Federal Reserve Bulletin, 1989-05

VOLUME 75 • NUMBER 5 • MAY 1989 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 321 U.S. INTERNATIONAL TRANSACTIONS Joint Statement on Community Reinvest- IN 1988 ment Act. The U.S. merchandise trade and current Revised prices for Federal Reserve reaccount deficits narrowed substantially in turned check services. 1988, marking the first year of improvement Revisions to official staff commentaries on in either balance since 1981. Regulations B, E, and Z. Meeting of Consumer Advisory Council. 333 HOME EQUITY LENDING Extension of comment period on a series of This article uses the results of surveys conrevised proposals regarding ACH credit and ducted in 1988 to report on the market for debit transactions processed by Federal Reconsumer credit secured by home equity, serve Banks. especially trends in traditional home equity loans compared with those for home equity Change in Board staff. lines of credit. 345 INDUSTRIAL PRODUCTION 353 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE Industrial production was unchanged in At its meeting on February 7-8, 1989, the February after having risen 0.4 percent in Committee established ranges of growth for January. the year of 3 to 7 percent for M2 and 3V2 to IVi percent for M3; no range was set for 347 STATEMENT TO CONGRESS Ml. A monitoring range for growth of total Alan Greenspan, Chairman, Board of Gov- domestic nonfinancial debt was set at 6V2 to ernors, outlines the views of the Board on IOV2 percent. In carrying out policy, the the legislation proposed by President Bush Committee indicated that it would continue for the reform and recovery of the thrift to evaluate money growth in light of the industry and says that it is vitally important behavior of other indicators, including inflafor Congress to move promptly to consider tionary pressures, the strength of the busiand enact the President's proposals because ness expansion, and developments in doprompt action is essential to maintaining mestic financial and foreign exchange public confidence in thrift institutions and markets. their insurance fund, before the Subcom- With regard to the implementation of mittee on Financial Institutions Supervi- policy for the period immediately ahead, sion, Regulation and Insurance of the the Committee adopted a directive that House Committee on Banking, Finance and called for maintaining the current degree of Urban Affairs, March 22, 1989. pressure on reserve conditions and for remaining alert to potential developments that might require some firming during the inter- 351 ANNOUNCEMENTS meeting period. Somewhat greater reserve Statement by Chairman Greenspan on pol- restraint would be acceptable, or slightly icy on debt of developing countries. lesser reserve restraint might be acceptable, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

over the intermeeting period, depending on Ai FINANCIAL AND BUSINESS STATISTICS indications of inflationary pressures, the These tables reflect data available as of strength of the business expansion, the be- March 29, 1989. havior of the monetary aggregates, and developments in foreign exchange and domes- A3 Domestic Financial Statistics tic financial markets. The reserve A46 Domestic Nonfinancial Statistics conditions contemplated by the Committee A55 International Statistics were expected to be consistent with growth of M2 and M3 at annual rates of around 2 ALL GUIDE TO TABULAR PRESENTATION, percent and 3Vz percent respectively over STATISTICAL RELEASES, AND SPECIAL the three-month period from December to TABLES March. It was understood that operations would continue to be conducted with some A76 BOARD OF GOVERNORS AND STAFF flexibility in light of the persisting uncertainty in the relationship between the de- A78 FEDERAL OPEN MARKET COMMITTEE mand for borrowed reserves and the federal AND STAFF; ADVISORY COUNCILS funds rate. The intermeeting range for the federal funds rate, which provides one A80 FEDERAL RESERVE BOARD mechanism for initiating consultation of the PUBLICATIONS Committee when its boundaries are persistently exceeded, was left unchanged at 7 to A83 INDEX TO STATISTICAL TABLES 11 percent. A85 FEDERAL RESERVE BANKS, 361 LEGAL DEVELOPMENTS BRANCHES, AND OFFICES Various bank holding company, bank ser- A86 MAP OF FEDERAL RESERVE SYSTEM vice corporation, and bank merger orders; and pending cases. 407 DIRECTORS OF FEDERAL RESERVE BANKS AND BRANCHES List of Directors by Federal Reserve District. V Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1988 Peter Hooper and Ellen E. Meade of the Board's in chart 1 are the relative growth in income and Division of International Finance prepared this demand at home and abroad and changes in the article. international price competitiveness of U.S. products. The U.S. merchandise trade and current account deficits narrowed substantially in 1988, marking the first year of improvement in either balance Relative Growth Rates since 1981. The improvement reflected continued rapid growth in merchandise exports, coupled During the years 1982-87, growth in U.S. gross with significant slowing of the growth of imports national product and in domestic demand exfrom the pace recorded in recent years. Net ceeded growth abroad, on average, and contribservices, other than capital gains on direct in- uted importantly to the widening of the external vestment assets abroad, were roughly the same deficit (chart 2). In 1988, however, relative in 1988 as in 1987. growth probably had a net positive effect on the Most of the improvement in the U.S. external trade balance. Growth in output and domestic balances occurred during the first two quarters of demand abroad, on average, exceeded that in the 1988. Both the trade and current account deficits United States. While U.S. growth in 1988 was narrowed only moderately in the third quarter, higher than the average growth over the previous and they widened somewhat in the fourth quar- five years, it did not match the rapid pace during ter. In view of the unusually rapid pace of 1987 (not shown in the chart); furthermore, deimprovement in the first half of the year, some mand in major foreign industrial countries, espeslowing of U.S. external adjustment in the sec- cially Japan and Germany, accelerated substanond half should have been expected. That slow- tially. The growth of output in developing ing probably also reflected the ebbing of the countries eased in 1988, but remained above its influence of the decline in the dollar through average level for the 1982-87 period. 1987, particularly after the dollar strengthened during 1988. The net inflow of capital from abroad declined in 1988 as the current account deficit narrowed, 1. U.S. external balances, 1980-88 and the composition of net capital flows shifted Billions of dollars somewhat. Official net capital inflows declined noticeably, and foreigners sold U.S. corporate stocks on balance. Private foreign purchases of U.S. Treasury securities, however, rebounded from the net sales recorded in 1987, and private purchases of corporate bonds remained strong. ECONOMIC INFLUENCES ON U.S. INTERNATIONAL TRANSACTIONS The data are seasonally adjusted annual rates. The current account Two factors that have influenced the develop- is adjusted to exclude capital gains and losses. SOURCE. Bureau of Economic Analysis, U.S. international transacments in U.S. external balances that are depicted tions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

322 Federal Reserve Bulletin • May 1989 2. Growth of real GNP and domestic demand, 3. Real exchange value of the dollar against selected countries, 1982-88 currencies of selected countries, 1980-88 Percent change from year earlier Real GNP Domestic demand . United States Foreign industrial countries The real exchange value of the dollar is calculated using weighted The 1988 figure for U.S. GNP excludes the effects of the drought nominal exchange rates adjusted with weighted consumer prices. The estimated by the Department of Commerce and thus is 0.3 percentage weights in the indexes are proportional to each country's share in point higher than the published figure. world exports plus imports during 1972-76. See note to chart 2 for the The GNP of foreign industrial countries is the weighted average for G-10 countries. the G-10 countries excluding the United States; they are Belgium- Luxembourg, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, and the United Kingdom. The GNP for balance between the end of 1987 and the end of developing countries is the weighted average GNP for Brazil, Hong Kong, Korea, Malaysia, Mexico, the Philippines, Singapore, and 1988 (table 1). The reason for the discrepancy is Taiwan. that most of the net appreciation for the year was The domestic demand in foreign industrial countries is the weighted average domestic demand for Canada, France, Germany, Italy, Japan, against the currencies of major European counand the United Kingdom. tries, whose shares of world trade are relatively Data for the domestic demand of developing countries are not available. In all three cases of weighted data, the weights are propor- high but whose shares of U.S. imports are relational to each country's share in world exports plus imports during tively low. Against the currencies of countries 1972-76. The figure for 1988 is an estimate. that weigh more heavily in U.S. imports, the Price Competitiveness dollar either showed little net change (the Japanese yen) or depreciated only moderately (the The primary stimulus to U.S. net exports during Canadian dollar, Mexican peso, and Korean 1988 came from the improvement in U.S. price won). The distinction between these measures of competitiveness associated mostly with the de- the dollar's exchange rate is important to the preciation of the dollar during the preceding analysis of the elements of the U.S. external three years but also with improvements in the balance. The index weighted by import shares is performance of U.S. prices, wages, and produc- more relevant to movements in import prices, tivity relative to those abroad. By the end of 1987, the price-adjusted, or real, exchange value of the dollar in terms of the currencies of the foreign Group of Ten countries had fallen more 1. Change in the real exchange value of the dollar than 40 percent from its peak in early 1985, so against selected currencies, 1985-881 that almost all of its rise during the first half of the Weighting scheme and Two years Year ending 1980s was reversed (chart 3). On the basis of this exchange rate ending 1987:4 1988:4 measure, in which the currencies of the G-10 countries are weighted by their shares in world Multilateral trade With the G-10 countries -27.3 2.2 trade, the dollar strengthened somewhat during With the G-10 and 8 developing countries -23.1 .3 1988, particularly around midyear, and it finished Bilateral non-oil imports the year about 2 percent above its level at the end With the G-10 countries -22.7 -2.5 of 1987. With the G-10 and 8 developing countries -18.5 -4.1 In terms of a more broadly based index of currencies weighted by shares in U.S. imports, 1. The changes are calculated using indexes weighted by each country's share in the specific trade. For the list of the G-10 countries by contrast, the dollar depreciated modestly on and the 8 developing countries, see note to chart 2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1988 323 4. U.S. and foreign labor costs in manufacturing, 2. U.S. merchandise trade, 1985-881 1980-88 Billions of dollars Type of trade 1985 1986 1987 1988 Merchandise exports 215.9 224.0 249.6 319.9 Agricultural 29.6 27.4 29.5 38.3 Computers 13.7 14.3 17.4 21.7 Other 172.7 182.3 202.7 259.9 Merchandise imports 338.1 368.5 409.9 446.4 Oil 51.3 34.4 42.9 39.3 Computers 8.4 11.0 14.9 18.4 278.4 323.1 352.1 388.7 Trade balance -122.2 -144.6 -160.3 -126.5 1. Components may not add to totals because of rounding. SOURCE. Bureau of Economic Analysis, U.S. international transac- The foreign index includes Canada, France, Germany, Japan, and tions accounts. the United Kingdom, and is constructed by weighting each country's unit labor costs by its share in total output. 3. Changes in U.S. merchandise exports and SOURCE. Peter Hooper and Kathryn Larin, "International Compar- imports, 1987-88 ison of Unit Labor Costs in Manufacturing," International Finance Discussion Papers 330 (Board of Governors of the Federal Reserve Percent change, annual rate System, August 1988), forthcoming in Review of Income and Wealth. Measures of unit labor costs are based partly on data published by the 1987:4 1988:4 1988:2 1988:4 Bureau of Labor Statistics. Type of trade from from from from 1986:4 1987:4 1987:4 1988:2 whereas the index weighted by shares in world trade is more relevant to export volumes or to the Merchandise exports1 Value 19 24 35 14 global price competitiveness of U.S. goods. Volume 19 17 28 8 The decline in the dollar since 1985 has con- Merchandise imports tributed to a significant gain in U.S. international 15 6 1 11 Volume 8 4 -1 10 competitiveness in terms of labor costs in manufacturing. As indicated in chart 4, foreign unit 1. Excludes gold shipments to Taiwan. SOURCE. Bureau of Economic Analysis, U.S. international transaclabor costs in manufacturing, expressed in dol- tions accounts. lars, rose sharply relative to U.S. unit labor costs between 1985 and 1988. While the fall in the DEVELOPMENTS IN U.S. MERCHANDISE exchange value of the dollar accounted for most TRADE of this shift, increases in U.S. labor productivity relative to foreign productivity, and declines in The merchandise trade deficit narrowed more U.S. wages relative to wages abroad, also than $30 billion last year to $127 billion, marking helped. As a result of this improvement, U.S. the first year of improvement since 1980 (table 2). unit labor costs in manufacturing were estimated The value of exports rose 24 percent between the to have been as much as 30 percent below the fourth quarter of 1987 and the fourth quarter of average level (in dollars) for other major indus- 1988, continuing the rapid expansion of the year trial countries. Such estimates of the compara- before (table 3). Imports grew much more tive levels of unit labor costs inevitably are slowly, in sharp contrast to their strong growth in crude, but they suggest that the adjustment of the 1987. Most of the improvement in the deficit in U.S. external balance to the current level of 1988 came during the first half of the year, as exchange rates can continue for some time if exports grew at an extremely rapid rate and output capacity is reallocated toward the United imports changed little. In the second half of the States to take advantage of relatively lower labor year, export growth slowed, while import growth costs here.1 change Rates and U.S. External Adjustment in the Short Run 1. Evidence that relative rates of investment in manufac- and the Long Run," International Finance Discussion Papers turing across countries have responded to international dif- 346 (Board of Governors of the Federal Reserve System, ferences in labor costs is considered in Peter Hooper, "Ex- March 1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

324 Federal Reserve Bulletin • May 1989 4. Changes in the volume of U.S. nonagricultural exports, selected periods, 1981-881 Percent change, annual rate 1986:4 from 1987:4 from 1988:4 from 1988:2 from 1988:4 from Type of export 1980:4 1986:4 1987:4 1987:4 1988:2 Nonagricultural, total 2 23 19 28 12 Computers 26 55 23 30 17 All other -2 16 18 27 10 Industrial supplies 0 8 11 13 -2 Capital goods (excluding computers) 0 17 21 28 14 Automotive 3 20 13 17 9 Consumer goods 0 18 31 37 26 Other 7 34 17 43 -4 1. Data exclude gold shipments to Taiwan. SOURCE. Bureau of Economic Analysis. U.S. international transactions accounts. picked up and actually exceeded the rate of during the first half of the year, and they slowed expansion in exports in volume terms. substantially in the second half. Several factors may explain the shift in the Growth in Exports growth of exports in the second half of 1988. One is timing: The slowdown represented a transitory The expansion of the value of U.S. exports last pause following an unusual bunching of shipyear was spread across commodity categories. ments in the first half of the year. The validity of Two-thirds of the growth in the value of agricul- this explanation cannot be assessed until more tural exports was due to increases in prices. time has gone by. Nevertheless, in light of the Prices for major export crops (particularly wheat phenomenal (and unexpected) growth of exports and soybeans) rose sharply in the wake of the in the first half of the year, timing must have severe drought in key sections of the country. played some role. The expansion in the value of nonagricultural A second possible explanation is the emerexports, on the other hand, was largely real; the gence of capacity constraints in U.S. manufacprices of these exports rose only moderately, turing production, which is indicated by the about in line with the increase in domestic pro- relatively high and rising level of capacity utiliducer prices. zation in a number of key U.S. industries. How- The volume of nonagricultural exports grew ever, among industries that are important in U.S. much faster than can be accounted for by growth abroad alone, so that much of the expansion of 5. U.S. nonagricultural exports, by region, 1987-88 exports was probably a direct result of the improvement in the price competitiveness of U.S. VVaalluuee,, Percent change, 1988' products in foreign markets. However, the 11998877::44 IImmppoorrttiinngg rreeggiioonn ((bbiilllliioonnss 1988:4 1988:2 1988:4 growth of exports (particularly of industrial sup- ooff from from from plies, capital goods, and automobiles) slowed ddoollllaarrss)) 1987:4 1987:4 1988:2 substantially in the second half of the year (table All regions2 239 24 32 16 4). Nonagricultural exports expanded quite rap- 64 13 28 0 idly for 1988 as a whole and to most of the Western Europe 65 27 49 8 regions of the world (table 5). Exports to the Japan 24 25 41 11 newly industrializing economies of Asia (NIEs) Asian NIEs2,3 21 41 47 35 Latin America 34 24 17 31 were particularly strong, spurred both by rapid Other 19 22 8 38 economic growth in those countries and by more recent gains in U.S. price competitiveness in 1. Half-year changes are at annual rates. 2. Data exclude gold shipments to Taiwan. those markets. Shipments to Canada, Western 3. Includes Hong Kong, Singapore, Taiwan, and Korea. Europe, and Japan increased at a rapid pace SOURCE. Bureau of Economic Analysis. U.S. international transactions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1988 325 6. U.S. merchandise exports and manufacturing capacity utilization, selected industries, selected periods, 1978-88 Percent Share in 1987 Capacity utilization rate IInndduussttrryy Total exports Net shipments' Average, 1978-80 1988:4 Total manufacturing2 82 ... 86.5 84.4 Nonelectrical machinery 16 17 86.0 82.2 Chemicals 10 17 82.9 89.7 Motor vehicles 8 21 93.3 86.1 Electrical machinery 8 13 89.9 78.1 Food 5 5 85.1 80.9 Instruments 4 17 88.9 83.4 Primary metals 2 7 97.1 90.5 Lumber 2 8 87.9 84.7 Paper 2 7 92.7 94.5 Fabricated metals 1 5 87.4 84.6 All other manufacturing 20 1. Export share of total U.S. shipments net of intra-industry 2. Sectors are listed in order of importance to exports. shipments. exports and that are shown in table 6 , only two, mid-1988 (see chart 5).2 The actual balance chemicals and paper, had reached record utiliza- dropped more sharply than the model predicted tion rates at the end of 1988. Utilization rates for in the second half of the year. If the historical aircraft and certain nonferrous metals are also relationship between exchange rates and the reported to have been relatively high. In most trade balance has remained the same, the pattern other industries, utilization rates were still some- of export growth and external adjustment during what below the peaks reached in 1978-80. Ca- 1988 cannot be explained solely by the wearing pacity constraints may have affected export off of the effects of the depreciation of the dollar. growth in some areas, but they probably were A final possible explanation is a slackening of not a major factor underlying the rapid deceler- economic growth abroad, particularly in Canada, ation of export growth after mid-1988. Had such Germany, Japan, and the United Kingdom, during constraints been binding, significant upward the second half of 1988. While this slackening was pressure on export prices would have emerged. evident in several major industrial countries, growth Yet, overall nonagricultural export prices for all foreign countries (weighted by shares in U.S. showed no signs of accelerating during the year. exports) appears to have been about unchanged A third possible explanation for the shift in between the first and second halves of the year; thus export growth in mid-1988 is the erosion of the growth abroad can account for little if any of the effects of the earlier decline in the dollar. How- slowdown in export growth. ever, the positive effects of gains in U.S. price Some additional evidence on the scope for competitiveness are unlikely to have disappeared further stimulus to exports from the past depreso abruptly. Empirical models that relate ciation of the dollar can be found in movements changes in the trade balance to changes in exchange rates suggest that, although much of the adjustment comes within four to six quarters, the 2. Imports and exports of computers have been excluded because their unusual behavior during the 1980s (discussed effects of a depreciation of the dollar are felt over below) has made them particularly difficult to model. The two to three years. The predictions of a model model used to produce these predictions is quite similar to that incorporates such adjustment lags suggest one that has been documented and discussed in William L. Helkie and Peter Hooper, "The U.S. External Deficit in the that the partial trade balance (that is, the trade 1980s: An Empirical Analysis," in Ralph C. Bryant, Gerald balance excluding agricultural exports, oil im- Holtham, and Peter Hooper, eds., External Deficits and the ports, and both imports and exports of comput- Dollar: The Pit and the Pendulum (Brookings Institution, 1988), and Ellen E. Meade, "Exchange Rates, Adjustment, ers) adjusted more slowly than expected through and the J-Curve," FEDERAL RESERVE BULLETIN, vol. 74 1987, and caught up to the model prediction by (October 1988), pp. 633-44. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

326 Federal Reserve Bulletin • May 1989 5. U.S. partial merchandise trade balance, 1982-88 6. U.S. shares of exports by selected major industrial countries, 1980-88 Billions of dollars, seasonally adjusted annual rate Percent The major industrial countries covered here are the United States, The data cover nonagricultural exports minus non-oil imports Japan, and the members of the European Community: Belgium excluding imports and exports of computers. The model is estimated Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the through 1986:4. Netherlands, Portugal, Spain, and the United Kingdom. SOURCE. Bureau of Economic Analysis, U.S. international transactions accounts. European Community) allows us to focus more in U.S. shares of world trade. With the real directly on the effects of changes in the price exchange value of the dollar against the other competitiveness of U.S. exports against exports G-10 currencies now back almost to its level at of the other two regions. In the first half of 1988, the beginning of the decade, U.S. exports may the United States regained the share of exports to reasonably be expected to begin regaining their third-country markets it had had in 1980. This share in world markets at that time.3 In the first measure suggests somewhat less scope for furhalf of 1988, the U.S. share in the total volume of ther adjustment at current exchange rates than is exports from the United States, the European indicated by the overall shares. Community, and Japan to all countries was about In sum, the increase in U.S. price competitivemidway between its level in 1980 and its low ness associated with the decline in the dollar point in 1985 (chart 6). These data suggest that during 1985-87 had had substantial benefits for there is room for further gains in exports. How- U.S. exports by mid-1988. Some slackening of ever, overall export shares may be a misleading export growth was to be expected thereafter, as indicator of the effects of changes in price comthe effects of that depreciation began to wear off. petitiveness, because they include U.S., Japa- Capacity constraints also may have impinged on nese, and EC exports to each other. It is not export growth by midyear in some sectors. In possible to distinguish between a decline in the addition, much of the slowing of export growth overall U.S. export share due to reduced comafter midyear probably reflected a bunching of petitiveness of U.S. exports vis-a-vis Japanese deliveries in the first half of the year. and EC exports in foreign markets, and a decline in that share due to strong U.S. growth and Prices of Imports demand for imports (from Japan, the European Community, and elsewhere). Examination of Total import prices (as measured from the natrade shares in third markets (that is, markets tional income and product accounts fixed-weight other than the United States, Japan, and the price index) rose 3 percent during 1988, as a sharp drop in oil prices offset much of the rise in 3. Of course, changes in other factors affecting U.S. trade non-oil prices. The average price of imported oil flows since 1980 could prevent a restoration of the trade fell 25 percent during 1988, to just under $13 per shares of that time. Nevertheless, several studies have sugbarrel in the fourth quarter. Overproduction by gested that the rise in the dollar between 1980 and early 1985 accounted for a large portion of the widening of the trade OPEC members, excess oil inventories, and condeficit. See, for example, Peter Hooper and Catherine L. tinued disagreement about production quotas af- Mann, The Emergence and Persistence of the U.S. External ter the resolution of the Iran-Iraq war, depressed Deficit: 1980-87, Princeton Studies in International Finance, 1989. prices. The tensions among OPEC members Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1988 327 7. Oil prices, 1985-88 adjusted basis). The BLS fixed-weight price index Dollars per barrel rose more than the fixed-weight NIPA index, partly because it uses a measure of computer prices that is - A. — 30 not adjusted for quality and partly because it uses 1 NJ L West Texas intermediate — 25 different measures of prices of raw and intermediate materials. y\ spot price . - -20 According to the fixed-weight NIPA price index, prices of non-oil imports rose in 1988 at f-15 x J a T ^/ U.S. import price about the same rate as they had on average over - —10 the previous two years (table 7). The most rapid 1 1 1 increases were recorded for industrial supplies, 1985 1986 1987 1988 particularly paper, chemicals, steel, and nonfer- SOURCE. U.S. Department of Commerce and Wall Street Journal. rous metals (other than gold); the prices of other were resolved, at least temporarily, toward the categories generally rose less than half as much. end of 1988, and both spot prices and import In most cases, prices increased more rapidly in prices increased significantly early this year the first half of the year than in the second half; (chart 7) . the deceleration, particularly in the third quarter, Non-oil import prices appear to have re- may have reflected an unusually swift incorporasponded sluggishly to the decline in the dollar tion of the effects of the appreciation of the dollar since early 1985. However, different measures of at midyear. import prices tell different stories about the amount of that adjustment. Chart 8 shows three Import Volumes measures of non-oil import prices: the implicit deflator from the national income and product The volume of oil imports rose fairly strongly in accounts (NIPA), the fixed-weight price index 1988, partly in response to the sharp decline in oil published by the Bureau of Labor Statistics prices and partly in anticipation of future price (BLS), and a NIPA price index that has been increases. Domestic oil consumption rose 3 perreconstructed with fixed weights. The fixed- cent, while domestic oil production declined weight price indexes hold the shares of the various nearly 2 percent. The growth of non-oil imports products in the index constant at some base-period slowed significantly, however, as increases in value. In contrast, the implicit deflator uses current- the prices of imports relative to the prices of share weights, which are thus variable. The rise in domestically produced goods finally began to the deflator since 1985 has been considerably depress the demand for imports (table 8). Nevsmaller than those in the other two indexes. This ertheless, the continued robust growth in total difference arises because the former gives increasing weight over time to computers, and the price of 7. Changes in the prices of U.S. imports, 1985—88' computers has been falling rapidly (on a quality- Percent change, annual rate 1987:4 1988:4 1988:2 1988:4 8. Prices of U.S. non-oil imports, 1982-88 Type of import from from from from 1985:4 1987:4 1987:4 1988:2 1982= 100 Total imports 22 33 55 11 NIPA It Oil --1199 --2266 --2255 --2277 Total non-oil 77 88 1100 55 Computers --1133 --66 --99 --33 All other 77 88 1100 55 Industrial supplies 55 1144 2211 77 Capital goods (excluding computers). 1144 66 44 Automotive 77 66 66 66 Consumer goods 88 66 99 22 Foods and other 66 66 99 55 1. As measured by NIPA fixed-weight price indexes. SOURCES. Bureau of Labor Statistics and Bureau of Economic SOURCE. Bureau of Economic Analysis, U.S. international transac- Analysis. tions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

328 Federal Reserve Bulletin • May 1989 8. Growth in the volume of U.S. imports, 1986-88 9. U.S. computer prices, 1980-88 Percent change, annual rate 1987:4 1988:4 1988:2 1988:4 TTyyppee ooff iimmppoorrtt from from from from 1986:4 1987:4 1987:4 1988:2 Total imports 8 4 -1 10 Oil 2 11 10 12 Total non-oil 9 3 -3 9 Computers 73 17 26 8 Other 4 2 -7 10 Capital goods (excluding computers) 10 10 10 10 Automotive 5 0 -14 15 Consumer goods -1 6 -7 20 Industrial supplies 7 -2 -11 7 Foods and other 2 -5 -17 9 The data are derived from the U.S. international transactions accounts. MEMO: Industrial supplies (excluding gold) 8 -1 -11 2 SOURCE. Bureau of Economic Analysis, U.S. international transacindustry is advancing as rapidly as computers tions accounts. have in the 1980s, unadjusted price indexes can domestic demand kept the quantity of non-oil overstate the true price change. Conventionally imports growing for the year as a whole. With the measured, prices of computers may well have exception of capital goods, most categories of risen during the 1980s. However, the services imports declined in the first half of the year from those computers provide have increased at a the high levels that had been reached during an considerably faster rate, and the hedonic price inventory build-up near the end of 1987. Strong index for computers has declined rapidly. domestic investment spending sustained the de- Unfortunately, quality-adjusted measures of mand for imports of capital goods throughout the prices for actual imports and exports of computyear. Imports of other goods, especially con- ers are not available. In their place the Comsumer goods and autos, rebounded during the merce Department uses the quality-adjusted second half of the year, partly in response to price for computers that is used to deflate the strength in domestic consumption. In addition, computer portion of domestic expenditures on some of the pick-up in imports of consumer producers' durable equipment.4 On this basis, goods and autos late in the year may have computer prices at the end of 1988 were almost reflected timing factors related to the Japanese 70 percent lower than they were in 1982 (chart 9). voluntary-restraint agreement for autos and the This decline in prices resulted in a rapid increase impending removal of the Generalized System of in the measured volumes of exports and imports Preferences privileges for certain Asian coun- of computers, even though the value of these tries. imports and exports rose only moderately faster than the value of other imports and exports. In Trade in Computers real terms, the share of computer exports in nonagricultural exports rose from about 5 per- Since the early 1980s, both U.S. imports and cent in 1982 to 21 percent last year; the share of U.S. exports of computers, computer accesso- computers in real imports has risen equally ries, peripherals, and related products have in- sharply (table 9). These developments have imcreased dramatically. Technological advances in portant implications for the analysis of movements in overall import and export volumes and the computer industry have been extremely rapid, so much so that the Commerce Department measures the domestic prices of these 4. See David W. Cartwright, "Improved Deflation of products with a quality-adjusted index. A quali- Purchases of Computers," Survey of Current Business, vol. ty-adjusted, or hedonic, price index for a product 66 (March 1986), pp. 7-10; and Rosanne Cole and others, "Quality Adjusted Price Indexes for Computer Processors measures prices across time for a given basket of and Selected Peripheral Equipment," Survey of Current services derived from that product. When an Business, vol. 66 (January 1986), pp. 41-50. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1988 329 9. Computers as a share of U.S. merchandise trade, selected years, 1980-88 Percent Item 1980 1982 1984 1986 1988 Value Nonagricultural exports 4.1 5.2 7.4 7.3 7.7 Non-oil imports .9 1.4 3.0 3.3 4.5 Volume Nonagricultural exports 3.3 5.2 10.5 14.9 21.1 Non-oil imports .8 1.4 4.2 7.2 14.2 SOURCE. Bureau of Economic Analysis, U.S. international transactions accounts. price indexes (as noted above). Because both Between 1980 and 1985, while the dollar was exports and imports of computers have grown rising, capital losses reduced the current account rapidly in recent years, however, trade in com- (chart 10). Just the reverse occurred during puters did not contribute substantially to either 1985-87, when the dollar was falling. The effect the widening of the trade deficit through 1987 or that these changing currency-translation gains the narrowing of the deficit last year. and losses have had on the current account has varied with changes in the currency composition of the assets and liabilities of foreign affiliates. NONTRADE CURRENT ACCOUNT Excluding capital gains and losses, net direct TRANSACTIONS investment income rose significantly further last year, to well over $30 billion, reflecting the In 1988, net services and transfers by the United strong growth of economic activity abroad. States declined significantly and registered a The net deficit on portfolio investment income, small deficit for the first time in more than three which has increased rapidly since 1985, rose to decades (table 10). The decline was more than nearly $30 billion in 1988. Rapid growth in U.S. accounted for by a large swing from capital gains net portfolio liabilities to the rest of the world on U.S. direct investment abroad in 1987, when more than accounted for the increase. In fact, the the dollar depreciated, to capital losses in 1988, decline in total net investment income flows when the dollar appreciated. These capital gains (including portfolio and direct investment, excluand losses result when the assets and liabilities of sive of capital gains) has not nearly matched the foreign affiliates of U.S. corporations, which are growth in U.S. net foreign indebtedness. This denominated in foreign currencies, are revalued discrepancy developed because the average rate in dollars at changed exchange rates. of return on U.S. assets abroad exceeds by a 10. U.S. nontrade current account transactions, 1984-881 Billions of dollars Account 1984 1985 1986 1987 1988 Total, nontrade current account 5 7 6 6 -9 Capital gains and losses on direct investment, net.... -9 7 12 16 -2 Nontrade current account excluding capital gains and losses 14 0 -6 -10 -7 Service transactions, net 26 15 9 4 7 Investment income, net 27 19 11 5 5 Direct investment income, net 21 20 21 26 33 Portfolio investment income, net 7 -1 -10 -21 -28 Military, net -2 -3 -4 -2 -4 Other services, net 1 -1 2 2 6 Unilateral transfers -12 -15 -15 -13 -14 Private transfers -1 -2 -1 -1 -1 U.S. government grants and pensions -11 -13 -14 -12 -13 1. Details may not add to totals because of rounding. SOURCE. Bureau of Economic Analysis, U.S. international transactions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

330 Federal Reserve Bulletin • May 1989 10. U.S. current account, 1980-88 of U.S. banks. The banks are intermediaries, which charge more on their loans to foreigners Billions of dollars than they pay on their deposits and other liabilities to foreigners. Other net service receipts increased fairly strongly last year, as tourism, travel, and transportation expenditures responded to earlier gains in U.S. price competitiveness. I I I I I I 1 I CAPITAL ACCOUNT TRANSACTIONS 1980 1982 1984 1986 1988 Both net official and net private capital inflows SOURCE. Bureau of Economic Analysis, U.S. international transactions accounts. declined last year, reflecting the narrowing of the current account deficit (table 11). In 1987, the significant margin the average rate of return that increase in foreign official holdings in the United foreign residents earn on their holdings in the States fell well short of the total increase in United States. The difference in rates of return official holdings of dollar reserves by foreign reflects several factors. First, the stock of U.S. authorities, a development that suggested that direct investment assets abroad is probably un- many of those dollar reserves were being indervalued substantially relative to the flow of vested outside the United States. In 1988, the income that it produces, as discussed below. increase in official holdings in the United States Second, a relatively large portion of U.S. port- exceeded increases in dollar reserves reported by folio liabilities to foreigners is in corporate foreign authorities; this shift indicated that, in stocks, for which a portion of income (capital addition to dollar accumulation by some official gains) is not recorded in the international ac- monetary authorities, foreign official dollar recounts. Third, a considerable portion of portfolio serves were being moved from the Eurodollar income is derived from the international activity markets to the United States. 11. U.S. capital account transactions, 1984-881 Billions of dollars Type of transaction 1984 1985 1986 1987 1988 Official capital, net2 -6 -8 34 55 33 Private capital, net2,3 77 112 101 96 84 Inflows reported by U.S. banks, net2 23 40 20 47 28 Securities, net 33 60 65 27 36 Net purchases by private foreigners U.S. Treasuries 23 20 4 -8 20 U.S. corporate bonds 16 42 49 24 24 U.S. corporate stocks -1 4 17 15 -1 U.S. net purchases of foreign securities2'4 -5 -8 -4 -5 -8 Direct investment, net3 12 12 23 16 23 Foreign direct investment4 in the United States3 26 21 36 42 42 U.S. direct investment abroad3,4 -14 -9 -13 -26 -19 Other 10 1 -7 5 -3 Statistical discrepancy 27 18 16 19 17 MEMO: Current account3 -99 -122 -151 -170 -133 1. A minus sign indicates an outflow. Details may not add to totals 3. Excludes capital gains and losses on direct investment income. because of rounding. 4. Transactions between U.S. companies and their Netherlands 2. The refinancing of foreign governments' military sales debt Antilles finance affiliates have been excluded from direct investment through the sale of securities guaranteed by the U.S. government has outflows and added to foreign purchases of U.S. securities. been excluded from changes in U.S. government assets, changes in SOURCE. Bureau of Economic Analysis, U.S. international transacbank custody claims on foreigners, and U.S. purchases of foreign tions accounts. securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1988 331 12. International investment position of the United States, 1984-88 Billions of dollars Item 1984 1985 1986 1987 1988e Total, net international investment position 4 -112 -269 -368 -487 Net direct investment 47 46 39 47 25 Other recorded portfolio investment, net -54 -169 -319 -426 -523 Gold 11 11 11 11 11 1. Components may not add to totals because of rounding. Positive changes in interest rates and exchange rates. Direct investment assets figures indicate U.S. investment abroad; negative figures indicate remain at book value in all years. foreign investment in the United States. All data except those for 1988 e Estimate. include estimates by the Department of Commerce of changes in the SOURCE. Bureau of Economic Analysis, U.S. international transacvalue of stocks, bonds, and other assets, largely as the result of tions accounts and U.S. international investment position. Among private capital flows, net bank- reason for the understatement is that direct inreported inflows were off sharply in 1988 from vestment assets are recorded at book value the 1987 pace, when the inflows had reflected in rather than at current market value. Crude atpart the substantial deposits in Euromarkets by tempts to revalue direct investment claims and foreign central banks. Foreigners sold U.S. cor- liabilities at current market prices suggest that porate stocks on balance in 1988, reversing the the recorded direct investment position was unnet purchases of the previous year. However, dervalued more than $300 billion at the end of foreign private purchases of Treasury securities 1987. This undervaluation helps to explain why rebounded from a decline in 1987. Despite highly U.S. net direct investment receipts (exclusive of publicized increases in foreign acquisitions of currency-translation gains and losses) are still U.S. firms, foreign direct investment in the significantly positive.6 At the same time, the United States in 1988 did not exceed the high recorded investment position may be overstated level recorded in 1987. Although a U.S. petro- because it does not take into account unrecorded leum company sold significant amounts of assets, capital inflows, and because the current market the level of U.S. direct investment abroad was value of loans to some countries with debt probalso little changed in 1988 after an adjustment to lems is substantially below their book value. The exclude currency-translation gains and losses. U.S. international transaction accounts have shown large positive net errors and omissions cumulating to about $200 billion over the past U.S. INTERNATIONAL INVESTMENT three decades. To the extent that some of this POSITION cumulative statistical discrepancy in the accounts represented unrecorded net capital in- As a result of the continued net inflow of capital flows, the net foreign investment position would last year, the official U.S. net foreign investment be still more negative. position is estimated to have declined $120 bil- In brief, if adjustments were made for the lion, to a deficit of nearly $500 billion at the end valuation changes and statistical discrepancies of 1988 (table 12). This estimate does not take just discussed, the U.S. net foreign investment into account capital gains and losses on nondirect investment assets and liabilities during 1988, as tion Data for Policy Coordination," International Finance the official data will do when they are released by Discussion Papers 337 (Board of Governors of the Federal the Department of Commerce in June. Recent Reserve System, November 1988); Michael Ulan and William studies have suggested that the recorded invest- G. Dewald, "The U.S. Net International Investment Position: The Numbers Are Misstated and Misunderstood," U.S. ment position is substantially understated.5 One Department of State, February 1989. 6. It has been suggested by many that the international investment position would be raised further if official gold 5. See Robert Eisner and Paul J. Pieper, "The World's holdings were valued at the current market price rather than Greatest Debtor Nation?" paper presented at the meetings of at the official price of $42.22 per ounce. However, the the American Economic Association, December 1988; Lois valuation of gold holdings has no bearing on the U.S. net Stekler, "Adequacy of International Transactions and Posi- investment income flows. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

332 Federal Reserve Bulletin • May 1989 position would be substantially higher, on bal- Further adjustment may take place as investors ance, than the official figure. In any event, that take advantage of lower production costs in the position would be continuing to fall rapidly, United States relative to other industrial counreflecting the deficit in the current account. tries. On the other hand, much of the adjustment in the external deficit as a result of the dollar's PROSPECTS FOR 1989 nominal depreciation may have occurred already. Rapid growth in export volume over the While the nominal merchandise trade and current past two years has gone a long way toward account deficits improved substantially in 1988, restoring U.S. shares in the total trade of indusmuch of the improvement occurred in the first trial countries to their previous highs. Increases two quarters of the year. The slowdown in the in import prices have tended to depress the rate of improvement during the second half of demand for imports, but the continued strength 1988 has mixed and uncertain implications for of domestic demand limits the scope for signififurther adjustment in 1989. On the one hand, this cant reduction in real imports from their current slowdown may be a transitory pause, with more high levels. Strong domestic demand also puts adjustment to come. The net decline in the value upward pressure on U.S. prices and interest of the dollar since early 1985, coupled with the rates, which could further hinder external adjustproductivity gains and only moderate increases ment by reducing U.S. price competitiveness and in U.S. wages and other costs, has substantially by increasing interest payments on the growing improved U.S. price and cost competitiveness. U.S. net external debt position. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

333 Home Equity Lending This article was prepared by Glenn B. Canner home equity lines of credit became available in and Charles A. Luckett of the Board's Division 1988 with publication of consumer surveys sponof Research and Statistics, and Thomas A. sored in 1987 by the Federal Reserve Board and Durkin of the Regulatory Planning and Review industry-sponsored surveys of financial institu- Section of the Office of the Secretary, with tions (see FEDERAL RESERVE BULLETIN, June assistance from Nellie D. Middleton. 1988, pages 361-73). In addition, the Report of Condition for year-end 1987 made available for Personal borrowing secured by equity in residen- the first time comprehensive information about tial property has become an increasingly impor- amounts outstanding under home equity lines of tant component of household liabilities. Growing credit at commercial banks. None of these equity in homes, aggressive promotions by finan- sources revealed much about traditional home cial institutions, and a revised tax code, which equity loans, however. To learn more about retains the deduction for interest on real-estate- traditional home equity loans and to relate trends secured debt but not on other consumer borrow- in these closed-end loans to available information ing, all appear to have contributed to the increas- about home equity lines of credit, the Federal ing use of home equity loans. Such credit Reserve Board again participated in sponsoring typically takes either of two forms.1 The first of consumer surveys in 1988 (appendix A). This these, referred to here as a "traditional home article uses the new survey results to provide a equity loan," is a closed-end loan extended for a more complete report on the market for conspecified period of time and generally requiring sumer credit secured by home equity. repayment of interest and principal in equal monthly installments.2 The second form is the newer "home equity line of credit," a revolving HOLDINGS OF HOME EQUITY LOANS account secured by residential equity. These accounts permit borrowing from time to time at The Federal Reserve Board has for many years the account holder's discretion up to the amount sponsored surveys of consumers to gather inforof the credit line, and they typically have more mation about their overall financial situation and flexible repayment schedules than those for the about their use of specific financial services. traditional home equity loans. These surveys can be used to assess the use of Until recently, relatively little statistical infor- home equity loans over time. Before the midmation has been available on home equity lend- 1980s, nearly all home equity loans were of the ing. Some information about uses and users of traditional type. More recent surveys provide information on consumer use of both types of home equity credit. Consumer surveys indicate that 5.4 percent of 1. Another way homeowners may access equity in their homeowners had a home equity loan in 1977.3 home is to refinance an existing mortgage. When the amount borrowed in a refinancing exceeds the amount of the debt By 1983, this proportion had risen only slightly, represented by the original mortgage plus closing costs, then in effect equity-secured credit has been extended. Such "excess" funds may be used in the same manner as any other home equity type of loan. Refinancings are not discussed in this article. 2. Traditional home equity loans are sometimes called 3. Thomas A. Durkin and Gregory E. Elliehausen, 1977 second mortgages, although legally they may involve a first Consumer Credit Survey (Board of Governors of the Federal lien. Reserve System, 1978). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

334 Federal Reserve Bulletin • May 1989 to 6.8 percent.4 However, surveys taken last Moreover, whether the growth of credit line year reveal substantial growth in the use of home accounts will continue to outpace that of tradiequity loans since 1983.5 These most recent tional home equity loans is open to question. surveys found that 11 percent of homeowners, or Two basic factors seem likely to influence nearroughly 6.5 million families, had a home equity term developments. First, many creditors have loan in the second half of 1988. Closer examina- aggressively promoted their credit line plans with tion of the 1988 surveys shows that 5.6 percent of discounted finance rates and waivers or rebates homeowners had a home equity line of credit, of closing costs and fees. If creditors reduce while a nearly equal proportion, 5.3 percent, had these promotions, home equity lines of credit will a traditional home equity loan. become relatively less attractive. Second, the Widespread consumer interest in home equity recent flattening of the yield curve, so that shortcredit line plans dates to 1986, when extensive term interest rates and longer-term rates are promotion of such plans by financial institutions more nearly equal, means credit lines may no began. In that year, the Tax Reform Act man- longer have a near-term price advantage over the dated the gradual removal of federal income tax closed-end loans. Typically, rates on traditional deductions for interest paid on nonmortgage con- home equity loans are more in line with longersumer credit, enhancing the attractiveness to term rates, while credit lines are indexed to consumers of using mortgage instruments to fund shorter-term rates. Until recently, short-term inexpenditures that typically have been financed terest rates were well below rates on longer-term by consumer loans. Favorable interest rates instruments, as shown in the chart. As a result, compared with those on many types of consumer credit line accounts have been priced favorably credit, particularly credit cards, also have en- relative to fixed-rate, closed-end home equity couraged borrowing against home equity. These loans for most of the past three years. If the features of reduced interest expense and tax flatter yield curve persists, the difference bedeductibility characterize both types of home tween the growth rates for the two home equity equity loans. In addition, the convenience of products should shrink. being able to draw as needed against a line of Short- and medium-term interest rates on credit has proved to be a particularly attractive U.S. Treasury debt feature of the credit line account. According to the 1988 Surveys of Consumer Attitudes, 31 percent of the families with a home equity line of credit obtained it in 1988, and 83 percent of families with accounts had opened them since 1986. In comparison, about one-fifth of the traditional home equity loans were established in 1988, and 64 percent had been granted since 1986. Looking at 1988 originations alone, 63 percent were credit lines and 37 percent were closed-end loans. Thus, in recent years homeequity-secured credit lines have been the more popular vehicle, but consumer demand for the traditional loan has by no means evaporated. SOURCES OF HOME EQUITY LOANS Before the mid-1970s, home equity loans were in 4. "1983 Survey of Consumer Finances," (Board of Governors of the Federal Reserve System, Division of Research large part the province of consumer finance comand Statistics). panies, second mortgage companies, and individ- 5. "Survey of Consumer Attitudes," July-December 1988 uals. Today the home equity loan market is (University of Michigan, Institute for Social Research, Survey Research Center). dominated by depository institutions, especially Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Equity Lending 335 1. Sources of home equity loans granting them loans of specified amounts with Percent distribution, by type of loan1 predetermined payment schedules. Home equity lines Traditional home Source of credit equity loans USERS AND USES Commercial banks 54 33 OF HOME EQUITY CREDIT Savings institutions2 31 27 Credit unions 11 8 Other creditors3 4 32 In general, home equity credit users fit the profile Total 100 100 of a financially sophisticated, "upscale" group of consumers. However, important differences ex- 1. Data have been weighted to ensure the representativeness of the sample. ist between holders of credit lines and users of 2. Includes savings and loan associations and savings banks. traditional home equity loans. Moreover, differ- 3. Includes finance and loan companies and brokerage firms. SOURCE. Surveys of Consumer Attitudes, July-December 1988, ences among customers of each product in de- Survey Research Center, University of Michigan. mographic characteristics, in uses of the funds, commercial banks and to a lesser extent savings and in the perceived attractiveness of the two institutions (savings and loan associations and credit products all suggest that they may not be savings banks) (table 1). However, some relative close substitutes in the minds of many consumspecialization by type of home equity loan prod- ers. uct is observable among creditors. In particular, finance companies have provided nearly a third Demographic Characteristics of Holders of the traditional home equity loans while playing of Home Equity Loans an insignificant role in the market for home equity lines of credit. Among depository institu- Families that have a home equity credit line tions, commercial banks and savings institutions typically have higher incomes and have built up have roughly equal shares of the market for substantially more equity in their homes than traditional home equity loans, but banks are the homeowners in general have, or those with a first predominant source of credit lines, accounting mortgage only (table 2). Families with traditional for 54 percent of the total market. home equity loans likewise have higher incomes The specialization of finance companies in the and more equity than the average first morttraditional home equity loan market may in part gagee, but they have significantly smaller reflect long-time customer relationships as well amounts of each than holders of credit line as limits on the services available from finance accounts have. In 1987, families with credit line companies. Because finance companies typically accounts had median incomes of $51,000, and do not offer deposit services (except, in some holders of traditional home equity loans had cases, through banking affiliates), they are less median incomes of $43,000. In comparison, the well suited to offering credit accounts that can be median income for those with a first mortgage accessed by check, a feature of virtually all home only was $38,000. Median amounts of home equity lines of credit. Also, finance companies equity were $83,000 for credit line holders, tend to serve a somewhat lower-income home- $43,000 for those with traditional home equity owner clientele with smaller amounts of home loans, and $35,000 for those who had a first equity.6 Lenders often prefer to exercise tighter mortgage only. Those borrowing against home control over the credit use of such customers by equity also tend to be older than homeowners with a first mortgage only; in part their higher incomes and home equity may reflect the fact 6. For example, the median incomes of traditional home that older homeowners have probably proequity loan borrowers at commercial banks and savings gressed further in their careers and have owned institutions were $55,000 and $40,000 respectively in 1988. In their homes longer. Homeowners with no mortcontrast, the median family income of persons borrowing from finance companies was $32,000. See memorandum, gage debt at all tend to have sizable equity and "Home Equity Loan Holding and Use: Results of 1988 relatively low incomes; the median age for this Consumer Surveys," to the Consumer Advisory Council, group is 65, and many of them are on retirement January 24, 1989, table 4. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

336 Federal Reserve Bulletin • May 1989 2. Characteristics of homeowners, by debt status1 Home equity2 (dollars) 1987 family income (dollars) EEdduuccaattiioonn NNoonnwwhhiittee aanndd AAggee ((mmeeddiiaann DDeebbtt ssttaattuuss ((mmeeddiiaann ggrraaddee HHiissppaanniicc yyeeaarrss)) Mean Median Mean Median ccoommpplleetteedd)) ((PPeerrcceenntt)) No mortgage debt 84,925 60,000 25,920 23,000 65 12 10 First mortgage only 59,886 35,000 41,266 38,000 41 14 11 Home equity line of credit 139,779 83,000 56,537 51,000 47 15 9 Traditional home equity loan 93,163 43,000 49,453 43,000 46 14 13 MEMO: All homeowners 75,643 50,000 36,359 32,500 50 14 10 1. Data have been weighted to ensure the representativeness of the lines of credit and traditional home equity loans. sample. SOURCE. Surveys of Consumer Attitudes, July-December 1988, 2. Home equity consists of the market value of the home less all Survey Research Center, University of Michigan, debts secured by the home, including balances outstanding on equity incomes and have owned their homes for a long home equity product. The data reveal that home time. equity lines of credit in particular are an upscale The strong correlation between the use of product, with larger proportions of each of the home equity for loan collateral and levels of higher-income groups ($35,000 or more in annual family income and equity is further illustrated in income) holding a credit line account rather than table 3, which groups homeowners by income a traditional home equity loan. The other demoand equity categories and shows the proportion graphic characteristics in tables 2 and 3 do not of each group that has one or the other type of show significant differences between holders of credit lines and users of traditional home equity 3. Proportion of homeowners with home equity loans, although the latter are somewhat more loans, by demographic characteristic1 likely to be nonwhite or Hispanic and to have had Percent somewhat fewer years of formal schooling than credit line holders. Home Traditional DDeemmooggrraapphhiicc cchhaarraacctteerriissttiicc equity line home Either type The geographic breakdown in table 3 illusof credit equity loan trates the pronounced regional character of the Age market for home equity lines of credit. Twelve 18-34 4 4 8 percent of homeowners in the Northeast have a 35-44 6 7 13 45-54 9 10 18 credit line account, compared with an average of 55-64 8 6 14 65 or older 2 1 2 4 percent for the other three major regions. A Family income similar, though less pronounced, geographic pat- Under $15,000 1 2 2 tern also characterizes the market for traditional $15,000-24,999 3 4 7 $25,000-34,999 3 5 8 home equity loans. The Northeast is, of course, $35,000-44,999 7 5 12 $45,000-59,999 9 7 16 a part of the country where incomes and real $60,000 or more 14 10 23 estate values have both grown rapidly, and it is Home equity2 also the home of many financial institutions that Under $50,000 3 6 9 $50,000-99,999 6 3 9 have aggressively promoted home equity loan $100,000 or more 11 6 16 products. Region West 4 6 1100 North Central 4 5 9 Northeast 12 8 20 Amount of Borrowing South 3 4 7 MEMO: All homeowners 5.6 5.3 11 Users of credit line accounts and traditional 1. Data have been weighted to ensure the representativeness of the home equity loans also differ considerably in the sample. amounts they have borrowed (table 4). Survey 2. Home equity consists of the market value of the home less all debts secured by the home, including balances outstanding on equity data for 1988 reveal that, on average, credit line lines of credit and traditional home equity loans. users (disregarding those with no outstanding SOURCE. Surveys of Consumer Attitudes, July-December 1988, balances) owe considerably less than users of Survey Research Center, University of Michigan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Equity Lending 337 4. Outstanding balance on home equity loans 5. Purpose of home equity borrowing, by type of loan1 Percent distribution, by type of loan1 Proportion of debtors citing purpose Outstanding balance Home equity line Traditional Home equity line of (dollars) of credit home equity loans credit2 TTrraaddiittiioonnaall PPuurrppoossee hhoommee N 1- o 9 n ,9 e 9 2 9 4 2 1 7 34 Initial draw A d ll r a o w th s e 3 r eeqquuiittyy llooaann22 10,000-24,999 23 41 25,000 or more 9 25 Home improvement 38 58 45 Total 100 100 Repayment of other debts .. 40 28 35 Education 11 20 1 MEMO:3 Real estate 10 2 16 Mean (dollars) 12,983 19,036 Auto, truck 7 30 5 Median (dollars) 10,000 15,000 Medical 3 16 0 Business 4 7 6 Vacation 1 11 0 1. Data have been weighted to ensure the representativeness of the Other4 11 23 5 sample. 2. Includes respondents who reported that they had never used 1. Data have been weighted to ensure the representativeness of the their accounts, plus respondents who had paid off outstanding debt. sample. 3. Excludes accounts with no outstanding balance. 2. Proportions add to more than 100 percent because multiple uses SOURCE. Surveys of Consumer Attitudes, July-December 1988, could be cited for a single loan or drawdown and because a number of Survey Research Center, University of Michigan. draws could be cited for one line of credit. 3. One-third of account users made no drawdown after the original one. traditional home equity loans. For example, 9 4. "Other" includes purchases of furniture or appliances, tax payments, personal financial investments, and purchases of boats or percent of credit line holders owe $25,000 or other recreational vehicles. more compared with 25 percent of those using SOURCE. Surveys of Consumer Attitudes, July-December 1988, Survey Research Center, University of Michigan. closed-end home equity loans. The mean and median amounts owed by traditional home equity never drawn on them. Nevertheless, the high loan users in 1988 were $19,000 and $15,000 proportion of credit line holders who either have respectively, compared with $13,000 and $10,000 never drawn on their accounts or have repaid respectively for credit line users. outstanding balances in full is surprising and Thus far, consumer use of home equity lines of appears inconsistent with information provided credit has been moderate; in particular, the by creditors. Some industry estimates suggest amounts that consumers owe are typically well that in 1987 the proportion of home equity credit below the maximum amounts allowed under their lines without an outstanding balance was in the plans. The median credit line available to survey range of 15 to 20 percent.7 respondents was $31,250, more than three times the median amount actually owed. In addition, Purposes of Borrowing the surveys reveal that many credit line holders (about 41 percent) have no balance outstanding Historically, surveys have found that consumers (table 4). Of these, nearly 85 percent have never have used traditional home equity loans primarused their account, while the other 15 percent ily to repay other debts and to finance home have paid off a previous obligation and currently improvements.8 The 1988 surveys show that carry no balance. Some of those who have never these uses are the most prevalent ones for both activated their credit line accounts are new ac- types of home equity loans, although there are count holders (they have had the account less some differences. Outlays for education, medical than six months), but the majority are not. Most expenses, and vacations are relatively more imholders of these accounts appear to have estab- portant uses of credit line borrowings than of lished them as standby lines of credit. closed-end debt. In contrast, financing purchases Since many creditors offering home equity of real estate has been a somewhat more comlines have either waived or rebated closing costs mon use of closed-end loans. These differences as a marketing device and since most creditors do not assess any fees to maintain an account, it 7. "Home Equity Credit Report" (American Bankers is not surprising to find that some consumers Association, no date), table 16, p. 36. have arranged for these lines of credit but have 8. 1977 Consumer Credit Survey, p. 92. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

338 Federal Reserve Bulletin • May 1989 in use apparently stem from the differing features 6. Advantages and disadvantages cited by holders of of the two products. The convenient availability home equity loans, by loan type of multiple draws on the credit lines suggests that Percent1 they will be more attractive to consumers for Traditional relatively small purchases, such as home appli- Home home Advantage or disadvantage equity line ances, for unanticipated outlays, such as some of credit2 equity loan medical expenses, or for outlays recurring over time, such as college tuition payments. On the Convenience 76 40 other hand, real estate transactions often are To obtain the loan 24 23 To access funds 48 7 large, one-time events that may be relatively Other 4 10 better financed with a traditional home equity Cost 61 50 Low interest rate 21 32 loan. Tax deductibility 29 16 11 0 Other 0 2 Other advantages 8 7 No special advantages 2 11 ADVANTAGES AND DISADVANTAGES OF Disadvantages HOME EQUITY PRODUCTS Risks 40 29 Lose home 13 16 Debt overextension 27 13 Costs 24 15 Further differences emerge between users of Interest rates 23 15 credit lines and users of closed-end loans regard- To establish account 1 0 Other disadvantages 5 25 ing their views of the advantages and disadvan- No special disadvantages 27 22 tages of their chosen loan type compared with 1. Data have been weighted to ensure the representativeness of the other consumer credit products. For example, sample. nearly 50 percent of credit line holders cited the 2. Adds to more than 100 percent due to multiple responses. SOURCE. Surveys of Consumer Attitudes, July-December 1988, convenience of obtaining money as needed as an Survey Research Center, University of Michigan. important advantage; only 7 percent of traditional home equity loan users mentioned this of this upscale group of borrowers and the varifactor (table 6). In addition, in comparing users able rates on most of these accounts.9 of the two types of loans, a larger proportion of In sum, survey evidence suggests that holders the credit line holders mentioned cost, princi- of credit lines and users of closed-end loans pally a lack of fees, as an important advantage. represent different market segments, albeit with Many observers have suggested that tax deduct- some similarities and overlaps. Credit line holdibility of interest payments likely is an important ers have somewhat higher incomes and more factor contributing to the recent growth of home equity in their homes, but, so far at least, have equity credit lines, and the survey responses borrowed less. Debt repayment and home imsupport this conclusion. Nearly 30 percent of provement are the main uses of both kinds of credit line holders and 16 percent of traditional loan, but the credit lines are also used more home equity loan users mentioned tax deductibil- broadly for other purposes. Credit line holders ity as an advantage of home equity loans com- are more likely to mention convenience as an pared with other types of consumer credit. Con- advantage, but they also more often mention the sumers also cited several potential disadvantages cost in terms of variable interest rates and the of home equity products. Roughly equal propor- risk of possible debt overextension as disadvantions of the users of each type of home equity tages. product mentioned the risk of losing the home as Significantly, lack of knowledge about alternaa disadvantage, but credit line holders expressed tives does not appear to be associated with the concerns about possible debt overextension selection of loan type. The 1988 surveys show twice as frequently as users of traditional home equity loans. Likewise, a higher proportion of credit line users cited cost (interest rate) as a 9. Virtually all credit line accounts have a variable interest disadvantage of this type of credit, probably rate feature, typically one that allows monthly adjustments that are indexed to changes in the prime rate or to some other reflecting simultaneously the sensitivity to prices short-term money market rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Equity Lending 339 that 92 percent of all homeowners are aware of Aggregate Home Equity Debt the availability of traditional home equity loans, and 75 percent are aware of home equity lines of Before examining the sensitivity of households to credit. In comparing the two types of credit, movements in interest rates, it might be useful to about 90 percent of users of each type were gauge the aggregate amount of home equity debt aware of the availability of the other product. outstanding. Comprehensive statistics are not But, despite their high levels of awareness, most available, but rough estimates can be constructed users of either a traditional home equity loan or from reports for some lender groups together of a credit line account did not seriously consider with inferences from the household surveys. the other type of credit instrument before obtain- Debt outstanding under home equity credit lines ing their current loan. Among homeowners with can be estimated at about $75 billion at the end of a traditional home equity loan, only 16 percent 1988; a less precise estimate puts the amount of considered obtaining a line of credit instead. traditional home equity loans somewhere be- Similarly, among homeowners with a credit line, tween $135 billion and $190 billion. The total only 20 percent considered taking out a tradi- market for home equity debt thus ranges from tional home equity loan. This lack of cross- about $210 billion to $265 billion, or between 10 product shopping likely reflects factors such as and 12 percent of all home mortgage debt on 1- to the differences in loan purpose discussed earlier. 4-family residential properties. For instance, as previously noted, many credit Commercial banks (since December 1987) and line holders seem to have established their ac- FSLIC-insured savings institutions (since June counts as standby lines with no immediate use 1988) have been itemizing their receivables under intended, and roughly three-quarters of them credit lines on the Reports of Condition that they mentioned convenience (in one form or another) file quarterly with their respective supervisory as a key advantage of that loan product. agencies. These reports, which cover the two largest institutional segments of the market for home equity lines, provide a solid foundation for estimates of revolving home equity debt; a sam- EFFECTS OF HOME EQUITY DEBT ON THE ple of commercial banks also supplies such data ECONOMIC BEHAVIOR OF HOUSEHOLDS to the Federal Reserve on a weekly basis. However, because debt incurred through traditional The growing importance of home equity debt in home equity loans is not reported separately, it household balance sheets may have implications remains embedded in the total of home mortgage for the economic behavior of households. The debt outstanding, with no means available to June 1988 BULLETIN article, for instance, ex- separate it out. plored the question of how the availability of Responses to the consumer surveys indicated home equity credit lines might be affecting aggre- that commercial banks and savings institutions gate consumption and borrowing. That article (including mutual savings banks) may have acconcluded that home equity lines were primarily counted for 85 percent of the credit line accounts substituting for other types of debt and therefore in place during the second half of 1988. Compihad not expanded the total volume of household lations from the Reports of Condition establish borrowing; likewise, it concluded that any effect that at the end of 1988, commercial banks had on aggregate consumption was probably quite receivables under credit lines of $40 billion and small. Another behavioral issue is whether the FSLIC-insured savings institutions had $11 bilvariable-rate structure of most home equity lines lion. In the absence of data for mutual savings and some traditional home equity loans might banks (MSBs), an estimate of $10 billion is used affect the economic behavior of households here.10 Adding the figures together gives an estiin some way, particularly during periods when the general level of interest rates is rising. 10. While MSBs have substantially fewer mortgage assets This question is addressed in the following secthan commercial banks, their business is concentrated in the tions. Northeast, which, as noted, has been a region of particularly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

340 Federal Reserve Bulletin • May 1989 mated total of $61 billion in revolving home Effects of Variable Rates equity credit outstanding at these various depository institutions. If this total for depositories is With the development of adjustable-rate mortinflated to account for the 15 percent of credit gages early in the present decade, the interest line accounts held by other lenders, then the obligation on the existing stock of household year-end aggregate for all lenders approached debt began to become more responsive to general $75 billion.11 movements in interest rates. This trend has con- In the absence of any direct means to isolate tinued with the advent of home equity lines of the amounts of traditional home equity credit on credit, virtually all of which have variable rates, lenders' books, deriving an aggregate estimate insofar as these credit lines have substituted for for that type of lending is more problematic. consumer debt and for traditional home equity Some inferences can be drawn from the survey loans that have been largely fixed in rate. In data, however. For instance, the survey indi- recent years, even some of these types of debt cates that the mean balance outstanding on a have been made with adjustable rates, but not traditional closed-end loan is about one and nearly to the extent that home equity lines have one-half times the average balance on an active been.12 home equity line of credit. Further, after sub- The prime rate has served as, by far, the most tracting out credit line accounts with no bal- common index to which the variable rates on ances—about 40 percent of all accounts, accord- home equity lines have been pegged. About ing to the survey—the ratio of traditional loans to three-quarters of all providers of these credit active credit line accounts is about 1.6 to 1. lines use the prime rate for this purpose. Rates on Multiplying together these ratios of size of bal- Treasury bills, typically of 90-day or 6-month ance and number of loans (accounts) suggests maturity, have been used by virtually all other that outstanding debt on closed-end loans may be institutions. Two-thirds of the providers adjust about two and one-half times the amount of debt rates monthly, and most of the rest adjust quarunder credit lines. If the estimate offered here of terly. Moreover, few lenders at present provide about $75 billion in revolving credit is accurate, any annual limit on rate increases. The use of then traditional home equity debt may have been market-sensitive indexes with frequent adjustas much as $190 billion at year-end. ments and little constraint on rate levels means If, however, inaccuracies exist in the mean that the average interest rate applied to the stock amounts of debt outstanding or in the proportion of credit line debt should move closely with of credit line accounts with no balance that was money market rates. calculated from the survey, then the above esti- How rate adjustments affect the payment obmate of traditional home equity credit could be ligation of the typical credit line holder can be off target. For example, if industry estimates of estimated with the help of the survey statistics. 15 to 20 percent for inactive credit line accounts As noted earlier, the mean outstanding balance are closer to the mark, then we would have to on an equity-secured line of credit is about pare the estimate of traditional home equity loans $13,000. For each percentage point of interest, a outstanding (other things equal) to about $135 borrower would pay $10.83 a month. A common billion. markup over prime is Wi percentage points. With the prime rate at percent last spring, the typical borrower with a $13,000 balance and an interest rate of 10 percent would have paid $108 of interest each month. By December, when the heavy use of home equity accounts. Several MSBs are known prime rate had risen to IOV2 percent and the rate to have large portfolios of home equity credit lines. on credit lines thus to 12 percent, this borrower 11. Based on a similar methodology, but using less complete data on receivables and a less reliable estimate of market shares, an estimate of $75 billion outstanding at the end of 1987 was presented in the June 1988 BULLETIN article. 12. In the 1988 survey of households, 16 percent of the It now appears that the year-end 1987 figure was closer to $60 traditional home equity loans held by respondents had an billion. adjustable rate of interest. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Equity Lending 341 would have paid $130 in interest, assuming ap- sector as a whole would increase with a rise in proximately the same balance outstanding. interest rates. Whether changes in interest obligations of this If increased interest receipts outweigh higher magnitude might stimulate some curtailment of interest payments when rates rise, consumer current spending or a reduction of debt by con- spending might increase. However, a rise in sumers is difficult to say. At the margin, these interest rates causes the current stock of wealth changes presumably would have some effect, but to be revalued downward, which is apt to exert its significance is open to question. One practical some pressure on spending. Moreover, taking consideration is that a rise in the interest rate on account of even broader economic effects, higher a credit line balance need not increase the interest rates, by raising financing costs, tend to monthly payment. Only those borrowers faced restrain aggregate economic activity and thus to with an "interest only" minimum payment re- reduce labor income. This chain of economic quirement and who customarily pay the mini- consequences also points toward lower conmum would necessarily be obligated to make a sumer spending. higher payment. More commonly, lenders set In sum, variable-rate debt makes the cash flow minimum payments at some percentage of the of consumer-debtors more vulnerable to conoutstanding balance (for instance, Wi percent). straint in times of rising interest rates, but, for A minimum payment of 1 Vi percent on the mean the sector as a whole, increased interest receipts balance of $13,000 would be $195, more than probably outweigh the higher interest payments. enough to cover the interest payments calculated In any event, the positive effect on cash flow is above. In these circumstances, of course, the just one way in which higher interest rates affect loan balance would amortize more slowly. Bor- consumers. The negative effects of higher interrowers who found this development undesirable est rates on consumer wealth and on aggregate might then adjust their behavior in some fashion. demand operate to reduce consumer spending. Another consideration is that holders of credit line accounts have higher incomes than other homeowners or other households in general, as DEVELOPMENTS IN PUBLIC POLICY shown in table 2. They also have substantially more home equity than the average homeowner. In recent months, legislative and regulatory ac- The surveys did not obtain data on any assets of tions have been taken that will influence the households other than home equity, but it seems future development of the home equity loan clear that holders of home equity credit lines tend market. Two statutes, the Competitive Equality to be financially well situated. Therefore, higher Banking Act of 1987 (CEBA) and the Home interest payments would be unlikely to impose a Equity Loan Consumer Protection Act of 1988 serious constraint on their spending. (HELCPA), added new Truth-in-Lending re- A broader examination of household sector quirements regarding credit linked to home behavior reveals that the cash flow of some equity.13 Also, in late 1988, the Federal Reserve households improves with rising interest rates adopted new capital adequacy guidelines.14 The because they hold variable-rate (or short-matu- guidelines establish a framework that makes regrity) financial assets. In the aggregate, interest- ulatory capital requirements more sensitive to paying assets of households exceed their inter- differences in credit-risk profiles among banking est-bearing liabilities by roughly 50 percent, and in 1987 households received interest of nearly $315 billion and paid out interest of about $255 13. The Competitive Equality Banking Act of 1987 was billion, according to the latest available data. enacted on August 10, 1987; implementing requirements under Regulation Z were adopted on November 3, 1987. The Many assets, like many liabilities, carry fixed Home Equity Loan Consumer Protection Act of 1988 was rates, of course, and therefore the overall effect enacted November 23, 1988; proposed amendments to Regof rising interest rates on receipts and payments ulation Z to implement the act were published by the Board for public comment on January 23, 1989. of consumers is hard to quantify. It appears 14. Press release, "Risk-Based Capital Guidelines," Fedlikely, however, that the net cash flow to the eral Reserve System, January 19, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

342 Federal Reserve Bulletin • May 1989 organizations. The new guidelines assign all cat- Z. For instance, as for other open-end loan egories of housing-related credit to specific risk- products, disclosures for home equity lines of weight categories and thereby, in effect, specify credit had to be provided to the consumer before the amount of capital that creditors need to fund the first transaction. However, borrowing limits outstanding balances on home equity loans and on home equity lines typically are much larger on the undrawn portions of credit lines. than those on other types of open-end loan products, and home equity lines entail a security Competitive Equality Banking Act of 1987 interest in the consumer's home. Thus, home equity lines tend to expose the consumer to more The CEBA requires creditors to place a ceiling financial risk than other open-end products do. In on the life-of-loan interest rate on adjustable-rate addition, a perception existed among some inmortgages (ARMs). However, the statute does dustry observers that certain common features of not specify any particular rate ceiling, leaving contracts for home equity credit lines, such as that choice to the discretion of the creditor, or, in the right to change unilaterally the terms and some instances, to determination by the applica- conditions of the plan at any time, were inherble state usury law. With respect to home pur- ently unfair to consumers. In response to these chase loans, the CEBA has had relatively little concerns, rather than to any record of industry effect, since nearly all ARMs had life-of-loan abuse of consumers, Congress enacted the ceilings before the statute's enactment. The sit- HELCPA. The act expands the coverage of rules uation for home equity loans is different. Virtu- on disclosure and advertising for home equity ally none of the credit line plans set up before the lines, requires the distribution of an information effective date of the CEBA included a ceiling on brochure about them, and places a variety of finance rates. Now any newly established home substantive restrictions on contract terms and equity line with an adjustable interest rate must conditions. carry a rate ceiling. The new disclosure rules, along with the infor- It is difficult to assess whether the CEBA has mation brochure that must be provided to loan had a meaningful influence on the market for applicants, may help consumers to better underhome equity loans. However, at least some cred- stand the potential benefits and risks of using itors have emphasized their relatively low ceiling home equity lines of credit. The timing of the rates when promoting their credit line accounts. distribution of the disclosure material to consum- Ultimately, competitive forces will determine the ers, along with requirements for more complete level of the rate ceiling a particular creditor needs advertising about the costs of credit line acto establish (given the other features of its prod- counts, should facilitate credit shopping. Noneuct) to maintain its share of the market. Whether theless, the extent of these benefits appears such ceiling rates will be low enough to signifi- limited. First, as noted, consumers who obtain cantly reduce the interest rate risk of borrowers home equity credit lines tend to be financially is yet to be seen. Moreover, because creditors well-endowed and better educated than most will find it more difficult to modify terms and other consumers and thus are probably already conditions on home equity lines owing to the better able to understand the potential benefits enactment of HELCPA, they may be reluctant to and risks.15 Moreover, consumer surveys have lock themselves into long-term contracts with consistently found that credit line holders believe relatively low rate ceilings. they received adequate information about their accounts when they opened them. Second, surveys indicate that only about one-third of credit Home Equity Loan Consumer Protection line holders considered applying for an account Act of 1988 Before the enactment of HELCPA, home equity credit plans were treated like other types of 15. For example, as the consumer surveys reveal, holders of home equity lines are well aware that serious conseopen-end credit plans for purposes of account quences (including the loss of their home) are associated with disclosure and advertising rules under Regulation failing to repay loans as scheduled. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Equity Lending 343 with a lender other than the one they ultimately Capital Adequacy Guidelines selected and thus did not shop extensively for their accounts. Together, these findings suggest In recent years, federal banking supervisors have that if future holders of home equity credit lines assessed the adequacy of the level of bank capital are similar to those who have already established by comparing a bank's ratio of primary and total such accounts, then the new disclosure rules are capital to total assets with minimum standard likely to have limited effects. ratios. On December 16, 1988, the Federal Re- As mentioned, HELCPA contains several sub- serve Board approved new capital guidelines. stantive limitations on the way credit line plans The guidelines attempt to take explicit account of can be structured. First, the act requires credi- differences in credit risks among banking organitors offering plans with variable interest rates to zations' assets and off-balance-sheet items by select an index rate that is publicly available and assigning each type of asset and off-balancebeyond the control of the creditor. In effect, this sheet exposure to one of several broad risk requirement prohibits creditors from using an categories. index such as an internal measure of cost-of- Outstanding balances on both home equity funds or their own prime rate, which roughly lines of credit and traditional home equity loans one-quarter of creditors have used in the past. that are not first liens will be assigned a 100 Second, the statute prohibits creditors from ter- percent weight for purposes of calculating riskminating an account and accelerating payment of weighted assets. Those that are first liens will be the outstanding balance before the scheduled assigned a 50 percent weight, provided that such expiration of the plan. However, the law protects loans have been made with prudent underwriting creditors by providing three exceptions to this standards, have sufficient homeowner equity, rule. A creditor may terminate a plan if (1) there and are performing in accordance with their has been fraud or material misrepresentation by original terms. Undrawn portions of home equity the consumer in connection with the plan; (2) the credit lines will not be assessed a capital charge consumer has failed to meet the repayment terms if two conditions are met: first, that the bank can of the agreement; or (3) the consumer acts in a terminate the account, prohibit additional draws way that adversely affects the creditor's security on the line, or reduce the credit line in accordinterest. Whether the safeguards afforded credi- ance with the provisions of applicable federal tors in the statute will prove adequate remains to statutes (at this time, the HELCPA); and second, be seen and may depend on future court deci- that the bank reviews the status of the account at sions that will further clarify appropriate situa- least annually. If these conditions are not met, tions in which creditors may curtail operations of undrawn portions of home equity lines are effectheir home equity line programs. tively assigned a 50 percent weight for purposes The final substantive limitation provides that of calculating the amount of risk-weighted assets. creditors may not unilaterally change the terms Given the large volume of undrawn credit lines of a home equity line after an account has been available to consumers (roughly twice the curopened.16 However, the proposed regulation rent level of outstanding balances), significant would allow the creditor and consumer to modify capital charges could be incurred by creditors if a plan after it starts by using a bilateral written they fail to conform to these conditions. agreement. Such agreements offer both parties an opportunity to make mutually beneficial changes to plans as circumstances change over APPENDIX: SURVEY OF CONSUMER time. ATTITUDES To obtain information on the prevalence of home 16. Unilateral changes that are unequivocally beneficial to equity accounts and their use by homeowners, the consumer, such as a reduction in an annual fee, would be the Federal Reserve Board helped to develop permitted. Moreover, under certain circumstances creditors questions that were included in the Survey of may freeze a consumer's access to an account or reduce the available credit line. Consumer Attitudes for July through December Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

344 Federal Reserve Bulletin • May 1989 1988, conducted by the Survey Research Center A.l Approximate sampling errors of survey results, by size of sample at the University of Michigan. Interviews were conducted by telephone, with telephone numbers Percentage points chosen from a cluster sample of residential num- Size of sample bers. The sample was chosen to be broadly SSuurrvveeyy rreessuulltt ((ppeerrcceenntt)) representative of the four major regions—North- 100 300 3,000 east, North Central, South, and West—in pro- 50 10.5 6.2 2.5 portion to their populations (Alaska and Hawaii 30 or 70 9.6 5.7 2.3 were not included). For each telephone number 20 or 80 8.4 4.9 2.0 10 or 90 6.3 3.7 1.5 drawn, an adult from the family was randomly 5 or 95 4.6 2.7 1.1 selected as the respondent. 1. Ninety-five percent confidence level, 1.96 standard errors. The survey defines the family as any group of persons living together who are related by mar- homeowners reported having a home equity line riage, blood, or adoption, and any individual of credit, and 114 homeowners indicated they living alone or with persons to whom the individ- had a traditional home equity loan. The survey ual is not related. The head of the family is data have been weighted to be representative of defined as the individual living alone, the male of the population, thereby correcting for differences a married couple, or the adult in a family with among families in the probability of their being more than one person and only one adult. Gen- selected as survey respondents. Estimates of erally, when there is no married couple and more population characteristics derived from samples than one adult, the head is the person most are subject to errors based on the degree to familiar with the family's finances, or the one which the sample differs from the general popuclosest to age 45. Adults are persons aged 18 lation. Table A.l indicates the sampling errors years or more. for proportions derived from samples of different Together the surveys sampled 3,010 families, sizes. 2,011 of whom were homeowners. Overall, 109 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

345 Industrial Production Released for publication March 16 the total index in February was 5.0 percent higher that it was a year earlier. Industrial production was unchanged in Febru- In market groups, production of consumer ary, after having risen 0.4 percent in January. In goods rose only slightly in February. Auto as- February, output of business equipment and semblies declined to an annual rate of 7.2 million home goods rose strongly; however, production units from a rate of 7.5 million units in January, of construction supplies, materials, and autos and the output of light trucks for consumer use declined. At 141.1 percent of the 1977 average, edged down. In contrast, production of home Ratio scale, 1977=100 All series are seasonally adjusted. Latest series: February. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

346 Federal Reserve Bulletin • May 1989 1977 = 100 Percentage change from preceding month Percentage change, Group 1989 1988 1989 Feb. 1988 to Feb 1989 Jan. Feb. Oct. Nov. Dec. Jan. Feb. Major market groups Total industrial production 141.1 141.1 .6 .4 .4 .4 .0 5.0 Products, total 150.3 150.7 .5 .2 .6 .6 .2 5.1 Final products 148.5 149.0 .4 .2 .7 .5 .3 5.2 Consumer goods 138.8 139.0 1.2 .3 1.0 .4 .1 5.8 Durable 131.5 131.5 2.4 -.1 2.2 -.3 .0 9.1 Nondurable 141.5 141.8 .7 .5 .6 .7 .2 4.8 Business equipment 164.1 165.4 -.4 .6 .7 1.0 .8 8.5 Defense and space 180.9 180.6 -.3 -1.0 -.7 -.1 -.2 -5.4 Intermediate products 156.5 156.4 .7 .1 .5 1.0 .0 4.7 Construction supplies 143.7 142.7 1.2 .5 .4 1.8 -.7 3.6 Materials 128.5 128.0 .8 .6 .1 .0 -.4 4.8 Major industry groups Manufacturing 147.4 147.4 .6 .4 .4 .7 .0 5.7 Durable 146.7 146.9 .6 .4 .3 .7 .1 6.1 Nondurable 148.3 148.2 .7 .3 .4 .6 -.1 5.0 Mining 103.4 101.5 -.6 1.5 .7 -1.9 -1.8 .0 Utilities 114.8 116.9 .8 -.2 1.5 -.5 1.9 1.2 NOTE. Indexes are seasonally adjusted. goods, which includes appliances, increased fur- ruary, mainly reflecting large declines in the ther, and nondurable consumer goods rose output of steel and coal. Nondurable materials, slightly. such as chemicals and textiles, were little After having weakened briefly last fall, the changed, on balance, again in February. output of business equipment has picked up In industry groups, manufacturing output was considerably. Much of the recent strength has unchanged in February after having risen a reoccurred in commercial equipment, mainly com- vised 0.7 percent in January. Both durable and puters, and in manufacturing equipment. The nondurable manufacturing were about unproduction of construction supplies fell in Feb- changed in February. Outside manufacturing, ruary, retracing some of January's large gain. mining output declined 1.8 percent, but produc- Materials production declined 0.4 percent in Feb- tion at utilities rose 1.9 percent. Capacity utilization in total industry for Feb- Total industrial production—Revisions ruary was estimated at 84.3 percent, down 0.2 Estimates as shown last month and current estimates percentage point from January. In manufacturing, capacity utilization for February was 84.6 Percentage change percent, 0.2 percentage point lower than in Jan- Index (1977=100) from previous MMoonntthh months uary, and 2.0 percentage points higher than it was a year earlier. Detailed data for capacity Previous Current Previous Current utilization are shown separately in "Capacity Nov 139.9 139.9 .3 .4 Utilization," Federal Reserve monthly statistical Dec 140.6 140.5 .5 .4 Jan 141.1 141.1 .3 .4 release, G.3. Feb 141.1 .0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

347 Statement to Congress Statement by Alan Greenspan, Chairman, Board ing program the Federal Reserve Banks and of Governors of the Federal Reserve System, Federal Home Loan Banks will share in meeting before the Subcommittee on Financial Institu- the liquidity needs of thrift institutions that cantions Supervision, Regulation and Insurance of not be met by Federal Home Loan Bank adthe Committee on Banking, Finance and Urban vances under traditional collateral standards, or Affairs of the U.S. House of Representatives, market sources of funds. This arrangement is March 22, 1989. consistent with Federal Reserve Bank practice of lending secured to troubled institutions until their I am pleased to appear today before this commit- difficulties can be resolved. Loans under this tee to outline the views of the Board of Gover- arrangement will be secured by assets of the nors on the legislation proposed by President Federal Savings and Loan Insurance Corpora- Bush for the reform and recovery of the thrift tion (FSLIC) as well as those of the troubled industry. The Board supports this comprehen- institution. sive package of proposals to strengthen the thrift I would like to focus my remarks today on the industry, and depository institutions generally, two major elements of the President's program: as well as to prevent the serious problems of the (1) the restructuring and reform proposals, and thrift industry from recurring. (2) the procedures for dealing with failed savings The proposals in the bill include the following: and loan associations as well as the funding (1) greatly enhanced supervisory, regulatory, and required to cover losses incurred by these instienforcement authority; (2) a new framework for tutions. Before turning to this task, I believe it resolving insolvent thrift institutions; (3) a sepa- would be useful to recall why we are facing a rate insurance fund for thrift institutions under thrift problem and to draw some lessons from its the administration of the Federal Deposit Insur- causes. ance Corporation (FDIC); and (4) a strengthening Today's thrift industry losses grew partly out of this new thrift fund, as well as the FDIC fund, of the vulnerability of a fixed rate, long-term, through higher premiums. lender with relatively short-term liabilities, to Besides this legislative program, a number of changes in interest rates. As inflation, and interadministrative measures have been taken or are est rates, rose in the late 1970s and early 1980s, planned. As a first step to limit losses in insolvent and as deposit rate ceilings were phased out, the institutions, more than 160 of them have been resulting mismatch on the rising cost of deposit brought under federal control to date, and ap- liabilities and the fixed return on mortgage assets proximately 60 more will be similarly addressed produced substantial losses and a serious erosion in the next few weeks. As part of this effort, we of industry capital. Into this situation other eleare contributing 170 Federal Reserve examiners ments were added. Expanded powers were to the overall task force. mixed with inexperienced or dishonest manage- Moreover, to help attract responsible buyers ment, brokered deposits that fed unchecked for troubled thrift institutions, and as a result of growth, lax accounting standards, and seriously the important changes in the environment for inadequate supervision, all within the context of interstate banking, the Federal Reserve Board adverse economic conditions. It is sobering how intends to reconsider the tandem operations re- these factors led so quickly to insolvencies. In a strictions on applications brought to the Board short period, the serious, but manageable, matufor acquisitions of failed or failing savings and rity-mismatch problem became the disastrous loan associations. In addition, under a joint lend- asset-quality problem that we face today. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

348 Federal Reserve Bulletin • May 1989 In evaluating this situation, I would not limit actions, to terminate insurance on an expedited my emphasis, as some have done, to focusing basis, and to prohibit thrift institutions from only on the decline in regional economies and, in exercising powers that could cause undue risk to particular, on the drop in oil prices. The regional the FSLIC insurance fund. economic problems were real, but in assessing Moreover, the proposal puts a new emphasis responsibility it is important to recognize that the on adequate capital for the thrift industry as a oversupply in the real estate market in certain cushion against losses and as a restraint on areas was at least partially a result of the lending excessive risktaking. Accordingly, thrift instituby the savings and loan associations themselves. tions will be required to meet bank capital stan- During the period 1982 to 1985, in the face of dards by June 1991, with the exception that they declining oil prices, commercial real estate loans will be given 10 years to write off goodwill. For of savings and loan associations increased more those institutions that do not meet this standard, than $57 billion (129 percent). In many cases growth can be restricted before the 1991 deadthese loans were made with an eye principally line, and must be prohibited after this time. focused on front-end fees, and without any rea- Our estimates indicate that more than a majorsonable assurance of repayment. ity of the thrift institutions with positive tangible A comparison with the banking industry is capital under generally accepted accounting prininstructive. While the banks do not have real ciples (GAAP) standards could meet the existing estate equity investment powers, nonrecourse bank primary capital requirements; on a risklending by banks for commercial real estate adjusted basis, we estimate that nearly twodevelopment projects with thin borrower equity thirds would meet bank standards due largely to positions often puts the bank lenders in a position the favorable risk-weight given to 1- to 4-family in which they are very close to equity investors. residential mortgages under the risk-based mea- Taking this into account, it is all the more sur- sure of capital. prising that the estimated cost of resolving the If goodwill were to be immediately excluded thrift problems in Texas will run about $40 bil- from capital, the institutions falling below the lion. In that state, in which the economic envi- standard would have to raise about $15 billion to ronment for banks and thrift institutions is iden- $20 billion in capital to meet bank minimums. tical, the costs for resolving the problems of the However, the proposed legislation, as noted, banking industry, with assets that are much gives thrift institutions a 10-year period to write larger than those of the thrift institutions, should off the goodwill; thus, this major capital-raising amount to considerably less than $10 billion. effort can be spread over a number of years. Clearly, the large absolute difference in costs and It should be emphasized that if losses continue the even larger difference in costs relative to or accelerate due to further credit deterioration assets is evidence that the thrift industry experi- or interest rate exposure, the industry's need for enced a systems failure, that is, a major lapse in capital could be substantial. Those institutions public and private prudential standards. that cannot meet bank capital standards as set To deal with these problems, the new program forth in the proposed legislation would necessarfocuses on the supervisory and regulatory re- ily have their growth restricted or might be forms designed to ensure that the mistakes that required to shrink their assets. have so adversely affected the thrift industry, its The administration's program also takes major deposit insurance fund, and the taxpayers will steps toward restructuring the thrift supervisory not be repeated. A number of important steps and regulatory framework. Besides separating have been proposed. the insurance and regulatory functions, the pro- A new insurance fund for thrift institutions will posal would create a new federal thrift regulator. be established to be administered by the FDIC, The new regulator—the Chairman of the Federal separately from the insurance fund for banks, but Home Loan Bank System (FHLBS), who would with special powers for the FDIC to approve be under the Secretary of the Treasury in the applications by thrift institutions for insurance, same relationship as the Comptroller of the Curto make examinations, to initiate enforcement rency—should be more independent from the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statement to Congress 349 industry. Importantly, the FHLBS would be another 3 basis points in 1991; and then would be required to apply bank supervisory and account- held at that level. However, when the insurance ing standards to the savings and loan associa- funds reach the target for reserves of 1.25 pertions. cent of insured deposits, rebates would again be Moreover, the boards of directors of the Fed- possible. eral Home Loan Banks will be reconstituted The level of FDIC insurance reserves as a along the lines of Federal Reserve Bank boards. percentage of insured deposits has dropped in This should make them more responsive to the recent years to the present ratio of 0.83 percent, broader public interest. In contrast to present and it is important that this trend be reversed. arrangements, most of the membership of the The proposed premium increase for banks thus boards will be drawn from outside the industry, stands on its own merits, quite apart from anyincluding the Chairman and Vice Chairman of the thing that might be done about thrift institutions, boards, who will be chosen by the new chief of as a necessary step to maintain the integrity of the Federal Home Loan Bank System. Finally, the FDIC fund against future contingencies. the Chairman of the FHLBS, as the new regula- Another element of the President's program is tor and supervisor, would carry a mandate em- a funding package designed to provide sufficient phasizing safety and soundness, and would ap- financial resources to resolve current and propoint the head supervisory agent at the Home spective insolvencies among FSLIC-insured in- Loan Banks who would be directly responsible stitutions. This function would be assigned to a to the FHLBS in Washington. These are both newly created Resolution Trust Corporation necessary and important reforms. (RTC), which would be managed by the FDIC Another step recommended by the President, and operate under the direction of the Oversight to which we attach great importance, is the Board composed of the Secretary of the Trearequirement that savings and loan associations sury, the Chairman of the Federal Reserve that do not meet the qualified thrift lender (QTL) Board, and the Attorney General. To accomplish test (60 percent of assets in residential-related its task, the RTC would be provided with $50 lending) in the Competitive Equality Banking Act billion of funding—the proceeds of bonds issued of 1987 must, after an appropriate transition by an RTC Funding Corporation. These funds period, become banks and be subject to the would be used to resolve insolvent thrift instituentire regulatory and supervisory regime appli- tions that have not received assistance from cable to banks and their holding companies. We FSLIC or that will become insolvent over the believe that it is fully appropriate to confine the next three years. Principal would be repaid with benefits of thrift status, involving both access to the proceeds of zero coupon bonds purchased subsidized long-term borrowing from Federal from thrift industry resources, and the interest on Home Loan Banks and tax benefits, to only those the bonds would be paid with thrift industry and, institutions that devote a major part of their if necessary, Treasury funds. assets to promoting homeownership. Based on data for September 30, 1988, about Another important part of the reform package 470 thrift institutions, with assets of about $250 is the increase in insurance premiums for both billion, are tangible capital insolvent. It seems thrift institutions and banks, as well as the au- prudent to assume that all of these institutions thority for the FDIC to raise premiums for both will require RTC assistance. We cannot know types of institutions in the light of experience. exactly what the resolution costs will be for these For thrift institutions in which the fund is now institutions, but based on FSLIC's estimates of insolvent and in need of rebuilding, premiums the costs of its 1988 resolutions we estimate that under the proposal will rise in 1990 from their it will cost about $40 billion to take care of these present level of 20.8 basis points to 23 basis 470 institutions. Of course, many other FSLICpoints in 1991, remain at that level for three insured institutions are at present thinly capitalyears, and then fall to 18 basis points in 1994. ized, and some of these could well become For banks the current premium of 8 basis insolvent during the three-year period for which points would increase 4 basis points in 1990, and RTC would be responsible for new insolvencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

350 Federal Reserve Bulletin • May 1989 We have looked at the cost of resolving new never any losses as a result of deposit insurance; and existing insolvencies under different scenar- to do so would require limitations and rules that ios, and under some, unlikely, circumstances the would put depository institution lenders, and the resolution costs could exceed $50 billion. How- economy they serve, in a straitjacket. Such a ever, in our judgment, all things considered, the course would be costly to growth and efficiency. $50 billion should be adequate. There is, of Our task is to see to it that the potential for losses course, much that is unknown, and that is now is minimized to the extent possible, and that unknowable, that will affect this judgment. Mar- steps are taken to ensure that the preventable ginal adjustments may be necessary as experi- governmental, regulatory, supervisory, and huence is gained to take account of, for example, man failures that were the cause of the thrift additional costs or recoveries. The critical point industry losses do not happen again. is that the fundamental approach is sound, and The Board attaches considerable importance has the necessary flexibility to adapt to changes to the provision of the proposed legislation that in circumstances. calls for the Secretary of the Treasury, in con- Key to the RTC's ability to minimize costs is junction with the federal financial regulators, to flexibility to pursue various resolution options. undertake a study of the nation's deposit insur- Such flexibility would permit the separate mar- ance system. There are major areas of concern keting of franchises and troubled real estate about the system, focusing on its apparent bias portfolios, which might broaden the market and toward excessive risktaking, its tendency in the thereby increase the values of both. In particular, direction of differential treatment of small and in cases in which no franchise value remains in large institutions, and the unintended expansion an organization, the least-cost option would of insurance coverage through such techniques likely be liquidation rather than purchase and as brokering deposits that have been disaggreassumption. To reduce overall costs, the RTC gated into $100,000 segments. must have the resources necessary to pursue this A review, at both a conceptual and practical course. level, is needed of the consistency of an insur- When so much money is needed to make up for ance system that evolved out of the Great Desuch large losses, partly from mismanagement, pression, on the one hand, with today's depositand in no small part due to fraud, is it reasonable gathering industry of both small banks and giant to ask the taxpayers to pay any part of these modern financial services organizations that opcosts? erate across markets and national boundaries, on It is. The basis for my answer goes far beyond the other. It will be no easy task. It must be done the congressional pledge of the full faith and carefully and the recommendations implemented credit of the United States behind insured depos- gradually to ensure a smooth transition to modiits. The reason for public expenditure to support fied insurance arrangements. deposit insurance is the basic benefits to the I would like to close my testimony by stressing economy as a whole that we derive from deposit that it is vitally important for the Congress to insurance. The certainty and stability provided move very promptly to consider and enact the by deposit insurance benefit the nation as a President's proposals. We must make available whole, while they protect the individual from the resources the regulators need to close insolcatastrophic loss. By giving the public confi- vent thrift institutions. We must stop the continudence in the safety of its funds, we avoid the ing daily losses due to operating expenses that deposit withdrawal and the losses that disrupted greatly exceed income, as well as to the higherthe payments system and the savings and invest- than-normal rates that they must offer to attract ment process in the 1930s. Losses of the kind deposits. In operating in this way, they not only that we face today should not happen, but with hurt themselves and the insurance funds, but, as the gains to society as a whole that come with they drive up rates, they also injure their comdeposit insurance we must accept both the pos- petitors and the economy as a whole. Prompt sibility and the reality that there will be losses to action is essential to maintaining public confibe borne by society as a whole. dence in thrift institutions and their insurance fund. • Our job now is not to see to it that there are Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

351 Announcements STATEMENT ON POLICY The statement strongly encourages financial ON DEBT OF DEVELOPING COUNTRIES institutions to expand the CRA statements that are presently required to include information Chairman Alan Greenspan of the Federal Re- regarding the institution's past record of meeting serve Board issued the following statement on its obligations under the CRA. The statement March 16, 1989: indicates that these expanded statements could form the basis for useful comment by and discus- I fully support the principles put forward by Secretary sions with community groups regarding the insti- Brady last Friday for helping the heavily indebted tution's record well before an application is filed, developing countries to resolve their economic and at a time when any issues or problems can be financial problems: continued economic reform in oraddressed more effectively. der to achieve sustained economic growth; timely and adequate external financial resources to support eco- The statement also discusses the role of prinomic development; and for voluntary debt reduction vate meetings between financial institutions and supported by the international financial institutions. community groups in the applications process, The challenge ahead for all of us is to reinvigorate the the policy of the agencies regarding private CRA process and to ensure that it works. agreements, and the views of the agencies regarding extensions of the public comment period for applications. Examples are provided in the statement of specific steps that have been taken JOINT STATEMENT by institutions with effective programs for meet- ON COMMUNITY REINVESTMENT ACT ing their CRA responsibilities. The Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Home REVISED PRICES FOR FEDERAL RESERVE Loan Bank Board, and the Federal Deposit In- RETURNED CHECK SERVICES surance Corporation ("the agencies") jointly issued a Community Reinvestment Act (CRA) The Federal Reserve Board announced on March statement on March 21, 1989. This joint state- 16, 1989, revised prices for Federal Reserve ment revises the 1980 CRA Information State- returned check services. The prices will become ment issued by the agencies and reflects the effective May 1, 1989, and remain in effect experience of the agencies since 1977 in admin- through 1989. istering the CRA. The Board's action at this time is in response The statement is designed to provide federally to declining check recovery rates in the latter insured financial institutions and the public with part of 1988, after Reserve Banks began offering guidance regarding the requirements of the CRA new returned check services on September 1, and the policies and procedures the agencies will 1988. The declining rates are primarily a function apply during the applications process. of returned check revenue that was lower than The statement discusses the following topics: anticipated and higher-than-expected costs rethe basic components of an effective CRA policy; sulting from the poor quality of qualified check the role of examination reports on CRA perfor- deposits. The Federal Reserve is actively admance in reviewing applications; the need for dressing quality problems and is working directly periodic review and documentation by financial with depository institutions to reduce operational institutions of their CRA performance; and the costs and to improve the overall quality of rerole of commitments to the agencies in the appli- turned check deposits. cations process. Under the new fee schedules for returned Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

352 Federal Reserve Bulletin • May 1989 checks, the Federal Reserve anticipates recover- finance charge in a credit transaction. Additional ing 102.9 percent of total check costs during the commentary is included that interprets the time that the new prices are in effect, from May Board's uniform rule for disclosures for adjustthrough December 1989, and 100.5 percent for able-rate mortgages. the full year. The proposed raw return fees are an average of $.19 more than current fees, which brings the MEETING OF CONSUMER ADVISORY System average price to $.72. The proposed COUNCIL qualified return prices have increased an average of $.14, resulting in a new System average price The Federal Reserve Board announced that its of $.212. Fine sort fees were adjusted in four Consumer Advisory Council held a meeting on Districts at an average increase of $.0022. March 30 and March 31, 1989. Copies of fee schedules and deadlines for Federal Reserve Bank priced services are available from District Federal Reserve Banks. PROPOSED ACTIONS REVISIONS TO OFFICIAL STAFF The Federal Reserve Board announced on March COMMENTARIES 10, 1989, that it had extended until June 2, 1989, ON REGULATIONS B, E, AND Z the public comment period on a series of revised proposals regarding the finality accorded auto- The Federal Reserve Board issued on March 3, mated clearinghouse (ACH) credit and debit 1989, revisions to the official staff commentaries transactions processed by Federal Reserve for three of its consumer credit protection regu- Banks. (54 Federal Register 8822). lations: Regulation B (Equal Credit Opportunity), Regulation E (Electronic Fund Transfers), and Regulation Z (Truth in Lending). The revision to the Regulation B commentary CHANGE IN BOARD STAFF addresses a recent preemption determination by the Board regarding New York law. The Board of Governors announced on April 5, The revisions to the staff commentary for 1989, the appointment of Patrick M. Parkinson to Regulation E clarify the disclosure requirements the official staff as Assistant Director in the applicable when consumers preauthorize direct Division of Research and Statistics. deposit of social security and other federal gov- Mr. Parkinson joined the Board's staff in 1980 ernment benefits. as an economist in the Division of International Revisions to the Regulation Z staff commen- Finance. In 1988, he became Chief of the Capital tary address disclosure questions raised by the Markets Section in the Division of Research and emergence of reverse mortgages and questions Statistics. He holds a Ph.D. from the University concerning when a third-party fee may be a of Wisconsin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

353 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON FEBRUARY 7-8, 1989 quarter; and outlays for services again advanced at a rapid pace, reflecting big increases in expen- Domestic Policy Directive ditures for medical care, airline travel, and recreation. Consumption of nondurables advanced The information reviewed at this meeting sug- further, after a steep rise the previous quarter, gested that, apart from the direct effects of the while purchases of motor vehicles were little drought, economic activity had continued to ex- changed over the quarter as a whole. pand at a fairly vigorous pace. The latest infor- Indicators of business capital spending sugmation on prices indicated little change in the gested some weakening in recent months from rate of inflation from recent trends, while labor the rapid increases evident earlier in 1988. Real costs had continued to accelerate. outlays for business fixed investment were esti- After strong gains in the fourth quarter, total mated to have fallen somewhat in the fourth nonfarm payroll employment rose sharply in quarter. Softness was fairly widespread among January. Although some of the strength may various types of equipment, but the most prohave reflected such temporary factors as unusu- nounced weakness was in office and computing ally mild winter weather, job gains were wide- equipment. Nonresidential construction activity spread; in manufacturing, sizable increases were picked up in December but was estimated to registered in nonelectrical machinery, transpor- have been about flat on balance for the quarter; tation equipment, and food processing. The ci- oil drilling and expenditures on commercial vilian unemployment rate, at 5.4 percent, re- buildings other than offices declined further. Inmained in the lower part of the range that had ventory investment in the manufacturing sector prevailed since the early spring of last year. in the fourth quarter was little changed from the Industrial production rose appreciably further third-quarter pace, with much of the accumulain December and January, with gains continuing tion continuing to occur in durable goods indusat about the robust pace experienced in 1988 as a tries where demand had been strong. At the retail whole. Output of consumer goods advanced level, increases in nonautomobile inventories strongly, despite a somewhat slower pace of generally kept pace with the growth in sales. automobile assemblies over the two months, and Excluding food and energy, producer prices of production of business equipment picked up a finished goods rose sharply in December, the rise bit. Total industrial capacity utilization moved reflecting large increases for tobacco products, higher, owing to a sizable jump in the utilization women's apparel, and passenger cars. Prices for of manufacturing capacity to the highest level intermediate materials again increased substansince 1979. Housing starts declined somewhat in tially in November and December. The most December but were up substantially on balance notable hikes occurred in industries such as for the fourth quarter as a whole, largely because metals, chemicals, and paper products in which of a strengthening in single-family construction. capacity utilization has been high. Consumer Multifamily starts have remained relatively flat in prices, reflecting more favorable developments recent months. in the food, energy, and apparel components, Consumer spending was up considerably in the rose at a somewhat slower pace in November fourth quarter, capping a strong year. Spending and December. Excluding food and energy, conon household durables rose vigorously in the sumer prices rose in the fourth quarter at about Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

354 Federal Reserve Bulletin • May 1989 the rate observed over 1988 as a whole. Re- carried out in two stages over the intermeeting flecting tighter market conditions, wages and period, although operations were complicated by salaries, and labor costs more generally, ad- continuing uncertainty about the relationship bevanced at a faster pace in the fourth quarter than tween borrowing and money market conditions. was observed a year earlier. In the circumstances, open market operations The nominal U.S. merchandise trade deficit continued to be conducted with a special degree was slightly larger on average in October and of flexibility. Adjustment plus seasonal borrow- November than it was in the third quarter. The ing averaged somewhat more than $500 million value of imports rose as a sharp rise in the value over the period, but such borrowing fluctuated of non-oil imports, especially from industrial over a wide range, including a typical bulge countries, outweighed a drop in the value of oil around the year-end. The federal funds rate rose imports resulting from a decline in oil prices. from around 8V2 percent to a little above 9 Increases were widespread across trade catego- percent during the intermeeting period. ries but were paced by a rebound in imports of Changes in other short-term market rates were passenger cars from somewhat depressed levels mixed over the intermeeting period. Treasury bill in the third quarter. The value of exports was rates rose somewhat on balance, although less little changed as a decline in agricultural exports than the federal funds rate, while rates on private offset a rise in nonagricultural products. market instruments were generally unchanged to In foreign exchange markets, the trade- slightly lower. To some extent, the firming of weighted value of the dollar in terms of the other monetary policy had been anticipated; in addi- G-10 currencies rose substantially over the inter- tion, private rates in particular were affected by meeting period and nearly reversed its decline of the passing of year-end pressures. Bond yields October and November. Despite the release of declined somewhat, apparently influenced in part data indicating U.S. trade deficits that were by the favorable effect of actual and anticipated larger than expected for October and November, monetary restraint on inflationary expectations. the dollar climbed persistently from early De- Major indexes of stock prices rose considerably cember in response to perceptions of a relative over the intermeeting period. tightening of monetary policy in the United Growth of the broader monetary aggregates States; short-term interest rate differentials weakened appreciably in January, especially M2, moved in favor of the dollar relative to the yen. which apparently declined slightly after a mod- At its meeting on December 13-14, the Com- erate increase in December. The behavior of mittee adopted a directive calling for some im- these aggregates appeared to reflect recent inmediate increase in the degree of pressure on creases in short-term market rates, which in turn reserve positions, with some further tightening to widened the opportunity costs of holding deposbe implemented at the start of 1989 if economic its. Those costs were accentuated by slowerand financial conditions remained consistent with than-usual adjustments in offering rates by dethe Committee's expectations. These reserve pository institutions on most of their retail conditions were expected to be associated with deposits. Also, needs for deposits to fund credit growth of M2 and M3 at annual rates of about 3 growth were damped in this period. On average percent and 6V2 percent respectively over the in December and January, growth of M2 was period from November through March. The slightly below Committee expectations and that members agreed that somewhat greater reserve of M3 considerably below. Ml changed little on restraint would, or slightly lesser reserve re- balance over the two months. For the year 1988, straint might, be acceptable depending on indi- M2 expanded at a rate a little below and M3 at a cations of inflationary pressures, the strength of rate around the midpoint of the Committee's the business expansion, the behavior of the mon- ranges. Growth of total domestic nonfinancial etary aggregates, and developments in foreign debt moderated in 1988 to a pace around the exchange and domestic financial markets. midpoint of the Committee's monitoring range. In accordance with the Committee's instruc- The staff projections prepared for this meeting tions, a firming of reserve supply conditions was suggested that the expansion was likely to mod- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 355 erate in 1989 from the pace in 1988, although the term objectives for monetary growth, the memadjustments related to the assumed end of the bers of the Committee and the Federal Reserve drought would be reflected in relatively strong Bank presidents not currently serving as memmeasured growth in the first quarter. To the bers had prepared specific projections of ecoextent that expansion of final demand tended to nomic activity, the rate of unemployment, and remain at a pace that could foster higher inflation inflation for the year 1989. The central tendency but was not accommodated by monetary policy, of these forecasts pointed to somewhat slower pressures would be generated in financial mar- expansion and somewhat greater inflation than kets that would restrain domestic spending. The had occurred in 1988. For the period from the staff continued to project slower growth in con- fourth quarter of 1988 to the fourth quarter of sumer spending, sharply reduced expansion of 1989, the forecasts for growth of real GNP had a business fixed investment, and some decline in central tendency of 2Vi to 3 percent and a full housing construction. Foreign trade was ex- range of Wi to 3!/4 percent. Forecasts of nominal pected to make a smaller contribution to growth GNP centered on growth rates of 6Vi to IV2 in domestic output than in 1988. The staff antic- percent and ranged from 5l/2 to 8V2 percent. ipated somewhat faster increases in consumer Estimates of the civilian rate of unemployment in prices and also some further cost pressures over the fourth quarter of 1989 were concentrated in a the year ahead, especially because of reduced range of 5!/4 to 5V2 percent with a full range of 5 margins of unutilized labor and other production to 6 percent. The projected increase in the conresources. sumer price index centered on rates of 41/2 to 5 In the Committee's discussion of the economic percent and had an overall range of 3V2 to 5V2 situation and outlook, members commented that percent for the year. In making these forecasts, the expansion in business activity was generally the members took account of the Committee's well balanced and that continuing growth was a policy of continuing restraint on aggregate dereasonable expectation for the year ahead. mand to resist any increase in inflation pressures Nearly all the members believed that the risks and foster price stability over time. They also remained on the side of greater inflation and that assumed that normal weather conditions and a the Federal Reserve would need to stay espe- rise in acreage under cultivation this year would cially alert to inflationary developments. How- increase farm output and add around 2/s of a ever, views differed to some extent with regard percentage point to the growth of GNP, an to the likely strength of the expansion and the amount similar to the reduction in GNP that degree of inflationary risk. Several members resulted from the drought in 1988. Excluding this stressed that, in the absence of some further swing in farm output, the central tendency of the monetary restraint, economic growth was likely forecasts implied considerably slower growth in to continue at a rate that would foster greater output than in 1988. Finally, the forecasts aspressures on already strained production re- sumed that fluctuations in the foreign exchange sources and induce more inflation. Other mem- value of the dollar would not be of sufficient bers gave more weight to indications of possible magnitude to have a significant effect on the slowing in the expansion and to the possibility economy or prices. that the substantial restraint applied over the past In the Committee's discussion of developyear might be sufficient to foster substainable ments bearing on the economic outlook, a numexpansion without increased inflationary pres- ber of members stressed that the economy had a sures. The members agreed that the chances for good deal of momentum and that there was little satisfactory economic performance over time or no current evidence of a potential slowdown would be greatly enhanced by progress in reduc- or downturn in the expansion. Indeed, some ing the federal budget deficit in order to contain recent data, including those on employment and domestic demands and to facilitate the process of consumer spending, could be viewed as consisadjustment in the nation's external balance. tent with some strengthening of the expansion in In conformance with the usual practice at recent months. Reports from around the country meetings when the Committee considers its long- suggested a high level of business activity in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

356 Federal Reserve Bulletin • May 1989 many parts of the nation and at least modest these members expressed particular concern improvement in some previously depressed ar- about recent indications of higher labor costs, eas. On the whole, growth in production was which might augur escalating inflationary presbeing well maintained, buttressed by continuing sures. Other members saw a lesser risk that expansion in exports. Other members saw a inflation would intensify, at least in the absence greater potential for some softening in the rate of of unfavorable developments such as a second economic growth. They referred to sectors of year of drought conditions, a sharp upturn in relative weakness in the economy, including en- energy prices, or a substantial decline in the ergy, nonresidential construction, and housing. foreign exchange value of the dollar. It was With regard to the outlook for capital expendi- difficult to judge the point at which added prestures, many firms were investing in new equip- sures on production resources might be transment to improve their efficiency in competitive lated into stronger inflationary pressures, but markets, but they generally continued to hold several members observed that despite relatively back on investments to expand production facil- vigorous economic growth the impact on the ities. More generally, a number of members overall rate of inflation had been less than they emphasized that the behavior of money, whose might have anticipated earlier. Promising factors growth had been relatively damped for an ex- in the inflation outlook included the continuation tended period and was likely to remain so in 1989 of strong competitive pressures, notably compeunder the Committee's targets, probably was tition from abroad that tended to inhibit efforts to consistent with only limited strength in spending. raise prices, restrained monetary growth, and A key element in the outlook for business was generally favorable inflationary expectations as the extent of the improvement in the nation's evidenced by developments in financial markets. external trade balance. The members generally In one view, commodity prices, while still afexpected further gains, at least over the year fected by the impact of the drought, might be ahead, but several observed that these might be signalling at least tentatively a downturn in the considerably smaller than in 1988, given the overall rate of inflation. behavior of the dollar over the past year and Against the background of the members' views assuming a steady dollar in the future. Such an regarding the economic outlook and in keepoutcome could have the advantage of helping to ing with the requirements of the Full Employmoderate potential inflationary demand pres- ment and Balanced Growth Act of 1978 (the sures in the economy but at the cost and the risks Humphrey-Hawkins Act), the Committee at this associated with a continuing need to finance meeting reviewed the ranges of growth for the massive external deficits. It also was noted that monetary and debt aggregates that had been substantial improvement in the trade balance at a established on a tentative basis in late June 1988 time of increasing pressure on productive re- for the year 1989. The tentative range for M2 had sources would require the expansion in domestic been reduced by 1 percentage point to 3 to 7 demand to slow sufficiently—perhaps more than percent and that for M3 by Vi percentage point to was currently anticipated—to permit added pro- 3V to 7Vi percent for 1989. The monitoring range 2 duction for exports. for growth of total domestic nonfinancial debt Turning to the outlook for inflation, several had been lowered by Vi percentage point to 6Vi to members expressed concern that, with margins IOV2 percent for the year. The Committee had of unused labor and capital relatively low, any decided in June not to establish any range for slowing in the growth of overall demands now in Ml. train might be inadequate to prevent some rise in In the Committee's discussion, a majority of the underlying rate of inflation, much less to the members indicated that they were in favor of permit progress to be made in bringing inflation affirming the reduced ranges that had been set on down. In this view the economy's current mo- a tentative basis in mid-1988, while the remaining mentum in association with a reduced availability members expressed a preference for some furof production resources clearly biased the eco- ther reductions. Members who supported the nomic risks toward greater inflation. A number of tentative ranges believed that they were fully Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 357 consistent with progress toward price level sta- ranges were initially widened in 1988 in recognibility. Indeed, the reduction of a full percentage tion of the uncertain outlook for financial marpoint in the M2 range was larger than usual and kets and the economy and the extent to which the would convey in this view an appropriately relationship between monetary growth and ecostrong signal of the System's commitment to an nomic performance had varied over an extended anti-inflationary policy. This lower range encom- period. In particular, the growth of M2 and its passed money growth that was fully consistent velocity had remained very sensitive to fluctuaunder likely economic and financial conditions tions in interest rates, reflecting in turn a tenwith continued expansion of spending but at the dency of depository institutions to adjust only somewhat slower pace needed to contain infla- sluggishly their offering rates on many types of tionary pressures. A number of members also deposit accounts. In these circumstances and commented that the tentative ranges would pro- against the background of the multiplicity of vide more room in subsequent years for continu- largely unpredictable factors affecting the econing the desirable policy of gradually lowering the omy and interest rates, the appropriate rate of monetary growth targets to noninflationary levels monetary growth remained subject to considerwhile also reducing the possibility that unantici- able uncertainty and could not be projected pated economic or financial developments might within narrow ranges with any degree of confirequire those targets to be raised on a temporary dence. An additional uncertainty in 1989 would basis. Even though temporarily higher ranges be the impact of developments affecting thrift might be consistent with progress toward price depository institutions as serious financial probstability, a decision to raise the ranges could be lems at many of those institutions moved toward misinterpreted as a weakening of the System's resolution under the aegis of new government anti-inflationary resolve. programs. The behavior of M2 and M3 was likely Other members believed that further reduc- to be affected by such developments, but there tions in the ranges would provide greater assur- was only limited basis in prior experience to ance of encompassing the potential policy re- gauge the extent of the impact. sponses and associated monetary growth that The members found acceptable the tentative might be needed to resist inflationary pressures reduction of Vi percentage point in the monitorover the year ahead, should they prove to be ing range for total domestic nonfinancial debt in especially strong. Such reductions would under- 1989. As in several previous years, growth of score the Committee's commitment to its longer- total debt was expected to exceed that of nominal run objective of price stability, since achieving GNP. The members anticipated that the federal that objective would require lower money growth government would continue to place heavy deat some point than was indicated by the middle of mands on credit markets to finance its large the tentative ranges. Lower ranges for the ongoing deficits. In addition, the expansion of broader aggregates would have midpoints that business borrowing would probably continue to were more clearly below actual growth in 1988 be boosted by a widening financing gap and by and given the slow growth thus far this year, the substitution of debt for equity in conjunction especially in the case of M2, would improve the with leveraged buyouts and other corporate reprospects that expansion for the year would structuring activities. Growth of household debt approximate the midpoints. Moreover, the upper might moderate somewhat, reflecting the effect ends of the tentative ranges, while below those of increases in interest rates in 1988 on mortgage for 1988, nonetheless remained appreciably debt and of reduced expansion in consumer higher than the rates of monetary growth that credit in association with a smaller rise in outlays were likely to be consistent with price stability on consumer durables over the year. over time. In keeping with the Committee's tentative de- The Committee agreed on the desirability of cision in late June, no member proposed the retaining the relatively wide spread of 4 percent- inclusion of Ml among the monetary target age points between the upper and the lower ends ranges. The Committee continued to view the of the growth ranges for M2 and M3. These prospective relationship between Ml and aggre- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

358 Federal Reserve Bulletin • May 1989 gate measures of economic activity as too unpre- he believed that the ranges adopted should be dictable to warrant reliance on this monetary more closely centered on that possible outcome. measure as a guide for the conduct of monetary He also felt that lower ranges were desirable at policy. this time to underscore the System's determina- At the conclusion of the Committee's discus- tion to pursue an anti-inflationary policy. sion, all but one of the members indicated that In the Committee's discussion of policy implethey favored or could accept the ranges for 1989 mentation for the period until the next meeting, a that had been established on a tentative basis in majority of the members indicated a preference late June 1988. Against the background of the for maintaining unchanged conditions of reserve uncertainties that continued to surround the re- availability, at least initially, following today's lationship between monetary growth and broad meeting. Further monetary restraint might be measures of economic performance, most of the desirable in the near future, perhaps during the members endorsed a proposal to make explicit in intermeeting period. However, recent informathe directive the Committee's procedure in re- tion had given a somewhat mixed picture of cent years of evaluating money growth in the economic and price developments, and these conduct of policy in light of the behavior of other members preferred to wait for further confirmaindicators, including inflationary pressures, the tion of inflationary pressures before additional strength of the business expansion, and develop- firming of monetary policy was undertaken. Apments in domestic financial and foreign exchange preciable policy tightening had been implemarkets. mented only recently and the impact would be At the conclusion of this discussion, the Com- felt only after a considerable lag. Monetary polmittee approved for inclusion in the domestic icy was now fairly restrictive, as evidenced for policy directive the following paragraph relating example by relatively high real rates of interest, to its longer-run policy for 1989: a slightly inverted yield curve, and the slow growth of the monetary aggregates. The credibility of the System's anti-inflationary policy was The Federal Open Market Committee seeks monetary and financial conditions that will foster price quite high. Some members expressed concern stability, promote growth in output on a sustainable that higher interest rates would exacerbate the basis, and contribute to an improved pattern of inter- financial difficulties of many thrift depository national transactions. In furtherance of these objecinstitutions, weaken heavily indebted firms, and tives, the Committee at this meeting reaffirmed its in the context of a strong dollar possibly lead to decision of late June to lower the ranges for growth of M2 and M3 to 3 to 7 percent and V/2 to IV2 percent, an undesired upward ratcheting of interest rates respectively, measured from the fourth quarter of 1988 in world financial markets. It also was noted that to the fourth quarter of 1989. The monitoring range for further tightening should be approached with growth of total domestic nonfinancial debt was set at special caution when the dollar was under up- 6V2 to IOV2 percent for the year. The behavior of the ward pressure in the foreign exchange markets. monetary aggregates will continue to be evaluated in the light of movements in their velocities, develop- Other members indicated a preference for ments in the economy and financial markets, and some immediate firming of monetary policy in progress toward price level stability. light of their concerns about current and prospective inflationary pressures in the economy. In Votes for this action: Messrs. Greenspan, Corrithis view delaying further tightening would only gan, Angell, Black, Forrestal, Heller, Johnson, worsen such pressures and could greatly increase Kelley, LaWare, Parry, and Ms. Seger. Vote against this action: Mr. Hoskins. the difficulty and ultimate cost of achieving the Committee's anti-inflationary objectives. More- Mr. Hoskins dissented because he preferred over, while higher interest rates could have adlower ranges for the year. In his view satisfactory verse effects on interest-sensitive sectors of the economy, a failure to arrest and to reverse inflaprogress in reducing the underlying rate of inflation would lead to even higher interest rates and tion would require a degree of restraint over the greater damage over time. Some concern also year that would be likely to result in money was expressed that maintenance of steady regrowth at the low end of the tentative ranges, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 359 serve conditions might disappoint market expec- favored or could accept a directive that called for tations, with adverse repercussions in present maintaining the current degree of pressure on circumstances on the credibility of the System's reserve conditions and for remaining alert to anti-inflationary policy and thus on inflationary potential developments that might require some expectations. Should too much restraint later firming during the intermeeting period. Accordprove to have been applied, it could be reversed ingly, somewhat greater reserve restraint would more readily and with less lasting implications be acceptable, or slightly lesser reserve restraint for economic performance than too little re- might be acceptable, over the intermeeting pestraint, which would tend to embed inflation and riod depending on indications of inflationary inflationary expectations in the economic struc- pressures, the strength of the business expanture. sion, the behavior of the monetary aggregates, A number of members observed that the rela- and developments in foreign exchange and dotively slow monetary expansion that had been mestic financial markets. The reserve conditions experienced in recent months—and indeed on contemplated by the Committee were expected balance for some two years—portended restraint to be consistent with growth of M2 and M3 at on prices and was a welcome development. A annual rates of around 2 percent and V/i percent staff forecast suggested that money growth was respectively over the three-month period from likely to remain damped over coming months, December to March. It was understood that with both M2 and M3 growing at the lower end of operations would continue to be conducted with the Committee's 1989 ranges. In the view of a some flexibility in light of the persisting uncernumber of members, this might be acceptable or tainty in the relationship between the demand for even desirable depending on the extent of infla- borrowed reserves and the federal funds rate. tionary pressures being experienced in the econ- The intermeeting range for the federal funds rate, omy. At the same time some members cautioned which provides one mechanism for initiating conthat a persistent shortfall from the ranges might sultation of the Committee when its boundaries be a cause for concern. are persistently exceeded, was left unchanged at 7 to 11 percent. In the Committee's discussion of possible intermeeting adjustments in the degree of reserve At the conclusion of the meeting, the following restraint, members generally felt that there domestic policy directive was issued to the Fedshould be a clear presumption of some further eral Reserve Bank of New York: firming if the incoming information tended to confirm expectations of growing inflationary The information reviewed at this meeting suggests pressures. Indeed, several members indicated that, apart from the direct effects of the drought, that such a presumption would enable them to economic activity has continued to expand at a fairly accept a directive that called for no immediate vigorous pace. After strong gains in the fourth quarter, change in the degree of reserve pressure. Some total nonfarm payroll employment rose sharply in January, including a sizable increase in manufacturing. members expressed the view that developments The civilian unemployment rate, at 5.4 percent in in foreign exchange markets might have an im- January, remained in the lower part of the range that portant bearing on the timing or even the desir- has prevailed since the early spring of last year. ability of any firming in the period ahead. More Industrial production rose appreciably further in Degenerally, the Committee agreed that consider- cember and January. Housing starts declined somewhat in December but were up substantially on balation would need to be given to the usual range of ance in the fourth quarter. Consumer spending factors that might call for a change in policy advanced considerably in the fourth quarter, in part implementation, including the possibility that reflecting stronger sales of durable goods. Indicators some easing might be warranted under certain of business capital spending suggest some weakening conditions. For the immediate future, however, in recent months. The nominal U.S. merchandise trade deficit was slightly larger on average in October several stressed that any perceptions that moneand November than in the third quarter. The latest tary policy might be easing should be resisted. information on prices suggests little change from re- At the conclusion of the Committee's discus- cent trends, while wages have tended to accelerate. sion, all but two members indicated that they The federal funds rate and Treasury bill rates have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

360 Federal Reserve Bulletin • May 1989 risen since the Committee meeting in mid-December; exchange and domestic financial markets, somewhat other short-term interest rates are generally un- greater reserve restraint would, or slightly lesser rechanged to somewhat lower. Bond yields have de- serve restraint might, be acceptable in the intermeetclined somewhat. In foreign exchange markets, the ing period. The contemplated reserve conditions are trade-weighted value of the dollar in terms of the other expected to be consistent with growth of M2 and M3 G-10 currencies rose substantially over the intermeet- over the period from December through March at ing period. annual rates of about 2 and 3V2 percent, respectively. M2 and M3 weakened appreciably in January, espe- The Chairman may call for Committee consultation if cially M2. For the year 1988, M2 expanded at a rate a it appears to the Manager for Domestic Operations little below, and M3 at a rate around, the midpoint of that reserve conditions during the period before the the ranges established by the Committee. Ml has next meeting are likely to be associated with a federal changed little on balance over the past several months; funds rate persistently outside a range of 7 to 11 it grew about 4XA percent in 1988. Expansion of total percent. domestic nonfinancial debt appears to have moderated somewhat in 1988 to a pace around the midpoint of the Votes for the paragraph on short-term policy im- Committee's monitoring range for the year. plementation: Messrs. Greenspan, Corrigan, The Federal Open Market Committee seeks mone- Angell, Black, Forrestal, Heller, Johnson, Kelley, tary and financial conditions that will foster price LaWare, and Ms. Seger. Votes against this action: stability, promote growth in output on a sustainable Messrs. Hoskins and Parry. basis, and contribute to an improved pattern of international transactions. In furtherance of these objec- Messrs. Hoskins and Parry dissented because tives, the Committee at this meeting reaffirmed its they believed that a prompt move to greater decision of late June to lower the ranges for growth of M2 and M3 to 3 to 7 percent and V/2 to 7l/2 percent, monetary restraint was needed. Mr Hoskins felt respectively, measured from the fourth quarter of 1988 that additional restraint was desirable to put to the fourth quarter of 1989. The monitoring range for policy on a course that would lead toward longergrowth of total domestic nonfinancial debt was set at run price stability. Mr. Parry emphasized that 61/2 to IOV2 percent for the year. The behavior of the inflationary pressures appeared to be intensifying monetary aggregates will continue to be evaluated in as the economy had grown to a level in excess of the light of movements in their velocities, developments in the economy and financial markets, and its long-run, noninflationary potential. Both beprogress toward price level stability. lieved that any delay in implementing more re- In the implementation of policy for the immediate straint probably would aggravate inflationary future, the Committee seeks to maintain the existing pressures, thereby increasing the difficulty of degree of pressure on reserve positions. Taking acachieving the Committee's anti-inflationary obcount of indications of inflationary pressures, the jectives and leading to even higher interest rates strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign over time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

361 Legal Developments AMENDMENT TO REGULATION A 3. Section 201.52 is revised to read as follows: The Board of Governors is amending 12 C.F.R. Part Section 201.52—Extended credit for depository 201, its Regulation A (Extensions of Credit by Federal institutions. Reserve Banks), for the purpose of increasing discount rates. The Board took this action in light of inflationary (a) Seasonal credit. The rates for seasonal credit pressures on the economy. extended to depository institutions under section The Board acted on requests submitted by the 201.3(b)(1) of Regulation A are: Boards of Directors of the twelve Federal Reserve Banks. The discount rate is the interest rate that is charged depository institutions when they borrow from their district Federal Reserve Banks. Federal Reserve Bank Rate Effective Effective March 6, 1989, 12 C.F.R. Part 201 is Boston 7.0 Feb. 24, 1989 amended as follows: New York 7.0 Feb. 24, 1989 Philadelphia 7.0 Feb. 24, 1989 Cleveland 7.0 Feb. 24, 1989 1. The authority citation for 12 C.F.R. Part 201 7.0 Feb. 24, 1989 7.0 Feb. 24, 1989 continues to read as follows: Chicago 7.0 Feb. 24, 1989 St. Louis 7.0 Feb. 24, 1989 Authority: Sections 10(a), 10(b), 13, 13a, 14(d) and 19 Minneapolis 7.0 Feb. 24, 1989 of the Federal Reserve Act (12 U.S.C. 347a, 347b, 343 Kansas City 7.0 Feb. 24, 1989 Dallas 7.0 Feb. 27, 1989 et seq., 347c, 348 et seq., 357, 374, 374a and 461); and San Francisco 7.0 Feb. 24, 1989 section 7(b) of the International Banking Act of 1978 (12 U.S.C. 347d). (b) Other extended credit. The rates for other extended credit provided to depository institutions under 2. Section 201.51 is revised to read as follows: sustained liquidity pressures or where there are exceptional circumstances or practices involving a particular Section 201.51—Short-term adjustment credit institution under section 201.3(b)(2) of Regulation A for depository institutions. are: The rates for short-term adjustment credit provided to depository institutions under section 201.3(a) of Reg- Federal Reserve Bank Rate Effective ulation A are: 7.0 Feb. 24, 1989 New York 7.0 Feb. 24, 1989 Philadelphia 7.0 Feb. 24, 1989 Cleveland 7.0 Feb. 24, 1989 Richmond 7.0 Feb. 24, 1989 7.0 Feb. 24, 1989 Federal Reserve Bank Rate Effective Chicago 7.0 Feb. 24, 1989 St. Louis 7.0 Feb. 24, 1989 777...000 FFFeeebbb... 222444,,, 111999888999 Minneapolis 7.0 Feb. 24, 1989 New York 777...000 FFFeeebbb... 222444,,, 111999888999 Kansas City 7.0 Feb. 24, 1989 Philadelphia 777...000 FFFeeebbb... 222444,,, 111999888999 Dallas 7.0 Feb. 27, 1989 Cleveland 777...000 FFFeeebbb... 222444,,, 111999888999 San Francisco 7.0 Feb. 24, 1989 Richmond 777...000 FFFeeebbb... 222444,,, 111999888999 777...000 FFFeeebbb... 222444,,, 111999888999 Chicago 777...000 FFFeeebbb... 222444,,, 111999888999 These rates apply for the first 30 days of borrowing. St. Louis 777...000 FFFeeebbb... 222444,,, 111999888999 For credit outstanding for more than 30 days, a flexible Minneapolis 777...000 FFFeeebbb... 222444,,, 111999888999 Kansas City 777...000 FFFeeebbb... 222444,,, 111999888999 rate will be charged which takes into account rates on Dallas 777...000 FFFeeebbb... 222777,,, 111999888999 market sources of funds, but in no case will the rate San Francisco 777...000 FFFeeebbb... 222444,,, 111999888999 charged be less than the basic discount rate plus Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

362 Federal Reserve Bulletin • May 1989 one-half percentage point. Where credit provided to a particular depository institution is anticipated to be outstanding for an unusually prolonged period and in relatively large amounts, the 30-day time period may AMENDMENT TO REGULATION E be lengthened or shortened. The Board of Governors is amending 12 C.F.R. Part 205, its Regulation E (Electronic Fund Transfers), by publishing in final form revisions to the official staff AMENDMENT TO REGULATION B commentary to Regulation E. The commentary applies and interprets the requirements of Regulation E and is The Board of Governors is amending 12 C.F.R. Part a substitute for individual staff interpretations of the 202, its Regulation B (Equal Credit Opportunity), by regulation. The revisions address questions that have publishing in final form an addition to the official staff arisen about the disclosure requirements of the regucommentary to Regulation B. The commentary applies lation. and interprets the requirements of Regulation B and is Effective April 1, 1989, 12 C.F.R. Part 205 contina substitute for individual staff interpretations of the ues to read as follows: regulation. The addition addresses a recent Board preemption determination regarding a provision of 1. The authority citation for Part 205 continues to read: New York law. Effective March 7, 1989, 12 C.F.R. Part 202 is Authority: Pub. L. 95-630, 92 Stat. 3730 (15 U.S.C. amended as follows: 1693b). 1. The authority citation for Part 202 continues to read: 2. The official staff commentary to Regulation E, Supp. II to 12 C.F.R. Part 205, is amended by revising Authority: 15 U.S.C. 1691 et seq. questions 7-1 and 7-2 for section 205.7 to read as follows: 2. The addition amends the commentary (12 C.F.R. Part 202, Supp. I) by adding comment 11(a) to read as Supplement II—Official Staff Interpretations follows: Section 205.7—Initial Disclosure of Terms and Section 202.11—Relation to State Law Conditions 11(a) Inconsistent state laws Q 7-1: Timing of disclosures—early disclosure. An 1. Preemption determination—New York. Effective institution is required to give initial disclosures either November 11,1988, the Board has determined that the (1) when the consumer contracts for an EFT service or following provisions in the state law of New York are (2) before the first electronic fund transfer to or from preempted by the federal law: the consumer's account. If an institution provides • Article 15, Section 296a(l)(b)—Unlawful discrimina- initial disclosures when a consumer opens a checking tory practices in relation to credit on the basis of account and the consumer does not sign up for an EFT race, creed, color, national origin, age, sex, marital service until a later time, has the institution satisfied status, or disability. This provision is preempted to the disclosure requirements? the extent that it bars taking a prohibited basis into A: Yes, if the EFT contract is between the consumer account when establishing eligibility for certain spe- and a third party for preauthorized electronic transfers cial-purpose credit programs. to be initiated by the third party to or from the • Article 15, Section 296a(l)(c)—Unlawful discrimina- consumer's account. In this case, the financial institutory practice to make any record or inquiry based on tion need not repeat disclosures previously given race, creed, color, national origin, age, sex, marital unless the terms and conditions required to be disstatus, or disability. This provision is preempted to closed are different from those that were given. the extent that it bars a creditor from requesting and If, on the other hand, the EFT contract is directly considering information regarding the particular between the consumer and the financial institution — characteristics (for example, race, national origin, or for the issuance of an access device, or for a telephone sex) required for eligibility for special-purpose credit bill-payment plan, for example —the institution should programs. provide the disclosures at the time of contracting. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 363 Disclosures given before the time of contracting will comments 4(b)(7) and (8)-2; adding a bullet at the end satisfy the regulation only if they occurred in close of comments 17(a)(l)-5; adding two sentences after the proximity thereto. (Section 205.7(a)) first sentence, and revising the second and third sen- Q 7-2: Timing of disclosures—Social Security and tences and the parenthetical material in comment other federal government direct deposits. In the case 17(c)(l)-8; redesignating comments 17(c)(l)-14 and -15 of direct deposits by the federal government—Social to be comments 17(c)(1)-15 and -16, respectively; Security payments, for example—how can the finan- adding comment 17(c)(l)-14; adding parenthetical macial institution comply with the disclosure require- terial at the end of comment 18(f)(2)-1; adding three ments absent prenotification, such as in cases where sentences at the end of comment 19(b)-l; revising the the government agency no longer uses Form 1199A? first, third and fourth sentences, adding a sentence A: Before direct deposit of payments such as Social after the third sentence, and removing the last three Security takes place, usually the consumer and the sentences of comment 19(b)(2)-1; revising the second, institution both must complete a Form 1199A, and the third, and fifth sentences of comment 19(b)(2)-2 redeinstitution can make disclosures at that time. How- signating comments 19(b)(2)-3 and -4 to be comments ever, if a Form 1199A (or a comparable form providing 19(b)(2)-4 and -5, respectively; adding comment notice to the institution) is not used and there is no 19(b)(2)-3; adding three sentences after the second prenotification, the institution should provide the re- sentence in comment 19(b)(2)(iii)-l; adding a new quired disclosures as soon as reasonably possible after sentence before the parenthetical material at the end of comment 19(b)(2)(v)-l; adding four sentences the first direct deposit is received, unless the instituand parenthetical material at the end of comment tion has previously given the disclosures (see question 19(b)(2)(vi)-l; adding five sentences and parenthetical 7-1). (Section 205.7(a)) material at the end of comment 19(b)(2)(vii)-l; revising the third sentence in the parenthetical material after the first sentence in comment 19(b)(2)(viii)-l ; adding AMENDMENT TO REGULATION Z comments 19(b)(2)-5, -6 and -7; adding a sentence after the second sentence in comment 19(b)(2)(ix)-l; adding The Board of Governors is amending 12 C.F.R. Part comments 19(b)(2)(x)-2, -3 and -4; adding a sentence 226, its Regulation Z (Truth in Lending), by publishing after the second sentence in comment 20(c)(4)-1; rerevisions to the official staff commentary to Regulation vising comment 20(c)(5)-1; changing the references Z. The commentary applies and interprets the requireto "comment 18(f)-8" in the first sentence and in ments of Regulation Z and is a substitute for individual the first bullet of comment 24(b)-5 to be "comment staff interpretations of the regulation. The revisions 17(c)(1)-10"; adding comment 25(a)-3; revising the first address a variety of questions that have arisen about sentence of comment 30-8; revising the last sentence the regulation, and include new material and changes in comment 30-13; removing the word "most" and in existing material. The comments address, for examchanging the reference to "section 226.18(f)(4)" in ple, disclosure questions raised by the emergence of comment app. D-2 to be "section 226.18(f)(l)(iv)" to reverse mortgage products, questions concerning the read as follows: amendments to Regulation Z affecting disclosures for adjustable-rate mortgages, and questions concerning when a third party fee may be a finance charge in a Subpart A—General credit transaction. Effective February 28, 1989, but compliance optional until October 1, 1989, 12 C.F.R. Part 226 is amended as follows: Section 226.2—Definitions and Rules of Construction 1. The authority citation for Part 226 continues to read: 2(a) Definitions Authority: Section 105, Truth in Lending Act, as amended by section 605, Pub. L. 96-221, 94 Stat. 170 (15 U.S.C. 1604 et seq.)\ section 1204(c), Competitive 2(a)(25) "Security Interest" Equality Banking Act, Pub. L. 100-86, 101 Stat. 552. * * * ** 2. The revisions amend the commentary (TIL-1, 6. Specificity of disclosure. A creditor need not sepa- 12 C.F.R. Part 226 Supp.I) by adding comment rately disclose multiple security interests that it may 2(a)(25)-6; adding a sentence and a bullet at the end of hold in the same collateral. The creditor need only comment 4(a)-3; revising the heading and text of disclose that the transaction is secured by the collat- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

364 Federal Reserve Bulletin • May 1989 eral, even when security interests from prior transac- •The disclosures set forth under section 226.18(f)(1) tions remain of record and a new security interest is for variable-rate transactions subject to section taken in connection with the transactions. 226.18(f)(2). Section 226.4—Finance Charge 17(c) Basis of Disclosures and Use of Estimates Paragraph 17(c)(1) 4(a) Definition 8. Basis of disclosures in variable-rate transactions. 3. Charges by third parties. * * * * * * Creditors should base the disclosures only on the initial rate and should not assume that this rate will increase. For example, in a loan with an initial rate of In contrast, charges imposed on the consumer by 10 percent and a 5 percentage points rate cap, credisomeone other than the creditor are finance charges tors should base the disclosures on the initial rate and (unless otherwise excluded) if the creditor requires the should not assume that this rate will increase 5 perservices of the third party. For example: centage points. However, in a variable-rate transac- • A fee charged by a loan broker if the consumer tion with a seller buydown that is reflected in the credit cannot obtain the same credit terms from the creditor contract, a consumer buydown, or a discounted or without using a broker. premium rate, disclosures should not be based solely on the initial terms. In those transactions, the disclosed annual percentage rate should be a composite 4(b) Examples of Finance Charges rate based on the rate in effect during the initial period and the rate that is the basis of the variable-rate feature for the remainder of the term. (See the commentary to Paragraphs 4(b)(7) and (8) section 226.17(c) for a discussion of buydown, discounted, and premium transactions and the commentary to section 226.19(a)(2) for a discussion of the 2. Insurance written in connection with a transaction. redisclosure in certain residential mortgage transac- Insurance sold after consummation in closed-end tions with a variable-rate feature). credit transactions or after the opening of a plan in open-end credit transactions is not "written in connection with" the credit transaction if the insurance is 14. Reverse mortgages. Reverse mortgages, also written because of the consumer's default (for examknown as reverse annuity or home equity conversion ple, by failing to obtain or maintain required property mortgages, typically involve the disbursement of insurance) or because the consumer requests insurmonthly advances to the consumer for a fixed period ance after consummation or the opening of a plan or until the occurrence of an event such as the con- (although credit sale disclosures may be required for sumer's death. Repayment of the loan (generally a the insurance sold after consummation if it is single payment of principal and accrued interest) may financed). be required to be made at the end of the disbursements or, for example, upon the death of the consumer. In disclosing these transactions, creditors must apply the following rules, as applicable: Subpart C—Closed-End Credit • If the reverse mortgage has a specified period for disbursements but repayment is due only upon the Section 226.17 —General Disclosure occurrence of a future event such as the death of the Requirements consumer, the creditor must assume that disbursements will be made until they are scheduled to end. 17(a) Form of Disclosures The creditor must assume repayment will occur Paragraph 17(a)(1) when disbursements end (or within a period following the final disbursement which is not longer than the regular interval between disbursements). This 5. Directly related. assumption should be used even though repayment * * * may occur before or after the disbursements are Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 365 scheduled to end. In such cases, the creditor may 1. Disclosure required. include a statement such as "The disclosures assume * * * that you will repay the loan at the time our payments (See the commentary to section 226.17(a)(1) regarding to you end. As provided in your agreement, your the disclosure of certain directly related information in repayment may be required at a different time." addition to the variable-rate disclosures required un- If the reverse mortgage has neither a specified period der section 226.18(f)(2)). for disbursements nor a specified repayment date and these terms will be determined solely by reference to future events including the consumer's death, the creditor must assume that the disbursements will end Section 226.19—Certain Residential Mortgage upon the consumer's death (by using actuarial tables, Transactions for example) and that repayment will be required at the same time (or within a period following the date of the final disbursement which is not longer than the 19(b) Certain Variable-Rate Transactions regular interval for disbursements). Alternatively, 1. Coverage. the creditor may base the disclosures upon another * * * future event it estimates will be most likely to occur In determining whether a construction loan that may first. (If terms will be determined by reference to be permanently financed by the same creditor is covfuture events which do not include the consumer's ered under this section, the creditor may treat the death, the creditor must base the disclosures upon construction and the permanent phases as separate the occurrence of the event estimated to be most transactions with distinct terms to maturity or as a likely to occur first.) single combined transaction. For purposes of the In making the disclosures, the creditor must assume disclosures required under section 226.18, the creditor that all disbursements and accrued interest will be may nevertheless treat the two phases either as sepapaid by the consumer. For example, if the note has a rate transactions or as a single combined transaction in nonrecourse provision providing that the consumer is accordance with section 226.17(c)(6). Finally, in any not obligated for an amount greater than the value of assumption of a variable-rate transaction secured by the house, the creditor must nonetheless assume that the consumer's principal dwelling with a term greater the full amount to be disbursed will be repaid. In this than one year, disclosures need not be provided under case, however, the creditor may include a statement sections 226.18(f)(2)(ii) or 226.19(b). such as "The disclosures assume full repayment of the amount advanced plus accrued interest, although the amount you may be required to pay is limited by Paragraph 19(b)(2) your agreement." 1. Disclosure for each variable-rate program. A cred- Some reverse mortgages provide that some or all of itor must provide disclosures to the consumer that the appreciation in the value of the property will be fully describe each of the creditor's variable-rate loan shared between the consumer and the creditor. Such programs in which the consumer expresses an interest. loans are considered variable-rate mortgages, as de- * * * scribed in comment 17(c)(l)-ll, and the appreciation Disclosures must be given at the time an application feature must be disclosed in accordance with section form is provided or before the consumer pays a 226.18(f)(1). If the reverse mortgage has a variable nonrefundable fee, whichever is earlier. If program interest rate, is written for a term greater than one disclosures cannot be provided because a consumer year, and is secured by the consumer's principal expresses an interest in individually negotiating loan dwelling, the shared appreciation feature must be terms that are not generally offered, disclosures redescribed under section 226.19(b)(2)(vii). flecting those terms may be provided as soon as reasonably possible after the terms have been decided upon, but not later than the time a non-refundable fee is paid. If a consumer who has received program Section 226.18—Content of Disclosures disclosures subsequently expresses an interest in other available variable-rate programs subject to section 226.19(b)(2), or the creditor and consumer decide on a 18(f) Variable Rate program for which the consumer has not received disclosures, the creditor must provide appropriate disclosures as soon as reasonably possible. Paragraph 18(f)(2) * * * Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

366 Federal Reserve Bulletin • May 1989 2. Variable-rate loan program defined. * * * * * * For example, separate loan programs would exist based on differences in any of the following loan features: Paragraph 19(b)(2)(v) * * * 1. Discounted and premium interest rate. In addition, if a loan feature must be taken into account in * * * preparing the disclosures required by section In a transaction with a consumer buydown or with 226.19(b)(2)(viii) and (x), variable-rate loans that differ as a third-party buydown that will be incorporated to that feature constitute separate programs under section in the legal obligation, the creditor should disclose the 226.19(b)(2). program as a discounted variable-rate transaction, but need not disclose additional information regarding the For example, separate programs would not exist based buydown in its program disclosures. on differences in the following loan features: * * * * * * Paragraph 19(b)(2)(vi) 3. Form of program disclosures. A creditor may provide 1. Frequency. separate program disclosure forms for each ARM pro- * * * gram it offers or a single disclosure form that describes In certain ARM transactions, the interval between multiple programs. A disclosure form may consist of more loan closing and the initial adjustment is not known than one page. For example, a creditor may attach a and may be different from the regular interval for separate page containing the historical payment example adjustments. In such cases, the creditor may disclose for a particular program. A disclosure form describing the initial adjustment period as a range of the minimum more than one program need not repeat information and maximum amount of time from consummation or applicable to each program that is described. For exam- closing. For example, the creditor might state: "The ple, a form describing multiple programs may disclose the first adjustment to your interest rate and payment may information applicable to all of the programs in one place occur no sooner than 6 months and no later than 18 with the various program features (such as options per- months after closing. Subsequent adjustments may mitting conversion to a fixed rate) disclosed separately. occur once each year after the first adjustment." (See The form, however, must state if any program feature that comments 19(b)(2)(viii)-7 and 19(b)(2)(x)-4 for guidis described is available only in conjunction with certain ance on other disclosures when this alternative discloother program features. Both the separate and multiple sure rule is used.) program disclosures may illustrate more than one loan Paragraph 19(b)(2)(vii) maturity or payment amortization—for example, by in- 1. Rate and payment caps. cluding multiple payment and loan balance columns in the * * * historical payment example. Disclosures may be inserted The creditor need not disclose each periodic or overall or printed in the Consumer Handbook (or a suitable rate limitation that is currently available. As an altersubstitute) as long as they are identified as the creditor's native, the creditor may disclose the range of the loan program disclosures. lowest and highest periodic and overall rate limitations that may be applicable to the creditor's ARM transactions. For example, the creditor might state: "The Paragraph 19(b)(2)(iii) limitation on increases to your interest rate at each 1. Determination of interest rate and payment. adjustment will be set at an amount in the following * * * range: between 1 and 2 percentage points at each In transactions where paying the periodic payments adjustment. The limitation on increases to your interwill not fully amortize the outstanding balance at the est rate over the term of the loan will be set at an end of the loan term and where the final payment will amount in the following range: between 4 and 7 equal the periodic payment plus the remaining unpaid percentage points above the initial interest rate." A balance, the creditor must disclose this fact. For creditor using this alternative rule must include a example, the disclosure might read, "Your periodic statement in its program disclosures suggesting that payments will not fully amortize your loan and you the consumer ask about the overall rate limitations will be required to make a single payment of the currently offered for the creditor's ARM programs. periodic payment plus the remaining unpaid balance at (See comments 19(b)(2)(viii)-6 and 19(b)(2)(x)-3 for an the end of the loan term." The creditor, however, explanation of the additional requirements for a credneed not reflect any irregular final payment in the itor using this alternative rule for disclosure of periodic historical example or in the disclosure of the initial and and overall rate limitations.) maximum rates and payments. * * * Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 367 Paragraph 19(b)(2)(viii) Paragraph 19(b)(2)(ix) 1. Index movement. 1. Calculation of payments. * * * * * * For the remaining ten years, 1982-1991, the creditor need However, in transactions in which the latest payment only show the remaining index values, margin and interest shown in the historical example is not for the latest rate and must continue to reflect all significant loan year of index values shown (such as in a five-year program terms such as rate limitations affecting them.) loan), a creditor may provide additional examples * * * based on the initial and maximum payments disclosed under section 226.19(b)(x). * * * 5. Term of the loan. In calculating the payments and Paragraph 19(b)(2)(x) loan balances in the historical example, a creditor need not base the disclosures on each term to maturity or payment amortization that it offers. Instead, disclo- 2. Term of the loan. In calculating the initial and sures for ARMs may be based upon terms to maturity maximum payments, the creditor need not base the or payment amortizations of 5, 15 and 30 years, as disclosures on each term to maturity or payment follows: ARMs with terms or amortizations from over amortization offered under the program. Instead, the 1 year to 10 years may be based on a 5-year term or creditor may follow the rules set out in comment amortization; ARMs with terms or amortizations from 19(b)(2)(viii)-5. In calculating the initial and maximum over 10 years to 20 years may be based on a 15-year payment, the terms to maturity or payment amortizaterm or amortization; and ARMs with terms or amor- tions selected for the purpose of making disclosures tizations over 20 years may be based on a 30-year term under section 226.19(b)(2)(viii) must be used. In addior amortization. Thus, disclosures for ARMs offered tion, creditors must state the term or payment amorwith any term from over 1 year to 40 years may be tization used in making the disclosures under this based solely on terms of 5, 15 and 30 years. Of course, section. a creditor may always base the disclosures on the 3. Rate caps. A creditor using the alternative rule for actual terms or amortizations offered. If the creditor disclosure of interest rate limitations described in bases the disclosures on 5-, 15- or 30-year terms or comment 19(b)(2)(vii)-l must calculate the maximum payment amortizations as provided above, the term or interest rate and payment based upon the highest payment amortization used in making the disclosure periodic and overall rate limitations disclosed under must be stated. section 226.19(b)(2)(vii). In addition, the creditor must 6. Rate caps. A creditor using the alternative rule state the rate limitations used in calculating the maxidescribed in comment 19(b)(2)(vii)-l for disclosure of mum interest rate and payment. (See comment rate limitations must base the historical example upon 19(b)(2)(viii)-6 for an explanation of the use of the the highest periodic and overall rate limitations dis- highest rate limitation in other disclosures.) closed under section 226.19(b)(2)(vii). In addition, the 4. Frequency of adjustments. In certain transactions, a creditor must state the limitations used in the historical creditor may use the alternative rule for disclosure of example. (See comment 19(b)(2)(x)-3 for an explana- the frequency of rate and payment adjustments detion of the use of the highest rate limitation in other scribed in comment 19(b)(2)(vi)-l. In such cases, the disclosures.) creditor must base the calculations of the initial and 7. Frequency of adjustments. In certain transactions, maximum rates and payments upon the earliest possicreditors may use the alternative rule described in ble first adjustment disclosed under section comment 19(b)(2)(vi)-l for disclosure of the frequency 226.19(b)(2)(vi). (See comment 19(b)(2)(viii)-7 for an of rate and payment adjustments. In such cases, the explanation of how to disclose the historical example creditor may assume for purposes of the historical when the initial adjustment period is not known.) example that the first adjustment occurred at the end of the first full year in which the adjustment could occur. For example, in an ARM in which the first adjustment may occur between 6 and 18 months after Section 226.20—Subsequent Disclosure closing and annually thereafter, the creditor may as- Requirements sume that the first adjustment occurred at the end of the first year in the historical example. (See comment 19(b)(2)(x)-4 for an explanation of how to compute the 20(c) Variable-Rate Adjustments maximum interest rate and payment when the initial adjustment period is not known.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

368 Federal Reserve Bulletin • May 1989 Paragraph 20(c)(4) Section 226.30—Limitation on Rates 1. Contractual effects of the adjustment. * * * In transactions where paying the periodic payments 8. Manner of stating the maximum interest rate. The will not fully amortize the outstanding balance at the maximum interest rate must be stated in the credit end of the loan term and where the final payment will contract either as a specific amount or in any other equal the periodic payment plus the remaining unpaid manner that would allow the consumer to easily ascerbalance, the amount of the adjusted payment must be tain, at the time of entering into the obligation, what disclosed if such payment has changed as a result of the rate ceiling will be over the term of the obligation. the rate adjustment. * * * * * * Paragraph 20(c)(5) 1. Fully-amortizing payment. This paragraph requires 13. Transition rules. * * * On or after that date, a disclosure only when negative amortization occurs creditors must have the maximum rate set forth in as a result of the adjustment. A disclosure is not their credit contracts and, where applicable, as part of required simply because a loan calls for non-amor- their truth in lending disclosures in the manner pretizing or partially amortizing payments. For example, scribed in the applicable sections of the regulation. in a transaction with a five-year term and payments based on a longer amortization schedule, and where the final payment will equal the periodic payment plus AMENDMENT TO REGULATION CC the remaining unpaid balance, the creditor would not have to disclose the payment necessary to fully amor- The Board of Governors is amending 12 C.F.R. Part 229, tize the loan in the remainder of the five-year term. A its Regulation CC (Availability of Funds and Collection of disclosure is required, however, if the payment dis- Checks), with respect to the law of Wisconsin. The closed under section 226.20(c)(4) is not sufficient to Expedited Funds Availability Act provides standards for prevent negative amortization in the loan. The adjustdetermining whether state law governing funds availabilment notice must state the payment required to preity supersedes or is preempted by federal law. Under vent negative amortization. (This paragraph does not Regulation CC, the Board will issue preemption determiapply if the payment disclosed in section 226.20(c)(4) nations upon request. is sufficient to prevent negative amortization in the Effective March 31, 1989, 12 C.F.R. Part 229 is loan but the final payment will be a different amount amended as follows: due to rounding.) 1. The authority citation for 12 C.F.R. Part 229 continues to read as follows: Authority: Title VI of Pub. L. 100-86, 101 Stat. 552, Subpart D—Miscellaneous 635, 12 U.S.C. §§ 4001 et seq. 2. Appendix F is amended by adding a preemption Section 226.25—Record Retention determination for the state of Wisconsin alphabetically to read as follows: 25(a) General Rule APPENDIX F—OFFICIAL BOARD INTERPRETATIONS 3. Certain variable-rate transactions. In variable-rate transactions that are subject to the disclosure requirements of section 226.19(b), written procedures for compliance with those requirements as well as a Wisconsin sample disclosure form for each loan program represent adequate evidence of compliance. (See comment Background 25(a)-2 pertaining to permissible methods of retaining the required disclosures.) The Board has been requested, in accordance with section 229.20(d) of Regulation CC (12 C.F.R. Part 229), to determine whether the Expedited Funds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 369 Availability Act (the Act) and Subpart B (and in (§ 229.2(k)), such as nonnegotiable instruments, and connection therewith, Subpart A) of Regulation CC are therefore not subject to Regulation CC's provipreempt the provisions of Wisconsin law concerning sions governing funds availability. Those items that availability of funds. This preemption determination are subject to Wisconsin law but are not subject to specifies those provisions of the Wisconsin funds Regulation CC will continue to be covered by the state availability law that are not preempted by the Act and availability schedules and exceptions. Regulation CC. (See also the Board's preemption determination regarding the Uniform Commercial Availability Schedules Code, section 4-213(5), pertaining to availability of cash deposits.) Temporary schedule. The Wisconsin statute requires Wisconsin Statutes §§ 404.213(4m), 215.136, and that in-state nonlocal checks be made available for 186.117 require Wisconsin banks, savings and loan withdrawal not later than the fifth day following deassociations, and credit unions, respectively, to make posit [Wisconsin Statutes §§ 404.213(4m)(b)(2); funds deposited in accounts available for withdrawal 215.136(2)(b); 186.117(2)(b)]. This time period is within specified time frames. Generally, checks drawn shorter than the seventh business day availability on the U.S. Treasury, the State of Wisconsin, or on a required for nonlocal checks under § 229.11(c) of local government located in Wisconsin must be made Regulation CC, although it is not shorter than available for withdrawal by the second day following the schedules for nonlocal checks set forth in deposit. (The law governing commercial banks deter- § 229.11(c)(2) and Appendix B-l of Regulation CC. mines availability based on banking day; the laws Thus, the state schedule for in-state nonlocal checks governing savings and loan associations and credit supersedes the federal schedule to the extent that it unions determine availability based on business days.) applies to an item payable by a Wisconsin bank that is In-state and out-of-state checks must be made avail- defined as a nonlocal check under Regulation CC able for withdrawal within five days and eight days and is not subject to reduced schedules under § following deposit, respectively. Exceptions are pro- 229.11(c)(2) and Appendix B-l. vided for new accounts and reason to doubt collecti- Permanent schedule. Under the federal permanent bility. In addition, Wisconsin Statutes § 404.103 per- availability schedule, nonlocal checks must be made mits commercial banks to vary these availability available for withdrawal not later than the fifth busirequirements by agreement. ness day following deposit. The fifth day availability requirement for in-state items in the Wisconsin statute Coverage supersedes the Regulation CC time period adjustment for withdrawal by cash or similar means in the perma- Wisconsin law defines "account", with respect to the nent schedule, to the extent that the in-state checks rules governing commercial banks, as "any account with are defined as nonlocal under Regulation CC. a bank and includes a checking, time, interest or savings Next-day availability. Under the Wisconsin statute, account" [Wisconsin Statutes § 404.104(l)(a)]. The stat- the proceeds of state and local government checks utes relating to the funds availability requirements appli- must be made available for withdrawal by the second cable to savings and loan associations and credit unions day following deposit, if the check is indorsed only do not define the term "account." The federal preemption by the person to whom it was issued [Wisconsin of state funds availability requirements applies only to Statutes §§ 404.213(4m)(b)(l); 215.136(2)(b); and "accounts" subject to Regulation CC, which generally 186.117(2)(a)l. Regulation CC requires next-day availconsist of transaction accounts. Regulation CC does not ability for these checks if they are affect the Wisconsin law to the extent that the state law (1) deposited in an account of a payee of the check, applies to deposits in savings, time, and other accounts (2) deposited in a depositary bank located in the (including transaction accounts where the account holder same state as the state or local government that is a bank, foreign bank, or the U.S. Treasury) that are not issued the check, "accounts" under Regulation CC. (Note, however, that (3) deposited in person to an employee of the under § 229.19(e) of Regulation CC, Holds on Other depositary bank, and Funds, the federal availability schedules may apply to (4) deposited with a special deposit slip, if the savings, time, and other accounts not defined as depositary bank informed its customers that use of "accounts" under Regulation CC in certain circum- such a slip is a condition to next-day availability. stances.) Under the federal law, if a state or local government The Wisconsin statute applies to "items" deposited check is not deposited in person to an employee of the in accounts. This term encompasses instruments that depositary bank, but meets the other conditions set are not defined as "checks" in Regulation CC forth in § 229.10(c)(l)(iv), the funds must be made Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

370 Federal Reserve Bulletin • May 1989 available for withdrawal not later than the second Regulation CC preempts state disclosure requirebusiness day following deposit. The Wisconsin statute ments concerning funds availability that relate to supersedes Regulation CC to the extent that the state "accounts" that are inconsistent with the federal law does not permit the use of a special deposit slip as requirements. The state requirement is different from, a condition to receipt of second-day availability. and therefore inconsistent with, the federal disclosure Exceptions to the schedules. Wisconsin law pro- rules [§ 229.20(c)(2)]. Thus, the Wisconsin statute is vides exceptions to the state availability schedules for preempted by Regulation CC to the extent that the new accounts (those opened less than 90 days) and state notice requirement applies to "accounts" as reason to doubt collectibility [Wisconsin Statutes defined by Regulation CC. The Wisconsin requirement §§ 404.213(4m)(b); 215.136(2); and 186.117(2)]. The would continue to apply to accounts, such as savings state availability law also permits commercial banks to and time accounts, not governed by the Regulation CC vary the funds availability requirements by agreement disclosure requirements. [Wisconsin Statute § 404.103(1)]. In all cases where the federal schedule preempts the state schedule, only the federal exceptions apply. For deposits that are covered by the state availability schedule (e.g., in- AMENDMENT TO REGULATION CC state nonlocal checks), a state exception must apply in order to extend the state availability schedule up to the The Board of Governors is amending 12 C.F.R. Part federal availability schedule. Once the deposit is held 229, its Regulation CC (Availability of Funds and up to the federal availability limit under a state excep- Collection of Checks) and its Commentary (Appendix tion, the depositary bank may further extend the hold E to Regulation CC). The regulation requires banks to only if a federal exception can be applied to the make funds available to their customers within specideposit. Any time a depositary bank invokes an ex- fied times, to disclose their funds availability policies ception to extend a hold beyond the time periods to their customers, and to handle returned checks otherwise permitted by law, it must give notice of the expeditiously. Since the publication of Regulation CC, extended hold to its customer in accordance with the Board has received numerous requests from banks § 229.13(g) of Regulation CC. and others for clarification of various provisions of the Business day thanking day. The definitions of "bus- regulation. The Board believes that the changes to iness day" and "banking day" in the Wisconsin stat- Regulation CC and its Official Commentary (Appendix utes are preempted by the Regulation CC definition of E) respond to many of these questions and will aid those terms. For determining the permissible hold banks in understanding and complying with the reguunder the Wisconsin schedules that supersede the lation. Regulation CC schedule, deposits are considered The effective date for the amendment to § 229.2(e) available for withdrawal on the specified number of regarding agencies of foreign banks and the amend- "business days" following the "banking day" of de- ment to Appendix A is August 10, 1989. All other posit. amendments are effective April 10, 1989. 12 C.F.R. Wisconsin law considers funds to be deposited, for Part 229 is amended as follows: the purpose of determining when they must be made available for withdrawal, when an item is "received at Part 229—Availability of Funds and Collection the proof and transit facility of the depository." For of Checks the purposes of this preemption determination, funds are considered deposited under Wisconsin law in 1. The authority citation for 12 C.F.R. Part 229 conaccordance with the rules set forth in § 229.19(a) of tinues to read as follows: Regulation CC. Authority: Title VI of Pub. L. 100-86, 101 Stat. 552, Disclosures 635, 12 U.S.C. 4001 et seq. 2. In section 229.2, paragraphs (e)(7), (z)(5), and (cc) are revised to read as follows: The Wisconsin statute does not require disclosure of a bank's funds availability policy. The state law does require, however, that a bank give notice to its cus- Section 229.2—Definitions, tomer if it extends the time within which funds will be available for withdrawal due to the bank's doubt as to the collectibility of the item [Wisconsin Statutes §§ 404.213(4m)(b); 215.136(2); and 186.117(2)]. (e) "Bank" means — Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 371 Section 229.19—Miscellaneous. (7) An "agency" or a "branch" of a "foreign bank" as defined in section 1(b) of the International Banking Act (12 U.S.C. § 3101). (e) Holds on other funds. (1) A depositary bank that receives a check for deposit in an account may not place a hold on any (z) "Paying bank" means — funds of the customer at the bank, where — (i) The amount of funds that are held exceeds the amount of the check; or (5) The state or unit of general local government on (ii) The funds are not made available for withwhich a check is drawn and to which it is sent for drawal within the times specified in 229.10, payment or collection. 229.11, 229.12, and 229.13. (2) A depositary bank that cashes a check for a customer over the counter, other than a check (cc) "Returning bank" means a bank (other than the drawn on the depositary bank, may not place a hold paying or depositary bank) handling a returned check on funds in an account of the customer at the bank, or notice in lieu of return. A returning bank is also a if — collecting bank for purposes of U.C.C. § 4-202(2). (i) The amount of funds that are held exceeds the amount of the check; or (ii) The funds are not made available for with- 3. In section 229.13, the last sentence of paragraph drawal within the times specified in 229.10, (e)(2) concluding text is revised to read as follows: 229.11, 229.12, and 229.13. Section 229.13—Exceptions. 6. In section 229.31, the last sentence of paragraph (b) is revised to read as follows: Section 229.31—Returning bank's responsibility (2) Overdraft and returned check fees. for return of checks. * * * The notice must state that the customer may be entitled to a refund of overdraft or returned check fees ( * b ) * U * nidentifiable depositary bank. that are assessed if the check subject to the exception is paid and how to obtain a refund. A returning bank that receives a returned check from a paying bank under § 229.30(b), or from a returning bank under this paragraph, but that is able to identify 4. In section 229.16, the last sentence of paragraph the depositary bank, must thereafter return the check (c)(3) concluding text is revised to read as follows: expeditiously to the depositary bank. Section 229.16—Specific availability policy 7. In section 229.32, the word "or" is removed at the disclosure. end of paragraph (a)(2)(ii), paragraph (a)(2)(iii) is redesignated as paragraph (a)(2)(iv), and a new paragraph (a)(2)(iii) is added to read as follows: (3) Overdraft and returned check fees. Section 229.32—Depositary bank's * * * responsibility for returned checks. The notice must state that the customer may be entitled to a refund of overdraft or returned check fees (ct) ^ that are assessed if the check subject to the delay is (2) * * * paid and how to obtain a refund. (iii) If the address in the indorsement is not in the same check processing region as the address associated with the routing number of the bank in its 5. In section 229.19, paragraph (e) is revised to read as indorsement on the check, at a location consistent follows: with the address in the indorsement and at a branch Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

372 Federal Reserve Bulletin • May 1989 or head office associated with the routing number in condition of the check when issued by it or its custhe bank's indorsement; or * * * tomer adversely affects the ability of a bank to indorse the check legibly in accordance with § 229.35. * * * 8. In section 229.34, paragraph (a)(1), the undesignated paragraph following paragraph (a)(4), paragraph (b), (b)(1), and the undesignated paragraph after paragraph (b)(3) are revised to read as follows: APPENDIX A —[AMENDED] Section 229.34—Warranties by paying and 10. Appendix A is amended by adding a new routing returning bank. number to the list, under the heading Federal Home Loan Banks, in numerical order, as follows: (a) Warranties. * * * (1) The paying bank, or in the case of a check 1130 1750 8 payable by a bank and payable through another bank, the bank by which the check is payable, returned the check within its deadline under the U.C.C., Regulation J (12 C.F.R. Part 210), or § 229.30(c) of this part; APPENDIX E —[AMENDED] * * * These warranties are not made with respect to checks Section 229.2—[Amended] drawn on the Treasury of the United States, U.S. Postal Service money orders, or checks drawn on a 11. The Commentary to section 229.2 is amended as state or a unit of general local government that are not follows: payable through or at a bank. a. In paragraph (d), removing the last sentence of (b) Warranty of notice of nonpayment. Each paying the second paragraph and replacing it with two new bank that gives a notice of nonpayment warrants to the sentences. transferee bank, to any subsequent transferee bank, to (d) Available for withdrawal. the depositary bank, and to the owner of the check * * * that — For purposes of this regulation, funds are considered (1) The paying bank, or in the case of a check available for withdrawal even though they are being payable by a bank and payable through another held by the bank to satisfy an obligation of the cusbank, the bank by which the check is payable, tomer other than the customer's potential liability for returned or will return the check within its deadline the return of the check. For example, funds are under the U.C.C., Regulation J (12 C.F.R. Part available for withdrawal even though they are being 210), or § 229.30(c) of this part; * * * held by a bank to satisfy a garnishment, tax levy, or court order restricting disbursements from the ac- These warranties are not made with respect to count, or to satisfy the customer's liability arising from checks drawn on a state or a unit of general local the certification of a check, sale of a cashier's or government that are not payable through or at a bank. teller's check, guaranty or acceptance of a check, or similar transaction. b. In paragraph (e), revising the second paragraph. 9. In section 229.38(d), the first sentence is revised to (e) Bank. read as follows: * * * "Bank" is defined to include depository institutions, Section 229.38—Liability. such as commercial banks, savings banks, savings and loan associations, and credit unions as defined in the Act, and U.S. branches and agencies of foreign banks. (d) Responsibility for back of check. A paying bank, For purposes of subpart B, the term does not include or in the case of a check payable through the paying corporations organized under section 25(a) of the bank and payable by another bank, the bank by which Federal Reserve Act, 12 U.S.C. § 611-631 (Edge the check is payable, is responsible for damages under corporations) or corporations having an agreement or paragraph (a) of this section to the extent that the undertaking with the Board under section 25 of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 373 Federal Reserve Act, 12 U.S.C. § 601-604a (agree- and replacing it with two new sentences, and removment corporations). For purposes of subpart C, and in ing the last sentence and replacing it with four new connection therewith, subpart A, any Federal Reserve sentences. Bank, Federal Home Loan Bank, or any other person (i) Cashier's check. * * * engaged in the business of banking is regarded as a bank. The phrase "any other person engaged in the The definition of cashier's check includes checks business of banking" is derived from U.C.C. provided to a customer of the bank in connection with § 1-201(4), and is intended to cover entities that han- customer deposit account activity, such as account dle checks for collection and payment, such as Edge disbursements and interest payments. The definition and agreement corporations, commercial lending com- also includes checks acquired from a bank by nonpanies under 12 U.S.C. § 3101, certain industrial customers for remittance purposes, including loan banks, and private bankers, so that virtually all checks disbursement checks. will be covered by the same rules for forward collec- * * * tion and return, even though they may not be covered The definition excludes checks that a bank draws on by the requirements of subpart B. For the purposes itself for other purposes, such as to pay employees and of subpart C, and in connection therewith, subpart A, vendors, and checks issued by the bank in connection the term may also include a state or a unit of general with a payment service, such as a payroll or a billlocal government to the extent that it pays warrants or paying service. Cashier's checks are generally sold by other drafts drawn directly on the state or local gov- banks to substitute the bank's credit for the customernment itself, and the warrants or other drafts are er's credit and thereby enhance the collectibility of sent to the state or local government for payment or the checks. A check issued in connection with a collection. payment service is generally provided as a convenience to the customer rather than as a guarantee of the check's collectibility. In addition, such checks are c. In paragraphs (f) and (g), revising the last para- often more difficult to distinguish from other types of graph. checks than are cashier's checks as defined by this (f) Banking day and regulation. (g) Business day. e. In paragraph (k), revising the last paragraph. * * * (k) Check The definition of "banking day" is phrased in terms of * * * when "an office of a bank is open" to indicate that a The definition of check does not include an instrument bank may observe a banking day on a per-branch payable in a foreign currency (i.e., other than in basis. A deposit made at an ATM or off-premise United States money as defined in 31 U.S.C. 5101) or facility (such as a remote depository or a lock box) is a credit card draft (i.e., a sales draft used by a considered made at the branch holding the account merchant or a draft generated by a bank as a result of into which the deposit is made for the purpose of a cash advance). The definition of check includes a determining the day of deposit. All other deposits are check that a bank may supply to a customer as a considered made at the branch at which the deposit is means of accessing a credit line without the use of a received. For example, under 229.19(a)(1), funds de- credit card. posited at an ATM are considered deposited at the f. In paragraph (u), adding a new sentence to the end time they are received at the ATM. The day of deposit of the second paragraph. for such funds is determined by the banking day at the ( * u ) * N * oncash item. account-holding branch at the time the funds are received at the ATM. Similarly, under § 229.19(a)(3), (In the context of this definition, "paying bank" refers funds deposited to a night depository, lock box, or to the paying bank as defined for purposes of subsimilar facility are considered deposited when the part C.) funds are removed from the facility and are available for processing. If such a facility is not on the premises of a branch, the day of deposit is determined by the g. In paragraph (cc), revising the last sentence and banking day at the account-holding branch. If such a adding a new sentence immediately following. facility is on branch premises, the day of deposit is (cc) Returning bank determined by the banking day at the branch at which * * * the deposit is received, whether or not it is the A returning bank is also a collecting bank for the account-holding branch. purpose of a collecting bank's duty to act seasonably d. In paragraph (i), removing the second sentence under U.C.C. § 4-202(2) and is analogous to a collect- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

374 Federal Reserve Bulletin • May 1989 ing bank for purposes of final settlement. (See Com- $5,000 aggregation of checks deposited on any one mentary to § 229.35(b)). banking day that are subject to the next-day availabilh. In paragraph (gg), removing the fourth sentence ity requirement. (See § 229.13(a)). and replacing it with seven new sentences. b. Revising the heading "Deposit at Staffed Teller (gg) Teller's check Station" and the first paragraph under that heading. * * * The definition does not include checks that are drawn Deposits Made to an Employee of the Depositary by a nonbank on a nonbank even if payable through or Bank at a bank. The definition includes checks provided to a customer of the bank in connection with customer In most cases, next-day availability of the proceeds of deposit account activity, such as account disburse- checks subject to this section is conditioned on the ments and interest payments. The definition also in- deposit of these checks in person to an employee of cludes checks acquired from a bank by a noncustomer the depositary bank. If the deposit is not made to an for remittance purposes, including loan disbursement employee of the depositary bank on the premises of checks. The definition excludes checks used by the such bank, the proceeds of the deposit must be made bank to pay employees or vendors and checks issued available for withdrawal by the start of business on the by the bank in connection with a payment service, second business day after deposit, under paragraph such as a payroll or a bill-paying service. Teller's (c)(2) of this section. For example, second-day availchecks are generally sold by banks to substitute the ability rather than next-day availability would be albank's credit for the customer's credit and thereby lowed for deposits of checks subject to this section enhance the collectibility of the checks. A check made at a proprietary ATM (and at a nonproprietary issued in connection with a payment service is gener- ATM under the permanent schedule), night deposially provided as a convenience to the customer rather tory, through the mail or a lock box, or at a teller than as a guarantee of the check's collectibility. In station staffed by a person that is not an employee of addition, such checks are often more difficult to dis- the depositary bank. Second-day availability may also tinguish from other types of checks than are teller's be allowed for deposits picked up by an employee of checks as defined by this regulation. the depositary bank at the customer's premises; such * * * deposits would be considered made upon receipt at the i. Adding a new paragraph (kk) immediately follow- branch or other location of the depositary bank. ing paragraph (ii). (kk) Unit of general local government is defined to include a city, county, parish, town, township, village, c. Removing the heading "Fees for Withdrawals" or other general purpose political subdivision of a and the paragraph appearing under it. state. The term does not include special purpose units, d. In the fifth paragraph under the heading "Special such as school districts, water districts, or Indian Deposit Slips," revising the second sentence. nations. Special Deposit Slips Section 229.10 —[Amended] 12. The Commentary to section 229.10(c) is amended * * * as follows: If a bank only provides the special deposit slips upon a. In paragraph (c) introductory text, revising the the request of a depositor, however, the teller must last sentence and adding two sentences to follow. advise the depositor of the availability of the special (c) Certain check deposits. deposit slips, or the bank must post a notice advising * * * customers that the slips are available upon request. For the purposes of this section, all checks drawn on a * * * Federal Reserve Bank or a Federal Home Loan Bank 13. The Commentary to section 229.11(c) is amended that contain in the MICR line a routing number that is by revising the first sentence to read as follows: listed in Appendix A are subject to the next-day availability requirement if they are deposited in an Section 229.11—Temporary Availability account held by a payee of the check and in person to Schedule an employee of the depositary bank, regardless of the purposes for which the checks were issued. For all new accounts, even if the new account exception is (c) Nonlocal checks. Under the temporary schedule, not invoked, traveler's checks must be included in the funds deposited by nonlocal checks must be made Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 375 available for withdrawal not later than the seventh day of deposit, even though it may use the deposited business day following the banking day the funds are funds to pay checks prior to the second business day; deposited, except in the case of deposits in accounts of the funds used to pay checks in this example are not banks located outside the 48 contiguous states. available for withdrawal until the second business day * * * after deposit because the funds are not available for all uses until the second business day. (See the definition of "available for withdrawal" in § 229.2(d).) 14. The Commentary to section 229.13(b) is amended (b) Content of Specific Policy Disclosure. by adding a new sentence after the second sentence in * * * paragraph (b) introductory text to read as follows: A bank that provides availability based on when the bank generally receives credit for deposited checks Section 229.13—Exceptions need not disclose the time when a check drawn on a specific bank will be available for withdrawal. Instead, the bank may disclose the categories of deposits that (b) Large Deposits. must be available on the first business day after the * * * day of deposit (deposits subject to § 229.10) and state When the large deposit exception is applied to deposits the other categories of deposits and the time periods composed of both local and nonlocal checks, the that will be applicable to those deposits. For example, depositary bank has the discretion to choose the a bank might disclose the four-digit Federal Reserve portion of the deposit to which it applies the excep- routing symbol for local checks and indicate that such tion. checks as well as certain nonlocal checks will be * * * available for withdrawal on the first or second business day following the day of deposit, depending on the location of the particular bank on which the check is 15. The Commentary to section 229.16 is amended by drawn, and disclose that funds from all other checks adding two new paragraphs to paragraph (a) and will be available on the second or third business day. adding a new paragraph at the end of paragraph (b) to The bank must also disclose that the customer may read as follows: request a copy of the bank's detailed schedule that would enable the customer to determine the availabil- Section 229.16—Specific Availability Policy ity of any check and must provide such schedule upon Disclosure request. A change in the bank's detailed schedule would not trigger the change in policy disclosure (a) General. requirement of § 229.18(e). * * * The disclosure must reflect the policy and practice of the bank regarding availability as to most accounts and most deposits into those accounts. In disclosing the Section 229.19 —[Amended] availability policy that it follows in most cases, a bank may provide a single disclosure that reflects one policy 16. The Commentary to section 229.19 is amended as to all its transaction account customers, even though follows: some of its customers may receive faster availability a. Adding a new sentence after the third sentence of than that reflected in the policy disclosure. Thus, a paragraph (a) introductory text and removing the bank need not disclose to some customers that they last sentence of the last paragraph and adding a new receive faster availability than indicated in the disclo- paragraph at the end thereof. sure. If, however, a bank has a policy of imposing (a) When Funds Are Considered Deposited. delays in availability on any customers longer than * * * those specified in its disclosure, those customers must Funds deposited to a deposit box in a bank lobby that receive disclosures that reflect the longer applicable is accessible to customers only during regular business availability periods. hours are generally considered deposited when placed A bank may disclose that funds are "available for in the lobby box; a bank may, however, treat deposits withdrawal" on a given day notwithstanding the fact to lobby boxes the same as deposits to night deposithat the bank uses the funds to pay checks received tories (as provided in § 229.19(a)(3)), provided a notice before that day. For example, a bank may disclose that appears on the lobby box informing the customer its policy is to make funds available from deposits of when such deposits will be considered received. local checks on the second business day following the * * * Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

376 Federal Reserve Bulletin • May 1989 considered finally paid when cashed (See U.C.C. § 4- A bank is not required to remain open until 2:00 p.m. 213(l)(a)). If a bank closes before 2:00 p.m., deposits received 17. The Commentary to section 229.20(c) is revised to after the closing may be considered received on the read as follows: next banking day. Further, as § 229.2(f) defines the term "banking day" as the portion of a business day Section 229.20—Relation to State Law on which a bank is open to the public for substantially all of its banking functions, a day, or a portion of a day, is not necessarily a banking day merely because (c) Standards for preemption. This section describes the bank is open for only limited functions, such as the standards the Board will use in making determinakeeping drive-in or walk-up teller windows open, tions on whether federal law will preempt state laws when the rest of the bank is closed to the public. For governing funds availability. A provision of state law example, a banking office that usually provides a full is considered inconsistent with federal law if it permits range of banking services may close at 12:00 noon but a depositary bank to make funds available to a cusleave a drive-in teller window open for the limited tomer in a longer period of time than the maximum purpose of receiving deposits and making cash with- period permitted by the Act and this regulation. For drawals. Under those circumstances, the bank is con- example, a state law that permits a hold of four sidered closed and may consider deposits received business days or longer for local checks permits a hold after 12:00 noon as having been received on the next that is longer than that permitted under the Act and banking day. The fact that a bank may reopen for this regulation, and therefore is inconsistent and presubstantially all of its banking functions after 2:00 empted. State availability schedules that provide for p.m., or that it continues its back office operations availability in a shorter period of time than required throughout the day, would not affect this result. A under Regulation CC supersede the federal schedule. bank may not, however, close individual teller stations Under a state law, some categories of deposits could and reopen them for next-day's business before 2:00 be available for withdrawal sooner or later than the p.m. during a banking day. time required by this subpart, depending on the comb. In paragraph (e), revising the second paragraph position of the deposit. For example, the Act and this and adding a third paragraph. regulation (§ 229.10(c)(l)(vii)) require next-day avail- (e) Holds on other funds. ability for the first $100 of the aggregate deposit of * * * local or nonlocal checks on any day, and a state law This paragraph clarifies that if a customer deposits could require next-day availability for any check of a check in an account (as defined in § 229.2(a)), the $100 or less that is deposited. Under the Act and this bank may not place a hold on any of the customer's regulation, if either one $150 check or three $50 checks funds so that the funds that are held exceed the are deposited on a given day, $100 must be made amount of the check deposited or the total amount available for withdrawal on the next business day, and of funds held are not made available for withdrawal $50 must be made available in accordance with the within the times required in this subpart. For example, local or nonlocal schedule. Under the state law, howif a bank places a hold on funds in a customer's ever, the two deposits would be subject to different nontransaction account, rather than a transaction availability rules. In the first case, none of the proaccount, for deposits made to the customer's transac- ceeds of the deposit would be subject to next-day tion account, the bank may place such a hold only to availability; in the second case, the entire proceeds of the extent that the funds held do not exceed the the deposit would be subject to next-day availability. amount of the deposit and the length of the hold does In this example, because the state law would, in some not exceed the time periods permitted by this regula- situations, permit a hold longer than the maximum tion. permitted by the Act, this provision of state law is These restrictions also apply to holds placed on inconsistent and preempted in its entirety. funds in a customer's account (as defined in § 229.2(a)) In addition to the differences between state and if a customer cashes a check at a bank (other than a federal availability schedules, a number of state laws check drawn on that bank) over the counter. The contain exceptions to the state availability schedules regulation does not prohibit holds that may be placed that are different from those provided under the Act on other funds of the customer for checks cashed over and this regulation. The state exceptions continue to the counter, to the extent that the transaction does not apply only in those cases where the state schedule is involve a deposit to an account. A bank may not, shorter than or equal to the federal schedule, and then however, place a hold on any account when an on us only up to the limit permitted by the Regulation CC check is cashed over the counter. On us checks are schedule. Where a deposit is subject to a state excep- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 377 tion under a state schedule that is not preempted by * * * Regulation CC and is also subject to a federal excep- If a paying bank returns a check on its banking day of tion, the hold on the deposit cannot exceed the hold receipt without paying for the check, as permitted permissible under the federal exception in accordance under U.C.C. § 4-302(a), and receives settlement for with Regulation CC. In such cases, only one exception the returned check from a returning bank, it must notice is required, in accordance with § 229.13(g). This promptly pay the amount of the check to the collecting notice need only include the applicable federal excep- bank from which it received the check. tion as the reason the exception was invoked. For those categories of checks for which the state schedule is preempted by the federal schedule, only the federal * * * exceptions may be used. Also, a paying bank is not responsible for failure to State laws that provide maximum availability peri- make expeditious return to a party that has breached a ods for categories of deposits that are not covered by presentment warranty under U.C.C. § 4-207(1), notthe Act would not be preempted. Thus, state funds withstanding that the paying bank has returned the availability laws that apply to funds in time and check. (See Commentary to section 229.30(a).) savings deposits are not affected by the Act or this regulation. In addition, the availability schedules of several states apply to "items" deposited to an acb. In paragraph (b), revising the fourth sentence of count. The term "items" may encompass deposits, the second paragraph and adding two new sentences such as nonnegotiable instruments, that are not subto immediately follow, and revising the first senject to the Regulation CC availability schedules. Detence of the third paragraph. posits that are not covered by Regulation CC continue (b) Unidentifiable depositary bank. to be subject to the state availability schedules. State * * * laws that provide maximum availability periods for A paying bank returning a check under this paragraph categories of institutions that are not covered by the to a bank that has not agreed to handle the check Act would also not be preempted. For example, a state expeditiously must advise that bank that it is unable to law that governs money market mutual funds would identify the depositary bank. This advice must be not be affected by the Act or this regulation. conspicuous, such as a stamp on each check for which Generally, state rules governing the disclosure or the depositary bank is unknown if such checks are notice of availability policies applicable to accounts commingled with other returned checks, or, if such are also preempted, if they are different from the checks are sent in a separate cash letter, by one notice federal rules. Nevertheless, a state law requiring dison the cash letter. The returned check may not be closure of funds availability policies that apply to prepared for automated return. deposits other than "accounts," such as savings or * * * time deposits, are not inconsistent with the Act and The sending of a check to a bank that handled the this subpart. Banks in these states would have to check for forward collection under this paragraph is follow the state disclosure rules for these deposits. not subject to the requirements for expeditious return by the paying bank. * * * Section 229.30—[Amended] 18. The Commentary to section 229.30 is amended as c. Revising paragraph (f) introductory text. follows: (f) Notice in Lieu of Return. A check that is lost or a. In paragraph (a), under the fourth numbered otherwise unavailable for return may be returned by example, adding a new sentence to the end of the sending a legible copy of both sides of the check or, if third paragraph and adding a new sentence to the such a copy is not available to the paying bank, a end of the eighth paragraph. written notice of nonpayment containing the informa- (a) Return of checks. tion specified in § 229.33(b). The copy or written * * * notice must clearly indicate it is a notice in lieu of return and must be handled in the same manner as Examples other returned checks. Notice by telephone, telegraph, or other electronic transmission, other than a legible facsimile or similar image transmission of both sides of the check, does not satisfy the requirements Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

378 Federal Reserve Bulletin • May 1989 for a notice in lieu of return. The requirement for a * * * (See section 229.36(d) and Commentary to secwriting and the indication that the notice is a substitute tion 229.35(b).) for the returned check is necessary so that the returning and depositary banks are informed that the notice carries value. Notice in lieu of return is permitted only c. In paragraph (f), adding a new sentence before the when a bank does not have and cannot obtain posses- parenthetical phrase. sion of the check or must retain possession of the (f) Notice in lieu of return. check for protest. A check is not unavailable for return * * * if it is merely difficult to retrieve from a filing system or Notice in lieu of return is permitted only when a bank from storage by a keeper of checks in a truncation does not have and cannot obtain possession of the system. A notice in lieu of return may be used by a check or must retain possession of the check for bank handling a returned check that has been lost or protest. A check is not unavailable for return if it is destroyed, including when the original returned check merely difficult to retrieve from a filing system or from has been charged back as lost or destroyed as provided storage by a keeper of checks in a truncation system. in § 229.35(b). A bank using a notice in lieu of return * * * gives a warranty under § 229.34(a)(4) that the original 20. The Commentary to section 229.32(a) is amended check has not been and will not be returned. by redesignating item 2(iii) as 2(iv), adding a new item 2(iii), and adding a new paragraph after the last paragraph to read as follows: Section 229.31—[Amended] Section 229.32—Depository Bank's Responsibility for Returned Checks 19. The Commentary to section 229.31 is amended as (a) Acceptance of returned checks. follows: * * * a. In paragraph (b), revising the last sentence of the 2 * * * introductory text and revising the last paragraph. (iii) The depositary bank must accept returned (b) Unidentifiable depositary bank. checks at the address in its indorsement and at an * * * address associated with its routing number in the In the limited cases where the returning bank cannot indorsement if the written address in the indorseidentify the depositary bank, the returning bank may ment and the address associated with the routing send the returned check to a returning bank that agrees number in the indorsement are not in the same to handle the returned check for expeditious return check processing region. Under §§ 229.30(g) and under § 229.31(a), or it may send the returned check to 229.31(g), a paying or returning bank may rely on a bank that handled the check for forward collection, the depositary bank's routing number in its indoreven if that bank does not agree to handle the returned sement in handling returned checks and is not check expeditiously under § 229.31(a). required to send returned checks to an address in the depositary bank's indorsement that is not in the same check processing region as the address * * * associated with the routing number in the in- As in the case of a paying bank returning a check dorsement. under § 229.30(b), a returning bank returning a check under this paragraph to a bank that has not agreed to handle the check expeditiously must advise that bank Under section 229.33(d), a depositary bank receivthat it is unable to identify the depositary bank. This ing a returned check or notice of nonpayment must advice must be conspicuous, such as a stamp on each send notice to its customer by its midnight deadline or check for which the depositary bank is unknown if within a longer reasonable time. such checks are commingled with other returned checks, or, if such checks are sent in a separate cash letter, by one notice on the cash letter. The returned check may not be prepared for automated return. Section 229.33—[Amended] b. In paragraph (c), revising the parenthetical at the end of the second paragraph. (c) Settlement. 21. The Commentary to section 229.33 is amended as * * * follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 379 a. In paragraph (a), adding a new paragraph at the Section 229.35—[Amended] end thereof. (a) Requirement. 23. The Commentary to section 229.35 is amended as * * * follows: Unless the returned check is used to satisfy the notice a. In paragraph (a), adding two sentences to the end requirement, the requirement for notice is independent of the fourth paragraph, revising the first two senof and does not affect the requirements for timely and tences in the fifth paragraph, and adding a sentence expeditious return of the check under § 229.30 and the to the end of the last paragraph. U.C.C. (See § 229.30(a).) If a paying bank fails both to (a) Indorsement Standards. comply with this section and to comply with the * * * requirements for timely and expeditious return under § 229.30 and the U.C.C. and Regulation J (12 C.F.R. Part 210), the paying bank shall be liable under either * * * this section or such other requirements, but not both. Depositary banks should not include information that (See § 229.38(b).) A paying bank is not responsible for can be confused with required information. For examfailure to give notice of nonpayment to a party that has ple, a nine-digit zip code could be confused with the breached a presentment warranty under U.C.C. sec- nine-digit routing number. tion 4-207(1), notwithstanding that the paying bank A depositary bank is not required to place a street may have returned the check. (See U.C.C. §§ 4-207(1) address in its indorsement; however, a bank may want and 4-302.) to put an address in its indorsement in order to limit b. In paragraph (d), revising the first sentence. the number of locations at which it must accept (d) Notification to Customer. This paragraph requires returned checks. In instances where this address is not a depositary bank to notify its customer of nonpay- consistent with the routing number in the indorsement, ment upon receipt of a returned check or notice of the depositary bank is required to accept returned nonpayment, regardless of the amount of the check or checks at a branch or head office consistent with the notice. routing number. Banks should note, however, that * * * § 229.32 requires a depositary bank to accept returned 22. The Commentary to section 229.34(a) is amended checks at the location(s) it accepts forward collection by revising the first and last sentence thereof to read as checks. follows: * * * Section 229.34—Warranties by Paying Bank * * * and Returning Bank The standard requires collecting and returning banks to indorse the check for tracing purposes. (a) Warranty of returned checks. This paragraph in- b. In paragraph (b), adding four sentences to the end cludes warranties that a returned check, including a of the fifth paragraph and adding a new paragraph notice in lieu of return, was returned by the paying after the fifth paragraph. bank, or in the case of a check payable by a bank and ( * b ) * L * i ability of bank handling check. payable through another bank, the bank by which the check is payable, within the deadline under the U.C.C., Regulation J, or 229.30(c); that the paying or returning bank is authorized to return the check; that * * * the returned check has not been materially altered; Nor does this paragraph affect a collecting bank's and that, in the case of notice in lieu of return, the accountability under U.C.C. §§ 4-211(2) and (3) and original check has not and will not be returned (see 4-213(3). A collecting bank becomes accountable Commentary to § 229.30(f)). upon receipt of final settlement as provided in the * * * foregoing U.C.C. sections. The term "final settle- These warranties do not apply to checks drawn on the ment" in §§ 229.31(c), 229.32(b), and 229.36(d) is United States Treasury, to Postal Service money intended to be consistent with the use of the term orders, or to checks drawn on a state or a unit of "final settlement" in the U.C.C. (e.g., U.C.C. §§ 4general local government that are not payable through 211, 4-212, and 4-213). (See also § 229.2(cc) and or at a bank (see § 229.42). Commentary.) This paragraph also provides that a bank may have the rights of a "holder" based on the handling of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

380 Federal Reserve Bulletin • May 1989 check for collection or return. A bank may become a holder or a holder in due course regardless of whether Banks that have used model forms C-l, C-2, or C-3 or prior banks have complied with the indorsement stan- have used forms C-4, C-5, C-6, or C-7 (which give dard in § 229.35(a) and Appendix D. social security benefits and payroll payments as examples of preauthorized credits available the day after deposit) and that at the same time follow Treasury 24. The Commentary to section 229.37 is amended by regulations (31 C.F.R. Part 210) and ACH association revising the second sentence of the first paragraph and rules requiring that these credits be made available on revising the second paragraph to read as follows: the day the bank receives the funds are protected from civil liability under § 229.21(e). Such banks are encour- Section 229.37—Variations by Agreement aged to disclose same-day availability for those electronic payments when reordering supplies of forms. * * * To achieve consistency, the official comment to U.C.C. §4-103(1) (which in turn follows U.C.C. § 1-201(3)) should be followed in construing this section. AMENDMENT TO RULES REGARDING * * * DELEGATION OF AUTHORITY The Board has not followed U.C.C. § 4-103(2), which permits Federal Reserve regulations and oper- The Board of Governors is amending 12 C.F.R. Part ating letters, clearinghouse rules, and the like to apply 265, its Rules Regarding Delegation of Authority to to parties that have not specifically assented. Never- delegate to each Federal Reserve Bank, after consultheless, this section does not affect the status of such tation with the Board's General Counsel, the authority agreements under the Uniform Commercial Code. to decide not to disapprove requests for director interlocks pursuant to section 205(8) of the Depository Institution Management Interlocks Act (12 U.S.C. 25. In the Commentary to section 229.38(d), the first 3204(8)) for diversified savings and loan holding comtwo sentences of the second paragraph are revised to panies. read as follows: Effective March 10, 1989, 12 C.F.R. Part 265 is amended as follows: Section 229.38—Liability Part 265—Rules Regarding Delegation of Authority (d) Responsibility for back of check. * * * 1. The authority citation for 12 C.F.R. Part 265 con- The paying bank or, in the case of a check payable tinues to read as follows: through the paying bank and payable by another bank, the bank by which the check is payable, is responsible for the Authority: Section ll(k), 38 Stat. 261 and 80 Stat. condition of the check when it is issued by it or its 1314; 12 U.S.C. 248(k). customer. (It would not be responsible for a check issued by a person other than such a bank or customer.) 2. A new paragraph (f)(49) is added to section 265.2 to * * * read as follows: Section 265.2—Specific functions delegated to 26. In the Commentary to Appendix C, under the Board employees and to Federal Reserve heading "Models C-l Through C-7 Generally," a new Banks. paragraph is added after the fifth paragraph to read as follows: ^ * * * (49) Under the provisions of section 205(8) of the APPENDIX C Depository Institution Management Interlocks Act (12 U.S.C. § 3204(8)), after consultation with the General Counsel of the Board, to decide not to disapprove notices to establish director interlocks Models C-l Through C-7 Generally with diversified savings and loan holding companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 381 ORDERS ISSUED UNDER BANK HOLDING sitions of banks and bank holding companies in that COMPANY ACT state by Georgia bank holding companies on a reciprocal basis. Orders Issued Under Section 3 of the Bank Based on its review of the relevant Alabama and Holding Company Act Georgia statutes, the Board has determined that the Georgia statute satisfies the conditions of the Alabama CB&T Bancshares, Inc. regional reciprocal banking statute and that Alabama Columbus, Georgia has by statute expressly authorized a Georgia bank holding company, such as CB&T, to acquire an Ala- Order Approving Acquisition of a Bank bama bank holding company or bank, such as Bank. In this regard, Bank satisfies the longevity requirement in CB&T Bancshares, Inc., Columbus, Georgia the Alabama statute, and the Alabama Superintendent ("CB&T"), a bank holding company within the mean- of Banks has approved Applicant's proposal pursuant ing of the Bank Holding Company Act ("Act"), has to the Alabama statute. Based on the foregoing, the applied for the Board's approval under section 3(a)(3) Board has determined that the proposed acquisition is of the Act (12 U.S.C. § 1842(a)(3)) to acquire all of the specifically authorized by the statute laws of Alabama voting shares of Farmers and Merchants Bank of and that Board approval of the proposal is not barred Russell County, Phenix City, Alabama ("Bank"). by the Douglas Amendment. Notice of the application, affording opportunity for CB&T, a multi-bank holding company controlling 16 interested persons to submit comments, has been banking subsidiaries, is the sixth largest commercial published (54 Federal Register 999 (1989)). The time banking organization in Georgia. CB&T controls 13 for filing comments has expired, and the Board has bank subsidiaries operating in Georgia with approxiconsidered the application and all comments received mately $1.6 billion in deposits, representing approxiin light of the factors set forth in section 3(c) of the mately 3.7 percent of the total deposits in commercial Act. banks in the state.4 Applicant also currently owns two Section 3(d) of the Act, the Douglas Amendment, bank subsidiaries in Florida, with total deposits of prohibits the Board from approving an application by a approximately $75.9 million, and another bank subsidbank holding company to acquire control of any bank iary in Alabama, with total deposits of approximately located outside of the holding company's home state,1 $29.0 million. Based on the facts of this case, consumunless such acquisition is "specifically authorized by mation of the proposal would have no significantly the statute laws of the State in which [the] bank is adverse effect on the concentration of resources in located, by language to that effect and not merely by Alabama. implication." 12 U.S.C. § 1842(d). Alabama state law Applicant competes with Bank in the Columbus permits a bank holding company located in a region (Georgia) banking market ("Columbus market").5 Apthat includes Georgia to acquire an Alabama bank or plicant is the largest of eight commercial banking bank holding company, provided that Alabama bank organizations in the market, controlling deposits of holding companies are permitted to acquire banks or approximately $522.2 million, representing approxibank holding companies in the home state of the mately 42.6 percent of total deposits in commercial acquiring bank holding company on a reciprocal banking organizations in the market ("market basis.2 Alabama law also requires that the banking deposits").6 Bank is the seventh largest commercial organization to be acquired must have been in exist- banking organization in the market, controlling deposence and continuously operating for more than five its of approximately $29.6 million, representing apyears prior to the acquisition, and that the Alabama proximately 2.4 percent of market deposits. Upon Superintendent of Banks approve the acquisition. consummation, Applicant would remain the largest Georgia law also permits a bank holding company commercial banking organization in the market, conlocated in a region that includes Alabama to acquire a trolling deposits of approximately $551.8 million, rep- Georgia bank or bank holding company.3 Like Ala- resenting approximately 45.0 percent of total market bama, Georgia state law requires that the home state deposits. The Columbus market is considered highly of the acquiring bank holding company permit acqui- concentrated, with a Herfindahl-Hirschman Index 1. A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were 4. Data are as of September 30, 1988. principally conducted on July 1, 1966, or the date on which the 5. The Columbus market is approximated by Muscogee and Chatcompany became a bank holding company, whichever is later. tahoochee counties in Georgia, Russell County in Alabama, and the 2. Ala. Code § 5-13A-3(l) (Supp. 1988). city of Smiths in Lee County, Alabama. 3. Ga. Code Ann. § 7-1-621 (Supp. 1988). 6. Market data for commercial banks are as of June 30, 1987. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

382 Federal Reserve Bulletin • May 1989 ("HHI") of 2853, which would increase by 204 points cause by the Board or by the Federal Reserve Bank of to 3057 upon consummation of the proposal.7 Atlanta, acting pursuant to delegated authority. Although consummation of this proposal would By order of the Board of Governors, effective eliminate some existing competition in the Columbus March 15, 1989. market, seven commercial banks would continue to operate in the market after consummation of this Voting for this action: Chairman Greenspan and Governors proposal.8 In addition, the Board has considered the Johnson, Seger, Angell, Heller, Kelley, and LaWare. presence of thrift institutions in this market. The Board has previously indicated that thrift institutions JENNIFER J. JOHNSON have become, or have the potential to become, major Associate Secretary of the Board competitors of commercial banks.9 In the Columbus market, thrift institutions account for a significant Crestar Financial Corporation percentage of the total deposits.10 Based upon the size Richmond, Virginia and market share of thrift institutions, the Board has concluded that thrift institutions exert a significant Order Approving Merger of Bank Holding competitive influence that mitigates the anticompeti- Companies and Banks, and the Establishment of tive effects of this proposal in this banking market.11 Branches Based on the facts of record, the Board concludes that consummation of the proposal would not have a Crestar Financial Corporation, Richmond, Virginia significantly adverse effect on competition in the Co- ("Crestar"), has applied for the Board's approval lumbus market or in any other relevant market. under section 3(a)(5) of the Bank Holding Company The financial and managerial resources of Applicant Act (12 U.S.C. § 1842(a)(5)) ("BHC Act"), to merge and its subsidiaries, and Bank, are consistent with with Colonial American Bankshares Corporation, approval. In addition, considerations relating to the Roanoke, Virginia ("Colonial"). In addition, Crestar convenience and needs of the communities to be Bank, Richmond, Virginia, a state member bank, has served by CB&T and Bank are consistent with ap- applied to merge with Colonial American National proval. Bank, Roanoke, Virginia ("Colonial Bank"), pursuant Accordingly, based on the foregoing and other facts to section 18(c) of the Federal Deposit Insurance Act of record, the Board has determined that the applica- (12 U.S.C. § 1828(c)), and thereby to establish tion should be, and hereby is, approved. The acquisi- branches pursuant to section 9 of the Federal Reserve tion shall not be consummated before the thirtieth Act (12 U.S.C. § 321). calendar day following the effective date of this Order, Notice of the proposal, affording an opportunity for or later than three months after the effective date of interested persons to submit comments, has been this Order, unless such period is extended for good given in accordance with section 3(b) of the BHC Act (54 Federal Register 66 (1989)). As required by the Bank Merger Act, reports of the competitive effects of 7. Under the revised Department of Justice Merger Guidelines (49 the merger were requested from the United States Federal Register 26,823 (June 29, 1984)), a market in which the Attorney General, the Comptroller of the Currency post-merger HHI is over 1800 is considered highly concentrated. The and the Federal Deposit Insurance Corporation. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other time for filing comments has expired, and the Board factors indicating anticompetitive effects) unless the post-merger HHI has considered the applications and all comments is at least 1800 and the merger increases the HHI by at least 200 points. The Department of Justice has stated that the higher than received in light of the factors set forth in section 3(c) normal HHI thresholds for screening bank mergers for anticompeti- of the BHC Act and in the Bank Merger Act tive effects implicitly recognizes the competitive effect of limited (12 U.S.C. § 1828(c)(5)). purpose lenders and other non-depository financial entities. 8. In addition, a state charter was recently issued to a de novo bank Crestar is the second largest banking organization in in the Columbus market. Virginia, controlling domestic deposits of approxi- 9. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 mately $7.2 billion, representing 15.5 percent of total (1984); The Chase Manhattan Corporation, 70 FEDERAL RESERVE BULLETIN 529 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE deposits in commercial banks in the state.1 Colonial is BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL the eleventh largest banking organization in Virginia, RESERVE BULLETIN 802 (1983); and First Tennessee National Corpocontrolling deposits of approximately $351.9 million, ration, 69 FEDERAL RESERVE BULLETIN 298 (1983). 10. Thrift institutions control approximately 30 percent of the representing 0.8 percent of total deposits in commercombined deposits of banks and thrifts in the market. Market deposit cial banks in the state. Crestar would remain the data for thrift institutions are as of June 30, 1986. 11. If 50 percent of deposits held by thrift institutions in the Columbus market were included in the calculation of market concentration, Applicant's pro forma market share would be 37.2 percent. The HHI would increase by 140 points to 2177. 1. Deposit data are as of June 30, 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 383 second largest banking organization in Virginia upon activities of thrift institutions in the market, the Board consummation of this proposal. Consummation of this has concluded that thrift institutions exert a significant proposal would not increase significantly the concen- influence upon existing competition in the Roanoke, tration of banking resources in Virginia. Virginia, banking market.6 In light of these factors and Crestar competes directly with Colonial in the other facts of record, the Board concludes that con- Roanoke, Virginia, banking market.2 Crestar is the summation of this proposal would not have a signifisixth largest banking organization in the market, with cantly adverse effect on existing or potential competideposits of $199.5 million, representing approximately tion in any relevant banking market. 8 percent of deposits in commercial banks in the In considering the convenience and needs of the market ("market deposits").3 Colonial is the second communities to be served, the Board has taken into largest banking organization in the market, with de- account the records of Crestar and Colonial under the posits of $293.3 million, representing approximately Community Reinvestment Act ("CRA").7 The CRA 11.9 percent of market deposits. Upon consummation requires the federal bank supervisory agencies to of the proposal, Crestar would become the second encourage financial institutions to help meet the credit largest banking organization in the market, with de- needs of the local communities in which they are posits of $492.8 million, representing 19.9 percent of chartered consistent with the safe and sound operation market deposits. The Roanoke, Virginia, banking mar- of such institutions. To accomplish this end, the CRA ket is considered highly concentrated, with a Herfin- requires the appropriate federal supervisory authority, dahl-Hirschman Index ("HHI") of 2492. in connection with its examination of financial institu- The HHI for this market would increase by 190 tions, to "assess the record of banks under their points to 2682 upon consummation of the proposal, supervision in meeting the credit needs of their entire and the four-firm concentration ratio would increase communities, including low- and moderate-income from 77 percent to 85.1 percent.4 neighborhoods, consistent with the safe and sound Although consummation of this proposal would operation of such institution."8 The CRA also requires eliminate existing competition between Crestar and the agencies to take these records into account when Colonial in the Roanoke, Virginia, banking market, 10 acting on certain applications involving the institubanking institutions would continue to operate in the tions. market following consummation of this proposal. In The Board's experience over the years in examining addition, the Board has considered the presence of bank performance under the CRA has indicated that thrift institutions in the market in its analysis of this institutions with effective programs to help meet comproposal. The Board previously has indicated that munity credit needs share a number of elements. thrift institutions have become, or have the potential These institutions maintain outreach programs that to become, major competitors of commercial banks.5 include procedures to permit effective communication Thrift institutions already exert a considerable com- between the bank and various segments of the competitive influence in the market as providers of NOW munity and formalized methods for incorporating findaccounts and consumer loans, and many are engaged ings regarding community credit needs into the develin the business of making commercial loans. Based opment and delivery of products and services. They upon the size, market share, and commercial lending monitor institutional performance at the senior management or board of director level and periodically evaluate new opportunities for innovative lending programs, such as home mortgage and neighborhood 2. The Roanoke, Virginia, banking market is approximated by the Roanoke, Virginia, Ranally Metro Area plus the adjacent northern residential rehabilitation lending and similar programs, portion of Franklin County. designed to meet the credit needs of their designated 3. Market data are as of June 30, 1987. community, including those of low- and moderate- 4. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)), a market in which the income persons. An effective program also includes post-merger HHI is over 1800 is considered highly concentrated. The the use of specifically designed marketing and adver- Department of Justice has informed the Board that a bank merger or tising plans to stimulate public awareness of the bank's acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompeti- 6. If 50 percent of the deposits controlled by thrift institutions were tive effects implicitly recognizes the competitive effect of limited included in the calculation of market concentration, Crestar and purpose lenders and other non-depository financial entities. Colonial would control approximately 7 percent and 10.3 percent of 5. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 total market deposits, respectively. Upon consummation of this (1984); NCNB Bancorporation, 70 FEDERAL RESERVE BULLETIN 225 proposal, the HHI would increase by 144 points to 2084, and the four- (1984); General Bancshares Corporation, 69 FEDERAL RESERVE BUL- firm concentration ratio for the market would be 74.1 percent. LETIN 802 (1983); and First Tennessee National Corporation, 69 7. 12 U.S.C. § 2901 etseq. FEDERAL RESERVE BULLETIN 298 (1983). 8. 12 U.S.C. § 2903. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

384 Federal Reserve Bulletin • May 1989 services throughout the community, including low- In addition, Protestants claim that Colonial Bank and moderate-income neighborhoods, as well as sup- has reduced housing loans to urban areas; made more port of community development projects and pro- loans to upper-income white tracts than to low-income grams. minority tracts; and originated fewer loans to minority In the Board's opinion, financial institutions that low- and moderate-income customers than to white make meeting their responsibilities under the CRA an customers with the same income levels. Protestants integral part of their management and operational have further alleged that Colonial Bank has failed to structure are best able to accomplish the goals of the meet community credit needs for home improvement statute. In that light, the Board expects banking orga- loans, multi-family mortgage loans, and federal govnizations to have addressed their CRA responsibilities ernment-insured loans. before the submission of applications to the Board. The Board has carefully reviewed the CRA perfor- This is in accord with the requirements of the CRA, mance record of Crestar and its subsidiary banks, and under which an institution's record of performance in the CRA record of Colonial and its subsidiary banks, helping to meet the credit needs of its entire commu- as well as Protestants' comments and Crestar's renity is a critical factor in determining whether the sponse to those comments. institution has lived up to its responsibilities under the Initially, the Board notes that all of Crestar's substatute. sidiary banks have received satisfactory ratings from The Board has received comments filed jointly by their primary regulators in examinations of their CRA The United Mine Workers of America ("UMWA") performance, and that Colonial's subsidiary banks, and the Metro Area Fair Banking Coalition Colonial Bank and The Mountain National Bank of ("MAFBC") (collectively "Protestants") regarding Clifton Forge, Clifton Forge, Virginia ("Mountain the CRA performance of Crestar and Colonial.9 National Bank"), also received satisfactory CRA rat- Crestar has submitted a detailed response to the com- ings from the Office of the Comptroller of the Curments made by the UMWA and MAFBC. In this rency. regard, the Federal Reserve Bank of Richmond ar- In addition, the Board has considered Crestar's ranged a meeting among the parties in the context of development of a comprehensive program that estabearlier applications by Crestar Bank to establish three lishes standards that its subsidiary banks must meet in branch offices.10 The parties were unable to come to a ascertaining community credit needs, responding to resolution of all of their differences.11 those needs through the development and delivery of Protestants have raised several questions concern- products and services, and monitoring and evaluating ing Crestar's Home Mortgage Disclosure Act the bank's success in meeting those needs and its ("HMDA") recordkeeping, lending patterns, and re- responsibilities under the CRA. Recently, Crestar sponsiveness to and concern for the communities established four regional CRA plans covering all of its served by its subsidiaries. Many of these comments subsidiary banks. As part of these plans, Crestar concerning Crestar's CRA record were raised and appointed CRA officers at the subsidiary bank level, addressed in Crestar's previously approved branch the regional level, and the corporate level responsible applications.12 for developing, implementing, and overseeing Crestar's CRA efforts. To ensure that these regional plans address community credit needs, Crestar's re- 9. In addition, the Board has received a favorable comment from the gional CRA officers are required to meet at least Board Chair of S.R.O. Housing of Richmond, noting Crestar's comannually with community leaders, government offimitment to housing and community development issues. 10. The applications were approved by the Federal Reserve Bank of cials, community groups, and other individuals within Richmond, pursuant to authority delegated by the Board, on Decem- their region to obtain feedback on Crestar's perforber 2, 1988. mance. Crestar implemented a similar plan in 1985 for 11. Although the UMWA did not submit comments on those applications, a member of the UMWA was present at the meeting. the Washington, D.C. area. 12. Protestants allege that: Crestar's HMDA data are inaccurate; Under the regional CRA plans, each regional CRA Crestar Bank, N.A., Washington, D.C. ("Crestar-DC"), and Crestar Mortgage Company, Arlington, Virginia ("Crestar Mortgage"), are officer reports to Crestar's corporate Senior Vice pursuing discriminatory lending patterns; Crestar is deemphasizing President for Compliance, who has direct responsibilresidential mortgages in low-income neighborhoods and is failing to ity for coordinating Crestar's CRA efforts. To ensure meet the credit needs for co-operative housing loans; Crestar-DC and Crestar Mortgage originate few loans within the District of Columbia; that Crestar's board of directors is fully informed of Crestar Mortgage sells many of its mortgages on the secondary mortgage market, thus transferring ownership of the mortgages beyond the bounds of the community; Crestar has been unresponsive to the small business credit needs of the Washington, D.C. community Washington, D.C., or in Virginia; Crestar Bank Maryland, Bethesda, and has made few Small Business Administration ("SBA") loans to Maryland ("Crestar-MD"), originated few mortgage loans between minorities, females, and residents of Alexandria, Virginia, Washing- 1985-87; and Crestar-DC's branches and ATMs are not convenient to ton, D.C., or Maryland; Crestar does not originate student loans in low- and moderate-income community residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 385 Crestar's CRA activities, this officer makes periodic Furthermore, Crestar, in consultation with the D.C. reports to the Audit Committee of Crestar's board of Reinvestment Alliance, a local community group in directors. This officer also reports directly to Crestar's Washington, D.C., is reviewing a study involving the corporate vice-chairman, who has ultimate manage- feasibility of locating a branch of Crestar-DC in a lowment responsibility for Crestar's CRA matters. and moderate-income neighborhood in Washington, In response to concerns raised in Crestar's previous D.C. branch applications, Crestar supplemented its 1985 With regard to Colonial Bank, an analysis of HMDA CRA plan for the Washington, D.C. area with a data indicates that, in 1985 and 1987, Colonial Bank "Greater Washington Area CRA Plan" on Decem- made the majority of its home mortgage loans within ber 1, 1988. As required by this plan, Crestar will the city of Roanoke. Between 1985 and 1987, Colonial develop and implement a variety of advertising and Bank increased the percentage of multi-family mortmarketing strategies to communicate the availability of gage loans made in urban areas and provided approxcredit and other bank products in all segments of the imately three times as many home improvement loans community. For example, Crestar will advertise the to urban areas as to suburban areas. HMDA data also availability of its products and services in minority indicate that in 1985 and 1987, Colonial Bank made audience media and neighborhood newspapers, where approximately the same number of home purchase available, targeting specific products appropriate to loans per owner-occupied unit in low- and moderatethe area served.13 In addition, Crestar will participate income areas as in upper-income areas. In addition, an in local programs and seminars that offer community analysis of the HMDA data for 1985 through 1987 does residents and small businesses technical assistance not indicate any pattern of prohibited discriminatory with respect to obtaining and utilizing credit. As lending by Colonial Bank. Moreover, while HMDA noted, advertising and marketing are important ele- data show that Colonial Bank has not made many ments in an effective CRA program, and the Board home improvement, multi-family, and federal governexpects that Crestar's CRA program to promote its ment-insured loans in the last few years, the record services throughout its communities will include such indicates that loans that were made in these areas were advertising and marketing efforts. distributed throughout all income level census tracts in The HMDA data appear to reflect accurately the Roanoke, and that a greater percentage of home lending practices of Crestar's banking subsidiaries in improvement loans and multi-family loans originated the Washington, D.C. metropolitan area, and do not by Colonial Bank per owner-occupied unit were made indicate a pattern of discriminatory lending. More- in low- and moderate-income areas than in upperover, under its Greater Washington Area CRA Plan, income areas. Crestar established an overall lending target of $25 Crestar has stated that it will implement its systemmillion for real estate, small business, and student wide CRA monitoring mechanism and its Western loans for low- and moderate-income residents of the Regional CRA Plan at Colonial Bank and Mountain greater Washington, D.C. metropolitan area, to be National Bank upon consummation of this proposal. achieved within a five-year period.14 Additionally, In addition, Crestar states that it will offer FHA and Crestar has hired a real estate cooperative and multi- VA mortgages to Colonial Bank's customers through family housing lending officer, as well as lending Crestar Mortgage. These steps should further improve officers for student loans and small business lending.15 the CRA performance of Colonial Bank and Mountain National Bank. Based upon this record, the Board concludes that 13. In 1987, Crestar sponsored a weekly radio program, entitled Crestar has a satisfactory program in place to ensure "Money Matters", for a six-month period on a station oriented that its subsidiary banks carry out their responsibilities towards serving minority residents of the Washington, D.C. area. 14. Pursuant to its previous Washington area CRA agreement with under the CRA to help meet the credit needs of their the D.C. Reinvestment Alliance, Crestar has been a participant in communities, including low- and moderate-income SBA lending programs. Moreover, Crestar has already exceeded its and minority neighborhoods, and that Crestar's sub- $10 million lending target under its previous agreement, providing $4.1 million in qualifying loans to minority- and women-owned small sidiary banks are performing in accordance with that businesses, a $520,000 qualifying non-profit developer loan, and $15.3 program in a manner consistent with their statutory million in qualifying multi-family and mixed-use commercial real estate loans. responsibilities. As noted above, Crestar has commit- 15. Crestar has indicated that it will expand its student loan program ted that it will implement this program at Colonial's in Washington, D.C. and Maryland. In addition, Crestar has estab- subsidiary banks upon consummation of this proposal. lished task forces dealing with residential mortgage lending, affir- For the foregoing reasons, and based upon the overall mative marketing, and small business lending, and has recently provided funds to groups promoting low-income housing and small CRA records of Crestar and Colonial, as well as other business development in Washington, D.C., such as the Local Initia- facts of record, the Board concludes that convenience tive Support Corporation and the Neighborhood Economic Development Corporation. and needs considerations in this case are consistent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

386 Federal Reserve Bulletin • May 1989 with approval of the applications.16 The Board has also meaning of the Bank Holding Company Act ("BHC determined that the financial and managerial resources Act"), and its wholly owned subsidiary, PMI Acquiand future prospects of Crestar and Colonial are sitions Corporation, Peoria, Illinois ("PMI"), have consistent with approval of the proposal.17 applied for the Board's approval under section 3 of the Accordingly, based on all the facts of record in this BHC Act (12 U.S.C. § 1842) to acquire all of the case, the Board has determined that the applications voting shares of Peoples Mid-Illinois Corporation, should be, and hereby are, approved. The transactions Bloomington, Illinois ("Peoples"), and thereby indishall not be consummated before the thirtieth calendar rectly acquire Peoples Bank, Bloomington, Illinois day following the effective date of this Order, or later ("Bank").1 than three months after the effective date of this Notice of the applications, affording an opportunity Order, unless such period is extended for good cause for interested persons to submit comments, has been by the Board or by the Federal Reserve Bank of given in accordance with section 3(b) of the BHC Act Richmond, acting pursuant to delegated authority. (53 Federal Register 51,164 (1988)). The time for By order of the Board of Governors, effective filing comments has expired, and the Board has con- March 14, 1989. sidered the applications and all comments received in light of the factors set forth in section 3(c) of the BHC Voting for this action: Vice Chairman Johnson and Gover- Act. nors Seger, Heller, Kelley, and La Ware. Absent and not Midwest is the seventh largest commercial banking voting: Chairman Greenspan and Governor Angell. organization in Illinois, controlling total deposits of approximately $1.7 billion, representing 1.6 percent of JENNIFER J. JOHNSON total deposits in commercial banking organizations Associate Secretary of the Board ("total bank deposits") in the state.2 Peoples is the 59th largest commercial banking organization in Illi- Midwest Financial Group nois, controlling total deposits of $236.3 million, rep- Peoria, Illinois resenting 0.2 percent of total bank deposits in the state. Upon consummation of this proposal, Midwest Order Approving the Acquisition of a Bank would become the fifth largest commercial banking Holding Company organization in Illinois, controlling total deposits of $1.9 billion, representing 1.8 percent of total bank Midwest Financial Group, Inc., Peoria, Illinois deposits in the state. Based on the facts of record, ("Midwest"), a bank holding company within the consummation of this proposal would not have a significantly adverse effect on the concentration of banking resources in Illinois. 16. Protestants have also requested that the Board order a public meeting or hearing to receive public testimony on the issues presented Midwest and Peoples compete directly in the by these applications. Although section 3(b) of the BHC Act does Bloomington-Normal, Illinois, banking market.3 In not require a public meeting or hearing in this instance, the Board may, in its discretion, order a public meeting or hearing. See this market, Midwest is the second largest commercial 12 C.F.R. 262.3(e). In that regard, the Board's Rules of Procedure banking organization, with deposits of $158.7 million, provide that a public meeting may be held to clarify factual issues representing 18.2 percent of the market's total bank related to an application or to provide an opportunity for interested persons to testify. 12 C.F.R. 262.25(d). In addition, under the deposits. Peoples is the largest commercial banking provisions of the Board's Regulation Y, 12 C.F.R. 225.23(g), the organization in the market, with deposits of $236.3 Board shall order a hearing only if there are disputed issues of material fact that cannot be resolved in some other manner. million, representing 27.1 percent of the market's total In the Board's view, the parties have had ample opportunity to bank deposits. Upon consummation of this proposal, present their arguments in writing and to respond to one another's Midwest would become the largest commercial banksubmissions. Moreover, Crestar and Protestants have met privately in the context of Crestar's recent branch application, involving many of ing organization in the market, controlling 45.3 percent the CRA issues raised here. In light of these facts, the Board has of the market's total bank deposits. The four-firm determined that the record has been developed through these proceedconcentration ratio would rise from 65.6 percent to ings and that a public meeting or hearing would serve no useful purpose in this case. Accordingly, Protestants' request for a public 71.9 percent, and the Herfindahl-Hirschman Index meeting and hearing is hereby denied. 17. Protestants also allege that Crestar has inadequate financial and managerial resources. Protestants allege that Crestar's lending policies, including loans to specific companies, speculative construction loans, loans to Mexico, and Crestar-MD's loan-to-asset ratio, raise general safety and soundness concerns. The Board has examined 1. In connection with this application, PMI has applied to become a these contentions in the context of its evaluation of the capital and bank holding company. overall financial condition of Crestar and the effects of this acquisition 2. Banking data are as of June 30, 1987. on these factors. Based upon this review, the Board has concluded 3. The Bloomington-Normal banking market is approximated by that Protestants' allegations do not support an adverse finding regard- McLean County, and Kansas, El Paso, Panola, and Minonk Towning Crestar's financial or managerial resources. ships in Woodford County, Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 387 ("HHI") of the market would increase from 1389 to not have a significantly adverse effect on competition 2375.4 in the Bloomington-Normal banking market. Consummation of this proposal would eliminate Midwest and Peoples also compete in the provision some existing competition in the Bloomington-Normal of discount brokerage services within the relevant banking market. The Board believes, however, that banking market. The relevant product market for certain factors mitigate the anticompetitive effects discount brokerage services is retail securities brokerassociated with the proposal. First, numerous banks age, which includes both discount and full-service would continue to operate in the market after consum- brokerage services.8 Although consummation of this mation of this proposal.5 In addition, the Board has proposal would eliminate some existing competition in considered the presence of thrift institutions in the the provision of retail brokerage services, the Bloommarket in its analysis of this proposal. The Board has ington-Normal banking market has fourteen local previously indicated that thrift institutions have be- sources of retail brokerage services, and a substantial come, or have the potential to become, major compet- number of firms outside the Bloomington-Normal itors of commercial banks.6 The Bloomington-Normal banking market offer this service to customers in the banking market has seven thrift institutions, represent- banking market. In addition, Bank provides retail ing 48.8 percent of total deposits in thrifts and com- securities brokerage services for only a small number mercial banking organizations in the market ("total of customers, and Bank is not actively soliciting new customers for this service. Accordingly, consummamarket deposits"). Three of the five largest depository tion of this proposal would not have a significantly institutions, including the largest depository instituadverse effect on existing competition for discount tion, in the market are currently thrifts. Upon consumbrokerage services in any relevant market. mation of this proposal, three of the four largest depository institutions would be thrifts, with deposits The financial and managerial resources and future representing 44.2 percent of total market deposits. The prospects of Midwest and Peoples are consistent with largest depository institution in the market upon con- approval. Considerations relating to convenience and summation of this proposal would continue to be a needs of the communities to be served are also conthrift, with deposits representing 29.5 percent of total sistent with approval of the applications. market deposits. Thrifts in the market offer transaction Based on the foregoing and other facts of record, the accounts and make commercial as well as consumer Board has determined that the applications should be, loans. Based on the size and market share of thrift and hereby are, approved. The transactions shall not institutions, the Board has concluded that thrift insti- be consummated before the thirtieth calendar day tutions exert a significant competitive influence that following the effective date of this Order, or later than mitigates the anticompetitive effects of this proposal in three months following the effective date of this Order, the Bloomington-Normal banking market.7 Based on unless such period is extended for good cause by the these and other facts of record in this case, the Board Board or by the Federal Reserve Bank of Chicago, concludes that consummation of the proposal would pursuant to delegated authority. By order of the Board of Governors, effective March 20, 1989. 4. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered highly concentrated. In Voting for this action: Chairman Greenspan and Governors such markets, the Justice Department is likely to challenge a merger Johnson, Seger, Angell, Heller, Kelley, and LaWare. that increases the HHI by more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors JENNIFER J. JOHNSON indicating anticompetitive effects) unless the post-merger HHI is at Associate Secretary of the Board least 1800 and the merger increases the HHI by at least 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects Orders Issued Under Section 4 of the Bank implicitly recognizes the competitive effect of limited-purpose lenders Holding Company Act and other non-depository financial entities. 5. Twenty commercial banks currently compete in the Bloomington-Normal market. First Bank System, Inc. 6. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 Minneapolis, Minnesota (1984); First National of Nebraska, Inc., 75 FEDERAL RESERVE BULLETIN 27 (1989). 7. If 50 percent of deposits held by thrift institutions in the Order Approving Application to Engage in the Bloomington-Normal banking market were included in the calculation Activity of Making and Servicing Loans of market concentration, Midwest's pro forma market share would be 30.6 percent. The market would be considered moderately concentrated after consummation of the proposed transaction, with the HHI increasing by 450 points to 1513 and the four-firm concentration ratio 8. BankAmerica Corporation, 69 FEDERAL RESERVE BULLETIN 105, rising by 6.8 percent to 63.8 percent. 110 (1983). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

388 Federal Reserve Bulletin • May 1989 First Bank System, Inc., Minneapolis, Minnesota, a ation the steps First Bank System intends to take to bank holding company within the meaning of the Bank further improve its capital position. Holding Company Act ("Act"), has applied for the Consummation of the proposal will have no adverse Board's approval under section 4(c)(8) of the Act effect on competition, as this proposal is viewed as an (12 U.S.C. § 1843(c)(8)) to engage through its subsid- internal reorganization. The Board believes that the iary, FBS Credit Services, Inc. ("FBSCS"), Minne- proposal is not likely to result in conflicts of interests, apolis, Minnesota, in making extensions of credit in unsound banking practices, concentration of reconnection with the administration, management, col- sources, or other adverse effects. Based upon the facts lection, and liquidation of low-quality assets acquired of record, the Board concludes that performance of from subsidiary banks of First Bank System. the proposed activities by First Bank System can Notice of the application, affording interested per- reasonably be expected to provide benefits to the sons an opportunity to submit comments, has been public that outweigh any adverse effects. duly published (53 Federal Register 51,164 (1988)). Based upon the foregoing and all the facts of record, The time for filing comments has expired, and the the Board has determined that the balance of public Board has considered the application and all com- interest factors it is required to consider under section ments received in light of the public interest factors set 4(c)(8) is favorable. Accordingly, the application is forth in section 4(c)(8) of the Act. hereby approved. This determination is subject to all First Bank System is the largest commercial banking of the conditions set forth in Regulation Y, including organization in Minnesota, with total consolidated sections 225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) assets of $24 billion.1 It operates subsidiary banks in and 225.23(b)(3)), and to the Board's authority to Minnesota, Colorado, Montana, North Dakota, South require modification or termination of the activities of Dakota, Washington, and Wisconsin and engages in a the holding company or any of its subsidiaries as the variety of nonbanking activities. Board finds necessary to assure compliance with the First Bank System proposes to engage through provisions and purposes of the Act and the Board's FBSCS in making extensions of credit in connection regulations and orders issued thereunder, or to prewith the administration, management, collection, and vent evasion thereof. liquidation of low-quality assets acquired by FBSCS This transaction shall not be consummated later from some of the subsidiary banks of First Bank than three months after the effective date of this System's direct subsidiary, Central Bancorporation, Order, unless such period is extended for good cause Inc., Denver, Colorado. These activities are permissi- by the Board or by the Federal Reserve Bank of ble for bank holding companies under section Minneapolis, pursuant to delegated authority. 225.25(b)(1) of the Board's Regulation Y (12 C.F.R. By order of the Board of Governors, effective 225.25(b)(1)).2 March 13, 1989. In every case involving an acquisition by a bank holding company under section 4 of the Act, the Board Voting for this action: Vice Chairman Johnson and Goverconsiders the effect of the acquisition on the financial nors Seger, Heller, Kelley, and La Ware. Absent and not condition and resources of the applicant. In this con- voting: Chairman Greenspan and Governor Angell. nection, the Board has taken into consideration that JENNIFER J. JOHNSON the subsidiary would be capitalized at a level commen- Associate Secretary of the Board surate with the quality of the specific low-quality assets. Further, the Board also considered that fund- Merchants National Corporation ing would be provided by sophisticated investors and Indianapolis, Indiana would be on terms which do not expose the subsidiary to liquidity or interest rate risks. After reviewing all the facts of record relating to the overall financial Order Granting Relief From Commitments condition of First Bank System, the Board has deter- Regarding Insurance Agency Activities of Subsidiary mined that the financial factors relating to this appli- Banks cation are consistent with approval, particularly in light of certain commitments made by First Bank Merchants National Corporation, Indianapolis, Indi- System in connection with this proposal. In reaching ana ("Merchants"), a bank holding company within this conclusion, the Board has taken into consider- the meaning of the Bank Holding Company Act ("BHC Act" or "Act"), has applied under section 4(c)(8)(D) of the BHC Act (12 U.S.C. § 1843(c)(8)(D)) 1. All banking data are as of December 31, 1988. and section 225.25(b)(8)(iv) of the Board's Regulation 2. See First Bank System, Inc., 72 FEDERAL RESERVE BULLETIN 660 (1986). Y (12 C.F.R. § 225.25(b)(8)(iv)) for approval for its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 389 wholly owned subsidiary, Anderson Banking Com- would cause the banks to divest the insurance agency pany, Anderson, Indiana ("Anderson Bank"), to activities within two years and, in the interim, to resume the conduct of certain insurance agency activ- refrain from the sale of insurance except for the ities authorized for state banks under Indiana law. renewal of existing policies. Alternatively, Merchants seeks a Board determination Merchants subsequently sought relief from these that the nonbanking prohibitions of section 4 of the commitments. On September 10, 1987, the Board BHC Act do not apply to activities conducted directly granted the requested relief on the grounds that the by subsidiary banks of a bank holding company, insurance activities would be conducted directly by thereby permitting Anderson Bank and another of the banks and, thus, would not be prohibited by Merchants's state bank subsidiaries, Mid State Bank section 4 of the BHC Act or consequently the insurof Hendricks County, Danville, Indiana ("Mid State ance provisions of the Garn-St Germain Act. 73 FED- Bank"), to resume insurance agency activities. In both ERAL RESERVE BULLETIN 876 (1987). The Board's cases the insurance agency activities would be con- Order noted that the relief did not violate the moratoducted directly by the banks and not through subsid- rium provisions of the Competitive Equality Banking iaries of the banks. Act of 1987 ("CEBA")4 because Merchants had acquired the banks involved before the moratorium. The I. Background Board also noted that the grant of relief would not increase the banks' insurance powers since the banks already had the powers by virtue of state law and those The record shows that Anderson Bank, prior to its powers were not and never had been limited by the acquisition by Merchants, engaged directly in insur- BHC Act. ance agency activities since the bank's incorporation in 1916 and that Mid State Bank acquired an insurance Protestants sought review of the Board's decision in agency in 1985.1 The banks are authorized to sell the United States Court of Appeals for the Second insurance directly pursuant to state law.2 Circuit, which, on January 25, 1988, vacated the On October 29, 1986, the Board approved applica- Board's Order.5 The court ruled that the Board's tions by Merchants under section 3 of the BHC Act to decision fell within the moratorium provisions of acquire Anderson Bank and Mid State Bank. 72 FED- CEBA and, thus, that the Board should not have ERAL RESERVE BULLETIN 838 (1986). The applications granted Merchants's request to conduct the insurance had been protested by various insurance industry activities while the moratorium was effective. The trade groups on the ground that, as subsidiaries of a court did not address the question of whether insurbank holding company, the insurance agency activities ance activities conducted directly by the banks would then being conducted by the banks pursuant to Indiana be prohibited by the nonbanking provisions of section law would be prohibited by section 4 of the BHC Act, 4 of the BHC Act. The moratorium provisions have as amended by Title VI of the Garn-St Germain now expired, and Merchants has requested that the Depository Institutions Act of 1982.3 As discussed Board reissue the vacated Order.6 below, the Garn-St Germain Act amended section Notice of the application, affording interested per- 4(c)(8) of the BHC Act to provide that, with seven sons an opportunity to submit comments on the prospecific exceptions, insurance activities are not closely posal, was published (52 Federal Register 8966 related to banking. This amendment removed the (1987)). The time for filing comments has expired, and Board's discretion to authorize insurance activities as the Board has considered the application and all a permissible nonbanking activity for bank holding comments received, including those of various insurcompanies under the closely related to banking stan- ance trade associations ("Protestants").7 dard of section 4(c)(8) of the Act. In response to the protests, Merchants committed that, unless it received Board approval in the mean- 4. Pub. L. No. 100-86, 101 Stat. 552 (1987). 5. Independent Insurance Agents of America, Inc. v. Board of time for the banks to retain their insurance activities, it Governors, 838 F.2d 627 (2nd Cir. 1988). 6. By letter dated December 8, 1988, the Board granted a request by Merchants for an extension of time to divest the insurance agency 1. Prior to consummation of this proposal, Mid State Bank will activities of Anderson Bank and Mid State Bank until such time as the transfer the insurance activities of the subsidiary to the bank itself, Board acts on the request of Merchants to reissue its earlier Order. which will thereafter conduct the activities directly. Anderson Bank 7. The Board has received comments protesting the application and and Mid State Bank would act as agent for a full line of property and the request to reissue the earlier Order from the Independent Insurcasualty coverage, but would not sell life insurance. ance Agents of America, Inc., Independent Insurance Agents of New 2. Ind. Code § 28-1-11-2 provides that "any bank or trust company York, Inc., National Association of Casualty and Surety Agents, shall have power ... to solicit and write insurance as agent or broker National Association of Life Underwriters, National Association of for any insurance company authorized to do business in this state, Professional Insurance Agents, National Association of Surety Bond other than a life insurance company." Producers, New York Association of Life Underwriters, and Profes- 3. Pub. L. No. 97-320, codified at 12 U.S.C. § 1843(c)(8). sional Insurance Agents of New York, Inc. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

390 Federal Reserve Bulletin • May 1989 Protestants contend that the banks do not qualify bank holding company or any of its subsidiaries to under any of the seven exemptions to the insurance engage in any insurance agency activity in which the provisions in the Garn-St Germain Act and that, bank holding company or subsidiary was engaged on therefore, they may not resume their insurance agency May 1, 1982, subject to certain geographic and funcactivities. With respect to Merchants's alternative tional limitations. Exemption D, however, applies argument, protestants contend that the terms and only to entities that were bank holding companies or legislative history of the BHC Act and the Board's subsidiaries of bank holding companies on May 1, regulations indicate that the nonbanking and insurance 1982. The record shows that on May 1, 1982, Anderprovisions of section 4 of the BHC Act apply to all son Bank was not a subsidiary of a bank holding bank holding company activities, including activities company and, therefore, does not qualify under Exconducted by a subsidiary bank of the holding com- emption D. Similarly, Mid State Bank does not qualify pany. In protestants' view, a bank holding company's under Exemption D because it did not commence activities, whether conducted directly by the holding selling insurance until after the May 1, 1982, grandfacompany or by any of its subsidiaries, including sub- ther date.9 sidiary banks, are limited by the terms of section 4 of the Act to "banking" activities and activities permit- III. Inapplicability of the Nonbanking ted under the closely related to banking standard in Provisions of the BHC Act to the Direct section 4(c)(8) of the Act (or one of the other specific Activities of Holding Company Banks exemptions in the Act, none of which are relevant here). Protestants argue that because Anderson Accordingly, the Board has considered Merchants's Bank's and Mid State Bank's insurance activities are alternative ground for relief. On the basis of the record not "banking" and do not qualify under any of the before it and the comments received, the Board has insurance exemptions in section 4(c)(8), Merchants determined that the direct insurance activities of Anmay not engage in the activities through the banks.8 derson Bank and Mid State Bank are not limited by the After considering the comments of all interested nonbanking provisions of section 4 of the BHC Act or, parties and for the reasons set forth below, the Board consequently, the insurance provisions of the Garn-St has determined to grant Merchants's request for relief Germain Act.10 In the Board's view, the nonbanking from its earlier commitments on the alternative provisions of section 4 do not limit the direct activities grounds advanced by Merchants, thereby permitting of holding company banks, except where the record Anderson Bank and Mid State Bank to resume the demonstrates the type of evasion described in the insurance agency activities they terminated when they Citicorp (South Dakota) case,11 a situation not present were acquired by Merchants in 1986. II. Inapplicability of Exemption D of the Garn- 9. Mid State Bank appears to qualify for the exemption provided in St Germain Act section 4(c)(8)(C) of the BHC Act for insurance agency activities conducted in a town of less than 5,000 inhabitants. In this application, Merchants initially had proposed that Mid State Bank conduct the Initially, the Board has determined that Anderson insurance agency activities through a wholly owned subsidiary under exemption C. Merchants, however, subsequently withdrew that re- Bank and Mid State Bank do not qualify under section quest and amended the proposal to conduct the insurance activities 4(c)(8)(D), the grandfather provision of the Garn-St directly by Mid State Bank on the basis discussed below that the Germain Act (hereinafter "exemption D"), to engage nonbanking provisions of the BHC Act do not apply to the direct activities of holding company banks. in insurance agency activities. Exemption D permits a 10. As noted, Title VI of the Garn-St Germain Act does not establish a prohibition on the conduct of insurance activities by bank holding companies separate from or in addition to the general non- 8. Protestants also argue that Merchants should be bound by its banking prohibitions of section 4 of the BHC Act. Rather, Title VI earlier commitments to divest the banks' insurance activities because limits the Board's discretion to authorize bank holding companies to Merchants voluntarily offered the commitments with full knowledge conduct these activities under the closely related to banking exception of their limitations and that, in any event, the commitments preclude (in section 4(c)(8) of the Act) to the general nonbanking provisions of Merchants from arguing that the provisions of section 4 of the BHC the Act (in section 4(a)). Thus, the provisions of the Garn-St Germain Act do not apply to the direct activities of the banks. Act have no applicability to situations, such as this, where the In the Board's view, however, the commitments contemplated that nonbanking provisions of section 4 of the Act do not apply. Merchants could request Board relief from the commitments. While 11. 71 FEDERAL RESERVE BULLETIN 789 (1985). In that case, the couched in terms of seeking Board approval on the Board's applica- Board found, based on the structure of the South Dakota statute, the tion Form Y-4, the commitments did not represent a concession by operating plans of Citicorp, and the fact that the bank would serve Merchants that section 4 applies to the direct activities of the banks. primarily as an insurance subsidiary of Citicorp and would conduct Rather, the commitments contemplated that the application would only insignificant banking activities, that the acquisition of the bank provide a forum for evaluating the issues and arguments raised by the was primarily, if not solely, for the purpose of enabling Citicorp to proposal apart from Merchants' earlier application to acquire the engage through the bank in various insurance activities. The Board did banks. Accordingly, the Board does not consider that the commit- not address the question raised in this case regarding whether the ments limit either the right of Merchants to request relief or the prohibitions of section 4 of the Act apply to the direct activities of arguments Merchants may put forward in support of that relief. holding company banks where no evidence of evasion is presented. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 391 in the instant case.12 The Board believes this view is services to or performing services for its subsidiaries" consistent with the terms, purposes, and legislative and activities the Board has determined to be closely history of the BHC Act and the Board's regulations, related to banking. 12 U.S.C. § 1843(a)(2). Protestants prior interpretations, and longstanding practice. contend that this provision applies not only to activities conducted directly by a bank holding company, A. Terms and Structure of the BHC Act but also to activities conducted indirectly through any subsidiary of the bank holding company, including a Section 4 of the BHC Act contains two provisions that subsidiary bank. This interpretation, however, cannot together limit the nonbanking activities and invest- be squared with the words or structure of the statute. ments of bank holding companies. First, section 4 The language of the activities limitation in section prohibits, with certain specific exceptions, a bank 4(a)(2) forbids "bank holding companies" —not holding company from acquiring or retaining, directly "banks" —from engaging in activities other than those or indirectly, voting shares of any company except a specified in that provision. The BHC Act defines bank.13 The principal exception to this prohibition is "bank holding company" to mean any company that for the shares of companies engaged in activities that has control over any bank,15 a definition that clearly the Board has determined are closely related to bank- refers only to the parent holding company itself, not to ing. By its terms, this restriction in section 4 does not the system as a whole or to any "subsidiary," a term apply to shares of a company that is itself a bank. that is separately defined.16 Thus, a bank holding company that controls an insti- The structure of the BHC Act indicates that this tution that qualifies as a "bank" under the definition in provision of section 4(a)(2) of the Act was intended to the Act14 is not required, in order to acquire or retain apply to the activities of bank holding companies the shares of the institution, to limit the institution's themselves, many of which are operating companies activities to those permitted under the closely related engaged directly in nonbanking activities as well as in to banking standard of section 4 (or one of the other controlling banks and companies engaged in permissilimited exceptions in the Act), except where the ble nonbanking activities.17 This reading harmonizes record demonstrates an evasion of the Act, such as the provisions of section 4 of the Act, with one presented in the Citicorp (South Dakota) case. It is provision limiting the types of companies the shares of only companies that do not qualify as "banks" under which a bank holding company may acquire and retain the Act that must limit their nonbanking activities to (banks and other companies authorized under the those permitted under the closely related to banking Act), and the second limiting in a similar manner the standard in section 4(c)(8) of the Act (or qualify under activities in which the bank holding company itself some other exception in section 4) in order to be may engage to acquired or retained directly or indirectly by a bank (1) banking, holding company. (2) managing and controlling banks and authorized In addition to the above limitation, section 4 of the nonbank companies, and Act provides that a bank holding company may not (3) activities closely related to banking. "engage in any activities other than . . . those of Furthermore, section 4(a) of the Act distinguishes banking or of managing or controlling banks and other between a bank holding company's acquiring and subsidiaries authorized under the Act or of furnishing retaining "direct or indirect" ownership or control of any company that is not a bank, on the one hand, and the holding company's engaging in activities itself, on 12. In this case, the record does not show, nor is there any the other. The use of the words "direct or indirect" in allegation, that the banks would be operated by Merchants predomithe investment limitation of the Act makes clear that nantly as insurance agencies or that the acquisition of the banks is a device to enable the applicant to engage in insurance activities. neither a bank holding company nor any of its subsid- Rather, the record shows that the insurance activities of the banks are iaries may own or control a nonbank company (unless incidental and small relative to their banking operations. exempted). In the activities limitation of section 13. Section 4(a) of the Act provides: Except as otherwise provided in this Act, no bank holding company shall 4(a)(2), however, Congress did not use the words (1). . . acquire direct or indirect ownership or control of any voting "directly or indirectly" to modify the word "engage". shares of any company which is not a bank, or This demonstrates, in the Board's view, Congress' (2) . . . retain direct or indirect ownership or control of any voting shares of any company which is not a bank or bank holding company or engage in any activities other than (A) those of banking or of managing or controlling banks and other subsidiaries autho- 15. 12 U.S.C. § 1841(a)(1). rized under this Act or of furnishing services to or performing 16. 12 U.S.C. § 1841(d). services for its subsidiaries, and (B) those permitted under para- 17. The portion of section 4 that authorizes a bank holding company graph (8) of subsection (c) of this section [the closely related to to engage in "banking" is intended to provide for those few situations banking exception] . . . (emphasis supplied) 12 U.S.C. § 1843(a). that existed in 1956 in which the bank holding company was itself a 14. 12 U.S.C. § 1841(c). bank. See Heller, Federal Bank Holding Company Law, § 4.02(1). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

392 Federal Reserve Bulletin • May 1989 intent to apply the activities limitation in section B. Prior Board Interpretations 4(a)(2) to the holding company only and not to its subsidiaries.18 Since enactment of the BHC Act, the Board has not The reading suggested by protestants would make read the nonbanking prohibitions of section 4 as apsuperfluous the provision in section 4(a)(2) restricting plying to the direct activities of holding company the types of companies that may be controlled by bank banks. On the contrary, the Board's actions and holding companies to banks and authorized nonbanks. regulations over the years have consistently inter- If a bank holding company is deemed to be engaged in preted section 4 as not applying to such bank each activity in which a company it controls is en- activities.22 Protestants contend otherwise, pointing to gaged, as protestants suggest, the other provision of section 225.21(a) of Regulation Y, which provides that section 4 prohibiting a bank holding company from "a bank holding company or a subsidiary may not controlling nonbank companies unless engaged in per- engage in . . . any activity other than ... an activity missible activities would be unnecessary.19 Accord- {permitted by section 4(c)(8)}." The Board has never ingly, the Board believes that the provision of section interpreted the provisions of Regulation Y relating to 4(a)(2) of the Act limiting the activities in which a bank nonbanking activities as applicable to direct activities holding company may "engage" applies only to the of banks, however.23 For example, the Board has activities of the bank holding company itself, and that never required bank holding companies that seek to activities of subsidiaries of the bank holding company acquire a bank to obtain prior approval under section are regulated through provisions limiting the compa- 4(c)(8) for any nonbanking activities that might be nies that a bank holding company may hold the shares engaged in directly by the bank, as would be required of or control to banks and other companies engaged in under protestants' construction of the statute. In adactivities permitted for bank holding companies under dition, the section upon which protestants rely appears the Act. in a subpart of the Board's rules that pertains to the Protestants point to the fact that a bank may be a "nonbanking acquisitions and activities of bank hold- "subsidiary" of a bank holding company under the ing companies." Thus, in context and consistent with Act's definition as evidence that the Act does not the terms of section 4(a) of the Act, the reference in distinguish between banking and nonbanking section 225.21(a) of Regulation Y to subsidiaries subsidiaries.20 That conclusion simply does not follow, means subsidiaries other than banks.24 however. The Act clearly distinguishes between banking and nonbanking subsidiaries in section 4(a) when it permits a bank holding company to control banks without any limitation on their activities, but provides holding company" must also refer to activities conducted by its subsidiaries, banking and nonbanking alike. As noted, however, that a bank holding company may control a "company section 4(c)(8) sets forth an exemption to the general prohibition found which is not a bank" only if its activities are autho- in section 4(a) against a bank holding company owning shares of a rized under the closely related to banking or other nonbank company. Because this general prohibition does not apply to shares of a bank, nonbanking exceptions in the Act.21 section 4(c)(8) must necessarily apply only to nonbank companies. Thus, in context and consistent with the prohibition in section 4, the reference in the insurance provisions to subsidiaries must mean subsidiaries to which the prohibition applies. 18. Protestants look to 12 U.S.C. § 1850, which establishes a 22. See, e.g., 12 C.F.R. 225.118(c); American Bancorp, Inc., 39 competitor's standing to challenge adverse Board action regarding Federal Register 22,468 (June 24, 1974); Piedmont Carolina Financial applications by bank holding companies to engage directly or indi- Services, Inc., 59 FEDERAL RESERVE BULLETIN 766, 767-68 (1973); rectly in nonbanking activities, to demonstrate that the term "engage" Cameron Financial Corp. v. Board of Governors, 497 F.2d 841, 845 in the BHC Act necessarily applies to the activities of a bank holding (4th Cir. 1974); Board of Governors v. Investment Company Institute, company and all its subsidiaries. In that section, however, the word 450 U.S. 46, 59 n.25 (1981); Fed. Res. Reg. Serv. 4-591 (Staff Op. "engage" is modified by the words "directly or indirectly." The January 12, 1982). activities limitation in section 4(a)(2), however, is not modified by the The Board notes that, contrary to protestants' implication, Camwords "directly or indirectly." eron was not questioned by the Ninth Circuit ruling in Patagonia 19. Protestants suggest that Congress intentionally included a Corp. v. Board of Governors, 517 F.2d 803 (9th Cir. 1975), which superfluous provision in order to establish a "catch-all" provision. distinguished Cameron and did not address the banking/nonbanking The Board cannot accept this explanation, however, when the clear subsidiary issue. See 517 F.2d at 810-11 n.10. terms of the statute can be interpreted so as to give meaning to every 23. The original Regulation Y implementing the Act's provisions, word. See Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979). adopted immediately after passage of the Act, contained no provision 20. 12 U.S.C. § 1841(d); also see 12 C.F.R. 225.20). restricting the activities conducted directly by banks controlled by 21. With respect to the Board's definition of "subsidiary" in holding companies. 21 Federal Register 5686 (1956). Regulation Y, the regulation makes clear that the definition does not 24. Protestants cite several isolated phrases from various regulaapply where the context otherwise requires. 12 C.F.R. 225.2. tions to argue that the Board has "repeatedly affirmed that bank Protestants also point to the fact that the insurance provisions in holding companies and all of their subsidiaries are subject to section section 4(c)(8) begin by using the term "bank holding company" but 4." None of the examples cited, however, are persuasive. First, the then state in Exemption D that this limitation applies also to a bank Board's requirement that courier services not be conducted through a holding company and its subsidiaries. On this basis, protestants argue, servicing arm of the bank (12 C.F.R. 225.129) was imposed to the reference in section 4(a)(2) to activities engaged in by a "bank eliminate possible unfair competition and supports the view that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 393 C. Legislative History and Purposes of the well as bank holding companies and their nonbank Statute subsidiaries.26 There is also no indication that when in 1982 Con- The Board's reading of the scope of the section 4(a) gress incorporated the general prohibition on approvprohibitions is fully consistent with the Act's legisla- ing insurance activities into section 4(c)(8), Congress tive history. When the nonbanking prohibitions in meant to expand the general nonbanking prohibitions section 4 were adopted in 1956 as part of the original in section 4(a). The relevant history instead indicates Act, Congress gave no indication that the statute was that Congress intended to retain the existing regulameant to affect in any way the activities engaged in tory framework contained in section 4. The Board has directly by holding company subsidiary banks, whose found no legislative history expressly stating that the powers traditionally were determined by the authority Garn-St Germain Act was intended to limit the direct that issued the bank's charter.25 insurance activities of holding company banks.27 To The 1970 amendment to section 4(c)(8) reinforced the contrary, the Board explicitly advised Congress the view that section 4 does not reach the direct during Congressional hearings in 1980 that the draft activities of banks controlled by holding companies. legislation (containing substantially the same language During proceedings on this amendment, Congress as ultimately enacted) would not limit the insurance specifically considered and rejected a proposed activities of subsidiary banks. In response to a quesamendment to section 4 that would have prohibited tion concerning whether "a bank owned by a bank certain specified activities, including providing insur- holding company [would] be allowed to sell automoance, and that arguably applied to subsidiary banks as bile casualty or collision insurance" under the proposed bill, the Board stated that the answer would depend on the state or federal chartering authority.28 It Board has no authority to authorize activities for banks under the is clear from the legislative reports that the Garn-St BHC Act. Germain Act was intended to address certain Board Second, the Board's now-repealed interpretive rule on insurance decisions under section 4(c)(8) that allowed bank holdservices (12 C.F.R. 225.128) referred to bank subsidiaries of bank holding companies because bank holding companies were authorized ing companies to sell credit related property and to sell credit insurance in connection with loans made by both their bank and nonbank subsidiaries. Third, soon after enactment of the Act, the Board issued an opinion making clear that the exemption provided by section 4(c)(6) of the Act (providing that the section 4(a) prohibitions shall not apply to the acquisition of less than five percent of the voting shares of a nonbank- 26. See 115 Cong. Rec. 33,133-34 (November 5, 1969); H.R. Rep. ing company) applies to shares held by banking subsidiaries of a bank No. 387, 91st Cong., 1st Sess. 15 (1969); 115 Cong. Rec., E 9016-17 holding company as well as shares held directly by the bank holding (daily ed. October 28, 1969) (statement of Rep. Brown); 115 Cong. company itself. 12 C.F.R. 225.101. This position is consistent with Rec., H 10503 (daily ed. November 4, 1969)(statement of Rep. section 4(a)'s prohibition against the direct and indirect ownership or Stanton). Bills to Amend the Bank Holding Company Act of 1956: control of shares of a nonbanking company. It says nothing about the Hearings on S. 1052, S. 1211, S. 1664, S. 3823, and H.R. 6778 Before application of the activities limitation of section 4(a)(2). the Senate Comm. on Banking and Currency, 91st Cong., 2nd Sess. Finally, with respect to the Board's regulation relating to invest- 144, 157-158 (1970) (statement of Arthur Burns, Chairman of the ment company advisory activities (12 C.F.R. 225.125), the Board has Federal Reserve Board) (hereinafter cited as 1970 Senate hearings); made clear that while that regulation did define bank holding company 1970 Senate Hearings at 179-81 (Colloquy between Senator Packto include both bank and nonbank subsidiaries, "the restrictions wood and Frank Wille, Chairman of the FDIC). contained in the interpretation on operations of banking subsidiaries 27. The Board has considered protestants' references to language were only intended to apply where the investment advisory function from the Senate Conference Report on Title VI of the Garn-St was being conducted by a nonbanking subsidiary of the bank holding Germain Act (S. Rep. No. 97-641, 97th Cong. 2d Sess. 91 (1982), company." Letter denying petition of Investment Company Institute, which states that Title VI would prohibit "bank holding companies March 8, 1974. and their subsidiaries" from selling and underwriting insurance. In the 25. See S. Rep. No. 1095, Part 2, 84th Cong., 2d Sess. 5 (1956). The Board's view, in the context of the terms of the Act, the purpose of the BHC Act does, however, provide the Board with certain supervisory Garn-St Germain Act, and the longstanding practice of not applying authority over holding company banks. For example, the Board may the nonbanking provisions of the Act to the direct activities of holding examine any bank that is a subsidiary of a bank holding company company banks, the reference in the report to subsidiaries was meant (12 U.S.C. § 1844(c)) and is required to evaluate the management and to refer to nonbanking subsidiaries. financial condition of any bank that a bank holding company proposes The Board notes that references in earlier reports on the Title VI to acquire (12 U.S.C. § 1842(c)). legislation indicate that section 4 and thus the proposed legislation Protestants argue that the Board's original Merchants decision is would apply to bank holding companies and their "nonbank subsidsuspect because, according to protestants, the decision rested essen- iaries." S. Rep. No. 96-923, 96th Cong., 2d Sess. 2 (1980); S. Rep. tially on the premise that state banks are regulated exclusively by state No. 97-536,97th Cong., 2d Sess 36, 38-40 (1982). See also, H.R. Rep. law. Protestants have misread the Board's decision. As noted above, No. 96-845, 96th Cong., 2d Sess. 2-3 (1980) ("the BHC Act generally the Board recognizes that Congress intended for the OCC and the prohibits a bank holding company from owning the shares of any state banking authorities to remain as the primary (not exclusive) company that is not a bank.") There is no indication of any Congresregulatory authorities responsible for their respective institutions. At sional intent in the Title VI amendments to section 4(c)(8) of the Act the same time, the Board recognizes that the BHC Act provides the to extend the coverage of the nonbanking prohibitions of section 4(a) Board with certain supervisory authority over holding company of the Act to the direct activities of holding company banks. banks. Second, the original decision, as well as the present one, rests 28. Competition in Banking Act of1980, Hearings Before the Senate on an interpretation of the explicit language of section 4 of the BHC Comm. on Banking, Housing and Urban Affairs, 96th Cong., 2d Sess. Act. 22 (1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

394 Federal Reserve Bulletin • May 1989 casualty insurance.29 These Board decisions clearly a bank holding company will permit states to "nullify did not authorize any activities for the subsidiary the effect" of the Act by permitting state banks to banks of the companies involved. engage in nonbanking activities that are forbidden by The Board believes that reading the Garn-St Ger- section 4. In establishing the BHC Act framework, main Act as inapplicable to the direct insurance activ- however, Congress was required to draw the line ities of banks does not frustrate the basic remedial between banking and nonbanking activities in the Act purposes of the Act, which were to address what in some manner. As the terms of the Act demonstrate, Congress believed to be potential unfair competitive Congress rationally did so on the basis of whether the practices associated with provision of insurance by entity conducting the activity is a bank or a nonbank.32 banking organizations. In this regard, the Board notes Thus, where the company is chartered and operated as that prior to 1982 insurance activities conducted di- a bank under the definition in the BHC Act, it is rectly by banks were not extensive, since banks were outside the scope of the nonbanking provisions of the authorized to engage in these activities only in a few Act. But where the company is not a bank, it is, states and the acquisition of banks by out of state bank consistent with the line drawn by Congress in section holding companies was not permitted. In contrast, 4, subject to the nonbanking provisions of the Act, and under the Board's section 4(c)(8) decisions, on which in order for these activities to be permissible, they Congress specifically focused in enacting the Garn-St must fit within one of the Act's authorizing provisions. Germain Act, insurance activities could be conducted Protestants also rely on section 101(d) of CEBA, by nonbank companies in a holding company system which amends section 3 of the BHC Act to permit on a nationwide basis.30 qualified state-chartered savings banks to engage in In any event, the Supreme Court has held that the any activity permitted by state law, but prohibits such purpose of legislation is determined in the first in- savings banks from violating section 4(c)(8)'s insurstance with reference to the plain language of the ance restrictions. 12 U.S.C. § 1842(f). Protestants asstatute and that the broad purposes of legislation sert that, if section 4 did not restrict the nonbanking cannot be relied upon to overcome the terms of the activities of banks, an exemption for savings bank statute itself.31 As noted, in this instance, the terms of would not have been necessary, nor would Congress the BHC Act are clear that the direct activities of have had any reason to apply the insurance restricholding company banks are not restricted by section 4 tions uniquely to savings banks. Section 101(d), howof the Act. ever, applies only to savings banks, which are not Protestants argue that failing to interpret section 4's involved in this case, and does not extend the reach of activities limitation to apply to banking subsidiaries of section 4 of the BHC Act. Moreover, it does not necessarily follow that this amendment to section 3 is an indication that Congress 29. See, e.g., S. Rep. No. 97-536, 97th Cong., 2d Sess. 36-37 believed the restrictions in section 4 apply to all (1982). The Board, of course, has no authority to authorize state or holding company banks. This amendment may have national banks to conduct nonbanking activities. That authorization must come from the state banking authorities or the Comptroller of the been intended merely to confirm, for this category of Currency, respectively. "banks," the Board's longstanding view that banks 30. After passage of the Garn-St Germain Act, in light of developmay engage in state-authorized activities in the face of ments Congress could not necessarily have foreseen in 1982, the direct insurance activities of banks began to expand. The growth of inter- contrary arguments advanced by insurance trade asstate banking after the Supreme Court's decision in Northeast Ban- sociations that the section 4 limitations apply to the corp, Inc. v. Board of Governors, All U.S. 159 (1985), resulted in the establishment by bank holding companies of interstate networks of direct activities of holding company banks. Congress' banks that could sell insurance. During this period there also was a decision expressly to limit the insurance activities of general expansion in the powers of banks. Since 1982, Congress has these savings banks (in contrast to other types of repeatedly considered proposed legislation that would restrain the direct insurance functions of banks on a permanent basis, but no such holding company banks) is merely a part of a "special legislation has been enacted. rule" adopted for those institutions under the BHC 31. Board of Governors v. Dimension Financial Corporation, 474 U.S. 361, 368, 373-374, (1986) ("If the statute is clear and unambiguous, 'that is the end of the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.' " (citations omitted)). See also, Independent Insurance 32. Protestants point to several general references in the legislative Agents of America, Inc. v. Board of Governors, 835 F.2d 1452, history of the Act, as well as the 1966 and 1970 Amendments to the 1456-1457 (D.C. Cir. 1987). As the Supreme Court recognized, the Act, to suggest that Congress intended to separate banking from process of legislative compromise may result in the adoption of nonbanking interests wherever the nonbanking interests were held, express exceptions that run counter to the general remedial purpose of and that Congress intended for banks to divest themselves of their the legislation. 474 U.S. at 374. The legislative history of the Gam-St nonbanking interests. The Board agrees that one of the purposes of the Germain Act reveals some disagreement among members of Congress BHC Act is to separate banking from commerce. As is evident in the as to whether banking organizations should be prohibited completely terms and legislative history of the Act, Congress achieved this from engaging in insurance activities. 128 Cong. Rec. S 12,220-24, purpose by prohibiting banks from being affiliated within a bank 12,230 (1982). holding company system with commercial companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 395 Act.33 In fact, as noted, the 100th Congress actively bank holding company to acquire and retain all (but considered (although it did not adopt) legislation ex- not less than all) of the voting shares of a company, pressly to extend these limitations to holding company without Board approval under the Act, so long as banks —action that is inconsistent with protestants' the company engages solely in activities the parent interpretation of the Garn-St Germain Act.34 bank may conduct directly and at locations at which For the foregoing reasons, the Board has deter- the bank could conduct the activities. 12 C.F.R. mined that section 4 of the BHC Act does not limit the § 225.22(d)(2).37 The Board adopted this regulation in sale of insurance directly by Anderson Bank and Mid order to permit holding company state banks to com- State Bank within the banks as proposed, and that the pete on equal footing with state banks that are not in a banks may, therefore, insofar as the BHC Act is holding company system and in the absence of eviconcerned, resume within the banks the sale of insur- dence that such acquisitions were resulting in evasions ance as permitted under Indiana law.35 of the Act.38 At that time, however, the Board stated that it would review the merits of the decision from IV. Operating Subsidiaries of State Banks time to time in light of its experience in administering the Act.39 The Board emphasizes that its views regarding the In December 1988, in light of a number of developcoverage of section 4 in this Order pertain only where ments, the Board asked for comment on whether to the activities are conducted directly by banks. The rescind this regulation, thereby requiring bank holding Order does not address the situation where the insur- companies to obtain approval under section 4(c)(8) of ance activities are conducted by nonbank companies the BHC Act prior to establishing or acquiring, controlled by holding company banks. Under the Act, through their subsidiary state banks, shares of compashares of a company held by a holding company bank nies engaged in activities that the bank is permitted to are deemed to be indirectly held by the parent holding conduct under state law, unless the transaction is company (12 U.S.C. § 1841(g)) and, therefore, under otherwise authorized under the Act. 53 Federal Regthe terms of the Act, their ownership or control by a ister 48,915 (1988). The comment period on the probank holding company must qualify under the closely posal ends April 28, 1989.40 related to banking exception or one of the other exceptions in section 4 of the Act.36 V. Legislation Regarding Direct Activities of In this regard, in 1971 the Board adopted section Holding Company Banks 225.22(d)(2) of Regulation Y (formerly section 225.4(e)), which authorizes a state bank owned by a The Board notes that the 100th Congress had under active consideration legislation that would have applied the insurance prohibitions of the Garn-St Ger- 33. See H.R. Rep. No. 100-261, 100th Cong., 1st Sess. 130 (1987); S. Rep. No. 100-19, 100th Cong., 1st Sess. 33 (1987). 34. Protestants' reliance on the nonbank bank provisions of CEBA 37. Section 225.22(d)(1) of Regulation Y authorizes a national bank also is misplaced. 12 U.S.C. § 1843(f). Such provisions were enacted to acquire and retain voting shares of a company in accordance with in order to minimize the potential for unfair competition and adverse the rules of the Comptroller of the Currency. 12 C.F.R. 225.22(d)(1). effects associated with the grandfather provisions applied to nonbank 38. The regulation does not, as protestants assert, rest on the banks and their parent holding companies, not to expand the scope of Board's "belief' that it has the authority to regulate the activities of the general prohibitions in section 4. subsidiary banks of bank holding companies. 35. Protestants request that the Board take cognizance of the public 39. The Board stated: interest questions involved in the issue of whether section 4 applies to The Board should not at this time apply the [nonbanking] restricactivities conducted directly by state banks. The Board is required by tions [of the BHC Act] to subsidiaries of banks. This decision is section 4(c)(8), in determining whether a particular activity is closely believed warranted by considerations of equity between banks that related to banking, to consider whether its performance by a bank are and are not members of bank holding companies and by the holding company affiliate can reasonably be expected to produce absence of evidence that acquisition by holding company banks are public benefits that outweigh possible adverse effects. Because the resulting in evasions of the purpose of the Act. The merits of this Board has determined that section 4's prohibitions do not apply to decision will be reviewed by the Board from time to time in light of activities conducted by Merchants' state bank subsidiaries, the Board its experience in administering the Act. (36 Federal Register 9292 need not decide whether these activities are closely related to banking (May 22, 1971)). or that their performance meets the net public benefits test of section 40. In December 1986, the Board asked for comment on whether to 4(c)(8). The Board notes, however, that the insurance activities of the amend 12 C.F.R. 225.22(d)(2) to prohibit bank holding companies banks will be subject to the anti-tying restrictions of the 1970 Amend- from acquiring or retaining voting shares or control of companies ments to the BHC Act, which unlike section 4(a) explicitly apply to engaged in real estate development activities or to limit such acquisi- "banks." 12 U.S.C. § 1972(1). tions to those situations that the Board proposed to permit for bank 36. Similarly, a bank holding company is deemed to control any holding companies. 52 Federal Register 543, 551 (1987). The Board company that is controlled by the holding company's subsidiaries. indicated that it would consider whether to apply the proposed 12 U.S.C. § 1841(a)(2). Under section 4(a)(2) of the Act, in order for restrictions to a wholly owned subsidiary of a holding company state the holding company to maintain control of such a company, the bank. Contrary to protestants' implication, the proposed regulation company must be a "bank" or a company whose activities qualify would not bar state banks themselves that are owned by a holding under one of the Act's nonbanking exceptions. 12 U.S.C. company from engaging in state-authorized real estate activities § 1843(a)(2). within the bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

396 Federal Reserve Bulletin • May 1989 main Act to the activities of holding company banks By order of the Board of Governors, effective except where the bank was located in the same state as March 3, 1989. the bank holding company, the insurance activities were permissible under state law, and sales were limited to Voting for this action: Chairman Greenspan and Governors within the state. The insurance activities to be conducted Johnson, Seger, Angell, Heller, Kelley, and LaWare. by Merchants's subsidiary banks would not have been prohibited under these provisions. While this legislation JENNIFER J. JOHNSON was passed by the U.S. Senate and favorably reported by Associate Secretary of the Board committees of the U.S. House of Representatives,41 no legislation was enacted into law. The Board calls to PNC Financial Corp Merchants's attention, however, that subsequent Con- Pittsburgh, Pennsylvania gressional action may modify the Board's Order granting Merchants's request for relief without providing so-called Order Approving Applications to Underwrite and grandfather rights to continue the insurance activities. Deal in Certain Securities to a Limited Extent and to The Board retains jurisdiction over the application to act Offer Full-Service Brokerage Services to carry out the requirements of any legislation adopted by Congress that would affect the conduct of insurance PNC Financial Corp, Pittsburgh, Pennsylvania activities by Merchants's subsidiary banks under the ("PNC"), a bank holding company within the meaning BHC Act. of the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 4(c)(8) VI. Request for a Hearing of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23), Protestants have requested that the Board grant dis- for its subsidiary, PNC Securities Corp, Pittsburgh, covery rights and conduct a hearing under section 5(f) Pennsylvania ("PNCSC"), to provide investment adof the Act (12 U.S.C. § 1844(f)) on the application in visory and brokerage services on a combined basis order to determine whether Merchants is attempting to ("full-service brokerage") to institutional and retail evade the BHC Act, as forbidden by the Citicorp customers, and to engage, to a limited extent, in (South Dakota) decision. However, section 5(f) does underwriting and dealing in 1-4 family mortgage-renot itself require that a hearing be conducted in any lated securities and consumer-receivable-related secucase; this section merely sets forth the powers the rities (collectively "ineligible securities"). Board may exercise in any hearing or other proceeding PNC has previously received approval under the undertaken under another provision of the Act. BHC Act to: Section 4(c)(8) does provide that in approving activ- (1) engage in discount brokerage activities pursuant ities under that provision the Board must provide to section 225.25(b)(15) of Regulation Y (12 C.F.R. notice and opportunity for hearing. However, because 225.25(b)(15)); the Board has determined that section 4 does not apply (2) underwrite and deal in U.S. government and to the direct activities of Merchants's subsidiary state other bank-eligible securities pursuant to section banks, the Board by this Order is not approving an 225.25(b)(16) of Regulation Y (12 C.F.R. application under section 4(c)(8). Accordingly, pro- 225.25(b)(16)); and testants do not have the right to a hearing or discovery (3) underwrite and deal in, to a limited extent, in this case, and the Board does not believe such a commercial paper and municipal revenue bonds.1 proceeding would be appropriate under the facts and PNC, with approximately $25.0 billion in domestic circumstances of this case.42 deposits, is the twelfth largest commercial banking organization in the United States, with full-service banks in Delaware, Indiana, Kentucky, New Jersey, 41. S. 1886, Title VIII, § 802, 100th Cong., 2d Sess., 134 Cong. Rec. S3437 (daily ed. March 30, 1988); H.R. 5094, Title III, § 302, 100th Cong., 2d Sess., 134 Cong. Rec. H6453 (daily ed. August 4,1988), 134 Cong. Rec. H8470 (Sept. 27, 1988). See also S. Rep. No. 305, 100th evasive intent is in the hands of Merchants. Such a bare allegation is Cong., 2d Sess., 108 (1988); H.R. Rep. No. 822 (Part 1), 100th Cong., insufficient to show that material facts are in dispute. In any event, as 2d Sess., 166 (1988); H.R. Rep. No. 822 (Part 2), 100th Cong., 2d noted above, the Board has determined that the factual basis for such Sess., 80-81 (1988). evasion is not present in this case. Moreover, the Board retains supervisory authority to act under the BHC Act to prevent any 42. Even where the applicable provision requires an opportunity for evasion of the requirements of the Act or this Order should that a hearing, such as under section 4(c)(8), a protestant is not entitled to situation arise in the future. discovery and a hearing on every application, but only when there are material issues of fact in dispute. Connecticut Bankers Assn. v. Board of Governors, 627 F.2d 245 (D.C. Cir. 1980). In this case, there are no material issues of fact in dispute. Protestants present no specific 1. See PNC Financial Corp, 73 FEDERAL RESERVE BULLETIN 742 allegations; rather, they assert that any evidence that might prove an (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 397 Ohio, and Pennsylvania.2 PNC engages directly and authorized underwriting and dealing activities. through subsidiaries in a broad range of permissible PNCSC will provide full and appropriate disclosure of nonbanking activities in the United States. its interest in the transaction, as required by the Notice of the applications, affording interested per- securities laws, the National Association of Securities sons an opportunity to submit comments on the pro- Dealers and fiduciary principles. posal, has been published (54 Federal Register 3850, The Board has previously authorized an underwrit- 6028 (1989)). The time for filing comments has ex- ing subsidiary to provide full-service brokerage with pired, and the Board has considered the applications respect to ineligible securities that it holds as principal, and all comments received in light of the public but only to institutional customers. See Bankers Trust interest factors set forth in section 4(c)(8) of the BHC New York Company, 74 FEDERAL RESERVE BULLETIN Act. 695 (1988) ("Bankers Trust"). PNC has made the same The Board has previously determined that the con- commitments regarding disclosure as in Bankers duct of the proposed ineligible securities underwriting Trust. Specifically, PNCSC will inform its customers and dealing activities is consistent with section 20 of at the commencement of the relationship that, as a the Glass-Steagall Act, provided the underwriting general matter, PNCSC may be a principal or may be subsidiary derives no more than 5 percent of its total engaged in underwriting with respect to, or may purgross revenue from underwriting and dealing in the chase from an affiliate, those securities for which approved securities over any two-year period.3 The brokerage and advisory services are provided. At the Board further found that, subject to the prudential time any brokerage order is taken, the customer will framework of limitations established in those cases to be informed (usually orally) whether PNCSC is acting address the potential for conflicts of interest, unsound as agent or principal with respect to a security. banking practices or other adverse effects, the pro- Confirmations sent to customers also will state posed underwriting and dealing activities were so whether PNCSC is acting as agent or principal. closely related to banking as to be a proper incident The Board also notes that in its orders permitting thereto within the meaning of section 4(c)(8) of the ineligible securities underwriting and dealing, the BHC Act. PNC has committed to conduct its ineligible Board has prohibited banks and thrift institutions from securities underwriting and dealing activities subject offering advice to customers on the purchase or sale of to the 5 percent revenue test and the prudential ineligible securities underwritten or dealt in by an limitations established by the Board in its Citicorp/ underwriting subsidiary, unless adequate disclosure is Morgan/Bankers Trust and Chemical Orders.4 given. The Board concluded that full disclosure would The Board has previously determined that full- address the conflicts of interest potential that could service brokerage for both institutional and retail arise in this situation. For the same reason, the Board customers is closely related and a proper incident to believes that such disclosure is sufficient to address banking under section 4(c)(8) of the BHC Act, and the conflicts of interest issue raised where the underdoes not violate the Glass-Steagall Act. Bank of New writing subsidiary provides advice on securities it England Corporation, 74 FEDERAL RESERVE BULLE- holds as principal. TIN 700 (1988) ("Bank of New England"). See also In this regard, the Board notes that in performing National Westminster Bank PLC, et al., 72 FEDERAL the full-service brokerage activity, the underwriting RESERVE BULLETIN 584 (1986).5 subsidiary would operate under a more extensive PNC's proposal differs from prior cases in that framework of prudential limitations than would be the PNCSC will provide full-service brokerage to retail case if the full-service brokerage activity were concustomers with respect to ineligible securities that ducted by a bank, a subsidiary of a bank, or by another PNCSC may hold as principal in connection with its holding company subsidiary. These limitations require a marked operational and managerial separation of the underwriting subsidiary from its banking affiliates. 2. Banking data are as of September 30, 1988. Moreover, as noted, PNCSC will conduct its bro- 3. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust New York Corporation, 73 FEDERAL RESERVE BULLETIN 473 (1987) kerage and advisory activities within the same frame- ("Citicorp/Morgan/Bankers Trust"), affdsub nom., Securities Indus- work approved by the Board in Bank of New England. try Association v. Board of Governors of the Federal Reserve System, Thus, PNC has committed that, before providing any 839 F.2d 47 (2d Cir. 1988), cert, denied, 108 S. Ct. 2830 (1988) C'SIA v. Board"); and Chemical New York Corporation, The Chase Man- brokerage or advisory services to retail customers, hattan Corporation, Bankers Trust New York Corporation, Citicorp, PNCSC will prominently disclose in writing to each Manufacturers Hanover Corporation and Security Pacific Corporasuch customer that PNCSC is not a bank and is tion, Ti FEDERAL RESERVE BULLETIN 731 (1987) ("Chemical"). 4. In light of the decision in SIA v. Board, the Board has determined separate from any affiliated bank, and that the securinot to require PNC to comply with a market share limitation. ties sold, offered, or recommended by PNCSC are not 5. Ajfd sub nom. Security Industry Ass'n v. Board of Governors, 821 F.2d 810 (D.C. Cir. 1987), cert, den., 108 S. Ct. 697 (1988). deposits, are not insured by the FDIC, are not guar- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

398 Federal Reserve Bulletin • May 1989 anteed by an affiliated bank, and are not otherwise an By order of the Board of Governors, effective obligation of an affiliated bank, unless such is in fact March 14, 1989. the case. Consummation of the proposal would provide added Voting for this action: Vice Chairman Johnson and Goverconvenience to PNC's customers. In addition, the nors Seger, Heller, Kelley, and LaWare. Absent and not Board expects that the de novo entry of PNC into the voting: Chairman Greenspan and Governor Angell. market for these services would increase the level of competition among providers of these services. Ac- JENNIFER J. JOHNSON Associate Secretary of the Board cordingly, the Board has determined that the performance of the proposed activities by PNC can reason- Westpac Banking Corporation ably be expected to produce public benefits that would Sydney, Australia outweigh adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Order Approving Application to Engage in Based on the above, the Board has determined to Underwriting and Dealing in Certain Securities to a approve the proposed activities subject to all of the Limited Extent terms and conditions established in the Bank of New England, Citicorp!Morgan!Bankers Trust and Chemi- Westpac Banking Corporation, Sydney, Australia, a cal Orders, except the market share limitation and as provided above.6 bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied for Accordingly, PNC's proposed activities are hereby approved.7 The Board's determination is subject to all the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the of the conditions set forth in the Board's Regulation Y, Board's Regulation Y (12 C.F.R. 225.23) for its subincluding those in sections 225.4(d) and 225.23(b), and sidiary, Westpac Pollock Government Securities, Inc., to the Board's authority to require modification or New York, New York ("Company"), to engage termination of the activities of a bank holding company or any of its subsidiaries as the Board finds de novo on a limited basis, in underwriting and dealing in: necessary to assure compliance with, and to prevent (1) municipal revenue bonds, including certain inevasion of, the provisions of the BHC Act and the dustrial development bonds; Board's regulations and orders issued thereunder. (2) 1-4 family mortgage-related securities; (3) commercial paper; and The transaction shall not be consummated later than (4) consumer-receivable-related securities ("CRRs") three months after the effective date of this Order, (collectively "ineligible securities"). unless such period is extended for good cause by the Applicant, with consolidated assets of $62.5 billion, Board or by the Federal Reserve Bank of Cleveland, is the 75th largest banking organization in the world. It pursuant to delegated authority. operates four branches in the United States in New York, Chicago, San Francisco, and Los Angeles and 6. The industrial development bonds approved in those applications engages directly and through subsidiaries in a broad and for PNC in this case are only those tax-exempt bonds in which the range of permissible nonbanking activities.1 governmental issuer, or the governmental unit on behalf of which the Notice of the application, affording interested perbonds are issued, is the owner for federal income tax purposes of the financed facility (such as airports, mass commuting facilities, and sons an opportunity to submit comments on the prowater pollution control facilities). Without further approval from the posal, has been published (53 Federal Register 44,124 Board, PNCSC may underwrite or deal in only these types of (1988)). The time for filing comments has expired, and industrial development bonds. The Board's approval of the proposed underwriting and dealing the Board has considered the application and all activities extends only to PNCSC. The activities may not be con- comments received in light of the public interest ducted by PNC in any other subsidiary without prior Board review. Pursuant to Regulation Y, no corporate reorganization of PNCSC, factors set forth in section 4(c)(8) of the BHC Act. such as the establishment of subsidiaries of PNCSC to conduct the The Board has previously determined that the conactivities, may be consummated without prior Board approval. duct of the proposed ineligible securities underwriting 7. PNCSC may also provide services that are necessary incidents to these approved activities. Any activity conducted as a necessary and dealing activity is consistent with section 20 of the incident to the ineligible securities underwriting and dealing activity Glass-Steagall Act, provided the underwriting subsidmust be treated as part of the ineligible securities activity unless iary derives no more than 5 percent of its total gross PNCSC has received specific approval under section 4(c)(8) of the BHC Act to conduct the activity independently. Until such approval revenue from underwriting and dealing in the apis obtained, any revenues from the incidental activity must be counted as ineligible revenue subject to the 5 percent gross revenue limit set forth in Citicorp/Morgan!Bankers Trust. This 5 percent gross revenue limit should be calculated in accordance with the method stated in J.P. Morgan & Co. Incorporated, 1. Ranking is as of September 30, 1987. All other data are as of et al., 75 FEDERAL RESERVE BULLETIN 192. September 30, 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 399 proved securities over any two-year period.2 The The Board's determination is subject to all of the Board further found that, subject to the prudential conditions set forth in the Board's Regulation Y, framework of limitations established in those cases to including those in sections 225.4(d) and 225.23(b), and address the potential for conflicts of interest, unsound to the Board's authority to require modification or banking practices or other adverse effects, the pro- termination of the activities of a bank holding composed underwriting and dealing activities were so pany or any of its subsidiaries as the Board finds closely related to banking as to be a proper incident necessary to assure compliance with, and to prevent thereto within the meaning of section 4(c)(8) of the evasion of, the provisions of the BHC Act and the BHC Act. Applicant has committed to conduct its Board's regulations and orders issued thereunder. ineligible underwriting and dealing activities subject to This transaction shall not be consummated later the 5 percent revenue test and the prudential limita- than three months after the effective date of this tions established by the Board in its Citicorp/Morgan! Order, unless such period is extended for good cause Bankers Trust and Chemical Orders, including those by the Board or by the Federal Reserve Bank of New relating to the treatment of Applicant's capital invest- York, pursuant to delegated authority. ment in Company.3 By order of the Board of Governors, effective Consummation of the proposal would provide added March 1, 1989. convenience to Applicant's customers. In addition, the Board expects that the de novo entry of Applicant Voting for this action: Chairman Greenspan and Governors into the market for these services would increase the Johnson, Kelley, and LaWare. Absent and not voting: Govlevel of competition among providers of these ser- ernors Seger, Angell, and Heller. vices. Accordingly, the Board has determined that the performance of the proposed activities by Applicant JENNIFER J. JOHNSON Associate Secretary of the Board can reasonably be expected to produce public benefits which would outweigh adverse effects under the Orders Issued Under Sections 3 and 4 of the proper incident to banking standard of section 4(c)(8) of the BHC Act.4 Bank Holding Company Act Based on the above, the Board has determined to Norwest Corporation approve the application subject to all of the terms and Minneapolis, Minnesota conditions established in the Citicorp!Morgan!Bankers Trust and Chemical Orders, except the market share limitation.5 Order Approving Acquisition of a Bank Holding Company and its Banking and Nonbanking Subsidiaries 2. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust New York Corporation, 73 FEDERAL RESERVE BULLETIN 473 (1987) Norwest Corporation, Minneapolis, Minnesota ("Citicorp!Morgan!Bankers Trust"), ajfdsub nom., Securities Indus- ("Norwest"), a bank holding company within the try Association v. Board of Governors of the Federal Reserve System, meaning of the Bank Holding Company Act ("BHC 839 F.2d 47 (2d Cir. 1988), cert, denied, 108 S. Ct. 2830 (1988) ("S/A v. Board"); and Chemical New York Corporation, The Chase Man- Act"), has applied for the Board's approval under hattan Corporation, Bankers Trust New York Corporation, Citicorp, section 3(a)(5) of the BHC Act to acquire by merger Manufacturers Hanover Corporation and Security Pacific Corpora- The Bank Group, Inc., Wayzata, Minnesota ("BGI"), tion, 73 FEDERAL RESERVE BULLETIN 731 (1987) ("Chemical"). 3. Applicant has not proposed a market share limitation. Accord- and thereby acquire its bank subsidiaries: The Bank ingly, and in light of the decision in SIA v. Board, the Board has Wayzata, Wayzata, Minnesota; The Bank North, determined not to require Applicant to comply with a market share limitation. Crystal, Minnesota; and The Bank Excelsior, Excel- 4. Company may also provide services that are necessary incidents sior, Minnesota. Norwest has also applied under secto these approved activities. Any activity conducted as a necessary tion 4(c)(8) of the BHC Act to acquire BGI's two incident to the ineligible securities activity must be treated as part of the ineligible securities activity unless Company has received specific nonbanking subsidiaries: Wayzata Mortgage Comapproval under section 4(c)(8) of the BHC Act to conduct the activity independently. Until such approval is obtained, any revenues from the incidental activity must be counted as ineligible revenue subject to the 5 percent gross revenue limit set forth in CiticorplMorgan/Bankers facilities, and water pollution control facilities). Without further Trust. This 5 percent gross revenue limit should be calculated in approval from the Board, Company may underwrite or deal in only accordance with the method stated in J.P. Morgan ct Co. Incorpo- these types of industrial development bonds. rated, et al, 75 FEDERAL RESERVE BULLETIN 192 (Order dated The Board's approval of the proposed underwriting and dealing January 18, 1989). activities extends only to Company. The activities may not be 5. The industrial development bonds approved in those applications conducted by Applicant in any other subsidiary without prior Board and for Applicant in this case are only those tax-exempt bonds in review. Pursuant to Regulation Y, no corporate reorganization of which the governmental issuer, or the governmental unit on behalf of Company, such as the establishment of subsidiaries of Company to which the bonds are issued, is the owner for federal income tax conduct the activities, may be consummated without prior Board purposes of the financed facility (such as airports, mass commuting approval. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

400 Federal Reserve Bulletin • May 1989 pany, Plymouth, Minnesota, and The I.M.F. Group, centration ratio would rise from 74.6 percent to 75.8 Inc., Wayzata, Minnesota, and thereby engage in percent and the Herfindahl-Hirschman Index certain mortgage banking activities and certain insur- ("HHI") would increase by 56 points to 2575.4 ance agency activities.1 Although consummation of this proposal would Notice of the applications, affording interested per- eliminate existing competition between Norwest and sons an opportunity to submit comments, has been BGI in the Minneapolis-St. Paul banking market, 107 published (53 Federal Register 50,095 (December 13, banking institutions would continue to operate in the 1988)). The time for filing comments has expired, and market. In addition, the Board has considered the the Board has considered the applications and all presence of thrift institutions in the banking market in comments received in light of the factors set forth in its analysis of this proposal. The Board previously has sections 3(c) and 4(c)(8) of the BHC Act. indicated that thrift institutions have become, or have Norwest is the second largest commercial banking the potential to become, major competitors of comorganization in Minnesota, controlling deposits of $7.4 mercial banks.5 Thrift institutions already exert a billion, representing approximately 18.4 percent of considerable competitive influence in the market as total deposits in commercial banking organizations in providers of NOW accounts and consumer loans, and the state.2 BGI, the seventh largest commercial bank- many are engaged in the business of making commering organization in Minnesota, controls deposits of cial loans. Based upon the size, market share, and $327 million, representing approximately 0.8 percent commercial lending activities of thrift institutions in of total deposits in commercial banking organizations the market, the Board has concluded that thrift instiin the state. Upon consummation of this proposal, tutions exert a significant influence upon existing com- Norwest would remain the second largest banking petition in the Minneapolis-St. Paul banking market.6 organization in Minnesota, controlling deposits of $7.7 Accordingly, in view of all the facts of record, includbillion, representing approximately 19.3 percent of ing the small increase in concentration in the market, total deposits in commercial banks in the state. Con- the Board has determined that consummation of this summation of this proposal would not increase signif- proposal would not have a significant adverse effect on icantly the concentration of banking resources in Min- existing competition in the Minneapolis-St. Paul banknesota. ing market. Norwest competes directly with BGI in the Minne- The financial and managerial resources of Norwest apolis-St. Paul banking market.3 Norwest is the sec- and BGI are consistent with approval. Considerations ond largest commercial banking organization in this relating to the convenience and needs of the commumarket, with deposits of $5.6 billion, representing 22.6 nities to be served are also consistent with approval. percent of the market's total deposits in commercial Norwest has also applied, pursuant to section 4(c)(8) banks. BGI is the seventh largest commercial banking of the BHC Act, to acquire the two nonbanking organization in this market, with $327 million in de- subsidiaries of BGI. Norwest operates mortgage bankposits, representing 1.3 percent of the market's total ing and insurance subsidiaries that directly compete deposits in commercial banks. The Minneapolis-St. with BGI's subsidiaries in these activities. Consum- Paul banking market is considered to be highly concentrated, with a four-firm concentration ratio of 74.6 percent. Upon consummation of this proposal, Nor- 4. Under the revised Department of Justice Merger Guidelines (49 west would remain the second largest commercial Federal Register 26,823 (June 29, 1984)), any market in which the post-merger HHI is over 1800 is considered to be highly concentrated, banking organization, controlling $5.9 billion in depos- and the Department is likely to challenge a merger that increases the its, representing 23.9 percent of the total deposits in HHI by more than 50 points unless other factors indicate that the merger will not substantially lessen competition. The Department of commercial banks in the market. The four-firm con- Justice has informed the Board that a bank merger or acquisition is not likely to be challenged (in the absence of other factors indicating an anti-competitive effect) unless the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. The Justice 1. Norwest intends to merge these subsidiaries into its existing Department has stated that the higher than normal anti-competitive mortgage subsidiary (Norwest Mortgage, Inc., Des Moines, Iowa) and effects implicitly recognizes the competitive effects of limited-purpose insurance subsidiary (Norwest Insurance, Inc., Minneapolis, Minne- lenders and other non-depository financial entities. sota). Mortgage banking activities are authorized for bank holding 5. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 companies pursuant to section 225.25(b)(1) of the Board's Regulation (1984); NCNB Bancorporation, 70 FEDERAL RESERVE BULLETIN 225 Y. Norwest's general insurance activities are conducted pursuant to (1984); General Bancshares Corporation, 69 FEDERAL RESERVE BULsection 4(c)(8)(G) of the BHC Act and section 225.25(b)(8)(vii) of LETIN 802 (1983); and First Tennessee National Corporation, 69 Regulation Y. FEDERAL RESERVE BULLETIN 298 (1983). 2. State deposit and market deposit data are as of March 31, 1988. 6. If 50 percent of the deposits controlled by thrift institutions were Thrift data are as of June 30, 1987. included in the calculation of market concentration, Norwest and BGI 3. The Minneapolis-St. Paul banking market is defined as the would control 19.9 percent and 1.2 percent of total market deposits, Minneapolis-St. Paul RMA adjusted to include all of Scott and Carver respectively. The HHI would increase by 46 points to 2051 upon Counties and Lanesburgh Township in Le Sueur County, Minnesota. consummation of this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 401 mation of the proposal, however, would have a unless such period is extended for good cause by the de minimis effect on existing competition in this mar- Board or by the Federal Reserve Bank of Minneapolis, ket and there are numerous competitors for these acting pursuant to delegated authority. The determiservices. Accordingly, the Board concludes that the nations as to Norwest's nonbanking activities are proposal would not have any significant adverse effect subject to all of the conditions contained in Regulation on existing or probable future competition in the Y, including those in sections 225.4(d) and 225.23(b)(3) relevant market. Furthermore, there is no evidence in (12 C.F.R. 225.4(d) and 225.23(b)(3)), and to the the record to indicate that approval of this proposal Board's authority to require such modification or would result in undue concentration of resources, termination of the activities of a holding company or decreased or unfair competition, conflicts of interests, any of its subsidiaries as the Board finds necessary to unsound banking practices, or other adverse effects on assure compliance with the provisions and purposes of the public interest. Accordingly, the Board has deter- the BHC Act and the Board's regulations and orders mined that the balance of public interest factors that it issued thereunder, or to prevent evasion thereof. must consider under section 4(c)(8) of the BHC Act is By order of the Board of Governors, effective favorable and consistent with approval of the applica- March 6, 1989. tion to acquire the nonbanking subsidiaries of BGI. Based on the foregoing and other facts of record, the Voting for this action: Chairman Greenspan and Governors Board has determined that the applications should be, Johnson, Angell, Kelley, and La Ware. Absent and not votand hereby are, approved. The acquisition shall not be ing: Governors Seger and Heller. consummated before the thirtieth calendar day following the effective date of this Order, or later than three JENNIFER J. JOHNSON Associate Secretary of the Board months following the effective date of this Order Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

402 Federal Reserve Bulletin • May 1989 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Alabama National Bank of Alabama, Atlanta March 1, 1989 Bancorporation, Fultondale, Alabama Shoal Creek, Alabama Annapolis Bancshares, Inc., Bank of Annapolis, Richmond March 23, 1989 Annapolis, Maryland Annapolis, Maryland Bridge Bancorp, Inc., The Bridgehampton National New York February 24, 1989 Bridgehampton, New York Bank, Bridgehampton, New York CB&T Bancshares, Inc., International City Bancorp, Inc., Atlanta March 20, 1989 Columbus, Georgia Warner Robins, Georgia Citizens Bancorp, Arlington Bank, Richmond March 21, 1989 Riverdale, Maryland Arlington, Virginia CMJR Investments, Inc., Lyndon State Bank, Kansas City March 1, 1989 Lyndon, Kansas Lyndon, Kansas Colwich Financial Corporation, State Bank of Colwich, Kansas City March 8, 1989 Colwich, Kansas Colwich, Kansas Conrad Company, First Galleria Bank, Minneapolis February 16, 1989 Minneapolis, Minnesota Houston, Texas Dickinson Bancorporation, Inc., Liberty National Bank and Trust Minneapolis March 2, 1989 Dickinson, North Dakota Company, Dickinson, North Dakota Eastchester Financial Eastchester Savings Bank, New York March 10, 1989 Corporation, White Plains, New York White Plains, New York Enterprise Bancorp, Inc., Enterprise Bank, National Richmond March 22, 1989 Raleigh, North Carolina Association, Raleigh, North Carolina Financial Future Corporation, First Bancorp of Wayne, Inc., Richmond February 28, 1989 Ceredo, West Virginia Sprague, West Virginia Financial Services Corporation of Henry County Bank, Chicago March 15, 1989 the Midwest, Green Rock, Illinois Rock Island, Illinois First Banks, Inc., The Salem National Bank, St. Louis March 10, 1989 St. Louis, Missouri Salem, Illinois First Kansas Holding Company, Valley Holdings, Inc., Kansas City March 10, 1989 Junction City, Kansas Junction City, Kansas First National Bancshares, Inc., First National Bank of Atlanta March 16, 1989 Hollywood, Florida Hollywood, Hollywood, Florida First National Bankshares, Inc., First Bank of America, Inc., Chicago February 24, 1989 Logansport, Indiana Monticello, Indiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 403 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date First National Bowie Bancorp, The First National Bank of Dallas March 16, 1989 Inc., Bowie, Bowie, Texas Bowie, Texas First State Bancshares, Inc., First State Bank of St. Charles, St. Louis February 22, 1989 St. Charles, Missouri Missouri, St. Charles, Missouri 1st United Bancorp, 1st United Bank, Atlanta March 7, 1989 Boca Raton, Florida Boca Raton, Florida FNB Bancshares, Inc., The First National Bank of Iron Minneapolis March 23, 1989 Iron Mountain, Michigan Mountain, Iron Mountain, Michigan Foresight Financial Group, Inc., Northwest Funding Co., Inc., Chicago March 17, 1989 Freeport, Illinois Rockford, Illinois Fostoria Bankshares, Inc., Farmers Savings Bank, Chicago March 1, 1989 Fostoria, Iowa Fostoria, Iowa The Frankford Corporation, Dime Financial Corp., Philadelphia February 27, 1989 Horsham, Pennsylvania West Chester, Pennsylvania Lanier Bankshares, Inc., Lanier National Bank, Atlanta March 20, 1989 Gainesville, Georgia Gainesville, Georgia Madison Bancshares Group, The Madison Bank, Philadelphia February 24, 1989 Ltd., Blue Bell, Pennsylvania Blue Bell, Pennsylvania Magna Group, Inc., Sesser Bancorporation, St. Louis March 1, 1989 Belleville, Illinois Inc., Sesser, Illinois Michael Bancorporation, Inc., Summit National Bank of Minneapolis March 1, 1989 Minneapolis, Minnesota St. Paul, St. Paul, Minnesota Mid Am, Inc., FBC Bancshares, Inc., Cleveland February 28, 1989 Bowling Green, Ohio Lake view, Ohio Mission-Valley Bancorp, The Bank of Milpitas, N.A., San Francisco February 21, 1989 Pleasanton, California Milpitas, California Missouri Valley Financial First Bank N.A., Chicago March 14, 1989 Services, Inc., Council Bluffs, Iowa Missouri Valley, Iowa Northern New York Bancorp, The Redwood National Bank, New York March 10, 1989 Inc., Alexandria Bay, New York Alexandria Bay, New York Peoples Community Bank of Bloomsdale, St. Louis March 3, 1989 Bancorporation, Inc., Bloomsdale, Missouri Bloomsdale, Missouri PNB Bankshares, Inc., Peachtree National Bank, Atlanta March 20, 1989 Peachtree City, Georgia Peachtree City, Georgia Reliable Community Bancshares, Bank of Perryville, St. Louis March 9, 1989 Inc., Perryville, Missouri Perryville, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

404 Federal Reserve Bulletin • May 1989 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Sleepy Hollow Bancorp, Inc., The First National Bank of North New York February 24, 1989 North Tarry town, New York Tarrytown, North Tarrytown, New York South Gasconade Investment Eagle Bank of Gasconade St. Louis March 10, 1989 Corporation, County, Owensville, Missouri Owensville, Missouri Texop Bancshares, Inc., North Texas Bank, Dallas March 1, 1989 Dallas, Texas Lewisville, Texas Texop Bancshares II, Inc., American National Bank of Wilmington, Delaware Piano, Piano, Texas Tompkins Bancorp, Inc., Tompkins State Bank, Chicago February 27, 1989 Avon, Illinois Avon, Illinois Trenton Bancshares, Inc., Bank of Commerce, St. Louis March 7, 1989 Trenton, Tennessee Trenton, Tennessee Section 4 Nonbanking Reserve Effective Applicant Activity/Company Bank date First Commonwealth Financial Commonwealth Trust Credit Life Cleveland March 3, 1989 Corporation, Insurance Co., Indiana, Pennsylvania Indiana, Pennsylvania S&T Bancorp, Inc., Indiana, Pennsylvania Fleet/Norstar Financial Group, Fleet Real Estate Funding Corp., Boston February 24, 1989 Inc., Columbia, South Carolina Providence, Rhode Island U.S. Bancorp, Colorado Division of Far West San Francisco March 9, 1989 Portland, Oregon Federal Mortgage, Portland, Oregon Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 405 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 The Bank of Mid-Jersey, Howard Savings Bank, Philadelphia March 17, 1989 Bordentown Township, New Livingston, New Jersey Jersey Citizens Bank of Virginia, Arlington Bank, Richmond March 21, 1989 Arlington, Virginia Arlington, Virginia 1st United Interim Bank, 1st United Bank, Atlanta March 7, 1989 Boca Raton, Florida Boca Raton, Florida 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. Independent Insurance Agents of America, Inc. v. Cohen v. Board of Governors, No. 88-1061 (D.N.J., Board of Governors, No. 89-4030 (2d Cir., filed filed March 7, 1988). March 9, 1989). Stoddard v. Board of Governors, No. 88-1148 (D.C. Securities Industry Association v. Board of Gover- Cir., filed February 25, 1988). nors, No. 89-1127 (D.C. Cir. filed February 16, Independent Insurance Agents of America, Inc. v. 1989). Board of Governors, No. 87-1686 (D.C. Cir., filed American Land Title Association v. Board of Gover- November 19, 1987). nors, No. 88-1872 (D.C. Cir., filed December 16, National Association of Casualty and Surety Agents, 1988). et al., v. Board of Governors, Nos. 87-1644, 87- MCorp v. Board of Governors, No. CA3-88-2693-F 1801, 88-1001, 88-1206, 88-1245, 88-1270 (D.C. (N.D. Tex., filed October 28, 1988). Cir., filed Nov. 4, Dec. 21, 1987, Jan. 4, March 18, White v. Board of Governors, No. CU-S-88-623- March 30, April 7, 1988). RDF (D. Nev., filed July 29, 1988). Teichgraeber v. Board of Governors, No. 87-2505-0 VanDyke v. Board of Governors, No. 88-5280 (8th (D. Kan., filed Oct. 16, 1987). Cir., filed July 13, 1988). National Association of Casualty & Insurance Agents Whitney v. United States, etal., No. CA3-88-1596-H v. Board of Governors, Nos. 87-1354, 87-1355 (D.C. (N.D. Tex., filed July 7, 1988). Cir., filed July 29, 1987). Baugh v. Board of Governors, No. C88-3037 (N.D. The Chase Manhattan Corporation v. Board of Gov- Iowa, filed April 8, 1988). ernors, No. 87-1333 (D.C. Cir., filed July 20, 1987). Bonilla v. Board of Governors, No. 88-1464 (7th Cir., Lewis v. Board of Governors, Nos. 87-3455, 87-3545 filed March 11, 1988). (11th Cir., filed June 25, Aug. 3, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

407 Directors of Federal Reserve Banks and Branches Regional decentralization and a combination of Class A directors of each Reserve Bank repregovernmental and private characteristics are im- sent the stockholding member banks of the Fedportant hallmarks of the uniqueness of the Fed- eral Reserve District. Class B and Class C direceral Reserve System. Under the Federal Reserve tors represent the public and are chosen with Act, decentralization was achieved by division of due, but not exclusive, consideration to the inthe country into 12 Federal Reserve Districts and terests of agriculture, commerce, industry, serthe establishment in each District of a separately vices, labor, and consumers; they may not be incorporated Federal Reserve Bank with its own officers, directors, or employees of any bank. In board of directors. The member banks in each addition, Class C directors may not be stockhold- District own the stock of their Reserve Bank and ers of any bank. The Board of Governors desigelect a majority of the board of directors of that nates annually one Class C director as chairman Bank. The Board of Governors, an agency of the of the board of directors of each District Bank federal government, exercises general supervi- and designates another Class C director as depsion over the Reserve Banks and appoints a uty chairman. minority of each board of directors of the Re- Each of the 25 Branches of the Federal Reserve Banks and their Branches. Thus, the Fed- serve Banks has a board of either seven or five eral Reserve relies importantly in the conduct of directors, a majority of whom are appointed by the System's affairs on the regional participation the parent Federal Reserve Bank; the others are and counsel of the directors of the Federal Re- appointed by the Board of Governors. One of the serve Banks and Branches. Board's appointees is designated annually as The following list of directors of Federal Re- chairman of the board of that Branch in a manner serve Banks and Branches shows for each direc- prescribed by the parent Federal Reserve Bank. tor the class of directorship, the principal busi- The names of the chairman and deputy chairness affiliation, and the date the current term man of the Board of directors of each Reserve expires. Each Federal Reserve Bank has nine Bank and of the chairman of each Branch are members on its board of directors: the member published monthly in the FEDERAL RESERVE banks elect the three Class A and three Class B BULLETIN.1 directors, and the Board of Governors appoints the three directors in Class C. Directors are chosen without discrimination as to race, creed, color, sex, or national origin. 1. The current list appears on page A85 of this BULLETIN. DISTRICT 1—BOSTON Term expires Class A Dec.31 Joel B. Alvord Chairman and Chief Executive Officer, Shawmut National 1989 Corporation, Hartford, Connecticut Richard D. Wardell President and Chief Executive Officer, National Iron Bank of 1990 Salisbury, Salisbury, Connecticut William H. Chadwick President and Chief Executive Officer, The Howard Bank, N.A., 1991 Burlington, Vermont Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

408 Federal Reserve Bulletin • May 1989 DISTRICT 1—Continued Term expires Class B Dec. 31 Richard M. Oster President and Chief Executive Officer, Cookson America, Inc., 1989 Providence, Rhode Island Stephen R. Levy Chairman and Chief Executive Officer, Bolt Beranek and Newman, 1990 Inc., Cambridge, Massachusetts Edward H. Ladd President and Chief Executive Officer, Standish, Ayer and Wood, 1991 Inc., Boston, Massachusetts Class C Richard N. Cooper Maurits C. Boas Professor of International Economics, Harvard 1989 University, Cambridge, Massachusetts Richard L. Taylor President, Taylor Properties, Inc., Boston, Massachusetts 1990 George N. Hatsopoulos Chairman of the Board and President, Thermo Electron 1991 Corporation, Waltham, Massachusetts DISTRICT 2—NEW YORK Class A Chairman of the Board and President, Banco de Ponce, 1989 Alberto M. Paracchini Ponce, Puerto Rico President and Chief Executive Officer, The Flemington National 1990 J. Kirby Fowler Bank and Trust Company, Flemington, New Jersey Chairman of the Board and Chief Executive Officer, Manufacturers 1991 John F. McGillicuddy Hanover Trust Company, New York, New York Class B John A. Georges Chairman and Chief Executive Officer, International Paper, 1989 New York, New York John F. Welch, Jr. Chairman and Chief Executive Officer, GE, Fairfield, Connecticut 1990 Richard L. Gelb Chairman and Chief Executive Officer, Bristol-Myers Company, 1991 New York, New York Class C Presiding Partner, Simpson Thacher and Bartlett, 1989 Cyrus R. Vance New York, New York President, Barnard College, Columbia University, 1990 Ellen V. Futter New York, New York President and Chief Executive Officer, American International 1991 Maurice R. Greenberg Group, Inc., New York, New York -BUFFALO BRANCH Appointed by the Federal Reserve Bank Harry J. Sullivan President, Salamanca Trust Company, Salamanca, New York 1989 Norman W. Sinclair Chairman and Chief Executive Officer, Lockport Savings Bank, 1990 Lockport, New York Richard H. Popp Operating Partner, Southview Farm, Castile, New York 1991 Robert G. Wilmers Chairman and Chief Executive Officer, Manufacturers and Traders 1991 Trust Company, Buffalo, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 409 DISTRICT 2—Continued Term expires BUFFALO BRANCH—Continued Dec~ 31 Appointed by the Board of Governors Matthew Augustine President and Chief Executive Officer, Eltrex Industries, Inc., 1989 Rochester, New York Paul E. McSweeney Executive Vice President, United Food and Commercial Workers, 1990 District Union Local One, AFL-CIO, Amherst, New York Mary Ann Lambertsen Vice President, Human Resources, The Quaker Oats Company, 1991 Fisher-Price Division, East Aurora, New York DISTRICT 3—PHILADELPHIA Class A George A. Butler Chairman and Chief Executive Officer, First Pennsylvania Bank, 1989 N.A., Philadelphia, Pennsylvania Constantinos I. Costalas Chairman, President, and Chief Executive Officer, Glendale National 1990 Bank of New Jersey, Voorhees, New Jersey Gary E. Burl President, Delaware National Bank, Georgetown, Delaware 1991 Class B Carl E. Singley Partner, White, McClelland and Singley, Philadelphia, Pennsylvania 1989 Charles F. Seymour Chairman, Jackson-Cross Company, Philadelphia, Pennsylvania 1990 Nicholas Riso Executive Vice President, AHOLD, U.S.A., 1991 Harrisburg, Pennsylvania Class C Chairman of the Board, Quaker Chemical Corporation, 1989 Peter A. Benoliel Conshohocken, Pennsylvania President, The Pennsylvania Horticultural Society, 1990 Jane G. Pepper Philadelphia, Pennsylvania Chairman, President, and Chief Executive Officer, United Engineers 1991 Gunnar E. Sarsten and Constructors, Inc., Philadelphia, Pennsylvania DISTRICT 4—CLEVELAND Class A Chairman and Chief Executive Officer, Huntington Bancshares 1989 Frank Wobst Incorporated, Columbus, Ohio Chairman and President, First National Bank of Nelsonville, 1990 William H. May Nelsonville, Ohio President, The Park National Bank, Newark, Ohio 1991 William T. McConnell Class B Laban P. Jackson, Jr. Chairman of the Board, Clearcreek Properties, Lexington, Kentucky 1989 Verna K. Gibson President, The Limited Stores, Inc., Columbus, Ohio 1990 Daniel M. Galbreath President, John W. Galbreath and Company, Columbus, Ohio 1991 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

410 Federal Reserve Bulletin • May 1989 DISTRICT 4—Continued Term expires Class C Dec• 31 Charles W. Parry Director and Retired Chairman and Chief Executive Officer, 1989 Aluminum Company of America, Pittsburgh, Pennsylvania Robert D. Storey Partner, Burke, Haber and Berick, Cleveland, Ohio 1990 John R. Miller Former President and Chief Operating Officer, The Standard Oil 1991 Company (Ohio), Cleveland, Ohio —CINCINNATI BRANCH Appointed by the Federal Reserve Bank Robert M. Duncan President, First National Bank of Louisa, Louisa, Kentucky 1989 Jack W. Buchanan President, Sphar and Company, Inc., Winchester, Kentucky 1990 Jerry L. Kirby Chairman of the Board, President, and Chief Executive Officer, 1990 Citizens Federal Savings and Loan Association, Dayton, Ohio Allen L. Davis President and Chief Executive Officer, The Provident Bank, 1991 Cincinnati, Ohio Appointed by the Board of Governors Owen B. Butler Chairman of the Board (Retired), The Procter and Gamble 1989 Company, Cincinnati, Ohio Marvin Rosenberg Partner, Towne Properties, Ltd., Cincinnati, Ohio 1990 Kate Ireland National Chairman, Frontier Nursing Service, Wendover, Kentucky 1991 -PITTSBURGH BRANCH Appointed by the Federal Reserve Bank Thomas G. Dove Chairman of the Executive Committee and Chief Executive Officer, 1989 Wheeling Dollar Bank, Wheeling, West Virginia George A. Davidson, Jr. Chairman and Chief Executive Officer, Consolidated Natural Gas 1990 Company, Pittsburgh, Pennsylvania Stephen C. Hansen President and Chief Executive Officer, Dollar Bank, F.S.B., 1990 Pittsburgh, Pennsylvania E. James Trimarchi President and Chief Executive Officer, First Commonwealth 1991 Financial Corporation, Indiana, Pennsylvania Appointed by the Board of Governors Karl M. von der Hey den Senior Vice President-Finance, and Chief Financial Officer, 1989 H. J. Heinz Company, Pittsburgh, Pennsylvania Milton A. Washington President and Chief Executive Officer, Allegheny Housing 1990 Rehabilitation Corporation, Pittsburgh, Pennsylvania James E. Haas Chairman and Chief Executive Officer, Braishfield Associates, Inc., 1991 New York, New York DISTRICT 5—RICHMOND Class A Chester A. Duke President and Chief Executive Officer, Marion National Bank, 1989 Marion, South Carolina President and Chief Executive Officer, Wachovia Bank and Trust 1990 John F. McNair III Company, N.A. and The Wachovia Corporation, Winston-Salem, North Carolina Chairman and President, M & M Financial Corporation and 1991 C. R. Hill, Jr. Merchants & Miners National Bank, Oak Hill, West Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 411 DISTRICT 5—Continued Term expires Dec. 31 Class B Thomas B. Cookerly President, Broadcast Division, Allbritton Communications, 1989 Washington, D.C. Jack C. Smith Chairman of the Board and Chief Executive Officer, K-VA-T Food 1990 Stores, Inc., Grundy, Virginia Edward H. Covell President, The Covell Company, Easton, Maryland 1991 Class C Leroy T. Canoles, Jr. President, Kaufman & Canoles, Norfolk, Virginia 1989 Hanne Merriman President and Chief Executive Officer, Honeybee, Inc., 1990 New York, New York Anne Marie Whittemore Partner, McGuire, Woods, Battle, and Boothe, Richmond, Virginia 1991 —BALTIMORE BRANCH Appointed by the Federal Reserve Bank Charles W. Hoff III President and Chief Executive Officer, Farmers and Mechanics 1989 National Bank, Frederick, Maryland Raymond V. Haysbert, Sr. President and Chief Executive Officer, Parks Sausage Company, 1990 Baltimore, Maryland H. Grant Hathaway Chairman of the Board, Equitable Bank, N.A., Baltimore, Maryland 1991 Joseph W. Mosmiller Chairman of the Board, Loyola Federal Savings and Loan 1991 Association, Baltimore, Maryland Appointed by the Board of Governors John R. Hardesty, Jr. President, Preston Energy, Inc., Kingwood, West Virginia 1989 Gloria L. Johnson Deputy Director of Administration, The Baltimore Museum of Art, 1990 Baltimore, Maryland Thomas R. Shelton President, Case Foods, Inc., Salisbury, Maryland 1991 —CHARLOTTE BRANCH Appointed by the Federal Reserve Bank William McKay President, First Federal Savings Bank, Hendersonville, 1989 North Carolina James M. Culberson, Jr. Chairman and President, The First National Bank of Randolph 1990 County, Asheboro, North Carolina Crandall C. Bowles President, The Springs Company, Lancaster, South Carolina 1991 James G. Lindley Chairman and Chief Executive Officer, South Carolina National 1991 Corporation, and Chairman, President and Chief Executive Officer, The South Carolina National Bank, Columbia, South Carolina Appointed by the Board of Governors Anne M. Allen Vice President, Allen Construction Company, Greensboro, 1989 North Carolina William E. Masters President, Perception, Inc., Easley, South Carolina 1990 Harold D. Kingsmore President and Chief Operating Officer, Graniteville Company, 1991 Graniteville, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

412 Federal Reserve Bulletin • May 1989 DISTRICT 6—ATLANTA Term expires Class A Dec. 31 Mary W. Walker Vice Chairman, The National Bank of Walton County, 1989 Monroe, Georgia E.B. Robinson, Jr. Chairman and Chief Executive Officer, Deposit Guaranty National 1990 Bank and Deposit Guaranty Corporation, Jackson, Mississippi Virgil H. Moore, Jr. Chairman and Chief Executive Officer, First Farmers and Merchants 1991 National Bank, Columbia, Tennessee Class B President and Chief Executive Officer, American Cast Iron Pipe 1989 Paul W. Green Company, Birmingham, Alabama President and Chief Executive Officer, Edison Chouest Offshore, 1990 Gary J. Chouest Inc., Galliano, Louisiana Co-Owner, Gemini Springs Farm, DeBary, Florida 1991 Saundra H. Gray Class C Bradley Currey, Jr. President, Rock-Tenn Company, Norcross, Georgia 1989 Edwin A. Huston Senior Executive Vice President-Finance, Ryder System, Inc., 1990 Miami, Florida Larry L. Prince President and Chief Operating Officer, Genuine Parts Company, 1991 Atlanta, Georgia -BIRMINGHAM BRANCH Appointed by the Federal Reserve Bank John H. Newman, Jr. President and Chief Executive Officer, First National Bank of 1989 Scottsboro, Scottsboro, Alabama Harry B. Brock, Jr. Chairman and Chief Executive Officer, Central Bank of the South, 1990 Birmingham, Alabama Shelton E. Allred Chairman, President, and Chief Executive Officer, Frit Industries, 1991 Inc., Ozark, Alabama William F. Childress President, First American Federal Savings and Loan Association, 1991 Huntsville, Alabama Appointed by the Board of Governors Nelda P. Stephenson President, Nelda Stephenson Chevrolet, Inc., Florence, Alabama 1989 A.G. Trammell President, Alabama Labor Council, AFI^CIO, 1990 Birmingham, Alabama Roy D. Terry President and Chief Executive Officer, Terry Manufacturing 1991 Company, Inc., Roanoke, Alabama —JACKSONVILLE BRANCH Appointed by the Federal Reserve Bank A. Bronson Thayer Chairman and Chief Executive Officer, First Florida Banks, Inc., 1989 Tampa, Florida Charles K. Cross, Sr. Chairman and President, Barnett Bank of Central Florida, N.A., 1990 Orlando, Florida Perry M. Dawson President and Chief Executive Officer, Suncoast Schools Federal 1991 Credit Union, Tampa, Florida Samuel H. Vickers Chairman, President, and Chief Executive Officer, Design 1991 Containers, Inc., Jacksonville, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 413 DISTRICT 6—Continued Term expires JACKSONVILLE BRANCH—Continued Dec. 31 Appointed by the Board of Governors Lana Jane Lewis-Brent Vice Chairman, President, and Chief Executive Officer, Sunshine Jr. 1989 Stores, Inc., Panama City, Florida Winnie F. Taylor Professor of Law, University of Florida, Gainesville, Florida 1990 Hugh M. Brown President and Chief Executive Officer, BAMSI, Inc., Titusville, Florida 1991 —MIAMI BRANCH Appointed by the Federal Reserve Bank James H. Robinson President, Sun Bank/South Florida, N.A., Fort Lauderdale, Florida 1989 Robert M. Taylor Chairman and Chief Executive Officer, The Mariner Group, Inc., 1990 Fort Myers, Florida Frederick A. Teed President and Chief Executive Officer, Community Savings, F.A., 1990 Riviera Beach, Florida Roberto G. Blanco Vice Chairman and Chief Financial Officer, Republic National Bank of Miami, Miami, Florida 1991 Appointed by the Board of Governors Jose L. Saumat Chairman, Kaufman and Roberts, Inc., Miami, Florida 1989 Robert D. Apelgren President, Apelgren Corporation, Pahokee, Florida 1990 Dorothy C. Weaver Vice President, Intercap Investments, Inc., Miami, Florida 1991 -NASHVILLE BRANCH Appointed by the Federal Reserve Bank James A. Rainey Chairman, Sovran Financial Corporation/Central South, 1989 Nashville, Tennessee Lawrence A. Roseberry Chairman, First National Bank & Trust Company, and Chairman 1990 and Chief Executive Officer, First Franklin Bancshares, Inc., Athens, Tennessee William Baxter Lee III Chairman and President, Southeast Services Corporation, 1991 Knoxville, Tennessee Edwin W. Moats, Jr. Chairman and Chief Executive Officer, Metropolitan Federal Savings 1991 and Loan Association, Nashville, Tennessee Appointed by the Board of Governors Patsy R. Williams Partner, Rhyne Lumber Company, Newport, Tennessee 1989 Victoria B. Jackson President and Chief Executive Officer, Diesel Sales and Service, 1990 Inc. and Prodiesel, Inc., Nashville, Tennessee Shirley A. Zeitlin President, Shirley Zeitlin and Co., Realtors, Nashville, Tennessee 1991 —NEW ORLEANS BRANCH Appointed by the Federal Reserve Bank Robert S. Gaddis President and Chief Executive Officer, Trustmark National Bank, 1989 Laurel, Mississippi Ronald M. Boudreaux President and Chief Executive Officer, First National Bank of St. 1990 Landry Parish, Opelousas, Louisiana A.F. Delchamps, Jr. Chairman, President, and Chief Executive Officer, Delchamps, Inc., 1991 Mobile, Alabama Stanley S. Scott President, Crescent Distributing Company, Harahan, Louisiana 1991 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

414 Federal Reserve Bulletin • May 1989 DISTRICT 6—Continued Term expires Appointed by the Board of Governors Dec' James A. Hefner President, Jackson State University, Jackson, Mississippi 1989 Caroline G. Theus President, Ingle wood Land and Development Company, 1990 Alexandria, Louisiana Andre M. Rubenstein Chairman, President, and Chief Executive Officer, Rubenstein 1991 Brothers, Inc., New Orleans, Louisiana DISTRICT 7—CHICAGO Class A B.F. Backlund Chairman and Chief Executive Officer, Bartonville Bank, 1989 Bartonville, Illinois Barry F. Sullivan Chairman of the Board, First Chicago Corporation, Chicago, Illinois 1990 John W. Gabbert President and Chief Executive Officer, First of America 1991 Bank-LaPorte, N.A., LaPorte, Indiana Class B Paul J. Schierl Chairman of the Board and Chief Executive Officer, Fort Howard 1989 Corporation, Green Bay, Wisconsin Edward D. Powers President, Fire Brick Engineers, Milwaukee, Wisconsin 1990 Max J. Nay lor President, Naylor Farms, Inc., Jefferson, Iowa 1991 Class C Chairman and Chief Executive Officer, USG Corporation, 1989 Robert J. Day Chicago, Illinois Dean, College of Business Administration, University of Illinois at 1990 Marcus Alexis Chicago, Chicago, Illinois Chairman of the Board and Chief Executive Officer, Wisconsin 1991 Charles S. McNeer Energy Corporation, Milwaukee, Wisconsin —DETROIT BRANCH Appointed by the Federal Reserve Bank Ronald D. Story Chairman and President, The Ionia County National Bank of Ionia, 1989 Ionia, Michigan James A. Aliber Chairman of the Board and Chief Executive Officer, First Federal of 1990 Michigan, Detroit, Michigan Frederik G.H. Meijer Chairman of the Board, Meijer, Incorporated, 1990 Grand Rapids, Michigan Robert J. Mylod Chairman, President, and Chief Executive Officer, Michigan 1991 National Corporation, Farmington Hills, Michigan Appointed by the Board of Governors Richard T. Lindgren Birmingham, Michigan 1989 Beverly Beltaire President, P R Associates, Inc., Detroit, Michigan 1990 Phyllis E. Peters Director, Professional Standards Review, Touche Ross and 1991 Company, Detroit, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 415 DISTRICT 8—ST. LOUIS Term expires Class A Dec• 31 David W. Kemper II Chairman and Chief Executive Officer, Commerce Bank of St. Louis, 1989 N.A., Clayton, Missouri, and President and Chief Executive Officer, Commerce Bancshares, Inc., Kansas City, Missouri H.L. Hembree III Chairman of the Executive Committee, Merchants National Bank, 1990 Fort Smith, Arkansas Henry G. River President and Chief Executive Officer, First National Bank of 1991 Pinckneyville, Pinckneyville, Illinois Class B Frank M. Mitchener, Jr. President, Mitchener Farms, Inc., Sumner, Mississippi 1989 Roger W. Schipke Senior Vice President, GE Appliances, General Electric Company, 1990 Louisville, Kentucky Thomas F. McLarty III Chairman and Chief Executive Officer, Arkla, Inc., Little Rock, Arkansas 1991 Class C H. Edwin Trusheim Chairman and Chief Executive Officer, General American Life 1989 Insurance Company, St. Louis, Missouri Janet McAfee Weakley President, Janet McAfee, Inc., Clayton, Missouri 1990 Robert L. Virgil, Jr. Dean, John M. Olin School of Business, Washington University in 1991 St. Louis, St. Louis, Missouri —LITTLE ROCK BRANCH Appointed by the Federal Reserve Bank Patricia M. Townsend President, Townsend Company, Stuttgart, Arkansas 1989 David Armbruster President, First America Federal Savings Bank, Fort Smith, Arkansas 1990 W. Wayne Hartsfield President and Chief Executive Officer, First National Bank, 1990 Searcy, Arkansas Barnett Grace President and Chief Executive Officer, First Commercial Bank, 1991 N.A., Little Rock, Arkansas Appointed by the Board of Governors L. Dickson Flake President, Barnes, Quinn, Flake & Anderson, Inc., 1989 Little Rock, Arkansas William E. Love President, Sound-Craft Systems, Inc., Morrilton, Arkansas 1990 James R. Rodgers Airport Manager, Little Rock Regional Airport, Little Rock, Arkansas 1991 —LOUISVILLE BRANCH Appointed by the Federal Reserve Bank Morton Boyd President, First Kentucky National Corporation, Louisville, Kentucky 1989 Irving W. Bailey II Chairman, President, and Chief Executive Officer, Capital Holding 1990 Corporation, Louisville, Kentucky Wayne G. Overall, Jr. President, First Federal Savings Bank, Elizabethtown, Kentucky 1990 Douglas M. Lester Chairman, President, and Chief Executive Officer, Trans Financial 1991 Bancorp, Inc., Bowling Green, Kentucky Appointed by the Board of Governors Thomas A. Alvey Delegate, Owensboro Council of Labor, Owensboro, Kentucky 1989 Raymond M. Burse President, Kentucky State University, Frankfort, Kentucky 1990 Lois H. Gray Chairman of the Board, James N. Gray Construction Company, 1991 Inc., Glasgow, Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

416 Federal Reserve Bulletin • May 1989 DISTRICT 8—Continued Term expires —MEMPHIS BRANCH Dec- 31 Appointed by the Federal Reserve Bank Michael J. Hennessey President, Munro and Company, Inc., Wynne, Arkansas 1989 Thomas M. Garrott President and Chief Operating Officer, National Bank of Commerce 1990 and National Commerce Bancorporation, Memphis, Tennessee Larry A. Watson Chairman of the Board and President, Liberty Federal Savings 1990 Bank, Paris, Tennessee Ray U. Tanner Chairman and Chief Executive Officer, Jackson National Bank and 1991 Volunteer Bancshares, Inc., Jackson, Tennessee Appointed by the Board of Governors Sandra B. Sanderson President and Chief Executive Officer, Sanderson Plumbing 1989 Products, Inc., Columbus, Mississippi Seymour B. Johnson Owner, Kay Planting Company, Indianola, Mississippi 1990 Katherine Hinds Smythe President, Memorial Park, Inc., Memphis, Tennessee 1991 DISTRICT 9—MINNEAPOLIS Class A Charles W. Ekstrum President and Chief Executive Officer, First National Bank, 1989 Philip, South Dakota Joel S. Harris President, Yellowstone Holding Company, Columbus, Montana 1990 James H. Hearon III Chairman of the Board and Chief Executive Officer, National City 1991 Bank, Minneapolis, Minnesota Class B Bruce C. Adams Partner, Triple Adams Farms, Lansford, North Dakota 1989 Earl R. St. John, Jr. President and Owner, St. John Forest Products, Inc., 1990 Spalding, Michigan Duane E. Dingmann President, Trubilt Auto Body, Inc., Eau Claire, Wisconsin 1991 Class C Chairman, President, and Chief Executive Officer, Super Valu 1989 Michael W. Wright Stores, Inc., Minneapolis, Minnesota President and Chief Executive Officer, Pioneer/Norelkote, 1990 Delbert W. Johnson Minneapolis, Minnesota Chairman and Chief Executive Officer, Cray Research Inc., 1991 John A. Rollwagen Minneapolis, Minnesota —HELENA BRANCH Appointed by the Federal Reserve Bank F. Charles Mercord President and Managing Officer, First Federal Savings Bank of 1989 Montana, Kalispell, Montana Noble E. Vosburg President and Chief Executive Officer, Pacific Hide and Fur 1990 Corporation, Great Falls, Montana Robert H. Waller President and Chief Executive Officer, First Interstate Bank of 1990 Billings, N.A., Billings, Montana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 417 DISTRICT 9—Continued Term expires HELENA BRANCH—Continued Dec-31 Appointed by the Board of Governors Warren H. Ross President, Ross 8-7 Ranch, Inc., Chinook, Montana 1989 John F. Gardner President, Montana Resources, Inc., Butte, Montana 1990 DISTRICT 10—KANSAS CITY Class A President and Chief Executive Officer, First National Bank, 1989 Harold L. Gerhart, Jr. Newman Grove, Nebraska Co-Chairman, FirstBank Holding Company of Colorado, 1990 Roger L. Reisher Lake wood, Colorado Chairman of the Board and Chief Executive Officer, First National 1991 Robert L. Hollis Bank and Trust Co., Okmulgee, Oklahoma Class B Richard D. Harrison Chairman and Chief Executive Officer, Fleming Companies, Inc., 1989 Oklahoma City, Oklahoma S. Dean Evans, Sr. Partner, Evans Grain Company, Salina, Kansas 1990 Frank J. Yaklich, Jr. President, CF & I Steel Corporation, Pueblo, Colorado 1991 Class C President and Chief Executive Officer, Marion Laboratories, Inc., 1989 Fred W. Lyons, Jr. Kansas City, Missouri President and General Manager, Thomas E. Rodriguez & 1990 Thomas E. Rodriguez Associates, P.C., Aurora, Colorado Chairman and President, Puritan-Bennett Corporation, 1991 Burton A. Dole, Jr. Overland Park, Kansas —DENVER BRANCH Appointed by the Federal Reserve Bank Henry A. True III Partner, True Companies, Casper, Wyoming 1989 Junius F. Baxter Chairman of the Board and Chief Executive Officer, Bank Western, 1990 a Federal Savings Bank, Denver, Colorado Norman R. Corzine President and Chief Executive Officer, First National Bank in 1991 Albuquerque and First National Financial Corporation, Albuquerque, New Mexico W. Richard Scarlett III Chairman and Chief Executive Officer, Jackson State Bank, 1991 Jackson Hole, Wyoming Appointed by the Board of Governors James C. Wilson Management Consultant, Longmont, Colorado 1989 Gilbert Sanchez President, New Mexico Highlands University, 1990 Las Vegas, New Mexico Barbara B. Grogan President, Western Industrial Contractors, Inc., Denver, Colorado 1991 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

418 Federal Reserve Bulletin • May 1989 DISTRICT 10—Continued Term expires Dec. 31 —OKLAHOMA CITY BRANCH Appointed by the Federal Reserve Bank William H. Crawford Chairman and Chief Executive Officer, First National Bank and 1989 Trust Company, Frederick, Oklahoma W. Dean Hidy Chairman of the Board, Triad Bank, N.A., Tulsa, Oklahoma 1990 John Wm. Laisle President, MidFirst Savings and Loan Association, 1990 Oklahoma City, Oklahoma Appointed by the Board of Governors Patience S. Latting Oklahoma City, Oklahoma 1989 John F. Snodgrass President and Trustee, The Samuel Roberts Noble Foundation, Inc., 1990 Ardmore, Oklahoma —OMAHA BRANCH Appointed by the Federal Reserve Bank John T. Selzer President, Scottsbluff National Bank and Trust Company, 1989 Scottsbluff, Nebraska Charles H. Thorne Chairman of the Board, First Federal Savings and Loan Association 1989 of Lincoln, Lincoln, Nebraska John R. Cochran President and Chief Executive Officer, Norwest Bank Nebraska, 1990 N.A., Omaha, Nebraska Appointed by the Board of Governors Kenneth L. Morrison President, Morrison Enterprises, Hastings, Nebraska 1989 Herman Cain President and Chief Executive Officer, Godfather's Pizza, Inc., 1990 Omaha, Nebraska DISTRICT 11—DALLAS Class A Robert G. Greer Chairman of the Board, Tanglewood Bank, N.A., Houston, Texas 1989 T. C. Frost Chairman of the Board, The Frost National Bank, 1990 San Antonio, Texas Charles T. Doyle Chairman and Chief Executive Officer, Gulf National Bank, 1991 Texas City, Texas Class B Gary E. Wood President, Texas Research League, Austin, Texas 1989 Robert L. Pfluger Rancher, San Angelo, Texas 1990 Charles Dickie Chairman of the Board and Chief Executive Officer, 1991 Williamson Williamson-Dickie Manufacturing Company, Fort Worth, Texas Class C Chairman and Chief Executive Officer, Linbeck Construction 1989 Leo E. Linbeck, Jr. Corporation, Houston, Texas Chairman of the Board and Chief Executive Officer, 1990 Bobby R. Inman Westmark Systems Inc., Austin, Texas President, Cityplace Development Corporation, Dallas, Texas 1991 Hugh G. Robinson Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 419 DISTRICT 11—Continued Term —EL PASO BRANCH oTc.Tl Appointed by the Federal Reserve Bank David L. Stone President, The Portales National Bank, Portales, New Mexico 1989 Henry B. Ellis President and Chief Credit Officer, MBank El Paso, N.A., 1990 El Paso, Texas Ethel Ortega Olson Owner, NAMBE of Ruidoso, Ruidoso, New Mexico 1990 Humberto F. Sambrano President, SamCorp General Contractors, El Paso, Texas 1991 Appointed by the Board of Governors W. Thomas Beard III President, Leoncita Cattle Company, Alpine, Texas 1989 Diana S. Natalicio President, The University of Texas at El Paso, El Paso, Texas 1990 Donald G. Stevens Owner, Stevens Oil Company, Roswell, New Mexico 1991 —HOUSTON BRANCH Appointed by the Federal Reserve Bank Jenard M. Gross President, Gross Builders, Inc., Houston, Texas 1989 Clive Runnells President and Director, Runnells Cattle Company, Bay City, Texas 1990 David E. Sheffield Vice Chairman, Texas National Bank of Victoria, Victoria, Texas 1990 Jeff Austin, Jr. President, First National Bank of Jacksonville, Jacksonville, Texas 1991 Appointed by the Board of Governors Walter M. Mischer, Jr. President and Chief Operating Officer, The Mischer Corporation, 1989 Houston, Texas Andrew L. Jefferson, Jr. Attorney, Jefferson and Mims, Houston, Texas 1990 Gilbert D. Gaedcke, Jr. Chairman of the Board and Chief Executive Officer, Gaedcke 1991 Equipment Company, Houston, Texas —SAN ANTONIO BRANCH Appointed by the Federal Reserve Bank C. Ivan Wilson Chairman of the Board and Chief Executive Officer, First City Bank 1989 of Corpus Christi, Corpus Christi, Texas Javier Garza Executive Vice President, The Laredo National Bank, Laredo, Texas 1990 Sam R. Sparks President, Sam R. Sparks, Inc., Progreso, Texas 1990 Jane Flato Smith Investor and Rancher, San Antonio, Texas 1991 Appointed by the Board of Governors Lawrence E. Jenkins Vice President (Retired), Austin Division, Lockheed Missiles and 1989 Space Co., Inc., Austin, Texas Vacancy 1990 Roger R. Hemminghaus Chairman and Chief Executive Officer, Diamond Shamrock 1991 R&M, Inc., San Antonio, Texas DISTRICT 12—SAN FRANCISCO Class A Rayburn S. Dezember Chairman of the Board and Chief Executive Officer, Central Pacific 1989 Corporation, and Chairman, American National Bank, Bakersfield, California R. Blair Hawkes President and Chief Executive Officer, Ireland Bank, Malad City, Idaho 1990 William E.B. Siart Chairman of the Board, President, and Chief Executive Officer, 1991 First Interstate Bank of California, Los Angeles, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

420 Federal Reserve Bulletin • May 1989 DISTRICT 12—Continued Term expires Class B Dec. 31 John C. Hampton President and Chief Executive Officer, Willamina Lumber Company, 1989 Portland, Oregon John N. Nordstrom Co-Chairman of the Board, Nordstrom, Inc., Seattle, Washington 1990 William L. Tooley Chairman, Tooley & Company, Investment Builders, 1991 Los Angeles, California Class C Chairman of the Board and Chief Executive Officer, The Times 1989 Robert F. Erburu Mirror Company, Los Angeles, California Executive Vice President and Director, Bechtel Group, Inc., 1990 Cordell W. Hull San Francisco, California President and Chief Executive Officer, Chambers Communications 1991 Carolyn S. Chambers Corp., Eugene, Oregon -LOS ANGELES BRANCH Appointed by the Federal Reserve Bank Fred D. Jensen Chairman of the Board, President, and Chief Executive Officer, 1989 National Bank of Long Beach, Long Beach, California Ross M. Blakely Chairman of the Executive Committee of the Board, Coast Savings 1990 and Loan, Los Angeles, California Ignacio E. Lozano, Jr. Editor-in-Chief, La Opinion, Los Angeles, California 1991 Howard C. McCrady Vice Chairman, Valley National Corporation, Phoenix, Arizona 1991 Appointed by the Board of Governors Yvonne Brathwaite Burke Partner, Jones, Day, Reavis and Pogue, Los Angeles, California 1989 Richard C. Seaver Chairman, Hydril Company, Los Angeles, California 1990 Harry W. Todd Chairman and Chief Executive Officer, Rohr Industries, Inc., 1991 Chula Vista, California -PORTLAND BRANCH Appointed by the Federal Reserve Bank Wayne E. Phillips, Jr. Vice President, Phillips Ranch, Inc., Baker, Oregon 1989 Stephen G. Kimball President and Chief Executive Officer, Baker Boyer Bancorp, 1990 Walla Walla, Washington G. Dale Weight Chairman of the Board and Chief Executive Officer, Benjamin 1990 Franklin Savings and Loan Association, Portland, Oregon Stuart H. Compton Chairman and Chief Executive Officer, Pioneer Trust Bank, N. A. 1991 Salem, Oregon Appointed by the Board of Governors Paul E. Bragdon Assistant to the Governor for Education, Office of the Governor, 1989 Salem, Oregon Sandra A. Suran Small Business Advocate, State of Oregon, Salem, Oregon 1990 William A. Hilliard Editor, The Oregonian, Portland, Oregon 1991 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 421 DISTRICT 12—Continued Term expires Dec. 31 —SALT LAKE CITY BRANCH Appointed by the Federal Reserve Bank Ronald S. Hanson President, Zions First National Bank, Salt Lake City, Utah 1989 Curtis H. Eaton President and Vice Chairman of the Board, Twin Falls Bank and 1990 Trust Company, Twin Falls, Idaho Virginia P. Kelson Associate, Ralston and Associates, Salt Lake City, Utah 1990 Gerald R. Christensen President and Chairman, First Federal Savings and Loan 1991 Association, Salt Lake City, Utah Appointed by the Board of Governors Robert N. Pratt President and Chief Operating Officer, Bonneville Pacific 1989 Corporation, Salt Lake City, Utah Don M. Wheeler President, Wheeler Machinery Company, Salt Lake City, Utah 1990 D.N. Rose President and Chief Executive Officer, Mountain Fuel Supply 1991 Company, Salt Lake City, Utah —SEATTLE BRANCH Appointed by the Federal Reserve Bank H.H. Larison President, Columbia Paint and Coatings, Spokane, Washington 1989 B.R. Beeksma Chairman of the Board, InterWest Savings Bank, 1990 Oak Harbor, Washington William S. Randall Chairman, President, and Chief Executive Officer, First Interstate 1990 Bank of Washington, N.A., Seattle, Washington Robert P. Gray President, National Bank of Alaska, Anchorage, Alaska 1991 Appointed by the Board of Governors Carol A. Nygren Partner, Laventhol and Horwath, Seattle, Washington 1989 Irma Goertzen Hospital Administrator, University Hospital, University of 1990 Washington, Seattle, Washington Bruce R. Kennedy Chairman and Chief Executive Officer, Alaska Air Group, Inc., 1991 Seattle, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics NOTE. The following tables may have some 1.43, 1.45,1.46, 1.47,1.48, 1.50, 1.53, 1.54, 1.55, discontinuities in historical data for some series 1.56, 2.11, 2.14, 2.15, 2.16, 2.17, 3.14, and 3.21. beginning with the March 1989 issue: 1.10, 1.17, For a more detailed explanation of the changes, 1.20, 1.21, 1.22, 1.23, 1.24, 1.25,1.26, 1.28, 1.30, see the announcement on pages 288-89 of the 1.31,1.32,1.35,1.36,1.37,1.39,1.40,1.41,1.42, April 1989 BULLETIN. CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics A19 All reporting banks A20 Banks in New York City A21 Branches and agencies of foreign banks MONEY STOCK AND BANK CREDIT A22 Gross demand deposits—individuals, A3 Reserves, money stock, liquid assets, and debt partnerships, and corporations measures A4 Reserves of depository institutions, Reserve Bank credit FINANCIAL MARKETS A5 Reserves and borrowings—Depository A23 Commercial paper and bankers dollar institutions acceptances outstanding A6 Selected borrowings in immediately available A23 Prime rate charged by banks on short-term funds—Large member banks business loans A24 Interest rates—money and capital markets A25 Stock market—Selected statistics POLICY INSTRUMENTS A26 Selected financial institutions—Selected assets A7 Federal Reserve Bank interest rates and liabilities A8 Reserve requirements of depository institutions A9 Federal Reserve open market transactions FEDERAL FINANCE A28 Federal fiscal and financing operations FEDERAL RESERVE BANKS A29 U.S. budget receipts and outlays A10 Condition and Federal Reserve note statements A30 Federal debt subject to statutory limitation All Maturity distribution of loan and security A30 Gross public debt of U.S. Treasury—Types holdings and ownership A31 U.S. government securities dealers— Transactions MONETARY AND CREDIT AGGREGATES A32 U.S. government securities dealers—Positions A12 Aggregate reserves of depository institutions and financing and monetary base A3 3 Federal and federally sponsored credit A13 Money stock, liquid assets, and debt measures agencies—Debt outstanding A15 Bank debits and deposit turnover A16 Loans and securities—All commercial banks SECURITIES MARKETS AND CORPORATE FINANCE COMMERCIAL BANKING INSTITUTIONS A34 New security issues—State and local A17 Major nondeposit funds governments and corporations A18 Assets and liabilities, last-Wednesday-of-month A35 Open-end investment companies—Net sales series and asset position Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • May 1989 A35 Corporate profits and their distribution A57 Foreign branches of U.S. banks—Balance A35 Total nonfarm business expenditures on new sheet data plant and equipment A59 Selected U.S. liabilities to foreign official A36 Domestic finance companies—Assets and institutions liabilities and business credit REAL ESTATE REPORTED BY BANKS IN THE UNITED STATES A37 Mortgage markets A59 Liabilities to and claims on foreigners A38 Mortgage debt outstanding A60 Liabilities to foreigners A62 Banks' own claims on foreigners A63 Banks' own and domestic customers' claims on foreigners CONSUMER INSTALLMENT CREDIT A63 Banks' own claims on unaffiliated foreigners A39 Total outstanding and net change A64 Claims on foreign countries—Combined A40 Terms domestic offices and foreign branches FLOW OF FUNDS REPORTED BY NONBANKING BUSINESS A41 Funds raised in U.S. credit markets ENTERPRISES IN THE UNITED STATES A43 Direct and indirect sources of funds to credit markets A65 Liabilities to unaffiliated foreigners A44 Summary of credit market debt outstanding A66 Claims on unaffiliated foreigners A45 Summary of credit market claims, by holder Domestic Nonfinancial Statistics SECURITIES HOLDINGS AND TRANSACTIONS A67 Foreign transactions in securities SELECTED MEASURES A68 Marketable U.S. Treasury bonds and notes— A46 Nonfinancial business activity—Selected Foreign transactions measures A47 Labor force, employment, and unemployment A48 Output, capacity, and capacity utilization INTEREST AND EXCHANGE RATES A49 Industrial production—Indexes and gross value A51 Housing and construction A69 Discount rates of foreign central banks A52 Consumer and producer prices A69 Foreign short-term interest rates A53 Gross national product and income A70 Foreign exchange rates A54 Personal income and saving International Statistics A71 Guide to Tabular Presentation, Statistical Releases, and Special Tables SUMMARY STATISTICS A55 U.S. international transactions—Summary A56 U.S. foreign trade SPECIAL TABLE A56 U.S. reserve assets A56 Foreign official assets held at Federal Reserve All Assets and liabilities of U.S. branches and Banks agencies of foreign banks, September 1988 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 Annual rates of change, seasonally adjusted in percent1 1988 1988 1989 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Q1 Q2 Q3' Q4' Oct. Nov.' Dec.' Jan.' Feb. Reserves of depository institutions2 1 Total 3.5 5.8 4.3 -.7 -.8 2.0 -1.5 -8.5 -1.2 2 Required 2.9 7.2 4.0 -1.4 -2.6 .8 .1 -10.8 -1.4 3 Nonborrowed 1.5 -6.5 2.5 5.3 10.3 -9.5 22.1 -7.7 2.4 4 Monetary base3 8.1 7.4 6.7 5.0 5.7 3.9 5.0 4.0 4.4 Concepts of money, liquid assets, and debt4 5 Ml 3.2 6.4 5.2 2.3 2.7 1.8 5.5 -6.1 1.7 6 M2 6.1 6.9 3.8 3.6 2.8 6.7 4.0 -1.3 1.7 1 M3 6.7r 7.2 5.8 5.1 5.3' 6.4 5.4 1.6 3.1 8 L 6.6 8.5 7.4 6.1 5.8' 8.0 10.3 .6 n.a. 9 Debt 8.<r 8.6' 8.4 8.8 8.1' 9.9 7.7 6.9 n.a. Nontransaction components 1100 In M2 7.1' 7.1 3.3 4.1 2.9 8.4 3.5 .3 1.7 11 In M3 only6 9.1 8.3 13.3 10.5 14.2' 5.1 10.4 12.3 8.0 Time and savings deposits Commercial banks 1122 Savings 7.1 10.4 7.9 4.0 -2.2 18.9 -1.9 -10.2 -2.9 13 Small-denomination time 13.4 12.9 11.6 18.0 20.6 15.3 18.3 21.8 26.9 14 Large-denomination time • 6.3 9.1 18.2 12.9 14.3 6.6 12.1 18.9 24.2 Thrift institutions 15 Savings -1.3 2.6 2.1 -2.5 -4.7 -1.7 -1.2 -9.2 -13.6 16 Small-denomination time 20.5 12.5 5.4 6.6 7.7 5.4 1.7 5.4 5.1 17 Large-denomination time9 13.0 9.2 3.9 7.9 7.7 2.7 -2.4 5.9 -2.3 Debt components4 18 Federal 8.0 8.3' 7.1 8.0 5.3' 7.1 7.5 4.2 19 Nonfederal 8.0' 8.7' 8.8 9.0 9.0' 10.7 7.8 7.7 20 Total loans and securities at commercial banks 5.6' 9.8' 7.5 5.7 9.8' 4.7 3.7 2.4 14.4 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 Federi 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 Financial Statistics • May 1989 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending FFFaaaccctttooorrrsss 1988 1989 1989 Dec. Jan. Feb. Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 263,823 264,482 254,480 268,011 261,033 261,033 262,127 253,083 254,680 253,396 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 234,567 235,128 225,591 236,983 233,808 233,420 234,149 223,424 225,367 225,143 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 233,606 233,851 225,591 234,526 233,808 232,989 234,149 223,424 225,367 225,143 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 961 1,277 0 2,457 0 431 0 0 0 0 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 7,565 7,702 6,792 8,736 6,966 7,084 6,819 6,819 6,785 6,779 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 7,041 6,923 6,792 6,966 6,966 6,903 6,819 6,819 6,785 6,779 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 524 779 0 1,770 0 181 0 0 0 0 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 1,749 1,570 1,487 1,816 1,879 1,174 956 1,588 1,220 1,733 1111100000 FFFFFllllloooooaaaaattttt 1,436 877 1,254 1,816 933 68 308 1,569 1,155 1,215 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 18,507 19,205 19,357 18,659 19,225 19,286 19,895 19,683 20,153 18,526 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,061 11,057 11,060 11,057 11,057 11,056 11,057 11,057 11,061 11,061 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 18,769 18,831 18,890 18,815 18,829 18,843 18,857 18,871 18,885 18,899 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 244,540 243,398 240,493 245,887 243,652 241,475 239,570 240,056 240,656 240,785 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 399 406 428 400 408 409 413 420 429 432 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 5,364 8,303 5,713 6,242 4,368 9,360 13,304 6,079 5,001 5,075 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 248 257 264 251 247 281 222 226 256 246 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 2,014 1,999 1,967 2,183 1,884 1,950 1,989 1,983 1,846 2,158 2222200000 OOOOOttttthhhhheeeeerrrrr 369 402 349 332 330 381 510 324 319 340 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 8,040 7,913 7,744 7,975 7,847 8,025 7,835 7,519 7,710 7,869 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 37,697 36,710 32,489 39,632 38,981 34,068 33,215 31,422 33,425 31,469 End-of-month figures Wednesday figures 1988 1989 1989 Dec. Jan. Feb. Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 269,748 261,056 258,429 269,463 262,485 266,298 261,057 251,236 254,421 254,443 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 238,422 232,933 229,499 237,875 233,131 235,988 232,874 219,033 226,274 224,659 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 233,662 232,933 229,499 234,916 233,131 232,974 232,874 219,033 226,274 224,659 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 4,760 0 0 2,959 0 3,014 0 0 0 0 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 9,067 6,819 6,779 8,637 6,966 8,087 6,819 6,819 6,779 6,779 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 6,966 6,819 6,779 6,966 6,966 6,819 6,819 6,819 6,779 6,779 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 2,101 0 0 1,671 0 1,268 0 0 0 0 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 2,170 863 1,602 1,814 1,314 2,018 903 4,539 1,409 2,007 3333322222 FFFFFllllloooooaaaaattttt 1,286 798 1,296 1,955 1,914 569 575 762 1,163 2,203 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 18,803 19,643 19,253 19,182 19,160 19,636 19,886 20,083 18,796 18,795 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,060 11,056 11,061 11,057 11,056 11,056 11,056 11,058 11,061 11,061 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 18,799 18,855 18,911 18,827 18,841 18,855 18,869 18,883 18,897 18,911 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 247,649 239,581 240,733 244,862 243,191 240,425 239,624 240,627 240,847 241,007 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 395 412 432 408 408 412 417 421 432 432 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 8,656 11,766 6,298 4,806 3,650 13,769 8,984 5,586 4,825 6,296 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 347 279 326 177 245 204 240 184 308 307 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,605 1,589 1,595 1,606 1,591 1,594 1,589 1,588 1,602 1,603 4444422222 OOOOOttttthhhhheeeeerrrrr 548 390 517 578 365 749 376 311 396 324 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 7,683 7,746 8,127 7,828 7,634 7,961 7,416 7,497 7,452 7,704 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 37,742 34,221 35,390 44,101 40,316 36,113 37,354 29,981 33,534 31,760 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 1986 1987 1988 1988 1989 Dec. Dec. Dec. Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Reserve balances with Reserve Banks2 37,360 37,673 37,830 36,911 37,213 36,421 36,997 37,830 36,475 32,834 2 Total vault cash 24,077' 26,185' 27,197 26,895 26,727' 27,198r 26,745r 27,197 28,376 29,776 3 Vault* 22,199 24,449 25,909 25,054 24,940 25,494 25,410 25,909 26,993 27,859 4 Surplus 1,878' 1,736' 1,288 1,841 1,787' 1,705r 1,335 1,288' 1,383 1,917 5 Total reserves 59,560 62,123 63,739 61,965 62,153 61,915 62,407 63,739' 63,468 60,693 6 Required reserves 58,191 61,094 62,699 61,012 61,181 60,853 61,287 62,699' 62,323 59,539 7 Excess reserve balances at Reserve Banks 1,369 1,029 1,040 953 972 1,062 1,119 1,040 1,145 1,154 8 Total borrowings at Reserve Banks 827 777 1,716 3,241 2,839 2,299 2,861 1,716 1,662 1,487 9 Seasonal borrowings at Reserve Banks 38 93 130 423 421 332 186 130 76 97 10 Extended credit at Reserve Banks 303 483 1,244 2,653 2,059 1,781 2,322 1,244 1,046 1,050 Biweekly averages of daily figures for weeks ending 1988 1989 Nov. 16 Nov. 30 Dec. 14 Dec. 28 Jan.11 Jan. 25 Feb. 8 Feb. 22 Mar. 8 Mar. 22 11 Reserve balances with Reserve Banks2 38,143 35,981 38,363 37,106 38,724 36,514 32,260 32,455 34,485 34,720 12 Total vault cash3 26,219' 27,259 26,316 27,927 27,904 27,414 31,488 29,739 27,581 26,738 13 Vault . 25,022 25,814 25,128 26,525 26,679 26,243 29,318 27,838 25,962 25,335 14 Surplus5.... 1,198' 1,446 1,188 1,403 1,225 1,171 2,170 1,901 1,620 1,403 15 Total reserves6 63,165 61,795 63,491 63,631 65,403 62,757 61,578 60,293 60,446 60,055 16 Required reserves 61,562 61,160 62,515 62,550 64,256 61,786 60,035 59,278 59,490 59,304 17 Excess reserve balances at Reserve Banks 1,603 635 976 1,081 1,147 972 1,543 1,016 957 751 18 Total borrowings at Reserve Banks 3,233 2,562 2,014 1,347 2,048 1,527 1,270 1,477 1,800 1,586 19 Seasonal borrowings at Reserve Banks 180 178 131 137 94 61 78 99 116 136 20 Extended credit at Reserve Banks8 2,838 1,863 1,529 968 1,208 1,028 792 1,111 1,250 1,164 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 Domestic Financial Statistics • May 1989 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1 Averages of daily figures, in millions of dollars 1988 week ending Monday MMaattuurriittyy aanndd ssoouurrccee May 9 May 16 May 23 May 30 June 6 June 13 June 20 June 27 July 4 Federal funds purchased, repurchase agreements, and other selected borrowing in immediately available funds From commercial banks in the United States 1 For one day or under continuing contract 66,700 63,447 63,088 64,248 71,726 70,428 70,096 66,210 75,686 2 For all other maturities 10,857 11,208 9,894 10,388 1100,,881166 11,780 1111,,000088 1100,,998811 1100,,110011 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 32,399 33,207 34,265 32,706 33,220 34,264 31,159 29,594 29,279 4 For all other maturities 8,146 8,205 7,486 7,534 7,130 7,740 7,176 6,487 6,326 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 15,256 16,394 16,467 17,941 17,697 17,216 15,705 14,676 14,746 6 For all other maturities 17,652 17,513 15,092 15,342 14,767 15,953 15,692 15,319 13,027 All other customers 7 For one day or under continuing contract 24,271 25,333 25,536 25,573 25,070 25,553 25,348 25,741 24,921 8 For all other maturities 9,238 9,444 9,348 10,648 10,049 10,136 10,794 10,766 9,658 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 34,480 32,915 31,181 33,269 37,361 34,293 36,889 33,377 38,379 10 To all other specified customers 14,540 13,607 13,154 13,410 15,880 16,959 16,479 13,030 15,731 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 3/2 O 9 n / 89 Ef d fe a c te ti ve Pre ra v t i e o us 3/2 O 9 n /8 9 Eff d e a c te ti ve Pre ra v t i e o us 3/2 O 9 n / 89 Eff d e a c te ti ve Pre ra v t i e o us Effective date Boston 7 2/24/89 6 Vi 7 2/24/89 6Vi 10.50 3/23/89 10.35 3/9/89 New York 2/24/89 2/24/89 3/23/89 3/9/89 Philadelphia 2/24/89 2/24/89 3/23/89 3/9/89 Cleveland 2/24/89 2/24/89 3/23/89 3/9/89 Richmond 2/24/89 2/24/89 3/23/89 3/9/89 Atlanta 2/24/89 2/24/89 3/23/89 3/9/89 Chicago 2/24/89 2/24/89 3/23/89 3/9/89 St. Louis 2/24/89 2/24/89 3/23/89 3/9/89 Minneapolis 2/24/89 2/24/89 3/23/89 3/9/89 Kansas City 2/24/89 2/24/89 3/23/89 3/9/89 Dallas 2/27/89 2/27/89 3/23/89 3/9/89 San Francisco ... 7 2/24/89 6Vi 7 2/24/89 6V2 10.50 3/23/89 10.35 3/9/89 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o a f n k Effective A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977. 6 6 1980-——JJuullyy 78 . . 10-11 10 1984-——AApprr.. 9 8Vi-9 9 1978—Jan. 9 6-6Vi 6Vi 79 10 10 13 9 9 20 6 Vi 6 Vi Sept. 76 11 11 Nov. 21 8Vi-9 8Vi May 11 6V2-I 1 Nov. 17 . 12 12 26 8Vi m 12 7 7 Dec. 5 12-13 13 Dec. 24 8 8 July 3 1-1 VA 1V4 10 IV* 7V4 1981-——MMaayy 13-14 14 1985-——MMaayy 20 7Vi-8 IVi Aug. 21 73/4 m 8 14 14 24 7Vi 7Vi Sept. 22 8 8 Nov. 7 13-14 13 Oct. 16 8-8Vi> 8VS 6 13 13 1986-—Mar. 7 7-7 Vi 7 20 8 Vi 8Vi Dec. 4 12 12 10 1 7 Nov. 1 8Vi-9Vi m Apr. 21 6Vi-7 6Vi 3 9 Vi m 1982---JJuullyy 70 llVi-12 llVi July 11 6 6 73 1 \Vi 11 Vi AAuugg.. 21 5Vi-6 5Vi 1979—July 20 10 10 Aug. 7 11-1 IVi 11 22 5Vi 5Vi Aug. 17 10-10V5 10H2 3 , , 11 11 20 lOVi lOVi 16 lOVi lOVi 1987---SSeepptt.. 4 5Vi-6 6 Sept. 19 10Vi-ll 11 77 lO-lOVi 10 11 6 6 21 11 11 30 , 10 10 Oct. 8 11-12 12 Oct. 17 9VS-10 9Vi 1988---AAuugg.. 9 6-6 Vi 6 Vi 10 12 12 13 . 9Vi 9Vi 11 6Vi 6Vi Nov. 77 9-9V2 9 1980—Feb. 15 12-13 13 76 9 9 1989--Feb. 24 6Vi-7 7 19 13 13 Dec. 14 8Vi-9 9 27 7 7 May 29 12-13 13 15 8Vi-9 8Vi 30 12 12 17 8 Vi 8Vi In effect March 29, 1989 ... 7 7 June 13 11-12 11 16 11 11 1. Adjustment credit is available on a short-term basis to help depository in no case will the rate charged be less than the basic discount rate plus 50 basis institutions meet temporary needs for funds that cannot be met through reason- points. The flexible rate is reestablished on the first business day of each able alternative sources. After May 19, 1986, the highest rate established for loans two-week reserve maintenance period. At the discretion of the Federal Reserve to depository institutions may be charged on adjustment credit loans of unusual Bank, the time period for which the basic discount rate is applied may be size that result from a major operating problem at the borrower's facility. shortened. Seasonal credit is available to help smaller depository institutions meet regular, 4. For earlier data, see the following publications of the Board of Governors: seasonal needs for funds that cannot be met through special industry lenders and Banking and Monetary Statistics, 1914-1941, and 1941-1970\ Annual Statistical that arise from a combination of expected patterns of movement in their deposits Digest, 1970-1979. and loans. A temporary simplified seasonal program was established on Mar. 8, In 1980 and 1981, the Federal Reserve applied a surcharge to short-term 1985, and the interest rate was a fixed rate Vi percent above the rate on adjustment adjustment credit borrowings by institutions with deposits of $500 million or more credit. The program was reestablished for 1986 and 1987; but was not renewed for that had borrowed in successive weeks or in more than four weeks in a calendar 1988. 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 3. For extended-credit loans outstanding more than 30 days, a flexible rate moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. somewhat above rates on market sources of funds ordinarily will be charged, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Financial Statistics • May 1989 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act Type of deposit, and deposit interval Effective date Net transaction accounts ' $0 million-$41.5 million 12/20/88 More than $41.5 million ... 12/20/88 Nonpersonal time deposits5 By original maturity L 1 e V s l s y t e h a a r n s o lV r t m y o e r a e r s 1v0s/6r/8n3i Eurocurrency liabilities All types 11/13/80 1. Reserve requirements in effect on Dec. 31, 1988. 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. 20, ment each year for the succeeding calendar year by 80 percent of the percentage 1988 for institutions reporting quarterly and Dec. 27, 1988 for institutions increase in the total reservable liabilities of all depository institutions, measured reporting weekly, the amount was increased from $40.5 million to $41.5 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. 20, 1988, the exemption was raised from $3.2 deposits, that are not transaction accounts and in which a beneficial interest is million to $3.4 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 1989 TTyyppee ooff ttrraannssaaccttiioonn 11998866 11998877 11998888 July Aug. Sept. Oct. Nov. Dec. Jan. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 22,604 18,983 8,223 515 0 1,280 375 3,599 1,125 0 2 Gross sales 2,502 6,051 587 0 0 0 0 0 0 154 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 1,000 9,029 2,200 0 0 0 0 0 0 600 Others within 1 year 5 Gross purchases 190 3,659 2,176 0 0 0 0 0 1,084 0 6 Gross sales 0 300 0 0 0 0 0 0 0 0 7 Maturity shift 18,674 21,504 23,854 1,033 3,932 1,368 1,669 5,264 1,750 620 8 Exchange -20,180 -20,388 -24,588 -87 -4,296 -1,646 -916 -2,391 -1,703 -2,703 9 Redemptions 0 70 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 893 10,231 5,485 0 0 0 0 0 1,824 0 11 Gross sales 0 452 800 0 0 0 0 0 0 3 12 Maturity shift -17,058 -17,975 -17,720 -997 -1,821 -1,368 -1,544 -3,088 -1,750 -541 13 Exchange 16,985 18,938 22,515 0 3,971 1,646 639 2,091 1,703 2,492 5 to 10 years 14 Gross purchases 236 2,441 1,579 0 0 0 0 0 562 0 15 Gross sales 0 0 175 0 0 0 0 0 0 20 16 Maturity shift -1,620 -3,529 -5,946 -36 -2,111 0 -125 -2,145 0 -79 17 Exchange 2,050 950 1,797 87 325 0 276 300 0 212 Over 10 years 18 Gross purchases 158 1,858 1,398 0 0 0 0 0 432 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift 0 0 -188 0 0 0 0 -31 0 0 21 Exchange 1,150 500 275 0 0 0 0 0 0 0 All maturities 22 Gross purchases 24,081 37,170 18,863 515 0 1,280 375 3,599 5,028 0 23 Gross sales 2,502 6,803 1,562 0 0 0 0 0 0 177 24 Redemptions 1,000 9,099 2,200 0 0 0 0 0 0 600 Matched transactions 25 Gross sales 927,999 950,923 1,168,484 81,979 124,875 113,886 98,804 98,618 93,650 94,204 26 Gross purchases 927,247 950,935 1,168,142 83,464 123,220 113,384 97,897 100,680 93,584 94,252 Repurchase agreements2 27 Gross purchases 170,431 314,621 152,613 22,978 0 35,800 4,715 17,867 15,575 17,208 28 Gross sales 160,268 324,666 151,497 28,164 0 30,191 7,727 16,463 14,815 21,969 29 Net change in U.S. government securities 29,988 11,234 15,872 -3,186 -1,655 6,386 -3,544 7,064 5,721 -5,489 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 398 276 587 67 10 0 75 14 135 148 Repurchase agreements2 33 Gross purchases 31,142 80,353 57,259 12,355 0 12,107 2,223 4,763 7,672 8,980 34 Gross sales 30,521 81,350 56,471 14,594 0 8,225 4,454 5,132 6,853 11,081 35 Net change in federal agency obligations 222 -1,274 198 -2,306 -10 3,882 -2,306 -383 683 -2,249 36 Total net change in System Open Market Account 30,212 9,961 16,070 -5,492 -1,665 10,268 -5,850 6,681 6,404 -7,738 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 Financial Statistics • May 1989 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1989 1988 1989 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 Dec. Jan. Feb. Consolidated condition statement ASSETS 1 Gold certificate account 11,056 11,056 11,058 11,061 11,061 11,060 11,057 11,061 2 Special drawing rights certificate account 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 i Coin 457 483 499 512 512 395 448800 551144 Loans 4 To depository institutions 2,018 903 4,539 1,409 2,007 2,170 863 1,602 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 / Bought outright 6,819 6,819 6,819 6,779 6,779 6,966 6,819 6,779 8 Held under repurchase agreements 1,268 0 0 0 0 22,,110011 0 0 U.S. Treasury securities Bought outright y Bills 112,094 112,017 98,176 105,642 104,027 112,782 112,076 108,867 10 Notes 90,950 90,928 90,928 90,603 90,603 90,950 90,928 90,603 li Bonds 29,930 29,929 29,929 30,029 30,029 29,930 29,929 30,029 12 Total bought outright2 232,974 232,874 219,033 226,274 224,659 233,662 232,933 229,499 13 Held under repurchase agreements 3,014 0 0 0 0 4,760 0 0 14 Total U.S. Treasury securities 235,988 232,874 219,033 226,274 224,659 238,422 232,933 229,499 15 Total loans and securities 246,093 240,596 230,391 234,462 233,445 249,659 240,615 237,880 16 Items in process of collection 6,605 7,225 6,942 7,199 11,156 8,739 9,959 10,856 17 Bank premises 752 754 754 756 755 750 754 755 Other assets 18 Denominated in foreign currencies3 9,860 9,824 10,008 10,017 10,026 9,129 9,824 10,154 19 All other4 9,024 9,308 9,321 8,023 8,014 8,924 9,065 8,344 20 Total assets 288,865 284,264 273,991 277,048 279,987 293,674 286,771 284,582 LIABILITIES 21 Federal Reserve notes 222,439 221,655 222,664 222,895 222233,,004400 222299,,664400 222211,,661199 222222,,776699 Deposits 22 To depository institutions 37,707 38,943 31,569 35,136 33,363 39,347 35,810 36,985 23 U.S. Treasury—General account 13,769 8,984 5,586 4,825 6,296 8,656 11,766 6,298 24 Foreign—Official accounts 204 240 184 308 307 347 279 326 25 Other 749 376 311 396 324 548 390 517 26 Total deposits 52,429 48,543 37,650 40,665 40,290 48,898 48,245 44,126 27 Deferred credit items 6,036 6,650 6,180 6,036 8,953 7,453 9,161 9,560 28 Other liabilities and accrued dividends5 3,349 3,043 2,877 2,816 3,055 3,457 3,079 3,048 29 Total liabilities 284,253 279,891 269,371 272,412 275,338 289,448 282,104 279,503 CAPITAL ACCOUNTS 30 Capital paid in 2,117 2,119 2,123 2,129 2,144 2,113 2,117 2,144 31 Surplus 2,113 2,112 2,112 2,112 2,112 2,113 2,112 2,112 32 Other capital accounts 382 142 385 395 393 0 438 823 33 Total liabilities and capital accounts 288,865 284,264 273,991 277,048 279,987 293,674 286,771 284,582 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 228,413 228,431 228,246 231,297 230,770 234,733 229,817 232,507 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 270,349 269,855 269,124 268,636 268,549 271,492 269,942 268,215 36 LESS: Held by bank 47,910 48,200 46,460 45,741 45,509 41,852 48,323 45,446 37 Federal Reserve notes, net 222,439 221,655 222,664 222,895 223,040 228,640 221,619 222,769 Collateral held against notes net: 38 Gold certificate account 11,056 11,056 11,058 11,061 11,061 11,060 11,057 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 206,365 205,581 206,588 206,816 206,961 213,562 205,544 206,690 42 Total collateral 222,439 221,655 222,664 222,895 223,040 229,640 221,619 222,769 1. Some of these data also appear in the Board's H.4.1 (503) release. For 4. Includes special investment account at the Federal Reserve Bank of Chicago address, see inside front cover. in Treasury bills maturing within 90 days. 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities 5. Includes exchange-translation account reflecting the monthly revaluation at pledged with Federal Reserve Banks—and excludes securities sold and scheduled market exchange rates of foreign-exchange commitments. to be bought back under matched sale-purchase transactions. 3. Valued monthly at market exchange rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks A11 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1989 1988 1989 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 Dec. 30 Jan. 31 Feb. 28 1 Loans—Total 2,018 903 4,539 1,409 2,007 2,170 863 1,602 2 Within 15 days 2,017 888 4,517 1,400 1,997 2,152 854 1,594 3 16 days to 90 days 1 15 22 9 10 18 9 8 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. Treasury securities—Total 235,988 232,874 219,033 226,274 224,659 238,422 232,933 229,499 10 Within 15 days1 10,213 12,614 8,192 17,550 10,120 9,935 5,457 6,220 11 16 days to 90 days 56,994 51,770 44,929 46,600 49,465 58,448 58,957 57,336 12 91 days to 1 year 73,894 73,376 70,798 70,329 73,280 75,236 73,405 74,164 13 Over 1 year to 5 years 55,277 55,524 55,524 52,004 52,004 55,326 55,524 51,989 14 Over 5 years to 10 years 12,701 12,681 12,681 12,781 12,781 12,568 12,681 12,781 15 Over 10 years 26,909 26,909 26,909 27,010 27,009 26,909 26,909 27,009 16 Federal agency obligations—Total 8,087 6,819 6,819 6,779 6,779 9,067 6,819 6,779 17 Within 15 days' 1,364 0 40 305 305 2,271 136 235 18 16 days to 90 days 825 910 870 565 565 697 835 626 19 91 days to 1 year 1,353 1,378 1,378 1,378 1,378 1,492 1,303 1,347 20 Over 1 year to 5 years 3,359 3,345 3,345 3,345 3,345 3,418 3,359 3,412 21 Over 5 years to 10 years 997 997 997 997 997 1,000 997 970 22 Over 10 years 189 189 189 189 189 189 189 189 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 Financial Statistics • May 1989 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1988 1989 1985 1986 1987 1988 IItteemm Dec. Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Seasonally adjusted ADJUSTED FOR , CHANGES IN RESERVE REQUIREMENTS-' 1 Total reserves3 47.26 57.46 58.72 60.98 61.24 61.09 61.00 60.96 61.06 60.98 60.55 60.49 2 Nonborrowed reserves 45.94 56.63 57.94 59.26 57.80 57.85 58.16 58.66 58.19 59.26 58.88' 59.00 3 Nonborrowed reserves plus extended credit 46.44 56.93 58.43 60.51 60.34 60.50 60.21 60.44 60.52 60.51 59.93 60.05 4 Required reserves 46.20 56.09 57.69 59.94 60.23 60.14 60.02 59.89 59.94 59.94 59.40 59.33 5 Monetary base5 218.29 240.82 258.06 275.81 270.50 271.14 272.47 273.77 274.66 275.81 276.74r 277.76 Not seasonally adjusted 6 Total reserves3 48.27 58.70 60.02 62.43 61.47 60.59 60.65 60.54 61.15 62.43 62.28 59.56 7 Nonborrowed reserves 46.95 57.87 59.25 60.71 58.03 57.35 57.82 58.24 58.29 60.71 60.62 58.07 8 Nonborrowed reserves plus extended credit 47.45 58.18 59.73 61.96 60.57 60.00 59.87 60.02 60.62 61.96 61.66' 59.12 9 Required reserves 47.21 57.33 58.99 61.39 60.46 59.64 59.68 59.48 60.04 61.39 61.13 58.40 10 Monetary base 221.49 244.55 262.05 279.89 272.41 271.73 271.57 272.44 275.48 279.89 278.09" 274.51 NOT ADJUSTED FOR , CHANGES IN RESERVE REQUIREMENTS" 11 Total reserves3 48.14 59.56 62.12 63.74 62.76 61.97 62.15 61.92 62.41 63.74 63.47 60.69 12 Nonborrowed reserves 46.82 58.73 61.35 62.02 59.32 58.72 59.31 59.62 59.55 62.02 61.81 59.21 13 Nonborrowed reserves plus extended credit 47.32 59.04 61.83 63.27 61.85 61.38 61.37 61.40 61.87 63.27 62.85' 60.26 14 Required reserves 47.08 58.19 61.09 62.70 61.75 61.01 61.18 60.85 61.29 62.70 62.32' 59.54 15 Monetary base 223.53 247.71 266.16 283.18 275.59 275.03 274.87 275.78 278.65 283.18 281.31' 277.66 1. Latest monthly and biweekly figures are available from the Board's H.3(502) the 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 Banks and the currency component of the money stock plus, for instireserve requirements. To adjust for discontinuities due to changes in reserve tutions not having required reserve balances, the excess of current vault cash over requirements on reservable nondeposit liabilities, the sum of such required the amount applied to satisfy current reserve requirements. Currency and vault reserves is subtracted from the actual series. Similarly, in adjusting for disconti- cash figures are measured over the weekly computation period ending Monday. nuities in the monetary base, required clearing balances and adjustments to The seasonally adjusted monetary base consists of seasonally adjusted total compensate for float also are subtracted from the actual series. reserves, which include excess reserves on a not seasonally adjusted basis, plus 3. Total reserves not adjusted for discontinuities consist of reserve balances the seasonally adjusted currency component of the money stock and the remainwith Federal Reserve Banks, which exclude required clearing balances and ing items seasonally adjusted as a whole. adjustments to compensate for float, plus vault cash held during the lagged 6. Reflects actual reserve requirements, including those on nondeposit liabilicomputation period by institutions having required reserve balances at Federal ties, with no adjustments to eliminate the effects of discontinuities associated with Reserve Banks plus the amount of vault cash equal to required reserves during the implementation of the Monetary Control Act or other regulatory changes to maintenance period at institutions having no required reserve balances. reserve requirements. 4. Extended credit consists of borrowing at the discount window under 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 1989 IItteemm22 DD 1199 ee 88 cc 55 .. DD 1199 ee 88 cc 66 .. DD 1199 ee 88 cc 77 .. DD 1199 ee 88 cc 88 .. Nov. Dec. Jan. Feb. Seasonally adjusted 1 Ml 620.5 725.9 752.3 790.2 786.6 790.2 786.2' 787.4 2 M2 2,567.4 2,811.2 2,909.9' 3,069.4' 3,059.1 3,069.4' 3,066.0' 3,070.3 3 M3 3,201.7 3,494.9 3,677.6' 3,917.9' 3,900.5' 3,917.9' 3,923.2' 3,933.5 4 L 3,830.6 4,137.1 4,340.5'' 4,689.3' 4,649.6' 4,689.3' 4.691.6 n.a. 5 Debt 6,719.9 7,576.8 8,283.9' 9,001.0' 8,943.4' 9,001.0' 9.052.7 n.a. Ml components 6 Currency 167.8 180.5 196.4 211.8 210.5 211.8 213.4 214.3 7 Travelers checks'; 5.9 6.5 7.1 7.6 7.5 7.6 7.6 7.5 8 Demand deposits . 267.3 303.2 288.3 288.6 287.7 288.6 284.0 284.8 9 Other checkable deposits 179.5 235.8 260.4 282.3 281.0' 282.3 281.2' 280.8 Nontransactions components 10 In M2 ... 1,946.9 2,085.3 2,157.7r 2,279.2' 2,272.5 2,279.2' 2,279.7' 2,282.9 11 In M3 only8 634.3 683.7 767.6 848.5' 841.3' 848.5' 857.3' 863.2 Savings deposits9 12 Commercial Banks 125.0 155.8 178.5 192.5 192.8 192.5 190.8 190.4 13 Thrift institutions 176.6 215.2 237.8 238.8 239.0 238.8 237.0 234.3 Small-denomination time deposits10 14 Commercial Banks 383.3 364.6 385.3 443.0 436.4 443.0 451.1 461.2 15 Thrift institutions 499.2 489.3 528.8 582.2 581.4 582.2 584.8' 587.3 Money market mutual funds 16 General purpose and broker-dealer. 176.5 208.0 221.1 239.6 237.4 239.6 242.0 247.9 17 Institution-only 64.5 84.4 89.6 87.6 87.4 87.6 89.3 89.6 Large-denomination time deposits" 18 Commercial Banks 285.1 288.8 325.4 364.9' 361.2 364.9' 370.6' 378.1 19 Thrift institutions 151.5 150.1 162.0 172.9 173.2 172.9 173.7' 173.4 Debt components 20 Federal debt 1,585.3 1,805.8 1,957.5' 2,114.7' 2,101.5' 2,114.7' 2,122.1 n.a. 21 Nonfederal debt 5,134.6 5,771.1 6,326.3' 6,886.3' 6,841.9' 6,886.3' 6,930.6 n.a. Not seasonally adjusted 22 Ml 633.5 740.4 766.4 804.3 788.3 804.3 793.0 772.3 23 M2 2,576.2 2,821.1 2,918.7' 3,077.1' 3,057.6' 3,077.1' 3,076.3' 3,057.8 24 M3 3,213.3 3,507.4 3,688.5' 3,927.7' 3,905.6' 3,927.7' 3,930.7' 3,921.5 25 L 3,843.7 4,152.0 4,354.9' 4,703.1' 4,657.6' 4,703.1' 4,708.3 n.a. 26 6,710.2 7,561.0 8,266.0' 8,981.3' 8,906.3' 8,981.3' 9,031.8 n.a. Ml components 27 Currency3 , 170.2 183.0 199.3 214.9 211.3 214.9 211.8 211.9 28 Travelers checks 5.5 6.0 6.5 6.9 7.1 6.9 7.0 7.1 29 Demand deposits 276.9 314.0 298.6 298.8 290.0 298.8 290.5 275.7 30 Other checkable deposits 180.9 237.4 262.0 283.7 279.8 283.7 283.7 277.6 Nontransactions components 31 M2 1,942.7 2,080.7 2,152.3' 2,272.8' 2,269.4 2,272.8' 2,283.3' 2,285.5 32 M3 only8 637.1 686.3 769.8 850.6' 848.0' 850.6' 854.5' 863.7 Money market deposit accounts 33 Commercial Banks 332.8 379.6 358.8 352.4 354.1 352.4 348.3 342.3 34 Thrift institutions 180.7 192.9 167.5 150.3 152.6 150.3 146.8 142.8 Savings deposits9 35 Commercial Banks 123.7 154.2 176.6 190.3 192.2 190.3 189.3' 188.3 36 Thrift institutions 174.8 212.7 234.8 235.6 238.2 235.6 233.5 230.4 Small-denomination time deposits10 37 Commercial Banks 384.0 365.3 386.1 444.1 437.7 444.1 453.1 463.0 38 Thrift institutions 499.9 489.8 529.1 582.4 581.8 582.4 588.7' 591.6 Money market mutual funds 39 General purpose and broker-dealer 176.5 208.0 221.1 239.6 237.4 239.6 242.0 247.9 40 Institution-only 64.5 84.4 89.6 87.6 87.4 87.6 89.3 89.6 Large-denomination time deposits" 41 Commercial Banks 285.4 289.1 325.8 365.5' 362.3 365.5' 370.2' 377.9 42 Thrift institutions 151.8 150.7 163.0 174.0 174.9 174.0 174.9 174.2 Debt components 43 Federal debt 1,583.7 1,803.9 1,955.6' 2,112.5' 2,090.9' 2,112.5' 2,121.4 n.a. 44 Nonfederal debt 5,126.4 5,757.2 6,310.4' 6,868.8' 6,815.4' 6,868.8' 6,910.5 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • May 1989 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. 1988 Bank group, or type of customer 11998866 11998877 11998888 July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted Demand deposits 1 All insured banks 188,346.0 217,116.2 226,888.4 224,512.7 228,898.2 227,617.3 235,980.5 238,497.5 245,617.5 2 Major New York City banks 91,397.3 104,496.3 107,547.3 107,336.7 110,150.0 108,741.8 114,876.4 112,071.8 111,115.5 3 Other banks 96,948.8 112,619.8 119,341.2 117,176.0 118,748.2 118,875.5 121,104.1 126,425.7 134,502.0 4 ATS-NOW accounts4 2,182.5 2,402.7 2,757.7 2,570.4 2,963.6 2,871.2 2,820.2 2,897.2 3,020.8 5 Savings deposits 403.5 526.5 583.0 583.3 609.6 578.6 521.3 574.9 640.7 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 556.5 612.1 641.2 622.7 645.8 651.0 659.7 676.6 698.5 7 Major New York City banks 2,498.2 2,670.6 2,903.5 2,789.6 2,939.3 3,102.4 3,086.1 3,034.6 3,140.7 8 Other banks 321.2 357.0 376.8 363.8 374.6 377.9 377.9 400.6 425.3 9 ATS-NOW accounts4 15.6 13.8 14.7 13.5 15.6 15.1 14.8 15.1 15.8 10 Savings deposits 3.0 3.1 3.1 2.9 3.2 3.1 2.8 3.1 3.4 DEBITS TO Not seasonally adjusted Demand deposits 11 All insured banks 188,506.7 217,125.1 227,010.7 217,350.7 237,459.0 224,089.2 227,485.2 228,743.0 258,119.4 12 Major New York City banks 91,500.1 104,518.8 91,242.6 103,561.2 112,654.6 107,115.7 111,019.4 108,689.1 117,470.7 13 Other banks 97,006.7 112,606.2 119,445.7 113,789.6 124,804.4 116,973.5 116,465.8 120,053.9 140,648.8 14 ATS-NOW accounts4 2,184.6 2,404.8 2,754.7 2,536.6 2,828.0 2,951.1 2,805.4 2,714.1 3,163.8 15 MMDA 1,609.4 1,954.2 2,430.1 2,399.0 2,530.0 2,409.4 2,325.8 2,539.7 2,940.5 16 Savings deposits 404.1 526.8 578.0 566.2 615.9 570.1 540.9 523.7 655.6 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 556.7 612.3 591.7 599.9 681.6 642.9 39.8 643.3 699.1 18 Major New York City banks 2,499.1 2,674.9 2,901.4 2,660.7 3,170.3 3,046.4 3,059.1 2,998.6 3,058.1 2 1 0 9 AT O S t h N er O b W a n a k c s counts4} 32 1 1 5 . . 2 6 35 1 6 3 . . 9 8 37 1 7 4 . . 1 7 35 1 1 3 . . 9 4 39 1 8 5 . . 9 1 37 1 3 5 . . 3 6 36 1 4 4 . . 8 9 37 1 5 4 . . 9 3 42 1 5 6 . . 2 3 21 MMDA 4.5 5.3 6.9 6.7 7.2 6.9 6.7 7.3 8.4 22 Savings deposits 3.0 3.1 3.1 3.0 3.3 3.1 2.9 2.8 3.5 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 Financial Statistics • May 1989 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1988r 1989 CCaatteeggoorryy Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan.' Feb. Seasonally adjusted 1 Total loans and securities2 2,284.3 2,303.5 2,325.5 2,343.5 2,358.5 2,371.4 2,373.5 2,392.6 2,400.6 2,408.0 2,412.8 2,441.8 2 U.S. government securities 341.3 343.9 346.4 348.8 349.3 350.9 353.2 356.0 358.5 362.4 361.8 363.4 3 Other securities 196.2 196.5 196.4 196.7 196.9 196.7 195.4 196.6 195.3 192.9 188.0 188.5 4 Total loans and leases" 1,746.8 1,763.1 1,782.7 1,797.9 1,812.3 1,823.9 1,825.0 1,839.9 1,846.8 1,852.7 1,863.0 1,889.9 5 Commercial and industrial ..... 570.4 577.4 584.5 589.3 594.9 595.3 594.3 597.8 598.9 599.7 604.5 616.6 6 Bankers acceptances held ... 4.7 4.7 4.4 4.3 4.3 4.2 4.1 4.1 4.3 4.1 4.3 4.1 7 Other commercial and industrial 565.6 572.7 580.1 584.9 590.6 591.0 590.3 593.8 594.6 595.6 600.2 612.5 8 U.S. addressees4. 557.6 565.2 573.2 578.1 583.7 584.4 583.5 587.3 588.5 589.6 594.5 607.5 y Non-U.S. addressees 8.0 7.5 6.9 6.8 6.9 6.7 6.8 6.5 6.2 6.0 5.7 5.0 10 Real estate 606.2 613.1 620.5 626.9 633.3 640.3 646.9 654.7 659.3 664.8 671.2 678.3 n Individual 336.9 339.9 341.9 343.4 344.6 346.5 348.9 350.8 352.3 355.1 357.0 357.9 12 Security 40.2 39.5 39.7 39.5 38.9 39.7 36.7 38.4 37.9 37.9 37.0 44.0 13 Nonbank financial institutions 31.0 30.5 30.6 30.6 31.0 31.0 30.5 30.2 30.0 29.9 30.4 30.8 14 Agricultural 29.4 29.4 29.5 29.6 29.6 29.6 29.6 29.8 30.3 30.7 30.7 30.7 15 State and political subdivisions 50.3 49.7 49.4 49.2 48.8 48.2 48.0 48.7 47.9 47.1 44.7 44.9 16 Foreign banks 7.9 8.3 8.0 8.1 8.2 8.2 7.5 7.8 8.2 7.5 7.6 8.2 17 Foreign official institutions 5.1 5.1 5.1 5.0 5.0 5.2 5.2 5.1 5.4 5.6 5.6 5.5 18 Lease financing receivables .... 25.6 25.9 26.2 26.8 27.5 27.6 27.8 27.9 28.0 28.1 28.3 28.4 19 All other loans 44.0 44.4 47.2 49.6 50.4 52.3 49.4 48.7 48.7 46.4 45.9 44.5 Not seasonally adjusted 20 Total loans and securities2 2,281.5 2,306.2 2,326.5 2,346.6 2,352.6 2,364.4 2,370.9 2,383.8 2,399.6 2,420.3 2,420.7 2,443.6 21 U.S. government securities 342.7 344.0 345.6 347.8 347.9 351.1 353.0 352.9 357.2 362.7 363.6 367.9 22 Other securities 195.4 196.4 196.7 196.9 196.4 197.0 195.2 195.4 195.4 192.7 190.1 188.3 23 Total loans and leases' 1,743.5 1,765.8 1,784.2 1,801.9 1,808.2 1,816.3 1,822.7 1,835.5 1,847.0 1,865.0 1,867.0 1,887.4 24 Commercial and industrial ..... 573.4 581.6 588.3 593.1 593.9 591.0 589.5 593.2 596.5 602.8 603.8 615.9 25 Bankers acceptances held ... 4.7 4.6 4.4 4.5 4.4 4.3 4.2 4.1 4.2 4.0 4.1 4.0 26 Other commercial and industrial 568.7 577.0 583.9 588.5 589.5 586.7 585.4 589.1 592.2 598.8 599.7 611.9 27 U.S. addressees4. 560.8 569.2 576.8 581.7 582.6 580.1 578.8 583.0 586.2 592.6 594.4 606.5 28 Non-U.S. addressees 7.9 7.9 7.1 6.9 6.9 6.6 6.5 6.1 6.1 6.1 5.4 5.4 29 Real estate 604.2 611.1 619.5 626.8 633.7 641.5 648.6 655.6 661.1 666.1 671.2 676.4 30 Individual 334.2 337.6 339.9 342.0 343.5 346.7 350.5 351.8 353.3 359.0 359.8 357.2 31 Security 40.6 41.5 40.7 41.2 38.6 38.5 35.3 36.9 37.3 38.3 37.4 43.1 32 Nonbank financial institutions 30.2 30.3 30.8 30.8 31.0 30.9 30.4 29.8 30.1 30.9 30.9 30.2 33 Agricultural 28.3 28.6 29.3 29.9 30.3 30.4 30.5 30.6 30.5 30.5 30.1 29.8 34 State and political subdivisions 51.0 50.0 49.3 48.9 48.2 47.7 47.4 48.2 47.3 46.9 46.2 45.9 35 Foreign banks 7.7 7.9 7.7 7.9 8.4 8.1 7.7 7.9 8.2 7.8 7.8 8.3 36 Foreign official institutions 5.1 5.1 5.1 5.0 5.0 5.2 5.2 5.1 5.4 5.6 5.6 5.5 37 Lease financing receivables .... 25.6 25.9 26.2 26.8 27.4 27.5 27.7 27.8 27.9 28.3 28.6 28.5 38 All other loans 43.2 46.1 47.5 49.5 48.3 49.0 49.9 48.6 49.3 48.8 45.6 46.7 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 1988 1989 SSoouurrccee Mar/ Apr. May June July' Aug. Sept. Oct.' Nov. Dec. Jan. Feb. Seasonally adjusted 1 Total nondeposit funds2 193.3 203.5r 210.2' 212.3' 214.7 219.3' 209.3' 211.6 217.4' 213.5' 208.0 212.8 2 Net balances due to related foreign offices .... 708.0 716.3'' 726.1' 729.9' 733.5 735.4' 735.5' 741.8 745.0' 753.8' 763.5 779.2 3 Borrowings from other than commercial banks in United States4 195.9 199. r 203.0' 204.1' 200.9 200.3' 201.2' 206.1 208.2' 206.9' 200.1 202.2 4 Domestically chartered banks 166.2 167.0' 170.4' 170.3' 166.5 165.8' 165.3' 167.9 168.9' 168.0' 163.2 163.1 5 Foreign-related banks 29.6 32.1 32.6 33.8 34.4 34.5 35.9 38.2 39.3 38.9 36.9 39.1 Not seasonally adjusted 6 Total nondeposit funds2 198.7 205.8' 217.7' 215.5' 210.3 218.2' 205.9' 205.5 214.1' 207.9' 207.2 217.7 7 Net balances due to related foreign offices .... -3.2 2.0 9.7 8.7 10.7 18.6 9.1 5.1 10.2 9.1 7.5' 10.3 8 Domestically chartered banks -25.3 -22.2 -16.5 -16.3 -14.1 -7.3 -15.7 -20.5 -19.2 -20.7 -20.5' -17.9 9 Foreign-related banks 22.1 24.2 26.2 25.0 24.8 25.9 24.7 25.5 29.4 29.8 28.1 28.2 10 Borrowings from other than commercial banks in United States 201.9 203.9' 208.0' 206.8' 199.6 199.6' 196.8' 200.4 203.9' 198.9' 199.6 207.3 11 Domestically chartered banks 171.0 171.0' 175.0' 171.6' 164.7 165.4' 161.5' 163.6 167.6' 162.0' 161.6 166.9 12 Federal funds and security RP borrowings 167.6 166.3' 170.4' 166.8' 159.3 160.3' 157.1' 159.6 163.0' 158.5' 158.2 163.7 13 Other 3.4 4.8 4.6 4.8 5.4 5.0 4.4 4.1 4.6 3.5 3.4 3.2 14 Foreign-related banks6 30.8 32.8 33.0 35.2 34.9 34.2 35.3 36.8 36.3 36.9 38.0 40.4 MEMO Gross large time deposits 15 Seasonally adjusted 398.0 397.1 399.8 403.2 408.4 414.6 419.7 423.2 424.5 429.1 434.9 440.4 16 Not seasonally adjusted 399.5 395.4 398.9 401.8 405.9 415.1 421.7 424.7 425.6 429.8 434.5 440.3 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 25.2 22.4 23.9 22.0 21.3 17.1 23.5 27.2 23.0 24.9 20.3 20.3 18 Not seasonally adjusted 22.3 21.7 30.4 21.0 22.0 11.9 24.6 27.7 16.3 22.9 25.0 25.9 1. Commercial banks are those in the 50 states and the District of Columbia 4. Other borrowings are borrowings through any instrument, such as a promwith national or state charters plus agencies and branches of foreign banks, New issory note or due bill, given for the purpose of borrowing money for the banking York investment companies majority owned by foreign banks, and Edge Act business. This includes borrowings from Federal Reserve Banks and from foreign corporations owned by domestically chartered and foreign banks. banks, term federal funds, loan RPs, and sales of participations in pooled loans. These data also appear in the Board's G.10 (411) release. For address, see 5. Based on daily average data reported weekly by approximately 120 large inside front cover. banks and quarterly or annual data reported by other banks. 2. Includes federal funds, RPs, and other borrowing from nonbanks and net 6. Figures are partly daily averages and partly averages of Wednesday data. balances due to related foreign offices. 7. Time deposits in denominations of $100,000 or more. Estimated averages of 3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and daily data. U.S. branches and agencies of foreign banks with related foreign offices plus net 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at compositions with own IBFs. mercial banks. Averages of daily data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • May 1989 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1988 1989 Account Apr/ May June July' Aug/ Sept/ Oct/ Nov/ Dec/ Jan/ Feb. ALL COMMERCIAL BANKING INSTITUTIONS^ 1 Loans and securities 2,467.6 2,475.4 2,514.5 2,512.1 2,526.3 2,524.9 2.541.5 2,581.3 2,592.0 2,576.7 2,613.5 2 Investment securities 520.7 523.0 520.4 523.5 526.7 527.0 525.0 531.3 533.0 533.3 535.5 3 U.S. government securities 329.5 331.4 328.8 332.6 335.1 336.5 334.7 340.8 345.9 348.8 352.9 4 Other 191.2 191.6 191.6 190.8 191.6 190.5 190.4 190.5 187.1 184.5 182.6 5 Trading account assets 19.5 20.3 22.0 23.9 22.7 21.2 24.9 24.8 19.2 21.5 20.1 6 Total loans 1.927.4 1.932.1 1,972.1 1,964.8 1.977.0 1,976.7 1.991.6 2,025.2 2.039.7 2,022.0 2,057.9 7 Interbank loans 158.4 152.9 164.8 159.7 156.8 153.2 160.0 170.6 165.4 159.9 173.0 8 Loans excluding interbank 1,769.0 1.779.2 1.807.3 1,805.1 1.820.1 1,823.5 1,831.6 1.854.6 1,874.3 1,862.1 1,884.9 9 Commercial and industrial 582.9 587.5 596.4 591.0 589.0 589.2 591.6 598.5 606.1 602.2 615.2 10 Real estate 613.4 621.0 630.2 635.2 645.1 651.0 656.3 663.1 669.3 672.2 677.0 11 Individual 339.2 339.9 342.4 343.8 348.9 351.6 352.5 354.7 361.3 359.9 357.3 12 All other 233.5 230.9 238.3 235.0 237.2 231.8 231.2 238.3 237.5 227.9 235.4 13 Total cash assets 214.4 200.5 221.6 217.1 222.1 215.0 208.5 235.1 244.4 214.7 226.0 14 Reserves with Federal Reserve Banks 32.2 26.0 34.4 30.7 33.0 31.1 31.7 33.8 34.5 31.6 27.8 15 Cash in vault 25.5 25.5 26.6 26.0 26.6 26.3 26.4 28.8 30.5 27.6 26.7 16 Cash items in process of collection .. 76.5 71.3 77.0 75.5 79.7 76.2 72.8 89.6 92.0 76.2 17 Demand balances at U.S. depository institutions 30.3 29.2 31.6 31.3 31.5 29.4 29.2 32.1 34.3 27.8 32.5 18 Other cash assets 50.0 48.5 52.0 53.5 51.3 52.0 48.4 50.8 53.2 51.5 50.1 19 Other assets 192.2 195.0 189.3 188.4 193.4 201.4 201.2 199.4 195.0 20 Total assets/total liabilities and capital 2,874.2 2,863.7 2,931.1 2,918.5 2,936.8 2,933.3 2.951.3 3.017.7 3.035.8 2,986.4 3,030.8 21 Deposits 2.012.5 2,009.7 2.044.4 2,052.1 2,075.1 2,060.0 2.069.4 2.122.8 2.142.9 2,093.9 2,121.8 22 Transaction deposits 596.1 579.3 603.8 598.9 609.9 588.5 587.4 627.7 641.5 585.5 601.4 23 Savings deposits 536.4 542.4 544.7 545.5 542.4 536.8 538.4 542.2 537.0 530.2 528.7 24 Time deposits 880.0 887.9 895.9 907.6 922.7 934.7 943.6 952.9 964.4 978.2 991.7 25 Borrowings 467.3 458.1 486.6 469.2 448.7 468.3 479.5 476.7 470.9 491.8 500.9 26 Other liabilities 210.0 209.6 211.3 209.9 222.4 215.5 211.9 224.2 229.0 204.8 212.3 27 Residual (assets less liabilities) 184.4 186.3 188.8 187.3 190.6 189.5 190.6 193.9 193.1 195.8 195.8 MEMO 28 U.S. government securities (including trading account) 344.1 347.1 345.4 350.2 352.0 352.7 354.5 360.3 359.9 365.9 367.8 29 Other securities (including trading account) 196.2 196.2 197.1 197.1 197.4 195.5 195.3 195.8 192.3 188.9 187.8 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,283.6 2,289.1 2.318.4 2,322.9 2,334.5 2,332.7 2,347.3 2,382.9 2.385.5 2.378.3 2.399.0 31 Investment securities 495.3 496.5 493.8 496.3 499.7 501.2 499.2 505.7 508.0 507.5 509.4 32 U.S. Treasury securities 318.2 319.2 317.0 320.2 323.2 324.9 323.4 329.6 334.9 336.3 340.0 33 Other 177.0 177.3 176.8 176.1 176.4 176.3 175.8 176.1 173.0 171.2 169.3 34 Trading account assets 19.5 20.3 22.0 23.9 22.7 21.2 24.9 24.8 19.2 21.5 20.1 35 Total loans 1,768.8 1.772.3 1.802.5 1.802.7 1,812.1 1,810.2 1,823.3 1,852.4 1,858.3 1.849.4 1,869.5 36 Interbank loans 129.2 126.0 135.0 132.1 127.8 124.2 129.6 139.4 132.2 130.6 138.2 37 Loans excluding interbank 1,639.6 1.646.4 1,667.5 1,670.6 1,684.3 1,686.0 1,693.6 1,713.1 1,726.1 1.718.7 1,731.3 38 Commercial and industrial 488.5 490.6 493.9 492.6 490.6 489.9 492.4 498.1 499.5 498.7 503.0 39 Real estate 597.0 603.8 612.5 618.0 626.1 631.8 636.6 642.3 648.5 651.3 655.6 40 Individual 338.9 339.5 342.1 343.5 348.5 351.2 352.2 354.4 361.0 359.6 357.0 41 All other 215.2 212.4 219.0 216.6 219.0 213.1 212.4 218.3 217.1 209.2 215.8 42 Total cash assets 197.0 183.6 202.4 197.1 203.5 194.2 190.4 216.0 223.2 193.7 206.6 43 Reserves with Federal Reserve Banks 30.8 23.6 32.9 29.6 31.4 29.0 29.9 32.6 33.1 30.1 26.6 44 Cash in vault 25.4 25.4 26.6 26.0 26.6 26.3 26.4 28.8 30.4 27.6 26.7 45 Cash items in process of collection .. 75.9 71.1 76.6 75.2 79.4 75.8 72.0 91.2 75.4 87.8 46 Demand balances at U.S. depository institutions 28.7 27.5 29.8 29.5 29.8 27.4 27.3 30.2 32.2 25.9 30.5 47 Other cash assets 36.2 35.9 36.4 36.9 36.4 35.7 34.8 35.5 36.2 34.8 35.1 48 Other assets 121.6 125.5 121.5 123.6 131.9 132.9 134.9 127.8 129.1 49 Total assets/liabilities and capital 2,602.2 2,591.0 2,646.2 2,641.5 2,661.5 2.653.6 2,669.6 2,731.7 2.743.6 2.699.8 2,734.7 50 Deposits 1,949.0 1,946.4 1,979.2 1.986.8 2,009.0 1.992.7 2,001.0 2,053.0 2,069.9 2,022.6 2.049.1 51 Transaction deposits 587.3 571.1 595.0 590.2 601.1 579.4 577.6 617.5 631.5 576.0 591.9 52 Savings deposits 534.0 540.0 542.0 543.0 539.9 534.3 535.8 539.7 534.5 527.8 526.3 53 Time deposits 827.8 835.3 842.2 853.6 868.0 879.0 887.6 895.8 903.9 918.8 930.9 5 5 4 5 B O o th rr e o r w li i a n b g i s l ities 3 1 6 1 0 1 . . 5 6 3 1 5 0 3 8 . . 2 6 3 1 7 0 1 9 . . 8 8 3 1 5 1 9 1 . . 9 0 3 1 4 2 5 0 . . 3 1 3 1 5 1 9 5 . . 0 8 3 1 6 1 4 6 . . 7 7 3 1 6 2 5 2 . . 6 6 3 1 6 2 3 0 . . 1 9 3 1 7 0 6 8 . . 2 6 3 1 7 1 8 5 . . 1 2 56 Residua) (assets less liabilities) 181.1 182.9 185.4 183.9 187.2 186.1 187.2 190.5 189.7 192.4 192.4 MEMO 57 Real estate loans, revolving 33.0 33.7 34.9 35.4 36.3 37.4 38.4 39.5 40.1 40.6 41.4 58 Real estate loans, other 564.0 570.1 577.6 582.6 589.8 594.4 598.2 602.8 608.4 610.7 614.2 1. Back data are available from the Banking and Monetary Statistics section, condition report data. Data for other banking institutions are estimates made for Board of Governors of the Federal Reserve System, Washington, D.C., 20551. the last Wednesday of the month based on a weekly reporting sample of These data also appear in the Board's weekly H.8 (510) release. foreign-related institutions and quarter-end condition reports. Data have been revised because of benchmarking to new Call reports beginning 2. Commercial banking institutions include insured domestically chartered October 1987. commercial banks, branches and agencies of foreign banks, Edge Act and Figures are partly estimated. They include all bank-premises subsidiaries and Agreement corporations, and New York State foreign investment corporations. other significant majority-owned domestic subsidiaries. Loan and securities data 3. Insured domestically chartered commercial banks include all member banks for domestically chartered commercial banks are estimates for the last Wednes- and insured nonmember banks. day of the month based on a sample of weekly reporting banks and quarter-end Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures 1988 1989 AAccccoouunntt Dec. 282 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb.l Feb. 8 Feb. 15 Feb. 22 1 Cash and balances due from depository institutions 125,023 140,505 115,869 130,199 106,823 125,598 97,931 113,862 114,148 2 Total loans, leases, and securities, net 1,154,340 1,177,194 1,172,696 1,176,749 1,175,383' 1,183,422 1,188,823 1,196,182 1,189,414 3 U.S. Treasury and government agency 128,584 131,352 132,175 134,266 135,361 133,155 134,537 136,184 135,158 4 Trading account 14,371 14,619 15,367 17,292 17,121 15,015 15,765 16,925 14,871 5 Investment account 114,214 116,733 116,808 116,974 118,240 118,140 118,772 119,259 120,287 6 Mortgage-backed securities 46,306 47,211 47,154 47,338 47,766 48,266 48,195 48,713 49,022 All other maturing in 7 One year or less 20,458 21,048 21,074 21,072 21,761 21,969 22,070 22,750 23,297 8 Over one through five years 39,527 40,465 40,600 40,704 40,868 40,391 40,933 40,180 40,302 9 Over five years 7,923 8,010 7,979 7,860 7,844 7,514 7,574 7,616 7,666 10 Other securities 72,315 73,358 72,989 72,937 72,688 73,112 72,578 72,429 72,311 11 Trading account 1,713 1,535 1,334 1,273 1,299 1,578 1,388 1,391 1,400 12 Investment account 70,602 71,823 71,655 71,664 71,388 71,534 71,189 71,038 70,911 13 States and political subdivisions, by maturity 44,653 45,216 45,206 45,192 45,159 44,997 44,885 44,757 44,778 14 One year or less 4,865 4,948 4,911 4,902 4,893 4,890 4,908 4,885 4,891 15 Over one year 39,788 40,268 40,295 40,291 40,266 40,107 39,977 39,872 39,888 16 Other bonds, corporate stocks, and securities 25,949 26,607 26,449 26,472 26,229 26,538 26,304 26,281 26,132 17 Other trading account assets 3,596 ' 3,693 3,700 3,524 3,041 3,705 3,677 4,350 3,807 18 Federal funds sold4 74,401 77,259 76,387 74,237 75,321 82,219 84,013 85,865 82,909 19 To commercial banks 49,135 52,820 50,946 49,351 50,565 51,451 55,281 54,956 52,849 20 To nonbank brokers and dealers in securities 16,707 16,343 16,616 16,734 16,934 20,999 20,441 20,519 21,776 21 To others 8,558 8,096 8,825 8,152 7,822 9,768 8,291 10,390 8,284 22 Other loans and leases, gross 915,695 931,160 926,724 930,980 928,357' 930,943 933,818 937,197 935,076 23 Other loans, gross 891,942 907,061 902,576 906,762 904,058' 906,717 909,635 913,034 910,842 24 Commercial and industrial 301,530' 305,987' 303,778' 303,808' 305,134' 306,213 310,029 310,968 310,051 25 Bankers acceptances and commercial paper 1,780 1,930 1,733 1,693 1,626 1,703 1,666 1,831 1,693 26 All other 299,750' 304,057' 302,046' 302,116' 303,509' 304,510 308,363 309,137 308,358 27 U.S. addressees 297,391' 301,805' 299,857' 300,226' 301,570' 302,617 306,473 307,192 306,438 28 Non-U.S. addressees 2,359 2,252 2,188 1,890 1,938 1,893 1,889 1,945 1,918 29 Real estate loans 300,067' 308,906' 309,781' 310,569' 310,582 311,024 311,433 312,656 312,623 30 Revolving, home equity 21,792 22,085 22,210 22,258 22,335 22,430 22,459 22,535 22,583 31 All other 278,275' 286,821' 287,571' 288,312' 288,247 288,594 288,973 290,121 290,040 32 To individuals for personal expenditures 169,179 173,078 172,696 172,362 172,148' 170,936 170,387 170,233 170,115 33 To depository and financial institutions 48,728 47,404 48,199 48,973 47,205 48,437 48,528 48,413 48,013 34 Commercial banks in the United States 22,185 21,044 22,246 22,852 22,289 22,204 22,855 23,358 22,980 35 Banks in foreign countries 3,685 3,890 4,017 4,277 3,445 4,167 3,996 3,476 4,305 36 Nonbank depository and other financial institutions .. 22,858 22,470 21,937 21,844 21,472 22,067 21,677 21,578 20,728 37 For purchasing and carrying securities 13,926 12,237 11,520 12,915 12,455 12,728 13,193 14,056 13,480 38 To finance agricultural production 5,508 5,809 5,777 5,740 5,682 5,692 5,669 5,661 5,601 39 To states and political subdivisions 28,648 28,392' 28,268' 28,269" 28,222' 28,151 28,143 28,083 28,099 40 To foreign governments and official institutions 1,964 1,910 1,861 1,828 1,888 1,963 1,940 1,771 1,848 41 All other 22,390 23,338' 20,695' 22,296' 20,742' 21,571 20,313 21,193 21,012 42 Lease financing receivables 23,753 24,098 24,148 24,218 24,299 24,226 24,183 24,163 24,234 43 LESS: Unearned income 4,889 4,990 5,023 5,028 5,039' 4,986 4,998 5,011 5,027 44 Loan and lease reserve 35,362 34,638 34,256 34,167 34,346' 34,725 34,802 34,832 34,820 45 Other loans and leases, net 875,444 891,531 887,445 891,784 888,972' 891,232 894,018 897,354 895,229 46 All other assets 132,924' 134,664' 131,357' 132,548' 127,310' 131,358 128,766 130,800 130,454 47 Total assets 1,412,288' 1,452,362' 1,419,922' 1,439,496' 1,409,516' 1,440,379 1,415,520 1,440,844 1,434,016 48 Demand deposits 247,195 270,603 235,299 248,581 219,368' 245,610 215,502 237,955 228,985 49 Individuals, partnerships, and corporations 195,382 214,182 187,645 194,618 175,066' 189,453 171,483 186,891 181,031 50 States and political subdivisions 6,993 8,144 6,207 6,385 6,770 7,405 5,571 6,164 5,868 51 U.S. government 2,711 2,626 3,484 3,172 2,531 1,767 3,460 4,169 1,709 52 Depository institutions in the United States 24,187 28,284 22,032 27,294 19,413 27,658 19,253 24,080 23,360 53 Banks in foreign countries 6,662 7,244 6,127 7,076 6,006 6,847 6,157 6,255 7,471 54 Foreign governments and official institutions 985 754 959 869 787 781 756 908 1,080 55 Certified and officers' checks 10,274 9,369 8,844 9,167 8,795 11,698 8,822 9,488 8,466 56 Transaction balances other than demand deposits 75,412 82,675 79,506 78,750 75,237 77,228 77,257 76,798 75,988 57 Nontransaction balances 623,960 651,710 652,082 652,718 651,113 653,019 657,113 657,302 657,407 58 Individuals, partnerships, and corporations 585,172 610,601 610,725 611,569 609,460 611,529 615,160 614,815 614,973 59 States and political subdivisions 29,480 31,102 31,439 31,345 31,469 31,478 32,158 32,584 32,594 60 U.S. government 928 885 858 845 855 853 853 861 854 61 Depository institutions in the United States 7,702 8,444 8,350 8,254 8,623 8,460 8,239 8,347 8,296 62 Foreign governments, official institutions, and banks .. 677 678 710 705 705 699 703 696 694 63 Liabilities for borrowed money 278,192 264,645 270,226' 277,782 282,216 282,918 282,951 284,336 285,158 64 Borrowings from Federal Reserve Banks 1,035 1,655 1,462 1,015 1,574 559 4,242 1,005 1,677 65 Treasury tax-and-loan notes 21,053 3,155 9,825 20,625 24,107 22,775 16,236 15,812 16,768 66 All other liabilities for borrowed money6 256,103 259,834 258,939' 256,143 256,535 259,584 262,472 267,518 266,713 67 Other liabilities and subordinated notes and debentures .. 93,536 87,316 86,299' 85,274 85,262' 85,449 86,075 87,791 89,469 68 Total liabilities 1,318,294 1,356,949 1,323,412' 1,343,107 1,313,196' 1,344,224 1,318,898 1,344,182 1,337,007 69 Residual (total assets minus total liabilities)7 93,993' 95,413' 96,51(r 96,389' 96,320' 96,154 96,622 96,662 97,009 MEMO 70 Total loans and leases (gross) and investments adjusted . 1,123,271 1,142,958 1,138,784 1,143,741 1,141,914' 1,149,478 1,150,488 1,157,710 1,153,432 71 Total loans and leases (gross) adjusted 918,776 934,555 929,920 933,013 930,824' 939,507 939,696 944,748 942,155 72 Time deposits in amounts of $100,000 or more 196,083 204,475 206,249 206,332 206,798' 205,761 208,105 209,008 209,264 73 U.S. Treasury securities maturing in one year or less 18,560 18,503 18,965 18,835 19,531 19,310 19,344 20,825 20,770 74 Loans sold outright to affiliates—total 1,380 1,461 1,521 1,520 1,555 1,491 1,533 1,526 1,544 75 Commercial and industrial 1,029 1,115 1,176 1,195 1,240 1,194 1,230 1,236 1,251 76 Other 350 346 345 325 315 297 303 290 293 77 Nontransaction savings deposits (including MMDAs) 250,402 259,084 256,923 256,479 253,433 255,350 256,264 254,860 253,710 1. Beginning Jan. 6, 1988, the "Large bank" reporting group was revised 6. Includes federal funds purchased and securities sold under agreements to somewhat, eliminating some former reporters with less than $2 billion of assets repurchase; for information on these liabilities at banks with assets of $1 billionor and adding some new reporters with assets greater than $3 billion. more on Dec. 31, 1977, see table 1.13. 2. For adjustment bank data see this table in the March 1989 Bulletin. The 7. This is not a measure of equity capital for use in capital-adequacy analysis or adjustment data for 1988 should be added to the reported data for 1988 to establish for other analytic uses. comparability with data reported for 1989. 8. Exclusive of loans and federal funds transactions with domestic commercial 3. Includes U.S. government-issued or guaranteed certificates of participation banks. in pools of residential mortgages. 9. Loans sold are those sold outright to a bank's own foreign branches, 4. Includes securities purchased under agreements to resell. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 5. Includes allocated transfer risk reserve. 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 Financial Statistics • May 1989 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1988 1989 AAccccoouunntt Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 1 Cash balances due from depository institutions 26,940 29,826 25,318 27,633 24,996 33,916 19,634 27,913 24,559 2 Total loans, leases and securities, net2 221,039 216,341 215,771 215,823 218,381 220,482 226,048 225,203 222,797 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 15,689 15,800 15,595 16,069 16,032 15,937 15,914 15,931 15,920 6 Mortgage-backed securities4 6,782 6,913 6,910 6,977 6,948 6,966 6,966 6,918 6,924 All other maturing in 7 One year or less 2,225 2,276 2,268 2,672 2,663 2,666 2,664 3,507 3,519 8 Over one through five years 4,617 4,563 4,509 4,510 4,495 4,452 4,449 3,635 3,595 9 Over five years 2,066 2,048 1,908 1,911 1,925 1,852 1,834 1,870 1,882 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 17,468 17,834 17,761 17,817 17,646 17,652 17,471 17,348 17,341 13 States and political subdivisions, by maturity 12,205 12,198 12,198 12,198 12,190 12,138 12,092 12,046 12,052 14 One year or less 969 1,033 1,038 1,049 1,053 1,052 1,056 1,063 1,070 15 Over one year 11,236 11,165 11,160 11,149 11,137 11,085 11,036 10,983 10,982 16 Other bonds, corporate stocks, and securities 5,262 5,636 5,563 5,618 5,456 5,514 5,378 5,302 5,289 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold5 29,229 26,613 28,214 25,878 29,830 31,988 35,164 33,827 32,264 19 To commercial banks 14,683 13,640 14,043 11,882 15,804 13,123 17,583 15,823 14,529 20 To nonbank brokers and dealers in securities 8,970 8,276 8,666 8,871 9,266 12,306 12,215 11,340 12,569 21 To others 5,576 4,698 5,505 5,125 4,760 6,559 5,366 6,665 5,166 22 Other loans and leases, gross 173,521 170,542 168,847 170,705 169,587 169,621 172,238 172,859 172,054 23 Other loans, gross 167,825 164,848 163,174 165,016 163,910 163,948 166,624 167,244 166,327 24 Commercial and industrial 55,398 55,590 55,190 54,878 55,675 55,389 57,936 57,910 57,511 25 Bankers acceptances and commercial paper 389 353 343 301 289 322 316 362 352 26 All other 55,009 55,237 54,847 54,577 55,386 55,067 57,620 57,548 57,158 27 U.S. addressees 54,487 54,874 54,474 54,166 54,947 54,658 57,240 57,103 56,685 28 Non-U.S. addressees 522 363 372 412 438 409 380 445 473 29 Real estate loans 50,600 50,318 50,362 50,500 50,306 50,296 50,402 50,763 50,389 30 Revolving, home equity 3,271 3,285 3,282 3,288 3,282 3,296 3,292 3,308 3,310 31 All other 47,328 47,033 47,080 47,213 47,023 47,000 47,110 47,456 47,079 32 To individuals for personal expenditures 20,923 20,901 20,827 20,809 20,788 20,723 20,459 20,477 20,286 33 To depository and financial institutions 21,851 20,530 20,956 21,086 20,048 20,326 20,604 20,328 20,021 34 Commercial banks in the United States 12,310 11,355 11,717 11,855 11,260 10,768 11,038 11,338 10,594 35 Banks in foreign countries 2,061 2,261 2,470 2,553 2,007 2,561 2,443 1,922 2,648 36 Nonbank depository and other financial institutions 7,479 6,914 6,769 6,678 6,780 6,997 7,123 7,068 6,780 37 For purchasing and carrying securities 5,874 4,305 3,896 4,855 4,751 4,599 4,814 5,382 5,458 38 To finance agricultural production 159 149 172 164 158 211 212 195 196 39 To states and political subdivisions 6,362 6,160 6,142 6,132 6,146 6,147 6,138 6,134 6,104 40 To foreign governments and official institutions 517 500 455 427 474 561 538 384 464 41 All other 6,142 6,395 5,173 6,163 5,564 5,6% 5,519 5,670 5,898 42 Lease financing receivables 5,696 5,693 5,673 5,689 5,678 5,673 5,614 5,615 5,727 43 LESS: Unearned income 1,646 1,627 1,642 1,651 1,654 1,628 1,635 1,650 1,661 44 Loan and lease reserve 13,221 12,820 13,003 12,995 13,060 13,089 13,104 13,112 13,121 45 Other loans and leases, net6 158,654 156,095 154,201 156,059 154,873 154,904 157,499 158,097 157,272 46 All other assets7 58,804 61,787 59,831 63,838 58,760 61,310 59,482 62,098 61,418 47 Total assets 306,783 307,954 300,920 307,294 302,137 315,708 305,164 315,214 308,775 Deposits 48 Demand deposits 59,274 62,132 53,603 57,492 52,045 63,180 48,330 57,580 53,276 49 Individuals, partnerships, and corporations 41,640 45,280 38,046 39,950 36,748 40,239 33,392 39,016 37,637 50 States and political subdivisions 593 909 650 641 822 985 628 656 597 51 U.S. government 458 287 630 436 454 190 705 722 176 52 Depository institutions in the United States 5,848 6,303 5,340 6,578 5,069 10,393 4,329 7,562 4,646 53 Banks in foreign countries 5,481 6,018 4,976 5,784 4,691 5,637 4,955 5,043 6,270 54 Foreign governments and official institutions 831 582 788 672 647 606 601 736 930 55 Certified and officers' checks 4,423 2,755 3,172 3,430 3,615 5,129 33,,771199 33,,884455 3,020 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 9,110 9,540 9,161 9,004 8,605 8,850 8,886 8,746 8,684 57 Nontransaction balances 110,517 113,046 112,688 113,638 112,383 112,967 113,880 112,919 112,697 58 Individuals, partnerships, and corporations 100,417 103,166 102,687 103,534 101,840 102,433 103,228 102,016 101,836 59 States and political subdivisions 8,014 7,796 7,917 8,034 8,201 8,221 8,336 8,512 8,469 60 U.S. government 33 32 23 24 32 35 30 32 29 61 Depository institutions in the United States 1,797 1,793 1,802 1,786 2,047 2,028 2,024 2,102 2,104 62 Foreign governments, official institutions, and banks 257 258 260 259 262 250 262 257 259 63 Liabilities for borrowed money 65,301 65,526 66,669 69,269 70,186 72,856 74,078 75,464 72,604 64 Borrowings from Federal Reserve Banks 0 0 0 0 875 0 2,525 0 0 65 Treasury tax-and-loan notes 5,392 625 2,509 5,410 6,404 5,690 3,936 4,218 4,290 66 All other liabilities for borrowed money 59,909 64,901 64,160 63,859 62,907 67,165 67,617 71,246 68,314 67 Other liabilities and subordinated notes and debentures 35,359 30,174 30,698 29,900 30,968 30,032 31,984 32,384 33,391 68 Total liabilities 279,562 280,418 272,820 279,303 274,187 287,885 277,158 287,092 280,653 69 Residual (total assets minus total liabilities)9 27,221 27,536 28,100 27,991 27,951 27,823 28,006 28,122 28,122 MEMO 70 Total loans and leases (gross) and investments adjusted '10 208,913 205,793 204,656 206,732 206,032 211,308 212,165 212,804 212,457 71 Total loans and leases (gross) adjusted 175,756 172,160 171,300 172,846 172,354 177,718 178,780 179,524 179,195 72 Time deposits in amounts of $100,000 or more 41,246 41,924 42,316 42,982 42,260 41,855 41,759 41,905 41,942 73 U.S. Treasury securities maturing in one year or less 2,984 2,751 2,836 3,288 3,277 3,180 2,905 4,199 3,870 1. These data also appear in the Board's H.4.2 (504) release. For address, see 6. Includes allocated transfer risk reserve. inside front cover. 7. Includes trading account securities. 2. Excludes trading account securities. 8. Includes federal funds purchased and securities sold under agreements to 3. Not available due to confidentiality. repurchase. 4. Includes U.S. government-issued or guaranteed certificates of participation 9. Not a measure of equity capital for use in capital adequacy analysis or for Digitized for FRiAn SpoEolRs of residential mortgages. other analytic uses. 5. Includes securities purchased under agreements to resell. 10. Exclusive of loans and federal funds transactions with domestic commerhttp://fraser.stlouisfed.org/ cial banks. 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 1989 AAccccoouunntt Dec. 28 Jan. 4 Jan. 11 Jan. 18 Jan. 25 Feb. 1 Feb. 8 Feb. 15 Feb. 22 1 Cash and due from depository institutions ... 12,181 11,424 11,386 11,304 11,706 11,461 11,806 10,330 10,661 2 Total loans and securities 111188,,117722'' 126,252' 122,531' 123,037' 121,752 122,036 128,022 129,364 131,593 3 U.S. Treasury and government agency securities 7,640' 8,159' 7,970' 8,297' 8,542 8,894 8,897 9,095 88,,773322 4 Other securities. 7,008' 7,273' 7,294' 7,245' 7,147 7,138 7,088 7,026 7,063 5 Federal funds sold 9,290 8,298 7,106 6,446 6,319 5,993 6,364 6,540 9,656 6 To commercial banks in the United States. 7,282 7,445 6,349 5,272 5,385 4,929 5,313 5,390 8,586 7 To others 2,008 853 757 1,174 934 1,064 1,051 1,150 1,070 8 Other loans, gross 94,234' 102,522 100,161 101,049 99,744 100,011 105,673 106,703 106,142 9 Commercial and industrial 5599,,550055'' 6677,,331188 6655,,660044 66,061 64,582 65,237 70,381 70,724 70,237 10 Bankers acceptances and commercial paper 1,420 1,651 1,648 1,786 1,703 1,680 1,732 1,692 1,674 11 All other 58,085' 65,667 63,956 64,275 62,879 63,557 68,649 69,032 68,563 12 U.S. addressees 56,416' 64,215 62,474 62,771 61,340 61,998 67,108 67,521 67,000 13 Non-U.S. addressees. 1,669 1,452 1,482 1,504 1,539 1,559 1,541 1,511 1,563 14 Loans secured by real estate n.a. 13,108 13,285 ' 13,458 13,630 13,466 13,775 13,812 13,662 15 To financial institutions 18,666 18,206 17,581 17,410 17,929 17,673 17,446 17,902 18,079 16 Commercial banks in the United States.. 14,098 13,517 13,020 12,715 13,188 12,788 12,538 12,677 13,052 17 Banks in foreign countries 1,269 1,225 1,126 1,198 1,214 1,415 1,328 1,667 1,440 18 Nonbank financial institutions 33,,229999 33,,446644 3,435 3,497 3,527 3,470 3,580 3,558 3,587 19 To foreign governments and official institutions 857 756 811 754 746 746 772 773 775588 20 For purchasing and carrying securities 2,317 1,772 1,664 2,053 1,642 1,592 2,041 2,132 1,971 21 All other3 12,889' 1,362 1,216 1,313 1,215 1,297 1,258 1,360 1,435 22 Other assets (claims on nonrelated parties) .. 32,511 32,727 32,206 31,341 31,401 31,256 31,492 31,406 30,881 23 Net due from related institutions 13,002 14,573 16,154 14,452 16,286 14,986 16,706 16,905 14,187 24 Total assets 117755,,886655 118844,,997766 182,280 180,134 181,146 179,740 188,026 188,004 187,324 25 Deposits or credit balances due to other than directly related institutions 46,765' 43,774' 43,036' 43,491' 43,415' 43,495 43,533 44,089 44,241 26 Transaction accounts and credit balances . 44,,118833 33,,774477 3,516 3,463 3,451 3,445 3,256 3,369 3,386 27 Individuals, partnerships, and corporations 2,453 2,436 2,316 2,325 2,140 2,099 2,070 2,311 2,209 28 Other 1,730 1,311 1,200 1,138 1,311 1,346 1,186 1,058 1,177 29 Nontransaction accounts 4422,,558822'' 4400,,002277'' 39,520' 40,028' 39,964' 40,050 40,277 40,720 40,855 30 Individuals, partnerships, and corporations 36,436 33,186 32,630 33,148 33,408 33,505 33,337 33,794 3333,,999933 31 Other 66,,114466'' 66,,884411'' 6,880' 6,556' 6,545 6,940 6,926 6,862 32 Borrowings from other than directly related institutions 66,000' 78,492' 79,921' 74,145' 76,813' 79,003 85,158 84,355 8811,,666644 33 Federal funds purchased 2277,,449922 36,769 37,577 32,285 34,756 35,564 43,482 37,521 36,477 34 From commercial banks in the United States 14,188 21,548 23,006 15,838 18,974 18,277 25,322 21,117 18,769 35 From others 13,304 15,221 14,571 16,447 15,782 17,287 18,160 16,404 17,708 36 Other liabilities for borrowed money 3388,,550088'' 4411,,772233'' 42,344' 41,86c 42,057' 43,439 41,676 46,834 45,187 37 To commercial banks in the United States 25,576' 27,894' 28,352' 28,081' 27,886' 28,873 27,260 30,618 29,930 38 To others 12,932 13,829 13,992 13,779 14,171 14,566 14,416 16,216 15,257 39 Other liabilities to nonrelated parties 34,088 33,697 33,189 32,446 32,546 32,392 32,441 32,564 32,111 40 Net due to related institutions 29,011 29,013 26,134 30,051 28,373 24,851 26,895 26,995 29,307 41 Total liabilities 175,865 184,976 182,280 180,134 181,146 179,740 188,026 188,004 187,324 MEMO 42 Total loans (gross) and securities adjusted .. 96,791' 105,290' 103,162' 105,050' 103,179 104,319 110,171 111,297 110099,,995555 43 Total loans (gross) adjusted 82,144' 89,858 87,898 89,508 87,490 88,287 94,186 95,176 94,160 1. Effective Jan. 4, 1989, the reporting panel includes a new group of large U.S. separate component of Other loans, gross. Formerly, these loans were included in branches and agencies of foreign banks. Earlier data included 65 U.S. branches "All other", line 21. and agencies of foreign banks that included those branches and agencies with 4. Includes credit balances, demand deposits, and other checkable deposits. assets of $750 million or more on June 30, 1980, plus those branches and agencies 5. Includes savings deposits, money market deposit accounts, and time that had reached the $750 million asset level on Dec. 31, 1984. These data also deposits. appear in the Board's H.4.2 (504) release. For address, see inside front cover. 6. Includes securities sold under agreements to repurchase. 2. Includes securities purchased under agreements to resell. 7. Exclusive of loans to and federal funds sold to commercial banks in the 3. Effective Jan. 4, 1989, loans secured by real estate are being reported as a United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • May 1989 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 11998844 11998855 11998866 11998877 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Sept. Dec. Mar. June Sept. Dec. 1 All holders—Individuals, partnerships, and corporations 302.7 321.0 363.6 343.5 339.0 343.5 328.6 346.5 337.8 n.a. 2 Financial business 31.7 32.3 41.4 36.3 36.5 36.3 33.9 37.2 34.8 n.a. 3 Nonfinancial business 166.3 178.5 202.0 191.9 188.2 191.9 184.1 194.3 190.3 n.a. 4 Consumer 81.5 85.5 91.1 90.0 88.7 90.0 86.9 89.8 87.8 n.a. 5 Foreign 3.6 3.5 3.3 3.4 3.2 3.4 3.5 3.4 3.2 n.a. 6 Other 19.7 21.2 25.8 21.9 22.4 21.9 20.3 21.9 21.7 n.a. Weekly reporting banks 1987 1988 11998844 11998855 11998866 11998877 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Sept. Dec. Mar. June Sept. Dec. 7 All holders—Individuals, partnerships, and corporations 157.1 168.6 195.1 183.8 179.1 183.8 181.8 191.5 185.3 198.3 8 Financial business 25.3 25.9 32.5 28.6 29.3 28.6 27.0 30.0 27.2 30.5 9 Nonfinancial business 87.1 94.5 106.4 100.0 96.0 100.0 98.2 103.1 101.5 108.7 10 Consumer 30.5 33.2 37.5 39.1 37.2 39.1 41.7 42.3 41.8 42.6 11 Foreign 3.4 3.1 3.3 3.3 3.1 3.3 3.4 3.4 3.1 3.6 12 Other 10.9 12.0 15.4 12.7 13.5 12.7 11.4 12.8 11.7 12.9 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 1989 IInnssttrruummeenntt D 19 e 8 c 4 . D 19 e 8 c 5 . D 19 e 8 c 6 . D 19 e 8 c 7 . D 19 e 8 c 8 . Aug. Sept. Oct. Nov. Dec. Jan. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 237,586 298,779 329,991 357,129 455,017 424,504 421,383 426,216 443,531 455,017 471,066 Financial companies1 Dealer-placed paper 2 Total 5566,,448855 7788,,444433 110011,,007722 110011,,995588 115599,,994477 114466,,559922 114499,,999955 114499,,884455 115577,,004422 115599,,994477 116622,,888844 3 Bank-related (not seasonally adjusted) 22,,003355 11,,660022 22,,226655 11,,442288 11,,224488 911 901 840 995 11,,224488 n.a. Directly placed paper* 4 Total 111100,,554433 113355,,332200 115511,,882200 117733,,993399 119922,,444422 118877,,003311 118800,,990055 118844,,004444 119922,,222200 119922,,444422 119999,,882288 5 Bank-related (not seasonally adjusted) 42,105 44,778 40,860 43,173 43,155 46,224 43,887 42,204 43,729 43,155 n.a. 6 Nonfinancial companies 70,558 85,016 77,099 81,232 102,628 90,881 90,483 92,327 94,269 102,628 108,354 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 78,364 68,413 64,974 70,565 66,63lr 64,036 63,452 62,253 65,961 66,63lr 62,212 Holder 8 Accepting banks 9,811 11,197 13,423 10,943 9,086r 9,551r 9,334 9,083 9,483 9,086r 9,719 9 Own bills 8,621 9,471 11,707 9,464 8,022r 88,,666644 8,400 8,026 8,768 8,022r 8,489 10 Bills bought 11,,119911 11,,772266 1,716 11,,447799 11,,006644 888888 934 11,,005577 715 11,,006644 11,,223300 Federal Reserve Banks 11 Own account 0 0 0 0 0 0 0 0 0 0 0 12 Foreign correspondents 671 937 1,317 965 1,493 9,915 963 1,166 1,393 1,493 1,596 13 Others 67,881 56,279 50,234 58,658 56,052' 53,493 53,154 52,004 55,086 56,052'' 50,898 Basis 14 Imports into United States 17,845 15,147 14,670 16,483 14,984' 14,608 14,622 14,064 14,959 14,984' 14,901 15 Exports from United States 16,305 13,204 12,960 15,227 14,410r 14,345 13,946 14,067 14,578 14,4K/ 13,705 16 All other 44,214 40,062 37,344 38,855 37,237' 35,083 34,884 34,122 36,424 37,237' 33,605 1. Institutions engaged primarily in activities such as, but not limited to, 5. 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. 6. 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. Beginning January 1989, bank-related series have been discontinued. or more in total acceptances. The new reporting group accounts for over 90 4. As reported by financial companies that place their paper directly with percent of total acceptances activity. investors. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year Rate Av r e a r te a ge Period Av r e a r te a ge Period 1986—Mar. 7 9.00 1986 8.33 1987 —Jan. 7.50 1988 —Jan. Apr. 21 8.50 1987 8.21 Feb. 7.50 Feb. July 11 8.00 1988 9.32 Mar. 7.50 Mar. Aug. 26 7.50 Apr. 7.75 Apr. 1986 —Jan. 9.50 May 8.14 May. 1987—Apr. 1 7.75 Feb. 9.50 June 8.25 June. May 1 8.00 Mar. 9.10 July 8.25 July . 15 8.25 Apr. 8.83 Aug. 8.25 Aug. Sept. 4 8.75 May 8.50 Sept. 8.70 Sept. Oct. 7 9.25 June 8.50 Oct. 9.07 Oct.. 22 9.00 July 8.16 Nov. 8.78 Nov. Nov. 5 8.75 Aug. 7.90 Dec. 8.75 Dec. Sept. 7.50 1988—Feb. 2 8.50 Oct. 7.50 1989 —Jan. May 11 9.00 Nov. 7.50 Feb. July 14 9.50 Dec. 7.50 Aug. 11 10.00 Nov. 28 10.50 1989—Feb. 10 11.00 24 11.50 NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • May 1989 1.35 INTEREST RATES Money and Capital Markets Averages, percent per year; weekly, monthly and annual figures are averages of business day data unless otherwise noted. 1988 1989 1989, week ending IInnssttrruummeenntt 11998866 11998877 11998888 Nov. Dec. Jan. Feb. Jan. 27 Feb. 3 Feb. 10 Feb. 17 Feb. 24 MONEY MARKET RATES 1 Federal funds' " ^ 6.80 6.66 7.57 8.35 8.76 9.12 9.36 9.06 9.16 9.10 9.27 9.39 2 Discount window borrowing' " 6.32 5.66 6.20 6.50 6.50 6.50 6.59 6.50 6.50 6.50 6.50 6.50 Commercial paper ' 3 1-month 6.61 6.74 7.58 8.38 9.31 9.03 9.29 9.00 9.04 9.14 9.28 9.41 4 3-month 6.49 6.82 7.66 8.66 9.11 9.04 9.37 9.04 9.08 9.21 9.37 9.52 5 6-month 6.39 6.85 7.68 8.55 8.97 9.02 9.35 9.02 9.05 9.18 9.35 9.53 Finance paper, directly placed 6 1-month 6.57 6.61 7.44 8.29 9.00 8.90 9.21 8.84 8.96 9.05 9.21 9.32 7 3-month 6.38 6.54 7.38 8.20 8.50 8.78 9.11 8.73 8.90 9.02 9.07 9.22 8 6-month , 6.31 6.37 7.14 7.94 8.24 8.44 8.65 8.41 8.50 8.58 8.63 8.68 Bankers acceptances 9 3-month 6.38 6.75 7.56 8.55 8.96 8.93 9.27 8.92 8.95 9.09 9.29 9.47 10 6-month 6.28 6.78 7.60 8.46 8.83 8.92 9.26 8.91 8.94 9.07 9.26 9.48 Certificates of deposit, secondary market 11 1-month 6.61 6.75 7.59 8.43 9.37 9.06 9.33 9.02 9.05 9.19 9.33 9.44 12 3-month 6.51 6.87 7.73 8.78 9.25 9.20 9.51 9.17 9.19 9.34 9.53 9.66 13 6-month 6.50 7.01 7.91 8.81 9.28 9.36 9.71 9.34 9.35 9.51 9.72 9.90 14 Eurodollar deposits. 3-month 6.71 7.06 7.85 8.91 9.30 9.28 9.61 9.26 9.26 9.34 9.58 9.68 U.S. Treasury bills Secondary market9 15 3-month 5.97 5.78 6.67 7.76 8.07 8.27 8.53 8.29 8.38 8.52 8.52 8.57 16 6-month 6.02 6.03 6.91 7.86 8.22 8.36 8.55 8.32 8.42 8.50 8.57 8.59 17 1-year 6.07 6.33 7.13 7.87 8.32 8.37 8.55 8.30 8.38 8.46 8.56 8.67 Auction average10 IS 3-month 5.98 5.82 6.68 7.68 8.09 8.29 8.48 8.26 8.33 8.57 8.49 8.51 19 6-month 6.03 6.05 6.92 7.76 8.24 8.38 8.49 8.31 8.39 8.53 8.54 8.50 20 1-year 6.18 6.33 7.17 7.92 8.49 8.45 8.59 n.a. n.a. n.a. 8.59 n.a. CAPITAL MARKET RATES U.S. Treasury notes aqd bonds" Constant maturities'" 21 1-year 6.45 6.77 7.65 8.48 8.99 9.05 9.25 8.97 9.05 9.15 9.27 9.41 22 2-year 6.86 7.42 8.10 8.67 9.09 9.18 9.37 9.10 9.14 9.26 9.39 9.54 23 3-year 7.06 7.68 8.26 8.72 9.11 9.20 9.32 9.11 9.14 9.24 9.36 9.42 24 5-year 7.30 7.94 8.47 8.79 9.09 9.15 9.27 9.04 9.07 9.14 9.32 9.43 25 7-year 7.54 8.23 8.71 8.89 9.13 9.14 9.23 9.02 9.04 9.11 9.28 9.38 26 10-year 7.67 8.39 8.85 8.96 9.11 9.09 9.17 8.97 9.00 9.05 9.21 9.31 27 20-year 7.84 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 30-year 7.78 8.59 8.96 9.02 9.01 8.93 9.01 8.81 8.83 8.90 9.07 9.13 Composite13 29 Over 10 years (long-term) 8.14 8.64 8.98 9.07 9.13 9.07 9.16 8.96 8.97 9.04 9.23 9.29 State and local notes and bonds Moody's series'4 30 Aaa 6.95 7.14 7.36 7.35 7.35 7.23 7.23 7.10 7.10 7.20 7.28 7.33 31 Baa 7.76 8.17 7.83 7.78 7.76 7.67 7.59 7.60 7.60 7.60 7.55 7.60 32 Bond Buyer series'5 7.32 7.63 7.68 7.46 7.61 7.35 7.44 7.27 7.29 7.38 7.54 7.55 Corporate bonds Seasoned issues'6 33 All industries 9.71 9.91 10.18 9.91 10.03 10.05 10.05 9.99 9.98 9.98 10.08 10.12 34 Aaa 9.02 9.38 9.71 9.45 9.57 9.62 9.64 9.56 9.56 9.56 9.65 9.70 35 Aa 9.47 9.68 n.a. 9.72 9.81 9.81 9.83 9.75 9.75 9.77 9.85 9.89 36 A 9.95 9.99 10.24 9.99 10.11 10.10 10.13 10.04 10.04 10.04 10.15 10.21 37 Baa 10.39 10.58 10.83 10.48 10.65 10.65 10.61 10.61 10.56 10.53 10.64 10.68 38 A-rated, recently offered utility bonds'7 9.61 9.95 n.a. 10.12 10.08 10.09 10.25 10.00 10.10 10.27 10.24 10.37 MEMO: Dividend/price ratio'8 39 Preferred stocks 8.76 8.37 9.23 9.29 9.38 9.31 9.31 9.23 9.25 9.27 9.34 9.37 40 Common stocks 3.48 3.08 3.64 3.70 3.68 3.64 3.64 3.61 3.53 3.52 3.62 3.67 1. Weekly, monthly and annual figures are averages of all calendar days, percentage yield (on a bank discount basis) that they would accept to two decimal where the rate for a weekend or holiday is taken to be the rate prevailing on the places. Thus, average issuing rates in bill auctions will be reported using two preceding business day. The daily rate is the average of the rates on a given day rather than three decimal places. weighted by the volume of transactions at these rates. 11. Yields are based on closing bid prices quoted by at least five dealers. 2. Weekly figures are averages for statement week ending Wednesday. 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields 3. Rate for the Federal Reserve Bank of New York. are read from a yield curve at fixed maturities. Based on only recently issued, 4. Unweighted average of offering rates quoted by at least five dealers (in the actively traded securities. case of commercial paper), or finance companies (in the case of finance paper). 13. Averages (to maturity or call) for all outstanding bonds neither due nor Before November 1979, maturities for data shown are 30-59 days, 90-119 days, callable in less than 10 years, including one very low yielding "flower" bond. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 14. General obligations based on Thursday figures; Moody's Investors Service. 150-179 days for finance paper. 15. General obligations only, with 20 years to maturity, issued by 20 state and 5. Yields are quoted on a bank-discount basis, rather than in an investment local governmental units of mixed quality. Based on figures for Thursday. yield basis (which would give a higher figure). 16. Daily figures from Moody's Investors Service. Based on yields to maturity 6. Dealer closing offered rates for top-rated banks. Most representative rate on selected long-term bonds. (which may be, but need not be, the average of the rates quoted by the dealers). 17. Compilation of the Federal Reserve. This series is an estimate of the yield 7. Unweighted average of offered rates quoted by at least five dealers early in on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of the day. call protection. Weekly data are based on Friday quotations. 8. Calendar week average. For indication purposes only. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 9. Unweighted average of closing bid rates quoted by at least five dealers. sample of ten issues: four public utilities, four industrials, one financial, and one 10. Rates are recorded in the week in which bills are issued. Beginning with the transportation. Common stock ratios on the 500 stocks in the price index. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1988 1989 IInnddiiccaattoorr 11998866 11998877 11998888 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 136.00 161.70 149.91 152.72 152.12 149.25 151.47 156.36 152.67 155.35 160.40 165.08 2 Industrial 155.85 195.31 180.83 184.92 184.09 179.72 182.18 188.58 182.25 187.75 194.62 200.00 3 Transportation 119.87 140.39 134.01 136.02 136.49 132.52 136.27 141.83 137.51 144.06 153.09 162.66 4 Utility 71.36 74.29 72.22 72.25 71.49 70.67 71.83 74.19 79.28 74.81 75.87 77.84 5 Finance 147.19 146.48 127.41 129.04 129.99 130.77 133.15 136.09 130.05 128.83 132.26 137.19 6 Standard & Poor's Corporation (1941-43 = 10)1 236.34 286.83 n.a. 270.68 269.05 263.73 267.97 277.40 271.02 281.28 285.41 294.01 7 American Stock Exchange (Aug. 31, 1973 = 50F 264.38 316.61 294.90 306.13 307.48 297.76 297.86 302.83 292.25 298.59 316.14 323.96 Volume of trading (thousands of shares) 8 New York Stock Exchange 141,385 188,647 161,450 195,772 166,916 144,668 145,702 162,631 134,427 135,473 168,204 169,321 9 American Stock Exchange 11,846 13,832 9,955 11,348 9,938 9,307 8,198 9,051 8,497 11,227 10,797 11,780 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 36,840 31,990 32,740 32,300 31,770 31,930 32,770 33,410 33,640 32,740 32,530 31,480 Free credit balances at brokers4 11 Margin-account 4,880 4,750 5,660 4,580 4,485 4,655 4,725 5,065 4,920 5,660 5,790 5,605 12 Cash-account 19,000 15,640 16,595 14,460 14,340 14,045 14,175 14,880 15,185 16,595 15,705 16,195 Margin requirements (percent of market vallie and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance "margin securities" (as defined in the regulations) when such credit is collateracompanies. With this change the index includes 400 industrial stocks (formerly lized by securities. Margin requirements on securities other than options are the 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 difference between the market value (100 percent) and the maximum loan value of financial. collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 2. Beginning July 5, 1983, the American Stock Exchange rebased its index 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; effectively cutting previous readings in half. and Regulation X, effective Nov. 1, 1971. 3. Beginning July 1983, under the revised Regulation T, margin credit at On Jan. 1, 1977, the Board of Governors for the first time established in broker-dealers includes credit extended against stocks, convertible bonds, stocks Regulation T the initial margin required for writing options on securities, setting acquired through exercise of subscription rights, corporate bonds, and govern- it at 30 percent of the current market-value of the stock underlying the option. On ment securities. Separate reporting of data for margin stocks, convertible bonds, Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the and subscription issues was discontinued in April 1984. same as the option maintenance margin required by the appropriate exchange or 4. Free credit balances are in accounts with no unfulfilled commitments to the self-regulatory organization; such maintenance margin rules must be approved by brokers and are subject to withdrawal by customers on demand. the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC 5. New series beginning June 1984. approved new maintenance margin rules, permitting margins to be the price of the 6. These regulations, adopted by the Board of Governors pursuant to the option plus 15 percent of the market value of the stock underlying the option. Securities Exchange Act of 1934, limit the amount of credit to purchase and carry Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • May 1989 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1988 AAccccoouunntt 11998866 11998877 Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. FSLIC-insured institutions 1 Assets 1,163,851 1,250,855 1,261,581 1,274,482 1,285,338 1,289,979 1,299,408 1,311,704 l,323,934r 1,332,952' 1,332,978' 1,351,494 2 Mortgages 697,451 721,593 725,625 728,984 733,547 773366,,889933 774433,,112288 775511,,446688 775544,,444411'' 776600,,992233'' 776633,,009933'' 776644,,996644 3 Mortgage-backed securities 158,193 201,828 197,889 202,767 205,053 207,744 220088,,553322 221100,,559966 221111,,884411'' 221111,,884411'' 221122,,334444'' 221133,,774433 4 Contra-assets to mortgage assets' . 41,799 42,344 41,268 39,358 39,764 40,251 40,308 39,113 38,450' 38,266' 37,696' 37,369 5 Commercial loans 23,683 23,163 24,004 24,243 24,201 24,672 24,959 25,094 24,791' 25,251' 25,391 33,008 6 Consumer loans 51,622 57,902 58,390 5599,,112211 6600,,225500 6611,,115511 6611,,556688 6622,,441122 6611,,555566'' 6611,,331111'' 6611,,778800'' 6622,,004433 7 Contra-assets to nonmortgage loans2.... 3,041 3,467 3,628 3,513 3,395 3,513 33,,338899 33,,115566 33,,007733'' 22,,992299'' 22,,995588'' 22,,99%% 8 Cash and investment securities 164,844 169,717 176,386 177,955 179,506 177,533 178,446 176,099 183,204' 184,797' 180,162' 187,345 9 Other3 112,898 122,462 124,184 124,284 125,939 125,751 126,471' 128,304' 130,303' 130,025' 130,863' 130,755 10 Liabilities and net worth . 1,163,851 1,250,855 1,261,581 1,274,482 1,285,338 1,289,979 1,299,408 1,311,704 1,323,934' l,332,952r l,332,978r 1,351,494 11 Savings capital 890,664 932,616 958,471 962,304 963,761 966,750 968,213 968,293 973,742' 976,163' 971,490' 971,500 12 Borrowed money 196,929 249,917 237,663 244,990 250,697 257,134 262,745 266,787 273,666 278,243' 281,028' 299,241 13 FHLBB 100,025 116,363 112,389 113,029 114,994 117,287 118,213 120,677 123,436 124,368 127,547 134,143 14 Other 96,904 133,554 125,274 131,961 135,703 139,847 144,532 146,110 150,230 153,875' 153,481' 165,098 15 Other 23,975 21,941 22,555 24,618 27,160 24,563 27,111 28,905 26,014 27,544 29,166' 24,333 16 Net worth 52,282 46,382 42,892 42,570 43,720 41,531 41,339 47,719 50,511' 51,002' 51,294' 56,420 FSLIC-insured federal savings banks 17 Assets 210,562 284,270 307,756 311,434 323,028 329,736 333,609r 357,912' 367,949' 369,711' 374,957' 410,097 18 Mortgages 113,638 161,926 176,090 178,394 184,575 190,647' 193,155' 204,357' 207,990' 209,721' 213,378' 224,584 19 Mortgage-backed securities 29,766 45,826 47,979 49,075 51,290 52,648 53,049 55,710 56,405' 56,778' 57,619' 64,772 20 Contra-assets to mortgage assets' 9,100 9,460 9,347 9,735 10,089 10,135' 10,916' 10,988' 10,907' 10,908' 12,034 21 Commercial loans 6,504 7,376 7,531 7,639 7,904 7,916' 8,568' 8,694' 8,886' 9,051' 8,916 22 Consumer loans 13,180 17,696 19,141 19,616 20,426 21,142 21,444 22,520 22,412' 22,414' 22,671' 23, %2 23 Contra-assets to nonmortgage loans2... 678 800 724 707 738 699 772 785' 789 803' 867 24 Finance leases plus interest 591 611 615 652 708 735 791 804' 805 833' 881 25 Cash and investment .. 35,347 38,224 38,259 39,889 40,286 40,825 45,167' 48,986' 48,681' 48,222' 59,424 26 Other 19,034 24,069 26,424 25,822 26,758 27,230 27,319' 32,487' 34,430' 34,121' 34,895' 40,459 27 Liabilities and net worth 210,562 284,270 307,756 311,434 323,028 329,736 333,609r 357,912' 367,949' 369,711' 374,957' 410,097 28 Savings capital .. 157,872 203,1% 224,169 226,544 232,656 236,759 239,591 256,224 261,863' 262,924' 263,984' 284,822 29 Borrowed money 37,329 60,716 61,552 62,566 66,816 69,356 70,015 75,759' 80,690' 80,782 83,628' 97,850 30 FHLBB 19,897 29,617 30,456 30,075 31,682 32,177 31,941 35,357 37,245 37,510 39.63C 44,994 31 Other 17,432 31,099 31,096 32,491 35,134 37,179 38,074 40,402' 43,445' 43,272 43,998' 52,856 32 Other 4,263 5,324 6,089 6,390 7,118 6,639 7,057' 8,059' 7,370' 7,679' 8,334' 7,843 33 Net worth 11,098 15,034 15,946 16,086 16,589 16,886 16,849' 17,668' 17,894' 18,206' 18,893' 19,472 Savings banks 34 Assets 236,866 259,643 262,100 262,269 264,507 249,927 252,875 253,453 255,510 257,127 258,537 261,361 Loans 35 Mortgage 118,323 138,494 140,835 139,691 143,235 138,148 139,844 141,316 143,626 145,398 146,501 147,597 36 Other 35,167 33,871 36,476 37,471 35,927 3322,,339999 3322,,994411 3322,,779999 3322,,887799 3333,,223344 3333,,779911 3311,,226699 Securities 37 U.S. government 14,209 13,510 12,225 13,203 12,490 11,597 11,563 1111,,335533 11,182 1100,,88%% 1100,,880044 1111,,445577 38 Mortgage-backed securities 25,836 32,772 32,272 31,072 31,861 29,735 3300,,006644 3300,,000066 2299,,119900 2299,,889933 2299,,337722 2299,,775511 39 State and local government 2,185 2,003 2,033 2,013 1,933 1,849 1,840 1,901 1,878 1,872 1,887 1,848 40 Corporate and other . 20,459 18,772 18,336 18,549 18,298 17,492 17,527 17,301 17,234 16,886 16,773 17,822 41 Cash 6,894 5,864 4,881 5,237 5,383 4,831 5,186 4,950 5,463 4,825 5,093 7,050 42 Other assets 13,793 14,357 15,042 15,033 15,380 13,876 13,910 13,827 14,058 14,123 14,316 14,567 43 Liabilities 236,866 259,643 262,100 262,269 264,507 249,927 252,875 253,453 255,510 257,127 258,537 261,361 44 Deposits 192,194 201,497 203,407 203,273 205,692 194,018 195,537 195,907 197,665 197,925 199,092 202,058 45 Regular4 186,345 196,037 198,273 197,801 200,098 188,571 189,993 190,716 192,228 192,663 194,095 196,407 46 Ordinary savings .. 37,717 41,959 41,867 41,741 42,403 40,179 40,124 39,738 39,618 39,375 39,482 39,750 47 Time 100,809 112,429 115,529 115,887 117,297 110,738 112,272 114,255 116,387 117,712 119,026 121,148 48 Other 5,849 5,460 5,134 5,472 5,594 5,447 5,544 5,191 5,427 5,262 4,997 5,651 49 Other liabilities 25,274 35,720 35,737 3355,,882277 3355,,883366 3344,,003388 3344,,668866 3344,,777766 3355,,000011 3355,,999977 3366,,001122 3366,,116699 50 General reserve accounts 18,105 20,633 21,024 21,109 21,179 19,875 20,069 20,018 20,151 20,324 20,462 20,337 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37—Continued 1988 AAccccoouunntt 11998866 11998877 Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Credit unions5 51 Total assets/liabilities and capital 147,726 f 169,111 169,175 172,456 172,345 173,276 173,044 174,649 174,722 174,406 174,593 5a2 F S e ta d t e e r al 9 5 5 2 , , 4 2 8 4 3 3 1 1 5 0 9 9 , , 3 7 1 9 4 7 1 5 0 9 9 , , 2 9 6 1 2 3 1 5 1 9 2 , , 8 5 5 9 5 5 1 5 1 9 2 , , 7 5 7 7 2 3 1 6 1 0 3 , , 2 0 0 6 8 8 1 6 1 0 2 , , 3 6 5 8 8 6 1 6 1 1 3 , , 2 3 6 8 6 3 1 6 1 1 3 , , 2 4 4 7 8 4 1 6 1 1 3 , , 1 7 3 1 5 7 1 6 1 0 4 , , 0 5 2 6 7 6 54 Loans outstanding.. 86,137 n.a. 101,965 103,271 105,704 105,800 107,065 108,974 110,939 111,624 112,452 113,191 55 Federal 55,304 65,732 66,431 68,213 68,658 69,626 70,944 72,200 72,551 73,100 73,766 56 State 30,833 1 36,233 36,840 37,491 37,142 37,439 38,030 38,739 39,073 39,352 39,425 57 Savings 134,327 156,045 155,105 157,764 158,186 159,314 158,731 157,944 160,174 159,021 159,010 58 Federal 87,954 1 1 101,847 101,048 103,129 103,347 104,256 103,657 103,698 104,184 103,223 104,431 59 State 46,373 54,198 54,057 54,635 54,839 55,058 55,074 54,246 55,990 55,798 n a. Life insurance companies 60 Assets 937,551 1,044,459 1,065,549 1,075,541 1,094,827 1,105,546 1,113,547 1,121,337 1,131,179 1,139,490 Securities 61 Government 84,640 84,426 92,408 93,946 86,711 87,160 88,218 88,362 87,588 8888,,888833 62 United States6.. 59,033 57,078 65,218 66,749 58,988 59,351 60,244 60,407 59,874 6600,,662211 63 State and local . 11,659 10,681 12,033 11,976 11,016 11,114 11,102 11,190 11,054 11,069 64 Foreign 13,948 16,667 15,157 15,221 16,707 16,695 16,872 16,765 16,660 17,193 65 Business 492,807 569,199 580,392 587,846 606,445 614,052 618,742 624,917 630,086 633,390 n.a. n a. 66 Bonds 401,943 472,684 484,403 490,285 503,728 509,105 514,926 520,796 525,336 527,419 67 Stocks 90,864 96,515 95,989 97,561 102,717 104,947 103,816 104,121 104,750 105,971 68 Mortgages 193,842 203,545 214,815 215,383 219,012 220,870 221,990 233,438 225,627 227,342 69 Real estate 31,615 34,172 34,845 34,964 35,484 35,545 35,737 35,920 35,892 36,892 70 Policy loans 54,055 53,626 52,604 52,568 53,013 53,107 53,142 53,194 53,149 53,157 71 Other assets 80,592 89,586 90,499 90,834 94,162 94,812 95,718 95,505 98,837 99,826 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 Financial Statistics • May 1989 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1988 1989 111999888666 111999888777 111999888888 Sept. Oct. Nov. Dec. Jan. Feb. U.S. budget1 1 Receipts, total 769,091 854,143 908,953 97,803 63,646 64,408 93,795 89,369 61,978 2 On-budget 568,862 640,741 667,462 75,586 45,847 47,023 74,682 65,250 38,473 3 Off-budget 200,228 213,402 241,491 22,217 17,799 17,385 19,114 24,119 23,505 4 Outlays, total 990,258 1,003,830 1,064,044 87,588 90,655 93,541 105,241 86,563 89,850 5 On-budget 806,760 809,998 861,352 70,071 73,514 75,542 91,610 68,999 71,324 6 Off-budget 183,498 193,832 202,691 17,518 17,141 17,999 13,632 17,564 18,526 7 Surplus, or deficit (-), total -221,167 -149,687 -155,090 10,214 -27,009 -29,133 -11,446 2,806 -27,871 8 On-budget -237,898 -169,257 -193,890 5,515 -27,667 -28,518 -16,928 -3,749 -32,851 9 Off-budget 16,731 19,570 38,800 4,699 658 -614 5,482 6,555 4,979 Source of financing (total) 10 Borrowing from the public 236,187 150,070 162,062 14,665 10,716 31,520 12,036 7,359 17,190 11 Operating cash (decrease, or increase (-)l -14,324 -5,052 —7,963 -31,444 13,748 9,218 -12,268 -8,135 17,009 12 Other2 -696 4,669 991 6,564 2,545 -11,605 11,678 -2,030 -6,328 MEMO 13 Treasury operating balance (level, end of period) 31,384 36,436 44,398 44,398 30,650 21,432 33,700 41,835 24,826 14 Federal Reserve Banks 7,514 9,120 13,024 13,024 6,151 5,198 8,657 11,766 6,298 15 Tax and loan accounts 23,870 27,316 31,375 31,375 24,499 16,234 25,044 30,069 18,528 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 FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr 1987 1988 1988 1989 111999888777 111999888888 HI H2 HI H2 Dec. Jan. Feb. RECEIPTS 1 All sources 854,143 908,954 447,282 421,712 476,115 449,821 93,795 89,369 61,978 2 Individual income taxes, net 392,557 401,181 205,157 192,575 207,659 200,299 39,673 48,627 23,427 3 Withheld 322,463 341,435 156,760 170,203 169,300 179,600 37,578 28,049 26,021 4 Presidential Election Campaign Fund 33 33 30 4 28 4 0 0 3 5 Nonwithheld 142,957 132,199 112,421 31,223 101,614 29,880 3,034 20,993 930 6 Refunds 72,896 72,487 64,052 8,853 63,283 9,187 939 415 3,528 Corporation income taxes 7 Gross receipts 102,859 109,683 52,396 52,821 58,002 56,409 23,100 4,003 22,,227777 8 Refunds 18,933 15,487 10,881 7,119 8,706 7,384 940 822 1,370 9 Social insurance taxes and contributions, net 303,318 334,335 163,519 143,755 181,058 157,603 24,698 31,652 32,086 10 Employment taxes and contributions 273,028 305,093 146,696 130,388 164,412 144,983 24,100 3300,,335511 2299,,885544 11 Self-employment taxes and contributions 13,987 17,691 12,020 1,889 14,839 3,032 0 11,,118811 11,,443399 12 Unemployment insurance 25,575 24,584 14,514 10,977 14,363 10,359 189 949 1,882 13 Other net receipts 4,715 4,659 2,310 2,390 2,284 2,262 410 351 349 14 Excise taxes 32,457 35,540 15,845 17,680 16,440 19,434 3,155 2,597 2,303 15 Customs deposits 15,085 16,198 7,494 7,993 7,913 8,535 1,391 1,316 1,347 16 Estate and gift taxes 7,493 7,594 3,818 3,610 3,863 4,054 673 687 498 17 Miscellaneous receipts5 19,307 19,909 10,299 10,399 9,950 10,873 2,046 1,309 1,411 OUTLAYS 18 All types 1,004,586 1,064,054 503,267 532,839 513,210 553,220 105,241 86,563 89,850 19 National defense 281,999 290,349 142,886 146,995 143,080 150,496 28,934 19,916 23,167 20 International affairs 11,649 10,469 4,374 4,487 7,150 2,636 805 938 274 21 General science, space, and technology 9,216 10,876 4,324 5,469 5,361 5,852 1,007 946 864 22 Energy 4,115 2,342 2,335 1,468 555 1,966 406 234 358 23 Natural resources and environment 13,363 14,538 6,175 7,590 6,776 8,330 1,480 932 1,056 24 Agriculture 26,606 17,210 11,824 14,640 7,872 7,725 1,712 2,141 2,175 25 Commerce and housing credit 6,156 19,064 4,893 3,852 5,951 20,274 7,217 836 -413 26 Transportation 26,221 27,196 12,113 14,096 12,700 14,922 2,249 2,293 1,810 27 Community and regional development 5,051 5,577 3,108 2,075 2,765 2,690 536 425 317 28 Education, training, employment, and social services 29,724 30,856 14,182 15,592 15,451 16,152 2,849 33,,446633 33,,111144 29 Health 39,968 44,482 20,318 20,750 22,643 23,360 4,102 3,922 3,523 30 Social security and medicare 282,472 297,828 142,864 158,469 135,322 149,017 25,374 25,641 25,402 31 Income security 123,255 130,174 62,248 61,201 65,555 64,978 12,355 10,701 12,234 32 Veterans benefits and services 26,782 29,248 12,264 14,956 13,241 15,797 3,539 1,188 2,287 33 Administration of justice 7,548 9,205 3,626 4,291 4,761 4,778 765 884 677 34 General government 7,564 9,506 3,344 3,560 4,337 5,137 1,600 389 558 35 General-purpose fiscal assistance 0 0 337 1,175 448 0 0 0 0 3 3 7 6 N U e n t d i i s n t t r e i r b e u s t t e 6 d offsetting receipts i - 1 3 3 6 8 , , 4 5 5 7 5 0 - 1 3 5 6 1 , , 5 7 7 1 6 1 -1 7 9 0 , , 1 1 0 1 2 0 -1 7 7 1 , , 6 9 8 3 4 3 -1 7 7 6 , , 7 0 6 9 6 8 -1 7 8 8 , , 7 3 7 1 1 7 - 1 2 2 , , 5 9 3 7 7 2 - 1 3 4 , , 0 7 6 8 8 0 - 1 2 5 , , 7 2 9 4 2 1 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 Nonfinancial Statistics • May 1989 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1986 1987 1988 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 2,218.9 2,250.7 2,313.1 2,354.3 2,435.2 2,493.2 2,555.1 2,614.6 n.a. 2 Public debt securities 2,214.8 2,246.7 2,309.3 2,350.3 2,431.7 2,487.6 2,547.7 2,602.3 2,684.4 3 Held by public 1,811.7 1,839.3 1,871.1 1,893.1 1,954.1 1,996.7 2,013.4 2,051.7 2,095.2 4 Held by agencies 403.1 407.5 438.1 457.2 477.6 490.8 534.2 550.4 5 Agency securities 4.0 4.0 3.8 4.0 3.5 5.6 7.4 12.4 6 Held by public 3.0 2.9 2.8 3.0 2.7 5.1 7.0 12.2 7 Held by agencies 1.1 1.1 1.0 1.0 .8 .6 .5 .2 n.a. 8 Debt subject to statutory limit 2,200.5 2,232.4 2,295.0 2,336.0 2,417.4 2,472.6 2,532.2 2,586.9 9 Public debt securities 2,199.3 2,231.1 2,293.7 2,334.7 22,,441166..33 2,472.1 22,,553322..11 22,,558866..77 10 Other debt1 1.3 1.3 1.3 1.3 11..11 .5 ..11 ..11 11 MEMO: Statutory debt limit 2,300.0 2,300.0 2,320.0 2,800.0 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 1988 TTyyppee aanndd hhoollddeerr 11998855 11998866 11998877 11998888 Q1 Q2 Q3 Q4 1 Total gross public debt 1,945.9 2,214.8 2,431.7 2,684.4 2,487.6 2,547.7 2,602.3 2,684.4 By type 2 Interest-bearing debt 1,943.4 2,212.0 2,428.9 2,663.1 2,484.9 2,545.0 2,599.9 2,663.1 i Marketable 1,437.7 1,619.0 1,724.7 1,821.3 1,758.7 1,769.9 1,802.9 1,821.3 4 Bills 399.9 426.7 389.5 414.0 392.6 382.3 398.5 414.0 5 812.5 927.5 1,037.9 1,083.6 1,059.9 1,072.7 1,089.6 1,083.6 6 Bonds 211.1 249.8 282.5 308.9 291.3 299.9 299.9 308.9 7 Nonmarketable1 505.7 593.1 704.2 841.8 726.2 775.1 797.0 841.8 8 State and local government series 87.5 110.5 139.3 151.5 142.9 146.9 147.6 151.5 y Foreign issues 7.5 4.7 4.0 66 6.1 5.7 6.3 66 10 Government 7.5 4.7 4.0 66 6.1 5.7 6.3 66 n Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 78.1 90.6 99.2 107.6 102.3 104.5 106.2 107.6 13 Government account series 332.2 386.9 461.3 575.6 474.4 517.5 536.5 575.6 14 Non-interest-bearing debt 2.5 2.8 2.8 21.3 2.6 2.7 2.5 21.3 By holder4 15 U.S. government agencies and trust funds 348.9 403.1 477.6 490.8 534.2 550.4 16 Federal Reserve Banks 181.3 211.3 222.6 217.5 227.6 229.2 17 Private investors 1,417.2 1,602.0 1,745.2 1,778.2 1,784.9 1,819.0 18 Commercial banks 198.2 203.5 201.2 201.0 202.5 203.0 19 Money market funds 25.1 28.0 14.3 14.9 13.1 10.8 20 Insurance companies 78.5 105.6 120.6 125.5 132.2 135.0 21 Other companies 59.0 68.8 84.6 n.a. 83.0 86.5 86.0 n.a. 22 State and local Treasurys 226.7 262.8 282.6 285.8 n.a. nn..aa.. Individuals 23 Savings bonds 79.8 92.3 101.1 104.0 106.2 107.8 24 Other securities 75.0 70.5 72.3 69.8 71.7 72.0 25 Foreign and international 212.5 251.6 287.3 321.0 333.8 334.3 26 Other miscellaneous investors 462.4 518.9 581.2 573.2 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. Treasure 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 1989 1989 IItteemm 11998866 11998877 11998888 Dec. Jan.' Feb. Jan. 18 Jan. 25' Feb. 1 Feb. 8 Feb. 15 Feb. 22 Immediate delivery2 1 U.S. Treasury securities 95,444 110,050 101,624' 89,961' 107,119 121,453 122,490' 107,993 105,739 117,072 141,801 106,559 By maturity 2 Bills 34,247 37,924 29,388 28,533 31,917 33,869 36,732' 29,872 27,346 30,005 42,354 29,500 3 Other within 1 year 2,115 3,271 3,426 2,925 3,778 3,636 3,984' 3,562 3,627 2,691 4,055 3,202 4 1-5 years 24,667 27,918 27,777 23,380' 28,254 38,136 28,291 31,132 29,246 37,427 40,686 39,240 5 5-10 years 20,455 24,014 24,939 21,480 27,316 27,949 33,775 26,374 29,037 27,471 31,256 21,029 6 Over 10 years 13,961 16,923 16,093 13,643 15,854 17,862 19,708 17,054 16,483 19,478 23,450 13,589 By type of customer / U.S. government securities dealers 3,669 2,936 2,761 2,810 2,425 3,913 2,937 2,403 2,400 4,507 4,587 2,957 8 U.S. government securities brokers 49,558 61,539 59,844 51,787 63,245 70,265 71,840 65,400 61,874 67,273 82,665 61,625 9 All others3 42,217 45,575 39,019 35,364 41,449 47,274 47,712' 40,190 41,465 45,291 54,550 41,977 10 Federal agency securities 16,747 18,084 15,903 14,801 19,425 17,196 20,376 18,496 18,277 17,903 18,492 14,873 11 Certificates of deposit 4,355 4,112 3,369 2,759 3,779 3,701 4,167 3,745 3,474 2,758 3,942 3,405 12 Bankers acceptances 3,272 2,965 2,316 1,898 2,608 2,368 2,943 2,338 2,122 2,121 2,246 2,543 13 Commercial paper 16,660 17,135 22,927 28,156 35,573 32,131 36,787 34,323 32,828 32,833 31,623 30,638 Futures contracts 14 Treasury bills 3,311 3,233 2,627 2,643 2,924 3,948 2,968 2,814 3,643 2,258 4,212 4,089 15 Treasury coupons 7,175 8,963 9,695 9,490 9,834 10,655 12,481 10,104 10,381 9,701 12,173 9,433 16 Federal agency securities 16 5 1 0 0 0 0 0 0 0 0 0 Forward transactions 17 U.S. Treasury securities 1,876 2,029 2,095 1,748' 1,677 3,062 l^ 1,636 1,643 4,143 1,428 3,450 18 Federal agency securities 7,830 9,290 8,008 9,217 8,211 7,644 9,723 6,921 6,469 8,560 9,593 5,847 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 bonds) or after 30 days for mortgage-backed agency issues. 2. Data for immediate transactions do not include forward transactions. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • May 1989 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1988 1989 1989 IItteemm 11998866 Dec. Jan/ Feb. Jan. 25' Feb. 1 Feb. 8 Feb. 15 Feb. 22 Positions Net immediate2 1 U.S. Treasury securities 12,912 -6,216 -22,754 -32,980 -32,251 -31,729 -29,661 -29,052 -30,699 -29,408 -34,653 2 Bills 12,761 4,317 2,247 -1,524 -3,517 -3,718 -1,664 -2,261 -2,706 -3,380 -5,882 3 Other within 1 year 3,705 1,557 -2,233 -1,938r -1,845 -3,548 -1,979 -2,647 -2,708 -3,299 -4,418 4 1-5 years 9,146 649 -3,019 -10,021 -10,073 -8,827 -11,192 -9,511 -9,817 -7,708 -9,151 5 5-10 years -9,505 -6,564 -9,666 -7,116f -8,502 -8,251 -7,460 -6,981 -7,222 -8,515 -8,978 6 Over 10 years -3,197 -6,174 -10,082 -12,380 -8,313 -7,385 -7,367 -7,651 -8,246 -6,505 -6,225 7 Federal agency securities 32,984 31,911 28,230 27,284' 26,690 30,055 27,191 27,356 27,669 31,829 30,936 8 Certificates of deposit 10,485 8,188 7,300 8,767 6,831 6,306 6,124 6,276 6,519 6,037 6,142 9 Bankers acceptances 5,526 3,660 2,486 2,128 2,236 2,152 2,122 2,219 2,317 2,336 2,023 10 Commercial paper 88,,008899 77,,449966 66,,115522 99,,336633 88,,661188 6,471 8,112 88,,004411 66,,443344 55,,991133 5,880 Futures positions 11 Treasury bills -18,059 -3,373 -2,210 1,014 -1,609 4,593 -2,822 906 3,080 4,600 6,380 12 Treasury coupons 3,473 5,988 6,224 6,611 3,320 2,872 1,737 1,387 1,936 2,533 3,064 13 Federal agency securities -153 -95 0 0 0 0 0 0 0 0 0 Forward positions 14 U.S. Treasury securities -2,144 -1,211 346' -451 108 850 447 666 393 802 1,506 lb Federal agency securities -11,840 -18,817 -16,348 -12,847 -12,787 -14,829 -12,451 -12,035 -13,233 -16,786 -15,136 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 98,913 126,709 136,327 147,712 150,515 127,409 151,458 158,967 150,815 170,181 156,846 17 Term 110088,,660077 114488,,228888 117777,,447777 220022,,005522 119988,,884455 172,632 220088,,002255 221144,,993300 222266,,009933 220077,,118844 221144,,226655 Repurchase agreements 18 Overnight and continuing 141,823 170,763 172,695 183,081 193,411 163,773 191,920 207,736 197,002 216,564 199,980 19 Term 102,397 121,270 137,056 145,045 139,465 125,989 154,157 153,939 168,965 148,827 155,378 1. Data for dealer positions and sources of financing are obtained from reports ties involved are not available for trading purposes. Immediate positions include submitted to the Federal Reserve Bank of New York by the U.S. Treasury reverses to maturity, which are securities that were sold after having been securities dealers on its published list of primary dealers. obtained under reverse repurchase agreements that mature on the same day as the Data for positions are averages of daily figures, in terms of par value, based on securities. Data for immediate positions do not include forward positions. the number of trading days in the period. Positions are net amounts and are shown 3. Figures cover financing involving U.S. Treasury and federal agency securion a commitment basis. Data for financing are in terms of actual amounts ties, negotiable CDs, bankers acceptances, and commercial paper. borrowed or lent and are based on Wednesday figures. 4. Includes all reverse repurchase agreements, including those that have been 2. Immediate positions are net amounts (in terms of par values) of securities arranged to make delivery on short sales and those for which the securities owned by nonbank dealer firms and dealer departments of commercial banks on obtained have been used as collateral on borrowings, that is, matched agreements. a commitment, that is, trade-date basis, including any such securities that have 5. Includes both repurchase agreements undertaken to finance positions and been sold under agreements to repurchase (RPs). The maturities of some "matched book" repurchase agreements. repurchase agreements are sufficiently long, however, to suggest that the securi- NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially estimated. 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 1989 AAggeennccyy 11998844 11998855 11998866 11998877 Sept. Oct. Nov. Dec. Jan. 1 Federal and federally sponsored agencies 271,220 293,905 307,361 341,386 363,894 364,491 370,639" n.a. n.a. 2 Federal agencies 35,145 36,390 36,958 37,981 35,448 35,070 35,209 35,668 35,727 3 Defense Department 142 71 33 13 11 8 8 8 8 4 Export-Import Bank2-3 15,882 15,678 14,211 11,978 10,964 10,964 10,964 11,033 11,033 5 Federal Housing Administration 133 115 138 183 120 118 139 150 143 6 Government National Mortgage Association participation certificates5 2,165 2,165 2,165 1,615 0 0 0 0 0 7 Postal Service6 1,337 1,940 3,104 6,103 5,842 5,842 5,842 6,142 6,142 8 Tennessee Valley Authority 15,435 16,347 17,222 18,089 18,511 18,138 18,256 18,335 18,401 9 United States Railway Association 51 74 85 0 0 0 0 0 0 10 Federally sponsored agencies7 237,012 257,515 270,553 303,405 328,446 329,421 335,430" n.a. n.a. 11 Federal Home Loan Banks 65,085 74,447 88,752 115,725 126,011 127,113 130,630 135,834 139,802 12 Federal Home Loan Mortgage Corporation 10,270 11,926 13,589 17,645 18,368 17,384 19,500 n.a. n.a. N Federal National Mortgage Association 83,720 93,896 93,563 97,057 105,986 105,698 105,337 105,459' 104,834 14 Farm Credit Banks 72,192 68,851 62,478 55,275 53,764 53,923 53,420 53,127' n.a. 15 Student Loan Marketing Association 5,745 8,395 12,171 16,503 20,117 21,112 21,403 22,073 n.a. 16 Financing Corporation n.a. n.a. n.a. 1,200 3,750 3,750 4,450 5,850 5,850 17 Farm Credit Financial Assistance Corporation11 n.a. n.a. n.a. n.a. 450 450 690 690 690 MEMO 18 Federal Financing Bank debt 145,217 153,373 157,510 152,417 146,151 145,529 143,321 142,850 142,447 Lending to federal and federally sponsored agencies 19 Export-Import Bank 15,852 15,670 14,205 11,972 10,958 10,958 10,958 1111,,002277 1111,,002277 7.0 Postal Service 1,087 1,690 2,854 5,853 5,592 5,592 5,592 5,892 5,892 21 Student Loan Marketing Association 5,000 5,000 4,970 4,940 4,910 4,910 4,910 4,910 4,910 22 Tennessee Valley Authority 13,710 14,622 15,797 16,709 17,131 16,758 16,876 16,955 17,021 23 United States Railway Association 51 74 85 0 0 0 0 0 0 Other Lending13 74 Farmers Home Administration 58,971 64,234 65,374 59,674 58,496 58,496 58,4% 58,4% 5588,,449966 75 Rural Electrification Administration 20,693 20,654 21,680 21,191 19,205 19,222 19,220 19,246 19,225 26 29,853 31,429 32,545 32,078 29,859 29,593 27,269 26,324 25,876 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 • May 1989 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1988 1989 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998866 11998877 11998888 July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. 1 All issues, new and refunding' 147,011 102,407 108,078 9,746 6,966 9,669 10,455 8,551 11,268 6,640 7,960 Type of issue 2 General obligation 46,346 30,589 29,662 1,959 2,472 2,370 2,058 2,368 2,491 1,784 4,217 3 Revenue 100,664 71,818 78,417 7,788 4,494 7,299 8,397 6,183 8,777 4,856 3,743 Type of issuer 4 State 14,474 10,102 9,254 140 576 1,206 734 525 1,011 280 1,846 5 Special district and statutory authority 89,997 65,460 69,447 6,752 3,749 6,407 7,283 5,550 7,690 4,882 3,573 6 Municipalities, counties, and townships 42,541 26,845 29,377 2,854 2,641 2,056 2,438 2,476 2,567 1,478 2,541 7 Issues for new capital, total 83,492 56,789 75,064 8,386 5,317 7,076 6,965 5,830 8,738 4,141 6,171 Use of proceeds 8 Education 12,307 9,524 13,722 1,699 694 1,351 512 827 2,564 827 750 9 Transportation 7,246 3,677 6,974 1,446 265 732 559 237 636 344 736 10 Utilities and conservation 14,594 7,912 7,929 225 613 694 1,238 1,055 463 1,335 1,219 11 Social welfare 11,353 11,106 17,824 1,222 1,242 2,358 2,478 1,991 2,072 509 753 12 Industrial aid 6,190 7,474 6,276 128 460 280 393 294 1,010 293 87 13 Other purposes 31,802 18,020 22,339 3,666 2,043 1,661 1,785 1,426 1,993 834 2,626 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 1988 1989 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998866 11998877 11998888 June July Aug. Sept. Oct. Nov. Dec. Jan. 1 All issues' 423,726 392,156 264,987' 30,043 18,037 19,305 23,933 21,688' 24,489' 12,186 17,361 2 Bonds2 355,293 325,648 222,531r 25,748 12,899 15,970 20,928 18,901' 21,054' 10,135 14,200 Type of offering 3 Public, domestic 231,936 209,279 199,203' 22,753 10,905 14,631 18,240 17,389' 16,756 10,000 11,500 4 Private placement, domestic 80,760 92,070 90,000 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 42,596 24,299 23,328' 2,995 1,994 1,339 2,688 1,512 4,298 135r 2,700 Industry group 6 Manufacturing 91,548 61,666 40,836' 5,305 2,205 3,476 3,750 3,552 2,890 1,446 764 7 Commercial and miscellaneous 40,124 49,327 18,614 2,281 1,530 2,226 1,035 764 3,260 722 1,875 8 Transportation 9,971 11,974 3,771 580 100 0 150 605 45 0 0 9 Public utility 31,426 23,004 13,775 1,707 540 298 856 1,346 672 138 650 10 Communication 16,659 7,340 4,044 925 577 29 1,064 100 289 158 0 11 Real estate and financial 165,564 172,343 141,491' 14,949 7,948 9,940 14,072 12,534' 13,899 7,671' 8,211 12 Stocks3 68,433 66,508 42,456 4,295 5,138 3,335 3,005 2,787 3,435' 2,051 3,161 Type 13 Preferred 11,514 10,123 6,544 501 407 498 385 865 478 495 275 14 Common 50,316 43,225 35,911 3,794 4,731 2,837 2,620 1,922 2,957 1,556 2,886 15 Private placement 6,603 13,157 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 15,027 13,880 6,115 1,676 296 538 244 288 430 425 33 17 Commercial and miscellaneous 10,617 12,888 4,766 522 2,073 347 525 222 52 89 32 18 Transportation 2,427 2,439 845 51 0 72 5 25 20 0 220 19 Public utility 4,020 4,322 1,581 207 20 135 215 282 70 20 1,960 20 Communication 1,825 1,458 448 13 20 3 23 0 20 59 5 21 Real estate and financial 34,517 31,521 28,701 1,826 2,729 2,240 1,993 1,970 2,843 1,459 911 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., the Board of Governors of the bonds. Stock data include ownership securities issued by limited partnerships. Federal Reserve System, and before 1989, the U.S. Securities and Exchange Commission. 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 1988 1989 IItteemm 11998877 11998888 June July Aug. Sept. Oct. Nov. Dec. Jan. INVESTMENT COMPANIES1 1 Sales of own shares2 381,260 271,237 22,503 20,728 20,595 19,872 20,494 20,327 25,780 29,015 2 Redemptions of own shares3 314,252 267,451 23,168 20,561 22,837 21,330 19,362 20,599 25,976 24,494 3 Net sales 67,008 3,786 -665 167 -2,242 -1,458 1,132 -272 -196 4,521 4 Assets4 453,842 472,297 481,120 477,076 465,822 474,662 481,571 470,660 472,297 487,204 5 Cash position5 38,006 45,090 43,229 44,015 45,229 46,706 45,976 43,488 45,090 48,144 6 Other 415,836 427,207 437,891 433,061 420,595 427,956 435,595 427,172 427,207 439,060 1. Data on sales and redemptions exclude money market mutual funds but 4. Market value at end of period, less current liabilities. include limited maturity municipal bond funds. Data on asset positions exclude 5. Also includes all U.S. government securities and other short-term debt both money market mutual funds and limited maturity municipal bond funds. securities. 2. Includes reinvestment of investment income dividends. Excludes reinvest- NOTE. Investment Company Institute data based on reports of members, which ment of capital gains distributions and share issue of conversions from one fund comprise substantially all open-end investment companies registered with the to another in the same group. Securities and Exchange Commission. Data reflect newly formed companies after 3. Excludes share redemption resulting from conversions from one fund to their initial offering of securities. another in the same group. SOURCE. Survey of Current Business (Department of Commerce). 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1987 1988 AAccccoouunntt 11998866 11998877 11998888'' Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Corporate profits with inventory valuation and capital consumption adjustment 298.9 310.4 328.1 298.3 305.2 322.0 316.1 316.2 326.5 330.0 339.9 2 Profits before tax 236.4 276.7 306.4 261.8 273.7 289.4 281.9 286.2 305.9 313.9 319.5 3 Profits tax liability 106.6 133.8 142.6 126.3 132.6 140.0 136.2 136.9 143.2 144.8 145.6 4 Profits after tax 129.8 142.9 163.8 135.5 141.1 149.5 145.7 149.4 162.7 169.1 173.9 5 Dividends 88.2 95.5 104.5 91.7 94.0 97.0 99.3 101.3 103.1 105.7 108.0 6 Undistributed profits .41.6 47.4 59.2 43.8 47.0 52.4 46.4 48.1 59.6 63.4 65.9 7 Inventory valuation 8.3 -18.0 -23.8 -14.4 -20.0 -19.5 -18.2 -19.4 -27.4 -29.3 -19.2r 8 Capital consumption adjustment 54.2 51.7 45.6 50.8 51.5 52.1 52.4 49.4 48.0 45.4 39.6' 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1987 1988 1989 IInndduussttrryy 11998866 11998877 11998888 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Total nonfarm business 379.47 389.67 430.95 380.66 394.54 406.82 412.02 426.94 436.01 445.73 466.76 Manufacturing 2 Durable goods industries 69.14 71.01 78.06 69.05 71.96 72.28 75.70 76.87 79.48 78.97 84.25 3 Nondurable goods industries 73.56 74.88 85.50 72.66 76.24 79.92 82.90 84.82 89.43 90.00 93.56 Nonmanufacturing 4 Mining 11.22 11.39 12.62 11.02 11.81 12.32 12.59 1133..2266 12.47 11.97 11.62 Transportation 5 Railroad 6.66 5.92 7.05 5.84 6.07 6.12 6.92 7.01 6.84 8.07 9.26 6 Air 6.26 6.53 7.61 6.02 6.15 6.94 6.43 6.66 8.06 6.84 10.07 7 Other 5.89 6.40 6.91 6.26 6.97 6.28 7.08 77..0055 7.26 7.20 77..5588 Public utilities 8 Electric 33.91 31.63 32.20 31.47 31.57 32.28 30.31 30.95 32.20 33.54 32.69 9 Gas and other 12.47 13.25 14.27 12.47 13.73 14.11 14.30 14.48 14.50 15.25 16.66 10 Commercial and other 160.38 168.65 186.74 165.86 170.05 176.56 175.79 185.83 185.76 193.87 201.07 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

A36 Domestic Nonfinancial Statistics • May 1989 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 n 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. Data after 1987:4 are currently unavailable. It is anticipated that these data will be available later this year. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Outstanding and Net Change1 Millions of dollars, seasonally adjusted 1988 1989 TTyyppee 11998855 11998866 Aug. Sept. Oct. Nov. Dec. Jan. 1 156,297 171,966 205,869 223,958 230,474 231,807 234,059 234,808 235,738 Retail financing of installment sales 2 Automotive (commercial vehicles) 20,660 25,952 35,674 37,519 37,120 37,359 36,984 37,067 38,030 3 Business, industrial, and farm equipment 22,483 22,950 24,987 27,603 27,569 27,841 28,160 27,919 28,278 Wholesale financing 4 Automotive 23,988 23,419 31,059 27,721 32,732 32,523 32,523 33,879 33,808 5 Equipment 4,568 5,423 5,693 5,803 5,949 5,888 6,045 6,083 6,1% 6 All other 6,809 7,079 8,408 8,531 8,738 8,867 9,025 9,278 9,547 Leasing 7 Automotive 16,275 19,783 21,943 24,370 23,861 24,186 24,623 24,639 24,660 8 Equipment 34,768 37,833 43,002 53,671 55,400 55,786 56,294 58,147 58,444 9 Loans on commercial accounts receivable and factored commercial accounts receivable 15,765 15,959 18,024 19,132 19,386 19,239 19,616 18,133 17,066 10 All other business credit 10,981 13,568 17,079 19,609 19,719 20,117 20,790 19,664 19,708 Net change (during period) 11 19,607 15,669 3,040 252 6,515 1,333 2,252 749 930 Retail financing of installment sales 12 Automotive (commercial vehicles) 5,067 5,292 1,220 -163 -399 239 -375 83 %3 n Business, industrial, and farm equipment -363 467 223 175 -35 272 319 -240 359 Wholesale financing 14 Automotive 5,423 -569 158 -728 5,011 -208 0 1,355 -71 15 Equipment -867 855 -101 149 146 -60 157 38 114 16 All other 1,069 270 257 73 207 129 158 253 270 Leasing 17 Automotive 3,896 3,508 -70 -30 -509 325 436 16 21 18 Equipment 2,685 3,065 1,038 867 1,729 386 508 1,853 297 19 Loans on commercial accounts receivable and factored commercial accounts receivable 2,161 194 -477 37 255 -148 377 -1,483 -1,067 20 All other business credit 536 2,587 792 -127 110 398 673 -1,126 44 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

Real Estate A37 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1988 1989 IItteemm 11998866 11998877 11998888 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms 1 Purchase price (thousands of dollars) 118.1 137.0 150.0 154.2 148.3 153.8 155.3 150.0 165.2r 2 Amount of loan (thousands of dollars) 86.2 100.5 110.5 114.9 109.8 114.0 115.6 110.8 121.3' 3 Loan/price ratio (percent) 75.2 75.2 75.5 76.7 75.4 75.8 76.1 75.6 75.2' 4 Maturity (years) 26.6 27.8 28.0 28.5 27.6 28.4 28.4 28.3 28.8 5 Fees and charges (percent of loan amount) 2.48 2.26 2.19 2.35 2.14 1.98 2.28 2.08 1.9C 6 Contract rate (percent per year) 9.82 8.94 8.81 8.68 8.90 8.77 9.05 9.04 9.2 <r Yield (percent per year) 7 FHLBB series5 10.26 9.31 9.18 9.06 9.26 9.10 9.43 9.39 9.52r 8 HUD series 10.07 10.17 10.30 10.55 10.39 10.21 10.37 10.67 10.55 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 9.91 10.16 10.49 10.74 10.58 10.23 10.63 10.81 10.69 10 GNMA securities6 9.30 9.43 9.83 10.09 9.93 9.77 9.85 10.07 10.02 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 98,048 95,030 101,329 102,540 102,453 102,493 102,696 103,013 102,370 101,922 12 FHA/VA-insured 29,683 21,660 19,762 19,586 19,526 19,464 19,467 19,415 19,354 19,275 13 Conventional 68,365 73,370 81,567 82,954 82,927 83,032 83,228 83,598 83,016 82,647 Mortgage transactions (during period) 14 Purchases 30,826 20,531 23,110 1,638 1,111 1,488 1,596 1,726 1,037 905 Mortgage commitments7 15 Contracted (during period) 32,987 25,415 23,435 1,041 1,439 1,740 1,289 1,350 1,087 3,557 16 Outstanding (end of period) 3,386 4,886 2,148 3,135 3,257 3,165 2,740 2,148 2,081 4,520 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 17 Total 13,517 12,802 15,105 15,142 15,442 15,669 15,419 17,425 n.a. n.a. 18 FHA/VA 746 686 620 611 606 601 595 590 n.a. n.a. 19 Conventional 12,771 12,116 14,485 14,531 14,836 15,068 14,824 16,834 n.a. n.a. Mortgage transactions (during period) 20 Purchases 103,474 76,845 44,077 3,858 4,192 4,037 4,109 5,843 n.a. n.a. 21 Sales 100,236 75,082 39,780" 3,719 3,728 3,674 4,231 5,510r n.a. n.a. Mortgage commitments9 22 Contracted (during period) 110,855 71,467 66,026 3,480 6,209 4,406 5,419 10,101 n.a. n.a. 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associmajor institutional lender groups; compiled by the Federal Home Loan Bank ation guaranteed, mortgage-backed, fully modified pass-through securities, as- Board in cooperation with the Federal Deposit Insurance Corporation. suming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying 2. Includes all fees, commissions, discounts, and "points" paid (by the the prevailing ceiling rate. Monthly figures are averages of Friday figures from the borrower or the seller) to obtain a loan. Wall Street Journal. 3. Average effective interest rates on loans closed, assuming prepayment at the 7. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Based on transactions on first day of subsequent month. Large securities swap programs, while the corresponding data for FNMA exclude swap monthly movements in average yields may reflect market adjustments to changes activity. in maximum permissable contract rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • May 1989 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1987 1988 Type of holder, and type of property 11998855 11998866 11998877 Q3 Q4 Ql Q2 Q3 1 All holders 2,289,843 2,597,175 2,943,144 2,864,736 2,943,144 2,988,100 3,067,566 3,151,956 2 1- to 4-family 1,488,009 1,698,524 1,925,197 1,870,635 1,925,197 1,955,770 2,015,646 2,079,706 3 Multifamily 214,470 247,831 273,830 268,911 273,830 277,622 282,511 286,918 4 Commercial 481,514 555,039 655,249 635,230 655,249 666,521 681,478 697,919 5 Farm 105,850 95,781 88,868 89,960 88,868 88,187 87,931 87,413 6 Selected financial institutions 1,390,394 1,507,289 1,700,820 1,648,328 1,700,820 1,723,737 1,773,444 1,827,383 7 Commercial banks 429,196 502,534 591,151 567,000 591,151 604,403 628,132 653,288 8 1- to 4-family 213,434 235,814 275,761 263,762 275,761 280,439 291,767 304,029 9 Multifamily 23,373 31,173 33,296 32,114 33,296 33,640 34,672 35,936 10 Commercial 181,032 222,799 267,663 256,981 267,663 275,535 286,366 297,880 11 Farm 11,357 12,748 14,431 14,143 14,431 14,789 15,327 15,443 12 Savings institutions3 760,499 777,312 856,945 838,737 856,945 863,110 881,924 905,372 13 1- to 4-family 554,301 558,412 598,886 583,432 598,886 603,532 622,863 644,676 14 Multifamily 89,739 97,059 106,359 104,609 106,359 107,687 109,108 109,800 15 Commercial 115,771 121,236 150,943 149,938 115500,,994433 115511,,113366 114499,,220011 115500,,114444 16 Farm 688 605 17 Life insurance companies 171,797 193,842 212,375 204,263 212,375 214,815 220,870 225,245 18 1- to 4-family 12,381 12,827 13,226 12,742 13,226 13,653 14,172 14,892 19 Multifamily 19,894 20,952 22,524 21,968 22,524 22,723 23,021 23,100 20 Commercial 127,670 149,111 166,722 159,464 166,722 168,774 174,086 178,012 21 Farm 11,852 10,952 9,903 10,089 9,903 9,665 9,591 9,241 22 Finance companies4 28,902 33,601 40,349 38,328 40,349 41,409 42,518 43,478 23 Federal and related agencies 166,928 203,800 192,721 191,520 192,721 196,909 199,474 197,885 24 Government National Mortgage Association.. 1,473 889 444 458 444 434 42 43 25 1- to 4-family 539 47 25 25 25 25 24 24 26 Multifamily 934 842 419 433 419 409 18 19 27 Farmers Home Administration 733 48,421 43,051 42,978 43,051 43,076 42,767 41,836 28 1- to 4-family 183 21,625 18,169 18,111 18,169 18,185 18,248 18,268 29 Multifamily 113 7,608 8,044 7,903 8,044 8,115 8,213 8,349 30 Commercial 159 8,446 6,603 6,592 6,603 6,640 6,288 5,300 31 Farm 278 10,742 10,235 10,372 10,235 10,136 10,018 9,919 32 Federal Housing and Veterans Administration 4,920 5,047 5,574 5,330 5,574 5,660 5,673 5,545 33 1- to 4-family 2,254 2,386 2,557 2,452 2,557 2,608 2,564 2,445 34 Multifamily 2,666 2,661 3,017 2,878 3,017 3,052 3,109 3,100 35 Federal National Mortgage Association 98,282 97,895 96,649 94,884 96,649 99,787 102,368 102,453 36 1- to 4-family 91,966 90,718 89,666 87,901 89,666 92,828 95,404 95,417 37 Multifamily 6,316 7,177 6,983 6,983 6,983 6,959 6,964 7,036 38 Federal Land Banks 47,498 39,984 34,131 34,930 34,131 33,566 33,048 32,566 39 1- to 4-family 2,798 2,353 2,008 2,055 2,008 1,975 1,945 1,917 40 Farm 44,700 37,631 32,123 32,875 32,123 31,591 31,103 30,649 41 Federal Home Loan Mortgage Corporation .. 14,022 11,564 12,872 12,940 12,872 14,386 15,576 15,442 42 1- to 4-family 11,881 10,010 11,430 11,570 11,430 12,749 13,631 13,589 43 Multifamily 2,141 1,554 1,442 1,370 1,442 1,637 1,945 1,853 44 Mortgage pools or trusts6 439,058 565,428 718,297 692,944 718,297 736,344 754,045 782,093 45 Government National Mortgage Association.. 212,145 262,697 317,555 308,339 317,555 322,976 322,616 332,926 46 1- to 4-family 207,198 256,920 309,806 300,815 309,806 315,095 314,728 324,469 47 Multifamily 4,947 5,777 7,749 7,524 7,749 7,881 7,888 8,457 48 Federal Home Loan Mortgage Corporation .. 100,387 171,372 212,634 208,872 212,634 214,724 216,155 220,683 49 1- to 4-family 99,515 166,667 205,977 202,308 205,977 208,138 209,702 214,063 50 Multifamily 872 4,705 6,657 6,564 6,657 6,586 6,453 6,620 51 Federal National Mortgage Association 54,987 97,174 139,960 130,540 139,960 145,242 157,438 167,170 52 1- to 4-family 54,036 95,791 137,988 128,770 137,988 142,330 153,253 162,228 53 Multifamily 951 1,383 1,972 1,770 1,972 2,912 4,185 4,942 54 Farmers Home Administration 47,523 348 245 333 245 172 106 106 55 1- to 4-family 22,186 142 121 144 121 65 23 27 56 Multifamily 6,675 57 Commercial 8,190 132 63 124 63 58 41 38 58 Farm 10,472 74 61 65 61 49 42 41 59 Individuals and others7 293,463 320,658 331,306 331,944 331,306 331,110 340,603 344,595 60 1- to 4-family 162,419 177,374 171,325 173,360 171,325 169,509 177,074 178,976 61 Multifamily 55,849 66,940 75,368 74,795 75,368 76,021 76,935 77,706 62 Commercial 48,692 53,315 63,255 62,131 63,255 64,378 65,496 66,545 63 Farm 26,503 23,029 21,358 21,658 21,358 21,202 21,098 21,368 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

Consumer Installment Credit A39 1.55 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change, seasonally adjusted Millions of dollars 19 58 1989 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998877 11998888'' May June July Aug. Sept. Oct. Nov. Dec/ Jan. Amounts outstanding (end of period) 1 Total 613,022 666,191 636,318 644,372 647,993 653,317 653,319 657,226 661,889 666,191 670,551 By major holder 2 Commercial banks 281,564 319,130 295,546 300,275 303,189 307,119 308,960 312,968 317,128 319,130 320,600 3 Finance companies 140,072 143,523 144,454 144,748 143,812 143,962 142,723 142,480 142,226 143,523 145,186 4 Credit unions 81,065 86,214 83,881 84,912 85,468 85,881 85,553 86,024 86,102 86,214 86,864 5 Retailers 42,782 45,370 43,162 43,450 43,634 43,712 43,956 44,250 44,644 45,370 45,131 6 Savings institutions 63,949 68,298 65,509 67,274 68,182 68,909 68,462 67,845 68,140 68,298 69,153 7 Gasoline companies 3,590 3,657 3,765 3,713 3,707 3,735 3,665 3,658 3,648 3,657 3,616 By major type of credit 8 Automobile 267,180 289,823 279,418 282,254 283,359 285,560 284,782 286,107 287,474 289,823 292,041 9 Commercial banks 108,438 126,054 115,951 117,322 118,650 120,380 121,450 122,995 124,583 126,054 126,913 10 Credit unions 43,474 48,324 45,831 46,565 47,043 47,444 47,436 47,870 48,088 48,324 48,864 11 Finance companies 98,026 96,368 99,708 99,900 98,896 98,711 96,939 96,400 95,825 96,368 96,890 12 Savings institutions 17,242 19,078 17,928 18,465 18,770 19,026 18,958 18,842 18,979 19,078 19,374 13 Revolving 159,307 185,755 169,154 172,809 174,927 177,568 178,675 181,277 184,467 185,755 186,578 14 Commercial banks 98,808 117,050 105,742 108,309 109,645 111,623 112,341 114,404 116,824 117,050 117,393 15 Retailers 36,959 39,095 37,259 37,526 37,671 37,708 37,914 38,169 38,481 39,095 38,945 16 Gasoline companies 3,590 3,657 3,765 3,713 3,707 3,735 3,665 3,658 3,648 3,657 3,616 17 Savings institutions 13,279 16,472 14,518 15,098 15,492 15,850 15,938 15,984 16,244 16,472 16,871 18 Credit unions 6,671 9,481 7,870 8,162 8,413 8,652 8,816 9,063 9,270 9,481 9,754 19 Mobile home 25,957 25,552 25,703 25,852 25,882 25,915 25,746 25,776 25,830 25,552 25,634 20 Commercial banks 9,101 8,793 8,966 8,933 8,913 8,893 8,833 9,048 9,079 8,793 8,826 21 Finance companies 7,771 7,210 7,578 7,513 7,436 7,387 7,341 7,243 7,224 7,210 7,141 22 Savings institutions 9,085 9,549 9,159 9,406 9,533 9,634 9,572 9,485 9,527 9,549 9,667 23 Other 160,578 165,061 162,043 163,456 163,825 164,274 164,116 164,066 164,117 165,061 166,298 24 Commercial banks 65,217 67,233 64,887 65,710 65,981 66,222 66,335 66,522 66,642 67,233 67,470 25 Finance companies 34,275 39,945 37,168 37,335 37,480 37,863 38,443 38,837 39,177 39,945 41,155 26 Credit unions 30,920 28,409 30,180 30,184 30,012 29,785 29,302 29,091 28,745 28,409 28,247 27 Retailers 5,823 6,275 5,903 5,923 5,964 6,004 6,041 6,081 6,163 6,275 6,187 28 Savings institutions 24,343 23,199 23,904 24,305 24,388 24,399 23,995 23,534 23,390 23,199 23,240 Net change (during period) 29 Total 41,189 53,169 2,982 8,054 3,621 5,324 2 3,907 4,663 4,302 4,360 By major holder 30 Commercial banks 19,425 37,566 2,380 4,729 2,914 3,930 1,841 4,008 4,160 2,002 1,470 31 Finance companies 6,374 3,451 -62 294 -936 150 -1,239 -243 -254 1,297 1,663 32 Credit unions 4,874 5,149 677 1,031 556 413 -328 471 78 112 650 33 Retailers 3,122 2,588 -133 288 184 78 244 294 394 726 -239 34 Savings institutions 7,068 4,349 122 1,765 908 727 -447 -617 295 158 855 35 Gasoline companies 326 67 -4 -52 -6 28 -70 -7 -10 9 -41 By major type of credit 36 Automobile 21,071 22,643 851 2,836 1,105 2,201 -778 1,325 1,367 2,349 2,218 37 Commercial banks 7,531 17,616 1,083 1,371 1,328 1,730 1,070 1,545 1,588 1,471 859 38 Credit unions 5,061 4,850 538 734 478 401 -8 434 218 236 540 39 Finance companies 5,676 -1,658 -856 192 -1,004 -185 -1,772 -539 -575 543 522 40 Savings institutions 2,803 1,836 87 537 305 256 -68 -116 137 99 296 41 Revolving 22,926 26,448 1,798 3,655 2,118 2,641 1,107 2,602 3,190 1,288 823 42 Commercial banks 12,051 18,242 1,492 2,567 1,336 1,978 718 2,063 2,420 226 343 43 Retailers 2,639 2,136 -155 267 145 37 206 255 312 614 -150 44 Gasoline companies 326 67 -4 -52 -6 28 -70 -7 -10 9 -41 45 Savings institutions 4,913 3,193 209 580 394 358 88 46 260 228 399 46 Credit unions 2,997 2,810 256 292 251 239 164 247 207 211 273 47 Mobile home -926 -405 -61 149 30 33 -169 30 54 -278 82 48 Commercial banks 175 -308 -81 -33 -20 -20 -60 215 31 -286 33 49 Finance companies -1,051 -561 3 -65 -77 -49 -46 -98 -19 -14 -69 50 Savings institutions -50 464 17 247 127 101 -62 -87 42 22 118 51 Other -1,882 4,483 394 1,413 369 449 -158 -50 51 944 1,237 52 Commercial banks -332 2,016 -114 823 271 241 113 187 120 591 237 53 Finance companies 1,749 5,670 792 167 145 383 580 394 340 768 1,210 54 Credit unions -3,184 -2,511 -117 4 -172 -227 -483 -211 -346 -336 -162 55 Retailers 483 452 23 20 41 40 37 40 82 112 -88 56 Savings institutions -598 -1,144 -191 401 83 11 -404 -461 -144 -191 41 1. The Board's series cover most short- and intermediate-term credit extended These data also appear in the Board's G.19 (421) release. For address, see to individuals that is scheduled to be repaid (or has the option of repayment) in inside front cover. two or more installments. 2. More detail for finance companies is available in the G. 20 statistical release. 3. Excludes 30-day charge credit held by travel and entertainment companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • May 1989 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1988 1989 IItteemm 11998866 11998877 11998888 July Aug. Sept. Oct. Nov. Dec. Jan. INTEREST RATES Commercial banks2 1 48-month new car3 11.33 10.45 10.85" n.a. 10.93 n.a. n.a. 11.22 n.a. n.a. 2 24-month personal 14.82r 14.22" 14.68 n.a. 14.81 n.a. n.a. 15.06 n.a. n.a. 3 120-month mobile home3 13.99 13.38 13.54 n.a. 13.62 n.a. n.a. 13.61 n.a. n.a. 4 Credit card 18.26 17.92 17.78 n.a. 17.79 n.a. n.a. 17.77 n.a. n.a. Auto finance companies 5 New car 9.44 10.73 12.60 12.44 12.64 12.93 13.10 13.20 13.25 13.27 6 Used car 15.95 14.60 15.11 14.99 15.16 15.46 15.67 15.75 15.80 15.57 OTHER TERMS4 Maturity (months) 7 New car 50.0 53.5 56.2 56.4 56.5 56.3 56.3 56.2 56.3 56.2 8 Used car 42.6 45.2 46.7 46.8 46.8 46.5 46.3 46.2 46.0 47.8 Loan-to-value ratio 9 New car 91 93 94 94 94 94 94 94 94 94 10 Used car 97 98 98 99 98 98 99 98 98 97 Amount financed (dollars) 11 New car 10,665 11,203 11,663 11,663 11,593 11,530 11,845 11,975 12,068 11,956 12 Used car 6,555 7,420 7,824 7,947 7,918 7,903 7,944 7,991 8,022 8,006 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

Flow of Funds A41 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1987 1988 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Q2 Q3 Q4 Ql Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 750.8 846.3 830.6 682.0 712.8 753.2 653.6 769.4 713.9 687.8 748.8 700.7 By sector and instrument ? U.S. government 198.8 223.6 215.0 144.9 157.5 146.8 103.1 168.2 227.7 89.2 188.6 112244..44 Treasury securities 199.0 223.7 214.7 143.4 140.0 148.7 104.0 163.2 228.2 81.5 167.7 82.8 4 Agency issues and mortgages -.2 -.1 .4 1.5 17.4 -1.9 -.9 5.0 -.5 7.7 20.9 41.6 5 Private domestic nonfinancial sectors 552.0 622.7 615.6 537.1 555.3 606.4 550.5 601.2 486.3 598.6 560.2 576.3 6 Debt capital instruments 319.3 452.3 460.7 446.0 400.8 466.7 428.3 415.8 351.2 445.8 424.9 381.4 7 Tax-exempt obligations 50.4 136.4 30.8 34.5 36.3 33.1 32.7 33.5 24.8 32.6 44.4 43.5 8 Corporate bonds 46.1 73.8 121.3 99.9 97.4 88.5 100.7 81.6 101.4 118.4 90.3 79.3 9 Mortgages 222.8 242.2 308.6 311.6 267.1 345.1 294.9 300.8 225.0 294.8 290.1 258.5 10 Home mortgages 136.7 156.8 210.9 221.7 196.4 243.5 212.1 206.9 162.4 240.3 206.5 176.6 11 Multifamily residential 25.2 29.8 33.5 24.4 15.1 30.9 23.3 15.9 23.6 2.6 13.5 20.6 1? Commercial 62.2 62.2 73.6 72.0 57.9 77.2 64.2 79.9 44.9 53.5 71.8 61.5 13 Farm -1.2 -6.6 -9.5 -6.4 -2.3 -6.6 -4.7 -1.9 -6.0 -1.7 -1.6 -.1 14 Other debt instruments 232.7 170.3 154.9 91.1 154.6 139.7 122.2 185.4 135.1 152.8 135.4 194.9 15 Consumer credit 81.6 82.5 54.4 40.7 49.3 52.4 61.4 49.4 34.8 59.5 34.9 67.9 16 Bank loans n.e.c 67.1 38.6 69.3 8.8 42.5 36.6 21.0 85.3 36.1 76.0 9.5 48.4 17 Open market paper 21.7 14.6 -9.3 2.3 11.6 4.7 1.0 3.9 -3.8 4.0 1111..11 35.1 18 Other 62.2 34.6 40.5 39.3 51.2 46.1 38.7 46.9 67.9 13.4 7799..99 43.5 19 By borrowing sector 552.0 622.7 615.6 537.1 555.3 606.4 550.5 601.2 486.3 598.6 560.2 576.3 70 State and local governments 27.4 91.8 44.3 34.0 34.9 31.4 34.8 32.9 19.5 29.2 46.1 44.6 ?1 Households 231.5 283.6 282.2 260.3 248.9 302.7 281.1 264.9 203.0 304.6 258.3 229.9 ?? Nonfinancial business 293.1 247.3 289.0 242.7 271.6 272.4 234.5 303.4 263.7 264.8 255.8 301.7 73 Farm -.4 -14.5 -16.3 -10.6 -3.4 -12.7 -9.4 3.3 -15.6 -3.6 -1.8 7.5 24 Nonfarm noncorporate 123.2 129.3 103.2 107.9 82.1 117.7 97.4 116.3 86.4 70.9 99.7 71.6 25 Corporate 170.3 132.4 202.1 145.4 192.9 167.4 146.6 183.8 192.9 197.6 158.0 222.7 26 Foreign net borrowing in United States 8.4 1.2 9.6 4.3 9.3 -.1 12.3 13.9 -1.0 5.2 4.6 28.5 77 Bonds 3.8 3.8 3.0 6.8 9.4 -4.1 6.7 21.6 16.8 -2.7 6.5 17.2 78 Bank loans n.e.c -6.6 -2.8 -1.0 -3.6 -.8 -3.5 -3.7 -6.1 .7 -3.5 2.9 -3.2 29 Open market paper 6.2 6.2 11.5 2.1 9.6 -6.4 21.6 -2.5 1.5 6.4 10.7 20.0 30 U.S. government loans 5.0 -5.9 -3.9 -1.0 -9.0 13.9 -12.3 .8 -19.9 5.1 -15.6 -5.5 31 Total domestic plus foreign 759.2 847.5 840.2 686.4 722.1 753.1 665.8 783.2 713.0 693.0 753.4 729.1 Financial sectors 32 Total net borrowing by financial sectors 148.7 198.3 297.2 303.3 240.0 316.7 306.4 250.2 134.4 262.9 235.5 327.0 By instrument 33 U.S. government related 74.9 101.5 178.1 185.8 136.1 196.8 185.5 167.5 120.3 101.8 115500..66 117711..77 34 Sponsored credit agency securities 30.4 20.6 15.2 30.2 44.9 21.5 32.0 71.6 56.8 9.4 42.8 70.8 35 Mortgage pool securities 44.4 79.9 163.3 156.4 91.2 175.4 153.5 95.9 63.4 92.4 107.8 100.9 1.1 --..44 -.8 -.1 37 Private financial sectors 73.8 96.7 119.1 117.5 103.9 119.9 120.8 82.7 14.1 161.1 84.9 155.3 38 Corporate bonds 33.0 47.9 70.9 67.2 37.3 45.6 77.7 42.4 11.1 60.1 40.9 37.0 39 Mortgages .4 .1 .1 .4 -.1 .1 .2 .8 -.1 * * -.2 40 Bank loans n.e.c .7 2.6 4.0 -3.3 -6.2 .6 6.3 -10.7 -26.8 8.7 -8.6 2.1 41 Open market paper 24.1 32.0 24.2 28.8 53.1 54.0 14.3 5.4 24.6 82.2 26.1 79.6 42 Loans from Federal Home Loan Banks 15.7 14.2 19.8 24.4 19.7 19.6 22.2 44.9 5.4 10.1 26.6 36.8 By sector 43 148.7 198.3 297.2 303.3 240.0 316.7 306.4 250.2 134.4 262.9 235.5 332277..00 44 Sponsored credit agencies 30.4 21.7 14.9 29.5 44.9 21.4 32.0 71.6 56.8 9.4 42.8 70.8 45 Mortgage pools 44.4 79.9 163.3 156.4 91.2 175.4 153.5 95.9 63.4 92.4 107.8 100.9 46 Private financial sectors 73.8 96.7 119.1 117.5 103.9 119.9 120.8 82.7 14.1 161.1 84.9 155.3 47 Commercial banks 7.3 -4.9 -3.6 7.1 -4.5 20.0 -13.1 15.0 -22.4 6.2 -8.3 6.3 48 Bank affiliates 15.6 14.5 4.6 2.9 -12.8 -2.7 11.3 -22.6 -67.4 11.3 9.7 -4.5 49 Savings and loan associations 22.7 22.3 29.8 36.0 29.2 22.2 41.9 51.9 9.1 16.6 54.3 37.0 50 Finance companies 18.2 52.7 48.4 31.6 58.4 40.7 35.5 30.2 50.9 94.2 9.4 79.2 51 REITs .8 .5 1.0 .8 1.6 -1.3 2.5 2.2 1.0 1.7 -1.4 5.2 52 CMO Issuers 9.3 11.5 39.0 39.1 31.9 41.0 42.7 6.0 43.0 31.2 21.3 32.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • May 1989 1.57—Continued 1987 1988 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All sectors 53 Total net borrowing 907.9 1,045.7 1,137.4 989.7 962.1 1,069.8 972.2 1,033.4 847.4 955.9 988.9 1,056.1 54 U.S. government securities 273.8 324.2 393.5 331.5 293.6 343.7 288.6 335.7 347.9 191.0 339.2 296.1 55 State and local obligations 50.4 136.4 30.8 34.5 36.3 33.1 32.7 33.5 24.8 32.6 44.4 43.5 56 Corporate and foreign bonds 83.0 125.4 195.2 174.0 144.1 130.0 185.1 145.6 129.3 175.9 137.7 133.4 57 Mortgages 223.1 242.2 308.6 312.0 267.0 345.2 295.1 301.6 224.8 294.8 290.1 258.3 58 Consumer credit 81.6 82.5 54.4 40.7 49.3 52.4 61.4 49.4 34.8 59.5 34.9 67.9 59 Bank loans n.e.c 61.1 38.3 72.3 1.9 35.6 33.8 23.6 68.5 10.0 81.1 3.7 47.4 60 Open market paper 52.0 52.8 26.4 33.2 74.3 52.3 36.9 6.7 22.3 92.5 48.0 134.7 61 Other loans 82.9 44.0 56.1 62.0 61.9 79.4 48.7 92.5 53.5 28.6 90.9 74.8 62 MEMO: U.S. government, cash balance 6.3 14.4 * -7.9 4.6 77.7 -19.6 -54.7 60.9 3.3 16.2 -61.9 Totals net of changes in U.S. government cash balances 63 Net borrowing by domestic nonfinancial 744.5 831.9 830.6 689.9 708.2 675.5 673.2 824.0 653.0 684.5 732.7 762.6 64 Net borrowing by U.S. government 192.5 209.3 215.0 152.8 152.9 69.1 122.7 222.8 166.8 86.0 172.4 186.3 External corporate equity funds raised in United States 65 Total net share issues -36.0 20.1 93.9 13.5 -114.4 13.9 -47.1 -82.7 -75.6 -131.1 -76.2 -174.5 66 Mutual funds 29.3 84.4 161.8 72.3 -2.0 79.1 13.8 -9.1 5.0 -8.0 0.3 -5.2 67 All other -65.3 -64.3 -68.0 -58.8 -112.4 -65.2 -60.9 -73.6 -80.5 -123.1 -76.5 -169.3 68 Nonfinancial corporations -74.5 -81.5 -80.8 -76.5 -130.5 -83.0 -78.0 -88.0 -95.0 -140.0 -92.0 -195.0 69 Financial corporations 8.2 13.5 11.5 20.1 17.2 16.5 18.4 26.4 15.2 23.4 14.4 16.0 70 Foreign shares purchased in United States .9 3.7 1.3 -2.4 0.9 1.2 -1.3 -12.0 -.7 -6.5 1.1 9.7 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; quarterly data are at seasonally adjusted annual rates. 1987 1988 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998855 11998866 11998877 11998888 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Total funds advanced in credit markets to domestic nonfinancial sectors 846.3 830.6 682.0 712.8 552.0 753.2 653.6 769.4 713.9 687.8 748.8 700.7 By public agencies and foreign 2 Total net advances 193.1 304.2 256.7 233.1 270.9 279.3 211.1 265.4 261.7 116688..00 222299..11 227733..77 3 U.S. government securities 37.9 69.4 68.2 77.6 59.0 55.3 35.1 123.3 148.6 42.4 21.1 98.4 4 Residential mortgages 94.6 160.3 153.2 100.6 194.8 169.4 146.0 102.7 83.6 106.7 108.3 103.7 5 FHLB advances to savings and loans 14.2 19.8 24.4 19.7 11.0 19.6 22.2 44.9 5.4 10.1 26.6 36.8 6 Other loans and securities 46.3 54.6 10.9 35.2 6.1 35.1 7.8 -5.5 24.1 8.7 73.2 34.8 Total advanced, by sector 7 U.S. government 16.8 9.7 -11.9 -4.1 -8.5 -12.3 -24.1 -2.6 -8.8 -21.8 8.4 5.8 8 Sponsored credit agencies 95.5 177.3 181.4 120.8 204.9 177.0 187.0 156.6 103.1 103.4 129.9 146.9 9 Monetary authorities 18.4 19.4 24.7 10.5 9.4 29.8 29.0 30.4 -5.5 4.1 17.1 26.5 10 Foreign 62.3 97.8 62.5 105.9 65.1 84.8 19.1 81.0 172.9 82.4 73.8 94.6 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 101.5 178.1 185.8 136.1 193.5 196.8 185.5 167.5 120.3 101.8 150.6 171.7 12 Foreign 1.2 9.6 4.3 9.3 -8.7 -.1 12.3 13.9 -1.0 5.2 4.6 28.5 Private domestic funds advanced 13 Total net advances 756.0 714.1 615.5 625.1 465.9 670.6 640.3 685.3 571.5 626.8 674.9 627.2 14 U.S. government securities 286.2 324.1 263.3 215.9 299.0 288.5 253.5 212.4 199.3 148.6 318.1 197.7 15 State and local obligations 136.4 30.8 34.5 36.3 38.7 33.1 32.7 33.5 24.8 32.6 44.4 43.5 16 Corporate and foreign bonds 40.8 84.1 86.5 87.1 100.4 58.8 83.7 102.9 115.7 90.7 63.4 78.5 17 Residential mortgages 91.8 84.1 92.8 110.9 56.7 105.0 89.4 120.1 102.4 136.2 111.7 93.5 18 Other mortgages and loans 214.9 210.8 162.8 194.5 -18.0 204.8 203.2 261.4 134.7 228.9 163.9 250.7 19 LESS: Federal Home Loan Bank advances 14.2 19.8 24.4 19.7 11.0 19.6 22.2 44.9 5.4 10.1 26.6 36.8 Private financial intermediation 20 Credit market funds advanced by private financial institutions 569.8 746.5 566.0 577.7 521.5 551.2 641.3 550.1 652.3 567.8 489.2 601.7 21 Commercial banking 186.3 194.8 136.3 149.1 -56.2 198.0 150.9 252.6 56.2 213.1 140.6 186.4 22 Savings institutions 83.0 105.5 140.4 101.7 89.9 132.0 188.7 151.0 82.4 66.0 159.7 98.7 23 Insurance and pension funds 148.9 181.9 211.9 231.5 266.3 179.5 247.5 154.3 279.3 230.5 175.3 240.8 24 Other finance 151.6 264.3 77.4 95.5 221.6 41.7 54.1 -7.8 234.4 58.2 13.6 75.7 25 Sources of funds 569.8 746.5 566.0 577.7 521.5 551.2 641.3 550.1 652.3 567.8 489.2 601.7 26 Private domestic deposits and RPs 210.6 264.7 146.2 187.7 -17.1 141.1 193.9 267.0 292.4 53.1 209.7 195.6 27 Credit market borrowing 96.7 119.1 117.5 103.9 146.5 119.9 120.8 82.7 14.1 161.1 84.9 155.3 78 Other sources 262.5 362.7 302.3 286.2 392.1 290.2 326.6 200.4 345.7 353.5 194.6 250.8 29 Foreign funds 19.7 12.9 43.7 5.9 14.9 35.1 99.5 25.2 -80.1 106.6 -50.4 47.5 30 Treasury balances 10.3 1.7 -5.8 1.3 -36.9 43.6 6.1 -36.1 53.3 -17.5 8.7 -39.1 31 Insurance and pension reserves 131.9 144.3 176.1 215.5 195.1 192.6 196.1 120.3 244.5 223.5 137.4 256.8 32 Other, net 100.7 203.8 88.4 63.4 219.0 18.9 24.8 90.9 128.1 40.9 98.9 -14.3 Private domestic nonfinancial investors 33 Direct lending in credit markets 282.9 86.7 167.0 151.2 90.9 239.3 119.8 217.9 -66.6 220.2 270.6 180.7 34 U.S. government securities 175.7 50.1 103.2 137.7 52.1 170.1 70.9 119.6 115.2 93.9 230.0 111.7 35 State and local obligations 39.6 -13.6 46.1 21.1 27.8 58.1 42.4 56.0 1.5 20.3 28.8 33.7 36 Corporate and foreign bonds 2.4 32.6 5.3 -18.7 9.3 -58.6 28.3 42.1 -97.9 36.0 -18.7 6.0 37 Open market paper 45.6 -3.0 7.9 13.1 -1.9 64.2 -23.3 -7.5 -68.7 77.4 35.3 8.3 38 Other 19.6 20.7 4.6 -2.0 3.6 5.6 1.6 7.7 -16.7 -7.4 -4.8 21.1 39 Deposits and currency 220.9 285.0 162.4 199.3 -46.6 149.2 229.3 317.8 287.4 83.8 232.7 193.2 40 Currency 12.4 14.4 19.0 15.9 9.4 12.5 17.3 36.8 8.2 11.9 28.6 14.7 41 Checkable deposits 40.9 93.2 -2.2 13.5 -98.4 40.0 35.3 14.2 4.4 18.3 -23.9 55.1 42 Small time and savings accounts 138.5 120.6 76.7 104.2 30.8 70.0 80.2 125.7 190.0 63.1 98.3 65.4 43 Money market fund shares 8.9 41.5 28.2 25.1 14.4 2.4 32.7 63.3 59.1 -34.8 13.0 63.0 44 Large time deposits 7.7 -11.4 26.7 26.9 14.0 4.4 -1.0 89.4 11.7 -16.2 122.7 -10.5 45 Security RPs 14.6 20.8 16.9 18.1 22.1 24.3 46.6 -25.6 27.3 22.7 -.4 22.6 46 Deposits in foreign countries -2.1 5.9 -2.8 -4.3 -38.9 -4.4 18.1 13.9 -13.2 18.8 -5.6 -17.1 47 Total of credit market instruments, deposits, and currency 503.7 371.8 329.4 350.5 44.3 388.5 349.1 535.7 220.9 304.0 503.3 374.0 48 Public holdings as percent of total 22.7 36.2 37.3 32.2 49.8 37.0 31.7 33.8 36.7 24.2 30.4 37.5 49 Private financial intermediation (in percent) 75.3 104.5 91.9 92.4 111.9 82.1 100.1 80.2 114.1 90.5 72.4 95.9 50 Total foreign funds 82.0 110.7 106.2 111.8 80.0 119.9 118.7 106.2 92.8 189.0 23.4 142.1 MEMO: Corporate equities not included above 51 Total net issues 20.1 93.9 13.5 -114.4 170.1 13.9 -47.1 -82.7 -75.6 -131.1 -76.2 -174.5 52 Mutual fund shares 84.4 161.8 72.3 -2.0 205.4 79.1 13.8 -9.1 5.0 -8.0 .3 -5.2 53 Other equities -64.3 -68.0 -58.8 -112.4 -35.3 -65.2 -60.9 -73.6 -80.5 -123.1 -76.5 -169.3 54 Acquisitions by financial institutions 45.6 48.5 22.6 -3.3 29.2 72.6 5.2 -16.5 -35.4 -5.4 16.1 11.3 55 Other net purchases -25.5 45.4 -9.1 -111.0 140.9 -58.7 -52.4 -66.2 -40.2 -125.8 -92.3 -185.8 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 • May 1989 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1987 1988 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998855 11998866 Q2 Q3 Q4 Ql' Q2' Q3' Q4 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 5,204.3 5,953.7 6,797.0 7,618.1 7,917.8r 8,074.9' 8,302.7' 8,441.2 8,618.5 8,797.7 9,002.8 By sector and instrument 2 U.S. government 1,177.9 1,376.8 1,600.4 1,815.4 l,875.7r 1,897.8' 1,960.3' 2,003.2 2,022.3 2,063.9 2,117.8 3 Treasury securities 1,174.4 1,373.4 1,597.1 1,811.7 1,871.5' 1,893.8' 1,955.2' 1,998.1 2,015.3 2,051.7 2,095.2 4 Agency issues and mortgages 3.6 3.4 3.3 3.6 4.2 3.9 5.2 5.0 7.0 12.2 22.6 5 Private domestic nonfinancial sectors 4,026.4 4,577.0 5,196.6 5,802.7 6,042.1 6,177.2' 6,342.4 6,438.0 6,596.2 6,733.7 6,885.1 6 Debt capital instruments 2,717.8 3,040.0 3,488.4 3,946.4 4,189.4 4,297.0' 4,404.5 4,476.2 4,587.9 4,698.1 4,798.0 7 Tax-exempt obligations 471.7 522.1 658.4 689.2 705.2 715.5 723.7 728.0 735.8 749.4 -•',1.1 8 Corporate bonds 423.0 469.2 542.9 664.2 718.5 743.7 764.1 789.5 819.1 841.7 9 Mortgages 1,823.1 2,048.8 2,287.1 2,593.0 2,765.7 2,837.7 2,916.6 2,958.8 3,033.0 3,107.1 3 !"•:• 4 10 Home mortgages 1,200.2 1,336.2 1,490.2 1,699.6 1,800.7 1,853.8 1,908.7 1,935.8 1,996.7 2,052.0 2 < : 11 Multifamily residential 158.8 183.6 213.0 246.3 259.9 265.0' 270.0 274.4 275.2 277.8 ..1 12 Commercial 350.4 416.5 478.1 551.4 613.8 629.0 649.1 660.6 673.3 690.1 705.7 13 Farm 113.7 112.4 105.9 95.8 91.3 90.0 88.9 88.0 87.8 87.2 86.5 14 Other debt instruments 1,308.6 1,536.9 1,708.2 1,856.3 1,852.7 1,880.2 1,937.9 1,961.8 2,008.3 2,035.6 2,087.1 15 Consumer credit 437.7 519.3 601.8 656.2 658.7 680.9 696.9 692.2 709.6 725.7 746.2 16 Bank loans n.e.c 490.2 552.9 592.6 658.6 636.3 637.5 656.7 668.4 689.3 689.8 699.2 17 Open market paper 36.8 58.5 72.2 62.9 67.9 68.1 73.8 73.5 77.8 80.3 85.4 18 Other 344.0 406.2 441.6 478.6 489.9 493.7 510.5 527.7 531.6 539.8 556.3 19 By borrowing sector 4,026.4 4,577.0 5,196.6 5,802.7 6,042.1 6,177.2' 6,342.4 6,438.0 6,596.2 6,733.7 6,885.1 20 State and local governments 357.7 385.1 476.9 520.2 535.3 546.2 554.2 557.2 564.1 577.5 588.5 21 Households 1,811.6 2,038.2 2,314.5 2,594.2 2,691.2 2,762.8 2,836.5 2,862.0 2,942.8 3,012.6 3,079.4 22 Nonfinancial business 1,857.1 2,153.7 2,405.2 2,688.3 2,815.7 2,868.2' 2,951.6 3,018.9 3,089.3 3,143.6 3,217.2 23 Farm 188.4 187.9 173.4 156.6 150.2 148.5 145.5 141.3 143.9 143.7 141.7 24 Nonfarm noncorporate 645.8 769.0 898.3 1,001.6' 1,055.9"" 1,076.4' 1,109.5 1,131.8 1,148.6 1,167.9 1,190.2 25 Corporate 1,022.9 1,196.8 1,333.5 1,530. lr 1,609.6' 1,643.3' 1,696.6 1,745.8 1,796.8 1,832.0 1,885.3 26 Foreign credit market debt held in United States 227.3 235.1 236.7 238.2 236.8 238.9 244.3 245.1 246.4 246.6 253.6 27 Bonds 64.2 68.0 71.8 74.8 74.6 75.9 81.6 85.4 85.2 86.5 91.1 28 Bank loans n.e.c 37.4 30.8 27.9 26.9 25.4 24.2 23.3 22.8 22.4 22.7 22.5 29 Open market paper 21.5 27.7 33.9 37.4 35.6 40.6 41.2 42.5 44.0 46.3 50.9 30 U.S. government loans 104.1 108.6 103.0 99.1 101.2 98.2 98.1 94.4 94.7 91.1 89.1 31 Total domestic plus foreign 5,431.6 6,188.8 7,033.7 7,856.3 8,154.6' 8,313.9r 8,547.0' 8,686.4 8,864.8 9,044.3 9,256.4 Financial sectors 32 Total credit market debt owed by financial sectors 857.9 1,006.2 1,206.2 1,510.8 1,710.0 1,783.8 1,862.8' 1,882.9 1,954.9 2,014.6 2,102.8 By instrument 33 U.S. government related 456.7 531.2 632.7 810.3 937.1 981.6 1,026.5 1,050.6 1,076.9 1,116.3 1,162.6 34 Sponsored credit agency securities 206.8 237.2 257.8 273.0 275.8 283.7 303.2 313.5 317.9 328.5 348.2 35 Mortgage pool securities 244.9 289.0 368.9 531.6 656.4 692.9 718.3 732.1 754.0 782.8 809.4 36 Loans from U.S. government 5.0 5.0 6.1 5.7 5.0 5.0 5.0 5.0 5.0 5.0 5.0 37 Private financial sectors 401.2 475.0 573.4 700.5 772.9 802.1 836.3' 832.4 878.0 898.3 940.2 38 Corporate bonds 115.8 148.9 197.5 268.4 304.6 324.2 335.6' 337.5 352.3 362.8 372.9 39 Mortgages 2.1 2.5 2.7 2.7 2.9 2.9 3.1' 3.1 3.1 3.1 3.0 40 Bank loans n.e.c 28.9 29.5 32.1 36.1 40.1 42.2 40.8 31.7 34.3 32.9 34.6 41 Open market paper 195.5 219.5 252.4 284.6 311.1 312.7 323.8 330.6 353.4 358.0 376.9 42 Loans from Federal Home Loan Banks... 59.0 74.6 88.8 108.6 114.3 120.1 133.1 129.5 134.8 141.6 152.8 43 Total, by sector 857.9 1,006.2 1,206.2 1,510.8 1,710.0 1,783.8 1,862.8' 1,882.9 1,954.9 2,014.6 2,102.8 44 Sponsored credit agencies 211.8 242.2 263.9 278.7 280.7 288.7 308.2 318.5 322.9 333.5 353.1 45 Mortgage pools 244.9 289.0 368.9 531.6 656.4 692.9 718.3 732.1 754.0 782.8 809.4 46 Private financial sectors 401.2 475.0 573.4 700.5 772.9 802.1 836.3' 832.4 878.0 898.3 940.2 47 Commercial banks 76.8 84.1 79.2 75.6 80.7 78.6 82.7 76.4 77.2 76.6 78.1 48 Bank affiliates 71.0 86.6 101.2 101.3 108.7 109.5 104.2 88.8 91.8 92.2 91.4 49 Savings and loan associations 73.9 93.2 115.5 145.1 157.0 165.4 181.1 177.4 186.9 197.9 210.3 50 Finance companies 171.7 193.2 246.9 308.1 329.5' 340.4' 358.0' 368.4 392.4 397.1 416.4 51 REITs 3.5 4.3 5.6 6.5 6.1' 6.8' 7.3' 7.6 8.0 7.6 8.9 52 CMO issuers 4.2 13.5 25.0 64.0 90.9 101.6 103.1 113.9 121.7 127.0 135.1 All sectors 53 Total credit market debt 6,289.5 7,195.0 8,239.8 9,367.2 9864.6' 10,097.6' 10,409.8' 10,569.3 10,819.7 11,058.9 11,359.2 54 U.S. government securities 1,629.4 1,902.8 2,227.0 2,620.0 2,807.8' 2,874.4' 2,981.8' 3,048.8 3,094.2 3,175.2 3,275.4 55 State and local obligations 471.7 522.1 658.4 689.2 705.2 715.5 723.7 728.0 735.8 749.4 760.1 56 Corporate and foreign bonds 603.0 686.0 812.1 1,007.4 1,097.7 1,143.9 1,181.4' 1,212.3 1,256.6 1,291.0 1,325.4 57 Mortgages 1,825.4 2,051.4 2,289.8 2,595.8 2,768.6 2,840.7' 2,919.8' 2,961.9 3,036.1 3,110.2 3,179.5 58 Consumer credit 437.7 519.3 601.8 656.2 658.7 680.9 696.6 692.2 709.6 725.7 746.2 59 Bank loans n.e.c 556.5 613.2 652.6 721.6 701.7 703.8 720.8 722.9 746.0 745.4 756.4 60 Open market paper 253.8 305.7 358.5 384.9 414.6 421.4 438.8 446.7 475.3 484.6 513.1 61 Other loans 512.1 594 4 639.5 692.0 710.4 717.0 746.6' 756.6 766.1 777.4 803.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A45 1.60 SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER Billions of dollars, except as noted; period-end levels. 1987 1988' TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998833 11998844 11998855 11998866 Q2 Q3 Q4r Ql Q2 Q3 Q4 1 Total funds advanced in credit markets to domestic nonfinancial sectors 5,204.3 5,953.7 6,797.0 7,618.1 7,917.8r 88,,007744..99'' 8,302.7 8,441.2 8,618.5 88,,779977..77 99,,000022..88 By public agencies and foreign ? Total held 1,101.7 1,259.2 1,459.4 1,759.3 1,918.0 1,967.0 22,,003388..22 22,,009933..99 22,,114411..11 22,,119922..22 22,,226655..99 3 U.S. government securities 339.0 377.9 421.8 491.2 519.5 525.6 559.4 592.7 607.1 609.1 637.0 4 Residential mortgages 367.0 423.5 518.2 678.5 800.0 834.6 862.0 880.6 906.1 934.9 962.6 5 FHLB advances to savings and loans 59.0 74.6 88.8 108.6 114.3 120.1 133.1 129.5 134.8 141.6 152.8 6 Other loans and securities 336.8 383.1 430.6 481.0 484.3 486.8 483.7 491.1 493.0 506.6 513.5 7 Total held, by type of lender 1,101.7 1,259.2 1,459.4 1,759.3 1,918.0 1,967.0 2,038.2 2,093.9 2,141.1 2,192.2 2,265.9 8 U.S. government 212.8 229.7 247.6 254.3 242.9 237.1 235.0 233.3 228.6 225.6 225.4 9 Sponsored credit agencies and mortgage pools ... 482.0 556.3 657.8 833.9 957.9 1,003.7 1,044.9 1,064.0 1,091.6 1,126.7 1,165.7 10 Monetary authority 159.2 167.6 186.0 205.5 214.9 219.6 230.1 224.9 229.7 230.8 240.6 11 Foreign 247.7 305.6 367.9 465.7 502.3 506.7 528.2 571.8 591.1 609.2 634.1 Agency and foreign debt not in line 1 1? Sponsored credit agencies and mortgage pools ... 456.7 531.2 632.7 810.3 937.1 981.6 1,026.5 11,,005500..66 11,,007766..99 11,,111166..33 11,,116622..66 13 Foreign 227.3 235.1 236.7 238.2 236.8 238.9 244.3 245.1 246.4 246.6 253.6 Private domestic holdings 14 Total private holdings 4,786.6 5,460.8 6,207.0 6,907.3 77,,117733..66'''' 7,328.5' 7,535.3 77,,664433..00 77,,880000..77 77,,996688..33 88,,115533..11 15 U.S. government securities 1,290.4 1,524.9 1,805.2 2,128.7 2,288.3'' 2,348.8' 2,422.4 2,456.0 2,487.0 2,566.1 2,638.3 16 State and local obligations 471.7 522.1 658.4 689.2 705.2 715.5 723.7 728.0 735.8 749.4 760.1 17 Corporate and foreign bonds 441.7 476.8 517.6 601.7 642.4 663.4 688.1 716.3 740.7 756.6 775.2 18 Residential mortgages 992.2 1,096.5 1,185.1 1,267.4 1,260.6 1,284.2 1,316.7 1,329.6 1,365.9 1,394.9 1,421.7 19 Other mortgages and loans 1,649.6 1,915.2 2,129.5 2,328.9 2,391.5 2,436.6 2,517.4 2,542.5 2,606.0 2,642.9 2,710.6 20 LESS: Federal Home Loan Bank advances 59.0 74.6 88.8 108.6 114.3 120.1 133.1 129.5 134.8 141.6 152.8 Private financial intermediation 71 Credit market claims held by private financial 4,111.2 4,691.0 5,264.4 6,009.5 6,277.9' 6,434.3' 6,593.7 66,,772255..88 66,,887799..22 77,,000000..00 77,,116644..11 ?? Commercial banking 1,622.1 1,791.1 1,978.5 2,173.2 2,207.9 2,248.7 2,309.6 2,322.2 2,377.5 2,416.4 2,458.6 73 Savings institutions 944.0 1,092.8 1,178.4 1,283.0 1,355.4 1,396.5 1,434.2 1,438.9 1,467.6 1,502.5 1,528.6 74 Insurance and pension funds 1,093.5 1,215.3 1,364.2 1,546.0 1,653.0' 1,716.0' 1,758.0 1,823.3 1,880.0 1,925.8 1,989.4 25 Other finance 451.6 591.7 743.4 1,007.3 1,061.5 1,073.1' 1,091.9 1,141.4 1,154.2 1,155.3 1,187.4 76 Sources of funds 4,111.2 4,691.0 5,264.4 6,009.5 6,277.9'' 6,434.3' 6,593.7 6,725.8 6,879.2 7,000.0 7,164.1 77 Private domestic deposits and RPs 2,389.8 2,711.5 2,922.1 3,182.6 3,198.6 3,234.4 3,328.4 3,386.5 3,399.3 3,438.3 3,516.1 28 Credit market debt 401.2 475.0 573.4 700.5 772.9 802.1 836.3 832.4 878.0 898.3 940.2 79 Other sources 1,320.2 1,504.5 1,768.9 2,126.4 2,306.3' 2,397.7' 2,428.9 2,506.9 2,601.9 2,663.4 2,707.8 30 Foreign funds -23.0 -14.1 5.6 18.6 26.1 52.7 62.2 45.9 62.3 51.9 68.1 31 Treasury balances 11.5 15.5 25.8 27.5 30.9 33.0 21.6 23.5 32.6 34.2 23.0 37 Insurance and pension reserves 1,036.1 1,160.8 1,289.5 1,427.9 1,507.9' 1,553.5'' 1,593.3 1,653.0 1,704.9 1,741.2 1,795.5 33 Other, net 295.6 342.2 448.0 652.5 741.4 758.6' 751.7 784.6 802.1 836.0 821.2 Private domestic nonfinancial investors 34 Credit market claims 1,076.6 1,244.8 1,516.0 1,598.3 1,668.7 1,696.3 1,777.9 1,749.6 1,799.4 11,,886666..77 11,,992299..11 35 U.S. government securities 548.6 663.6 830.7 881.2 950.4 969.4 1,011.1 1,021.4 1,040.3 1,102.2 1,148.8 36 Tax-exempt obligations 170.0 196.3 235.9 222.3 243.1 255.9 268.3 265.6 272.9 282.4 289.4 37 Corporate and foreign bonds 45.4 44.5 47.6 80.1 71.4 80.6 84.8 67.9 74.0 71.3 66.1 38 Open market paper 68.4 72.4 118.0 115.0 132.6 118.7 140.5 124.0 144.6 144.5 153.6 39 Other 244.3 268.0 283.8 299.7 271.2 271.9 273.2 270.6 267.6 266.3 271.2 40 Deposits and currency 2,566.4 2,891.7 3,112.5 3,393.4 3,405.6 3,444.5 3,555.4 3,608.3 3,634.5 3,672.8 3,754.7 41 Currency 150.9 159.6 171.9 186.3 191.3 192.4 205.4 204.0 209.9 213.4 221.2 47 Checkable deposits 350.9 378.8 419.7 512.9 488.0 487.4' 510.3 490.9 505.8 490.5 523.8 43 Small time and savings accounts 1,542.9 1,693.4' 1,831.9 1,948.3 1,977.8' 1,990.9' 2,025.0 2,078.8 2,091.7 2,109.7 2,129.2 44 Money market fund shares 169.5 218.5 227.3 268.9 279.5 286.4 297.1 322.1 310.4 311.1 322.1 45 Large time deposits 247.7 332.1 339.8 328.4 322.4' 326.0' 355.1 350.0 343.0 377.0 382.0 46 Security RPs 78.8 88.7 103.3 124.1 130.9 143.6 141.0 144.6 148.4 149.9 159.1 47 Deposits in foreign countries 25.7 20.6 18.5 24.5 15.7 17.8 21.6 17.8 25.2 21.2 17.4 48 Total of credit market instruments, deposits, and currency 3,643.0 4,136.5 4,628.5 4,991.7 5,074.2 5,140.8 5,333.3 5,357.9 5,433.9 5,539.5 55,,668833..99 49 Public holdings as percent of total 20.2'' 20.3 20.7 22.4 23.5 23.6' 23.8 24.1 24.1 24.2 24.4 50 Private financial intermediation (in percent) 85.8r 85.9 84.8 87.0 87.5 87.7' 87.5 87.9 8888..11 87.8 87.8 51 Total foreign funds 224.7 291.5 373.5 484.2 528.4 559.4 590.5 617.6 665533..55 661.1 702.2 MEMO: Corporate equities not included above 52 Total market value 2,134.0 2,158.2 2,824.5 3,362.0 4,110.0 4,300.8 3,313.4 3,494.7 3,614.1 3,568.8 33,,559944..33 53 Mutual fund shares 112.1 136.7 240.2 413.5 520.7 525.1 460.1 479.2 486.8 478.1 475.2 54 Other equities 2,021.9 2,021.5 2,584.3 2,948.5 3,589.3 3,775.7 2,853.2 3,015.6 3,127.3 3,090.8 3,119.1 55 Holdings by financial institutions 612.0 615.6 800.0 972.2 1,238.9 1,312.5 1,021.7 1,090.7 1,142.0 1,135.4 1,153.2 56 Other holdings 1,522.0 1,542.6 2,024.5 2,389.8 2,871.1 2,988.4 2,291.7 2,404.0 2,472.1 2,433.4 2,441.1 NOTES BY LINE NUMBER. 32. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.59. 33. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 34. Line 14 less line 21 plus line 28. 6. Includes farm and commercial mortgages. 35-39. Lines 15-19 less amounts acquired by private finance plus amounts 12. Credit market debt of federally sponsored agencies, and net issues of borrowed by private finance. Line 39 includes mortgages. federally related mortgage pool securities. 41. Mainly an offset to line 10. 14. Line 1 less line 2 plus line 12 and 13. Also line 21 less line 28 plus line 34. 48. Lines 34 plus 40, or line 14 less line 29 plus 41 and 47. Also sum of lines 29 and 48 less lines 41 and 47. 49. Line 2/line 1 and 13. 19. Includes farm and commercial mortgages. 50. Line 21/line 14. 27. Line 40 less lines 41 and 47. 51. Sum of lines 11 and 30. 28. Excludes equity issues and investment company shares. Includes line 20. 52-54. Includes issues by financial institutions. 30. Foreign deposits at commercial banks plus bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts affiliates, less claims on foreign affiliates and deposits by banking in foreign banks. outstanding may be obtained from Flow of Funds Section, Stop 95, Division of 31. Demand deposits and note balances at commercial banks. Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • May 1989 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1988 1989 MMeeaassuurree 11998866 11998877 11998888 June July Aug. Sept. Oct. Nov.' Dec.' Jan.' Feb. 1 Industrial production 125.1 129.8 137.2 136.5 138.0 138.5 138.6 139.4 139.9 140.5 141.1 141.1 Market groupings 2 Products, total 133.3 138.3 145.9 145.3 146.5 147.3 147.4 148.1 148.4 149.4 150.3 150.7 3 Final, total 132.5 136.8 144.3 144.0 145.0 145.8 145.8 146.4 146.8 147.7 148.5 149.0 4 Consumer goods 124.0 127.7 133.9 133.0 134.2 135.0 134.8 136.4 136.8 138.2 138.8 139.0 5 Equipment 143.6 148.8 158.2 158.5 159.4 160.1 160.4 154.0 159.9 160.3 161.5 162.3 6 Intermediate 136.2 143.5 151.5 150.0 151.6 152.3 152.9 154.0 154.2 155.0 156.5 156.4 7 Materials 113.8 118.2 125.3 124.5 126.4 126.5 126.5 127.5 128.3 128.5 128.5 128.0 Industry groupings 8 Manufacturing 129.1 134.6 142.8 142.1 143.6 144.0 144.4 145.3 145.8 146.4 147.4 147.4 Capacity utilization (percent)2 9 Manufacturing 79.7 81.1 83.5 83.3 84.0 84.0 84.0 84.3 84.4 84.5 84.8 84.6 10 Industrial materials industries 78.6 80.5 83.7 83.2 84.4 84.3 84.1 84.7 85.1 85.1 84.9 84.4 11 Construction contracts (1982 = 100)3 158.0 164.0 161.0 169.0 160.0 162.0 157.0 164.0 158.0 163.0 155.0 148.0 12 Nonagricultural employment, total4 120.7 124.1 128.6 128.6 128.9 129.1 129.4 129.7 130.3 130.5 131.0 131.4 13 Goods-producing, total 100.9 101.8 105.0 105.1 105.4 105.3 105.4 105.8 106.2 106.4 107.0 106.9 14 Manufacturing, total 96.3 96.8 99.2 99.3 99.5 99.4 99.3 99.8 100.1 100.3 100.5 100.5 15 Manufacturing, production-worker.... 91.r 91.9' 94.3 94.4 94.6 94.4 94.3 94.9 95.2 95.3 95.7 95.7 16 Service-producing 129.0 133.4 138.5 138.4 138.7 139.0 139.5 139.8 140.3 140.6 141.1 141.6 17 Personal income, total 219.7 235.1 252.8 251.6 253.5 254.5 256.0 259.8' 259.1 261.3 265.8 268.4 18 Wages and salary disbursements 210.7 226.2 245.2 244.2 246.7 247.4 249.0 252.2' 253.0 254.5 257.4 258.8 19 Manufacturing 177.4 183.8 195.9' 195.4 196.6 196.8 198.1 202.2' 201.1 200.8 202.5 203.4 20 Disposable personal income 218.9 232.7 251.7 251.2 253.1 254.2 255.6 259.6' 258.7 261.0 265.3 268.2 21 Retail sales 199.3r 210.8' 225.2' 224^ 225.9^ 226.6' 226.1' 229.6' 232.4 231.8 233.3 232.4 Prices7 22 Consumer (1982-84 = 100) 109.6 113.6 118.3 118.0 118.5 119.0 119.8 120.2 120.3 120.5 121.1 121.6 23 Producer finished goods (1982 = 100) ... 103.2 105.4 108.0 107.7 108.6 108.7 108.6 109.3 109.7 110.0 111.0 111.7 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 A47 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1988 1989 CCaatteeggoorryy 11998866 11998877 11998888 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 182,822 185,010 186,837 186,911 187,033 187,178 187,333 187,471 187,618 187,859 187,979 2 Labor force (including Armed Forces)1 120,078 122,122 123,893 123,840 124,203 124,200 124,310 124,737 124,779 125,643 125,383 3 Civilian labor force 111177,,883344 111199,,886655 112211,,666699 112211,,665588 112222,,000000 112211,,998844 112222,,009911 112222,,551100 112222,,556633 123,428 123,181 Employment 4 Nonagricultural industries 106,434 109,232 111,800 111,974 112,061 112,194 112,335 112,709 112,816 113,411 113,630 5 Agriculture 33,,116633 33,,220088 33,,116699 33,,006600 33,,114422 3,176 33,,223388 3,238 3,193 3,300 3,223 Unemployment 6 Number 8,237 7,425 6,701 6,624 6,797 6,614 6,518 6,563 6,554 6,716 6,328 7 Rate (percent of civilian labor force) — 7.0 6.2 5.5 5.4 5.6 5.4 5.3 5.4 5.3 5.4 5.1 8 Not in labor force 62,744 62,888 62,944 63,071 62,830 62,978 63,023 62,734 62,839 62,216 62,596 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 99,525 102,310 106,039 106,271 106,425 106,737 106,973 107,419 107,641r 108,056'' 108,345 10 Manufacturing 18,965 19,065 19,536 19,593 19,560 19,549 19,648 19,714 19,741/ 19,793' 19,785 11 Mining 777 721 733 740 739 734 729 722 719 716' 714 12 Contract construction 4,816 4,998 5,294 5,330 5,340 5,365 5,366 5,413 5,430r 5,535r 5,513 13 Transportation and public utilities 5,255 5,385 5,584 5,598 5,605 5,618 5,631 5,658 5,670r 5,71lr 5,723 14 Trade 23,683 24,381 25,362 25,435 25,471 25,510 25,573 25,676 25,73(K 25,889' 25,993 15 Finance 6,283 6,549 6,679 6,684 6,689 6,692 6,708 6,725 6,74V 6,732r 6,743 16 Service 23,053 24,196 25,464 25,561 25,662 25,737 25,826 25,947 26,07c 26,139 26,268 17 Government 16,693 17,015 17,387 17,330 17,359 17,532 17,492 17,564 17,541r 17,541'" 17,606 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

A48 Domestic Nonfinancial Statistics • May 1989 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1988 1988 1988 SSeerriieess Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4r Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 11 TToottaall iinndduussttrryy 111333444...555 111333666...000 138.2 139.8 111666333...111 111666444...222 165.2 166.2 888222...444 888222...888 888333...888 888444...222 22 MMiinniinngg 111000222...555 111000333...333 104.8 103.9 111222777...777 111222777...000 126.2 125.5 888000...333 888111...555 888222...333 888333...111 33 UUttiilliittiieess 111111444...777 111111111...777 114.9 114.6 111333999...888 111444000...111 140.4 140.7 888222...000 777999...999 888111...999 888111...333 44 MMaannuuffaaccttuurriinngg 111333999...666 111444111...666 143.7 145.7 111666888...999 111777000...222 171.5 172.7 888222...777 888333...222 888444...000 888444...444 55 PPrriimmaarryy pprroocceessssiinngg 111 111 222 444 333 999 ... ... 000 777 1 1 1 1 1 1555 222 222 333 ... ... 333 999 112554..75 112576..94 111111484848151515......666666 111111484848262626......777777 1 18 4 8 3 . . 1 9 1 1 4 8 5 9 . . 1 4 8 8 8 8 8 8000 666 ... ... 777 999 8 8 8 8 8 8 666 111 ... ... 888 555 888888777222......555444 8 8 8 8 8 8222 888 ... ... 777 000 66 AAddvvaanncceedd pprroocceessssiinngg 111222222...555 111222444...000 126.6 128.1 111444888...555 111444999...333 150.1 150.9 888222...555 888333...000 888444...333 888444...999 77 MMaatteerriiaallss 111333111...555 111333444...222 136.9 139.3 111666555...777 111666666...888 167.9 169.0 777999...444 888000...444 888111...666 888222...444 88 DDuurraabbllee ggooooddss 111 888 222 666 999 ... ... 222 444 111 888 333 888 000 ... ... 111 555 1 9 3 2 2 . . 4 4 1 9 3 4 5. . 5 8 111 111 444 000 666 888 ... ... 888 888 111 111 444 000 888 999 ... ... 333 111 1 1 4 0 9 9 . . 8 4 1 1 5 0 1 9 . . 4 7 7 8 7 8 7 8888 999 ... ... 111 222 888 888 777 000 ... ... 999 888 888 888 888 444 ... ... 777 888 888 888 999 666 ... ... 666 222 99 MMeettaall mmaatteerriiaallss 111333111...666 111333222...666 135.1 138.3 111444666...777 111444888...555 150.2 152.0 888999...777 888999...222 999000...000 999111...111 1100 NNoonndduurraabbllee ggooooddss 111444555...777 111444555...999 111444777...666 111444999...222 999888...777 999777...888 999888...888 999777...666 1111 TTeexxttiillee,, ppaappeerr,, aanndd cchheemmiiccaall 111333333...555 111333555...777 111555333...555 111555555...444 888777...000 888777...333 888888...666 999000...777 14 Energy materials 111000000...999 111000000...444 103.5 102.0 111111999...777 111111999...444 119.1 118.8 888444...333 888444...222 888666...000 888666...111 Previous cycle2 Latest cycle3 1988 1988 1989 High Low High Low Feb. June July Aug. Sept. Oct. Nov. Dec/ Jan/ Feb. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 82.4 83.0 83.7 83.8 83.7 84.0 84.1 84.3 84.5 84.3 16 Mining 92.8 87.8 95.2 76.9 79.5 81.2 82.5 82.2 82.3 81.9 83.3 84.0 82.5 81.1 17 Utilities 95.6 82.9 88.5 78.0 82.6 80.8 81.5 83.9 80.4 81.0 80.8 82.0 81.5 82.9 18 Manufacturing 87.7 69.9 86.5 68.0 82.6 83.3 84.0 84.0 84.0 84.3 84.4 84.5 84.8 84.6 19 Primary processing 91.9 68.3 89.1 65.0 86.6 86.6 87.8 87.4 87.2 87.9 88.1 88.0 88.4 88.0 20 Advanced processing.. 86.0 71.1 85.1 69.5 80.7 81.7 82.2 82.4 82.4 82.6 82.6 82.8 83.1 83.0 21 Materials 92.0 70.5 89.1 68.5 82.3 83.2 84.4 84.3 84.1 84.7 85.lr 85.1 84.9 84.4 22 Durable goods 91.8 64.4 89.8 60.9 79.3 80.7 81.7 81.4 81.9 82.4 82.7 82.1 82.6 82.2 23 Metal materials 99.2 67.1 93.6 45.7 79.3 80.8 84.9 83.4 86.0 87.3 86.9" 84.5 86.8 85.0 24 Nondurable goods .... 91.1 66.7 88.1 70.7 87.3 87.4 88.9 88.8 88.2 89.3 89.4 90.0 89.8 89.4 25 Textile, paper, and chemical 92.8 64.8 89.4 68.8 88.5 88.9 90.4 90.3 89.4 90.9 90.9 91.6 91.3 90.8 76 98.4 70.6 97.3 79.9 97.8 97.1 100.0 98.4 97.9 97.8 96 T 98.4 97 3 2277 9922..55 6644..44 8877..99 6633..55 8855..77 8877..00 8888..88 8899..00 8888..00 9900..22 9900..55 9911..33 9900..99 2288 Energy materials 9944..66 8866..99 9944..00 8822..33 8844..11 8844..44 8866..22 8866..66 8855..33 8855..33 8866..22rr 8866..99 8855..22 84.4 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 A49 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1977 1988 1989 GGrroouuppss por- aa 1 vv 98 gg 8 .. tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov/ Dec. Jan." Feb/ Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 137.2 134.4 134.7 135.4 136.1 136.5 138.0 138.5 138.6 139.4 139.9 140.5 141.1 141.1 7 Products 57.72 145.9 143.4 143.6 144.1 145.0 145.3 146.5 147.3 147.4 148.1 148.4 149.4 150.3 150.7 Final products 44.77 144.3 141.6 141.8 142.5 143.5 144.0 145.0 145.8 145.8 146.4 146.8 147.7 148.5 149.0 4 Consumer goods 25.52 133.9 131.3 131.2 131.9 132.7 133.0 134.2 135.0 134.8 136.4 136.8 138.2 138.8 139.0 Equipment 19.25 158.2 155.3 155.9 156.5 157.7 158.5 159.4 160.1 160.4 159.7 159.9 160.3 161.5 162.3 6 Intermediate products 12.94 151.5 149.4 149.9 149.6 150.4 150.0 151.6 152.3 152.9 154.0 154.2 155.0 156.5 156.4 7 Materials 42.28 125.2 122.1 122.5 123.6 123.9 124.5 126.4 126.5 126.5 127.5 128.3 128.5 128.5 128.0 Consumer goods 8 Durable consumer goods 6.89 125.3 120.6 120.4 123.3 125.6 125.3 125.3 125.7 126.3 129.3 129.2 132.0 131.5 131.5 9 Automotive products 2.98 124.9 117.6 120.6 121.9 127.1 127.1 124.4 124.2 126.4 128.9 129.5 134.5 132.7 131.7 10 Autos and trucks 1.79 122.7 111.8 116.4 118.0 126.9 125.3 120.8 123.1 124.8 128.3 129.5 138.0 135.6 133.1 11 Autos, consumer 1.16 93.4 79.5 86.3 91.0 98.9 99.0 93.8 93.0 97.7 101.3 101.0 105.1 99.6 96.0 17 Trucks, consumer .63 177.0 171.6 172.2 168.2 178.9 174.1 170.8 179.0 175.3 178.4 182.4 199.1 202.3 N Auto parts and allied goods 1.19 128.1 126.4 126.9 127.8 127.4 129.7 129.9 125.9 128.8 129.8 129.5 129.3 128.3 129.5 14 Home goods 3.91 125.6 122.8 120.2 124.3 124.4 123.9 125.9 126.8 126.2 129.7 128.9 130.0 130.7 131.4 15 Appliances, A/C and TV 1.24 144.1 140.6 132.8 143.2 142.2 138.0 143.3 146.5 144.9 154.4 150.4 151.0 151.1 151.7 16 Appliances and TV 1.19 143.6 141.4 132.7 142.2 143.0 137.1 143.8 146.1 143.7 151.9 148.9 150.0 148.7 17 Carpeting and furniture .96 136.2 132.3 133.1 133.1 135.8 135.9 136.6 137.2 137.1 138.8 139.8 140.7 139.9 18 Miscellaneous home goods 1.71 106.3 104.7 103.9 105.7 105.2 107.0 107.4 106.8 106.6 106.7 107.3 108.9 110.8 19 Nondurable consumer goods 18.63 137.1 135.3 135.1 135.1 135.4 135.8 137.5 138.5 138.0 139.0 139.7 140.6 141.5 141.8 70 Consumer staples 15.29 144.9 142.9 142.5 142.5 143.1 143.5 145.3 146.6 145.8 147.0 147.9 149.1 149.9 150.3 71 Consumer foods and tobacco 7.80 140.9 140.8 139.4 138.3 139.2 139.3 141.1 141.3 141.1 142.4 143.7 144.5 145.1 72 Nonfood staples 7.49 149.1 145.0 145.7 146.8 147.0 147.9 149.6 152.1 150.7 151.8 152.2 153.8 155.0 155.6 r\ Consumer chemical products 2.75 180.0 171.7 172.7 175.6 177.9 179.5 181.8 183.8 185.0 186.1 185.7 187.0 188.4 74 Consumer paper products 1.88 163.4 157.5 159.1 161.4 162.4 162.8 164.0 165.3 166.3 167.1 167.8 169.7 171.2 75 Consumer energy 2.86 110.0 111.3 111.0 109.6 107.3 107.7 109.3 113.0 107.6 108.9 109.8 111.6 112.3 76 Consumer fuel 1.44 95.4 97.0 97.9 98.9 94.3 93.0 94.6 95.5 92.7 95.3 94.1 96.3 99.0 27 Residential utilities 1.42 124.8 125.8 124.5 120.5 120.6 122.6 124.4 130.9 122.8 122.7 125.8 127.1 Equipment 78 Business and defense equipment 18.01 163.3 160.3 160.8 161.4 162.7 163.5 164.6 165.2 165.6 165.1 165.5 166.2 167.5 168.5 29 Business equipment 14.34 157.6 152.4 153.3 154.6 156.9 158.1 159.3 160.2 160.8 160.2 161.2 162.4 164.1 165.4 30 Construction, mining, and farm 2.08 71.9 67.6 68.3 70.8 71.8 72.4 73.6 73.1 74.3 74.2 74.5 75.3 74.9 74.8 31 Manufacturing 3.27 131.3 124.9 127.0 127.7 128.3 130.3 132.4 134.0 135.8 136.2 136.2 137.0 138.4 139.3 37 Power 1.27 89.4 88.3 87.8 87.0 87.4 88.3 89.8 90.9 92.2 91.5 92.1 91.9 92.2 92.2 33 Commercial 5.22 245.2 240.3 239.9 241.5 245.7 247.1 248.2 249.8 248.7 245.4 247.0 248.9 253.4 256.6 34 Transit 2.49 114.9 108.2 111.1 112.3 115.3 115.7 115.9 115.2 116.8 120.3 122.3 123.3 122.0 121.9 35 Defense and space equipment 3.67 185.9 191.0 189.9 187.9 185.5 184.6 184.9 184.9 184.5 184.0 182.2 181.0 180.9 180.6 Intermediate products ^ 36 Construction supplies 5.95 138.6 137.7 137.3 137.6 138.8 137.6 138.4 138.1 138.4 140.0 140.7 141.2 143.7 142.7 37 Business supplies 6.99 162.5 159.4 160.7 159.9 160.3 160.6 162.8 164.4 165.2 165.9 165.7 166.7 167.4 38 General business supplies 5.67 168.5 165.0 166.6 165.7 165.5 165.9 168.6 170.6 171.8 172.3 172.9 173.9 174.8 39 Commercial energy products 1.31 136.3 135.3 135.3 134.6 137.8 137.5 137.6 137.7 136.7 138.2 134.3 135.8 135.3 Materials 40 Durable goods materials 20.50 135.4 131.4 131.3 132.7 134.8 134.9 136.8 136.6 137.8 138.9 139.8 139.1 140.3 139.9 41 Durable consumer parts 4.92 108.9 104.4 103.5 106.2 110.0 110.3 110.1 109.8 111.0 111.4 113.9 112.6 113.2 111.7 42 Equipment parts 5.94 171.7 167.6 167.3 168.9 170.8 171.6 174.1 173.5 174.0 174.9 175.0 174.3 175.1 175.8 43 Durable materials n.e.c 9.64 126.7 123.0 123.4 124.0 125.3 124.8 127.5 127.6 129.2 130.8 131.3 130.9 132.6 132.1 44 Basic metal materials 4.64 95.9 91.4 90.5 91.6 94.8 93.7 98.4 97.3 100.3 101.1 101.4 99.7 101.6 100.0 45 Nondurable goods materials 10.09 132.0 128.1 130.1 131.1 130.1 130.1 132.8 133.1 132.6 134.7 135.1 136.5 136.6 136.5 46 Textile, paper, and chemical materials 7.53 134.4 129.9 132.4 133.3 131.9 132.1 135.3 135.7 134.9 137.4 137.9 139.5 139.5 139.3 47 Textile materials 1.52 109.9 110.2 112.7 111.9 107.5 107.5 108.5 110.1 109.2 109.5 110.1 109.3 110.6 48 Pulp and paper materials 1.55 147.3 144.4 144.8 145.8 146.4 145.4 150.3 148.3 148.1 148.4 147.2 150.3 149.3 49 Chemical materials 4.46 138.3 131.5 134.8 136.2 135.1 135.8 139.2 140.0 139.0 143.1 144.2 146.1 146.0 50 Miscellaneous nondurable materials ... 2.57 124.9 123.0 123.2 124.6 125.1 124.2 125.6 125.6 125.9 126.6 127.0 127.6 51 Energy materials 11.69 101.5 100.6 100.6 101.0 99.5 101.3 102.7 103.2 101.5 101.3 102.3 103.0 100.9 99.9 52 Primary energy 7.57 106.3 104.8 105.0 106.7 104.0 105.6 106.8 106.2 106.8 106.0 108.6 108.2 105.5 53 Converted fuel materials 4.12 92.8 93.0 92.6 90.5 91.2 93.5 95.3 97.7 91.8 92.6 90.7 93.4 92.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • May 1989 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1988 1989 SIC 1988 Groups code aavvgg.. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov/ Dec. Jan." Feb.'' Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 107.6 106.8 106.7 107.1 106.0 106.8 108.1 109.0 107.2 107.2 108.1 109.2 107.7 107.3 2 Mining 9.83 103.5 101.5 102.7 104.7 102.6 103.0 104.3 103.8 103.7 103.1 104.7 105.4 103.4 101.5 3 Utilities 5.96 114.3 115.6 113.3 111.0 111.6 113.2 114.4 117.8 113.0 113.9 113.7 115.4 114.8 116.9 4 Manufacturing 84.21 142.7 139.5 140.0 140.8 141.8 142.1 143.6 144.0 144.4 145.3 145.8 146.4 147.4 147.4 5 Nondurable 35.11 143.9 141.1 141.7 142.3 142.1 142.6 144.6 145.1 145.3 146.3 146.7 147.3 148.3 148.2 6 Durable 49.10 141.9 138.4 138.8 139.7 141.5 141.7 142.9 143.2 143.8 144.6 145.2 145.7 146.7 146.9 Mining 7 Metal 10 .50 93.1 83.9 84.9 86.9 86.0 82.2 94.0 96.6 99.1 101.6 104.6 111.4 8 Coal 11.12 1.60 137.9 133.7 129.1 136.0 127.8 126.9 141.5 137.2 142.2 138.5 149.7 155.1 144.7 134.0 9 Oil and gas extraction 13 7.07 93.0 92.4 94.8 95.5 94.6 95.8 93.3 93.2 92.0 91.5 90.8 89.6 89.0 10 Stone and earth minerals 14 .66 139.9 134.3 136.9 141.2 140.1 137.4 140.2 141.3 139.7 142.8 144.0 149.5 153.1 Nondurable manufactures 11 Foods 20 7.96 142.6 141.9 141.1 140.3 141.0 141.3 143.3 143.3 143.2 144.0 145.7 145.6 146.4 12 Tobacco products 21 .62 105.1 107.0 107.2 107.2 107.2 104.5 100.6 105.1 105.0 105.4 102.4 105.7 13 Textile mill products 22 2.29 116.3 115.3 117.0 117.3 114.6 114.3 117.1 116.4 116.2 117.0 117.2 117.5 118.7 14 Apparel products 23 2.79 109.1 108.5 108.7 109.2 108.6 109.3 109.4 108.9 109.9 109.5 110.1 108.5 15 Paper and products 26 3.15 150.3 148.0 149.1 149.2 149.5 148.6 152.3 151.0 150.9 151.8 150.7 151.7 152.0 16 Printing and publishing 27 4.54 184.2 178.7 180.4 181.8 180.7 182.3 184.9 186.7 188.0 188.1 188.5 188.4 191.4 191.9 17 Chemicals and products 28 8.05 152.0 145.4 146.4 148.9 149.1 150.5 153.4 154.8 155.3 156.7 157.5 159.0 159.1 18 Petroleum products 29 2.40 96.0 95.9 98.4 98.5 95.2 94.1 95.0 96.0 93.7 96.3 95.0 98.0 99.7 98.1 19 Rubber and plastic products.... 30 2.80 174.4 172.3 172.2 172.3 173.4 174.4 175.4 175.3 175.3 176.9 177.5 178.0 178.5 20 Leather and products 31 .53 59.5 59.7 59.5 58.0 57.1 58.9 59.1 59.4 59.9 61.0 61.5 60.2 61.6 Durable manufactures 21 Lumber and products 24 2.30 137.3 139.0 137.8 138.0 139.8 136.4 136.6 133.8 133.5 137.5 139.4 142.6 142.7 22 Furniture and fixtures 25 1.27 162.1 158.3 159.4 159.2 160.5 161.2 162.9 164.9 164.9 164.5 165.4 166.0 167.0 23 Clay, glass, and stone products. 32 2.72 122.6 121.6 122.5 121.4 121.5 123.4 122.2 122.6 122.6 123.3 124.7 125.2 127.0 24 Primary metals 33 5.33 89.2 86.4 85.1 85.3 89.2 87.5 91.5 90.8 93.1 94.2 92.7 90.1 93.8 92.9 25 Iron and steel 331.2 3.49 78.1 77.4 74.2 74.5 78.6 74.2 80.2 78.9 81.4 83.1 80.8 77.7 83.1 26 Fabricated metal products 34 6.46 120.9 117.6 118.8 118.8 119.8 120.4 121.7 122.1 122.5 122.6 124.6 124.9 124.9 125.0 27 Nonelectrical machinery 35 9.54 170.8 163.6 164.6 167.2 170.3 171.2 173.1 174.1 174.8 173.8 175.4 177.9 179.7 181.8 28 Electrical machinery 36 7.15 180.1 177.8 176.6 178.7 179.1 179.5 181.5 182.2 181.8 183.0 182.2 181.4 181.3 181.8 29 Transportation equipment 37 9.13 132.1 128.4 130.0 130.4 133.1 132.8 131.9 131.8 132.7 134.8 135.2 136.4 136.1 135.4 30 Motor vehicles and parts 371 5.25 117.2 109.3 113.0 114.8 119.6 119.1 116.6 117.5 118.5 121.7 122.9 125.5 124.1 122.6 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 152.3 154.5 153.0 151.5 151.5 151.4 152.7 151.3 151.9 152.7 151.9 151.2 152.4 152.7 32 Instruments 38 2.66 154.3 149.2 149.7 150.5 151.3 153.0 156.4 156.8 157.8 159.9 160.4 159.0 161.5 162.2 33 Miscellaneous manufactures..., 39 1.46 107.1 104.4 105.1 105.9 106.0 107.6 107.8 108.3 108.5 107.7 109.0 110.9 112.5 Utilities 34 Electric 44..1177 113322..00 113300..77 112299..00 112277..66 112299..77 113322..11 113344..66 113388..88 113322..22 113322..88 113311..66 113322..99 113311..88 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,824.5 1,797.5 1,807.5 1,812.2 1,820.1 1,813.9 1,822.3 1,828.6 1,828.9 1,853.4 1,855.5 1,875.3 1,890.3 1,889.7 36 Final 405.7 1,401.2 1,381.1 1,385.9 1,393.9 1,397.1 1,394.3 1,398.9 1,404.2 1,404.3 1,423.5 1,426.3 1,442.2 1,452.7 1,456.4 37 Consumer goods. 272.7 902.5 893.7 893.2 899.1 898.9 893.6 895.6 900.4 897.2 915.0 918.4 935.2 941.4 940.9 38 Equipment 133.0 498.8 487.3 492.7 494.7 498.3 500.7 503.2 503.8 507.1 508.4 507.9 507.0 511.3 515.5 39 Intermediate 111.9 423.3 416.5 421.6 418.4 423.0 419.6 423.4 424.3 424.5 430.0 429.3 433.1 437.6 433.3 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 A51 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1988 1989 IItteemm 11998866 11998877 11998888'' Apr. May June July Aug. Sept. Oct. Nov." Dec." Jan. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,750 1,535 1,451 1,449 1,436 1,493 1,420 1,464 1,394 1,516 1,516 1,566 1,507 ? 1-family 1,071 1,024 1,000 960 982 1,002 984 1,022 974 1,027 1,046 1,082 1,064 3 2-or-more-family 679 511 452 489 454 491 436 442 420 489 470 484 443 4 Started 1,805 1,621 1,488 1,576 1,392 1,463 1,478 1,459 1,463 1,532 1,567 1,577 1,690 5 1-family 1,179 1,146 1,081 1,087 1,001 1,088 1,067 1,076 1,039 1,136 1,138 1,141 1,202 6 2-or-more-family 626 474 407 489 391 375 411 383 424 396 429 436 488 7 Under construction, end of period1 . 1,074 987 923 999 985" 979" 973" 962" 955 951" 959 957 968 8 1-family 583 591 573 621" 610 608" 605" 601" 596 597" 603 604 611 9 2-or-more-family 490 397 350 378" 375" 371" 368 361" 359 354 356 353 357 10 Completed 1,756 1,669 1,529 1,661" 1,461" 1,517" 1,528" 1,539" 1,536" 1,516 1,429 1,526 1,491 11 1-family 1,120 1,123 1,084 1,058" 1,096" 1,105" 1,077 1,074" 1,092" 1,088" 1,037 1,097 1,104 12 2-or-more-family 636 546 445 603" 365" 412 451" 465" 444 428" 392 429 387 13 Mobile homes shipped 244 233 218 215 221 227 207 223 224 216 227 225 232 Merchant builder activity in l-family units 14 Number sold 748 672 675 677" 679" 716" 701" 712" 691 718" 650 674 691 15 Number for sale, end of period1 357 365 366 367 370 367 365 363 361 353" 364 366 369 Price (thousands of dollars)2 Median 16 Units sold 92.2 104.7 113.3 111.0 110.0 111.5 118.0 110.0 116.6 112.9" 110.4 121.0 113.0 17 Units sold 112.2 127.9 139.0 135.6 133.5 136.5 141.3 140.6 142.7 137.3" 137.3 148.3 137.5 EXISTING UNITS (l-family) 18 Number sold 3,566 3,530 3,594 3,510" 3,620" 3,800" 3,650" 3,690" 3,650" 3,680" 3,710 3,920 3,550 Price of units sold 7 (thousands of dollars)' 19 Median 80.3 85.6 89.2 8888..00"" 89.6" 90.2 90.7 91.5" 8888..55"" 8888..99"" 8888..55 88.7 8899..77 20 Average 98.3 106.2 112.5 109.6" 113.3" 115.4 114.7" 115.4" 112.6" 112.3" 112.4 112.0 113.0 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 386,093 398,848 403,434 396,238 398,473 395,714 404,164 403,172 406,906 408,184 413,562 422,286 424,032 77 Private 314,651 323,819 325,200 318,515 320,194 317,708 324,658 326,763 327,164 330,291 333,286 336,403 342,2% 7.3 Residential 187,147 194,772 195,403 192,026 190,374 188,071 194,215 195,393 196,945 199,567 201,768 202,314 204,576 24 Nonresidential, total 127,504 129,047 129,797 126,489 129,820 129,637 130,443 131,370 130,219 130,724 131,518 134,089 137,720 Buildings 75 Industrial 13,747 13,707 14,239 13,849 13,907 13,676 13,928 14,006 13,546 15,234 15,898 15,060 16,242 76 Commercial 56,762 55,448 55,588 56,169 57,447 56,585 56,687 56,404 55,815 54,706 53,857 55,918 57,878 77 Other 13,216 15,464 16,761 16,382 16,847 16,757 16,166 16,613 16,600 17,132 16,775 17,119 17,463 28 Public utilities and other 43,779 44,428 43,209 40,089 41,619 42,619 43,662 44,347 44,258 43,652 44,988 45,992 46,137 79 Public 71,437 75,028 78,233 77,723 78,278 78,007 79,506 76,409 79,742 77,893 80,276 85,884 81,736 30 Military 3,868 4,327' 4,077 3,872 3,547 4,844 4,350 3,984 4,897 3,659 3,932 4,147 3,750 31 Highway 22,681 22,758 25,721 26,912 25,254 24,822 27,673 23,491 23,841 25,997 26,433 30,907 27,841 37 Conservation and development... 4,646 5,162 4,513 4,226 4,460 4,5% 4,861 4,793 5,045 3,927 3,805 4,312 4,065 33 Other 40,242 42,781 43,922 42,713 45,017 43,745 42,622 44,141 45,959 44,310 46,106 46,518 46,080 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 previous 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

A52 Domestic Nonfinancial Statistics • May 1989 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier months earlier (at annual rate) Change from 1 month earlier IIInnndddeeexxx IIIttteeemmm 1988 1988 1989r lll FFF eee eee vvv bbb eee ... lll 11998888 11998899 111999888999 FFeebb.. FFeebb.. Mar. June Sept. Dec. Oct/ Nov. Dec. Jan. Feb. CONSUMER PRICES2 (1982-84=100) 1 All items 3.9 4.8 3.9 4.9 4.8 4.1 .4 .3 .3 .6 .4 121.6 2 Food 2.8 6.2 2.5 6.4 8.8 3.0 .2 .2 .3 .7 .4 122.9 3 Energy items 1.6 2.6 -4.0 3.7 2.7 -.4 -.1 .3 -.3 .8 .6 89.3 4 All items less food and energy 4.3 4.8 5.4 4.3 4.3 4.9 .5 .3 .4 .5 .4 126.9 5 Commodities 3.4 4.2 4.7 3.9 3.1 4.2 .5 .3 .3 .5 .2 118.1 6 Services 4.8 5.0 5.6 4.5 4.8 5.4 .5 .4 .5 .5 .5 132.0 PRODUCER PRICES (1982=100) 7 Finished goods 1.9 5.3 4.2 3.0 5.7 3.0 .1 ,2r .5 11..00 1.0 111.7 8 Consumer foods 1.0 7.2 6.8 5.5 9.2 2.1 .1 .3 .1 11..11 1.2 117.3 9 Consumer energy -1.7 5.8 -7.0 -5.2 -2.7 2.1 .0 .5 .0 4.9 2.4 61.9 10 Other consumer goods 3.4 5.0 5.3 3.5 5.9 4.4 .2 .r .7 .4 .7 122.6 11 Capital equipment 1.8 3.7 3.6 2.9 6.1 1.4 -.1 .R .3 .6 .4 117.4 12 Intermediate materials3 4.7 6.1 5.1 7.4 4.6 4.5 .1 .6 .5 .9 .6 110.8 13 Excluding energy 5.9 6.9 8.2 6.9 7.2 6.7 .4 ,8r .4 .6 .5 119.9 Crude materials 14 Foods 7.4 11.3 18.5 21.3 29.1 -7.9 .3 —4.3r 2.1 2.2 --11..33 111.0 15 Energy -3.4 2.3 -24.1 7.8 -27.0 12.9 -2.2 -i.R 6.5 6.7 11..11 72.0 16 Other 23.9 5.2 17.3 -6.5 8.5 5.8 .2 ,4r .7 2.2 .0 138.5 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 A53 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1987 1988 AAccccoouunntt 11998866 11998877 11998888rr Q4 Q1 Q2 Q3 Q4r GROSS NATIONAL PRODUCT 1 4,240.3 4,526.7 4,864.3 4,662.8 4,724.5 4,823.8 4,909.0 4,999.7 By source 2 Personal consumption expenditures 2,807.5 3,012.1 3,227.5 3,076.3 3,128.1 3,194.6 33,,226611..22 33,,332266..44 3 Durable goods 406.5 421.9 451.1 422.0 437.8 449.8 452.9 464.0 4 Nondurable goods 943.6 997.9 1,046.9 1,012.4 1,016.2 1,036.6 1,060.8 1,073.9 5 Services 1,457.3 1,592.3 1,729.6 1,641.9 1,674.1 1,708.2 1,747.5 1,788.5 6 Gross private domestic investment 665.9 712.9 766.5 764.9 763.4 758.1 772.5 772.0 7 Fixed investment 650.4 673.7 718.1 692.9 698.1 714.4 722.8 737.2 8 Nonresidential 433.9 446.8 488.4 464.1 471.5 487.8 493.7 500.6 9 Structures 138.5 139.5 142.8 147.7 140.1 142.3 143.8 145.0 10 Producers' durable equipment 295.4 307.3 345.6 316.3 331.3 345.5 349.9 355.6 11 Residential structures 216.6 226.9 229.7 228.8 226.6 226.5 229.1 236.6 12 Change in business inventories 15.5 39.2 48.4 72.0 65.3 43.7 49.7 34.7 13 Nonfarm 17.4 40.7 42.2 72.8 49.4 33.1 41.9 44.6 14 Net exports of goods and services -104.4 -123.0 -94.6 -125.7 -112.1 -90.4 -80.0 -96.1 15 Exports 378.4 428.0 519.7 459.7 487.8 507.1 536.1 548.0 16 Imports 482.8 551.1 614.4 585.4 599.9 597.5 616.0 644.0 17 Government purchases of goods and services 871.2 924.7 964.9 947.3 945.2 961.6 955.3 997.5 18 366.2 382.0 381.0 391.4 377.7 382.2 367.7 396.3 19 State and local 505.0 542.8 583.9 555.9 567.5 579.4 587.6 601.2 By major type of product 70 Final sales, total 4,224.7 4,487.5 4,815.9 4,590.7 4,659.2 4,780.1 44,,885599..33 44,,996655..00 71 Goods 1,697.9 1,792.5 1,938.7 1,849.3 1,879.5 1,928.0 1,960.1 1,987.1 ?? Durable 725.3 776.3 858.3 808.7 819.3 849.5 881.6 882.7 73 Nondurable 972.6 1,016.3 1,080.4 1,040.7 1,060.1 1,078.5 1,078.5 1,104.4 74 Services 2,118.3 2,295.7 2,478.0 2,363.9 2,405.2 2,451.5 2,501.6 2,553.5 25 Structures 424.0 438.4 447.7 449.5 439.9 444.3 447.3 459.1 26 Change in business inventories 15.5 39.2 48.4 72.0 65.3 43.7 49.7 34.7 27 Durable goods 4.3 26.6 30.9 50.5 26.6 17.8 45.1 34.1 28 Nondurable goods 11.3 12.6 17.4 21.6 38.6 25.9 4.6 0.6 MEMO 29 Total GNP in 1982 dollars 3,721.7 3,847.0 3,996.1 3,923.0 3,956.1 3,985.2 4,009.4 4,033.4 NATIONAL INCOME 30 3,437.1 3,678.7 3,968.2 3,802.0 3,850.8 3,928.8 4,000.7 4,092.4 31 Compensation of employees 2,507.1 2,683.4 2,904.7 2,769.9 2,816.4 2,874.0 2,933.2 2,995.3 32 Wages and salaries 2,094.0 2,248.4 2,436.9 2,324.8 2,358.7 2,410.0 2,462.0 2,516.8 33 Government and government enterprises 393.7 420.1 446.1 429.2 437.1 442.9 449.1 455.4 34 Other 1,700.3 1,828.3 1,990.7 1,895.6 1,921.6 1,967.1 2,012.9 2,061.4 35 Supplement to wages and salaries 413.1 435.0 467.8 445.1 457.7 464.0 471.1 478.5 36 Employer contributions for social insurance 217.0 227.1 249.6 232.7 243.1 247.5 251.7 256.0 37 Other labor income 196.1 207.9 218.3 212.4 214.6 216.5 219.5 222.5 38 Proprietors' income1 286.7 312.9 324.5 326.0 323.9 328.8 321.6 323.8 39 Business and professional 250.3 270.0 288.2 279.0 279.2 285.3 290.7 297.7 40 Farm1 36.4 43.0 36.3 47.0 44.7 43.4 30.9 26.0 41 Rental income of persons2 12.4 18.4 19.3 20.5 20.5 19.1 19.7 18.1 47 Corporate profits1 298.9 310.4 328.1 316.1 316.2 326.5 330.0 339.9 43 Profits before tax3 236.4 276.7 306.4 281.9 286.2 305.9 313.9 319.5 44 Inventory valuation adjustment 8.3 -18.0 -23.8 -18.2 -19.4 -27.4 -29.3 -19.2 45 Capital consumption adjustment 54.2 51.7 45.6 52.4 49.4 48.0 45.4 39.6 46 Net interest 331.9 353.6 391.5 369.5 373.9 380.6 396.2 415.4 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

A54 Domestic Nonfinancial Statistics • May 1989 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1987 1988 AAccccoouunntt 11998866 11998877 11998888'' Q4 Ql Q2 Q3 Q4' PERSONAL INCOME AND SAVING 1 Total personal income 3,531.1 3,780.0 4,062.1 3,906.8 3,951.4 4,022.4 4,094.0 4,180.5 2 Wage and salary disbursements 2.094.0 2,248.4 2,436.9 2,325.1 2,358.7 2,410.0 2,462.0 2,516.8 3 Commodity-producing industries 625.5 649.8 695.4 665.5 676.0 689.1 701.3 715.4 4 Manufacturing 473.1 490.3 522.5 501.3 509.6 517.4 525.9 537.1 5 Distributive industries 498.9 531.7 578.7 547.3 558.2 572.1 585.8 598.6 6 Service industries 575.9 646.8 716.6 682.8 687.4 705.9 725.8 747.4 1 Government and government enterprises 393.7 420.1 446.1 429.5 437.1 442.9 449.1 455.4 8 Other labor income 196.1 207.9 218.3 212.4 214.6 216.5 219.5 222.5 9 Proprietors' income1 286.7 312.9 324.5 326.0 323.9 328.8 321.6 323.8 10 Business and professional' 250.3 270.0 288.2 279.0 279.2 285.3 290.7 297.7 li Farm1 36.4 43.0 36.3 47.0 44.7 43.4 30.9 26.0 12 Rental income of persons" 12.4 18.4 19.3 20.5 20.5 19.1 19.7 18.1 13 Dividends 82.8 88.6 96.3 91.9 93.5 95.0 97.3 99.4 14 Personal interest income 499.1 527.0 575.9 550.0 554.2 563.7 581.9 603.7 15 Transfer payments 521.1 548.8 586.0 556.8 576.3 582.8 588.6 596.4 lb Old-age survivors, disability, and health insurance benefits ... 269.3 282.9 301.8 286.5 298.1 300.4 303.1 305.7 17 LESS: Personal contributions for social insurance 161.1 172.0 195.1 175.9 190.2 193.5 196.7 200.1 18 EQUALS: Personal income 3,531.1 3,780.0 4,062.1 3,906.8 3,951.4 4,022.4 4,094.0 4,180.5 19 LESS: Personal tax and nontax payments 511.4 570.3 590.3 591.0 575.8 601.0 586.5 598.0 20 EQUALS: Disposable personal income 3,019.6 3,209.7 3,471.8 3,315.8 3,375.6 3,421.5 3,507.5 3,582.5 21 LESS: Personal outlays 2,898.0 3,105.5 3,327.5 3,171.8 3,225.7 3,293.6 3,361.8 3,428.7 22 EQUALS: Personal saving 121.7 104.2 144.3 144.0 149.9 127.8 145.7 153.8 MEMO Per capita (1982 dollars) 23 Gross national product 15,401.2 15,772.9 16,231.1 16,031.9 16,127.6 16,213.2 16,265.3 16,322.9 24 Personal consumption expenditures 10,160.1 10,336.2 10,528.8 10,346.1 10,435.4 10,492.3 10,563.1 10,628.1 25 Disposable personal income 10,929.0 11,012.0 11,326.0 11,145.0 11,260.0 11,237.0 11,362.0 11,445.0 lb Saving rate (percent) 4.0 3.2 4.2 4.3 4.4 3.7 4.2 4.3 GROSS SAVING 27 Gross saving 537.2 560.4 644.4 603.4 627.0 634.1 665.4 650.9 28 Gross private saving 681.6 665.3 731.6 714.1 726.3 711.2 732.9 756.2 29 Personal saving 121.7 104.2 144.3 144.0 149.9 127.8 145.7 153.8 30 Undistributed corporate profits1 104.1 81.1 81.0 80.5 78.1 80.1 79.5 86.2 31 Corporate inventory valuation adjustment 8.3 -18.0 -23.8 -18.2 -19.4 -27.4 -29.3 -19.2 Capital consumption allowances 32 Corporate 282.4 297.5 315.7 303.7 309.8 313.3 316.8 323.0 33 Noncorporate 173.5 182.5 190.6 185.8 188.5 189.9 190.9 193.1 34 Government surplus, or deficit (-), national income and product accounts -144.4 -104.9 -87.3 -110.7 -99.2 -77.1 -67.5 -105.3 35 Federal -205.6 -157.8 -142.4 -160.4 -155.1 -133.3 -123.5 -157.8 36 State and local 61.2 52.9 55.1 49.7 55.8 56.2 56.0 52.5 37 Gross investment 523.6 552.3 630.3 597.0 612.0 629.0 651.4 628.7 38 Gross private domestic 665.9 712.9 766.5 764.9 763.4 758.1 772.5 772.0 39 Net foreign -142.4 -160.6 -136.2 -167.8 -151.3 -129.1 -121.1 -143.3 40 Statistical discrepancy -13.6 -8.1 -14.1 -6.4 -15.0 -5.1 -14.0 -22.2 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 A55 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 11998866 11998877 11998888 Q4 Q1 Q2 Q3 Q4" 1 Balance on current account --113388,,882277 --115533,,996644 --113355,,333322 -33,523 -36,998' -33,814' -32,607 -31,912 2 Not seasonally adjusted -31,802 -32,179' -34,606 -38,560 -29,986 3 Merchandise trade balance2 -144,547 -160,280 -126,525 -41,192 -35,187' -30,152' -29,170 -32,016 4 Merchandise exports 223,969 249,570 319,905 68,013 75,140' 79,443' 81,674 83,648 5 Merchandise imports -368,516 -409,850 -446,430 -109,205 -110,327' -109,595' -110,844 -115,664 6 Military transactions, net -4,372 -2,369 -4,229 -1,261 -1,033 -914 -857 -1,425 7 Investment income, net 23,143 20,374 2,602 12,539 1,128' -1,986' -1,234 4,694 8 Other service transactions, net 2,257 1,755 6,404 764c 1,241 2,015' 1,869 1,279 9 Remittances, pensions, and other transfers -3,571 -3,434 -3,531 -828 -908' -872 -932 10 U.S. government grants (excluding military) -11,738 -10,011 -10,052 -3,545 -2,239 -1,958 -2,343 -3,512 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -2,000 1,162 3,641 1,012 -814 -801 1,990 3,266 12 Change in U.S. official reserve assets (increase, -) 312' 9,149' 3,566 3,741 1,503 39 -7,380 2,272 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -246 -509' 474 -205 155 180 -35 173 15 Reserve position in International Monetary Fund 1,50c 2,070 1,025 722 446 69 202 307 16 Foreign currencies -942 7,588' -5,064 3,225 901 -210 -7,547 1,791 17 Change in U.S. private assets abroad (increase, -) -96,303 -86,297 -92,029 -43,645 5,817' -18,295' -33,833 -45,718 18 Bank-reported claims -59,975 -40,531 -57,493 -23,460 17,108 -13,274 -27,832 -33,495 19 Nonbank-reported claims -4,220 3,145 -6,627 1,248 -315 -7,061 749 20 U.S. purchase of foreign securities, net -4,297 -4,456 -7,474 -1,757 -4,467 1,529 -1,554 -2,982 21 U.S. direct investments abroad, net -27,811 -44,455 -20,435 -19,676 -6,509' 511' -5,196 -9,241 22 Change in foreign official assets in United States (increase, +) 35,507 44,968' 39,012 20,047 24,670 5,946 -2,534 10,930 23 U.S. Treasury securities 34,364 43,361 41,703 19,243 27,701 5,863 -3,769 11,908 24 Other U.S. government obligations -1,214 1,570 1,351 662 -121 202 572 698 25 Other U.S. government liabilities4 ^ 2,054 -2,824' -1,278 108 -123 -570 -292 -293 26 Other U.S. liabilities reported by U.S. banks3 1,187 3,901 -269 -223 -1,954 868 1,463 -646 27 Other foreign official assets5 -884 -1,040 -2,495 257 -833 -417 -508 -737 28 Change in foreign private assets in United States (increase, +) , 185,746 166,522 171,726 36,025 1,395 59,549 50,631 60,150 29 U.S. bank-reported liabilities3 79,783 87,778 78,877 29,764 -17,233 31,121 29,226 35,763 30 U.S. nonbank-reported liabilities -2,906 2,150 3,778 -1,000 2,015 113 1,650 31 Foreign private purchases of U.S. Treasury securities, net 3,809 -7,596 19,886 496 6,887 5,457 3,412 4,130 32 Foreign purchases of other U.S. securities, net 70,969 42,213 26,961 -4,977 2,379 9,797 7,948 6,837 33 Foreign direct investments in United States, net 34,091 41,977 42,224 11,742 7,347 13,061 8,395 13,420 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 1155,,556666 1188,,446611 1166,,554488 16,342 4,428' -12,624 23,733 1,013 36 Owing to seasonal adjustments 3,138 3,893' -3,425' -5,119 4,653 37 Statistical discrepancy in recorded data before seasonal adjustment 15,566 18,461 16,548 13,204 535 -9,199 28,852 -3,640 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 312' 9,149' -3,566 3,741 1,503 39 -7,380 2,272 39 Foreign official assets in United States (increase, +) excluding line 25 33,453 47,792 40,290 19,939 24,793 6,516 -2,242 11,223 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22 above) -9,327 -9,956' -2,909 -2,750 -1,375 -1,783 -466 715 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 101 58 86 12 45 4 7 30 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 3. Reporting banks include all kinds of depository institutions besides commer- Business (Department of Commerce). cial banks, as well as some brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • May 1989 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1988 1989 IItteemm 11998866 11998877 11998888 July Aug. Sept. Oct. Nov. Dec/ Jan. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 227,159 254,122 322,225 26,516 27,493 27,989 27,816 27,542 29,062 27,802 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 365,438 406,241 440,940 34,533 38,140 37,178 36,600 38,200 40,052 37,290 Trade balance 3 Customs value -138,279 -152,119 -118,716 -8,017 -10,647 -9,189 -8,784 -10,658 -10,991 -9,488 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 1989 TTyyppee 11998855 11998866 11998877 Aug. Sept. Oct. Nov. Dec. Jan. Feb." 1 Total 43,186 48,511 45,798 47,778 47,788 50,204 48,944 47,802 48,190 49,373 2 Gold stock, including Exchange 11,090 11,064 11,078 11,061 11,062 11,062 11,059 11,057 11,056 11,061 Stabilization Fund1 7,293 8,395 10,283 9,058 9,074 9,464 9,785 9,637 9,388 9,653 3 Special drawing rights2'3 4 ReseMrvoe npeotasriyti oFnu nind International 11,947 11,730 11,349 9,642 9,637 10,075 10,103 9,745 9,422 9,353 5 Foreign currencies4 12,856 17,322 13,088 18,017 18,015 19,603 17,997 17,363 18,324 19,306 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- 3. Includes allocations by the International Monetary Fund of SDRs as follows; tional accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 3.13. Gold stock is valued at $42.22 per fine troy ounce. 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based million on Jan. 1, 1981; plus transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4 Valued at current market exchange rates. From July 1974 through December 1980, 16 currencies were used; from January 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in the IMF also are valued on this basis beginning July 1974. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1988 1989 AAsssseettss 11998855 11998866 11998877 p Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Deposits 480 287 244 230 338 301 251 347 279 325 Assets held in custody 2 U.S. Treasury securities 121,004 155,835 195,126 221,715 221,119 226,533 229,926 232,547 228,399 230,860 3 Earmarked gold 14,245 14,048 13,919 13,658 13,653 13,637 13,640 13,636 13,635 13,609 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 A57 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1988 1989 AAsssseett aaccccoouunntt 11998855 11998866 11998877 July" Aug/ Sept. Oct." Nov. Dec." Jan. All foreign countries 1 Total, all currencies 458,012 456,628 518,618 488,774 488,372 489,896' 494,289 512,854" 505,037 496,506 2 Claims on United States 119,706 114,563 138,034 147,730 157,150 155,397'' 155,491 169,487" 168,443 167,143 3 Parent bank 87,201 83,492 105,845 109,989 117,636 115,286 115,963 129,105" 130,146 127,403 4 Other banks in United States 13,057 13,685 16,416 15,954 16,176 16,121 14,744 16,075 14,918 14,338 5 Nonbanks 19,448 17,386 15,773 21,787 23,338 23,990" 24,784 24,307" 23,379 25,402 6 Claims on foreigners 315,676 312,955 342,520 305,979 295,617 297,976" 301,456 305,359" 300,116 291,650 7 Other branches of parent bank 91,399 96,281 122,155 103,753 98,393 102,355 100,738 105,220" 107,667 102,478 8 Banks 102,960 105,237 108,859 99,712 99,040 98,356" 102,198 100,696" 96,968 93,760 9 Public borrowers 23,478 23,706 21,832 19,276 18,709 18,415" 18,205 18,169" 17,138 16,751 10 Nonbank foreigners 97,839 87,731 89,674 83,238 79,475 78,850" 80,315 81,274" 78,343 78,661 11 Other assets 22,630 29,110 38,064 35,065 35,605 36,523" 37,342 38,008 36,478 37,713 12 Total payable in U.S. dollars 336,520 317,487 350,107 336,724 343,383 340,795" 337,907 352,146" 357,461 345,506 13 Claims on United States 116,638 110,620 132,023 141,483 151,710 149,775" 149,772 162,997" 162,788 160,520 14 Parent bank 85,971 82,082 103,251 106,852 115,054 112,621 113,578 125,963" 127,219 124,4% 15 Other banks in United States 12,454 12,830 14,657 14,434 14,901 14,687 13,265 14,771 14,167 12,976 16 Nonbanks 18,213 15,708 14,115 20,197 21,755 22,467" 22,929 22,263 21,402 23,048 17 Claims on foreigners 210,129 195,063 202,428 179,499 174,780 174,154" 172,068 172,345" 178,276 167,271 18 Other branches of parent bank 72,727 72,197 88,284 78,177 73,886 76,506 73,637 75,965" 81,227 76,221 19 Banks 71,868 66,421 63,707 54,241 54,897 52,397" 54,783 53,570" 54,986 49,544 20 Public borrowers 17,260 16,708 14,730 13,247 12,933 12,770 12,616 12,233" 11,964 11,596 21 Nonbank foreigners 48,274 39,737 35,707 33,834 33,064 32,481" 31,032 30,577" 30,099 29,910 22 Other assets 9,753 11,804 15,656 15,742 16,893 16,866 16,067 16,804 16,397 17,715 United Kingdom 23 Total, all currencies 148,599 140,917 158,695 151,017 149,646 147,329 155,580 159,556 156,085 156,529 24 Claims on United States 33,157 24,599 32,518 35,716 36,325 32,059" 36,260 39,242" 40,089 40,954 25 Parent bank 26,970 19,085 27,350 30,615 30,767 26,661 30,569 33,138 34,243 34,928 26 Other banks in United States 1,106 1,612 1,259 1,064 1,197 1,238 994 1,343 1,123 1,128 27 Nonbanks 5,081 3,902 3,909 4,037 4,361 4,160" 4,697 4,761" 4,723 4,898 28 Claims on foreigners 110,217 109,508 115,700 105,586 103,509 105,813" 109,743 110,336" 106,407 104,668 29 Other branches of parent bank 31,576 33,422 39,903 30,228 29,656 31,758 33,103 33,243 35,625 35,322 30 Banks 39,250 39,468 36,735 37,805 38,259 38,848 40,236 40,875 36,765 34,907 31 Public borrowers 5,644 4,990 4,752 4,665 4,543 4,250 4,190 4,276 4,019 4,090 32 Nonbank foreigners 33,747 31,628 34,310 32,888 31,051 30,957" 32,214 31,942" 29,998 30,349 33 Other assets 5,225 6,810 10,477 9,715 9,812 9,457 9,577 9,978 9,589 10,907 34 Total payable in U.S. dollars 108,626 95,028 100,574 94,492 96,767 93,790 99,868 101,341 102,937 102,873 35 Claims on United States 32,092 23,193 30,439 33,803 34,553 30,127" 34,184 36,881 38,012 38,591 36 Parent bank 26,568 18,526 26,304 29,706 29,837 25,692 29,667 32,115 33,252 33,925 37 Other banks in United States 1,005 1,475 1,044 870 1,039 910 606 849 964 678 38 Nonbanks 4,519 3,192 3,091 3,227 3,677 3,525" 3,911 3,917 3,796 3,988 39 Claims on foreigners 73,475 68,138 64,560 55,824 57,019 58,463' 60,984 59,405 60,483 58,798 40 Other branches of parent bank 26,011 26,361 28,635 22,549 22,465 24,472 25,703 25,574 28,474 27,939 41 Banks 26,139 23,251 19,188 18,025 19,165 19,066 20,488 19,452 18,494 16,778 42 Public borrowers 3,999 3,677 3,313 3,133 3,105 3,022 2,984 2,898 2,840 2,869 43 Nonbank foreigners 17,326 14,849 13,424 12,117 12,284 11,903" 11,809 11,481 10,675 11,212 44 Other assets 3,059 3,697 5,575 4,865 5,195 5,200 4,700 5,055 4,442 5,484 Bahamas and Caymans 45 Total, all currencies 142,055 142,592 160,321 161,024 166,290 164,313 155,922 165,528" 170,639 162,352 46 Claims on United States 74,864 78,048 85,318 92,368 99,201 99,541 94,461 104,220" 104,652 103,016 47 Parent bank 50,553 54,575 60,048 61,457 67,145 66,607 62,718 71,925" 73,699 71,065 48 Other banks in United States 11,204 11,156 14,277 13,863 13,907 13,878 12,504 13,774 13,145 12,521 49 Nonbanks 13,107 12,317 10,993 17,048 18,149 19,056 19,239 18,521 17,808 19,430 50 Claims on foreigners 63,882 60,005 70,162 62,956 61,229 57,887 55,127 54,647" 58,986 52,503 51 Other branches of parent bank 19,042 17,296 21,277 22,904 20,883 20,320 17,460 17,115" 18,445 15,982 52 Banks 28,192 27,476 33,751 26,189 26,966 24,545 25,549 25,487" 28,370 24,755 53 Public borrowers 6,458 7,051 7,428 6,457 6,185 6,219 6,045 5,861" 5,830 5,422 54 Nonbank foreigners 10,190 8,182 7,706 7,406 7,195 6,803 6,073 6,184" 6,341 6,344 55 Other assets 3,309 4,539 4,841 5,700 5,860 6,885 6,334 6,661 7,001 6,833 56 Total payable in U.S. dollars 136,794 136,813 151,434 153,193 158,494 156,409 148,138 157,732' 163,518 154,981 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

A58 International Statistics • May 1989 3.14—Continued 1988 1989 LLiiaabbiilliittyy aaccccoouunntt 11998855 11998866 11998877 Julyr Aug/ Sept. Oct/ Nov. Dec/ Jan. All foreign countries 57 Total, all currencies 458,012 456,628 518,618 488,774 488,372 489,896' 494,289 512,854R 505,037 496,506 58 Negotiable CDs 34,607 31,629 30,929 30,159 31,203 28,953 27,969 30,734 28,511 28,538 59 To United States 156,281 152,465 161,390 159,068 164,512 165,495' 161,792 172,654'' 185,379 172,095 60 Parent bank 84,657 83,394 87,606 84,227 88,848 94,906r 95,371 104,427'' 114,655 100,742 61 Other banks in United States . 16,894 15,646 20,559 15,310 16,356 14,272 14,029 13,584' 14,960 15,358 62 Nonbanks 54,730 53,425 53,225 59,531 59,308 56,317' 52,392 54,643' 55,764 55,995 63 To foreigners 245,939 253,775 304,803 278,225 271,086 274,237' 281,791 286,036' 270,731 273,735 64 Other branches of parent bank 89,529 95,146 124,601 107,191 100,632 106,284 106,139 110,735' 110,968 109,116 65 Banks 76,814 77,809 87,274 83,156 80,707 79,797r 82,184 82,488' 72,972 72,299 66 Official institutions 19,520 17,835 19,564 16,628 17,232 16,911 18,786 17,743 15,183 18,506 67 Nonbank foreigners 60,076 62,985 73,364 71,250 72,515 71,245 74,682 75,070' 71,608 73,814 68 Other liabilities 21,185 18,759 21,496 21,322 21,571 21,2Hr 22,737 23,43C 20,416 22,138 69 Total payable in U.S. dollars 353,712 336,406 361,438 342,030 346,662 348,151' 343,794 359,919' 366,506 353,661 70 Negotiable CDs 31,063 28,466 26,768 24,870 26,128 24,353 23,218 26,130 24,045 23,696 71 To United States 150,905 144,483 148,442 147,610 152,856 154,646' 150,506 159,297' 172,951 159,651 72 Parent bank 81,631 79,305 81,783 77,534 81,739 88,362' 88,391 96,118' 107,105 92,772 73 Other banks in United States . 16,264 14,609 19,155 14,011 15,153 13,153 12,868 12,230 13,629 14,173 74 Nonbanks 53,010 50,569 47,504 56,065 55,964 53,131' 49,247 50,949' 52,217 52,706 75 To foreigners 163,583 156,806 177,711 159,350 156,766 158,325 159,162 163,094' 160,476 160,615 76 Other branches of parent bank 71,078 71,181 90,469 81,251 75,108 79,450 78,552 81,235' 83,727 82,145 77 Banks 37,365 33,850 35,065 28,565 30,142 29,341 29,069 30,985' 28,891 27,220 78 Official institutions 14,359 12,371 12,409 9,354 9,938 9,207 10,624 9,121 8,224 10,879 79 Nonbank foreigners 40,781 39,404 39,768 40,180 41,578 40,327 40,917 41,753' 39,634 40,371 80 Other liabilities 8,161 6,651 8,517 10,200 10,912 10,827r 10,908 11,398' 9,034 9,699 United Kingdom 81 Total, all currencies 148,599 140,917 158,695 151,017 149,646 147,329 155,580 159,556 156,085 156,529 82 Negotiable CDs 31,260 27,781 26,988 25,750 26,998 24,311 23,345 26,013 24,528 24,253 83 To United States 29,422 24,657 23,470 26,859 25,013 25,657 31,575 32,420 36,734 34,535 84 Parent bank 19,330 14,469 13,223 16,844 15,100 17,115 22,800 23,226 27,799 24,130 85 Other banks in United States 2,974 2,649 1,740 2,051 1,878 2,021 2,192 1,768 2,197 2,568 86 Nonbanks 7,118 7,539 8,507 7,964 8,035 6,521 6,583 7,426 6,738 7,837 87 To foreigners 78,525 79,498 98,689 88,489 87,504 87,212 89,934 90,404 86,026 87,519 88 Other branches of parent bank 23,389 25,036 33,078 26,948 25,570 26,837 25,743 26,268 26,812 26,815 89 Banks 28,581 30,877 34,290 32,763 31,829 31,701 32,385 33,029 30,609 29,329 90 Official institutions 9,676 6,836 11,015 9,034 9,982 8,570 10,656 9,542 7,873 10,010 91 Nonbank foreigners 16,879 16,749 20,306 19,744 20,123 20,104 21,150 21,565 20,732 21,365 92 Other liabilities 9,392 8,981 9,548 9,919 10,131 10,149 10,726 10,719 8,797 10,222 93 Total payable in U.S. dollars 112,697 99,707 102,550 96,908 97,926 96,970 101,689 102,933 104,948 104,462 94 Negotiable CDs 29,337 26,169 24,926 22,846 24,229 22,043 20,864 23,543 22,063 21,500 95 To United States 27,756 22,075 17,752 23,105 20,993 22,177 28,063 27,123 32,538 30,032 96 Parent bank 18,956 14,021 12,026 15,729 13,745 16,031 21,665 21,003 26,354 22,069 97 Other banks in United States 2,826 2,325 1,512 1,817 1,655 1,819 1,978 1,366 1,912 2,362 98 Nonbanks 5,974 5,729 4,214 5,559 5,593 4,327 4,420 4,754 4,272 5,601 99 To foreigners 51,980 48,138 55,919 46,083 47,227 47,149 47,278 46,843 46,690 48,421 100 Other branches of parent bank 18,493 17,951 22,334 18,539 17,550 18,6% 17,384 17,443 18,561 18,936 101 Banks 14,344 15,203 15,580 12,240 13,501 13,417 13,436 14,029 13,407 13,090 102 Official institutions 7,661 4,934 7,530 5,036 5,781 4,519 6,186 4,713 4,348 5,897 103 Nonbank foreigners 11,482 10,050 10,475 10,268 10,395 10,517 10,272 10,658 10,374 10,498 104 Other liabilities 3,624 3,325 3,953 4,874 5,477 5,601 5,484 5,424 3,657 4,509 Bahamas and Caymans 105 Total, all currencies 142,055 142,592 160,321 161,024 166,290 164,313 155,922 165,528' 170,639 162,352 106 Negotiable CDs 610 847 885 940 731 924 1,092 1,361 953 1,118 107 To United States 104,556 106,081 113,950 112,599 117,876 116,687 107,124 115,169' 122,206 113,622 108 Parent bank 45,554 49,481 53,239 49,927 54,203 56,768' 51,466 58,103' 62,899 54,884 109 Other banks in United States . 12,778 11,715 17,224 12,069 13,412 11,106 10,824 10,823 11,556 11,709 110 Nonbanks 46,224 44,885 43,487 50,603 50,261 48,813' 44,834 46,243' 47,751 47,029 111 To foreigners 35,053 34,400 43,815 45,442 45,470 44,478 45,284 46,39c 45,216 45,543 112 Other branches of parent bank 14,075 12,631 19,185 22,395 21,315 22,872 23,412 22,933' 23,392 24,973 113 Banks 10,669 8,617 10,769 10,225 9,708 8,405 8,392 9,887' 8,685 7,120 114 Official institutions 1,776 2,719 1,504 1,015 1,099 1,067 972 1,060 1,074 1,337 115 Nonbank foreigners 8,533 10,433 12,357 11,807 13,348 12,134 12,508 12,51C 12,065 12,113 116 Other liabilities 1,836 1,264 1,671 2,043 2,213 2,224 2,422 2,608 2,264 2,069 117 Total payable in U.S. dollars 138,322 138,774 152,927 152,743 158,031 156,215 148,375 157,28c 162,950 154,663 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A59 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1988 1989 IItteemm 11998866 11998877 July Aug. Sept. Oct. Nov/ Dec. Jan." 1 Total1 211,834 259,556 290,944 290,263 288,601 295,017 300,926 299,699 301,423 By type 2 Liabilities reported by banks in the United States 27,920 31,838 32,070 32,813 32,224 34,594 35,059 31,457 36,459 3 U.S. Treasury bills and certificates3 75,650 88,829 9966,,771155 96,698 96,812 110000,,881144 103,841 103,722 98,457 U.S. Treasury bonds and notes 4 Marketable 91,368 122,432 146,971 145,521 144,040 144,617 146,813 149,025 151,018 5 Nonmarketable 1,300 300 506 509 513 516 520 523 527 6 U.S. securities other than U.S. Treasury securities 15,596 16,157 14,682 14,722 15,012 14,476 14,693 14,972 14,962 By area 7 Western Europe 88,629 124,620 125,195 123,428 121,206 125,204 128,655 125,089 125,666 8 2,004 4,961 10,725 9,981 10,054 11,014 10,066 9,584 9,668 9 Latin America and Caribbean 8,417 8,328 9,888 11,336 10,136 9,840 10,496 10,046 9,929 10 Asia 105,868 116,098 135,657 136,165 137,513 139,447 142,777 145,587 147,371 11 1,503 1,402 1,179 1,196 1,130 1,094 993 1,369 1,093 12 Other countries6 5,412 4,147 7,793 7,646 8,049 7,903 7,418 7,501 7,169 1. Includes the Bank for International Settlements. bonds and notes payable in foreign currencies. 2. Principally demand deposits, time deposits, bankers acceptances, commer- 5. Debt securities of U.S. government corporations and federally sponsored cial paper, negotiable time certificates of deposit, and borrowings under repur- agencies, and U.S. corporate stocks and bonds. chase agreements. 6. Includes countries in Oceania and Eastern Europe. NOTE. Based on Treasury Department data and on data reported to the 3. Includes nonmarketable certificates of indebtedness (including those payable Treasury Department by banks (including Federal Reserve Banks) and securities in foreign currencies through 1974) and Treasury bills issued to official institutions dealers in the United States. of foreign countries. 4. Excludes notes issued to foreign official nonreserve agencies. Includes 3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies' Millions of dollars, end of period 1988 IItteemm 11998855 11998866 11998877 Mar. June Sept. Dec. 1 Banks' own liabilities 15,368 29,702 55,438 55,818 55,110 61,243 71,044 2 Banks' own claims 16,294 26,180 51,271 52,221 51,183 60,957 66,085 3 Deposits 8,437 14,129 18,861 18,407 17,785 22,139 23,739 4 Other claims 7,857 12,052 32,410 33,814 33,398 38,818 42,346 5 Claims of banks' domestic customers 580 2,507 551 810 1,004 392 364 1. Data on claims exclude foreign currencies held by U.S. monetary author- 2. Assets owned by customers of the reporting bank located in the United ities. States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • May 1989 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1988 1989 Holder and type of liability 11998855 11998866 11998877 July Aug. Sept. Oct. Nov/ Dec. Jan." 1 All foreigners 435,726 540,996 618,874 654,809 658,039 657,404 651,776 677,870 684,830 659,432 2 Banks' own liabilities 341,070 406,485 470,070 490,856 493,988 491,108 482,560 503,333 512,913 491,075 3 Demand deposits 21,107 23,789 22,383 21,983 20,314 21,375 21,830 22,052 21,797 20,544 4 Time deposits 117,278 130,891 148,374 142,551 145,123 148,747 141,948 149,227 150,887 146,137 5 Other. 29,305 42,705 51,677 50,747 52,630 53,840 57,199 53,899 51,890 50,873 6 Own foreign offices4 173,381 209,100 247,635 275,575 275,920 267,145 261,583 278,156 288,339 273,521 7 Banks' custody liabilities5 94,656 134,511 148,804 163,953 164,050 166,296 169,215 174,537 171,916 168,358 8 U.S. Treasury bills and certificates6 69,133 90,398 101,743 109,555 109,106 109,768 112,267 116,860 114,976 111,141 9 Other negotiable and readily transferable instruments 17,964 15,417 16,776 16,231 15,971 15,555 16,397 16,644 16,339 17,137 10 Other 7,558 28,696 30,285 38,167 38,973 40,973 40,551 41,033 40,601 40,080 11 Nonmonetary international and regional organizations 5,821 5,807 4,464 7,061 4,749 7,764 5,879 4,752 3,102 2,703 12 Banks' own liabilities 2,621 3,958 2,702 4,882 2,925 5,104 4,067 3,4% 2,405 1,908 13 Demand deposits 85 199 124 92 85 104 143 76 71 67 14 Time deposits 2,067 2,065 1,538 1,857 966 1,688 1,101 1,384 1,183 565 15 Other 469 1,693 1,040 2,933 1,874 3,311 2,823 2,036 1,150 1,277 16 Banks' custody liabilities5 3,200 1,849 1,761 2,179 1,824 2,660 1,812 1,256 698 795 17 U.S. Treasury bills and certificates6 1,736 259 265 286 43 755 62 83 57 69 18 Other negotiable and readily transferable instruments 1,464 1,590 1,497 1,861 1,769 1,899 1,750 1,163 641 711 19 Other 0 0 0 32 12 5 0 10 0 15 20 Official institutions9 79,985 103,569 120,667 128,786 129,511 129,036 135,408 138,900 135,178 134,916 21 Banks' own liabilities 20,835 25,427 28,703 28,486 29,079 28,725 30,820 31,087 27,057 31,969 22 Demand deposits 2,077 2,267 1,757 1,696 1,405 1,756 1,781 1,584 1,915 1,627 23 Time deposits 10,949 10,497 12,843 11,520 12,289 11,573 11,209 12,156 9,744 13,618 24 Other 7,809 12,663 14,103 15,270 15,385 15,396 17,830 17,348 15,398 16,725 25 Banks' custody liabilities5 59,150 78,142 91,965 100,300 100,432 100,311 104,589 107,813 108,122 102,947 26 U.S. Treasury bills and certificates6 53,252 75,650 88,829 96,715 96,698 96,812 100,814 103,841 103,722 98,457 27 Other negotiable and readily transferable instruments 5,824 2,347 2,990 3,368 3,450 3,221 3,612 3,758 4,120 4,367 28 Other 75 145 146 217 284 279 163 214 279 124 29 Banks10 275,589 351,745 414,280 436,443 439,532 436,310 425,242 447,255 460,077 435,745 30 Banks' own liabilities 252,723 310,166 371,665 387,578 390,416 385,217 374,639 395,436 408,761 383,829 31 Unaffiliated foreign banks 79,341 101,066 124,030 112,003 114,495 118,072 113,056 117,281 120,421 110,308 32 Demand deposits 10,271 10,303 10,898 10,217 9,258 9,349 10,228 10,401 9,979 9,451 33 Time deposits 49,510 64,232 79,717 73,000 73,826 77,713 71,096 76,453 80,363 73,025 34 Other3 19,561 26,531 33,415 28,787 31,412 31,010 31,733 30,427 30,079 27,833 35 Own foreign offices4 173,381 209,100 247,635 275,575 275,920 267,145 261,583 278,156 288,339 273,521 36 Banks' custody liabilities5 22,866 41,579 42,615 48,865 49,116 51,093 50,603 51,819 51,316 51,916 37 U.S. Treasury bills and certificates6 9,832 9,984 9,134 9,324 9,299 8,969 7,976 8,087 7,602 7,819 38 Other negotiable and readily transferable instruments 6,040 5,165 5,392 4,625 4,090 4,230 5,265 5,712 5,682 6,475 39 Other 6,994 26,431 28,089 34,916 35,727 37,893 37,362 38,020 38,033 37,623 40 Other foreigners 74,331 79,875 79,463 82,520 84,247 84,294 85,247 86, %3 86,472 86,068 41 Banks' own liabilities 64,892 66,934 67,000 69,910 71,568 72,061 73,035 73,313 74,691 73,368 42 Demand deposits 8,673 11,019 9,604 9,979 9,566 10,166 9,678 9,991 9,832 9,399 43 Time deposits 54,752 54,097 54,277 56,174 58,042 57,772 58,542 59,234 59,596 58,930 44 Other. 1,467 1,818 3,119 3,757 3,960 4,123 4,814 4,088 5,263 5,039 45 Banks' custody liabilities5 9,439 12,941 12,463 12,610 12,678 12,233 12,212 13,650 11,780 12,700 46 U.S. Treasury bills and certificates6 4,314 4,506 3,515 3,231 3,066 3,231 3,415 4,849 3,595 4,797 47 Other negotiable and readily transferable instruments 4,636 6,315 6,898 6,378 6,663 6,205 5,771 6,011 5,8% 5,584 48 Other 489 2,120 2,050 3,002 2,950 2,797 3,026 2,789 2,290 2,319 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 9,845 7,4% 7,314 6,975 6,792 6,121 6,123 6,128 6,357 6,416 1. Reporting banks include all kinds of depository institutions besides commer- 5. Financial claims on residents of the United States, other than long-term cial banks, as well as some brokers and dealers. securities, held by or through reporting banks. 2. Excludes negotiable time certificates of deposit, which are included in 6. Includes nonmarketable certificates of indebtedness and Treasury bills "Other negotiable and readily transferable instruments." issued to official institutions of foreign countries. 3. Includes borrowing under repurchase agreements. 7. Principally bankers acceptances, commercial paper, and negotiable time 4. 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 8. 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 9. Foreign central banks, foreign central governments, and the Bank for foreign bank. International Settlements. 10. Excludes central banks, which are included in "Official institutions." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.17—Continued 1988 1989 AArreeaa aanndd ccoouunnttrryy 11998855 11998866 11998877 July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Total 435,726 540,9% 618,874 654,809 658,039 657,404 651,776 677,870' 684,830 659,432 2 Foreign countries 429,905 535,189 614,411 647,749 653,289 649,640 645,896 673,118'' 681,727 656,729 3 Europe 164,114 180,556 234,641 231,218 232,797 224,663 227,308 233,943 236,272 223,520 4 Austria 693 1,181 920 1,425 1,245 1,072 1,271 1,604 1,156 1,134 5 Belgium-Luxembourg 5,243 6,729 9,347 9,531 10,051 9,937 10,247 ii,nr 10,043 8,995 6 Denmark 513 482 760 1,474 2,078 1,402 2,362 3,089 2,180 1,833 7 Finland 496 580 377 549 417 447 339 339 284 380 8 France 15,541 22,862 29,835 26,005 24,237 24,295 23,285 24,564 24,758 22,256 9 Germany 4,835 5,762 7,022 5,211 6,226 5,085 5,898 7,981 6,774 5,666 10 Greece 666 700 689 620 694 633 675 683 675 919 11 Italy 9,667 10,875 12,073 9,921 9,766 8,550 12,512 13,337 14,609 11,309 12 Netherlands 4,212 5,600 5,014 5,007 5,647 6,167 6,377 5,939 5,311 5,154 13 Norway 948 735 1,362 1,322 900 1,060 1,143 1,342 1,558 1,502 14 Portugal 652 699 801 859 848 858 915 738 903 870 15 Spain 2,114 2,407 2,621 5,011 5,570 6,248 6,838 5,976 5,507 5,745 16 Sweden 1,422 884 1,379 1,926 2,011 2,1% 1,579 1,815' 1,276 1,289 17 Switzerland 29,020 30,534 33,766 30,416 29,043 31,330 31,333 31,929' 34,230 33,390 18 Turkey 429 454 703 537 709 706 878 793 1,017 990 19 United Kingdom 76,728 85,334 116,852 121,895 122,620 113,287 109,9% 111,733 116,111 110,792 20 Yugoslavia 673 630 710 614 629 579 655 569 529 489 21 Other Western Europe 9,635 3,326 9,798 8,215 9,463 10,207 10,240 9,617' 8,623 9,949 22 U.S.S.R 105 80 32 80 99 45 100 74 138 161 23 Other Eastern Europe 523 702 582 598 544 558 667 711 589 699 24 Canada 17,427 26,345 30,095 29,944 28,128 28,247 26,697 26,188 21,029 19,342 25 Latin America and Caribbean 167,856 210,318 220,372 242,719 246,723 246,743 240,074 257,306' 266,903 257,160 26 Argentina 6,032 4,757 5,006 5,975 6,775 7,106 7,065 7,307 7,751 7,568 27 Bahamas 57,657 73,619 74,767 76,002 78,889 77,921 76,805 83,615' 86,499 82,013 28 Bermuda 2,765 2,922 2,344 2,413 2,394 2,389 2,577 2,820' 2,622 2,381 29 Brazil 5,373 4,325 4,005 4,489 4,524 4,475 4,726 5,137' 5,133 4,567 30 British West Indies 42,674 72,263 81,494 101,332 99,907 101,711 95,828 105,016' 110,611 106,921 31 Chile 2,049 2,054 2,210 2,323 2,463 2,467 2,727 2,653 2,918 2,942 32 Colombia 3,104 4,285 4,204 4,441 4,403 4,171 4,136 4,221 4,315 4,264 33 Cuba 11 7 12 9 8 9 12 9 10 10 34 Ecuador 1,239 1,236 1,082 1,216 1,224 1,244 1,265 1,360 1,360 1,345 35 Guatemala 1,071 1,123 1,082 1,183 1,182 1,177 1,150 1,178 1,186 1,229 36 Jamaica 122 136 160 154 149 166 177 164 186 176 37 Mexico 14,060 13,745 14,480 16,334 17,260 15,842 15,636' 15,457 15,116 15,261 38 Netherlands Antilles 4,875 4,970 4,975 4,798 5,011 5,252 5,354 5,907 6,659 5,917 39 Panama 7,514 6,886 7,414 4,251 4,262 4,128 4,114 4,046 4,231 4,122 40 Peru 1,167 1,163 1,275 1,514 1,539 1,584 1,605 1,650 1,626 1,673 41 Uruguay 1,552 1,537 1,582 1,828 1,898 1,884 1,788 1,887' 1,876 1,986 42 Venezuela 11,922 10,171 9,048 9,116 9,330 9,752 9,547 9,301 9,144 9,098 43 Other 4,668 5,119 5,234 5,343 5,504 5,462 5,560 5,578' 5,662 5,687 44 72,280 108,831 121,288 133,933 135,851 139,845 142,062 145,756' 147,378 146,726 China 45 Mainland 1,607 1,476 1,162 1,564 1,757 1,608 1,479 1,401 1,892 1,566 46 Taiwan 7,786 18,902 21,503 24,023 23,422 22,334 23,377 24,791 26,041 26,178 47 Hong Kong 8,067 9,393 10,180 9,951 10,417 10,875 11,532 12,386 11,731 10,951 48 India 712 674 582 858 845 1,013 793 761 695 689 49 Indonesia 1,466 1,547 1,404 1,036 1,254 1,121 1,286 995 1,189 1,189 50 Israel 1,601 1,892 1,292 1,244 1,194 1,130 2,323 1,063 1,472 1,215 51 Japan 23,077 47,410 54,322 63,460 64,559 70,188 70,594 73, IOC 74,072 75,553 52 Korea 1,665 1,141 1,637 1,459 1,720 2,091 2,440 2,681' 2,540 2,647 53 Philippines 1,140 1,866 1,085 1,085 1,001 971 1,140 1,150 1,151 976 54 Thailand 1,358 1,119 1,345 1,650 1,422 1,369 1,363 1,205 1,236 1,373 55 Middle-East oil-exporting countries 14,523 12,352 13,988 14,298 12,787 14,091 13,232 12,871 12,061 12,060 56 Other 9,276 11,058 12,788 13,306 15,472 13,053 12,503 13,352 13,298 12,330 57 4,883 4,021 3,945 3,837 3,846 3,659 3,702 3,530 3,974 3,677 58 Egypt 1,363 706 1,151 1,039 %9 813 850 757 912 770 59 Morocco 163 92 194 80 70 111 66 64 68 90 60 South Africa 388 270 202 200 204 247 245 267 437 250 61 Zaire 163 74 67 63 67 71 71 72 71 67 62 Oil-exporting countries 1,494 1,519 1,014 1,052 1,039 1,015 993 952 1,017 1,024 63 Other 1,312 1,360 1,316 1,403 1,498 1,402 1,477 1,418 1,470 1,475 64 Other countries 3,347 5,118 4,070 6,098 5,945 6,484 6,054 6,3% 6,171 6,305 65 Australia 2,779 4,1% 3,327 5,329 5,170 5,639 5,199 5,426 5,302 5,510 66 All other 568 922 744 769 775 845 854 970 870 795 67 Nonmonetary international and regional organizations 5,821 5,807 4,464 7,061 4,749 7,764 5,879 4,752 3,102 2,703 68 International 4,806 4,620 2,830 5,130 2,979 5,721 3,912 3,265 2,381 1,724 69 Latin American regional 894 1,033 1,272 1,651 1,614 1,762 1,662 1,276 589 747 70 Other regional 121 154 362 279 156 281 306 211 133 232 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

A62 International Statistics • May 1989 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1988 1989 AArreeaa aanndd ccoouunnttrryy 11998855 11998866 11998877 July Aug. Sept. Oct. Nov. Dec. Jan." 1 Total 401,608 444,745 459,877 470,241 469,243 477,149 465,916 485,745' 489,749 480,221 2 Foreign countries 400,577 441,724 456,472 467,427 466,799 471,566 462,814 481,094' 487,742 477,949 3 Europe 106,413 107,823 102,348 99,751 99,284 102,409 105,855 108,199' 116,6% 107,741 4 Austria 598 728 793 888 743 808 812 721 485 544 Belgium-Luxembourg 5,772 7,498 9,397 8,530 8,419 8,786 8,902 8,954r 8,473 8,356 6 Denmark 706 688 717 742 608 582 631 599 480 410 7 Finland 823 987 1,010 1,325 1,231 1,195 912 1,157 1,065 901 8 France 9,124 11,356 13,548 11,861 11,965 12,164 12,327 12,478 13,082 13,340 9 Germany 1,267 1,816 2,039 2,169 2,000 1,728 2,315 2,305 2,324 2,381 10 Greece 991 648 462 562 523 506 493 601 433 448 11 Italy 8,848 9,043 7,460 6,607 6,626 6,118 6,027 7,097' 7,945 5,555 12 Netherlands 1,258 3,296 2,619 3,017 2,933 3,202 2,666 2,763 2,548 2,514 13 Norway 706 672 934 484 534 510 534 478 455 472 14 Portugal 1,058 739 477 333 321 333 265' 253 374 339 13 Spain 1,908 1,492 1,853 1,973 2,011 1,969 1,800 2,054 1,823 2,182 16 Sweden 2,219 1,964 2,254 1,958 2,256 1,983 1,852 2,083' 1,977 2,613 17 Switzerland 3,171 3,352 2,718 2,491 2,569 2,559 2,918 2,983 3,895 3,555 18 Turkey 1,200 1,543 1,680 1,432 1,397 1,3% 1,344 1,265 1,222 1,169 19 United Kingdom 62,566 58,335 50,823 51,918 51,789 54,669 57,906 58,025' 65,562 58,174 20 Yugoslavia 1,964 1,835 1,700 1,559 1,537 1,476 1,472 1,450 1,390 1,370 21 Other Western Europe2 998 539 619 671 524 889 1,125 916' 1,152 1,290 22 U.S.S.R 130 345 389 431 466 473 754 1,218' 1,255 1,286 23 Other Eastern Europe 1,107 948 852 800 831 1,065 800 801 757 842 24 Canada 16,482 21,006 25,368 23,937 24,137 23,804 22,482 23,274 18,965 16,740 25 Latin America and Caribbean 202,674 208,825 214,789 205,268 206,798 212,897 201,049 211,037' 213,172 209,265 26 Argentina 11,462 12,091 11,996 12,342 12,238 12,235 12,077 12,023 11,804 11,852 27 Bahamas 58,258 59,342 64,587 60,350 63,305 64,253 59,322 67,218' 67,003 68,768 28 Bermuda 499 418 471 460 430 688 5% 511 483 472 29 Brazil 25,283 25,716 25,897 26,023 25,909 25,610 25,461 26,399 25,723 26,071 30 British West Indies 38,881 46,284 50,042 50,483 49,641 55,262 48,881 50,646' 54,667 49,496 31 Chile 6,603 6,558 6,308 5,771 5,677 5,656 5,459 5, 5,401 5,148 32 Colombia 3,249 2,821 2,740 3,127 3,029 3,023 3,016 2,978' 22,,993388 22,,885599 33 Cuba 0 0 1 0 0 0 0 0 11 11 34 Ecuador 2,390 2,439 2,286 2,143 2,156 2,185 2,168 2,162 2,075 2,046 33 Guatemala4 194 140 144 157 148 150 175 167 198 185 36 Jamaica4 224 198 188 214 184 185 201 205 268 232 37 Mexico 31,799 30,698 29,532 26,022 25,885 25,971 25,645 25,366 24,564 24,239 38 Netherlands Antilles 1,340 1,041 980 1,055 1,269 1,079 1,491 1,427 1,309 1,259 39 Panama 6,645 5,436 4,744 2,400 2,370 2,238 2,214 2,350 2,506 2,503 40 Peru 1,947 1,661 1,329 1,137 1,192 1,080 1,065 11,,001122 1,012 11,,001100 41 Uruguay 960 940 963 878 889 891 850 888888 910 888800 42 Venezuela 10,871 11,108 10,843 11,021 10,862 10,754 10,803 10,735 10,731 10,702 43 Other Latin America and Caribbean 2,067 1,936 1,738 1,684 1,612 1,636 1,626 1,628 1,580 1,544 44 66,212 96,126 110066,,00%% 113300,,557733 112288,,778877 112244,,883355 112255,,006677 113300,,330099'' 113300,,777788 113355,,556666 China Mainland 639 787 968 1,033 1,017 888 756 777 762 830 46 Taiwan 1,535 2,681 4,592 3,562 3,241 3,121 3,040 3,845 4,184 3,852 47 Hong Kong 6,797 8,307 8,218 8,342 7,451 8,389 9,495 10,826 9,893 8,801 48 India 450 321 510 508 548 540 634 568 560 645 49 Indonesia 698 723 580 765 786 778 808 767 730 669 50 Israel 1,991 1,634 1,363 1,206 1,174 1,180 1,174 1,230 1,135 1,0% 51 Japan 31,249 59,674 68,658 93,140 92,840 87,246 87,626 89,549' 90,416 98,995 32 Korea 9,226 7,182 5,148 4,889 4,909 5,137 5,192 5,395 5,155 4,772 33 Philippines 2,224 2,217 2,071 2,029 2,030 2,009 1,912 1,900 1,875 1,848 34 Thailand 845 578 496 668 683 759 766 778 850 887 33 Middle East oil-exporting countries 4,298 4,122 4,858 6,400 6,216 6,401 5,412 6,657 6,130 5,344 36 Other Asia 6,260 7,901 8,635 8,031 7,891 8,389 8,253 8,018 9,086 7,829 57 Africa 5,407 4,650 4,742 5,493 5,462 5,454 5,633 5,629 5,720 5,917 38 Egypt 721 567 521 539 530 535 540 532 509 494 39 Morocco 575 598 542 481 478 478 476 488 511 522 60 South Africa 1,942 1,550 1,507 1,726 1,711 1,693 1,707 1,698 1,681 1,672 61 Zaire 20 28 15 38 36 16 17 18 17 16 62 Oil-exporting countries 630 694 1,003 1,340 1,359 1,388 1,483 1,491 1,523 1,533 63 Other 1,520 1,213 1,153 1,369 1,348 1,343 1,410 1,402 1,479 1,681 64 Other countries 3,390 3,294 3,129 2,404 2,331 2,167 2,728 2,645' 2,410 2,720 65 Australia 2,413 1,949 2,100 1,554 1,499 1,392 1,879 1,586' 1,532 1,731 66 All other 978 1,345 1,029 850 832 775 849 1,059 879 989 67 Nonmonetary international and regional organizations 1,030 3,021 3,404 2,814 2,445 5,583 3,101 4,651' 2,006 2,272 1. Reporting banks include all kinds of depository institutions besides commer- 4. Included in "Other Latin America and Caribbean" through March 1978. cial banks, as well as some brokers and dealers. 5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 2. Includes the Bank for International Settlements. Beginning April 1978, also United Arab Emirates (Trucial States). includes Eastern European countries not listed in line 23. 6. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German 7. Excludes the Bank for International Settlements, which is included in Democratic Republic, Hungary, Poland, and Romania. "Other Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 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 1989 TTyyppee ooff ccllaaiimm 11998855 11998866 11998877 July Aug. Sept. Oct. Nov.r Dec. Jan." 1 Total 444444433333330000000,,,,,,,444444488888889999999 444444477777778888888,,,,,,,666666655555550000000 444444499999997777777,,,,,,,666666633333335555555 555555511111112222222,,,,,,,999999955555550000000 555555533333336666666,,,,,,,999999944444445555555 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444400000001111111,,,,,,,666666600000008888888 444444444444444444444,,,,,,,777777744444445555555 444444455555559999999,,,,,,,888888877777777777777 470,241 469,243 444444477777777777777,,,,,,,111111144444449999999 465,916 485,745 444444488888889999999,,,,,,,777777744444449999999 480,221 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666660000000,,,,,,,555555500000007777777 66666664444444,,,,,,,000000099999995555555 66666664444444,,,,,,,666666600000005555555 62,825 61,696 66666663333333,,,,,,,777777733333336666666 60,649 64,791 66666661111111,,,,,,,555555577777777777777 63,437 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111177777774444444,,,,,,,222222266666661111111 222222211111111111111,,,,,,,555555533333333333333 222222222222224444444,,,,,,,777777722222227777777 239,112 237,012 222222244444445555555,,,,,,,333333399999997777777 237,414 254,980 222222255555556666666,,,,,,,111111188888883333333 256,044 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111111111116666666,,,,,,,666666655555554444444 111111122222222222222,,,,,,,999999944444446666666 111111122222227777777,,,,,,,666666600000009999999 127,298 128,447 111111122222224444444,,,,,,,888888855555552222222 121,950 123,213 111111122222229999999,,,,,,,444444422222221111111 118,681 66 DDeeppoossiittss 44444448888888,,,,,,,333333377777772222222 55555557777777,,,,,,,444444488888884444444 66666660000000,,,,,,,666666688888887777777 60,184 60,558 66666661111111,,,,,,,555555522222221111111 54,180 55,925 66666665555555,,,,,,,777777733333335555555 58,738 77 OOtthheerr 66666668888888,,,,,,,222222288888882222222 66666665555555,,,,,,,444444466666662222222 66666666666666,,,,,,,999999922222222222222 67,114 67,889 66666663333333,,,,,,,333333333333330000000 67,771 67,287 66666663333333,,,,,,,666666688888886666666 59,944 88 AAllll ootthheerr ffoorreeiiggnneerrss 55555550000000,,,,,,,111111188888885555555 44444446666666,,,,,,,111111177777771111111 44444442222222,,,,,,,999999933333336666666 41,006 42,089 44444443333333,,,,,,,111111166666664444444 45,902 42,761 44444442222222,,,,,,,555555566666668888888 42,058 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 22222228888888,,,,,,,888888888888881111111 33333333333333,,,,,,,999999900000005555555 33333337777777,,,,,,,777777755555558888888 33333335555555,,,,,,,888888800000001111111 44444447777777,,,,,,,111111199999996666666 3333333,,,,,,,333333333333335555555 4444444,,,,,,,444444411111113333333 3333333,,,,,,,666666699999992222222 5555555,,,,,,,333333399999991111111 8888888,,,,,,,222222288888889999999 11 Negotiable and readily transferable 11111119999999,,,,,,,333333333333332222222 22222224444444,,,,,,,000000044444444444444 22222226666666,,,,,,,666666699999996666666 22222220000000,,,,,,,999999911111116666666 22222225555555,,,,,,,333333377777772222222 12 Outstanding collections and other 6666666,,,,,,,222222211111114444444 5555555,,,,,,,444444444444448888888 7777777,,,,,,,333333377777770000000 9999999,,,,,,,444444499999994444444 11111113333333,,,,,,,555555533333335555555 13 MEMO: Customer liability on 22222228888888,,,,,,,444444488888887777777 22222225555555,,,,,,,777777700000006666666 22222223333333,,,,,,,111111100000007777777 11111118888888,,,,,,,777777733333330000000 11111119999999,,,,,,,444444488888884444444 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .... 38,102 43,984 40,087 46,837 49,732 42,720 41,862r 48,614 41,513 n.a. 1. Data for banks' own claims are given on a monthly basis, but the data for and foreign branches, agencies, or wholly owned subsidiaries of head office or claims of banks' own domestic customers are available on a quarterly basis only. parent foreign bank. Reporting banks include all kinds of depository institutions besides commercial 3. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the account banks, as well as some brokers and dealers. of their domestic customers. 2. U.S. banks: includes amounts due from own foreign branches and foreign 4. Principally negotiable time certificates of deposit and bankers acceptances. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 5. Includes demand and time deposits and negotiable and nonnegotiable regulatory agencies. Agencies, branches, and majority-owned subsidiaries of certificates of deposit denominated in U.S. dollars issued by banks abroad. For foreign banks: principally amounts due from head office or parent foreign bank, description of changes in data reported by nonbanks, see July 1979 BULLETIN, p. 550. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1988 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998855 11998866 11998877 Mar. June Sept. Dec." 1 Total 227,903 232,295 235,130 219,323 227,589 228,887 231,858 By borrower 2 Maturity of 1 year or less 160,824 160,555 163,997 152,658 162,912 166,342 171,275 3 Foreign public borrowers 26,302 24,842 25,889 24,488 25,608 27,721 25,402 4 All other foreigners 134,522 135,714 138,108 128,171 137,304 138,622 145,873 5 Maturity over 1 year2 67,078 71,740 71,133 66,664 64,677 62,545 60,583 6 Foreign public borrowers 34,512 39,103 38,625 35,879 35,613 35,101 34,982 7 All other foreigners 32,567 32,637 32,507 30,785 29,064 27,445 25,601 By area Maturity of 1 year or less 8 Europe 56,585 61,784 59,027 51,552 55,242 53,859 55,501 9 Canada 6,401 5,895 5,680 4,978 6,426 5,913 6,223 10 Latin America and Caribbean 63,328 56,271 56,535 55,544 56,333 55,661 57,809 11 Asia 27,966 29,457 35,919 35,579 38,893 41,909 46,397 12 Africa 3,753 2,882 2,833 2,5% 2,914 3,112 3,338 13 All other3 2,791 4,267 4,003 2,410 3,103 5,888 2,006 Maturity of over 1 year2 14 Europe 7,634 6,737 6,696 5,914 5,420 5,323 4,818 15 Canada 1,805 1,925 2,661 2,213 2,337 2,075 1,818 16 Latin America and Caribbean 50,674 56,719 53,817 51,541 49,775 48,293 47,493 17 Asia 4,502 4,043 3,830 3,680 3,711 3,954 3,661 1,538 1,539 1,747 2,201 2,429 2,265 2,292 19 All other3 926 777 2,381 1,114 1,006 635 501 1. Reporting banks include all kinds of depository institutions besides commer- 2. Remaining time to maturity, cial banks, as well as some brokers and dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • May 1989 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks12 Billions of dollars, end of period 1986 1987 1988 AArreeaa oorr ccoouunnttrryy 11998844 11998855 Dec. Mar. June Sept. Dec. Mar. June Sept. Dec/ 1 Total 405.7 385.4 385.1 395.4 384.6 387.7 381.4 373.1 352.6 356.9 349.0 2 G-10 countries and Switzerland 148.1 146.0 156.6 162.7 158.1 155.2 160.0 156.7 150.5 149.5 154.6 3 Belgium-Luxembourg 8.7 9.2 8.3 9.1 8.3 8.2 10.1 9.3 9.2 9.5 9.0 4 France 14.1 12.1 13.7 13.3 12.5 13.7 13.8 11.5 10.8 10.0 10.7 5 Germany 9.0 10.5 11.6 12.7 11.2 10.5 12.6 11.8 10.6 8.9 9.9 6 Italy 10.1 9.6 9.0 8.7 7.5 6.6 7.3 7.4 6.1 5.9 6.4 7 Netherlands 3.9 3.7 4.6 4.4 7.3 4.8 4.0 3.3 3.3 3.0 2.8 8 Sweden 3.2 2.7 2.4 3.0 2.4 2.6 2.1 2.1 1.9 2.0 2.0 9 Switzerland 3.9 4.4 5.8 5.8 5.7 5.4 5.6 5.1 5.6 5.2 5.7 10 United Kingdom 60.3 63.0 71.0 73.7 72.0 72.1 69.1 71.4 69.8 68.0 66.8 11 Canada 7.9 6.8 5.3 5.3 4.7 4.7 5.6 4.9 5.4 5.2 5.5 12 Japan 27.1 23.9 24.9 26.9 26.3 26.5 29.8 29.9 27.9 31.7 35.9 13 Other developed countries 33.6 29.9 25.7 25.7 25.2 25.9 26.2 26.2 23.7 22.7 20.9 14 Austria 1.6 1.5 1.7 1.9 1.8 1.9 1.9 1.6 1.6 11..66 1.6 15 Denmark 2.2 2.3 1.7 1.7 1.5 1.6 1.7 1.4 1.0 11..11 .9 16 Finland 1.9 1.6 1.4 1.4 1.4 1.4 1.3 1.0 1.2 1.3 1.2 17 Greece 2.9 2.6 2.3 2.1 2.0 1.9 2.0 2.3 2.2 2.1 11..99 18 Norway 3.0 2.9 2.4 2.2 2.1 2.0 2.3 2.0 2.0 2.0 11..88 19 Portugal 1.4 1.2 .8 .9 .8 .8 .5 .4 .4 .4 .5 20 Spain 6.5 5.8 5.8 6.3 6.1 7.4 8.0 9.0 7.2 6.3 6.2 21 Turkey 1.9 1.8 1.8 1.7 1.7 1.5 1.6 1.6 1.5 1.3 1.2 22 Other Western Europe 1.7 2.0 1.4 1.4 1.5 1.6 1.6 1.9 1.6 1.9 1.3 23 South Africa 4.5 3.2 3.0 3.0 3.0 2.9 2.9 2.8 2.8 22..77 22..44 24 Australia 6.0 5.0 3.5 3.2 3.1 2.9 2.4 2.1 2.2 11..88 11..88 25 OPEC countries3 24.9 21.3 19.3 20.0 18.8 19.0 17.1 17.2 16.4 1177..66 16.5 26 Ecuador 2.2 2.1 2.2 2.1 2.1 2.1 11..99 11..99 1.8 11..88 1.7 27 Venezuela 9.3 8.9 8.6 8.5 8.4 8.3 88..11 88..11 8.0 7.9 7.9 28 Indonesia 3.3 3.0 2.5 2.4 2.2 2.0 1.9 1.9 1.9 1.9 1.9 29 Middle East countries 7.9 5.3 4.3 5.4 4.4 5.0 3.6 3.6 3.1 4.3 3.2 30 African countries 2.3 2.0 1.7 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 31 Non-OPEC developing countries 111.8 104.2 99.1 100.7 100.4 97.7 97.7 94.0 91.3 87.0 85.4 Latin America 32 Argentina 8.7 8.8 9.5 9.5 9.5 9.3 9.4 9.5 9.4 9.2 8.9 33 Brazil 26.3 25.4 25.2 26.2 25.1 25.1 24.7 23.9 23.7 22.4 22.5 34 Chile 7.0 6.9 7.1 7.3 7.2 7.0 6.9 6.6 6.4 6.2 5.7 35 Colombia 2.9 2.6 2.1 2.0 1.9 1.9 2.0 1.9 2.1 2.1 2.0 36 Mexico 25.7 23.9 23.8 24.1 25.3 24.8 23.7 22.5 21.1 2200..66 1188..99 37 Peru 2.2 1.8 1.4 1.4 1.3 1.2 1.1 1.1 .9 ..88 ..88 38 Other Latin America 3.9 3.4 3.1 3.0 2.9 2.8 2.7 2.8 2.6 2.5 2.7 Asia China 39 Mainland .7 .5 .4 .9 .6 .3 .3 .4 .3 .2 .3 40 Taiwan 5.1 4.5 4.9 5.5 6.6 6.0 8.2 6.1 4.9 3.2 3.6 41 India .9 1.2 1.2 1.8 1.7 1.9 1.9 2.1 2.3 2.0 2.1 42 Israel 1.8 1.6 1.5 1.4 1.3 1.3 1.0 1.0 1.0 1.0 1.2 43 Korea (South) 10.6 9.2 6.6 6.2 5.6 4.9 5.0 5.7 5.9 6.0 6.1 44 Malaysia 2.7 2.4 2.1 1.9 1.7 1.6 1.5 1.5 1.5 1.6 1.6 45 Philippines 6.0 5.7 5.4 5.4 5.4 5.4 5.1 5.1 44..99 4.5 44..55 46 Thailand 1.8 1.4 .9 .9 .8 .7 .7 1.0 11..11 11..22 11..11 47 Other Asia 1.1 1.0 .7 .6 .7 .7 .7 .7 .8 ..88 .9 Africa 48 Egypt 1.2 1.0 .7 .6 .6 .6 .5 .5 .6 .5 .4 49 Morocco .8 .9 .9 .9 .9 .8 .9 ..99 ..99 .8 .9 50 Zaire .1 .1 .1 .1 .1 .1 .0 ..11 11 0 ..00 51 Other Africa4 2.1 1.9 1.6 1.4 1.3 1.3 1.3 1.0 1.2 1.2 11..11 52 Eastern Europe 4.4 4.1 3.2 3.0 3.3 3.3 3.0 2.9 3.1 3.0 3.7 53 U.S.S.R .1 .1 .1 .1 .3 .5 .4 .3 .4 .4 ..77 54 Yugoslavia 2.3 2.2 1.7 1.6 1.7 1.7 1.6 1.7 1.7 1.7 11..88 55 Other 2.0 1.8 1.4 1.3 1.3 1.2 1.0 .9 1.0 1.0 1.2 56 Offshore banking centers 65.6 62.9 61.3 63.1 60.7 64.3 54.3 54.6 45.3 49.8 45.7 57 Bahamas 21.5 21.2 22.0 23.9 19.9 25.5 17.1 1188..33 11.0 15.8 1111..88 58 Bermuda .9 .7 .7 .8 .6 .6 .6 ..88 1.0 .9 ..88 59 Cayman Islands and other British West Indies 11.8 11.6 12.4 12.2 14.0 12.8 13.3 12.2 10.6 11.6r 13.1 60 Netherlands Antilles 3.4 2.2 1.8 1.7 1.3 1.2 1.2 1.3 1.2 1.2 1.0 61 Panama 6.7 6.0 4.0 4.3 3.9 3.7 3.7 3.2 33..00 22..77 22..66 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 ..11 ..11 ..11 63 Hong Kong 11.4 11.4 11.1 11.4 12.5 12.3 11.3 11.3 11.7 10.6 10.2 64 Singapore 9.8 9.8 9.2 8.6 8.3 8.1 7.0 7.4 6.8 7.0 6.2 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 17.3 16.9 19.8 20.1 18.1 22.3 23.2 21.5 22.2 27.0 21.8 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 A65 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 Sept. Dec. Mar. June Sept. 1 Total 29,357 27,825 25,587 28,571 27,852 28,877 29,387 31,096' 2 Payable in dollars 26,389 24,296 21,749 24,006 22,468 23,293 24,136 25,911' 3 Payable in foreign currencies 2,968 3,529 3,838 4,565 5,384 5,584 5,251 5,185' By type 4 Financial liabilities 14,509 13,600 12,133 12,936 11,828 13,134 13,112 13,616' 5 Payable in dollars 12,553 11,257 9,609 9,945 8,303 9,459 9,607 10,243' 6 Payable in foreign currencies 1,955 2,343 2,524 2,991 3,525 3,675 3,505 3,374' 7 Commercial liabilities 14,849 14,225 13,454 15,635 16,025 15,743 16,275 17,480' 8 Trade payables 7,005 6,685 6,450 7,548 7,425 6,560 6,867 6,589' 9 Advance receipts and other liabilities .. 7,843 7,540 7,004 8,086 8,600 9,183 9,409 10,891 10 Payable in dollars 13,836 13,039 12,140 14,061 14,165 13,834 14,529 15,669" 11 Payable in foreign currencies 1,013 1,186 1,314 1,574 1,859 1,909 1,746 1,811' By area or country Financial liabilities 12 Europe 6,728 7,700 7,917 9,162 8,065 8,983 8,758 9,645' 13 Belgium-Luxembourg 471 349 270 230 202 241 269 326 14 France 995 857 661 615 364 365 332 329 15 Germany 489 376 368 505 583 586 626 709 16 Netherlands 590 861 542 505 884 883 880 889^ 17 Switzerland 569 610 646 685 493 652 707 697 18 United Kingdom 3,297 4,305 5,140 6,357 5,346 6,074 5,772 6,524' 19 Canada 863 839 399 397 400 467 461 439 20 Latin America and Caribbean 5,086 3,184 1,944 998 829 1,178 1,175 862' 21 Bahamas 1,926 1,123 614 280 278 249 211 213' 22 Bermuda 13 4 4 0 0 0 0 0 23 Brazil 35 29 32 22 25 23 20 35 24 British West Indies 2,103 1,843 1,146 618 459 807 878 581 25 Mexico 367 15 22 17 13 15 26 2 26 Venezuela 137 3 0 3 0 2 0 0 27 Asia 1,777 1,815 1,805 2,300 2,429 2,426 2,641 2,665' 28 Japan 1,209 1,198 1,398 1,830 2,042 1,987 2,066 2,076 29 Middle East oil-exporting countries . 155 82 8 7 8 11 11 4' 30 Africa 14 12 1 2 4 5 2 3 31 Oil-exporting countries3 0 0 1 0 1 3 1 1 32 All other4 41 50 67 76 100 75 74 3' Commercial liabilities 4,001 4,074 4,446 4,951 5,635 5,738 5,836 6,855 33 Europe 48 62 101 59 134 156 150 208' 34 Belgium-Luxembourg 438 453 352 437 451 441 433 470 35 France 622 607 715 674 916 818 798 1,203 36 Germany 245 364 424 336 428 463 535 653 37 Netherlands 257 379 385 556 559 527 482 510 38 Switzerland 1,095 976 1,341 1,473 1,668 1,798 1,848 2,186 39 United Kingdom 40 Canada 1,975 1,449 1,405 1,399 1,301 1,392 1,168 1,109' 41 Latin America and Caribbean 1,871 1,088 924 1,082 865 938 996 995 42 Bahamas 7 12 32 22 19 15 58 20 43 Bermuda 114 77 156 252 168 325 272 222 44 Brazil 124 58 61 40 46 59 53 58 45 British West Indies 32 44 49 47 19 14 28 30 46 Mexico 586 430 217 231 189 164 233 178 47 Venezuela 636 212 216 176 162 85 111 204 48 Asia 5,285 6,046 5,080 6,511 6,573 5,888 6,262 6,644 49 Japan . 1,256 1,799 2,042 2,422 2,580 2,510 2,659 2,767 50 Middle East oil-exporting countries • 2,372 2,829 1,679 2,104 1,964 1,062 1,318 1,312 51 Africa 588 587 619 572 574 575 624 463' 52 Oil-exporting countries 233 238 197 151 135 139 115 106 53 All other4 1,128 982 980 1,119 1,078 1,211 1,390 1,414 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

A66 International Statistics • May 1989 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 Sept. Dec. Mar. June Sept. 1 Total 29,901 28,876 36,265 33,265 31,967 31,445 38,716 37,524r 2 Payable in dollars 27,304 26,574 33,867 30,705 29,114 29,368 36,637 34,877' 3 Payable in foreign currencies 2,597 2,302 2,399 2,561 2,854 2,077 2,078 2,648r By type 4 Financial claims 19,254 18,891 26,273 22,847 21,338 20,612 27,102 26,548' 5 Deposits 14,621 15,526 19,916 17,274 15,214 13,257 20,037 19,759" 6 Payable in dollars 14,202 14,911 19,331 16,366 13,997 12,604 19,195 18,559" 7 Payable in foreign currencies 420 615 585 908 1,217 654 842 1,200 8 Other financial claims 4,633 3,364 6,357 5,572 6,124 7,355 7,064 6,789' 9 Payable in dollars 3,190 2,330 5,005 4,448 5,020 6,301 6,238 5,911' 10 Payable in foreign currencies 1,442 1,035 1,352 1,124 1,104 1,054 826 878' 11 Commercial claims 10,646 9,986 9,992 10,419 10,630 10,832 11,614 10,977' 12 Trade receivables 9,177 8,696 8,783 9,420 9,565 9,719 10,558 9,992' 13 Advance payments and other claims 1,470 1,290 1,209 999 1,065 1,113 1,056 985 14 Payable in dollars 9,912 9,333 9,530 9,891 10,097 10,464 11,204 10,407' 15 Payable in foreign currencies 735 652 462 528 533 369 410 570 By area or country Financial claims 16 Europe 5,762 6,929 10,744 10,785 10,182 10,314 12,577 11,129' 17 Belgium-Luxembourg 15 10 41 26 7 15 16 49 18 France 126 184 138 171 360 335 185 212 19 Germany 224 223 116 103 122 112 181 119 20 Netherlands 66 161 151 157 351 336 337 364 21 Switzerland 66 74 185 44 84 57 82 84 22 United Kingdom 4,864 6,007 9,855 10,074 9,008 9,210 11,407 9,729' 23 Canada 3,988 3,260 4,808 3,295 3,293 2,777 3,074 3,523' 24 Latin America and Caribbean 8,216 7,846 9,291 7,568 6,817 6,572 10,898 11,165' 25 Bahamas 3,306 2,698 2,628 3,299 1,804 2,349 4,145 4,103' 26 Bermuda 6 6 6 2 7 43 126 138 27 Brazil 100 78 86 113 63 86 46 45' 28 British West Indies 4,043 4,571 6,078 3,705 4,427 3,561 6,077 6,412' 29 Mexico 215 180 174 174 172 154 147 133 30 Venezuela 125 48 21 18 19 35 28 27 31 Asia 961 731 1,317 1,105 908 874 446 610 32 Japan 353 475 999 737 628 708 211 425 33 Middle East oil-exporting countries'1 13 4 7 10 10 7 6 6 34 Africa 210 103 85 71 65 53 60 96 35 Oil-exporting countries3 85 29 28 14 7 7 10 9 36 All other4 117 21 28 24 72 23 47 26 Commercial claims 37 Europe 3,801 3,533 3,725 4,166 4,190 4,201 4,901 4,263' 38 Belgium-Luxembourg 165 175 133 169 179 192 159 171 39 France 440 426 431 462 652 554 686 535 40 Germany 374 346 444 551 562 637 770 604 41 Netherlands 335 284 164 190 135 151 173 146 42 Switzerland 271 284 217 206 185 172 262 182 43 United Kingdom 1,063 898 999 1,228 1,086 1,084 1,300 1,187 44 Canada 1,021 1,023 934 1,051 931 1,155 946 933 45 Latin America and Caribbean 2,052 1,753 1,857 1,732 1,947 1,973 2,090 2,100' 46 Bahamas 8 13 28 12 19 14 13 12 47 Bermuda 115 93 193 143 170 171 174 161 48 Brazil 214 206 234 231 227 214 234 237' 49 British West Indies 7 6 39 20 26 24 25 22 50 Mexico 583 510 412 369 368 374 399 462 51 Venezuela 206 157 237 192 298 314 343 264' 52 Asia 3,073 2,982 2,755 2,800 2,919 2,857 3,002 2,987' 53 Japan 1,191 1,016 881 1,027 1,160 1,109 1,169 956 54 Middle East oil-exporting countries 668 638 563 434 450 408 445 411' 55 Africa 470 437 500 407 401 419 422 42C 56 Oil-exporting countries 134 130 139 124 144 126 136 137' 57 All other4 229 257 222 262 241 227 253 272 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 A67 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1989 1988 1989 Transactions, and area or country 1987 1988 J J a a n n . . - July Aug. Sept. Oct. Nov. Dec. Jan." U.S. corporate securities STOCKS 1 Foreign purchases 249,122 180,960' 11,923 19,207 17,275 11,971 13,232 11,973 11,224 11,923 2 Foreign sales 232,849 183,017' 11,789 18,383 16,704 12,552 14,852 11,861 12,467 11,789 3 Net purchases, or sales (—) 16,272 -2,056' 134 824 572 -581 -1,620 112 -1,243 134 4 Foreign countries 16,321 -1,881' 167 793 548 -554 -1,507 89 -1,198 167 5 Europe 1,932 -3,423' -98 227 287 -616 -128 -901 -771 -98 6 France 905 -281 38 -34 -21 -37 89 -49 -64 38 7 Germany -70 229' 30 -3 9 -14 107 -20 -53 30 8 Netherlands 892 -535 128 20 -5 -56 17 -30 -1 128 9 Switzerland -1,123 -2,242 -345 -90 -37 -506 -217 -268 -273 -345 10 United Kingdom 631 -1,035' 75 253 234 245 -41 -579 -424 75 11 Canada 1,048 1,087' 320 58 162 44 -116 576 274 320 12 Latin America and Caribbean 1,318 1,249' 599 58 159 310 374 98 -21 599 13 Middle East1 -1,360 -2,466 -100 -159 91 -188 -846 151 -132 -100 14 Other Asia 12,896 1,362 -603 518 -228 -127 -693 138 -567 -603 15 Japan 11,365 1,923 -563 475 -282 24 -626 133 -407 -563 16 Africa 123 188 29 78 41 5 5 21 -1 29 17 Other countries 365 121 21 13 36 19 -102 6 19 21 18 Nonmonetary international and regional organizations -48 -175 -33 31 23 -28 -112 23 -45 -33 BONDS2 19 Foreign purchases 105,856 86,362 6,137 8,277 5,966 7,450 7,552 7,650 8,423 6,137 20 Foreign sales 78,312 57,715' 4,593 5,064 4,144 5,048 4,674 4,795' 4,441 4,593 21 Net purchases, or sales (-) 27,544 28,647' 1,544 3,213 1,822 2,401 2,878 2,856 3,982 1,544 22 Foreign countries 26,804 29,193' 1,524 3,190 1,837 2,337 3,002 2,825 3,978 1,524 23 Europe 21,989 17,892' 663 1,744 1,482 1,611 2,341 1,240 2,560 663 24 France 194 143 107 -7 5 90 45 13 -130 107 25 Germany 33 1,344 15 8 166 160 34 -122 75 15 26 Netherlands 269 1,514 30 17 41 415 545 171 17 30 27 Switzerland 1,587 513 130 -139 84 97 175 -13 273 130 28 United Kingdom 19,770 13,642 313 1,685 1,188 793 1,339 1,141 2,468 313 29 Canada 1,296 711 180 130 27 -155 20 5 178 180 30 Latin America and Caribbean 2,857 1,930 229 254 193 45 198 58 240 229 31 Middle East1 -1,314 -174 -128 -101 -87 -14 -45 143 159 -128 32 Other Asia 2,021 8,900 552 1,152 254 916 485 1,353 840 552 33 Japan 1,622 7,686 392 1,035 178 575 381 1,210 746 392 34 Africa 16 -8 3 0 1 1 4 -1 0 3 35 Other countries -61 -58 24 10 -33 -67 -1 26 2 24 36 Nonmonetary international and regional organizations 740 -547 20 23 -14 64 -124 31 3 20 Foreign securities 37 Stocks, net purchases, or sales (-) 1,081 -1,779' -890 -126 -257 -57 -126 -222' -1,103 -890 38 Foreign purchases 95,458 74,774' 6,856 7,052 5,904 5,054 6,070 7,625 7,468 6,856 39 Foreign sales 94,377 76,553' 7,747 7,178 6,161 5,111 6,196 7,846' 8,571 7,747 40 Bonds, net purchases, or sales (-) -7,946 -10,167' -217 -659 -363 -509 -3,407 433' -1,720 -217 41 Foreign purchases 199,089 216,456' 14,864 19,224 17,038 25,271 20,525 20,873 20,508 14,864 42 Foreign sales 207,035 226,624' 15,080 19,882 17,401 25,780 23,932 20,440' 22,228 15,080 43 Net purchases, or sales (—), of stocks and bonds .... -6,865 -11,946' -1,107 -785 -620 -566 -3,533 211' -2,823 -1,107 44 Foreign countries -6,757 -12,422' -1,083 -759 -650 -547 -3,582 175' -2,918 -1,083 45 Europe -12,101 -10,313' -46 -488 -897 -446 -2,881 -476' -1,545 -46 46 Canada -4,072 -3,799 -380 -319 216 -730 -273 392 -658 -380 47 Latin America and Caribbean 828 1,441' 68 -48 -34 290 -120 23' -32 68 48 9,299 869' -872 237 -114 189 112 166 -189 -872 49 Africa 89 -54 6 11 37 28 -189 18 -33 6 50 Other countries -800 -567' 139 -153 143 121 -230 52 -461 139 51 Nonmonetary international and regional organizations -108 476 -23 -26 30 -19 49 36 94 -23 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

A68 International Statistics • May 1989 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1989 1988 1989 Country or area 1987 1988 J J a a n n . . - July Aug. Sept. Oct. Nov. Dec. Jan." Transactions, net purchases or sales (-) during period1 1 Estimated total2 25,587 48,529 2,942 905 -383 -1,937 2,193R 8,582 134 2,942 2 Foreign countries2 30,889 47,843r 2,156 2,156 -149 -2,259 -244 8,247 2,145 2,156 3 Europe2 23,716 14,255 2,239 -1,460 -836 -1,233 -175 1,719 299 2,239 4 Belgium-Luxembourg 653 923 -1 122 -209 -333 -3 133 -90 -1 5 Germany 13,330 -5,348 828 -4,240 -2,020 -720 277 -1,015 -406 828 6 Netherlands -913 -356 258 312 -346 -58 41 135 -114 258 7 Sweden 210 -323 -115 -187 175 -121 -162 355 118 -115 8 Switzerland2 1,917 -1,074 271 -51 344 -1,355 87 -411 -18 271 9 United Kingdom 3,975 9,667 -157 837 416 2,023 -1,019 1,945 -231 -157 10 Other Western Europe 4,563 10,776 1,154 1,755 803 -663 615 577 1,054 1,154 11 Eastern Europe -19 -10 0 -9 0 -7 -10 -2 -15 0 12 Canada 4,526 3,761 43 -314 -315 -167 633 -368 788 43 13 Latin America and Caribbean -2,192 696r -86 0 -312 269 -574 582 -104 -86 14 Venezuela 150 -109 -37 -2 -128 -17 1 0 0 -37 15 Other Latin America and Caribbean -1,142 1,113r -145 57 -292 285 -331 506 140 -145 16 Netherlands Antilles -1,200 —308 96 -55 108 1 -244 77 -244 96 17 Asia 4,488 27,357 637 3,246 919 -1,351 -107 6,870 812 637 18 Japan 868 21,753 73 3,006 1,540 -2,841 220 4,224 -157 73 19 Africa -56 -13 -1 -10 5 31 0 -8 -7 -1 20 All other 407 1,786 -676 694 391 193 -21 -548 358 -676 21 Nonmonetary international and regional organizations -5,300 689 785 -1,251 -234 323 2,438 335 -2,011 785 22 International -4,387 1,142 777 -1,137 -282 294 2,365 489 -2,019 777 23 Latin America regional 3 -31 0 -14 -8 0 0 10 10 0 Memo 24 Foreign countries 30,889 47,843' 2,156 2,156 -149 -2,259 -244 8,247 2,145 2,156 25 Official institutions 31,064 26,593 1,993 -2,362 -1,450 -1,481 577 2,196 2,212 1,993 26 Other foreign2 -181 21,247r 163 4,518 1,301 -779 -821 6,050 -67 163 Oil-exporting countries 27 Middle East3 -3,142 11,,771155 132 295 449 -182 -1,023 2,121 881 132 28 Africa4 16 11 0 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 A69 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on Mar. 31, 1989 Rate on Mar. 31, 1989 Rate on Mar. 31, 1989 Country Country Country e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 4.5 Jan. 1989 France 8.25 Jan. 1989 Norway 8.0 June 1983 Belgium . 8.25 Jan. 1989 Germany, Fed. Rep. of, 4.0 Jan. 1989 Switzerland . 4.0 Jan. 1989 Brazil ... 49.0 Mar. 1981 Italy 13.5 Mar. 1989 United Kingdom' Canada.. 12.39 Mar. 1989 Japan 2.5 Feb. 1987 Venezuela Denmark 7.0 Oct. 1983 Netherlands 5.0 Jan. 1989 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 1989 CCoouunnttrryy,, oorr ttyyppee 11998866 11998877 11998888 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 Eurodollars 6.70 7.07 7.86 8.31 8.51 8.91 9.30 9.28 9.61 10.18 2 United Kingdom 10.87 9.65 10.28 12.09 11.94 12.23 13.07 13.06 12.97 13.00 3 Canada 9.18 8.38 9.63 10.48 10.48 10.86 11.15 11.34 11.69 12.22 4 Germany 4.58 3.97 4.28 4.93 5.03 4.91 5.32 5.63 6.36 6.57 5 Switzerland 4.19 3.67 2.94 3.34 3.62 4.10 4.77 5.31 5.69 5.75 6 Netherlands 5.56 5.24 4.72 5.51 5.35 5.30 5.60 5.99 6.75 6.88 7 France 7.68 8.14 7.80 7.86 7.87 8.03 8.36 8.55 9.11 9.07 8 Italy 12.60 11.15 11.04 11.27 11.30 11.48 11.96 11.84 12.26 12.88 9 Belgium 8.04 7.01 6.69 7.39 7.24 7.18 7.38 7.59 8.04 8.28 10 Japan 4.96 3.87 3.96 4.15 4.26 4.22 4.16 4.24 4.21 4.21 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

A70 International Statistics • May 1989 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1988 1989 Country/currency 11998866 11998877 11998888 Oct. Nov. Dec. Jan. Feb. Mar. 1 Australia/dollar^ 67.093 70.136 78.408 80.96 85.07 85.73 87.05 85.64 81.69 2 Austria/schilling 15.260 12.649 12.357 12.777 12.307 12.359 12.904 13.022 13.148 3 Belgium/franc 44.662 37.357 36.783 38.077 36.670 36.815 38.441 38.792 39.136 4 Canada/dollar 1.3896 1.3259 1.2306 1.2055 1.2186 1.1962 1.1913 1.1891 1.1954 5 China, P.R./yuan 3.4615 3.7314 3.7314 3.7314 3.7314 3.7314 3.7314 3.7314 3.7314 6 Denmark/krone 8.0954 6.8477 6.7411 7.0055 6.7547 6.7891 7.1143 7.2094 7.2912 7 Finland/markka 5.0721 4.4036 4.1933 4.3041 4.1522 4.1408 4.2553 4.3006 4.2994 8 France/franc 6.9256 6.0121 5.9594 6.1975 5.9746 5.9994 6.2538 6.3004 6.3321 9 Germany/deutsche mark 2.1704 1.7981 1.7569 1.8165 1.7491 1.7563 1.8356 1.8505 1.8686 10 Greece/drachma 139.93 135.47 142.00 148.71 145.22 146.10 152.25 154.72 157.34 11 Hong Kong/dollar 7.8037 7.7985 7.8071 7.8133 7.8095 7.8062 7.8047 7.8009 7.7969 12 India/rupee.. 12.597 12.943 13.899 14.720 14.966 15.019 15.092 15.240 15.467 13 Ireland/punt 134.14 148.79 152.49 147.30 152.70 152.29 145.82 144.10 142.84 14 Italy/lira 1491.16 1297.03 1302.39 1353.36 1300.22 1295.61 1345.12 1355.28 1372.50 15 Japan/yen 168.35 144.60 128.17 128.68 123.20 123.61 127.36 127.74 130.55 16 Malaysia/ringgit 2.5830 2.5185 2.6189 2.6785 2.6779 2.6935 2.7221 2.7307 2.7535 17 Netherlands/guilder 2.4484 2.0263 1.9778 2.0486 1.9729 1.9824 2.0723 2.0895 2.1085 18 New Zealand/dollar2 ... 52.456 59.327 65.558 62.113 64.067 63.621 62.412 61.629 61.547 19 Norway/krone 7.3984 6.7408 6.5242 6.7400 6.5796 6.5234 6.6808 6.7254 6.8059 20 Portugal/escudo 149.80 141.20 144.26 150.13 145.57 145.56 150.74 152.10 154.05 21 Singapore/dollar 2.1782 2.1059 2.0132 2.0202 1.9616 1.9442 1.9404 1.9285 1.9407 22 South Africa/rand 2.2918 2.0385 2.1900 2.4662 2.3943 2.3487 2.3847 2.4570 2.5393 23 South Korea/won 884.61 825.93 734.51 712.72 696.08 687.89 685.28 680.28 675.68 24 Spain/peseta 140.04 123.54 116.52 120.02 115.17 113.73 114.78 115.67 116.40 25 Sri Lanka/rupee 27.933 29.471 31.847 32.989 32.989 33.016 33.132 33.115 33.416 26 Sweden/krona 7.1272 6.3468 6.1369 6.2694 6.0968 6.0888 6.2725 6.3238 6.3933 27 Switzerland/franc 1.7979 1.4918 1.4642 1.5372 1.4675 1.4799 1.5619 1.5740 1.6110 28 Taiwan/dollar 37.837 31.756 28.636 28.880 28.170 28.199 27.821 27.716 27.591 29 Thailand/baht 26.314 25.774 25.312 25.365 25.146 25.146 25.322 25.386 25.542 30 United Kingdom/pound2 146.77 163.98 178.13 173.87 180.85 182.58 177.37 175.34 171.34 MEMO 31 United States/dollar3 ... 112.22 96.94 92.72 95.10 91.91 91.88 95.12 95.77 96.99 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

A71 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 po- "U.S. government securities" may include guaranteed litical subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables, details do not add to totals because also include not fully guaranteed issues) as well as direct of rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1988 A77 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, December 31, 1987 June 1988 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1988 September 1988 A82 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1988 January 1989 A78 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1988 May 1989 A72 Terms of lending at commercial banks, February 1988 May 1988 A70 Terms of lending at commercial banks, May 1988 September 1988 A70 Terms of lending at commercial banks, August 1988 January 1989 A72 Terms of lending at commercial banks, November 1988 April 1989 All 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 FRSApSecEiRa l tables begin on next page. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All Special Tables • May 1989 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1988 Millions of dollars All states2 New York California Illinois IItteemm inc T I l B o u F t d a s i l n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g o IB nl F y s 3 inc T IB l o u F t d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 1 Total assets4 490,766 240,234 357,553 188,467 74,985 33,945 33,966 10,786 2 Claims on nonrelated parties 442,034 196,118 322,144 154,851 67,471 27,485 3333,,995500 10,284 i Cash and balances due from depository institutions 120,786 102,104 98,747 8833,,116622 1122,,225566 1111,,441144 88,,008866 66,,557755 4 Cash items in process of collection and unposted debits 629 0 573 0 43 0 6 0 5 Currency and coin (U.S. and foreign) 24 n.a. 17 n.a. 2 n.a. 2 n.a. 6 Balances with depository institutions in United States 66,680 50,293 5533,,552222 3399,,888833 77,,220000 66,,445500 44,,998899 33,,558844 7 U.S. branches and agencies of other foreign banks (including their IBFs) 59,026 47,349 47,318 37,149 66,,668877 66,,334455 44,,229911 33,,449911 8 Other depository institutions in United States (including their IBFs) 7,654 2,944 6,204 22,,773355 513 105 699 93 y Balances with banks in foreign countries and with foreign central banks 52,333 51,812 43,719 43,278 4,972 4,964 3,007 2,991 10 Foreign branches of U.S. banks 1,394 1,256 11,,117799 11,,005533 152 152 5522 4488 n Other banks in foreign countries and foreign central banks 50,939 50,555 42,540 42,225 4,820 4,813 2,955 2,943 12 Balances with Federal Reserve Banks 1,120 n.a. 915 n.a. 39 n.a. 82 n.a. 13 Total securities and loans 261,213 85,693 175,962 65,422 45,664 14,620 23,950 3,305 14 Total securities, book value 34,534 9,993 27,918 7,605 4,301 1,805 1,288 412 15 U.S. Treasury 6,682 n.a. 6,195 n.a. 264 n.a. 156 n.a. 16 Obligations of U.S. government agencies and corporations 4,385 n.a. 4,346 n.a. 35 n.a. 0 n.a. 17 Other bonds, notes, debentures and corporate stock (including state and local securities) 23,467 9,993 17,376 7,605 4,002 1,805 1,132 412 18 Federal funds sold and securities purchased under agreements to resell 14,479 1,702 12,924 1,224 853 212 264 125 iy U.S branches and agencies of other foreign banks.... 7,947 1,067 6,768 688 742 193 236 125 20 Commercial banks in United States 2,608 31 2,351 31 88 0 13 0 21 Other 3,924 603 3,804 505 23 19 14 0 22 Total loans, gross 226,935 75,812 148,162 57,854 41,484 12,890 22,669 2,893 23 Less: Unearned income on loans 256 112 119 36 121 75 7 0 24 Equals: Loans, net 226,679 75,700 148,043 57,818 41,362 12,815 22,662 2,893 Total loans, gross, by category 25 Real estate loans 19,815 211 10,471 184 4,550 19 2,627 0 26 Loans to depository institutions 61,049 41,689 43,964 28,624 11,968 9,553 3,507 2,291 27 Commercial banks in United States (including IBFs) . 33,303 15,847 23,198 9,476 7,430 5,073 2,375 1,197 28 U.S. branches and agencies of other foreign banks . 30,107 15,169 20,407 8,981 7,115 4,906 2,330 1,181 29 Other commercial banks in United States 33,,119955 678 22,,779911 495 315 167 4455 1166 30 Other depository institutions in United States (including IBFs) 154 82 104 82 25 0 25 0 31 Banks in foreign countries 27,593 25,760 20,662 19,066 4,514 4,480 1,107 1,094 32 Foreign branches of U.S. banks 731 693 639 600 67 67 25 25 33 Other banks in foreign countries 26,861 25,067 20,024 18,466 4,447 4,414 1,082 1,069 34 Other financial institutions 5,408 439 3,328 336 802 51 730 33 35 Commercial and industrial loans 117,513 17,294 70,634 14,404 22,234 2,203 15,458 368 36 U.S. addressees (domicile) 95,805 290 53,399 255 19,341 34 14,935 0 37 Non-U.S. addressees (domicile) 21,708 17,004 17,235 1144,,114499 2,893 2,169 523 368 38 Acceptances of other banks 826 13 562 88 233 0 6 5 39 U.S. banks 201 0 153 0 37 0 1 0 40 Foreign banks 626 13 409 8 196 0 5 5 41 Loans to foreign governments and official institutions (including foreign central banks) 17,919 15,951 15,773 14,098 1,116 11,,006611 216 197 42 Loans for purchasing or carrying securities (secured and unsecured) 2,051 37 1,505 34 504 0 0 0 43 All other loans 2,354 176 1,924 165 77 3 126 0 44 All other assets 45,556 6,619 34,512 5,044 8,698 1,240 1,650 280 45 Customers' liability on acceptances outstanding 28,380 n.a. 20,815 n.a. 6,364 n.a. 863 n.a. 46 U.S. addressees (domicile) 18,837 n.a. 11,988 n.a. 5,880 n.a. 857 n.a. 47 Non-U.S. addressees (domicile) 9,544 n.a. 8,827 n.a. 485 n.a. 6 nn..aa.. 48 Other assets including other claims on nonrelated parties 17,176 6,619 13,696 5,044 2,334 1,240 786 280 49 Net due from related depository institutions5 48,732 44,116 35,409 33,616 77,,551144 66,,446600 16 502 50 Net due from head office and other related depository institutions5 48,732 n.a. 35,409 n.a. 77,,551144 n.a. 1166 nn..aa.. 51 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 44,116 n.a. 33,616 n.a. 6,460 n.a. 502 52 Total liabilities4 490,766 240,234 357,553 188,467 74,985 33,945 33,966 10,786 53 Liabilities to nonrelated parties 427,227 213,488 326,268 169,538 67,623 31,064 18,534 6,367 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30—Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c IB l o u t F d a s i l ng o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l ng o IB nl F y s 3 54 Total deposits and credit balances 63,528 170,925 52,199 149,996 2,378 11,945 3,160 3,665 55 Individuals, partnerships, and corporations 49,889 14,108 39,682 9,347 2,215 420 2,491 44 56 U.S. addressees (domicile) 38,048 285 32,048 266 679 0 2,120 18 57 Non-U.S. addressees (domicile) 11,841 13,823 7,634 9,081 1,536 420 371 26 58 Commercial banks in United States (including IBFs) . 9,364 60,407 8,659 52,231 31 5,687 645 2,219 59 U.S. branches and agencies of other foreign banks . 3,411 53,002 2,867 45,690 6 5,155 527 1,971 60 Other commercial banks in United States 5,953 7,405 5,792 6,541 25 532 118 248 61 Banks in foreign countries 1,914 85,182 1,789 77,484 38 5,697 2 1,384 62 Foreign branches of U.S. banks 227 8,496 207 7,118 20 1,072 0 221 63 Other banks in foreign countries 1,686 76,685 1,582 70,366 18 4,624 2 1,163 64 Foreign governments and official institutions (including foreign central banks) 1,040 11,194 891 10,901 2200 114422 3 1188 65 All other deposits and credit balances 800 34 747 34 40 0 2 0 66 Certified and official checks 521 n.a. 431 n.a. 35 n a. 17 n.a. 67 Transaction accounts and credit balances (excluding IBFs) 6,825 5,678 291 223 68 Individuals, partnerships, and corporations 4,353 3,457 244 200 69 U.S. addressees (domicile) 3,024 2,498 194 196 70 Non-U.S. addressees (domicile) 1,329 959 50 4 71 Commercial banks in United States (including IBFs) . 327 321 0 0 72 U.S. branches and agencies of other foreign banks . 110 109 0 0 73 Other commercial banks in United States 217 n a. 212 n.a. 0 n a. 0 n a. 74 Banks in foreign countries 827 762 7 2 75 Foreign branches of U.S. banks 44 44 0 0 76 Other banks in foreign countries 783 718 7 2 77 Foreign governments and official institutions (including foreign central banks) 519 441 2 33 78 All other deposits and credit balances 278 267 1 1 79 Certified and official checks 521 431 35 17 80 Demand deposits (included in transaction accounts and credit balances) 5,801 4,910 204 220077 81 Individuals, partnerships, and corporations 3,784 3,135 159 184 82 U.S. addressees (domicile) 2,639 2,261 127 180 83 Non-U.S. addressees (domicile) 1,145 874 32 4 84 Commercial banks in United States (including IBFs) . 133 129 0 0 85 U.S. branches and agencies of other foreign banks . 10 9 0 0 86 Other commercial banks in United States 123 n.a. 120 n.a. 0 n.a. 0 n a. 87 Banks in foreign countries 686 626 7 2 88 Foreign branches of U.S. banks 44 44 0 0 89 Other banks in foreign countries 642 583 7 2 90 Foreign governments and official institutions (including foreign central banks) 443 365 2 3 91 All other deposits and credit balances 233 224 0 1 92 Certified and official checks 521 431 35 17 93 Non-transaction accounts (including MMDAs, excluding IBFs) 56,703 46,521 2, 088 2,937 94 Individuals, partnerships, and corporations 45,536 36,225 1,970 2,292 95 U.S. addressees (domicile) 35,024 29,551 484 1,924 96 Non-U.S. addressees (domicile) 10,513 6,675 1,486 367 97 Commercial banks in United States (including IBFs) . 9,038 8,338 31 644 98 U.S. branches and agencies of other foreign banks . 3,302 2,758 6 527 99 Other commercial banks in United States 5,736 n a. 5,580 n.a. 25 n a. 118 n a. 100 Banks in foreign countries 1,087 1,028 30 0 101 Foreign branches of U.S. banks 184 164 20 0 102 Other banks in foreign countries 903 864 10 0 103 Foreign governments and official institutions (including foreign central banks) 521 450 18 0 104 All other deposits and credit balances 521 480 39 1 105 IBF deposit liabilities 170,925 149,996 11,945 3,665 106 Individuals, partnerships, and corporations 14,108 9,347 420 44 107 U.S. addressees (domicile) 285 266 0 18 108 Non-U.S. addressees (domicile) 13,823 9,081 420 26 109 Commercial banks in United States (including IBFs) . 60,407 52,231 5,687 2,219 110 U.S. branches and agencies of other foreign banks . 53,002 45,690 5,155 1,971 111 Other commercial banks in United States n. a. 7,405 n.a. 6,541 n.a. 532 n a. 248 112 Banks in foreign countries 85,182 77,484 5,697 1,384 113 Foreign branches of U.S. banks 8,496 7,118 1,072 221 114 Other banks in foreign countries 76,685 70,366 4,624 1,163 115 Foreign governments and official institutions (including foreign central banks) 11,194 10,901 142 18 116 All other deposits and credit balances 34 34 0 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • May 1989 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19881—Continued Millions of dollars All states2 New York California Illinois IItteemm inc T I l B o u F t d a s i l n g o IB nl F y s 3 in T c I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g o IB nl F y s 3 inc T IB l o u F t d a s i l n g o IB nl F y s 3 117 Federal funds purchased and securities sold under agreements to repurchase 48,867 2,463 37,513 1,272 8,422 777 2,297 146 118 U.S. branches and agencies of other foreign banks ... 11,577 767 7,939 141 2,559 449 836 65 119 Other commercial banks in United States 17,008 93 11,211 7 4,488 81 1,158 0 170 Other 20,281 1,603 18,362 1,125 1,375 247 302 81 121 Other borrowed money 98,483 34,570 52,889 13,966 35,294 17,361 7,963 2,377 177. Owed to nonrelated commercial banks in United States (including IBFs) 63,747 14,682 32,465 3,604 23,946 9,503 5,465 959 123 Owed to U.S. offices of nonrelated U.S. banks 27,672 2,480 16,417 796 7,334 1,367 3,292 77 124 Owed to U.S. branches and agencies of nonrelated foreign banks 36,075 12,202 16,048 2,808 16,611 8,136 2,173 882 125 Owed to nonrelated banks in foreign countries 18.424 17,803 8,800 8,292 7,854 7,843 1,441 1,418 126 Owed to foreign branches of nonrelated U.S. banks .. 2,716 2,550 1,131 970 1,323 1,323 182 182 127 Owed to foreign offices of nonrelated foreign banks... 15,708 15,254 7,670 7,322 6,532 6,520 1,259 1,236 128 Owed to others 16,312 2,085 11,624 2,070 3,495 15 1,057 0 129 All other liabilities 45,424 5,529 33,671 4,304 9,582 980 1,449 179 130 Branch or agency liability on acceptances executed and outstanding 31,449 n.a. 2222,,119944 n.a. 77,,887733 n.a. 889 n.a. 131 Other liabilities to nonrelated parties 13,975 5,529 11,477 4,304 1,709 980 560 179 132 Net due to related depository institutions5 63,539 26,746 31,285 18,929 7,362 2,881 15,432 4,420 133 Net due to head office and other related depository institutions5 63,539 n.a. 31,285 n.a. 7,362 n.a. 15,432 n.a. 134 Net due to establishing entity, head office, and other related depository institutions5 n.a. 26,746 n.a. 18,929 n.a. 2,881 n.a. 4,420 MEMO 135 Non-interest bearing balances with commercial banks in United States 1,881 80 1,641 80 117 0 54 0 136 Holding of commercial paper included in total loans .... 571 373 132 55 137 Holding of own acceptances included in commercial 4 4 F and industrial loans 2,653 | 11,,333355 11,,001111 174 | 138 Commercial and industrial loans with remaining maturity 1 1 of one year or less 61,411 33,521 12,134 9,728 139 Predetermined interest rates 41,316 n.a. 22,119 n.a. 9,018 n.a. 6,185 n.a. 140 Floating interest rates 20,095 11,402 3,116 3,542 141 Commercial and industrial loans with remaining maturity 1 1 of more than one year 56,102 37,114 10,100 5,730 1 1 4 4 7 3 P F r lo ed at e i t n e g r m in in te e r d e s i t n r te a r t e es s t rates 3 1 9 7 , , 0 02 7 7 4 T 1 2 1 6 0 , , 2 8 8 3 4 0 T 1 3 6, , 2 8 8 1 2 8 t1 3 1 , , 8 9 0 2 4 6 t1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30—Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c IB l o u t F d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l ng o IB nl F y s 3 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff t t t t nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnnaaaallll aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 75,627 65,424 1,894 3,235 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 41,892 34,773 1,168 2,122 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 10,510 n 1 .a. 9,144 n1.a. 600 n 1 .a. 574 n 1 .a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 23,225 21,507 126 539 All states2 New York California Illinois Total Total Total Total inc I l B u F d s in g o IB nl F y s 3 inc I l B u F d s in g o IB nl F y s 3 inc I l B u F d s in g o IB nl F y s 3 inc I l B u F d s in g o IB nl F y s 3 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 4433,,118811 18,216 3377,,004455 16,119 33,,999988 1,658 11,,112211 268 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 5577,,665511 n.a. 2288,,889900 n.a. 2244,,111155 n.a. 33,,116600 n.a. 551122 223344 112244 5533 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, that no IBF data are reported for that item, either because the item is not an "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign eligible IBF asset or liability or because that level of detail is not reported for Banks." Details may not add to totals because of rounding. This form was first IBFs. From December 1981 through September 1985, IBF data were included in used for reporting data as of June 30, 1980, and was revised as of December 31, all applicable items reported. 1985. From November 1972 through May 1980, U.S. branches and agencies of 4. Total assets and total liabilities include net balances, if any, due from or due foreign banks had filed a monthly FR 886a report. Aggregate data from that report to related banking institutions in the United States and in foreign countries (see were available through the Federal Reserve statistical release G.ll, last issued on footnote 5). On the former monthly branch and agency report, available through July 10, 1980. Data in this table and in the G. 11 tables are not strictly comparable the G.ll statistical release, gross balances were included in total assets and total because of differences in reporting panels and in definitions of balance sheet liabilities. Therefore, total asset and total liability figures in this table are not items. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. "Related banking institutions" includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of the bank, the bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent International Banking Facilities (IBFs). As of December 31, 1985, data for IBFs holding company (including subsidiaries owned both directly and indirectly). are reported in a separate column. These data are either included in or excluded 6. In some cases two or more offices of a foreign bank within the same from the total columns as indicated in the headings. The notation "n.a." indicates metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MARTHA R. SEGER MANUEL H. JOHNSON, Vice Chairman WAYNE D. ANGELL OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director BOB STAHLY MOORE, Special Assistant to the Board CHARLES J. SLEGMAN, 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 KAREN H. JOHNSON, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel RICHARD M. ASHTON, Associate General Counsel RALPH W. SMITH, JR., Assistant Director OLIVER IRELAND, Associate General Counsel RICKI R. TIGERT, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS SCOTT G. ALVAREZ, Assistant General Counsel MARYELLEN A. BROWN, Assistant to the General Counsel MICHAEL J. PRELL, Director EDWARD C. ETTIN, Deputy Director THOMAS D. SIMPSON, Associate Director OFFICE OF THE SECRETARY LAWRENCE SLIFMAN, Associate Director MARTHA BETHEA, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary MYRON L. KWAST, Assistant Director BARBARA R. LOWREY, Associate Secretary SUSAN J. LEPPER, Assistant Director PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director DIVISION OF CONSUMER DAVID J. STOCKTON, Assistant Director AND COMMUNITY AFFAIRS JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, Assistant Director (Administration) GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director ELLEN MALAND, Assistant Director DIVISION OF MONETARY AFFAIRS DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director DIVISION OF BANKING BRIAN F. MADIGAN, Assistant Director SUPERVISION AND REGULATION RICHARD D. PORTER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM TAYLOR, Staff Director DON E. KLINE, Associate Director FREDERICK M. STRUBLE, Associate Director OFFICE OF THE INSPECTOR GENERAL WILLIAM A. RYBACK, Deputy Associate Director STEPHEN C. SCHEMERING, Deputy Associate Director BRENT L. BOWEN, Inspector General RICHARD SPILLENKOTHEN, Deputy Associate Director BARRY R. SNYDER, Assistant Inspector General HERBERT A. BLERN, 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

and Official Staff H. ROBERT HELLER JOHN P. LA WARE EDWARD W. KELLEY, JR. OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES S. DAVID FROST, Staff Director THEODORE E. ALLISON, Staff Director EDWARD T. MULRENIN, Assistant Staff Director PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF HUMAN RESOURCES MANAGEMENT CLYDE H. FARNSWORTH, JR., Director DAVID L. ROBINSON, Associate Director DAVID L. SHANNON, Director C. WILLIAM SCHLEICHER, JR., Associate Director JOHN R. WEIS, Associate Director BRUCE J. SUMMERS, Associate Director ANTHONY V. DIGIOIA, Assistant Director CHARLES W. BENNETT, Assistant Director JOSEPH H. HAYES, JR., Assistant Director JACK DENNIS, JR., Assistant Director FRED HOROWITZ, Assistant Director EARL G. HAMILTON, Assistant Director JOHN H. PARRISH, Assistant Director OFFICE OF THE CONTROLLER LOUISE L. ROSEMAN, Assistant Director FLORENCE M. YOUNG, Adviser GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director OFFICE OF THE EXECUTIVE DIRECTOR FOR INFORMATION RESOURCES MANAGEMENT ALLEN E. BEUTEL, Executive Director STEPHEN R. MALPHRUS, Deputy Executive Director DIVISION OF HARDWARE AND SOFTWARE SYSTEMS BRUCE M. BEARDSLEY, Director THOMAS C. JUDD, Assistant Director ELIZABETH B. RIGGS, Assistant Director ROBERT J. ZEMEL, Assistant Director DIVISION OF APPLICATIONS DEVELOPMENT AND STATISTICAL SERVICES WILLIAM R. JONES, Director DAY W. RADEBAUGH, Assistant Director RICHARD C. STEVENS, Assistant Director PATRICIA A. WELCH, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Bulletin • May 1989 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL MANUEL H. JOHNSON JOHN P. LAWARE ROGER GUFFEY SILAS KEEHN THOMAS C. MELZER H. ROBERT HELLER EDWARD W. KELLEY, JR. MARTHA R. SEGER RICHARD F. SYRON ALTERNATE MEMBERS EDWARD G. BOEHNE W. LEE HOSKINS JAMES H. OLTMAN ROBERT H. BOYKIN GARY H. STERN STAFF DONALD L. KOHN, Secretary and Economist THOMAS E. DAVIS, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary DAVID E. LINDSEY, Associate Economist GARY P. GILLUM, Deputy Assistant Secretary ALICIA H. MUNNELL, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel LARRY J. PROMISEL, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel KARL A. SCHELD, Associate Economist MICHAEL J. PRELL, Economist CHARLES J. SLEGMAN, Associate Economist EDWIN M. TRUMAN, Economist THOMAS D. SIMPSON, Associate Economist ANATOL B. BALBACH, Associate Economist LAWRENCE SLIFMAN, Associate Economist RICHARD G. DAVIS, 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 DONALD N. BRANDIN, President SAMUEL A. McCULLOUGH, Vice President J. TERRENCE MURRAY, First District B. KENNETH WEST, Seventh District WILLARD C. BUTCHER, Second District DONALD N. BRANDIN, Eighth District SAMUEL A. MCCULLOUGH, Third District LLOYD P. JOHNSON, Ninth District THOMAS H. O'BRIEN, Fourth District JORDAN L. HAINES, Tenth District FREDERICK DEANE, JR., Fifth District JAMES E. BURT III, Eleventh District KENNETH L. ROBERTS, 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

A79 and Advisory Councils CONSUMER ADVISORY COUNCIL JUDITH N. BROWN, Edina, Minnesota, Chairman WILLIAM E. ODOM, Dearborn, Michigan, Vice Chairman NAOMI G. ALBANESE, Greensboro, North Carolina ROBERT A. HESS, Washington, D.C. GEORGE H. BRAASCH, Chicago, Illinois RAMON E. JOHNSON, Salt Lake City, Utah BETTY TOM CHU, Arcadia, California BARBARA KAUFMAN, San Francisco, California CLIFF E. COOK, Tacoma, Washington A. J. (JACK) KING, Kalispell, Montana JERRY D. CRAFT, Atlanta, Georgia MICHELLE S. MEIER, Washington, D.C. DONALD C. DAY, Boston, Massachusetts RICHARD L. D. MORSE, Manhattan, Kansas R.B.(JOE) DEAN, JR., Columbia, South Carolina LINDA K. PAGE, Columbus, Ohio RICHARD B. DOBY, Denver, Colorado SANDRA PHILLIPS, Pittsburgh, Pennsylvania WILLIAM C. DUNKELBERG, Philadelphia, Pennsylvania VINCENT P. QUAYLE, Baltimore, Maryland RICHARD H. FINK, Washington, D.C. CLIFFORD N. ROSENTHAL, New York, New York JAMES FLETCHER, Chicago, Illinois ALAN M. SPURGIN, New York, New York STEPHEN GARDNER, Dallas, Texas RALPH E. SPURGIN, Columbus, Ohio ELENA G. HANGGI, Little Rock, Arkansas DAVID P. WARD, Peapack, New Jersey JAMES HEAD, Berkeley, California LAWRENCE WINTHROP, Portland, Oregon THRIFT INSTITUTIONS ADVISORY COUNCIL GERALD M. CZARNECKI, Honolulu, Hawaii, President DONALD B. SHACKELFORD, Columbus, Ohio, Vice President CHARLOTTE CHAMBERLAIN, Glendale, California JOE C. MORRIS, Overland Park, Kansas ROBERT S. DUNCAN, Hattiesburg, Mississippi JOSEPH W. MOSMILLER, Baltimore, Maryland ADAM A. JAHNS, Chicago, Illinois Louis H. PEPPER, Seattle, Washington H. C. KLEIN, Jacksonville, Arkansas MARION O. SANDLER, Oakland, California PHILIP E. LAMB, Springfield, Massachusetts CHARLES B. STUZIN, Miami, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SER- FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; up- VICES, MS-138, Board of Governors of the Federal Reserve dated at least monthly. (Requests must be prepaid.) System, Washington, D.C. 20551 or telephone (202) 452- Consumer and Community Affairs Handbook. $75.00 per 3244. When a charge is indicated, payment should accom- year. pany request and be made payable to the Board of Governors Monetary Policy and Reserve Requirements Handbook. of the Federal Reserve System. Payment from foreign resi- $75.00 per year. dents 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, 1988-89. 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 BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint each. of Part I only) 1976. 682 pp. $5.00. WELCOME TO THE FEDERAL RESERVE. ANNUAL STATISTICAL DIGEST PROCESSING AN APPLICATION THROUGH THE FEDERAL RE- 1974-78. 1980. 305 pp. $10.00 per copy. SERVE SYSTEM. August 1985. 30 pp. 1981. 1982. 239 pp. $ 6.50 per copy. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1982. 1983. 266 pp. $ 7.50 per copy. 440 pp. $9.00 each. 1983. 1984. 264 pp. $11.50 per copy. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1984. 1985. 254 pp. $12.50 per copy. December 1986. 264 pp. $10.00 each. 1985. 1986. 231 pp. $15.00 per copy. 1986. 1987. 288 pp. $15.00 per copy. 1987. 1988. 272 pp. $15.00 per copy. HISTORICAL CHART BOOK. Issued annually in Sept. $1.25 CONSUMER EDUCATION PAMPHLETS each in the United States, its possessions, Canada, and Short pamphlets suitable for classroom use. Multiple copies Mexico; 10 or more to one address, $1.00 each. Else- are available without charge. where, $1.50 each. SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- Consumer Handbook on Adjustable Rate Mortgages RIES OF CHARTS. Weekly. $24.00 per year or $.60 each in Consumer Handbook to Credit Protection Laws the United States, its possessions, Canada, and Mexico; Federal Reserve Glossary 10 or more of same issue to one address, $22.50 per year A Guide to Business Credit and the Equal Credit Opportunity or $.55 each. Elsewhere, $30.00 per year or $.70 each. Act THE FEDERAL RESERVE ACT, and other statutory provisions A Guide to Federal Reserve Regulations affecting the Federal Reserve System, as amended How to File A Consumer Credit Complaint through April 20, 1983, with Supplements covering If You Use A Credit Card amendments through August 1987. 576 pp. $7.00. REGULATIONS OF THE BOARD OF GOVERNORS OF THE Series on the Structure of the Federal Reserve System FEDERAL RESERVE SYSTEM. The Board of Governors of the Federal Reserve System ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— The Federal Open Market Committee Regulation Z) Vol. I (Regular Transactions). 1969. 100 Federal Reserve Bank Board of Directors pp. Vol. 11 (Irregular Transactions). 1969. 116 pp. Each Federal Reserve Banks volume $2.25; 10 or more of same volume to one Organization and Advisory Committees address, $2.00 each. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; A Consumer's Guide to Mortgage Lock-Ins 10 or more to one address, $1.25 each. A Consumer's Guide to Mortgage Closings PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. A Consumer's Guide to Mortgage Refinancing $13.50 each. Making Deposits: When Will Your Money Be Available? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 PAMPHLETS FOR FINANCIAL INSTITUTIONS vestigation, by Bonnie E. Loopesko. November 1983. Short pamphlets on regulatory compliance, primarily suit- Out 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, GERvestment MANY, AND JAPAN, by Deborah J. Danker, Richard A. The Board of Directors' Role in Consumer Law Compliance Haas, Dale W. Henderson, Steven A. Symansky, and Combined Construction/Permanent Loan Disclosure and Ralph 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 GUIDE- Signature Rules in Community Property States: Regulation B LINES, AND THE LIMITS OF CONCENTRATION IN LOCAL Signature Rules: Regulation B BANKING MARKETS, by James Burke. June 1984.14 pp. Timing Requirements for Adverse Action Notices: Regula- Out of print. tion B 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN What An Adverse Action Notice Must Contain: Regulation B THE UNITED STATES, by Thomas D. Simpson and Understanding Prepaid Finance Charges: Regulation Z Patrick M. Parkinson. August 1984. 20 pp. 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF THE LITERATURE, by John D. Wolken. November 1984. 38 pp. Out of print. STAFF STUDIES: Summaries Only Printed in the 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAY- Bulletin MENT COSTS, by William Dudley. November 1984. Studies and papers on economic and financial subjects that 15 pp. Out of print. are of general interest. Requests to obtain single copies of 142. MERGERS AND ACQUISITIONS BY COMMERCIAL the full text or to be added to the mailing list for the series BANKS, 1960-83, by Stephen A. Rhoades. December may be sent to Publications Services. 1984. 30 pp. Out of print. 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF Staff Studies 115-125 are out of print. THE ELECTRONIC FUND TRANSFER ACT: RECENT SUR- VEY EVIDENCE, by Frederick J. Schroeder. April 1985. 114. MULTIBANK HOLDING COMPANIES: RECENT EVI- 23 pp. Out of print. DENCE ON COMPETITION AND PERFORMANCE IN 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- BANKING MARKETS, by Timothy J. Curry and John T. SUMER CREDIT REGULATIONS: THE TRUTH IN LEND- Rose. Jan. 1982. 9 pp. ING AND EQUAL CREDIT OPPORTUNITY LAWS, by 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- Gregory E. Elliehausen and Robert D. Kurtz. May KET INTERVENTION, by Donald B. Adams and Dale W. 1985. 10 pp. Henderson. August 1983. 5 pp. Out of print. 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- AND THEIR IMPACT ON CONSUMERS, by Glenn B. VENTION: JANUARY-MARCH 1975, by Margaret L. Canner and Robert D. Kurtz. August 1985. 31 pp. Out of Greene. August 1984. 16 pp. Out of print. print. 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, garet L. Greene. October 1984. 40 pp. Out of print. by Thomas F. Brady. November 1985. 25 pp. 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) VENTION: OCTOBER 1980-OCTOBER 1981, by Margaret INDEXES OF THE MONETARY AGGREGATES, by Helen L. Greene. August 1984. 36 pp. T. Farr and Deborah Johnson. December 1985. 42 pp. 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON INTER- 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF NATIONAL TRADE AND OTHER ECONOMIC VARIABLES: THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA- A REVIEW OF THE LITERATURE, by Victoria S. Farrell TION RESULTS, by Flint Brayton and Peter B. Clark. with Dean A. DeRosa and T. Ashby McCown. January December 1985. 17 pp. 1984. Out of print. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- IN BANKING BEFORE AND AFTER ACQUISITION, by DEUTSCHE MARK INTERVENTION, by Laurence R. Ja- Stephen A. Rhoades. April 1986. 32 pp. cobson. October 1983. 8 pp. 150. STATISTICAL COST ACCOUNTING MODELS IN BANK- 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BE- ING: A REEXAMINATION AND AN APPLICATION, by TWEEN EXCHANGE RATES AND INTERVENTION: A RE- John T. Rose and John D. Wolken. May 1986. 13 pp. VIEW OF THE TECHNIQUES AND LITERATURE, by Ken- 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT neth Rogoff. October 1983. 15 pp. PRICING FROM 1983 THROUGH 1985, by Patrick I. Ma- 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTER- honey, Alice P. White, Paul F. O'Brien, and Mary M. VENTION, AND INTEREST RATES: AN EMPIRICAL IN- McLaughlin. January 1987. 30 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A A Financial Perspective on Agriculture. 1/84. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Survey of Consumer Finances, 1983. 9/84. April 1987. 18 pp. Bank Lending to Developing Countries. 10/84. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Survey of Consumer Finances, 1983: A Second Report. Alice P. White. September 1987. 14 pp. 12/84. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF Union Settlements and Aggregate Wage Behavior in the PROPOSED CEILINGS ON CREDIT CARD INTEREST 1980s. 12/84. RATES, by Glenn B. Canner and James T. Fergus. The Thrift Industry in Transition. 3/85. October 1987. 26 pp. A Revision of the Index of Industrial Production. 7/85. 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. Financial Innovation and Deregulation in Foreign Industrial Warshawsky. November 1987. 25 pp. Countries. 10/85. 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANK- Recent Developments in the Bankers Acceptance Market. ING MARKETS, by James V. Houpt. May 1988. 47 pp. 1/86. 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR The Use of Cash and Transaction Accounts by American THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Families. 2/86. Porter, and David H. Small. April 1989. 28 pp. Financial Characteristics of High-Income Families. 3/86. Prices, Profit Margins, and Exchange Rates. 6/86. Agricultural Banks under Stress. 7/86. REPRINTS OF BULLETIN ARTICLES Foreign Lending by Banks: A Guide to International and U.S. Statistics. 10/86. Most of the articles reprinted do not exceed 12 pages. Recent Developments in Corporate Finance. 11/86. Measuring the Foreign-Exchange Value of the Dollar. 6/87. Limit of 10 copies Changes in Consumer Installment Debt: Evidence from the Foreign Experience with Targets for Money Growth. 10/83. 1983 and 1986 Surveys of Consumer Finances. 10/87. Intervention in Foreign Exchange Markets: A Summary of U.S. International Transactions in 1988. 5/89. Ten Staff Studies. 11/83. Home Equity Lines of Credit. 6/88. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 Index to Statistical Tables References are to pages A3-A75 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Depository institutions Agricultural loans, commercial banks, 19, 20 Reserve requirements, 8 Assets and liabilities (See also Foreigners) Reserves and related items, 3, 4, 5, 12 Banks, by classes, 18-20 Deposits (See also specific types) Domestic finance companies, 36 Banks, by classes, 3, 18-20, 21 Federal Reserve Banks, 10 Federal Reserve Banks, 4, io Financial institutions, 26 Turnover, 15 Foreign banks, U.S. branches and agencies, 21, 72-75 Discount rates at Reserve Banks and at foreign central Automobiles banks and foreign countries (See Interest rates) Consumer installment credit, 39, 40 Discounts and advances by Reserve Banks (See Loans) Production, 49, 50 Dividends, corporate, 35 EMPLOYMENT, 47 BANKERS acceptances, 9, 23, 24 Eurodollars, 24 Bankers balances, 18-20. (See also Foreigners) Bonds (See also U.S. government securities) FARM mortgage loans, 38 New issue s, 34 Federal agency obligations, 4, 9, 10, 11, 31, 32 Rates, 24 Federal credit agencies, 33 Branch banks, 21, 57 Federal finance Business activity, nonfinancial, 46 Debt subject to statutory limitation, and types and own- Business expenditures on new plant and equipment, 35 ership of gross debt, 30 Business loans (See Commercial and industrial loans) Receipts and outlays, 28, 29 Treasury financing of surplus, or deficit, 28 CAPACITY utilization, 48 Treasury operating balance, 28 Capital accounts Federal Financing Bank, 28, 33 Banks, by classes, 18 Federal funds, 6, 17, 19, 20, 21, 24, 28 Federal Reserve Banks, 10 Federal Home Loan Banks, 33 Central banks, discount rates, 69 Federal Home Loan Mortgage Corporation, 33, 37, 38 Certificates of deposit, 24 Federal Housing Administration, 33, 37, 38 Commercial and industrial loans Federal Land Banks, 38 Commercial banks, 16, 19, 72-73 Federal National Mortgage Association, 33, 37, 38 Weekly reporting banks, 19-21 Federal Reserve Banks Commercial banks Condition statement, 10 Assets and liabilities, 18-20 Discount rates (See Interest rates) Commercial and industrial loans, 16, 18, 19, 20, 21 U.S. government securities held, 4, 10, 11, 30 Consumer loans held, by type, and terms, 39, 40 Federal Reserve credit, 4, 5, 10, 11 Loans sold outright, 19 Federal Reserve notes, 10 Nondeposit funds, 17 Federal Savings and Loan Insurance Corporation insured Real estate mortgages held, by holder and property, 38 institutions, 26 Time and savings deposits, 3 Federally sponsored credit agencies, 33 Commercial paper, 23, 24, 36 Finance companies Condition statements (See Assets and liabilities) Assets and liabilities, 36 Construction, 46, 51 Business credit, 36 Consumer installment credit, 39, 40 Loans, 39, 40 Consumer prices, 46, 48 Paper, 23, 24 Consumption expenditures, 53, 54 Financial institutions Corporations Loans to, 19, 20, 21 Nonfinancial, assets and liabilities, 35 Selected assets and liabilities, 26 Profits and their distribution, 35 Float, 4 Security issues, 34, 67 Flow of funds, 41, 43, 44, 45 Cost of living (See Consumer prices) Foreign banks, assets and liabilities of U.S. branches and Credit unions, 26, 39. (See also Thrift institutions) agencies, 21, 72-75 Currency and coin, 18 Foreign currency operations, 10 Currency in circulation, 4, 13 Foreign deposits in U.S. banks, 4, 10, 19, 20 Customer credit, stock market, 25 Foreign exchange rates, 70 Foreign trade, 56 DEBITS to deposit accounts, 15 Foreigners Debt (See specific types of debt or securities) Claims on, 57, 59, 62, 63, 64, 66 Demand deposits Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68 Banks, by classes, 18-21 Ownership by individuals, partnerships, and GOLD corporations, 22 Certificate account, 10 Turnover, 15 Stock, 4, 56 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Government National Mortgage Association, 33, 37, 38 Real estate loans—Continued Gross national product, 53 Terms, yields, and activity, 37 Type of holder and property mortgaged, 38 HOUSING, new and existing units, 51 Repurchase agreements, 6, 17, 19, 20, 21 Reserve requirements, 8 INCOME, personal and national, 46, 53, 54 Reserves Industrial production, 46, 49 Commercial banks, 18 Installment loans, 39, 40 Depository institutions, 3, 4, 5, 12 Insurance companies, 26, 30, 38 Federal Reserve Banks, 10 Interest rates U.S. reserve assets, 56 Bonds, 24 Residential mortgage loans, 37 Consumer installment credit, 40 Retail credit and retail sales, 39, 40, 46 Federal Reserve Banks, 7 Foreign central banks and foreign countries, 69 SAVING Money and capital markets, 24 Flow of funds, 41, 43, 44, 45 Mortgages, 37 National income accounts, 53 Prime rate, 23 Savings and loan associations, 26, 38, 39, 41. (See also International capital transactions of United States, 55-69 Thrift institutions) International organizations, 59, 60, 62, 65, 66 Savings banks, 26, 38, 39 Inventories, 53 Savings deposits (See Time and savings deposits) Investment companies, issues and assets, 35 Securities (See also specific types) Investments (See also specific types) Federal and federally sponsored credit agencies, 33 Banks, by classes, 18, 19, 20, 21, 26 Foreign transactions, 67 Commercial banks, 3, 16, 18-20, 38 New issues, 34 Federal Reserve Banks, 10, 11 Prices, 25 Financial institutions, 26, 38 Special .drawing rights, 4, 10, 55, 56 State and local governments LABOR force, 47 Deposits, 19, 20 Life insurance companies (See Insurance companies) Holdings of U.S. government securities, 30 Loans (See also specific types) New security issues, 34 Banks, by classes, 18-20 Ownership of securities issued by, 19, 20, 26 Commercial banks, 3, 16, 18-20 Rates on securities, 24 Federal Reserve Banks, 4, 5, 7, 10, 11 Stock market, selected statistics, 25 Financial institutions, 26, 38 Stocks (See also Securities) Insured or guaranteed by United States, 37, 38 New issues, 34 Prices, 25 MANUFACTURING Capacity utilization, 48 Student Loan Marketing Association, 33 Production, 48, 50 Margin requirements, 25 TAX receipts, federal, 29 Member banks (See also Depository institutions) Thrift institutions, 3. (See also Credit unions and Savings Federal funds and repurchase agreements, 6 and loan associations) Reserve requirements, 8 Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 Mining production, 50 Trade, foreign, 56 Mobile homes shipped, 51 Treasury cash, Treasury currency, 4 Monetary and credit aggregates, 3, 12 Treasury deposits, 4, 10, 28 Money and capital market rates, 24 Treasury operating balance, 28 Money stock measures and components, 3, 13 UNEMPLOYMENT, 47 Mortgages (See Real estate loans) U.S. government balances Mutual funds, 35 Commercial bank holdings, 18, 19, 20 Mutual savings banks (See Thrift institutions) Treasury deposits at Reserve Banks, 4, 10, 28 U.S. government securities NATIONAL defense outlays, 29 Bank holdings, 18-20, 21, 30 National income, 53 Dealer transactions, positions, and financing, 32 Federal Reserve Bank holdings, 4, 10, 11, 30 OPEN market transactions, 9 Foreign and international holdings and transactions, 10, 30, 68 PERSONAL income, 54 Open market transactions, 9 Prices Outstanding, by type and holder, 26, 30 Consumer and producer, 46, 52 Rates, 24 Stock market, 25 U.S. international transactions, 55-69 Prime rate, 23 Utilities, production, 50 Producer prices, 46, 52 Production, 46, 49 VETERANS Administration, 37, 38 Profits, corporate, 35 WEEKLY reporting banks, 19-21 REAL estate loans Wholesale (producer) prices, 46, 52 Banks, by classes, 16, 19, 20, 38 Financial institutions, 26 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 George N. Hatsopoulos Richard F. Syron Richard N. Cooper Robert W. Eisenmenger NEW YORK* 10045 Cyrus R. Vance E. Gerald Corrigan Ellen V. Futter James H. Oltman Buffalo 14240 Mary Ann Lambertsen John T. Keane PHILADELPHIA 19105 Peter A. Benoliel Edward G. Boehne Gunnar E. Sarsten 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 Hanne Merriman Robert P. Black Leroy T. Canoles, Jr. Jimmie R. Monhollon Baltimore 21203 Thomas R. Shelton Robert D. McTeer, Jr.1 Charlotte 28230 William E. Masters 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 Nelda P. Stephenson Fred R. Herr1 Jacksonville 32231 Winnie F. Taylor James D. Hawkins1 Miami 33152 Jose L. Saumat James Curry III Nashville 37203 Patsy R. Williams Donald E. Nelson New Orleans 70161 James A. Hefner 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 L. Dickson Flake John F. Breen1 Louisville 40232 Thomas A. Alvey Howard Wells Memphis 38101 Seymour B. Johnson Ray Laurence MINNEAPOLIS 55480 Michael W. Wright Gary H. Stern John A. Rollwagen Thomas E. Gainor Helena 59601 Warren H. Ross Robert F. McNellis KANSAS CITY 64198 Fred W. Lyons, Jr. Roger Guffey Burton A. Dole, 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 Diana S. Natalicio Sammie C. Clay Houston 77252 Andrew L. Jefferson, Jr. Robert Smith, III1 San Antonio 78295 Lawrence E. Jenkins Thomas H. Robertson SAN FRANCISCO 94120 Robert F. Erburu Robert T. Parry Carolyn S. Chambers Carl E. Powell John F. Hoover1 Los Angeles 90051 Yvonne B. Burke 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. Digitized for FR1.A SSeEniRor Vice President. http://fraser.stlo2.u Eisxfeecdu.toivrge /V ice President. Federal Reserve Bank of St. Louis

A86 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis