- foreign exchange market, could have an imporpated lagged effects of earlier policy tightening tant effect on the timing of policy actions in the actions, and most of these members also inter- near term, and such developments would need to preted recent information as indicative of some be reviewed carefully. The members generally slowing in the business expansion. They also endorsed a suggestion to give particular weight to were concerned that any firming, however slight, incoming information bearing on the outlook for would add to existing upward pressures on the inflation during the intermeeting period, though dollar. The rise in the dollar already suggested the usual attention should also continue to be monetary restraint in the United States, and given to the strength of the economic expansion, further upward movements might work against conditions in domestic and foreign exchange needed adjustment of external imbalances. Some markets, and the growth of the monetary aggrefirming might well be needed at some point and gates. should be reflected in a directive that indicated a At the conclusion of the Committee's discusgreater willingness to tighten than to ease in sion, a majority of the members indicated that response to new data. However, economic and they preferred or could accept a directive that monetary indicators in this view did not point to called for a slight increase in the degree of the need for any tightening at this time. pressure on reserve positions. The members in- According to a staff analysis prepared for this dicated that somewhat greater reserve restraint meeting, the implementation of unchanged or would be acceptable, or slightly lesser reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 661 restraint might be acceptable, depending on indi- the Committee for 1988. Expansion in total domestic cations of inflationary pressures, the strength of nonfinancial debt for the year thus far appears to be at a pace somewhat below that in 1987. the business expansion, developments in foreign The Federal Open Market Committee seeks moneexchange and domestic financial markets, and tary and financial conditions that will foster price the behavior of the monetary aggregates. The stability over time, promote growth in output on a reserve conditions contemplated by the Commit- sustainable basis, and contribute to an improved pattee were expected to be consistent with growth in tern of international transactions. In furtherance of these objectives, the Committee reaffirmed at this M2 and M3 at annual rates of about 5V2 and 7 meeting the ranges it had established in February for percent respectively over the three-month period growth of 4 to 8 percent for both M2 and M3, meafrom June through September. In keeping with sured from the fourth quarter of 1987 to the fourth its decision on the longer-run ranges, the Com- quarter of 1988. The monitoring range for growth in mittee decided not to indicate any expectations total domestic nonfinancial debt was also maintained at 7 to 11 percent for the year. regarding the growth of Ml over the months For 1989, the Committee agreed on tentative ranges immediately ahead. The members agreed that the for monetary growth, measured from the fourth quarintermeeting range for the federal funds rate, ter of 1988 to the fourth quarter of 1989, of 3 to 7 which provides one mechanism for initiating con- percent for M2 and 3!/2 to 71/2 percent for M3. The sultation of the Committee when its boundaries Committee set the associated monitoring range for growth in total domestic nonfinancial debt at 6V2 to are persistently exceeded, should be left un- IOV2 percent. It was understood that all these ranges changed at 5 to 9 percent. were provisional and that they would be reviewed in At the conclusion of the meeting the following early 1989 in the light of intervening developments. domestic policy directive was issued to the Fed- With respect to Ml, the Committee reaffirmed its eral Reserve Bank of New York: decision in February not to establish a specific target for 1988 and also decided not to set a tentative range for 1989. The behavior of this aggregate will continue The information reviewed at this meeting suggests to be evaluated in the light of movements in its that economic activity has continued to expand at a velocity, developments in the economy and financial fairly vigorous pace. Growth in total nonfarm payroll markets, and the nature of emerging price pressures. employment moderated somewhat in April and May. In the implementation of policy for the immediate The civilian unemployment rate rose to 5.6 percent in future, the Committee seeks to increase slightly the May, a level just below its average in the first quarter. existing degree of pressure on reserve positions. Tak- Industrial production advanced considerably in April ing account of indications of inflationary pressures, the and May. Retail sales were little changed on balance strength of the business expansion, developments in over the two months after rising appreciably in the first foreign exchange and domestic financial markets, and quarter. Available data indicate that business capital the behavior of the monetary aggregates, somewhat spending has remained at the high level reached in the greater reserve restraint would, or slightly lesser refirst quarter. Housing starts fell sharply in May, but serve restraint might, be acceptable in the intermeetother indicators suggested little change in the pace of ing period. The contemplated reserve conditions are recent housing activity. The nominal U.S. merchan- expected to be consistent with growth in M2 and M3 dise trade deficit declined substantially in April, as over the period from June through September at imports dropped sharply and exports were essentially annual rates of about 5V2 and 7 percent, respectively. unchanged. Most measures indicate that prices and The Chairman may call for Committee consultation if wages have risen somewhat more rapidly in recent it appears to the Manager for Domestic Operations months. Prices of a broad range of commodities, that reserve conditions during the period before the particularly agricultural goods, have increased sharply next meeting are likely to be associated with a federal in the past few weeks. funds rate persistently outside a range of 5 to 9 Short-term interest rates have risen since the Com- percent. mittee's meeting on May 17, while bond yields have moved lower. The trade-weighted foreign exchange Votes for the paragraph on short-term policy imvalue of the dollar in terms of the other G-10 currenplementation: Messrs. Greenspan, Corrigan, cies appreciated considerably over the intermeeting Black, Forrestal, Heller, Hoskins, Johnson, and period. Parry. Votes against: Messrs. Angell, Kelley, and Expansion of M2 and M3 slowed considerably in Ms. Seger. May and Ml was about unchanged, but data available for June suggested some pickup in monetary growth. From a fourth-quarter base, M2 and M3 have grown at Messrs. Angell and Kelley and Ms. Seger rates in the upper portion of the ranges established by dissented because they preferred to direct policy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

662 Federal Reserve Bulletin • October 1988 toward maintaining unchanged conditions of re- could not concur with a decision to increase serve availability. They did not rule out the reserve pressure further at this time. The econpossible need for some firming later during the omy, for the most part, was behaving satisfactointermeeting period, subject to a review of devel- rily, with evidence that the rate of growth in real opments by the Committee. activity might be decelerating. He recognized Mr. Angell indicated that he supported a con- and shared the concern that inflation had the tinued slowing in the growth of the monetary potential to accelerate. However, there was inaggregates that was directed toward price level sufficient evidence at this time to justify further stability over time. In his view, while longer-run tightening that might foster undue slowing in developments in prices remained somewhat un- economic growth. He would be prepared to certain, recent information from exchange rate support appropriate firming action later should and commodity markets, as well as the monetary adequate evidence of increased inflationary presaggregates, called for a pause in the process of sures emerge, taking into account overall ecocontinuous tightening in order to gain additional nomic activity. insight regarding the effects of previous actions. Ms. Seger emphasized that some current bus- In addition, the dollar had been under substantial iness indicators already pointed to a slower ecoupward pressure, which had prompted central nomic expansion. Moreover, the full impact of bank intervention. He felt that the exchange rate the firming of policy in recent months had not yet objectives implied in dollar sales would be frus- materialized. In the circumstances and also taktrated by the double sterilization of reserves ing into account the strength of the dollar and the implied by monetary tightening. He wanted to absence of broad indications of significant accelcall attention to the cross purposes of these eration in the rate of inflation, she believed that a actions. further increase in the degree of reserve restraint Mr. Kelley noted that he had supported firming represented an unwarranted risk at this time to actions over the past several months, but he satisfactory economic performance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

663 Legal Developments AMENDMENT TO REGULATION A 3. Section 201.52 is revised to read as follows: The Board of Governors is amending 12 C.F.R. Part Section 201.52—Extended credit for depository 201, its Regulation A (Extensions of Credit by Federal institutions. Reserve Banks), for the purpose of increasing discount rates. The decision reflects the intent of the Federal Reserve to reduce inflationary pressures. The action was also taken in light of the growing spread of market (a) Seasonal credit. The rates for seasonal credit interest rates over the discount rate. The Board acted extended to depository institutions under section on requests submitted by the Boards of Directors of 201.3(b)(1) of Regulation A are: the twelve Federal Reserve Banks. The discount rate is the interest rate that is charged depository institutions when they borrow from their district Federal Reserve Banks. Federal Reserve Bank Rate Effective Effective on the dates specified below, 12 C.F.R. Part 201 is amended as follows: Boston 6.5 August 9, 1988 New York 6.5 August 9, 1988 Part 201—Extensions of Credit by Federal Philadelphia 6.5 August 9, 1988 Reserve Banks 6.5 August 9, 1988 Richmond 6.5 August 9, 1988 Atlanta 6.5 August 9, 1988 1. The authority citation for 12 C.F.R. Part 201 continues to read as follows: Chicago 6.5 August 10, 1988 St. Louis 6.5 August 9, 1988 Minneapolis 6.5 August 9, 1988 Authority: Sees. 10(a), 10(b), 13, 13a, 14(d) and 19 of Kansas City 6.5 August 9, 1988 the Federal Reserve Act (12 U.S.C. 347a, 347b, 343 Dallas 6.5 August 11, 1988 San Francisco 6.5 August 9, 1988 et seq., 347c, 348 et seq., 357, 374, 374a and 461); and sec. 7(b) of the International Banking Act of 1978 (12 U.S.C. 347d). 2. Section 201.51 is revised to read as follows: (b) Other extended credit. The rates for other ex- Section 201.51—Short-term adjustment credit tended credit provided to depository institutions under for depository institutions. sustained liquidity pressures or where there are exceptional circumstances or practices involving a particular The rates for short-term adjustment credit provided to institution under section 201.3(b)(2) of Regulation A depository institutions under section 201.3(a) of Reg- are: ulation A are: Federal Reserve Bank Rate Effective Federal Reserve Bank Rate Effective Boston 6.5 August 9, 1988 Boston 6.5 August 9, 1988 New York 6.5 August 9, 1988 New York 6.5 August 9, 1988 Philadelphia 6.5 August 9, 1988 Philadelphia 6.5 August 9, 1988 Cleveland 6.5 August 9, 1988 Cleveland 6.5 August 9, 1988 Richmond 6.5 August 9, 1988 6.5 August 9, 1988 Atlanta 6.5 August 9, 1988 Atlanta 6.5 August 9, 1988 Chicago 6.5 August 10, 1988 Chicago 6.5 August 10, 1988 St. Louis 6.5 August 9, 1988 St. Louis 6.5 August 9, 1988 Minneapolis 6.5 August 9, 1988 Minneapolis 6.5 August 9, 1988 Kansas City 6.5 August 9, 1988 Kansas City 6.5 August 9, 1988 Dallas 6.5 August 11, 1988 Dallas 6.5 August 11, 1988 San Francisco 6.5 August 9, 1988 San Francisco 6.5 August 9, 1988 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

664 Federal Reserve Bulletin • October 1988 These rates apply for the first 30 days of borrowing. pursuant to the Home Mortgage Disclosure Act For credit outstanding for more than 30 days, a flexible 12 U.S.C. 2801 et seq.). The information collection rate will be charged which takes into account rates on requirements have been approved by the U.S. Office market sources of funds, but in no case will the rate of Management and Budget under 44 U.S.C. 3501 et charged be less than the basic discount rate plus seq. and have been assigned OMB No. 7100-0090. one-half percentage point. Where credit provided to a (b) Purpose. particular depository institution is anticipated to be (1) This regulation carries out the purposes of the outstanding for an unusually prolonged period and in Home Mortgage Disclosure Act, which is intended relatively large amounts, the 30-day time period may to provide the public with loan data that can be be lengthened or shortened. used: (i) to help determine whether financial institutions are serving the housing needs of their communi- FINAL RULE—REVISIONS TO REGULATION C ties; and (ii) to assist public officials in distributing public The Board of Governors has adopted a revised sector investments so as to attract private invest- 12 C.F.R. Part 203, its Regulation C (Home Mortgage ment to areas where it is needed. Disclosure). The revised regulation incorporates re- (2) Neither the act nor this regulation is intended to cent amendments to the Home Mortgage Disclosure encourage unsound lending practices or the alloca- Act that were contained in the Housing and Commu- tion of credit. nity Development Act of 1987. These statutory amend- (c) Scope. This regulation applies to financial instituments permanently extend the act and expand its tions, as defined in section 203.2(e), and requires them coverage to include mortgage banking subsidiaries of to disclose loan data at their home and certain branch bank and savings and loan holding companies, and offices and to report the data to supervisory agencies. savings and loan service corporations that originate or (d) Central data depositories. Loan data are available purchase mortgage loans. Other revisions stem from a to the public at central data depositories located in review made in accordance with the Board's Regula- each metropolitan statistical area. The Federal Finantory Improvement Program. cial Institutions Examination Council aggregates loan The HMDA-1 form, which is used by banks, thrifts, data for all institutions in each metropolitan statistical and other depository institutions for reporting loan area, showing lending patterns by location, age of data, remains essentially unchanged. The Board has housing stock, income level, and racial characteristics. adopted a separate form HMDA-2 for use by mortgage A listing of central data depositories can be obtained banking subsidiaries of holding companies and newly from the U.S. Department of Housing and Urban covered service corporations, because these institu- Development, Washington, D.C. 20410, or from any of tions are required to exclude FHA loans from their the agencies listed in Appendix B. reports. Effective September 19, 1988, 12 C.F.R. Part 203 is revised to read as follows: Section 203.2—Definitions. Part 203—Home Mortgage Disclosure In this regulation: Section 203.1—Authority, purpose, and scope. (a) Act means the Home Mortgage Disclosure Act Section 203.2—Definitions. (12 U.S.C. 2801 et seq.). Section 203.3—Exempt institutions. (b) Branch office means: Section 203.4—Compilation of loan data. (1) (i) any office of a financial institution that is Section 203.5—Disclosure and reporting. approved as a branch by a federal or state super- Section 203.6—Enforcement. visory agency; or Appendix A Forms and instructions. (ii) for a financial institution that is not required to Appendix B Federal supervisory agencies. obtain approval for a branch office, any office of the institution that takes applications from the Authority: 12 U.S.C. 2801-2810. public for home purchase or home improvement loans. Section 203.1—Authority, purpose, and scope. (2) The term excludes free-standing automated teller machines and other electronic terminals. (a) Authority. This regulation is issued by the Board of (c) Federal Housing Administration (FHA), Farmers Governors of the Federal Reserve System ("Board") Home Administration (FmHA), or Veterans Adminis- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 665 tration (VA) loans mean mortgage loans insured under statistical area, as defined by the U.S. Office of Man- Title II of the National Housing Act or Title V of the agement and Budget. Housing Act of 1949 or guaranteed under Chapter 37 (i) State means any state of the United States of of Title 38 of the United States Code. America, the District of Columbia, and the Common- (d) Federally related mortgage loan means any loan wealth of Puerto Rico. (other than temporary financing such as a construction loan) secured by a first lien on a l-to-4 family dwelling Section 203.3—Exempt institutions. (including a condominium, a cooperative, or a mobile or manufactured home): (a) Exemption based on asset size or location. A (1) that is originated by a federally insured or financial institution is exempt from the requirements of regulated institution; this regulation for a given calendar year if on the (2) that is insured, guaranteed, or supplemented by preceding December 31: any federal agency; or (1) its total assets were $10,000,000 or less; or (3) that the originator intends to sell to the Federal (2) it had neither a home office nor a branch office in National Mortgage Association, the Government an MSA. National Mortgage Association, or the Federal (b) Exemption based on state law. Home Loan Mortgage Corporation. (1) A state-chartered financial institution is exempt (e) Financial institution means: from the requirements of this regulation if the Board (1) (i) a commercial bank, savings bank, savings and determines that the institution is subject to a state loan association, building and loan association, disclosure law that contains requirements substanhomestead association (including a cooperative tially similar to those imposed by this regulation and bank) or credit union that originates federally contains adequate provisions for enforcement. related mortgage loans; (2) Any state, state-chartered financial institution, or (ii) a mortgage banking subsidiary of a savings and association of such institutions may apply to the loan holding company, or a mortgage banking Board for an exemption under this paragraph. subsidiary of a bank holding company; however, a (3) An institution that is exempt under this parasubsidiary is not a "mortgage banking subsidgraph shall submit the data required by the state iary" under this section unless, in the preceding disclosure law to its state supervisory agency, for calendar year, ten percent or more of its loan purposes of aggregation. volume, measured in dollars, consisted of home (c) Loss of exemption. purchase loans; or (1) An institution losing an exemption that was (iii) a savings and loan service corporation that based on asset size or location under paragraph (a) originates or purchases mortgage loans, other of this section shall compile loan data in compliance than a savings and loan service corporation idenwith this regulation beginning with the calendar year tified in paragraph (e)(2) of this section. following the year in which it lost its exemption. (2) A majority-owned subsidiary of a financial insti- (2) An institution losing an exemption that was tution, including a majority-owned savings and loan based on state law under paragraph (b) of this service corporation, is deemed to be part of the section shall compile loan data in compliance with parent institution for purposes of this reguthis regulation beginning with the calendar year lation. following the year for which it last reported loan (f) Home improvement loan means any loan that: data under the state disclosure law. (1) is stated by the borrower (at the time of the loan application) to be for the purpose of repairing, rehabilitating, or remodeling a residential dwelling Section 203.4—Compilation of loan data. (including a condominium, cooperative, or mobile or manufactured home) located in a state; and (a) Data to be included. A financial institution shall (2) is classified by the financial institution as a home compile data on the number and total dollar amount of improvement loan. home purchase and home improvement loans origi- (g) Home purchase loan means any loan secured by nated or purchased (by the institution and any majorand made for the purpose of purchasing, or refinancing ity-owned subsidiary) at any time during the calendar the purchase of, a residential dwelling (including a year, whether or not the loans are later sold. The condominium, cooperative, or mobile or manufac- institution shall compile the loan data in the format tured home) located in a state. prescribed in Appendix A of this regulation. (h) Metropolitan statistical area or MSA means a (b) Itemization of data. A financial institution shall metropolitan statistical area or a primary metropolitan present the loan data separately for originations and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

666 Federal Reserve Bulletin • October 1988 purchases, itemizing the data by census tract or gage loans (such as mortgage participation certifcounty and by type of loan, as prescribed below. It icates); or shall use the MSA boundaries (defined by the U.S. (vi) the purchase solely of the right to service Office of Management and Budget) that were in effect loans. on January 1 of the calendar year for which the data (2) Mortgage banking subsidiaries of holding comare compiled, and shall use the census tract maps from panies and savings and loan service corporations (as the most recent census tract series prepared by the defined in section 203.2(e)(1)) shall not report FHA U.S. Bureau of the Census. loans insured under Title I or II of the National (1) Geographic itemization. Housing Act. (i) Itemization by census tract or county. For each MSA in which the institution has a home or Section 203.5—Disclosure and reporting. branch office, the institution shall itemize the loan data: (a) Time requirements. By March 31 following the (A) by the census tract in which the property calendar year for which the loan data are compiled, a purchased or improved is located, or financial institution shall: (B) by the county in which the property pur- (1) make a complete loan data disclosure statement chased or improved is located, if the property is available to the public, and continue to make it located in an area not assigned census tracts or available for five years from that date; and in a county with a population of 30,000 or less. (2) send two copies of its complete loan disclosure (ii) Property located elsewhere. The institution statement to the agency office specified in Appenshall list the loan data as an aggregate sum for dix B of this regulation. loans on property located outside an MSA, or (b) Availability to the public. located in an MSA where the institution has (1) A financial institution shall make a complete loan neither a home nor a branch office. disclosure statement available at its home office. (2) Type-of-loan itemization. The financial institu- (2) If it has branch offices in other MS As, the tion shall further itemize the loan data within each financial institution shall also make a statement geographic unit by loan category as follows: available in at least one branch office in each of (i) FHA, FmHA, and VA home purchase loans on those MS As; the statement at a branch office need l-to-4 family dwellings (except as provided in only contain data relating to property in the MSA paragraph (c)(2) of this section); where that branch office is located. (ii) conventional home purchase loans on l-to-4 (3) A financial institution shall make its disclosure family dwellings; statement available for inspection and copying dur- (iii) home improvement loans on l-to-4 family ing the hours the office is normally open to the dwellings; public for business. A financial institution that pro- (iv) loans on dwellings for 5 or more families vides photocopying facilities may impose a reason- (including both home purchase and home im- able charge for this service. provement loans); and (c) Notice of availability. A financial institution shall (v) loans reported in the l-to-4 family categories post a general notice about the availability of its that are made to nonoccupant borrowers, except disclosure statement in the lobbies of its home office for loans on property located outside an MSA, or and any branch offices located in an MSA. Upon located in an MSA where the institution has request, it shall promptly provide the location of the neither a home nor a branch office. institution's offices where the disclosure statement is (c) Data to be excluded. available. At its option, an institution may include the (1) A financial institution shall not report: location in its notice. (i) loans originated or purchased by the financial institution acting in a fiduciary capacity (such as Section 203.6—Enforcement. trustee); (ii) loans on unimproved land; (a) Administrative enforcement. A violation of the act (iii) refinancings, between the original parties, or this regulation is subject to administrative sanctions involving no increase in the outstanding principal as provided in section 305 of the act. Compliance is aside from closing costs and accrued finance enforced by the agencies listed in Appendix B of this charges; regulation. (iv) temporary financing (such as bridge or con- (b) Bona fide errors. An error in compiling or disclosstruction loans); ing loan data is not a violation of the act or this (v) the purchase of an interest in a pool of mort- regulation if it was unintentional and occurred despite Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 667 the maintenance of procedures reasonably adapted to institution's majority-owned subsidiaries (including a avoid such errors. majority-owned service corporation, in the case of a savings and loan association). To comply with the requirements described under section G (Geographic APPENDIX A—FORMS AND INSTRUCTIONS Itemization) below, itemize loan data for MS As or PMSAs where the parent institution has a home or "Mortgage Loan Disclosure Statement" branch offices. Example: If you have a home and branch offices in Form HMDA-1 New York City, and your subsidiary's loan offices are in Philadelphia, itemize data by census tract (or Public reporting burden for this collection of informa- county) only for the New York PMSA. Report loan tion is estimated to vary from 2 to 50 hours per data on loans relating to property located anywhere response, with an average of 30 hours per response, outside the New York PMSA (including loans in Philincluding time to gather and maintain the data needed adelphia) as an aggregate sum in Section 2 (Loans on and to review instructions and complete the informa- property not located in MSAs/PMSAs where institution collection. Send comments regarding this burden tion has home or branch offices). estimate or any other aspect of this collection of information, including suggestions for reducing the B. Who Must Use Other Forms burden, to Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551; and to the Office of Information and Regulatory Af- 1. Mortgage banking subsidiaries of bank holding fairs, Office of Management and Budget, Washington, companies, mortgage banking subsidiaries of savings D.C. 20503. and loan holding companies, and savings and loan service corporations that originate or purchase mort- Instructions to Commercial Banks, Savings gage loans (other than service corporations that are Banks, Savings and Loan Associations, Credit majority-owned by a single savings and loan associa- Unions and Other Depository Institutions tion) must use the HMDA-2 form instead of the HMDA-1. A. Who Must Use This Form 2. Institutions that have been exempted by the Federal Reserve Board from complying with federal law be- 1. A commercial bank, savings bank, savings and loan cause they are covered by a similar state law on association, building and loan association, homestead mortgage loan disclosures must use the disclosure association (including a cooperative bank) or credit form required by their state law. union must complete this HMDA-1 form to disclose loan data for a given calendar year if on the preceding C. Format December 31 the institution: a. had assets of more than $10 million, and b. had a home or a branch office in a metropolitan 1. You must use the format of the HMDA-1 form, but statistical area (MSA) or a primary metropolitan you are not required to use the form itself. For statistical area (PMSA). example, you may produce a computer printout of Example: If on December 31, 1987, your home office your disclosure statement instead. But you must give was located in an MSA and your assets exceeded $10 all the identifying information asked for at the top of million, you must compile data and complete a disclo- the form, use the prescribed column headings, provide sure statement for all home purchase and home im- the signature of a certifying officer, etc. provement loans that you originate or purchase during 2. If your report on loan originations or purchases calendar year 1988. consists of more than one page, number the pages and 2. However, your institution need not complete a include the name of your institution and the MSA disclosure statement—even though it meets the tests number at the top of each page. Enter the totals for the for asset size and location—if it makes no first-lien MSA on the final page; do not give subtotals on earlier mortgage loans on l-to-4 family dwellings in the cal- pages. Report the Section 2 data (Loans on property endar year for which the data are compiled. not located in MSAs/PMSAs) on the final page. If your 3. Any majority-owned subsidiary is deemed to be part report contains itemized data for more than one MSA, of the parent institution. Consequently, you should report the Section 2 data only once for Part A and once consolidate into your disclosure statement loan data for Part B — do not repeat the data on the report for relating to originations and purchases by all of your each MSA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OMB No. 7100-0090 Approval expires June 1990. MORTGAGE LOAN DISCLOSURE STATEMENT, FORM HMDA-1 This report is required by law (12 USC 2801-2810 and 12 CFR 203) Control number (agency use only) FOR USE BY DEPOSITORY INSTITUTIONS •u Part A—Originations Report for loans made in 19 Reporting institution Enforcement agency for reporting institution MSA/PMSA number for data reported in Section 1 Address Address Name of MSA/PMSA Section 1—Loans on property located in MSA/PMSA where institution has a home or branch office Loans on 1-to-4 Family Dwellings LLLoooaaannnsss ooonnn MMMuuullltttiiifffaaammmiiilllyyy DDDwwweeelllllliiinnngggsss fffooorrr Home Purchase Loans 555 ooorrr MMMooorrreee FFFaaammmiiillliiieeesss NNNooonnnoooccccccuuupppaaannnttt LLLoooaaannnsss (((hhhooommmeee pppuuurrrccchhhaaassseeesss aaannnddd ooonnn 111---tttooo---444 FFFaaammmiiilllyyy DDDwwweeelllllliiinnngggsss FHA, FmHA, and VA Conventional HHoommee IImmpprroovveemmeenntt LLooaannss hhhooommmeee iiimmmppprrrooovvveeemmmeeennnttt))) fffrrrooommm cccooollluuummmnnnsss AAA,,, BBB aaannnddd CCC CCCCEEEENNNNSSSSUUUUSSSS TTTTRRRRAAAACCCCTTTT ((((iiiinnnn nnnnuuuummmmeeeerrrriiiiccccaaaallll sssseeeeqqqquuuueeeennnncccceeee)))) A B CC DDD EEE oooorrrr No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount CCCCOOOOUUUUNNNNTTTTYYYY ((((nnnnaaaammmmeeee oooorrrr nnnnuuuummmmbbbbeeeerrrr)))) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) MRA/PMRA TOTAL Section 2—Loans on property not located in MSAs/PMSAs where institution has home or branch offices I hereby certify to the accuracy of this report. The report includes • does not include • loan data for majority-owned subsidiaries. Signature of Certifying Officer Print Name of Person Completing Form Telephone Number (include Area Code and Extension) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MORTGAGE LOAN DISCLOSURE STATEMENT, FORM HMDA-1 Control number (agency use only) FOR USE BY DEPOSITORY INSTITUTIONS -u Part B—Purchases Report for loans made in 19 Reporting institution Enforcement agency for reporting institution MSA/PMSA number for data reported in Section 1 Address Address Name of MSA/PMSA Section 1—Loans on property located in MSA/PMSA where institution has a home or branch office Loans on 1-to-4 Family Dwellings LLLoooaaannnsss ooonnn MMMuuullltttiiifffaaammmiiilllyyy DDDwwweeelllllliiinnngggsss fffooorrr Home Purchase Loans 555 ooorrr MMMooorrreee FFFaaammmiiillliiieeesss NNNooonnnoooccccccuuupppaaannnttt LLLoooaaannnsss (((hhhooommmeee pppuuurrrccchhhaaassseeesss aaannnddd ooonnn 111---tttooo---444 FFFaaammmiiilllyyy DDDwwweeelllllliiinnngggsss FHA, FmHA, and VA Conventional HHoommee IImmpprroovveemmeenntt LLooaannss hhhooommmeee iiimmmppprrrooovvveeemmmeeennnttt))) fffrrrooommm cccooollluuummmnnnsss AAA,,, BBB aaannnddd CCC CCCCEEEENNNNSSSSUUUUSSSS TTTTRRRRAAAACCCCTTTT ((((iiiinnnn nnnnuuuummmmeeeerrrriiiiccccaaaallll sssseeeeqqqquuuueeeennnncccceeee)))) A B CC DDD EEE oooorrrr No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount CCCCOOOOUUUUNNNNTTTTYYYY ((((nnnnaaaammmmeeee oooorrrr nnnnuuuummmmbbbbeeeerrrr)))) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) MSA/PMSA TOTAL Section 2—Loans on property not located in MSAs/PMSAs where institution has home or branch offices I hereby certify to the accuracy of this report. The report includes • does not include Q loan data for majority-owned subsidiaries. Signature of Certifying Officer Print Name of Person Completing Form Telephone Number (include Area Code and Extension) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

670 Federal Reserve Bulletin • October 1988 D. When and Where Statement is Due 2. loans made or purchased in a fiduciary capacity (for example, by your trust department); 1. You must send two copies of your disclosure 3. loans on unimproved land; statement to the office specified by your federal super- 4. refinancing of a loan that you originated, if the visory agency no later than March 31 following the refinancing involves no increase in the outstanding calendar year for which the loan data are compiled. principal, aside from closing costs and unpaid finance 2. The completed disclosure statement must be signed charges; by an officer of your institution (for both Part A and 5. construction loans and other temporary financing; Part B, on the final page of each) certifying to the 6. purchase of an interest in a pool of mortgage loans accuracy of the data and indicating whether the state- such as mortgage participation certificates; or ment includes data of a majority-owned subsidiary. 7. purchases solely of the right to service loans. (See paragraph 3 of section A above.) 3. You also must make your disclosure statement G. Geographic Itemization (breakdown of loan available no later than March 31 for inspection by the data for each MSA or PMSA by census tract or public at your home office and, if you have branch county and of loan data in the outside-MSA/ offices in other MS As, at one branch office in each of PMSA category). these MS As. E. Data to Be Shown 1. MSAIPMSA. You must compile loan data geographically for each MSA or PMSA in which you have a 1. Originations and purchases. Show the data on home home or branch office. (See item 6 below for treatment purchase and home improvement loans that you orig- of loans on property outside MSAs/PMSAs). Start a inated or purchased during the calendar year covered new page for each MSA or PMSA, if you itemize data by the disclosure statement. Report the data on loan for more than one MSA/PMSA. You must use the originations on Part A of the form and the data on loan MSA/PMSA boundaries (defined by the U.S. Office of purchases on Part B of the form even if the loans were Management and Budget) that were in effect on Janusubsequently sold. If you have no loans to report in ary 1 of the calendar year for which the loan data are one of the two parts, enter "none" in the column compiled. provided for census tract numbers and enter zeros in 2. Census tract or county. For loans on property that Columns A through E; this helps to show that no part is located within one of these MS As or PMSAs, of an institution's report has been lost. itemize the data by the census tract in which the 2. Number and total dollar amount. Show the number property is located, except that you must itemize the of loans and the total dollar amount of loans for each data by county instead of census tract when the category on the statement. For home purchase loans property: that you originate, "total dollar amount" means the a. is located in an area that is not divided into census original principal amount of the loan. For home pur- tracts on the U. S. Census Bureau's census tract chase loans that you purchase, "total dollar amount" outline maps (see item 3 below); or means the unpaid principal balance of the loan at time b. is located in a county with a population of 30,000 of purchase. For home improvement loans (both orig- or less. inations and purchases), you may include unpaid fi- To determine population, use the Census Bureau's nance charges in the "total dollar amount" if that is PC80-1-A population series even if the population has how you record such loans on your books. increased above 30,000 since 1980. 3. Rounding. Round all dollar amounts to the nearest 3. Census tract maps. To determine census tract thousand ($500 should be rounded up), and show in numbers, consult the U.S. Census Bureau's census terms of thousands. tract outline maps. You may use the maps of the appropriate MSAs/PMSAs in the Census Bureau's F. Data to Be Excluded PHC80-2 series for the 1980 census, or use equivalent census data from the Census Bureau (such as GBF/ Do not report the following types of loans: DIME files) or from a private publisher. Use the maps 1. loans that, although secured by real estate, are made in the 1980 series even if more current maps are for purposes other than for home purchase or home available. improvement (for example, do not report a loan se- 4. Compilation. Enter the data for all loans made in a cured by residential real property for purposes of given census tract on the same line, listing the number financing education, a vacation, or business opera- and total dollar amount in the appropriate columns (as tions); described below in section H) and listing the census Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 671 tracts in numerical sequence. Do the same for loans 4. At your option, you may include loans that are made made in a given county. for home improvement purposes but that are secured 5. Duplicate census tract numbers. If you have a home by a first lien, if you normally classify first-lien loans as or branch office in the New York, NY PMSA, note purchase loans. that there are duplicate census tract numbers in New York City. When reporting, you must indicate the county (by name or number) in addition to the tract Column C: Home improvement loans on l-to-4 number for these census tracts. family dwellings. 6. Outside-MSA/PMSA. If the loans are for property that is located outside those MS As or PMS As in which 1. Report in Column C only loans that: you have a home or branch office (or outside any MSA a. the borrowers have said are to be used for or PMSA), report the loan data as an aggregate sum in repairing, rehabilitating, or remodeling residential Section 2 of the form. You do not have to itemize these dwellings, and loans by census tract or county. (But you will have to b. are recorded on your books as home improveitemize the data by type of loan, as described in ment loans. section H below.) 2. For home equity lines of credit, you may include in Column C that portion of the line of credit that the H. Type-of-Loan Itemization (Breakdown of borrower indicates will be used for home improveeach geographic grouping into loan catego- ment, at the time the account is opened. Report only in ries—Columns A-E). the year the line is established. 3. Include both secured and unsecured loans. Column A: FHA, FmHA, and VA loans on l-to-4 4. You may include unpaid finance charges in the family dwellings. "total dollar amount" if that is how you record such loans on your books. I. Report in Column A loans made for the purpose of 5. Include any nonoccupant home improvement loans purchasing a residential dwelling for 1 to 4 families if in this column as well as in Column E. the loan is secured by a lien and if it is insured or guaranteed by FHA, FmHA, or VA. Column D: Loans on multifamily dwellings (5 or 2. At your option, you may include loans that are made more families). for home improvement purposes but are secured by a first lien, if you normally classify first-lien loans as 1. Report in Column D loans on dwellings for 5 or purchase loans. more families, including both loans for home purchase 3. Include refinancings if there is an increase in the and loans for home improvement. outstanding principal aside from any increase related 2. Do not report loans on individual condominium or to closing costs or unpaid finance charges, or if you cooperative units in Column D; report such loans in refinance a loan originally made by another lender. Columns A, B, or C. 4. Include any nonoccupant FHA, FmHA, or VA loans in this column as well as in Column E. Column E: Nonoccupant loans on l-to-4 family 5. Do not report any FHA Title I (home improvement) dwellings. loans in Column A; these loans are to be entered in Column C. 1. Report in Column E any home purchase and home improvement loans on l-to-4 family dwellings (listed in Column B: Conventional home purchase loans on Columns A, B, and C) that were made to borrowers l-to-4 family dwellings. who indicated at the time of the loan application that they did not intend to use the property as a principal 1. Report in Column B conventional loans (all loans dwelling. other than FHA, FmHA, and VA loans) made for the 2. In completing Column E of Part B, you may assume purpose of purchasing a residential dwelling for 1 to 4 that a purchased loan does not fall within this "nonocfamilies if the loans are secured by a lien. cupant" category unless your documents contain in- 2. Include refinancings if there is an increase in the formation to the contrary. outstanding principal aside from any increase related 3. Do not complete Column E for loans that you report to closing costs or unpaid finance charges, or if you under Section 2 (Loans on property not located in refinance a loan originally made by another lender. MSAs/PMSAs), in either Part A (Originations) or Part 3. Include any nonoccupant conventional loans in this B (Purchases). (See pages 668 and 669 for form column as well as in Column E. HMDA-1.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OMB No. 7100-0090 Approval expires June 1990. MORTGAGE LOAN DISCLOSURE STATEMENT, FORM HMDA-2 This report is required by law (12 USC 2801-2810 and 12 CFR 203). Control number (agency use only) FOR USE BY: • MORTGAGE BANKING SUBSIDIARIES OF HOLDING COMPANIES • CERTAIN SAVINGS AND LOAN SERVICE CORPORATIONS U -U Part A—Originations Report for loans made in 19 Reporting institution Enforcement agency for reporting institution MSA/PMSA number for data reported in Section Name of MSA/PMSA Name of Parent Company Section 1—Loans on property located in MSA/PMSA where institution has a home or branch office Loans on 1-to-4 Family Dwellings LLLoooaaannnsss ooonnn MMMuuullltttiiifffaaammmiiilllyyy DDDwwweeelllllliiinnngggsss fffooorrr Home Purchase Loans 555 ooorrr MMMooorrreee FFFaaammmiiillliiieeesss NNNooonnnoooccccccuuupppaaannnttt LLLoooaaannnsss (((hhhooommmeee pppuuurrrccchhhaaassseeesss aaannnddd ooonnn MMM000---444 FFFaaammmiiilllyyy DDDwwweeelllllliiinnngggsss FmHA and VA Conventional HHoommee IImmpprroovveemmeenntt LLooaannss hhhooommmeee iiimmmppprrrooovvveeemmmeeennnttt))) fffrrrooommm cccooollluuummmnnnsss AAA,,, BBB aaannnddd CCC CCCCEEEENNNNSSSSUUUUSSSS TTTTRRRRAAAACCCCTTTT ((((iiiinnnn nnnnuuuummmmeeeerrrriiiiccccaaaallll sssseeeeqqqquuuueeeennnncccceeee)))) A B CC DDD EEE oooorrrr No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount CCCCOOOOUUUUNNNNTTTTYYYY ((((nnnnaaaammmmeeee oooorrrr nnnnuuuummmmbbbbeeeerrrr)))) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) MSA/PMSA TOTAI Section 2—Loans on property not located in MSAs/PMSAs where institution has home or branch offices I hereby certify to the accuracy of this report. Signature of Certifying Officer Print Name of Person Completing Form Telephone Number (include Area Code and Extension) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

MORTGAGE LOAN DISCLOSURE STATEMENT, FORM HMDA-2 Control number (agency use only) FOR USE BY: • MORTGAGE BANKING SUBSIDIARIES OF HOLDING COMPANIES •u • CERTAIN SAVINGS AND LOAN SERVICE CORPORATIONS Part B—Purchases Report for loans made in 19 Reporting institution Enforcement agency for reporting institution MSA/PMSA number for data reported in Section 1 Name of MSA/PMSA Name of Parent Company Section 1—Loans on property located in MSA/PMSA where institution has a home or branch office Loans on 1-to-4 Family Dwellings LLLoooaaannnsss ooonnn MMMuuullltttiiifffaaammmiiilllyyy DDDwwweeelllllliiinnngggsss fffooorrr Home Purchase Loans 555 ooorrr MMMooorrreee FFFaaammmiiillliiieeesss NNNooonnnoooccccccuuupppaaannnttt LLLoooaaannnsss (((hhhooommmeee pppuuurrrccchhhaaassseeesss aaannnddd ooonnn 111 ---tttooo---444 FFFaaammmiiilllyyy DDDwwweeelllllliiinnngggsss FmHA and VA Conventional HHoommee IImmpprroovveemmeenntt LLooaannss hhhooommmeee iiimmmppprrrooovvveeemmmeeennnttt))) fffrrrooommm cccooollluuummmnnnsss AAA,,, BBB aaannnddd CCC CCCCEEEENNNNSSSSUUUUSSSS TTTTRRRRAAAACCCCTTTT ((((iiiinnnn nnnnuuuummmmeeeerrrriiiiccccaaaallll sssseeeeqqqquuuueeeennnncccceeee)))) A B CC DDD EEE oooorrrr No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount No. of Total Dollar Amount CCCCOOOOUUUUNNNNTTTTYYYY ((((nnnnaaaammmmeeee oooorrrr nnnnuuuummmmbbbbeeeerrrr)))) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) Loans (thousands) MSA/PMSA TOTAL Section 2—Loans on property not located in MSAs/PMSAs where institution has home or branch offices I hereby certify to the accuracy of this report. Signature of Certifying Officer Print Name of Person Completing Form Telephone Number (include Area Code and Extension) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 Federal Reserve Bulletin • October 1988 "Mortgage Loan Disclosure Statement" B. Who Must Use Other Forms 1. Commercial banks, savings banks, savings and loan Form HMDA-2 associations, building and loan associations, homestead associations (including cooperative banks) and credit unions must use the HMDA-1 form, instead of Public reporting burden for this collection of informathe HMDA-2. tion is estimated to vary from 30 to 100 hours per 2. A service corporation that is majority-owned by a response, with an average of 60 hours per response, single savings and loan association is deemed to be including time to gather and maintain the data needed part of the parent institution, and its loan data will be and to review instructions and complete the informareported on a consolidated basis with the parent's data tion collection. Send comments regarding this burden on the HMDA-1. estimate or any other aspect of this collection of 3. Institutions that have been exempted by the Federal information, including suggestions for reducing the Reserve Board from complying with the federal law burden, to Secretary, Board of Governors of the because they are covered by a similar state law on Federal Reserve System, Washington, D.C. 20551; mortgage loan disclosures must use the disclosure and to the Office of Information and Regulatory Afform required by their state law. fairs, Office of Management and Budget, Washington, D.C. 20503. C. Format 1. You must use the format of the HMDA-2 form, but you are not required to use the form itself. For Instructions to Mortgage Banking Subsidiaries example, you may produce a computer printout of of Holding Companies and to Savings and your disclosure statement instead. But you must give Loan Service Corporations all the identifying information asked for at the top of the form, use the prescribed column headings, provide the signature of a certifying officer, etc. A. Who Must Use This Form 2. If your report on loan originations or purchases consists of more than one page, number the pages and include the name of your institution and the MSA 1. A mortgage banking subsidiary of a bank holding number at the top of each page. Enter the totals for the company, a mortgage banking subsidiary of a savings MSA on the final page; do not give subtotals on earlier and loan holding company, or a savings and loan pages. Report the Section 2 data (Loans on property service corporation that originates or purchases mortnot located in MSAs/PMSAs) on the final page. If your gage loans (other than a service corporation that is report contains itemized data for more than one MSA, majority-owned by a single savings and loan associareport the Section 2 data only once for Part A and once tion) must complete this HMDA-2 form to disclose for Part B — do not repeat the data on the report for loan data for the current calendar year if on the each MSA. preceding December 31 the subsidiary or service corporation: D. When and Where Statement is Due a. had assets of more than $10 million, and b. had a home or branch office in a metropolitan statistical area (MSA) or a primary metropolitan 1. You must send two copies of your disclosure statistical area (PMSA). statement to the office specified by your federal super- Example: If on December 31, 1987, your home office visory agency no later than March 31 following the was in an MSA and your assets exceeded $10 million, calendar year for which the loan data are compiled. you must compile data and complete a disclosure 2. The completed disclosure statement must be signed statement for all home purchase and home improve- by an officer of your institution (for both Part A and ment loans that you originate or purchase during Part B on the final page of each), certifying to the calendar year 1988. accuracy of the data. 2. For purposes of loan disclosure requirements (in- 3. You also must make your disclosure statement cluding geographic itemization under section G available no later than March 31 for inspection by the below), a branch office means any office of your public at your home office and, if you have branch institution (not of an affiliate) that takes applications offices in other MS As, at one branch office in each of from the public. these MS As. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 675 E. Data to Be Shown G. Geographic Itemization (breakdown of loan data for each MSA or PMSA by census tract or county, and aggregation of loan data for the 1. Originations and purchases. Show the data on home outside-MSA/PMSA category). purchase and home improvement loans that you originated or purchased during the calendar year covered 1. MSA/PMSA. You must compile loan data geographby the disclosure statement. Report the data on loan ically for each MSA or PMSA in which you have a originations on Part A of the form and the data on home or branch office. (See item 6 below for treatment purchases on Part B of the form even if the loans were of loans on property outside such MSAs/PMSAs). subsequently sold. If you have no loans to report in Start a new page for each MSA or PMSA if you one of the two parts, enter "none" in the column itemize data for more than one MSA/PMSA. You must provided for census tract numbers and enter zeros in use the MSA/PMSA boundaries (defined by the U.S. Columns A through E; this helps to show that no part Office of Management and Budget) that were in effect of an institution's report has been lost. on January 1 of the calendar year for which the loan 2. Number and total dollar amount. Show both the data are compiled. number of loans and the total dollar amount of loans 2. Census tract or county. For loans on property that for each category on the statement. For home pur- is located within one of these MS As or PMSAs, chase loans that you originate, "total dollar amount" itemize the data by the census tract in which the means the original principal amount of the loan. For property is located, except that you must itemize the home purchase loans that you purchase, "total dollar data by county instead of census tract when the amount" means the unpaid principal balance of the property: loan at time of purchase. For home improvement loans a. is located in an area that is not divided into census (both originations and purchases), you may include tracts on the U.S. Census Bureau's census tract unpaid finance charges in the "total dollar amount" if outline maps (see item 3 below); or that is how you record such loans on your books. b. is located in a county with a population of 30,000 3. Rounding. Round all dollar amounts to the nearest or less. To determine population, use the Census thousand ($500 should be rounded up), and show in Bureau's PC80-1-A population series even if the terms of thousands. population has increased above 30,000 since 1980. 3. Census tract maps. To determine census tract numbers, consult the U.S. Census Bureau's census tract outline maps. You may use the maps of the F. Data to Be Excluded appropriate MSAs/PMSAs in the Census Bureau's PHC80-2 series for the 1980 census, or use equivalent census data from the Census Bureau (such as GBF/ Do not report the following types of loans: DIME files) or from a private publisher. Use the maps 1. loans that, although secured by real estate, are made in the 1980 series even if more current maps are for purposes other than for home purchase or home available. improvement (for example, do not report a loan se- 4. Compilation. Enter the data for all loans made in a cured by residential real property for purposes of given census tract on the same line, listing the number financing education, a vacation, or business opera- and total dollar amount in the appropriate columns (as tions); described below in section H) and listing the census 2. loans made or purchased in a fiduciary capacity ; tracts in numerical sequence. Do the same for loans 3. loans on unimproved land; made in a given county. 4. refinancing of a loan that you originated, if the 5. Duplicate census tract numbers. If you have a home refinancing involves no increase in the outstanding or branch office in the New York, NY PMSA, note principal, aside from closing costs and unpaid finance that there are duplicate census tract numbers in New charges; York City. When reporting, you must indicate the 5. construction loans and other temporary financing; county (by name or number) in addition to the tract 6. purchase of an interest in a pool of mortgage loans number for these census tracts. such as mortgage participation certificates; 6. Outside-MSA/PMSA. If the loans are for property 7. purchases solely of the right to service loans; or that is located outside those MSAs or PMSAs in which 8. FHA home purchase and home improvement loans you have a home or branch office (or outside any MSA (at your option, you may record FHA Loans on form or PMSA), report the loan data as an aggregate sum in HMDA-2A, "Mortgage Loan Statement for Optional Section 2 of the form. You do not have to itemize the Disclosure of FHA Loans"). loans by census tract or county. (But you will have to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 Federal Reserve Bulletin • October 1988 itemize the data by type of loan, as described in b. are recorded on your books as home improvesection H below.) ment loans. 2. For home equity lines of credit, you may include in H. Type-of-Loan Itemization (breakdown of Column C that portion of the line of credit that the each geographic grouping into loan catego- borrower indicates will be used for home improveries—Columns A-E). ment, at the time the account is opened. Report only for the year in which the line is established. 3. Include both secured and unsecured loans. Column A: FmHA and VA loans on l-to-4 family 4. You may include unpaid finance charges in the dwellings. "total dollar amount" if that is how you record such loans on your books. I. Report in Column A loans made for the purpose of 5. Include any nonoccupant home improvement loans purchasing a residential dwelling for 1 to 4 families if in this column as well as in Column E. the loan is secured by a lien and if it is insured or 6. Do not report FHA loans in Column C. At your guaranteed by FmHA or VA. option, you may report FHA loans on form HMDA- 2. At your option, you may include loans that are made 2A, "Mortgage Loan Statement for Optional Disclofor home improvement purposes but are secured by a sure of FHA Loans." first lien, if you normally classify first-lien loans as purchase loans. 3. Include refinancings if there is an increase in the Column D: Loans on multifamily dwellings (5 or outstanding principal aside from any increase related more families). to closing costs or unpaid finance charges, or if you refinance a loan originally made by another lender. 4. Include any nonoccupant loans in this column as 1. Report in Column D all loans on dwellings for 5 or well as in Column E. more families, including both loans for home purchase 5. Do not include FHA loans in Column A. At your and loans for home improvement. option, you may record FHA loans on form HMDA- 2. Do not report loans on individual condominium or 2A, "Mortgage Loan Statement for Optional Disclocooperative units; report such loans in Columns A, B, sure of FHA Loans." or C. 3. Do not report FHA loans in Column D. At your Column B: Conventional home purchase loans on option, you may report FHA loans on form HMDAl-to-4 family dwellings. 2A, "Mortgage Loan Statement for Optional Disclosure of FHA Loans." 1. Report in Column B conventional loans (all loans other than FmHA and VA loans) made for the purpose of purchasing a residential dwelling for 1 to 4 families Column E: Nonoccupant loans on l-to-4 family if the loan is secured by a lien. dwellings. 2. Include refinancings if there is an increase in the outstanding principal aside from any increase related to closing costs or unpaid finance charges, or if you 1. Report in Column E any home purchase and home refinance a loan originally made by another lender. improvement loans on l-to-4 family dwellings (listed in 3. Include any nonoccupant conventional loans in this Columns A, B, and C) that were made to borrowers column as well as in Column E. who indicated at the time of the loan application that 4. At your option, you may include loans that are made they did not intend to use the property as a principal for home improvement purposes but that are secured dwelling. by a first lien, if you normally classify first-lien loans as 2. In completing Column E of Part B, you may assume purchase loans. that a purchased loan does not fall within this "nonoccupant" category unless your documents contain in- Column C: Home improvement loans on l-to-4 formation to the contrary. family dwellings. 3. Do not complete Column E for loans that you report under Section 2 (Loans on property not located in 1. Report in Column C only loans that: MSAs/PMSAs where institution has home or branch a. the borrowers have said are to be used for offices), in either Part A (Originations) or Part B repairing, rehabilitating, or remodeling residential (Purchases). (See pages 672 and 673 for form dwellings, and HMDA-2.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 677 "Mortgage Loan Statement for Optional ings and multifamily dwellings for 5 or more families. Disclosure of FHA Loans" (See page 678 for form HMDA-2 A.) Form HMDA-2A APPENDIX B—FEDERAL SUPERVISORY This collection of information is not required. Mort- AGENCIES gage banking subsidiaries of holding companies and certain savings and loan associations may record their The following list indicates which federal agency is FHA loans on this form if they wish to make that data responsible for enforcing compliance by each class of available to the public. Public reporting burden for this covered institutions. Questions should be directed, collection of information is estimated to vary from 10 and copies of your disclosure statements should be to 50 hours per response, with an average of 20 hours sent, to the office specified below. You may also per response, including time to gather and maintain the obtain posters from these agencies that you can use to data needed and to review instructions and complete inform the public of the availability of your disclosure the information collection. Send comments regarding statement. this burden estimate or any other aspect of this collection of information, including suggestions for reducing National Banks the burden, to Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551; Comptroller of the Currency regional office serving the and to the Office of Information and Regulatory Af- district in which the national bank is located. fairs, Office of Management and Budget, Washington, D.C. 20503. State Member Banks and Mortgage Banking Subsidiaries of Bank Holding Companies Instructions to Mortgage Banking Subsidiaries of Holding Companies and to Certain Savings Federal Reserve Bank serving the district in which the and Loan Service Corporations state member bank or mortgage banking subsidiary is located. A. Who May Use This Form Nonmember Insured Banks (except for Federal If you are the mortgage banking subsidiary of a bank Savings Banks) holding company or of a savings and loan holding company, or if you are a savings and loan service Federal Deposit Insurance Corporation Regional Dicorporation that files the HMDA-2 form, you are rector for the region in which the bank is located. required to exclude data on FHA Title I (home improvement) and FHA Title II (home purchase) loans Savings Institutions Insured by FSLIC, from your form HMDA-2. At your option, however, Mortgage Banking Subsidiaries of Savings and you may record FHA loans on form HMDA-2A and Loan Holding Companies, Savings and Loan make the form available to the public along with your Service Corporations, and Members of the HMDA-2 disclosure statement. FHLB System (except for State Savings Banks insured by FDIC) B. Data to be Shown Federal Home Loan Bank Board Supervisory Agent in 1. For loans that you originate, see the instructions the district in which the institution is located. that are provided for the HMDA-2 form under section G (Geographic Itemization). Report the number and Credit Unions total dollar amount of FHA home purchase loans in Column 1 and FHA home improvement loans in Office of Examination and Insurance Column 2. Include loans oil both l-to-4 family dwell- National Credit Union Administration ings and multifamily dwellings for 5 or more families. 1776 G Street, N.W. 2. For loans that you purchase, see the instructions Washington, D.C. 20456 that are provided for the HMDA-2 form under section G (Geographic Itemization). Report the number and Other Financial Institutions total dollar amount of FliA home purchase loans in Column 3 and FHA home improvement loans in Federal Deposit Insurance Corporation Regional Di- Column 4. Include loans on both l-to-4 family dwell- rector for the region in which the institution is located. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

OMB No. 7100-0090 Approval expires June 1990. MORTGAGE LOAN STATEMENT FOR OPTIONAL DISCLOSURE This report authorized by law (12 USC 2801-2810 and 12 CFR 203). OF FHA LOANS, FORM HMDA-2A FOR USE BY: • MORTGAGE BANKING SUBSIDIARIES OF HOLDING COMPANIES • CERTAIN SAVINGS AND LOAN SERVICE CORPORATIONS Record of FHA loans made in 19 Institution Enforcement agency for this institution MSA/PMSA number for data reported in Section 1 Name of MSA/PMSA Name of Parent Company Section 1—Loans on property located in MSA/PMSA where institution has a home or branch office FHA Loans Originated FHA Loans Purchased Home Purchase Loans Home improvement Loans Home Purchase Loans Home Improvement Loans CCCEEENNNSSSUUUSSS TTTRRRAAACCCTTT (((iiinnn nnnuuummmeeerrriiicccaaalll ssseeeqqquuueeennnccceee))) 1 2 3 4 ooorrr Total Dollar Amount Total Dollar Amount Total Dollar Amount Total Dollar Amount CCCOOOUUUNNNTTTYYY (((nnnaaammmeee ooorrr nnnuuummmbbbeeerrr))) No. of Loans (thousands) No. of Loans (thousands) No. of Loans (thousands) No. of Loans (thousands) MSA/PMSA TDTAI Section 2—Loans on property not located in MSAs/PMSAs where institution has home or branch offices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 679 AMENDMENT TO REGULATION T Collection of Checks), with respect to the laws of Illinois and New York and with respect to section The Board of Governors is amending 12 C.F.R. Part 4-213(5) of the Uniform Commercial Code. 220, its Regulation T. The regulation will permit bro- Effective September 1, 1988, 12 C.F.R. Part 229 is ker-dealers to extend "good faith" loan value on amended as follows: long-term debt securities issued or guaranteed as a general obligation by a foreign sovereign, its prov- 1. The authority citation for Part 229 continues to read inces, cities or states, or a supranational entity if there as follows: is available an explicit or implicit rating of the entity in one of the two highest rating categories by a nationally Authority: Title VI of Pub. L. 100-86, 101 Stat. 552, recognized statistical rating organization. The amend- 635, 12 U.S.C. 4001 et seq. ment will provide equitable treatment for U.S. brokerdealers who, unlike banks and foreign broker-dealers, 2. A new Appendix F is added to read as follows: were previously prohibited from extending purpose credit on these securities. Effective September 15, 1988, the Board amends 12 C.F.R. Part 220 as follows: APPENDIX F—OFFICIAL BOARD INTERPRETATIONS; PREEMPTION DETERMINATIONS UNIFORM COMMERCIAL Part 220—Credit by Brokers and Dealers CODE, SECTION 4-213(5) 1. The authority citation for Part 220 continues to read Section 4-213(5) of the Uniform Commercial Code as follows: ("U.C.C.") provides that money deposited in a bank is available for withdrawal as of right at the opening of Authority: 15 U.S.C. §§ 78c, 78g, 78h, 78q, and 78w. business of the banking day after deposit. Although the language "deposited in a bank" is unclear, argu- 2. Section 220.2 is amended by adding a new paraably it is broader than the language "made in person to graph (r)(4) to read: an employee of the depositary bank", which conditions the next-day availability of cash under Regulation CC (§ 229.10(a)(1)). Under Regulation CC, depos- Section 220.2—Definitions its of cash that are not made in person to an employee of the depositary bank must be made available by the second business day after the banking day of deposit (r) "OTC margin bond" means: (§ 229.10(a)(2)). Therefore, this provision of the U.C.C. may call for the availability of certain cash * * * deposits in a shorter time than provided in Regu- (4) A debt security issued or guaranteed as a general lation CC. obligation by the government of a foreign country, This provision of the U.C.C., however, is subject to its provinces, states, or cities, or a supranational § 4-103(1), which provides, in part, that "the effect of entity, if at the time of the extension of credit one of the provisions of this Article may be varied by agreethe following is rated in one of the two highest rating ment . . . ." (The Regulation CC funds availability categories by a nationally recognized statistical rat- requirements may not be varied by agreement.) ing organization: U.C.C. § 4-213(5) supersedes the Regulation CC pro- (i) the issue, vision in § 229.10(a)(2), but a depositary bank may not (ii) the issuer or guarantor (implicitly), or agree with its customer under § 4-103(1) of the Code to (iii) other outstanding unsecured long-term debt extend availability beyond the time periods provided securities issued or guaranteed by the government in § 229.10(a) of Regulation CC. or entity. ILLINOIS AMENDMENT TO REGULATION CC The Board has been requested, in accordance with The Board of Governors is amending 12 C.F.R. Part § 229.20(d) of Regulation CC (12 C.F.R. Part 229), to 229, its Regulation CC (Availability of Funds and determine whether the Expedited Funds Availability Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 Federal Reserve Bulletin • October 1988 Act and Subpart B, and, in connection therewith, Subpart A, of Regulation CC, preempt provisions of Savings Banks Institutions Illinois law relating to the availability of funds. Section 4-213(5) of the Uniform Commercial Code as adopted Local checks (same city) 3 4 in Illinois (Illinois Revised Statutes Chapter 26, para- In-state checks 4 5 Out-of-state checks 7 9 graph 4-213(5), enacted July 26, 1988) provides that: $100 or less checks—on us checks (in-state); Treasury checks; New York state and local Time periods after which deposits must be available for government checks 2 2 withdrawal shall be determined by the provisions of the Nonproprietary ATMs + 1 + 1 federal Expedited Funds Availability Act (Title VI of the Competitive Equality Banking Act of 1987) and the NOTE: Part 34 requires that funds be available at the start of the regulations promulgated by the Federal Reserve Board business day subsequent to the number of days specified in the regulation. To simplify comparisons of the New York and federal for the implementation of that Act. regulations, the Board has converted the time periods used in Part 34 to the method used in Regulation CC; i.e. the number of business days Section 4-213(5) of the Illinois law does not super- following the day of deposit. sede Regulation CC; and, because this provision of Illinois law does not permit funds to be made available for withdrawal in a longer period of time than required Coverage under the Act and Regulation, it is not preempted by Regulation CC. The New York law and regulation govern the availability of funds deposited into savings and time deposits, as well as to "accounts" as defined in § 229.2(a) of NEW YORK Regulation CC. The federal preemption of state funds availability laws only applies to "accounts" subject to Background Regulation CC, which generally include transaction accounts. Thus, to the extent that the New York law The Board has been requested, in accordance with applies to deposits in time, savings, and other ac- § 229.20(d) of Regulation CC (12 C.F.R. Part 229), to counts (such as accounts in which the account holder determine whether the Expedited Funds Availability is another bank or foreign bank) that are not Act and Subpart B, and, in connection therewith, "accounts" under Regulation CC, the state funds Subpart A, of Regulation CC, preempt the provisions availability law will continue to apply. (Note, howof New York law concerning the availability of funds. ever, that under § 229.19(e) of Regulation CC, Holds This preemption determination specifies those provi- on other funds, the federal availability schedules may sions in the New York funds availability law that apply to savings, time, and other accounts not defined supersede the Act and Regulation CC. (See also the as "accounts" under Regulation CC, in certain cir- Board's preemption determination regarding U.C.C. cumstances.) The New York State Superintendent of § 4-213(5), pertaining to availability of cash deposits, Banks stated, in her comments to the Board, that in paragraph (a), above.) "[t]he Banking Department believes that the Regula- The New York State Banking Department, pursuant tion CC definition of 'account' to the extent it applies to section 14-d of the New York Banking Law, has to transaction accounts preempts the scope of the issued regulations requiring that funds deposited in an accounts as defined in Part 34." account be made available for withdrawal within spec- The New York law and regulation apply to "items" ified time periods, and providing certain exceptions to deposited to accounts. Part 34.2(e) defines "item" as those availability schedules. "a check, negotiable order of withdrawal or money Part 34 of the New York State Banking Depart- order deposited into an account." The Board interment's General Regulations establishes time frames prets the definition of "item" in New York law to be within which commercial banks, trust companies, and consistent with the definition of "check" in Regulabranches of foreign banks ("banks") and savings tion CC (§ 229.2(k)). banks, savings and loan associations, and credit unions ("savings institutions") must make funds de- Availability Schedules posited in customer accounts available for withdrawal. The following provisions of New York law provide for Different schedules apply to deposits in banks and the same or a shorter hold for certain categories of savings institutions. Deposits must be made available checks than is provided under Regulation CC, and for withdrawal not later than the following number of supersede the federal availability requirements. All business days following the business day of deposit: other provisions of the New York law relating to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 681 availability of funds deposited in "accounts" are pre- for withdrawal not later than the start of business on empted by Regulation CC, because they provide for the fourth business day following deposit, if deposited longer availability than is provided for in Regu- in a bank (Part 34.3(a)(2)), or the fifth business day lation CC. following deposit, if deposited in a savings institution Temporary Schedule. The New York regulation (Part 34.3(b)(2)). These time periods are shorter than requires that items payable by a local bank or savings the seventh business day availability required for institution (i.e., one that is located in the same city, nonlocal checks under § 229.11(c) of Regulatown, or village, and which uses the same clearing tion CC, although they are not necessarily shorter than facility, as the depositary bank) be made available for the schedules for nonlocal checks set forth in withdrawal not later than the start of business on the § 229.11(c)(2) and Appendix B-l of Regulation CC. third business day following deposit, if deposited in a Thus, these state schedules supersede the federal bank (Part 34.2(a)(1)). The New York Superintendent schedule to the extent that they apply to an item of Banking has interpreted "clearing facility" to in- payable by a New York bank or savings institution clude both check clearinghouse associations and Fed- that is defined as a nonlocal check under Regulaeral Reserve check processing facilities. (See Decem- tion CC and the applicable state schedule is less than ber 21, 1983, letter from Vincent Tese, New York the applicable schedule specified in § 229.11(c) and State Superintendent of Banks, regarding adoption of Appendix B-l. Part 34.) Regulation CC (§ 229.11(b)) also requires that Parts 34.3(a)(8) and (b)(8) provide that for any item the proceeds of these check deposits be made avail- deposited at a shared or nonproprietary electronic able for withdrawal not later than the start of business facility, the depositary bank may, at its option, add on the third business day following deposit. Regulaone business day to the relevant state schedule for tion CC, however, includes a time period adjustment the item being deposited. In the following cases, the which permits a depositary bank to delay the time it state schedules applicable to deposits at nonpromust make funds available by cash or similar means, prietary ATMs to accounts in banks supersede the for deposits of local checks cleared outside a check federal schedule, which provides for seventh day clearinghouse arrangement (§ 229.11(b)(2)). New York availability: law supersedes this time period adjustment for with- Treasury checks, state and local government drawal by cash and similar means for local checks (as checks, on us in-state checks—Third business day defined by New York law) deposited in banks and Local checks—Fourth business day cleared through the Federal Reserve. In-state checks—Fifth business day The state schedules applicable to deposits at nonpro- Temporary availability schedule, New York prietary ATMs to accounts in savings institutions supersede the federal schedule for the following items: Savings Banks Institutions Treasury checks, state and local government checks, on us in-state checks—Third business day 3333311111.....33333 3333322222 Local checks—Fifth business day In-state nonlocal checks 44444 5555544444 Out-of-state nonlocal In-state checks—Sixth business day 7777733333'''''44444 rrrrr Permanent Schedule. Under Part 34.3(a)(2), in-state Deposits at nonproprietary ATMs Treasury checks, state and local checks must be made available for withdrawal by the government checks, on us (in-state) 33333 33333 start of business on the fourth business day following Local checks (same city) 44444 55555 deposit, if deposited in a bank, and the fifth business 55555 66666 All other deposits 77777 77777 day following deposit, if deposited in a savings institution. The New York schedule for banks supersedes 1. Withdrawals by cash or similar means for local checks cleared the Regulation CC requirement in the permanent outside the same check clearing facility (i.e., outside a check clearinghouse or the Federal Reserve) may be delayed in accordance with schedule that nonlocal checks be made available for § 229.11(c). withdrawal by the start of the fifth business day 2. Withdrawals by cash or similar means for local checks cleared following deposit, with a time period adjustment for outside a check clearinghouse may be delayed in accordance with § 229.11(c). withdrawals by cash or similar means, to the extent 3. In order to extend the hold beyond the availability schedule, a that the in-state checks are defined as nonlocal under state exception as well as a federal exception must be applicable. In no Regulation CC, and the Regulation CC schedule for case can the hold be extended beyond that permitted under Regulation CC. nonlocal checks is not shortened under § 229.12(c)(2) 4. Schedule is subject to reductions for certain nonlocal checks. and Appendix B-2 of Regulation CC. In addition, the See Appendix B-l of Regulation CC. New York schedule for savings institutions supersedes The New York regulation requires items payable by the Regulation CC time period adjustment in the an in-state bank or savings institution to be available permanent schedule for withdrawal by cash or similar Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

682 Federal Reserve Bulletin • October 1988 means, to the extent that the in-state checks are effect for those provisions of New York law that defined as nonlocal under Regulation CC, and the supersede Regulation CC; however, a depositary bank Regulation CC schedule for nonlocal checks is not could not agree with its customer to extend availability shortened under § 229.12(c)(2) and Appendix B-2. beyond the times permitted under Regulation CC. The following charts show the relationship between Business Day I Banking Day. New York law requires the New York law that supersedes Regulation CC and availability within a specified number of "business the temporary and permanent availability schedules in days" following the "business day" of deposit. "Bus- Regulation CC. Sections 229.10(b) and (c) of Regula- iness day" is defined as any day excluding Saturdays, tion CC preempt the New York law and thus are not Sundays, and legal holidays (Part 34.2(c)). Legal holaffected by it. iday is not further defined in the regulation. The New York definition of business day is preempted by the Permanent Availability Schedule, New York Regulation CC definitions of "business day" and "banking day". Savings Banks Institutions Part 34.2(c) also provides that "for electronic branches, opening and closing times shall be the hours In-state, nonlocal checks 22 44 ii 22 ,,33 22 5522 11 .. 33 of the closest manned office of the depositary bank." Out-of-state, nonlocal checks 5511 5511 The Commentary to the Regulation CC definition of "banking day" provides that "deposits at an ATM are 1. Withdrawals by cash or similar means may be delayed in considered made at the branch holding the account accordance with § 229.12(d). 2. Schedule is subject to reductions for certain nonlocal checks. into which the deposit is made for purposes of deter- See Appendix B-2 of Regulation CC. mining the day of deposit." The Regulation CC rule to 3. In order to extend the hold beyond the availability schedule, a determine what constitutes a banking day for ATM state exception must be applicable. To extend the hold beyond the applicable federal availability schedule, a federal exception must also deposits preempts the New York provision. be applicable. In no case can the hold be extended beyond that permitted under Regulation CC. Disclosures Exceptions to the Availability Schedules. New York law provides exceptions to the state availability sched- Part 34.5 of New York law requires depositary banks ules for large deposits, new accounts, repeated over- to disclose their funds availability policy to their drafters, doubtful collectibility, foreign items, and customers, and to post their availability schedule in emergency conditions (Part 34.4). In all instances each branch location. The purposes of the disclosures where the federal availability schedule preempts the concerning funds availability appear to be met by the state availability schedule, the state exceptions do not disclosure requirements in Regulation CC. Regulation apply. In such cases, the depositary bank may only CC preempts state disclosure requirements concerning invoke the federal exceptions. For those deposits to funds availability that relate to "accounts". Thus, Part which the state availability schedule applies, however, 34.5 of New York law is preempted by Regulation CC, the depositary bank may invoke a state exception and to the extent that it applies to "accounts", as defined place a hold on the deposit up to the federal availabil- by Regulation CC. The New York disclosure rules ity schedule limit for that type of deposit. Once the would continue to apply to savings, time, and other federal availability schedule limit is reached, the de- accounts not governed by Regulation CC disclosure positary bank may further extend the hold under any requirements. of the federal exceptions that apply to that deposit. Any time a depositary bank invokes an exception to ORDERS ISSUED UNDER BANK HOLDING extend a hold beyond the time periods otherwise COMPANY ACT permitted by law, it must give notice of the extended hold to its customer in accordance with § 229.13(g) of Orders Issued Under Section 3 of the Bank Regulation CC. Holding Company Act Variation by Agreement. Part 34.4(f) provides that the New York regulation does not prohibit a deposi- Banco Bilbao-Vizcaya, S.A. tary bank from agreeing with its customer to make Bilbao, Spain funds available for withdrawal in a longer period of time than prescribed in New York law because of Order Approving Formation of a Bank Holding special circumstances, "provided that such agreement Company is not contained in a preprinted form and is not a usual, regular business practice of the depositary bank." The Banco Bilbao-Vizcaya, S.A., Bilbao, Spain ("BBV"), variation by agreement provision would remain in has applied for the Board's approval pursuant to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 683 section 3(a)(1) of the Bank Holding Company Act ing companies and to be able to serve as a source of ("BHC Act") (12 U.S.C. § 1842(a)(1)), to become a strength to its United States banking operations.5 In bank holding company by acquiring 98.9 percent of the considering applications of foreign banking organizavoting shares of Banco Comercial de Mayaguez, Ma- tions, the Board has noted that foreign banks operate yaguez, Puerto Rico ("Banco Comercial").1 outside the United States in accordance with different Notice of the application, affording interested per- regulatory and supervisory requirements, accounting sons an opportunity to submit comments, has been principles, asset quality standards, and banking pracpublished (53 Federal Register 25,010 (1988)). The tices and traditions, and that these differences have time for filing comments has expired, and the Board made it difficult to compare the capital positions of has considered the applications and all comments domestic and foreign banks. The Board, however, received in light of the factors set forth in section 3(c) recently adopted a proposal to supplement its considof the BHC Act. eration of capital adequacy with a risk-based system BB V will be the result of the proposed consolidation that has been agreed to by the member countries of the under Spanish law of Banco de Vizcaya, S.A., Viz- Basle Committee on Banking Regulations and Supercaya, Spain ("Vizcaya") and Banco de Bilbao, S.A., visory Practices and the other domestic federal bank- Bilbao, Spain. It will become the largest bank in Spain, ing agencies.6 The Board considers the Basle Commitwith total assets of approximately $57.7 billion.2 BBV tee proposal an important step toward a more has applied in connection with this consolidation to consistent and equitable international standard for retain the shares of Banco Comercial currently held by assessing capital adequacy. Until that framework be- Vizcaya. On a pro forma basis, BBV would have 3,216 comes effective, however, the Board will continue to branches in Spain, and operate 26 branches and 12 evaluate applications involving foreign banking orgarepresentative offices worldwide, including a branch in nizations on a case-by-case basis consistent with its New York and agencies in Miami and San Francisco. prior precedent. BBV has elected New York as its home state under In this case, the Board notes that the primary capital the International Banking Act of 1978.3 The acquisi- ratio of BBV, after making adjustments to reflect tion of Banco Comercial raises no issue under the differences in banking and accounting practices, is Douglas Amendment because Puerto Rico is not con- slightly below the minimum capital guidelines for sidered to be a state for purposes of that statute. United States multinational bank holding companies. Banco Comercial is the seventh largest commercial The Board notes, however, that BBV's application banking organization in Puerto Rico, controlling de- represents a request to retain ownership of shares posits of $307 million, representing 2.7 percent of the already held by Vizcaya and a reduction in the prestotal deposits in commercial banks in Puerto Rico.4 ence in the United States of these organizations in Based upon the facts in the record, including the fact connection with the consolidation of two foreign orgathat the two consolidating organizations, Vizcaya and nizations. The transaction will not result in a diminu- Bilbao, do not compete in any of the same banking tion of the consolidated organization's capital. Moremarkets in the United States, the Board concludes that over, BBV will be in compliance with the capital and the proposed transaction will not have any adverse other financial requirements of Spanish banking orgaeffect on competition, or increase the concentration of nizations. The Board also notes that BBV's risk-based resources in any relevant market in the United States. capital ratios exceed the 1990 transitional standards. Section 3(c) of the BHC Act requires in every case The Board has placed considerable emphasis on the that the Board consider the financial resources of the fact that Banco Comercial is strongly capitalized and applicant organization and the bank to be acquired. In small in relation to BBV. The Board expects that BBV accordance with the principles of national treatment will maintain Banco Comercial among the more and competitive equity, the Board has stated that it strongly capitalized banking organizations of compaexpects a foreign bank to meet the same general standards of financial strength as domestic bank hold- 5. Toyo Trust and Banking Co., Ltd., 74 FEDERAL RESERVE BULLETIN 623 (Order dated July 11, 1988);7aryo Kobe Bank, 74 FEDERAL RESERVE BULLETIN 621 (Order dated July 8, 1988); Sumi- 1. Section 2(c) of the BHC Act defines a bank for purposes of the tomo Trust & Banking Co., Ltd., 73 FEDERAL RESERVE BULLETIN 749 Act to include any bank chartered pursuant to the laws of Puerto Rico. (1987); Ljubljanska Banka-Associated Bank, 72 FEDERAL RESERVE 2. Banking data are as of December 31, 1987. BULLETIN 489 (1986); The Mitsubishi Trust and Banking Corporation, 3. See The Bank of Nova Scotia, 61 FEDERAL RESERVE BULLETIN 72 FEDERAL RESERVE BULLETIN 256 (1986); The Industrial Bank of 309 (1975). Vizcaya is a bank holding company within the meaning of Japan, Ltd., 72 FEDERAL RESERVE BULLETIN 71 (1986); The Mitsuthe BHC Act by virtue of its ownership of shares of Banco Comercial bishi Bank, Limited, 70 FEDERAL RESERVE BULLETIN 518 (1984). See and a minority interest in New Mexico Banquest Investors Corpora- also, Policy Statement on Supervision and Regulation of Foreigntion, Santa Fe, New Mexico ("Banquest"). Vizcaya will divest its Based Bank Holding Companies, Federal Reserve Regulatory Service interest in Banquest. 114-835 (1979). 4. Deposit data are as of June 30, 1988. 6. 53 Federal Register 8,549 (1988). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

684 Federal Reserve Bulletin • October 1988 rable size in the United States. In view of these and wide, including agencies in New York and Los other facts of record, the Board finds that financial Angeles and a representative office in Houston.2 considerations are consistent with approval. Bank, a de novo institution, will provide a full range The Board has also determined that considerations of commercial banking services in the Metropolitan relating to managerial factors as well as those relating Los Angeles banking market.3 In view of the de novo to the convenience and needs of the community to be status of Bank and based upon the facts in the record, served are consistent with approval. the Board concludes that the proposed transaction will Based on the foregoing and other facts of record, the have no adverse effect on existing or probable future Board has determined that the application should be, competition, nor will it increase the concentration of and hereby is, approved. The transaction shall not be resources in any relevant market. consummated before the thirtieth calendar day follow- Section 3(c) of the Act requires in every case that ing the effective date of this Order, or later than three the Board consider the financial resources of the months after the effective date of this Order, unless applicant organization and the bank to be acquired. In such period is extended for good cause by the Board or accordance with the principles of national treatment the Federal Reserve Bank of New York, acting pur- and competitive equity, the Board has stated that it suant to delegated authority. expects a foreign bank to meet the same general By order of the Board of Governors, effective Au- standards of financial strength as domestic bank holdgust 31, 1988. ing companies and to be able to serve as a source of strength to its United States banking operations.4 In considering applications of foreign banking organiza- Voting for this action: Vice Chairman Johnson and Governors Seger, Angell, Heller, Kelley, and LaWare. Absent and tions, the Board has noted that foreign banks operate not voting: Chairman Greenspan. outside the United States in accordance with different regulatory and supervisory requirements, accounting JAMES MCAFEE principles, asset quality standards, and banking prac- Associate Secretary of the Board tices and traditions, and that these differences have made it difficult to compare the capital positions of Bank of Seoul domestic and foreign banks. The Board, however, Seoul, Korea recently adopted a proposal to supplement its consideration of capital adequacy with a risk-based system Order Approving Formation of a Bank Holding that has been agreed to by the member countries of the Company Basle Committee on Banking Regulations and Supervisory Practices and the other domestic federal bank- Bank of Seoul, Seoul, Korea ("Applicant"), has ap- ing agencies.5 The Board considers the Basle Commitplied for the Board's approval under section 3(a)(1) of tee proposal an important step toward a more the Bank Holding Company Act of 1956, as amended consistent and equitable international standard for (12 U.S.C. § 1842(a)(1)) ("BHC Act"), to become a assessing capital adequacy. bank holding company by acquiring all of the outstanding voting shares of Seoul Bank of California, Los Angeles, California ("Bank"). Notice of the application, affording an opportunity 2. Applicant had originally selected New York as its home state for interested persons to submit comments, has been under the Board's Regulation K (12 C.F.R. 211.22(b)), but has notified the Board of its intention to change its home state to California given in accordance with section 3(b) of the BHC Act pursuant to the provision of Regulation K permitting a one-time (53 Federal Register 9,143 (1988)). The time for filing change of home state (12 C.F.R. 211.22(c)). In connection with this, comments has expired, and the Board has considered Applicant will cease accepting deposits from United States citizens and residents at its New York office. the application and all comments received in light of 3. The Metropolitan Los Angeles banking market is defined by the the factors set forth in section 3(c) of the BHC Act Los Angeles RMA. (12 U.S.C. § 1842(c)). 4. Toyo Trust and Banking Co., Ltd., 74 FEDERAL RESERVE BULLETIN 623 (Order dated July 11, 1988); Taiyo Kobe Bank, Ltd., 74 Applicant, with total assets of approximately $15.7 FEDERAL RESERVE BULLETIN 621 (Order dated July 8, 1988); Sumibillion, is the largest banking institution in South tomo Trust & Banking Co., Ltd., 11 FEDERAL RESERVE BULLETIN 749 (1987); Ljubljanska Banka-Associated Bank, 72 FEDERAL RESERVE Korea and the 147th largest commercial bank in the BULLETIN 489 (1986); The Mitsubishi Trust and Banking Corporation, world.1 Applicant has 191 offices in Korea and oper- 72 FEDERAL RESERVE BULLETIN 256 (1986); The Industrial Bank of ates 6 branches and 2 representative offices world- Japan, Ltd., 72 FEDERAL RESERVE BULLETIN 71 (1986); The Mitsubishi Bank, Limited, 70 FEDERAL RESERVE BULLETIN 518 (1984). See also, Policy Statement on Supervision and Regulation of Foreign- Based Bank Holding Companies, Federal Reserve Regulatory Service 1. Asset data are as of June 30, 1988. Banking data are as of 14-835 (1979). December 31, 1986. Ranking is as of July 31, 1987. 5. 53 Federal Register 8,549 (1988). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 685 In this case, the Board notes that the primary capital Voting for this action: Vice Chairman Johnson and Goverratio of Applicant is slightly below the minimum nors Angell, Heller, Kelley, and La Ware. Voting against this capital guidelines for United States multinational bank action: Governor Seger. Absent and not voting: Chairman Greenspan. holding companies. However, Applicant's ratios of equity, Tier 1, and Tier 2 capital to risk assets, exceed JAMES MCAFEE the 1990 transitional standards. The Board also notes Associate Secretary of the Board that Bank is being established de novo, will initially be small in relation to Applicant and will be strongly The Bank of Tokyo, Ltd. capitalized. As Bank's size increases, the Board will Tokyo,Japan expect Applicant to maintain Bank among the more strongly capitalized banking organizations of comparable size in the United States. The Board has also Order Approving the Formation of a Bank Holding considered that Applicant has just recently completed Company and the Acquisition of a Bank the first phase of a capital improvement plan that raised $246 million in common equity. Moreover, The Bank of Tokyo, Ltd., Tokyo, Japan ("Ap- Applicant is in compliance with the capital and other plicant"), a bank holding company within the meaning financial requirements of Korean banking organiza- of the Bank Holding Company Act (12 U.S.C. § 1841 tions. In view of these and other facts of record, the et seq.) (the "Act"), has applied for the Board's Board finds that considerations relating to banking approval under section 3(a)(3) of the Act (12 U.S.C. factors are consistent with approval. § 1842(a)(3)) to indirectly acquire 100 percent of the Applicant has a 9.1 percent interest in Korea Asso- voting shares of Union Bank, Los Angeles, California, ciated Securities, Inc., New York, New York, a in connection with the proposed merger of Union company engaged in the securities business in the Bank into Applicant's 77-percent-owned subsidiary United States. While this interest appears to meet the bank, California First Bank, San Francisco, Califorrequirements for the grandfather privileges under sec- nia. In connection with the proposed merger, Califortion 8(c)(1) of the International Banking Act of 1978 nia First Bank has applied for the Board's approval (the "IBA") (12 U.S.C. § 3106(c)(1)), section 8(c)(2) under section 3(a)(1) of the Act (12 U.S.C. of the IBA provides that such grandfather rights shall § 1842(a)(1)) to become a bank holding company for a terminate two years after the date on which the foreign two-day period by acquiring 100 percent of the voting bank becomes a bank holding company.6 Consistent shares of Union Bank. with this provision, Applicant has committed to re- Applicant proposes to acquire Union Bank through duce its interest in Korea Associated Securities, Inc., a series of transactions. First, a subsidiary of Califorto less than 5 percent within two years of consumma- nia First Bank will merge into Standard Chartered tion of the proposed transaction. Holdings, Inc. ("Holdings"), a holding company of The Board has also determined that considerations Union Bank. California First Bank will thereby acrelating to the convenience and needs of the commu- quire, and Applicant will indirectly acquire, 100 pernity to be served are consistent with approval. Based cent of the voting shares of Union Bank. Second, on the foregoing and other facts of record, the Board Holdings will be merged into California First Bank. has determined that consummation of the transaction Third, Union Bancorp, Holdings' subsidiary and would be consistent with the public interest. Accord- Union Bank's immediate holding company, will be ingly, the Board has determined that the application merged into California First Bank. Finally, Union should be, and hereby is, approved. The acquisition of Bank itself will merge into California First Bank. The Bank shall not be consummated before the thirtieth resulting bank will operate under the corporate charter calendar day following the effective date of this Order, of California First Bank and the name "Union Bank." or later than three months after the effective date of The merger of California First Bank's interim subsidthis Order, unless such period is extended for good iary into Holdings, by which Applicant will indirectly cause by the Board or by the Federal Reserve Bank of acquire the voting shares of Union Bank, will take San Francisco, acting pursuant to delegated authority. place after the close of banking hours on a Friday, and By order of the Board of Governors, effective Au- the mergers of Holdings, Union Bancorp, and Union gust 31, 1988. Bank into California First Bank will take place on the following Monday. The Federal Deposit Insurance Corporation approved the merger of Union Bank into California First Bank on July 19, 1988. Section 3(a)(3) of the Act requires Board approval 6. 12 U.S.C. § 3106(c)(2). before a bank holding company may acquire direct or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

686 Federal Reserve Bulletin • October 1988 indirect ownership or control of more than 5 percent of mercial banks in the state. Union Bank is the fifth the voting shares of a bank. Because Applicant will largest commercial bank in the state, with total deposindirectly acquire the shares of Union Bank prior to its of $7,825 billion, representing 3.8 percent of the consummating the merger of Union Bank into Califor- total deposits in commercial banks in the state. Upon nia First Bank, the transaction is literally subject to the consummation of the proposed transaction, the resultprior approval requirements of the Act. While section ant bank's share of total deposits in commercial banks 3(a)(4) of the Act exempts from the Act's prior ap- in the state would be approximately 6.1 percent, and proval requirements the acquisition by a holding com- the resultant bank would be the fifth largest commerpany bank of the assets of another bank, that section cial bank in the state.1 does not by its terms exempt a holding company Applicant, with total consolidated assets equivalent bank's acquisition of the voting shares of another to approximately $183 billion2, ranks as the 22nd bank, as proposed by Applicant. See 12 C.F.R. largest bank in the world. In addition to California § 225.12(d). Accordingly, when a bank holding com- First Bank, Applicant owns one other subsidiary bank pany directly, or indirectly through a subsidiary bank, in the United States, The Bank of Tokyo Trust Comacquires shares of a bank that it previously did not pany, New York, New York. Applicant acquired these control, an application is required, even where a bank subsidiaries prior to the enactment in 1956 of the portion of the overall transaction is subject to review Douglas Amendment's interstate banking requirement under the Bank Merger Act (12 U.S.C. § 1828). See and, therefore, may retain these companies under the Girard Bank v. Board of Governors of the Federal Douglas Amendment and section 5(b) of the Interna- Reserve System, 748 F.2d 838 (3d Cir. 1984). Because tional Banking Act (12 U.S.C. § 3103(b)). California is Applicant will indirectly acquire the shares of Union the principal state of operation of Applicant for pur- Bank prior to consummating the merger of Union poses of the Douglas Amendment and is Applicant's Bank into California First Bank, an application under home state for purposes of the International Banking section 3 of the Act is required under the terms of the Act. Because Union Bank will be located in Appli- Act. cant's principal state of operation for purposes of the The Board has given careful consideration to Appli- Act and home state for purposes of the International cant's suggestion that, in light of the Federal Deposit Banking Act, the Board concludes that the acquisition Insurance Corporation's approval of the merger of of Union Bank by Applicant is consistent with the Union Bank into California First Bank pursuant to the provisions of the Douglas Amendment and section 5 of Bank Merger Act, the Board not object to consumma- the International Banking Act. tion of the proposal without Applicant's filing an Applicant also operates agencies in New York, application under the Act in this case. In this regard, Miami, San Francisco, Los Angeles, and Honolulu; the Board notes that Union Bank, the bank to be branches in Portland and Seattle; and representative acquired, is a major U.S. banking organization. The offices in Chicago, Washington, D.C., Houston, and Board also has taken into account its general oversight Atlanta. In addition, Applicant owns Bank of Tokyo responsibilities for foreign banks in the United States International, U.S.A., an Edge Act corporation headand the fact that the acquiror is a significant foreign quartered in Miami; Tokyo Bancorp International banking organization. These factors raise important (Houston) Inc., an Agreement corporation located in policy and financial considerations under the Act that Houston; and BOT Securities Inc., a wholly owned the Board believes require its consideration. Accord- subsidiary in New York that is engaged primarily in ingly, the Board has determined that Applicant and the delivery and placement of U.S. Treasury bills. California First Bank are required to obtain prior Indirectly through The Bank of Tokyo Trust Comapproval for the proposed acquisition of the voting pany, Applicant also owns 50 percent of Nissei-BOT shares of Union Bank under section 3(a) of the Act. Asset Management Corporation, a New York corpo- Notice of the applications, affording opportunity for ration engaged in investment advisory services. interested persons to submit comments, has been California First Bank competes with Union Bank in given in accordance with section 3(b) of the Act. (53 nine banking markets in California. Consummation of Federal Register 30,871 (1988)). The time for filing the proposal would not have a significant adverse comments has expired, and the Board has considered effect on competition in any of these markets. Five of the applications and all comments received in light of the factors set forth in section 3(c) of the Act (12 U.S.C. § 1842(c)). California First Bank is the sixth largest commercial 1. Statewide data are as of December 31, 1986. bank in California, with deposits of $4,731 billion, 2. Banking data are as of March 31, 1988, and reflect the yen/dollar representing 2.3 percent of the total deposits in com- exchange rate as of that date. Rankings are as of December 31, 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 687 these markets3 would be only moderately concen- The Board carefully analyzes the effect of expansion trated after consummation of the proposal,4 and in all proposals on the preservation or achievement of of these markets the increase in market share is small. strong capital levels and has adopted a policy that The remaining four markets are already considered there should be no significant diminution of financial concentrated under the Guidelines and would remain strength below these levels for the purpose of effecting so upon consummation.5 The increase in concentra- major expansion proposals.10 tion resulting from the proposal, however, as mea- In accordance with the principles of national treatsured by the increase in the HHI in these markets, is ment and competitive equity, the Board has stated that either very small or nonexistent.6 In addition, the it expects foreign banks seeking to establish or acquire presence of thrift institutions in these markets further banking organizations in the United States to meet the mitigates any anticompetitive effects in the markets.7 same general standards of financial strength as domes- Section 3(c) of the Act requires in every case that tic bank holding companies and to be able to serve as the Board consider the financial resources of the a source of strength to their banking operations in the applicant organization and the bank or bank holding United States.11 In considering applications of foreign company to be acquired. The Board has stated and banking organizations, the Board has noted that forcontinues to believe that capital adequacy is an espe- eign banks operate outside the United States in accially important factor in the analysis of bank holding cordance with different regulatory and supervisory company expansion proposals, particularly in transac- requirements, accounting principles, asset quality tions, such as this, where a major acquisition is standards, and banking practices and traditions, and proposed.8 In this regard, the Board has stated that it that these differences have made it difficult to compare expects banking organizations contemplating expan- the capital positions of domestic and foreign banks. sion proposals to maintain strong capital levels sub- The Board, however, recently adopted a proposal to stantially above the minimum levels specified in the supplement its consideration of capital adequacy with Board's Capital Adequacy Guidelines9 without signif- a risk-based system that has been agreed to by the icant reliance on intangibles, particularly goodwill. member countries of the Basle Committee on Banking Regulations and Supervisory Practices and the other domestic federal banking agencies.12 The Japanese 3. These markets are the Bakersfield, Los Angeles, Oceanside- Ministry of Finance in April of this year acted to Vista, San Diego, and Stockton markets, all in California. implement for Japanese banking organizations the 4. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)) ("Guidelines"), a market in risk-based capital framework developed by the Basle which the post-merger Herfindahl-Hirschman Index ("HHI") is over Committee. The Board considers the Basle Committee 1800 is considered highly concentrated. In such markets, the Department of Justice is likely to challenge a merger that produces an proposal an important step toward a more consistent increase in the HHI of more than 50 points. The Department of Justice and equitable international standard for assessing caphas informed the Board that a bank merger or acquisition generally ital adequacy. will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 In this case, the Board notes that the primary capital and the merger increases the HHI by at least 200 points. The Department of Justice has stated that the higher than normal HHI ratio of Applicant meets United States standards after thresholds for screening bank mergers for anticompetitive effects making adjustments to reflect Japanese banking and implicitly recognizes the competitive effect of limited purpose lenders and other non-depository financial entities. 5. These markets are the Fresno, Sacramento, San Bernardino, and San Francisco markets, all in California. 10. Thus, for example, the Board has generally approved the pro- 6. The pre-merger HHI for the Fresno market is 1941 and would posals involving a decline in capital only where the applicants have increase by 7 points upon consummation; the pre-merger HHI for the promptly restored their capital to pre-acquisition levels following Sacramento market is 1998 and would increase by 3 points; the consummation of the proposals and have implemented programs of pre-merger HHI for the San Bernardino market is 2383 and would not capital improvement to raise capital significantly above minimum increase upon consummation; and the pre-merger HHI for the San levels. See, e.g., Citicorp, 72 FEDERAL RESERVE BULLETIN 726 Francisco market is 2227 and would increase by 8 points. (1986); Security Pacific Corporation, 72 FEDERAL RESERVE BULLETIN 7. The Board has previously indicated that thrift institutions have 800 (1986). See also Security Banks of Montana, 71 FEDERAL REbecome, or have the potential to become, major competitors of SERVE BULLETIN 246 (1985). commercial banks. National City Corporation, 70 FEDERAL RESERVE 11. See Toyo Trust and Banking Co., Ltd., 74 FEDERAL RESERVE BULLETIN 743 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE BULLETIN 623 (Order dated July 11, 1988); Taiyo Kobe Bank, 74 BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL FEDERAL RESERVE BULLETIN 621 (Order dated July 8, 1988); Sumi- RESERVE BULLETIN 802 (1983); First Tennessee National Corpora- tomo Trust & Banking Co., Ltd., 73 FEDERAL RESERVE BULLETIN 749 tion, 69 FEDERAL RESERVE BULLETIN 298 (1983). (1987); Ljubljanska Banka-Associated Bank, 72 FEDERAL RESERVE 8. Chemical New York Corporation, 73 FEDERAL RESERVE BULLE- BULLETIN 489 (1986); The Mitsubishi Trust and Banking Corporation, TIN 378 (1987); Citicorp, 72 FEDERAL RESERVE BULLETIN 497 (1986); 72 FEDERAL RESERVE BULLETIN 256 (1986); The Industrial Bank of National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 Japan, Ltd., 72 FEDERAL RESERVE BULLETIN 71 (1986); The Mitsu- (1984); Banks of Mid-America, Inc., 70 FEDERAL RESERVE BULLETIN bishi Bank, Limited, 70 FEDERAL RESERVE BULLETIN 518 (1984). See 460 (1984); Manufacturers Hanover Corporation (CIT), 70 FEDERAL also Policy Statement on Supervision and Regulation of Foreign- RESERVE BULLETIN 452 (1984). Based Holding Companies, Federal Reserve Regulatory Service 9. Capital Adequacy Guidelines, 50 Federal Register 16,057 (1985), 114-835 (1979). 71 FEDERAL RESERVE BULLETIN 445 (1985). 12. 53 Federal Register 8,549 (1988). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

688 Federal Reserve Bulletin • October 1988 accounting practices, including consideration of a por- indicated that there are certain areas in which Califortion of the unrealized appreciation in Applicant's nia First Bank should improve its CRA performance. portfolio of equity securities consistent with the prin- In response, California First Bank has adopted a ciples in the Basle capital framework.13 The Board comprehensive CRA plan, which includes: also has considered several additional factors that - creation of direct deposit checking accounts with mitigate its concern in this case. Applicant has com- no minimum balance requirements or monthly sermitted to maintain the resultant bank of the merger vice charges for low-income individuals; among the more strongly capitalized banking organi- - expected increased funding for California First zations of comparable size in the United States. The Bank's contributions program and expanded use of Board notes further that Applicant is in compliance the program to support low-income housing and with the capital and other financial requirements of small business development; Japanese banking organizations. In addition, the - intensified efforts to provide bilingual banking Board has considered as favorable factors that, in services in such languages as Chinese, Korean, anticipation of implementation of the Basle Committee Tagalog, and Vietnamese, with an emphasis on risk-based capital framework and this proposed trans- providing services in Spanish; and action, Applicant has increased its equity capital by - the establishment of a formal community outreach approximately $940 million through the issuance of program to maintain dialogue with community orgacommon stock on April 30, 1988, and the retention of nizations in minority, low- and moderate-income earnings through Applicant's most recent fiscal year. areas. The Board also notes that Applicant's capital improvement program is consistent with meeting the standards Under the plan, California First Bank plans to make in the Basle Committee capital framework for 1990 and $84 million available in housing-related and small 1992. business loans in minority and low-income communi- In this regard, California First Bank has indicated ties during 1988 to 1990, consistent with safe and that it will fund the $750 million purchase price of sound banking practices. Union Bank through the issuance by California First Based on the foregoing and all the facts of record, Bank of new common shares, the assumption or the Board concludes that convenience and needs conreplacement by California First Bank of outstanding siderations are consistent with approval. Union Bancorp preferred stock and subordinated cap- California First Bank engages, through several joint ital notes, and from internally generated funds. As ventures, in real estate investment and development noted above, subsequent to the execution of the letter activities authorized by state law. In addition, Union of intent with respect to the proposed transaction, Bank owns minority interests in two joint ventures Applicant raised approximately $745 million of new engaged in certain other activities authorized under common equity, which is substantially in excess of the state law. These investments represent more than 5 cash amount of Applicant's proposed investment in percent of the outstanding voting shares of the joint connection with the transaction. Accordingly, con- ventures and involve the conduct of activities that are summation of the proposal will not result in any not permissible under section 4 of the Act.15 The diminution of Applicant's overall capital position. investments also are not permissible under section Based on a review of all the facts of record, the 225.22(d)(2) of Regulation Y (relating to activities Board concludes that the financial and managerial conducted by nonbank subsidiaries of holding comfactors are consistent with approval of this applica- pany state banks), because the joint ventures are not tion. wholly owned by California First Bank or Union Bank In considering the convenience and needs of the as required under that regulation.16 Accordingly, Apcommunities to be served, the Board has taken into account the records of California First Bank and Union Bank under the Community Reinvestment Act ("CRA"), 12 U.S.C. § 2901 et seq,14 The Board notes 15. Security Pacific Corporation, 72 FEDERAL RESERVE BULLETIN that the Federal Deposit Insurance Corporation has 800 (1986). 16. 12 C.F.R. § 225.22(d)(2). The Board adopted this regulation in 1971 in the absence of evidence that acquisitions by holding company banks were resulting in evasions of the purposes of the Act. Board 13. Capital Adequacy Guidelines, 50 Federal Register 16,057 Press Release dated May 13, 1971, 36 Federal Register 9,292 (May 22, (1985), 71 FEDERAL RESERVE BULLETIN 445 (1985). 1971). The Board, however, stated that it would review the continued 14. The CRA requires the Board, in its evaluation of a bank holding merits of the regulation from time to time in light of experience in company application, to assess the record of an applicant in meeting administering the Act. Id. The Board currently has this regulation the credit needs of the entire community, including the low- and under review and has asked for comment, in connection with the moderate-income neighborhoods, consistent with safe and sound exercise of real estate development powers by holding company operation. banks, as to whether modifications in the regulation are appropriate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 689 plicant has committed to conform these investments to available for U.S. banks under guidelines that have not the requirements of the Act and the Board's regula- yet become effective for U.S. or foreign banking tions and has committed that all future real estate and organizations. other investments by the resultant bank and its sub- In addition, I am concerned that while this applicasidiaries will conform to the Board's regulations, in- tion would permit a large Japanese banking organizacluding section 225.22(d)(2) of Regulation Y. In addi- tion to acquire a bank in the U.S., U.S. banking tion, Applicant has made certain commitments limiting organizations are not permitted to make comparable its real estate investments and has agreed to conform acquisitions in Japan. While some progress is being to any change in Board regulations or policy with made in opening Japanese markets to U.S. banking respect to real estate investments. organizations, U.S. banking organizations and other Based on the foregoing and other facts of record and financial institutions, in my opinion, are still far from in reliance on the commitments made by Applicant being afforded the full opportunity to compete in and California First Bank, the Board has determined Japan. that consummation of the transaction would be in the August 31, 1988 public interest and that the application should be, and hereby is, approved.17 The transaction shall not be First Bank System, Inc. Minneapolis, Minnesota consummated before the thirtieth calendar day following the effective date of this Order, or later than three Order Approving Acquisition of a Bank Holding months after the effective date of this Order, unless Company such period is extended for good cause by the Board or the Federal Reserve Bank of San Francisco, pursuant First Bank System, Inc., Minneapolis, Minnesota, a to delegated authority. bank holding company within the meaning of the Bank By order of the Board of Governors, effective Au- Holding Company Act (12 U.S.C. § 1841 et seq.) gust 31, 1988. ("BHC Act"), has applied for the Board's approval under section 3(a)(3) of the BHC Act (12 U.S.C. Voting for this action: Vice Chairman Johnson and Gover- § 1842(a)(3)) to acquire all the voting shares of Cottage nors Angell, Heller, Kelley, and La Ware. Voting against this action: Governor Seger. Absent and not voting: Chairman Grove Bancorporation, Inc., Cottage Grove, Minne- Greenspan. sota ("Cottage Grove"), and thereby indirectly acquire Minnesota National Bank of Cottage Grove, JAMES MCAFEE Cottage Grove, Minnesota ("Bank"). Associate Secretary of the Board Notice of the application, affording interested persons an opportunity to submit comments, has been Dissenting Statement of Governor Seger published (53 Federal Register 13,322 (1988)). The time for filing comments has expired, and the Board I dissent from the Board's action in this case. I believe has considered the application and all comments rethat foreign banking organizations whose primary capceived in light of the factors set forth in section 3(c) of ital, based on U.S. accounting principles, is below the the BHC Act. Board's minimum capital guidelines for U.S. banking First Bank System is the largest commercial banking organizations have an unfair competitive advantage in organization in Minnesota, controlling deposits of the United States over domestic banking organizations. In my view, such foreign organizations should $11.3 billion, representing 29 percent of the total be judged against the same financial and managerial deposits in commercial banking organizations in the standards, including the Board's capital adequacy state.1 Bank is among the smaller banking organizaguidelines, as are applied to domestic banking organi- tions in Minnesota, controlling deposits of $28 million, zations. The majority concludes that Applicant's pri- representing less than one percent of total deposits in mary capital meets United States standards. To do so, commercial banking organizations in the state. Upon however, the majority makes adjustments that are not consummation of this proposal, First Bank System would control $11,328 billion in deposits, representing 29.1 percent of statewide commercial bank deposits. 17. By approving California First Bank's application to acquire the Consummation of this proposal would not increase shares of Union Bank, the Board is not overruling the precedent established by Depositors Trust Company, 64 FEDERAL RESERVE significantly the concentration of banking resources in BULLETIN 213 (1978). In that case the Board held as a matter of policy Minnesota. that it would not approve the application of a commercial bank to operate as a bank holding company. California First Bank, however, is acquiring the shares of Union Bank for a short time only and solely for the purpose of effecting the merger of Union Bank into California 1. Banking data are as of December 31, 1986. Thrift data are as of First Bank. June 30, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

690 Federal Reserve Bulletin • October 1988 First Bank System competes directly with Cottage Board has determined that consummation of this pro- Grove in the Minneapolis-St. Paul banking market.2 posal would not have a significant adverse effect on First Bank System is the largest commercial banking existing competition in the Minneapolis-St. Paul bankorganization in the market, with deposits of $9.3 ing market. billion, representing 40 percent of the market's total The financial and managerial resources and future deposits in commercial banks. Cottage Grove is the prospects of First Bank System, its subsidiary banks, 85th largest commercial banking organization in the Cottage Grove and Bank also are consistent with market, with $28 million in deposits, representing 0.1 approval of the proposal. percent of the market's total commercial bank depos- In considering the convenience and needs of the its. The Minneapolis-St. Paul banking market is con- communities to be served, the Board has taken into sidered highly concentrated with a four firm ratio of account the records of First Bank System and Cottage 73.4 percent. Consummation of this proposal would Grove under the Community Reinvestment Act increase the Herfindahl-Hirschman Index ("HHI") of ("CRA").6 The CRA requires the federal banking the market by 10 points to 2285.3 agencies, in connection with their examination of Although consummation of this proposal would financial institutions, to assess the record of banks eliminate some existing competition in the Minneapo- under their supervision in meeting the credit needs of lis-St. Paul banking market, over 116 other commer- their entire communities, the low- and moderatecial banks would continue to operate in the market. In income neighborhoods, consistent with the safe and addition, the Board has considered the presence of sound operation of the institutions. The CRA also thrift institutions in the banking market in its analysis requires the agencies to take these records into acof this proposal. The Board previously has indicated count when acting on certain applications involving that thrift institutions have become, or have the po- the institutions. tential to become, major competitors of commercial The Board has received comments regarding First banks.4 Thrift institutions already exert a considerable Bank System's CRA performance generally and with competitive influence in the market as providers of particular respect to its subsidiary, the First Bank of NOW accounts and consumer loans, and many are Billings, Billings, Montana ("Billings Bank"). In light engaged in the business of making commercial loans. of these comments, the Board has reviewed the overall Based upon the size, market share and commercial CRA record of First Bank System and of the Billings lending activities of thrift institutions in the market, Bank in particular. The most recent report of examithe Board has concluded that thrift institutions exert a nation of the Billings Bank identified certain areas significant influence upon competition in the Minneapwhere the Billings Bank could improve its perforolis-St. Paul banking market.5 Accordingly, in view of mance, particularly with regard to real estate lending all the facts of record, and in particular in light of the and the bank's efforts to market its credit services to small increase in concentration in the market, the its community. In order to strengthen the Billings Bank's CRA performance, First Bank System has committed to do the following: 2. The Minneapolis-St. Paul banking market is defined as the 1) Establish lending goals and strategies to enhance Minneapolis-St. Paul RMA adjusted to include all of Scott and Carver home mortgage, home improvement, and business Counties and Lanesburgh Township in Le Sueur County. 3. Under the revised Department of Justice Merger Guidelines (49 lending activities in the Billings south side neighbor- Federal Register 26,823 (June 29,1984)), any market in which the post hood. merger HHI is over 1800 is considered highly concentrated, and the Department is likely to challenge a merger that increases the HHI by 2) Establish means of communication by which First more than 50 points unless other factors indicate that the merger will Bank of Billings will inform and address the needs of not substantially lessen competition. The Department of Justice has low- and moderate-income and minority individuals informed the Board that a bank merger or acquisition is not likely to be challenged (in the absence of other factors indicating an anticom- and families in its community. petitive effect) unless the post-merger HHI is at least 1800 and the 3) Provide means by which community groups will merger increases the HHI by at least 200 points. The Justice Departinitiate local participation in the lending program. ment has stated that the higher than normal anti-competitive effects implicitly recognizes the competitive effects of limited purpose lenders and other non-depository financial entities. First Bank System is also in the process of implement- 4. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 ing a corporate CRA policy that will give accountabil- (1984); NCNB Bancorporation, 70 FEDERAL RESERVE BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL RESERVE BUL- ity for CRA compliance at various levels within the LETIN 802 (1983); and First Tennessee National Corporation, 69 First Bank System organization. The policy specifies FEDERAL RESERVE BULLETIN 298 (1983). 5. If 50 percent of the deposits controlled by thrift institutions were mechanisms for ensuring and monitoring CRA compliincluded in the calculation of market concentration, First Bank and ance at Applicant's subsidiary banks, and as well Cottage Grove would control 36.1 percent and 0.1 percent of total market deposits, respectively. The HHI would increase by 8 points to 1898 upon consummation of this proposal. 6. 12 U.S.C. § 2901 etseq. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 691 implements a coordinated compliance strategy among ately pursuant to the provisions of section 3(b) of the the banks. Based upon the Board's review of First Act (12 U.S.C. § 1842(b)) in order to safeguard Bank System's CRA record, and after taking into depositors of Bank. Having considered the record of account First Bank System's commitments to enhance this application in light of the factors contained in the its ability to meet the convenience and needs of all Act, the Secretary of the Board has determined that segments of its community, the Board has determined consummation of the transaction would be in the that the convenience and needs factors are consistent public interest and that the application should be with approval of the application. approved on a basis that would not preclude immedi- Accordingly, based on the foregoing and other facts ate consummation of the proposal. On the basis of of record, the Board has determined that the applica- these considerations, the application is approved. tion should be, and hereby is, approved. The acquisi- The transaction may be consummated immediately tion shall not be consummated before the thirtieth but in no event later than three months after the calendar day following the effective date of this Order, effective date of this Order, unless such period is or later than three months after the effective date of extended for good cause by the Board or by the this Order, unless such period is extended for good Federal Reserve Bank of San Francisco, acting pursucause by the Board or by the Federal Reserve Bank of ant to delegated authority. Minneapolis, acting pursuant to delegated authority. By order of the Secretary of the Board acting By order of the Board of Governors, effective Au- pursuant to delegated authority for the Board of Govgust 31, 1988. ernors, effective August 2, 1988. Voting for this action: Vice Chairman Johnson and Gover- WILLIAM W. WILES nors Seger, Angell, Heller, Kelley, and La Ware. Absent and Secretary of the Board not voting: Chairman Greenspan. First McAllen International Bancshares, Inc. JAMES MCAFEE McAllen, Texas Associate Secretary of the Board Order Approving Formation of a Bank Holding First Interstate Bancorp Company Los Angeles, California First McAllen International Bancshares, Inc., McAl- Order Approving the Acquisition of a Bank len, Texas ("Applicant"), has applied for the Board's approval under section 3(a)(1) of the Bank Holding First Interstate Bancorp, Los Angeles, California, a Company Act, as amended ("BHC Act") (12 U.S.C. bank holding company within the meaning of the Bank § 1842(a)(1)), to become a bank holding company by Holding Company Act, (the "Act"), has applied for acquiring 100 percent of the voting shares of Inter approval under section 3(a)(3) of the Act (12 U.S.C. § National Bank of McAllen, McAllen, Texas 1842(a)(3)) to acquire Alaska Continental Bank, An- ("Bank"). chorage, Alaska. Notice of the application, affording an opportunity Public notice of the application before the Board is for interested persons to submit comments, has been not required by the Act and in view of the emergency given in accordance with section 3(b) of the BHC Act situation the Board has not followed its normal prac- (12 U.S.C. § 1842(b)). The time for filing comments tice of affording interested parties the opportunity to has expired, and the Board has considered the applisubmit comments and views. In view of the emergency cation and all comments received in light of the factors situation involving Bank, the Alaska Director of Bank- set forth in section 3(c) of the BHC Act (12 U.S.C. ing and Securities has recommended immediate action § 1842(c)). by the Board to prevent the probable failure of Bank. Applicant, a non-operating corporation with no sub- In connection with the application, the Secretary of sidiaries, was organized for the purpose of becoming a the Board has taken into consideration the competitive bank holding company by acquiring Bank. Bank holds effects of the proposed transaction and the financial deposits of $33.2 million and ranks 567 out of 1242 and managerial resources and future prospects of the commercial banking organizations in Texas.1 Based on banks concerned, and the convenience and needs of all the facts of record, the Board believes that consumthe communities to be served. On the basis of the information before the Board, the Secretary of the Board finds that an emergency situation exists so as to require that the Secretary of the Board act immedi- 1. All banking data are as of December 31, 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

692 Federal Reserve Bulletin • October 1988 mation of the proposal would have no adverse effect ing Company Act, as amended (12 U.S.C. on the concentration of banking resources in Texas. § 1842(a)(1)) ("BHC Act"), to become a bank holding Further, because this proposal represents the re- company by acquiring all of the voting shares of Fort structuring of Bank's ownership into corporate form, Madison Bank & Trust Company, Fort Madison, Iowa consummation of the proposed transaction would not ("Bank"). result in any adverse effects on existing or potential Notice of the application, affording interested percompetition, nor would it increase the concentration sons an opportunity to submit comments, has been of banking resources in any relevant banking market. given in accordance with section 3(b) of the BHC Act Accordingly, the Board concludes that competitive (53 Federal Register 16,898 (1988)). The time for filing considerations under the BHC Act are consistent with comments has expired, and the Board has considered approval of the application. the application and all comments received in light of The Board has previously indicated that a bank the factors set forth in section 3(c) of the BHC Act. holding company should serve as a source of financial Fort Madison, a non-operating corporation with no and managerial strength to its subsidiary banks.2 Al- subsidiaries,1 has applied to become a bank holding though Applicant will incur some debt in connection company by acquiring Bank, which holds deposits of with this proposal, it appears that Applicant will be $51.1 million.2 Upon consummation of this proposal, able to service its debt. Accordingly, the Board con- Fort Madison will become the 124th largest banking cludes that the financial and managerial resources of organization in Iowa, controlling less than one percent Applicant and Bank are consistent with approval. of total deposits held by commercial banks in the state. Considerations relating to the convenience and needs Bank operates in the Fort Madison-Keokuk banking of the communities to be served are also consistent market,3 where it is the second largest of fourteen with approval. banks and controls 13.2 percent of total deposits in Based on the foregoing and all the facts of record commercial banks in the market. The principals of and the commitments offered in this case, the Board Fort Madison are not affiliated with any other deposhas determined that the application should be, and itory institutions in this market. Consummation of this hereby is, approved. The transaction shall not be proposal would not result in any adverse effects upon consummated before the thirtieth calendar day follow- competition or increase the concentration of banking ing the effective date of this Order, or later than three resources in any relevant area. Accordingly, the Board months after the effective date of this Order, unless concludes that competitive considerations under the such period is extended for good cause by the Board or BHC Act are consistent with approval. the Federal Reserve Bank of Dallas, acting pursuant to The Board previously has indicated that a bank delegated authority. holding company should serve as a source of financial By order of the Board of Governors, effective Au- and managerial strength for its subsidiary bank.4 Algust 12, 1988. though Fort Madison will incur debt in connection with this proposal, it appears that Fort Madison will be Voting for this action: Chairman Greenspan and Governors able to service its debt and serve as a source of Johnson, Seger, Angell, Heller, and Kelley. financial and managerial strength to Bank, particularly in light of certain commitments by Fort Madison's JAMES MCAFEE principals. Accordingly, the Board concludes that the Associate Secretary of the Board financial and managerial resources of Fort Madison and Bank are consistent with approval. Considerations Fort Madison Financial Company relating to the convenience and needs of the commu- Fort Madison, Iowa nities to be served are also consistent with approval. Based on the foregoing and other facts of record, Order Approving Formation of a Bank Holding including the commitments made by Fort Madison and Company Fort Madison Financial Company, Fort Madison, 1. Fort Madison recently sold its ownership in its sole banking Iowa ("Fort Madison"), has applied for the Board's subsidiary, Iowa State Bank, Fort Madison, Iowa, and currently is not a bank holding company. approval pursuant to section 3(a)(1) of the Bank Hold- 2. All banking data are as of June 30, 1987. 3. The Fort Madison-Keokuk banking market is approximated by Lee County, Iowa, excluding Greenbay and Cedar Township; and including the western portion of Hancock County, Illinois. 2. Policy Statement: Responsibility of Bank Holding Companies to 4. Policy Statement: Responsibility of Bank Holding Companies to Act as Sources of Strength to Their Subsidiary Banks, 52 Federal Act as Sources of Strength to their Subsidiary Banks, 52 Federal Register 15,707 (1987); CNB Bancorp, Inc., Danville, Illinois, 73 Register 15,707 (1987); CNB Bancorp, Inc., 73 FEDERAL RESERVE FEDERAL RESERVE BULLETIN 598 (1987). BULLETIN 598 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 693 its principals, the Board has determined that the institutions in this market. Consummation of this application should be, and hereby is, approved. The proposal would not result in any adverse effects upon transaction shall not be consummated before the thir- competition or increase the concentration of banking tieth calendar day following the effective date of this resources in any relevant area. Order, or later than three months after the effective Applicant will acquire Bank with existing funds and date of this Order, unless such period is extended for proposes to make an additional capital injection into good cause by the Board or the Federal Reserve Bank Bank. The capital injection will serve to improve the of Chicago, acting pursuant to delegated authority. condition of Bank and enhance its future prospects. By order of the Board of Governors, effective Au- Based upon the facts of record, including certain gust 15, 1988. commitments made by Applicant's principal, the financial and managerial resources and future prospects of Applicant and Bank are consistent with approval. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Heller. Absent and not voting: Considerations relating to convenience and needs of Governor Kelley. the community to be served also are consistent with approval of the application. JAMES MCAFEE Based on the foregoing and other facts of record, the Associate Secretary of the Board Board has determined that consummation of the transaction would be in the public interest and that the HRH Bancorp, Inc. application should be, and hereby is, approved. The Grant City, Missouri transaction shall not be consummated before the thirtieth calendar day following the effective date of this Order Approving Formation of a Bank Holding Order, or later than three months following the effec- Company tive date of this Order, unless such period is extended for good cause by the Board or by the Federal Reserve HRH Bancorp, Inc., Grant City, Missouri, has applied Bank of Kansas City, acting pursuant to delegated for the Board's approval under section 3(a)(1) of the authority. Bank Holding Company Act (12 U.S.C. § 1842(a)(1)) By order of the Board of Governors, effective Au- ("BHC Act"), to become a bank holding company by gust 31, 1988. acquiring all of the outstanding voting shares of Farmers Bank of Grant City/Sheridan, Grant City, Missouri Voting for this action: Vice Chairman Johnson and Gover- ("Bank"). nors Seger, Angell, Heller, Kelley, and La Ware. Absent and Notice of the application, affording an opportunity not voting: Chairman Greenspan. for interested persons to submit comments, has been given in accordance with section 3(b) of the BHC Act JAMES MCAFEE (53 Federal Register 7,971 (1988)). The time for filing Associate Secretary of the Board comments has expired, and the Board has considered the application and all comments received in light of Moore Financial Group Incorporated the factors set forth in section 3(c) of the BHC Act. Boise, Idaho Applicant is a nonoperating corporation formed to acquire Bank. Bank is among the smaller commercial Order Approving Acquisition of a Bank Holding banking organizations in Missouri, with total deposits Company of $11.9 million, representing less than one percent of the total deposits in commercial banks in the state.1 Moore Financial Group Incorporated, Boise, Idaho Consummation of the transaction would not result in ("Moore"), a bank holding company within the meanan increase in the concentration of banking resources ing of the Bank Holding Company Act (the "Act") in Missouri. (12 U.S.C. § 1841 etseq.), has applied for the Board's Bank operates in the Worth County banking approval pursuant to section 3(a)(3) of the Act market,2 where it is the second largest of two commer- (12 U.S.C. § 1842(a)(3)), to acquire all of the voting cial banks, controlling 33.5 percent of the total depos- shares of Western Bank Holding Company, Bellevue, its in commercial banks in the market. Principals of Washington ("Western"), and thereby indirectly ac- Applicant are not affiliated with any other depository quire First Western Bank, Bellevue, Washington ("Bank"). Notice of the application, affording interested per- 1. Banking data are as of December 31, 1987. sons an opportunity to submit comments, has been 2. The Worth County banking market is approximated by Worth County, Missouri. published (53 Federal Register 23,152 (1988)). The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

694 Federal Reserve Bulletin • October 1988 time for filing comments has expired, and the Board Douglas Amendment. Inasmuch as section 30.04.230 has considered the application and all comments re- of the Washington Revised Code requires approval of ceived in light of the factors set forth in section 3(c) of this transaction by the Washington Supervisor of the Act. Banking, the Board's Order is specifically conditioned Section 3(d) of the Act (12 U.S.C. § 1842(d)), the upon satisfaction of this state regulatory requirement. Douglas Amendment, prohibits the Board from ap- Moore, a multi-bank holding company with three proving an application by a bank holding company to commercial bank subsidiaries, controls total deposits acquire control of any bank located outside of the bank of $2.5 billion and engages in certain nonbanking holding company's home state unless the acquisition is activities. It is the largest commercial banking organi- "specifically authorized by the statute laws of the state zation in Idaho, controlling deposits of $2.2 billion, in which such bank is located, by language to that which represent 37.4 percent of the deposits in comeffect and not merely by implication."1 mercial banking organizations in the state.6 Western, a Moore's home state is Idaho2 and Bank's home state one-bank holding company, controls Bank, which is is Washington. Effective July 1, 1987, the interstate the 42nd largest commercial banking organization in banking statute of Washington authorizes bank hold- Washington and controls deposits of $30.5 million, ing companies located in other states to acquire a representing less than one percent of the deposits in Washington bank subject to certain conditions, includ- commercial banking organizations in the state. ing in pertinent part: The Board has considered the effects of the proposal (1) that the acquiree bank has been in operation for upon competition in the relevant banking markets. three years or more; and Because Moore does not operate a bank in any market (2) that the state in which the acquirer bank holding in which Western operates a banking subsidiary, concompany principally conducts its operations permits summation of the proposal would not eliminate signifa Washington bank or bank holding company to icant existing competition in any relevant banking acquire a bank or bank holding company in that market. The Board has also concluded that consumstate.3 mation of this proposal would not have any significant adverse effect on probable future competition in any Section 30.04.232(c) of that statute also requires that relevant banking market. the Washington Supervisor of Banking adopt a rule The financial and managerial resources and future making a determination whether the laws of a partic- prospects of Moore, its subsidiary banks, Western and ular state meet this reciprocity requirement. Upon a Bank are considered consistent with approval. The review of the record, this transaction fulfills the re- convenience and needs of the communities to be quirements of Washington law. Bank has been in served are also consistent with approval of the applioperation since 1979, and the Washington Supervisor cation. of Banking has adopted a regulation determining that Based on the foregoing and other facts of record, the the interstate banking statute of Idaho meets the Board has determined that the application should be, reciprocity requirement.4 and hereby is, approved, subject to the concurrence of The interstate banking statute of Idaho permits the Washington Supervisor of Banking. This acquisiout-of-state bank holding companies without geo- tion shall not be consummated before the thirtieth graphic limitation to acquire control of the stock or calendar day following the effective date of this Order, assets of Idaho financial institutions, subject to ap- or later than three months after the effective date of proval by the Director of the Department of Finance.5 this Order, unless such period is extended for good Based on the foregoing and other facts of record, the cause by the Board or by the Federal Reserve Bank of Board has determined that the proposed acquisition is San Francisco, acting pursuant to delegated authority. specifically authorized by the statute laws of Washing- By order of the Board of Governors, effective Auton and thus Board approval is not prohibited by the gust 24, 1988. Voting for this action: Chairman Greenspan and Governors Johnson, Seger, and La Ware. Absent and not voting: Gov- 1. A bank holding company's home state is the state in which the ernors Angell, Heller, and Kelley. operations of the bank holding company's subsidiary banks were principally located on July 1, 1966, or on the date on which the company became a bank holding company, whichever is later. JAMES MCAFEE 2. Moore controls bank subsidiaries in Idaho, Oregon and Utah. Associate Secretary of the Board More than 80 percent of Moore's assets are located in Idaho, which is considered Moore's home state. 3. Wash. Rev. Code Ann. § 30.04.230 et seq. (1986). 4. Wash. Admin. Code § 50-48-100 (1988). 5. Idaho Code § 26-2605 (Supp. 1987). 6. All banking data are as of December 31, 1986. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 695 The Union of Arkansas Corporation Orders Issued Under Section 4 of the Bank Little Rock, Arkansas Holding Company Act Bankers Trust New York Company Order Approving Acquisition of a Bank New York, New York Order Approving Application to Engage in The Union of Arkansas Corporation, Little Rock, Combined Investment Advisory and Securities Arkansas, a bank holding company within the meaning Brokerage Activities of the Bank Holding Company Act ("Act") (12 U.S.C. § 1841 et seq.), has applied for approval Bankers Trust New York Company, New York, New under section 3(a)(3) of the Act (12 U.S.C. § York ("BTNY"), a bank holding company within the 1842(a)(3)) to acquire the successor of BancFirst- meaning of the Bank Holding Company Act ("BHC Westlake, N.A., Austin, Texas. Act") (12 U.S.C. § 1841 et seq.), has applied for the Public notice of the application before the Board is Board's approval under section 4(c)(8) of the BHC Act not required by the Act and in view of the emergency and section 225.21(a) of the Board's Regulation Y situation the Board has not followed its normal prac- (12 C.F.R. § 225.21(a)), to expand the authority of its tice of affording interested parties the opportunity to wholly owned subsidiary, BT Brokerage Corporation, submit comments and views. In view of the emergency New York, New York ("BT Brokerage"), to include situation involving Bank, the Comptroller of the Cur- the activities of: providing investment advisory and rency has recommended immediate action by the research services to "Institutional Customers";1 fur- Board to prevent the probable failure of First National nishing general economic advice and forecasting; and Bank. providing an integrated combination of securities bro- In connection with the application, the Secretary of kerage services and investment advisory activities the Board has taken into consideration the competitive ("full-service brokerage activities") to such customers. BT Brokerage presently engages in securities effects of the proposed transaction and the financial brokerage services throughout the United States and managerial resources and future prospects of the pursuant to section 225.25(b)(15) of Regulation Y, banks concerned, and the convenience and needs of 12 C.F.R. § 225.25(b)(15), and now proposes to prothe communities to be served. On the basis of the vide its expanded investment advisory and full-service information before the Board, the Secretary of the brokerage activities to institutional customers in addi- Board finds that an emergency situation exists so as to tion to its previously approved discount brokerage require that the Secretary of the Board act immediactivities. ately pursuant to the provisions of section 3(b) of the Act (12 U.S.C. § 1842(b)) in order to safeguard depos- BTNY has also applied to expand the authority of its itors of Bank. Having considered the record of this wholly owned subsidiary BT Securities, New York, application in light of the factors contained in the Act, New York ("BT Securities"), to include the provision the Secretary of the Board has determined that con- of discount brokerage, investment advice, and full-sersummation of the transaction would be in the public vice brokerage activities to institutional customers interest and that the application should be approved on a basis that would not preclude immediate consummation of the proposal. On the basis of these consider- 1. An Institutional Customer is defined by BTNY to be: ations, the application is approved. (1) a bank (acting in an individual or fiduciary capacity); an insurance company; a registered investment company under the The transaction may be consummated immediately Investment Company Act of 1940; or a corporation, partnership, but in no event later than three months after the trust, proprietorship, organization or institutional entity with assets effective date of this Order unless such period is exceeding $1,000,000 that regularly invests in the types of securities as to which investment advice is given, or that regularly engages in extended for good cause by the Board or by the transactions in securities; Federal Reserve Bank of St. Louis, acting pursuant to (2) an employee benefit plan with assets exceeding $1,000,000, or delegated authority. whose investment decisions are made by a bank, insurance company or investment advisor registered under the Investment Advi- By order of the Secretary of the Board acting sors Act of 1940 (the "Advisors Act"); pursuant to delegated authority for the Board of Gov- (3) a natural person whose individual net worth (or joint net worth ernors, effective August 25, 1988. with his or her spouse) at the time of receipt of the investment advice or brokerage services exceeds $1,000,000; (4) a broker-dealer or option trader registered under the Securities Exchange Act of 1934 (the "Exchange Act"), or other securities, investment or banking professional; or WILLIAM W. WILES (5) an entity all of the equity owners of which are Institutional Secretary of the Board Customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

696 Federal Reserve Bulletin • October 1988 only.2 BT Securities presently engages in underwriting clearly imprinted to avoid confusion with affiliated and dealing in U.S. government and other bank- banks. All customer agreements will specify that the eligible securities under section 225.25(b)(16) of Reg- brokerage subsidiaries are solely responsible for their ulation Y, 12 C.F.R. § 225.25(b)(16), and in certain contractual obligations and commitments. bank-ineligible securities on a limited basis.3 As in earlier proposals approved by the Board, BTNY, with total consolidated assets of $60.0 bil- when both BT Brokerage and BT Securities purchase lion, is the 8th largest commercial banking organiza- securities for a customer from an affiliate, they will tion in the nation. It operates three subsidiary banks, disclose that fact to the customer and obtain the one each in New York, Delaware, and Florida, and customer's consent.7 The brokerage subsidiaries also engages directly and through other subsidiaries in a will fully disclose their dual role as securities broker broad range of nonbanking activities.4 and investment advisor to their institutional Notice of the application, affording interested per- customers.8 In addition, the brokerage subsidiaries sons an opportunity to submit comments on the pro- will exercise discretionary portfolio management for posal, has been duly published (52 Federal Register institutional customers; the subsidiaries do not intend 49,505 (1987)). The time for filing comments has ex- to market such services. pired, and the Board has considered the application and all comments received, in light of the public II. BHC Act Factors interest factors set forth in section 4(c)(8) of the BHC Act. BTNY has proposed several modifications to the conduct of activities approved in NatWest, J.P. Morgan, I. Background and Manufacturers Hanover. For the reasons set forth below, the Board concludes that these modifications The Board has previously determined that a combina- do not alter the underlying rationale of the Board's tion of investment advice and securities execution previous decisions in those cases that the combined services to institutional customers through the same activities are closely related to banking and a proper bank holding company subsidiary is closely related incident thereto.9 and a proper incident to banking under section 4(c)(8) of the BHC Act and does not violate the Glass- A. Definition of Institutional Customer. Steagall Act.5 BTNY has structured its proposal to parallel in most BTNY's definition of institutional customer differs substantive respects the NatWest, J.P. Morgan and from that approved in Manufacturers Hanover only in Manufacturers Hanover proposals. BT Brokerage and that the definition includes investment or banking BT Securities will hold themselves out as separate and professionals. In the Board's view, expansion of the distinct corporations with their own properties, assets, definition of institutional customers to include investliabilities, capital, books and records.6 All of the ment and banking professionals would not materially brokerage subsidiaries' notices, advice, confirmations, increase the likelihood of significant adverse effects. correspondence and other documentation will be BTNY also proposes that the subsidiaries make available their services to employees of BTNY and its subsidiaries who may not be investment or banking 2. Both BT Securities and BT Brokerage will also provide services professionals, in order that BTNY may monitor the to other subsidiaries of BTNY as permissible servicing activities employees' securities activities for compliance with under section 225.22 of Regulation Y, 12 C.F.R. § 225.22. 3. BT Securities has been authorized to underwrite and deal in BTNY's insider trading rules. Because these employmunicipal revenue bonds, commercial paper, mortgage-related secu- ees would be retail, rather than institutional customrities and consumer receivables-related securities, so long as it is not "engaged principally" in such activities in contravention of section 20 of the Glass-Steagall Act. Citicorp, et al., 73 FEDERAL RESERVE BULLETIN 473 (1987) ("Citicorp" or "Section 20 Order"). 7. As further specified below, the disclosure terms and procedures 4. Banking data are as of March 31, 1988. for each subsidiary will vary slightly, inasmuch as BT Brokerage 5. National Westminster Bank PLC, et al., 72 FEDERAL RESERVE conducts purely agency activities. In contrast, BT Securities also may BULLETIN 584 (1986) ('"NatWest") ajfdsub nom., Securities Industry hold a principal's position with respect to the securities it is brokering Ass'n v. Board of Governors, 821 F.2d 810 (D.C. Cir. 1987), cert, or recommending, and therefore is subject to different disclosure denied, 108 S. Ct. 697 (1988); J.P. Morgan and Company, Inc. 73 requirements under applicable securities law. FEDERAL RESERVE BULLETIN 810 ("J.P. Morgan")-, Manufacturers 8. The brokerage subsidiaries will not offer their services to non- Hanover Corporation, 73 FEDERAL RESERVE BULLETIN 930 (1987) institutional customers. ("Manufacturers Hanover"). 9. The Board hereby incorporates by reference its rationale and 6. Any back office services provided by affiliates will be compen- findings in the NatWest and J.P. Morgan Orders regarding the sated for in accordance with the fair market pricing provisions of closely-relatedness of the proposed activities to banking. In addition, section 23B of the Federal Reserve Act, 12 U.S.C. § 371c-l. these modifications do not alter the Board's determination in NatWest Moreover, any research or investment advice purchased from affil- and subsequent cases that the proposed activities are not activities iates also will be compensated for in accordance with section 23B. covered by section 20 of the Glass-Steagall Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 697 ers, BTNY has committed to restrict the services With respect to BT Brokerage, BTNY has commitprovided to such employees in accordance with the ted that in any transaction in which BT Brokerage Board's recent Order approving the combination of purchases securities for an institutional customer from investment advisory and securities brokerage services an affiliate, BT Brokerage also will make prior disclofor retail customers. See Bank of New England Cor- sure of that fact to the customer and obtain the poration, 74 FEDERAL RESERVE BULLETIN 700 (Order customer's consent. This disclosure will occur both at dated August 10, 1988). the beginning of the relationship with the institutional customer and upon confirmation of each order.12 B. BT Securities Taking a Principal's Position. In view of BTNY's provision for extensive disclosures in both brokerage subsidiaries regarding securi- BT Securities may take a principal's position in those ties in which BT Securities may hold a principal's securities it is authorized to underwrite and deal in, position, and the likely financial sophistication of and as well may broker or recommend such securities BTNY's institutional customers, the Board concludes to its institutional customers.10 that the likelihood of adverse effects, such as conflicts With respect to potential conflicts of interest arising of interests, arising from this aspect of the proposal is from such dual activities, BTNY has committed to a substantially mitigated. series of disclosure and other requirements that would tend to mitigate the potential for such adverse effects. C. Cross Marketing of Services. Both BT Securities and BT Brokerage will prominently disclose in writing to each customer before As previously approved in the J.P. Morgan proposal, entering into an agreement to provide any brokerage the brokerage subsidiaries will share customer lists or advisory services that the brokerage subsidiaries with bank affiliates,13 as well as confidential informaare not banks, are separate from any affiliated bank, tion regarding such customers, only with the customand the securities sold, offered, or recommended by ers' consent.14 In addition, BTNY proposes a cross these subsidiaries are not deposits, are not insured by marketing of services whereby the brokerage subsidthe FDIC, are not guaranteed by an affiliated bank, iaries and their affiliates will have an opportunity to and are not otherwise an obligation of an affiliated introduce each other's services to institutional bank (unless such is in fact the case). Moreover, under customers.15 federal securities laws and common law fiduciary BTNY acknowledges that its affiliates cannot enrequirements, both BT Securities and BT Brokerage gage in such activities inconsistent with the cross are required to disclose to an advisory customer any marketing restrictions in the Board's Section 20 Orinterest of an affiliate as underwriter or market maker ders. Moreover, BTNY has proposed no cross marin the securities being purchased or recommended. keting services that would be inconsistent with those With respect to BT Securities, BTNY also has committed that this subsidiary will give prior notice to 12. In addition, in order to ensure that its institutional customers customers as to whether it is acting as principal or would receive unbiased investment advice from BT Brokerage, agent in any particular transaction, as set forth BTNY has committed that research personnel of BT Brokerage will below.11 (The brokerage subsidiaries will not, pursu- not be provided with position reports regarding the securities its affiliates may hold in inventory. As in J.P. Morgan, this condition ant to this proposal, offer securities to the public as should help to ensure that institutional customers of BT Brokerage agent for an issuer). receive unbiased investment advice. For compliance reasons, BT Brokerage may, at the time a research report is being released, disclose to customers its affiliates' positions in securities that are the subject of the research report. If this 10. As noted above, BT Securities may underwrite and deal in U.S. procedure is followed, research personnel may be able to learn about government obligations and general obligations of states and munici- affiliates' positions—after the research report is prepared—by virtue palities and other securities member banks may underwrite and deal, of the public disclosure of those positions. as well as municipal revenue bonds, commercial paper, mortgage- 13. Furthermore, BTNY proposes making available to affiliated related securities and consumer receivables-related securities. banks the investment recommendations and research that it makes 11. In particular, BT Securities intends to inform its brokerage/ available to unaffiliated investor clients or that are non-confidential. advisory customers of its underwriter/dealer role in three ways. First, 14. BTNY has committed that there will be no flow of confidential it will send out a special disclosure statement to each brokerage/ customer information between any affiliated bank and the brokerage advisory customer at the commencement of the customer relationship subsidiaries without customer consent. Additionally, any confidential (or at the time of commencing full-service brokerage) informing the information obtained by a bank affiliate in its commercial banking customer that, as a general matter, BT Securities might be a principal, business will be subject to BTNY's policy against disclosure to or might be engaged in an underwriting, with respect to certain persons other than on a "need to know" basis. securities as to which brokerage/advisory services are being provided. 15. BTNY proposes, as examples, that a bank affiliate could Second, at the time a brokerage order is being taken, the customer will introduce BT Brokerage to a client who is seeking to make open be informed (usually orally) whether BT Securities is acting as agent market purchases of its own stock, or sales personnel at BT Securities or as principal with respect to the security. Third, confirmations sent may sell certain instruments issued by affiliated banks, such as to customers will state whether BT Securities is acting as agent or as certificates of deposit and bankers acceptances of Bankers Trust principal. Company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

698 Federal Reserve Bulletin • October 1988 Orders. In addition, and as noted above, both BT The Board's reluctance in prior Orders18 to autho- Brokerage and BT Securities provide extensive disclo- rize management interlocks between securities affilsure at the commencement of their relationship with iates and domestic banks advances the principle of an institutional customer regarding their separation corporate separateness, where an affiliated bank is from an affiliated bank. Finally, as required by section insulated from the financial fortunes of its securities 23B of the Federal Reserve Act, no affiliated bank may affiliate and from the risk of financial loss in those engage in advertising for these subsidiaries stating or securities in which the securities affiliate may hold a suggesting that an affiliated bank is responsible for the principal's position. In addition, these interlock prohisubsidiaries' obligations, or enter into any agreement bitions serve to prevent common control of the deciso stating or suggesting. In light of these factors, the sion-making process within a bank and its securities Board concludes that the private introduction of insti- affiliate so as not to influence the independent judgtutional customers to services of affiliates (consistent ments of these subsidiaries, which would serve to with the terms of the Section 20 Orders) would not undermine the separation of these entities that the result in significant adverse effects. Board seeks to achieve. These concerns, however, are of a substantially smaller magnitude here, where BT D. Management Interlocks Between BT Brokerage would be engaged in purely agency activi- Brokerage and Affiliated Banks. ties and where no substantial capital is put at risk.19 Therefore, the corporate separateness achieved BTNY commits that no officer of any affiliated bank through entirely separate management structures is will serve as an officer of BT Brokerage, and no not as critical for BT Brokerage as it would be for a director of any affiliated bank will serve as an officer or subsidiary (such as BT Securities) which may take a director of BT Brokerage.16 Furthermore, as man- principal's position in those securities it brokers and dated by the Section 20 Order, BTNY commits that recommends, and thereby subject that subsidiary to there will be no interlocking relationships whatsoever the risk of substantial financial loss. between affiliated banks and BT Securities. BTNY These prohibitions also reduce the potential for proposes, however, that officers of affiliated banks conflicts of interests where one individual is required may serve as directors of BT Brokerage. to advance the differing objectives of a bank and its Under BTNY's present plan, one Executive Vice securities affiliate, as well as to enhance the separation President of Bankers Trust Company would serve as a of such affiliates. Such interlocks could facilitate the director of BT Brokerage. That officer would have flow of information between the affiliates, such that direct line responsibility for certain trust, investment commitments designed to allow bank commercial advisory and brokerage activities in Bankers Trust lending departments to remain impartial extenders of Company, but not for lending activities. He would also credit—uninfluenced by the fortunes or recommendahave a role in strategic planning and other general tions of its securities affiliate—could be rendered inefmanagerial matters relating to Bankers Trust Com- fective and result in unsound banking practices. In pany's private banking business as a whole, which view of the substantial Chinese Walls erected by includes lending, but no responsibility for customer BTNY to prevent such information flows, and the interface or credit decisions in lending activities.17 reduced incentive to engage in such unsound practices where the affiliate has no salesman's stake in the securities it brokers or recommends, the Board believes that the potential for such conflicts is substantially mitigated. 16. In addition, BTNY has committed that there will be no employee interlocks between BT Brokerage and affiliated banks. 17. BTNY asserts that the Executive Vice President in question would be triply removed from the risks that BTNY's "Chinese Wall" is designed to deal with. First, given his lack of responsibility for customer interface or credit decisions for lending activities, he would generally not receive material non-public information arising out of 18. See, e.g., the Board's NatWest and Manufacturers Hanover lending activities. Second, the part of Bankers Trust Company he will Orders cited above; see also Bank of Nova Scotia, 74 FEDERAL be associated with, the private banking group, generally makes loans RESERVE BULLETIN 249 (1988). to individuals and to privately held companies, not to issuers of traded 19. In this regard, the Board notes that the current version of the securities, so even if he were to come into possession of confidential Proxmire Financial Modernization Act of 1988 prohibits officer or information about a borrower, the information would ordinarily not be director interlocks between a "securities affiliate" (engaged in the material information as to any issuer of traded securities. Third, underwriting of bank-ineligible securities) and an affiliated bank, BTNY contends that the Executive Vice President's activities relating subject to a general asset limitation exception inapplicable here. This to BT Brokerage would involve him in broad oversight of the prohibition does not extend to companies engaging solely in agency corporation's activities, not in the preparation or dissemination of activities, such as BT Brokerage. See S. 1886, 100th Cong., 2d Sess., investment advice. 134 Cong. Rec. S3520 (daily ed. March 31, 1988). 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Legal Developments 699 III. Conclusion (3) commercial paper; and (4) consumer-receivable-related securities ("CRRs") Based upon the foregoing and other considerations (collectively "ineligible securities"). reflected in the record, the Board has determined that the public benefits associated with this proposal can Applicant has also applied to engage through reasonably be expected to outweigh its possible ad- Company in underwriting and dealing in securities verse effects and that the balance of the public interest that state member banks are permitted to underwrite factors that the Board is required to consider under and deal in under the Glass-Steagall Act (hereinsection 4(c)(8) of the BHC Act is favorable. Accord- after "bank-eligible securities"), as permitted by secingly, the application is hereby approved, subject to tion 225.25(b)(16) of Regulation Y (12 C.F.R. the commitments made by BTNY and the conditions § 225.25(b)(16)). stated or incorporated by reference in this Order. This Applicant, with consolidated assets of $33.4 billion, determination is further subject to all of the conditions is the 13th largest banking organization in the nation. It set forth in the Board's Regulation Y, including those operates four subsidiary banks and engages directly in sections 225.4(d) and 225.23(b), and to the Board's and through subsidiaries in a broad range of permissiauthority to require modification or termination of the ble nonbanking activities.1 activities of the holding company or any of its subsid- Notice of the application, affording interested periaries as the Board finds necessary to assure compli- sons an opportunity to submit comments on the proance with the provisions and purposes of the BHC Act posal, has been published (53 Federal Register 7,970 and the Board's regulations and orders issued there- (1988)). The Securities Industry Association, a trade under, or to prevent evasion thereof. association of the investment banking industry, op- This transaction shall not be consummated later poses the application for the reasons stated in its than three months after the effective date of this earlier protests to similar applications by Citicorp, J.P. Order, unless such period is extended for good cause Morgan & Co. Incorporated and Bankers Trust New by the Board or by the Federal Reserve Bank of New York Corporation. The California Bankers Associa- York, pursuant to delegated authority. tion commented in favor of the application. By order of the Board of Governors, effective Au- The Board has previously determined that undergust 15, 1988. writing and dealing in bank-eligible securities is closely related to banking under section 4(c)(8) of the BHC Act. 12 C.F.R. § 225.25(b)(16). In addition, the Board Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Heller. Absent and not voting: concludes that Company's performance of this activity Governor Kelley. may reasonably be expected to result in public benefits which would outweigh adverse effects under the JAMES MCAFEE proper incident to banking standard of section 4(c)(8) Associate Secretary of the Board of the BHC Act. Accordingly, Applicant may engage through Company in underwriting and dealing in bank- Bank of Boston Corporation eligible securities to the extent that state member Boston, Massachusetts banks are authorized by section 16 of the Glass- Steagall Act. Order Approving Application to Engage in The Board has also previously determined that the Underwriting and Dealing in Certain Securities to a conduct of the proposed ineligible securities under- Limited Extent writing and dealing activity is consistent with section 20 of the Glass-Steagall Act, provided the underwrit- Bank of Boston Corporation, Boston, Massachusetts, ing subsidiary derives no more than 5 percent of its a bank holding company within the meaning of the total gross revenue from underwriting and dealing in Bank Holding Company Act ("BHC Act"), has ap- the approved securities over any two-year period.2 plied for the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 1. All data are as of March 31, 1988. 225.23 of the Board's Regulation Y (12 C.F.R. 2. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust § 225.23) to engage de novo through BancBoston New York Corporation, 73 FEDERAL RESERVE BULLETIN 473 (1987) ("Citicorp/Morgan/Bankers Trust"), ajfd sub nom., Securities Indus- Securities, Inc., Boston, Massachusetts ("Compatry Association v. Board of Governors of the Federal Reserve System, ny"), on a limited basis in underwriting and dealing in: 839 F.2d 47 (2d Cir. 1988), cert, denied, 108 S. Ct. 697 (1988) ("SIA v. (1) municipal revenue bonds, including certain in- Board"); and Chemical New York Corporation, The Chase Manhattan Corporation, Bankers Trust New York Corporation, Citicorp, dustrial development bonds; Manufacturers Hanover Corporation and Security Pacific Corpora- (2) 1-4 family mortgage-related securities; tion, 73 FEDERAL RESERVE BULLETIN 731 (1987) ("Chemical"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

700 Federal Reserve Bulletin • October 1988 The Board further found that, subject to the prudential by the Board or by the Federal Reserve Bank of framework of limitations established in those cases to Boston, pursuant to delegated authority. address the potential for conflicts of interests, unsound By order of the Board of Governors, effective Aubanking practices or other adverse effects, the pro- gust 8, 1988. posed underwriting and dealing activities were so closely related to banking as to be a proper incident Voting for this action: Chairman Greenspan and Governors thereto within the meaning of section 4(c)(8) of the Johnson, Seger, Angell, Heller, and Kelley. BHC Act. Applicant has committed to conduct its ineligible underwriting and dealing activities subject to JAMES MCAFEE the 5 percent revenue test and the prudential limita- Associate Secretary of the Board tions established by the Board in its Citicorp!Morgan! Bankers Trust and Chemical Orders.3 Bank of New England Corporation Boston, Massachusetts Consummation of the proposal would provide added convenience to Applicant's customers. In addition, the Board expects that the de novo entry of Applicant Order Approving Application to Engage in into the market for these services would increase the Combined Investment Advisory and Securities level of competition among providers of these ser- Brokerage Activities vices. Accordingly, the Board has determined that the performance of the proposed activities by Applicant Bank of New England Corporation, Boston, Massacan reasonably be expected to produce public benefits chusetts ("BNEC"), a bank holding company within which would outweigh adverse effects under the the meaning of the Bank Holding Company Act proper incident to banking standard of section 4(c)(8) ("BHC Act") (12 U.S.C. § 1841 et seq.), has applied of the BHC Act.4 for the Board's approval under section 4(c)(8) of the BHC Act and section 225.21(a) of the Board's Regu- Based on the above, the Board has determined to lation Y, 12 C.F.R. § 225.21(a), to expand the auapprove the underwriting application subject to all of thority of its wholly owned subsidiary, New England the terms and conditions established in the Citicorp! Discount Brokerage, Inc. ("NEDB"), to include the Morgan!Bankers Trust and Chemical Orders, except the market share limitation.5 activities of providing investment advisory and research services1 to "institutional" and retail The Board's determination is subject to all of the customers.2 NEDB presently engages in securities conditions set forth in the Board's Regulation Y, brokerage services throughout the United States purincluding those in sections 225.4(d) and 225.23(b), and suant to section 225.25(b)(15) of Regulation Y, to the Board's authority to require modification or 12 C.F.R. § 225.25(b)(15), and now proposes to comtermination of the activities of a bank holding combine investment advice with its brokerage services pany or any of its subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. 1. NEDB will furnish general economic information and advice, general economic statistical forecasting services and industry studies This transaction shall not be consummated later to its customers. NEDB will also provide these services to its affiliates than three months after the effective date of this as permissible servicing activities under section 225.22 of the Board's Order, unless such period is extended for good cause Regulation Y, 12 C.F.R. § 225.22. 2. An Institutional Customer is defined by Applicant to include: (1) a bank (acting in an individual or fiduciary capacity); a savings and loan association; an insurance company; a registered investment company under the Investment Company Act of 1940; or a 3. Applicant has not proposed a market share limitation. Accord- corporation, partnership, proprietorship, organization or instituingly, and in light of the decision in SIA v. Board, the Board has tional entity that regularly invests in the types of securities as to determined not to require Applicant to comply with a market share which investment advice is given, or that regularly engages in limitation. transactions in securities; 4. Company may also provide services that are necessary incidents (2) an employee benefit plan with assets exceeding $1,000,000 or to these approved activities. The incidental services should be taken whose investment decisions are made by a bank, insurance cominto account in computing the gross revenue limit on the underwriting pany or investment adviser registered under the Investment Advissubsidiary's ineligible underwriting and dealing activities, to the ers Act of 1940; extent such limits apply to particular incidental activities. (3) a natural person whose individual net worth (or joint net worth 5. The industrial development bonds approved in those applications with his or her spouse) at the time of receipt of the investment and for Applicant in this case are only those tax exempt bonds in advice or brokerage services exceeds $1,000,000; which the governmental issuer, or the governmental unit on behalf of (4) a broker-dealer or option trader registered under the Securities which the bonds are issued, is the owner for federal income tax Exchange Act of 1934, or other securities professionals; or purposes of the financed facility (such as airports, mass commuting (5) an entity all of the equity owners of which are Institutional facilities, and water pollution control facilities). Without further Customers. approval from the Board, Company may underwrite or deal in only The term "retail customer" means any customer that does not meet these types of industrial development bonds. the definition of an "institutional customer". 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Legal Developments 701 ("full-service brokerage") for institutional and retail time as an officer, director, or employee of NEDB. customers. NEDB will offer investment advice, as well as provide Applicant, with total consolidated assets of $28.8 securities execution services, to institutional and retail billion, is the 19th largest commercial banking organi- customers on an integrated basis, i.e., NEDB will not zation in the nation.3 It operates ten subsidiary banks, charge an explicit fee for the investment advice and seven in Massachusetts and one each in Connecticut, will receive fees only for transactions executed for Maine, and Rhode Island, and engages directly and customers. Applicant has also made certain additional through other subsidiaries in various nonbanking ac- commitments paralleling those in previous orders tivities. which tend to mitigate potential conflicts of interests.6 Notice of the application, affording interested per- To address the potential for conflicts of interests sons an opportunity to submit comments on the pro- that might arise in the extension of the full-service posal, has been duly published (52 Federal Register brokerage activity to retail customers, Applicant has 44,934 (1987)). The time for filing comments has ex- committed that, before providing any brokerage or pired, and the Board has considered the application advisory services to retail customers, NEDB will and all comments received in light of the public prominently disclose in writing to each of such cusinterest factors set forth in section 4(c)(8) of the BHC tomers that NEDB is not a bank and is separate from Act. any affiliated bank, and that the securities sold, offered, or recommended by NEDB are not deposits, are I. Background not insured by the FDIC, are not guaranteed by an affiliated bank, and are not otherwise an obligation of an affiliated bank, unless such is in fact the case. The Board has previously determined that the com- BNEC has also stated that NEDB will not recombined offering of investment advice with securities mend, purchase, or sell for its customers any security execution services to institutional customers from the being underwritten by an affiliate or in which an same bank holding company subsidiary is closely affiliate makes a market.7 NEDB will provide discrerelated and a proper incident to banking under section tionary investment management for institutional cus- 4(c)(8) of the BHC Act and does not violate the Glasstomers only, under the same terms and conditions as Steagall Act. National Westminster Bank PLC, et al., previously approved by the Board in its J.P. Morgan 72 FEDERAL RESERVE BULLETIN 584 (1986) ("NatWest");4 J.P. Morgan and Company, Inc., 73 Order. Such discretionary investment management services will not be provided for retail customers. FEDERAL RESERVE BULLETIN 810 (1987) ("/.P. Finally, no affiliated bank will engage in advertising for Morgan"); Manufacturers Hanover Corporation, 73 NEDB stating or suggesting that an affiliated bank is FEDERAL RESERVE BULLETIN 930 (1987) ("Manufacresponsible in any way for NEDB's obligations or turers Hanover"). The principal difference between enter into any agreement so stating or suggesting. the NatWest application and this proposal is the provision of such combined services to retail as well as institutional customers. Under this proposal, NEDB will not act as principal or take a position (i.e., bear the financial risk) in any securities it brokers or recommends. In line with NatWest, Applicant has committed that NEDB will hold itself out as a separate and distinct corporation 6. For example, NEDB will not transmit advisory research or with its own properties, assets, liabilities, capital, recommendations to the commercial lending department of any bank books and records.5 To further ensure the separation affiliate. In addition, NEDB will provide notice to its customers that an affiliated bank may be a lender to an issuer of securities. NEDB of NEDB and its bank affiliates and to avoid potential proposes to share customer lists with affiliates, as previously apconflicts of interests, no officer, director, or employee proved in the Board's Manufacturers Hanover Order. In order to guard against potential adverse effects arising from the exchange of of any bank affiliate of NEDB will serve at the same such lists, Applicant has committed that: NEDB will use customer lists for general advertising purposes only, such as mass mailings; customers of its affiliates will not be individually solicited; and that such lists will not indicate whether the customers are depositors or 3. Banking data are as of March 31, 1988. borrowers of affiliated banks or include any information regarding 4. Affirmed sub nom., Securities Industry Ass'n v. Board of Gover- extensions of credit by any affiliate. Moreover, NEDB and its affiliates nors, 821 F.2d 810 (D.C. Cir. 1987), cert, denied, 108 S. Ct. 697 (1988). will not share any other confidential information concerning their 5. All of NEDB's notices, advice, confirmations, correspondence respective customers. and other documentation will clearly indicate NEDB's separate iden- 7. NEDB may, however, recommend, purchase, or sell for its tity in order to avoid any confusion between NEDB and its bank customers corporate stock or commercial paper issued by Applicant affiliates. NEDB also will specify in all customer agreements that or its affiliates to fund their activities in accordance with the appro- NEDB is solely responsible for its contractual obligations and com- priate Board and securities regulations regarding the conduct of such mitments. funding activities. See, e.g., 12 C.F.R. § 250.221. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

702 Federal Reserve Bulletin • October 1988 II. Glass-Steagall Act Considerations to the proposed activity as to require their provision in a specialized form.8 As noted, the Board in NatWest and subsequent cases In the NatWest Order, the Board determined that concluded that the combined offering of investment the provision of combined investment advisory and advisory and securities execution services to institu- securities execution services to institutional customers tional customers by bank holding company subsidiar- by the same subsidiary was closely related to ies did not violate the Glass-Steagall Act and was banking.9 The extension of these services to retail consistent with the intent of that Act. The Board does customers does not alter the functional nature of the not believe that the expansion of this activity to retail activity. In this regard, the Board notes that banks customers alters that determination. The relevant have traditionally provided, in conjunction with affil- Glass-Steagall Act provisions make no distinction iates, both investment advice and securities execution between brokerage activities based on whether the services on behalf of trust customers, in a manner that customer is an institutional or a retail customer. Ac- closely resembles full-service brokerage activities.10 cordingly, for the reasons noted in the Board's Nat- In addition, the Board notes that the Office of the West Order and in light of the current record, the Comptroller of the Currency has authorized national Board concludes that the combination of investment banks and their subsidiaries to offer combined investadvice and execution services proposed here does not ment advisory and securities brokerage services for constitute a "public sale" of securities for purposes of retail customers.11 section 20 or 32 of the Glass-Steagall Act and that the On the basis of these considerations, the Board proposal is consistent with the terms and intent of that concludes that the proposed activity is closely related Act. to banking. III. Bank Holding Company Act Factors B. The Proper Incident to Banking Analysis Section 4(c)(8) imposes a two-step test for determining With respect to the "proper incident" requirement, the permissibility of nonbanking activities for bank section 4(c)(8) of the BHC Act requires the Board to holding companies: consider whether the performance of the activity by an affiliate of a holding company "can reasonably be (1) whether the activity is closely related to banking; expected to produce benefits to the public, such as and greater convenience, increased competition, or gains (2) whether the activity is a "proper incident" to in efficiency that outweigh possible adverse effects, banking —that is, whether the proposed activity such as undue concentration of resources, decreased can reasonably be expected to produce benefits to or unfair competition, conflicts of interests, or unthe public that outweigh possible adverse effects. sound banking practices." 12 U.S.C. § 1843(c)(8). For the reasons set forth below, the Board believes that the expansion of full- An issue raised by this proposal is whether the service brokerage services to retail customers does provision of full-service brokerage activities to retail not alter the underlying rationale of the Board's customers would produce the type of adverse effects decision in NatWest that such combined activities are closely related to banking and a proper incident 8. Nat'l Courier Ass'n v. Board of Governors, 516 F.2d 1229, 1237 thereto, particularly in light of the additional com- (D.C. Cir. 1975). The Board has stated that in acting on a request to mitments made by Applicant regarding the provision engage in a new nonbanking activity, it will consider any other factor of the combined services to retail customers. that an applicant may advance to demonstrate a reasonable or close connection or relationship of the activity to banking. 49 Federal Register 794, 806 (1984); Securities Industry Ass'n v. Board of Governors, 104 S. Ct. 3003, 3005-06 n.5 (1984). A. Closely Related to Banking Analysis 9. The Board preferred two distinct grounds for its determination. The Board concluded that banks generally provide services that are so functionally similar to the proposed activity as to equip bank holding Based on guidelines established in the National Cou- companies particularly well to provide the proposed activity. Inderier case, a particular activity may be found to meet pendently, the Board also found that the combined services were closely related to banking on the basis that the functional nature and the "closely related to banking" test if it is demonscope of two previously approved activities—investment advice and strated that banks generally have in fact provided the discount brokerage—would not be altered when the activities were proposed activity; that banks generally provide ser- combined. 10. The Board notes that NEDB expects to rely primarily on vices that are operationally or functionally so similar research provided by third parties in serving its customers. NEDB to the proposed activity as to equip them particularly expects that much of this research will be available from the trust well to provide the proposed activity; or that banks departments of its affiliated banks. 11. OCC Interpretive Letter No. 386 (June 19, 1987), reprinted in generally provide services that are so integrally related [Current] Fed. Banking L. Rep. (CCH)/85,610, at 77,932. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 703 mentioned in the BHC Act, such as conflicts of inter- tions.12 Moreover, as in prior orders regarding the ests or unsafe or unsound banking practices, or the conduct of these activities, the Board conditions its "subtle hazards" that the Supreme Court has stated approval of the proposal on NEDB's observance of the Glass-Steagall Act was designed to prevent, such the same standards of care and conduct applicable to as damage to the reputation of the bank or the fiduciaries that are imposed on investment advisers "churning" of brokerage accounts, that would out- pursuant to section 225.25(b)(4) of Regulation Y. weigh any public benefits associated with the pro- The Board also notes that Applicant has made posal. commitments which tend to mitigate the potential for conflicts of interests. NEDB will not provide investment advice to its brokerage customers with respect to 1. Public Benefits shares of any investment company for which BNEC or any of its affiliates serves as investment adviser. NEDB will also provide a general disclosure statement NEDB will enter the full-service brokerage market as to its customers, which will point out that an affiliated a de novo competitor, which may be expected to result bank may be a lender to an issuer of securities. As in increased competition. Moreover, the ability to noted above, BNEC has stated that NEDB will not offer and to obtain the combined brokerage and invest- recommend, purchase, or sell for its customers any ment advisory services at the same location would security being underwritten by an affiliate or in which result in increased efficiencies for NEDB as well as it makes a market.13 Finally, NEDB will not have any increased convenience for institutional and retail cus- discretion over the investments of its retail customers, tomers. acting solely to execute the specific buy and sell orders of such customers. The Board does not believe that unsound banking 2. Potential Adverse Effects practices would result from this proposal. The mere expansion of the customer base for full-service brokerage activities should not create any greater likelihood The activity proposed here is substantially similar to of affiliated banks failing to provide impartial credit or that approved by the Board in the Nat West Order. In shoring-up failing securities affiliates. Furthermore, like fashion, Applicant has made a series of commit- the Board believes that Applicant's extensive prements and conditions regarding the conduct of this transaction disclosure commitments regarding the sepactivity that parallel in pertinent part the commitments aration of NEDB from its banking affiliates should be and conditions in the NatWest Order that were de- sufficient to prevent any potential damage to affiliated signed to address the potential for adverse effects banks' reputations arising from the extension of fullarising from the combination of investment advice and service brokerage services to retail customers.14 In securities execution services. Moreover, Applicant sum, the Board believes that its determination in the has made additional commitments, outlined above, NatWest proposal that unsound banking practices would not likely result from these combined activities that are designed to address the potential for conflicts remains unaffected by the inclusion of retail customers of interests and other adverse effects that may result within the ambit of such activities. from the provision of the combined services to retail customers. As discussed below, subject to these commitments and conditions, the Board has determined that the provision of full-service brokerage to both institutional and retail customers is a proper incident 12. 15 U.S.C. § 78k, and 17 C.F.R. § 240.15cl-2(a), respectively. to banking. These provisions have been interpreted as prohibiting churning. See, It does not appear likely that the provision of e.g., First Securities Corp., 40 S.E.C. 589, 591 (1961); Hecht v. Harris, Upham & Co., 283 F. Supp. 417, 435 (N.D. Cal. 1968). full-service brokerage services to institutional and 13. NEDB may, however, recommend, purchase or sell for its retail customers will lead NEDB to churn its accounts customers corporate stock or commercial paper issued by Applicant or recommend unsuitable investments for its clients, or its affiliates to fund their activities in accordance with the appropriate securities regulations and relevant Board interpretations regardsubstantially for the reasons already outlined in the ing the conduct of such funding activities. Board's NatWest, J.P. Morgan, and Manufacturers 14. Applicant has indicated that affiliates may provide certain back office services to NEDB, in accord with section 225.22 of the Board's Hanover Orders. The record reflects the fact that Regulation Y, 12 C.F.R. § 225.22. As these activities would be NEDB, as a registered broker-dealer, must abide by purely administrative in nature, with no identifiable contact with the antifraud provisions of the Securities Exchange NEDB's retail customers, these activities would not increase the likelihood of customer association of NEDB with its bank affiliates. Act of 1934, as well as the general antifraud provisions The provision of similar back office services to a full-service brokerin Securities and Exchange Commission Regula- age subsidiary was approved by the Board in its J.P. Morgan Order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin • October 1988 IV. Conclusion Applicant also proposes to engage through Company in providing portfolio investment advice and Based upon the foregoing and other considerations research to institutional customers and affiliates and in reflected in the record, the Board has determined that furnishing general economic information and financial the public benefits associated with consummation of advice, general economic statistical forecasting serthis proposal can reasonably be expected to outweigh vices, and industry studies to institutional customers. possible adverse effects, and that the balance of the The Board has previously determined that these inpublic interest factors that the Board is required to vestment advisory activities are generally permissible consider under section 4(c)(8) of the BHC Act is for bank holding companies.1 favorable. Accordingly, the application is hereby ap- Company has previously received Board authorizaproved, subject to the commitments made by Appli- tion to underwrite and deal in commercial paper, cant and the conditions (whether explicitly stated or municipal revenue bonds, 1-4 family mortgage-related incorporated by reference) in this Order. This deter- securities and consumer-receivable-related securities mination is further subject to all of the conditions set ("ineligible securities"), as long as Company is not forth in the Board's Regulation Y, including those in principally engaged in such activities.2 sections 225.4(d) and 225.23(b), and to the Board's Applicant, with consolidated assets of $97.6 billion,3 authority to require modification or termination of the is the second largest commercial banking organization activities of the holding company or any of its subsid- in the nation. It operates seven subsidiary banks and iaries as the Board finds necessary to assure compli- engages in a broad range of permissible nonbanking ance with the provisions and purposes of the BHC Act activities in the United States and abroad. and the Board's regulations and orders issued there- Notice of the application, affording interested perunder, or to prevent evasion thereof. sons an opportunity to submit comments on the pro- This proposal shall not be consummated later than posal, has been duly published (53 Federal Register three months after the effective date of this Order, 5,833 (1988)). The time for filing comments has exunless such period is extended for good cause by the pired, and the Board has considered the application Board or by the Federal Reserve Bank of Boston, and all comments received in light of the public pursuant to delegated authority. interest factors set forth in section 4(c)(8) of the BHC By order of the Board of Governors, effective Au- Act. gust 10, 1988. The Board has previously determined that the offering of a combination of investment advice and securities execution services to institutional customers Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, Heller, and Kelley. through the same bank holding company subsidiary is closely related and a proper incident to banking under JAMES MCAFEE section 4(c)(8) of the BHC Act and does not violate the Associate Secretary of the Board Glass-Steagall Act.4 Applicant has applied to conduct its brokerage activities in accordance with the limita- The Chase Manhattan Corporation tions approved by the Board in its prior decisions.5 New York, New York Order Approving Application to Engage in 1. 12 C.F.R. §§ 225.25(b)(4)(iii) and (iv). 2. The Chase Manhattan Corporation, 73 FEDERAL RESERVE BUL- Combined Investment Advisory and Securities LETIN 607 (1987) (underwriting and dealing in municipal revenue Brokerage Activities bonds and mortgage-related securities); Chemical New York Corporation/The Chase Manhattan Corporation, et al., 73 FEDERAL RE- SERVE BULLETIN 731 (1987) (underwriting and dealing in consumer- The Chase Manhattan Corporation, New York, New receivable-related securities); and The Chase Manhattan York, a bank holding company within the meaning of Corporation, 74 FEDERAL RESERVE BULLETIN 391 (1988) (underwriting and dealing in commercial paper). the Bank Holding Company Act of 1956, as amended 3. Banking data are as of March 31, 1988. (12 U.S.C. § 1841 et seq.) ("BHC Act"), has applied 4. National Westminster Bank PLC, et al., 72 FEDERAL RESERVE for the Board's approval under section 4(c)(8) of the BULLETIN 584 (1986) ("NatWest"), aff d sub nom., Securities Industry Ass'n v. Board of Governors, 821 F.2d 810 (D.C. Cir. 1987), cert, BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 denied, 108 S. Ct. 697 (1988); J.P. Morgan and Company, Inc., 73 of the Board's Regulation Y (12 C.F.R. § 225.23) to FEDERAL RESERVE BULLETIN 810 ("J.P. Morgan"); and Manufacexpand the authority of its wholly owned subsidiary, turers Hanover Corporation, 11 FEDERAL RESERVE BULLETIN 930 (1987) ("Manufacturers Hanover"). Chase Manhattan Treasury Corporation, New York, 5. Company will be maintained and will hold itself out to the public New York ("Company"), to include offering invest- as a separate and distinct corporate entity with its own properties, ment advice and securities brokerage activities on a assets, liabilities, books and records. It will conduct its business independently from Applicant and its affiliates, and all of Company's combined basis to institutional customers. notices, advice, confirmations, correspondence and other documen- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 705 Applicant, however, proposes to expand the defini- financially sophisticated and thus unlikely to place tion of institutional customer to include corporations, undue reliance on investment advice received and partnerships, proprietorships, organizations, and insti- better able to detect investment advice motivated by tutional entities with net worths exceeding $1 million.6 self-interest. Applicant's proposal would simply ex- In the Board's view, and for the reasons set forth tend the $1 million net worth test to corporations, below, this modification does not alter the underlying partnerships and other organizations in addition to rationale of the Board's prior decisions that the com- natural persons. The Board believes that such entities bined activities are closely related to banking and a can be expected to possess a degree of financial proper incident thereto. sophistication comparable to that of natural persons Applicant's definition of institutional customer dif- with equivalent net worths and that such entities hence fers from that approved in Manufacturers Hanover would be as unlikely to place undue reliance on only in that the definition includes corporations, part- investment advice received and would be as able to nerships, proprietorships, organizations, and institu- detect investment advice motivated by self-interest. tional entities with net worths exceeding $1 million.7 As previously approved in Bankers Trust New York The Manufacturers Hanover Order approved a $1 Company,8 Company proposes to recommend or bromillion threshold for institutional customers, but lim- ker securities in which it has taken a principal's ited the net worth test to natural persons. Entities position. As proposed in Bankers Trust, Company will other than natural persons qualified as institutional inform its customers upon commencement of a brocustomers only if they fit within certain categories of kerage/advisory relationship that, as a general matter, financial institutions or securities or investment com- Company might be a principal with respect to securipanies. ties as to which brokerage and related advisory ser- In the Manufacturers Hanover Order, the Board's vices are being provided. In addition, whenever Comobjective in limiting the clients of the full service pany, acting as principal, sells a security from its brokerage affiliate to institutional customers was to inventory to a customer, this fact will be disclosed to ensure that the customers of such affiliates would be the customer (usually orally) prior to the execution of the trade and in the written confirmation thereof.9 Based upon the foregoing and other considerations reflected in the record, the Board has determined that tation will clearly indicate the separate identity of Company in order to avoid confusion with Applicant and other affiliates. Any "back the public benefits associated with this proposal can office" services provided by affiliates will be compensated for on an reasonably be expected to outweigh possible adverse arm's-length basis. Moreover, any research or investment advice purchased from affiliates will also be compensated for on an arm's- effects and that the balance of the public interest length basis. factors that the Board is required to consider under As previously approved in J.P. Morgan, Company proposes to section 4(c)(8) of the BHC Act is favorable. Accordexercise discretionary portfolio management for institutional customers only within defined parameters and at the customer's request. ingly, the application is hereby approved, subject to Applicant does not intend to market this service. If securities trans- the commitments made by Applicant and the condiactions on behalf of an institutional customer are executed with an affiliate of Company, Company will disclose that fact to the customer tions stated or incorporated by reference in this Order. and obtain the customer's consent in writing prior to execution of the This determination is further subject to all of the transaction. Any such transactions will only be made on an arm'sconditions set forth in the Board's Regulation Y, length basis consistent with the applicable securities laws, rules, and regulations. including those in sections 225.4(d) and 225.23(b), and 6. An institutional customer is defined by Applicant to be: to the Board's authority to require modification or (1) a bank (acting in an individual or fiduciary capacity); a savings termination of the activities of the holding company or and loan association; an insurance company; a registered investment company under the Investment Company Act of 1940; or a any of its subsidiaries as the Board finds necessary to corporation, partnership, proprietorship, organization or institu- assure compliance with the provisions and purposes of tional entity with net worth exceeding $1,000,000; (2) an employee benefit plan with assets exceeding $1,000,000, or the BHC Act and the Board's regulations and orders whose investment decisions are made by a bank, insurance com- issued thereunder, or to prevent evasion thereof. pany or investment advisor registered under the Investment Advisors Act of 1940; (3) a natural person whose individual net worth (or joint net worth with his or her spouse) at the time of receipt of the investment advice or brokerage services exceeds $1,000,000; (4) a broker-dealer or option trader registered under the Securities 8. 74 FEDERAL RESERVE BULLETIN 695 (Order dated August 15, Exchange Act of 1934, or other securities professional; or 1988) ("Bankers Trust"). (5) an entity all of the equity owners of which are institutional 9. Also as approved in Bankers Trust, Applicant proposes to engage customers. in cross-marketing to the extent that employees of Applicant and its 7. Applicant has substituted the above definition of "institutional affiliates with responsibility for developing customer relations will customer" for the Manufacturers Hanover category of corporations, make customers aware of products offered by other affiliates. Such partnerships, proprietorships, organizations, or institutional entities cross-marketing activities would be subject to the restrictions imposed that regularly invest in the types of securities as to which investment on Applicant by the Board as a condition to its approval of Company's advice is given or that regularly engage in transactions in securities. ineligible securities underwriting and dealing activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Federal Reserve Bulletin • October 1988 This transaction shall not be consummated later underwrite and deal in under section 16 of the Banking than three months after the effective date of this Act of 1933 (the "Glass-Steagall Act") (12 U.S.C. Order, unless such period is extended for good cause §§ 24 Seventh and 335) (hereinafter "bank-eligible by the Board or by the Federal Reserve Bank of New securities"), as permitted by section 225.25(b)(16) of York, pursuant to delegated authority. Regulation Y (12 C.F.R. § 225.25(b)(16)). By order of the Board of Governors, effective Au- Applicant, with consolidated assets of $44.4 billion, gust 15, 1988. is the eleventh largest banking organization in the nation. It operates 14 subsidiary banks and engages in a broad range of permissible nonbanking activities in Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Heller. Absent and not voting: the United States.2 Governor Kelley. Notice of the application, affording interested parties an opportunity to submit comments, has been duly JAMES MCAFEE published (53 Federal Register 2,782 (1988)). The time Associate Secretary of the Board for filing comments has expired, and the Board has considered the application and all comments received First Chicago Corporation in light of the public interest factors set forth in section Chicago, Illinois 4(c)(8) of the BHC Act. The Board has previously determined that under- Order Conditionally Approving Application to writing and dealing in bank-eligible securities is closely Underwrite and Deal in Certain Securities to a related to banking under section 4(c)(8) of the BHC Limited Extent Act. 12 C.F.R. § 225.25(b)(16). In addition, the Board concludes that Company's performance of this First Chicago Corporation, Chicago, Illinois, a bank activity may reasonably be expected to result in public holding company within the meaning of the Bank benefits which would outweigh adverse effects under Holding Company Act (12 U.S.C. § 1841 et seq.) the proper incident to banking standard of section ("BHC Act"), has applied for the Board's approval 4(c)(8) of the BHC Act. Accordingly, Applicant may under section 4(c)(8) of the BHC Act and section engage through Company in underwriting and dealing 225.21(a) of the Board's Regulation Y, 12 C.F.R. in bank-eligible securities to the extent that state § 225.21(a), to engage through a wholly owned subsidmember banks are authorized by section 16 of the iary, First Chicago Capital Markets, Inc., Chicago, Glass-Steagall Act. Illinois ("Company"), in underwriting and dealing in, On April 30, 1987, the Board approved applications on a limited basis, the following securities: by Citicorp, J.P. Morgan and Bankers Trust to under- (1) municipal revenue bonds, including certain inwrite and deal in, through their bank-eligible securities dustrial development bonds; underwriting subsidiaries, 1-4 family mortgage- (2) 1-4 family mortgage-related securities; backed securities, municipal revenue bonds (and cer- (3) commercial paper; and tain industrial development bonds) and (except for (4) consumer-receivable-related securities ("CRRs") Citicorp) commercial paper.3 The Board concluded (collectively "ineligible securities"). that the underwriting subsidiaries would not be "engaged principally" in underwriting or dealing in secu- Applicant proposes to conduct Company's underrities within the meaning of section 20 of the Glasswriting and dealing activity in these securities in the Steagall Act4 provided they derived no more than same manner as previously approved by the Board 5 percent of their total gross revenues from underwritexcept that Company would limit its gross revenues ing and dealing in the approved securities over any from these activities to no more than 10 percent of two-year period and their underwriting and dealing Company's gross revenues.1 However, Applicant also activities did not exceed 5 percent of the market for states that should the Board not approve its request for 10 percent, a 5 percent level would be acceptable. Applicant also proposes to underwrite and deal in securities that state member banks are permitted to 2. Asset and banking data are as of June 30, 1988. Ranking is as of March 31, 1988. 3. CiticorplMorganlBankers Trust, supra. The Board subsequently approved similar applications by a number of other bank holding 1. See, e.g., Citicorp, J.P. Morgan & Co. Incorporated and companies. Bankers Trust New York Corporation, 73 FEDERAL RESERVE BULLE- 4. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits TIN 473 (1987) and Chemical New York Corporation, The Chase the affiliation of a member bank with "any corporation . . . engaged Manhattan Corporation, Bankers Trust New York Corporation, Citi- principally in the issue, flotation, underwriting, public sale, or districorp, Manufacturers Hanover Corporation and Security Pacific Cor- bution at wholesale or retail or through syndicate participation of poration, 73 FEDERAL RESERVE BULLETIN 731 (1987). stocks, bonds, debentures, notes, or other securities . . . . " Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 707 each particular type of security involved.5 The Board Section 20 decisions to assess whether higher levels further found that, subject to the prudential framework should be established.8 of limitations established in those cases to address the For the reasons set forth in the Board's Citicorp/ potential for conflicts of interest, unsound banking Morgan/Bankers Trust and Chemical Orders, the practices or other adverse effects, the proposed under- Board concludes that Applicant's proposal to engage writing and dealing activities were so closely related to through Company in underwriting and dealing in mubanking as to be a proper incident thereto within the nicipal revenue bonds,9 1-4 family mortgage-related meaning of section 4(c)(8) of the BHC Act. On July 14, securities, commercial paper and consumer-receiv- 1987, the Board subsequently decided that underwrit- able-related securities would not result in a violation of ing and dealing in CRRs is so closely related to section 20 of the Glass-Steagall Act and is closely banking as to be a proper incident thereto within the related and a proper incident to banking within the meaning of section 4(c)(8) of the BHC Act.6 meaning of section 4(c)(8) of the BHC Act provided In its original decision, the Board stated that the 5 Applicant limit Company's activities as provided in percent gross revenue threshold represents a conser- those Orders, except with regard to the market share vative approach to measuring the level of ineligible limitation. underwriting and dealing and that it would review this Accordingly, the Board has determined to approve determination after the applicants had gained experi- the underwriting application subject to all of the terms ence in operating their underwriting subsidiaries, to and conditions established in the Citicorp!Morgan! determine whether the 5 percent level should be Bankers Trust and Chemical Orders, except as proincreased up to a maximum level of 10 percent. On vided above. The Board hereby adopts and incorpo- February 8, 1988, the United States Court of Appeals rates herein by reference the reasoning and analysis for the Second Circuit upheld the Board's determina- contained in those Orders. tion regarding the above revenue limitation and, on The Board's approval of this application extends June 13, the U.S. Supreme Court declined to review only to activities conducted within the limitations of that decision.7 The underwriting subsidiaries have section 225.25(b)(16) of the Board's Regulation Y and only recently commenced operations following the the Citicorp!Morgan!Bankers Trust, Chemical and Supreme Court's decision. Bankers Trust Orders as modified above, including the Applicant has requested a 10 percent limitation as a Board's reservation of authority to establish additional basis for making a not-principally-engaged determina- limitations to ensure that the subsidiary's activities are tion, suggesting that a higher threshold of activity consistent with safety and soundness, conflicts of would enhance Company's ability to provide services interests and other relevant considerations under the to its customers, thereby increasing the public benefits BHC Act. Underwriting and dealing in the approved stemming from the proposal. However, the Board has securities in any manner other than as approved in previously stated that it would be desirable to obtain those Orders and above10 is not within the scope of the experience in the operation of securities affiliates at Board's approval and is not authorized for Company. the conservative level of 5 percent for a period of time, and accordingly the Board has determined to maintain the underwriting level at 5 percent. As stated in these cases, however, the Board will review this decision within one year from the effective date of its initial 8. Applicant has also proposed to privately place ineligible securities as agent as an incident to its underwriting and dealing activities. The Board has previously determined that private placement as agent does not fall within the terms of the Glass-Steagall Act if those activities are carried out within the prudential framework of limitations set forth by the Board in Bankers Trust New York Corporation. 73 FEDERAL RESERVE BULLETIN 138 (1987). Applicant has committed to the Bankers Trust limitations. 5. In this regard, the Board notes that the U.S. Court of Appeals for 9. The industrial development bonds approved in those applications the Second Circuit has upheld the Board's determination that the and for Applicant in this case are only those tax exempt bonds in underwriting subsidiaries would not be engaged principally in ineligi- which the governmental issuer, or the governmental unit on behalf of ble securities underwriting and dealing under the above revenue which the bonds are issued, is the owner for federal income tax limitation and the U.S. Supreme Court has declined to review that purposes of the financed facility (such as airports, mass commuting decision. Securities Industry Association v. Board of Governors of the facilities, and water pollution control facilities). Without further Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert, denied, 108 approval from the Board, Company may underwrite or deal in only S. Ct. 697 (1988) ("SM v. Board'). The Supreme Court also let stand these types of industrial development bonds. the lower court's determination that the 5 percent market share 10. Company may also provide services that are necessary incidents limitation was not adequately supported by the facts of record. to these approved activities. The incidental services should be taken Accordingly, the Board has determined not to impose a market share into account in computing the gross revenue and market share limits limitation in this case. on the underwriting subsidiaries' ineligible underwriting and dealing 6. Chemical, supra. activities, to the extent such limits apply to particular incidental 7. SIA V. Board, supra. activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Federal Reserve Bulletin • October 1988 The Board's determination is subject to all of the and thereby engage in discount brokerage activities conditions set forth in the Board's Regulation Y, and credit life reinsurance activities.2 These activities including those in sections 225.4(d) and 225.23(b), and are authorized for bank holding companies pursuant to to the Board's authority to require modification or sections 225.25(b)(15) and 225.25(b)(8)(ii), respectermination of the activities of the holding company or tively, of the Board's Regulation Y. any of its subsidiaries as the Board finds necessary to Notice of the applications, affording interested perassure compliance with the provisions and purposes of sons an opportunity to submit comments, has been the BHC Act and the Board's regulations and orders published (53 Federal Register 15,879 (1988)). The issued thereunder, or to prevent evasion thereof. time for filing comments has expired, and the Board This transaction shall not be consummated later has considered the applications and all comments than three months after the effective date of this received in light of the factors set forth in sections 3(c) Order, unless such period is extended for good cause and 4(c)(8) of the BHC Act. by the Board or by the Federal Reserve Bank of First Chicago, with approximately $15.8 billion in Chicago, pursuant to delegated authority. domestic deposits, is the largest commercial banking By order of the Board of Governors, effective Au- organization in Illinois, controlling approximately 14.7 gust 4, 1988. percent of deposits in commercial banking organizations in Illinois.3 Gary-Wheaton is the 21st largest commercial banking organization in Illinois, with de- Voting for this action: Vice Chairman Johnson and Governors Seger, Angell, and Heller. Absent and not voting: posits of approximately $728.0 million, controlling Chairman Greenspan and Governor Kelley. approximately 0.7 percent of total deposits in commercial banking organizations in Illinois. Upon consum- JAMES MCAFEE mation of this proposal, First Chicago would remain Associate Secretary of the Board the largest commercial banking organization in Illinois, controlling deposits in Illinois of approximately Order Issued Under Sections 3 and 4 of the $16.5 billion, representing approximately 15.4 percent Bank Holding Company Act of total deposits in commercial banking organizations in the state. Consummation of the proposal would not First Chicago Corporation have a significant adverse effect on the concentration Chicago, Illinois of banking resources in Illinois. First Chicago competes directly with Gary-Wheaton Order Approving Acquisition of a Bank Holding in the Chicago and Aurora banking markets. Company In the Chicago banking market,4 First Chicago is the largest of 257 commercial banking organizations, con- First Chicago Corporation, Chicago, Illinois ("First trolling deposits of $15.7 billion, representing 22.5 Chicago"), a bank holding company within the meanpercent of the total deposits in commercial banking ing of the Bank Holding Company Act (12 U.S.C. organizations in the market. Gary-Wheaton is the 16th § 1841 et seq.) ("BHC Act"), has applied for the largest commercial banking organization in the bank- Board's approval under section 3 of the BHC Act ing market, controlling deposits of $626.0 million, (12 U.S.C. § 1842) to acquire Gary-Wheaton Corporarepresenting 0.9 percent of the total deposits in comtion, Wheaton, Illinois ("Gary-Wheaton"), and mercial banking organizations in the market. Upon thereby indirectly to acquire its subsidiary banks: consummation of this proposal, First Chicago would Gary-Wheaton Bank, Wheaton, Illinois; Garycontrol deposits of $16.3 billion, representing 23.4 Wheaton Bank of Batavia, Batavia, Illinois; Garypercent of the total deposits in commercial banks in Wheaton Bank of Downers Grove, Downers Grove, the market. The Chicago banking market is considered Illinois; and Gary-Wheaton Bank of Fox Valley, Auunconcentrated, with a Herfindahl-Hirschman Index rora, Illinois.1 Applicant has also applied for the ("HHI") of 801. Upon consummation, the HHI would Board's approval pursuant to section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) to acquire Gary- Wheaton Stock Brokerage, Inc., Wheaton, Illinois, and G-W Life Insurance Company, Wheaton, Illinois, 2. In connection with these applications, First Chicago Acquisition II Corp., Chicago, Illinois ("Acquisition Corp."), has applied to become a bank holding company through the merger of Gary-Wheaton with and into Acquisition Corp. Acquisition Corp. also has applied to acquire Gary-Wheaton Stock Brokerage, Inc. and G-W Life Insurance 1. Alternatively, in the event that an entity other than First Chicago Company. gains control of Gary-Wheaton, First Chicago has proposed to acquire 3. Data are as of June 30, 1987. an option to purchase up to 25 percent of the voting shares of 4. The Chicago banking market is approximated by Cook, Lake and Gary-Wheaton. DuPage counties in Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 709 increase by 40 points to 841.5 The four-firm concen- As indicated earlier, First Chicago also has applied, tration ratio for the market would increase from 49 pursuant to section 4(c)(8), to acquire a discount percent to 50 percent. Based on the facts of record, the brokerage subsidiary and a credit life reinsurance Board concludes that consummation of the proposal subsidiary of Gary-Wheaton. First Chicago currently would not have a substantial adverse effect on compe- provides discount brokerage and credit related insurtition in the Chicago banking market. ance services. The markets for these activities have In the Aurora banking market,6 First Chicago is the numerous competitors and are regional or national in 7th largest of 19 commercial banking organizations, scope. Accordingly, the Board concludes that concontrolling deposits of $66.3 million, representing 4.5 summation of this proposal will not have any signifipercent of the total deposits in commercial banking cant adverse effect upon competition in any relevant organizations in the market. Gary-Wheaton is the 5th market. largest commercial banking organization in the bank- There is no evidence in the record to indicate that ing market, controlling deposits of $101.4 million, approval of this proposal would result in undue conrepresenting 6.9 percent of the total deposits in com- centration of resources, decreased or unfair competimercial banking organizations in the market. Upon tion, conflicts of interests, unsound banking practices, consummation of this proposal, First Chicago would or other adverse effects on the public interest. Accordcontrol deposits of $167.7 million, representing 11.4 ingly, the Board has determined that the balance of percent of the total deposits in commercial banking public interest factors it must consider under section organizations in the market. The Aurora banking mar- 4(c)(8) of the BHC Act is favorable and consistent with ket is moderately concentrated, with an HHI of 1063. approval of the applications to acquire Gary-Whea- Upon consummation, the HHI would increase by 62 ton's nonbanking subsidiaries and activities. points to 1125. The four-firm concentration ratio for Based on the foregoing and other facts of record, the the market would increase from 56.3 percent to 59.3 Board has determined that the applications should be, percent. Accordingly, the Board concludes that con- and hereby are, approved. The acquisition of Garysummation of this proposal would not have a substan- Wheaton shall not be consummated before the thirtitial adverse effect upon competition in the Aurora eth calendar day following the effective date of this banking market. Order, or later than three months after the effective The financial and managerial resources of First date of this Order, unless such period is extended for Chicago and Gary-Wheaton are consistent with ap- good cause by the Board or by the Federal Reserve proval. Convenience and needs considerations also Bank of Chicago, pursuant to delegated authority. The are consistent with approval. determinations as to First Chicago's nonbanking activities are subject to all of the conditions contained in Regulation Y, including those in sections 225.4(d) and 225.23(b)(3) (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), and to the Board's authority to require such modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds 5. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)) a market in which the necessary to assure compliance with the provisions post-merger HHI is between 1000 and 1800 is considered moderately and purposes of the BHC Act and the Board's regulaconcentrated. In such markets, the Department is likely to challenge tions and orders issued thereunder, or to prevent a merger that increases the HHI by more than 100 points. The Department has informed the Board that a bank merger or acquisition evasion thereof. generally will not be challenged (in the absence of other factors By order of the Board of Governors, effective Auindicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. The gust 1, 1988. Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognizes the competitive effect of limited purpose lenders Voting for this action: Chairman Greenspan and Governors and other non-depository financial entities. Johnson, Seger, Angell, Heller, and Kelley. 6. The Aurora banking market is approximated by the southern portion of Kane County; Piano, Bristol, Oswego, Fox and Kendall townships in Kendall County; and Sandwich township in DeKalb JAMES MCAFEE County, all in Illinois. Associate Secretary of the Board Legal Developments continued on next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

710 Federal Reserve Bulletin • October 1988 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Effective Applicant Bank(s) date FirstBank Holding Company of First Bank of Green Mountain, N.A., August 10, 1988 Colorado, Lakewood, Colorado Lake wood, Colorado FirstBank at Arapahoe/Holly, N.A., Arapahoe County, Colorado Section 4 . .. Nonbanking Effective Activity/Company date First Wachovia Corporation, to engage in management consulting to August 29, 1988 Winston Salem, North Carolina depository institutions First Union Corporation, Charlotte, North Carolina CB&T Bancshares, Inc., Columbus, Georgia Barnett Banks, Inc., Jacksonville, Florida Sun Trust Banks, Inc., Atlanta, Georgia Citizens and Southern Corporation, Atlanta, Georgia Bank South Corporation, Atlanta, Georgia Norwest Corporation, Underwriting Specialists, August 12, 1988 Minneapolis, Minnesota Minneapolis, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 711 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Ameribanc, Inc., First Financial Bank of St. Kansas City August 12, 1988 St. Joseph, Missouri Charles County, Lake St. Louis, Missouri ANB Corporation, The Saratoga State Bank, Chicago July 21, 1988 Muncie, Indiana Saratoga, Indiana Bancshares of Dyer, Inc., Bank of Dyer, St. Louis August 2, 1988 Dyer, Tennessee Dyer, Tennessee Bankshares Corporation of Peoples National Bank of Atlanta August 9, 1988 Niceville, Niceville, Niceville, Florida Niceville, Florida BBOK Bancshares, Inc., Bankers' Bank of Kansas, N.A., Kansas City August 3, 1988 Wichita, Kansas Wichita, Kansas BSB Bancorp, Inc., Binghamton Savings Bank, New York August 5, 1988 Wilmington, Delaware Binghamton, New York Capital Bancshares, Inc., Caldwell County Bank, Kansas City July 29, 1988 Brookfield, Missouri Hamilton, Missouri Central West Bancorporation, Security State Bank, Chicago August 3, 1988 Casey, Iowa Casey, Iowa Citizens Bancorp, McLachlen Bancshares Richmond July 26, 1988 Riverdale, Maryland Corporation, Washington, D.C. Citizens State Bancorp, Inc., Citizens State Savings Bank, Chicago August 4, 1988 New Baltimore, Michigan New Baltimore, Michigan Clyde Financial Corporation, The Peoples State Bank, Dallas July 22, 1988 Clyde, Texas Clyde, Texas Commerce Bancorp, Inc., Commerce Bank/Harrisburg, Philadelphia August 12, 1988 Cherry Hill, New Jersey Camp Hill, Pennsylvania Commex Financial Corporation, Commercial Exchange Bank, Atlanta August 18, 1988 Kennesaw, Georgia Kennesaw, Georgia Commonwealth Bankshares, Inc., Bank of the Commonwealth, Richmond July 21, 1988 Norfolk, Virginia Norfolk, Virginia Comm. Bancorp, Inc., The First National Bank of Philadelphia July 22, 1988 Forest City, Pennsylvania Nicholson, Nicholson, Pennsylvania Community Bank System, Inc., ComuniCorp, Inc., New York August 24, 1988 Dewitt, New York Addison, New York Delaware Bancshares, Inc., The National Bank of Delaware New York July 22, 1988 Walton, New York County, Walton, Walton, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin • October 1988 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Eastern Bancshares, Inc., The First National Bank of Richmond July 22, 1988 Romney, West Virginia Romney, Romney, West Virginia Eufaula BancCorp, Inc., Eufaula Bank & Trust Company, Atlanta August 2, 1988 Eufaula, Alabama Eufaula, Alabama Fifth Third Bancorp, Decatur Bancshares, Inc., Cleveland July 27, 1988 Cincinnati, Ohio Greensburg, Indiana FIRST MIDWEST BANCORP, Continental Illinois Bank of Chicago July 20, 1988 INC., Deerfield, National Naperville, Illinois Association, Deerfield, Illinois Continental Bank of Buffalo Grove, N.A., Buffalo Grove, Illinois First American Bancshares of First American Bank of Blooming Minneapolis July 21, 1988 Blooming Prairie, Inc., Prairie, Blooming Prairie, Minnesota Blooming Prairie, Minnesota First Virginia Banks, Inc., Monroe Bancshares, Inc., Richmond July 29, 1988 Falls Church, Virginia Madisonville, Tennessee First Wisconsin Corporation, Century Bancorp, Inc., Chicago August 11, 1988 Milwaukee, Wisconsin Circle Pines, Minnesota Fourth Financial Corporation, Corporate Bankshares, Inc., Kansas City July 29, 1988 Wichita, Kansas Overland Park, Kansas IV Corporate Woods Acquisition, Inc., Wichita, Kansas Grand Bank Financial Grand Bank, Chicago August 4, 1988 Corporation, Grand Rapids, Michigan Grand Rapids, Michigan Greenwood National Greenwood National Bank, Richmond August 23, 1988 Bancorporation, Greenwood, South Carolina Greenwood, South Carolina Havana Bancshares, Inc., State Bank of Havana, Chicago August 1, 1988 Springfield, Illinois Havana, Illinois Heritage Bancorp, Inc., Heritage-NIS Bank for Savings, Boston August 12, 1988 Northampton, Massachusetts Northampton, Massachusetts Hickman Corporation, First State Bank, Kansas City August 19, 1988 Hickman, Nebraska Hickman, Nebraska Illini Community Bancorp, Inc., SBV Bancshares, Inc., Chicago August 18, 1988 Springfield, Illinois Virden, Illinois Indiana National Corporation, Morgan County Bancorp, Chicago August 8, 1988 Indianapolis, Indiana Mooresville, Indiana Jackson County Bancorp, Inc., Jackson County Bank, Atlanta August 1, 1988 Gainesboro, Tennessee Gainesboro, Tennessee Johnson Heritage Bancorp, Ltd., Community National Bank, Chicago August 18, 1988 Racine, Wisconsin Mukwonago, Wisconsin Kansas Banc Corporation, Kansas State Bank, Chicago August 2, 1988 Kansas, Illinois Kansas, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 713 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Kentucky Bancorporation, Inc., The First National Bank of Cleveland August 12, 1988 Covington, Kentucky Georgetown, Georgetown, Ohio Key Bancshares of Idaho, Inc., IB&T CORP., New York August 19, 1988 Boise, Idaho Boise, Idaho KeyCorp, Albany, New York Lexington Bancshares, Inc., The Fayette Banking Company, Cleveland August 10, 1988 Lexington, Kentucky Lexington, Kentucky Magna Group, Inc., First Bancorp of Mascoutah, St. Louis August 19, 1988 Belleville, Illinois Ltd., Mascoutah Acquisition Company, Mascoutah, Illinois Wilmington, Delaware Mark Twain Bancshares, Inc., Bancenter One Group, Inc., St. Louis August 10, 1988 St. Louis, Missouri Chesterfield, Missouri Marshall & Ilsley Corporation, GREATER MILWAUKEE Chicago July 22, 1988 Milwaukee, Wisconsin FINANCIAL CORP., Milwaukee, Wisconsin HARTLAND BANCORP., INC., Hartland, Wisconsin VILLAGE BANC HOLDING CO., INC., Elm Grove, Wisconsin Mercantile Bancorp, Inc., Security State Bank of Hamilton, St. Louis July 25, 1988 Quincy, Illinois Hamilton, Illinois Mercantile Capital Corp., Mercantile Bank and Trust Boston August 15, 1988 Boston, Massachusetts Company, Boston, Massachusetts National Penn Bancshares, Inc., First Capital Bank, Philadelphia July 29, 1988 Boyertown, Pennsylvania York, Pennsylvania NBB Bancorp, Inc., New Bedford Institution for Boston August 18, 1988 New Bedford, Massachusetts Savings, New Bedford, Massachusetts North Adams Bancshares, Inc., B.W. Bancshares, Inc., St. Louis August 19, 1988 Ursa, Illinois Warrensburg, Illinois ONB Corporation, The Ontario National Bank of New York August 24, 1988 Clifton Springs, New York Clifton Springs, Clifton Springs, New York Ostrander Bancshares, Inc., Ostrander State Bank, Minneapolis July 21, 1988 Ostrander, Minnesota Ostrander, Minnesota Peoples, Inc., Peoples Savings, Inc., Kansas City August 12, 1988 Ottawa, Kansas Ottawa, Kansas Provident Bankshares First Security Bank of Maryland, Richmond August 4, 1988 Corporation, Baltimore, Maryland Baltimore, Maryland Richwood Bancshares, Inc., The Richwood Banking Cleveland August 18, 1988 Rich wood, Ohio Company, Richwood, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • October 1988 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Salin Bancshares of North Carroll Financial Corporation, Chicago July 29, 1988 Central Indiana, Inc., Burlington, Indiana Indianapolis, Indiana Shelby County Bancorp, Inc., Strasburg State Bank, Chicago July 27, 1988 Shelbyville, Illinois Strasburg, Illinois Sooner Southwest Bankshares, Anadarko Bancshares, Inc., Kansas City August 12, 1988 Inc., Bristow, Oklahoma Bristow, Oklahoma Southeastern Bancorp, Inc., Bank of Greeleyville, Richmond August 9, 1988 Greeleyville, South Carolina Greeleyville, South Carolina The One Bancorp, Southstate Bank for Savings, Boston August 23, 1988 Portland, Maine Brockton, Massachusetts The Weld State Company, Central Bank of Craig, N.A., Kansas City August 5, 1988 Ft. Lupton, Colorado Craig, Colorado TraCorp, Inc., The Traders National Bank of Atlanta August 15, 1988 Tullahoma, Tennessee Tullahoma, Tullahoma, Tennessee Warren Bancorp, Inc., Warren Five Cents Savings Bank, Boston August 12, 1988 Peabody, Massachusetts Peabody, Massachusetts Wathena Bancshares, Inc., Farmers State Bank, Kansas City August 12, 1988 Wathena, Kansas Wathena, Kansas Section 4 Nonbanking Reserve Effective Applicant Activity/Company Bank date Delhi Bancshares, Inc., Manchester Insurance Service, Chicago August 19, 1988 Traer, Iowa Manchester, Iowa First American Bank CFM, Inc., Chicago August 5, 1988 Corporation, New Ulm, Minnesota Elk Grove Village, Illinois to engage in data processing services First NH Banks, Inc., EG&G Financial Services, Inc., Boston August 16, 1988 Manchester, New Hampshire Wellesley, Massachusetts Westpac Banking Corporation, to engage in bullion industry New York July 28, 1988 Sydney, Australia financing Sections 3 and 4 Nonbanking Reserve Effective Applicant Activity/Company Bank date Lena Spitzer Limited Streeter Insurance Agency, Inc., Minneapolis August 5, 1988 Partnership, Streeter, North Dakota Streeter, North Dakota Old Kent Financial Corporation, Unibancorp, Inc., Chicago August 1, 1988 Grand Rapids, Michigan Chicago, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 715 APPLICATIONS APPROVED UNDER BANK MERGER 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. Reserve Effective Applicant Bank(s) Bank date New Bank, Bank of Madisonville, Atlanta July 29, 1988 Madisonville, Tennessee Madisonville, Tennessee Richwood Interim Bank, The Richwood Banking Cleveland August 18, 1988 Rich wood, Ohio Company, Richwood, Ohio United Jersey Bank, United Jersey Bank/Edgewater New York August 1, 1988 Hackensack, New Jersey National, Englewood Cliffs, New Jersey 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. Whitney v. United States, et al., No. CA3-88-1596-H Teichgraeber v. Board of Governors, No. 87-2505-0 (N.D. Tex., filed July 7, 1988). (D. Kan., filed Oct. 16, 1987). Credit Union National Association, Inc., et al., v. Northeast Bancorp v. Board of Governors, No. 87- Board of Governors, No. 88-1295 (D.D.C. May 13, 1365 (D.C. Cir., filed July 31, 1987). 1988). National Association of Casualty & Insurance Agents Bonilla v. Board of Governors, No. 88-1464 (7th Cir., v. Board of Governors, Nos. 87-1354, 87-1355 (D.C. filed March 11, 1988). Cir., filed July 29, 1987). Cohen v. Board of Governors, No. 88-1061 (D.N.J., The Chase Manhattan Corporation v. Board of Govfiled March 7, 1988). ernors, No. 87-1333 (D.C. Cir., filed July 20, 1987). Stoddard v. Board of Governors, No. 88-1148 (D.C. Lewis v. Board of Governors, Nos. 87-3455, 87-3545 Cir., filed Feb. 25, 1988). (11th Cir., filed June 25, Aug. 3, 1987). Independent Insurance Agents of America, Inc. v. Securities Industry Association v. Board of Gover- Board of Governors, No. 87-1686 (D.C. Cir., filed nors, et al., No. 87-1169 (D.C. Cir., filed April 17, Nov. 19, 1987). 1987). National Association of Casualty and Surety Agents, CBC, Inc. v. Board of Governors, No. 86-1001 (10th et al., v. Board of Governors, Nos. 87-1644, 87- Cir., filed Jan. 2, 1986). 1801, 88-1001, 88-1206, 88-1245, 88-1270 (D.C. Cir., filed Nov. 4, Dec. 21, 1987, Jan. 4, March 18, March 30, April 7, 1988). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al 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 A22 Gross demand deposits—individuals, MONEY STOCK AND BANK CREDIT partnerships, and corporations A3 Reserves, money stock, liquid assets, and debt measures A4 Reserves of depository institutions, Reserve FINANCIAL MARKETS Bank credit A5 Reserves and borrowings—Depository A23 Commercial paper and bankers dollar institutions acceptances outstanding 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 A9 Federal Reserve open market transactions FEDERAL FINANCE 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 A10 Condition and Federal Reserve note statements and ownership Al 1 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 A33 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 A35 Open-end investment companies—Net sales COMMERCIAL BANKING INSTITUTIONS and asset position A17 Major nondeposit funds A35 Corporate profits and their distribution A18 Assets and liabilities, last-Wednesday-of-month A36 Total nonfarm business expenditures on new series plant and equipment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • October 1988 A37 Domestic finance companies—Assets and A55 Foreign branches of U.S. banks—Balance liabilities and business credit sheet data A57 Selected U.S. liabilities to foreign official institutions REAL ESTATE A38 Mortgage markets A39 Mortgage debt outstanding REPORTED BY BANKS IN THE UNITED STATES A57 Liabilities to and claims on foreigners A58 Liabilities to foreigners CONSUMER INSTALLMENT CREDIT A60 Banks' own claims on foreigners A40 Total outstanding and net change A61 Banks' own and domestic customers' claims on A41 Terms foreigners A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined FLOW OF FUNDS domestic offices and foreign branches A42 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit markets REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES Domestic Nonfinancial Statistics A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners SELECTED MEASURES A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment SECURITIES HOLDINGS AND TRANSACTIONS A46 Output, capacity, and capacity utilization A65 Foreign transactions in securities A47 Industrial production—Indexes and gross value A66 Marketable U.S. Treasury bonds and notes— A49 Housing and construction Foreign transactions A50 Consumer and producer prices A51 Gross national product and income A52 Personal income and saving INTEREST AND EXCHANGE RATES International Statistics A67 Discount rates of foreign central banks A67 Foreign short-term interest rates SUMMARY STATISTICS A68 Foreign exchange rates A53 U.S. international transactions—Summary A54 U.S. foreign trade A54 U.S. reserve assets A69 Guide to Tabular Presentation, A54 Foreign official assets held at Federal Reserve Statistical Releases and Special Banks Tables 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 (annua! rates of change, seasonally adjusted in percent)1 IItteemm 1987 1988 1988 Q3 Q4 Q1 Q2R Mar. Apr. Mayr June' July Reserves of depository institutions2 1 Total -.9 2.5 3.5 5.8 3.8 12.3 -.2 5.4 12.0 2 Required .3 1.4 2.9 7.2 8.0 13.9 -3.8 8.6 9.7 3 Nonborrowed .3 2.4 1.5 -6.5 -23.7 -13.0 8.5 -4.8 5.2 4 Monetary base 5.1 7.8 8.3 7.6 5.9 11.4 5.0 6.2 10.1 Concepts of money, liquid assets, and debt4 5 Ml .8 3.9 3.8 6.3 5.4R 11.3R .2 9.8 9.0 6 M2 2.8 3.9 6.7 7.7 8.6R 9.8 4.4 5.3 2.9 7 M3 4.5 5.4 7.0 7.0 7.2 4.2 6.4 5.3 8 L 4.3 5.7 6.5 8.5 l.Y 11.4R 7.5 3.5 n.a. 9 Debt 7.9 10.1 8.3 8.4 8.7 8.6R 8.3 7.6 n.a. Nontransaction components 10 In M2y 3.6 3.9 7.7 8.3 9.8R 9.3R 5.8 3.7 .9 11 In M3 only6 11.0 11.3 7.9 4.3 5.4 -2.6'' 3.4 10.6 14.5 Time and savings deposits Commercial banks 12 Savings7 10.1 .7 6.3 11.0 14.6 6.5 11.7 12.9 9.6 13 Small-denomination time 7.4 14.8 13.7 11.8 11.6 15.1 6.6 6.2 8.6 14 Large-denomination time9'10 6.8 10.5 3.4 6.4 5.5 -2.2 8.1 20.5 25.5 Thrift institutions 15 Savings' 7.0 -3.8 -2.4 6.6 7.1 10.1 3.0 9.0 6.0 16 Small-denomination time 9.3 16.0 21.3 14.0 18.0 13.6R 10.7 1.7 .0 17 Large-denomination time 9.9 22.2 15.7 8.8 1.5 16.0R 5.7 .0 2.9 Debt components4 18 Federal 5.8 7.6 9.3 8.2 15.2 7.1 2.7 5.3 n.a. 19 Nonfederal 8.5 10.9 8.0 8.5 6.7r 9.R 10.0 8.4 n.a. 20 Total loans and securities at commercial banks 6.2 5.5 5.1 10.8 7.9 11.4 13.0 11.1 4.9 1. Unless otherwise noted, rates of change are calculated from average institutions and money market funds. Also excludes all balances held by U.S. amounts outstanding in preceding month or quarter. commercial banks, money market funds (general purpose and broker-dealer), 2. Figures incorporate adjustments for discontinuities associated with the foreign governments and commercial banks, and the U.S. government. implementation of the Monetary Control Act and other regulatory changes to M3: M2 plus large-denomination time deposits and term RP liabilities (in reserve requirements. To adjust for discontinuities due to changes in reserve amounts of $100,000 or more) issued by commercial banks and thrift institutions, requirements on reservable nondeposit liabilities, the sum of such required term Eurodollars held by U.S. residents at foreign branches of U.S. banks reserves is subtracted from the actual series. Similarly, in adjusting for discon- worldwide and at all banking offices in the United Kingdom and Canada, and tinuities in the monetary base, required clearing balances and adjustments to balances in both taxable and tax-exempt, institution-only money market mutual compensate for float also are subtracted from the actual series. funds. Excludes amounts held by depository institutions, the U.S. government, 3. The monetary base not adjusted for discontinuities consists of total money market funds, and foreign banks and official institutions. Also subtracted reserves plus required clearing balances and adjustments to compensate for float is the estimated amount of overnight RPs and Eurodollars held by institution-only at Federal Reserve Banks plus the currency component of the money stock less money market mutual funds. the amount of vault cash holdings of thrift institutions that is included in the L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term currency component of the money stock plus, for institutions not having required Treasury securities, commercial paper and bankers acceptances, net of money reserve balances, the excess of current vault cash over the amount applied to market mutual fund holdings of these assets. satisfy current reserve requirements. After the introduction of contemporaneous Debt: Debt of domestic nonfinancial sectors consists of outstanding credit reserve requirements (CRR), currency and vault cash figures are measured over market debt of the U.S. government, state and local governments, and private the weekly computation period ending Monday. nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- Before CRR, all components of the monetary base other than excess reserves sumer credit (including bank loans), other bank loans, commercial paper, bankers are seasonally adjusted as a whole, rather than by component, and excess acceptances, and other debt instruments. The source of data on domestic reserves are added on a not seasonally adjusted basis. After CRR, the seasonally nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt adjusted series consists of seasonally adjusted total reserves, which include data are based on monthly averages. Growth rates for debt reflect adjustments for excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted discontinuities over time in the levels of debt presented in other tables. currency component of the money stock plus the remaining items seasonally 5. Sum of overnight RPs and Eurodollars, money market fund balances adjusted as a whole. (general purpose and broker-dealer), MMDAs, and savings and small time 4. Composition of the money stock measures and debt is as follows: deposits less the estimated amount of demand deposits and vault cash held by Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults thrift institutions to service their time and savings deposit liabilities. of depository institutions; (2) travelers checks of nonbank issuers; (3) demand 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, deposits at all commercial banks other than those due to depository institutions, money market fund balances (institution-only), less a consolidation adjustment the U.S. government, and foreign banks and official institutions less cash items in that represents the estimated amount of overnight RPs and Eurodollars held by the process of collection and Federal Reserve float; and (4) other checkable institution-only money market mutual funds. deposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- 7. Excludes MMDAs. matic transfer service (ATS) accounts at depository institutions, credit union 8. Small-denomination time deposits—including retail RPs—are those issued share draft accounts, and demand deposits at thrift institutions. 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • October 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 FFFaaaccctttooorrrsss 1988 1988 May June July June 15 June 22 June 29 July 6 July 13 July 20 July 27 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 249,800 251,010 253,673 250,624 250,967 252,634 254,882 256,086 252,593 251,401 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 223,732 225,333 225,800 224,931 224,955 226,509 226,817 227,986 225,254 224,208 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 222,187 224,690 224,319 224,931 224,955 224,495 223,256 225,882 224,440 223,390 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 1,545 643 1,481 0 0 2,014 3,561 2,104 814 818 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 7,777 7,590 8,140 7,268 7,268 8,327 9,464 8.329 8,180 7,319 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 7,272 7,268 7,242 7,268 7,268 7,268 7,268 7,268 7,258 7,201 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss,,,,, 505 322 898 0 0 1,059 2,196 1,061 922 118 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 2,592 3,040 3,508 3,651 3,034 2,281 3,434 3,878 3,138 3,398 1111100000 FFFFFllllloooooaaaaattttt 649 478 936 359 845 519 334 939 766 806 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 15,050 14,569 15,289 14,415 14,865 14,998 14,832 14,953 15,255 15,670 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,063 11,063 11,063 11,063 11,063 11,063 11,063 11,063 11,063 11,063 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 18,427 18,478 18,503 18,472 18,482 18,492 18,481 18,491 18,505 18,519 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 230,482 233,525 235,965 233,640 233,382 233,267 236,183 237,232 236,025 234,880 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 475 455 414 459 457 449 426 421 417 406 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 7,276 4,306 3,695 3,110 4,252 6,529 4,686 4,148 3,209 3,594 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 259 243 272 236 257 235 316 226 244 315 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,922 1,949 1,857 1,827 1,938 1,811 1,943 1,824 1,797 1,935 2222200000 OOOOOttttthhhhheeeeerrrrr 360 329 329 304 322 363 293 350 357 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd 335 cccccaaaaapppppiiiiitttttaaaaalllll 7,302 7,348 7,306 7,463 7,417 7,510 7.330 7,446 7,392 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll 7,077 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 36,231 37,413 ' 38,418 38,140 37,506 37,045 39,183 37,691 37,122 38,478 End-of-month figures Wednesday figures 1988 1988 May June July June 15 June 22 June 29 July 6 July 13 July 20 July 27 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 248,274 254,647 252,440 253,545 248,875 256,429 254,427 260,783 250,990 248,719 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss''''' 223,192 227,636 224,450 226,697 223,663 228,438 226,059 227,258 223,988 220,727 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 223,192 222,450 224,450 226,697 223,663 223,010 223,748 226,214 223,988 220,727 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 5,186 0 0 0 5,428 2,311 1,044 0 0 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 7,268 9,508 7,201 7,268 7,268 9,821 8,850 7,893 7,201 7,201 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 7,268 7,268 7,201 7,268 7,268 7,268 7,268 7,268 7,201 7,201 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 2,240 0 0 0 2,553 1,582 625 0 0 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 3,304 2,464 3,650 4,388 2,297 2,244 3,080 9,434 3,123 3,415 3333322222 FFFFFllllloooooaaaaattttt 122 259 774 624 861 522 1,666 976 1,102 1,616 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 14,388 14,780 16,365 14,568 14,786 15,404 14,772 15,222 15,576 15,760 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,063 11,063 11,063 11,063 11,063 11,063 11,063 11,063 11,063 11,062 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 18,451 18,501 18,531 18,481 18,491 18,501 18,489 18,503 18,517 18,531 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 232,758 235,513 234,990 233,776 233,246 234,426 237,279 236,982 235,610 234,979 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 459 432 397 458 452 432 418 419 407 397 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 2,871 9,762 3,910 3,787 4,122 8,216 4,154 4,106 3,606 3,490 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 298 382 269 219 204 203 339 205 266 343 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,660 1,655 1,642 1,653 1,657 1,657 1,658 1,659 1,637 1,641 4444422222 OOOOOttttthhhhheeeeerrrrr 427 351 291 363 275 359 313 285 323 322 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 7,235 7,109 7,200 7,235 7,265 7,394 6,886 7,309 7,226 7,157 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 37,098 34,026 38,352 40,616 36,227 38,325 37,949 44,402 36,512 35,001 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 Institutions1 Millions of dollars Monthly averages9 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1985 1986 1987 1987 1988 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June 1 Reserve balances with Reserve Banks2 27,620 37,360 37,673 37,673 37,485 34,211 36,027 38,429 36,509 37,907 2 Total vault cash1 22,953 24,079 26,155 26,155 26,919 28,119 25,926 25,200 25,873 25,717 3 Vault 20,522 22,199 24,449 24,449 25,155 25,836 24,049 23,636 24,172 24,084 4 Surplus 2,431 1,879 1,706 1,706 1,764 2,283 1,877 1,564 1,700 1,632 5 Total reserves6 48,142 59,560 62,123 62,123 62,640 60,047 60,076 62,064 60,681 61,991 6 Required reserves 47,085 58,191 61,094 61,094 61,345 58,914 59,147 61,205 59,641 61,103 7 Excess reserve balances at Reserve Banks 1,058 1,369 1,029 1,029 1,295 1,133 929 859 1,040 888 8 Total borrowings at Reserve Banks 1,318 827 777 777 1,082 396 1,752 2,993 2,578 3,083 9 Seasonal borrowings at Reserve Banks 56 38 93 93 59 75 119 146 246 311 10 Extended credit at Reserve Banks8 499 303 483 483 372 205 1,478 2,624 2,107 2,554 Biweekly averages of daily figures for weeks ending 1988 Apr. 6 Apr. 20 May 4 May 18 June 1 June 15 June 29 July 13r July 27 Aug. 10 11 Reserve balances with Reserve Banks2 37,003 39,123 38,313 36,737 35,707 38,644 37,260 38,831 37,399 37,346 1? Total vault cash 25,336 25,205 25,112 25,726 26,265 25,118 26,237 26,270 26,647 26,571 13 Vault4 23,610 23,709 23,549 24,122 24,418 23,614 24,492 24,629 24,889 24,762 14 Surplus 1,726 1,497 1,563 1,604 1,847 1,504 1,745 1,641 1,758 1,810 15 Total reserves 60,613 62,831 61,862 60,859 60,125 62,258 61,752 63,460 62,288 62,107 16 Required reserves ^ 59,696 62,145 60,796 59,959 58,943 61,563 60,692 62,599 61,085 61,305 17 Excess reserve balances at Reserve Banks 917 686 1,067 901 1,182 696 1,060 861 1,203 803 18 Total borrowings at Reserve Banks 2,817 3,619 2,224 2,175 3,120 3,465 2,658 3,656 3,268 3,339 19 Seasonal borrowings at Reserve Banks 122 124 191 241 269 287 337 352 390 407 20 Extended credit at Reserve Banks 2,494 3,278 1,787 1,798 2,538 2,986 2,138 2,340 2,663 2,748 1. These data also appear in the Board's H.3 (502) release. For address, see in- with Federal Reserve Banks, which exclude required clearing balances and side front cover. adjustments to compensate for float, plus vault cash used to satisfy reserve 2. Excludes required clearing balances and adjustments to compensate for requirements. Such vault cash consists of all vault cash held during the lagged float. computation period by institutions having required reserve balances at Federal 3. Dates refer to the maintenance periods in which the vault cash can be used Reserve Banks plus the amount of vault cash equal to required reserves during the to satisfy reserve requirements. Under contemporaneous reserve requirements, maintenance period at institutions having no required reserve balances. maintenance periods end 30 days after the lagged computation periods in which 7. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy the balances are held. 4. Equal to all vault cash held during the lagged computation period by reserve requirements less required reserves. institutions having required reserve balances at Federal Reserve Banks plus the 8. Extended credit consists of borrowing at the discount window under the amount of vault cash equal to required reserves during the maintenance period at terms and conditions established for the extended credit program to help institutions having no required reserve balances. depository institutions deal with sustained liquidity pressures. Because there is 5. Total vault cash at institutions having no required reserve balances less the not the same need to repay such borrowing promptly as there is with traditional amount of vault cash equal to their required reserves during the maintenance short-term adjustment credit, the money market impact of extended credit is period. similar to that of nonborrowed reserves. 6. Total reserves not adjusted for discontinuities consist of reserve balances 9. Data are prorated monthly averages of biweekly averages. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • October 1988 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks' Averages of daily figures, in millions of dollars 1987 week ending Monday MMaattuurriittyy aanndd ssoouurrccee Dec. 14 Dec. 21 Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 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 75,774 70,856 67,536 75,090 75,188 70,870 69,234 68,643 73,658 2 For all other maturities 9,608 8,953 9,409 8,611 9,297 99,,330000 8,966 88,,889999 10,198 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 27,276 24,725 22,860 23,602 28,254 29,954 28,418 28,852 33,324 4 For all other maturities 7,468 6,968 7,191 6,886 5,920 5,897 6,140 6,356 6,762 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 14,052 14,741 12,170 15,781 14,660 14,427 15,796 16,800 15,386 6 For all other maturities 13,274 12,119 12,603 8,110 10,653 12,060 13,614 14,309 15,290 All other customers 7 For one day or under continuing contract 27,093 24,887 24,512 25,793 27,673 27,327 26,5% 26,307 25,172 8 For all other maturities 9,942 9,886 12,018 9,675 9,984 9,420 10,378 10,268 9,986 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 30,472 31,147 30,352 34,041 35,783 35,356 35,063 36,523 35,727 10 To all other specified customers 11,027 11,062 10,326 10,793 12,665 12,541 14,446 15,399 15,169 1. Banks with assets of $1 billion or more as of Dec. 31, 1977 . 2. Brokers and nonbank dealers in securities; other depository institutions; These data also appear in the Board's H.5 (507) release. For address, see inside foreign banks and official institutions; and United States government agencies, front cover. 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 Extended credit2 AAddjjuussttmmeenntt ccrreeddiitt aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall ccrreeddiitt'' First 30 days of borrowing After 30 days of borrowing3 BBBaaannnkkk 8/2 O 4 n /8 8 Ef d fe a c t t e i ve Pre ra v t i e o us 8/2 O 4 n /8 8 Eff d e a c t t e i ve Pre ra v t i e o us 8/2 O 4 n /8 8 Ef d fe a c t t e i ve Pre r v at i e o us Effective date 6V1 Boston 6 Vl 8/9/88 6 8/9/88 6 8.45 8/11/88 8.40 7/28/88 New York 8/9/88 8/9/88 8/11/88 7/28/88 Philadelphia 8/9/88 8/9/88 8/11/88 7/28/88 Cleveland 8/9/88 8/9/88 8/11/88 7/28/88 Richmond 8/9/88 8/9/88 8/11/88 7/28/88 Atlanta 8/9/88 8/9/88 8/11/88 7/28/88 Chicago 8/10/88 8/10/88 8/11/88 7/28/88 St. Louis 8/9/88 8/9/88 8/11/88 7/28/88 Minneapolis 8/9/88 8/9/88 8/11/88 7/28/88 Kansas City 8/9/88 8/9/88 8/11/88 7/28/88 Dallas Vi 8/11/88 Vl 8/11/88 8/11/88 7/28/88 San Francisco ... 6 8/9/88 6 6 8/9/88 6 8.45 8/11/88 8.40 7/28/88 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. Ba o n f k Effective date A le l v l e F l) . — R. Ba of n k Effective date A le l v l e F l) . — R. Ba of n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977. 6-66 V1 66 V1 1980—July 28 10-11 10 11998844——AApprr.. 9 &V1-9 9 1978-—Jan. 9 6V1 6V1 29 10 10 13 9 9 20 evi-i 1 Sept. 26 11 11 Nov. 21 8>/>-9 m May 11 1 1 Nov. 17 12 12 26 %Vl 8 Vi 12 Dec. 5 12-13 13 Dec. 24 8 8 July 3 7-7V4 IIVVi i 10 IVi, 1981—May 5 13-14 14 11998855——MMaayy 20 lVi-% IVi Aug. 21 73/4 7V4 8 14 14 24 IVi IVi O Se c p t. t . 2 1 2 6 8-8 8 W 8S Vi Nov. 2 6 13 1 - 3 1 4 1 1 3 3 1986—Mar. 7 1-1 Vi 1 20 8 Vi 8 Vi Dec. 4 12 12 10 1 1 Nov. 3 1 SV 9 i- V 9 i ' A 99V1i /2 1982—July 20 HVi-12 1m J A u p l r y . 2 1 1 1 evi 6 -i 6 6 Vi 23 UVi 1 \Vl AAuugg.. 21 5^-6 5 Vi 1979--July 20 10 10 Aug. 2 11-iivs 11 22 5 Vi 5 Vi Aug. 17 10-10W 1 1 0 0 W '/ ! 3 11 11 20 lOVi 16 10^ 10V2 11998877——SSeepptt.. 4 5Vz-6 6 Sept. 19 10V^-11 11 27 10-10Vi 10 11 6 6 21 11 11 30 10 10 Oct. 8 11-12 12 Oct. 12 9^-10 9 Vi 11998888——AAuugg.. 9 6-6 Vi 6 Vi 10 12 12 13 9 Vi 9 Vi 11 6 Vi 6 Vi Nov. 22 9-9'/i 9 1980--Feb. 15 12-13 13 26 9 9 In effect August 24, 1988 6 Vi (>Vi 19 13 13 Dec. 14 m-9 9 May 29 12-13 13 15 S'A-9 8 Vi 30 12 12 17 8 Vl 8 Vi June 13 11-12 11 16 11 11 1. Adjustment credit is available on a short-term basis to help depository somewhat above rates on market sources of funds ordinarily will be charged, but institutions meet temporary needs for funds that cannot be met through reason- in no case will the rate charged be less than the basic discount rate plus 50 basis able alternative sources. After May 19, 1986, the highest rate established for loans points. The flexible rate is reestablished 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 reestablished 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 four 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, when similar assist- 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was ance is not reasonably available from other sources, when exceptional circum- adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and stances or practices involve only a particular institution or when an institution is to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective experiencing difficulties adjusting to changing market conditions over a longer Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981 the period of time. formula for applying the surcharge was changed from a calendar quarter to a 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 • October 1988 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act Type of deposit, and deposit interval Percent of deposits Effective date Net transaction accounts • $0 million-$40.5 million 12/15/87 More than $40.5 million ... 12/15/87 Nonpersonal time deposits5 By original maturity Less than 1 Vi years 3 10/6/83 1 xh years or more 0 10/6/83 Eurocurrency liabilities All types 3 11/13/80 1. Reserve requirements in effect on Dec. 31, 1987. Required reserves must be other transaction accounts, the exemption applies only to such accounts that held in the form of deposits with Federal Reserve Banks or vault cash. Nonmem- would be subject to a 3 percent reserve requirement. bers may maintain reserve balances with a Federal Reserve Bank indirectly on a 3. Transaction accounts include all deposits on which the account holder is pass-through basis with certain approved institutions. For previous reserve permitted to make withdrawals by negotiable or transferable instruments, payrequirements, see earlier editions of the Annual Report and of the FEDERAL ment orders of withdrawal, and telephone and preauthorized transfers in excess of RESERVE BULLETIN. Under provisions of the Monetary Control Act, depository three per month for the purpose of making payments to third persons or others. institutions include commercial banks, mutual savings banks, savings and loan However, MMDAs and similar accounts subject to the rules that permit no more associations, credit unions, agencies and branches of foreign banks, and Edge than six preauthorized, automatic, or other transfers per month, of which no more corporations. than three can be checks, are not transaction accounts (such accounts are savings 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law deposits subject to time deposit reserve requirements). 97-320) requires that $2 million of reservable liabilities (transaction accounts, 4. The Monetary Control Act of 1980 requires that the amount of transaction nonpersonal time deposits, and Eurocurrency liabilities) of each depository accounts against which the 3 percent reserve requirement applies be modified institution be subject to a zero percent reserve requirement. The Board is to adjust annually by 80 percent of the percentage increase in transaction accounts held by the amount of reservable liabilities subject to this zero percent reserve require- all depository institutions, determined as of June 30 each year. Effective Dec. 15, ment each year for the succeeding calendar year by 80 percent of the percentage 1987 for institutions reporting quarterly and Dec. 29, 1987 for institutions increase in the total reservable liabilities of all depository institutions, measured reporting weekly, 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. with those with the highest reserve ratio. With respect to NOW accounts and 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 1988 Type of transaction 1985 1986 1987 Feb. Apr. May U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) 1 Tr G ea r s o u s r s y p b u i r ll c s h ases 22,214 22,602 18,983 150 0 346 560 423 2 4 3 G E R x r e o d ch s e s m a n s p a g t e l i e o s n s 4 3 , , 1 5 1 0 8 0 0 2 1 , , 5 0 0 0 2 0 0 6 9 , , 0 0 5 2 0 9 0 0 0 0 60 49 0 0 1, 5 6 3 0 8 0 0 0 0 0 0 0 0 5 6 Ot G G he r r r o o s s s s s w p i s t a u h l r i e n c s h 1 a s y e e s ar 1,349 0 190 0 3,6 3 5 0 8 0 479 0 0 0 0 0 0 0 1,092 0 0 0 7 Maturity shift 19,763 18,673 21,502 1,400 950 1,939 2,051 1,646 8 9 R Ex ed ch em an p g t e i ons -17,717 0 -20,179 0 -20,38 7 8 0 -1,742 0 -754 0 -2,868 0 -2,089 0 -1,688 0 -4,324 0 1 1 0 1 1 t G G o r r 5 o o s s y s s e p s a a u rs l r e c s hases 2,185 0 893 0 10,2 4 3 5 1 2 2,589 0 0 0 800 0 0 0 3,661 0 0 0 12 Maturity shift -17,459 -17,058 -17,974 -1,400 -840 -952 -2,051 -823 -1,102 13 Exchange 13,853 16,984 18,938 1,742 749 2,643 2,089 1,434 3,724 1 1 1 1 7 5 6 4 5 t E G G M o x r r a 1 c o o t 0 h u s s s s a r y i n p s e ty g a a u e l r r e s s c s h h if a t s es -1 2 , , 8 1 4 1 5 8 5 0 7 4 8 0 -1 2 , , 6 0 2 2 5 3 0 0 6 0 -3 2 , , 5 4 9 4 2 5 1 9 0 0 596 0 0 0 -110 0 0 5 -9 1 1 8 7 5 7 0 5 0 1 - ,0 2 4 1 5 5 7 4 0 -3 4 8 0 7 0 0 0 1 1 9 8 Ov G G er r r o o 1 s s 0 s s p s y a e u l a r e r c s s h ases 293 0 15 0 8 1,858 0 445 0 966 0 0 0 20 Maturity shift -447 0 0 0 0 -157 21 Exchange 1,679 1,150 500 0 0 200 All maturities 22 Gross purchases 26,499 24,078 37,171 4,259 0 346 560 7,160 2 2 3 4 G Re r d os e s m s p a t l i e o s n s 4 3 , , 2 5 1 0 8 0 2 1 , , 5 0 0 0 2 0 6 9, , 0 8 9 0 9 2 0 0 60 49 0 1 1 , , 5 6 1 0 3 0 0 0 0 0 Matched transactions 25 Gross sales 866,175 927,997 950,923 104,833 78,358 97,892 104,527 86,900 115,287 26 Gross purchases 865,968 927,247 950,935 105,917 78,513 99,139 104,572 85,608 115,115 Repurchase agreements2 27 Gross purchases 134,253 170,431 314,620 23,512 10,591 18,696 15,871 28 Gross sales 132,351 160,268 324,666 25,264 14,237 11,088 23,478 29 Net change in U.S. government securities 20,477 29,989 11,235 3,591 -4,140 -1,520 605 13,476 -7,779 FEDERAL AGENCY OBLIGATIONS Outright transactions 3 3 0 1 G G r r o o s s s s p sa u l r e c s h ases 0 0 0 0 0 0 0 0 0 0 32 Redemptions 162 398 276 131 120 Repurchase agreements2 33 Gross purchases 22,183 31,142 80,353 9,718 4,042 4,243 4,771 34 Gross sales 20,877 30,522 81,351 10,679 5,357 1,447 7,566 35 Net change in federal agency obligations . 1,144 222 -1,274 -975 -1,446 2,676 -2,807 36 Total net change in System Open Market Account 21,621 30,211 9,961 2,617 -5,586 -1,541 16,151 -10,585 1. Sales, redemptions, and negative figures reduce holdings of the System Open 2. In July 1984 the Open Market Trading Desk discontinued accepting bankers Market Account; all other figures increase such holdings. Details may not add to acceptances in repurchase agreements, totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • October 1988 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1988 1988 June 29 July 6 July 13 July 20 July 27 May June July Consolidated condition statement ASSETS 1 Gold certificate account 11,063 11,063 11,063 11,063 11,062 11,063 11,063 11,063 2 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3 380 348 350 361 374 402 369 383 Loans 4 To depository institutions 2,244 3,080 9,434 3,123 3,415 3,304 2,464 33,,665500 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 7,268 7,268 7,268 7,201 77,,220011 77,,226688 77,,226688 77,,220011 8 Held under repurchase agreements 2,553 1,582 625 0 0 0 2,240 0 U.S. Treasury securities Bought outright 9 Bills 106,033 106,771 109,237 107,011 103,750 106,215 105,473 110077,,447733 10 Notes 87,484 87,484 87,484 87,484 87,484 87,484 87,484 87,484 11 Bonds 29,493 29,493 29,493 29,493 29,493 29,493 29,493 29,493 12 Total bought outright2 223,010 223,748 226,214 223,988 220,727 223,192 222,450 224,450 13 Held under repurchase agreements 5,428 2,311 1,044 0 0 0 5,186 0 14 Total U.S. Treasury securities 228,438 226,059 227,258 223,988 220,727 223,192 227,636 224,450 15 Total loans and securities 240,503 237,989 244,585 234,312 231,343 233,764 239,608 235,301 16 Items in process of collection 6,155 10,495 6,977 7,239 7,239 5,354 6,604 7,278 17 Bank premises 725 727 729 728 729 723 727 729 Other assets 18 Denominated in foreign currencies 6,457 6,236 6,478 7,050 7,118 6,349 6,226 7,561 19 All other 8,222 7,809 8,015 7,798 7,913 7,316 7,827 8,075 20 Total assets 278,523 279,685 283,215 273,569 270,7% 269,989 277,442 275,408 LIABILITIES 21 Federal Reserve notes 216,736 219,557 219,248 217,862 217,219 215,168 217,812 217,240 Deposits 22 To depository institutions 39,982 39,607 46,061 38,149 36,642 3388,,775588 3355,,668811 3399,,999944 23 U.S. Treasury—General account 8,216 4,154 4,106 3,606 3,490 2,871 9,762 3,910 24 Foreign—Official accounts 203 339 205 266 343 298 382 269 25 Other 359 313 285 323 322 427 351 291 26 Total deposits 48,760 44,413 50,657 42,344 40,797 42,354 46,176 44,464 77 Deferred credit items 5,633 8,829 6,001 6,137 5,623 5,232 6,345 6,504 28 Other liabilities and accrued dividends5 2,847 2,595 2,747 2,650 2,588 2,539 2,819 2,611 29 Total liabilities 273,976 275,394 278,653 268,993 266,227 265,293 273,152 270,819 CAPITAL ACCOUNTS 30 Capital paid in 2,110 2,113 2,117 2,117 2,118 2,101 2,110 2,119 31 Surplus 2,047 2,047 2,047 2,047 2,047 2,047 2,039 2,046 32 Other capital accounts 390 131 398 412 404 548 141 424 33 Total liabilities and capital accounts 278,523 279,685 283,215 273,569 270,796 269,989 277,442 275,408 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 226,364 225,926 225,945 224,445 224,329 230,917 228,226 222266,,229944 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 260,133 260,036 260,748 261,263 261,825 258,661 260,049 262,021 36 LESS: Held by bank 43,397 40,479 41,500 43,401 44,606 43,493 42,237 44,781 37 Federal Reserve notes, net 216,736 219,557 219,248 217,862 217,219 215,168 217,812 217,240 Collateral held against notes net: 38 Gold certificate account 11,063 11,063 11,063 11,063 11,062 11,063 11,063 11,063 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 200,655 203,476 203,167 201,781 201,139 199,087 201,731 201,159 42 Total collateral 216,736 219,557 219,248 217,862 217,219 215,168 217,812 217,240 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 A11 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1988 1988 June 29 July 6 July 13 July 20 July 27 May 31 June 30 July 29 1 Loans—Total 2,244 3,080 9,434 3,123 3,415 3,282 2,464 3,650 2 Within 15 days 2,184 2,896 9,225 3,050 3,246 3,185 2,336 3,510 3 16 days to 90 days 60 184 209 73 169 97 128 140 4 91 days to 1 year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6 7 W 16 i t d h a in y s 1 t 5 o d 9 a 0 y d s ays 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 U.S. Treasury securities—Total 228,438 226,059 227,258 223,988 220,727 223,192 227,636 224,450 10 Within 15 days1 16,317 12,454 9,550 10,247 7,273 7,372 10,569 7,756 11 16 days to 90 days 50,356 53,765 55,018 51,240 50,742 53,232 50,269 56,583 1 1 1 1 2 3 4 5 9 O O O 1 v v v e d e e r r r a y 5 1 1 s 0 y y t e y e o a a e r r a 1 s r y t s o t e o a 5 r 1 y 0 e y a e rs a rs 6 5 2 1 6 6 3 5 , , , , 2 5 5 4 9 0 3 3 2 8 0 5 6 5 2 1 3 6 3 5 , , , , 9 5 9 4 2 0 7 3 5 8 2 5 6 5 2 1 6 6 3 5 , , , , 7 5 9 4 7 0 7 3 5 8 2 5 6 5 2 1 6 6 3 5 , , , , 7 5 7 4 8 0 2 8 5 8 2 6 6 5 2 1 6 6 3 5 , , , , 9 5 7 4 9 0 2 8 6 8 2 6 6 5 2 1 7 6 3 5 , , , , 1 5 5 4 1 0 3 3 5 8 5 0 7 2 5 1 6 0 3 5 , , , , 5 8 9 4 7 0 8 3 1 8 4 5 6 2 5 1 4 6 3 5 , , , , 3 5 7 4 9 0 2 8 5 8 2 6 16 Federal agency obligations—Total 9,821 8,850 7,893 7,201 7,201 7,268 9,508 7,201 17 Within 15 days' 2,783 1,649 733 165 174 246 2,470 185 18 16 days to 90 days 694 837 802 678 776 661 694 765 1,808 1,778 1,802 1,847 1,759 1,728 1,808 1,759 2 2 2 1 2 0 O O O v v v e e e r r r 5 1 1 0 y y y e e a e a r a r s r t s o t o 5 1 y 0 e a y r e s a rs 3 1 , , 2 1 1 0 4 8 4 3 9 3 1 , , 2 1 1 5 4 8 4 3 9 3 1 , , 2 1 1 2 4 8 4 3 9 3 1 , , 1 1 1 7 4 8 9 3 9 3 1 , , 1 1 1 7 3 8 3 0 9 3 1 , , 3 1 1 0 3 8 9 5 9 3 1 , , 2 1 1 0 4 8 4 3 9 3 1 , , 1 1 1 7 3 8 3 0 9 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 • October 1988 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1988 1984 1985 1986 1987 1987 IItteemm Dec. Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 40.96 47.26 57.46 58.72 58.72 59.46 59.57 59.76 60.37 60.37 60.64 61.25 2 Nonborrowed reserves 37.77 45.94 56.63 57.94 57.94 58.38 59.18 58.01 57.38 57.79 57.55 57.81 3 Nonborrowed reserves plus extended credit 40.38 46.44 56.93 58.43 58.43 58.75 59.38 59.49 60.00 59.89 60.11 60.34 4 Required reserves 40.11 46.20 56.09 57.69 57.69 58.16 58.44 58.83 59.51 59.32 59.75' 60.23 5 Monetary base 200.45 218.26 240.80 257.93 257.93 260.72 262.02 263.32 265.81 266.92 268.3 lr 270.56 Not seasonally adjusted 6 Total reserves3 41.84 48.27 58.70 60.02 60.02 61.20 58.66 58.85 60.95 59.45 60.68 61.47 7 Nonborrowed reserves 38.65 46.95 57.87 59.25 59.25 60.12 58.27 57.10 57.95 56.88 57.60 58.03 8 Nonborrowed reserves plus extended credit4 41.26 47.45 58.18 59.73 59.73 60.49 58.47 58.58 60.58 58.98 60.15 60.57 9 Required reserves 40.99 47.21 57.33 58.99 58.99 59.90 57.53 57.92 60.09 58.41 59.79' 60.46 10 Monetary base 203.39 221.49 244.55 262.05 262.05 262.01 259.01 260.77 265.01 265.73 269.44' 272.35 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS6 11 Total reserves3 40.70 48.14 59.56 62.12 62.12 62.64 60.05 60.08 62.06 60.68 61.99 62.76 12 Nonborrowed reserves 37.51 46.82 58.73 61.35 61.35 61.56 59.65 58.32 59.07 58.10 58.91 59.32 13 Nonborrowed reserves plus extended credit4 40.09 47.41 59.04 61.86 61.86 62.12 59.82 59.58 61.89 60.08 61.47 61.99 14 Required reserves 39.84 47.08 58.19 61.09 61.09 61.34 58.91 59.15 61.21 59.64 61.10' 61.75 15 Monetary base 204.18 223.53 247.71 266.16 266.16 265.79 262.60 263.98 268.13 268.90 272.65' 275.53 1. Latest monthly and biweekly figures are available from the Board's H.3(502) terms and conditions established for the extended credit program to help statistical release. Historical data and estimates of the impact on required reserves depository institutions deal with sustained liquidity pressures. Because there is of changes in reserve requirements are available from the Monetary and Reserves not the same need to repay such borrowing promptly as there is with traditional Projections Section. Division of Monetary Affairs. Board of Governors of the short-term adjustment credit, the money market impact of extended credit is Federal Reserve System, Washington, D.C. 20551. similar to that of nonborrowed reserves. 2. Figures incorporate adjustments for discontinuities associated with the 5. The monetary base not adjusted for discontinuities consists of total reserves implementation of the Monetary Control Act and other regulatory changes to plus required clearing balances and adjustments to compensate for float at Federal reserve requirements. To adjust for discontinuities due to changes in reserve Reserve Banks and the currency component of the money stock plus, for instirequirements on reservable nondeposit liabilities, the sum of such required tutions not having required reserve balances, the excess of current vault cash over reserves is subtracted from the actual series. Similarly, in adjusting for disconti- the amount applied to satisfy current reserve requirements. Currency and vault nuities in the monetary base, required clearing balances and adjustments to cash figures are measured over the weekly computation period ending Monday. compensate for float also are subtracted from the actual series. The seasonally adjusted monetary base consists of seasonally adjusted total 3. Total reserves not adjusted for discontinuities consist of reserve balances reserves, which include excess reserves on a not seasonally adjusted basis, plus with Federal Reserve Banks, which exclude required clearing balances and the seasonally adjusted currency component of the money stock and the remainadjustments to compensate for float, plus vault cash held during the lagged ing items seasonally adjusted as a whole. computation period by institutions having required reserve balances at Federal 6. Reflects actual reserve requirements, including those on nondeposit liabili- Reserve Banks plus the amount of vault cash equal to required reserves during the ties, with no adjustments to eliminate the effects of discontinuities associated with maintenance period at institutions having no required reserve balances. implementation of the Monetary Control Act or other regulatory changes to 4. Extended credit consists of borrowing at the discount window under the reserve requirements. 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 MEASURES1 Billions of dollars, averages of daily figures 1988 IItteemm22 D 19 e 8 c 4 . D 19 e 8 c 5 . D 19 e 8 c 6 . D 19 e 8 c 7 . Apr. Mayr Juner July Seasonally adjusted 1 Ml 551.9 620.1 725.4 750.8 770.1 770.2 776.5 782.3 7 M2 2,363.6 2,562.6 2,807.8 2,901.1 2,991.4 3,002.3 3,015.5 3,022.9 M3 2,978.3 3,196.4 3,490.4 3,661.1 3,766.7 3,779.8 3,799.9 3,816.8 4 L 3,519.4 3,825.9 4,133.8 4,323.9 4,460.5 4,488.4 4,501.6 n.a. 5 5,932.6 6,749.4 7,607.6 8,305.5 8,529.7 8,588.5 8,643.2 n.a. Ml components 6 Currency 156.1 167.7 180.4 196.5 202.5 203.6 204.9 206.3 7 Travelers checks 5.2 5.9 6.5 7.1 7.3 7.4 7.3 7.2 8 Demand deposits 244.1 267.2 303.3 288.0 290.2 287.4 289.9 290.6 9 Other checkable deposits 146.4 179.2 235.2 259.3 270.1 271.9 274.4 278.3 Nontransactions components 10 In M2 . 1,811.7 1,942.5 2,082.4 2,150.3 2,221.3 2,232.1 2,239.0 2,240.6 11 In M3 only8 614.7 633.8 682.6 760.0 775.3 777.5 784.4 793.9 Savings deposits9 1? Commercial Banks 122.6 124.8 155.5 178.2 184.2 186.0 118888..00 118899..55 13 Thrift institutions 162.9 176.6 215.2 236.0 238.6 239.2 241.0 242.2 Small-denomination time deposits10 14 Commercial Banks 386.3 383.3 364.6 384.6 402.5 404.7 406.8 409.7 15 Thrift institutions 497.0 496.2 488.6 528.5 562.3 567.3 568.1 568.1 Money market mutual funds 16 General purpose and broker-dealer 167.5 176.5 208.0 221.1 235.8 231.7 228.9 229.5 17 Institution-only 62.7 64.5 84.4 89.6 91.9 90.0 86.3 84.8 Large-denomination time deposits11 18 Commercial Banks 270.2 284.9 288.9 323.5 325.7 327.9 333333..55 334400..66 19 Thrift institutions 146.8 151.6 150.3 161.2 167.3 168.1 168.1 168.5 Debt components 70 Federal debt 1,365.3 1,584.3 1,804.5 1,954.7 2,018.5 2,023.1 22,,003322..11 n.a. 21 Nonfederal debt 4,567.3 5,165.1 5,803.2 6,350.8 6,511.2 6,565.4 6,611.2 n.a. Not seasonally adjusted 77 Ml 564.5 633.5 740.6 765.9 778.3 763.8 778.8 785.5 73 M2 2,373.2 2,573.9 2,821.5 2,914.8 2,998.9 2,988.5 3,013.3 3,027.5 74 2,991.4 3,211.0 3,507.2 3,677.7 3,771.5 3,767.3 3,795.2 3,814.2 75 L 3,532.7 3,841.4 4,151.9 4,342.0 4,460.8 4,470.9 4,498.2 n.a. 26 5,927.1 6,740.6 7,593.3 8,289.3 8,500.0 8,558.8 8,618.3 n.a. Ml components 77 Currency 158.5 170.2 183.0 199.4 201.6 203.6 220055..88 220077..99 78 Travelers checks 4.9 5.5 6.0 6.5 6.9 7.1 7.6 8.2 29 Demand deposits 253.0 276.9 314.4 298.5 292.0 282.9 291.0 292.7 30 Other checkable deposits 148.2 180.9 237.3 261.6 277.8 270.1 274.4 276.8 Nontransactions components 31 M27 1,808.7 1,940.3 2,080.8 2,148.9 2,220.7 2,224.7 22,,223344..55 22,,224422..00 32 M3 only8 618.2 637.1 685.7 762.9 772.6 778.8 781.9 786.7 Money market deposit accounts 33 Commercial Banks 267.4 332.8 379.6 358.2 360.3 357.0 359.9 359.2 34 Thrift institutions 149.4 180.8 192.9 167.0 163.0 162.6 162.4 161.7 Savings deposits9 35 Commercial Banks 121.5 123.7 115544..22 176.7 185.1 187.1 118899..66 119911..44 36 Thrift institutions 161.5 174.8 212.9 233.3 239.4 241.2 243.8 245.5 Small-denomination time deposits10 37 Commercial Banks 386.9 384.0 365.3 385.2 399.6 401.4 405.4 410.2 38 Thrift institutions 498.2 497.5 489.7 529.3 560.9 562.8 564.6 568.3 Money market mutual funds 39 General purpose and broker-dealer 167.5 176.5 208.0 221.1 235.8 231.7 228.9 229.5 40 Institution-only 62.7 64.5 84.4 89.6 91.9 90.0 86.3 84.8 Large-denomination time deposits11 41 Commercial Banks12 270.9 285.4 228899..11 323.6 325.6 328.5 332.7 337.8 42 Thrift institutions 146.8 151.9 150.7 161.8 165.7 167.2 166.9 167.0 Debt components 43 Federal debt 1,364.7 1,583.7 1,803.9 1,954.1 2,001.6 2,005.2 2,014.7 n.a. 44 Nonfederal debt 4,562.4 5,156.9 5,789.4 6,335.1 6,498.4 6,553.6 6,603.6 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • October 1988 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) Debt: Debt of domestic nonfinancial sectors consists of outstanding credit release. Historical data are available from the Banking Section, Division of market debt of the U.S. government, state and local governments, and private Monetary Affairs, Board of Governors of the Federal Reserve System, Washing- nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conton, D.C. 20551. sumer credit (including bank loans), other bank loans, commercial paper, bankers 2. Composition of the money stock measures and debt is as follows: acceptances, and other debt instruments. The source of data on domestic Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt of depository institutions; (2) travelers checks of nonbank issuers; (3) demand data are based on monthly averages. deposits at all commercial banks other than those due to depository institutions, 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of the U.S. government, and foreign banks and official institutions less cash items in depository institutions. the process of collection and Federal Reserve float; and (4) other checkable 4. Outstanding amount of U.S. dollar-denominated travelers checks of nondeposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- bank issuers. Travelers checks issued by depository institutions are included in matic transfer service (ATS) accounts at depository institutions, credit union demand deposits. share draft accounts, and demand deposits at thrift institutions. 5. Demand deposits at commercial banks and foreign-related institutions other M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) than those due to depository institutions, the U.S. government, and foreign banks issued by all commercial banks and overnight Eurodollars issued to U.S. residents and official institutions less cash items in the process of collection and Federal by foreign branches of U.S. banks worldwide, MMDAs, savings and small- Reserve float. denomination time deposits (time deposits—including retail RPs—in amounts of 6. Consists of NOW and ATS balances at all depository institutions, credit less than $100,000), and balances in both taxable and tax-exempt general purpose union share draft balances, and demand deposits at thrift institutions. and broker-dealer money market mutual funds. Excludes individual retirement 7. Sum of overnight RPs and overnight Eurodollars, money market fund accounts (IRA) and Keogh balances at depository institutions and money market balances (general purpose and broker-dealer), MMDAs, and savings and small funds. Also excludes all balances held by U.S. commercial banks, money market time deposits. funds (general purpose and broker-dealer), foreign governments and commercial 8. Sum of large time deposits, term RPs, and term Eurodollars of U.S. banks, and the U.S. government. residents, money market fund balances (institution-only), less the estimated M3: M2 plus large-denomination time deposits and term RP liabilities (in amount of overnight RPs and Eurodollars held by institution-only money market amounts of $100,000 or more) issued by commercial banks and thrift institutions, funds. term Eurodollars held by U.S. residents at foreign branches of U.S. banks 9. Savings deposits exclude MMDAs. worldwide and at all banking offices in the United Kingdom and Canada, and 10. Small-denomination time deposits—including retail RPs—are those issued balances in both taxable and tax-exempt, institution-only money market mutual in amounts of less than $100,000. All individual retirement accoums (IRA) and funds. Excludes amounts held by depository institutions, the U.S. government, Keogh accounts at commercial banks and thrifts are subtracted from small time money market funds, and foreign banks and official institutions. Also subtracted deposits. is the estimated amount of overnight RPs and Eurodollars held by institution-only 11. Large-denomination time deposits are those issued in amounts of $100,000 money market mutual funds. or more, excluding those booked at international banking facilities. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term 12. Large-denomination time deposits at commercial banks less those held by Treasury securities, commercial paper and bankers acceptances, net of money money market mutual funds, depository institutions, and foreign banks and market mutual fund holdings of these assets. official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 1.22 BANK DEBITS AND DEPOSIT TURNOVER1 Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1987 1988 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 1199885522 1199886622 1199887722 Dec. Jan. Feb. Mar. Apr. May DEBITS TO Seasonally adjusted Demand deposits3 1 All insured banks 156,091.6 188,345.8 217,115.9 203,290.6 213,270.8 221,057.3 218,986.7 213,971.5 224,052.3 2 Major New York City banks 70,585.8 91,397.3 104,496.3 92,640.1 98,733.8 104,568.3 101,161.0 100,695.1 109,714.7 3 Other banks 85,505.9 96,948.8 112,619.6 110,650.5 114,537.0 116,489.0 117,825.7 113,276.4 114,337.6 4 ATS-N0W accounts4 1,823.5 2,182.5 2,402.7 2,525.7 2,352.7 2,730.3 2,856.8 2,557.9 2,664.9 5 Savings deposits5 384.9 403.5 526.5 556.0 534.9 596.0 640.7 543.7 574.7 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 500.3 556.5 612.1 590.4 602.5 628.2 628.8 600.2 630.9 7 Major New York City banks 2,196.9 2,498.2 2,670.6 2,608.1 2,600.3 2,844.8 2,811.0 2,700.6 2,881.3 8 Other banks 305.7 321.2 357.0 358.3 362.5 369.7 377.3 354.9 360.6 9 ATS-NOW accounts4 15.8 15.6 13.8 14.2 13.0 14.9 15.5 13.8 14.2 10 Savings deposits 3.2 3.0 3.1 3.2 3.0 3.3 3.5 3.0 3.1 Not seasonally adjusted Demand deposits 11 All insured banks 156,052.3 188,506.4 217,124.8 222,338.9 210,029.1 208,899.2 233,286.6 214,848.8 222,685.5 12 Major New York City banks 70,559.2 91,500.0 104,518.6 102,548.7 40.3 36.8 109,557.8 101,141.9 106,335.6 13 Other banks 85,493.1 97,006.6 112,606.1 119,790.3 112,189.0 110,792.7 123,728.8 113,706.9 116,349.9 14 ATS-NOW accounts4 1,826.4 2,184.6 2,404.8 2,645.3 2,565.2 2,468.6 2,825.0 2,745.3 2,601.3 15 MMDA 1,223.9 1,609.4 1,954.2 2,276.4 2,305.6 2,102.8 2,337.5 2,372.8 2,341.0 16 Savings deposits 385.3 404.1 526.8 568.9 552.5 526.3 616.5 603.2 566.4 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 499.9 556.7 612.3 615.0 578.7 610.5 684.3 601.8 638.6 18 Major New York City banks, 2,196.3 2,499.1 2,674.9 2,661.4 2,430.3 2,664.6 3,005.7 . 2,706.2 2,895.6 19 Other banks 305.6 321.2 356.9 370.9 347.7 362.8 406.4 355.7 372.9 20 ATS-NOW accounts4 15.8 15.6 13.8 14.6 13.9 13.5 15.3 14.4 14.1 21 MMDA6 4.0 4.5 5.3 6.4 6.5 5.9 6.5 6.6 6.6 22 Savings deposits 3.2 3.0 3.1 3.2 3.1 3.0 3.4 3.3 3.1 1. Historical tables containing revised data for earlier periods may be obtained of states and political subdivisions. from the Monetary and Reserves Projections Section, Division of Monetary 4. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. counts authorized for automatic transfer to demand deposits (ATS). ATS data are 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. 3. Represents accounts of individuals, partnerships, and corporations and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • October 1988 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1987 1988 CCaatteeggoorryy Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted 1 Total loans and securities2 2,199.0 2,214.7 2,227.6 2,232.1 2,230.6 2,242.4 2,259.8 2,274.8 2,297.7 2,322.5 2,343.9 2,353.5 2 U.S. government securities 328.5 331.3 331.7 331.1 333.2 334.6 334.9 338.9 343.0 345.9 349.8 344.8 3 Other securities 193.7 193.7 194.2 196.2 196.0 193.9 195.6 197.5 198.2 197.6 198.5 199.1 4 Total loans and leases2 1,676.8 1,689.8 1,701.7 1,704.8 1,701.4 1,714.0 1,729.2 1,738.4 1,756.4 1,778.9 1,795.5 1,809.5 5 Commercial and industrial ..... 554.0 559.0 562.8 563.1 565.5 568.3 571.1 569.3 578.8 587.4 594.4 600.7 6 Bankers acceptances held ... 5.3 5.4 5.5 4.6 4.3 4.5 4.5 4.8 4.7 4.5 4.5 4.4 / Other commercial and industrial 548.7 553.6 557.3 558.5 561.2 563.9 566.6 564.5 574.1 582.9 589.9 596.2 8 U.S. addressees4 540.6 545.7 549.4 551.0 553.1 554.9 557.6 556.1 565.8 575.7 583.0 589.4 9 Non-U.S. addressees 8.1 7.9 7.9 7.5 8.2 9.0 8.9 8.4 8.3 7.1 7.0 6.8 10 Real estate 556.8 561.7 569.4 576.2 582.3 587.5 593.0 598.2 604.4 612.6 618.9 624.9 11 Individual 321.5 322.8 324.1 325.0 325.9 327.9 330.8 334.6 337.6 339.1 340.6 341.6 12 Security 45.4 46.1 47.1 39.3 33.4 36.3 41.3 39.8 38.1 38.8 38.6 38.0 13 Nonbank financial institutions 31.5 31.4 31.7 31.9 31.9 32.1 32.7 32.1 31.2 31.8 31.4 31.9 14 Agricultural 29.7 29.6 29.6 29.3 29.2 29.3 29.5 29.5 29.5 29.4 29.0 28.3 15 State and political subdivisions 54.8 54.7 54.1 53.4 51.2 52.3 52.3 52.1 51.9 51.6 51.5 51.1 1161 Foreign banks 9.1 9.2 9.6 8.8 8.2 8.2 7.8 8.1 8.5 8.2 8.2 8.5 Foreign official institutions 5.7 5.7 5.8 5.7 5.6 5.6 5.2 5.2 5.2 5.3 5.2 5.2 18 Lease financing receivables 24.0 24.1 24.3 24.5 24.8 24.8 24.7 24.8 25.0 25.3 25.8 26.5 19 All other loans 44.2 45.4 43.1 47.6 43.3 41.6 40.9 44.7r 46.1 49.5 51.8 52.9 Not seasonally adjusted 20 Total loans and securities2 2,188.8 2,211.6 2,222.4 2,231.3 2,247.0 2,255.0 2,264.5 2,275.0 2,298.8 2,319.1 2,340.0 2,343.3 21 U.S. government securities 328.3 331.3 329.3 331.0 333.1 336.1 340.0 340.8 342.6 344.3 346.3 343.9 22 Other securities 193.6 193.8 193.3 195.6 196.6 196.5 196.3 197.1 197.8 197.7 198.0 197.9 23 Total loans and leases2 1,666.9 1,686.6 1,699.8 1,704.7 1,717.3 1,722.4 1,728.2 1,737.2 1,758.5 1,777.1 1,795.7 1,801.6 24 Commercial and industrial ..... 549.5 555.7 558.7 562.0 569.6 568.0 570.3 574.5 582.8 589.8 595.9 597.8 25 Bankers acceptances held ... 5.3 5.5 5.4 4.6 4.4 4.3 4.4 4.8 4.7 4.5 4.6 4.5 26 Other commercial and industrial 544.2 550.2 553.3 557.4 565.2 563.7 565.9 569.7 578.1 585.3 591.3 593.3 27 U.S. addressees 536.0 542.1 545.3 549.3 557.1 555.5 557.4 561.5 570.0 577.9 584.2 586.0 28 Non-U.S. addressees 8.3 8.1 8.1 8.1 8.1 8.2 8.5 8.1 8.1 7.3 7.1 7.3 29 Real estate 556.8 562.4 570.0 576.8 583.2 587.8 592.3 597.4 603.4 612.0 618.6 624.9 30 Individual 321.5 324.3 325.7 326.7 330.2 331.3 330.2 331.5 334.5 336.3 338.5 340.2 31 Security 43.3 44.8 45.6 39.4 35.1 37.1 39.7 39.3 39.8 39.3 40.0 37.5 32 Nonbank financial institutions 31.4 31.8 31.7 32.3 33.2 32.4 31.6 31.1 31.1 31.5 31.5 31.7 33 Agricultural 30.6 30.7 30.4 29.6 28.9 28.6 28.5 28.5 28.7 29.1 29.3 28.9 34 State and political subdivisions 54.1 53.8 53.2 52.3 51.2 54.1 53.5 53.0 52.4 51.6 51.1 50.3 35 Foreign banks 8.9 9.5 9.8 8.8 8.6 8.4 8.0 8.0 8.1 7.9 8.1 8.5 36 Foreign official institutions 5.7 5.7 5.8 5.7 5.6 5.6 5.2 5.2 5.2 5.3 5.2 5.2 37 Lease financing receivables 23.9 24.0 23.9 24.2 24.8 25.0 24.9 25.0 25.2 25.4 26.0 26.5 38 All other loans 41.0 43.9 44.8 46.8 46.8 44.1 43.8 43.8 47.1 48.9 51.3 50.1 1. These data also appear in the Board's G.7 (407) release. For address, see 3. Includes nonfinancial commercial paper held. inside front cover. 4. United States includes the 50 states and the District of Columbia. 2. Excludes loans to commercial banks in the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions All 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1987 1988 Source Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Total nondeposit funds 1 Seasonally adjusted 166.8 177.3 176.3 173.8 177.4 178.9 176.7 174.2 181.5 191.5 190.7 187.5 2 Not seasonally adjusted 166.9 177.7 176.3 176.1 178.2 179.2 179.2 175.1 180.7 191.3 187.0 183.7 Federal funds, RPs, and other borrowings from nonbanks 3 Seasonally adjusted 167.1 165.0 164.7 165.9 162.2 169.8 173.6 177.4 179.5 181.6 181.7 176.5 4 Not seasonally adjusted 167.2 165.4 164.8 168.3 163.1 170.1 176.1 178.2 178.7 181.4 178.1 172.7 5 Net b in a s l t a i n tu c t e i s o n d s u , e n t o o t f s o e r a e s i o g n n a -r ll e y l a a te d d j usted -.3 12.3 11.6 7.9 15.2 9.1 3.1 -3.1 2.0 9.8 8.9 11.0 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted -17.7 -11.8 -14.7 -17.1 -14.0 -16.5 -20.2 -25.3 -22.2 -16.4 -16.0 -13.6 7 Gross due from balances 64.5 63.8 67.7 70.4 69.5 71.2 72.9 76.6 72.9 69.6 69.4 70.2 8 Gross due to balances 46.8 52.0 53.0 53.3 55.5 54.7 52.7 51.3 50.7 53.3 53.4 56.6 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted5 17.4 24.1 26.3 24.9 29.2 25.6 23.3 22.1 24.2 26.2 25.0 24.6 10 Gross due from balances 77.7 77.3 79.7 83.2 79.8 85.2 87.3 88.6 88.3 89.9 93.6 94.0 11 Gross due to balances 95.0 101.4 106.0 108.2 109.0 110.9' 110.6 110.7 112.4 116.0 118.5 118.7 Security RP borrowings 1 1 2 3 S N e o a t so se n a a s l o ly n a a l d ly j u a st d e j d u sted 1 1 0 0 5 5 . . 2 3 1 1 0 0 7 7 . . 4 8 1 1 0 0 7 7 . . 6 6 1 1 0 0 7 9 . . 0 3 1 1 0 0 6 7 . . 5 4 1 1 0 0 8 9 . . 9 3 1 1 0 1 7 0 . . 7 3 1 10 0 9 8 . . 1 2 1 1 1 1 2 1 . . 0 2 1 1 1 1 4 4 . . 9 7 1 11 1 4 7 . . 1 7 1 1 1 1 4 1 . . 8 0 U.S. Treasury demand balances 14 Seasonally adjusted 28.5 24.9 34.2 35.7 26.1 18.6 22.6 24.9 21.8 24.7 22.0 20.2 15 Not seasonally adjusted 21.6 25.5 30.7 25.8 22.4 24.9 28.2 22.3 21.7 30.4 21.0 22.0 Time deposits, $100,000 or more8 16 Seasonally adjusted 372.3 373.0 380.5 387.0 389.2 389.1 394.4 396.1 394.0' 396.4' 400.5' 406.7 17 Not seasonally adjusted 371.8 373.2 380.4 387.0 389.3 390.1 394.7 398.2 393.9' 397.1' 399.8' 403.9 1. Commercial banks are those in the 50 states and the District of Columbia business. This includes borrowings from Federal Reserve Banks and from foreign with national or state charters plus agencies and branches of foreign banks. New banks, term federal funds, overdrawn due from bank balances, loan RPs, and York investment companies majority owned by foreign banks, and Edge Act participations in pooled loans. corporations owned by domestically chartered and foreign banks. 4. Averages of daily figures for member and nonmember banks. These data also appear in the Board's G.10 (411) release. For address, see 5. Averages of daily data. inside front cover. 6. Based on daily average data reported by 122 large banks. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from 7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at nonbanks and not seasonally adjusted net Eurodollars. commercial banks. Averages of daily data. 3. Other borrowings are borrowings on any instrument, such as a promissory 8. Averages of Wednesday figures. note or due bill, given for the purpose of borrowing money for the banking Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • October 1988 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1987 1988 AAccccoouunntt Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Juner July ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2,374.8 2,402.4 2,389.9 2,430.5 2,416.5 2,424.1 2,444.6 2,462.9 2,469.0 2,508.7 2,503.3 2 Investment securities 501.7 503.8 508.0 514.4 516.0 515.4 518.3 520.3 522.5 519.8 520.8 3 U.S. government securities 313.8 316.0 317.3 321.4 323.7 323.6 324.6 328.1 330.0 326.8 328.3 4 Other 187.9 187.9 190.7 193.1 192.2 191.8 193.7 192.1 192.6 192.9 192.4 5 Trading account assets 19.5 19.6 20.3 16.9 18.2 21.9 20.3 19.6 20.3 22.1 23.9 6 Total loans 1,853.6 1,878.9 1,861.6 1,899.2 1,882.3 1,886.9 1,906.0 1,923.0 1,926.2 1,966.8 1,958.6 7 Interbank loans 157.4 172.9 162.0 172.1 160.9 162.8 161.0 161.6 154.0 166.6 160.2 8 Loans excluding interbank 1,696.2 1,706.1 1,699.7 1,727.2 1,721.4 1,724.1 1,745.0 1,761.5 1,772.1 1,800.2 1,798.4 9 Commercial and industrial 560.7 559.7 561.1 576.4 565.4 570.4 576.9 584.1 588.7 600.3 594.7 10 Real estate 564.1 571.7 577.4 586.3 589.3 592.7 600.0 605.9 613.9 621.3 626.6 11 Individual 325.3 326.7 326.9 332.4 330.8 330.4 332.7 335.9 336.3 339.3 340.4 12 All other 246.0 248.0 234.3 232.1 235.8 230.6 235.4 235.6 233.2 239.3 236.7 13 Total cash assets 223.8 223.5 215.2 232.5 209.7 203.3 207.9 210.8 197.0 218.2 213.7 14 Reserves with Federal Reserve Banks. 32.9 38.3 33.8 36.2 33.3 32.8 32.1 32.2 26.0 34.4 30.7 15 Cash in vault 24.5 25.0 24.0 28.5 25.8 25.1 24.8 25.4 25.4 26.5 25.9 16 Cash items in process of collection ... 81.6 79.0 76.1 79.9 70.7 66.8 74.1 76.4 71.6 77.2 75.8 17 Demand balances at U.S. depository institutions 32.7 32.3 32.9 36.6 31.3 30.0 31.6 30.6 29.5 31.9 31.6 18 Other cash assets 52.1 48.9 48.4 51.4 48.6 48.5 45.3 46.2 44.6 48.3 49.8 19 Other assets 193.6 186.3 187.5 184.0 177.7 178.1 189.0 185.2 182.0 189.1 182.7 20 Total assets/total liabilities and capital 2,792.2 2,812.2 2,792.6 2,847.1 2,803.9 2,805.5 2,841.5 2,859.0 2,848.0 2,916.0 2,899.6 21 Deposits 1,972.4 1,971.2 1,974.1 2,009.1 1,969.0 1,975.0 2,004.1 2,007.2 2,004.6 2,038.3 2,045.8 22 Transaction deposits 612.4 598.1 592.0 623.3 576.2 567.5 587.6 595.0 578.1 602.3 597.3 23 Savings deposits 535.3 531.7 531.1 528.0 531.7 535.6 539.7 536.0 542.0 544.5 545.3 24 Time deposits 824.7 841.4 851.0 857.9 861.1 871.8 876.8 876.2 884.4 891.6 903.2 25 Borrowings 416.3 435.7 420.1 426.2 446.1 444.2 446.3 456.3 448.7 478.1 456.9 26 Other liabilities 224.7 225.5 218.9 231.5 208.1 205.3 211.1 214.1 211.8 215.2 213.3 27 Residual (assets less liabilities) 178.8 179.8 179.5 180.4 180.7 181.0 180.0 181.4 182.9 184.5 183.6 MEMO 28 U.S. government securities (including trading account) 327.7 329.9 331.7 332.4 337.7 340.8 340.1 342.8 345.7 343.5 345.9 29 Other securities (including trading account) 193.5 193.5 196.6 198.9 196.5 196.5 198.5 197.1 197.2 198.4 198.8 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,195.4 2,218.6 2,213.8 2,238.5 2,232.9 2,237.8 2,255.8 2,272.0 2,277.3 2,303.8 2,306.6 31 Investment securities 475.9 478.7 482.6 488.3 488.0 487.6 490.4 493.8 495.2 492.4 492.8 32 U.S. Treasury securities 302.9 305.7 306.4 311.0 312.1 312.2 313.1 316.8 317.7 314.9 315.7 33 Other 173.0 173.0 176.2 177.3 175.9 175.4 177.2 177.0 177.6 177.5 177.0 34 Trading account assets 19.5 19.6 20.3 16.9 18.2 21.9 20.3 19.6 20.3 22.1 23.9 35 Total loans 1,700.0 1,720.3 1,711.0 1,733.3 1,726.6 1,728.3 1,745.1 1,758.6 1,761.8 1,789.3 1,789.9 36 Interbank loans 125.0 133.3 130.5 135.3 131.4 133.4 132.2 129.0 125.5 133.5 131.2 37 Loans excluding interbank 1,575.0 1,587.0 1,580.4 1,598.0 1,595.2 1,595.0 1,612.9 1,629.7 11,,663366..33 1,655.8 1,658.7 38 Commercial and industrial 470.2 470.6 472.0 479.4 472.7 475.6 480.7 487.2 448888..88 492.5 490.9 39 Real estate 554.0 561.9 567.3 575.0 577.9 580.3 587.3 593.0 600.5 607.9 613.6 40 Individual 325.0 326.4 326.6 332.1 330.5 330.1 332.4 335.6 336.0 338.9 340.1 41 All other 225.8 228.1 214.6 211.6 214.1 209.0 212.5 213.9 211.0 216.5 214.2 42 Total cash assets 204.8 207.8 199.3 214.9 192.1 184.4 191.7 194.3 180.8 199.4 194.1 43 Reserves with Federal Reserve Banks. 30.9 36.5 31.5 35.1 31.7 30.5 30.1 30.8 23.6 32.9 29.5 44 Cash in vault 24.4 24.9 24.0 28.4 25.7 25.1 24.7 25.4 25.4 26.4 25.9 45 Cash items in process of collection ... 81.0 78.4 75.7 79.5 70.2 66.3 73.6 75.9 71.1 76.6 75.2 46 Demand balances at U.S. depository institutions 30.8 30.6 31.4 34.7 29.7 28.4 30.0 29.0 27.8 30.1 29.7 47 Other cash assets 37.7 37.3 36.7 37.3 34.8 34.0 33.4 33.3 32.9 33.4 33.8 48 Other assets 134.2 130.0 123.7 127.2 118.9 121.4 126.8 125.1 121.7 129.4 124.0 49 Total assets/liabilities and capital 2,534.5 2,556.4 2,536.8 2,580.7 2,543.9 2,543.6 2,574.3 2,591.5 2,579.7 2,632.7 2,624.7 50 Deposits 1,910.3 1,909.1 1,912.4 1,944.6 1,906.9 1,912.2 1,940.1 1,943.7 1,940.6 1,972.7 1,980.0 51 Transaction deposits 603.9 589.5 583.7 614.9 567.9 559.6 579.2 586.4 569.8 593.6 588.6 52 Savings deposits 533.2 529.5 528.8 525.7 529.4 533.2 537.3 533.6 539.6 541.7 542.8 53 Time deposits 773.3 790.1 799.9 804.1 809.6 819.4 823.6 823.7 831.2 837.4 848.6 54 Borrowings 324.7 345.7 323.2 331.9 347.0 344.8 343.4 351.0 344.2 362.0 346.0 55 Other liabilities 123.8 125.0 124.8 127.0 112.5 108.8 114.0 118.5 115.2 116.7 118.2 56 Residual (assets less liabilities) 175.6 176.6 176.3 177.2 177.5 177.8 176.8 178.2 179.7 181.3 180.4 1. Back data are available from the Banking and Monetary Statistics section, the last Wednesday of the month based on a weekly reporting sample of Board of Governors of the Federal Reserve System, Washington, D.C., 20551. foreign-related institutions and quarter-end condition reports. These data also appear in the Board's weekly H.8 (510) release. 2. Commercial banking institutions include insured domestically chartered Figures are partly estimated. They include all bank-premises subsidiaries and commercial banks, branches and agencies of foreign banks, Edge Act and other significant majority-owned domestic subsidiaries. Loan and securities data Agreement corporations, and New York State foreign investment corporations. for domestically chartered commercial banks are estimates for the last Wednes- 3. Insured domestically chartered commercial banks include all member banks day of the month based on a sample of weekly reporting banks and quarter-end and insured nonmember banks. condition report data. Data for other banking institutions are estimates made for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures 1988 AAccccoouunntt June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 1 Cash and balances due from depository institutions 133,443 103,512' 123,097 100,236 107,943 117,852 110,500 105,055 103,025 2 Total loans, leases, and securities, net 1,138,997' 1,123,307' 1,144,402' 1,124,669 1,128,652' 1,126,645 1,124,510 1,126,173 1,127,761 3 U.S. Treasury and government agency 131,985r 133,957' 134,732' 131,568' 129,891' 129,170 129,312 130,605 130,874 4 Trading account 16,311 18,859 21,246 18,016 16,677 16,945 16,386 17,232 17,535 Investment account 115,674' 115,099' 113,486' 113,552' 113,214' 112,225 112,926 113,372 113,340 6 Mortgage-backed securities2 41,817r 41.85C 41,313' 41,888' 41,501' 41,591 41,836 42,409 42,299 All other maturing in 7 One year or less 17,136 16,588 16,426 16,176 16,715 17,243 17,238 17,188 17,422 8 Over one through five years 47,183 47,131 46,186 45,988 45,368 43,789 44,461 45,101 44,803 9 Over five years 9,538 9,530 9,561 9,499 9,630 9,602 9,391 8,674 8,815 10 Other securities 73,788r 73,336' 73,431' 72,873' 73,385' 72,786 72,855 72,794 73,012 11 Trading account 1,719 1,654 1,929 1,690 1,939 1,808 1,705 1,613 1,898 12 Investment account 72,069' 71,682' 71,502' 71,182' 71,445' 70,977 71,150 71,180 71,114 13 States and political subdivisions, by maturity 48,531 48,275 48,212 48,138 48,006 47,334 47,377 47,410 47,456 14 One year or less 5,661 5,633 5,590 5,541 5,348 5,207 5,176 5,141 5,160 IS Over one year 42,870 42,642 42,621 42,598 42,659 42,128 42,201 42,269 42,296 16 Other bonds, corporate stocks, and securities 23,538' 23,407' 23,29c 23,044' 23,439' 23,643 23,773 23,770 23,658 17 Other trading account assets 3,262 2,972 3,418 3,257 3,474' 3,568 3,304 3,542 4,463 18 Federal funds sold3 85,346 71,904 86,870 70,770 74,583 68,276 70,904 69,914 71,024 19 To commercial banks 52,608 42,943 53,762 42,184 47,640 43,678 44,984 43,363 43,799 70 To nonbank brokers and dealers in securities 21,695 18,669 22,456 19,610 18,249 16,769 17,644 18,065 18,185 71 To others 11,044 10,292 10,651 8,976 8,694 7,829 8,276 8,486 9,040 77 Other loans and leases, gross 886,018' 882,495' 887,253' 887,518' 888,317 893,433 888,626 889,896 888,844 73 Other loans, gross 864,521' 860,715' 865,410' 865,589' 866,348' 871,324 866,300 867,453 866,423 74 Commercial and industrial 299,289' 299,949' 300,578' 300,333' 300,860' 301,902 298,801 299,447 299,344 Bankers acceptances and commercial paper 2,232 2,206 2,083 2,111 2,158 2,180 1,994 2,000 2,009 76 All other 297,057' 297,744' 298,495' 298,221' 298,702' 299,722 296,806 297,446 297,334 77 U.S. addressees 294,446' 295,124' 295,930' 295,670' 2%, 171' 297,200 294,280 294,925 294,699 28 Non-U.S. addressees 2,611 2,619 2,565 2,552 2,531 2,522 2,526 2,521 2,635 79 Real estate loans 277,449' 277,871' 278,928 279,803' 280,882' 281,306 282,629 282,868 283,663 30 Revolving, home equity 18,528' 18,647' 18,780' 18,910' 19,042' 19,086 19,199 19,270 19,367 31 All other 258,921' 259,224' 260,149' 260,893' 261,840' 262,220 263,430 263,598 264,297 32 To individuals for personal expenditures 162,420' 162,491' 162,48C 162,379' 162,397' 162,510 162,531 162,855 162,296 33 To depository and financial institutions 50,464' 49,754' 49,293' 49,964' 48,676' 51,392 50,716 51,202 50,609 34 Commercial banks in the . United States 23,226' 23,307' 22,753' 23,435' 22,173' 22,694 23,251 24,071 24,212 35 Banks in foreign countries 4,055 3,829 4,071 4,198 3,786 5,264 4,667 4,669 4,103 36 Nonbank depository and other financial institutions 23,184 22,619 22,469 22,330 22,717 23,433 22,798 22,461 22,294 37 For purchasing and carrying securities 13,737 11,568 13,772 12,856 13,712 13,497 12,460 11,827 11,994 38 To finance agricultural production 5,715 5,745 5,609 5,672 5,645' 5,695 5,706 5,623 5,566 39 To states and political subdivisions 31,006 30,897 30,837 30,793 30,759 30,414 30,385 30,235 30,352 40 To foreign governments and official institutions 2,235 1,950 2,080 1,978 1,982 1,975 1,948 1,971 1,866 41 All other 22,205' 20,489' 21,831' 21,812' 21,435' 22,634 21,122 21,426 20,732 42 Lease financing receivables 21,497' 21,780' 21,844' 21,929' 21,969' 22,109 22,326 22,443 22,421 43 LESS: Unearned income 4,901' 4,916' 4,918' 4,941' 4,913 4,846 4,850 4,866 4,897 44 Loan and lease reserve 36,500 36,442 36,384 36,376 36,086 35,742 35,641 35,712 35,559 45 Other loans and leases, net 844,617' 841,137' 845,952' 846,201 847,318 852,845 848,135 849,318 848,388 46 All other assets 126,495' 122,486' 127,258' 123,042 128,183 128,254 122,754 124,485 123,014 47 Total assets 1,398,935' 1,349,305' 1,394,758' 1,347,947 1,364,778' 1,372,751 1,357,765 1,355,713 1,353,800 48 Demand deposits 268,245 226,567' 263,607 222,352 232,704 255,698 229,897 228,400 226,382 49 Individuals, partnerships, and corporations 205,929 179,592 198,136 175,839 182,577 198,415 185,126 180,699 177,638 50 States and political subdivisions 7,331 5,336 7,023 6,463 5,979 5,886 5,441 5,966 6,156 51 U.S. government 1,536 3,153 15,723 2,785 3,008 4,312 1,300 4,226 2,898 52 Depository institutions in the United States 32,132 21,738' 26,086 20,939 22,433 27,170 21,073 21,547 22,598 53 Banks in foreign countries 7,719 6,283 6,225 6,988 7,170 8,449 6,554 6,627 6,988 54 Foreign governments and official institutions 892 732 777 687 1,091 886 640 980 856 55 Certified and officers' checks 12,705 9,733 9,635 8,650 10,446 10,577 9,762 8,354 9,246 56 Transaction balances other than demand deposits 73,306 73,295 73,605 71,019 70,702 74,449 72,863 72,364 71,614 57 Nontransaction balances 596,663 598,320 599,690 601,289 599,672 601,640 603,004 602,832 604,081 58 Individuals, partnerships, and corporations 555,922' 557,433' 558,868' 560,713' 559,925' 563,383 564,232 564,044 564,675 59 States and political subdivisions 30.19C 30,382' 30,373' 30,045' 29,213 27,920 28,247 28,436 28,822 60 U.S. government 1,068' 1,056' 1,062' 1,071' 1,080 1,038 1,048 1,041 1,061 61 Depository institutions in the United States 8,772' 8,738' 8,627' 8,673' 8,660' 8,485 8,682 8,498 8,6% 67. Foreign governments, official institutions, and banks 710' 711' 759' 789 793 813 795 813 826 63 Liabilities for borrowed money 287,721 277,693 283,767' 282,480 287,781' 269,257 277,395 274,272 273,604 64 Borrowings from Federal Reserve Banks 2,550 2,900 3,853 1,800 1,675 2,600 8,732 2,625 2,815 65 Treasury tax-and-loan notes 13,599 3,066 3,056' 26,044 25,580 7,653 12,241 14,708 16,059 66 All other liabilities for borrowed money5 271,572 271,727 276,857' 254,636 260,526' 259,004 256,422 256,939 254,729 67 Other liabilities and subordinated notes and debentures 84,906' 84,626' 85,702' 82,502 85,491 82,874 85,107 88,427 89,084 68 Total liabilities 1,310,841' 1,260,503 1,306,371' 1,259,642 1,276,350' 1,283,918 1,268,267 1,266,295 1,264,764 69 Residual (total assets minus total liabilities)6 88,094 88,803 88,386 88,304 88,428 88,833 89,497 89,418 89,036 MEMO 70 Total loans and leases (gross) and investments adjusted7 ... 1,104,564' 1,098,415' 1,109,189' 1,100,366' 1,099,838' 1,100,860 1,096,766 1,099,316 1,100,206 71 Total loans and leases (gross) adjusted 895,530' 888,149' 897,608' 892,669' 893,088' 895,336 891,294 892,376 891,857 77 Time deposits in amounts of $100,000 or more 180,498' 182,329 182,688' 184,693' 183,477' 183,009 184,257 184,642 186,633 73 U.S. Treasury securities maturing in one year or less 16,510 17,143 16,477 15,534 16,280 16,670 16,005 16,709 17,258 74 Loans sold outright to affiliates—total 1,474 1,468 1,403 1,441 1,522 1,509 1,486 1,476 1,424 75 Commercial and industrial 1,027 1,018 953 989 1,068 1,054 1,031 1,020 968 76 Other 447 449 450 452 454 455 455 456 456 77 Nontransaction savings deposits (including MMDAs) 255,212 254,595 255,227 254,349 253,607 255,540 255,085 254,140 253,128 1. Beginning Jan. 6, 1988, the "Large bank" reporting group was revised repurchase; for information on these liabilities at banks with assets of $1 billion or somewhat, eliminating some former reporters with less than $2 billion of assets more on Dec. 31, 1977, see table 1.13. and adding some new reporters with assets greater than $3 billion. 6. This is not a measure of equity capital for use in capital-adequacy analysis or 2. Includes U.S. government-issued or guaranteed certificates of participation for other analytic uses. in pools of residential mortgages. 7. Exclusive of loans and federal funds transactions with domestic commercial 3. Includes securities purchased under agreements to resell. banks. 4. Includes allocated transfer risk reserve. 8. Loans sold are those sold outright to a bank's own foreign branches, 5. Includes federal funds purchased and securities sold under agreements to nonconsolidated nonbank affiliates of the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank subsidiaries of the holding company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • October 1988 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1988 AAccccoouunntt June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 1 Cash balances due from depository institutions 35,082 25,185 33,809 21,791 27,325 26,919 27,251 24,432 22,474 2 Total loans, leases and securities, net2 226,149 215,179 228,243 218,686 218,753 215,109 218,565 218,904 217,776 Securities 3 U.S. Treasury and government agency 0 0 0 0 0 0 0 0 0 4 Trading account3 0 0 0 0 0 0 0 0 0 5 Investment account 14,856 14,882 14,818 14,747 14,702 14,586 14,638 14,771 14,785 6 Mortgage-backed securities4 5,520 5,513 5,512 5,453 5,431 5,509 5,748 5,724 5,669 All other maturing in 7 One year or less 2,414 2,385 2,325 2,315 2,311 2,220 2,187 2,187 2,285 8 Over one through five years 4,750 4,809 4,839 4,838 4,811 4,678 4,747 4,816 4,816 9 Over five years 2,171 2,175 2,141 2,141 2,149 2,180 1,956 2,044 2,014 10 Other securities 0 0 0 0 0 0 0 0 0 11 Trading account3 0 0 0 0 0 0 0 0 0 12 Investment account 16,801 16,802 16,798 16,679 16,444 16,304 16,484 16,488 16,529 13 States and political subdivisions, by maturity 12,950 12,949 12,953 12,937 12,866 12,620 12,713 12,739 12,774 14 One year or less 1,002 996 986 979 866 907 925 929 930 15 Over one year 11,947 11,953 11,967 11,958 12,000 11,713 11,788 11,811 11,844 16 Other bonds, corporate stocks, and securities 3,852 3,853 3,846 3,742 3,578 3,684 3,771 3,748 3,756 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold5 38,139 30,357 39,542 30,766 32,545 26,762 31,628 31,641 31,313 19 To commercial banks 16,984 12,099 18,374 13,951 16,573 12,495 15,985 15,497 14,538 20 To nonbank brokers and dealers in securities 13,026 10,411 13,467 10,485 9,730 8,918 10,015 10,529 10,748 21 To others 8,129 7,846 7,701 6,330 6,242 5,349 5,628 5,615 6,026 22 Other loans and leases, gross 171,689 168,464 172,414 171,832 170,391 172,531 170,845 171,073 170,159 23 Other loans, gross 166,720 163,238 167,159 166,557 165,110 167,214 165,350 165,567 164,685 24 Commercial and industrial 57,161 57,189 58,122 57,548 57,389 57,634 57,103 57,952 57,779 25 Bankers acceptances and commercial paper 487 454 431 422 446 539 461 445 484 26 All other 56,674 56,735 57,691 57,126 56,943 57,095 56,642 57,507 57,294 27 U.S. addressees 56,204 56,302 57,284 56,730 56,515 56,689 56,226 57,078 56,760 28 Non-U.S. addressees 470 433 407 396 428 406 417 430 535 29 Real estate loans 46,666 46,767 46,670 46,%2 47,041 47,265 47,523 47,359 47,680 30 Revolving, home equity 2,937 2,950 2,966 2,980 2,995 3,008 3,022 3,036 3,055 31 All other 43,728 43,818 43,703 43,982 44,046 44,257 44,501 44,322 44,625 32 To individuals for personal expenditures 21,529 21,523 21,491 21,302 20,928 20,867 20,804 20,910 20,945 33 To depository and financial institutions 21,247 20,670 21,010 22,027 20,730 22,506 21,433 21,328 20,448 34 Commercial banks in the United States 11,993 12,210 12,027 12,896 11,944 12,676 12,354 12,124 12,003 35 Banks in foreign countries 2,512 2,222 2,544 2,763 2,247 3,352 2,818 2,850 2,163 36 Nonbank depository and other financial institutions 6,742 6,238 6,439 6,368 6,540 6,478 6,261 6,354 6,282 37 For purchasing and carrying securities 5,893 3,935 5,717 4,556 5,480 5,322 4,958 4,490 4,628 38 To finance agricultural production 289 291 302 298 295 290 299 206 203 39 To states and political subdivisions 6,904 6,952 6,886 6,866 6,836 6,763 6,754 6,716 6,743 40 To foreign governments and official institutions 733 481 656 575 607 525 627 653 559 41 All other 6,297 5,429 6,306 6,422 5,804 6,042 5,848 5,953 5,701 42 Lease financing receivables 4,969 5,226 5,255 5,275 5,281 5,317 5,495 5,506 5,474 43 LESS: Unearned income 1,520 1,532 1,537 1,546 1,564 1,501 1,516 1,535 1,553 44 Loan and lease reserve 13,817 13,794 13,793 13,791 13,765 13,574 13,514 13,533 13,456 45 Other loans and leases, net 156,352 153,137 157,085 156,494 155,062 157,456 155,815 156,004 155,150 46 All other assets7 60,885 58,708 61,415 56,621 59,110r 59,052 54,830 56,038 57,589 47 Total assets 322,116 299,072 323,466 297,099 305,188r 301,079 300,646 299,374 297,839 Deposits 48 Demand deposits 72,300 55,003 70,948 54,348 59,105 65,389 55,557 56,398 55,264 49 Individuals, partnerships, and corporations 47,495 37,919 47,320 37,910 40,222 44,368 39,221 39,513 37,351 50 States and political subdivisions 1,109 579 1,226 631 775 791 638 917 695 51 U.S. government 207 646 4,624 483 560 846 168 751 541 52 Depository institutions in the United States 10,277 5,520 8,026 5,439 6,078 6,802 5,024 5,743 6,214 53 Banks in foreign countries 6,448 5,057 5,049 5,761 5,934 7,112 5,337 5,365 5,787 54 Foreign governments and official institutions 753 584 625 505 858 686 478 834 711 55 Certified and officers' checks 6,011 4,697 4.078 3,618 44,,667799 44,,778833 44,,668899 33,,227755 33,,996655 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,873 8,812 8,952 8,6% 8,644 8,920 8,788 8,681 8,579 57 Nontransaction balances 106,195 105,232 105,894 106,290 105,347 106,055 105,714 105,829 106,336 58 Individuals, partnerships, and corporations 97,532 96,490 %,922 97,125 %,600 97,584 %,843 97,038 97,240 59 States and political subdivisions 6,667 6,702 6,851 7,001 6,657 6,304 6,668 6,720 6,868 60 U.S. government 41 30 33 42 42 41 40 34 37 61 Depository institutions in the United States 1,695 1,751 1,816 1,817 1,740 1,808 1,858 1,734 1,877 62 Foreign governments, official institutions, and banks 261 258 272 303 307 318 303 302 313 63 Liabilities for borrowed money 76,690 72,151 78,023 72,718 73,865' 65,354 72,389 67,731 67,496 64 Borrowings from Federal Reserve Banks 0 0 725 0 0 0 3,815 0 0 65 Treasury tax-and-loan notes 4,098 677 609 7,526 6,879 1,480 3,112 4,221 5,083 66 All other liabilities for borrowed money8 72,592 71,474 76,689 65,192 66,986' 63,874 65,462 63,510 62,413 67 Other liabilities and subordinated notes and debentures 32,541 31,988 33,992 29,545 32,797 29,849 32,281 34,890 34,737 68 ToUl liabilities 296,600 273,186 297,810 271,5% 279,758' 275,567 274,728 273,529 272,412 69 Residual (total assets minus total liabilities)9 25,516 25,886 25,656 25,502 25,430 25,512 25,918 25,845 25,427 MEMO 70 Total loans and leases (gross) and investments adjusted2,10 212,508 206,1% 213,172 207,178 205,565 205,014 205,256 206,352 206,245 71 Total loans and leases (gross) adjusted10 180,851 174,512 181,555 175,752 174,419 174,123 174,134 175,093 174,931 72 Time deposits in amounts of $100,000 or more 37,346 37,334 37,350 37,767 37,031 37,485 37,681 37,844 38,751 73 U.S. Treasury securities maturing in one year or less 3,620 4,262 3,700 3,158 3,302 3,472 2,831 3,222 3,774 1. These data also appear in the Board's H.4.2 (504) release. For address, see 7. Includes trading account securities. inside front cover. 8. Includes federal funds purchased and securities sold under agreements to 2. Excludes trading account securities. repurchase. 3. Not available due to confidentiality. 9. Not a measure of equity capital for use in capital adequacy analysis or for 4. Includes U.S. government-issued or guaranteed certificates of participation other analytic uses. Digitized for FiRn ApoSolEs Rof residential mortgages. 10. Exclusive of loans and federal funds transactions with domestic commer- 5. Includes securities purchased under agreements to resell. cial banks. http://fraser.stlo6u. isInfecldud.oesr gal/l ocated transfer risk reserve. 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 1988 AAccccoouunntt June 1 June 8 June 15 June 22 June 29 July 6 July 13 July 20 July 27 1 Cash and due from depository institutions ... 11,174 10,467 11,571 10,705 11,604 11,219 11,720 10,893 11,441 2 Total loans and securities 105,741 105,264 108,728 107,658 111,058' 110,308 109,191 107,888 106,775 3 U.S. Treasury and government agency securities 7,780 77,,889922 88,,335522 8,234 88,,110022 77,,883311 88,,000000 88,,228822 88,,556622 4 Other securities 7,605 7,605 7,609 7,609 7,595 7,566 7,561 7,570 7,496 5 Federal funds sold2 8,469 7,610 10,842 7,672 9,764 8,113 8,691 8,570 8,609 6 To commercial banks in the United States . 5,546 5,137 7,645 4,857 6,827 5,826 6,166 6,319 6,428 7 To others 2,923 2,473 3,197 2,815 2,937 2,286 2,525 2,251 2,182 8 Other loans, gross 81,886 82,157 81,926 84,144 85,598' 86,798 84,939 83,466 82,107 9 Commercial and industrial 55,094 55,245 54,911 56,536 57,'733' 58,562 57,150 56,149 55,548 10 Bankers acceptances and commercial paper 1,678 1,641 1,604 1,707 1,574 1,712 1,702 1,509 1,609 11 All other 53,415 53,604 53,306 54,829 56,159' 56,851 55,448 54,640 53,938 17 U.S. addressees 51,398 51,590 51,317 52,794 54,124' 54,799 53,374 52,456 51,955 n Non-U.S. addressees 2,017 2,014 1,990 2,034 2,034' 2,052 2,074 2,184 1,983 14 To financial institutions 15,052 15,161 14,834 15,244 15,2% 15,845 15,662 15,023 14,834 15 Commercial banks in the United States.. 10,422' 10,860r 10,494' 10,928' 11,340' 11,465 11,307 10,772 10,731 16 Banks in foreign countries 1,146 1,180 1,037 1,127 918 991 1,039 999 1,006 17 Nonbank financial institutions 3,484' 3,121' 3,303' 3,189' 3,039' 3,389 3,316 3,252 3,097 18 To foreign governments and ofiScial institutions 596 585 558866 558 562 559900 557744 553333 664400 19 For purchasing and carrying securities 1,382 1,433 1,622 1,811 2,100 1,851 1,690 1,644 1,347 ?0 All other 9,763 9,732 9,972 9,994 9,907 9,950 9,862 10,117 9,739 21 Other assets (claims on nonrelated parties) .. 31,366 31,231 31,418 31,382 32,335 32,292 31,929 32,361 31,383 72 Net due from related institutions 15,942 16,704 17,879 15,546 15,269 16,366 16,804 16,317 15,146 23 Total assets 164,223 163,666 169,597 165,291 170,266' 170,185 169,644 167,460 164,745 24 Deposits or credit balances due to other than directly related institutions 42,217 42,566 42,858 42,906 43,122 42,793 42,689 42,575 42,903 25 Transaction accounts and credit balances3. 3,758 3,616 3,827 3,852 3,680 4,167 3,731 3,601 3,591 26 Individuals, partnerships, and corporations 2,322 2,312 2,448 2,261 2,134 2,481 22,,228888 2,324 22,,332200 71 Other 1,435 1,304 1,379 1,591 1,546 1,686 1,443 1,277 1,271 28 Nontransaction accounts 38,459 38,950 39,031 39,054 39,442 38,626 38,959 38,974 39,311 29 Individuals, partnerships, and corporations 31,187 31,833 31,924 31,715 32,268 31,551 31,693 31,572 31,718 30 Other 7,272 7,116 7,107 7,339 7,174 7,075 7,266 7,402 7,593 31 Borrowings from other than directly related institutions 66,542 65,965 70,988 66,816 70,311' 69,383 70,599 69,177 66,194 32 Federal funds purchased 32,883 32,712 37,834 31,781 32,614 32,896 33,842 31,121 27,896 33 From commercial banks in the United States 16,328 16,788 20,807 15,561 16,053 19,407 16,837 15,544 13,900 34 From others 16,556 15,924 17,027 16,220 16,562 13,489 17,005 15,577 13,996 35 Other liabilities for borrowed money 33,659 33,253 33,154 35,035 37,696' 36,486 36,757 38,056 38,298 36 To commercial banks in the United States 25,089 24,184 23,364 25,236 26,596' 25,959 26,861 27,686 27,871 37 To others 8,570 9,069 9,791 9,799 11,100 10,528 9,896 10,370 10,427 38 Other liabilities to nonrelated parties 32,676 32,926 33,104 32,969 33,787 33,624 33,395 33,945 33,029 39 Net due to related institutions 22,787 22,209 22,647 22,600 23,046 24,386 22,960 21,763 22,619 40 Total liabilities 164,223 163,666 169,597 165,291 170,266' 170,185 169,644 167,460 164,745 MEMO 41 Total loans (gross) and securities adjusted6 .. 89,773' 89,267' 90,589' 91,874' 92,892' 93,017 91,718 90,797 89,616 42 Total loans (gross) adjusted6 74,388' 73,770' 74,629' 76,031' 77,195' 77,619 76,157 74,944 73,558 1. Effective Jan. 1, 1986, the reporting panel includes 65 U.S. branches and 3. Includes credit balances, demand deposits, and other checkable deposits. agencies of foreign banks that include those branches and agencies with assets of 4. Includes savings deposits, money market deposit accounts, and time depos- $750 million or more on June 30,1980, plus those branches and agencies that had its. reached the $750 million asset level on Dec. 31,1984. These data also appear in the 5. Includes securities sold under agreements to repurchase. Board's H.4.2 (504) release. For address, see inside front cover. 6. Exclusive of loans to and federal funds sold to commercial banks in the 2. Includes securities purchased under agreements to resell. United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • October 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 1987 1988 11998833 11998844 11998866 DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June 1 AH holders—Individuals, partnerships, and corporations 293.5 302.7 321.0 363.6 335.9 340.2 339.0 343.5 328.6 n.a. 2 Financial business 32.8 31.7 32.3 41.4 35.9 36.6 36.5 36.3 33.9 n.a. 3 Nonfinancial business 161.1 166.3 178.5 202.0 183.0 187.2 188.2 191.9 184.1 n.a. 4 Consumer 78.5 81.5 85.5 91.1 88.9 90.1 88.7 90.0 86.9 n.a. 5 Foreign 3.3 3.6 3.5 3.3 2.9 3.2 3.2 3.4 3.5 n.a. 6 Other 17.8 19.7 21.2 25.8 25.2 23.1 22.4 21.9 20.3 n.a. Weekly reporting banks 1987 1988 11998833 11998844,, 11998866 DDeecc.. DDeecc..22 DD''ee9955<< DDeecc.. Mar. June Sept. Dec. Mar.5 June 7 All holders—Individuals, partnerships, and corporations 146.2 157.1 168.6 195.1 178.1 179.3 179.1 183.8 181.8 191.5 8 Financial business 24.2 25.3 25.9 32.5 28.7 29.3 29.3 28.6 27.0 29.9 9 Nonfinancial business 79.8 87.1 94.5 106.4 94.4 94.8 96.0 100.0 98.2 103.1 10 Consumer 29.7 30.5 33.2 37.5 36.8 37.5 37.2 39.1 41.7 42.3 11 Foreign 3.1 3.4 3.1 3.3 2.8 3.1 3.1 3.3 3.4 3.3 12 Other 9.3 10.9 12.0 15.4 15.5 14.6 13.5 12.7 11.4 13.0 1. Figures include cash items in process of collection. Estimates of gross 4. Historical data back to March 1985 have been revised to account for deposits are based on reports supplied by a sample of commercial banks. Types corrections of bank reporting errors. Historical data before March 1985 have not of depositors in each category are described in the June 1971 BULLETIN, p. 466. been revised, and may contain reporting errors. Data for all commercial banks for Figures may not add to totals because of rounding. March 1985 were revised as follows (in billions of dollars): all holders, -.3; 2. Beginning in March 1984, these data reflect a change in the panel of weekly financial business, —.8; nonfinancial business, —.4; consumer, .9; foreign, .1; reporting banks, and are not comparable to earlier data. Estimates in billions of other, -.1. Data for weekly reporting banks for March 1985 were revised as dollars for December 1983 based on the new weekly reporting panel are: financial follows (in billions of dollars): all holders, - .1; financial business, -.7; nonfinanbusiness, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other cial business, -.5; consumer, 1.1; foreign, .1; other, -.2. 9.5. 5. Beginning March 1988, these data reflect a change in the panel of weekly 3. Beginning March 1985, financial business deposits and, by implication, total reporting banks, and are not comparable to earlier data. Estimates in billions of gross demand deposits have been redefined to exclude demand deposits due to dollars for December 1987 based on the new weekly reporting panel are: financial thrift institutions. Historical data have not been revised. The estimated volume of business, 29.4; nonfinancial business, 105.1; consumer, 41.1; foreign, 3.4; other, such deposits for December 1984 is $5.0 billion at all insured commercial banks 13.1. and $3.0 billion at weekly reporting banks. 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 1988 IInnssttrruummeenntt 1983 1984 1985 1986 1987 Dec. Dec. Dec. Dec. Dec. Jan.1 Feb. Mar. Apr. May June Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 187,658 237,586 298,779 329,991 357,129 380,339 388,893 391,305 406,484 414,312 417,788 Financial companies2 Dealer-placed paper 2 Total 44,455 56,485 78,443 101,072 101,958 120,930 125,914 128,680 133,946 137,838 142,322 3 Bank-related (not seasonally adjusted) 2,441 2,035 1,602 2,265 1,428 1,694 1,724 1,371 1,093 1,422 1,448 Directly placed paper4 4 Total 9977,,004422 110,543 135,320 151,820 173,939 175,467 174,595 173,316 180,119 118855,,887766 118844,,665588 5 Bank-related (not seasonally adjusted) 35,566 42,105 44,778 40,860 43,173 45,425 43,987 43,681 45,703 47,719 45,294 6 Nonfinancial companies5 46,161 70,558 85,016 77,099 81,232 83,942 88,384 89,309 92,419 90,598 90,808 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 78,309 78,364 68,413 64,974 70,565 63,152r 62,419 63,454 64,111 63,332 64,259 Holder 8 Accepting banks 9,355 9,811 11,197 13,423 10,943 8,646' 9,629 10,243 10,295 9,342 9,614 9 Own bills 8,125 8,621 9,471 11,707 9,464 7,804r 8,561 8,825 8,929 8,518 8,741 10 Bills bought 1,230 1,191 1,726 1,716 1,479 843 1,067 1,417 1,366 825 873 Federal Reserve Banks 11 Own account 418 0 0 0 0 0 0 0 0 0 0 12 Foreign correspondents 729 671 937 1,317 965 831 833 795 803 1,050 1,273 13 Others 67,807 67,881 56,279 50,234 58,658 53,674r 51,958 52,417 53,013 52,940 53,371 Basis 14 Imports into United States 15,649 17,845 15,147 14,670 16,483 14,469' 14,354 14,575 14,735' 14,044 14,244 15 Exports from United States 16,880 16,305 13,204 12,960 15,227 14,054 13,891 13,899 14,724' 14,520 14,606 16 All other 45,781 44,214 40,062 37,344 38,855 34,629' 34,173 34,980 34,651' 34,768 35,410 1. Data reflect a break in series resulting from additions to the reporting 5. Includes public utilities and firms engaged primarily in such activities as panel and from the correction of a misclassification that had understated dealer- communications, construction, manufacturing, mining, wholesale and retail trade, placed financial and overstated nonfinancial outstandings. transportation, and services. 2. Institutions engaged primarily in activities such as, but not limited to, 6. Beginning January 1988, the number of respondents in the bankers accepcommercial savings, and mortgage banking; sales, personal, and mortgage fi- tance survey were reduced from 155 to 111 institutions—those with $100 million nancing; factoring, finance leasing, and other business lending; insurance under- or more in total acceptances. The new reporting group accounts for over 90 writing; and other investment activities. percent of total acceptances activity. 3. Includes all financial company paper sold by dealers in the open market. 4. As reported by financial companies that place their paper directly with investors. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year 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 1986 —Nov. 10.00 May 1 8.00 Feb. 10.50 Dec. 9.50 15 8.25 Mar. 10.50 Sept. 4 8.75 Apr. 10.50 1987 —Jan. 9.00 Oct. 7 9.25 May 10.31 Feb. 8.50 ?? 9.00 June 9.78 Mar. 8.00 Nov. 5 8.75 July 9.50 Apr. 7.50 Aug. 9.50 May 1988 —Feb. ? 8.50 Sept. 9.50 June May 11 9.00 Oct. 9.50 July July 14 9.50 Nov. 9.50 Aug. Aug. 11 10.00 Dec. 9.50 Sept. Oct. 1986 —Jan. 9.50 Nov. Feb. 9.50 Dec. Mar. 9.10 Apr. 8.83 1988 —Jan. May 8.50 Feb. June 8.50 Mar. July 8.16 Apr. Aug. 7.90 May Sept. 7.50 June Oct.. 7.50 July, NOTE. These data also appear in the Board's H.15 (519) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • October 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. 1988 1988, week ending IInnssttrruummeenntt 11998855 11998866 11998877 Apr. May June July July 1 July 8 July 15 July 22 July 29 MONEY MARKET RATES 1 Federal funds1'2 8.10 6.80 6.66 6.87 7.09 7.51 7.75 7.63 7.81 7.59 7.83 7.80 2 Discount window borrowing1' ' 7.69 6.32 5.66 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Commercial paper ' 3 1-month 7.93 6.61 6.74 6.80 7.07 7.41 7.72 7.56 7.60 7.68 7.79 7.82 4 3-month 7.95 6.49 6.82 6.86 7.19 7.49 7.82 7.59 7.64 7.79 7.91 7.95 5 6-month 8.00 6.39 6.85 6.92 7.31 7.53 7.90 7.60 7.67 7.88 8.01 8.07 Finance paper, directly placed ' 6 1-month 7.90 6.57 6.61 6.71 6.96 7.23 7.62 7.43 7.48 7.61 7.69 7.76 7 3-month 7.77 6.38 6.54 6.67 7.00 7.25 7.55 7.32 7.37 7.55 7.64 7.70 8 6-month 7.74 6.31 6.37 6.51 6.75 7.01 7.19 7.08 7.09 7.19 7.26 7.28 Bankers acceptances • 9 3-month 7.91 6.38 6.75 6.79 7.12 7.38 7.77 7.48 7.59 7.76 7.86 7.92 10 6-month .. 7.95 6.28 6.78 6.86 7.25 7.41 7.85 7.48 7.62 7.84 7.94 8.02 Certificates of deposit, secondary market 11 1-month 7.96 6.61 6.75 6.80 7.04 7.41 7.73 7.54 7.64 7.69 7.78 7.82 12 3-month 8.04 6.51 6.87 6.92 7.24 7.51 7.94 7.62 7.76 7.91 8.03 8.08 13 6-month 8.24 6.50 7.01 7.14 7.52 7.69 8.18 7.76 7.92 8.17 8.30 8.38 14 Eurodollar deposits. 3-month 8.28 6.71 7.06 7.05 7.40 7.61 8.09 7.69 7.79 8.00 8.18 8.24 U.S. Treasury bills5 Secondary market9 15 3-month 7.47 5.97 5.78 5.91 6.26 6.46 6.73 6.57 6.58 6.70 6.72 6.93 16 6-month 7.65 6.02 6.03 6.21 6.56 6.71 6.99 6.75 6.78 7.00 7.07 7.12 17 1-year 7.81 6.07 6.33 6.56 6.90 6.99 7.22 7.01 7.11 7.25 7.25 7.31 Auction average 18 3-month 7.47 5.98 5.82 5.92 6.27 6.50 6.73 6.59 6.57 6.72 6.76 6.88 19 6-month 7.64 6.03 6.05 6.21 6.53 6.76 6.97 6.75 6.71 6.99 7.09 7.09 20 1-year 7.80 6.18 6.33 6.57 6.74 7.08 7.04 n.a. 7.04 n.a. n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities 21 1-year 8.42 6.45 6.77 7.01 7.40 7.49 7.75 7.52 7.62 7.79 7.79 7.85 22 2-year 9.27 6.86 7.42 7.59 8.00 8.03 8.28 8.04 8.12 8.29 8.34 8.39 23 3-year 9.64 7.06 7.68 7.83 8.24 8.22 8.44 8.21 8.27 8.45 8.51 8.56 24 5-year 10.12 7.30 7.94 8.19 8.58 8.49 8.66 8.46 8.51 8.67 8.72 8.74 25 7-year 10.50 7.54 8.23 8.52 8.89 8.78 8.91 8.73 8.80 8.94 8.97 8.97 26 10-year 10.62 7.67 8.39 8.72 9.09 8.92 9.06 8.86 8.93 9.08 9.13 9.12 27 20-year 10.97 7.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 30-year 10.79 7.78 8.59 8.95 9.23 9.00 9.14 8.90 8.99 9.14 9.23 9.22 Composite13 29 Over 10 years (long-term) 10.75 8.14 8.64 8.91 9.24 9.04 9.20 8.99 9.09 9.23 9.27 9.24 State and local notes and bonds Moody's series 30 Aaa 8.60 6.95 7.14 7.33 7.56 7.51 7.50 7.50 7.45 7.51 7.55 7.48 31 BBaaaa 9.58 7.76 8.17 7.82 7.90 7.86 7.86 8.00 7.85 7.90 7.90 7.80 32 BBoonndd BBuuyyeerr sseerriieess 9.11 7.32 7.64 7.81 7.90 7.78 7.76 7.74 7.75 7.77 7.77 7.76 Corporate bonds Seasoned issues16 33 All industries 12.05 9.71 9.91 10.15 10.37 10.36 10.47 10.31 10.37 10.46 10.52 10.55 34 Aaa 11.37 9.02 9.38 9.67 9.90 9.86 9.96 9.82 9.84 9.95 10.03 10.03 35 Aa 11.82 9.47 9.68 9.86 10.10 10.13 10.26 10.09 10.17 10.24 10.31 10.34 36 A 12.28 9.95 9.99 10.17 10.41 10.42 10.55 10.37 10.43 10.53 10.61 10.63 37 Baa 12.72 10.39 10.58 10.90 11.04 11.00 11.11 10.97 11.02 11.11 11.14 11.20 38 A-rated, recently-offered utility bonds17 12.06 9.61 9.95 10.23 10.61 10.41 10.40 10.25 10.39 10.44 10.44 10.41 MEMO: Dividend/price ratio18 39 Preferred stocks 10.49 8.76 8.37 9.19 9.25 9.32 9.34 9.38 9.41 9.29 9.30 9.36 40 Common stocks 4.25 3.48 3.08 3.57 3.80 3.58 3.65 3.60 3.59 3.63 3.63 3.75 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 A23 1.36 STOCK MARKET Selected Statistics 1987 - 1988 IInnddiiccaattoorr 11998855 11998866 11998877 Nov. Dec. Jan. Feb. Mar. Apr. May June July Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 108.09 136.00 161.70 137.21 134.88 140.55 145.13 149.88 148.46 144.99 152.72 152.12 2 Industrial 123.79 155.85 195.31 163.42 162.19 168.47 173.44 181.57 181.01 176.02 184.92 184.09 3 Transportation 104.11 119.87 140.39 117.57 115.85 121.20 126.09 135.15 133.40 127.63 136.02 136.49 4 Utility 56.75 71.36 74.29 69.86 67.39 70.01 72.89 71.16 69.35 68.66 72.25 71.49 5 Finance 114.21 147.19 146.48 118.30 111.47 119.40 124.36 125.27 121.66 120.35 129.04 129.99 6 Standard & Poor's Corporation (1941-43 = 10)' 186.84 236.34 286.83 245.01 240.96 250.48 258.13 265.74 262.61 256.12 270.68 269.05 7 American Stock Exchange (Aug. 31, 1973 = 50? 229.10 264.38 316.61 249.42 248.52 267.29 276.54 295.78 300.43 296.30 306.13 307.48 Volume of trading (thousands of shares) 8 New York Stock Exchange 109,191 141,385 188,647 179,513 178,517 174,755 184,688 176,189 162,518 153,906 195,772 166,916 9 American Stock Exchange 8,355 11,846 13,832 11,268 13,422 9,853 9,961 12,442 10,706 8,931 11,348 9,938 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 28,390 36,840 31,990 34,180 31,990 31,320 31,990 32,660 33,270 33,070 32,300 31,770 Free credit balances at brokers4 11 Margin-account 2,715 4,880 4,750 6,700 4,750 4,675 4,555 4,615 4,395 4,380 4,580 4,485 12 Cash-account 12,840 19,000 15,640 15,360 15,640 15,270 14,695 14,355 13,965 14,150 14,460 14,340 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 • October 1988 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1987 1988 AAccccoouunntt 11998855 11998866 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr/ May FSLIC-insured institutions 1 Assets 1,070,012 1,163,851 1,216,995 1,218,829 1,239,883' 1,246,983' 1,250,855' 1,254,785' 1,257,367' 1,261,438 1,274,318 1,284,893 2 Mortgages 690,717 697,451 704,815 708,433 713,488' 717,933' 721,593' 772222,,994455'' 772233,,885522'' 772255,,551111 728,880 773333,,552222 3 Mortgage-backed securities 115,525 158,193 186,101 191,829 197,131' 200,039' 201,828' 201,604' 197,676' 197,586 202,252 204,751 4 Contra-assets to mortgage assets' 45,219 41,799 42,023 42,438 42,182' 41,396 42,344' 41,269' 40,812' 41,247 39,293 39,715 5 Commercial loans 17,424 23,683 23,174 23,300 23,256 23,294 23,163' 23,530 23,333' 24,125 24,349 24,308 6 Consumer loans 45,809 51,622 56,079 56,118 56,548 57,465 57,902' 58,336' 58,681' 58,399 59,114 60,240 7 Contra-assets to nonmortgage loans2 2,521 3,041 3,242 3,442 3,373 3,430 3,467 3,578' 3,524' 3,630 3,510 3,402 8 Cash and investment securities 143,538 164,844 170,071 164,034 173,121' 170,713' 169,717' 169,937' 174,075 176,461 178,150 179,729 9 Other3 104,739 112,898 122,020 120,995 121,894' 122,367' 122,462 123,291' 124,085' 124,233 124,375 125,460 10 Liabilities and net worth . 1,070,012 1,163,851 1,216,995 1,218,829 1,239,883' 1,246,983' 1,250,855' 1,254,785' 1,257,367' 1,261,438 1,274,318 1,284,893 11 Savings capital 843,932 890,664 904,441 908,907 916,843 922,340 932,616' 939,079 946,790 958,470 962,250 963,694 12 Borrowed money 157,666 196,929 232,332 234,941 246,370' 247,461' 249,917' 245,954' 239,319' 237,467 244,762 250,462 13 FHLBB 84,390 100,025 104,191 106,250 109,736 111,283 116,363 114,053 112,725 112,388 113,029 114,994 14 Other 73,276 96,904 128,141 128,691 136,634' 136,178' 133,554' 131,901' 126,594' 125,079 131,733 135,468 15 Other 21,756 23,975 28,170 24,599 27,098' 27,404' 21,941' 23,871' 25,816' 22,489 24,597 27,191 16 Net worth 46,657 52,282 52,052 50,382 49,573' 49,777' 46,382' 45,881' 45,442' 43,012 42,708 43,548 FSLIC-insured federal savings banks 17 Assets 131,868 210,562 272,134 272,834 276,560 279,221 284,272 284,303 295,952 307,758 311,424 323,018 18 Mortgages 72,355 113,638 156,048 156,705 158,507 161,014 164,013 163,915' 171,592' 178,142 180,464 186,681 19 Mortgage-backed securi ties 15,676 29,766 43,532 44,421 45,117 45,237 45,826 46,171 46,687 48,004 49,231 51,247 20 Contra-assets to mort gage assets1 8,853 8,700 8,787 8,809 9,100' 8,909 9,175 9,458 9,344 9,720 21 Commercial loans 6,213 6,188 6,275 6,540 6,504 6,496 6,971 7,503 7,663 7,774 22 Consumer loans 8,361 13,180 16,549 16,582 16,563 17,343 17,696 17,649 18,795 19,137 19,610 20,417 23 Contra-assets to nonmortgage loanr... 704 702 690 712 678 698 737 800 724 708 24 Finance leases plus interest 577 552 550 566 591 604 584 611 615 652 25 Cash and investment .. 34,267 33,589 34,902 33,965 35,347 34,645 35,718 38,199 38,288 39,917 26 Other 11,723 19,034 24,506 24,199 24,122 24,078 24,070 24,428 25,516 26,418 25,822 26,757 27 Liabilities and net worth 131,868 210,562 272,134 272,834 276,560 279,221 284,272 284,303 295,952 307,758 311,424 323,018 28 Savings capital 103,462 157,872 194,853 195,213 197,298 199,114 203,196 204,329 214,169 224,168 226,469 232,582 29 Borrowed money 19,323 37,329 55,660 56,549 57,551 58,277 60,716 59,206 59,704 61,553 62,555 66,805 30 FHLBB 10,510 19,897 25,546 26,287 27,350 27,947 29,617 28,280 29,169 30,456 30,075 31,682 31 Other 8,813 17,432 30,114 30,262 30,201 30,330 31,099 30,926 30,535 31,097 32,480 35,123 32 Other 2,732 4,263 6,450 5,631 6,293 6,350 5,324 5,838 6,602 6,084 6,459 7,188 33 Net worth 6,351 11,098 15,172 15,444 15,416 15,481 15,036 14,930 15,478 15,963 16,098 16,598 Savings banks 34 Assets 216,776 236,866 249,888 251,472 255,989 260,600 259,643 258,628 259,224 262,100 262,269 264,507 Loans 35 Mortgage 110,448 118,323 130,721 133,298 135,317 137,044 138,494 137,858 139,108 140,835 139,691 143,235 36 Other 30,876 35,167 36,793 36,134 36,471 37,189 33,871 35,095 3355,,775522 3366,,447766 3377,,447711 3355,,992277 Securities 37 U.S. government 13,111 14,209 13,720 13,122 13,817 15,694 13,510 12,776 12,269 1122,,222255 1133,,220033 1122,,449900 38 Mortgage-backed securities 1199,,448811 25,836 28,913 29,655 30,202 31,144 32,772 32,241 3322,,442233 3322,,227722 3311,,007722 3311,,886611 39 State and local government 2,323 2,185 2,038 2,023 2,034 2,046 2,003 1,994 2,053 2,033 2,013 1,933 40 Corporate and other . 21,199 20,459 18,573 18,431 18,062 17,583 18,772 18,780 18,271 18,336 18,549 18,298 41 Cash 6,225 6,894 4,823 4,484 5,529 5,063 5,864 4,841 5,002 4,881 5,237 5,383 42 Other assets 13,113 13,793 14,307 14,325 14,557 14,837 14,357 15,043 14,346 15,042 15,033 15,380 43 Liabilities 216,776 236,866 249,888 251,472 255,989 260,600 259,643 258,628 259,224 262,100 262,269 264,507 44 Deposits 185,972 192,194 195,895 196,824 199,336 202,030 201,497 199,545 200,391 203,407 203,273 205,692 45 Regular 181,921 186,345 190,335 191,376 193,777 196,724 196,037 194,322 195,336 198,273 197,801 200,098 46 Ordinary savings . 33,018 37,717 41,767 41,773 42,045 42,493 41,959 41,047 41,234 41,867 41,741 42,403 47 Time 103,311 100,809 105,133 107,063 109,486 112,231 112,429 112,781 113,751 115,529 115,887 117,297 48 Other 4,051 5,849 5,560 5,448 5,559 5,306 5,460 5,223 5,055 5,134 5,472 5,594 49 Other liabilities 17,414 25,274 32,467 32,827 34,226 3366,,116677 3355,,772200 3366,,883366 3355,,778877 3355,,773377 3355,,882277 3355,,883366 50 General reserve accounts 12,823 18,105 20,471 20,407 20,365 21,133 20,633 20,514 20,894 21,024 21,109 21,179 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.37—Continued 1987 1988 AAccccoouunntt 11998855 11998866 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr/ May Credit unions5 5511 TToottaall aasssseettss//lliiaabbiilliittiieess aanndd ccaappiittaall 118,010 147,726 I 1 1 1 1 1 t 169,111 169,175 172,456 5522 FFeeddeerraall 77,861 95,483 109,797 109,913 112,595 5533 SSttaattee 40,149 52,243 59,314 59,262 59,855 5544 LLooaannss oouuttssttaannddiinngg .... 73,513 86,137 n.a. n.a. n.a. 101,965 103,271 105,704 5555 FFeeddeerraall 47,933 55,304 65,732 66,431 68,213 5566 SSttaattee 25,580 30,833 I 1 n.a. n.a. 1 n.a. n.a. 36,233 36,840 37,491 5577 SSaavviinnggss 105,963 134,327 156,045 155,105 157,764 5588 FFeeddeerraall 70,926 87,954 1 1 1 1 101,847 101,048 103,129 5599 SSttaattee 35,037 46,373 54,198 54,057 54,635 Life insurance companies 60 Assets 825,901 937,551 1,017,018 1,026,919 1,021,148 1,024,460 1,033,170 1,042,350 1,052,645 1,065,549 1,075,541 Securities 61 Government 75,230 84,640 89,924 89,408 90,782 91,227 91,302 91,682 92,497 92,408 93,946 62 United States6.. 51,700 59,033 64,150 63,352 64,880 65,186 64,551 64,922 65,534 65,218 66,749 63 State and local . 9,708 11,659 11,190 11,087 11,363 11,539 11,758 11,749 11,859 12,033 11,976 64 Foreign 13,822 13,948 14,584 14,969 14,539 14,502 14,993 15,011 15,104 15,157 15,221 65 Business 423,712 492,807 551,701 558,787 549,426 548,767 553,486 563,019 571,070 580,392 587,846 n.a. 66 Bonds 346,216 401,943 442,604 451,453 455,678 459,537 461,942 469,207 476,448 484,403 490,285 67 Stocks 77,496 90,864 109,097 107,334 93,748 89,230 91,544 93,812 94,622 95,989 97,561 68 Mortgages 171,797 193,842 202,241 204,264 206,507 208,839 212,375 212,637 213,182 214,815 215,383 69 Real estate 28,822 31,615 32,992 33,048 33,235 33,538 34,016 34,178 34,503 34,845 34,964 70 Policy loans 54,369 54,055 53,330 53,422 53,413 53,334 53,313 53,265 52,720 52,604 52,568 71 Other assets 71,971 80,592 86,830 87,991 87,785 88,755 88,678 87,569 88,673 90,499 90,834 1. Contra-assets are credit-balance accounts that must be subtracted from the NOTE. FSLlC-insured institutions: Estimates by the FHLBB for all institutions corresponding gross asset categories to yield net asset levels. Contra-assets to insured by the FSLIC and based on the FHLBB thrift Financial Report. mortgage loans, contracts, and pass-through securities include loans in process, FSLIC-insured federal savings banks: Estimates by the FHLBB for federal unearned discounts and deferred loan fees, valuation allowances for mortgages savings banks insured by the FSLIC and based on the FHLBB thrift Financial "held for sale," and specific reserves and other valuation allowances. Report. 2. Contra-assets are credit-balance accounts that must be subtracted from the Savings banks: Estimates by the National Council of Savings Institutions for all corresponding gross asset categories to yield net asset levels. Contra-assets to savings banks in the United States and for FDIC-insured savings banks that have nonmortgage loans include loans in process, unearned discounts and deferred loan converted to federal savings banks. fees, and specific reserves and valuation allowances. Credit unions: Estimates by the National Credit Union Administration for 3. Holding of stock in Federal Home Loan Bank and Finance leases plus federally chartered and federally insured state-chartered credit unions serving interest are included in "Other" (line 9). natural persons. 4. Excludes checking, club, and school accounts. Life insurance companies: Estimates of the American Council of Life Insurance 5. Data include all federally insured credit unions, both federal and state for all life insurance companies in the United States. Annual figures are annualchartered, serving natural persons. statement asset values, with bonds carried on an amortized basis and stocks at 6. Direct and guaranteed obligations. Excludes federal agency issues not year-end market value. Adjustments for interest due and accrued and for guaranteed, which are shown in the table under "Business" securities. differences between market and book values are not made on each item separately 7. Issues of foreign governments and their subdivisions and bonds of the but are included, in total, in "other assets." International Bank for Reconstruction and Development. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • October 1988 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr 1988 111999888666 111999888777 Feb. Mar. Apr. May June July U.S. budget1 1 Receipts, total 769,091 854,143 60,355 65,730 109,323 59,711 99,205' 60,690 2 On-budget 568,862 640,741 40,610 44,958 81,993 39,764 77,643' 40,980 3 Off-budget 200,228 213,402 19,745 20,772 27,330 19,947 21,562 19,710 4 Outlays, total 990,258 1,004,586 84,382r 95,013' 95,554' 82,295' 89,862' 83,634 5 On-budget 806,760 810,754 66,629' 76,994' 79,629' 64,688' 72,678' 66,818 6 Off-budget 183,498 193,832 17,753 18,020 15,925 17,607 17,184 16,816 7 Surplus, or deficit (-), total -221,167 -150,444 -24,027' -29,283' 13,769' -22,583' 9,343' -22,944 8 On-budget -237,898 -170,014 -26,019' -32,036' 2,364' -24,924' 4.965' -25,838 9 Off-budget 16,731 19,570 1,992 2,752 11,405 2,340 4,379 2,894 Source of financing (total) 10 Borrowing from the public 236,187 115500,,007700 20,157 17,160 -334 77,,555599 1111,,339911 33,,666655 11 Operating cash (decrease, or increase (-)l -14,324 -5,052 11,002 6,009 -23,276 27,223 -20,638 15,696 12 Other2 -696 5,426 -7,257 5,979 9,719 -12,321 -244 3,583 MEMO 13 Treasury operating balance (level, end of period) 31,384 36,436 28,922 22,913 46,189 18,966 39,604 23,908 14 Federal Reserve Banks 7,514 9,120 2,473 2,403 16,186 2,871 9,762 3,910 15 Tax and loan accounts 23,870 27,316 26,450 20,510 30,003 16,095 29,842 19,998 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 gainAoss 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 OUTLAYS1 Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr 1986 1987 1988 1988 111999888666 111999888777 H2 HI H2 HI May June July RECEIPTS 1 All sources 769,091 854,143 387,524 447,282 421,712 476,115' 59,711 99,205' 60,690 2 Individual income taxes, net 348,959 392,557 183,156 205,157 192,575 207,801 17,958 46,234 25,791 3 Withheld 314,803 322,463 164,071 156,760 170,203 169,300 27,071 30,995 25,567 4 Presidential Election Campaign Fund 36 33 4 30 4 28 7 3 2 5 Nonwithheld 105,994 142,957 27,733 112,421 31,223 101,614 9,714 16,667 2,300 6 Refunds 71,873 72,896 8,652 64,052 8,853 63,283' 18,834 1,573' 2,078 Corporation income taxes 7 Gross receipts 80,442 102,859 42,108 52,396 52,821 58,002 2,748 19,213 3,101 8 Refunds 17,298 18,933 8,230 10,881 7,119 8,706 1,136 866 1,602 9 Social insurance taxes and contributions, net 283,901 303,318 134,006 163,519 143,755 181,058 33,396 27,967 26,915 10 Employment taxes and contributions2 255,062 273,185 122,246 146,696 130,388 164,412 24,948 27,200 24,964 11 Self-employment taxes and contributions3 11,840 13,987 1,338 12,020 1,889 14,839 974 1,965 0 12 Unemployment insurance 24,098 25,418 9,328 14,514 10,977 14,363 8,073 352 1,598 13 Other net receipts4 4,742 4,715 2,429 2,310 2,390 2,284 375 415 353 14 Excise taxes 32,919 32,510 15,947 15,845 17,680 16,440 3,055 3,136 3,250 15 Customs deposits 13,327 15,032 7,282 7,129 7,993 7,851 1,282 1,430 1,343 16 Estate and gift taxes 6,958 7,493 3,649 3,818 3,610 3,863 751 644 627 17 Miscellaneous receipts 19,884 19,307 9,605 10,299 10,399 9,950 1,657 1,590 1,265 OUTLAYS 18 All types 990,231 1,004,586 506,556 503,112' 532,839' 513,001' 82,295' 89,862' 83,634 19 National defense 273,375 281,999 138,544 142,886 146,995 143,080 20,967 25,317 24,449 20 International affairs 14,152 11,649 8,938 4,374 4,487 7,150 907 1,602 1,568 21 General science, space, and technology 8,976 9,216 4,594 4,324 5,469 5,361 911 1,023 961 22 Energy 4,735 4,115 2,446 2,335 1,468 555 507 516 257 23 Natural resources and environment 13,639 13,363 7,141 6,175 7,590 6,776 1,133 1,458 1,096 24 Agriculture 31,449 27,356 15,660 11,824 14,640 7,872 1,304 20 311 25 Commerce and housing credit 4,890 6,182 3,764 4,893 3,852 5,951 163 1,826 -337 26 Transportation 28,117 26,228 14,745 12,113 14,096 12,700 2,427 2,397 2,335 27 Community and regional development 7,233 5,051 3,651 3,108 2,075 2,765 296 468 -109 28 Education, training, employment, and social services 30,585 29,724 16,209 14,182 15,592 15,451 2,410 2,431 1,984 29 Health 35,935 39,968 18,795 20,318 20,750 22,643 3,741 4,119 3,502 30 Social security and medicare 268,921 282,473 138,299 142,864 158,469 135,322 24,487 28,234 23,475 31 Income security 119,796 123,250 59,979 62,248 61,201 65,555 10,214 8,203 10,907 32 Veterans benefits and services 26,356 26,782 14,190 12,264 14,956 13,241 1,441 2,120 2,354 33 Administration of justice 6,603 7,548 3,413 3,626 4,291 4,761 831 827 735 34 General government 6,104 5,948 1,860 3,344 3,560 4,337 1,017 1,486 174 35 General-purpose fiscal assistance 6,431 1,621 2,886 337 1,175 448 0 0 0 36 Net interest6 136,008 138,570 66,226 70,110 71,933 76,098 12,719 11,061 12,677 37 Undistributed offsetting receipts -33,007 -36,455 -16,475 -19,102 -17,684 -17,766 -3,303 -3,251 -2,706 1. Functional details do not add to total outlays for calendar year data because 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous revisions to monthly totals have not been distributed among functions. Fiscal year receipts. total for outlays does not correspond to calendar year data because revisions from 6. Net interest function includes interest received by trust funds. the Budget have not been fully distributed across months. 7. Consists of rents and royalties on the outer continental shelf and U.S. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. government contributions for employee retirement. 3. Old-age, disability, and hospital insurance. SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of 4. Federal employee retirement contributions and civil service retirement and Receipts and Outlays of the U.S. Government, and the U.S. Office of Managedisability fund. 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 • October 1988 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1986 1987 1988 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 1991.1 2,063.6 2,129.5 2,218.9 2,250.7 2,313.1 2,354.3 2,435.2 2,493.2 2 Public debt securities 1986.8 2,059.3 2,125.3 2,214.8 2,246.7 2,309.3 2,350.3 2,431.7 2,487.6 3 Held by public 1,634.3 1,684.9 1,742.4 1,811.7 1,839.3 1,871.1 1,893.1 1,954.1 1,996.7 4 Held by agencies 352.6 374.4 382.9 403.1 407.5 438.1 457.2 477.6 490.8 5 Agency securities 4.3 4.3 4.2 4.0 4.0 3.8 4.0 3.5 5.6 6 Held by public 3.2 3.2 3.2 3.0 2.9 2.8r 3.0 2.7 5.1 7 Held by agencies 1.1 1.1 1.1 1.1 1.1 1.0 1.0 .8 .6 8 Debt subject to statutory limit 1,973.3 2,060.0 2,111.0 2,200.5 2,232.4 2,295.0 2,336.0 2,417.4 2,487.0 9 Public debt securities 1,972.0 2,058.7 2,109.7 2,199.3 2,231.1 2,293.7 2,334.7 2,416.3 2,486.7 10 Other debt1 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.1 .3 11 MEMO: Statutory debt limit 2,078.7 2,078.7 2,111.0 2,300.0 2,300.0 2,320.0 2,800.0 2,800.0 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 1987 1988 Type and holder 1984 1985 1986 1987 Q2 Q3 Q4 Q1 1 Total gross public debt 1,663.0 1,945.9 2,214.8 2,431.7 2,309.3 2,350.3 2,431.7 2,487.6 By type 2 Interest-bearing debt 1,660.6 1,943.4 2,212.0 2,428.9 2,306.7 2,347.7 2,428.9 2,484.9 3 Marketable 1,247.4 1,437.7 1,619.0 1,724.7 1,659.0 1.676.0 1,724.7 1,758.7 4 Bills 374.4 399.9 426.7 389.5 391.0 378.3 389.5 392.6 5 Notes 705.1 812.5 927.5 1,037.9 984.4 1.005.1 1,037.9 1,059.9 6 Bonds 167.9 211.1 249.8 282.5 268.6 277.6 282.5 291.3 7 Nonmarketable1 413.2 505.7 593.1 704.2 647.7 671.8 704.2 726.2 8 State and local government series 44.4 87.5 110.5 139.3 125.4 129.0 139.3 142.9 9 Foreign issues 9.1 7.5 4.7 4.0 5.1 4.3 4.0 6.1 10 Government 9.1 7.5 4.7 4.0 5.1 4.3 4.0 6.1 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes... 73.1 78.1 90.6 99.2 95.2 97.0 99.2 102.3 13 Government account series3 286.2 332.2 386.9 461.3 421.6 440.7 461.3 474.4 14 Non-interest-bearing debt 2.3 2.5 2.8 2.8 2.6 2.5 2.8 2.6 By holder4 15 U.S. government agencies and trust funds 289.6 348.9 403.1 477.6 438.1 457.2 477.6 n.a. 16 Federal Reserve Banks 160.9 181.3 211.3 222.6 212.3 211.9 222.6 n.a. 17 Private investors 1,212.5 1,417.2 1,602.0 1,745.2 1,657.7 1,682.6 1,745.2 1,778.2 18 Commercial banks 183.4 192.2 238.3r 253.3r 238.4r 251.3r 253.3r 260.7 19 Money market funds 25.9 25.1 28.0 14.3 20.6 15.2 14.3 14.9 20 Insurance companies 88.7' 115.4 135.4 n.a. 140.0 143.0 n.a. n.a. 21 Other companies 50.1 59.0 68.8 84.6 79.7 81.8 84.6 n.a. 22 State and local Treasurys 173.0 224.0 260.0 n.a. n.a. n.a. n.a. n.a. Individuals 23 Savings bonds 74.5 79.8 92.3 101.1 96.8 98.5 101.1 104.0 24 Other securities 69.3 75.0 70.5 n.a. 68.6 70.4 n.a. n.a. 25 Foreign and international5 192.9 212.5 251.6 287.3 268.6 267.0 287.3 323.5 26 Other miscellaneous investors6 354.7 434.2 467.1 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 Transactions1 Par value; averages of daily figures, in millions of dollars 1988 1988 IItteemm 11998855 11998866 11998877 Mayr June1, July June 22 June 29r July 6 July 13 July 20 July 27 Immediate delivery2 1 U.S. Treasury securities 75,331 95,445 110,052 105,200 111,010 92,209 122,109 113,014 91,759 100,880 89,812 89,824 By maturity 2 Bills 32,900 34,247 37,924 30,344 28,060 29,211 28,985 30,147 30,303 30,301 28,518 29,045 3 Other within 1 year 1,811 2,115 3,272 3,848 3,826 2,941 3,940 4,202 3,612 3,014 2,800 2,890 4 1-5 years 18,361 24,667 27,918 30,825 31,292 23,139 39,533 34,441 20,747 23,368 21,789 24,966 5 5-10 years 12,703 20,456 24,014 23,925 28,079 23,292 30,013 24,092 23,242 29,661 22,645 20,061 6 Over 10 years 9,556 13,961 16,923 16,259 19,753 13,627 19,637 20,132 13,856 14,536 14,060 12,863 By type of customer V U.S. government securities dealers 3,336 3,670 2,936 2,620 2,766 2,257 2,917 3,369 2,350 2,171 1,827 2,685 8 U.S. government securities brokers 36,222 49,558 61,539 63,549 66,145 55,142 75,418 65,044 51,532 60,669 54,649 54,551 9 All others3 35,773 42,218 45,576 39,031 42,097 34,808 43,773 44,600 37,877 38,039 33,335 32,587 10 Federal agency securities 11,640 16,748 18,087 15,182 15,660 14,273 11,913 14,930 13,186 15,659 15,515 12,094 11 Certificates of deposit 4,016 4,355 4,112 2,910 3,193 3,313 3,282 3,465 3,085 3,273 3,574 3,244 12 Bankers acceptances 3,242 3,272 2,965 2,125 2,114 2,400 2,006 2,169 2,630 2,354 2,408 2,215 13 Commercial paper 12,717 16,660 17,135 17,765 24,139 26,729 27,976 24,765 29,250 27,325 26,128 25,095 Futures contracts 14 Treasury bills 5,561 3,311 3,233 3,193 2,205 1,886 3,111 1,615 1,471 2,516 1,781 2,053 15 Treasury coupons 6,085 7,175 8,964 9,081 11,565 8,540 12,423 11,657 8,477 9,420 8,437 8,401 16 Federal agency securities 252 16 5 0 0 0 0 0 0 0 0 0 Forward transactions 17 U.S. Treasury securities 1,283 1,876 2,029 2,516 2,330 1,673 4,186 2,203 965 1,640 1,348 2,613 18 Federal agency securities 3,857 7,831 9,290 8,598 9,370 7,088 9,957 7,148 5,271 9,166 8,071 5,182 1. Transactions are market purchases and sales of securities as reported to the securities, nondealer departments of commercial banks, foreign banking agencies, Federal Reserve Bank of New York by the U.S. government securities dealers on and the Federal Reserve System. its published list of primary dealers. 4. Futures contracts are standardized agreements arranged on an organized Averages for transactions are based on the number of trading days in the period. exchange in which parties commit to purchase or sell securities for delivery at a The figures exclude allotments of, and exchanges for, new U.S. Treasury future date. securities, redemptions of called or matured securities, purchases or sales of 5. Forward transactions are agreements arranged in the over-the-counter securities under repurchase agreement, reverse repurchase (resale), or similar market in which securities are purchased (sold) for delivery after 5 business days contracts. from the date of the transaction for Treasury securities (Treasury bills, notes, and 2. Data for immediate transactions do not include forward transactions. bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • October 1988 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1988 1988 IItteemm 11998855 11998866 11998877 Mayr June' July June 29' July 6 July 13 July 20 July 27 Positions Net immediate2 1 U.S. Treasury securities 7,391 12,912 -6,216 -26,408 -25,186 -30,235 -20,164 -24,726 -27,532 -31,634 -34,120 2 Bills 10,075 12,761 4,317 86 1,723 32 967 1,395 1,071 -1,183 -510 3 Other within 1 year 1,050 3,706 1,557 -2,613 -983 -2,634 -587 -2,491 -3,192 -2,703 -2,233 4 1-5 years 5,154 9,146 649 -6,785 -7,541 -4,668 -2,559 -2,165 -3,037 -5,403 -7,582 5 5-10 years -6,202 -9,505 -6,564 -8,649 -10,274 -13,892 -11,070 -13,477 -14,160 -13,111 -14,042 6 Over 10 years -2,686 -3,197 -6,174 -8,446 -8,112 -9,074 -6,915 -7,988 -8,214 -9,234 -9,754 7 Federal agency securities 22,860 32,984 31,910 26,785 29,417 31,002 30,131 29,531 31,200 32,924 29,703 8 Certificates of deposit 9,192 10,485 8,188 6,075 8,066 8,843 8,502 9,679 88,,888888 8,791 8,447 9 Bankers acceptances 4,586 5,526 3,661 2,395 2,618 2,734 2,917 3,094 22,,771155 2,770 2,520 10 Commercial paper 5,570 8,089 7,496 4,519 5,561 5,846 5,612 6,290 5,120 5,931 5,952 Futures positions 11 Treasury bills -7,322 -18,059 -3,373 -2,027 -2,695 909 -2,024 -1,176 338 1,944 1,733 12 Treasury coupons 4,465 3,473 5,988 4,460 4,136 7,518 3,805 6,724 6,251 8,483 7,946 13 Federal agency securities -722 -153 -95 0 0 0 0 0 0 0 0 Forward positions 14 U.S. Treasury securities -911 -2,144 -1,211 2,191 1,114 1,356 1,838 623 910 1,415 2,083 15 Federal agency securities -9,420 -11,840 -18,817 -14,977 -17,820 -18,777 -18,567 -18,348 -19,585 -19,716 -17,152 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 68,035 98,954 124,791 133,373 139,006 132,912 141,251 130,391 133,643 133,835 132,327 17 Term 80,509 108,693 148,033 173,858 168,069 173,938 163,380 162,655 171,138 174,307 179,198 Repurchase agreements5 18 Overnight and continuing 101,410 141,735 170,840 169,031 176,017 170,062 180,348 172,365 171,418 173,896 165,821 19 Term 70,076 102,640 120,980 139,537 131,104 130,220 130,217 119,605 128,451 128,207 136,480 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 1988 AAggeennccyy 11998844 11998855 11998866 11998877 Feb. Mar. Apr. May June 1 Federal and federally sponsored agencies 271,220 293,905 307,361 341,386 346,901 351,356 348,273 352,216 n.a. 2 Federal agencies 35,145 36,390 36,958 37,981 37,286 36,844 36,672 36,430 36,361 3 Defense Department1 142 71 33 13 12 12 11 11 11 4 Export-Import Bank2,3 15,882 15,678 14,211 11,978 11,978 11,494 11,494 11,494 11,232 5 Federal Housing Administration4 133 115 138 183 101 100 103 105 116 6 Government National Mortgage Association participation certificates 2,165 2,165 2,165 1,615 1,165 1,165 830 830 830 7 Postal Service6 1,337 1,940 3,104 6,103 6,103 6,103 6,103 •$,842 5,842 8 Tennessee Valley Authority 15,435 16,347 17,222 18,089 17,927 17,970 18,131 re, 148 18,330 9 United States Railway Association 51 74 85 0 0 0 0 0 0 10 Federally sponsored agencies7 237,012 257,515 270,553 303,405 309,615 314,512 311,601 315,786 n.a. 11 Federal Home Loan Banks 65,085 74,447 88,752 115,725 117,569 118,250 118,153 117,864 117,773 12 Federal Home Loan Mortgage Corporation 10,270 11,926 13,589 17,645 19,405 20,143 17,199 19,495 n.a. 13 Federal National Mortgage Association 83,720 93,896 93,563 97,057 98,593 99,853 100,911 102,515 104,757 14 Farm Credit Banks 72,192 68,851 62,478 55,275 55,275 56,145 54,311 54,578 55,779 15 Student Loan Marketing Association 5,745 8,395 12,171 16,503 16,923 18,271 18,877 18,434 19,257 16 Financing Corporation9 n.a. n.a. n.a. 1,200 1,850 1,850 2,150 2,900 2,900 MEMO 17 Federal Financing Bank debt10 145,217 153,373 157,510 152,417 150,178 149,721 150,044 149,986 149,833 Lending to federal and federally sponsored agencies 18 Export-Import Bank3 15,852 15,670 14,205 11,972 11,972 11,488 11,488 11,488 1111,,222266 19 Postal Service6 1,087 1,690 2,854 5,853 5,853 5,853 5,853 5,592 5,592 20 Student Loan Marketing Association 5,000 5,000 4,970 4,940 4,940 4,940 4,940 4,940 4,940 21 Tennessee Valley Authority 13,710 14,622 15,797 16,709 16,547 16,590 16,751 16,768 16,950 22 United States Railway Association6 51 74 85 0 0 0 0 0 0 Other Lending11 23 Farmers Home Administration 58,971 64,234 65,374 59,674 59,674 59,674 59,674 59,674 5599,,667744 24 Rural Electrification Administration 20,693 20,654 21,680 21,191 19,193 19,184 19,203 19,218 19,204 25 Other 29,853 31,429 32,545 32,078 31,999 31,992 32,135 32,306 32,247 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 Domestic Nonfinancial Statistics • October 1988 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1987 1988 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. May' June' July 1 All issues, new and refunding1 214,189 147,011 102,407 8,385 5,412 8,585 9,821 5,847 7,846 13,912 8,057 Type of issue 2 General obligation 52,622 46,346 30,589 1,995 1,259 2,880 2,776 1,707 3,085 4,237 1,816 3 Revenue 161,567 100,664 71,818 6,390 4,153 5,705 7,045 4,140 4,761 9,675 6,241 Type of issuer 4 State 13,004 14,474 10,102 550 423 1,197 739 441 913 1,349 143 5 Special district and statutory authority2 134,363 89,997 65,460 5,447 3,220 5,154 6,310 4,078 4,625 8,629 5,216 6 Municipalities, counties, and townships 66,822 42,541 26,845 2,388 1,769 2,234 2,772 1,328 2,308 3,934 2,698 7 Issues for new capital, total 156,050 83,490 56,789 5,913 2,862 5,773 6,044 3,948 5,190 8,935 7,178 Use of proceeds 8 Education 16,658 16,948 9,525 931 841 754 933 911 1,316 1,320 1,345 9 Transportation 12,070 11,666 3,677 455 189 826 559 215 452 858 1,446 10 Utilities and conservation 26,852 35,383 7,912 377 326 655 1,016 429 580 635 194 11 Social welfare 63,181 17,332 11,107 1,278 740 650 1,218 1,099 694 2,060 1,078 12 Industrial aid 12,892 5,594 6,551 1,297 153 2,473 105 298 248 434 188 13 Other purposes 24,398 47,433 18,020 1,575 613 415 2,213 996 1,900 3,628 2,927 1. Par amounts of long-term issues based on date of sale. SOURCES. Securities Data/Bond Buyer Municipal Data Base beginning 1986. 2. Includes school districts beginning 1986. Public Securities Association for earlier data. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1987 1988 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998855 11998866 11998877 Nov. Dec. Jan. Feb. Mar. Apr. May' June 1 All issues' 239,015 423,726 392,156 14,322 11,872 22,175 22,394 25,902 21,202r 23,413 29,168 2 Bonds2 203,500 355,293 325,648 13,624 11,098 19,485 18,504 20,815 18,490' 19,382 24,995 Type of offering 3 Public, domestic 119,559 231,936 209,279 12,891 10,763 18,246 16,713 19,827 16,177 17,496 22,000 4 Private placement, domestic 46,200 80,760 92,070 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 37,781 42,596 24,299 733 335 1,239 1,791 988' 2,313' 1,886 2,995 Industry group 6 Manufacturing 63,973 91,548 61,666 1,280 928 3,053 3,151 3,482 4,503' 4,206 5,284 7 Commercial and miscellaneous 17,066 40,124 49,327 483 2,577 2,084 1,396 1,007 771 1,446 2,136 8 Transportation 6,020 9,971 11,974 0 226 0 200 1,017 890 184 580 9 Public utility 13,649 31,426 23,004 895 1,570 1,142 1,718 2,259 1,170 1,929 1,700 10 Communication 10,832 16,659 7,340 290 510 206 101 115 411 69 910 11 Real estate and financial 91,958 165,564 172,343 10,676 5,287 13,000 11,937 12,935 10,746' 11,546 14,384 12 Stocks3 35,515 68,433 66,508 698 774 2,690 3,890 5,087 2,712 4,031 4,173 Type 13 Preferred 6,505 11,514 10,123 162 61 1,388 376 625 241 285 501 14 Common 29,010 50,316 43,228 533 713 1,302 3,534 4,490 2,471 3,746 3,672 15 Private placement3 6,603 13,157 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 5,700 15,027 13,880 237 76 268 296 256 318 1,080 1,695 17 Commercial and miscellaneous 9,149 10,617 12,888 86 14 360 44 99 276 157 466 18 Transportation 1,544 2,427 2,439 149 1 1 474 32 150 15 51 19 Public utility 1,966 4,020 4,322 25 0 100 142 93 238 59 188 20 Communication 978 1,825 1,458 1 11 60 0 63 109 78 13 21 Real estate and financial 16,178 34,517 31,521 200 672 1,901 2,933 4,544 1,621 2,642 1,760 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. Before 1987, annual totals include Excludes secondary offerings, employee stock plans, investment companies other underwritten issues only. than closed-end, intracorporate transactions, equities sold abroad, and Yankee SOURCES. IDD Information Services, Inc., U.S. Securities and Exchange bonds. Stock data include ownership securities issued by limited partnerships. Commission and the Board of Governors of the Federal Reserve System. 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 1988 IItteemm 11998866 11998877 Nov. Dec. Jan. Feb. Mar. Apr. May' June INVESTMENT COMPANIES1 1 Sales of own shares2 411,751 381,260 21,927 26,494 30,343 23,265 24,589 23,162 19,579 22,516 2 Redemptions of own shares3 239,394 314,252 20,400 28,099 22,324 20,914 23,968 25,000 21,412 23,201 3 Net sales 172,357 67,008 1,507 -1,605 8,019 2,351 620 -1,828 -1,833 -685 4 Assets4 424,156 453,842 446,479 453,842 468,998 481,232 473,206 473,321 468,735 483,574 30,716 38,006 41,432 38,006 40,157 41,232 43,561 45,307 45,003 43,691 6 Other 393,440 415,836 405,047 415,836 428,841 439,995 426,645 428,014 423,732 439,883 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. 1986 1987 1988 AAccccoouunntt 11998855 11998866 11998877 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2P 1 Corporate profits with inventory valuation and capital consumption adjustment 282.3 298.8 310.4 301.2 293.9 298.3 305.2 322.0 316.1 331166..22 333322..00 2 Profits before tax 224.2 236.3 276.7 240.5 252.1 261.8 273.7 289.4 281.9 286.2 310.7 3 Profits tax liability 96.4 106.6 133.8 107.9 114.3 126.3 132.6 140.0 136.2 136.9 144.1 4 Profits after tax 127.8 129.8 142.9 132.6 137.9 135.5 141.1 149.5 145.7 149.4 166.6 5 Dividends 83.2 88.2 95.5 88.9 89.8 91.7 94.0 97.0 99.3 101.3 103.1 6 Undistributed profits 44.5 41.5 47.4 43.7 48.1 43.8 47.0 52.4 46.4 48.1 63.5 7 Inventory valuation -1.7 8.3 -18.0 8.7 -8.1 -14.4 -20.0 -19.5 -18.2 -19.4 -27.1 8 Capital consumption adjustment 59.8 54.1 51.7 52.0 49.8 50.8 51.5 52.1 52.4 49.4 48.4 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • October 1988 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment • Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1986 1987 1988 IInndduussttrryy 11998866 11998877 1199888811 Q4 Ql Q2 Q3 Q4 Ql Q21 Q31 1 Total nonfarm business 379.47 388.60 430.23 386.09 374.23 377.65 393.13 409.37 409.73 429.01 438.22 Manufacturing 2 Durable goods industries 69.14 70.91 163.01 69.87 70.47 68.76 71.78 72.64 75.33 79.00 79.30 3 Nondurable goods industries 73.56 74.55 85.39 74.20 70.18 72.03 75.78 80.20 82.45 83.82 86.43 Nonmanufacturing 4 Mining 11.22 11.34 12.39 10.31 10.31 11.02 11.64 12.39 12.50 12.87 12.51 Transportation 5 Railroad 6.66 5.91 6.65 6.41 5.55 5.77 6.21 6.10 6.76 6.78 6.81 6 Air 6.26 6.55 7.62 6.84 7.46 5.72 5.91 7.12 6.90 7.44 8.43 7 Other 5.89 6.39 6.97 6.25 5.97 6.19 7.05 6.35 6.94 6.58 7.37 Public utilities 8 Electric 33.91 31.58 32.90 33.78 30.85 31.13 31.31 33.01 29.94 32.55 34.31 9 Gas and other 12.47 13.18 14.28 12.34 12.75 12.35 13.58 14.06 14.37 13.81 14.63 10 Commercial and other 160.38 168.19 186.40 166.08 160.70 164.69 169.87 177.50 174.54 186.15 188.44 •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 Liabilities1 Billions of dollars, end of period 1986 1987 AAccccoouunntt 11998833 11998844 11998855 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ASSETS Accounts receivable, gross 1 Consumer 83.3 89.9 111.9 123.4 135.3 134.7 131.1 134.7 141.6 141.1 2 Business 113.4 137.8 157.5 166.8 159.7 173.4 181.4 188.1 188.3 207.6 Real estate 20.5 23.8 28.0 29.8 31.0 32.6 34.7 36.5 38.0 39.5 4 Total 217.3 251.5 297.4 320.0 326.0 340.6 347.2 359.3 367.9 388.2 Less: 5 Reserves for unearned income 30.3 33.8 39.2 40.7 42.4 41.5 40.4 41.2 42.5 45.3 6 Reserves for losses 3.7 4.2 4.9 5.1 5.4 5.8 5.9 6.2 6.5 6.8 7 Accounts receivable, net 183.2 213.5 253.3 274.2 278.2 293.3 300.9 311.9 318.9 336.1 8 All other 34.4 35.7 45.3 49.5 60.0 58.6 59.0 57.7 64.5 58.2 9 Total assets 217.6 249.2 298.6 323.7 338.2 351.9 359.9 369.6 383.4 394.3 LIABILITIES 10 Bank loans 18.3 20.0 18.0 16.3 16.8 18.6 17.2 17.3 15.9 16.4 11 Commercial paper 60.5 73.1 99.2 108.4 112.8 117.8 119.1 120.4 124.2 128.4 Debt 12 Other short-term 11.1 12.9 12.7 15.8 16.4 17.5 21.8 24.8 26.9 28.0 13 Long-term 67.7 77.2 94.4 106.9 111.7 117.5 118.7 121.8 128.2 137.1 14 All other liabilities 31.2 34.5 41.5 40.9 45.0 44.1 46.5 49.1 48.6 52.8 15 Capital, surplus, and undivided profits 28.9 31.5 32.8 35.4 35.6 36.4 36.6 36.3 39.5 31.5 16 Total liabilities and capital 217.6 249.2 298.6 323.7 338.2 351.9 359.9 369.6 383.4 394.3 1. NOTE. Components may not add to totals because of rounding. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Outstanding and Net Change1 Millions of dollars, seasonally adjusted 1987 1988 TTyyppee Dec. Jan. Feb. Mar. Apr. May June 1 Total 156,297 171,966 205,869 206,755 213,337 216,007 218,914 220,304 222,133 Retail financing of installment sales 2 Automotive (commercial vehicles) 20,660 25,952 35,674 36,419 36,318 36,914 37,619 37,219 37,519 3 Business, industrial, and farm equipment 22,483 22,950 24,987 25,474 26,976 27,081 27,263 2277,,008811 2277,,554488 Wholesale financing 4 Automotive 23,988 23,419 31,059 30,115 28,654 27,329 27,361 28,260 28,731 5 Equipment 4,568 5,423 5,693 5,308 5,323 5,251 5,429 5,237 5,557 6 All other 6,809 7,079 8,408 8,454 8,331 8,347 8,311 88,,441144 88,,448811 Leasing 7 Automotive 16,275 19,783 21,943 22,943 23,100 23,493 23,458 23,690 24,076 8 Equipment 34,768 37,833 43,002 43,245 48,175 50,411 51,092 52,126 52,365 9 Loans on commercial accounts receivable and factored commercial accounts receivable 15,765 15,959 18,024 18,506 17,862 17,895 18,789 18,700 18,595 10 All other business credit 10,981 13,568 17,079 16,291 17,062 19,287 19,592 19,578 19,260 Net change (during period) 11 19,607 15,669 3,040 886 549 2,670 2,907 1,390 1,829 Retail financing of installment sales 12 Automotive (commercial vehicles) 5,067 5,292 1,220 745 -101 596 705 -400 300 13 Business, industrial, and farm equipment -363 467 223 487 -232 105 182 -181 467 Wholesale financing 14 Automotive 5,423 -569 158 -944 -1,461 -1,325 32 899 471 15 Equipment -867 855 -101 -385 14 -72 178 -192 320 16 All other 1,069 270 257 46 -123 16 -36 103 67 Leasing 17 Automotive 33,,889966 33,,550088 -70 1,000 157 393 -34 231 386 18 Equipment 2,685 3,065 1,038 243 632 2,236 681 11,,003344 239 19 Loans on commercial accounts receivable and factored commercial accounts receivable 2,161 194 -477 482 -643 -643 894 -88 -105 20 All other business credit 536 2,587 792 -788 770 689 305 -14 -318 1. These data also appear in the Board's G.20 (422) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • October 1988 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1988 IItteemm 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May' June July Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms 1 Purchase price (thousands of dollars) 104.1 118.1 137.0 150.1 139.4 147.2 151.4 145.3 152.0' 152.9 2 Amount of loan (thousands of dollars) 77.4 86.2 100.5 108.4 104.3 106.3 112.1 108.0 110.2' 111.9 3 Loan/price ratio (percent) 77.1 75.2 75.2 74.0 76.4 75.0 76.2 76.4 73.8' 75.2 4 Maturity (years) 26.9 26.6 27.8 28.2 28.1 27.3 27.7 28.1 27.5' 28.4 5 Fees and charges (percent of loan amount) . 2.53 2.48 2.26 2.17 2.23 2.28 2.20 2.15 2.16' 2.24 6 Contract rate (percent per year) 11.12 9.82 8.94 8.75 8.76 8.77 8.76 8.59 8.9C 8.80 Yield (percent per year) 1 FHLBB series' 11.58 10.25 9.31 9.10 9.12 9.15 9.13 8.95 9.26' 9.17 8 HUD series4 12.28 10.07 10.13 10.09 9.80 9.99 10.19 10.48 n.a. n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 12.24 9.91 10.12 10.17 9.86 10.28 10.46 10.84 n.a. n.a. 10 GNMA securities6 11.61 9.30 9.42 9.83 9.53 9.53 9.67 9.93 9.88 9.91 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 94,574 98,048 95,030 97,159 98,358 99,787 100,796 101,747 102,368 102,540 12 FHA/V A-insured 34,244 29,683 21,660 20,237 20,181 20,094 19,932 19,805 19,765 19,677 13 Conventional 60,331 68,365 73,370 76,923 78,177 79,693 80,864 81,941 82,603 82,864 Mortgage transactions (during period) 14 Purchases 21,510 30,826 20,531 1,267 2,629 2,776 2,409 2,138 2,372 1,960 Mortgage commitments7 15 Contracted (during period) 20,155 32,987 25,415 2,254 2,516 3,823 2,555 2,142 2,179 1,108 16 Outstanding (end of period) 3,402 3,386 4,886 5,542 4,966 6,149 6,033 5,777 5,365 4,277 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 12,399 13,517 12,802 13,090 13,926 14,386 14,822 15,228 n.a. n.a. 18 FHA/VA 841 746 686 632 646 641 635 633 n.a. n.a. 19 Conventional 11,559 12,771 12,116 12,458 13,280 13,745 14,187 14,595 n.a. n.a. Mortgage transactions (during period) 20 Purchases 44,012 103,474 76,845 2,168 3,293 2,932 2,772 2,877 n.a. n.a. 21 Sales 38,905 100,236 75,082 1,832 2,414 2,312 2,271 2,325 n.a. n.a. Mortgage commitments9 22 Contracted (during period) 48,989 110,855 71,467 3,868 4,910 4,262 6,437 5,159 n.a. n.a. 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage 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 1987 1988 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998855 11998866 11998877 Q2 Q3 Q4 Ql' Q2 1 All holders 2,269,173 2,568,562 2,908,970 2,756,502' 2,832,537' 2,908,970' 2,952,881 3,024,144 ? 1- to 4-family 1,467,409 1,668,209 1,889,198 1,780,662' 1,837,209' 1,889,198' 1,919,364 1,972,195 3 Multifamily 214,045 247,024 273,556 263,560' 268,519' 273,556' 277,262 282,811 4 Commercial 482,029 556,569 656,305 620,159' 635,897' 656,305' 667,036 680,400 5 105,690 96,760 89,911 92,121' 90,912' 89,911' 89,219 88,738 6 Selected financial institutions 1,390,394 1,507,289 1,700,820 1,607,000' 1,648,328' 1,700,820' 1,722,742 1,762,742 7 Commercial banks2 429,196 502,534 591,151 544,759' 567,OOC 591,151' 603,408 622,237 8 1- to 4-family 213,434 235,814 275,761 252,813' 263,762' 275,761' 279,977 289,029 9 Multifamily 23,373 31,173 33,296 30,543' 32,114' 33,296' 33,585 34,347 10 Commercial 181,032 222,799 267,663 247,576' 256,981' 267,663' 275,081 283,678 11 Farm 11,357 12,748 14,431 13,827' 14,143' 14,431' 14,765 15,183 1? Savings institutions3 760,499 777,312 856,945 824,961 838,737 856,945' 863,110 878,972 13 1- to 4-family 554,301 558,412 598,886 572,075 583,432 598,886' 603,532 617,121 14 Multifamily 89,739 97,059 106,359 102,933 104,609 106,359' 107,687 109,854 IS Commercial 115,771 121,236 150,943 149,183 149,938 150,943' 151,136 151,245 16 Farm 688 605 17 Life insurance companies 171,797 193,842 212,375 200,382 204,263 212,375 214,815 219,015 18 1- to 4-family 12,381 12,827 13,226 12,745 12,742 13,226 13,653 14,053 19 Multifamily 19,894 20,952 22,524 21,663 21,968 22,524 22,723 22,823 70 Commercial 127,670 149,111 166,722 155,611 159,464 166,722 168,774 172,624 71 Farm 11,852 10,952 9,903 10,363 10,089 9,903 9,665 9,515 22 Finance companies4 28,902 33,601 40,349 36,898 38,328 40,349 41,409 42,518 73 Federal and related agencies 166,928 203,800 192,721 196,514 191,520 192,721 196,909 199,780 74 Government National Mortgage Association 1,473 889 444 667 458 444 434 425 75 1- to 4-family 539 47 25 45 25 25 25 24 76 Multifamily 934 842 419 622 433 419 409 401 77 Farmers Home Administration 733 48,421 43,051 48,085 42,978 43,051 43,076 42,767 78 1- to 4-family 183 21,625 18,169 21,157 18,111 18,169 18,185 18,248 79 Multifamily 113 7,608 8,044 7,808 7,903 8,044 8,115 8,213 30 Commercial 159 8,446 6,603 8,553 6,592 6,603 6,640 6,288 31 Farm 278 10,742 10,235 10,567 10,372 10,235 10,136 10,018 37 Federal Housing and Veterans Administration 4,920 5,047 5,574 5,268 5,330 5,574 5,660 5,544 33 1- to 4-family 2,254 2,386 2,557 2,531 2,452 2,557 2,608 2,452 34 Multifamily 2,666 2,661 3,017 2,737 2,878 3,017 3,052 3,092 3S Federal National Mortgage Association 98,282 97,895 96,649 94,064 94,884 96,649 99,787 102,368 36 1- to 4-family 91,966 90,718 89,666 87,013 87,901 89,666 92,828 95,404 37 Multifamily 6,316 7,177 6,983 7,051 6,983 6,983 6,959 6,964 38 Federal Land Banks 47,498 39,984 34,131 35,833 34,930 34,131 33,566 33,048 39 1- to 4-family 2,798 2,353 2,008 2,108 2,055 2,008 1,975 1,945 40 Farm 44,700 37,631 32,123 33,725 32,875 32,123 31,591 31,103 41 Federal Home Loan Mortgage Corporation 14,022 11,564 12,872 12,597 12,940 12,872 14,386 15,628 47 1- to 4-family 11,881 10,010 11,430 11,172 11,570 11,430 12,749 13,768 43 Multifamily 2,141 1,554 1,442 1,425 1,370 1,442 1,637 1,860 44 Mortgage pools or trusts6 415,042 531,591 670,394 615,142 648,084 670,394 683,114 703,960 45 Government National Mortgage Association 212,145 262,697 317,555 293,246 308,339 317,555 322,976 329,976 46 1- to 4-family 207,198 256,920 309,806 286,091 300,815 309,806 315,095 321,924 47 Multifamily 4,947 5,777 7,749 7,155 7,524 7,749 7,881 8,052 48 Federal Home Loan Mortgage Corporation 100,387 171,372 212,634 200,284 208,872 212,634 214,724 216,440 49 1- to 4-family 99,515 166,667 205,977 194,238 202,308 205,977 208,138 209,900 SO Multifamily 872 4,705 6,657 6,046 6,564 6,657 6,586 6,540 SI Federal National Mortgage Association 54,987 97,174 139,960 121,270 130,540 139,960 145,242 157,438 s? 1- to 4-family 54,036 95,791 137,988 119,617 128,770 137,988 142,330 153,253 S3 Multifamily 951 1,383 1,972 1,653 1,770 1,972 2,912 4,185 54 Farmers Home Administration 47,523 348 245 342 333 245 172 106 55 1- to 4-family 22,186 142 121 149 144 121 65 23 S6 6,675 57 Commercial 8,190 132 63 126 124 63 58 41 58 Farm 10,472 74 61 67 65 61 49 42 59 Individuals and others7 296,809 325,882 345,035 337,846 344,605 345,035 350,116 357,662 60 1- to 4-family 165,835 180,896 183,229 182,010 184,794 183,229 186,795 192,533 61 Multifamily 55,424 66,133 75,094 73,924 74,403 75,094 75,716 76,480 67 49,207 54,845 64,311 59,110 62,798 64,311 65,347 66,524 63 Farm 26,343 24,008 22,401 22,802 22,610 22,401 22,258 22,125 1. Based on data from various institutional and governmental sources, with 4. Assumed to be entirely 1- to 4-family loans. some quarters estimated in part by the Federal Reserve. Multifamily debt refers 5. FmHA-guaranteed securities sold to the Federal Financing Bank were to loans on structures of five or more units. reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:4, 2. Includes loans held by nondeposit trust companies but not bank trust because of accounting changes by the Farmers Home Administration. departments. 6. Outstanding principal balances of mortgage pools backing securities insured 3. Includes savings banks and savings and loan associations. Beginning 1987:1, or guaranteed by the agency indicated. data reported by FSLIC-insured institutions include loans in process and other 7. Other holders include mortgage companies, real estate investment trusts, contra assets (credit balance accounts that must be subtracted from the corre- state and local credit agencies, state and local retirement funds, noninsured sponding gross asset categories to yield net asset levels). pension funds, credit unions, and other U.S. agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • October 1988 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1987 1988 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998866 11998877 Oct. Nov. Dec. Jan. Feb. Mar. Apr/ Mayr June Amounts outstanding (end of period) 1 Total 571,833 613,022 606,926 608,728 613,022 619,258 624,294 629,485 633,336 636,318 641,752 By major holder 2 Commercial banks 262,139 281,564 278,855 279,550 281,564 284,753 287,344 290,831 293,166 295,546 300,108 3 Finance companies2 133,698 140,072 139,236 138,928 140,072 141,695 142,946 144,053 144,516 144,454 144,748 4 Credit unions 76,191 81,065 80,672 80,923 81,065 81,662 81,897 82,595 83,204 83,881 84,679 Retailers 39,660 42,782 42,012 42,291 42,782 42,926 43,080 43,271 43,295 43,162 43,450 6 Savings institutions 56,881 63,949 62,457 63,412 63,949 64,633 65,396 65,078 65,387 65,509 65,054 7 Gasoline companies 3,264 3,590 3,694 3,624 3,590 3,590 3,631 3,657 3,769 3,765 3,713 By major type of credit S Automobile 246,109 267,180 263,823 264,474 267,180 269,883 273,133 276,762 278,567 279,418 281,834 9 Commercial banks 100,907 108,438 107,414 107,727 108,438 109,298 111,021 113,593 114,868 115,951 117,640 10 Credit unions 38,413 43,474 42,612 43,071 43,474 43,959 44,251 44,795 45,293 45,831 46,438 11 Finance companies 92,350 98,026 97,261 96,733 98,026 99,147 100,123 100,669 100,564 99,708 99,900 12 Savings institutions 14,439 17,242 16,536 16,943 17,242 17,479 17,738 17,705 17,841 17,928 17,856 n Revolving 136,381 159,307 155,196 156,425 159,307 162,065 163,462 165,643 167,356 169,154 172,001 14 Commercial banks 86,757 9988,,880088 97,416 97,378 98,808 100,879 101,537 103,152 104,250 105,742 108,021 15 Retailers 34,320 3366,,995599 36,270 36,501 36,959 37,087 37,231 37,408 37,414 37,259 37,526 16 Gasoline companies 3,264 3,590 3,694 3,624 3,590 3,590 3,631 3,657 3,769 3,765 3,713 17 Savings institutions 8,366 13,279 11,922 12,636 13,279 13,601 13,945 14,059 14,309 14,518 14,599 18 Credit unions 3,674 6,671 5,894 6,286 6,671 6,908 7,117 7,368 7,614 7,870 8,140 19 Mobile home 26,883 25,957 26,698 26,604 25,957 25,926 25,857 25,732 25,764 25,703 25,498 20 Commercial banks 8,926 9,101 9,174 9,169 9,101 9,064 9,035 8,993 9,047 8,966 8,889 21 Finance companies 8,822 7,771 8,228 8,211 7,771 7,753 7,679 7,640 7,575 7,578 7,513 22 Savings institutions 9,135 9,085 9,296 9,224 9,085 9,109 9,143 9,099 9,142 9,159 9,095 23 Other 162,460 160,578 161,209 161,225 160,578 161,384 161,842 161,348 161,649 162,043 162,419 24 Commercial banks 65,549 65,217 64,851 65,276 65,217 65,512 65,750 65,094 65,001 64,887 65,557 25 Finance companies 32,526 34,275 33,747 33,984 34,275 34,795 35,144 35,744 36,376 37,168 37,335 26 Credit unions 34,104 30,920 32,166 31,566 30,920 30,795 30,529 30,432 30,297 30,180 30,101 27 Retailers 5,340 5,823 5,742 5,790 5,823 5,839 5,849 5,863 5,880 5,903 5,923 28 Savings institutions 24,941 24,343 24,703 24,609 24,343 24,444 24,570 24,216 24,095 23,904 23,503 Net change (during period) 29 Total 54,078 41,189 3,949 1,802 4,294 6,236 5,036 5,191 3,851 2,982 5,434 By major holder 30 Commercial banks 20,495 19,425 2,050 695 2,014 3,189 2,591 3,487 2,335 2,380 4,562 31 Finance companies 22,670 6,374 841 -308 1,144 1,623 1,251 1,107 463 -62 294 32 Credit unions 4,268 4,874 321 251 142 597 235 698 609 677 798 33 Retailers 466 3,122 380 279 491 144 154 191 24 -133 288 34 Savings institutions 7,223 7,068 359 955 537 684 763 -318 309 122 -455 35 Gasoline companies -1,044 326 -2 -70 -34 0 41 26 112 -4 -52 By major type of credit 36 Automobile 36,473 21,071 1,921 651 22,,770066 22,,770033 3,250 3,629 1,805 851 2,416 37 Commercial banks 8,178 7,531 729 313 711 860 1,723 2,572 1,275 1,083 1,689 38 Credit unions 2,388 5,061 494 459 403 485 292 544 498 538 607 39 Finance companies 22,823 5,676 452 -528 1,293 1,121 976 546 -105 -856 192 40 Savings institutions 3,084 2,803 246 407 299 237 259 -33 136 87 -72 41 Revolving 14,368 22,926 2,643 1,229 2,882 2,758 1,397 2,181 1,713 1,798 2,847 42 Commercial banks 11,150 12,051 1,333 -38 1,430 2,071 658 1,615 1,098 1,492 2,279 43 Retailers 47 2,639 329 231 458 128 144 177 6 -155 267 44 Gasoline companies -1,044 326 -2 -70 -34 0 41 26 112 -4 -52 45 Savings institutions 2,078 4,913 589 714 643 322 344 114 250 209 81 46 Credit unions 2,137 2,997 394 392 385 237 209 251 246 256 270 47 Mobile home 49 -926 -147 -94 -647 -31 -69 -125 32 -61 -205 48 Commercial banks -627 175 17 -5 -68 -37 -29 -42 54 -81 -77 49 Finance companies -472 -1,051 -7 -17 -440 -18 -74 -39 -65 3 -65 50 Savings institutions 1,148 -50 -157 -72 -139 24 34 -44 43 17 -64 51 Other 3,188 -1,882 -468 16 -647 806 458 -494 301 394 376 52 Commercial banks 1,794 -332 -29 425 -59 295 238 -656 -93 -114 670 53 Finance companies 319 1,749 396 237 291 520 349 600 632 792 167 54 Credit unions -257 -3,184 -567 -600 -646 -125 -266 -97 -135 -117 -79 55 Retailers 419 483 51 48 33 16 10 14 17 23 20 56 Savings institutions 913 -598 -319 -94 -266 101 126 -354 -121 -191 -401 1. The Board's series cover most short- and intermediate-term credit extended 2. More detail for finance companies is available in the G. 20 statistical release. to individuals that is scheduled to be repaid (or has the option of repayment) in 3. Excludes 30-day charge credit held by travel and entertainment companies. two or more installments. These data also appear in the Board's G.19 (421) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Installment Credit A41 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1987 1988 IItteemm 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. May June INTEREST RATES Commercial banks2 1 48-month new car 12.91 11.33 10.45 n.a. n.a. 10.72 n.a. n.a. 10.55 n.a. 2 24-month personal 15.94 14.82 14.22 n.a. n.a. 14.46 n.a. n.a. 14.40 n.a. 3 120-month mobile home3 14.96 13.99 13.38 n.a. n.a. 13.45 n.a. n.a. 13.49 n.a. 4 Credit card 18.69 18.26 17.92 n.a. n.a. 17.80 n.a. n.a. 17.78 n.a. Auto finance companies New car 11.98 9.44 10,73 12.23 12.19 12.26 12.24 12.29 12.29 12.32 6 Used car 17.59 15.95 14.60 14.97 14.56 14.75 14.77 14.82 14.81 14.83 OTHER TERMS4 Maturity (months) 7 New car 51.5 50.0 53.5 55.5 55.5 55.9 56.0 56.2 56.2 56.3 8 Used car 41.4 42.6 45.2 45.3 47.2 46.8 46.9 46.9 46.9 46.9 Loan-to-value ratio 9 New car 91 91 93 93 93 94 94 94 94 94 10 Used car 94 97 98 99 98 99 98 98 99 99 Amount financed (dollars) 11 New car 9,915 10,665 11,203 11,645 11,534 11,447 11,493 11,553 11,624 11,626 12 Used car 6,089 6,555 7,420 7,718 7,612 7,619 7,587 7,662 7,778 7,899 1. These data also appear in the Board's G.19 (421) release. For address, see 3. Before 1983 the maturity for new car loans was 36 months, and for mobile inside front cover. home loans was 84 months. 2. Data for midmonth of quarter only. 4. At auto finance companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • October 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 11998833 11998844 11998855 11998866 11998877 H2 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 550.2 753.9 854.8 831.7 672.2 790.4 722.7 986.8 679.1 984.4 623.1 721.4 By sector and instrument 2 U.S. government 186.6 198.8 223.6 215.0 143.8 207.2 204.8 242.5 207.2 222.8 152.8 134.9 3 Treasury securities 186.7 199.0 223.7 214.7 142.3 207.3 204.9 242.5 207.4 222.0 151.7 132.9 -.1 -.2 -.1 .4 1.5 -.1 -.1 -.1 -.1 .9 1.0 2.0 363.6 555.1 631.1 616.7 528.4 583.3 518.0 744.3 471.8 761.6 470.3 586.4 253.4 313.6 447.8 452.7 435.6 342.5 350.4 545.2 365.6 539.8 443.6 427.7 53.7 50.4 136.4 30.8 34.5 67.0 67.0 205.8 -15.6 77.2 34.9 34.1 16.0 46.1 73.8 121.3 99.4 69.8 62.2 85.3 135.3 107.3 97.3 101.6 183.6 217.1 237.7 300.6 301.7 205.7 221.2 254.2 245.9 355.4 311.4 291.9 117.5 129.7 151.9 201.2 211.4 119.9 139.2 164.7 163.9 238.6 221.0 201.9 14.2 25.1 29.2 33.1 25.0 22.4 25.0 33.4 31.3 34.9 30.0 20.1 49.3 63.2 62.5 74.6 71.5 63.8 59.5 65.5 59.7 89.6 69.8 73.1 13 Farm 2.6 -.9 -6.0 -8.4 -6.3 -.4 -2.5 -9.5 -9.0 -7.7 -9.3 -3.2 110.2 241.5 183.3 164.0 92.8 240.8 167.5 199.1 106.3 221.7 26.7 158.8 56.6 90.4 94.6 65.8 41.8 86.2 95.3 93.9 71.0 60.6 28.3 55.2 23.2 67.1 38.6 66.5 9.3 63.0 21.0 56.2 12.2 120.8 -32.6 51.2 -.8 21.7 14.6 -9.3 2.3 16.8 14.4 14.8 -13.1 -5.5 4.5 .1 18 Other 31.3 62.2 35.5 41.0 39.4 74.7 36.8 34.2 36.2 45.8 26.6 52.2 363.6 555.1 631.1 616.7 528.4 583.3 518.0 744.3 471.8 761.6 470.3 586.4 34.0 27.4 91.8 44.3 33.9 38.6 56.3 127.2 4.3 84.3 33.2 34.7 188.2 234.6 293.4 281.1 248.9 234.2 259.8 327.1 233.0 329.3 231.1 266.8 22 Farm 4.1 -.1 -13.9 -15.1 -11.7 .4 -7.0 -20.8 -16.9 -13.3 -17.8 -5.6 77.0 97.0 93.1 116.2 103.3 92.2 85.7 100.5 96.7 135.6 104.5 102.1 60.3 196.0 166.7 190.2 153.9 217.8 123.2 210.3 154.7 225.8 119.4 188.5 17.3 8.3 1.2 9.0 3.8 -19.4 -5.8 8.2 21.5 -3.5 -7.4 15.0 3.1 3.8 3.8 2.6 6.3 6.3 5.5 2.1 6.2 -1.1 -1.7 14.3 3.6 -6.6 -2.8 -1.0 -3.6 -11.9 -5.8 .1 1.5 -3.5 -3.2 -4.1 6.5 6.2 6.2 11.5 2.1 -4.3 2.8 9.6 19.1 3.9 -5.3 9.5 4.1 5.0 -6.0 -4.0 -1.0 -9.6 -8.2 -3.7 -5.3 -2.7 2.7 -4.7 556677..55 776622..22 885566..00 884400..77 676.0 771.0 716.9 995.0 700.5 980.9 615.7 736.3 Financial sectors 31 Total net borrowing by financial sectors ... 99.3 151.9 199.0 295.3 284.2 150.7 175.1 222.8 242.3 348.2 319.3 249.7 By instrument 32 U.S. government related 67.8 74.9 101.5 178.1 168.3 77.3 96.8 106.3 136.1 220.1 180.5 156.5 33 Sponsored credit agency securities 1.4 30.4 20.6 15.2 30.2 31.5 26.6 14.6 8.7 21.7 8.1 52.3 34 Mortgage pool securities 66.4 44.4 79.9 163.3 138.8 45.8 70.3 89.5 126.5 200.0 174.0 104.1 35 Loans from U.S. government 1.1 -.4 -.8 2.2 .8 -1.5 -1.5 36 Private financial sectors 31.5 77.0 97.4 117.2 116.0 73.5 78.3 116.5 106.2 128.1 138.7 93.2 37 Corporate bonds 17.4 36.2 48.6 69.0 65.8 41.5 48.9 48.3 72.1 66.0 80.2 51.4 38 Mortgages * .4 .1 .1 .3 .4 * .1 .6 -.5 .2 .3 39 Bank loans n.e.c -.1 .7 2.6 4.0 -3.3 .7 2.3 2.9 4.0 4.0 -4.7 -1.9 40 Open market paper 21.3 24.1 32.0 24.2 28.8 16.0 14.6 49.4 15.1 33.4 49.4 8.2 41 Loans from Federal Home Loan Banks -7.0 15.7 14.2 19.8 24.4 14.9 12.5 15.9 14.4 25.2 13.6 35.2 By sector 42 Sponsored credit agencies 1.4 30.4 21.7 14.9 29.5 31.5 26.6 16.8 9.5 20.2 6.6 52.3 43 Mortgage pools 66.4 44.4 79.9 163.3 138.8 45.8 70.3 89.5 126.5 200.0 174.0 104.1 44 Private financial sectors 31.5 77.0 97.4 117.2 116.0 73.5 78.3 116.5 106.2 128.1 138.7 93.2 45 Commercial banks 5.0 7.3 -4.9 -3.6 7.1 -5.3 -4.7 -5.0 -2.7 -4.6 14.1 .1 46 Bank affiliates 12.1 15.6 14.5 4.6 3.0 10.8 10.2 18.9 -1.7 10.9 11.5 -5.6 47 Savings and loan associations -2.1 22.7 22.3 29.8 35.7 23.3 14.2 30.4 25.5 34.0 27.7 43.8 48 Finance companies 12.9 18.9 53.9 49.7 30.8 29.6 49.7 58.1 53.1 46.3 32.9 28.7 49 REITs -.1 .1 -.7 -.3 1.4 .1 -.6 -.8 .6 -1.3 * 2.9 50 CMO Issuers 3.7 12.4 12.2 37.1 38.0 15.0 9.5 14.9 31.4 42.8 52.6 23.3 All sectors 51 Total net borrowing 666.8 914.1 1,054.9 1,136.0 960.2 921.8 892.1 1,217.8 942.8 1,329.1 935.0 986.0 52 U.S. government securities .. 254.4 273.8 324.2 393.5 312.9 284.5 301.7 346.6 342.5 444.5 334.8 291.4 53 State and local obligations ... 53.7 50.4 136.4 30.8 34.5 67.0 67.0 205.8 -15.6 77.2 34.9 34.1 54 Corporate and foreign bonds . 36.5 86.1 126.1 192.9 171.5 117.6 116.6 135.7 213.6 172.1 175.8 167.3 55 Mortgages 183.6 217.4 237.7 300.7 301.9 206.0 221.2 254.2 246.5 354.9 311.6 292.2 56 Consumer credit 56.6 90.4 94.6 65.8 41.8 86.2 95.3 93.9 71.0 60.6 28.3 55.2 57 Bank loans n.e.c 26.7 61.1 38.3 69.5 2.4 51.8 17.5 59.2 17.7 121.3 -40.5 45.3 58 Open market paper 26.9 52.0 52.8 26.4 33.2 28.6 31.8 73.7 21.0 31.7 48.6 17.8 59 Other loans 28.4 82.9 44.8 56.5 62.1 80.0 41.1 48.6 46.1 66.8 41.5 82.7 External corporate equity funds raised in United States 60 Total new share issues 61.8 -36.4 19.9 91.6 1.6 -24.9 3.0 36.7 100.8 82.3 84.5 -81.3 61 Mutual funds 27.2 29.3 85.7 163.3 75.4 32.2 64.2 107.1 155.5 171.1 147.2 3.6 62 All other 34.6 -65.7 -65.8 -71.7 -73.8 -57.1 -61.2 -70.4 -54.7 -88.7 -62.7 -84.9 63 Nonfinancial corporations 28.3 -74.5 -81.5 -80.8 -76.5 -69.4 -75.5 -87.5 -68.7 -92.7 -70.0 -83.0 64 Financial corporations 2.6 7.8 12.0 8.3 5.4 8.8 11.2 12.8 7.5 9.1 5.4 5.3 65 Foreign shares purchased in United States. 3.7 .9 3.7 .7 -2.7 3.5 3.1 4.3 6.6 -5.1 1.9 -7.2 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 11998833 11998844 11998855 11998866 11998877 H2 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to domestic 550.2 753.9 854.8 831.7 672.2 790.4 722.7 998866..88 667799..11 998844..44 662233..11 772211..44 By public agencies and foreign ? Total net advances 114.0 157.6 202.3 319.7 231.6 182.5 119955..88 220088..77 226644..77 337744..66 223377..00 222266..33 3 U.S. government securities 26.3 39.3 47.1 84.8 58.2 51.0 50.3 43.9 74.0 95.6 45.4 71.0 4 Residential mortgages 76.1 56.5 94.6 160.3 135.6 57.4 88.6 100.7 123.7 196.9 166.8 104.6 5 FHLB advances to savings and loans -7.0 15.7 14.2 19.8 24.4 14.9 12.5 15.9 14.4 25.2 13.6 35.2 6 Other loans and securities 18.6 46.2 46.3 54.7 13.4 59.2 44.4 48.2 52.6 56.9 11.1 15.4 Total advanced, by sector 7 U.S. government 9.7 17.1 16.8 9.5 -13.7 26.6 25.1 8.4 10.8 8.2 --1166..66 --1111..22 8 Sponsored credit agencies 69.8 74.3 101.5 177.3 166.2 75.2 96.4 106.7 128.2 226.5 168.1 164.7 9 Monetary authorities 10.9 8.4 21.6 30.2 10.0 4.8 27.5 15.8 13.2 47.2 10.8 9.1 10 Foreign 23.7 57.9 62.3 102.6 69.2 75.9 46.8 77.8 112.5 92.7 74.6 63.8 Agency and foreign borrowing not in line 1 II Sponsored credit agencies and mortgage pools 67.8 74.9 101.5 178.1 168.3 77.3 96.8 110066..33 113366..11 222200..11 118800..55 115566..55 12 Foreign 17.3 8.3 1.2 9.0 3.8 -19.4 -5.8 8.2 21.5 -3.5 -7.4 15.0 Private domestic funds advanced 13 521.3 679.5 755.2 699.2 612.6 665.7 618.0 889922..55 557711..99 882266..44 555599..33 666666..55 14 U.S. government securities 228.1 234.5 277.0 308.7 254.7 233.5 251.3 302.7 268.6 348.9 289.5 220.4 15 State and local obligations 53.7 50.4 136.4 30.8 34.5 67.0 67.0 205.8 -15.6 77.2 34.9 34.1 16 Corporate and foreign bonds 14.5 35.1 40.8 83.4 85.5 53.0 39.7 42.0 100.2 66.6 70.3 100.7 17 Residential mortgages 55.0 98.2 86.4 74.0 100.8 84.8 75.5 97.4 71.5 76.5 84.1 117.3 18 Other mortgages and loans 162.4 276.9 228.8 222.1 161.6 242.3 197.0 260.6 161.7 282.4 94.1 229.2 19 LESS: Federal Home Loan Bank advances -7.0 15.7 14.2 19.8 24.4 14.9 12.5 15.9 14.4 25.2 13.6 35.2 Private financial intermediation 70 Credit market funds advanced by private financial institutions 395.8 559.8 579.5 726.9 558.7 532.1 483.8 675.2 638.5 881155..33 557788..55 553388..99 71 Commercial banking 144.3 168.9 186.3 194.7 136.6 145.5 143.3 229.4 117.2 272.3 99.1 173.6 V Savings institutions 135.6 150.2 83.0 105.5 135.8 133.5 54.5 111.4 94.5 116.6 106.4 165.1 73 Insurance and pension funds 100.1 121.8 156.0 176.7 177.2 95.3 139.4 172.5 169.0 184.4 210.2 144.2 24 Other finance 15.8 118.9 154.2 249.9 109.4 157.8 146.5 161.9 257.9 241.9 162.8 56.0 75 Sources of funds 395.8 559.8 579.5 726.9 558.7 532.1 483.8 675.2 638.5 815.3 578.5 538.9 76 Private domestic deposits and RPs 215.4 316.9 213.2 271.4 163.8 353.5 191.4 235.0 252.2 290.6 60.0 265.4 27 Credit market borrowing 31.5 77.0 97.4 117.2 116.0 73.5 78.3 116.5 106.2 128.1 138.7 93.2 78 148.9 165.9 268.9 338.3 279.0 105.1 214.1 323.6 280.1 396.5 379.8 180.3 79 Foreign funds 14.6 8.8 19.7 12.9 44.0 1.7 10.8 28.6 11.9 14.0 24.5 63.5 30 Treasury balances -5.3 4.0 10.3 1.7 -5.8 10.8 13.9 6.6 -4.2 7.6 4.3 -16.0 31 Insurance and pension reserves 109.7 118.6 141.0 152.8 147.8 74.6 118.6 163.4 136.6 168.9 175.2 120.3 32 Other, net 30.0 34.5 98.1 170.9 93.0 18.0 71.4 124.7 135.8 206.1 175.7 12.5 Private domestic nonfinancial investors 33 Direct lending in credit markets 157.0 196.7 273.2 89.4 169.9 207.1 212.5 333.9 3399..77 113399..22 111199..55 222200..88 34 U.S. government securities 99.3 123.6 145.3 47.1 69.4 84.3 156.2 134.5 42.2 51.9 72.9 66.3 35 State and local obligations 40.3 30.4 47.6 -5.4 58.7 50.4 14.8 80.4 -67.6 56.8 25.6 91.8 36 Corporate and foreign bonds -11.6 5.2 11.8 34.7 23.0 36.9 15.4 8.2 68.8 .7 -8.0 53.9 37 Open market paper 12.0 9.3 43.9 -4.8 6.8 3.0 3.5 84.2 -17.3 7.7 19.0 -5.5 38 Other 17.0 28.1 24.6 17.9 12.1 32.5 22.6 26.6 13.6 22.1 9.9 14.3 39 Deposits and currency 232.8 320.4 223.5 291.8 180.6 354.0 198.3 248.7 261.9 321.6 45.1 313.9 40 Currency 14.3 8.6 12.4 14.4 19.0 3.6 15.9 8.8 10.7 18.2 9.6 28.4 41 Checkable deposits 28.8 28.0 41.5 100.1 -.2 29.9 13.8 69.2 82.5 117.8 -21.6 21.3 47 Small time and savings accounts 215.4 150.7 138.6 120.8 78.8 169.9 162.1 115.1 112.6 129.0 51.7 105.9 43 Money market fund shares -39.0 49.0 8.9 43.8 27.2 73.4 10.6 7.1 46.9 40.6 3.1 51.3 44 Large time deposits -8.3 84.3 7.6 -11.6 31.0 79.1 -7.3 22.5 .2 -23.3 4.0 55.9 4S Security RPs 18.5 5.0 16.6 18.3 26.9 1.2 12.2 21.1 10.0 26.5 22.7 31.0 46 Deposits in foreign countries 3.1 -5.1 -2.1 5.9 -2.2 -3.1 -9.0 4.9 -.9 12.8 -24.5 20.1 47 Total of credit market instruments, deposits, and currency 389.9 517.1 496.7 381.2 350.5 561.1 410.7 582.6 301.6 460.9 164.6 534.7 48 Public holdings as percent of total 20.1 20.7 23.6 38.0 34.3 23.7 27.3 21.0 37.8 38.2 38.5 30.7 49 Private financial intermediation (in percent) 75.9 82.4 76.7 104.0 91.2 79.9 78.3 75.6 111.6 98.7 103.4 80.8 50 Total foreign funds 38.2 66.7 82.0 115.5 113.2 77.6 57.7 106.4 124.4 106.7 99.2 127.2 MEMO: Corporate equities not included above SI Total net issues 61.8 -36.4 19.9 91.6 1.6 -24.9 3.0 36.7 100.8 82.3 8844..55 --8811..33 5? Mutual fund shares 27.2 29.3 85.7 163.3 75.4 32.2 64.2 107.1 155.5 171.1 147.2 3.6 53 Other equities 34.6 -65.7 -65.8 -71.7 -73.8 -57.1 -61.2 -70.4 -54.7 -88.7 -62.7 -84.9 54 Acquisitions by financial institutions 51.1 19.7 43.4 50.6 43.0 39.7 59.5 27.3 46.5 54.6 67.4 18.5 55 Other net purchases 10.7 -56.1 -22.9 41.0 -41.4 -64.6 -55.8 9.5 54.3 27.7 17.1 -99.9 NOTES BY LINE NUMBER. 31. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.57. 32. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 33. Line 13 less line 20 plus line 27. 6. Includes farm and commercial mortgages. 34-38. Lines 14-18 less amounts acquired by private finance plus amounts 11. Credit market funds raised by federally sponsored credit agencies, and net borrowed by private finance. Line 38 includes mortgages. issues of federally related mortgage pool securities. 40. Mainly an offset to line 9. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. Also sum of lines 28 and 47 less lines 40 and 46. 48. Line 2/line 1. 18. Includes farm and commercial mortgages. 49. Line 20/line 13. 26. Line 39 less lines 40 and 46. 50. Sum of lines 10 and 29. 27. Excludes equity issues and investment company shares. Includes line 19. 51. 53. Includes issues by financial institutions. 29. Foreign deposits at commercial banks, bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts branches, and liabilities of foreign banking agencies to foreign affiliates, less outstanding may be obtained from Flow of Funds Section, Division of Research claims on foreign affiliates and deposits by banking in foreign banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, 30. Demand deposits and note balances at commercial banks. D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • October 1988 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1987 1988 MMeeaassuurree 11998855 11998866 11998877 Nov. Dec. Jan. Feb. Mar. Apr/ Mayr June July" 1 Industrial production 123.7 125.1 129.8 133.2 133.9 134.4 134.4 134.7 135.4 136.1 136.6 137.7 Market groupings 2 Products, total 130.6 133.3 138.3 141.0 141.3 142.7 143.4 143.6 144.1 144.9 145.4 146.1 3 Final, total 131.0 132.5 136.8 139.2 139.8 141.1 141.6 141.8 142.5 143.3 143.9 144.8 4 Consumer goods 119.8 124.0 127.7 129.4 129.8 131.2 131.3 131.2 131.9 132.5 133.0 133.4 5 Equipment 145.8 143.6 148.8 152.2 153.1 154.3 155.3 155.9 156.5 157.6 158.5 159.8 6 Intermediate 129.3 136.2 143.5 147.3 146.5 148.1 149.4 149.9 149.6 150.1 150.6 150.8 7 Materials 114.3 113.8 118.2 122.5 123.7 123.0 122.1 122.5 123.6 124.2 124.7 126.2 Industry groupings 8 Manufacturing 126.4 129.1 134.6 137.9 138.9 139.4 139.5 140.0 140.8 141.7 142.0 143.1 Capacity utilization (percent)2 9 Manufacturing 80.1 79.7 81.1 82.2 82.6 82.7 82.6 82.7 82.9 83.2 83.2 83.7 10 Industrial materials industries 80.3 78.6 80.5 82.9 83.6 83.0 82.3 82.4 82.9 83.2 83.4 84.2 11 Construction contracts (1982 = 100)3 150.0 158.0 161.0 157.0 157.0 145.0 159.0 154.0 144.0 157.0 165.0 156.0 12 Nonagricultural employment, total4 118.3 120.7 124.1 125.7 126.1 126.4 127.0 127.3 127.7 127.9 128.6 128.9 13 Goods-producing, total 102.1 100.9 101.8 103.2 103.5 103.4 103.8 104.1 104.5 104.6 105.1 105.5 14 Manufacturing, total 97.8 96.3 96.8 98.0 98.3 98.4 98.5 98.6 98.8 99.0 99.3 99.6 15 Manufacturing, production-worker 92.6 91.2 92.1 93.2 93.5 93.5 93.7 93.7 93.9 94.1 94.4 94.8 16 Service-producing 125.0 129.0 133.4 135.1 135.6 136.1 136.7 137.1 137.4 137.7 138.4 138.7 17 Personal income, total 206.9 219.7 235.1 241.6 245.0 244.0 245.5 248.0 248.8 250.1 251.7 253.3 18 Wages and salary disbursements 198.8 210.7 226.2 233.3 236.8 235.7 237.3 238.9 240.9 242.3 244.2 246.7 19 Manufacturing 172.8 177.4 183.8 188.3 188.2 189.4 190.2 193.6 192.8 193.8 195.4 196.9 20 Disposable personal income 205.8 218.9 232.7 239.0 242.1 242.4 244.8 247.0 243.3 249.5 251.3 252.8 21 Retail sales® 189.6 199.5 209.3 211.9 214.2 214.5 216.7 220.3 219.4 221.2 222.1 223.2 Prices7 22 Consumer (1982-84 = 100) 107.6 109.6 113.6 115.4 115.4 115.7 116.0 116.5 117.1 117.5 118.0 118.5 23 Producer finished goods (1982 = 100) ... 104.7 103.2 105.4 106.3 105.8 106.3 106.1 106.2 106.9 107.5 107.9 108.5 1. A major revision of the industrial production index and the capacity 5. Based on data in Survey of Current Business (U.S. Department of Comutilization rates was released in July 1985. See "A Revision of the Index of merce). Industrial Production" and accompanying tables that contain revised indexes 6. Based on Bureau of Census data published in Survey of Current Business. (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 7. Data without seasonal adjustment, as published in Monthly Labor Review. (July 1985), pp. 487-501. The revised indexes for January through June 1985 were Seasonally adjusted data for changes in the price indexes may be obtained from shown in the September BULLETIN. the Bureau of Labor Statistics, U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Com- NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, merce, and other sources. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 3. Index of dollar value of total construction contracts, including residential, of Current Business. nonresidential and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the last two months are preliminary and Company, F. W. Dodge Division. estimated, respectively. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1987 1988 CCaatteeggoorryy 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. May' June' July HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 180,440 182,822 185,010 185,882 186,083 186,219 186,361 186,478 186,600 186,755 186,911 2 Labor force (including Armed Forces)1 117,695 120,078 122,122 122,984 123,436 123,598 123,153 123,569 123,204 123,665 123,866 3 Civilian labor force 115,461 117,834 119,865 120,722 121,175 121,348 120,903 121,323 120,978 121,472 121,684 4 Nonagricultural industries 103,971 106,434 109,232 110,529 110,836 111,182 110,899 111,485 111,160 111,933 112,014 5 Agriculture 3,179 3,163 3,208 3,215 3,293 3,228 3,204 3,228 3,035 3,085 3,046 Unemployment 6 Number 8,312 8,237 7,425 6,978 7,046 6,938 6,801 6,610 6,783 6,455 6,625 7 Rate (percent of civilian labor force) 7.2 7.0 6.2 5.8 5.8 5.7 5.6 5.4 5.6 5.3 5.4 8 Not in labor force 62,745 62,744 62,888 62,898 62,647 62,621 63,208 62,909 63,396 63,090 63,045 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 97,519 99,525 102,310 104,001 104,262 104,729 105,020 105,281 105,489 106,021 106,304 10 Manufacturing 19,260 18,965 19,065 19,348 19,369 19,390 19,405 19,460 19,490 19,545 19,613 11 Mining 927 777 721 735 728 731 733 737 739 740 740 12 Contract construction 4,673 4,816 4,998 5,118 5,083 5,150 5,192 5,238 5,237 5,305 5,319 13 Transportation and public utilities 5,238 5,255 5,385 5,481 5,499 5,513 5,530 5,543 5,556 5,578 5,593 14 Trade 23,073 23,683 24,381 24,768 24,937 25,080 25,111 25,182 25,245 25,358 25,464 15 Finance 5,955 6,283 6,549 6,619 6,633 6,636 6,651 6,650 6,656 6,676 6,678 16 Service 22,000 23,053 24,196 24,725 24,795 24,975 25,078 25,163 25,216 25,459 25,522 17 Government 16,394 16,693 17,015 17,207 17,218 17,254 17,320 17,308 17,350 17,360 17,375 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • October 1988 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1987r 1988r 1987 1988 1987 1988 SSeerriieess Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2' Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 131.0 133.2 134.5 136.1 161.3 162.2 163.1 164.2 81.2 82.1 82.4 82.9 2 Mining 100.7 104.3 102.5 103.8 129.0' 128.4 127.7 127.0 78.0 81.2 80.3 81.7 3 Utilities 111.8 112.3 114.7 112.8 138.8 139.4 139.8 140.1 80.5 80.6 82.0 80.5 4 Manufacturing 135.7 138.1 139.6 141.5 166.7 167.7 168.9 170.2 81.4 82.3 82.7 83.1 5 Primary processing 119.2 122.2 123.0 123.9 139.8 140.6 141.6' 142.7 85.3 86.9 86.9 86.9 6 Advanced processing... 145.8 147.6 149.7 152.1 182.9 184.1 185.6 186.7 79.7 80.1 80.7 81.5 7 Materials 119.2 122.5 122.5 124.1 147.2 147.8 148.5 149.3 81.0 82.9 82.5 83.1 8 Durable goods 125.7 130.3 131.5 134.2 163.9 164.7r 165.7 166.8 76.7 79.1 79.4 80.5 9 Metal materials 83.8 91.4 86.2 88.3 109.4 108.9 108.8 109.1 76.5 84.0 79.2 80.9 10 Nondurable goods 128.2 130.1 129.4 130.6 144.7 145.6 146.8 148.3 88.6 89.3 88.1 88.1 11 Textile, paper, and chemical ... 130.5 133.0 131.6 132.4 144.4 145.4 146.7r 148.5 90.4r 91.5 89.7r 89.2 12 Paper 144.6 145.1 145.7 145.4 145.1 146.2 147.6 149.2f 99.6 99.2 98.7 97.5 13 Chemical 130.2 135.5 133.5 135.7 150.9 152.0' 153.5r 155.4r 86.3 89.1 87.0 87.3 14 Energy materials 100.0 102.1 100.9 100.9 120.1 119.9 119.7 119.4 83.3 85.2 84.3 84.5 Previous cycle2 Latest cycle3 1987 1987 1988 High Low High Low July Nov. Dec/ Jan. Feb. Mar/ Apr/ May' Juner July Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 81.1 82.1 82.4 82.5 82.4 82.4 82.7 82.9 83.1 83.5 16 Mining 92.8 87.8 95.2 76.9 76.8 81.5 81.5 80.7 79.5 80.6 82.3 81.1 81.7 82.3 17 Utilities 95.6 82.9 88.5 78.0 80.2 81.2 80.0 82.4 82.6 81.0 79.3 80.2 82.1 82.5 18 Manufacturing 87.7 69.9 86.5 68.0 81.5 82.2 82.6 82.7 82.6 82.7 82.9 83.2 83.2 83.7 19 Primary processing 91.9 68.3 89.1 65.0 85.4 87.0 87.6 87.1 86.6 86.9 86.9 87.0 86.6 87.3 20 Advanced processing.. 86.0 71.1 85.1 69.5 79.8 80.0 80.3 80.7 80.7 80.7 81.2 81.6 81.7 82.0 21 Materials 92.0 70.5 89.1 68.5 80.6 82.9 83.6 83.0 82.3 82.4 82.9 83.2 83.4 84.2 22 Durable goods 91.8 64.4 89.8 60.9 76.5 79.0 80.0 79.7 79.3 79.1 79.7 80.9 80.8 81.6 23 Metal materials 99.2 67.1 93.6 45.7 73.8 83.3 86.3 80.1 79.3 78.3 79.3 82.0 81.4 84.6 24 Nondurable goods .... 91.1 66.7 88.1 70.7 88.4 89.0 90.8 88.8 87.3 88.3 88.7 87.9 87.6 88.2 25 Textile, paper, and chemical 92.8 64.8 89.4 68.8 90.0 91.0 93.1 90.8 88.5 89.9 90.1 88.7 88.6 89.3 ''6 98.4 70.6 97.3 79.9 101.6 98.7 101.6 100.6 97.8 97.8 98.1 98.1 96.3 92.5 64.4 87.9 63.5 90.9 88.6 90.9 87.8 8855..77 87.5 88.0 86.9 87.0 28 Energy materials 94.6 86.9 94.0 82.3 82.4 85.7 84.8 84.7 8844..11 84.1 84.5 83.7 85.2 86.3 1. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly high 1973; monthly low 1975. inside front cover. 3. Monthly highs 1978 through 1980; monthly lows 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1977 1987 1988 1987 GGrroouuppss por- aavvgg.. tion July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May JJuunnee"" JJuullyy'' Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 129.8 130.6 131.2 131.0 132.5 133.2 133.9 134.4 134.4 134.7 135.4 136.1 136.6 137.7 ? 57.72 138.3 139.5 139.9 139.4 140.9 141.0 141.3 142.7 143.4 143.6 144.1 144.9 145.4 146.1 Final products 44.77 136.8 137.9 138.4 137.8 139.3 139.2 139.8 141.1 141.6 141.8 142.5 143.3 143.9 144.8 4 Consumer goods 25.52 127.7 128.9 129.4 127.7 129.0 129.4 129.8 131.2 131.3 131.2 131.9 132.5 133.0 133.4 Equipment 19.25 148.8 149.7 150.2 151.2 153.0 152.2 153.1 154.3 155.3 155.9 156.5 157.6 158.5 159.8 6 Intermediate products 12.94 143.4 145.0 145.3 144.9 146.1 147.3 146.5 148.1 149.4 149.9 149.6 150.1 150.6 150.8 7 Materials 42.28 118.2 118.5 119.4 119.7 121.2 122.5 123.7 123.0 122.1 122.5 123.6 124.2 124.7 126.2 Consumer goods 8 Durable consumer goods 6.89 120.2 120.4 121.2 118.6 124.3 123.9 120.3 121.7 120.6 120.4 123.3 125.7 125.2 112244..88 9 Automotive products 2.98 118.5 117.5 118.0 114.2 124.3 121.3 115.4 118.7 117.6 120.6 121.9 127.1 126.5 123.7 10 Autos and trucks 1.79 115.1 112.3 112.4 107.2 122.2 118.7 110.2 112.8 111.8 116.4 118.0 126.9 125.3 120.1 11 Autos, consumer 1.16 90.7 86.4 76.8 79.1 94.7 91.9 83.7 77.5 79.5 86.3 91.0 98.9 99.0 93.8 1? Trucks, consumer .63 160.5 160.4 178.4 159.4 173.2 168.5 159.5 178.3 171.6 172.2 168.2 178.9 174.1 N Auto parts and allied goods 1.19 123.5 125.3 126.6 124.8 127.5 125.2 123.3 127.7 126.4 126.9 127.8 127.3 128.3 129.1 14 Home goods 3.91 121.6 122.5 123.6 121.9 124.3 125.8 123.9 124.0 122.8 120.2 124.3 124.7 124.1 125.6 15 Appliances, A/C and TV 1.24 141.5 141.7 147.1 141.8 145.7 150.1 142.7 142.2 140.6 132.8 143.2 142.4 138.8 141.4 16 Appliances and TV 1.19 142.1 142.6 145.5 140.6 146.1 150.5 142.6 140.9 141.4 132.7 142.2 143.0 137.9 17 Carpeting and furniture .96 130.7 134.1 132.0 131.6 132.9 133.5 133.9 134.2 132.3 133.1 133.1 135.7 136.4 18 Miscellaneous home goods 1.71 102.0 102.2 102.0 102.2 104.1 103.9 104.8 105.2 104.7 103.9 105.7 105.7 106.7 19 Nondurable consumer goods 18.63 130.5 132.1 132.5 131.0 130.8 131.5 133.3 134.7 135.3 135.1 135.1 135.1 135.8 136.6 70 Consumer staples 15.29 137.3 138.9 139.2 137.8 137.4 138.3 140.7 142.3 142.9 142.5 142.5 142.7 143.4 144.4 ?1 Consumer foods and tobacco 7.80 136.2 137.2 137.4 137.0 137.5 137.3 139.2 140.3 140.8 139.4 138.3 139.4 140.2 ?? Nonfood staples 7.49 138.5 140.6 141.2 138.6 137.2 139.4 142.2 144.3 145.0 145.7 146.8 146.1 146.8 114488!!66 ?3 Consumer chemical products 2.75 162.9 165.7 167.4 163.6 160.0 163.5 167.7 170.7 171.7 172.7 175.6 176.1 176.0 ?4 Consumer paper products 1.88 151.8 153.8 153.9 153.2 151.8 152.8 157.0 157.1 157.5 159.1 161.4 161.5 162.8 ?5 Consumer energy 2.86 106.3 108.0 107.7 105.0 105.8 107.4 108.0 110.6 111.3 111.0 109.6 107.3 108.2 ?6 Consumer fuel 1.44 93.1 92.7 91.4 91.6 92.4 93.2 95.4 95.4 97.0 97.9 98.9 94.3 92.1 27 Residential utilities 1.42 119.8 123.6 124.3 118.7 119.4 121.8 120.7 126.0 125.8 124.5 120.5 120.6 Equipment 78 Business and defense equipment 18.01 153.6 154.4 154.5 155.2 157.2 156.6 157.8 159.2 160.3 116600..88 116611..44 116622..77 116633..55 116644..88 79 Business equipment 14.34 144.5 145.6 145.6 146.3 148.7 148.3 149.8 151.2 152.4 153.3 154.6 156.8 158.2 159.7 30 Construction, mining, and farm 2.08 62.2 65.0 66.4 66.1 66.5 66.3 67.4 67.1 67.6 68.3 70.8 71.1 72.3 72.9 31 Manufacturing 3.27 117.9 120.4 120.9 122.0 120.5 120.6 122.2 125.4 124.9 127.0 127.7 128.6 129.6 131.8 3? Power 1.27 82.6 81.8 82.8 81.1 83.0 83.1 84.2 86.2 88.3 87.8 87.0 87.1 88.3 89.3 33 Commercial 5.22 226.5 227.9 227.7 229.1 232.4 232.1 235.5 238.0 240.3 239.9 241.5 245.5 247.4 249.9 34 Transit 2.49 108.4 106.1 104.7 105.1 112.5 111.2 109.1 106.5 108.2 111.1 112.3 115.2 116.3 115.9 35 Defense and space equipment 3.67 188.9 188.7 189.1 189.8 190.3 188.7 188.9 190.6 191.0 189.9 187.9 185.6 184.3 185.0 Intermediate products 36 Construction supplies 5.95 131.5 133.1 132.5 132.3 133.3 134.2 133.8 136.8 137.7 113377..33 137.6 113388..33 138.2 113377..88 37 Business supplies 6.99 153.5 155.2 156.3 155.6 157.1 158.4 157.4 157.8 159.4 160.7 159.9 160.2 161.1 38 General business supplies 5.67 158.6 160.5 161.0 160.9 162.3 164.3 163.3 163.1 165.0 166.6 165.7 165.4 165.9 39 Commercial energy products 1.31 131.1 132.3 135.8 132.7 134.6 132.9 131.8 135.0 135.3 135.3 134.6 137.8 140.3 Materials 40 Durable goods materials 20.50 125.0 125.2 125.5 126.4 128.7 130.2 132.0 131.8 131.4 131.3 132.7 134.9 135.0 113366..77 41 Durable consumer parts 4.92 100.9 98.5 99.6 99.0 102.3 103.1 104.6 104.7 104.4 103.5 106.2 109.6 109.8 110.0 47 5.94 159.0 159.3 159.5 161.1 162.2 163.2 165.3 167.4 167.6 167.3 168.9 170.7 171.1 172.9 43 Durable materials n.e.c 9.64 116.4 117.7 117.9 118.9 121.6 123.6 125.5 123.7 123.0 123.4 124.0 125.7 125.6 128.0 44 Basic metal materials 4.64 86.7 86.6 90.4 91.3 95.3 96.5 100.0 92.9 91.4 90.5 91.6 94.6 94.3 98.1 45 Nondurable goods materials 10.09 125.8 127.6 128.3 128.6 128.2 129.6 132.5 129.9 128.1 130.1 131.1 130.4 130.4 131.7 46 Textile, paper, and chemical materials 7.53 127.6 129.6 130.6 131.2 131.0 132.3 135.6 132.7 129.9 132.4 133.3 131.7 132.1 113333..66 47 Textile materials 1.52 111.7 117.8 116.7 116.0 113.0 112.7 113.6 112.6 110.2 112.7 111.9 107.0 109.5 48 Pulp and paper materials 1.55 141.0 145.4 145.0 143.3 142.0 144.4 149.0 148.0 144.4 144.8 145.8 146.4 144.1 49 Chemical materials 4.46 128.4 128.1 130.4 132.2 133.4 134.7 138.4 134.2 131.5 134.8 136.2 135.1 135.7 50 Miscellaneous nondurable materials ... 2.57 120.4 122.0 121.4 120.9 119.7 121.7 123.3 121.8 123.0 123.2 124.6 126.5 51 Energy materials 11.69 99.8 99.0 100.9 100.2 101.8 102.8 101.7 101.4 100.6 100.6 101.0 100.0 101.6 102.8 5? Primary energy 7.57 105.0 102.5 104.6 104.6 106.8 108.4 107.7 107.3 104.8 105.0 106.7 104.3 105.6 53 Converted fuel materials 4.12 90.3 92.5 94.1 92.2 92.7 92.6 90.7 90.6 93.0 92.6 90.5 92.1 94.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • October 1988 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1987 1988 1977 SIC 1987 Groups code aavvgg.. July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May Junep July' Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 104.3 103.7 105.4 105.4 106.8 107.9 107.3 107.8 106.8 106.7 107.1 106.5 107.9 108.5 2 Mining 9.83 100.7 99.2 100.9 101.9 103.6 104.6 104.6 103.3 101.5 102.7 104.7 103.0 103.5 104.1 3 Utilities 5.96 110.3 111.2 112.9 111.2 112.1 113.2 111.7 115.2 115.6 113.3 111.0 112.3 115.2 115.8 4 Manufacturing 84.21 134.6 135.6 135.9 135.7 137.3 137.9 138.9 139.4 139.5 140.0 140.8 141.7 142.0 143.1 5 Nondurable 35.11 136.7 138.5 138.8 138.6 138.1 139.6 141.3 141.4 141.1 141.7 142.3 141.9 142.5 143.6 6 Durable 49.10 133.1 133.5 133.8 133.7 136.8 136.7 137.3 137.9 138.4 138.8 139.7 141.5 141.7 142.8 Mining 7 Metal 10 .50 77.5 71.4 79.3 86.5 85.6 90.4 96.5 91.5 83.9 84.9 86.9 84.9 8 Coal 11.12 1.60 131.8 127.9 130.5 133.3 140.3 142.9 140.6 140.2 133.7 129.1 136.0 127.8 126.9 132.6 9 Oil and gas extraction 13 7.07 92.7 91.8 93.0 93.3 94.1 94.2 94.1 93.1 92.4 94.8 95.5 95.0 96.0 95.3 10 Stone and earth minerals 14 .66 128.2 130.7 130.3 130.0 131.0 134.1 135.6 132.1 134.3 136.9 141.2 142.4 140.1 Nondurable manufactures 11 Foods 20 7.96 137.7 138.5 138.8 139.5 138.0 138.9 140.1 141.2 141.9 141.1 140.3 141.4 142.0 12 Tobacco products 21 .62 103.4 106.8 110.4 101.7 103.7 106.5 110.5 105.8 107.0 107.2 107.2 106.8 13 Textile mill products 22 2.29 115.8 118.3 119.8 118.2 116.8 117.3 118.2 116.2 115.3 117.0 117.3 114.2 115.9 14 Apparel products 23 2.79 107.4 109.7 108.4 107.6 108.0 109.4 107.8 108.7 108.5 108.7 109.2 108.6 15 Paper and products 26 3.15 144.4 148.8 148.9 147.4 146.0 148.3 150.6 149.9 148.0 149.1 149.2 149.5 146.9 16 Printing and publishing 27 4.54 172.0 174.0 174.7 174.9 175.2 175.7 176.9 177.5 178.7 180.4 181.8 180.1 182.2 183.2 17 Chemicals and products 28 8.05 140.1 140.8 142.3 142.4 141.5 144.4 147.9 147.9 145.4 146.4 148.9 148.4 149.1 18 Petroleum products 29 2.40 93.5 94.1 92.9 93.5 94.6 93.3 96.1 96.3 95.9 98.4 98.5 95.0 94.2 94.7 19 Rubber and plastic products 30 2.80 163.6 167.2 164.8 165.2 166.7 169.9 170.6 170.5 172.3 172.2 172.3 173.8 174.8 20 Leather and products 31 .53 60.0 59.2 61.3 60.7 59.6 60.7 57.5 58.3 59.7 59.5 58.0 57.1 57.6 Durable manufactures 21 Lumber and products 24 2.30 130.3 132.8 131.1 126.9 129.8 134.0 133.6 136.3 139.0 137.8 138.0 139.9 138.6 22 Furniture and fixtures 25 1.27 152.8 156.2 155.2 155.9 156.0 158.5 159.4 158.0 158.3 159.4 159.2 159.6 160.9 23 Clay, glass, and stone products. 32 2.72 119.1 118.8 116.5 118.6 118.9 120.5 120.1 120.4 121.6 122.5 121.4 121.5 122.4 24 Primary metals 33 5.33 81.5 81.4 85.1 84.5 90.6 90.2 90.6 86.5 86.4 85.1 85.3 89.2 87.6 91.4 25 Iron and steel 331.2 3.49 70.8 70.9 76.0 74.6 82.0 79.7 81.9 77.8 77.4 74.2 74.5 78.6 75.0 26 Fabricated metal products 34 6.46 111.0 111.1 110.1 111.1 113.5 113.6 115.8 117.1 117.6 118.8 118.8 120.0 120.6 121.1 27 Nonelectrical machinery 35 9.54 152.7 155.3 154.3 156.6 158.0 157.2 161.0 162.9 163.6 164.6 167.2 170.0 171.3 173.5 28 Electrical machinery 36 7.15 172.3 172.5 174.3 173.4 175.5 175.6 175.9 177.4 177.8 176.6 178.7 179.0 179.4 181.0 29 Transportation equipment 37 9.13 129.2 127.6 128.1 125.5 132.0 130.4 128.1 128.6 128.4 130.0 130.4 133.1 132.4 132.3 30 Motor vehicles and parts — 371 5.25 111.8 109.4 109.1 105.6 116.0 114.0 110.2 109.7 109.3 113.0 114.8 119.6 119.0 116.9 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 152.8 152.3 153.9 152.5 153.7 152.7 152.4 154.2 154.5 153.0 151.5 151.5 150.6 153.3 32 Instruments 38 2.66 143.9 143.8 146.3 145.6 146.7 147.8 145.5 148.2 149.2 149.7 150.5 151.3 152.8 154.4 33 Miscellaneous manufactures— 39 1.46 102.6 100.5 102.2 102.1 104.6 104.5 105.6 105.0 104.4 105.1 105.9 106.8 107.7 Utilities 34 Electric 44..1177 112266..66 113311..00 113322..00 112277..55 112266..88 112277..55 112255..66 113300..33 113300..77 112299..00 112277..66 112299..77 113333..77 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,735.8 1,732.5 1,741.7 1,735.9 1,774.1 1,772.4 1,778.8 1,790.6 1,797.5 1,807.5 1,812.2 1,819.2 1,816.9 1,809.5 36 Final 405.7 1,333.8 1,326.6 1,334.9 1,330.3 1,360.9 1,359.9 1,359.4 1,375.5 1,381.1 1,385.9 1,393.9 1,397.1 1,396.8 1,389.5 37 Consumer goods 272.7 866.0 863.2 866.4 856.9 876.6 879.8 881.2 893.6 893.7 893.2 899.1 898.5 894.0 892.4 38 Equipment 133.0 467.8 463.5 468.5 473.4 484.4 480.1 478.2 481.9 487.3 492.7 494.7 498.7 502.7 497.2 39 Intermediate 111.9 402.0 405.9 406.8 405.6 413.2 412.5 419.4 415.1 416.5 421.6 418.4 422.0 420.1 419.8 1. These data also appear in the Board's G. 12.3 (414) release. For address, see Industrial Production" and accompanying tables that contain revised indexes inside front cover. (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 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. 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 1988 IItteemm 11998855 11998866 11998877 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May' June Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,733 1,750 1,535 1,501 1,453 1,459 1,372 1,248 1,429 1,476 1,449 1,436 1,493 2 1-family 957 1,071 1,024 983 962 971 957 918 1,003 1,030 960 982 1,002 3 2-or-more-family 111 679 511 518 491 488 415 330 426 446 489 454 491 4 Started 1,742 1,805 1,621 1,679 1,538 1,661 1,399 1,382 1,519 1,529 1,584 1,393 1,454 5 1-family 1,072 1,179 1,146 1,211 1,105 1,129 1,035 1,016 1,102 1,172 1,093 1,004 1,089 6 2-or-more-family 669 626 474 468 433 532 364 366 417 357 491 389 365 7 Under construction, end of period1 . 1,063 1,074 987 1,046 1,044 1,042 1,016 1,008 983 999 999 984 984 8 1-family 539 583 591 627 627 625 618 614 596 617 622 610 612 9 2-or-more-family 524 490 397 419 417 417 398 394 387 382 377 374 372 10 Completed 1,703 1,756 1,669 1,591 1,565 1,571 1,624 1,550 1,452 1,598 1,665 1,455 1,485 11 1-family 1,072 1,120 1,123 1,100 1,114 1,088 1,104 1,098 1,043 1,094 1,059 1,093 1,080 12 2-or-more-family 631 637 546 491 451 483 520 452 409 504 606 362 405 13 Mobile homes shipped 284 244 233 240 234 222 227 200 208 212 213 216 230 Merchant builder activity in 1-family units 14 Number sold 688 748 672 644 653 625 586 579 648 664 668811 667777 773344 15 Number for sale, end of period 350 361 370 361 360 362 365 368 359 372 368 372 370 Price (thousands of dollars)2 16 Units sold 84.3 92.2 104.7 106.5 106.5 117.0 111.8 119.0 110.9 108.9 111111..00 111100..00 111177..88 Average 17 Units sold 101.0 112.2 127.9 133.5 125.8 139.2 136.2 144.4 137.6 133.2 135.6 133.6 141.2 EXISTING UNITS (1-family) 18 Number sold 3,217 3,566 3,530 3,430 3,470 3,370 3,330 3,170 3,250 3,330 3,520 3,590 3,780 Price of units sold (thousands of dollars)2 75.4 80.3 85.6 85.5 84.6 8855..00 8855..44 8877..44 88.1 8877..99 8877..33 88.8 9900..66 20 Average 90.6 98.3 106.2 106.9 106.1 106.6 107.1 108.7 110.4 110.7 108.7 111.9 115.1 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 355,735 386,093 398,848 405,375 400,818 407,066 410,870 395,264 392,456 403,555 399,163 402,269 402,771 22 Private 291,665 314,651 323,819 327,131 325,915 331,497 331,641 321,550 317,754 324,257 319,979 322,545 324,166 23 Residential 158,475 187,147 194,772 194,801 194,547 195,599 195,822 195,168 192,097 195,554 191,665 189,936 188,144 24 Nonresidential, total 133,190 127,504 129,047 132,330 131,368 135,898 135,819 126,382 125,657 128,703 128,314 132,609 136,022 Buildings 25 Industrial 15,769 13,747 13,707 15,332 13,968 14,512 14,130 13,480 13,489 14,546 15,235 15,753 16,742 26 Commercial 59,629 56,762 55,448 56,531 56,890 59,374 55,831 53,555 53,571 54,843 56,023 57,419 57,308 27 Other 12,619 13,216 15,464 15,497 16,018 16,692 17,708 16,954 17,101 17,301 16,409 16,972 17,199 28 Public utilities and other 45,173 43,779 44,428 44,970 44,492 45,320 48,150 42,393 41,496 42,013 40,647 42,465 44,773 29 Public 64,070 71,437 75,028 78,244 74,903 75,569 79,228 73,715 74,702 79,298 79,184 79,724 78,604 30 Military 3,235 3,868 4,327 6,048 4,010 5,080 4,879 4,172 3,280 4,216 4,414 4,273 4,633 31 Highway 21,540 22,681 22,758 23,145 24.374 23,439 25,274 24,808 25,348 26,963 27,276 25,254 24,919 32 Conservation and development... 4,777 4,646 5,162 5,023 5,144 4,871 5,759 4,038 4,535 4,899 4,470 4,744 4,774 33 Other 34,518 40,242 42,781 44,028 41.375 42,179 43,316 40,697 41,539 43,220 43,024 45,453 44,278 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (1) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices comparable with data in prior periods because of changes by the Bureau of the of existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from the originating agency. Permit Construction Reports (C-30-76-5), issued by the Bureau in July 1976. authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • October 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 IIIttteeemmm llleeevvveeelll 1987 1988 1988 JJJuuulllyyy 11998877 11998888 111999888888''' JJuullyy JJuullyy Dec. Mar/ June' July Mar/ Apr/ May June July CONSUMER PRICES2 (1982-84=100) 1 All items 3.9 4.1 3.9 3.2 4.2 4.5 .5 .4 .3 .3 .4 118.5 2 Food 4.2 4.5 2.1 2.8 1.4 7.1 .3 .7 .4 .6 1.0 118.8 3 Energy items 4.4 .3 6.0 -3.9 -4.9 4.2 .0 .8 .5 -.2 .3 91.4 4 All items less food and energy 4.0 4.5 3.8 4.4 5.4 4.3 .6 .4 .2 .4 .3 123.3 5 Commodities 2.9 3.6 2.9 2.5 4.7 3.9 .7 .6 .2 .2 .3 115.2 6 Services 4.6 4.9 4.3 5.0 5.9 4.5 .5 .2 .4 .5 .4 128.0 PRODUCER PRICES (1982=100) ) Finished goods 3.4 2.4 3.8 -1.9 2.7 4.6 .6 .3 .5 .4 .5 108.5 8 Consumer foods 2.5 2.5 -1.8 -5.7 6.0 9.4 .8 .3 .9 1.1 .4 113.7 9 Consumer energy 13.0 -4.3 16.5 -9.6 -18.5 4.8 1.2 2.7 .2 -1.6 .0 60.7 10 Other consumer goods 2.7 4.1 4.6 1.7 5.7 2.4 .3 -.1 .3 .3 .9 118.9 11 Capital equipment 1.8 2.3 4.0 -.7 3.2 3.6 .2 .2 .4 .4 .1 114.2 12 Intermediate materials3 4.0 5.4 5.6 4.3 4.3 7.4 .5 .7 .6 .6 .6 107.7 13 Excluding energy 3.0 7.2 5.3 7.2 8.2 6.9 .6 .6 .5 .5 .7 115.7 Crude materials 14 Foods 4.0 11.7 -4.8 -4.8 17.7 30.5 .8 .2 2.4 4.2 1.5 109.9 15 Energy 17.9 -14.0 5.9 -15.2 -24.1 12.2 -2.4 2.6 1.3 -1.0 -5.4 66.9 16 Other 10.2 14.8 39.4 18.0 15.9 -7.0 1.1 -.3 -1.7 .2 1.9 132.8 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. 1987 1988 AAccccoouunntt 11998855 11998866 11998877 Q2 Q3 Q4 QL Q2' GROSS NATIONAL PRODUCT 1 Total 4,014.9 4,240.3 4,526.7 4,484.2 4,568.0 4,662.8 4,724.5 4,819.7 By source 2 Personal consumption expenditures 2,629.0 2,807.5 3,012.1 2,992.2 3,058.2 3,076.3 3,128.1 3,189.1 3 Durable goods 372.2 406.5 421.9 420.5 441.4 422.0 437.8 448.2 4 Nondurable goods 911.2 943.6 997.9 995.3 1,006.6 1,012.4 1,016.2 1,035.7 5 Services 1,345.6 1,457.3 1,592.3 1,576.4 1,610.2 1,641.9 1,674.1 1,705.2 6 Gross private domestic investment 643.1 665.9 712.9 698.5 702.8 764.9 763.4 758.2 7 Fixed investment 631.8 650.4 673.7 665.8 688.3 692.9 698.1 715.3 8 Nonresidential 442.9 433.9 446.8 438.2 462.1 464.1 471.5 488.2 9 Structures 153.2 138.5 139.5 134.4 143.0 147.7 140.1 145.4 10 Producers' durable equipment 289.7 295.4 307.3 303.8 319.1 316.3 331.3 342.8 11 Residential structures 188.8 216.6 226.9 227.6 226.2 228.8 226.6 227.1 12 Change in business inventories 11.3 15.5 39.2 32.7 14.5 72.0 65.3 42.9 13 Nonfarm 14.6 17.4 40.7 31.4 17.8 72.8 49.4 32.5 14 Net exports of goods and services -78.0 -104.4 -123.0 -122.2 -125.2 -125.7 -112.1 -88.6 15 Exports 370.9 378.4 428.0 416.8 440.4 459.7 487.8 508.0 16 Imports 448.9 482.8 551.1 539.0 565.6 585.4 599.9 596.6 17 Government purchases of goods and services 820.8 871.2 924.7 915.7 932.2 947.3 945.2 961.0 18 Federal 355.2 366.2 382.0 377.5 386.3 391.4 377.7 381.6 19 State and local 465.6 505.0 542.8 538.2 546.0 555.9 567.5 579.4 By major type of product 20 Final sales, total 4,003.6 4,224.7 4,487.5 4,451.5 4,553.5 4,590.7 4,659.2 44,,777766..99 21 Goods 1,641.2 1,697.9 1,792.5 1,774.6 1,812.9 1,849.4 1,879.4 1,924.8 22 Durable 706.5 725.3 776.3 767.1 792.2 808.7 819.3 846.7 23 Nondurable 934.6 972.6 1,016.3 1,007.5 1,020.7 1,040.7 1,060.1 1,078.1 24 Services 1,968.3 2,118.3 2,295.7 2,276.2 2,314.4 2,363.9 2,405.2 2,447.5 25 Structures 405.4 424.0 438.4 433.4 440.6 449.5 439.9 447.4 26 Change in business inventories 11.3 15.5 39.2 32.7 14.5 72.0 65.3 42.9 27 Durable goods 6.4 4.2 26.6 24.3 2.9 50.5 26.6 17.4 28 Nondurable goods 4.9 11.3 12.6 8.4 11.6 21.6 38.6 25.5 29 MEMO Total GNP in 1982 dollars 3,618.7 3,721.7 3,847.0 3,823.0 3,865.3 3,923.0 3,956.1 3,988.1 NATIONAL INCOME 30 Total 3,234.0 3,437.1 3,678.7 3,631.8 3,708.0 3,802.0 3,850.8 3,933.9 31 Compensation of employees 2,367.5 2,507.1 2,683.4 2,652.0 2,702.8 2,769.9 2,816.4 2,874.0 32 Wages and salaries 1,975.2 2,094.0 2,248.4 2,220.6 2,265.3 2,324.8 2,358.7 2,410.0 33 Government and government enterprises 372.0 393.7 420.1 416.9 423.2 429.2 437.1 443.0 34 Other 1,603.4 1,700.3 1,828.3 1,803.7 1,842.1 1,895.6 1,921.6 1,967.0 35 Supplement to wages and salaries 392.4 413.1 435.0 431.3 437.5 445.1 457.7 464.0 36 Employer contributions for social insurance 204.8 217.0 227.1 225.0 228.2 232.7 243.1 247.5 37 Other labor income 187.6 196.1 207.9 206.4 209.3 212.4 214.6 216.5 38 Proprietors' income1 255.9 286.7 312.9 308.9 306.8 326.0 323.9 328.2 39 Business and professional1 225.6 250.3 270.0 265.9 271.5 279.0 279.2 285.4 40 Farm1 30.2 36.4 43.0 43.0 35.2 47.0 44.7 42.7 41 Rental income of persons2 9.2 12.4 18.4 17.8 18.1 20.5 20.5 19.0 42 Corporate profits1 282.3 298.9 310.4 305.2 322.0 316.1 316.2 332.0 43 Profits before tax 224.3 236.4 276.7 273.7 289.4 281.9 286.2 310.7 44 Inventory valuation adjustment -1.7 8.3 -18.0 -20.0 -19.5 -18.2 -19.4 -27.1 45 Capital consumption adjustment 59.7 54.2 51.7 51.5 52.1 52.4 49.4 48.4 46 Net interest 319.0 331.9 353.6 348.1 358.3 369.5 373.9 380.8 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • October 1988 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1987 1988 AAccccoouunntt 11998855 11998866 11998877 Q2 Q3 Q4 Ql Q2r PERSONAL INCOME AND SAVING 1 Total personal income 3,325.3 3,531.1 3,780.0 3,736.1 3,801.0 3,906.8 3,951.4 4,021.9 2 Wage and salary disbursements 1,975.4 2,094.0 2,248.4 2,220.6 2,265.1 2,325.1 2,358.7 2,410.0 3 Commodity-producing industries 608.9 625.5 649.8 642.8 652.8 665.5 676.0 689.1 4 Manufacturing 460.9 473.1 490.3 484.6 492.6 501.3 509.6 517.4 5 Distributive industries 473.2 498.9 531.7 526.1 536.8 547.3 558.2 572.2 6 Service industries 521.3 575.9 646.8 634.8 652.4 682.8 687.4 705.7 7 Government and government enterprises 372.0 393.7 420.1 416.9 423.0 429.5 437.1 443.0 8 Other labor income 187.6 196.1 207.9 206.4 209.3 212.4 214.6 216.5 9 Proprietors' income1 255.9 286.7 312.9 308.9 306.8 326.0 323.9 328.2 10 Business and professional1 225.6 250.3 270.0 265.9 271.5 279.0 279.2 285.4 11 Farm1 30.2 36.4 43.0 43.0 35.2 47.0 44.7 42.7 12 Rental income of persons 9.2 12.4 18.4 17.8 18.1 20.5 20.5 19.0 78.7 82.8 88.6 87.3 89.9 91.9 93.5 95.0 14 Personal interest income 478.0 499.1 527.0 517.9 533.0 550.0 554.2 563.7 15 Transfer payments 489.8 521.1 548.8 547.8 551.7 556.8 576.3 583.0 16 Old-age survivors, disability, and health insurance benefits ... 253.4 269.3 282.9 282.8 284.5 286.5 298.1 300.4 17 LESS: Personal contributions for social insurance 149.3 161.1 172.0 170.5 172.7 175.9 190.2 193.5 18 EQUALS: Personal income 3,325.3 3,531.1 3,780.0 3,736.1 3,801.0 3,906.8 3,951.4 4,021.9 19 LESS: Personal tax and nontax payments 486.6 511.4 570.3 582.0 576.2 591.0 575.8 601.0 20 EQUALS: Disposable personal income 2,838.7 3,019.6 3,209.7 3,154.1 3,224.9 3,315.8 3,375.6 3,421.0 21 LESS: Personal outlays 2,713.3 2,898.0 3,105.5 3,084.7 3,152.3 3,171.8 3,225.7 3,288.3 22 EQUALS: Personal saving 125.4 121.7 104.2 69.5 72.6 144.0 149.9 132.6 MEMO Per capita (1982 dollars) 23 Gross national product 15,122.0 15,398.0 15,772.8 15,700.2 1155,,883344..99 1166,,003311..88 1166,,112277..66 1166,,222244..99 24 Personal consumption expenditures 9,840.3 10,158.0 10,336.2 10,335.1 10,426.8 10,346.1 10,435.4 10,484.9 25 Disposable personal income 10,625.0 10,929.0 11,012.0 10,889.0 10,989.0 11,145.0 11,260.0 11,247.0 26 Saving rate (percent) 4.4 4.0 3.2 2.2 2.3 4.3 4.4 3.9 GROSS SAVING 27 Gross saving 533.5 537.2 560.4 542.4 556.8 603.4 627.0 645.3 28 Gross private saving 665.3 681.6 665.3 625.0 642.2 714.1 726.3 720.0 125.4 121.7 104.2 69.5 72.6 144.0 149.9 132.6 30 Undistributed corporate profits1 102.6 104.1 81.1 78.5 85.0 80.5 78.1 84.8 31 Corporate inventory valuation adjustment -1.7 8.3 -18.0 -20.0 -19.5 -18.2 -19.4 -27.1 Capital consumption allowances 268.6 282.4 229977..55 229955..44 229999..77 330033..77 330099..88 331122..99 168.7 173.5 182.5 181.6 184.9 185.8 188.5 189.7 34 Government surplus, or deficit (-), national income and product accounts -131.8 -144.4 -104.9 -82.6 -85.5 -110.7 -99.2 -74.7 -196.9 -205.6 -157.8 -144.0 -138.3 -160.4 -155.1 -130.9 65.1 61.2 52.9 61.4 52.9 49.7 55.8 56.2 528.7 523.6 552.3 539.9 541.7 597.0 612.0 631.0 38 Gross private domestic 643.1 665.9 712.9 698.5 702.8 764.9 763.4 758.2 39 Net foreign -114.4 -142.4 -160.6 -158.6 -161.1 -167.8 -151.3 -127.2 40 Statistical discrepancy -4.8 -13.6 -8.1 -2.5 -15.1 -6.4 -15.0 -14.3 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1987 1988 Item credits or debits 11998855 11998866 11998877 Ql Q2 Q3 Q4 Qlp 1 Balance on current account -115,102 --113388,,882277 -153,964 -37,624 -40,852 -41,967 -33,523 -39,751 2 Not seasonally adjusted -33,032 -41,799 -47,330 -31,803 -34,937 3 Merchandise trade balance2 -122,148 -144,547 -160,280 -39,871 -39,552 -39,665 -41,192 -35,945 4 Merchandise exports 215,935 223,969 249,570 56,791 59,864 64,902 68,013 74,672 5 Merchandise imports -338,083 -368,516 -409,850 -96,662 -99,416 -104,567 -109,205 -110,617 6 Military transactions, net -3,431 -4,372 -2,369 -78 -179 -851 -1,261 -899 7 Investment income, net3 25,936 23,143 20,374 5,076 1,692 1,067 12,539 -595 8 Other service transactions, net -449 2,257 1,755 -143 13 87 479 735 9 Remittances, pensions, and other transfers -3,786 -3,571 -3,434 -867 -884 -855 -828 -868 10 U.S. government grants (excluding military) -11,223 -11,738 -10,011 -2,100 -2,241 -2,125 -3,545 -2,283 11 Change in U.S. government assets, other than official reserve assets, net (increase, —) -2,829 -2,000 1,162 67 -170 252 1,012 -780 12 Change in U.S. official reserve assets (increase, -) -3,858 312 9,149 1,956 3,419 32 3,741 1,503 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -897 -246 -509 76 -171 -210 -205 155 15 Reserve position in International Monetary Fund 908 1,500 2,070 606 335 407 722 446 16 Foreign currencies -3,869 -942 7,588 1,274 3,255 -165 3,225 901 17 Change in U.S. private assets abroad (increase, -)3 -25,949 -96,303 -86,298 9,049 -26,127 -25,576 -43,645 8,169 18 Bank-reported claims -1,323 -59,975 -40,531 21,870 -22,422 -16,519 -23,460 17,402 19 Nonbank-reported claims 923 -4,220 3,145 -491 2,603 -215 1,248 20 U.S. purchase of foreign securities, net -7,481 -4,297 -4,456 -1,639 -88 -972 -1,757 -4,388 21 U.S. direct investments abroad, net3 -18,068 -27,811 -44,456 -10,691 -6,220 -7,870 -19,676 -4,845 22 Change in foreign official assets in the United States (increase, +) -1,196 35,507 44,968 13,977 10,332 611 20,047 24,372 23 U.S. Treasury securities -838 34,364 43,361 12,193 11,083 842 19,243 27,568 24 Other U.S. government obligations -301 -1,214 1,570 -62 256 714 662 -116 25 Other U.S. government liabilities 767 2,054 -2,824 -1,337 -1,309 -287 108 -251 26 Other U.S. liabilities reported by U.S. banks 645 1,187 3,901 3,543 615 -34 -223 -1,996 27 Other foreign official assets -1,469 -884 -1,040 -360 -313 -624 257 -833 28 Change in foreign private assets in the United States (increase, +)3 131,096 185,746 166,521 19,122 40,327 71,047 36,025 3,504 29 U.S. bank-reported liabilities 41,045 79,783 87,778 -6,100 17,961 46,153 29,764 -15,994 30 U.S. nonbank-reported liabilities -366 -2,906 2,150 1,696 1,570 -116 -1,000 31 Foreign private purchases of U.S. Treasury securities, net 20,433 3,809 -7,596 -2,826 -2,431 -2,835 496 7,001 32 Foreign purchases of other U.S. securities, net 50,962 70,969 42,213 18,373 15,998 12,819 -4,977 2,328 33 Foreign direct investments in the United States, net 19,022 34,091 41,976 7,979 7,229 15,026 11,742 10,169 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 17,839 15,566 18,461 -6,547 13,071 -4,399 16,342 2,984 36 Owing to seasonal adjustments 4,141 -2,615 -4,658 3,138 3,925 37 Statistical discrepancy in recorded data before seasonal adjustment 17,839 15,566 18,461 -10,688 15,686 259 13,204 -941 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,858 312 9,149 1,956 3,419 32 3,741 1,503 39 Foreign official assets in the United States (increase, +) excluding line 25 — 1,963 33,453 47,792 15,314 11,641 898 19,939 24,623 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) -6,709 -9,327 -9,956 -2,801 -2,681 -1,723 -2,750 -1,331 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 46 101 58 8 26 13 12 15 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • October 1988 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are not seasonally adjusted. 1987 1988 IItteemm 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. Mayr June 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 218,815 227,159 254,122 24,314 22,990 24,139 29,106 26,335 28,143 27,385 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses, c.i.f. value .... 352,463 382,295 424,442 37,340 34,523 37,133 38,633 36,528 37,657 40,008 3 Trade balance -133,648 -155,137 -170,320 -13,026 -11,533 -12,994 -9,528 -10,193 -9,514 -12,624 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 1988 TTyyppee 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July" 1 Total 43,186 48,511 45,798 42,955 43,064 43,186 42,730 41,949 41,028 43,876 2 Gold stock, including Exchange Stabilization Fund1 11,090 11,064 11,078 11,068 11,063 11,063 11,063 11,063 11,063 11,063 3 Special drawing rights2,3 7,293 8,395 10,283 9,765 9,761 9,899 9,589 9,543 9,180 8,984 4 Reserve position in International Monetary Fund2 11,947 11,730 11,349 10,804 10.445 10,645 10,803 10,431 9,992 9,773 5 Foreign currencies4 12,856 17,322 13,088 11,318 11,795 11,579 11,275 10,912 10,793 14,056 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 holdiings and reserve position 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1988 AAsssseettss 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July 1 Deposits 480 287 244 355 343 534 215 297 381 269 Assets held in custody i 2 U.S. Treasury securities 121,004 155,835 195,126 206,675 215,308 222,407 224,725 226,341 223,127 223,296 3 Earmarked gold3 14,245 14,048 13,919 13,882 13,824 13,773 13,719 13,654 13,662 13,666 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 pold 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 1988 AAsssseett aaccccoouunntt Dec. Jan. Feb. Mar. Apr. May June'' All foreign countries 1 Total, all currencies 453,656 458,012 456,628 518,604 503,254 495,003 502,398 488,939 492,844 487,822 2 Claims on United States 113,393 119,706 114,563 138,034 131,376 131,012 135,514' 139,186 141,789 141,076 3 Parent bank 78,109 87,201 83,492 105,845 95,482 94,348 99,109' 102,957 104,299 104,568 4 Other banks in United States 13,664 13,057 13,685 16,416 14,910 15,008 14,587' 13,271' 14,483 14,283 5 Nonbanks 21,620 19,448 17,386 15,773 20,984 21,656 21,818' 22,958' 23,007 22,225 6 Claims on foreigners 320,162 315,676 312,955 342,506 334,074 326,653 328,153' 314,338 315,303 311,322 7 Other branches of parent bank 95,184 91,399 96,281 122,155 115,275 111,671 108,972 103,090 102,931 106,722 8 Banks 100,397 102,960 105,237 108,856 108,161 105,604 106,761' 101,226 103,429 100,686 9 Public borrowers 23,343 23,478 23,706 21,828 21,329 21,331 21,748 20,827 20,991 20,439 10 Nonbank foreigners 101,238 97,839 87,731 89,667 89,309 88,047 90,672 89,195 87,952 83,475 11 Other assets 20,101 22,630 29,110 38,064 37,804 37,338 38,731 35,415 35,752 35,424 12 Total payable in U.S. dollars 350,636 336,520 317,487 350,106 335,313 330,726 333,874 327,736 334,112 335,207 13 Claims on United States 111,426 116,638 110,620 132,023 124,893 124,786 128,945' 133,299 136,077 135,492 14 Parent bank 77,229 85,971 82,082 103,251 92,466 91,271 95,844' 100,320 101,578 101,585 15 Other banks in United States 13,500 12,454 12,830 14,657 13,439 13,886 13,270' 12,257' 13,458 13,520 16 Nonbanks 20,697 18,213 15,708 14,115 18,988 19,629 19,831' 20,722' 21,041 20,387 17 Claims on foreigners 228,600 210,129 195,063 202,427 196,154 190,922 190,583' 179,712 182,981 183,641 18 Other branches of parent bank 78,746 72,727 72,197 88,284 84,468 83,063 81,692 75,654 76,136 79,774 19 Banks 76,940 71,868 66,421 63,706 61,359 58,181 58,099' 54,578 57,102 55,234 20 Public borrowers 17,626 17,260 16,708 14,730 14,720 14,645 14,853 14,407 14,342 13,924 21 Nonbank foreigners 55,288 48,274 39,737 35,707 35,607 35,033 35,939 35,073 35,401 34,709 22 Other assets 10,610 9,753 11,804 15,656 14,266 15,018 14,346 14,725 15,054 16,074 United Kingdom 23 Total, all currencies 144,385 148,599 140,917 158,695 160,244 157,634 155,657 152,592 156,184 151,835 24 Claims on United States 27,675 33,157 24,599 32,518 32,464 32,869 29,581' 31,618 32,832 33,852 25 Parent bank 21,862 26,970 19,085 27,350 26,923 27,484 24,580' 26,155 27,506 28,535 26 Other banks in United States 1,429 1,106 1,612 1,259 1,558 1,527 1,191' 1,013 1,360 1,322 27 Nonbanks 4,384 5,081 3,902 3,909 3,983 3,858 3,810' 4,450 3,966 3,995 28 Claims on foreigners 111,828 110,217 109,508 115,700 118,407 115,489 116,975' 112,261 114,452 107,856 29 Other branches of parent bank 37,953 31,576 33,422 39,903 39,702 38,077 34,278 33,019 33,849 32,446 30 Banks 37,443 39,250 39,468 36,735 39,697 38,654 40,247' 38,790 39,883 37,108 31 Public borrowers 5,334 5,644 4,990 4,752 4,639 4,613 5,312 4,914 4,987 4,742 32 Nonbank foreigners 31,098 33,747 31,628 34,310 34,369 34,145 37,138 35,538 35,733 33,560 33 Other assets 4,882 5,225 6,810 10,477 9,373 9,276 9,101 8,713 8,900 10,127 34 Total payable in U.S. dollars 112,809 108,626 95,028 100,574 102,148 101,642 95,972 93,214 97,188 95,326 35 Claims on United States 26,868 32,092 23,193 30,439 30,156 30,971 27,388' 29,555 30,736 31,855 36 Parent bank 21,495 26,568 18,526 26,304 25,854 26,565 23,285' 25,137 26,608 27,672 37 Other banks in United States 1,363 1,005 1,475 1,044 1,132 1,273 1,025' 781 1,068 1,069 38 Nonbanks 4,010 4,519 3,192 3,091 3,170 3,133 3,078' 3,637 3,060 3,114 39 Claims on foreigners 82,945 73,475 68,138 64,560 67,458 66,313 64,247' 59,434 62,018 57,969 40 Other branches of parent bank 33,607 26,011 26,361 28,635 29,336 29,813 26,812 24,867 25,448 23,843 41 Banks 26,805 26,139 23,251 19,188 20,814 19,516 19,656' 18,065 19,555 17,477 42 Public borrowers 4,030 3,999 3,677 3,313 3,313 3,347 3,864 3,412 3,252 3,188 43 Nonbank foreigners 18,503 17,326 14,849 13,424 13,995 13,637 13,915 13,090 13,763 13,461 44 Other assets 2,996 3,059 3,697 5,575 4,534 4,358 4,337 4,225 4,434 5,502 Bahamas and Caymans 45 Total, all currencies 146,811 142,055 142,592 160,321 148,718 143,630 153,254 152,930 156,353 159,747 46 Claims on United States 77,296 74,864 78,048 85,318 79,893 78,015 85,847 88,293 90,896 88,144 47 Parent bank 49,449 50,553 54,575 60,048 51,249 48,402 56,330 59,240 60,419 58,626 48 Other banks in United States 11,544 11,204 11,156 14,277 12,472 12,662 12,400 11,409 12,348 12,122 49 Nonbanks 16,303 13,107 12,317 10,993 16,172 16,951 17,117 17,644 18,129 17,396 50 Claims on foreigners 65,598 63,882 60,005 70,162 63,469 60,111 61,952 58,808 59,374 65,856 51 Other branches of parent bank 17,661 19,042 17,296 21,277 19,802 18,486 19,368 17,790 18,463 24,745 52 Banks 30,246 28,192 27,476 33,751 29,340 27,687 28,637 26,690 27,019 27,650 53 Public borrowers 6,089 6,458 7,051 7,428 7,257 7,063 6,891 6,849 6,955 6,836 54 Nonbank foreigners 11,602 10,190 8,182 7,706 7,070 6,875 7,056 7,479 6,937 6,625 55 Other assets 3,917 3,309 4,539 4,841 5,356 5,504 5,455 5,829 6,083 5,747 56 Total payable in U.S. dollars 141,562 136,794 136,813 151,434 141,135 135,916 145,050 145,398 148,545 152,248 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 • October 1988 3.14—Continued 1987 1988 LLiiaabbiilliittyy aaccccoouunntt Dec. Jan. Feb. Mar. Apr. May Junep All foreign countries 57 Total, all currencies 453,656 458,012 456,628 518,604 503,254 495,003 502,398 488,939 492,844 487,822 58 Negotiable CDs 37,725 34,607 31,629 30,929 29,277 31,158 31,854 31,585 32,175 29,485 59 To United States 147,583 156,281 152,465 161,390 150,676 149,402 157,063 155,381' 162,002 156,351 60 Parent bank 78,739 84,657 83,394 87,606 78,590 85,142 91,628 85,586' 86,944 87,431 61 Other banks in United States 18,409 16,894 15,646 20,559 15,801 14,237 14,806 16,246' 15,389 14,625 62 Nonbanks 50,435 54,730 53,425 53,225 56,285 50,023 50,629 53,549 59,669 54,295 63 To foreigners 247,907 245,939 253,775 304,790 302,042 293,360 290,064 281,162' 277,106 281,027 64 Other branches of parent bank 93,909 89,529 95,146 124,601 116,434 111,949 109,071 105,148' 104,667 110,418 65 Banks 78,203 76,814 77,809 87,261 89,552 88,400 88,257 85,097 82,499 82,494 66 Official institutions 20,281 19,520 17,835 19,564 21,130 20,373 18,608 18,006 17,700 17,159 67 Nonbank foreigners 55,514 60,076 62,985 73,364 74,926 72,638 74,128 72,911 72,240 70,956 68 Other liabilities 20,441 21,185 18,759 21,495 21,259 21,083 23,417 20,811 21,561 20,959 69 Total payable in U.S. dollars 367,145 353,712 336,406 361,438 344,805 341,536 344,395 337,122 341,729 341,556 70 Negotiable CDs 35,227 31,063 28,466 26,768 24,785 26,386 26,869 26,596 27,233 25,015 71 To United States 143,571 150,905 144,483 148,442 139,185 138,737 144,983 144,783' 149,576 144,514 72 Parent bank 76,254 81,631 79,305 81,783 73,064 79,363 84,801 79,904' 80,378 80,927 73 Other banks in United States 17,935 16,264 14,609 19,155 14,433 12,918 13,501 15,035r 13,999 13,186 74 Nonbanks 49,382 53,010 50,569 47,504 51,688 46,456 46,681 49,844 55,199 50,401 75 To foreigners 178,260 163,583 156,806 177,711 172,285 167,623 163,275 156,848' 155,519 162,151 76 Other branches of parent bank 77,770 71,078 71,181 90,469 84,298 82,9% 81,073 76,708r 76,920 83,482 77 Banks 45,123 37,365 33,850 35,065 33,315 32,278 30,688 29,924 28,712 29,014 78 Official institutions 15,773 14,359 12,371 12,409 12,736 12,071 10,489 10,539 10,028 9,571 79 Nonbank foreigners 39,594 40,781 39,404 39,768 41,936 40,278 41,025 39,677 39,859 40,084 80 Other liabilities 10,087 8,161 6,651 8,517 8,550 8,790 9,268 8,895 9,401 9,876 United Kingdom 81 Total, all currencies 144,385 148,599 140,917 158,695 160,244 157,634 155,657 152,592 156,184 151,835 82 Negotiable CDs 34,413 31,260 27,781 26,988 25,184 26,786 27,279 27,090 27,659 25,390 83 To United States 25,250 29,422 24,657 23,470 25,209 26,382 22,725 23,868 27,145 25,120 84 Parent bank 14,651 19,330 14,469 13,223 14,177 15,527 14,506 14,904 15,518 15,9% 85 Other banks in United States 3,125 2,974 2,649 1,740 1,596 1,615 1,768 1,508 2,408 1,791 86 Nonbanks 7,474 7,118 7,539 8,507 9,436 9,240 6,451 7,456 9,219 7,333 87 To foreigners 77,424 78,525 79,498 98,689 100,001 94,235 95,049 92,219 91,995 91,691 88 Other branches of parent bank 21,631 23,389 25,036 33,078 33,344 30,350 30,211 27,383 28,743 28,%7 89 Banks 30,436 28,581 30,877 34,290 34,820 33,520 33,316 32,970 31,995 33,125 90 Official institutions 10,154 9,676 6,836 11,015 11,571 11,048 9,624 10,181 9,672 8,893 91 Nonbank foreigners 15,203 16,879 16,749 20,306 20,266 19,317 21,898 21,685 21,585 20,706 92 Other liabilities 7,298 9,392 8,981 9,548 9,850 10,231 10,604 9,415 9,385 9,634 93 Total payable in U.S. dollars 117,497 112,697 99,707 102,550 105,138 105,162 98,982 96,532 99,378 97,555 94 Negotiable CDs 33,070 29,337 26,169 24,926 22,875 24,281 24,716 24,392 24,994 22,960 95 To United States 24,105 27,756 22,075 17,752 20,799 23,019 19,116 20,310 22,405 20,889 96 Parent bank 14,339 18,956 14,021 12,026 13,307 14,626 13,622 13,947 14,134 14,712 97 Other banks in United States 2,980 2,826 2,325 1,512 1,398 1,401 1,556 1,306 2,184 1,512 98 Nonbanks 6,786 5,974 5,729 4,214 6,094 6,992 3,938 5,057 6,087 4,665 99 To foreigners 56,923 51,980 48,138 55,919 57,620 53,444 50,590 47,589 47,%9 48,777 100 Other branches of parent bank 18,294 18,493 17,951 22,334 22,870 21,753 21,292 18,060 18,902 20,303 101 Banks 18,356 14,344 15,203 15,580 16,119 14,401 13,106 12,889 12,860 12,957 102 Official institutions 8,871 7,661 4,934 7,530 7,993 7,045 5,181 5,918 5,470 4,700 103 Nonbank foreigners 11,402 11,482 10,050 10,475 10,638 10,245 11,011 10,722 10,737 10,817 104 Other liabilities 3,399 3,624 3,325 3,953 3,844 4,418 4,560 4,241 4,010 4,929 Bahamas and Caymans 105 Total, all currencies 146,811 142,055 142,592 160,321 148,718 143,630 153,254 152,930 156,353 159,747 106 Negotiable CDs 615 610 847 885 851 940 1,069 1,038 1,0% 941 107 To United States 102,955 104,556 106,081 113,950 105,147 99,821 110,451 109,199 112,605 109,424 108 Parent bank 47,162 45,554 49,481 53,239 46,594 48,976 55,981 50,623 51,792 52,280 109 Other banks in United States 13,938 12,778 11,715 17,224 13,017 11,455 11,829 13,621 11,684 11,451 110 Nonbanks 41,855 46,224 44,885 43,487 45,536 39,390 42,641 44,955 49,129 45,693 111 To foreigners 40,320 35,053 34,400 43,815 40,822 41,234 40,038 40,953 40,369 47,390 112 Other branches of parent bank 16,782 14,075 12,631 19,185 18,629 18,604 17,260 19,420 18,909 24,755 113 Banks 12,405 10,669 8,617 10,769 9,344 9,825 9,404 9,162 9,080 9,803 114 Official institutions 2,054 1,776 2,719 1,504 1,377 1,179 1,873 1,164 1,053 1,850 115 Nonbank foreigners 9,079 8,533 10,433 12,357 11,472 11,626 11,501 11,207 11,327 10,982 116 Other liabilities 2,921 1,836 1,264 1,671 1,898 1,635 1,6% 1,740 2,283 1,992 117 Total payable in U.S. dollars 143,582 138,322 138,774 152,927 141,750 136,636 145,366 146,134 148,923 151,713 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 1988 IItteemm 11998855 11998866 Dec. Jan. Feb. Mar. Apr. May Junep 1 Total1 178,380 211,834 259,517 266,925 276,233 286,547 286,547r 294,747 290,733 By type 2 Liabilities reported by banks in the United States 26,734 27,920 31,833 32,528 32,121 29,879 29,683r 31,460 30,714 3 U.S. Treasury bills and certificates3 53,252 75,650 88,829 90,635 93,407 95,624 94,974 96,604 95,300 U.S. Treasury bonds and notes 4 Marketable 77,154 91,368 122,432 127,550 134,719 142,865 145,940 150,002 149,272 5 Nonmarketable 3,550 1,300 300 300 300 792 795 499 502 6 U.S. securities other than U.S. Treasury securities 17,690 15,596 16,123 15,912 15,686 15,170 15,155 15,182 14,945 By area 7 Western Europe1 74,447 88,629 124,620 127,753 127,614 129,376 129,791r 131,457 126,609 8 Canada 1,315 2,004 4,961 6,182 6,839 7,954 8,314 9,372 10,773 9 Latin America and Caribbean 11,148 8,417 8,328 7,950 8,296 8,734 8,520 9,145 9,319 10 Asia 86,448 105,868 116,060 119,139 127,304 131,423 132,016 135,086 134,427 11 Africa 1,824 1,503 1,402 1,458 1,495 1,512 1,417 1,418 1,266 12 Other countries6 3,199 5,412 4,147 4,442 4,682 4,839 5,993 7,773 7,837 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. 6. Includes countries in Oceania and Eastern Europe. chase agreements. NOTE. Based on Treasury Department data and on data reported to the 3. Includes nonmarketable certificates of indebtedness (including those 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 1987 1988 IItteemm 11998844 11998855 11998866 June Sept. Dec. Mar. 1 Banks' own liabilities 8,586 15,368 29,702 39,487 46,800 55,688 55,871 2 Banks' own claims 11,984 16,294 26,180 34,209 41,239 50,486 51,344 3 Deposits 4,998 8,437 14,129 12,043 14,535 18,109 17,463 4 Other claims 6,986 7,857 12,052 22,166 26,704 32,377 33,881 5 Claims of banks' domestic customers 569 580 2,507 923 1,067 551 810 1. Data on claims exclude foreign currencies held by U.S. monetary author- States that represent claims on foreigners held by reporting banks for the accounts ities. of the domestic customers. 2. Assets owned by customers of the reporting bank located in the United Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • October 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 1988 Holder and type of liability 11998844 11998855 11998866 Dec. Jan. Feb. Mar. Apr. May Junep 1 All foreigners 407,306 435,726 540,9% 618,903 601,332 605,301 607,023 611,259' 628,668 635,190 2 Banks' own liabilities 306,898 341,070 406,485 469,829 446,391 446,235 444,887 449,323r 464,797 475,168 3 Demand deposits 19,571 21,107 23,789 22,718 20,740 21,129 21,889 20,777 23,259 24,360 4 Time deposits1 110,413 117,278 130,891 148,401 138,964 140,178 137,890 134,335' 138,164 140,468 5 Other. 26,268 29,305 42,705 51,120 52,694 52,661 46,997 45,642r 47,351 47,656 6 Own foreign offices3 150,646 173,381 209,100 247,590 233,993 232,268 238,110 248,570' 256,022 262,684 8 7 Ba U nk .S s . ' T cu re st a o s d u y r y l i b a i b ll i s l it a i n es d 4 certificates5 1 7 0 6 0 , , 3 4 6 0 8 8 9 69 4 , , 1 6 3 5 3 6 1 9 3 0 4 , ,5 3 1 9 1 8 1 10 4 1 9 , , 7 0 4 7 3 4 1 1 5 0 4 3 , , 9 8 4 6 1 1 1 10 5 7 9 , , 0 0 8 6 7 6 1 10 6 9 2 , , 2 1 3 3 3 6 1 1 6 0 1 7 , ,8 9 8 3 1 5 1 1 0 6 8 3 , , 8 87 0 1 3 1 10 6 7 0 , , 6 0 4 2 9 2 9 Other negotiable and readily transferable instruments6 18,747 17,964 15,417 16,791 16,727 15,650 16,121 16,017 16,595 16,504 10 Other 5,293 7,558 28,696 30,540 34,353 36,328 36,783 38,038 38,472 35,869 11 Nonmonetary international and regional organizations 4,454 5,821 5,807 4,387 5,875 8,640 6,033 4,575 6,889 7,879 12 Banks' own liabilities 2,014 2,621 3,958 2,626 4,052 6,629 4,031 2,412 4,898 5,142 13 Demand deposits 254 85 199 249 70 74 134 67 695 1,202 14 Time deposits 1,267 2,067 2,065 1,538 1,583 2,481 2,061 335 1,981 1,873 15 Other2. 493 469 1,693 839 2,398 4,074 1,836 2,010 2,223 2,068 16 Banks' custody liabilities4 2,440 3,200 1,849 1,761 1,823 2,011 2,002 2,163 1,991 2,737 17 U.S. Treasury bills and certificates 916 1,736 259 265 613 415 635 587 132 745 18 Other negotiable and readily transferable instruments6 1,524 1,464 1,590 1,497 1,210 1,521 1,351 1,564 1,852 1,989 19 Other 0 0 0 0 0 75 16 11 7 3 20 Official institutions8 86,065 79,985 103,569 120,662 123,163 125,527 125,503 124,657' 128,065 126,013 21 Banks' own liabilities 19,039 20,835 25,427 28,698 29,901 29,234 26,928 26,623' 28,451 27,979 22 Demand deposits 1,823 2,077 2,267 1,949 1,605 1,861 2,021 1,660 2,351 1,860 23 Time deposits' 9,374 10,949 10,497 12,843 11,913 11,654 11,749 11,753' 12,860 12,012 24 Other 7,842 7,809 12,663 13,906 16,383 15,719 13,158 13,209 13,240 14,107 25 Banks' custody liabilities4 67,026 59,150 78,142 91,965 93,262 %,294 98,575 98,033 99,613 98,034 26 U.S. Treasury bills and certificates5 59,976 53,252 75,650 88,829 90,635 93,407 95,624 94,974 96,604 95,300 27 Other negotiable and readily transferable instruments 6,966 5,824 2,347 2,990 2,442 2,592 2,750 2,939 2,775 2,528 28 Other 84 75 145 146 185 295 201 120 234 207 29 Banks9 248,893 275,589 351,745 414,152 391,750 390,848 395,463 401,972' 413,092 421,514 30 Banks' own liabilities 225,368 252,723 310,166 371,471 345,597 344,040 347,937 353,971' 364,747 374,399 31 Unaffiliated foreign banks 74,722 79,341 101,066 123,880 111,605 111,773 109,827 105,402' 108,725 111,715 32 Demand deposits 10,556 10,271 10,303 10,915 9,786 9,759 10,000 9,438 10,260 11,060 33 Time deposits 47,095 49,510 64,232 79,710 71,130 71,709 70,171 68,128' 69,543 71,724 34 Other. 17.071 19,561 26,531 33,256 30,689 30,305 29,655 27,835' 28,923 28,931 35 Own foreign offices 150,646 173,381 209,100 247,590 233,993 232,268 238,110 248,57C 256,022 262,684 36 Banks' custody liabilities4 23,525 22,866 41,579 42,682 46,152 46,808 47,526 48,000 48,345 47,115 37 U.S. Treasury bills and certificates 11,448 9,832 9,984 9,134 8,979 9,526 9,597 8,889 8,872 8,173 38 Other negotiable and readily transferable instruments6 7,236 6,040 5,165 5,392 5,580 4,436 4,627 4,637 4,341 4,747 39 Other 4,841 6,994 26,431 28,156 31,594 32,846 33,303 34,474 35,132 34,196 40 Other foreigners 67,894 74,331 79,875 79,701 80,544 80,285 80,024 80,055 80,622 79,784 41 Banks' own liabilities 60,477 64,892 66,934 67,034 66,841 66,332 65,990 66,317 66,700 67,648 42 Demand deposits 6,938 8,673 11,019 9,605 9,279 9,435 9,734 9,612 9,953 10,239 43 Time deposits 52,678 54,752 54,097 54,310 54,338 54,334 53,909 54,118 53,781 54,859 44 Other. 861 1,467 1,818 3,119 3,224 2,563 2,347 2,586 2,966 2,551 45 Banks' custody liabilities4 7,417 9,439 12,941 12,666 13,703 13,953 14,034 13,739 13,922 12,136 46 U.S. Treasury bills and certificates 4,029 4,314 4,506 3,515 3,633 3,740 3,378 3,430 3,1% 3,432 47 Other negotiable and readily transferable instruments6 3,021 4,636 6,315 6,914 7,495 7,102 7,393 6,876 7,628 7,240 48 Other 367 489 2,120 2,238 2,575 3,112 3,263 3,433 3,099 1,464 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,476 9,845 7,4% 7,314 7,647 7,370 7,325 7,480 8,261 7,650 1. Excludes negotiable time certificates of deposit, which are included in 5. Includes nonmarketable certificates of indebtedness and Treasury bills "Other negotiable and readily transferable instruments." issued to official institutions of foreign countries. 2. Includes borrowing under repurchase agreements. 6. Principally bankers acceptances, commercial paper, and negotiable time 3. U.S. banks: includes amounts due to own foreign branches and foreign certificates of deposit. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 7. Principally the International Bank for Reconstruction and Development, and regulatory agencies. Agencies, branches, and majority-owned subsidiaries of the Inter-American and Asian Development Banks. Data exclude "holdings of foreign banks: principally amounts due to head office or parent foreign bank, and dollars" of the International Monetary Fund. foreign branches, agencies, or wholly owned subsidiaries of head office or parent 8. Foreign central banks, foreign central governments, and the Bank for foreign bank. International Settlements. 4. Financial claims on residents of the United States, other than long-term 9. Excludes central banks, which are included in "Official institutions." securities, held by or through reporting banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17—Continued 1987 1988 AArreeaa aanndd ccoouunnttrryy 11998844 11998855 11998866 Dec. Jan. Feb. Mar. Apr. May Junep 1 Total 407,306 435,726 540,996 618,903 601,332 605,301 607,023 611,259' 628,668 635,190 2 Foreign countries 402,852 429,905 535,189 614,516 595,457 596,660 600,990 606,684r 621,779 627,311 3 Europe 153,145 164,114 180,556 234,651 225,552 226,517 213,023 218,567' 227,853 226,527 4 Austria 615 693 1,181 920 992 964 958 1,172 1,090 941 5 Belgium-Luxembourg 4,114 5,243 6,729 9,347 9,433 9,832 8,804 9,629' 9,893 10,358 6 Denmark 438 513 482 760 551 659 930 1,034 1,164 1,363 7 Finland 418 496 580 377 401 369 405 504 478 431 8 France 12,701 15,541 22,862 29,954 28,198 28,868 28,449 27,040 28,189 26,964 9 Germany 3,358 4,835 5,762 7,047 7,701 8,872 6,594 6,893' 6,483 5,095 10 Greece 699 666 700 689 638 639 656 656 675 653 11 Italy 10,762 9,667 10,875 12,073 11,259 11,001 10,076 10,040 9,285 10,690 12 Netherlands 4,731 4,212 5,600 5,014 5,272 5,302 5,399 5,154' 5,757 5,351 13 Norway 1,548 948 735 1,362 1,196 828 917 1,101 1,239 1,171 14 Portugal 597 652 699 801 725 780 877 917 910 910 15 Spain 2,082 2,114 2,407 2,621 2,359 2,433 2,618 2,415' 2,839 4,120 16 Sweden 1,676 1,422 884 1,379 1,393 1,719 1,836 1,692' 2,280 1,535 17 Switzerland 31,740 29,020 30,534 33,765 31,932 32,006 31,815 30,523' 31,343 30,213 18 Turkey 584 429 454 703 674 541 616 518 628 1,477 19 United Kingdom 68,671 76,728 85,334 116,717 111,845 112,207 101,590 109,547' 115,434 114,428 20 Yugoslavia 602 673 630 710 541 557 550 566 586 690 21 Other Western Europe 7,192 9,635 3,326 9,798 9,683 8,340 9,244 8,473' 8,984 9,275 22 U.S.S.R 79 105 80 31 37 49 66 44 136 246 23 Other Eastern Europe 537 523 702 582 721 549 623 649' 460 615 24 Canada 16,059 17,427 26,345 30,084 28,691 25,967 27,330 27,010' 27,875 30,055 25 Latin America and Caribbean 153,381 167,856 210,318 220,365 212,097 212,731 222,136 225,890' 229,548 231,879 26 Argentina 4,394 6,032 4,757 5,006 4,902 5,092 5,101 5,307 5,219 5,875 27 Bahamas 56,897 57,657 73,619 74,590 69,205 64,964 70,266 69,970' 74,123 73,522 28 Bermuda 2,370 2,765 2,922 2,335 2,187 2,021 2,214 2,402 2,927 1,998 29 Brazil 5,275 5,373 4,325 4,003 3,937 3,747 4,074 3,992 4,119 4,646 30 British West Indies 36,773 42,674 72,263 81,675 78,503 82,625 88,344 92,722' 91,188 93,924 31 Chile 2,001 2,049 2,054 2,210 2,122 2,361 2,314 2,251 2,184 2,378 32 Colombia 2,514 3,104 4,285 4,208 3,947 3,897 3,833 3,843 4,395 4,502 33 Cuba 10 11 7 12 8 9 8 13 9 10 34 Ecuador 1,092 1,239 1,236 1,082 1,115 1,133 1,169 1,174 1,206 1,206 35 Guatemala 896 1,071 1,123 1,082 1,098 1,098 1,182 1,209 1,191 1,208 36 Jamaica 183 122 136 160 150 148 208 209 152 156 37 Mexico 12,303 14,060 13,745 14,480 15,024 15,186 15,783 15,347 15,866 15,680 38 Netherlands Antilles 4,220 4,875 4,970 4,972 4,987 5,231 5,207 5,345 5,348 5,306 39 Panama 6,951 7,514 6,886 7,414 7,329 6,983 4,306 4,059 4,005 4,156 40 Peru 1,266 1,167 1,163 1,275 1,235 1,328 1,364 1,424 1,423 1,441 41 Uruguay 1,394 1,552 1,537 1,580 1,670 1,753 1,763 1,743 1,715 1,879 42 Venezuela 10,545 11,922 10,171 9,048 9,174 9,729 9,411 9,564 9,255 8,728 43 Other 4,297 4,668 5,119 5,234 5,502 5,426 5,591 5,315 5,221 5,264 44 71,187 72,280 108,831 121,401 121,245 122,973 129,265 125,649' 125,587 127,866 China 45 Mainland 1,153 1,607 1,476 1,162 1,336 1,352 1,562 1,814' 1,921 1,725 46 Taiwan 4,990 7,786 18,902 21,503 22,878 23,884 24,005 23,982 23,874 23,064 47 Hong Kong 6,581 8,067 9,393 10,196 9,579 10,010 10,011 9,631 10,209 9,240 48 India 507 712 674 582 571 879 659 675 619 940 49 Indonesia 1,033 1,466 1,547 1,399 1,474 1,583 1,547 1,063' 1,016 1,049 50 Israel 1,268 1,601 1,892 1,292 1,270 1,333 1,400 1,292 1,190 1,334 51 Japan 21,640 23,077 47,410 54,418 55,221 56,346 60,334 58,567 58,021 60,759 52 Korea 1,730 1,665 1,141 1,637 1,709 1,502 1,593 1,574 1,476 1,561 53 Philippines 1,383 1,140 1,866 1,085 1,035 1,009 1,095 1,015 975 951 54 Thailand 1,257 1,358 1,119 1,345 1,433 1,354 1,189 1,181 1,448 1,095 55 Middle-East oil-exporting countries 16,804 14,523 12,352 13,994 12,503 12,408 12,735 12,647' 12,412 12,099 56 Other 12,841 9,276 11,058 12,788 12,237 11,311 13,135 12,208 12,426 14,048 57 3,396 4,883 4,021 3,945 3,758 3,756 4,034 3,878 4,054 4,028 58 Egypt 647 1,363 706 1,151 1,142 1,119 1,099 1,218 1,196 1,186 59 Morocco 118 163 92 194 71 69 75 68 65 73 60 South Africa 328 388 270 202 214 194 387 195 266 245 61 Zaire 153 163 74 67 89 86 81 82 63 60 62 Oil-exporting countries4 1,189 1,494 1,519 1,014 981 1,047 1,062 1,008 1,090 1,121 63 Other 961 1,312 1,360 1,316 1,261 1,241 1,330 1,307 1,373 1,343 64 Other countries 5,684 3,347 5,118 4,070 4,114 4,717 5,203 5,689 6,862 6,956 65 Australia 5,300 2,779 4,196 3,327 3,319 3,814 4,154 4,885 5,943 6,016 66 All other 384 568 922 744 795 903 1,048 804 919 940 67 Nonmonetary international and regional organizations 4,454 5,821 5,807 4,387 5,875 8,640 6,033 4,575 6,889 7,879 68 International 3,747 4,806 4,620 2,754 4,301 6,600 4,330 2,691 4,955 5,924 69 Latin American regional 587 894 1,033 1,272 1,181 1,505 1,305 1,528 1,727 1,769 70 Other regional6 120 121 154 362 393 536 397 356 207 186 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 • October 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 1988 AArreeaa aanndd ccoouunnttrryy 11998844 11998855 11998866 Dec. Jan. Feb. Mar. Apr. May June" 1 Total 400,162 401,608 444,745 460,261 443,890 442,204 442,486 431,724r 449,881 457,633 2 Foreign countries 399,363 400,577 441,724 456,857 441,191 439,980 440,360 430,412r 448,735 455,088 3 Europe 99,014 106,413 107,823 102,324 97,437 100,441 94,574 93,236' 100,668 100,901 4 Austria 433 598 728 793 762 800 846 893' 867 805 5 Belgium-Luxembourg 4,794 5,772 7,498 9,382 9,626 9,793 8,254 8,792' 8,726 7,887 6 Denmark 648 706 688 717 852 746 874 612' 632 640 7 Finland 898 823 987 1,010 876 835 729 993 1,106 954 8 France 9,157 9,124 11,356 13,475 11,680 12,268 12,226 10,791 12,145 12,192 9 Germany 1,306 1,267 1,816 2,061 2,195 1,927 1,881 1,610' 1,894 2,839 10 Greece 817 991 648 461 576 711 6% 513 558 590 11 Italy 9,119 8,848 9,043 7,467 6,508 6,164 6,453 6,211 6,606 7,053 12 Netherlands 1,356 1,258 3,296 2,619 2,902 2,879 2,780 2,865' 22,,776666 2,644 13 Norway 675 706 672 934 842 746 627 650 888866 589 14 Portugal 1,243 1,058 739 477 471 499 425 439 400 358 15 Spain 2,884 1,908 1,492 1,849 1,628 1,965 1,761 1,766' 1,911 1,864 16 Sweden 2,230 2,219 1,964 2,269 2,106 2,274 2,229 2,347' 2,480 2,087 17 Switzerland 2,123 3,171 3,352 2,689 2,569 3,086 2,237 2,452 3,093 3,274 18 Turkey 1,130 1,200 1,543 1,681 1,637 1,660 1,593 1,733 1,543 1,495 19 United Kingdom 56,185 62,566 58,335 50,839 48,753 50,493 47,430 47,133' 51,657 52,037 20 Yugoslavia 1,886 1,964 1,835 1,700 1,694 1,702 1,658 1,618' 1,586 1,623 21 Other Western Europe1 596 998 539 660 578 725 747 573 598 662 22 U.S.S.R 142 130 345 389 386 380 328 377 339 506 23 Other Eastern Europe 1,389 1,107 948 852 795 790 802 866' 876 800 24 Canada 16,109 16,482 21,006 25,284 23,457 21,930 21,155 22,044' 23,796 24,582 25 Latin America and Caribbean 207,862 202,674 208,825 214,807 208,046 203,500 209,103 199,557' 203,036 201,596 26 Argentina 11,050 11,462 12,091 11,990 12,032 11,977 12,226 12,288' 12,312 12,345 27 Bahamas 58,009 58,258 59,342 64,744 60,879 57,415 58,264 54,625' 59,239 56,365 28 Bermuda 592 499 418 474 375 311 1,471 669 366 1,302 29 Brazil 26,315 25,283 25,716 25,879 25,932 25,905 25,993 26,099' 26,119 26,263 30 British West Indies 38,205 38,881 46,284 49,944 47,882 47,340 52,529 47,486' 47,997 49,516 31 Chile 6,839 6,603 6,558 6,305 6,327 6,260 6,099 6,132' 5,998 5,856 32 Colombia 3,499 3,249 2,821 22,,774400 2,709 2,668 2,652 22,,772211'' 3,082 33,,008888 33 Cuba 0 0 0 11 0 0 0 11 0 11 34 Ecuador 2,420 2,390 2,439 2,286 2,339 2,238 2,239 2,883' 2,197 2,140 35 Guatemala3 158 194 140 144 134 140 149 141 149 144 36 Jamaica3 252 224 198 188 202 191 201 212 177 184 37 Mexico 34,885 31,799 30,698 29,534 29,139 29,217 27,974 27,303' 26,670 26,239 38 Netherlands Antilles 1,350 1,340 1,041 980 1,009 1,146 1,159 1,304 1,434 1,229 39 Panama 7,707 6,645 5,436 4,739 4,304 3,818 3,108 2,749 2,586 2,483 40 Peru 2,384 1,947 1,661 1,323 1,316 1,336 1,277 1,283 11,,227777 1,145 41 Uruguay 1,088 960 940 968 961 955 929 913 888800 885 42 Venezuela 11,017 10,871 11,108 10,834 10,753 10,872 11,005 10,944 10,833 10,778 43 Other Latin America and Caribbean 2,091 2,067 1,936 1,735 1,753 1,710 1,831 1,805 1,719 1,631 44 Asia 66,316 66,212 96,126 106,472 105,025 110066,,887700 110088,,114488 110088,,448800'' 111133,,772299 112200,,111155 China 45 Mainland 710 639 787 968 886 887 1,0% 1,140 841 1,065 46 Taiwan 1,849 1,535 2,681 4,577 3,877 3,813 3,554 3,807 3,805 3,957 47 Hong Kong 7,293 6,797 8,307 8,216 7,593 7,948 8,473 6,328' 8,341 9,618 48 India 425 450 321 510 495 548 565 542 507 499 49 Indonesia 724 698 723 580 566 632 645 643 631 695 50 Israel 2,088 1,991 1,634 1,363 1,282 1,211 1,238 1,284 1,259 1,213 51 Japan 29,066 31,249 59,674 69,113 71,229 73,215 72,797 75,434' 78,395 82,372 52 Korea 9,285 9,226 7,182 5,094 4,943 4,777 5,011 4,769 5,041 4,985 53 Philippines 2,555 2,224 2,217 2,069 1,961 1,966 2,074 1,959' 2,012 2,055 54 Thailand 1,125 845 578 493 520 521 541 516 596 576 55 Middle East oil-exporting countries 5,044 4,298 4,122 4,858 3,567 3,454 3,538 3,922' 3,541 4,573 56 Other Asia 6,152 6,260 7,901 8,633 8,108 7,897 8,616 8,136 8,760 8,508 57 Africa 6,615 5,407 4,650 4,742 4,807 4,865 4,881 4,879' 5,092 5,418 58 Egypt 728 721 567 521 513 469 483 484' 503 603 59 Morocco 583 575 598 542 491 490 487 495' 483 484 60 South Africa 2,795 1,942 1,550 1,507 1,520 1,461 1,458 1,439' 1,496 1,694 61 Zaire 18 20 28 15 36 82 46 47 42 41 62 Oil-exporting countries 842 630 694 1,003 1,019 1,086 1,142 1,137 1,244 1,274 63 Other 1,649 1,520 1,213 1,153 1,229 1,276 1,265 1,276 1,324 1,322 64 Other countries 3,447 3,390 3,294 3,228 2,419 2,375 2,499 2,216' 2,413 2,477 65 Australia 2,769 2,413 1,949 2,189 1,428 1,430 1,481 1,360' 1,405 11,,559933 66 Allother 678 978 1,345 1,039 991 945 1,019 856' 1,008 888844 67 Nonmonetary international and regional organizations 880000 1,030 3,021 3,404 2,700 2,224 2,126 1,312' 1,147 2,545 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 1988 TTyyppee ooff ccllaaiimm 11998844 11998855 11998866 Dec. Jan. Feb. Mar. Apr.' May Junep 1 Total 444444433333333333333,,,,,,,000000077777778888888 444444433333330000000,,,,,,,444444488888889999999 444444477777778888888,,,,,,,666666655555550000000 444444499999997777777,,,,,,,999999977777777777777 444444477777779999999,,,,,,,666666633333338888888RRRRRRR 445577,,663333 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444400000000000000,,,,,,,111111166666662222222 444444400000001111111,,,,,,,666666600000008888888 444444444444444444444,,,,,,,777777744444445555555 444444466666660000000,,,,,,,222222266666661111111 443,890 442,204 444444444444442222222,,,,,,,444444488888886666666 431,724 449,881 445577,,663333 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666662222222,,,,,,,222222233333337777777 66666660000000,,,,,,,555555500000007777777 66666664444444,,,,,,,000000099999995555555 66666664444444,,,,,,,666666666666660000000 63,766 62,687 66666661111111,,,,,,,888888822222222222222 61,065 61,395 6622,,775566 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111155555556666666,,,,,,,222222211111116666666 111111177777774444444,,,,,,,222222266666661111111 222222211111111111111,,,,,,,555555533333333333333 222222222222224444444,,,,,,,999999933333334444444 217,579 218,758 222222222222220000000,,,,,,,888888888888882222222 210,862 224,203 222299,,001188 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222224444444,,,,,,,999999933333332222222 111111111111116666666,,,,,,,666666655555554444444 111111122222222222222,,,,,,,999999944444446666666 111111122222227777777,,,,,,,777777711111113333333 120,467 118,918 111111111111118888888,,,,,,,222222288888882222222 117,293 123,000 112233,,445500 66 DDeeppoossiittss 44444449999999,,,,,,,222222222222226666666 44444448888888,,,,,,,333333377777772222222 55555557777777,,,,,,,444444488888884444444 66666660000000,,,,,,,666666611111118888888 55,437 55,801 55555555555555,,,,,,,999999922222227777777 55,806 57,012 5588,,775511 77 OOtthheerr 77777775555555,,,,,,,777777700000006666666 66666668888888,,,,,,,222222288888882222222 66666665555555,,,,,,,444444466666662222222 66666667777777,,,,,,,000000099999995555555 65,030 63,117 66666662222222,,,,,,,333333355555555555555 61,487 65,988 6644,,669988 88 AAllll ootthheerr ffoorreeiiggnneerrss 55555556666666,,,,,,,777777777777777777777 55555550000000,,,,,,,111111188888885555555 44444446666666,,,,,,,111111177777771111111 44444442222222,,,,,,,999999955555555555555 42,079 41,842 44444441111111,,,,,,,555555500000000000000 42,504 41,283 4422,,441100 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 33333332222222,,,,,,,999999911111116666666 22222228888888,,,,,,,888888888888881111111 33333333333333,,,,,,,999999900000005555555 33333337777777,,,,,,,777777711111116666666 33333337777777,,,,,,,111111155555552222222''''''' 3333333,,,,,,,333333388888880000000 3333333,,,,,,,333333333333335555555 4444444,,,,,,,444444411111113333333 3333333,,,,,,,666666655555550000000 5555555,,,,,,,000000011111111111111 11 Negotiable and readily transferable 22222223333333,,,,,,,888888800000005555555 11111119999999,,,,,,,333333333333332222222 22222224444444,,,,,,,000000044444444444444 22222226666666,,,,,,,666666699999996666666 22222223333333,,,,,,,444444455555551111111''''''' 12 Outstanding collections and other 5555555,,,,,,,777777733333332222222 6666666,,,,,,,222222211111114444444 5555555,,,,,,,444444444444448888888 7777777,,,,,,,333333377777770000000 8888888,,,,,,,666666688888889999999''''''' 13 MEMO: Customer liability on 33333337777777,,,,,,,111111100000003333333 22222228888888,,,,,,,444444488888887777777 22222225555555,,,,,,,777777700000006666666 22222223333333,,,,,,,888888822222228888888 11111118888888,,,,,,,777777766666669999999 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .... 40,714 38,102 41,396 38,090 34,258 39,504 37,637' 42,992 41,851 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 1987 1988 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998844 11998855 11998866 June Sept. Dec. Mar.' 1 Total 243,952 227,903 232,295 237,608 237,521 235,447 219,327 By borrower 2 Maturity of 1 year or less' 167,858 160,824 160,555 168,238 167,187 164,396 152,592 3 Foreign public borrowers 23,912 26,302 24,842 23,702 26,914 25,986 24,300 4 All other foreigners 143,947 134,522 135,714 144,537 140,273 138,410 128,291 5 Maturity over 1 year 76,094 67,078 71,740 69,370 70,334 71,051 66,735 6 Foreign public borrowers 38,695 34,512 39,103 39,372 39,476 38,626 35,763 7 All other foreigners 37,399 32,567 32,637 29,997 30,858 32,425 30,972 By area Maturity of 1 year or less1 8 Europe 58,498 56,585 61,784 69,138 62,941 59,123 51,522 9 Canada 6,028 6,401 5,895 5,773 5,890 5,712 4,939 10 Latin America and Caribbean 62,791 63,328 56,271 55,691 58,387 56,410 55,472 11 Asia 33,504 27,966 29,457 31,184 32,161 36,436 35,992 12 Africa 4,442 3,753 2,882 2,989 2,871 2,824 2,605 13 All other2 2,593 2,791 4,267 3,463 4,937 3,891 2,062 Maturity of over 1 year1 14 Europe 9,605 7,634 6,737 6,479 6,753 6,831 6,011 15 Canada 1,882 1,805 1,925 1,664 1,579 2,661 2,233 16 Latin America and Caribbean 56,144 50,674 56,719 55,609 55,089 53,788 51,609 17 Asia 5,323 4,502 4,043 3,495 3,497 3,649 3,627 18 Africa 2,033 1,538 1,539 1,512 1,622 1,746 2,192 19 All other2 1,107 926 777 611 1,794 2,375 1,063 1. Remaining time to maturity. 2. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • October 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 1986 1987 1988 AArreeaa oorr ccoouunnttrryy 11998844 11998855 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total 405.7 385.3 385.6 389.7 389.5 389.6 395.2' 384.8 387.5' 381.5' 371.4' 2 G-10 countries and Switzerland 148.1 146.0 152.8 160.3 159.0 158.0 162.7 158.T 155.6 160.3' 157.2' 3 Belgium-Luxembourg 8.7 9.2 8.2 9.0 8.5 8.4 9.1 8.3 8.2 10.1 9.4 4 France 14.1 12.1 13.6 15.1 14.7 13.8 13.3 12.5 13.7 13.8 11.5 5 Germany 9.0 10.5 11.2 11.5 12.5 11.7 12.7 11.2 10.5 12.6 11.8 6 Italy 10.1 9.6 8.3 9.3 8.1 9.0 8.6 7.5 6.6 7.3 7.4 7 Netherlands 3.9 3.7 3.5 3.4 3.9 4.6 4.4 7.3 4.8 4.1 3.3 8 Sweden 3.2 2.7 2.8 2.9 2.7 2.4 3.0 2.4 2.6 2.1 2.1 9 Switzerland 3.9 4.4 5.3 5.6 4.8 5.8 5.8 5.7 5.4 5.6 5.1 10 United Kingdom 60.3 63.0 67.4 69.2 70.3 71.9 73.7' 72.<y 72.1 69.1 71.2' 11 Canada 7.9 6.8 6.0 7.0 6.2 5.4 5.3 4.7' 4.7 5.6 5.0 12 Japan 27.1 23.9 26.5 27.2 27.4 25.0 26.9 26.3 27.0 30.1' 30.3 13 Other developed countries 33.6 29.9 31.1 30.7 29.5 26.2 25.7 25.2 25.9 26.2 26.2' 14 Austria 1.6 1.5 1.5 1.7 1.7 1.7 1.9 1.8 1.9 1.9 1.6 15 Denmark 2.2 2.3 2.5 2.4 2.3 1.7 1.7 1.5 1.6 1.7 1.4 16 Finland 1.9 1.6 1.9 1.6 1.7 1.4 1.4 1.4 1.4 1.3 1.0 17 Greece 2.9 2.6 2.5 2.6 2.3 2.3 2.1 2.0 1.9 2.0 2.3 18 Norway 3.0 2.9 2.7 3.0 2.7 2.4 2.2 2.1 2.0 2.3 2.0 19 Portugal 1.4 1.2 1.0 1.1 1.0 .8 .8 .8 .8 .5 .4 20 Spain 6.5 5.8 6.4 6.4 6.7 5.8 6.3 6.1 7.4 8.0 9.0 21 Turkey 1.9 1.8 2.1 2.5 2.1 2.0 1.7 1.7 1.5 1.6 1.6 22 Other Western Europe 1.7 2.0 2.4 2.1 1.6 1.4 1.4 1.5 1.6 1.6' 1.9 23 South Africa 4.5 3.2 3.1 3.1 3.1 3.1 3.0 3.0 2.9 2.9 2.8 24 Australia 6.0 5.0 4.9 4.2 4.1 3.5 3.2 3.1 2.9 2.5 2.1' 25 OPEC countries3 24.9 21.3 20.4 20.6 20.0 19.6 20.0 18.8 18.9 17.1 17.1 26 Ecuador 2.2 2.1 2.2 2.1 2.2 2.2 2.1 2.1 2.0 1.9 1.9 27 Venezuela 9.3 8.9 8.7 8.8 8.7 8.6 8.5 8.4 8.2 8.0 8.0 28 Indonesia 3.3 3.0 3.3 3.0 2.8 2.5 2.4 2.2 2.0 1.9 1.9 29 Middle East countries 7.9 5.3 4.5 5.0 4.6 4.5 5.4 4.4 4.9 3.6 3.6' 30 African countries 2.3 2.0 1.8 1.7 1.7 1.7 1.6 1.7 1.7 1.7 1.7 31 Non-OPEC developing countries 111.8 104.2 102.9 102.0 100.0 99.7 100.2' 100. r 97.4' 97.3' 94.(K Latin America 32 Argentina 8.7 8.8 8.8 9.2 9.3 9.5 9.5 9.5 9.3 9.4 9.5 33 Brazil 26.3 25.4 25.6 25.5 25.4 25.3 26.0 25.0 25.1 24.7 23.9 34 Chile 7.0 6.9 7.0 7.1 7.2 7.1 7.2 7.2 7.0 6.9 6.6 35 Colombia 2.9 2.6 2.3 2.2 2.0 2.1 2.0 1.9 1.9 2.0 1.9 36 Mexico 25.7 23.9 23.9 24.0 24.0 24.0 23.9 25.3 24.7 23.6 22.5 37 Peru 2.2 1.8 1.7 1.6 1.5 1.5 1.4 1.3 1.2 1.1 1.1 38 Other Latin America 3.9 3.4 3.3 3.3 3.3 3.1 3.0 2.9 2.8 2.7 2.8 Asia China 39 Mainland .7 .5 .6 .6 .6 .4 .9 .6 .3 .3 .4 40 Taiwan 5.1 4.5 4.3 3.7 4.3 4.9 5.5 6.6 5.9 8.2 6.1' 41 India .9 1.2 1.2 1.3 1.3 1.2 1.7 1.7 1.9 1.9 2.1 42 Israel 1.8 1.6 1.3 1.6 1.4 1.5 1.4 1.3 1.3 1.0 1.0' 43 Korea (South) 10.6 9.2 9.2 8.7 7.3 6.7 6.2 5.6 4.9 4.9' 5.6' 44 Malaysia 2.7 2.4 2.2 2.0 2.1 2.1 1.9 1.7 1.6 1.5 1.5 45 Philippines 6.0 5.7 5.6 5.7 5.4 5.4 5.4 5.4 5.4 5.1 5.1 46 Thailand 1.8 1.4 1.3 1.1 1.0 .9 .9 .8 .7 .7 1.0 47 Other Asia 1.1 1.0 .9 .8 .7 .7 .6 .7 .7 .7 .7 Africa 48 Egypt 1.2 1.0 .9 .9 .7 .7 .6 .6 .6 .5 .5 49 Morocco .8 .9 .9 .9 .9 .9 .9 .9 .8 .9 .9 50 Zaire .1 .1 .1 .1 .1 .1 .1 .1 .1 .0 .1 51 Other Africa4 2.1 1.9 1.9 1.7 1.6 1.6 1.4' 1.1 1.3' 1.1 1.0 52 Eastern Europe 4.4 4.1 4.0 4.0 3.4 3.2 3.0 3.3 3.3 3.0 2.9 53 U.S.S.R .1 .1 .3 .3 .1 .1 .1 .3 .5 .4 .3 54 Yugoslavia 2.3 2.2 2.0 2.0 1.9 1.7 1.6 1.7 1.7 1.6 1.7 55 Other 2.0 1.8 1.7 1.7 1.4 1.4 1.3 1.3 1.2 l.C .y 56 Offshore banking centers 65.6 62.9 57.5 55.4 60.5 63.2 63.5 61. V 64.4' 54.4' 52.7' 57 Bahamas 21.5 21.2 21.2 17.1 19.9 22.3 24.0 20.1' 25.7 17.3 15.9 58 Bermuda .9 .7 .7 .4 .4 .7 .8 .6 .6 .6 1.8 59 Cayman Islands and other British West Indies 11.8 11.6 9.2 12.2 12.8 13.6 12.5' 14.3' 12.7' 13.2' 11.7' 60 Netherlands Antilles 3.4 2.2 2.2 2.4 1.9 1.8 1.7 1.3 1.2 1.2 1.3 61 Panama5 6.7 6.0 4.3 4.2 5.1 4.1 4.2' 3.9' 3.7' 3.7' 3.2 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.4 11.4 11.4 9.5 10.5 11.2 11.4 12.5 12.3 11.2' 11.3 64 Singapore 9.8 9.8 8.4 9.3 9.7 9.4 8.6 8.3' 8.1 7.0 7.4 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 17.3 16.9 16.8 16.8 17.2 19.8 20.1 18.1 21.9 23.2 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 1987 1988 Type, and area or country 11998844 11998855 11998866 Mar. June Sept. Dec. Mar. 1 Total 29,357 27,825 25,779 27,568 29,019 28,669 27,641 29,632 2 Payable in dollars 26,389 24,296 21,980 23,410 24,565 24,141 22,304 23,198 3 Payable in foreign currencies 2,968 3,529 3,800 4,158 4,454 4,528 5,337 6,434 By type 4 Financial liabilities 14,509 13,600 12,312 13,183 14,096 13,034 11,625 13,972 5 Payable in dollars 12,553 11,257 9,827 10,446 11,197 10,080 8,148 9,447 6 Payable in foreign currencies 1,955 2,343 2,485 2,737 2,899 2,954 3,477 4,526 7 Commercial liabilities 14,849 14,225 13,467 14,386 14,923 15,635 16,016 15,659 8 Trade payables 7,005 6,685 6,462 7,073 7,286 7,548 7,425 6,619 9 Advance receipts and other liabilities .. 7,843 7,540 7,004 7,313 7,637 8,086 8,591 9,040 10 Payable in dollars 13,836 13,039 12,153 12,964 13,368 14,061 14,157 13,751 11 Payable in foreign currencies 1,013 1,186 1,314 1,422 1,555 1,574 1,859 1,909 By area or country Financial liabilities 12 Europe 6,728 7,700 8,079 8,434 9,713 9,298 7,845 9,850 13 Belgium-Luxembourg 471 349 270 232 257 230 202 241 14 France 995 857 661 758 822 615 415 365 15 Germany 489 376 368 463 402 505 583 586 16 Netherlands 590 861 704 693 669 641 1,014 1,013 17 Switzerland 569 610 646 663 655 685 493 775 18 United Kingdom 3,297 4,305 5,140 5,365 6,646 6,357 4,946 6,689 19 Canada 863 839 399 431 441 397 400 467 20 Latin America and Caribbean 5,086 3,184 1,961 2,366 1,744 961 847 1,310 21 Bahamas 1,926 1,123 614 669 398 280 278 264 22 Bermuda 13 4 4 0 0 0 0 0 23 Brazil 35 29 32 26 22 22 25 23 24 British West Indies 2,103 1,843 1,163 1,545 1,223 580 476 924 25 Mexico 367 15 22 30 29 17 13 15 26 Venezuela 137 3 0 0 2 3 0 2 27 Asia 1,777 1,815 1,805 1,882 2,131 2,300 2,429 2,260 28 Japan 1,209 1,198 1,398 1,480 1,751 1,830 2,042 1,868 29 Middle East oil-exporting countries2 . 155 82 8 7 7 7 8 12 30 Africa 14 12 1 3 1 2 4 5 0 0 1 1 0 0 1 3 31 Oil-exporting countries3 41 50 67 67 66 76 100 80 32 All other4 Commercial liabilities 4,001 4,074 4,447 4,498 4,966 4,951 5,626 5,748 33 Europe 48 62 101 85 111 56 125 144 34 Belgium-Luxembourg 438 453 352 380 423 437 451 441 35 France 622 607 714 582 585 674 916 817 36 Germany 245 364 424 356 324 336 421 483 37 Netherlands 257 379 387 484 557 556 559 529 38 Switzerland 1,095 976 1,341 1,309 1,380 1,473 1,668 1,797 39 United Kingdom 40 Canada 1,975 1,449 1,405 1,407 1,371 1,399 1,301 1,402 41 Latin America and Caribbean 1,871 1,088 924 1,128 1,069 1,082 865 886 42 Bahamas 7 12 32 28 13 22 19 17 43 Bermuda 114 77 156 325 266 252 168 325 44 Brazil 124 58 61 82 88 40 46 59 45 British West Indies 32 44 49 93 67 47 19 14 46 Mexico 586 430 217 189 214 231 189 161 47 Venezuela 636 212 216 223 203 176 162 77 48 Asia 5,285 6,046 5,091 5,814 5,919 6,511 6,573 5,881 49 Japan 1,256 1,799 2,052 2,468 2,481 2,422 2,580 2,518 50 Middle East oil-exporting countries ' 2,372 2,829 1,679 1,943 1,867 2,104 1,964 1,067 51 Africa 588 587 619 520 524 572 574 551 52 Oil-exporting countries3 233 238 197 170 166 151 135 133 53 All other4 1,128 982 980 1,019 1,074 1,119 1,078 1,193 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • October 1988 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1987 1988 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998844 11998855 11998866 Mar. June Sept. Dec. Mar. 1 Total 29,901 28,876 33,399 34,094 31,628 31,405 30,055 30,372 2 Payable in dollars 27,304 26,574 31,031 31,446 28,686 28,880 26,965 28,393 3 Payable in foreign currencies 2,597 2,302 2,367 2,649 2,941 2,525 3,089 1,979 By type 4 Financial claims 19,254 18,891 23,424 24,235 21,736 21,068 19,571 19,584 5 Deposits 14,621 15,526 17,283 16,955 14,687 15,796 13,673 12,238 6 Payable in dollars 14,202 14,911 16,726 16,112 13,482 14,919 12,246 11,684 7 Payable in foreign currencies 420 615 557 842 1,205 877 1,426 555 8 Other financial claims 4,633 3,364 6,141 7,280 7,048 5,271 5,899 7,346 9 Payable in dollars 3,190 2,330 4,792 5,937 5,773 4,151 4,790 6,294 10 Payable in foreign currencies 1,442 1,035 1,349 1,343 1,275 1,120 1,109 1,051 11 Commercial claims 10,646 9,986 9,975 9,859 9,892 10,338 10,483 10,788 12 Trade receivables 9,177 8,696 8,783 8,803 8,849 9,385 9,476 9,739 13 Advance payments and other claims 1,470 1,290 1,192 1,056 1,043 953 1,007 1,049 14 Payable in dollars 9,912 9,333 9,513 9,397 9,431 9,810 9,929 10,415 15 Payable in foreign currencies 735 652 462 463 461 528 554 373 By area or country Financial claims 16 Europe 5,762 6,929 8,827 9,421 9,975 9,475 9,066 9,432 17 Belgium-Luxembourg 15 10 41 15 6 26 6 15 18 France 126 184 138 181 169 171 359 328 19 Germany 224 223 111 163 92 99 69 85 20 Netherlands 66 161 151 132 140 157 282 334 21 Switzerland 66 74 185 77 98 44 76 56 22 United Kingdom 4,864 6,007 7,957 8,500 9,271 8,783 8,040 8,369 23 Canada 3,988 3,260 3,965 3,828 3,344 2,895 2,796 2,840 24 Latin America and Caribbean 8,216 7,846 9,209 9,574 7,554 7,502 6,757 6,397 25 Bahamas 3,306 2,698 2,628 3,968 2,589 3,328 1,865 2,253 26 Bermuda 6 6 6 3 6 2 7 43 27 Brazil 100 78 73 71 103 102 53 86 28 British West Indies 4,043 4,571 6,078 5,157 4,425 3,687 4,378 3,482 29 Mexico 215 180 174 164 167 173 172 154 30 Venezuela 125 48 21 20 20 18 19 35 31 Asia 961 731 1,316 1,188 789 1,105 830 841 32 Japan 353 475 999 931 452 737 550 673 33 Middle East oil-exporting countries2 13 4 7 7 6 10 10 8 34 Africa 210 103 85 84 58 71 65 53 35 Oil-exporting countries3 85 29 28 19 9 14 7 7 36 All other4 117 21 22 140 16 20 58 21 Commercial claims 37 Europe 3,801 3,533 3,708 3,690 3,845 4,115 4,116 4,132 38 Belgium-Luxembourg 165 175 133 145 137 169 177 192 39 France 440 426 414 419 439 416 593 484 40 Germany 374 346 444 447 526 545 555 629 41 Netherlands 335 284 164 154 172 190 132 150 42 Switzerland 271 284 217 196 187 206 185 173 43 United Kingdom 1,063 898 999 1,072 1,074 1,227 1,086 1,088 44 Canada 1,021 1,023 934 977 1,046 1,049 927 1,169 45 Latin America and Caribbean 2,052 1,753 1,857 1,818 1,728 1,709 1,907 1,969 46 Bahamas 8 13 28 11 14 12 19 14 47 Bermuda 115 93 193 180 169 143 159 171 48 Brazil 214 206 234 216 202 230 226 215 49 British West Indies 7 6 39 25 19 20 25 24 50 Mexico 583 510 412 451 346 368 363 373 51 Venezuela 206 157 237 173 203 192 297 324 52 Asia 3,073 2,982 2,755 2,703 2,642 2,796 2,892 2,871 53 Japan 1,191 1,016 881 927 952 1,026 1,150 1,105 54 Middle East oil-exporting countries 668 638 563 525 452 434 450 402 55 Africa 470 437 500 432 378 407 400 418 56 Oil-exporting countries 134 130 139 141 123 124 144 154 57 All other4 229 257 222 240 255 262 240 229 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 1988 1987 1988 Transactions, and area or country 1986 1987 J J a u n n . e - Dec. Jan. Feb. Mar. Apr. May Junep U.S. corporate securities STOCKS 1 Foreign purchases 148,114 249,113 96,007 13,627 12,923 16,344 18,068 15,022' 13,654 19,996 2 Foreign sales 129,395 232,849 96,178 16,630 12,891 16,720 18,482 13,705' 14,723 19,657 3 Net purchases, or sales (-) 18,719 16,264 -171 -3,004 32 -376 -414 1,317' -1,069 339 4 Foreign countries 18,927 16,313 -103 -2,943 64 -344 -444 1,300' -976 297 Europe 9,559 1,928 -1,541 -2,329 -222 -323 -360 481 -1,151 33 6 France 459 905 -165 -393 -96 -29 -7 -1 -153 121 7 Germany 341 -74 203 -149 67 -37 171 104 -66 -36 8 Netherlands 936 892 -480 34 -72 59 -223 -145 -43 -56 9 Switzerland 1,560 -1,123 -862 -743 -110 -252 -32 -17 -247 -204 10 United Kingdom 4,826 630 -734 -959 -136 -130 -331 429 -711 146 11 Canada 816 1,048 90 111 147 -167 -61 241 102 -172 1? Latin America and Caribbean 3,031 1,314 247 -50 -143 261 98 230' -82 -116 13 Middle East1 976 -1,360 -1,398 -448 104 -251 -788 24 62 -549 14 Other Asia 3,876 12,896 2,332 -160 159 70 577 372 106 1,049 15 Africa 297 123 39 -6 7 -18 5 19 23 3 16 Other countries 373 365 130 -61 12 85 84 -67 -35 51 17 Nonmonetary international and regional organizations -208 -48 -68 -61 -32 -33 31 17 -92 42 BONDS2 18 Foreign purchases 123,169 105,856 41,057 6,807 5,024 6,453 7,799 5,618 7,810 8,352 19 Foreign sales 72,520 78,312 29,372 5,432 5,193 6,039 5,594 4,433 3,518 4,594 20 Net purchases, or sales (-) 50,648 27,544 11,685 1,375 -169 414 2,206 1,185 4,292 3,757 21 Foreign countries 49,801 26,804 12,206 975 458 532 2,201 1,186 4,262 3,567 77 Europe 39,313 21,989 7,114 576 272 263 1,462 658 2,256 2,202 73 France 389 194 125 -13 51 13 57 7 -18 15 74 Germany -251 33 1,024 87 61 118 260 347 11 226 75 Netherlands 387 269 308 1 -13 -1 30 58 180 55 76 Switzerland 4,529 1,587 55 -208 -56 60 -14 -15 152 -71 77 United Kingdom 33,900 19,770 5,210 713 333 49 976 228 1,886 1,738 78 Canada 548 1,296 505 114 29 -29 87 104 98 216 79 Latin America and Caribbean 1,476 2,473 930 292 -22 316 245 100 134 157 30 Middle East1 -2,961 -548 -238 -16 -164 -76 144 -61 10 -92 31 Other Asia 11,270 1,638 3,905 -7 347 88 270 377 1,749 1,075 37. Africa 16 16 -14 3 0 -22 3 4 -2 4 33 Other countries 139 -61 5 0 -4 -8 -11 5 17 5 34 Nonmonetary international and regional organizations 847 740 -521 400 -627 -119 5 -1 31 191 Foreign securities 35 Stocks, net purchases, or sales (-) -1,853 1,149 292 840 511 -678 -724 372 963 -152 36 Foreign purchases 49,149 95,263 35,569 4,897 4,989 5,717 6,693 5,797 5,983 6,389 37 Foreign sales 51,002 94,114 35,277 4,057 4,478 6,396 7,417 5,425 5,020 6,542 38 Bonds, net purchases, or sales (-) -3,685 -7,830 -3,875 -1,490 -1,326 -1,433 -1,179 -137 873 -673 39 Foreign purchases 166,992 199,010 92,802 12,322 12,812 15,858 16,561 15,593 15,119 16,860 40 Foreign sales 170,677 206,840 96,677 13,812 14,137 17,291 17,740 15,730 14,246 17,533 41 Net purchases, or sales (—), of stocks and bonds .... -5,538 -6,682 -3,583 -650 -814 -2,111 -1,903 235 1,836 -825 42 Foreign countries -6,493 -6,713 -3,896 -336 -879 -2,131 -1,944 179 1,620 -741 43 Europe -18,026 -12,083 -3,396 -493 -326 -1,627 -1,541 483 719 -1,104 44 Canada -876 -4,065 -2,422 107 -654 -648 -366 -406 -162 -186 45 Latin America and Caribbean 3,476 828 1,355 2 126 -64 138 538 322 295 46 10,858 9,338 511 159 -197 37 -154 -407 716 515 47 Africa 52 89 74 10 9 3 48 14 -1 1 48 Other countries -1,977 -820 -19 -121 163 169 -70 -43 24 -262 49 Nonmonetary international and regional organizations 955 31 331133 -314 65 20 41 56 216 -84 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, ties sold abroad by U.S. corporations organized to finance direct investments Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). abroad. 2. Includes state and local government securities, and securities of U.S. government agencies and corporations. Also includes issues of new debt securi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • October 1988 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1988 1987 1988 Country or area 1986 1987 J J a u n n . e - Dec. Jan. Feb. Mar. Apr. May Junep Transactions, net purchases or sales i -) during period1 1 Estimated total2 19,388 25,587 38,952 2,507 4,645 12,083 9,980 3,433 11,013 -2,202 2 Foreign countries2 20,491 30,889 37,863 4,121 5,740 12,832 9,017 3,728 9,923 -3,377 3 Europe2 16,326 23,716 15,885 1,387 4,321 5,878 3,471 2,332 3,108 -3,226 4 Belgium-Luxembourg -245 653 1,302 -103 469 242 454 47 159 -68 5 Germany 7,670 13,330 2,776 1,157 3,045 1,397 919 1,576 79 -4,241 6 Netherlands 1,283 -913 -327 -78 -337 334 378 117 -22 -796 7 Sweden 132 210 -501 28 -61 26 -245 -93 104 -232 8 Switzerland2 329 1,917 262 -530 118 -1,188 643 344 -309 654 9 United Kingdom 4,546 3,975 5,696 1,220 -101 4,373 -244 97 1,523 47 10 Other Western Europe 2,613 4,563 6,645 -307 1,179 678 1,570 238 1,560 1,420 11 Eastern Europe 0 -19 32 1 9 16 -3 5 14 -10 12 Canada 881 4,526 3,505 711 356 559 372 133 1,415 669 13 Latin America and Caribbean 926 -2,192 903 -188 219 630 198 75 360 -580 14 Venezuela -96 150 37 1 0 -1 20 15 1 2 15 Other Latin America and Caribbean 1,130 -1,142 815 120 184 320 169 97 -17 63 16 Netherlands Antilles -108 -1,200 51 -309 36 311 10 -36 376 -645 17 Asia 1,345 4,488 16,874 2,210 772 5,921 5,463 713 4,427 -422 18 Japan -22 868 15,719 2,012 2,979 4,996 4330 687 2,820 -92 19 Africa -54 -56 -23 49 -38 25 5 0 -13 -1 20 All other 1,067 407 720 -48 110 -182 -492 475 626 183 21 Nonmonetary international and regional organizations -1,104 -5,300 1,091 -1,614 -1,095 -748 963 -295 1,091 1,175 22 International -1,430 -4,387 1,432 -1,620 -1,023 -879 968 -334 1,155 1,546 23 Latin American regional 157 3 -29 0 8 -2 -5 0 7 -38 Memo 24 Foreign countries2 20,491 30,889 37,863 4,121 5,740 12,832 9,017 3,728 9,923 -3,377 25 Official institutions 14,214 31,064 26,840 1,670 5,118 7,169 8,146 3,075 5,062 -1,730 26 Other foreign2 6,283 -181 11,021 2,451 622 5,663 871 653 4,860 -1,648 Oil-exporting countries 27 Middle East3 -1,529 -3,142 -827 338 -809 -296 578 514 -612 -201 28 Africa4 5 16 1 -1 0 0 0 0 0 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria. notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on Aug. 31, 1988 Rate on Aug. 31, 1988 Rate on Aug. 31, 1988 Country Country Country Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 4.0 Aug. 1988 France 7.0 Aug. 1988 Norway 8.0 June 1983 Belgium . 7.5 Aug. 1988 Germany, Fed. Rep. of 3.5 Aug. 1988 Switzerland .... 3.0 Aug. 1988 Brazil ... 49.0 Mar. 1981 Italy 12.5 Aug. 1988 United Kingdom2 Canada.. 9.80 Aug. 1988 Japan 2.5 Feb. 1987 Venezuela Denmark 7.0 Oct. 1983 Netherlands 4.0 Aug. 1988 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 year, averages of daily figures 1988 CCoouunnttrryy,, oorr ttyyppee 11998855 11998866 11998877 Feb. Mar. Apr. May June July Aug. 1 Eurodollars 8.27 6.70 7.07 6.73 6.74 7.05 7.40 7.61 8.09 8.47 2 United Kingdom 12.16 10.87 9.65 9.18 8.83 8.25 8.00 8.91 10.45 11.29 3 Canada 9.64 9.18 8.38 8.58 8.63 8.90 9.07 9.44 9.42 9.92 4 Germany 5.40 4.58 3.97 3.29 3.38 3.37 3.51 3.88 4.88 5.28 5 Switzerland 4.92 4.19 3.67 1.48 1.61 1.83 2.23 2.82 3.67 3.57 6 Netherlands 6.29 5.56 5.24 3.98 3.97 3.98 4.07 4.10 4.85 4.50 7 France 9.91 7.68 8.14 7.54 7.89 7.99 7.81 7.27 7.32 7.58 8 Italy 14.86 12.60 11.15 10.80 11.11 10.54 10.57 10.90 11.02 11.02 9 Belgium 9.60 8.04 7.01 6.19 6.09 6.08 6.05 6.04 6.84 7.25 10 Japan 6.47 4.96 3.87 3.82 3.82 3.80 3.80 3.82 3.84 3.98 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • October 1988 3.28 FOREIGN EXCHANGE RATES' Currency units per dollar 1988 Country/currency 1985 1987 Apr. May June July Aug. 1 Australia/dollar^ 70.026 67.093 70.136 73.29 74.80 77.74 80.76 80.00 80.57 2 Austria/schilling 20.676 15.260 12.649 11.767 11.744 11.912 12.380 12.991 13.281 3 Belgium/franc 59.336 44.662 37.357 35.126 34.962 35.381 36.786 38.649 39.562 4 Canada/dollar 1.3658 1.3896 1.3259 1.2492 1.2353 1.2373 1.2176 1.2075 1.2237 5 China, P.R./yuan 2.9434 3.4615 3.7314 3.7314 3.7314 3.7314 3.7314 3.7314 3.7314 6 Denmark/krone 10.598 8.0954 6.8477 6261 6.4207 6.4938 6.6893 7.0266 7.2280 7 Finland/markka 6.1971 5.0721 4.4036 4.0483 4.0064 4.0297 4.1761 4.3896 4.4720 8 France/franc 8.9799 6.9256 6.0121 5.6893 5.6704 5.7348 5.9310 6.2241 6.3919 9 Germany/deutsche mark 2.9419 2.1704 1.7981 1.6770 1.6710 1.6935 1.7579 1.8466 1.8880 10 Greece/drachma 138.40 139.93 135.47 134.60 133.86 135.75 140.69 147.85 151.62 11 Hong Kong/dollar 7.7911 7.8037 7.7985 7.8028 7.8166 7.8156 7.8073 7.8135 7.8050 12 India/rupee 12.332 12.597 12.943 12.979 13.158 13.315 13.785 14.079 14.217 13 Ireland/punt 106.62 134.14 148.79 159.33 159.81 157.78 152.65 145.49 142.17 14 Italy/lira 1908.90 1491.16 1297.03 1240.67 1240.99 1258.81 1305.56 1367.26 1397.93 15 Japan/yen 238.47 168.35 144.60 127.11 124.90 124.79 127.47 133.02 133.77 16 Malaysia/ringgit . 2.4806 2.5830 2.5185 2.5689 2.5743 2.5847 2.5860 2.6267 2.6520 17 Netherlands/guilder 3.3184 2.4484 2.0263 1.8837 1.8749 1.8987 1.9767 2.0827 2.1319 18 New Zealand/dollar2 ... 49.752 52.456 59.327 66.239 66.143 68.889 69.996 66.832 64.815 19 Norway/krone 8.5933 7.3984 6.7408 6.3337 6.2140 6.1875 6.3951 6.7207 6.9016 20 Portugal/escudo 172.07 149.80 141.20 137.48 136.77 138.44 143.54 150.42 153.72 21 Singapore/dollar 2.2008 2.1782 2.1059 2.0133 2.0044 2.0109 2.0285 2.0459 2.0417 22 South Africa/rand 2.2343 2.2918 2.0385 2.1330 2.1428 2.2114 2.2716 2.3985 2.4531 23 South Korea/won 861.89 884.61 825.93 757.37 745.31 739.44 732.88 728.67 725.74 24 Spain/peseta 169.98 140.04 123.54 112.38 110.80 112.04 116.25 122.27 124.122 25 Sri Lanka/rupee 27.187 27.933 29.471 30.892 30.939 30.993 31.133 31.782 32.807 26 Sweden/krona 8.6031 7.1272 6.3468 5.9497 5.8892 5.9091 6.1074 6.3542 6.4878 27 Switzerland/franc 2.4551 1.7979 1.4918 1.3863 1.3823 1.4111 1.4629 1.5343 1.5837 28 Taiwan/dollar 39.889 37.837 31.756 28.687 28.695 28.666 28.723 28.726 28.693 29 Thailand/baht 27.193 26.314 25.774 25.232 25.171 25.170 25.280 25.523 25.560 30 United Kingdom/pound 129.74 146.77 163.98 183.30 187.82 186.95 177.68 170.51 169.65 MEMO 31 United States/dollar3 ... 143.01 96.94 89.74 92.58 98.29 1. 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 2. Value in U.S. cents. RESERVE BULLETIN, vol. 64, August 1978, p. 700). 3. Index of weighted-average exchange value of U.S. dollar against the 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 July 1988 A87 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference 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 commercial banks, September 30, 1987 April 1988 A70 Assets and liabilities of commercial banks, December 31, 1987 June 1988 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 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1987 June 1988 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1988 September 1988 A82 Terms of lending at commercial banks, August 1987 January 1988 A70 Terms of lending at commercial banks, November 1987 September 1988 A76 Terms of Lending at commercial banks, February 1988 May 1988 A70 Terms of lending at commercial banks, May 1988 September 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 Pro forma balance sheet and income statments for priced service operations, March 31, 1987 August 1988 A70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 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 BOB STAHLY MOORE, Special Assistant to the Board CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser LEGAL DIVISION DONALD B. ADAMS, Assistant Director PETER HOOPER III, Assistant Director MICHAEL BRADFIELD, General Counsel KAREN H. JOHNSON, Assistant Director J. VIRGIL MATTINGLY, JR., Deputy General Counsel RALPH W. SMITH, JR., Assistant Director RICHARD M. ASHTON, Associate General Counsel OLIVER IRELAND, Associate General Counsel RICKI R. TIGERT, Assistant General Counsel DIVISION OF RESEARCH AND STATISTICS MARYELLEN A. BROWN, Assistant to the General Counsel MICHAEL J. PRELL, Director EDWARD C. ETTIN, Deputy Director OFFICE OF THE SECRETARY JARED J. ENZLER, Associate Director THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director WILLIAM W. WILES, Secretary BARBARA R. LOWREY, Associate Secretary ELEANOR J. STOCKWELL, Associate Director JAMES MCAFEE, Associate Secretary MARTHA BETHEA, Deputy Associate Director PETER A. TINSLEY, Deputy Associate Director MARK N. GREENE, Assistant Director DIVISION OF CONSUMER MYRON L. KWAST, Assistant Director AND COMMUNITY AFFAIRS SUSAN J. LEPPER, Assistant Director MARTHA S. SCANLON, Assistant Director DAVID J. STOCKTON, Assistant Director GRIFFITH L. GARWOOD, Director JOYCE K. ZICKLER, Assistant Director GLENN E. LONEY, Assistant Director LEVON H. GARABEDIAN, Assistant Director ELLEN MALAND, Assistant Director (Administration) DOLORES S. SMITH, Assistant Director DIVISION OF MONETARY AFFAIRS DIVISION OF BANKING SUPERVISION AND REGULATION DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director WILLIAM TAYLOR, Staff Director BRIAN F. MADIGAN, Assistant Director DON E. KLINE, Associate Director RICHARD D. PORTER, Assistant Director FREDERICK M. STRUBLE, Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM A. RYBACK, Deputy Associate Director STEPHEN C. SCHEMERING, Deputy Associate Director RICHARD SPILLENKOTHEN, Deputy Associate Director OFFICE OF THE INSPECTOR GENERAL HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director BRENT L. BOWEN, Inspector General ROGER T. COLE, 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 FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff H. ROBERT HELLER JOHN P. LA WARE 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 HUMAN RESOURCES MANAGEMENT CLYDE H. FARNSWORTH, JR., Director DAVID L. SHANNON, Director ELLIOTT C. MCENTEE, Associate Director JOHN R. WEIS, Associate Director DAVID L. ROBINSON, Associate Director ANTHONY V. DIGIOIA, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director JOSEPH H. HAYES, JR., Assistant Director CHARLES W. BENNETT, Assistant Director FRED HOROWITZ, 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 FLORENCE M. YOUNG, Adviser GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISON OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director OFFICE OF THE EXECUTIVE DIRECTOR FOR INFORMATION RESOURCES MANAGEMENT ALLEN E. BEUTEL, Executive Director STEPHEN R. MALPHRUS, Associate Director DIVISION OF HARDWARE AND SOFTWARE SYSTEMS BRUCE M. BEARDSLEY,Director THOMAS C. JUDD, Assistant Director ELIZABETH B. RIGGS, Assistant Director ROBERT J. ZEMEL, Assistant Director DIVISION OF APPLICATIONS DEVELOPMENT AND STATISTICAL SERVICES WILLIAM R. JONES, Director DAY W. RADEBAUGH, Assistant Director RICHARD C. STEVENS, Assistant Director PATRICIA A. WELCH, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin • October 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. ROBERT P. BLACK W. LEE HOSKINS JOHN P. LA WARE ROBERT P. FORRESTAL MANUEL H. JOHNSON ROBERT T. PARRY MARTHA R. SEGER ALTERNATE MEMBERS ROGER GUFFEY THOMAS C. MELZER JAMES H. OLTMAN SILAS KEEHN FRANK E. MORRIS STAFF DONALD L. KOHN, Secretary and Economist JOHN M. DAVIS, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary RICHARD G. DAVIS, Associate Economist MICHAEL BRADFIELD, General Counsel DAVID E. LINDSEY, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist LAWRENCE SLIFMAN, Associate Economist JOHN H. BEEBE, Associate Economist SHEILA L. TSCHINKEL, Associate Economist J. ALFRED BROADDUS, JR., 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 CHARLES T. FISHER, III, President BENNETT A. BROWN, Vice President 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 T. C. FROST, 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

A73 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, Arcadia, 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

A74 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SER- PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. VICES, MS-138, Board of Governors of the Federal Reserve $13.50 each. System, Washington, D.C. 20551 or telephone (202) 452- FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; up- 3244. When a charge is indicated, payment should accom- dated at least monthly. (Requests must be prepaid.) pany request and be made payable to the Board of Governors Consumer and Community Affairs Handbook. $75.00 per of the Federal Reserve System, and forwarded to Publica- year. tions Services, Board of Governors of the Federal Reserve Monetary Policy and Reserve Requirements Handbook. System, P.O. Box 27531, Richmond, VA 23261-7531. Pay- $75.00 per year. ment from foreign residents should be drawn on a U.S. bank. Securities Credit Transactions Handbook. $75.00 per year. The Payment System Handbook. $75.00 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- Federal Reserve Regulatory Service. 3 vols. (Contains all TIONS. 1984. 120 pp. three Handbooks plus substantial additional material.) ANNUAL REPORT. $200.00 per year. ANNUAL REPORT: BUDGET REVIEW, 1986-87. Rates for subscribers outside the United States are as FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or follows and include additional air mail costs: $2.00 each in the United States, its possessions, Canada, Federal Reserve Regulatory Service, $250.00 per year. and Mexico; 10 or more of same issue to one address, Each Handbook, $90.00 per year. $18.00 per year or $1.75 each. Elsewhere, $24.00 per THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A year or $2.50 each. MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint WELCOME TO THE FEDERAL RESERVE. of Part I only) 1976. 682 pp. $5.00. PROCESSING AN APPLICATION THROUGH THE FEDERAL RE- ANNUAL STATISTICAL DIGEST SERVE SYSTEM. August 1985. 30 pp. 1974-78. 1980. 305 pp. $10.00 per copy. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1981. 1982. 239 pp. $ 6.50 per copy. 440 pp. $9.00 each. 1982. 1983. 266 pp. $ 7.50 per copy. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1983. 1984. 264 pp. $11.50 per copy. December 1986. 264 pp. $10.00 each. 1984. 1985. 254 pp. $12.50 per copy. 1985. 1986. 231 pp. $15.00 per copy. 1986. 1987. 288 pp. $15.00 per copy. HISTORICAL CHART BOOK. Issued annually in Sept. $1.25 each in the United States, its possessions, Canada, and Mexico; 10 or more to one address, $1.00 each. Elsewhere, $1.50 each. CONSUMER EDUCATION PAMPHLETS SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- RIES OF CHARTS. Weekly. $24.00 per year or $.60 each in Short pamphlets suitable for classroom use. Multiple copies the United States, its possessions, Canada, and Mexico; are available without charge. 10 or more of same issue to one address, $22.50 per year or $.55 each. Elsewhere, $30.00 per year or $.70 each. Consumer Handbook on Adjustable Rate Mortgages THE FEDERAL RESERVE ACT, and other statutory provisions Consumer Handbook to Credit Protection Laws affecting the Federal Reserve System, as amended Fair Credit Billing through April 20, 1983, with Supplements covering Federal Reserve Glossary amendments through August 1987. 576 pp. $7.00. A Guide to Business Credit and the Equal Credit Opportunity REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- Act ERAL RESERVE SYSTEM. Guide to Federal Reserve Regulations ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— How to File A Consumer Credit Complaint Regulation Z) Vol. I (Regular Transactions). 1969. 100 If You Borrow To Buy Stock pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each If You Use A Credit Card volume $2.25; 10 or more of same volume to one Series on the Structure of the Federal Reserve System address, $2.00 each. The Board of Governors of the Federal Reserve System FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY The Federal Open Market Committee UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one Federal Reserve Bank Board of Directors address, $1.50 each. Federal Reserve Banks THE BANK HOLDING COMPANY MOVEMENT TO 1978: A Organization and Advisory Committees COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to A Consumer's Guide to Mortgage Lock-Ins one address, $2.25 each. A Consumer's Guide to Mortgage Closings INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; A Consumer's Guide to Mortgage Refinancing 10 or more to one address, $1.25 each. Making Deposits: When Will Your Money Be Available? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 PAMPHLETS FOR FINANCIAL INSTITUTIONS GATION, by Bonnie E. Loopesko. November 1983. Out Short pamphlets on regulatory compliance, primarily suit- of print. able for banks, bank holding companies and creditors. 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET INTERVENTION: A REVIEW OF THE LITERATURE, by Limit of 50 copies Ralph W. Tryon. October 1983. 14 pp. Out of print. 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET The Board of Directors' Opportunities in Community Rein- INTERVENTION: APPLICATIONS TO CANADA, GERMANY, vestment AND JAPAN, by Deborah J. Danker, Richard A. Haas, The Board of Directors' Role in Consumer Law Compliance Dale W. Henderson, Steven A. Symansky, and Ralph Combined Construction/Permanent Loan Disclosure and W. Tryon. April 1985. 27 pp. Out of print. Regulation Z 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECON- Community Development Corporations and the Federal Re- OMY, by Darrell Cohen and Peter B. Clark. January serve 1984. 16 pp. Out of print. Construction Loan Disclosures and Regulation Z 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF Finance Charges Under Regulation Z FINANCIAL DEREGULATION, INTERSTATE BANKING, How to Determine the Credit Needs of Your Community AND FINANCIAL SUPERMARKETS, by Stephen A. Regulation Z: The Right of Rescission Rhoades. February 1984. Out of print. The Right to Financial Privacy Act 138. ANTITRUST LAWS, JUSTICE DEPARTMENT GUIDELINES, Signature Rules in Community Property States: Regulation B AND THE LIMITS OF CONCENTRATION IN LOCAL BANK- Signature Rules: Regulation B ING MARKETS, by James Burke. June 1984. 14 pp. Out Timing Requirements for Adverse Action Notices: Regula- of print. tion B 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN What An Adverse Action Notice Must Contain: Regulation B THE UNITED STATES, by Thomas D. Simpson and Understanding Prepaid Finance Charges: Regulation Z Patrick M. Parkinson. August 1984. 20 pp. 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF THE LITERATURE, by John D. Wolken. November 1984. STAFF STUDIES: Summaries Only Printed in the 38 pp. Out of print. Bulletin 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAY- Studies and papers on economic and financial subjects that MENT COSTS, by William Dudley. November 1984. are of general interest. Requests to obtain single copies of 15 pp. Out of print. the full text or to be added to the mailing list for the series 142. MERGERS AND ACQUISITIONS BY COMMERCIAL BANKS, may be sent to Publications Services. 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 114. MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE EVIDENCE, by Frederick J. Schroeder. April 1985. 23 ON COMPETITION AND PERFORMANCE IN BANKING pp. Out of print. MARKETS, by Timothy J. Curry and John T. Rose. Jan. 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- 1982. 9 pp. SUMER CREDIT REGULATIONS: THE TRUTH IN LENDING 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- AND EQUAL CREDIT OPPORTUNITY LAWS, by Gregory KET INTERVENTION, by Donald B. Adams and Dale W. E. Elliehausen and Robert D. Kurtz. May 1985. 10 pp. Henderson. August 1983. 5 pp. Out of print. 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME AND 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- THEIR IMPACT ON CONSUMERS, by Glenn B. Canner and VENTION: JANUARY-MARCH 1975, BY Margaret L. Robert D. Kurtz. August 1985. 31 pp. Out of print. Greene. August 1984. 16 pp. Out of print. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- Thomas F. Brady. November 1985. 25 pp. garet L. Greene. October 1984. 40 pp. Out of print. 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- DEXES OF THE MONETARY AGGREGATES, by Helen T. VENTION: OCTOBER I98O-OCTOBER 1981, by Margaret Farr and Deborah Johnson. December 1985. 42 pp. L. Greene. August 1984. 36 pp. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTER- ECONOMIC RECOVERY TAX ACT: SOME SIMULATION NATIONAL TRADE AND OTHER ECONOMIC VARIABLES: RESULTS, by Flint Brayton and Peter B. Clark. Decem- A REVIEW OF THE LITERATURE, by Victoria S. Farrell ber 1985. 17 pp. with Dean A. DeRosa and T. Ashby McCown. January 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN 1984. Out of print. BANKING BEFORE AND AFTER ACQUISITION, by Stephen 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- A. Rhoades. April 1986. 32 pp. DEUTSCHE MARK INTERVENTION, by Laurence R. Ja- 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: cobson. October 1983. 8 pp. A REEXAMINATION AND AN APPLICATION, by John T. 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN Rose and John D. Wolken. May 1986. 13 pp. EXCHANGE RATES AND INTERVENTION: A REVIEW OF 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRIC- THE TECHNIQUES AND LITERATURE, by Kenneth Ro- ING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, goff. October 1983. 15 pp. Alice P. White, Paul F. O'Brien, and Mary M. 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVEN- McLaughlin. January 1987. 30 pp. TION, AND INTEREST RATES: AN EMPIRICAL INVESTI- 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Bank Lending to Developing Countries. 10/84. April 1987. 18 pp. Survey of Consumer Finances, 1983: A Second Report. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and 12/84. Alice P. White. September 1987. 14 pp. Union Settlements and Aggregate Wage Behavior in the 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF PRO- 1980s. 12/84. POSED CEILINGS ON CREDIT CARD INTEREST RATES, by The Thrift Industry in Transition. 3/85. Glenn B. Canner and James T. Fergus. October 1987. A Revision of the Index of Industrial Production. 7/85. 26 pp. Financial Innovation and Deregulation in Foreign Industrial 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. Countries. 10/85. Warshawsky. November 1987. 25 pp. Recent Developments in the Bankers Acceptance Market. 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANK- 1/86. ING MARKETS, by James V. Houpt. May 1988. 47 pp. The Use of Cash and Transaction Accounts by American Families. 2/86. Financial Characteristics of High-Income Families. 3/86. REPRINTS OF BULLETIN ARTICLES Prices, Profit Margins, and Exchange Rates. 6/86. Agricultural Banks under Stress. 7/86. Most of the articles reprinted do not exceed 12 pages. Foreign Lending by Banks: A Guide to International and U.S. Statistics. 10/86. Limit of 10 copies Recent Developments in Corporate Finance. 11/86. Foreign Experience with Targets for Money Growth. 10/83. Measuring the Foreign-Exchange Value of the Dollar. 6/87. Intervention in Foreign Exchange Markets: A Summary of Changes in Consumer Installment Debt: Evidence from the Ten Staff Studies. 11/83. 1983 and 1986 Surveys of Consumer Finances. 10/87. A Financial Perspective on Agriculture. 1/84. U.S. International Transactions in 1987. 5/88. Survey of Consumer Finances, 1983. 9/84. Home Equity Lines of Credit. 6/88. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Index to Statistical Tables References are to pages A3-A68 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (,See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 8 Financial institutions, 26 Reserves and related items, 3, 4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Nonfinancial corporations, 36 Banks, by classes, 3, 18-20, 21 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 40, 41 Turnover, 15 Production, 47, 48 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) BANKERS acceptances, 9, 23, 24 Dividends, corporate, 35 Bankers balances, 18-20. (See also Foreigners) Bonds (See also U.S. government securities) EMPLOYMENT, 45 New issues, 34 Eurodollars, 24 Rates, 24 Branch banks, 21, 55 FARM mortgage loans, 39 Business activity, nonfinancial, 44 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business expenditures on new plant and equipment, 36 Federal credit agencies, 33 Business loans (See Commercial and industrial loans) Federal finance Debt subject to statutory limitation, and types and ownership of gross debt, 30 CAPACITY utilization, 46 Receipts and outlays, 28, 29 Capital accounts Treasury financing of surplus, or deficit, 28 Banks, by classes, 18 Treasury operating balance, 28 Federal Reserve Banks, 10 Federal Financing Bank, 28, 33 Central banks, discount rates, 67 Federal funds, 6, 17, 19, 20, 21, 24, 28 Certificates of deposit, 24 Federal Home Loan Banks, 33 Commercial and industrial loans Federal Home Loan Mortgage Corporation, 33, 38, 39 Commercial banks, 16, 19 Federal Housing Administration, 33, 38, 39 Weekly reporting banks, 19-21 Federal Land Banks, 39 Commercial banks Federal National Mortgage Association, 33, 38, 39 Assets and liabilities, 18-20 Federal Reserve Banks Commercial and industrial loans, 16, 18, 19, 20, 21 Condition statement, 10 Consumer loans held, by type, and terms, 40, 41 Discount rates (See Interest rates) Loans sold outright, 19 U.S. government securities held, 4, 10, 11, 30 Nondeposit funds, 17 Federal Reserve credit, 4, 5, 10, 11 Real estate mortgages held, by holder and property, 39 Federal Reserve notes, 10 Time and savings deposits, 3 Federal Savings and Loan Insurance Corporation insured Commercial paper, 23, 24, 37 institutions, 26 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 33 Construction, 44, 49 Finance companies Consumer installment credit, 40, 41 Assets and liabilities, 37 Consumer prices, 44, 50 Business credit, 37 Consumption expenditures, 51, 52 Loans, 40, 41 Corporations Paper, 23, 24 Nonfinancial, assets and liabilities, 36 Financial institutions Profits and their distribution, 35 Loans to, 19, 20, 21 Security issues, 34, 65 Selected assets and liabilities, 26 Cost of living (See Consumer prices) Float, 4 Credit unions, 26, 40. (See also Thrift institutions) Flow of funds, 42, 43 Currency and coin, 18 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 13 agencies, 21 Customer credit, stock market, 25 Foreign currency operations, 10 Foreign deposits in U.S. banks, 4, 10, 19, 20 Foreign exchange rates, 68 DEBITS to deposit accounts, 15 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 18-21 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 GOLD Real estate loans—Continued Certificate account, 10 Financial institutions, 26 Stock, 4, 54 Terms, yields, and activity, 38 Government National Mortgage Association, 33, 38, 39 Type of holder and property mortgaged, 39 Gross national product, 51 Repurchase agreements, 6, 17, 19, 20, 21 Reserve requirements, 8 HOUSING, new and existing units, 49 Reserves Commercial banks, 18 INCOME, personal and national, 44, 51, 52 Depository institutions, 3, 4, 5, 12 Industrial production, 44, 47 Federal Reserve Banks, 10 Installment loans, 40, 41 U.S. reserve assets, 54 Insurance companies, 26, 30, 39 Residential mortgage loans, 38 Interest rates Retail credit and retail sales, 40, 41, 44 Bonds, 24 Consumer installment credit, 41 Federal Reserve Banks, 7 SAVING Foreign central banks and foreign countries, 67 Flow of funds, 42, 43 Money and capital markets, 24 National income accounts, 51 Mortgages, 38 Savings and loan associations, 26, 39, 40, 42. (See also Prime rate, 23 Thrift institutions) International capital transactions of United States, 53-67 Savings banks, 26, 39, 40 International organizations, 57, 58, 60, 63, 64 Savings deposits (See Time and savings deposits) Inventories, 51 Securities (See also specific types) Investment companies, issues and assets, 35 Federal and federally sponsored credit agencies, 33 Investments (See also specific types) Foreign transactions, 65 Banks, by classes, 18, 19, 20, 21, 26 New issues, 34 Commercial banks, 3, 16, 18-20, 39 Prices, 25 Federal Reserve Banks, 10, 11 Special drawing rights, 4, 10, 53, 54 Financial institutions, 26, 39 State and local governments Deposits, 19, 20 LABOR force, 45 Holdings of U.S. government securities, 30 Life insurance companies (See Insurance companies) New security issues, 34 Loans (See also specific types) Ownership of securities issued by, 19, 20, 26 Banks, by classes, 18—20 Rates on securities, 24 Commercial banks, 3, 16, 18-20 Stock market, selected statistics, 25 Federal Reserve Banks, 4, 5, 7, 10, 11 Stocks (See also Securities) Financial institutions, 26, 39 New issues, 34 Insured or guaranteed by United States, 38, 39 Prices, 25 MANUFACTURING Student Loan Marketing Association, 33 Capacity utilization, 46 Production, 46, 48 TAX receipts, federal, 29 Margin requirements, 25 Thrift institutions, 3. (See also Credit unions and Savings Member banks (See also Depository institutions) and loan associations) Federal funds and repurchase agreements, 6 Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 Reserve requirements, 8 Trade, foreign, 54 Mining production, 48 Treasury cash, Treasury currency, 4 Mobile homes shipped, 49 Treasury deposits, 4, 10, 28 Monetary and credit aggregates, 3, 12 Treasury operating balance, 28 Money and capital market rates, 24 UNEMPLOYMENT, 45 Money stock measures and components, 3, 13 U.S. government balances Mortgages (See Real estate loans) Commercial bank holdings, 18, 19, 20 Mutual funds, 35 Treasury deposits at Reserve Banks, 4, 10, 28 Mutual savings banks (See Thrift institutions) U.S. government securities Bank holdings, 18-20, 21, 30 NATIONAL defense outlays, 29 Dealer transactions, positions, and financing, 32 National income, 51 Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, OPEN market transactions, 9 30, 66 Open market transactions, 9 PERSONAL income, 52 Outstanding, by type and holder, 26, 30 Prices Rates, 24 Consumer and producer, 44, 50 U.S. international transactions, 53-67 Stock market, 25 Utilities, production, 48 Prime rate, 23 Producer prices, 44, 50 VETERANS Administration, 38, 39 Production, 44, 47 Profits, corporate, 35 WEEKLY reporting banks, 19-21 Wholesale (producer) prices, 44, 50 REAL estate loans Banks, by classes, 16, 19, 20, 39 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 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 James H. Oltman 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 M. Merriman Jimmie R. Monhollon Baltimore 21203 Thomas R. Shelton Robert D. McTeer, Jr.1 Charlotte 28230 G. Alex Bernhardt Albert D. Tinkelenberg1 Culpeper Communications John G. Stoides 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 James Curry III Nashville 37203 Condon S. Bush Donald E. Nelson New Orleans 70161 Sharon A. Perlis Robert J. Musso 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 Lois H. Gray Howard Wells Memphis 38101 Sandra B. Sanderson Paul I. Black, Jr. MINNEAPOLIS 55480 Michael W. Wright Gary H. Stern John A. Rollwagen Thomas E. Gainor Helena 59601 Marcia S. Anderson 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, III1 San Antonio 78295 Robert F. McDermott Thomas H. Robertson SAN FRANCISCO 94120 Robert F. Erburu Robert T. Parry Carolyn S. Chambers Carl E. Powell John F. Hoover1 Los Angeles 90051 Richard C. Seaver Thomas C. Warren2 Portland 97208 Paul E. Bragdon Angelo S. Carella1 Salt Lake City 84125 Don M. Wheeler E. Ronald Liggett1 Seattle 98124 Carol 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. 1. Senior Vice President. 2. Executive Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories April 1984 \i / i / ALASKA i / I I i © \ / YYP * •AN 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