Federal Reserve Bulletin, 1988-11

VOLUME 74 • NUMBER 11 • NOVEMBER 1988 FEDERAL RESERVE BULLETIN v 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 PeterG. 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 717 PENSION PLANS: FUNDING, ASSETS, guaranty insurance, before the Subcommit- AND REGULATORY ENVIRONMENT tee on Commerce, Consumer Protection, and Competitiveness of the House Commit- Large increases in the market value of astee on Energy and Commerce, September sets, combined with healthy investment in- 9, 1988. come, have improved the financial condition of pension plans in the 1980s. Assets 746 Alan Greenspan, Chairman, Board of Govnow exceed liabilities in most plans sponernors, gives the Board's views on the sored by private employers. Corporate conimplications for competition and concentratributions to pension plans fell dramatically tion of the Depository Institutions Act of in the 1980s, partly because of regulations 1988, and says that the Board generally that limit contributions to fully funded supports the provisions of the bill aimed at plans; this reduction helped lower labor maintaining competition and regards the expenses and improve corporate profits. reform of the Glass-Steagall Act and the implementation of a new framework allow- 731 INDUSTRIAL PRODUCTION ing the affiliation of banking organizations and securities firms as having the highest Industrial production increased an estipriority, before the Subcommittee on Momated 0.2 percent in August. nopolies and Commercial Law of the House Committee on the Judiciary, September 14, 733 STATEMENTS TO CONGRESS 1988. Manuel H. Johnson, Vice Chairman, Board of Governors, discusses the various consumer provisions of Title IV of H.R. 5094, 752 ANNOUNCEMENTS and places special emphasis on the Commu- Meeting of Consumer Advisory Council. nity Reinvestment Act of 1977, including Amendments to Regulation Y. how it has been implemented and how the Board can improve its administration, be- Proposed revisions to official staff commenfore the Senate Committee on Banking, tary on Regulation Z. Housing, and Urban Affairs, September 8, New pamphlet published on schedule of 1988. availability of funds under the Expedited 743 H. Robert Heller, Member, Board of Gov- Funds Availability Act. ernors, presents the views of the Board on Changes in Board staff. the insurance provisions of H.R. 5094, the Depository Institutions Act of 1988, and Admission of two state banks to membersays that the Board recommended deletion ship in the Federal Reserve System. of the insurance provisions because they were unnecessarily restrictive of competi- 754 RECORD OF POLICY ACTIONS OF THE tion to the detriment of consumers and that FEDERAL OPEN MARKET COMMITTEE the Board maintains that view, except that it supports the bill's intent to authorize At its meeting on August 16, 1988, the bank holding companies to offer financial Committee agreed on a directive that called Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

for maintaining the current degree of pres- AI FINANCIAL AND BUSINESS STATISTICS sure on reserve positions. The members These tables reflect data available as of decided that somewhat greater reserve re- September 28, 1988. straint would be acceptable, or slightly lesser reserve restraint might be acceptable, A3 Domestic Financial Statistics over the intermeeting period depending on A44 Domestic Nonfinancial Statistics indications of inflationary pressures, the A53 International Statistics strength of the business expansion, the behavior of the monetary aggregates, and A69 GUIDE TO TABULAR PRESENTATION, developments in foreign exchange and STATISTICAL RELEASES, AND SPECIAL domestic financial markets. The reserve TABLES conditions contemplated by the Committee were expected to be consistent with growth A70 BOARD OF GOVERNORS AND STAFF of M2 and M3 at annual rates of around 3!/2 percent and 5'/2 percent respectively over A72 FEDERAL OPEN MARKET COMMITTEE the three-month period from June through AND STAFF; ADVISORY COUNCILS September. The intermeeting range for the federal funds rate was raised by 1 percent- A74 FEDERAL RESERVE BOARD age point to a range of 6 to 10 percent. PUBLICATIONS 760 LEGAL DEVELOPMENTS ALL INDEX TO STATISTICAL TABLES Various bank holding company, bank ser- A79 FEDERAL RESERVE BANKS, vice corporation, and bank merger orders; BRANCHES, AND OFFICES and pending cases. A80 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Pension Plans: Funding, Assets, and Regulatory Environment Mark J. Warshawsky, of the Board's Division of market. In particular, block trading off the floors Research and Statistics, prepared this article. of the stock exchanges and the development and Paula DeCubellis and Scott M. Hochgesang growth of stock-index futures and options have provided research assistance. Notes appear at been supported by fund managers seeking the end of the article. cheaper ways to enact various investment strategies. The pace of stock trading also has picked Pension plans play an increasingly important role up partly as a result of increased holdings by in the U.S. economy. They are a major factor in pension funds. the financial well-being of households, a signifi- This article describes the basic characteristics cant expense for their sponsors, and among the of pension plans, with particular emphasis on the most active participants in the market for debt regulatory environment. The trend in employer and equity securities. The government is in- contributions in the 1980s is examined and linked volved heavily in pensions through the regulation to the financial condition of pension plans. The of private plans, the insurance of private retire- article then reviews the investment strategies of ment benefits, and the direct provision of pension pension funds and concludes with a brief discusplans for government workers. sion of the federal insurance program for private Large increases in the market value of assets, pension plans. combined with healthy investment income, have improved the financial condition of pension plans BASIC CHARACTERISTICS in the 1980s. Assets now exceed liabilities in OF PENSION PLANS most plans sponsored by private employers. Corporate contributions to pension plans fell dramat- Employers have several motivations to establish ically in the 1980s, partly because of regulations pension plans and have used a variety of plan that limit contributions to fully funded plans; this types to meet their needs. Whatever their type, reduction helped lower labor expenses and implans sponsored by employers in the private prove corporate profits. In some manufacturing sector must adhere to certain federal regulations. industries, however, pension plans remain severely underfunded, and a few large terminations Advantages to Employers have bloated the deficit of the Pension Benefit and to Workers Guaranty Corporation, the federal agency that insures retirement benefits. Contributions by lo- Employer-sponsored pension plans offer several cal, state, and federal governments for employee advantages to employers and their workers. For retirement funds remain steady because assets in example, they offer an advantage to an employer these funds still fall below liabilities. concerned about the welfare of its work force: by The very rapid growth in pension assets, com- making regular contributions to a retirement fund bined with strategies that include investment in on behalf of, or together with, workers, the equity securities, has led to an increase in the employer can provide its workers with at least a percentage of all equity securities outstanding minimum level of retirement income, even for held by pension funds. The larger presence of those workers who fail to make any financial pension funds and other institutional investors, arrangements for their retirement years. A furin turn, has changed the character of the equities ther advantage to employers is that, by careful Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • November 1988 design of the formula whereby benefits are ac- defined-benefit or defined-contribution. Under crued, the sponsor can discourage expensive defined-benefit plans, retirement benefits are deturnover of its work force, especially at ages termined by formula and are generally payable as when employees are most productive. a life annuity. Contributions are adjusted in light An advantage to workers is that, because of of investment experience, demographics, and economies of scale in the administration and other changing data to fund adequately the fixed investment of a sizable accumulation of funds, liability of the plan. Contributions to definedgroup pension plans can offer, for a given level of benefit plans are generally made only by the risk, net rates of return higher than those of most employer. The typical private defined-benefit savings instruments available to individuals. In plan credits the employee with \xh percent of a addition, for plans that require participants to compensation base for each year of service. In a receive retirement benefits in the form of a life "final-average" plan, the compensation base is annuity, the self-selection problem that plagues the average salary earned during a specified the individual annuity market is substantially period (generally, five years) immediately prereduced. The self-selection problem is that indi- ceding retirement. For most plans, the earliest viduals who have a greater-than-average life ex- age at which a worker can retire with full benefits pectancy are more likely to purchase annuities, is 62. Hence, in such a plan, a 62 year-old worker thereby leading life insurance companies to retiring with 30 years of service will typically charge a high premium for individual annuities.1 receive an annual retirement payment equal to 45 In a group pension annuity, on the other hand, all percent of the average of the worker's final five workers, regardless of their life expectancy, years of salary. In some large corporate plans must participate equally in the plan. Hence, a and in most state and local government plans, pension plan gives a worker with average life retirees also receive partial cost-of-living adjustexpectancy more retirement income per dollar ments (COLAs) to their benefits, while in federal invested than does an individual life annuity from government plans, retirees receive complete an insurance company. COLAs. These economic advantages are further en- In defined-contribution plans, the contribution hanced for both employers and workers by tax rate is predetermined, and retirement benefits, advantages enacted to encourage employers to generally payable as a lump sum, depend on establish pension plans for workers. Contribu- investment performance. The largest definedtions by employers to a fund for a qualified contribution plan covers college and university pension plan are tax-deductible expenses for teachers; the plan is the main source of retireemployers, like wage and salary compensation, ment income from a pension for these workers. and they are not counted as taxable income to The more typical defined-contribution plan, howworkers until the workers receive their retire- ever, is a supplemental thrift plan that provides a ment benefits. Investment earnings on assets 50 percent employer match of employee contriaccumulate within the pension fund free from butions of up to 6 percent of current salary. corporate and personal taxes. Under a progres- Other types of defined-contribution plans include sive tax system, deferred income plans such as profit-sharing and employee stock ownership pensions are particularly advantageous to highly plans. compensated workers.2 By smoothing income Older workers generally prefer a defined-benflows over the life cycle, a deferred income plan efit plan because the level of retirement benefits lowers the marginal tax rate that will apply to is fixed. In contrast, the worker bears the risk of current and future deferred income. poor investment performance in a defined-contribution plan. Defined-benefit plans, however, Types of Plans can be costly for their sponsors because the plan sponsor bears the risk of poor investment perfor- Pension plans fall into several categories accord- mance, and the level of retirement benefits is ing to their payment system and sponsorship. In usually more generous than in defined-contriterms of payment system, pensions are either bution plans. There are many more defined- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Pension Plans: Funding, Assets, and Regulatory Environment 719 1. Number of private pension plans, number of participants, and assets, by type of plan, 1985' All plans Single-employer plans Multiemployer plans PPllaann Participants Assets Participants Assets Participants Assets Number (in (millions of Number (in (millions of Number (in (millions of thousands) dollars) thousands) dollars) thousands) dollars) All 805,405 74,665 1,185,380 802,339 65,414 1,070,325 3,066 9,251 115,055 Defined-benefit 224,474 39,692 786,489 222,213 31,436 677,348 2,261 8,256 109,141 Defined-contribution 580,931 34,973 398,891 580,126 33,978 392,976 805 995 5,915 1. The number of participants is greater than the number of workers SOURCE. Arnold J. Hoffman, "Appendix: Historical Pension Stacovered because participants are counted according to the number of tistics," in John A. Turner and Daniel J. Beller, eds.. Trends in plans to which they belong. Participants also include retirees and Pensions, 1988 (U.S. Government Printing Office, forthcoming), table beneficiaries. Al. contribution than defined-benefit plans, but de- tions and reporting requirements are determined fined-benefit plans cover more participants and by the relevant legislative body of the plan sponhave more assets (table 1). sor. Some benefit provisions of state and local In terms of sponsorship, plans are either pri- government plans, however, are subject to revate or governmental. Private plans are either strictions contained in the federal tax code. single-employer or multiemployer plans. Most Moreover, many state and local government workers in private plans are covered by single- plans and all plans for federal civilian workers employer plans, in which workers who quit their hired after 1983 have accepted ERISA-like rejobs will not continue to accrue benefits with quirements. However, other government plans, their former employers. If these workers are not especially the plans for the military and for yet vested, they will lose any accrued benefits. In federal civilian workers hired before 1984, differ a multiemployer plan, however, plan participants considerably from private plans in several imporwho quit and start working for another employer tant aspects. In these non-ERISA-like federal who is a member of the group sponsoring the plans, a worker may retire with full benefits after pension plan will continue to accrue benefits. 20 years of service (for military personnel) or Multiemployer plans, most of which are defined- after age 55 (for civilian workers). benefit plans, are found mainly in unionized industries, such as mining, where it is common for workers to switch jobs among employers within the industry. 2. Number of participants in pension plans, by type About one-fifth of all pension participants are of sponsor, selected years, 1950-85' covered by plans sponsored by local, state, or Thousands federal governments and agencies for their em- State and ployees (table 2). Although some of the charac- Year Private Railroad c F iv ed il e ia ra n l 2 local governments teristics of private and government plans are similar, their regulatory frameworks differ signif- 1950 10,255 1,881 1,872 2,894 icantly. All private plans (except those for rail- 1955 16,395 1,876 2,333 3,927 1960 23,015 1,654 2,703 5,160 road workers and employees of some tax-exempt 1965 28,100 1,661 3,114 6,780 1970 36,100 1,633 3,624 8,591 organizations) are governed by the Employee 1975 44,511 1,564 4,171 11,230 Retirement Income Security Act of 1974 1980 57,903 1,533 4,460 13,950 1985 74,665 1,310 4,887 15,235 (ERISA), which regulates the funding contributions of defined-benefit plans, requires that plans 1. See table I, note 1. Includes retired workers. 2. Does not include military personnel. In 1985, 1,479,940 persons meet certain fairness conditions in order to qualreceived retirement, disability, and survivor benefits based on military ify for tax preferences, and requires the reporting service; 2,192,268 persons on active duty in that year could qualify for benefits from military pension plans. of extensive information about funding levels and SOURCE. American Council of Life Insurance, Pension Facts 1987 asset management. All government plans are (ACLI, 1987), p. 4, and Richard A. Ippolito and Walter W. Kolodrubetz, eds.. The Handbook of Pension Statistics, 1985 (Chicago: excluded from ERISA; their funding contribu- Commerce Clearing House, 1986). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • November 1988 The Regulatory Environment tax on assets in excess of plan liability that revert for Private Plans to a private plan sponsor when a defined-benefit plan is terminated. For a plan to qualify for preferential tax status, Before passage of ERISA, private sponsors of ERISA requires it to meet a minimum level of defined-benefit pension plans were not required fairness in assigning retirement benefits among to set aside funds for the payment of benefits in employees. ERISA enforces fairness by mandat- advance of the date on which the benefits became ing minimum standards of participation, cover- payable. Sponsors used pay-as-you-go and other age, and vesting for qualified plans. All eligible lax approaches to funding. Thus, in the absence full-time employees over the age of 21 who have of a segregated and adequate fund devoted to the more than one year of service with the employer full payment of accrued benefits and adminismust be allowed to participate in the plan. To tered by a disinterested party, participants deprevent discrimination in favor of highly com- pended on their employer's future ability to pensated employees, say, in the form of a retire- honor its pension obligations. The enactment of ment plan especially designed for management, ERISA in 1974 was a response to cases of ERISA requires that a broad cross-section of financial malfeasance and bankruptcy-induced employees be eligible for coverage in any plan terminations of unfunded pension plans in which sponsored for a particular line of business by an participants lost accrued pension benefits. employer. ERISA also states that, after a specific ERISA mandated minimum funding requireperiod, a participant's right to his or her accrued ments, established the Pension Benefit Guaranty benefits is nonforfeitable, that is, vested. The law Corporation (PBGC) to insure vested pension allows for complete vesting after five years of benefits, and required trustees of pension plans service (cliff vesting), or for an increasing per- to manage assets solely in the interest of particcentage of vesting beginning three years after the ipants and beneficiaries. Premiums paid by plan date of plan entry and ending within seven years sponsors finance the PBGC. The minimum fundof that date (gradual vesting). ing requirements are intended to secure benefits, Although the federal tax code clearly encour- to protect the PBGC against abuse, and to instill ages pension plans, it also has imposed limits on a sense of fiscal responsibility and realism in retirement benefits and on funding contributions private plan sponsors. to reduce the loss of tax revenues. Dollar and percentage limits constrain the amount of taxdeferred compensation that can be contributed to CONTRIBUTIONS TO PENSION FUNDS defined-contribution plans. For defined-benefit plans, sponsors can make tax-free contributions Contributions to pension funds are determined to the pension fund only if the full-funding limi- by a combination of plan provisions, legal retation, defined in terms of the assets and liability quirements, and the discretion of the plan sponof the plan, has not been reached. The dollar size sor. For most defined-contribution plans, contriof the annual retirement benefit that can be paid butions are a percentage of salary, as stated in by a defined-benefit plan to a plan participant is the plan provisions. For private defined-benefit limited. Dollar limits also apply to the compen- plans, contributions must at least equal ERISA's sation base from which retirement benefits can minimum funding requirement and cannot be be computed. To ensure that tax-favored pen- deducted from corporate taxes when contribusions are used for retirement and not for tax tions exceed the maximum funding limitation. avoidance, the law requires that withdrawals Furthermore, financial accounting standards inbefore retirement, death, or disability be se- fluence the funding behavior of corporate plans verely restricted and penalized. Loans to partic- by exposing, in the annual financial statement, ipants from a defined-contribution plan also are the size of pension assets relative to reported restricted. And, to discourage employers from pension liabilities. Contributions to defined-benusing pensions as tax-favored corporate saving, efit plans sponsored by governments are generthe Tax Reform Act of 1986 imposed a penalty ally governed by formulas established by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Pension Plans: Funding, Assets, and Regulatory Environment 721 legislative body of the sponsor, but at a minimum recently, standards for reporting on pensions in they must cover current benefits to retirees if the financial statements have been tightened by the plan is not fully funded. Contributions also are Financial Accounting Standards Board (FASB). influenced by pressures from employee unions In 1980, FASB issued Statement 36, requiring and from investors in securities issued by the sponsors to report pension assets and liabilities plan sponsor. in a footnote to their annual statement. Liabilities were to be computed as the present value of ERISA Funding Requirements accrued benefits, calculated without considerfor Private Defined-Benefit Plans ation for projected increases in retirement benefits owing to salary increases. Statement 87, For private defined-benefit plans, ERISA re- issued in 1985, required more information about quires, at a minimum, the contribution of an pension liabilities. In addition to being computed annual payment to the pension fund sufficient to as the present value of accrued benefits, liabilicover the present value of benefits accruing in ties were to be computed as the present value of the current year. In addition, the plan sponsor is projected benefits, calculated with consideration required to amortize over a period of years any of projected increases in retirement benefits owsupplemental liabilities arising from the liberal- ing to salary increases. Statement 87 also imization of plan provisions or the retroactive posed a standard market discount rate on such granting of retirement benefits for past service. calculations. ERISA also imposes maximum limits on tax- Although financial accounting standards do not deductible contributions by employers to de- govern the funding of pension plans, they do fined-benefit plans. Tax-deductible contributions influence funding decisions. By providing a focal are not allowed if the value of assets held in the point for employees, investors, and plan sponpension fund exceeds the plan's actuarial liabil- sors, accounting standards strongly suggest the ity. Recently, these full-funding limitations have appropriate funding policy of pension plans— been severely tightened. The appendix presents that contributions be sufficient to maintain assets more detail on ERISA funding rules. equal to or in excess of liabilities as calculated under these accounting standards. Other Influences on Contributions Although ERISA imposes minimum and maxi- Trends in Contributions to Pension Funds mum bounds on contributions, the private plan by Private and Government Employers sponsor has some discretion in its funding decision. Moreover, through the choice of an actuar- Employer contributions to pension funds (exial cost method and actuarial assumptions, the cluding Social Security) as a percentage of all plan sponsor can influence the required level of workers' wages and salaries have declined contributions. The sponsor will be more likely to sharply since 1980, following an uptrend for all fund the pension plan generously to the extent types of pension plan sponsors that had lasted that it is subject to the discipline of those con- since 1948 (chart 1). The long uptrend was gencerned about the competing claims that will arise erated by the increasing number of plans and in a bankruptcy: employee unions and investors participants and the increasing generosity of rein securities issued by the sponsor. tirement benefits over the period. For sponsors In this context, accurate public reporting of of private pension plans, a large step-up in conplan assets and liabilities is important to employ- tributions occurred in the years immediately folees and investors concerned about the extent of lowing the 1974 passage of ERISA, which subthe sponsor's outstanding liabilities for its pen- stantially strengthened minimum funding sion plans. Since 1975, ERISA has required requirements. Since 1980, however, contribusponsors to publicly report, on the Form 5500 tions to government plans have shown only slight filed with the Internal Revenue Service, exten- growth, while private sponsors have sharply cursive information about their pension plans. More tailed their contributions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • November 1988 of defined-benefit plans terminated their over- 1. Employer contributions to pension plans as a percentage of wages and salaries funded plans to capture assets in excess of their of all workers, by type of employer legal liability to workers. These voluntary terminations peaked in 1985, when almost $7 billion in excess assets reverted to plan sponsors (table 3). Because many terminated defined-benefit plans have been replaced with defined-contribution plans, which generally require lower employer contributions, aggregate measures of employer contributions were damped. Terminations have declined sharply since 1986, perhaps owing to the excise tax on reversions established by the Tax Reform Act of 1986. Many other sponsors altered their actuarial cost methods and assumptions so as to reduce required contributions. In particular, some sponsors raised the valuation interest rate, thereby reducing the present value of future benefits and lowering required contributions.3 Sponsors also have increasingly chosen actuarial cost methods that produce lower required contributions. Finally, and perhaps most important, many sponsors halted completely their contributions because capital gains caused asset values to exceed plan liabilities, triggering the full-funding limitations.4 A reduced rate of contributions into private pension funds has had a positive effect on corpo- Source. Bureau of Economic Analysis, national income and product rate earnings. After ERISA was adopted in 1974, accounts. pension expenses represented nearly 30 percent Plans sponsored by the federal government for of the after-tax earnings of corporate plan sponfederal employees are only partially advance- sors (chart 2); by 1987, however, the proportion funded. The contribution rate for such plans will had dropped to 10 percent. For many companies, naturally rise as the work force matures. Plans the decline in pension expenses was a significant sponsored by state and local governments gener- factor in improved earnings in recent years. ally are not required to be advance-funded. Nevertheless, many state and local governments have partially advance-funded their plans, re- 3. Terminations of private pension plans in which excess assets reverted to plan sponsor, 1980-871 portedly to avoid pressures from investors in Millions of dollars unless otherwise noted municipal securities concerned about large unfunded liabilities and to forestall the sometimes Number of Accrued threatened imposition by the federal government Year term pl i a n n a s t ed Assets liability Reversion of ERISA requirements on their plans. Hence, contributions by state and local governments 1980 9 58.5 40.0 18.5 1981 35 341.5 183.3 158.2 have remained high as these sponsors try to 1982 82 1,136.8 732.9 403.9 1983 166 3,431.7 1,823.4 1,608.3 improve the funding of their plans and, at the 1984 331 7,426.8 3,862.0 3,564.8 same time, cover the retirement benefits of an 1985 580 15,060.0 8,393.4 6,666.6 1986 263 8,918.3 4,630.7 4,287.6 expanding work force. 1987 169 3,706.3 2,279.6 1,426.7 The decline in contributions by private sector I. For reversions in excess of $1 million. employers reflects many factors. Some sponsors SOURCE. Pension Benefit Guaranty Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Pension Plans: Funding, Assets, and Regulatory Environment 723 2. Pension expenses of private-plan sponsors of plan sponsors who have overfunded plans. In as a percentage of after-tax corporate earnings addition, the claim that pension plans have on sponsors' resources can be gauged by calculating the ratio of plan liabilities to the net worth of firms (including pension assets). Calculations of funding status are based on three different concepts of plan liability. The first concept, accrued liability or the present value of accrued benefits, has been reported in annual statements since 1980 in accordance with the guidelines of FASB Statement 36. The second concept, projected liability or the present value Source. Standard and Poor's Compustat Data Service, Inc. of projected benefits, including an adjustment for an increasing compensation base, has been re- FUNDING STATUS ported in most annual statements since 1986, OF DEFINED-BENEFIT PLANS following the enactment of new guidelines in FASB Statement 87. The third concept is the A theme of the previous discussion is that the present value of projected benefits, including rate of employer contributions to defined-benefit consideration for partial cost-of-living increases pension plans is influenced strongly by the fund- to retirees' benefits. Accounting for partial ing status of those plans. For government plans COLAs is not found in current financial accountthat are partially advance-funded or are funded ing standards, but may be considered important on a pay-as-you-go basis, employer contributions to an estimate of the broadest notion of plan will be influenced primarily by the necessity to sponsors' obligations to workers. Where the relpay benefits to current retirees and other benefi- evant liability concept is not actually used in the ciaries. For private plans that are slightly under- annual statement, estimates reported here are funded or fully funded, contributions generally based on reported figures and a model of the will equal the present value of accruing benefits. typical defined-benefit plan.5 For private plans that are overfunded, however, By any measure, the funding status of private ERISA restrictions and accounting standards defined-benefit plans has improved in the 1980s suggest a cessation of funding contributions. (table 4); all measures of the funding ratio show Moreover, in a shift from one policy regime to an improvement of about 30 percent. The meaanother, namely from a pay-as-you-go funding sure using accrued liability indicates that private approach to a fully funded approach, contribu- pension plans, in the aggregate, had already tions will be at temporarily high levels until a reached fully funded status in 1981, while the fully funded status is reached and then will fall gauge using the broadest notion of liability indioff. Thus, some of the particular reasons for cates that plans were fully funded by 1987. The changes in flows of contributions to defined- percentage of sponsors with fully funded plans benefit plans can be derived from the funding also increased uniformly, although many understatus of the plans. funded plans remain. The claim of defined-benefit pension plans on the book value of firms' net Funding Status of Private Plans worth increased slightly over the period. Accounting rules and ERISA allow plan spon- An assessment of the overall status of pension sors to report values of pension assets and liabilfunding can be made from reported values of ities for a date differing from that of their annual pension assets and liabilities available from an- statement. For example, for most plan sponsors, nual company statements since 1980. Measures 1987 information about pensions is given with a of the funding status of plans include the funding January 1 reporting date, although 1987 informaratio—the market value of pension assets as a tion for some larger plans is reported as of percentage of plan liabilities—and the percentage December 31. A very rough approximation of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • November 1988 4. Funding status of private defined-benefit plans, plans. Data on state plans, which can be gathered 1981-87 from disparate sources, shows that their funding Percent status has improved. In 1987, their funding ratio using projected liability was approximately 73 percent, and 16 states had overfunded plans. The funding status of state plans, however, is clearly not as healthy as that of private plans. The federal government sponsors separate defined-benefit pension plans for civilian and military personnel. The military plan was funded on a pay-as-you-go basis before October 1, 1984; thereafter military plans became partially advance-funded. The civilian plan is partially advance-funded; all of its assets, however, must be invested in non-marketable U.S. government securities. (The new plan for civilian workers hired after 1983 will allow investments in private securities.) The funding status of the plans for civilian and military personnel is very poor but has improved slightly; only 14.5 percent of projected 1. Ratio of plan's assets to its liabilities. Derived from the sample of approximately 2,000 plan sponsors reported by Standard and Poor's liabilities were covered by assets in 1981 and 20.7 Compustat Data Services, Inc. percent in 1985. The ultimate security of plans 2. Net worth includes pension assets. Firms with negative net worth are not included. sponsored by the federal government depends on SOURCE. Mark J. Warshawsky, "The Adequacy of Funding of the government's ability to levy taxes to pay the Private Defined Benefit Pension Plans," in Turner and Beller, eds.. Trends in Pensions, 1988. pension benefits of retired government workers and military personnel, as well as on the assets "average" reporting date would be around the held in the pension fund. beginning of the second quarter. For example, in table 4, the 1987 funding ratio using the projected liability, 116 percent, may be considered valid as of April or May. ASSETS OF PENSION PLANS Because of disparate reporting dates, it is difficult to know, in the aggregate, what effect the As noted, the funding status of private pension stock market crash of October 1987 had on the plans received a boost from larger contributions funding status of private pension plans. It is in the wake of the 1974 enactment of ERISA. possible, however, to examine the 1986 and 1987 Although contributions declined in the 1980s, the data on plans whose sponsors report as of De- funding status continued to improve because of cember 31; in such cases, the funding ratio using healthy investment income and a substantial inprojected liability actually increased from 101 crease in the market value of assets. The net percent to 115 percent. This result may be due, in flows of assets (including capital gains) into pripart, to the increase in market interest rates over vate defined-benefit and defined-contribution 1987, which reduced plan liabilities. Also, stock plans have been positive (table 5). Contributions prices of year-end 1987 were only slightly lower (by employers and employees) less benefits paid than a year earlier. were actually negative for defined-benefit plans for most of the period, while already substantial Funding Status of Government Plans interest and dividend income trended upward. Capital gains on stocks and long-term bonds held Information about liabilities of state and local in portfolio, while volatile, were very large in government pension plans is limited. Almost no total. These gains raised the funding ratio of information is regularly collected about local defined-benefit plans, caused a decline in em- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Pension Plans: Funding, Assets, and Regulatory Environment 725 5. Net flows into private pension plans, by plan increased prominence of pension funds in housetype, 1983-87 hold savings, and, in particular, their role in Millions of dollars financial markets, have drawn attention to the investment strategies of pension funds. Funding contri- Interest butions Capital Plan type and year and less gains Total Investment Strategies dividends benefits paid ERISA generally does not specify types of in- Defined-benefit vestments allowed or prohibited to private pen- Single-employer 1983 34,861 -10,929 34,728 58.660 sion funds. Instead, ERISA imposes broad duties 1984 39.050 -25,200 -2,615 11,235 on the fiduciaries responsible for investing plan 1985 39,070 -32,182 89,906 96,795 1986 39,260 -33,367 63,227 69,120 assets. Fiduciaries must invest with the care, 1987 41,831 -35,752 4,890 10,969 skill, and diligence that a "prudent" investor Multiemployer would exercise, must diversify investments of 1983 6,240 4,738 2,405 13,383 1984 7,745 1,119 72 8,936 the defined-benefit plan in order to minimize the 1985 8.340 1,570 12,129 22,039 1986 9,429 -505 10,497 19,421 risk of large losses, and must avoid all conflicts of 1987 10,305 -601 -5,238 4,466 interest. The only specific prohibition imposed Defined- by ERISA is that no more than 10 percent of a contribution 1983 16,747 17,158 15,333 49,238 defined-benefit plan's assets can be invested in 1984 20,801 -1,186 -135 19,480 1985 21,088 75,818 48,355 145,261 securities issued by the plan's sponsor. 1986 21,799 -12,613 34,818 44,004 1987 23,854 3,471 3,288 30,613 Single-employer plans and state and local government plans seem to use a traditional "40-60" SOURCE. Board of Governors of the Federal Reserve System, investment strategy (table 7). In the strategy, Division of Research and Statistics, Flow of Funds Section. roughly 40 percent of the portfolio is invested in ployer contributions, and increased the value of equity securities, and the remaining 60 percent is assets in defined-contribution plans. invested in various types of debt instruments. The effect of the increased market value of The 40-60 strategy is consistent with ERISA's pension assets of the 1980s and the increased rate directive to diversify adequately. The strategy of employer contributions of the late 1970s is also provides pension plans with the opportunity evident in the framework of the flow of funds to earn the higher real returns that equities have accounts. Pension assets grew to 15 percent of provided historically, while capturing some of household net worth by 1987 (table 6). The the nominal stability provided by bonds held to 6. Financial assets of private and government pension funds, selected years, 1950-87' Billions of dollars at year-end unless otherwise noted I. Excludes value of real estate investments. The data here for SOURCE. Board of Governors, Flow of Funds Accounts, private pension plans do not necessarily match those reported by the Department of Labor. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin • November 1988 7. Portfolio composition of pension plans, first quarter 1988' Percent of total assets of specified plans unless otherwise noted • Demand deposits Time deposits Open market paper U.S. government bonds Corporate bonds .... Corporate equity Unallocated insurance accounts Other assets Total MEMO: Financial assets (billions of dollars) .,..... .Hj 1. Details may not add to totals because of rounding. SOURCE. Board of Governors, Flow of Funds Section. maturity. In comparison, multiemployer plans is held, seems to be closely linked to the greater follow a more conservative investment strategy, holding of equities by pension funds and other investing a lower proportion of their assets in institutional investors. Because of their market equities and a higher proportion in U.S. govern- power, larger size, and the deregulation of broment bonds. kerage commissions in 1975, pension funds pay Private plans invest a significant proportion of much lower commissions on stock trades than do their assets through arrangements with life insur- individual investors. As a result, pension funds ance companies. These arrangements are used are more active traders than individuals. Furthercommonly by small plans, which are usually more, from May 1975, when fixed minimum unable to achieve economies of scale in portfolio commissions on equity trades were eliminated, management or the reduction of aggregate risk to 1983, commission charges to pension funds for through the pooling of independent mortality equity trades declined by two-thirds; simultarisks. In these cases, a life insurance company neously, equity portfolio turnover for pension will issue life annuities to retired workers and plans roughly tripled.6 The turnover rate for all will invest the plan's funds in an account that, in equities has increased partly because of the turn, is invested in debt or equity securities. growing importance of pension funds. Roughly one-third of the assets of private pension plans are managed in this manner; the 3. Share of corporate equities outstanding "unallocated insurance accounts" in table 7 give held by pension funds, by type of sponsor some indication of the amount of assets invested in insurance accounts. Percent 25 Implications for the Equities Market 20 The explosion in pension assets has helped trans- Private1 •15 form the character of the U.S. equities market, -10 which formerly was dominated by individual investors. Pension funds owned nearly a quarter 5 of all corporate equities in the first quarter of 1988, up from only 2 percent in 1952 (chart 3). The increase in the turnover rate of stocks, that SOURCE. Board of Governors, flow of funds accounts. is, a decline in the average amount of time stock 1. Includes insurance accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Pension Plans: Funding, Assets, and Regulatory Environment 727 The existence of large pools of equity securi- cost, effectiveness, and adverse market implicaties has changed the structure, as well as the tions of the strategy during events of the week of pace, of trading. Because the equity portfolios of October 19, 1987, when liquidity in the stock pension funds are so large, sales or purchases of market tended to vanish, reportedly has reduced an individual security by even a single fund can the appeal of portfolio insurance to fund cause market changes in share price. Instead of managers.9 relying on the limited resources of specialists on the stock exchanges to conduct trades at market prices, many institutional investors instead ar- THE FINANCIAL CONDITION OF THE PBGC range for trades of blocks of stock off the floor of the exchange ("upstairs trades"). The role of Under ERISA, the Pension Benefit Guaranty specialists in matching trades has as a conse- Corporation was set up to insure payment of quence diminished. retirement benefits by private plan sponsors up Other innovations in the equity market are also to a maximum indexed amount. The sponsor's linked closely with increased institutional hold- payment of an insurance premium to the PBGC, ings of equities. Stock-index futures began trad- however, does not relieve the sponsor of responing in 1982, and options on stock indexes and on sibility for unfunded pension liabilities in a bankstock-index futures were initiated in 1983. These ruptcy proceeding or forced plan termination. If new financial instruments permit trading of de- unfunded liabilities exist, the PBGC can attach a rivative securities that mimic large diversified lien (with the status of a federal tax lien) up to the portfolios of securities. Many pension funds have lesser of the unfunded liabilities or 30 percent of such large diversified equity portfolios—often the firm's net worth. The firm's legal liability is containing tens or hundreds of individual equity 100 percent of unfunded pension liabilities up to issues—because ERISA strongly encourages it. the entire net worth of the firm, but in conditions When a pension fund wants to adjust quickly the of financial distress, the PBGC is unlikely to equity-debt mix of its entire portfolio, buying recover much beyond its lien of 30 percent of net and selling index futures and options, whose worth. returns mirror the aggregate returns of the diver- Although the funding status of defined-benefit sified portfolio, is often cheaper than is selling plans sponsored by private employees has imthe tens or hundreds of individual equity issues proved greatly during the 1980s, the improvethemselves.7 ment has not been uniform. Pension plans in A particular strategy for trading derivative declining industries remain underfunded and instruments designed to protect portfolios of have exposed the PBGC to significant risks. securities held by pension funds against declines Particular concern has been expressed about the in prices is called portfolio insurance or dynamic financial health of pension plans sponsored by hedging.8 The strategy uses futures contracts to companies in the steel industry. The funding alter the relative sizes of the portfolio's positions status of steel plans, although improving, has in securities and cash as market circumstances indeed been worse than plans in other industries change. As stock prices fall, stock-index futures (table 8). Moreover, pension plans burden the are sold short against an underlying portfolio of industry heavily; 74 percent of the industry's net stocks. The increase in value of the futures worth would be required to fund pension liabiliposition as prices fall compensates for the de- ties. In the 1980s, several large underfunded cline in the value of the stock portfolio. If prices plans sponsored by steel and other industrial rise, the short futures position is reduced. Port- companies were, in fact, terminated, substanfolio insurance appealed to managers of pension tially inflating the deficit of the PBGC (table 9). funds as a way to preserve the comfortable Several legislative changes have been made in funding status of plans achieved during the response to the deteriorating financial condition 1980s, even at the cost of losses on the short of the PBGC and to instances of corporate abuse futures positions that result from increases in of the pension insurance program. In 1987, the market prices. However, questions about the Congress tightened the funding requirements of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Federal Reserve Bulletin • November 1988 8. Funding status of pension plans in the steel CONCLUSIONS industry, 1981-87' Percent Pension plans are now significant factors in the financial well-being of households, the profit- Measure 1981 1982 1983 1984 1985 1986 1987 ability of corporate sponsors, and the activity in Funding ratio2 56 55 60 61 67 78 80 securities markets. Although pension plans will Percent of sponsors continue to be important features on the ecowith overfunded Bil plans 14 26 26 25 29 35 46 nomic landscape, recent trends possibly imply Ratio of plan liability to net worth of future changes in their relative position. The firm3 .. 71 84 90 94 93 81 74 favorable funding status of private defined-ben- 1. Does not include plans of USX; does not include plans of LTV efit plans and stricter limitations on funding con- Steel after its 1985 bankruptcy. Ratios are calculated using projected tributions imply that contributions by employers liability. 2. See table 4, note I. to private pension funds will remain low. As a 3. See table 4, note 2. consequence, the size of private pension funds SOURCE. Warshawsky, "Adequacy of Funding." likely will not continue to grow at the rapid pace of the 1970s and 1980s. On the other hand, the assets of plans sponsored by governments for ERISA by mandating a faster amortization of their employees likely will continue to grow at a supplemental liabilities arising from the granting rapid pace, as government sponsors try to imof credit for retirement benefits due to past prove the funding status of their plans. Pension service. In addition, beginning this year, the plans will continue to be active investors, and flat-rate PBGC premium structure was changed. further developments in the securities markets Instead of paying a flat $8.50 per participant, likely will reflect their growing influence. Barring sponsors will now pay a premium based on a any major failures, the increase in premiums, the combination of rates: a flat $16 per participant, tighter funding requirements for underfunded priplus a risk-related premium equal to 0.6 percent vate plans, and improved economic conditions in of the plan's unfunded vested benefit obligation, the steel industry should lead to an improvement up to a maximum of $50 per participant. Other in the financial condition of the PBGC. legislative changes last year included improving the PBGC's status in bankruptcy proceedings. It was anticipated by the PBGC in 1987 that if there APPENDIX: FUNDING REQUIREMENTS FOR were no catastrophic terminations and annual PRIVATE DEFINED-BENEFIT PLANS claims declined to those of the PBGC's earlier years, these changes should cause the financial ERISA requires the contribution of the definedcondition of the PBGC to improve over the near benefit plan's annual "normal cost." The normal term. costs are the annual payments necessary to amortize the present value of future retirement benefits expected to be paid to current workers, retired beneficiaries, and workers who have quit 9. Balance sheet of the Pension Benefit Guaranty Corporation1 after vesting in the plan. As a theoretical matter, Millions of dollars the normal costs may follow any pattern, provided that the present value of normal costs Item 1983 1984 1985 19862 1987equals the present value of future retirement • benefits. As a regulatory matter, however, plan Assets 11..113377 11,,112244 11,,223333 11,,883399 22,,227777 11,,661144 11,,553388 22,,449944 55,,662200 33,,775577 sponsors must calculate costs with one of several •Accumulated deficit..... --447777** --441144 --11,,226611 --33,,778811 --11,,448800 alternative actuarial methods, which, in turn, 1. Fiscal year ends September 30. limit the choice of allowable patterns of normal- 2. Includes pension plans of LTV Steel. cost payments. One widely used method, "entry- 3. Does not include pension plans of LTV Steel, whose liabilities are estimated at $2 billion. age normal cost," develops a normal cost that is SOURCE. Pension Benefit Guaranty Corporation, 1987 Annual constant, either as a dollar amount or as a share Report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Pension Plans: Funding, Assets, and Regulatory Environment 729 of salary, throughout the years of credited ser- ative, are termed "supplemental liabilities." vice of current workers. Another common ERISA requires that supplemental liabilities arismethod, "projected unit credit," develops a nor- ing from investment experience that differs from mal cost that equals the present value of pro- assumptions be amortized over 5 years; supplejected benefits accruing in the current year. The mental liabilities arising from changes in actuarial projected-unit-credit method is a much less con- assumptions, such as a change in the assumed servative approach than entry-age normal, which interest rate, must be amortized over 10 years. at first overfunds so as to keep contributions Liabilities due to changes in plan provisions have level over the work life of current employees. very complicated amortization schedules. Sponsors have increasingly chosen the project- To reduce the loss of tax revenues to the ed-unit-credit actuarial cost method (table A.l). federal government, ERISA places limits on tax- In order to calculate the normal-cost payment, deductible employer contributions to definedan actuary must first compute the present value benefit plans. The full-funding limitation preof future retirement benefits, which requires the vents employer contributions if the value of combination of current and forecasted factors. assets held in the pension fund exceeds the plan Current factors include the benefit provisions of liability. In applying the limitation, assets now the plan and the characteristics of current work- are determined by the lesser of current market ers and retirees, such as age, sex, length of value or the market value smoothed by five-year service, and current salary. The factors that must averaging. Before 1988, the plan liability was be forecast include the life expectancy of current defined for purposes of determining the full fundworkers and retirees, the rate at which salaries ing limitation as the "actuarial" liability, that is, will increase over the employees' work lives, the the present value of future benefits less future rate of turnover, and the interest rate used in normal costs. The actuarial liability is dependent present-value calculations. on the choice of an actuarial cost method. In ERISA requires the actuary to use "rea- order to restrict the discretion of plan sponsors to sonable" forecasts and assumptions as well as influence contribution flows through the choice current plan provisions in calculating the normal- of actuarial cost method (and hence the actuarial cost payment, but conditions surrounding a pen- liability), the definition of plan liability was sion plan change. The alteration of provisions amended in 1987. The plan liability is now deconcerning plan benefits, changes in actuarial fined to be the lesser of the actuarial liability or assumptions, and deviations of investment or 150 percent of the present value of accrued demographic experience from assumptions will benefits, calculated on the assumption that the generate differences between past and current plan is terminated at the valuation date. calculations of the liability of the plan sponsor. In the case of a plan whose assets are less than These differences, which can be positive or neg- the plan liability, changes in asset value have only a small effect on allowed contributions because of the gradual amortization of the sup- A.l. Distribution of private defined-benefit pension plemental liability arising from unexpected inplans, by actuarial method of computing normal cost, 1978-84' vestment experience. For a plan whose assets Percent are equal to the liability, however, an increase in asset value, if larger than the annual normal cost, prevents a plan sponsor from making any taxdeductible cash contributions for the year. Taxdeductible contributions are also not allowed for a plan whose assets substantially exceed the liability. Hence, whether any contribution will be made to plans that are fully funded or overfunded is very sensitive to fluctuations in the market 1. Includes multiemployer plans; excludes plans with fewer than value of assets.10 100 participants. SOURCE. Form 5500 reports filed with the Internal Revenue Service. The interest rate used in the calculation of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

730 Federal Reserve Bulletin • November 1988 present value of future benefits, normal costs, ies, had too much influence in the choice of the and plan liabilities is critical. Because retirement interest rate used to calculate liabilities and norbenefits of current workers will not be com- mal costs (and hence, the required level of conpletely paid at the end of 20, 40, or even 60 years, tributions). The law was changed in 1987 to present value calculations for pensions are very restrict the allowable valuation interest rate to sensitive to changes in the valuation interest rate. within 10 percent of the yield on 30-year Trea- Many thought that plan sponsors, through the sury bonds averaged over the four-year period exertion of subtle pressure on valuation actuar- preceding the valuation date. NOTES Beller, eds., Trends in Pensions, 1988 (U.S. Government Printing Office, forthcoming.) 6. See Berkowitz, Logue and Associates, "Study of the 1. The self-selection problem is explained in greater detail Investment Performance of ERISA Plans," report submitted and empirical estimates of its size are calculated in Mark to the Department of Labor, Office of Pension and Welfare Warshawsky, "Private Annuity Markets in the United Benefits, July 21, 1986. States: 1919 to 1984," Journal of Risk and Insurance (forth- 7. Transaction costs are lower in futures markets than in coming). the stock market because fees, commissions, and margin 2. See Richard A. Ippolito, Pensions, Economics and costs are lower and because futures markets are more liquid. Public Policy (Homewood, 111.: Pension Research Council See Arnold kling, "Futures Markets and Transaction and Dow-Jones Irwin, 1985). Costs," in Myron L. Kwast, ed., Financial Futures and 3. See Zvi Bodie and others, "Funding and Asset Alloca- Options in the U.S. Economy: A Study by the Staff of the tion in Corporate Pension Plans: An Empirical Investiga- Federal Reserve System (Board of Governors of the Federal tion," in Zvi Bodie, John B. Shoven, and David A. Wise, Reserve System, 1986). eds., Issues in Pension Economics (University of Chicago 8. This discussion of portfolio insurance follows closely the Press, 1987), pp. 15-44. description in Carolyn D. Davis and Alice P. White, Stock 4. Alicia Munnell with Nicole Ernsberger, "Pension Con- Market Volatility, Staff Studies 153 (Board of Governors of tributions and the Stock Market," New England Economic the Federal Reserve System, 1987). Review, Federal Reserve Bank of Boston, November/De- 9. Before the crash, portfolio insurance was estimated to cember 1987, p. 9, report that 42 percent of a sample of large cover up to $70 billion of assets. After the crash, the plans were subject to ERISA's full-funding limitation in 1986. estimated coverage declined to less than $25 billion. See 5. The source of data is Standard and Poor's Compustat Trudy Ring, "66% Drop in Portfolio Insurance," Pensions Data Services, Inc. For further details, see Mark J. War- and Investment Age, vol. 16 (January 25, 1988), pp. 2 and 84. shawsky, "The Adequacy of Funding of Private Defined 10. For further details and an example, see Munnell, Benefit Pension Plans," in John A. Turner and Daniel J. "Pension Contributions and the Stock Market." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

731 Industrial Production Released for publication September 14 nents also showed small increases in August. At 138.2 percent of the 1977 average, the total index Industrial production increased 0.2 percent in in August was 5.3 percent higher than it was a August after having risen a revised 1.0 percent in year earlier. July and 0.3 percent in June. In August, output of In market groups, output of consumer goods business equipment rose slightly further after increased slightly after having risen 0.5 percent having posted large gains throughout the first half in July. Automobile assemblies in August, at an of 1988. Production of most other major compo- annual rate of 7.0 million units, were down a bit Ratio scale, 1977 = 100 TOTAL INDEX 140 Products 120 Materials 100 I I L _ MANUFACTURING 140 _ MATERIALS Nondurable Durable 120 100 Energy N. / - INTERMEDIATE PRODUCTS Business supplies y Construction supplies 140 MOTOR VEHICLES AND PARTS FINAL PRODUCTS Defense and space 200 120 180 100 Business equipment 160 140 80 Consumer goods 120 100 60 1982 1984 1986 1988 1982 1984 1986 1988 All series are seasonally adjusted. Latest figures: August. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

732 Federal Reserve Bulletin • November 1988 1977 = 100 Percentage change from preceding month Group 1988 1988 July Aug. Apr. May June July Aug. Major market groups Total industrial production 137.9 138.2 .5 .5 .3 1.0 .2 5.3 Products, total 146.2 146.5 .3 .7 -> .6 .2 4.7 Final products 144.8 145.0 .5 .7 .4 .5 .2 4.8 Consumer goods 133.7 134.0 .6 .6 .2 .5 .2 3.5 Durable 125.4 125.6 2.4 1.9 -.3 .1 .1 3.6 Nondurable 136.7 137.1 .0 .2 .4 .6 .3 3.5 Business equipment... 159.3 159.7 .8 1.5 .9 .6 .2 9.7 Defense and space 185.4 184.9 -1.1 -1.3 -.5 .5 -.3 -2.2 Intermediate products... 150.9 151.5 -.2 .5 -.4 .8 .4 4.2 Construction supplies. 137.6 138.0 .2 .9 -1.1 .2 .3 4.2 Materials 126.5 126.9 .8 .3 .4 1.7 .3 6.3 Major industry groups Manufacturing 143.4 143.7 .6 .7 .2 .9 .2 5.7 Durable 142.9 143.3 .6 1.3 .1 .9 .2 7.0 Nondurable 144.1 144.2 .4 -.2 .4 1.0 .1 3.9 Mining 104.9 104.6 2.0 -2.0 .0 2.3 -.3 3.7 Utilities 113.3 115.6 -2.0 .6 .7 .8 2.1 2.4 NOTE. Indexes are seasonally adjusted. from July, but production of light trucks for expand rapidly, but production of both commerconsumer use advanced. In August, output of cial and transit equipment was little changed in home goods declined following a large gain in July and August. Construction supplies rose July and has been, on balance, sluggish over the slightly in August, owing in part to a settlement past year. Nondurable consumer goods rose fur- of one of the strikes that had affected the lumber ther, mainly reflecting continued strength in industry during the summer. Output of materials, chemical products as well as increased genera- after having risen rapidly in July, increased 0.3 tion of electricity for residential use. percent in August. Among durables, production Among components of business equipment, of basic metals advanced sharply again, but output of manufacturing equipment continued to output of parts for equipment slowed and parts for consumer durables declined. Within nondurables, chemical materials posted another gain, Total industrial production—Revisions but output of textiles and paper fell. Energy materials continued to increase sharply, owing in Estimates as shown last month and current estimates part to the extraordinary summer heat, which Percentage change boosted demands for electricity. Index (1977=100) from previous MMoonntthh months In industry groups, manufacturing output increased 0.2 percent in August as both nondur- Previous Current Previous Current ables and durables rose slightly. Production at May 136.1 136.1 .5 .5 utilities advanced about 2 percent, but mining June 136.6 136.5 .4 .3 July 137.7 137.9 .8 1.0 output declined 0.3 percent, as coal production August 138.2 .2 fell after a large increase in July. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

733 Statements to Congress Statement by Manuel H. Johnson, Vice Chair- CRA and to discuss the steps taken by the Board man, Board of Governors of the Federal Reserve to implement these policies. This will provide a System, before the Committee on Banking, useful perspective on the types of bank CRA Housing, and Urban Affairs, U.S. Senate, Sep- programs that the Board believes are effective tember 8, 1988. and will serve as a guide for organizing a meaningful discussion of the House bill and other I appreciate this opportunity to appear before the programs that have been suggested for revising Senate Banking Committee to address the vari- CRA in the future. ous consumer provisions of Title IV of H.R. The CRA gives the federal financial supervi- 5094, recently reported by the House Banking sory agencies a significant role in assuring that Committee. In my testimony, I will place special financial institutions identify and take steps to focus on the Community Reinvestment Act of meet the credit needs of their local communities. 1977, which I will refer to as "the CRA," how In particular, the CRA provides that the federal CRA has been implemented, and how we can financial supervisory agencies must assess the improve its administration. record of each institution under their supervision In giving this emphasis to my testimony, I do in meeting the credit needs of the institution's not intend to convey any lesser degree of con- entire community, including low- and moderatecern about other provisions that were included in income neighborhoods, consistent with safe and Title IV of the bill, which, besides those affecting sound operation of the institution. In addition, the CRA, also impose new regulatory require- the CRA requires that the federal financial superments in the areas of government check cashing, visory agencies take this record into account in basic financial services accounts, bank branch evaluating an application by the institution for a closings, equal credit opportunity, and home deposit facility. equity loan requirements. Taken as a whole, The CRA does not impose any specific lending these new provisions constitute a massive new or other requirements on financial institutions. burden on the banking system, particularly on Instead, the purpose of the CRA is to encourage smaller banks without the resources to handle depository institutions to make meaningful efthese regulatory requirements. I will address our forts to assure that local communities are aware serious concerns about these extensive new reg- of available credit facilities and to take steps to ulatory requirements at the conclusion of my meet local credit needs in a nondiscriminatory testimony, as well as in a staff appendix.1 manner compatible with safe and sound operation. The Board fully supports the purposes of CRA, and strongly believes that all depository THE CURRENT CRA FRAMEWORK institutions should make meaningful efforts to meet these objectives. Before discussing suggestions that have been made for revising the CRA, I think it would be helpful to outline briefly the responsibilities es- THE BOARD'S IMPLEMENTATION tablished under the current provisions of the OF THE CRA The Board has taken three broad steps to imple- 1. The attachments to this statement are available on ment these CRA policies. These steps include request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. conducting specialized CRA performance exam- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

734 Federal Reserve Bulletin • November 1988 inations, a program for informing banks of their loans within its community, including low- and responsibilities under the CRA, and a program moderate-income neighborhoods, and the bank's for reviewing applications that includes consid- participation in local community development eration of the CRA performance records of the projects, and governmentally insured, guaranbanks and bank holding companies involved. The teed, or subsidized loan programs. Board's CRA performance examinations estab- The examination also focuses on the geolish a framework for regularly assessing the per- graphic distribution of the bank's credit extenformance of state member banks in meeting the sions, and the existence of any evidence of credit needs of their communities. The outreach discriminatory or other illegal credit practices by program helps inform banks regarding effective the bank. Finally, the examiners take into acmethods for assessing the needs of their commu- count other information that relates to the bank's nities and methods that are available to meet record of meeting the convenience and needs of those needs. The applications process acts as an its entire community, including the bank's record effective check on the performance of banks and of opening and closing offices. These assessment bank holding companies that seek to expand and factors have been incorporated in the Board's provides a vehicle for public participation in the Regulation BB governing CRA matters. review of the institution's CRA performance. As part of the examination process, our exam- The public has increasingly taken advantage of iners contact members of the communities in its ability to participate in the applications pro- which they conduct examinations—including locess, with the number of cases involving CRA cal government agencies, small businesses, grass comments increasing from only 3 in 1984 to 35 in roots community organizations, and others—in 1987. an attempt to understand the needs of the community the bank serves. The examiners then discuss the performance of state member banks THE BOARD'S CRA EXAMINATION under the CRA with the bank's management in PROCESS light of the examiner's contact with the community and provide both written and oral reports to The first part of our CRA program involves the management. These examination reports are examination of the CRA performance records of intended to inform the bank's management of state member banks. These examinations are both the strengths and weaknesses of the financarried out by examiners who are specifically cial institution's CRA compliance efforts and to trained in consumer compliance and CRA issues, suggest particular steps that management may and are conducted approximately every 18 take to enhance that performance. When defimonths in most cases, and more frequently in the ciencies are noted in the examination, the Recase of banks with less satisfactory records. serve Bank continues supervisory attention until CRA examinations conducted by the Board improvement has been achieved. focus on a number of factors and are designed to The Board's continued attention to CRA peridentify the general framework of an effective formance by our examiners has, I believe, em- CRA program. They recognize that banks must phasized to state member banks that we are be permitted the flexibility to meet the credit serious about CRA and that we expect these needs of the community in a way that is compat- banks to maintain responsible CRA programs. ible with the bank's overall business strategy and We also believe these efforts have been useful to the community's needs. the banks in designing effective CRA programs Among the factors examined by the Board are and, therefore, have resulted in benefits to local the bank's efforts to become aware of the credit communities. needs of its community, and to implement marketing and special credit-related programs to COMMUNITY OUTREACH PROGRAMS inform members of the community of the credit services offered by the bank. In addition, the The second step taken by the Board to imple- Board examines the bank's record of making ment the policies of the CRA is the establishment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 735 at each of the Reserve Banks of community projects. CDCs may focus, for example, on speaffairs officers, who provide information about cial community needs such as low-income houscommunity development strategies and tech- ing or small business revitalization. niques to banks, bank holding companies, and These corporations have the potential for makothers. One of the goals of the System's commu- ing important contributions to community revinity affairs program is to become familiar with talization, in part because they are given unusual the credit needs of the cities, towns, and rural authority, such as authority to take equity posiareas in the Federal Reserve Districts through tions and own real estate. In August 1987 the outreach to those areas. Once having identified Federal Reserve and the Comptroller's office these needs, our community affairs officers help cosponsored a conference dealing with CDCs, banks to construct programs that will identify which was attended by about 200 bankers. A and address community credit needs. pamphlet containing the proceedings of that con- For example, over the past three and one-half ference was produced and widely distributed. years the program has sponsored 120 confer- Since that time we have seen a great deal of ences and seminars on opportunities and tech- interest, particularly in the formation of national niques for community development lending and banks. other related subjects. In 1987 alone, the com- Community outreach efforts such as these are, munity affairs officers at the Reserve Banks we believe, an essential element of our charge sponsored more than 60 seminars and workshops under the CRA to encourage financial institutions that explored a variety of topics related to com- to meet the credit needs of their communities. munity investment, community revitalization, and rehabilitation financing. During 1987 the staff at the Reserve Banks spoke before more than 100 CONSIDERATION OF CRA PERFORMANCE groups, most of which represented bankers, con- IN THE APPLICATIONS PROCESS cerning the CRA. The Reserve Banks have also undertaken ad- The third facet of our approach to implementing ditional initiatives, such as publishing periodicals CRA involves consideration of the CRA perforthat deal with community lending, producing mance records of banks in connection with apresource books on the programs for community plications received by the Board under the Bank development lending in which a bank might wish Holding Company Act and the Bank Merger Act. to participate, forming community lender forums CRA performance is taken into account, along to provide mutual education about community with financial, safety and soundness, managerial, development opportunities and techniques, and and competitive factors, when the Board reviews producing community profiles designed to help these applications. lenders and others in the community know what Through its experience in examining the CRA the needs are, what resources are available, and performance of banks, the Board has found that what contribution the various participants might institutions with the most effective CRA promake. grams share a number of critical elements. These One activity in this area that I would particu- institutions accomplish the following: larly like to mention is our work with community 1. Maintain outreach programs that include development corporations. Since well before the procedures to permit regular, ongoing, and advent of CRA, the Federal Reserve and the meaningful communication between all levels of Comptroller of the Currency have allowed and management of the bank and members of the encouraged the creation by bank holding compa- community, community-based organizations, nies and national banks of community develop- businesses, local agencies, and others for the ment corporations. Community development purpose of ascertaining local credit and deposit corporations—or "CDCs" as they are called— needs, including, particularly, the credit needs of are corporations chartered to bring the lending, low- and moderate-income neighborhoods. financial packaging, and other special talents of 2. Establish formalized methods for incorpothe banker to bear on specific community rating the findings regarding community credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Federal Reserve Bulletin • November 1988 needs gathered through these outreach efforts services through newspaper and radio advertiseinto the institution's development and delivery of ments, brochures, posters, or officer call proproducts and services to all segments of the grams; improving internal procedures for reviewcommunity. ing and implementing CRA policies; and, finally, 3. Study opportunities for innovative lending in some cases, improving certain types of lending programs for low- and moderate-income neigh- when the record indicated that the applicant had borhoods, including home mortgage and neigh- not been active in making loans in areas when the borhood and residential rehabilitation lending. applicant had itself identified a need in its CRA 4. Support community development projects, statement. Although protestants sometimes resuch as Neighborhood Housing Services Pro- quest that the applicant also reduce interest rates grams, and develop policies to meet specific, or relax credit standards, the Community Reinidentified needs of low- and moderate-income vestment Act and the Bank Holding Company persons. Act do not authorize the Board to establish the 5. Through specifically designed marketing and terms or conditions of loans, nor does the Board advertising programs, stimulate public aware- believe that this was the intent of the Congress in ness of the bank's services throughout the com- enacting the CRA. munity, including efforts targeted to low- and An essential part of this process are the affirmoderate-income neighborhoods and groups. mative steps that the Board takes to assure that 6. Establish systems for monitoring the insti- institutions fulfill commitments made during the tution's performance at senior management lev- applications process. In particular, the Board els and periodically assessing areas for improve- often requires special periodic reports from the ment. applicant regarding progress in implementing the 7. Train employees regarding the lending op- commitments. The Board examiners also review portunities offered through the institution as well compliance with the commitments during perias the availability of community and local devel- odic CRA examinations of state member banks. opment programs. In addition, the Board will check for adherence It has been the Board's practice in the appli- to the commitments—and take into account efcations process, as a general matter, to work forts to fulfill these commitments—the next time with institutions to improve their CRA perfor- the institution submits an application. mance. The Board's experience has been that a In fact, we have observed that banks have significant and growing number of banks and improved the attention and resources devoted to bank holding companies have adopted formal the credit needs of their communities, including and detailed internal policies and programs to low- and moderate-income neighborhoods. For address their responsibilities under the CRA. example, home mortgage lending in low- and When the Board has found inadequacies in a moderate-income areas has increased steadily bank holding company's performance or pro- and substantially during this decade. Despite gram in the context of an application before the increasing competition by other financial service Board, these institutions have made commit- providers, banks have maintained their predomments designed to improve the institution's CRA inant position in the field of small business lendperformance and to permit the Board to proceed ing, outstripping other financial service providers to review the application. Usually these commit- by a wide margin. Furthermore, banks have ments have addressed many of the concerns consistently been the predominant lenders in the raised by public comments, as well as those Small Business Administration's lending proexpressed by the Board in similar applications. grams. Forty-four of the fifty-five national bank and bank holding company community develop- While the commitments vary from case to case ment corporations have been formed since the depending on the particular facts, commitments CRA was enacted in 1977. Banks have been generally relate to establishing or improving proamong the primary lenders for projects undergrams for ascertaining the credit needs of the taken under the Department of Housing and community; implementing programs to make the Urban Development's Urban Development Accommunity more aware of the institution's credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 737 tion Grant program, and have been substantial process: (1) that there is not enough opportunity financial contributors to the Neighborhood for individuals and community groups to have Housing Services programs around the country. input into the evaluation of CRA performance of In our view, the results achieved through our institutions, and (2) that high CRA examination efforts to implement the current provisions of the ratings are commonplace. We believe that these CRA are substantial. Viewed from the perspec- criticisms could be fully met by providing a tive of the objectives of the CRA that I outlined mechanism that would permit the public to parthis morning, the Board's implementation pro- ticipate in the assessment of the CRA perforgram must be viewed as successful. As I said at mance records of financial institutions. the outset, the purpose of the CRA is to assure This could be effectively accomplished that banks take steps to identify the credit needs through establishment of a two-stage procedure. of the community, make all segments of the First, the appropriate federal financial supervicommunity aware of the credit facilities offered sory agencies should publish, approximately evby the bank, and meet the credit needs of cred- ery two years, an evaluation of each financial itworthy members of all segments of the commu- institution's record of performance under the nity in a nondiscriminatory manner. We believe CRA. This evaluation would provide the public that our CRA program has made important con- with the basis for the regulatory agency's analytributions to achieving these goals. sis of the CRA performance of each financial institution. Second, the public should be invited to submit comments regarding this evaluation RECOMMENDED IMPROVEMENTS and the institution's performance record. As an IN THE CRA essential part of this program, the federal financial supervisory agencies would be required to We recognize that improvements in the imple- take these public comments into account in rementation of the CRA can be made, but we do viewing expansion proposals by the institution. not see a need for major revision of the CRA. We In our view, this approach would provide a believe that the current CRA policies and frame- meaningful and highly effective method for comwork are fundamentally sound and workable. munication among banks, communities, and reg- Any modification to that system must be care- ulators regarding the community's needs, the fully tailored not to upset the balance between institution's CRA plans and goals to address the needs of local communities and the safe and those needs, and the institution's record of sound operation of banks, or to raise administra- accomplishment in meeting their responsibilities tive obstacles that may tend to erase the gains under the CRA on a regular basis. already achieved by the CRA. It would also assure the advantage of increased It is from this perspective that the Board public participation without establishing a combelieves modifications of the CRA must be plex system that relies on credit allocation or viewed. With these objectives in mind, the Board intricate administrative procedures that are deinitiated an ongoing study earlier this year of the signed to enforce CRA compliance by imposing Board's CRA programs and established a staff the possibility of costly delays. Moreover, this task force to identify model CRA programs and approach has the advantage of simplicity and factors that are necessary for the implementation could be incorporated into the existing frameof a sound CRA program. The Board believes work established by the CRA as an effective that this self-evaluation, which is based on 10 substitute for many of the provisions of Title IV years of experience with the CRA, will lead to of the House bill. further improvement in the Board's implementation of the CRA. The Board has also considered changes in the ANALYSIS OF TITLE IV OF H.R. 5094 law that would improve the current CRA process. We believe that changes in CRA should I have tried to paint a background that describes focus on two criticisms of the existing CRA current CRA policy and the Board's implemen- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin • November 1988 tation of that policy and explains the areas that data collection requirements are set under the the Board believes could be improved. I would bill. The proposal revises the current CRA rating like to turn now to a discussion of the provisions system to provide a comparative system that of Title IV of H.R. 5094 and the Board's con- requires institutions of the same size to devote cerns regarding the likely effect of these provi- comparable resources to community investment sions on the existing CRA framework. activities. The system includes five rating cate- I hope the committee will bear with me while I gories: two above-average ratings, one average take a few minutes to explain the complexities of rating, and two below-average ratings. the House bill, because it is so important that the Third, the House bill would require as a pre- Congress understand the full ramifications of the requisite to any banking or nonbanking expanbill's exceedingly complex and procedurally bur- sion that bank holding companies have an imdensome framework of data collection, CRA puted CRA rating that is above average on a performance evaluation, and new administrative comparative basis with institutions of similar requirements. size. Institutions with an average CRA rating could be granted preliminary approval to expand their nonbanking and interstate banking activities SUMMARY OF TITLE IV provided that they commit to implement policies that will improve their CRA performance. The Title IV of the House bill establishes a frame- bill establishes a complex procedure for monitorwork that includes four basic parts. These parts ing compliance with these commitments. Instituinclude the following: (1) data collection require- tions with a below-average CRA rating would be ments in three specified lending areas; (2) a prohibited from acquiring other financial institucomparative evaluation of the resources devoted tions on an interstate basis or from expanding by banks of comparable size to these three their nonbanking activities. A detailed and exlending areas; (3) limitations imposed on both tended process would be established to permit banking and nonbanking expansion proposals these institutions to acquire additional banks based on an institution's numerical CRA rating; within their home state provided they commit to and (4) the establishment of a number of complex improve their CRA performance. and protracted procedures for analyzing applica- Finally, the bill would revise the applications tions submitted under the Bank Holding Com- process under the Bank Holding Company Act in pany Act. several key respects. The bill would extend to 45 The first part of the House proposal requires days the period during which the public may that institutions collect data regarding their hous- submit comments regarding any proposal requiring loans in low- and moderate-income neighbor- ing Board approval under the Bank Holding hoods, small business loans and small farm Company Act except simple reorganizations. In loans, as well as investments in community de- addition, the bill would establish a formidable velopment projects and associated activities in procedure spanning a course of two years and these three specific areas. While data collection involving public comment, two stages of Board alone is only burdensome, when combined with review, and a mandatory public hearing in cases other parts of the bill, these requirements move involving acquisitions by bank holding compathe CRA away from its present emphasis on nies with an average or below average CRA expanding awareness of credit-granting opportu- performance rating. nities toward directed lending for specific purposes. Second, the bill requires that the federal finan- MAJOR AREAS OF CONCERN cial institutions supervisory agencies prepare and make available to the public evaluations of the Although the House Banking Committee has record of depository institutions in meeting the adopted a number of improvements to Title IV credit needs of their communities, placing special that reflect comments made by the federal bankemphasis on the specific types of loans for which ing agencies and others, the Board believes that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 739 a number of significant problems continue to business strategy. We are also concerned that exist with the House bill. There are five areas of credit needs of the community in other areas may major concern: go largely unmet by banks because resource 1. The provisions of the bill will work together commitments in these other areas clearly are to establish a system of credit allocation. given only minor significance under the rating 2. The extended comment period required in system established in the House bill. Thus, the the bill for all applications submitted under the effect of the bill will be to establish congression- Bank Holding Company Act will impose unnec- ally mandated direction of credit for specific essary costs and burdens on applicants with no purposes and to remove the flexibility that banks practical benefit to the public. currently have to identify and meet the special 3. The comparative rating system has the ana- needs of their community in a manner that takes molous effect of putting banks in an inappropri- advantage of the special skills and resources of ate competitive CRA performance race, and by individual banks. complex procedures prevents so-called average This system is made worse by the bill's use of performers from undertaking any expansion. a comparative CRA rating system that limits the 4. The protracted preliminary review and ability of institutions with an average CRA rating postapproval hearing procedures established by to expand. The House bill requires that the the bill are excessively burdensome. agencies grade financial institutions by compar- 5. In contrast to existing CRA provisions, ing the resources devoted by the institution to many parts of the new statute do not recognize community investment activities, particularly in the existing obligation of banks to make credit the three specified areas for which data are decisions consistent with safe and sound banking collected, to the resources committed by similar practice. size institutions. Our staff has prepared a more detailed appen- The bill also establishes a base rating of "avdix discussing a number of other difficulties that erage" on this comparative scale and limits the we see in the implementation of Title IV. ability of institutions with a performance rating As I have stressed, the major defect of the bill of average or below average from expanding is that its proposed information collection re- their banking or nonbanking activities. By setting quirements, CRA rating system, and limitations an "average" rating as the centerpiece of a on the approval of expansionary programs by comparative system, the bill will effectively force banks and bank holding companies will, taken as financial institutions to bid against similarly sized a whole, have the effect of requiring financial financial institutions for the above-average CRA institutions to devote increasing amounts of re- ratings that are necessary to gain approval of sources to areas for which data are collected. expansion proposals. The Board is very con- This is because, under the system contained in cerned that this comparative rating system will the House bill, it is impossible for a bank regu- force financial institutions to extend credit withlator to give an above-average rating to an insti- out regard to principles of safety and soundness tution unless the institution has committed an to assure that the institution has devoted suffiabove-average level of resources to three specific cient resources to the bill's three specified lendtypes of loans for which data are to be collected. ing areas in comparison with their peers to obtain By tying the data collection and rating system an above-average CRA rating. to three specific loan categories, the bill departs The Board believes that this system is also from the existing CRA philosophy, which per- defective because the complex and protracted mits banks to meet the needs of the community in application process established by the House bill a variety of ways, from purchasing low-income for proposals involving acquisitions by bank housing bonds to making business loans in mi- holding companies with an average CRA rating nority areas. It will, thus, stifle the ability of effectively makes the average rating unsatisfacfinancial institutions to specialize in certain par- tory in all meaningful respects. Any CRA rating ticular banking areas and to shoulder their CRA that is not "above average"—whether it is a responsibility in a manner consistent with their rating of average or poor—will, in practice, have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Federal Reserve Bulletin • November 1988 the same result of preventing the institution from lished by the bill introduces substantial uncertaking advantage of opportunities to expand into tainty into the approval process and could extend new geographic locations and new nonbanking that regulatory review process far beyond the areas. time horizon of most investors. In our view, The Board is also concerned that, taken to- permitting the public to participate in assessing gether, the impact of this bill will act as a tax on the CRA performance of the bank holding comfinancial institutions that will reduce the ability of pany in the manner 1 proposed earlier would regulated financial institutions to compete effec- provide a better vehicle for permitting public tively against unregulated entities that provide participation in the enforcement of CRA commitsimilar products and services. This would ulti- ments. mately hurt all segments of the consuming pub- Title II of S. 1886 makes significant strides lic. toward streamlining the review process under the The House bill also establishes an excessively Bank Holding Company Act and reducing the elaborate system of procedures for evaluating costs associated with the applications process. and considering the CRA records of financial The Board has fully supported these provisions institutions. The bill would establish a minimum of the Senate bill. The needless extension of the public comment period of 45 days for all appli- comment period and the complex review procecations or notices submitted to the Board to dures established for certain expansion proposals acquire banks under section 3 or to expand that have been proposed in the House bill, hownonbanking activities under section 4 of the Bank ever, would largely vitiate the gains made by the Holding Company Act. expedited procedures process established in S. In addition, the procedures established by the 1886. House bill for reviewing applications by bank holding companies with an average CRA rating are also exceedingly complex and would estab- SUGGESTIONS FOR MODIFICATION lish an excessively protracted administrative pro- OF TITLE IV cess. In these cases, the bill establishes a preliminary approval process in which the acquiring Along with the suggestions that I have made for bank holding company is permitted to commit to increasing public participation in assessing the specific proposals designed to improve its CRA CRA performance of banks, other improvements performance. Besides initial public comment and are needed to deal with the problems I have review of the proposal and CRA commitments, raised. First, the specific data collection requirethe bill imposes a re-review process of the acqui- ments of the bill should be eliminated. In place of sition and commitments six months after the this rigid format, which has the effect of limiting acquisition has been consummated, and man- lending flexibility, financial institutions should be dates a public hearing on the proposal two years permitted to collect whatever data are appropriafter the acquisition has been completed. ate to demonstrate their record of meeting the The Board does not believe that the very small credit needs of the community that the institution number of cases in which CRA comments are has identified and targeted. The institution could received warrants a significant increase in the be required to make this data available in sumpublic comment period in all cases reviewed by mary form for inspection by the public as part of the Board, particularly in view of the added the institution's CRA program. expense and burden that this extended delay Second, as a substitute for the comparative would impose. The Board could simply be di- rating system proposed in the bill, the bill should rected to use its existing authority both to permit adopt the procedure for public participation in members of the public additional time to com- the process for examining the CRA performance ment on applications before the Board and to of financial institutions that I have outlined. assure that commitments made by bank holding Clearly, the system that is centered on a rating companies during that process are met. defined as "average," and on a comparison of The protracted re-review procedure estab- resources devoted by financial institutions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 741 should be eliminated. Moreover, the bill must be only by an extensive outreach program that changed to permit banks to recognize their obli- includes contact with as many communities as gation to make credit decisions consistent with possible. The Board believes that its existing safe and sound banking practice and must permit Community Affairs Officers and outreach prothe federal agencies to take these principles into grams provide the most effective methods of account in evaluating the CRA performance of assessing these varied needs. In this regard, we financial institutions. note that the Federal Advisory Committee Act Third, a 45-day public comment period should embodies a congressional policy to avoid the not be required in every case reviewed by the creation of new advisory committees whose Board. Instead, the Board could be instructed to functions could be performed by an advisory grant extensions of the public comment period committee already in existence. whenever a request for additional time has been made and a reasonable showing has been made that an extension is appropriate. GOVERNMENT CHECK CASHING Finally, the complex and burdensome procedural requirements that the bill would impose on The House bill would require financial institubank holding companies that do not achieve an tions to establish a program for cashing governabove-average CRA performance rating should ment checks. The Board does not, in principle, be replaced by a specific direction to the Board to favor a statutory requirement that mandates the use its existing authority to enforce commitments provision of certain services at a specified price. by bank holding companies to improve their The Board recognizes that many of the changes CRA performance offered in connection with made in the final version of the bill are helpful in applications and notices submitted under the reducing the potential for fraud that is associated Bank Holding Company Act. with these programs. But the risk of fraud remains a real concern in a situation in which banks are required to provide immediate cash where COMMUNITY REVIEW BOARDS the authentication of the check being offered may be difficult to verify, and the identification pro- The House bill also makes a number of changes cedures are subject to abuse. in other areas. I would like to discuss only a few The Board questions, however, whether focusof these. First, the bill would require each Fed- ing exclusively on check cashing is the best eral Reserve Bank to establish a community approach to the problem of delivering governreview board that would advise each of the ment payments in a reliable and efficient manner. federal regulators of depository institutions of We believe that electronic alternatives represent the needs of consumers and communities within a much better long-term solution to problems in the Reserve Bank District and would review the this area. Any legislation on the subject should agencies' performance in implementing the poli- provide some sort of encouragement to develop cies of the CRA. We believe that these boards, as more innovative ways of delivering government constituted, are not well suited to the mission payments. assigned to them and would duplicate work al- For example, consideration should be given to ready done by the existing Consumer Advisory the development of arrangements whereby fed- Council. eral, state, and local benefit payments could be The regional focus of these review boards is electronically transferred to depository institutoo narrow to provide meaningful advice on tions that have agreed to participate in a volunexamination standards and practices, which must tary program. The cost to the banking industry to be uniform across the country. We believe that process an electronic payment is much lower, the Board's Consumer Advisory Council already and, consequently, the fee charged to the indiserves this function. These review boards are vidual would probably be considerably less than also ill suited to advise the Reserve Banks on the $2.00 charge now permitted in the House bill local issues, which can be effectively surveyed for cashing a government check. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin • November 1988 BASIC BANKING able by a depository institution, the determination of whether the draft is local or nonlocal be Similarly, the Board believes that it is inappro- based on the location of the payable through priate to require depository institutions to offer bank. basic transaction accounts at a given price. Our With regard to the provisions on Truth in concern is that any mandatory arrangement will Savings, home equity lines of credit, and the be both static and inflexible and that transaction Equal Credit Opportunity Act, which are disaccount fee requirements will be extremely diffi- cussed in the attached appendix, the Board supcult to implement in regulations. In light of these ports the need for full disclosure to consumers problems, the Board believes that voluntary ef- about the terms of their deposit and credit acforts by financial institutions to offer basic low- counts, but we question the need for substantive cost accounts are the appropriate response. Sur- limitations on the practices of institutions. veys indicate that as many as 50 percent of financial institutions voluntarily offer basic banking services and that more institutions establish CONCLUSION these types of programs every year. The Board believes that the trend will increase and can be Our criticism today of some of the provisions of encouraged without legislation mandating a spe- Title IV of the House bill stems from our judgcific program of services and fees. ment that the policies and framework established by the CRA are sound and workable. The Board fully supports the basic purpose of the CRA of EXPEDITED FUNDS AVAILABILITY encouraging financial institutions to meet the AMENDMENTS AND OTHER PROVISIONS credit needs of all segments of their local communities in a manner that is nondiscriminatory The House bill contains several amendments to and consistent with the principles of safe and the Expedited Funds Availability Act. For the sound banking practice. We believe that our most part, these amendments facilitate compli- current system of examinations, community outance with the act's requirements and reduce the reach programs, and review of applications is risk of fraud in accepting checks that must be well suited for this purpose and has been sucgiven next-day availability. The Board supports cessful in encouraging banks to increase their these amendments and believes that the Con- commitment of resources to community needs gress should act on them quickly. including low- and moderate-income neighbor- The Board continues to be concerned, how- hoods. ever, about the treatment of payable-through The changes in the CRA that are proposed in drafts under the act. The House bill contains an the House bill go far beyond the alterations that amendment that would explicitly codify a recent we believe can be justified by our experience in decision by the U.S. District Court that credit administering and reviewing compliance with the union share drafts that are payable through an- CRA. These changes upset the balance estabother bank be treated as local or nonlocal checks lished in the CRA between the responsibility of based on the location of the credit union, rather financial institutions to serve the needs of all than the payable-through bank. segments of their communities and the principles The Board believes that under this approach, it of safe and sound banking. In the process, the is difficult for consumers to understand when the House bill establishes a framework that tends proceeds of credit union payable through share toward credit allocation and erects formidable drafts are available for withdrawal, it is difficult procedural obstacles. for depository institutions to comply with the We recognize that some improvements can act, and the risk associated with accepting these still be made in the implementation of the policies drafts for deposit is increased. Therefore, the of the CRA. In particular, we have offered de- Board recommends that the Congress adopt an tailed recommendations that include a new sysamendment clarifying the act to provide that, in tem of public participation in assessing a bank's the case of payable through drafts that are pay- CRA performance, elimination of rigid data col- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 743 lection requirements, adoption of provisions for to improve communication between banks and granting requests by members of the public for all segments of the communities they serve, and extensions of the public comment period on to assure that credit is available on a nondiscrimapplications, and use of the Board's authority to inatory basis to creditworthy customers. enforce bank commitments to improve CRA per- We stand ready to provide any assistance that formance. The objective of these suggestions is we can in this area. • Statement by H. Robert Heller, Member, Board To the extent that the bill's insurance proviof Governors of the Federal Reserve System, sions are measured against these standards, they before the Subcommittee on Commerce, Con- fall short. Rather than offering consumers a sumer Protection, and Competitiveness of the broader choice of products and financial services Committee on Energy and Commerce, U.S. providers, the insurance title restricts the num- House of Representatives, September 9, 1988. ber of market participants and opportunities for price competition and constructive product inno- I am pleased to be here today to present the vation. Rather than allowing depository institu- Federal Reserve Board's position on the insur- tions to develop a more flexible line of products ance provisions of H.R. 5094, the Depository and enhance consumer choices, the provisions Institutions Act of 1988. During consideration of impose unnecessary additional barriers to bank the bill by the House Banking Committee, the participation in insurance agency activities. Im- Board recommended deletion of the insurance portantly, these new restrictions would be improvisions as unnecessarily restrictive of compe- posed in a manner that focuses not on questions tition to the detriment of consumers. The Board of risk, but on ownership, and in so doing would maintains that view, with the exception that it arbitrarily cut back the already limited insurance supports the bill's intent to authorize bank hold- agency powers of bank holding companies as ing companies to offer financial guaranty insur- well as their subsidiary banks. ance. My remarks will amplify these general statements. BANK HOLDING COMPANY EXPERIENCE THE NEED FOR FINANCIAL WITH INSURANCE ACTIVITIES RESTRUCTURING LEGISLATION The Board has consistently supported the provi- The Board has strongly supported congressional sion of insurance agency activities by banks and efforts to enact legislation to update the nation's bank holding companies. Acting under the probanking statutes and to create a framework that visions of the Bank Holding Company Act, the will allow depository institutions to adapt to the Board has authorized the careful expansion of changes in technology and competition that are insurance agency activities for bank holding transforming our financial markets. We are en- companies. In the original 1956 act, the Congress couraged by efforts undertaken first in the Sen- recognized the appropriateness and benefits of ate, and now in the House, to begin the process permitting bank holding companies to sell insurof modernizing the financial system by establish- ance by authorizing, in the act itself, holding ing appropriate structural arrangements for bank company participation in activities of a financial holding companies to conduct securities activi- or insurance nature. Pursuant to this standard, ties. Important goals of these efforts include the the Board from 1956 to 1970 approved a variety promotion of competition and consumer service of insurance agency activities for holding compaby broadening the array of financial services nies, including operating general insurance agenproviders and enhancing the flexibility and safety cies, as well as selling credit-related life, acciof banking organizations and the banking system dent, and health insurance, the development of generally. which, I might add, was pioneered by banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

744 Federal Reserve Bulletin • November 1988 After the 1970 amendments added the closely- have adversely affected bank safety and soundrelated-to-banking standard to the Bank Holding ness or the banking system generally, or created Company Act, the Board continued to authorize the potential for conflicts of interest or other insurance agency activities for bank holding adverse effects. Today's highly competitive marcompanies, including particularly the sale of ket for consumer credit, the Bank Holding Comcredit-related property and casualty insurance. pany Act's prohibitions against the tying of bank In authorizing this activity, the Board deter- and nonbank products, such as insurance, and mined that its conduct by bank holding compa- Board regulations requiring disclosure when innies could be expected to produce public benefits surance is sold by lenders substantially mitigate in the form of increased competition and cus- concerns regarding the potential for tying of tomer convenience that outweighed potential ad- insurance purchases to credit decisions. I might verse effects. As I will discuss below, the Board add that as a result of the Bank Holding Comalso adopted various precautions to guard against pany Act's antitying provisions, bank customers the potential for conflicts of interest in the com- are offered more protection in this area than are bination of banking and insurance. customers of their nonbank competitors, such as The Board's decision with respect to the sale finance companies, which are not subject to of credit-related property and casualty insurance these tying prohibitions and, of course, may sell was challenged, and, in a series of court cases, all types of insurance. upheld by the federal courts as an appropriate In light of these safeguards, the Board does not activity for bank holding companies under the believe that a general prohibition on the conduct closely-related-to-banking standard and as meet- of insurance by bank holding companies and ing the standards of safety and soundness, con- their subsidiaries is necessary or warranted. flict of interest, and other potential standards in the act. Subsequently, in 1982, the Congress amended BOARD RESER VA TIONS the Bank Holding Company Act to prohibit bank REGARDING TITLE III OF H.R. 5094 holding companies generally from engaging in insurance activities subject to seven exceptions. The insurance provisions of H.R. 5094 further This statute thereby prohibited bank holding limit the already limited insurance agency activcompanies from operating general insurance ities permitted under the 1982 Garn-St Germain agencies or selling credit-related property and Act in two principal respects: First, the bill casualty insurance, except in small towns, or by extends the Garn-St Germain Act to state bank small holding companies, or when the bank hold- subsidiaries of bank holding companies. Under ing company had been authorized to do so before the bill, state banks may not engage in state the new statute's enactment. authorized insurance activities if they are acquired by an out-of-state bank holding company. Further, state banks owned by in-state bank RISK AND CONFLICT holding companies must limit their insurance OF INTEREST CONCERNS activities to persons present in the state. Second, the bill eliminates insurance agency activities Nevertheless, over the more than 30 years since protected by the grandfather provisions of the passage of the Bank Holding Company Act, bank 1982 act if the bank holding company providing holding companies either directly or through the insurance is acquired by another bank holdbank subsidiaries have become substantial pro- ing company. viders of insurance agency products. Based on this record, the Board's view has been that increased bank participation in insurance agency INSURANCE AGENCY ACTIVITIES activities may be expected to enhance consumer OF STATE BANKS convenience, lower the cost of insurance, and promote product innovation. Significantly, the With regard to the insurance agency activities of Board has found no evidence that these activities state banks, the Board is opposed to the addi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 745 tional limitations contained in the bill for several engage in insurance agency activities that they reasons. First, as noted, the Board believes that conducted on the May 2, 1982, grandfather date. there is no competitive or risk-related rationale The exemption applies only to the particular to justify further restrictions on the conduct of company actively conducting insurance activities insurance agency activities by banking organiza- on that date. Other affiliates within the same tions. This is particularly the case since the bill holding company are not allowed to engage in imposes these further restrictions unevenly grandfathered activities, and there are geobased solely on the ownership of the bank by a graphic and product limitations imposed on an holding company. Exemption D company. The purpose of this Second the Board believes that considerations exemption was to avoid the disruption of estabof competitive equity weigh against further re- lished customer relationships or the forced divesstrictions on bank holding company sales of titure of insurance activities lawfully authorized insurance. Thrift institutions, and their holding under the Bank Holding Company Act and concompanies, independent banks, and nonbank ducted, in many cases, for a number of years. lenders, such as finance companies and mortgage H.R. 5094 would terminate these grandfather banking concerns, have unlimited authority to rights if the grandfathered company were acoperate general insurance agency activities. quired by another bank holding company. The Moreover, a number of our nation's leading Board believes that this termination of grandfainsurance underwriting companies have recently ther rights is unnecessary in view of the substanacquired federally insured commercial banks or tial limitations already placed on Exemption D thrift institutions. companies. In the Board's view, the intent of Thirdly, the provisions of H.R. 5094, which Exemption D is that the grandfathered subsidiary restrict insurance activities on the basis of own- should continue to be able to engage in the ership by an out-of-state entity, run directly activity, even if acquired by another bank holdcounter to both marketplace developments and ing company, so long as the grandfathered subpolicy determinations regarding the provision of sidiary complies with the geographic and funcbanking services on an interstate basis. This tional limitations in Exemption D and the decade has seen a rapid and needed movement insurance activity is not transferred to the acquirtoward full interstate banking. Currently, all but ing company. Under these limitations, already five states have enacted laws providing for acqui- contained in the statute, the acquisition would sition of banks in these states by out-of-state not add an additional insurance competitor or holding companies. We believe that it is anticom- permit the grandfathered subsidiary to expand its petitive and not in the best interest of consumers activities other than as limited under Exemption to require the elimination of bank insurance D. competitors as a penalty for the benefits of For example, under current law, if a California interstate banking. bank holding company were to acquire a Texas Finally, the bill goes far beyond merely closing bank holding company with grandfathered insurthe South Dakota loophole. As drafted, the bill ance activities, these activities could not be would require a state bank acquired by an out- exported to California or offered by the Califorof-state bank holding company to cease selling nia holding company. With such limitations alinsurance even in the bank's own state. The ready in place, the Board sees no public policy Board sees no economic justification for this gain in requiring the termination of the insurance uneven treatment for state banks owned by out- activities of the Texas company with the attenof-state bank holding companies. dant disruption in settled customer relationships, the loss of a market competitor, and the possibility of substantial financial loss. Loss OF EXEMPTION D RIGHTS Accordingly, the Board would strongly urge that, consistent with the intent of the 1982 Garn- Under Exemption D of the Garn-St Germain St Germain Act, Exemption D not be revised as Act, bank holding companies may continue to proposed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

746 Federal Reserve Bulletin • November 1988 FINANCIAL GUARANTY INSURANCE and by access to the Federal Reserve System's discount window, from other activities of the The Board supports as constructive and reflect- bank holding company. As long as there are ing the changes that are under way in our finan- adequate fire walls between the bank and other cial markets the provisions of the bill permitting subsidiaries of the holding company, any finanfinancial guaranty insurance. cial problems of the nonbank activities are less We believe, however, that as in the case of the likely to become the problems of either the bank securities powers authorized under the bill, it or the banking system. Similarly, location of the would be preferable for this insurance to be new activity in a separate subsidiary, along with provided through a separate subsidiary of the appropriate fire walls, helps to ensure that the bank holding company rather than by a subsid- protections of the federal safety net are not iary bank. As presently drafted, the bill would extended to the subsidiary's activities. permit banks to offer this product. Unlike the operation of a general insurance agency, financial guaranty insurance is a new activity for banking CONCLUSION organizations and poses the additional risk associated with the company acting as a principal To conclude, our analysis of the insurance title of rather than as an agent. The Board views these the Depository Institutions Act of 1988 suggests risks as manageable, in large part because banks that many of the provisions would further restrict have had long experience in providing similar the ability of banking organizations to compete in types of financial guarantees, such as standby the provision of insurance agency products and letters of credit. It is, however, in keeping with services, thereby limiting consumer options, our general philosophy to safeguard banks and eliminating the prospect of decreased costs and protect the federal safety net to separate non- improved services, and, in many cases, forcing bank activities from the bank by placing them in bank customers to turn to other sources to meet separate subsidiaries of the holding company insurance needs that banks have long satisfied. rather than in the bank itself. Based upon the established record of prudence The approach of insulating the bank from other and safety that bank holding companies and activities is integral to the Board's recommenda- banks have in insurance agency activities, the tion in favor of the repeal of the Glass-Steagall existing statutory and regulatory safeguards, and Act's separation of commercial and investment concepts of competitive equity, the Board cannot banking, and, as noted, it is the approach embod- support these further restrictions on bank insuried in other sections of H.R. 5094 authorizing ance agency activities. On the contrary, it is the bank securities activities. We strongly recom- Board's view that insurance agency activities mend that such a framework be utilized for represent an appropriate adjunct to traditional nonbanking activities such as insurance under- banking activities. The Board would also supwriting that might be authorized by the Congress. port, subject to appropriate fire walls, a provision The advantages to such an approach lie in the authorizing bank holding companies to offer fiseparation of banking activities, which are ulti- nancial guaranty insurance as well as a broader mately supported by federal deposit insurance range of insurance products. • Statement by Alan Greenspan, Chairman, Board I am pleased to take this opportunity to present of Governors of the Federal Reserve System, the Federal Reserve Board's views on the combefore the Subcommittee on Monopolies and petition and concentration of resources implica- Commercial Law of the Committee on the Judi- tions of H.R. 5094, the Depository Institutions ciary, U.S. House of Representatives, Septem- Act of 1988. The promotion of competition in the ber 14, 1988. financial services industry and the prevention of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 747 the undue concentration of resources are impor- sacrifice some competitive benefits to insulate tant goals of Federal Reserve regulatory policy. these new activities from an affiliated bank. Here Indeed, we are required to pursue these objec- again, we believe that the framework of the bank tives by the Bank Holding Company Act. holding company subsidiary that would be estab- For several years the Board has argued force- lished by both the Senate's bill and the Deposifully that our laws regarding financial structure tory Institutions Act of 1988 appropriately balneed substantial revision to sustain and promote ances our complex goals. competitive financial institutions. We have Since the Bank Holding Company Act prostrongly supported repeal of the Glass-Steagall vides the foundation of our current and, we hope, separations of commercial and investment bank- our future approach to dealing with competition ing and are very much in favor of the Financial issues, I should like to review briefly how the Modernization Act passed by the Senate, includ- Federal Reserve uses that act in this area. I will ing its establishment of the bank holding com- argue that the existing provisions of the Bank pany subsidiary framework for expanded securi- Holding Company Act are fully adequate to ties powers. We believe that this framework, address these concerns. The final section of my which is also the approach of the proposed testimony discusses in some detail why the Depository Institutions Act, is the best available, Board feels that reform of the Glass-Steagall Act can be tested in the "real world" of financial is procompetitive, identifies those provisions of institutions, and, if it proves as effective as we the proposed Depository Institutions Act of 1988 expect, should serve as a foundation on which to that we feel go too far in restricting the expected build more generally for the future. I urge the benefits of increased competition, and explains committee to support the establishment of this why we feel the issue of the undue concentration approach to expanded securities powers. of resources is not a major concern. Without denigrating the importance of encouraging competition and preventing the undue concentration of resources, it must be remembered BOARD SUPPORTS THE APPROACH that there are other important goals of regulatory OF THE BANK HOLDING COMPANY ACT policy. Here also the Bank Holding Company TO COMPETITION Act includes principles that made good sense when they were first enacted and that make good The Board is generally comfortable with, and sense today. By these I mean that the Bank supports, the provisions of H.R. 5094 aimed at Holding Company Act also requires us to con- maintaining competition. The proposed bill's sider, in determining the appropriateness of new provisions on competition retain the principles activities for bank holding companies, whether set down in the Bank Holding Company Act as the activities will result in unsafe and unsound amended in 1970. These principles require that banking practices, decreased competition, or the Board not approve any acquisition or merger conflicts of interest. Over the years we have that would result in a monopoly, an attempt to interpreted these principles to be consistent with monopolize, or a substantial lessening of compeour efforts to promote competitive and efficient tition in any section of the nation unless the capital markets and to protect impartiality in the anticompetitive effects are clearly outweighed by granting of credit, to avoid the risk of systemic other public interest concerns. We believe that failure of the insured depository system, and to these principles continue to make good sense. prevent the extension of the federal safety net to Moreover, they have proved to be workable and nonbanking activities. effective in practice during almost two decades of I am sure it will come as no surprise when I tell experience. Thus, the banking system has reyou that success in achieving these multiple mained highly competitive and there has been no objectives is neither easy nor assured, and that general tendency toward an undue concentration one goal can sometimes be in conflict with an- of financial resources during this period even as other. For example, some proposed new powers bank holding companies entered various nonare relatively risky, and it may be necessary to banking activities approved by the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

748 Federal Reserve Bulletin • November 1988 Besides the sensible principles and proved would likely seek additional powers in at least efficacy of the Bank Holding Company Act ap- the municipal revenue bond area, and possibly in proach to competition, a relatively efficient ad- corporate bonds as well. With banks outside ministrative framework is already in place. In money markets engaging in investment banking, particular, prior approval from the Federal Re- the Board anticipates that local and regional serve is now required for acquisitions by bank firms would very possibly acquire direct access holding companies of banks and nonbank firms. to capital markets that is similar not only to the Further, the Federal Reserve must assess, access now available to large corporations, but among other things, the competitive effects of all also to that currently available to municipalities acquisitions. This assessment begins with an whose general obligation bonds are underwritten analysis that focuses on the impact of an acqui- by local banks. sition on traditional structural measures such as More generally, the major public benefit of the the concentration ratio and the Herfindahl index. Glass-Steagall repeal would be lower customer If a particular acquisition proposal raises sub- costs and increased availability of investment stantive competitive issues based on purely banking services, both resulting from increased structural measures, additional factors are taken actual and potential competition and from the into account. Most notable among these are (1) realization of possible economies of scale and the possible competitive influence of nonbank scope from the coordinated provision of comfirms, especially thrift institutions, and (2) the mercial and investment banking services. We importance of potential competition, that is, the believe that the repeal of Glass-Steagall would likely influence of firms outside the particular reduce underwriting spreads and therefore lower market on the pricing behavior of participants in financing costs to businesses large and small, as that market. This analytical approach applies to well as to state and local governments. In addiboth bank and nonbank acquisitions. tion, bank holding company participation in deal- In short, I think that the competition principles ing currently ineligible securities is likely to that are contained in both the Bank Holding provide the benefit of enhanced secondary mar- Company Act and the proposed bill have been, ket liquidity. and can continue to be, efficiently and effectively Studies of the market structure of investment applied with established administrative machin- banking suggest that at least portions of this ery and the application of established economic industry are fairly concentrated. Evidence in this analysis. There is a track record and it has regard was provided in the September 1987 Reworked. port of the House Committee on Government Operations, which presented data supporting its conclusion that underwriting of corporate secu- SPECIFIC COMMENTS ON H.R. 5094 rities is highly concentrated. In 1986, the five largest underwriters of commercial paper ac- Expanded Securities Powers Are counted for more than 90 percent of the market; Procompetitive the five largest underwriters of all domestic corporate debt accounted for almost 70 percent of Repeal of the Glass-Steagall Act would increase the market; and the five largest underwriters of the number of actual and potential competitors in public stock issues accounted for almost 50 perthe investment banking industry. Many of the cent of the market. Data for 1987 and 1988 major bank holding companies have made clear indicate that these numbers have remained estheir intentions to quickly take advantage of sentially unchanged. expanded securities powers, should they be I would emphasize that these data, while very granted; and it is our expectation that more bank suggestive, do not necessarily imply that concenholding companies would follow if Glass-Stea- tration has led to higher consumer costs. The gall is repealed. For example, many banks and possibility, or potential, that new firms will enter bank holding companies that currently under- a market may be sufficient to achieve competitive write and deal in municipal general obligations prices. However, it is precisely here that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 749 Glass-Steagall Act is so troublesome. Bank hold- straining. The provision of investment banking ing companies, with their existing expertise in services, particularly to corporate clients, is at many securities activities and their broad finan- the cutting edge of the information revolution. cial skills and industry networks, would be the The ability of banking organizations to hold their most likely potential competitors of investment competitive position by continuing to operate on banks if not constrained by law. the margins of customer services is limited. Un- Repeal of the Glass-Steagall Act is also con- less the Glass-Steagall Act is repealed, the consistent with technological changes that are occur- straints it imposes, along with the continued ring in the financial services industry—changes undermining of the bank franchise by the new that are inhibiting the ability of banking organi- technology, are likely to limit the future ability of zations to be effective competitors both now and bank holding companies to contribute to and in the future. Unless there are compelling public encourage a competitive and efficient economy. policy reasons to continue the current Glass- Steagall restrictions—and we see none—society Some Provisions of the Bill Unnecessarily will incur unnecessary costs as bank holding Inhibit Competition companies' specialized resources are repositioned into other activities, not because of bank As I noted in my introductory remarks, the holding companies' unwillingness to compete or encouragement of competition is not the only innovate, but simply because of an inflexible objective of Federal Reserve regulatory policy. statutory and regulatory structure. Other important objectives include a safe and The technological changes that I am referring sound banking system, prevention of conflicts of to—and that I and other members of the Board interest, and limiting the federal safety net to have discussed on many previous occasions—are insured depositories. These objectives have led developments in computer and communications us to support locating certain expanded nonbanktechnology that have enabled both borrowers ing activities, including expanded securities powand lenders to more easily and at lower cost ers, in a separate subsidiary of a bank holding obtain and use credit and market risk informa- company. Successful implementation of this tion. This strikes at the very heart of the value- strategy requires the construction and mainteadded of financial intermediation. More specifi- nance of effective "fire walls" between a bank cally, service organizations or investors' own and an affiliated securities firm. Thus, we support on-line data bases, coupled with powerful com- most of the fire wall provisions of the Depository puters and wide-ranging telecommunication fa- Institutions Act of 1988. cilities, can now provide potential investors with However, two of the fire wall and securities virtually the same timely credit and market infor- activities provisions of H.R. 5094 are, in our mation that was once available only to the inter- view, unnecessarily restrictive and would, if immediaries. There are numerous examples of new plemented, impose competitive costs that exceed financial products that have resulted from this any benefits. The first such provision is the technological revolution and that challenge tradi- exclusion of underwriting and dealing corporate tional bank loans—the explosion in the use of equities from the set of expanded securities accommercial paper, the rapid growth of mortgage- tivities. In view of the extensive fire walls, parbacked securities, and the invention of consum- ticularly those limiting credit transactions and er-receivable-related securities. It seems reason- asset sales, insulating affiliate banks and thrift able to assume that the trend toward direct institutions from potential safety and soundness investor-borrower linkage, or more securitiza- and conflict of interest concerns, we see no tion, will continue. reason for an absolute fire wall prohibiting equity Bank holding companies, of course, have not activities. ignored these vast changes and, indeed, have A second place where we believe the proposed responded to the technological revolution by bill would unnecessarily inhibit competition is its participating in it. However, it is here once again restrictions on the sharing of similar name, logo, that the Glass-Steagall Act is particularly con- premises, and joint advertising between the se- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

750 Federal Reserve Bulletin • November 1988 curities subsidiary and the affiliated bank or industries, or if the bank holding company and thrift. Restrictions of this type would dilute, and securities firm have total assets greater than $30 perhaps prevent, some of the cost-saving syner- billion and $15 billion respectively. gies and economies of scope that are expected While we recognize that the anxieties underlyfrom the joint provision of these activities within ing inclusion of new undue concentration stana bank holding company. The other extensive fire dards in H.R. 5094 have a lengthy historical walls contained in the bill, and in the bill passed tradition, there appears to be little foundation for by the Senate, are sufficient to insulate the bank such anxieties in today's environment. This confrom risk, to warn investors of the nature of their clusion is supported by two observations. First, risk, and to meet safety and soundness concerns the nonbank financial sector in general remains in this area. highly fragmented, in spite of the fact that it is Besides the securities provisions that I have generally much less regulated than banking. Secjust discussed, the Board believes that many of ond, the Board's experience in implementing the insurance provisions of the proposed bill section 4(c)(8) of the Bank Holding Company Act would unnecessarily restrict competition and as amended in 1970, which allows bank holding thereby raise costs to consumers. The one ex- companies to enter nonbanking activities apception is that part of the bill that permits banks proved by the Board, has not been marked with to provide financial guaranty insurance. Since any general tendency toward increasing overall my colleague Governor Heller testified on the concentration in the approved activities. Under insurance provisions before another committee section 4(c)(8), when considering expanded bank of this House last Friday, 1 will not dwell on this holding company powers, the Board is required issue. However, let me emphasize that of partic- to account for possible adverse effects such as ular concern to the Board are the increased undue concentration of resources. restrictions on the ability of banks to engage in Even a brief examination of the nonbank finaninsurance agency activities. Insurance agency cial sector illustrates that much of it is highly activities entail little risk, have been engaged in fragmented. For one thing, while recent years safely by many banks for many years, and their have seen significant blurring of distinctions beprovision by banking organizations is clearly tween commercial and investment banking, the procompetitive. Aside from deposit and loan nonbank financial sector in general has tended to activities, insurance is the one financial service remain segmented. For example, different comthat virtually all of our citizens use. Generalized panies have operated in insurance, commercial bank insurance agency services would reduce and consumer finance, and mutual funds. Furinsurance costs to the public, and modernize the thermore, within most of the major nonbank delivery of a valuable product. financial services there are a large number of firms, including roughly 2,300 in life insurance Undue Concentration Provisions underwriting, 3,500 in property and casualty insurance underwriting, 1,700 in commercial and Presumably because of the federal safety net consumer finance, and 650 in mutual funds. and, therefore, a concern over the potential size Without any significant regulatory standards to of failed institutions, banking is the only industry inhibit them, market forces have not shown any to which laws explicitly restraining overall, or notable tendency toward undue levels of aggreundue, concentration apply. In addition, these gate concentration in the nonbank financial secrestraints apply only to the acquisition of non- tor. bank firms by bank holding companies and do not Just as the nonbank financial sector in general appear in any of the nation's antitrust laws. has remained disaggregated, the activities ap- The proposed bill contains specific numerical proved since 1970 by the Board as permissible standards prohibiting the acquisition of a securi- for bank holding companies have also generally ties firm by a bank holding company. These remained unconcentrated. Acquisitions by bank standards include prohibition of a merger if both holding companies in most of the 25 nonbanking parties are among the top 15 in their respective activities approved by the Board have been mod- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 751 est. Indeed, most of the bank holding companies In short, based on the experience of bank that entered activities such as underwriting credit holding companies in nonbanking activities, the life insurance, operating insurance agencies, pro- experience of the nonbank financial sector in viding financial advice, and engaging in data general, and the apparent effectiveness of current processing, have done so on a de novo basis. provisions of the Bank Holding Company Act, Such entry is procompetitive and has extremely there seems to be little foundation for concern little effect on overall asset concentration. with the issue of undue concentration of re- In a few activities, including mortgage bank- sources. However, we recognize that many peoing, consumer finance, and factoring, bank hold- ple are concerned about this issue, and because ing companies have not only expanded de novo we view the reform of Glass-Steagall as having but have also expanded significantly by acquisi- the highest priority, we continue not to oppose tions subject, of course, to review by the Federal the provisions for expanded concentration of Reserve applying the competition and undue resources in the proposed bill. concentration standards of the Bank Holding In closing, the Board believes that the Con- Company Act. In spite of entry by bank holding gress now has a historic opportunity to put the companies, mortgage banking and consumer fi- nation's financial system on a sounder footing— nance remain relatively unconcentrated, bank perhaps a unique opportunity to make it more holding companies have not dominated or taken competitive, more efficient, more responsive to over these industries, and overall financial sector consumer needs, and equally important, more concentration has not been appreciably in- stable. It would be a major waste of the scarce creased because of the relatively small size of the resources of the Congress and others if all the acquired nonbank firms and their activities com- hard work on this subject of the last year were pared to banking. While factoring has become lost. We urge you in the strongest terms to aid in dominated by bank holding companies, because the passage of legislation to repeal the Glassof the small absolute size of factoring in the Steagall Act and to put in its place a new framefinancial sector, the role of bank holding compa- work allowing the affiliation of banking organizanies has not materially affected financial concen- tions and securities firms as provided in the tration in the United States. Financial Modernization Act and our suggested revisions to the Depository Institutions Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

752 Announcements MEETING OF CONSUMER ADVISORY that interprets an amendment, issued December COUNCIL 22, 1987, requiring creditors to provide consumers with more information regarding closed-end The Federal Reserve Board announced that its adjustable-rate mortgage loans (ARMs) secured Consumer Advisory Council met on October 27- by the consumer's principal dwelling. 28. NEW PAMPHLET PUBLISHED ON AMENDMENTS TO REGULATION Y SCHEDULE OF AVAILABILITY OF FUNDS The Federal Reserve Board issued amendments The Federal Reserve Board issued on September to Regulation Y (Bank Holding Companies and 2, 1988, a pamphlet that explains when funds Change in Bank Control) on September 22, 1988, deposited in a bank must be made available for to implement the limitations placed on grandfause by a customer under the Expedited Funds thered nonbank banks by the Competitive Equal- Availability Act. ity Banking Act of 1987 (CEBA). This new act requires all banks, savings and CEBA redefined the term "bank" in the Bank loan associations, savings banks, and credit Holding Company Act to include any bank unions to disclose to their customers their checkwhose deposits are insured by the Federal Dehold policy when funds are deposited in checkposit Insurance Corporation (FDIC) and to proing, share draft, or NOW accounts. It also spechibit the formation of new FDIC-insured nonifies how quickly deposited funds must be made bank banks. available for withdrawals. CEBA also contains a grandfather provision The pamphlet outlines the availability schedule that permits a nonbanking company that conby type of deposit; names the circumstances trolled a nonbank bank on March 5, 1987, to when an institution may delay customers' use of retain the nonbank bank and not be treated as a their funds beyond the normal limits; states the bank holding company if the company and its disclosure requirements; demonstrates endorsesubsidiary nonbank bank observe certain limitament procedures; and provides the consumer tions. with error resolution information. These limitations generally restrict the ability The pamphlet is available by request from of nonbank banks to commence new activities or Publications Services, Board of Governors of the to engage in new cross-marketing activities with Federal Reserve System, Washington, D.C. affiliates after March 5, 1987; to permit over- 20551 and from the Federal Reserve Banks. drafts by, or incur overdrafts on behalf of, affiliates at a Reserve Bank; and to expand their assets more than 7 percent annually during any CHANGES IN BOARD STAFF 12-month period after August 10, 1988. The Board announced the following changes in PROPOSED ACTION the Division of Research and Statistics: Jared J. Enzler, Associate Director, resigned, The Federal Reserve Board issued on September effective September 27, 1988. 28, 1988, proposed revisions to its official staff Mark N. Greene, Assistant Director, resigned, commentary to Regulation Z (Truth in Lending) effective September 30, 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

753 SYSTEM MEMBERSHIP: ADMISSION OF Pennsylvania STATE BANKS Philadelphia Republic Bank Virginia The following state banks were admitted to mem- Virginia Beach Resource Bank bership in the Federal Reserve System during the period September 1 through September 30, 1988: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

754 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON AUGUST 16, 1988 registered another sharp rise, paced by continued large gains in outlays for computing equipment. Domestic Policy Directive An upturn in expenditures for nonresidential construction offset about half of the drop in the The information reviewed at this meeting sug- previous quarter. With outlays for consumer gested that the economy was continuing to ex- durables and business equipment relatively ropand at a vigorous pace, with manufacturing bust, the accumulation of nonfarm business inactivity exhibiting particular strength. Some ventories slowed markedly in the second quarter. measures of price inflation pointed to a pickup Housing starts were unchanged in the quarter from recent trends, and data on wages and total from their pace in the first quarter. compensation indicated that labor costs were The U.S. merchandise trade deficit declined rising more rapidly. considerably in the second quarter to its lowest Total nonfarm payroll employment increased level in three years. Exports of both agricultural sharply further in June and July. The rise in- and nonagricultural goods rose substantially cluded continuing rapid expansion in the manu- while non-oil imports fell after increasing steadily facturing sector, and it was accompanied by an since early 1985. Economic activity appeared to appreciable increase in the workweek of produc- have slowed in most of the major foreign industion workers. After declining considerably in trial countries in the second quarter. The rate of June, the civilian unemployment rate edged up inflation had increased in some of those countries to 5.4 percent in July but remained slightly below in recent months, but it was still relatively low. its average level for the second quarter. Producer prices of finished goods, which had Industrial production rose strongly in July af- increased at an accelerated pace in the second ter a sizable advance during the second quarter. quarter, rose appreciably further in July. The Production gains were widespread but were es- advance in July included a substantial rise in pecially pronounced for business equipment. prices of consumer goods excluding food and Capital utilization rates in manufacturing rose energy. The consumer price index, available for further in June and July and were at relatively June, continued to suggest little change in the high levels in primary processing industries. rate of consumer price inflation as declines in Retail sales increased moderately further in energy prices tended to offset some acceleration July, and revised data indicated somewhat higher in food and other prices. The prices of some retail sales in the second quarter than had been basic commodities had softened recently, in part estimated earlier. Overall consumer spending in because of the appreciation of the dollar in constant dollar terms increased at about the same foreign exchange markets. Increases in most moderate pace in the second quarter as it had on measures of labor costs had picked up over the average in the previous three quarters; outlays past several months, with the acceleration occurfor services and durable goods posted strong ring in most broad industry and occupational gains in the quarter, while spending for nondura- groupings. ble goods declined. In the foreign exchange markets, the dollar Business fixed investment was now indicated rose somewhat further over the period since the to have increased substantially further in the Committee meeting on June 29-30. In relation to second quarter. Spending for business equipment other G-10 currencies, the dollar was up about Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

755 2Vi percent on average over the intermeeting the intermeeting period; however, increases in period. Indications of continuing improvement in yields on corporate and municipal bonds were the U.S. trade balance and of some tightening in more limited, reflecting reduced supplies of new U.S. monetary conditions contributed to the issues. Mortgage rates rose marginally during the strength of the dollar, but the rise in its exchange period. Banks raised their prime lending rate value may have been tempered by perceptions from 9 to 9V2 percent in mid-July and subsethat it would be resisted by official actions. quently to 10 percent in the first part of August. At its meeting in late June, the Committee Broad indexes of stock prices were down around adopted a directive calling for a slight increase in 5 percent over the intermeeting period. the degree of pressure on reserve positions. Growth of the broader monetary aggregates, These reserve conditions were expected to be especially M2, slowed in July to rates somewhat consistent with growth of M2 and M3 at annual below the Committee's expectations for the third rates of about 5Vi percent and 7 percent respec- quarter as a whole. The weakness in M2 was tively over the period from June to September. concentrated in its volatile overnight RP and The members agreed that somewhat greater re- Eurodollar components. Growth of retail deposserve restraint would, or slightly lesser reserve its in M2 remained considerably less than in the restraint might, be acceptable depending on indi- first few months of the year and apparently was cations of inflationary pressures, the strength of damped by the rise since early spring of market the business expansion, developments in foreign interest rates and related opportunity costs of exchange and domestic financial markets, and holding such deposits. Ml continued to expand the behavior of the monetary aggregates. The rapidly in July, with strength especially evident intermeeting range for the federal funds rate was in other checkable deposits. Reflecting a surge in left unchanged at 5 to 9 percent. total reserves, the growth of the monetary base Some slight firming of reserve conditions was accelerated in July. implemented immediately after the June meeting. In the light of recent economic developments, In the reserve maintenance period ending in the staff projection prepared for this meeting was mid-July, adjustment plus seasonal borrowings revised to incorporate notably faster real growth jumped to an average of $1.3 billion, reflecting a in the current quarter than had been anticipated surge in borrowings over the extended July 4 earlier. Nevertheless, the rate of expansion was weekend and another bulge associated with an still projected to moderate considerably on balunanticipated large upward revision in required ance over the next several quarters. The effects reserves late in that maintenance period. In the of the drought were expected to depress meatwo reserve maintenance periods that followed, sured GNP growth in the second half of the year, borrowings averaged close to $600 million, some- but those effects would be reversed in the first what above the level prior to the June meeting. part of 1989. Growth of final demand was pro- Over much of the intermeeting period, federal jected to moderate somewhat over the year funds traded primarily in a range of 73/4 percent to ahead. To the extent that the current momentum 77/8 percent. In addition to the firming of reserve in final demand tended to be sustained but was conditions, market expectations of further near- not accommodated by monetary policy, presterm monetary restraint in response to the sures would be generated in financial markets strength of incoming economic data seemed to that would restrain domestic spending. The staff contribute to the rise in the federal funds rate projection continued to anticipate relatively slugfrom its average level in June. On August 9, the gish growth of consumer spending, much slower discount rate was increased from 6 percent to 6V2 expansion of business fixed investment, and subpercent and at the time of this meeting federal dued housing activity. The strengthening of the funds were trading around SVs percent. dollar since late spring might inhibit the improve- Against the background of continuing strength ment in the nation's trade balance to some extent in the economy, related concerns about inflation, in 1989, but continuing progress in reducing the and the firming of monetary policy, most other trade deficit was still expected to provide a key interest rates rose V2 to 3A percentage point over impetus to sustained economic expansion. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

756 Federal Reserve Bulletin • November 1988 rate of inflation was projected by the staff to surge in inventory accumulation could not be increase somewhat over the next several quar- ruled out at this stage of the cyclical expansion. ters, to an important extent because of the effects Under prevailing economic conditions, such a of reduced margins of unutilized labor and other development might well add to inflationary deproduction resources. mand pressures and could threaten the sustaina- In the Committee's discussion of the economic bility of the business expansion itself. situation and outlook, a number of members gave Views with respect to the outlook for conconsiderable emphasis to indications of ongoing sumer spending differed to some extent, but the strength in the economic expansion and to the members generally anticipated relatively limited implications of such growth for inflation in the growth over the next several quarters. One factor context of relatively full utilization of labor and cited was the impact of higher interest rates, capital resources. Some commented that the whose restraining effects on consumer spending surprises in the incoming economic information might be reflected more quickly than earlier over the course of recent weeks—indeed for the because of the increased use of variable rates on year 1988 to date—had tended to be on the side consumer and mortgage loans. Some members of greater than projected strength. Other mem- commented that relatively slow growth of conbers gave more weight to the possibility that sumer expenditures would be desirable not only monetary tightening over previous months—re- to curb potentially inflationary expansion of flected in reduced growth of the monetary aggre- overall final demand but to facilitate the allocagates, higher interest and exchange rates, and flat tion of more production resources to export commodity prices—might already have fostered markets. The rise in mortgage interest rates was a significant slowing of the expansion and re- expected to damp housing activity, and one straint on inflation. The members generally an- member emphasized that this effect might be ticipated at least some moderation in the expan- quite substantial. sion from the recent pace and viewed slower With regard to the prospects for foreign trade, growth as a desirable development in terms of the members still expected net exports to conaccommodating long-run anti-inflation objec- tinue to improve, but the extent of that improvetives, but they differed as to what degree of ment might be less than previously anticipated, policy restraint might be needed to achieve a given the appreciation of the dollar in recent sustainable and noninflationary rate of economic months. Indeed, some business contacts competexpansion. ing in international markets or preparing to enter In their assessment of prospective develop- such markets were already expressing concern ments in key sectors of the economy, a number about the potentially negative impact that the rise of members focused on business fixed invest- in the dollar would have on their sales. ment and business inventory accumulation as Turning to the outlook for inflation, members areas of particular uncertainty. Growth in busi- noted with particular concern that labor compenness capital spending was expected to slow sub- sation costs were rising at a faster rate this year. stantially from its rapid pace earlier this year, but Several commented on increasing shortages of a number of members believed that the risks of a workers in their local and regional markets and different outcome were in the direction of unan- on more numerous reports of higher wages to ticipated strength, particularly in light of excep- attract or retain workers. However, wage inflationally high rates of capacity utilization in many tion did not appear to be worsening in many industries. Tending to support that view were a areas, including some where available workers growing number of reports from business con- were reported to be in increasingly short supply. tacts of plans to expand or modernize production With regard to price developments, recent statisfacilities. Business inventories currently ap- tical indicators presented a mixed picture. Propeared to be at generally acceptable levels, as ducer prices of finished goods were rising more evidenced by inventory-to-sales ratios, lead rapidly, and there were reports from some parts times on deliveries, and reports from many bus- of the country that business firms were succeediness firms around the country. Nonetheless, a ing to a greater extent than earlier in their efforts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 757 to pass on rising costs or to raise profit margins. over, under prevailing circumstances, further On the other hand, sensitive commodity prices, firming might well foster some added strengthenparticularly for industrial materials, had been ing of the dollar in foreign exchange markets with fairly steady and a firmer dollar should relieve undesirable repercussions over time on progress some of the pressure on import prices. On bal- in improving the nation's foreign trade position. ance, however, most of the members thought One member also noted that further tightening so that the risks were on the side of greater inflation soon after the increase in the discount rate would over the quarters ahead. add to pressures for firmer monetary policies At its meeting in late June, the Committee abroad and thereby heighten the risks of an reviewed the basic policy objectives that it had upward ratcheting of interest rates in financial set for growth of the monetary and debt aggre- markets around the world. gates in 1988 and established tentative objectives While the members generally agreed on the for expansion of those aggregates in 1989. For desirability of a steady policy for the near term, the period from the fourth quarter of 1987 to the many thought that some further firming was fourth quarter of 1988, the Committee reaffirmed likely to be needed, perhaps relatively soon. the ranges of 4 to 8 percent established in Feb- These members saw substantial risks that inflaruary for growth of both M2 and M3. The mon- tionary pressures would intensify in the absence itoring range for expansion of total domestic of further fiscal and monetary restraint. The nonfinancial debt was left unchanged at 7 to 11 economy had considerable momentum, and there percent for 1988. On a cumulative basis through already were indications that cost pressures and July, M2 and M3 grew at annual rates a little some prices were increasing more rapidly. In above the midpoints of their annual ranges. Ex- light of their concerns, these members favored a pansion of total domestic nonfinancial debt ap- directive that would permit operations during the peared to have moderated to a pace marginally intermeeting period to be adjusted more readily below the midpoint of its range. For 1989 the toward further tightening if incoming information Committee agreed on tentative reductions to tended to confirm the potential that they saw for ranges of 3 to 7 percent for M2 and 3L/I to LL/2 increasing inflationary pressures. While most of percent for M3. The monitoring range for growth these members did not rule out the possibility of of total domestic nonfinancial debt was reduced some easing, one proposed a directive that did to 61/2 to IOV2 percent for 1989. It was understood not envisage any move in that direction during that all the ranges for next year were provisional the intermeeting period. and that they would be reviewed in February Other members, while they could accept a 1989 in the light of intervening developments. directive that indicated a greater willingness to With respect to Ml, the Committee reaffirmed in tighten than to ease reserve conditions, were less June its earlier decision not to set a specific target certain of the potential need for further monetary for growth in 1988 and also decided not to restraint, especially in the near term. These establish a tentative range for 1989. members emphasized that, when taken together, During the Committee's discussion of policy the tightening actions over the past several for the intermeeting period ahead, nearly all the months represented, in their judgment, a major members indicated that they preferred or could policy move whose restraining impact was not support a directive to maintain unchanged con- yet fully reflected in the economy. In this view, ditions of reserve availability. In assessing the time was needed to observe the effects of the desirability of such a policy, members noted that earlier policy actions and thus to reduce the risk the discount rate had been raised only recently that monetary policy inadvertently might become and, to date, financial markets did not appear to too restrictive. Also, a cautious approach to have adjusted fully to the increase. In the circum- further tightening might be appropriate in light of stances, several members expressed concern the fragilities that had developed in the economy, that further tightening at this time through open including the vulnerability of many financial inmarket operations might have unintended and termediaries and the exposure of many business unsettling effects on financial markets. More- and household borrowers and of some foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

758 Federal Reserve Bulletin • November 1988 debtor countries to rising interest rates. Other meeting range for the federal funds rate by 1 members, while not disagreeing that debtor prob- percentage point to a range of 6 to 10 percent. lems were a matter of serious concern, neverthe- The upward adjustment in the range was inless felt that primary emphasis needed to be tended to align its midpoint more closely with the placed on curbing any tendency for inflation to current average level of the federal funds rate. gather momentum; such a development, if al- The range for the federal funds rate provides one lowed to proceed, would lead to even higher mechanism for initiating consultation of the interest rates and more severe damage to ex- Committee when its boundaries are persistently posed, interest-sensitive borrowers, both in the exceeded. United States and abroad. At the conclusion of the Committee's discus- In the discussion of factors that might trigger sion, all but one member indicated that they future monetary policy actions, a number of favored or could accept a directive that called for members felt that the behavior of the monetary maintaining the current degree of pressure on aggregates should be given more weight, al- reserve positions. The members decided that though only a few favored giving primary empha- somewhat greater reserve restraint would be sis to these measures. According to a staff anal- acceptable, or slightly lesser reserve restraint ysis prepared for this meeting, growth of both M2 might be acceptable, over the intermeeting peand M3 was likely to be appreciably slower in the riod depending on indications of inflationary current quarter than had been anticipated at the pressures, the strength of the business expantime of the previous meeting, given the rise in sion, the behavior of the monetary aggregates, interest rates that had occurred over the inter- and developments in foreign exchange and domeeting period. Assuming no further increase in mestic financial markets. The reserve conditions interest rates, the cumulative expansion of M2 contemplated by the Committee were expected through September might be around the midpoint to be consistent with growth of M2 and M3 at of the Committee's range for the year while that annual rates of around 3V2 percent and 5Vi perof M3 might be only marginally above the mid- cent respectively over the three-month period point of its range. Growth of Ml also was ex- from June to September. The intermeeting range pected to slow substantially from its relatively for the federal funds rate was raised by 1 perrapid rates of expansion in June and July. Mem- centage point to a range of 6 to 10 percent. bers who wanted to give the monetary aggregates At the conclusion of the meeting, the following greater attention expressed satisfaction that domestic policy directive was issued to the Fedmonetary growth appeared to have slowed to a eral Reserve Bank of New York: pace deemed more consistent with progress in reducing inflationary pressures and a sustainable The information reviewed at this meeting suggests expansion in economic activity over time. They that economic activity has continued to expand at a also observed that the behavior of M2 had re- vigorous pace. Total nonfarm payroll employment sumed a more predictable pattern over the past grew sharply further in June and July. The civilian several quarters in relation to aggregate mea- unemployment rate in July, at 5.4 percent, was slightly below its average level in the second quarter. Indussures of economic performance. However, sevtrial production advanced considerably further in July. eral members expressed the reservation that Growth in retail sales remained moderate last month. more time was needed to assess the ongoing Business capital spending has continued to grow rapreliability of M2 as a guide for the conduct of idly. Some measures of prices indicate a pickup from monetary policy. A number commented that the recent trends and labor costs have risen more rapidly in recent months. major focus in policy implementation should Most interest rates have increased appreciably since continue to be on incoming indications of inflathe Committee's meeting on June 29-30. On August 9 tionary pressures in the economy. the Federal Reserve Board approved an increase in the In light of the increase that had occurred in the discount rate from 6 to 6'/2 percent. The nominal U.S. merchandise trade deficit fell in federal funds rate, including the recent rise folthe second quarter as exports continued to rise and lowing the advance in the discount rate, the non-oil imports declined. Over the intermeeting pemembers accepted a proposal to raise the inter- riod, the trade-weighted foreign exchange value of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 759 dollar appreciated somewhat further in terms of the count of indications of inflationary pressures, the other G-10 currencies. strength of the business expansion, the behavior of the Expansion of M2 and to a lesser extent M3 slowed in monetary aggregates, and developments in foreign July but growth of Ml remained relatively strong. exchange and domestic financial markets, somewhat From a fourth-quarter base through July, M2 and M3 greater reserve restraint would, or slightly lesser rehave grown at rates somewhat above the midpoints of serve restraint might, be acceptable in the intermeetthe ranges established by the Committee for 1988. ing period. The contemplated reserve conditions are Expansion in total domestic nonfinancial debt for the expected to be consistent with growth in M2 and M3 year thus far appears to be at a pace somewhat below over the period from June through September at that in 1987. annual rates of about V/2 and 5Vi percent, respec- The Federal Open Market Committee seeks mone- tively. The Chairman may call for Committee consultary and financial conditions that will foster price tation if it appears to the Manager for Domestic stability over time, promote growth in output on a Operations that reserve conditions during the period sustainable basis, and contribute to an improved pat- before the next meeting are likely to be associated with tern of international transactions. In furtherance of a federal funds rate persistently outside a range of 6 to these objectives, the Committee at its meeting in late 10 percent. June reaffirmed the ranges it had established in February for growth of 4 to 8 percent for both M2 and M3, measured from the fourth quarter of 1987 to the fourth Votes for this action: Messrs. Greenspan, Corriquarter of 1988. The monitoring range for growth in gan, Angell, Black, Forrestal, Heller, Johnson, total domestic nonfinancial debt was also maintained LaWare, Parry, and Ms. Seger. Vote against this at 7 to 11 percent for the year. action: Mr. Hoskins. Absent and not voting: Mr. Kelley. For 1989, the Committee agreed on tentative ranges for monetary growth, measured from the fourth quarter of 1988 to the fourth quarter of 1989, of 3 to 7 President Hoskins dissented because he prepercent for M2 and 3!/2 to IV2 percent for M3. The ferred a policy that would give less emphasis to Committee set the associated monitoring range for growth in total domestic nonfinancial debt at 6V2 to near-term business conditions and exchange rate IOV2 percent. It was understood that all these ranges considerations and greater emphasis to the longwere provisional and that they would be reviewed in er-term objective of price stability. He viewed early 1989 in the light of intervening developments. the current rate of inflation as too high relative to With respect to Ml, the Committee reaffirmed its that objective and believed that the strength of decision in February not to establish a specific target final demand and associated pressures on costs in for 1988 and also decided not to set a tentative range for 1989. The behavior of this aggregate will continue the economy suggested that inflation may be to be evaluated in the light of movements in its heading higher. In the circumstances, he thought velocity, developments in the economy and financial further monetary restraint would be more consismarkets, and the nature of emerging price pressures. tent with the Committee's long-run price stability In the implementation of policy for the immediate objective and would increase market confidence future, the Committee seeks to maintain the existing degree of pressure on reserve positions. Taking ac- in the eventual achievement of that objective. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

760 Legal Developments AMENDMENT TO REGULATION Y Part 225—Bank Holding Companies and Change in Bank Control The Board of Governors is amending 12 C.F.R. Part 1. The authority citation for Part 225 continues to read 225, its Regulation Y (Limitations on Nonbank as follows: Banks), to implement provisions of the Competitive Equality Banking Act of 1987 ("CEBA") (Pub. L. No. 100-86), relating to so-called nonbank banks. CEBA Authority: 12 U.S.C. 18170(13), 1818, 1843(c)(8), amended the definition of "bank" in the Bank Holding 1844(b), 3106, 3108, 3907 and 3909. Company Act (the "BHC Act" or the "Act") to include certain banking institutions that had previ- 2. In section 225.2 paragraphs (a) through (f) and (g) ously been outside that definition (so called "nonbank through (1) are redesignated as paragraphs (b) through banks"). CEBA also contained a grandfather provi- (g) and (i) through (n) respectively; new paragraphs (a) sion that permitted nonbanking companies that con- and (h) are added; and newly redesignated paragraph trolled nonbank banks as of March 5, 1987, to retain (b) is revised to read as follows: control of the institution and not be treated as a bank holding company for purposes of the BHC Act Section 225.2—Definitions. if the company and its subsidiary nonbank bank observe certain restrictions. These limitations generally restrict nonbank banks from commencing new (a) "Affiliate" means any company that controls, is activities or certain cross-marketing programs with controlled by, or is under common control with, a affiliates after March 5, 1987, increasing their bank or nonbank bank. assets at an annual rate of more than 7 percent (b) (1) "Bank" means: during any 12-month period commencing after (i) an insured bank as defined in section 3(h) of the August 10, 1988, or permitting overdrafts by affiliates Federal Deposit Insurance Act (12 U.S.C. or incurring overdrafts on behalf of affiliates at a § 1813(h)); or Federal Reserve Bank. 12 U.S.C. 1843(f)(2) (ii) an institution organized under the laws of the and (3). United States which both: To implement these limitations, the rules and inter- (A) accepts demand deposits or deposits that pretation: the depositor may withdraw by check or similar (1) discuss how the term "activity" will be means for payment to third parties or others; applied; and (2) clarify the scope of the cross-marketing limita- (B) is engaged in the business of making comtion; mercial loans. (3) describe how compliance with the 7 percent (2) "Bank" does not include those institutions qualannual asset growth rate will be determined; and ifying under the exceptions listed in section 2(c)(2) (4) define the restrictions on overdrafts. of the BHC Act (12 U.S.C. 1841(c)(2)). This rule also amends the definition of "bank" in (h) "Nonbank bank" means any institution that: Regulation Y to reflect the changes in that definition (1) became a bank as a result of enactment of made by CEBA. the Competitive Equality Amendments of 1987 Effective September 28, 1988, except for section (Pub. L. No. 100-86), on the date of such enactment 225.52 which will be effective January 1, 1989, and (August 10, 1987); and section 225.145, which will be effective (2) was not controlled by a bank holding company October 28, 1988, 12 C.F.R. Part 225 is amended as on the day before the enactment of the Competitive follows: Equality Amendments of 1987 (August 9, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 761 more than 7 percent of the average of its Total 3. The heading "Appendices to Subparts A through Assets as reported on Schedule RC-K of its Report E" is revised to read "Appendices to Subparts". of Condition for the four quarters in the preceding Subpart F, consisting of sections 225.51 and 225.52, is 12-month period. added immediately following Subpart E to read as (c) Alternative method to compute annual rate of asset follows: growth. (1) Quarterly Measurement Permitted. In lieu of the methods for measuring compliance with the asset Subpart F—Limitations on Nonbank Banks growth rate described in paragraph (b), a nonbank bank may elect to have its compliance with the Section 225.51 Seven percent growth limit for nonbank growth rate determined in the following manner: its banks. Total Assets as reported on Schedule RC-K of its Report of Condition for each quarter ending after Section 225.52 Limitation on overdrafts. August 10, 1989, may not increase by more than 7 percent of its Total Assets as reported on Schedule Subpart F—Limitations on Nonbank Banks. RC-K of its Report of Condition for the same quarter of the previous year. Section 225.51—Seven percent growth limit for (2) Initial Quarter. In measuring compliance with nonbank banks. the growth rate under paragraph (c)(1) for the third quarter of 1989, the nonbank bank may elect to use (a) Period for determining compliance. A nonbank its assets on August 10, 1988, as the base rather than bank's annual rate of asset growth for purposes of the Total Assets for the third quarter of 1988 as paragraph (b) shall be determined for twelve-month reported on Schedule RC-K of its Report of Condiperiods that begin on October 1 of each year and end tion. on September 30 of the following year, unless the bank (3) Notice Required. A nonbank bank electing to elects to use the alternative method described in compute its asset growth pursuant to this paragraph paragraph (c). The initial 12-month period shall com- shall notify the Board by October 15, 1988, of this mence on October 1, 1988, and expire on September election. The nonbank bank may not thereafter alter 30, 1989, unless the Board establishes a different its election. period pursuant to paragraph (d). (d) Determination of total assets on August 10,1988. If (b) Computing annual rate of asset growth. the Board determines that a nonbank bank has en- (1) Initial 12-month period. For the initial 12-month gaged in transactions that have artificially inflated its period beginning on October 1, 1988, the average of total assets on August 10, 1988, and that are unrelated the nonbank bank's Total Assets as reported on to its normal business activities, the Board may re- Schedule RC-K of its Report of Condition for the quire that — four quarters during this period may not increase by (1) the nonbank exclude such amounts in calculating more than 7 percent of the nonbank bank's initial its total assets on August 10, 1988, for purposes of base. The nonbank bank may determine its initial paragraph (b)(l)(ii); or base under any of the following methods: (2) the initial 12-month period for determining com- (i) its Total Assets as reported on Schedule RC-K pliance with the 7 percent growth rate shall comof its Report of Condition for the quarter ending mence on a date later than August 10, 1988, and the September 30, 1988, divided by 1.601; or institution's total assets on that later date shall be (ii) its total assets on August 10, 1988, divided by used instead of the bank's total assets on August 10, 1.567, unless the Board determines pursuant to 1988, for purposes of measuring compliance with the paragraph (d) that such amount may not be used; 7 percent growth rate under paragraph (b)(1). or (e) Required reports. (iii) the average of its Total Assets as reported on (1) A nonbank bank shall file with the Board by Schedule RC-K of its Report of Condition for the October 15, 1988, a statement indicating the method fourth quarter of 1987 and the first three quarters it has elected to compute its initial base for purposes of 1988. of paragraph (b)(1). (2) Succeeding 12-month periods. For each 12- (2) A nonbank bank electing to use its actual total month period after the initial period, the average of assets on August 10, 1988, as its initial base for the nonbank bank's Total Assets as reported on purposes of paragraph (b)(1), shall report that figure Schedule RC-K of its Report of Condition for the to the Board by October 15, 1988, and the nonbank four quarters during that period may not increase by bank's Total Assets for the third calendar quarter of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

762 Federal Reserve Bulletin • November 1988 1988 as required to be reported on Schedule RC-K overdraft in its account with the nonbank bank or of its Report of Condition for that quarter. industrial bank. (2) Nonbank banks or industrial banks. (i) No nonbank bank or industrial bank shall incur Section 225.52—Limitation on Overdrafts. any overdraft in its account at a Federal Reserve Bank on behalf of an affiliate. (a) Definitions. For purposes of this section — (ii) An overdraft by a nonbank bank or industrial (1) "Account" means a reserve account, clearing bank in its account at a Federal Reserve Bank account, or deposit account as defined in the shall be deemed to be on behalf of an affiliate Board's Regulation D (12 C.F.R. 204.2(a)(l)(i)), that whenever: is maintained at a Federal Reserve Bank or nonbank (A) a nonbank bank or industrial bank holds an bank. account for an affiliate from which third-party (2) "Cash item" means payments can be made; and (i) a check other than a check classified as a (B) when the posting of an affiliate's transaction noncash item; or to the nonbank bank's or industrial bank's (ii) any other item payable on demand and collect- account at a Reserve Bank creates an overdraft ible at par that the Federal Reserve Bank of the in its account at a Federal Reserve Bank or district in which the item is payable is willing to increases the amount of an existing overdraft in accept as a cash item. its account at a Federal Reserve Bank. (3) "Discount window loan" means any credit ex- (c) Permissible overdrafts. The following are permistended by a Federal Reserve Bank to a nonbank sible overdrafts not subject to paragraph (b): bank or industrial bank pursuant to the provisions of (1) Inadvertent error. An overdraft in its account by the Board's Regulation A (12 C.F.R. Part 201). a nonbank bank or its affiliate, or an industrial bank (4) "Industrial bank" means an institution as de- or its affiliate, that results from an inadvertent fined in section 2(c)(2)(H) of the BHC Act computer error or inadvertent accounting error, that (12 U.S.C. § 1841(c)(2)(H)). was not reasonably forseeable or could not have (5) "Noncash item" means an item handled by a been prevented through the maintenance of proce- Reserve Bank as a noncash item under the Reserve dures reasonably adopted by the nonbank bank or Bank's "Collection of Noncash Items Operating affiliate to avoid such overdraft; and Circular "(e.g., a maturing bankers' acceptance or a (2) Fully secured primary dealer affiliate overdrafts. maturing security, or a demand item, such as a (i) An overdraft incurred by an affiliate of a check, with special instructions or an item that has nonbank bank, which affiliate is recognized as a not been preprinted or post-encoded). primary dealer by the Federal Reserve Bank of (6) "Other nonelectronic transactions" include all New York, in the affiliate's account at the nonother transactions not included as funds transfers, bank bank, or an overdraft incurred by a nonbank book-entry securities transfers, cash items, noncash bank on behalf of its primary dealer affiliate in the items, automated clearing house transactions, net nonbank bank's account at a Federal Reserve settlement entries, and discount window loans (e.g., Bank; provided: the overdraft is fully secured by original issue of securities or redemption of securi- bonds, notes, or other obligations which are direct ties). obligations of the United States or on which the (7) An "overdraft" in an account occurs whenever principal and interest are fully guaranteed by the the Federal Reserve Bank, nonbank bank, or indus- United States or by securities and obligations trial bank holding an account posts a transaction to eligible for settlement on the Federal Reserve the account of the nonbank bank, industrial bank, or book-entry system. affiliate that exceeds the aggregate balance of the (ii) An overdraft by a nonbank bank in its account accounts of the nonbank bank, industrial bank, or at a Federal Reserve Bank that is on behalf of a affiliate, as determined by the posting rules set forth primary dealer affiliate is fully secured when that in paragraphs (d) and (e) of this section and contin- portion of its overdraft at the Federal Reserve ues until the aggregate balance of the account is zero Bank that corresponds to the transaction posted or greater. for an affiliate that caused or increased the non- (8) "Transfer item" means an item as defined in bank bank's overdraft is fully secured in accord- Subpart B of Regulation J (12 C.F.R. 210.25 et seq). ance with paragraph (c)(2)(iii). (b) Restriction on overdrafts. (iii) An overdraft is fully secured under paragraph (1) Affiliates. Neither a nonbank bank nor an indus- (c)(2)(i) when the nonbank bank can demonstrate trial bank shall permit any affiliate to incur any that the overdraft is secured, at all times, by a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 763 perfected security interest in specific, identified iate's account under this section, payments and transobligations described in paragraph (c)(2)(i) with a fers through an affiliate's account at a nonbank bank or market value that, in the judgment of the Reserve industrial bank shall be posted as follows: Bank holding the nonbank bank's account, is (1) Funds transfers. sufficiently in excess of the amount of the over- (i) Fedwire transfer items shall be posted: draft to provide a margin of protection in a volatile (A) to the transferor affiliate's account no later market or in the event the securities need to be than the time the transfer is actually made by liquidated quickly. the transferor's Federal Reserve Bank; and (d) Posting by Federal Reserve Banks. For purposes of (B) to the transferee affiliate's account no eardetermining the balance of an account under this lier than the time the transferee's Reserve Bank section, payments and transfers by nonbank banks and sends the transfer item, or sends or telephones industrial banks processed by the Federal Reserve the advice of credit for the item to the trans- Banks shall be considered posted to their accounts at feree, whichever occurs first. Federal Reserve Banks as follows: (ii) For funds transfers not sent or received (1) Funds transfers. Transfer items shall be posted: through Federal Reserve Banks, debits shall be (i) to the transferor's account at the time the posted to the transferor affiliate's account not transfer is actually made by the transferor's Fed- later than the time the nonbank bank or industrial eral Reserve Bank; and bank becomes obligated on the transfer. Credits (ii) to the transferee's account at the time the shall not be posted to the transferee affiliate's transferee's Reserve Bank sends the transfer item account before the nonbank bank or industrial or sends or telephones the advice of credit for the bank has received actually and finally collected item to the transferee, whichever occurs first. funds for the transfer. (2) Book-entry securities transfers against payment. (2) Book-entry securities transfers against payment. A book-entry securities transfer against payment (i) A book-entry securities transfer against payshall be posted: ment shall be posted: (i) to the transferor's account at the time the entry (A) to the transferor affiliate's account not is made by the transferor's Reserve Bank; and earlier than the time the entry is made by the (ii) to the transferee's account at the time the transferor's Reserve Bank; and entry is made by the transferee's Reserve Bank. (B) to the transferee affiliate's account not later (3) Discount window loans. Credit for a discount than the time the entry is made by the transferwindow loan shall be posted to the account of a ee's Reserve Bank. nonbank bank or industrial bank at the close of (ii) For book-entry securities transfers against business on the day that it is made or such earlier payment that are not sent or received through time as may be specifically agreed to by the Federal Federal Reserve Banks, entries shall be posted: Reserve Bank and the nonbank bank under the (A) to the buyer-affiliate's account not later terms of the loan. Debit for repayment of a discount than the time the nonbank bank or induswindow loan shall be posted to the account of the trial bank becomes obligated on the transfer; nonbank bank or industrial bank as of the close of and business on the day of maturity of the loan or such (B) to the seller-affiliate's account not before earlier time as may be agreed to by the Federal the nonbank bank or industrial bank has re- Reserve Bank and the nonbank bank or required by ceived actually and finally collected funds for the Federal Reserve Bank under the terms of the the transfer. loan. (3) Other transactions. (4) Other transactions. Total aggregate credits for (i) Credits. Except as otherwise provided in this automated clearing house transfers, cash items, paragraph, credits for cash items, noncash items, noncash items, net settlement entries, and other ACH transfers, net settlement entries, and all nonelectronic transactions shall be posted to the other nonelectronic transactions shall be posted account of a nonbank bank or industrial bank as of to an affiliate's account on the day of the transacthe opening of business on settlement day. Total tion (i.e., settlement day for ACH transactions or aggregate debits for these transactions and entries the day of credit for check transactions), but no shall be posted to the account of a nonbank bank or earlier than the Federal Reserve Bank's opening industrial bank as of the close of business on settle- of business on that day. Credit for cash items that ment day. are required by federal or state statute or regula- (e) Posting by nonbank banks and industrial banks. tion to be made available to the depositor for For purposes of determining the balance of an affil- withdrawal prior to the posting time set forth in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

764 Federal Reserve Bulletin • November 1988 the preceding paragraph shall be posted as of the ing 7 percent during any 12 month period after required availability time, August 10, 1988, or permitting overdrafts for affiliates (ii) Debits. Debits for cash items, noncash items, or incurring overdrafts on behalf of affiliates at a ACH transfers, net settlement entries, and all Federal Reserve Bank. 12 U.S.C. 1843(f)(3).2 The other nonelectronic transactions shall be posted Board's views regarding the meaning and scope of to an affiliate's account on the day of the transac- these limitations are set forth below and in provisions of tion {e.g., settlement day for ACH transactions or the Board's Regulation Y (12 C.F.R. §§ 225.51 and 52). the day of presentment for check transactions), (b) Congressional Findings. but no later than the Federal Reserve Bank's (1) At the outset, the Board notes that the scope and close of business on that day. If a check drawn on application of the Act's limitations on nonbank an affiliate's account or an ACH debit transfer banks must be guided by the Congressional findings received by an affiliate is returned timely by the set out in section 4(f)(3) of the BHC Act. Congress nonbank bank or industrial bank in accordance was aware that these nonbank banks had been with applicable law and agreements, no entry acquired by companies that engage in a wide range need be posted to the affiliate's account for such of nonbanking activities, such as retailing and genitem. eral securities activities that are forbidden to bank holding companies under section 4 of the BHC Act. 4. Section 225.145 is added to read as follows: In section 4(f)(3), Congress found that nonbank banks controlled by grandfathered nonbanking com- Section 225.145—Limitations Established by panies may, because of their relationships with the Competitive Equality Banking Act of 1987 affiliates, be involved in conflicts of interest, conon the Activities and Growth of Nonbank centration of resources, or other effects adverse to Banks. bank safety and soundness. Congress also found that nonbank banks may be able to compete unfairly (a) Introduction. Effective August 10, 1987, the Com- against banks controlled by bank holding companies petitive Equality Banking Act of 1987 ("CEBA") by combining banking services with financial serredefined the term "bank" in the Bank Holding Com- vices not permissible for bank holding companies. pany Act ("BHC Act" or "Act") to include any bank Section 4(f)(3) states that the purpose of the nonthe deposits of which are insured by the Federal bank bank limitations is to minimize any such po- Deposit Insurance Corporation as well as any other tential adverse effects or inequities by restricting the institution that accepts demand or checkable deposit activities of nonbank banks until further Congresaccounts and is engaged in the business of making sional action in the area of bank powers could be commercial loans. 12 U.S.C. § 1841(c). CEBA also undertaken. Similarly, the Senate Report accompacontained a grandfather provision for certain compa- nying CEBA states that the restrictions CEBA nies affected by this redefinition. CEBA amended places on nonbank banks "will help prevent existing section 4 of the BHC Act to permit a company that on nonbank banks from changing their basic character March 5, 1987, controlled a nonbank bank (an institu- . . . while Congress considers proposals for comtion that became a bank as a result of enactment of prehensive legislation; from drastically eroding the CEBA) and that was not a bank holding company on separation of banking and commerce; and from August 9, 1987, to retain its nonbank bank and not be increasing the potential for unfair competition, contreated as a bank holding company for purposes of the flicts of interest, undue concentration of resources, BHC Act if the company and its subsidiary nonbank and other adverse effects." S. Rep. No. 100-19, bank observe certain limitations imposed by CEBA.1 100th Cong., 1st Sess. 12 (1987). See also H. Rep. Certain of these limitations are codified in section No. 100-261, 100th Cong., 1st Sess. 124 (1987) (the 4(f)(3) of the BHC Act and generally restrict nonbank "Conference Report"). banks from commencing new activities or certain (2) Thus, Congress explicitly recognized in the statcross-marketing activities with affiliates after March 5, ute itself that nonbanking companies controlling 1987, increasing their assets at an annual rate exceed- grandfathered nonbank banks, which include the many of the nation's largest commercial and finan- 1. 12 U.S.C. 1843(f)- Such a company is treated as a bank holding company, however, for purposes of the anti-tying provisions in section 106 of the BHC Act Amendments of 1970 (12 U.S.C. § 1971 2. CEBA also prohibits, with certain limited exceptions, a company et seq.) and the insider lending limitations of section 22(h) of the controlling a grandfathered nonbank bank from acquiring control of an Federal Reserve Act (12 U.S.C. § 375b). The company is also subject additional bank or thrift institution or acquiring, directly or indirectly to certain examination and enforcement provisions to assure compli- after March 5, 1987, more than 5 percent of the assets or shares of a ance with CEBA. bank or thrift institution. 12 U.S.C. § 1843(f)(2). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 765 cial organizations, were being accorded a significant "lawfully engaged" as of March 5, 1987. As of competitive advantage that could not be matched by that date, a nonbank bank could not have been bank holding companies because of the general engaged in both demand deposit-taking and comprohibition against nonbanking activities in section 4 mercial lending activity without placing it and its of the BHC Act. Congress recognized that this parent holding company in violation of the BHC inequality in regulatory approach could inflict seri- Act. Thus, under the activity limitations, a nonous competitive harm on regulated bank holding bank bank could not after March 5, 1987, comcompanies as the grandfathered entities sought to mence the demand deposit-taking or commercial exploit potential synergies between banking and lending activity that it did not conduct as of commercial products and services. See Conference March 5, 1987. The debates and Senate and Report at 125-126. The basic and stated purpose of Conference Reports on CEBA confirm that Conthe restrictions on grandfathered nonbank banks is gress intended the activity limitation to prevent a to minimize these potential anticompetitive effects. grandfathered nonbank bank from converting it- (3) The Board believes that the specific CEBA self into a full-service bank by both offering limitations should be implemented in light of these demand deposits and engaging in the business of Congressional findings and the legislative intent making commercial loans.4 Thus, these types of reflected in the plain meaning of the terms used in transactions provide a clear guide as to the type of the statute. In those instances when the language of banking transactions that would constitute activthe statute did not provide clear guidance, legisla- ities under CEBA and the degree of specificity tive materials and the Congressional intent mani- intended by Congress in interpreting that term. fested in the overall statutory structure were con- (iii) It is also clear that the activity limitation was sidered. The Board also notes that prior precedent not intended simply to prevent a nonbank bank requires that grandfather exceptions in the BHC from both accepting demand deposits and making Act, such as the nonbank bank limitations and commercial loans; it has a broader scope and particularly the exceptions thereto, are to be inter- purpose. If Congress had meant the term to refer preted narrowly in order to ensure the proper im- to just these two activities, it would have used the plementation of Congressional intent.3 restriction it used in another section of CEBA (c) Activity Limitation. dealing with nonbank banks owned by bank hold- (1) Scope of "Activity". ing companies which has this result, i.e., the (i) The first limitation established under section nonbank bank could not engage in any activity 4(f)(3) provides that a nonbank bank shall not that would have caused it to become a bank under "engage in any activity in which such bank was the prior bank definition in the Act. See 12 U.S.C. not lawfully engaged as of March 5, 1987." The § 1843(g)(1)(A). Indeed, an earlier version of term "activity" as used in this provision of CEBA CEBA under consideration by the Senate Banking is not defined. The structure and placement of the Committee contained such a provision for non- CEBA activity restriction within section 4 of the bank banks owned by commercial holding com- BHC Act and its legislative history do, however, panies, which was deleted in favor of the broader provide direction as to certain transactions that activity limitation actually enacted. Committee Congress intended to treat as separate activities, Print No. 1, (Feb. 17, 1987). In this regard, both thereby providing guidance as to the meaning the Senate Report and Conference Report refer to Congress intended to ascribe to the term gener- demand deposit-taking and commercial lending as ally. First, it is clear that the term "activity" was examples of activities that could be affected by not meant to refer to banking as a single activity. the activity limitation, not as the sole activities to To the contrary, the term must be viewed as be limited by the provision.5 distinguishing between deposit taking and lending (iv) Finally, additional guidance as to the meaning activities and treating demand deposit-taking as a of the term "activity" is provided by the statutory separate activity from general deposit-taking and context in which the term appears. The activity commercial lending as separate from the general limitation is contained in section 4 of the BHC lending category. (ii) Under the activity limitation, a nonbank bank may engage only in activities in which it was 4. Conference Report at 124-25; S. Rep. No. 100-19 at 12, 32; H. Rep. No. 99-175 , 99th Cong., 1st Sess. 3 (1985) ("the activities limitation is to prevent an institution engaged in a limited range of functions from expanding into new areas and becoming, in essence, a 3. e.g., Maryland National Corporation, 73 FEDERAL RESERVE full-service bank"); 133 Cong. Rec. S4054 (daily ed. March 27, 1987); BULLETIN 310, 313-314 (1987). Cf., Spokane & Inland Empire Rail- (Comments of Senator Proxmire). road Co. v. United States, 241 U.S. 344, 350 (1915). 5. Conference Report at 124-125; S. Rep. No. 100-19 at 32. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

766 Federal Reserve Bulletin • November 1988 Act, which regulates the investments and activi- requires that the taking of demand deposits be ties of bank holding companies and their nonbank treated as a separate activity. subsidiaries. The Board believes it reasonable to (ii) The Board also considers nondemand deposits conclude that by placing the CEBA activity limi- withdrawable by check or other similar means for tation in section 4 of the BHC Act, Congress payment to third parties or others to constitute a meant that Board and judicial decisions regarding separate line of business for purposes of applying the meaning of the term "activity" in that section the activity limitation. In this regard, the Board be looked to for guidance. This is particularly has previously recognized that this line of busiappropriate given the fact that grandfathered non- ness constitutes a permissible but separate activbank banks, whether owned by bank holding ity under section 4 of the BHC Act. Furthermore, companies or unregulated holding companies, the offering of accounts with transaction capabilwere treated as nonbank companies and not banks ity requires different expertise and systems than before enactment of CEBA. non-transaction deposit-taking and represented a (v) This interpretation of the term activity draws distinct new activity that traditionally separated support from comments by Senator Proxmire banks from thrift and similar institutions. during the Senate's consideration of the provi- (iii) Support for this view may also be found in the sion that the term was not intended to apply House Banking Committee report on proposed "on a product-by-product, customer-by-customer legislation prior to CEBA that contained a similar basis." 133 Cong. Rec. S4054-5 (daily ed. prohibition on new activities for nonbank banks. March 27, 1987). This is the same manner in In discussing the activity limitation, the report which the Board has interpreted the term recognized a distinction between demand deposits activity in the nonbanking provision of sec- and accounts with transaction capability and tion 4 as referring to generic categories of those without transaction capability: activities, not to discrete products and services. With respect to deposits, the Committee recog- (vi) Accordingly, consistent with the terms and nizes that it is legitimate for an institution curpurposes of the legislation and the Congressional rently involved in offering demand deposits or intent to minimize unfair competition and the other third party transaction accounts to make use other adverse effects set out in the CEBA find- of new technologies that are in the process of ings, the Board concludes that the term "ac- replacing the existing check-based, paper paytivity" as used in section 4(f)(3) means any line of ment system. Again, however, the Committee banking or nonbanking business. This definition does not believe that technology should be used does not, however, envision a product-by-product as a lever for an institution that was only incidenapproach to the activity limitation. The Board tally involved in the payment system to transform believes it would be helpful to describe the appli- itself into a significant offeror of transaction accation of the activity limitation in the context of count capability.6 the following major categories of activities: de- (iv) Finally, this distinction between demand and posit-taking, lending, trust, and other activities nondemand checkable accounts and accounts not engaged in by banks. subject to withdrawal by check was specifically (2) Deposit-Taking Activities. recognized by Congress in the redefinition of the (i) With respect to deposit-taking, the Board be- term "bank" in CEBA to include an institution lieves that the activity limitation in section 4(f)(3) that takes demand deposits or "deposits that the generally refers to three types of activity: demand depositor may withdraw by check or other means deposit-taking; non-demand deposit-taking with a for payment to third parties or others" as well as third party payment capability; and time and in various exemptions from that definition for savings deposit-taking without third party pay- trust companies, credit card banks, and certain ment powers. As previously discussed, it is clear industrial banks.7 from the terms and intent of CEBA that the (v) Thus, an institution that as of March 5, 1987, activity limitation would prevent, and was de- offered only time and savings accounts that were signed to prevent, nonbank banks that prior to the not withdrawable by check for payment to third enactment of CEBA had refrained from accepting parties could not thereafter begin offering acdemand deposits in order to avoid coverage as a "bank" under the BHC Act, from starting to take these deposits after enactment of CEBA and thus 6. H. Rep. No. 99-175, 99th Cong., 1st Sess. 13 (1985). becoming full-service banks. Accordingly, CEBA 7. See 12 U.S.C. 1841(c)(2)(D), (F), (H), and (I). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 767 counts with transaction capability, for example, consumer credit card lending, and other consumer NOW accounts or other types of transaction lending. Mortgage lending and credit card lending accounts. are recognized, discrete lines of banking and (3) Lending. As noted, the CEBA activity limitation business activity, involving techniques and prodoes not treat lending as a single activity; it clearly cesses that are different from and more specialdistinguishes between commercial and other types ized than those required for general consumer of lending. This distinction is also reflected in the lending. For example, these activities are, in definition of "bank" in the BHC Act in effect both many cases, conducted by specialized instituprior to and after enactment of CEBA as well as in tions, such as mortgage companies and credit card various of the exceptions from this definition. In institutions, or through separate organizational addition, commercial lending is a specialized form of structures within an institution, particularly in the lending involving different techniques and analysis case of mortgage lending. Additionally, the from other types of lending. Based upon these Board's decisions under section 4 of the Act have factors, the Board would view commercial lending recognized mortgage banking and credit card as a separate and distinct activity for purposes of the lending as separate activities for bank holding activity limitation in section 4(f)(3). The Board's companies. The Board's Regulation Y reflects this decisions under section 4 of the BHC Act have not specialization, noting as examples of permissible generally differentiated between types of commer- lending activity: consumer finance, credit card cial lending, and thus the Board would view com- and mortgage lending. 12 C.F.R. § 225.25(b)(1). mercial lending as a single activity for purposes of Finally, CEBA itself recognizes the specialized CEBA. Thus, a nonbank bank that made commer- nature of credit card lending by exempting an cial loans as of March 5, 1987, could make any type institution specializing in that activity from the of commercial loan thereafter. bank definition. For purpose of the activity limi- (i) Commercial Lending. For purposes of the tation, a consumer mortgage loan will mean any activity limitation, a commercial loan is defined in loan to an individual that is secured by real estate accordance with the Supreme Court's decision in and that is not a commercial loan. A credit card Board of Governors v. Dimension Financial Cor- loan would be any loan made to an individual by poration, 474 U.S. 361 (1986), as a direct loan to means of a credit card that is not a commercial a business customer for the purpose of providing loan. funds for that customer's business. In this regard, (4) Trust Activities. Under section 4 of the Act, the the Board notes that whether a particular trans- Board has historically treated trust activities as a action is a commercial loan must be determined single activity and has not differentiated the function not from the face of the instrument, but from the on the basis of whether the customer was an indiapplication of the definition of commercial loan in vidual or a business. See 12 C.F.R. § 225.25(b)(3). the Dimension decision to that transaction. Thus, Similarly, the trust company exemption from the certain transactions of the type mentioned in the bank definition in CEBA makes no distinction be- Board's ruling at issue in Dimension and in the tween various types of trust activities. Accordingly, Senate and Conference Reports in the CEBA the Board would view trust activities as a separate legislation8 would be commercial loans if they activity without additional differentiation for purmeet the test for commercial loans established in poses of the activity limitation in section 4(f)(3). Dimension. Under this test, a commercial loan (5) Other Activities. With respect to activities other would not include, for example, an open-market than the various traditional deposit-taking, lending investment in a commercial entity that does not or trust activities, the Board believes it appropriate, involve a borrower-lender relationship or negoti- for the reasons discussed above, to apply the activation of credit terms, such as a money market ity limitation in section 4(0(3) as the term "activity" transaction. generally applies in other provisions of section 4 of (ii) Other Lending. Based upon the guidance in the BHC Act. Thus, a grandfathered nonbank bank the Act as to the degree of specificity required in could not, for example, commence after March 5, applying the activity limitation with respect to 1987, any of the following activities (unless it was lending, the Board believes that, in addition to engaged in such an activity as of that date): discount commercial lending, there are three other types of securities brokerage, full-service securities brokerlending activities: consumer mortgage lending, age investment advisory services, underwriting or dealing in government securities as permissible for member banks, foreign exchange transaction ser- 8. S. Rep. No. 100-19 at 31; Conference Report at 123. vices, real or personal property leasing, courier Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

768 Federal Reserve Bulletin • November 1988 services, data processing for third parties, insurance affiliates. Under this provision, a nonbank bank may agency activities,9 real estate development, real not offer or market a product or service of an affiliate estate brokerage, real estate syndication, insurance unless the product or service may be offered by underwriting, management consulting, futures com- bank holding companies generally under section mission merchant, or activities of the general type 4(c)(8) of the BHC Act. In addition, a nonbank bank listed in section 225.25(b) of Regulation Y. may not permit any of its products or services to be (6) Meaning of "Engaged in". In order to be "en- offered or marketed by or through a nonbank affilgaged in" an activity, a nonbank bank must demon- iate unless the affiliate engages only in activities strate that it had a program in place to provide a permissible for a bank holding company under secparticular product or service included within the tion 4(c)(8). These limitations are subject to an grandfathered activity to a customer and that it was exception for products or services that were being in fact offering the product or service to customers so offered or marketed as of March 5, 1987, but only as of March 5, 1987. Thus, a nonbank bank is not in the same manner in which they were being offered engaged in an activity as of March 5, 1987, if the or marketed as of that date. product or service in question was in a planning (2) Examples of Impermissible Cross-Marketing. state as of that date and had not been offered or The Conference Report illustrates the application of delivered to a customer. Consistent with prior this limitation to the following two covered transac- Board interpretations of the term activity in the tions: grandfather provisions of section 4, the Board does (i) products and services of an affiliate that bank not believe that a company may be engaged in an holding companies may not offer under the BHC activity on the basis of a single isolated transaction Act, and that was not part of a program to offer the particular (ii) products and services of the nonbank bank. In product or to conduct in the activity on an ongoing the first case, the restrictions would prohibit, for basis. For example, a nonbank bank that held an example, a company from marketing life insurinterest in a single real estate project would not ance or automotive supplies through its affiliate thereby be engaged in real estate development for nonbank bank because these products are not purposes of this provision, unless evidence was generally permissible under the BHC Act. Conpresented indicating the interest was held under a ference Report at 126. In the second case, a program to commence a real estate development nonbank bank may not permit its products or business. services to be offered or marketed through a life (7) Meaning of "as of'. The Board believes that the insurance affiliate or automobile parts retailer grandfather date "as of March 5, 1987" as used because these affiliates engage in activities prohibthroughout section 4(f)(3) should refer to activities ited under the BHC Act. Id. engaged in on March 5, 1987, or a reasonably short (3) Permissible Cross-Marketing. On the other period preceding this date not exceeding 13 months. hand, a nonbank bank could offer to its customers 133 Cong. Rec. S3957 (daily ed. March 26, 1987). consumer loans from an affiliated mortgage banking (Remarks of Senator Dodd and Proxmire). Activi- or consumer finance company. These affiliates could ties that the institution had terminated prior to likewise offer their customers the nonbank bank's March 5, 1988, however, would not be considered to products or services provided the affiliates engaged have been conducted or engaged in "as of' only in activities permitted for bank holding compa- March 5. For example, if within 13 months of nies under the closely-related-to-banking standard March 5, 1987, the nonbank bank had terminated its of section 4(c)(8) of the BHC Act. If the affiliate is commercial lending activity in order to avoid the engaged in both permissible and impermissible ac- "bank" definition in the Act, the nonbank bank tivities within the meaning of section 4(c)(8) of the could not recommence that activity after enactment BHC Act, however, the affiliate could not offer or of CEBA. market the nonbank bank's products or services. (d) Cross-Marketing Limitation. (4) Product Approach to Cross-Marketing Restric- (1) In General. Section 4(f)(3) also limits cross- tion. marketing activities by nonbank banks and their (i) Unlike the activity restrictions, the crossmarketing restrictions of CEBA apply by their terms to individual products and services. Thus, an affiliate of a nonbank bank that was engaged in 9. In this area, section 4 of the Act does not treat all insurance agency activities as a single activity. Thus, for example, the Act treats activities that are not permissible for bank holding the sale of credit-related life, accident and health insurance as a companies and that was marketing a particular separate activity from general insurance agency activities. See 12 U.S.C. 1843(c)(8). product or service of a nonbank bank on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 769 grandfather date could continue to market that and must be narrower in scope than the definition product and, as discussed below, could change of activity. Essentially, the concept applied in this the terms and conditions of the loan. The nonbank analysis is one of permitting the continuation of affiliate could not, however, begin to offer or the specific product marketing activity that was market another product or service of the nonbank undertaken as of March 5, 1987. Thus, for exambank. ple, while insurance underwriting may constitute (ii) The Board believes that the term "product or a separate activity under CEBA, a nonbank bank service" must be interpreted in light of its ac- could not market a life insurance policy issued by cepted ordinary commercial usage. In some in- the affiliate if on the grandfather date it had only stances, commercial usage has identified a group marketed homeowners' policies issued by the of products so closely related that they constitute affiliate. a product line (e.g., certificates of deposit) and (5) Change in Terms and Conditions Permitted. differences in versions of the product {e.g., a (i) The cross-marketing restrictions would not one-year certificate of deposit) simply represent a limit the ability of the institution to change the difference in the terms of the product.10 This specific terms and conditions of a particular approach is consistent with the treatment in grandfathered product or service. The Conference CEBA's legislative history of certificates of de- Report indicates a legislative intent not to lock posit as a product line rather than each particular into place the specific terms or conditions of a type of CD as a separate product.11 grandfathered product or service. Conference Re- (iii) In the area of consumer lending, the Board port at 126. For example, a nonbank bank marbelieves the following provide examples of dif- keting a three-year, $5,000 certificate of deposit ferent consumer loan products: mortgage loans to through an affiliate under the exemption could finance the purchase of the borrower's residence, offer a one-year $2,000 certificate of deposit with unsecured consumer loans, consumer installment a different interest rate after the grandfather date. loans secured by the personal property to be See footnote 11 above. Modifications that alter purchased (e.g. automobile, boat or home appli- the type of product, however, are not permitted. ance loans), or second mortgage loans.12 Under Thus, a nonbank bank that marketed through this interpretation, a nonbank bank that offered affiliates on March 5, 1987, only certificates of automobile loans through a nonbank affiliate on deposit could not commence marketing MMDA's the grandfather date could market boat loans, or NOW accounts after the grandfather date. appliance loans or any type of secured consumer (ii) General changes in the character of the prodinstallment loan through that affiliate. It could not, uct or service as the result of market or technohowever, market unsecured consumer loans, logical innovation are similarly permitted to the home mortgage loans or other types of consumer extent that they do not transform a grandfathered loans. product into a new product. Thus, an unsecured (iv) In other areas, the Board believes that the line of credit could not be modified to include a determination as to what constitutes a product or lien on the borrower's residence without becomservice should be made on a case-by-case basis ing a new product. consistent with the principles that the terms (6) Meaning of "Offer or Market". In the Board's "product or service" must be interpreted in ac- opinion, the terms "offer or market" in the crosscordance with their ordinary commercial usage marketing restrictions refer to the presentation to a customer of an institution's products or service through any type of program, including telemarket- 10. American Bankers Association, Banking Terminology (1981). 11. During the Senate debates on CEBA, Senator Proxmire in ing, advertising brochures, direct mailing, personal response to a statement from Senator Cranston that the joint-mar- solicitation, customer referrals, or joint-marketing keting restrictions do not lock into place the specific terms or agreements or presentations. An institution must conditions of the particular grandfathered product or service, stated: That is correct. For example, if a nonbank bank was jointly have offered or actually marketed the product or marketing on March 5, 1987, a 3-year, $5,000 certificate of service on March 5 or shortly before that date (as deposit, this bill would not prohibit offering in the same manner a 1-year, 2,000 certificate of deposit with a different interest rate. discussed above) to qualify for the grandfather priv- 133 Cong. Rec. S3959 (daily ed. March 26. 1987). ilege. Thus, if the cross-marketing program was in 12. In this regard, the Supreme Court in United States v. Philadelthe planning stage on March 5, 1987, the program phia National Bank, noted that "the principal banking products are of course various types of credit, for example: unsecured personal and would not qualify for grandfather treatment under business loans, mortgage loans, loans secured by securities or ac- CEBA. counts receivable, automobile installment and consumer goods, in- (7) Limitations on Cross-Marketing to "in the same stallment loans, tuition financing, bank credit cards, revolving credit funds." 374 U.S. 321, 326 n.5 (1963). manner". Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

770 Federal Reserve Bulletin • November 1988 (i) The cross-marketing restriction in section commenced business operations on August 10, 1987, 4(f)(3) contains a grandfather provision that per- the date of enactment of CEBA, claimed grandfather mits products or services that would otherwise be privileges under section 4(f)(3) of CEBA. To qualify prohibited from being offered or marketed under for grandfather privileges under section 4(f)(3), the the provision to continue to be offered or mar- institution must have "becfolme a bank as a result of keted by a particular entity if the products or the enactment of [CEBA]" and must have been conservices were being so offered or marketed as of trolled by a nonbanking company on March 5, 1987. March 5, 1987, but "only in the same manner in 12 U.S.C. 1843(f)(1)(A). An institution that did not which they were being offered or marketed as of have FDIC insurance on August 10, 1987, and that did that date." Thus, to qualify for the grandfather not accept demand deposits or transaction accounts or provision, the manner of offering or marketing the engage in the business of commercial lending on that otherwise prohibited product or service must re- date, would not have become a "bank" as a result of main the same as on the grandfather date. enactment of CEBA. Thus, institutions that had not (ii) In interpreting this provision, the Board notes commenced operations on August 10, 1987, could not that Congress designed the joint-marketing re- qualify for grandfather privileges under section 4(f)(3) strictions to prevent the significant risk to the of CEBA. This view is supported by the activity limitations of section 4(f)(3), which, as noted, limit the public posed by the conduct of such activities by activities of grandfathered nonbank banks to those in insured banks affiliated with companies engaged which they were lawfully engaged as of March 5, 1987. in general commerce, to ensure objectivity in the A nonbank bank that had not commenced conducting credit-granting process and to "minimize the unbusiness activities on March 5, 1987, could not after fair competitive advantage that grandfathered enactment of CEBA engage in any activities under this commercial companies owning nonbank banks provision. might otherwise engage over regulated bank holding companies and our competing commercial companies that have no subsidiary bank." Conference Report at 125-126. The Board believes ORDERS ISSUED UNDER BANK HOLDING that determinations regarding the manner of COMPANY ACT cross-marketing of a particular product or service may best be accomplished by applying the limita- Orders Issued Under Section 3 of the Bank tion to the particular facts in each case consistent Holding Company Act with the stated purpose of this provision of CEBA and the general principle that grandfather restric- Western Illinois Bancorp, Inc. tions and exceptions to general prohibitions must Chicago, Illinois be narrowly construed in order to prevent the exception from nullifying the rule. Essentially, as Order Approving Formation of a Bank Holding in the scope of the terms "product or service", Company the guiding principle of Congressional intent with respect to this term is to permit only the continu- Western Illinois Bancorp, Inc., Chicago, Illinois, has ation of the specific types of cross-marketing applied for the Board's approval under section 3(a)(1) activity that were undertaken as of March 5, 1987. of the Bank Holding Company Act (12 U.S.C. (8) Eligibility for Cross-Marketing Grandfather Ex- § 1842(a)(1)) ("BHC Act"), to become a bank holding emption. The Conference Report also clarifies that company by acquiring all of the outstanding voting entitlement to an exemption to continue to cross- shares of The First National Bank of Blandinsville, market products and services otherwise prohibited Blandinsville, Illinois ("Bank"). by the statute applies only to the specific company Notice of the application, affording an opportunity that was engaged in the activity as of March 5, 1987. for interested persons to submit comments, has been Conference Report at 126. Thus, an affiliate that was given in accordance with section 3(b) of the BHC Act not engaged in cross-marketing products or services (53 Federal Register 25,010 (1988)). The time for filing as of the grandfather date may not commence these comments has expired, and the Board has considered activities under the exemption even if such activities the application and all comments received in light of were being conducted by another affiliate. Id.; see the factors set forth in section 3(c) of the BHC Act. also S. Rep. No. 100-19 at 33-34. Applicant is a nonoperating corporation formed to (e) Eligibility for Grandfathered Nonbank Bank Sta- acquire Bank. Bank is among the smaller commercial tus. In reviewing the reports required by CEBA, the banking organizations in Illinois, with total deposits of Board notes that a number of institutions that had not approximately $16.0 million, representing less than 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 771 percent of the total deposits in commercial banks in companies within the meaning of the Bank Holding the state. Consummation of the transaction would not Company Act (12 U.S.C. § 1841 et seq.) (the "Act"), result in an increase in the concentration of banking have applied pursuant to section 4(c)(8) of the Act resources in Illinois. (12 U.S.C. § 1843(c)(8)) and section 225.21(a) of the Bank operates in the McDonough County banking Board's Regulation Y (12 C.F.R. § 225.21(a)), to market, where it is the 4th largest of 6 commercial engage de novo through a wholly-owned subsidiary of banks, controlling 8.2 percent of the total deposits in First Florida Banks, Inc., First Management Group, commercial banks in the market. Consummation of Inc., Tampa, Florida ("First Management Group"), in this proposal would not result in any adverse effects providing management services to failed savings and upon competition in any relevant market. loan associations under the Federal Home Loan Bank Based upon the facts of record, including certain Board's Management Consignment Program. Applicommitments made by Applicant's principal, the fi- cant has also applied to engage de novo through a 60 nancial and managerial resources and future prospects percent owned subsidiary, Florida Asset Management of Applicant and Bank are consistent with approval. Group, Inc., Tampa, Florida ("Asset Management Considerations relating to convenience and needs of Group"), in assisting in the disposition of the nonearnthe communities to be served also are consistent with ing assets and other applicable assets of such failed approval of the application. savings and loan associations. (First Management Based on the foregoing and other facts of record, the Group and Asset Management Group are together Board has determined that consummation of the pro- sometimes referred to as the "Subsidiaries".) The posal would be in the public interest and that the remaining 40 percent of Asset Management Group application should be, and hereby is, approved. The would be owned by an individual with prior experience transaction shall not be consummated before the thir- in the disposition of assets of troubled financial institieth calendar day following the effective date of this tutions. Order, or later than three months following the effec- Notice of the application, affording interested pertive date of this Order, unless such period is extended sons an opportunity to submit comments on the profor good cause by the Board or by the Federal Reserve posal, has been duly published (53 Federal Register Bank of Chicago, pursuant to delegated authority. 29,276 (1988)). The time for filing comments has ex- By order of the Board of Governors, effective Sep- pired, and the Board has considered the application tember 26, 1988. and all comments received in light of the public interest factors set forth in section 4(c)(8) of the Act. Voting for this action: Vice Chairman Johnson and Gover- Applicant had total consolidated assets of $5.0 bilnors Seger, Angell, Heller, Kelley, and La Ware. Absent and lion as of March 31, 1988. Applicant operates two not voting: Chairman Greenspan. subsidiary banks and engages through two nonbanking subsidiaries in certain insurance agency and property WILLIAM W. WILES management activities. Secretary of the Board The Management Consignment Program was developed by the Federal Home Loan Bank Board Orders Issued Under Section 4 of the Bank ("FHLBB") as a vehicle for preserving the assets and Holding Company Act liabilities of a failed savings and loan association pending their disposition to a third-party acquiror. First Florida Banks, Inc. Under the program, the FHLBB charters a new shell Tampa, Florida federal mutual savings and loan association. The Federal Savings and Loan Insurance Corporation 7L Corporation ("FSLIC"), as receiver for the failed association, Tampa, Florida transfers the assets and liabilities of the failed association to the new association. The FHLBB appoints a Order Approving Application to Provide board of directors for the new association, and the Management Consulting Services to Failed Savings FSLIC and the board of directors together appoint a and Loan Associations under the Federal Home manager for the association. The manager, which may Loan Bank Board's Management Consignment be either an individual or a corporate entity, has Program responsibility for carrying out the mandates of the association's board of directors and for supervising 7L Corporation, Tampa, Florida, and its 35 percent operations to ensure conformity with the board of owned subsidiary, First Florida Banks, Inc., Tampa, directors' guidelines. The general management ser- Florida (together "Applicant"), both bank holding vices are provided until the FHLBB succeeds in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

772 Federal Reserve Bulletin • November 1988 selling the new association. Applicant proposes to Under the Management Consignment Program, the seek the appointment by the FHLBB of First Manage- manager's authority is limited to carrying out the ment Group as a principal manager of one or more mandates of the association's board of directors, failed savings and loan associations from time to time. which is appointed by the FHLBB. Neither Applicant The FSLIC and the board of directors and manager nor the Subsidiaries will have any representation on of the association may also contract for an assets the board of directors, nor will they be able to select manager to provide specific management services for any of the board members or to direct or establish major loan assets or major real estate assets acquired policies. In addition, the Subsidiaries will perform the through foreclosure, such as the maintenance and proposed services for any given association for a disposition of such assets. The assets manager pro- limited time only. Upon the sale of the association, in vides such services for varying lengths of time, de- the case of First Management Group, or upon the pending on the nature of the assets in question. Appli- conclusion of the services required by the assets cant proposes to seek the appointment by the FSLIC manager, in the case of Asset Management Group, the of Asset Management Group as an assets manager of Subsidiaries will have no further relationship with the one or more failed savings and loan associations from association. The Subsidiaries will be paid on an extime to time. plicit fee basis, based on time spent in the case of First The Board has not previously approved the pro- Management Group and on assets managed in the case posed activity. The Board has ruled that bank holding of Asset Management Group. companies may provide management consulting ad- While management officials of the Subsidiaries will vice to nonaffiliated depository institutions under cer- be acting as management officials of the client associtain conditions,1 but has not authorized such activities ation, such interlocks will be exempt from the prohito be provided on either a daily or a continuing basis, bition against management official interlocks under the except as necessary to instruct the client institution on Board's Regulation L.3 That exemption allows a perthe performance of such services for itself.2 This son to serve at the same time as a management official restriction was imposed in order to ensure that the of two depository organizations if one of the deposibank holding company does not, by virtue of providing tory organizations has been placed formally in the management consultant services, exercise control hands of a receiver, conservator, or other official over the client institution without satisfying the re- exercising a similar function. quirements of the Act. Other than the limitation regarding the provision of Based on the facts and circumstances of this case, services on a daily or continuing basis, Applicant's the Board has determined that the proposed activity is proposed activities will conform to the restrictions of closely related to banking and a proper incident the Board's Regulation Y applicable to management thereto, particularly in light of the significant public consulting services. Accordingly, based on the foregobenefits that will be produced by making additional ing and other facts of record, the Board has deterresources available to the FHLBB to assist in salvag- mined that the application should be, and hereby is, ing the assets of failed savings and loan associations. approved. This determination is subject to all of the In this connection, the Board notes that the issues conditions set forth in the Board's Regulation Y, involved in an application such as this must be ad- including those in sections 225.4(d) and 225.23(b), and dressed on a case-by-case basis. In reaching its con- to the Board's authority to require modification or clusion in this case, the Board relied on a number of termination of the activities of the holding company or considerations, in particular the fact that the Manage- any of its subsidiaries as the Board finds necessary to ment Consignment Program is designed to place con- assure compliance with the provisions and purposes of trol of the associations taking part in the program with the Act and the Board's regulations and orders issued the FHLBB and the FSLIC. Neither Applicant nor the thereunder, or to prevent evasion thereof. Subsidiaries will own shares of the client association. This transaction shall not be consummated later Nor will Applicant or the Subsidiaries hold any own- than three months after the effective date of this ership interest of any kind in the association, either Order, unless such period is extended for good cause during the course of the Subsidiaries' duties as princi- by the Board or by the Federal Reserve Bank of pal manager or assets manager or afterwards. Appli- Atlanta, pursuant to delegated authority. cant will not bid on the association or in any way By order of the Board of Governors, effective Sepattempt to purchase the association from the FSLIC. tember 20, 1988. 1. 12 C.F.R. § 225.25(b)(ll). 2. 12 C.F.R. § 225.25, n. 10. 3. 12 C.F.R. § 212.4(a)(3). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 773 Voting for this action: Chairman Greenspan and Governors its banking and nonbanking subsidiaries. Grant Street Johnson, Seger, Angell, Heller, and La Ware. Absent and not Bank will contract with CSC, which will perform the voting: Governor Kelley. actual collection, liquidation and disposition of the assets acquired. JAMES MCAFEE Mellon's proposed activities are encompassed Associate Secretary of the Board within the authorization in the Board's Regulation Y for bank holding companies to make, acquire, or Mellon Bank Corporation service loans or other extensions of credit, 12 C.F.R. Pittsburgh, Pennsylvania § 225.25(b)(1), and to operate a collection agency, 12 C.F.R. § 225.25(b)(23). Accordingly, Mellon's Order Approving an Application to Engage in proposed activities are closely related to banking and Lending and Collection Agency Activities are permissible for bank holding companies. In order to approve these applications, the Board Mellon Bank Corporation, Pittsburgh, Pennsylvania also must find that the performance of the proposed ("Mellon"), a bank holding company within the meanactivities can reasonably be expected to produce bening of the Bank Holding Company Act (the "Act") efits to the public, such as greater convenience, in- (12 U.S.C. § 1841 et seq.), has applied pursuant to creased competition, or gains in efficiency, that outsection 4(c)(8) of the Act and section 225.23(a) of the weigh possible adverse effects, such as undue Board's Regulation Y, 12 C.F.R. § 225.23(a), to concentration of resources, decreased or unfair comacquire Grant Street Bank (in Liquidation) ("Grant petition, conflicts of interest, or unsound banking Street Bank"), Pittsburgh, Pennsylvania, and engage practices. de novo in loan recovery and collection activities. Mellon has also applied to engage de novo through its In connection with the application to acquire Grant subsidiary, Collection Services Corporation, Pitts- Street Bank, the Board received a protest from the burgh, Pennsylvania ("CSC"), in loan recovery and United Mine Workers of America ("UMW") alleging collection activities. CSC proposes to engage in these that Mellon lacks the financial and managerial reactivities on a worldwide basis. sources to undertake the proposed operations. UMW also alleges that Mellon is not meeting the convenience Notice of the applications, affording interested perand needs of the communities it serves pursuant to the sons an opportunity to submit comments, has been Community Reinvestment Act ("CRA") (12 U.S.C. duly published (53 Federal Register 29,524 (1988)). § 2901 et seq.) and that Grant Street Bank will not The time for filing comments has expired, and the enhance Mellon's ability to do so. Finally, the UMW Board has considered the applications and all comalleges that Mellon has carried out policies that have ments received in light of the public interest factors set resulted in discriminatory lending practices.4 forth in section 4(c)(8) of the Act. The CRA does not apply to applications filed under Mellon, with total consolidated assets of $31.7 bilsection 4(c)(8) of the BHC Act.5 Accordingly, the lion, is the largest commercial banking organization in Board is not required to undertake an extensive anal- Pennsylvania.1 Mellon operates five banks in Pennsylysis of Mellon's record under the CRA. The Board, vania, and one bank in Delaware, and engages directly however, is required by section 4(c)(8) to determine and through other subsidiaries in various nonbanking whether the public benefits of these applications exactivities. ceed any adverse effects that may result from the Mellon proposes to acquire approximately 4.9 perproposal. In this regard, the Board has reviewed the cent of the voting shares and 75.7 percent of the total record of Mellon's subsidiary banks under CRA and equity of Grant Street Bank.2 Grant Street Bank, upon finds their records to be satisfactory. Moreover, Grant receiving a national bank charter,3 will be a limitedpurpose de novo bank in voluntary liquidation engaged solely in liquidating assets acquired from Mellon and 4. UMW has requested that the Board conduct a public hearing to receive testimony on the issues presented by these applications. Under the Board's rules, the Board may hold a public hearing on an 1. Banking data are as of June 30, 1988. application to clarify factual issues related to the application and to 2. The acquisition of 75.7 percent of the total equity of Grant Street provide an opportunity for testimony, if appropriate. 12 C.F.R. Bank necessitates an application under section 4(c)(8) of the Act. § 262.25(d). In the Board's view, the parties have had ample 12 C.F.R. § 225.143(d)(5). opportunity to present their arguments in writing and to respond to 3. Grant Street Bank will not be a "bank" for purposes of the Act. one another's submissions. Based on Mellon's efforts to ascertain and It will not accept deposits, will not grant credit to the public in the meet the convenience and needs of its community, and other facts of ordinary course of business, and will not be insured by the Federal record, the Board has determined that a hearing will serve no useful Deposit Insurance Corporation. Accordingly, Grant Street Bank will purpose. Accordingly, UMW's request for a public hearing is denied. not be a bank for the purposes of the Act. 12 U.S.C. § 1841(c). See 5. 12 U.S.C. § 2902(3)(f). Citicorp, 65 FEDERAL RESERVE BULLEalso Federal Reserve Regulatory Service f 4-363. TIN 507, 512 (1979). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

11A Federal Reserve Bulletin • November 1988 Street Bank is being established solely for the purpose Integra Financial Corporation, Mt. Lebanon, Pennsylof liquidating assets acquired from Mellon and its vania ("Integra"), has applied for the Board's apsubsidiaries. Because Mellon's banks will divest a proval under section 3(a)(5) of the Bank Holding substantial portion of their low-quality assets, Mel- Company Act ("BHC Act") (12 U.S.C. §§ 1842(a)(5)) lon's banks should be able to operate more efficiently for the consolidation of Pennbancorp, Titusville, and provide better services to their communities. Pennsylvania ("Pennbancorp") and Union National There is no evidence in the record to indicate that Corporation, Mt. Lebanon, Pennsylvania ("Union"), Mellon's proposed activity would lead to any undue both registered bank holding companies under the concentration of resources, decreased or unfair com- BHC Act. Integra would be the successor corporation petition, unsound banking practices, or other adverse and would thereby become a bank holding company, effects. The establishment of Grant Street Bank is part acquiring the banking subsidiaries of both of Mellon's recapitalization, which will result in the Pennbancorp1 and Union.2 liquidation of low-quality assets and increased capital. Integra has also applied for the Board's approval Public benefit factors, therefore, favor approval of the under section 4(c)(8) of the BHC Act (12 U.S.C. proposal. In addition, the financial and managerial § 1843(c)(8)) and section 225.23(a)(2) of the Board's resources of Mellon also are consistent with approval. Regulation Y (12 C.F.R. § 225.23(a)(2)) to acquire Based upon the foregoing and all the facts of record, several nonbanking companies, which are existing the Board has determined that the balance of the subsidiaries of Pennbancorp and Union3, and whose public interest factors that it is required to consider activities have been determined by the Board to be under section 4(c)(8) is favorable. Accordingly, the closely related to banking and permissible for bank applications are hereby approved. This determination holding companies (12 C.F.R. §§ 225.25 (b)(8) and is subject to all of the conditions set forth in Regulation (15)). Y, including sections 225.4(d) and 225.23(b) of the Notice of the applications, affording interested per- Board's Regulation Y, 12 C.F.R. §§ 225.4(d) and sons an opportunity to submit comments, has been 225.23(b), and to the Board's authority to require such published (53 Federal Register 26,501 (1988)). The modification or termination of the activities of a bank time for filing comments has expired, and the Board holding company or any of its subsidiaries as the has considered the applications and all comments Board finds necessary to assure compliance with the received in light of the factors set forth in sections 3(c) provisions and purposes of the Act and the Board's and 4(c)(8) of the BHC Act. regulations and orders issued thereunder, or to pre- Pennbancorp is the ninth largest commercial bankvent evasion thereof. ing organization in Pennsylvania, controlling deposits This activity shall not be commenced later than of $2.9 billion, representing 2.7 percent of the total three months after the effective date of this Order, unless such period is extended for good cause by the 1. The following are banking subsidiaries of Pennbancorp: First Board or by the Federal Reserve Bank of Cleveland, Seneca Bank, Oil City, Pennsylvania; Gallatin National Bank, Unionpursuant to delegated authority. town, Pennsylvania; and Pennbank, Titusville, Pennsylvania. Penn- By order of the Board of Governors, effective Sep- bancorp also controls more than 5 percent but less than 7 percent of the outstanding voting shares of Producers Bank and Trust Company, tember 29, 1988. Bradford, Pennsylvania; and Independence Bancorp, Inc., Perkasie, Pennsylvania. Independence Bancorp has three banking subsidiaries: Bucks County Bank and Trust Company, Perkasie, Pennsylvania; The Voting for this action: Chairman Greenspan and Governors Cheltenham Bank, Cheltenham, Pennsylvania; and Union Bank and Johnson, Angell, Heller, Kelley, and LaWare. Absent and Trust Company, Pottsville, Pennsylvania. not voting: Governor Seger. 2. The following are banking subsidiaries of Union: First National Bank & Trust Co., Washington, Pennsylvania; Keystone National Bank, Punxsutawney, Pennsylvania; McDowell National Bank, JAMES MCAFEE Sharon, Pennsylvania; The Union National Bank of Pittsburgh, Pitts- Associate Secretary of the Board burgh, Pennsylvania; and Valley National Bank, Freeport, Pennsylvania. 3. The following are the existing nonbanking subsidiaries of Pennbancorp and Union: Pennbancorp Life Insurance Company, Phoenix, Orders Issued Under Sections 3 and 4 of the Arizona, which engages in underwriting credit life and credit accident/ disability insurance directly related to extensions of credit by Penn- Bank Holding Company Act bancorp's subsidiary banks; and Pennbancorp Brokerage Services Company, Erie, Pennsylvania, which engages in providing securities Integra Financial Corporation brokerage services and incidental activities, such as offering individual retirement accounts. Integra has also applied to acquire Union's Mt. Lebanon, Pennsylvania existing nonbank subsidiary, Union National Life Insurance Company, Phoenix, Arizona, which engages in underwriting, as reinsurer, credit life and credit disability insurance directly related to extensions Order Approving Consolidation of Bank Holding of credit and non-operating full payout lease transactions by Union's Companies bank subsidiaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 775 deposits in commercial banks in the state ("com- the consolidation to competitors who either are not mercial bank deposits").4 Union is the eighth largest currently present in the markets or currently hold less commercial banking organization in Pennsylvania, than one percent of the deposits in the respective controlling deposits of $2.8 billion, representing 2.7 markets.10 In addition to these proposed divestitures, percent of the commercial banks deposits. Upon con- the Board has also considered the presence of thrift summation of the proposed consolidation and all institutions in these banking markets in its analysis of planned divestitures, Integra would become the sixth this proposal. The Board previously has indicated that largest commercial banking organization in Pennsylva- thrift institutions have become, or have the potential nia, and its share of total deposits in commercial banks to become, major competitors of commercial banks.11 would increase to $5.5 billion, representing approxi- Thrift institutions already exert a considerable commately 5.2 percent of the commercial bank deposits in petitive influence in the market as providers of NOW the state. Consummation of this proposal would have accounts and consumer loans, and many are engaged no significant adverse effect upon the concentration of in the business of making commercial loans and accommercial banking resources in Pennsylvania. cepting demand deposits. Based upon the number, Pennbancorp and Union compete directly in the size, market shares and commercial lending activities Fayette County, Washington/Waynesburg, Butler, of thrift institutions in the relevant markets, the Board Sharon, Greensburg/Latrobe, Kittanning, Pittsburgh, has concluded that thrift institutions exert a significant and Beaver banking markets in Pennsylvania,. competitive influence that mitigate the anticompetitive The Fayette County,5 Washington/Waynesburg,6 effects of this proposal in these markets.12 Butler,7 and Sharon8 banking markets are each highly Any adverse competitive effects of this proposal in concentrated. Upon consummation of the proposal, the Greensburg/Latrobe,13 Kittanning,14 and Integra would control 63.6 percent of the commercial Pittsburgh15 markets are also mitigated by the signifibank deposits in the Fayette County market, 43.4 cant influence of thrift institutions and the numerous percent of the commercial bank deposits in the Washington/Waynesburg market, 32.3 percent in the Butler market, and 43.4 percent in the Sharon market. In 10. The Board's policy with regard to divestitures intended to each market, the Herfindahl-Hirschman Index «remedy the anticompetitive effects resulting from a merger or acquisition proposal requires that divestitures must occur on or before ("HHI") would increase by over 500 points to over consummation. Barnett Banks of Florida, Inc., 68 FEDERAL RESERVE 2700 points.9 BULLETIN 190 (1982). InterFirst Corporation, 68 FEDERAL RESERVE BULLETIN 243 (1982). In order to mitigate the adverse competitive effects 11. National City Corporation, 70 FEDERAL RESERVE BULLETIN that would otherwise result from consummation of this 743 (1984); The Chase Manhattan Corporation, 70 FEDERAL RESERVE proposal, in the Fayette County, Washington/Waynes- BULLETIN 529 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL burg, Butler and Sharon banking markets, Pennban- RESERVE BULLETIN 802 (1983); First Tennessee Corporation, 69 corp and Union have committed to divest a total of FEDERAL RESERVE BULLETIN 298 (1983). thirteen banking offices on or before consummation of 12. The following data indicate the market share and the change in the HHI if 50 percent of the deposits controlled by thrift institutions and the described divestitures were included in the calculation of marketing concentration for the following markets: 4. State deposit data are as of March 31, 1988, and market deposit In the Fayette County market, Pennbancorp would control 47.9 data are as of June 30, 1987. percent of the total market deposits, and Union would control 4.3 5. The Fayette County banking market consists of Fayette County, percent of the total market deposits. The HHI would increase by 125 Pennsylvania. points to 3051. 6. The Washington/Waynesburg banking market includes the south- In the Washington/Waynesburg market, Pennbancorp would conern two-thirds of Washington County and all of Greene County except trol 12.1 percent of the total market deposits, and Union would control for Perry and Dunkard townships, in Pennsylvania. 18.8 percent of the total market deposits. The HHI would increase by 7. The Butler banking market includes the northern two-thirds of 341 points to 1747. Butler County, and Hovey, Perry, Sugar Creek, and Brady's Bend In the Sharon market, Pennbancorp would control 7.3 percent of the townships in Armstrong County, Pennsylvania. total market deposits, and Union would control 22.9 percent of the 8. The Sharon banking market includes Mercer County, Pennsyl- total market deposits. The HHI would increase 130 points to 2030. vania, and Brookfield Township in Trumbull County, Ohio. In the Butler market, Pennbancorp would control 7.5 percent of the 9. Under the reviewed Department of Justice Merger Guidelines, 49 total market deposits and Union would control 12.8 percent of the Federal Register 26,823 (June 29, 1984), a market in which the total market deposits. The HHI would increase by 68 points to 1611. post-merger HHI is above 1800 is considered highly concentrated. In 13. The Greensburg/Latrobe banking market includes the eastern such markets, the Department is likely to challenge a merger that two-thirds of Westmoreland County, excluding St. Clair Township, increased the HHI by more than 50 points. The Department has Pennsylvania. informed the Board that a bank merger or acquisition generally will 14. The Kittanning banking market includes the northern two-thirds not be challenged (in the absence of other factors indicating anticom- of Armstrong County, excluding Hovey, Perry, Sugar Creek and petitive effects) unless the post-merger HHI is at least 1800 and the Brady's Bend townships, Pennsylvania. merger increases the HHI by at least 200 points. The Justice Depart- 15. The Pittsburgh banking market includes: Allegheny County, the ment has stated that the higher than normal HHI thresholds for southern third of Armstrong County, the southern tier of townships in screening bank mergers for anticompetitive effects implicitly recog- Beaver County, the southern third of Butler County, the northern nizes the competitive effect of limited-purpose lenders and other third of Washington County, and the eastern third of Westmoreland nondepository financial entities. County, Pennsylvania. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

776 Federal Reserve Bulletin • November 1988 other commercial banking organizations that operate convenience and needs considerations are consistent in each market. With the inclusion of 50 percent of the with approval of this application. deposits controlled by thrift institutions, consumma- Integra has also applied, pursuant to section 4(c)(8) tion of the proposal would result in an increase of less of the Act, to acquire the nonbanking subsidiaries of than 50 points in the HHI and Integra would control Pennbancorp and Union. Consummation of the proless than 10 percent of the total deposits in the posal, however, would have a de minimis effect on Greensburg/Latrobe, Kittanning and Pittsburgh mar- existing competition and there are numerous competkets. In the Beaver market,16 Integra would control itors for these services. Accordingly, the Board con- 12.2 percent of the market's deposits and the HHI cludes that the proposal would not have any significant would increase by 73 points to 1015. The Board adverse effect on existing or probable future competiconcludes that consummation of the proposal would tion in any relevant market. Furthermore, there is no have no significant adverse effect in any of these evidence in the record to indicate that approval of this banking markets. proposal would result in undue concentration of re- On the basis of the above and other facts of record, sources, decreased or unfair competition, conflicts of the Board finds that consummation of Integra's pro- interest, unsound banking practices, or other adverse posal would not have a significant adverse effect on effects on the public interest. Accordingly, the Board existing competition in any relevant market. In addi- has determined that the balance of public interest tion, the Board concludes that based on the number of factors it must consider under section 4(c)(8) of the Act is favorable and consistent with approval of the probable future entrants in the markets, consummaapplications to acquire the nonbanking subsidiaries of tion of this proposal would not have a significant Pennbancorp and Union. adverse effect on probable future competition in any relevant market. Based on the foregoing and other facts of record, the The Board notes that the proposal will involve an Board has determined that the applications should be, exchange of shares and Integra will not acquire any and hereby are, approved. The consolidation shall not debt as a result of the transaction. Accordingly, the be consummated before the thirtieth calendar day financial and managerial resources of Pennbancorp following the effective date of this Order, or later than and Union are consistent with approval. three months after the effective date of this Order, In considering the convenience and needs of the unless such period is extended for good cause by the communities to be served, the Board has taken into Board or by the Federal Reserve Bank of Cleveland, consideration Pennbancorp's and Union's records un- acting pursuant to delegated authority. The determider the Community Reinvestment Act ("CRA"), nations as to Integra's nonbanking activities are sub- (12 U.S.C. § 2901 et seq.). In light of certain deficien- ject to all of the conditions contained in Regulation Y, cies noted at Union's lead bank, Union has committed including those in sections 225.4(d) and 225.23(b)(3) to expand its participation in various government (12 C.F.R. §§ 225.4(d) and 225.23(b)(3)), and to the lending programs and to develop new mortgage pro- Board's authority to require such modification of grams targeted for low- and moderate-income areas. termination of the activities of a holding company or The bank has recently hired an official for community any of its subsidiaries as the Board finds necessary to assure compliance with the provisions and purposes of development affairs and will establish committees to the Act and the Board's regulations and orders issued report to the bank's board of directors. The bank will thereunder, or to prevent evasion thereof. also improve its marketing program to low- and moderate-income areas. Union has also committed to file By order of the Board of Governors, effective Sepsemi-annual reports with the Federal Reserve Bank of tember 7, 1988. Cleveland regarding the CRA activities of its bank and its commitment. Based upon a review of the record Voting for this action: Chairman Greenspan and Governors and Union's commitments, the Board concludes that Johnson, Angell, Heller, and La Ware. Absent and not voting: Governors Seger and Kelley. 16. The Beaver banking market includes: Perry, Wayne, Big Bea- JAMES MCAFEE ver, and Little Beaver townships in Lawrence County, Pennsylvania. Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 111 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. Applicant Bank(s) ^date^ Norwest Corporation, Chase Manhattan Bank N.A., September 23, 1988 Minneapolis, Minnesota New York, New York 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 Anmer Corporation, Schuyler State Bank and Trust Kansas City September 12, 1988 Neligh, Nebraska Company, Schuyler, Nebraska Apple Bancorp, Inc., Apple Bank for Savings, New York August 31, 1988 New York, New York New York, New York Ashton Bancshares, Inc., Ashton State Bank, Chicago August 29, 1988 St. Paul, Minnesota Ashton, Iowa Athens Bancorp, Inc., Junction State Bank, Chicago September 14, 1988 Athens, Illinois Junction City, Wisconsin Bank Maryland Corp, Bay National Bank, Richmond September 9, 1988 Towson, Maryland Annapolis, Maryland Barnett Banks, Inc., Bank of Madison County, Atlanta September 19, 1988 Jacksonville, Florida Madison, Florida BNB Holding Company, Inc., Broadway National Bank, New York September 19, 1988 New York, New York New York, New York Citizens Bancshares Corporation, The Citizens Bank, Richmond September 14, 1988 Olanta, South Carolina Olanta, South Carolina City Holding Company, Bank of Ripley, Richmond August 29, 1988 Charleston, West Virginia Ripley, West Virginia Clarkfield Bancshares, Inc., Fergus Falls Bancshares, Inc., Minneapolis August 29, 1988 Clarkfield, Minnesota Fergus Falls, Minnesota Eastern Iowa Bancshares, Ltd., Onslow Savings Bank, Chicago September 21, 1988 Cascade, Iowa Onslow, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

778 Federal Reserve Bulletin • November 1988 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Edgewood Bancshares, Inc., EdgeMark Financial Corporation, Chicago September 7, 1988 Countryside, Illinois Countryside, Illinois Cosmopolitan Financial Services, Inc., Countryside, Illinois Farmers and Traders Bancshares, The Farmers and Traders Bank St. Louis September 2, 1988 Inc., of California, Missouri, St. Louis, Missouri California, Missouri First Bancorp Inc., Custer County Bank, Minneapolis September 20, 1988 Huron, South Dakota Custer, South Dakota Southern Hills Bank, Edgemont, South Dakota First Bancorporation of Alliance Bank, N.A., Kansas City September 9, 1988 Holdenville, Inc., Oklahoma City, Oklahoma Holdenville, Oklahoma 1st Carolina Bancshares, Ltd., 1st Carolina Bank, N.A., Richmond August 31, 1988 Charleston, South Carolina Charleston, South Carolina First Community Bankshares, The First National Bank of Kansas City August 31, 1988 Inc., Holyoke, Fort Morgan, Colorado Holyoke, Colorado Heartland Community Colorado National Bank-Sterling, Bankshares, Inc., Sterling, Colorado Fort Morgan, Colorado FIRST MERCHANTS Pendleton Banking Company, Chicago September 19, 1988 CORPORATION, Pendleton, Indiana Muncie, Indiana First National Cincinnati Star Bank, N.A., Cleveland September 6, 1988 Corporation, Cleveland, Ohio Cincinnati, Ohio First National of Nebraska, Inc., Firn-Co., Inc., Kansas City September 8, 1988 Omaha, Nebraska North Platte, Nebraska First of America Bank Commercial National Bank & Chicago September 21, 1988 Corporation, Trust Co., Kalamazoo, Michigan Iron Mountain, Michigan First of America Bank The State Savings Bank of Chicago September 6, 1988 Corporation, South Lyon, Kalamazoo, Michigan South Lyon, Michigan First Sterling Bancshares, Inc., First Sterling Bank of Osceola Atlanta August 24, 1988 Winter Haven, Florida County, Kissimmee, Florida Fleet/Norstar Financial Group, Fleet Bancorp of New Boston August 31, 1988 Inc., Hampshire, Inc., Providence, Rhode Island Nashua, New Hampshire Fleet Bank of New Hampshire, Nashua, New Hampshire Forest Bancorp, Metropolitan Corporation, Atlanta September 19, 1988 Forest, Mississippi Biloxi, Mississippi Granite State Bankshares, Inc., First Peterborough Bank Corp., Boston August 30, 1988 Keene, New Hampshire Peterborough, New Hampshire Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 111 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Hassenstab Management Co., Farmers State Bank, Kansas City September 16, 1988 Inc., Humphrey, Nebraska Humphrey, Nebraska Hometown Bancshares, Inc., Union Bank of Tyler County, Cleveland September 12, 1988 Middlebourne, West Virginia Middlebourne, West Virginia H & W Holding Company, Merchants State Bank, Minneapolis September 9, 1988 Freeman, South Dakota Freeman, South Dakota MAH Bancorp, Inc., Republic Bank of Chicago, Chicago September 2, 1988 Orland Park, Illinois Chicago, Illinois Mason City National Bancorp, Mason City National Bank, Chicago September 19, 1988 Inc., Mason City, Illinois Mason City, Illinois Mid-Citco Incorporated, Union Bank and Trust Company, Chicago August 24, 1988 Chicago, Illinois Oklahoma City, Oklahoma Piper Bankshares, Inc., State Bank of Piper City, Chicago September 20, 1988 Piper City, Illinois Piper City, Illinois Pocahontas Bancorporation, The Pocahontas State Bank, Chicago September 15, 1988 Pocahontas, Iowa Pocahontas, Iowa P.T.C. Bancorp, Bank of Versailles, Chicago September 12, 1988 Brookville, Indiana Versailles, Indiana Republic Bancorp, Inc., Premier Bancorporation, Inc., Chicago August 30, 1988 Ann Arbor, Michigan Jackson, Michigan RHNB Corporation, MetroBank, N.A., Richmond September 16, 1988 Rock Hill, South Carolina Charlotte, North Carolina Security National Corporation, Security National Bank of Atlanta September 19, 1988 Maitland, Florida Seminole, Altamonte Springs, Florida Soperton Bancshares, Inc., The Bank of Soperton, Atlanta August 29, 1988 Soperton, Georgia Soperton, Georgia Soperton Naval Stores, Inc., The Bank of Soperton, Atlanta August 29, 1988 Soperton, Georgia Soperton, Georgia SouthTrust of South Carolina, Latta Bank & Trust Company, Atlanta September 7, 1988 Inc., Latta, South Carolina Latta, South Carolina SouthTrust of Tennessee, Inc., Meltons Bank, Atlanta September 7, 1988 Nashville, Tennessee Gassaway, Tennessee Sullivan BancShares, The First National Bank of Chicago September 15, 1988 Incorporated, Sullivan, Sullivan, Illinois Sullivan, Illinois Sunset Commercial Corporation, Sunset Financial Corporation, Atlanta September 2, 1988 Miami, Florida Miami, Florida Telluride Bancorp, Ltd., Bank of Telluride, Kansas City September 14, 1988 Telluride, Colorado Telluride, Colorado Terrabank Holding Corporation, Terrabank, National Association, Atlanta September 2, 1988 Miami, Florida Miami, Florida Throckmorton Bancshares, Inc., First National Bank of Dallas September 22, 1988 Throckmorton, Texas Throckmorton, Throckmorton, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

780 Federal Reserve Bulletin • November 1988 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Town & Country Roseville Bancorp, Inc., Minneapolis September 2, 1988 Bancorporation, Inc., Roseville, Minnesota Newport, Minnesota Tri-County Bancshares, Inc., The Linn State Bank, Kansas City September 7, 1988 Linn, Kansas Linn, Kansas University National Bankshares, University National Bank, Atlanta September 1, 1988 Inc., Orlando, Florida Orlando, Florida Valley Bancorporation, Colonial Bancorporation, Chicago September 9, 1988 Appleton, Wisconsin Thiensville, Wisconsin Vogel Bancshares, Inc., Sioux County State Bank, Chicago August 29, 1988 Orange City, Iowa Orange City, Iowa Section 4 Nonbanking Reserve Effective AApppplliiccaanntt Activity/Company Bank date Alta Vista Bancshares, Inc., Alta Vista Insurance and Chicago September 19, 1988 Alta Vista, Iowa Services Corporation, Alta Vista, Iowa Commercial Bancshares, Inc., Traders Bankshares, Inc., Richmond September 2, 1988 Parkersburg, West Virginia Spencer, West Virginia MOVE Capital, Inc., Charleston, West Virginia Constellation Bancorp, N.A. Home Investors Mortgage New York August 26, 1988 Elizabeth, New Jersey Corporation, Hackensack, New Jersey Credit Lyonnais, Alexanders Rouse (USA) New York September 2, 1988 Paris, France Limited, New York, New York First NH Banks, Inc., Insurance Premium Finance Boston August 25, 1988 Manchester, New Hampshire Corporation, Derry, New Hampshire First Sioux Bancshares, Ltd., engaging in the sale of insurance Chicago September 16, 1988 Sioux Center, Iowa to area farmers and to certain consumer loan customers GL & ML, Limited, Meyer Insurance Agency, Chicago September 2, 1988 Aplington, Iowa Aplington, Iowa Guaranty Bancshares, Inc., Computer SIGNET, Dallas September 16, 1988 Mount Pleasant, Texas Mount Pleasant, Texas Michigan National Corporation, Second Commercial Fund, Inc., Chicago August 30, 1988 Farmington Hills, Michigan Bala Cynwyd, Pennsylvania MNC Financial, Inc., Landmark Financial Services, Richmond August 30, 1988 Baltimore, Maryland Inc., Silver Spring, Maryland Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 111 Section 4—Continued Nonbanking Reserve Effective Applicant Activity/Company Bank date Old Kent Financial Corporation, Hartger & Willard Mortgage Chicago September 14, 1988 Grand Rapids, Michigan Associates, Inc., Grand Rapids, Michigan Otto Bremer Foundation, First American Agency, Inc., of Minneapolis August 24, 1988 St. Paul, Minnesota St. Cloud, St. Cloud, Minnesota Prairieland Bancorp, Inc., Prairieland Accounting and Tax Chicago August 25, 1988 Bushnell, Illinois Service, Bushnell, Illinois Southern Michigan Bancorp, Lease Pack Incorporated, Chicago September 16, 1988 Inc., Mason, Michigan Cold water, Michigan Trustcorp, Inc., Burke Insurance Agency, Inc., Cleveland September 1, 1988 Toledo, Ohio Hoopestown, Illinois Sections 3 and 4 Nonbanking Reserve Effective Applicant Activity/Company Bank date Fleet/Norstar Financial Group, Fleet/Norstar New York, Inc., Boston September 1, 1988 Inc., Providence, Rhode Island Providence, Rhode Island Fleet/Norstar New York, Inc., LI Holding Company, Boston September 1, 1988 Providence, Rhode Island Hempstead, New York Nor star Bank of Upstate New York, Albany, New York Norstar Bank, N.A., Buffalo, New York Norstar Bank of Central New York, Syracuse, New York Norstar Bank, Hempstead, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

782 Federal Reserve Bulletin • November 1988 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 Bank of Ripley, Ripley Bank Merger Subsidiary, Richmond August 29, 1988 Ripley, West Virginia Inc., Ripley, West Virginia First Community Bank, Inc. The First National Bank of Richmond September 7, 1988 Princeton, West Virginia Grafton, Grafton, West Virginia Norstar Bank, Chemical Bank, New York August 30, 1988 Hempstead, New York New York, New York United Jersey Bank, United Jersey Bank/Wood Ridge New York September 7, 1988 Hackensack, New Jersey National, Wood-Ridge, 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, etal., No. CA3-88-1596-H 1801, 88-1001 88-1206, 88-1245, 88-1270 (D.C. (N.D. Tex., filed July 7, 1988). Cir., filed Nov. 4, Dec. 21, 1987, Jan. 4, March 18, VanDyke v. Board of Governors, No. 88-5280 (8th March 30, April 7, 1988). Cir., filed July 13, 1988). Teichgraeber v. Board of Governors, No. 87-2505-0 Credit Union National Association, Inc., et al., v. (D. Kan., filed Oct. 16, 1987). Board of Governors, No. 88-1295 (D.D.C. May 13, Northeast Bancorp v. Board of Governors, No. 87- 1988). 1365 (D.C. Cir., filed July 31, 1987). Bonilla v. Board of Governors, No. 88-1464 (7th Cir., National Association of Casualty & Insurance Agents filed March 11, 1988). v. Board of Governors, Nos. 87-1354, 87-1355 (D.C. Cohen v. Board of Governors, No. 88-1061 (D.N.J., Cir., filed July 29, 1987). filed March 7, 1988). The Chase Manhattan Corporation v. Board of Gov- Stoddard v. Board of Governors, No. 88-1148 (D.C. ernors, No. 87-1333 (D.C. Cir., filed July 20, 1987). Cir., filed Feb. 25, 1988). Lewis v. Board of Governors, Nos. 87-3455, 87-3545 Independent Insurance Agents of America, Inc. v. (11th Cir., filed June 25, Aug. 3, 1987). Board of Governors, No. 87-1686 (D.C. Cir , filed Securities Industry Association v. Board of Gover- Nov. 19, 1987). nors, et al., No. 87-1169 (D.C. Cir., filed April 17, Irving Bank Corporation v. Board of Governors, No. 1987). 88-1176 (D.C. Cir., filed March 1, 1988). CBC, Inc. v. Board of Governors, No. 86-1001 (10th National Association of Casualty and Surety Agents, Cir., filed Jan. 2, 1986). et al., v. Board of Governors, Nos. 87-1644, 87- 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 FINANCIAL MARKETS A4 Reserves of depository institutions, Reserve Bank credit A23 Commercial paper and bankers dollar A5 Reserves and borrowings—Depository acceptances outstanding institutions A23 Prime rate charged by banks on short-term A6 Selected borrowings in immediately available business loans funds—Large member banks A24 Interest rates—money and capital markets A25 Stock market—Selected statistics A26 Selected financial institutions—Selected assets POLICY INSTRUMENTS and liabilities AL Federal Reserve Bank interest rates A8 Reserve requirements of depository inst itutions FEDERAL FINANCE A9 Federal Reserve open market transactions A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays FEDERAL RESERVE BANKS A30 Federal debt subject to statutory limitation A30 Gross public debt of U.S. Treasury—Types A10 Condition and Federal Reserve note statements and ownership All Maturity distribution of loan and security A31 U.S. government securities dealers— holdings Transactions A32 U.S. government securities dealers—Positions and financing MONETARY AND CREDIT AGGREGATES 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

2 Federal Reserve Bulletin • November 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 REPORTED BY BANKS IN THE UNITED STATES A39 Mortgage debt outstanding A57 Liabilities to and claims on foreigners A58 Liabilities to foreigners CONSUMER INSTALLMENT CREDIT A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on A40 Total outstanding and net change foreigners A41 Terms A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined domestic offices and foreign branches FLOW OF FUNDS A42 Funds raised in U.S. credit markets REPORTED BY NONBANKING BUSINESS A43 Direct and indirect sources of funds to credit ENTERPRISES IN THE UNITED STATES markets A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS SELECTED MEASURES A44 Nonfinancial business activity—Selected A65 Foreign transactions in securities measures A66 Marketable U.S. Treasury bonds and notes— A45 Labor force, employment, and unemployment Foreign transactions A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A49 Housing and construction INTEREST AND EXCHANGE RATES A50 Consumer and producer prices A67 Discount rates of foreign central banks A51 Gross national product and income A67 Foreign short-term interest rates A52 Personal income and saving A68 Foreign exchange rates International Statistics A69 Guide to Tabular Presentation, Statistical Releases and Special SUMMARY STATISTICS Tables A53 U.S. international transactions—Summary A54 U.S. foreign trade A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve Banks Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)1 1987 Q3 Q4 Ql Q2 Apr. May June July' Reserves of depository institutions 1 Total -.9 2.5 3.5 5.8 12.3 -.2 5.4 11.9 2 Required .3 1.4 2.9 7.2 13.9 -3.8 8.6 9.7 3 Nonborrowed .3 2.4 1.5 -6.5 -13.0 8.5 -4.8 5.1 4 Monetary base3 5.1 7.8 8.3 7.6 11.4 5.0 6.2 10.4 Concepts of money, liquid assets, and debt4 5 Ml 3.9 3.8 6.3 11.3 .2 9.8 9.1 6 M2 2.8 3.9 6.8' 7.7 9.5' 4.5' 5.8' 3.8 7 M3 4.6' 5.5r 7.r 7.5r 7.4r 5.3' 7.7' 6.4 8 L 4.4' 5.8' 6.7' 8.7' 11.5' 8.T 3.8' 9.4 9 Debt 7.9 10.1 8.3 8.5' 8.6 8.3 8.0' 7.6 Nontransaction components 1 1 0 1 I I n n M M 3 2 y o nly6 1 3 1 . . 6 4 r 11 3 . .9 9 ' 7 8 . . 8 4 r r 8 6. .3 8 r - 8 . . 5 9 r r 1 4 5 . . 4 1' ' 1 2 6 . . 0 0 Time and savings deposits Commercial banks 12 Savings 10.1 .7 6.3 11.0 6.5 11.7 12.9 9.6 13 Small-denomination time8 7.4 14.8 13.7 11.8 15.1 6.6 6.2 8.8 14 Large-denomination time9, 6.8 10.5 3.4 6.7' -2.2 1.1" 23.4' 27.3 Thrift institutions 15 Savings 7.0 -3.8 -2.4 6.6 10.1 3.0 9.0 6.5 16 Small-denomination time 9.3 16.0 21.3 14.0 13.6 10.7 1.7 1.3 17 Large-denomination time9 9.9 22.2 15.7 16.0 5.7 .0 1.4 Debt components4 18 Federal 5.8 7.6 9.3 8.2 7.1 2.7 5.3 4.1 19 Nonfederal 8.5 10.9 8.0 8.6' 9.1 io. r 8.8' 8.7 20 Total loans and securities at commercial banks' 6.2 5.5 5.1 10.8 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 NonfinancialS tatistics • November 1988 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending Factors 1988 1988 June July Aug. July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 251,010 253,673 251,530 252,593 251,401 252,575 251,659 252,047 250,017 251,874 2 U.S. government securities1 225,333 225,800 223,140 225,254 224,208 224,296 223,106 223,742 222,259 223,018 3 Bought outright 224,690 224,319 223,140 224,440 223,390 224,296 223,106 223,742 222,259 223,018 4 Held under repurchase agreements 643 1,481 0 814 818 0 0 0 0 0 Federal agency obligations 7,590 8,140 7,194 8,180 7,319 7,201 7,201 7,192 7,191 7,191 6 Bought outright 7,268 7,242 7,194 7,258 7,201 7,201 7,201 7,192 7,191 7,191 7 Held under repurchase agreements 322 898 0 922 118 0 0 0 0 0 8 Acceptances 0 0 0 0 0 0 0 0 0 0 9 Loans 3,040 3,508 3,267 3,138 3,398 3,502 3,176 3,267 3,222 3,342 10 Float 478 936 595 766 806 828 679 369 426 501 11 Other Federal Reserve assets 14,569 15,289 17,334 15,255 15,670 16,748 17,497 17,478 16,916 17,822 12 Gold stock2 11,063 11,063 11,062 11,063 11,063 11,063 11,062 11,062 11,062 11,062 13 Special drawing rights certificate account... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 14 Treasury currency outstanding 18,478 18,503 18,555 18,505 18,519 18,532 18,542 18,552 18,562 18,572 ABSORBING RESERVE FUNDS 15 Currency in circulation 233,525 235,965 235,916 236,025 234,880 235,303 236,507 236,466 235,641 235,166 16 Treasury cash holdings2 455 414 396 417 406 397 396 398 394 397 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,306 3,695 3,153 3,209 3,594 3,410 3,158 2,676 3,116 3,725 18 Foreign 243 272 227 244 315 262 214 223 213 259 19 Service-related balances and adjustments 1,949 1,857 1,899 1,797 1,935 1,949 2,060 1,998 1,873 1,781 20 Other 329 329 377 350 357 301 319 357 315 540 21 Other Federal Reserve liabilities and capital 7,348 7,306 7,329 7,446 77,,339922 77,,220055 77,,227799 77,,440000 77,,335500 77,,335588 22 Reserve balances with Federal Reserve Banks 37,413 38,418 36,868 37,691 37,122 38,360 36,350 37,161 35,756 37,301 End-of-month figures Wednesday figures 1988 1988 June July Aug. July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 254,647 252,440 251,520 250,990 248,719 252,069 251,642 250,637 249,301 251,520 24 U.S. government securities1 227,636 224,450 222,795 223,988 220,727 223,552 222,676 223,152 220,473 222,795 25 Bought outright 222,450 224,450 222,795 223,988 220,727 223,552 222,676 223,152 220,473 222,795 26 Held under repurchase agreements 5,186 0 0 0 0 0 0 0 0 0 27 Federal agency obligations 9,508 7,201 7,191 7,201 7,201 7,201 7,201 7,191 7,191 7,191 28 Bought outright 7,268 7,201 7,191 7,201 7,201 7,201 7,201 7,191 7,191 7,191 29 Held under repurchase agreements 2,240 0 0 0 0 0 0 0 0 0 30 Acceptances 0 0 0 0 0 0 0 0 0 0 31 Loans 2,464 3,650 3,237 3,123 3,415 3,346 3,028 3,356 3,318 3,237 32 Float 259 774 659 1,102 1,616 725 679 478 816 659 33 Other Federal Reserve assets 14,780 16,365 17,638 15,576 15,760 17,245 18,058 16,460 17,503 17,638 34 Gold stock2 11,063 11,063 11,061 11,063 11,062 11,062 11,062 11,062 11,062 11,061 35 Special drawing rights certificate account... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 36 Treasury currency outstanding 18,501 18,531 18,581 18,517 18,531 18,541 18,551 18,561 18,571 18,581 ABSORBING RESERVE FUNDS 37 Currency in circulation 235,513 234,990 235,881 235,610 234,979 235,998 236,807 236,337 235,366 235,881 38 Treasury cash holdings 432 397 398 407 397 395 399 394 397 398 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 9,762 3,910 4,390 3,606 3,490 3,460 4,397 3,672 3,503 4,390 40 Foreign 382 269 231 266 343 209 177 234 215 231 41 Service-related balances and adjustments 1,655 1,642 1,634 1,637 1,641 1,642 1,660 1,637 1,637 1,637 42 Other 351 291 392 323 322 263 359 324 294 392 43 Other Federal Reserve liabilities and capital 7,109 7,200 7,020 7,226 7,157 6,934 77,,224466 77,,112200 77,,117700 77,,002200 44 Reserve balances with Federal Reserve Banks3 34,026 38,352 36,234 36,512 35,001 37,789 35,228 35,560 35,370 36,231 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 1988 Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July 1 Reserve balances with Reserve Banks2 27,620 37,360 37,673 37,485 34,211 36,027 38,429 36,509 37,907 37,992 ?. Total vault cash 22,953 24,079 26,155 26,919 28,119 25,926 25,200 25,873 25,717 26,479 3 Vault4 20,522 22,199 24,449 25,155 25,836 24,049 23,636 24,172 24,084 24,763 4 Surplus 2,431 1,879 1,706 1,764 2,283 1,877 1,564 1,700 1,632 1,715 Total reserves6 48,142 59,560 62,123 62,640 60,047 60,076 62,064 60,681 61,991 62,756 6 Required reserves 47,085 58,191 61,094 61,345 58,914 59,147 61,205 59,641 61,103 61,749 7 Excess reserve balances at Reserve Banks 1,058 1,369 1,029 1,295 1,133 929 859 1,040 888 1,007 8 Total borrowings at Reserve Banks 1,318 827 777 1,082 396 1,752 2,993 2,578 3,083 3,440 9 Seasonal borrowings at Reserve Banks 56 38 93 59 75 119 146 246 311 376 10 Extended credit at Reserve Banks 499 303 483 372 205 1,478 2,624 2,107 2,554 2,538 Biweekly averages of daily figures for weeks ending 1988 May 4 May 18 June 1 June 15 June 29 July 13 July 27 Aug. 10 Aug. 24 Sept. 7 11 Reserve balances with Reserve Banks2 38,313 36,737 35,707 38,644 37,260 38,831 37,399 37,343' 36,442 37,273 17, Total vault cash 25,112 25,726 26,265 25,118 26,237 26,270 26,647 26,571 27,400 26,351 13 Vault" 23,549 24,122 24,418 23,614 24,492 24,629 24,889 24,762 25,513 24,554 14 Surplus 1,563 1,604 1,847 1,504 1,745 1,641 1,758 1,810 1,887 1,798 15 Total reserves6 61,862 60,859 60,125 62,258 61,752 63,460 62,288 62,104' 61,935 61,826 16 Required reserves 60,796 59,959 58,943 61,563 60,692 62,599 61,085 61,30y 60,954 60,705 17 Excess reserve balances at Reserve Banks 1,067 901 1,182 696 1,060 861 1,203 796r 981 1,122 18 Total borrowings at Reserve Banks 2,224 2,175 3,120 3,465 2,658 3,656 3,268 3,339 3,245 3,093 19 Seasonal borrowings at Reserve Banks 191 241 269 287 337 352 390 407 431 433 20 Extended credit at Reserve Banks 1,787 1,798 2,538 2,986 2,138 2,340 2,663 2,748 2,671 2,482 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. reserve requirements less required reserves. 4. Equal to all vault cash held during the lagged computation period by 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 DomesticN onfinancialS tatistics • November 1988 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1 Averages of daily figures, in millions of dollars 1987 week ending Monday MMaattuurriittyy aanndd ssoouurrccee Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 Feb. 29 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 75,090 75,188 70,870 69,234 68,643 73,658 71,220 70,499 68,564 2 For all other maturities 8,611 9,297 9,300 8,966 88,,889999 1100,,119988 1100,,998833 1100,,333366 10,925 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 23,602 28,254 29,954 28,418 28,852 33,324 34,496 35,712 36,350 4 For all other maturities 6,886 5,920 5,897 6,140 6,356 6,762 7,250 6,146 5,926 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 15,781 14,660 14,427 15,796 16,800 15,386 13,137 14,778 13,368 6 For all other maturities 8,110 10,653 12,060 13,614 14,309 15,290 16,451 13,610 14,974 All other customers 7 For one day or under continuing contract 25,793 27,673 27,327 26,596 26,307 25,172 25,709 25,270 24,686 8 For all other maturities 9,675 9,984 9,420 10,378 10,268 9,986 10,605 10,130 10,652 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 34,041 35,783 35,356 35,063 36,523 35,727 34,848 36,414 32,112 10 To all other specified customers2 10,793 12,665 12,541 14,446 15,399 15,169 14,115 13,620 13,381 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 AAddjjuussttmmeenntt ccrreeddiitt Extended credit2 aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall ccrreeddiitt11 First 30 days of borrowing After 30 days of borrowing3 BBBaaannnkkk 9/2 O 8 n /8 8 Eff d e a c t t e i ve Pre ra v t i e o us 9/2 O 8 n /8 8 Eff d e a c t t e i ve Pre ra v t i e o us 9/2 O 8 n /8 8 Eff d e a c t t e i ve Pre ra v t i e o us Effective date Boston 6 Vl 8/9/88 6 6 Vi 8/9/88 6 8.65 9/22/88 8.80 9/8/88 New York 8/9/88 8/9/88 9/22/88 9/8/88 Philadelphia 8/9/88 8/9/88 9/22/88 9/8/88 Cleveland 8/9/88 8/9/88 9/22/88 9/8/88 Richmond 8/9/88 8/9/88 9/22/88 9/8/88 Atlanta 8/9/88 8/9/88 9/22/88 9/8/88 Chicago 8/10/88 8/10/88 9/22/88 9/8/88 St. Louis 8/9/88 8/9/88 9/22/88 9/8/88 Minneapolis 8/9/88 8/9/88 9/22/88 9/8/88 Kansas City 8/9/88 8/9/88 9/22/88 9/8/88 Dallas 8/11/88 8/11/88 9/22/88 9/8/88 San Francisco ... 6 Vl 8/9/88 6 6 Vi 8/9/88 6 8.65 9/22/88 8.80 9/8/88 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 ll v e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. Ba o n f k Effective date A le ll v e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977. 6 6 1980—July 28 10-11 10 11998844——AApprr.. 9 8W-9 9 1978-—Jan. 9 6-6W 6 Vl 29 10 10 13 9 9 20 6W 61 W Sept. 26 11 11 Nov. 21 8W-9 8W May 11 6V2-7 1 Nov. 17 12 12 26 8W 8W 12 I-7I VA Dec. 5 12-13 13 Dec. 24 8 8 July 3 m 7mW 10 1981—May 5 13-14 14 11998855——MMaayy 20 7W-8 7W Aug. 21 73/4 73/4 8 14 14 24 7W 7W Sept. 22 8 8 Nov. 2 13-14 13 Oct. 2 1 0 6 8- s 8 w W 8 8 WV i Dec. 4 6 1 1 2 3 1 1 2 3 1986—Mar. 10 7 7-7 7 W 7 7 Nov. 1 8W-9W 9 Vi Apr. 21 6W-7 6W 3 9 W 9V: 1982—July 20 11W-12 11W July 11 6 6 23 11 W 11W AAuugg.. 21 5W-6 5W 1979--July 20 10 10 Aug. 2 11-11W 11 22 5W 5W Aug. 17 10-10W 10W 3 11 11 20 10V5 10W 16 10W 10W 11998877——SSeepptt.. 4 5W-6 6 Sept. 19 10W-11 11 27 10-10W 10 11 6 6 21 11 11 30 10 10 Oct. 8 II-12 12 Oct. 12 9W-10 9W 11998888——AAuugg.. 9 6-6W 6W 10 12 12 13 9W 9W 11 6W 6W Nov. 22 9-9W 9 1980--Feb. 15 12-13 13 26 9 9 In effect September 28, 1988 .. 6W 6W 19 13 13 Dec. 14 8W-9 9 May 29 12-13 13 15 8W-9 8W 30 12 12 17 8W 8W 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 Vl 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 Vl 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 • November 1988 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Type of deposit, and Monetary Control Act deposit interval2 Percent of Effective date deposits Net transaction accounts3 4 $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 x/i years 3 10/6/83 \Vz 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 1988 Type of transaction 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 22,214 22,602 18,983 0 346 560 423 0 0 515 2 Gross sales 4,118 2,502 6,050 49 538 0 0 0 0 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 3,500 1,000 9,029 600 1,600 0 0 0 0 0 Others within 1 year 5 Gross purchases 1,349 190 3,658 0 0 0 1,092 0 0 0 6 Gross sales 0 0 300 0 0 0 0 0 0 0 7 Maturity shift 19,763 18,673 21,502 950 1,939 2,051 868 1,646 1,384 1,033 8 Exchange -17,717 -20,179 -20,388 -754 -2,868 -2,089 -1,688 -4,324 -1,826 -87 9 Redemptions 0 0 70 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 2,185 893 10,231 0 0 0 3,661 0 0 0 11 Gross sales 0 0 452 0 800 0 0 0 0 0 12 Maturity shift -17,459 -17,058 -17,974 -840 -952 -2,051 -823 -1,102 -1,384 -997 13 Exchange 13,853 16,984 18,938 749 2,643 2,089 1,434 3,724 1,826 0 5 to 10 years 14 Gross purchases 458 236 2,441 0 0 0 1,017 0 0 0 15 Gross sales 100 0 0 0 175 0 0 0 0 0 16 Maturity shift -1,857 -1,620 -3,529 -110 -987 0 -45 -387 0 -36 17 Exchange 2,184 2,050 950 5 150 0 254 400 0 87 Over 10 years 18 Gross purchases 293 158 1,858 0 0 0 966 0 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -447 0 0 0 0 0 0 -157 0 0 21 Exchange 1,679 1,150 500 0 75 0 0 200 0 0 All maturities 22 Gross purchases 26,499 24,078 37,171 0 346 560 7,160 0 0 515 23 Gross sales 4,218 2,502 6,802 49 1,513 0 0 0 0 0 24 Redemptions 3,500 1,000 9,099 600 1,600 0 0 0 0 0 Matched transactions 25 Gross sales 866,175 927,997 950,923 78,358 97,892 104,527 86,900 115,287 73,708 81,979 26 Gross purchases 865,968 927,247 950,935 78,513 99,139 104,572 85,608 115,115 72,966 83,464 Repurchase agreements1 27 Gross purchases 134,253 170,431 314,620 10,591 0 0 18,6% 15,871 10,520 22,978 28 Gross sales 132,351 160,268 324,666 14,237 0 0 11,088 23,478 5,334 28,164 29 Net change in U.S. government securities 20,477 29,989 11,235 -4,140 -1,520 605 13,476 -7,779 4,444 -3,186 FEDERAL AGENCY OBLIGATIONS Outright transactions 3 3 3 2 0 1 G R G e r r d o o e s s s s m p p sa t u i l r o e c s n h s a ses 162 0 0 398 0 0 276 0 0 131 0 0 21 0 0 0 0 3 120 0 0 11 0 0 0 0 0 6 0 0 7 Repurchase agreements2 33 Gross purchases 22,183 31,142 80,353 4,042 0 0 4,243 4,771 5,083 12,355 34 Gross sales 20,877 30,522 81,351 5,357 0 0 1,447 7,566 2,843 14,594 35 Net change in federal agency obligations . 1,144 222 -1,274 -1,446 -21 -3 2,676 -2,807 2,239 -2,306 36 Total net change in System Open Market Account 21,621 30,211 9,961 -5,586 -1,541 602 16,151 -10,585 6,683 -5,492 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 NonfinancialS tatistics • November 1988 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1988 1988 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 June July Aug. Consolidated condition statement ASSETS 1 Gold certificate account 11,062 11,062 11,062 11,062 11,061 11,063 11,063 11,061 2 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3 372 377 385 380 370 369 383 370 Loans 4 To depository institutions 3,346 3,028 3,356 3,318 3,237 2,464 3,650 3,237 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 7,201 7,201 7,191 7,191 7,191 7,268 7,201 7,191 8 Held under repurchase agreements 0 0 0 0 0 2,240 0 0 U.S. Treasury securities Bought outright 9 Bills 106,575 105,699 106,175 103,4% 105,818 105,473 107,473 105,818 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 outright 223,552 222,676 223,152 220,473 222,795 222,450 224,450 222,795 13 Held under repurchase agreements 0 0 0 0 0 5,186 0 0 14 Total U.S. Treasury securities 223,493 222,676 223,152 220,473 222,795 227,636 224,450 222,795 15 Total loans and securities 234,099 232,905 233,699 230,982 233,223 239,608 235,301 233,223 16 Items in process of collection 7,380 6,318 6,887 6,237 6,283 6,604 7,278 6,283 17 Bank premises 731 731 730 733 732 727 729 732 Other assets 18 Denominated in foreign currencies3 8,462 8,840 8,973 9,606 9,797 6,226 7,561 9,797 19 All other4 8,052 8,487 6,757 7,164 7,109 7,827 8,075 7,109 20 Total assets 275,176 273,738 273,511 271,182 273,593 277,442 275,408 273,593 LIABILITIES 21 Federal Reserve notes 218,224 219,032 218,555 221177,,557722 221188,,006688 221177,,881122 221177,,224400 221188,,006688 Deposits 22 To depository institutions 39,431 36,888 37,197 37,007 37,868 35,681 39,994 37,868 23 U.S. Treasury—General account 3,460 4,397 3,672 3,503 4,390 9,762 3,910 4,390 24 Foreign—Official accounts 209 177 234 215 231 382 269 231 25 Other 263 359 324 294 392 351 291 392 26 Total deposits 43,363 41,821 41,427 41,019 42,881 46,176 44,464 42,881 27 Deferred credit items 6,655 5,639 6,409 5,421 5,624 6,345 6,504 5,624 28 Other liabilities and accrued dividends5 2,524 2,700 2,632 2,667 2,613 2,819 2,611 2,613 29 Total liabilities 270,766 269,192 269,023 266,679 269,186 273,152 270,819 269,186 CAPITAL ACCOUNTS 30 Capital paid in 2,118 2,075 2,075 2,079 2,083 2,110 2,119 2,083 31 Surplus 2,047 2,047 2,047 2,047 2,041 2,039 2,046 2,041 32 Other capital accounts 245 424 366 377 283 141 424 283 33 Total liabilities and capital accounts 275,176 273,738 273,511 271,182 273,593 277,442 275,408 273,593 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 224,230 224,069 225,066 225,105 223,518 228,226 226,294 223,518 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 262,317 262,747 263,153 263,770 263,958 260,049 262,021 263,958 36 LESS: Held by bank 44,093 43,715 44,598 46,198 45,890 42,237 44,781 45,890 37 Federal Reserve notes, net 218,224 219,032 218,555 217,572 218,068 217,812 217,240 221188,,006688 Collateral held against notes net: 38 Gold certificate account 11,062 11,062 11,062 11,062 11,061 11,063 11,063 11,061 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 202,144 202,952 202,475 201,492 201,989 201,731 201,159 201,989 42 Total collateral 218,224 219,032 218,555 217,572 218,068 217,812 217,240 218,068 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 Al 1 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month Type and maturity groupings 1988 1988 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 June 30 July 29 1 Loans—Total 3,346 3,028 3,356 3,318 3,237 2,464 3,650 2 3 W 16 i d th a i y n s 1 t 5 o d 9 a 0 y s d ays 3,1 2 0 4 5 0 1 2,7 2 7 5 7 1 0 3,26 9 5 1 0 3,25 6 4 4 0 3,0 17 6 4 3 0 2,3 1 3 2 6 0 8 3,5 14 10 0 0 4 91 days to 1 year 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 8 91 days to 1 year 9 U.S. Treasury securities—Total .. 223,552 222,676 223,152 220,473 222,795 227,636 224,450 10 Within 15 days1 11,964 9,464 12,161 9,518 10,774 10,569 7,756 11 16 days to 90 days 50,638 49,706 47,376 47,191 50,393 50,269 56,583 12 91 days to 1 year 64,503 67,060 68,255 68,404 66,2% 70,884 64,395 1 1 1 4 5 3 O O O v v v e e e r r r 5 1 1 0 y y y e e e a a a r r s r t s o to 5 10 y e y a e rs a rs 5 2 15 6 4 , , , 4 5 4 0 8 5 8 6 3 2 5 15 6 4 , , , 4 5 4 0 8 5 8 6 2 2 5 13 6 5 , , , 7 5 1 0 0 52 8 0 2 5 13 6 5 , , , 7 5 1 0 0 52 0 8 2 5 13 6 5 , , , 7 5 12 0 0 4 0 8 2 5 15 6 3 , , , 5 4 9 0 3 7 8 5 1 5 2 15 6 3 , , , 4 5 7 0 8 2 8 2 6 2 2 2 1 1 1 1 6 7 8 9 0 1 2 Fe 9 W O d O O 16 1 e v v v i r t d d e e e a h r r r a a l i y y n 5 1 1 a s s 0 g y y 1 t t 5 e y e e o o n a e a d c 9 r r a 1 a s y 0 r t y y s o t d e s o o 1 a a b 5 r y 1 l 0 s i y g e a y a t e r i s a o r n s s —Total 7 3 1 1 , , , , 7 2 1 8 1 1 6 3 7 9 0 6 7 0 3 9 0 9 1 0 7 3 1 1 , , , , 7 2 7 1 1 1 1 6 7 8 6 0 8 2 9 3 9 1 9 1 0 7 3 1 1 , , , , 6 6 1 3 1 1 1 9 7 5 9 7 1 8 7 3 5 1 0 6 0 7 3 1 1 , , , , 6 6 1 3 1 1 1 9 7 9 5 7 1 8 7 3 1 5 0 6 0 7 3 1 1 , , , , 6 2 1 2 6 1 1 4 9 6 4 8 8 6 0 1 8 7 9 7 0 9 2 3 1 1 , , , , , 8 4 2 5 6 1 1 0 4 0 0 8 7 9 3 8 0 8 4 9 4 7 3 1 1 , , , , 7 2 7 1 1 1 1 3 5 7 8 8 6 0 0 9 3 5 9 5 1 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 • November 1988 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1988 IItteemm D 19 e 8 c 4 . D 19 e 8 c 5 . D 19 e 8 c 6 . D 19 e 8 c 7 . Jan. Feb. Mar. Apr. May June July Aug. Seasonally adjusted CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 40.% 47.26 57.46 58.72 59.46 59.57 59.76 60.37 60.37 60.64 61.24r 61.09 2 Nonborrowed reserves 37.77 45.94 56.63 57.94 58.38 59.18 58.01 57.38 57.79 57.55 57.80r 57.85 3 Nonborrowed reserves plus extended credit 40.38 46.44 56.93 58.43 58.75 59.38 59.49 60.00 59.89 60.11 60.34 60.50 4 Required reserves 40.11 46.20 56.09 57.69 58.16 58.44 58.83 59.51 59.32 59.75 60.23 60.14 5 Monetary base 200.45 218.26 240.80 257.93 260.72 262.02 263.32 265.81 266.92 268.31 270.63' 271.20 Not seasonally adjusted 6 Total reserves3 41.84 48.27 58.70 60.02 61.20 58.66 58.85 60.95 59.45 60.68 61.47 60.59 7 Nonborrowed reserves 38.65 46.95 57.87 59.25 60.12 58.27 57.10 57.95 56.88 57.60 58.03 57.35 8 Nonborrowed reserves plus extended credit4 41.26 47.45 58.18 59.73 60.49 58.47 58.58 60.58 58.98 60.15 60.57 60.00 9 Required reserves 40.99 47.21 57.33 58.99 59.90 57.53 57.92 60.09 58.41 59.79 60.46 59.64 10 Monetary base 203.39 221.49 244.55 262.05 262.01 259.01 260.77 265.01 265.73 269.44 272.41r 271.73 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS6 11 Total reserves3 40.70 48.14 59.56 62.12 62.64 60.05 60.08 62.06 60.68 61.99 62.76 61.97 12 Nonborrowed reserves 37.51 46.82 58.73 61.35 61.56 59.65 58.32 59.07 58.10 58.91 59.32 58.73 13 Nonborrowed reserves plus extended credit4 40.09 47.41 59.04 61.86 62.12 59.82 59.58 61.89 60.08 61.47 61.99 61.26 14 Required reserves 39.84 47.08 58.19 61.09 61.34 58.91 59.15 61.21 59.64 61.10 61.75 61.02 15 Monetary base 204.18 223.53 247.71 266.16 265.79 262.60 263.98 268.13 268.90 272.65 275.59r 275.03 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 Item2 - D 19 e 8 c 4 . D 19 e 8 c 5 . D 19 e 8 c 6 . D 19 e 8 c 7 . May June July' Aug. Seasonally adjusted 1 551.9 620.1 725.4 750.8 770.2 776.5 782.4 782.5 ? 2,363.6 2,562.6 2,807.7' 2,901.0' 3,002.2' 3,016.6' 3,025.8 3,031.7 2,978.3 3,196.4 3,490.8' 3,664.2' 3,788.5' 3,812.8' 3,833.8 3,846.6 4 3,519.4 3,825.9 4,134.3' 4,327.0' 4,495.2' 4,509.3' 4,550.8 n.a. 5 5,932.6 6,749.4 7,607.6 8,305.5 s.sss^ 8,646.0' 8,700.9 n.a. Ml components 6 Currency3 156.1 167.7 180.4 196.5 203.6 220044..99 220066..33 220077..22 7 Travelers checks 5.2 5.9 6.5 7.1 7.4 7.3 7.2 7.2 8 Demand deposits5 244.1 267.2 303.3 288.0 287.4 289.9 290.6 290.0 9 Other checkable deposits6 146.4 179.2 235.2 259.3 271.9 274.4 278.3 278.1 Nontransactions components 10 In M2 1,811.7 1,942.5 2,082.3r 2,150.2' 2,232.0' 2,240.1' 2,243.4 2,249.1 11 In M3 only8 614.7 633.8 683. r 763.2' 786.3' 796.2' 808.0 815.0 Savings deposits9 1? Commercial Banks 122.6 124.8 155.5 178.2 186.0 188.0 118899..55 119900..66 13 Thrift institutions 162.9 176.6 215.2 236.0 239.2 241.0 242.3 243.2 Small-denomination time deposits10 14 Commercial Banks 386.3 383.3 364.6 384.6 404.7 440066..88 440099..88 441144..22 15 Thrift institutions 497.0 496.2 488.6 528.5 567.3 568.1 568.7 571.2 Money market mutual funds 16 General purpose and broker-dealer 167.5 176.5 208.0 221.1 231.7 222288..99 222299..55 223300..99 17 Institution-only 62.7 64.5 84.4 89.6 90.0 86.3 84.8 84.0 Large-denomination time deposits" 18 Commercial Banks 270.2 284.9 288.9 332233..55 332277..88'' 333344..22'' 334411..33 334466..99 19 Thrift institutions 146.8 151.6 150.3 161.2 168.1 168.1 168.3 167.9 Debt components 70 Federal debt 1,365.3 1,584.3 1,804.5 1,954.7 22,,002233..11 22,,003322..11 22,,003399..00 n.a. 21 Nonfederal debt 4,567.3 5,165.1 5,803.2 6,350.8 6,565.8' 6,614.0' 6,661.8 n.a. Not seasonally adjusted ?? 564.5 633.5 740.6 765.9 763.8 778.8 785.6 781.3 73 2,373.2 2,573.9 2,821.4' 2,914.7' 2,988.3' 3,014.4' 3,030.3 3,030.8 74 2,991.4 3,211.0 3,507.6' 3,680.8' 3,776.1' 3,808.1' 3,831.1 3,844.3 ?5 3,532.7 3,841.4 4,152.3' 4,345.1' 4,477.8' 4,505.9' 4,540.2 n.a. 26 5,927.1 6,740.6 7,593.3 8,289.3 8,559.2' 8,621.1' 8,675.6 n.a. Ml components 77 Currency 158.5 170.2 183.0 199.4 203.6 220055..88 220077..99 220077..99 78 Travelers checks 4.9 5.5 6.0 6.5 7.1 7.6 8.2 8.2 79 Demand deposits 253.0 276.9 314.4 298.5 282.9 291.0 292.6 288.7 30 Other checkable deposits 148.2 180.9 237.3 261.6 270.1 274.4 276.8 276.4 Nontransactions components 31 M27 1,808.7 1,940.3 2,080.7' 2,148.8' 2,224.5' 2,235.6' 2,244.8 22,,224499..55 32 M3 only8 618.2 637.1 686.2' 766.1' 787.7' 793.7' 800.8 813.5 Money market deposit accounts 33 Commercial Banks 267.4 332.8 379.6 358.2 357.0 359.9 335599..44 335566..99 34 Thrift institutions 149.4 180.8 192.9 167.0 162.6 162.4 161.8 160.2 Savings deposits9 35 Commercial Banks 121.5 123.7 154.2 117766..77 118877..11 118899..66 119911..44 119900..99 36 Thrift institutions 161.5 174.8 212.9 233.3 241.2 243.8 245.6 243.8 Small-denomination time deposits10 37 Commercial Banks 386.9 384.0 365.3 385.2 401.4 405.4 410.3 441155..33 38 Thrift institutions 498.2 497.5 489.7 529.3 562.8 564.6 568.9 570.9 Money market mutual funds 39 General purpose and broker-dealer 167.5 176.5 208.0 221.1 231.7 228.9 229.5 230.9 40 Institution-only 62.7 64.5 84.4 89.6 90.0 86.3 84.8 84.0 Large-denomination time deposits" 41 Commercial Banks 270.9 285.4 289.1 323.6 328.5 333333..44'' 333388..44 334466..33 42 Thrift institutions 146.8 151.9 150.7 161.8 167.2 166.9 166.8 167.6 Debt components 43 Federal debt 1,364.7 1,583.7 1,803.9 1,954.1 2,005.2 2,014.7 22,,002222..33 n.a. 44 Nonfederal debt 4,562.4 5,156.9 5,789.4 6,335.1 6,554.0 6,606.4' 6,653.3 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • November 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 Monetary and Reserves Projection market debt of the U.S. government, state and local governments, and private section, Division of Monetary Affairs, Board of Governors of the Federal Reserve nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- System, Washington, 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 accounts (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. Bank group, or type of customer 19862 1987 Feb. Mar. Apr. May June Seasonally adjusted Demand deposits 1 All insured banks 156,091.6 188,345.8 217,115.9 213,270.8 221,057.3 218,986.7 213,971.5 224,052.3 230,198.8 2 Major New York City banks 70,585.8 91,397.3 104,496.3 98,733.8 104,568.3 101,161.0 100,695.1 109,714.7 111,402.1 3 Other banks 85,505.9 96,948.8 112,619.6 114,537.0 116,489.0 117,825.7 113,276.4 114,337.6 118,796.6 4 ATS-NOW accounts4 1,823.5 2,182.5 2,402.7 2,352.7 2,730.3 2,856.8 2,557.9 2,664.9 2,786.0 5 Savings deposits 384.9 403.5 526.5 534.9 596.0 640.7 543.7 574.7 597.1 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 500.3 556.5 612.1 602.5 628.2 628.8 600.2 630.9 649.8 7 Major New York City banks 2,196.9 2,498.2 2,670.6 2,600.3 2,844.8 2,811.0 2,700.6 2,881.3 2,911.0 8 Other banks 305.7 321.2 357.0 362.5 369.7 377.3 354.9 360.6 376.0 9 ATS-NOW accounts4 15.8 15.6 13.8 13.0 14.9 15.5 13.8 14.2 14.8 10 Savings deposits 3.2 3.0 3.1 3.0 3.3 3.5 3.0 3.1 3.2 Not seasonally adjusted Demand deposits3 11 All insured banks 156,052.3 188,506.4 217,124.8 210,029.1 208,899.2 233,286.6 214,848.8 222,685.5 241,133.2 12 Major New York City banks 70,559.2 91,500.0 104,518.6 97,840.lc 98,106.5C 109,557.8 101,141.9 106,335.6 117,287.7 13 Other banks 85,493.1 97,006.6 112,606.1 112,189.0 110,792.7 123,728.8 113,706.9 116,349.9 123,845.5 14 ATS-NOW accounts4 1,826.4 2,184.6 2,404.8 2,565.2 2,468.6 2,825.0 2,745.3 2,601.3 2,851.4 15 MMDA" 1,223.9 1,609.4 1,954.2 2,305.6 2,102.8 2,337.5 2,372.8 2,341.0 2,557.1 16 Savings deposits 385.3 404.1 526.8 552.5 526.3 616.5 603.2 566.4 598.3 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 499.9 556.7 612.3 578.7 610.5 684.3 601.8 638.6 679.5 18 Major New York City banks 2,196.3 2,499.1 2,674.9 2,430.3 2,664.6 3,005.7 2,706.2 2,895.6 3,121.4 19 Other banks 305.6 321.2 356.9 347.7 362.8 406.4 355.7 372.9 390.3 20 ATS-NOW accounts4 15.8 15.6 13.8 13.9 13.5 15.3 14.4 14.1 15.2 21 MMDA 4.0 4.5 5.3 6.5 5.9 6.5 6.6 6.6 7.2 22 Savings deposits5 3.2 3.0 3.1 3.1 3.0 3.4 3.3 3.1 3.2 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 NonfinancialS tatistics • November 1988 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1987 1988 CCaatteeggoorryy Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Seasonally adjusted 1 Total loans and securities2 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 2,367.2 2 U.S. government securities 331.3 331.7 331.1 333.2 334.6 334.9 338.9 343.0 345.9 349.8 344.8 347.3 3 Other securities 193.7 194.2 196.2 196.0 193.9 195.6 197.5 198.2 197.6 198.5 199.1 199.1 4 Total loans and leases 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 1,820.7 5 Commercial and industrial ..... 559.0 562.8 563.1 565.5 568.3 571.1 569.3 578.8 587.4 594.4 600.7 601.5 6 Bankers acceptances held ... 5.4 5.5 4.6 4.3 4.5 4.5 4.8 4.7 4.5 4.5 4.4 4.6 7 Other commercial and industrial 553.6 557.3 558.5 561.2 563.9 566.6 564.5 574.1 582.9 589.9 596.2 596.9 8 U.S. addressees 545.7 549.4 551.0 553.1 554.9 557.6 556.1 565.8 575.7 583.0 589.4 590.3 9 Non-U.S. addressees 7.9 7.9 7.5 8.2 9.0 8.9 8.4 8.3 7.1 7.0 6.8 6.6 10 Real estate 561.7 569.4 576.2 582.3 587.5 593.0 598.2 604.4 612.6 618.9 624.9 632.2 11 Individual 322.8 324.1 325.0 325.9 327.9 330.8 334.6 337.6 339.1 340.6 341.6 343.3 12 Security 46.1 47.1 39.3 33.4 36.3 41.3 39.9' 38.1 38.8 38.6 38.0 39.5 13 Nonbank financial institutions 31.4 31.7 31.9 31.9 32.1 32.7 32.1 31.2 31.8 31.4 31.9 31.7 14 Agricultural 29.6 29.6 29.3 29.2 29.3 29.5 29.5 29.5 29.4 29.0 28.6r 28.3 15 State and political subdivisions 54.7 54.1 53.4 51.2 52.3 52.3 52.1 51.9 51.6 51.5 51.1 50.5 16 Foreign banks 9.2 9.6 8.8 8.2 8.2 7.8 8.1 8.5 8.2 8.2 8.5 8.4 17 Foreign official institutions 5.7 5.8 5.7 5.6 5.6 5.2 5.2 5.2 5.3 5.2 5.2 5.4 18 Lease financing receivables .... 24.1 24.3 24.5 24.8 24.8 24.7 24.8 25.0 25.3 25.8 26.5 26.7 19 All other loans 45.4 43.1 47.6 43.3 41.6 40.9 44.6r 46.1 49.5 51.8 52.5' 53.4 Not seasonally adjusted 20 Total loans and securities2 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 2,355.8 21 U.S. government securities 331.3 329.3 331.0 333.1 336.1 340.0 340.8 342.6 344.3 346.3 343.9 347.3 22 Other securities 193.8 193.3 195.6 196.6 196.5 196.3 197.1 197.8 197.7 198.0 197.9 199.0 23 Total loans and leases' 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 1,809.5 24 Commercial and industrial ..... 555.7 558.7 562.0 569.6 568.0 570.3 574.5 582.8 589.8 595.9 597.8 596.3 25 Bankers acceptances held ... 5.5 5.4 4.6 4.4 4.3 4.4 4.8 4.7 4.5 4.6 4.5 4.6 26 Other commercial and industrial 550.2 553.3 557.4 565.2 563.7 565.9 569.7 578.1 585.3 591.3 593.3 591.8 27 U.S. addressees4. 542.1 545.3 549.3 557.1 555.5 557.4 561.5 570.0 577.9 584.2 586.0 584.8 28 Non-U.S. addressees 8.1 8.1 8.1 8.1 8.2 8.5 8.1 8.1 7.3 7.1 7.3 7.0 2V Real estate 562.4 570.0 576.8 583.2 587.8 592.3 597.4 603.4 612.0 618.6 624.9 632.2 30 Individual 324.3 325.7 326.7 330.2 331.3 330.2 331.5 334.5 336.3 338.5 340.2 343.4 31 Security 44.8 45.6 39.4 35.1 37.1 39.7 39.3 39.8 39.3 40.0 37.5 37.7 32 Nonbank financial institutions 31.8 31.7 32.3 33.2 32.4 31.6 31.1 31.1 31.5 31.5 31.7 31.6 33 Agricultural 30.7 30.4 29.6 28.9 28.6 28.5 28.5 28.7 29.1 29.3 29.Y 29.1 34 State and political subdivisions 53.8 53.2 52.3 51.2 54.1 53.5 53.0 52.4 51.6 51.1 50.3 49.9 35 Foreign banks 9.5 9.8 8.8 8.6 8.4 8.0 8.0 8.1 7.9 8.1 8.5 8.2 36 Foreign official institutions 5.7 5.8 5.7 5.6 5.6 5.2 5.2 5.2 5.3 5.2 5.2 5.4 37 Lease financing receivables .... 24.0 23.9 24.2 24.8 25.0 24.9 25.0 25.2 25.4 26.0 26.5 26.6 38 All other loans 43.9 44.8 46.8 46.8 44.1 43.8 43.8 47.1 48.9 51.3 49.7r 49.1 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 A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1987 1988 SSoouurrccee Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July' Aug. Total nondeposit funds 2 1 S N e o a t s o se n a a s l o ly n a a l d ly ju s a t d e j d u sted 1 17 7 8 7 . . 0 6 '" ' 1 1 7 7 6 6 . . 8 8 ' ' 1m74s.6r' 1 1 7 7 8 9 . . 4 3' ' 1 18 8 0 0 . . 6 2' ' 1 18 7 0 8 . . 7 1' ' 1 17 7 6 5. . 8 6 ' ' 1 18 8 2 3 . . 2 1' ' 1 1 9 9 4 4 . . 4 1' ' 1 1 9 9 5 1. . 3 1 ' ' 1 18 9 8 2. . 9 9 1 1 9 9 7 7 . . 0 2 Federal funds, RPs, and other borrowings from nonbanks or 3 Seasonally adjusted 165.3' 165.2' 166.7' 163.2' 171.1' 175. 178.9' 181.1' 184.5' 118866..11'' 118811..77 117777..99 4 Not seasonally adjusted 165.7' 165.3' 169.0' 164. r 171.4' 177.6' 179.8' 180.2' 184.3' 182.4' 177.7 178.2 5 Net balances due to foreign-related institutions, not seasonally adjusted 1122..33 1111..66 77..99 1155..22 99..11 33..11 --33..11 22..00 99..88 99..00 1111..22 19.1 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted -11.8 -14.7 -17.1 -14.0 -16.5 -20.2 -25.3 -22.2 -16.4 -16.0 -13.6 -6.9 7 Gross due from balances 63.8 67.7 70.4 69.5 71.2 72.9 76.6 72.9 69.6 69.4 70.2 70.2 8 Gross due to balances 52.0 53.0 53.3 55.5 54.7 52.7 51.3 50.7 53.3 53.4 56.6 63.3 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted 24.1 26.3 24.9 29.2 25.6 23.3 22.1 24.2 26.2 25.0 24.8 26.0 10 Gross due from balances 77.3 79.7 83.2 79.8 85.2 87.3 88.6 88.3 89.9 93.6 94.1 93.9 11 Gross due to balances 101.4 106.0 108.2 109.0 110.9 110.6 110.7 112.4 116.1' 118.6' 118.9 119.9 Security RP borrowings 1 13 ? S N e o a t s o se n a a s l o ly n a a l d ly ju s a t d e j d u sted 1 1 0 0 7 8. .7 r ' 1 1 0 0 8 8 . . 0 1' ' 11007.96' .V 1 10 0 8 7. . 3 2 ' ' 1 11 1 0 0 . . 4 1' ' 1 1 0 11 9 . . 6 C ' 1 1 0 10 9 . . 6 7 ' ' 1 1 1 12 3 . . 6 5' ' 1 1 1 1 7 7 . . 7 5' ' 1 1 2 18 2 . .0 3' ' 1 1 1 1 9 5. . 8 8 1 11 1 8 7. . 7 0 U.S. Treasury demand balances7 14 Seasonally adjusted 24.9 34.2 35.7 26.1 18.6 22.6 24.9 21.8 24.7 2222..00 2200..22 1155..88 15 Not seasonally adjusted 25.5 30.7 25.8 22.4 24.9 28.2 22.3 21.7 30.4 21.0 22.0 11.9 Time deposits, $100,000 or more" 16 Seasonally adjusted 373.0 380.5 387.0 389.2 389.1 394.4 396.1 394.0 339966..44 440000..55 440066..77 441133..55 17 Not seasonally adjusted 373.2 380.4 387.0 389.3 390.1 394.7 398.2 393.9 397.1 399.8 403.9 412.8 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 • November 1988 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1987 1988 AAccccoouunntt Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 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 2,517.2 2 Investment securities 503.8 508.0 514.4 516.0 515.4 518.3 520.3 522.5 519.8 520.8 524.6 3 U.S. government securities 316.0 317.3 321.4 323.7 323.6 324.6 328.1 330.0 326.8 328.3 331.2 4 Other 187.9 190.7 193.1 192.2 191.8 193.7 192.1 192.6 192.9 192.4 193.4 5 Trading account assets 19.6 20.3 16.9 18.2 21.9 20.3 19.6 20.3 22.1 23.9 22.8 6 Total loans 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 1,958.7' 1,969.8 7 Interbank loans 172.9 162.0 172.1 160.9 162.8 161.0 161.6 154.0 166.6 160.2 156.4 8 Loans excluding interbank 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 1,813.5 9 Commercial and industrial 559.7 561.1 576.4 565.4 570.4 576.9 584.1 588.7 600.3 594.7 595.0 10 Real estate 571.7 577.4 586.3 589.3 592.7 600.0 605.9 613.9 621.3 626.6 635.2 11 Individual 326.7 326.9 332.4 330.8 330.4 332.7 335.9 336.3 339.3 340.5R 345.7 12 All other 248.0 234.3 232.1 235.8 230.6 235.4 235.6 233.2 239.3 236.7 237.6 13 Total cash assets 223.5 215.2 232.5 209.7 203.3 207.9 210.8 197.0 218.2 213.6' 218.6 14 Reserves with Federal Reserve Banks. 38.3 33.8 36.2 33.3 32.8 32.1 32.2 26.0 34.4 30.7 33.0 15 Cash in vault 25.0 24.0 28.5 25.8 25.1 24.8 25.4 25.4 26.5 25.9 26.5 16 Cash items in process of collection ... 79.0 76.1 79.9 70.7 66.8 74.1 76.4 71.6 77.2 75.8 79.8 17 Demand balances at U.S. depository institutions 32.3 32.9 36.6 31.3 30.0 31.6 30.6 29.5 31.9 31.6 31.8 18 Other cash assets 48.9 48.4 51.4 48.6 48.5 45.3 46.2 44.6 48.3 49.8 47.4 19 Other assets 186.3 187.5 184.0 177.7 178.1 189.0 185.2 182.0 189.1 182.6' 181.7 20 Total assets/total liabilities and capital.... 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 2,917.4 21 Deposits 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 2,068.9 22 Transaction deposits 598.1 592.0 623.3 576.2 567.5 587.6 595.0 578.1 602.3 597.3 608.4 23 Savings deposits 531.7 531.1 528.0 531.7 535.6 539.7 536.0 542.0 544.5 545.3 542.1 24 Time deposits 841.4 851.0 857.9 861.1 871.8 876.8 876.2 884.4 891.6 903.2 918.3 25 Borrowings 435.7 420.1 426.2 446.1 444.2 446.3 456.3 448.7 478.1 457.0' 436.0 26 Other liabilities 225.5 218.9 231.5 208.1 205.3 211.1 214.1 211.8 215.2 213.3 226.8 27 Residual (assets less liabilities) 179.8 179.5 180.4 180.7 181.0 180.0 181.4 182.9 184.5 183.6 185.8 MEMO 28 U.S. government securities (including trading account) 329.9 331.7 332.4 337.7 340.8 340.1 342.8 345.7 343.5 345.9 348.0 29 Other securities (including trading account) 193.5 196.6 198.9 196.5 196.5 198.5 197.1 197.2 198.4 198.8 199.3 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 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 2,306.7' 2,318.4 31 Investment securities 478.7 482.6 488.3 488.0 487.6 490.4 493.8 495.2 492.4 492.8 496.7 32 U.S. Treasury securities 305.7 306.4 311.0 312.1 312.2 313.1 316.8 317.7 314.9 315.7 319.2 33 Other 173.0 176.2 177.3 175.9 175.4 177.2 177.0 177.6 177.5 177.0 177.5 34 Trading account assets 19.6 20.3 16.9 18.2 21.9 20.3 19.6 20.3 22.1 23.9 22.8 35 Total loans 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 1,790.0' 1,798.9 36 Interbank loans 133.3 130.5 135.3 131.4 133.4 132.2 129.0 125.5 133.5 131.2 125.7 37 Loans excluding interbank 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 1,658.8' 1,673.3 38 Commercial and industrial 470.6 472.0 479.4 472.7 475.6 480.7 487.2 448888..88 492.5 490.9 489.8 39 Real estate 561.9 567.3 575.0 577.9 580.3 587.3 593.0 600.5 607.9 613.6 621.8 40 Individual 326.4 326.6 332.1 330.5 330.1 332.4 335.6 336.0 338.9 340.1 345.3 41 All other 228.1 214.6 211.6 214.1 209.0 212.5 213.9 211.0 216.5 214.2 216.4 42 Total cash assets 207.8 199.3 214.9 192.1 184.4 191.7 194.3 180.8 199.4 194.1 200.5 43 Reserves with Federal Reserve Banks. 36.5 31.5 35.1 31.7 30.5 30.1 30.8 23.6 32.9 29.5 31.4 44 Cash in vault 24.9 24.0 28.4 25.7 25.1 24.7 25.4 25.4 26.4 25.9 26.4 45 Cash items in process of collection ... 78.4 75.7 79.5 70.2 66.3 73.6 75.9 71.1 76.6 75.2 79.2 46 Demand balances at U.S. depository institutions 30.6 31.4 34.7 29.7 28.4 30.0 29.0 27.8 30.1 29.7 30.1 47 Other cash assets 37.3 36.7 37.3 34.8 34.0 33.4 33.3 32.9 33.4 33.8 33.4 48 Other assets 130.0 123.7 127.2 118.9 121.4 126.8 125.1 121.7 129.4 123.9' 125.4 49 Total assets/liabilities and capital 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 2,644.3 50 Deposits 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 2,002.5 51 Transaction deposits 589.5 583.7 614.9 567.9 559.6 579.2 586.4 569.8 593.6 588.6 599.6 52 Savings deposits 529.5 528.8 525.7 529.4 533.2 537.3 533.6 539.6 541.7 542.8 539.6 53 Time deposits 790.1 799.9 804.1 809.6 819.4 823.6 823.7 831.2 837.4 848.6 863.2 54 Borrowings 345.7 323.2 331.9 347.0 344.8 343.4 351.0 344.2 362.0 346.1' 330.8 55 Other liabilities 125.0 124.8 127.0 112.5 108.8 114.0 118.5 115.2 116.7 118.2 128.4 56 Residual (assets less liabilities) 176.6 176.3 177.2 177.5 177.8 176.8 178.2 179.7 181.3 180.4 182.6 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 Account July 6' July 13r July 20 July 27r Aug. 3 Aug. 10 Aug. 17 Aug. 24 1 Cash and balances due from depository institutions — 117,852 110,500 105,055 103,135 105,475 97,008 105,681 %,737 2 Total loans, leases, and securities, net 1,126,695 1,124,558 1,126,221' 1,127,809 1,130,152 1,134,474 1,133,784 1,129,017 3 U.S. Treasury and government agency 129,208 129,356 130,649r 130,890 130,020 129,404 131,499 130,431 4 6 5 T M In r o v a e d rt s i g n tm a g g e e a n - c b t c a o a c u c k n c e o t d u n s t e curities 11 4 1 2 6 1 , , , 2 8 9 6 7 4 3 2 5 11 4 1 2 6 2 , , , 9 3 1 8 2 7 4 6 1 11 4 1 3 7 2 , , , 4 2 39 3 17 2 7 r r 1 4 1 1 3 7 2 , , , 3 5 2 5 5 3 5 5 8 11 4 1 3 6 2 , , , 6 7 3 5 3 6 9 9 1 1 4 1 1 3 6 2 , , , 3 0 7 5 5 5 5 4 0 11 4 1 3 7 2 , , , 5 9 8 6 4 0 0 0 6 11 4 1 3 6 3 , , , 9 4 4 5 6 7 4 8 8 All other maturing in 7 One year or less 17,243 17,238 17,188 17,422 18,388 17,878 18,190 18,239 8 Over one through five years 43,846 44,518 45,158' 44,860 44,055 44,220 43.777 43,481 9 Over five years 9,303 9,092 8,674 8,815 8,477 8,503 8,786 8,764 10 Other securities 72,747 72,811 72,749' 72,996 73,050 72,858 72,836 72,498 11 Trading account 1,808 1,705 1,613 1,898 1,937 1,806 1,943 1,741 12 Investment account 70,939 71,105 71,136' 71,098 71,112 71,052 70,893 70,757 13 States and political subdivisions, by maturity 47,334 47,377 47,410 47,456 47,236 47,245 47,163 47,165 14 One year or less 5,207 5,176 5,141 5,160 5,331 5,326 5,324 5,345 15 Over one year 42,128 42,201 42.269 42,296 41,904 41,919 41,840 41,820 16 Other bonds, corporate stocks, and securities 23,604 23,728 23,725' 23,643 23,876 23,806 23,730 23,591 17 Other trading account assets 3,568 3,304 3,542 4,463 4,599 4,582 4,265 3,955 18 Federal funds sold3 68,276 70,904 69,914 71,024 70,839 75,482 71.778 69,314 19 To commercial banks 43,678 44,984 43.363 43,799 42,175 46,078 44,009 44,517 20 To nonbank brokers and dealers in securities 16,769 17,644 18,065 18,185 19,698 19,468 18,037 16,329 21 Toothers 7,829 8,276 8,486 9,040 8,966 9,935 9,732 8,467 22 Other loans and leases, gross 893,483 888,674 889,944' 888,893 892,143 892,759 894,032 893,367 23 Other loans, gross 871,374 866,348 867,501' 866,471 869,740 870,493 871,679 870,949 2 2 4 5 Co B m a m nk e e r r c s i a a l c a c n e d p t i a n n d c u e s s t r a ia n l d commercial paper 30 2 1, , 9 1 0 8 6 0 298 1, , 9 8 9 17 4 29 2 9 , , 0 4 0 3 0 2 ' 29 2 9 , , 0 33 0 2 8 299 2 , , 9 0 9 11 4 300 1, , 9 0 8 13 5 298 2 , , 2 0 0 17 5 296 1 . , 8 88 19 2 26 All other 299,726 296,823 297,432' 297,323 297,983 298,028 296,188 294,937 27 U.S. addressees 297,194 294,287 294,901' 294,679 295,485 295,533 293,742 292,485 28 Non-U.S. addressees 2,532 2,536 2,531' 2,644 2,498 2,495 2,445 2,452 3 3 3 3 3 3 3 2 3 7 1 2 3 4 5 6 0 9 T T F R o o o e A B N C R r a d i a l l o e o n p l e n v m n d e u p o o k s b i r o m t v t s l c a h v a s i h n e d i e t i i t n k a n e r r u o c s g a r f i l i d , l o n y a o s e l a g r h p e a n f o b o n o i a s m a g s r n d i n n t d e p o k f c e i s r e c n o y r q a s a i u u r n o a n n r i n n c y t t t i d y a r h i a n i l e l e o g s e t i U h x n s p n e s e t r e c i i t n u t f e u i d r d n t i i t a i t o i S n u e n t c r s a s e i a t s e l s i nstitutions 2 2 16 5 2 2 6 8 1 1 9 3 2 2 5 3 1 2 1 , , , , , , , , , 5 4 4 6 0 3 2 3 4 0 7 7 9 6 3 7 6 16 7 9 1 4 0 7 3 2 2 2 16 5 2 6 2 8 1 1 2 0 2 9 3 2 4 3 2 , , , , , , , , , 4 4 6 2 6 7 5 7 1 9 8 6 8 5 9 6 7 5 0 0 4 7 0 0 2 5 4 2 2 1 5 2 6 2 6 8 1 19 4 1 2 4 1 3 2 3 , , , . , , , , , 8 4 2 0 7 1 6 0 8 8 4 7 4 4 7 6 1 1 0 6 7 0 5 4 7 1 7 ' r ' ' ' ' ' ' 2 2 16 6 5 2 2 8 1 1 0 9 2 4 2 2 4 4 3 , , , , , , , , , 5 4 0 2 3 2 1 8 2 8 0 6 4 5 7 0 1 1 9 8 0 7 1 7 4 1 2 2 2 16 6 5 2 2 8 1 1 9 2 5 2 4 2 4 2 4 , , , , , , , , , 0 4 4 8 7 0 3 3 12 6 9 0 2 6 5 2 0 8 4 4 5 4 2 1 0 2 2 2 16 6 5 2 2 8 1 1 2 9 4 2 2 1 4 5 5 , , , , , , , , , 7 9 8 5 2 5 1 6 5 6 7 8 9 8 6 0 1 1 3 9 4 7 7 0 9 2 3 2 2 16 8 5 2 2 6 1 1 2 9 2 4 4 2 6 3 7 , , , , , , , , , 6 8 7 8 8 1 5 2 1 0 0 0 5 2 5 5 3 10 0 0 4 4 5 2 3 5 2 2 16 8 6 5 2 2 1 1 2 9 2 2 5 3 4 7 7 , , , , , , , , , 4 6 4 7 5 8 5 1 7 0 8 5 4 5 5 5 0 % 0 5 7 4 8 6 4 6 38 To finance agricultural production 5,653 5,667 5,587' 5,530 5,551 5,525 5,549 5,563 39 To states and political subdivisions 30,414 30,385 30,235 30,352 30,198 30,069 30,086 30,014 40 To foreign governments and official institutions ... 1,972 1,944 1,967' 1,862 2,068 1,867 1,863 2,139 41 All other 22,639 21,127 21,421' 20,735 21,060 20,986 21,207 20,359 42 Lease financing receivables 22,109 22,326 22,443 22,421 22,403 22,266 22,352 22,417 43 LESS: Unearned income 4,846 4,850 4,866 4.897 4,835 4,869 4,892 4,8 44 Loan and lease reserve 35,742 35,641 35,712 35,559 35,664 35,742 35,735 35,649 45 Other loans and leases, net 852,895 848,183 849,366' 848,436 851,644 852,147 853,405 852.820 46 All other assets 128,254 122,764 124,495' 123,024 124,830 124,647 121,592 121,071 47 Total assets 1,372,801 1,357,823 1,355,771' 1,353,968 1,360,457 1,356,129 1,361,056 1,346,825 48 Demand deposits 255,698 229,897 228,400 226,382 231,916 220,973 229,969 215,5% 49 Individuals, partnerships, and corporations 198,415 185,125 180,699 177,638 181,120 176,531 183,641 170,173 50 States and political subdivisions 5,886 5,441 5,966 6,156 6,590 5,482 5,780 5,878 51 U.S. government 4,312 1,300 4,226 2.898 5,141 2,687 1,549 3,091 52 Depository institutions in the United States 27,171 21,074 21,548' 22,598 23,118 20,919 22,311 21,031 53 Banks in foreign countries 8,449 6,554 6,627 6,988 6,246 6,377 7,031 6,130 54 Foreign governments and official institutions 886 640 980 856 801 700 786 791 6 6 5 5 5 5 5 6 6 6 6 6 6 5 6 7 8 9 1 2 0 3 5 6 7 4 T N L O r i o t a a D C F T S I A B U h n b n n t o e r o e l e t . a i d l s e r r r S p r l r t a e t i i a a r o . e o t v i l c i o s n f i i t s g s i t g a u e i h w d s i i n e o b s t a r o a e u d i o y v i n c n r n g f l a e r t i d o a g o l y t l t i r s b r n i i o s a v n a , e p a d x n i e b m b s n f o p l - r r o i a a o l s a n l e b a o i r n i n t f r t n n m t a m r i f c i t d i t o t l d c i e n u e a e - c a w s s F l e t n n e l s o i r e e c r u o f t o a s s d d o s s e n b n t h u ' , s r e h s o i b m c r o p e b n r h d a i r d f s o o o n l f i e , i v n r i t t n c c R e r h t a i e k a h s i o s n a e y a i s t e w n o d s l e e n d e i U d n c r d s v o e n s n e t m r i m o i t p t e t a B u o o e d n a t r n s i d a n e o S a t y k n t i n d o a s s d e t n , p e s a d s o n e s d i b t e s b n a tu n r k e s s 6 5 2 2 6 5 7 6 2 8 0 10 9 4 7 9 8 2 7 2 3 1 1 , , , , , , , , , , , , 6 4 0 9 0 5 8 6 5 3 6 8 4 9 0 4 7 0 3 5 2 2 0 5 1 1 3 5 8 7 0 4 0 4 7 9 3 3 0 6 5 2 25 7 2 8 7 6 0 1 6 2 8 2 9 7 8 8 3 4 5 1, , , , , , , , , , , , 0 0 8 4 4 2 2 7 7 7 1 7 2 0 4 0 4 8 6 0 6 9 4 5 3 14 7 8 3 4 7 0 3 0 2 2 1 5 6 5 2 2 6 7 2 8 5 0 7 14 8 2 8 6 8 2 8 4 4 2 1 . , . , , , , , , , , , 3 0 7 6 4 4 8 9 3 0 8 3 5 6 0 5 4 3 2 2 3 3 9 2 1 1 3 4 4 6 8 2 7 5 6 1 0 6 7 ' ' ' ' 6 2 2 5 7 7 6 5 8 2 0 16 3 4 9 8 2 9 4 8 1 4 1 , , , , , , , , , , , , 6 6 0 0 7 2 8 7 8 8 7 0 1 8 4 6 6 8 9 2 5 1 2 6 1 1 4 4 5 9 6 7 2 2 7 4 6 1 1 6 5 2 26 6 7 9 6 2 0 4 0 9 8 8 2 0 7 4 6 5 1, , , , , , , , , , , , 0 9 8 8 4 5 3 0 0 8 3 3 5 5 6 9 4 0 5 7 5 1 3 3 1 1 4 8 4 4 5 9 6 2 3 4 9 3 0 6 2 5 2 7 6 7 2 9 6 0 2 8 3 9 8 2 7 2 7 7 1 1 , , , , , , , , , , , , 0 7 4 3 4 0 5 2 5 7 8 0 10 6 3 7 7 8 8 7 3 3 5 1 6 8 6 2 8 5 5 3 6 0 0 2 8 0 6 5 2 2 6 7 9 6 6 2 0 2 8 8 2 8 5 9 0 1 7 1 7 , , , , , , , , , , , , 9 3 0 0 8 7 5 8 8 2 5 5 1 8 4 0 8 6 3 4 2 % 1 1 1 1 0 4 0 7 5 3 9 5 7 7 9 8 6 5 2 2 6 7 9 5 6 2 0 7 9 8 1 5 3 8 2 5 8 8 , , , , , , , , , , , 9 4 4 9 6 8 8 9 8 5 7 5 1 5 8 0 2 4 6 7 0 1 8 5 7 1 9 2 4 2 6 7 2 6 5 3 1 1 5 68 Total liabilities 1,283,968 1,268,325 1,266,353' 1,264,932 1,269,741 1,265,188 1,270,028 1,255,474 69 Residual (total assets minus total liabilities)6 88,833 89,497 89,418 89,036 90,716 90,941 91,028 91,351 MEMO 70 Total loans and leases (gross) and investments adjusted' 1,100,912 1,096,815 1,099,366' 1,100,256 1,103,051 1,104,718 1,105,569 1,099,492 71 Total loans and leases (gross) adjusted 895,388 891,344 892,426' 891,907 895,383 897,873 896,969 892,608 72 Time deposits in amounts of $100,000 or more 182,938 184,174 184,557' 186,571 186,994 188,404 188,468 189,954 73 U.S. Treasury securities maturing in one year or less .. 16,670 16,005 16.709 17,258 17,296 17,139 18,489 17,750 74 Loans sold outright to affiliates—total 1,509 1,486 1,476 1,424 1,373 1,387 1,419 1,251 75 Commercial and industrial 1,054 1,031 1,020 968 918 933 965 798 76 Other 455 455 456 456 454 454 454 454 77 Nontransaction savings deposits (including MMDAs)... 255,540 255,085 254,140 253,128 254,128 253,723 253,317 252,299 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 NonfinancialS tatistics • November 1988 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1988 AAccccoouunntt July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 1 Cash balances due from depository institutions 26,919 27,251 24,432 22,474 22,272 21,024 23,592 21,663 21,672 2 Total loans, leases and securities, net2 215,109 218,565 218,904 217,776 217,880 219,726 218,8% 215,940 217,470 Securities 3 U.S. Treasury and government agency3 0 0 0 0 0 0 0 0 0 4 Trading account3 0 0 0 0 0 0 0 0 0 5 Investment account 14,586 14,638 14,771 14,785 14,701 14,582 14,646 14,618 14,615 6 Mortgage-backed securities 5,509 5,748 5,724 5,669 5,551 5,548 5,681 5,717 5,662 All other maturing in 7 One year or less 2,220 2,187 2,187 2,285 2,366 2,236 2,290 2,289 2,274 8 Over one through five years 4,678 4,747 4,816 4,816 4,809 4,821 4,707 4,660 4,664 9 Over five years 2,180 1,956 2,044 2,014 1,974 1,976 1,969 1,951 2,015 10 Other securities3 0 0 0 0 0 0 0 0 0 11 Trading account3 0 0 0 0 0 0 0 0 0 12 Investment account 16,304 16,484 16,488 16,529 16,648 16,663 16,580 16,438 16,665 13 States and political subdivisions, by maturity 12,620 12,713 12,739 12,774 12,821 12,815 12,857 12,759 12,770 14 One year or less 907 925 929 930 1,121 1,124 1,118 1,125 1,127 15 Over one year 11,713 11,788 11,811 11,844 11,700 11,691 11,739 11,634 11,643 16 Other bonds, corporate stocks, and securities 3,684 3,771 3,748 3,756 3,827 3,849 3,722 3,679 3,895 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold 26,762 31,628 31,641 31,313 29,998 31,606 31,265 28,995 28,923 19 To commercial banks 12,495 15,985 15,497 14,538 13,227 14,050 14,357 14,137 13,116 20 To nonbank brokers and dealers in securities 8,918 10,015 10,529 10,748 10,936 10,894 10,374 9,231 10,180 21 To others 5,349 5,628 5,615 6,026 5,834 6,662 6,534 5,627 5,626 22 Other loans and leases, gross 172,531 170,845 171,073 170,159 171,519 171,960 171,445 170,946 172,362 23 Other loans, gross 167,214 165,350 165,567 164,685 166,032 166,606 166,038 165,524 166,924 24 Commercial and industrial 57,634 57,103 57,952 57,779 57,672 58,100 56,899 55,748 56,268 25 Bankers acceptances and commercial paper 539 461 445 484 390 405 418 393 444 26 Allother 57,095 56,642 57,507 57,294 57,283 57,695 56,480 55,354 55,825 27 U.S. addressees 56,689 56,226 57,078 56,760 56,850 57,266 56,071 54,908 55,360 28 Non-U.S. addressees 406 417 430 535 433 429 409 447 465 29 Real estate loans 47,265 47,523 47,359 47,680 47,797 47,947 48,380 48,805 48,874 30 Revolving, home equity 3,008 3,022 3,036 3,055 3,076 3,097 3,109 3,119 3,135 31 All other 44,257 44,501 44,322 44,625 44,721 44,849 45,271 45,686 45,739 32 To individuals for personal expenditures 20,867 20,804 20,910 20,945 20,945 20,980 21,067 20,898 20,986 33 To depository and financial institutions 22,506 21,433 21,328 20,448 21,622 21,324 21,710 22,269 21,338 34 Commercial banks in the United States 12,676 12,354 12,124 12,003 12,930 11,970 12,318 13,084 12,498 35 Banks in foreign countries 3,352 2,818 2,850 2,163 2,148 2,646 2,742 2,889 2,520 36 Nonbank depository and other financial institutions 6,478 6,261 6,354 6,282 6,544 6,708 6,650 6,295 6,320 37 For purchasing and carrying securities 5,322 4,958 4,490 4,628 4,860 4,786 5,036 4,777 5,782 38 To finance agricultural production 290 299 206 203 201 188 201 210 215 39 To states and political subdivisions 6,763 6,754 6,716 6,743 6,704 6,762 6,748 6,737 6,727 40 To foreign governments and official institutions 525 627 653 559 711 504 482 754 707 41 Allother 6,042 5,848 5,953 5,701 5,519 6,015 5,514 5,327 6,026 42 Lease financing receivables 5,317 5,495 5,506 5,474 5,487 5,354 5,407 5,421 5,439 43 LESS: Unearned income 1,501 1,516 1,535 1,553 1,528 1,550 1,567 1,579 1,572 44 Loan and lease reserve 13,574 13,514 13,533 13,456 13,457 13,536 13,473 13,477 13,524 45 Other loans and leases, net6 157,456 155,815 156,004 155,150 156,534 156,874 156,404 155,889 157,266 46 All other assets 59,052 54,830 56,038 57,589 56,457 56,310 57,095 55,243 56,265 47 Total assets 301,079 300,646 299,374 297,839 296,610 297,059 299,583 292,846 295,407 Deposits 48 Demand deposits 65,389 55,557 56,398 55,264 53,406 52,778 56,444 52,250 54,954 49 Individuals, partnerships, and corporations 44,368 39,221 39,513 37,351 36,819 37,176 39,266 35,875 39,495 50 States and political subdivisions 791 638 917 695 739 530 577 690 586 51 U.S. government 846 168 751 541 1,025 471 215 583 173 52 Depository institutions in the United States 6,802 5,024 5,743 6,214 5,795 5,319 6,175 5,862 5,612 53 Banks in foreign countries 7,112 5,337 5,365 5,787 4,928 5,248 5,874 5,019 6,052 54 Foreign governments and official institutions 686 478 834 711 659 563 648 638 527 55 Certified and officers' checks 4,783 4,689 3,275 3,965 3,442 3,470 3,688 3,582 2,508 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,920 8,788 8,681 8,579 8,802 8,662 8,665 8,468 8,599 57 Nontransaction balances 106,055 105,714 105,829 106,336 107,056 105,989 105,741 106,185 106,131 58 Individuals, partnerships, and corporations 97,584 96,843 97,038 97,240 97,829 96,887 96,515 %,928 96,772 59 States and political subdivisions 6,304 6,668 6,720 6,868 7,007 6,880 7,003 6,976 6,942 60 U.S. government 41 40 34 37 30 35 41 39 29 61 Depository institutions in the United States 1,808 1,858 1,734 1,877 1,881 1,874 1,873 1,929 2,066 62 Foreign governments, official institutions, and banks 318 303 302 313 309 313 309 312 321 63 Liabilities for borrowed money 65,354 72,389 67,731 67,4% 65,400 67,426 65,985 62,670 60,242 64 Borrowings from Federal Reserve Banks 0 3,815 0 0 0 0 0 0 0 65 Treasury tax-and-loan notes 1,480 3,112 4,221 5,083 1,139 547 1,520 1,858 2,034 66 All other liabilities for borrowed money 63,874 65,462 63,510 62,413 64,261 66,879 64,465 60,811 58,208 67 Other liabilities and subordinated notes and debentures 29,849 32,281 34,890 34,737 35,934 36,219 36,684 37,148 39,327 68 Total liabilities 275,567 274,728 273,529 272,412 270,600 271,073 273,520 266,721 269,252 69 Residual (total assets minus total liabilities)9 25,512 25,918 25,845 25,427 26,010 25,986 26,063 26,125 26,154 MEMO 70 Total loans and leases (gross) and investments adjusted '10 205,014 205,256 206,352 206,245 206,708 208,792 207,262 203,775 206,951 71 Total loans and leases (gross) adjusted10 174,123 174,134 175,093 174,931 175,359 177,546 176,035 172,720 175,671 72 Time deposits in amounts of $100,000 or more 37,485 37,681 37,844 38,751 38,882 38,394 38,260 38,491 38,341 73 U.S. Treasury securities maturing in one year or less 3,472 2,831 3,222 3,774 3,090 3,119 4,012 3,570 4,538 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. in pools of residential mortgages. 10. Exclusive of loans and federal funds transactions with domestic commer- Digitized for FRA5S. EInRcl udes securities purchased under agreements to resell. cial banks. 6. Includes allocated transfer risk reserve. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS1 Assets and Liabilities Millions of dollars, Wednesday figures 1988 Account July 6 July 13 July 20 July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 1 Cash and due from depository institutions .. 11,219 11,720 10,893 11,441 10,749 10,635 10,640 10,989 10,745 2 Total loans and securities 110,308 109,191 107,888 106,775 105,905 108,489 109,912 107,662 108,076 3 U.S. Treasury and government agency securities 7,831 8,000 8,282 8,562 8,360 8,456 8,718 8,184 8,062 4 Other securities 7,566 7,561 7,570 7,496 7,496 7,475 7,413 7,412 7,731 5 Federal funds sold2 8,113 8,691 8,570 8,609 7,420 8,956 9,643 9,295 8,785 6 To commercial banks in the United States 5,826 6,166 6,319 6,428 5,159 6,177 7,440 6,967 6,726 7 To others 2,286 2,525 2,251 2,182 2,261 2,778 2,204 2,328 2,058 8 Other loans, gross 86,798 84.939 83,466 82,107 82,629 83,603 84,137 82,770 83,498 9 Commercial and industrial 58,562 57,150 56,149 55,548 55,456 56,590 56,983 55,981 56,387 10 Bankers acceptances and commercial paper 1,712 1,702 1,509 1,609 1,510 1,498 1,630 1,768 1,769 11 Allother 56,851 55,448 54,640 53,938 53,945 55,092 55,353 54,213 54,618 12 U.S. addressees 54,799 53,374 52,456 51,955 52,012 53,241 53,368 52,347 52,653 13 Non-U.S. addressees 2,052 2,074 2,184 1,983 1,934 1,851 1,986 1,866 1,965 14 To financial institutions 15,845 15,662 15,023 14,834 15,138 15,313 15,106 15,153 15,324 15 Commercial banks in the United States. 11,465 11,307 10,772 10,731 11,058 11,340 10,805 11,073 11,149 16 Banks in foreign countries 991 1,039 999 1,006 898 868 891 900 824 17 Nonbank financial institutions 3,389 3,316 3,252 3,097 3,182 3,105 3,410 3,180 3,351 18 To foreign governments and official institutions 590 574 533 640 637 659 754 660 639 19 For purchasing and carrying securities ... 1,851 1,690 1,644 1,347 1,730 1,261 1,396 1,365 1,265 20 All other 9,950 9,862 10,117 9,739 9,668 9,780 9,897 9,610 9,882 21 Other assets (claims on nonrelated parties) . 32,292 31,929 32,361 31,383 31,818 31,353 31,855 31,222 31,839 22 Net due from related institutions 16,366 16,804 16,317 15,146 16,974 15,325 15,666 16,671 13,836 23 Total assets 170,185 169,644 167,460 164,745 165,446 165,802 168,072 166,544 164,496 24 Deposits or credit balances due to other than directly related institutions 42,793 42,689 42,575 42,903 43,677 43,512 43,181 43,118 42,506 25 Transaction accounts and credit balances 4,167 3,731 3,601 3,591 4,225 3,622 3,550 3,374 3,352 26 Individuals, partnerships, and corporations 2,481 2,288 2,324 2,320 2,630 2,381 2,391 2,295 2,259 27 Other 1,686 1,443 1,277 1,271 1,595 1,242 1,159 1,079 1,093 28 Nontransaction accounts 38,626 38,959 38,974 39,311 39,452 39,889 39,632 39,743 39,153 29 Individuals, partnerships, and corporations 31,551 31,693 31,572 31,718 32,087 32,656 32,268 32,346 32,037 30 Other 7,075 7,266 7,402 7,593 7,366 7,233 7,363 7,397 7,116 31 Borrowings from other than directly related institutions 69,383 70,599 69,177 66,194 66,570 66,260 66,030 66,821 63,316 32 Federal funds purchased 32,896 33,842 31,121 27,896 28,503 28,523 29,585 29,957 24,961 33 From commercial banks in the United States 19,407 16,837 15,544 13,900 13,145 15,353 14,973 14,213 10,944 34 From others 13,489 17,005 15,577 13;996 15,359 13,170 14,611 15,744 14,017 35 Other liabilities for borrowed money 36,486 36,757 38,056 38,298 38,066 37,737 36,445 36,864 38,355 36 To commercial banks in the United States 25,959 26,861 27,686 27,871 27,508 27,163 26,046 26,684 27,533 37 To others 10,528 9,896 10,370 10,427 10,558 10,574 10,399 10,180 10,822 38 Other liabilities to nonrelated parties 33,624 33,395 33,945 33,029 33,168 32,981 33,445 32,492 32,914 39 Net due to related institutions 24,386 22,960 21,763 22,619 22,030 23,049 25,417 24,114 25,760 40 Total liabilities 170,185 169,644 167,460 164,745 165,446 165,802 168,072 166,544 164,496 MEMO 41 Total loans (gross) and securities adjusted6 . 93,017 91,718 90,797 89,616 89,688 90,972 91,666 89,621 90,201 42 Total loans (gross) adjusted 77,619 76,157 74,944 73,558 73,832 75,041 75,536 74,024 74,407 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 • November 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^^''44 DDeecc.. Mar. June Sept. Dec. Mar. Juner 1 All holders—Individuals, partnerships, and corporations 293.5 302.7 321.0 363.6 335.9 340.2 339.0 343.5 328.6 346.5 2 Financial business 32.8 31.7 32.3 41.4 35.9 36.6 36.5 36.3 33.9 37.2 3 Nonfinancial business 161.1 166.3 178.5 202.0 183.0 187.2 188.2 191.9 184.1 194.3 4 Consumer 78.5 81.5 85.5 91.1 88.9 90.1 88.7 90.0 86.9 89.8 5 Foreign 3.3 3.6 3.5 3.3 2.9 3.2 3.2 3.4 3.5 3.4 6 Other 17.8 19.7 21.2 25.8 25.2 23.1 22.4 21.9 20.3 21.9 Weekly reporting banks 1987 1988 11998833 11998844 11998866 DDeecc.. DDeecc..22 DD^^44 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 30.0 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 12.8 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 11998833 11998844 11998855 11998866 11998877 IInnssttrruummeenntt DDeecc.. DDeecc.. DDeecc.. DDeecc.. DDeecc.. Feb. Mar. Apr. Mayr j June July Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 187,658 237,586 298,779 329,991 357,129 388,893 391,305 406,484 414,312 417,788 423,229 Financial companies1 Dealer-placed paper 2 Total 44,455 56,485 78,443 101,072 101,958 125,914 128,680 133,946 137,838 142,322' 148,125 3 Bank-related (not seasonally adjusted) 2,441 2,035 1,602 2,265 1,428 1,724 1,371 1,093 1,422 1,448 1,340 Directly placed paper 4 Total 97,042 110,543 135,320 151,820 173,939 174,595 173,316 180,119 185,876 184,658 184,783 5 Bank-related (not seasonally adjusted) 35,566 42,105 44,778 40,860 43,173 43,987 43,681 45,703 47,719 45,294 44,975 6 Nonfinancial companies 46,161 70,558 85,016 77,099 81,232 88,384 89,309 92,419 90,598 90,808 90,321 Bankers dollar acceptances (not seasonally adjusted)5 7 Total 78,309 78,364 68,413 64,974 70,565 62,419 63,454 64,111 63,381 64,359r 63,240 Holder 8 Accepting banks 9,355 9,811 11,197 13,423 10,943 9,629 10,243 10,295 9,412 9,734r 9,655 9 Own bills 8,125 8,621 9,471 11,707 9,464 8,561 8,825 8,929 8,588 8,861r 8,702 10 Bills bought 1,230 1,191 1,726 1,716 1,479 1,067 1,417 1,366 825 873 953 Federal Reserve Banks 11 Own account 418 0 0 0 0 0 0 0 0 0 0 12 Foreign correspondents. 729 671 937 1,317 965 833 795 803 1,050 1,273 1,114 13 Others 67,807 67,881 56,279 50,234 58,658 51,958 52,417 53,013 52,918 53,351r 52,471 Basis 14 Imports into United States.. 15,649 17,845 15,147 14,670 16,483 14,354 14,575 14,735 14,045 14,244 14,001 1 1 5 6 E A x ll p o o t r h ts e r from United States . 4 16 5 , , 8 7 8 8 0 1 4 16 4 , , 3 2 0 14 5 4 13 0 , , 2 0 0 6 4 2 3 12 7 , , 9 34 6 4 0 3 15 8 , , 2 8 2 5 7 5 3 13 4 , , 8 17 9 3 1 3 13 4 , , 8 9 9 8 9 0 3 14 4 , , 7 6 2 5 4 2 3 14 4, , 8 53 0 7 3 3 14 5, ,6 50 06 9 r 3 14 4 , , 6 56 76 4 1. Institutions engaged primarily in activities such as, but not limited to, 4. Includes public utilities and firms engaged primarily in such activities as commercial savings, and mortgage banking; sales, personal, and mortgage fi- communications, construction, manufacturing, mining, wholesale and retail trade, nancing; factoring, finance leasing, and other business lending; insurance under- transportation, and services. writing; and other investment activities. 5. Beginning January 1988, the number of respondents in the bankers accep- 2. Includes all financial company paper sold by dealers in the open market. tance survey were reduced from 155 to 111 institutions—those with $100 million 3. As reported by financial companies that place their paper directly with or more in total acceptances. The new reporting group accounts for over 90 investors. percent of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year Rate Month Av r e a r t a e g e Month Av r e a r t a e ge Month 1985—Jan. 15 10.50 1985 —Jan. 10.61 1986—July 8.16 1988 —Jan. May 20 10.00 Feb. 10.50 Aug 7.90 Feb. June 18 9.50 Mar. 10.50 Sept 7.50 Mar. Apr. 10.50 Oct 7.50 Apr. 1986—Mar. 7 9.00 May 10.31 Nov 7.50 May Apr. 21 8.50 June 9.78 Dec 7.50 June July 11 8.00 July 9.50 July Aug. 26 7.50 Aug. 9.50 1987 —Jan 7.50 Aug. Sept. 9.50 Feb 7.50 1987—Apr. 1 7.75 Oct. 9.50 Mar 7.50 MMaayy 1 8.00 Nov. 9.50 Apr 7.75 15 8.25 Dec. 9.50 May 8.14 Sept. 4 8.75 June 8.25 Oct. 7 9.25 1986 —Jan. 9.50 July 8.25 22 9.00 Feb. 9.50 Aug 8.25 Nov. 5 8.75 Mar. 9.10 Sept 8.70 Apr. 8.83 Oct 9.07 1988—Feb. 2 8.50 May 8.50 Nov 8.78 May 11 9.00 June 8.50 Dec 8.75 July 14 9.50 Aug. 11 10.00 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 • November 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 May June July Aug. July 29 Aug. 5 Aug. 12 Aug. 19 Aug. 26 MONEY MARKET RATES 1 Federal funds1-2 8.10 6.80 6.66 7.09 7.51 7.75 8.01 7.80 7.84 7.75 8.19 8.02 2 Discount window borrowing1,3 7.69 6.32 5.66 6.00 6.00 6.00 6.37 6.00 6.00 6.14 6.50 6.50 Commercial paper • 3 1-month 7.93 6.61 6.74 7.07 7.41 7.72 8.09 7.82 7.85 8.04 8.23 8.18 4 3-month 7.95 6.49 6.82 7.19 7.49 7.82 8.26 7.95 8.00 8.21 8.39 8.36 5 6-month , 8.00 6.39 6.85 7.31 7.53 7.90 8.36 8.07 8.08 8.33 8.49 8.48 Finance paper, directly placed4. 6 1-month 7.90 6.57 6.61 6.96 7.23 7.62 7.96 7.76 7.76 7.95 8.13 8.07 7 3-month 7.77 6.38 6.54 7.00 7.25 7.55 7.95 7.70 7.75 7.85 8.07 8.06 8 6-month 7.74 6.31 6.37 6.75 7.01 7.19 7.57 7.28 7.34 7.47 7.69 7.69 Bankers acceptances5,6 9 3-month 7.91 6.38 6.75 7.12 7.38 7.77 8.19 7.92 7.94 8.15 8.31 8.30 10 6-month 7.95 6.28 6.78 7.25 7.41 7.85 8.30 8.02 8.02 8.28 8.41 8.42 Certificates of deposit, secondary market 11 1-month 7.96 6.61 6.75 7.04 7.41 7.73 8.08 7.82 7.85 8.01 8.21 8.18 12 3-month 8.04 6.51 6.87 7.24 7.51 7.94 8.35 8.08 8.10 8.28 8.49 8.48 13 6-month 8.24 6.50 7.01 7.52 7.69 8.18 8.66 8.38 8.37 8.59 8.79 8.82 14 Eurodollar deposits,, 3-month8 8.28 6.71 7.06 7.40 7.61 8.09 8.47 8.24 8.25 8.29 8.59 8.56 U.S. Treasury bills Secondary market9 15 3-month 7.47 5.97 5.78 6.26 6.46 6.73 7.06 6.93 6.89 6.98 7.03 7.20 16 6-month 7.65 6.02 6.03 6.56 6.71 6.99 7.39 7.12 7.13 7.39 7.52 7.48 17 1-year 7.81 6.07 6.33 6.90 6.99 7.22 7.59 7.31 7.34 7.59 7.68 7.69 Auction average10 18 3-month 7.47 5.98 5.82 6.27 6.50 6.73 7.02 6.88 6.89 6.94 7.05 7.18 19 6-month 7.64 6.03 6.05 6.53 6.76 6.97 7.36 7.09 7.15 7.26 7.51 7.51 20 1-year 7.80 6.18 6.33 6.74 7.08 7.04 7.40 n.a. 7.40 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 7.40 7.49 7.75 8.17 7.85 7.89 8.17 8.27 8.28 22 2-year 9.27 6.86 7.42 8.00 8.03 8.28 8.63 8.39 8.36 8.61 8.73 8.75 23 3-year 9.64 7.06 7.68 8.24 8.22 8.44 8.77 8.56 8.52 8.76 8.85 8.89 24 5-year 10.12 7.30 7.94 8.58 8.49 8.66 8.94 8.74 8.67 8.94 9.05 9.06 25 7-year 10.50 7.54 8.23 8.89 8.78 8.91 9.13 8.97 8.90 9.13 9.22 9.24 26 10-year 10.62 7.67 8.39 9.09 8.92 9.06 9.26 9.12 9.04 9.27 9.36 9.36 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 9.23 9.00 9.14 9.32 9.22 9.11 9.30 9.42 9.42 Composite 29 Over 10 years (long-term) 10.75 8.14 8.64 9.24 9.04 9.20 9.33 9.24 9.14 9.35 9.44 9.43 State and local notes and bonds Moody's series14 30 Aaa 8.60 6.95 7.14 7.56 7.51 7.50 7.51 7.48 7.48 7.48 7.48 7.60 31 Baa 9.58 7.76 8.17 7.90 7.86 7.86 7.89 7.80 7.75 7.90 7.90 8.00 32 Bond Buyer series 9.11 7.32 7.64 7.90 7.78 7.76 7.79 7.76 7.69 7.83 7.85 7.80 Corporate bonds Seasoned issues16 33 All industries 12.05 9.71 9.91 10.37 10.36 10.47 10.58 10.55 10.51 10.57 10.62 10.63 34 Aaa 11.37 9.02 9.38 9.90 9.86 9.96 10.11 10.03 10.00 10.10 10.15 10.16 35 Aa 11.82 9.47 9.68 10.10 10.13 10.26 10.37 10.34 10.28 10.35 10.41 10.43 36 A 12.28 9.95 9.99 10.41 10.42 10.55 10.63 10.63 10.59 10.62 10.67 10.66 37 Baa 12.72 10.39 10.58 11.04 11.00 11.11 11.21 11.20 11.16 11.20 11.23 11.25 38 A-rated, recently offered utility bonds17 12.06 9.61 9.95 10.61 10.41 10.40 10.45 10.41 10.31 10.53 10.50 10.51 MEMO: Dividend/price ratio18 39 Preferred stocks 10.44 8.76 8.37 9.25 9.32 9.34 9.39 9.36 9.41 9.34 9.36 9.36 40 Common stocks 4.25 3.48 3.08 3.80 3.58 3.65 3.75 3.75 3.60 3.77 3.79 3.79 1. Weekly and monthly figures are averages of all calendar days, where the places. Thus, average issuing rates in bill auctions will be reported using two rate for a weekend or holiday is taken to be the rate prevailing on the preceding rather than three decimal places. business day. The daily rate is the average of the rates on a given day weighted by 11. Yields are based on closing bid prices quoted by at least five dealers. the volume of transactions at these rates. 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields 2. Weekly figures are averages for statement week ending Wednesday. are read from a yield curve at fixed maturities. Based on only recently issued, 3. Rate for the Federal Reserve Bank of New York. actively traded securities. 4. Unweighted average of offering rates quoted by at least five dealers (in the 13. Averages (to maturity or call) for all outstanding bonds neither due nor case of commercial paper), or finance companies (in the case of finance paper). callable in less than 10 years, including one very low yielding "flower" bond. Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. General obligations based on Thursday figures; Moody's Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 15. General obligations only, with 20 years to maturity, issued by 20 state and 150-179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 5. Yields are quoted on a bank-discount basis, rather than in an investment 16. Daily figures from Moody's Investors Service. Based on yields to maturity yield basis (which would give a higher figure). on selected long-term bonds. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Compilation of the Federal Reserve. This series is an estimate of the yield (which may be, but need not be, the average of the rates quoted by the dealers). on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 7. Unweighted average of offered rates quoted by at least five dealers early in call protection. Weekly data are based on Friday quotations. the day. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 8. Calendar week average. For indication purposes only. sample often issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H. 15 (519) and G.13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.36 STOCK MARKET Selected Statistics 1987 1988 IInnddiiccaattoorr 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. May June July Aug. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 108.09 136.00 161.70 134.88 140.55 145.13 149.88 148.46 144.99 152.72 152.12 149.25 2 Industrial 123.79 155.85 195.31 162.19 168.47 173.44 181.57 181.01 176.02 184.92 184.09 179.72 3 Transportation 104.11 119.87 140.39 115.85 121.20 126.09 135.15 133.40 127.63 136.02 136.49 132.52 4 Utility 56.75 71.36 74.29 67.39 70.01 72.89 71.16 69.35 68.66 72.25 71.49 70.67 5 Finance 114.21 147.19 146.48 111.47 119.40 124.36 125.27 121.66 120.35 129.04 129.99 130.77 6 Standard & Poor's Corporation (1941-43 = 10)1 186.84 236.34 286.83 240.96 250.48 258.13 265.74 262.61 256.12 270.68 269.05 263.73 7 American Stock Exchange (Aug. 31, 1973 = 50? 229.10 264.38 316.61 248.52 267.29 276.54 295.78 300.43 296.30 306.13 307.48 297.76 Volume of trading (thousands of shares) 8 New York Stock Exchange 109,191 141,385 188,647 178,517 174,755 184,688 176,189 162,518 153,906 195,772 166,916 144,668 9 American Stock Exchange 8,355 11,846 13,832 13,422 9,853 9,961 12,442 10,706 8,931 11,348 9,938 9,307 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers 28,390 36,840 31,990 31,990 31,320 31,990 32,660 33,270 33,070 32,300 31,770 31,930 Free credit balances at brokers4 11 Margin-account 2,715 4,880 4,750 4,750 4,675 4,555 4,615 4,395 4,380 4,580 4,485 4,655 12 Cash-account 12,840 19,000 15,640 15,640 15,270 14,695 14,355 13,965 14,150 14,460 14,340 14,045 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 Excharige 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 • November 1988 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1987 1988 AAccccoouunntt 11998855 11998866 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June FSLIC-insured institutions 1 Assets 1,070,012 1,163,851 1,218,829 1,239,883 1,246,983 1,250,855 1,254,781' 1,257,363' 1,261,428' 1,274,312' 1,285,167' 1,290,032 2 Mortgages 690,717 697,451 708,433 713,488 717,933 721,593 722,950' 723,856' 725,515' 728,877' 733,446' 737,098 3 Mortgage-backed securities 115,525 158,193 191,829 197,131 200,039 201,828 201,604 197,676 197,560' 202,231' 204,712' 207,546 4 Contra-assets to mortgage assets1 45,219 41,799 42,438 42,182 41,396 42,344 41,282' 40,824' 41,255' 39,326' 39,730' 40,040 5 Commercial loans 17,424 23,683 23,300 23,256 23,294 23,163 23,58C 23,340' 24,131' 24,358' 24,324' 24,740 6 Consumer loans 45,809 51,622 56,118 56,548 57,465 57,902 58,336 58,681 58,380' 59,115' 60,240 61,135 7 Contra-assets to nonmortgage loans" 2,521 3,041 3,442 3,373 3,430 3,467 3,580' 3,524 3,628' 3,512' 3,396' 3,512 8 Cash and investment securities 143,538 164,844 164,034 173,121 170,713 169,717 169,937 174,099' 176,495' 178,713' 179,585' 177,589 9 Other 104,739 112,898 120,995 121,894 122,367 122,462 123,278' 124,060' 124,230' 124,396' 125,986' 125,476 10 Liabilities and net worth . 1,070,012 1,163,851 1,218,829 1,239,883 1,246,983 1,250,855 1,254,781' 1,257,363' 1,261,428' 1,274,312' 1,285,167' 1,290,032 11 Savings capital 843,932 890,664 908,907 916,843 922,340 932,616 939,079 946,790 958,470 962,250 963,685' 966,677 12 Borrowed money 157,666 196,929 234,941 246,370 247,461 249,917 245,967' 239,332' 237,467 244,764' 250,466' 257,105 13 FHLBB 84,390 100,025 106,250 109,736 111,283 116,363 114,053 112,725 112,388 113,029 114,994 117,213 14 Other 73,276 96,904 128,691 136,634 136,178 133,554 131,914' 126,607' 125,079 131,735' 135,472' 139,892 15 Other 21,756 23,975 24,599 27,098 27,404 21,941 23,871 25,816 22,496' 24,605' 27,168' 24,574 16 Net worth 46,657 52,282 50,382 49,573 49,777 46,382 45,864' 45,425' 42,995' 42,694' 43,849' 41,676 FSLIC-insured federal savings banks 17 Assets 131,868 210,562 272,834 276,560 279,221 284,272 284,303 295,952 307,758 311,424 323,018 329,776 18 Mortgages 72,355 113,638 156,705 158,507 161,014 164,013 163,915 171,592 178,142 180,464 186,681 190,906 19 Mortgage-backed securities 15,676 29,766 44,421 45,117 45,237 45,826 46,171 46,687 48,004 49,231 51,247 52,244 20 Contra-assets to mortgage assets 8,700 8,787 8,809 9,100 8,909 9,175 9,458 9,344 9,720 10,055 6,188 6,275 6,540 6,504 6,496 6,971 7,503 7,663 7,774 8,062 22 Consumer loans 8,361 13,180 16,582 16,563 17,343 17,696 17,649 18,795 19,137 19,610 20,417 21,139 23 Contra-assets to nonmortgage loans 702 690 712 678 698 737 800 724 708 728 24 Finance leases plus 552 550 566 591 604 584 611 615 652 709 25 Cash and investment ... 33,589 34,902 33,965 35,347 34,645 35,718 38,199 38,288 39,917 40,250 26 Other 11,723 19,034 24,199 24,122 24,078 24,070 24,428 25,516 26,418 25,822 26,757 27,251 27 Liabilities and net worth . 131,868 210,562 272,834 276,560 279,221 284,272 284,303 295,952 307,758 311,424 323,018 329,776 28 Savings capital 103,462 157,872 195,213 197,298 199,114 203,196 204,329 214,169 224,168 226,469 232,582 236,677 29 Borrowed money 19,323 37,329 56,549 57,551 58,277 60,716 59,206 59,704 61,553 62,555 66,805 69,327 30 FHLBB 10,510 19,897 26,287 27,350 27,947 29,617 28,280 29,169 30,456 30,075 31,682 32,177 31 Other 8,813 17,432 30,262 30,201 30,330 31,099 30,926 30,535 31,097 32,480 35,123 37,150 32 Other 2,732 4,263 5,631 6,293 6,350 5,324 5,838 6,602 6,084 6,459 7,188 6,729 33 Net worth 6,351 11,098 15,444 15,416 15,481 15,036 14,930 15,478 15,963 16,098 16,598 16,938 Savings banks 34 Assets 216,776 236,866 251,472 255,989 260,600 259,643 258,628 259,224 262,100 262,269 264,507 264,970 Loans 35 Mortgage 110,448 118,323 133,298 135,317 137,044 138,494 137,858 139,108 140,835 139,691 143,235 142,337 36 Other 30,876 35,167 36,134 36,471 37,189 33,871 35,095 35,752 36,476 37,471 35,927 35,283 Securities 37 U.S. government 13,111 14,209 13,122 13,817 15,694 13,510 12,776 12,269 12,225 13,203 12,490 16,729 38 Mortgage-backed securities 19,481 25,836 29,655 30,202 31,144 32,772 32,241 32,423 32,272 31,072 31,861 30,455 39 State and local government 2,323 2,185 2,023 2,034 2,046 2,003 1,994 2,053 2,033 2,013 1,933 1,810 40 Corporate and other . 21,199 20,459 18,431 18,062 17,583 18,772 18,780 18,271 18,336 18,549 18,298 18,022 41 Cash 6,225 6,894 4,484 5,529 5,063 5,864 4,841 5,002 4,881 5,237 5,383 4,709 42 Other assets 13,113 13,793 14,325 14,557 14,837 14,357 15,043 14,346 15,042 15,033 15,380 15,623 43 Liabilities 216,776 236,866 251,472 255,989 260,600 259,643 258,628 259,224 262,100 262,269 264,507 264,970 44 Deposits 185,972 192,194 196,824 199,336 202,030 201,497 199,545 200,391 203,407 203,273 205,692 204,187 45 Regular 181,921 186,345 191,376 193,777 196,724 196,037 194,322 195,336 198,273 197,801 200,098 198,354 46 Ordinary savings . 33,018 37,717 41,773 42,045 42,493 41,959 41,047 41,234 41,867 41,741 42,403 42,824 47 Time 103,311 100,809 107,063 109,486 112,231 112,429 112,781 113,751 115,529 115,887 117,297 116,683 48 Other 4,051 5,849 5,448 5,559 5,306 5,460 5,223 5,055 5,134 5,472 5,594 5,833 49 Other liabilities 17,414 25,274 32,827 34,226 36,167 35,720 36,836 35,787 35,737 35,827 35,836 38,850 50 General reserve accounts 12,823 18,105 20,407 20,365 21,133 20,633 20,514 20,894 21,024 21,109 21,179 20,553 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.37—Continued 1987 1988 AAccccoouunntt 11998855 11998866 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Credit unions5 5511 TToottaall aasssseettss//lliiaabbiilliittiieess aanndd ccaappiittaall 118,010 147,726 i 1 I 1 t 1 169,111 169,175 172,456 1 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. 101,965 103,271 105,704 n.a. 5555 FFeeddeerraall 47,933 55,304 65,732 66,431 68,213 5566 SSttaattee 25,580 30,833 1 1 n.a. n.a. n.a. n.a. 36,233 36,840 37,491 1 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 1,026,919 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 89,408 90,782 91,227 91,302 91,682 92,497 92,408 93,946 62 United States6.. 51,700 59,033 63,352 64,880 65,186 64,551 64,922 65,534 65,218 66,749 63 State and local . 9,708 11,659 11,087 11,363 11,539 11,758 11,749 11,859 12,033 11,976 64 Foreign 13,822 13,948 14,969 14,539 14,502 14,993 15,011 15,104 15,157 15,221 65 Business 423,712 492,807 558,787 549,426 548,767 553,486 563,019 571,070 580,392 587,846 n.a. n.a. 66 Bonds 346,216 401,943 451,453 455,678 459,537 461,942 469,207 476,448 484,403 490,285 67 Stocks 77,496 90,864 107,334 93,748 89,230 91,544 93,812 94,622 95,989 97,561 68 Mortgages 171,797 193,842 204,264 206,507 208,839 212,375 212,637 213,182 214,815 215,383 69 Real estate 28,822 31,615 33,048 33,235 33,538 34,016 34,178 34,503 34,845 34,964 70 Policy loans 54,369 54,055 53,422 53,413 53,334 53,313 53,265 52,720 52,604 52,568 71 Other assets 71,971 80,592 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. FSLIC-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 • November 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 Mar. Apr. May June July Aug. U.S. budget1 1 Receipts, total 769,091 854,143 65,730 109,323 59,711 99,205 60,690 69,479 2 On-budget 568,862 640,741 44,958 81,993 39,764 77,643 40,980 51,015 3 Off-budget 200,228 213,402 20,772 27,330 19,947 21,562 19,710 18,464 4 Outlays, total 990,258 1,004,586 95,013 95,554 82,295 90,071' 83,634 92,561 5 On-budget 806,760 810,754 76,994 79,629 64,688 72,888' 66,818 74,756 6 Off-budget 183,498 193,832 18,020 15,925 17,607 17,184 16,816 17,805 7 Surplus, or deficit (-), total -221,167 -150,444 -29,283 13,769 -22,583 9,134r -22,944 -23,082 8 On-budget -237,898 -170,014 -32,036 2,364 -24,924 4,755 -25,838 -23,741 9 Off-budget 16,731 19,570 2,752 11,405 2,340 4,379 2,894 659 Source of financing (total) 10 Borrowing from the public 236,187 150,070 17,160 -334 7,559 11,391 3,665 23,370 11 Operating cash (decrease, or increase (-)l -14,324 -5,052 6,009 -23,276 27,223 -20,638 15,696 10,954 12 Other2 -6% 5,426 6,114' 9,841' -12,199' 113' 3,583 -11,242 MEMO 13 Treasury operating balance (level, end of period) 31,384 36,436 22,913 46,189 18,966 39,604 23,908 12,954 14 Federal Reserve Banks 7,514 9,120 2,403 16,186 2,871 9,762 3,910 4,390 15 Tax and loan accounts 23,870 27,316 20,510 30,003 16,095 29,842 19,998 8,564 1. In accordance with the Balanced Budget and Emergency Deficit Control Act international monetary fund; other cash and monetary assets; accrued interest of 1985, all former off-budget entries are now presented on-budget. The Federal payable to the public; allocations of special drawing rights; deposit funds; Financing Bank (FFB) activities are now shown as separate accounts under the miscellaneous liability (including checks outstanding) and asset accounts; agencies that use the FFB to finance their programs. The act has also moved two seigniorage; increment on gold; net gain/loss for U.S. currency valuation adjustsocial security trust funds (Federal old-age survivors insurance and Federal ment; net gain/loss for IMF valuation adjustment; and profit on the sale of gold. disability insurance trust funds) off-budget. SOURCE. Monthly Treasury Statement of Receipts and Outlays of the U.S. 2. Includes SDRs; reserve position on the U.S. quota in the IMF; loans to Government and the Budget of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year Fiscal Fiscal SSoouurrccee oorr ttyyppee year year 1986 1987 1988 1988 11998866 11998877 H2 HI H2 HI June July Aug. RECEIPTS 1 All sources 769,091 854,143 387,524 447,282 421,712 476,115 99,205 60,690 69,479 7 Individual income taxes, net 348,959 392,557 183,156 205,157 192,575 207,659' 46,092' 25,791 31,942 3 Withheld 314,803 322,463 164,071 156,760 170,203 169,300 30,995 25,567 30,330 4 Presidential Election Campaign Fund .... 36 33 4 30 4 28 3 2 11 105,994 142,957 27,733 112,421 31,223 101,614 16,667 2,300 22,,995566 6 Refunds 71,873 72,896 8,652 64,052 8,853 63,283 1,573 2,078 1,346 Corporation income taxes 7 Gross receipts 80,442 102,859 42,108 52,396 52,821 58,002 1199,,221133 33,,110011 22,,337777 8 Refunds 17,298 18,933 8,230 10,881 7,119 8,706 866 1,602 916 9 Social insurance taxes and contributions, net 283,901 303,318 134,006 163,519 143,755 181,058 27,967 2266,,991155 2288,,337733 10 Employment taxes and contributions 255,062 273,185 122,246 146,696 130,388 164,412 2277,,220000 2244,,996644 2233,,447777 11 Self-employment taxes and contributions 11,840 13,987 1,338 12,020 1,889 1144,,883399 11,,996655 00 338800 1? Unemployment insurance 24,098 25,418 9,328 14,514 10,977 14,363 352 1,598 4,545 13 Other net receipts4 4,742 4,715 2,429 2,310 2,390 2,284 415 353 351 14 Excise taxes 32,919 32,510 15,947 15,845 17,680 16,440 3,136 3,250 3,490 15 Customs deposits 13,327 15,032 7,282 7,129 7,993 7,851 1,430 1,343 1,650 16 Estate and gift taxes 6,958 7,493 3,649 3,818 3,610 3,863 644 627 661 17 Miscellaneous receipts 19,884 19,307 9,605 10,299 10,399 9,950 1,590 1,265 1,902 OUTLAYS 18 All types 990,231 1,004,586 506,556 503,112 532,839 513,210r 90,071' 83,634 92,561 19 National defense 273,375 281,999 138,544 142,886 146,995 143,080 25,317 24,449 24,532 ?0 International affairs 14,152 11,649 8,938 4,374 4,487 7,150 1,602 1,568 833 71 General science, space, and technology 8,976 9,216 4,594 4,324 5,469 5,361 1,023 961 930 ?? Energy 4,735 4,115 2,446 2,335 1,468 555 516 257 282 73 Natural resources and environment 13,639 13,363 7,141 6,175 7,590 6,776 1,458 1,096 1,213 24 Agriculture 31,449 27,356 15,660 11,824 14,640 7,872 20 311 -152 75 Commerce and housing credit 4,890 6,182 3,764 4,893 3,852 5,951 2,035r -337 4,077 76 Transportation 28,117 26,228 14,745 12,113 14,096 12,700 2,397 2,335 2,6% 27 Community and regional development 7,233 5,051 3,651 3,108 2,075 2,765 468 -109 284 78 Education, training, employment, and social services 30,585 29,724 16,209 14,182 15,592 15,451 2,431 11,,998844 33,,003333 ?9 Health 35,935 39,968 18,795 20,318 20,750 22,643 4,119 3,502 3,977 30 Social security and medicare 268,921 282,473 138,299 142,864 158,469 135,322 28,234 23,475 25,692 31 Income security 119,796 123,250 59,979 62,248 61,201 65,555 8,203 10,907 10,581 3? Veterans benefits and services 26,356 26.782 14,190 12,264 14,956 13,241 2,120 2,354 2,249 33 Administration of justice 6,603 7,548 3,413 3,626 4,291 4,761 827 735 900 34 General government 6,104 5,948 1,860 3,344 3,560 4,337 1,486 174 814 35 General-purpose fiscal assistance 6,431 1,621 2,886 337 1,175 448 0 0 0 36 Net interest 136,008 138,570 66,226 70,110 71,933 76,098 11,061 12,677 13,661 37 Undistributed offsetting receipts -33,007 -36,455 -16,475 -19,102 -17,684 -17,766 -3,251 -2,706 -3,041 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 • November 1988 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1986 1987 1988 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding 2,063.6 2,129.5 2,218.9 2,250.7 2,313.1 2,354.3 2,435.2 2,493.2 2,555.1 7. Public debt securities 2,059.3 2,125.3 2,214.8 2,246.7 2,309.3 2,350.3 2,431.7 2,487.6 2,547.7 3 Held by public 1,684.9 1,742.4 1,811.7 1,839.3 1,871.1 1,893.1 1,954.1 1,996.7 2,013.4 4 Held by agencies 374.4 382.9 403.1 407.5 438.1 457.2 477.6 490.8 534.2 5 Agency securities 4.3 4.2 4.0 4.0 3.8 4.0 3.5 5.6 7.4 6 Held by public 3.2 3.2 3.0 2.9 2.8 3.0 2.7 5.1 7.0 7 Held by agencies 1.1 1.1 1.1 1.1 1.0 1.0 .8 .6 .5 8 Debt subject to statutory limit 2,060.0 2,111.0 2,200.5 2,232.4 2,295.0 2,336.0 2,417.4 2,472.6 2,532.2 9 Public debt securities 2,058.7 2,109.7 2,199.3 2,231.1 2,293.7 2,334.7 2,416.3 2,472.1 2,532.1 10 Other debt1 1.3 1.3 1.3 1.3 1.3 1.3 1.1 .5 .1 11 MEMO: Statutory debt limit 2,078.7 2,111.0 2,300.0 2,300.0 2,320.0 2,800.0 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 TTyyppee aanndd hhoollddeerr 11998844 11998855 11998866 11998877 Q3 Q4 Q1 Q2 1 Total gross public debt 1,663.0 1,945.9 2,214.8 2,431.7 2,350.3 2,431.7 2,487.6 2,547.7 By type 2 Interest-bearing debt 1,660.6 1,943.4 2,212.0 2,428.9 2,347.7 2,428.9 2,484.9 2,545.0 3 Marketable 1,247.4 1,437.7 1,619.0 1,724.7 1,676.0 1,724.7 1,758.7 1,769.9 4 Bills 374.4 399.9 426.7 389.5 378.3 389.5 392.6 382.3 5 705.1 812.5 927.5 1,037.9 1,005.1 1,037.9 1,059.9 1,072.7 6 Bonds 167.9 211.1 249.8 282.5 277.6 282.5 291.3 299.9 7 Nonmarketable1 413.2 505.7 593.1 704.2 671.8 704.2 726.2 775.1 8 State and local government series 44.4 87.5 110.5 139.3 129.0 139.3 142.9 146.9 9 Foreign issues2 9.1 7.5 4.7 4.0 4.3 4.0 6.1 5.7 10 Government 9.1 7.5 4.7 4.0 4.3 4.0 6.1 5.7 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 73.1 78.1 90.6 99.2 97.0 99.2 102.3 104.5 13 Government account series3 286.2 332.2 386.9 461.3 440.7 461.3 474.4 517.5 14 Non-interest-bearing debt 2.3 2.5 2.8 2.8 2.5 2.8 2.6 2.7 By holder4 15 U.S. government agencies and trust funds 289.6 348.9 403.1 477.6 457.2 477.6 n.a. n.a. 16 Federal Reserve Banks 160.9 181.3 211.3 222.6 211.9 222.6 n.a. n.a. 17 1,212.5 1,417.2 1,602.0 1,745.2 1,682.6 1,745.2 1,778.2 1,784.9 18 Commercial banks 183.4 192.2 238.3 253.3 251.3 253.3 260.7 263.0 19 Money market funds 25.9 25.1 28.0 14.3 15.2 14.3 15.2r 13.4 20 Insurance companies 76.4r 115.4 135.4 n.a. 143.0 n.a. n.a. n.a. 21 Other companies 50.1 59.0 68.8 84.6 81.8 84.6 n.a. 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 98.5 101.1 104.0 106.2 24 Other securities 69.3 75.0 70.5 n.a. 70.4 n.a. n.a. n.a. 25 Foreign and international 192.9 212.5 251.6 287.3 267.0 287.3 320.8r 332.3 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 June Julyr Aug. July 27 Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Immediate delivery2 1 U.S. Treasury securities 75,331 95,445 110,052 111,010 92,153 100,178 89,731r 87,932 121,311 109,991 82,270 93,805 By maturity 7 Bills 32,900 34,247 37,924 28,060 29,166 29,546 29,045 26,995 34,362 31,586 21,977 31,634 3 Other within 1 year 1,811 2,115 3,272 3,826 2,939 3,459 2,890 3,878 3,346 3,673 2,662 3,674 4 1-5 years 18,361 24,667 27,918 31,292 23,127 28,573 24,873' 23,527 37,258 32,746 25,419 22,613 5 5-10 years 12,703 20,456 24,014 28,079 23,294 23,640 20,060' 20,657 28,922 23,207 19,261 23,989 6 Over 10 years 9,556 13,961 16,923 19,753 13,628 14,960 12,863 12,875 17,424 18,779 12,950 11,894 By type of customer V U.S. government securities dealers 3,336 3,670 2,936 2,766 2,255 2,332 2,685 2,903 2,307 2,760 1,739 2,132 8 U.S. government securities brokers 36,222 49,558 61,539 66,145 55,147 58,488 54,561' 50,653 73,087 64,444 47,112 54,111 9 All others3 35,773 42,218 45,576 42,097 34,750 39,356 32,484' 34,376 45,916 42,786 33,418 37,561 10 Federal agency securities 11,640 16,748 18,087 15,660 14,290 13,954 12,094 15,968 15,556 15,669 10,550 13,078 11 Certificates of deposit 4,016 4,355 4,112 3,193 3,316 3,049 3,244 3,128 3,054 2,975 3,019 3,045 12 Bankers acceptances 3,242 3,272 2,965 2,114 2,401 1,845 2,215 2,194 1,918 1,582 1,687 2,055 13 Commercial paper 12,717 16,660 17,135 24,139 26,738 23,418 25,095 23,726 23,048 24,100 22,397 24,656 Futures contracts 14 Treasury bills 5,561 3,311 3,233 2,205 1,886 2,593 2,053 1,381 4,420 2,647 1,384 2,479 15 Treasury coupons 6,085 7,175 8,964 11,565 8,536 9,444 8,401 8,064 10,928 12,323 7,765 7,675 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 2,330 1,673 2,323 2,613 1,278 3,464 1,875 3,740 754 18 Federal agency securities 3,857 7,831 9,290 9,370 7,088 8,701 5,182 7,451 10,258 12,167 7,426 5,444 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 NonfinancialS tatistics • November 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 June July' Aug. Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 Positions Net immediate2 1 U.S. Treasury securities 7,391 12,912 -6,216 -25,186 -31,320 -31,561 -32,120 -36,093 -32,063 -32,657 -25,935 2 Bills 10,075 12,761 4,317 1,723 -90 1,686 -246 -1,279 901 1,448 6,299 3 Other within 1 year 1,050 3,706 1,557 -983 -2,638 -2,389 -2,068 -1,734 -2,338 -2,583 -3,210 4 1-5 years 5,154 9,146 649 -7,541 -4,887 -6,154 -3,774 -5,328 -7,414 -7,970 -5,263 5 5-10 years -6,202 -9,505 -6,564 -10,274 -14,049 -13,367 -14,912 -15,872 -12,251 -12,564 -12,015 6 Over 10 years -2,686 -3,197 -6,174 -8,112 -9,655 -11,336 -11,120 -11,881 -10,962 -10,989 -11,746 7 Federal agency securities 22,860 32,984 31,910 29,417 30,071 28,049 30,390 28,763 28,217 26,608 27,067 8 Certificates of deposit 9,192 10,485 8,188 8,066 8,831 8,470 8,356 8,407 8,836 8,393 8,346 9 Bankers acceptances 4,586 5,526 3,661 2,618 2,734 1,962 2,547 1,893 1,779 1,776 2,048 10 Commercial paper 5,570 8,089 7,496 5,561 5,847 5,820 6,779 6,357 5,426 4,967 6,082 Futures positions 11 Treasury bills -7,322 -18,059 -3,373 -2,695 904 1,160 376 979 1,534 1,713 1,098 12 Treasury coupons 4,465 3,473 5,988 4,136 7,454 8,488 8,579 9,127 8,867 7,777 7,948 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 1,114 1,353 655 1,279 1,825 -350 -243 1,167 15 Federal agency securities -9,420 -11,840 -18,817 -17,820 -18,780 -17,255 -19,157 -18,620 -17,061 -16,432 -15,702 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 68,035 98,954 124,791 139,006 132,912 142,120 135,279 136,150 146,552 137,614 152,267 17 Term 80,509 108,693 148,033 168,069 173,938 180,855 189,433 195,672 117700,,889933 117777,,441199 174,288 Repurchase agreements 18 Overnight and continuing 101,410 141,735 170,840 176,017 170,062 174,006 163,085 165,279 177,738 172,488 187,072 19 Term 70,076 102,640 120,980 131,104 130,220 134,608 145,256 149,668 125,776 130,995 125,603 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 Mar. Apr. May June July 1 Federal and federally sponsored agencies 271,220 293,905 307,361 341,386 351,356 348,273 352,216 354,446 n.a. 2 Federal agencies 35,145 36,390 36,958 37,981 36,844 36,672 36,430 36,361 36,465 3 Defense Department1 142 71 33 13 12 11 11 11 11 4 Export-Import Bank 15,882 15,678 14,211 11,978 11,494 11,494 11,494 11,232 11,232 5 Federal Housing Administration4 133 115 138 183 100 103 105 116 116 6 Government National Mortgage Association participation certificates 2,165 2,165 2,165 1,615 1,165 883300 883300 883300 883300 7 Postal Service6 1,337 1,940 3,104 6,103 6,103 6,103 5,842 5,842 5,842 8 Tennessee Valley Authority 15,435 16,347 17,222 18,089 17,970 18,131 18,148 18,330 18,434 9 United States Railway Association 51 74 85 0 0 0 0 0 0 10 Federally sponsored agencies7 237,012 257,515 270,553 303,405 314,512 311,601 315,786 318,085 n.a. 11 Federal Home Loan Banks 65,085 74,447 88,752 115,725 118,250 118,153 117,864 117,773 119,409 12 Federal Home Loan Mortgage Corporation 10,270 11,926 13,589 17,645 20,143 17,199 19,495 17,619 n.a. 13 Federal National Mortgage Association 83,720 93,896 93,563 97,057 99,853 100,911 102,515 104,757 104,751 14 Farm Credit Banks8 72,192 68,851 62,478 55,275 56,145 54,311 54,578 55,779 54,538 15 Student Loan Marketing Association9 5,745 8,395 12,171 16,503 18,271 18,877 18,434 19,257 n.a. 16 Financing Corporation1" n.a. n.a. n.a. 1,200 1,850 2,150 2,900 2,900 2,900 17 Farm Credit Financial Assistance Corporation11 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 450 MEMO 18 Federal Financing Bank debt 145,217 153,373 157,510 152,417 149,721 150,044 149,986 149,833 149,937 Lending to federal and federally sponsored agencies 19 Export-Import Bank3 15,852 1155,,667700 1144,,220055 1111,,997722 1111,,448888 1111,,448888 1111,,448888 1111,,222266 1111,,222266 70 Postal Service6 1,087 1,690 2,854 5,853 5,853 5,853 5,592 5,592 5,592 21 Student Loan Marketing Association 5,000 5,000 4,970 4,940 4,940 4,940 4,940 4,940 4,940 22 Tennessee Valley Authority 13,710 14,622 15,797 16,709 16,590 16,751 16,768 16,950 17,054 23 United States Railway Association6 51 74 85 0 0 0 0 0 0 Other Lending13 24 Farmers Home Administration 58,971 64,234 65,374 59,674 59,674 59,674 5599,,667744 5599,,667744 5599,,667744 75 Rural Electrification Administration 20,693 20,654 21,680 21,191 19,184 19,203 19,218 19,204 19,206 26 Other 29,853 31,429 32,545 32,078 31,992 32,135 32,306 32,247 32,245 1. Consists of mortgages assumed by the Defense Department between 1957 9. Before late 1981, the Association obtained financing through the Federal and 1963 under family housing and homeowners assistance programs. Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. shown on line 21. 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. 10. The Financing Corporation, established in August 1987 to recapitalize the 4. Consists of debentures issued in payment of Federal Housing Administration Federal Savings and Loan Insurance Corporation, undertook its first borrowing in insurance claims. Once issued, these securities may be sold privately on the October 1987. securities market. 11. The Farm Credit Financial Assistance Corporation (established in January 5. Certificates of participation issued before fiscal 1969 by the Government 1988 to provide assistance to the Farm Credit System) undertook its first National Mortgage Association acting as trustee for the Farmers Home Admin- borrowing in July 1988. istration; Department of Health, Education, and Welfare; Department of Housing 12. The FFB, which began operations in 1974, is authorized to purchase or sell and Urban Development; Small Business Administration; and the Veterans obligations issued, sold, or guaranteed by other federal agencies. Since FFB Administration. incurs debt solely for the purpose of lending to other agencies, its debt is not 6. Off-budget. included in the main portion of the table in order to avoid double counting. 7. Includes outstanding noncontingent liabilities; notes, bonds, and deben- 13. Includes FFB purchases of agency assets and guaranteed loans; the latter tures. Some data are estimated. contain loans guaranteed by numerous agencies with the guarantees of any 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, particular agency being generally small. The Farmers Home Administration item shown in line 17. consists exclusively of agency assets, while the Rural Electrification Administration 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 • November 1988 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1988 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July' Aug. 1 All issues, new and refunding1 214,189 147,011 102,407 5,412 8,585 9,821 5,847 7,846 13,912 9,746 6,614 Type of issue 2 General obligation 52,622 46,346 30,589 1,259 2,880 2,776 1,707 3,085 4,237 1,959 2,455 3 Revenue 161,567 100,664 71,818 4,153 5,705 7,045 4,140 4,761 9,675 7,788 4,159 Type of issuer 4 State 13,004 14,474 10,102 423 1,197 739 441 913 1,349 140 576 5 Special district and statutory authority 134,363 89,997 65,460 3,220 5,154 6,310 4,078 4,625 8,629 6,752 3,563 6 Municipalities, counties, and townships 78,754 42,541 26,845 1,769 2,234 2,772 1,328 2,308 3,934 2,854 2,475 7 Issues for new capital, total 156,050 83,490 56,789 1,669' 2,738' 2,401r 1,476' 2,334r 2,352r 2,079 2,318 Use of proceeds 8 Education 16,658 12,307 9,524 841 754 933 911 1,316 1,320 1,699 646 9 Transportation 12,070 7,246 3,677 189 826 559 215 452 858 1,446 264 10 Utilities and conservation 26,852 14,594 7,912 326 655 1,016 429 580 635 225 591 11 Social welfare 63,181 11,353 11,106 740 650 1,218 1,099 694 2,060 1,222 1,273 12 Industrial aid 12,892 6,190 7,474 153 2,473 105 298 248 434 128 367 13 Other purposes 24,398 31,802 18,020 613 415 2,213 996 1,900 3,628 3,666 2,040 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,, 11998855 11998866 11998877 oorr uussee Dec. Jan. Feb. Mar. Apr. May June' July 1 AH issues' 239,015 423,726 392,156 11,872 22,175 22,439' 25,902 21,227' 23,413 29,716 17,632 2 Bonds2 203,500 355,293 325,648 11,098 19,485 18,549' 20,815 18,515' 19,382 25,421 12,494 Type of offering 3 Public, domestic 119,559 231,936 209,279 10,763 18,246 16,758' 19,827 16,202' 17,496 22,426 10,500 4 Private placement, domestic3 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 24,299 335 1,239 1,791 988 2,313 1,886 2,995 1,994 Industry group 6 Manufacturing 63,973 91,548 61,666 928 3,053 3,151 3,482 4,513' 4,206 5,270 2,223 7 Commercial and miscellaneous 17,066 40,124 49,327 2,577 2,084 1,416' 1,007 771 1,446 2,261 1,513 8 Transportation 6,020 9,971 11,974 226 0 200 1,017 890 184 580 100 9 Public utility 13,649 31,426 23,004 1,570 1,142 1,718 2,259 1,170 1,929 1,707 550 10 Communication 10,832 16,659 7,340 510 206 101 115 411 69 910 575 11 Real estate and financial 91,958 165,564 172,343 5,287 13,000 11,962' 12,935 10,76c 11,546 14,693 7,534 12 Stocks3 35,515 68,433 66,508 774 2,690 3,890 5,087 2,712 4,031 4,295 5,138 Type 13 Preferred 6,505 11,514 10,123 61 1,388 376 625 241 285 501 407 14 Common 29,010 50,316 43,228 713 1,302 3,513' 4,462' 2,471 3,746 3,794 4,731 66,,660033 1133,,115577 nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. nn..aa.. Industry group 16 Manufacturing 5,700 15,027 13,880 76 268 296 256 318 1,080 1,676 296 17 Commercial and miscellaneous 9,149 10,617 12,888 14 360 44 99 276 157 522 2,073 18 Transportation 1,544 2,427 2,439 1 1 474 32 150 15 51 0 19 Public utility 1,966 4,020 4,322 0 100 142 93 238 59 207 20 20 Communication 978 1,825 1,458 11 60 0 63 109 78 13 20 21 Real estate and financial 16,178 34,517 31,521 672 1,901 2,933 4,544 1,621 2,642 1,826 2,729 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 Dec. Jan. Feb. Mar. Apr. May Juner July INVESTMENT COMPANIES1 1 Sales of own shares2 411,751 381,260 26,494 30,343 23,265 24,589 23,162 19,579 22,503 20,728 2 Redemptions of own shares3 239,394 314,252 28,099 22,324 20,914 23,968 25,000 21,412 23,168 20,560 3 Net sales 172,357 67,008 -1,605 8,019 2,351 620 -1,828 -1,833 -665 168 4 Assets4 424,156 453,842 453,842 468,998 481,232 473,206 473,321 468,735 481,120 477,122 30,716 38,006 38,006 40,157 41,232 43,561 45,307 45,003 43,229 44,031 6 Other 393,440 415,836 415,836 428,841 439,995 426,645 428,014 423,732 437,891 433,091 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 Ql Q2 Q3 Q4 Ql Q2 1 Corporate profits with inventory valuation and capital consumption adjustment 282.3 298.8 310.4 301.2 293.9 298.3 305.2 322.0 316.1 316.2 326.5 2 Profits before tax 224.2 236.3 276.7 240.5 252.1 261.8 273.7 289.4 281.9 286.2 305.9 3 Profits tax liability 96.4 106.6 133.8 107.9 114.3 126.3 132.6 140.0 136.2 136.9 143.2 4 Profits after tax 127.8 129.8 142.9 132.6 137.9 135.5 141.1 149.5 145.7 149.4 162.7 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 59.6 7 Inventory valuation -1.7 8.3 -18.0 8.7 -8.1 -14.4 -20.0 -19.5 -18.2 -19.4 -27.4 8 Capital consumption adjustment 59.8 54.1 51.7 52.0 49.8 50.8 51.5 52.1 52.4 49.4 48.0 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 DomesticN onfinancialS tatistics • November 1988 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1987r 1988' IInndduussttrryy 11998866 11998877rr 1199888811''"" Qi Q2 Q3 Q4 Ql Q2 Q31 Q41 1 Total nonfarm business 379.47 389.67 430.95 376.73 380.66 394.54 406.82 412.02 426.94 440.42 444.40 Manufacturing 2 Durable goods industries 69.14 71.01 78.06 70.79 69.05 71.96 72.28 75.70 76.87 80.59 7799..0099 3 Nondurable goods industries 73.56 74.88 85.50 70.70 72.66 76.24 79.92 82.90 84.82 85.78 88.48 Nonmanufacturing 4 Mining 11.22 11.39 12.62 10.38 11.02 11.81 12.32 12.59 13.26 12.74 11.89 Transportation 5 Railroad 6.66 5.92 7.05 5.68 5.84 6.07 6.12 6.92 7.01 7.07 7.19 6 Air 6.26 6.53 7.61 7.01 6.02 6.15 6.94 6.43 6.66 9.31 8.02 7 Other 5.89 6.40 6.91 6.08 6.26 6.97 6.28 7.08 7.05 7.06 6.44 Public utilities 8 Electric 33.91 31.63 32.20 31.23 31.47 31.57 32.28 30.31 30.95 33.79 33.76 9 Gas and other 12.47 13.25 14.27 12.72 12.47 13.73 14.11 14.30 14.48 14.26 14.04 10 Commercial and other 160.38 168.65 186.74 162.13 165.86 170.05 176.56 175.79 185.83 189.82 195.50 ATrade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period 1986 1987 AAccccoouunntt 11998833 11998844 11998855 Q2 Q3 Q4 QL 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 1988 TTyyppee 11998855 11998866 11998877 Feb. Mar. Apr. May June July 1 Total 156,297 171,966 205,869 213,337 216,007 218,914 220,304 222,133 223,706 Retail financing of installment sales 2 Automotive (commercial vehicles) 20,660 25,952 35,674 36,318 36,914 37,619 37,219 37,519 37,682 3 Business, industrial, and farm equipment 22,483 22,950 24,987 26,976 27,081 27,263 27,081 27,548 27,428 Wholesale financing 4 Automotive 23,988 23,419 31,059 28,654 27,329 27,361 28,260 28,731 28,449 5 Equipment 4,568 5,423 5,693 5,323 5,251 5,429 5,237 5,557 5,654 6 All other 6,809 7,079 8,408 8,331 8,347 8,311 8,414 8,481 8,458 Leasing 7 Automotive 16,275 19,783 21,943 23,100 23,493 23,458 23,690 24,076 24,400 8 Equipment 34,768 37,833 43,002 48,175 50,411 51,092 52,126 52,365 52,803 9 Loans on commercial accounts receivable and factored commercial accounts receivable 15,765 15,959 18,024 17,862 17,895 18,789 18,700 18,595 19,095 10 All other business credit 10,981 13,568 17,079 17,062 19,287 19,592 19,578 19,260 19,736 Net change (during period) 11 19,607 15,669 3,040 549 2,670 2,907 1,390 1,829 1,573 Retail financing of installment sales 12 Automotive (commercial vehicles) 5,067 5,292 1,220 -101 5% 705 -400 300 163 13 Business, industrial, and farm equipment -363 467 223 -232 105 182 -181 467 -120 Wholesale financing 14 Automotive 5,423 -569 158 -1,461 -1,325 32 899 471 -282 15 Equipment -867 855 -101 14 -72 178 -192 320 97 16 All other 1,069 270 257 -123 16 -36 103 67 -23 Leasing 17 Automotive 3,896 3,508 -70 157 393 -34 231 386 324 18 Equipment 2,685 3,065 1,038 632 2,236 681 1,034 239 438 19 Loans on commercial accounts receivable and factored commercial accounts receivable 2,161 194 -477 -643 -643 894 -88 -105 500 20 All other business credit 536 2,587 792 770 689 305 -14 -318 476 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 Financial Statistics • November 1988 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1988 IItteemm 11998855 11998866 11998877 Feb. Mar. Apr. May June July Aug. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 104.1 118.1 137.0 139.4 147.2 151.4 145.3 152.0 152.9 152.3 2 Amount of loan (thousands of dollars) 77.4 86.2 100.5 104.3 106.3 112.1 108.0 110.2 111.9 113.8 3 Loan/price ratio (percent) 77.1 75.2 75.2 76.4 75.0 76.2 76.4 73.8 75.2 76.9 4 Maturity (years) 26.9 26.6 27.8 28.1 27.3 27.7 28.1 27.5 28.4 28.6 5 Fees and charges (percent of loan amount) 2.53 2.48 2.26 2.23 2.28 2.20 2.15 2.16 2.24 2.39 6 Contract rate (percent per year) 11.12 9.82 8.94 8.76 8.77 8.76 8.59 8.90 8.80 8.68 Yield (percent per year) 7 FHLBB series5 11.58 10.25 9.31 9.12 9.15 9.13 8.95 9.26 9.17 9.07 8 HUD series 12.28 10.07 10.13 9.80 9.99 10.19 10.48 10.35R n.a. n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 12.24 9.91 10.12 9.86 10.28 10.46 10.84 10.65' n.a. n.a. 10 GNMA securities 11.61 9.30 9.42 9.53 9.53 9.67 9.93 9.88 9.91 10.09 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 94,574 98,048 95,030 98,358 99,787 100,796 101,747 102,368 102,540 102,540 12 FHA/VA-insured 34,244 29,683 21,660 20,181 20,094 19,932 19,805 19,765 19,677 19,586 13 Conventional 60,331 68,365 73,370 78,177 79,693 80,864 81,941 82,603 82,864 82,954 Mortgage transactions (during period) 14 Purchases 21,510 30,826 20,531 2,629 2,776 2,409 2,138 2,372 1,960 1,638 Mortgage commitments7 15 Contracted (during period) 20,155 32,987 25,415 2,516 3,823 2,555 2,142 2,179 1,108 1,041 16 Outstanding (end of period) 3,402 3,386 4,886 4,966 6,149 6,033 5,777 5,365 4,277 3,135 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 12,399 13,517 12,802 13,926 14,386 14,822 15,228 15,576 n.a. n.a. 18 FHA/VA 841 746 686 646 641 635 633 627 n.a. n.a. 19 Conventional 11,559 12,771 12,116 13,280 13,745 14,187 14,595 14,949 n.a. n.a. Mortgage transactions (during period) 20 Purchases 44,012 103,474 76,845 3,293 2,932 2,772 2,877 4,117 n.a. n.a. 21 Sales 38,905 100,236 75,082 2,414 2,312 2,271 2,325 3,649 n.a. n.a. Mortgage commitments9 22 Contracted (during period) 48,989 110,855 71,467 4,910 4,262 6,437 5,159 6,447 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 1. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Based on transactions on first day of subsequent month. Large securities swap programs, while the corresponding data for FNMA exclude swap monthly movements in average yields may reflect market adjustments to changes activity. in maximum permissable contract rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A39 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1987 1988 Type of holder, and type of property 11998855 11998866 11998877 Q2 Q3 Q4 Ql' Q2 1 All holders 2,289,843' 2,597,175' 2,943,176' 2,792,723' 2,864,736' 2,943,176' 2,987,155' 3,056,615' 2 1- to 4-family 1,488,009' 1,698,524' 1,925,203' 1,817,482' 1,870,635' 1,925,203' 1,955,325' 2,006,675' 3 Multifamily 214,470r 247,831' 273,836' 263,874' 268,911' 273,836' 277,571' 282,920' 4 Commercial 481,514' 555,039' 655,269' 620,087' 635,230' 655,269' 666,0%' 679,305' 5 Farm 105,850' 95,781' 88,868' 91,280' 89,96c 88,868' 88,163' 87,715' 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 1,760,744' 7 Commercial banks2 429,1% 502,534 591,151 544,759 567,000 591,151 603,408 622,237 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 12 Savings institutions3 760,499 777,312 856,945 824,961 838,737 856,945 863,110 876,974' 13 1- to 4-family 554,301 558,412 598,886 572,075 583,432 598,886 603,532 615,771' 14 Multifamily 89,739 97,059 106,359 102,933 104,609 106,359 107,687 109,588' 15 Commercial 115,771 121,236 150,943 149,183 149,938 150,943 151,136 150,863' 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 20 Commercial 127,670 149,111 166,722 155,611 159,464 166,722 168,774 172,624 21 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 23 Federal and related agencies 166,928 203,800 192,721 196,514 191,520 192,721 196,909 199,728' 24 Government National Mortgage Association.. 1,473 889 444 667 458 444 434 425 25 1- to 4-family 539 47 25 45 25 25 25 24 26 Multifamily 934 842 419 622 433 419 409 401 27 Farmers Home Administration 733 48,421 43,051 48,085 42,978 43,051 43,076 42,767 28 1- to 4-family 183 21,625 18,169 21,157 18,111 18,169 18,185 18,248 29 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 32 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 35 Federal National Mortgage Association 98,282 97,895 %,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 15,576' 42 1- to 4-family 11,881 10,010 11,430 11,172 11,570 11,430 12,749 13,631' 43 Multifamily 2,141 1,554 1,442 1,425 1,370 1,442 1,637 1,945' 44 Mortgage pools or trusts6 439,058' 565,428' 718,297' 656,361' 692,944' 718,297' 736,344' 761,405' 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 .. 100,387 171,372 212,634 200,284 208,872 212,634 214,724 216,155' 49 1- to 4-family 99,515 166,667 205,977 194,238 202,308 205,977 208,138 209,702' 50 Multifamily 872 4,705 6,657 6,046 6,564 6,657 6,586 6,453' 51 Federal National Mortgage Association 54,987 97,174 139,960 121,270 130,540 139,960 145,242 157,438 52 1- to 4-family 54,036 95,791 137,988 119,617 128,770 137,988 142,330 153,253 53 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 56 Multifamily 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 293,463' 320,658' 331,338' 332,848' 331,944' 331,338' 331,160' 334,738' 60 I- to 4-family 162,419' 177,374' 171,331' 177,611' 173,360' 171,331' 169,526' 170,968' 61 Multifamily 55,849' 66,94C 75,374' 74,238' 74,795' 75,374' 76,025' 76,857' 62 Commercial 48,692' 53,315' 63,275' 59,038' 62,131' 63,275' 64,407' 65,811' 63 Farm 26,503' 23,029' 21,358' 21, %lr 21,658' 21,358' 21,202' 21,102' 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 DomesticN onfinancial Statistics • November 1988 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 1987 1988 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt Nov. Dec. Jan. Feb. Mar. Apr. May Juner July Amounts outstanding (end of period) 1 Total 571,833 613,022 608,728 613,022 619,258 624,294 629,485 633,336 636,318 644,372 646,945 By major holder 2 Commercial banks 262,139 281,564 279,550 281,564 284,753 287,344 290,831 293,166 295,546 300,275 302,049 3 Finance companies 133,698 140,072 138,928 140,072 141,695 142,946 144,053 144,516 144,454 144,748 143,812 4 Credit unions 76,191 81,065 80,923 81,065 81,662 81,897 82,595 83,204 83,881 84,912 85,550 5 Retailers3 39,660 42,782 42,291 42,782 42,926 43,080 43,271 43,295 43,162 43,450 43,634 6 Savings institutions 56,881 63,949 63,412 63,949 64,633 65,396 65,078 65,387 65,509 67,274 68,192 7 Gasoline companies 3,264 3,590 3,624 3,590 3,590 3,631 3,657 3,769 3,765 3,713 3,707 By major type of credit 8 Automobile 246,109 267,180 264,474 267,180 269,883 273,133 276,762 278,567 279,418 282,254 282,809 9 Commercial banks 100,907 108,438 107,727 108,438 109,298 111,021 113,593 114,868 115,951 117,322 118,051 10 Credit unions 38,413 43,474 43,071 43,474 43,959 44,251 44,795 45,293 45,831 46,565 47,088 11 Finance companies 92,350 98,026 96,733 98,026 99,147 100,123 100,669 100,564 99,708 99,900 98,896 12 Savings institutions 14,439 17,242 16,943 17,242 17,479 17,738 17,705 17,841 17,928 18,465 18,773 13 Revolving 136,381 159,307 156,425 159,307 162,065 163,462 165,643 167,356 169,154 172,809 174,851 14 Commercial banks 86,757 98,808 97,378 98,808 100,879 101,537 103,152 104,250 105,742 108,309 109,558 15 Retailers 34,320 36,959 36,501 36,959 37,087 37,231 37,408 37,414 37,259 37,526 37,671 16 Gasoline companies 3,264 3,590 3,624 3,590 3,590 3,631 3,657 3,769 3,765 3,713 3,707 17 Savings institutions 8,366 13,279 12,636 13,279 13,601 13,945 14,059 14,309 14,518 15,098 15,494 18 Credit unions 3,674 6,671 6,286 6,671 6,908 7,117 7,368 7,614 7,870 8,162 8,421 19 Mobile home 26,883 25,957 26,604 25,957 25,926 25,857 25,732 25,764 25,703 25,852 25,892 20 Commercial banks 8,926 9,101 9,169 9,101 9,064 9,035 8,993 9,047 8,966 8,933 8,922 21 Finance companies 8,822 7,771 8,211 7,771 7,753 7,679 7,640 7,575 7,578 7,513 7,436 22 Savings institutions 9,135 9,085 9,224 9,085 9,109 9,143 9,099 9,142 9,159 9,406 9,534 23 Other 162,460 160,578 161,225 160,578 161,384 161,842 161,348 161,649 162,043 163,456 163,394 24 Commercial banks 65,549 65,217 65,276 65,217 65,512 65,750 65,094 65,001 64,887 65,710 65,518 25 Finance companies 32,526 34,275 33,984 34,275 34,795 35,144 35,744 36,376 37,168 37,335 37,480 26 Credit unions 34,104 30,920 31,566 30,920 30,795 30,529 30,432 30,297 30,180 30,184 30,041 27 Retailers 5,340 5,823 5,790 5,823 5,839 5,849 5,863 5,880 5,903 5,923 5,964 28 Savings institutions 24,941 24,343 24,609 24,343 24,444 24,570 24,216 24,095 23,904 24,305 24,392 Net change (during period) 29 Total 54,078 41,189 1,802 4,294 6,236 5,036 5,191 3,851 2,982 8,054 2,573 By major holder 30 Commercial banks , 20,495 19,425 695 2,014 3,189 2,591 3,487 2,335 2,380 4,729 1,774 31 Finance companies 22,670 6,374 -308 1,144 1,623 1,251 1,107 463 -62 294 -936 32 Credit unions 4,268 4,874 251 142 597 235 698 609 677 11,,003311 638 33 Retailers 466 3,122 279 491 144 154 191 24 -133 228888 184 34 Savings institutions 7,223 7,068 955 537 684 763 -318 309 122 1,765 918 35 Gasoline companies -1,044 326 -70 -34 0 41 26 112 -4 -52 -6 By major type of credit 36 Automobile 36,473 21,071 651 2,706 2,703 3,250 3,629 1,805 851 2,836 555 37 Commercial banks 8,178 7,531 313 711 860 1,723 2,572 1,275 1,083 1,371 729 38 Credit unions 2,388 5,061 459 403 485 292 544 498 538 734 523 39 Finance companies 22,823 5,676 -528 1,293 1,121 976 546 -105 -856 192 -1,004 40 Savings institutions 3,084 2,803 407 299 237 259 -33 136 87 537 308 41 Revolving 14,368 22,926 1,229 2,882 2,758 1,397 2,181 1,713 1,798 3,655 2,042 42 Commercial banks 11,150 12,051 -38 1,430 2,071 658 1,615 1,098 1,492 2,567 1,249 43 Retailers 47 2,639 231 458 128 144 177 6 -155 267 145 44 Gasoline companies -1,044 326 -70 -34 0 41 26 112 -4 -52 -6 45 Savings institutions 2,078 4,913 714 643 322 344 114 250 209 580 396 46 Credit unions 2,137 2,997 392 385 237 209 251 246 256 292 259 47 Mobile home 49 -926 -94 -647 -31 -69 -125 32 -61 149 40 48 Commercial banks -627 175 -5 -68 -37 -29 -42 54 -81 -33 -11 49 Finance companies -472 -1,051 -17 -440 -18 -74 -39 -65 3 -65 -77 50 Savings institutions 1,148 -50 -72 -139 24 34 -44 43 17 247 128 51 Other 3,188 -1,882 16 -647 806 458 -494 301 394 1,413 -62 52 Commercial banks 1,794 -332 425 -59 295 238 -656 -93 -114 823 -192 53 Finance companies 319 1,749 237 291 520 349 600 632 792 167 145 54 Credit unions -257 -3,184 -600 -646 -125 -266 -97 -135 -117 4 -143 55 Retailers 419 483 48 33 16 10 14 17 23 20 41 56 Savings institutions 913 -598 -94 -266 101 126 -354 -121 -191 401 87 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 1988' IItteemm 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July INTEREST RATES Commercial banks2 1 48-month new car3 12.91 11.33 10.45 n.a. n.a. 11.57 n.a. n.a. 11.51 n.a. 2 24-month personal 15.94 14.82 14.22 n.a. n.a. 13.16 n.a. n.a. 13.20 n.a. 3 120-month mobile home 14.96 13.99 13.38 n.a. n.a. 11.87 n.a. n.a. 12.14 n.a. 4 Credit card 18.69 18.26 17.92 n.a. n.a. 17.16 n.a. n.a. 17.24 n.a. Auto finance companies 5 New car 11.98 9.44 10.73 12.84 12.97 13.06 13.10 13.08 13.07 13.07 6 Used car 17.59 15.95 14.60 17.61 17.78 17.88 17.89 17.17 17.39 17.52 OTHER TERMS4 Maturity (months) 7 New car 51.5 50.0 53.5 35.9 36.0 36.2 36.4 36.9 37.3 37.3 8 Used car 41.4 42.6 45.2 28.5 28.5 28.2 28.0 29.8 29.7 29.6 Loan-to-value ratio 9 New car 91 91 93 87 87 87 86 87 87 87 10 Used car 94 97 98 99 97 97 96 95 96 96 Amount financed (dollars) 11 New car 9,915 10,665 11,203 3,625 3,793 3,906 3,976 3,931 3,863 3,975 12 Used car 6,089 6,555 7,420 2,005 2,055 2,102 2,112 2,212 2,215 2,180 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 • November 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 H2 HI H2 HI H2 HI H2 Nonfinancial sectors 550.2 775533..99 854.8 831.7 672.2 790.4 722.7 986.8 679.1 984.4 623.1 721.4 By sector and instrument 186.6 119988..88 223.6 215.0 143.8 207.2 204.8 242.5 207.2 222.8 152.8 134.9 186.7 199.0 223.7 214.7 142.3 207.3 204.9 242.5 207.4 222.0 151.7 132.9 -.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 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 26 Bonds 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 44..11 5.0 -6.0 -4.0 -1.0 -9.6 -8.2 -3.7 -5.3 -2.7 2.7 -4.7 30 Total domestic plus foreign 567.5 762.2 856.0 840.7 676.0 771.0 716.9 995.0 700.5 980.9 615.7 736.3 Financia 1 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 67.8 74.9 101.5 178.1 168.3 77.3 96.8 106.3 136.1 220.1 180.5 156.5 1.4 30.4 20.6 15.2 30.2 31.5 26.6 14.6 8.7 21.7 8.1 52.3 6666..44 44.4 79.9 163.3 138.8 45.8 70.3 89.5 126.5 200.0 174.0 104.1 1.1 -.4 -.8 2.2 .8 -1.5 -1.5 31.5 77.0 97.4 117.2 116.0 73.5 78.3 116.5 106.2 128.1 138.7 93.2 17.4 36.2 48.6 69.0 65.8 41.5 48.9 48.3 72.1 66.0 80.2 51.4 .4 .1 .1 .3 .4 * .1 .6 -.5 .2 .3 -.1 .7 2.6 4.0 -3.3 .7 2.3 2.9 4.0 4.0 -4.7 -1.9 21.3 24.1 32.0 24.2 28.8 16.0 14.6 49.4 15.1 33.4 49.4 8.2 -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 1.4 30.4 21.7 14.9 29.5 31.5 26.6 16.8 9.5 20.2 6.6 52.3 66.4 44.4 79.9 163.3 138.8 45.8 70.3 89.5 126.5 200.0 174.0 104.1 31.5 77.0 97.4 117.2 116.0 73.5 78.3 116.5 106.2 128.1 138.7 93.2 5.0 7.3 -4.9 -3.6 7.1 -5.3 -4.7 -5.0 -2.7 -4.6 14.1 .1 12.1 15.6 14.5 4.6 3.0 10.8 10.2 18.9 -1.7 10.9 11.5 -5.6 -2.1 22.7 22.3 29.8 35.7 23.3 14.2 30.4 25.5 34.0 27.7 43.8 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 33..77 12.4 12.2 37.1 38.0 15.0 9.5 14.9 31.4 42.8 52.6 23.3 All sectors 666.8 914.1 1,054.9 1,136.0 960.2 921.8 892.1 1,217.8 942.8 1,329.1 935.0 986.0 254.4 273.8 324.2 393.5 312.9 284.5 301.7 346.6 342.5 444.5 334.8 291.4 53.7 50.4 136.4 30.8 34.5 67.0 67.0 205.8 -15.6 77.2 34.9 34.1 36.5 86.1 126.1 192.9 171.5 117.6 116.6 135.7 213.6 172.1 175.8 167.3 183.6 217.4 237.7 300.7 301.9 206.0 221.2 254.2 246.5 354.9 311.6 292.2 56.6 90.4 94.6 65.8 41.8 86.2 95.3 93.9 71.0 60.6 28.3 55.2 26.7 61.1 38.3 69.5 2.4 51.8 17.5 59.2 17.7 121.3 -40.5 45.3 26.9 52.0 52.8 26.4 33.2 28.6 31.8 73.7 21.0 31.7 48.6 17.8 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 61.8 -36.4 19.9 91.6 1.6 -24.9 3.0 36.7 100.8 82.3 84.5 -81.3 27.2 29.3 85.7 163.3 75.4 32.2 64.2 107.1 155.5 171.1 147.2 3.6 34.6 -65.7 -65.8 -71.7 -73.8 -57.1 -61.2 -70.4 -54.7 -88.7 -62.7 -84.9 28.3 -74.5 -81.5 -80.8 -76.5 -69.4 -75.5 -87.5 -68.7 -92.7 -70.0 -83.0 2.6 7.8 12.0 8.3 5.4 8.8 11.2 12.8 7.5 9.1 5.4 5.3 33..77 ..99 33..77 .7 --22..77 33..55 3.1 44..33 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 nonfinancial sectors 550.2 753.9 854.8 831.7 672.2 790.4 722.7 986.8 679.1 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 88..22 --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 11 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 7? 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 ?6 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 Other sources 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 39.7 113399..22 119.5 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 45 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 51 61.8 -36.4 19.9 91.6 1.6 -24.9 3.0 36.7 100.8 8822..33 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 • November 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 Dec. Jan. Feb. Mar. Apr. May June' July Aug." 1 Industrial production 123.7 125.1 129.8 133.9 134.4 134.4 134.7 135.4 136.1 136.5 137.9 138.2 Market groupings 2 Products, total 130.6 133.3 138.3 141.3 142.7 143.4 143.6 144.14 145.0' 145.3 146.2 146.5 3 Final, total 131.0 132.5 136.8 139.8 141.1 141.6 141.8 142.5 143.5' 144.1 144.8 145.0 4 Consumer goods 119.8 124.0 127.7 129.8 131.2 131.3 131.2 131.9 132.7' 133.0 133.7 134.0 5 Equipment 145.8 143.6 148.8 153.1 154.3 155.3 155.9 156.5 157.7' 158.7 159.5 159.7 6 Intermediate 129.3 136.2 143.5 146.5 148.1 149.4 149.9 149.6 150.4' 149.7 150.9 151.5 7 Materials 114.3 113.8 118.2 123.7 123.0 122.1 122.5 123.6 123.9' 124.4 126.5 126.9 Industry groupings 8 Manufacturing 126.4 129.1 134.6 138.9 139.4 139.5 140.0 140.8 141.8' 142.1 143.4 143.7 Capacity utilization (percent)2 9 Manufacturing 80.1 79.7 81.1 82.6 82.7 82.6 82.7 82.9 83.3' 83.3 83.9 83.8 10 Industrial materials industries 80.3 78.6 80.5 83.6 83.0 82.3 82.4 82.9 83.C 83.2 84.4 84.5 11 Construction contracts (1982 = 100)3 150.0 158.0 161.0 157.0 145.0 159.0 154.0 144.0 157.0 165.0 156.0 155.0 12 Nonagricultural employment, total4 118.3 120.7 124.1 126.1 126.4 127.0 127.3 127.7 127.9 128.6 128.9 129.1 13 Goods-producing, total 102.1 100.9 101.8 103.5 103.4 103.8 104.1 104.5 104.6 105.1 105.4 105.4 14 Manufacturing, total 97.8 96.3 96.8 98.3 98.4 98.5 98.6 98.8 99.0 99.3 99.5 99.5 15 Manufacturing, production-worker 92.6 91.2 92.1 93.5 93.5 93.7 93.7 93.9 94.1 94.4 94.6 94.6 16 Service-producing 125.0 129.0 133.4 135.6 136.1 136.7 137.1 137.4 137.7 138.4 138.7 139.1 17 Personal income, total 206.9 219.7 235.1 245.0 244.0 245.5 248.0 248.8 250.2' 251.6 253.3 253.7 18 Wages and salary disbursements 198.8 210.7 226.2 236.8 235.7 237.3 238.9 240.9 242.3 244.2 246.7 247.4 19 Manufacturing 172.8 177.4 183.8 188.2 189.4 190.2 193.6 192.8 193.8 195.4 196.7 196.7 20 Disposable personal income5 205.8 218.9 232.7 242.1 242.4 244.8 247.0 243.3 249.5 251.2 252.8 253.2 21 Retail sales® 189.6 199.5 209.3 214.2 214.5 216.7 220.3 219.4 221.2 222.5 222.8 222.3 Prices7 22 Consumer (1982-84 = 100) 107.6 109.6 113.6 115.4 115.7 116.0 116.5 117.1 117.5 118.0 118.5 119.0 23 Producer finished goods (1982 = 100) ... 104.7 103.2 105.4 105.8 106.3 106.1 106.3' 107.0' 107.5 107.9 108.5 108.8 1. A major revision of the industrial production index and the capacity 5. Based on data in Survey of Current Business (U.S. Department of Comutilization rates was released in July 1985. See "A Revision of the Index of merce). Industrial Production" and accompanying tables that contain revised indexes 6. Based on Bureau of Census data published in Survey of Current Business. (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 7. Data without seasonal adjustment, as published in Monthly Labor Review. (July 1985), pp. 487-501. The revised indexes for January through June 1985 were Seasonally adjusted data for changes in the price indexes may be obtained from shown in the September BULLETIN. the Bureau of Labor Statistics, U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Com- NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, merce, and other sources. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 3. Index of dollar value of total construction contracts, including residential, of Current Business. nonresidential and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the last two months are preliminary and Company, F. W. Dodge Division. estimated, respectively. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1988 CCaatteeggoorryy 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June Julyr Aug. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 180,440 182,822 185,010 186,083 186,219 186,361 186,478 186,600 186,755 186,911 187,033 2 Labor force (including Armed Forces)1 117,695 120,078 122,122 123,436 123,598 123,153 123,569 123,204 123,665 123,866 124,234 3 Civilian labor force 115,461 117,834 119,865 121,175 121,348 120,903 121,323 120,978 121,472 121,684 122,031 4 Nonagricultural industries 103,971 106,434 109,232 110,836 111,182 110,899 111,485 111,160 111,933 112,014 112,029 5 Agriculture 3,179 3,163 3,208 3,293 3,228 3,204 3,228 3,035 3,085 3,046 3,151 Unemployment 6 Number 8,312 8,237 7,425 7,046 6,938 6,801 6,610 6,783 6,455 6,625 6,851 7 Rate (percent of civilian labor force) .... 7.2 7.0 6.2 5.8 5.7 5.6 5.4 5.6 5.3 5.4 5.6 8 Not in labor force 62,745 62,744 62,888 62,647 62,621 63,208 62,909 63,396 63,090 63,045 62,799 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 97,519 99,525 102,310 104,262 104,729 105,020 105,281 105,489 106,057r 106,257 106,476 10 Manufacturing 19,260 18,965 19,065 19,369 19,390 19,405 19,460 19,490 19,544r 19,589 19,584 11 Mining 927 777 721 728 731 733 737 739 740 741 735 12 Contract construction 4,673 4,816 4,998 5,083 5,150 5,192 5,238 5,237 5,308r 5,325 5,328 13 Transportation and public utilities 5,238 5,255 5,385 5,499 5,513 5,530 5,543 5,556 5,582r 5,597 5,609 14 Trade 23,073 23,683 24,381 24,937 25,080 25,111 25,182 25,245 25,353r 25,438 25,480 15 Finance 5,955 6,283 6,549 6,633 6,636 6,651 6,650 6,656 6,679r 6,686 6,696 16 Service 22,000 23,053 24,196 24,795 24,975 25.078 25,163 25,216 25,472r 25,551 25,648 17 Government 16,394 16,693 17,015 17,218 17,254 17,320 17,308 17,350 17,379r 17,330 17,396 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 • November 1988 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1987 1988 1987 198 8 1987 1988 SSeerriieess Q3 Q4 Ql Q2T Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 131.0 133.2 134.5 136.0 161.3 162.2 163.1 164.2 81.2 82.1 82.4 82.8 2 Mining 100.7 104.3 102.5 103.3 129.0 128.4 127.7 127.0 78.0 81.2 80.3 81.4 3 Utilities 111.8 112.3 114.7 111.7 138.8 139.4 139.8 140.1 80.5 80.6 82.0 79.7 4 Manufacturing 135.7 138.1 139.6 141.6 166.7 167.7 168.9 170.2 81.4 82.3 82.7 83.2 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 86.8 6 Advanced processing.. 145.8 147.6 149.7 152.3 182.9 184.1 185.6 186.7 79.7 80.1 80.7 81.5 7 Materials 119.2 122.5 122.5 124.0 147.2 147.8 148.5 149.3 81.0 82.9 82.5 83.0 8 Durable goods 125.7 130.3 131.5 134.2 163.9 164.7 165.7 166.8 76.7 79.1 79.4 80.4 9 Metal materials 83.8 91.4 86.2 88.1 109.4 108.9 108.8 109.1 76.5 84.0 79.2 80.8 10 Nondurable goods .... 128.2 130.1 129.4 130.5 144.7 145.6 146.8 148.3 88.6 89.3 88.1 88.0 11 Textile, paper, and chemical .. 130.5 133.0 131.6 132.6 144.4 145.4 146.7 148.5 90.4 91.5 89.7 89.3 12 Paper 144.6 145.1 145.7 145.9 145.1 146.2 147.6 149.2 99.6 99.2 98.7 97.8 13 Chemical 130.2 135.5 133.5 135.7 150.9 152.0 153.5 155.4 86.3 89.1 87.0 87.3 14 Energy materials 100.0 102.1 100.9 100.4 120.1 119.9 119.7 119.4 83.3 85.2 84.3 84.1 Previous cycle2 Latest cycle3 1987 1987 1988 High Low High Low Aug. Dec. Jan. Feb. Mar. Apr. May' June' July' Aug. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 81.4 82.4 82.5 82.4 82.4 82.7 82.9 83.0 83.6 83.7 16 Mining 92.8 87.8 95.2 76.9 78.2 81.5 80.7 79.5 80.6 82.3 80.8 81.0 83.0 82.9 17 Utilities 95.6 82.9 88.5 78.0 81.3 80.0 82.4 82.6 81.0 79.3 79.7 80.2 80.7 82.4 18 Manufacturing 87.7 69.9 86.5 68.0 81.5 82.6 82.7 82.6 82.7 82.9 83.3 83.3 83.9 83.8 19 Primary processing.... 91.9 68.3 89.1 65.0 85.3 87.6 87.1 86.6 86.9 86.9 87.0 86.6 87.8 87.8 20 Advanced processing.. 86.0 71.1 85.1 69.5 79.9 80.3 80.7 80.7 80.7 81.2 81.7 81.7 82.1 82.1 21 Materials 92.0 70.5 89.1 68.5 81.1 83.6 83.0 82.3 82.4 82.9 83.0 83.2 84.4 84.5 22 Durable goods 91.8 64.4 89.8 60.9 76.6 80.0 79.7 79.3 79.1 79.7 80.8 80.7 81.7 81.8 23 Metal materials 99.2 67.1 93.6 45.7 77.5 86.3 80.1 79.3 78.3 79.3 82.1 80.8 84.2 85.5 24 Nondurable goods .... 91.1 66.7 88.1 70.7 88.6 90.8 88.8 87.3 88.3 88.7 87.7 87.6 89.0 88.6 25 Textile, paper, and chemical 92.8 64.8 89.4 68.8 90.5 93.1 90.8 88.5 89.9 90.1 88.8 88.9 90.3 89.7 •>6 98.4 70.6 97.3 79.9 99.9 101.6 100.6 97.8 97.8 98.1 98.1 97.2 98.7 2277 9922..55 6644..44 8877..99 6633..55 8866..44 9900..99 8877..88 8855..77 8877..55 8888..00 8866..99 8877..00 8888..66 2288 Energy materials 9944..66 8866..99 9944..00 8822..33 8844..00 8844..88 8844..77 8844..11 8844..11 8844..55 8833..33 8844..44 8866..22 86.9 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 11998877 GGrroouuppss tion Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayr June Julyp Aug/ Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 129.8 131.2 131.0 132.5 133.2 133.9 134.4 134.4 134.7 135.4 136.1 136.5 137.9 138.2 ? Products 57.72 138.3 139.9 139.4 140.9 141.0 141.3 142.7 143.4 143.6 144.1 145.0 145.3 146.2 146.5 Final products 44.77 136.8 138.4 137.8 139.3 139.2 139.8 141.1 141.6 141.8 142.5 143.5 144.1 144.8 145.0 4 25.52 127.7 129.4 127.7 129.0 129.4 129.8 131.2 131.3 131.2 131.9 132.7 133.0 133.7 134.0 5 Equipment 19.25 148.8 150.2 151.2 153.0 152.2 153.1 154.3 155.3 155.9 156.5 157.7 158.7 159.5 159.7 6 Intermediate products 12.94 143.4 145.3 144.9 146.1 147.3 146.5 148.1 149.4 149.9 149.6 150.4 149.7 150.9 151.5 7 Materials 42.28 118.2 119.4 119.7 121.2 122.5 123.7 123.0 122.1 122.5 123.6 123.9 124.4 126.5 126.9 Consumer goods 8 Durable consumer goods 6.89 120.2 121.2 118.6 124.3 123.9 120.3 121.7 120.6 120.4 123.3 112255..66 112255..33 112255..44 112255..66 9 Automotive products 2.98 118.5 118.0 114.2 124.3 121.3 115.4 118.7 117.6 120.6 121.9 127.1 127.1 124.2 125.3 10 Autos and trucks 1.79 115.1 112.4 107.2 122.2 118.7 110.2 112.8 111.8 116.4 118.0 126.9 125.3 120.1 121.5 11 Autos, consumer 1.16 90.7 76.8 79.1 94.7 91.9 83.7 77.5 79.5 86.3 91.0 98.9 99.0 93.8 92.6 1? Trucks, consumer .63 160.5 178.4 159.4 173.2 168.5 159.5 178.3 171.6 172.2 168.2 178.9 174.1 168.7 N Auto parts and allied goods 1.19 123.5 126.6 124.8 127.5 125.2 123.3 127.7 126.4 126.9 127.8 127.4 129.8 130.5 113311"" 11 14 Home goods 3.91 121.6 123.6 121.9 124.3 125.8 123.9 124.0 122.8 120.2 124.3 124.4 123.9 126.3 125.7 is Appliances, A/C and TV 1.24 141.5 147.1 141.8 145.7 150.1 142.7 142.2 140.6 132.8 143.2 142.2 138.0 143.3 143.2 16 Appliances and TV 1.19 142.1 145.5 140.6 146.1 150.5 142.6 140.9 141.4 132.7 142.2 143.0 137.1 143.8 17 Carpeting and furniture .96 130.7 132.0 131.6 132.9 133.5 133.9 134.2 132.3 133.1 133.1 135.8 135.9 136.4 18 Miscellaneous home goods 1.71 102.0 102.0 102.2 104.1 103.9 104.8 105.2 104.7 103.9 105.7 105.2 107.0 108.4 19 Nondurable consumer goods 18.63 130.5 132.5 131.0 130.8 131.5 133.3 134.7 135.3 135.1 135.1 135.4 135.9 136.7 137.1 ?n Consumer staples 15.29 137.3 139.2 137.8 137.4 138.3 140.7 142.3 142.9 142.5 142.5 143.1 143.6 144.8 145.3 71 Consumer foods and tobacco 7.80 136.2 137.4 137.0 137.5 137.3 139.2 140.3 140.8 139.4 138.3 139.2 139.5 141.0 V Nonfood staples 7.49 138.5 141.2 138.6 137.2 139.4 142.2 144.3 145.0 145.7 146.8 147.0 147.8 148.8 IISSAAII ?3 Consumer chemical products 2.75 162.9 167.4 163.6 160.0 163.5 167.7 170.7 171.7 172.7 175.6 177.9 179.5 182.0 ?4 Consumer paper products 1.88 151.8 153.9 153.2 151.8 152.8 157.0 157.1 157.5 159.1 161.4 162.4 162.6 161.3 ?s Consumer energy 2.86 106.3 107.7 105.0 105.8 107.4 108.0 110.6 111.3 111.0 109.6 107.3 107.7 108.7 76 Consumer fuel 1.44 93.1 91.4 91.6 92.4 93.2 95.4 95.4 97.0 97.9 98.9 94.3 93.0 94.2 27 Residential utilities 1.42 119.8 124.3 118.7 119.4 121.8 120.7 126.0 125.8 124.5 120.5 120.6 122.6 Equipment 78 Business and defense equipment 18.01 153.6 154.5 155.2 157.2 156.6 157.8 159.2 160.3 160.8 161.4 162.7 116633..77 116644..66 116644..88 79 Business equipment 14.34 144.5 145.6 146.3 148.7 148.3 149.8 151.2 152.4 153.3 154.6 156.9 158.4 159.3 159.7 30 Construction, mining, and farm 2.08 62.2 66.4 66.1 66.5 66.3 67.4 67.1 67.6 68.3 70.8 71.8 72.4 72.6 72.9 31 Manufacturing 3.27 117.9 120.9 122.0 120.5 120.6 122.2 125.4 124.9 127.0 127.7 128.3 130.3 133.8 136.0 3? Power 1.27 82.6 82.8 81.1 83.0 83.1 84.2 86.2 88.3 87.8 87.0 87.4 88.3 90.0 90.6 33 5.22 226.5 227.7 229.1 232.4 232.1 235.5 238.0 240.3 239.9 241.5 245.7 247.1 247.2 246.6 34 Transit 2.49 108.4 104.7 105.1 112.5 111.2 109.1 106.5 108.2 111.1 112.3 115.3 116.9 116.7 116.7 35 Defense and space equipment 3.67 188.9 189.1 189.8 190.3 188.7 188.9 190.6 191.0 189.9 187.9 185.5 184.6 185.4 184.9 Intermediate products 36 Construction supplies 5.95 131.5 132.5 132.3 133.3 134.2 133.8 136.8 137.7 137.3 137.6 138.8 113377..33 113377..66 113388..00 37 Business supplies 6.99 153.5 156.3 155.6 157.1 158.4 157.4 157.8 159.4 160.7 159.9 160.3 160.3 162.3 38 General business supplies 5.67 158.6 161.0 160.9 162.3 164.3 163.3 163.1 165.0 166.6 165.7 165.5 165.7 168.0 39 Commercial energy products 1.31 131.1 135.8 132.7 134.6 132.9 131.8 135.0 135.3 135.3 134.6 137.8 137.0 137.5 Materials 40 Durable goods materials 20.50 125.0 125.5 126.4 128.7 130.2 132.0 131.8 131.4 131.3 132.7 134.8 113355..00 113366..99 113377..33 41 Durable consumer parts 4.92 100.9 99.6 99.0 102.3 103.1 104.6 104.7 104.4 103.5 106.2 110.0 110.3 110.2 109.8 4? Equipment parts 5.94 159.0 159.5 161.1 162.2 163.2 165.3 167.4 167.6 167.3 168.9 170.8 171.6 173.5 173.8 43 Durable materials n.e.c 9.64 116.4 117.9 118.9 121.6 123.6 125.5 123.7 123.0 123.4 124.0 125.3 125.0 128.0 128.8 44 Basic metal materials 4.64 86.7 90.4 91.3 95.3 96.5 100.0 92.9 91.4 90.5 91.6 94.8 93.7 97.6 99.2 45 Nondurable goods materials 10.09 125.8 128.3 128.6 128.2 129.6 132.5 129.9 128.1 130.1 131.1 130.1 130.4 132.9 132.7 46 Textile, paper, and chemical 7.53 127.6 130.6 131.2 131.0 132.3 135.6 132.7 129.9 132.4 133.3 131.9 132.5 113355..11 113344..88 47 Textile materials 1.52 111.7 116.7 116.0 113.0 112.7 113.6 112.6 110.2 112.7 111.9 107.5 110.0 110.6 48 Pulp and paper materials 1.55 141.0 145.0 143.3 142.0 144.4 149.0 148.0 144.4 144.8 145.8 146.4 145.5 148.3 49 Chemical materials 4.46 128.4 130.4 132.2 133.4 134.7 138.4 134.2 131.5 134.8 136.2 135.1 135.7 138.9 50 Miscellaneous nondurable materials ... 2.57 120.4 121.4 120.9 119.7 121.7 123.3 121.8 123.0 123.2 124.6 125.1 124.2 51 Energy materials 11.69 99.8 100.9 100.2 101.8 102.8 101.7 101.4 100.6 100.6 101.0 99.5 100.7 102.8 103.5 5? Primary energy 7.57 105.0 104.6 104.6 106.8 108.4 107.7 107.3 104.8 105.0 106.7 104.0 105.2 107.5 53 Converted fuel materials 4.12 90.3 94.1 92.2 92.7 92.6 90.7 90.6 93.0 92.6 90.5 91.2 92.5 94.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • November 1988 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1987 1988 1977 Groups c S o I d C e aa 19 vv 8 gg 7 .. Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June Julyp Aug/ Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 104.3 105.4 105.4 106.8 107.9 107.3 107.8 106.8 106.7 107.1 106.0 106.3 108.1 108.8 2 Mining 9.83 100.7 100.9 101.9 103.6 104.6 104.6 103.3 101.5 102.7 104.7 102.6 102.6 104.9 104.6 3 Utilities 5.96 110.3 112.9 111.2 112.1 113.2 111.7 115.2 115.6 113.3 lll.O 111.6 112.4 113.3 115.6 4 Manufacturing 84.21 134.6 135.9 135.7 137.3 137.9 138.9 139.4 139.5 140.0 140.8 141.8 142.1 143.4 143.7 5 Nondurable 35.11 136.7 138.8 138.6 138.1 139.6 141.3 141.4 141.1 141.7 142.3 142.1 142.7 144.1 144.2 6 Durable 49.10 133.1 133.8 133.7 136.8 136.7 137.3 137.9 138.4 138.8 139.7 141.5 141.7 142.9 143.3 Mining 7 Metal 10 .50 77.5 79.3 86.5 85.6 90.4 96.5 91.5 83.9 84.9 86.9 86.0 82.3 8 Coal 11.12 1.60 131.8 130.5 133.3 140.3 142.9 140.6 140.2 133.7 129.1 136.0 127.8 126.9 141.5 138.4 9 Oil and gas extraction 13 7.07 92.7 93.0 93.3 94.1 94.2 94.1 93.1 92.4 94.8 95.5 94.6 95.3 94.4 10 Stone and earth minerals 14 .66 128.2 130.3 130.0 131.0 134.1 135.6 132.1 134.3 136.9 141.2 140.1 137.4 142.9 Nondurable manufactures 11 Foods 20 7.96 137.7 138.8 139.5 138.0 138.9 140.1 141.2 141.9 141.1 140.3 141.0 141.5 142.8 12 Tobacco products 21 .62 103.4 110.4 101.7 103.7 106.5 110.5 105.8 107.0 107.2 107.2 107.2 104.5 13 Textile mill products 22 2.29 115.8 119.8 118.2 116.8 117.3 118.2 116.2 115.3 117.0 117.3 114.6 116.1 116.4 14 Apparel products 23 2.79 107.4 108.4 107.6 108.0 109.4 107.8 108.7 108.5 108.7 109.2 108.6 109.3 15 Paper and products 26 3.15 144.4 148.9 147.4 146.0 148.3 150.6 149.9 148.0 149.1 149.2 149.5 148.5 151.3 16 Printing and publishing 27 4.54 172.0 174.7 174.9 175.2 175.7 176.9 177.5 178.7 180.4 181.8 180.7 182.0 182.9 183.5 17 Chemicals and products 28 8.05 140.1 142.3 142.4 141.5 144.4 147.9 147.9 145.4 146.4 148.9 149.1 150.4 153.2 18 Petroleum products 29 2.40 93.5 92.9 93.5 94.6 93.3 96.1 96.3 95.9 98.4 98.5 95.2 94.1 94.3 94.8 19 Rubber and plastic products 30 2.80 163.6 164.8 165.2 166.7 169.9 170.6 170.5 172.3 172.2 172.3 173.4 174.4 176.2 20 Leather and products 31 .53 60.0 61.3 60.7 59.6 60.7 57.5 58.3 59.7 59.5 58.0 57.1 58.9 56.9 Durable manufactures 21 Lumber and products 24 2.30 130.3 131.1 126.9 129.8 134.0 133.6 136.3 139.0 137.8 138.0 139.8 136.2 134.4 22 Furniture and fixtures 25 1.27 152.8 155.2 155.9 156.0 158.5 159.4 158.0 158.3 159.4 159.2 160.5 161.2 163.2 23 Clay, glass, and stone products. 32 2.72 119.1 116.5 118.6 118.9 120.5 120.1 120.4 121.6 122.5 121.4 121.5 123.3 123.8 24 Primary metals 33 5.33 81.5 85.1 84.5 90.6 90.2 90.6 86.5 86.4 85.1 85.3 89.2 87.5 91.4 93.0 25 Iron and steel 331.2 3.49 70.8 76.0 74.6 82.0 79.7 81.9 77.8 77.4 74.2 74.5 78.6 74.2 80.0 26 Fabricated metal products 34 6.46 111.0 110.1 111.1 113.5 113.6 115.8 117.1 117.6 118.8 118.8 119.8 120.6 122.4 122.8 27 Nonelectrical machinery 35 9.54 152.7 154.3 156.6 158.0 157.2 161.0 162.9 163.6 164.6 167.2 170.3 171.3 172.6 172.6 28 Electrical machinery 36 7.15 172.3 174.3 173.4 175.5 175.6 175.9 177.4 177.8 176.6 178.7 179.1 179.5 181.3 181.7 29 Transportation equipment 37 9.13 129.2 128.1 125.5 132.0 130.4 128.1 128.6 128.4 130.0 130.4 133.1 132.8 132.4 132.3 30 Motor vehicles and parts 371 5.25 111.8 109.1 105.6 116.0 114.0 110.2 109.7 109.3 113.0 114.8 119.6 119.1 116.4 116.9 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 152.8 153.9 152.5 153.7 152.7 152.4 154.2 154.5 153.0 151.5 151.5 151.3 154.0 153.2 32 Instruments 38 2.66 143.9 146.3 145.6 146.7 147.8 145.5 148.2 149.2 149.7 150.5 151.3 152.8 155.7 157.0 33 Miscellaneous manufactures.... 39 1.46 102.6 102.2 102.1 104.6 104.5 105.6 105.0 104.4 105.1 105.9 106.0 107.6 108.4 Utilities 34 Electric 44..1177 112266..66 113322..00 112277..55 112266..88 112277..55 112255..66 113300..33 113300..77 112299..00 112277..66 112299..77 113311..33 113322..55 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total. S17.5 1,735.8 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 1,820.1 1,814.5 1,818.0 1,824.3 36 Final 405.7 1,333.8 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 1,395.4 1,397.0 1,402.1 37 Consumer goods. 272.7 866.0 866.4 856.9 876.6 879.8 881.2 893.6 893.7 893.2 899.1 898.9 894.2 892.5 897.0 38 Equipment 133.0 467.8 468.5 473.4 484.4 480.1 478.2 481.9 487.3 492.7 494.7 498.3 501.2 504.5 505.1 39 Intermediate 111.9 402.0 406.8 405.6 413.2 412.5 419.4 415.1 416.5 421.6 418.4 423.0 419.1 421.0 422.2 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June' July Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,733 1,750 1,535 1,453 1,459 1,372 1,248 1,429 1,476 1,449 1,436 1,493 1,420 2 1-family 957 1,071 1,024 962 971 957 918 1,003 1,030 960 982 1,002 984 3 2-or-more-family 777 679 511 491 488 415 330 426 446 489 454 491 436 4 Started 1,742 1,805 1,621 1,538 1,661 1,399 1,382 1,519 1,529 1,584 1,393 1,465 1,485 1-family 1,072 1,179 1,146 1,105 1,129 1,035 1,016 1,102 1,172 1,093 1,004 1,092 1,064 6 2-or-more-family 669 626 474 433 532 364 366 417 357 491 389 373 421 7 Under construction, end of period1 . 1,063 1,074 987 1,044 1,042 1,016 1,008 983 999 999 984 984 981 8 1-family 539 583 591 627 625 618 614 596 617 622 610 610 609 9 2-or-more-family 524 490 397 417 417 398 394 387 382 377 374 374 372 10 Completed 1,703 1,756 1,669 1,565 1,571 1,624 1,550 1,452 1,598 1,665 1,450 1,502 1,506 11 1-family 1,072 1,120 1,123 1,114 1,088 1,104 1,098 1,043 1,094 1,059 1,090 1,096 1,062 12 2-or-more-family 631 637 546 451 483 520 452 409 504 606 360 406 444 13 Mobile homes shipped 284 244 233 234 222 227 200 208 212 213 216 230 206 Merchant builder activity in 1-family units 14 Number sold 688 748 672 653 625 586 579 648 664 681 675 720 686 15 Number for sale, end of period 350 361 370 360 362 365 368 359 372 367r 370 365 365 Price (thousands of dollars)2 Median 16 Units sold 84.3 92.2 104.7 106.5 117.0 111.8 119.0 110.9 108.9 111.0 111.0 117.0 123.5 17 Units sold 101.0 112.2 127.9 125.8 139.2 136.2 144.4 137.6 133.2 135.6 133.4 139.3 146.0 EXISTING UNITS (1-family) 18 Number sold 3,217 3,566 3,530 3,470 3,370 3,330 3,170 3,250 3,330 3,520 3,590 3,820 3,630 Price of units sold (thousands of dollars) 19 Median 75.4 80.3 85.6 84.6 85.0 85.4 87.4 88.1 87.9 87.3 88.8 9900..22 9900..77 20 Average 90.6 98.3 106.2 106.1 106.6 107.1 108.7 110.4 110.7 108.7 111.9 115.4 114.8 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 355,735 386,093 398,848 400,818 407,066 410,870 395,264 392,456 403,555 399,163 402,268 396,193 401,000 n Private 291,665 314,651 323,819 325,915 331,497 331,641 321,550 317,754 324,257 319,979 322,157 317,956 319,779 7,3 Residential 158,475 187,147 194,772 194,547 195,599 195,822 195,168 192,097 195,554 191,665 189,874 187,267 188,266 74 Nonresidential, total 113333,,119900 112277,,550044 129,047 131,368 135,898 135,819 126,382 125,657 128,703 128,314 132,283 130,689 131,513 Buildings 75 Industrial 15,769 13,747 13,707 13,968 14,512 14,130 13,480 13,489 14,546 15,235 15,690 13,868 13,756 76 Commercial 59,629 56,762 55,448 56,890 59,374 55,831 53,555 53,571 54,843 56,023 57,390 56,749 57,311 77 Other 12,619 13,216 15,464 16,018 16,692 17,708 16,954 17,101 17,301 16,409 16,882 16,840 16,616 28 Public utilities and other 45,173 43,779 44,428 44,492 45,320 48,150 42,393 41,496 42,013 40,647 42,321 43,232 43,830 79 Public 64,070 71,437 75,028 74,903 75,569 79,228 73,715 74,702 79,298 79,184 80,111 78,237 81,221 30 Military 3,235 3,868 4,327 4,010 5,080 4,879 4,172 3,280 4,216 4,414 4,297 4,657 4,362 31 Highway 21,540 22,681 22,758 24,374 23,439 25,274 24,808 25,348 26,963 27,276 25,536 24,973 28,227 32 Conservation and development... 4,777 4,646 5,162 5,144 4,871 5,759 4,038 4,535 4,899 4,470 4,758 4,862 5,021 33 Other 34,518 40,242 42,781 41,375 42,179 43,316 40,697 41,539 43,220 43,024 45,520 43,745 43,611 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 • November 1988 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted C m h o a n n t g h e s fr e o a m rli e 1 r 2 Change ( f a r t o a m n n 3 u m al o r n a t t h e s ) earlier Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm 1987 1988 1988 AAAuuuggg... 11998877 11998888 111999888888 AAuugg.. AAuugg.. Sept. Dec. Mar. June Apr. May June July Aug. CONSUMER PRICES2 (1982-84=100) 1 All items 4.3 4.0 3.9 3.2 4.2 4.5 .4 .3 .3 .4 .4 119.0 ?. Food 3.5 4.9 2.1 2.8 1.4 7.1 .7 .4 .6 1.0 .6 119.4 3 Energy items 8.4 -.4 6.0 -3.9 -4.9 4.2 .8 .5 -.2 .3 .9 92.3 4 All items less food and energy 4.2 4.4 3.8 4.4 5.4 4.3 .4 .2 .4 .3 .2 123.8 5 Commodities 3.0 3.0 2.9 2.5 4.7 3.9 .6 .2 .2 .3 -.3 115.2 6 Services 4.9 5.0 4.3 5.0 5.9 4.5 .2 .4 .5 .4 .5 128.8 PRODUCER PRICES (1982=100) 7 Finished goods 3.1 2.7 3.8 -1.9 2.7 4.6 A,4R " .4R .4 .5 .6 108.8 8 Consumer foods -.1 3.7 -1.8 -5.7 6.0 9.4 .8R 1.1 .4 .4 113.6 9 Consumer energy 17.1 -4.8 16.5 -9.6 -18.5 4.8 2.7 .2 -1.6 .0 2.2 61.8 10 Other consumer goods 2.9 4.2 4.6 1.7 5.7 2.4 .C .3 .3 .9 .3 119.1 11 Capital equipment 1.9 2.5 4.0 -.7 3.2 3.6 .2 .4 .4 .1 .4 114.5 12 Intermediate materials3 4.6 5.3 5.6 4.3 4.3 7.4 ..7r .6 .6 .6 .4 108.1 13 Excluding energy 3.1 7.3 5.3 7.2 8.2 6.9 .4R .5 .7 .4 116.1 Crude materials .2 14 Foods 1.0 13.4 -4.8 -4.8 17.7 30.5 2.4 4.2 1.5 2.2 110.1 15 Energy 21.6 -15.1 5.9 -15.2 -24.1 12.2 2.8R 1.1' -1.0 -5.4 .1 67.0 16 Other 19.8 12.7 39.4 18.0 15.9 -7.0 -,7R -1.3R .2 1.9 .9 133.8 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 11998855 11998866 11998877 Q2 Q3 Q4 Ql Q2r 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 4,823.8 By source 2 4 5 3 Pe D N r S s e u o o r n r n v a d a i b c l u l e e r c s a o b g n o le s o u d g m s o p o t d io s n expenditures 2 1, ,6 3 9 3 4 2 7 1 9 5 1 2 . . . . 2 6 0 2 2 1 , , 8 4 4 9 0 5 0 4 7 7 6 3 . . . . 5 3 6 5 3 1, , 5 4 9 0 9 9 2 12 2 7 1. . . . 9 3 1 9 2 1, , 5 9 4 9 7 9 2 9 6 0 2 5 . . . . 4 2 5 3 3 1 1, , , 0 6 0 4 0 5 1 4 0 6 8 1. . . . 4 2 6 2 3 1 1 , . . 0 6 0 4 7 4 2 12 6 2 1. . . . 9 4 3 0 3 1 1 . , . 6 0 1 4 2 7 1 3 6 8 4 7 . . . . 2 8 1 1 3 1 1, , , 7 0 1 4 9 0 3 4 4 6 8 9 . . . . 6 6 2 8 6 Gross private domestic investment 643.1 665.9 712.9 698.5 702.8 764.9 763.4 758.1 7 Fixed investment 631.8 650.4 673.7 665.8 688.3 692.9 698.1 714.4 8 Nonresidential 442.9 433.9 446.8 438.2 462.1 464.1 471.5 487.8 9 Structures 153.2 138.5 139.5 134.4 143.0 147.7 140.1 142.3 10 Producers' durable equipment 289.7 295.4 307.3 303.8 319.1 316.3 331.3 345.5 11 Residential structures 188.8 216.6 226.9 227.6 226.2 228.8 226.6 226.5 12 Change in business inventories 11.3 15.5 39.2 32.7 14.5 72.0 65.3 43.7 13 Nonfarm 14.6 17.4 40.7 31.4 17.8 72.8 49.4 33.1 14 Net exports of goods and services -78.0 -104.4 -123.0 -122.2 -125.2 -125.7 -112.1 -90.4 15 Exports 370.9 378.4 428.0 416.8 440.4 459.7 487.8 507.1 16 Imports 448.9 482.8 551.1 539.0 565.6 585.4 599.9 597.5 17 Government purchases of goods and services .. 820.8 871.2 924.7 915.7 932.2 947.3 945.2 961.6 18 Federal 355.2 366.2 382.0 377.5 386.3 391.4 377.7 382.2 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 4,780.1 21 Goods 1.641.2 1,697.9 1,792.5 1.774.6 1,812.9 1,849.4 1,879.4 1,928.0 22 Durable 706.5 725.3 776.3 767.1 792.2 808.7 819.3 849.5 23 Nondurable 934.6 972.6 1,016.3 1,007.5 1,020.7 1,040.7 1,060.1 1,078.5 24 Services 1.968.3 2,118.3 2,295.7 2,276.2 2,314.4 2,363.9 2,405.2 2,451.5 25 Structures 405.4 424.0 438.4 433.4 440.6 449.5 439.9 444.3 26 Change in business inventories 11.3 15.5 39.2 32.7 14.5 72.0 65.3 43.7 27 Durable goods 6.4 4.2 26.6 24.3 2.9 50.5 26.6 17.8 28 Nondurable goods 4.9 11.3 12.6 8.4 11.6 21.6 38.6 25.9 29 MEMO 3,618.7 3,721.7 3,847.0 3,823.0 3,865.3 3,923.0 3,956.1 3,985.2 Total GNP in 1982 dollars NATIONAL INCOME 3,234.0 3,437.1 3,678.7 3,631.8 3,708.0 3,802.0 3,850.8 3,928.8 30 Total 2,367.5 2,507.1 2,683.4 2,652.0 2,702.8 2,769.9 2,816.4 2,874.0 31 Compensation of employees 1,975.2 2,094.0 2,248.4 2,220.6 2,265.3 2,324.8 2,358.7 2.410.0 32 Wages and salaries 372.0 393.7 420.1 416.9 423.2 429.2 437.1 442.9 33 Government and government enterprises .. 1,603.4 1,700.3 1,828.3 1,803.7 1,842.1 1,895.6 1,921.6 1.967.1 34 Other 392.4 413.1 435.0 431.3 437.5 445.1 457.7 464.0 35 Supplement to wages and salaries 204.8 217.0 227.1 225.0 228.2 232.7 243.1 247.5 36 Employer contributions for social insurance 187.6 196.1 207.9 206.4 209.3 212.4 214.6 216.5 37 Other labor income 38 Proprietors'income1 255.9 286.7 312.9 308.9 306.8 326.0 323.9 328.8 39 Business and professional 225.6 250.3 270.0 265.9 271.5 279.0 279.2 285.3 40 Farm1 30.2 36.4 43.0 43.0 35.2 47.0 44.7 43.4 41 Rental income of persons2 9.2 12.4 18.4 17.8 18.1 20.5 20.5 19.1 42 Corporate profits' 282.3 298.9 310.4 305.2 322.0 316.1 316.2 326.5 43 Profits before tax 224.3 236.4 276.7 273.7 289.4 281.9 286.2 305.9 44 Inventory valuation adjustment -1.7 8.3 -18.0 -20.0 -19.5 -18.2 -19.4 -27.4 45 Capital consumption adjustment 59.7 54.2 51.7 51.5 52.1 52.4 49.4 48.0 46 Net interest 319.0 331.9 353.6 348.1 358.3 369.5 373.9 380.6 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • November 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 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 4,022.4 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 473.2 498.9 531.7 526.1 536.8 547.3 558.2 572.1 6 Service industries 521.3 575.9 646.8 634.8 652.4 682.8 687.4 705.9 7 Government and government enterprises 372.0 393.7 420.1 416.9 423.0 429.5 437.1 442.9 8 Other labor income 187.6 196.1 207.9 206.4 209.3 212.4 214.6 216.5 9 Proprietors' income 255.9 286.7 312.9 308.9 306.8 326.0 323.9 328.8 10 Business and professional1 225.6 250.3 270.0 265.9 271.5 279.0 279.2 285.3 11 Farm1 30.2 36.4 43.0 43.0 35.2 47.0 44.7 43.4 12 Rental income of persons 9.2 12.4 18.4 17.8 18.1 20.5 20.5 19.1 13 Dividends 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 489.8 521.1 548.8 547.8 551.7 556.8 576.3 582.8 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 4,022.4 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 3,421.5 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 3,293.6 22 EQUALS: Personal saving 125.4 121.7 104.2 69.5 72.6 144.0 149.9 127.8 MEMO Per capita (1982 dollars) 23 Gross national product 15,120.6 15,401.2 15,770.0 15,700.2 15,834.9 16,031.8 16,127.6 1166,,221133..11 24 Personal consumption expenditures 9,839.4 10,160.1 10,334.3 10,335.1 10,426.8 10,346.1 10,435.4 10,492.2 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 11,237.0 26 Saving rate (percent) 4.4 4.0 3.2 2.2 2.3 4.3 4.4 3.7 GROSS SAVING 27 Gross saving 533.5 537.2 560.4 542.4 556.8 603.4 627.0 634.1 28 Gross private saving 665.3 681.6 665.3 625.0 642.2 714.1 726.3 711.2 29 Personal saving 125.4 121.7 104.2 69.5 72.6 144.0 149.9 127.8 30 Undistributed corporate profits' 102.6 104.1 81.1 78.5 85.0 80.5 78.1 8800..11 31 Corporate inventory valuation adjustment -1.7 8.3 -18.0 -20.0 -19.5 -18.2 -19.4 --2277..44 Capital consumption allowances 32 Corporate 268.6 282.4 297.5 229955..44 229999..77 330033..77 330099..88 331133..33 33 Noncorporate 168.7 173.5 182.5 181.6 184.9 185.8 188.5 189.9 34 Government surplus, or deficit (-), national income and product accounts -131.8 -144.4 -104.9 -82.6 -85.5 -110.7 -99.2 --7777..11 -196.9 -205.6 -157.8 -144.0 -138.3 -160.4 -155.1 -133.3 36 State and local 65.1 61.2 52.9 61.4 52.9 49.7 55.8 56.2 37 Gross investment 528.7 523.6 552.3 539.9 541.7 597.0 612.0 629.0 38 Gross private domestic 643.1 665.9 712.9 698.5 702.8 764.9 763.4 758.1 -114.4 -142.4 -160.6 -158.6 -161.1 -167.8 -151.3 -129.1 40 Statistical discrepancy -4.8 -13.6 -8.1 -2.5 -15.1 -6.4 -15.0 -5.1 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1987 1988 Item credits or debits 1987 Q2 Q3 Q4 Q1 Q2" 1 Balance on current account -115,102 -138,827 -153,964 -40,852 -41,967 -33,523 -36,938 -33,336 2 Not seasonally adjusted -41,799 -47,330 -31,803 -32,179 -34,228 3 Merchandise trade balance -I 22,148 - i44,547 —i60,280 -39,552 -39,665 -41,192 -35,184 -29,937 4 Merchandise exports 215,935 223,969 249,570 59,864 64,902 68,013 75,300 79,665 5 Merchandise imports -338,083 -368,516 -409,850 -99,416 -104,567 -109,205 -110,484 -109,602 6 Military transactions, net -3,431 -4,372 -2,369 -179 -851 -1,261 -1,033 -865 7 Investment income, net3 25,936 23,143 20,374 1,692 1,067 12,539 1,159 -1,747 8 Other service transactions, net -449 2,257 1,755 13 87 479 1,241 2,120 10 9 U Re .S m . i g tt o a v n e c r e n s m , e p n e t n s g i r o a n n s t , s a ( n e d x c o lu th d e in r g t r m an il s i f t e a r r s y ) -1 -3 1 , , 7 22 8 3 6 -1 - 1 3 , , 7 5 3 7 8 1 -1 -3 0 , , 4 0 3 1 4 1 -2 - , 8 2 8 4 4 1 -2 - , 8 12 5 5 5 -3 - , 8 5 2 4 8 5 -2 - , 8 2 8 39 2 -2 - , 7 1 8 2 7 0 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -2,829 -2,000 1,162 -170 252 1,012 -814 -828 1 1 3 2 Ch G a o n l g d e in U.S. official reserve assets (increase, -) -3,858 0 312 0 9,149 0 3,419 0 32 0 3,741 0 1,503 0 39 0 14 Special drawing rights (SDRs) -897 -246 -509 -171 -210 -205 155 180 15 Reserve position in International Monetary Fund 908 1,500 2,070 335 407 722 446 69 16 Foreign currencies -3,869 -942 7,588 3,255 -165 3,225 901 -210 17 Change in U.S. private assets abroad (increase, -)3 -25,949 -96,303 -86,298 -26,127 -25,576 -43,645 5,903 -12,497 18 Bank-reported claims -1,323 -59,975 -40,531 -22,422 -16,519 -23,460 17,108 -13,999 2 19 0 N U o .S n . b p an u k rc -r h e a p s o e r o te f d f o c r l e a i i g m n s securities, net -7,4 9 8 2 1 3 - - 4 4, , 2 2 9 20 7 -4 3 , , 4 14 56 5 2, - 6 8 0 8 3 - -9 2 7 15 2 -1 1 , , 7 2 5 4 7 8 -4 - ,4 3 6 15 7 "i,610 21 U.S. direct investments abroad, net3 -18,068 -27,811 -44,456 -6,220 -7,870 -19,676 -6,423 -108 22 Chan ( g in e c i r n e a f s o e r , e i + g ) n official assets in the United States -1,196 35,507 44,968 10,332 611 20,047 24,670 5,832 23 U.S. Treasury securities -838 34,364 43,361 11,083 842 19,243 27,701 5,793 2 2 4 5 O O t th h e e r r U U . . S S . . g g o o v v e e r r n n m m e e n n t t o li b ab li i g l a it t i i e o s n 4 s -3 7 0 6 1 7 -1 2 , , 2 0 1 5 4 4 -2 1 , , 8 5 2 7 4 0 -1,3 2 0 5 9 6 -2 7 8 1 7 4 6 1 6 0 2 8 - - 1 12 2 3 1 -5 1 7 9 0 2 26 Other U.S. liabilities reported by U.S. banks 645 1,187 3,901 615 -34 -223 -1,954 834 27 Other foreign official assets -1,469 -1,040 -313 -624 257 -833 -417 28 Change in foreign private assets in the United States (increase, +)3 131,096 185,746 166,521 40,327 71,047 36,025 1,395 56,507 29 U.S. bank-reported liabilities 41,045 79,783 87,778 17,961 46,153 29,764 -17,233 28,839 30 U.S. nonbank-reported liabilities -366 -2,906 2,150 1,570 -116 -1,000 2,015 31 Foreign private purchases of U.S. Treasury securities, net 20,433 3,809 -7,596 -2,431 -2,835 496 6,887 '4,473 32 Foreign purchases of other U.S. securities, net 50,962 70,969 42,213 15,998 12,819 -4,977 2,379 9,823 33 Foreign direct investments in the United States, net3 19,022 34,091 41,976 7,229 15,026 11,742 7,347 13,372 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 17,839 15,566 18,461 13,071 -4,399 16,342 4,282 -15,717 36 Owing to seasonal adjustments -2,615 -4,658 3,138 3,747 -3,456 37 Statistical discrepancy in recorded data before seasonal adjustment 17,839 15,566 18,461 15,686 259 13,204 -12,261 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -3,858 312 9,149 3,419 32 3,741 1,503 39 39 Foreign official assets in the United States (increase, +) excluding line 25 -1,963 33,453 47,792 11,641 19,939 24,793 6,402 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 -2,681 -1,723 -2,750 -1,375 -1,782 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 46 101 58 26 13 12 45 10 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • November 1988 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are not seasonally adjusted. 1988 IItteemm 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May Juner July 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 218,815 227,159 254,122 22,990 24,139 29,106 26,335 28,143 26,839 25,051 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 C.I.F. value 352,463 382,295 424,442 34,523 37,133 38,633 36,528 37,657 40,158 37,087 3 Customs value 345,276 365,438 406,241 32,995 35,569 37,030 35,027 36,147 38,590 35,583 Trade balance 4 C.I.F. value -133,648 -155,137 -170,320 -11,533 -12,994 -9,528 -10,193 -9,514 -13,319 -12,036 5 Customs value -132,129 -138,279 -152,119 -10,005 -11,430 -7,924 -8,692 -8,004 -11,751 -10,531 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; the timing. On the export side, the largest adjustment is the exclusion of military sales previous month is revised to reflect late documents. Total exports and the trade (which are combined with other military transactions and reported separately in balance reflect adjustments for undocumented exports 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 Feb. Mar. Apr. May June July Aug/ 1 Total 43,186 48,511 45,798 43,064 43,186 42,730 41,949 41,028 43,876 47,778 2 Gold stock, including Exchange Stabilization Fund1 11,090 11,064 11,078 11,063 11,063 11,063 11,063 11,063 11,063 11,061 3 Special drawing rights2-3 7,293 8,395 10,283 9,761 9,899 9,589 9,543 9,180 8,984 9,058 4 Reserve position in International Monetary Fund 11,947 11,730 11,349 10,445 10,645 10,803 10,431 9,992 9,773 9,642 5 Foreign currencies4 12,856 17,322 13,088 11,795 11,579 11,275 10,912 10,793 14,056 18,017 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- 3. Includes allocations by the International Monetary Fund of SDRs as follows: tional accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 3.13. Gold stock is valued at $42.22 per fine troy ounce. 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based million on Jan. 1, 1981; plus transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4. Valued at current market exchange rates. From July 1974 through December 1980, 16 currencies were used; from January 1981, 5 currencies have been used. The U.S. SDR holdiings and reserve position in the IMF also are valued on this basis beginning July 1974. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1988 AAsssseettss 11998855 11998866 11998877 Feb. Mar. Apr. May June July Aug.p 1 Deposits 480 287 244 343 534 215 297 381 269 230 Assets held in custody 2 U.S. Treasury securities 121,004 155,835 195,126 215,308 222,407 224,725 226,341 223,127 223,2% 221,715 3 Earmarked gold 14,245 14,048 13,919 13,824 13,773 13,719 13,654 13,662 13,666 13,658 1. Excludes deposits and U.S. Treasury securities held for international and 3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce, regional organizations. Earmarked gold is gold held for foreign and international accounts and is not 2. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. included in the gold stock of the United States. Treasury securities payable in dollars and in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A55 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1988 AAsssseett aaccccoouunntt 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July" All foreign countries 1 Total, all currencies 458,012 456,628 518,604 503,254 495,003 502,398 488,939 492,844 487,677 488,407 7 Claims on United States 119,706 114,563 138,034 131,376 131,032' 135,504' 139,176' 141,789 140,932 147,662 3 Parent bank 87,201 83,492 105,845 95,482 94,348 99,109 102,957 104,299 104,405 109,929 4 Other banks in United States 13,057 13,685 16,416 14,910 15,028r 14,663' 13,332' 14,624' 14,424 15,954 5 Nonbanks 19,448 17,386 15,773 20,984 21,656 21,732' 22,887' 22,866' 22,103 21,779 6 Claims on foreigners 315,676 312,955 342,506 334,074 326,633' 328,163' 314,348' 315,303 311,321 305,042 7 Other branches of parent bank 91,399 96,281 122,155 115,275 111,671 108,972 103,090 102,931 106,722 103,638 8 102,960 105,237 108,856 108,161 105,584' 106,771' 101,236' 103,429 100,686 99,683 9 Public borrowers 23,478 23,706 21,828 21,329 21,331 21,748 20,827 20,991 20,438 19,427 10 Nonbank foreigners 97,839 87,731 89,667 89,309 88,047 90,672 89,195 87,952 83,475 82,294 11 Other assets 22,630 29,110 38,064 37,804 37,338 38,731 35,415 35,752 35,424 35,703 12 Total payable in U.S. dollars 336,520 317,487 350,106 335,313 330,726 333,874 327,736 334,112 335,062 336,378 n Claims on United States 116,638 110,620 132,023 124,893 124,806' 128,935' 133,289' 136,077 135,348 141,415 14 Parent bank 85,971 82,082 103,251 92,466 91,271 95,844 100,320 101,578 101,422 106,792 15 Other banks in United States 12,454 12,830 14,657 13,439 13,906' 13,346' 12,318' 13,599' 13,661 14,434 16 Nonbanks 18,213 15,708 14,115 18,988 19,629 19,745' 20,651' 20,90C 20,265 20,189 17 Claims on foreigners 210,129 195,063 202,427 196,154 190,902' 190,593' 179,722' 182,981 183,640 179,076 18 Other branches of parent bank 72,727 72,197 88,284 84,468 83,063 81,692 75,654 76,136 79,774 78,063 19 Banks 71,868 66,421 63,706 61,359 58,161' 58,109' 54,588' 57,102 55,234 54,189 70 Public borrowers 17,260 16,708 14,730 14,720 14,645 14,853 14,407 14,342 13,923 13,321 21 Nonbank foreigners 48,274 39,737 35,707 35,607 35,033 35,939 35,073 35,401 34,709 33,503 22 Other assets 9,753 11,804 15,656 14,266 15,018 14,346 14,725 15,054 16,074 15,887 United Kingdom 23 Total, all currencies 148,599 140,917 158,695 160,244 157,634 155,657 152,592 156,184 151,835 151,141 74 Claims on United States 33,157 24,599 32,518 32,464 32,869 29,581 31,618 32,832 33,852 35,708 75 Parent bank 26,970 19,085 27,350 26,923 27,484 24,580 26,155 27,506 28,535 30,615 76 Other banks in United States 1,106 1,612 1,259 1,558 1,527 1,191 1,013 1,360 1,322 1,064 77 Nonbanks 5,081 3,902 3,909 3,983 3,858 3,810 4,450 3,966 3,995 4,029 78 Claims on foreigners 110,217 109,508 115,700 118,407 115,489 116,975 112,261 114,452 107,856 105,080 79 Other branches of parent bank 31,576 33,422 39,903 39,702 38,077 34,278 33,019 33,849 32,446 30,228 30 Banks 39,250 39,468 36,735 39,697 38,654 40,247 38,790 39,883 37,108 37,829 31 Public borrowers 5,644 4,990 4,752 4,639 4,613 5,312 4,914 4,987 4,742 4,641 32 Nonbank foreigners 33,747 31,628 34,310 34,369 34,145 37,138 35,538 35,733 33,560 32,382 33 Other assets 5,225 6,810 10,477 9,373 9,276 9,101 8,713 8,900 10,127 10,353 34 Total payable in U.S. dollars 108,626 95,028 100,574 102,148 101,642 95,972 93,214 97,188 95,326 94,492 35 Claims on United States 32,092 23,193 30,439 30,156 30,971 27,388 29,555 30,736 31,855 33,795 36 Parent bank 26,568 18,526 26,304 25,854 26,565 23,285 25,137 26,608 27,672 29,706 37 Other banks in United States 1,005 1,475 1,044 1,132 1,273 1,025 781 1,068 1,069 870 38 Nonbanks 4,519 3,192 3,091 3,170 3,133 3,078 3,637 3,060 3,114 3,219 39 Claims on foreigners 73,475 68,138 64,560 67,458 66,313 64,247 59,434 62,018 57,%9 55,832 40 Other branches of parent bank 26,011 26,361 28,635 29,336 29,813 26,812 24,867 25,448 23,843 22,549 41 Banks 26,139 23,251 19,188 20,814 19,516 19,656 18,065 19,555 17,477 18,025 47 Public borrowers 3,999 3,677 3,313 3,313 3,347 3,864 3,412 3,252 3,188 3,133 43 Nonbank foreigners 17,326 14,849 13,424 13,995 13,637 13,915 13,090 13,763 13,461 12,125 44 Other assets 3,059 3,697 5,575 4,534 4,358 4,337 4,225 4,434 5,502 4,865 Bahamas and Caymans 45 Total, all currencies 142,055 142,592 160,321 148,718 143,630 153,254 152,930 156,353 159,718 160,516 46 Claims on United States 74,864 78,048 85,318 79,893 78,035' 85,837' 88,283' 90,896 88,116 92,308 47 Parent bank 50,553 54,575 60,048 51,249 48,402 56,330 59,240 60,419 58,579 61,397 48 Other banks in United States 11,204 11,156 14,277 12,472 12,682' 12,476' 11,47c 12,489' 12,236 13,863 49 Nonbanks 13,107 12,317 10,993 16,172 16,951 17,031' 17,573' 17,988' 17,301 17,048 50 Claims on foreigners 63,882 60,005 70,162 63,469 60,091' 61,%2' 58,818' 59,374 65,855 62,508 51 Other branches of parent bank 19,042 17,2% 21,277 19,802 18,486 19,368 17,790 18,463 24,745 22,797 57 Banks 28,192 27,476 33,751 29,340 27,667' 28,647' 26,70C 27,019 27,650 26,120 53 Public borrowers 6,458 7,051 7,428 7,257 7,063 6,891 6,849 6,955 6,835 6,457 54 Nonbank foreigners 10,190 8,182 7,706 7,070 6,875 7,056 7,479 6,937 6,625 7,134 55 Other assets 3,309 4,539 4,841 5,356 5,504 5,455 5,829 6,083 5,747 5,700 56 Total payable in U.S. dollars 136,794 136,813 151,434 141,135 135,916 145,050 145,398 148,545 152,219 152,685 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 • November 1988 3.14—Continued 1988 LLiiaabbiilliittyy aaccccoouunntt 11998866 Jan. Feb. Mar. Apr. May June July" All foreign countries 57 Total, all currencies 458,012 456,628 518,604 503,254 495,003 502,398 488,939 492,844 487,677 488,407 58 Negotiable CDs 34,607 31,629 30,929 29,277 31,158 31,854 31,585 32,175 29,485 30,159 59 To United States 156,281 152,465 161,390 150,676 149,402 157,063 155,381 162,002 156,235 158,966 60 Parent bank 84,657 83,394 87,606 78,590 85,142 91,628 85,585' 86,944 87,315 84,216 61 Other banks in United States 16,894 15,646 20,559 15,801 14,237 14,806 16,246 15,389 14,625 15,333 62 Nonbanks 54,730 53,425 53,225 56,285 50,023 50,629 53,55c 59,669 54,295 59,417 63 To foreigners 245,939 253,775 304,790 302,042 293,360 290,064 281,162 277,106 280,998 277,819 64 Other branches of parent bank 89,529 95,146 124,601 116,434 111,949 109,071 105,148 104,667 110,418 107,030 65 Banks 76,814 77,809 87,261 89,552 88,400 88,257 85,097 82,499 82,470 83,172 66 Official institutions 19,520 17,835 19,564 21,130 20,373 18,608 18,006 17,700 17,159 16,554 67 Nonbank foreigners 60,076 62,985 73,364 74,926 72,638 74,128 72,911 72,240 70,951 71,063 68 Other liabilities 21,185 18,759 21,495 21,259 21,083 23,417 20,811 21,561 20,959 21,463 69 Total payable in U.S. dollars 353,712 336,406 361,438 344,805 341,536 344,395 337,122 341,729 341,411 341,539 70 Negotiable CDs 31,063 28,466 26,768 24,785 26,386 26,869 26,596 27,233 25,015 24,870 71 To United States 150,905 144,483 148,442 139,185 138,737 144,983 144,783 149,576 144,398 147,555 72 Parent bank 81,631 79,305 81,783 73,064 79,363 84,801 79,903' 80,378 80,811 77,523 73 Other banks in United States 16,264 14,609 19,155 14,433 12,918 13,501 15,035 13,999 13,186 14,011 74 Nonbanks 53,010 50,569 47,504 51,688 46,456 46,681 49,845' 55,199 50,401 56,021 75 To foreigners 163,583 156,806 177,711 172,285 167,623 163,275 156,848 155,519 162,122 158,897 76 Other branches of parent bank 71,078 71,181 90,469 84,298 82,996 81,073 76,708 76,920 83,482 81,090 77 Banks 37,365 33,850 35,065 33,315 32,278 30,688 29,924 28,712 28,990 28,495 78 Official institutions 14,359 12,371 12,409 12,736 12,071 10,489 10,539 10,028 9,571 9,308 79 Nonbank foreigners 40,781 39,404 39,768 41,936 40,278 41,025 39,677 39,859 40,079 40,004 80 Other liabilities 8,161 6,651 8,517 8,550 8,790 9,268 8,895 9,401 9,876 10,217 United Kingdom 81 Total, all currencies 148,599 140,917 158,695 160,244 157,634 155,657 152,592 156,184 151,835 151,141 82 Negotiable CDs 31,260 27,781 26,988 25,184 26,786 27,279 27,090 27,659 25,390 25,750 83 To United States 29,422 24,657 23,470 25,209 26,382 22,725 23,868 27,145 25,120 26,801 84 Parent bank 19,330 14,469 13,223 14,177 15,527 14,506 14,904 15,518 15,9% 16,844 85 Other banks in United States 2,974 2,649 1,740 1,596 1,615 1,768 1,508 2,408 1,791 2,051 86 Nonbanks 7,118 7,539 8,507 9,436 9,240 6,451 7,456 9,219 7,333 7,906 87 To foreigners 78,525 79,498 98,689 100,001 94,235 95,049 92,219 91,995 91,691 88,547 88 Other branches of parent bank 23,389 25,036 33,078 33,344 30,350 30,211 27,383 28,743 28,%7 26,948 89 Banks 28,581 30,877 34,290 34,820 33,520 33,316 32,970 31,995 33,125 32,837 90 Official institutions 9,676 6,836 11,015 11,571 11,048 9,624 10,181 9,672 8,893 9,006 91 Nonbank foreigners 16,879 16,749 20,306 20,266 19,317 21,898 21,685 21,585 20,706 19,756 92 Other liabilities 9,392 8,981 9,548 9,850 10,231 10,604 9,415 9,385 9,634 10,043 93 Total payable in U.S. dollars 112,697 99,707 102,550 105,138 105,162 98,982 96,532 99,378 97,555 96,908 94 Negotiable CDs 29,337 26,169 24,926 22,875 24,281 24,716 24,392 24,994 22,%0 22,846 95 To United States 27,756 22,075 17,752 20,799 23,019 19,116 20,310 22,405 20,889 23,105 96 Parent bank 18,956 14,021 12,026 13,307 14,626 13,622 13,947 14,134 14,712 15,729 97 Other banks in United States 2,826 2,325 1,512 1,398 1,401 1,556 1,306 2,184 1,512 1,817 98 Nonbanks 5,974 5,729 4,214 6,094 6,992 3,938 5,057 6,087 4,665 5,559 99 To foreigners 51,980 48,138 55,919 57,620 53,444 50,590 47,589 47,969 48,777 46,083 100 Other branches of parent bank 18,493 17,951 22,334 22,870 21,753 21,292 18,060 18,902 20,303 18,539 101 Banks 14,344 15,203 15,580 16,119 14,401 13,106 12,889 12,860 12,957 12,240 102 Official institutions 7,661 4,934 7,530 7,993 7,045 5,181 5,918 5,470 4,700 5,036 103 Nonbank foreigners 11,482 10,050 10,475 10,638 10,245 11,011 10,722 10,737 10,817 10,268 104 Other liabilities 3,624 3,325 3,953 3,844 4,418 4,560 4,241 4,010 4,929 4,874 Bahamas and Caymans 105 Total, all currencies 142,055 142,592 160,321 148,718 143,630 153,254 152,930 156,353 159,718 160,516 106 Negotiable CDs 610 847 885 851 940 1,069 1,038 1,096 941 940 107 To United States 104,556 106,081 113,950 105,147 99,821 110,451 109,199 112,605 109,424 112,540 108 Parent bank 45,554 49,481 53,239 46,594 48,976 55,981 50,622' 51,792 52,280 49,916 109 Other banks in United States 12,778 11,715 17,224 13,017 11,455 11,829 13,621 11,684 11,451 12,092 110 Nonbanks 46,224 44,885 43,487 45,536 39,390 42,641 44,956' 49,129 45,693 50,532 111 To foreigners 35,053 34,400 43,815 40,822 41,234 40,038 40,953 40,369 47,361 44,993 112 Other branches of parent bank 14,075 12,631 19,185 18,629 18,604 17,260 19,420 18,909 24,755 22,288 113 Banks 10,669 8,617 10,769 9,344 9,825 9,404 9,162 9,080 9,779 10,155 114 Official institutions 1,776 2,719 1,504 1,377 1,179 1,873 1,164 1,053 1,850 1,015 115 Nonbank foreigners 8,533 10,433 12,357 11,472 11,626 11,501 11,207 11,327 10,977 11,535 116 Other liabilities 1,836 1,264 1,671 1,898 1,635 1,696 1,740 2,283 1,992 2,043 117 Total payable in U.S. dollars 138,322 138,774 152,927 141,750 136,636 145,366 146,134 148,923 151,684 152,235 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 1988 IItteemm 11998866 11998877 Jan. Feb. Mar. Apr. May June July" 1 Total1 211,834 259,517 266,925 276,233 286,289r 286,507r 294,706' 290,672 290,851 By type 2 Liabilities reported by banks in the United States^ 27,920 31,833 32,528 32,121 29,879 29,683 31,460 30,612 31,700 3 U.S. Treasury bills and certificates 75,650 88,829 90,635 93,407 95,624 94,974 96,604 95,300 97,015 U.S. Treasury bonds and notes 4 Marketable 91,368 122,432 127,550 134,719 142,865 145,940 151,002r 149,344 146,982 5 Nonmarketable 1,300 300 300 300 792 795 499 502 506 6 U.S. securities other than U.S. Treasury securities 15,596 16,123 15,912 15,686 15,129r 15,115r 15,141r 14,914 14,648 By area 7 Western Europe1 88,629 124,620 127,753 127,614 129,336r 129,751r 131,417r 126,640 125,106 8 Canada 2,004 4,961 6,182 6,839 7,954 8,314 9,372 10,773 10,725 9 Latin America and Caribbean 8,417 8,328 7,950 8,296 8,734 8,520 9,145 9,403 9,554 10 Asia 105,868 116,060 119,139 127,304 131,423 132,016 135,086 134,251 135,617 11 Africa 1,503 1,402 1,458 1,495 1,512 1,417 1,418 1,266 1,179 12 Other countries6 5,412 4,147 4,442 4,682 4,839 5,993 7,773 7,837 8,162 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 Sept. Dec. Mar. June 1 Banks' own liabilities 8,586 15,368 29,702 46,800 55,688 55,871 55,794 2 Banks' own claims 11,984 16,294 26,180 41,239 50,486 51,344 50,034 3 Deposits 4,998 8,437 14,129 14,535 18,109 17,463 16,640 4 Other claims 6,986 7,857 12,052 26,704 32,377 33,881 33,394 5 Claims of banks' domestic customers 569 580 2,507 1,067 551 810 1,004 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 • November 1988 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1988 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July" 1 All foreigners 435,726 540,996 618,903 601,332 605,301 607,023 611,259 629,022r 637,191 645,900 2 Banks' own liabilities 341,070 406,485 469,829 446,391 446,235 444,887 449,323 465,548r 476,118 481,602 3 Demand deposits 21,107 23,789 22,718 20,740 21,129 21,889 20,777 22,548' 23,328 21,971 4 Time deposits1 117,278 130,891 148,401 138,964 140,178 137,890 134,335 138,253r 141,360 142,849 5 Other. 29,305 42,705 51,120 52,694 52,661 46,997 45,642 48,055' 47,829 50,032 6 Own foreign offices3 173,381 209,100 247,590 233,993 232,268 238,110 248,570 256,692 263,601 266,751 7 Banks' custody liabilities4 94,656 134,511 149,074 154,941 159,066 162,136 161,935 163,474'' 161,073 164,297 8 U.S. Treasury bills and certificates5 69,133 90,398 101,743 103,861 107,087 109,233 110077,,888811 110088,,880033 110088,,661144 110099,,995511 9 Other negotiable and readily transferable instruments6 17,964 15,417 16,791 16,727 15,650 16,121 16,017 16,595 16,420 16,106 10 Other 7,558 28,696 30,540 34,353 36,328 36,783 38,038 38,075' 36,039 38,239 11 Nonmonetary international and regional organizations7 5,821 5,807 4,387 5,875 8,640 6,033 4,575 6,889 7,879 6,988 12 Banks' own liabilities 2,621 3,958 2,626 4,052 6,629 4,031 2,412 4,898 5,142 4,809 13 Demand deposits 85 199 249 70 74 134 67 84' 84 92 14 Time deposits1 2,067 2,065 1,538 1,583 2,481 2,061 335 1,981 1,873 1,874 15 Other2 469 1,693 839 2,398 4,074 1,836 2,010 2,833' 3,185 2,843 16 Banks' custody liabilities4 3,200 1,849 1,761 1,823 2,011 2,002 2,163 1,991 2,737 2,179 17 U.S. Treasury bills and certificates 11,,773366 259 265 613 415 635 587 132 745 286 18 Other negotiable and readily transferable instruments6 1,464 1,590 1,497 1,210 1,521 1,351 1,564 1,852 1,989 1,861 19 Other 0 0 0 0 75 16 11 7 3 32 20 Official institutions8 79,985 103,569 120,662 123,163 125,527 125,503 124,657 128,065 125,912 128,715 21 Banks' own liabilities 20,835 25,427 28,698 29,901 29,234 26,928 26,623 28,451 27,878 28,116 22 Demand deposits 2,077 2,267 1,949 1,605 1,861 2,021 1,660 2,249' 1,833 1,696 23 Time deposits1 10,949 10,497 12,843 11,913 11,654 11,749 11,753 12,860 11,864 11,596 24 Other2 7,809 12,663 13,906 16,383 15,719 13,158 13,209 13,342' 14,180 14,824 25 Banks' custody liabilities4 59,150 78,142 91,965 93,262 96,294 98,575 98,033 99,613 98,034 100,599 26 U.S. Treasury bills and certificates5 53,252 75,650 88,829 90,635 93,407 95,624 9944,,997744 9966,,660044 9955,,330000 9977,,001155 27 Other negotiable and readily transferable instruments6 5,824 2,347 2,990 2,442 2,592 2,750 2,939 2,775 2,528 3,368 28 Other 75 145 146 185 295 201 120 234 207 217 29 Banks9 275,589 351,745 414,152 391,750 390,848 395,463 401,972 413,445' 423,258 427,663 30 Banks' own liabilities 252,723 310,166 371,471 345,597 344,040 347,937 353,971 365,498' 375,092 379,057 31 Unaffiliated foreign banks 79,341 101,066 123,880 111,605 111,773 109,827 105,402 108,805' 111,491 112,306 32 Demand deposits 10,271 10,303 10,915 9,786 9,759 10,000 9,438 10,260 11,137 10,211 33 Time deposits' 49,510 64,232 79,710 71,130 71,709 70,171 68,128 69,616' 72,412 73,345 34 Other 19,561 26,531 33,256 30,689 30,305 29,655 27,835 28,929' 27,943 28,750 35 Own foreign offices3 173,381 209,100 247,590 233,993 232,268 238,110 248,570 256,692' 263,601 266,751 36 Banks' custody liabilities4 22,866 41,579 42,682 46,152 46,808 47,526 4488,,000000 47,948' 48,166 48,606 37 U.S. Treasury bills and certificates 9,832 9,984 9,134 8,979 9,526 99,,559977 88,,888899 88,,887722 99,,113388 99,,334466 38 Other negotiable and readily transferable instruments6 6,040 5,165 5,392 5,580 4,436 4,627 4,637 4,341 4,663 4,566 39 Other 6,994 26,431 28,156 31,594 32,846 33,303 34,474 34,735' 34,365 34,694 40 Other foreigners 74,331 79,875 79,701 80,544 80,285 80,024 80,055 80,623' 80,143 82,534 41 Banks' own liabilities 64,892 66,934 67,034 66,841 66,332 65,990 66,317 66,701' 68,006 69,620 42 Demand deposits 8,673 11,019 9,605 9,279 9,435 9,734 9,612 9,955' 10,274 9,972 43 Time deposits 54,752 54,097 54,310 54,338 54,334 53,909 54,118 53,796' 55,211 56,033 44 Other2 1,467 1,818 3,119 3,224 2,563 2,347 2,586 2,951' 2,521 3,615 45 Banks' custody liabilities4 9,439 12,941 12,666 13,703 13,953 14,034 13,739 13,922 12,136 12,913 46 U.S. Treasury bills and certificates 4,314 4,506 3,515 3,633 3,740 3,378 33,,443300 33,,119966 33,,443322 33,,330055 47 Other negotiable and readily transferable instruments6 4,636 6,315 6,914 7,495 7,102 7,393 6,876 7,628 7,240 6,311 48 Other 489 2,120 2,238 2,575 3,112 3,263 3,433 3,099 1,464 3,297 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 9,845 7,496 7,314 7,647 7,370 7,325 7,480 8,261 7,650 6,916 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 1988 AArreeaa aanndd ccoouunnttrryy 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July" 1 Total 435,726 540,996 618,903 601,332 605,301 607,023 611,259 629,022' 637,191 645,900 2 Foreign countries 429,905 535,189 614,516 595,457 596,660 600,990 606,684 622,133r 629,312 638,912 3 164,114 180,556 234,651 225,552 226,517 213,023 218,567 227,867'' 227,492 223,725 4 693 1,181 920 992 964 958 1,172 1,090 941 1,408 5 Belgium-Luxembourg 5,243 6,729 9,347 9,433 9,832 8,804 9,629 9,893 10,363 9,494 6 513 482 760 551 659 930 1,034 1,164 1,364 1,474 7 496 580 377 401 369 405 504 478 426 560 8 15,541 22,862 29,954 28,198 28,868 28,449 27,040 28,194r 26,976 25,992 9 4,835 5,762 7,047 7,701 8,872 6,594 6,893 6,483 5,104 5,184 10 666 700 689 638 639 656 656 675 653 621 II Italy 9,667 10,875 12,073 11,259 11,001 10,076 10,040 9,285 10,695 9,360 1? 4,212 5,600 5,014 5,272 5,302 5,399 5,154 5,757 5,351 5,552 13 Norway 948 735 1,362 1,196 828 917 1,101 1,240' 1,078 1,329 14 Portugal 652 699 801 725 780 877 917 910 897 859 IS Spain 2,114 2,407 2,621 2,359 2,433 2,618 2,415 2,839 4,168 5,010 16 Sweden 1,422 884 1,379 1,393 1,719 1,836 1,692 2,280 1,522 1,936 17 Switzerland 29,020 30,534 33,765 31,932 32,006 31,815 30,523 31,293r 31,197 30,301 18 Turkey 429 454 703 674 541 616 518 628 1,476 537 19 United Kingdom 76,728 85,334 116,717 111,845 112,207 101,590 109,547 115,439 114,451 114,408 70 Yugoslavia 673 630 710 541 557 550 566 586 690 804 71 Other Western Europe1 9,635 3,326 9,798 9,683 8,340 9,244 8,473 9,038 9,282 8,141 7? U.S.S.R 105 80 31 37 49 66 44 136 246 81 23 Other Eastern Europe 523 702 582 721 549 623 649 460 612 676 24 Canada 17,427 26,345 30,084 28,691 25,967 27,330 27,010 27,875 30,051 29,986 75 Latin America and Caribbean 167,856 210,318 220,365 212,097 212,731 222,136 225,890 229,827' 232,785 241,834 76 6,032 4,757 5,006 4,902 5,092 5,101 5,307 5,219 5,876 6,079 77 57,657 73,619 74.590 69,205 64,964 70,266 69,970 73,990' 74,034 75,782 78 Bermuda 2,765 2,922 2,335 2,187 2,021 2,214 2,402 2,927 2,077 2,439 79 5,373 4,325 4,003 3,937 3,747 4,074 3,992 4,119 4,538 4,217 30 British West Indies 42,674 72,263 81,675 78,503 82,625 88,344 92,722 91,601' 93,959 100,825 31 Chile 2,049 2,054 2,210 2,122 2,361 2,314 2,251 2,184 2,378 2,325 37 Colombia 3,104 4,285 4,208 3,947 3,897 3,833 3,843 4,395 4,502 4,415 33 Cuba 11 7 12 8 9 8 13 9 10 9 34 Ecuador 1,239 1,236 1,082 1,115 1,133 1,169 1,174 1,206 1,212 1,211 35 Guatemala 1,071 1,123 1,082 1,098 1,098 1,182 1,209 1,191 1,209 1,178 36 122 136 160 150 148 208 209 152 156 154 37 14,060 13,745 14,480 15,024 15,186 15,783 15,347 15,866 15,801 16,330 38 Netherlands Antilles 4,875 4,970 4,972 4,987 5,231 5,207 5,345 5,348 5,338 4,807 39 7,514 6,886 7,414 7,329 6,983 4,306 4,059 4,005 4,176 4,226 40 1,167 1,163 1,275 1,235 1,328 1,364 1,424 1,423 1,438 1,509 41 Uruguay 1,552 1,537 1,580 1,670 1,753 1,763 1,743 1,715 1,879 1,827 47 Venezuela 11,922 10,171 9,048 9,174 9,729 9,411 9,564 9,255 8,950 9,047 43 Other 4,668 5,119 5,234 5,502 5,426 5,591 5,315 5,221 5,252 5,454 44 72,280 108,831 121,401 121,245 122,973 129,265 125,649 125,650' 127,999 133,062 China 45 Mainland 1,607 1,476 1,162 1,336 1,352 1,562 1,814 1,921 1,725 11,,555577 46 7,786 18,902 21,503 22,878 23,884 24,005 23,982 23,874 23,072 24,023 47 Hong Kong 8,067 9,393 10,196 9,579 10,010 10,011 9,631 10,214r 9,255 9,928 48 712 674 582 571 879 659 675 619 942 858 49 Indonesia 1,466 1,547 1,399 1,474 1,583 1,547 1,063 1,036' 1,075 1,036 50 1,601 1,892 1,292 1,270 1,333 1,400 1,292 1,190 1,334 1,244 51 Japan 23,077 47,410 54,418 55,221 56,346 60,334 58,567 58,051' 60,815 62,628 57 Korea 1,665 1,141 1,637 1,709 1,502 1,593 1,574 1,476 1,564 1,459 53 Philippines 1,140 1,866 1,085 1,035 1,009 1,095 1,015 975 954 1,085 54 Thailand 1,358 1,119 1,345 1,433 1,354 1,189 1,181 1,448 1,099 1,650 55 Middle-East oil-exporting countries3 14,523 12,352 13,994 12,503 12,408 12,735 12,647 12,413'' 12,101 14,298 56 Other 9,276 11,058 12,788 12,237 11,311 13,135 12,208 12,434' 14,063 13,295 57 4,883 4,021 3,945 3,758 3,756 4,034 3,878 4,055' 4,028 3,836 58 Egypt 1,363 706 1,151 1,142 1,119 1,099 1,218 1,196 1,186 1,039 59 Morocco 163 92 194 71 69 75 68 65 73 80 60 South Africa 388 270 202 214 194 387 195 267' 245 200 61 Zaire 163 74 67 89 86 81 82 63 60 63 67 Oil-exporting countries 1,494 1,519 1,014 981 1,047 1,062 1,008 1,090 1,111 1,051 63 Other 1,312 1,360 1,316 1,261 1,241 1,330 1,307 1,373 1,352 1,404 64 Other countries 3,347 5,118 4,070 4,114 4,717 5,203 5,689 6,859' 6,957 6,467 6S Australia 2,779 4,196 3,327 3,319 3,814 4,154 4,885 5,943 6,017 5,639 66 All other 568 922 744 795 903 1,048 804 919 940 828 67 Nonmonetary international and regional organizations 5,821 5,807 4,387 5,875 8,640 6,033 4,575 6,889 7,879 6,988 68 International 4,806 4,620 2,754 4,301 6,600 4,330 2,691 4,955 5,925 5,057 69 Latin American regional 894 1,033 1,272 1,181 1,505 1,305 1,528 1,727 1,769 1,651 70 Other regional6 121 154 362 393 536 397 356 207 185 280 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 • November 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 1988 AArreeaa aanndd ccoouunnttrryy 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May June July" 1 Total 401,608 444,745 460,261 443,890 442,204 442,486 431,724 450,728r 458,120 469,274 2 Foreign countries 400,577 441,724 456,857 441,191 439,980 440,360 430,412 449,582r 455,574 466,208 3 Europe 106,413 107,823 102,324 97,437 100,441 94,574 93,236 100,484' 100,980 99,411 4 Austria 598 728 793 762 800 846 893 865' 806 893 5 Belgium-Luxembourg 5,772 7,498 9,382 9,626 9,793 8,254 8,792 8,724' 7,888 8,525 6 Denmark 706 688 717 852 746 874 612 630' 640 742 7 Finland 823 987 1,010 876 835 729 993 1,106 954 1,325 8 France 9,124 11,356 13,475 11,680 12,268 12,226 10,791 12,144' 12,194 11,578 9 Germany 1,267 1,816 2,061 2,195 1,927 1,881 1,610 1,719' 2,835 2,132 10 Greece 991 648 461 576 711 696 513 558 590 563 11 Italy 8,848 9,043 7,467 6,508 6,164 6,453 6,211 6,606 7,064 6,607 12 Netherlands 1,258 3,296 2,619 2,902 2,879 2,780 2,865 2,766 2,656 3,022 13 Norway 706 672 934 842 746 627 650 886 589 479 14 Portugal 1,058 739 477 471 499 425 439 400 358 333 15 Spain 1,908 1,492 1,849 1,628 1,965 1,761 1,766 1,911 1,867 1,976 16 Sweden 2,219 1,964 2,269 2,106 2,274 2,229 2,347 2,480 2,087 1,938 17 Switzerland 3,171 3,352 2,689 2,569 3,086 2,237 2,452 3,093 3,274 2,506 18 Turkey 1,200 1,543 1,681 1,637 1,660 1,593 1,733 1,543 1,495 1,432 19 United Kingdom 62,566 58,335 50,839 48,753 50,493 47,430 47,133 51,679 52,080 51,885 20 Yugoslavia 1,964 1,835 1,700 1,694 1,702 1,658 1,618 1,586 1,624 1,549 21 Other Western Europe1 998 539 660 578 725 747 573 598 672 673 22 U.S.S.R 130 345 389 386 380 328 377 339 506 441 23 Other Eastern Europe 1,107 948 852 795 790 802 866 851' 801 812 24 Canada 16,482 21,006 25,284 23,457 21,930 21,155 22,044 23,801' 24,617 23,940 25 Latin America and Caribbean 202,674 208,825 214,807 208,046 203,500 209,103 199,557 203,942' 201,875 205,178 26 Argentina 11,462 12,091 11,990 12,032 11,977 12,226 12,288 12,297 12,351 12,340 27 Bahamas 58,258 59,342 64,744 60,879 57,415 58,264 54,625 59,251' 56,722 62,319 28 Bermuda 499 418 474 375 311 1,471 669 369' 763 518 29 Brazil 25,283 25,716 25,879 25,932 25,905 25,993 26,099 26,119' 26,265 26,097 30 British West Indies 38,881 46,284 49,944 47,882 47,340 52,529 47,486 48,882' 49,804 48,215 31 Chile 6,603 6,558 6,305 6,327 6,260 6,099 6,132 6,018' 5,881 5,771 32 Colombia 3,249 2,821 2,740 2,709 2,668 2,652 22,,772211 3,082 3,095 3,126 33 Cuba 0 0 1 0 0 0 11 0 0 0 34 Ecuador 2,390 2,439 2,286 2,339 2,238 2,239 2,883 2,197 2,142 2,143 35 Guatemala3 194 140 144 134 140 149 141 149 144 157 36 Jamaica 224 198 188 202 191 201 212 177 187 214 37 Mexico 31,799 30,698 29,534 29,139 29,217 27,974 27,303 26,670 26,214 26,023 38 Netherlands Antilles 1,340 1,041 980 1,009 1,146 1,159 1,304 1,434 1,238 1,055 39 Panama 6,645 5,436 4,739 4,304 3,818 3,108 2,749 2,566' 2,492 2,400 40 Peru 1,947 1,661 1,323 1,316 1,336 1,277 1,283 1,297' 1,149 1,136 41 Uruguay 960 940 968 961 955 929 913 880 885 878 42 Venezuela 10,871 11,108 10,834 10,753 10,872 11,005 10,944 10,833 10,912 11,014 43 Other Latin America and Caribbean 2,067 1,936 1,735 1,753 1,710 1,831 1,805 1,719 1,632 1,772 44 Asia 66,212 96,126 106,472 105,025 110066,,887700 108,148 110088,,448800 111133,,884444'' 112200,,114422 112299,,77%% China 45 Mainland 639 787 968 886 887 1,096 1,140 841 1,065 1,003 46 Taiwan 1,535 2,681 4,577 3,877 3,813 3,554 3,807 3,805 3,957 3,562 47 Hong Kong 6,797 8,307 8,216 7,593 7,948 8,473 6,328 8,356' 9,632 7,679 48 India 450 321 510 495 548 565 542 507 499 1,171 49 Indonesia 698 723 580 566 632 645 643 631 695 688 50 Israel 1,991 1,634 1,363 1,282 1,211 1,238 1,284 1,259 1,213 1,206 51 Japan 31,249 59,674 69,113 71,229 73,215 72,797 75,434 78,700' 82,381 92,456 52 Korea 9,226 7,182 5,094 4,943 4,777 5,011 4,769 4,871' 4,985 4,889 53 Philippines 2,224 2,217 2,069 1,961 1,966 2,074 1,959 2,012 2,055 2,040 54 Thailand 845 578 493 520 521 541 516 596 576 619 55 Middle East oil-exporting countries 4,298 4,122 4,858 3,567 3,454 3,538 3,922 3,541 4,573 6,579 56 Other Asia 6,260 7,901 8,633 8,108 7,897 8,616 8,136 8,725' 8,510 7,902 57 Africa 5,407 4,650 4,742 4,807 4,865 4,881 4,879 5,092 5,423 5,473 58 Egypt 721 567 521 513 469 483 484 503 605 539 59 Morocco 575 598 542 491 490 487 495 483 484 481 60 South Africa 1,942 1,550 1,507 1,520 1,461 1,458 1,439 1,4% 1,693 1,726 61 Zaire 20 28 15 36 82 46 47 42 41 38 62 Oil-exporting countries 630 694 1,003 1,019 1,086 1,142 1,137 1,244 1,275 1,319 63 Other 1,520 1,213 1,153 1,229 1,276 1,265 1,276 1,324 1,325 1,369 64 Other countries 3,390 3,294 3,228 2,419 2,375 2,499 2,216 2,419' 2,537 2,410 65 Australia 2,413 1,949 2,189 1,428 1,430 1,481 1,360 1,413' 11,,665533 1,554 66 All other 978 1,345 1,039 991 945 1,019 856 1,006' 888844 856 67 Nonmonetary international and regional organizations 1,030 33,,002211 33,,440044 22,,770000 2,224 2,126 1,312 1,147 2,545 3,066 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 1988 TTyyppee ooff ccllaaiimm 11998855 11998866 11998877 Jan. Feb. Mar. Apr. May' June July" 1 Total 444444433333330000000,,,,,,,444444488888889999999 444444477777778888888,,,,,,,666666655555550000000 444444499999997777777,,,,,,,999999977777777777777 444444477777779999999,,,,,,,666666633333338888888 444444499999995555555,,,,,,,222222244444446666666 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444400000001111111,,,,,,,666666600000008888888 444444444444444444444,,,,,,,777777744444445555555 444444466666660000000,,,,,,,222222266666661111111 443,890 442,204 444444444444442222222,,,,,,,444444488888886666666 431,724 450,728 444444455555558888888,,,,,,,111111122222220000000 469,274 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666660000000,,,,,,,555555500000007777777 66666664444444,,,,,,,000000099999995555555 66666664444444,,,,,,,666666666666660000000 63,766 62,687 66666661111111,,,,,,,888888822222222222222 61,065 6t,354 66666662222222,,,,,,,888888800000004444444 62,990 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111177777774444444,,,,,,,222222266666661111111 222222211111111111111,,,,,,,555555533333333333333 222222222222224444444,,,,,,,999999933333334444444 217,579 218,758 222222222222220000000,,,,,,,888888888888882222222 210,862 224,482 222222222222229999999,,,,,,,111111155555556666666 236,430 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111111111116666666,,,,,,,666666655555554444444 111111122222222222222,,,,,,,999999944444446666666 111111122222227777777,,,,,,,777777711111113333333 120,467 118,918 111111111111118888888,,,,,,,222222288888882222222 117,293 122,534 111111122222223333333,,,,,,,555555533333331111111 128,951 66 DDeeppoossiittss 44444448888888,,,,,,,333333377777772222222 55555557777777,,,,,,,444444488888884444444 66666660000000,,,,,,,666666611111118888888 55,437 55,801 55555555555555,,,,,,,999999922222227777777 55,806 57,569 55555558888888,,,,,,,777777799999993333333 59,751 77 OOtthheerr 66666668888888,,,,,,,222222288888882222222 66666665555555,,,,,,,444444466666662222222 66666667777777,,,,,,,000000099999995555555 65,030 63,117 66666662222222,,,,,,,333333355555555555555 61,487 64,965 66666664444444,,,,,,,777777733333338888888 69,200 88 AAllll ootthheerr ffoorreeiiggnneerrss 55555550000000,,,,,,,111111188888885555555 44444446666666,,,,,,,111111177777771111111 44444442222222,,,,,,,999999955555555555555 42,079 41,842 44444441111111,,,,,,,555555500000000000000 42,504 41,359 44444442222222,,,,,,,666666622222228888888 40,903 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 22222228888888,,,,,,,888888888888881111111 33333333333333,,,,,,,999999900000005555555 33333337777777,,,,,,,777777711111116666666 33333337777777,,,,,,,111111155555552222222 33333337777777,,,,,,,111111122222227777777 3333333,,,,,,,333333333333335555555 4444444,,,,,,,444444411111113333333 3333333,,,,,,,666666655555550000000 5555555,,,,,,,000000011111111111111 5555555,,,,,,,555555533333338888888 11 Negotiable and readily transferable 11111119999999,,,,,,,333333333333332222222 22222224444444,,,,,,,000000044444444444444 22222226666666,,,,,,,666666699999996666666 22222223333333,,,,,,,444444455555551111111 22222225555555,,,,,,,111111122222220000000 12 Outstanding collections and other 6666666,,,,,,,222222211111114444444 5555555,,,,,,,444444444444448888888 7777777,,,,,,,333333377777770000000 8888888,,,,,,,666666688888889999999 6666666,,,,,,,444444466666668888888 13 MEMO: Customer liability on 22222228888888,,,,,,,444444488888887777777 22222225555555,,,,,,,777777700000006666666 22222223333333,,,,,,,888888822222228888888 11111118888888,,,,,,,777777766666669999999 11111119999999,,,,,,,555555500000003333333 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .... 38,102 41,396 38,090 34,258 39,504 37,637 43,007r 41,871 41,584 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 Sept. Dec. Mar. June" 1 Total 243,952 227,903 232,295 237,521 235,447 219,327 226,410 By borrower i Maturity of 1 year or less1 167,858 160,824 160,555 167,187 164,396 152,592 161,808 3 Foreign public borrowers 23,912 26,302 24,842 26,914 25,986 24,300 25,676 4 All other foreigners 143,947 134,522 135,714 140,273 138,410 128,291 136,131 5 Maturity over 1 year 76,094 67,078 71,740 70,334 71,051 66,735 64,602 6 Foreign public borrowers 38,695 34,512 39,103 39,476 38,626 35,763 35,571 7 All other foreigners 37,399 32,567 32,637 30,858 32,425 30,972 29,032 By area Maturity of 1 year or less1 8 Europe 58,498 56,585 61,784 62,941 59,123 51,522 54,675 9 Canada 6,028 6,401 5,895 5,890 5,712 4,939 6,284 10 Latin America and Caribbean 62,791 63,328 56,271 58,387 56,410 55,472 55,900 11 Asia 33,504 27,966 29,457 32,161 36,436 35,992 38,981 12 Africa 4,442 3,753 2,882 2,871 2,824 2,605 2,914 13 All other2 2,593 2,791 4,267 4,937 3,891 2,062 3,053 Maturity of over 1 year 14 Europe 9,605 7,634 6,737 6,753 6,831 6,011 5,427 15 Canada 1,882 1,805 1,925 1,579 2,661 2,233 2,336 16 Latin America and Caribbean 56,144 50,674 56,719 55,089 53,788 51,609 49,729 17 Asia 5,323 4,502 4,043 3,497 3,649 3,627 3,694 18 Africa 2,033 1,538 1,539 1,622 1,746 2,192 2,416 19 All other2 1,107 926 777 1,794 2,375 1,063 1,001 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 • November 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 June Sept. Dec. Mar. June Sept. Dec. Mar. June 1 Total 405.7 385.3 389.7 389.5 389.6 395.2 384.8 387.5 381.5 371.3r 353.0 2 G-10 countries and Switzerland 148.1 146.0 160.3 159.0 158.0 162.7 158.1 155.6 160.3 157.lr 150.6 3 Belgium-Luxembourg 8.7 9.2 9.0 8.5 8.4 9.1 8.3 8.2 10.1 9.3r 9.2 4 France 14.1 12.1 15.1 14.7 13.8 13.3 12.5 13.7 13.8 11.5 10.8 5 Germany 9.0 10.5 11.5 12.5 11.7 12.7 11.2 10.5 12.6 11.8 10.5 6 Italy 10.1 9.6 9.3 8.1 9.0 8.6 7.5 6.6 7.3 7.4 6.1 7 Netherlands 3.9 3.7 3.4 3.9 4.6 4.4 7.3 4.8 4.1 3.3 3.3 8 Sweden 3.2 2.7 2.9 2.7 2.4 3.0 2.4 2.6 2.1 2.1 1.9 9 Switzerland 3.9 4.4 5.6 4.8 5.8 5.8 5.7 5.4 5.6 5.1 5.6 10 United Kingdom 60.3 63.0 69.2 70.3 71.9 73.7 72.0 72.1 69.1 71.2 69.9 11 Canada 7.9 6.8 7.0 6.2 5.4 5.3 4.7 4.7 5.6 5.0 5.4 12 Japan 27.1 23.9 27.2 27.4 25.0 26.9 26.3 27.0 30.1 30.3 28.0 13 Other developed countries 33.6 29.9 30.7 29.5 26.2 25.7 25.2 25.9 26.2 26.2 23.8 14 Austria 1.6 1.5 1.7 1.7 1.7 1.9 1.8 1.9 1.9 1.6 1.6 15 Denmark 2.2 2.3 2.4 2.3 1.7 1.7 1.5 1.6 1.7 1.4 1.0 16 Finland 1.9 1.6 1.6 1.7 1.4 1.4 1.4 1.4 1.3 1.0 1.2 17 Greece 2.9 2.6 2.6 2.3 2.3 2.1 2.0 1.9 2.0 2.3 2.2 18 Norway 3.0 2.9 3.0 2.7 2.4 2.2 2.1 2.0 2.3 2.0 2.0 19 Portugal 1.4 1.2 1.1 1.0 .8 .8 .8 .8 .5 .4 .4 20 Spain 6.5 5.8 6.4 6.7 5.8 6.3 6.1 7.4 8.0 9.0 7.2 21 Turkey 1.9 1.8 2.5 2.1 2.0 1.7 1.7 1.5 1.6 1.6 1.5 22 Other Western Europe 1.7 2.0 2.1 1.6 1.4 1.4 1.5 1.6 1.6 1.9 1.6 23 South Africa 4.5 3.2 3.1 3.1 3.1 3.0 3.0 2.9 2.9 2.8 2.8 24 Australia 6.0 5.0 4.2 4.1 3.5 3.2 3.1 2.9 2.5 2.1 2.3 25 OPEC countries3 24.9 21.3 20.6 20.0 19.6 20.0 18.8 18.9 17.1 17.1 16.4 26 Ecuador 2.2 2.1 2.1 2.2 2.2 2.1 2.1 2.0 1.9 1.9 1.8 27 Venezuela 9.3 8.9 8.8 8.7 8.6 8.5 8.4 8.2 8.0 8.0 8.0 28 Indonesia 3.3 3.0 3.0 2.8 2.5 2.4 2.2 2.0 1.9 1.9 1.8 29 Middle East countries 7.9 5.3 5.0 4.6 4.5 5.4 4.4 4.9 3.6 3.6 3.1 30 African countries 2.3 2.0 1.7 1.7 1.7 1.6 1.7 1.7 1.7 1.7 1.7 31 Non-OPEC developing countries 111.8 104.2 102.0 100.0 99.7 100.2 100.1 97.4 97.3 94.0 91.3 Latin America 32 Argentina 8.7 8.8 9.2 9.3 9.5 9.5 9.5 9.3 9.4 9.5 9.4 33 Brazil 26.3 25.4 25.5 25.4 25.3 26.0 25.0 25.1 24.7 23.9 23.7 34 Chile 7.0 6.9 7.1 7.2 7.1 7.2 7.2 7.0 6.9 6.6 6.4 35 Colombia 2.9 2.6 2.2 2.0 2.1 2.0 1.9 1.9 2.0 1.9 2.1 36 Mexico 25.7 23.9 24.0 24.0 24.0 23.9 25.3 24.7 23.6 22.5 21.1 37 Peru 2.2 1.8 1.6 1.5 1.5 1.4 1.3 1.2 1.1 1.1 .9 38 Other Latin America 3.9 3.4 3.3 3.3 3.1 3.0 2.9 2.8 2.7 2.8 2.6 Asia China 39 Mainland .7 .5 .6 .6 .4 .9 .6 .3 .3 .4 .3 40 Taiwan 5.1 4.5 3.7 4.3 4.9 5.5 6.6 5.9 8.2 6.1 4.7 41 India .9 1.2 1.3 1.3 1.2 1.7 1.7 1.9 1.9 2.1 2.3 42 Israel 1.8 1.6 1.6 1.4 1.5 1.4 1.3 1.3 1.0 1.0 1.0 43 Korea (South) 10.6 9.2 8.7 7.3 6.7 6.2 5.6 4.9 4.9 5.6 5.9 44 Malaysia 2.7 2.4 2.0 2.1 2.1 1.9 1.7 1.6 1.5 1.5 1.5 45 Philippines 6.0 5.7 5.7 5.4 5.4 5.4 5.4 5.4 5.1 5.1 4.9 46 Thailand 1.8 1.4 1.1 1.0 .9 .9 .8 .7 .7 1.0 1.0 47 Other Asia 1.1 1.0 .8 .7 .7 .6 .7 .7 .7 .7 .9 Africa 48 Egypt 1.2 1.0 .9 .7 .7 .6 .6 .6 .5 .5 .6 49 Morocco .8 .9 .9 .9 .9 .9 .9 .8 .9 .9 ..99 50 Zaire .1 .1 .1 .1 .1 .1 .1 .1 .0 .1 ..11 51 Other Africa4 2.1 1.9 1.7 1.6 1.6 1.4 1.1 1.3 1.1 1.0 1.2 52 Eastern Europe 4.4 4.1 4.0 3.4 3.2 3.0 3.3 3.3 3.0 2.9 3.1 53 U.S.S.R .1 .1 .3 .1 .1 .1 .3 .5 .4 .3 .4 54 Yugoslavia 2.3 2.2 2.0 1.9 1.7 1.6 1.7 1.7 1.6 1.7 1.7 55 Other 2.0 1.8 1.7 1.4 1.4 1.3 1.3 1.2 1.0 .9 1.0 56 Offshore banking centers 65.6 62.9 55.4 60.5 63.2 63.5 61.1 64.4 54.4 52.7 45.8 57 Bahamas 21.5 21.2 17.1 19.9 22.3 24.0 20.1 25.7 17.3 15.9 12.0 58 Bermuda .9 .7 .4 .4 .7 .8 .6 .6 .6 1.8 1.0 59 Cayman Islands and other British West Indies 11.8 11.6 12.2 12.8 13.6 12.5 14.3 12.7 13.2 11.7 10.0 60 Netherlands Antilles 3.4 2.2 2.4 1.9 1.8 1.7 1.3 1.2 1.2 1.3 1.2 61 Panama 6.7 6.0 4.2 5.1 4.1 4.2 3.9 3.7 3.7 33..22 3.0 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 ..11 .1 63 Hong Kong 11.4 11.4 9.5 10.5 11.2 11.4 12.5 12.3 11.2 11.3 11.7 64 Singapore 9.8 9.8 9.3 9.7 9.4 8.6 8.3 8.1 7.0 7.4 6.8 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .1 66 Miscellaneous and unallocated7 17.3 16.9 16.8 17.2 19.8 20.1 18.1 21.9 23.2 21.4 22.4 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 28,886 2 Payable in dollars 26,389 24,296 21,980 23,410 24,565 24,141 22,304 23,201 3 Payable in foreign currencies 2,968 3,529 3,800 4,158 4,454 4,528 5,337 5,685 By type 4 Financial liabilities 14,509 13,600 12,312 13,183 14,096 13,034 11,625 13,219 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 3,773 7 Commercial liabilities 14,849 14,225 13,467 14,386 14,923 15,635 16,016 15,666 8 Trade payables 7,005 6,685 6,462 7,073 7,286 7,548 7,425 6,609 9 Advance receipts and other liabilities .. 7,843 7,540 7,004 7,313 7,637 8,086 8,591 9,057 10 Payable in dollars 13,836 13,039 12,153 12,964 13,368 14,061 14,157 13,754 11 Payable in foreign currencies 1,013 1,186 1,314 1,422 1,555 1,574 1,859 1,912 By area or country Financial liabilities 12 Europe 6,728 7,700 8,079 8,434 9,713 9,298 7,845 9,093 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 5,932 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 1,195 21 Bahamas 1,926 1,123 614 669 398 280 278 249 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 1,223 580 476 824 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 2,379 28 Japan 1,209 1,198 11,,339988 1,480 1,751 1,830 2,042 1,987 29 Middle East oil-exporting countries2 . 155 82 88 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 countries 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 5,751 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 1,798 39 United Kingdom 40 Canada 1,975 1,449 1,405 1,407 1,371 1,399 1,301 1,393 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 5,885 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 1,070 51 Africa 588 587 619 520 524 572 574 551 52 Oil-exporting countries 233 238 197 170 166 151 135 134 53 All other4 1,128 982 980 1,019 1,074 1,119 1,078 1,201 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 • November 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 31,246 2 Payable in dollars 27,304 26,574 31,031 31,446 28,686 28,880 26,965 29,267 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 20,455 5 Deposits 14,621 15,526 17,283 16,955 14,687 15,796 13,673 13,085 6 Payable in dollars 14,202 14,911 16,726 16,112 13,482 14,919 12,246 12,531 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 7,369 9 Payable in dollars 3,190 2,330 4,792 5,937 5,773 4,151 4,790 6,318 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 10,792 12 Trade receivables 9,177 8,6% 8,783 8,803 8,849 9,385 9,476 9,734 13 Advance payments and other claims 1,470 1,290 1,192 1,056 1,043 953 1,007 1,057 14 Payable in dollars 9,912 9,333 9,513 9,397 9,431 9,810 9,929 10,418 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 10,189 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 9,126 23 Canada 3,988 3,260 3,965 3,828 3,344 2,895 2,7% 2,840 24 Latin America and Caribbean 8,216 7,846 9,209 9,574 7,554 7,502 6,757 6,511 25 Bahamas 3,306 2,698 2,628 3,968 2,589 3,328 1,865 2,268 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 3,580 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 4,127 38 Belgium-Luxembourg 165 175 133 145 137 169 177 191 39 France 440 426 414 419 439 416 593 484 40 Germany 374 346 444 447 526 545 555 628 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 1,084 44 Canada 1,021 1,023 934 977 1,046 1,049 927 1,164 45 Latin America and Caribbean 2,052 1,753 1,857 1,818 1,728 1,709 1,907 1,967 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 583 510 412 451 346 368 363 371 51 Venezuela 206 157 237 173 203 192 297 323 52 Asia 3,073 2,982 2,755 2,703 2,642 2,796 2,892 2,881 53 Japan 1,191 1,016 881 927 952 1,026 1,150 1,105 54 Middle East oil-exporting countries2 668 638 563 525 452 434 450 413 55 Africa 470 437 500 432 378 407 400 422 56 Oil-exporting countries3 134 130 139 141 123 124 144 157 57 All other4 229 257 222 240 255 262 240 230 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 1988 Transactions, and area or country 1986 1987 Jan.- Jan. Feb. Mar. Apr. May June Julyp July U.S. corporate securities STOCKS 1 148,114 249,113 115,244 12,923 16,344 18,068 15,022 13,654 20,007 19,226 2 Foreign sales 129,395 232,849 114,592 12,891 16,720 18,482 13,705 14,723 19,678 18,393 3 Net purchases, or sales (-) 18,719 16,264 652 32 -376 -414 1,317 -1,069 329 832 4 Foreign countries 18,927 16,313 688 64 -344 -444 1,300 -976 287 801 s 9,559 1,928 -1,315 -222 -323 -360 481 -1,151 33 227 6 459 905 -199 -96 -29 -7 -1 -153 121 -34 7 341 -74 200 67 -37 171 104 -66 -36 -3 8 936 892 -460 -72 59 -223 -145 -43 -56 20 9 Switzerland 1,560 -1,123 -951 -110 -252 -32 -17 -247 -204 -90 10 United Kingdom 4,826 630 -481 -136 -130 -331 429 -711 146 253 11 816 1,048 148 147 -167 -61 241 102 -172 58 1 N ? Middle East' 3,0 9 3 7 1 6 -1 1 , , 3 3 6 1 0 4 -1,5 3 5 1 7 3 -1 1 4 0 3 4 -2 2 5 6 1 1 -78 9 8 8 23 2 0 4 -8 6 2 2 - - 1 5 1 4 6 9 -15 6 9 6 14 3,876 12,896 2,840 159 70 577 372 106 1,039 518 is 297 123 117 7 -18 5 19 23 3 78 16 Other countries 373 365 143 12 85 84 -67 -35 51 13 17 Nonmonetary international and regional organizations -208 -48 -36 --3322 --3333 3311 1177 --9922 4422 3311 BONDS2 18 Foreign purchases 123,169 105,856 49,978 5,024 6,453 7,799 5,618 7,810 8,341 8,931 19 Foreign sales 72,520 78,312 34,988 5,193 6,039 5,594 4,433 3,518 4,592 5,617 20 Net purchases, or sales (—) 50,648 27,544 14,990 -169 414 2,206 1,185 4,292 3,749 3,314 21 Foreign countries 49,801 26,804 15,497 458 532 2,201 1,186 4,262 3,567 3,291 7? 39,313 21,989 8,828 272 263 1,462 658 2,256 2,202 1,715 ?3 389 194 119 51 13 57 7 -18 15 -7 ?4 Germany -251 33 1,031 61 118 260 347 1111 226 88 75 Netherlands 387 269 325 -13 -1 30 58 118800 55 1177 76 Switzerland 4,529 1,587 -113 -56 60 -14 -15 152 -71 -169 77 United Kingdom 33,900 19,770 6,896 333 49 976 228 1,886 1,738 1,685 78 548 1,296 635 29 -29 87 104 98 216 130 Latin America and Caribbean 1,476 2,473 1,315 -22 316 245 100 134 157 385 30 Middle East1 -2,961 -548 -340 -164 -76 144 -61 10 -92 -102 31 Other Asia 11,270 1,638 5,058 347 88 270 377 1,749 1,075 1,153 3? Africa 16 16 -14 0 -22 3 4 -2 4 0 33 Other countries 139 -61 15 -4 -8 -11 5 17 5 10 34 Nonmonetary international and regional organizations 847 740 -507 -627 --111199 5 -1 3311 118822 2233 Foreign securities 35 Stocks, net purchases, or sales (-) -1,853 1,149 163 511 -678 -724 372 925' -153 -90 36 Foreign purchases 49,149 95,263 42,612 4,989 5,717 6,693 5,797 5,964r 6,404 7,048 37 Foreign sales 51,002 94,114 42,449 4,478 6,396 7,417 5,425 5,039r 6,557 7,138 38 Bonds, net purchases, or sales (-) -3,685 -7,830 -4,569 -1,326 -1,433 -1,179 -137 873 -710 -657 39 166,992 199,010 112,172 12,812 15,858 16,561 15,593 15,119 17,011 19,219 40 Foreign sales 170,677 206,840 116,741 14,137 17,291 17,740 15,730 14,246 17,721 19,876 41 Net purchases, or sales (-), of stocks and bonds .... -5,538 -6,682 -4,406 -814 -2,111 -1,903 235 l,798r -863 -747 42 Foreign countries -6,493 -6,713 -4,689 -879 -2,131 -1,944 179 L,582R -774 -721 43 -18,026 -12,083 -3,993 -326 -1,627 -1,541 483 681r -1,186 -478 44 -876 -4,065 -2,741 -654 -648 -366 -406 -162 -186 -319 45 Latin America and Caribbean 3,476 828 1,312 126 -64 138 538 322 301 -48 46 10,858 9,338 817 -197 37 -154 -407 716 558 263 47 Africa 52 89 85 9 3 48 14 -1 11 11 48 Other countries -1,977 -820 -170 163 169 -70 -43 24 --226622 -151 49 Nonmonetary international and regional organizations 955 31 283 6655 2200 4411 5566 221166 --8899 --2266 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 • November 1988 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1988 1988 Country or area 1986 1987 J J a u n ly .- Jan. Feb. Mar. Apr. May June July" Transactions, net purchases or sales (-) during period 1 Estimated total2 19,388 25,587 39,921 4,645 12,083 9,980 3,433 ll,062r -2,162 879 2 Foreign countries2 20,491 30,889 40,082 5,740 12,832 9,017 3,728 9,972r -3,337 2,130 3 Europe2 16,326 23,716 14,408 4,321 5,878 3,471 2,332 3,108 -3,226 -1,477 4 Belgium-Luxembourg -245 653 1,424 469 242 454 47 159 -68 122 5 Germany2 7,670 13,330 -1,481 3,045 1,397 919 1,576 79 -4,241 -4,257 6 Netherlands 1,283 -913 -14 -337 334 378 117 -22 -7% 312 7 Sweden 132 210 -688 -61 26 -245 -93 104 -232 -187 8 Switzerland2 329 1,917 211 118 -1,188 643 344 -309 654 -51 9 United Kingdom 4,546 3,975 6,533 -101 4,373 -244 97 1,523 47 837 10 Other Western Europe 2,613 4,563 8,400 1,179 678 1,570 238 1,560 1,420 1,755 11 Eastern Europe 0 -19 23 9 16 -3 5 14 -10 -9 12 Canada 881 4,526 3,191 356 559 372 133 1,415 669 -314 13 Latin America and Caribbean 926 -2,192 895 219 630 198 75 360 -580 -8 14 Venezuela -96 150 35 0 -1 20 15 1 2 -2 15 Other Latin America and Caribbean 1,130 -1,142 864 184 320 169 97 -17 63 49 16 Netherlands Antilles -108 -1,200 -5 36 311 10 -36 376 -645 -55 17 Asia 1,345 4,488 20,208 772 5,921 5,463 713 4,476r -382 3,246 18 Japan -22 868 18,766 2,979 4,996 4330 687 2,820 -52 3,006 19 Africa -54 -56 -33 -38 25 5 0 -13 -1 -10 20 All other 1,067 407 1,414 110 -182 -492 475 626 183 694 21 Nonmonetary international and regional organizations -1,104 -5,300 -163 -1,095 -748 963 -295 LIWC 1,174 -1,252 22 International -1,430 -4,387 294 -1,023 -879 968 -334 1,155 1,546 -1,137 23 Latin American regional 157 3 -43 8 -2 -5 0 7 -38 -14 Memo 24 Foreign countries 20,491 30,889 40,082 5,740 12,832 9,017 3,728 9,972r -3,337 2,130 25 Official institutions 14,214 31,064 24,550 5,118 7,169 8,146 3,075 5,062 -1,658 -2,362 26 Other foreign2 6,283 -181 15,534 622 5,663 871 653 4,910r -1,678 4,493 Oil-exporting countries 27 Middle East3 -1,529 -3,142 -532 -809 -2% 578 514 -612 -201 295 28 Africa4 5 16 1 0 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 Sept. 30, 1988 Rate on Sept. 30, 1988 Rate on Sept. 30, 1988 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 4.0 Aug. 1988 France1 7.0 Aug. 1988 Norway 8.0 June 1983 7.5 Aug. 1988 Germany, Fed. Rep. of, 3.5 Aug. 1988 Switzerland .... 3.0 Aug. 1988 49.0 Mar. 1981 Italy 12.5 Aug. 1988 United Kingdom2 10.54 Sept. 1988 Japan 2.5 Feb. 1987 Venezuela 8.0 Oct.'i985' 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 Mar. Apr. May June July Aug. Sept. 1 Eurodollars 8.27 6.70 7.07 6.74 7.05 7.40 7.61 8.09 8.47 8.31 7 United Kingdom 12.16 10.87 9.65 8.83 8.25 8.00 8.91 10.45 11.29 12.09 3 Canada 9.64 9.18 8.38 8.63 8.90 9.07 9.44 9.42 9.92 10.48 4 Germany 5.40 4.58 3.97 3.38 3.37 3.51 3.88 4.88 5.28 4.93 5 Switzerland 4.92 4.19 3.67 1.61 1.83 2.23 2.82 3.67 3.57 3.34 6 Netherlands 6.29 5.56 5.24 3.97 3.98 4.07 4.10 4.85 4.50 5.51 7 France 9.91 7.68 8.14 7.89 7.99 7.81 7.27 7.32 7.58 7.86 8 Italy 14.86 12.60 11.15 11.11 10.54 10.57 10.90 11.02 11.02 11.27 9 Belgium 9.60 8.04 7.01 6.09 6.08 6.05 6.04 6.84 7.25 7.39 10 Japan 6.47 4.96 3.87 3.82 3.80 3.80 3.82 3.84 3.98 4.15 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 • November 1988 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1988 Country/currency 11998855 11998866 11998877 Apr. May June July Aug. Sept. 1 Australia/dollar2 70.026 67.093 70.136 74.80 77.74 80.76 80.00 80.57 79.15 2 Austria/schilling 20.676 15.260 12.649 11.744 11.912 12.380 12.991 13.281 13.135 3 Belgium/franc 59.336 44.662 37.357 34.962 35.381 36.786 38.649 39.562 39.149 4 Canada/dollar 1.3658 1.3896 1.3259 1.2353 1.2373 1.2176 1.2075 1.2237 1.2267 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 6.4207 6.4938 6.6893 7.0266 7.2280 7.1764 7 Finland/markka 6.1971 5.0721 4.4036 4.0064 4.0297 4.1761 4.3896 4.4720 4.4282 8 France/franc 8.9799 6.9256 6.0121 5.6704 5.7348 5.9310 6.2241 6.3919 6.3515 9 Germany/deutsche mark 2.9419 2.1704 1.7981 1.6710 1.6935 1.7579 1.8466 1.8880 1.8668 10 Greece/drachma 138.40 139.93 135,47 133.86 135.75 140.69 147.85 151.62 151.47 11 Hong Kong/dollar 7.7911 7.8037 7.7985 7.8166 7.8156 7.8073 7.8135 7.8050 7.8106 12 India/rupee 12.332 12.597 12.943 13.158 13.315 13.785 14.079 14.217 14.490 13 Ireland/punt2 106.62 134.14 148.79 159.81 157.78 152.65 145.49 142.17 143.60 14 Italy/lira 1908.90 1491.16 1297.03 1240.99 1258.81 1305.56 1367.26 1397.93 1393.15 15 Japan/yen 238.47 168.35 144.60 124.90 124.79 127.47 133.02 133.77 134.32 16 Malaysia/ringgit 2.4806 2.5830 2.5185 2.5743 2.5847 2.5860 2.6267 2.6520 2.6643 17 Netherlands/guilder 3.3184 2.4484 2.0263 1.8749 1.8987 1.9767 2.0827 2.1319 2.1063 18 New Zealand/dollar2 ... 49.752 52.456 59.327 66.143 68.889 69.996 66.832 64.815 61.480 19 Nor way/krone 8.5933 7.3984 6.7408 6.2140 6.1875 6.3951 6.7207 6.9016 6.9150 20 Portugal/escudo 172.07 149.80 141.20 136.77 138.44 143.54 150.42 153.72 154.18 21 Singapore/dollar 2.2008 2.1782 2.1059 2.0044 2.0109 2.0285 2.0459 2.0417 2.0409 22 South Africa/rand 2.2343 2.2918 2.0385 2.1428 2.2114 2.2716 2.3985 2.4531 2.4575 23 South Korea/won 861.89 884.61 825.93 745.31 739.44 732.88 728.67 725.74 723.00 24 Spain/peseta 169.98 140.04 123.54 110.80 112.04 116.25 122.27 124.122 124.36 25 Sri Lanka/rupee 27.187 27.933 29.471 30.939 30.993 31.133 31.782 32.807 32.953 26 Sweden/krona 8.6031 7.1272 6.3468 5.8892 5.9091 6.1074 6.3542 6.4878 6.4448 27 Switzerland/franc 2.4551 1.7979 1.4918 1.3823 1.4111 1.4629 1.5343 1.5837 1.5763 28 Taiwan/dollar 39.889 37.837 31.756 28.695 28.666 28.723 28.726 28.693 28.914 29 Thailand/baht 27.193 26.314 25.774 25.171 25.170 25.280 25.523 25.560 25.548 30 United Kingdom/pound2 129.74 146.77 163.98 187.82 186.95 177.68 170.51 169.65 168.40 MEMO 31 United States/dollar3 ... 143.01 112.22 96.94 88.95 89.74 92.58 96.53 98.29 97.91 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 statements for priced service operations, March 31, 1988 ... 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 THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director WILLIAM W. WILES, Secretaty ELEANOR J. STOCKWELL, Associate Director BARBARA R. LOWREY, Associate Secretary MARTHA BETHEA, Deputy Associate Director PETER A. TINSLEY, Deputy Associate Director JAMES MCAFEE, Associate Secretary MYRON L. KWAST, Assistant Director SUSAN J. LEPPER, Assistant Director DIVISION OF CONSUMER MARTHA S. SCANLON, Assistant Director DAVID J. STOCKTON, Assistant Director AND COMMUNITY AFFAIRS JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, Assistant Director GRIFFITH L. GARWOOD, Director (Administration) GLENN E. LONEY, Assistant Director ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DIVISION OF MONETARY AFFAIRS DIVISION OF BANKING DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director SUPERVISION AND REGULATION BRIAN F. MADIGAN, Assistant Director RICHARD D. PORTER, Assistant Director WILLIAM TAYLOR, Staff Director NORMAND R.V. BERNARD, Special Assistant to the Board DON E. KLINE, Associate Director FREDERICK M. STRUBLE, Associate Director WILLIAM A. RYBACK, Deputy Associate Director OFFICE OF THE INSPECTOR GENERAL STEPHEN C. SCHEMERING, Deputy Associate Director RICHARD SPILLENKOTHEN, Deputy Associate Director BRENT L. BOWEN, Inspector General HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director 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 CLYDE H. FARNSWORTH, JR., Director MANAGEMENT ELLIOTT C. MCENTEE, Associate Director DAVID L. ROBINSON, Associate Director DAVID L. SHANNON, Director C. WILLIAM SCHLEICHER, JR., Associate Director JOHN R. WEIS, Associate Director. CHARLES W. BENNETT, Assistant Director ANTHONY V. DIGIOIA, Assistant Director JACK DENNIS, JR., Assistant Director JOSEPH H. HAYES, JR., Assistant Director EARL G. HAMILTON, Assistant Director FRED HOROWITZ, Assistant Director JOHN H. PARRISH, Assistant Director LOUISE L. ROSEMAN, Assistant Director FLORENCE M. YOUNG, Adviser OFFICE OF THE CONTROLLER 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 Digitized for DFRAYA SWE.R R ADEBAUGH, Assistant Director http://fraser.sRtlIoCuHisAfReDd .oCr. gS/ TEVENS, Assistant Director Federal ResePrAvTeR BICaInAk Ao. f WStE. LLCoHui, sAssistant Director

72 Federal Reserve Bulletin • November 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, Overland Park, 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 STAFF STUDIES: Summaries Only Printed in the THE LITERATURE, by John D. Wolken. November 1984. Bulletin 38 pp. Out of print. Studies and papers on economic and financial subjects that 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAY- 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 may be sent to Publications Services. 142. MERGERS AND ACQUISITIONS BY COMMERCIAL BANKS, 1960-83, by Stephen A. Rhoades. December 1984. 30 Staff Studies 115-125 are out of print. pp. Out of print. 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF THE 114. MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE ELECTRONIC FUND TRANSFER ACT: RECENT SURVEY ON COMPETITION AND PERFORMANCE IN BANKING EVIDENCE, by Frederick J. Schroeder. April 1985. 23 MARKETS, by Timothy J. Curry and John T. Rose. Jan. pp. Out of print. 1982. 9 pp. 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- SUMER CREDIT REGULATIONS: THE TRUTH IN LENDING KET INTERVENTION, by Donald B. Adams and Dale W. AND EQUAL CREDIT OPPORTUNITY LAWS, by Gregory Henderson. August 1983. 5 pp. Out of print. E. Elliehausen and Robert D. Kurtz. May 1985. 10 pp. 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME AND VENTION: JANUARY-MARCH 1975, by Margaret L. THEIR IMPACT ON CONSUMERS, by Glenn B. Canner and Greene. August 1984. 16 pp. Out of print. Robert D. Kurtz. August 1985. 31 pp. Out of print. 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by garet L. Greene. October 1984. 40 pp. Out of print. Thomas F. Brady. November 1985. 25 pp. 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- VENTION: OCTOBER I98O-OCTOBER 1981, by Margaret DEXES OF THE MONETARY AGGREGATES, by Helen T. L. Greene. August 1984. 36 pp. Farr and Deborah Johnson. December 1985. 42 pp. 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTER- 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE NATIONAL TRADE AND OTHER ECONOMIC VARIABLES: ECONOMIC RECOVERY TAX ACT: SOME SIMULATION A REVIEW OF THE LITERATURE, by Victoria S. Farrell RESULTS, by Flint Bray ton and Peter B. Clark. Decemwith Dean A. DeRosa and T. Ashby McCown. January ber 1985. 17 pp. 1984. Out of print. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- BANKING BEFORE AND AFTER ACQUISITION, by Stephen DEUTSCHE MARK INTERVENTION, by Laurence R. Ja- A. Rhoades. April 1986. 32 pp. cobson. October 1983. 8 pp. 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN A REEXAMINATION AND AN APPLICATION, by John T. EXCHANGE RATES AND INTERVENTION: A REVIEW OF Rose and John D. Wolken. May 1986. 13 pp. THE TECHNIQUES AND LITERATURE, by Kenneth Ro- 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICgoff. October 1983. 15 pp. ING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERVEN- Alice P. White, Paul F. O'Brien, and Mary M. TION, AND INTEREST RATES: AN EMPIRICAL INVESTI- McLaughlin. January 1987. 30 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Bank Lending to Developing Countries. 10/84. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Survey of Consumer Finances, 1983: A Second Report. April 1987. 18 pp. 12/84. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Union Settlements and Aggregate Wage Behavior in the Alice P. White. September 1987. 14 pp. 1980s. 12/84. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF PRO- The Thrift Industry in Transition. 3/85. POSED CEILINGS ON CREDIT CARD INTEREST RATES, A Revision of the Index of Industrial Production. 7/85. by Glenn B. Canner and James T. Fergus. October Financial Innovation and Deregulation in Foreign Industrial 1987. 26 pp. Countries. 10/85. 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. Recent Developments in the Bankers Acceptance Market. Warshawsky. November 1987. 25 pp. 1/86. 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANK- The Use of Cash and Transaction Accounts by American ING MARKETS, by James V. Houpt. May 1988. 47 pp. Families. 2/86. Financial Characteristics of High-Income Families. 3/86. Prices, Profit Margins, and Exchange Rates. 6/86. REPRINTS OF BULLETIN ARTICLES Agricultural Banks under Stress. 7/86. Foreign Lending by Banks: A Guide to International and Most of the articles reprinted do not exceed 12 pages. U.S. Statistics. 10/86. Recent Developments in Corporate Finance. 11/86. Limit of 10 copies Measuring the Foreign-Exchange Value of the Dollar. 6/87. Foreign Experience with Targets for Money Growth. 10/83. Changes in Consumer Installment Debt: Evidence from the Intervention in Foreign Exchange Markets: A Summary of 1983 and 1986 Surveys of Consumer Finances. 10/87. Ten Staff Studies. 11/83. U.S. International Transactions in 1987. 5/88. A Financial Perspective on Agriculture. 1/84. Home Equity Lines of Credit. 6/88. Survey of Consumer Finances, 1983. 9/84. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All 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 SAVING Federal Reserve Banks, 7 Flow of funds, 42, 43 Foreign central banks and foreign countries, 67 National income accounts, 51 Money and capital markets, 24 Savings and loan associations, 26, 39, 40, 42. (See also Mortgages, 38 Thrift institutions) Prime rate, 23 Savings banks, 26, 39, 40 International capital transactions of United States, 53-67 Savings deposits (See Time and savings deposits) International organizations, 57, 58, 60, 63, 64 Securities (See also specific types) Inventories, 51 Federal and federally sponsored credit agencies, 33 Investment companies, issues and assets, 35 Foreign transactions, 65 Investments (See also specific types) New issues, 34 Banks, by classes, 18, 19, 20, 21, 26 Prices, 25 Commercial banks, 3, 16, 18-20, 39 Special drawing rights, 4, 10, 53, 54 Federal Reserve Banks, 10, 11 State and local governments Financial institutions, 26, 39 Deposits, 19, 20 Holdings of U.S. government securities, 30 LABOR force, 45 New security issues, 34 Life insurance companies (See Insurance companies) Ownership of securities issued by, 19, 20, 26 Loans (See also specific types) Rates on securities, 24 Banks, by classes, 18—20 Stock market, selected statistics, 25 Commercial banks, 3, 16, 18-20 Stocks (See also Securities) Federal Reserve Banks, 4,5,7, 10, 11 New issues, 34 Financial institutions, 26, 39 Prices, 25 Insured or guaranteed by United States, 38, 39 Student Loan Marketing Association, 33 MANUFACTURING Capacity utilization, 46 TAX receipts, federal, 29 Production, 46, 48 Thrift institutions, 3. (See also Credit unions and Savings Margin requirements, 25 and loan associations) Member banks (See also Depository institutions) Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 Federal funds and repurchase agreements, 6 Trade, foreign, 54 Reserve requirements, 8 Treasury cash, Treasury currency, 4 Mining production, 48 Treasury deposits, 4, 10, 28 Mobile homes shipped, 49 Treasury operating balance, 28 Monetary and credit aggregates, 3, 12 UNEMPLOYMENT, 45 Money and capital market rates, 24 U.S. government balances Money stock measures and components, 3,13 Commercial bank holdings, 18, 19, 20 Mortgages (See Real estate loans) Treasury deposits at Reserve Banks, 4, 10, 28 Mutual funds, 35 U.S. government securities Mutual savings banks (See Thrift institutions) Bank holdings, 18-20, 21, 30 Dealer transactions, positions, and financing, 32 NATIONAL defense outlays, 29 Federal Reserve Bank holdings, 4, 10, 11, 30 National income, 51 Foreign and international holdings and transactions, 10, 30, 66 OPEN market transactions, 9 Open market transactions, 9 Outstanding, by type and holder, 26, 30 PERSONAL income, 52 Rates, 24 Prices U.S. international transactions, 53-67 Consumer and producer, 44, 50 Utilities, production, 48 Stock market, 25 Prime rate, 23 VETERANS Administration, 38, 39 Producer prices, 44, 50 Production, 44, 47 Profits, corporate, 35 WEEKLY reporting banks, 19-21 Wholesale (producer) prices, 44, 50 REAL estate loans Banks, by classes, 16, 19, 20, 39 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 Ellen V. Futter 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. Stoides1 and Records Center 22701 ATLANTA 30303 Bradley Currey, Jr. Robert P. Forrestal Larry L. Prince Jack Guynn Delmar Harrison1 Birmingham 35283 Roy D. Terry Fred R. Herr1 Jacksonville 32231 E. William Nash, Jr. James D. Hawkins1 Miami 33152 Sue McCourt Cobb 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 Kent M. Scott Oklahoma City 73125 Patience S. Latting David J. France Omaha 68102 Kenneth L. Morrison Harold L. Shewmaker 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 \SE•,r r/e Helena ® Minneapolis j ((7)i ) ^ i ^ f ^ ^ m ^ ^0' j © / I Den i• (H i c r ^w 1 jS Kansas City ^ I Sr. tows p -* V X'Rich»»,?i \Oklahoma City" ^Memphis ffasknlJl A» S \ e les I n. —^ ^ Dallas® \ ) ® S«fi Antonio (Mi**1 April 1984 LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest NEW HANDBOOK AVAILABLE FROM THE containing all Board regulations and related statutes, REGULATORY SERVICE interpretations, policy statements, rulings, and staff opinions. For those with a more specialized interest in The Federal Reserve Board has announced publica- the Board's regulations, parts of this service are pubtion of The Payment System Handbook. The new lished separately as handbooks pertaining to monetary handbook, which is part of the Federal Reserve Reg- policy, securities credit, consumer affairs, and, availulatory Service, deals with expedited funds availabil- able for the first time in September 1988, The Payment ity, check collection, wire transfers, and risk-reduc- System Handbook. tion policy. It includes Regulation CC (Availability of For domestic subscribers, the annual rate for The Funds and Collection of Checks), Regulation J (Col- Payment System Handbook is $75. For subscribers lection of Checks and Other Items and Wire Transfers outside the United States, the price, including addiof Funds by Federal Reserve Banks), the Expedited tional air mail costs, is $90. For the Federal Reserve Funds Availability Act and related statutes, official Regulatory Service, not including handbooks, the an- Board commentary on Regulation CC, and policy nual rate is $200 for domestic subscribers and $250 for statements on risk reduction in the payment system. In subscribers outside the United States. All subscription addition, it contains detailed subject and citation in- requests must be accompanied by a check payable to dexes. It is published in loose-leaf binder form and is "Board of Governors of the Federal Reserve updated monthly. System." Orders should be addressed to Board of To promote public understanding of its regulatory Governors of the Federal Reserve System, P.O. Box functions, the Board publishes the Federal Reserve 27531, Richmond, Virginia, 23261-7531. Regulatory Service, a three-volume loose-leaf service Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis